delta hy2010 analyst presentation

1. WELCOME AND INTRODUCTION

2. SIX MONTHS VOLUMES AND FINANCIALS

3. BUSINESS REVIEW 6 MONTHS TO 30 SEPTEMBER 2010

4. DISCUSSION/QUESTIONS

5. REFRESHMENTS

JOE MUTIZWA

ROB MAUNSELLMATTS VALELA

JOE MUTIZWA

ALL

ALL

INCREASEINCREASEVs SEPTEMBERVs SEPTEMBER

2009 2009 Lager BeerSorghum BeerSparkling Beverages

Total Beverages

47%(4%)63%

16%

Plastic 33%

STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS

SEPTEMBER 2010US$000’s

SEPTEMBER 2009 US$000’s

Turnover 214 498 142 510

Operating Income – Continuing Operations 2 7 195 15 048

Loss on disposal of discontinued operations - (111)

Net Finance expense (1 198) (160)

Gain on Acquisition of Associates 1 325 -

Associates – Share of Loss (366) (115)

Profit Before Tax from continued operations 26 954 14 662

Tax (6 488) (4 566)

Profit from continuing operations 20 466 10 096

Loss from discontinued Operations - (617)

Total comprehensive Income 20 466 9 479

SEPTEMBER

2010 2009

Operating income to net sales from continuing operations

Operating Income to net sales from all operations

17,6%

17,6%

14,3%

13,6%

SEP 2010 SEP 2009

From continuing and discontinued

operations

Normal EPS – Cents 1,71 0,83

Fully Diluted EPS – Cents 1,65 0,78

From continuing operations

EPS - Cents1,71 0,89

Fully Diluted EPS Cents 1,65 0,83

Dividend per share – cents 0,50 -

ASSETS2010

US$000’s2009

US$000’s

Non-current assets

Property, plant and equipment 186 956 133 924

Investments, loans and trademarks 12 276 5 819

199 232 139 742

CURRENT ASSETS

Inventories 54 550 40 393

Trade and other receivables 38 224 23 209

Discontinued Operations - 4 000

Bank balances and cash 6 129 4 901

TOTAL CURRENT ASSETS 98 903 72 503

TOTAL ASSETS 298 135 212 246

EQUITY AND LIABILITIES 2010US$000’s

2009US$000’s

Share Capital 11 802 -Share Premium 17 707 29 364Reserves 150 521 97 660Non-controlling Interests 3 184 5 993Shareholder’s equity 183 214 133 017

Deferred taxation 23 898 32 409

CURRENT LIABILITIESShort-term borrowings 23 000 5 315Interest free liabilities 68 023 41 505TOTAL CURRENT LIABILITIES 91 023 46 820

TOTAL EQUITY AND LIABILITES 298 135 212 246

1. VOLUME PERFORMANCE REVIEW BY

PRODUCT CATEGORY

1. Significant Market Share Growth across all beverages

2. Strong Demand for Lagers and Soft Drinks for the Six Months and Continuing to third quarter

4. Sorghum beer volumes decline as consumers switch to lagers. The loss slowed down in the second quarter as the Shake Shake pack recovered.

3. Under supply for both beer and Soft Drinks due to capacity constraints

668618

550 574

274

491

724

0

100

200

300

400

500

600

700

800

F05 F06 F07 F08 F09 F10 F11

000 hls The highest Half Year Volume since 1998

1747 16981537

1388

881

1616 1547

0

500

1000

1500

2000

F05 F06 F07 F08 F09 F10 F11

000 hls

651

558

322 326

157

299

488

0

100

200

300

400

500

600

700

F05 F06 F07 F08 F09 F10 F11

000 hls

2398 2536

1923

1451

930

2133

2834

0

500

1000

1500

2000

2500

3000

F05 F06 F07 F08 F09 F10 F11

Tonnes Best Ever

20%

67%

13%

Sep-09

Lager Sorghum Soft Drinks

23%

56%

18%

Sep-10

Lager Sorghum Soft Drinks

SHIFT IN BEVERAGES VOLUME CONTRIBUTION SIX MONTHS TO SEP ‘09 VS. SIX MONTHS TO SEPT ‘10

23%

77%

Sep-09

Lager Sorghum

32%

68%

Sep-10

Lager Sorghum

VOLUME CONTRIBUTION BEER CATEGORY

2. THE DRIVE FOR MARGIN EXPANSION

+16%

+51%

+82%

+115%

0

20

40

60

80

100

120

140

Beverage Volumes Turnover EBIT Att.Income

% Growth Key Drivers1. Disposal of loss making businesses2. Product mix - - shift to higher margin products3. Reduction in maintenance costs as new capacity kicks in4. Supply Chain Savings5. Improved Efficiencies - still to play out

LEVERAGING OUR GROWTH: 6 MONTHS TO SEPTEMBER VS. PRIOR YEAR

13.6%15.3%

17.6%21%

0

5

10

15

20

25

Hl F10 FY F10 Hl F11 FY F11

September 2010

EBIT MARGIN EXPANSION

L.T goal 23-25% Range 400 Basis Points Gain since September 2009

2. UPDATE ON RECAPITALIZATION SINCE DOLLARIZATION

CAPITAL INVESTMENT PROGRAMME F10 AND F11

F10 ACTUAL SPEND F11 CAPEX TWO YEARS COMBINED

TOTAL: $47,6m H1: $35,2m F.Yr $72,7m $120,3m

1. Plant & Equipment: $34.5m Plant & Equipment: $47.4m $81,9m

2. Containers: $13,1m Containers: $25,3m $38,4m

KEY PROJECTS

• Southerton Lager Beer Packaging Line

KEY PROJECTS

• PET packaging line at Graniteside

• Lager Beer Packaging Line at Belmont in Byo

• C02 Plant in Bulawayo

IMPACTS• Lager Beer Capacity

adequate until F14.• Soft Drinks Capacity

still needs upgrading in F12

• Investment in Containers will continue

N

HECTOLITRES RELIABLE CAPACITY

ANNUAL VOLUMES

CAPACITY UTILIZATION

LAGER BEER

SOFT DRINKS

CHIBUKU/SORGHUM

TOTAL

2,000,000

1,400,000

5,500,000

1,553,000

1, 143 000

3 250 000

78%

82%

59%

8 900,000 5,946,000

Soft Drinks RGB packaging lines not entirely reliable. New USD12m line planned for Graniteside by July/August 2011

67%

4. NEW PRODUCT LAUNCHES

1. BEER

1.1 Golden Pilsener• Relaunched Golden Pilsener in the green 340 ml bottle and

repositioned it as a Local Worthmore offering with higher price and higher margins

• Hugely successful

1.2 Castle Light• Launched Castle Light using the 330ml one way imported

bottle to counter Competition• Since September launch this brand has now climbed to 2% of

total lager beer volumes.

2. SPARKLING BEVERAGES

2.1 PET Range • Launched In July in 500ml and 2 litre for all core brands• Recently launched full range of mixers in PET• Shortly launching Sparkling flavoured waters• PET Contributed 11% to soft drink volumes in October

2.2 Launch of Burn• Launched the energy drink in the imported 250ml can in

October

5. SUPPLY CHAIN UPDATE

1. Barley 20 000 tonnes delivered to date. We expect +/- 28 000 tonnes. Full cover in hand with room for barley malt exports

2. MaizeSecure to end January. Thereafter we import

3. Carbon DioxideSecure. Vast improvement as suppliers compete

4. Returnable Glass Bottles Secure on 100% imports

5. SugarWill rely largely on imports. Global prices rising. Now at a 30 year high.

6. UtilitiesRemains our greatest risk

6. UPDATE ON ASSOCIATES

6.1 Schweppes Zimbabwe Limited • Volumes for nine months to September 65% higher than prior

year• Market Share around 65-70% of the cordials and squashes sector• Profitability in line with expectations. For full year to December

the business should make $5,5m EBIT

6.2 African Distillers• The business is in recovery mode following positive changes to the

excise regime in the July Mid Term Fiscal Statement. The playing field has been levelled as of September 2010.

• A restructuring has taken place with the head count reduced by 35% and payroll slashed by 45%

• Volumes in October were 3% ahead of prior year and above break even point.

• The business will return to profitability in the 2011 financial year.

7. OUTLOOK FOR BALANCE OF YEAR

• Lager Volumes very strong : 54% ahead of Prior Year and 3% ahead of plan. Market under supplied in Southern Region

• Decline in Sorghum Volumes slowed down. Only 2% below prior year. Good recovery in one litre Shake Shake volumes. This has better margins than the two litre scud

• Sparkling Beverages volumes very strong: 41% ahead of Prior year and ahead of plan,

• Operating Margins improved to 19.2%

• Profitability in line with plan

OCTOBER UPDATE

• Generating sufficient cash to fund dividends to share holders

• Beverage Volumes of 6m hectolitres

• Beverage market shares between 90 and 97% in the core businesses

• EBIT of $74m

• EBIT Margin (i.e., Operating Income to net sales) of 21%

We are on track to achieving all our key deliverables for F11

THANK YOU