-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BESbHy3zXFesekG1nqw1JTMw12sY2I61weXbEPqDx9Duc7WuuWJ/ukPTuJ3f+f/o CqiTV3+wwBsmbPI5xsL2fg== 0000950005-00-001215.txt : 20001227 0000950005-00-001215.hdr.sgml : 20001227 ACCESSION NUMBER: 0000950005-00-001215 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001122 ITEM INFORMATION: FILED AS OF DATE: 20001226 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MENDOCINO BREWING CO INC CENTRAL INDEX KEY: 0000919134 STANDARD INDUSTRIAL CLASSIFICATION: MALT BEVERAGES [2082] IRS NUMBER: 680318293 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-13636 FILM NUMBER: 795599 BUSINESS ADDRESS: STREET 1: 13351 S HWY 101 CITY: HOPLAND STATE: CA ZIP: 95449 BUSINESS PHONE: 7077441015 MAIL ADDRESS: STREET 1: 13351 S HWY 101 CITY: HOPLAND STATE: CA ZIP: 95449 8-K/A 1 0001.txt FORM 8-K/A - -------------------------------------------------------------------------------- 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. 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 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.
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 ----------------- ------------------ ------------------ ----------------- 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 ================= ================== ================== ================= (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.
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 ----------------- ---------------- ------------------ ----------------- 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 ================= ================== ================== (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.
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 --------------------- ---------------------- ---------------------- --------------------- 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 ===================== ====================== ===================== (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.
GBP (pound's) GBP (pound's) GBP (pound's) Nine months ended September December 31, December 31, 30, 2000 1999 1998 --------------------- ----------------- ----------------- 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 ===================== ================= =================
Conversion to United States Dollars
GBP US$ GBP US$ 1999 Exchange 1999 1998 Exchange 1998 UBIUK Rate Consolidated UBIUK Rate Consolidated ------------ ---------- ---------------- ------------ ---------- ---------------- 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 ========= ========== ========= ========== 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 ========== ==========
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.
United Breweries International, Ltd. (UBI) Balance Sheet September 30, 2000 (GBP pound) Exchange (US$) UBI Rate UBI ---------------- ------------- ----------------- 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 ================ =================
United Breweries International, Ltd. (UBI) Statement of Income and Stockholder's Equity September 30, 2000 (GBP pound) Exchange (US$) UBI Rate UBI ---------------- ------------- ----------------- 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 ================ =================
United Breweries International, Ltd. (UBI) Statement of Cash Flows September 30, 2000
(GBP pound) Exchange (US$) UBI Rate UBI ---------------- ------------- ----------------- 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 ================ =================
United Breweries International, Ltd. (UBI) Balance Sheet December 31, 1999
(GBP pound) Exchange (US$) UBI Rate UBI --------------- ------------ ------------------ 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 ================ ==================
United Breweries International, Ltd. (UBI) Statement of Income and Stockholder's Equity December 31, 1999
(GBP pound) Exchange (US$) UBI Rate UBI ---------------- ------------- ------------------ 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 ================ ==================
United Breweries International, Ltd. (UBI) Statement of Cash Flows December 31, 1999
(GBP pound) Exchange (US$) UBI Rate UBI ---------------- ------------ ------------------ 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 ================ ==================
United Breweries International, Ltd. (UBI) Balance Sheet December 31, 1998
(GBP pound) Exchange (US$) UBI Rate UBI ---------------- ------------ -------------------- 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 ================ ====================
United Breweries International, Ltd. (UBI) Statement of Income and Stockholder's Equity December 31, 1998
(GBP pound) Exchange (US$) UBI Rate UBI --------------- ------------- --------------------- 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 =============== =====================
United Breweries International, Ltd. (UBI) Statement of Cash Flows December 31, 1998
(GBP pound) Exchange (US$) UBI Rate UBI ----------------- ------------- ----------------- 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 ================= =================
Company Registration No. 1688201 (England and Wales) UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY GROUP FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30TH SEPTEMBER 2000 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 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 UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
Note (pound) 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 ==========
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. UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY CONSOLIDATED BALANCE SHEET AS AT 30TH SEPTEMBER 2000
Note (pound) (pound) 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 ==========
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
(pound) (pound) 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 ========
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
(pound) (pound) 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) ==========
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY COMPANY BALANCE SHEET AS AT 30TH SEPTEMBER 2000
Note (pound) (pound) 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 ===========
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. 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 a) Group
Plant and Motor equipment Vehicles Total Cost (pound) (pound) (pound) 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. 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 ===========
UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30TH SEPTEMBER 2000
12 Statement of movement on profit and loss account Group Profit and loss a/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 ==============
16 Control The group's ultimate parent company is Inversion Mirabele S.A., a company incorporated in Panama. UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARY NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30TH SEPTEMBER 2000 17 Related party transactions During the period to 30th September 2000, the group has had the following transactions with related parties:
Related Party Transactions (pound) 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 ===========
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 ======== 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 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 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 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 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)
- -------------------------------------------------------------------------------- -1- 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- UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 Notes (pound) (pound) 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 ========== ==========
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- UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 Notes (pound) (pound) (pound) pound) 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 ========== ==========
- -------------------------------------------------------------------------------- -4- UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 (pound) (pound) 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) ======== ========
- -------------------------------------------------------------------------------- -5- UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1 Reconciliation of operating profit to net cash outflow from operating 1999 1998 activities (pound) (pound) 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) =============== ===============
- -------------------------------------------------------------------------------- -6- UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES COMPANY BALANCE SHEET AS AT 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 Notes (pound) (pound) (pound) (pound) 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 ============== ===============
- -------------------------------------------------------------------------------- -7- 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- 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- 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- 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
Group Group Company Company 1999 1998 1999 1998 (pound) (pound) (pound) (pound) Finished goods and promotional material 63,074 111,420 -- -- =============== ============== =============== ===============
There is no material difference between the current replacement cost and historic cost of stock. - -------------------------------------------------------------------------------- -11- UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 1999 - -------------------------------------------------------------------------------- 11 Debtors
Group Group Company Company 1999 1998 1999 1998 (pound) (pound) (pound) (pound) 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 =============== ============== =============== ===============
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. 12 Creditors: amounts falling due within one year
Group Group Company Company 1999 1998 1999 1998 (pound) (pound) (pound) (pound) 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 =============== ============== =============== ===============
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- UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 1999 - -------------------------------------------------------------------------------- 14 Share capital
Company Company 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 =============== =============== 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 =============== ===============
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- 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- UNITED BREWERIES INTERNATIONAL (UK) LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 1999 - -------------------------------------------------------------------------------- 22 Related party transactions During the year the group has had the following transactions with its related parties:
1999 1998 Related party Transactions (pound) (pound) 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 ---------------- ------------------
- -------------------------------------------------------------------------------- -15- UNITED BREWERIES INTERNATIONAL (UK) LIMITED COMPANY DETAILED TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 (pound) (pound) (pound) (pound) 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 ============== ===============
- -------------------------------------------------------------------------------- -16- U B S N LIMITED NO 2367133 REPORT & ACCOUNTS 31 DECEMBER 1999 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 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 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 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 UBSN Limited
PROFIT AND LOSS ACCOUNT Year ended 31 December 1999 1999 1998 Notes (pound) (pound) ----- ----------- ----------- 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 =========== ===========
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 UBSN Limited
BALANCE SHEET 31 December 1999 1999 1998 Notes (pound) (pound) ----- ----------- ----------- 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 =========== ===========
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 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 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 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 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 ======= ======= 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.
9. FIXED ASSETS Plant and Motor Equipment Vehicles Total ---------- -------- --------- (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 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 ========== ======= ==========
11 UBSN Limited NOTES TO THE ACCOUNTS 31 December 1999
10. STOCKS 1999 1998 (pound) (pound) Finished goods and promotional materials 63,074 111,420 ========= ========= 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
12 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. 16. SHARE CAPITAL
Authorised Allotted, called up And issued and partly paid 1999 1998 1999 1998 No No (pound) (pound) 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 ======= ======= ======= =======
13 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 UBSN Limited NOTES TO THE ACCOUNTS 31 December 1999 20. TRANSACTIONS WITH RELATED PARTIES During the year the company has had the following transactions with its related parties.
1999 1998 (pound) (pound) 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
15 THE FOLLOWING STATEMENTS DO NOT FORM PART OF THE AUDITED STATUTORY ACCOUNTS 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 ========== ========== UNITED BREWERIES INTERNATIONAL (UK) LIMITED DIRECTORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 1999 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 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 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. 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 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 UNITED BREWERIES INTERNATIONAL (UK) LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 Notes (pound) (pound) 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 ===================== ====================
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. UNITED BREWERIES INTERNATIONAL (UK) LIMITED BALANCE SHEET AS AT 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 Notes (pound) (pound) (pound) (pound) 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 ============== ===============
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 UNITED BREWERIES INTERNATIONAL (UK) LIMITED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 (pound) (pound) 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) ============== ===============
UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1 Reconciliation of operating profit to net cash (outflow)/inflow from 1999 1998 operating activities (pound) (pound) 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) =============== ===============
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. 3 Operating profit
1999 1998 (pound) (pound) 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) -- =================== ================== 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 -- ======================= ====================
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. UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
8 Debtors 1999 1998 (pound) (pound) 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 =============== ===============
UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 1999 - -------------------------------------------------------------------------------- 12 Statement of movements on profit and loss account
Profit and loss account (pound) 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 =============== ===============
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. UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 1999 - -------------------------------------------------------------------------------- 16 Employees Number of employees The average monthly number of employees (including directors) during the year was:
1999 1998 Number Number 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 =============== ===============
UNITED BREWERIES INTERNATIONAL (UK) LIMITED DETAILED TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 1999 - --------------------------------------------------------------------------------
1999 1998 (pound) (pound) (pound) (pound) 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 ============== ===============
U B S N LIMITED NO 2367133 REPORT & ACCOUNTS 31 DECEMBER 1998 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 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 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 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 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 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 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 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 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 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 UBSN Limited NOTES TO THE ACCOUNTS 31 December 1998 10. STOCKS
1998 1997 (pound) (pound) 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 ========= =========
12 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 UBSN Limited NOTES TO THE ACCOUNTS 31 December 1998 16. SHARE CAPITAL
Authorised Allotted, called up And issued and partly paid 1998 1997 1998 1997 No No (pound) (pound) 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 ======= ======= ======= =======
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 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 THE FOLLOWING STATEMENTS DO NOT FORM PART OF THE AUDITED STATUTORY ACCOUNTS 16 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 Company Registration No. 1688201 (England and Wales) UNITED BREWERIES INTERNATIONAL (UK) LIMITED DIRECTORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 1998 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 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 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. 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- 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- UNITED BREWERIES INTERNATIONAL (UK) LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 1998 - --------------------------------------------------------------------------------
1998 1997 Notes (pound) (pound) 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 ===================== ====================
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- UNITED BREWERIES INTERNATIONAL (UK) LIMITED BALANCE SHEET AS AT 31 DECEMBER 1998 - --------------------------------------------------------------------------------
1998 1997 Notes (pound) (pound) (pound) (pound) 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 ============== ===============
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- 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- 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- UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 1998 - --------------------------------------------------------------------------------
5 Debtors 1998 1997 (pound) (pound) 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) ===============
- -------------------------------------------------------------------------------- -8- 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- UNITED BREWERIES INTERNATIONAL (UK) LIMITED DETAILED TRADING AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 1998 - --------------------------------------------------------------------------------
1998 1997 (pound) (pound) (pound) (pound) 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 ============== ===============
- -------------------------------------------------------------------------------- -10- 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 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: ______________ -----END PRIVACY-ENHANCED MESSAGE-----