Harare — DELTA Corporation Limited, Zimbabwe's prime producer and distributor of alcoholic and non-alcoholic beverages, has suffered a US$2 million impairment from the disposal of its 30 percent stake in Ariston Holdings Limited at US$4 million.

The biological assets, which have been sold to Luxembourg-based African Land Fund, were valued at US$5 928 556 as at March 31 2009, the closing date of the conglomerate's full year.

The company's statement of financial position also changed radically in August after it floated a rights issue to acquire a new lager packaging unit from Germany firm, Klones, at US$12 million.

The rights issue increased Delta's issued share capital to 1, 152, 696, 015 from 1, 092, 694, 729, 30 percent of which went to its South African associate, SABMiller.

The group equity position is likely to change further in the second half of its financial year through a number of pipeline disposals and acquisitions, including the purchase of a 49 percent stake in Schweppes Zimbabwe (Private) Limited.

The deal, which would give Delta a foothold in still beverages, has already been approved by the Competition and Tariff Commission and the Ministry of Indigenisation and now awaits "other regulatory approvals". For the half year ended September 30, Delta reported strong earnings, slightly weighed down by its US$617 053 share of Ariston's loss.

Profit after tax jumped 77 percent to US9,5 million or US$0,83 earnings per share from US$5,4 million or US$0,48 earnings per share the year before. Operating income for the period accounted for 10,5 percent of group turnover, which reached US$142 510,185.

Associate operations, excluding Ariston, continued to contribute losses to the group with the proportion of losses increasing from 0,5 percent to 0,8 percent. The contribution of operating income is, however, expected to increase in the second half as the company pursues a massive expansion drive to grow volumes.

Estimates say the new bottling line commissioned in September with capacity to package 660 hectolitres per year would increase capacity utilisation to 85 percent.

By September 30, the company had recaptured its entire traditional market share from competitors after volumes surged 83 percent over 2008, but only five percent over 2008, signifying the gravity of capacity loss in just one year.

Delta's strategic vision is to saturate the local market by expanding larger business, which accounts for nearly 40 percent of its revenue, and bulking up in wines and spirits as well as still beverages.