By Oliver Kazunga
Beverages producer, Delta Corporation, has completed a 100 percent shareholding acquisition of South Africa’s leading tradional brewer, United National Breweries (UNB), which owns Chibuku brand.
In a statement for the year ended March 31, 2020, Delta said the transaction was completed as the national lockdown was being implemented under strict prohibition on the sale of alcohol.
“The company finalised the acquisition of 100 percent equity in UNB effective 1 April 2020.
“It is noted that South Africa has implemented very strict prohibitions on the sale and consumption of alcohol during the Covid-19 national lockdown.
“The transaction was completed as the lockdown was being implemented,” it said.
The company said the national, regional and global responses that were implemented and may remain in place to counteract Covid-19 have pervasive and negative impacts on the economy and company’s business activities.
Delta said the first quarter of the current trading year will be significantly subdued owing to the lockdown.
Sales volume across the product categories will be depressed as consumers adjust to the new normal.
“The board cannot reasonably estimate the duration and severity of the pandemic at this stage as the Covid-19 pandemic is complex and rapidly evolving.
“Management have implemented mitigatory measures that will ensure that the company remains in operation,” said the manufacturing concern.
During the period under review, Delta said in historical cost numbers, revenue of ZWL$4,2 billion was realised to achieve a 480 percent growth on the year.
The revenue growth was driven by inflation induced pricing across all product categories. Earnings before interest and tax grew by 650 percent over last year.
“The net finance cost of ZWL$100 million is a result of foreign exchange losses and low deposit interest rates.
“The company closed the year with a net borrowing of ZWL$1,07 billion,” it said.
The group foreign currency exposure from legacy debt arrangement remained at US$63,8 million. Capital expenditure of ZWL$156 million was below planned replacement levels due to forex constraints.
In inflation adjusted terms, revenue increased by 10 percent over prior year while operating income increased by 19 percent. On the outlook, Delta said its fortunes and that of the country would largely be dependent on how Zimbabwe manages and contains the Covid-19 pandemic and the ramp up plan directed at re-opening the country and economy.
“The first quarter of the trading year will be significantly subdued owing to the effects of lockdown on business and the lag that will follow as the economy is gradually re-opened and new or modified consumption patterns are established,” it said.
The group said it will continue placing the safety and health of its workers and stakeholders first, abiding by best practice and as pronounced by the authorities while seeking to defend its capital base and achieve modest profitability under the circumstances.
“However, all this is dependent on the unknown and unprecedented risky way forward,” it said.
Meanwhile, the company declared an interim dividend of ZWL6,75 cents during the year and declaration of the final dividend has been deferred due to the uncertainties arising from the Covid-19 pandemic and measures implemented to mitigate its spread.
As such, Delta said it will re-assess the implications of the Covid-19 lockdowns on the business after the first quarter of the current financial year. The Chronicle