--------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A NO. 1
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 22, 2000
Commission File No. 0-22524
MENDOCINO BREWING COMPANY, INC.
-------------------------------
(Exact name of small business issuer as specified in its charter)
California 68-0318293
--------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
13351 South Highway 101, 95449
Hopland, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (707) 744-1015
--------------------------
Item 5. Other events
On November 22, 2000, Mendocino Brewing Company, Inc. (the "Company") filed a
definitive proxy statement in connection with its Annual Meeting of
Shareholders, which is scheduled to be held on January 24, 2001. At the Annual
Meeting, the Company's shareholders will be asked to consider four Proposals:
(1) approval of a Share Purchase Agreement between the Company and two offshore
entities, Inversiones Mirabel, S.A. ("Inversiones"), and Golden Eagle Trust
("Golden Eagle"), under which the Company would acquire United Breweries
International, UK Ltd. its wholly owned subsidiary, UBSN Ltd., as well as the
U.S. and Canadian distribution rights for Kingfisher Premium Lager, in exchange
for 5,500,000 shares of the Company's Common Stock; (2) amendment of the
Company's Bylaws to allow for the election of up to nine Directors; (3) election
of the Company's Directors for the forthcoming year, for which purpose the Board
of Directors has nominated all seven of the existing Directors for re-election
and Inversiones has nominated, pursuant to the terms of the Stock Purchase
Agreement (and assuming that Proposal No. 2, above, is approved by the
shareholders), David Townshend; and (4) ratification of the appointment of Moss
Adams, L.L.P. to serve as the Company's independent accountants for the year
ending December 31, 2000
The main Proposal to be considered at the Annual Meeting is the proposed
acquisition of UBI, UK Ltd. and UBSN from Inversiones and Golden Eagle, both of
which entities are affiliated with the Company's largest shareholder, United
Breweries of America Inc., and its Chairman of the Board, Dr. Vijay Mallya. The
Company originally announced the proposed acquisition by press release on March
29, 2000, but because of a variety of accounting, legal, and transaction issues
the Share Purchase Agreement was not formally entered into until November 3,
2000. The proxy statement describes in detail the terms and conditions of the
proposed acquisition, and includes as an attachment both the text of the Share
Purchase Agreement and an opinion, prepared by the Company's financial advisor,
Sage Capital LLC, as to the fairness of the transaction, from a financial point
of view, to the Company's shareholders. The proxy statement also includes a
description of the businesses of UBI, UK Ltd. and UBSN, as well as financial
statements of the two companies.
<PAGE>
The Company expects that it will mail the definitive proxy statement or about
December 27, 2000. Meanwhile, a copy of the definitive proxy statement (and
other information periodically filed with the Securities and Exchange Commission
(the "Commission")) is available now and can be inspected and copies made at the
public reference facilities of the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the Commission's regional offices at Seven
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at its Washington, D.C. address at prescribed rates. Such material
may also be accessed electronically by means of the Commission's Web site at
http://www.sec.gov.
Item 7. Financial Statements and Exhibits
The following exhibits are filed as part of this report.
Exhibit
Number Description of Document
------ -----------------------
1. United Breweries International (UK) Limited Directors' Report
and Financial Statements for the Year Ended December 31, 1998
2. United Breweries International (UK) Limited Directors' Report
and Financial Statements for the Year Ended December 31, 1999
3. United Breweries International (UK) Limited Unaudited Balance
Sheet, Income Statement, and Statement of Cash Flows for the
Nine Months Ended September 30, 2000
4. United Breweries International (UK) Limited Unaudited Income
Statement and Statement of Cash Flows for the Nine Months
Ended September 30, 1999.
5. Mendocino Brewing Company, Inc. and United Breweries
International (UK) Limited Consolidated Pro Forma Balance
Sheet as at September 30, 2000
6. Mendocino Brewing Company, Inc. and United Breweries
International (UK) Limited Consolidated Pro Forma Income
Statement for the Nine Months Ended September 30, 2000
7. Mendocino brewing Company, Inc. and United Breweries
International (UK) Limited Consolidated Pro Forma Income
Statement for the Year Ended December 31, 1999.
SIGNATURES
Pursuant to the requirements on the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MENDOCINO BREWING COMPANY, INC.
(Registrant)
Date: December 22, 2000 By
----------------------------------------
P.A. Murali, Chief Financial Officer
<PAGE>
SUPPLEMENT F
UBI AND UBSN FINANCIAL STATEMENTS, PRO FORMAS, AND AUDITORS' REPORTS
The Pro Forma Condensed Consolidated Balance Sheet of Registrant as of
September 30, 2000 reflects the financial position of Registrant after giving
effect to the acquisition of the stock of United Breweries International, Ltd.
discussed above and assumes the acquisition took place on September 30, 2000.
The Pro Forma Condensed Consolidated Statements of Operations for the fiscal
year ended December 31, 1999 and the nine months ended September 30, 2000 assume
that the acquisition occurred on January 1, 1999, and are based on the
operations of Registrant for the year ended December 31, 1999 and the nine
months ended September 30, 2000. Such pro forma financial statements also
reflect the sale of 5,500,000 shares of common stock referred above for the
purchase of the common stock of United Breweries International, Ltd. at a
purchase price of $ .81 per share (the last reported sale price of common stock
on March 29, the day the purchase was announced.)
The unaudited pro forma condensed consolidated financial statements have been
prepared by Registrant based upon assumptions deemed proper by it. The unaudited
pro forma condensed consolidated financial statements presented herein are shown
for illustrative purposes only and are not necessarily indicative of the future
financial position or future results of operations of Registrant, or of the
financial position or results of operations of Registrant that would have
actually occurred had the transaction been in effect as of the date or for the
periods presented. In addition, it should be noted that Registrant's financial
statements will reflect the purchase only from the closing date, should it
occur.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements and related notes
of Registrant.
<PAGE>
<TABLE>
<CAPTION>
Pro forma Adjustment
----------------------------------------------
Mendocino Brewing United Breweries Pro forma
Co., Inc. International, Ltd. Consolidated
09/30/2000 09/30/2000 (a) Adjustments 09/30/2000
----------------- ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 97,200 $ 158,600 $ - $ 255,800
Accounts receivable 1,458,700 3,426,100 - 4,884,800
Inventories 1,071,000 143,800 - 1,214,800
Prepaid expenses 215,000 - - 215,000
----------------- ------------------ ------------------ -----------------
Total current assets 2,841,900 3,728,500 - 6,570,400
----------------- ------------------ ------------------ -----------------
PROPERTY AND EQUIPMENT 14,148,700 871,700 - 15,020,400
----------------- ------------------ ------------------ -----------------
OTHER ASSETS
Goodwill, net of amortization - - 3,476,600(b) 3,476,600
Deferred taxes and other assets 2,993,700 - - 2,993,700
----------------- ------------------ ------------------ -----------------
2,993,700 - 3,476,600 6,470,300
----------------- ------------------ ------------------ -----------------
Total assets $ 19,984,300 $ 4,600,200 $ 3,476,600 $ 28,061,100
================= ================== ================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,695,200 2,442,600 $ - $ 4,137,800
Accrued liabilities 466,900 290,600 - 757,500
Current maturities of debt 615,400 888,600 - 1,504,000
----------------- ------------------ ------------------ -----------------
Total current liabilities 2,777,500 3,621,800 - 6,399,300
LONG-TERM DEBT AND CAPITAL LEASES,
Less current maturities 5,696,500 - - 5,696,500
LINE OF CREDIT 1,482,700 - - 1,482,700
----------------- ------------------ ------------------ -----------------
Total liabilities 9,956,700 3,621,800 - 13,578,500
----------------- ------------------ ------------------ -----------------
STOCKHOLDERS' EQUITY
Preferred stock 227,600 - 227,600
Common stock 13,841,900 147,900 3,476,600(b) 17,466,400
Accumulated deficit (4,041,900) 830,500 (3,211,400)
----------------- ------------------ ------------------ -----------------
Total stockholders' equity 10,027,600 978,400 3,476,600 14,482,600
----------------- ------------------ ------------------ -----------------
Total liabilities and
stockholders' equity $ 19,984,300 $ 4,600,200 $ 3,476,600 $ 28,061,100
================= ================== ================== =================
<FN>
(a) To include the assets and liabilities of United Breweries International,
Ltd., as of September 30, 2000.
(b) To reflect the goodwill purchased resulting from the fair market value of
5,500,000 shares of the Registrant's stock at $.81 per share over the net
book value of the assets of United Breweries International, Ltd.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pro forma Adjustment
----------------------------------------------
Mendocino Brewing United Breweries Pro forma
Co., Inc. International, Ltd. Consolidated
09/30/2000 09/30/2000 (a) Adjustments 09/30/2000
----------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
NET SALES $ 7,011,600 $ 9,383,000 $ - $ 16,394,600
COST OF GOODS SOLD 4,323,100 6,184,100 - 10,507,200
----------------- ---------------- ------------------ -----------------
GROSS PROFIT 2,688,500 3,198,900 - 5,887,500
OPERATING EXPENSES
Selling and marketing 1,505,900 1,874,000 3,380,700
General and administrative 976,200 721,100 65,200(b) 1,762,500
----------------- ---------------- ------------------ -----------------
2,482,100 2,595,900 65,200 5,143,200
----------------- ---------------- ------------------ -----------------
INCOME (LOSS) FROM OPERATIONS 206,400 603,000 (65,200) 744,200
OTHER INCOME (EXPENSE)
Interest expense (668,100) (66,300) - (734,400)
Other income (expense) 70,700 (49,000) - 21,700
----------------- ---------------- ------------------ -----------------
(597,400) (115,300) - (712,700)
----------------- ---------------- ------------------ -----------------
INCOME (LOSS) BEFORE INCOME TAXES (391,000) 487,700 (65,200) 31,500
BENEFIT FROM INCOME TAXES (154,200) - - 31,500
----------------- ---------------- ------------------ -----------------
NET INCOME (LOSS) $ (236,800) $ 487,700 $ (65,200) $ 185,700
================= ================ ================== =================
BASIC INCOME (LOSS) PER COMMON SHARE $ (0.04) $ 0.02
================= ==================
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 5,530,117 5,500,000(c) 11,030,117
================= ================== ==================
<FN>
(a) To include the profits and losses of United Breweries International, Ltd.
(b) To record amortization of goodwill on the purchase amortized over 40 years.
(c) To reflect the shares issued for the purchase of the stock of United
Breweries International, Ltd.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Pro forma Adjustment
----------------------------------------------
Mendocino Brewing United Breweries Pro forma
Co., Inc. International, Ltd. Consolidated
09/30/2000 09/30/2000 (a) Adjustments 09/30/2000
--------------------- ---------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
NET SALES $ 8,698,600 $ 11,886,600 $ - $ 20,585,200
COST OF GOODS SOLD 5,767,900 7,783,600 - 13,551,500
--------------------- ---------------------- ---------------------- ---------------------
GROSS PROFIT 2,930,700 4,103,000 - 7,033,700
OPERATING EXPENSES
Selling and marketing 2,108,600 2,513,900 4,622,500
General and administrative 1,652,200 1,049,300 86,900(b) 2,788,400
--------------------- ---------------------- ---------------------- ---------------------
3,760,800 3,563,200 86,900 7,410,900
--------------------- ---------------------- ---------------------- ---------------------
INCOME (LOSS) FROM OPERATIONS (830,100) 539,800 (86,900) (377,200)
OTHER INCOME (EXPENSE)
Interest expense (846,800) (119,100) - (965,900)
Other income (expense) (358,900) (121,800) - (480,700)
--------------------- ---------------------- ---------------------- ---------------------
(1,205,700) (240,900) - (1,446,600)
--------------------- ---------------------- ---------------------- ---------------------
INCOME (LOSS) BEFORE INCOME TAXES (2,035,800) 298,900 (86,900) (1,823,800)
PROVISION (BENEFIT) FOR INCOME TAXES (729,500) 102,000 - (627,500)
--------------------- ---------------------- ---------------------- ---------------------
NET INCOME (LOSS) $ (1,306,300) $ 196,900 $ (86,900) $ (1,196,300)
===================== ====================== ====================== =====================
BASIC INCOME (LOSS) PER COMMON SHARE $ (0.27) $ (0.12)
===================== =====================
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 4,838,151 5,500,000(c) 10,338,151
===================== ====================== =====================
<FN>
(a) To include the profits and loses of United Breweries International, Ltd.
(b) To record amortization of goodwill on the purchase amortized over 40 years.
(c) To reflect the shares issued for the purchase of the stock of United
Breweries International, Ltd.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GBP (pound's) GBP (pound's) GBP (pound's)
Nine months
ended September December 31, December 31,
30, 2000 1999 1998
--------------------- ----------------- -----------------
<S> <C> <C> <C>
Net income (pound)314,774 (pound)121,710 (pound)90,843
Items that would reduce net income
Increase in deferred tax liability - - (9,000)
Items that would increase net income
Reduction in deferred tax liability - 23,000 -
--------------------- ----------------- -----------------
Net income (pound)314,774 (pound)144,710 (pound)81,843
===================== ================= =================
Balance sheet
Deferred tax liability (pound)12,000 (pound)12,000 (pound)35,000
===================== ================= =================
</TABLE>
<PAGE>
<TABLE>
Conversion to United States Dollars
<CAPTION>
GBP US$ GBP US$
1999 Exchange 1999 1998 Exchange 1998
UBIUK Rate Consolidated UBIUK Rate Consolidated
------------ ---------- ---------------- ------------ ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Cash 33,845 1.615 $ 54,660 154,381 1.6628 $ 256,705
Accounts Receivable 2,972,235 1.615 4,800,160 2,719,157 1.6628 4,521,414
Allowance for doubtful accounts (250,000) 1.615 (403,750) (250,000) 1.6628 (415,700)
Inventory 63,074 1.615 101,865 111,420 1.6628 185,269
--------- ---------- --------- ----------
Current assets 2,819,154 4,552,934 2,734,958 4,547,688
Fixed assets
Plant & equipment 1,291,990 1.615 2,086,564 1,298,445 1.6628 2,159,054
Motor vehicles 104,445 1.615 168,679 97,804 1.6628 162,628
Accumulated depreciation (803,327) 1.615 (1,297,373) (788,811) 1.6628 (1,311,635)
--------- ---------- --------- ----------
Total assets 3,412,262 5,510,803 3,342,396 5,557,736
========= ========== ========= ==========
Current liabilities
Bank overdraft 1,243,943 1.615 2,008,968 1,062,613 1.6628 1,766,913
Accounts payable 1,414,454 1.615 2,284,343 1,292,923 1.6628 2,149,872
Income tax payable 69,094 1.615 111,587 57,382 1.6628 95,415
Accruals 337,893 1.615 545,697 704,310 1.6628 1,171,127
--------- ---------- --------- ----------
Total liabilities 3,065,384 4,950,595 3,117,228 5,183,327
Equity
Common stock 100,000 1.615 161,500 100,000 1.6628 166,280
Currency translation (268) 500
Prior year retained earnins 125,168 1.615 202,146 34,325 1.6628 57,076
Current years earnings 121,710 1.617 196,829 90,843 1.6573 150,554
--------- ---------- --------- ----------
Total equity and liabilities 3,412,262 $5,510,803 3,342,396 $5,557,736
========= ========== ========= ==========
<PAGE>
Sales 7,350,109 1.617 $11,886,596 6,787,918 1.6573 $11,249,617
Cost of goods sold (4,813,017) 1.617 (7,783,611) (4,369,611) 1.6573 (7,241,756)
--------- ---------- --------- ----------
Gross profit 2,537,092 4,102,985 2,418,307 4,007,860
Selling costs (1,554,503) 1.617 (2,513,942) (1,487,735) 1.6573 (2,465,623)
General and Administrative (648,855) 1.617 (1,049,328) (613,781) 1.6573 (1,017,219)
--------- ---------- --------- ----------
Net income from operations 333,734 539,715 316,791 525,018
Provision for litigation (125,303) 1.617 (202,640) (89,099) 1.6573 (147,664)
Disposal of fixed assets 21,637 1.617 34,991 - 1.6573 -
Other income 28,363 1.617 45,869 - 1.6573 -
Interest expense (73,649) 1.617 (119,105) (85,489) 1.6573 (141,681)
--------- ---------- --------- ----------
Net income before tax 184,782 298,829 142,203 235,673
Provision for income tax (63,072) 1.617 (102,000) (51,360) 1.6573 (85,119)
--------- ---------- --------- ----------
Net income 121,710 196,829 90,843 150,554
========= =========
Items that would reduce net income
Increase in deferred
tax liability - (9,000) 1.6573 (14,916)
Items that would increase net income
Reduction in deferred tax
liability 23,000 1.617 37,196
---------- ----------
Net income $ 234,025 $ 135,638
========== ==========
</TABLE>
<PAGE>
<TABLE>
The following nine pages contain conversions of the consolidated financial
statements of UBI from United Kingdom Pounds Sterling to United States Dollars.
These conversions are not a part of the audited financial statements and are
provided for reference purposes only.
<CAPTION>
United Breweries International, Ltd. (UBI)
Balance Sheet
September 30, 2000
(GBP pound) Exchange (US$)
UBI Rate UBI
---------------- ------------- -----------------
<S> <C> <C> <C>
Cash (pound)107,281 1.4787 $ 158,636
Accounts receivable 2,316,983 1.4787 3,426,123
Inventory 97,221 1.4787 143,761
---------------- -----------------
Current assets 2,521,485 3,728,520
Property, plant and equipment 589,491 1.4787 871,680
---------------- -----------------
Total assets (pound)3,110,976 $ 4,600,200
================ =================
Current liabilities
Bank overdraft (pound)600,936 1.4787 $ 888,604
Accounts payable 1,651,837 1.4787 2,442,571
Income tax payable 29,022 1.4787 42,915
Accruals 167,529 1.4787 247,725
---------------- -----------------
Total liabilities 2,449,324 3,621,815
---------------- -----------------
Stockholder's equity
Common stock 100,000 1.4787 147,870
Currency translation 1.4787 (22,349)
Retained earnings 561,652 - 852,864
---------------- -----------------
661,652 978,385
---------------- -----------------
Total stockholder's equity and liabilities (pound)3,110,976 $ 4,600,200
================ =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
United Breweries International, Ltd. (UBI)
Statement of Income and Stockholder's Equity
September 30, 2000
(GBP pound) Exchange (US$)
UBI Rate UBI
---------------- ------------- -----------------
<S> <C> <C> <C>
Sales (pound)6,054,809 1.5497 $ 9,383,138
Cost of goods sold 3,990,558 1.5497 6,184,168
---------------- -----------------
Gross profit 2,064,251 3,198,970
Selling and distribution 1,209,783 1.5497 1,874,801
General and administrative 465,332 1.5497 721,125
---------------- -----------------
Net income from operations 389,136 603,044
Other income (expense)
Provision for litigation (31,605) 1.5497 (48,978)
Interest expense (42,757) 1.5497 (66,261)
---------------- -----------------
Net income before taxes 314,774 487,805
Provision for income tax - 1.5497 -
---------------- -----------------
Net income 314,774 487,805
Retained earnings, beginning of year 246,878 1.4787 365,058
---------------- -----------------
Retained earnings, end of year (pound)561,652 $ 852,864
================ =================
</TABLE>
<PAGE>
<TABLE>
United Breweries International, Ltd. (UBI)
Statement of Cash Flows
September 30, 2000
<CAPTION>
(GBP pound) Exchange (US$)
UBI Rate UBI
---------------- ------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (pound)314,774 1.5497 $ 487,805
Adjustments to reconcile net income
to net cash from operating activities
Depreciation 181,111 1.5497 280,668
Gain on sale of assets (2,185) 1.5497 (3,386)
Changes in:
Accounts receivable 405,252 1.5497 628,019
Inventory (34,147) 1.5497 (52,918)
Accounts payable and accruals 26,943 1.5497 41,754
---------------- -----------------
Net cash from operating activities 891,748 1,381,942
---------------- -----------------
Cash flows from investing activities
Purchase of property, plant and equipment (179,295) 1.5497 (277,853)
Cash received from sale of assets 3,985 1.5497 6,176
---------------- -----------------
(175,310) (271,678)
---------------- -----------------
Cash flows from financing activities
Decrease in bank overdraft (763,538) 1.5497 (1,183,255)
---------------- -----------------
Translation adjustment - 3,344
---------------- -----------------
Net increase (decrease) in cash (47,100) (69,647)
Cash beginning of year 154,381 1.4787 228,283
---------------- -----------------
Cash end of year (pound)107,281 $ 158,636
================ =================
</TABLE>
<PAGE>
<TABLE>
United Breweries International, Ltd. (UBI)
Balance Sheet
December 31, 1999
<CAPTION>
(GBP pound) Exchange (US$)
UBI Rate UBI
--------------- ------------ ------------------
<S> <C> <C> <C>
Cash (pound)33,845 1.6150 $ 54,660
Accounts receivable 2,722,235 1.6150 4,396,410
Inventory 63,074 1.6150 101,865
---------------- ------------------
Current assets 2,819,154 4,552,934
Property, plant and equipment 593,108 1.6150 957,869
---------------- ------------------
Total assets (pound)3,412,262 $ 5,510,803
================ ==================
Current liabilities
Bank overdraft (pound)1,243,943 1.6150 $ 2,008,968
Accounts payable 1,414,454 1.6150 2,284,343
Income tax payable 69,094 1.6150 111,587
Accruals 337,893 1.6150 545,697
---------------- ------------------
Total liabilities 3,065,384 4,950,595
---------------- ------------------
Stockholder's Equity
Common stock 100,000 1.6150 161,500
Currency translation - (268)
Retained earnings 246,878 - 398,976
---------------- ------------------
346,878 560,208
---------------- ------------------
Total stockholder's equity and liabilities (pound)3,412,262 $ 5,510,803
================ ==================
</TABLE>
<PAGE>
<TABLE>
United Breweries International, Ltd. (UBI)
Statement of Income and Stockholder's Equity
December 31, 1999
<CAPTION>
(GBP pound) Exchange (US$)
UBI Rate UBI
---------------- ------------- ------------------
<S> <C> <C> <C>
Sales (pound)7,350,109 1.6172 $ 11,886,596
Cost of goods sold 4,813,017 1.6172 7,783,611
---------------- ------------------
Gross profit 2,537,092 4,102,985
Selling and distribution 1,554,503 1.6172 2,513,942
General and administrative 648,855 1.6172 1,049,328
---------------- ------------------
Net income from operations 333,734 539,715
Other income (expense)
Provision for litigation (125,303) 1.6172 (202,640)
Disposal of fixed assets 21,637 1.6172 34,991
Other income 28,363 1.6172 45,869
Interest expense (73,649) 1.6172 (119,105)
---------------- ------------------
Net income before taxes 184,782 298,829
Provision for income tax (63,072) 1.6172 (102,000)
---------------- ------------------
Net income (pound)121,710 $ 196,829
Retained earnings, beginning of year 125,168 1.6150 202,146
---------------- ------------------
Retained earnings, end of year (pound)246,878 $ 398,976
================ ==================
</TABLE>
<PAGE>
<TABLE>
United Breweries International, Ltd. (UBI)
Statement of Cash Flows
December 31, 1999
<CAPTION>
(GBP pound) Exchange (US$)
UBI Rate UBI
---------------- ------------ ------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (pound)121,710 1.6172 $ 196,829
Adjustments to reconcile net income
to net cash from operating activities
Depreciation 235,315 1.6172 380,551
Gain on sale of assets (21,637) 1.6172 (34,991)
Write-off of investment (28,363) 1.6172 (45,869)
Changes in:
Accounts receivable (253,078) 1.6172 (409,278)
Inventory 48,346 1.6172 78,185
Accounts payable and accruals (244,886) 1.6172 (396,030)
---------------- ------------------
Net cash from operating activities (142,593) (230,601)
---------------- ------------------
Cash flows from investing activities
Purchase of property, plant and equipment (238,809) 1.6172 (386,202)
Cash received from sale of assets 22,065 1.6172 35,684
Cash received from sale of investments 50,000 1.6172 80,860
---------------- ------------------
(166,744) (269,658)
---------------- ------------------
Cash flows from financing activities
Increase in bank overdraft 188,801 1.6172 305,329
---------------- ------------------
Translation adjustment - 266
---------------- ------------------
Net increase (decrease) in cash (120,536) (194,665)
Cash beginning of year 154,381 1.6150 249,325
---------------- ------------------
Cash end of year (pound)33,845 $ 54,660
================ ==================
</TABLE>
<PAGE>
<TABLE>
United Breweries International, Ltd. (UBI)
Balance Sheet
December 31, 1998
<CAPTION>
(GBP pound) Exchange (US$)
UBI Rate UBI
---------------- ------------ --------------------
<S> <C> <C> <C>
Cash (pound)154,381 $1.6628 $ 256,705
Accounts receivable 2,469,157 1.6628 4,105,714
Inventory 111,420 1.6628 185,269
---------------- --------------------
Current assets 2,734,958 4,547,688
Property, plant & equipment 607,438 1.6628 1,010,048
---------------- --------------------
Total assets (pound)3,342,396 $ 5,557,736
================ ====================
Current liabilities
Bank overdraft (pound)1,062,613 1.6628 $ 1,766,913
Accounts payable 1,292,923 1.6628 2,149,872
Income tax payable 57,382 1.6628 95,415
Accruals 704,310 1.6628 1,171,127
---------------- --------------------
Total liabilities 3,117,228 5,183,327
---------------- --------------------
Stockholder's Equity
Common stock 100,000 1.6628 166,280
Currency translation adjustment - - 499
Retained earnings 125,168 - 207,630
---------------- --------------------
225,168 374,409
---------------- --------------------
Total stockholder's equity and liabilities (pound)3,342,396 $ 5,557,736
================ ====================
</TABLE>
<PAGE>
<TABLE>
United Breweries International, Ltd. (UBI)
Statement of Income and Stockholder's Equity
December 31, 1998
<CAPTION>
(GBP pound) Exchange (US$)
UBI Rate UBI
--------------- ------------- ---------------------
<S> <C> <C> <C>
Sales (pound)6,787,918 1.6573 $ 11,249,617
Cost of goods sold 4,369,611 1.6573 7,241,756
--------------- ---------------------
Gross profit 2,418,307 4,007,860
Selling and distribution 1,487,735 1.6573 2,465,623
General and a+A121dministrative 613,781 1.6573 1,017,219
--------------- ---------------------
Net income from operations 316,791 525,018
Other income (expense)
Provision for litigation (89,099) 1.6573 (147,664)
Interest expense (85,489) 1.6573 (141,681)
--------------- ---------------------
Net income before taxes 142,203 235,673
Provision for income tax (51,360) 1.6573 (85,119)
--------------- ---------------------
Net income (pound)90,843 150,554
Retained earnings, beginning of year 34,325 1.6628 57,076
--------------- ---------------------
Retained earnings, end of year (pound)125,168 $ 207,630
=============== =====================
</TABLE>
<PAGE>
<TABLE>
United Breweries International, Ltd. (UBI)
Statement of Cash Flows
December 31, 1998
<CAPTION>
(GBP pound) Exchange (US$)
UBI Rate UBI
----------------- ------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (pound)90,843 1.6573 $ 150,554
Adjustments to reconcile net income
to net cash from operating activities
Depreciation 175,173 1.6573 290,314
Litigation costs (89,099) 1.6573 (147,664)
Changes in:
Accounts receivable (580,585) 1.6573 (962,204)
Inventory (67,150) 1.6573 (111,288)
Accounts payable and accruals (211,670) 1.6573 (350,801)
----------------- -----------------
Net cash from operating activities (682,488) (1,131,087)
----------------- -----------------
Cash flows from investing activities
Purchase of property, plant and equipment (264,397) 1.6573 (438,185)
----------------- -----------------
Cash flows from financing activities
Increase in bank overdraft 1,041,932 1.6573 1,726,794
----------------- -----------------
Translation adjustment - - 523
----------------- -----------------
Net increase (decrease) in cash 95,047 158,044
Cash beginning of year 59,334 $1.6628 98,661
----------------- -----------------
Cash end of year (pound)154,381 $ 256,705
================= =================
</TABLE>
<PAGE>
Company Registration No. 1688201 (England and Wales)
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
GROUP FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
COMPANY INFORMATION
Directors M.K. Nambiar
V.S. Kumar
G.M.K. Lodhi
Secretary G.M.K. Lodhi
Company number 1688201
Registered office 75 Westow Hill
Crystal Palace
London
SE19 1TX
Business address 77 Marlowes
Hemel Hampstead
Herts.
HP1 1LF
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
CONTENTS
Page
Consolidated profit and loss account 1
Consolidated balance sheet 2
Consolidated cash flow statement 3
Notes to the consolidated cash flow statement 4
Company balance sheet 5
Notes to the financial statements 6 - 10
Company detailed profit and loss account 11
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
<TABLE>
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
<CAPTION>
Note (pound)
<S> <C> <C>
Turnover 2 6,054,809
Cost of sales (3,990,558)
----------
Gross profit 2,064,251
Distribution costs (1,209,783)
Administrative expenses (465,332)
----------
Operating profit 3 389,137
Litigation and other costs (31,605)
----------
Profit on ordinary activities before interest 357,532
Interest payable and similar charges 4 (42,757)
----------
Profit on ordinary activities before taxation 314,774
Tax on profit on ordinary activities 5 --
----------
Profit on ordinary activities after taxation 13 (pound) 314,774
==========
</TABLE>
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
There are no recognised gains and losses other than those passing through the
profit and loss account.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
<TABLE>
CONSOLIDATED BALANCE SHEET AS AT 30TH SEPTEMBER 2000
<CAPTION>
Note (pound) (pound)
<S> <C> <C> <C>
Fixed assets
Tangible assets 6 589,491
Current assets
Stocks 7 97,221
Debtors 8 2,316,983
Cash at bank and in hand 107,281
----------
2,521,485
Creditors: amounts falling due within one year 9 (2,449,325)
----------
Net current liabilities 72,161
----------
Total assets less current liabilities (pound) 661,652
==========
Capital and reserves
Called up share capital 11 100,000
Profit and loss account 12 561,652
----------
Shareholder's funds - equity interests 13 (pound) 661,652
==========
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
<TABLE>
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
<CAPTION>
(pound) (pound)
<S> <C>
Net cash inflow/(outflow) from operation activities 934,510
Returns on investments and servicing of finance (42,757)
--------
Net cash outflow for returns on investments and servicing of finance 891,753
Taxation --
Capital expenditure and financial investments
Payments to acquire tangible assets (179,295)
Receipts from sales of tangible assets 3,985
--------
(175,310)
--------
Net cash outflow before management of liquid resources and financing (pound) 716,443
========
Increase in cash in the period (pound) 716,443
========
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
<TABLE>
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
<CAPTION>
(pound) (pound)
<S> <C> <C> <C>
1 Reconciliation of operating profit to net cash outflow from
operating activities
Profit on ordinary activities before interest 357,532
Depreciation of tangible assets 181,111
Profit on disposal of tangible assets (2,185)
(Increase) in stocks (34,147)
Decrease in debtors 405,252
(Decrease) in creditors within one year 26,948
Provision for litigation costs -- 576,979
---------- --------
Net cash outflow from operating activities (pound) 934,510
========
1-Jan-00 Cash flow 30-Sep-00
2 Analysis of net debt
(pound) (pound) (pound)
Cash at bank and in hand 33,845 73,436 107,281
Bank overdraft (1,243,943) 643,007 (600,936)
---------- ------- --------
(pound) (1,210,098) 716,443 (493,655)
========== ======= ========
3 Reconciliation of net cash flow to movement in net debt
Increase/(Decrease) in cash in the period 716,443
Opening net debt (1,210,098)
----------
Closing net debt (pound) (493,655)
==========
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
<TABLE>
COMPANY BALANCE SHEET AS AT 30TH SEPTEMBER 2000
<CAPTION>
Note (pound) (pound)
<S> <C> <C> <C>
Fixed assets
Investments 6 299,119
Current assets
Debtors 8 13,071
Cash at bank and in hand 10,451
--------
23,522
Creditors: amounts falling due within one year 9 (26,858)
--------
Net current liabilities (3,336)
-----------
Fixed assets over net current assets 295,782
Creditors: amounts falling due after more than one year (162,000)
-----------
Total assets less liabilities (pound) 133,782
===========
Capital and reserves
Called up share capital 100,000
Profit and loss account 33,782
-----------
Shareholders' fund - equity interests (pound) 133,782
===========
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
1 Accounting policies
1.1 Accounting convention
The financial statements are prepared under the historical cost
convention.
1.2 Compliance with accounting standards
The financial statements are prepared in accordance with applicable
accounting standards.
1.3 Turnover
Turnover represents amounts receivable for goods sold, services
supplied and commissions receivable and is stated net of value added
tax and trade discounts.
1.4 Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation.
Depreciation is provided at rates to calculate the residual value of
each asset over its expected useful life, as follows:
Plant and equipment 6 to 7 years
Motor vehicles 2 to 5 years
1.5 Investments
Fixed asset investments are stated at cost less provision for
diminution in value.
1.6 Stocks
Stock is valued on first-in, first-out basis at the lower of cost and
net realizable value.
1.7 Pensions
The pension costs charged in the financial statements represent the
contributions payable by the company during the period in accordance
with Statements of Standard Accounting Practice 24.
1.8 Deferred Taxation
Transactions denominated in foreign currencies are translated at the
exchange rate on the transaction date. Balances denominated in foreign
currencies are translated at the balance sheet date.
1.9 Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are
translated into sterling at the rates of exchange ruling at balance
sheet date. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction. All differences are taken to
profit and loss account.
2 Turnover
The total turnover of the group for the period has been derived from
its principal activities. Export sales during the period were
(pound)778,787.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
(pound)
3 Operating profit
Operating profit is stated after charging:
Depreciation 181,111
Auditors' remuneration --
Profit and loss on disposal of tangible assets (2,185)
==============
4 Interest payable
On bank overdraft and other credit facilities 42,757
==============
5 Taxation
No provision for UK taxation for the period has been made in the
accounts.
6 Tangible fixed assets
<TABLE>
a) Group
<CAPTION>
Plant and Motor
equipment Vehicles Total
Cost (pound) (pound) (pound)
<S> <C> <C> <C>
At 1 January 2000 1,291,990 104,445 1,396,435
Additions 139,418 39,877 179,295
Disposals -- (12,003) (12,003)
------------- ----------- -------------
At 30th September 2000 1,431,408 132,319 1,563,727
============= =========== =============
Depreciation
At 1 January 2000 767,385 35,942 803,327
Charge for the period 149,479 31,632 181,111
Disposals -- (10,202) (10,202)
------------- ----------- -------------
At 30th September 2000 916,864 57,372 974,236
============= =========== =============
Net book value
At 30th September 2000 514,544 74,947 589,491
============= =========== =============
============= =========== =============
At 1st January 2000 524,605 68,503 593,108
============= =========== =============
b) Company
Cost at 1st January 2000 and 30th September 2000 (pound) 299,119
=============
The company holds 100% of the ordinary issued shares capital of UBSN Limited, a
company incorporated in England and Wales.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
7 Stocks
Finished goods and promotional material (pound) 97,221
=============
There is no material difference between the current replacement cost
and historical cost of stock.
8 Debtors
Group Company
Trade debtors 2,314,679 13,071
Prepayments and accrued income 2,304
------------ -----------
(pound) 2,316,983 (pound)13,071
============ ===========
Trade debtors include an amount of approximately (pound)250,000 due
from German Lager Importers Limited, which is now in Creditors
Voluntary Liquidation. The debt had been the subject of a legal action
and German Lager Importers Limited had made a counter claim for the
breech of contract. This counter claim was dismissed by the courts and
UBSN Limited, the subsidiary undertaking, obtained judgement for the
debt and full costs. In view of the subsequent voluntary liquidation a
full provision has been made for all the money due from German Lager
Importers Limited. All legal costs associated with these actions have
been provided for in the accounts. UBSN Limited is pursuing an action
to recover the debt through the liquidator of German Lager Importers
Limited.
9 Creditors: amounts falling due within one year.
Group Company
Bank overdrafts (600,936) --
Trade creditors (1,651,837) (4,318)
Corporation tax (29,022) (0)
Other taxes and social security costs -- --
Other creditors (27,078) (22,540)
Accruals and deferred Income (140,451) 0
------------ -----------
(pound)(2,449,325)(pound)(26,858)
============ ===========
The bank overdraft is secured by a fixed charge over the assets of the
group.
10 Pension costs
The group operates a defined contribution pension scheme. The assets of
the scheme are held separately from those of the group in an
independently administered fund.
11 Share Capital
Company
Authorised
500,000 Ordinary shares of(pound)1 each 500,000
===========
Allotted, called up and fully paid
100,000 Ordinary shares of (pound) 1 each 100,000
===========
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
<TABLE>
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
<CAPTION>
12 Statement of movement on profit and loss account Group Profit
and loss a/c:
-------------
<S> <C>
Balance at 1st January 2000 (pound) 246,878
Retained profit for the period 314,774
--------------
Balance at 30th September 2000 (pound) 561,652
==============
13 Reconciliations of movements in Shareholders' fund Group
Profit for the period to 30th September 2000 (pound) 314,774
Opening Shareholders' fund 346,878
--------------
Closing Shareholders' fund (pound) 661,652
==============
14 Contingent liabilities
a) The company acts as a surety for the obligations on leased premises
acquired by UB (Soyco) Limited, (a former subsidiary undertaking) for a
term of twenty years from 24th June 1990 at an annual rental of
(pound)61,500.
b) The company has issued a letter of comfort to the bankers of the
subsidiary undertaking in respect of a facility of (pound)1,500,000.
made available to the subsidiary undertaking. Within the letter of
comfort the company gave an undertaking to ensure the subsidiary would
be able to fulfill all of its undertakings to the bank including
business and financial obligations.
15 Employee
Number of employees
The average monthly number of employees (including directors) during
the period was:
Sales and marketing 11
Administration 7
==============
Wages and salaries (pound) 282,509
(including pension costs) 14,034
--------------
(pound) 296,543
==============
</TABLE>
16 Control
The group's ultimate parent company is Inversion Mirabele S.A., a
company incorporated in Panama.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
17 Related party transactions
<TABLE>
During the period to 30th September 2000, the group has had the following
transactions with related parties:
<CAPTION>
Related Party Transactions (pound)
<S> <C>
Shepherd Neame Limited Sales 734,066
Freight costs 244,878
Commissions payable 60,644
Purchases 3,924,716
UBSN Limited Royalties charge payable 7,186
American United Breweries Inc. Commissions/advertising payable 99,034
===========
At the balance sheet date, the following balances remained outstanding
with the related parties:
Shepherd Neame Limited owed by (pound) 241,238
owed to 1,555,404
Accruals --
United Breweries International (UK) Limited owed by 162,000
owed to 5,875
UB Ltd. Royalties payable 4,318
===========
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY
COMPANY DETAILED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
(pound) (pound)
Turnover
Sales and commission 7,196
Administration expenses
Wages and national insurance 244,014
Pension scheme contribution --
Sundry expenses 780
Royalties payable 4,612
--------
(249,406)
Other operating income
Costs reimbursed 244,014
--------
Operating profit 1,804
Interest payable
Bank interest paid (111)
--------
Profit before taxation (pound) 1,692
========
<PAGE>
Company Registration No. 1688201 (England and Wales)
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND
SUBSIDIARIES
DIRECTORS' REPORT AND GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 1999
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
COMPANY INFORMATION
Directors M.K. Nambiar
V.S. Kumar
G.M.K. Lodhi
Secretary G.M.K. Lodhi
Company number 1688201
Registered office 75 Westow Hill
Crystal Palace
London
SE19 1TX
Business address 77 Marlowes
Hemel Hampstead
HP1 1LF
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
CONTENTS
Page
Directors' report 1 - 2
Consolidated profit and loss account 3
Consolidated balance sheet 4
Consolidated cash flow statement 5
Notes to the consolidated cash flow statement 6
Company balance sheet 7
Notes to the financial statements 8 - 15
The following does not form part of the statutory financial
statements:
Company detailed trading and profit and loss account 16
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
The directors present their report and group financial statements for the year
ended 31 December 1999.
Principal activities and review of the business
The group's principal activities during the year continued to be those of
commission agents for the sale of beverages and marketing and distribution of
beer and wines.
The results for the year and the financial position at the year end were
considered satisfactory by the directors who expect continued growth in the
foreseeable future.
Results and dividends
The results for the year are set out on page 3.
The directors do not recommend payment of any dividends.
Fixed assets
The significant changes in fixed assets during the year are shown in the notes
to the financial statements.
Year 2000
The directors have identified the key risks to the company and has developed a
plan to minimize their impact. They have considered not only the company's own
systems but also those of its major suppliers and customers. Although no
organization can guarantee that no year 2000 problems will arise, they believe
that, having identified and removed the major risks to the company in accordance
with the plan they have developed, it will be possible to quickly resolve any
such problems as may arise without significant additional costs.
Directors' interests
<TABLE>
The directors who served during the year and their beneficial interests in the
shares of the company were as stated below:
<CAPTION>
Ordinary shares of (pound) 1 each
31 December 1999 1 January 1999
<S> <C> <C>
M K Nambiar -- --
V S Kumar -- --
G M K Lodhi -- --
K G James (Resigned 30 June 1999)
</TABLE>
--------------------------------------------------------------------------------
-1-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
Directors' responsibilities
Company law 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
company and of the profit or loss of the company for that period. In preparing
those financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
On behalf of the board
/s/ Gul Lodhi
---------------------------------------
Director
/s/ M.K. Nambiar
---------------------------------------
--------------------------------------------------------------------------------
-2-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
Notes (pound) (pound)
<S> <C> <C> <C>
Turnover 2 7,350,109 6,787,918
Cost of sales (4,813,017) (4,369,611)
---------- ----------
Gross profit 2,537,092 2,418,307
Distribution costs (1,554,503) (1,487,735)
Administrative expenses (648,855) (613,781)
---------- ----------
Operating profit 3 333,734 316,791
Provision for litigation costs (125,303) (89,099)
---------- ----------
Profit on ordinary activities before interest 208,431 227,692-
Profit on sale of fixed asset investment 4 21,637 --
Amounts written off investments 5 28,363 --
Interest payable and similar charges 6 (73,649) (85,489)
---------- ----------
Profit on ordinary activities before taxation 184,782 142,203
Tax on profit on ordinary activities 7 (63,072) (51,360)
---------- ----------
Profit on ordinary activities after taxation 15 121,710 90,843
========== ==========
</TABLE>
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
There are no recognised gains and losses other than those passing through the
profit and loss account.
--------------------------------------------------------------------------------
-3-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
Notes (pound) (pound) (pound) pound)
<S> <C> <C> <C> <C> <C>
Fixed assets
Tangible assets 8 593,108 607,438
Current assets
Stocks 10 63,074 111,420
Debtors 11 2,722,235 2,469,157
Cash at bank and in hand 33,845 154,381
---------- ----------
2,819,154 2,734,958
Creditors: amounts falling due within
one year 12 (3,065,384) (3,117,228)
---------- ----------
Net current liabilities (246,230) (382,270)
---------- ----------
Total assets less current liabilities 346,878 225,168
========== ==========
Capital and reserves
Called up share capital 14 100,000 100,000
Profit and loss account 15 246,878 125,168
---------- ----------
Shareholders' funds - equity interests 16 346,878 225,168
========== ==========
</TABLE>
--------------------------------------------------------------------------------
-4-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
(pound) (pound)
<S> <C> <C>
Net cash inflow/(outflow) from operating activities (10,113) (219,425)
Returns on investments and servicing of finance
Interest paid (73,649) (85,489)
-------- --------
Net cash outflow for returns on investments
and servicing of finance (73,649) (85,489)
Taxation (51,360) (77,475)
Capital expenditure and financial investment
Payments to acquire tangible assets (238,809) (264,397)
Payments to acquire investments -- (249,119)
Receipts from sales of tangible assets 22,065 --
Receipts from sales of investments 50,000 --
-------- --------
Net cash outflow for capital expenditure (166,744) (513,516)
-------- --------
Net cash outflow before management of liquid
resources and financing (301,866) (895,905)
-------- --------
Decrease in cash in the year (301,866) (895,905)
======== ========
</TABLE>
--------------------------------------------------------------------------------
-5-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Reconciliation of operating profit to net cash outflow from operating 1999 1998
activities
(pound) (pound)
<S> <C> <C>
Operating profit 333,734 316,791
Depreciation of tangible assets 235,315 175,173
Profit on disposal of tangible assets (4,241) --
Decrease/(Increase) in stocks 48,346 (67,150)
Increase in debtors (253,078) (546,455)
Decrease in creditors within one year (244,886) (8,685)
Provision for litigation costs (125,303) (89,099)
--------------- ---------------
Net cash outflow from operating activities (10,113) (219,425)
=============== ===============
2 Analysis of net debt 1 January 1999 Cash flow Other 31 December
non-cash 1999
changes
(pound) (pound) (pound) (pound)
Net cash:
Cash at bank and in hand 154,381 (120,536) -- 33,845
Bank overdrafts (1,062,613) (181,330) -- (1,243,943)
--------------- -------------- --------------- ---------------
Net debt (906,232) (301,866) -- (1,210,098)
=============== ============== =============== ===============
3 Reconciliation of net cash flow to movement in net debt 1999 1998
(pound) (pound)
Decrease in cash in the year (301,866) (895,905)
Cash inflow from increase in debt -- --
--------------- ---------------
Movement in net debt in the year (301,866) (895,905)
Opening net debt (908,232) (12,327)
--------------- ---------------
Closing net debt (1,210,098) (908,232)
=============== ===============
</TABLE>
--------------------------------------------------------------------------------
-6-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
Notes (pound) (pound) (pound) (pound)
<S> <C> <C> <C>
Fixed assets
Investments 9 299,119 299,119
Current assets
Debtors 11 14,787 67,298
Cash at bank and in hand 7,681 --
--------------- ---------------
22,468 67,298
Creditors: amounts falling due within
one year 12 (189,496) (296,275)
--------------- ---------------
Net current liabilities (167,028) (228,977)
-------------- ---------------
Total assets less current liabilities 132,091 70,142
============== ===============
Capital and reserves
Called up share capital 14 100,000 100,000
Profit and loss account 32,091 (29,858)
-------------- ---------------
Shareholders' funds - equity interests 132,091 70,142
============== ===============
</TABLE>
--------------------------------------------------------------------------------
-7-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
1 Accounting policies
1.1 Accounting convention
The financial statements are prepared under the historical cost
convention.
1.2 Compliance with accounting standards
The financial statements are prepared in accordance with applicable
accounting standards.
1.3 Turnover
Turnover represents amounts receivable for goods sold, services supplied
and commissions receivable and is stated net of value added tax and trade
discounts.
1.4 Tangible fixed assets and depreciation
Tangible fixed assets are stated at cost less depreciation. Depreciation
is provided at rates calculated to write off the cost less estimated
residual value of each asset over its expected useful life, as follows:
Plant and equipment 6 to 7 years
Motor vehicles 2 to 5 years
1.5 Investments
Fixed asset investments are stated at cost less provision for diminution
in value.
1.6 Stock
Stock is valued on first-in, first-out basis at the lower of cost and net
realizable value.
1.7 Pensions
The pension costs charged in the financial statements represent the
contributions payable by the company during the year in accordance with
Statements of Standard Accounting Practice 24.
1.8 Deferred Taxation
Deferred taxation is provided at appropriate rates on all timing
differences using the liability method only to the extent that, in the
opinion of the directors, there is a reasonable probability that a
liability or asset will crystallise in the foreseeable future.
1.9 Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are
translated into sterling at the rates of exchange ruling at the balance
sheet date. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction. All differences are taken to
profit and loss account.
2 Turnover
The total turnover of the group for the year has been derived from its
principal activities. Export sales during the period were (pound)999,437
(1998 - (pound)881,744).
3 Operating profit Group Group
1999 1998
(pound) (pound)
Operating profit is stated after charging:
Depreciation of tangible assets 235,315 175,173
Auditors' remuneration 19,000 19,407
Profit on disposal of tangible assets (4,241) --
========= ==========
--------------------------------------------------------------------------------
-8-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
Group Group
4 Investment income 1999 1998
(pound) (pound)
Profit on sale of fixed asset investments 21,637 --
======== ========
Group Group
5 Amounts written off investments 1999 1998
(pound) (pound)
Amounts written off investments in prior years written
back: - fixed assets investment 28,363 --
======== ========
Group Group
6 Interest payable 1999 1998
(pound) (pound)
On bank overdrafts and other credit facilities 73,649 85,489
======== ========
Group Group
7 Taxation 1999 1998
(pound) (pound)
U.K. current year taxation
U.K. corporation tax 63,072 51,360
======== ========
--------------------------------------------------------------------------------
-9-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
8 Tangible fixed assets
GROUP Plant and Motor Total
equipment vehicles
(pound) (pound) (pound)
Cost
At 1 January 1999 1,298,445 97,804 1,396,249
Additions 186,076 52,733 238,809
Disposals (192,531) (46,092) (238,623)
----------- ----------- ------------
At 31 December 1999 1,291,990 104,445 1,396,435
----------- ----------- ------------
Depreciation
At 1 January 1999 747,203 41,608 788,811
On disposals (192,531) (28,268) (220,799)
Charge for the year 212,713 22,602 235,315
----------- ----------- ------------
At 31 December 1999 767,385 35,942 803,327
----------- ----------- ------------
Net book value
At 31 December 1999 524,605 68,503 593,108
----------- ----------- ------------
At 31 December 1998 551,242 56,196 607,438
=========== =========== ============
--------------------------------------------------------------------------------
-10-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
9 Fixed asset investments
COMPANY Shares in
subsidiary
undertakings
(pound)
Cost
At 1 January 1999 327,482
Disposals (28,363)
---------------
At 31 December 1999 299,119
---------------
Provisions for diminution in value
At 1 January 1999 28,363
Charge for the year (28,363)
---------------
At 31 December 1999 --
---------------
Net book value
At 31 December 1999 299,119
===============
At 31 December 1998 --
===============
Holding of more than 20%
The company holds more than 20% of the share capital of the following
companies:
Shares held
Company Country of registration Class %
Subsidiary undertakings
UB (Soyco) Limited England and Wales Ordinary 98
UBSN Limited England and Wales Ordinary 100
The results of the subsidiary undertaking, UB (Soyco) Limited, are not
included in the group consolidated financial statements as there will be
disproportionate expenses incurred and delay in getting the information.
On 8 December 1999 the company disposed of its investment in UB (Soyco)
Limited.
10 Stocks
<TABLE>
<CAPTION>
Group Group Company Company
1999 1998 1999 1998
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
Finished goods and promotional material 63,074 111,420 -- --
=============== ============== =============== ===============
</TABLE>
There is no material difference between the current replacement cost and
historic cost of stock.
--------------------------------------------------------------------------------
-11-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
11 Debtors
<TABLE>
<CAPTION>
Group Group Company Company
1999 1998 1999 1998
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
Trade debtors 2,631,095 2,173,221 -- --
Amounts owed by subsidiary undertakings -- -- -- 5,875
Other debtors -- 91,403 -- 55,347
Prepayments and accrued income 91,140 204,533 14,787 6,076
--------------- -------------- --------------- ---------------
2,722,235 2,469,157 14,787 67,298
=============== ============== =============== ===============
</TABLE>
Trade debtors include an amount of approximately (pound)250,000 due from
German Lager Importers Limited which is now in Creditors Voluntary
Liquidation. The debt had been the subject of a legal action and German
Lager Importers Limited had made a counter claim for breech of contract.
This counter claim was dismissed by the courts and UBSN Limited, the
subsidiary undertaking, obtained judgement for the debt and full costs.
In view of the subsequent voluntary liquidation a full provision has been
made for all the money due from German Lager Importers Limited. All legal
costs associated with these actions have been provided for in the
accounts. The directors are pursuing an action to recover the debt
through the liquidator of German Lager Importers Limited.
<TABLE>
12 Creditors: amounts falling due within one year
<CAPTION>
Group Group Company Company
1999 1998 1999 1998
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
Bank overdrafts 1,243,943 1,062,613 -- 7,633
Trade creditors 1,414,454 1,292,923 -- --
Amounts owed to subsidiary undertakings -- -- 156,125 --
Corporation tax 69,094 57,382 72 1,391
Other taxes and social security costs 35,395 40,910 11,764 11,907
Other creditors 16,035 221,595 16,035 221,595
Accruals and deferred income 286,463 441,805 5,500 53,749
--------------- -------------- --------------- ---------------
3,065,384 3,117,228 189,496 296,275
=============== ============== =============== ===============
</TABLE>
The bank overdrafts are secured by a fixed and floating charge over the
assets of the group.
13 Pension costs
The group operates a defined contribution pension scheme. The assets of
the scheme are held separately from those of the group in an
independently administered fund. The pension cost charge represents
contributions payable by the group to the fund and amounted to
(pound)9,786 (1988 - (pound)11,818).
--------------------------------------------------------------------------------
-12-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
14 Share capital
<CAPTION>
Company Company
1999 1998
(pound) (pound)
<S> <C> <C>
Authorised
500,000 Ordinary shares of (pound)1 each 500,000 500,000
=============== ===============
Allotted, called up and fully paid
100,000 Ordinary shares of (pound)1 each 100,000 100,000
=============== ===============
15 Statement of movements on profit and loss account
Group
Profit and
loss account
(pound)
Balance at 1 January 1999 125,168
Retained profit for the year 121,710
---------------
Balance at 31 December 1999 246,878
===============
16 Reconciliation of movements in shareholders' funds Group Group
1999 1998
(pound) (pound)
Profit for the financial year 121,710 90,843
Opening shareholders' funds 225,168 134,325
--------------- ---------------
Closing shareholders' funds 346,878 225,168
=============== ===============
</TABLE>
17 Contingent liabilities
Company
a) The company acts as a surety for the obligations on a lease of
premises acquired by UB (Soyco) Limited (a former subsidiary undertaking)
for a term of twenty years from 24 June 1990 at an annual rental of
(pound)61,500.
b) The company has issued a letter of comfort to the bankers of a
subsidiary undertaking in respect of a facility of (pound)1,500,000 made
available to this subsidiary undertaking. Within the letter of comfort
the company gave an undertaking to ensure the subsidiary would be able to
fulfill all of its undertakings to the bank including business and
financial obligations.
18 Deferred taxation
The full potential liability for 1999 is (pound)12,000 (1998 -
(pound)35,000) in respect of capital allowance carried forward which has
not been provided in the accounts.
--------------------------------------------------------------------------------
-13-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
19 Employees
Number of employees
The average monthly number of employees (including directors) during the
year was:
1999 1998
Number Number
Sales and marketing 15 15
=============== ===============
Employment costs
(pound) (pound)
Wages and salaries 255,946 257,339
Other pension costs 9,786 11,818
--------------- ---------------
265,732 269,157
=============== ===============
20 Litigation
During 1998 a claim for (pound)500,000 was made jointly against the
subsidiary undertaking, UBSN Limited, and two other defendants relating
to a breech of an alleged sponsorship contract. The action was settled
during the year.
21 Control
The directors consider the group's ultimate parent company to be
Inversion Mirabele S.A., a company incorporated in Panama.
--------------------------------------------------------------------------------
-14-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
22 Related party transactions
<TABLE>
During the year the group has had the following transactions with its
related parties:
<CAPTION>
1999 1998
Related party Transactions (pound) (pound)
<S> <C> <C>
Shepherd Neame Limited Sales 699,493 636,100
Freight costs 240,590 265,830
Commission payable 63,227 49,092
Purchases 4,625,586 4,076,419
UBSN Limited Management fees received -- 48,000
Royalty income 8,711 6,067
UB International Limited Management charge payable 103,547 66,666
UB Global Corporation Limited Purchases 96,009 296,449
American United Breweries Inc. Commission/Advertising payable 125,492 173,276
---------------- ------------------
At the balance sheet date, the following balances remained outstanding
with the related parties:
1999 1998
(pound) (pound)
Shepherd Neame Limited Owed by 652,672 478,889
Owed to 1,246,978 1,148,494
Accruals 159,212 292,631
UB International Limited Management charge payable 103,547 66,666
American United Breweries Inc. Accruals 38,386 29,739
UB Global Corporation Limited Owed to 64,023 6,944
---------------- ------------------
</TABLE>
--------------------------------------------------------------------------------
-15-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
COMPANY DETAILED TRADING AND PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
(pound) (pound) (pound) (pound)
<S> <C> <C>
Turnover
Sales and commissions 20,881 38,848
Administrative expenses
Wages and national insurance 255,946 257,339
Pension scheme contributions 9,786 11,818
Management fees payable -- 75,000
Traveling and hotel accommodation -- 211
Legal and professional fees 150 --
Accountancy fees -- 600
Audit fees 2,500 2,400
Bank charges 116 460
General expenses 15 335
Royalty payable 5,227 3,646
--------------- ---------------
(273,740) (351,809)
Other operating income
Management fees receivable -- 48,000
Costs reimbursed 265,732 269,158
--------------- ---------------
265,732 317,158
-------------- ---------------
Operating profit 12,873 4,197
Profit on sale of fixed asset investments 21,637 --
Amounts written back on investments 28,383
Interest payable
Bank interest paid (852) (908)
-------------- ---------------
Profit before taxation 62,021 3,289
============== ===============
</TABLE>
--------------------------------------------------------------------------------
-16-
<PAGE>
U B S N LIMITED
NO 2367133
REPORT & ACCOUNTS
31 DECEMBER 1999
<PAGE>
UBSN LIMITED
Directors
V Mallya
B Dozey
D Townshend
D Anand
K Ganguly
Secretary
G. Lodhi
Auditors
Ernst & Young
Rolls House
7 Rolls Building
Fetter Lane
London
EC4A 1NH
Main Bankers
Nedcor Bank Ltd
Nedbank House
20 Abchurch Lane
London
EC4N 7AD
Solicitors
Travers Smith Braithwaite
10 Snow Hill
LONDON
EC1A 2AL
Registered Office
75 Westow Hill
Crystal Palace
London
SE19 1TX
2
<PAGE>
UBSN Limited
DIRECTORS' REPORT
The directors have pleasure in presenting their report and accounts for the year
ended 31 December 1999.
RESULTS AND DIVIDENDS
In the year the company made a profit of (pound)59,761 (1998 - (pound)87,547).
The directors do not recommend the payment of a dividend.
PRINCIPAL ACTIVITIES AND REVIEW OF THE BUSINESS
The principal activity of the company is the marketing and distribution of beer
and wines.
With the continued growth in the sales of Kingfisher Lager it is anticipated
results will improve in coming years.
DIRECTORS AND THEIR INTERESTS
The directors of the company during the year from 1 January 1999 to 31 December
1999 were those listed on page 2.
None of the directors held an interest in the company's shares at 31 December
1999, or at any time during the year.
FIXED ASSETS
The changes in fixed assets are disclosed in note 9.
By order of the board.
/s/ G Lodhi
---------------------------
Secretary
G Lodhi
3
<PAGE>
UBSN Limited
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS
Company law requires the directors to prepare accounts for each financial year
which give a true and fair view of the state of affairs of the company and of
the profit or loss of the company for that period. In preparing those accounts,
the directors are required to:
o Select suitable accounting policies and then apply them consistently;
o Make judgements and estimates that are reasonable and prudent; and
o Prepare the accounts on the going concern basis unless it is inappropriate
to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the accounts comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
4
<PAGE>
UBSN Limited
REPORT OF THE AUDITORS
To the members of UBSN Limited
We have audited the accounts on pages 6 to 15, which have been prepared under
the historical cost convention and on the basis of accounting policies set out
on page 9.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 4 the company's directors are responsible for the
preparation of the accounts in accordance with applicable United Kingdom law
and, accounting standards. It is our responsibility to form an independent
opinion, based on our audit, on those accounts and to report our opinion to you.
Our responsibilities, as independent auditors, are established in the United
Kingdom by Statute, the auditing Practices Board and by our profession's ethical
guidance.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includes an assessment of the significant estimates and judgements made by the
directors in the preparation of the accounts, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the accounts.
OPINION
In our opinion the accounts give a true and fair view of the state of affairs of
the company as at 31 December 1999 and of its profit for the year then ended and
have been properly prepared in accordance with the Companies Act 1985.
Ernst & Young
Registered Auditor
London
5
<PAGE>
UBSN Limited
<TABLE>
<CAPTION>
PROFIT AND LOSS ACCOUNT
Year ended 31 December 1999
1999 1998
Notes (pound) (pound)
----- ----------- -----------
<S> <C> <C> <C>
Turnover 3 7,337,939 6,755,146
Cost of sales (4,813,017) (4,369,611)
----------- -----------
Gross profit 2,524,922 2,385,535
Distribution and selling costs (1,554,503) (1,487,735)
Administrative expenses (649,558) (585,213)
----------- -----------
Operating profit 4 320,861 312,587
Costs relating to litigation 13/14 (125,303) (89,099)
Interest payable & similar charges 7 (72,797) (84,581)
----------- -----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 122,761 138,907
Tax on profit on ordinary activities 8 (63,000) (51,360)
----------- -----------
RETAINED PROFIT FOR THE YEAR 17 59,761 87,547
=========== ===========
</TABLE>
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Year ended 31 December 1999
There are no recognised gains or losses other than the profit attributable to
shareholders of the company of (pound)59,761 in the year ended 31 December 1999
and of (pound)87,547 in the year ended 31 December 1998.
6
<PAGE>
UBSN Limited
<TABLE>
<CAPTION>
BALANCE SHEET
31 December 1999
1999 1998
Notes (pound) (pound)
----- ----------- -----------
<S> <C> <C> <C>
FIXED ASSETS 9 593,108 607,438
----------- -----------
CURRENT ASSETS
Stocks 10 63,074 111,420
Debtors 11 2,883,363 2,407,734
Cash at bank and in hand 26,164 154,381
----------- -----------
2,972,601 2,673,535
CREDITORS: amounts falling due within one year 12 (3,051,803) (2,826,828)
----------- -----------
NET CURRENT LIABILITIES (79,202) (153,293)
----------- -----------
NET ASSETS 513,906 454,145
=========== ===========
CAPITAL AND RESERVES
Called up share capital 16 100,000 100,000
Profit and loss account 17 413,906 354,145
----------- -----------
Equity shareholder's funds 513,906 454,145
=========== ===========
</TABLE>
These financial statements were approved by the Board of Directors on 18 April
2000 and were signed on its behalf by:
/s/ D Townshend
-----------------------
D Townshend
Director
/s/ B Dozey
-----------------------
B Dozey
Director
7
<PAGE>
UBSN Limited
Statement of Cash Flow
1999 1998
----------- ---------
Net Cash Inflow/(Outflow) from Operating Activities 23,721 (460,744)
Servicing of Finance (Interest Paid) (72,797) (84,581)
Taxation - Corporation Tax Paid (51,360) (77,475)
Capital Expenditure
Payment to acquire tangible Fixed Assets (238,809) (264,397)
Proceeds from Sale of tangible Fixed Assets 22,065 0
----------- ---------
(Decrease) in Cash in the period (317,180) (887,197)
=========== =========
Reconciliation of Operating Profit to Net Cash
Inflow/Outflow from Operating Activities
1999 1998
Operating Profit 320,861 312,587
Costs relating to Litigation (125,303) (89,099)
Depreciation 235,315 175,173
(Profit) on Sale of Fixed Assets (4,241) 0
Decrease in Debtors (475,629) (580,585)
Decrease/(Increase) in Stocks 48,346 (67,150)
Increase/(Decrease) in Creditors 24,372 (211,670)
----------- ---------
Net Cash Inflow/(Outflow) from Operating Activities 23,721 (460,744)
=========== =========
Analysis of Net Debt
1999 1998
Bank Balance/(Overdraft)
At 1st January (900,599) (13,402)
Net Cash Inflow/(Outflow) (317,180) (887,197)
----------- ---------
At 31st December (1,217,779) (900,599)
=========== =========
8
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1999
1. ACCOUNTING POLICIES
Accounting convention
The accounts are prepared under the historical cost convention and
in accordance with applicable accounting standards.
Stocks
Stocks are valued on a first-in, first-out basis at the lower of
cost and net realisable value.
Depreciation
Depreciation is provided on all fixed assets at rates calculated to
write off the cost of each asset evenly over its expected useful
life as follows:
Plant and equipment -- 6 to 7 years
Motor vehicles -- 2 to 5 years
Foreign currency
Transactions denominated in foreign currencies are translated at the
exchange rate on the transaction date. Balances denominated in
foreign currencies are translated at the exchange rate at the
balance sheet date.
Deferred taxation
Provision is made for deferred taxation using the liability method
on timing differences to the extent that it is probable that the
liability will crystallise.
Pensions
The company does not operate a pension scheme.
2. OWNERSHIP
The comnpany is owned by United Breweries International (UK)
Limited.
Under an exclusive licence granted from United Breweries Limited of
India, the company holds the right to brew, market, develop and sell
Kingfisher Lager. The company, in turn, has granted a sub-licence to
Shepherd Neame Limited for the brewing of Kingfisher.
9
<PAGE>
UBSN Limited
NOTES TO TEE ACCOUNTS
31 December 1999
3. TURNOVER
Turnover comprises sales excluding value added tax. Export sales during the year
were (pound)999,437 (1998 - (pound)881,744).
4. OPERATING PROFIT
This is stated after charging:
1999 1998
(pound) (pound)
Depreciation 235,315 175,173
Auditors' remuneration: Audit services 16,500 17,007
Non-audit services 4,740 8,000
Exchange differences (4,652) 2,032
-------- -------
5. DIRECTORS' EMOLUMENTS
1999 1998
(pound) (pound)
Other Emoluments 100,000 88,800
-------- -------
Emoluments excluding pension contributions of the Chairman were nil (1998 --
nil), and of the highest paid Director were (pound)47,800 (1998 - (pound)45,500)
which included pension contributions of (pound)3,180 (1998 - (pound)3,100).
6. STAFF COSTS
The company had no employees during the year ended 31 Decembcr 1999 (1998--
nil).
10
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1999
7. INTEREST PAYABLE
1999 1998
(pound) (pound)
Bank overdrafts and other credit facilities 72,797 84,581
======= =======
8. TAX ON PROFIT ON ORDINARY ACTIVITIES
1999 1998
UK Corporation tax 63,000 51,360
======= =======
<TABLE>
The corporation tax charge on the profits for 1998 has been reduced
by tax losses brought forward. The main reason for the tax charge
exceeding the standard rate corporation rate of 30% is that
depreciation charges have exceeded taxation capital allowances.
<CAPTION>
9. FIXED ASSETS
Plant and Motor
Equipment Vehicles Total
---------- -------- ---------
(pound) (pound) (pound)
<S> <C> <C> <C>
Cost:
At 1 January 1999 1,298,445 97,804 1,396,249
Additions 186,076 52,733 238,809
Disposals (192,531) (46,092) (238,623)
---------- ------- ----------
At 31 December 1999 1,291,990 104,445 1,396,435
---------- ------- ----------
Depreciation:
At 1 January 1999 747,203 41,608 788,811
Charge for the year 212,713 22,602 235,315
Disposals (192,531) (28,268) (220,799)
---------- ------- ----------
At 31 December 1999 767,385 35,942 803,327
---------- ------- ----------
Net book value:
At 31 December 1999 524,605 68,503 593,108
---------- ------- ----------
At 1 January 1999 551,242 56,196 607,438
========== ======= ==========
</TABLE>
11
<PAGE>
UBSN Limited
<TABLE>
NOTES TO THE ACCOUNTS
31 December 1999
<CAPTION>
10. STOCKS
1999 1998
(pound) (pound)
Finished goods and promotional materials 63,074 111,420
========= =========
<S> <C> <C>
There is no material difference between the
current replacement cost and historical cost
of stock
11. DEBTORS
1999 1998
(pound) (pound)
Trade debtors:
Amounts owed by Shepherd Neame Limited 583,469 383,979
Other 2,047,626 1,789,242
Other debtors 0 36,056
Prepayments 21,065 0
Prepayments and accrued income in respect of related parties
Amounts owed by Shepherd Neame Limited 69,203 94,910
UB International Ltd 0 103,547
Loans
United Breweries International (UK) Ltd 162,000 0
--------- ---------
2,883,363 2,407,734
========= =========
12. CREDITORS: amounts falling due within one year
1999 1998
(pound) (pound)
Bank overdraft (Secured - see Note 18) 1,243,943 1,054,980
Trade creditors
Amounts owed to Shepherd Neame Limited 1,246,978 1,148,494
UB Global Corporation Limited 64,023 6,994
Others 103,453 137,435
Corporation tax payable 69,022 57,382
VAT Payable 23,631 27,612
Accruals
Amounts owed to Shepherd Neame Limited 159,212 292,631
Amnemican United Breweries Inc 38,386 29,739
United Breweries International (UK) Ltd 19,790 0
Other 83,365 71,561
--------- ---------
3,051,803 2,826,828
</TABLE>
12
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1999
13. DISPUTE WITH MAJOR DISTRIBUTOR
Trade debtors include an amount of approximately (pound)250,000 due
from German Lager Importers Ltd which is now in Creditors Voluntary
liquidation. This debt had been the subject of a legal action and
German Lager Importers Ltd had made a counter claim for breach of
contract. This counter claim was dismissed by the courts and UBSN
Ltd obtained judgenment for the debt and full costs. In view of the
subsequent voluntary liquidation a full provision has been made for
all money due from German Lager Importers. All legal costs
associated with these actions have been provided for in the
accounts. The Directors are pursuing an action to recover the debt
through the liquidator of German Lager Importers Ltd.
14. LITIGATION
During 1998 a claim for (pound)500,000 was made jointly against the
company and two other defendants relating to a breach of an alleged
sponsorship contract. The action was settled during the year.
15. DEFERRED TAXATION
The full potential liability for 1999 is (pound)12,000 (1998 -
(pound)35,000) in respect of capital allowance carried forward which
has not been provided in the accounts.
<TABLE>
16. SHARE CAPITAL
<CAPTION>
Authorised Allotted, called up
And issued and partly paid
1999 1998 1999 1998
No No (pound) (pound)
<S> <C> <C> <C> <C>
125,000 "A" shares of (pound)1 each 125,000 125,000 50,000 50,000
125,000 "B" shares of (pound)1 each 125,000 125,000 50,000 50,000
------- ------- ------ ------
250,000 250,000 100,000 100,000
======= ======= ======= =======
</TABLE>
13
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1999
17. RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENTS ON RESERVES
Profit
Share and loss
Capital account Total
(pound) (pound) (pound)
As at 1 January 1998 100,000 266,591 366,591
Profit for the year - 87,554 87,554
------- ------- -------
As at 31 December 1998 100,000 354,145 454,145
Profit for the year - 59,761 59,761
------- ------- -------
As at 31 December 1999 100,000 413,906 513,906
======= ======= =======
18. BANK OVERDRAFT
The bank overdraft is secured by a fixed and floating charge over
the assets of the company.
19. PARENT UNDERTAKING AND CONTROLLING PARTY
The company's immediate parent undertaking is United Breweries
International (UK) Limited and the ultimate parent company is
Inversion Mirabela S.A. incorporated in Panama.
For the period under review Shepherd Neame Limited remains a related
party as envisaged by FRS 8 on the basis of shared business
interests.
14
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1999
20. TRANSACTIONS WITH RELATED PARTIES
<TABLE>
During the year the company has had the following transactions with its related parties.
<CAPTION>
1999 1998
(pound) (pound)
<S> <C> <C>
Shepherd Neame Limited.
Sales 699,493 636,100
Freight Costs 240,590 265,830
Commission Payable 63,227 49,092
Purchases 4,625,586 4,076,419
United Breweries International (UK) Limited.
(Parent Company registered in the UK)
Management Charge Payable 0 48,000
Loans made by UBSN Ltd 162,000 0
Royalties Payable 14,970 0
Consultancy Fee Payable 5,000 0
UB International Ltd.
(Company registered in the UK)
Management Charge Payable 103,547 66,666
UB Global Corporation Ltd.
(Subsidiary of United Breweries of India,
registered in India)
Purchases 96,009 296,449
American United Breweries Inc
(Registered in the USA)
Commission/Advertising payable 125,492 173,276
As a result of the trading and other activities with related parties,
the following balances remained outstanding as at 31 December 1999
1999 1998
(pound) (pound)
Amount owed by United Breweries International (UK) Ltd 162,000 0
Amounts owed by Shepherd Neame Limited 652,672 478,889
Amounts owed to Shepherd Neame Limited 1,246,978 1,148,494
Amounts owed to UB Global Corportation Ltd 64,023 6,944
Accruals - Shepherd Neame Limited 159,212 292,631
American United Brewers Inc 38,386 29,739
United Breweries International (UK) Ltd 19,790 0
</TABLE>
15
<PAGE>
THE FOLLOWING STATEMENTS DO NOT FORM
PART OF THE AUDITED STATUTORY ACCOUNTS
<PAGE>
UBSN Limited
DETAILED PROFIT AND LOSS ACCOUNT
Year ended 31 December 1999
1999 1998
(pound) (pound)
GROSS PROFIT
Sales 7,337,939 6,755,146
Cost of sales (4,813,017) (4,369,611)
---------- ----------
Gross profit 2,524,922 2,385,535
---------- ----------
DISTRIBUTION AND SELLING EXPENSES
Freight 329,185 352,277
Advertising and promotional expenses 497,093 514,543
Sales commission 141,228 119,592
Dispense equipment repairs 152,073 120,087
Operational expenses 207,385 183,862
Sponsorship 127,049 88,902
Other distribution and selling 100,490 108,472
---------- ----------
1,554,503 1,487,735
---------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES
Management fees 103,547 114,666
Audit and taxation fees 25,047 25,007
Postage and stationery 3,845 2,842
Bad debt provision 47,634 64,400
Depreciation/Profit on asset disposal 231,074 175,173
Exchange differences (4,652) 2,032
Operational expenses 187,497 167,531
Royalties payable/receivable 5,330 6,076
Miscellaneous 50,236 27,486
---------- ----------
649,558 585,213
---------- ----------
FINANCE COSTS
Bank interest and charges 72,797 84,581
---------- ----------
72,797 84,581
---------- ----------
EXCEPTIONAL ITEMS
Litigation costs 125,303 89,099
---------- ----------
Profit on ordinary activities before tax 122,761 138,907
========== ==========
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 1999
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
COMPANY INFORMATION
--------------------------------------------------------------------------------
Directors M K Nambiar
V S Kumar
G M K Lodhi
Secretary G M K Lodhi
Company number 1688201
Registered office 75 Westow Hill
Crystal Palace
London
SE19 1TX
Auditors J.M. Shah and Company
Chartered Accountants
24 Old Bond Street
London
W1X 4JE
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
CONTENTS
Page
Directors' report 1 - 2
Auditors' report 3
Profit and loss account 4
Balance sheet 5
Cash flow statement 6
Notes to the cash flow statement 7
Notes to the financial statements 8 - 13
---------------------------------
The following does not form part of the
statutory financial statements:
Detailed trading and profit and loss account 14
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
The directors present their report and financial statements for the year ended
31 December 1999.
Principal activities and review of the business
The principal activity of the company during the year continued to be that of
commission agents for the sale of beverages.
The results for the year and the financial position at the year end were
considered satisfactory by the directors who expect continued growth in the
foreseeable future.
Results and dividends
The results for the year are set out on page 4.
The directors do not recommend payment of dividends.
Fixed assets
Details relating to fixed assets are shown in the notes to the financial
statements.
Year 2000
The directors have considered whether the company's operations could be
adversely affected by malfunctions in computer or other equipment arising from
errors in processing dates in the year 2000 and beyond.
No part of the company's current operations are critically dependent on computer
or other equipment which could be affected by year 2000 problems.
Directors' interests
The directors who served during the year and their beneficial interests in the
shares of the company were as stated below:
Ordinary shares of (pound) 1 each
31 December 1999 1 January 1999
M K Nambiar -- --
V S Kumar -- --
G M K Lodhi -- --
K G James (Resigned 30 June 1999)
Auditors
The company has by elective resolution dispensed with the obligation to appoint
auditors annually in accordance with section 386(1) of the Companies Act 1985.
Therefore, the auditors, J.M. Shah and Company, will be deemed to be reappointed
for each succeeding financial year.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
Directors' responsibilities
Company law 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
company and of the profit or loss of the company for that period. In preparing
those financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
This report has been prepared in accordance with the special provisions of Part
VII of the Companies Act 1985 relating to medium-sized companies.
By order of the board
G M K Lodhi
Director
20 April 2000
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
AUDITORS' REPORT
TO THE SHAREHOLDERS OF UNITED BREWERIES INTERNATIONAL (UK) LIMITED
--------------------------------------------------------------------------------
We have audited the financial statements on pages 4 to 13 which have been
prepared under the historical cost convention and the accounting policies set
out on page 8.
Respective responsibilities of directors and auditors
As described on page 2 the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 31 December 1999 and of its profit for the year
then ended and have been properly prepared in accordance with the Companies Act
1985.
/s/ J.M. Shah & Co.
-----------------------
J. M. Shah and Company
Chartered Accountants
and Registered Auditors
24 Old Bond Street
London
W1X 4JE 20 April 2000
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
Notes (pound) (pound)
<S> <C> <C> <C>
Turnover 2 20,881 38,848
Administrative expenses (273,740) (351,809)
Other operating income 265,732 317,158
--------------------- --------------------
Operating profit 3 12,873 4,197
Profit on sale of fixed asset investment 21,637 --
--------------------- --------------------
Profit on ordinary activities before interest 34,510 4,197
Amounts written off investments 4 28,363 --
Interest payable and similar charges 5 (852) (908)
--------------------- --------------------
Profit on ordinary activities before taxation 62,021 3,289
Tax on profit on ordinary activities 6 (72) --
--------------------- --------------------
Profit on ordinary activities after taxation 12 61,949 3,289
===================== ====================
</TABLE>
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
There are no recognised gains and losses other than those passing through the
profit and loss account.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
Notes (pound) (pound) (pound) (pound)
<S> <C> <C> <C>
Fixed assets
Investments 7 299,119 299,119
Current assets
Debtors 8 14,787 67,298
Cash at bank and in hand 7,681 --
--------------- ---------------
22,468 67,298
Creditors: amounts falling due within
one year 9 (189,496) (296,275)
--------------- ---------------
Net current liabilities (167,028) (228,977)
-------------- ---------------
Total assets less current liabilities 132,091 70,142
============== ===============
Capital and reserves
Called up share capital 11 100,000 100,000
Profit and loss account 12 32,091 (29,858)
-------------- ---------------
Shareholders' funds - equity interests 13 132,091 70,142
============== ===============
</TABLE>
This report has been prepared in accordance with the special provisions of Part
VII of the Companies Act 1985 relating to medium-sized companies.
The financial statements were approved by the Board on 20 April 2000.
M K Nambiar G M K Lodhi
Director Director
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
(pound) (pound)
<S> <C> <C>
Net cash inflow/(outflow) from operating activities (32,443) 258,488
Returns on investments and servicing of finance
Interest paid (852) (908)
--------------- ---------------
Net cash outflow from returns on investments
and servicing of finance (852) (908)
Taxation (1,391) (17,170)
Acquisitions and disposals
Purchase of subsidiary undertakings -- (249,118)
Sale of subsidiary undertakings 50,000 --
--------------- ---------------
Net cash inflow/(outflow) for acquisitions and
disposals 50,000 (249,118)
-------------- ---------------
Increase/(decrease) in cash in the year 15,314 (8,708)
============== ===============
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Reconciliation of operating profit to net cash (outflow)/inflow from 1999 1998
operating activities
(pound) (pound)
<S> <C> <C>
Operating profit 12,873 4,197
Decrease in debtors 52,511 28,255
(Decrease)/Increase in creditors within one year (97,827) 226,036
--------------- ---------------
Net cash (outflow)/inflow from operating activities (32,443) 258,488
=============== ===============
2 Analysis of net funds/(debt) 1 January 1999 Cash flow Other 31 December
non-cash 1999
changes
(pound) (pound) (pound) (pound)
Net cash:
Cash at bank and in hand -- 7,681 -- 7,681
Bank overdrafts (7,633) 7,633 -- --
--------------- -------------- --------------- ---------------
Net (debt)/funds (7,633) 15,314 -- 7,681
=============== ============== =============== ===============
3 Reconciliation of net cash flow to movement in net funds/(debt) 1999 1998
(pound) (pound)
Increase/(decrease) in cash in the year 15,314 (8,708)
Cash inflow from increase in debt -- --
--------------- ---------------
Movement in net funds/(debt) in the year 15,314 (8,708)
Opening net (debt)/funds (7,633) 1,075
--------------- ---------------
Closing net funds/(debt) 7,681 (7,633)
=============== ===============
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
1 Accounting policies
1.1 Accounting convention
The financial statements are prepared under the historical cost
convention.
1.2 Turnover
Turnover represents amounts receivable by the company for goods sold,
services supplied and commissions receivable and is stated net of value
added tax.
1.3 Investments
Fixed asset investments are stated at cost less provision for diminution
in value.
1.4 Pensions
The pension costs charged in the financial statements represent the
contributions payable by the company during the year in accordance with
Statement of Standard Accounting Practice 24.
1.5 Deferred Taxation
Deferred taxation is provided at appropriate rates on all timing
differences using the liability method only to the extent that, in the
opinion of the directors, there is a reasonable probability that a
liability or asset will crystallise in the foreseeable future.
1.6 Group accounts
The financial statements present information about the company as an
individual undertaking and not about its group. The company and its
subsidiary undertaking comprise a medium-sized group. The company has
therefore taken advantage of the exemptions provided by section 248 of
the Companies Act 1985 not to prepare group financial statements.
2 Turnover
The total turnover of the company for the year has been derived from its
principal activity wholly undertaken in the United Kingdom.
<TABLE>
3 Operating profit
<CAPTION>
1999 1998
(pound) (pound)
<S> <C> <C>
Operating profit is stated after charging:
Auditors' remuneration 2,500 2,400
=================== ==================
4 Amounts written off investments 1999 1998
(pound) (pound)
Amounts written off investments in prior years written back:
- fixed assets (28,363) --
=================== ==================
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
5 Interest payable 1999 1998
(pound) (pound)
On bank loans and overdrafts 852 908
======================= ====================
6 Taxation 1999 1998
(pound) (pound)
U.K. current year taxation
U.K. corporation tax at 20% (1998 - 21%) 72 --
======================= ====================
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
7 Fixed asset investments
Shares in
group
undertakings
and
participating
interests
(pound)
Cost
At 1 January 1999 327,482
Disposals (28,363)
--------------
At 31 December 1999 299,119
--------------
Provisions for diminution in value
At 1 January 1999 28,363
On disposals (28,363)
--------------
At 31 December 1999 --
--------------
Net book value
At 31 December 1999 299,119
==============
At 31 December 1998 299,119
==============
Holdings of more than 20%
The company holds more than 20% of the share capital of the following
companies:
Shares held
Company Country of registration or Class %
Incorporation
Subsidiary undertakings
UBSN Limited England and Wales Ordinary 100
The aggregate amount of capital and reserves and the results of these
undertakings for the last relevant financial year were as follows:
Capital and Profit for
reserves the year
UBSN Limited 513,906 59,761
=============== ===============
On 8 December 1999 the company disposed of its investment in UB (Soyco)
Limited.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
8 Debtors 1999 1998
(pound) (pound)
<S> <C> <C>
Amounts owed by subsidiary undertakings -- 5,875
Other debtors -- 55,347
Prepayments and accrued income 14,787 6,076
--------------- ---------------
14,787 67,298
=============== ===============
9 Creditors: amounts falling due within one year 1999 1998
(pound) (pound)
Bank loans and overdrafts -- 7,633
Amounts owed to subsidiary undertakings 156,125 --
Corporation tax 72 1,391
Other taxes and social security costs 11,764 11,907
Other creditors 16,035 221,595
Accruals and deferred income 5,500 53,749
--------------- ---------------
189,496 296,275
=============== ===============
10 Pension costs
The company operates a defined contribution pension scheme. The assets of
the scheme are held separately from those of the company in an
independently administered fund. The pension cost charge represents
contributions payable by the company to the fund and amounted to
(pound)9,786 (1998 - (pound)11,818).
11 Share capital 1999 1998
(pound) (pound)
Authorised
500,000 Ordinary shares of(pound)1 each 500,000 500,000
=============== ===============
Allotted, called up and fully paid
100,000 Ordinary shares of(pound)1 each 100,000 100,000
=============== ===============
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
12 Statement of movements on profit and loss account
<CAPTION>
Profit and
loss account
(pound)
<S> <C> <C>
Balance at 1 January 1999 (29,858)
Retained profit for the year 61,949
---------------
Balance at 31 December 1999 32,091
===============
13 Reconciliation of movements in shareholders' funds 1999 1998
(pound) (pound)
Profit for the financial year 61,949 3,289
Opening shareholders' funds 70,142 66,853
--------------- ---------------
Closing shareholders' funds 132,091 70,142
=============== ===============
</TABLE>
14 Contingent liabilities
a) The company acts as a surety for the obligations on a lease of
premises acquired by UB (Soyco) Limited (a former subsidiary undertaking)
for a term of twenty years from 24th June 1990 at an annual rental of
(pound)61,500.
b) The company has issued a letter of comfort to the bankers of a
subsidiary undertaking in respect of a facility of (pound)1,500,000 made
available to this subsidiary undertaking. Within the letter of comfort
the company gave an undertaking to ensure the subsidiary would be able to
fulfill all of its undertakings to the bank including business and
financial obligations.
15 Transactions with the directors
During the year, the company was charged management fees of (pound)Nil
(1998 - (pound)75,000) by UB Group (UK) Limited. The directors of United
Breweries International (UK) Limited are also directors of UB Group (UK)
Limited.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
16 Employees
Number of employees
<TABLE>
The average monthly number of employees (including directors) during the
year was:
<CAPTION>
1999 1998
Number Number
<S> <C> <C>
Sales and marketing 10 10
=============== ===============
Employment costs
(pound) (pound)
Wages and salaries 255,946 257,339
Other pension costs 9,786 11,818
--------------- ---------------
265,732 269,157
=============== ===============
17 Ultimate parent undertaking and control
The directors consider the company's ultimate parent undertaking to be
Inversion Mirabele S.A., a company incorporated in Panama.
18 Related party transactions
During the year the company received management fees of (pound)Nil (1998
- (pound)48,000) and also received royalty income of (pound)8,711 (1998 -
(pound)6,067) from its subsidiary undertaking UBSN Limited.
At the balance sheet date, the following amounts were owed by/(to)
related parties:
1999 1998
(pound) (pound)
UBSN Limited (subsidiary undertaking) (156,125) 5,875
=============== ===============
</TABLE>
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
DETAILED TRADING AND PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
(pound) (pound) (pound) (pound)
<S> <C> <C> <C> <C>
Turnover
Sales and commissions 20,881 38,848
Administrative expenses
Wages and national insurance 255,946 257,339
Pension scheme contributions 9,786 11,818
Management fees payable -- 75,000
Traveling and hotel accommodation -- 211
Legal and professional fees 150 --
Accountancy fees -- 600
Audit fees 2,500 2,400
Bank charges 116 460
General expenses 15 335
Royalties payable 5,227 3,646
--------------- ---------------
(273,740) (351,809)
-------------- ---------------
(252,859) (312,961)
Other operating income
Management fees receivable -- 48,000
Costs reimbursed 265,732 269,158
--------------- ---------------
265,732 317,158
-------------- ---------------
Operating profit 12,873 4,197
Profit on sale of fixed asset investments 21,637 --
Amounts written off investments
Amounts written back on investments 28,363 --
Interest payable
Bank interest paid (852) (908)
-------------- ---------------
Profit before taxation 62,021 3,289
============== ===============
</TABLE>
<PAGE>
U B S N LIMITED
NO 2367133
REPORT & ACCOUNTS
31 DECEMBER 1998
<PAGE>
UBSN Limited
Directors
V Mallya
B Dozey
D Townshend
D Anand
K Ganguly
Secretary
G Lodhi
Auditors
Ernst & Young
Becket House
1 Lambeth Palace Road
LONDON
SEl 7EU
Bankers
Nedcor Bank Ltd
Nedbank House
20 Abchurch Lane
London
EC4A 2AL
Solicitors
Travers Smith Braithwaite
10 Snow Hill
LONDON
EClA 2AL
Registered Office
75 Westow Hill
Crystal Palace
London
SE19 1TX
2
<PAGE>
UBSN Limited
DIRECTORS' REPORT
The directors have pleasure in presenting their report and accounts for the year
ended 31 December 1998.
RESULTS AND DIVIDENDS
In the year the company made a profit of (pound)87,547 (1997 - (pound)78,102).
The directors do not recommend the payment of a dividend.
PRINCIPAL ACTIVITIES AND REVIEW OF THE BUSINESS
The principal activity of the company is the marketing, distribution, selling
and wholesaling of beer and wines.
With the continued growth in the sales of Kingfisher Lager and the introduction
of Kalyani Indian Lager it is anticipated results will continue to improve in
coming years.
DIRECTORS AND THEIR INTERESTS
The directors of the company during the year from 1 January 1998 to 31 December
1998 were those listed on page 2.
None of the directors held an interest in the company's shares at 31 December
1998, or at any time during the year.
FIXED ASSETS
The changes in fixed assets are disclosed in note 9.
By order of the board.
Secretary
G Lodhi
3
<PAGE>
UBSN Limited
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS
Company law requires the directors to prepare accounts for each financial year
which give a true and fair view of the state of affairs of the company and of
the profit or loss of the company for that period. In preparing those accounts,
the directors are required to:
o Select suitable accounting policies and then apply them consistently;
o Make judgements and estimates that are reasonable and prudent; and
o Prepare the accounts on the going concern basis unless it is inappropriate
to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the accounts comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
4
<PAGE>
UBSN Limited
REPORT OF THE AUDITORS
To the members of UBSN Limited
We have audited the accounts on pages 6 to 14, which have been prepared under
the historical cost convention and on the basis of accounting policies set out
on page 8.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 4 the company's directors are responsible for the
preparation of the accounts. It is our responsibility to form an independent
opinion, based on our audit, on those accounts and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includes an assessment of the significant estimates and judgements made by the
directors in the preparation of the accounts, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the accounts.
OPINION
In our opinion the accounts give a true and fair view of the state of affairs of
the company as at 31 December 1998 and of its profit for the year then ended and
have been properly prepared in accordance with the Companies Act 1985.
Ernst & Young
Registered Auditor
London
5
<PAGE>
UBSN Limited
PROFIT AND LOSS ACCOUNT
Year ended 31 December 1998
1998 1997
Notes (pound) (pound)
Turnover 3 6,755,146 5,743,653
Cost of sales 4,369,611 3,563,867
--------- ---------
Gross profit 2,385,535 2,179,786
Distribution and selling costs 1,487,735 1,287,459
Administrative expenses 585,213 676,146
--------- ---------
Operating profit 4 312,587 216,181
Costs relating to litigation 13/14 89,099 64,463
Interest payable & similar charges 7 84,581 43,116
--------- ---------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 138,907 108,602
Tax on profit on ordinary activities 8 51,360 30,500
--------- ---------
RETAINED PROFIT FOR THE YEAR 17 87,547 78,102
========= =========
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Year ended 31 December 1998
There are no recognised gains or losses other than the profit attributable to
shareholders of the company of (pound)87,547 in the year ended 31 December 1998
and of (pound)78,102 in the year ended 31 December 1997.
6
<PAGE>
UBSN Limited
BALANCE SHEET
31 December 1998
1998 1997
Notes (pound) (pound)
FIXED ASSETS 9 607,438 518,214
CURRENT ASSETS
Stocks 10 111,420 44,270
Debtors 11 2,407,734 1,827,149
Cash at bank and in hand 154,381 59,334
--------- ---------
2,673,535 1,930,753
CREDITORS:
amounts falling due within one year 12 2,826,828 2,082,376
--------- ---------
NET CURRENT LIABILITIES (153,293) (151,623)
NET ASSETS 454,145 366,591
========= =========
CAPITAL AND RESERVES
Called up share capital 16 100,000 100,000
Profit and loss account 17 354,145 266,591
--------- ---------
454,145 366,591
========= =========
These financial statements were approved by the Board of Directors on___________
and were signed on its behalf by:
D Townshend
D Dozey
Directors
7
<PAGE>
UBSN Limited
Statement of Cash Flow
1998 1997
Net Cash Inflow/(Outflow) from Operating Activities (460,744) 122,465
Servicing of Finance (Interest Paid) (84,581) (43,116)
Taxation - Corporation Tax Paid (77,475) (52,844)
Capital Expenditure
Payment to acquire tangible Fixed Assets (264,397) (152,396)
Proceeds from Sale of tangible Fixed Assets - 3,299
-------- --------
(Decrease)/Increase in Cash in the period (887,197) (122,592)
Reconciliation of Operating Profit to Net Cash Inflow/Outflow from
Operating Activities
1998 1997
Operating Profit 312,587 216,181
Costs relating to Litigation (89,099) (64,463)
Depreciation 175,173 163,773
(Profit)/Loss on Sale of Fixed Assets 0 1,843
(Increase)/Decrease in Debtors (580,585) (189,835)
(Increase)/Decrease in Stocks (67,150) (5,174)
Increase/(Decrease) in Creditors (211,670) 140
-------- --------
Net Cash Inflow/(Outflow) from Operating Activities (460,744) 122,465
Analysis of Net Debt
1998 1997
Bank Balance/(Overdraft)
At 1st January (13,402) 109,190
Net Cash Inflow/(Outflow) (887,197) (122,592)
-------- --------
At 31st December (900,599) (13,402)
8
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1998
1. ACCOUNTING POLICIES
Accounting convention
The accounts are prepared under the historical cost convention and
in accordance with applicable accounting standards.
Stocks
Stocks are valued on a first-in, first-out basis at the lower of
cost and net realisable value.
Depreciation
Depreciation is provided on all fixed assets at rates calculated to
write off the cost of each asset evenly over its expected useful
life as follows:
Plant and equipment - 6 to 7 years
Motor vehicles - 2 to 5 years
Foreign currency
Transactions denominated in foreign currencies are translated at
the exchange rate on the transaction date. Balances denominated in
foreign currencies are translated at the exchange rate at the
balance sheet date.
Deferred taxation
Provision is made for deferred taxation using the liability method
on timing differences to the extent that it is probable that the
liability will crystallise.
Pensions
The company does not operate a pension scheme.
2. JOINT VENTURE
The company was jointly owned by United Breweries International
(UK) Limited and Shepherd Neame Limited under a joint venture
agreement whereby both parties held a 50 per cent interest in the
company. At the 1 January 1998 Shepherd Neame Limited agreed to
sell its 50 per cent share in the company to United Breweries
International (UK) Limited. Under an exclusive licence granted from
United Breweries Limited of India, the company holds the right to
brew, market, develop and sell Kingfisher Lager. The company, in
turn, has granted a sub-licence to Shepherd Neame Limited for the
brewing of Kingfisher.
9
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1998
3. TURNOVER
Turnover comprises sales excluding value added tax. Export sales
during the year were (pound)881,744 (1997 - (pound)924,826).
4. OPERATING PROFIT
This is stated after charging:
1998 1997
(pound) (pound)
Depreciation 175,173 163,773
Auditors' remuneration: Audit services 17,007 8,532
Non-audit services 8,000 -
Exchange differences 2,032 7,914
======= =======
5. DIRECTORS' EMOLUMENTS 1998 1997
(pound) (pound)
Other Emoluments 88,800 86,900
======= =======
Emoluments excluding pension contributions of the Chairman were nil
(1997 - nil), and of the highest paid Director were (pound)45,500
(1997 - (pound)43,567) which included pension contributions of
(pound)3,100 (1997 - (pound)3,030).
6. STAFF COSTS
The company had no employees during the year ended 31 December
1998 (1997 - nil).
10
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1998
7. INTEREST PAYABLE
1998 1997
(pound) (pound)
Bank overdrafts and other credit facilities 84,581 43,116
======= =======
8. TAX ON PROFIT ON ORDINARY ACTIVITIES
1998 1997
UK Corporation tax 51,360 30,500
======= =======
The corporation tax charge on the profits for 1997 has been reduced
by tax losses brought forward.
9. FIXED ASSETS
Plant and Motor
Equipment Vehicles Total
(pound) (pound) (pound)
Cost:
At 1 January 1998 1,034,048 97,804 1,131,852
Additions 264,397 0 264,397
--------- ------ ---------
At 31 December 1998 1,298,445 97,804 1,396,249
--------- ------ ---------
Depreciation:
At 1 January 1998 592,593 21,045 613,638
Charge for the year 154,610 20,563 175,173
--------- ------ ---------
At 31 December 1998 747,203 41,608 788,811
--------- ------ ---------
Net book value:
At 31 December 1998 551,235 56,196 607,438
--------- ------ ---------
At 1 January 1998 441,455 76,759 518,214
========= ====== =========
11
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1998
<TABLE>
10. STOCKS
<CAPTION>
1998 1997
(pound) (pound)
<S> <C> <C>
Finished goods and promotional materials 111,420 44,270
======== ========
There is no material difference between the current replacement
cost and historical cost of stock.
11. DEBTORS
1998 1997
(pound) (pound)
Trade debtors:
Amounts owed by Shepherd Neame Limited (note 19) 383,979 253,999
Other 1,789,242 1,475,182
Other debtors 36,056 15,889
Prepayments and accrued income:
Amounts owed by Shepherd Neame Limited (note 19) 94,910 27,780
UB Global Corporation Limited 0 54,299
UB International Ltd 103,547 -
--------- ---------
2,407,734 1,827,149
========= =========
12. CREDITORS: amounts falling due within one year
1998 1997
(pound) (pound)
Bank overdraft 1,054,980 72,736
Trade creditors
Amounts owed to Shepherd Neame Limited (note 19) 1,148,494 1,589,417
UB Global Corporation Limited 6,994 -
Others 137,435 129,168
Corporation tax payable 57,382 83,497
VAT Payable 27,612
Accruals
Amounts owed to Shepherd Neame Limited (note 19) 292,631 114,295
American United Breweries Inc. 29,739 -
Other 71,561 93,263
--------- ---------
2,826,828 2,082,376
========= =========
</TABLE>
12
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1998
13. DISPUTE WITH MAJOR DISTRIBUTOR
Trade debtors include an amount of approximately (pound)250,000 due
from German Lager Importers Ltd. which is now in Creditors
Voluntary liquidation. This debt had been the subject of a legal
action and German Lager Importers Ltd. had made a counter claim for
breach of contract. This counter claim was dismissed by the courts
and UBSN Ltd. obtained judgement for the debt and full costs. In
view of the subsequent voluntary liquidation a full provision has
been made for all money due from German Lager Importers. All legal
costs associated with these actions have been provided for in the
accounts. The Directors are considering what further action can be
taken to recover the debt.
14. LITIGATION
During the year a claim for (pound)500,000 was made jointly against
the company and two other defendants relating to a breach of an
alleged sponsorship contract. The directors dispute that the
company has any connection with the alleged sponsorship contract
and having taken legal advice do not believe that there is a valid
claim against the company. Consequently no provision for future
costs or damages has been made. Proceedings have also been started
in India in relation to the same dispute. Indian legal advice has
indicated that no liability other than legal costs is likely to
arise as a consequence of these proceedings. (pound)30,455 of legal
costs incurred in defending the action during 1998 are included in
the Profit & Loss account.
15. DEFERRED TAXATION
The full potential liability for 1998 is (pound) 35,000 (1997 -
(pound)26,000) in respect of capital allowance carried forward
which has not been provided in the accounts.
13
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1998
<TABLE>
16. SHARE CAPITAL
<CAPTION>
Authorised Allotted, called up
And issued and partly paid
1998 1997 1998 1997
No No (pound) (pound)
<S> <C> <C> <C> <C>
125,000 'A' shares of(pound)1 each 125,000 125,000 50,000 50,000
125,000 'B' shares of(pound)1 each 125,000 125,000 50,000 50,000
------- ------- ------ ------
250,000 250,000 100,000 100,000
======= ======= ======= =======
</TABLE>
17. RECONCILIATION OF SHAREHOLDERS' FUNDS AND MOVEMENTS ON RESERVES
Profit
Share and loss
Capital account Total
(pound) (pound) (pound)
As at 1 January 1997 100,000 188,489 288,489
Profit for the year - 78,102 78,102
------- ------- -------
At 1 January 1998 100,000 266,591 366,591
Profit for the year - 87,554 87,554
------- ------- -------
As at 31 December 1998 100,000 354,145 454,145
======= ======= =======
18. PARENT UNDERTAKING AND CONTROLLING PARTY
The company's immediate parent undertaking is United Breweries
International (UK) Limited and the ultimate parent company is
Inversion Mirabela S.A. incorporated in Panama.
For the period under review Shepherd Neame Limited remains a related
party as envisaged by FRS 8 on the basis of control and shared
business interests.
14
<PAGE>
UBSN Limited
NOTES TO THE ACCOUNTS
31 December 1998
19 TRANSACTIONS WITH RELATED PARTIES
During the year the company has had the following transactions with
its related parties.
1998 1997
(pound) (pound)
Shepherd Neame Limited.
Sales 636,100 674,000
Freight Costs 265,830 199,423
Commission 49,092 56,489
Purchases 4,076,419 3,458,845
United Breweries International (UK) Limited.
(Parent Company registered in the UK)
Management Charge 114,666 144,000
UB Global Corporation Ltd.
(Subsidiary of United Breweries of India,
registered in India)
Purchases 296,449 112,118
Kinnade Associate Inc.
(Subsidiary of United Breweries Limited of
India, registered in Panama)
Loan balance recoverable 27,000 -
American United Breweries Inc.
(Registered in the USA)
Commission/Advertising 173,276 162,402
As a result of the trading activity with related parties, the following
balances remained outstanding as at 31 December 1998.
1998 1997
(pound) (pound)
Amounts owed by Shepherd Neame Limited 478,889 281,779
Amounts owed to Shepherd Neame Limited 1,148,494 1,589,417
Accruals - Shepherd Neame Limited 292,631 114,295
American United Brewers Inc. 29,739 -
Amounts owed to UB Global Corporation
Limited 6,994 6,994
15
<PAGE>
THE FOLLOWING STATEMENTS DO NOT FORM
PART OF THE AUDITED STATUTORY ACCOUNTS
16
<PAGE>
UBSN Limited
DETAILED PROFIT AND LOSS ACCOUNT
Year ended 31 December 1998
1998 1997
(pound) (pound)
GROSS PROFIT
Sales 6,755,146 5,743,653
Cost of sales (4,369,611) (3,583,867)
---------- ----------
Gross profit 2,385,535 2,179,786
---------- ----------
DISTRIBUTION AND SELLING EXPENSES
Freight 352,277 306,135
Advertising and promotional expenses 514,543 428,472
Sales commission 119,592 138,574
Dispense equipment repairs 120,087 97,715
Operational expenses 183,862 145,048
Benetton sponsorship 88,902 118,626
Other distribution and selling 108,472 52,889
---------- ----------
1,487,735 1,287,459
---------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES
Management fees 114,666 288,000
Audit and taxation fees 25,007 8,535
Postage and stationery 2,842 3,439
Bad debt provision 64,400 24,638
Depreciation/loss on asset disposal 175,173 165,616
Exchange differences 2,032 7,914
Operational expenses 167,531 148,097
Royalties payable/receivable 6,076 (8,826)
Miscellaneous 27,486 38,733
---------- ----------
585,213 676,146
---------- ----------
FINANCE COSTS
Bank interest and charges 84,581 23,116
Other interest - 20,000
---------- ----------
84,581 71,122
---------- ----------
EXCEPTIONAL ITEMS
Bad debt provision
Litigation costs 89,099 64,463
---------- ----------
Profit on ordinary activities before tax 138,907 108,602
========== ==========
17
<PAGE>
Company Registration No. 1688201 (England and Wales)
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 1998
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
COMPANY INFORMATION
--------------------------------------------------------------------------------
Directors M K Nambiar
V S Kumar
G M K Lodhi
Secretary G M K Lodhi
Company number 1688201
Registered office 75 Westow Hill
Crystal Palace
London
SE19 1TX
Auditors J. M. Shah and Company
Chartered Accountants
24 Old Bond Street
London
W1X 4JE
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
CONTENTS
Page
Directors' report 1 - 2
Auditors' report 3
Profit and loss account 4
Balance sheet 5
Notes to the financial statements 6 - 9
---------------------------------
The following does not form part of the
statutory financial statements:
Detailed trading and profit and loss account 10
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 1998
--------------------------------------------------------------------------------
The directors present their report and financial statements for the year ended
31 December 1998.
Principal activity
The principal activity of the company during the year continued to be that of
commission agents for the sale of beverages.
Year 2000
The directors have considered whether the company's operations could be
adversely affected by malfunctions in computer or other equipment arising from
errors in processing dates in the year 2000 and beyond.
No part of the company's current operations are critically dependent on computer
or other equipment which could be affected by year 2000 problems.
Directors and their interests
The directors who served during the year and their beneficial interests in the
shares of the company were as stated below:
Ordinary shares of (pound) 1 each
31 December 1998 1 January 1998
V S Kumar -- --
M K Nambiar -- --
K G James
G M K Lodhi -- --
Subsequent to the financial year end, K G James resigned as director on 30 June
1999.
Auditors
The company has by elective resolution dispensed with the obligation to appoint
auditors annually in accordance with section 386(1) of the Companies Act 1985.
Therefore, the auditors, J.M. Shah and Company, will be deemed to be reappointed
for each succeeding financial year.
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1998
--------------------------------------------------------------------------------
Directors' responsibilities
Company law 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
company and of the profit or loss of the company for that period. In preparing
those financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
This report has been prepared in accordance with the special provisions of Part
VII of the Companies Act 1985 relating to small companies.
By order of the board
M K Nambiar
Director
17 January 2000
--------------------------------------------------------------------------------
-2-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
AUDITORS' REPORT
TO THE SHAREHOLDERS OF UNITED BREWERIES INTERNATIONAL (UK) LIMITED
--------------------------------------------------------------------------------
We have audited the financial statements on pages 4 to 9 which have been
prepared under the historical cost convention and the accounting policies set
out on page 6.
Respective responsibilities of directors and auditors
As described on page 2 the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied or adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 31 December 1998 and of its profit for the year
then ended and have been properly prepared in accordance with the Companies Act
1985.
/s/ J. M. Shah and Company
--------------------------
J. M. Shah and Company
Chartered Accountants
and Registered Auditors
24 Old Bond Street
London
W1X 4JE 18 January 2000
--------------------------------------------------------------------------------
-3-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
Notes (pound) (pound)
<S> <C> <C>
Turnover 38,848 28,402
Administrative expenses (351,809) (351,915)
Other operating income 317,158 372,006
--------------------- --------------------
Operating profit 2 4,197 48,493
Interest payable and similar charges (908) (960)
--------------------- --------------------
Profit on ordinary activities before taxation 3,289 47,533
Tax on profit on ordinary activities 3 -- --
--------------------- --------------------
Profit on ordinary activities after taxation 9 3,289 47,533
===================== ====================
</TABLE>
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
There are no recognised gains and losses other than those passing through the
profit and loss account.
--------------------------------------------------------------------------------
-4-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
Notes (pound) (pound) (pound) (pound)
<S> <C> <C> <C>
Fixed assets
Investments 4 299,119 50,000
Current assets
Debtors 5 67,298 95,553
Cash at bank and in hand -- 1,075
--------------- ---------------
67,298 96,628
Creditors: amounts falling due within
one year 6 (296,275) (79,776)
--------------- ---------------
Net current (liabilities)/assets (228,977) 16,852
-------------- ---------------
Total assets less current liabilities 70,142 66,852
============== ===============
Capital and reserves
Called up share capital 8 100,000 100,000
Profit and loss account 9 (29,858) (33,148)
-------------- ---------------
Shareholders' funds - equity interests 10 70,142 68,852
============== ===============
</TABLE>
These financial statements have been prepared in accordance with the special
provisions of Part VII of the Companies Act 1985 relating to small companies.
The financial statements were approved by the board on 17 January 2000.
M K Nambiar G M K Lodhi
Director Director
--------------------------------------------------------------------------------
-5-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 1998
--------------------------------------------------------------------------------
1 Accounting policies
1.1 Accounting convention
The financial statements are prepared under the historical cost
convention.
The company has taken advantage of the exemption in Financial Reporting
Standard No. 1 from the requirement to produce a cashflow statement on
the grounds that it is a small company.
1.2 Turnover
Turnover represents amounts receivable by the company for goods sold,
services supplied and commissions receivable and is stated net of value
added tax.
1.3 Investments
Fixed asset investments are stated at cost less provision for diminution
in value.
1.4 Pensions
The pension costs charged in the financial statements represent the
contributions payable by the company during the year in accordance with
Statement of Standard Accounting Practice 24.
1.5 Deferred Taxation
Deferred taxation is provided at appropriate rates on all timing
differences using the liability method only to the extent that, in the
opinion of the directors, there is a reasonable probability that a
liability or asset will crystallise in the foreseeable future.
1.6 Consolidation
The company and its subsidiary undertakings comprise a small group. The
company is exempt from the requirement to prepare consolidated financial
statements by virtue of section 248 of the Companies act 1985. These
financial statements therefore present information about the company as
an individual undertaking and not about its group.
2 Operating profit
1998 1997
(pound) (pound)
Operating profit is stated after charging:
Auditors' remuneration 2,400 2,000
========== ==========
3 Taxation
No corporation tax charge arises for the year in view of tax losses
available (1997 - (pound)Nil).
--------------------------------------------------------------------------------
-6-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1998
--------------------------------------------------------------------------------
4 Fixed asset investments
Shares in
group
undertakings
and
participating
interests
(pound)
Cost
At 1 January 1998 78,363
Additions 249,119
---------------
At 31 December 1998 327,482
---------------
Provisions for diminution in value
At 1 January 1998 and at 31 December 1998 28,363
---------------
Net book value
At 31 December 1998 299,119
===============
At 31 December 1997 50,000
===============
Holdings of more than 20%
The company holds more than 20% of the share capital of the following
companies:
Shares held
Company Country of registration or Class %
Incorporation
Subsidiary undertakings
UB (Soyco) Limited England and Wales Ordinary 98
UBSN Limited England and Wales Ordinary 100
The aggregate amount of capital and reserves and the results of these
undertakings for the last relevant financial year were as follows:
Capital and Profit for
reserves the year
UB (Soyco) Limited (1,726,271) (18,897)
UBSN Limited 454,145 87,547
=============== ===============
--------------------------------------------------------------------------------
-7-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
5 Debtors 1998 1997
(pound) (pound)
<S> <C> <C>
Amounts owed by group undertakings and undertakings in which the
company has a participating interest 5,875 1,551
Other debtors 61,423 94,002
--------------- ---------------
67,298 95,553
=============== ===============
6 Creditors: amounts falling due within one year 1998 1997
(pound) (pound)
Bank loans and overdrafts 7,633 --
Taxation and social security 13,298 18,561
Other creditors 275,344 61,215
--------------- ---------------
296,275 79,776
=============== ===============
7 Pension costs
The company operates a defined contribution pension scheme. The assets of
the scheme are held separately from those of the company in an
independently administered fund. The pension cost charge represents
contributions payable by the company to the fund and amounted to
(pound)11,818 (1997 - (pound)9,969).
8 Share capital 1998 1997
(pound) (pound)
Authorised
500,000 Ordinary shares of(pound)1 each 500,000 500,000
=============== ===============
Allotted, called up and fully paid
100,000 Ordinary shares of(pound)1 each 100,000 100,000
=============== ===============
9 Statement of movements on profit and loss account
Profit and
loss account
(pound)
Balance at 1 January 1998 (33,147)
Retained profit for the year 3,289
---------------
Balance at 31 December 1998 (29,858)
===============
</TABLE>
--------------------------------------------------------------------------------
-8-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 1998
--------------------------------------------------------------------------------
10 Reconciliation of movements in shareholders' funds 1998 1997
(pound) (pound)
Profit for the financial year 3,289 47,533
Opening shareholders' funds 66,852 19,319
---------- ---------
Closing shareholders' funds 70,142 66,852
========== =========
11 Contingent liabilities
a) The company acts as a surety for the obligations on a lease of
premises acquired by a subsidiary undertaking for a term of twenty years
from 24th June 1990 at an annual rental of (pound)61,500.
b) During the year the company issued a letter of comfort to the bankers
of a subsidiary undertaking in respect of a facility of (pound)1,500,000
made available to this subsidiary undertaking. Within the letter of
comfort the company gave an undertaking to ensure the subsidiary would be
able to fulfill all of its undertakings to the bank including business
and financial obligations.
12 Transactions with the directors
During the year, the company was charged management fees of (pound)75,000
(1997 - (pound)120,000) by UB Group (UK) Limited. The directors of United
Breweries International (UK) Limited are also directors of UB Group (UK)
Limited.
13 Ultimate parent undertaking and control
The directors consider the company's ultimate parent undertaking to be
Inversion Mirabele S.A., a company incorporated in Panama.
14 Related party transactions
During the year the company received management fees of (pound)48,000
(1997 - (pound)144,000) and also received royalty income of (pound)6,076
(1997 - (pound)Nil) from UBSN Limited, a fully owned subsidiary.
At the balance sheet date, the following amounts were owed by related
parties:
1998 1997
(pound) (pound)
UBSN Limited (subsidiary undertaking) 5,875 1,551
============ ===========
15 Post balance sheet events
Subsequent to the financial year end the company disposed of its
investment in its subsidiary undertaking, UB (Soyco) Limited.
--------------------------------------------------------------------------------
-9-
<PAGE>
UNITED BREWERIES INTERNATIONAL (UK) LIMITED
DETAILED TRADING AND PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
(pound) (pound) (pound) (pound)
<S> <C> <C>
Turnover
Sales and commissions 38,848 28,402
Administrative expenses
Wages and national insurance 257,339 217,382
Pension scheme contributions 11,818 9,969
Management fees payable 75,000 120,000
Traveling and hotel accommodation 211 1,641
Legal and professional fees -- (63)
Accountancy fees 600 500
Audit fees 2,400 2,000
Bank charges 460 243
General expenses 335 --
Subscriptions -- 243
Royalties payable 3,646 --
--------------- ---------------
(351,809) (351,915)
-------------- ---------------
(312,961) 28,402
Other operating income
Management fees receivable 48,000 144,00
Costs reimbursed 269,158 228,006
--------------- ---------------
317,158 372,006
-------------- ---------------
Operating profit 4,197 48,493
Interest payable
Bank interest paid (908) (960)
-------------- ---------------
Profit before taxation 3,289 47,533
============== ===============
</TABLE>
--------------------------------------------------------------------------------
-10-
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
MENDOCINO BREWING COMPANY, INC.
The undersigned shareholder of MENDOCINO BREWING COMPANY, INC., a
California corporation (the "Company") hereby acknowledges receipt of the Notice
of Annual Meeting of Shareholders and Proxy Statement each dated December 18,
2000 and appoints Dr. Vijay Mallya, Jerome Merchant, and Yashpal Singh, and each
of them, as proxy of the undersigned with power of substitution and revocation,
to represent the undersigned at the Annual Meeting of the Shareholders of the
Company, to be held on January 24, 2001 at 2:00 p.m. at the Ukiah Valley
Conference Center located at 200 South School Street, Ukiah, California, and at
any adjournment thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote as if the undersigned were present and
voting the shares.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS NO. 1, 2, AND 4 AND FOR THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL
NO. 4 AS DESCRIBED THEREIN. IN THEIR DISCRETION, THE PROXY HOLDERS ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
If you wish to vote in accordance with the Board of Directors'
recommendations, just sign on the reverse side. You do not need to mark any
boxes.
[X] Please mark votes as in this example.
The Board of Directors recommends a vote FOR Proposals 1 through 4.
1. To approve a Share Purchase Agreement dated November 3, 2000, between
the Company, Inversiones Mirabel, S.A., and Golden Eagle Trust, and the
transactions contemplated thereby.
[ ] For [ ] Against [ ] Abstain
2. To amend the Company's Bylaws to allow for the election of up to nine
Directors.
[ ] For [ ] Against [ ] Abstain
<PAGE>
3. a. Election of the 7 Directors nominated by the Board (or if any
nominee is not available for election, such substitute(s) as
the Board of Directors may designate). (To WITHHOLD authority
to vote for any individual nominee or nominees strike a line
through that nominee's name in the list below. To WITHHOLD
authority to vote for ALL of the Board's nominees, check the
appropriate box below.)
Nominees: Vijay Mallya, Michael Laybourn, Robert Neame, Kent
Price, Sury Rao Palamand, Jerome Merchant, and Yashpal Singh
[ ] FOR ALL [ ] WITHHOLD FOR ALL
b. If Proposals 1 and 2 are approved, election of nominee David
Townshend as Director (or if he is not available for election,
such substitute as the Board of Directors may designate).
[ ] FOR [ ] WITHHOLD
4. To ratify the appointment of Moss Adams, L.L.P. as independent auditors
of the Company for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
MARK HERE [ ] MARK HERE [ ]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
Signature: ________________________________ Date: ______________
Signature: ________________________________ Date: ______________
