INCAR (NIGERIA) PLCRC 3309

INCAR (NIGERIA) PLCRC 3309

CHAIRMAN'S STATEMENT

INTRODUCTION

Distinguished shareholders, members ofthe Board of Directors, our esteemed Guests,and Gentlemen of the press, Ladies and Gentlemen, it gives me great pleasure towelcome you to the 42nd Annual General Meeting of our Company and to present toyou our Annual Report andAccounts for the financial year ended 31st December, 2004.

THE OPERATING ENVIRONMENT

The socio-economic environment under which our Company operated was difficult andchallenging. A number of policies were introduced by the Federal Government in linewith the Reform Agenda.

The Federal Government moved to articulate the National Economics Empowermentand Development Strategy (NEEDS), aimed at addressing macroeconomic andstructural problems. The Federal Government's commitment to improve transparencywas evidenced by Nigeria's participation in the Extractive Industries TransparencyInitiatives (EITI), New Partnership for Africa Development (NEPAD) and the G8Transparency Initiatives. The Economic and Financial Crimes Commission (EFCC)was strengthened to fight corruption in the Country.

However, the announcement by the President to introduce special levy ofN 1.50per litreof PMS and AGO for road maintenance was met with thick opposition. The Labourwent on strike and the implementation was abolished. Despite the promises made by theFederal Government to keep inflation rate as a single digit, records showed thatinflation rate remained in double digits.

The hikes in the price of petroleum products led to increase in inflation, drop inconsumer purchasing power and decrease in corporate profit. This was in response tothe high price of crude oil in the international market. Interest rate remained high and thebanks are not willing to lend money to real sector, as they prefer to lend to business withshorter cycles.

Also, despite the increase in oil revenue ofthe government at Federal level as a result ofhigher price of crude oil in the international market, there was. no appreciableimprovement in the provision of infrastructures-roads, water and electricity inparticular. The bonafide manufacture certificate of the Company issued by the FederalMinistry of Finance meant to enjoy concessionary imports was cancelled during theyear under review. This led to decrease in turnover and profitability.

All these factors accounted for the poor performance of the Company during the yearunder review. Indeed, the year recorded the worst performance in the history of ourCompany!

INCAR (NIGERIA) PLCRC3309

OPERATING RESULTS

The results of the Company reflect the factors .about 3% froJ? N166.9 1m in year 2003 to N171n;~ntI~ned above, The turnover rose byGross Profit mcreased by about 93%. The Loss m in the year under review Also, theNI3.39m recorded in the preceding year. after Tax was N33.96m compared to

BUSINESS TREND

Our subsidiary, Sea Bride Fishin Com a .of the group. Vehicle departmentgcontribu~~d~~ ~o~trlbuted 88% of the total turnoverSal~s ofMF Agric Tractor recorded onl I% of 0 0 t e total turnove: of the Company.revrew, The contribution of Haula e y 0e t.ota!turnover during the year undervehicles. g was very insignificam owing to old age of the

FUTURE OUTLOOK

!he principal activities of the Company will tiImportatIOn, distribution and servicin f con mue to be the manufacturing of buses. g 0 motor vehi I' ' "eqUIpment and haulage. APTECH CENTRE in c es, agncultural and indusfrinlmonth of October, 2005. Anothercenter '11b Kano ~ommenced operations in IhcThe Boar~ and Management of the Comw:u : opened rn ~aduna in the coming y 'ur,p:op.erty m Abuja and re-development tf If ~e embarkmg on development of' ourFishing Company Ltd is being re- 0 iti oyi property in Lagos. The SCHllrideto the profitability of the group. p Sl ioned and strengthened to contribute POSifiv "y

RIGHTS ISSUE

I am pleased to inform you that the Ri htJI81% ofthe total Rights were taken up ~ s ssue of the Company was sue . 'NN Iul, OverRights. The effects ofthe fresh fund "11bowevfler,so~e Shareholders did IIOffO/(('lIpth 'ir

. WI ere ected m the Company.APPRECIATION

I w?uld like to express my appreciation to mtheir contributions and Shareh Id e. y col.leagues on the BUlII'd ul J)/I 'tor for

I . 0 ers lor their underst I' 1cone usIOn,my thanks go to the Man a~cIn ,ilill pllti()IICC.Insupport. agementandStaffforthclr(/ <II'litioll, loyally and

Thank you and God bless.

Alhaji (Dr.)V.A.MutallabCHAIRMAN CON,

7

INCAR (NIGERIA) PLCsc 3309

GROUP PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 DECEMBER, 2004

GROUP ----- COMPANY -------Note 2004 2004 2003

N'OOO N'OOO N'OOO

TURNOVER 12 171,991 21,091 166,914

COSTOFSALES (160,221) (17,561) (160,818)

GROSS PROFIT 11,770 3,530 6,096

ADMINISTRATIVE EXPENSES (55,773) (46,949) (36,118)

OTHER OPERATING INCOME 13 1,756 1,749 2,883

PROFIT/CLOSS) ON DISPOSAL OFFIXED ASSETS 926 926 647

OPERATING LOSS (41,321) (40,744) (26,492)

INCOME FROM RENT &OTHERS 14 14,058 14,058 16,810

INTEREST AND SIMILAR CHARGES (5,276) (4,246) (4,539)

(LOSS) ON ORDINARY ACTIVITIESBEFORE TAXATION 11 (32,539) (30,932) (14,221)

PROVISION FOR TAXATION 15.1 (1,421 ) (1,071) 833

(LOSS) AFTER TAXATION (33,960) (32,003) (13,388)

DEDUCT PRE-ACQUISITION LOSS 25 1,689(32,271) (32,003) (13,388)

(LOSS) PER SHARE (KOBO) 16 (41) (38) (16)

Earnings per share are based on net profit after tax.

The accounting policies on page 13 to 14 and the notes on pages 18 to 23form part of these financial statements.

16

CASH FLOWS JIlIO I , 11 1(Loss)lProfit b 'I\n I "1Add/Deduc!:Profit on dispO~1I11I1II ," ,

DepreciationInterest paidGratuitiesDefeITedExpell(/"11i1 \ 1"" 11111

CashFlowbe[or' ,IiII"I" III"iI'III" 11'11111

Changes in Workilll ( III'll iIIStockSea Bride Fishillf ('0 I ,"Trade DebtorsOther DebtorsTrade CreditorsOtherCreditor'llIld/\11 ",,,,

• 11\ IIII\S:

Tax Paid

Net Cash from/(uscd III"111111111'1'\1 IIVII,'s)

CASH FLOWS fRO I IN' IIIN(: ("j"J TIES:

Purchase offixcd IISSI'I

Purchase ofTnveSII1H'II"Deferred Expendilull'Proceeds on Disposu/ill 1I I" \I 1"1 11'1tlfexpenses

CASH FLOWS E/{U I I'IN N( IN( i

Paid Up Capitalln<.:rJ;IINInterest paidNet Cash (Used' )/1111 1()1I11'1I11111111111\ 'Iivities

NcetIhncre~se/(Decrell~l') IIII11'IIiIlIldas EqUIvalent

Cash and Cash Equivnj '111III"" 1Jnnuary

"'IVITlES:

Cash and Cash E . 1C h quivr, '1I11~IlIlId. up ofas and Bank B,i/UIlC.~ .

Bank Overdraft '

GROUP ----- COMPANY _______2004 2004 200N'OOO N'OOO N'OOO

(32,539) (30,932) (14.2 I)

(926) (926) «(,II/)

3,812 3,736 {I,I)() }4,247 4,247 ·1.~ 1114,601 4,601 (,,11K)2,309 2,309 1/\

(11\,496) (16.965) (.'l,M'1

6,559 2,928 I. Ii{993

11,760 11,090 (I~, / HI(517) (552) II, Iii I20,596 20,5% I I,426 3.758 , I) I I20,328 21.84/\ 1,/011)1

(513) (511119,1\15 21,335 I,.~III

(7,033) (6,6x4 ) ( I, lOll I(920) (1,720)(11,375) (II ,37~) (\1100)927 _ I) I 1/1/(18,401) (18,X51 ) (/1, ' I)

100(4.247) --...:1 ',11 ('1,~19(4,147) ·1, '.11 ('I. 39)-===(2,733) (I '/("') (7,~9S)C9.19i1 (II/I~\) (3,555J(11,928) (11, I I) (11,453)

1,360 71 1,819(13,28~ (I 1 ~XX (13,272)(11,92X) ( 11.217) (11 A53)

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INCAR (NIGERIA) PLCRC 3309

GROUP NOTES TO THE FINANCIAL STATEMENTSYEAR ENDED 31 DECEMBER 2004

Fixed AssetsOffice CapitalLeasehold

Income in TOTALPlant & Equipmcnts MotorLand &Vehicle ProgressBuilding Equipment Furniture &

FittingsN'OOO N'OOON'OOO N'OOO N'OOO N'OOO(a) Group

Cost Valuation10,557 14,515 18,144 118,411January I 2004 71,187 4,008

1,861 950 4,221 7,032Additions

(6,065)(2,1l7) (3,948)Disposals

119,37810,301 11,517 22,36571,187 4,008December 31 2004

Dcprcciation8,897 12,690 46,51121,264 3,660January I 2004

810 1,906 3,812807 289Charge TnThe Year

( 1,884) (3,948) (5,832)Disposals

7,823 10,648 44,49122,071 3,949

Net Book Value2,478 869 22,365 74,88749,116 59At December 312004

(b) Company

Cost Ivaluation10,391 14,515 18,144 118,24571,187 4,008January I 2004

4,221 6,6841,513 950Additions

(6,065)(2,117) (3,948)Disposals

118,86422,36571,187 4,008 9,787 11,517December 3 I 2004

Depreciation8,891 12,690 46,50521,264 3,660January I 2004

3,735807 289 733 1,906Charge In The Year

(5,832)(1,884) (3,948)Disposals

44,40822,071 3,949 7,740 10,648December 31 2004

Net Book Value2,047 869 22,365 74,456December312004 49,116 59

18,144 71,740348 1,500 1,825December 3 I 2003 49,923

. I valuation carried out in 1992, subsequentThe Land and Buildings are stated at:rofess~on;'rofessional revaluation of the propertiesto the valuation additions are state a~8c~s 'Messrs Knight Frank Estate Surveyors andbetween December 1994 and July I h Y rties at thc open market. The latter valuationsValuers put a total value ofN567m on t e propc I

have not been used in these financial statements.

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INCAR (NIGERIA) PLCRC 3309

GROUP NOTES TO THE FINANCIAL STATEMENTS (CONT'I))YEAR ENDED 31 DECEMBER 2004

2

GROUP2004N'OOO

()()I

N'()OO

----- COMPANY2004N'OOO

INVESTMENT98 per cent holding in the share capital ofIncar Infotech Limited (The company wasincorporated on 26 August 2004, it has notcommenced trading)64 per cent holding inSea-Bride Fishing Company Limited

3 DEFERRED EXPENDITUREFranchsise Fees for Informal ion Tcchnologyand expenses incurred on training school-Balance B/FwdExpenses incurred in yearExpenses on increase ofauth rised capital

920 920800

920 1,720

5,227 5,227

4,375 4,375 5,(iO()7,000 7,00016,602 16,602 5,()()()(2,309) (2,309) --..!lJl)14,293 14,293 5,22 I

==

Less Amount written offin the year

The Deferred Expenditure represented franchise fees for Information Technology Trainill/'.Agreement signed with Aptcch Limit<:d in Scptember 2003 and some expenses incurred (0set up the training schoo l.

The amount will be amortised Over five years. While the amount incurred on incrc:Cls('01authorised capital will be carried forward till completion of the rights issue of the COI1'J'III1Y(see Note 19).

GROUP ----- COMPANY2004 2004 '(/(/1N'OOO N'OOO N'IIIIII

4 STOCKSVehicles, Machinery and Equipment 21,331 21,331 , 1."1i ISpare parts and other Stores

9,374 8,805 " I, IWork in Progress10,658 10,65lj II (11,1i

41,363 40,7<)4==-5 DEBTORSTrade Debtors

6,131 4,H Ic,Other debtors and prcpayments2,610 ~(,'(I8,741 7 -IHc,==-6 CURRENT LIAB1LI 1'1ES

Amount Falling due within one Year:

66,888 (,0, I ' ITrade and other Creditor' (Note 6.1)

1','11Bank overdrafts13,288 I I, 'HH I I. ' I.!80,176 11,1'1 IH.,IH3

6.1 TRADE AND OTHER CREDITORSTrade Creditors

32,269 II"IM 11,100Other Creditors and Accrua I34,619 \ I,Hc,'1 24,111Sea-Bride Fishing Co. Ltd.

1)'1166,888 (,0,1 7 35,211

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INCAR (NIGERIA) PLCRC 3309

GROUP NOTES ON THE FINANCIAL STATEMENTS (CONT'D)YEAR ENDED 31 DECEMBER, 2004

GROUP _____COMPANY -------

2004 2004 2003

NOOO N'OOO NOOO

7 GRATUITIESBalance B/Fwd

381 381 (419)

Charge for the year4,601 4,601 800

4,982 4,982 381

8 SRARECAPlTALAuthorized:500,000,000 Ordinary Shares of50k each

255,000 250,000 250,000

Issued and fully paid:83,750,000 Ordinaty shares of50k each

41,875 41,875 41,875

9 REVALUATION RESERVESurplus on Revaluation of properties

64,837 64,837 64,837

10 PROFIT AND LOSS ACCOUNTMovements in the year are as follows:(Loss) b/f 1 January, 2004

17,720 (17,720) (4,332)

Retained (Loss) for the year32,271 (32,O03} ( 13,388}

Loss as at 31 December, 200449,991 (49,723) (17,720)

11 TRADING LOSSTrading Loss is arrived at after Charging/(Crediting):Directors Emoluments:Fees

220 220 220

Other Emoluments750 750 750

Gain/(Loss) on Foreign Exchange transactionDepreciation

3,812 3,736 4,902

Auditors'remuneration700 500 450

Finance charges5,276 4,246 4,539

Profit on disposal of fixed assets926 926 647

12 ANALYSIS OF TURNOVERTurnover represents the value of goods sold to thirdparties at invoiced prices, less discount.

20

INCAR NI ImIA) 1'1,('HC .111I11

GROUP NOTES ON THE FINANCIAL STAT1"YEAR ENDED 31 DECEMBI':I{:

GROUP2004N'OOO

II"NItill I

( ! I~II' r j_(H).I

N'(J()()

Turnover Gross TurnoverProfit

Ir()N~1 IIH 1111

(Loss)Profit

Vehicles Sales DivisionN'OOO N'OOO N'OOO

(LOSS)

Vehicles Spares Division14,660 3,711 14,660

N'OOO N'IHHI

610 (131 )3,711 1·1 \ '

Workshop Division 2,131610 (131)

Industrial Machinery &(1,269) 2,131

I'(1,269) 1,1Ii I

Equipment Division 3.690 1.219Frozen Fish 150,900 8,240

3,690 1,219 1'1,\(,\

171,991 11,770 21,091 3,530

13 OTHER OPERATING INCOMEIncome from Fish HaulageBank Interest Earned

GROUP ----- 'OMI' II

2004 20(HN'OOO N

1,749 1,749 ',H I \7

1,756 1,749

13,838 13,838 H, \ "220 220 ti.l,t14,058 14,058 «',M III

316 316

687 337 (1dtl

1,003 653 (,.(,

418 418 (1,47'1)1,421 1,071 ~1)

2,676 2,676 2,O,()1,003 " 653 64(1(513) (513)

3,166 2,816 2,676

14 ~~OME FROM RENT AND OTHERS

Sale of scraps ad'n mcornc from hiring ofstoeks

15 TAXATION

15.1 Per Profit & LossAccount~rnd~l1?ro,:,ision in the previous yearOVISton In the year'

IneomeTaxBas d . M' .Education Tax e on 1!1I n1111TI Tax Provision

Deferred Taxation l5.3

15.2 Per Balance SheetBalance B/Fwd.Current Year ProvisionPayment during the year

15.3 DEFERRED TAXATIONBalance I January 2004~Wnte baek)/provision for the yearalance 31 December 2004

16

__ .....:!.4~18Q. 418 ( 1,479418 418

1,479)

The cha~ge for taxation has been COin . ~-~~ -Companies Income puted In accordance with the ..Tax Act 1979 pr ovrsroris of theTh as amended to date and th Ed .e Company has adopted the state ~e ucation Tax Act No. 7 of 1993taxation computed, using the liabil~;~~~tt~~;ieeounting Standard (SAS i9) in deferred(LOSS) EARNINGS PER SHARE(LO;'S) Earnmgs per share are based on thpro. it on ordinary activities afte . eordinary shares issued and ful l r taxdatlOnand on the 83,750 000ypal . '

21

INCAR (NIGERIA) PLCRC 3309

GR~~::~~~E~~~1~~~~i~~~~~ED----------- COMPANY -----------

2003 %2004 % N'OOON'OOO

GROUP2004 %N'OOO

21,091 166,914171,991TURNOVER

(41,475) (173,306)Less Cost of Goods and

(190,069)(6,392)

Services(18,078) (20,384)

17,45716,740 16,733Other Income

100100 11,065(100) (3,651)(1,338)Value Added

Distributed as follows:Employees: '.

529 15,845 143Salaries, Gratuity and

22,113 1653 19,300Welfare

18 646 6Government

1,003 75 653TaxesFinance House:

116 4,539 41Interests and Bank

5,276 394 4,246charges

418 12 (1,479) (13)4'18 31Deferred Taxation

Retained f~r ~ssets ReplaCem{S\:2102 4,902 44285 3,735Depreciation

Retained Deficit for(32,003) (877) (13,388) (121)(33,960) (2538)the Year

11,065 100(100)(100) (3,651)(1,338)

Value add~~:~~~~~~~~ ~~~::~~~;~~ ~:~t~~ecompany Thi statement shows t eits employees efforts. IS employees, shareholders,allocation of the wealth b.e~e::rthe future creation of moregovernment and that retamewealth.

INCAR I EHIA) 1'1,('nc .I./flYGROUPFIVE YEAR FINANCIAL SUMM InYEAR ENDED 31 DECEMBEU 200.'

GROUP ----------------- MflAN\'2004 2003 2002 '(J( 1/

"""ASSETS EMPLOYED:

N'OOO N'OOO N'OOO N'()()() r IlflllFixedAssets74,887 71,740 73,342 7/j,J I 1 7/'

Investment920GOOdwill

3,899Deferred Expenditure14,293 5,227Current Assets51,464 63,565 60,720 46,052 /1)//,)

Liabilities(88,742) (51,540) (31,682) (19,716) (1f,'lIl/)

56,721 88,992 102,380 104,649 10,/,/111FINANCED BY:Share Capital

41,875 41,875 41,875 41,875 41HIRevaluation Surplus

64,837 64,837 64,837 67,743 67,7'/1Profit and loss account(Deficit)

(49,991) (17,720) (4,332) (4,969) (5,157)

56,721 88,992 102,380 104,649 1044()1Turnover171,991 166,914 47,528 97,384 /00,467

(Loss) before tax(32,539) (14,221) (17,441) 2,101 (2, /13)

(Loss) after tax(33,960) (13,388) (18,422) 188 (2,814)

Dividend(Loss )/Earnings per share(Ko bo)

(41) (16) (22)(3)

NetAssets per share (Kobo)68 106 122 125 125

Earnings per share (profit after tax and minority interest) and dividend per share for eachyear have been calculated on the issued ordinary share capital as at 31 December 2004, i.e.83,750,000 Ordinary Shares of 50 kobo each.