Ages Firm, Delta Corporation, Suffered a Slump in Volumes

June 22-28 2017 S17

A flourishing brewer DESPITE a stormy financial year in which bever- SABMiller then began extending bottling lines which boosted beer production facilities. ages firm, Delta Corporation, suffered a slump technical and marketing support to Del- duction capacity. The group also increased its PET fill- in volumes, the company remains one of the ta. Add to this the company’s access to This entailed plant refurbishments ing capacity at Coca-Cola plants to close few profitable entities on the domestic bourse, funding at relatively cheap rates, which and the installation of new production the PET supply gap. writes Dumisani Ndlela enabled the brewer to set up new beer lines at almost all of the company’s pro- To S18 In its year to March 31, 2017, Delta Corpora- tion declared that it had “experienced significant challenges during the year”. The reason: Con- strained aggregate demand, limited access to cash, changes in payment platforms and delays in foreign currency remittances. Add to this the fact that torrential rains, which Zimbabwe experienced during the last season, limited market access and inhibited outdoor consumption occasions. “As a consumer facing business, these challenges impacted the fortunes of the company,” said the group’s statement on the results. As a result, revenue decreased 10 percent during the year to March 31, 2017 to $483 million, with profit and earnings per share going down in sympathy. Profit for the year was at $69,9 million, from $80 million during the prior year. Still robust Yet if truth be told, Delta remains a money-generating entity, and is likely to remain a formidable player in the beverages market for the foreseeable future. Many of the municipal- ity-owned breweries that competed for market share have folded, and those still operational are tottering on the brink of collapse. During the hyperinflationary crisis, the company had lost its beer market share to imported lagers due to government’s interference with the pricing of consumer products. The share for soft drinks had also been lost to imported cordials, PET and some limited can imports. But since 2009 when Zimbabwe ditched its currency and adopted a hard currency regime, Delta clawed back to its dominant position. SABMiller, the major shareholder until Octo- ber 2016 when the conglomerate merged with AB InBev, resumed consolidation of Delta’s financial results from April 2010.

Delta CEO Pearson Gowero S18 TOP COMPANIES SURVEY: DELTa CORPORATION congratulatory SUPPLEMENT June 22-28 2017

From S17 Total capital expenditure invested in ex- panding the firm’s operations between dol- A flourishing brewer larisation to March 2017 amounted to just under $300 million while expenditure utilised to maintain operations is in the region of $194 million. One analyst has suggested that the company’s entire plant and equipment is now just over five years old, and the business does not need to make significant investments to re- place plant and equipment in the short to me- dium term. Delta, which has a strong brand portfolio of lager beers and a portfolio of sparkling beverages – Coca-Cola, Fanta, Sprite, Sparleta and Schweppes, among others – as well as traditional beer, reclaimed its dominance of the beer market and the soft drinks market, and almost completely closed the gap on competition. But the challenges precipitated by impru- dence in economic management since 2013 again began to take a toll on volumes and rev- enues. During the period under review, lager beer volumes were down seven percent on the prior year, while sparkling beverages were down 11 percent. Sorghum beer, the more af- fordable concoction, was down three percent on the prior year. Concerns There are concerns the recent merger of SABMiller and AB InBev could result in the loss of the sparkling beverages business. The sparkling beverages business and an associate entity, Schweppes Holdings Africa, produce brands under licence from The Coca-Cola Com- pany (TCCC) in terms of bottlers’ agreements. Following the merger with of SABMiller and AB InBev, TCCC indicated its intention to ter- minate these bottlers’ agreements. Currently, TCCC and AB InBev are pursuing strategies that could result in a restructure of these business entities, but Delta’s management said the units had “not been identified as a disposal group” because no specific positions had been reached yet on these matters. The company Delta is principally an integrated beverage company with a diverse portfolio of local and international brands in lager beer, traditional beer, Coca-Cola franchised sparkling and alter- native non-alcoholic beverages. It has investments in associate companies whose activities are in cordials and juice drinks, wines and spir- its. The company was first listed on the Zimba- bwe Stock Exchange in 1946 as Rhodesia Brew- eries Limited. Its origins, however, date back to 1898 when the country’s first brewery was established in Cameroon Street, (Salisbury) Harare, from where the brewing industry de- veloped into a major industrial and commercial operation. By 1950, the company had built the Sable Brewery in Bulawayo, producing pale ale, milk stout and Sable Lager. Over the years, it continued to expand its portfolio of businesses and diversified its brewing base. In 1978, the name was changed to Delta Corporation Limited and the company assumed the mantle of a holding company for a broad range of interests serving the mass consumer market. These included lager and sorghum beer brewing, bottling of carbonated and non-carbonated soft drinks, supermarket and furniture retailing, tourism and hotels and various agro-industrial operations. The hotel, supermarket and furniture retailing businesses were demerged from the group in 2001 to 2002 resulting in Delta focusing on the core beverages sectors. Some supply chain related investments re- mained part of the group until 2014 when the plastic packaging entity, MegaPak, was demerged. The company has a minority share- holding in the now consolidated packaging group NamPak Zimbabwe. Outlook Going forward we expect that the company will continue to face systematic challenges associated with the economic environment in Zimbabwe, in particular the continued shortage of cash especially for its traditional The Financial Gazette congratulates all the 2017 Top Companies semi-urban and rural customers. As the country’s acceptance and infrastruc- award winners. A big thank you to our sponsors and stakeholders ture related to the use of electronic money im- proves, we expect Delta’s revenue streams to for making the event a success. be alleviated from the downward pressure. The opening up of the Kwekwe and Masvingo Chibuku Super plants and the flow of income to the rural areas following a relatively strong recovery in the agricultural sector should aug- ment revenue generation as well as. Major risks that the company faces in their outlook include import competition, inflation- ary pressures for their supplies and continued pressure on disposable income limiting aggre- New Worth Knowing gate demand for their products. June 22-28 2017 TOP COMPANIES SURVEY: DELTA CORPORATION CONGRATULATORY SUPPLEMENT S19 Delta Corporation Top Companies Survey Awards S20 TOP COMPANIES SURVEY: DELTA CORPORATION CONGRATULATORY SUPPLEMENT June 22-28 2017 Our brands in the community THE company remains committed to the development of sport and the arts through various brand sponsorships as it endeavours to connect its brands with both its consumers and the communities. Sports Soccer remains Zimbabwe’s premier sport. The Coca- Cola brand invests significantly in grassroots soccer development where talent in both boys and girls has been discovered. The likes of Knowledge Musona have come through the Copa Coca- Cola programme. Meanwhile, the brand Castle Lager has renewed its Pre- mier Soccer League for another three years, an investment of over one million dollars per year in sponsorship and sup- porting activities. The Chibuku brand also plays in with a sponsorship for the Chibuku Super Cup. Carling Black Label sponsors the National Pool tournament, a sport that has a rising following. Zambezi Lager focuses on consumers eager to follow the call to embrace Zimbabwe’s great outdoor life. It remains the official beer for Kariba Invitational Tiger Fishing Tournament. The Pilsener brand has a long history in part- nering golf and for a long time was the anchor sponsor of The Chibuku Road to Fame. the Zimbabwe Open Golf Tournament. The company also makes notable contribution to the Annual National Sports Awards where sporting prowess in various sporting disci- plines is rewarded. Philanthropy Castle Lager brought consumers together for a worthy cause at the maiden Castle Lager Braai Day at Alexander Sports Club on October 29, 2016. The event saw consumers coming out to enjoy good music, braai and some cold Castle Lagers. Through this event, the brand will donate a year’s supply The Castle Lager of meat to the country’s two biggest referral hospitals - Ha- Braai Festival at rare Hospital and Mpilo Hospital in Bulawayo. Alexander Sports Arts Club. Chibuku is the brand behind the country’s most priced Traditional Dance competition, Chibuku Neshamwari held annually. It reaches all the 10 provinces of the country and is a valuable tool for the preservation of authentic Zimba- bwean art. The brand also supports grassroots talent search competition, Chibuku Road to Fame which has provided an im- portant platform to expose local music talent in the country. Delta is also behind the schools traditional dance competition Jikinya, which is an annual competition drawing chil- dren from primary schools across the country. June 22-28 2017 TOP COMPANIES SURVEY: DELTA CORPORATION CONGRATULATORY SUPPLEMENT S21 Our people are our enduring advantage WITH a headcount of about 4 which the company continues and a business imperative. Our 500 employees, Delta recog- to be recognised through vari- safety around beverages policy A wellness coordinator oversees all wellness activities of the nises and appreciates the team ous awards. requires that we take responsi- employees. that makes it a top company. Employee volunteer pro- bility for maintaining a produc- We have a notable number of gramme tive workplace in every area of employees who have served While the company makes our company by, among other the company for more than strides in impacting the com- things, working towards min- two decades and this speaks to munities in which we operate, imising the risk of accidents, the kind of workplace, quality our employees are encour- injury and exposure to health of team work and the value of aged to organise themselves as hazards for all our associates camaraderie and sense of fun teams or as individuals to par- and contractors. The safety in- we uphold at the workplace. ticipate in volunteer initiatives. itiatives were revamped with Employee wellness This year our employees partic- the launch and implementa- A healthy workforce is a pro- ipated in the Orange Day com- tion of the Act10n programme ductive workforce. Delta holds memorations (Pediatric Can- whose key message is “safety with value the total wellbeing cer Awareness Support). They begins with me” — a realisation of all employees. The compa- participated in the fundraising of the need for each employee ny has a wellness team led by activities with proceeds being to take responsibility for their a wellness coordinator who channelled to Kidzcan. Our fe- own safety. Safety committees oversees all wellness activities male managers together with are in place throughout the including recommending di- counterparts in the Coke sys- business under the guidance of etary standards for our staff tem which includes Schweppes suitably qualified safety, health canteens, fitness activities and and Mutare Bottling Company and environmental managers wellness expos. raised funds for food packs un- who ensure adherence to the The company also has an der the “Feed a Child and Keep safety and health procedures. HIV and Aids policy which ca- them in School Campaign”. Del- Statistics on accidents are col- ters for employees and their ta employees also volunteer in lated and evaluated against in- families. Our clinics provide the various groups and associa- ternationally accepted bench- free anti-retroviral drugs to our tions they are affiliated. marks, with safety matters employees and are accredited Workplace health and being deliberated at divisional for testing and counselling. The safety boards and the environmental general awareness of health We believe that a safe and and safety council under the issues has increased driven by healthy workplace is both a fun- oversight of the audit commit- the wellness programme, for damental right of every person tee. S22 TOP COMPANIES SURVEY: DELTA CORPORATION CONGRATULATORY SUPPLEMENT June 22-28 2017 Efficiency in our distribution logistics

Delta Corporation works with the Traffic Safety Council of Zimba- bwe to promote road safety.

DELTA Corporation operates an monitors highest standards of road internal fleet comprising over 200 safety. prime mover vehicles and in ex- We work collaboratively with the cess of 400 trailers, primarily for Traffic Safety Council in the further- secondary distribution. This allows ance of programmes to promote the company to deliver its products road safety through campaigns directly to retail and wholesale cus- against drinking and driving. We tomers. also work with stakeholders in en- With over two hundred delivery suring driver competence. vehicles plying our roads each day, To this end Delta runs an internal it is a safety imperative for the com- Driver of the Year Competition and pany to up-rate driver skills. The our drivers also compete in annual Delta Transport Services invests in driving competitions against other world class driver training as well as fleet operators. June 22-28 2017 TOP COMPANIES SURVEY: DELTA CORPORATION CONGRATULATORY SUPPLEMENT S23

The sorghum contract scheme provides inputs for the Chibuku traditional beer and Eagle Lager. Delta enterprise development

DELTA Corporation Limited has across the country in areas such since 1974 been involved in farm- as Chiredzi, Buhera, Mutoko and er development programmes in Muzarabani. one form or another involving The scheme supports over barley, sorghum and maize. 9000 small holder farmers. Over the years hundreds of The company also contracts farmers have benefitted from farmers under the winter barley the company’s contract farming scheme. programmes. The company requirements The company runs the sor- vary every season depending on ghum contract scheme which the projected domestic beer vol- provides inputs for our flagship umes. Chibuku traditional beer and Ea- This year Delta resumed a gle Lager. limited maize contract scheme The scheme provides inputs during the 2016/17 summer sea- mainly seed to the communal son. farmers who provide up to 70 Delta is a relatively small user percent of output. of maize compared to the indi- Selected commercial farmers cated national consumption. may access other inputs such as We therefore target to par- fertilisers. ticipate through marketing con- The farmers are spread tracts. S24 TOP COMPANIES SURVEY: DELTA CORPORATION CONGRATULATORY SUPPLEMENT June 22-28 2017 Other Delta Corporation awards

S and Mtaﬀ anagement of Pevimag would like to congratulate Delta Corporation on being crowned the Top Listed Company of the Year.

We say Congratulations Makorokoto Amhlop h e Services OFFERED

1. Civil Engineering Services 2. Structural Engineering Services

I. Water reticulation networks I. Telecommunication services, Base Stations and Towers ii. Sewerage reticulation services ii. Industrial buildings, Reinforced concrete and/or structural iii. Water and sewerage treatment plants steelworks iv. Roads and stormwater drainage iii. Buildings, Offce blocks, commercial warehouses and v. Reservoirs and dams housing developments vi. Borehole drilling, Standard drilling, full pump installations iv. Water retaining structures, Reservoirs, treatment plants and borehole maintenance and storage tanks vii. Mining: • Cart away debris v. Specialized structures, Sports stadiums, etc • Underground dewatering and drainage vi. Bridges, Reinforced concrete and structural steelworks • Massive underground concrete works vii. Renovations, Floors, tiling, plastering, painting, plumbing, water prooﬁng, roofs and ceilings

No. 26 Clyde Road Eastlea, Harare Telefax: +263 (04) 778589 P.O. Box CY2928, Causeway, Harare Mobile: +263 (0) 772 297 122 / +263 (0) 773 837 019 Email: [email protected] +263 (0) 772 280 463 / +263 (04) 747747 www.pevimagcontractors.weebly.com June 22-28 2017 TOP COMPANIES SURVEY: DELTA CORPORATION CONGRATULATORY SUPPLEMENT S25

2014: Best Corporate Disclosures Award 2015: Top Company of the Year first runner-up 2015: Disclosure and Investor Relations Win- Delta achievements over the years ner 2016: Top Company of the Year second runner-up 2016: Disclosure and Investor Relations Win- ner 2017: Top Company of the Year

Other achievements Delta Awards 2015/2016 Mackay Awards for Sustainable Development SABMiller Africa Regional runner-up Post consumer Packaging Waste Management.

Mackay Awards for Sustainable Development SABMiller Global Silver Winner Sorghum Contract Scheme.

SABMiller Africa Corporate Affairs Excellence Awards Bronze Overall Achievement.

SABMiller Africa Corporate Affairs Excellence Awards Distinction Regulatory Enhancement & Protection.

Zimbabwe Investment Authority Winner Manufacturing sector Award.

Zimbabwe Investment Authority Winner Stock Market Company of the Year.

Zimbabwe Revenue Authority Highest Customs & Excise Tax Payers Awards.

Zimbabwe Revenue Authority Highest Income Tax Tax Payers Awards.

Confederation of Zimbabwe Industries Winner Industrial Energy Management Award.

Confederation of Zimbabwe Industries Best CSR Award.

Quoted Companies Survey Top 10 Performing Company Zimbabwe Stock Exchange.

Zimbabwe National Chamber of Commerce Second runner-up National Corporate Responsibility HIV and Aids Awareness.

Contact Centre Association of Zimbabwe Second runner-up Manufacturing Sector Customer Care Award.

Zimbabwe International Trade Fair Gold Food and Manufacturing Industry Best Exhibition.

Top Companies Survey Awards Second runner-up & Best Overall Disclosure and Investor Relations Award.

2013/2014 Awards SABMiller Africa & Asia Innovation Excellence Award.

SABMiller MD’s Gold Award Chibuku sales team.

Top Companies Survey Awards Best Disclosure and Investor Relations Award.

Monde Selection Award Golden Pilsener Silver Award

Super Brands Award First Position Overall Consumer Award

SuperBrands Award Second Position Overall Business SuperBrand

Zimbabwe Investment Authority Lifetime Investment and Investor of the Year Zimbabwe Investor Awards.

Zimbabwe Investment Authority Stock Market Award Winner Zimbabwe Investor Awards.

Confederation of Zimbabwe Industries Delta Kwekwe Maltings First runner-up Midlands Chamber. S26 2017 TOP COMPANIES SURVEY AWARDS SUPPLEMENT June 22-28 2017 Top Companies Survey Awards ceremony in pictures