Zwack Unicum : GM - Proposals

DOCUMENTS FOR THE ANNUAL GENERAL MEETING

ANNUAL GENERAL MEETING OF

THE ZWACK UNICUM PLC.

(CAPS COAF: GMET HU20230430011285)

DATE OF THE AGM:	28 June, 2023, 10 a.m.
VENUE OF THE AGM:	Mercure Budapest Castle Hill,
	H-1013 Budapest, Krisztina krt. 41-43.

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

1

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 28, 2023 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, 2022 and terminating on March 31, 2023 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, 2022 and terminating on March 31, 2023, 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, 2022 and terminating on March 31, 2023;
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, 2022 and terminating on March 31, 2023;
10. Authorization of the Board of Directors to increase the registered capital by way of issuing redeemable shares of preferred liquidation quota;
11. Resolution on the exclusion of preferential subscription in connection with the redeemable shares of preferred liquidation shares;
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. Approval of the remuneration of the Company's auditor;
15. Miscellaneous.

The Supervisory Board of Zwack Unicum Plc. suggests the Shareholders

all the proposals for APPROVAL.

2

Item No. 1

Report of the Board of Directors on the business activities of the Company in the business year starting on April 1, 2022 and terminating on March 31, 2023 and presentation of the related draft Annual Report of the Company

REPORT ON THE ACTIVITY OF THE 2022-2023 BUSINESS YEAR

Analysis of the Company's performance

Total gross sales of the Company in the 2022-23 business year were HUF 35 364 million - a year-on- year increase of 10.7% (HUF 3 415 million). Net sales (sales revenues excluding excise tax and public health product tax [NETA]) were HUF 21 215 million, a year-on-year increase of 15.8% (HUF 2 901 million). In this report on the 2022-23 business year the revenues derived from marketing expenditure reimbursement paid by brand owners are posted in the sales revenue in contrast to the earlier practice of posting them at the other operating income. The relevant data have been transferred also in the revenue figure of the previous business year.

Net domestic sales of products had a year-on-year increase of HUF 2 218 million (14.2%). Net sales of own-produced goods in the domestic market increased by HUF 1 392 million (12.1%) (HUF 12 937 million instead of HUF 11 545 million). Broken down, sales of premium products increased by 11%, while sales of quality products increased by 16%. Within the premium segment, sales of Kalumba increased nearly one and a half times, mainly due to the successful market launch of two new flavours (mango and blood orange). Fütyülős also performed well in this business year with its sales up 17%. In the quality segment Kalinka grew steeper than the average.

Net sales of traded products had a year-on-year increase of 20.5%. Broken down, the revenues of the Diageo portfolio were up 18.7%, and those of other traded products grew by 35.6%. In the latter category, wines and sparkling wines performed higher than the average.

As a consequence of the amendment of Hungarian tax regulations, which became operative on 1 July 2022, the excise tax of alcohol jumped by nearly 70% (HUF 5 658 per litre of pure alcohol (LPA) instead of HUF 3 334 per LPA), while the public health product tax (NETA) was abolished. Put together, those changes increased the Company's tax burden as related to alcohols on average by 6%. Our Company incorporated into its invoiced prices the increase in taxes and the rise in costs, which in turn was caused by the rise the prices of raw materials. As of 1 July 2022, the Company upped its prices on average by 7%. Owing to the continued rise of raw and packaging materials, and due to a marked increase in our costs of operation, the Company needed to further increase its prices as of 1 January 2023. That hike was an average of 5.6%. During the last quarter of the business year the volume of domestic sales fell by nearly 20%. Because our prices had gone up in the meantime, the net sales figure showed a smaller drop: nearly 8%. The decrease in sales was felt especially in off trade.

According to the April 2022-March 2023 market research data for the retail turnover, the Hungarian country-wide taxed spirits market declined by 3.6% in volume terms, while it grew by 7.9% in value terms. Over the same period, the Company's retail sales increased by 1.0% in volume and 6.7% in gross value.

Export sales of products in the business year were HUF 2 337 million, a year-on-year increase of 10.4% (HUF 221 million). Among our major export markets, strong growth was achieved in Slovakia (39%). Sales value to Italy grew by 12% but in terms of volume they levelled off. Duty free sales significantly outperformed the previous business year both in volume (27%) and sales revenue (52%). In the fourth

3

quarter the sales revenue from exports decreased by 9.6%, which was mainly caused by poorer performance in Romania and Germany. As for Romania, despite the underperforming fourth quarter, the whole of the business year achieved an increase of 6% in sales revenue.

Revenue from services were HUF 1 085 million, a year-on-year increase of 74,2% (HUF 462 million). Within that revenues derived from marketing expenditure reimbursement paid by brand owners - which according to the current new accounting method is posted at the Sales revenue instead of the Other operating income - went up by HUF 392 million (62.9%).

Material-type expenses increased by HUF 1 950 million (29.7%) - higher than the 15.8% increase in net sales, resulting in a gross margin ratio of 4.3 percentage points lower than a year ago (59.9% instead of 64.2%). The increase in the per-unit material cost was due to a steady growth of raw material prices and a weakening of the forint.

Expenditure on employee benefits increased by HUF 535 million (17%). At the beginning of the business year wages and salaries were raised on average by 10%. The Annual General Meeting of 29 June 2022 decided to pay HUF 1 500 in dividend per share instead of HUF 700 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 costs. Consequently, the higher dividend increased the employee benefit expenditure by HUF 68 million. In view of the drastic increase in energy prices, during the heating season from October to March, the Company provided its employees an allowance for overheads in the value of HUF 30 000 per month. In the third quarter, that employee benefit resulted in an additional cost increase of HUF 52 million. At the end of the business year the Management of the Company decided to reward the dedicated and successful work of the staff with a one-off bonus of HUF 180 000. That move upped the expenditure on employee benefits by a further HUF 52 million. Furthermore, increase in other personnel expenses (attendance of conferences, the cost of training courses), plus the taxes payable for them, increased the employee benefit expense by about 1.5%.

Depreciation increased by HUF 4 million (0.7%). Broken down, the immediate depreciation of pallets, whose price has been steadily rising, was by HUF 28 million higher. By contrast, the depreciation of property, plant and equipment decreased by HUF 24 million. The Company regularly revises the expected useful service life of the parts of its equipment deemed especially valuable. We have found that several pieces of production machinery have a longer expected useful service life than what our books showed.

Other operating expenses went up by HUF 247 million (5.6%). An increased turnover and rise in fuel prices resulted in a HUF 119 million increase in freight costs. In this business year an exchange loss of HUF 69 million was incurred due to the strong weakening of the forint till mid-October 2022 and its higher closing level at the end of the business year compared to the opening on 1 April 2022. Furthermore, warehouse costs went up by HUF 50 million as the inventories were expanded to make our operation more robust. As our Company received certain supplies from partners late, we were late in some of our supplies to some partners and therefore had to pay them late delivery penalty in the value of HUF 47 million. Other taxes (building tax, company car and vehicle tax and inspection fees) increased by HUF 22 million. There was a noteworthy year-on-year increase, totalling HUF 73 million, in maintenance costs, guarding property, fees paid to experts and fees paid to inspection and certification done by other than official personnel. The other costs of operation went up by HUF 10 million. However, our expenditure on promoting our brands decreased by 5.4% (HUF 143 million).

The other operating income increased by HUF 50 million (100%). During the business year the Company sold some of its motorcars and the related profit (+HUF 36 million) is posted in that line of

4

the balance. Deferred income derived from assets that were obtained without payment increased the other income by HUF 21 million. However, compared to a foreign exchange gain of HUF 7 million in the same period last year, this year there has been a foreign exchange loss, which is detailed at Other operating expenses.

The operating profit or loss figure was HUF 3 868 million, which exceeded that a year before by HUF 215 million.

During the period under review the Company gained a net financial income of HUF 292 million, all of which was interest on our fixed deposits.

Taxes levied on the Company's profits showed a year-on-year increase of HUF 150 million (+26.7%). Corporation tax was by HUF 126 million (+60.6%) higher. The local business tax and the innovation contribution went up by HUF 26 million (7.5%). The deferred tax expenditure showed a year-on-year decrease of HUF 2 million.

All in all, the Company's profit after taxation was HUF 3 448 million, which shows a year-on-year increase of HUF 248 million (7.8%). Although profits in the fourth quarter were lower than in the comparable period last year, the Company had a business year that outperformed even the previous, outstanding period. That was thanks to strong increase in profits during the first three quarters, which fell in the last quarter by 13%.

The stock of fixed assets increased by HUF 637 million (19.3%). The main items here are projects that have been realized in the production plant in Dunaharaszti: a geothermal power facility and the installation of solar panels.

The inventories grew by HUF 1 377 million (43.9%), whose main cause was an increase in the inventory of own-produced goods and their raw materials. The bulk of that increase can be ascribed to the drastic rise in the cost of raw materials and unpredictable jolts in supply chains. In view of those circumstances, the Company has been forced to stockpile more than usual raw materials to avoid temporary shortages in its finished products. At the same time, the stock value of purchased finished goods also increased, explained by the weakening of the exchange rate of the forint in addition to the increase in purchase prices.

Cash and cash equivalents decreased by HUF 1 646 million (32.4%) as a consequence of the increase in the value of our inventories and the projects to have a geothermal facility and solar panels in Dunaharaszti.

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 spirits market. As the Hungarian domestic market accounts for nearly 90% of the Company's revenues from selling products, the domestic demand plays a definitive 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. Recently after the short increasing period the high inflation, higher shelf prices due to rising cost of goods and rising tax levels has clearly slowed down the rising trend of consumption.

5