EXHIBIT 2.1
                                  -----------

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.  If you are in
any doubt about the action you should take, you are  recommended  immediately to
seek your own personal  financial  advice from your  stockbroker,  bank manager,
solicitor,  accountant or other  independent  financial  adviser duly authorised
under  the  Financial  Services  Act  1986.  

This  document  should  be read in  conjunction  with the  accompanying  Form of
Acceptance.  

If you have sold or otherwise  transferred all your Matthew Clark Shares, please
send this document,  the accompanying Form of Acceptance and reply-paid envelope
as soon as possible to the purchaser or transferee or to the  stockbroker,  bank
or other agent through whom the sale or transfer was effected,  for transmission
to the purchaser or transferee.  However, such documents should not be forwarded
or  transmitted in or into the United States,  Canada,  Australia or Japan.  

The  Offer  referred  to in  this  document  is  not  being  made,  directly  or
indirectly,  in or into the United States,  Canada,  Australia or Japan and this
document  and the Form of  Acceptance  are not being,  and must not be,  mailed,
forwarded,  transmitted  or otherwise  distributed or sent in or into the United
States, Canada, Australia or Japan.

- --------------------------------------------------------------------------------
                             Recommended cash offer
                                       by
                                    Schroders
                                  on behalf of
                               Canandaigua Limited
              a wholly-owned subsidiary of Canandaigua Brands, Inc.
                                   to acquire
                                Matthew Clark plc
- --------------------------------------------------------------------------------

A LETTER OF  RECOMMENDATION  TO ACCEPT  THE OFFER FROM THE  CHAIRMAN  OF Matthew
Clark IS SET OUT ON PAGES 3 AND 4 OF THIS DOCUMENT.

TO ACCEPT THE OFFER,  THE FORM OF  ACCEPTANCE  MUST BE COMPLETED  AND  RETURNED,
WHETHER OR NOT YOUR Matthew Clark SHARES ARE IN CREST, AS SOON AS POSSIBLE,  AND
IN ANY  EVENT SO AS TO BE  RECEIVED  BY HAND OR BY POST BY IRG PLC,  NEW  ISSUES
DEPARTMENT,  P.O. BOX NO. 166, BOURNE HOUSE, 34 BECKENHAM ROAD, BECKENHAM,  KENT
BR3 4TH OR BY HAND ONLY DURING NORMAL  BUSINESS  HOURS TO IRG PLC, 23 IRONMONGER
LANE,  LONDON EC2 NO LATER THAN 3.00 P.M. ON 24 NOVEMBER 1998. 

THE  PROCEDURE  FOR  ACCEPTANCE OF THE OFFER IS SET OUT ON PAGES 8 TO 11 OF THIS
DOCUMENT AND IN THE ACCOMPANYING FORM OF ACCEPTANCE.

Schroders,  which is  regulated  in the  United  Kingdom by The  Securities  and
Futures  Authority  Limited,   is  acting  for  Canandaigua   Brands,  Inc.  and
Canandaigua Limited and no-one else in connection with the Offer and will not be
responsible  to anyone  other than  Canandaigua  Brands,  Inc.  and  Canandaigua
Limited for providing the protections  afforded to customers of Schroders or for
providing  advice in  relation  to the  Offer.  

Warburg Dillon Read,  which is regulated in the United Kingdom by The Securities
and Futures Authority  Limited,  is acting for Matthew Clark plc and no-one else
in connection  with the Offer and will not be  responsible  to anyone other than
Matthew Clark plc for providing the protections afforded to customers of Warburg
Dillon Read or for providing advice in relation to the Offer.




                                                                            Page


Letter of recommendation from the Chairman of Matthew Clark ................   3
Letter from Schroders ......................................................   5
1.      Introduction .......................................................   5
2.      Irrevocable undertakings and holdings ..............................   5
3.      The Offer ..........................................................   5
4.      Further terms of the Offer .........................................   6
5.      Information relating to Canandaigua ................................   6
6.      Information relating to Canandaigua Limited ........................   6
7.      Information relating to Matthew Clark ..............................   6
8.      Background to and reasons for the Offer ............................   7
9.      Financial effects of acceptance ....................................   7
10.     Management and employees ...........................................   8
11.     Matthew Clark Share Option Schemes .................................   8
12.     Procedure for acceptance of the Offer ..............................   8
13.     Settlement .........................................................  11
14.     United Kingdom taxation ............................................  12
15.     Further information ................................................  12
16.     Action to be taken .................................................  13

Appendices
I       Conditions and further terms of the Offer and 
        Form of Acceptance .................................................  14
II      Further information on Canandaigua .................................  32
III     Further information on Matthew Clark ...............................  55
IV      Additional information .............................................  69
V       Definitions ........................................................  78


2



                                ________________
                                Matthew Clark pc
                                ________________

                       Whitchurch Lane, Bristol BS14 0JZ
               Tel: 01275 830345 Telex: 445565 Fax: 01275 890697


Directors:
Graham Wilson (Chairman)*
Peter Aikens (Chief Executive)
Martin Boase*
Hugh Etheridge (Finance Director)
Michael Garner*
Robert MacNevin
Richard Peters
Kevin Philp
*Non-executive

                                                                 3 November 1998

To Matthew Clark  Shareholders and, for information only, to participants in the
Matthew Clark Share Option Schemes

Dear  Matthew Clark  Shareholder,  

                 Recommended cash offer by Canandaigua Limited

It was announced  today that  agreement  had been reached  between the boards of
Matthew Clark and  Canandaigua  on the terms of a  recommended  cash offer to be
made by Schroders on behalf of Canandaigua Limited, a wholly-owned subsidiary of
Canandaigua,  for the entire issued and to be issued  ordinary  share capital of
Matthew Clark.  This letter sets out the background to the Offer and the reasons
why the board of Matthew Clark is recommending all Matthew Clark Shareholders to
accept it. The formal offer is set out in this document.

The Offer 

The Offer values each Matthew Clark Share at 243 pence, valuing the whole of the
existing issued ordinary share capital of Matthew Clark at  approximately  215.1
million pounds sterling.  Further terms of the Offer and the conditions to which
it is subject are set out in Appendix I.

Background to and reasons for  recommending  the Offer 

The Matthew Clark Group,  which grew rapidly by acquisition during the 1990s, is
now a major  producer  of cider,  wine,  water and other  drinks,  and a leading
drinks wholesaler.  In recent years a number of significant  challenges have had
to be faced:  the  rapid  rise of what are  commonly  known as  "alcopops",  the
aggressive  pricing policy of Matthew Clark's principal cider competitor and the
influx of cheap  imported  beers,  lagers  and wines,  as well as the  extremely
active  management  by  supermarket  stores and cash and carry  outlets of their
buying margins.

As we indicated in the 1997 annual  report,  the board has adopted a strategy of
rebuilding  the value of Matthew  Clark's  brands  over the  medium  term and of
rationalising  and then  expanding its wholesale  operations.  As a result,  the
decision was taken to make a  substantial  investment in brand  development  and
support,  particularly  in  cider  brands,  as well as  centralising  production
facilities and achieving economies of scale in the wholesale business.  The full
benefits  of these  investments  would,  it was  recognised,  take  time to work
through and the board of Matthew  Clark would not expect to see these  reflected
in Matthew Clark's market valuation in the immediate future.

Following the adoption of this  strategy,  and in light of the ratings that were
being attributed to Matthew Clark's historic and future earnings relative to its
industry sector peers, in February 1998 the board of

Registered Office: Whitchurch Lane, Bristol BS14 0JZ. Registered in England
163952


                                                                               3


Matthew  Clark  conducted  a review of the  options  available  to it to enhance
shareholder  value.  The board then reaffirmed that the adopted strategy was the
one most likely to deliver increased earnings,  although it was anticipated that
the rating  improvement would not be realised for some time. Since then, Matthew
Clark has  received  tentative  approaches  from  parties  interested  in taking
advantage of Matthew  Clark's recent share price,  none of which your board felt
reflected full value for shareholders.

In September  of this year,  Canandaigua  made an approach to the Matthew  Clark
board with  respect to a  potential  offer for the  company at a level which the
directors of Matthew Clark felt offered the value to its shareholders today that
its own strategy  was planned to deliver in two to three years time.  Because of
the  prevailing  market  uncertainty  over Matthew  Clark's  share price and the
recent series of adverse comments from the alcoholic  beverages  industry,  your
board has concluded  that Matthew  Clark's  businesses  can more  effectively be
developed  within a larger and more broadly  based drinks  group,  with a strong
balance sheet able to support the future  development of the business.  In these
circumstances, the board has decided to recommend Canandaigua Limited's offer as
set out in this document.

Management and employees

Canandaigua  has indicated that it attaches  great  importance to the skills and
experience  of the  existing  management  and  employees  of  Matthew  Clark and
believes that they will have greater  opportunities  as a result of the proposed
acquisition.  It is intended that the Matthew Clark  executive  management  team
will continue to operate the business following the Offer becoming unconditional
in all respects.  Canandaigua has given assurances to the board of Matthew Clark
that the existing  employment  rights,  including pension rights, of all Matthew
Clark employees will be fully safeguarded.

Matthew Clark Share Option Schemes 

The Offer extends to any Matthew Clark Shares which are unconditionally allotted
or issued by reason of the  exercise of options  under the  Matthew  Clark Share
Option  Schemes  whilst  the  Offer  remains  open for  acceptance.  Appropriate
proposals  will be made,  in due course,  to  participants  in the Matthew Clark
Share Option Schemes if the Offer becomes unconditional in all respects.

Action to be taken to accept the Offer 

The  procedures for acceptance of the Offer are set out on pages 8 to 11 of this
document and in the  accompanying  Form of  Acceptance.  

In deciding whether to accept the Offer, you should have regard to your personal
circumstances,  including your taxation position.  If you are in any doubt as to
the action you should take, you should consult your professional adviser. 

If you intend to accept  the Offer,  you should  ensure  that you  complete  and
return your Form of Acceptance  as soon as possible and, in any event,  so as to
arrive by no later than 3.00 pm on 24 November  1998.  

Recommendation to accept the Offer

The directors of Matthew Clark, who have been so advised by Warburg Dillon Read,
consider  the terms of the Offer to be fair and  reasonable.  The  directors  of
Matthew Clark  unanimously  recommend  Matthew Clark  Shareholders to accept the
Offer, as they and certain  members of their immediate  families have undertaken
to do in respect of their own  holdings,  which amount to 147,889  Matthew Clark
Shares, representing approximately 0.2 per cent. of Matthew Clark's issued share
capital.  In providing advice to the directors of Matthew Clark,  Warburg Dillon
Read has taken into account the Matthew Clark directors' commercial assessments.


                                Yours sincerely,

                                /s/Graham Wilson
                                  Graham Wilson
                                    Chairman

4



                                                                       Schroders
                                                              Investment Banking

                                                                 3 November 1998

To Matthew Clark  Shareholders and, for information only, to participants in the
Matthew Clark Share Option Schemes

Dear Shareholder

       Recommended cash offer by Canandaigua Limited for Matthew Clark plc

1.   Introduction

The boards of  Canandaigua  and  Matthew  Clark  announced  today that they have
agreed the terms of a recommended  cash offer, to be made by Schroders on behalf
of Canandaigua Limited, a wholly-owned subsidiary of Canandaigua,  for the whole
of the issued and to be issued ordinary share capital of Matthew Clark.

This document  contains the formal offer.  Your attention is drawn to the letter
from the  Chairman of Matthew  Clark set out on pages 3 and 4 of this  document,
which  outlines  the  background  to the Offer and states that the  directors of
Matthew  Clark  consider  the  terms of the  Offer  to be fair  and  reasonable.
Accordingly, the directors of Matthew Clark have unanimously recommended Matthew
Clark  Shareholders  to accept the Offer,  as they and certain  members of their
immediate  families have undertaken to do in respect of their personal  holdings
of 147,889  Matthew Clark Shares,  representing  approximately  0.2 per cent. of
Matthew Clark's issued ordinary share capital.

2.   Irrevocable undertakings  and  holdings   

Canandaigua  Limited has received  irrevocable  undertakings to accept the Offer
(including  those from the  directors  of Matthew  Clark and certain  members of
their  immediate  families) in respect of a total of  24,514,352  Matthew  Clark
Shares  representing  27.7 per cent. of Matthew Clark's existing issued ordinary
share capital.  The terms of the irrevocable  undertakings require acceptance of
the Offer even if a competing  or higher  offer is made by a third party  except
that  irrevocable  undertakings  from  shareholders  (other than  directors  and
certain members of their immediate  families) cease to be binding if a competing
or higher  offer is made by a third  party at,  or in excess  of,  267 pence per
Matthew Clark Share.

3.   The Offer 

On behalf of Canandaigua  Limited,  we hereby offer to purchase,  upon the terms
and subject to the  conditions set out in this Offer Document and in the Form of
Acceptance, all outstanding Matthew Clark Shares on the following basis: 

          for each Matthew Clark Share        243 pence in cash 

The Offer values the entire  issued  ordinary  share capital of Matthew Clark at
approximately  215.1 million pounds sterling.  The Offer represents a premium of
over 81 per cent.  to the closing  middle-market  price of 134 pence per Matthew
Clark Share, as derived from the Official List on 21 October 1998 (the day prior
to the announcement by Matthew Clark that it was in discussions which may or may
not lead to an offer  for the  whole of the  issued  share  capital  of  Matthew
Clark).

________________________________________________________________________________
Telephone 0171-658 6000     Regulated by SFA     J. Henry Schroder & Co. Limited
Facsimile 0171-658 6459                           120 Cheapside, London EC2V 6DS
DX 42615                                      Registered office at above address
                                                Registered number 532081 England



                                                                               5




To  accept  the  Offer  you  should  return  the Form of  Acceptance  as soon as
possible, and in any event, so as to be received by IRG plc no later than 3.00pm
on 24 November 1998.

4.   Further terms of the Offer 

Matthew Clark Shares will be acquired  pursuant to the Offer fully paid and free
from all liens, charges, encumbrances, rights of pre-emption and any other third
party  rights of any  nature  whatsoever  and  together  with all  rights now or
hereafter  attaching  thereto,  including  the  right  to  receive  in full  all
dividends and other  distributions,  if any, declared,  made or paid on or after
the date of this document.

The Offer will extend to all  existing  issued  Matthew  Clark Shares and to any
Matthew Clark Shares which are  unconditionally  allotted or issued prior to the
date on which the Offer closes (or such earlier date as the Offeror may, subject
to the City Code,  decide) including Matthew Clark Shares issued pursuant to the
exercise of options under the Matthew Clark Share Option Schemes or otherwise.

5.   Information relating to Canandaigua  

Canandaigua is the largest  single-source  supplier of imported beers, wines and
distilled spirits in the United States, with over 130 brands distributed by more
than 850 wholesalers  throughout the United States and in selected international
markets. 

Canandaigua's brands are marketed in three general categories:

Imported Beer:  Canandaigua  is the second largest  marketer of imported beer in
the United States.  Canandaigua's portfolio includes five of the top twenty-five
imported beers in the United States:  Corona Extra (the leading imported beer in
the United States), Modelo Especial,  Corona Light, St. Pauli Girl and Pacifico;

Wine:  Canandaigua is the second  largest  producer and marketer of wines in the
United States, with over 70 brands including  internationally-known  brands such
as Inglenook, Almaden, Paul Masson and Manischewitz; and

Distilled Spirits:  Canandaigua ranks fourth in the US distilled spirits market.
Canandaigua  produces,  bottles,  imports and markets a diverse  line of quality
distilled  spirits.  Canandaigua  exports  distilled spirits to approximately 20
countries  outside the United  States.  Key  distilled  spirits  brands  include
Fleischmann's,  Barton,  Paul Masson Grande  Amber,  Mr.  Boston,  Montezuma and
Canadian LTD. 

In the year ended 28 February 1998,  Canandaigua's total sales were $1.6 billion
and profit before tax was $84.9 million.  Net assets as at 28 February 1998 were
$415.2  million.  

Canandaigua's  shares are listed on the NASDAQ  National  Stock Market under the
symbols CBRNA and CBRNB.  Canandaigua's  market  capitalisation as at 30 October
1998 (the latest  practicable  date prior to the printing of this  document) was
approximately $897.6 million.

6.   Information  relating to Canandaigua  Limited

Canandaigua  Limited,  the Offeror, is a wholly-owned  subsidiary of Canandaigua
specifically  formed for the purpose of the Offer.  

7.   Information  relating to Matthew Clark 

Matthew  Clark  is a major UK  drinks  group  which  produces,  distributes  and
wholesales  a variety of  alcoholic  and bottled  water  beverages in the United
Kingdom.

Matthew Clark operates through two divisions:  

Matthew  Clark  Brands is the branded  drinks  division  which  comprises  cider
products,  wine and bottled water  products.  Cider products  include cider sold
predominantly  under the Blackthorn  brand and premium packaged cider sold under
the Diamond White and K brands. Wine and bottled water products include


6


Stowell's  of  Chelsea  wine box,  QC  fortified  British  wine,  light  British
wine/perry and  Strathmore  bottled water.  New products  include  Stone's Cream
Liqueur,  Jinzu and Espri;  and  

Matthew  Clark  Wholesale is the United  Kingdom's  leading  independent  drinks
wholesaler. Matthew Clark provides a full range of wines, spirits, ciders, beers
and  soft  drinks  to  over  17,000  on-licensed  outlets.  Matthew  Clark  also
distributes the Grants of St James's wine list.

In the year ended 30 April 1998,  Matthew Clark's total sales were 553.1 million
pounds  sterling and profit  before tax was 35.8 million  pounds  sterling.  Net
assets as at 30 April 1998 were 95.4 million pounds sterling.

8.   Background to and reasons for the Offer 

A major facet of  Canandaigua's  growth  strategy is to acquire  businesses that
enable the  Canandaigua  Group to expand its  geographic  presence and provide a
base of business  that has the  potential  to grow  through  brand  development,
marketing and  strategic  initiatives.  Matthew Clark  provides a strong base of
business with the first  position in the UK branded wine market,  which excludes
private label, and the second position in the UK cider market. In addition,  the
board of  Canandaigua  believes  that  Matthew  Clark's  position  as the United
Kingdom's largest  independent drinks wholesaler creates a unique opportunity to
develop  further a growing and largely  under-exploited  sector and that Matthew
Clark's highly experienced management infrastructure creates the opportunity for
further  strategic  and  synergistic   acquisitions  in  Europe.  The  board  of
Canandaigua also believes that both Matthew Clark's and Canandaigua's businesses
would  benefit from being part of an  international  drinks group which would be
created  as a result  of the  successful  completion  of the Offer  through  the
potential for  development of  Canandaigua's  products in the United Kingdom and
Matthew Clark's products in the United States.

9.   Financial effects of acceptance

The following  tables set out, for  illustrative  purposes only and on the bases
and  assumptions  stated below,  the financial  effects of acceptance on capital
value and gross  income for a holder of one Matthew  Clark Share  accepting  the
Offer if the Offer becomes or is declared unconditional in all respects:



                                                            Notes          Pence
A. Increase in capital value
Cash consideration                                                         243.0
Market value of one Matthew Clark Share                       (i)          134.0
                                                                           -----
Increase in capital value                                                  109.0
                                                                           =====
This represents an increase of                                             81.3%

B. Decrease in gross income
Gross income from cash consideration                         (ii)           12.4
Gross dividend income from one Matthew Clark Share          (iii)           16.3
                                                                            ----
Decrease in gross income                                                   (3.8)
                                                                           =====
This represents a decrease of                                             (23.4)


Notes:

(i)  Based on the closing  middle-market  quotation of 134.0p per Matthew  Clark
     Share,  as  derived  from the  Official  List at the close of  business  on
     21 October 1998, the day prior to the announcement by Matthew Clark that it
     was in  discussions  which may or may not lead to an offer for the whole of
     the issued ordinary share capital of Matthew Clark.

(ii) The  gross  income on the cash  consideration  has been  calculated  on the
     assumption  that the cash is  re-invested to yield  approximately  5.12 per
     cent. per annum,  being the gross yield shown by the FTSE Actuaries average
     gross redemption yield for medium coupon British  Government  securities of
     up to  five  year  maturities  on 30  October  1998,  as  published  in the
     Financial  Times on 31 October 1998, the latest  practicable  date prior to
     the printing of this document.


(iii)The  gross  dividend  income  from  one  Matthew  Clark  Share  is based on
     aggregate  dividends of 13.0p (net) per Matthew Clark Share being the total
     of the 5.0p (net) interim  dividend for the  financial  year ended 30 April
     1998 and the 8.0p (net)  final  dividend  for the  financial  year ended 30
     April  1998,  together  in both  cases  with an  associated  tax  credit of
     20/80ths of the amount paid.

(iv) Save as  disclosed  in note (iii)  above,  no account has been taken of any
     liability to taxation.


                                                                               7



10.  Management and employees 

Canandaigua  attaches  great  importance  to the  skills and  experience  of the
existing  management  and employees of Matthew Clark and believes that they will
have  greater  opportunities  as a result  of the  proposed  acquisition.  It is
intended  that the Matthew  Clark  executive  management  team will  continue to
operate the business following the Offer becoming unconditional in all respects.
Canandaigua has given assurances to the board of Matthew Clark that the existing
employment rights, including pension rights, of all Matthew Clark employees will
be fully safeguarded.

11.  Matthew Clark Share Option Schemes 

Canandaigua Limited will make appropriate  proposals to holders of options under
the  Matthew  Clark Share  Option  Schemes,  to the extent that  options are not
exercised, once the Offer becomes or is declared unconditional in all respects.

12.  Procedure for  acceptance of the Offer 

This section should be read together with the notes on the Form of Acceptance.

(a)  Completion of Form of  Acceptance  

     You should note that if you hold Matthew Clark Shares in both  certificated
     and uncertificated  form (that is, in CREST) you should complete a separate
     Form of  Acceptance  for each  holding.  In addition,  you should  complete
     separate   Forms  of   Acceptance   for  Matthew   Clark   Shares  held  in
     uncertificated  form, but under different  member account IDs, and separate
     Forms of Acceptance for Matthew Clark Shares held in certificated  form but
     under different designations.  Additional Forms of Acceptance are available
     from IRG plc, New Issues  Department,  P.O. Box No. 166,  Bourne House,  34
     Beckenham  Road,  Beckenham,  Kent BR3 4TH and during normal business hours
     from IRG plc, 23 Ironmonger Lane, London EC2.

     (i)  To accept the Offer 

          To accept the Offer in respect of all your Matthew Clark  Shares,  you
          must  complete  Boxes 1, 2 and 3 and, if your Matthew Clark Shares are
          in CREST, Box 4. In all cases you must sign Box 2 of the enclosed Form
          of  Acceptance  in accordance  with the  instructions  printed on that
          form. All holders of Matthew Clark Shares who are  individuals  should
          sign the Form of Acceptance  in the presence of a witness,  who should
          also sign in accordance with the instructions printed on that form.

     (ii) To accept  the Offer in respect  of less than all your  Matthew  Clark
          Shares

          To accept  the Offer in respect  of less than all your  Matthew  Clark
          Shares,  you must insert in Box 1 on the enclosed  Form of  Acceptance
          the lesser number of Matthew Clark Shares in respect of which you wish
          to accept the Offer in accordance with the instructions printed on the
          form.  You should  then follow the  procedure  set out in (i) above in
          respect of that lesser number of Matthew  Clark Shares.  If you do not
          insert a number  in Box 1,  your  acceptance  will be  deemed to be in
          respect of all of the Matthew Clark Shares held by you.

     If you have any  questions  as to how to complete  the Form of  Acceptance,
     please telephone IRG plc on 0181 639 2188.

(b)  Return of Form of  Acceptance 

     To accept the Offer,  the completed  Form of Acceptance  should be returned
     whether or not your Matthew Clark Shares are in CREST.  The completed  Form
     of Acceptance  should be returned by post or by hand to IRG plc, New Issues
     Department,  P.O. Box No. 166, Bourne House, 34 Beckenham Road,  Beckenham,
     Kent BR3 4TH or by hand only during  normal  business  hours to IRG plc, 23
     Ironmonger Lane,  London EC2 together (subject to paragraph (d) below) with
     the relevant share certificate(s) and/or other document(s) of title as soon
     as possible, but in any event so as to arrive no later than 3.00 p.m. on 24
     November 1998. A reply-paid envelope for use in the UK only is enclosed


8


     for your convenience.  No  acknowledgement  of receipt of documents will be
     given by or on behalf of Canandaigua  Limited.  The instructions printed on
     the Form of Acceptance are deemed to form part of the terms of the Offer.

(c)  Documents of title 

     If your Matthew  Clark  Shares are in  certificated  form, a completed  and
     signed Form of  Acceptance  should be  accompanied  by the  relevant  share
     certificate(s)  and/or other  document(s)  of title.  If for any reason the
     relevant  share  certificates(s)  and/or other  document(s) of title is/are
     lost or not readily available,  you should nevertheless complete,  sign and
     lodge the Form of  Acceptance  as stated  above so as to be lodged with IRG
     plc, New Issues  Department,  P.O. Box No. 166,  Bourne House, 34 Beckenham
     Road, Beckenham,  Kent BR3 4TH or by hand only during normal business hours
     to IRG plc, 23 Ironmonger  Lane,  London EC2, by no later than 3.00 p.m. on
     24 November  1998.  You should send with the Form of  Acceptance  any share
     certificate(s)  and/or  other  document(s)  of  title  which  you may  have
     available and a letter stating that the remaining  documents will follow as
     soon as  possible  or that you have lost one or more  share  certificate(s)
     and/or  other  document(s)  of title.  No  acknowledgement  of  receipt  of
     documents will be given. If you have lost your share certificate(s)  and/or
     other document(s) of title, you should contact Matthew Clark's  registrars,
     IRG plc, Bourne House, 34 Beckenham  Road,  Beckenham,  Kent BR3 4TU, for a
     letter of indemnity for (a) lost share certificate(s) which, when completed
     in accordance with the instructions  given,  should be returned to IRG plc,
     New Issues  Department,  P.O. Box No. 166, Bourne House, 34 Beckenham Road,
     Beckenham, Kent BR3 4TH.

(d)  Additional procedures for Matthew Clark Shares in uncertificated form (that
     is, in CREST) 

     If your Matthew Clark Shares are in uncertificated  form, you should insert
     in Box 4 of the enclosed Form of Acceptance  the  participant ID and member
     account ID under which such  Matthew  Clark Shares are held by you in CREST
     and  otherwise  complete  and return the Form of  Acceptance  as  described
     above. In addition, you should take (or procure to be taken) the action set
     out in this  paragraph  (d) to transfer the Matthew Clark Shares in respect
     of which you wish to accept the Offer to an escrow  balance (that is, a TTE
     instruction)  specifying  IRG plc (in its  capacity as a CREST  participant
     under the Escrow  Agent  participant  ID  referred  to below) as the Escrow
     Agent,  as soon as possible and in any event so that the transfer to escrow
     settles no later than 3.00 p.m. on 24 November 1998.

     If you are a CREST sponsored member, you should refer to your CREST sponsor
     before  taking  any  action.  Your  CREST  sponsor  will be able to confirm
     details of your  participant  ID and the member account ID under which your
     Matthew Clark Shares are held. In addition, only your CREST sponsor will be
     able to send the TTE  instruction  to CRESTCo in relation  to your  Matthew
     Clark Shares.

     You should send (or, if you are a CREST sponsored member, procure that your
     CREST sponsor  sends) a TTE  instruction  to CRESTCo which must be properly
     authenticated  in accordance with CRESTCo's  specifications  and which must
     contain,  in addition to the other  information  that is required for a TTE
     instruction to settle in CREST,  the following  details:

     ---  the  number of  Matthew Clark  Shares to be  transferred  to an escrow
          balance;

     ---  your member  account  ID.  This must be the same member  account ID as
          that inserted in Box 4 of the Form of Acceptance;

     ---  your  participant  ID.  This must be the same  participant  ID as that
          inserted in Box 4 of the Form of Acceptance;

     ---  the participant ID of the Escrow Agent,  IRG plc, in its capacity as a
          CREST receiving agent. This is RA10;


                                                                               9



     ---  the member  account ID of the Escrow  Agent.  This is MATTHEWC for the
          Matthew Clark Shares; 

     ---  the Form of Acceptance  reference number. This is the reference number
          that appears next to Box 4 on page 3 of the Form of  Acceptance.  This
          reference  number should be inserted in the first eight  characters of
          the shared  note field on the TTE  instruction.  Such  insertion  will
          enable  IRG plc to  match  the  transfer  to  escrow  to your  Form of
          Acceptance. You should keep a separate record of this reference number
          for future reference; 

     ---  the intended  settlement  date. This should be as soon as possible and
          in any event not later  than 3.00 p.m.  on  24 November  1998; 

     ---  the Corporate Action ISIN,  which is  GB0002013083;  

     ---  the  Corporate  Action  Number for the  Offer.  This is  allocated  by
          CRESTCo  and can be found by viewing  the  relevant  Corporate  Action
          Details in CREST;  and 

     ---  the  standard  TTE  delivery  instruction  with  priority of 80. 

     After settlement of the TTE instruction, you will not be able to access the
     Matthew  Clark Shares  concerned in CREST for any  transaction  or charging
     purposes.  If  the  Offer  becomes  or is  declared  unconditional  in  all
     respects, the escrow agent will transfer the Matthew Clark Shares concerned
     to itself in accordance  with paragraph (d) of Part C of Appendix I to this
     document.

     You are  recommended to refer to the CREST manual  published by CRESTCo for
     further  information on the CREST  procedures  outlined above.  For ease of
     processing, you are requested,  wherever possible, to ensure that a Form of
     Acceptance relates to only one transfer to escrow.

     If no  Form  of  Acceptance  reference  number,  or an  incorrect  Form  of
     Acceptance   reference   number,   is  included  on  the  TTE  instruction,
     Canandaigua   Limited  may  treat  any  amount  of  Matthew   Clark  Shares
     transferred  to an escrow  balance in favour of the escrow agent  specified
     above from the  participant  ID and member account ID identified in the TTE
     instruction as relating to any Form(s) of Acceptance which relate(s) to the
     same  member  account  ID and  participant  ID (up to the amount of Matthew
     Clark Shares inserted or deemed to be inserted on the Form(s) of Acceptance
     concerned).

     You should note that CRESTCo does not make available special procedures, in
     CREST,  for any  particular  corporate  action.  Normal system  timings and
     limitations  will therefore  apply in connection with a TTE instruction and
     its settlement.  You should  therefore  ensure that all necessary action is
     taken  by you  (or by your  CREST  sponsor)  to  enable  a TTE  instruction
     relating to your  Matthew  Clark  Shares to settle prior to 3.00 p.m. on 24
     November  1998.  In this regard,  you are referred in  particular  to those
     sections of the CREST manual concerning practical  limitations of the CREST
     system and timings.

     Canandaigua  Limited will make an  appropriate  announcement  if any of the
     details contained in this paragraph (d) alter for any reason.

(e)  Deposits of Matthew  Clark Shares  into, and withdrawals  of Matthew  Clark
     Shares from, CREST

     Normal  CREST  procedures  (including  timings)  apply in  relation  to any
     Matthew Clark Shares that are, or are to be, converted from  uncertificated
     to certificated  form, or from certificated to uncertificated  form, during
     the course of the Offer (whether any such conversion  arises as a result of
     a  transfer  of  Matthew   Clark  Shares  or   otherwise).   Matthew  Clark
     Shareholders  who are proposing so to convert any such Matthew Clark Shares
     are recommended to ensure that the conversion procedures are implemented in
     sufficient time to enable the person holding or acquiring the Matthew Clark
     Shares  as a  result  of the  conversion  to take  all  necessary  steps in
     connection  with an  acceptance  of the Offer (in  particular,  as  regards
     delivery  of share  certificate(s)  and/or  other  document(s)  of title or
     transfer(s) to an escrow balance as described  above) prior to 3.00 p.m. on
     24 November 1998.


10


(f)  Validity of acceptances  

     Subject to the provisions of the City Code and without prejudice to Parts B
     and C of Appendix I of this  document,  Canandaigua  Limited  reserves  the
     right to treat as  valid in whole or in part any  acceptance  of the  Offer
     which is not entirely in order or which is not  accompanied by the relevant
     TTE instruction or (as applicable) the relevant share certificate(s) and/or
     other documents of title. In that event, no payment of cash under the Offer
     will be made to Matthew  Clark  Shareholders  until after the  relevant TTE
     instruction   has   settled  or  (as   applicable)   the   relevant   share
     certificate(s)   and/or   other   document(s)   of  title  or   indemnities
     satisfactory to Canandaigua Limited have been received.

(g)  Overseas shareholders 

     The attention of Matthew Clark  Shareholders  who are citizens or residents
     of  jurisdictions  outside  the UK is  drawn to  paragraph  7 of Part B and
     paragraph (b) of Part C of Appendix I of this document, and to the relevant
     provisions of the Form of Acceptance.

     The availability of the Offer to persons not resident in the United Kingdom
     may be affected by the laws of the relevant jurisdictions.  Persons who are
     not  resident in the United  Kingdom  should  inform  themselves  about and
     observe any applicable requirements.  

     The Offer is not being made, directly or indirectly,  in or into the United
     States,  Canada,  Australia  or Japan or to any  North  American  person or
     resident of  Australia  or Japan or by use of the mails of, or by any means
     or  instrumentality  (including,  without  limitation,   telephonically  or
     electronically)  of interstate or foreign commerce of, or any facilities of
     a  national,  state or other  securities  exchange  of, the United  States,
     Canada, Australia or Japan. 

     Copies of this document,  the Form of Acceptance  and any related  offering
     documents  are  not  being  sent  and  must  not  be  mailed  or  otherwise
     distributed or sent in, into or from the United States,  Canada,  Australia
     or Japan or to any person  whom the  Offeror or its  agents  believes  is a
     North  American  person or a person in, or resident of  Australia or Japan.
     Any  accepting  Matthew  Clark  Shareholder  who  is  unable  to  give  the
     warranties  set  out in  paragraph  (b) of  Part C of  Appendix  I of  this
     document will be deemed not to have accepted the Offer.

     If  you  are in  any  doubt  as to the  procedure  for  acceptance,  please
     telephone  IRG plc on 0181 639 2188.  You are reminded  that,  if you are a
     CREST sponsored member, you should contact your CREST sponsor before taking
     any action.  

13.  Settlement 

Subject to the Offer  becoming or being declared  unconditional  in all respects
(except  as  provided  in  paragraph  7 of Part B of  Appendix  I in the case of
certain overseas Matthew Clark Shareholders), settlement of the consideration to
which any Matthew Clark Shareholder is entitled under the Offer will be effected
(i) in the case of acceptances  received,  complete in all respects, by the date
on which the Offer becomes or is declared unconditional in all respects,  within
14 days of such date, or (ii) in the case of acceptances of the Offer  received,
complete  in all  respects,  after  the date on which the  Offer  becomes  or is
declared unconditional in all respects but while it remains open for acceptance,
within 14 days of such receipt, in the following manner:

(a)  Matthew Clark Shares in uncertificated form (that is, in CREST)

     Where an acceptance relates to Matthew Clark Shares in uncertificated form,
     settlement of any cash  consideration to which the accepting  Matthew Clark
     Shareholder  is entitled will be effected by means of CREST by  Canandaigua
     Limited  procuring the creation of an assured payment  obligation in favour
     of the accepting Matthew Clark Shareholder's payment bank in respect of the
     cash  consideration  due,  in  accordance  with the CREST  assured  payment
     arrangements.

     Canandaigua  Limited  reserves  the right to settle  all or any part of the
     consideration  referred to in this  paragraph (a), for all or any accepting
     Matthew Clark  Shareholder(s),  in the manner  referred to in paragraph (b)
     below, if, for any reason, it wishes to do so.


                                                                              11



(b)  Matthew Clark Shares in certificated form

     Where an acceptance  relates to Matthew Clark Shares in certificated  form,
     settlement  of any  cash  due  will be  despatched  (but not in or into the
     United States, Canada,  Australia or Japan) by first class post (or by such
     other method as the Panel may approve). All such cash payments will be made
     in pounds sterling by cheque drawn on a branch of a UK clearing bank.

(c)  General

     If the  Offer  does not  become  or is not  declared  unconditional  in all
     respects (i) share certificate(s) and/or other document(s) of title will be
     returned  by post (or such other  method as may be  approved by the Panel),
     within 14 days of the Offer lapsing,  to the person or agent whose name and
     address (outside the United States, Canada, Australia and Japan) is set out
     in Box 6 of the Form of  Acceptance  or,  if none is set out,  to the first
     named holder at his or her registered  address  (outside the United States,
     Canada,  Australia  and Japan) and (ii) the escrow agent will,  immediately
     after the lapsing of the Offer (or within such longer period, not exceeding
     14 days  after the Offer  lapsing,  as the  Panel  may  approve),  give TFE
     instructions to CRESTCo to transfer all Matthew Clark Shares held in escrow
     balances  to  the  original   available   balances  of  the  Matthew  Clark
     Shareholders concerned.

     All  communications,   notices,   certificates,   documents  of  title  and
     remittances   to  be  delivered  by  or  sent  to  or  from  Matthew  Clark
     Shareholders (or their appointed  agent(s)) will be delivered by or sent to
     or from them (or their appointed agent(s)) at their own risk.

14.  United Kingdom taxation

The following paragraphs,  which are intended as a general guide only, are based
on current  legislation  and Inland Revenue  practice.  They  summarise  certain
limited aspects of the UK taxation treatment of the acceptance of the Offer, and
they relate only to the position of Matthew  Clark  Shareholders  who hold their
Matthew Clark Shares  beneficially  as an investment and who are resident in the
UK for taxation  purposes.  If you are in any doubt as to your taxation position
or if you may be subject to taxation in any jurisdiction  other than the UK, you
should consult an appropriate professional adviser immediately.

(a)  UK taxation on  chargeable  gains  

     Liability to UK taxation on chargeable  gains will depend on the individual
     circumstances   of  Matthew Clark   Shareholders.  

     To the extent  that a Matthew  Clark  Shareholder  receives  cash under the
     Offer,  this will constitute a disposal,  or part disposal,  of his Matthew
     Clark Shares for the purposes of UK taxation on chargeable gains which may,
     depending on the  shareholder's  individual  circumstances  (including  the
     availability of exemptions and allowable losses),  give rise to a liability
     to UK taxation on chargeable gains.

(b)  Stamp duty and stamp duty reserve tax ("SDRT")

     No stamp duty or SDRT will be payable by Matthew  Clark  Shareholders  as a
     result of accepting the Offer.

(c)  Other direct tax matters

     Special tax  provisions  may apply to Matthew Clark  Shareholders  who have
     acquired or acquire their Matthew Clark Shares by exercising  options under
     the Matthew Clark Share Option  Schemes,  including  provisions  imposing a
     charge to income tax when such options are exercised.

15.  Further information

Your attention is drawn to the further  information  contained in the Appendices
to this document.


12



16.  Action to be taken

To accept the Offer,  the Form of  Acceptance  must be  completed  and  returned
whether  or not your  Matthew  Clark  Shares are in CREST.  Forms of  Acceptance
should be returned as soon as possible  and, in any event,  so as to be received
by post or by hand by IRG plc, New Issues  Department,  P.O. Box No. 166, Bourne
House, 34 Beckenham Road, Beckenham,  Kent BR3 4TH or by hand only during normal
business  hours to IRG plc, 23  Ironmonger  Lane,  London EC2 no later than 3.00
p.m. on 24 November 1998.

                                Yours sincerely,
                        for J. Henry Schroder Co. Limited

                                    Rory Maw
                                    Director


                                                                              13



PART A -- CONDITIONS OF THE OFFER 

The  Offer,  made by  Schroders  on behalf  of the  Offeror,  complies  with the
applicable  rules and regulations of the London Stock Exchange and the City Code
and is governed by English law. The Offer is subject to the  jurisdiction of the
courts of England and to the terms and conditions set out in this Offer Document
and the related  Form of  Acceptance.  

1.   Conditions of the Offer

The Offer is subject to the following  conditions:  

(a)  valid acceptances  being received (and not, where permitted,  withdrawn) by
     not later than 3.00 p.m. on 24 November 1998, (or such later time(s) and/or
     date(s) as the Offeror may, subject to the rules of the City Code,  decide)
     in respect of not less than 90 per cent. (or such lesser  percentage as the
     Offeror may decide) in nominal  value of the Matthew  Clark Shares to which
     the Offer  relates,  provided  that this  condition  will not be  satisfied
     unless the Offeror (together with its wholly-owned subsidiaries) shall have
     acquired or agreed to acquire (pursuant to the Offer or otherwise)  Matthew
     Clark  Shares  carrying in aggregate  more than 50 per cent.  of the voting
     rights then  exercisable  at general  meetings of holders of Matthew  Clark
     Shares.  For the purposes of this condition Matthew Clark Shares which have
     been  unconditionally  allotted  shall be deemed to carry the voting rights
     they will carry upon being  entered in the  register  of members of Matthew
     Clark;

(b)  the  Office  of Fair  Trading  indicating,  in  terms  satisfactory  to the
     Offeror,  that it is not the  intention of the Secretary of State for Trade
     and  Industry to refer the  proposed  acquisition  of Matthew  Clark by the
     Offeror,  or any matters arising  therefrom,  to the Monopolies and Mergers
     Commission;

(c)  all necessary  filings having been made,  all applicable  waiting and other
     time periods having  expired,  lapsed or been  terminated and all statutory
     and regulatory  obligations in any jurisdiction  having been complied with,
     in each case in connection with the Offer and all Authorisations  necessary
     or appropriate in any  jurisdiction  for or in respect of the Offer and the
     acquisition or the proposed  acquisition of any shares or other  securities
     in or  control  of Matthew  Clark by any  member of the  Canandaigua  Group
     having been obtained in terms and in a form reasonably  satisfactory to the
     Offeror  from all  appropriate  Third  Parties and all such  Authorisations
     necessary to carry on the business of any member of the Wider Matthew Clark
     Group in any jurisdiction  having been obtained and all such Authorisations
     remaining  in full force and effect at the time at which the Offer  becomes
     otherwise  unconditional  and there  being no notice  or  intimation  of an
     intention  to  revoke,  suspend,  restrict,  modify  or not to  renew  such
     Authorisations;

(d)  no Third Party  having  decided to take,  institute or threaten any action,
     proceeding,  suit,  investigation,  enquiry or reference or having required
     any action to be taken or otherwise having done anything or having enacted,
     made or proposed any statute,  regulation,  decision or order and there not
     continuing to be  outstanding  any statute,  regulation,  decision or order
     which would or might:

       (i)    make the  Offer,  its  implementation  or the  acquisition  by any
              member of the Canandaigua Group of any or all Matthew Clark Shares
              or control  of Matthew  Clark  void,  unenforceable  or illegal or
              restrict,  prohibit,  delay  or  otherwise  to a  material  extent
              interfere with the implementation of, or impose additional adverse
              conditions or obligations with respect to, or otherwise  challenge
              or require amendment of the Offer or the acquisition by any member
              of the  Canandaigua  Group of any or all Matthew  Clark  Shares or
              control of Matthew Clark;

       (ii)   require,  prevent  or delay  the  divestiture  or alter  the terms
              envisaged  for  such  divestiture  by  any  member  of  the  Wider
              Canandaigua  Group or by any  member  of the Wider  Matthew  Clark
              Group of all or any material part of their respective  businesses,
              assets or  properties  or impose any material  limitation on their
              ability to conduct  their  respective  businesses or to own any of
              their respective assets or properties;

       (iii)  impose any material  limitation  on, or result in a material delay
              in, the ability of any member of the Canandaigua  Group to acquire
              or to hold or to exercise effectively, directly or indirectly, all
              or any rights of ownership of shares or other  securities  (or the
              equivalent)  in Matthew  Clark or on the  ability of any member of
              the Matthew Clark Group or any member of the Canandaigua  Group to
              hold or exercise  effectively any rights of ownership of shares or
              other  securities  in or to exercise  management  control over any
              member of the Wider Matthew Clark Group;


14



       (iv)   require  any  member of the Wider  Canandaigua  Group or the Wider
              Matthew  Clark  Group to acquire or offer to acquire any shares or
              other  securities  (or the  equivalent) in any member of the Wider
              Matthew Clark Group or of the Wider Canandaigua Group owned by any
              third  party  or to sell or  offer  to sell  any  shares  or other
              securities  (or the  equivalent)  in or any asset of any member of
              the Wider  Matthew Clark Group or of the Wider  Canandaigua  Group
              (in each case, other than in the implementation of the Offer);

       (v)    require,  prevent  or  delay a  divestiture  or  alter  the  terms
              envisaged for any proposed divestiture, by any member of the Wider
              Canandaigua  Group  of any  shares  or  other  securities  (or the
              equivalent) in Matthew Clark;

       (vi)   result in any member of the Wider  Matthew  Clark  Group or of the
              Wider  Canandaigua  Group  ceasing to be able to carry on business
              under any name which it  presently  does so to an extent  which is
              material in the context of the wider  group  concerned  taken as a
              whole;

       (vii)  impose any material  limitation  on, or result in a material delay
              in, the  ability of any member of the Wider  Canandaigua  Group or
              any  member of the  Wider  Matthew  Clark  Group to  integrate  or
              co-ordinate  all or any part of its business  with all or any part
              of the business of any other member of the Wider Canandaigua Group
              and/or the Wider Matthew Clark Group; or

       (viii) otherwise affect the business, assets, profits or prospects of any
              member of the Wider  Canandaigua  Group or any member of the Wider
              Matthew  Clark Group in a manner  which is adverse to and material
              in the context of the wider group concerned taken as a whole,

     and all  applicable  waiting and other time  periods  during which any such
     Third Party could  decide to take,  institute  or threaten any such action,
     proceeding,   suit,  investigation,   enquiry  or  reference  or  otherwise
     intervene having expired, lapsed or been terminated; 

(e)  (save as disclosed in writing to Canandaigua  and/or the Offeror prior to 3
     November  1998) there being no  provision  of any  arrangement,  agreement,
     licence, permit, lease or other instrument to which any member of the Wider
     Matthew  Clark Group is a party or by or to which any such member or any of
     their  respective  assets  is  or  may  be  bound  or  be  subject  or  any
     circumstance  which could, as a consequence of the Offer or the acquisition
     or the proposed acquisition by any member of the Wider Canandaigua Group of
     any shares or other  securities  (or the  equivalent)  in Matthew  Clark or
     because of a change in the control or management of any member of the Wider
     Matthew Clark Group or otherwise,  could or might reasonably be expected to
     result  in, to an extent  which is  material  in the  context  of the Wider
     Matthew Clark Group taken as a whole:

     (i)  any monies  borrowed  by, or any other  indebtedness  or  liabilities,
          actual or  contingent,  of any member of the Wider Matthew Clark Group
          being or becoming  repayable,  or capable of being declared repayable,
          immediately or prior to its or their stated  maturity,  or the ability
          of any such  member  or  associate  to  borrow  monies  or  incur  any
          indebtedness being withdrawn or inhibited;

     (ii) the rights,  liabilities,  obligations,  interests  or business of any
          member of the Wider  Matthew  Clark Group under any such  arrangement,
          agreement,  licence,  permit,  lease or instrument or the interests or
          business of any member of the Wider  Matthew Clark Group or any member
          of the Wider Canandaigua Group in or with any other firm or company or
          body or person (or any agreement or arrangements  relating to any such
          business or interests) being, or becoming capable of being, terminated
          or  adversely  modified  or  affected  or any  onerous  obligation  or
          liability arising or any adverse action being taken thereunder;

     (iii)any  member of the Wider  Matthew  Clark  Group  ceasing to be able to
          carry on business under any name under which it presently does so;

     (iv) any assets or  interests  of, or any asset the use of which is enjoyed
          by any member of the Wider  Matthew Clark Group being or falling to be
          disposed of or charged or any right arising under which any such asset
          or  interest  could be  required to be disposed of or charged or could
          cease to be available to any member of the Wider  Matthew  Clark Group
          or associate otherwise than in the ordinary course of business;


                                                                              15



     (v)  the creation or enforcement of any mortgage,  charge or other security
          interest  over  the  whole or any part of the  business,  property  or
          assets  of any  member of the Wider  Matthew  Clark  Group or any such
          security interest becoming enforceable or being enforced;

     (vi) the value or the financial or trading  position or  prospects,  of any
          member of the Wider Matthew Clark Group being  prejudiced or adversely
          affected;

     (vii)the creation of any liability  (actual or contingent) by any member of
          the Wider Matthew Clark Group; or

    (viii) any  interest or  business of any member of the Wider  Matthew  Clark
          Group or of the Wider  Canandaigua  Group in or with any other person,
          firm or body (or any  arrangement  relating  to any such  interest  or
          business) being, or becoming capable of being, terminated, modified or
          otherwise affected;

(f)  no member of the Wider Matthew Clark Group having since 30 April 1998 (save
     as  disclosed  in the 1998  Report  and  Accounts  of  Matthew  Clark or as
     publicly  announced  by Matthew  Clark  through the  Company  Announcements
     Office  of the  London  Stock  Exchange  prior  to 3  November  1998  or as
     disclosed in writing to Canandaigua  and/or the Offeror prior to 3 November
     1998):

     (i)  issued or  agreed  to issue or  authorised  or  proposed  the issue of
          additional   shares  or  securities   of  any  class,   or  securities
          convertible into, or exchangeable for, or rights,  warrants or options
          to  subscribe  for  or  acquire,   any  such  shares,   securities  or
          convertible securities (save as between Matthew Clark and wholly-owned
          subsidiaries  of Matthew Clark and save for the issue of Matthew Clark
          Shares on the exercise of options granted before 1 February 1998);

     (ii) recommended, declared, paid or made or proposed to recommend, declare,
          pay or make any bonus,  dividend or other  distribution  other than to
          Matthew Clark or one of its wholly-owned subsidiaries;

     (iii)save for  transactions  between  Matthew  Clark  and its  wholly-owned
          subsidiaries,  merged with or demerged or acquired any body corporate,
          partnership  or business or acquired or disposed of, or, other than in
          the ordinary course of business, transferred,  mortgaged or charged or
          created any security interest over, any assets or any right,  title or
          interest  in any asset  (including  shares and trade  investments)  or
          authorised, proposed or announced any intention to do so;

     (iv) save as between Matthew Clark and its wholly-owned subsidiaries, made,
          authorised,  proposed or  announced an intention to propose any change
          in its share or loan capital;

     (v)  issued,  authorised  or  proposed  the issue or  authorisation  of any
          debentures  or (save as  between  Matthew  Clark and its  wholly-owned
          subsidiaries)  incurred or increased  any  indebtedness  or contingent
          liability to an extent which is material in the context of the Matthew
          Clark Group taken as a whole;

     (vi) entered  into or varied or  announced  its  intention to enter into or
          vary any contract, transaction,  arrangement or commitment (whether in
          respect of capital  expenditure or otherwise) which is of a long term,
          unusual or  onerous  nature,  or which  involves  or could  involve an
          obligation  of a nature  or  magnitude  which  is,  in any such  case,
          material in the  context of the Matthew  Clark Group or which is or is
          likely to be  restrictive  on the  business of any member of the Wider
          Matthew Clark Group or the Wider Canandaigua Group;

     (vii)entered  into or  varied  or made any offer  (which  remains  open for
          acceptance) to enter into or vary the terms of any service  agreement,
          contract or  arrangement  with any director of any member of the Wider
          Matthew Clark Group;

    (viii) implemented,  effected or  authorised,  or  proposed or announced its
          intention   to   implement,   effect,   authorise   or   propose   any
          reconstruction,  amalgamation, commitment, scheme or other transaction
          or arrangement otherwise than in the ordinary course of business;

     (ix) purchased,  redeemed or repaid or proposed the purchase, redemption or
          repayment of any of its own shares or other  securities  or reduced or
          made any other  change to any part of its share  capital  to an extent
          which  (other  than in the case of Matthew  Clark) is  material in the
          context of the Matthew Clark Group;



16


     (x)  waived or  compromised  any claim  which is material in the context of
          the  Matthew Clark  Group;  

     (xi) made  any  material  alteration  to  its  memorandum  or  articles  of
          association or other incorporation or constitutional documents;  

     (xii)taken or proposed any  corporate  action or had any legal  proceedings
          instituted or threatened  against it for its winding-up  (voluntary or
          otherwise), dissolution,  reorganisation or for the appointment of any
          administrator,  administrative receiver, trustee or similar officer of
          all or any of its assets or revenues or any analogous  proceedings  in
          any   jurisdiction   or  appointed   any   analogous   person  in  any
          jurisdiction;  

    (xiii) been unable,  or  admitted in writing  that it is unable,  to pay its
          debts  or  having  stopped  or  suspended  (or  threatened  to stop or
          suspend)  payment of its debts  generally or ceased or  threatened  to
          cease carrying on all or a substantial part of its business;  or 

     (xiv)entered into any contract,  commitment,  agreement or  arrangement  or
          passed any  resolution  with  respect to or  announced an intention to
          effect or propose any of the transactions,  matters or events referred
          to in this paragraph  1(f); 

(g)  since 30 April 1998 (save as  disclosed  in the 1998 Report and Accounts of
     Matthew Clark or as publicly announced by Matthew Clark through the Company
     Announcements  Office of the London Stock Exchange prior to 3 November 1998
     or as disclosed  in writing to  Canandaigua  and/or the Offeror  prior to 3
     November 1998):

     (i)  there having been no adverse change in the business, assets, financial
          or trading position or profits or prospects of any member of the Wider
          Matthew  Clark Group to an extent  which is material in the context of
          the Wider Matthew Clark Group taken as a whole;

     (ii) no  litigation,  arbitration  proceedings,  prosecution or other legal
          proceedings  having been  threatened,  announced or  instituted  by or
          against  or  remaining  outstanding  against  any  member of the Wider
          Matthew  Clark Group or to which any member of the Wider Matthew Clark
          Group is or may become a party  (whether as  plaintiff or defendant or
          otherwise)  and  no  enquiry  or  investigation  by  or  complaint  or
          reference  to any Third  Party  against or in respect of any member of
          the Wider  Matthew  Clark Group having been  threatened,  announced or
          instituted  or  remaining  outstanding,  against  or in respect of any
          member of the Wider Matthew Clark Group which, in any such case, might
          be likely  adversely to affect any member of the Wider  Matthew  Clark
          Group to an  extent  which is  material  in the  context  of the Wider
          Matthew Clark Group taken as a whole; and

     (iii)no contingent or other  liability  having arisen or become apparent to
          the Offeror  which might be likely  adversely to affect the  business,
          assets,  financial or trading  position or profits or prospects of any
          member of the Wider Matthew Clark Group to an extent which is material
          in the context of the Matthew Clark Group taken as a whole;

(h)  (save  as  publicly   announced  by  Matthew   Clark  through  the  Company
     Announcements  Office of the London Stock Exchange prior to 3 November 1998
     and save as disclosed in writing to Canandaigua and/or the Offeror prior to
     3 November 1998) the Offeror not having discovered:

     (i)  that any financial,  business or other information  concerning Matthew
          Clark or the Wider Matthew Clark Group publicly disclosed or disclosed
          at any time by or on behalf of any member of the Wider  Matthew  Clark
          Group which is material in the context of the  acquisition  of Matthew
          Clark  by  any  member  of  the   Canandaigua   Group  is  misleading,
          incomplete,  contains a misrepresentation  of fact or omits to state a
          fact  necessary  to  make  the  information   contained   therein  not
          misleading;

     (ii) that any member of the Wider Matthew  Clark Group or any  partnership,
          company or other entity in which any member of the Wider Matthew Clark
          Group  has  a  significant  economic  interest  and  which  is  not  a
          subsidiary  undertaking  of Matthew Clark is subject to any liability,
          contingent or otherwise, which is not disclosed in the 1998 Report and
          Accounts of Matthew Clark or in an announcement  made by Matthew Clark
          through the Company  Announcements Office of the London Stock Exchange
          prior to 3 November  1998 and which is  material in the context of the
          Matthew Clark Group taken as a whole;

     (iii)that  there is or is likely  to be any  liability  (whether  actual or
          contingent)  or  requirement  to  make  good,  repair,  re-instate  or
          clean-up any property now or previously owned, occupied or made use of
          by any




                                                                              17


          past or  present  member of the Wider  Matthew  Clark  Group  which is
          material in the context of the Wider Matthew Clark Group;

     (iv) that circumstances exist whereby a person or class of persons would be
          likely  to have any  claim or  claims in  respect  of any  product  or
          process of  manufacture  or materials  used therein now or  previously
          manufactured, sold or carried out by any past or present member of the
          Wider  Matthew  Clark  Group  which  claim or  claims  would be likely
          materially  and  adversely  to affect any member of the Wider  Matthew
          Clark Group; or

     (v)  any information  which renders  misleading in the context of the Offer
          any information  publicly disclosed at any time by or on behalf of any
          member of the Wider  Matthew Clark Group to an extent that is material
          in the context of the Wider Matthew Clark Group; and

(i)  in relation to any release, emission,  discharge, disposal or other fact or
     circumstance which has caused or might impair the environment or harm human
     health,  (save as  disclosed in writing to  Canandaigua  and/or the Offeror
     prior to 3 November  1998) no past or present  member of the Wider  Matthew
     Clark  Group  having in a manner or to an extent  which is  material in the
     context of the Matthew  Clark Group,  (a) committed any violation of or not
     complied   with  any  laws,   statutes,   regulations,   notices  or  other
     requirements of any Third Party and/or (b) incurred any liability  (whether
     actual or contingent) to any Third Party.

The  Offeror  reserves  the right to waive all or any of  conditions  (b) to (i)
inclusive,  in  whole  or in  part.  Conditions  (b) to (i)  inclusive  must  be
satisfied as at, or waived (where possible) on or before, the 21st day after the
later of 24 November 1998 and the date on which  condition (a) is fulfilled (or,
in each case,  such later date as the Panel may  agree).  The  Offeror  shall be
under no  obligation  to waive,  to determine to be or treat as fulfilled any of
conditions (b) to (i) inclusive by a date earlier than the latest date specified
above for the fulfilment  thereof  notwithstanding  that the other conditions of
the Offer may at such earlier date have been waived or fulfilled  and that there
are,  at  such  earlier  date,  no  circumstances  indicating  that  any of such
conditions may not be capable of  fulfilment.  

If the Offeror is  required by the Panel to make an offer for any Matthew  Clark
Shares  under the  provisions  of Rule 9 of the City Code,  the Offeror may make
such  alterations  to the conditions set out in this Appendix I as are necessary
to comply with the provisions of that Rule.

The Offer will lapse if the proposed  acquisition of Matthew Clark or any matter
relating to it is referred to the Monopolies and Mergers  Commission  before the
later of 3.00 p.m. on 24 November  1998 and the date on which the Offer  becomes
or is declared  unconditional  as to  acceptances.  If the Offer so lapses,  the
Offer will cease to be capable of further  acceptance and persons  accepting the
Offer and the Offeror will cease to be bound by Forms of Acceptance submitted on
or before the time when the Offer lapses.


18




PART B -- FURTHER TERMS OF THE OFFER

The  conditions  in Part A of this  Appendix I and the  following  further terms
apply, where relevant, to the Offer. 

Unless the context otherwise requires, any reference in this document and in the
Form of Acceptance to acceptances of the Offer shall include deemed  acceptances
of the Offer.  

Unless the context  otherwise  requires,  any reference in Parts B and C of this
Appendix I and in the Form of Acceptance:

(i)  to the "Offer" shall include any revision,  variation, renewal or extension
     thereof and shall also (where the context requires) include any election or
     alternative  available  in  connection  with  the  Offer  or any  revision,
     variation, renewal or extension thereof;

(ii) to the Offer becoming  "unconditional" includes the Offer being or becoming
     or being declared unconditional;

(iii)to the Offer being or becoming  "unconditional"  is to be  construed as the
     Offer becoming or being declared unconditional as to acceptances whether or
     not any other condition of the Offer remains to be fulfilled;

(iv) to the  "acceptance  condition"  is to the condition as to  acceptances  in
     paragraph  1(a) of Part A of this Appendix I and any reference to the Offer
     becoming unconditional as to acceptances is to be construed accordingly;

(v)  to the  "Offer  Document"  is to  this  document  and  any  other  document
     containing the Offer; and

(vi) to an  extension  of the Offer shall  include an  extension  of the date by
     which the acceptance condition was to be satisfied.

1.   Acceptance period

(a)  The Offer is initially open for  acceptance  until 3.00 p.m. on 24 November
     1998.

(b)  Although no revision is  envisaged,  if the Offer is revised it will remain
     open for  acceptance for a period of at least 14 days (or such other period
     as may be permitted by the Panel) after the date on which the revised Offer
     Document is posted to Matthew Clark  Shareholders.  Except with the consent
     of the Panel,  no  revision  of the Offer may be made and no revised  Offer
     Document may be posted after 19 December 1998 or, if later,  the date which
     is  14  days   before   the  last  date  on  which  the  Offer  can  become
     unconditional.

(c)  The Offer,  whether  revised or not, is not (except with the consent of the
     Panel) capable of becoming  unconditional  after midnight on 2 January 1999
     (or any other time or date  beyond  which the  Offeror  has stated that the
     Offer will not be extended and has not  withdrawn  that  statement)  nor of
     being  kept  open for  acceptance  after  that  time or date  unless it has
     previously become  unconditional.  The Offeror reserves the right, with the
     permission  of the  Panel,  to  extend  the  time for the  Offer to  become
     unconditional  to a later  time(s)  or  date(s).  

(d)  If the  Offer  becomes  unconditional,  the  Offer  will  remain  open  for
     acceptance  for not  less  than 14 days  from  the  date on  which it would
     otherwise have expired. If the Offer becomes  unconditional and the Offeror
     states it will remain open until further notice,  the Offeror will give not
     less than 14 days' notice in writing to Matthew Clark Shareholders who have
     not accepted the Offer before closing it.

(e)  If a competitive  situation  arises after the Offeror makes a "no increase"
     and/or "no extension"  statement in relation to the Offer, the Offeror may,
     if it  has  specifically  reserved  the  right  to do so at  the  time  the
     statement was made or otherwise with the consent of the Panel, withdraw the
     statement  provided it complies with the  requirements of the City Code and
     in particular that:

     (i)  it  announces  the  withdrawal  as soon as  possible  and in any event
          within four  business days after the date of the  announcement  of the
          competing offer or other competitive situation;

     (ii) it notifies  Matthew Clark  Shareholders  in writing of the withdrawal
          (or  in  the  case  of  Matthew  Clark  Shareholders  with  registered
          addresses  outside the United  Kingdom by  announcement  in the United
          Kingdom) at the earliest opportunity; and

     (iii)any  Matthew  Clark  Shareholders  who accept the Offer  after the "no
          increase"  and/or  "no  extension"  statement  are  given a  right  of
          withdrawal as described in paragraph 4 of Part B of this Appendix I.


                                                                              19



     The Offeror may, if it specifically reserves the right to do so at the time
     the  statement  is  made,  choose  not to be  bound  by the  terms of a "no
     increase" or "no extension" statement and may post an increased or improved
     offer if it is  recommended  for  acceptance  by the board of  directors of
     Matthew Clark, or in other circumstances permitted by the Panel.

2.   Acceptance condition

(a)  Except  with the  consent of the  Panel,  for the  purpose  of  determining
     whether the  acceptance  condition is satisfied,  the Offeror may only take
     into account acceptances received or purchases of shares made in respect of
     which  all  relevant   documents  are  received  by  IRG  plc,  New  Issues
     Department,  P.O. Box No. 166, Bourne House, 34 Beckenham Road,  Beckenham,
     Kent BR3 4TH or IRG plc, 23 Ironmonger Lane, London EC2:

     (i)  by 1.00 p.m.  on 2 January  1999 (or any other date  beyond  which the
          Offeror  has stated  that the Offer will not be  extended  and has not
          withdrawn that statement); or

     (ii) if the Offer is  extended  with the  consent of the Panel,  such later
          time(s) or date(s) as the Panel may agree.

     If the latest time at which the Offer may become  unconditional is extended
     beyond midnight on 2 January 1999,  acceptances received and purchases made
     in respect of which the  relevant  documents  are  received by IRG plc, New
     Issues  Department,  P.O. Box No. 166,  Bourne  House,  34 Beckenham  Road,
     Beckenham,  Kent BR3 4TH or IRG plc, 23 Ironmonger  Lane,  London EC2 after
     1.00 p.m. on that date may only be taken into account with the agreement of
     the Panel  except  where the City Code  permits  otherwise.  

(b)  Except as otherwise agreed by the Panel: 

     (i)  an  acceptance  of the  Offer  will only be  treated  as valid for the
          purposes of the  acceptance  condition if the  requirements  of Note 4
          and, if  applicable,  Note 6 on Rule 10 of the City Code are satisfied
          in respect of it;

     (ii) a purchase  of Matthew  Clark  Shares by the Offeror or its nominee or
          (if the  Offeror is required by the Panel to make an offer for Matthew
          Clark  Shares  under  Rule 9 of the City  Code) by a person  acting in
          concert with Canandaigua Limited or its nominee,  will only be treated
          as  valid  for  the  purposes  of  the  acceptance  condition  if  the
          requirements  of Note 5 and, if  applicable,  Note 6 on Rule 10 of the
          City Code are satisfied in respect of it; and

     (iii)before the Offer may become or be declared  unconditional IRG plc must
          issue a certificate  to the Offeror or Schroders (or their  respective
          agents)  which states the number of Matthew Clark Shares in respect of
          which  acceptances  have been received and the number of Matthew Clark
          Shares otherwise acquired,  whether before or during the Offer period,
          which comply with the provisions of this paragraph 2(b).

(c)  For  the  purpose  of  determining  whether  the  acceptance  condition  is
     satisfied the Offeror is not bound  (unless  required by the Panel) to take
     into  account  any Matthew  Clark  Shares  which have been  unconditionally
     allotted or issued or which arise as a result of the exercise of conversion
     rights  before the  determination  takes place unless  Matthew Clark or its
     agent has given written notice to IRG plc,  containing  relevant details of
     the  allotment,  issue or  conversion.  Notification  by telex or facsimile
     transmission or copies does not constitute written notice.

3.   Announcements

(a)  By 8.30 a.m.  on the  business  day (the  "relevant  day") after the day on
     which the Offer expires,  becomes unconditional,  is revised or is extended
     (or such later time or date as the Panel may agree),  the Offeror will make
     an  appropriate  announcement  and  simultaneously  inform the London Stock
     Exchange.  In the  announcement  the Offeror will state  (unless  otherwise
     permitted by the Panel) the total number of Matthew Clark Shares and rights
     over Matthew Clark Shares (as nearly as practicable):

     (i)  for which acceptances of the Offer have been received; 

     (ii) held by or on behalf of the Offeror or any person  deemed to be acting
          in concert with the Offeror before the Offer period;

     (iii)acquired  or agreed to be  acquired  by or on behalf of the Offeror or
          any person  deemed to be acting in concert  with the  Offeror  for the
          purposes of the Offer during the Offer period;

20



     (iv) for which  acceptances of the Offer have been received from any person
          deemed to be acting in concert  with the Offeror  for the  purposes of
          the Offer,  and the  announcement  will specify the percentages of the
          relevant class of issued share capital of Matthew Clark represented by
          each of these figures.

(b)  Any decision to extend the time or date by which the  acceptance  condition
     has to be fulfilled may be made at any time up to, and will be announced by
     8.30 a.m. on the  relevant  day or such later time or date as the Panel may
     agree. The announcement will state the next expiry time and date unless the
     Offer is then unconditional.

(c)  In  calculating   the  number  of  Matthew  Clark  Shares   represented  by
     acceptances  and purchases,  the Offeror may only include  acceptances  and
     purchases  if they  could be  counted  towards  fulfilling  the  acceptance
     condition  under Notes 4 and 5 on Rule 10 of the City Code unless the Panel
     agrees otherwise.  Subject to this, the Offeror may include or exclude, for
     announcement  purposes,  acceptances  and  purchases not in all respects in
     order or which are subject to verification.

(d)  In this  Appendix I, a reference  to the making of an  announcement  or the
     giving of notice by the Offeror  includes the release of an announcement by
     the Offeror's  public relations  consultants or Schroders,  in each case on
     behalf of Canandaigua  Limited, to the press and the delivery or telephone,
     telex or facsimile or other  electronic  transmission of an announcement to
     the London Stock  Exchange.  An  announcement  made  otherwise  than to the
     London Stock Exchange will be notified  simultaneously  to the London Stock
     Exchange.

4.   Rights of withdrawal

(a)  Except as provided by this  paragraph  4,  acceptances  and  elections  are
     irrevocable. 

(b)  If the Offeror  announces the Offer to be  unconditional  and then fails to
     comply by 3.30 p.m. on the  relevant day (or such later time and/or date as
     the  Panel  may  agree)  with any of the other  requirements  specified  in
     paragraph  3(a) of Part B of this  Appendix  I, a person may  withdraw  his
     acceptance  by  written  notice  given by post or by hand to IRG  plc,  New
     Issues  Department,  P.O. Box No. 166,  Bourne  House,  34 Beckenham  Road,
     Beckenham, Kent BR3 4TH or by hand only during normal business hours to IRG
     plc, 23 Ironmonger Lane, London EC2. Subject to paragraph 1(e) of Part B of
     this Appendix I, this right of withdrawal  may be terminated  not less than
     eight days after the relevant day by the Offeror confirming, if such is the
     case,  that  the  Offer  is  still  unconditional  as to  acceptances,  and
     complying with the other requirements specified in paragraph 3(a) of Part B
     of this Appendix I. If that  confirmation is given,  the first period of 14
     days referred to in paragraph  1(d) of Part B of this Appendix I will start
     on the date of that confirmation.

(c)  If by 3.00 p.m. on 15 December  1998 (or such later time and/or date as the
     Panel may  agree)  the Offer has not  become  unconditional,  a person  may
     withdraw  his  acceptance  by  written  notice  given by post or by hand to
     IRGplc, New Issues Department, P.O. Box No. 166, Bourne House, 34 Beckenham
     Road, Beckenham,  Kent BR3 4TH or by hand only during normal business hours
     to IRG plc, 23 Ironmonger  Lane,  London EC2 at any time before the earlier
     of (i) the time that the Offer  becomes  unconditional;  and (ii) the final
     time for the  lodging of  acceptances  which can be taken  into  account in
     accordance with paragraph 2(a) of Part B of this Appendix I.

(d)  If a  "no  increase"  and/or  "no  extension"  statement  is  withdrawn  in
     accordance  with  paragraph 1(e) of Part B of this Appendix I, a person who
     accepts  the  Offer  after  the  date of the  statement  may  withdraw  his
     acceptance  by  written  notice  given by post or by hand to IRG  plc,  New
     Issues  Department,  P.O. Box No. 166,  Bourne  House,  34 Beckenham  Road,
     Beckenham, Kent BR3 4TH or by hand only during normal business hours to IRG
     plc,  23 Ironmonger Lane,  London  EC2 for a period of eight days after the
     date the Offeror posts the notice of the  withdrawal  of that  statement to
     Matthew Clark Shareholders.

(e)  In this paragraph 4, "written notice" (including any letter of appointment,
     direction  or  authority)  means  notice in writing  signed by the relevant
     person(s)  accepting  the Offer (or his/their  agent(s)  duly  appointed in
     writing and evidence of whose  appointment  satisfactory  to the Offeror is
     produced with the notice).  Telex or facsimile  transmission or copies will
     not be sufficient. A notice which is postmarked in, or otherwise appears to
     the  Offeror  or its  agents to have been sent  from,  the  United  States,
     Canada,  Australia  or Japan (or by a North  American  person)  will not be
     valid.

5.   Revised or new offer

(a)  Although no revision or new offer is envisaged,  if the Offer is revised or
     if a new offer is made for the  purpose of section  429(3) of the Act,  the
     benefit of the  revised or new offer  will be made  available  to a Matthew
     Clark  Shareholder  who has  accepted  the  Offer (in its  original  or any
     revised  form(s))  (a  "Previous  Acceptor")  if the  revised  or new offer
     represents,  on the  date on  which  it is  announced  (on  such  basis  as
     Schroders may consider



                                                                              21


     appropriate),  an  improvement  or  no  diminution  in  the  value  of  the
     consideration  offered compared with the consideration  previously offered.
     The acceptance by a Previous  Acceptor of the Offer (in its original or any
     revised form(s)) will, subject as provided in paragraphs 5(b), (c) and 6 of
     Part B of this  Appendix I, be deemed an  acceptance  of the revised or new
     offer and will  constitute  the  appointment of any director of the Offeror
     and/or Schroders as his attorney and/or agent with authority: 

     (i)  to accept the revised or new offer on his behalf;  

     (ii) if  the   revised  or  new  offer   includes   alternative   forms  of
          consideration,  to make elections or accept the  alternative  forms of
          consideration  on his behalf in the  proportions  the attorney  and/or
          agent in his absolute  discretion  thinks fit; and 

     (iii)to execute on his behalf in his name any  further  documents  required
          to give  effect to those  elections  or  acceptances.  

     In making any election or acceptance,  the attorney  and/or agent will take
     into account the nature of any previous  acceptance or election made by the
     Previous  Acceptor  and other facts or matters he may  reasonably  consider
     relevant. 

(b)  The  deemed  acceptance  referred  to in  paragraph  5(a) of Part B of this
     Appendix  I will not  apply  and the  power  of  attorney  and  authorities
     conferred by that paragraph will not be exercised if the Previous  Acceptor
     would (on such basis as Schroders may consider appropriate) receive less in
     aggregate  in  consideration  under the  revised or new offer than he would
     have received in aggregate in  consideration  as a result of his acceptance
     of the Offer in the form originally accepted by him or on his behalf.

(c)  The  deemed  acceptance  referred  to in  paragraph  5(a) of Part B of this
     Appendix  I will not apply and the power of  attorney  and the  authorities
     conferred by that  paragraph  will be ineffective in the case of a Previous
     Acceptor  who  lodges,  within  14  days  of the  posting  of the  document
     containing  the revised or new offer,  a Form of  Acceptance  (or any other
     form issued on behalf of Canandaigua Limited) in which he validly elects to
     receive consideration under the revised or new offer in some other manner.


(d)  The  authorities  and powers of attorney  conferred by this paragraph 5 and
     any acceptance of a revised or new offer and any election in relation to it
     will be irrevocable  unless and until the Previous  Acceptor  withdraws his
     acceptance  having become  entitled to do so under paragraph 4 of Part B of
     this Appendix I.

(e)  The Offeror and  Schroders  reserve the right to treat an executed  Form of
     Acceptance  relating to the Offer which is received after the  announcement
     of any  revised or new offer as a valid  acceptance  of the  revised or new
     offer (and where  applicable a valid election for the alternative  forms of
     consideration).  That  acceptance will constitute an authority in the terms
     of  paragraph  5(a) of Part B of this  Appendix I on behalf of the relevant
     Matthew Clark Shareholder.

6.   General

(a)  Except with the consent of the Panel,  the Offer will lapse  unless all the
     conditions relating to the Offer have been fulfilled or, where appropriate,
     have been  determined  by the Offeror in its  reasonable  opinion to be and
     continue  to be  satisfied  or have been  waived by midnight on 19 December
     1998  or  within  21 days  after  the  date  on  which  the  Offer  becomes
     unconditional,  or such later date as the Offeror,  with the consent of the
     Panel,  may decide,  whichever  is the later.  If the Offer  lapses for any
     reason:

     (i)  it  will  not  be  capable  of  further  acceptance;   

     (ii) accepting Matthew Clark Shareholders and the Offeror will not be bound
          by Forms of Acceptance submitted before the time the Offer lapses;

     (iii)Forms of  Acceptance  and  documents of title will be returned by post
          (or by such other method as the Panel may  approve)  within 14 days of
          the Offer  lapsing to the person or agent whose name is set out in the
          relevant box on the Form of Acceptance or otherwise to the first-named
          holder at his registered address; and

     (iv) IRG plc will,  immediately  after the Offer  lapses  (or  within  such
          longer  period as the Panel may permit,  not  exceeding 14 days of the
          Offer lapsing)  instruct  CRESTCo to transfer all Matthew Clark Shares
          held



22


          in escrow balances and in relation to which it is the escrow agent for
          the  purposes of the Offer to the original  available  balances of the
          relevant  Matthew Clark   Shareholders.   

(b)  The  expression  "Offer period" when used in this document means the period
     beginning  on 22 October 1998 and ending on the latest of: 

     (i)  3.00 p.m. on 24 November 1998; and

     (ii) the earlier of the time the Offer becomes  unconditional  and the time
          the Offer lapses.

(c)  Except with the consent of the Panel:  

     (i)  settlement of the consideration to which any Matthew Clark Shareholder
          is entitled  under the Offer will be fully  implemented  in accordance
          with the terms of the  Offer  without  regard  to any  lien,  right of
          set-off, counterclaim or other analogous right to which the Offeror or
          Schroders  may  otherwise  be, or claim to be,  entitled  against that
          Matthew Clark Shareholder; and

     (ii) settlement  of the  consideration  will  be  effected  in  the  manner
          prescribed  in  paragraph  13 of  Schroders  letter  contained in this
          document  not  later  than 14 days  after  the date on which the Offer
          becomes or is declared unconditional in all respects or within 14 days
          after  receipt of a valid and  complete  acceptance,  whichever is the
          later.

     No consideration will be posted to an address in the United States, Canada,
     Australia or Japan.

(d)  The terms,  provisions,  instructions and authorities contained in the Form
     of Acceptance  also  constitute  part of the terms of the Offer.  A word or
     expression  defined in this  document has the same meaning when used in the
     Form of Acceptance unless the context requires otherwise. The provisions of
     this Appendix I shall be deemed to be  incorporated in and form part of the
     Form of  Acceptance.  

(e)  If the expiry date of the Offer is extended,  a reference in this  document
     and in the Form of Acceptance to 24 November 1998 will (except in paragraph
     6(b) of Part B of this  Appendix I and except  where the  context  requires
     otherwise)  be  deemed  to  refer  to the  expiry  date of the  Offer as so
     extended.  

(f)  Any accidental  omission to despatch this document,  the Form of Acceptance
     or any notice required to be despatched under the terms of the Offer to, or
     any  failure  to  receive  the same by, any person to whom the Offer is, or
     should be, made will not invalidate the Offer. Subject to the provisions of
     paragraph 7 of Part B of this  Appendix I, the Offer is made to any Matthew
     Clark  Shareholder  to whom this document and the Form of Acceptance or any
     related  document  may not have  been  despatched,  and these  persons  may
     collect  the  relevant  documents  from IRG plc and/or  Schroders  at their
     respective addresses set out in sub-paragraph (l) below.

(g)  The Offeror and  Schroders  reserve the right to treat  acceptances  of the
     Offer as valid if received by IRG plc or otherwise on behalf of the Offeror
     at any place or in any manner  determined by them otherwise than as set out
     in  this  document  or  in  the  Form  of  Acceptance.  

(h)  If sufficient  acceptances  are received,  the Offeror intends to apply the
     provisions  of  sections  428-430F of the Act to acquire  compulsorily  any
     outstanding  Matthew  Clark Shares to which the Offer  relates and to apply
     for cancellation of Matthew Clark's listing on the London Stock Exchange.

(i)  All powers of attorney, appointments of agents and authorities on the terms
     conferred by or referred to in this Appendix I or in the Form of Acceptance
     are given by way of security for the  performance of the obligations of the
     Matthew Clark  Shareholder and are irrevocable in accordance with section 4
     of the Powers of Attorney  Act 1971 except in the  circumstances  where the
     donor  of  the  power  of  attorney  or  authority  validly  withdraws  his
     acceptance in accordance with paragraph 4 of Part B of this Appendix I.

(j)  No acknowledgement of receipt of any Form of Acceptance,  transfer by means
     of CREST,  share  certificate  or  document  of title  will be  given.  All
     communications,  notices, certificates,  documents of title and remittances
     to be delivered  by, or sent to or from,  Matthew  Clark  Shareholders  (or
     their designated agents) will be delivered or sent at their own risk.

(k)  The Offeror and Schroders reserve the right to notify any matter, including
     the making of the Offer, to a Matthew Clark Shareholder:

     (i)  with a registered address outside the United Kingdom; or 


                                                                              23


     (ii) whom the Offeror knows to be a custodian,  trustee or nominee  holding
          Matthew  Clark  Shares for  persons  who are  citizens,  residents  or
          nationals of jurisdictions outside the United Kingdom,

     by  announcement  or by paid  advertisement  in a newspaper  published  and
     circulated  in the United  Kingdom.  The notice will be deemed to have been
     sufficiently  given, despite any failure by a Matthew Clark  Shareholder to
     receive or see that notice. A reference in this document to a notice or the
     provision of information in writing by or on behalf of Canandaigua  Limited
     is to be construed accordingly.

(l)  The Offer is made on 3 November 1998 and is capable of acceptance  from and
     after that time.  The Form of Acceptance and copies of this document may be
     collected  from IRG plc, New Issues  Department,  P.O. Box No. 166,  Bourne
     House,  34  Beckenham  Road,  Beckenham,  Kent  BR3 4TH or  Schroders,  120
     Cheapside, London EC2V 6DS or during normal business hours from IRG plc, 23
     Ironmonger Lane, London EC2. The Offer is made by means of this document.

(m)  The Offer,  all acceptances of the Offer and all elections in respect of it
     are  governed by and will be  construed  in  accordance  with  English law.
     Execution  by or on behalf of an  Matthew  Clark  Shareholder  of a Form of
     Acceptance  constitutes his irrevocable  submission to the  jurisdiction of
     the courts of England in relation to all matters arising in connection with
     the Offer.

(n)  Matthew  Clark  Shares will be acquired by the Offeror  fully paid and free
     from all liens,  equities,  charges,  encumbrances  and other interests and
     together with all rights now or hereafter attaching thereto,  including the
     right to receive and retain all dividends and other distributions declared,
     made or paid on or after 3 November 1998.

(o)  All  references  in this  Appendix I to any statute or statutory  provision
     shall include a statute or statutory  provision which amends,  consolidates
     or replaces the same (whether before or after the date hereof).

7.   Overseas Shareholders

(a)  The making of the Offer in, or to certain persons resident in, or nationals
     or  citizens  of,  jurisdictions  outside  the  United  Kingdom  ("overseas
     shareholders") or to nominees of or trustees for overseas  shareholders may
     be affected by the laws of the relevant jurisdiction. Overseas shareholders
     should  inform   themselves   about  and  observe  any   applicable   legal
     requirements.  It is the responsibility of overseas shareholders wishing to
     accept the Offer to satisfy  themselves  as to the full  observance  of the
     laws of the  relevant  jurisdiction  in  connection  with the  Offer.  This
     includes  the  obtaining  of any  governmental,  exchange  control or other
     consents which may be required, compliance with other necessary formalities
     needing to be  observed  and the  payment of any issue,  transfer  or other
     taxes due in that  jurisdiction.  The Offeror and Schroders (and any person
     acting  on  behalf  of  them)  will  be  fully   indemnified   by  overseas
     shareholders for any such issue,  transfer or other taxes which the Offeror
     or  Schroders  (or any person  acting on behalf of them) may be required to
     pay.  If you are an  overseas  shareholder  and you are in doubt about your
     position  you should  consult  your  professional  adviser in the  relevant
     jurisdiction.

(b)  The Offer is not being made, directly or indirectly,  in or into the United
     States,  Canada,  Australia  or Japan or to any  North  American  person or
     resident of  Australia  or Japan by use of the mails of, or by any means or
     instrumentality of interstate or foreign commerce of, or of any facility of
     a  national,  state or other  securities  exchange  of, the United  States,
     Canada, Australia or Japan. This includes, but is not limited to, facsimile
     transmission, telex and telephone.  

     Accordingly,  copies  of this  document,  the Form of  Acceptance,  and any
     related offer documents are not being, and must not be, mailed or otherwise
     distributed or sent in, into or from the United States,  Canada,  Australia
     or Japan  including to Matthew Clark  Shareholders  or  participants in the
     Matthew Clark Share Option Schemes with registered  addresses in the United
     States, Canada,  Australia or Japan or to persons whom the Offeror knows to
     be  custodians,  trustees  or nominees  holding  Matthew  Clark  Shares for
     persons with  addresses in the United States,  Canada,  Australia or Japan.
     Persons   receiving  those  documents   (including,   without   limitation,
     custodians,  nominees and trustees) must not distribute,  mail or send them
     in, into or from the United  States,  Canada,  Australia or Japan or to any
     North American  Person or resident of Australia or Japan, or use the United
     States,  Canadian,   Australian  or  Japanese  mails  or  any  such  means,
     instrumentality or facility in connection with the Offer, and so doing will
     invalidate any related purported  acceptance of the Offer.  Persons wishing
     to accept the Offer must not use the United States, Canadian, Australian or
     Japanese  mails or any such  means,  instrumentality  or  facility  for any
     purpose  directly  or  indirectly  relating  to  acceptance  of the  Offer.
     Envelopes



24


     containing  a Form of  Acceptance  in  respect  of the  Offer  must  not be
     postmarked in the United  States,  Canada,  Australia or Japan or otherwise
     despatched  from  those   jurisdictions  and  all  acceptors  must  provide
     addresses  outside the United  States,  Canada,  Australia or Japan for the
     receipt of the  consideration to which they are entitled under the Offer or
     for the return of the Form of Acceptance or documents of title.

(c)  Subject as provided below, a Matthew Clark  Shareholder  will be deemed not
     to have accepted the Offer if:

     (i)  he cannot give the representations and warranties set out in paragraph
          (b) of Part C of this  Appendix I; 

     (ii) he completes  Box 3 of the Form of  Acceptance  with an address in the
          United States, Canada,  Australia or Japan or has a registered address
          in the United States, Canada, Australia or Japan and in either case he
          does  not  insert  in Box 6 of the  Form of  Acceptance  the  name and
          address  of a person  or agent  outside  the  United  States,  Canada,
          Australia or Japan to whom he wishes the  consideration to which he is
          entitled under the Offer to be sent;  

     (iii)he inserts in Box 6 of the Form of Acceptance  the name and address of
          a person or agent in the United States, Canada,  Australia or Japan to
          whom he wishes the  consideration  to which he is  entitled  under the
          Offer to be sent; or 

     (iv) the Form of Acceptance  received from him is in an envelope postmarked
          in, or which  otherwise  appears to the  Offeror or its agents to have
          been sent from, the United  States,  Canada,  Australia or Japan.  

     The Offeror reserves the right, in its sole discretion, to investigate,  in
     relation to any acceptance,  whether the representations and warranties set
     out in  paragraph  (b) of Part C of this  Appendix  I have been  truthfully
     given by the relevant Matthew Clark Shareholders and, if such investigation
     is made and,  as a result,  the  Offeror  cannot  satisfy  itself that such
     representations and warranties are true and correct,  such acceptance shall
     not be valid.

(d)  If any person,  despite the  restrictions  referred to in paragraph 7(b) of
     Part B of this Appendix I and whether  pursuant to a  contractual  or legal
     obligation or otherwise,  forwards this document, the Form of Acceptance or
     any related offering  document in, into or from the United States,  Canada,
     Australia  or  Japan  or uses the  mails  or any  means or  instrumentality
     (including,   without  limitation,   facsimile   transmission,   telex  and
     telephones)  of interstate or foreign  commerce of, or any  facilities of a
     national  securities exchange of, the United States,  Canada,  Australia or
     Japan in connection with that forwarding, that person should:

     (i)  inform the recipient of that fact;

     (ii) explain to the recipient that that action may invalidate any purported
          acceptance  by the  recipient;  and 

     (iii)draw  the   attention   of  the   recipient   to  this   paragraph 7.

     Notwithstanding  the  above,  the  Offeror  may in its  sole  and  absolute
     discretion  provide  cash  consideration  to a North  American  Person or a
     person in or resident of  Australia or Japan if requested to do so by or on
     behalf of that person if the Offeror is satisfied, in that particular case,
     that to do so would  not  constitute  a breach of any  securities  or other
     relevant legislation of the United States,  Canada,  Australia or Japan, as
     appropriate.  

(e)  If any written  notice from a Matthew  Clark  Shareholder  withdrawing  his
     acceptance in accordance  with  paragraph 4 of Part B of this Appendix I is
     received in an envelope  postmarked in, or which  otherwise  appears to the
     Offeror or its agents to have been sent from,  the United  States,  Canada,
     Australia  or Japan,  the  Offeror  reserves  the  right,  in its  absolute
     discretion, to treat that notice as invalid.

(f)  The  provisions  of this  paragraph  7 and any  other  terms  of the  Offer
     relating  to  overseas  shareholders  may be waived,  varied or modified as
     regards  specific  Matthew Clark  Shareholders or on a general basis by the
     Offeror in its sole discretion.  Subject to this discretion, the provisions
     of this  paragraph 7  supersede  any terms of the Offer  inconsistent  with
     them.  A  reference  in this  paragraph  7 to a Matthew  Clark  Shareholder
     includes the person or persons  executing a Form of Acceptance  and, in the
     event of more  than  one  person  executing  the  Form of  Acceptance,  the
     provisions of this paragraph 7 apply to them jointly and severally.



                                                                              25


(g)  As used in this document and in the Form of Acceptance, the "United States"
     means the United States of America,  its territories and  possessions,  any
     state of the United  States of America,  the  District of Columbia  and all
     other areas  subject to the  jurisdiction  of the United States of America;
     "Australia"  means the Commonwealth of Australia,  its states,  territories
     and possessions;  "Canada" means Canada, its provinces and territories; and
     "restricted   overseas   person"  means  either  a  person   (including  an
     individual,    partnership,    unincorporated   syndicate,   unincorporated
     organisation,  trust,  trustee,  executor,  administrator,  or other  legal
     representatives) in, or resident in Australia,  Japan, Canada or the United
     States, or a North American Person.

(h)  "US person" means:  

       (i)    any natural person resident in the United States;

       (ii)   any partnership or corporation organised or incorporated under the
              laws of the United States or any state thereof;

       (iii)  any estate of which any executor or administrator is a US person;

       (iv)   any trust of which any trustee is a US person;

       (v)    any agency or branch of a non-United  States entity located in the
              United States;

       (vi)   any  non-discretionary  account or similar  account (other than an
              estate  or  trust)  held by a dealer  or other  fiduciary  for the
              benefit or account of a US dealer;

       (vii)  any  discretionary  account  or similar  (other  than an estate or
              trust) held by a dealer or other fiduciary organised, incorporated
              or (if an individual) resident in the United States; and

       (viii) any partnership or corporation, if:

              (1)    organised or incorporated  under the laws of any non-United
                     States jurisdiction;

              (2)    formed  by a US  person  principally  for  the  purpose  of
                     investing in securities  not  registered  under the US Act,
                     unless  it  is  organised  or  incorporated  and  owned  by
                     accredited  investors  (as defined in Rule 501(a) under the
                     US Act) who are not natural persons, estates or trusts.

     "North  American  person" means a person whose last address as shown on the
     register of members of Matthew Clark is in Canada and/or a US person.

(i)  Notwithstanding paragraph 7(h) of this Part B, any discretionary account or
     similar  account  (other than an estate or trust) held for the benefit of a
     non-US  person  by a dealer  or  other  professional  fiduciary  organised,
     incorporated, or (if an individual) resident in the United States shall not
     be deemed a US Person. 

(j)  Notwithstanding  paragraph  7(h) of this  Part B, any  estate  of which any
     professional  fiduciary  acting as executor or administrator is a US person
     shall not be deemed a US person if: 

     (i)  an  executor  or  administrator  of the estate who is not a person has
          whole or shared  investment  discretion  with respect to the assets of
          the estate;  and 

     (ii) the estate is governed by non-United  States law. 

(k)  Notwithstanding  paragraph  7(h) of this  Part B, any  trust  of which  any
     professional fiduciary acting as trustee is a US person shall not be deemed
     a US  person  if a  trustee  who is not a US  person  has  sole  or  shared
     investment  discretion with respect to the trust assets, and no beneficiary
     of the trust (and no settler if the trust is revocable) is a US person. 

(l)  Notwithstanding  paragraph  7(h) of this Part B, an employee  benefit  plan
     established and  administered in accordance with the law of a country other
     than the United States and customary  practices  and  documentation  of any
     such country shall not be deemed a US person. 

(m)  Notwithstanding paragraph 7(h) of this Part B, any agency or branch of a US
     person  located  outside the United  States shall not be deemed a US person
     if: 

     (i)  the agency or branch operates for valid business reasons; and 


26


     (ii) the agency or branch is engaged in the business of insuring or banking
          and  is  subject  to  substantive  insurance  or  banking  regulation,
          respectively, in the jurisdiction where located. 

(n)  The International  Monetary Fund, the International Bank for Reconstruction
     and Development, the Inter-American Development Bank, the Asian Development
     Bank, the African Development Bank, the United Nations, and their agencies,
     affiliates  and  pension  plans,   and  any  other  similar   international
     organisations,  their  agencies,  affiliates and pension plans shall not be
     deemed US persons.


                                                                              27


PART C -- FORM OF  ACCEPTANCE 

Without prejudice to the terms of the Form of Acceptance,  and the provisions of
Parts A and B of this Appendix I, each Matthew Clark  Shareholder by whom, or on
whose  behalf,  a  Form  of  Acceptance  is  executed  irrevocably   undertakes,
represents,  warrants and agrees to and with the Offeror and Schroders (so as to
bind him, his personal representatives, heirs, successors and assigns):

(a)  that  the  execution  of a Form  of  Acceptance  shall  constitute:  

     (i)  an  acceptance of the Offer in respect of such number of Matthew Clark
          Ordinary  Shares as is  inserted  or deemed to be inserted in Box 1 of
          the Form of Acceptance; and

     (ii) an undertaking  to execute any further  documents and give any further
          assurances  which may be  required  to enable  Canandaigua  Limited to
          obtain the full  benefit  of this Part C and/or to perfect  any of the
          authorities  expressed  to be  given  hereunder,  in each  case on and
          subject to the terms and  conditions  set out or  referred  to in this
          document  and the Form of  Acceptance  and that,  subject  only to the
          rights of withdrawal set out in paragraph 4 of Part B of this Appendix
          I, each such acceptance shall be irrevocable;

(b)  that unless such Matthew Clark Shareholder has written "No" in Box 5 of the
     Form of Acceptance that:

     (i)  he has not received or sent copies or originals of this document,  the
          Form of Acceptance or any related  offering  document in, into or from
          the United States, Canada, Australia or Japan;

     (ii) he has not used in  connection  with the  Offer  or the  execution  or
          delivery of the Form of Acceptance,  directly or indirectly, the mails
          of, or any means or instrumentality  (including,  without  limitation,
          facsimile  transmission,  telex and/or  telephone)  of  interstate  or
          foreign commerce of, or of any facility of a national,  state or other
          securities exchange of, the United States, Canada, Australia or Japan;

     (iii)he is not a restricted overseas person (as described in paragraph 7(h)
          of Part B of this Appendix I);

     (iv) the Form of Acceptance  has not been mailed or otherwise sent in, into
          or from the  United  States,  Canada,  Australia  or  Japan  and he is
          accepting the Offer from outside the United States, Canada,  Australia
          and Japan;

     (v)  if he is,  or is  acting  on  behalf  of, a US  person,  he or that US
          person,  as the case may be, is outside the United  States  within the
          meaning of Regulation S of the US Act; and

     (vi) he is not delivering the Form of Acceptance from, or as agent of or on
          behalf of, any person in the United States, Canada, Australia or Japan
          (unless  such person has given all  instructions  with  respect to the
          Offer from outside the United States, Canada,  Australia and Japan) or
          a North American person or a resident of Australia or Japan;

(c)  that the execution of the Form of Acceptance constitutes the appointment of
     any director of, or any person  authorised  by, the Offeror or Schroders as
     his agent and/or attorney  (subject to the Offer becoming  unconditional in
     all respects and him not having validly  withdrawn his acceptance)  with an
     irrevocable instruction and authorisation to:

     (i)  complete  and  execute  any form of  transfer,  renunciation  or other
          document in relation to the Matthew  Clark Shares  comprised or deemed
          to be comprised in such  acceptance  in favour of the Offeror or as it
          may direct;

     (ii) deliver any form of transfer,  renunciation or other document with any
          certificate  or other  document of title for  registration  within six
          months of the Offer becoming unconditional in all respects; and

     (iii)take any other action as the agent and/or attorney may think necessary
          or expedient in  connection  with his  acceptance  of the Offer and to
          vest in the Offeror (or as it may  direct)  the Matthew  Clark  Shares
          comprised or deemed to be comprised in such acceptance;

(d)  that the  execution  of the relevant  Form of  Acceptance  constitutes  the
     appointment  of IRG plc as his agent and/or  attorney  with an  irrevocable
     instruction and authorisation to:

28



     (i)  subject  to  the  Offer  becoming  unconditional  in all  respects  in
          accordance  with its terms and him not having  validly  withdrawn  his
          acceptance,  transfer to itself (or to such other person or persons as
          the  Offeror or its agent may  direct) by means of CREST all or any of
          the Relevant  Matthew  Clark Shares (but not  exceeding  the number of
          Matthew  Clark  Shares in  respect of which the Offer is  accepted  or
          deemed to be accepted); and

     (ii) if the Offer does not become  unconditional  in all respects,  to give
          instructions to CRESTCo  immediately after the Offer lapses (or within
          such longer  period as the Panel may permit,  not exceeding 14 days of
          the Offer  lapsing) to transfer all Relevant  Matthew  Clark Shares to
          the  original   available  balance  of  the  accepting  Matthew  Clark
          shareholder.


     In this  paragraph,  "Relevant  Matthew  Clark  Shares" means Matthew Clark
     Shares in  uncertificated  form in respect of which a transfer or transfers
     to escrow  has or have been  effected  in  accordance  with the  procedures
     described in paragraph  12(d) of the  Schroders'  letter  contained in this
     document  and where the transfer or transfers to escrow was or were made in
     respect of Matthew  Clark Shares held under the same member  account ID and
     participant ID as the member account ID and  participant ID relating to the
     relevant Form of Acceptance (but irrespective of whether or not any Form of
     Acceptance  Reference  Number,  or a Form of  Acceptance  Reference  Number
     corresponding  to that  appearing on the relevant Form of  Acceptance,  was
     included in the relevant TTE Instruction);

(e)  that such Matthew Clark Shareholder authorises and requests (subject to the
     Offer becoming  unconditional  in all respects in accordance with its terms
     and him not having validly withdrawn his acceptance):

     (i)  Matthew  Clark  or its  agents  to  procure  the  registration  of the
          transfer  of the  Matthew  Clark  Shares  comprised  or  deemed  to be
          comprised in such  acceptance  that are in  certificated  form and the
          delivery of the share certificate(s) and other document(s) of title in
          respect  of the  Matthew  Clark  Shares  to the  Offeror  or as it may
          direct;

     (ii) if the Matthew  Clark  Shares  comprised  or deemed to be comprised in
          such acceptance are in certificated form or paragraph (f)(i) of Part C
          of this  Appendix I applies,  the Offeror or its agents to procure the
          despatch  by post (or by such other  method as may be  approved by the
          Panel) of the consideration to which he is entitled under the Offer at
          his risk to the person or agent  whose name and  address is set out in
          Box 6 of the Form of  Acceptance  or, if no person or agent's name and
          address  is set  out,  to the  first-named  holder  at his  registered
          address;

     (iii)if the Matthew  Clark  Shares  comprised  or deemed to be comprised in
          such acceptance are in uncertificated form, the Offeror,  Schroders or
          their respective  agents to ensure that an assured payment  obligation
          is created in favour of the Matthew Clark  Shareholder's  payment bank
          in accordance with the CREST assured  payment  arrangements in respect
          of any  cash  consideration  to which  such  shareholder  is  entitled
          provided that the Offeror may (if, for any reason, it wishes to do so)
          determine  that all or any part of such  cash  consideration  shall be
          paid by cheque  despatched  by post (or by such other method as may be
          approved by the Panel); and

     (iv) the Offeror,  Matthew Clark or their respective  agents, to record and
          act on any instructions  with regard to payments or notices which have
          been entered in the records of Matthew Clark in respect of his holding
          of Matthew Clark Shares;

(f)  that the execution of the Form of Acceptance constitutes agreement that:

     (i)  the Offeror may decide to  despatch  all or part of the  consideration
          payable  to  a   shareholder   whose   Matthew  Clark  Shares  are  in
          uncertificated  form in accordance with paragraph (e)(ii) of Part C of
          this Appendix I; and

     (ii) the consideration  payable to a shareholder whose Matthew Clark Shares
          are in  uncertificated  form will be  despatched  in  accordance  with
          paragraph (e)(ii) of Part C of this Appendix I if the shareholder is a
          CREST member whose registered address is in the United States, Canada,
          Australia or Japan;

(g)  that  the  execution  of the Form of  Acceptance  constitutes  a giving  of
     authority to any director of, or person authorised by, Canandaigua  Limited
     or Schroders  within the terms of paragraph 5 of Part B of this  Appendix I
     in respect of those  Matthew Clark Shares in respect of which the Offer has
     been accepted or has been deemed to have been accepted and such  acceptance
     not validly withdrawn;


                                                                              29



(h)  that  such  Matthew  Clark  Shareholder,  subject  to  the  Offer  becoming
     unconditional  in all respects  and him not having  validly  withdrawn  his
     acceptance  (or if the Offer will become  unconditional  in all respects or
     lapse on the  outcome of the  resolution  in question or if the Panel gives
     its consent):

     (i)  authorises  the  Offeror  or its agent to direct the  exercise  of any
          votes and any other  rights  and  privileges  (including  the right to
          requisition  the  convening of a general or separate  class meeting of
          Matthew  Clark)  attaching to the Matthew  Clark  Shares  comprised or
          deemed to be comprised in such acceptance;

     (ii) authorises  Matthew  Clark to send any  notice,  circular,  warrant or
          other  document or  communication  which may be required to be sent to
          him as a member of Matthew Clark  (including  without  limitation  any
          share  certificate(s) or other document(s) of title issued as a result
          of a conversion of such Matthew Clark Shares into  certificated  form)
          to the Offeror at its registered office;

     (iii)authorises  any director of, or person  authorised  by, the Offeror or
          Schroders  to  sign  any  document  and do such  things  as may in the
          opinion of that agent and/or  attorney seem  necessary or desirable in
          connection  with  the  exercise  of  any  votes  or  other  rights  or
          privileges   attaching  to  the  Matthew  Clark  Shares  held  by  him
          (including, without limitation, signing any consent to short notice of
          a general or separate  class meeting as his agent and/or  attorney and
          on his  behalf and  executing  a form of proxy  appointing  any person
          nominated by the Offeror to attend general and separate class meetings
          of Matthew  Clark and attending  any such meeting and  exercising  the
          votes attaching to the Matthew Clark Shares  comprised or deemed to be
          comprised in such acceptance on his behalf, where relevant, such votes
          to be cast so far as possible to satisfy any outstanding  condition of
          the Offer); and

     (iv) agrees not to  exercise  any such  rights  without  the consent of the
          Offeror and  irrevocably  undertakes  not to appoint a proxy for or to
          attend such general or separate class meetings of Matthew Clark.  

     This  authority  will  cease  to be valid if the acceptance is withdrawn in
     accordance with paragraph 4 of Part B of this Appendix I;

(i)  that he will  deliver to IRG plc or procure the delivery to IRG plc of, his
     certificate or other document(s) of title in respect of those Matthew Clark
     Shares  comprised or deemed to be comprised in such  acceptance that are in
     certificated form, or an indemnity  acceptable to Matthew Clark, as soon as
     possible  and in  any  event  within  six  months  of  the  Offer  becoming
     unconditional in all respects;

(j)  that he will take (or ensure to be taken)  the action set out in  paragraph
     12(d) of the Schroders'  letter  contained in this document to transfer all
     those  Matthew  Clark  Shares  comprised  or deemed to be comprised in such
     acceptance and not validly withdrawn by him that are in uncertificated form
     to an  escrow  balance  as soon as  possible  and in any  event so that the
     transfer  to  escrow  settles  within  six  months  of the  Offer  becoming
     unconditional in all respects;

(k)  that if for any  reason  any  Matthew  Clark  Shares in  respect of which a
     transfer  to an  escrow  balance  has  been  effected  in  accordance  with
     paragraph  12(d)  of  Schroders'  letter  contained  in this  document  are
     converted to  certificated  form, he will  (without  prejudice to paragraph
     h(ii)  of  Part C of this  Appendix)  immediately  deliver  or  ensure  the
     immediate delivery of the share  certificate(s) or other documents of title
     in respect of all those  Matthew Clark Shares that are converted to IRG plc
     or to the Offeror at its registered  office or as the Offeror or its agents
     may direct;

(l)  that the creation of an assured payment obligation in favour of his payment
     bank in accordance with the CREST assured payment  arrangements as referred
     to in paragraph  (e)(iii) of Part C of this  Appendix I will, to the extent
     of the obligation so created, discharge fully any obligation of the Offeror
     or Schroders to pay to him the cash  consideration  to which he is entitled
     under the Offer;

(m)  that he will do everything necessary or expedient to vest in the Offeror or
     its nominees the Matthew  Clark Shares  comprised or deemed to be comprised
     in such acceptance and to enable IRG plc to perform its functions as escrow
     agent for the purposes of the Offer;

(n)  that he agrees to ratify  everything  which may be done or  effected by any
     director of, or person authorised by, the Offeror,  Schroders or IRG plc in
     exercise  of any of the  powers  and/or  authorities  under  Part C of this
     Appendix I;

(o)  that, if any  provision of Part C of this Appendix I will be  unenforceable
     or invalid or will not operate so as to afford the  Offeror,  Schroders  or
     IRG plc or any of their respective directors or persons authorised by them,
     the


30


     benefit of the  authority  expressed to be given in Part C of this Appendix
     I, he will, with all practicable  speed, do everything that may be required
     or desirable to enable the Offeror,  Schroders and IRG plc and any of their
     respective  directors  or  persons  authorised  by them to secure  the full
     benefit of Part C of this Appendix I;

(p)  that he is irrevocably and unconditionally entitled to transfer the Matthew
     Clark Shares  comprised or deemed to be  comprised in such  acceptance  and
     that  such  shares  are  sold  free  from  all  liens,  equities,  charges,
     encumbrances  and other interests and together with all rights attaching to
     them on or after 3 November 1998 including,  without limitation,  the right
     to receive and retain all dividends and other distributions  declared, paid
     or made on or after that date;

(q)  that the terms and  conditions  of the Offer are deemed to be  incorporated
     in, and form part of, the Form of Acceptance;

(r)  that on execution the Form of Acceptance takes effect as a deed; and

(s)  that the execution of the Form of Acceptance  constitutes his submission to
     the  jurisdiction  of the  courts of  England in  relation  to all  matters
     arising in connection with the Offer and the Form of Acceptance.

A reference  in Part C of this  Appendix I to a holder of Matthew  Clark  Shares
includes a reference to the person or persons  executing  the Form of Acceptance
and in the event of more than one  person  executing  a Form of  Acceptance  the
provisions  of Part C of this  Appendix I will apply to them jointly and to each
of them.


                                                                              31



PART A: AUDITED FINANCIAL INFORMATION

1.   Financial information 

The financial  information  set out in Part A of this Appendix II summarises the
consolidated financial statements of Canandaigua for the years ended 28 February
1998 and 28 February 1997, the six months ended 29 February 1996 and 28 February
1995 and the year ended 31 August  1995.  All  financial  data in Part A of this
Appendix II is extracted from the published  audited accounts for those periods,
except  for  the  six  months  ended  28  February  1995,  which  is  unaudited.
Canandaigua's auditors for these periods were Arthur Andersen LLP.

2.  Consolidated statements of income  

The  following  table  sets  out  the  consolidated   statements  of  income  of
Canandaigua  for the years ended 28 February 1998 and 28 February  1997, the six
months ended 29 February 1996 and 28 February  1995 and the year ended 31 August
1995 as derived from the published  audited  accounts for those periods,  except
for the six months ended 28 February 1995 which is unaudited:




                                                 For the Years Ended          For the Six Months Ended      For the Year Ended
                                                --------------------         -------------------------      ------------------
Consolidated Statements of Income               28 Feb     28 Feb               29 Feb    28 Feb                31 Aug
(in US$ thousands, except share data)            1998       1997                 1996      1995                   1995
- ------------------------------------------------------------------------------------------------------------------------------
                                                                                            (unaudited)

                                                                                                      
Gross sales                                $ 1,632,357     $ 1,534,452       $ 738,415       $ 592,305       $ 1,185,074
Less -- Excise taxes                          (419,569)       (399,439)       (203,391)       (137,820)         (278,530)
                                           -----------     -----------       ---------       ---------       -----------

Net sales                                    1,212,788       1,135,013         535,024         454,485           906,544
Cost of product sold                          (864,053)       (844,181)       (396,208)       (327,694)         (653,811)
                                           -----------     -----------       ---------       ---------        -----------

Gross profit                                   348,735         290,832         138,816         126,791           252,733
Selling, general and
administrative expenses                       (231,680)       (208,991)       (112,411)        (79,925)         (159,196)
Nonrecurring restructuring expenses               --              --            (2,404)           (685)           (2,238)
                                           -----------     -----------       ---------       ---------        -----------

Operating income                               117,055          81,841          24,001          46,181            91,299
Interest expense, net                          (32,189)        (34,050)        (17,298)        (13,141)          (24,601)
                                           -----------     -----------       ---------       ---------        -----------

Income before provision for
Federal and state income taxes                  84,866          47,791           6,703          33,040            66,698
Provision for Federal and
state income taxes                             (34,795)        (20,116)         (3,381)        (12,720)          (25,678)
                                           -----------     -----------       ---------       ---------        -----------

Net income                                 $    50,071     $    27,675       $   3,322       $  20,320       $    41,020
                                           ===========     ===========       =========       =========       ===========

Earnings per common share:
Basic                                      $      2.68     $      1.43       $    0.17       $    1.13       $      2.18
                                           ===========     ===========       =========       =========       ===========

Diluted                                    $      2.62     $      1.42       $    0.17       $    1.12       $      2.16
                                           ===========     ===========       =========       =========       ===========


Weighted average common shares outstanding:

Basic                                           18,672          19,333          19,611          17,989            18,776
Diluted                                         19,105          19,521          19,807          18,179            19,005


 See notes to the consolidated  financial  statements in section 5 of Part A
 of this Appendix II.


32


3. Consolidated balance sheets

The following table sets out the  consolidated  balance sheets of Canandaigua as
at 28 February 1998 and 28 February 1997, as derived from the published  audited
accounts for those years.

                                                               28 Feb
Consolidated Balance Sheets                             ------------------------
(in US$ thousands, except share data)                   1998                1997
- --------------------------------------------------------------------------------
ASSETS:
Current assets:
Cash and cash investments                          $     1,232      $    10,010
Accounts receivable, net                               142,615          142,592
Inventories, net                                       394,028          326,626
Prepaid expenses and other current assets               26,463           21,787
                                                     ---------         --------
Total current assets                                   564,338          501,015
Property, plant and equipment, net                     244,035          249,552
Other assets                                           264,786          270,334
                                                     ---------         --------
Total assets                                       $ 1,073,159      $ 1,020,901
                                                   ===========      ===========
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY:                     
Current liabilities:                                 
Notes payable                                      $    91,900      $    57,000
Current maturities of long-term debt                    24,118           40,467
Accounts payable                                        52,055           55,892
Accrued Federal and state excise taxes                  17,498           17,058
Other accrued expenses and liabilities                  97,763           76,156
                                                     ---------         --------
Total current liabilities                              283,334          246,573
Long-term debt, less current maturities                309,218          338,884
Deferred income taxes                                   59,237           61,395
Other liabilities                                        6,206            9,316
                                                     ---------         --------
Total liabilities                                      657,995          656,168
                                                     ---------         --------
Commitments and contingencies

Stockholders' equity:
Preferred Stock, $0.01 par value -- Authorised, 
 1,000,000 shares; Issued, none at 28 February 1998, 
 and 28 February 1997                                      ---               ---
Class A Common Stock, $0.01 par value -- Authorised, 
 60,000,000 shares; Issued, 17,604,784 shares 
 at 28 February 1998, and 17,462,332 shares at 28
 February 1997                                             176               174
Class B Convertible Common Stock, $0.01 par 
 value -- Authorised, 20,000,000 shares;
 Issued, 3,956,183 shares at 28 February 1998,
 and 28 February 1997                                       40                40
Additional paid-in capital                             231,687           222,336
Retained earnings                                      220,346           170,275
                                                     ---------          --------
                                                       452,249           392,825
                                                     ---------          --------
Less: Treasury stock --
Class A Common Stock, 2,199,320 shares at 
 28 February  1998, and 1,915,468 shares 
at 28 February 1997, at cost                           (34,878)         (25,885)
Class B Convertible Common Stock, 625,725 
shares at 28 February 1998, and 
28 February 1997, at cost                               (2,207)          (2,207)
                                                     ----------        --------

                                                       (37,085)         (28,092)
                                                     ----------         --------
Total stockholders' equity                             415,164          364,733
                                                     ----------        --------
Total liabilities and stockholders' equity        $  1,073,159      $ 1,020,901
                                                  ============      ===========

See notes to the  consolidated  financial  statements  in section 5 of Part A of
this Appendix II.


                                                                              33



4.  Consolidated  statements  of cash  flows 

The  following  table  sets out the  consolidated  statements  of cash  flows of
Canandaigua  for the years  ended 28  February  1998 and 28  February  1997,  as
derived from the published audited accounts for those years:

                                                          For the Years Ended
                                                                28 Feb
Consolidated Statements of Cash Flows                   ------------------------
(in US$ thousands)                                      1998                1997
- --------------------------------------------------------------------------------
Cash flows from operating activities:
Net income                                        $     50,071     $     27,675
Adjustments to reconcile net income to  
 net cash provided by operating activities:
Depreciation of property, plant and equipment           23,847           22,359
Amortisation of intangible assets                        9,314            9,480
Deferred tax provision                                   6,319            5,769
Stock-based compensation expense                         1,747              275
Amortisation of discount on long-term debt                 352              112
Gain on sale of property, plant and equipment           (3,001)          (3,371)
Change in operating assets and liabilities:
     Accounts receivable, net                              749            3,523
     Inventories, net                                  (65,644)          16,232
     Prepaid expenses and other current assets          (4,354)           3,271
     Accounts payable                                   (3,288)            (431)
     Accrued Federal and state excise taxes                440           (2,641)
     Other accrued expenses and liabilities             14,655           24,617
     Other assets and liabilities, net                  (2,452)             898
                                                     ---------         --------
Total adjustments                                      (21,316)          80,093
                                                     ---------          --------
Net cash provided by operating activities               28,755          107,768
                                                     ---------          --------
Cash flows from investing activities:
Purchases of property, plant and equipment, 
 net of minor disposals                                (31,203)         (31,649)
Proceeds from sale of property, plant 
 and equipment                                          12,552            9,174
Payment of accrued earn-out amounts                        ---          (13,848)
                                                     ---------         --------
Net cash used in investing activities                  (18,651)         (36,323)
                                                     ---------         --------
Cash flows from financing activities:
Principal payments of long-term debt                  (186,367)         (50,842)
Purchases of treasury stock                             (9,233)         (20,765)
Payment of issuance costs of long-term debt             (1,214)          (1,550)
Proceeds from issuance of long-term debt, 
 net of discount                                       140,000           61,668
Net proceeds from (repayment of) notes payable          34,900          (54,300)
Exercise of employee stock options                       1,776               17
Proceeds from employee stock purchases                   1,256              998
                                                     ---------         --------
Net cash used in financing activities                  (18,882)         (64,774)
                                                     ----------         --------
Net (decrease) increase in cash and cash investments    (8,778)           6,671
Cash and cash investments, beginning of period          10,010            3,339
                                                     ---------         --------
Cash and cash investments, end of period          $      1,232      $    10,010
                                                   ===========       ==========

See notes to the  consolidated  financial  statements  in section 5 of Part A of
this Appendix II.


34



5.   Notes  to  the   consolidated   financial   statements  

The notes to the consolidated  financial statements of Canandaigua which include
a summary of significant  accounting policies, set out below, are extracted from
its  audited  consolidated  accounts  for  the  year  ended  28  February  1998.
References to "the Company" are to  Canandaigua.  

Note 1.   Summary of Significant Accounting  Policies  

Year-end  Change:  The Company changed its fiscal year end from 31 August to the
last day of  February.  The period  from 1 September  1995,  through 29 February
1996,  is  hereinafter  referred to as the  "Transition  Period."  

Principles  of  Consolidation:  The  consolidated  financial  statements  of the
Company include the accounts of the Canandaigua Group. All intercompany accounts
and  transactions  have been eliminated.  

Unaudited Financial Statements:  The consolidated  statements of income and cash
flows for the six month period ended 28 February 1995, have been prepared by the
Company,  without audit, pursuant to the rules and regulations of the Securities
and Exchange  Commission  applicable to interim  reporting  and reflect,  in the
opinion  of the  Company,  all  adjustments  necessary  to  present  fairly  the
financial  information for the Canandaigua  Group. All such adjustments are of a
normal  recurring  nature.  

Management's  Use of  Estimates  and  Judgement:  The  preparation  of financial
statements in conformity with generally accepted accounting  principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.   

Cash Investments:  Cash investments consist of highly liquid investments with an
original maturity when purchased of three months or less and are stated at cost,
which  approximates  market value. The amounts at 28 February 1998 and 1997, are
not  significant.  

Fair Value of  Financial  Instruments:  To meet the  reporting  requirements  of
Statement of Financial  Accounting  Standards No. 107,  "Disclosures  about Fair
Value of  Financial  Instruments,"  the  Company  calculates  the fair  value of
financial instruments using quoted market prices whenever available. When quoted
market prices are not  available,  the Company uses standard  pricing models for
various types of financial instruments (such as forwards,  options, swaps, etc.)
which take into account the present  value of estimated  future cash flows.  The
methods and assumptions used to estimate the fair value of financial instruments
are summarised as follows: 

     Accounts receivable: The carrying amount approximates fair value due to the
     short maturity of these instruments,  the creditworthiness of the customers
     and the large number of  customers  constituting  the  accounts  receivable
     balance.  

     Notes payable:  These  instruments are variable interest rate bearing notes
     for which the carrying value  approximates the fair value.  

     Long-term  debt: The carrying value of the debt  facilities with short-term
     variable interest rates  approximates the fair value. The fair value of the
     fixed rate debt was  estimated  by  discounting  cash flows using  interest
     rates  currently  available  for debt with  similar  terms and  maturities.
     

     Foreign  exchange  hedging  agreements:  The fair value of currency forward
     contracts is estimated based on quoted market prices. 

     Interest rate hedging  agreements:  The fair value of interest rate hedging
     instruments  is the  estimated  amount that the Company would receive or be
     required to pay to terminate  the  derivative  agreements  at year end. The
     fair  value  includes  consideration  of  current  interest  rates  and the
     creditworthiness  of the  counterparties  to  the  agreements.  

     Letters of credit: At 28 February 1998 and 1997, the Company had letters of
     credit  outstanding  totalling  approximately  $3,865,000  and  $8,622,000,
     respectively,  which guarantee payment for certain obligations. The Company
     recognises  expense on these obligations as incurred and no material losses
     are anticipated.


                                                                              35



The  carrying  amount  and  estimated  fair  value  of the  Company's  financial
instruments are summarised as follows:




                                                          28 Feb 1998                            28 Feb 1997
                                                   ------------------------------         ---------------------
(in US$ thousands)                                 Carrying                               Carrying      
                                                     Amount    Fair Value                   Amount   Fair Value
- ---------------------------------------------------------------------------------------------------------------
                                                                                              
Liabilities:
Notes payable                                     $  91,900     $  91,900                $  57,000    $  57,000
Long-term debt, including current portion         $ 333,336     $ 340,934                $ 379,351    $ 374,628

Derivative instruments:
Foreign exchange hedging agreements:
     Currency forward contracts                   $  ---        $  ---                   $     374    $     407
Interest rate hedging agreements:
     Interest rate cap agreement                  $  ---        $  ---                   $   ---      $   ---
     Interest rate collar agreement               $  ---        $  ---                   $   ---      $   ---



Interest Rate Futures and Currency  Forward  Contracts:  From time to time,  the
Company  enters into  interest  rate  futures and a variety of currency  forward
contracts  in  the  management  of  interest  rate  risk  and  foreign  currency
transaction  exposure.  Unrealised gains and losses on interest rate futures are
deferred and  recognised  as a component of interest  expense over the borrowing
period.  Unrealised gains and losses on currency forward  contracts are deferred
and recognised as a component of the related  transactions  in the  accompanying
financial  statements.  Discounts or premiums on currency forward  contracts are
recognised over the life of the contract. 

Inventories: Inventories are valued at the lower of cost (computed in accordance
with the last-in,  first-out  (LIFO) or first-in,  first-out  (FIFO) methods) or
market.  The percentage of  inventories  valued using the LIFO method is 92% and
94%  at 28  February  1998  and  1997,  respectively.  Replacement  cost  of the
inventories  determined  on a FIFO  basis is  approximately  $411,424,000  at 28
February 1998, and  $349,006,000  at 28 February 1997. 

A substantial portion of barreled whiskey and brandy will not be sold within one
year because of the  duration of the aging  process.  All  barreled  whiskey and
brandy are  classified  as  in-process  inventories  and are included in current
assets,  in accordance with industry  practice.  Bulk wine  inventories are also
included  as work in process  within  current  assets,  in  accordance  with the
general  practices of the wine industry,  although a portion of such inventories
may be aged for  periods  greater  than one  year.  Warehousing,  insurance,  ad
valorem taxes and other  carrying  charges  applicable  to barreled  whiskey and
brandy held for aging are included in inventory costs.  

Elements  of cost  include  materials,  labour and  overhead  and consist of the
following:

(in US$ thousands)                              28 Feb 1998          28 Feb 1997
- --------------------------------------------------------------------------------
Raw materials and supplies                      $    14,439         $    14,191
Wine and distilled spirits in process               304,037             262,289
Finished case goods                                  92,948              72,526
                                                   --------            --------
                                                    411,424             349,006
Less -- LIFO reserve                                (17,396)            (22,380)
                                                   --------            --------
                                                $   394,028         $   326,626
                                                   ========            ========

If the FIFO method of  inventory  valuation  had been used,  reported net income
would have been approximately $2,941,000, or $0.15 per share on a diluted basis,
lower for the year ended 28 February  1998,  and  reported net income would have
been approximately  $18,163,000,  or $0.93 per share on a diluted basis,  higher
for the year ended 28 February  1997.  

Property, Plant and Equipment:  Property, plant and equipment is stated at cost.
Major  additions  and  betterments  are  charged  to  property  accounts,  while
maintenance  and repairs  are charged to  operations  as  incurred.  The cost of
properties   sold  or  otherwise   disposed  of  and  the  related   accumulated
depreciation  are  eliminated  from the  accounts  at the time of  disposal  and
resulting gains and losses are included as a component of operating income.

36


Depreciation:  Depreciation is computed primarily using the straight-line method
over the following estimated useful lives:



                                                       Depreciable Life in Years
- --------------------------------------------------------------------------------
Buildings and improvements                                          10 to 33 1/3
Machinery and equipment                                                  3 to 15
Motor vehicles                                                            3 to 7

Amortisation  of  assets  capitalised  under  capital  leases is  included  with
depreciation expense.  Amortisation is calculated using the straight-line method
over the shorter of the estimated useful life of the asset or the lease term.

Other Assets:  Other assets,  which  consist of goodwill,  distribution  rights,
trademarks, agency license agreements,  deferred financing costs, cash surrender
value of officers' life insurance and other amounts,  are stated at cost, net of
accumulated  amortisation.  Amortisation  is  calculated on a  straight-line  or
effective interest basis over the following estimated useful lives:


                                                            Useful Life in Years
- --------------------------------------------------------------------------------

Goodwill                                                                      40
Distribution rights                                                           40
Trademarks                                                                    40
Agency license agreements                                                6 to 40
Deferred financing costs                                                 5 to 10

At 28 February 1998, the weighted average  remaining useful life of these assets
is  approximately  36 years.  The face  value of the  officers'  life  insurance
policies  totalled  $2,852,000  at both 28  February  1998 and 1997.  

Long-lived  Assets and  Intangibles:  In accordance  with Statement of Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets and for  Long-Lived  Assets to be Disposed  of," the Company  reviews its
long-lived assets and certain  identifiable  intangibles for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable on an  undiscounted  cash flow basis.  The statement also
requires  that  long-lived  assets and certain  identifiable  intangibles  to be
disposed of be reported at the lower of carrying  amount or fair value less cost
to sell.  The  Company  did not  record  any asset  impairment  in fiscal  1998.


Advertising and Promotion Costs: The Company generally expenses  advertising and
promotion costs as incurred, shown or distributed.  Prepaid advertising costs at
28 February 1998 and 1997, are not material.  Advertising and promotion  expense
for the years ended 28 February 1998 and 1997,  the Transition  Period,  the six
months ended 28 February  1995  (unaudited),  and the year ended 31 August 1995,
were  approximately   $111,685,000,   $101,319,000,   $60,187,000,   $41,658,000
(unaudited) and  $84,246,000,  respectively.  

Income  Taxes:  The Company uses the liability  method of accounting  for income
taxes.  The  liability  method  accounts for  deferred  income taxes by applying
statutory  rates in effect at the balance sheet date to the  difference  between
the financial reporting and tax basis of assets and liabilities.  

Environmental:  Environmental expenditures that relate to current operations are
expensed as  appropriate.  Expenditures  that  relate to an  existing  condition
caused by past  operations,  and which do not  contribute  to  current or future
revenue  generation,  are expensed.  Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the cost can be reasonably
estimated. Generally, the timing of these accruals coincides with the completion
of a feasibility  study or the Company's  commitment to a formal plan of action.
Liabilities  for  environmental  costs were not material at 28 February 1998 and
1997. 

Earnings Per Common Share:  The Company  adopted the  provisions of Statement of
Financial  Accounting  Standards  No. 128,  "Earnings Per Share," (SFAS No. 128)
effective 28 February 1998.  Basic earnings per common share excludes the effect
of common  stock  equivalents  and is computed by dividing  income  available to
common  stockholders by the weighted average number of common shares outstanding
during the period for Class A Common Stock and Class B Convertible Common Stock.
Diluted  earnings per common share  reflects the  potential  dilution that could
result if securities or other  contracts to issue common stock were exercised or
converted  into common  stock.  Diluted  earnings per common  share  assumes the
exercise  of stock  options  using the  treasury  stock  method and  assumes the
conversion of convertible  securities,  if any, using the "if converted" method.
Historical  earnings  per common  share have been  restated to conform  with the
provisions of SFAS No. 128. 

                                                                              37


Other: Certain fiscal 1997, Transition Period and fiscal 1995 balances have been
reclassified to conform with current year presentation.  

Note 2.   Acquisitions

UDG  Acquisition:  On 1 September  1995,  the Company  through its  wholly-owned
subsidiary,  Barton  Incorporated  (Barton),  acquired  certain of the assets of
United Distillers  Glenmore,  Inc., and certain of its North American affiliates
(collectively,  UDG) (the UDG Acquisition). The acquisition was made pursuant to
an Asset  Purchase  Agreement  dated  29 August 1995 (the  Purchase  Agreement),
entered  into  between  Barton and UDG.  The  acquisition  included all of UDG's
rights to the  Fleischmann's,  Skol,  Mr.  Boston,  Canadian  LTD, Old Thompson,
Kentucky Tavern, Chi-Chi's,  Glenmore and di Amore distilled spirits brands; the
U.S. rights to Inver House,  Schenley and El Toro distilled spirits brands;  and
related inventories and other assets. The acquisition also included two of UDG's
production facilities; one located in Owensboro, Kentucky, and the other located
in Albany, Georgia. In addition, pursuant to the Purchase Agreement, the parties
entered into multiyear  agreements under which Barton (i) purchases various bulk
distilled  spirits  brands from UDG and (ii)  provides  packaging  services  for
certain of UDG's distilled spirits brands as well as warehousing  services.  

The aggregate  consideration  for the acquired brands and other assets consisted
of  $141,780,000  in cash and  assumption of certain  current  liabilities.  The
source of the cash payment made at closing, together with payment of other costs
and expenses  required by the UDG  Acquisition,  was  financing  provided by the
Company  pursuant to a term loan under the  Company's  then existing bank credit
agreement.  

The UDG  Acquisition was accounted for using the purchase  method;  accordingly,
the UDG assets were  recorded at fair market  value at the date of  acquisition.
The excess of the purchase price over the estimated fair market value of the net
assets acquired (goodwill),  $86,348,000,  is being amortised on a straight-line
basis over 40 years.  The results of operations of the UDG Acquisition have been
included in the Consolidated Statements of Income since the date of acquisition.


Note 3.   Property, Plant and Equipment 

The major components of property, plant and equipment are as follows:

(in US$ thousands)                              28 Feb 1998          28 Feb 1997
- --------------------------------------------------------------------------------
Land                                            $    15,103         $    16,961
Buildings and improvements                           74,706              76,379
Machinery and equipment                             244,204             243,274
Motor vehicles                                        5,316               5,355
Construction in progress                             17,485              13,999
                                                    -------             -------
                                                    356,814             355,968
Less -- Accumulated depreciation                   (112,779)           (106,416)
                                                    -------             -------
                                                $   244,035         $   249,552
                                                ===========          ===========

Note 4.   Other Assets

The major components of other assets are as follows:

(in US$ thousands)                              28 Feb 1998          28 Feb 1997
- --------------------------------------------------------------------------------
Goodwill                                        $   150,595         $   150,595
Distribution rights, agency license 
 agreements and trademarks                          119,346             119,316
Other                                                23,686              22,936
                                                    -------             -------
                                                    293,627             292,847
Less -- Accumulated amortisation                    (28,841)           (22,513)
                                                    -------             -------
                                                $   264,786         $   270,334
                                                ===========         ===========


38


Note 5.   Other  Accrued  Expenses and  Liabilities  

The major components of other accrued expenses and liabilities are as follows:

(in US$ thousands)                              28 Feb 1998          28 Feb 1997
- --------------------------------------------------------------------------------
Accrued salaries and commissions                $    23,704          $    12,109
Other                                                74,059               64,047
                                                    -------              -------
                                                $    97,763          $    76,156
                                                ===========          ===========

Note 6.   Borrowings 

Borrowings consist of the following:



                                                         28 Feb 1998                 28 Feb 1997
                                              ------------------------------------   ------------
(in US$ thousands)                               Current    Long-term       Total         Total
- -------------------------------------------------------------------------------------------------

                                                                            
Notes payable:
Senior Credit Facility:
Revolving Credit Loans                          $  91,900  $    ---    $  91,900   $  57,000
                                                =========  ========    =========   =========

Long-term debt:
Senior Credit Facility:
  Term loan, variable rate, aggregate proceeds
  of $140,000, due in instalments through 
  June 2003                                     $  24,000 $ 116,000    $ 140,000   $ 185,900

Senior Subordinated Notes:
  8.75% redeemable after 15 December 1998, 
  due 2003                                            ---   130,000      130,000     130,000
  8.75% Series C redeemable after 15 December
  1998, due 2003 (less unamortised discount
  of $2,868 -- effective rate 9.76%)                  ---    62,132       62,132      61,780
Capitalised Lease Agreements:
  Capitalised  facility lease bearing  
  interest at 9%, due in monthly 
  instalments through fiscal 1998                     ---       ---          ---         348
Industrial Development Agencies:
  7.50% 1980 issue, original proceeds $2,370, 
  due in annual instalments of $119 
  through fiscal 2000                                 118       119          237         356
Other Long-term Debt:
Loans payable bearing interest at 5%, 
  secured by cash surrender value of officers'
  life insurance policies                             ---       967          967         967
                                                ---------  --------     --------    --------
                                                $  24,118 $ 309,218    $ 333,336   $ 379,351
                                                ========= =========    =========   =========




Senior  Credit  Facility:  On 19 December  1997,  the Company and a syndicate of
banks (the  Syndicate  Banks)  entered  into a new  $325,000,000  senior  Credit
Agreement (the Credit Agreement). The proceeds of the Credit Agreement were used
to repay all outstanding  principal and accrued  interest on all loans under the
Company's Third Amended and Restated Credit Agreement,  as amended.  As compared
to the previous bank credit  agreement,  the Credit  Agreement  includes,  among
other things,  lower  interest  rates,  lower  quarterly loan  amortisation  and
greater   flexibility   with  respect  to  effecting   acquisitions,   incurring
indebtedness and repurchasing the Company's  capital stock. 

The Credit Agreement  provides for a $140,000,000 term loan facility due in June
2003 and a $185,000,000 revolving loan facility,  including letters of credit up
to a maximum of  $20,000,000,  which expires in June 2003.  The rate of interest
payable,  at the Company's option, is a function of the London interbank offered
rate (LIBOR) plus a margin, federal funds rate plus a margin, or the prime rate.
The margin is adjustable  based upon the Company's Debt Ratio (as defined in the
Credit Agreement). The Credit Agreement also provides for certain mandatory term
loan  prepayments.  

The term loan facility  requires  quarterly  repayments of $6,000,000  beginning
March 1998 through  December 2002, and payments of $10,000,000 in March 2003 and
June 2003. At 28 February 1998, the margin on the term loan facility  borrowings
was  0.75%  and may be  decreased  by up to 0.35%  and  increased  by up to 0.5%
depending on the Company's  Debt Ratio.  

The revolving loan facility is utilised to finance working capital requirements.
The Credit Agreement requires that the Company reduce the outstanding balance of
the revolving loan facility to less than $60,000,000 for thirty consecutive days
during the six months ending each 31 August.  The margin on the  revolving  loan
facility was 0.5% at  28 February  1998, and may be decreased by up to 0.25% and
increased by up to 0.4% depending on the Company's Debt Ratio. In addition,  the
Company pays a facility fee on the total revolving loan facility. At 28 February
1998, the facility fee was 0.25% and may be reduced or increased by 0.1% subject
to  the  Company's  Debt  Ratio.  


                                                                              39


Each of the Company's principal operating  subsidiaries has guaranteed,  jointly
and  severally,  the  Company's  obligations  under the  Credit  Agreement.  The
Syndicate Banks have been given security  interests in substantially  all of the
assets of the Company  including  mortgage liens on certain real  property.  The
Company  is subject to  customary  secured  lending  covenants  including  those
restricting  additional  liens, the incurrence of additional  indebtedness,  the
sale of assets,  the payment of dividends,  transactions with affiliates and the
making of certain  investments.  The  primary  financial  covenants  require the
maintenance of a Debt Ratio, a senior debt coverage  ratio, a fixed charge ratio
and an interest coverage ratio. Among the most restrictive  covenants  contained
in the Credit  Agreement is the  requirement to maintain a fixed charge ratio of
not less than 1.0 at the last day of each  fiscal  quarter  for the most  recent
four quarters.  

The Company had average  outstanding  Revolving  Credit  Loans of  approximately
$59,892,000  and  $88,825,000  for the years  ended 28  February  1998 and 1997,
respectively.  Amounts  available  to be drawn down under the  Revolving  Credit
Loans  were   $89,235,000   and   $119,378,000  at  28 February 1998  and  1997,
respectively. The average interest rate on the Revolving Credit Loans was 6.57%,
6.58%,  6.76% and 7.16%, for fiscal 1998 and 1997, the Transition Period and for
fiscal 1995,  respectively.  Facility  fees on the new Credit  Agreement are due
based upon the total revolving loan facility,  whereas commitment fees under the
prior  agreement  were  based  upon the unused  portion  of the  revolving  loan
facility.  These fees are based upon the Company's Debt Ratio and can range from
0.15% to 0.35%. At 28 February 1998, the facility fee percentage was 0.25%.  The
commitment  fee percentage at 28 February 1997 was 0.325%.  

Senior  Subordinated Notes: On 27 December 1993, the Company issued $130,000,000
aggregate  principal amount of 8.75% Senior  Subordinated  Notes due in December
2003 (the Notes).  Interest on the Notes is payable  semiannually on 15 June and
15 December of each year. The Notes are unsecured and  subordinated to the prior
payment in full of all senior  indebtedness  of the Company,  which includes the
Credit Agreement.  The Notes are guaranteed,  on a senior subordinated basis, by
all of the Company's  significant  operating  subsidiaries.  

The Trust Indenture relating to the Notes contains certain covenants, including,
but  not  limited  to,  (i)  limitation  on  indebtedness;  (ii)  limitation  on
restricted  payments;  (iii) limitation on transactions  with  affiliates;  (iv)
limitation on senior  subordinated  indebtedness;  (v) limitation on liens; (vi)
limitation on sale of assets;  (vii) limitation on issuance of guarantees of and
pledges  for  indebtedness;  (viii)  restriction  on  transfer  of assets;  (ix)
limitation on subsidiary  capital  stock;  (x) limitation on the creation of any
restriction on the ability of the Company's  subsidiaries to make  distributions
and other payments;  and (xi)  restrictions on mergers,  consolidations  and the
transfer  of all or  substantially  all of the assets of the  Company to another
person.  The limitation on  indebtedness  covenant is governed by a rolling four
quarter fixed charge ratio requiring a specified minimum.

On 29 October 1996, the Company issued $65,000,000 aggregate principal amount of
8.75%  Series B Senior  Subordinated  Notes due in  December  2003 (the Series B
Notes). The Company used the net proceeds of approximately  $61,700,000 to repay
$50,000,000  of  Revolving  Credit  Loans and to prepay and  permanently  reduce
$9,600,000  of the Term Loan.  The  remaining  proceeds were used to pay various
fees and expenses associated with the offering.  The terms of the Series B Notes
were  substantially  identical  to those of the Notes.  In  February  1997,  the
Company  exchanged  $65,000,000  aggregate  principal  amount of 8.75%  Series C
Senior  Subordinated  Notes due in  December  2003 (the  Series C Notes) for the
Series B Notes.  The terms of the Series C Notes are  identical  in all material
respects  to the  Series B Notes.  

Loans  Payable:  Loans payable,  secured by officers'  life insurance  policies,
carry  an  interest  rate  of  5%.  The  notes  carry  no  due  dates  and it is
management's  intention  not to repay the notes  during  the next  fiscal  year.


Capitalised  Lease  Agreements  --  Industrial  Development  Agencies:   Certain
capitalised lease agreements require the Company to make lease payments equal to
the principal  and interest on certain  bonds issued by  Industrial  Development
Agencies. The bonds are secured by the leases and the related facilities.  These
transactions  have been  treated  as  capital  leases  with the  related  assets
included in property,  plant and equipment and the lease commitments included in
long-term debt.  Among the provisions  under the debenture and lease  agreements
are covenants  that define  minimum  levels of working  capital and tangible net
worth  and the  maintenance  of  certain  financial  ratios  as  defined  in the
agreements.


40



Debt Payments:  Principal  payments  required under  long-term debt  obligations
during the next five fiscal years are as follows:


(in thousands)
- --------------------------------------------------------------------------------
1999                                                                    $ 24,118
2000                                                                      24,119
2001                                                                      24,000
2002                                                                      24,000
2003                                                                      24,000
Thereafter                                                               215,967
                                                                         -------
                                                                       $ 336,204
                                                                       =========

Note 7.   Income Taxes

The provision for Federal and state income taxes consists of the following:




                                                                                            For the Six
                                                                               For the           Months         For the
                                         For the Year Ended 28 Feb 1998     Year Ended            Ended       Year Ended
                                       ----------------------------------   ----------      -----------       ----------
                                                    State and                   28 Feb           29 Feb        31 August
(in US$ thousands)                       Federal        Local       Total         1997             1996             1995
- ------------------------------------------------------------------------------------------------------------------------

                                                                                                   
Current income tax provision           $  21,032   $    7,444  $   28,476   $   14,347      $     1,390       $    6,446
Deferred income tax provision              5,935          384       6,319        5,769            1,991           19,232
                                       ---------   ----------  ----------   ----------      -----------       ----------
                                       $  26,967   $    7,828  $   34,795   $   20,116      $     3,381       $   25,678
                                       =========   ==========  ==========   ==========      ===========       ==========


A  reconciliation  of the total tax provision to the amount computed by applying
the expected U.S. Federal income tax rate to income before provision for Federal
and state income taxes is as follows:





                                           For the Year           For the Year            For the Six        For the Year
                                           Ended 28 Feb           Ended 28 Feb        Months Ended 29     Ended 31 August
                                                   1998                   1997               Feb 1996                1995
                                         ---------------     -----------------     ------------------    ----------------
                                                    % of                  % of                   % of                % of
                                                  Pretax                Pretax                 Pretax              Pretax
(in US$ thousands)                     Amount     Income     Amount     Income     Amount      Income    Amount    Income
- -------------------------------------------------------------------------------------------------------------------------
                                                                                              
Computed "expected" tax provision    $ 29,703       35.0   $ 16,727       35.0    $ 2,346        35.0  $ 23,344      35.0
State and local income taxes, 
  net of Federal income tax benefit     5,089        6.0      3,304        6.9        827        12.3     2,395       3.6
Nondeductible meals and 
  entertainment expenses                  294        0.3        310        0.6        205         3.1       290       0.4
Miscellaneous items, net                 (291)      (0.3)      (225)      (0.4)         3         ---      (351)    (0.5)
                                         ----       ----       ----       ----       ----        ----      ----      ---- 
                                     $ 34,795       41.0   $ 20,116       42.1    $ 3,381        50.4  $ 25,678      38.5
                                      =======       ====    =======       ====     ======        ====   =======      ====



Deferred tax liabilities (assets) are comprised of the following:

(in US$ thousands)                              28 Feb 1998          28 Feb 1997
- --------------------------------------------------------------------------------
Depreciation and amortisation                   $    70,303         $    68,155
LIFO reserve                                         13,601               2,019
Inventory reserves                                    6,974               9,418
Other accruals                                      (18,193)            (13,191)
                                                    -------            ------- 
                                                $    72,685         $    66,991
                                                 ==========          ==========

At 28 February 1998,  the Company has state and U.S.  Federal net operating loss
(NOL)  carryforwards  of $16,213,000  and  $3,654,000,  respectively,  to offset
future taxable income that, if not otherwise  utilised,  will expire as follows:
state NOLs of $6,945,000,  $6,828,000  and $2,440,000 at 28 February 2001,  2002
and 2003, respectively,  and Federal NOL of $3,654,000 at 28 February 2011. 

Note 8. Profit Sharing Retirement Plans and Retirement Savings Plan

The Company's profit sharing  retirement  plans,  which cover  substantially all
employees, provide for contributions by the Company in such amounts as the Board
of  Directors  may  annually  determine  and  for  voluntary   contributions  by
employees. The plans are qualified as tax-exempt under the Internal Revenue Code
and conform  with the  Employee  


                                                                              41



Retirement Income Security Act of 1974. The Company's  provisions for the plans,
including the Barton plan described  below,  were  $5,571,000 and $4,999,000 for
the years  ended 28  February  1998 and 1997,  respectively,  $2,579,000  in the
Transition  Period and  $3,830,000  for fiscal 1995.  

The Company's retirement savings plan, established pursuant to Section 401(k) of
the Internal Revenue Code, permits  substantially all full-time employees of the
Company  (excluding  Barton  employees,  who  are  covered  by a  separate  plan
described  below) to defer a portion of their  compensation  on a pretax  basis.
Participants may defer, subject to a maximum contribution limitation,  up to 10%
of their compensation for the year. The Company makes a matching contribution of
25% of the first 4% of compensation an employee defers. Company contributions to
this plan were  $367,000 and  $700,000 for the years ended 28 February  1998 and
1997,  respectively,  $325,000 in the  Transition  Period and $281,000 in fiscal
1995. 

The Barton  profit  sharing  and 401(k) plan covers all  salaried  employees  of
Barton. The amount of Barton's  contribution under the profit sharing portion of
the plan is at the discretion of its Board of Directors,  subject to limitations
of the plan.  Contribution  expense was  $2,799,000 and $2,504,000 for the years
ended 28 February  1998 and 1997,  respectively,  $1,095,000  in the  Transition
Period and  $1,430,000  in fiscal  1995.  Pursuant to the 401(k)  portion of the
plan,  participants  may  defer up to 8% of  their  compensation  for the  year,
subject to limitations of the plan,  and receive no matching  contribution  from
Barton. 

Note 9.   Stockholders' Equity

Common Stock: The Company has two classes of common stock:  Class A Common Stock
and Class B Convertible  Common Stock.  Class B Convertible  Common Stock shares
are convertible into shares of Class A Common Stock on a one-to-one basis at any
time at the option of the holder.  Holders of Class B  Convertible  Common Stock
are  entitled  to ten  votes  per  share.  Holders  of Class A Common  Stock are
entitled to only one vote per share but are entitled to a cash dividend premium.
If the Company pays a cash  dividend on Class B Convertible  Common Stock,  each
share of Class A Common  Stock  will  receive  an amount  at least  ten  percent
greater  than  the  amount  of the  cash  dividend  per  share  paid on  Class B
Convertible  Common Stock.  In addition,  the Board of Directors may declare and
pay a dividend on Class A Common  Stock  without  paying any dividend on Class B
Convertible  Common Stock. 

At 28 February 1998,  there were  15,405,464  shares of Class A Common Stock and
3,330,458  shares  of  Class B  Convertible  Common  Stock  outstanding,  net of
treasury  stock. 

Stock  Repurchase  Authorisation:  On 11 January 1996,  the  Company's  Board of
Directors  authorised  the  repurchase of up to  $30,000,000  of its Class A and
Class B Common stock. The Company was permitted to finance such purchases, which
became  treasury  shares,  through cash generated from operations or through the
Credit  Agreement.  The Company  completed its repurchase  program during fiscal
1998,  repurchasing  362,100  shares  of Class A Common  Stock  for  $9,233,000.
Throughout  the year ended 28 February  1997,  the Company  repurchased  787,450
shares of Class A Common Stock totalling $20,765,000.  

Long-Term  Stock  Incentive  Plan: In July 1997, the  stockholders  approved the
amendment and restatement of the Company's  Stock Option and Stock  Appreciation
Right Plan (the Original Stock Plan) as the Long-Term  Stock Incentive Plan (the
Long-Term  Stock Plan).  Options  granted  under the Original  Stock Plan remain
outstanding  and in full  force  in  accordance  with  their  terms.  

Under the Long-Term Stock Plan,  nonqualified stock options,  stock appreciation
rights,  restricted  stock  and  other  stock-based  awards  may be  granted  to
employees,  officers and directors of the Company. Grants, in the aggregate, may
not exceed  4,000,000 shares of the Company's Class A Common Stock. The exercise
price,  vesting  period  and term of  nonqualified  stock  options  granted  are
established by the committee  administering the plan (the Committee).  Grants of
stock  appreciation  rights,  restricted stock and other stock-based  awards may
contain such vesting,  terms, conditions and other requirements as the Committee
may  establish.  During  fiscal 1998,  no stock  appreciation  rights and 25,000
shares of  restricted  Class A Common Stock were granted.  At 28 February  1998,
there were 1,840,258 shares available for future grant.


42



 A summary of nonqualified stock option activity is as follows:



                                                  Shares        Weighted                    Weighted
                                                   Under   Avg. Exercise     Options   Avg. Exercise
                                                  Option           Price  Exercisable          Price
- ----------------------------------------------------------------------------------------------------
                                                                             
 Balance, 31 August 1994                         563,500     $     15.65   
  Options granted                                289,000     $     40.29
  Options exercised                             (114,075)    $      7.02
  Options forfeited/cancelled                     (4,500)    $     19.22
                                                --------     
 Balance, 31 August 1995                         733,925     $     26.68     39,675      $      4.44
  Options granted                                571,050     $     36.01
  Options exercised                              (18,000)    $     13.23
  Options forfeited/cancelled                   (193,250)    $     44.06
                                                --------

 Balance, 29 February 1996                     1,093,725     $     28.70     28,675      $      4.44
  Options granted                              1,647,700     $     22.77
  Options exercised                              (3,750)     $      4.44   
  Options forfeited/cancelled                 (1,304,700)    $     32.09
                                                --------
 Balance, 28 February 1997                     1,432,975     $     18.85     51,425      $     10.67
  Options granted                                569,400     $     38.72
  Options exercised                             (117,452)    $     15.33
  Options forfeited/cancelled                    (38,108)    $     17.66
                                               --------

 Balance, 28 February 1998                     1,846,815     $     25.23    360,630      $     25.46
                                              ==========


The following table summarises information about stock options outstanding at 28
February 1998:



                                                   Options Outstanding                     Options Exercisable
                                   -------------------------------------------------   -----------------------------
                                                      Weighted Avg.         Weighted                        Weighted
                                        Number           Remaining     Avg. Exercise        Number     Avg. Exercise
Range of Exercise Prices           Outstanding    Contractual Life             Price   Exercisable             Price
- --------------------------------------------------------------------------------------------------------------------
                                                                                                  
 $ 4.44 -- $11.50                       38,675           3.5 years       $      9.15        38,675       $      9.15
 $17.00 -- $25.63                      998,540           7.3 years       $     17.37       134,280       $     17.00
 $26.75 -- $31.25                      351,800           8.5 years       $     28.46        80,200       $     27.30
 $35.38 -- $56.75                      457,800           9.6 years       $     41.25       107,475       $     40.53
                                       -------                                            --------
                                     1,846,815           8.0 years       $     25.23       360,630       $     25.46
                                     =========                                            =========




The weighted  average fair value of options  granted during fiscal 1998,  fiscal
1997 and the Transition Period was $20.81, $10.27 and $15.90, respectively.  The
fair value of options is estimated on the date of grant using the  Black-Scholes
option-pricing model with the following weighted average assumptions:  risk-free
interest  rate of 6.4% for fiscal  1998,  6.6% for fiscal  1997 and 5.5% for the
Transition  Period;  volatility of 41.3% for fiscal 1998,  42.7% for fiscal 1997
and 39.6%  for the  Transition  Period;  expected  option  life of 6.9 years for
fiscal 1998, 4.7 years for fiscal 1997 and 5.4 years for the Transition  Period.
The  dividend  yield was 0% for  fiscal  1998,  fiscal  1997 and the  Transition
Period.  Forfeitures are recognised as they occur.  

Incentive  Stock Option Plan: The ability to grant incentive stock options under
the Original Stock Plan was  eliminated  when it was amended and restated as the
Long-Term  Stock Plan. In July 1997,  stockholders  approved the adoption of the
Company's  Incentive  Stock Option Plan.  Under the Incentive Stock Option Plan,
incentive stock options may be granted to employees,  including officers, of the
Company.  Grants,  in the  aggregate,  may not  exceed  1,000,000  shares of the
Company's Class A Common Stock. The exercise price of any incentive stock option
may not be less than the fair market value of the Company's Class A Common Stock
on the date of grant.  The vesting  period and term of incentive  stock  options
granted are  established by the Committee.  The maximum term of incentive  stock
options is ten years.  During  fiscal  1998,  no  incentive  stock  options were
granted.  

Employee  Stock  Purchase  Plan:  In fiscal 1989,  the Company  approved a stock
purchase  plan  under  which  1,125,000  shares  of Class A Common  Stock can be
issued.  Under the terms of the plan,  eligible employees may purchase shares of
the Company's  Class A Common Stock  through  payroll  deductions.  The purchase
price is the lower of 85% of the fair market  value of the stock on the first or
last day of the  purchase  period.  During  fiscal  1998 and  fiscal  1997,  the
Transition Period and fiscal 1995,  employees purchased 78,248,  37,768,  20,869
and 28,641 shares, respectively.  

The weighted  average fair value of purchase  rights  granted during fiscal 1998
and fiscal 1997 was $11.90 and $8.41,  respectively.  The fair value of purchase
rights is estimated on the date of grant using the Black-Scholes  option-pricing


                                                                              43


model with the following weighted average  assumptions:  risk-free interest rate
of 5.3% for fiscal 1998 and 5.6% for fiscal 1997; volatility of 35.1% for fiscal
1998 and 65.4% for fiscal 1997;  expected  purchase  right life of 0.5 years for
fiscal 1998 and 0.8 years for fiscal 1997.  The  dividend  yield was 0% for both
fiscal 1998 and fiscal 1997. No purchase  rights were granted in the  Transition
Period. 

Pro Forma Disclosure:  The Company applies  Accounting  Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and related  interpretations
in accounting for its plans.  In fiscal 1997,  the Company  elected to adopt the
disclosure-only  provisions of Statement of Financial  Accounting  Standards No.
123, "Accounting for Stock-Based Compensation," (SFAS No. 123). Accordingly,  no
compensation expense has been recognised for its stock-based compensation plans.
Had the Company  recognised the  compensation  cost based upon the fair value at
the date of grant for awards  under its plans  consistent  with the  methodology
prescribed  by SFAS No. 123, net income and earnings per common share would have
been reduced to the pro forma amounts as follows:




                         For the Year Ended            For the Year Ended            For the Six Months Ended
                            28 Feb 1998                    28 Feb 1997                      29 Feb 1996
                       ----------------------         ---------------------        ----------------------------
(in US$ thousands,            As                             As                              As  
except share data)      Reported   Pro Forma           Reported  Pro Forma              Reprted     Pro Forma
- ---------------------------------------------------------------------------------------------------------------
                                                                                        
Net income             $  50,071   $  46,171           $ 27,675  $  25,038           $    3,322     $   3,178
Earnings per 
common share:
  Basic                $    2.68   $    2.47           $   1.43  $    1.30           $     0.17     $    0.16
  Diluted              $    2.62   $    2.42           $   1.42  $    1.28           $     0.17     $    0.16


The  provisions  of SFAS No. 123 have not been  applied  to options or  purchase
rights  granted prior to 1 September  1995.  Therefore,  the resulting pro forma
effect on net income may not be  representative of that to be expected in future
years.  

Stock Offering:  During  November 1994, the Company  completed a public offering
and sold 3,000,000 shares of its Class A Common Stock, resulting in net proceeds
to the Company of approximately  $95,515,000 after  underwriters'  discounts and
commissions  and  expenses.  In  connection  with the  offering,  432,067 of the
Vintners  option  shares were  exercised  and the Company  received  proceeds of
$7,885,000.  Under  the  terms  of the  then  existing  bank  credit  agreement,
approximately $82,000,000 was used to repay a portion of the Term Loan under the
bank credit  agreement.  The balance of net proceeds was used to repay Revolving
Credit Loans under the bank credit agreement.  

Note 10.  Earnings Per Common Share

The following  table presents  historical  earnings per common share restated to
conform with the provisions of SFAS No.128.


                                                                                                                    For the
                                                  For the Years Ended          For the Six Months Ended          Year Ended
                                               ------------------------      -----------------------------     ------------
                                                   28 Feb        28 Feb             29 Feb        28 Feb             31 Aug
(in thousands, except per share data)                1998          1997               1996          1995               1995
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                             (unaudited)
                                                                                                         
Basic earnings per common share:
Income applicable to common shares             $   50,071    $   27,675         $    3,322   $    20,320         $   41,020
                                               ----------    ----------         ----------   -----------         ----------

Weighted average common shares outstanding         18,672        19,333             19,611        17,989             18,776
Basic earnings per common share                $     2.68    $     1.43         $     0.17   $      1.13         $     2.18
                                               ==========    ==========         ==========   ===========         ==========
Diluted earnings per common share:
Income applicable to common shares             $   50,071    $   27,675         $    3,322   $    20,320         $   41,020
                                               ----------    ----------         ----------   -----------         ----------

Weighted average common shares outstanding         18,672        19,333             19,611        17,989             18,776
Incentive stock options                               423           179                129           152                155
Options/employee stock purchases                       10             9                 67            38                 74
                                                   ------        ------             ------        ------             ------
Adjusted weighted average common 
shares outstanding                                 19,105        19,521             19,807        18,179             19,005
                                                   ------        ------             ------        ------             ------

Diluted earnings per common share              $     2.62    $     1.42         $     0.17   $      1.12         $     2.16
                                                =========     =========          =========    ==========           ========


44


Note 11.  Commitments and Contingencies

Operating Leases:  Future payments under  noncancelable  operating leases having
initial or remaining terms of one year or more are as follows:

(in thousands)
- --------------------------------------------------------------------------------

1999                                                                     $ 3,506
2000                                                                       2,627
2001                                                                       1,947
2002                                                                       1,513
2003                                                                       1,291
Thereafter                                                                 8,590
                                                                          ------
                                                                        $ 19,474
                                                                         =======


Rental expense was  approximately  $5,554,000 and $4,716,000 for fiscal 1998 and
fiscal 1997,  respectively,  $2,382,000 in the Transition  Period and $4,193,000
for fiscal 1995.

Purchase  Commitments and  Contingencies:  The Company has agreements with three
suppliers to purchase  blended Scotch whisky through December 2001. The purchase
prices under the agreements are  denominated in British pounds  sterling.  Based
upon  exchange  rates  at 28  February  1998,  the  Company's  aggregate  future
obligation  ranges  from  approximately   $10,758,000  to  $22,835,000  for  the
contracts  expiring  through  December  2001.  

The Company has an  agreement  to purchase  Canadian  blended  whisky  through 1
September  1999,  with a maximum  obligation of  approximately  $4,453,000.  The
Company also has two  agreements to purchase  Canadian new  distillation  whisky
(including  dumping  charges)  through  December  2005  at  purchase  prices  of
approximately  $12,521,000  to  $13,536,000.  In  addition,  the  Company has an
agreement to purchase  corn whiskey  through  April 1999 at a purchase  price of
approximately  $90,000. 

All of the  Company's  imported  beer products are marketed and sold pursuant to
exclusive  distribution  agreements  from the suppliers of these  products.  The
Company's  agreement  to  distribute  Corona and its other  Mexican  beer brands
exclusively  throughout 25 states was renewed  effective 22 November  1996,  and
expires December 2006, with automatic five year renewals thereafter,  subject to
compliance  with  certain  performance   criteria  and  other  terms  under  the
agreement.  The remaining  agreements  expire through June 2003.  Prior to their
expiration,  these  agreements  may be  terminated  if the Company fails to meet
certain performance criteria. At 28 February 1998, the Company believes it is in
compliance  with all of its  material  distribution  agreements  and,  given the
Company's  long-term  relationships  with its  suppliers,  the Company  does not
believe  that  these  agreements  will be  terminated.  

In  connection  with  the  Vintners   Acquisition   and  the   Almaden/Inglenook
Acquisition,  the Company  assumed  purchase  contracts with certain growers and
suppliers.  In addition,  the Company has entered into other purchase  contracts
with various  growers and suppliers in the normal course of business.  Under the
grape  purchase  contracts,  the  Company is  committed  to  purchase  all grape
production yielded from a specified number of acres for a period of time ranging
up to 20 years. The actual tonnage and price of grapes that must be purchased by
the Company will vary each year depending on certain factors, including weather,
time of harvest,  overall market  conditions and the agricultural  practices and
location of the growers and  suppliers  under  contract.  

The Company purchased $154,909,000 of grapes under these contracts during fiscal
1998. Based on current production yields and published grape prices, the Company
estimates that the aggregate  purchases under these contracts over the remaining
term of the contracts will be approximately $915,651,000. During fiscal 1994, in
connection with the Vintners Acquisition and the Almaden/Inglenook  Acquisition,
the Company  established a reserve for the estimated loss on these firm purchase
commitments of approximately $62,664,000,  which was subsequently reduced during
fiscal  1995 to  reflect  the  effects  of the  termination  payments  to cancel
contracts with certain growers.  The remaining reserve for the estimated loss on
the  remaining  contracts is  approximately  $771,000 at 28 February  1998.  

The Company's  aggregate  obligations under bulk wine purchase contracts will be
approximately  $32,502,000 over the remaining term of the contracts which expire
through fiscal 2001. 

Employment  Contracts:  The Company has employment contracts with certain of its
executive  officers and certain other management  personnel with remaining terms
ranging up to three years.  These agreements  provide for minimum  salaries,  as
adjusted for annual  increases,  and may include  incentive  bonuses  based upon
attainment of specified management goals. In addition,  these agreements provide
for severance payments in the event of specified termination of employment.  The
aggregate commitment for future compensation and severance,  excluding incentive
bonuses, was  



                                                                              45


approximately  $7,903,000  as  of  28  February  1998,  of  which  approximately
$1,436,000 is accrued in other  liabilities  as of 28 February  1998.  

Employees Covered by Collective Bargaining Agreements:  Approximately 42% of the
Company's full-time employees are covered by collective bargaining agreements at
28 February 1998.  Agreements expiring within one year cover approximately 7% of
the Company's  full-time  employees. 

Legal  Matters:  The Company is subject to  litigation  from time to time in the
ordinary  course of business.  Although the amount of any liability with respect
to such  litigation  cannot be determined,  in the opinion of  management,  such
liability  will not have a material  adverse  effect on the Company's  financial
condition  or  results  of  operations.  

Note 12.  Significant Customers and Concentration of Credit Risk

The Company sells its products  principally to wholesalers  for resale to retail
outlets  including  grocery  stores,  package liquor  stores,  club and discount
stores and  restaurants.  Gross  sales to the five  largest  wholesalers  of the
Company  represented 26.4%,  22.9%, 16.9% and 21.6% of the Company's gross sales
for the fiscal years ending 28 February 1998 and 1997, the Transition Period and
for the  fiscal  year ended 31 August  1995,  respectively.  Gross  sales to the
Company's  largest  wholesaler,  Southern Wine and Spirits,  represented  12.1%,
10.5% and 10.6% of the  Company's  gross  sales for the  fiscal  years  ended 28
February  1998  and  1997,  and  for the  fiscal  year  ended  31  August  1995,
respectively.   Accounts   receivable  from  the  Company's  largest  wholesaler
represented 14.1% and 11.3% of the Company's total accounts  receivable as of 28
February 1998 and 1997,  respectively.  No single wholesaler was responsible for
greater than 10% of gross sales during the Transition Period. Gross sales to the
Company's  five  largest  wholesalers  are  expected to continue to  represent a
significant portion of the Company's revenues.  The Company's  arrangements with
certain of its wholesalers  may,  generally,  be terminated by either party with
prior notice.  The Company performs ongoing credit evaluations of its customers'
financial  position,  and  management  of the Company is of the opinion that any
risk of  significant  loss is reduced  due to the  diversity  of  customers  and
geographic sales area. 

Note 13.  Restructuring Plan

The Company  provided for costs to restructure  the operations of its California
wineries (the  Restructuring  Plan) in the fourth quarter of fiscal 1994.  Under
the Restructuring Plan, all bottling operations at the Central Cellars winery in
Lodi,  California,  and the branded  wine  bottling  operations  at the Monterey
Cellars  winery in Gonzales,  California,  were moved to the Mission Bell winery
located in Madera,  California.  The Monterey Cellars winery will continue to be
used as a crushing,  winemaking  and  contract  bottling  facility.  The Central
Cellars  winery was closed in the fourth quarter of fiscal 1995 and was sold for
its  approximate  net book  value  during  fiscal  1997.  In  fiscal  1994,  the
Restructuring  Plan reduced income before taxes and net income by  approximately
$24,005,000  and  $14,883,000,  respectively,  or $0.92  per  share on a diluted
basis. Of the total pretax charge in fiscal 1994, approximately  $16,481,000 was
to recognise estimated losses associated with the revaluation of land, buildings
and  equipment  related to  facilities  described  above to their  estimated net
realisable  value; and approximately  $7,524,000  related to severance and other
benefits  associated  with the  elimination  of 260 jobs.  In fiscal  1995,  the
Restructuring  Plan  reduced  income  before  income  taxes  and net  income  by
approximately $2,238,000 and $1,376,000,  respectively,  or $0.07 per share on a
diluted basis. Of the total pretax charge in fiscal 1995,  $4,288,000 relates to
equipment  relocation  and employee  hiring and  relocation  costs,  offset by a
decrease of  $2,050,000  in the  valuation  reserve as compared to fiscal  1994,
primarily  related to the land,  buildings and equipment at the Central  Cellars
winery. The Company also expended  approximately  $19,071,000 in fiscal 1995 for
capital  expenditures to expand storage  capacity and install certain  relocated
equipment. In the Transition Period, the expense incurred in connection with the
Restructuring  Plan reduced income before taxes and net income by  approximately
$2,404,000 and $1,192,000,  respectively, or $0.06 per share on a diluted basis.
These  charges  represented  incremental,  nonrecurring  expenses of  $3,982,000
primarily   incurred   for  overtime  and  freight   expenses   resulting   from
inefficiencies  related to the Restructuring  Plan, offset by a reduction in the
accrual for  restructuring  expenses of $1,578,000,  primarily for severance and
facility holding and closure costs. The Company completed the Restructuring Plan
at 29 February 1996, with a total employment  reduction of 177 jobs. The Company
expended  approximately  $2,125,000  in fiscal  1997 and  $6,644,000  during the
Transition Period for capital expenditures to expand storage capacity.  As of 28
February 1997, the Company had accrued  liabilities  of  approximately  $402,000
relating to the  Restructuring  Plan. As of 28 February 1998, the Company had no
accrued  liabilities  relating to the  Restructuring  Plan.  

Note 14.  Summarised Financial Information -- Subsidiary Guarantors

The  subsidiary  guarantors  are  wholly  owned  and the  guarantees  are  full,
unconditional,   joint  and  several  obligations  of  each  of  the  subsidiary
guarantors.  Summarised financial  information for the subsidiary  guarantors is
set forth below.  Separate financial statements for the subsidiary guarantors of
the Company are not  presented  because  the  Company has  

46


determined  that such financial  statements  would not be material to investors.
The subsidiary  guarantors comprise all of the direct and indirect  subsidiaries
of the Company, other than the nonguarantor subsidiaries which individually, and
in the aggregate, are inconsequential.  There are no restrictions on the ability
of the  subsidiary  guarantors  to transfer  funds to the Company in the form of
cash dividends or loan  repayments;  however,  except for limited  amounts,  the
subsidiary  guarantors  may not loan funds to the Company.  

The following  table presents  summarised  financial  information for subsidiary
guarantors in connection  with all of the  Company's  8.75% Senior  Subordinated
Notes:


(in US$ thousands)                              28 Feb 1998          28 Feb 1997
- --------------------------------------------------------------------------------
Balance Sheet Data:
  Current assets                                $   460,618          $   401,870
  Noncurrent assets                             $   395,225          $   403,068
  Current liabilities                           $   102,207          $   100,009
  Noncurrent liabilities                        $    61,784          $    65,300



                                                                                    For the
                            For the Years Ended      For the Six Months Ended       Year Ended
                        --------------------------   -------------------------     -----------
(in US$ thousands)      28 Feb 1998    28 Feb 1997   29 Feb 1996   28 Feb 1995     31 Aug 1995
- ----------------------------------------------------------------------------------------------
Income Statement Data:
                                                                            
 Net sales              $   985,757    $   907,387   $   416,839   $   334,885     $   716,969
  Gross profit          $   196,642    $   164,471   $    73,843   $    62,883     $   131,489
  Income before
  provision for 
  Federal and
    state income taxes  $    64,270    $    47,303   $    17,083   $    22,690     $    52,756
  Net income            $    38,094    $    27,392   $     8,466   $    13,954     $    32,445



Note 15.  Accounting Pronouncements

In June 1997,  Statement of Financial  Accounting  Standards No. 130, "Reporting
Comprehensive  Income,"  (SFAS No. 130) and  Statement of  Financial  Accounting
Standards No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information," (SFAS No. 131) were issued. SFAS No. 130 establishes standards for
reporting and display of  comprehensive  income and its components in a full set
of  financial  statements.  The  Company is  required  to adopt SFAS No. 130 for
interim  periods and fiscal years  beginning 1 March 1998.  Reclassification  of
financial  statements for earlier periods  provided for comparative  purposes is
required.  The Company  believes the effect of adoption will not be significant.
SFAS No. 131  establishes  standards for reporting  information  about operating
segments in annual  financial  statements  and  requires  reporting  of selected
information in interim  financial  statements.  The Company is required to adopt
SFAS No. 131 for fiscal years  beginning 1 March 1998,  and for interim  periods
beginning 1 March 1999. Restatement of comparative information for earlier years
is required in the initial  year of adoption  and  comparative  information  for
interim  periods in the initial  year of adoption is to be reported  for interim
periods in the second year of  application.  The Company has not yet  determined
the impact of SFAS No. 131 on its financial statements.


                                                                              47


Note 16.  Selected Quarterly Financial Information (Unaudited)

A summary of selected quarterly financial information is as follows:




                                                          Quarter Ended
                                        ---------------------------------------------------
                                        31 May         31 Aug         30 Nov         28 Feb
(in US$ thousands, except share data)     1997           1997           1997           1998         Fiscal 1998
- ---------------------------------------------------------------------------------------------------------------
                                                                                             
Net sales                               $  306,011     $  301,524     $  322,703     $  282,550     $ 1,212,788
Gross profit                            $   80,732     $   84,759     $   98,000     $   85,244     $   348,735
Net income                              $   10,046     $   12,365     $   17,611     $   10,049     $    50,071
Earnings per common share:
  Basic                                 $     0.54     $     0.67     $     0.94     $     0.54     $      2.68
  Diluted                               $     0.53     $     0.65     $     0.92     $     0.53     $      2.62
Market price per share:
  Class A High                          $     32.25    $    42.75     $    53.50     $    58.50
  Class A Low                           $   21 7/8    $    29 3/8     $    39.50     $    43.75     
  Class B High                          $       37     $       43     $   54 5/8    $     57.75
  Class B Low                           $       27     $    35.50     $    40.75     $       45






                                                          Quarter Ended
                                        ---------------------------------------------------
                                        31 May         31 Aug         30 Nov         28 Feb
(in US$ thousands, except share data)     1996           1996           1996           1997         Fiscal 1997
- ---------------------------------------------------------------------------------------------------------------
                                                                                             
Net sales                               $  276,493     $  279,218     $  317,733     $  261,569     $ 1,135,013
Gross profit                            $   72,907     $   69,835     $   81,683     $   66,407     $   290,832
Net income                              $    8,501     $    4,941     $    8,311     $    5,922     $    27,675
Earnings per common share:
  Basic                                 $     0.43     $     0.25     $     0.43     $     0.31     $      1.43
  Diluted                               $     0.43     $     0.25     $     0.43     $     0.31     $      1.42
Market price per share:
  Class A High                          $    39.50     $    32.25     $    27.50     $    31.75
  Class A Low                           $       27     $   22 7/8     $    15.75     $    25.50
  Class B High                          $    39.50     $    32.50     $    29.75     $       34
  Class B Low                           $    27.75     $   25 3/8     $       19     $    28.75


Note 17.  Dividends

The Company's policy is to retain all of its earnings to finance the development
and expansion of its business,  and the Company has not paid any cash  dividends
since its initial public offering in 1973.


48



PART B: UNAUDITED FINANCIAL INFORMATION

1.   Financial information

The financial  information  relating to Canandaigua for the six and three months
ended 31 August  1998 and 31 August 1997 has been  extracted  from the Form 10-Q
which was filed with the United  States  Securities  and Exchange  Commission on
29 September 1998.  All  information  presented in Part B of this Appendix II is
unaudited.

2.   Consolidated statements of income



                                             For the Six Months       For the Three Months
                                              Ended 31 August             Ended 31 August
  Consolidated Statements of Income      ---------------------       ---------------------
  (in US$ thousands, except share data)      1998         1997            1998        1997
- ------------------------------------------------------------------------------------------
                                                                           
Gross sales                              $ 880,150   $ 820,326       $ 457,281   $ 409,288
Less -- Excise taxes                      (217,836)   (212,791)       (107,895)   (107,764)
                                          --------    --------        --------    -------- 

Net sales                                  662,314     607,535         349,386     301,524
Cost of product sold                      (467,767)   (442,044)       (247,775)   (216,765)
                                          --------    --------        --------    -------- 

Gross profit                               194,547     165,491         101,611      84,759
Selling, general and 
administrative expenses                   (128,786)   (111,483)        (67,454)    (56,258)
                                          --------    --------         -------     ------- 

Operating income                            65,761      54,008          34,157      28,501
Interest expense, net                     (15,952)    (16,024)         (7,425)     (7,545)
                                          -------     -------          ------      ------ 

Income before provision for Federal 
and state income taxes                      49,809      37,984          26,732      20,956
Provision for Federal and state 
income taxes                               (20,422)    (15,573)        (10,960)     (8,591)
                                           -------     -------         -------      ------ 

 Net income                              $  29,387   $  22,411       $  15,772   $  12,365
                                         =========   =========       =========   =========

Earnings per common share:
 Basic                                   $    1.57   $    1.20       $    0.85   $    0.67
                                         =========   =========       =========   =========
 Diluted                                 $    1.53   $    1.18       $    0.83   $    0.65
                                         =========   =========       =========   =========


Weighted average common shares 
outstanding:
 Basic                                      18,669      18,665          18,589      18,559
 Diluted                                    19,168      19,002          19,051      18,962


See notes to the  consolidated  financial  statements  in section 5 of Part B of
this Appendix II.


                                                                              49


3.   Consolidated balance sheets



Consolidated Balance Sheets                                                31 August      28 February
(in US$ thousands, except share data)                                           1998             1998
- -----------------------------------------------------------------------------------------------------
                                                                                            
ASSETS:
Current assets:
Cash and cash investments                                                  $   1,473      $     1,232
Accounts receivable, net                                                     154,550          142,615
Inventories, net                                                             345,972          394,028
Prepaid expenses and other current assets                                     37,550           26,463
                                                                           ---------      -----------
Total current assets                                                         539,545          564,338
Property, plant and equipment, net                                           246,157          244,035
Other assets                                                                 262,004          264,786
                                                                           ---------      -----------
Total assets                                                               1,047,706      $ 1,073,159
                                                                           =========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Notes payable                                                              $  63,000      $    91,900
Current maturities of long-term debt                                          24,118           24,118
Accounts payable                                                              65,624           52,055
Accrued Federal and state excise taxes                                        21,561           17,498
Other accrued expenses and liabilities                                       101,569           97,763
                                                                           ---------      -----------
Total current liabilities                                                    275,872          283,334
Long-term debt, less current maturities                                      297,407          309,218
Deferred income taxes                                                         59,237           59,237
Other liabilities                                                              5,445            6,206
                                                                           ---------      -----------
Total liabilities                                                            637,961          657,995
                                                                           ---------      -----------

Commitments and contingencies
Stockholders' equity:
Preferred Stock, $0.01 par value -- Authorised, 1,000,000 shares;
 Issued, none at 31 August 1998, and 28 February 1998                            ---              ---
Class A Common Stock, $0.01 par value -- Authorised, 120,000,000 
  shares; Issued, 17,802,475 shares at 31 August 1998, and 
  17,604,784 shares at 28 February 1998                                          178              176
Class B Convertible Common Stock, $0.01 par value -- Authorised, 
  20,000,000 shares; Issued, 3,873,912 shares at 31 August 1998, 
  and 3,956,183 shares at 28 February 1998                                        39               40
Additional paid-in capital                                                   234,992          231,687
Retained earnings                                                            249,733          220,346
                                                                           ---------      -----------

                                                                             484,942          452,249
                                                                           ---------      -----------
Less: Treasury stock --
Class A Common Stock, 3,029,505 shares at 31 August 1998, 
  and 2,199,320 shares at 28 February 1998, at cost                          (72,990)         (34,878)
Class B Convertible Common Stock, 625,725 shares at  
  31 August 1998, and 28 February 1998, at cost                               (2,207)          (2,207)
                                                                           ---------      -----------
                                                                             (75,197)         (37,085)
                                                                           ---------      -----------
Total stockholders' equity                                                   409,745          415,164
                                                                             -------          -------

Total liabilities and stockholders' equity                               $ 1,047,706      $ 1,073,159
                                                                           =========      ===========


See notes to the  consolidated  financial  statements  in section 5 of Part B of
this Appendix II.



50



4. Consolidated statements of cash flows




                                                                    For the Six Months Ended
Consolidated Statements of Cash Flows                                      31 August
                                                                   -------------------------
(in US$ thousands)                                                          1998        1997
- --------------------------------------------------------------------------------------------
                                                                                   
Cash flows from operating activities:
Net income                                                              $ 29,387    $ 22,411
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation of property, plant and equipment                             11,952      12,625
Amortisation of intangible assets                                          5,015       4,699
Deferred tax provision                                                       900       4,900
Amortisation of discount on long-term debt                                   189         172
Stock-based compensation expense                                              51         350
Gain on sale of property, plant and equipment                                 (3)       (883)
Change in operating assets and liabilities:
  Accounts receivable, net                                               (11,935)    (17,518)
  Inventories, net                                                        48,056      (8,131)
  Prepaid expenses and other current assets                              (10,867)      1,285
  Accounts payable                                                        11,339      57,408
  Accrued Federal and state excise taxes                                   4,063       2,669
  Other accrued expenses and liabilities                                   2,906       1,584
  Other assets and liabilities, net                                       (2,549)       (717)
                                                                          ------        ---- 

Total adjustments                                                         59,117      58,443
                                                                          ------      ------

Net cash provided by operating activities                                 88,504      80,854
                                                                          ------      ------

Cash flows from investing activities:
Purchases of property, plant and equipment                               (14,098)    (18,213)
Purchase of joint venture minority interest                                 (716)       --
Proceeds from sale of property, plant and equipment                           27       8,512
                                                                           -----      ------
Net cash used in investing activities                                    (14,787)     (9,701)
                                                                         -------      ------ 

Cash flows from financing activities:
Purchases of treasury stock                                              (36,014)     (9,233)
Net repayments of notes payable                                          (28,900)    (27,800)
Principal payments of long-term debt                                     (12,000)    (40,409)
Exercise of employee stock options                                         2,154         741
Proceeds from employee stock purchases                                     1,284         204
Payment of issuance costs of long-term debt                                 --          (388)
                                                                         -------      ------ 

Net cash used in financing activities                                    (73,476)    (76,885)
                                                                         -------     ------- 

Net increase (decrease) in cash and cash investments                         241      (5,732)
Cash and cash investments, beginning of period                             1,232      10,010
                                                                         -------      ------ 

Cash and cash investments, end of period                                $  1,473    $  4,278
                                                                        ========    ========


See notes to the  consolidated  financial  statements  in section 5 of Part B of
this Appendix II.



                                                                              51


5.   Notes to the consolidated financial statements

Note 1.   Management's Representations

The  condensed  consolidated  financial  statements  included  herein  have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission applicable to quarterly reporting on Form
10-Q and reflect,  in the opinion of the Company,  all adjustments  necessary to
present fairly the financial  information  for the Canandaigua  Group.  All such
adjustments are of a normal recurring nature.  Certain  information and footnote
disclosures  normally included in financial  statements,  prepared in accordance
with generally accepted accounting principles, have been condensed or omitted as
permitted by such rules and regulations. These consolidated financial statements
and related notes should be read in conjunction with the consolidated  financial
statements  and related notes  included in the  Company's  Annual Report on Form
10-K for the fiscal year ended 28 February 1998. 

Note 2.   Inventories

Inventories  are valued at the lower of cost  (computed in  accordance  with the
last-in,  first-out  (LIFO) or first-in,  first-out  (FIFO)  methods) or market.
Substantially all of the inventories are valued using the LIFO method.  Elements
of cost include materials, labour and overhead and consist of the following:


                                      31 August    28 February
(in US$ thousands)                         1998           1998
- --------------------------------------------------------------
Raw materials and supplies              $  14,395    $  14,439
Wine and distilled spirits in process     231,442      304,037
Finished case goods                       118,280       92,948
                                          -------       ------
                                          364,117      411,424
Less -- LIFO reserve                      (18,145)     (17,396)
                                          -------      ------- 
                                        $ 345,972    $ 394,028
                                        =========    =========

Information  related to the FIFO method of inventory  valuation may be useful in
comparing  operating  results to those  companies  not using the LIFO  method of
inventory valuation. If the FIFO method had been used, reported net income would
have been $0.4 million,  or $0.02 per share on a diluted  basis,  higher for the
six months  ended 31 August  1998,  and reported net income would have been $1.7
million,  or $0.09 per share on a diluted basis, higher for the six months ended
31 August 1997. 

Note 3.   Borrowings

Bank credit  agreement:  In June 1998, the bank credit agreement was amended to,
among other  things,  eliminate  the  requirement  that the  Company  reduce the
outstanding  balance of the revolving loan facility to less than $60,000,000 for
thirty  consecutive  days during the six months  ending each 31 August.  In July
1998, the revolving loan facility under the bank credit  agreement was increased
by $100.0  million  to $285.0  million.  

Note 4.   Retirement Savings and Profit Sharing Retirement Plan

Effective 1 March 1998,  the Company's  existing  retirement  savings and profit
sharing  retirement  plans and the Barton  profit  sharing  and 401(k) plan were
merged into the Canandaigua  401(k) and Profit Sharing Plan (the Plan). The Plan
covers  substantially  all  employees,  excluding  those  employees  covered  by
collective  bargaining  agreements.  The  401(k)  portion  of the  Plan  permits
eligible  employees to defer a portion of their  compensation (as defined in the
Plan) on a pretax basis.  Participants may defer up to 10% of their compensation
for the year,  subject to  limitations of the Plan. The Company makes a matching
contribution  of 50% of the first 6% of compensation a participant  defers.  The
amount of the Company's  contribution  under the profit  sharing  portion of the
Plan is in such  discretionary  amount as the Board of  Directors  may  annually
determine, subject to limitations of the Plan. 

Note 5.   Stockholders' Equity

Stock repurchase  authorisation:  In June 1998, the Company's Board of Directors
authorised the repurchase of up to  $100,000,000 of its Class A Common Stock and
Class B Convertible Common Stock. The Company may finance such purchases,  which
will become treasury  shares,  through cash generated from operations or through
the bank credit  agreement.  

Increase in number of authorised  shares of Class A Common Stock:  In July 1998,
the stockholders of the Company approved an increase in the number of authorised
shares of Class A Common Stock from  60,000,000  shares to  120,000,000  shares,
thereby  increasing the aggregate number of authorised  shares of the Company to
141,000,000 shares.


52


Note 6.   Earnings Per Common Share

The  Company  adopted  the  provisions  of  Statement  of  Financial  Accounting
Standards No. 128,  "Earnings  Per Share," (SFAS No. 128)  effective 28 February
1998.  Basic  earnings  per common  share  excludes  the effect of common  stock
equivalents and is computed by dividing income available to common  stockholders
by the weighted  average number of common shares  outstanding  during the period
for Class A Common Stock and Class B Convertible Common Stock.  Diluted earnings
per common share reflects the potential dilution that could result if securities
or other contracts to issue common stock were exercised or converted into common
stock.  Diluted  earnings per common share assumes the exercise of stock options
using the  treasury  stock  method and assumes  the  conversion  of  convertible
securities,  if any, using the "if converted"  method.  Historical  earnings per
common share have been restated to conform with the provisions of SFAS No. 128.

The computation of basic and diluted earnings per common share is as follows:


                                        For the Six Months  For the Three Months
                                         Ended 31 August     Ended 31 August
                                      -------------------  -------------------- 
(in thousands, except per share data)      1998      1997       1998        1997
- --------------------------------------------------------------------------------
Income applicable to common shares      $29,387   $22,411    $15,772     $12,365
                                        =======   =======    =======     =======


Weighted average common shares
outstanding -- basic                     18,669    18,665     18,589      18,559
Stock options                               499       337        462         403
                                         ------    ------     ------      ------
Weighted average common shares
outstanding -- diluted                   19,168    19,002     19,051      18,962
                                         ======    ======     ======      ======


Earnings per common share -- Basic      $  1.57   $  1.20    $  0.85     $  0.67
                                        =======   =======    =======     =======

Earnings per common share -- Diluted    $  1.53   $  1.18    $  0.83     $  0.65
                                        =======   =======    =======     =======

Note 7.   Summarised Financial Information -- Subsidiary Guarantors

The  subsidiary  guarantors  are  wholly  owned  and the  guarantees  are  full,
unconditional,   joint  and  several  obligations  of  each  of  the  subsidiary
guarantors.  Summarised financial  information for the subsidiary  guarantors is
set forth below.  Separate financial statements for the subsidiary guarantors of
the Company are not  presented  because  the  Company has  determined  that such
financial  statements  would  not  be  material  to  investors.  The  subsidiary
guarantors comprise all of the direct and indirect  subsidiaries of the Company,
other  than  the  nonguarantor  subsidiaries  which  individually,  and  in  the
aggregate, are inconsequential.  There are no restrictions on the ability of the
subsidiary  guarantors  to  transfer  funds to the  Company  in the form of cash
dividends  or  loan  repayments;   however,  except  for  limited  amounts,  the
subsidiary  guarantors  may not loan funds to the Company.  

The following  table presents  summarised  financial  information for subsidiary
guarantors in connection  with all of the  Company's  8.75% Senior  Subordinated
Notes:


                                                  31 August          28 February
(in US$ thousands)                                     1998                 1998
- --------------------------------------------------------------------------------
Balance Sheet Data:
  Current assets                                  $ 440,223            $ 460,618
  Noncurrent assets                               $ 394,917            $ 395,225
  Current liabilities                             $ 121,729            $ 102,207
  Noncurrent liabilities                          $  62,010            $  61,784



                                   For the Six Months       For the Three Months
                                     Ended 31 August           Ended 31 August
                                 ----------------------    ---------------------
(in US$ thousands)                  1998         1997        1998          1997
- --------------------------------------------------------------------------------
Income Statement Data:
  Net sales                        $552,352    $514,338    $289,774     $253,064
  Gross profit                     $122,885    $106,425    $ 64,673     $ 53,093
  Income before provision for 
  Federal and state income taxes   $ 50,451    $ 41,448    $ 27,406     $ 20,233
  Net income                       $ 29,766    $ 24,768    $ 16,221     $ 12,103


Note 8.   Accounting Pronouncement


In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  133  (SFAS  No.  133),   "Accounting  for
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  133  establishes


                                                                              53


accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred to as
derivatives)  and for  hedging  activities.  SFAS No.  133  requires  that every
derivative  be recorded  as either an asset or  liability  in the balance  sheet
measured  at  its  fair  value.  SFAS  No.  133  requires  that  changes  in the
derivative's  fair value be  recognised  currently in earnings  unless  specific
hedge  accounting  criteria are met.  Special  accounting for qualifying  hedges
allows a derivative's  gains and losses to offset related  results on the hedged
item in the income  statement,  and requires that a company  formally  document,
designate  and assess the  effectiveness  of  transactions  that  receive  hedge
accounting. The Company is required to adopt SFAS No. 133 on a prospective basis
for  interim  periods  and fiscal  years  beginning  1 March  2000.  The Company
believes  the  effect  of  adoption  on its  financial  statements  will  not be
material.


54


                APENDIX III   FURTHER INFORMATION ON MATTHEW CLARK
- --------------------------------------------------------------------------------


1.   Financial information

The  financial  information  contained in this  Appendix III relating to Matthew
Clark does not constitute  statutory  accounts within the meaning of section 240
of the Act but has been  summarised  and  extracted  from the audited  financial
statements of Matthew Clark for the three  financial  years ended 30 April 1998.
Matthew  Clark's  auditors for this period were KPMG for the year ended 30 April
1996 and KPMG Audit Plc thereafter.  The auditors have issued  unqualified audit
reports on the financial  statements for each of these three years in accordance
with section 235 of the Act. Copies of each of the statutory  accounts have been
delivered to the Registrar of Companies.

2.   Consolidated profit and loss account

The  following  table  sets out the  consolidated  profit and loss  accounts  of
Matthew  Clark for the  financial  years ended 30 April 1996,  1997 and 1998, as
derived from the published, audited accounts for those years:


Consolidated Profit and Loss Account            For the Years Ended 30 April
(in millions pounds sterling,                  -------------------------------
 except per share amounts)               Note      1998         1997      1996 1
- -------------------------------------------------------------------------------
Turnover                                    2     553.1        570.7     450.9
Operating costs                             3    (516.0)      (525.6)   (429.4)
                                                 ------       ------    ------ 

Operating profit                            4      37.1         45.1      21.5
Profit/(loss) on fixed asset sales          7       3.7          0.4      (2.0)
                                                 ------       ------    ------ 

Profit before interest and tax              2      40.8         45.5      19.5
Interest receivable                                 0.1          0.2       0.4
Interest payable and similar charges        8      (5.1)        (5.1)     (2.7)
                                                 ------       ------    ------ 

Profit on ordinary activities before tax    2      35.8         40.6      17.2
Tax on profit on ordinary activities        9     (10.5)       (12.4)     (5.0)
                                                 ------       ------    ------ 

Profit on ordinary activities after tax            25.3         28.2      12.2
Equity minority interests                           --           --       (0.1)
Dividends                                  10     (11.5)       (21.2)    (21.2)
                                                 ------       ------    ------ 

Retained profit/(loss) for the year        21      13.8          7.0      (9.1)
                                                 ======      =======     ======
Earnings per share                         11      28.6p        31.9p     18.4p
                                                 ======      =======     ======

1    Includes  exceptional items from  reorganisation as a result of integration
     of acquisitions (Note 4).  Pre-exceptional  items,  profit  attributable to
     ordinary  shareholders was 29.3m pounds sterling and earnings per share was
     44.4p.

There are no recognised gains or losses in any year other than the profit/(loss)
for the year.

See notes to the consolidated financial statements in Section 5 of this Appendix
III.


                                                                              55


3.   Consolidated balance sheets

The  following  table  sets  out  the  consolidated   group  balance  sheets  of
Matthew Clark as at 30 April 1998 and 1997 as derived from the published audited
consolidated accounts at those dates:

                                                                 30 April
                                                            --------------------
Consolidated Balance Sheets
(in millions sterling pound)                      Note       1998         1997 1
- --------------------------------------------------------------------------------
Fixed assets                                         
Intangible assets                                  12         9.7          9.7
Tangible assets                                    13        97.1         98.6
                                                            -----        -----
                                                            106.8        108.3
                                                            =====        =====


Current assets
Stocks                                             14        44.6         49.3
Debtors                                            15       115.7        123.7
Cash at bank and in hand                                     17.3          5.8
                                                            -----        -----
                                                            177.6        178.8
                                                            =====        =====


Creditors: amounts falling due within one year
Trade and other creditors                          16       105.2        116.3
Proposed dividend                                  10         7.1         13.3
Bank loans and overdrafts                                     --          56.4
                                                            -----        -----
                                                            112.3        186.0
                                                            =====        =====


Net current assets/(liabilities)
Amounts due within one year                                  44.4       (29.6)
Debtors due after more than one year               15        20.9         22.4
                                                            -----        -----
                                                             65.3        (7.2)
                                                            =====        =====

Total assets less current liabilities                       172.1        101.1
Creditors: amounts falling due after
more than one year                                 17        61.2          1.9
Provisions for liabilities and charges             18        15.5         17.6
                                                            -----        -----

Net assets                                          2        95.4         81.6
                                                            =====        =====

Capital and reserves
Called up share capital                            19        22.1         22.1
Share premium account                              21       105.5        105.5
Capital redemption reserve                         21         0.1          0.1
Profit and loss account                            21       (32.3)       (46.1)
                                                            -----        -----

Equity shareholders' funds                         22        95.4         81.6
                                                            =====        =====

1    As  restated  Note 1  (Goodwill)  

See notes to the consolidated financial statements in Section 5 of this Appendix
III.


56


4.   Consolidated cash flow statements

The following  table sets out the  consolidated  cash flow statements of Matthew
Clark for the financial  years ended 30 April 1998 and 1997, extracted  from the
published audited consolidated accounts for those years:


                                                             For the Years Ended
                                                                 30 April
Consolidated Statements of Cash Flow                      ----------------------
(in millions pounds sterling)                      Note      1998          1997
- --------------------------------------------------------------------------------
Cash inflow from operating activities               25       49.8          52.3
                                                            -----         -----
                                                           
Returns on investments and servicing of finance            
Interest received                                             0.1           0.2
Interest paid                                                (6.1)         (5.0)
Interest element of finance lease rental payments            (0.1)         (0.1)
                                                             ----          ---- 
                                                             (6.1)         (4.9)
                                                             ----          ---- 
Taxation paid                                                (7.5)         (7.0)
                                                             ----          ---- 
                                                           
Capital expenditure                                        
Purchase of tangible fixed assets                           (31.6)        (21.3)
Receipts from sale of fixed assets                           22.2           2.6
                                                             ----           ---
                                                             (9.4)        (18.7)
                                                             ----         ----- 
                                                           
Acquisitions                                                 (0.8)          0.3
                                                             ----           ---
Dividends paid                                              (17.7)        (21.2)
                                                            -----         ----- 
Cash inflow before financing                                  8.3           0.8
                                                             ----          ----
                                                           
Financing                                                  
Drawdown of committed loan                                   25.0          10.0
Issue of ordinary share capital                               --            0.6
Capital element of finance lease payment                     (0.4)         (0.2)
                                                            -----         ----- 
                                                             24.6          10.4
                                                            -----         ----- 
Increase in cash in the period                               32.9          11.2
                                                            =====         =====
Reconciliation of net cashflow to                          
movement in net debt                                       
Increase in cash in period                                   32.9          11.2
Cash inflow from increase in debt and 
leasing financing                                           (25.6)         (9.8)
                                                            -----         ----- 

Movement in net debt in the period                            7.3           1.4
Net debt at the start of the period                         (51.2)        (52.6)
                                                            -----         ----- 

Net debt at the end of the period                           (43.9)        (51.2)
                                                            =====         ===== 
Analysis of net debt
Cash at bank and in hand                                     17.3           5.8
Bank loans and overdrafts                                   (60.0)        (56.4)
Finance lease obligations                                    (1.2)         (0.6
                                                            -----         ----- 
                                                            (43.9)        (51.2)
                                                            =====         ===== 


See notes to the consolidated financial statements in section 5 of this Appendix
III.


                                                                              57


5.   Notes to the Consolidated Financial Statements

Note 1.   Accounting Policies

The accounts have been prepared under the historical cost convention,  using the
following  accounting  policies,  which have been applied consistently except as
noted  below under  'Goodwill'  and in  compliance  with  applicable  accounting
standards including Financial Reporting Standard 10. 

Basis of  consolidation:  The Group accounts  consist of a consolidation  of the
accounts of the Company with those of its subsidiary undertakings.  All accounts
are drawn up to 30 April. The acquisition method of accounting has been adopted.
Under this method, the results of acquired subsidiaries and other businesses are
included in the consolidated  profit and loss account from the date when control
passes. 

Goodwill:  During  the  year  Financial  Reporting  Standard  10  'Goodwill  and
intangible assets' was issued and is mandatory for periods ending on or after 23
December 1998. The Group has chosen to adopt the  requirements  of this standard
early. The Group's policy for acquisitions  which occurred prior to the issue of
the standard is that purchased  goodwill,  being the excess of the fair value of
consideration paid or payable over the fair value of the identifiable net assets
acquired, has been taken directly to reserves. On subsequent disposal,  goodwill
previously  taken  direct to reserves is included in  determining  the profit or
loss on disposal.  Previously,  such  goodwill was presented  separately  within
reserves  as a  'goodwill  write  off  reserve'.  This is not  permitted  by the
Standard  and,  accordingly,  goodwill  has been taken to merger  reserve to the
extent  available  (309.5m  pounds  sterling)  and  the  balance  (52.8m  pounds
sterling) taken to the profit and loss account reserve.  The  comparatives  have
been restated accordingly.

Turnover:  Turnover  consists  of the value of goods and  services  supplied  to
customers outside the Group, including duty and excluding VAT.  

Depreciation:  Depreciation  of fixed assets is provided on the original cost of
the Group or its  acquired  businesses  at rates  calculated  to write  down the
assets to their  estimated  residual  values on a  straight  line basis over the
total expected economic lives of the assets. The principal periods used are:



Freehold buildings                                                      50 years
Leasehold buildings                                              Length of lease
Plant and machinery                                                8 to 25 years
Computer equipment                                                  3 to 5 years
Motor vehicles                                                      4 to 7 years


Assets  in  the  course  of the  construction  are  not  depreciated.  They  are
transferred to the relevant  fixed asset category when they become  operational.
Freehold land is not depreciated.

Stocks:  Stocks  have been  valued at the lower of cost  (including  Customs and
Excise Duty where  incurred),  determined on a first in first out basis, and net
realisable value. In the case of beverages  produced by the Group, cost includes
direct  materials and labour  together with  appropriate  overheads  incurred in
bringing  the product to its  present  location  and  condition.  

Deferred tax:  Deferred tax is provided using the liability method in respect of
the tax effect of all timing  differences to the extent that it is probable that
liabilities or assets will crystallise in the future.

Foreign  currency:  Receipts  and  payments of foreign  currency are recorded at
actual rates obtained.  Foreign currency balances at the year end are translated
at the rate ruling at that date. All exchange differences are dealt with through
the profit and loss account.

Brand  valuation:  The cost of acquired  brands is  capitalised as an intangible
asset at the time of  acquisition.  No annual  amortisation is provided on these
assets  but the  directors  assess  the  value of the  brands  each year and any
permanent  diminution  in value is written  off to the profit and loss  account.

Leases:  Where the Group enters into a lease which entails taking  substantially
all the risks and rewards of  ownership  of an asset,  the lease is treated as a
'finance lease'.  The asset is recorded in the balance sheet as a tangible fixed
asset and is depreciated  over its estimated useful economic life or the term of
the lease,  whichever is shorter.  Future  instalments under such leases, net of
finance charges, are included within creditors.  Rentals payable are apportioned
between the finance  element,  which is charged to the profit and loss  account,
and the capital  element which  reduces the  outstanding  obligation  for future
instalments.  All other rentals  relating to assets held under operating  leases
are  charged to the profit  and loss  account on a straight  line basis over the
period of the  lease.  


58


Pension costs: Pension costs for the Group's defined benefit pension schemes are
charged against profits so as to spread the cost of pensions over the employees'
expected working lives within the Group.

Note 2.   Segmental Information

All turnover  and profit  originates  in the UK. There are no material  sales to
customers outside the UK.





                                        Branded drinks                 Wholesale                   Group
                                    ----------------------       --------------------     -------------------
Turnover                              1998            1997         1998          1997         1998       1997
(in millions pounds sterling)
- -------------------------------------------------------------------------------------------------------------
                                                                                       
Total                                343.5           367.0        225.2         215.1       568.7      582.1
Less intersegmental sales            (15.6)          (11.4)         --            --        (15.6)     (11.4)
                                     -----           -----        -----         -----       -----      ----- 
Sales to third parties               327.9           355.6        225.2         215.1       553.1      570.7
                                     =====           =====        =====         =====       =====      =====
Operating profit                      28.7            38.1          8.4           7.0        37.1       45.1
Profit on fixed asset disposals        3.7            --            --            0.4         3.7        0.4
                                      ----            ----         ----          ----        ----       ----
Profit before interest and tax        32.4            38.1          8.4           7.4        40.8       45.5
Net interest payable                                                                         (5.0)      (4.9)
                                                                                             ----       ---- 
Profit before tax                                                                            35.8       40.6
                                                                                             ====       ====
Net assets          
Segment net assets                   120.3           116.7         20.6          27.0        140.9     143.7
Unallocated net liabilities                                                                  (45.5)    (62.1)
                                                                                             -----     ----- 
Total net assets                                                                              95.4      81.6
                                                                                              ====      ====
Unallocated assets and liabilities consist of:                                               1998      1997
Cash at bank and in hand                                                                     17.3        5.8
Pension prepayment                                                                           19.0       19.1
Dividends payable                                                                            (7.1)     (13.3)
Finance lease liabilities and deferred consideration                                         (2.8)      (2.9)
Loans and overdrafts                                                                        (60.0)     (56.4)
Provisions                                                                                  (11.9)     (14.4)
                                                                                            -----      ----- 
                                                                                           (45.5)      (62.1)
                                                                                            =====      =====


Note 3.   Operating Costs




(in millions pounds sterling)                                 Note            1998         1997  
- -----------------------------------------                 ---------------------------------------
                                                                                     
Change in stocks of finished goods and                    
work in progress                                                               7.5          11.7
Raw materials, consumables and other                      
external charges (incl. duty)                                                466.2         474.6
Staff costs                                                     6             32.8          30.9
Depreciation and amounts written off                      
fixed asset investments                                        13              9.8           8.7
Royalties from overseas                                                       (0.3)         (0.3)
                                                                              ----         ---- 
                                                                             516.0         525.6
                                                                             =====         =====

                                                                              59


Note 4.   Operating Profit

(in millions pounds sterling)                                1998           1997
- --------------------------------------------------------------------------------
Operating profit is stated after charging/(crediting):
Operating lease charges:
 Plant and machinery                                          0.4           0.4
 Other                                                        1.7           1.4
Auditors' remuneration for audit services                     0.2           0.3
Loss on disposal of fixed assets                              3.6           2.9
Release  of  amounts  charged as exceptional 
costs in prior years no longer required                      (1.2)          ---
Exceptional write down of wine dispense 
equipment with customers                                      1.0           ---

Amounts payable to the auditors and their associates for non audit services were
0.1m pounds sterling (1997 -- 0.1m pounds sterling).

Exceptional items in the year ended 30 April 1996 were as follows:




                                                   Branded
                                                     Drinks            Wholesale
(in millions pounds sterling                       Division             Division       Total 1996
- -------------------------------------------------------------------------------------------------

                                                                                    
a) Reorganisation
   Employee severance and relocation costs              3.7                  3.6             7.3
   Stock write downs                                    1.5                  0.7             2.2
   Property, plant relocation and other costs           7.5                  5.4            12.9
                                                       ----                  ---            ----
                                                       12.7                  9.7            22.4
   Provision for loss on disposal of fixed assets       2.5                  0.2             2.7
                                                       ----                  ---            ----
                                                       15.2                  9.9            25.1
                                                       ====                  ===            ====


The reorganisation costs arose as a result of integration  programmes within the
divisions  following  acquisition of businesses.  The costs charged in 1996 were
net of a release of provisions of 2,249,000 pounds sterling  established in 1995
and which were no longer  required.  

The tax effect of exceptional items was a credit of 7.9m pounds sterling.

Note 5.   Directors' Interests

Directors'emoluments:



                                                                                         Total Emoluments 
                                                                 Cash Value of            (excluding pension
                                        Basic Salary            Benefits in Kind           contributions)
                                 -----------------------   -------------------------   ---------------------
(in thousands pounds sterling)    1997/98       1996/97       1997/98    1996/97         1997/98    1996/97
- ------------------------------------------------------------------------------------------------------------
                                                                                      
Peter Aikens                          230           230            14         14             244        244
Hugh Etheridge                        130           130            13         13             143        143
Peter Huntley                         119           130            10         11             129        141
Robert MacNevin                       128           --             18         --             146         --
Kevin Philp                           100           --              6         --             106         --
Martin Boase                           21            21            --         --              21         21
Michael Garner                         21            40            --         --              21         40
Graham Wilson                          60           --             --         --              60         --
Andrew Nash                           --            130            --         12              --        142
Former directors                      --             67            --          6              --         73
                                      ---           ---            --         --             ---        ---
                                      809           748            61         56             870        804
                                     ====          ====          ====       ====            ====       ====


On 19 March 1998 the sum of 110,000 pounds sterling was paid to Peter Huntley by
way of compensation  for the termination of his employment with the Company.  On
12 May 1997 the sum of 177,630 pounds sterling was paid to Andrew Nash (a former
director) by way of compensation  for the termination of his employment with the
Company.


60


Directors'  pension  contributions:  Directors  who were  members of the Matthew
Clark Executive Pension Plan had benefits as follows:
                                                                      

                                                                      

                                 Increase in             Transfer     Contributions          Increase              Accumulated
                             Accrued Pension             Value of     by Individual      Attributable          Accrued Pension
                             During the Year         the Increase          Director        to Company              at Year End
                         pounds sterling p.a.     pounds sterling   pounds sterling   pounds sterling     pounds sterling p.a.
- ------------------------------------------------------------------------------------------------------------------------------
                                                                                                            
Hugh Etheridge                          3,036              35,000             4,200            30,800                   20,672
Robert MacNevin                         2,920              24,056             4,200            19,856                    2,920
Kevin Philp                             1,585              13,618             4,908             8,710                   32,463
                                                                                                              


Contributions to Personal Pension schemes:



                                                  Contributions to Personal
                                                         Pension Plans
(in thousands pounds sterling)                        1997/98     1996/97
- --------------------------------------------------------------------------

Peter Aikens                                                83          83
Peter Huntley                                               35          37
Andrew Nash                                                 --          39
Hugh Etheridge                                              13          14
Robert MacNevin                                             10          --
                                                                

Contributions  in  respect  of Peter  Aikens  and  Peter  Huntley  were to their
respective  personal  pension  plans up to the maximum  permitted  under  Inland
Revenue rules. The element of contributions in excess of Inland Revenue rules is
paid into a Funded Unapproved  Retirement Benefit Scheme for the benefit of each
individual. 

Directors' beneficial interest in shares:

                                                     30 April 1998    1 May 1997
- --------------------------------------------------------------------------------
Peter Aikens                                               *79,467        71,267
Hugh Etheridge                                             *31,591        28,891
Peter Huntley                                                --           29,391
Robert MacNevin                                              --             --
Kevin Philp                                                  5,000         5,000
Martin Boase                                                10,000        10,000
Michael Garner                                              10,000        10,000
Graham Wilson                                               10,000        10,000
                                                  

*Note: A number of these shares were purchased from bonus paid under the Capital
Incentive  Scheme which imposes a minimum period before such shares may be sold.
Details are provided below:



                                                      Shares to be  Shares to be
                                                        Held Until    Held Until
                                                              1998          1999
- --------------------------------------------------------------------------------
Peter Aikens                                                 8,227         9,715
Hugh Etheridge                                               4,775         5,675

There were no changes between 30 April 1998 and 6 July 1998.



                                                                              61


Directors' share options:



                                                                        Date from which
                        1 May 1997     30 April 1998    Exercise Price      Exercisable   Expiry Date
- -----------------------------------------------------------------------------------------------------
                                                                                   
Peter Aikens                52,652            52,652              331p             1996          2003
                            24,723            24,723              566p             1997          2004
                            56,811            56,811              561p             1997          2004
                            59,000            59,000              662p             1998          2005
                            ------            ------
                           193,186           193,186
                           =======           =======

Hugh Etheridge              24,723            24,723              566p             1997          2004
                            18,937            18,937              561p             1997          2004
                            33,000            33,000              662p             1998          2005
                            ------            ------
                            76,660            76,660
                           =======           =======

Robert MacNevin               ---             40,000            247.5p             2000          2007
                           =======           =======

Kevin Philp                 21,041            21,041              566p             1997          2004
                            10,521            10,521              523p             1997          2004
                            10,000            10,000              555p             1998          2005
                             2,000             2,000              662p             1998          2005
                             2,000             2,000              680p             1999          2006
                              ---             60,000            247.5p             2000          2007
                            ------            ------
                            45,562           105,562
                           =======           =======




At 30 April 1998, the Company's  share price was 201.5p.  The highest and lowest
share prices  during the year were 277.5p and 162.5p  respectively.  Exercise of
the above options was not conditional upon any performance criteria.

All options were granted for nil consideration.

Note 6.   Staff Numbers and Costs

The average number of people employed by the Group, including directors,  within
each category of activity was:

(number of people)                                           1998          1997
- -------------------------------------------------------------------------------
Production staff                                              471           516
Sales, marketing and distribution staff                       883           792
Administration staff                                          268           270
                                                              ---           ---
                                                            1,622         1,578
                                                            =====         =====

The aggregate payroll costs of these persons were as follows:

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Wages and salaries                                           30.2          28.6
Social security costs                                         2.4           2.4
Other pension costs                                           0.2          (0.1)
                                                             ----          ---- 
                                                             32.8          30.9
                                                           ======        ======

Note 7.   Profit/(loss) on Fixed Asset Sales

The profit on fixed asset sales comprises:

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Profit on property sales                                      4.2           0.4
Provision for loss on plant and machinery sales              (0.5)          ---
                                                             ----          ---- 
                                                              3.7           0.4
                                                            ======       ======

The tax charge for the year includes 1.2m pounds sterling in respect of property
sales.


62



Note 8.   Interest Payable and Similar Charges

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Bank interest and interest on loans repayable 
within 5 years                                                5.0           4.9
Finance charges on finance leases                             0.1           0.1
Other                                                         ---           0.1
                                                             ----          ---- 
                                                              5.1           5.1
                                                             ====          ====

In addition interest  capitalised into tangible fixed assets during the year was
0.6m pounds sterling  (1997 Nil pounds sterling).

Note 9.   Tax on Profit on Ordinary Activities

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
The charge in the profit and loss account consists of:
 Corporation tax at 31% (1997 -- 33%)                        14.9           7.6
 Deferred tax -- effect of change in rate from 33% to 30%    (0.9)          ---
 Deferred tax -- other                                       (3.5)          4.8
                                                             ----          ---- 
                                                             10.5          12.4
                                                             ====          ====

The deferred tax provision/(asset) represents:
 Excess of capital allowances over depreciation              (1.4)          6.6
 Unutilised losses                                            ---          (1.3)
 Pensions timing differences                                  5.7           6.3
 Other timing differences                                    (0.7)         (3.6)
 Offset of ACT recoverable                                    ---          (4.8)
                                                             ----          ---- 
                                                              3.6           3.2
                                                             ====          ====

Full provision has been made for deferred tax except for a deferred tax asset of
0.1m pounds  sterling  (1997 -- 0.2m pounds  sterling)  on the excess of capital
allowances over depreciation.

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Deferred tax
 At the beginning of the year                                 3.2          (0.4)
 ACT and losses transferred to/(from) corporation tax         4.8          (2.9)
 Adjustment to fair value                                     ---           1.7
 Deferred tax (credit)/charge to profit and loss account     (4.4)          4.8
                                                             ----           ---

At the end of the year                                        3.6           3.2
                                                             ====          ====

Note 10. Dividends


                                           1998        1997      1998       1997
                                          Pence       Pence  m pounds   m pounds
Dividends paid or proposed:           per share   per share  sterling   sterling
- --------------------------------------------------------------------------------
Ordinary shares
 Interim dividend paid of                   5.0         9.0       4.4        7.9
 Proposed final dividend of                 8.0        15.0       7.1       13.3
                                           ----        ----      ----       ----
Total                                      13.0        24.0      11.5       21.2
                                          =====       =====     =====      =====
Gross equivalent per share                16.25        30.0      
                                          =====       =====

Note 11   Earnings Per Share

The  calculation  of  earnings  per share is based on a profit  of 25.3m  pounds
sterling and 88,520,498 shares, being the weighted average number in issue (1997
- -- profit  28.2m  pounds  sterling  and  88,469,740  shares in issued).  A fully
diluted  earnings  per share figure based on share  options  outstanding  is not
provided as the effect on earnings per share is not material.



                                                                              63


Note 12.  Intangible Assets

Group                                                          m pounds sterling
- --------------------------------------------------------------------------------
Cost and net book value of Strathmore brand
As at 30 April 1998 and 30 April 1997                                        9.7
                                                                            ====

Note 13.  Tangible Assets





                                        Land and Buildings                        Plant      Fixtures,
                                -------------------------------      Assets    Machinery     Fittings,
Group                                         Long      Short         Under          and     Tools and
(in millions pounds sterling)   Freehold Leasehold  Leasehold  Construction     Vehicles     Equipment     Total
- ----------------------------------------------------------------------------------------------------------------

                                                                                        
Cost
At 30 April 1997                    29.1       2.0        0.9           4.7        110.3          11.7     158.7
Additions                            1.2       0.7        0.3          14.2         12.2           2.5      31.1
Reclassifications                   16.1      (0.1)       ---         (18.3)         1.7           0.6       ---
Disposals                          (22.2)     (1.3)       ---           ---         (8.9)         (2.8)    (35.2)
                                   -----     -----      -----         -----        -----         -----     ----- 

At 30 April 1998                    24.2       1.3        1.2           0.6        115.3          12.0     154.6
                                   -----     -----      -----         -----        -----         -----     ----- 
Depreciation        
At 30 April 1997                     7.6       0.7        0.2           ---         43.8           7.8      60.1 
Charged in the year                  0.4       ---        ---           ---          8.2           1.2       9.8
Disposals                           (5.2)     (0.4)       ---           ---         (4.2)         (2.6)    (12.4)
                                   -----     -----      -----         -----        -----         -----     ----- 
At 30 April 1998                     2.8       0.3        0.2           ---         47.8           6.4      57.5 
                                   -----     -----      -----         -----        -----         -----     ----- 
Net book amounts:   
At 30 April 1997                    21.5       1.3        0.7           4.7         66.5           3.9      98.6
At 30 April 1998                    21.4       1.0        1.0           0.6         67.5           5.6      97.1
                                   =====     =====      =====         =====        =====         =====     =====


Included  within the  depreciation  charge for the year for plant  machinery and
vehicles of 8.2m pounds  sterling is an  exceptional  write-down  of 1.0m pounds
sterling of wine  dispensing  equipment  with  customers.  

The net book value of assets held under finance  leases  within plant  machinery
and vehicles as at 30 April 1998 was 1.1m pounds  sterling  (1997 -- 0.9m pounds
sterling).  Depreciation  on assets held under  finance  leases  during the year
ended 30 April 1998 was 0.2m pounds  sterling  (1997 -- 0.4m  pounds  sterling).
Freehold land and buildings  includes 4.6m pounds  sterling (1997 -- 4.6m pounds
sterling) in respect of land.

Note 14.  Stocks

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Raw materials and consumables                                 8.7           5.9
Work in progress                                              7.3           9.7
Finished goods for resale                                    28.6          33.7
                                                             ----          ----
                                                             44.6          49.3
                                                             ====          ====

Note 15.  Debtors

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Amounts failing due within one year:
Trade debtors                                                83.3          91.2
ACT recoverable                                               ---           1.7
Other debtors                                                 6.4           4.9
Prepayments and accrued income                                5.1           3.5
                                                             ----          ----
                                                             94.8         101.3
                                                             ====         =====

Amounts falling due after more than one year:
ACT recoverable                                               1.9           3.3
Pension prepayment                                           19.0          19.1
                                                             20.9          22.4
                                                             ----          ----
                                                            115.7         123.7
                                                            =====         =====

64



Note 16.  Creditors: Amounts Falling Due Within One Year

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Trade and other creditors          
Trade creditors                                              52.0          52.8
Corporation tax                                               4.7           2.9
Other tax, including social security and ACT payable         10.4          12.3
Finance lease obligations less than one year (note 17)        0.4           0.4
Other creditors, including deferred duty                     11.0          12.5
Accruals and deferred income                                 26.7          35.4
                                                             ----          ----
                                                            105.2         116.3
                                                            =====         =====

Note 17.  Creditors: Amounts Falling Due After More Than One Year

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Bank loans and overdrafts (unsecured)                        60.0           ---
Obligations under finance leases                              0.8           0.2
Deferred purchase consideration                               0.4           1.7
                                                             ----          ----
                                                             61.2           1.9
                                                             ====           ===

The deferred purchase consideration of 0.4m poounds sterling in the current year
is in addition to 1.2m pounds  sterling (1997 - 0.6m pounds  sterling)  included
within other creditors due in less than one year and relates to the acquisitions
of Dunn & Moore and  Liddingtons  and is related to future  profits.  The amount
provided  represents both the current best estimate of the amount payable in due
course, and the maximum amount payable.

The maturity of net obligations under finance leases and hire purchase contracts
is as follows:

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Within one year                                               0.4           0.4
In the second to fifth years                                  0.4           0.2
Over five years                                               0.4           ---
                                                             ----          ----
                                                              1.2           0.6
                                                              ===           ===

Note 18.  Provisions for Liabilities and Charges

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Deferred tax (see note 9)                                     3.6           3.2
Provisions                                                   11.9          14.4
                                                             ----          ----
                                                             15.5          17.6
                                                             ====          ====

Provisions
At the beginning of the year                                 14.4          17.5
Transfer to creditors                                         ---          (0.4)
Release to profit and loss account within 
exceptional item                                             (1.0)          ---
Used during the year                                         (1.5)         (2.3)
Released to goodwill                                          ---          (0.4)
                                                             ----          ----

At the end of the year                                       11.9          14.4
                                                             ====          ====

Provisions primarily relate to surplus property costs. 

The Group has a number of freehold and leasehold properties which are surplus to
operational  requirements.  Provision  has been  made  for  future  fixed  costs
associated with these  properties for the period up to their expected  disposal.
To the extent that these  properties are disposed of earlier than  anticipated a
benefit will arise;  conversely if the properties are not disposed of within the
anticipated period a contingent liability exists for the ongoing fixed costs.


                                                                              65


Note 19.  Share Capital




                                              4.9 per cent Cumulative 
                                              Redeemable  Preference                
                                           Shares of 1 pound sterling           Ordinary Shares of 25p
                                                    each                                 each                           Total
                                           -----------------------------      ---------------------------    ----------------
Authorised:                                  Number    m pounds sterling       Number   m pounds sterling    m pounds sterling
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                    
As at 30 April 1997 and 30 April 1998       260,000         0.3           117,920,000       29.5                 29.8
Allotted, called up and fully paid
In issue as at 30 April 1997 
and 30 April 1998                               ---         ---            88,520,498       22.1                 22.1



During the year no ordinary  shares were issued under the share  option  schemes
(1997 -- 217,240  shares  were issued for a total  consideration  of 0.6m pounds
sterling)

Note 20.  Share Options

Savings  related share option  scheme:  Employees and directors in the UK with a
minimum of two years'  service  were  entitled  to apply for  options to acquire
ordinary shares at 100% (1997 -- 100%) of the average of the middle market price
on the three dealing days immediately  preceding the date of the invitation.  

At 30 April 1998 options  granted and  outstanding  under employee share schemes
amounted to 458,102  ordinary  shares.  These options are exercisable at varying
dates up to 2002 at prices  ranging  from 2.92  pounds  sterling  to 5.26 pounds
sterling per share. During the year the Company issued no ordinary shares under
the employee share schemes.

Executive share option scheme:  Under the Company's  executive  scheme the board
may offer options to executives,  whose performance contributes significantly to
the Company's results, at the middle market price on the dealing day immediately
preceding the date of the grant of the option.

At 30 April 1998 options exercisable were as follows:       Price per  Number of
Options exercisable between:                                    Share     Shares
- --------------------------------------------------------------------------------
15 March 1992 and 14 March 1999                                  338p      1,300
22 June 1996 and 21 June 2003                                    331p     65,652
20 January 1997 and 19 January 2004                              566p    123,089
11 July 1997 and 10 July 2004                                    523p     50,497
17 October 1997 and 16 October 2004                              561p     93,633
16 January 1998 and 15 January 2005                              555p     61,000
20 July 1998 and 19 July 2005                                    628p     13,000
10 November 1998 and 9 November 2005                             662p    106,000
16 January 1999 and 15 January 2006                              680p     43,000
28 January 2000 and 27 January 2007                            296.5p    203,000
25 July 2000 and 24 July 2007                                  247.5p    580,000
8 January 2001 and 7 January 2008                                163p    225,000

During the year the Company issued no ordinary  shares under the executive share
option schemes. 

Note 21.   Reserves




                                                          Capital                Goodwill    Profit and
                                             Share     Redemption     Merger    Write-off          Loss
(in millions pounds sterling)              Premium        Reserve     Reserve     Reserve       Account
- -------------------------------------------------------------------------------------------------------
                                                                                   
As at 30 April 1997 and 30 April 1998        105.5            0.1       309.5      (362.3)          6.7
Prior year adjustment (note 1 ('Goodwill'))    ---            ---      (309.5)      362.3         (52.8)
                                             -----           ----      ------       -----          ---- 

At 30 April 1997 as restated                 105.5            0.1         ---         ---         (46.1)
Retained profit for the year                   ---            ---         ---         ---          13.8
                                             -----           ----      ------       -----          ---- 

At 30 April 1998                             105.5            0.1         ---         ---         (32.3)
                                             =====           ====       =====      ======         ===== 



The  Cumulative  amount of goodwill  written  off to  reserves is 362.3m  pounds
sterling (1997 -- 362.3m pounds sterling).


66



Note 22.  Reconciliations of Movements in Shareholders' Funds

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Opening shareholders' funds                                  81.6          71.9
                                                             ----          ----

Profit for the year                                          25.3          28.2
Dividends paid and proposed                                 (11.5)        (21.2)
                                                            -----         ----- 

Retained profit for the year                                 13.8           7.0
New share capital subscribed                                  ---           0.6
Goodwill adjustment                                           ---           2.1
                                                             ----          ----

Net addition to the shareholders' funds                      13.8           9.7
                                                             ----           ---

Closing shareholders' funds                                  95.4          81.6
                                                             ====          ====

Note 23.  Financial and Capital Commitments

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Contracted commitments for capital expenditure                2.2          11.8
                                                             ====          ====

                                             1998                     1997
                                 ----------------------   ----------------------
(in millions pounds sterling)       Land and                 Land and 
                                   Buildings      Other     Buildings      Other
- --------------------------------------------------------------------------------

Annual commitments under 
operating leases which expire
Within one year                          ---        ---           0.1       0.1
In the second to fifth years inclusive   0.1        0.6           ---       0.1
Over five years                          2.9        ---           2.3       0.3
                                        ----       ----          ----      ----
                                         3.0        0.6           2.4       0.5
                                        ====       ====          ====      ====

The Group had 9.8m pounds sterling (1997 -- 5.0m pounds sterling) of commitments
under forward currency contracts 30 April 1998.

Note 24.  Pensions

The Company and its  subsidiaries  currently  operate  two  Pension  Plans,  the
Matthew Clark  Group Pension Plan and the  Matthew Clark Executive Pension Plan.
These  Plans  are of the  defined  benefit  type  with  assets  held in  Trustee
administered funds separate from the Company's finances.  In addition, a further
Plan was acquired with the acquisition of Taunton Cider.  This Scheme was merged
with the Matthew Clark Group Pension Plan on 1 April 1997.

Actuarial  valuations of the  Matthew Clark Group Pension Plan have been carried
out by  independent  actuaries as at 1 January  1996.  The funding  level of the
combined  Plans on the  assumptions  stated below as at 1 January 1996 was 141%.
The combined market value of the assets at 1 January 1996 was  approximately 92m
pounds  sterling.  The pension cost is assessed in  accordance  with a qualified
actuary's  advice.  The  Actuary has  considered  the  long-term  effects of the
removal of ACT relief  for  pension  funds on the level of funding of the Plans.
The increase in the pension expense is not significant.

The assumptions adopted for the purposes of SSAP 24 were as follows:

Long-term investment return        9.00%
Salary escalation                  6.00%


Pension  increases were allowed for in accordance with the Rules of the Plan and
the past practice of granting  discretionary  increases.  Assets were taken into
account at 94.6% of their market value.

On a  discontinuance  of either of the  Plans,  the  market  value of the assets
exceeded the cost of securing the liabilities at the appropriate valuation date,
assuming that cash equivalent  transfer values were paid in respect of active or
deferred members.


                                                                              67



Note 25.  Reconciliation of Operating Profit to Operating Cashflows

(in millions pounds sterling)                                1998          1997
- -------------------------------------------------------------------------------
Operating profit                                             37.1          45.1
Depreciation charges                                          9.8           8.7
Loss on disposal and write-off of tangible fixed assets       3.6           2.9
Cashflow relating to previous year's 
restructuring provisions                                     (4.5)        (11.2)
Decrease in stocks                                            4.7          11.7
Decrease in debtors                                           5.4          13.6
Decrease in creditors and provisions                         (6.3)        (18.5)
                                                            -----         ----- 

Net cash inflow from operating activities                    49.8          52.3
                                                            =====         =====


68


                       APPENDIX IV   ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

1.   Directors' responsibilities

The directors of Canandaigua and Canandaigua Limited, whose names are set out in
paragraph 2(a) below,  accept  responsibility  for the information  contained in
this document other than that relating to the Matthew Clark Group, the directors
of  Matthew  Clark,  members of their  immediate  families,  related  trusts and
persons  connected  with them.  To the best of the  knowledge  and belief of the
directors of Canandaigua and Canandaigua  Limited (who have taken all reasonable
care to ensure that such is the case) the information contained in this document
for which they are responsible is in accordance with the facts and does not omit
anything likely to affect the import of such information.

The directors of Matthew Clark, whose names are set out in paragraph 2(b) below,
accept responsibility for the information contained in this document relating to
the Matthew  Clark  Group,  the  directors  of Matthew  Clark,  members of their
immediate families,  related trusts and persons connected with them. To the best
of the  knowledge  and belief of the  directors of Matthew Clark (who have taken
all reasonable care to ensure that such is the case) the  information  contained
in this document for which they are  responsible is in accordance with the facts
and does not omit anything likely to affect the import of such information.

2.   Directors of Canandaigua, Canandaigua Limited and Matthew Clark

(a)  (i)  The  directors  of  Canandaigua  and their  functions  are as follows:
          Marvin Sands  (Chairman)  
          Richard Sands  (President and Chief  Executive  Officer)  
          Robert Sands (Executive Vice President, General Counsel and Secretary)
          Bertram  Silk  (Executive  Director)  
          George  Bresler   (Non-Executive Director) 
          James Locke (Non-Executive  Director) 
          Thomas McDermott  (Non-Executive  Director) 
          Paul  Smith   (Non-Executive   Director)  

     The principal  office of  Canandaigua  is at 300  WillowBrook  Office Park,
     Fairport, NY 14450, United States.

     (ii) The  directors of  Canandaigua  Limited are as follows:  
          Richard  Sands  
          Robert Sands
          Thomas Summer 

     The registered  office of Canandaigua  Limited,  whose registered number is
     3649497, is at 200 Aldersgate Street,  London EC1A 4JJ. Canandaigua Limited
     is a limited  liability  company  incorporated on 14 October 1998 under the
     Act. Its  authorised  share capital is 100 pounds  sterling  comprising 100
     ordinary  shares of 1 pound  sterling  each.  Its issued share capital is 1
     pound  sterling  comprising 1 ordinary  share of 1 pound  sterling  held by
     Canandaigua.  The Offeror has been  specifically  formed for the purpose of
     making  the  Offer.  Other  than in  connection  with  making the Offer the
     Offeror  has not  traded or  otherwise  carried on any  activity  since its
     incorporation and no accounts of the Offeror have been prepared.

(b)  The  directors of Matthew  Clark and their  functions  are:  
     Graham  Wilson (Chairman)  
     Peter Aikens  (Chief  Executive)  
     Martin  Boase  (Non-Executive Director) 
     Hugh Etheridge (Finance  Director) 
     Michael Garner  (Non-Executive Director) 
     Robert MacNevin  (Marketing  Director) 
     Richard Peters (Production and Distribution Director) 
     Kevin Philp (Managing Director,  On-Trade Sales)

     The registered office of Matthew Clark,  whose registered number is 163952,
     is at Whitchurch Lane, Bristol BS14 0JZ.


                                                                              69



3. Shareholdings and dealings

(a)  Definitions  and  references  

References  in this  Appendix  IV to:  

     (i)  an "associate" are to:

          (1)  subsidiaries and associated  companies of Canandaigua Limited or,
               as the case may be, Matthew Clark and companies of which any such
               subsidiaries or associated companies are associated companies;

          (2)  banks,  financial  and  other  professional  advisers  (including
               stockbrokers)  to  Canandaigua  Limited  or,  as the case may be,
               Matthew  Clark  or a  company  covered  in (1)  above,  including
               persons  controlling,  controlled by or under the same control as
               such banks, financial or other professional advisers;

          (3)  the  directors  of  Canandaigua  Limited  or, as the case may be,
               Matthew  Clark or any company  covered in (1) above  (together in
               each case with their close relatives and related trusts);

          (4)  the pension funds of Canandaigua  Limited or, as the case may be,
               Matthew Clark or a company covered in (1) above; and

          (5)  an  investment   company,   unit  trust  or  other  person  whose
               investments   an  associate   (as   otherwise   defined  in  this
               sub-paragraph  (i)) manages on a discretionary  basis, in respect
               of the relevant investment accounts;

     (ii) a  "bank"  does not  apply  to a bank  whose  sole  relationship  with
          Canandaigua   Limited  or  Matthew  Clark  or  a  company  covered  in
          sub-paragraph  (i)(1)  above is in respect of the  provision of normal
          commercial  banking services or such activities in connection with the
          Offer as confirming that cash is available,  handling  acceptances and
          other registration work;

     (iii)ownership  or  control  of 20 per cent.  or more of the  equity  share
          capital of a company is  regarded  as the test of  associated  company
          status and "control" means a holding, or aggregate holdings, of shares
          carrying 30 per cent. or more of the voting rights attributable to the
          share  capital  of a company  which  are  currently  exercisable  at a
          general  meeting,  irrespective  of whether  the  holding or  holdings
          give(s) de facto control; 

     (iv) an "arrangement"  includes any indemnity or option arrangement and any
          agreement or  understanding,  formal or informal,  of whatever  nature
          relating to relevant  securities which may be an inducement to deal or
          refrain from dealing;  

     (v)  "relevant  securities"  means  Matthew  Clark  Shares  and  securities
          convertible into,  rights to subscribe for, options  (including traded
          options) in respect of and  derivatives  referenced  to Matthew  Clark
          Shares;

     (vi) "disclosure  period"  means the period  commencing  on 22 October 1997
          (being  the date 12  months  prior to the  commencement  of the  Offer
          period)  and ended on 30 October  1998 (the  latest  practicable  date
          prior to the  printing of this  document);  and 

     (vii)"Offer  period"  means the period  commencing  on 22 October 1998 (the
          date of the  announcement  by Matthew Clark that it was in discussions
          which  may or may not lead to an  offer  for the  whole of the  issued
          share capital of Matthew  Clark) and ending on 24 November 1998 or, if
          later, the date when the Offer becomes or is declared unconditional as
          to acceptances  or lapses  (whichever is the later).  

(b)  Canandaigua Limited

     (i)  As at 30  October  1998  (the  latest  practicable  date  prior to the
          printing of this  document) and save as disclosed in this paragraph 3,
          neither of Canandaigua  nor Canandaigua  Limited owns,  controls or is
          interested,  directly  or  indirectly,  in or has any  arrangement  in
          relation to any  relevant  securities  or has dealt for value  therein
          during the disclosure  period.  

     (ii) As at 30  October  1998  (the  latest  practicable  date  prior to the
          printing of this  document) and save as disclosed in this paragraph 3,
          no member of the Canandaigua  Group,  nor any person acting in concert
          with Canandaigua Limited for the purposes of the Offer, nor any of the
          directors of  Canandaigua or  Canandaigua  Limited,  nor any member of
          their  immediate  families  or related  trusts  owns,  controls  or is
          interested,  directly or indirectly,  in or (other than in the case of
          the directors of  Canandaigua  Limited and members of their  immediate
          families and related  trusts) has any  arrangement  in relation to any
          relevant  securities  or  has  dealt  for  value  therein  during  the
          disclosure period. 


70



     (iii)As at 30  October  1998  (the  latest  practicable  date  prior to the
          printing of this  document) and save as disclosed in this paragraph 3,
          neither  Schroders,   financial  adviser  and  broker  to  Canandaigua
          Limited,  nor  persons  controlling,  controlled  by or under the same
          control as Schroders,  owns,  controls or is  interested,  directly or
          indirectly,  in any relevant securities or has dealt for value therein
          during the disclosure period. 

     (iv) Irrevocable  undertakings  to accept or to procure  acceptance  of the
          Offer have been received from the following  persons in respect of the
          following  holdings  of Matthew  Clark  Shares  and,  where  relevant,
          Matthew Clark Shares held under option:



          Name                                             Number of issued     Number of Matthew Clark
                                                       Matthew Clark Shares         Shares under option
          ---------------------------------------------------------------------------------------------
                                                                                             
          Graham Wilson                                              10,000                        ---
          Peter Aikens                                                8,200                    193,186
          Mrs D B Aikens                                             71,267                        ---
          Martin Boase                                               10,000                        ---
          Hugh Etheridge                                              4,200                     76,660
          Mrs J Etheridge                                            27,391                        ---
          Michael Garner                                             10,000                        ---
          Robert MacNevin                                               ---                     40,000
          Richard Peters                                              1,831                     65,521
          Kevin Philp                                                 5,000                    105,562
          Phillips & Drew Fund Management Limited                18,215,680                        ---
          Schroder Investment Management (UK) Limited             2,741,661                        ---
          Edinburgh Fund Managers plc                             2,382,730                        ---
          AMP Asset Management plc                                1,026,392                        ---
                                                  


          In all cases the  undertakings  given are in respect of such  persons'
          entire holding of issued  Matthew Clark Shares and entire  entitlement
          to Matthew  Clark  Shares  held under  option  with the  exception  of
          Phillips & Drew Fund  Management  Limited where the  undertaking is in
          respect of  18,215,680  Matthew  Clark Shares of the total  19,154,024
          Matthew Clark Shares in which Phillips & Drew Fund Management  Limited
          is  interested.  The  terms of the  irrevocable  undertakings  require
          acceptance of the Offer even if a competing or higher offer is made by
          a third party except that irrevocable  undertakings  from shareholders
          (other than directors and certain members of their immediate families)
          cease to be binding if a competing  or higher offer is made by a third
          party at, or in excess of, 267 pence per Matthew Clark Share.

     (v)  The  following  dealings for value in Matthew  Clark Shares by persons
          who have given  irrevocable  undertakings  have taken place during the
          disclosure period:

          (1)  The  following  dealings  for value in Matthew  Clark Shares have
               been  carried  out by  Phillips  & Drew Fund  Management  Limited
               during the disclosure period  (individual  transactions have been
               aggregated by month):



                                                        Number of           Price Range per 
                Date/Period          Transaction   Matthew Clark Shares    Matthew Clark Share (p)
- --------------------------------------------------------------------------------------------------
                                                                              
               23 October 1997       Purchase                 1,767,100                      257.5
               23 October 1997       Sale                     1,767,100                      257.5
               9-17 December 1997    Purchase                   306,760                  181-185.5
               9-16 December 1997    Sale                       289,369                  181-185.5
               6-26 January 1998     Purchase                   101,021                  162.5-164
               6-26 January 1998     Sale                       101,021                  162.5-164
               9-27 February 1998    Purchase                    32,400                    180-194
               9-27 February 1998    Sale                        32,400                    180-194
               2 March 1998          Purchase                    10,900                        194
               2 March 1998          Sale                        10,900                        194
               21 April 1998         Purchase                    39,300                        199
               21-24 April 1998      Sale                       177,230                  199-200.5
               5 May 1998            Purchase                    12,000                      201.5
               5-22 May 1998         Sale                        27,000                201.5-212.5
               2-23 June 1998        Purchase                    87,042                    194-199
               2-23 June 1998        Sale                        65,019                    194-199
               1-31 July 1998        Purchase                    74,922                  183-187.5
               1-31 July 1998        Sale                       416,130                  183-187.5
               25 August 1998        Sale                        23,519                      167.5

       

                                                                              71


          (2)  The  following  dealings  for value in Matthew  Clark Shares have
               been carried out by Schroder  Investment  Management (UK) Limited
               during the disclosure period  (individual  transactions have been
               aggregated by month):


                                                        Number of           Price Range per 
                Date/Period          Transaction   Matthew Clark Shares    Matthew Clark Share (p)
- --------------------------------------------------------------------------------------------------
                                                                                
               12 January 1998       Internal transfer            3,750                      163.5
               27 January 1998       Sale                         3,750                      160.8
               13-25 February 1998   Purchase                   243,000                190.6-191.5
               13-23 March 1998      Sale                       195,075                204.4-205.4
               20 March 1998         Internal transfer              238                      207.5
               25 March 1998         Purchase                    15,000                      210.7
               24 April 1998         Purchase                    25,100                      202.6
               12 May 1998           Sale                         1,100                      201.6
               7-23 July 1998        Purchase                   440,592                196.6-201.6
               17 July 1998          Internal transfer           24,000                      197.5
               29 July 1998          Sale                        24,000                      184.4
               20 August 1998        Purchase                    16,000                      180.1


          (3)  The  following  dealings  for value in Matthew  Clark Shares have
               been  carried  out by  Edinburgh  Fund  Managers  plc  during the
               disclosure period:



                                                        Number of           Price Range per 
                Date/Period          Transaction   Matthew Clark Shares    Matthew Clark Share (p)
- --------------------------------------------------------------------------------------------------
                                                                                    
               18 December 1997      Sale                         8,189                      278.9



          (4)  The  following  dealings  for value in Matthew  Clark Shares have
               been  carried  out  by  AMP  Asset   Management  plc  during  the
               disclosure period  (individual  transactions have been aggregated
               by month):



                                                        Number of           Price Range per 
                Date/Period          Transaction   Matthew Clark Shares    Matthew Clark Share (p)
- --------------------------------------------------------------------------------------------------
                                                                                  
               1 October 1997        Purchase                     2,586                        252
               5 November 1997       Sale                        13,720                        243
               17 November 1997      Purchase                     7,824                        228
               13 March 1998         Purchase                     4,772                        211
               18-25 March 1998      Sale                           956                        207
               3 April 1998          Purchase                     9,280                        213
               17 April 1998         Sale                        27,646                        200
               2 July 1998           Purchase                     5,688                        185
               4-6 August 1998       Sale                       191,847                    177-179
               22 September 1998     Sale                       500,000                        120

 
     (vi) Save as  disclosed  in this  paragraph  3, no  dealings  for  value in
          Matthew Clark Shares have taken place during the disclosure  period by
          those persons who have given  irrevocable  undertakings  to accept the
          Offer.  

(c)  Matthew Clark  

     (i)  At the close of  business on 30 October  1998 (the latest  practicable
          date prior to the  printing of this  document)  the  interests  in the
          share  capital of Matthew  Clark of the  directors  of Matthew  Clark,
          their  immediate  families and related trusts which have been notified
          to Matthew  Clark  pursuant to Sections 324 or 328 of the Act or which
          are  required  pursuant to Section 325 of the Act to have been entered
          in the  register  referred to therein and the  interests  in the share
          capital of Matthew  Clark of those persons  connected  with any of the
          directors of Matthew  Clark  (within the meaning of Section 346 of the
          Act) which would, if such connected  persons were directors of Matthew
          Clark,  be  required  to be  disclosed  or  notified  under  the above
          sections of the Act,  and the  existence of which is known to or could
          with  reasonable  diligence be ascertained by the directors of Matthew
          Clark are set out below:


72





                                                            Matthew Clark
          Director                                                 Shares
          ---------------------------------------------------------------
          
          Graham Wilson                                           10,000
          Peter Aikens                                            79,467
          Martin Boase                                            10,000
          Hugh Etheridge                                          31,591
          Michael Garner                                          10,000
          Richard Peters                                           1,831
          Kevin Philp                                              5,000

     (ii) As at 30  October  1998  (the  latest  practicable  date  prior to the
          printing of this document),  the following  options over Matthew Clark
          Shares had been granted to the directors of Matthew Clark  pursuant to
          the Matthew Clark Share Option Schemes:



                                 Number of
                             Matthew Clark
                              Shares under                       Date from which
          Director                  Option     Exercise Price        Exercisable    Expiry Date
          --------------------------------------------------------------------------------
                                                                            
          Peter Aikens              52,652               331p       22 June 1996   21 June 2003
                                    24,723               566p        20 Jan 1997    19 Jan 2004
                                    56,811               561p        17 Oct 1997    16 Oct 2004
                                    59,000               662p        10 Nov 1998     9 Nov 2005
                                   -------               
                                   193,186
                                   =======
          Hugh Etheridge            24,723               566p        20 Jan 1997    19 Jan 2004
                                    18,937               561p        17 Oct 1997    16 Oct 2004
                                    33,000               662p        10 Nov 1998     9 Nov 2005
                                   -------
                                    76,660
                                   =======
          Robert MacNevin           40,000             247.5p       25 July 2000   24 July 2007
                                   =======
          Kevin Philp               21,041               566p        20 Jan 1997    19 Jan 2004
                                    10,521               523p       11 July 1997   10 July 2004
                                    10,000               555p        16 Jan 1998    15 Jan 2005
                                     2,000               662p        10 Nov 1998     9 Nov 2005
                                     2,000               680p        16 Jan 1999    15 Jan 2006
                                    60,000             247.5p       25 July 2000   24 July 2007
                                   -------
                                   105,562
                                   =======
          Richard Peters            10,521               561p        17 Oct 1997    16 Oct 2004
                                    10,000               555p        16 Jan 1998    15 Jan 2005
                                    10,000               662p        10 Nov 1998     9 Nov 2005
                                     5,000               680p        16 Jan 1999    15 Jan 2006
                                    30,000             247.5p       25 July 2000   24 July 2007
                                   -------
                                    65,521
                                   =======



          Exercise of the above options was not conditional upon any performance
          criteria. All options were granted for nil consideration.

     (iii)As at 30  October  1998  (the  latest  practicable  date  prior to the
          printing of this  document) P&D UK Equity  Exempt Fund held  1,619,594
          Matthew Clark Shares  within the Managed  Exempt Fund on behalf of the
          Matthew Clark Group Executive Pension Scheme.

     (iv) There  have  been no  dealings  for  value  in  Matthew  Clark  Shares
          (including upon the exercise of options  pursuant to the Matthew Clark
          Share Option  Schemes) by  directors  of Matthew  Clark and members of
          their  immediate  families and related trusts or in respect of Matthew
          Clark Shares in which the directors of Matthew  Clark are  interested,
          during the disclosure period.

     (v)  As at 30  October  1998  (the  latest  practicable  date  prior to the
          printing of this  document) and save as disclosed in this paragraph 3,
          neither  Matthew  Clark nor any  director  of Matthew  Clark nor their
          immediate  families or related trusts owns or controls or is, directly
          or indirectly,  interested in any relevant securities or in any shares
          of Canandaigua or  Canandaigua  Limited or any securities  convertible
          into,  rights to subscribe  for,  options in respect of or derivatives
          referenced  to,  such  shares or has dealt  for  value  therein  or in
          relevant securities during the disclosure period.

                                                                              73


     (vi) As at 30  October  1998  (the  latest  practicable  date  prior to the
          printing of this  document) and save as disclosed in this paragraph 3,
          no bank,  stockbroker,  financial  or other  professional  adviser  to
          Matthew  Clark  or to  any  subsidiary  of  Matthew  Clark  or to  any
          associated  company of  Matthew  Clark or to  companies  of which such
          companies   are   associated   companies   (other   than   an   exempt
          market-maker), nor any person controlling, controlled by, or under the
          same   control  as  such  bank,   stockbroker,   financial   or  other
          professional  adviser,  nor any subsidiary of Matthew  Clark,  nor any
          pension fund of Matthew Clark or of any of its  subsidiaries,  nor any
          person whose  investments are managed on a discretionary  basis by any
          fund  manager  (other  than an exempt  fund  manager)  connected  with
          Matthew  Clark,   owns,   controls  or  is  interested,   directly  or
          indirectly,  in any relevant securities (nor has any such person dealt
          for value therein during the period commencing on 22 October 1998 (the
          date of the  announcement  by Matthew Clark that it was in discussions
          which  may or may not lead to an  offer  for the  whole of the  issued
          share  capital of  Matthew  Clark)  and ended on  30 October 1998 (the
          latest practicable date prior to the printing of this document)).

     (vii)As at 30  October  1998  (the  latest  practicable  date  prior to the
          printing  of this  document)  and save in respect  of the  irrevocable
          undertakings  referred  to in  sub-paragraph  (b)(iv)  above,  neither
          Matthew  Clark nor any  associate  of  Matthew  Clark  falling  within
          paragraphs  (1) to (4) of the  definition  of  "associate"  set out in
          paragraph  3(a)(i) above has any arrangement  with any other person in
          relation to relevant securities.

4.  Market  quotations  

     (a)  The following table shows the closing  middle-market  quotations for a
          Matthew  Clark Share as derived from the Official List in each case on
          the first  business  day in each month from May 1998 to November  1998
          inclusive,  on 21 October 1998 (the day prior to the  announcement  by
          Matthew Clark that it was in discussions  which may or may not lead to
          an offer for the whole of the issued share  capital of Matthew  Clark)
          and on  2 November 1998  (the  latest  practicable  date  prior to the
          printing of this document):



                                                                   Matthew Clark
                                                                  Share price in
          Date                                                             pence
          ----------------------------------------------------------------------
          1 May 1998                                                     201 1/2
          1 June 1998                                                    199
          1 July 1998                                                    186
          3 August 1998                                                  177 1/2
          1 September 1998                                               140
          1 October 1998                                                 120
          21 October 1998                                                134
          2 November 1998                                                191 1/2


5.   Material contracts of Canandaigua and Matthew Clark

Save as disclosed below, there have been no contracts entered into by any member
of the Canandaigua Group or the Matthew Clark Group during the period commencing
on 22 October 1996 (the date two years before the  announcement by Matthew Clark
that it was in  discussions  which may or may not lead to an offer for the whole
of the issued share capital of Matthew  Clark) and ended on 2 November 1998 (the
latest  practicable  date  prior to the  printing  of this  document)  which are
outside the ordinary course of business and which are or may be considered to be
material: 

(a)  A Purchase  Agreement  dated 24 October 1996 between  Canandaigua and Chase
     Securities Inc. ("Chase") and CS First Boston  Corporation  ("CSFB") (Chase
     and CSFB together,  the "Initial  Purchasers")  relating to the sale to the
     Initial Purchasers of an issue of 8.75% Series B Senior  Subordinated Notes
     due 2003 having a principal value of US$65,000,000 (the "Series B Notes").

(b)  An Indenture  dated 29 October  1996 (as amended on 19 December  1997 and 2
     October 1998) between Canandaigua as issuer, various of its subsidiaries as
     guarantors (the  "Guarantors") and Harris Trust and Savings Bank as trustee
     relating  to the  issue  of the  Series  B Notes  and the  Series  C Senior
     Subordinated  Notes  (the  "Series  C Notes")  each due 2003 and  having an
     aggregate value of US$65,000,000.

(c)  An Exchange and Registration Rights Agreement dated 29 October 1996 between
     Canandaigua,  Chase and CSFB  concerning the obligation of Canandaigua  and
     the Guarantors to file a registration  statement with the US Securities and
     Exchange  Commission for the exchange of registered  Series C Notes for all
     unregistered  Series B Notes,  so as to permit the  trading of the Series C
     Notes generally  without  restriction under US Federal and state securities
     laws.


74


(d)  A Credit  Agreement  dated 19  December  1997 (as  amended on 19 June 1998)
     between Canandaigua,  various of its subsidiaries acting as guarantors (the
     "Subsidiary  Guarantors"),  various  lenders  (the  "Banks")  and The Chase
     Manhattan  Bank  ("TCMB")  as  administrative  agent  relating  to a credit
     facility  currently in the amount of US$407,000,000 and capable of increase
     in certain  circumstances  to  US$507,000,000,  used to  refinance  certain
     existing  indebtedness and to finance ongoing working capital  requirements
     and other general corporate  purposes of the Canandaigua Group (the "Credit
     Agreement").  

(e)  A Security  Agreement  dated 19  December  1997  between  Canandaigua,  the
     Subsidiary Guarantors and TCMB under which advances made by the Banks under
     the Credit Agreement are secured.

(f)  A Tranche II  Revolving  Agreement  (Series  A) dated 15 July 1998  between
     Canandaigua,   various   revolving   lenders  named  therein  and  TCMB  as
     administrative  agent  pursuant  to which  such  lenders  agree to  provide
     Canandaigua  with up to  US$100,000,000  in revolving  credit  commitments,
     swingline  loans  and  letters  of  credit as  contemplated  by the  Credit
     Agreement.

(g)  A new Credit Agreement dated 2 November 1998 between  Canandaigua,  various
     of its  subsidiaries  acting as  guarantors,  various  lenders  and TCMB as
     administrative  agent relating to a US$1,000,000,000  credit facility to be
     used for the refinancing of certain existing  indebtedness,  to finance the
     Offer and to finance ongoing working capital requirements and other general
     corporate  purposes  (including  certain  acquisitions)  of the Canandaigua
     Group.


6.   Service  contracts  and  other  arrangements  with  directors  or  proposed
     directors of Matthew Clark

Save as disclosed below, none of the directors or proposed  directors of Matthew
Clark has a service  contract  with any member of the Matthew  Clark Group where
such contract has more than twelve months to run. Except as set out below,  none
of the contracts  referred to below have been entered into or amended during the
six months prior to the date of this document:



          Director                      Notice                                                     Salary
          -----------------------------------------------------------------------------------------------------
                                                                                                      
          Peter Aikens          24 months by Matthew Clark, 6 months by the director    230,000 pounds sterling
          Hugh Etheridge        24 months by Matthew Clark, 6 months by the director    130,000 pounds sterling



7.   Other information

(a)  Schroders is satisfied that sufficient financial resources are available to
     Canandaigua   Limited  to  satisfy  full  acceptance  of  the  Offer.  Full
     acceptance   of  the  Offer  would   involve  a  maximum  cash  payment  of
     approximately 215.7 million pounds sterling.

     Financing  will be made  available to the  Canandaigua  Group pursuant to a
     credit agreement dated 2 November 1998 between Canandaigua as borrower, the
     Offeror and various other subsidiaries of Canandaigua as guarantors and The
     Chase Manhattan Bank together with a syndicate of other banks (the "Banks")
     under  which the Banks  agree to  provide  Canandaigua  with a loan up to a
     principal amount of US$1,000,000,000 (the "New Credit Agreement").

     In addition to being used to refinance certain existing indebtedness of the
     Canandaigua  Group and to finance ongoing working capital  requirements and
     other general corporate purposes  (including  certain  acquisitions) of the
     Canandaigua  Group,  the funds under the New Credit  Agreement will be made
     available to Canandaigua to finance,  through the Offeror,  the acquisition
     of the entire  issued and to be issued share  capital of Matthew  Clark and
     certain  associated  costs and expenses of the Offer.  The  availability of
     funds under the New Credit  Agreement is subject,  inter alia, to the Offer
     having  become  or  being  declared  wholly  unconditional;   repayment  of
     principal and interest on all other amounts owing by the Canandaigua  Group
     having been made (or being made  simultaneously with drawdown under the New
     Credit  Agreement)  under an existing credit agreement with the Banks dated
     19 December 1997;  various  security  documentation  being entered into and
     there  having  been at drawdown  no breach of certain  representations  and
     warranties given by Canandaigua in the New Credit Agreement.

(b)  As Mathew  Clark will form a  significant  part of the  Canandaigua  Group,
     Canandaigua  Limited intends that the payment of interest on, repayment of,
     or security for any liability  (contingent  or  otherwise)  relating to the
     financing  arrangements  referred to in paragraph 7(a) above will depend on
     the business of Matthew Clark.

(c)  Save as  disclosed  in this  Appendix  IV,  no  agreement,  arrangement  or
     understanding  (including  any  compensation  arrangement)  exists  between
     Canandaigua Limited or any person acting in concert with



                                                                              75


     Canandaigua   Limited  and  any  of  the   directors,   recent   directors,
     shareholders or recent  shareholders of Matthew Clark having any connection
     with,  or  dependence  on, or which is  conditional  on, the outcome of the
     Offer  and  there is no  proposal  existing  in  connection  with the Offer
     whereby any payment or other  benefit will be made or given to any director
     of Matthew Clark as compensation for loss of office or as consideration for
     or in connection with his retirement from office or otherwise in connection
     with the Offer.

(d)  There is no agreement,  arrangement or  understanding  whereby the legal or
     beneficial  ownership of any of the Matthew  Clark Shares to be acquired by
     Canandaigua  Limited pursuant to the Offer will be transferred to any other
     person,  save that  Canandaigua  Limited reserves the right to transfer any
     such shares to any member of the Canandaigua Group.

(e)  Settlement of the  consideration to which any Matthew Clark  Shareholder is
     entitled under the Offer will be implemented in full in accordance with the
     terms  of  the  Offer  without  regard  to any  lien,  right  of  set  off,
     counterclaim  or other  analogous  right to which  Canandaigua  Limited may
     otherwise be, or claim to be, entitled against such shareholder.

(f)  Save as  disclosed  in  Appendix  II of this  document,  the  directors  of
     Canandaigua  are not  aware of any  material  change  in the  financial  or
     trading  position of Canandaigua  since 28 February 1998 (the date to which
     the latest  published  audited  consolidated  accounts of Canandaigua  were
     prepared).

(g)  The expenses of and incidental to the preparation and implementation of the
     Offer will be paid by Canandaigua Limited.

(h)  Schroders,  which is a member of the London Stock Exchange and is regulated
     in the UK by The Securities and Futures  Authority  Limited,  has given and
     not  withdrawn its consent to the issue of this document with the inclusion
     of its name in the form and context in which it is included.

(i)  Warburg Dillon Read,  which is a member of the London Stock Exchange and is
     regulated  in the UK by The  Security and Futures  Authority  Limited,  has
     given and not  withdrawn its consent to the issue of this document with the
     inclusion of its name in the form and context in which it is included.

(j)  There has been no material  change in the financial or trading  position of
     Matthew  Clark since 30 April 1998 (the date to which the latest  published
     audited consolidated accounts of the Matthew Clark Group were prepared).

(k)  The fully diluted  share capital of Matthew Clark is based upon  88,520,498
     Matthew  Clark Shares in issue on 30 October  1998 (the latest  practicable
     date prior to the  printing  of this  document),  together  with  1,904,822
     Matthew  Clark  Shares  falling to be issued  upon the  exercise of options
     granted and  outstanding  on such date under the Matthew Clark Share Option
     Schemes.  It should be noted that only 225,000  options over Matthew  Clark
     Shares  are  capable  of being  exercised  at a price  below  243 pence per
     Matthew Clark Share.

(l)  The price of Matthew  Clark Shares at the close of business on a particular
     date is derived from the Official List.

(m)  Unless otherwise stated: 

     (i)  financial  information relating to Canandaigua has been extracted from
          the Canandaigua Annual Report for the year ended 28 February 1998; and

     (ii) financial  information  relating to Matthew  Clark has been  extracted
          from the annual report and published audited consolidated  accounts of
          Matthew Clark for the two years ended 30 April 1998 and 30 April 1997,
          respectively.

(n)  The  market   capitalisation   of  Canandaigua  is  based  on  the  closing
     middle-market  quotation for Canandaigua  shares of $50 1/8 per A Share and
     $50 3/4 per B Share on 30 October 1998 (the latest  practicable  date prior
     to the  printing of this  document),  as derived from  Bloomberg  Financial
     Markets.

8.   Documents available for inspection

Copies of the following  documents are  available  for  inspection  during usual
business  hours on any  weekday  (public  holidays  excepted)  at the offices of
Clifford Chance, 200 Aldersgate Street,  London EC1A 4JJ while the Offer remains
open for acceptance:

(a)  the Memorandum and Articles of Association of Canandaigua  Limited; 


76


(b)  the Memorandum and Articles of Association of Matthew Clark;

(c)  the published  audited  consolidated  accounts of  Canandaigua  for the two
     financial years ended 28 February 1998;

(d)  the published  audited  consolidated  accounts of Matthew Clark for the two
     financial years ended 30 April 1998;

(e)  the service contracts referred to in paragraph 6 above; 

(f)  the  irrevocable  undertakings to accept the Offer referred to in paragraph
     3(b)(iv) of this Appendix;

(g)  the material contracts referred to in paragraph 5 above;

(h)  the written consents referred to in paragraph 7 above;

(i)  the  documents  in respect of the  financing  arrangements  referred  to in
     paragraph 7(a) above; and

(j)  this document and the Form of Acceptance.

3 November 1998

                                                                              77


                             APPENDIX V  DEFINITIONS
- --------------------------------------------------------------------------------

The following definitions apply throughout this document unless the context
otherwise requires:


"Act"                                   the Companies Act 1985

"Authorisations"                        authorisations,      orders,     grants,
                                        recognitions,  confirmations,  consents,
                                        clearances,    certificates,   licences,
                                        permissions or approvals

"Canandaigua"                           Canandaigua Brands, Inc.

"Canandaigua Group"                     Canandaigua     and    its    subsidiary
                                        undertakings   and,  where  the  context
                                        permits, each of them

"Canandaigua Limited"                   the Offeror  

"certificated"
or "certificated  form"                 in   relation   to  a  share   or  other
                                        security,  a  share  or  other  security
                                        title  to  which  is   recorded  in  the
                                        relevant  register of the share or other
                                        security  as being held in  certificated
                                        form (that is, not in CREST)

"City Code"                             the City Code on Takeovers and Mergers

"CREST"                                 the  relevant  system (as defined in the
                                        Regulations)operated by CRESTCo

"CRESTCo"                               CRESTCo Limited

"CREST member"                          a person who is, in relation to CREST, a
                                        system-member   (as   defined   in   the
                                        Regulations)

"CREST participant"                     a person who  is, in relation  to CREST,
                                        a system-participant (as  defined in the
                                        Regulations)

"CREST sponsor"                         a person who is, in relation to CREST, a
                                        sponsoring    system-participant,    (as
                                        defined in the Regulations)

"CREST sponsored   member"              a CREST  member  admitted  to CREST as a
                                        sponsored  member under the  sponsorship
                                        of a CREST sponsor

"Form of  Acceptance"                   the form of  acceptance,  authority  and
                                        election   relating  to  the  Offer  and
                                        accompanying this document and "Forms of
                                        Acceptance"     shall    be    construed
                                        accordingly

"London Stock Exchange"                 London Stock Exchange Limited

"Matthew Clark"                         Matthew Clark plc

"Matthew Clark  Group"                  Matthew   Clark   and   its   subsidiary
                                        undertakings   and,  where  the  context
                                        permits, each of them

"Matthew Clark  Shareholders"           holders  of  Matthew  Clark  Shares  and
                                        "Matthew  Clark  Shareholder"  shall  be
                                        construed accordingly

"Matthew Clark Shares"                  ordinary  shares of 25 pence each in the
                                        capital of Matthew  Clark,  and "Matthew
                                        Clark    Share"   shall   be   construed
                                        accordingly

"Matthew Clark  Shares                  (a) Matthew Clark Shares unconditionally
to which the Offer relates"             allotted or issued on or before the date
                                        the Offer is made; and (b) Matthew Clark
                                        Ordinary Shares unconditionally allotted
                                        or issued after that date but before the
                                        date the Offer  closes,  or such earlier
                                        date or dates as the  Offeror may decide
                                        (not  being  earlier  than  the  date on
                                        which the Offer  becomes or is  declared
                                        unconditional  as to acceptances  or, if
                                        later,  the  first  closing  date of the
                                        Offer),  but excluding any Matthew Clark
                                        Shares  which,  on the date the Offer is
                                        made,  are  held  or  contracted  to  be
                                        acquired  (otherwise  than  under such a
                                        contract  as  is  described  in  section
                                        428(5) of the Act) by the Offeror and/or
                                        its  associates  (within  the meaning of
                                        section 430E of the Act)

"Matthew Clark Share Option Schemes"    the Matthew Clark Group  Executive Share
                                        Option  Scheme,  the Matthew Clark Group
                                        1995 Savings Related Share Option Scheme
                                        and the Matthew  Clark Group  Unapproved
                                        Executive Share Option Scheme

"member account ID"                     the   identification   code  or   number
                                        attached to any member account in CREST

"Offeror"                               Canandaigua   Limited,   a  wholly-owned
                                        subsidiary of Canandaigua

78


"Offer"                                 the   recommended    cash   offer   made
                                        hereunder  by Schroders on behalf of the
                                        Offeror to  acquire  the  Matthew  Clark
                                        Shares to which the Offer relates on the
                                        terms and subject to the  conditions set
                                        out in this  document and in the Form of
                                        Acceptance including,  where the context
                                        requires,   any   subsequent   revision,
                                        variation,  extension or renewal of such
                                        offer

"Offer period"                          as defined in  paragraph 6(b) of  Part B
                                        to Appendix I hereto

"Official List"                         the Daily  Official  List of the  London
                                        Stock Exchange

"Panel"                                 the Panel on Takeovers and Mergers

"participant ID"                        the  identification  code or  membership
                                        number used in CREST to identify a CREST
                                        member or other CREST participant


"Regulations"                           the      Uncertificated       Securities
                                        Regulations 1995

"Schroders"                             J.   Henry    Schroder    Co.    Limited


"Securities Act"                        the  United  States  Securities  Act  of
                                        1933, as amended

"subsidiary", "subsidiary               shall be  construed in  accordance  with
undertaking","associated                the Act (but for this  purpose  ignoring
"undertaking" and "undertaking"         paragraph 20(1)(b) of Schedule 4A to the
                                        Act)
                                                                                
"TTE  instruction"                      a  transfer  to escrow  instruction  (as
                                        defined  in the CREST  Manual  issued by
                                        CRESTCo)  

"TFE  instruction"                      a transfer from escrow  instruction  (as
                                        defined  in the CREST  Manual  issued by
                                        CRESTCo)  

"Third  Party"                          government       or        governmental,
                                        quasi-governmental,       supranational,
                                        statutory,  regulatory or  investigative
                                        body, trade agency, court,  professional
                                        association  or any other body or person
                                        whatsoever    in    any     jurisdiction

"uncertificated" or "uncertificated     in   relation   to  a  share   or  other
form"                                   security,  a  share  or  other  security
                                        title  to  which  is   recorded  in  the
                                        relevant   register   of  the  share  or
                                        security as being held in uncertificated
                                        form (that is, in  CREST),  and title to
                                        which, by virtue of the Regulations, may
                                        be transferred by means of CREST 

"United Kingdom" or "UK"                the United  Kingdom of Great Britain and
                                        Northern Ireland 

"United States" or "US"
                                        the  United   States  of  America,   its
                                        territories and  possessions,  any state
                                        of the  United  States of  America,  the
                                        District of Columbia and all other areas
                                        subject  to  the   jurisdiction  of  the
                                        United  States  

"US$" or "$"                            denotes  the lawful  currency  of the US

"US Act"                                the  United  States  Securities  Act  of
                                        1933, as amended

"US person" and                         as defined in  paragraph  7(h) of Part B
"North  American  person"               to  Appendix  I hereto  

"Warburg Dillon Read"                   UBS AG,  acting  through its  investment
                                        banking division Warburg Dillon Read

"Wider  Canandaigua  Group"             the  Canandaigua  Group  and  associated
                                        undertakings    and   any   other   body
                                        corporate, partnership, joint venture or
                                        person  in which the  Canandaigua  Group
                                        and such undertakings (aggregating their
                                        interests)  have a  direct  or  indirect
                                        interest of 20 per cent.  or more of the
                                        voting   or   equity   capital   or  the
                                        equivalent  

"Wider Matthew Clark  Group"            the  Matthew Clark Group and  associated
                                        undertakings    and   any   other   body
                                        corporate, partnership, joint venture or
                                        person in which the Matthew Clark  Group
                                        and such undertakings (aggregating their
                                        interests)  have a  direct  or  indirect
                                        interest of 20 per cent.  or more of the
                                        voting   or   equity   capital   or  the
                                        equivalent  

"1998 Report and Accounts of            the annual  report and audited  accounts
Matthew Clark"                          of  Matthew Clark  for  the  year  ended
                                        30 April 1998 


The Registrant has omitted from this filing the Form of  Acceptance  distributed
with  the  foregoing  Recommended  Cash  Offer.   The  Registrant  will  furnish
supplementally  to  the  Commission,  upon  request,  a copy  of  such  Form  of
Acceptance.