The data are not audited (either those prepared according to the IFRS standards or those according to the Hungarian accounting rules).
The Company gross revenues amounted to 19,442 M HUFs, which is 11.2% higher than in the previous year. Net sales were HUF 11,580 million, a year-on-year increase of 12% (+HUF 1,240 million).
Net domestic sales were up by HUF 1,067 million, that is, 11.5%. (That is a year-on-year increase from HUF 9,285 million to HUF 10,352 million.)
Net domestic sales in the third quarter exceeded the previous business year’s October to December figure by 24.4% (HUF 1,055 million). This significant increase was mainly due to the fact that most of our trade partners significantly increased purchases because the public health product tax (NETA) was levied on a wide range of spirits as of January 1st 2015. The introduction of this tax type can result in a shelf price increase of even 20-30% in case of such products. Therefore, a number of our trade partners purchased a stock of 3-5 months from these products. Due to the above, sales revenues will be lower in the last quarter of this business year and in the first quarter of the next one.
A minor part of the increase in sales in the third quarter was thanks to a real increase in consumption. Market research shows that in October–November 2014 the sale of premium products went up by nearly 5% while that of the quality products stagnated (+0.2%).
Within domestic sales the turnover of own-produced goods increased by 10.8%. Domestic sales of premium products increased by 9.0%; the net sales of quality products increased by 25.9%. The sales of the non-branded portfolio decreased by HUF 123 million ( 98%). The Company terminated producing non-branded products at the end of 2013 and discontinued its sale in June 2014.
The net earnings from traded products increased by 14.2%. Broken down, sales of the Diageo portfolio went up by 18.3% and those of other products traded increased by 5.8%.
Export revenues were HUF 1.228 million, which is 16.3% higher than in the previous year. Sales revenues in the last quarter are nearly 50% (by HUF 197 million) higher than last year. The spike was due to several factors. As indicated in our previous report, in 2014 the delivery of Christmas promotional packages to the traditional focus markets (Italy, Germany, Romania and Slovakia) began in October while in 2013 it had begun already in September. The Company managed to sell a larger consignment of Unicum in China, and there were significant increases in other markets as well (Duty Free; North America). The above factors supported the increase in the third quarter more or less in equal proportions.
The material costs and material-type expenditures increased by 11.8%. That is roughly the same as the increase of 12% in net sales. Consequently the gross margin went up to a similar degree (12.1%).
Employee benefits expense increased by HUF 162 million (8.8%). The Annual General Meeting of the Company that took place on 26 June, 2014, decided on the payment of a dividend of 2500 HUF per share (last year dividend was 775 HUF). Significant part of this unusual high dividend was founded by the cumulative retained earnings of the Company. According to IFRS, dividends paid after liquidation preference shares is a personnel type of cost, therefore the increase in the dividend increased the amount of personnel type of costs by HUF 60 million. Also in July the Company paid special bonuses to its personnel. Having obtained the unanimous support of the majority shareholders, the Management of the Company decided to reward the dedicated and successful work of the personnel by distributing bonuses to all employees. This resulted in an increase of HUF 70 million in the personnel type of costs. The collective layoff in Kecskemét announced by Zwack Unicum Nyrt. on 3 November 2014 increased costs with an additional HUF 32 million. Without these items, employee benefits expense would remain the same as last year.
The decrease of the other operating expenses by HUF 83 million (4.5%) is due in the first place to the fact that in the first three quarters of last business year the Company sponsored various sports and cultural organizations by paying them by HUF 77 million more than in the first three quarters of this year. Such sponsorship entitled the Company to a tax allowance and that explains why the Company had a lower tax level last year.
Other operating income increased by HUF 123 million (33.4%). Of this, HUF 99 million are due to the higher cost reimbursements because the brand owners of the distributed products increased their marketing expenditures compared to the base. The remaining HUF 24 million was exchange rate gain posted during the first three quarters of this year. (In the first three quarters of last year there was a HUF 12 million exchange rate loss having increased the other operating expenses.)
The net financial income decreased by HUF 81 million (-63.2%). Though on average the net funds of the Company showed a year-on-year increase of 10% in the first four months of the business year, the deposit interest rates were halved as a consequence of the decrease in the base interest rate. Payment of dividend in late July exceeded that of the previous year by HUF 3.5 billion so from then on the Company has had a considerably smaller disposable fund than a year before – and as a result, financial profits dropped at a larger scale.
The Company’s profit after taxation according to the International Financial Reporting Standards (IFRS) stood at HUF 2,263 million, a year-on-year increase of 22.4% (previous: HUF 1,848 million).
The significantly higher sales in Q3 caused considerable changes in some of the major balance sheet lines too. Within current assets, the value of the inventories dropped to a low never seen before by the end of December 2014 (HUF -561 million; -31.9% compared to the base). Simultaneously, trade receivables increased by HUF 883 million (17.6%) compared to the closing value of the base period. Other receivables, however, dropped by HUF 689 million, primarily because last year in this period the Company had a long term fix deposit of over 3 months in the amount of HUF 594 million (2 million Euro), but currently there is no such longer term fix deposit. This way trade and other receivables altogether increased only by HUF 194 million (3.3%) compared to the base.
Trade and other liabilities are HUF 1,538 million (32.9%) higher than the base value. Most of the increase (HUF 1,256 million) is due to the significantly higher tax obligations (VAT and excise tax).
The drop in the profit reserves is the result of the higher dividend payment than the profit last year.
In the first three quarters of this business year the Zwack Unicum Plc. spent HUF 286 million on fixed assets, and the investments were of a supplementary character and complied with the plan. The Company made a HUF 35 million capital investment into building a warehouse suitable to store marketing materials in the Dunaharaszti factory in an area unused due to terminating the production of non-branded products. That investment project is expected to reduce the Company’s expenditure on storage by HUF 20 million yearly.
The Company has 231 employees (at the end of the 2013/2014 business year it had 234 and in the corresponding period of last year it had 234.) The impact of the Kecskemét layoff will be seen in the 2015 headcount (13 persons).
The Management believes that the Company can again accomplish the profit targets that have already been published as a consequence of the above mentioned tax changes.
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 the Company.
– During the first three quarters of the 2014–2015 business year there was no change in the organization of the Company.
– The Company does not possess shares of its own, just as before.
5 February 2015
On behalf of the Board of Directors of Zwack Unicum Részvénytársaság: Sándor Zwack, Chairman and Frank Odzuck, Chief Executive Officer
