Tag: Financial Reports

Half year results for the six months ended 30 June 2021

Engineers walking in front of sustainable biomass wood pellet storage dome at Drax Power Station, June 2021

RNS Number: 8333G
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Six months ended 30 JuneH1 2021H1 2020
Key financial performance measures
Adjusted EBITDA (£ million)(1)(2)186179
Continuing operations165160
Discontinued operations – gas generation2119
Net debt (£ million)(3)1,029792
Adjusted basic EPS (pence)(1)14.610.8
Interim dividend (pence per share)7.56.8
Total financial performance measures from continuing operations
Operating profit / (loss) (£ million)84(57)
Profit / (loss) before tax (£ million)52(85)

Will Gardiner, CEO of Drax Group, said:

“We have had a great first half of the year, transforming Drax into the world’s leading sustainable biomass generation and supply company as well as the UK’s largest generator of renewable power.

“The business has performed well, and we have exciting growth opportunities to support the global transition to a low-carbon economy.

Drax Group CEO Will Gardiner in the control room at Drax Power Station

Drax Group CEO Will Gardiner in the control room at Drax Power Station

“Drax has reduced its generation emissions by over 90%, and we are very proud to be one of the lowest carbon intensity power generators in Europe – a huge transformation for a business which less than a decade ago operated the largest coal power station in Western Europe.

“In the past six months we have significantly advanced our plans for Bioenergy with Carbon Capture and Storage (BECCS) in the UK and globally. By 2030 Drax could be delivering millions of tonnes of negative emissions and leading the world in providing a critical technology needed to tackle the climate crisis.

“We are pleased to be announcing a 10% increase in our dividend, and we remain committed to creating long-term value for all our stakeholders.” 

Financial highlights

Pinnacle named ship

  • Adjusted EBITDA from continuing and discontinued operations up £7 million to £186 million (H1 2020: £179 million)
  • Acquisition of Pinnacle Renewable Energy Inc. (Pinnacle) for cash consideration of C$385 million (£222 million) (enterprise value of C$796 million) and sale of gas generation assets for £186 million
  • Strong liquidity and balance sheet
    • £666 million of cash and committed facilities at 30 June 2021
    • Refinancing of Canadian facilities (July 2021) with lower cost ESG facility following Pinnacle acquisition
  •  Sustainable and growing dividend – expected full year dividend up 10% to 18.8 pence per share (2020: 17.1p/share)
    • Interim dividend of 7.5 pence per share (H1 2020: 6.8p/share) – 40% of full year expectation

Strategic highlights

Kentaro Hosomi, Chief Regional Officer EMEA, Mitsubishi Heavy Industries (MHI) at Drax Power Station, North Yorkshire

Kentaro Hosomi, Chief Regional Officer EMEA, Mitsubishi Heavy Industries (MHI) at Drax Power Station, North Yorkshire

  • Developing complementary biomass strategies for supply, negative emissions and renewable power
  • Creation of the world’s leading sustainable biomass generation and supply company
    • Supply – 17 operational plants and developments across three major fibre baskets with production capacity of 4.9Mt pa and $4.3 billion of long-term contracted sales to high-quality customers in Asia and Europe
    • Generation – 2.6GW of biomass generation – UK’s largest source of renewable power by output
  • >90% reduction in generation emissions since 2012
    • Sale of gas generation assets January 2021 and end of commercial coal March 2021
  • Development of BECCS
    • Planning application submitted for Drax Power Station and technology partner (MHI) selected
    • Participation in East Coast Cluster – phase 1 regional clusters and projects to be selected from late 2021
    • Partnerships with Bechtel and Phoenix BioPower evaluating international BECCS and biomass technologies
  • System support – option to develop Cruachan from 400MW to over 1GW – commenced planning approval process

 Outlook

  • Adjusted EBITDA, inclusive of Pinnacle from 13 April 2021, full year expectations unchanged

Operational review

Pellet Production – acquisition of Pinnacle, capacity expansion and biomass cost reduction

close-up of truck raising and lowering

  • Sustainable sourcing
    • Biomass produced using forestry residuals and material otherwise uneconomic to commercial forestry
    • Science-based sustainability policy fully compliant with current UK, EU law on sustainable sourcing aligned with UN guidelines for carbon accounting
    • All woody biomass verified and audited against FSC®(4), PEFC or SBP requirements
  • Adjusted EBITDA (including Pinnacle since 13 April 2021) up 60% to £40 million (H1 2020: £25 million)
    • Pellet production up 70% to 1.3Mt (H1 2020: 0.8Mt)
    • Cost of production down 8% to $141/t(5) (H1 2020: $154/t(5))
  • Near-term developments in US Southeast (2021-22)
    • Commissioning of LaSalle expansion, Demopolis and first satellite plant in H2
  • Other opportunities for growth and cost reduction
    • Increased production capacity, supply of biomass to third parties and expansion of fuel envelope to include lower cost biomass

Generation – flexible and renewable generation

  • 12% of UK’s renewable electricity, strong operational performance and system support services
  • Adjusted EBITDA down 14% to £185 million (H1 2020: £214 million)
    • Biomass – Lower achieved power prices and higher GBP cost of biomass reflecting historical power and FX hedging
    • Strong system support (balancing mechanism, Ancillary Services and optimisation) of £70 million (H1 2020: £66 million) – additional coal operations and continued good hydro and pumped storage performance, in addition to coal operations
    • Coal – utilisation of residual coal stock in Q1 2021 and capture of higher power prices
  • Pumped storage / hydro – good operational and system support performance
    • £34 million of Adjusted EBITDA (Cruachan, Lanark, Galloway schemes and Daldowie) (H1 2020: £35 million)
  • Ongoing cost reductions to support operating model for biomass at Drax Power Station from 2027
    • End of commercial coal operations in March, formal closure September 2022 – reduction in fixed cost base
    • Major planned outage for biomass CfD unit – August to November 2021 – including third turbine upgrade delivering improved thermal efficiency and lower maintenance cost, supporting lower cost biomass operations
    • Trials to expand range of lower cost biomass fuels – up to 35% load achieved in test runs on one unit
  • Strong contracted power position – 29.3TWh sold forward at £52.1/MWh 2021-2023. Opportunities to capture higher power prices in future periods, subject to liquidity
As at 25 July 2021 202120222023
Fixed price power sales (TWh) 15.99.14.3
-      CfD(6)3.80.6-
-      ROC10.88.44.0
-      Other1.30.10.3
At an average achieved price (£ per MWh)51.752.452.7

Customers – renewable electricity and services under long-term contracts to high-quality I&C customer base

 

  • Adjusted EBITDA loss of £5 million inclusive of £10-15 million impact of Covid-19 (H1 2020 £37 million loss inclusive of £44 million impact of Covid-19)
  • Continuing development of Industrial & Commercial (I&C) portfolio
    • Focusing on key sectors to increase sales to high-quality counterparties supporting generation route to market
    • Energy services expand the Group’s system support capability and customer sustainability objectives
  • Closure of Oxford and Cardiff offices as part of SME strategic review and the rebranding of the Haven Power I&C business to Drax
  • Continue to evaluate options for SME portfolio to maximise value and alignment with strategy

Other financial information

  • Total operating profit from continuing operations of £84 million including £20 million mark-to-market gain on derivative contracts and acquisition related costs of £10 million and restructuring costs of £2 million
  • Total loss after tax from continuing operations of £6 million including a £48 million charge from revaluing deferred tax balances following announcement of future UK tax rate changes
  • Total loss after tax from continuing operations of £6 million including a £48 million charge from revaluing deferred tax balances following confirmation of UK corporation tax rate increases from 2023
  • Capital investment of £71 million (H1 2020: £78 million) – continued investment in biomass strategy
    • Full year expectation of £210–230 million, includes pellet plant developments – LaSalle expansion, satellite plants and commissioning of Demopolis
  • Group cost of debt now below 3.5% reflecting refinancing of Canadian facilities in July 2021
  • Net debt of £1,029 million (31 December 2020: £776 million), including cash and cash equivalents of £406 million (31 December 2020: £290 million)
    • 5x net debt to Adjusted EBITDA, with £666 million of total cash and committed facilities (31 December 2020: £682 million)
    • Continue to expect around 2.0x net debt to Adjusted EBITDA by end of 2022
View complete half year report View investor presentation Listen to webcast

Notice of half year results announcement

RNS Number: 1115G
Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)

Drax Group plc (“Drax”) confirms that it will be announcing its Half Year Results for the six months ended 30 June 2021 on Thursday 29 July 2021.

Information regarding the results presentation and webcast is detailed below.

Results presentation and webcast arrangements

Management will host a webcast presentation for analysts and investors at 9:00am (UK Time), Thursday 29 July 2021.

The presentation can be accessed remotely via a live webcast link, as detailed below. After the meeting, the webcast recording 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 Wednesday 29 July 2021 for download at: www.drax.com/northamerica/investors/announcements-events-reports/presentations/

Event Title:

Drax Group plc: Half Year Results

Event Date:

Thursday 29 July 2021
9:00am (UK time)

Webcast Live Event Link:

https://secure.emincote.com/client/drax/drax015

Conference call and pre-register Link:

https://secure.emincote.com/client/drax/drax015/vip_connect

Start Date:

Thursday 29 July 2021

Delete Date:

Thursday 31 December 2021

Archive Link:

https://secure.emincote.com/client/drax/drax015

For further information, please contact:

[email protected]

Website: www.Drax.com

 

Mailing of the Annual Report and Accounts 2020 and ancillary documents to shareholders

Drax Group plc
(“Drax” or the “Group”; Symbol:DRX)
RNS Number : 6407S

The following documents have been mailed to the registered shareholders of Drax Group plc:

  • Annual Report and Accounts 2020;

  • Notice of the 2021 Annual General Meeting; and

  • Form of Proxy for the 2021 Annual General Meeting.

In accordance with Listing Rule 9.6.1 a copy of each of these documents will shortly be available for viewing on the National Storage Mechanism.

The Annual Report and Accounts 2020 and the Notice of the 2021 Annual General Meeting will also shortly be available as follows:

  • for viewing on the Company’s website, www.drax.com/northamerica; and/or
  • by writing to the Company Secretary at the Registered Office; Drax Power Station, Selby, North Yorkshire YO8 8PH.

Annual General Meeting

The Company is to hold its Annual General Meeting (AGM) at 11.30am on Wednesday 21 April 2021, at 8-10, The Lakes, Northampton NN4 7YD.

In light of Covid-19 restrictions and current prohibitions on public gatherings, attendance at the AGM shall be restricted and therefore shareholders are strongly encouraged to vote electronically or to vote by proxy.

However, despite the current exceptional circumstances, the Directors are keen to maintain engagement with shareholders. Shareholders can therefore join the meeting and submit questions by logging on to web.lumiagm.com. A user guide detailing the arrangements to join and submit questions at the meeting is set out in the Notice of AGM.

Key dates relating to the proposed final dividend

Detailed below are the key dates regarding the proposed final dividend:

  • 22 April 2021 – ordinary shares marked ex-dividend.
  • 23 April 2021 – record date for entitlement to the dividend.
  • 14 May 2021 – payment date for the dividend.

The proposed rate of the final dividend is 10.3 pence per share.

Brett Gladden
Company Secretary
18 March 2021

Notice of full year results announcement

Close up of icicles on building within Drax Power Station
RNS Number : 4104P
Drax Group PLC
(Symbol: DRX)

Drax Group plc (“Drax”) confirms that it will be announcing its Full Year Results for the twelve months ended 31 December 2020 on Thursday 25 February 2021.

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

Results presentation and webcast arrangements

Management will host a webcast presentation for analysts and investors at 9:00am (UK Time), Thursday 25 February 2021.

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

In order to ask a question following the presentation please either dial-in using the conference call details below or submit a written question using the Q&A functionality on the webcast platform.

A copy of the presentation will be made available from 7:00am (UK time) on Thursday 25 February 2021 for download at: www.drax.com>>investors>>results-reports-agm>> #investor-relations-presentations or use the link https://www.drax.com/northamerica/investors/results-reports-agm/#investor-relations-presentations

Drax biomass wagons entering rail unloading building

Drax biomass wagons entering rail unloading building

Event Title:

Drax Group plc: Full Year Results

Event Date:

Thursday 25 February 2021

9:00am (UK time)

Webcast Live Event Link:

https://secure.emincote.com/client/drax/drax009

Conference call and pre-register Link:

https://secure.emincote.com/client/drax/drax009/vip_connect

Start Date:

Thursday 25 February 2021

Delete Date:

Friday 31 December 2021

Archive Link:

https://secure.emincote.com/client/drax/drax009

For further information, please contact:

[email protected]

Website:

www.drax.com/northamerica

Half year results for the six months ended 30 June 2020

LaSalle BioEnergy (centre) and co-located sawmill (right), Louisiana

RNS Number : 3978U
Drax Group PLC (Symbol: DRX)

Six months ended 30 JuneH1 2020H1 2019
Key financial performance measures
Adjusted EBITDA (£ million) (1)(2)179138
Cash generated from operations (£ million)226229
Net debt (£ million) (3)792924
Interim dividend (pence per share)6.86.4
Adjusted basic earnings per share (pence) (1)10.82
Total financial performance measures
Coal obsolescence charges-224-
Operating (loss) / profit (£ million)-3234
(Loss) / profit before tax (£ million)-614
Basic (loss) / earnings per share (pence)-141

Financial highlights

  • Group Adjusted EBITDA up 30% to £179 million (H1 2019: £138 million)
    • Includes estimated £44 million impact of Covid-19, principally in Customers SME business
    • £34 million of capacity payments (H1 2019: nil) following re-establishment of the Capacity Market
    • Strong biomass performance in both Pellet Production and Generation
  • Strong cash generation and balance sheet
    • £694 million of cash and total committed facilities
    • Extended £125 million ESG CO2 emission-linked facility to 2025
    • DBRS investment grade rating
  • Sustainable and growing dividend
    • Expected full year dividend up 7.5% to 17.1 pence per share (2019: 15.9 pence per share), subject to good operational performance and impact of Covid-19 being in line with current expectations
    • Interim dividend of 6.8 pence per share (H1 2019: 6.4 pence per share) – 40% of full year
Biomass storage dome with conveyor in the foreground, Drax Power Station, North Yorkshire

Biomass storage dome with conveyor in the foreground, Drax Power Station, North Yorkshire [Click to view/download]

Operational highlights

  • Biomass self-supply – 9% reduction in cost, 15% increase in production and improved quality vs. H1 2019
  • Generation – 11% of UK’s renewable electricity, strong operational performance and system support services
  • Customers – lower demand and an increase in bad debt provisions, principally in SME business

Progressing plans to create a long-term future for sustainable biomass

  • Targeting five million tonnes of self-supply at £50/MWh(4) by 2027 from expanded sources of sustainable biomass
    • Plan for $64 million ($35/t, £13/MWh(4)) annual savings on 1.85Mt by 2022 vs. 2018 base
    • Investment in new satellite plants in US Gulf – targeting 20% reduction in pellet cost versus current cost
  • BECCS(5) – developing proven and emerging technology options for large-scale negative emissions
  • End of coal operations – further reduction in CO2 emissions and lower cost operating model for biomass

Outlook

  • Full year Adjusted EBITDA, inclusive of c.£60 million estimated impact of Covid-19, in line with market consensus
  • Evaluating attractive investment options for biomass growth: cost reduction and capacity expansion
  • Strong contracted power sales (2020–2022) 34TWh at £51.4/MWh and high proportion of non-commodity revenues

Will Gardiner, CEO of Drax Group said:

“With these robust half-year results, Drax is delivering for shareholders with an increased dividend while continuing to support our employees, communities and customers during the Covid-19 crisis.

Drax Group CEO Will Gardiner

Drax Group CEO Will Gardiner in the control room at Drax Power Station [Click to view/download]

“As well as generating the flexible, reliable and renewable electricity the UK economy needs, we’re delivering against our strategy to reduce the costs of our sustainable biomass and we’re continuing to make progress pioneering world-leading bioenergy with carbon capture technologies, known as BECCS, to deliver negative emissions and help the UK meet its 2050 net zero carbon target.

“National Grid stated this week that the UK can’t reach net zero by 2050 without negative emissions from bioenergy with carbon capture and storage. BECCS delivers for the environment and also provides an opportunity to create jobs and clean economic growth in the North and around the country.”

Operational review

Pellet Production – capacity expansion, improved quality and reduced cost

  • Adjusted EBITDA up 213% to £25 million (H1 2019: £8 million)
    • Pellet production up 15% to 0.75Mt (H1 2019: 0.65Mt) – impact of adverse weather in H1 2019
    • Cost of production down nine per cent to $154/t(6) (H1 2019: $170/t(6))
    • Reduction in fines (larger particle-sized dust) in each cargo
  • Cost reduction plan – targeting $64 million ($35/t, £13/MWh(4)) annual savings on 1.85Mt by 2022 vs. 2018 base
    • Expect to deliver $27 million of annual savings by end of 2020 – a saving of $18/t vs. 2018
    • Greater use of low-cost fibre, LaSalle (improved rail infrastructure, woodyard and sawmill co-location) and relocation of HQ from Atlanta to Monroe
    • Savings from projects to be delivered in 2020-2022
    • 35Mt capacity expansion (LaSalle, Morehouse and Amite), increased use of low-cost fibre, improved logistics and other operational enhancements
  • $40 million investment in three 40kt satellite plants in US Gulf – commissioning from 2021, potential for up to 0.5Mt
    • Use of Drax infrastructure and sawmill residues – targeting 20% reduction in pellet cost versus current cost
Power lines and pylon above Cruachan Power Station, viewed from Ben Cruachan above

Power lines and pylon above Cruachan Power Station, viewed from Ben Cruachan above [Click to view/download]

Power Generation – flexible, low-carbon and renewable generation

  • Adjusted EBITDA up 45% to £214 million (H1 2019: £148 million)
    • Limited impact from Covid-19 – strong contracted position provided protection from lower demand, reduction in ROC(7) prices offset by increased system support services
    • £34 million of Capacity Market income (H1 2019: nil; £36 million in relation to H1 2019 subsequently recognised in H2 2019 following re-establishment of the Capacity Market)
    • £54 million of Adjusted EBITDA from hydro and gas generation assets (H1 2019: £36 million)
    • System support (Balancing Market, ancillary services and portfolio optimisation) up 8% to £66 million (H1 2019: £61 million)
    • Good commercial availability across the portfolio – 91% (H1 2019: 87%)
  • Covid-19 – business continuity plan in place to ensure safe and uninterrupted operations
  • Biomass generation up 16% to 7.4TWh (H1 2019: 6.4TWh)
    • Strong supply chain (impact of adverse weather in H1 2019) and record CfD availability (Q2 2020 – 99.5%)
  • Pumped storage / hydro – excellent operational and system support performance
  • Gas – excellent operational and system support performance, Damhead Creek planned outage underway
  • Coal – 10% of output in H1 2020 – utilisation of coal stock before end of commercial generation (March 2021)

Customers – managing the impact of Covid-19 on SME business

  • Adjusted EBITDA loss of £37 million (H1 2019: £9 million profit) inclusive of estimated £44 million impact of Covid-19 – reduced demand, MtM loss on pre-purchased power and increase in bad debt, principally in SME business
  • Covid-19 – implemented work from home procedures to allow safe and continuous operations and customer support
  • Good performance in Industrial and Commercial market – new contracts with large water companies providing five-year revenue visibility, while supporting the Group’s flexible, renewable and low-carbon proposition
  • Monitoring and optimisation of portfolio to ensure alignment with strategy

Other financial information

  • Total financial performance measures reflects £108 million MtM gain on derivative contracts, £224 million coal obsolescence charges and £10 million impact (£6 million adjusted impact) from UK Government’s reversal of previously announced corporation tax rate reduction resulting in revaluation of deferred tax asset and increased current tax charge
    • Additional c.£25–£35 million for coal closure costs expected to be reported as exceptional item in H2 2020 when coal consultation process is further advanced
  • Capital investment – continuing to invest in biomass strategy, some delay in investment due to Covid-19
    • H1 2020: £78 million (H1 2019: £60 million)
    • Full year expected investment £190–£210 million (was £230–£250 million), includes 0.35Mt expansion of existing pellet plants and $20 million initial investment in satellite plants ($40 million in total)
  • Net debt of £792 million, including cash and cash equivalents of £482 million (31 December 2019: £404 million)
    • Remain on track for around 2.0x net debt to Adjusted EBITDA by end of 2020

View complete half year report

View analyst presentation

Listen to webcast

View/download main image. Caption: LaSalle BioEnergy (centre) and co-located sawmill (right), Louisiana