Zimbabwe News and Internet Radio

Delta transfers legacy debt to RBZ

By Oliver Kazunga

Beverages producer, Delta Corporation, has registered and transferred to the Reserve Bank of Zimbabwe (RBZ) an equivalent of US$18,8 million legacy debt the company owes foreign creditors.

LISTED beverages concern, Delta Corporation
Delta is 38 percent owned by global brewing giant SABMiller

In a financial statement for the year ended March 31, the company said it registered and transferred the liabilities based on an exchange rate of US$1:ZWL$1 in line with the monetary authority’s directive.

“The group has legacy foreign liabilities of US$18,8 million, being those amounts that were due and payable on 22 February 2019 when the authorities promulgated Statutory Instrument 33 of 2019, which introduced the ZWL$ currency, as distinct from the US$, as the functional currency,” said Delta.

“The group has registered these liabilities with the Reserve Bank of Zimbabwe and transferred to the Reserve Bank the ZW$ equivalent of the foreign debts based on the USD/ZW$1:1 exchange rate in line with directives and as agreed with the Reserve Bank of Zimbabwe.”

In compliance with International Financial Reporting Standards, the deposit at RBZ represents a commitment to pay equivalent value in US dollar and has, therefore, been treated as a financial derivative translated at the closing rate and discounted to the net present value of ZWL$1,57 billion.

“The difference between the net present value and the face value of the financial asset of ZWL$12,7 million has been expensed,” it said.

“This unrealised net loss is expected to reverse on settlement of the instrument. The board notes that the authorities have not fully articulated the policy framework on the settlement of these liabilities.”

The beverages producer, however, expressed concern over the divergence of market exchange rates and the interbank exchange rate, which it said has an effect of creating a further risk that the “blocked funds” liabilities could be paid at exchange rates that are above the RBZ settlement rates.

Delta has said it was confident that RBZ will continue to settle the legacy debts as per the agreed framework. In historic cost terms, the group recorded revenue of ZWL$33 billion to achieve a 692 percent growth on the comparative year. The revenue growth was driven by inflation-induced pricing across all product categories.

On trading performance, the group said its Lager beer volume grew by 17 percent compared to the prior year. Volume recovery was mostly during the second and third quarters, following the relaxation of the Covid-19 restrictions.

“There are ongoing efforts to inject additional glass bottles to drive volume and enhance consumer choice of brand and pack,” said Delta.

“The business will benefit from the opening of more trade channels as the Covid-19 restrictions are eased.”

The company said the sorghum beer volume declined by seven percent compared to prior year, reflecting a notable recovery in the second half of the year.

The sector was adversely affected by the limited access to key trade channels such as bars, beer halls and bottle stores which were closed during most phases of lockdowns.

The South African entity, United National Breweries, was closed for extended periods as the authorities implemented very strict prohibitions on the sale and consumption of alcohol under the Covid-19 national lockdown measures, said Delta.

Meanwhile, sparkling beverages, volume grew by 33 percent over last year, albeit from a low base, recording a notable recovery in market share on the back of consistent product supply and competitive pricing.

Delta said its spirits and wine unit, African Distillers, recorded a volume growth of 31 percent compared to the the prior year, driven by spirits and ready-to-drink categories.

At Schweppes Holdings Africa, the beverage volume was one percent below prior year indicating a notable recovery in mainline crushes and syrups and the benefits from the relaunch of the Minute Maid Juice drinks. The Chronicle