Tag: Will Gardiner

RNS Number : 6261Y
Drax Group PLC
27 February 2025

Will Gardiner, CEO of Drax Group, said:

Will Gardiner, Drax Group CEO

“Drax has delivered a strong operational and financial performance while supporting UK energy security. We produced over 25% more dispatchable renewable power in 2024, keeping the lights on for millions of homes and businesses, while supporting thousands of jobs throughout our supply chain.

“Signing a Heads of Terms with the UK Government for a new low-carbon dispatchable CfD for Drax Power Station is a major milestone for the business and provides the basis on which the site continues to generate electricity for the country, especially when the wind isn’t blowing, and the sun isn’t shining.

“This is an investment in security of supply, which provides a net saving for consumers and helps deliver the Government’s Clean Power 2030 goal. It also offers a potential pathway for long-term growth for our business, including options for the development of BECCS and a data centre at Drax Power Station.

“We are making good progress with our growth ambitions for Flexible Generation, Pellet Production and our international carbon removals business, Elimini. Our strong balance sheet supports returns to shareholders and the development of options for long-term growth, both in the UK and internationally.”

Financial highlights

• 5% growth in Adj. EBITDA driven by increased renewable generation and improved Pellet Production performance
• Strong liquidity and balance sheet
  • £0.7 billion of new debt with maturities 2027-2029, £0.9 billion of shorter dated maturities repaid
  • £806 million of cash and committed facilities, 0.9x Net debt to Adj. EBITDA
• Sustainable and growing dividend – proposed final dividend of 15.6 pence per share (2023: 13.9 pence per share)
  • Expected full year dividend up 12.6% to 26.0 pence per share (2023: 23.1 pence per share)
• £300 million share buyback⁽⁵⁾
  • c.£150 million complete to date, third £75 million tranche expected to commence shortly

Other highlights

• Drax Power Station – UK’s largest power station and source of renewables – 5% of UK power, 10% of UK renewables
• Non-binding Heads of Terms agreed for low-carbon dispatchable CfD for Drax Power Station
• Potential for >1.2GW data centre at Drax Power Station, through 2030s, shortlist of developers
• Launch of Elimini (Global BECCS) carbon removals business
• Sale of non-core Opus Energy SME customer meters
• Heads of Terms agreed with SAF developer for 1Mt pa multi-year biomass sales from 2029, potential for 3Mt pa
• £80 million (40MW) expansion of Cruachan, operational 2027, underpinned by 15-year Capacity Market agreement

Financial outlook

• Full year 2025 expectations for Adj. EBITDA in line with analyst consensus estimates⁽⁶⁾
• Drax Power Station >£1 billion of estimated post-tax operating cash flow (2025 to 2027) underpinned by forward power hedges and renewable certificates

Targeting post 2027 Adj. EBITDA of £600-700m pa from FlexGen, Pellet Production and Biomass Generation⁽⁷⁾

• FlexGen and Energy Solutions – targeting post 2027 recurring Adj. EBITDA of >£250 million
  • Pumped storage, hydro, Open Cycle Gas Turbines (OCGTs) and Energy Solutions
• Pellet Production – targeting post 2027 recurring Adj. EBITDA >£250 million
  • Pipeline of opportunities for sales in existing and new markets, including SAF, and own-use
  • Positioned to capture value in supply chain as a producer, user and seller of biomass in the global market
• Biomass Generation – targeting average Adj. EBITDA of £100-200 million pa (Apr-27 to Mar-31)
  • Based on low-carbon dispatchable CfD across four units, flexible generation and ancillary services
  • Further opportunity from additional merchant generation

Capital allocation policy unchanged

• Maintain a strong balance sheet
• Invest in the core business
  • Short-term – capital returns, investment in existing business and commissioning of OCGTs
  • Medium-term – expansion of FlexGen to provide a full range of system support services and technologies
  • Long-term options for growth
    • FlexGen – long duration storage (Cruachan II) subject to attractive investment framework
    • Data centre – potential for >1.2GW data centre at Drax Power Station through 2030s, shortlist of developers
    • Carbon removals – development of pipeline of options for growth and value creation, including BECCS at Drax Power Station and Elimini
• Pay a sustainable and growing dividend
• Return surplus capital beyond investment requirements
  • £300 million share buyback commenced August 2024 – c.£150 million complete in first seven months, third £75 million tranche to commence shortly

Sustainability – continued development of approach to sustainability processes and reporting

• Launch of new Sustainability Framework – Climate, Nature and People Positive targets
• Full alignment with Task Force on Climate-related Financial Disclosure (TCFD) reporting requirements and voluntary Taskforce on Nature-related Financial Disclosure (TNFD) reporting
• SBTi – 2030 targets validated, validating 2040 targets
• CDP – increase in Forest rating (A- ratings for Climate and Forest)

Operational and financial review

FlexGen & Energy Solutions – flexible generation and system support services

• Pumped Storage and Hydro – performance supportive of post 2027 Adj. EBITDA target
  • Strong system support earnings with lower forward power sales, as expected, vs 2023
  • Progressing c.£80 million refurbishment and upgrade (40MW) of Cruachan underpinned by 15-year Capacity Market agreements (>£220 million)
• I&C
  • Maintaining margin in line with 2023, some reduction in volume
  • Development of Energy Solutions business including system support services via demand response, and electric vehicle services following acquisition of BMM (August 2023)
• SME (Opus Energy)
  • Sale of majority of Opus Energy’s meter points completed September 2024, with remaining meter points sale agreed February 2025 – reflects focus on core I&C business and exit from SME market

Biomass Generation – UK energy security with dispatchable renewable generation and system support services

• Biomass generation – increased level of renewable generation and continuing system support role
  • 14.6TWh – 27% increase (2023: 11.5TWh)
  • Single major planned outage, completed ahead of schedule
• Strong contracted power and renewables position
  • As at 24 February 2025 c.£1.9 billion of forward power sales between 2025 and Q1 2027 on RO biomass, pumped storage and hydro generation assets – 20.2TWh at an average price of £93.7/MWh^(8/9)
  • RO generation – fully hedged in 2025 and c.80% 2026, with >£1 billion of associated ROCs
  • A further 3.1TWh of CfD generation contracted for 2025

Pellet Production – North American supply chain supporting UK energy security and sales to third parties

• Strong improvement in operational and financial performance vs 2023
  • 5% increase in production vs 2023 (4.0Mt, 2023: 3.8Mt)
  • Deliveries weighted towards own-use – more reflective of current market for long-term large-scale supply
• Development of new capacity
  • Aliceville expansion commissioned H1 2024 (130kt)
• Potential long-term offtake opportunity for >60% of Drax current pellet production capacity
  • Heads of terms agreed with Pathway Energy for 1Mt pa multi-year biomass sales from 2029
  • Potential for additional 2Mt pa through 2030s

Other financial information

Capital investment

• Capital investment of £332 million (2023: £519 million)
  • Growth – £212 million, including £90 million OCGTs, £64 million pellet plants and £34 million Cruachan turbine upgrade
  • Maintenance and other – £121 million, including one major planned outage on biomass unit
• 2025 expected capital investment of c.£180-220 million
  • Growth – c.£90 million, primarily OCGTs and Cruachan turbine upgrade
  • Maintenance and other – c.£110 million, including Cruachan transformer upgrade

Cash and balance sheet

• Cash generated from operations of £1,135 million (2023: £1,111 million)
• Net working capital inflow of £122 million inclusive of an increase in renewable assets
• Net debt at 31 December 2024 of £992 million (31 December 2023: £1,220 million), including cash and cash equivalents of £356 million (31 December 2023: £380 million)
• >£0.7 billion of new debt maturing 2027-2029 and repayment of >£0.9 billion of shorter dated maturities
  • New c.£442 million term-loan facilities, maturing 2027-2029
  • New €350 million Euro bond, maturing 2029
  • Repaid £347 million of infrastructure facilities, maturing 2024-2026
  • Repaid $500 million US bond, maturing 2025
  • Repaid €106 million of €250 million Euro bond through tender offer, bond maturing 2025
  • Repaid £120 million collateral facility in July 2024

Notes:

⁽¹⁾ Financial performance measures prefixed with “Adjusted/Adj.” are stated after adjusting for exceptional items and certain remeasurements (including certain costs in relation to the disposal of the SME meters, impairment of non-current assets, proceeds from legal claims, change in fair value of financial instruments and impact of tax rate changes). Adj. EBITDA and EPS measures exclude earnings from associates and amounts attributable to non-controlling interests.
⁽²⁾ Earnings before interest, tax, depreciation, amortisation, other gains and losses and impairment of non-current assets, excluding the impact of exceptional items and certain remeasurements, earnings from associates and earnings attributable to non-controlling interests.
⁽³⁾ In January 2023 the UK Government introduced the Electricity Generator Levy (EGL) which runs to 31 March 2028. The EGL applies to the three biomass units operating under the RO scheme and run-of-river hydro operations. It does not apply to the Contract for Difference (CfD) biomass or pumped storage hydro units. EGL is included in Adj. EBITDA and amounted to £161 million in 2024 (2023: £205 million).
⁽⁴⁾ Net debt is calculated by taking the Group’s borrowings, adjusting for the impact of associated hedging instruments, lease liabilities and subtracting cash and cash equivalents. Net debt excludes the share of borrowings, lease liabilities and cash and cash equivalents attributable to non-controlling interests. Borrowings includes external financial debt, such as loan notes, term-loans and amounts drawn in cash under revolving credit facilities. Net debt does not include financial liabilities such as pension obligations, trade and other payables, working capital facilities linked directly to specific payables that provide short extension of payment terms of less than 12 months and balances related to supply chain finance. Net debt includes the impact of any cash collateral receipts from counterparties or cash collateral posted to counterparties. Net debt excluding lease liabilities was £876 million (2023: £1,084 million).
⁽⁵⁾ On 7 August 2024 Drax commenced a £300 million share buyback programme. The maximum number of shares that may be repurchased by the Company under the programme is 38,468,257, being the number of shares the Company is authorised to purchase pursuant to the authority granted by shareholders at the Annual General Meeting (AGM) held on 25 April 2024, which authority is expected to be renewed at the AGM to be held in 2025. As at 26 February 2025, 23,245,965 shares had been purchased, leaving a residual allowance of 15,222,292 shares which can be purchased under the programme ahead of the next AGM being held on 1 May 2025.
⁽⁶⁾ As of 20 February 2025, analyst consensus for 2025 Adj. EBITDA was £865 million, with a range of £839 – 893 million. The details of this consensus are displayed on the Group’s website. Consensus – Drax Global
⁽⁷⁾ Excludes Investment Opportunities including development expenditure in Elimini, Innovation, Capital Projects and Other.
⁽⁸⁾ Includes 1.8TWh of structured power sales in 2025, 2026 and 2027 (forward gas sales as a proxy for forward power), transacted for the purpose of accessing additional liquidity for forward sales from RO units and highly correlated to forward power prices.
⁽⁹⁾ Presented net of cost of closing out gas positions at maturity and replacing with forward power sales.

Forward Looking Statements

This announcement may contain certain statements, expectations, statistics, projections, and other information that are, or may be, forward looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans, beliefs, and objectives for the management of future operations of Drax Group plc (“Drax”) and its subsidiaries (the “Group”), are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although Drax believes that the statements, expectations, statistics and projections and other information reflected in such statements are reasonable, they reflect Drax’s current view and no assurance can be given that they will prove to be correct. Such events and statements involve risks and uncertainties. Actual results and outcomes may differ materially from those expressed or implied by those forward-looking statements. There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These include, but are not limited to, factors such as: delays in the process for finalising the proposed Low-carbon, Dispatchable CfD agreement with the UK Government; future revenues being lower than expected; increasing competitive pressures in the industry; uncertainty as to future investment and support achieved in enabling the realisation of strategic aims and objectives; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected, including the impact of prevailing economic and political uncertainty, the impact of conflict including those in the Middle East and Ukraine, the impact of cyber attacks on IT and systems infrastructure (whether operated directly by Drax or through third parties), the impact of strikes, the impact of adverse weather conditions or events such as wildfires, changes to the regulatory and compliance environment within which the Group operates. We do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.

Webcast Arrangements

Management will host a webcast presentation for analysts and investors at 9:00am (GMT) on Thursday 27 February 2025.

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 (GMT) on Thursday 27 February 2025 for download at: https://www.drax.com/investors/announcements-events-reports/presentations/

For further information, please contact: [email protected]

View investor presentation here

RNS Number : 8820E
Drax Group PLC
29 February 2024

Will Gardiner, CEO of Drax Group, said:

Will Gardiner, Drax Group CEO

“Drax performed strongly in 2023 and we remained the single largest provider of renewable power by output in the UK. We have created a business which plays an essential role in supporting energy security, providing dispatchable, renewable power for millions of homes and businesses, particularly during periods of peak demand when there is low wind and solar power.

“Policy support for our UK BECCS project continues to progress and we remain in formal discussions with the UK Government to ensure Drax Power Station can play a long-term role in UK energy security, creating thousands of jobs during construction and helping the country reach Net Zero.

“We have made further progress in our ambition to be a world leader in carbon removals and have visibility of high-quality, long-term earnings to 2042 and a strong balance sheet which supports returns to shareholders and investment in growth, both in the UK and internationally.”

Financial highlights – strong financial performance and returns to shareholders

• Adj. EBITDA growth driven by system support services, renewable generation, and energy solutions (Customers)
• Strong liquidity and balance sheet – £639 million of cash and committed facilities at 31 December 2023
• New £258 million term-loan facilities with 2027-2029 maturities (February 2024)
• Proposed final dividend of 13.9 pence per share (2022: 12.6 pence per share) – 10% increase
• £150 million share buyback programme concluded⁽⁵⁾

Current business and targets provide strong long-term foundation for balance sheet, dividend and investment

• Flexible generation and energy solutions portfolio – targeting post 2027 recurring Adj. EBITDA of >£250 million
  • Pumped storage, hydro, Open Cycle Gas Turbines (OCGTs) and energy solutions
  • Operating in power, renewable, system support and capacity markets
  • c.£580 million of capacity payments to 2042 – existing and new capacity, including Cruachan refurbishment
• Pellet production – targeting post 2027 recurring Adj. EBITDA >£250 million from own-use and third-party sales
• Biomass generation – 2.6GW of flexible renewable generation
  • Strong forward hedges support firm cash flows (2024-2026) with additional value from uncontracted power
  • Expect long-term value from bridging mechanism and BECCS

Financial outlook

• Full year 2024 expectations for Adj. EBITDA in line with analysts’ consensus estimates⁽⁶⁾
• Expect to repay Q4 2025 debt maturities through cash generation and refinancing activities in 2024
• Outlook for 2025 Adj. EBITDA underpinned by a strong hedge book – >90% hedge of power on RO units

Attractive opportunities to invest for long-term growth linked to energy transition and security of supply

• Options for c.£4 billion of growth investment by 2030, with additional investment through 2030s
  • UK BECCS – targeting first unit (4Mt pa) by 2030 in line with UK ambition, with second unit (4Mt pa) to follow – good progress over last 12 months
  • UK Government Biomass Strategy (August 2023) highlights important role for BECCS
    • Planning consent granted for two units (January 2024)
    • Consultation on BECCS bridging mechanism (January – February 2024)
    • MoU with Harbour Energy and bp to assess options for transportation and storage of CO₂ (February 2024)
    • Ongoing formal discussions with UK Government regarding bridging mechanism and BECCS
  • Global BECCS – targeting first project (3Mt pa) by 2030 – site selected in US South, moving to FEED in 2024
  • Targeting 600MW expansion of Cruachan Power Station (pumped storage) by 2030, planning consent granted
• Targeting 8Mt pa of pellet production capacity by 2030, subject to clarity on UK BECCS
• Ambition for the development of over 20Mt pa of carbon removals through 2030s

Capital allocation policy unchanged – continue to assess capital requirements in line with the current policy

Sustainability

• Compliance with TCFD reporting requirements
• Science Based Targets initiative (SBTi) targets approved
• Forum for the Future BECCS Done Well report and publication of initial Drax response

National Audit Office (NAO) and Ofgem

• NAO review of UK Government’s biomass strategy published (January 2024)
  • Outlines opportunities to develop standards consistent with existing statements from UK Government
  • Highlights UK Government’s commitment to biomass and its long-term role in delivering UK targets
• Ofgem – annual assessment of compliance with Renewables Obligation (RO) scheme (May 2023) – “Good” rating
• Ofgem – investigation of annual biomass profiling reporting under RO scheme (ongoing)

Operational and financial review

Pellet Production – production and sales supporting UK generation and sales to third parties

• Robust performance in a challenging environment
• Progressing development of new Longview pellet plant, and Aliceville expansion complete
  • Investment of c.$300 million adding c.0.6Mt of new capacity
• Pipeline of new third-party sales opportunities
  • 5Mt contract to Japan over five years, commenced in 2023
  • Letter of Intent for sale of up to 1Mt of biomass to European utility, for projects incl. Sustainable Aviation Fuel

Generation – energy security with dispatchable renewable generation and system support services

• Pumped storage and hydro – strong system support and generation performance
  • Includes forward sale of peak power (Q1 2023), system support services, renewables and capacity payments
• Biomass generation – strong system support and renewable generation performance
  • Period-on-period reduction in output reflects two major planned outages
  • Higher achieved power price and value from system support, but higher biomass costs
• As at 26 February >£2.8 billion of forward power sales between 2024 and 2026 on RO biomass, pumped storage and hydro generation assets – 22.3TWh at an average price of £127.3/MWh^(9/10)
  • RO generation – fully hedged in 2024 and >90% hedged in 2025
  • A further 2.6TWh of CfD generation contracted for 2024

Energy Supply (Customers) – renewable power and energy services

• Strong Industrial and Commercial (I&C) performance with 7% increase in power sales – 15.8TWh (2022: 14.8TWh), stable margins on contracted sales and lower balancing costs
• Growing value from 100% renewable power products
• Development of energy solutions business including system support services via demand response, and electric vehicle services following acquisition of BMM (August 2023)
• Impairment of Opus Energy of £69 million, following transfer of renewables activities to Drax Energy Solutions (along with £145 million of Goodwill) and the previously announced ending of gas sales

Other financial information

Capital investment

• Capital investment of £519 million (2022: £255 million)
  • £187 million maintenance and other, including two major planned outages on biomass units
  • £332 million growth, including £189 million OCGTs and £76 million pellet plant developments
• 2024 expected capital investment of £410-450 million
• OCGTs – c.900MW – three new-build sites, commissioning in H2 2024
  • Continuing to evaluate options for these projects

Cash and balance sheet

• Cash generated from operations £1,111 million (after £155 million inflow of collateral) (2022: £320 million, after £407 million outflow of collateral)
• Net debt at 31 December 2023 of £1,084 million (31 December 2022: £1,206 million), including cash and cash equivalents of £380 million (31 December 2022: £238 million)
• Good progress on financing activities
  • ESG term loan, extended maturity to 2026 and reduced size to C$200 million (November 2023)
  • £144 million of infrastructure facilities repaid (January 2024)
  • Extension of £300 million revolving credit facility to 2026 (January 2024)
  • New £258 million term-loan facilities with 2027-2029 maturities (February 2024)

Forward Looking Statements

This announcement may contain certain statements, expectations, statistics, projections and other information that are, or may be, forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans, beliefs, and objectives for the management of future operations of Drax Group plc (“Drax”) and its subsidiaries (the “Group”), are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although Drax believes that the statements, expectations, statistics and projections and other information reflected in such statements are reasonable, they reflect the Company’s current view and no assurance can be given that they will prove to be correct. Such events and statements involve risks and uncertainties. Actual results and outcomes may differ materially from those expressed or implied by those forward-looking statements. There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These include, but are not limited to, factors such as: future revenues being lower than expected; increasing competitive pressures in the industry; uncertainty as to future investment and support achieved in enabling the realisation of strategic aims and objectives; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected, including the impact of prevailing economic and political uncertainty, the impact of strikes, the impact of adverse weather conditions or events such as wildfires. We do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.

Webcast Arrangements

Management will host a webcast presentation for analysts and investors at 9:00am (GMT), Thursday 29 February 2024.

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 (GMT) on Thursday 29 February 2024 for download at: https://www.drax.com/investors/announcements-events-reports/presentations/

For further information, please contact: [email protected]

View investor presentation here

Notes:

⁽¹⁾ Financial performance measures prefixed with “Adjusted” are stated after adjusting for exceptional items (including impairment of non-current assets, proceeds from legal claims, change in fair value of financial instruments and impact of tax rate changes). Adj. EBITDA and EPS measures exclude earnings from associates and amounts attributable to non-controlling interests.
⁽²⁾ Earnings before interest, tax, depreciation, amortisation, other gains and losses and impairment of non-current assets, excluding the impact of exceptional items and certain remeasurements, earnings from associates and earnings attributable to non-controlling interests.
⁽³⁾ In December 2022, the UK Government confirmed the details of a windfall tax – the Electricity Generator Levy (EGL) – on renewable and low-carbon generators, implemented in 2023 and running to 31 March 2028. The EGL applies to the three biomass units operating under the RO scheme and run-of-river hydro operations. It does not apply to the Contract for Difference (CfD) biomass or pumped storage hydro units. Following review, we have concluded that EGL will be accounted for as a levy within Gross Profit and therefore Adj. EBITDA. For 2023 we have presented Adj. EBITDA including and excluding EGL for ease of comparison.
⁽⁴⁾ Net debt is calculated by taking the Group’s borrowings, adjusting for the impact of associated hedging instruments, and subtracting cash and cash equivalents. Net debt excludes the share of borrowings and cash and cash equivalents attributable to non-controlling interests.
Borrowings includes external financial debt, such as loan notes, term loans and amounts drawn in cash under revolving credit facilities, net of any deferred finance costs.
⁽⁵⁾ Following completion of the share buyback programme Drax has c.384.7 million shares in issue, with a further c.40.3 million held in treasury.
⁽⁶⁾ As of 21 February 2024, analyst consensus for 2024 Adj. EBITDA (incl. EGL) was £968 million, with a range of £882 – 1,097million. The details of this company collected consensus are displayed on the Group’s website. https://www.drax.com/investors/announcements-events-reports/presentations/
⁽⁷⁾ In 2023 a review of the mechanism for corporate recharges was performed, leading to a greater proportion being recharged to business units, primarily Generation. The remaining £85 million in 2023 is comprised of £57 million for Global BECCS (2022: £14 million) and £28 million of other corporate and innovation costs, including the development of options for pumped storage expansion (2022: £24 million) and intercompany eliminations. 2022 is not restated in the table, but footnote 8, below includes a restated Adj. EBITDA breakdown for 2022 which includes the cost reallocation on the same basis as 2023.
⁽⁸⁾ The table shows Adj. EBITDA breakdown with 2022 restated inclusive of the cost reallocation exercise described in footnote 7.

RNS Number : 7781Q
Drax Group PLC
23 February 2023

Will Gardiner, CEO of Drax Group, said:

Customers – renewable power under long-term contracts to high-quality I&C customers and decarbonisation products

• Adjusted EBITDA of £26 million (2021: £6 million) – continued improvement in profitability post impact of Covid-19
• Continued development of Industrial & Commercial (I&C) portfolio
  • 14.8TWh of power sales – 24% increase compared to 2021 (11.9TWh)
  • Commencement of new supply contracts to three major high-quality customers supporting generation route to market

Other financial information

Profits

• Total operating profit from continuing operations of £146 million (2021: £197 million), including £298 million mark-to-market loss on derivative contracts and £25 million of exceptional costs
• Total profit after tax of £83 million (2021: £55 million profit after tax from continuing operations, including a £49 million non-cash charge from revaluing deferred tax balances)
• Depreciation, amortisation, impairment, loss on disposal and exceptional items of £286 million (2021: £209 million) reflects inclusion of Pinnacle for a full 12 months, plant upgrades and accelerated depreciation of certain pellet plant equipment in line with planned capital upgrades and asset impairment of £17 million

Capital investment

• 2022 capital investment of £255 million (2021: £238 million) – includes c.£90 million from OCGT projects
• 2023 expected capital investment of £570 – £630 million
  • £120 million maintenance, including two major planned outages on biomass units; £30 million enhancements; £430 million strategic – includes >£200 million OCGT and >£100 million pellet plant developments

Cash and interest

• Group cost of debt below 4.2%
• Cash Generated from Operations £320 million (2021: £354 million), inclusive of collateral payments (2021: £168 million inflow) typically associated with higher commodity prices and expected to unwind through 2023 and 2024
  • £234 million of collateral placed in 2022 (2021: £173 million held)
• Net debt of £1,206 million (31 December 2021: £1,108 million), including cash and cash equivalents of £238 million (31 December 2021: £317 million)
  • 1.6x Net debt to Adjusted EBITDA, inclusive of temporary collateral outflows – significantly below 2x target
  • 1.3x Net debt to Adjusted EBITDA, excluding collateral

Capital allocation policy – unchanged

• Maintain a strong balance sheet
• Invest in the core business and strategy, including new biomass pellet plants, the development of options for BECCS, and the expansion of pumped storage power station at Cruachan
• Pay a sustainable and growing dividend
• Return surplus capital to shareholders – if there is a build-up of capital, the Board will consider the most appropriate mechanism to return this to shareholders
  • Considerations include – timing of capital deployment, leverage profile, prevention of dilution and divestment of non-core assets

2023 financial and operational outlook

• Continued optimisation of biomass supply chain and generation to create value for the Group
• Baseload ROC generation, plus two planned major outages
• CfD unit held in reserve – operation subject to good ROC unit operational performance and market conditions
• Biomass generation cost >£100/MWh
• Forward selling of pumped storage and hydro underpins expectations
• Electricity Generator Levy applicable to ROC and hydro assets, but not pumped storage, CfD or coal

Forward Looking Statements

Results presentation and webcast arrangements