Zwack Unicum

News Details

Ad-hoc | 4 June 2012 18:16

Zwack Unicum Likőripari és Kereskedelmi Nyilvánosan Működő Részvénytársaság:

DGAP-Geoinfo Ad-hoc-Service: Zwack Unicum Nyrt.
AGM/EGM

04 Jun 2012

Ad-hoc announcement according to Tpt. 55.§ of the Hungarian Capital market Act., transmitted by DGAP-Geoinfo.
The issuer is solely responsible for the content of this announcement.

DOCUMENTS FOR THE ANNUAL GENERAL MEETING

ANNUAL GENERAL MEETING OF THE ZWACK UNICUM PLC.
TO BE HELD ON 28 JUNE, 2012

DATE OF THE AGM: 28 JUNE, 2012, 10 a.m.
The venue of the AGM: Hotel Mercure Buda H-1013 Budapest, Krisztina krt.
41-43.

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, 2012 with the
below quoted items on the agenda. Please find the individual submissions
and the proposed text of the General Meeting resolutions attached.

(1) Report of the Board of Directors on the business activities of the
Company in the business year starting on April 1, 2011 and terminating on
March 31, 2012 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) Resolution on the determination and allocation of the after-tax profit
of the Company generated in the business year starting on April 1, 2011 and
terminating on March 31, 2012;
(6) Approval of the Annual Report of the Company, including the Balance
Sheet concerning the business year starting on April 1, 2011 and
terminating on March 31, 2012;
(7) Approval of the Annual Report of the Zwack Unicum Plc. concerning the
business year starting April 1, 2011 and terminating on March 31, 2012,
prepared in accordance with the international accounting standards (IFRS);
(8) Resolution on the remuneration of the members of the Board of Directors
and the Supervisory Board;
(9) Election of members of the Board of Directors, of the Supervisory Board
and the Audit Board;
(10) Election of the Company's auditor and approval of its remuneration;
(11) Authorization of the Board of Directors to increase the registered
capital by way of issuing redeemable shares of preferred liquidation quota;
(12) Resolution on the exclusion of preferential subscription in connection
with the redeemable shares of preferred liquidation shares;
(13) Modification and amendment of the Statutes of the Company;
(14) Approval of the consolidated text of the Company's Statutes, including
amendments to date;
(15) Miscellaneous.

Item No. 1

Report of the Board of Directors on the business activities of the Company
in the business year starting on April 1, 2011 and terminating on March 31,
2012 and presentation of the related draft Annual Report of the Company

REPORT ON THE ACTIVITY OF THE 2011-2012 BUSINESS YEAR

During the 2011-2012 business year the gross sales of Zwack Unicum Plc.
slightly increased and the profit after tax went up by 9%. Considering the
tangible decrease in gross sales and profit after tax in the previous two
years and the permanently unfavourable market conditions, those results are
impressive.

In Hungary the consumption of spirits continued decreasing (see the next
chapter for more details) but the reduction is smaller than that in the
past two years. That is why I see it as quite an achievement that our
Company could increase the sale of premium products.

Overall, the consumption of Hungarian households stagnated (in 2009-2010 it
decreased). It slightly increased until the end of summer 2011 yet, as from
autumn, the factors that negatively affected the households' daily spending
became stronger.

Taxes levied on consumption further increased (from 1 November 2011 the
excise tax went up by 5 and 50 per cent for various categories of products
respectively; and on 1 January 2012 the VAT increased from 25% to 27%).
That has been detrimental for market players because it forced them to
raise prices in a shrinking market. Excise tax exemption granted for
home-made pálinka has had a considerable influence on the commodity market
as plummeting volumes caused marked losses in economies of scale for
commercial pálinka producers.

The figures on the Company's business performance reflect the relative
consolidation of the market until late summer 2011 and the accelerating
decrease in consumption as from autumn. In the first half of the business
year net sales went up by 8.1% but during the second half it decreased by
4.8%. Within domestic sales the own-produced premium products continued
outperforming the average level as its sales figures increased in each
quarter.

The favourable shift in the proportions of product segments within the
portfolio (the premium products accounted for a bigger share of the total
sales) slightly increased the gross margin of sales. Furthermore, the
continued strict cost management in operating expenses greatly contributed
to the improvement of the profit from operation.

The Company's financial position continues being solid; reduced investments
in fixed assets improves cash flow.

Main financial figures of the Zwack Unicum Plc. (in HUF million)

            Plan

business year '08-09 '09-10 '10-11 '11-12 '12-13

Gross sales HUF mill 28 237 24 224 20 351 20 452 21 560
Net sales HUF mill 17 890 14 998 12 209 12 354 13 132
Gross margin HUF mill 10 802 8 572 6 785 6 833 6 465
Profit bef tax HUF mill 4 110 3 134 1 938 2 168 1 812
Profit aft tax HUF mill 3 048 2 276 1 555 1 696 1 301
Dividend HUF mill 4 600 2 000 1 700 1 800

Gross margin % 60,38% 57,15% 55,57% 55,31% 49,23%
Net profit margin% 17,04% 15,18% 12,74% 13,73% 9,91%
Earnings per shareHUF 1 498 1 118 764 833 640
Dividend/Profit after Tax% 150,92% 87,87% 109,32% 106,13%

MARKET SITUATION

Domestic spirit consumption showed a year-on-year decrease of 4.8% during
the business year under review. The volume of premium products consumption
decreased in line with the market average (4.7%) and that of the
non-branded products by 8.1%. Only the volume of quality products increased
(+3.4%). There was less decrease in the off-trade (3.4%) but the decrease
accelerated in the second half year. In the on-trade there was a
year-on-year decrease of 7.2%. The relatively favourable tendencies of the
first half year (decrease in volume slowed down and the quality segment
increased) reversed and in the second half consumption decreased more in
the domestic spirit market.

Market concentration continues in retail trade. Major retail chains (both
domestic-owned and foreign-owned ones) increased their market share at the
cost of independent stores. Moreover, the number of players has decreased
in 2012 as the stores of Cora have been purchased by Auchan, and stores of
Match and Profi are expected to be bought by CBA and Coop.
Market concentration badly affects suppliers because turnover is shifting
towards more expensive channels and the bargaining position of ever bigger
buyers is getting stronger.

There have been similar tendencies among drink wholesalers that supply the
on-trade units. Entities with more capital buy up their smaller rivals and
thereby increase their turnover and market share.

MARKETING ACTIVITIES

Thanks to the good performance of focus brands, we had somewhat more funds
to spend on marketing activities. We increasingly rely on new channels of
communication (more ads on the Internet, direct contacts with the most
active consumers of some of our brands on the social media etc.) to
propagate the manufacturing techniques of our brands and the eventful
history of our Company.

In the 2011-2012 business year Unicum, Hungary's premier digestive, was
promoted with a time-tested marketing strategy, which has won several
favourable feedbacks. Since 2009 we have been using an extremely successful
commercial (that is, a publicity film). In 2012 it was ranked second in a
contest for the most memorable commercials of the past twenty years!

In summer 2011 we used a new approach in our presence at three music
festivals: VOLT, SZIGET and BalatonSound. Entitled: 'Unicum Music Pub', the
new format partly owed its success to the fact that Tankcsapda, an iconic
Hungarian rock band, was constantly present at the festival communication
of the Unicum brand. The fan club of our flagship brand on the most popular
social media platform has reached 35,000 members. We regularly organize
visits to the Zwack plant and the Zwack Unicum Heritage Visitors' Centre
for members of the fan club also for our on-trade partners and journalists.
During those visits the guests can get first-hand information about the
Unicum brand and our drink experts inform them about the unique
manufacturing processes.

The Company's second most important brand, the Fütyülős introduced to the m
arket another honey-flavoured novelty in 2011. But the most noteworthy
relevant event of the year was the introduction of the Fütyülős pálinka lin
e. That line includes the most popular pálinka tastes, either neat or aged
on fruit bed. We supported the introduction of new pálinkas with an outdoor
advertising campaign and television sponsorship. Teams of our hostesses
organized tasting promotions in on-trade units across Hungary throughout
the year. Just as in previous years, our strategic brand-consolidation
efforts focused on on-trade units, the most popular restaurants and night
clubs in Budapest and in the countryside; furthermore, concerts and other
musical events. Enriched by spectacular show elements, our promotion
efforts zoomed in on young adult consumers.

Vilmos is one of Hungary's best known spirits brands and it continues being
an important component of our portfolio. During the business year we
supported Vilmos in two stages with a television campaign each. We
organized tasting promotions for the several varieties of Vilmos with a
hint of honey aged on fruit bed. The brand is now complemented with Vilmos
pálinka aged on pear bed. Aged on fruit bed for three months, this 100%
clear and natural drink offers the full taste and aroma of pear.

As the market is shrinking, brands that are of excellent quality but whose
price is available for broad sections of consumers play an increasingly
important role. In that category the product that we can sell in the
largest volume is Kalinka vodka. At the prestigious World Spirits Award
competition Kalinka vodka won gold medal in its category and that accolade
further strengthens the position of that drink of excellent quality.

Zwack Unicum Plc. devotes special attention to pálinkas, which are sold in
considerable quantities and are fashionable once again. In the premium
pálinka segment our Company is present with three powerful brands: Hírös Ke
cskeméti, Zwack Sándor Noble and Kosher. Prestigious prizes garnered at s
everal pálinka competitions during the business year prove the high quality
of the activities of the Company. (See the details in the chapter entitled:
Marketing Events of the 2011-2012 Business Year.)

The Diageo portfolio is a crucial component of our assortment of products.
The marketing activities focused on Johnnie Walker, Baileys and Captain
Morgan brands. The latter one is becoming an ever more important component
of our line.

FINANCIAL REPORT

The gross sales of the Zwack Unicum Plc. decreased by 16%. The gross
domestic sales were lower than in the previous business year by 16.6% (HUF
19 087 million as compared to HUF 22 881 million). Within domestic sales
the turnover of own produced goods decreased by 17.1%. The domestic sale of
premium products decreased by 22.7%, quality products by 6.3% and
non-branded products by 21.8%.
The sales revenue of traded products decreased by 8.7%. Within that
portfolio the sale of Diageo products decreased by 8.6%, of the wine
division by 11.2% and of other imported products by 5.4%.
The Company's gross sales in the fourth quarter showed a year-on-year
decrease of 22%. That was because in 2011 the Easter sales occurred in
April alone, while that took place in March during the previous business
year.

Export earnings were HUF 1 263 million. That was a decrease of 5.9% from
the previous business year (when it was HUF 1 342 million). The export
earnings dropped because, as from this business year, the Company settles
with its distributors the support it grants to certain market segments in
the form of bonuses (which in that form reduce earnings). In previous years
those items were posted as marketing costs. Without said change in
accounting, the exports earnings would be up by 2.1%. Exports to Italy hit
a record high but sales to Romania and Slovakia plummeted.

During the business year the gross margin shrank to 55.57% (by 1.58
percentage points). That is due mainly to the unfavourable changes in the
Company's product mix, namely, the lower share of the premium products.

The level of the operating expenses indicates that the Company continued
its strict cost management. As for each of the major expense categories the
Company operates at or below the expenses level of the corresponding period
of the previous business year. Overall, the Company managed to reduce the
operating expenses by HUF 734 million (11.5%) as compared to the previous
business year.

The increase in the other operating income was due to the fact that the
Company had exchange rate gain in the course of accounting its export and
import transactions.

Net financial income increased by HUF 23 million (13%). The growth in the
net financial income was due mainly to our controlled operating capital
management and the low level of investment in fixed assets.

The Company's profit after tax according to the International Financial
Reporting Standards is HUF 1.555 billion - a year-on-year shrinkage of
31.7%. (In the previous business year it was HUF 2.276 million).

The considerable decrease in the inventories, and the trade and other
receivables (9.1% and 16.7%, respectively) was mainly due to a lower
turnover.

During the business year the Zwack Unicum Plc. spent HUF 368 million on
fixed assets. Investments to improve energy efficiency continued: this year
a boiler has been replaced at the Kecskemét plant while the remainder of
investments was primarily of a supplementary character.

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, 2011 and terminating on March 31, 2012.

Item No. 2

Report of the Auditor

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Zwack Unicum Nyrt.

Report on the financial statements

We have audited the accompanying financial statements of Zwack Unicum Nyrt.
('the Company') which comprise the balance sheet as of 31 March 2012 (in
which the balance sheet total is THUF 14 842 180, the profit per balance
sheet is THUF 1 862 931), the related profit and loss account for the year
then ended, and the notes to the financial statements including a summary
of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the
financial statements in accordance with the provision of the Accounting Act
and accounting principles generally accepted in Hungary 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.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit in accordance with Hungarian
Standards on Auditing and with applicable laws and regulations in force in
Hungary. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the
financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation
of the financial statements 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 entity's internal control. An audit
also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Opinion

During our work we have audited the components and disclosures along with
the accounting records and supporting documentation underlying the
financial statements of Zwack Unicum Nyrt. in accordance with the Hungarian
Standards on Auditing and, on the basis of our audit work, we have gained
sufficient and appropriate evidence that the financial statements have been
prepared in accordance with the provision of the accounting law and with
accounting principles generally accepted in Hungary. In our opinion, the
accompanying financial statements give a true and fair view of the
financial position of Zwack Unicum Nyrt. as of 31 March 2012, and of the
results of its operations for the year then ended.

Other Matters

We draw attention to the fact that the attached financial statements have
been prepared for the consideration of the shareholders at the forthcoming
General Meeting and, as such, do not reflect the effects, if any, of
resolutions that might be adopted at that meeting. Our opinion is not
qualified in respect of this matter.

Other reporting requirements regarding the business report

We have examined the accompanying business report of Zwack Unicum Nyrt.
('the Company') for the financial year ended 31 March 2012.

Management is responsible for the preparation and fair presentation of the
business report in accordance with the provision of the Accounting Act and
accounting principles generally accepted in Hungary. Our responsibility is
to assess whether or not the accounting information disclosed in the
business report is consistent with that contained in the financial
statements. Our work in respect of the business report was limited to
checking it in within the aforementioned scope and did not include a review
of any information other than that drawn from the audited accounting
records of the Company. In our opinion the business report for the
financial year ended 31 March 2012 is consistent with the disclosures in
the financial statements as of 31 March 2012.

Budapest, 24 May 2012

Hegedűsné Szűcs Márta Róka Nikoletta
PricewaterhouseCoopers Kft. Statutory auditor
1077 Budapest, Wesselényi u. 16. Licence number: 005608
License Number: 001464

Note:

Our report has been prepared in Hungarian and in English. In all matters of
interpretation of information, views or opinions, the Hungarian version of
our report takes precedence over the English version. The accompanying
financial statements are not intended to present the financial position and
results of operations and cash flows in accordance with accounting
principles generally accepted in jurisdictions other than Hungary.

Resolution proposal:

The AGM has approved the report of PricewaterhouseCoopers Kft., as
statutory auditor of the Company regarding the operation of the Company in
the business year starting on April 1, 2011 and terminating on March 31,
2012 and the related Annual Report.

Item No. 3
Report of the Supervisory Board, including the report of the Audit Board

ZWACK UNICUM PLC.

REPORT OF THE SUPERVISORY BOARD AND THE AUDIT BOARD ON THE BUSINESS YEAR
STARTING ON APRIL 1, 2011 AND TERMINATING ON MARCH 31, 2012

In the business year starting on April 1, 2011 and terminating on March 31,
2012, the Supervisory Board held 3 sessions in order to monitor and
supervise the activities of the Board of Directors and the management of
the Company. The Company management submitted detailed written reports at
the sessions of the Supervisory Board. After receiving sufficient
information on specific issues, the Chairman of the Supervisory Board was
requested to take a position on each issue, and such position was
respected. The members of the Supervisory Board continuously monitored the
individual areas of operation. The Supervisory Board was allowed access to
all the information required for the satisfactory fulfilment of its
supervisory function.

The Supervisory Board did not make any complaint against the activities of
the Board of Directors or the management.

The Supervisory Board and the Audit Board, after examining and discussing
the draft of the Company's Annual Report concerning the business year
starting on April 1, 2011 and terminating on March 31, 2012, containing the
balance sheet and profit and loss statement prepared by the Board of
Directors and audited by PricewaterhouseCoopers Ltd., statutory auditor of
the Company, unanimously approved both documents and agreed to submit them
to the Annual General Meeting with a recommendation for approval.

The Supervisory Board also agreed with the Board of Directors' proposal to
declare and distribute HUF 1 831 500 000 after tax profit as a dividend to
be allocated in proportion to shareholding and to put the remaining HUF 31
431 000 to the profit reserves, and submitted the proposal to the Annual
General Meeting with a recommendation for approval.

The Supervisory Board also examined the Corporate Governance Report
prepared by the Board of Directors, agreed thereto and submitted it to the
Annual General Meeting with a recommendation for approval.

The Audit Board did not make any complaint against the activities of the
Auditor of the Company and recommends to the Annual General Meeting for
approval:

(i) the re-election of PricewaterhouseCoopers Ltd. (H-1077 Budapest,
Wesselényi utca 16, registration no.:001464; individual auditor in charge:
Ms. Nikoletta Róka, registration no.: 005608, the substitute auditor
appointed in the event of any extended absence of the auditor in charge is:
Ms. Szilvia Szabados, registration no.: 005314), as statutory auditor of
the Company for a definite period expiring on July 31, 2013; and

(ii) a honoraria - amounting to HUF 13 650 000 + VAT for
PricewaterhouseCoopers Ltd. (H-1077 Budapest, Wesselényi utca 16,
registration no.:001464;) for its services as auditor of the Company. The
honoraria includes the fee for the auditing of the annual report concerning
the business year starting on April 1, 2012 and terminating on March 31,
2013 in accordance with the Hungarian accounting principles and
international accounting standards (IFRS).

The Audit Board prepared the agreement to be concluded with the Auditor.

The Audit Board found the operation of the financial reporting system of
the Company satisfactory and did not make any recommendations in connection
thereto.

The Supervisory Board expressed its appreciation of the Board of Directors
and the Company's management for their efforts to maintain the successful
operation of the Company. The Supervisory Board pointed out that despite
the long-lasting negative market environment the Company maintained its
market leader position and increased its profitability.

The Supervisory Board would like to take this opportunity to express its
thanks to the employees of the company.

Budapest, May 24, 2012

DR. HUBERTINE UNDERBERG RUDER GERD PESKES
CHAIRPERSON OF THE SUPERVISORY BOARD CHAIRMAN OF THE AUDIT BOARD

Resolution proposal:
The AGM approved the report of the Supervisory Board, including the report
of Audit Committee for the business year starting on April 1, 2011 and
terminating on March 31, 2012.

Item No. 4

Approval of the Corporate Governance Report

Please see the Corporate Governance Report in the Appendix 1.

Resolution proposal:

The AGM approved the Corporate Governance Report of the Board of Directors,
approved by the Supervisory Board for the business year starting on April
1, 2011 and terminating on March 31, 2012.

Item No. 5

Resolution on the determination and allocation of the after-tax profit of
the Company generated in the business year starting on April 1, 2011 and
terminating on March 31, 2012

Resolution proposal:

The AGM approved the proposal of the Board of Directors on the allocation
of profits, on the basis of which the Company has declared the payment of
dividend in the amount of thousand HUF 1 831 500 000 (one billion eight
hundred and thirty one million and five hundred thousand Hungarian
Forints). The AGM has ordered the Board of Directors to take the necessary
steps for the payment of the dividends on a pro rata basis in accordance
with the shareholding set forth in the Company's Share Register on August
17, 2012. The distribution of the dividends shall commence on August 27,
2012.

Item No. 6

Approval of the Annual Report of the Company, including the Balance Sheet
concerning the business year starting on April 1, 2011 and terminating on
March 31, 2012

The AGM approved the Annual Report of the Company concerning the business
year starting on April 1, 2011 and terminating on March 31, 2012, which was
prepared in accordance with Hungarian accounting standards and contains the
audited balance sheet concerning the business year starting on April 1,
2011 and terminating on March 31, 2012, showing a total balance of assets
and liabilities in the amount of thousand HUF 14 842 180 as well as the
profit-and-loss statement with a net profit of HUF 31 431 as follows:

BALANCE SHEET: ZWACK UNICUM PLC.

Assets: in HUF (in thousands; -,000)
Invested assets: 3 939 110
Intangible assets 120 414
Tangible assets 3 746 625
Financial investments 72 071
Current assets: 10 718 707
Inventories 2 626 005
Receivables 2 429 195
Securities 0
Liquid assets 5 663 507
Accrued and deferred assets 184 363
Total assets: 14 842 180

Liabilities:
Equity: 9 916 910
Share capital 2 035 000
Capital reserves 264 044
Accumulated profit reserves 7 586 435
Balance sheet profits 31 431
Provisions: 62 070
Liabilities: 3 782 215
Accrued expenses: 1 080 985
Total liabilities: 14 842 180

PROFIT & LOSS STATEMENT:
in HUF (in thousands; -,000)
Net sales revenues 24 001 303
Capitalised value of own performance 217 993
Other revenues 313 653
Material Costs 10 043 286
Payment to personnel 2 484 871
Depreciation reserves 597 834
Other expenditures 9 475 689
Net profit on ordinary business 1 931 269
Net profit on financial transactions 292 370
Regular entrepreneurial profit 2 223 639
Extraordinary profits -107 674
Net profit before taxation 2 115 965
After-tax profits 1 862 931
Approved dividends 1 831 500
Balance sheet profits 31 431

Item No. 7

Approval of the Annual Report of the Company concerning the business year
starting April 1, 2011 and terminating on March 31, 2012, prepared in
accordance with the international accounting standards (IFRS)

Resolution proposal:

The AGM approved the Annual Report of Zwack Unicum Plc. concerning the
business year starting on April 1, 2011 and terminating on March 31, 2012,
prepared in accordance with the international accounting standards (IFRS)
as follows:

BALANCE SHEET: ZWACK UNICUM PLC.

Assets: in million HUF
Non-current assets: 3 690

Property, plant and equipment 3 345
Intangible assets 123
Returnable packaging materials 25
Investments 18
Non-current receivables 39
Deferred tax assets 140
Current assets: 10 385
Inventories 2 219
Trade and other receivables 3 980
Cash and cash equivalents 4 186
Total assets: 14 075

Equity and liabilities:
Shareholder's equity: 10 614
Share capital 2 000
Share premium account 165
Retained earnings 8 449
Non current liabilities: 320
Other financial liabilities 320
Provisions 0
Current liabilities: 3 141
Trade and other liabilities 3 087
Provisions 54
Total equity and liabilities: 14075

PROFIT & LOSS STATEMENT (IN MILLION HUF)

Sales net of excise tax 12 354
Operating expenses 11 287
Material cost of goods sold 5 522
Employee costs 2 362
Depreciation and amortization expense 666
Other operating expenses 2 738
Other operating income 822
Profit from operations 1 889
Net financial income 279
Profit before tax 2 168
Income tax expense 472
Profit after tax 1 696

Item No. 8

Resolution on the remuneration of the members of the Board of Directors and
the Supervisory Board

Resolution proposal:

The AGM approved the honoraria for the members of the Company's Board of
Directors and the Supervisory Board in regard to the business year starting
on April 1, 2011 and terminating on March 31, 2012 as follows:

Chairman of the Board of Directors: 3,4 M HUF
Deputy Chairman of the Board of Directors 2,8 M HUF
Members of the Board of Directors: 2,2 M HUF

Chairwoman of the Supervisory Board: 3,4 M HUF
Deputy Chairman of the Supervisory Board 2,8 M HUF
Members of the Supervisory Board: 2,2 M HUF

Item No. 9

Election of members of the Board of Directors

Resolution proposals:

The AGM acknowledged the resignation of Dr. Rudolf Kobatsch (mother's full
name: Eleonore Kobatsch born Reisinger; Address: A-3021 Pressbaum,
Hauptstrasse 63, Austria) as member of the Board of Directors as of June
27, 2012. The AGM discharged Mr. Dr. Rudolf Kobatsch from his liabilities
in connection with his activities as member of the Board of Directors.

The AGM approved the election of Mr. Mag. Wolfgang Spiller (mother's full
maiden name: Ilse Althaler; address 2380 Perchtoldsdorf, Herzogbergstrasse
18, Austria) as a member of the Board of Directors for a definite period
of time starting on June 28, 2012 and expiring on July 31, 2014.

The AGM acknowledged the resignation of Mr. Gerd Peskes (mother's full
name: Luise Peskes (born: Holterman), address: D-4300 Essen-Bredeney 17, Im
Riek, Germany) as member of the Supervisory and the Audit Board as of June
27, 2012. The AGM discharged Mr. Gerd Peskes from his liabilities in
connection with his activities as member of the Supervisory Board.

The AGM acknowledged the resignation of Mr. Rory John O'Keeffe (mother's
full maiden name: Ursula Ann Desmond; address: Unit 221, Roskina, Angelovo
Village, Krasnogorsky Region, Moscow, Russia, 143442) as member of the
Supervisory Board as of June 27, 2012. The AGM discharged Mr. Rory John
O'Keeffe from his liabilities in connection with his activities as member
of the Supervisory Board.

The AGM approved the election of Mr. Dr. Rudolf Kobatsch (mother's full
name: Eleonore Kobatsch born Reisinger; Address: A-3021 Pressbaum,
Hauptstrasse 63, Austria) as a member of the Supervisory Board for a
definite period of time starting on June 28, 2012 and expiring on July 31,
2014.

The AGM approved the election of Mr. Stephen Charles Morley (mother's full
maiden name: Jill Eames; address Oakdene, Oaklane, Seven Oaks, Kent, United
Kingdom TN131UH) as a member of the Supervisory Board for a definite period
of time starting on June 28, 2012 and expiring on July 31, 2014.

The AGM approved the election of Dr. Rudolf Kobatsch (mother's full name:
Eleonore Kobatsch born Reisinger; Address: A-3021 Pressbaum, Hauptstrasse
63, Austria) as a member of the Audit Board for a definite period of time
starting on June 28, 2012 and expiring on July 31, 2014.

Item No. 10

Prolongation of the appointment of the Company's auditor and approval of
its remuneration

Resolution proposals:

The AGM approved the re-election of PricewaterhouseCoopers Ltd. (H-1077
Budapest, Wesselényi utca 16, registration no.:001464; individual auditor
in charge: Ms. Nikoletta Róka, registration no.: 005608, the substitute
auditor appointed in the event of any extended absence of the auditor in
charge is: Ms. Szilvia Szabados, registration no.: 005314), as statutory
auditor of the Company for a definite period expiring on July 31, 2013. The
AGM authorized the Board of Directors to conclude the agreement with the
statutory auditor.

The AGM has approved the honoraria - amounting to HUF 13 650 000 for
PricewaterhouseCoopers Ltd. (H-1077 Budapest, Wesselényi utca 16,
registration no.:001464;) for its performance as auditor of the Company.
The honoraria includes the fee for the auditing of the annual report
concerning the business year starting on April 1, 2012 and terminating on
March 31, 2013 in accordance with the Hungarian accounting principles and
International Financial Reporting standards (IFRS).

Item No. 11

Authorization of the Board of Directors to increase the registered capital
by way of issuing redeemable shares of preferred liquidation quota

Resolution proposal:

The AGM authorized the Board of Directors of the Company to increase,
within one or more phases, the registered capital of the Company within
five (5) years as of June 28, 2012, exclusively by issuing up to 200,000
redeemable liquidation preference shares (including the already issued
redeemable liquidation preference shares) through private placement. The
highest amount by which the Board of Directors can increase the registered
capital of the Company is up to (within one or more phases) HUF 200,000,000
that is two hundred million Hungarian forints (including the capital
represented by the already issued redeemable liquidation preference
shares). The placement value of such redeemable liquidation preference
shares will be their nominal value equaling to HUF 1,000 (one thousand
Hungarian forints). The Board of Directors is entitled to decide about the
exclusion or limitation of preferential subscription rights related to such
capital increase(s) as may be necessary. The Board of Directors can only
exercise such capital increase right with respect to the new shares to be
issued and the prior written approval of the Supervisory Board.

Item No. 12

Resolution on the exclusion of preferential subscription in connection with
the redeemable shares of preferred liquidation shares

Resolution proposal:

The AGM - based on a written motion presented by the Board of Directors -
decided to exclude the exercise of preemptive subscription rights with
respect to any and all redeemable liquidation preference shares to be
issued through private placement by the Board of Directors on the basis of
the above resolution of the AGM.No. 19/2012. 06. 28.

Item No. 13

Modification and amendment of the Statutes of the Company

Please see the modification and amendment of the Statutes of the Company
in the Appendix 2.

Resolution proposal:

The AGM approved the amendments of the Statutes of the Company as set
attached to the Minutes of the AGM as Appendices 1/A and 1/B.

Item No. 14

Approval of the consolidated text of the Company's Statutes, including
amendments to date

Resolution proposal:

The AGM approved the consolidated version of the Statutes including the
modifications and amendments set forth by the above Resolutions of the AGM
(containing all the amendments to date) attached to the Minutes of the AGM
as Appendices 2/A and 2/B.

APPENDIX 1

REPORT
RELATING TO THE CORPORATE GOVERNANCE ON THE BASIS OF THE CORPORATE
GOVERNANCE RECOMMENDATIONS (THE 'RECOMMENDATIONS') PUBLISHED BY THE
BUDAPEST STOCK EXCHANGE

The Supervisory Board of Zwack Unicum Nyrt. (the 'Company') by its
resolution dated June 28, 2012 approved the following report made by the
Board of Directors in the name of the Company.

The Annual General Meeting of the Company held on June 28, 2012 by its
resolution no. 5/28.06.2012 also approved the following report.

DISCLOSURE ON CORPORATE GOVERNANCE

The Board of Directors of the Company

The Board of Directors of the Company actually consists of seven (7)
members. The Chairman of the Board of Directors is Mr. Sándor Zwack, the
Deputy Chairman is Dr. Rudolf Kobatsch. The list of the members of the
Board of Directors, their presentation and the data related to their
independency status are available at the homepage of the Company
(www.zwack.hu).

The members of the Board of Directors shall be elected by the Shareholders
Meeting in accordance with the proposal of the Shareholders for a period of
maximum four years. The Chairman and the Vice-Chairman of the Board of
Directors are elected by and from among the members of the Board of
Directors for a period of four (4) years. If the Chairman of the Board of
Directors would be unable to execute his function, the responsibility to
act as the Chairman of the Board of Directors shall be automatically
transferred to the Vice-Chairman of the Board of Directors.

The Chairman of the Board of Directors is obliged to call the meetings of
the Board of Directors and to organize and direct the continuous activities
of the work organization of the Company.

The Board of Directors shall hold ordinary meetings at least once every
quarter. The meeting of the Board of Directors is convoked by the Chairman
of the Board of Directors and in case of unavailability, by the
Vice-Chairman of the Board of Directors. The Chairman of the Board of
Directors is also obliged to convoke the meeting of the Board of Directors
if so required by two (2) members jointly with a statement regarding the
reason and purpose of said request.

With the exception of a closed meeting, the members of the Supervisory
Board and also the persons invited by the Board of Directors may take part
in the meeting of the Board of Directors as consultants. Upon the request
of any director, the meeting shall be a closed meeting.

The Board of Directors has a quorum if the majority of the board members
are present. The propositions and resolutions of the Board of Directors
shall be brought with a simple majority of the votes of the board members
present. In case of a tied-vote, the vote of the Chairman of the meeting
shall be the deciding vote. Minutes have to be kept regarding the meeting
of the Board of Directors, which shall contain a list of those present, the
deliberations regarding the issues of the agenda, the results of the votes
and the decisions.

The tasks and competences of the Board of Directors are defined by the
applicable legal regulations, the Statutes of the Company (available at
www.zwack.hu) and its Rules of Operation, accepted by itself.

The Board of Directors, during the past 2011-2012 business year, had eight
(8) meetings, with an average attendance of 91%.

Taking into consideration that the two main shareholders of the Company
having 76%+1 vote have the right to nominate the members of the Board of
Directors pursuant to their Shareholder's Agreement, the Company have not
elaborated any evaluation system so far.

Description of the division of responsibility and duties between the
Managing Body and the executive management, the management of the Company

The Board of Directors shall appoint a General Manager from among the
directors or the employees, for such period of time and under such terms as
it deems fit. The Board of Directors may revoke such appointment at any
time.

The General Manager, within his scope of employment, shall be responsible
for the administration of the Work Organization of the Company, and shall
exercise the employer's rights in respect of the employees of the Company.
The General Manager shall be entitled to delegate his power to exercise the
employer's rights in respect of employees of a given department to the
employee in charge of that department, except for the employer's rights in
respect of employees in executive positions. Employees in executive
positions are those who are designated as such on the basis of the
Company's Rules of Organization and Operation or by the General Manager at
the time of concluding the employment contract.

The General Manager shall have the powers to decide in matters relating to
the day-to-day operations of the Company. The competence of the General
Manager shall be determined by the Rules of Operation of the Company
approved by the Board of Directors.

The list of the members of the management and their presentation are
available at the homepage of the Company (www.zwack.hu).

Evaluation of the work of the management, remuneration (Remuneration
statement)

The Board of Directors continuously appraises the work of the management
and prepares an general appraisal on a yearly basis.

The scope of the remuneration of the General Manager (CEO) falls within the
competence of the Board of Directors and the scope of the remuneration of
the top managers (i.e. members of the management) is within the competence
of the General Manager. However, the following principles apply
universally:

Elements of the remuneration system:

* Basic salary: The basic salary essentially depends on the importance of
the position fulfilled - established on the basis of an analysis of the
related tasks and obligations - and may be influenced by the market.

* Bonus: The bonus is defined as a part of the annual basic salary
established as a percentage thereof. The amount of the bonus is maximized
and the condition of its payment is the realization of defined objectives.
The most important part of the bonus depends on the realization of the
planned results; the remaining part thereof depends on the realization of
the 2 or 3 objectives relating to the managed field.

* Benefits provided in the cafeteria system, equaling to one month's basic
salary.

The basic salary must represent at least 75% of the overall monetary salary
package.

* Other benefits: use of car including full personal use; life insurance;
mobile phone including full personal use; medical and sport services.

Furthermore, during year 2007, the Company elaborated a share incentive
system for three key managers of the Company (Mr. Frank Odzuck, General
Manager; Mr. Tibor Dörnyei, CFO and Deputy General Manager and Mr. Csaba
Belovai, Commercial Director) replacing the former bonus system. In the
framework of the share incentive system, the involved managers acquired
35.000 registered redeemable liquidation preference shares, each having a
nominal value of HUF 1,000, without voting rights, but entitling the
respective shareholders to dividend.

According to the Company's long established practice, the members of the
Board of Directors receive an annual consideration (honoraria) in
consideration of their performance, the amount of which is defined in a
separate resolution of the General Meeting each year.

The Supervisory Board

The Supervisory Board of the Company actually consists of six (6) members.
The Chairman of the Supervisory Board is Dr. Hubertine Underberg-Ruder, its
Deputy Chairman is Mr. Gerd Peskes. The list of the members of the
Supervisory Board, their presentation and the data related to their
independency status are available at the homepage of the Company
(www.zwack.hu).

Pursuant to the Statutes, the Company shall establish a Supervisory Board
consisting of at least six (6) members and at the most twelve (12) members.
The management of the Company entered into an agreement with the workers'
council pursuant to which the employees waived their right to participate
in the operation of the Supervisory Board. The members of the Supervisory
Board shall be elected by the Shareholders Meeting for a period of maximum
four (4) years.

The Supervisory Board shall hold a meeting at least once every six months,
but at any time upon the request of the Shareholders Meeting. The meeting
of the Supervisory Board shall be convoked by its Chairman, who shall also
chair the meeting. The Chairman of the Supervisory Board shall be obliged
to also call the meeting of the Supervisory Board, if so requested in
writing by a member of the Supervisory Board who provides the reason and
objective of the meeting. If the Chairman fails to comply with such
request, the member shall have the right to convene the meeting himself.

At the meeting of the Supervisory Board the Auditor may also take part with
a right of consultation.

The Supervisory Board shall have a quorum if two thirds, but at least three
, of the members of the Supervisory Board are present. The decisions of the
Supervisory Board are brought with a simple majority of the members of the
Supervisory Board present. Minutes have to be kept regarding the meeting of
the Supervisory Board, which shall contain the list of those present, the
results of the votes and the decisions.

The Supervisory Board, during the past 2011-2012 business year, had three
(3) meetings, with an average attendance of 78%.

Taking into consideration that the two main shareholders of the Company
having 76%+1 vote have the right to nominate the members of the Supervisory
Board pursuant to their Shareholder's Agreement, the Company has not
elaborated any evaluation system so far.

The tasks and competences of the Supervisory Board are defined by the
applicable legal regulations, the Statutes of the Company (available at
www.zwack.hu) and its Rules of Operation, accepted by the General Meeting.

The Audit Board

The Company established an Audit Board consisting of three (3) members,
elected by the Shareholder's Meeting from the independent members of the
Supervisory Board.

The Chairman of the Audit Board is Mr. Gerd Peskes. The list of the members
of the Audit Board and their presentation and the data related to their
independency status are available at the homepage of the Company
(www.zwack.hu).

The Audit Board, during the past 2011-2012 business year, had three (3)
meetings, with an average attendance of 100%.

The tasks and competences of the Audit Board are defined by the applicable
legal regulations, the Statutes of the Company (available at www.zwack.hu).

Taking into consideration (i) the shareholding structure of the Company,
(ii) the system of the nomination of titleholders; the facts that (iii) the
Board of Directors prepared the guidelines for the remuneration and
evaluation of the management; and (iv) the members of the Board of
Directors receive an annual honoraria for the performance of their
obligation to be approved by the AGM, there is neither nomination, nor
remuneration committee at the Company. The tasks of the nomination and the
remuneration committee are performed by the Board of Directors.

The Auditor

The Shareholders Meeting shall appoint a statutory Auditor for a period of
one (1) year, who must be a registered auditor employed or recommended by
an internationally recognized auditing firm.

The tasks and competences of the statutory Auditor are defined by the
applicable legal regulations, the Statutes of the Company (available at
www.zwack.hu).

The Auditor of the Company did not receive other assignment than the audit
of the annual report of the Company.

The internal control system

As of the 2008/2009 business year, the Company established a position of
internal controller. However, the size of the Company does not justify the
operation of a separate internal control department, thus the position is
held by an internal controller who is already an employee of the Company
and who directly reports to the General Manager. The Audit Committee
reviewed the result of the different administrative supervisions held at
the Company and analyzed - together with the management - the risks related
to Zwack Unicum Nyrt. as well as the study prepared by an independent
advisor.

Presentation of the company's disclosure policy, and its policy on trading
by insiders

The Company Documents are in compliance with the provisions of the
Companies Act, Act CXX of 2001 on the capital market (the 'Capital Market
Act'), the Budapest Stock Exchange and the Central Depository and Clearing
House respectively, and the Company is disclosing information pursuant to
the above acts and regulations. Consequently, the Company publishes
quarterly quick reports, annual reports following the closing of the
financial year and provides extraordinary reporting if the Company becomes
aware of any information on any past or ongoing change that could directly
or indirectly affect the value of or the yield on the securities, or could
be significant for the market players in making their investment decisions.
Furthermore, the Shareholders Bureau of the Company keeps continuous
contact with the investors. The Company publishes its notifications on its
own homepage (www.zwack.hu), on the homepage of the Budapest Stock Exchange
(www.bet.hu) and on the homepage www.kozzetetelek.hu.

The Company - in the General Manager's Instruction no. 7/2008 - established
its policy on insider tradings, pursuant to the applicable rules of the
Capital Market Act. According to the instruction, the Company considers as
insider - beside the persons defined as insiders by the Capital Market Act
- any and all leaders (higherly ranked than a head of department) and any
and all employees of the accounting and controlling departments. The
insiders cannot sell and/or buy Zwack shares from the turning date of the
balance (March 31) and to the date of the publication of the annual report,
and during the 15 days periods preceding the publication of the quarterly
flash reports and/or within a three-day period preceding the publication of
contracting subject to the obligation of extraordinary disclosure of
information, as the case may be. If the insider purchases/sells Zwack
shares outside of the above period, the Company informs PSZÁF and publishes
such information as prescribed by the Act within two days as of the
transaction. The information shall contain the nomination of the shares,
its rate, the nature of the transaction (purchase or sale), the place and
date of the transaction and the name of the investment service provider.
The Company holds a register about the insiders, as prescribed by the Act.

A brief presentation of rules on exercising shareholder's rights and on the
conducting of the general meeting

Every registered common share having a nominal value of 1,000 HUF (one
thousand Hungarian Forint) shall entitle its holder to one vote at the
General Meeting. Shareholders may exercise their rights at the General
Meeting either in person or through an authorized representative pursuant
to a voting card or an equivalent official certification confirming the
right to vote (hereinafter together: 'Voting Card') to be issued by the
Board of Directors. In accordance with Section 221 of the Companies Act,
the proxy empowering its holder to representation shall be incorporated
into a public legal document or a fully evidencing private deed (as
described in Section 196 of the Civil Procedure Code), and shall be
submitted prior to obtaining the certification entitling the certificate
holder to the receipt of the Voting Card.

Participating and voting at the AGM shall be reserved to the shareholders
duly entered into the Company's Share Register the latest 2 (two) working
day before the AGM. Certification of ownership is not required for the
exercise of shareholders' rights; the entitlement is verified by way of the
identification procedure prescribed in the act on securities and in rules
of procedures of the central depository (KELER Zrt.) (Section 297.§ (2) of
the Company Act). The registration of the shareholder into the Share
Register is the obligation of investment service firms. The registration of
the ownership can be initiated through the respective investment service
firm within the deadline set forth therefore. Shareholders' rights at the
General Meeting may be exercised by the person whose name is contained in
the Share Register at 6 PM (Budapest time) on the second business day
before the first day of the Shareholders' Meeting. (Section 304(3) of the
Company Act).

In lack of a quorum, the reconvened General Meeting shall have a quorum
irrespective of the actual number of shareholders present.

The detailed rules on exercising shareholder's rights and on the conducting
of the General Meeting are set forth by the Statutes of the Company
available at the homepage of the Company (www.zwack.hu).

__________________________________
CORPORATE GOVERNANCE DECLARATION ON COMPLIANCE WITH THE CORPORATE
GOVERNANCE RECOMMENDATIONS

A 1.1.1
The Managing Body ensured that shareholders received access to information
in time to enable them to exercise their rights.
Yes (Complies)

A 1.1.2
The company applies the 'one share - one vote' principle.

The Company has 35.000 registered redeemable liquidation preference shares,
each having a nominal value of HUF 1,000, without voting rights. With
respect to its common shares, the Company applies the 'one share - one
vote' principle.

A 1.2.8
The company ensures that shareholders must meet the same requirements in
order to attend at the general meeting.
Yes (Complies)

A 1.2.9
Items on the general meeting agenda only include subjects which are
correctly detailed and summarized clearly and unambiguously.
Yes (Complies)

The proposals included the suggestions of the Supervisory Board and a
detailed explanation of the effects of the decision.
Yes (Complies)

A 1.2.10
Shareholders' comments on and supplements to the items on the agenda were
published at least two days prior to the general meeting.
No

No such comments or supplements were made so far.

A 1.3.8
Comments on the items of the agenda were made available to shareholders
simultaneously with registration at the latest.
No

No such comments or supplements were made so far.

Written comments made on the items on the agenda were published two working
days prior to the general meeting.
No

No such comments or supplements were made so far.

A 1.3.10
The election and dismissal of executives took place individually and by
separate resolutions.
Yes (Complies)

A 2.1.1
The responsibilities of the Managing Body include those laid out in 2.1.1.
Yes (Complies)

A 2.3.1
The Managing Body held meetings regularly, at times designated in advance.
Yes (Complies)

The Supervisory Board held meetings regularly, at times designated in
advance.
Yes (Complies)

The rules of procedure of the Managing Body provide for unscheduled
meetings and decision-making through electronic communications channels.

The rules of procedure of the Board of Directors provide for unscheduled
meetings, but does not actually enable decision-making through electronic
communications channels

The rules of procedure of the Supervisory Board provide for unscheduled
meetings and decision-making through electronic communications channels.

The rules of procedure of the Supervisory Board provide for unscheduled
meetings, but does not actually enable and decision-making through
electronic communications channels. Section 14.5 of the Statutes of the
Company provides the possibility that these rules enable decision-making
through electronic communications channels.

A 2.5.1
The Management Board of the company has a sufficient number of independent
members to ensure the impartiality of the board.
Yes (Complies)

A 2.5.4
At regular intervals (in connection with the CG Report) the Managing Body
requested a confirmation of their independent status from those members
considered independent.
Yes (Complies)

A 2.5.5
At regular intervals (in connection with the CG Report) the Supervisory
Board requested a confirmation of their independent status from those
members considered independent.
Yes (Complies)

A 2.5.7
The company disclosed on its website the guidelines on the independence of
the Managing Body and the Supervisory Board, as well as the criteria
applied for assessing independence.
No

Taking into consideration its shareholding structure, the Company considers
the fulfillment of the independence criteria set forth in the Company Act
as satisfying.

A 2.6.1
Members of the Managing Body informed the Managing Body (Supervisory
Board/Audit Committee) if they (or any other person in a close relationship
to them) had a significant personal stake in a transaction of the company
(or the company's subsidiary).
No

No such transactions were made.

A 2.6.2
Transactions between board and executive management members (and persons in
close relationship to them) and the company (or its subsidiary) were
conducted according to general rules of practice of the company, but with
stricter transparency rules in place.

Such transactions were concluded according to general rules of practice of
the company, with the general transparency rules.

Transactions which according to 2.6.2, fall outside the normal course of
the company's business, and their terms and conditions were approved by the
Supervisory Board (Audit Committee).
No

No such transactions were made.

A 2.6.3
Board members informed the Supervisory Board/Audit Committee if they
received an offer of Board membership or an offer of an executive
management position in a company which is not part of the company group.
Yes (Complies)

A 2.6.4
The Managing Body established its guidelines on information flow within the
company and the handling of insider information, and monitored compliance
with those guidelines.
Yes (Complies)

The Managing Body established its guidelines regarding insiders' trading in
securities and monitored compliance with those guidelines.
Yes (Complies)

A 2.7.1
The Managing Body formulated remuneration guidelines regarding the
evaluation and remuneration of the work of the Managing Body, the
Supervisory Board and the executive management.
Yes (Complies)

The Supervisory Board formed an opinion on the remuneration guidelines.
Yes (Complies)

The guidelines regarding the remuneration for the Managing Body and the
Supervisory Board and the changes in those guidelines were approved by the
general meeting, as a separate item on the agenda.
Yes (Complies)

A 2.7.2.
The Managing Body prepared an evaluation of the work it carried out in the
given business year.
The Supervisory Board prepared an evaluation of the work it carried out in
the given business year.
Yes (Complies)

A 2.7.3
It is the responsibility of the Managing Body to monitor the performance of
and determine the remuneration for the executive management.
Yes (Complies)

The frameworks of benefits due to members of the executive management that
do not represent normal practice, and the changes in those benefits were
approved by the general meeting as a separate agenda item.
No

No such benefits were accorded.

A 2.7.4
The structure of share-incentive schemes were approved by the general
meeting.
Yes (Complies)

Prior to the decision by the general meeting on share-incentive schemes,
shareholders received detailed information (at least according to those
contained in 2.7.4).
Yes (Complies)

A 2.7.7
The Remuneration Statement was prepared by the company and submitted to the
general meeting.
Yes (Complies)

The Remuneration Statement includes information about the remuneration of
individual members of the Managing Body, the Supervisory Board, and the
executive management.
No

The remuneration of the members of the Board of Directors and the
Supervisory Board is decided by the General Meeting of the Company and is
included in the Remuneration Statement (See also section A 2.7). The
consolidated amount of the remuneration of the management is included in
the annual report and information concerning other benefits of the
management can be found on the homepage of the Company (www.zwack.hu).

A 2.8.1
The Managing Body or the committee operated by it is responsible for
monitoring and controlling the company's entire risk management.
Yes (Complies)

The Managing Body requests information on the efficiency of risk management
procedures at regular intervals.
Yes (Complies)

The Managing Body took the necessary steps to identify the major risk
areas.
Yes (Complies)

A 2.8.3
The Managing Body formulated the principles regarding the system of
internal controls.

The Board of Directors delegated this task to the Audit Committee.
Furthermore, the Board of Directors continuously deals with the issue of
risk management but, the disclosure of detailed information would cause
business disadvantages to the Company.
In the annual report, the Board of Directors advises the shareholders in
connection with the important risk factors influencing the operation of the
Company.

The system of internal controls established by the executive management
guarantees the management of risks affecting the activities of the company,
and the achievement of the company's performance and profit targets.
Yes (Complies)

A 2.8.4
When developing the system of internal controls, the Managing Body took
into consideration the viewpoints included in 2.8.4
Yes (Complies)

A 2.8.5
It is the duty and responsibility of the executive management to develop
and maintain the system of internal controls.
Yes (Complies)

A 2.8.6
The company created an independent Internal Audit function which reports to
the Audit Committee.
Yes

The audit committee reviewed the result of the different administrative
supervisions held at the Company and analyzed - together with the
management - the risks related to Zwack Unicum Nyrt. During the past years,
the Board of Directors have prepared, by independent advisors, studies
evaluating the operational risks of the Company and risks relating to its
information systems. Furthermore, as of the 2008/2009 business year, the
CEO established a function of internal controller. Although the size of the
Company does not justify the operation of a separate internal control
department, the position is held by an internal controller who is already
an employee of the Company and who also reports to the CEO. The audit
committee approved the internal audit plan and the internal controller
reports about the outcome of the controls to the audit committee.

The Internal Audit reported at least once to the Audit Committee on the
operation of risk management, internal control mechanisms and corporate
governance functions.

Yes (Complies)

A 2.8.7
The internal audit activity is carried out by the Internal Audit function
based on authorisation from the Audit Committee.
Yes (Complies)

As an organisation, the Internal Audit function is independent from the
executive management.
No

Please see section A 2.8.6 above.

A 2.8.8
The Internal Audit schedule was approved by the Managing Body (Supervisory
Board) based on the recommendation of the Audit Committee.
Yes (Complies)

A 2.8.9
The Managing Body prepared its report for shareholders on the operation of
internal controls.

Yes (Complies)

A 2.8.10
The Managing Body developed its procedures regarding the receipt,
processing of reports on the operation of internal controls, and the
preparation of its own report.

Please see section A 2.8.6 above.

A 2.8.11
The Managing Body identified the most important deficiencies or flow in the
system of internal controls, and reviewed and re-evaluated the relevant
activities.

Yes (Complies)

A 2.9.2
The Managing Body, the Supervisory Board and the Audit Committee were
notified in all cases when an assignment given to the auditor may have
resulted in significant additional expense, caused a conflict of interest,
or affected normal business practices significantly in any other way.
No

With the exception of the one time IFRS education, the business entity
performing the statutory audit of the Company did not receive other
assignment than the audit of the annual report of the Company pursuant to
Hungarian accounting standards and the international accounting standards
(IFRS).

A 2.9.3
The Managing Body informed the Supervisory Board of any assignment given to
the external auditor or an external advisor in connection with any event
which held significant bearing on the operations of the company.
No

Please see section A 2.9.2 above.

The Managing Body pre-determined in a resolution what circumstances
constitute 'significant bearing'.
No

Please see section A 2.9.2 above.

A 3.1.6
On its website, the company disclosed duties delegated to the Audit
Committee, the Nomination Committee and the Remuneration Committee, as well
as the committees' targets, rules of procedure, composition (indicating the
name, brief biography and the date of appointment of members).
No

The Company published on June 2, 2008 on its website, duties delegated to
the Audit Committee, as well as the committees' targets, rules of
procedure, composition (indicating the name, brief biography and the date
of appointment of members). No other committees are operating at the
Company. The tasks of the nomination and the remuneration committee are
performed by the Board of Directors.

A 3.2.1
The Audit Committee monitored the efficiency of risk management, the
operation of internal controls, and the activity of the Internal Audit.
Yes (Complies)

A 3.2.3
The Audit Committee received accurate and detailed information on the work
schedule of the Internal Auditor and the independent auditor, and received
the auditor's report on problems discovered during the audit.
Yes (Complies)

A 3.2.4
The Audit Committee requested the new candidate for the position of auditor
to submit the disclosure statement according to 3.2.4.
No

The same entity performs auditing activities for long time which has no
other relationship with the Company, the Board of Directors, the
Supervisory Board and the management.

A 3.3.1
There is a Nomination Committee operating at the company.

The two main shareholders of the Company having 76% + 1 votes concluded a
shareholders agreement regulating the nomination of titleholders, thus such
committee is not necessary. The tasks of the nomination and the
remuneration committee are performed by the Board of Directors.

A 3.3.2
The Nomination Committee provided for the preparation of personnel changes.

Please see section A 3.3.1 above.

The Nomination Committee reviewed the procedures regarding the election and
appointment of members of the executive management.
No

Please see section A 3.3.1 above.

The Nomination Committee evaluated the activity of board and executive
management members.
No

Please see section A 3.3.1 above.

The Nomination Committee examined all the proposals regarding the
nomination of board members which were submitted by shareholders or the
Managing Body.

Please see section A 3.3.1 above.

A 3.4.1
There is a Remuneration Committee operating at the company.

The tasks of the nomination and the remuneration committee are performed
by the Board of Directors (please see in the Remuneration statement,
included in the first part of this Report).

A 3.4.2
The Remuneration Committee made a proposal for the system of remuneration
for the boards and the executive management (individual levels and the
structure of remuneration), and carries out its monitoring
No