Tag: Will Gardiner

Half year results for the six months ended 30 June 2018

24 July 2018

Investors
RNS Number :  5142V
Drax Group PLC
Six months ended 30 JuneH1 2018H1 2017
Key financial performance measures
EBITDA (£ million)(1)102121
Underlying earnings (£ million)(2)79
Underlying earnings per share (pence)(2)1.62.2
Interim dividends (pence per share)5.64.9
Net cash from operating activities (£ million)112197
Net debt (£ million)(3)366372
Statutory accounting measures
Operating profit/(loss) (£ million)12(61)
Loss before tax (£ million)(11)(104)
Reported basic loss per share (pence)(1)(21)

Financial and Operational Highlights

  • H1 EBITDA lower year on year due to two unplanned outages, other areas performing well
  • Statutory loss before tax includes lower level of H1 EBITDA and asset write off
  • Refinancing complete – swapped floating for fixed rate debt with 7.5-year maturity
  • Sustainable and growing dividend
    • Increase in 2018 interim dividend to £22.4 million (5.6 pence per share) (H1 2017: £20 million)
    • Expected 2018 full year dividend of £56 million
    • Ongoing £50 million share buy-back programme – £13 million at 30 June 2018

Good progress with strategic initiatives, on track to deliver long-term objectives

  • Third biomass pellet plant, LaSalle Bioenergy, commissioning ahead of plan – full capacity Q1 2019
  • Conversion of fourth biomass generating unit on schedule and budget, commissioning late summer
  • Programme for long-term reduction in biomass cost including sawmill co-location and rail spur investment
  • Confident in growing requirement for system support services over coming years
  • Development of options for future generation:
    • Coal-to-gas repowering – detailed planning application accepted for review June 2018
    • Four OCGTs(4) – two projects in next capacity market auction, planning applications accepted for review for remaining two projects
  • B2B Energy Supply delivering solid progress to grow number of customer meters

2018 outlook

  • Full year financial expectations unchanged
    • Generation – fourth biomass unit conversion, improved margins, on target availability and capacity payments
    • Continued growth in Pellet Production and B2B Energy Supply
  • Capital Markets Day, 13 November

Will Gardiner, Chief Executive of Drax Group plc, said:

“Drax continues to be at the heart of decarbonising UK energy, securing government support to convert a fourth unit to biomass and piloting a Bioenergy Carbon Capture and Storage project, supporting the UK Government’s carbon capture and storage ambitions.

“Full year EBITDA expectations remain unchanged. However, first half EBITDA was lower, principally due to two specific generation outages. We made excellent progress with our Pellet Production business, driving down costs while producing at record levels and our B2B Energy Supply business continues to increase customer numbers. We also remain on track with our investment projects: the conversion of a fourth unit to biomass, and the development of our OCGT and coal-to-gas repowering options.

“We remain focused on safe and efficient operations and returns to shareholders and expect to declare a full year dividend of £56 million for 2018.”

Group Financial Review

  • Increase to operating profit includes unrealised gains on derivative contracts of £24 million (2017: loss £86 million)
  • Decrease in underlying earnings per share – principally reflects lower EBITDA from biomass generation in H1 2018 vs H1 2017
  • Reported basic earnings per share – a loss of 1.0 pence, which includes write off of coal-specific assets (£27 million) following commencement of fourth biomass unit conversion, largely offset by unrealised gains on derivative contracts (£24 million)
  • Tax – tax credit reflecting benefit of Patent Box claims
  • Capital investment of £46 million, full year investment expectation unchanged at £100–£110 million
    • Core maintenance (£50 million), improvement and optimisation projects (£20-£30 million) and conversion of a fourth biomass unit (£30 million)
  • Net debt of £366 million (31 Dec 2017: £367 million), including cash on hand of £245 million

Operational Review

Pellet Production – Good quality pellets at lowest cost

  • EBITDA up £14 million to £10 million
    • 80% increase in pellet production to 0.7 million tonnes (H1 2017: 0.4 million tonnes)
    • 12% reduction in cost per tonne
  • LaSalle Bioenergy (LaSalle) commissioning complete, full capacity Q1 2019
  • Biomass cost reduction initiatives
    • Co-location and offtake agreement with Hunt Forest Products for low-cost sawmill residues at LaSalle
    • Investment in LaSalle rail spur (£11 million) – reduced transport cost to Baton Rouge port facility

Power Generation – Optimisation of existing assets and decarbonisation projects

  • EBITDA down £49 million to £88 million
    • Rail unloading building outage restricted operation of two ROC(5) units (January 2018)
    • Generator outage on one ROC(5) unit (February 2018)
    • System support and flexibility £36 million (H1 2017: £48 million) – lower due to specific Black Start contract (Q1 2017)
    • Offset by 2016 insurance proceeds and lower carbon cost following decision to convert a fourth unit to biomass
  • Electricity output (net sales) down 17% to 8.9TWh (H1 2017: 10.7TWh)
    • Two unplanned outages on ROC(5) units in Q1 and reduced coal generation
    • High biomass availability in Q2
  • 71% of generation from biomass (H1 2017: 68%)
  • Commenced Bioenergy Carbon Capture and Storage (BECCS) pilot project, £0.4 million cost

B2B Energy Supply – Profitable business with growth in customer meters

  • EBITDA up £4 million to £16 million
    • 9% increase in customer meter points to 387,000 (H1 2017: 356,000)
    • Increase in bad debt reflecting challenging business environment for some customers
  • Strong renewable proposition – 59% of sales renewable
  • Continued investment in next generation IT systems
  • Development of flexibility and system support market

Notes:

  1. EBITDA is defined as earnings before interest, tax, depreciation, amortisation and material one-off items that do not reflect the underlying trading performance of the business.
  2. Underlying earnings exclude unrealised gains on derivative contracts of £24m (H1 2017: unrealised losses of £86m) and material one-off items that do not reflect the underlying performance of the business (finance costs of £7m (2017: £24m), acquisition and restructuring costs of £3m (2017: £6m), write off of coal-specific assets of £27m (H1 2017: £Nil), and the associated tax effect.
  3. Borrowings less cash and cash equivalents.
  4. Open Cycle Gas Turbine.
  5. Renewable Obligation Certificate.

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Drax Group plc Chief Executive comments on full year results

Will Gardiner, Chief Executive Officer, Drax Group

27 February 2018

Investors
Will Gardiner, CEO, Drax Group

We continued to transform the business in 2017, delivering a strong EBITDA performance, in line with expectations. This was delivered by all parts of the business making positive contributions for the first time.

We also made good progress delivering our strategy, which is clear and unchanged. We are increasing biomass self-supply, developing projects to diversify our generation mix and growing our B2B energy supply business.

The UK is undergoing an energy revolution, starting with a significant reduction in carbon emissions, and to support that we are helping to change the way energy is generated, supplied and used.

View full report

View investor relations presentation

Drax Group plc: Full year results for the twelve months ended 31 December 2017

Investors
RNS Number : 9871F
Drax Group PLC
Twelve months ended 31 December20172016
Key financial performance measures
EBITDA (£ million)(1)229140
Underlying profit after tax (£ million)(2)321
Underlying earnings per share (pence)(2)0.75.0
Total dividends (pence per share)12.32.5
Net cash from operating activities (£ million)315191
Net debt (£ million)(3)36793
Statutory accounting measures
(Loss) / profit before tax (£ million)(183)197
Reported basic (loss) / earnings per share (pence)(37.2)47.7

All areas of the business contributing to positive EBITDA for the first time

  • EBITDA up 64% to £229 million – improving earnings quality from biomass generation and Opus Energy
    • Pellet Production – EBITDA up £12 million to £6 million – 35% growth in production
    • Power Generation – EBITDA up £64 million to £238 million – contribution from biomass generation
    • B2B Energy Supply – EBITDA up £33 million to £29 million –acquisition of Opus Energy
  • Strong cash flow generation and balance sheet – 1.6x net debt to EBITDA
  • Final dividend of £30 million, representing 60% of the recommended full year – £50 million
  • £50 million share buy back programme consistent with capital allocation policy
  • Statutory loss before tax principally driven by unrealised losses related to foreign currency hedging of £156 million

Delivering strategy and remain on course to hit >£425 million EBITDA target by 2025

  • Accelerated energy supply growth with acquisition and on-boarding of Opus Energy
  • Increased biomass self-supply through acquisition and commissioning of third biomass pellet plant, LaSalle Bioenergy
  • Government support received for fourth biomass unit conversion at Drax Power Station
  • Development of options for future generation: coal-to-gas repowering option, two OCGTs (4) to enter next capacity market auction in December 2018

Focused on operational excellence and investment in strategy

  • Continued focus on safety, operational excellence and project development
  • Targeted investment in long-term growth opportunities
  • Continued growth in EBITDA and cash generation
  • Sustainable and growing dividend, with opportunities to return capital in line with policy

Will Gardiner, Chief Executive of Drax Group plc, said:

“We continued to transform the business in 2017, delivering a strong EBITDA performance, in line with expectations. This was delivered by all parts of the business making positive contributions for the first time.

“We also made good progress delivering our strategy, which is clear and unchanged. We are increasing biomass self-supply, developing projects to diversify our generation mix and growing our B2B energy supply business.

“The UK is undergoing an energy revolution, starting with a significant reduction in carbon emissions, and to support that we are helping to change the way energy is generated, supplied and used.”

Notes for analysts and editors

2017 Group Financial Review

  • Underlying earnings per share decreased to 0.7 pence
    • Accelerated depreciation of coal-specific assets, amortisation of intangible assets associated with the acquisition of Opus Energy and an increase in net finance charges.
  • Reported basic earnings per share – a loss of 37 pence, which includes unrealised losses on derivative contracts of £156 million (principally related to the foreign currency hedging programme) in addition to one-off items – transaction costs relating to the acquisition of Opus Energy (£8 million) and refinancing (£24 million)
  • Tax – one-off non-cash charge of £16 million – a reduction in US federal tax rates from 35% to 21% resulting in a revaluation of deferred tax balances, offset by £13 million cash tax credit from UK Patent Box tax regime, which rewards Drax patented innovation in biomass generation
  • Investment in line with guidance
    • Acquisition of Opus Energy (£367 million)
    • Acquisition and commissioning of LaSalle Bioenergy (£48 million)
    • Maintenance and improvement (£133 million) including pellet plant optimisation, strategic spares, Haven Power information systems, research and innovation and Opus Energy office consolidation
    • Continue to expect ongoing maintenance capital investment of £50-60 million per year
  • Net debt of £367 million (31 Dec 2016: £93 million), including cash on hand of £222 million

2017 Operational Review

Pellet Production – Focus on good quality pellets at lowest cost

  • 35% increase in pellet production to 0.8M tonnes (2016 0.6M tonnes)
  • Low-cost expansion of Amite and Morehouse plants complete
  • Improving operational performance whilst providing supply chain flexibility
  • LaSalle Bioenergy commissioning ahead of plan from November 2017, increasing output through 2018
  • Biomass self-supply increased

Power Generation – Focus on optimisation of existing assets and development of projects

  • Electricity output (net sales) 20.0TWh (2016: 19.6TWh)
  • 65% of generation from renewables (2016: 65%)
  • £88 million from system support and flexibility
  • £90 million capacity market payments secured for 2017-2022

B2B Energy Supply – Profitable business with growth in sales and customer meters

  • 12% increase in customer meter points to more than 375,000
  • 46% of energy sales from renewables
  • Opus Energy EBITDA in line with plan; Haven Power exceeded EBITDA breakeven target
  • Continued investment in next generation IT systems

Notes:

(1)  EBITDA is defined as earnings before interest, tax, depreciation, amortisation and material one-off items that do not reflect the underlying trading performance of the business.

(2)  2017 underlying earnings exclude unrealised losses on derivative contracts of £156 million and material one-off items that do not reflect the underlying performance of the business (2016: unrealised gains of £177 million).

(3)  Borrowings less cash and cash equivalents.

(4)  Open Cycle Gas Turbine.

Contacts

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 1757 612 491

Media:

Drax External Communications: Ali Lewis

+44 (0) 1757 612 165

 

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Appointment of Interim Chief Financial Officer

27 October 2017

Investors
RNS Number : 7736U
DRAX GROUP PLC
(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.

Enquiries:

Investor Relations:

Mark Strafford

+44 (0) 1757 612 491

Media:

External Communications:

Ali Lewis

+44 (0) 1757 612165

Website: www.drax.com

END

Will Gardiner to succeed Dorothy Thompson as Chief Executive of Drax Group

21 September 2017

Investors
RNS Number : 3929R
DRAX GROUP PLC
(Symbol: DRX)

Drax Group plc announces that Will Gardiner, currently Group Chief Financial Officer, is to be appointed as Group Chief Executive with effect from 1 January 2018. The appointment results from Dorothy Thompson’s decision to step down after 12 successful years as Group Chief Executive. Dorothy will leave the Group at the end of 2017.

Will joined Drax as Group Chief Financial Officer and a member of the Group Board in November 2015. The Board has kept succession planning well under review and his new appointment comes after a thorough selection process involving internal and external candidates.

Drax Chairman, Philip Cox said: “We are delighted Will is to become Chief Executive. He has been a key architect of our new strategy and is a focused, innovative and engaging leader. His appointment is a natural progression after two years working alongside Dorothy developing an ambitious strategy which I am confident will create significant benefits for all Drax’s stakeholders.

“On behalf of the Board I would like to thank Dorothy for her enormous contribution to Drax. She transformed the business during her tenure and leaves the Group in a strong position with a clear strategy that lays the foundations for further success in a changing energy sector.”

Will Gardiner said: “I am thrilled to be appointed as Group Chief Executive at this exciting time for Drax. The changes we are seeing in the UK energy sector are unprecedented and we have an opportunity to thrive while doing the right thing for the UK energy market. Drax’s people have demonstrated repeatedly their ability to deliver transformational change and I’m delighted to be working with them to build on Dorothy’s strong legacy.”

Dorothy Thompson said: “Drax Group plays a strategic role in the UK electricity sector generating around 16% of UK renewable electricity, is a world leader in the production of wood pellets and is a leading challenger brand in the supply of electricity to businesses. I retire knowing the Group is in excellent shape: it has the right strategy, the right team and in Will, the right leader.”

The Board will now commence a process to appoint a new Group Chief Financial Officer and will also review the option to make an appointment on an interim basis. 

No other disclosure obligations arise under paragraphs (1) to (6) of LR 9.6.13 R of the UK Listing Authority’s Listing Rules in respect of Will Gardiner’s appointment as Chief Executive of Drax Group plc.

Enquiries:

Drax Investor Relations:

Mark Strafford

+44 (0) 1757 612 491

+44 (0) 7730 763 949

Media:

Drax External Communications:

Matt Willey

+44 (0) 1757 612 285

+44 (0) 7711 376 087

Website: www.drax.com

Notes:

Will Gardiner joined Drax in November 2015 as Group Chief Financial Officer and a member of the Group Board. He is currently responsible for Finance, Strategy, and IT Systems.

Prior to joining Drax Will was Chief Financial Officer of CSR plc, a global semiconductor business.  He had previously been a Divisional Finance Director of BSKYB and Chief Financial Officer of Easynet Group plc.

At both CSR and Easynet Will’s focus was on driving transformational change to take advantage of new market opportunities. He is also a non-executive member on the Board of Qardio plc, a wireless medical devices company. Will is also a Trustee of the Institute for War & Peace Reporting, a London-based charity that supports local journalists and civic activists in areas of crisis and change around the world.

Will graduated from Harvard University with a BA Magna Cum Laude in Russian and Soviet Studies and from Johns Hopkins University with an MA in International Relations. He spent the early part of his career in corporate finance with Citibank and JP Morgan.

END

Three ways to judge a CFO

Will Gardiner, Chief Executive Officer, Drax Group

17 December 2015

Opinion

It’s a good question, because you can’t build a great company without a great chief financial officer (CFO). But as a shareholder, how can you judge how well your CFO is doing? Without setting myself up for a fall, the answer I gave our investor broke down into these three questions:

  1. Are they keeping control? At its heart, the first part of any CFO’s role is to make sure that their business is under control and that all risks are being properly managed. They need to maintain a strong balance sheet and keep reporting and communications clear and transparent. Above all, they need to make sure there are no surprises.
  2. Are they improving efficiency? The second part is making sure the organisation is always working as efficiently as possible, keeping a strong hand on costs and ensuring that current revenue streams are always optimised. Above all, they need to be making sure that less money is going out and more money is coming into the organisation.
  3. Are they allocating capital wisely? The final task of any CFO is investing shareholder’s money in the best projects – first internally and second externally. Above all, they need to have a clear consideration of cash returns for shareholders.

So now the next time you wonder how well your CFO is doing, you know how to judge them.

This article was originally published by Will on LinkedIn.