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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015

ROUST CORPORATION

(EXACT NAME OF THE COMPANY AS SPECIFIED IN ITS CHARTER)

Delaware

(State or Other Jurisdiction of Incorporation or Organization)

54-1865271

(I.R.S. Employer Identification No.)

2711 Centerville Road, Suite 400 Wilmington

New Castle County, Delaware

(Address of Principal Executive Offices)

19808

(Zip code)

(302) 636-5401

(Telephone Number, Including Area Code)

The number of shares outstanding of each class of the issuers common stock as of December 31, 2015: Common Stock ($0.01 par value) 10,000.

ROUST CORPORATION ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2015

All amounts are expressed in thousands of US dollars (except share and per share information)

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TABLE OF CONTENTS

EXECUTIVE SUMMARY 2

EXPLANATORY NOTE 7

PART I 9

Item 1. Business 9

Item 1A. Risk Factors 22

Item 2. Properties 30

Item 3. Legal Proceedings 31

Item 4. Mine Safety Disclosures 31

PART II 32

Item 5. Market for Registrants Common Equity and Related Stockholder Matters 32

Item 6. Selected Financial Data 33

Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations 35

Item 7A. Quantitative and Qualitative Disclosure about Market Risk 71

Item 8. Financial Statements and Supplementary Data 72

Independent Auditors Report 73



CONSOLIDATED BALANCE SHEETS 76

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS) 77

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY / (DEFICIT) 78

CONSOLIDATED STATEMENTS OF CASH FLOW 79

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 80

PART III 119

Item 10. Directors, Executive Officers and Corporate Governance 119

Item 11. Executive Compensation 122

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 127

Item 13. Certain Relationships and Related Transactions 127

Item 14. Principal Accounting Fees and Services 129

PART IV 130

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K. 130



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EXECUTIVE SUMMARY

Roust Corporations (previously Central European Distribution Corporation, collectively with its subsidiaries referred to as ROUST, we, us, our or the Company) objective is to be a leading global player in every major category of alcoholic beverages, including vodka, sparkling wines, still wines, brown spirits, liquors and ready-to-drink beverages, as well as in every price segment. We believe our brands are the most authentic in their categories, bringing affordable luxury to everyone.

We have continued to make significant improvements to our business over the last 2 years:

Business value growth Our operating income in 2015 amounted to $52.9 million. Our operating income margin amounted

to 9.1% in 2015 compared to 9.0% in 2014. Our Underlying EBITDA1 in 2015 amounted to $89.1 million. Our Underlying EBITDA margin improved by 2.6 percentage points from 12.7% in 2014 to 15.3% in 2015. Despite the adverse economic conditions in Russia, we are still generating positive financial results and increasing market share for premium brands. We believe the conditions on the alcohol market have improved recently, and we believe that we shall not see any further significant increases in excise tax over the coming year in Russia. We believe that lack of increases is also highly likely in Poland. In addition, the Russian government is currently combating rampant illegal and counterfeit production of alcoholic beverage products, which is a direct result of the large hikes in excise tax from 2012 to 2014. These long-overdue official efforts will benefit alcohol producers, such as ROUST.

Market leadership in Poland We are increasing our market leadership on the Polish vodka market, with our market share by volume achieving 40.3% in February 2016. Our ubrwka Biaa vodka is now the best-selling brand of vodka in Poland

and was described as the fastest growing brand among the top 50 alcohol brands worldwide. The market shares of our other brands, such as Soplica and ytniwka have also increased. Moreover, we became the market leader in the traditional trade channel in Poland in May and continued our leadership in the fourth quarter with a 39% market share (according to

the November 2015 Nielsen data) and achieving 40% in February 2016.

Russia has had great success with premium spirit brands, but mainstream vodka is under pressure: ROUST increased its leadership in the Russian premium vodka market with Russian Standard Vodka, is a leading premium brands importer, with an increasing whisky/cognac share, and is one of the leaders in the mainstream vodka market in Russia. However, low price illegal vodka sales have negatively affected our mainstream vodka volumes. Russia saw rapid growth of the Status Group company selling cheap (at a legal minimum price of 185 Russian ruble) vodka in the last six months. At this price ROUST would generate a negative margin. They do this through semi-legal excise rebates with the local authorities in several regions of Russia. Consequently, this cheap vodka segment has exploded in the last few months, leading to a sharp decline in mainstream vodka sales for the three leading manufacturers, including ROUST. This significantly affected our volume and EBITDA in Russia in the last six months. In March 2016, Status Group began experiencing government pressure in relation with their semi-legal schemes, and as a result ROUST is expecting an upside in the mainstream vodka segment in the second half of 2016.

Successful global expansion Our successful global expansion continued in 2015:

o We are now selling ubrwka in 40 countries and Green Mark in 30 countries and we are continuing to expand our global distribution. We have a well-developed distributor network in all Top 10 vodka countries globally, supported by our own ROUST employees. Together with our sister company, Russian Standard Vodka International, we now have a strong portfolio of vodka brands on international markets, which has allowed us to achieve growth, strong customer engagement, and economies of scale to enhance our profitability. Our International business (non-Russia/CIS) grew by more than 10% during the year. Global underlying profit increased during the year for the third year in a row.

o Growth in shipments in 2015 was almost 500k nine-liter cases in Germany (+12% compared with last year, including Russian Standard Vodka), and over 100k nine-liter cases in France (5% growth on last year). We also grew in Italy,

Bulgaria, Czech Republic, Lebanon, Austria, Canada and Japan in 2015.

o The ROUST portfolios retail sales volume also increased by 13% in the UK up to the end of 2015 (Moving Annual Total, MAT). Green Marks volume increased by 19% in 2015 compared to last year, while ubrwkas volume increased by 41% in 2015 compared to last year (according to the available Nielsen retail sales data).

o Many Commonwealth of Independent States (CIS) countries, including Kazakhstan, continued to decline due to market contractions and significant currency depreciation related to the Russian crisis. We proceeded with the implementation of a special action plan in 2015 to improve Kazakhstans shipments and depletions. The focus is on smart price differentiation, stock optimization, small pack development, portfolio optimization, the creation of an exclusive sales management team, as well as the development of numerical and weighted distribution. We see a potential for significant improvements in CIS markets in 2016.

Our Ukrainian business suffered greatly At first retail and then government bans on Russian vodkas led to a decline in

our business of 75.8% in volume terms compared to prior year. In 2016 we expect growth in our Ukrainian business as we focus on expansion of our Polish brands.

Acquisition of a new business: Roust Distribution Limited On December 31, 2015, Pasalba Ltd. (Pasalba), a wholly-

owned subsidiary of Roust Corporation, acquired all of the outstanding shares of Roust Distribution Limited (RDL) from Roust Trading Limited (RTL) in accordance with the Share Purchase Agreement, dated December 30, 2015, between Pasalba and RTL. ROUST, through the acquisition of RDL, aims to assume the international contracts and apply relevant

1 For more information about Underlying EBITDA, which is a non-US GAAP financial measure, please see Item 7. Managements Discussion and Analysis of the Financial Condition and Results of Operations (MD&A).



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processes in order to efficiently organize international distribution of alcohol beverages within Roust Corporation Group. RTL is the sole shareholder of RDL and ROUST, therefore for accounting purposes, the acquisition was accounted for under the as if pooling-of-interest method of accounting which applies to the transfer of assets or exchange of equity interests between entities under common control. Under the as if pooling-of-interest method of accounting, the value of the assets and liabilities transferred is recognized at historical carrying cost as at the date of the transfer, rather than at fair value. However in accordance with our debt agreements, we engaged an independent valuer who developed the range of fair value of RDL, to ensure that the conditions of the transactions are at least as favorable as might reasonably have been obtained from a non-Affiliate. After analyzing the independent valuation and the Companys strategic objectives, an aggregate purchase price for RDL was agreed at $40.0 million. RDL is the global distributor of Russian Standard Vodka. The acquisition of RDL means that we acquired the Russian Standard Vodka international distribution contracts, which were historically managed by RTLs subsidiaries. Strategically, the Company believes the transaction will enable it to benefit from the significant incremental EBITDA and increase in cash flow, leading to a stronger position in its International segment of operations, as well as to capture significant synergies across the key international markets through the integration of the Companys existing own portfolio with the leading Russian Standard Vodka brand, as well as through the integration of sales and route to market opportunities. Russian Standard Vodka is an internationally well-established brand, being the number 3 vodka in the UK, excluding private labels (after Smirnoff and Glens), number 7 in Germany (after, for example, Absolut and Smirnoff), number 4 in Global Travel Retail and having international sales of 2 million nine-liter cases, with 12%

compound average growth rate (CAGR) in revenue over the last 5 years. After acquisition of RDL, ROUST has now a full portfolio of brands to compete in western markets in all price segments. It strongly supports our objective to become a leading global alcohol business.

Multi-segment vodka portfolio strategy We would like to have vodka brands in all the core and profitable segments of

all the Top 10 global vodka markets. We have implemented this strategy in the Top 10 global vodka markets, which is the core driver of our strong international growth.

Portfolio optimization We are continuing to optimize our portfolio. Starting from 2014, our portfolio in Russia was reduced

from approximately 1,300 stock keeping units (SKU) to approximately 800 SKUs. We identified further opportunities to make our portfolio healthier and ensure a better focus on strong and profitable products. In 2015, 47 SKUs generated more than 80% of gross margin, net of transport, warehousing and consumer marketing costs. Our core brands and top 100 products still have strong potential for improvement in weighted distribution in Russia and Poland, as well as opportunities for significant international expansion. We are planning to focus on these brands and SKUs, thereby increasing profitability and working capital efficiency. We implemented a monthly routine review of slow moving SKUs in Poland and, as a result, we reduced the number of SKUs on export by 20% compared to 2014 and we have eliminated many unprofitable and non-strategic products, such as beer and private labels in Poland. In 2016, we shall continue to optimize our portfolio and reduce the numbers of SKUs even further, mainly by harmonizing SKUs for export markets and focusing on value drivers.

Product quality Product quality has always been a fundamental value for the Russian Standard Vodka group, which is

now driving quality improvements in all corners of our business. We developed and conducted cross-plant internal audits and implemented a Unified Electronic Management System for all distilleries. Some of our distilleries also received ISO certification (ISO 9001, ISO 22000).

Product appeal We are continuing our efforts to keep our products attractive to customers. A packaging upgrade was launched for Green Mark in November 2015, Parliament restyling is planned for 2016, ubrwka restyling was already launched in March 2015 and Absolwent restyling was launched in May 2015. Our in-house design team, which has experience with such brands as Russian Standard Vodka and Gancia sparkling wine, has been partnering with some of

Europes best design agencies to promote greater consumer appeal in our new packaging.

New product innovation Our marketing team is continuing to actively improve the quality and speed of our marketing with an accelerated new product pipeline, led by Polands notable extension of the ubrwka brand, including ubrwka Licie Klonu (Maple Leaves) and ubrwka Pdy Sosny (Pine Shoots), the recent extension of the Soplica brand with Soplica Strawberry, Absolwent with Absolwent Chery, ytniwka with ytniwka Lemon Peel, more active below-the-line or non-media promotional activities and partnership with our design team on the upgrade of our core brands. In Russia, we successfully launched a new flavor infusion product in the third quarter of 2015 (in September) under the Russian Standard brand. We also agreed on a full promotional plan with retailers for the full year of 2016 to drive Russian Standard infusions.

Brand building investment In 2015, we continued to increase our marketing investment in Poland, Hungary, the UK,

France and Germany among other international markets, successfully strengthening our brand equity and achieving increases in market share on these markets. In Russia, Ukraine and CIS in 2015 we reduced our marketing due to the consumer crisis.

Agency partnerships We are continuing to extend and expand our agency brand partnerships with an important Jgermeister contract in Hungary, a William Grant & Sons contract in Hungary, and a Campari contract in Poland. In order to pay more attention to our premium products portfolio, we activated a special department in Russia in 2015 the Luxury Sales Force which will be responsible for promoting and selling premium spirits and wines. A new team of 12 business development executives was added in Russia in the Agency Brand department to control and improve sales in all regions. Remy Cointreau brands are showing strong recovery, with average growth of all brands of 9% compared with last year. Jgermeisters annual sales result broke through 100k nine-liter cases. We have maintained relations with Jos Cuervo International and Lucas Bols and have acquired the distribution rights to the Molinari brands in Hungary from the fourth quarter of 2015. Additionally, we signed a contract on exclusive distribution of the Jean Paul Chenet brand in Russia a top global brand of French wine. In Poland, we are maintaining exclusive import contracts for a number of internationally recognized brands, including Grants whisky, Campari, Jgermeister, Remy Martin cognac, E&J Gallo wines, Carlo Rossi wines, Metaxa brandy, Sierra tequila, Wild Turkey, Cinzano, Old Smuggler and Concha y Toro wines.



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Distribution We saw continued growth in distribution in 2015.

o In Poland distribution remained at the highest level of 100% compared to the prior year (with ubrwkas distribution at 98%, which is 2 percentage points higher than last year and Soplicas distribution at 93%, which is 3 percentage points higher than last year).

o In Hungary Jgermeisters distribution increased by 6 percentage points compared with last year, to 88%. Royals vodka distribution is 81% which is 8 percentage points growth on last year.

o In the UK ubrowkas distribution increased by 4 percentage points compared with last year, reaching 57%. Green Mark is flat compared with last year, reaching 64%. Russian Standard Vodka reached a record level of distribution of 91%, which is 2 percentage points higher than last year.

o In Germany Parliaments distribution is 63%, which is flat compared with last year, while Green Marks distribution increased by 10 percentage points on last year and reached 49%.

o Our distribution in Russia also increased for the core brands achieving about 85%. It increased for such premium brands as Russian Standard Vodka, which ROUST distributes under a 10-year exclusive contract in Russia, as well as Remy brands and Jgermeister. Many of our core SKUs still have significant distribution growth potential in all markets.

Revenue growth management We are continuing our efforts to implement the revenue growth management structure

used by several global beverage companies, focusing on effective pricing, positive branding, packaging and channel mix, controlling and increasing the return on investment from trade spend. We commissioned brand elasticity studies in Poland, Russia and the UK, intensified our review of discounts and allowances in our top five markets, focused on driving our high margin brands and packages, and developed our premium agency brand businesses.

Production efficiency We have established global key performance indicator reports for the whole of production, and are

constantly reviewing our production and warehouse footprint to optimize productivity in our business. We remain focused on reducing production costs, while simultaneously improving the quality of our brands. We successfully launched Russian Standard flavors (raspberry, cherry and blackcurrant) in the third quarter of 2015. These products are developed using the experience of Polish premium infusions production.

Indirect cost management Cost optimization continued after ROUSTs acquisition of Roust Inc.s distribution business

in Russia, which enabled us to make faster progress on a combined structure. Number of employees was reduced in 2015, which led to savings of 57.8 million Russian rubles (approximately $1.0 million). In 2016, we expect continued head office savings of $3 million in Russia. Operating expenses in 2015 were 17.2% below 2014, including indirect costs savings of 450 million Russian rubles (approximately $11.9 million at the prior year foreign exchange rate) or 12% compared with last year. The key drivers are savings in staff costs including the effect of synergy from the integration project and lower logistics costs as a result of the optimization of the trading model.

Effective industry legislation We continued to work actively and productively with the alcohol industry and government

in Russia in 2015 to develop commercially viable but responsible legislation.

o We partnered with the government in its efforts to curtail the black market, which included new legislation: - introducing a united governmental tracking system (EGAIS) for each bottle of alcohol in retail and wholesale

from January 2016; - providing governmental bodies with the authority to disassemble and destroy equipment used for counterfeit

alcohol production.

o Consequently, we expect a reduction in the quantity of counterfeit alcohol and an increase in our revenue.

o We are awaiting a new trade law to be passed by the State Duma in 2016 reducing the maximum fees and allowances payable to retail chains from 10% to 3% of turnover. The bill was passed at the first reading in May 2015. We expect this to benefit our margins in Russia by reducing fees and discounts.

o We collaborated with industry and the government to exclude superfluous bank statements from the list of documents confirming the export of alcohol products from Russia. The corresponding bill was enacted in 2015, which will enable a reduction in the life of bank guaranties for exports from 10 months to 3-4 months and will lead to significant potential savings for Russian entities on payments for bank guaranties (approximately $1.5 million per year).

o We managed to obtain a zero environmental fee for 2015 for manufacturers and importers of goods that do not recycle waste from the consumption of their goods themselves.

o From November 2015, the owners of vehicles with a mass of over 12 tonnes are required to pay a road fee. This will lead to an increase in the cost of transportation and a potential shortage of carriers.

o We partnered with the alcohol industry and worked hard to lift the legislative ban on on-line alcohol sales. This will open a new sales channel for our products in Russia. We will continue this work in 2016.

o Also, we partnered with Russian industry and actively worked towards lifting the ban on the use of trademarks with images of people or animals in alcohol advertising. The government has given a positive opinion on the bill which has the purpose of lifting such a ban. We expect this to expand our opportunities in promotion and increase our sales and profits.

People We have continued to recruit managers trained at world-class fast-moving consumer goods (FMCG) companies

and now have a large group of people from Coca-Cola, Diageo and Pepsi-Cola, as well as a number of other world-class FMCG companies. We combine this with the very strong alcohol business expertise of the Russian Standard team. These people have improved professionalism, strategy, structure and productivity, resulting in substantial business improvements.



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In 2015, we welcomed top class managers in Poland in the areas of Quality and Health & Safety Management, both with extensive experience in FMCG companies including GlaxoSmithKline Pharmaceuticals and Philips Lighting Poland. Additionally, from September, the Polish executive team was strengthened with a new CFO with almost 20 years experience in cross-functional roles in international finance and accounting, as well as a National Key Accounts Director with over 10 years of experience in comprehensive sales management, for companies such as PZ Cussons and Colgate Palmolive. In Russia, we recently welcomed a Vice President of Sales, who has extensive experience in FMCG companies, including MTS, Coca-Cola HBC and Danone-Unimilk.

These actions have resulted in material improvements in all key financial and numerical business Key Performance Indicators (KPIs):

Market share We increased or maintained the moving annual total market share position in our main markets in 2015:

o Poland (a 7.8 percentage point increase by value compared to last year)

o Hungary (a 7.3 percentage point increase by value compared to last year)

o Roust Russia remains the market leader on the premium vodka market, Russian Standard Vodka share grew by 8

percentage points in June - July 2016 up to 39% in premium segment. However, low price illegal vodka sales have negatively affected our mainstream vodka volumes.

o We saw growth in our businesses in France (6.6% share by value in November, which is a 0.2 percentage point increase on last year), in Germany (6.1% share by value in November MAT, which is a 0.2 percentage point increase on last year) and in the UK (11.9% share by value in December MAT, which is a 1.1 percentage point increase on last year).

o In the UK, a strategically important export market for the Company, the sales volumes of Green Mark and ubrwka increased in December MAT 2015 by 19% and 41% respectively, while the total UK vodka market grew 2%.

Volumes In 2015, we saw a 12% volume increase in Poland (without beer). The drop in Russias volume was mainly

driven by Status Group attack on low price vodka segment with sales at mimimum price of 185 Russian ruble per bottle where we can not compete due to negative margin. As there will be no excise tax increases in Russia and Poland in 2016, we expect an acceleration of our growth by volume, which, combined with our strong international growth momentum, means that overall volumes of our core brands will accelerate globally in 2016. Hungary decreased by 7% compared to last year because of the Health Tax that was introduced in the country.

Revenue Our revenue in constant terms improved over the last 12 months from $31.6 per nine-liter case in 2014 to $33.2

per nine-liter case in 2015 with positive brand, pack and channel mix, real price increases and strong control of discounts and allowances.

Costs Our indirect costs are down as a percentage of revenue from 29.7% in 2014 to 26.4% in 2015 due to optimizing

headcount, productivity measures and general tight cost controls, as well as cooperation with the Russian Standard Vodka group.

Operating profit Our operating profit has reached $52.9 million, or $64.2 million on a currency neutral basis, in 2015 and

was lower compared to the previous year by $23.5 million and $12.2 million, respectively. Despite decline in sales, a difficult situation on Russian, Ukrainian and CIS markets and depreciation of our local currencies against US dollar, we managed to sustain operating profit as a percentage of revenue at the similar level as in the previous year of 9.1% compared to 9.0% in 2014.

EBITDA Our Underlying EBITDA has reached $89.1 million in 2015. Our Underlying EBITDA on a currency neutral basis

for the period 2013-2015 is general in line with the EBITDA presented in the Amended and Restated Offering Memorandum, Consent Solicitation Statement and Disclosure Statement Soliciting Acceptance of a Prepackaged Plan of Reorganization, filed with the US Securities and Exchange Commission (the SEC) as Exhibit 99.A1 to CEDCs Schedule TO-I/A as of March 11, 2013 (the Offering Memorandum).

Roust Distribution Limited acquisition results The aggregate purchase price for the acquisition of RDL was agreed at

$40.0 million. As a result of the acquisition by ROUST, we have seen an increase of $5.3 million in our EBITDA from June to December 2015. We expect continued cost improvements through 2016 as we optimize the business structure. Strategically, the Company believes the transaction will enable it to benefit from the significant incremental EBITDA and increase in cash flow, leading to a much stronger position in its International segment of operations, as well as to capture significant synergies across the key international markets through the integration of the Companys exist ing own portfolio with the leading Russian Standard Vodka brand, as well as through the integration of sales and route to market opportunities.

Russia domestic loan support In the last four months we have seen reduction in some domestic loan financing. We had

some bank loans (domestic credit lines) which have not been rolled over the last five months. On the other hand we have been able to increase financing from another domestic bank and double our Russian factoring facilities.

We shall continue to pursue our goals of becoming a larger, world class alcohol group, and we are confident in our managements ability to achieve this goal in the future, as we have done over the past two years.

Future improvement opportunity We believe that we are only part of the way through the structural improvement of ROUSTs

business and that we have significant revenue, EBITDA, cash flow and equity growth potential as a result of:

Further expansion of International business, in particular after the completion of the RDL acquisition transaction;

Innovation with new flavors and infusions, as well as exploration of new sales channels;

Improved packaging and liquid quality completion of the upgrade of the range;



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Access to high-growth categories, such as wine, whisky and premium spirits;

The full application of our revenue growth management principles to drive up our margin per case;

The combination of Roust Russia and Roust Inc., building a similar business platform to the one in Poland;

Further cost improvement in the Russian business, as we optimize the production footprint and logistics platforms;

The optimization of our sales and operations planning to improve inventory levels;

The maximization of growth from the consolidation of our strong international distribution network in the top ten vodka markets over the past two years;

Active collaboration with the government to optimize the legislative environment; and

The upgrade of our IT systems and processes to drive productivity and reduce our cost of sales.

We believe that significant progress has been made over the past year in driving a major change in the commercial and financial results, while further substantial benefits can be gained after the RDL acquisition transaction. Our continued focus on integrating Roust Inc. in Russia and pursuing our strategy on key International markets will provide benefits to all of our stakeholders.

By the end of 2015 we have expected the beginning of macroeconomic stabilization, but the situation recently became even more difficult. We have experienced the following:

A dramatic force majeure depreciation of our 4 leading market currencies (Russia, Poland, Kazakhstan and Ukraine) has significantly reduced our US dollar denominated EBITDA. The Russian ruble exchange rate depreciated against US dollar from an annual average of 37.9 in 2014 to an annual average of 60.8 in 2015 and further to 67.7 on March 31, 2016. Kazakhstan (our number 3 market by profit) depreciated its currency by more than half in December 2015.

The purchasing power of the Russian (as well as Kazakh and Ukrainian) population decreased in 2015, resulting in demand drop for both upper-mass vodka and imported agency brands. However, we recently see a recovery of the premium spirits business in 2016.

International embargo in Russia affected domestic liquidity and as a result cost of domestic financing has increased.

Russia saw rapid growth of the Status Group company selling cheap (at a legal minimum price of 185 Russian ruble) vodka in the last 6 months. At these price legal producers such as ROUST would generate a negative margin. They do this through semi-legal excise rebates with the local authorities in several regions of Russia. Consequently, this cheap vodka segment has exploded in the last few months, leading to a sharp decline in mainstream vodka sales for the 3 leading manufacturers, including ROUST. In March 2016, Status Group began experiencing government pressure in relation with their semi-legal schemes, and as a result ROUST is expecting an upside in the mainstream vodka segment in the second half of 2016.

Russian vodka exports to Ukraine were banned.

As a consequence of the above short term operating cash flow is less than optimal to maximize our growth in 2015 our

operating cash inflow was $2.3 million after outstanding operating cash results in 2013 and 2014. Our cumulative operating cash flow 2013 throughout 2015 is $179.3 million vs $105.8 million forecast presented in the Offering Memorandum published in 2013 in connection with our prior debt restructuring. The recent negative situation in Russia, Ukraine and the CIS economy has created short term liquidity pressure, meaning ROUST has had to work to generate incremental cash from accelerated customer payments for the short term. Our global business trend is improving with volumes growth of 17% year to date February 2016 versus comparable period of 2015, and we see stronger growth potential in 2016 than previous years, but the negative situation in Russia and Ukraine and the devaluation of the Russian Ruble and other currencies in which we conduct business has put significant pressure on our cash flows and cash position. In addition, in order to maximize our growth opportunity in 2016 we need to invest more in working capital and CAPEX compared to 2014 and 2015. We are working on a number of projects to ensure we have this liquidity to achieve the maximum potential of our business, taking into account our debt service requirements and maturity profile.

The financial statements are included in this report on Form 10-K in accordance with the United States generally accepted accounting principles (US GAAP) and the relevant rules of the Securities and Exchange Commission (SEC). The SEC rules prevent us from including additional management comments and non-US GAAP financial measures in Item 8 below. Therefore, we have included the relevant commentaries and non-US GAAP measures in our Managements Discussion and Analysis of the Financial Condition and Results of Operations.



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EXPLANATORY NOTE

CEDC changed its name from Central European Distribution Corporation to ROUST CORPORATION on November 24, 2014.

In this Form 10-K and any amendment or supplement hereto, unless otherwise indicated, the terms ROUST, the Company, we, us, and our refer and relate to Roust Corporation (previously Central European Distribution Corporation), a Delaware corporation, and, where appropriate, its subsidiaries. Roust Corporation, which is sometimes referred to herein, for periods ended after June 5, 2013, as the Successor Company, is the successor entity solely for accounting and financial reporting purposes to Roust Corporation, which is sometimes referred to herein, for periods ended on or prior to June 5, 2013, as the Predecessor Company.

On December 30, 2015, Pasalba Limited, a wholly-owned subsidiary of Roust Corporation, acquired all of the outstanding shares of Roust Distribution Limited (RDL) from Roust Trading Limited ("RTL"), pursuant to a Share Purchase Agreement, dated December 30, 2015, between the Company and RTL. ROUST, through the acquisition of RDL, aims to assume the international contracts and apply relevant processes in order to efficiently organize international distribution of alcohol beverages within Roust Corporation Group.

RTL is the sole shareholder of RDL and ROUST, therefore for accounting purposes, the acquisition was accounted for under the as if pooling-of-interest method of accounting which applies to the transfer of assets or exchange of equity interests between entities under common control. Under the as if pooling-of-interest method of accounting, the value of the assets and liabilities transferred is recognized at historical carrying costs as of the date of the transfer, rather than at fair value. However in accordance with our debt agreements we engaged an independent valuation expert who performed a valuation of the RDL business and issued a fairness opinion on its valuation, to ensure that the conditions of the transactions are at least as favorable as might reasonably have been obtained from a non-Affiliate. After analyzing the independent valuation and the Companys strategic objectives, an aggregate purchase price for RDL was agreed at $40.0 million.

In accordance with Accounting Standards Codification Topic 805-50 (ASC 805-50) common control of RDL and ROUST is deemed to have existed since August 2014, the date of RDL inception. However, as RDL commenced its activity in June 2015, the recast of historical financial statements for the year ended December 31, 2014 did not have any material impact.

Cautionary Statement Regarding Forward-Looking Statements

This report contains forward-looking statements, which present our current expectations or forecasts of future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms believes, estimates, anticipates, expects, intends, may, will or should or, in each case, their negative, or other variations or comparable terminology, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include, without limitation:

information on possible or assumed future results of operations, trends in financial results and business plans, including those related to earnings growth and revenue growth, liquidity, prospects, strategies and the industry in which the Company and its affiliates operate;

expectations about excise taxes in Russian and Poland;

expected developments in our markets expected efficiencies in our business and expected cost savings;

expected cost improvements in our business;

expectations about performance of our brands in the jurisdictions where we operate;

expected benefits of our acquisitions of Roust Inc. and RDL;

statements about the expected level of our costs and operating expenses, and about the expected composition of the Companys revenues;

information about the impact of governmental regulations on the Companys businesses;

statements about local and global credit markets, exchange rates and economic conditions;

other statements about the Companys plans, objectives, expectations and intentions including with respect to its credit facilities and other outstanding indebtedness;

statements about acquisition under common control, and

other statements that are not historical facts.

By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Companys actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the factors described in the section entitled Risk Factors in this report. Factors other than those described in this report could also affect the actual results. You should carefully consider the factors described in the section entitled Risk Factors when evaluating the Companys forward-looking statements.

We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, the development of the industries in which we operate, and the effects of acquisitions and other investments on us may differ materially from those anticipated in or suggested by the forward-looking statements contained in this report. In addition, even if our results of operations, financial condition and liquidity, as well as the development of the industry in which we operate, are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

We urge you to read and carefully consider the items of this and other reports and documents that we have published for a more complete discussion of the factors and risks that could affect our future performance and the industry in which we operate, including the risk factors described in this Annual Report on Form 10-K. In the light of these risks, uncertainties and assumptions, the forward-looking events described in this report may not take place in the manner described, or at all.

You should not unduly rely on these forward-looking statements, because they reflect our views only as of the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events



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after the date of this report, or to reflect on the occurrence of not anticipated events. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this report.



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PART I

Item 1. Business

Roust Corporation (previously, CEDC), a Delaware corporation incorporated on September 4, 1997, and its subsidiaries operate primarily in the alcoholic beverage industry. We are one of the largest producers of vodka in the world and are Central and Eastern Europes largest integrated spirit beverages business, measured by total volume, with approximately 24.6 million nine-liter cases produced and distributed in 2015. Our business primarily involves the production and sale of our own spirit brands (principally vodka), as well as importing a wide variety of spirits and wines on an exclusive basis. Our primary operations are conducted in Poland, Russia, Ukraine and Hungary. We have six operational manufacturing facilities located in Poland and Russia. The ultimate beneficial owner of the Company is Mr. Roustam Tariko. ROUST has a total work force of approximately 3,700 employees.

In Poland, we are the largest vodka producer, with a brand portfolio that includes the Absolwent, ubrwka, ubrwka Biaa, Soplica, Bols and Palace brands, each of which we produce at our Polish distilleries. Our legendary ubrwka Master Brand has grown rapidly in recent years. In 2014 it grew by 19% compared to 2013 and was the fastest growing vodka brand in the world, in terms of growth by volume. In 2015 ubrwka grew by a further 20% compared to 2014 and achieved an annual volume of 6.2 million nine-liter cases. This result estimates ubrwka as being the third largest vodka brand in the world.

In 2015, the Russian economy has been significantly hit by crisis due to strained relationship with the USA and the EU countries, which led to economic sanctions. As a result, many economic indicators dropped significantly. For example, in 2015, Russias Gross Domestic Product decreased to a negative 4% according to the latest Rosstat data. Ruble devaluation led to inflation increase which was about 11% in 2015; as a result, there was price increase for almost all products. Since March 2015, wage arrears have been showing double-digit growth, amounting to 61% in November 2015 compared with November 2014. Consumers started to buy more on promotion due to the continued negative trend in 2015. Russia retail sales have reversed from positive growth of 5% in 2014 to a deep decline of 12% in 2015, according to the latest Rosstat data. The Russian vodka market continued to decline by 8% in 2015 according to available Nielsen data. The Russian alcohol market showed a record decline in all categories in 2015. Ruble devaluation and the decline in purchasing power led to a significant decline of imported alcohol in the Russian market. Whisky, the biggest import category in Russia, fell by 22% in 2015 compared with the previous year. Imported vodka sales dropped four times in 2015 compared with 2014. Still and sparkling wine sales decreased by 33% and 34% respectively in 2015 compared with 2014 according to Federal Customs Service data. We also expect that the business environment in Russia will continue to be difficult in 2016.

In Russia, the worlds largest vodka market, trade statistics for 2015 show that we were one of the largest vodka producers in the country. As for 2015, Roust Russia Group was a nationwide brand leader in the Russian market. Our Green Mark brand remains a top-selling mainstream vodka and our Talka, Parliament and Zhuravli brands are among the top-selling sub-premium vodkas in the country. We sell the Urozhay and Yamskaya brands in the economy segment. We also sell Russian Standard Vodka the leading brand in the premium segment.

Our brands in Poland and Russia are well-represented in all vodka segments. Our portfolio strategy in Poland is to focus on our top two brands: ubrwka and Soplica as well as three core brands in different price categories: Bols in the premium segment, ytniwka in the economy segment and Absolwent in the lower mainstream segment. The category is highly driven by innovation and our

portfolio and margin growth is driven by new products development in Poland. Our production capacity in these two countries gives us the ability to launch new brands on both markets with minimal outlay. In 2014 we successfully launched new variants of our brands Absolwent Grapefruit and Absolwent Apple Mint. In 2014 we extended the ubrwka brand with new flavored ubrwka Kora Dbu (Oak Bark). Soplica Plum and Soplica Blackcurrant were launched during 2014. Last year we also introduced the new pack for Absolwent and our economy brand ytniwka. In 2015, we launched Soplica Walnut and Soplica Strawberry, Absolwent Cherry, Absolwent Tangerine, Absolwent Wild Strawberry, ytniwka Lemon Peel and two sweet bitter flavors, ubrwka Pine Shoots and ubrwka Maple Leaves. We also launched the new 350ml Soplica flavor packaging.

In Russia, we launched Talka in July 2011, which is accounted for almost 2 million nine-liter cases in 2015. In 2015, we restyled Green Mark and launched new pack sizes to attract a wider range of customers and fulfill a wider range of consumer demands. We believe our ability to introduce new brands into the market in an ever-changing economic and consumer preference environment gives us a distinct advantage.

In the year ended December 31, 2015, our Polish and Russian operations accounted for 43.0% and 43.7% of our revenues respectively and, excluding certain unallocated corporate charges, 64.7% and 33.5% of our operating profit, respectively.

We are a leading importer of spirits and wines in Poland, Russia and Hungary, and we generally seek to develop a complete portfolio of premium imported wines and spirits in each of the markets we serve. In Poland, we are maintaining exclusive import contracts for a number of internationally recognized brands, including Grants whisky, Campari, Jgermeister, Remy Martin cognac, E&J Gallo wines, Carlo Rossi wines, Metaxa brandy, Sierra tequila, Teachers whisky, Cinzano, Old Smuggler whisky, and Concha y Toro wines. In Russia, we expanded our import portfolio with well-known global brands as a result of the Roust Inc. acquisition. We distribute brands of wine, such as Robert Mondavi, E&J Gallo, Concha y Toro and Paul Masson, whiskies including Bushmills and other global brands such as Jgermeister, Remy Martin, Gancia, Jose Cuervo and Sierra Tequila. In Russia, we also produce ready-to-drink alcoholic beverages: wine-based Amore, gin-based Bravo Classic, Elle and Russian Bear with a taste of cognac and almonds. In 2015, we launched a new vodka-based drink, Green Mark Vodka Orange and Green Mark Grapefruit, as well as new flavors of Chateau Amore Pina Colada and Mojito. We also launched Enerbees Sting in the alco-energy segment with a different, non-energy recipe (without caffeine and taurine) to comply with the recent development of legislation and a healthy brand image.

In addition to our operations in Poland and Russia we have a sales office in Hungary and in Ukraine and distribution agreements in a number of key international markets including the CIS, the Baltic states, Germany, France, the United States and the United Kingdom, for Green Mark, Talka, Zhuravli, Parliament and ubrwka. Additionally, as a result of the acquisition of RDL, we have distribution contracts of Russian Standard Vodka products in a number of key international markets. In 2015, international sales

(excluding Russia and Poland) represented 13.3% of our sales by value.



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Reorganization and fresh start accounting

On April 7, 2013 (the Petition Date), the Company and its two wholly owned subsidiaries, CEDC Finance Corporation International Inc. and CEDC Finance Corporation LLC (collectively, with the Company, the Debtors) filed Chapter 11 cases under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court) in order to effectuate the Debtors prepackaged Plan of Reorganization (the Plan or Plan of Reorganization). The Chapter 11 cases were jointly administered under the caption In re: Central European Distribution Corporation, et al. Case No. 13-10738. The Plan of Reorganization was confirmed by the Bankruptcy Court on May 13, 2013. The Plan became effective when all material conditions to it were satisfied and the Debtors emerged from bankruptcy protection on June 5, 2013 (the Effective Date).

Pursuant to and by operation of the Plan of Reorganization, all of the Predecessor Companys existing equity securities, including common stock and stock options, were extinguished and deemed cancelled. On the Effective Date, in accordance with the Plan:

Roust Trading Ltd. (RTL) made a $172.0 million cash investment and exchanged the $50.0 million secured credit facility provided by RTL to ROUST pursuant to the facility agreement dated March 1, 2013 (the RTL Credit Facility) for new shares in the Companys common stock, with the proceeds of $172.0 million used to fund the cash consideration in the exchange offer for Senior Secured Notes due 2016 (SSN) described below;

all SSN representing approximately $960.7 million, including interest, were exchanged for (i) Senior Secured Notes due 2018 (New Senior Secured Notes or NSSN) in an aggregate principal amount of $464.6 million; (ii) 10% Convertible Junior Secured Notes due 2018 (New Convertible Junior Secured Notes or NCJSN) in an aggregate principal amount of $200.0 million; and (iii) $172.0 million in cash;

all 3% Convertible Senior Notes due 2013 (CSN) and the $20.0 million aggregate principal amount of ROUST Senior Notes due March 18, 2013 (the RTL Notes) were exchanged for their pro rata share (based upon the approximate sum of $282.2 million of aggregate principal amount of CSN and the RTL Notes outstanding and accrued interest calculated through April 7, 2013) of $16.9 million in cash, which was funded separately by RTL; and

in exchange for the investment described above, RTL and its affiliates received new shares in the Companys common stock representing 100% of the reorganized ROUST.

In accordance with ASC 852, the Company adopted fresh start accounting and adjusted the historical carrying value of its assets and liabilities to their respective fair values at the Effective Date. Simultaneously, the Company determined the fair value of its equity at the Effective Date. For financial reporting convenience, the Company elected to use May 31, 2013 financial and tax accounting records, adjusted for the effects of the Plan of Reorganization, as the basis for the June 5, 2013 fresh start financial presentation. As a result, the Company recorded fresh start accounting adjustments to the historical carrying values of assets and liabilities using market prices, discounted cash flow methodologies based primarily on observable market information and, to a lesser extent, unobservable market information, and other techniques. The adoption of fresh start accounting results in a new financial reporting entity. For details on the reorganization and fresh start accounting please refer to Note 2 and Note 3 of Item 8 of this report.

Our Competitive Strengths as a Group

The make-up of the ROUST portfolio, comprising mainly vodkas, is very well positioned to increase its share in the largest vodka markets in the world, such as Russia and Poland, and to participate in the growth of a dynamic category across major international markets. The ROUST mission is focused on the key strengths of our brands and our core principle of authenticity, which, in turn, positions us favorably to compete and differentiate ourselves to consumers around the world. We also benefit competitively from vertical and horizontal integration as brand owner, producer and distributor. Additionally, cooperating with the Russian Standard Vodka group, we have also benefited from our ability to access high quality spirit sourcing for our sub-premium products in Russia and internationally.

Leading Brand Portfolio in Poland, Russia and Hungary - In Poland, Russia and Hungary, we have a leading portfolio of domestic vodkas covering all key sectors. In addition to our domestic vodka portfolio we have a complementary import portfolio of leading import wines and spirits. This combined portfolio gives us a distinct advantage in the market by allowing us to provide a full spectrum of top domestic and import brands.

Strength of the market position in Poland - We are currently the number one vodka player in Poland in terms of share by volume, with a 36.5% market share for 2015, an increase of 8.3 percentage points compared with the previous year (37.9% share in December 2015, and an increase of 6.5 percentage points compared with the previous year), overtaking our main competitor, Stock Spirits, by 6.8 percentage points full year (or by 11.5 percentage points in December 2015). Our ubrwka Biaa is the best-selling vodka brand in Poland, with a market share of 15.6% for the full year of 2015, an increase of 5 percentage points compared with the previous year (16.4% in December 2015, an increase of 3.9 percentage points compared with the previous year) overtook Czysta de Luxe by 4.6

percentage points full year (7 percentage points in December 2015). We are also a leading importer of alcoholic beverages in Poland. Our portfolio includes top-selling brands that we produce, as well as brands that we import on an exclusive basis. Our broad range of products, including our own vodka brands, as well as imported wine and spirit brands, allows us to address a wide range of consumer tastes and trends, as well as wholesaler needs, and provides us with a solid portfolio base. Additionally, we have the scope and ability to bring new products to market in a timely and cost effective manner to meet the changing demands of our consumers.

Solid platform for further expansion in the fragmented Russian vodka market - We were one of the largest vodka producers in Russia in 2015. Our large portfolio of alcoholic beverages consists of our own brands, including Green Mark, which was the top-selling mainstream vodka brand in Russia in 2015, top-selling sub-premium vodka brands in Russia such as Parliament, Zhuravli and Talka, the most dynamic brand in the segment, and imported products. These vodka and imported brands are supported by a combined sales force (line sales managers, representatives and merchandisers) of approximately 1,500 people. We believe our combined size and the geographic coverage of our sales force enable us to benefit from the ongoing consolidation in the Russian vodka market. Furthermore, we believe we have the necessary infrastructure to introduce new brands to the market place in the segments where consumer demand is strongest.



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Our sales force in Russia includes people allocated to Exclusive Sales Teams, or ESTs. ESTs are employed by distributors that carry our vodka products but focus exclusively on the merchandising, marketing and sales of our portfolio. Because alcohol advertising is heavily regulated in Russia, we believe that this structure provides us with meaningful marketing benefits, as it allows us to maintain direct relationships with retailers and to ensure that our products receive prominent shelf space. Distributors who employ our ESTs are solely compensated through a rebate on purchases of our vodka brands. This arrangement enables us to maintain an expansive exclusive sales force covering almost all regions of Russia with limited associated fixed overhead costs.

Attractive import platform for international spirit companies to market and sell products in Poland and Hungary - Our existing import platform, in which we are the exclusive importer of numerous brands of spirits and wines into each of our core markets, combined with our sales and marketing organizations in Poland and Hungary, provide us with an opportunity to continue to expand our import portfolio. We believe we are well-positioned to serve the needs of other international spirit companies that wish to sell products on these markets.

Business Strategies

Capitalization on the consolidation of the Russian market The Russian vodka market is currently fragmented and we believe

we will be able to take market share from smaller competitors in the near and long-term. We estimate that the top five vodka producers in Russia accounted for an estimated 43% of the total vodka market in 2015 as compared to an estimated 26% in 2006. We believe that, based on our experience of the consolidation trends in Poland, the combined market share of the top five vodka producers in Russia could increase from 43% as the Russian market continues to consolidate. We intend to capitalize on our leading brand position, the breadth of our portfolio, our ability to bring new brands to market and our expansive sales and distribution network to increase our market share in Russia. According to available Nielsen data (February 2015 July 2015), our market share by volume amounted to 9.3%, making us third on the market, which is unchanged from the previous period, but less than last year (by 2.4 percentage points), having been driven by the decline in the low margin economy brand segment.

Development of our portfolio of exclusive import brands In addition to the development of our own brands, our strategy is to

be the leading importer of wines and spirits in the markets where we operate. We have already developed an extensive wine and spirit import portfolio in Poland. We also plan to utilize the platform we have developed in Ukraine for importing wines, spirits and ready-to-drink alcoholic beverages. In Russia, due to the Roust Inc. acquisition, we have broadened our portfolio to include well-known global brands, such as Remy Martin, Jgermeister, Jose Cuervo, Gallo, Concha Y Toro, Bushmills and JP Chenet (starting

from 2016).

Acceleration of high value core brands In Poland, we intend to continue our marketing efforts supporting ubrwka Bison Grass and ubrwka Biaa, the brand that became the market leader in 2015. We have just in March 2016 launched a new entry to the super premium segment with ubrwka Czarna. In 2016, we shall also expand our ubrwka flavors even further. Within Russia, we have concentrated our efforts on the development and restyling of our core brands, such as Green Mark, Zhuravli, Talka, Parliament and Urozhay.

Development of international sales opportunities for our vodka brands We continue to seek new international sales opportunities for our vodka brands by extending package sizes existing markets, entering new markets (including through new distribution partners) and extending our brands portfolio. The international sales structure was finalized in 2013 to maximize the potential for international sales through leveraging the Groups brand portfolio strength.

During 2015, ROUST introduced the ubrwka and Soplica brands to new markets: Ivory Coast, Lebanon, Chile, Mexico, Spain and Italy. The number of countries where our top five brands were distributed in 2014 and 2015 is presented in the table below.

Number of countries per brand 2014 2015

ubrwka 37 40

Green Mark 30 30

Talka 13 13

Soplica 8 10

Parliament 13 14

We aim to continue to expand globally to achieve a leading position in all of the top ten vodka countries in the world.

Industry Overview

Poland

The total value of the alcoholic beverage market in Poland (including beer, wine and spirits) was estimated at approximately $9.2 billion in 2015. In 2015, the total sales value of alcoholic beverages at current prices increased by approximately 1.8%; in volume terms, the sales market increased by around 1.5% (according to Nielsen data). Beer and vodka account for approximately 85% of the sales value of all alcoholic beverages.

Spirits

Compared to 2014, the vodka market in Poland increased in 2015 by approximately 0.4% by value. Sales by volume declined by around 2.0% in 2015, driven by lower sales of vodka big packs (500 ml and higher), while vodka small packs (100 ml and 200 ml) increased by volume in 2015 compared to 2014. In 2015, the small pack vodka segment was approximately 26.7% of total category volume. The clear vodka segment generated around 78% of the market and is still a core part of the business. However, in the long-term, we believe that flavored vodka will be increasingly important, currently accounting for approximately 22% of the total sales volume of vodka

From the channel point of view, the last two years have showed that the rapid growth of discounters is continuing. Based on Nielsen data for the full year of 2015, the share of discounters increased from 18% to 20% of vodka sales by volume. The traditional trade



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channel reduced its share from 65% to 63% of the category volume and is still the core channel for the vodka market. The share by volume of modern trade, excluding discounters, was approximately 16% and was stable.

Domestic vodka consumption dominates the Polish spirits market with an almost 96% market share. The Polish vodka market is divided into four segments based on quality and price (*):

Super premium and imported, with such brands as Finlandia, Absolut, Smirnoff Black, Norvegia, Amundsen;

Premium, with such brands as Bols Vodka, Stock Prestige, Sobieski, Wyborowa, Maximus and Palace Vodka;

Mainstream, with such brands as Absolwent, Soplica, ubrwka Bison Grass, ubrwka Biaa, odkowa Gorzka, Krupnik, Luksusowa, Polska, Czysta de Luxe, Lubelska; and

Economy, with such brands as ytniwka, 1906, ubr, Starogardzka and Z Czerwon Kartk.

(*) Brands in bold type are produced by the Company.

The super premium and imported segment accounts for approximately 5% of the total volume of vodka sales, while the premium segment accounts for approximately 10%. The mainstream segment, which is the largest, currently represents 67% of total sales volume. Sales in the economy segment currently represent around 17% of total sales volume.

The vodka market is highly concentrated, with the top three players (Stock, CEDC International, Sobieski) generating over 81% of the business. In 2015, we were the fastest growing company, achieving a 37.9% market share by volume in December 2015 and 36.5% full year. That is a 6.5 percentage points increase in market share compared to December 2014 and an 8.3 percentage points increase year on year. Furthermore, our sell-out volume increased by approximately 27% (28.8% in value terms) in 2015. In 2015, CEDC International strengthened its position on all its markets (full year market share by volume of modern trade excluding discounters was 35%, which is growth of 4.9 year on year, discounters 40.3%, which is growth of 7.8 percentage points year on year, traditional trade 35.7%, which is growth of 9.2 percentage points year on year) compared with 2014 and in all key vodka segments (the market share by volume of clear vodka for the full year was 37.1%, which is growth of 8.2 percentage points year on year, flavored vodka 34.6%, which is growth of 8.8 percentage points year on year, small packs 33.7%, which is growth of 10.8 percentage points year on year and big packs, 37.5%, which is growth of 7.5 percentage points year on year).

Brown spirits

The whisky market in Poland has been growing rapidly over the last few years. In 2015, category sales by volume reached 2 million nine-liter cases, (MAT November 2015), which means whisky more than doubled its volume over the last 5 years. Compared to 2014, whisky sales by volume increased by approximately 18.6% (17.9% by value). Together with table wine, whisky is the fastest growing category of alcoholic beverages in Poland. Scotch whisky dominates the category with around 80% of total sales volume, followed by American whiskey (16% of the market) and Irish whisky (3% of the market). In 2015, our market share in November reached 21% with 5.9 percentage points growth on 2014). Our growth was driven mainly by the increase in the market share of Grants (which became the number 1 brand of whisky on the Polish market) by volume to 18.7% (November 2015) (6.1 percentage points growth on 2014). Our other brands, such as Glenfiddich (one of the leading single malt whiskies) and Tullamore Dew (the top Irish whiskey in Poland) also saw good results. Our plans for 2016 include intensifying our marketing and promotional activities for whiskies in our portfolio.

Wine

The Polish wines market reached an estimated 12.9 million nine-liter cases in 2015 and is represented primarily by two categories: table wines, which account for 2.3% of the total alcohol market, and sparkling wines, which account for 0.6% of the total alcohol market. As Poland has almost no local wine production, the wine market has traditionally been dominated by imports, with lower priced Bulgarian wines representing the majority of sales. We believe there is room for long-term category growth, as table wine sales have continued to increase over the last few years. In 2015, our exclusive agency brand, Carlo Rossi, continued to be the number

one selling wine in Poland by value with a market share of 11.6% (November 2015) in the table wine market

Russia

Russia, with its official production of approximately 577.0 million liters (64.1 million nine-liter cases) of vodka from January to November 2015, is by far the largest vodka market worldwide. The Russian vodka market is fragmented with, according to our estimates, the top five producers having a combined market share by volume of approximately 43% in 2015. This number has increased significantly since 2006, when the top five producers only had an estimated 26% market share. Further sector consolidation has been ongoing in recent years, with the potential to continue in the near term, despite the market being down approximately 4.7% in the period from FebruaryMarch 2015 to JuneJuly 2015. We believe we were well-positioned to participate in the consolidation of the Russian vodka market in 2016, as we have the leading brands by volume and value in the mainstream and sub-premium categories, together with a dedicated sales force. In addition, the Russian government has put very restrictive policies on spirit advertising in place. We believe these policies make it difficult for any competitor to buy market share by out-spending its rivals, protecting our leadership.

We believe that a key factor affecting the Russian vodka market will be the continued role of the Russian government in further controls to reduce the black market. In particular:

The government has continued to develop policies to reduce the number of players who operate on the black market,

This was evidenced in recent years through the overall industry re-licensing process, which left a number of producers and distributors unable to operate, as their licenses were not renewed,

The continuation of this policy will benefit the larger legitimate vodka producers on the market, including ourselves,



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The government had increased excise taxes in the past which, in turn, increased the shelf price of vodka on the market,

Following the growth of the illegal market, the Russian government announced that all excise tax increases planned in 2015 and 2016 were cancelled.

We believe that the significant price increases of imported alcoholic beverages, driven by the Russian ruble devaluation, will mean that our vodka brands can take volume from brown spirits and other categories.

As the supply of spirits in Russia is generally controlled by a small number of producers and we purchase spirits primarily from a single source, we do not expect to see reductions in the prices of spirits in the near future, and we may see further increases in spirit pricing. In 2012, 2013, 2014 and 2015, we were able to recover spirit price increases through product price increases. As one of the largest producers of vodka in Russia, we believe we have the purchasing power to obtain highly competitive prices on grain-based spirits. Therefore, although prices can increase, we believe that, given our purchasing power, we will have advantageous spirits pricing compared to some of our competitors. Our strategy over the last few years in Russia has been focused on the mainstream and sub-premium price points and we believe we have a well-placed vodka portfolio. Starting from 2013, spirit transport companies have been obliged to hold a license for working with alcoholic beverages. We have a long-standing relationship with five licensed spirit transport companies. We worked with a fixed price for transport until 2016 however, starting from February 2016 transport costs have been increased by approximately 15-20%.

Spirits

The Russian vodka market is generally divided into five segments based on quality and price: premium, sub-premium, mainstream, economy and cheap. The premium segment accounts for approximately 2.2% of the total sales volume of vodka, while the sub-premium segment accounts for approximately 12.9%. The mainstream segment now represents 30.3% of the total sales volume. Sales in the economy and cheap segment currently represent 53.5% of total sales volume.

Vodka represented about 90% of the total Russian spirits market in 2015 (90% in 2012; 87% in 2013; 90% in 2014). The sales volume in the vodka market declined by approximately 8% in 2015 compared to 2014. We believe the premiumization process should benefit the mainstream and sub-premium brands mostly. 2016 is not expected to bring excise change, which will help us to be well positioned with the best-selling brands in both the sub-premium and mainstream sectors. In addition, with our current capacity and relatively low capitalization expense, we are planning to launch new brands onto the market to capture sales in sectors that we believe have the fastest growth potential. We believe the significant price increases on imported alcoholic drinks, driven by the Russian ruble devaluation, mean that our vodka brands will take some volume from the brown spirits category.

The Russian vodka market is quite fragmented, with the top five producers only having an estimated 43% market share for 2015 compared to an estimated 90% market share in Poland and an estimated 80% market share in Ukraine (based on Nielsen data). We believe that the Russian market will experience trends similar to those experienced on the Polish market and will continue to see further consolidation as the retail infrastructure consolidates further and develops, while the effects of the economic crisis stabilize and diminish. We believe that this post crisis consolidation will increase significantly over the coming five years.

Wine

In 2015, ROUSTs total wine business was strongly affected by the devaluation of the Russian ruble and the decline in consumer demand, dropping by 52% compared to the previous year. Concha y Toro and Gallo still generate the biggest volumes (250k nine-liter cases), although they declined by 47% and 48% respectively, which is in line with the decline in the total wine market estimated at 50% annually. Paul Masson was affected even more dramatically, dropping by 69% due to the substantial price increase on this brand and, consequently, losing its target market.

In 2016, the imported wines market will continue to decline in volume by a further 25%, but ROUST will expand its wine business because of its launch of a further two brands onto the market JP Chenet and Yellow Tail (increase of 82 thousand nine-liter cases).

Ready to Drink (RTD)

The Ready to Drink (or long drink) market in Russia consists of pre-mixed beverages with an alcohol content of up to 9%. The key segments of the market are alco-energy with a 39% market share, fruit-flavored drinks (36% of the market) and gin-based beverages (23%). The total annual sales volume of RTD declined by 33% in 2015, mainly driven by a dramatic reduction in the alco-energy segment arising from regional restrictions on alco-energy product sales. This type of product was banned from sale in Moscow, St. Petersburg, the North-West (jointly accounting for over 60% of the total market) and the Southern Region (10% of the market). In 2015, alco-energy producers lost 47% by volume and had to change the recipe to comply with new industry standard and changing legislation (removing the functional energy ingredients, caffeine and taurine), which had an adverse impact on the behavior of loyal consumers and contributed to a significant loss of volume. Bravo Premiums market share declined by 0.5 percentage points compared to 2014 (September 2015 compared to September 2014) and accounts for 8.6% of the total RTD market.

In 2015, Bravo successfully executed its New Product Development Strategy which was targeted at eliminating gaps on the market map, entering segments where Bravos product had not been traditionally represented. Bravo launched Enerbees Sting in the alco-energy segment with a different, non-energy recipe (without caffeine and taurine) to comply with the recent change in legislation and a very healthy brand image. In addition, Bravo launched a new brand, Russian Bear, with a taste of cognac and almonds, targeted at young males. We continued to develop our flagship brand, Chateau Amore, upgrading the pack image and adding two new flavors, Pina Colada and Mojito, to our mix. The Green Mark family was also extended with two new SKUs, Green Mark Vodka Orange (launched in the fourth quarter of 2015) and Green Mark Vodka Grapefruit (approved for launch in the first quarter of 2016). We are continuing to focus on growth in the distribution of our key brands in traditional trade and profitable customers in modern trade. Bravo started to expand its product portfolio with agency brands and is currently in an active dialogue on the acquisition of the large Greenalls Gin&Tonic brand in addition to Gordons Gin&Tonic that Bravo has been producing and distributing since 2005 under license from Diageo.



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International

Hungary

The Hungarian spirits retail market is primarily dominated by fruit-based eau-de-vie, brown spirits and bitters. Although non-excise-taxed, home-distilled, fruit based local spirits have been taking a share of consumption since September 2010, the government revised the liberal regulations on home distillation, making them stricter, which will affect growth in the volume of home-distilled spirits produced and consumed. According to the trade statistics, the top 10 most popular commercially sold spirit drinks were Royal vodka, Unicum, Jgermeister, Kalinka vodka, Hubertus herbal liqueur, Ballantine's whisky, Ftyls fruit eau-de-vie, Jim Beam bourbon, Finlandia vodka and Johnnie Walker (Nielsen 2014, brands in bold type are distributed by ROUST). The current major trends on the Hungarian spirits market are the overall stagnation of total spirit consumption (CAGR decrease of 0.2% in 2010-2014) and a pronounced move by consumers towards branded Value-for-Money imported spirits and home-distilled spirits. Our Royal vodka brand is the number one selling vodka and number two selling spirit in Hungary. In addition, Hungary is the 6 th largest market in the world for sales of our exclusive agency brand, Jgermeister, the number one imported spirit in Hungary.

We believe that the spirit market in Hungary would be stabilizing now, after a decline in 2015 resulting from the introduction of the Health Tax by the government from January 1, 2015 as described below. Despite declining total sales of spirits by volume, we believe that the share of imported spirits, the segment in which we operate, is stable, while the consumption of domestic spirits is declining. In 2015, our Royal vodka was still a strong No.1 Value-for-Money vodka with a share of over 45.6% by value in October-November 2015, reaching its highest ever 67% market share since 2012. Jgermeisters market share increased by 1.1 percentage point MAT

to 19.9% in bitters. The increased share of imported spirits arose from the elimination of customs duty and the improved purchasing power due to European Union accession in 2004, as well as the continuous marketing and advertising activities of the imported brands of spirits.

The spirits retail market is split into two major segments in Hungary: local producers and importers (as well as the unmeasurable and uncontrolled production and consumption of home-distilled spirits). Local producers primarily have low-cost, mainstream or below, local products, as well as fruit-based premium spirits (Palinka). The imported spirits market is more competitive and relatively fragmented. The major players are the market leader, ZwackUnicumZrt (with an interest in both the domestic and imported spirit segment), ROUST as the largest spirit importer, Duna Pro (Bacardi-Martini portfolio), Pernod Ricard Hungary, Heinemann (distributor of Jim Beam brands) and Coca-Cola (distributor of Brown-Forman brands). Our advantage in Hungary is the combination of our broad portfolio, including Royal vodka, the leading brand of vodka, a wide portfolio of imported bitter and brandy categories, as well as our experienced sales and marketing team, which offers a premium service and builds strong brand equity.

In November 2014, the Hungarian Parliament approved the introduction of a Health Tax on spirits, excluding fruit spirits and spirits containing at least seven medical herbs and no additives (e.g. Jgermeister) from January 1, 2015. ROUST reacted quickly to the new regulations, by changing the recipe of Royal vodka to a vodka based on 7 herbs in order to gain a competitive advantage over the competitors by being Health Tax free. We are also working on new product developments in Metaxa, which will be excluded from the new taxation and are planning to launch a Herbal Infusion Metaxa variant in the second quarter of 2016 to gain additional market share and strengthen our market position.

Ukraine

The traditional categories of spirits dominate the Ukrainian alcohol market. The market share of such beverages is 89%: vodka has a 40% share, while still wine has a 29% share. The current trend on the market shows a loss of share by the traditional categories from year to year: as such, vodkas share declined by 22% in 2015 compared to 2014.

All categories of spirits are declining, following general decline of consumer purchasing power.

The vodka market declined mainly in the mainstream segment, which has a share of approximately 90% of total sales. The share of the sub-premium segment is 6.7% (decline of 1.6% compared to 2014). Moreover, a feature of the Ukrainian market is the high level of the grey market (experts estimate that approximately 50% of the market is illegal). This is due to the decline in the purchasing power of consumers in a difficult economic climate, despite the governmental regulatory policy (minimum retail price increase for spirits). The market has suffered from a boycott of Russian goods and the military conflict in Ukraine, resulting in the devaluation of the local currency.

The main consumer trends:

For the majority of people, the main criterion for choosing a product is its low price;

Demand for national products is growing among the Ukrainian population;

The ban on Russian products was shown in various ways such as withdrawing Russian products from retail outlets;

Growth of consumer demand for products of European origin;

Consumers have started to buy home-distilled vodka or illegal goods.

Export from Poland and Russia to other markets

ROUSTs export from Poland experienced a 20% decline in volume in 2015 compared to 2014 and reached over 430k nine-liter cases in 2015. This was mainly caused by discontinuance of unprofitable private label production and destocking of Green Mark. Russia shipped internationally about 1,786k nine-liter cases in 2015, which means 53% growth compared to 2014.

Our core international brands exported from Poland in 2015 were ubrwka and Soplica and from Russia Green Mark, Talka and Parliament.

ubrwka is still the biggest global brand in our Poland portfolio with our main export markets: France, the UK, Global Duty free, Canada and Japan. During 2015, we extended our distribution network in Ivory Coast and Lebanon. With ubrwka international plus domestic volume, we reached 6.2 million nine-liter cases, which is significant growth compared to 2014, placing us among the top brands as per the Millionaires Club (an annual report of Drinks International publication on the worlds largest selling spirit brands).

file://10.81.50.22/Controling/Financial%20Closing/2015/Q4/Q4%2010-K/02_Notes%20to%20financial%20statements/International_CEDC_decline.xlsx



Page 15 of 132

We are the leading exporter of vodka in Russia with the key international markets in the CIS, Kazakhstan, the Baltics and Western European countries, especially Germany, France and the United Kingdom, for our leading brands: Green Mark, Parliament, Talka, Zhuravli, Kauffman and Yamskaya. As described above, Ukraine, which was historically one of the key export markets for our Russian products, shows general decline due to overall economic situation and, following the ban on Russian products, is now supplied from Poland.

ROUSTs main strength for international market expansion is our brand essence truly authentic brands with product and provenance gravitas and strength in their respective markets. The consumers, particularly younger consumers across key markets, value authentic brands in the alcoholic beverages category. Tied to strong distribution partners and a strong commercial orientation, these constitute our competitive strengths and opportunity for further development.

Operating Segments

The Company used to operate and manage its business on the basis of the primary geographic segments: Poland, Russia and Hungary. Our Ukrainian operations were directly linked to our Russian operations, so they were treated as one segment. Starting in 2015, we manage our business on the basis of the following segments: Poland domestic, Russia domestic, Corporate and International, which comprises other segments of an international nature.

Segment revenue and profit information and additional financial data for our operating segments is provided in Part II, Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations and in Note 28 to the consolidated financial statements in Part II, Item 8 Financial Statements and Supplemental Data of this Annual Report on Form 10-K.

Poland

According to the Nielsen data, in December 2015, we strengthened our leading position in the vodka market with a share of 37.9%, constituting growth of 6.5 percentage points compared with the previous year (December 2015), with Stock Spirit Group, the previous vodka leader, having a share of 26.4% (7.6 percentage points decline on the previous year). Moreover, in February 2016 we achieved the advantage of 14.6% over Stock Spirit Group with 40.3% of volume market share.

We own two production sites in Poland, one in Oborniki and one in Biaystok. The brands of spirits we produce at the Oborniki distillery include the Bols and Soplica vodka brands, whereas we produce Absolwent, ubrwka Bison Grass, ubrwka Biaa and ytniwka in Biaystok. In December 2015, ubrwka Biaa strengthened its leading position and achieved 16.4% of the vodka market (3.9 percentage points compared with the previous year). Our ubrwka Bison Grass is sold internationally on many markets around the world, including France, the United Kingdom and Japan. In 2015, Soplica continued to increase its market share and reached a market share by volume of 9.2% in December 2015, which is growth of 1.8 percentage points compared with the previous year. Brand growth was driven by higher sales of Soplica flavored as a result of our strong activities in the market (coolers, perfect store program, extended sales forces, etc.), together with the impact of two new launches: Soplica Strawberry and Soplica Walnut. Furthermore, Soplica flavored vodka further increased its share to 5.2% of the vodka market, which is 1 percentage point growth on the previous year. Our economy brand ytniwka further strengthened its position as the leading economy vodka with a market share of 4.9 % in December 2015, constituting growth of +0.8 percentage points compared with the previous year. In 2015, Bols defended its position as the leading premium vodka brand in Poland with a market share of 3% by volume. In 2015, we launched two new variants of Absolwent flavored (Grapefruit and Apple&Mint), which enabled the brand to reach a 2.8% market share of the flavored vodka segment by the end of 2014. In 2015, we launched three more flavor variants of Absolwent (Tangerine, Wild Strawberry and Cherry).

We are one of the leading importers of wine and spirits in Poland. We currently import approximately 40 leading brands of spirits and wines on an exclusive basis from almost 20 producers.

Own Brands and Import Portfolio

We sold over 13.7 million nine-l

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