8-K/A 1 d27150_8k-a.txt 8-K/A U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CURRENT REPORT ON 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): August 13, 2001 Commission File No. 0-22524 MENDOCINO BREWING COMPANY, INC. (Exact name of small business issuer as specified in its charter) California (State or other jurisdiction of incorporation or organization) 68-0318293 (IRS Employer Identification Number) 13351 South Highway 101, Hopland, California (Address of principal executive offices) 95449 (Zip Code) Registrant's telephone number, including area code: (707) 744-1015 Item 2. Acquisition or Disposition of Assets Financial Statements This Current Report amends the Current Report filed by Mendocino Brewing Company, Inc. (the "Company") on August 24, 2001, to add the unaudited individual financial statements of United Breweries International (UK) Limited ("UBI"), the combined pro forma financial statements for the Company and UBI, and the Report of the Directors of UBI for the six month periods which ended June 30, 2001. In all other respects, the Current Report filed August 24, 2001, remains unchanged. Item 7. Exhibits Exhibit No. Description ------- ----------- 4 Mendocino Brewing Company, Inc. and United Breweries International (UK) Limited Pro Forma Condensed Consolidated Balance Sheet and Income Statement for the six months ended June 30, 2000 and 2001 5 United Breweries International (UK) Limited Balance Sheet, Statement of Income and Stockholder's Equity, and Statement of Cash Flows and conversion into United States Dollars for the six months ended June 30, 2000 and 2001 6 United Breweries International (UK) Limited Consolidated Reports and Financial Statements, Period 1st January to 30th June 2001 1 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: October 19, 2001 By: /s/ N. Mahadevan -------------------------------- N. Mahadevan, Secretary and Chief Financial Officer 2 EXHIBIT INDEX Exhibit Description Page Number Number 4 Mendocino Brewing Company, Inc. and United Breweries 4 International (UK) Limited Pro Forma Condensed Consolidated Balance Sheet and Income Statement for the six months ended June 30, 2000 and 2001 5 United Breweries International (UK) Limited Balance Sheet, 9 Statement of Income and Stockholder's Equity, and Statement of Cash Flows and conversion into United States Dollars for the six months ended June 30, 2000 and 2001 6 United Breweries International (UK) Limited Consolidated 15 Reports and Financial Statements, Period 1st January to 30th June 2001 ----------- 3 Exhibit 4 The unaudited pro forma condensed consolidated financial statements of Mendocino Brewing Company, Inc. (the "Company") as of June 30, 2001 and 2000 (the "Pro Forma Statements") were prepared using U.S. Generally Accepted Accounting Principles (U.S. GAAP) and reflect the financial position of the Company after giving effect to the acquisition of all of the outstanding stock of United Breweries International, Ltd. ("UBI") and assume the acquisition took place on January 1, 1999. The Pro Forma Statements also reflect the sale of 5,500,000 shares of the Company's common stock in exchange for the common stock of UBI at a purchase price of $ .8125 per share (the last reported sale price of common stock on the day immediately prior to November 3, 2000, the day the agreement was executed.) The purchase is recorded as if it were a pooling transaction due to the related party nature of the transaction. The Pro Forma Statements have been prepared by the Company based upon assumptions deemed proper by it. The Pro Forma 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 the Company, or of the financial position or results of operations of the Company that would have actually occurred had the transaction been in effect as of the date or for the periods presented. The Pro Forma Statements should be read in conjunction with the Company's historical financial statements and related notes. 4 Pro Forma Balance Sheet June 30, 2001
Pro forma Adjustment ------------------------------- Mendocino United Breweries Pro forma Brewing Co, Inc. International, Ltd. Consolidated ASSETS 6/30/2001 6/30/2001 (a) Adjustments 6/30/2001 --------------- ------------------ ----------- ------------ CURRENT ASSETS Cash $ -- $ 35,100 $ -- $ 35,100 Accounts receivable 1,660,200 3,781,700 -- 5,441,900 Inventories 1,206,700 37,400 -- 1,244,100 Prepaid expenses 283,800 -- 283,800 Deferred income taxes 48,100 -- -- 48,100 ------------ ----------- ----------- ------------ Total current assets 3,198,800 3,854,200 -- 7,053,000 ------------ ----------- ----------- ------------ PROPERTY AND EQUIPMENT 13,735,400 809,700 -- 14,545,100 ------------ ----------- ----------- ------------ OTHER ASSETS Intangibles 103,900 29,300 -- 133,200 Other assets 731,600 -- (558,100)(b) 173,500 Deferred taxes and other assets 2,844,000 -- -- 2,844,000 ------------ ----------- ----------- ------------ 3,679,500 29,300 (558,100) 3,150,700 ------------ ----------- ----------- ------------ Total assets $ 20,613,700 $ 4,693,200 $ (558,100) $ 24,748,800 ============ =========== =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Disbursements in excess of deposits $ 119,400 $ 1,364,400 $ -- $ 1,483,800 Accounts payable 2,819,900 1,954,400 -- 4,774,300 Accrued liabilities 85,600 93,100 -- 178,700 Accrued wages and related expense 176,800 -- -- 176,800 Income taxes payable 3,800 240,300 -- 244,100 Current maturities of longterm debt and leases 765,900 -- -- 765,900 ------------ ----------- ----------- ------------ Total current liabilities 3,971,400 3,652,200 -- 7,623,600 LONG-TERM DEBT AND CAPITAL LEASES, less current maturities 5,819,800 -- -- 5,819,800 LINE OF CREDIT 1,608,100 -- -- 1,608,100 ------------ ----------- ----------- ------------ Total liabilities 11,399,300 3,652,200 -- 15,051,500 ------------ ----------- ----------- ------------ STOCKHOLDERS' EQUITY Preferred stock 227,600 -- 227,600 Common stock 13,875,900 140,800 -- 14,016,700 Accumulated deficit (4,889,100) 900,200 (558,100)(b) (4,547,000) ------------ ----------- ----------- ------------ Total stockholders' equity 9,214,400 1,041,000 (558,100) 9,697,300 ------------ ----------- ----------- ------------ Total liabilities and stockholders' equity $ 20,613,700 $ 4,693,200 $ (558,100) $ 24,748,800 ============ =========== =========== ============
(a) To include the assets and liabilities of United Breweries International, Ltd., as of June 30, 2001. (b) To reflect the write-off of the capitalized acquisition costs. 5 Pro Forma Income Statement June 30, 2001
Pro forma Adjustment -------------------------------- Mendocino United Breweries Pro forma Brewing Co, Inc. International, Ltd. Consolidated 6/30/2001 6/30/2001 (a) Adjustments 6/30/2001 --------------- ------------------ ----------- ------------ NET SALES $ 5,365,800 $ 5,904,700 $ -- $ 11,270,500 COST OF GOODS SOLD 3,531,100 3,886,000 -- 7,417,100 ----------- ----------- ------------ ------------ GROSS PROFIT 1,834,700 2,018,700 -- 3,853,400 OPERATING EXPENSES Selling and marketing 1,223,400 1,218,200 -- 2,441,600 General and administrative 809,900 552,000 -- 1,361,900 ----------- ----------- ------------ ------------ 2,033,300 1,770,200 -- 3,803,500 ----------- ----------- ------------ ------------ INCOME (LOSS) FROM OPERATIONS (198,600) 248,500 -- 49,900 OTHER INCOME (EXPENSE) Interest expense (443,900) (36,300) -- (480,200) Other income (expense) 9,700 -- (558,100)(b) (548,400) ----------- ----------- ------------ ------------ (434,200) (36,300) (558,100) (1,028,600) ----------- ----------- ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES (632,800) 212,200 (558,100) (978,700) PROVISION (BENEFIT) FROM INCOME TAXES (76,000) 75,400 -- (600) ----------- ----------- ------------ ------------ NET INCOME (LOSS) $ (556,800) $ 136,800 $ (558,100) $ (978,100) =========== =========== ============ ============ BASIC INCOME (LOSS) PER COMMON SHARE $ (0.10) $ (0.09) ============ ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,580,498 5,500,000 (c) 11,080,498 =========== ============ ============
(a) To include the profits and losses of United Breweries International, Ltd. (b) To write-off the capitalized acquisition costs. (c) To reflect the shares issued for the purchase of the stock of United Breweries International, Ltd. Shares assumed issued at January 1, 1999 6 Pro Forma Balance Sheet June 30, 2000
Pro forma Adjustment ------------------------------- Mendocino United Breweries Pro forma Brewing Co, Inc. International, Ltd. Consolidated ASSETS 6/30/2000 6/30/2000 (a) Adjustments 6/30/2000 --------------- ------------------ ----------- ------------ CURRENT ASSETS Cash $ 106,900 $ 156,400 $ -- $ 263,300 Accounts receivable 1,240,500 3,282,400 -- 4,522,900 Inventories 992,900 119,100 -- 1,112,000 Prepaid expenses 168,800 -- 168,800 Deferred income taxes 43,100 -- -- 43,100 ------------ ----------- ----------- ------------ Total current assets 2,552,200 3,557,900 -- 6,110,100 ------------ ----------- ----------- ------------ PROPERTY AND EQUIPMENT 14,355,500 904,300 -- 15,259,800 ------------ ----------- ----------- ------------ OTHER ASSETS Intangibles -- 36,300 -- 36,300 Other assets 311,600 -- (192,100)(b) 119,500 Deferred taxes and other assets 2,440,300 -- -- 2,440,300 ------------ ----------- ----------- ------------ 2,751,900 36,300 (192,100) 2,596,100 ------------ ----------- ----------- ------------ Total assets $ 19,659,600 $ 4,498,500 $ (192,100) $ 23,966,000 ============ =========== =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Line of credit $ 1,268,100 $ 1,095,500 $ -- $ 2,363,600 Accounts payable 1,910,200 2,173,000 4,083,200 Accrued liabilities 319,300 270,500 -- 589,800 Accrued wages and related expense 176,800 -- -- 176,800 Income taxes payable -- 216,200 216,200 Current maturities of longterm debt and leases 925,400 -- -- 925,400 ------------ ----------- ----------- ------------ Total current liabilities 4,599,800 3,755,200 -- 8,355,000 LONG-TERM DEBT AND CAPITAL LEASES, less current maturities 5,221,800 -- -- 5,221,800 ------------ ----------- ----------- ------------ Total liabilities 9,821,600 3,755,200 -- 13,576,800 ------------ ----------- ----------- ------------ STOCKHOLDERS' EQUITY Preferred stock 227,600 227,600 Common stock 13,834,900 151,300 -- 13,986,200 Accumulated deficit (4,224,500) 592,000 (192,100)(b) (3,824,600) ------------ ----------- ----------- ------------ Total stockholders' equity 9,838,000 743,300 (192,100) 10,389,200 ------------ ----------- ----------- ------------ Total liabilities and stockholders' equity $ 19,659,600 $ 4,498,500 $ (192,100) $ 23,966,000 ============ =========== =========== ============
(a) To include the assets and liabilities of United Breweries International, Ltd., as of June 30, 2000. (b) To write-off capitalized acquisition costs. 7 Pro Forma Income Statement June 30, 2000
Pro forma Adjustment -------------------------------- Mendocino United Breweries Pro forma Brewing Co, Inc. International, Ltd. Consolidated 6/30/2000 6/30/2000 (a) Adjustments 6/30/2000 --------------- ------------------ ----------- ------------ NET SALES $ 4,458,100 $ 6,000,200 $ -- $ 10,458,300 COST OF GOODS SOLD 2,865,700 3,883,300 -- 6,749,000 ----------- ----------- ------------ ------------ GROSS PROFIT 1,592,400 2,116,900 -- 3,709,300 OPERATING EXPENSES Selling and marketing 912,100 1,274,200 2,186,300 General and administrative 682,100 465,900 -- 1,148,000 ----------- ----------- ------------ ------------ 1,594,200 1,740,100 -- 3,334,300 ----------- ----------- ------------ ------------ INCOME (LOSS) FROM OPERATIONS (1,800) 376,800 -- 375,000 OTHER INCOME (EXPENSE) Interest expense (458,400) (50,200) -- (508,600) Other income (expense) 43,000 (49,500) (192,100)(b) (198,600) ----------- ----------- ------------ ------------ (415,400) (99,700) (192,100) (707,200) ----------- ----------- ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES (417,200) 277,100 (192,100) (332,200) PROVISION (BENEFIT) FROM INCOME TAXES 2,200 91,000 -- 93,200 ----------- ----------- ------------ ------------ NET INCOME (LOSS) $ (419,400) $ 186,100 $ (192,100) $ (425,400) =========== =========== ============ ============ BASIC INCOME (LOSS) PER COMMON SHARE $ (0.08) $ (0.04) =========== ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,530,117 5,500,000 (c) 11,030,117 =========== ============ ============
(a) To include the profits and losses of United Breweries International, Ltd. (b) To write-off capitalized acquisition costs (c) To reflect the shares issued for the purchase of the stock of United Breweries International, Ltd. Shares assumed issued at January 1, 1999 8 Exhibit 5 United Breweries International, Ltd. (UBI) Balance Sheet June 30, 2001 (GBP(pound)) (US$) 2001 Exchange 2001 UBI Rate Consolidated ----------- -------- ------------ Cash 24,948 1.408 $ 35,119 Accounts Receivable 2,686,422 1.408 3,781,676 Inventory 26,570 1.408 37,403 ---------- ----------- Current assets 2,737,940 3,854,198 Fixed assets 575,176 1.408 809,675 Goodwill 20,801 1.408 29,282 ---------- ----------- Total assets 3,333,917 $ 4,693,155 ========== =========== Current liabilities Bank overdraft 969,224 1.408 1,364,377 Accounts payable 1,388,355 1.408 1,954,387 Income tax payable 170,680 1.408 240,266 Accruals 66,160 1.408 93,133 ---------- ----------- Total liabilities 2,594,419 3,652,164 Equity Common stock 100,000 1.408 140,770 Currency translation 1.408 (2,979) Prior year retained earnings 544,322 1.408 766,242 Current years earnings 95,176 1.439 136,958 ---------- ----------- Total equity and liabilities (pound)3,333,917 $ 4,693,155 ================ =========== 9 United Breweries International, Ltd. (UBI) Statement of Income For the Six Months Ended June 30, 2001 (GBP(pound)) (US$) 2001 Exchange 2001 UBI Rate Consolidated ----------- -------- ------------ Sales 4,103,366 1.439 $ 5,904,744 Cost of goods sold 2,700,495 1.439 3,886,012 ---------- ----------- Gross profit 1,402,871 2,018,731 Selling costs 846,531 1.439 1,218,158 General and Administrative 383,590 1.439 551,986 ---------- ----------- Net income from operations 172,750 248,587 Interest expense (25,196) 1.439 (36,257) ---------- ----------- Net income before tax 147,554 212,330 Provision for income tax 52,378 1.439 75,372 ---------- ----------- Net income (pound)95,176 $ 136,958 ------------- ----------- 10 United Breweries International, Ltd. (UBI) Statement of Cash Flows For the Six Months Ended June 30, 2001 (GBP(pound)) Exchange (US$) 2001 UBI Rate 2001 UBI ------------ -------- --------- Cash flows from operating activities Net income 95,176 1.439 $ 136,958 Adjustments to reconcile net income to net cash from operating activities Depreciation 92,504 1.439 133,113 Amortization 1,600 1.439 2,302 Litigation costs -- 1.439 -- Changes in: Accounts receivable 121,663 1.439 175,073 Inventory 42,483 1.439 61,133 Accounts payable and accruals (364,207) 1.439 (524,094) ------------- --------- Net cash from operating activities (10,781) (15,514) ------------- --------- Cash flows from investing activities Purchase of property, plant and equipment (89,324) 1.439 (128,537) ------------- --------- Cash flows from financing activities Decrease in bank overdraft (14,220) 1.439 (20,463) ------------- --------- Translation adjustment -- (8,652) ------------- --------- Net increase (decrease) in cash (114,325) (173,166) Cash beginning of year 139,274 1.496 208,284 ------------- --------- Cash end of year (pound)24,949 $ 35,119 ============= ========= 11 United Breweries International, Ltd. (UBI) Balance Sheet June 30, 2000 (GBP(pound)) (US$) 2000 Exchange 2000 UBI Rate Consolidated ---------- -------- ------------ Cash 103,356 1.513 $ 156,378 Accounts Receivable 2,419,443 1.513 3,660,617 Allowance for doubtful accounts (250,000) 1.513 (378,250) Inventory 78,764 1.513 119,170 ---------- ----------- Current assets 2,351,563 3,557,915 Fixed assets 597,689 1.513 904,303 Goodwill 24,001 1.513 36,314 ---------- ----------- Total assets 2,973,253 $ 4,498,532 ========== =========== Current liabilities Bank overdraft 724,049 1.513 1,095,486 Accounts payable 1,436,244 1.513 2,173,037 Income tax payable 142,901 1.513 216,209 Accruals 178,759 1.513 270,462 ---------- ----------- Total liabilities 2,481,953 3,755,195 Equity Common stock 100,000 1.513 151,300 Currency translation -- 1.513 (6,416) Prior year retained earnings 272,479 1.513 412,261 Current years earnings 118,821 1.567 186,193 ---------- ----------- Total equity and liabilities (pound)2,973,253 $ 4,498,532 ================ =========== 12 United Breweries International, Ltd. (UBI) Statement of Income For the Six Months Ended June 30, 2000 (GBP(pound)) (US$) 2000 Exchange 2000 UBI Rate Consolidated ---------- -------- ------------ Sales 3,829,076 1.567 $ 6,000,162 Cost of goods sold 2,478,177 1.567 3,883,303 ---------- ----------- Gross profit 1,350,899 2,116,859 Selling costs 813,128 1.567 1,274,172 General and Administrative 297,303 1.567 465,874 ---------- ----------- Net income from operations 240,468 376,813 Provision for litigation (31,584) 1.567 (49,492) Interest expense (32,012) 1.567 (50,163) ---------- ----------- Net income before tax 176,872 277,158 Provision for income tax 58,051 1.567 90,966 ---------- ----------- Net income (pound)118,821 $ 186,193 ============== =========== 13 United Breweries International, Ltd. (UBI) Statement of Cash Flows For the Six Months Ended June 30, 2000
(GBP (pound)) Exchange (US$) 2000 UBI Rate 2000 UBI -------------- -------- --------- Cash flows from operating activities Net income (pound)118,821 1.567 $ 186,193 Adjustments to reconcile net income to net cash from operating activities Depreciation 107,337 1.567 168,197 Profit on disposal of assets (2,185) 1.567 (3,424) Amortization 1,600 1.567 2,507 Litigation costs (31,584) 1.567 (49,492) Changes in: Accounts receivable 552,792 1.567 866,225 Inventory (15,690) 1.567 (24,586) Income taxes payable (426) 1.567 (668) Accounts payable and accruals (121,162) 1.567 (189,861) ------------- --------- Net cash from operating activities 609,503 955,091 ------------- --------- Cash flows from investing activities Purchase of property, plant and equipment (109,733) 1.567 (171,952) ------------- --------- Cash flows from financing activities Increase in bank overdraft (430,259) 1.567 (674,216) ------------- --------- Translation adjustment -- (7,205) ------------- --------- Net increase (decrease) in cash 69,511 101,719 Cash beginning of year 33,845 1.615 54,660 ------------- --------- Cash end of year (pound)103,356 $ 156,378 ============= =========
14 EXHIBIT 6 UNITED BREWERIES INTERNATIONAL (UK) LIMITED CONSOLIDATED REPORTS AND FINANCIAL STATEMENTS PERIOD 1ST JANUARY 2001 TO 30TH JUNE 2001 FOR GROUP REPORTING PURPOSES ONLY 15 UNITED BREWERIES INTERNATIONAL (UK) LIMITED Officers and Professional Advisers Directors: M. K. Nambiar (resigned 13th August 2001) V. S. Kumar (resigned 13th August 2001) G. M. K. Lodhi J. Merchant (appointed 13th August 2001) V. Mallya (appointed 13th August 2001) Secretary: G. M. K. Lodhi Auditors: Messrs. Hawsons, Chartered Accountants, Jubilee House, Billing Brook Road, Weston Favell, Northampton, NN3 8NW 16 UNITED BREWERIES INTERNATIONAL (UK) LIMITED INDEX Page no. Report of the Directors 18 Statement of Directors' responsibilities 19 Accountants' Report 20 Consolidated Profit and Loss Account 21 Consolidated Balance Sheet 22 Company Balance Sheet 23 Consolidated Cash Flow Statement 24 Notes to the Financial Statements 25 - 34 Detailed Consolidated Profit and Loss Account 35 17 UNITED BREWERIES INTERNATIONAL (UK) LIMITED REPORT OF THE DIRECTORS The directors submit their report and the financial statements of the Group for the six-month period ended 30th June 2001. PRINCIPAL ACTIVITIES AND BUSINESS REVIEW The principal activities of the Group during the period continued to be that of marketing and distribution of beer and wines and commission agents for the sale of beverages. The results for the period and the financial position at the period end were considered to be satisfactory by the directors who expect continued growth in the forseeable future. RESULTS AND DIVIDENDS The results for the period are set out on page 21. The directors do not recommend the payment of a dividend. FIXED ASSETS Details relating to fixed assets are shown in the notes to the financial statements. DIRECTORS AND INTERESTS IN SHARES The directors who served during the period and their beneficial interests in the shares of the company were as stated below: Ordinary shares of(pound)1 each 30th June 30th June 2001 2000 M. K. Nambiar (resigned 13th August 2001) - - V. S. Kumar (resigned 13th August 2001) - - G. M. K. Lodhi - - J. Merchant (appointed 13th August 2001) - - V. Mallya (appointed 13th August 2001) - - - - On behalf of the Board. /s/ Gul Lodhi G. M. K. Lodhi Director / Secretary Date: September 5, 2001 Registered Office: 75 Westow Hill, Crystal Palace, London, SE19 1TX 18 UNITED BREWERIES INTERNATIONAL (UK) LIMITED STATEMENT OF DIRECTORS' RESPONSIBILITIES Company law requires the directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the company and the group and of the profit or loss for that period. In preparing those financial statements, the directors are required to:- (1) Select suitable accounting policies and then apply them consistently. (2) Make judgements and estimates that are reasonable and prudent. (3) State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements. (4) Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group 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 group 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 group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 19 UNITED BREWERIES INTERNATIONAL (UK) LIMITED ACCOUNTANTS' REPORT TO THE DIRECTORS As described on page 19 the group's directors are responsible for the preparation of the financial statements for the period ended 30th June 2001 set out on pages 21 to 36. In accordance with your instructions, we have compiled these unaudited financial statements in order to assist you to fulfil the group's external reporting requirements to the Securities and Exchange Commission in the United States of America, from the accounting records, information and explanations supplied to us. Hawsons Chartered Accountants Jubilee House Reporting Accountants Billing Brook Road Weston Favell Northampton United Kingdom NN3 8NW 20 UNITED BREWERIES INTERNATIONAL (UK) LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT - PERIOD ENDED 30TH JUNE 2001
Six months to 30th June Six months to 30th June 2001 2001 2000 2000 Notes (pound) (pound) (pound) (pound) Turnover: 2 4,103,366 3,829,076 Cost of sales 2,700,495 2,478,177 ---------- ---------- Gross Profit 1,402,871 1,350,899 Distribution and selling costs 846,531 813,128 Administrative expenses 383,590 297,303 -------- -------- 1,230,121 1,110,431 ---------- ---------- Operating profit 172,750 240,468 Exceptional items: Costs relating to litigation 4 -- 31,584 ---------- ---------- Profit on ordinary activities before interest 172,750 208,884 Interest payable 5 25,196 32,012 ---------- ---------- Profit on ordinary activities before taxation 147,554 176,872 Tax on profit on ordinary activities 6 52,378 58,051 ---------- ---------- Profit on ordinary activities after taxation 95,176 118,821 ---------- ---------- Retained profit transferred to reserves 17 95,176 118,821 ========== ==========
The group has no recognized gains and losses other than those included in the profits above, and therefore no separate statement of total recognized gains and losses has been presented. The notes on pages 25 to 34 form part of these financial statements. 21 UNITED BREWERIES INTERNATIONAL (UK) LIMITED CONSOLIDATED BALANCE SHEET - 30TH JUNE 2001
30th June 30th June 2001 2000 Note (pound) (pound) (pound) (pound) Fixed assets Intangible Fixed Assets 8 20,801 24,001 Tangible Fixed Assets 9 575,176 597,689 ------- -------- 595,977 621,690 Current assets Stocks 11 26,570 78,764 Debtors 12 2,686,422 2,169,443 Cash at bank and in hand 24,948 103,356 ----------- ----------- 2,737,940 2,351,563 Creditors - amounts falling due within one year 13 (2,594,419) (2,481,953) ----------- ----------- Net current assets/(liabilities) 143,521 (130,390) ------- -------- Total assets less current liabilities 739,498 491,300 ======= ======== Capital and Reserves Called up share capital 16 100,000 100,000 Profit and loss account 17 639,498 391,300 ------- ------- Equity Shareholders' funds 18 739,498 491,300 ======= ========
The financial statements were approved by the board of directors on _______, 2001 and were signed on its behalf by: /s/ Gul Lodhi G. M. K. Lodhi Director The notes on pages 25 to 34 form part of these financial statements. 22 UNITED BREWERIES INTERNATIONAL (UK) LIMITED BALANCE SHEET - 30TH JUNE 2001
30th June 30th June 2001 2000 Note (pound) (pound) (pound) (pound) Fixed Assets Investments 10 299,119 299,119 Current Assets Debtors 12 42,032 5,434 Cash at bank and in hand 16,450 10,951 --------- --------- 58,482 16,385 Creditors: amounts falling due within one year 13 (225,353) (182,361) --------- --------- Net Current Liabilities (166,871) (165,976) --------- -------- Total assets less current liabilities 132,248 133,143 ========= ======== Capital and Reserves Called up share capital 16 100,000 100,000 Profit and loss account 32,248 33,143 --------- -------- Equity Shareholders' funds 132,248 133,143 ========= ========
The financial statements were approved by the board of directors on _______________ , 2001 and were signed on its behalf by: /s/ Gul Lodhi G. M. K. Lodhi Director The notes on pages 25 to 34 form part of these financial statements. 23 UNITED BREWERIES INTERNATIONAL LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30TH JUNE 2001
Six months Six months to 30th June to 30th June 2001 2000 (pound) (pound) Net cash inflow from operating activities (Note 24a) 66,793 731,576 Returns on investments and servicing of finance Interest paid (25,196) (32,012) ------- -------- Net cash outflow from returns on investments and servicing of finance (25,196) (32,012) Taxation (41,953) (426) Capital expenditure and financial investment Payments to acquire tangible assets (89,324) (112,983) Sale of tangible fixed assets -- 3,250 ------- -------- Net cash outflow for capital expenditure (89,324) (109,733) ------- -------- Net (decrease)/increase in cash in the period (89,680) 589,405 ======= ========
The notes on pages 25 to 34 form part of these financial statements. 24 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES Basis of accounting: The financial statements are prepared under the historical cost convention and in accordance with Generally Accepted Accounting Principles (GAAP) applicable in the United Kingdom (UK). All figures are derived from the company's unaudited management accounts for the six month periods ended 30th June 2000 and 2001. Reconciliation to US accounting principles - summary of differences between UK and US GAAP: No reconciliation between US GAAP and UK GAAP has been presented. In the opinion of the directors, for the period ended 30th June 2001, and for the period ended 30th June 2000 there are no significant differences in the group's net income and net equity on preparing the financial statements under either UK GAAP or US GAAP. Comparative figures: Comparative figures have been prepared for the six months to 30th June 2000 from unaudited management accounts. Balance sheet and cash flow notes showing movements in the period have been prepared to support the profit and loss account movements. Accordingly, certain comparatives use 1st January, 2001 as the appropriate starting point. Where this is the case, no full comparatives for 30th June 2000 have been prepared. Basis of consolidation: The consolidated accounts comprise the accounts of the parent undertaking and its subsidiary undertakings for the period ended 30th June 2001. Goodwill and intangible fixed assets: Goodwill represents purchased goodwill on the acquisition of UBSN Limited, a wholly owned subsidiary. It is valued at the amount by which the cost of UBSN Limited as a whole exceeded the aggregate fair values of its identifiable assets and liabilities at the date of acquisition. The goodwill is being amortized on a straight-line basis over ten years. This is the period over which UBSN Limited holds its brewing license to carry out its principal activity. Depreciation of tangible fixed assets: Depreciation is provided on all fixed assets at rates calculated to write off the costs 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 on the balance sheet date. 25 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued Turnover: Turnover represents the amounts receivable by the group for goods sold, services supplied and commissions receivable and is stated net of value added tax. Stocks: Stocks are valued on a first-in, first-out basis at the lower of cost and net realizable value. Taxation: Corporation tax is provided on taxable profits at current rates. 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 crystallize in the forseeable future. Pensions: The pension costs charged in the financial statements represent the contributions payable by the group during the period. 26 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 2. TURNOVER The total turnover comprises sales and commissions excluding value added tax.
The geographic analysis of turnover is as follows: Six months Six months to to 2001 2000 (pound) (pound) United Kingdom 3,552,519 3,294,876 Export 550,847 534,200 --------- --------- 4,103,366 3,829,076 ========= =========
3. OPERATING PROFIT
2001 2000 (pound) (pound) Operating profit has been arrived at after charging/(crediting):- Amortisation of intangible fixed assets 1,600 1,600 Depreciation of tangible fixed assets 92,504 105,152 Auditors' remuneration - as auditors 7,850 7,500 - for non audit services 4,650 4,200 (Profit) on disposal of tangible fixed assets -- (2,185) Exchange differences (4,797) 6,389 ======= ========
As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent undertaking is not presented as part of these financial statements. The consolidated profit for the financial period includes a profit of (pound)1,052, which is dealt with in the financial statements of the parent undertaking. 4. COSTS RELATING TO LITIGATION All remaining matters in issue between the parties have been finally resolved to their satisfaction. 5. INTEREST PAYABLE
2001 2000 (pound) (pound) Bank overdrafts 25,196 32,012 ====== ======
6. TAX ON PROFIT ON ORDINARY ACTIVITIES
2001 2000 (pound) (pound) Corporation Tax on profit for period at 30% (2000 - 30%) 50,000 57,625 Prior period adjustment 2,378 426 ------ ------ 52,378 58,051 ====== ======
27 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 7. DIRECTORS AND EMPLOYEES Staff costs during the period were as follows: Six months Six months to to 2001 2000 (pound) (pound) Wages and salaries 202,107 148,682 Other pension costs 9,227 6,126 ------- ------- 211,334 154,808 ======= ======= The average monthly number of employees, including directors, during the period was as follows: 2001 2000 Number Number Sales and marketing 15 13 ==== ==== 8. INTANGIBLE FIXED ASSETS - Group Goodwill (pound) Cost At 1st January 2001 and at 30th June 2001 32,001 ====== Aggregate amortisation At 1st January 2001 9,600 Charge for the period 1,600 ------ At 30th June 2001 11,200 ====== Net Book Value At 30th June 2001 20,801 ====== At 31st December 2000 22,401 ====== 28 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 9. TANGIBLE FIXED ASSETS - Group Plant and Motor Equipment Vehicles Total (pound) (pound) (pound) Cost At 1st January 2001 1,473,813 132,319 1,606,132 Additions 59,329 29,995 89,324 --------- ------- --------- At 30th June 2001 1,533,142 162,314 1,695,456 ========= ======= ========= Depreciation At 1st January 2001 976,644 51,132 1,027,776 Charge for period 78,557 13,947 92,504 --------- ------- --------- At 30th June 2001 1,055,201 65,079 1,120,280 ========= ======= ========= Net Book Value At 30th June 2001 477,941 97,235 575,176 ========= ======= ========= At 31st December 2000 497,169 81,187 578,356 ========= ======= ========= 10. FIXED ASSET INVESTMENTS - Company Shares in group undertakings and participating interests (pound) Cost and Net Book Value at 30th June 2000 and 30th June 2001 299,119 ======= The subsidiary undertakings are as follows:- Percentage of equity held UBSN Limited Registered in England 100% 11. STOCKS Group Company 2001 2000 2001 2000 (pound) (pound) (pound) (pound) Finished goods and goods for resale 26,570 78,764 -- -- ====== ====== ====== ====== 29 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 12. DEBTORS
Group Company 2001 2000 2001 2000 (pound) (pound) (pound) (pound) Trade debtors: Amounts owed by Shepherd Neame Limited 520,757 233,893 -- -- Other 2,153,561 1,929,949 42,032 5,434 Prepayments 12,104 -- -- -- Prepayments and accrued income in respect of related parties: Amounts owed by Shepherd Neame Limited -- 5,601 -- -- --------- --------- ------ ----- 2,686,422 2,169,443 42,032 5,434 ========= ========= ====== =====
13. CREDITORS - amounts falling due within one year
Group Company 2001 2000 2001 2000 (pound) (pound) (pound) (pound) Bank overdraft (secured - see note 19) 969,224 724,049 -- -- Trade creditors: Amounts owed to Shepherd Neame 1,208,260 1,322,174 -- -- Limited -- 25,363 -- -- UB Global Corporation Limited 180,095 88,707 68,545 7,162 Others 145,890 126,719 -- 72 Corporation tax 24,790 16,182 683 16,002 Other taxation and social security Accruals: Amounts owed to Shepherd Neame Limited 32,947 66,043 -- -- American United Breweries Inc 23,403 -- -- -- Other 9,810 112,716 -- 3,000 Other creditors -- -- -- -- Loan from subsidiary undertaking UBSN Ltd -- -- 156,125 156,125 --------- --------- ------- ------- 2,594,419 2,481,953 225,353 182,361 ========= ========= ======= =======
14. PENSION COSTS The group 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)9,227 (2000 - (pound)6,126). 30 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 15. DEFERRED TAXATION The full potential liability for 2001 is (pound)Nil (2000 - (pound)4,000) in respect of accelerated capital allowances carried forward which have not been provided for in the accounts. 16. CALLED UP SHARE CAPITAL - Company and Group
Authorized Allotted, called up and Issued and fully paid 2001 2000 2001 2000 No. No. No. No. 100,000 Ordinary shares of(pound)1 each 500,000 500,000 100,000 100,000 ------- ------- ------- ------- 500,000 500,000 100,000 100,000 ======= ======= ======= =======
17. PROFIT AND LOSS ACCOUNT - Group
(pound) At 1st January 2001 544,322 Retained profit for period 95,176 ------- At 30th June 2001 639,498 =======
18. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS - Group
2001 2000 (pound) (pound) Profit after taxation for the financial period 95,176 118,821 ------- ------- Net addition to shareholders' funds 95,176 118,821 Profit after taxation for the financial period 1st July 2000 to 31st December 2000 -- 153,022 Opening shareholders' funds 644,322 372,479 ------- ------- Closing shareholders' funds 739,498 644,322 ======= =======
31 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 19. BANK OVERDRAFT The bank overdraft is secured by a fixed and floating charge over the assets of UBSN Limited. The maximum facility available to the group is (pound)1,250,000. This facility is available on an on-going basis and is repayable on demand. Interest is calculated on a daily basis at 1.5% above the bank's base rate. 20. OPERATING LEASE COMMITMENTS Financial commitments under non-cancelable operating leases will result in the following payments falling due in the next financial year: 2001 2000 Land and Land and buildings buildings (pound) (pound) Expiring: Within two to five years 7,000 7,000 ===== ===== 21. ULTIMATE PARENT UNDERTAKING AND CONTROL The directors consider the company's ultimate parent undertaking to be Mendocino Brewing Company, Inc., a company incorporated in the United States of America. 22. POST BALANCE SHEET EVENTS On 13th August, 2001 Inversion Mirabele S.A. transferred its shareholding in United Breweries International (UK) Limited, in its entirety, to Mendocino Brewing Company. Inc., a company incorporated in the United States of America. 32 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 23. RELATED PARTY TRANSACTIONS During the year the group had the following transactions with its related parties:
30th June 30th June Nature of 2001 2000 relationship (pound) (pound) Shepherd Neame Limited Common trade (Company registered in the UK) Sales 520,159 485,281 Freight cost 128,906 138,272 Commission payable 51,997 39,644 Purchases 2,638,325 2,436,613 Galaxy International Limited Common commercial (Company registered in the UK) interests Management charge payable 17,000 -- American United Breweries Inc Mutuality of (Company registered in the USA) interest 20,290 53,897 Commission/advertising payable United Breweries Limited Licence owner (Company registered in India) 18,142 3,260 Royalty payable As a result of the trading and other activities with related parties, the following balances remained outstanding as at 30th June 2001. 2001 2000 (pound) (pound) Amounts owed by Shepherd Neame Limited 520,757 233,893 Amounts owed to Shepherd Neame Limited 1,208,260 1,322,174 Amounts owed to Galaxy International Limited 19,975 -- Amounts owed to United Breweries Limited 24,101 3,260 Accruals - Shepherd Neame Limited 32,947 66,043 - American United Brewers Inc 23,403 --
33 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 24. CASH FLOW STATEMENT a. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2001 2000 (pound) (pound) Operating profit 172,750 240,468 Depreciation charges 92,504 107,337 Amortisation charges 1,600 1,600 (Profit) on disposal of tangible assets -- (2,185) Decrease/(increase) in stocks 42,483 (15,690) Decrease/(increase) in debtors 121,663 552,792 (Decrease)/increase in creditors (364,207) (121,162) Costs relating to litigation -- (31,584) -------- -------- Net cash inflow from continuing operating activities 66,793 731,576 ======== ========
b. ANALYSIS OF CHANGES IN NET DEBT
At 1st At 1st At 30th July Cash January Cash June 2000 Flows 2001 Flows 2001 (pound) (pound) (pound) (pound) (pound) Net cash: Cash at bank and in hand Bank overdrafts 103,356 35,918 139,274 (114,326) 24,948 (724,049) (269,821) (993,870) 24,646 (969,224) -------- -------- -------- -------- -------- (620,693) (233,903) (854,596) (89,680) (944,276) ======== ======== ======== ======== ========
c. RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT IN NET DEBT 2001 2000 (pound) (pound) (Decrease)Increase in cash in the period and change in net debt (89,680) 589,405 (Decrease) in cash in the period 1st July 2000 to 31st December 2000 -- (233,903) Opening net debt (854,596) (1,210,098) -------- ---------- Closing net debt (944,276) (854,596) ======== ========== 34 UNITED BREWERIES INTERNATIONAL (UK) LIMITED DETAILED CONSOLIDATED PROFIT AND LOSS ACCOUNT Period ended 30th June 2001
Six months Six months to 30th June to 30th June 2001 2000 (pound) (pound) GROSS PROFIT Sales and commissions 4,103,366 3,829,076 Cost of sales (2,700,495) (2,478,177) ---------- ---------- Gross profit 1,402,871 1,350,899 ---------- ---------- DISTRIBUTION AND SELLING EXPENSES Freight 187,097 225,543 Advertising and promotional expenses 248,207 230,852 Sales commission 72,287 93,541 Dispense equipment repairs 85,017 58,647 Operational expenses 170,419 124,924 Sponsorship 900 27,280 Other distribution and selling 82,604 52,341 ---------- ---------- 846,531 813,128 ---------- ---------- GENERAL AND ADMINISTRATIVE EXPENSES Management fees 17,000 -- Audit and taxation fees 25,420 11,700 Postage and stationery 3,077 1,885 Bad debt provision 15,000 12,500 Depreciation/profit on asset disposal 92,504 105,152 Amortisation 1,600 1,600 Exchange rate differences (4,797) 6,389 Operational expenses 116,974 93,858 Royalties payable/receivable 21,995 2,370 Miscellaneous 94,817 61,849 ---------- ---------- 383,590 297,303 ---------- ---------- FINANCE COSTS Bank interest paid and charges 25,196 32,012 ---------- ---------- 25,196 32,012 ---------- ---------- EXCEPTIONAL ITEMS Litigation costs -- 31,584 ---------- ---------- -- 31,584 ---------- ---------- Profit on ordinary activities before taxation 147,554 176,872 ========== ==========
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