Delta Corporation Limited Annual Report 2019 BRIGHTER TOGETHER OUR VISION To be the most admired Beverage Company in the Region. OUR MISSION We bring enjoyment and refreshment to our consumers by nurturing our brands and growing our business sustainably for the betterment of our employees and communities OUR STRATEGIC OUR PRIORITIES VALUES • Creating a balanced portfolio of businesses • People are our enduring advantage • Building and nurturing strong brand • Accountability is clear and personal portfolios that earn the support and • We work and win in teams affection of our customers and consumers • We are customer and consumer • Growing the profitability of the business focused on a sustainable basis • We do our best for local communities • Building and sustaining alliances with • Our reputation is indivisible business partners CONTENTS OUR VISION IS TO BE THE MOST ADMIRED 03 Values Statements BEVERAGE BUSINESS IN THE REGION 04 Company Profile OUR MISSION IS TO BRING ENJOYMENT AND 06 Principal Risks Update REFRESHMENT TO OUR CONSUMERS BY 08 Financial Highlights NURTURING OUR BRANDS AND GROWING OUR BUSINESS SUSTAINABLY FOR THE BETTERMENT 10 Chairman’s Letter to Shareholders OF OUR EMPLOYEES AND COMMUNITIES. 12 Review of Operations We value the accountability of our people, 32 Report of the Directors teamwork, our local communities, our customers 34 Corporate Governance and our reputation. 38 Directors’ Responsibility for And this means that together we can prosper, Financial Reporting creating a thriving, sociable, resilient, cleaner, and productive world. 39 Independent Auditor’s Report 43 Annual Financial Statements WE ARE DELTA CORPORATION. BRIGHTER SUPPLEMENTARY TOGETHER INFORMATION 103 Group Statistics BRIGHTER TOGETHER IN THREE WAYS: 104 Sustainable Development Report 117 Group Structure • People get more from life when they come together – our products make those moments 118 Portfolio of Businesses shine BRIGHTER • Our people shine brighter when they work 119 Directorate and Management TOGETHER in teams 120 Board of Directors • Our involvement in communities helps to create a BRIGHTER future 124 Group Management Committee To view the Online SHAREHOLDER Annual Report, please visit our website at INFORMATION www.delta.co.zw 127 Notice to Members 128 Shareholders Analysis 01 Delta Corporation Limited Annual Report 2019 EMPLOYEE DECLARATION As an employee of Delta Corporation…. I VALUE ….......BECAUSE….. MYSELF I am accountable for the things I do every day. Personally and professionally, my reputation is what defines me. OTHERS What I do matters to those I work with and what they do matters to me. As colleagues we can achieve higher goals. MY COMMUNITY I want the best for the people I love. I do work safely and with passion, so we can enjoy health and fun. OUR CUSTOMERS I know that happy customers mean security and prosperity for my future 02 VALUES STATEMENTS OUR PEOPLE ARE WE WORK AND OUR REPUTATION OUR ENDURING WIN IN TEAMS IS INDIVISIBLE ADVANTAGE • We actively develop and share • Our reputation relies on the • The calibre and commitment knowledge within the Group actions and statements of of our people set us apart • We foster trust and integrity in every employee • We are a diverse and dynamic internal relationships • We build our reputation for team • We encourage camaraderie the long term • We select and develop people and a sense of fun • We are fair and ethical in all for the long term our dealings • Performance is what counts • Health and Safety issues receive priority attention ACCOUNTABILITY IS WE UNDERSTAND WE DO OUR CLEAR AND AND RESPECT OUR BEST FOR LOCAL PERSONAL CUSTOMERS AND COMMUNITIES CONSUMERS • We favour decentralized • We consciously balance local management and a practical • We are endlessly concerned and group interests maximum of local autonomy with our customers’ needs and • We benefit the local • Goals and objectives are perceptions communities in which we aligned and clearly articulated • We build lasting relationships, operate • We prize both intellectual based on trust • We endeavour to conduct rigour and passion for our • We aspire to offer the our business in an work preferred choices of product environmentally sustainable • We are honest about and service manner performance • We innovate and lead in a • We require and enable self- changing world management 03 Delta Corporation Limited Annual Report 2019 COMPANY PROFILE WE ARE DELTA CORPORATION BRIGHTER TOGETHER 04 COMPANY PROFILE (continued) Delta Corporation is a modern Zimbabwean company poised for growth in all facets of its business. It is principally a beverages company In 1978 the name was changed to Delta with a diverse portfolio of local and Corporation Limited and the Company international brands in lager beer, assumed the mantle of a holding traditional beer, Coca-Cola franchised company for a broad range of interests sparkling and alternative non-alcoholic serving the mass consumer market. beverages. The Coca-Cola franchise These included lager and sorghum beer covers the activities of associate brewing, bottling of carbonated and non- entity Schweppes Holdings Africa carbonated soft drinks, supermarket and Limited which focuses on cordials, furniture retailing, tourism and hotels juice drinks, water and downstream and various agro-industrial operations. agricultural value chain activities such as Beitbridge Juice Company and The hotel, supermarket and furniture Best Fruit Processors. The alcoholic retailing businesses were demerged beverages portfolio also includes from the Group in 2001 to 2002 African Distillers Limited, which resulting in the Group focusing on the manufactures wines, spirits and ciders, core beverages sectors. Some supply which is now reported as a subsidiary chain related investments remained following the acquisition of an part of the Group until 2014 when the additional stake in November 2018. plastic packaging entity, MegaPak, was demerged. The Company has a minority The Company has been listed on the shareholding in the packaging group, Zimbabwe Stock Exchange since 1946, Nampak Zimbabwe. initially as Rhodesia Breweries Limited. Its origins, however, date back to 1898 when On 1 January 2018, the Company the country’s first brewery was established acquired a majority stake in National on Cameroon Street, (Salisbury) Harare, Breweries Plc, a Zambian traditional from where the brewing industry developed beer entity which is listed on the Lusaka into a major industrial and commercial Stock Exchange. This could be a start of operation. a journey to consolidate the traditional beer franchises and businesses in the By 1950, the Company had built the Sable region, a sector in which the Company Brewery in Bulawayo, producing pale ale, boasts of significant competences. milk stout and Sable Lager. Over the years The Company is currently engaged in the Company continued to expand its a process to acquire a leading South portfolio of businesses and diversified its African traditional beer business. brewing base. BRIGHTER TOGETHER 05 Delta Corporation Limited Annual Report 2019 PRINCIPAL RISKS UPDATE The principal risks Unfavourable general economic Concerns about perceived negative facing the Group and and political conditions in the health and social consequences of country both alcoholic and non-alcoholic considered by the board The economic environment continues beverages. and group management to deteriorate and this increases There is growing global concern committee are detailed the overall risk of doing business. and high profile debate over alcohol The political environment, although consumption, certain ingredients and below. These are not peaceful, remains turbid. The general advocacy for reduced consumption of the only risks facing election held in July 2018, though sugar sweetened beverages. These issues the Group. There may peaceful, was contested and did not would impact on consumer preferences, be additional risks not receive the full endorsement of the hence any restrictions on the permissible international observer missions. The advertising style and media messages currently known to us or character of the current administration and the marketing, labelling, packaging that we currently deem was severely dented by the military or sale of these beverages which could to be immaterial which interventions in quelling the post- impact on business performance. election demonstrations of August 2018 may materially adversely and suppressing the violent reactions to Product Safety and Quality affect the business, fuel price increases in January 2019. Issues and Trademarks financial condition or Our success depends largely on our The fiscal and monetary policies ability to maintain and enhance the results of operations in implemented in 2018 and early 2019 image and reputation of our brands or future periods. have set the country on an uncertain products. We have rigorous product path; tight budgetary control in line safety and quality standards which we with the Transitional Stabilisation Plan, endeavour to meet. Any product that removal of subsidies and distortions, becomes contaminated or adulterated reforms of state owned enterprises may be subject to product liability claims etc. The key development relates to and negative publicity which impacts on the formalisation of the RTGS$ as the the business. Any failure to protect the functional and reporting currency and company’s intellectual property rights, introducing an inter-bank market for the trademarks, patents, trade secrets and RTGS$ to foreign