Delta plc (“Delta” or the “Group”)
Trading Update
Delta plc today issues a post close trading update for the full year to 31 December 2009 ahead of its preliminary results in March.
The Group’s 2009 full year trading performance was in line with the Board’s expectations, as highlighted at the time of our interim management statement on 23 October 2009. This reflects significant improvement over the prior year, with the Group’s second half trading performance remaining strong but somewhat below the levels achieved during the first half. The Group’s results continue to be assisted by favourable exchange rates.
The Group’s engineered steel products businesses performed well during the second half, with trading performance similar to the first half, and, as expected, the division’s full year trading performance was significantly better than the prior year.
The Group’s galvanizing services business performed marginally better than expected in the second half of the year and improved upon the first half. Despite this improvement since October’s statement, the division’s full year trading performance will be lower than 2008.
Delta EMD’s full year trading performance was in line with the forecasts provided by Delta EMD Limited (“Delta EMD”) on 19 November 2009, with full year profits forecast to be better than 2008 despite lower sales volumes reflecting lower global demand. As reported on 18 January 2010, Delta EMD has commenced a process to dispose of the Delta EMD business. Delta EMD’s results will continue to be reported as a continuing business until the outcome of that disposal process is more certain. As the disposal of Manganese Metal Company (MMC) has become less certain, its results also will be reported as a continuing business. MMC’s second half performance fell short of the first half due to less favourable selling prices and exchange rates.
As reported in December, the triennial actuarial valuation of the Delta Pension Plan concluded successfully in 2009, and the Group has committed to contributing £6.3 million annually to the plan for ten years (2008: £nil) and to funding annual administrative expenses of approximately £1.0 million (2008: £nil). The year end IAS19 determination will reflect higher inflation and reduced corporate bond yields and will result in a deficit of approximately £70 million, significantly larger than determined at the half year (£25.8 million), and also larger than the actuarial deficit determined as at 31 March 2009 (£48.5 million). Consequently the Group’s 2010 IAS19 pension interest charge will be approximately £4.5 million, substantially greater than during 2009 (£0.2 million).
As at 31 December 2009, and after payment of a £6.8 million contribution (inclusive of one half year’s contribution to administrative expenses) to the Delta Pension Plan, the Group had net cash of more than £140 million.
The markets served by the Group’s products and services remain stable with some early signs of slight improvement. Input costs are expected to increase during the year, and consequently the Group expects trading performance to continue at levels similar to those achieved during the second half of 2009. However the Group’s financial performance will be adversely affected by the pension interest charge and reduced interest income.
As this trading update contains forward-looking statements, these statements have been made by the directors in good faith based on information available to them up to the time of their approval of this update; and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information.
Enquiries:
Todd Atkinson, Chief Executive
Jon Kempster, Finance Director
Tel: +44 (0) 207 842 6050