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© COPYRIGHT 2017 Grupo PGS

PRIVATE AND CONFIDENTIAL

Madrid, August 2017

Information Memorandum



2

1. Executive Summary

2. Market

3. Enterprise Description

4. Historical Financials

5. Financial Forecast

6. Enterprise Value



1.- Executive Summary

Cerveza Gredos S.L. is a company dedicated to the manufacture and marketing of beer,

hand-made and it comes from the Sierra de Gredos

Overview of the Company

Cerveza Gredos S.L. is located in Hoyocasero (Ávila), in the Sierra

Gredos.

Formed by two brothers of Ávila, Luis and Jesús, who are the partners of

the company.

The company has a factory which includes several ships.

It is characterized by craftsmanship and 100% natural, being the water

used to produce it from Sierra de Gredos. Malt, yeast and hops are the

other principle ingredients of the beer.

Overview of the Transaction

Partners are looking for the total sale of the company for

personal reasons. The percentage of shares is 50/50 each.

They are willing to stay for a limited period of time with the

new board management to convey the know-how and the

company´s method.

Ships, brewery and goodwill are included in the operation



4


2. Market




6. Enterprise Value



2.- Market

Market Analysis

The climatic conditions of Spain make it a traditionally beer country. Temperatures and hours of sun per year are the main conditions that support

the culture of the terraces, snacks and beer. According to studies by the National Institute of statistics, every Spanish consumes 22 liters of beer

on average in the year.

The beer sector has increased its sales over the past years: in 2015, domestic sales increased 3.1% regard last year and the growth was 4% in

2016. For years, the trend is expected to remain growing.

It is a sector which, in Spain, has not been affected by the years of crisis as it happened in other sectors. In fact, the main change has occurred in

the place in which the beer is consumed: in 2006 73% of consumption of beer was produced in local bars and restaurants, while the remaining

27% corresponded to consumption in homes. Less than a decade later and after the crisis, in 2013 the ratio stabilized, being 38% of the total

consumption in homes. However, this trend is returning to the figures for the years prior to the crisis, since in 2015 consumption in the hotel and

catering sector amounts to 65%.



2.- Market

Market Analysis

The craft beer market has been growing in recent years in the world, as well as in the Spanish market. It is a product developed by entrepreneurs

who make their passion and love for beer in an economic activity, giving priority to the taste and quality over volume. This are companies that

produce in smaller volume, since its manufacturing process is slow and careful, without making any major series and with a more limited production.

The growth in this niche of the sector in recent years has been reflected in that, in 2008, the number of breweries craft just came to 20, while by the

end of 2015 the number amounted to 360 in Spain, approximately. Within the domestic market, are Catalonia and Andalusia main regions that

recorded a higher number of artisanal brands due, in large part, to the climate and culture of the lid and the beer.

In recent years, the supply of beer has increased in terms of liters produced, being a total of 33.6 hectoliters produced in 2015 (3.1% higher than the

previous year and reaching the highs). Spain has become the fourth largest producer in the European Union, and one of the ten countries around the

world. The main factors that have led to the rise of the sector in Spain are the variety of styles, the reduced costs of production and the

quality of the raw materials.

Another factor that reflects the rise and the time of the craft beer industry is the increase of export around the world, highlighting the export to

European countries such as Greece, Netherlands, United Kingdom and Belgium, as well as exports to China or United States.



2.- Market

Competitors

It's a highly competitive market, with more and more offer for the same (or similar) demand. Increase the supply is due to the investigation and the

search for new flavors or styles of beer, supported by the increase in local production and beer culture. This increase in supply saturates the market

and causes growth is limited and each time it will be harder to differentiate themselves in the market.

Some of the main craft Brewers of the national market are as

follows:

• Maier (Cádiz). They manufacture beer, organize visits guided

factory, advising other entrepreneurs of the sector and prepare

courses for the University of Cádiz.

• Califa (Córdoba). Craft-based business model, the location in

historic areas and passion for beer of the partners make it a

successful model.

• Cerveza La Virgen (Madrid). Most offer service of bar and restaurant facilities of the brewery, offering different types of beer for wine tasting and

testing. It has recently been acquired by AB-INVEB, Belgian multinational company and the largest manufacturer of beer around the world.



2.- Market

Competitors

The domestic market is occupied by 7 large companies, comprising almost all of the production of beer in Spain. Leading companies, with many

factories in the country:

• Mahou - San Miguel, S.A., whose main beers are Mahou, San Miguel or Alhambra, predominate in the central zone of the country.

• Heineken España, S.A. Cruzcampo, Amstel or Heineken are some of the most important brands of the Group Heineken, with a dominant position

in areas such as Andalucía in Spain.

• Damm, S.A. predominate in the area of Catalonia and the Valencian Community, whose major brands of beer are Estrella Damm, star of lift or

Skol.

• Compañía cervecera de Canarias, S.A. main Brewery Group of Islands, dominated by beer Dorada (Tenerife) or La Tropical (Las Palmas de

Gran Canaria).

• Hijos de la Riviera, S.A. stands out mainly in Galicia, with the Estrella Galicia beer, valued as one of the best beers around the world.

• Zaragoza, S.A, which includes brands such as Moritz and amber.



9


2. Market




6. Enterprise Value



3.- Enterprise Description

History

The company arises from the desire of the brothers Luis and Jesus making a beer with natural, artisan flavor and that benefits from its location in

the Sierra de Gredos, which gives a higher quality product.

It is owned 50% by each of the two brothers, as they work as external collaborators.

Beer Gredos has facilities and some ships perfectly equipped for the artisan production of up to 4,000 litres a day. It is located in the Avila town of

Hoyocasero, in the Sierra de Gredos.




Facilities

One of the main assets of the company are the ships and facilities, located in Hoyocasero, town of Ávila, in perfect conditions for the development

and manufacture of beer. Fully operational and with current machinery factory has a potential capacity of 4,000 liters a day.

The facilities are in perfect condition and equipped with everything you need to carry out their activities, including electric, pneumatic, and cold and

heat cooling installation. Has video surveillance and alarm systems, fire equipment and is adapted to the current legislation of occupational

hazards.




Facilities

The company has three terraced aisles, with thermal insulation for the conservation of the temperature, structure of concrete prefabricated insulated

or covered special insulation, as well as a mezzanine.

Ship 1

966 m2 total surface, divided into a plant floor 635 m 2 and a mezzanine of 332 m2. In this first ship is carried out manufacture, milling and storage

of raw materials, so it is necessary to be perfectly acclimatized to keep the ingredients in its perfect state.




Facilities

Ship 2

The second ship is divided on the ground floor (490 m2) and mezzanine (193 m2), and different functions:

• Offices, 19 m2 and equipped with all the necessary furnishings.

• Laboratories (17 m2)

• Costume (7 m2)

• Sink and shower

• Room of second fermentation (100 m2) and maintenance (93 m2)

This ship is used as logistics area, for the receipt and shipment of goods or transport input.




Facilities

Ship 3

The third ship has a total area of 398 m2, divided into a ground floor of 263 m 2 and a mezzanine of 135 m2. The main function of this ship is more

commercial, since it is where products factory and the lobby shop with photocell for visits area.




Facilities

Mezzanine

Area of 264 m2 mezzanine, destined to the tasting area and the Museum of beer by a commercial role and face the public, mainly.




Facilities




Production Capacity

Thanks to the installations, machinery and the team of professionals with whom the company has, production of the same capacity could reach

100,000 bottles of craft beer (33 cl each bottle) monthly.

Currently, 2,000 litres of beer are produced daily, but by the resources of the company, it is ready to produce the double (4,000 litres a day and

200,000 bottles per month). However, not all produced ends up being bottled and ready for sale, since it occurs around 35% reduced production,

either by testing new bottlenecks.

Historically, the annual output has grown year after year, having produced nearly double from 2014 to 2016: 40,000 liters were produced in 2014,

2015 were 60,000 liters while the last year 2016 production reached 70,000 liters per year.

Due to the geographical situation and taking advantage of the water from the Sierra de Gredos, the produced beer is one of the best artisan award

several times.

The company has corresponding quality certificates, such as the use of the mark "Land of taste" for agro-food products produced, processed or

transformed in Castilla y León.




Production Capacity

Certificate of “Tierra de Sabor “




Awards




Business Model

The business model of the company is based in the manufacturing and marketing of Cerveza Gredos, 100% natural and manufactured by hand.

Differs mainly by the benefits of natural ingredients, especially the water of the Sierra de Gredos, and the geographical location of the

factory.

Ingredients

The ingredients used in the manufacture of the company are 100% natural, standing out for its quality and the absence of chemicals. It contains

water from the Sierra de Gredos, hops, malt and yeast.

• Water from the Sierra de Gredos. Born in the sierra, produced by the melting of the area and characterized by their purity and low

mineralization. It does not add additional flavors and its singular origin gives a special flavor.

• Hops. Concrete plant that gets the fruit, that manages to give a bitter taste to the beer. 100% organic and natural product

• Malta. Used for the production process, in order to obtain a best quality malted barley. Humidity of the area of the factory and climatic

characteristics favor grain life.

• Yeast. Used for the fermentation of the must, which is essential for the process of production of the essential cerveza.es have pure strains,

that guarantee quality and are free of any possible contamination.




Business Model

Sierra de Gredos water

Hop

Malt

Yeast




Business Model

Geographical location

The factory is located in Hoyocasero (Ávila), in the Sierra de Gredos. Its situation in the sierra is what brings benefits in terms of climate

conditions for the production of beer.

The main benefits include greater quality in the product, a lower energy cost due to the lesser degree of boiling water by altitude or better

conservation of raw materials, thanks to the climate of the Sierra. In addition, is in a natural environment that conveys peace, serenity and

tranquility, which favors a better ripening of the beer-




Business Model

Process of artisanal brewing

The beer Gredos is a craft beer, based on natural ingredients and original. The company's strategy is to market high quality products, away from

the strategy of mass production that can follow other companies in the sector. One of the differential aspects with respect to other products in

the market lies in the absence of any artificial additive or other substances, since it is an unpasteurized beer.

Beer Gredos stands for the search for new tastes, by investment in innovation and the continuous search for varieties of product, always

maintaining the quality standards that come from natural ingredients.




Business Model

Process of artisanal brewing

Phase 1 Phase 2 Phase 3 Phase 4

PHASE 1

• Grinding and maceration for wort

• Boiling of Wort and the varieties of hops are added

PHASE 2

• The first fermentation wort cooling

• Along with the yeast, getting 90 percent of alcohol

• The bottling of the product and second fermentation

alcohol, getting 10% of remaining alcohol and carbonation

PHASE 3

• Conservation of the product at low temperature, in a

vertical position favoring the sedimentation of yeast

PHASE 4

• Completion and release of the final product. Revision and

control of the product, while maintaining a high quality and

in the best conditions




Business Model

The main line of business is the manufacture, marketing and sale of own-brand beers, though they also conduct guided tours and tasting of beers to

organized groups.

Hand made beer

Currently, the company markets three major craft beers, well differentiated from one another, without added chemicals and 100% natural.

• Blonde beer: top-fermented, thin and light flavor with a percentage of 4.7% alcohol.

• Double beer malta: it is a beer with body containing a 6.9% alcohol, with roasted and bitter taste.

• Beer tequila and hemp: new on the market, because it is the first craft beer with these ingredients. Its taste is milder than the rest of beer,

with a 5.7% alcohol, with exciting and refreshing aromas.

In addition, the company sells another type of beers, such as beer with lemon, beer with cherries or beer with malt whisky.




Business Model

Blonde Beer Double beer malt Beer tequila and hemp




Business Model

The main channel of sale of the company is the distribution through shopping malls, such as Carrefour, Auchan, El Corte Inglés or Cash &

Carry, in addition to other many national distributors.

In addition to the sales by distributors, the company uses the online sales channel through its web site (www.cervezagredos.com) to receive

orders and send them to the customer's home.

Enlace web para la venta online




Stakeholders

Cerveza Gredos

Clients

Suppliers Human

Resources



1. Clients


Stakeholders

Depending on the channel's sale of the company, customers are divided by large surfaces or private clients:

• Large surfaces. It is one of the sales channels, through which the company distributes its products to large distribution chains, such as Alcampo,

Cash & Carry, El Corte Inglés and Carrefour. In this way, the company can reach a greater market share to reach more potential buyers;

However, this strategy of selling to the wholesale entails a loss in control and the personification of the customer.

• Our private customers. They are those who, or either via the web or by sales in the factory after the commercial visits, buy personal and private

way. The target audience is anyone who likes the craft beer and want to enjoy a natural product and quality, although historically men buy more

than women.

• Gourmet shops and distributors. Place orders for smaller scale locally and nationally.



1. Clients


Stakeholders



2. Suppliers


Stakeholders

The main suppliers of the company are as follows:

• OI Sales Distribution Spain. It is the company whose main activity is the trade to the retail and the wholesale of intermediate products. It is

responsible for distributing the Gredos beer bottles.

• Frais Flaschenverschlusse GMBH (Austria). Austrian company responsible for providing beer Gredos sheets of bottles.

• Ricardo Molina S.A. Raw materials Spanish company dedicated to the distribution. Handles the distribution of malt and beer Gredos raw

materials, products from Germany.

• Esembal Embalajes. It is the provider of the boxes packing the product.

• Litografía Sintesís. Company to which beer Gredos demand labeling of beers.

• Ecovidrio. Organization nonprofit that beer Gredos works for the recycling of bottles.



2. Suppliers


Stakeholders




Stakeholders

3. Human Resources

Currently, the company has only a person on payroll, which is responsible for the entire organization and business operations.

Accounting and financial service is outsourced, carried out by the staff of Bandas Tarragona. Also, Jesus and Luis partners act as collaborators both

in the commercial aspect and in the production department.




SWOT Analysis

SWOT Favorable Aspects Aspects to improve

Intern analysis

Strengths

o Raw materials and natural ingredients

o Natural water from Sierra de Gredos use to produce

o Quality certificates and several national awards

o Great potential of growth and high capacity of production

o Possibility of producing various types of beer without greater

investment

o Hand made product with high quality

Weaknesses

o Lack of human resources for the potential production capacity

o Absence of commercial activities and promotion capacity to

increase sales

Extern analysis

Opportunities

o Exports to countries like Holland, Portugal, and Denmark

o Growth of the hand made and traditional beer in the market

o Press releases and appearances on TV

o Trend of natural products consumption

o Become the first national beer home in production and

quality

Threats

o Increase the supply in the market and growth of different

brands



35


2. Market




6. Enterprise Value



4.- Historical Financials

Balance Sheet: Assets




Balance Sheet: Equity and Liabilities




Profit and Loss Account



39


2. Market




6. Enterprise Value



5.- Business Plan

Balance Sheet



5.- Business Plan

Balance Sheet

Asset hypothesis

• Plant and equipment of the company corresponds with other facilities, and the provision for the depreciation follows the historical trend,

20% a year.

• The ratio of stock for stock trading will be 295 days, being an average of the historical ratio.

• The middle period of payment to customers is 38 days, ratio allowing to have liquidity and Treasury to deal with payments to suppliers and

creditors of the company.



5.- Business Plan

Balance Sheet



5.- Business Plan

Balance Sheet

Equity & Liabilities hypothesis

• The dividend of the company policy is that not will they be distributed over the next few years, since everything will be earmarked for

reinvestment in the company for the development and growth of the same. This policy may be reviewed and modified by the new

management.

• The middle period of payment to suppliers is projected in days, long enough to have gained customers and avoid problems of Treasury.



5.- Business Plan




5.- Business Plan


Profit and Loss Account hypothesis

• Revenues of the company will be significantly higher than the historical, since the most of the potential production and marketing of the

product are not removed in the past.

• Both hypotheses of expenses as income for 2017 they will be considered from September of that year, so it will be only 4 months of said

first year.

Sales hypothesis

• Sales of beer revenue is given by the liters produced and sold per year (600,000 liters), which represent a cost of provisioning of

1.080.000 euros (€ 1.80/litre). The company has an operating margin average of 38% on the cost of production, so the billing would be

2.842.105 euros.

• For 2017, is extrapolated that billing for the four months (September to December) of which Imaging is performed. By 2018 it is considered

as fixed annual turnover.

• Growth for the year 2018 will be 2%, while in 2020 and 2021 would be 5%.

• Visits revenues would be around 9,000 euros per year, with a steady 2% annual growth.



5.- Business Plan


Expenses hypothesis

• Spending on procurement would be a historic ratio with respect to annual sales. For the next five years, this ratio stands at 50% of

sales.

• For the planned production of 4,000 litres a day, staffing is as follows, with their corresponding wages and costs for the company:

• Exploitation costs grow at the rate of 5% annually in the following years. Due to the increase of activity and as a result of the growth of

sales, advertising spending will increase 15% per year and spending of other services, including mainly travel, hotels, and gasoline, will

rise 50% annual.



47


2. Market




6. Enterprise Value



6.- Enterprise Value

When performing the valuation of the company, we will follow the following method:

Free Cash Flow Discounted




Discounted Cash Flow




Discounted Cash Flow

The valuation of the company range is between 3.145.543 EUR and 3.744.933 EUR.



DISCLAIMER

The information contained in this memorandum has been facilitated by the unit-holders of beer Gredos S.L.. (in later "the company" or "the company", either).

This documentation was generated solely for informational purposes for a limited number of persons or companies that have shown interest in studying the full

acquisition of the company's capital.

The information contained in this memorandum has been provided by the property of the company and has been regarded as truthful information by group PGS

(in later "PGS"). For this reason, PGS assumes no responsibility over the accuracy or veracity of the information provided, expressed or implied, upon which this

document is based, is the responsibility of the company the veracity of the information provided.

The information contained herein is confidential and property of the company. Is you provided strictly on the basis that assumes a respect its confidentiality and its

commitment to keep confidential the information contained in this and many accompanying documents accompany him.

This memorandum does not aim to establish the basis of an investment decision and should not be considered as a recommendation by PGS. Any natural or

legal person who receives this memorandum must be its own assessment of the business and the estimates it deems necessary in order to determine their

interest in the company.

PGS acts as financial advisor to the company and does not provide any other person or company as its client in connection with this transaction.

For any questions in reference to the potential take of a stake in the company, you should contact representatives from PGS indicated below:

Miguel Escobar Galindo

Senior Manager Corporate Finance

Grupo PGS

[email protected]

Ignacio Pérez de Herrasti

Project analyst

Grupo PGS

[email protected]


Information Memorandum

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