Report on the results of the Zwack Unicum Plc. in the 2014–2015 business year
The Board of Directors of the Zwack Unicum Plc. has approved the Management’s report about the results of the Company in the 2014-2015 business year.
The data are audited (either those prepared according to the IFRS standards or those according to the Hungarian accounting rules).
The Company gross revenues amounted to HUF 21,385 million, 8.2% higher than in the previous year. Net sales (sales revenues excluding excise and public health product tax) were HUF 12,795 million, 8.7% higher than the last year revenues (HUF +1,020 million).
Net domestic sales were up by HUF 862 million, that is 8.3%. (That is a year-on-year increase from HUF 10,420 million to HUF 11,283 million.)
Net domestic sales in the fourth quarter were below January to March 2014 figure by 18% (HUF 205 million). As predicted in our previous Interim Management Report, this considerable decrease occurred because the public health product tax (NETA) was levied on a wide range of spirits as of January 1st 2015. Therefore, a number of our trade partners purchased a stock for 3-5 months in December 2014 from these products. As a result, our sales dropped in the final quarter of this business year, and a spill-over effect is likely to be felt even in the first quarter of the next business year.
Within domestic sales the turnover of own-produced goods had a year-on-year increase of 8.6%. Domestic sales of premium products increased by 6.6%; the net sales of quality products increased by 21.5%. The sales of the non-branded portfolio decreased by HUF 138 million (‑98.2%). 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 7.1%. Broken down, sales of the Diageo portfolio went up by 9.4% and those of other products traded increased by 2.6%.
The taxed spirits market has shrunk for five years altogether by 35%. The tendency turned around recently and in the last year there was a growth of volume of 3.7%.
Export revenues amounted to HUF 1,513 million, which is11.6% higher than last year. (HUF +158 million). About 40% of the increase in export earnings was due to a one-off sales transaction for the PR of China. In addition, our exports increased by about 25% to Romania, North America and in the Duty Free category.
The material costs and material-type expenditures increased by 8.7%. As that equals the increase in net sales, the gross margin remained at the previous year’s level (55.6%).
Employee benefits expense increased by HUF 212 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 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 remaining increase of 82 M HUFs was due to the 3% wage increase at the beginning of the year and the onetime costs related to the collective layoffs in Kecskemét.
The depreciation charge and the other operating expenses remained mostly the same as in the previous business year.
Other operating income increased by HUF 130 million (26.7%). Most of this increase is due to the higher cost reimbursements because the brand owners of the distributed products increased their marketing expenditures compared to the last year.
The net financial income decreased by HUF 101 million (-61.8%). 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.
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. Interest expenses showed a year-on-year decrease of HUF 10 million.
The Company’s profit after taxation according to the International Financial Reporting Standards (IFRS) stood at HUF 1,714 million, a year-on-year increase of 14.8% (previous: HUF 1,493 million).
Within current assets, stock value decreased by 392 M HUFs (20.6%) compared to the base. On the one hand, due to the purchases brought forward in December there is a lower stock of finished products and goods, and on the other hand, palinka stocks were reduced this business year, bringing it in line with the current demand.
That our cash in banks and on hand decreased by HUF 2,765 million due to the – above-mentioned – payment of dividend.
The drop in the profit reserves is the result of the higher dividend payment than the profit last year.
The Provisions for other liabilities and charges increased by HUF 50 million to cover the run out costs of remaining stock of products that the Company has stopped producing because they are not competitive in the new price environment.
During the business year the Zwack Unicum Plc. spent HUF 374 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 has reduced the Company’s annual expenditure on storage by HUF 20 million.
The Company has 218 employees (at the end of the 2013/2014 business year it had 234) Collective redundancy measures affecting 13 persons at the Kecskemét division was the main cause of the decrease.
This 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 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 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.
21 May 2015
On behalf of the Board of Directors of Zwack Unicum Részvénytársaság: Sándor Zwack, Chairman and Frank Odzuck, Chief Executive Officer.
Zwack Unicum Plc’s Report is published and accessible at:
