international breweries

INTERNATIONAL BREWERIES PLC

This Prospectus provides detailed information about the International Breweries Plc Public Offering that an investor should know and review before investing in the Offer. Investors are therefore advised to read carefully the document and retain for future reference. In the event that an investor is not clear about the action to take, he/she should consult his/her Investment Advisers, Stockbrokers, Bankers, Solicitors or any Professional for guidance. FOR INFORMATION CONCERNING CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, SEE RISK FACTORS COMMENCING ON PAGE 18.

Offer for Subscription

Of

1,600,000,000

Ordinary Shares of 50 Kobo each

At

87K per share

Payable in full on Application

APPLICATION LIST OPENS: 31st August 2007 APPLICATION LIST CLOSES: 28th September 2007

ISSUING HOUSE

This Prospectus and the securities, which it offers, have been cleared and registered by the Securities & Exchange Commission. It is a civil wrong and a criminal offence under the Investments and Securities Act, CAP I24 LFN 2004 to issue a Prospectus, which contains false or misleading information. Clearance and registration of this Prospectus and the securities, which it offers, do not relieve the parties from any liability arising under the Act for false and misleading statements contained herein or for any omission of a material fact.

This Prospectus is dated 28th August, 2007

INTERNATIONAL BREWERIES PLC 1

Contents

Glossary of Abbreviations & Technical Terms... 2

Addresses of International Breweries Plc Offices3

Abridged Timetable....4

The Offer..5

Summary of the Offer.6

Directors and Other Parties to the Offer..9

The Chairmans Letter ..................11 1. History and Business of the Company........ ..11 2. Profile of Board Members and Senior Management Staff.............................................. 12 3. Shareholdings of Key Management Staff ................................................................... 16 4. Premises............................................................................................................... 16 5. Financial Summary................................................................................................. 17 6. Purpose of the Offer .. ...... 17 7. Working Capital, Profit and Dividend Forecasts . ........ ..17 8. Business Prospects & Going Concern Status . ...... 18 9. Risk Factors & Mitigants . ...... 18 10. Research & Development ...............19 11. Compliance with Code of Corporate Governance ...............19 12. Future Plans ............ ..20

The Profit Forecast 1. Letter from the Reporting Accountants...................................................................... 22 2. Letter from the Reporting Accountants on Going Concern Status ..23 3. Bases and Assumptions ...............................................................................24 4. Profit Forecast..25 5. Letter from the Issuing House.................................................................................. 26

Five Year Financial Information

1. Reporting Accountants Report................................................................................. 27 2. Statement of Accounting Policies. ..28 3. Profit and Loss Accounts ......................................................................................... 30 4. Balance Sheets ...................................................................................................... 31 5. Cash Flow Statements ............................................................................................ 32 6. Notes to the Financial Statements ............................................................................ 33

Statutory and General Information 1. Incorporation and Share Capital History.................................................................... 40 2. Shareholding Structure ........................................................................................... 40 3. Directors Interests................................................................................................. 41 4. Indebtedness......................................................................................................... 41 5. Subsidiaries and Associated Companies ....... ...41 6. Extracts from the Articles of Association.................................................................... 41 7. Claims and Litigation .............................................................................................. 45 8. Estimated costs and expenses of Offer...................................................................... 45 9. Mergers and Acquisitions . 45 10. Declarations .....45 11. Status of Unpaid/ Unclaimed Dividends .. 46 12. Contingent Liability/Off balance sheet events .......46 13. Material Contracts .................................................................................................. 46 14. Relationship between the Issuer, Issuing House and other Advisers.............................. 46

15. Compliance with Code of Corporate Governance.46 16. Consents............................................................................................................... 48 17. Documents Available for Inspection.......................................................................... 48

Procedure for Application and Allotment..49

Receiving Agents50

Application Form51


GLOSSARY OF ABBREVIATIONS AND TECHNICAL TERMS Brokerage Commission payable to Receiving Agents in

respect of Returns bearing their Stamps and duly allotted

CSCS Central Securities Clearing System International Breweries or The Company International Breweries Plc Issuing House Sterling Capital Markets Limited LFN Laws of the Federation of Nigeria NSE or The Exchange The Nigerian Stock Exchange Pari Passu Equally in all respects Parties to the Offer Professional Advisers engaged by International

Breweries Plc to ensure the success of the Offer

Receiving Bank Oceanic International Bank Plc Receiving Agents Financial institutions authorized to receive

Acceptance Forms/monies from investors Registrars or UBA UBA Registrars Limited

SEC or the Commission The Securities and Exchange Commission Sterling Capital Sterling Capital Markets Limited Stockbroker GTI Capital Limited Working Day Any day other than a Saturday, Sunday or

Nigerian official public holiday


ADDRESSES AND TELEPHONE NUMBERS OF INTERNATIONAL BREWERIES PLC OFFICES/DEPOTS

HEAD OFFICE/FACTORY P.M.B 5104 Lawrence Omole Way Omi Asoro ILESHA, Osun State, Nigeria Telephone: 036-461500; 460150 E-Mail: [email protected]

ABEOKUTA DEPOT

90b, Igbore Road Ijeja, Abeokuta Ogun State AKURE DEPOT 184 Oyemekun Road Akure, Ondo State ILORIN DEPOT

Behind Offa Garage Ilorin Kwara State ISEYIN DEPOT Opposite I.D.G.S Iseyin Oyo State IBADAN DEPOT Akunleyan Estate, Opposite Green Spring Hotel, Old Ife Road, Ibadan Oyo State

LAGOS DEPOT 603, Agege Motor Road Shogunle Bus-Stop Lagos State OSOGBO DEPOT 22, Obafemi Awolowo Way, New Ikirun Road, Osogbo, Osun State


Abridged Timetable

DATE ACTIVITY RESPONSIBILITY

31/08/07 Application List opens STERLING CAPITAL

28/09/07 Application List closes STERLING CAPITAL

12/10/07 Receiving Agents make returns STERLING CAPITAL /REGISTRARS

09/11/07 Forward allotment proposal and draft newspaper advertisement to SEC

STERLING CAPITAL

19/11/07 Receive SEC authorisation of allotment STERLING CAPITAL

20/11/07 Pay net proceeds of the Offer to the Issuer STERLING CAPITAL

21/11/07 Allotment announcement STERLING CAPITAL

23/11/07 Return excess/rejected application moneys STERLING CAPITAL /REGISTRARS

07/12/07 Distribute share certificates REGISTRARS

14/12/07 Forward General Undertaking and Declaration of Compliance to The Exchange

STOCKBROKER

24/12/07 Listing of the Companys shares/Trading Commences

STOCKBROKER

31/12/07 Forward summary report to SEC STERLING CAPITAL


THE OFFER A copy of this Prospectus and the documents specified herein have been delivered to the Securities & Exchange Commission (the Commission) for clearance and registration. This Prospectus is being issued in compliance with the Provisions of the Investments and Securities Act, CAP I24 LFN 2004, the Rules and Regulations of the Commission and the Listing Requirements of The Nigerian Stock Exchange (The Exchange) and contains particulars in compliance with the requirements of the Commission and The Exchange, for the purpose of giving information to the public with regard to the Offer for Subscription of 1,600,000,000 Ordinary Shares of 50 kobo each of International Breweries Plc by Sterling Capital Markets Limited. An application has been made to the Council of The Nigerian Stock Exchange for the admission to its Daily Official List of the 1,600,000,000 Ordinary Shares of 50 kobo each now being offered for subscription. The Directors of International Breweries Plc individually and collectively accept full responsibility for the accuracy of the information contained in this Prospectus. The Directors have taken reasonable care to ensure that the facts contained herein are true and accurate in all respects and confirm, having made all reasonable enquiries that, to the best of their knowledge and belief, there are no material facts the omission of which would make any statement herein misleading or untrue.

On behalf of

Offers for Subscription

and are authorised to receive applications for 1,600,000,000 Ordinary Shares of 50 Kobo each

at

87K per Share

Payable in full on Application The Application List for the shares now being offered will open on 31st August 2007 and close on 28th September 2007 SHARE CAPITAL AND RESERVES OF THE COMPANY AS AT 31ST DECEMBER, 2006 N000 AUTHORISED*: 520,000,000 Ordinary Shares of 50 Kobo each 260,000 ISSUED AND FULLY PAID: 512,914,681 Ordinary Shares of 50 Kobo each 256,457 RESERVES: 350,479 REVENUE RESERVE: (1,796,783) SHAREHOLDERS FUNDS: (1,189,847) INDEBTEDNESS: As at 31st December, 2006, the Company had no outstanding debentures, mortgages, charges or similar indebtedness or material contingent liabilities other than in the ordinary course of business. However, the Company had contingent liabilities in the ordinary course of business amounting to N11,999,316.35 from claims against the Company from pending suits. * At the Extra Ordinary General Meeting of the Company held on the 12th February 2007, the shareholders of the Company approved an increase in the authorised share capital from N260, 000,000 to N1, 500,000,000 by the creation of 2,480,000,000 ordinary shares of 50 kobo each ranking pari-passu with the existing shares of the Company.


SUMMARY OF THE OFFER 1. ISSUER: International Breweries Plc (International Breweries or the Company) 2. Issuing House: Sterling Capital Markets Limited 3. Now being offered: 1,600,000,000 Ordinary Shares of 50 Kobo each 4. SHARE CAPITAL:

Authorised: N1,500,000,000 comprising 3,000,000,000 Ordinary Shares of 50k each Issued and fully paid: N 256,457,341 comprising 512,914,681 Ordinary Shares of 50k each

5. PURPOSE: To enable International Breweries to rebuild the capital base of the Company and to carry out restructuring, staff right-sizing, improvement and expansion of production facilities.

UTILISATION: The net proceeds of N 1,318,034,900 after deducting the costs of the Offer,

estimated at N 73,965,100 (representing 5.31% of gross proceeds) would be utilised as follows:

N % Estimated

Project completion

period(months)

Staff Right Sizing Costs 331,260,900 25.13 24 Months

Capital investments to improve plant and equipment reliability and expand overall production capability

921,774,000 69.94 24 Months

Repayment of Bridging Loan 65,000,000 4.93 3 Months

TOTAL 1,318,034,900 100

6. METHOD OF OFFER: Offer for Subscription of 1,600,000,000 ordinary shares of 50k each

7. UNIT OF SALES: Minimum of 1,000 Ordinary Shares and multiples of 100 thereafter.

8. OFFER PRICE: 87k per share

9. SUPPLEMENTARY ALLOTMENT: In the event of an over subscription, additional shares may be absorbed subject

to approval of the Board of International Breweries Plc and the subsequent approval of the Securities & Exchange Commission. The proceeds of the supplementary allotment will be utilised in the same proportion as the utilisation earlier stated.

10. OFF-SHORE INVESTORS: Offshore investors can participate in the Offer through foreign currency

denominated subscription in line with S.17 of the Nigerian Investment Promotion Commission Act, Cap N.117 LFN 2004 and in compliance with rule 209 and 210 of SEC Rules and Regulations and The Nigerian Stock Exchange guidelines on foreign investment through the Nigerian Stock Market. Payment will be domiciled with a correspondent bank of the Receiving Bank, through Bank Transfers or cheque issuance for onward remittance to the Receiving Bank, as cash payments in any currency are not allowed for investments in securities. The applicable exchange rate will be the ruling autonomous rate on the date of subscription. The Receiving Bank shall arrange necessary Capital Importation Certificate for valid subscribers at the conclusion of the Offer.

11. PAYMENT: In full on application

12. MARKET CAPITALISATION AT

OFFER PRICE (PRE OFFER): N446, 235,772.47 (512,914,681 Ordinary shares of 50k each at 87k per share)

13. MARKET CAPITALISATION AT OFFER PRICE (POST-OFFER): N 1,838,235,772.47

(2,112,914,681 Ordinary shares of 50k each at 87k per share) 14. OPENING DATE: 31st August 2007 15. CLOSING DATE: 28th September 2007


SUMMARY OF THE OFFER (CONTD)

16. UNDERWRITING: The Offer is 80% underwritten on a firm basis by the Issuing House.

17. STATUS: The new shares being offered shall rank pari passu in all respects with the issued ordinary shares of the Company.

18. QUOTATION: An application has been made to the Council of The Nigerian Stock Exchange for the admission to its Daily Official List of the 1,600,000,000 Ordinary Shares now being offered for subscription.

19. FINANCIAL SUMMARY: (Extracted from the Reporting Accountants Report)

Year ended 31/12/06 31/12/05 31/12/04 31/12/03 31/12/02

=N=000 =N=000 =N=000 =N=000 =N=000

Turnover 313,048 401,399 594,704 452,001 453,732

Loss before taxation (361,360) (523,658) (242,388) (142,587) (100,228)

Taxation - - - - -

Loss After taxation (361,360) (523,658) (242,388) (142,587) (100,228)

Proposed dividend - - - - -

Loss carried forward (1,796,783) (1,435,423) (911,766) (669,378) (526,791)

EPS (actual kobo) (70.5) (102) (47) (28) (20)

EPS (Adjusted kobo) (70.5) (102) (47) (28) (20)

DPS (actual kobo) - - - - - Calculations of actual earnings and dividend per share were based on the number of shares in issue at the respective balance sheet dates while adjusted earnings and dividend per share were based on the 512,914,681 ordinary shares of 50k each in issue as at 31st December, 2006 20. FORECAST OFFER STATISTICS: (Extracted from the Reporting Accountants Memorandum on the Profit Forecast)

Year Ending 2007 2008 2009

31 December =N=000 =N=000 =N=000

Turnover 875,929 2,376,412 3,853,685

Profit/(Loss) Before taxation (132,456) 117,705 719,732

Estimated taxation - - 143,946

Profit/(Loss) after taxation (132,456) 117,705 575,786

Proposed dividend - - -

Profit/(Loss) transferred to revenue reserve (132,456) 117,705 575,786

Forecast earnings per share (Kobo) (6.26) 5.57 27.25

Forecast dividend per share (Kobo) - - -

Price Earning Ratio (At Offer Price) (13.89) 15.62 3.19

Earnings Yield (%) (7.19) 6.40 31.32 Note: Forecast earnings and dividend per share are based on projected post offer share capital of 2,112,914,681 Ordinary Shares of 50 kobo each for 2007, 2008 and 2009, made up of existing share capital of 512,914,681 and 1,600,000,000 Ordinary Shares of 50kobo each now being offered.

21. ALLOTMENT: Sterling Capital Markets Limited and the Directors of the Company reserve the right to accept or reject any application in whole or in part. The allotment proposal will be subject to the clearance of the Securities & Exchange Commission. All irregular or suspected multiple applications will be rejected.

22. GROUP STRUCTURE: International Breweries Plc has no Subsidiaries, however, 60.01% of its shares

are held by Brauhaase International Management GmbH. 23. SHARE CERTIFICATE: A share certificate will be sent by registered post not later than fifteen (15)

working days from the date of allotment. For subscribers who have indicated their CSCS number on the form, their accounts will be credited with the number of shares allotted to them.


SUMMARY OF THE OFFER (CONTD) 24. CLAIMS AND LITIGATIONS: The Company in its ordinary course of business is presently involved

in five (5) suits, four (4) of which were instituted against the Company whilst one (1) suit was instituted by the Company. The total amount claimed in the 4 suits instituted against the Company is estimated at N11,999,316.35, whilst the total amount claimed in the suit instituted by the Company is N8,901,728.06.

However, the Solicitors to the Offer are of the opinion that the claims against the Company will not in any way have fundamental or material adverse effect on the proposed Offer and the Company.

The Directors are of the opinion that none of the aforementioned cases is likely to have any material adverse effect on the Company or the Offer, and are not aware of any other pending claims or litigation.

25. INDEBTEDNESS: As at 31st December, 2006, the Company had a short term loan of N532million

which was granted by the parent Company (Brauhaase International Management GmbH). Apart from these the Company had no outstanding debentures, mortgages, charges or similar indebtedness or material contingent liabilities other than in the ordinary course of business. However, the Company has contingent liabilities amounting to N11,999,316.35 from suits pending against the Company and N65,000,000 bridging facility repayable from the proceeds of this Offer.

26. GOING CONCERN STATUS: Messrs Oyelami, Soetan, Adeleke & Co (Chartered Accountants) were the

auditors to the Company for the years ended 31 December 2002, 2003, 2004, 2005 and 2006 and their audit reports thereon were unqualified except for the attention of the Company which was drawn to the persistent loss for the past ten years raising doubts on the going concern status of the Company and which greatly depends on further injection of fresh funds in order to increase its production capacity.


DIRECTORS AND OTHER PARTIES TO THE OFFER DIRECTORS Mr. Christoph Steinwehe (German) (Chairman)

Brauhaase International Management GmbH Hans-Henny-Jahnn-Wed 51, D22085 Hamburg Germany

Otunba Michael O. Daramola (Managing)

International Breweries Plc PMB 5104, Lawrence Omole Way Omi Asoro Ilesha Osun State

Mr. Joachim Haase (German) Brauhaase International Management GmbH Hans-Henny-Jahnn-Wed 51, D22085 Hamburg Germany Mr. Georg Munde (German) Brauhaase International Management GmbH Hans-Henny-Jahnn-Wed 51, D22085 Hamburg Germany

Mr. Detlef Srugis (German) Brauhaase International Management GmbH Hans-Henny-Jahnn-Wed 51, D22085 Hamburg Germany

Mr. Folorunso Awomolo

37a Marine Road Apapa Lagos Mr. Akintoye S. Omole 4, Oluyole Way Bodija, Ibadan

Company Secretary DTT Services Limited 235, Ikorodu Road Ilupeju Lagos

Registered Office International Breweries Plc PMB 5104, Lawrence Omole Way Omi Asoro Ilesha Osun State


DIRECTORS AND OTHER PARTIES TO THE OFFER (CONTD) PROFESSIONAL PARTIES

Issuing House and Underwriter Sterling Capital Markets Limited 67 Marina Lagos

Stockbroker to the Offer GTI Capital Ltd Stock Exchange House

20th Floor, 2-4 Customs Street Tinubu Lagos

Auditor Oyelami Soetan Adeleke & Co (Chartered Accountants),

Broking House (4th Floor) 1, Alhaji Jimoh Odutola Road, Ibadan, Oyo State

Reporting Accountant Balogun Badejo & Co (Chartered Accountants)

6, Ilupeju Bye-Pass Opposite Olajire House Lagos

Solicitors to the Offer Yusuf D. Jengwe & Co Suite 96, 3rd Floor LSDPC Office Complex Lagos Solicitors to the Company Zeal Firstfruits Chambers

Geodetic Road, Near Shell Industrial Area Rumuobriokani, Port Harcourt Rivers State Registrar UBA Registrars Limited UBA House (11th Floor)

57 Marina Lagos

Receiving Banker

Oceanic Bank International Plc Waterfront Plaza 270, Ozumba Mbadiwe Avenue Victoria Island Lagos


THE CHAIRMANS LETTER The following is the text of a letter received by the Issuing House, Sterling Capital Markets Limited from Mr. Christoph Steinwehe, Chairman, Board of Directors of International Breweries Plc. Lawrence Omole Way Omi Asoro Ilesha

Osun State. 7th May 2007 The Directors Sterling Capital Markets Limited 67 Marina Lagos Dear Sirs, OFFER FOR SUBSCRIPTION OF 1,600,000,000 ORDINARY SHARES OF 50 KOBO EACH IN INTERNATIONAL BREWERIES PLC AT 87K PER SHARE (THE OFFER) On behalf of the Directors of International Breweries Plc (International Breweries or the Company), I am pleased to provide you with the following information in connection with the Offer for Subscription of 1,600,000,000 Ordinary Shares of 50 kobo each of the Company at 87k per share. This is in line with the resolutions passed at the Extraordinary General Meeting of the Company held on 12th February 2007. 1.0 History and Business of the Company History International Breweries Plc was incorporated in December 1971 by its founder and first Chairman, Dr. Lawrence Omole in collaboration with some of his business associates, under the name INTERNATIONAL BREWERIES LIMITED. With adequate back-up having been provided by the initial corporate and private investors, the Company commenced production in December 1978 with an installed capacity of 200,000 hectolitres of TROPHY lager beer per annum. Following the increasing demand for its product, in December 1982 the Company embarked upon an expansion programme to increase its brewing capacity to 500,000 hectolitres annually. To date, the Companys products are TROPHY lager beer and BETAMALT, a non alcoholic beverage drink which came into production in 1988. However, demand for Trophy Lager Beer remains very strong. The Company oftentimes is unable to meet demand within Osun State. Our customers often pay for products up to two weeks in advance and are ready to carry products off the production line to satisfy their demand. It is obvious that the Brewery needs the injection of fresh capital to substantially increase production substantially and cut costs considerably thereby enabling it to return to the path of profitability. International Breweries Plc has a subsisting Technical Services Agreement with Brauhaase International Management GmbH (a wholly owned subsidiary of Warsteiner Group of Germany), which owns 60.01% equity in International Breweries Plc. It has been the Technical Partner of International Breweries Plc since inception and became the majority shareholder at the time of the last share issue of the Company. The name Brauhaase is steeped in German brewing traditions since the opening of the family run brewery E. Haase Lagerbierbrauerei in 1858. In the mid-sixties, Haase-Brauerei shifted its focus into niche markets overseas, beginning with the state of the art 500,000 hectolitres turnkey brewery in West Africa Brasserie BB Lome, SA. As of January 1, 1997, Brauhaase had completed turnkey projects for production of over 6 million hectoliters of beer per annum, and more than a million hectoliters of soft drinks. These projects cover all 5 continents of the globe and are located in 20 different countries worldwide, no less than 13 of which benefit from either a full management or a technical management contract with Brauhaase. A number of new projects have just recently gone on-line (Cameroon) or are currently in the planning or construction phase.


THE CHAIRMANS LETTER One of Brauhaases most successful major brewery projects was the construction of the Golden Key Brewery in Putian, Fulkien Province, Peoples Republic of China: this brewery produces Becks beer under license and was designed and constructed according to Becks specifications. The Warsteiner brewery itself was founded in 1753; it is one of Germanys biggest privately owned breweries. Its main product, which is sold in more than 60 countries, is Warsteiner Premium Verum 4.8%ABV. Also popular is Warsteiner Premium Fresh without alcohol. It is usually packaged in 500ml cans brewed and canned in Germany. Sales for 2005 rose from 470million Euros to 510million Euros with total output of 5.9million hectoliters. Warsteiner Groups re-organisation and repositioning as a modern, fully comprehensive beverages conglomerate oriented towards customer and market interests played a particularly important role in the overall results. Long term investments in the Companys foreign businesses and other brands such as Frankenheim Alt, Frankenheim blue, Konig Ludwig Dunkel and Konig Ludwig Weissbier have paid off, as corroborated by a 20.2% surge in sales volume outside Germany. Apart from the factory and corporate headquarters located at Omi-Asoro, Ilesa, which also services the Ilesa/Ile-Ife sector of its market, the Company maintains depots/branches in all the states in the South Western region of Nigeria. Despite the challenges of the years gone by, the Company is now repositioned to achieve optimal capacity utilisation and a return to profitability. A new management team led by Otunba Michael Daramola took over the management of the brewery in 2005 and the positive results are already evident. Towards the end of 2005, the new management successfully completed the first phase of our project on expanding capacity, by inaugurating the rehabilitated Bottling Line II. In addition, we have concluded arrangements for the regular supply of high grade malted barley and other critical raw materials using a 90-day suppliers credit facility and access to term funding for the procurement of key spare parts. These initiatives coupled with Managements focus on a profit-oriented strategy that is anchored to our new core values of honesty, integrity and a commitment to excellence, transparency and customer satisfaction, constitute the foundations for the renaissance of your Company that has been so long awaited. The Board and Management are committed to a programme of Company restructuring that is results oriented and which embraces professionalism and excellence in all aspects of operations. Our objective is to return to profitability and growth, win back investors confidence, revitalise and expand our customer base so that an ever-increasing number of consumers may enjoy the unique tasting experience offered by the products of International Breweries Plc. 1.2 Our Products and Services The Companys products are TROPHY Lager Beer and BETAMALT (a non-alcoholic beverage). 2.0 Board and Management 2.1 Board of Directors The general policies and direction of the Company are determined by the Board of Directors, of which I am the Chairman. I graduated from the University of Birmingham UK in 1983, with LL.B (Hons) in Law, specialising in International Trade, EU and Company Law. My stint with Brauhaase International Management GmbH started in 1992 as a Project Consultant; by 1994, I was the Personal Assistant to the Company Partner and Managing Director.


THE CHAIRMANS LETTER (CONTD) I have also been privileged to hold directorships in several companies such as Vodi Technik Motors (Ghana) Limited; Banjul Breweries Limited The Gambia (as Chairman); Solomon Breweries Limited, Honiora Solomon Islands (as Managing Director) and my present position as Chairman of International Breweries Plc, Ilesha.

The other members of the Board are: Otunba Michael O. Daramola (Managing Director/ Chief Executive)

Otunba Daramola attended the prestigious Kings College Lagos, where he passed all his 3 A level papers at one sitting. He then proceeded to the University of Manchester to study Finance, but had to return back home when he was offered a federal government scholarship to study Industrial Economics in the then Soviet Union. In 1986, after bagging a Masters degree, he returned to Nigeria with First Class Honours in Industrial Finance from the U.S.S.R. After his one year compulsory National Service with the Central Bank of Nigeria in 1987, he started his professional career as the country economist of L.M Ericsson Nigeria Limited in 1988 and rose steadily to the top as the second in command to the Companys Financial Controller. In 1993, he joined MicCom Cables & Wires as the Financial Controller, but left to set up his own outfit called Ladyet Ventures Limited. In 1994, in conjunction with some foreign technical partners from the UK, he set up MicBeth Nig. Ltd; an electro-mechanical company with an office in London, that specialises in the rewinding of electric motors and alternators for generators as well as supplying essential spares to industries. The company has grown extensively with projects from both private and government institutions spanning the country. It was this wealth of experience in the managing of business enterprises, together with long years of interaction with the brewing industry that prompted Warsteiner International of Germany to approach him to take over the management of International Breweries Plc as the Managing Director in 2005. Mr. Joachim Haase (German) Mr. Haase did his Brewer and Malzer Apprenticeship at Bavaria Brewery Hamburg Germany between 1945 to 1947, thereafter he attended the Technical University Muenchen/Weihenstephan in Germany and obtained the Professional degree diploma in Brewery Engineering in 1952. He was the Chairman/Managing Director of Seychelles Brewery Limited, Mahe Seychelles, between 1972 to 1994 and has held the position of President of SIAC Isenbeck Brewery SA Douala Cameroun since 1994. He has been the Consultant/Chairman of Brauhaase International Management since 2001. Mr. Georg Munde (German) Mr. Munde graduated from Technical University of Munich, Freisung-Werhenstephan, Federal Republic of Germany in 1994 with a Master of Science degree. He started his career as Acting Technical Manager of Soc Trang Beer Company, Vietnam in April 1996, from where he moved to Warsteiner International as Technical Adviser up until July 1997. Thereafter he became the Business Development Manager in Warsteiner International, wherein he carried out business development projects in Africa, Asia, The Caribbean, Eastern Europe, India, and Russia etc. He is the Managing Director of Brauhaase Group of Companies and also sits on the Boards of other companies such as SIAC Brasserie Isenbeek S.A Douala Cameroun; Solomon Breweries Limited Solomon Islands; Banjul Breweries The Gambia and International Breweries Plc Ilesha Nigeria. Mr. Detlef Srugis (German) Mr. Srugis obtained the Professional Brewmaster degree from Technical University Berlin in 1965 and also attended a certificate course at the United States Brewers Academy in 1980. He has also attended several workshops in Brewing, Fermentation & Filtration; Environmental Management; Computer Software and Product Safety. He worked in Brasserie BB Lome S.A Togo from 1969 to 1980, from where he joined Brauhaase International Management in the same year as Head of Technical & Technological Department.


THE CHAIRMANS LETTER (CONTD) He rose rapidly through the ranks and was appointed the Managing Director in 2001, a position he has held to date. Mr. Srugis also sits on the Boards of Banjul Breweries Banjul, The Gambia; Solomon Breweries Limited Honiara Solomon Islands and International Breweries Plc Ilesha. Mr. Folorunso Awomolo Mr. Folorunso Awomolo was born in 1932 in Ilesha, Osun State where he had his basic education. He was later employed in Niteco where he rose along the ranks to the position of Managing Director and eventually became an executive chairman. He is on the board of the following companies: International Breweries Plc, Nigerian Shipbuilders Ltd, Newco Investment Ltd, Career Development Ltd, Water Services Ltd, Imo Hills Farm Ltd, Brewtech and Adesina Investment Property Company Ltd. Mr. Akintoye S. Omole Mr. Omole graduated from the University of Ibadan in 1982 with a BSc. In Sociolology and joined the Accountancy firm of Coopers & Lybrand in the same year. He proceeded to the London School of Accountancy in 1984 where he qualified as an accountant with the Association of Certified Accountants in 1986. He has since worked with several firms both in Nigeria and overseas. Mr. Omole sits on the Board of several companies including Fourhold Investments Limited, Cardinal Investments Limited, Eyot Nigeria Limited and International Breweries Plc. THE KEY MANAGEMENT The Management team of the Company is headed by the Chief Executive Officer, Otunba Michael Daramola, and includes the following: Mr. Barry H. Stokes (FCA): General Manager, Finance Mr Stokes is a British National, an experienced Senior Executive with strong communication and team building/leadership skills. He started his professional career with Price Waterhouse in 1967 after obtaining the associateship of the Institute of Chartered Accountants in England & Wales, and rose through the ranks to become Managing Partner in the firms office in Cote dIvoire by 1987. From June 1987 to December 1991 he was Director Financial Policy Planning and Budget at the African Development Bank. Thereafter he went into freelance financial consultancy, wherein he consulted for the World Bank amongst other assignments. Between September 1995 and June 2001, He was Vice-President in Builders Federal (Hong Kong) Limited; a group of companies that specializes in the design, fabrication, assembly and installation of curtain wall facades for prestigious high rise buildings. Between, February 2002 to September 2004, Barry Stokes engaged in consulting assignments at the African Development Bank and Islamic Development Bank, before joining International Breweries Plc in March 2005 on a consulting assignment to advise and assist the incoming Managing Director in making an initial diagnostic study of the problems and continuing lack of profitability of the brewery. Since his arrival at the brewery, the restructuring and re-organisation of the brewery has progressed steadily with a substantial staff reduction and introduction of modern accounting and information management systems. He became a fellow of the Institute of Chartered Accountants in England & Wales in January 1978.


THE CHAIRMANS LETTER (CONTD) Mr. Sunday J. Taiwo: Technical Manager He obtained a B.Sc in Biochemistry from Concordia University Montreal Canada in 1977, after which he proceeded to Domens Schle Munich Germany in 1984 for the qualified brewers course. He has also attended several technical and management courses within and outside the country. Mr. Taiwo has overall responsibility for brewing, production and engineering. He started his career with International Breweries Plc in 1980 as a Trainee Brewer and has risen through the ranks to become the Technical Manager. Mr. D. Olufemi Omotosho: Marketing Manager Femi Omotosho started as a Sales Clerk with MDS (a division of UAC Nigeria Plc) Ibadan 1973-1975, from where he moved to Nigerian Breweries Plc Ibadan, as a Sales Representative 1976-1978. In 1979, he joined International Breweries Plc Ilesha as a Sales Representative and he rose through the ranks to become the General Sales Manager in September 2003. He became the Marketing Manager with effect from November 2004. Mr. Rufus G. Oladapo: Commercial Manager Rufus Oladapo obtained his HND from The Polytechnic Ibadan in 1981; LL.B (Hons) from University of Benin in 2001. He also obtained the professional qualification ACIS, London in 1992. He joined International Breweries Plc in 1982 during which time he held several positions within the rganization culminating in his current appointment as the Commercial Manager. Before joining International Breweries, Rufus was employed by the Oyo State Water Corporation, Ibadan as a Storekeeper (1976). From 1972 1976, he had a teaching role at the Ife Local Schools Board, Ile-Ife. Mrs. Folasade Oluyemisi Omole: Internal Audit Manager Mrs Omole joined International Breweries Plc in 1991, where she successively occupied the positions of Laboratory Analyst (1991 1996); Assistant Manager, Salaries & Wages (1996 1999); Manager, Salaries & Wages (1999 2003) before becoming head of Internal Audit in 2003. Mrs Omole obtained her B.Sc in Industrial Chemistry from University of Ilorin in 1987 and MBA in 1995 from Obafemi Awolowo University Ile-Ife. Ms Bamidele F. Kayode: Acting Personnel Manager Ms Kayode obtained the National Certificate of Education (English/French) in 1978 and Bachelor of Arts (English Language) in 1983. She joined International Breweries in 1989 as Personnel Officer handling administrative and labour related matters. Between 1990 and 1994, she was Assistant Training Manager with responsibilities for handling the recruitment of staff and matters related to staff training. She was promoted to Training Manager in 1994 and remained in that role until July 2002. She assumed the responsibilities as Head of the Personnel Department in April 2005.


THE CHAIRMANS LETTER (CONTD)

3.0 Individual shareholdings of key management staff in the Company as at 18th May 2007 are as stated below:

Management Shareholding

Otunba M.O Daramola Nil

Mr. Barry H. Stokes Nil

Mr. S.J Taiwo 10,000

Mr. D.O Omotosho 17,000

Mr. R.G Oladapo 7,500

Ms B.F Kayode 10,500

Mrs. F.O Omole 4,000

4.0 Premises

The Companys Head Office/Factory is situated at Lawrence Omole Way, Omi Asoro, Ilesha. In addition, the Company also has depots at Abeokuta, Akure, Ilorin, Iseyin, Ibadan, Lagos and Osogbo as stated below: S/N STATE LOCATION ADDRESS TITLE 1 Ogun Abeokuta 90b Igbore Road Ijeja Abeokuta Leasehold 2 Ondo Akure 184 Oyemekun Road, Akure Leasehold 3 Kwara Ilorin Behind Offa Garage, Ilorin Leasehold 4 Oyo Iseyin Opposite I.D.G.S Iseyin Leasehold 5 Oyo Ibadan Akunleyan Estate, Opp Green Spring Hotel, Old Ife Road

Ibadan Leasehold

6 Lagos Lagos 603, Agege Motor Road, Shogunle, Lagos Leasehold 7 Osun Osogbo 22, Obafemi Awolowo Way, New Ikirun Road, Osogbo Leasehold


THE CHAIRMANS LETTER (CONTD) 5.0 Financial Summary (Extracted from the Reporting Accountants Report)

Year ended 31/12/06 31/12/05 31/12/04 31/12/03 31/12/02

=N=000 =N=000 =N=000 =N=000 =N=000

Turnover 313,048 401,399 594,704 452,001 453,732

Loss before taxation (361,360) (523,658) (242,388) (142,586) (100,228)

Taxation - - - - -

Loss After taxation (361,360) (523,658) (242,388) (142,586) (100,228)

Proposed dividend - - - - -

Loss carried forward (1,796,783) (1,435,423) (911,766) (669,378) (526,792)

EPS (actual kobo) (70.5) (102) (47) (28) (20)

EPS (Adjusted kobo) (70.5) (102) (47) (28) (20)

DPS (actual kobo) - - - - - Calculations of actual earnings and dividend per share were based on the number of shares in issue at the respective balance sheet dates while adjusted earnings and dividend per share were based on the 512,914,681 ordinary shares of 50k each in issue as at 31st December, 2006

6.0 Purpose of the Offer To enable International Breweries to rebuild the capital base of the Company and to carry out restructuring, staff right sizing, improvement and expansion of production facilities.

The net proceeds of N 1,318,034,900 after deducting the costs of the Offer, estimated at N73,965,100 (representing 5.31% of gross proceeds) would be utilised as follows:

Purpose N % Estimated Project completion period

(months)

Staff Right Sizing Costs 331,260,900 25.13 24 Months

Capital Investments to improve plant reliability and equipment reliability and expand overall production capability

921,774,000

69.94

24 Months

Repayment of Bridging Facility 65,000,000 4.93 3 Months

TOTAL 1,318,034,900 100

7.0 Working Capital, Profit and Dividend Forecasts

The Directors of the Company, having regard to its present financial position and the anticipated proceeds of the Offer, are of the opinion that the Company will have adequate working capital and sufficient liquidity to meet its immediate and foreseeable obligations and funding requirements.

The Directors estimate that in the absence of unforeseen circumstances, the profit/loss before taxation for the years ending 31st December, 2007, 2008 and 2009 will be in the order of (N132,456,000), N117,705,000 and N719,732,000 respectively. If these estimates are achieved, the appropriations thereof will be approximately as follows:

Year Ending 2007 2008 2009

31 December =N=000 =N=000 =N=000

Turnover 875,929 2,376,412 3,853,685

Profit/(Loss) Before taxation (132,456) 117,705 719,732

Estimated taxation - - 143,946

Profit/(Loss) after taxation (132,456) 117,705 575,786

Proposed dividend - - -

Profit/(Loss) transferred to revenue reserve (132,456) 117,705 575,786

Forecast earnings per share (Kobo) (6.26) 5.57 27.25

Forecast dividend per share (Kobo) - - -

Price Earning Ratio (At Offer Price) (13.89) 15.62 3.19

Earnings Yield (%) (7.19) 6.40 31.32

Note: Forecast earnings and dividend per share are based on projected post offer share capital of 2,112,914,681 Ordinary Shares of 50 kobo each for 2007, 2008 and 2009, made up of existing share capital of 512,914,681 and 1,600,000,000 Ordinary Shares of 50kobo each now being offered.


THE CHAIRMANS LETTER (CONTD) 8.0 Business Prospects and Going Concern Status The attention of the Board was drawn to the audit reports specifically to the persistent losses for the past ten years raising doubts on the going concern status of the Company, which greatly depends on further injection of fresh funds in order to increase production capacity. International Breweries has put in place a new management team concurrent with the investment in renovating and replacing plant and equipment designed to achieve a significant turnaround in the performance of the brewery. Current production volume in the brewery is grossly insufficient to satisfy local demand much less the regional demand, it is therefore imperative to significantly increase production volumes by improving the plant and equipment. It is planned that production volume would quickly increase to 140,000 hectoliters annually post-offer and thereafter to be in excess of 350,000 hectolitres annually thereafter. 9.0 Risk Factors & Mitigants Company Specific Risk International Breweries Plc has faced quite a number of challenges over the years; it has suffered from inadequate production facilities as a result of lack of working capital and breakdown of the plant. This has resulted in losses over the years. Mitigant The core investor has renewed interest in the Company by bringing in additional funds to build a new production line and changed the management team as well as staff rationalization to achieve return to profitability. It is believed that these measures together with the new funds from this Offer will achieve a significant turnaround in the Company. Sector Risk The Company faces stiff competition from the dominant breweries in Nigeria; Nigerian Breweries Plc and Guinness Nigeria Plc, which together control over 55% of the beer market. Their products are doing well in the market and there are no significant government policies that are likely to affect the industry adversely. The balance of 45% is fragmented amongst all the other brewers scattered across various regions in the country, each with significant market share in its locality. Mitigant International Breweries Plc enjoys good patronage of its product in Osun and Oyo States, where the Trophy brand is very popular. At present it is unable to satisfy local demand; it is planned that with increased production capabilities Trophy lager beer would be available in sufficient quantities in the South Western part of the country. Political Risk Changes in regulatory policies and unforeseen political crises could have adverse effects on economic development and stability in the country, which could restrict or slow down foreign direct investment into the country. A stable political climate is thus essential for business growth. Mitigant With the successful handover of government to a newly elected civilian administration, there is growing confidence in the Nigerian economy by the international community. This is evidenced by the continuos flow of international investors into the Nigerian economy. Equity Investment Risk Investments in the capital market are always subject to general risk. There can be no guarantee of constant trading in International Breweries shares or that the Companys market price will not fluctuate either upwards or downwards. The price of International Breweries, or any other equity, may rise or fall depending on a number of factors beyond the control of the Company. Mitigant Trading activities on the Nigerian Stock Exchange has witnessed tremendous turnover in the recent past as a result of investors confidence in the Market and several new issues that have been floated. With the new shares of International Breweries Plc being offered to the public through this Offer, it is expected that the Companys shares would be more liquid on the Stock Exchange.


THE CHAIRMANS LETTER (CONTD) Currency Risk Foreign Investors may run the risk of incurring losses caused by an adverse change in exchange rates. Mitigant The Central Bank of Nigeria, in light of Nigerias burgeoning foreign reserves, has recently instituted measures to stabilize and strengthen the Naira. These efforts if sustained will not only reduce the risk of foreign investments, but will make Naira investments stronger than investments held in other currencies. Environmental Risk Being a manufacturing company, International Breweries Plc poses some risk to its environment in form of by-products, industrial wastes and effluent discharge. Mitigant Some of the industrial by-products and wastes generated by the Company constitute raw materials for some agro-allied companies; therefore these wastes are collected by feedmillers and farmers for preparation of livestock feeds and other uses. This eliminates the dumping of such wastes in the environment. The Company also complies with all environmental standards prescribed by Federal Environmental Protection Agency, Standards Organisation of Nigeria and National Agency for Food, Drug Administration and Control. 10.0 RESEARCH AND DEVELOPMENT The Company has not embarked on any research and development activities in recent years.

11.0 COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

The Company recognizes the importance of an effective Corporate Governance that seeks to provide for the best practices to be followed by the Company in the exercise of the power over the strategic direction to be pursued, the supervision of the executive actions, transparency, accountability and regulatory compliance. We provide below the extent of compliance by the Company with the code of best practices on corporate governance.

Responsibility of the Board of Directors

The Company is compliant with all the duties and responsibilities stated under Parts A to C of the Code.

Composition of the Board of Directors

The Board of Directors of the Company is composed of 7 Directors, 6 of whom are non-executive Directors. The Board members are professionals and businessmen with vast experience and credible track records.

The Board has a formal schedule of matters specifically reserved for it to ensure that the direction and control of the Company is firmly in its hands.

Chairman and CEO Positions

The position of the Chairman is separate from that of the Chief Executive. The Chairman is not involved in the day-to-day operations of the Company and is not a member of any sub-committee of the Board.



Proceedings and frequency of meetings

The Board meets regularly and sufficient notices with clear agenda/report are given ahead of such meetings. All Directors have access to the Company Secretary who can only be appointed or removed by the Board and is also responsible to the Board.

Non-Executive Directors

Non-Executive Directors are not dependent on the Company for their income other than for their Directors fees and allowances. The non-executive Directors are independent and are not involved in business relationships with the Company that could hinder or encumber their independent judgement.

The Non-Executive Directors retire by rotation at the Annual General Meeting and are eligible for re-election.

Directors Remuneration

The remuneration of the Executive Director is fixed by the Board and full and clear disclosure of the Directors remuneration is always provided. The Directors agreed two years ago to suspend payment of their fees and allowances until the Company returns to profitability

Reporting and Control

The Board is responsible for and ensures that proper financial reporting, as well as establishment of strong internal control procedures, are in place. There is a Board Audit Committee comprising non-executive Directors and representatives of the shareholders. The Audit Committee is chaired by one of the representatives of shareholders.

Shareholders Rights & Privileges

The Directors ensure that shareholders statutory and general rights are protected at all times. Shareholders are responsible for electing the Directors at the Annual General Meetings for which at least notice of 21 days has been given before the meeting.

12.0 Future Plans The Technical Partner and Principal Shareholder, together with the Board of Directors and Management are committed to returning the Company to a path of growth and profitability. With this in mind, a fairly aggressive investment option and corresponding operating scenario has been developed that will greatly improve the reliability of the production facility, revitalise and expand the customer base and create the platform for further expansion. The Company has large plant capacities in specific areas and achieved its peak production levels in the late 1980s (e.g. approximately 400,000 Hls in 1988). The recent very low production efficiency (10% in 2006) is the result of the cumulative effect of unnecessary bureaucracy, a lack of maintenance, staff skills and competencies mismatches and deficiencies, as well as external factors such as epileptic power, fuel and raw materials shortages and difficulties in obtaining spare parts. With this situation in mind, the Board of Directors has adopted a business plan to cover the period 2007-2009, which seeks to firstly ensure the Company has a reliable production facility so that volumes can very quickly reach 140,000 hectolitres on an annual basis and be progressively increased to be in excess of 350,000 hectolitres annually by 2009. Arrangements have also been made to provide the necessary working capital that will ensure the regular supply of raw materials, fuel, spares and other essentials for uninterrupted production.



Concurrent with the investment in renovating and replacing plant and equipment, management has a programme to recruit highly experienced staff to fill key positions and thereby meet the skills deficiencies that the Company is currently facing. In addition, a renewed effort, together with the necessary budgetary resources, is now in hand to address the wide-ranging training and staff development needs of the Company as it takes up the challenge of turning the Company into a profitable and well-respected organisation for the benefit of all. With the foregoing in place, coupled with a well-focused marketing strategy to get the increased volume to the consumer, the company will be well-positioned to envisage yet further expansion, both in terms of volume and product type, and correspondingly greater profitability. The technical partners/majority shareholders to date have remitted over 3.2 million Euros towards maintaining their 60.01% equity holding in International Breweries Plc in this Public Offering.

Yours faithfully,

Mr. Christoph Steinwehe Chairman


THE PROFIT FORECAST 1. Letter from the Reporting Accountants 18th May, 2007 The Directors International Breweries Plc Lawrence Omole Way Omi Asoro Ilesha, Osun State and The Directors Sterling Capital Markets Limited 67 Marina Lagos Gentlemen, We have reviewed the accounting policies and the calculations made in preparing the profit forecast of INTERNATIONAL BREWERIES PLC for the three (3) years ending 31 December 2007, 2008 and 2009. Our review indicated that the profit forecast, so far as the accounting policies and calculations are concerned, have been properly compiled on the basis of the assumptions made by the Directors, and are presented on a basis consistent with the accounting policies normally adopted by the Company. Yours faithfully, BALOGUN BADEJO & CO (Chartered Accountants) REPORTING ACCOUNTANTS


THE PROFIT FORECAST 2. Letter from the Reporting Accountants in respect of Going Concern Status 18th May, 2007 The Directors International Breweries Plc Omi Asoro Way Ilesha Osun State And The Directors Sterling Capital Markets Limited 67, Marina Lagos Gentlemen, CONFIRMATION OF THE GOING CONCERN STATUS Based on the information and confirmation received from the Directors of International Breweries Plc, and our review of the past results of the Company, as well as existing operational position, the Directors of International Breweries Plc are of the belief that no material information will emanate from the observations noted in our Reporting Accountants Report that will affect the going concern status of the Company. We are therefore of the opinion that the Company will continue as a going concern in the foreseeable future. Yours faithfully, BALOGUN BADEJO & CO Chartered Accountants REPORTING ACCOUNTANTS


THE PROFIT FORECAST (CONTD)


BASIS AND ASSUMPTIONS ON PROFIT FORECAST

FOR THE THREE YEARS ENDING 31 DECEMBER 2007, 2008 AND 2009. 1 BASIS

.1

Previous years' performances have been considered as the basis for measuring the reasonableness of the forecasts.

.2

The forecast has been prepared on a basis consistent with the accounting policies normally adopted by the company.

2 ASSUMPTIONS

.1 The turnover for 2007, 2008 and 2009 will be N876 million, N2.38 billion and N3.85

Billion, respectively.

.2 The shares on offer will be fully taken up.

.3 There will be no disruption in the supply of raw materials and spares to the company.

.4 There will be no litigation that will materially impact negatively on the company

throughout the period of the forecast.

.5 Operating results will not be affected by industrial disputes within the country or company

.6 There will be no material changes in the accounting policies currently being used by

the company.

.7 There will be no material changes in government regulations affecting labour costs and operating expenses besides the ones already in force in 2006.

.8 Changes in political and economic environment of the country will not adversely

affect the operations of the company.

.9 The company shall continue to maintain stable and competent management staff and

the quality of the company's management will be sustained during the forecast period

.10 Government's pronouncements on the National minimum wage will not materially

affect labour costs and operating expenses as projected in the forecast.


THE PROFIT FORECAST (CONTD) 4.0 Profit Forecast for the Years Ending 31 December 2007, 2008 and 2009

The Directors of the Company are of the opinion that, in the absence of unforeseen circumstances, and based on the foregoing assumptions, the profit after taxation and appropriations for the three years ending 31st December, 2007, 2008 and 2009 shall be (N= 132.45) million, N117.70 million and N= 575.78 million respectively.


PROFIT FORECAST

FOR THE THREE (3) YEARS ENDING 31 DECEMBER

2 0 0 7 2 0 0 8 2 0 0 9

N'000 N'000 N'000

Turnover 875,929 2,376,412 3,853,685 ======== ========= =========

Profit/(loss) before taxation (132,456) 117,705 719,732

Taxation - - 143,946 ________ ________ _______

Profit/(loss) after taxation (132,456) 117,705 575,786

Dividend - - - _______ _______ _______

Profit/(loss) transferred to

revenue reserve (132,456) 117,705 575,786 ======= ======= =======

PER 50K SHARE DATA:

Earnings/(loss) per share (kobo) (6.26) 5.57 27.25

Dividend per share (Kobo) - - -

Price Earnings Ratio (at Offer Price) kobo (13.89) 15.62 3.19

Earnings Yield (7.19) 6.40 31.32 Earnings/Dividend per share are based on 2,112,914,681 post offer ordinary shares of 50k each.


THE PROFIT FORECAST (CONTD) The following is a copy of the letter from the Issuing House on the Profit Forecast: 5.0 Letter from the Issuing House 12th May 2007 The Directors International Breweries Plc Lawrence Omole Way Omi Asoro Ilesha Osun State Dear Sirs OFFER FOR SUBSCRIPTION OF 1,600,000,000 ORDINARY SHARES OF 50 KOBO EACH BY INTERNATIONAL BREWERIES PLC AT 87K PER SHARE (THE OFFER) We write further to the Prospectus issued in respect of the Offer for Subscription of 1,600,000,000 ordinary shares of 50 Kobo each by International Breweries Plc, the draft of which we have had the privilege of reviewing. The Prospectus contains forecasts of the profits of the Company for the years ending 31st December 2007, 2008 and 2009. We have discussed the bases and assumptions upon which the forecasts were made with you and with Balogun Badejo & Co. (Chartered Accountants), the Reporting Accountants. We have also considered the letter, dated 18th May 2007 from the Reporting Accountants regarding the accounting bases and calculations upon which the forecasts were compiled. Having considered the assumptions made by you as well as the accounting bases and calculations reviewed by Balogun Badejo & Co. (Chartered Accountants), we consider that the forecasts (for which you as Directors are solely responsible) have been made by you after due and careful enquiry. Yours faithfully, Biodun Dabiri MD/CEO, Sterling Capital


FINANCIAL INFORMATION 1.0 Reporting Accountants Report 13 March, 2007 The Directors INTERNATIONAL BREWERIES PLC Omi Asoro, Ilesha. Osun State and The Directors Sterling Capital Markets Limited 67 Marina Lagos Gentlemen, We have examined the audited financial statements of INTERNATIONAL BREWERIES PLC herein referred to as The Company for the years ended 31 December 2002, 2003, 2004, 2005 and 2006. These financial statements were prepared under the historical cost convention. Messrs Oyelami, Soetan, Adeleke & Co (Chartered Accountants) were the auditors to the Company for the years ended 31 December 2002, 2003, 2004, 2005 and 2006 and their audit reports thereon were unqualified except for the attention of the Company which was drawn to the persistent loss for the past ten years raising doubts on the going concern status of the Company and which greatly depends on further injection of fresh funds in order to increase its production capacity. The summarized profit and loss accounts, balance sheets and cash flows are based on the audited financial statements of the Company after making such adjustments as we considered appropriate. In our opinion, the financial information gives, for the purpose of the offer a true and fair view of the state of affairs of the Company as at 31 December 2002, 2003, 2004, 2005 and 2006 and its summarized profit/(loss) and cash flow for each of the years then ended. Yours faithfully , BALOGUN BADEJO & CO [Chartered Accountants] REPORTING ACCOUNTANTS


FINANCIAL INFORMATION (CONTD)

2.0 Statement of the significant accounting policies

The following are the significant accounting policies adopted by the company in the preparation of its financial statements:

1. BASIS OF ACCOUNTING

The financial statements have been prepared under the historical cost convention as modified by the revaluation of land and buildings.

2. TURNOVER

This is stated at the net value of products invoiced and delivered to customers.

3. STOCKS

Stocks have been valued at lower of cost and net realizable value as ascertained on the following basis:

(i)

Raw materials and other boughtin components are valued at weighted average cost together with transport and dock charges.

(ii)

New bottles and cartons have been valued at cost whilst trade returns are valued at deposit value.

(iii)

Work-in-progress has been valued at cost of materials and attributable production

overheads.

(iv)

Finished products have been valued at standard cost which includes direct costs and appropriate portion of production overheads.

4. DEPRECIATION

Depreciation has been charged on all fixed assets at the rates calculated to write off the cost of the fixed assets on straight line method over their expected useful lives from the date brought into commercial use. The rates used are:-

Factory buildings - 2%

Plant and machinery - 20%

Water supply installation - 10%/20%

Vehicles - 331/3%

Furniture and equipment - 20%/331/3%

5. PENSION

The company operates a contributory benefit scheme for its employees. The scheme is funded by contributions from employees and the company at the rate of 7% by employees and 7% by the company of basic salary, transport and housing allowances. The fund is being held with the Companys bankers pending the appointment of Pension Funds Administrators by the staff.



STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) 6. STAFF GRATUITY/TERMINATION BENEFITS Provision is made for retirement benefit entitlements due to staff upon disengagement based on

their years of service and current emoluments as contained in staff conditions of service. 7. DEFERRED TAXATION Deferred taxation is computed on the timing differences between the depreciation charged and tax

capital allowances claimed on the fixed assets using the liability method. 8. FOREIGN CURRENCIES Transactions arising during the period are recorded into Naira at the approximate official rates

ruling at the time of occurrence. Balances in foreign currencies are converted at the official exchange rates ruling at the balance sheet date. The residual profit or loss is transferred to the profit and loss accounts.


FINANCIAL INFORMATION (CONTD) 3.0 Profit and Loss Account

PROFIT AND LOSS ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER

2006 2005 2004 2003 2002

Notes N'000 N'000 N'000 N'000 N'000

Turnover 10

313,048 401,399 594,704 452,001 453,732

Cost of sales

(335,801) (333,764) (357,671) (324,404) (312,153) _________ ___________ ________ ________ ________

Gross profit/(loss)

(22,753) 67,635 237,033 127,597 141,579 Marketing and promotion expenses

(61,997) (63,745) (85,024) (66,320) (63,214)

Administration expenses

(164,348) (175,224) (203,501) (171,812) (143,534)

_________ ___________ ___________ ___________ ___________

(249,099) (171,334) (51,492) (110,535) (65,169)

Other income

33,891 21,058 6,162 4,098 14,838 _________ ___________ ________ ________ ________

Operating loss

(215,208) (150,276) (45,330) (106,437) (50,331)

Interest payable and similar charges

12

(3,141) (2,535) (5,880) (13,210) (21,354) _________ ___________ _______ _______ _______

(218,349) (152,811) (51,210) (119,647) (71,685)

Exeptional items 13

(143,011) (370,847) (191,178) (22,939) (28,543) _________ ________ ________ ________ ________

Loss before tax

(361,360) (523,658) (242,388) (142,586) (100,228)

Taxation - - - - - _________ ___________ ________ ________ ________

Loss after tax

(361,360) (523,658) (242,388) (142,586) (100,228)

Loss brought forward

(1,435,423) (911,766) (669,377) (526,792) (426,564) _________ ____________ ____________ ____________ ____________

Loss carried forward

balance sheet

(1,796,783) (1,435,423) (911,766) (669,378) (526,792)

========= =========== =========== =========== ===========

PER SHARE DATA: Earnings/(loss) per share (kobo)

(70.5) (102) (47) (28) (20)

Dividend per share (kobo) - - - - -

Note: The accounting policies on pages 27 and 28 and the notes on pages 32 to 38 are to be read along with these financial

statements.



BALANCE SHEET AS AT 31 DECEMBER

ASSETS EMPLOYED:

2006 2005 2004 2003 2002

Notes N'000 N'000 N'000 N'000 N'000

FIXED ASSETS 1 243,943 256,682

299,583 286,769 166,349

TRADE INVESTMENT 2 1,000 1,000

1,000 1,000 1,000 _________ ________ ________ ________ ________

244,943 257,682

300,583 287,769 167,349 _________ ________ ________ ________ ________

CURRENT ASSETS

Stocks 3 133,579 117,682

132,252 110,615 239,964

Debtors and prepayments 4 8,837 20,713

9,947 17,667 17,913

Bank and cash balances 539,004 4,442

12,230 3,179 16,478 _________ ________ ________ ________ ________

681,420 142,837

154,429 131,461 274,355 _________ ________ ________ ________ ________

CURRENTS LIABILITIES: Creditors: Amounts falling due

within one year 6 (1,632,964) (821,399)

(756,012) (477,842)

(357,730)

Taxation 5 - (3,830)

(3,830) (3,830)

(3,830) __________ ________ ________ ________ ________

(1,632,964) (825,229)

(759,842) (481,672)

(361,560) __________ ________ ________ ________ ________

Net current liabilities (951,545) (682,392)

(605,413) (350,211)

(87,205) __________ ________ ________ ________ ________

(706,602) (424,710)

(304,830) (62,442) 80,144

Creditors: Amounts due 6(b)

after more than one year (483,246) (403,777) - - - __________ ________ ________ ________ ________

Net assets

(1,189,847)

(828,487)

(304,830)

(62,442)

80,144

========== ======== ======== ======== ======== FINANCED BY:

CAPITAL AND RESERVES

Share capital 7 256,457 256,457

256,457 256,457 256,457

Share premium 8 229,254 229,254

229,254 229,254 229,254

Capital reserve 9 121,225 121,225

121,225 121,225 121,225

Revenue reserve (Negative) (1,796,783) (1,435,423)

(911,766) (669,378)

(526,792) __________ _________ ________ ________ ________

Shareholders fund

(1,189,847)

(828,487)

(304,830)

(62,442)

80,144

========== ========= ======== ======= ========

Note: The accounting policies on pages 27 and 28 and the notes on pages 32 to 38 are to be read along with these financial

statements.



CASH FLOW STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER

2006 2005 2004 2003 2002

N'000 N'000 N'000 N'000 N'000

Cash flows from operating activities

Loss before tax (361,360) (523,658) (242,388) (142,587) (100,228)

Adjustment for non cash items:

Depreciation 57,528 52,314 48,155 33,786 15,985

Under-provision for gratuities and terminal

benefits 105,048 403,777 - - -

Tax paid - - - - (1,522)

Interest paid 3,141 2,535 5,880 16,596 -

Interest received - - - - 9,970 _______ _______ _______ _______ _______

Cash outflow from operations before

working capital changes (195,643) (65,032) (188,353) (92,205) (75,795)

Stocks (15,896) 14,569 (21,637) 129,349 (120,714)

Debtors 11,876 (10,764) 7,720 245 16,156

Creditors and accruals 219,550 80,507 278,336 121,825 9,698 _______ _______ _______ _______ _______

Cash generated on operations 19,887 19,280 76,066 159,214 (170,655)

Gratuity paid (25,580) - - - -

Tax paid (3,830) - - - -

Cashflow from investing activities:

Purchase of fixed assets (44,789) (10,883) (60,969) (154,205) (24,025) _______ _______ _______ _______ _______

(54,312) 8,397 15,097 5,009 (194,680)

Cash flow from financing activities

Loan obtained 588,933 - - - -

Share capital - - - - 319,372

Interest paid (3,141) 2,535 (5,880) (16,596) (21,354)

Share issue expenses - - - - (31,031)

Dividend paid - - (450) (600) (600) _______ _______ _______ _______ _______

531,480 2,535 (6,330) (17,196) 266,387 _______ _______ _______ _______ _______

Increase in cash in hand and bank 531,480 5,862 8,767 (12,187) 71,707

Cash and cash equivalents at 1 January (9,899) (15,761) (24,528) (12,341) (84,048) _______ _______ _______ _______ _______

Cash and cash equivalents 31 December 521,581 (9,899) (15,761) (24,528) (12,341)

====== ====== ====== ====== ======



NOTES TO THE FINANCIAL STATEMENTS

1. Fixed assets 2006 2005 2004 2003 2002 Gross value: N'000 N'000 N'000 N'000 N'000

Cost/valuation at January

639,147

629,734 568,765 414,560 390,534

Additions

44,788

10,883 60,969 154,205 24,025

Reversal -

(1,470) - - - ________ _________ _________ _________ _________

At 31 December

683,935

639,147 629,734 568,765 414,559

========

========= =========

=========

========= Depreciation:

To 1 January

382,465

330,151 281,997 248,210 232,226

For the year

57,528

52,314 48,155 33,786 15,984 ________ _________ _________ _________ _________

To 31 December

439,993

382,465 330,151 281,996 248,210

========

========= =========

=========

========= Net book value:

At 31 December

243,943

256,682 299,583 286,769 166,349

========

========= =========

=========

=========

The company's land and buildings were revalued for a sum of N141, 938,090 as at 14 April, 1992 by Messrs. Diya Fatimilehin & Co., Estate Surveyors and Valuers. The revalued land and building have been incorporated into the company's books and the related revaluation surplus reflected in the accounts as capital reserve (Note 9).

2006 2005 2004 2003 2002

2. Trade investment

N'000 N'000 N'000 N'000 N'000

Cost of share held in International

Breweries (Agro-Allied) Limited.

1,000

1,000 1,000 1,000 1,000

====== =======

========== ======== ========

In the opinion of the directors, the realisable value of the above investments is not lower than their cost.

3. Stocks

Raw materials

6,623

13,175 19,037 10,811 14,585

Bottles and packaging materials

26,896

25,181 30,350 24,437 25,859

Spare parts, fuel and lubricants

59,559

62,752 64,207 50,613 48,507

Production in progress

27,910

15,664 17,351 23,101 12,629

Finished products

7,543

910 1,307 1,653 1,270

Goods-in-transit

5,049 - - - 137,114 ________ ________ _________ _________ _________

133,580

117,682 132,252 110,615 239,964

======== ======== =========

=========

=========



2006 2005 2004 2003 2002

N'000 N'000 N'000 N'000 N'000

4. DEBTORS AND PREPAYMENTS

Amounts falling due within one year of the balance sheet date

Trade debtors

5,431

11,007

3,615 16,123 9,316

Amount due from related companies

380

380

380 380 380

Other debtors

3,026

7,059

5,639 534 7,903

Prepayments -

2,267

313 630 314 _______ _________ _________ _________ _________

8,837

20,713

9,947 17,667 17,913

=======

=========

=========

=========

=========

5. TAXATION

(a) Current taxation

Balance at 1 January

3,830 3,830 3,830 3,830 5,100

Tax paid during the year

(3,830) - - - (1,270) _______ ________ ________ ________ ________

-

3,830

3,830 3,830 3,830 ======= ======== ======== ======== ========



NOTES TO THE FINANCIAL STATEMENTS (CONTD)

2006 2005 2004 2003 2002

N'000 N'000 N'000 N'000 N'000

(b) Deferred taxation

Owing to the substantial un-recouped losses and capital allowances of prior years, the company has deferred tax asset of about N297 million not provided for in these financial statements.

6. CREDITORS AND PROVISIONS

(a) Amounts falling due within one year

Trade creditors

77,533 84,877 85,859 77,877 64,524

Associated companies

1,069,919 381,892 395,050 200,971 160,162

Other creditors

239,181 223,863 180,385 127,333 73,029

Accrued expenses

224,091 111,608 61,908 38,686 25,327 ________ ________ ________ ________ ________

1,610,724 802,240 723,203 444,867 323,042

======== ======== ======== ======== ========

Provisions

Taxation (note 5) - 3,830 3,830 3,830 3,830

Unpaid dividend

4,818 4,818 4,818 5,268 5,868 ________ ________ ________ ________ ________

4,818 8,648 8,648 9,098 9,698

======== ======== ======== ======== ========

Borrowings

Bank loan and overdrafts (secured)

17,422 14,341 27,991 27,706 28,820 _________ _________ ________ ________ ________

1,632,964 825,229 759,842 481,672 361,560

========= ========= ======== ======== ========

(i) Included as part of the amount due to associated companies is a short-term loan of N532 million by Brauhaase which shall be convertible to ordinary shares of the company at the last published trading price of the shares of the company trading price of the shares prior to the date the funds were recovered.

Similarly, two loans in Euros (E200,000 and E160,000 respectively) totalling the equavalent of N57 million, were granted by the parent company during the year for the payment of salary arreas and the purchase of caterpillar generator. The terms and condition of the loan for the generator ar yet to be specified. Repayment of both loans, including interest, to be in Euros.

2006 2005

N'000 N'000

(b) Amount falling due within one year

Staff gratuity and terminal benefits:

Balance as at 1 January 403,777 -

Additional provision during the year 105,048 403,777 _________ _________

508,825 403,777

Payment made during the year (25,579) - _________ _________

483,246 403,777

=========

=========

As indicated below in Note 15, 76 staff members were terminated effective 31 December, 2006 as part of a down-sizing exercise and some N240.3 million of this provision was used in January 2007 to pay off their entitlements.

At the Extra-Ordinary general meeting held on 12 February, 2007, the authorized share capital of the company was increased to 3,000,000,000 ordinary shares by the creation of 2,480,000,000 new ordinary shares of 50k each ranking pari-passu with the existing shares of the company.

Overdraft facilities are secured by a fixed charge on some of the company's buildings as well as a floating charge on the other assets exclusive of furniture and fittings.




7. SHARE CAPITAL

(a) Authorised

520,000,000 Ordinary shares of 50 kobo each 260,000 260,000 260,000 260,000 260,000

========== ======== ========

======== =========

(b) Allotted, Called-up and fully paid

512,914,681 Ordinary shares of 50 kobo each 256,457 256,457 256,457 256,457 256,457

========== ======== ========

======== ========

8. SHARE PREMIUM

Balance at 31 December 229,254 229,254 229,254 229,254 229,254

========

========== ========

======== ========

9. CAPITAL RESERVE

Accretion on revalued land and buildings

121,225 121,225 121,225 121,225 121,225

========

========== =======

======== ========

10. TURNOVER

Turnover's wholly derived from Nigeria in respect of sale of beer and malt drinks.

313,048 401,399 594,704 452,001 453,732

========

========== =======

======== ========




2006 2005 2004 2003 2002

N'000 N'000 N'000 N'000 N'000

11. OPERATING LOSS

(a) This is arrived at after charging

Depreciation of fixed assets

57,528 52,314 48,155 33,786 15,985

Directors' emoluments;

Fees - - 282 282 282

Salary and allowances

19,227 13,729 300 371 570

Auditors remuneration 2,977 2,000 800 800 800

======== ======== =======

========

========

(b) Emoluments of directors

(i) The highest paid directors'

emoluments totalled

19,227 13,729 342 358 365

(ii) The Chairman's emoluments - - - - -

totalled

======== ======= ========

======== ========

(iii) Other directors received

emoluments in the following ranges

Number Number Number Number Number

Below N10,000

- - - - -

N10,001 to N20,000

- - - - -

N20,001 to N30,000

- - 8 3 3

N30,001 to N40,000

- - - - -

N40,001 to N50,000 - - - 4 4

N50,001 to N60,000

- - - - -

N60,001 to N70,000

- - - 1 1

Above N70,000

- - - - - ===== ===== ===== ===== =====

None of the non-executive directors received emoluments during the period.

(c) Staff cost and particulars

(i) The average number of persons

employed (excluding directors)

was as follows: Number Number Number Number Number

Management staff

62 65 71 73 78

Supervisory staff

73 73 78 87 92

Junior staff

95 96 101 112 120 ____ ____ ____ ____ ____

230 234 250 272 290 ==== ==== ==== ==== ====

N'000 N'000 N'000 N'000 N'000

(ii) The aggregate payroll costs

of the employees amounted to

Wages and salaries including

bonus

193,866,672 240,338 247,095 204,755 167,130

Contributions to pension scheme

8,259,842 11,502 19,315 18,686 13,348 ____________ _________ ________ ________ ________

202,126,514 251,840 266,410 223,441 180,478

============ ========= ======== ======== ========

INTERNATIONAL BREW