The data (those prepared according to the IFRS standards and those according to the Hungarian accounting rules) are audited.

Total gross sales of the Company stood at HUF 19,767 million, a year-on-year increase of 0.9%. Net sales were HUF 11,775 million, a year-on-year decrease of 2.5% (HUF 12,078 million).

Net domestic sales were down by 3.5% (a year-on-year decrease from HUF 10,799 million to HUF 10,420 million). Within domestic sales, the turnover of own-produced goods decreased by 4.2%. Domestic sales of premium products practically remained at the previous year’s level (decreased by 0.3%); the net sale of quality products decreased by 8.0%, and that of non-branded products decreased by 41.3%. As announced in the previous Interim Management Report, the Company discontinued the production of two product lines (PéterPál and Krajczár) at the end of 2013. We are selling off the remaining stock of said products.

The net earnings from traded products (including the Diageo portfolio) practically stagnated (a year-on-year decrease of 0.6%), in a similar manner to the own-produced premium goods.

Market research figures for the present business year indicate decrease of 6.8% in volume in the Hungarian market of spirits. Although the pace of shrinking of the market slowed down (last year the market decreased by 9.6%), it is still considerable. Of the three segments, the premium one is doing the best but even there we witnessed a decrease of 3.1%. The volume in the segment of quality and non-branded products went down considerably (-9.2% and 7.6%). The figures were very similar in the two main channels of sales (off trade and on trade). In both channels of sales the overall volume decreased (-7.2% and -6%), and that shrinkage affected each of the three segments. The premium volume was the least affected by decrease (4.6% in off trade and 1.6% in on trade). In on trade the sales of quality products decreased slightly (-2.4%) but those of non-branded products fell remarkably (-11-1%). In off trade however the decrease in sales affected the quality products in the first place (-11.7%), whereas the non-branded products performed relatively better there (-5.9%).

Export earnings amounted to HUF 1,355 million – by 6% higher than a year before. The earnings of Unicum went up by nearly 15% due especially to its sales in Italy and Germany and the introduction of Unicum Szilva (Unicum Plum) in neighbouring countries. However, the sales of lower-margin products (pálinka and rum) were below those a year before.

The gross margin level increased by 1.9 percentage points. That was mainly because, as from 2013, 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 and export continued to increase. Because of those factors and due to the slightly decreasing revenues, the gross margin increased by HUF 63 million (1%).

Overall, the operating expenses showed a year-on-year decrease of 2.3% (HUF 122 million). In light of the consistently unfavourable market conditions, for years now the Company has been laying special attention to manage operating expenses effectively. Thanks to those efforts, savings were achieved in numerous cost categories.

Due to above-mentioned causes (see the passage starting with the words: “The gross margin”), the other operating income decreased. By contrast, this year a part of the owners of the traded products increased their marketing expenditure. As the sum total of those factors the other operating income only decreased by HUF 9 million (1.7%).

Interest income decreased by 19.3% (HUF 39 million). The interest 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).

Interest expenses disclosed are related to interest portions of finance lease related charges incurred throughout the year. Financial lease calculations are utilised as means to measure the value of bottle production equipment set up for Zwack by the glass factories. Upon the annual re-evaluation of the attributes which form a basis for the estimated market value of bottles produced, the portion attributed to interest expenses within the annual embedded lease liabilities has increased. That explains the increase in interest expense.

The Company’s profit after taxation according to the International Financial Reporting Standards (IFRS) stood at HUF 1,493 million, a year-on-year increase of 3.4% (previous: HUF 1,444 million).

Within current assets there was a year-on-year decrease of 13.6% (300 million) in the value of inventories. That was due to the favourable effects of the changes implemented in the asset management processes.

The figure on the “Trade and other receivables” line increased by HUF 720 million (39.1%), due chiefly to increase in the Company’s tax liabilities (excise tax and VAT).

During the current business year the Zwack Unicum Plc. spent HUF 358 million on fixed assets (2012/13: HUF 376 million). The investments were of a supplementary character and complied with the plan.

The Company has 234 employees (a year ago it was 237).

This Management Report for 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 2013–2014 business year there was no change in the organization of the Company.

– The Company does not possess shares of its own, just as before.

20 May 2014

On behalf of the Board of Directors of Zwack Unicum Részvénytársaság: Sándor Zwack, Chairman and Frank Odzuck, General Manager

Financial Statements