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CONTENTS
PAGES
2&3
Notice of meeting
Chairmans report
5&6
7&8
10
11
12
13
14
15
16
17
18 - 42
Report and Financial Statements of Car & General (Kenya) Limited Group
30 September, 2006
Chairman
Group Managing Director
(Alternate S P Gidoomal)
REGISTERED OFFICE
New Cargen House
Lusaka Road
P O Box 20001
Nairobi City Square 00200
AUDITORS
Deloitte & Touche
Ring Road, Westlands
P O Box 40092
Nairobi GPO 00100
British
SECRETARY
N P Kothari
P O Box 30633
Nairobi GPO 00100
BANKERS
ACTIVITIES
NOTICE OF MEETING
Notice is hereby given that the sixty-seventh Annual General Meeting of Car & General (Kenya) Limited will be
held at the Companys Registered Office, New Cargen House, Lusaka Road, Nairobi on Wednesday, 28 March
2007 at 12 noon for the following purposes:
1
To consider the Directors Report and audited financial statements for the year ended 30 September
2006.
To declare a final dividend of Sh 15,000,000/- (Sh 0.67 per share) to shareholders registered at the close
of business on 23 February 2007.
To re-elect Dr B Kiplagat a Director of the Company, special notice having been received, pursuant to
Sections 142 and 186 (5) of the Companies Act (Cap 486), of the intention to propose the following
resolution as an ordinary resolution:
That Dr B Kiplagat who has attained the age of 70 years, be and is hereby re-elected a Director of the
Company.
To re-elect Mr C J Gidoomal a Director of the Company, who retires by rotation and being eligible, offers
himself for re-election.
To authorise the Directors to fix the remuneration of the auditors, Deloitte & Touche.
N P Kothari
Secretary
29 January 2007
A member entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend and vote
instead of him or her. A proxy need not be a member of the Company. A detachable proxy form is at the end of the
financial statements.
CHAIRMANS REPORT
The year to September 2006 proved challenging, as anticipated. Notwithstanding, the Group made
reasonable progress. Turnover, at Sh 1.24 billion, grew 17% over 2005 excluding tenders. The Group generated
a profit before tax of Sh 177 million, of which Sh 89 million related to a revaluation of investment properties as
required by International Financial Reporting Standards. Net results were affected by prudent provisions in
relation to stocks and debts.
The highlights of the financial year were the establishment of our Cummins engine business; the growth of our
TVS two wheelers in Uganda; the successful introduction of Cummins in Tanzania; the significant growth in our
Cummins power generation business throughout the region; the commencement of business in Ethiopia and
Djibouti through dealers; and the renovation and modernization of our workshop facilities in Kenya.
Areas for improvement are our administration and IT services; the promotion of our Mariner brand; the sales
and marketing of our after sales activity; the overall management of our compressor business; and the
reduction of inefficiencies in our working capital.
The critical success factors for the current financial year are as follows:
1
To improve the overall management of our business to ensure efficiency and clarity at all levels. We must
make the transition into a great organization if we are to maximise the significant growth opportunities
before us.
To effectively manage our growth opportunities which will inevitably strain our financial and human
resources. We will need to balance the interests of all stakeholders.
To focus more on after sales activity to ensure that we service the engines we sell. This will be particularly
challenging in the small engine business of motorcycles and Briggs & Stratton Power products.
Make better use of our upgraded IT systems to improve business efficiencies and administration.
To overcome registration problems in our two wheeler and three wheeler business. The inordinate delays
are causing customer dissatisfaction.
We have already implemented initiatives relating to these critical success factors. We look forward to seeing
the impact on profitability in the coming months.
I now comment more specifically on each subsidiary below:
Car & General (Trading) Limited Kenya
Our small engine business, in terms of power products, two-wheelers and three-wheelers, performed well. Our
market share grew across all product lines. The market size of our products continues to grow. We are strongly
positioned to take advantage of this growth. Efficiencies in our stocking and our ability to deliver immediately
to the customer will be critical to success.
This year will be extremely challenging due to the onslaught of competition from China. We need to improve
our marketing activity and service business in order to increase our differentiation. We are confident that the
business will continue to grow above 20% this year.
Our brake pad business struggled this year. Due to speed and load restrictions on matatus (our core market)
the demand for high end pads has reduced. We have launched a less expensive offering which will increase
volume. Notwithstanding this business will remain a small contributor to our trading operations.
Auto Italia
We have made little progress in this area. We continue to service customers to whom we have sold Alfa Romeo
vehicles. Due to focus in other business areas, we have been reluctant to relaunch the Alfa Romeo brand. We
will revisit this area later this year.
C J Gidoomal CHAIRMAN
29 January 2007
Audit Committee
The Board has constituted an audit committee that meets as required. Its responsibilities include review of
financial information, budgets, development plans, compliance with accounting standards, liaison with the
external auditors, remuneration of external auditors and overseeing internal control systems. Two non-executive directors attend all meetings of the committee. Internal and external auditors and other executives
attend as required.
1
2
3
4
5
6
7
8
9
10
Fincom Limited
Primaco Limited
Betrin Limited
Monyaka Investments Limited
Vapa Limited
Mr C J Gidoomal
Mr K D Kyuli
Lerematesho Limited
Mr D G Bellhouse
Mr Kieti Peter Makau
2006
No of shares
7,240,789
4,248,737
3,834,122
2,787,285
722,510
245,677
168,960
149,200
140,798
121,086
32.5
19.1
17.2
12.5
3.2
1.1
0.8
0.7
0.6
0.5
Directors shareholdings
Mr
Mr
Mr
Mr
Mr
Mr
Mr
C J Gidoomal
V V Gidoomal
N Nganga
EM Grayson
B Kiplagat
Harbans Singh Amrit
P Shah
245,677
880
3,027
880
880
880
880
Parent company
Trading
Engineering
Uganda:
Trading
Tanzania:
Trading
Poultry
86,059
15,487
32,017
-------------------------------------133,563
-------------------------------------22,218
-------------------------------------5,056
15,978
-------------------------------------21,034
-------------------------------------176,815
(39,228)
-------------------------------------137,587
==========
135,656
1,931
-------------------------------------137,587
==========
DIVIDEND
The directors propose payment of a first and final dividend of Sh 15,000,000 (2005 - Sh 15,000,000) in respect of
the year.
DIRECTORS
The present board of directors is shown on page 2.
A special notice has been received by the Company to the effect that Dr B Kiplagat who has attained the
age of 70 years be re-elected a director of the Company. Dr B Kiplagat offers himself for re-election.
Mr C J Gidoomal retires by rotation in accordance with the Articles of Association and, being eligible, offers
himself for re-election.
AUDITORS
Deloitte & Touche, having expressed their willingness, continue in office in accordance with Section 159 (2) of
the Companies Act (Cap 486).
N P Kothari
Secretary
29 January 2007
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Director
Director
29 January 2007
10
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CAR & GENERAL (KENYA) LIMITED
We have audited the financial statements of Car & General (Kenya) Limited set out on pages 12 to 42 which
comprise the consolidated and company balance sheets as at 30 September 2006, and the consolidated
income statement, consolidated and company statement of changes in equity and consolidated cash flow
statement for the year then ended, together with the summary of significant accounting policies and other
explanatory notes, and have obtained all the information and explanations which, to the best of our
knowledge and belief, were necessary for the purposes of our audit.
Respective responsibilities of directors and auditors
The companys directors are responsible for the preparation and fair presentation of these financial statements
in accordance with International Financial Reporting Standards and the provisions of the Kenyan Companies
Act. This responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error, selecting and applying appropriate accounting policies, and making accounting
estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these financial
statements based on our audit.
Basis of opinion
We conducted our audit in accordance with International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as
to whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on our judgment and include an assessment of the risks
of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, we considered internal controls relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by directors, as well as evaluating the overall presentation of the financial statements.
We believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion:
(a)
(b)
proper books of account have been kept by the company and the companys balance sheet is in
agreement therewith;
the financial statements give a true and fair view of the state of affairs of the company and the group
at 30 September 2006 and of the profit and cash flows of the group for the year then ended in
accordance with International Financial Reporting Standards and comply with the Kenyan Companies
Act.
29 January 2007
Audit
Partners: D.M. Ndonye H. Gadhoke* D.C. Hodges* J.M. Kiarie M.M. Kisuu S.O. Onyango J.W. Wangai
British*
11
A member firm of
Deloitte Touche Tohmatsu
TURNOVER
Note
2006
Sh000
2005
Sh000
1,244,403
1,061,742
COST OF SALES
GROSS PROFIT
OTHER OPERATING INCOME
GAIN IN FAIR VALUE OF INVESTMENT PROPERTY
SELLING AND DISTRIBUTION COSTS
ADMINISTRATIVE EXPENSES
3
17
OPERATING PROFIT
ATTRIBUTABLE TO:
EQUITY HOLDERS OF THE PARENT
MINORITY INTEREST
10
11
12
(925,358)
-------------------------------------319,045
4,923
89,320
(94,587)
(135,042)
--------------------------------------183,659
(801,776)
-------------------------------------259,966
13,790
205,218
(109,475)
(95,632)
-------------------------------------273,867
(6,844)
--------------------------------------176,815
(39,228)
--------------------------------------137,587
==========
9,143
-------------------------------------283,010
(88,737)
-------------------------------------194,273
==========
135,656
1,931
--------------------------------------137,587
==========
193,945
328
-------------------------------------194,273
==========
Sh
Sh
6.09
==========
0.67
==========
8.71
==========
0.67
==========
2005
Sh000
12
14
16
17
18
284,376
16,950
2,171
396,215
-------------------------------------699,712
---------------------------------------
268,969
17,425
352
283,284
11,485
-------------------------------------581,515
--------------------------------------
20
18
21
448,324
25,023
206,834
8,534
42,527
--------------------------------------731,242
---------------------------------------
375,066
28,050
158,297
6,098
11,887
-------------------------------------579,398
--------------------------------------
1,430,954
==========
1,160,913
==========
111,398
151,077
468,254
---------------------------------------
111,398
143,839
333,148
15,000
--------------------------------------
730,729
1,750
--------------------------------------732,479
---------------------------------------
603,385
(181)
-------------------------------------603,204
--------------------------------------
140,495
19,966
---------------------------------------
109,602
10,017
--------------------------------------
160,461
---------------------------------------
119,619
--------------------------------------
148,670
389,344
---------------------------------------
156,243
281,847
--------------------------------------
538,014
--------------------------------------1,430,954
==========
438,090
-------------------------------------1,160,913
==========
Note
ASSETS
Non-current assets
Property, plant and equipment
Operating lease prepayments
Intangible assets
Investment property
Finance lease receivables
Current assets
Inventories
Finance lease receivables
Trade and other receivables
Taxation recoverable
Cash and bank balances
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Revaluation reserve
Revenue reserve
Proposed dividend
23
Total equity
Non-current liabilities
Deferred taxation
Borrowings
24
25
Current liabilities
Borrowings
Trade and other payables
25
26
The financial statements on pages 12 to 42 were approved by the board of directors on 29 January 2007
and were signed on its behalf by:
V.V. Gidoomal
Director
E.M. Grayson
Director
13
2005
Sh000
13
15
16
17
19
152,770
1,121
1,900
396,215
27,427
--------------------------------------579,433
---------------------------------------
143,630
1,158
150
283,284
27,427
-------------------------------------455,649
--------------------------------------
21
22
24,485
177,897
1,288
438
--------------------------------------204,108
--------------------------------------783,541
==========
17,555
234,194
1,232
275
-------------------------------------253,256
-------------------------------------708,905
==========
23
111,398
74,122
310,449
--------------------------------------495,969
---------------------------------------
111,398
64,886
236,190
15,000
-------------------------------------427,474
--------------------------------------
24
25
137,163
7,881
--------------------------------------145,044
---------------------------------------
110,876
-------------------------------------110,876
--------------------------------------
Current liabilities
Trade and other payables
Due to group companies
Borrowings
26
22
25
22,589
89,540
30,399
--------------------------------------142,528
--------------------------------------783,541
==========
16,795
92,116
61,644
-------------------------------------170,555
-------------------------------------708,905
==========
Note
ASSETS
Non current assets
Property, plant and equipment
Operating lease prepayments
Intangible assets
Investment property
Investment in subsidiaries
Current assets
Trade and other receivables
Due from group companies
Taxation recoverable
Cash and bank balances
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Revaluation reserve
Revenue reserve
Proposed dividend
Shareholders funds
The financial statements on pages 12 to 42 were approved by the board of directors on 29 January 2007
and were signed on its behalf by:
V.V. Gidoomal
Director
E.M. Grayson
Director
14
Revenue
reserve
Sh000
Proposed
dividend
Sh000
Minority
interest
Sh000
103,190
168,854
15,000
(509)
397,933
62,462
(11,775)
(1,939)
582
(8,681)
-
1,939
(582)
(16,008)
193,945
(15,000)
(15,000)
15,000
328
62,462
(11,775)
(24,689)
194,273
(15,000)
-
Total
Sh000
At 30 September 2005
111,398
-------------------------------------111,398
==========
-------------------------------------143,839
==========
-------------------------------------333,148
==========
------------------------------------15,000
==========
111,398
143,839
333,148
15,000
(181)
603,204
________
14,935
(4,480)
(2,590)
2,590
777
(777)
(1,404)
(2,363)
135,656
1,931
(15,000)
________ ________ ________ ________
14,935
(4,480)
(3,767)
137,587
(15,000)
________
At 30 September 2006
111,398
==========
151,077
==========
732,479
==========
15
468,254
==========
==========
1,750
==========
At 1 October 2004
Share Revaluation
capital
reserve
Sh000
Sh000
111,398
38,167
Revenue
reserve
Sh000
Proposed
dividend
Sh000
Total
Sh000
90,186
15,000
254,751
--------------------------------------
39,249
(11,775)
(1,078)
1,078
323
(323)
160,249
(15,000)
-------------------------------------- --------------------------------------
(15,000)
15,000
-------------------------------------
39,249
(11,775)
160,249
(15,000)
--------------------------------------
At 30 September 2005
111,398
==========
64,886
==========
236,190
==========
15,000
==========
427,474
==========
111,398
64,886
236,190
15,000
427,474
--------------------------------------
14,935
(4,480)
(1,742)
1,742
523
(523)
73,040
-------------------------------------- --------------------------------------
(15,000)
-------------------------------------
14,935
(4,480)
73,040
(15,000)
--------------------------------------
At 30 September 2006
111,398
==========
74,122
==========
==========
495,969
==========
16
310,449
==========
Note
2006
Sh000
2005
Sh000
Operating activities
Cash generated from/(used in) operations
Interest paid
Interest received
Tax paid
27(a)
124,528
(25,007)
3,500
(15,750)
--------------------------------------
(28,278)
(23,183)
5,804
(7,529)
--------------------------------------
87,271
--------------------------------------
(53,186)
--------------------------------------
(31,915)
(2,251)
1,718
--------------------------------------
(21,005)
(221)
1,946
--------------------------------------
(32,448)
--------------------------------------
(19,280)
--------------------------------------
72,526
(48,632)
(15,000)
(1,270)
--------------------------------------
70,697
(31,999)
(15,000)
--------------------------------------
7,624
--------------------------------------
23,698
--------------------------------------
Investing activities
Financing activities
Loans received
Loans repaid
Dividend paid
Repayment of hire-purchase facility
27(b)
27(b)
27(d)
62,447
27(e)
17
(48,768)
(86,035)
--------------------------------------
(37,267)
--------------------------------------
(23,588)
==========
(86,035)
==========
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2006
1
ACCOUNTING POLICIES
The financial statements have been prepared in accordance with International Financial Reporting
Standards. The principal accounting policies adopted have not changed from the previous year and
are set out below:
Adoption of new and revised international financial reporting standards
In 2005 several new and revised standards became effective for the first time and have been
adopted by the group where relevant to its operations. The adoption of the new and revised
standards has no effect on the amounts reported for the current or prior years. This only resulted in
changes in presentation and disclosure:
IAS 1 requires:
Minority interest to be shown as part of equity,
Management judgements and key sources of estimation and uncertainty at the balance sheet
date be disclosed in the financial statements.
IAS 10 has affected the presentation of proposed dividends.
IAS 16 requires the disclosure of comparative figures for movements in property and equipment.
IAS 24 requires the disclosure of the compensation of key management personnel.
At the date of authorization of these financial statements IFRS 6 on Exploration for and Evaluation of
Mineral Assets and IFRS 7 on Financial Instruments Disclosures were in issue but not yet effective. The
adoption of these Standards, when effective, will have no material impact on the financial
statements of the Group.
Basis of accounting
The financial statements are prepared under the historical cost basis of accounting modified to
include the revaluation of certain properties.
Consolidation
Subsidiary undertakings, being those companies in which the Group either directly or indirectly has an
interest of more than 50% of the voting rights or otherwise has power to exercise control over the
operations, have been consolidated. Subsidiaries are consolidated from the date on which effective
control is transferred to the Group and are no longer consolidated as from the date of disposal. All
inter company transactions, balances and unrealised surpluses and deficits on transactions with the
subsidiary companies have been eliminated.
The income statements of subsidiaries are translated at average exchange rates for the year, and
balance sheets at year end rates. The resulting differences from translation are dealt with in reserves.
The consolidated financial statements incorporate the financial statements of the company and its
subsidiaries, all of which have a financial year end of 30 September.
The subsidiaries which have been consolidated are set out in note 19.
Turnover
Sales are recognised upon the delivery of products to customers and the performance of services,
and are stated net of VAT and discounts.
Rental income is recognised when it falls due.
Property, plant and equipment
Property, plant and equipment are stated at cost or valuation less depreciation and any
accumulated impairment losses.
The depreciation charge to the income statement is based on the carrying amounts of the property,
plant and equipment. The excess of this charge over that based on the historical cost of the property
and equipment is released each year from the revaluation reserves to retained earnings.
18
2%
12.5% - 20%
12.5% - 30%
25%
Impairment
At each balance sheet date, the group reviews the carrying amount of its tangible and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss. Where it is not possible to estimate the recoverable amount of an
individual asset, the group estimates the recoverable amount of the cash generating unit to which
the asset belongs.
Any impairment loss is recognised as an expense immediately. Where an impairment loss
subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its
recoverable amount. A reversal of an impairment loss is recognised as income immediately.
Leasehold land
Payments to acquire interest in leasehold land are treated as prepaid operating lease rentals and
amortised over the period of the lease.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all risks
and rewards of ownership to the lease.
All other leases are classified as operating leases.
Rentals payable under operating leases are charged to income on a straight line basis over the term
of the relevant lease.
Investment property
Investment property comprises land and buildings and parts of buildings held to earn rentals and/or
for capital appreciation. They are carried at fair value, as determined regularly by external
independent valuers. The fair value is based on active market prices as adjusted, if necessary, for any
difference in the nature, condition or location of the specific asset.
Investment property is not subject to depreciation. Changes in their carrying amount between
balance sheet dates are recorded, net of deferred tax, through the profit and loss account.
On disposal of an investment property, the difference between the net disposal proceeds and the
carrying amount is charged or credited to the profit and loss account.
Investment in subsidiaries
Investment in subsidiaries is stated at cost less any impairment losses in the companys separate
financial statements. The holding company accounts for dividends from subsidiary companies only
when they are received.
19
20
SEGMENTAL INFORMATION
(a)
Rental
income
Sh000
Poultry
sales
Sh000
Group
Sh000
1,134,653
81,190
745,735
574,331
8,833
20,348
==========
49,206
89,320
86,073
658,122
109,729
5,274
25,077
==========
60,544
16,396
27,097
14,415
632
300
==========
1,244,403
89,320
183,659
1,430,954
698,475
14,739
45,725
==========
60,544
13,255
18,195
14,336
400
2,441
==========
1,061,742
205,218
273,867
1,160,913
557,709
10,822
21,005
==========
2006
Turnover
Fair value gains
Operating profit
Segment assets
Segment liabilities
Depreciation/amortisation
Capital expenditure
2005
Turnover
Fair value gains
Operating profit
Segment assets
Segment liabilities
Depreciation/amortisation
Capital expenditure
951,998
52,148
633,388
354,058
5,974
16,096
==========
21
49,200
205,218
208,464
509,330
189,315
4,448
2,468
==========
Kenya
Uganda
Tanzania
2005
Sh000
715,099
335,735
193,569
-------------------------------------1,244,403
==========
761,038
135,505
165,199
-------------------------------------1,061,742
==========
671
4,252
-------------------------------------4,923
==========
1,706
12,084
-------------------------------------13,790
==========
14,139
211
389
122,447
1,182
15,722
2,202
10,495
235
92
86,092
650
14,638
2,151
89,320
205,218
671
==========
1,706
==========
2006
Sh000
OPERATING PROFIT
The operating profit is arrived at after charging:
Depreciation - property, plant and equipment
Amortisation - operating lease prepayments
- intangible assets
Staff costs (note 5)
Directors remuneration - current year fees
- other emoluments
Auditors remuneration
And after crediting:
Fair value gains on investment properties
Profit on disposal of property, plant and equipment and intangibles
22
STAFF COSTS
2005
Sh000
117,633
82,448
2,116
2,344
354
-------------------------------------122,447
==========
1,302
1,878
464
-------------------------------------86,092
==========
3,500
(25,007)
14,663
-------------------------------------(6,844)
==========
5,804
(23,183)
26,522
-------------------------------------9,143
==========
13,003
-------------------------------------42,405
(16,180)
-------------------------------------26,225
-------------------------------------39,228
==========
7,205
-------------------------------------81,642
(110)
-------------------------------------81,532
-------------------------------------88,737
==========
2006
Sh000
TAXATION CHARGE
Current tax
- current year
Deferred tax
- current year
- prior year overprovision
Deferred tax
- (note 24)
Taxation charge
The tax on the groups profit before tax differs from the theoretical amount that would arise using
the basic tax rate as follows:
23
2006
Sh000
2005
Sh000
176,815
==========
283,010
==========
53,045
84,903
2,363
(16,180)
-------------------------------------39,228
==========
5,606
(1,662)
(110)
-------------------------------------88,737
==========
2006
Sh000
9
MINORITY INTEREST
At 1 October
Share of profit for the year
At 30 September
Represented by:
%holding in Car & General (Marine) Limited
10
2005
Sh000
(181)
1,931
-------------------------------------1,750
==========
(509)
328
-------------------------------------(181)
==========
16
==========
16
==========
11
24
Freehold
land and
buildings
Sh000
Plant and
equipment
Sh000
Total
Sh000
COST OR VALUATION
At 1 October 2004
Exchange rate adjustments
Additions
Disposals
Write offs
Revaluation surplus
At 30 September 2005
At 1 October 2005
Exchange rate adjustments
Additions
Disposals
Write offs
Reclassified to investment property
Revaluation surplus
At 30 September 2006
214,231
(10,863)
51,836
-------------------------------------255,204
-------------------------------------
86,933
(3,045)
21,005
(1,260)
(1,791)
-------------------------------------101,842
--------------------------------------
301,164
(13,908)
21,005
(1,260)
(1,791)
51,836
-------------------------------------357,046
--------------------------------------
255,204
(1,610)
15,444
(24,076)
(6,355)
-------------------------------------238,607
--------------------------------------
101,842
(3,506)
28,030
(7,499)
(2,075)
-------------------------------------116,792
--------------------------------------
357,046
(5,116)
43,474
(7,499)
(2,075)
(24,076)
(6,355)
-------------------------------------355,399
--------------------------------------
140,207
55,836
10,141
20,529
10,049
1,845
-------------------------------------238,607
--------------------------------------
116,792
-------------------------------------116,792
--------------------------------------
140,207
55,836
10,141
20,529
10,049
118,637
-------------------------------------355,399
--------------------------------------
40,018
(2,265)
4,068
(10,626)
-------------------------------------31,195
--------------------------------------
54,165
(1,211)
6,427
(1,063)
(1,436)
-------------------------------------56,882
--------------------------------------
94,183
(3,476)
10,495
(1,063)
(1,436)
(10,626)
-------------------------------------88,077
--------------------------------------
31,195
(189)
5,085
(482)
(21,290)
-------------------------------------14,319
--------------------------------------
56,882
(686)
9,054
(6,615)
(1,931)
-------------------------------------56,704
--------------------------------------
88,077
(875)
14,139
(6,615)
(1,931)
(482)
(21,290)
-------------------------------------71,023
--------------------------------------
COMPRISING:
At
At
At
At
At
At
valuation
valuation
valuation
valuation
valuation
cost
2006
2005
1994
1992
1991
DEPRECIATION
At 1 October 2004
Exchange rate adjustments
Charge for the year
Eliminated on disposals
Eliminated on write offs
Written back on revaluation
At 30 September 2005
At 1 October 2005
Exchange rate adjustments
Charge for the year
Eliminated on disposals
Eliminated on write offs
Reclassified to investment property
Written back on revaluation
At 30 September 2006
25
Plant and
equipment
Sh000
Total
Sh000
At 30 September 2006
224,288
==========
60,088
==========
284,376
==========
At 30 September 2005
224,009
==========
44,960
==========
268,969
==========
At 30 September 2006
42,123
==========
60,088
==========
102,211
==========
At 30 September 2005
99,283
==========
32,768
==========
132,051
==========
Freehold land and buildings are carried at valuations derived by various external professional valuers.
The basis of valuation has been open market value.
2006
Sh000
2005
Sh000
130
62,597
175,880
------------------238,607
==========
130
62,462
192,612
------------------255,204
==========
The exchange rate adjustments arise as a result of the translation of the property, plant and
equipment opening balances of Car & General (Uganda) Limited, Car & General (Tanzania) Limited,
Car & General (Trading) Limited - Tanzania, Kibo Poultry Products Limited and Sovereign Holdings
International Limited.
The rates of exchange applied at 30 September were as follows:
1 Tanzania shilling
1 Uganda shilling
1 US dollar
2006
KSh
2005
KSh
0.0569
0.0391
72.7500
==========
0.0652
0.0397
74.0000
==========
Included in plant and equipment as at 30 September 2006 are idle assets with an original cost of
Sh 1,053,000 (2005 - Sh 1,053,000) and accumulated depreciation of Sh 986,000(2005 Sh 947,000).
Included in plant and equipment as at 30 September 2006 are fully depreciated assets with an original
cost of Sh 88,000 (2005 - Sh 88,000). The notional depreciation on these assets is Sh 11,000 (2005
Sh 11,000).
The group has pledged assets with a net book value of Sh 635,813,000 (2005 Sh 457,670,000) to
secure borrowings granted to it.
26
Total
Sh000
COST OR VALUATION
At 1 October 2004
Additions
Write offs
Revaluation surplus
At 30 September 2005
At 1 October 2005
Additions
Disposals
Reclassified to investment property
Revaluation surplus
At 30 September 2006
COMPRISING:
At valuation 2006
At cost
122,839
32,501
-------------------------------------155,340
--------------------------------------
18,652
2,468
(1,791)
-------------------------------------19,329
--------------------------------------
141,491
2,468
(1,791)
32,501
-------------------------------------174,669
--------------------------------------
155,340
15,428
(24,076)
(6,355)
-------------------------------------140,337
--------------------------------------
19,329
7,566
(4,062)
-------------------------------------22,833
--------------------------------------
174,669
22,994
(4,062)
(24,076)
(6,355)
-------------------------------------163,170
--------------------------------------
140,207
130
-------------------------------------140,337
--------------------------------------
22,833
-------------------------------------22,833
--------------------------------------
140,207
22,963
-------------------------------------163,170
--------------------------------------
22,982
2,457
(6,748)
-------------------------------------18,691
--------------------------------------
12,624
1,160
(1,436)
-------------------------------------12,348
--------------------------------------
35,606
3,617
(1,436)
(6,748)
-------------------------------------31,039
--------------------------------------
18,691
3,120
(482)
(21,290)
-------------------------------------39
--------------------------------------
12,348
1,801
(3,788)
-------------------------------------10,361
--------------------------------------
31,039
4,921
(3,788)
(482)
(21,290)
-------------------------------------10,400
--------------------------------------
DEPRECIATION
At 1 October 2004
Charge for the year
Eliminated on write offs
Written back on revaluation
At 30 September 2005
At 1 October 2005
Charge for the year
Eliminated on disposals
Reclassified to investment property
Written back on revaluation
At 30 September 2006
27
Total
Sh000
140,298
==========
136,649
==========
12,472
==========
6,981
==========
152,770
==========
143,630
==========
91
==========
60,526
==========
12,472
==========
6,981
==========
12,563
==========
67,507
==========
The company has pledged assets with net book value of Sh 537,543,000 (2005 Sh 351,250,000) to
secure borrowings granted to it.
2006
Sh000
2005
Sh000
130
6,761
133,446
------------------140,337
==========
130
5,667
149,543
------------------155,340
==========
Freehold land and buildings are carried at valuations derived by various external professional valuers.
The basis of valuation has been open market value.
14
25,493
(3,210)
(1,500)
(59)
-----------------20,724
------------------
At 30 September 2005
At 1 October 2005
Exchange rate adjustments
Reclassified to investment property
20,724
(290)
(30)
------------------20,404
------------------
At 30 September 2006
28
4,058
(451)
(527)
235
(16)
-------------------
At 30 September 2005
3,299
-------------------
At 1 October 2005
Exchange rate adjustments
Reclassified to investment property
Amortisation for the year
3,299
(43)
(13)
211
-------------------
At 30 September 2006
3,454
-------------------
16,950
==========
At 30 September 2005
17,425
==========
The reclassification relates to the transfer of leasehold land with a net book value of Sh 17,000 (2005 Sh 973,000) (note 17) to investment property in accordance with the revised International Accounting
Standard No. 40, Investment Property.
29
3,070
(1,500)
-----------------1,570
-----------------1,570
(30)
-----------------1,540
------------------
At 30 September 2005
At 1 October 2005
Reclassified to investment property
At 30 September 2006
AMORTISATION
At 1 October 2004
Reclassified to investment property
Charge for the year
898
(527)
41
-----------------412
------------------
At 30 September 2005
At 1 October 2005
Reclassified to investment property
Charge for the year
412
(13)
20
------------------
At 30 September 2006
419
------------------
1,121
==========
1,158
==========
At 30 September 2005
The reclassification relates to the transfer of leasehold land with a net book value of Sh 17,000 (2005 Sh 973,000) (note 17) to investment property in accordance with the revised International Accounting
Standard No. 40, Investment Property.
30
INTANGIBLE ASSETS
GROUP
Sh000
COMPANY
Sh000
COST
At 1 October 2004
Exchange rate adjustments
Additions
At 30 September 2005
At 1 October 2005
Exchange rate adjustments
Additions
Write-off
At 30 September 2006
523
(8)
221
------------------736
-------------------
465
------------------465
-------------------
736
(34)
2,251
(44)
------------------2,909
-------------------
465
2,083
------------------2,548
-------------------
294
(2)
92
------------------384
-------------------
278
37
------------------315
-------------------
384
(9)
389
(26)
------------------738
-------------------
315
333
------------------648
-------------------
2,171
==========
352
==========
1,900
==========
150
==========
DEPRECIATION
At 1 October 2004
Exchange rate adjustments
Charge for the year
At 30 September 2005
At 1 October 2005
Exchange rate adjustments
Charge for the year
Eliminated on write-off
At 30 September 2006
31
283,284
17
23,594
89,320
------------------At 30 September 2006
396,215
==========
Investment properties comprise residential and commercial properties held for long-term rental yields
and not occupied by the group.
These properties were valued by R R Oswald & Company Limited, registered valuers, as at 30
September 2006, on an open market basis.
2006
Sh000
2005
Sh000
111,215
285,000
------------------396,215
==========
73,284
210,000
------------------283,284
==========
18
29,505
------------------29,505
(4,482)
------------------25,023
==========
2005
Sh000
34,189
12,539
------------------46,728
(7,193)
------------------39,535
==========
Present value of
minimum lease payments
2006
Sh000
2005
Sh000
25,023
------------------25,023
------------------25,023
==========
28,050
11,485
-------------------39,535
-------------------39,535
==========
The company enters into finance leasing arrangements for certain equipment and motor vehicles.
The average term of finance leases entered into is 2 years.
Unguaranteed residual values of assets leased under finance leases are estimated at nil (2005 - Nil).
The interest rate inherent in the leases is variable at the contract date for all of the lease term. The
weighted average interest rate on finance lease receivables at 30 September 2006 was 18% (2005 18%).
32
INVESTMENT IN SUBSIDIARIES
Subsidiary
Country of
incorporation
Holding
2006
Sh000
2005
Sh000
Kenya
100%
Kenya
84%
3,155
3,155
Kenya
100%
1,098
1,098
Kenya
100%
20
20
Kenya
100%
40
40
Kenya
100%
500
500
Kenya
100%
2,600
2,600
Tanzania
100%
2,600
2,600
Tanzania
100%
15,072
15,072
Tanzania
100%
90
90
Uganda
100%
2,250
2,250
British Virgin
Islands
100%
------------------27,427
==========
------------------27,427
==========
33
20
81,979
2,931
129,172
230,785
3,457
------------------448,324
==========
44,600
2,154
121,085
203,847
3,380
------------------375,066
==========
2006
Sh000
GROUP
2005
Sh000
156,343
1,135
49,356
------------------206,834
==========
117,703
2,026
38,568
------------------158,297
==========
COMPANY
2006
2005
Sh000
Sh000
22
2005
Sh000
INVENTORIES
Raw materials, spares and consumables
Work in progress
Finished products
Goods in transit and in bond
Livestock
21
2006
Sh000
11,965
1,135
11,385
------------------24,485
==========
11,635
1,138
4,782
-------------------17,555
==========
2006
Sh000
2005
Sh000
53,377
85,795
10,749
1,371
1,484
9,103
7,237
235
8,546
------------------177,897
==========
113,641
66,999
19,926
1,371
1,141
9,096
7,236
6,238
8,546
------------------234,194
==========
85,056
4,484
------------------89,540
==========
87,631
4,485
------------------92,116
==========
GROUP COMPANIES
Due from Group companies:
Car & General (Trading) Limited - Kenya
Car & General (Piaggio) Limited
Car & General (Automotive) Limited
Car & General (Tanzania) Limited
Car & General (Trading) Limited - Tanzania
Car & General (Engineering) Limited
Car & General (Marine) Limited
Kibo Poultry Products Limited
Sovereign Holdings International Limited
34
SHARE CAPITAL
Authorised
23,000,000 ordinary shares of Sh 5 each
Issued and fully paid
22,279,616 ordinary shares of Sh 5 each
24
2006
Sh000
2005
Sh000
115,000
==========
115,000
==========
111,398
==========
111,398
==========
DEFERRED TAX
Deferred tax is calculated in full on all temporary differences under the liability method using a
principal tax rate of 30%. The movement on the deferred income tax account is as follows:
2006
Sh000
2005
Sh000
109,602
187
26,225
4,481
------------------140,495
==========
18,086
(1,791)
81,532
11,775
------------------109,602
==========
110,876
21,806
4,481
------------------137,163
==========
27,220
71,881
11,775
------------------110,876
==========
GROUP
At 1 October
Exchange difference on translation
Income statement charge - (note 7)
Revaluation reserve debit
At 30 September
COMPANY
At 1 October
Income statement charge
Revaluation reserve debit
At 30 September
Deferred tax assets and liabilities, and the movement on the deferred tax account are attributable to
the following items:
Charged to
Exchange revaluation
2005 adjustment
reserve
Sh000
Sh000
Sh000
Charged/
(credited)
to income
statement
Sh000
2006
Sh000
GROUP
DEFERRED TAX LIABILITIES
Accelerated capital allowances
Relating to revaluation surplus
Unrealised exchange differences
1,707
120,859
10,673
------------------133,239
-------------------
35
(63)
(211)
6
------------------(268)
-------------------
4,481
------------------4,481
-------------------
(3,510)
27,050
(12,000)
-------------------11,540
--------------------
(1,866)
152,179
(1,321)
------------------148,992
-------------------
Charged/
(credited)
to income
statement
Sh000
2006
Sh000
(22,440)
(1,197)
------------------(23,637)
------------------109,602
==========
455
------------------455
------------------187
==========
------------------------------------4,481
==========
15,042
(688)
331
-------------------14,685
-------------------26,225
==========
(6,943)
(688)
(866)
------------------(8,497)
------------------140,495
==========
106,887
5,933
------------------112,820
-------------------
-------------------------------------
4,481
------------------4,481
-------------------
26,796
(5,933)
-------------------20,863
--------------------
138,164
------------------138,164
-------------------
(202)
(983)
(759)
------------------(1,944)
------------------110,876
==========
------------------------------------==========
------------------------------------4,481
==========
589
461
(107)
-------------------943
-------------------21,806
==========
387
(522)
(866)
------------------(1,001)
------------------137,163
==========
COMPANY
DEFERRED TAX LIABILITIES
Relating to revaluation surplus
Unrealised exchange differences
25
BORROWINGS
2006
Sh000
2005
Sh000
72,323
49,960
8,714
13,303
5,075
11,195
10,289
------------------102,521
66,115
------------------168,636
------------------68,338
97,922
------------------166,260
(148,670)
------------------19,966
==========
(156,243)
------------------10,017
==========
GROUP
Loans:
Short - term note - interest 9.79% (2005 9.76%)p.a.
Stanbic Bank Tanzania Limited secured, interest at 18% (2005 - 16%)
Giro Commercial Bank Limited secured, interest at 16% (2005 - 16%) p.a.
Standard Chartered Bank Kenya Limited secured, interest at 14.75%
Hire purchase obligations
Bank overdrafts (secured)
Current
Non-current
36
BORROWINGS (continued)
2006
Sh000
2005
Sh000
12,803
12,856
11,195
1,601
------------------25,599
------------------12,856
12,681
------------------38,280
(30,399)
------------------7,881
==========
48,788
------------------61,644
(61,644)
------------------==========
COMPANY
Loans:
Current
Non-current
MATURITY OF NON CURRENT BORROWINGS
GROUP
2006
Sh000
2005
Sh000
18,223
1,743
------------------19,966
==========
10,017
------------------10,017
==========
COMPANY
2006
2005
Sh000
Sh000
7,591
290
------------------7,881
==========
-------------------==========
2006
2005
14.30%
11.16%
==========
14.34%
11.64%
==========
Interest rates
The effective interest rates at 30 September were as follows:
Bank overdrafts
Loans
Details of securities for loans and overdrafts
GROUP
a) The Standard Chartered Bank Kenya Limited loans and overdrafts are secured by a collateral legal
charge over land and buildings and a debenture over assets for Sh 252,500,000 1st ranking pari
passu with CFC Bank Limited for Sh 150,000,000.
b) The Stanbic Bank Tanzania Limited loan is secured by a legal charge over land and buildings.
c) The CFC Bank Limited overdraft is secured by a collateral legal charge over land and buildings and
a debenture over certain assets of the company for Sh 150,000,000 ranking pari passu with
Standard Chartered Bank Kenya Limited.
d) The Giro Commercial Bank Limited loan and overdraft are secured by a legal charge over land
and buildings for Sh 30,000,000.
e) The National Bank of Commerce (Uganda) Limited bank overdraft is secured by a debenture over
certain assets for Sh 1,390,000.
37
BORROWINGS (continued)
f) The Standard Chartered Bank Uganda Limited overdraft is secured by a legal charge over land
and buildings and a debenture over fixed and floating assets of Car & General (Uganda) Limited
for Sh 103,600,000.
COMPANY
The Standard Chartered Bank Kenya Limited loans and overdrafts are secured by a collateral legal
charge over land and buildings and a debenture over assets for Sh 252,500,000 1st ranking pari passu
with CFC Bank Limited for Sh 150,000,000.
ANALYSIS OF HIRE PURCHASE OBLIGATIONS
2006
Sh000
Minimum lease payments
Due within one year
Due after one year
3,785
9,710
------------------13,495
(3,206)
-------------------
10,289
GROUP
2005
Sh000
-------------------------------------
COMPANY
2006
2005
Sh000
Sh000
573
1,527
------------------2,100
(499)
------------------1,601
---------------------------------------
(2,886)
-------------------
-------------------
(437)
-------------------
--------------------
7,403
==========
==========
1,164
==========
==========
The finance lease obligations relate to the hire-purchase loan from NIC Bank Limited for purchase of
motor-vehicles.
The weighted average rate of interest was 14% (2005 - nil).
The carrying values of the lease obligations approximate their fair values. The leases are secured by
the assets which are subject of the finance lease.
Undrawn facilities
The group had undrawn committed borrowing facilities amounting to Sh 185,993,000 (2005 - Sh
183,075,000). The borrowing facilities consist of loans, bank overdrafts, letters of credit and guarantees.
26
Trade payables
Other payables
38
2006
Sh000
GROUP
2005
Sh000
317,558
71,786
------------------389,344
==========
215,602
66,245
------------------281,847
==========
COMPANY
2006
2005
Sh000
Sh000
7,934
14,655
------------------22,589
==========
3,401
13,394
-------------------16,795
==========
27
2006
Sh000
2005
Sh000
183,659
273,867
14,139
211
(89,320)
(815)
389
144
14,663
1,244
------------------124,314
10,495
235
(205,218)
(1,706)
92
355
26,522
(12,468)
------------------92,174
(73,258)
(48,537)
14,512
107,497
------------------124,528
==========
(87,246)
(33,848)
(39,535)
40,177
------------------(28,278)
==========
68,338
72,526
(48,632)
10,289
-------------------
29,640
70,697
(31,999)
-------------------
102,521
==========
68,338
==========
Acquisition by cash
Acquisition through hire-purchase (see note 27 (d))
31,915
11,559
-------------------
21,005
-------------------
43,474
==========
21,005
==========
11,559
(1,270)
------------------10,289
==========
------------------==========
39
28
11,887
(97,922)
------------------(86,035)
==========
==========
10,000
==========
1,434
------------------1,434
==========
1,258
1,000
------------------2,258
==========
578,273
1,434
------------------579,707
==========
359,370
1,258
1,000
------------------361,628
==========
CAPITAL COMMITMENTS
Authorised but not contracted for
29
42,527
(66,115)
------------------(23,588)
==========
CONTINGENT LIABILITIES
GROUP
Sundry bank guarantees
Pending legal suits
COMPANY
Guarantees in respect of bank facilities for subsidiaries
Sundry bank guarantees
Pending legal suits
The group is a defendant in various legal suits. In the opinion of the directors, after taking appropriate
legal advice, the outcome of such suits are unlikely to result in any significant loss.
30
40
2006
Sh000
2005
Sh000
49,713
34,872
------------------84,585
==========
43,956
57,745
------------------101,701
==========
COMPANY
2006
2005
Sh000
Sh000
Borrowings repaid
==========
414
==========
2,040
==========
414
==========
Interest paid
3,206
==========
6,858
==========
3
==========
81
==========
==========
10,884
==========
2,040
==========
23,054
==========
==========
==========
2,040
==========
7
==========
2006
Sh000
2005
Sh000
37,935
==========
32,030
==========
15,722
------------------15,722
==========
14,638
------------------14,638
==========
32
41
33
INCORPORATION
The company is domiciled and incorporated in Kenya under the Companies Act.
34
CURRENCY
The financial statements are presented in Kenya Shillings Thousands (Sh000).
42
Proxy
Annual General Meeting
I/We
of
of
of failing him/her
of
or failing him the Chairman of the Meeting as my/our Proxy to vote for me /us and on my /our behalf at the
Annual General Meeting of the Company to be held at the Companys Registered Office, New Cargen
House, Lusaka Road, Nairobi on 28 March 2007 at 12 noon, and at any adjournment thereof.
Dated this
day of
2007
Signature
Notes
1
A member may appoint a proxy of his own choice. A proxy need not be a member of the
Company.
If the appointer is a corporation, this form must be under its common seal or under the
hand of an officer or attorney duly authorized in their behalf.
In the case of joint holders, the signature of any one holder will be sufficient but the name
of all the joint holders should be stated.
To be valid, this form must be completed and deposited at the Registered Office of the
Company,New Cargen House, Lusaka Road, Nairobi, not less than twenty-four hours before
the time fixed for holding the meeting or adjourned meeting.