DELTA CORPORATION LIMITED: THE STRATEGIC PRIORITIES … · LAGER BEER FULL YEAR VOLUME PERFORMANCE...

AGENDA

1. WELCOME AND INTRODUCTION PEARSON GOWERO

2. TRADING REVIEW PEARSON GOWERO

3. FINANCIALS MATTS VALELA

4. DISCUSSION/QUESTIONS ALL

5. REFRESHMENTS ALL

VOLUME BEVERAGE CATEGORY

• Declined by 8% LAGER BEER

• SBs declined by 6%SOFT DRINKS

• Declined by 3% SORGHUM BEER

1. Underperforming economy – slump in commodity prices and poor agricultural output.

2. Cash shortages – impact on discretionary spending. Low consumer confidence.

3. Liquidity challenges – customer cash/debtors cycles.

4. Job losses and the inability of the economy to generate new jobs.

5. Strong US Dollar – increase in imports from regional markets as local products

become more expensive.

6. Delays or inability to meet wage/salary payments by local authorities, parastatals,

industry and central government.

7. Policy risk – discord in policy implementation discouraging FDI.

TRADING ENVIRONMENT

VOLUME PERFORMANCE SUMMARY

Category Actual

Volume

000hl

% Change

on Prior

Year

1. BEVERAGES (HLS 000)

1.1 Clear Beer

1.2 Sorghum Beer

1.3 Sparkling Beverages

1.4 Alternative Beverages

1 307

3 587

1 385

190

(8)

(3)

(6)

(2)

Total Excluding Associates 6 469 (5)

2. Malt Tonnage 24 391 11

QUARTERLY VOLUME & REVENUE PERFORMANCE

1 5261 639

1 726

1 578

$150

$159

$173

$143

$100

$120

$140

$160

$180

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Apr-Jun Jul-Sep Oct-Dec Jan-Mar

Gro

ss S

ale

s $

mil

lio

n

Vo

lum

e H

l '0

00

Volume Gross Sales

LAGER BEER VOLUME & REVENUE PERFORMANCE

1 981 2 060

1 697

1 4141 307

$326$352

$316

$278

$235

$0

$50

$100

$150

$200

$250

$300

$350

$400

0

500

1 000

1 500

2 000

2 500

F12 F13 F14 F15 F16

Gro

ss s

ale

s $

mil

lio

n

Vo

lum

e H

l '0

00

Volume Gross Sales

LAGER BEER FULL YEAR VOLUME PERFORMANCE F11 TO F16

TRADING REVIEW- LAGER BEER MIX

HLs ‘000

-

200

400

600

800

1,000

1,200

1,400

1,600

F15 F16

8% 14%

66% 59%

26%27%

Premium

Main Stream

Economy

• Increase in parallel imports.

• Market shares holding.

• Growth in value brands.

• Competition from other forms of alcohol increased.

• Leveraged association with SABMiller and

introduced a number of new products.

LAGER BEER

It all comes together with a CASTLE

1 4801 615 1 589

1 4721 385

$202

$231$225

$204

$183

$0

$50

$100

$150

$200

$250

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

F12 F13 F14 F15 F16

Gro

ss s

ale

s $

mil

lio

n

Vo

lum

e H

l '0

00

Volume Gross Sales

SPARKLING BEVERAGES VOLUME & REVENUE PERFORMANCE

TRADING REVIEW- SPARKLING BEVERAGES MIX

HLs ‘000

-

200

400

600

800

1,000

1,200

1,400

1,600

F15 F16

60% 58%

40% 42%

Convenience pack

RGB

SPARKLING BEVERAGES

• Growth in value packs (2L PET) and 1L returnable glass bottle

pushed volume away from higher margin packs.

• Higher demand in December/January driven by heat wave.

• Slow down in imports of value brands following duty increases.

• Parallel imports from Botswana and Zambia benefitting from trade

agreements (lower duties) and stronger USD.

• Competition largely on flavours as brand Coke remains dominant.

• Leveraging TCCC franchise arrangements to engage competition.

SORGHUM BEER VOLUME & REVENUE PERFORMANCE

3 354

3 080

3 442

3 7163 587

$103$118

$146

$176$193

$0

$50

$100

$150

$200

$250

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

F12 F13 F14 F15 F16

Gro

ss S

ale

s $

mil

lio

n

Vo

lum

e H

l '0

00

Volume Gross Sales

TRADING REVIEW- SORGHUM BEER MIX

HLs ‘000

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

F15 F16

71% 44%

29% 56%

Chibuku Super

Chibuku

SORGHUM BEER

• Additional Chibuku Super capacity commissioned in

October at Fairbridge Bulawayo.

• Recovery in standard Chibuku volume following

price review.

• Gain in value and market share driven by Chibuku

Super.

• Chibuku products offering an accessible and

affordable entry into commercial alcohol.

BEVERAGE VOLUME CONTRIBUTION

F15 F16

20%

55%

22%

3%

Lagers

Sorghum

SBs

Maheu

20%

56%

21%

3%

Lagers

Sorghum

SBs

Maheu

VOLUME CONTRIBUTION BEER CATEGORY

F15 F16

28%

72%Lagers

Sorghum

27%

73%Lagers

Sorghum

UPDATE ON ASSOCIATES

AFDIS

• Soft Volume

• Affordability challenges

SCHWEPPES ZIMBABWE LIMITED

• Volume holding

• Volume and revenue pressure – new growth areas being explored while

sorting out supply chain bottlenecks

• Improvement in financial performance

• Beitbridge Juice resumed supplies of juice concentrates to bottlers

• Launch of Bonaqua water brand at competitive prices

NAMPAK ZIMBABWE

• Listed entity has reported steady increase in earnings in their

half year results to March 2016

AGENDA

1. FINANCIAL HIGHLIGHTS

2. FINANCIAL STATEMENTS

VOLUME PERFORMANCE SUMMARY

Category Actual

Volume

000hl

% Growth

on Prior

Year

1. BEVERAGES (HLS 000)

1.1 Clear Beer

1.2 Sorghum Beer

1.3 Sparkling

Beverages

1.4 Alternative

Beverages

1 307

3 587

1 385

190

(8)

(3)

(6)

(2)

Total Excluding Associates 6 469 (5)

2. Malt Tonnage 24 391 11

GROSS SALES

• Down 15% to $235 millionLAGER BEER

• SBs down 10% to $183 million

• Alt.Bev down 17% to $14 million SOFT DRINKS

• Up 10% to $193 millionSORGHUM BEER

FINANCIAL HIGHLIGHTS

REVENUE

Declined by 7% to $538,2 million (Turnover - $633m)

OPERATING MARGIN %

Down from 22,08% to 20%

EBIT

Down by 14% to $96,1 million

FINANCIAL HIGHLIGHTS

EBITDA

Down by 10% to $129 million

ATTRIBUTABLE INCOME

Declined by 13% to $80,1 million

DIVIDEND PER SHARE

DIVIDEND PER SHARE

Up 3% on prior year

Interim dividend paid per share- US 1,40 cents

Final dividend proposed per share- US 2,35 cents

Cont….

EARNINGS PER SHARE

Decreased by 13% to US6,49 cents

Special Dividend

Special dividend proposed per share – US 0,95 cents

STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD

MARCH 2016

US$000’s

MARCH 2015

US$000’s

REVENUE 538 198 576 552

Operating income 96 072 111 136

Net finance expense 5 895 7 362

Share of associates profit 3 944 3 265

PROFIT BEFORE TAX 105 911 121 763

Taxation (25 822) (29 809)

PROFIT FOR THE YEAR- CONTINUING

OPERATIONS80 089 91 954

Profit for the year from discontinued operations - 846

TOTAL COMPREHENSIVE INCOME FOR THE

YEAR80 089 92 800

ANALYSIS OF ATTRIBUTABLE INCOME

2016

US$000’s

2015

US$000’s

Profit for the half year from operations attributable to:

Owners of the parent 80 089 91 943

Non-controlling interests - 857

80 089 92 800

EARNINGS PER SHARE

MARCH

2016

MARCH

2015

%

Change

Normal EPS (from Continuing

operations) – Cents6,49 7,44 (13)

Fully Diluted EPS (from

Continuing operations) Cents6,48 7,40 (12)

Dividend per share - Cents 4,70 3,65 29

MARCH

2016

US$’ 000

25 575

22 525

39 108

87 208

8 864

96 072

SEGMENT OPERATING INCOME

MARCH

2016

US$’ 000

MARCH

2015

US$’ 000

LAGER BEER 25 575 28 136

SPARKLING BEVERAGES 22 525 32 583

SORGHUM BEER 39 108 41 277

TOTAL REPORTABLE SEGMENTS 87 208 101 996

ALL OTHER SEGMENTS 8 864 9 140

TOTAL OPERATING INCOME 96 072 111 136

ASSETS2016

US$000’s

2015

US$000’s

Non-current assets

Property, plant and equipment 345 332 341 099

Investments, loans and trademarks 54 776 45 469

TOTAL NON-CURRENT ASSETS 400 108 386 568

CURRENT ASSETS

Inventories 86 431 98 262

Trade and other receivables 43 683 45 224

Cash and cash equivalents 166 016 133 611

TOTAL CURRENT ASSETS 296 130 277 097

TOTAL ASSETS 696 238 663 665

STATEMENT OF FINANCIAL POSITION MARCH

STATEMENT OF FINANCIAL POSITION MARCH

EQUITY AND LIABILITIES2016

US$000’s

2015

US$000’s

Share Capital 12 310 12 366

Share Premium 33 074 32 234

Reserves 5 985 4 531

Retained Earnings 436 530 407 514

Non-controlling Interests - -

Shareholder’s equity 487 899 456 645

Long- term borrowings 65 000 70 000

Deferred taxation 48 833 41 780

113 833 111 780

CURRENT LIABILITIES

Short term borrowings - -

Interest free liabilities 94 506 95 240

TOTAL CURRENT LIABILITIES 94 506 95 240

TOTAL EQUITY AND LIABILITES 696 238 663 665

cont…

CASH FLOW

2016

US$000’s

2015

US$000’s

Cash flow from operating

activities137 463 131 690

Net cash invested (49 426) (41 908)

Net funding 101 016 63 611

SHARE CAPITAL MOVEMENTS

Shares in Issue as at 31 March 2015 1 242 568 675

Share Options Exercised 1 745 300

Shares in Issue as at 31 March 2016 1 244 313 975

OUTLOOK

1. Trading conditions to remain difficult.

2. Business survival strategies to remain a priority.

3. Chibuku Super capacity increase. New plants to be

commissioned in Masvingo and Kwekwe by September 2016.

4. Target profitability, cash generation and dividend payout.

5. Optimise volume and spend on our products via innovative go to

market strategies.

6. People focus; to retain and refresh skills.

7. Transactional difficulties due to cash shortages pause a risk.

8. Perceived policy risk to remain.

THANK YOUCHEERS