Zwack Unicum : GM Proposals

DOCUMENTS FOR THE ANNUAL GENERAL MEETING

ANNUAL GENERAL MEETING OF

THE ZWACK UNICUM PLC.

(CAPS COAF: GMET HU20240425016338)

DATE OF THE AGM:	26 June, 2024, 10 a.m.
VENUE OF THE AGM:	Novotel Budapest Centrum,
	H-1088 Budapest, Rákóczi út 43-45.

Statement - based upon point b) of Subsection 3:272 (3) of the Civil Code

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Dear Shareholder,

Zwack Unicum Plc.'s Board of Directors convened the company's Annual General Meeting to take place at 10.00 a.m., on June 26, 2024 with the below quoted items on the agenda. Please find the individual submissions and the proposed text of the General Meeting resolutions attached.

Agenda of the AGM

1. Report of the Board of Directors on the business activities of the Company in the business year starting on April 1, 2023 and terminating on March 31, 2024 and presentation of the related draft Annual Report of the Company;
2. Report of the Auditor;
3. Report of the Supervisory Board, including the report of the Audit Board;
4. Approval of the Corporate Governance Report;
5. Approval of the Annual Report of the Zwack Unicum Plc. concerning the business year starting April 1, 2023 and terminating on March 31, 2024, prepared in accordance with the international financial reporting standards (IFRS);
6. Resolution on dividend on the basis of the annual report concerning the business year starting on April 1, 2023 and terminating on March 31, 2024;
7. Resolution on the remuneration of the members of the Board of Directors and the Supervisory Board;
8. Election of members of the Board of Directors, the Supervisory Board and the Audit Board;
9. Advisory vote on the Remuneration report concerning the business year starting on April 1, 2023 and terminating on March 31, 2024;
10. Election of the Company's auditor and approval of its remuneration;
11. Advisory vote on the Remuneration policy;
12. Modification and amendment of the Statutes of the Company;
13. Approval of the consolidated text of the Company's Statutes, including amendments to date;
14. Miscellaneous.

The Supervisory Board of Zwack Unicum Plc. suggests the Shareholders

all the proposals for APPROVAL.

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Item No. 1

Report of the Board of Directors on the business activities of the Company in the business year starting on April 1, 2023 and terminating on March 31, 2024 and presentation of the related draft Annual Report of the Company

REPORT ON THE ACTIVITY OF THE 2023-2024 BUSINESS YEAR

Analysis of the Company's performance

Total gross sales of the Company were HUF 36 938 million - a year-on-year increase of HUF 1574 million (4.5%). Net sales (sales revenues excluding excise tax and public health product tax [NETA]) were HUF 22 496 million, a year-on-year increase of 6.0% (HUF 1281 million).

Net domestic sales of products had an increase of HUF 1303 million (7.3%) over the previous business year. Net sales of own-produced goods in the domestic market increased by HUF 1111 million (8.6%) (HUF 14 048 million instead of HUF 12 937 million). Broken down in more detail, sales of premium products increased by 8.2% and sales of quality products increased by 9.7% over the previous business year. Within the premium category, the sale of only the Unicum liqueur had above-average growth. Though in the last quarter the sale of Fütyülős also went up considerably, if we look at its performance during the entire business year, it continued weakening the statistics of that category. In the quality products segment, the value of the sale of all the brands (mainly Kalinka and Hubertus) that are sold in major volumes increased.

Net sales of traded products had a year-on-year increase of 3.9%. Broken down in more detail, the revenues of the Diageo portfolio increased by 3.1%, and the revenues of the other traded products went up by 9.8%. Among the "other traded products", the revenues of Evian and champagnes increased more than those of other drinks.

The decrease in the Company's domestic sales in terms of the volume is due to a marked country-wide decline in consumption caused by high inflation - which has had a tangible impact on the profitability of this Company. Although the value of sales rose by over 7%, the volume of products sold dropped by 1%. It was a drop of merely 1% instead of 2.5% mentioned in our previous quarterly report because in the final quarter of the business year the volume of products sold went up by more than 9%. That increase in volume was mainly due to the fact that in this business year the entire Easter season occurred in March. And as for the business year as a whole, the drop in the sales volume continued mainly in the wholesale channel. The retail channel showed a minor year-on-year increase. This was largely due to the fact that, as from the second half of 2023, the retail division fought an aggressive price war to win consumers back. Those efforts had a favourable effect on the turnover of many of the Company's brands.

According to the April 2023-March 2024 market research data for the retail turnover, the Hungarian country-wide taxed spirits market decreased by 3.6% in volume but it grew by 6.5% in value. In the same period, the Company's retail sales had a year-on-year increase of 0.7% in volume and a year-on- year increase of 5.5% in gross value.

The export of products fetched HUF 2196 million, a year-on-year decrease of 6.1% (HUF 141 million). Among our major export markets, our sales to Italy had a year-on-year growth of 4%, in the case of Romania, the Company almost reached the revenues of the last business year, but exports to Germany fell significantly (by 17%) and also decreased to Slovakia (by 12%). Just as in the third quarter, the duty-free segment did better than in the corresponding period a year before, and considering the entire

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business year, grew by 11%. All in all, in our five major export destinations the Company's revenues were the same as in the previous business year. The revenues of the Company's flagship brand, the Unicum liqueur, were only slightly below of those of the previous business year. The decrease of the aggregated export revenues was the consequence mostly of the underperformance of products that were not in focus. The sale of Borco apricot ended in Germany during the business year, the volume of Kosher exported to Canada and the United States decreased considerably and, just as in the home market, the sale of Fütyülős significantly dropped in export markets.

The revenue from services was HUF 1204 million - a year-on-year increase of 11.0% (HUF 119 million). Within the revenue from services the biggest category that grew was revenues derived from marketing expenditure reimbursement paid by brand owners. The Zwack Unicum Heritage Visitors' Centre (called the House of Unicum) had a steep increase in revenue from ticket sales.

Material-type expenses increased by HUF 438 million (5.1%) while the net sales went up by 6.0%. That is why the gross margin ratio was higher by 0.3 percentage points than a year before (60.2% instead of 59.9%). The decrease in the per unit price of materials was due to a favourable change in the product mix (sales of own-produced products with higher margins increased more than sales of traded products).

The employee benefit expenditure rose by HUF 461 million (12.5%). At the beginning of the business year the Company gave an across-the-board pay hike averaging 15.4%. The Annual General Meeting of 28 June 2023 resolved to pay a dividend of HUF 1 700 per share, which was by HUF 200 higher than a year before. Under the IFRS, the dividend payable after liquidation preference shares, and any change in related liabilities, have to be posted as a personnel type of cost. Consequently, the dividend that was higher than in the previous year increased the employee benefit expenditure by HUF 7 million and the change in related liabilities raised the employee benefit expenditure by HUF 100 million. The other personnel expenditure figure was increased by HUF 26 million by certain cost increases (for example, higher conference prices, training course fees, travel allowance, benefits) and the related tax expenditure. At the same time, the increase in the sum set aside for the long-service award was by HUF 39 million lower than in the previous business year. During the business year the Company did not grant any unscheduled payment to the staff. By contrast, during the previous business year - when expenditure on energy had jumped - the Company paid the staff an allowance for overheads in the value of HUF 52 million and, at the end of that business year, paid a bonus for committed and effective work in the value of HUF 26 million.

The cumulative figure of depreciation increased by HUF 29 million (4.8%). Broken down in more detail, the depreciation of property, plant and equipment increased by HUF 35 million - which was mainly justified by the installation of a new geothermal facility in Dunaharaszti. The immediate depreciation of pallets showed a year-on-year decrease.

The other operating expenses had a year-on-year increase of HUF 756 million (16.3%). Higher expenditure on marketing activities accounted for a considerable part of that increase (HUF 400 million). The Company spent a sizeable part of that sum in the Italian market, where a four- week media campaign (worth the equivalent of nearly HUF 200 million) promoted the sale of Unicum. The Extended Producer Responsibility (EPR) fee, which was introduced in Hungary on 1 July 2023, added HUF 422 million to this Company's expenses during this past business year. Furthermore, there was a considerable year-on-year increase - in the total value of HUF 62 million - in expenditure on corporate security (HUF 18 million), insurance (HUF 13 million), experts' fees (HUF 14 million) and recruitment-agency fee (HUF 17 million). However, during the business year, there was a

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HUF 48 million year-on-year decrease in exchange-rate loss. The Company managed its inventory efficiently: even though warehousing prices rose steeply, its expenditure on warehousing shrank by HUF 10 million. As the volume of products sold decreased, the Company's spending on transport dropped by HUF 12 million. The Company did not have to pay any late-delivery penalty as caused by some inventory shortage. In the preceding business year, the Company had to pay to its partners HUF 50 million in such penalty. The Company managed to save HUF 15 million in the rest of the operating expenses that are not specified above.

The other operating income increased by HUF 1 million (1.0%). Revenues from the resale of returnable packaging materials went up but the Company sold fewer motorcars from its fleet than during the previous business year.

The profit from operations was HUF 3 466 million - lower than that a year before by HUF 402 million (10.4%).

During the period under review the Company gained a net financial income of HUF 170 million. Our funds kept in fixed bank deposits yielded an interest income of HUF 213 million. In order to minimize the risks of exchange rate fluctuations, the Company kept on its bank account a major quantity of euros

• which were mostly derived from futures contracts. As a consequence, when it came to fulfil its liabilities in the local currency (forints), in a transitional period the Company had to use an overdraft facility. That is why the Company had to pay HUF 43 million in interest.

Taxes levied on the Company's profits showed a year-on-year increase of HUF 18 million (2.5%). The corporation tax the Company had to pay was by HUF 38 million (11.4%) lower. The local business tax and the innovation contribution went up by HUF 49 million (13.1%). The deferred tax expenditure showed a year-on-year increase of HUF 7 million over the previous business year.

All in all, the Company's profit after taxation was HUF 2 906 million. Though it was lower than that a year before by HUF 542 million (15.7%), it exceeded the Company's plan target as defined in September 2023 by 25%.

Looking at other lines of the balance sheet, the inventories decreased by HUF 831 million (18.4%). During the financial year the Company regarded it a priority to optimize the inventory levels of the own-produced finished goods and their raw materials. Another favourable factor was that the lead time of obtaining the products of the Diageo portfolio markedly shortened. Consequently, the Company could considerably reduce the value of purchased finished goods.

Trade and other receivables increased by HUF 373 million (11.1%) - figures that roughly corresponded with the increase in sales revenue during the last quarter of the business year.

Apart from the changes described above, there were no other major changes in the balance sheet.

Business environment of the Company

Zwack Unicum Plc. is the biggest player in Hungary's spirit market. As the Hungarian domestic market accounts for nearly 90% of the Company's revenues from selling products, the domestic demand plays a decisive influence on the Company's results. The consumption of premium alcoholic drinks had grown in Hungary in the past few years, but that tendency drastically changed due to the pandemic in 2020. Following the post-pandemicbounce-back, consumption considerably decreased, which in turn was caused by a steep inflation and a related drop in real wages. Then disinflationary measures were swiftly introduced, and in their wake, the decline in consumption was reduced in the past half a year.

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Parameters and indicators of Company's performance (data in million HUF)

		2021-22	2022-23	2023-24	2024-25
		business	business	business
		year**	year	year	plan
Gross Sales	HUF mill	31 949	35 364	36 938	38 543
Sales net of taxes	HUF mill	18 314	21 215	22 496	24 036
Gross Margin	HUF mill	11 753	12 704	13 547	14 635
Profit from operations	HUF mill	3 653	3 868	3 466	3 066
Profit before tax	HUF mill	3 762	4 160	3 636	3 163
Profit for the year	HUF mill	3 200	3 448	2 906	2 453
Dividends paid / payable - ordinary	HUF mill	3 000	3 400	2 800*
Dividends paid / payable - redeemable		53	60	49*
Dividends paid / payable - total		3 053	3 460	2 849*
Total assets	HUF mill	15 092	15 433	14 963
Cash and cash equivalents, end of the year	HUF mill	5 079	3 433	3 622
Average statistical staff number	Person	254	258	255
Gross margin ratio	%	64.2%	59.9%	60.2%	60.9%
Profit from operations / Net sales	%	19.9%	18.2%	15.4%	12.8%
Profit for the year / Net sales	%	17.5%	16.3%	12.9%	10.2%
Dividend / Profit for the year	%	93.8%	98.6%	96.4%
Earnings per share	HUF	1 600	1 724	1 453	1 227

* The Company proposes to pay dividends for the financial year ended 31 March 2024, which is subject to approval by the forthcoming Annual General Meeting. The amount of dividend proposed by the Board of Directors amounts to 1 400 HUF/share).

** The base figure changed due to reclassification of marketing expenditure reimbursement.

Resolution proposal:

The AGM approved the report of the Board of Directors regarding the business activities and financial results of the Company in the business year starting on April 1, 2023 and terminating on March 31, 2024.

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Item No. 2

Report of the Auditor

Independent Auditors' Report

To the shareholders of Zwack Unicum Nyrt.

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements for the financial year between 1 April 2023 and 31 March 2024 of Zwack Unicum Nyrt. ("the Company"), included in the digital files 2138003326LXAD58SW93-2024-03-31-hu.xhtml1 which comprise the statement of financial position as at 31 March 2024, with total assets of MHUF 14,963, the statement of comprehensive income, with profit for the year of MHUF 2,906, and the statements of changes in equity and cash flows for the year then ended, and notes, comprising material accounting policies and other explanatory information.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 March 2024, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (EU IFRSs) and they are prepared, in all material respects, in accordance with the provisions applicable to entities preparing annual financial statements in accordance with EU IFRSs of Act C of 2000 on Accounting in force in Hungary (Act on Accounting).

Basis for Opinion

We conducted our audit in accordance with Hungarian National Standards on Auditing and applicable laws and regulations in Hungary. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company for the purposes of our audit of the financial statements, as provided in applicable laws in force in Hungary, the policy on rules of conduct (ethics) of the audit profession and on disciplinary procedures of the Chamber of Hungarian Auditors, as well as with respect to issues not covered by these, with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) translated into Hungarian and published on the website of the Chamber of Hungarian Auditors and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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1 digital identification of digital files identified above with SHA 256 HASH Algorithm: 0dcf613633ab151587b7ab66e9e8502d34e0c6f386ee5787adbfb7a3ea2af4a5

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Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Completeness and accuracy of customer incentives

As at 31 March 2024, amounts payable (due) to customers: HUF 654 million.

For more detailed information refer to Note 2 (r) (3) and Note 12 to the financial statements.

The key audit matter

How the matter was addressed in our audit

Amounts payable (due) to customers amount to HUF 654 million in the statement of financial position as at 31 March 2024. The majority of these liabilities arises from amounts that are payable to customers relating to sales incentives that are recognized as a reduction of the transaction price.

The end of the Company's reporting period is 31 March, while sales agreements with customers are concluded annually mainly for the calendar year. Therefore, the Company needs to estimate the sales incentives including volume rebates that the customer will be entitled to receive for its purchases made in the first calendar quarter, which are determined based on the total purchases made in the full calendar year.

Furthermore, in certain cases the Company has not finalized its agreements upon the annual terms and conditions of the sales incentives by the date the Company's financial statements were authorized for issue. As customers have valid expectation that the Company will continue to offer sales incentives, the consideration for the purchases made by customers in the last quarter of the Company's financial year includes the best estimate of such sales incentives.

Due to the judgement required as well as estimation uncertainty involved in the determination of the amounts payable to customers relating to sales incentives, we considered this area as a key audit matter.

We performed the following procedures amongst others:

• we tested selected controls over approval of sales incentives;
• we compared prior year estimate of sales incentives payable to customers to actual payments;
• for a sample of agreements with customers we compared the actual sales realized in the calendar year 2023 to the prior year estimate developed by the Company in order to assess the Company's estimation accuracy;
• when the prior period estimate of accrued sales incentive was not based on signed agreements with customers, we compared the terms and conditions used in prior year estimate to subsequently signed contracts on a sample basis;
• we evaluated the accuracy of data used in the estimate of sales incentives by reference to the underlying sales agreements on a sample basis;
• based on the results of the preceding procedure we recalculated the sample of sales incentives due to customers and compared to the estimate made by the Company.

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Other Information

The other information comprises the annual report (including the business report and management report) included in the 2138003326LXAD58SW93-2024-03-31-hu.xhtml of the Company for the period between 1 April 2023 and 31 March 2024. Management is responsible for the other information, including the preparation of the business report in accordance with the Act on Accounting and other applicable legal requirements, if any.

Our opinion on the financial statements expressed in the Opinion section of our report does not cover the business report, the management report and the other parts of the annual report. We do not express any form of assurance conclusion on the annual report except for the business report.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

Based on the Act on Accounting, we are also responsible for assessing whether the business report has been prepared in accordance with the Act on Accounting and other applicable legal requirements, including the assessment of whether the business report has been prepared in accordance with Section 95/B (2) e) and f) of the Act on Accounting and expressing an opinion on this and whether the business report is consistent with the financial statements.

With respect to the business report, based on the Act on Accounting, we are also responsible for checking that the information referred to in Section 95/B (2) a)-d), g) and h), Section 95/C of the Act on Accounting has been provided in the business report.

In fulfilling our responsibility with respect to the business report, the requirements set out in the Regulation (EU) No 815/2019 of 17 December 2018 (ESEF Regulation) were considered as other legal requirements applicable for the business.

In our opinion the business report of the Company for the period between 1 April 2023 and 31 March 2024 is consistent, in all material respects, with its financial statements for the period between 1 April 2023 and 31 March 2024 and the applicable provisions of the Act on Accounting and the requirements of the ESEF Regulation.

We confirm that the information referred to in Section 95/B (2) a)-d), g) and h) has been provided in the business report. The Company is exempt from providing information referred to in Section 95/C of the Act on Accounting.

In addition, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we are required to report if we have identified any material misstatement in the business report, and if so, the nature of such misstatement. We have nothing to report in this regard.

Moreover, if, based on the work we have performed, we conclude that there is a material misstatement of the other parts of the annual report, (including the management report) other than the business report, we are required to report that fact. We have nothing to report in this regard either.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU IFRSs and for the preparation of the financial statements in accordance with provisions applicable to entities preparing annual financial statements in accordance with EU IFRSs of the Act on Accounting and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Hungarian National Standards on Auditing and applicable laws and regulations in Hungary will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Hungarian National Standards on Auditing and applicable laws and regulations in Hungary, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
  We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
  We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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