The data are not audited (in neither the report according to IFRS nor according to the Hungarian accounting principles).
This Report has the same structure as the Annual Report closing the business year of 2012/13, however, there are differences compared to the last year interim reports in the following:
– Settlement of software-monitoring payments: this amount is paid regularly by the Company to the Supplier in order to be able to download and install the patches and updates. These payments are included under other operational expenditures. Earlier, these payments had been capitalised as non-tangible assets and were amortized in three years’ time.
– Settlement of the share in Morello kft: the long standing, 35.43% share of Zwack Unicum Nyrt in the above company is entered in the line “Investment in associates”. The value of the capital interest is determined by the equity method. In earlier reports the Company recognized the investment at cost in the line of Available-for-sale financial assets.
Both actual and base data are shown in this Report in the new structure.
The Company’s gross revenues amounted to HUF 17,447 million, which is 0.3% higher than in the previous year. Net sales revenues amounted to HUF 10,340 million, which is 3.4% lower than the baseline (HUF 10,703 million).
Net domestic sales revenues are 3.9% lower than in the previous year (HUF 9,285 million compared to HUF 9,666 million last year). Among domestic sales the turnover of own produced products decreased by 5% compared to the baseline. Revenues generated by premium brands went down by 2.5%, by the quality products by 6.6%, and the commodity portfolio by 35.5%. Based on market trends the Company’s Board agreed to stop the production and the trade of two product ranges (PéterPál and Krajczár) in the commodity segment by the end of the business year. The impact of this decision on the profitability of Zwack Unicum Plc. is negligible as the sales of those product lines only account for 1% of the total net sales with low margins.
The net sales revenues of traded products (including the Diageo portfolio) exceed that of the baseline period by 0.6%.
The Company’s domestic earnings in the third quarter had a year-on-year decrease of 5%. The sales revenue of traded products increased by 8%, while the domestic sale of own produced goods decreased by 7.9%. The decrease is due to the fact, that in December 2012 (as a result of the 15% increase in excise tax which took effect as of 1st January 2013) the trading partners made their purchases earlier. There were no similar events in this year.
The market research data of April-November 2013 show a 7% decrease in the volume sold on the Hungarian spirits market. The rate of the market decrease shrank further (there was a drop of 11% in the volume last year), however it is still considerable. The premium segment performs best, but even here is a decline of 1.9%. The decline in the consumption of quality and commodity products is significant (-9.6% and -8,4%). The trading developments in the two main sales channels (retail trade and gastronomy) deviated significantly from each other. The decline continued in all product categories (even the premium volume decreased by 4%) in retail trade. Whereas in gastronomy the premium volume was stagnating (+0.1%) and also the drop in the total volume sold was less (-4.6% gastronomy; -8.3% retail trade).
Export sales revenues amount to HUF 1,056 million, which exceeds last year’s value by 1.8%. The increase exceeded 10% in the sales revenues of Unicum, mainly due to the increase in Italy and the introduction of Unicum Szilva in the neighboring countries. At the same time, sale of lower margin products (palinkas and rums) dropped compared to the base.
The gross margin level increased by 2.6 percentage points. That was mainly because, as from the beginning of this calendar year, we have managed to secure more favourable purchase prices for a part of our traded products. That has reduced our cost of goods. Meantime, the funds available for the marketing support of the same brands also decreased – as can be seen in the Other operating income line. The increase in the gross margin rate was also due to the fact that within Company revenues, the weight of the most profitable own produced premium products continued to increase. Because of those factors and due to the slightly decreasing revenues, the gross margin increased by HUF 74 million (1.3%).
Total operating expenses were 3% lower than the baseline (HUF -126 million). Savings amounting to HUF 110 million in other operational expenses are mainly due to the decrease of marketing cost (the introduction of Unicum Szilva had significant one time cost last year), but also experts fees and logistics expenses fell (attributable to smaller stocks).
Other operational income fell by HUF 108 million (22.7%) due to reasons mentioned previously (see the paragraph beginning with “The gross margin level”).
The financial results dropped by 15% (23 Million HUFs). The net financial income decreased to a lesser degree than the deposit interest level because in this business year the Company had a much higher sum in deposits than in the previous one (due especially to the decrease in inventories).
The after-tax profit of the Company amounts to HUF 1,848 million in accordance with the International Financial Reporting Standards (IFRS), which is 1.7% higher than the baseline (HUF 1,817 million) and also exceeds the time-proportionate plan slightly.
Among current assets the value of inventories compared to the previous year decreased by 32.5 % (HUF 846 million). As a result of the changes which were introduced in stock management the inventories decreased by 10-15%. In the considerable decline of the closing stock in the calendar year also played an important role, that this year tax was paid only for those stocks of finished goods which are normally warehoused at this point of time, whereas at the end of last year, due to the increased commercial demand, taxes were paid for the vast majority of the stocks of finished goods.
The decrease in the accounts receivable and other accounts receivable (HUF -517million; -8,1%) originates from lower revenues in December and the improved payment discipline.
During the first three quarters of the business year the Zwack Unicum Plc. spent HUF 271 million on fixed assets. The investments were of a supplementary character and complied with the plan.
The headcount of the Company is 234 people (one year ago: 241) At the end of the business year 2012/2013 the Company employed 237 persons.
Taking into consideration that in the last quarter of the business year the Company – as a consequence of the weak season in our business – makes losses, the Management of the Company continues considering the original profit target as realistic.
This Interim Management Report for the first three quarters of the business year has been made according to the relevant accounting regulations and the financial statements made on the basis of our best knowledge, and they are in accordance with both the Hungarian and the international standards. It gives a truthful and reliable account of the assets, liabilities, financial standing and profits of Zwack Unicum Plc. This business report gives a reliable picture about the Company’s situation, development and performance and it includes the major risks and factors of uncertainties. To make this report comparable with earlier ones, it carries figures in compliance with the International Financial Reporting Standards.
Additional information:
– There was no change in the ownership structure of our Company.
– There was no change in the organisation of the Company in the quarters I-III in the 2013/2014 business year.
– The Company still has no own shares.
February 5, 2014
On behalf of the Board of Directors of Zwack Unicum Részvénytársaság: Sándor Zwack, Chairman and Frank Odzuck, General Manager
