Tag: corporate governance

Chairman’s statement

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

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

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

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

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

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

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

Results and dividend

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

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

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

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

Corporate governance

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

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

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

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

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

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

Our people

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

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

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

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

Read the Drax Group plc annual report and accounts 2017

Appointment of Interim Chief Financial Officer

RNS Number : 7736U
(Symbol: DRX)

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

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

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


Investor Relations:

Mark Strafford

+44 (0) 1757 612 491


External Communications:

Ali Lewis

+44 (0) 1757 612165

Website: www.drax.com/uk


Forbes: Drax joint-second most trustworthy company in Europe

I’m delighted that Drax Group plc has been named by Forbes magazine and MSCI ESG Research as one of the 50 most trustworthy companies in Europe.

In fact, Drax came joint second across the whole continent among companies judged who ‘consistently demonstrated transparent accounting practices and solid corporate governance’.

It’s a massive tribute to everyone involved with Drax that world-leading business experts have recognised our commitment to trust and integrity in this way.

Of course, that commitment goes much further than our accounting practices alone. (I believe my British colleagues would say that it runs right through Drax like the writing in a stick of rock.)

Indeed, it was one of the reasons I was so honoured to be asked to join Drax as CFO. From my very first meeting with CEO Dorothy Thompson, I could see that Drax would always strive do the right thing, in the right way.

That’s just as true for our sustainability data as it is for our business data.

It was our commitment to doing the right thing that led Drax to take on the decision to convert Drax power station from coal to compressed wood pellets.

It is our commitment to doing the right thing that means Drax is reducing emissions by over 80 per cent while giving people and businesses all over the UK the reliable, renewable power that they need.

And we know we can save bill-payers money at the same time.

The UK is lagging far behind the rest of Europe when it comes to generating energy from compressed wood pellets. Drax is committed to bringing us closer to the European average, while helping us move from the fossil fuels of the past to the renewables of the future. And yes, you can trust us on that.