ENG_Skonsolidowane-sprawozdanie-finansowe-Grupa-Kapitałowej-Żywiec-S.A.-za-2013-r..pdf

CAPITAL GROUP YWIEC S.A.

CONSOLIDATED FINANCIAL STATEMENT FOR 2013

CONSOLIDATED FINANCIAL STATEMENT Capital Group ywiec S.A. in PLN thousand unless otherwise stated As on and for the finan. year ended 31.12.2013 TRANSLATION ONLY

Contents

Consolidated statement of financial position ................................................................................................................................... 3

Consolidated profit and loss and other comprehensive income ....................................................................................................... 4

Consolidated statement of changes in equity ................................................................................................................................... 5

Consolidated statement of cash flow ............................................................................................................................................... 6

Additional information .................................................................................................................................................................... 7

Statutory information ....................................................................................................................................................... 7

Principal accounting policy ............................................................................................................................................. 7

Explanatory notes .......................................................................................................................................................... 17

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Capital Group ywiec S.A.As on and for the finan.year ended 31.12.2013

CONSOLIDATED FINANCIAL STATEMENT in PLN thousand unless otherwise stated

TRANSLATION ONLY

1 Note 31st December 2013 31st December 2012CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Non-current assets 1 378 377 1 394 492Tangible fixed assets 8 1 193 592 1 240 178Intangible fixed assets 12 73 043 72 934Deferred income tax asset 29 75 149 37 384Investments in associated companies 14 8 851 8 878Available-for-sale financial assets 2 2Other long-term receivables 15 27 740 35 116

Current assets 1 437 383 995 430Inventories 17 340 013 299 676Trade and other receivables 15 1 057 711 652 220Current income tax asset 15 10 243 12 176Cash and cash equivalents 19 29 416 31 358

Total assets 2 815 760 2 389 922

Equity 318 002 375 325Share capital 21 25 678 25 678Share premium 50 153 50 153Other capitals 22 150 739 131 644Retained earnings and net profit for the period 91 432 167 850

318 002 375 325Liabilities 2 497 758 2 014 597Non-current liabilities 745 908 206 501

Loans and indebted commercial papers 23, 25 690 000 155 000Retirement benefit and jubilee bonuses obligations 27 55 908 51 501

Current liabilities 1 751 850 1 808 096Loans and indebted commercial papers 24, 26 210 298 741 285Retirement benefit and jubilee bonuses obligations 28 6 435 7 020Current income tax liabilities 33 64 8 187Trade and other payables 33 1 525 888 1 041 209Provisions for other liabilities and charges 34 9 165 10 395

Total equity and liabilities 2 815 760 2 389 922

Capital and reserves attributable to the equity holders of the Company

Notes presented on pages 7-59 are integral part of annual consolidated financial statement3/59



TRANSLATION ONLY

2

Note

For the period from 01.01.2013

till 31.12.2013


till 31.12.2012CONSOLIDATED PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

Net sales of finished products, goods for resale and materials 35, 36 3 502 699 3 565 676Cost of finished products, goods for resale and materials sold 37 2 011 624 1 939 921Gross profit 1 491 075 1 625 755Selling and distribution expenses 37 1 027 044 1 099 785General and administration expenses 37 211 508 205 284Other income 39 4 611 41 639Other gains net 38 16 137 8 579Operating profit 273 271 370 904Interests income 40 2 306 1 509Interest costs 41 38 718 57 207Other financial income/(expenses) net 42 (580) 2 092Share in (loss)/profit of associates 14 (27) 264Profit before income tax 236 252 317 562Income tax 43 (35 108) 7 321Net profit 271 360 310 241Attributable to: - Shareholders of the Company 271 360 310 241Total profit and loss and other comprehensive income for the period 271 360 310 241Attributable to: - Shareholders of the Company 271 360 310 241

Weighted average number of potential number of ordinary shares 44 10 271 337 10 271 337Diluted earnings per ordinary share (in PLN) 26,42 30,20

Diluted earnings per one share equal earnings per one share.




TRANSLATION ONLY

3

Share capital Share premiumRetained

earnings and net profit of period

Capital and reserves attributable to the equity holders of the Company

Total Equity

Reseve capital - other

Other reservecapitals

Current periodBalance at 1st January 2013 25 678 50 153 101 592 30 052 167 850 375 325 375 325Profit and loss and other comprehensive income for the reporting period

Net income for the period - - - - 271 360 271 360 271 360

Profit and loss and other comprehensive income for the reporting period - - - - 271 360 271 360 271 360Transactions with owners of the parent company, recognized directly in equityPayments from and to owners

Set up of dividend fund - - - 49 147 (49 147) - -Dividend - - - (30 052) (298 631) (328 683) (328 683)

Total payments from and to owners - - - 19 095 (347 778) (328 683) (328 683)Balance at 31st December 2013 25 678 50 153 101 592 49 147 91 432 318 002 318 002

Comparable periodBalance at 1st January 2012 25 678 50 153 101 592 72 407 102 851 352 681 352 681Profit and loss and other comprehensive income for the reporting period

Net income for the period - - - - 310 241 310 241 310 241

Profit and loss and other comprehensive income for the reporting period - - - - 310 241 310 241 310 241Transactions with owners of the parent company, recognized directly in equityPayments from and to owners

Set up of dividend fund - - - 30 052 (30 052) - -Dividend - - - (72 407) (215 190) (287 597) (287 597)

Total payments from and to owners - - - (42 355) (245 242) (287 597) (287 597)Balance at 31st December 2012 25 678 50 153 101 592 30 052 167 850 375 325 375 325

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Other capitals

Notes presented on pages 7-59 are integral part of annual consolidated financial statement

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TRANSLATION ONLY

4 Note For the period from 01.01.2013

till 31.12.2013


till 31.12.2012CONSOLIDATED STATEMENT OF CASH FLOW

Cash flows from operating activitiesProfit before income tax 236 252 317 562

Total adjustments 269 090 274 678(Profit) of associates valued by the equity method 14 27 (29) Depreciation 37 193 660 191 692 Income tax (paid) (8 847) (9 914)Dividend and interest received (2 541) (1 744) Interests costs 41 38 718 57 207 (Gains) on sales and disposal of tangible fixed assets (16 137) (8 579) Impairment of non current assets 37 (84) 345 Increase/decrease in inventories (40 337) (55 366) Increase/decrease in provisions for other liabilities and charges (1 230) (5 206) Increase/decrease in trade and other receivables (398 115) (73 675) Increase/decrease in retirement and jubilee bonuses benefits 3 822 5 654 Increase/decrease in trade and other payables 7.19 500 154 174 293

Net cash flow from operating activities 505 342 592 240

Cash flow from investing activities Sales of intangible fixed assets and tangible fixed assets 21 601 9 404 Dividend received 235 235 Interest received 2 306 1 509 Purchases of intangible fixed assets and tangible fixed assets (168 038) (206 414)

Net cash flow from investing activities (143 896) (195 266)

Net cash flow from financing activities Credits and loans received 260 000 85 000 Issues of long term indebted commercial papers 100 000 120 000 Dividends and other payments to the owners (328 683) (287 597) Repayment of loans (355 000) (75 000) Repayment of indebted commercial papers (100 000) (120 000) Interest paid (44 997) (57 272)

Net cash flow used in financing activities (468 680) (334 869) Total net cash flow (107 234) 62 105 Balance sheet change in cash and cash equivalents (107 234) 62 105 Total cash and cash equivalents at the beginning of the period (72 984) (135 089) Total cash and cash equivalents at the end of the period 20 (180 218) (72 984)


CONSOILDATED FINANCIAL STATEMENT Capital Group ywiec S.A. in PLN thousand unless otherwise stated As on and for the finan. year ended 31.12.2013 TRANSLATION ONLY

Additional information

5. Statutory information

5.1. Main areas of activity of Capital Group ywiec S.A.

The principal activity of the Capital Group ywiec S.A. (Capital Group) is the production of beer, designated by Code PKD 1105 Z also its distribution and the distribution of other alcoholic beverages and soft drinks. The Group's parent company is a joint-stock company, Grupa ywiec S.A. with the seat in ywiec, Browarna Street 88, (the parent company, the Company), registered on 8th June 2001 in the National Court Register under number 0000018602 in the Bielsko-Biaa District Court. According to Warsaw Stock Exchange classification the Company operates in food industry. The Company is also entitled to use the abbreviated name ywiec S.A..

This consolidated financial statement for 2013 covers the Parent Company and its subsidiaries (named altogether as Grupa ywiec the Group the Capital Group) and the Companys shares in associates.

The consolidated financial statements were prepared by the parent company and its subsidiaries under going concern basis for a foreseeable future.

In the opinion of Management Board of the parent Company, there are no circumstances indicating any threat over the Capital Groups ability to continue as a going concern.

Principal accounting policies applied to prepare the consolidated financial statement are disclosed below. The following principal accounting policies were used continuously in all periods covered by the consolidated financial statement.

According to IAS 1 in the reporting period the disclosure method of financial statements was changed through change in name of statement of comprehensive income to statement of profit and loss and other comprehensive income.

Other standards that apply starting from 2013 had no significant on consolidated financial statement.

6. Principal accounting policies

6.1. Statement of compliance

The consolidated financial statement for 2013 is drawn up in accordance with the regulations of the Cabinet Decree dated 19th February 2009 on current and periodical information and reports disclosed by joint stock publicly traded companies and conditions of recognizing information as required by the law of a country not being a Member of the European Union.

6.2. Basis of preparation

The consolidated financial statement was prepared in accordance with International Financial Reporting Standards approved by the European Union (IFRS EU).

This consolidated financial statement has been prepared under the historical cost convention excluding financial assets available for sale are presented as a fair value.

The preparation of financial statement in accordance with IFRS EU requires the use of certain critical accounting estimates. It also requires the Management Board to exercise judgment in process of applying the Groups accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statement are disclosed in Note 7.3. of the consolidated financial statement.

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The consolidated financial statement was authorised for issue by the Management Board of Grupa ywiec S.A. at the day of signature.

6.3. Consolidation

6.3.1. Subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies in order to obtain benefits from their activities generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that, are currently exercisable or convertible, are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date on which control ceases.

The purchase method of accounting is used to account acquisition of subsidiaries control by the Group as of acquisition day.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Groups share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the Groups share of the net assets of the subsidiary acquired, the difference is recognised directly in the statement of profit and loss and other comprehensive income.

Standalone financial statements of subsidiaries included in consolidation were prepared using principal accounting policies and in accordance with IFRS EU.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Value of parent companys shares in subsidiaries and other entities included in consolidation shares in subsidiaries are eliminated with the part of fair value of subsidiarys net assets reflecting parent companys share and other companies of Capital Groups share in subsidiaries at the date the control over them is taken over.

6.3.2. Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting and are initially recognised at cost.

The Groups investment in associates includes goodwill identified on acquisition.

The Groups share of its associates post-acquisition profits or losses is recognised in the statement of profit and loss and other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.

When the Groups share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised losses on transactions between the Group and its associates are eliminated to the extent of the Groups interest in the associates. The accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

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6.4. Segment reporting

The Management Board has determined the operating segments which are used to make strategic decisions. The Management Board analyses the activity from geographical perspective and takes into account sales results of western, north, middle-east, south-west and south-east region.

According to IFRS 8 article 12 (join categories) it is possible to combine two or more operating segments into a single operating segment if the merger process is compatible with the fundamental principle of IFRS 8, segments have similar economic characteristics and are similar in each of the following aspects:

- types of products and services; - types of productions processes; - types or groups of customers for products and services; - methods used for the distributions of product or services , or; - if applicable, the type of regulatory environments, for example banking area, insurance and

public utilities.

Group conducts homogeneous business activity, and operating segments show similar economic characteristics.

Accordingly the Management Board recognised that Group fully complies with these principles and can combine operating segments into one reporting segment as the Group mains products are beer, other alcoholic beverages and soft drinks which are not different from each other between the segments. Beer is produced in five breweries that have nearly identical production processes. The type and client group are very similar to each other in different segments and distribution of products takes place in a uniform manner.

In hereby consolidated financial statement is used a combination of all operating segments into one reporting segment. Below you can find disclosure requirements according to IFRS 8 items 32-34.

Detailed information concerning segment reporting is disclosed in Explanatory note 7.11 hereby consolidated financial statement.

6.5. Foreign currency translation

6.5.1. Functional and presentation currency Items included in the financial statements of each of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency of company). The consolidated financial statements are presented in Polish zloty, which is the Companys functional and Groups presentation currency.

6.5.2. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions, as follows:

(i) for foreign currency sales and receivables payment transactions; (ii) for foreign currency purchases and liability payment transactions; (iii) inflow of sales receivables into currency account.

Other transactions are translated at actually used exchange rate (bank exchange selling/buying rate - used for transactions of currency sales or purchase in the bank, average exchange rate calculated with average prices measurement - used for the valuation of liability payment).

Assets and liabilities at the balance sheet date are valuated at the average rate determined for a given currency by the National Bank of Poland.

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit and loss and other comprehensive income, except when deferred in equity as qualifying cash flow hedges.

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6.6. Property, plant and equipment

All property, plant and equipment are shown at cost of acquisition (cost of manufacture) less subsequent depreciation and impairment losses, except for land, which is shown at cost of acquisition less impairment losses. Cost of acquisition includes expenditure that is directly attributable to the acquisition of these items.

Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

All other repairs and maintenance expenditures are charged to the statement of profit and loss and other comprehensive income during the financial period in which they incurred.

Depreciation is calculated using the straight-line method to allocate the cost of each asset to its residual value over its estimated useful life, as follows:

Land not depreciated Buildings 5-40 years Plant and machinery 3-30 years Furniture, fixture and fittings 3-5 years Motor vehicles and transport equipment 5 years Returnable packaging items 5-15 years Marketing equipment 5 years Taps 5 years

For tax purposes, the Groups companies use depreciation rates as stipulated by the depreciation rates appendix to Corporate Income Tax Act dated 15th February 1992.

Tangible fixed assets under construction are valued at actual cost.

Purchased perpetual usufruct of land is presented in the land. The balance sheet value at the beginning is based on the fair value (in case of merger of entities) or the cost of acquisition carried (other cases).

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the date of preparation of the annual consolidated financial statement.

An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of profit and loss and other comprehensive income.

6.7. Intangible assets

6.7.1. Trademarks and licences Trademarks and licences are recognised at historical cost. Trademarks and licences with a definite useful life are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of trademarks over their estimated useful lives (not longer than 5 years). Trademarks with an indefinite useful life are tested for impairment annually and when there are impartment conditions the impairment losses is made.

6.7.2. Computer software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives (3-7 years).

Costs associated with developing or maintaining computer software programs are recognised in the statement of profit and loss and other comprehensive income as an expense as incurred.

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6.8. Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are tested for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable.

An impairment loss is recognised in statement of profit and loss and other comprehensive income for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that were impaired are revived for possible reversal of the impairment at each reporting date.

6.9. Financial assets

The Group classifies its investments in the following categories: financial assets at fair value through statement of profit and loss and other comprehensive income, loans and receivables, held to maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.

6.9.1. Financial assets at fair value through the statement of profit and loss and other comprehensive income

This category has two sub-categories: financial assets held for trading, and those designated at fair value through the statement of comprehensive income at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current if they are either held for trading or are expected to be realised within 12 months of the end of financial year.

6.9.2. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the end of financial year. These are classified as non-current assets. Loans and receivables are included in trade and other receivables in the statement of financial position.

6.9.3. Held to maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Groups management has the positive intention and ability to hold to maturity. They are included in non-current assets, except for those with maturities less than 12 months from the end of financial year, which are classified as current assets.

6.9.4. Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless Management intends to dispose of the investment within 12 months of the end of financial year.

Purchases and disposal of financial assets are recognised on transaction date the date on which the Group commits to purchase or sell the financial asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through the statement of profit and loss and other comprehensive income. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through the statement of comprehensive income are subsequently recognized at fair value. Loans and receivables and held-to-maturity investments are valued at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the financial

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assets at fair value through the statement of comprehensive income category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the statement of profit and loss and other comprehensive income as gains and losses from investment securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arms length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuers specific circumstances.

The Group assesses at each end of the reporting period date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in the statement of profit and loss and other comprehensive income. Impairment losses recognised in the income statement on equity instruments are not reversed through the profit or loss.

6.10. Leases

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership is classified as finance leases. Finance leases are capitalised at the leases inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance expenses in order to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance expenses, are recognized in other payables. The interest element of the finance expenses is charged to income statement over the lease period in order to achieve a constant periodic rate of interest on the remaining balance. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the assets useful life and the lease term.

Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to income statement on a straight-line basis over the period of the lease.

6.11. Inventories

Inventories are presented at the cost of acquisition or production cost not higher than net realisable value. Cost is determined using following methods for particular group of inventories: raw materials, packaging, finished goods, products bought in for resale, semi-finished products and

work in progress valued according to standard prices; other inventories valued according to the weighted average method.

The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs and prepaid excise duty. Production cost of inventories includes the transfer from equity of any gains/losses on qualifying cash flow hedges relating to purchase of raw materials.

The net selling price is estimated selling price available to gain from basic activity less respective variable selling expenses.

6.12. Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at adjusted purchase price (amortised cost) using the effective interest method, less provision for impairment. A provision for

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impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the provision is recognised in the income statement within selling expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against selling expenses in the income statement.

6.13. Cash and cash equivalents

Cash and cash equivalents are recognized in the statement of financial position at fair value. Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are presented within credits, loans and indebted commercial papers in current liabilities. For the purposes of the cash flow statement current bank overdrafts held at call, which are integral part of cash management, are presented together with cash and cash equivalents.

6.14. Share capital, reserves and own shares

Ordinary share capital is stated at the nominal value of shares issued according to the statute and registered in the National Court Register.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds, net of tax.

Other reserves include revaluation reserve, dividend fund and other reserve capitals.

Other reserve capital is formed according to the Company statutes from retained earnings and transfers from other reserves.

The dividend reserve (dividend fund) is formed from available retained earnings on the basis of resolution of General Shareholders Meeting of Grupa ywiec S.A.

Shares purchased by Group entity, which are part of Companys share capital (own shares), are shown at cost till redemption of shares. At the moment of redemption, the nominal value of shares deducts share capital and surplus of value of shares at purchase price over their nominal value deducts share premium recognized initially.

6.15. Interest-bearing loans, borrowings and indebted commercial papers

Interest-bearing loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Interest-bearing loans and borrowings are subsequently valued at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss and other comprehensive income over the period of the borrowings using the effective interest method.

Interest from long term loans and borrowings paid within 12 months are presented in Short term credits, loans and indebted commercial papers.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of reporting period date.

Indebted commercial papers (bonds) issued by Grupa ywiec S.A. are initially recognised at fair value determined using market interest rate, subsequently using adjusted purchase price (amortised cost) until extinguished maturity. Bonds are classified as a short or long term liability depending on maturity.

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6.16. Income taxes

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the profit or loss except to the extent that it relates to items recognised directly in other comprehensive income or in equity, in which case it is recognised in other comprehensive income or in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the end of reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is calculated, using the liability method, based on temporary differences arising between the tax bases of assets and liabilities, their carrying amounts in the financial statement, tax losses and tax allowance. The deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit and loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

According to negative temporary difference between book and tax value of assets and liabilities, tax loss and tax relief possible to deduct in the future the deferred tax assets are accounted for. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax liabilities are provided on temporary differences arising on differences between assets and liabilities book value and their tax value.

Current tax assets and liabilities are offset if there is a legally enforceable right to do so and an intention either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Deferred taxes and liabilities are offset within each tax jurisdiction to the extent that actual tax payments and receipts can be settled net.

6.17. Employee benefits

6.17.1. Pension obligations A defined contribution plan is a pension plan under which the Group pays fixed contributions into a National Fund and other Pension Funds. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

6.17.2. Other post-employment obligations Some Group companies provide post-retirement healthcare benefits to their retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. Due to the immaterial nature of these costs they are expensed as incurred.

6.17.3. Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of reporting period date are discounted to present value.

6.17.4. Jubilee bonuses and retirement payments Provisions for jubilee bonuses and retirement payments, required by the article 92 of the Labour Code and collective labour agreement, are created in the amount calculated by an actuary. Revaluation of the provisions is performed once a year and included in statement of profit and loss and other comprehensive income in item General and administration expenses.

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6.18. Provisions

Provisions (for example for environmental restoration, restructuring costs and legal claims) are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Restructuring provisions comprise primarily employee termination payments. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the probability that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the probability of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of Managements best estimate of the expenditure required to settle the present obligation at the end of reporting period date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risk specific to the liability.

6.19. Trade and other payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

The parent company recognize in the statement of financial position, branded returnable packaging (bottles, crates, kegs and pallets) as tangible fixed assets. At the same time the accounting records are carried out concerning movements in this kind of packaging deposit creditor. The branded returnable packaging which customers possess are shown as trade debtors and simultaneously as deposit obligations.

Details concerning deposit obligation are disclosed in Note 37.

6.20. Revenue recognition

Revenue comprises the fair value of the sale of products, goods and services, net of value-added tax, rebates and discounts and after eliminating sales within the Group. Revenue is recognised as follows:

6.20.1. Sales of products, goods for resale and materials Sales of products, goods for resale and materials are recognised when a Group entity has delivered products and goods to the customer; the customer has accepted the products and collectibles of the related receivables are reasonably assured.

Excise duty is not included in the sales of products and goods item.

The amount of excise duty derived from not sold finished products and goods is presented in Trade and other receivables, till the moment of sale.

6.20.2. Sales of services Sales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

6.20.3. Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective interest rate of the instrument, and continues

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unwinding the discount as interest income. Interest income from loans granted with reduced value is posted at original effective interest rate.

Interest income is included in the statement of comprehensive income in item Interest income or Other income.

6.20.4. Dividend income Dividend income is recognised in statement of profit and loss and other comprehensive income in item Other income when the right to receive payment is established.

6.21. Expenses

6.21.1. Interest expenses and other financial expenses Interest expenses and other financial expenses comprise interest payable on borrowings, foreign exchange losses, and losses on hedging instruments that are recognised in the profit or loss for the current period.

6.21.2. Advertising and promotional costs and systems development expenses Advertising and promotional expenses are charged into the profit or loss in year in which these expenses were incurred. Development expenses and systems development expenses are charged into the profit or loss in year in which these expenses were incurred if they do not meet the criteria for capitalisation.

Co-operation agreements The Group has full control over profits from agreements transacted with licensed premises. Agreements are recognized and recorded over their useful lives (from one till five years).

6.22. Dividend distribution

Dividend distribution to the Companys shareholders is recognised as a liability in the Groups financial statements in the period in which the dividends are approved by the Companys shareholders.

6.23. New accounting standards and IFRIC interpretations not adopted in consolidated financial statement

A number of new standards, amendments to standards and interpretations that are not yet effective for reporting periods ending 31 December 2013 and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group, except for IFRS 9 Financial Instruments, which is currently awaiting for approval by the European Union and could have an impact on classification and measurement of financial assets. The Group does not plan to adopt this standard earlier and the extent of the impact has not been determined.

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7. Explanatory notes

7.1. Information on members of Supervisory and Management Board of the parent Company

Supervisory Board Jan Derck van Karnebeek - Chairman Allan James Myers - Deputy Chairman David Richard Hazelwood - Member Krzysztof Jasek - Member Krzysztof Loth - Member Thomas Polanyi - Member until 4th April 2013 Lodewijk Lockefeer - Member since 5th April 2013 John Charles Higgins - Member

Management Board Guillaume Duverdier - President since 6th December 2013 Xavier Belison - President until 30th October 2013 Michael Calfee - Member since 15th January 2013 Jacek Gerula - Member Barry Sheehan - Member Michael Peter McKeown - Member Magorzata Joanna Lubelska - Member Grayna Rzehak-Majcherek - Member

On 6th December 2012 Supervisory Board of the Company appointed Mr Michael Calfee to the position of the Member of the Management Board for three-year term effective from 15th January 2013.

On 1st March 2013 Mr Thomas Polanyi resigned from the position of the Member of the Supervisory Board of Grupa ywiec S.A. effective from 4th April 2013.

On 1st March 2013 Supervisory Board of Grupa ywiec S.A. according to article 368 item 4, of the Commercial Companies Code decided, at the day of approval of the annual financial statements for the 2012 by the Ordinary Shareholders Meeting, to reappoint to the positions of the Members of the Management Board of Grupa ywiec S.A. for another three-year cadence:

- Mr Xavier Belison- to the position of President of the Management Board of Grupa ywiec S.A.;

- Mr Jacek Gerula- to the position of Member of the Management Board of Grupa ywiec S.A.; - Mr Michael Peter McKeown- to the position of Member of the Management Board of Grupa

ywiec S.A.

According to the resolutions No. 6/2013 and 7/2013 passed on 5th April 2013 by the General Shareholders Meeting of Grupa ywiec S.A. for another three years cadence ending at the day of approval of the financial statements for 2015 by the General Shareholders Meeting, Mr John Higgins and Mr Lodewijk Lockefeer have been appointed for a Members of the Supervisory Board of the Company.

On 16th September 2013 Mr Xavier Belison resigned from the position of the President of the Management Board of Grupa ywiec S.A. as of 30th October 2013 by submitting a written statement addressed to the Supervisory Board of Grupa ywiec S.A.

On 6th December 2013 Supervisory Board of Grupa ywiec S.A., acting according to article 368, paragraph 4 of the Commercial Companies Code, appointed Mr Guillaume Duverdier a Member of the Management Board of the Company in the position of a President of the Management Board of Grupa ywiec S.A. as of 6th December 2013.

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7.2. The Groups entities

The Group's parent company is the joint stock company Grupa ywiec S.A.

Current Groups and its subsidiaries organisational structure has been presented below.

GRUPA YWIEC S.A.

Centrum Finansowo-Ksiegowe ywiecSp. z o.o. (100%)

Trans Trade-ywiec Sp. z o.o.(100%)

ywiec Sprzeda i Dystrybucja Sp. z o.o.(100%)

Brandhouse ywiec Sprzeda i Dystrybucja

Spka z ograniczon odpowiedzialnoci (100%)

Rolno-Spoywczy Rynek Hurtowy Gieda Elblska S.A.

(60.35%*)

*Grupa ywiec S.A. owns 60.35% of the share capital which represents 43.52% votes at the General Shareholders Meeting of Rolno-Spoywczy Rynek Hurtowy Gieda Elblska S.A.

On 2nd September 2013 the District Court in Bielsko- Biaa, VIII Economic Department of National Court Register, registered transformation of Brandhouse ywiec Sprzeda i Dystrybucja Spka z ograniczona odpowiedzialnoci spka komandytowa into Brandhouse ywiec Sprzeda i Dystrybucja Spka z ograniczon odpowiedzialnoci spka komandytowo-akcyjna which was registered with National Court Register number 0000475467. Transformation of Brandhouse was based on Article 551 paragraph 1, Article 562, 563 and 581 of the Commercial Companies Code and the resolution passed on 20th August 2013 by the Partners of the company transformed.

Subsequently on 2nd December 2013 the District Court in Bielsko- Biaa, VIII Economic Department of National Court Register, registered transformation of Brandhouse ywiec Sprzeda i Dystrybucja Spka z ograniczon odpowiedzialnoci spka komandytowo-akcyjna into Brandhouse ywiec Sprzeda i Dystrybucja Spka z ograniczon odpowiedzialnoci, with National Court Register number: 0000488819. Transformation of Brandhouse was based on Article 551 paragraph 1, Article 562, 563 and 571 of the Commercial Companies Code and the resolution passed on 7th November 2013 by the Partners of the company transformed.

The main activity of Brandhouse ywiec Sprzeda i Dystrybucja Spka z o.o. with the seat in ywiec, is leasing of intellectual property and similar products coded under PKD 2007 77.40.Z, except copyrighted works.

On 16th December 2013, the Management Board of ywiec Sprzeda i Dystrybucja Spka z ograniczon odpowiedzialnoci signed an agreement with the Management Board of Grupa ywiec S.A. to sell one share in Brandhouse ywiec Sprzeda i Dystrybucja Spka z o.o. at a price of PLN 66 thousand.

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On 17th December 2013 the Management Board of Grupa ywiec S.A. decided to take action aiming at merging Grupy ywiec S.A. (Acquiring Company) with subsidiary company Brandhouse ywiec Sprzeda i Dystrybucja Sp. z o.o. with its seat in ywiec (Acquired Company). The merger of the companies will be conducted according to Article 492 paragraph 1 item 1 of the Commercial Companies Code by the transfer of all assets of the acquired company to acquiring company. Planned date of the merger is the first half of 2014.

7.3. Critical estimates and judgments

The Group carries out certain judgements and makes assumptions concerning the future. Booking estimates reached that way will meet the actual results rarely. Significant judgement and assumptions are presented below.

(a) Tangible fixed assets and intangible fixed assets.

Details information concerning impairment of tangible fixed assets is disclosed in explanatory Note 8 estimated useful life of tangible fixed assets in Note 6.6, intangible fixed assets including trademarks in explanatory Note 12.

(b) Impairment of receivables

Details concerning impairment of receivables in Note 15

(c) Provisions for retirement benefits and jubilee bonuses and deposit obligation.

Details concerning provisions for retirement benefits and jubilee bonuses are in Notes 27 and 28 and decrease of deposit obligation in 37.

(d) Deferred tax

Details concerning deferred tax are presented in Note 29.

7.4. Financial risk management

The Groups activities expose it to a variety of financial risks: market risk (including price risk, interest rate risk and currency risk), credit risk and liquidity risk. Within overall risk management programme Group focuses on monitoring financial markets in order to minimise potential adverse effects on financial results.

Risk management is carried out by Groups Central Treasury Department under policies approved by the Management Board and the Supervisory Board. Group Treasury Department identifies, evaluates and hedges potential financial risks and threats in cooperation with operating companies.

Market risk

a) Price risk

The Group does not hold investments in equity securities classified on the statement of financial position as available for sale so is not exposed to equity securities price risk.

b) Interest rate risk

The Group is exposed to interest rate risk mainly as a result of partial financing of its principal activity with bank credits and loans. The main objective of interest rate risk management is to hedge from the increase of the market interest rate and its influence on Groups financing expenses. Group hedges future cash flows from interest payments incurring from exploited bank credits and loans.

Groups Treasury Department evaluates and audits cash flow hedges from interest payments, depending on actual requirements.

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In 2013 and in 2012 the Group didnt comprise any cash flow hedges for interest payments.

Sensitivity analysis of interest rate movements

31st December 2013 31st December 2012 Debt at the end of the period from bank credits and loans 900,298 896,285

Interest rate 1M WIBOR at the end of the period 2.61% 4.22%

Sensitivity analysis for increase / decrease of interest rate 1.0% 1.0%

Difference in the amount of interest and its influence on profit before income tax

9,003 8,963

c) Foreign currency risk

Capital Group ywiec S.A. is exposed to foreign currency risk as a result of carried out transactions in foreign currency. In connection with fact that companies of the Group are exposed to foreign currency risk, the Group Treasury Department monitors on an ongoing basis foreign currency exposure forecasted for 12 forthcoming months.

According with the decision made by the Supervisory Board, concerning ceasing policy to reduce foreign exchange rate risk, as on 31st December 2013 and also as on 31st December 2012 the Group didnt hold any hedging transactions.

As on 31st December 2013 the amount of PLN 69,530 thousand net liabilities, that is 21.9% of net assets, is denominated in foreign currency.

Sensitivity analysis of foreign currency risk for basic currencies

Trade and other receivables in foreign currency 31st December 2013 31st December 2012 - EUR () 2,377 2,657 - USD ($) 1,152 893 - GBP () 141 265

Trade and other payables in foreign currency 31st December 2013 31st December 2012 - EUR () 20,705 12,515 - USD ($) 2 36 - GBP () 11 16

Exchange rate 31.12.2013

PLN exchange rate weakened by 10%

/PLN 4.1472 4.5619 $/PLN 3.0120 3.3132 /PLN 4.9828 5.4811

Exchange rate 31.12. 2012

PLN exchange rate weakened by 10%

/PLN 4.0882 4.4970 $/PLN 3.0996 3.4096 /PLN 5.0119 5.5131

31st December 2013 $ Total Net balance sheet exposure in foreign currency

18,328 (1,150) (130)

Effects on equity in PLN (7,601) 347 65 (7,189) Effects on profit before taxation in PLN (7,601) 347 65 (7,189)

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9,858 (857) (249)

Effects on equity in PLN (4,030) 266 125 (3,639) Effects on profit before taxation in PLN (4,030) 266 125 (3,639)


PLN exchange rate strengthened by

10% /PLN 4.1472 3.7325 $/PLN 3.0120 2.7108 /PLN 4.9828 4.4845


PLN exchange rate strengthened by

10% /PLN 4.0882 3.6794 $/PLN 3.0996 2,7896 /PLN 5.0119 4.5107


18,328 (1,150) (130)

Effects on equity in PLN 7,601 (347) (65) 7,189 Effects on profit before taxation in PLN 7,601 (347) (65) 7,189


9,858 (857) (249)

Effects on equity in PLN 4,030 (266) (125) 3,639 Effects on profit before taxation in PLN 4,030 (266) (125) 3,639

Credit risk

Credit risk that arises within the Group can be divided into two categories: a) credit risk arising in case of cash and cash equivalents, derivative financial instruments, bank

deposits and cash deposits in other financial institutions, b) credit risk related with customers of Capital Group in particular sell out channels: wholesale,

retail, HoReCa and modern trade, including unsettled receivables and payables to make business transaction.

Credit risk described in point (a) is managed by the treasury department of the Group. Credit control department manages risk described in point (b) by assessing the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are based on internal ratings in accordance with limits set by the Management Board. Usage of individual risk limits is regularly monitored.

It is the Groups policy that all customers who wish to trade on credit terms are subject to initial credit verification procedures. In addition, receivable balances are monitored on an ongoing basis. Trade debts risk is highly diverse as are granted to grate number of varied costumers. Information concerning customer classification is disclosed in Note 15.

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Credit terms for transactions denominated in foreign currency have to be approved by the Manager of Export Department and in December 2013 began the process of adapting the process to export customers in order to start managing credit limits by the Credit Control Department.

Liquidity risk

The Groups liquidity risk management involves forecasting future cash flows in relation to level of liquid assets, monitoring of the liquidity of the Group and ensuring the Group adequate funding sources.

In order to secure current and long term liquidity, the Capital Group manages the liquidity risk trough maintaining respective funding sources, drawing up new credit agreements in order to meet operational and investing expenses as well as to maintain flexibility in selection of funding sources.

Intermediate credit lines in the total amount of PLN 500 million are guaranteed and available in three banks with a good reputation. Group also uses credits in the form of an overdraft facility in the amount that is sufficient to finance its operational activity.

Capital Group uses intercompany loan in the total amount of PLN 500 million that will expire in December 2016.

After balance sheet day the Company signed another agreement for intercompany loan for the amount of PLN 450,000 thousand (additional information are disclosed in note 7.17).

Moreover the available bond and commercial program up to PLN 500,000 thousand gives opportunity to issue on polish market necessary funding amount for a period from 1 month to 3 years.

Cash surpluses which arise in the parent Company and subsidiary companies are invested and managed through Groups Treasury Department.

As on 31st December 2013 current liabilities exceeded current assets by PLN 314,467 thousands. Taking into account the fact that intercompany financing will continue and the Group may use bank overdrafts and bond issue to finance its operational activity like also restrictive credit policy that hedge current proceeds from sale, in the opinion of the Management Board as on 31st December 2013 there is no significant liquidity risk relating to the parent company, as well as to the Group. Details concerning available credit limit are presented in Note 25 and 26.

The table below analyses the Groups financial liabilities into relevant maturity groupings based on the remaining period at the end of reporting period date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Less than 1 year Between 1 and 2 years

Between 2 and 5 years

As on 31st December 2013 Credits, loans and indebted commercial papers 243,804 32,345 714,158 Trade and other payables 1,525,888 - - Total 1,769,692 32,345 714,158

As on 31st December 2012 Credits, loans and indebted commercial papers 792,326 182,034 - Trade and other payables 1,041,209 - - Total 1,833,535 182,034 -

7.5. Capital management

The Groups objective when managing capital is to safeguard the Groups ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.

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Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including bank credits, loans, indebted commercial papers and trade and other payables, as shown in the consolidated statement of financial position) less cash and cash equivalents. Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus net debt.

The gearing ratios are as follows:

31st December 2013 31st December 2012 Total borrowings [1] 2,426,186 1,937,494 Cash and cash equivalents (Note 19) [2] 29,416 31,358 Net debt [1] [2] = [3] 2,396,770 1,906,136 Total equity [4] 318,002 375,325 Total capital [3] + [4] = [5] 2,714,772 2,281,461 Gearing ratio [3] / [5] 88% 84%

The gearing ratio as of 31st December 2013 remains at the level of the debt ratio as of 31st December 2012.

7.6. Fair value estimation

Its assumed that the balance sheet value less provision for impairment of receivables and balance sheet value of trade payables and other financial liabilities doesnt differ substantially from their fair value.

Details concern fair value of financial instruments for which it is possible to asses are listed below: - cash and cash equivalents, short-term bank deposits and short-term borrowings; carrying

amount of after mentioned instruments is approximate to its fair value because of its rapid maturity;

- trade receivables, other receivables, trade payables and accruals; carrying amount of after mentioned instruments is approximate to its fair value because of its floating-rate;

- long-term borrowings carrying amount of after mentioned instruments is approximate to its fair value due to the variable nature of their interest.

Fair value of financial liabilities (that are no derivatives) assessed for the purpose of disclosure is calculated through present value of future cash flows from repay the principal sum and discounted interest (following market interest rate at the reporting date).

7.7. Contingent and off-balance sheet liabilities

Tax liabilities

Tax authorities are allowed to control accounting books and tax calculations and returns during 5 years from the end of the calendar year in which the tax returns were submitted and may charge Group additional/extra tax together with interest and fines.

In 2013 no audit procedure was commenced against Group in scope of taxes.

In 2013 Group did not submit any material corrections of corporate income tax returns.

Contingent liabilities

31st December 2013 31st December 2012 - bank guarantees in favour of tenant for securing payments of rental of buildings (deposits)

2,484 2,235

- bank guarantees in favour of the Director of Customs Office for securing payment of suspend excise

11,350 10,950

Total off balance sheet liabilities 13,834 13,185

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Contractual commitments

Contractual commitments for the acquisition of property, plant and equipment amounted to:

31st December 2013 31st December 2012 PLN 2,895 thousand PLN 5,575 thousand

7.8. Information concerning discontinued activity in reporting period

In 2013 the Group didnt discontinue any significant activity. There are no plans to discontinue any activities in forthcoming periods.

7.9. Information concerning costs of investments in progress

In 2013 the value of investment incurred by Group entities amounted to PLN 152,563 thousand.

7.10. Significant related party transactions

As on 31st December 2013 Grupa ywiec S.A. together with subsidiary companies included in the consolidated statement of financial position following intercompany balances:

31st December 2013 31st December 2012 Intercompany statement of financial position

Receivables from parent companies - Heineken International B.V. - parent company of the highest level

108 81

Gross value 108 81 Net value 108 81 -Brau Union A.G. 69 284 Gross value 69 284 Net value 69 284 Total receivables from parent companies 177 365 Current portion

177 365

Receivables from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company)

4,096 2,132

Gross value 4,096 2,132 Net value 4,096 2,132 Total receivables from related parties (excluding parent companies)

4,096 2,132

Current portion 4,096 2,132

Long term loans from related parties

Long term loans from related parties 500,000 - - Mouterij Albert N.V. - related company 500,000 - Total long term loans from related parties 500,000 -

Short term loans from related parties

Short term loans from related parties - Mouterij Albert N.V. - related company - 455,000 - Interest from short and long term loans 224 6,395 Total short term loans from related parties 224 461,395

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Trade and other payables to parent companies - Heineken International B.V. - parent company of the highest level 13,170 14,425 - Brau Union A.G. 16 128 Total trade and other payables to parent companies 13,186 14,553 Current portion 13,186 14,553

Trade and other payables to related parties (excluding parent companies)

5,002 13,697

- in Heineken Group 5,002 13,697 Total trade and other payables to related parties (excluding parent companies)

5,002 13,697

Current portion 5,002 13,697

During 2013 Grupa ywiec S.A. together with subsidiary companies included in statement of profit and loss and other comprehensive income following material individual transactions with related parties:

Intercompany statement of statement of profit and loss and other comprehensive income

For the period from 01.01.2013 till 31.12.2013

For the period from 01.01.2012 till 31.12.2012

Income

Net proceeds from services from parent companies - Heineken International B.V.- parent company of the highest level 844 580 - Brau Union A.G. 350 272 Total net proceeds from services from parent companies 1,194 852

Net proceeds from services from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) 547 277 Total net proceeds from services from related parties (excluding parent companies)

547 277

Net sales of finished products, goods for resale and materials from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) 28,307 19,569 Total net sales of finished products, goods for resale and materials from related parties (excluding parent companies)

28,307 19,569

Proceeds from disposal of tangible fixed assets from parent companies:

- Brau Union A.G. - 4 Total proceeds from disposal of tangible fixed assets from parent companies

- 4

Proceeds from disposal of tangible fixed assets from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) 477 243 Total proceeds from disposal of tangible fixed assets from related parties (excluding parent companies)

477 243

Other proceeds from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) - 37 085

Total other proceeds from related parties (excluding parent companies) - 37 085

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Expenses

License fees from related parties (excluding parent companies ) - in Heineken Group (other related parties with parent company) 11,686 13,415 Total license fees from related parties ( excluding parent companies)

11,686 13,415

Cost of raw materials from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) 88,021 72,452 Total cost of raw materials from related parties (excluding parent companies)

88,021 72,452

Selling and marketing expenses from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) - 51 Total selling and marketing expenses from related parties (excluding parent companies)

- 51

Know-how fees from parent companies - Heineken International B.V.- parent company of the highest level 13,456 13,384 Total know-how fees from parent companies 13,456 13,384

Heineken technical services costs from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) 2,275 1,630 Total Heineken technical services costs from related parties (excluding parent companies)

2,275 1,630

Other expenses from parent companies - Heineken International B.V.- parent company of the highest level 30,321 36,977 - Brau Union A.G. 24 627 Total other expenses from parent companies 30,345 37,604

Other expenses from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) 1,999 1,801 Total other expenses from related parties (excluding parent companies)

1,999 1,801

Cost of goods and semi-finished products bought from related parties (excluding parent companies)

- in Heineken Group (other related parties with parent company) 1,752 2,521 Total cost of goods and semi-finished products bought from related parties ( excluding parent companies)

1,752 2,521

Investments from parent companies - Heineken International B.V.- parent company of the highest level 5,820 25,397 Total investments from parent companies 5,820 25,397

Investments from related parties (excluding parent companies) - in Heineken Group (other related parties with parent company) 814 1,550 Total investments from related parties (excluding parent companies)

814 1,550

Repurchase of materials (excluding parent companies) - in Heineken Group (other related parties with parent company) 1 041 920 Total repurchase of materials (excluding parent companies) 1 041 920

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Financial expenses (interest) from related parties (excluding parent companies)

- Heineken International B.V.- parent company of the highest level 18,862 27,008 Total financial expenses (interest) from related parties (excluding parent companies)

18,862 27,008

On 12th November 2013 the Management Board of Grupa ywiec S.A. signed a three-year loan agreement with Mouterij Albert N.V. with the seat in Antwerp (Belgium), an entity of Heineken Group. The loan of PLN 500 000 thousand was intended to finance current operational activities of the Company. The price of the loan is based on variable interest rate WIBOR plus margin. The Agreement entered into force on 27th December 2013 and replaced the loan agreement with Mouterij Albert NV dated 30th March 2010 with subsequent amendments.

All transactions with related parties are concluded on terms no different than the market terms.

7.11. Segment reporting

Information concerning products and services.

Revenue from external customer (thousand PLN) 2013 2012

Group Beer 2,656,251 2,835,912 Third party beer 4,126 8,600 External Portfolio 842,322 721,164 Total: 3,502,699 3,565,676

Information concerning geographic segments.

In case of presentation information in geographical areas, revenue is determined by the criterion of the location of the customer.

Revenue (thousand PLN)

2013 2012 Poland 3,417,534 3,489,834 Others 85,165 75,842 Total: 3,502,699 3,565,676

All tangibles assets are located in Poland.

Information concerning major customers.

The Capital Group ywiec S.A hasnt reached more than 10 % of the total revenue from transactions with external single client.

7.12. Information concerning issue, redemption and repayment of indebted commercial papers

On 8th May 2013 Grupa ywiec S.A. issued two tranches of own bonds: - I tranche- 4,000 items with the total nominal value of PLN 40,000 thousand with the

maturity date 7th June 2013; - II tranche- 6,000 items with the total nominal value of PLN 60,000 thousand with the

maturity date 8th July 2013.

On 7th June 2013 Grupa ywiec S.A repurchased own commercial papers with the nominal value of PLN 40,000 thousand 4,000 items at unit nominal price PLN 10 thousand.

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On 8th July 2013 Grupa ywiec S.A repurchased own commercial papers with the nominal value of PLN 60,000 thousand 6,000 items at unit nominal price PLN 10 thousand.

At 31st December 2013 Grupa ywiec S.A does not have issued own bonds. Information concerning bond program availability are presented in Note 7.4.

7.13. Information concerning paid dividend

On 1st March 2013 Supervisory Board of Grupa ywiec S.A. positively assessed the proposal of the Management Board of the Company concerning distribution of profit for 2012, including the proposal of dividend payment for 2012.

According to the resolution of the General Shareholders Meeting of Grupa ywiec S.A. No 3/2013 from 5th April 2013 dividend for 2012 in the amount of PLN 31 per one share. The Shareholders entitled to receive dividend are the ones who owned shares as per 22nd April 2013.

In 2012 the Company paid to the shareholders an advance payment for expected dividend in the amount of PLN 41,085 thousand what represents amount of PLN 4 per one share. The remaining payment in the amount of PLN 277,326 thousand what represents amount of PLN 27 per one share was paid on 9th May 2013. 10,271,337 ordinary shares of Grupa ywiec S.A. were entitled to receive the dividend.

On 30th September 2013, the Supervisory Board of the Company approved the resolution of Management Board from 24th September 2013 on paying to the shareholders an advance payment for expected dividend for the financial year 2013 in the amount of PLN 5 per share, i.e. a total amount of PLN 51,357 thousand. The Shareholders entitled to receive dividend are the ones who owned shares as per 21st November 2013 (the date when the right to payment was settled). Payment of advance started on 28th November 2013 (the date of payment of the advance).

Declared and paid dividend per one share amounted to:

PLN 5 in 2013 (for 2013- advance payment), PLN 27 in 2013 (for 2012), PLN 4 in 2012 (for 2012- advance payment), PLN 24 in 2012 (for 2011), PLN 9 in 2011 (for 2011 advance payment) PLN 45 in 2011 (for 2010), PLN 20 in 2010 (for 2010 advance payment)

7.14. Remuneration paid or due to the Management Board and the Supervisory Board of the parent Company

Total remuneration paid or due to members of the Management Board and the Supervisory Board of the parent Company in 2013 amounted to PLN 13,600 thousand.

The total remuneration paid or due represents as follows:

Mr Guillaume Duverdier PLN 209 thousand Mr Xavier Belison PLN 3,660 thousand Mr Michael Calfee PLN 1,605 thousand Mr Jacek Gerula PLN 1,203 thousand Mr Barry Sheehan PLN 2,535 thousand* Mrs Malgorzta Lubelska PLN 1,009 thousand * Mrs Grayna Rzehak-Majcherek PLN 1,162 thousand Mr Michael McKeown PLN 1,129 thousand Mr Jan Derck van Karnebeek PLN 130 thousand Mr Allan James Myers PLN 117 thousand Mr David Richard Hazelwood PLN 104 thousand Mr Krzysztof Jasek PLN 425 thousand Mr Krzysztof Loth PLN 104 thousand

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Mr John Charles Higgins PLN 104 thousand Mr Thomas Polanyi PLN 34 thousand Mr Lockefeer Lodewijk PLN 70 thousand

Total remuneration paid or due to members of the Management Board and the Supervisory Board of the parent Company in 2012 amounted to PLN 13,808 thousand.

The total remuneration paid or due represents as follows:

Mr Xavier Belison PLN 3,894 thousand Mr Radovan Sikorsky PLN 2,130 thousand Mr Jacek Gerula PLN 1,100 thousand Mr Mariusz Borowiak PLN 1,851 thousand * Mr Barry Sheehan PLN 1,352 thousand* Mrs Malgorzta Lubelska PLN 966 thousand * Mrs Grayna Rzehak-Majcherek PLN 522 thousand Mr Michael McKeown PLN 998 thousand Mr Jan Derck van Karnebeek PLN 99 thousand Mr Allan James Myers PLN 117 thousand Mr David Richard Hazelwood PLN 104 thousand Mr Krzysztof Jasek PLN 363 thousand Mr Krzysztof Loth PLN 104 thousand Mr John Charles Higgins PLN 104 thousand Mr Thomas Polanyi PLN 104 thousand

*Remuneration paid by subsidiary company

No other benefits except for short term benefits are given to Management Board and the Supervisory Board.

Information concerning costs of Employee Retirement Plan for Members of the Management Board and Supervisory Board is disclosed in Note 37.

7.15. Information on not repaid advance payments, loans and guarantees to members of the Management Board and the Supervisory Board of the parent Company

As on 31st December 2013 there were no guarantees granted by the companies of Capital Group to the Management Board and Supervisory Board.

7.16. Prior year events accounted for in the consolidated financial statement for the current period

As on 31st December 2013 there were no prior year events not included in the consolidated financial statement.

7.17. Subsequent events not included in the consolidated financial statement

On 10th January 2014 Grupa ywiec S.A. signed a loan agreement with Mouterij Albert NV, an entity of the Heineken Group with a limit to the amount of PLN 450,000 thousand. The Agreement shall enter into force on 24th January 2014 and will be in force till 24th June 2014. The loan is intended to finance the Company's current operations and the price of credit will be based on a variable market rate WIBOR plus margin.

On 22nd January 2014 Grupa ywiec S.A. terminated a three-year loan agreement in the amount of PLN 100,000 thousand signed with the Rabobank Poland S.A. on 11th May 2011, it was terminated before the expiry date of 11th May 2014. The agreement was terminated as the Company did not recognize the need to use the credit limit made available for the agreement period. On the day of termination of the Agreement, the loan was not used. According to the terms of the Agreement, it was terminated with a one month notice period.

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On 7th February 2014 Grupa ywiec S.A. issued own bonds i.e. 5,000 items with the total nominal value of PLN 50,000 thousand with the maturity date 7th May 2014.

7.18. Corrections of fundamental errors

No fundamental errors corrections, regarding the financial statements from previous periods were made in the consolidated financial statement.

7.19. Additional explanatory notes to the consolidated statement of cash flow

Explanation of principal differences between the movement in consolidated statement of financial position and the movement of these items as presented in the consolidated cash flow statement:

Trade and other payables Trade and other payables balance sheet movement for period 484,679 Change in investment liability 15,475 Change in trade and other payables in consolidated cash flow statement 500,154

7.20. Claims against the Company

Grupa ywiec S.A. and its subsidiaries have no significant liabilities or claims subjected to any initiated judicial or administrative proceedings.

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Capital Group ywiec S.A.As on and for the finan. year ended 31.12.2013

CONSOLIDATED FINANCIAL STATEMENTin PLN thousand unless otherwise stated

TRANSLATION ONLY

8

Land, perpetual usufruct of land

Buildings andconstructions

Plant and equipment Motor vehicles & transportequipment

Other tangible fixedassets

Tangible fixed assets in construction

Total

MOVEMENTS IN TANGIBLE FIXED ASSETS (by groups)Current period

Cost of tangible fixed assets at 1st January 2013 17 571 1 020 372 1 825 254 227 755 755 874 49 664 3 896 490 Accumulated depreciation at 1st January 2013 (1 300) (611 874) (1 275 851) (199 263) (566 187) - (2 654 475) Accumulated impairment at 1st January 2013 - (212) (968) - (369) (288) (1 837) Balance at 1st January 2013 16 271 408 286 548 435 28 492 189 318 49 376 1 240 178

Cost of tangible fixed assets at 1st January 2013 17 571 1 020 372 1 825 254 227 755 755 874 49 664 3 896 490 Increases - - - - - 143 815 143 815 Transfer - 19 334 53 688 19 110 66 545 (158 677) - Decreases - sales / disposal (1 703) (5 703) (20 225) (35 097) (29 635) - (92 363) Other - - (49) - 49 - - Cost of tangible fixed assets at 31st December 2013 15 868 1 034 003 1 858 668 211 768 792 833 34 802 3 947 942

Accumulated depreciation at 1st January 2013 (1 300) (611 874) (1 275 851) (199 263) (566 187) - (2 654 475) Decreases - sales / disposal 98 2 503 19 846 34 846 29 528 - 86 821 Depreciation for the period - (33 710) (85 752) (11 856) (53 703) - (185 021) Accumulated depreciation at 31st December 2013 (1 202) (643 081) (1 341 757) (176 273) (590 362) - (2 752 675)

Accumulated impairment at 1st January 2013 - (212) (968) - (369) (288) (1 837) Impairment increase - (89) (493) - (21) - (603) Impairment release - - 78 - - - 78 Impairment decrease - 60 288 - 339 - 687 Accumulated impairment at 31st December 2013 - (241) (1 095) - (51) (288) (1 675)

Balance at 31st December 2013 14 666 390 681 515 816 35 495 202 420 34 514 1 193 592

Net book value at 1st January 2013 16 271 408 286 548 435 28 492 189 318 49 376 1 240 178 Increases - - - - - 143 815 143 815 Transfer - 19 334 53 688 19 110 66 545 (158 677) - Decreases - sales / disposal (1 605) (3 200) (379) (251) (107) - (5 542) Impairment increase - (89) (493) - (21) - (603) Impairment release - - 78 - - - 78 Impairment decrease - 60 288 - 339 - 687 Depreciation for the period - (33 710) (85 752) (11 856) (53 703) - (185 021) Other - - (49) - 49 - - Net book value at 31st December 2013 14 666 390 681 515 816 35 495 202 420 34 514 1 193 592

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Capital Group ywiec S.A.As on and for the finan. year ended 31.12.2013

CONSOLIDATED FINANCIAL STATEMENTin PLN thousand unless otherwise stated

TRANSLATION ONLY

8 continued Land, perpetual usufruct of land

Buildings andconstructions

Plant and equipment Motor vehicles & transportequipment

Other tangible fixedassets

Tangible fixed assets in construction

Total

Comparable period

Cost of tangible fixed assets at 1st January 2012 17 614 1 005 571 1 778 773 234 941 716 232 70 494 3 823 625 Accumulated depreciation at 1st January 2012 (1 306) (578 253) (1 206 893) (207 180) (535 696) - (2 529 328) Accumulated impairment at 1st January 2012 - (349) (1 149) - (164) (288) (1 950) Balance at 1st January 2012 16 308 426 969 570 731 27 761 180 372 70 206 1 292 347

Cost of tangible fixed assets at 1st January 2012 17 614 1 005 571 1 778 773 234 941 716 232 70 494 3 823 625 Increases - - - - - 135 540 135 540 Transfer 41 15 397 63 113 17 549 60 270 (156 370) - Decreases - sales / disposal (84) (596) (16 638) (24 735) (20 622) - (62 675) Other - - 6 - (6) - - Cost of tangible fixed assets at 31st December 2012 17 571 1 020 372 1 825 254 227 755 755 874 49 664 3 896 490

Accumulated depreciation at 1st January 2012 (1 306) (578 253)

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ENG_Skonsolidowane-sprawozdanie-finansowe-Grupa-Kapitałowej-Żywiec-S.A.-za-2013-r..pdf