CAR & GENERAL (KENYA) LIMITED

CONTENTS PAGES Corporate information 23 Notice of annual general meeting 4 Chairman s report 57 Corporate governance report 1011 Report of the directors 12 Statement of directors responsibilities 13 Independent auditors report 14 Consolidated financial statements: Consolidated statement of profit or loss and other comprehensive income 15 Consolidated statement of financial position 16 Company statement of financial position 17 Consolidated statement of changes in equity 18 Company statement of changes in equity 19 Consolidated statement of cash flows 20 Notes to the consolidated financial statements 2158 Report and Financial Statements of Car & General (Kenya) Limited 30 September, 2013

CORPORATE INFORMATION BOARD OF DIRECTORS N Ng ang a, EBS Chairman V V Gidoomal* Managing Director E M Grayson* Finance Director S P Gidoomal Nonexecutive director Dr B Kiplagat Nonexecutive director P Shah Nonexecutive director M Soundararajan** Nonexecutive director * British ** Indian SECRETARY N P Kothari FCPS (Kenya) REGISTERED OFFICE New Cargen House Lusaka Road P O Box 20001 00200 Nairobi Telephone +254 020 6943000 AUDITORS Deloitte & Touche Certified Public Accountants (Kenya) Deloitte Place, Waiyaki Way, Muthangari P O Box 40092 00100 Nairobi BANKERS Kenya Standard Chartered Bank Kenya Limited CfC Stanbic Bank Limited Giro Commercial Bank Limited I & M Bank Limited Rwanda KCB Bank Rwanda Limited Tanzania Standard Chartered Bank Tanzania Limited Stanbic Bank Tanzania Limited NBC Limited Uganda Standard Chartered Bank Limited National Bank of Commerce Stanbic Bank (Uganda) Limited LEGAL ADVISORS Walker Kontos Advocates Hakika House, Bishops Road P O Box 60680 00200 Nairobi 4

CORPORATE INFORMATION (continued) SUBSIDIARY COMPANIES Car & General (Trading) Limited Kenya P O Box 20001 00200, Nairobi Car & General (Automotive) Limited P O Box 20001 00200, Nairobi Car & General (Piaggio) Limited (formerly Car & General (Weldtec) Limited) P O Box 20001 00200, Nairobi Car & General (Tanzania) Limited P O Box 1552 Dar es Salaam Car & General (Trading) Limited Tanzania P O Box 1552 Dar es Salaam Car & General (Uganda) Limited P O Box 207 Kampala Kibo Poultry Products Limited P O Box 742 Moshi Sovereign Holdings International Limited P O Box 146 Road Town, Tortola British Virgin Islands Car & General (Engineering) Limited P O Box 20001 00200, Nairobi Car & General (Marine) Limited P O Box 20001 00200, Nairobi Car & General (Industries) Limited P O Box 20001 00200, Nairobi Cargen Insurance Agencies Limited P O Box 20001 00200, Nairobi Dewdrops Limited P O Box 20001 00200, Nairobi Car & General (Rwanda) Limited Plot 1403, Muhima Road P O Box 7238,Kigali, Rwanda ACTIVITIES Sales and service of power equipment, household goods, agricultural tractors and implements, marine engines, motor cycles and vehicles, commercial laundry equipment, commercial engines and general goods. Sale of brake linings and friction materials. Sale of welding alloys and welding equipment and provision of sales and marketing services related to threewheeler vehicles. Sales and marketing service relating to the provision of power equipment, motor cycles, three wheeler vehicles, commercial engines and related services. Sales and marketing services relating to the provision of power equipment, motor cycles, three wheeler vehicles, commercial engines welding alloys and brake linings. Sales and service of power equipment, marine engines, motor cycles, agricultural tractors and implements, commercial engines and general goods. Dayold chick farming. Property holding company. Sales and marketing services relating to the provision of power equipment and related services. Sales and marketing services relating to the provision of marine engines and related products. Dormant. Dormant. Property holding company Sales and service of power equipment, marine engines, motor cycles, threewheeler vehicles, commercial engines and general goods. 5

NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the seventyfourth Annual General Meeting of Car & General (Kenya) Limited will be held at the Southern Sun, Mayfair Hotel, Parklands Road, Parklands, Nairobi on Thursday, 20th March 2014 at 11.00 a.m for the following purposes: ORDINARY BUSINESS 1 To receive the Directors Report and audited financial statements for the year ended 30 September 2013. 2 To declare a first and final dividend of KShs 26,735,539 (KShs 0.80 per share) in respect of the year ended 30th September 2013 to shareholders registered at the close of business on 19th February 2014. 3 To approve Directors fees. 4 To elect Directors: (a) Mr S P Gidoomal, a Director of the Company, retires by rotation and being eligible, offers himself for reelection. (b) Mr M Soundararajan, a Director of the Company retires by rotation and being eligible offers himself for reelection. 5 To authorize the Directors to fix the remuneration of the auditors, Deloitte & Touche. SPECIAL BUSINESS To consider and if thought fit pass the following resolutions as ORDINARY RESOLUTIONS subject to such regulatory approvals, including that of Capital Markets Authority, as may be required: 6 Increase of Authorized Capital That the share capital of the Company be increased from KShs 175,000,000/ to KShs 210,000,000/ by the creation of 7,000,000 additional Ordinary Shares of KShs 5/ each, to rank pari passu in all respects with the existing Ordinary Shares in the capital of the Company. 7 Capitalization of Revenue Reserve That it is desirable to capitalize the sum of KShs 33,419,420/ being part of the amount standing to the credit of the Revenue Reserve account in the books of the Company, and accordingly that such sum be set free for distribution amongst the holders of the Ordinary Shares of the Company on the Register of Members at the close of business on 19th February 2014 in the proportion in which they hold such Shares respectively on that day on condition that the same be not paid in cash but be applied in paying up in full at par 6,683,884 Ordinary Shares of KShs 5/ each to be allotted, distributed and credited as fully paid up to and amongst the said holders of Ordinary Shares in the proportion of one new Ordinary Share for every five Ordinary Shares then held, save that these Shares shall not rank for dividends in respect of the year ended 30th September 2013 and the Directors shall give effect to this Resolution. 8 Fractions That should any of the said Ordinary Shares not being issued by reason of any fractions of the Share being disregarded, the Directors be authorized to allot and issue the same to such persons and upon such terms and conditions as they may deem fit. BY ORDER OF THE BOARD N P Kothari Secretary 27 January 2014 Nairobi 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. 6

CHAIRMAN S REPORT FINANCIAL YEAR ENDED 30 SEPTEMBER 2013 We are budgeting for a turnover of KSh 9 billion. Nicholas Ng ang a Chairman of Car & General The year to 30th September 2013 proved extremely challenging. The elections in March 2013 had a negative impact in the first six months of our financial year. The second half was better both in terms of turnover and profitability. Nevertheless, our motorcycle business was adversely effected in August and September 2013 with the introduction of VAT on unit sales and the temporary withdrawal of duty remission on CKD kits. However, our turnover grew 23% from Kshs 5.7 billion to Kshs 7.1 billion and our net profit after tax increased by 18% from Kshs 266 million to Kshs 315 million. As volume grows we expect profitability of our distribution business to improve. The highlights of the financial year were the establishment of our motorcycle CKD manufacturing plant ; recognition by Cummins as the top distributor in Africa for the second year running; the growth of our aftermarket business in Kenya including MRF tyres and lubricants; our sustained market share in our three wheeler business in Kenya and Tanzania; the entry into Doosan construction equipment and Kubota tractors which represent significant growth opportunities. We now offer a complete range of specialized engine related products through a solid distribution network and must develop dominant market shares in each segment. The biggest challenges throughout the year were the slowdown due to elections; insufficient production at our poultry operations and a decline in our Cummins business in the mining sector. Going forward, we foresee a stable year from a political perspective which should result in a positive economic environment. We also see greater competition in all key markets which will result in both margin and market pressure. Key to success will be higher efficiency levels in all areas of our business, maintaining market share in core products and successfully developing our new products. We are pleased to report that we have continued our corporate social responsibility programs namely the building of water pans in arid areas and our countrywide eye clinic program. We hope to intensify activities in 2014. I now comment more specifically on each subsidiary below: Car & General (Trading) Limited Kenya Our small engine business, in terms of power products, twowheelers and threewheelers, saw a marginal recovery in market size which led to an increase in our volumes. We launched a new motorcycle and three wheeler model both of which have been well received. We expect sales to increase in 2014. 7

CHAIRMAN S REPORT FINANCIAL YEAR ENDED 30 SEPTEMBER 2013 (continued) This year will be extremely challenging with the expected increase in stronger competition which may lead to a decline in margin. We must get closer to our markets and our customers throughout Kenya in order to increase market share and unit sales in order to ensure profitable growth. Detailed planning and disciplined implementation will be key to success. Our aftermarket strategy is solid and we see growth in our sales of parts, tyres and oils. C&G Engineering Kenya The Cummins business in Kenya and regionally is growing. Our challenge remains the entry of competition from all over the world and our ability to differentiate ourselves. Our market share is strong but there is room for further improvement. Our Ingersoll Rand business is heading in the right direction. We have gained a foothold in the construction industry through our Doosan business. We must emerge as a mainstream competitor in 2014. Head Office Kenya The operation continues to earn rent and provide services to all divisions. There remains significant room for improvement in our shared services operations particularly in the area of logistics and information technology. Car & General (Uganda) Limited Uganda The operation has now made a recovery. All our product lines are on the right track and we expect a positive year. We need to focus more on our Rwanda branch. Our entry into South Sudan has been impacted by political issues in the country. Car & General (Trading) Limited Tanzania The operation had a positive year with good growth across all sectors. We expect to see reasonable returns this year. Kibo Poultry Products Limited Tanzania This operation had a difficult year. We expect a return to profitability in the second half of the year. We remain confident that the poultry business offers an opportunity in Tanzania and would like to pursue this as a means of diversifying group activity. The Future Our portfolio of niche engine products is now complete and offers significant scope for further growth. This year will be critical to future success. We are budgeting for a turnover of Kshs 9 billion. This will require a growth in market share in all sectors. Our primary concern is to ensure that we stay ahead of competition in our key markets in all respects. The quality of competition is increasing. 8

CHAIRMAN S REPORT FINANCIAL YEAR ENDED 30 SEPTEMBER 2013 (continued) In spite of the significant investments being made, your Board recommends a dividend of Kshs 26.7 m for the financial year 201213 (Kshs 18.4 m for 201112). This represents Kshs 0.80 per share (2012 Kshs 0.55 per share). We are maintaining conservative dividends in view of the considerable resources required to achieve budgeted growth levels and to develop into a great organization. We are investing heavily in all our operations and, as far as possible, we would like to do so through internal resources. In addition, your Board recommends an increase in the authorized capital of the company to Kshs 210 million and make a capitalization issue (Bonus issue) of one new share for every five shares held. The capitalization will be subject to the approvals of the Capital Markets Authority, other regulatory authorities and the shareholders. The bonus shares do not qualify for the final dividend in respect of the year ended 30th September 2013. I must express my gratitude to my fellowdirectors and all members of staff of the company for their dedication and support. I look forward to continued support and to further progress of the Group. N Nganga CHAIRMAN 27 January 2014 9

Complete transportation solutions 10

1 2 3 4 5 6 7 8 9 1. Official opening of our Nakuru TVS assembly plant. 2. We believe in customer education, here our staff show a customer how a Kubota tractor works during a demo in Nyahururu. 3. We value positive partnerships, here we exchange an MOU with CBA. 4. Car & General had a successful launch of Garmin GPS products. 5. We had a succesful Briggs & Stratton training at a Nairobi Hotel in November 2013. 6. Mr Vijay Gidoomal addresses residents of Bamba, in Kilifi during the opening of two water dams built by Car & General and Cummins in conjunction with the Lions Club. 7. We have a program that allows students from technical institutions to visit our facilities. Students from Don Bosco Technical Institute are shown how a Toyota forklift works. 8. We launched an improved boda boda bike the TVS Star HLX. 9. Mr Venkatesh Jayaraman, the Managing Director of Car & General Trading Tanzania recieves the Cargen premier League trophy from Mr Vijay Gidoomal, the Group Managing Director. 11

CORPORATE GOVERNANCE REPORT Corporate Governance The Group s Board of Directors is responsible for the governance of the Group and is accountable to the shareholders for ensuring that the Group complies with the law, the highest standards of corporate governance and business ethics. The directors attach great importance to the need to conduct the business and operations of the Company and the Group with integrity and in accordance with generally accepted corporate practice and endorse the internationally developed principles of good corporate governance. Board of Directors The full Board meets at least four times a year. The directors are given appropriate and timely information so that they can maintain full and effective control over strategic, financial, operational and compliance issues. Except for direction and guidance on general policy, the Board has delegated authority for conduct of daytoday business to the Group Managing Director. The Board nonetheless retains responsibility for establishing and maintaining the Group s overall internal control over financial, operational and compliance issues. Five out of the seven members of the Board are nonexecutive including the Chairman of the Board, and other than the Group Managing Director, all other directors are subject to periodic reappointment in accordance with the Company s Articles of Association. Committees of the Board The Group has the following standing committees which operate under the terms of reference set by the Board. Audit Committee The Board has constituted an audit committee that meets at least four times a year. Its responsibilities include review of financial information, budgets, development plans, compliance with accounting standards, liaison with the external auditors, fixing the remuneration of external auditors and overseeing internal control systems. Members of the audit committee comprise three nonexecutive directors, P Shah (Chairman), M Soundararajan and S P Gidoomal. The Group Finance Director attends on invitation. Internal and external auditors and other executives attend as required. Recruitment and Remuneration Committee The recruitment and remuneration committee meets as required. The committee is responsible for monitoring and appraising the performance of senior management, including the Group Managing Director, review of all human resource policies, determining the remuneration of senior management and making recommendations to the Board on the remuneration of executive directors. The Chairman, N Ng ang a, and the Group Managing Director, V V Gidoomal, attend all the meetings of the committee. Nominations Committee The Committee meets as necessary and is comprised of two nonexecutive directors and the Group Managing Director, Mr V V Gidoomal. The committee is chaired by Mr. N. Ng ang a. The committee s main role is to make recommendations to the Board to fill vacancies for executive and nonexecutive directors. In making recommendations, the committee looks at the mix of skills, expertise and how the new appointment will add value to the present complement. 12

CORPORATE GOVERNANCE REPORT (continued) Internal controls The Group has defined procedures and financial controls to ensure the reporting of complete and accurate accounting information. These cover systems for obtaining authority for major transactions and for ensuring compliance with laws and regulations that have significant financial implications. Procedures are also in place to ensure that assets are subject to proper physical controls and that the Group remains structured to ensure appropriate segregation of duties. A comprehensive management accounting system is in place providing financial and operational performance indicators. Monthly management meetings are held by the executive management to monitor performance and to agree on measures for improvement. Chief Financial Officer The chief financial officer, Mr. E.M Grayson, is a Fellow of the Institute of Chartered Accountants in England and Wales. Distribution of shareholders as at 30 September 2013 Shareholding (No. of shares) No. of shares held No. of shareholders Percentage of shareholding Less than 500 75,139 387 0.23 500 5,000 706,118 377 2.11 5,001 10,000 706,286 102 2.11 10,001 100,000 2,305,436 90 6.90 100,001 1,000,000 3,099,932 10 9.28 above 1,000,000 26,526,513 6 79.37 _ Total 33,419,424 972 100.00 _ Top ten shareholders 30 September 2013 No. of shares % 1 Fincom Limited 10,861,183 32.50 2 Betrin Limited 5,322,633 15.93 3 Monyaka Investments Limited 4,180,927 12.51 4 Primaco Limited 3,042,205 9.10 5 Standard Chartered Nominees A/C 9397 1,585,800 4.75 6 Vapa Limited 1,533,765 4.59 7 Paul Wanderi Ndung u 848,166 2.54 8 Nairobi Commercial Continental Limited 450,000 1.35 9 Mr. C J Gidoomal 368,515 1.10 10 Cannon Assurance (K) Ltd 310,350 0.93 Directors direct shareholding Mr N Ng ang a 4,540 Mr V V Gidoomal 1,320 Mr E M Grayson 1,320 Mr B Kiplagat 1,320 13

REPORT OF THE DIRECTORS The directors have pleasure in presenting their annual report together with the audited financial statements of Car & General (Kenya) Limited ( the company ) and its subsidiaries (together, the group ) for the year ended 30 September 2013 which show their state of affairs. ACTIVITIES The company acts as a holding company and derives its revenue from rental income, management fees and sale of industrial equipment. It also operates a trading branch in Juba, South Sudan. The activities of the subsidiary companies are detailed on page 3. GROUP RESULTS 2013 Sh 000 Profit before taxation 458,969 Taxation _ (143,179) Profit for the year 315,790 _ Attributable to: Owners of the parent 295,113 Noncontrolling interests _ 20,677 315,790 _ DIVIDEND The directors propose payment of a first and final dividend of Sh 26,735,539 (Sh 0.80 per share), (2012 Sh 18,380,683 (Sh 0.55 per share)) in respect of the year ended 30 September 2013. The bonus shares mentioned below do not qualify for the first and final dividend in respect of the year ended 30 September 2013. INCREASE OF AUTHORISED CAPITAL AND CAPITALISATION OF REVENUE RESERVES The directors have resolved to recommend to shareholders at the Annual General Meeting to (a) increase the authorised capital from Sh 175,000,000 to Sh 210,000,000 by the creation of 7,000,000 additional ordinary shares of Sh 5 each and (b) make a capitalisation issue (Bonus Issue) of 1 (one) new share for every five (5) shares held. The capitalisation issue is subject to the approvals of the Capital Markets Authority and the shareholders. DIRECTORS The present board of directors is shown on page 2. AUDITORS Deloitte & Touche have expressed their willingness to continue in office in accordance with Section 159(2) of the Companies Act (Cap 486). BY ORDER OF THE BOARD N P Kothari Secretary 27 January 2014 Nairobi 14

STATEMENT OF DIRECTORS RESPONSIBILITIES The Kenyan Companies Act requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the group and of the company as at the end of the financial year and of the operating results of the group for that year. It also requires the directors to ensure that the parent company and its subsidiary companies keep proper accounting records, which disclose with reasonable accuracy at any time, the financial position of the group and of the company. They are also responsible for safeguarding the assets of the group. The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act, and for such internal controls as directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards and in the manner required by the Kenyan Companies Act. The directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the group and of the company and of the group s operating results. The directors further accept responsibility for the maintenance of accounting records which may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control. Nothing has come to the attention of the directors to indicate that the company and its subsidiaries will not remain going concerns for at least the next twelve months from the date of this statement. N Ng ang a Director V V Gidoomal Director 27 January 2014 15

Deloitte & Touche Certified Public Accountants (Kenya) Deloitte Place, Waiyaki Way, Muthangari P.O. Box 40092 GPO 00100 Nairobi, Kenya Tel: (+254 20) 423 0000 (+254 20) 423 1344/0512 Fax: (+254 20) 444 8966 Dropping Zone No. 92 Email: admin@deloitte.co.ke www.deloitte.com INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CAR & GENERAL (KENYA) LIMITED Report on the Financial Statements We have audited the accompanying financial statements of Car & General (Kenya) Limited set out on pages 15 to 58 which comprise the consolidated and company statements of financial position as at 30 September 2013, and the consolidated statement of profit or loss and other comprehensive income, consolidated and company statements of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Directors Responsibility for the Financial Statements The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act and, for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. 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 about 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, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we considered the internal controls relevant to the entity s preparation of financial statements that give a true and fair view in order to design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of entity s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of Car & General (Kenya) Limited and its subsidiaries as at 30 September 2013, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act Report on Other Legal Requirements As required by the Kenyan Companies Act, we report to you, based on our audit, that: i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; ii) in our opinion, proper books of account have been kept by the company, so far as appears from our examination of those books; and iii) the parent company s statement of financial position (balance sheet) is in agreement with the books of account. The engagement partner responsible for the audit resulting in this independent auditors report is Fredrick Aloo P/ No 1537. Certified Public Accountants (Kenya) 27 January 2014 Nairobi, Kenya Partners: S.O. Onyango F.O. Aloo H. Gadhoke* N.R. Hira* B.W. Irungu I. Karim J.M. Kiarie D.M. Mbogho A.N. Muraya R. Mwaura J.Nyang aya J.W. Wangai *British 16

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2013 2013 2012 Notes Sh 000 Sh 000 TURNOVER 3(b) 7,056,021 5,711,529 COST OF SALES _ (5,861,852) _ (4,695,638) GROSS PROFIT 1,194,169 1,015,891 OTHER INCOME 4 13,502 23,823 GAIN IN FAIR VALUE OF INVESTMENT PROPERTY 13 292,500 196,750 PROFIT ON SALE OF SHARES IN SUBSIDIARY COMPANY 17(b) 119,755 SELLING AND DISTRIBUTION COSTS (362,448) (324,602) ADMINISTRATIVE EXPENSES (473,181) (425,389) INTEREST EXPENSE 5 (213,287) (261,716) NET EXCHANGE GAINS _ 7,714 _ 10,006 PROFIT BEFORE TAXATION 6 458,969 354,518 TAXATION CHARGE 8 (143,179) _ (87,962) _ PROFIT FOR THE YEAR 9 315,790 _ 266,556 _ OTHER COMPREHENSIVE INCOME: Items that will not be reclassified subsequently to profit or loss REVALUATION SURPLUS ON PROPERTY 86,970 43,935 DEFERRED TAX ON REVALUATION SURPLUS (26,091) (13,181) EXCHANGE DIFFERENCE ARISING ON TRANSLATION OF FOREIGN OPERATIONS 2,736 (34,767) _ 63,615 _ (4,013) TOTAL COMPREHENSIVE INCOME FOR THE YEAR 379,405 _ 262,543 _ PROFIT FOR THE YEAR ATTRIBUTABLE TO: OWNERS OF THE PARENT 295,113 250,068 NONCONTROLLING INTERESTS 20,677 _ 16,488 _ PROFIT FOR THE YEAR _ 315,790 _ 266,556 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: OWNERS OF THE PARENT 358,728 246,055 NONCONTROLLING INTERESTS 10 _ 20,677 _ 16,488 TOTAL COMPREHENSIVE INCOME FOR THE YEAR _ 379,405 _ 262,543 Sh Sh EARNINGS PER SHARE Basic and diluted 11 _ 8.83 _ 7.48 17

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2013 2013 2012 Notes Sh 000 Sh 000 ASSETS Noncurrent assets Investment property 13 1,895,000 1,602,500 Property, plant and equipment 14(a) 776,042 677,998 Operating lease prepayments 15 13,427 13,729 Intangible assets 16 6,165 2,816 Deferred tax asset 22(b) 22,204 11,178 2,712,838 2,308,221 Current assets Inventories 18 2,557,040 2,200,610 Trade and other receivables 19 1,443,407 1,007,150 Due from related parties 20 1,588 2,148 Tax recoverable 8(c) 16,069 15,379 Cash and bank balances 170,488 171,892 4,188,592 3,397,179 Total assets 6,901,430 5,705,400 EQUITY AND LIABILITIES Capital and reserves Share capital 21 167,097 167,097 Revaluation surplus 338,441 283,089 Revenue reserve 1,948,665 1,666,406 Translation reserve/(deficit) (23,853) (26,589) Equity attributable to owners of the parent 2,430,350 2,090,003 Noncontrolling interests 10 73,828 53,151 Total equity 2,504,178 2,143,154 Noncurrent liabilities Deferred tax liabilities 22(b) 535,779 409,886 Borrowings 23 94,869 223,897 630,648 633,783 Current liabilities Borrowings 23 1,827,960 1,476,963 Trade and other payables 24 1,927,135 1,441,981 Taxation payable 8(c) 11,509 9,519 3,766,604 2,928,463 Total equity and liabilities 6,901,430 5,705,400 The financial statements on pages 15 to 58 were approved by the board of directors on 27 January 2014 and were signed on its behalf by: N Ng ang a Director 18 V V Gidoomal Director

COMPANY STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2013 2013 2012 Notes Sh 000 Sh 000 ASSETS Non current assets Investment property 13 1,160,000 957,500 Property, plant and equipment 14(b) 373,717 286,981 Operating lease prepayments 15 937 955 Intangible assets 16 5,405 1,729 Investment in subsidiaries 17 27,942 27,942 1,568,001 1,275,107 Current assets Inventories 18 89,111 Trade and other receivables 19 64,830 47,461 Due from related parties 20 1,588 2,148 Due from group companies 20 2,727,235 2,892,650 Cash and bank balances 5,449 2,996 2,888,213 2,945,255 Total assets 4,456,214 4,220,362 EQUITY AND LIABILITIES Capital and reserves Share capital 21 167,097 167,097 Revaluation surplus 241,144 183,414 Revenue reserve 724,193 589,561 Total equity 1,132,434 940,072 Non current liabilities Deferred taxation 22 431,873 336,468 Borrowings 23 56,837 223,897 488,710 560,365 Current liabilities Borrowings 23 1,053,166 1,332,566 Trade and other payables 24 27,042 36,025 Due to group companies 20 1,754,862 1,351,334 2,835,070 2,719,925 Total equity and liabilities 4,456,214 4,220,362 The financial statements on pages 15 to 58 were approved by the board of directors on 27 January 2014 and were signed on its behalf by: N Ng ang a Director V V Gidoomal Director 19

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2013 Attributable to owners Non Share Revaluation Revenue Translation of the controlling capital surplus reserve reserve parent interests Total Sh 000 Sh 000 Sh 000 Sh 000 Sh 000 Sh 000 Sh 000 Year ended 30 September 2012 At 1 October 2011 _ 167,097 _ 256,430 1,430,624 8,178 1,862,329 57,993 1,920,322 _ Profit for the year 250,068 250,068 16,488 266,556 Revaluation surplus on property 43,935 43,935 43,935 Deferred tax on revaluation surplus (13,181) (13,181) (13,181) Exchange difference arising on translation of foreign operations (34,767) (34,767) (34,767) _ Total comprehensive income for the year _ 30,754 _ 250,068 (34,767) 246,055 _ 16,488 _ 262,543 _ Transfer of excess depreciation (5,850) 5,850 Deferred tax on excess depreciation transfer 1,755 (1,755) Noncontrolling interests share of subsidiary disposed off during the year note 10 (21,330) (21,330) Dividends paid 2011 _ (18,381) (18,381) (18,381) At 30 September 2012 167,097 _ 283,089 _ 1,666,406 _ (26,589) _ 2,090,003 _ 53,151 _ 2,143,154 _ Year ended 30 September 2013 At 1 October 2012 167,097 _ 283,089 _ 1,666,406 _ (26,589) _ 2,090,003 _ 53,151 _ 2,143,154 _ Profit for the year 295,113 295,113 20,677 315,790 Revaluation surplus on property 86,970 86,970 86,970 Deferred tax on revaluation surplus (26,091) (26,091) (26,091) Exchange difference arising on translation of foreign operations 2,736 2,736 2,736 _ Total comprehensive income for the year _ 60,879 _ 295,113 _ 2,736 _ 358,728 _ 20,677 _ 379,405 _ Transfer of excess depreciation (7,363) 7,363 Deferred tax on excess depreciation transfer 1,836 (1,836) Dividend paid 2012 (18,381) (18,381) (18,381) _ At 30 September 2013 167,097 338,441 1,948,665 (23,853) 2,430,350 73,828 2,504,178 _ 20

COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2013 Year ended 30 September 2012 Share Revaluation Revenue capital surplus reserve Total Sh 000 Sh 000 Sh 000 Sh 000 At 1 October 2011 167,097 155,193 396,971 719,261 Profit for the year 208,438 208,438 Revaluation surplus on property 43,935 43,935 Deferred tax on revaluation surplus (13,181) (13,181) Total comprehensive income for the year 30,754 208,438 239,192 Transfer of excess depreciation (3,619) 3,619 Deferred tax on depreciation transfer 1,086 (1,086) Dividend paid 2011 (18,381) (18,381) At 30 September 2012 167,097 183,414 589,561 940,072 Year ended 30 September 2013 At 1 October 2012 167,097 183,414 589,561 940,072 Profit for the year 149,864 149,864 Revaluation surplus on property 86,970 86,970 Deferred tax on revaluation surplus (26,091) (26,091) Total comprehensive income for the year 60,879 149,864 210,743 Transfer of excess depreciation (4,498) 4,498 Deferred tax on depreciation transfer 1,349 (1,349) Dividend paid 2012 (18,381) (18,381) At 30 September 2013 167,097 241,144 724,193 1,132,434 21

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 SEPTEMBER 2013 Cash flows from operating activities 2013 2012 Notes Sh 000 Sh 000 Net cash generated from operations 25(a) 148,546 286,730 Tax paid 8(c) (53,401) (6,214) Net cash generated from operating activities 95,145 280,516 Cash flows from investing activities Purchase of property, plant and equipment 14(a) (62,442) (109,284) Purchase of intangible assets 16 (4,489) (286) Proceeds on disposal of property, plant and equipment 5,346 9,353 Proceeds from disposal of subsidiary company 166,577 Net cash (used in)/generated from investing activities (61,585) 66,360 Cash flows from financing activities Loans received 25(b) 3,629,491 3,269,046 Loans repaid 25(b) (3,495,976) (3,379,525) Dividend paid (18,381) (18,381) Interest paid 5 (213,287) (261,716) Repayment of hirepurchase finance 25(b) (357) (2,459) Net cash used in financing activities (98,510) (393,035) Net decrease in cash and cash equivalents (64,950) (46,159) Cash out flow on disposal of subsidiary (550) Cash and cash equivalents at the beginning of the year 105,690 151,188 Effects of exchange rate changes on the balance of cash held in foreign operations 305 1,211 Cash and cash equivalents at the end of the year 25(d) 41,045 105,690 22

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2013 1 ACCOUNTING POLICIES Statement of compliance The financial statements are prepared in accordance with International Financial Reporting Standards and the requirements of the Kenyan Companies Act. For purposes of the Kenyan Companies Act the balance sheet is equivalent to the statement of financial position while the profit and loss account is equivalent to the statement of profit or loss. Adoption of new and revised International Financial Reporting Standards (IFRSs) and Interpretations (IFRIC) (i) Relevant new standards and amendments to published standards effective for the year ended 30 September 2013 The following new and revised IFRSs were effective in the current year and had no material impact on the amounts reported in these financial statements. Amendments to IAS 1 Presentation of Financial Statements The group has adopted the amendments to IAS 1 which became mandatory in the current year. Amendment to IAS 12 Income Taxes The amendment to IAS 12 relates to the treatment of deferred tax on investment properties carried at fair value. The value of the group s investments properties is expected to be recovered through use and the directors are of the opinion that the revised IAS 12 presumption can be rebutted. Thus its adoption has not had a significant impact on the group s financial statements. (ii) Relevant new standards and amendments to published standards effective for the year ended 30 September 2013 Effective for annual periods beginning on or after IFRS 10, Consolidated Financial Statements 1 January 2013 IFRS 12, Disclosure of Interests in Other Entities 1 January 2013 IFRS 13, Fair Value Measurement 1 January 2013 IAS 19 Employee Benefits (2011) Revised 1 January 2013 requirements for pensions and other postretirement benefits, termination benefits and other changes. IAS 27, Separate Financial Statements (2011) 1 January 2013 IAS 36, Impairment of Assets 1 January 2014 IFRS 9, Financial Instruments 1 January 2015 23

1 ACCOUNTING POLICIES (continued) Adoption of new and revised International Financial Reporting Standards (IFRSs) and Interpretations (IFRIC) (continued) (iii) Impact of relevant new and amended standards and interpretations on the financial statements in issue but not yet effective IFRS 10 Consolidated Financial Statements IFRS 10 requires a parent to present consolidated financial statements as those of a single economic entity, replacing the requirements previously contained in IAS 27 Consolidated and Separate Financial Statements and SIC12 Consolidation Special Purpose Entities. The standard identifies the principles of control, determines how to identify whether an investor controls an investee and therefore must consolidate the investee, and sets out the principles for the preparation of consolidated financial statements. The Standard introduces a single consolidation model for all entities based on control, irrespective of the nature of the investee (i.e. whether an entity is controlled through voting rights of investors or through other contractual arrangements as is common in special purpose entities ). Under IFRS 10, control is based on whether an investor has: power over the investee exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the returns. The directors anticipate that the adoption of this new standard will not materially affect the amounts reported in the financial statements. IFRS 12 Disclosure of Interests in Other Entities IFRS 12 requires the extensive disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. In highlevel terms, the required disclosures are grouped into the following broad categories: Significant judgements and assumptions such as how control, joint control, significant influence has been determined. Interests in subsidiaries including details of the structure of the group, risks associated with structured entities, changes in control, and so on. Interests in joint arrangements and associates the nature, extent and financial effects of interests in joint arrangements and associates (including names, details and summarised financial information). Interests in unconsolidated structured entities information to allow an understanding of the nature and extent of interests in unconsolidated structured entities and to evaluate the nature of, and changes in, the risks associated with its interests in unconsolidated structured entities. 24

1 ACCOUNTING POLICIES (continued) Adoption of new and revised International Financial Reporting Standards (IFRSs) and Interpretations (IFRIC) (continued) (iii) Impact of relevant new and amended standards and interpretations on the financial statements in issue but not yet effective (continued) IFRS 12 Disclosure of Interests in Other Entities (continued) IFRS 12 lists specific examples and additional disclosures which further expand upon each of these disclosure objectives, and includes other guidance on the extensive disclosures required. The directors anticipate that IFRS 12 will be adopted in the group s financial statements for the annual period beginning 1 October 2013 and that the application of the new standard would result in more extensive disclosures in the financial statements. IFRS 13 Fair Value Measurement IFRS 13 replaces the guidance on fair value measurement in existing IFRS accounting literature with a single standard. The IFRS is the result of joint efforts by the IASB and FASB to develop a converged fair value framework. The IFRS defines fair value, provides guidance on how to determine fair value and requires disclosures about fair value measurements. However, IFRS 13 does not change the requirements regarding which items should be measured or disclosed at fair value. IFRS 13 applies when another IFRS requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements). With some exceptions, the standard requires entities to classify these measurements into a fair value hierarchy based on the nature of the inputs: Level 1 quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; Level 3 unobservable inputs for the asset or liability. The scope of IFRS 13 is broad; it applies to both financial instrument items and nonfinancial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the threelevel fair value hierarchy currently required for financial instruments only under IFRS 7 Financial Instruments: Disclosures will be extended by IFRS 13 to cover all assets and liabilities within its scope. The directors anticipate that the application of the new Standard may affect the amounts reported in the financial statements and result in more extensive disclosures in the financial statements, however, the group has yet to assess IFRS 13 s full impact and intends to adopt the standard no later than the accounting period beginning on or after 1 October 2013. 25

1 ACCOUNTING POLICIES (continued) Adoption of new and revised International Financial Reporting Standards (IFRSs) and Interpretations (IFRIC) (continued) (iii) Impact of relevant new and amended standards and interpretations on the financial statements in issue but not yet effective (continued) IAS 19 Employee Benefits (2011) An amended version of IAS 19 Employee Benefits has introduced revised requirements regarding pensions and other postretirement benefits, termination benefits and other changes. The key amendments include: Requiring the recognition of changes in the net defined benefit liability (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements (eliminating the corridor approach permitted by the existing IAS 19) Introducing enhanced disclosures about defined benefit plans Modifying accounting for termination benefits, including distinguishing benefits provided in exchange for service and benefits provided in exchange for the termination of employment and affecting the recognition and measurement of termination benefits Clarifying various miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risksharing and conditional indexation features Incorporating other matters submitted to the IFRS Interpretations Committee. The amendments to IAS 19 are effective for annual periods beginning on or after 1 January 2013 and require retrospective application with certain exceptions. The directors anticipate that the amendments to IAS 19 will not have significant impact on the group s financial statement since the group does not operate defined benefits schemes. IAS 27 Separate Financial Statements (2011) An amended version of IAS 27 which only deals with the requirements for separate financial statements, which have been carried over largely unamended from IAS 27 Consolidated and Separate Financial Statements. Requirements for consolidated financial statements are now contained in IFRS 10 Consolidated Financial Statements. The Standard requires that when an entity prepares separate financial statements, investments in subsidiaries, associates, and jointly controlled entities are accounted for either at cost, or in accordance with IFRS 9 Financial Instruments. The Standard also deals with the recognition of dividends, certain group reorganisations and includes a number of disclosure requirements. The standard is effective for annual periods beginning on or after 1 January 2013. The group will apply this amendment prospectively. The directors anticipate no material impact to the group s financial statements. 26

1 ACCOUNTING POLICIES (continued) (iii) Impact of relevant new and amended standards and interpretations on the financial statements in issue but not yet effective (continued) IAS 36 Impairment of Assets The amendments to IAS 36 require the disclosure of the recoverable amount of an asset when an impairment loss has been recognized or reversed and a detailed disclosure of how the fair value less costs of disposal has been measured when an impairment loss has been recognized or reversed. The amendments to IAS 36 are effective for periods beginning on or after 1 January 2014. The directors anticipate no material impact to the group s financial statements.. IFRS 9 Financial Instruments This standard relates to the classification and measurement of financial assets and financial liabilities and it is intended that it will replace IAS 39 Financial Instruments: Recognition and Measurement. The Standard will require financial assets to be classified into two categories: those measured at amortised cost and those measured at fair value. For financial liabilities, the standard will retain most of the IAS 39 requirements. Further phases of this standard are due to be issued in due course. The group has yet to assess the full impact of this standard which will be effective for periods beginning on or after 1 January 2015. The group will also consider the impact of further phases of this Standard when completed by the IASB. There are no other new and amended standards and interpretations that are not yet effective that would be expected to have a material impact on the financial statements of the group. (iv) Early adoption of standards The group did not earlyadopt any new or amended standards in 2013. 27

1 ACCOUNTING POLICIES (continued) Basis of preparation The financial statements are prepared under the historical cost basis of accounting modified to include the revaluation of certain properties. Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by other members of the Group. All intragroup transactions, balances, income and expenses are eliminated in full on consolidation. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Changes in the Group s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to revenue reserves) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity. Noncontrolling interests that represent ownership interests and entitle their holders to a proportionate share of the entity s net assets in the event of liquidation may be initially measured either at fair value or at the noncontrolling interests proportionate share of the recognised amounts of the acquiree s identifiable net assets. The choice of measurement basis is made on a transactionbytransaction basis. Other types of noncontrolling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. The consolidated financial statements incorporate the audited financial statements of the company and its subsidiaries as at 30 September 2013. The subsidiaries are set out in note 17 (a). 28