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/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

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.


Investment programme in biomass capacity expansion and cost reduction

Woodchips and sawmill residue at Drax LaSalle Bioenergy in Louisiana, September 2019


  • Targeting biomass self-supply capacity of five million tonnes by 2027
    • 1.5 million tonnes of existing capacity, plus 0.35 million tonnes of low-cost capacity announced at the 2019 half year results
    • Evaluating options for a further three million tonnes over the next seven years
    • Supports target to reduce biomass cost by c.30 percent to c.£50/MWh
    • Targeting returns significantly in excess of the Group’s cost of capital
  • Trading update – in-line with expectations
    • Acquired assets performing strongly
    • Capacity Market restored and included in 2019 Adjusted EBITDA(1)

Will Gardiner, Drax Group CEO, said:

“Drax’s purpose is to enable a zero-carbon lower cost energy future. We believe sustainable biomass has a long-term critical role to play. That’s why we plan to supply 80 percent of our biomass from our own sources – a significant increase on the 20 percent we currently self-supply. Supplying more of our own biomass will cut costs and reduce supply chain risks, ensuring our biomass power generation remains viable in the long term. When combined with carbon capture it will also enable negative emissions, helping the UK on its path to net zero by 2050.”

Will Gardiner, CEO, Drax Group

Will Gardiner, CEO, Drax Group. Click to view/download in high res.

Capital Markets Day

Drax is today hosting a Capital Markets Day for investors and analysts.

Will Gardiner and his management team will update on how the Group is delivering on its purpose. The day will outline the significant opportunities Drax sees in growing its biomass supply and renewable generation businesses.

Investment in biomass to increase capacity and reduce cost

As a part of the Group’s key strategic objective of building a long-term future for sustainable biomass, Drax remains focused on opportunities to reduce its cost of biomass to a level which is economic without subsidy in 2027.

These savings will be delivered through further optimisation of existing biomass operations and greater utilisation of low-cost wood residues; an expansion of the fuel envelope to incorporate other renewable fuels and; a significant expansion of self-supply capacity.

Drax is targeting five million tonnes of self-supply capacity by 2027 (1.5 million today, plus 0.35 million tonnes in development), with greater scope for operational leverage and cost reduction. Drax will continue to work with its current suppliers to develop its portfolio.

At the 2019 half year results, Drax announced an investment in low-cost capacity at its existing three sites in the US Gulf, adding 350k tonnes of new capacity by 2021. The capital cost is in the region of £50 million, enabling targeted fuel cost savings in excess of £15/MWh on the additional capacity once commissioned.

Drax is evaluating options to deliver an additional three million tonnes of capacity. These options are expected to deliver returns significantly in excess of the Group’s cost of capital, with strong cash flow generation and a fast payback.

These activities would enable Drax to develop an unsubsidised biomass generation business by 2027, with the option to service wood pellet demand in other markets – Europe, North America and Asia.

Biomass sustainability is at the heart of the Group’s activities and Drax has implemented industry leading processes which support this expansion, encourage forest growth and make a positive contribution to climate change.

Drax LaSalle BioEnergy wood pellet plant in Louisiana

Drax LaSalle BioEnergy wood pellet plant in Louisiana is now co-located with a sawmill. A new rail spur became operational at LaSalle earlier in 2019. Click to view/download.

Options for gas generation

Drax continues to see flexible gas generation as an enabler of greater renewable and low carbon generation, in addition to supporting the development of hydrogen.

Any investment decision would reflect Drax’s objective of delivering earnings visibility and be underpinned by a 15-year capacity agreement to support a low double-digit rate of return. Drax would consider a range of funding options, including partnerships, consistent with Drax’s balance sheet objective of around 2 x net debt to Adjusted EBITDA(1) over time.

Capital allocation and dividend

Drax remains committed to the capital allocation policy established in 2017.

Trading and operational performance

The performance of the assets acquired from Iberdrola in December 2018 has been strong, particularly the pumped storage business which has performed well, driven by the system support market. Drax reiterates the Adjusted EBITDA(1) guidance provided at the time of acquisition, of £90-£110 million in the 2019 financial year.

In July, Drax completed the refinancing of the acquisition bridge facility used to acquire these assets. These facilities now extend the Group’s debt maturity profile to 2029, adding an ESG(2) facility with a mechanism that adjusts the margin based on Drax’s carbon emissions against an annual benchmark. The Group’s cost of debt is now below four percent and below three percent on the new facilities, reflecting the Group’s reduced business risk. The Group continues to identify opportunities to optimise its balance sheet and cash flow.

During the summer, Drax completed major planned outages on two biomass units. Following a delayed return to service, the plan is to run all four ROC(3) units at high utilisation levels in the fourth quarter of 2019.

The outlook for coal generation remains challenging and Drax continues to monitor the situation with regards to future operation, noting that all unabated UK coal generation must close by 2025.

Following formal confirmation from the UK Government, Drax expects the Capacity Market to be re-instated shortly, with full retrospective payments made for the capacity provided. Capacity payments due to Drax for 2019 and since the suspension of the Capacity Market in 2018 are £75 million. Drax expects these to be included in 2019 Adjusted EBITDA(1), with cash settlement in January 2020.

These factors underpin the Group’s expectations for full year Adjusted EBITDA(1), which remain unchanged and around 2 x net debt to Adjusted EBITDA(1) when adjusted to reflect cash payment of retrospective capacity payments received in January 2020.

Capital Markets Day webcast and presentation material

The event will be webcast from 9.30am and the material made available on the Group’s website at the same time. Joining instructions for the webcast and presentation are included in the links below.




(1) Earnings before interest, tax, depreciation, amortisation, excluding the impact of exceptional items and certain remeasurements.

(2) Environmental Social and Governance.

(3) Renewable Obligation Certificate.


Drax Investor Relations:
Mark Strafford

+44 (0) 1757 612 491


Drax External Communications:
Matt Willey

+44 (0) 203 943 4306

Website: www.drax.com


RNS Number: 8192T

View announcement in PDF format

Further statement in relation to the AGM vote on political donations

Meeting Seminar Conference Business Collaboration Team Concept

In the lead up to the 2019 AGM, the Company undertook initial consultation with major shareholders and received a variety of feedback on both the Resolution and the Company’s approach to engagement with regulators and policymakers including political parties and governments.

Following the AGM, the Board of Directors initiated further engagement to facilitate a clear understanding of the reasons underpinning the votes cast against the Resolution. This included writing to the Company’s largest shareholders and offering to discuss how the Company proposed to respond to points raised during the initial consultation and policy on stakeholder engagement. The Company is grateful to those shareholders that provided feedback at that time.

The Company regularly engages with regulators and policymakers in the UK, Europe and USA (including those associated with political parties and governments) to understand and contribute to discussions on a wide range of matters which are associated with our business and delivering increased value to our shareholders. This approach is detailed on pages 32 and 33 of the 2018 Annual Report as a fundamental aspect of our stakeholder engagement. Political and regulatory risk has been identified by the Board as one of the nine principal risks that the business faces. Activities of this nature are not designed to support any political party or to influence public support for a particular party and would not be thought of as political donations in the ordinary sense of those words.

Reflecting the feedback received from shareholders, it has been determined that within future Annual Reports additional disclosure will be provided. This will describe the forms of engagement that have taken place with regulators and policymakers in the financial year as well as additional disclosure regarding the oversight of that engagement. To assure shareholders of the governance associated with managing engagement and transparency, the Company has also developed and published a policy explaining how stakeholder engagement is undertaken, including oversight and associated reporting.

The term ‘political donation’ is widely defined in the Companies Act 2006 (“the Act”). For clarity, the Company has not made, and does not intend to knowingly make, political donations. The Company continues to believe it is in the best interests of the business and shareholders to renew the authority most recently granted at the 2019 AGM to avoid any inadvertent infringement of the Act.

Prior to 2019, the Company had proposed an authority to spend up to £50,000 under each of the three categories covered by the Act. At the 2019 AGM, Drax sought an authority to spend up to £100,000 under the same three categories which was approved by a majority of shareholders.Nonetheless and reflecting feedback received in connection with the Resolution, at the 2020 and future AGMs the Company will propose an authority to spend up to £100,000 in each of the three categories but will introduce an aggregate cap of £125,000.

Further explanation on these matters, and our ongoing engagement with shareholders, will be included in the 2019 Annual Report and notice of the 2020 AGM.


Drax Investor Relations: Mark Strafford
+44 (0) 1757 612 491


Drax External Communications: Matt Willey
+44 (0) 1757 612 285

Acquisition Bridge Facility refinancing completed

Private placement

The £375 million private placement with infrastructure lenders comprises facilities with maturities between 2024 and 2029(2).

ESG Facility

The £125 million ESG facility matures in 2022. The facility includes a mechanism that adjusts the margin based on Drax’s carbon emissions against an annual benchmark, recognising Drax’s continued commitment to reducing its carbon emissions as part of its overall purpose of enabling a zero-carbon, lower cost energy future.

Together these facilities extend the Group’s debt maturity profile beyond 2027 and reduce the Group’s overall cost of debt to below 4 percent. 


Drax Investor Relations:
Mark Strafford
+44 (0) 1757 612 491


Drax External Communications:
Matt Willey
+44 (0) 7711 376 087 

Website: www.drax.com


(1)  Drax Corporate Limited drew £550 million under an acquisition bridge facility on 2 January 2019 used to partially fund the acquisition of ScottishPower Generation Limited for initial net consideration of £687 million. £150 million of the acquisition bridge facility was repaid on 16 May 2019.

(2)  £122.5 million in 2024, £122.5 million in 2025, £80 million in 2026 and £50 million in 2029.

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


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.