-----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, IkzAn3bbRZVtVqyhdgVS0euvVMjD1Afdczk7jU1pgWxOL1R4LjFWy/Mmo6xjelrS MGhuUdOHNoSZ3JtQmw7trg== 0001053949-01-500049.txt : 20010412 0001053949-01-500049.hdr.sgml : 20010412 ACCESSION NUMBER: 0001053949-01-500049 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20001103 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010411 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: 1599929 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 e900096_r4.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A No. 2 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 3, 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 2. Acquisition or Disposition of Assets Acquisition of United Breweries International (UK) Limited On November 3, 2000 Mendocino Brewing Company, Inc. (the "Company") entered into a Share Purchase Agreement with Inversiones Mirabel, S.A., a Panamanian corporation ("Inversiones") and Golden Eagle Trust, a trust formed under the laws of the Isle of Man (part of the United Kingdom) ("Golden Eagle"). Under the terms of the Share Purchase Agreement, the Company will acquire from Inversiones all of the outstanding shares of United Breweries International (UK) Limited, a company organized under the laws of the United Kingdom ("UBI"). (The Company's acquisition of UBI is referred to below as the "Acquisition"). UBI's only material asset is UBSN Ltd., a United Kingdom corporation ("UBSN") which is its wholly-owned subsidiary. UBSN markets, sells, and distributes Kingfisher Lager beer, primarily in the United Kingdom and elsewhere in the European Union. Currently, the Kingfisher beer is brewed for UBSN by a third party, Shepherd Neame Limited, under a contract manufacturing agreement. Following consummation of the Acquisition, UBI will be a wholly-owned subsidiary of the Company and UBSN will continue to be a wholly owned subsidiary of UBI. The Company intends to continue operating UBI and UBSN in the marketing, sale, and distribution of beer, including Kingfisher Lager, in the United Kingdom and elsewhere in the European Union. The purchase price for UBI will be 5,500,000 shares of the Company's to be issued common stock (the "Purchase Shares"). The Company will not pay any cash or other consideration, except for the Purchase Shares, to acquire UBI. (A copy of the Share Purchase Agreement is attached to this Current Report as Exhibit 1) The shares of Company stock proposed to be issued to Inversiones under the Share Purchase Agreement would constitute approximately 49.6% of the Company's outstanding Common Stock after the Acquisition is consummated. Under the Share Purchase Agreement, Inversiones has made a number of representations and warranties with respect to UBI and UBSN. Each of these representations and warranties, and the performance by Inversiones of its indemnity obligations with respect thereto, are unconditionally indemnified and guaranteed by Golden Eagle, which must indemnify and hold the Company harmless against any and all losses, damages, costs, and expenses suffered or incurred by the Company as the result of any breach by Inversiones of any of such representations, warranties, or indemnities. Kingfisher Lager Beer One potential advantage of the Acquisition for the Company is that, as a result of the Acquisition, the Company could become the distribution agent for Kingfisher Lager beer in the United States and Canada. At present, the U.S. distribution agent for Kingfisher Lager beer in the United States is American United Breweries Int'l., Inc. ("AUBI"), a company which is affiliated with Inversiones and Golden Eagle, although there is no formal distribution agreement between UBI and AUBI for this purpose. After the proposed Acquisition is consummated, the Company 2 anticipates that UBI will terminate this relationship (as it relates to the distribution of Kingfisher beer) and that UBI will enter into a separate distribution agreement to grant the rights for the United States and Canada to the Company. AUBI will, however, continue to distribute other beers in the United States which compete with the Kingfisher brand (in the same market niche), notably the Flying Horse and Tajmahal brands. Approval of the Acquisition by a Special Committee of the Board; Fairness Opinion Because the Acquisition is considered to be a related party transaction (see below), the Company appointed a Special Committee of its Board of Directors, consisting of Directors who are not also Company employees or related to Inversiones, Golden Eagle, or their affiliates (the "Special Committee") to negotiate the Share Purchase Agreement and make a recommendation with respect to the Acquisition to the entire Board of Directors. The Special Committee retained Sage Capital LLC ("Sage") to act as its financial advisor in connection with the evaluation of certain elements of the Company's acquisition strategy. Pursuant to this engagement, Sage was asked to render an opinion as to whether the equity consideration to be paid for UBI pursuant to the Agreement is fair to the shareholders of the Company from a financial point of view. On November 3, 2000, Sage delivered to the Special Committee its written opinion that, as of that date, the consideration to be paid by the Company in exchange for all of the equity of UBI was fair to the Company's shareholders from a financial point of view. Related Party Transaction The principal trustee of Golden Eagle is CAS Nomines Ltd., a corporation organized under the laws of the Isle of Man (part of the United Kingdom). Because CAS Nominees Ltd. has the ability to act in favor of Dr. Vijay Mallya, the Company's Chairman of the Board and Chief Executive Officer, Dr. Mallya may be deemed to have a beneficial ownership interest, and therefore a material financial interest, in Golden Eagle. Golden Eagle is the sole (100%) owner of Inversiones, which in turn owns UBI. Through one of its subsidiaries, United Breweries of America, BVI, a British Virgin Islands corporation, Golden Eagle also holds a controlling interest in United Breweries of America, Inc., a Delaware corporation ("UBA") which is also the Company's principal shareholder. UBA owns 3,087,818 shares, or 55.3%, of the Company's currently outstanding voting Common Stock. (UBA also has an agreement with certain of the Company's original founders which grants to UBA a right of first refusal to purchase an additional 882,547 shares.) Dr. Mallya is the Chairman of the Board and Chief Executive Officer of UBA. Through Inversiones and UBA, therefore, Golden Eagle owns or controls a majority of the voting stock of both of the principal parties to the Agreement. In addition, Dr. Mallya is a member of the board of directors of UBSN. In addition to the relationship of Dr. Mallya to both the Company and Golden Eagle, another of the Company's Directors, Mr. R.H.B. Neame, may also be deemed to have an interest in the Acquisition. Mr. Neame has served as the Chairman and Chief Executive Officer of Shepherd Neame Ltd. for over twenty-five years. Shepherd Neame Ltd. is a distributor of Kingfisher Lager, and has an agreement with UBSN to provide distribution and other services to UBSN. 3 Because the Acquisition would be a related-party transaction, a Special Committee of the Board of Directors was created to review and approve the proposed Acquisition. The members of the Special Committee are Kent Price (Chairman), Sury Palamand and Michael Laybourn. The Special Committee engaged the law firm of Baker & McKenzie to act as its independent counsel and to advise it with respect to the terms and conditions of the Share Purchase Agreement. As discussed above, the Company has obtained, from Sage Capital, L.L.C., an independent opinion as to the fairness of the Acquisition, from a financial point of view, to the Company's shareholders (including shareholders other than UBA). Consummation of the Acquisition The Company anticipates that the Acquisition will be consummated during the late spring or early summer of 2001. The primary contingency affecting consummation of the Acquisition is that the Company must obtain approval of a majority of its shareholders. The Company intends to submit the Acquisition to its shareholders for approval at its next Annual Meeting, which is scheduled to be held in the spring of 2001. Even if the Acquisition does receive the approval of a majority of the Company's shareholders, however, under the terms of the Share Purchase Agreement the Company may elect not to consummate the Acquisition if the holders of more than 123,457 shares of Company stock (about 2.2% of the currently outstanding shares) elect to exercise their dissenters' rights under California law. Item 7. Exhibits Exhibit No. Description - ----------- ----------- 99.1 Share Purchase Agreement among Inversiones Mirabel, S.A., Mendocino Brewing Company, Inc., and Golden Eagle Trust, dated November 3, 2000. Incorporated by reference to Supplement A in Definitive Proxy Statement filed November 22, 2000. 99.2 Press release dated March 29, 2000 announcing the Company's acquisition of UBSN and the U.S. distribution rights to Kingfisher Premium Lager Beer from UBI. Incorporated by reference to EX-4.1 in 8-K filed March 29, 2000. 99.3 Mendocino Brewing Company, Inc. and United Breweries International (UK) Limited Pro Forma Balance Sheet and Income Statement for the years ended December 31, 1999 and 2000. 99.4 United Breweries International (UK) Limited December 31, 2000 Consolidated Financial Statements Conversion Table 99.5 United Breweries International (UK) Limited Balance Sheet, Statement of Income and Stockholder's Equity, and Statement of Cash Flows for the years ended December 31, 1999 and 2000. 4 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: April __, 2001 By /s/ N. Mahadevan --------------------------------------- N. Mahadevan Chief Financial Officer and Corporate Secretary EXHIBIT INDEX Sequentially Numbered Exhibit No. Description Page - ----------- ----------- ------------ 99.1 Share Purchase Agreement among Inversiones Mirabel, S.A., Mendocino Brewing Company, Inc., and Golden Eagle Trust, dated November 3, 2000 Incorporated by reference to Definitive Proxy Statement filed November 22, 2000. 99.2 Press release dated March 29, 2000 announcing the Company's acquisition of UBSN and the U.S. distribution rights to Kingfisher Premium Lager Beer from UBI. Incorporated by reference to EX-4.1 in 8K filed March 29, 2000. 99.3 Mendocino Brewing Company, Inc. and United 7 Breweries International (UK) Limited Pro Forma Balance Sheet and Income Statement for the years ended December 31, 1999 and 2000 99.4 United Breweries International (UK) Limited 12 December 31, 2000 Consolidated Financial Statements Conversion Table 99.5 United Breweries International (UK) Limited 18 Balance Sheet, Statement of Income and Stockholder's Equity, and Statement of Cash Flows for the years ended December 31, 1999 and 2000 6 EX-99.3 2 ex-99_3.txt EXHIBIT 99.3 Mendocino Brewing Company, Inc. and United Breweries International (UK) Limited Pro Forma Balance Sheet and Income Statement for the years ended December 31, 1999 and 2000 The Pro Forma Condensed Consolidated Financial Statements of Registrant as of December 31, 2000 and 1999 were prepared using U.S. Generally Accepted Accounting Principles (U.S. GAAP) and 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 January 1, 1999. 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 $.8125 per share (the last reported sale price of common stock on November 2, 2000, the day the agreement was finalized.) The purchase is being recorded as if it were a pooling transaction due to the related party nature of the transaction. 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. 7
Pro forma Adjustment ---------------------------------- Mendocino United Breweries Pro forma Brewing Co, Inc. International, Ltd. Consolidated ASSETS 12/31/00 12/31/2000 (a) Adjustments 12/31/00 -------------- ------------------- ----------- -------------- CURRENT ASSETS Cash $ - $ 208,300 $ - $ $ 208,300 Accounts receivable 1,173,000 4,242,900 - 5,415,900 Inventories 1,203,300 103,300 - 1,306,600 Prepaid expenses 116,600 - 116,600 Deferred income taxes 48,100 - - 48,100 -------------- --------------- ----------- ------------- Total current assets 2,541,000 4,554,500 - 7,095,500 -------------- --------------- ----------- ------------- PROPERTY AND EQUIPMENT 13,997,400 864,900 - 14,862,300 -------------- --------------- ----------- ------------- OTHER ASSETS Intangibles, net of amortization 53,900 33,500 - 87,400 Other assets 410,500 - (340,700)(b) 69,800 Deferred taxes 2,768,000 - - 2,768,000 -------------- --------------- ----------- ------------- 3,232,400 33,500 (340,700) 2,925,000 -------------- --------------- ----------- ------------- Total assets $ 19,770,800 $ 5,452,900 $(340,700) $ 24,883,000 ============== =============== =========== ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Disbursements in excess of deposits $ $ 1,700 $ - $ - $ 1,700 Line of credit - 1,486,300 1,486,300 Accounts payable 1,942,200 2,134,300 4,076,500 Accrued liabilities 358,100 666,100 - 1,024,200 Accrued income taxes 1,000 202,600 203,600 Current maturities of debt and leases 759,900 - - 759,900 -------------- --------------- ----------- ------------- Total current liabilities 3,062,900 4,489,300 - 7,552,200 LONG-TERM DEBT AND CAPITAL LEASES, less current maturities 5,655,100 - - 5,655,100 LINE OF CREDIT 1,281,600 - - 1,281,600 -------------- --------------- ----------- ------------- Total liabilities 9,999,600 4,489,300 - 14,488,900 -------------- --------------- ----------- ------------- STOCKHOLDERS' EQUITY Preferred stock 227,600 - - 227,600 Common stock 13,875,900 149,600 - 14,025,500 Accumulated deficit (4,332,300) 814,000 (340,700) (3,859,000) -------------- --------------- ----------- ------------- Total stockholders' equity 9,771,200 963,600 (340,700) 10,394,100 -------------- --------------- ----------- ------------- Total liabilities and stockholders' equity $ 19,770,800 $ 5,452,900 $(340,700) $ 24,883,000 ============== =============== =========== =============
(a) To include the assets and liabilities of United Breweries International, Ltd., as of December 31, 2000. (b) To expense capitalized acquisition costs. 8
Pro forma Adjustment ---------------------------------- Mendocino United Breweries Pro forma Brewing Co, Inc. International, Ltd. Consolidated 12/31/00 12/31/2000 (a) Adjustments 12/31/00 ---------------- ------------------- ------------- -------------- NET SALES $ 9,255,900 $ 12,643,600 $ - $ 21,899,500 COST OF GOODS SOLD 5,823,300 8,220,000 - 14,043,300 ------------- --------------- ------------- ------------ GROSS PROFIT 3,432,600 4,423,600 - 7,856,200 OPERATING EXPENSES Selling and marketing 2,041,900 2,806,400 - 4,848,300 General and administrative 1,441,500 903,500 2,345,000 ------------- --------------- ------------- ------------ 3,483,400 3,709,900 - 7,193,300 ------------- --------------- ------------- ------------ INCOME (LOSS) FROM OPERATIONS (50,800) 713,700 - 662,900 OTHER INCOME (EXPENSE) Interest expense (895,800) (82,000) - (977,800) Other income (expense) 90,000 (17,600) (340,700)(b) (268,300) ------------- --------------- ------------- ------------ (805,800) (99,600) (340,700) (1,246,100) ------------- --------------- ------------- ------------ INCOME (LOSS) BEFORE INCOME TAXES (856,600) 614,100 (340,700) (1,246,100) PROVISION (BENEFIT) FROM INCOME TAXES (329,400) 202,200 - (127,200) ------------- --------------- ------------- ------------ NET INCOME (LOSS) $ (527,200) $ 411,900 $ (340,700) $ (456,000) ============= =============== ============= ============ BASIC INCOME (LOSS) PER COMMON SHARE $ (0.10) $ (0.04) ============= ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 5,538,514 5,500,000 11,038,514 ============= ============= ============
(a) To include the profits and losses of United Breweries International, Ltd. (b) To expense capitalized acquisition costs. 9
Pro forma Adjustment ---------------------------------- Mendocino United Breweries Pro forma Brewing Co, Inc. International, Ltd. Consolidated ASSETS 12/31/99 12/31/1999 (a) Adjustments 12/31/99 ---------------- ------------------- ----------- -------------- CURRENT ASSETS Cash $ - $ 54,700 $ - $ 54,700 Accounts receivable 1,040,300 4,396,400 - 5,436,700 Inventories 1,168,700 101,900 - 1,270,600 Prepaid expenses 57,200 - 57,200 Deferred income taxes 43,100 - - 43,100 ------------- ------------- ---------- ------------ Total current assets 2,309,300 4,553,000 - 6,862,300 ------------- ------------- ---------- ------------ PROPERTY AND EQUIPMENT 14,727,200 957,900 - 15,685,100 ------------- ------------- ---------- ------------ OTHER ASSETS Intangibles, net of amortization 61,000 41,300 - 102,300 Other assets 92,100 92,100 Deferred taxes 2,440,300 - - 2,440,300 ------------- ------------- ---------- ------------ 2,593,400 41,300 - 2,634,700 ------------- ------------- ---------- ------------ Total assets $ 19,629,900 $ 5,552,200 $ - $ 25,182,100 ============= ============= ========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Disbursements in excess of deposits $ 9,600 $ - $ - $ 9,600 Line of credit 1,159,800 2,009,000 3,168,800 Accounts payable 1,708,700 2,284,300 3,993,000 Accrued liabilities 334,900 545,700 - 880,600 Accrued income taxes - 111,600 111,600 Current maturities of debt and leases 596,700 - - 596,700 ------------- ------------- ---------- ------------ Total current liabilities 3,809,700 4,950,600 - 8,760,300 LONG-TERM DEBT AND CAPITAL LEASES, less current maturities 5,562,800 - - 5,562,800 ------------- ------------- ---------- ------------ Total liabilities 9,372,500 4,950,600 - 14,323,100 ------------- ------------- ---------- ------------ STOCKHOLDERS' EQUITY Preferred stock 227,600 - - 227,600 Common stock 13,834,900 161,500 - 13,996,400 Accumulated deficit (3,805,100) 440,100 - (3,365,000) ------------- ------------- ---------- ------------ Total stockholders' equity 10,257,400 601,600 - 10,859,000 ------------- -------------- ---------- ------------ Total liabilities and stockholders' equity $ 19,629,900 $ 5,552,200 $ - $ 25,182,100 ============= ============= ========== ============
(a) To include the assets and liabilities of United Breweries International, Ltd., as of December 31, 1999. 10
Pro forma Adjustment ---------------------------------- Mendocino United Breweries Pro forma Brewing Co, Inc. International, Ltd. Consolidated 12/31/99 12/31/1999 (a) Adjustments 12/31/99 -------------- ------------------- ----------- -------------- 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 1,054,500 2,706,700 ------------ -------------- ----------- -------------- 3,760,800 3,568,400 - 7,329,200 ------------ -------------- ----------- -------------- INCOME (LOSS) FROM OPERATIONS (830,100) 534,600 - (295,500) OTHER INCOME (EXPENSE) Interest expense (846,800) (116,100) - (962,900) Other income (expense) (358,900) (202,700) - (561,600) ------------ -------------- ----------- -------------- (1,205,700) (318,800) - (1,524,500) ------------ -------------- ----------- -------------- INCOME (LOSS) BEFORE INCOME TAXES (2,035,800) 215,800 - 1,820,000 PROVISION (BENEFIT) FROM INCOME TAXES (729,500) 102,000 - (627,500) ------------ -------------- ----------- -------------- NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS (1,306,300) 113,800 - (1,192,500) LOSS FROM OPERATIONS OF SOYCO, LTD. - (242,500) 242,500 (b) - GAIN ON THE DISPOSAL OF SOYCO, LTD. - 3,056,300 (3,056,300)(b) - ------------ -------------- ----------- -------------- NET INCOME (LOSS) $ (1,306,300) $ 2,927,600 $(2,813,800) $ (1,192,500) ============ ============== =========== ============== 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 losses of United Breweries International, Ltd. (b) To carve out the operations of Soyco, Ltd., a subsidiary that will not be purchased as part of the the proposed transaction. Soyco, Ltd. was sold in December 1999. (c) To reflect the shares issued for the purchase of the stock of United Breweries International, Ltd. 11 EX-99.4 3 ex-99_4.txt EXHIBIT 99.4 United Breweries International (UK) Limited December 31, 2000 Consolidated Financial Statements Conversion Table United Breweries International, Ltd. (UBI) Consolidated Balance Sheet December 31, 2000
(GBP(pound)) Exchange (US$) UBI Rate UBI ---------------- ---------- ------------- Cash (pound)139,274 1.4955 $ 208,284 Accounts receivable 2,812,179 1.4955 4,205,614 Inventory 69,053 1.4955 103,269 Prepaids 24,932 1.4955 37,286 ---------------- ------------- Current assets 3,045,438 4,554,453 ---------------- ------------- Property, plant and equipment 578,356 1.4955 864,931 ---------------- ------------- Intangible assets, net of amortization 22,401 1.4955 33,501 ---------------- ------------- Total assets (pound)3,646,195 $ 5,452,885 ================ ============= Current liabilities Bank overdraft (pound)993,870 1.4955 $ 1,486,333 Accounts payable 1,427,112 1.4955 2,134,246 Income tax payable 135,464 1.4955 202,586 Accruals 445,427 1.4955 666,136 ---------------- ------------- Total liabilities 3,001,873 4,489,301 ---------------- ------------- Stockholder's Equity Common stock 100,000 1.4955 149,550 Currency translation - (5,464) Retained earnings 544,322 819,498 ---------------- ------------- 644,322 963,584 ---------------- ------------- Total stockholder's equity and liabilities (pound)3,646,195 $ 5,452,885 ================ =============
12 United Breweries International, Ltd. (UBI) Consolidated Statement of Income and Stockholder's Equity December 31, 2000
(GBP(pound)) Exchange (US$) UBI Rate UBI ---------------- ---------- ------------ Sales (pound)8,342,315 1.5156 $ 12,643,613 Cost of goods sold 5,423,592 1.5156 8,219,996 ---------------- ------------ Gross profit 2,918,723 4,423,617 Selling and distribution 1,851,646 1.5156 2,806,355 General and administrative 596,108 1.5156 903,461 ---------------- ------------ Net income from operations 470,969 713,801 Other income (expense) Provision for litigation (11,584) 1.5156 (17,557) Interest expense (54,116) 1.5156 (82,018) ---------------- ------------ Net income before taxes 405,269 614,226 Provision for income tax (133,426) 1.5156 (202,220) ---------------- ------------ Net income (pound)271,843 $ 412,005 Retained earnings, beginning of year 272,479 1.4955 407,492 ---------------- ------------ Retained earnings, end of year (pound)544,322 $ 819,498 ================ ============
13 United Breweries International, Ltd. (UBI) Consolidated Statement of Cash Flows December 31, 2000
(GBP(pound)) Exchange (US$) UBI Rate UBI -------------- ---------- ----------- Cash flows from operating activities Net income (pound)271,843 1.5156 $ 412,005 Adjustments to reconcile net income to net cash from operating activities Depreciation 238,587 1.5156 361,602 Gain on sale of assets (2,185) 1.5156 (3,312) Changes in: Accounts receivable (114,876) 1.5156 (174,106) Inventory (5,979) 1.5156 (9,062) Accounts payable and accruals 186,562 1.5156 282,753 -------------- ----------- Net cash from operating activities 573,952 869,882 -------------- ----------- Cash flows from investing activities Purchase of property, plant and equipment (221,700) 1.5156 (336,009) Cash received from sale of assets 3,250 1.5156 4,926 Cash received from sale of investments - 1.5156 - -------------- ----------- (218,450) (331,083) -------------- ----------- Cash flows from financing activities Increase in bank overdraft (250,073) 1.5156 (379,011) -------------- ----------- Translation adjustment - (2,119) -------------- ----------- Net increase in cash 105,429 157,669 Cash beginning of year 33,845 1.4955 50,615 -------------- ----------- Cash end of year (pound)139,274 $ 208,284 ============== ===========
14 United Breweries International, Ltd. (UBI) Consolidated Balance Sheet December 31, 1999
(GBP(pound)) Exchange (US$) UBI Rate UBI ---------------- ---------- ------------ Cash (pound)33,845 1.6150 $ 54,660 Accounts receivable 2,700,298 1.6150 4,360,981 Inventory 63,074 1.6150 101,865 Prepaids 21,937 1.6150 35,428 ---------------- ------------ Current assets 2,819,154 4,552,934 ---------------- ------------ Property, plant and equipment 593,108 1.6150 957,869 ---------------- ------------ Intangibles 25,601 1.6150 41,346 ---------------- ------------ Total assets (pound)3,437,863 $ 5,552,149 ================ ============ 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 - (3,982) Retained earnings 272,479 444,036 ---------------- ------------ 372,479 601,554 ---------------- ------------ Total stockholder's equity and liabilities (pound)3,437,863 $ 5,552,149 ================ ============
15 United Breweries International, Ltd. (UBI) Consolidated 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 652,055 1.6172 1,054,503 ---------------- ------------- Net income from operations 330,534 534,540 Other income (expense) Costs relating to litigation (125,303) 1.6172 (202,640) Disposal of fixed assets - 1.6172 - Other income - 1.6172 - Interest expense (74,837) 1.6172 (121,026) ---------------- ------------- Net income before taxes 130,394 210,873 Provision for income tax (63,072) 1.6172 (102,000) ---------------- ------------- Net income before discontinued 67,322 108,873 operations Minority interest in discontinued operations 3,023 1.6172 4,889 Discountinued operations Loss from operations of discontinued Soyco, Ltd, (149,967) 1.6172 (242,527) Gain on disposal of Soyco, Ltd 1,889,877 1.6172 3,056,309 ---------------- ------------- Net income (pound)1,810,255 $ 2,927,544 Retained earnings, beginning of year (1,537,776) 1.6150 (2,483,508) ---------------- ------------- Retained earnings, end of year (pound)272,479 $ 444,036 ================ =============
16 United Breweries International, Ltd. (UBI) Consolidated Statement of Cash Flows December 31, 1999
(GBP(pound)) Exchange (US$) UBI Rate UBI ---------------- ---------- ----------- Cash flows from operating activities Net income (pound)1,810,255 1.6172 $ 2,927,544 Adjustments to reconcile net income to net cash from operating activities Depreciation 238,515 1.6172 385,726 Gain on sale of assets (4,241) 1.6172 (6,859) Gain on sale of Soyco, Ltd. (1,739,310) 1.6172 (2,812,812) 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 (144,399) (233,522) ---------------- ----------- 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 190,607 1.6172 308,250 ---------------- ----------- Translation adjustment - 266 ---------------- ----------- Net 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 ================ ===========
17 EX-99.5 4 ex-99_5.txt EXHIBIT 99.5 United Breweries International (UK) Limited Balance Sheet, Statement of Income and Stockholder's Equity, and Statement of Cash Flows for the years ended December 31, 1999 and 2000 UNITED BREWERIES INTERNATIONAL (UK) LIMITED REPORT OF THE DIRECTORS The directors submit their report and the financial statements of the Group for the year ended 31st December 2000. PRINCIPAL ACTIVITIES AND BUSINESS REVIEW The principal activities of the Group during the year continued to be that of marketing and distribution of beer and wines and commission agents for the sale of beverages. The results for the year and the financial position at the year end were considered to be satisfactory by the directors who expect continued growth in the forseeable future. RESULTS AND DIVIDENDS The results for the year are set out on page 4. The directors do not recommend the payment of a dividend. FIXED ASSETS Details relating to fixed assets are shown in the notes to the financial statements. DIRECTORS AND INTERESTS IN SHARES The directors who served during the year and their beneficial interests in the shares of the company were as stated below: Ordinary shares of(pound)1 each 2000 1999 M. K. Nambiar - - V. S. Kumar - - G. M. K. Lodhi - - AUDITORS The auditors, Hawsons Chartered Accountants, were newly appointed during the year. They have indicated that they are willing to be reappointed at the forthcoming Annual General Meeting. On behalf of the Board. G. M. K. Lodhi Director / Secretary Date: 9th March 2001 Registered Office: 75 Westow Hill, Crystal Palace, London, SE19 1TX 18 UNITED BREWERIES INTERNATIONAL (UK) LIMITED STATEMENT OF DIRECTORS' RESPONSIBILITIES Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company and the group and of the profit or loss for that period. In preparing those financial statements, the directors are required to:- (1) Select suitable accounting policies and then apply them consistently. (2) Make judgements and estimates that are reasonable and prudent. (3) State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements. (4) Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the group and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 19 UNITED BREWERIES INTERNATIONAL (UK) LIMITED INDEPENDENT AUDITOR'S REPORT To the Board of Directors United Breweries International (UK) Limited We have audited the consolidated financial statements on pages 4 to 17 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 group's directors are responsible for the preparation of the financial statements. It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion to you. We did not audit the financial statements of United Breweries International (UK) Limited or its subsidiaries as individual entities for the year ended 31st December 1999. Those statements were audited by other auditors whose report has been furnished to us and our opinion, in so far as it relates to the amounts included for the year ended 31st December 1999, is based solely on the other auditors' reports. Basis of opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 group's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all information and explanations which we consider 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, other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of the information in the financial statements. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. Opinion In our opinion, based on our audits and the report of other auditors, the consolidated financial statements give a true and fair view of the state of affairs of United Breweries International (UK) Limited and the group as at 31st December 2000 and 31st December 1999 and of the profits of the group for the years then ended and have been properly prepared in accordance with accounting principles generally accepted in the United Kingdom. Hawsons Chartered Accountants And Registered Auditors Jubilee House Billing Brook Road Weston Favell Northampton NN3 8NW Dated: 9th March 2001 20 UNITED BREWERIES INTERNATIONAL (UK) LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT - YEAR ENDED 31ST DECEMBER 2000
2000 2000 1999 1999 Notes (pound) (pound) (pound) (pound) Turnover: Continuing 2 8,342,315 7,350,109 Discontinued operations 3 - 846,597 --------- --------- 8,342,315 8,196,706 Cost of sales 5,423,592 5,471,122 --------- --------- Gross Profit 2,918,723 2,725,584 Distribution and selling costs 1,851,646 1,554,503 Administrative expenses 596,108 990,514 --------- --------- 2,447,754 2,545,017 Operating profit/(loss) Continuing operations 470,969 330,534 Discontinued operations 3 - (149,967) ---------- --------- --------- --------- Operating profit total 4 470,969 180,567 Exceptional items: Profit on sale of subsidiary undertaking 5 - 1,889,877 Costs relating to litigation 6 (11,584) (125,303) -------- -------- (11,584) 1,764,574 --------- --------- Profit on ordinary activities before interest 459,385 1,945,141 Interest receivable - 21 Interest payable 7 (54,116) (74,858) --------- --------- Profit on ordinary activities before taxation 405,269 1,870,304 Tax on profit on ordinary activities 8 (133,426) (63,072) --------- --------- Profit on ordinary activities after taxation 271,843 1,807,232 --------- --------- Equity minority interests - 3,023 --------- -------- Retained profit transferred to reserves 19 271,843 1,810,255 ======== ========
The group has no recognised gains and losses other than those included in the profits above, and therefore no separate statement of total recognised gains and losses has been presented. The notes on pages 8 to 17 form part of these financial statements. 21 UNITED BREWERIES INTERNATIONAL (UK) LIMITED CONSOLIDATED BALANCE SHEET - 31ST DECEMBER 2000
2000 2000 1999 1999 Note (pound) (pound) (pound) (pound) ---- Fixed assets Intangible Fixed Assets 10 22,401 25,601 Tangible Fixed Assets 11 578,356 593,108 ------- ------- 600,757 618,709 Current assets Stocks 13 69,053 63,074 Debtors 14 2,837,111 2,722,235 Cash at bank and in hand 139,274 33,845 ----------- ---------- 3,045,438 2,819,154 Creditors - amounts falling due within one year 15 (3,001,873) (3,065,384) ----------- ----------- Net current assets/(liabilities) 43,565 (246,230) ------- --------- Total assets less current liabilities 644,322 372,479 ======= ======= Capital and Reserves Called up share capital 18 100,000 100,000 Profit and loss account 19 544,322 272,479 ------- ------- Equity Shareholders' funds 20 644,322 372,479 ======= =======
The financial statements were approved by the board of directors on 9th March, 2001 and were signed on its behalf by: M. K. Nambiar Director G. M. K. Lodhi Director The notes on pages 8 to 17 form part of these financial statements. 22 UNITED BREWERIES INTERNATIONAL (UK) LIMITED BALANCE SHEET - 31ST DECEMBER 2000
2000 2000 1999 1999 Note (pound) (pound) (pound) (pound) Fixed Assets Investments 12 299,119 299,119 Current Assets Debtors 14 9,933 14,787 Cash at bank and in hand 31,436 7,681 --------- --------- 41,369 22,468 Creditors: amounts falling due within one year 15 (209,081) (189,496) --------- --------- Net Current Liabilities (167,712) (167,028) -------- -------- Total assets less current liabilities 131,407 132,091 ======== ======== Capital and Reserves Called up share capital 18 100,000 100,000 Profit and loss account 31,407 32,091 -------- -------- Equity Shareholders' funds 131,407 132,091 ======== ========
The financial statements were approved by the board of directors on 9th March, 2001 and were signed on its behalf by: M. K. Nambiar Director G. M. K. Lodhi Director The notes on pages 8 to 17 form part of these financial statements. 23 UNITED BREWERIES INTERNATIONAL LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2000
2000 1999 (pound) (pound) Net cash inflow/(outflow) from operating activities (Note 27a) 695,123 (10,113) Returns on investments and servicing of finance Interest paid (54,116) (73,649) -------- -------- Net cash outflow from returns on investments and servicing of finance (54,116) (73,649) Taxation (67,055) (51,360) Capital expenditure and financial investment Payments to acquire tangible assets (221,700) (238,809) Sale of tangible fixed assets 3,250 22,065 --------- --------- Net cash outflow for capital expenditure (218,450) (216,744) Acquisitions and disposals (note 27d) Sale of subsidiary undertaking - 50,000 Cash at bank and in hand disposed of with subsidiary - (24,150) -------- --------- Net cash inflow from disposals - 25,850 -------- --------- Net increase/(decrease) in cash in the year 355,502 (326,016) ======== =========
The notes on pages 8 to 17 form part of these financial statements. 24 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES Basis of accounting: The financial statements are prepared under the historical cost convention and in accordance with Generally Accepted Accounting Principles (GAAP) applicable in the United Kingdom (UK). Reconciliation to US accounting principles - summary of differences between UK and US GAAP: No reconciliation between US GAAP and UK GAAP has been presented. In the opinion of the directors, there are no significant differences in the group's net income and net equity on preparing the 2000 and 1999 financial statements under either UK GAAP or US GAAP. Basis of consolidation: The consolidated accounts comprise the accounts of the parent undertaking and its subsidiary undertakings for the year ended 31st December 2000. Goodwill and intangible fixed assets: Goodwill represents purchased goodwill on the acquisition of UBSN Limited, a wholly owned subsidiary. It is valued at the amount by which the cost of UBSN Limited as a whole exceeded the aggregate fair values of its identifiable assets and liabilities at the date of acquisition. The goodwill is being amortised on a straight-line basis over ten years. This is the period over which UBSN Limited holds its brewing licence to carry out its principal activity. Depreciation of tangible fixed assets: Depreciation is provided on all fixed assets at rates calculated to write off the costs of each asset evenly over its expected useful life as follows:- - Plant and equipment 6 to 7 years - Motor vehicles 2 to 5 years Foreign currency: Transactions denominated in foreign currencies are translated at the exchange rate on the transaction date. Balances denominated in foreign currencies are translated at the exchange rate on the balance sheet date. Turnover: Turnover represents the amounts receivable by the group for goods sold, services supplied and commissions receivable and is stated net of value added tax. Stocks: Stocks are valued on a first-in, first-out basis at the lower of cost and net realisable value. Taxation: Corporation tax is provided on taxable profits at current rates. Deferred taxation is provided at appropriate rates on all timing differences using the liability method only to the extent that, in the opinion of the directors, there is a reasonable probability that a liability or asset will crystallise in the forseeable future. Pensions: The pension costs charged in the financial statements represent the contributions payable by the group during the year. 25 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 2. TURNOVER The total turnover comprises sales and commissions excluding value added tax. The geographic analysis of turnover is as follows: 2000 1999 (pound) (pound) United Kingdom 7,197,991 7,185,099 Export 1,144,324 1,011,607 --------- --------- 8,342,315 8,196,706 ========= ========= 3. ANALYSIS OF PROFIT AND LOSS ACCOUNT BETWEEN CONTINUING AND DISCONTINUED OPERATIONS
Continuing Acquisitions Discontinued Total 2000 2000 2000 2000 (pound) (pound) (pound) (pound) Turnover 8,342,315 - - 8,342,315 Cost of sales 5,423,592 - - 5,423,592 --------- -------- -------- --------- Gross profit 2,918,723 - - 2,918,723 Distribution and selling costs 1,851,646 - - 1,851,646 Administrative expenses 596,108 - - 596,108 --------- -------- -------- --------- Operating profit 470,969 - - 470,969 ========= ======== ======== ========= Continuing Acquisitions Discontinued Total 1999 1999 1999 1999 (pound) (pound) (pound) (pound) Turnover 7,350,109 - 846,597 8,196,706 Cost of sales 4,813,017 - 658,105 5,471,122 --------- -------- -------- --------- Gross profit 2,537,092 - 188,492 2,725,584 Distribution and selling costs 1,554,503 - - 1,554,503 Administrative expenses 652,055 - 338,459 990,514 -------- -------- -------- -------- Operating profit/(loss) 330,534 - (149,967) 180,567 ======= ======= ======= =======
26 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 4. OPERATING PROFIT
2000 1999 (pound) (pound) Operating profit has been arrived at after charging/(crediting):- Amortisation of intangible fixed assets 3,200 3,200 Depreciation of tangible fixed assets 235,387 272,232 Auditors' remuneration - as auditors 15,250 24,294 - for non audit services 25,830 12,857 (Profit)/Loss on disposal of tangible fixed assets (2,185) 13,563 Exchange differences (44,382) (4,652) ======= =======
As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the parent undertaking is not presented as part of these financial statements. The consolidated profit for the financial year includes a deficit of (pound)684, which is dealt with in the financial statements of the parent undertaking. 5. PROFIT ON SALE OF SUBSIDIARY UNDERTAKING
2000 1999 (pound) (pound) Gain on disposal of subsidiary net liabilities - 2,163,205 Goodwill previously eliminated against reserves - (273,328) -------- --------- Profit on sale of subsidiary - 1,889,877 ======== =========
On 9th December 1999, the group sold its entire shareholding in UB (Soyco) Limited, a 98% owned subsidiary, for (pound)50,000 in cash. 6. COSTS RELATING TO LITIGATION All remaining matters in issue between the parties have been finally resolved to their satisfaction. 7. INTEREST PAYABLE
2000 1999 (pound) (pound) Bank overdrafts 54,116 74,858 ====== ======
8. TAX ON PROFIT ON ORDINARY ACTIVITIES
2000 1999 (pound) (pound) Corporation Tax on profit for year at 30% (1999 - 30%) 133,000 63,072 Prior year adjustment 426 - ------- ------ 133,426 63,072 ======= ======
27 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 9. DIRECTORS AND EMPLOYEES Staff costs during the year were as follows:
2000 1999 (pound) (pound) Wages and salaries 325,017 348,902 Other pension costs 14,410 14,315 ------- ------- 339,427 363,217 ======= =======
The average monthly number of employees, including directors, during the year was as follows:
2000 1999 Number Number Sales and marketing 13 26 ==== ====
10. INTANGIBLE FIXED ASSETS - Group
Goodwill (pound) Cost At 1st January 2000 and at 31st December 2000 32,001 ====== Aggregate amortisation At 1st January 2000 6,400 Charge for the year 3,200 ------ At 31st December 2000 9,600 ====== Net Book Value At 31st December 2000 22,401 ====== At 31st December 1999 25,601 ======
28 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 11. TANGIBLE FIXED ASSETS - Group
Plant and Motor Equipment Vehicles Total (pound) (pound) (pound) Cost At 1st January 2000 1,291,990 104,445 1,396,435 Additions 181,823 39,877 221,700 Disposals - (12,003) (12,003) --------- -------- --------- At 31st December 2000 1,473,813 132,319 1,606,132 Depreciation ========= ======= ========= At 1st January 2000 767,385 35,942 803,327 Charge for year 209,259 26,128 235,387 Disposals - (10,938) (10,938) --------- -------- --------- At 31st December 2000 976,644 51,132 1,027,776 ========= ======= ========= Net Book Value At 31st December 2000 497,169 81,187 578,356 ========= ======= ========= At 31st December 1999 524,605 68,503 593,108 ========= ======= =========
12. FIXED ASSET INVESTMENTS - Company
Shares in group undertakings and participating interests Cost and Net Book Value at (pound) 1st January 2000 and 31st December 2000 299,119 =======
The subsidiary undertakings are as follows:- Percentage of equity held UBSN Limited Registered in England 100%
13. STOCKS Group Company 2000 1999 2000 1999 (pound) (pound) (pound) (pound) Finished goods and goods for resale 69,053 63,074 - - ====== ====== ====== ======
29 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued
14. DEBTORS Group Company 2000 1999 2000 1999 (pound) (pound) (pound) (pound) Trade debtors: Amounts owed by Shepherd Neame Limited 485,068 583,469 - - Other 2,244,259 2,047,626 - - Prepayments 24,932 21,937 9,933 14,787 Prepayments and accrued income in respect of related parties: Amounts owed by Shepherd Neame Limited 82,852 69,203 - - --------- --------- ----- ------ 2,837,111 2,722,235 9,933 14,787 ========= ========= ===== ====== 15. CREDITORS - amounts falling due within one year Group Company 2000 1999 2000 1999 (pound) (pound) (pound) (pound) Bank overdraft (secured - see note 21) 993,870 1,243,943 - - Trade creditors: Amounts owed to Shepherd Neame Limited 1,427,112 1,246,978 - - UB Global Corporation Limited - 64,023 19,975 - Others 107,827 103,453 - - Corporation tax 135,464 69,094 - 72 Other taxation and social security 76,518 35,395 13,163 11,764 Accruals: Amounts owed to Shepherd Neame Limited 135,466 159,212 - - American United Breweries Inc 41,292 38,386 - - Other 70,906 88,865 6,400 5,500 Other creditors 13,418 16,035 13,418 16,035 Loan from subsidiary undertaking UBSN Ltd - - 156,125 156,125 --------- --------- ------- ------- 3,001,873 3,065,384 209,081 189,496 ========= ========= ======= =======
16. PENSION COSTS The group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to (pound)14,410 (1999 - (pound)14,315). 17. DEFERRED TAXATION The full potential liability for 2000 is (pound)4,000 (1999 - (pound)12,000) in respect of capital allowances carried forward which has not been provided for in the accounts. 30 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued
18. CALLED UP SHARE CAPITAL - Company and Group Authorised Allotted, called up and Issued and partly paid 2000 1999 2000 1999 No. No. No. No. 100,000 Ordinary shares of (pound)1 each 500,000 500,000 100,000 100,000 ------- ------- ------- ------- 500,000 500,000 100,000 100,000 ======= ======= ======= ======= 19. PROFIT AND LOSS ACCOUNT - Group (pound) At 1st January 2000 272,479 Retained profit for year 271,843 ------- At 31st December 2000 544,322 =======
20. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS - Group
2000 1999 (pound) (pound) Profit after taxation for the financial year 271,843 1,810,255 ------- --------- Net addition to shareholders' funds 271,843 1,810,255 Opening shareholders' funds 372,479 (1,437,776) ------- --------- Closing shareholders' funds 644,322 372,479 ======= =======
21. CONTINGENT LIABILITIES The company acts as a surety for the obligations on a lease of premises acquired by UB (Soyco) Limited (a former subsidiary undertaking) for the term of twenty years from 24th June 1999 at an annual rental of (pound)61,500. 22. BANK OVERDRAFT The bank overdraft is secured by a fixed and floating charge over the assets of UBSN Limited. The maximum facility available to the group is (pound)1,250,000. This facility is available on an on-going basis and is repayable on demand. Interest is calculated on a daily basis at 1.5% above the bank's base rate. 31 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 23. OPERATING LEASE COMMITMENTS Financial commitments under non-cancellable operating leases will result in the following payments falling due in the next financial year: 2000 1999 Land and Land and buildings buildings (pound) (pound) Expiring: Within two to five years 7,000 7,000 ===== ===== 24. 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. Prior to the balance sheet date, a conditional sale/purchase agreement had been entered into by the ultimate parent company. As at the balance sheet date this transfer of shareholding had not occurred. 32 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 26. RELATED PARTY TRANSACTIONS During the year the group had the following transactions with its related parties:
Nature of 2000 1999 relationship (pound) (pound) Shepherd Neame Limited Common trade (Company registered in the UK) Sales 990,220 699,493 Freight cost 312,241 240,590 Commission payable 94,229 63,227 Purchases 5,276,064 4,625,586 Galaxy International Limited Common commercial (Company registered in the UK) interests Management charge payable 17,000 103,547 UB Global Corporation Limited Mutuality of (Subsidiary of United Breweries interest Limited of India registered in India) Purchases 70,278 96,009 American United Breweries Inc Mutuality of (Company registered in the USA) interest Commission/advertising payable 166,762 125,492 United Breweries Limited Licence owner (Company registered in India) Royalty payable 5,960 5,227 As a result of the trading and other activities with related parties, the following balances remained outstanding as at 31st December 2000. 2000 1999 (pound) (pound) Amounts owed by Shepherd Neame Limited 485,068 652,672 Amounts owed to Shepherd Neame Limited 1,427,112 1,246,978 Amounts owed to UB Global Corporation Ltd - 64,023 Amounts owed to Galaxy International Limited 19,975 - Amounts owed to United Breweries Limited 5,960 5,227 Accruals - Shepherd Neame Limited 135,466 159,212 - American United Brewers Inc 41,292 38,386
33 UNITED BREWERIES INTERNATIONAL (UK) LIMITED NOTES TO THE FINANCIAL STATEMENTS continued 27. CASH FLOW STATEMENT a. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
2000 1999 (pound) (pound) Operating profit 470,969 180,567 Depreciation charges 235,387 235,315 Amortisation charges 3,200 3,200 (Profit)/loss on disposal of tangible assets (2,185) (4,241) (Increase)/decrease in stocks (5,979) 48,346 (Increase) in debtors (110,894) (253,078) Increase/(decrease) in creditors 116,209 (244,886) Costs relating to litigation (11,584) (125,303) Operating loss in respect of discontinued activities - 149,967 -------- -------- Net cash inflow/(outflow) from continuing operating activities 695,123 (10,113) ======= ======= b. ANALYSIS OF CHANGES IN NET DEBT At 1st January Cash At 31st December 2000 Flows 2000 (pound) (pound) (pound) Net cash: Cash at bank and in hand 33,845 105,429 139,274 Bank overdrafts (1,243,943) 250,073 (993,870) ----------- ------- --------- (1,210,098) 355,502 (854,596) =========== ======= ========= c. RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT IN NET DEBT 2000 1999 (pound) (pound) Increase/(Decrease) in cash in the period and change in net debt 355,502 (326,016) Opening net debt (1,210,098) (884,082) ----------- ----------- Closing net debt (854,596) (1,210,098) ========= ===========
d. CASH FLOWS IN RESPECT OF DISPOSAL OF SUBSIDIARY UNDERTAKING IN 1999 On 9th December 1999, a 98% owned subsidiary, UB (Soyco) Limited, was disposed of through the transfer of the groups entire shareholding, for the consideration of (pound)50,000 in cash. The fair values of UB (Soyco) Limited's identifiable assets and liabilities at the date of disposal were as follows: (pound) Fixed assets 404,700 Stocks 117,861 Debtors 191,583 Cash at bank and in hand 24,150 Trade creditors (113,634) Other creditors (2,350,932) ----------- (1,726,272) Minority interests 34,525 ----------- (1,691,747) =========== 34 UNITED BREWERIES INTERNATIONAL (UK) LIMITED DETAILED CONSOLIDATED PROFIT AND LOSS ACCOUNT Year ended 31 December 2000
2000 1999 (pound) (pound) GROSS PROFIT Sales and commissions 8,342,315 8,196,706 Cost of sales (5,423,592) (5,471,122) --------- ----------- Gross profit 2,918,723 2,725,584 --------- ----------- DISTRIBUTION AND SELLING EXPENSES Freight 446,690 329,185 Advertising and promotional expenses 569,930 497,093 Sales commission 205,405 141,228 Dispense equipment repairs 178,012 152,073 Operational expenses 273,205 207,385 Sponsorship 58,062 127,049 Other distribution and selling 120,342 100,490 --------- ----------- 1,851,646 1,554,503 --------- ----------- GENERAL AND ADMINISTRATIVE EXPENSES Management fees 17,000 103,547 Audit and taxation fees 41,080 37,151 Postage and stationery 5,552 5,660 Bad debt provision 25,000 50,687 Depreciation/profit on asset disposal 233,202 285,701 Amortisation 3,200 3,200 Exchange rate differences (44,382) (4,652) Operational expenses 251,255 429,517 Royalties payable/receivable 5,960 1,846 Miscellaneous 58,241 77,857 --------- ----------- 596,108 990,514 --------- ----------- FINANCE COSTS Bank interest received - (21) Bank interest paid and charges 54,116 74,858 --------- ----------- 54,116 74,837 --------- ----------- EXCEPTIONAL ITEMS Sale of subsidiary undertaking - (1,889,877) Litigation costs 11,584 125,303 --------- ----------- 11,584 1,764,574 --------- ----------- Profit on ordinary activities before taxation 405,269 1,870,304 ========= ===========
35 -----END PRIVACY-ENHANCED MESSAGE-----