Tag: corporate governance

Notice of Full Year Results announcement, presentation and webcast arrangements

Drax Group CEO Will Gardiner
RNS Number : 3963D
Drax Group PLC

Information regarding the results presentation meeting and webcast is detailed below.

Results presentation meeting and webcast arrangements

Management will host a presentation for analysts and investors at 9:00am (UK Time), Thursday 27 February 2020, at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. 

Would anyone wishing to attend please confirm by e-mailing [email protected] or calling Rosie Corbett at FTI Consulting on +44 (0) 20 3727 1718

The meeting can also be accessed remotely via a live webcast, as detailed below. After the meeting, the webcast will be made available and access details of this recording are also set out below.

A copy of the presentation will be made available from 7:00am (UK time) on Thursday 27 February 2020 for download at: https://www.drax.com/northamerica/investors/results-reports-agm/#investor-relations-presentations

Event Title: Drax Group plc: Full Year Results

Event Date: Thursday 27 February 2020, 9:00am (UK time)

Webcast Live Event Link: https://secure.emincote.com/client/drax/drax005

Start Date: Thursday 27 February 2020

Delete Date: Thursday 31 December 2020

Archive Link: https://secure.emincote.com/client/drax/drax005                                            

For further information please contact [email protected] on +44 (0) 20 3727 1718

Website: www.drax.com/northamerica

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.


Half year results for the six months ended 30 June 2019

Drax Biomass - Morehouse
Six months ended 30 JuneH1 2019H1 2018 (restated)
Key financial performance measures
Adjusted EBITDA (£ million)138102
Net cash from operating activities (£ million)197112
Net debt (£ million)924366
Interim dividends (pence per share)6.45.6
Adjusted basic earnings per share (pence)21.6
Total financial performance measures
Operating profit (£ million)3412
Profit / (loss) before tax (£ million)4-11
Basic earnings / (loss) per share (pence)1-1

Financial highlights

  • Group Adjusted EBITDA up 35% to £138 million (H1 2018: £102 million)
    • Includes £36 million from acquired Hydro and Gas assets
    • Excludes £34 million of capacity payments (H1 2018: £6 million recognised) – expect Capacity Market to be re-established in 2019
  • Sustainable and growing dividend
    • Interim dividend up 12.5% to £25 million (6.4 pence per share) (H1 2018: £22 million, 5.6 pence per share)
    • Expected 2019 full year dividend up 12.5% to £63 million (15.9 pence per share) (2018: £56 million)
  • Good progress with refinancing of acquisition bridge facility, continue to expect completion during 2019
    • On track to deliver 2x net debt / Adjusted EBITDA by year end, assuming reinstatement of the Capacity Market

Operational highlights

  • Integration of acquired Hydro and Gas assets progressing well
  • Strong system support performance – 92% increase in value from flexibility(5) – £69 million (H1 2018: £36 million)
  • Progress with biomass cost reduction – LaSalle sawmill co-location and rail spur operational
  • 52% reduction in reported carbon emissions – 128tCO2/GWh (H1 2018: 265tCO2/GWh)

Progress with strategic initiatives

  • Planned expansion of biomass self-supply – 0.35Mt of new capacity and lower cost biomass
  • Development of options for BECCS(6) – potential for large-scale carbon negative generation at Drax Power Station
  • Planning approval for third OCGT(7) received, expect fourth OCGT and coal-to-gas CCGT(8) approval in 2019


  • Full year EBITDA and net debt expectations unchanged; remain subject to re-establishment of Capacity Market
    • Generation – strong contracted position and system support services, higher H2 biomass generation
    • Pellet Production – growth in H2 pellet volumes, focus on cost reduction and improved quality
    • Customers (formerly B2B Energy Supply) – focus on increasing gross profit, reducing bad debt and cost to serve
  • Attractive investment options for growth: biomass capacity expansion, cost reduction and new gas generation

Will Gardiner, Chief Executive of Drax Group said:

Will Gardiner, CEO, Drax Group. Click to view high resolution photo.

“Drax Group has delivered strong profit and dividend growth in the first half of the year. Integration of our new Hydro and Gas generation assets is progressing well and the value the Group delivers from supporting the energy system has almost doubled. Drax is supporting British business with innovative new energy services and, despite challenging market conditions, our Customers business continues to grow. Our biomass cost reduction initiative and plans for expanded biomass self-supply are going well.

“Drax wholeheartedly supports the UK’s target of achieving net zero carbon emissions by 2050.”

“Reducing our greenhouse gas emissions by half in the past year underscores Drax’s commitment to this goal. With the right investment and regulatory framework we could go further and Drax could become the world’s first carbon negative power station – something the UK Committee on Climate Change recognises will be crucial.”

Operational review

Pellet Production – Focus on capacity expansion with good quality pellets at lowest cost

  • Adjusted EBITDA of £8 million (H1 2018: £10 million)
    • Pellet production 0.65Mt (H1 2018: 0.66Mt) – weather-affected forestry activities and lower pellet production
  • Good progress with cost reduction initiatives
    • Initiatives for run rate savings of £10/MWh on 0.45Mt pa from LaSalle pellet plant
      • Rail spur operational May 2019 – reduction in transport cost to Port of Baton Rouge
      • Co-location agreement with Hunt Forest Products for low-cost sawmill residues, now operational
      • Port of Baton Rouge rail agreement – increased rail capacity and lower costs for LaSalle and Morehouse
    • Capacity expansion with run rate savings of £20/MWh on 0.35Mt
      • £50 million investment in 0.35Mt capacity increase at LaSalle, Morehouse and Amite, commissioning 2020/21
      • Pellet and hammermill upgrades to enable greater utilisation of low-cost sawmill residues and dry shavings

Power Generation – Flexible, low-carbon and renewable generation

  • Adjusted EBITDA of £148 million (H1 2018: £88 million)
    • Contribution of Hydro and Gas assets following acquisition from ScottishPower – £36 million
    • Strong system support performance – 92% increase in value from flexibility(5) – £69 million (H1 2018: £36 million)
    • Suspension of Capacity Market – £34 million of H1 revenue not accrued (H1 2018: £6 million recognised)
  • Biomass output (net sales) up 2% to 6.4TWh (H1 2018: 6.3TWh)
    • ROC(9) generation reprofiled to reflect weather-affected US biomass supplies – optimise within ROC cap and utilise fourth biomass unit to produce expected higher levels of ROC generation in H2 2019
  • Lower thermal output
    • Coal – higher carbon costs, lower margins and reduced output – buy back opportunities for hedged sales
    • Gas – Damhead Creek restricted hours ahead of inspection and Shoreham interim inspection brought forward

Customers – Continued growth in meters and margin per MWh, implementing structure to support long-term growth

  • Adjusted EBITDA of £9 million (H1 2018: £16 million)
    • Increased operating costs associated with integration, restructuring and development of next generation system
    • Weather-related reduction in energy consumption and increased focus on margin per MWh
    • Continued growth in gross profit per MWh
    • Growth in customer meters to 405,000 (H2 2018: 396,000)
    • Improvement in bad debt £13 million (H1 2018: £18 million)
  • Progressing with integration of Opus and Haven
  • Focused on creation of scalable platform for growth, improved gross margin, reduction in bad debt and cost to serve

Group financial information

  • Tax rate benefits from Patent Box claims – Corporation Tax rate of 10% on profits arising from the use of biomass innovation
  • Capital investment of £60 million, full year expectations unchanged (£170 – £190 million)
    • Includes 0.35Mt of new low-cost US pellet capacity (£10 million in 2019 and £40 million in 2020/21)
  • Net debt of £924 million, including cash and cash equivalents of £244 million (31 December 2018: £289 million)
    • Expect 2x net debt to Adjusted EBITDA by end of 2019 subject to re-establishment of Capacity Market


  1. H1 2018 restated to reflect adoption of IFRIC guidance issued in respect of derivative contract accounting consistent with the approach taken in the 2018 Annual Report.
  2. Adjusted Results are stated after adjusting for exceptional items (including acquisition and restructuring costs, asset obsolescence charges and debt restructuring costs), and certain remeasurements.
  3. Earnings before interest, tax, depreciation, amortisation, excluding the impact of exceptional items and certain remeasurements.
  4. Borrowings less cash and cash equivalents (see note 12 to condensed consolidated interim financial statements).
  5. Balancing Market, Ancillary Services and lower-cost coals.
  6. BioEnergy Carbon Capture and Storage.
  7. Open Cycle Gas Turbine.
  8. Combined Cycle Gas Turbine.
  9. Renewable Obligation Certificate.

Read full Report   |   View investor presentation   |   Sign up or watch webcast   |   Read press release

Appointment of non-executive director

RNS Number: 4066W
Drax Group PLC

Following appointment, John will also be a member of the Audit, Remuneration and Nomination Committees.

John has extensive engineering and safety experience in the energy industry with over 45 years working across nuclear, electricity and latterly oil and gas sectors. Between 2004 and 2015 John was at BP plc, most recently as Group Head of Engineering & Process Safety, prior to which he worked at the UK utility Powergen plc as Group Engineering Director.

John is Visiting Professor of Nuclear Engineering at The University of Strathclyde and is a Non-Executive Director of Sellafield Ltd, the nuclear site management company based in Cumbria. He also chairs the Sellafield Board Committee on Environment, Health, Safety & Security.

Commenting on the appointment, Philip Cox, Chair of Drax, said:

“I am delighted that John is joining the Board. His extensive experience gained in the energy sectors, focussed on critical operational services at both multi-national and UK based businesses, will strengthen our Board and support Drax as we continue to focus on both growing our capabilities and continuing to deliver operational excellence.”

Other information – John Baxter holds 3,000 ordinary shares in Drax Group plc. such investment was made prior to any association with the Company



Appointment of new Chief Financial Officer

RNS Number : 1079F
Drax Group PLC

Andy Skelton

Andy has been CFO at Fidessa Group plc, a UK listed global software and services business, since October 2015.  He was previously Deputy CFO at CSR plc, before its acquisition in 2015 by Qualcomm Incorporated. Prior to joining CSR Andy held senior finance positions at Ericsson and Marconi, including two years as CFO of Ericsson Nikola Tesla. He has a BA in Accounting and Finance from Heriot Watt University and qualified as a chartered accountant in 1994.

Den Jones will remain with the Company until June 2019 to support the acquisition and integration of Scottish Power’s portfolio of pumped storage, hydro and gas-fired generation from Iberdrola. The acquisition is conditional upon the approval by Drax’s shareholders and clearance by UK Competition and Markets Authority.

Commenting on the appointment Phil Cox, Chairman of Drax, said:

“The Directors are delighted to welcome Andy to the Board of Drax.  He brings a wealth of experience and skills, and will be a strong addition to the Drax team.  I also extend the directors’ thanks to Den Jones who has done an excellent job as Interim CFO.”

There are no further matters which are required to be disclosed under Rule 9.6.13R of the Listing Rules of the Financial Services Authority.


Drax Investor Relations: Mark Strafford

+44 (0) 1757 612 491


Drax External Communications: Matt Willey

+44 (0) 1757 612285

Website: www.drax.com/northamerica


Mr Skelton’s remuneration will be in accordance with the Company’s remuneration policy and at an annual base salary of £355,000.  No payments in respect of compensation for benefits lost on resignation from his previous employment will be made.

On 3 August 2018, an offer from ION Capital UK for the entire share capital of Fidessa was declared unconditional in all respects.


Chairman’s statement

In 2017 we made significant progress with the strategy we announced in December 2016.

First, we completed the acquisition of Opus Energy – a leading challenger brand in the UK Small and Medium-sized Enterprise (SME) energy market; second, we acquired a third biomass pellet plant (LaSalle Bioenergy), which significantly increases our pellet production capacity; and third, we continued to develop options for flexible gas generation at four sites around the UK.

We also began developing longer-term options for growth, with the exploration of coal-to-gas repowering at Drax Power Station, as we look to provide new sources of flexible generation backed up by long-term capacity contracts. To support our strategy, we completed a refinancing in May and announced a new dividend policy in June.

At the same time, we have continued to provide a significant amount of the UK’s renewable electricity. With confirmation of Government support for further biomass generation at Drax Power Station we plan to continue our work to develop a low-cost solution for a fourth biomass unit conversion, allowing us to provide even more renewable electricity, whilst supporting system stability at minimum cost to the consumer.

Opus Energy performed well, delivering on the plans we set out at the time of acquisition and, in North America, LaSalle Bioenergy is successfully commissioning. This performance alongside safety, sustainability and expertise in our core markets acts as a strong base from which the business can grow and deliver long-term sustainable value.

We have a major role to play in supporting the UK energy system, as it becomes increasingly ambitious in decarbonising, first the electricity sector and subsequently transport and heating. In doing so, through our flexible, low-carbon and customer- focused approach we aim to deliver higher quality earnings, with a reduction in commodity exposure alongside opportunities for growth.

Our people – employees and contractors – remain a key asset of the business. Their safety remains at the centre of our operational philosophy and we have performed well in this regard, although we continue to work to improve our performance across the Group.

Results and dividend

EBITDA in 2017 of £229 million was significantly ahead of 2016 (£140 million).

This increase was principally from producing high levels of renewable power from sustainable biomass. We also benefited from our growing B2B Energy Supply and Pellet Production businesses. Through these activities we are improving the visibility of our earnings.

In June we announced a new dividend policy. This policy is to pay a dividend which is sustainable and expected to grow as the implementation of the strategy generates an increasing proportion of stable earnings and cash flows. In determining the rate of growth in dividends the Board will take account of contracted cash flows, the less predictable cash flows from the Group’s commodity based business and future investment opportunities. If there is a build-up of capital the Board will consider the most appropriate mechanism to return this to shareholders.

At the 2017 half year results we confirmed an interim dividend of £20 million (4.9 pence per share) representing 40% of the full year expected dividend of £50 million (12.3 pence per share) (2016: £10 million, 2.5 pence per share). Accordingly, the Board proposes to pay a final dividend in respect of 2017 of £30 million, equivalent to 7.4 pence per share. In addition, the Board has decided to announce a £50 million share buy-back programme, which will take place during 2018, which is consistent with our capital allocation policy.

Corporate governance

In September, Dorothy Thompson CBE announced her intention to stand down as Group Chief Executive Officer (CEO). I would like to thank Dorothy for her enormous contribution to the Group over the last 13 years. During her tenure Dorothy led the transformation of the business and leaves the Group in a strong position with a clear strategy that lays the foundations for further success in a changing energy sector.

Dorothy is succeeded by Will Gardiner, who was previously Group Chief Financial Officer (CFO) and a key architect of the strategy. His appointment follows a thorough review of internal and external candidates and is a natural progression after two years working alongside Dorothy developing a strategy which I am confident will create significant benefits for all Drax’s stakeholders.

A process to appoint a permanent CFO is underway and Den Jones has been appointed as Interim CFO. Den is highly experienced, having previously served as CFO of both Johnson Matthey and BG Group. Drax remains committed to the highest standards of corporate governance. The Board and its committees play an active role in guiding the Company and leading its strategy. We greatly value the contribution made by our Non-Executive Directors (NEDs) and during a time of transition their role is especially important.

We indicated last year that we were seeking additional NEDs with experience in sustainability and energy supply to complement our already experienced Board. I am therefore delighted to welcome two new NEDs to the Drax Board. Firstly, David Nussbaum, whose in-depth knowledge of sustainability will support our continued focus in this area; and secondly, Nicola Hodson, whose experience in technology, business transformation and energy, will provide real value as the Group delivers its strategy.

Sustainability remains at the heart of the business, both the specific sustainability of biomass and more broadly the long-term sustainability of the business. As such I am pleased to note that alongside this year’s annual report and accounts the Group has published a comprehensive overview of our sustainability progress in 2017 on our website.

Full details of our corporate governance can be found on page 64 of the 2017 annual report.

Our people

As the Group grows I would also like to welcome colleagues from Opus Energy and our other developments. On-boarding is proceeding well and by working together in our common goal to help change the way energy is generated, supplied and used, we are creating real value for all stakeholders.

I must thank all the employees and contractors who have worked so hard to help the Group succeed in the last 12 months. It is through their skill, expertise and hard work that we are able to deliver our strategy for the business.

My sincere thanks to colleagues for their commitment and hard work.

It only remains for me to say that your Board remains totally committed to the complementary aims of delivering sustainable long-term value for the Group, and of helping our country build a low-carbon economy.

Read the Drax Group plc annual report and accounts 2017

Appointment of Interim Chief Financial Officer

RNS Number : 7736U
(Symbol: DRX)

Following the recent announcement that Will Gardiner will succeed Dorothy Thompson as Chief Executive Officer of Drax Group from 1 January 2018, the Board is progressing a process to appoint a permanent Chief Financial Officer (CFO) as soon as practicable.

In the meantime, Den Jones has been appointed as Interim CFO of the Group from 1 November 2017 and will work with Will Gardiner to ensure a smooth transition.

Den was previously CFO of Johnson Matthey, a FTSE 100 specialty chemicals company and has held senior and executive positions, including Interim CFO, in BG Group, a major global energy company. He spent the early part of his career in banking and professional services with Citibank and PwC where he held a number of specialist financial management positions.


Investor Relations:

Mark Strafford

+44 (0) 1757 612 491


External Communications:

Ali Lewis

+44 (0) 1757 612165

Website: www.drax.com/northamerica


My four principles of leadership

1. Have vision  

The first task of any leader is to have the vision for the future of their organisation. This doesn’t mean creating it on his or her own. It means that a leader needs to be ready to challenge assumptions, embrace change, have courage and be brave when necessary.

When I think about this I’m reminded of the challenges we faced when we decided to upgrade our power station in Yorkshire to use compressed wood pellets instead of coal .

In delivering this strategy, we faced three major hurdles:

  • Nobody had ever done it before.  There was no technical solution readily available. We had to create one ourselves using our own engineering know-how.
  • There was no supply chain for the compressed wood pellets. We would need to build our own.
  • Civil servants doubted we could deliver it and regardless, there was no Government support for our vision.

Because we had been so thorough, I knew that we had our facts right. In particular, I was certain that we could produce the same amount of electricity while cutting carbon by 80 per cent.

The only logical conclusion was to drive forward. It would never have happened if we hadn’t been confident about our vision.

I’m particularly proud of the way Drax engineers have developed a world-leading technology to transform the way the UK’s largest power station works without any interruption to supply. In 2015, we generated 7.9% of the UK’s electricity or 26.7 TWh from the one single site in North Yorkshire, according to data in our annual report and from the Department for Energy and Climate Change (DECC). That included 11.5 TWh of compressed wood pellet power – equal to around 13% of the UK’s total renewable electricity (up from 12% a year earlier) or enough to meet the needs of around three million homes (one in every 10 in the country). From the fourth quarter of 2015, we began generating more electricity from sustainable biomass than from coal.

There’s still a long way to go – at least three years if not more – before we can say our work is done, but it’s already a massive achievement.

2. Always be open and approachable

Everyone in your organisation needs to understand what you’re seeking to achieve and why.

For me, being open is also about being honest, approachable and interested in other views. Not just as an individual, but as an entire organisation. As President Obama said while addressing young people on his recent visit to the UK:

“Seek out people who don’t agree with you, and it will also help you to compromise.”

In some instances you need to push forward, while in others you need to compromise. That means a leader needs to trust in their vision while being open to challenges.

At Drax, we know our employees have integrity and can be trusted. At all levels, people need to have highly sensitive information to do their job. This can be a very challenging issue for a company listed on the London Stock Exchange, where a leak could do very serious damage indeed.

When we first listed in 2005, this led to boardroom disagreement. On one side, directors wanted to restrict information to a minimum because they felt this was the best way to limit risk.

As Chief Executive, I strongly disagreed with this. Obviously some things need to be kept confidential, but I really believe that it is important for a leader to be open. In fact, I think one of the key strengths of the Group is our open and frank culture. We have never suffered a significant leak in my time in charge.

3. Together we’re stronger 

A leader’s role is not to take all the decisions. Leadership is about getting the best out of everyone around you. That includes the team you work with on a day-to-day basis, the wider team across the whole organisation, and all your stakeholders.

You never know in advance where the best idea is going to come from. If you’re recruitment is right, you’re surrounded by highly qualified experts.

At Drax, I encourage colleagues to have their say. I am surrounded by people who are willing and able to challenge my views and those of my colleagues on our Executive Committee. I would be silly not to listen to them. We all are more engaged when we’re involved in finding the solution to a problem than when we’re merely dictated to.

Central business district, Gaborone, Botswana

4. Drive the future  

No leader can wait for events to unfold. You have to drive your organisation forward in order to shape its future. In my opinion, indecision is the worst decision of all.

In my 20s I worked for the National Development Bank of Botswana in Gaborone. The bank provided farmers with short- term loans to buy seed to grow their crops.

One day a farmer who was clearly very poor turned up to see the loan officer who shared an office with me. He hadn’t received his loan, because the loan officer hadn’t processed his application in time. So there were no seeds to plant and no crops for the next season.

For years I blamed the loan officer for the farmer’s misfortune. However, from my practical experience as a leader, I now know better. The loan officer’s manager, who was afraid to reprimand him because he came from a privileged local family, should have had more courage. Because they couldn’t decide how to handle the situation, the company and the community it served suffered. Leadership is not an exact science and nothing can compare to experience.

For the sake of future generations, the world needs to urgently move away from coal. Unlike the manager in Gaborone who jeopardised a farmer’s future, my Drax colleagues and I know our leadership is driving the future towards the decarbonisation of our economy.