Tag: Financial Reports

Chief Executive comments on half year results

We have made good progress with our strategy during the first half of 2017, acquiring Opus Energy and a third compressed wood pellet plant, in addition to refinancing and implementing a new dividend policy.

Central to our strategy is the delivery of targeted growth through deploying our expertise across our markets and, in so doing, diversifying, growing and improving the quality of earnings whilst reducing exposure to commodity market volatility.

Delivering reliable renewable electricity remains at the heart of our business. We continue to produce at record levels, helping to keep the UK’s electricity system secure and supplying our customers through our retail business. With the right conditions, we can do even more. We are progressing our four new rapid response gas power projects and our research and innovation work has identified potentially attractive options to repurpose our remaining coal assets.

We continue to play a vital role in the UK’s energy infrastructure and our strategy is helping to change the way energy is generated, supplied and used for a better future.

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Chief Executive comments on capital markets event and trading update

Britain’s energy market is changing. Drax has embraced these changes with a strategy which will help change the way energy is generated, supplied and used for a better future.

Through our operations in retail, generation and biomass supply we expect to deliver a significant increase in high quality, visible, contracted earnings for the Group.

With the optimisation of our existing asset portfolio combined with acquisitions across our markets the strategy is already delivering, allowing the Group to create long-term opportunities in all areas of the business.

We are confident in the strategy and our ability to deliver high quality earnings, growth and value for shareholders, supported by a strong financial model and clear capital allocation policy, including a sustainable dividend that we expect to grow from a level of £50m in 2017.

Further information:

Capital markets day and trading update

Image: Artist’s impression of a Drax rapid-response gas power station with planning permission

Preliminary results for the 12 months ended 31 December 2016

RNS Number : 0194X
Drax Group PLC
(Symbol: DRX)

Twelve months ended 31 December



Key financial performance measures

EBITDA (£ million)



Underlying earnings (£ million)



Underlying earnings per share (pence)



Total dividends (pence per share)



Net debt (£ million)



Statutory accounting measures

Profit before tax (£ million)



Reported basic earnings per share (pence)



Financial and Operational Highlights

  • 2016 EBITDA in line with guidance
    • Year on year reduction driven by challenging commodity markets and loss of LECs
    • Mitigated by growth in system support, improving retail and pellet supply profitability
  • Three converted biomass units, CfD approved in December
    • 65% of generation from biomass in 2016 (2015: 43%)
    • Investment completed on budget
  • Statutory profit before tax includes unrealised gains related to foreign currency hedging
  • Strong cash flows and balance sheet

Strategic Highlights and Outlook

  • Acquisition of Opus Energy and open cycle gas turbine projects
  • Focus on delivery of strategy
    • Higher quality diversified earnings and targeted long-term growth opportunities
    • Significant earnings growth
  • Maintain operational excellence across base business
  • Refinancing of existing debt facilities
  • 2017 EBITDA expectations in line with consensus

Dorothy Thompson, Chief Executive of Drax Group plc, said:

“We are playing a vital role in helping change the way energy is generated, supplied and used as the UKmoves to a low carbon future.

“With the right conditions, we can do even more, converting further units to run on compressed wood pellets. This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses.

“In a challenging commodity environment Drax has delivered a good operational performance with 65% renewable power generation.

“The acquisition of Opus Energy and rapid response open cycle gas turbine projects are an important step in delivering our strategy, diversifying our earnings base and contributing to stronger, long-term financial performance across the markets in which we operate.”


See: https://otp.tools.investis.com/clients/uk/drax1/rns/regulatory-story.aspx?cid=1607&newsid=844424

We can make a difference in 2016 and beyond

Today we released our financial results for 2015.  I’ll be the first to admit that they are not good.  What makes it all the more painful is that one of the strongest operational performances the business has achieved in the last decade, was more than wiped out by factors well outside of our control.

Let’s be frank, for any business operating in the UK energy market 2015 was a tough year. The deterioration in the commodity markets were some of the most severe I have seen in my career. This was then accompanied by a series of unexpected regulatory announcements which caused many to question the UK governments commitment to decarbonisation.

Like any CEO on results day I have spent this morning speaking to investors, journalists and financial analysts. Instead of focusing too much on what hasn’t gone our way in 2015, I’ve focused on where I think we can make a difference in 2016 and beyond, and I’ve been pleased with their positive reaction.

The affordable way to end coal

In November Amber Rudd announced the government’s proposal to consult on setting a clear end date for coal of March 2025. Given it still provides around 25% of the country’s electricity this is an ambitious target. Part of the solution is new nuclear and gas. But as a recent report by the Institute of Mechanical Engineers noted, the country will find it very hard to build enough new facilities to replace coal capacity in time.

Instead of having to take all the existing coal power stations off the grid and build new facilities, the country could use the world leading biomass technology that Drax has pioneered to upgrade some of them to use compressed wood pellets instead of coal. The economic consultancy NERA found that more biomass conversions are one of the most sensible ways for the UK to get off coal at the fairest price to the taxpayer. With the right support we stand ready to convert our remaining coal units to become a fully renewable generator.

Helping society and creating shareholder value

I fundamentally believe that Drax is making a valuable contribution in helping society deal with one of the most pressing issues of our time – cutting carbon emissions to limit climate change. We have an approach which is both affordable and reliable. So long as we remain operationally strong, which I am very confident about, then shareholder value will accrue.

Throughout 2016 and beyond, we will build on our expertise and continue to evaluate a range of longer term strategic options. I lead a strong business that will use the opportunities available to us to create value for our shareholders and help bring about a reliable, renewable future that we can all afford.

Three ways to judge a CFO

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.