Tag: investors

Chief Executive comments on half year results

Dorothy Thompson, (2005-2017 Chief Executive, Drax Group)

19 July 2017

Investors

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.

Related documents:

 

Capital Markets Event and Trading Update

15 June 2017

Investors
RNS Number : 1264I
Drax Group PLC
(Symbol: DRX)

Capital markets event

Drax is today hosting a capital markets event for investors and analysts.

The event will provide an update on the Group’s strategy, outlining a plan for 2025 EBITDA in excess of £425(1) million – more than a third of which is expected to come from Retail (>£80 million) and Biomass Supply (>£75 million) operations. This will be delivered by maximising the opportunities from the existing portfolio of assets and targeted value creative investment in long-term growth opportunities, underpinned by a robust financial model and capital allocation plan.

The event will provide further insight into the Group’s three areas of operation and how these support the strategy:

Retail – an annuity-like income stream with profitable SME(2)and I&C(3) businesses; 

Generation – visible biomass earnings, flexible operations, the development of options for rapid response gas and long-term opportunities to repurpose coal assets; and

Biomass Supply – lower cost, good quality pellets, with visible earnings and the capacity to provide at least 30 per cent of the Group’s fuel requirements.

These activities are underpinned by safety, sustainability, operational excellence and expertise in our markets. Drax is committed to using research and innovation to help reduce supply chain costs, identify new long-term opportunities and to maximise value across the Group.

The event will be led by Dorothy Thompson, Group CEO, supported by the senior management team from across the business.

Dividend policy and capital allocation

Following discussion with shareholders, Drax today announces a new dividend policy.

Drax expects to pay a growing dividend consistent with maintaining its credit rating and investing in its business.

Drax expects to recommend a dividend of £50m with regards to the 2017 financial year. The Board is confident that this dividend is sustainable and expects it to grow from this level as the implementation of the strategy generates an increasing proportion of stable earnings and cash flow. In determining the rate of growth in dividends the Board will take account of future investment opportunities and the less predictable cash flows from the Group’s commodity-based businesses.

If there is a build-up of capital in excess of the Group’s investment needs the Board will consider the most appropriate mechanism to return this to shareholders.

Dorothy Thompson said:

“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.” 

Trading and Operational Performance

Since publishing our full year results on 16 February 2017, trading conditions in the markets in which we operate have remained unchanged and operational performance has been good.

These factors underpin our expectations for full year EBITDA(4), which remain unchanged.

Capital markets webcast and presentation material

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

https://cache.merchantcantos.com/webcast/webcaster/4000/7464/16531/90093/Lobby/default.htm

https://www.drax.com/uk/investors/capital-markets-day/

Notes:

(1)   Three business areas, including an assumed central cost, based on £21mactual in 2016.

(2)   Small and Medium-sized Enterprise.

(3)   Industrial and Commercial.

(4)   EBITDA is defined as profit before interest, tax, depreciation, amortisation and unrealised gains and losses on derivative contracts.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Enquiries:

Drax Investor Relations:

Mark Strafford

+44 (0) 1757 612 491

+44 (0) 7730 763 949 

Media:

Brunswick:

Simon Maine

Mike Smith

+44 (0) 207 404 5959

Drax External Communications:

Paul Hodgson

+44 (0) 1757 612 026

Website: www.drax.com/uk

Chief Executive comments on capital markets event and trading update

Dorothy Thompson, (2005-2017 Chief Executive, Drax Group)

Investors

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

Pricing of offering of senior secured notes due 2022

21 April 2017

Investors
London Skyline with cranes
RNS Number : 0509D
Drax Group PLC
(Symbol: DRX)

Drax Group plc’s (“Drax”) indirect wholly owned subsidiary, Drax Finco plc, has today priced its offering of £350 millionsenior secured fixed rate notes due 2022 (the “Fixed Rate Notes”) and £200 million senior secured floating rate notes due 2022 (the “Floating Rate Notes” and together with the Fixed Rate Notes, the “Notes”).

The Fixed Rate Notes will bear interest at a rate of 4.25 per cent. per annum and will be issued at 100 per cent. of their nominal value.  

The Floating Rate Notes will bear interest at an annual rate of 3 month LIBOR (subject to a zero per cent. floor) plus 4.0 per cent. per annum and will be issued at 100 per cent. of their nominal value.    

The proceeds from the offering of the Notes, together with cash on hand will be used as part of a refinancing of Drax’s existing debt.

An amendment to the current £400 million credit facility is also expected to become effective on or around 5 May. Under the amendment, an aggregate principal amount of £350 million will be made available to Drax Corporate Limited. It is expected that approximately £35 million will be drawn at closing.

Drax has also extended its existing commodity trading facility, to include gas related commodity trades in addition to the existing power and dark green spread facility. The extension of the commodity trading facility allows Drax to transact prescribed volumes of trades without the requirement to post collateral.  

Enquiries:

Drax Investor Relations:

Mark Strafford

+44 (0) 1757 612 491 

Media:

Drax External Communications:

Paul Hodgson

+44 (0) 1757 612026

Website: www.drax.com/uk

Cautionary Statement
This release is for information purposes only and does not constitute a prospectus or any offer to sell or the solicitation of an offer to buy any security in the United States of America or in any other jurisdiction. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Notes will be offered in a private offering exempt from the registration requirements of the Securities Act and will accordingly be offered only to (i) qualified institutional buyers pursuant to Rule 144A under the Securities Act and (ii) certain non-U.S. persons outside the United States in compliance with Regulation S under the Securities Act.  No indebtedness incurred in connection with any other financing transactions will be registered under the Securities Act. 
This communication is directed only at (i) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the “Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations, etc.”) of the Order,  (iii) are persons who are outside the United Kingdom, and (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). Any investment activity to which this communication relates will only be available to, and will only be engaged in with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.  
This announcement is not a public offering in the Grand Duchy of Luxembourg or an offer of securities to the public in any European Economic Area member state that has implemented Directive 2003/71/EC, and any amendments thereto (together with any applicable implementing measures in any member state, the “Prospectus Directive”). 
Forward Looking Statements
This release includes forward-looking statements within the meaning of the securities laws of certain applicable jurisdictions. These forward-looking statements can be identified by the use of forward-looking terminology, including, but not limited to, terms such as “aim”, “anticipate”, “assume”, “believe”, “continue”, “could”, “estimate”, “expect”, “forecast”, “guidance”, “intend”, “may”, “outlook”, “plan”, “predict”, “project”, “should”, “will” or “would” or, in each case, their negative, or other variations or comparable terminology.  These forward-looking statements include, but are not limited to, all statements other than statements of historical facts and include statements regarding Drax’s intentions, beliefs or current expectations concerning, among other things, Drax’s future financial conditions and performance, results of operations and liquidity, strategy, plans, objectives, prospects, growth, goals and targets, future developments in the markets in which Drax participate or are seeking to participate, and anticipated regulatory changes in the industry in which Drax operate. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Readers are cautioned that forward-looking statements are not guarantees of future performance and are based on numerous assumptions. Given these risks and uncertainties, readers should not rely on forward looking statements as a prediction of actual results. 

END

AGM Statement

13 April 2017

Investors
Photo of Philip Cox CBE
RNS Number : 4477C
Drax Group PLC
(Symbol: DRX)

Drax holds its Annual General Meeting at 11:30am today at The Grand Hotel and Spa, Station Rise, York.  At this meeting Philip Cox, Chairman of Drax, will make the following comments:

“The Annual Report and Accounts were published on 10 March and therefore I hope that you’ve had time to review them. By way of a reminder, our principal performance indicators and operational achievements for 2016 are summarised on the screen. 

2016 was a pivotal year for Drax, marking the completion of the biomass transformation project which commenced in 2012, and the announcement of a new strategy to deliver long-term sustainable value for our shareholders.

Our underlying earnings for 2016 at £140 million was in line with our guidance, although £29 million below 2015. This reflects the continuation of challenging commodity markets and the removal of Climate Change Levy (CCL) exemptions. However, we were pleased to be able to partly offset the impact of these factors with a focus on flexible system support, the prompt and balancing markets, ancillary services and improving retail margins, all of which are important parts of our strategy to develop broader, non-commodity exposed earnings. 

Against a background of low wholesale electricity prices, the Group has again delivered strong operational performance. This is not something we take for granted and it remains at the core of our strategy.

Following a comprehensive review, initiated in 2015, the Group’s new strategy has been defined and is based on creating a more diversified earnings base that will produce higher-quality returns in the long term.

Central to this strategy, Drax aims to play an increasing role in the way energy is generated, supplied and used for a better future. We announced our new strategy to the market in December. Evidence of delivering on the new strategy can already be seen in the acquisition of Opus Energy and four projects to develop rapid-response Open Cycle Gas Turbine (OCGT) generation plants and most recently we have made progress in our plans to expand our biomass pellet self-supply capability with the provisional acquisition of a new biomass pellet plant in Louisiana.

Sustainably sourced biomass generation remains at the heart of your business and we were delighted to be able to complete the full conversion of our third biomass generating unit, resulting in Drax delivering 16 per cent of the UK’s renewable electricity. 

Biomass is the most cost-effective large scale renewable and with the right policy frameworks we could become 100% renewable through the full conversion of our three remaining coal units and we could do this well before 2025, supporting the Government’s objective to remove unabated coal from the system.

Through our strategy your Board remain focused on optimising the value of the Group as well as remaining alert to opportunities for growth.

The sustainable biomass we use to provide energy is at the heart of our business. Because this must be sustainable we always strive to ensure all our pellets comply with our policy. We are well aware of the obligations we have to society, and specifically the communities in which we are located, as well as the wider environment. 

We take these obligations very seriously. 

And, I’d like to remind you our shareholders of our guiding principles:

  • We never work in countries that lack proper regulation.
  • We never cause deforestation or forest decline.
  • We never source from areas that are officially protected or where our activities would harm endangered species.
  • We only take wood from working forests that grow back and stay as forests.
  • We require all our suppliers to pass tough screening and sustainability audits, conducted by independent auditors.
  • We only source wood from countries that already have huge working forests where we provide another market for low grade material that solid-wood industries, such as construction and furniture manufacture, aren’t using.

This year there are a larger number of resolutions than usual as a result of the submission of a new Remuneration Policy for consideration by shareholders and a number of other resolutions as set out in the Notice of Meeting.  Following comments by shareholder advisory bodies and discussions with major shareholders, I want to be clear that all payments and awards made to directors are in line with our remuneration policy, although I acknowledge that some elements of remuneration structure could have been better explained in the previous year’s Directors’ Remuneration Report.”        

Enquires:

Investor Relations

Mark Strafford        +44 (0) 1757 612491

Media 

Paul Hodgson +44 (0) 1757 612026

Website: www.drax.com/uk

Notes:

(1)  The principal performance indicators and operational achievements for 2016 which were  “summarised on the screen” were as follows:

During 2016:

  • Total revenue – £2,950 million
    (2015: £3,065 million)
  • Gross Profit was £376 million
    (2015: £409 million)
  • EBITDA – £140 million
    (2015: £169 million)
  • Net debt – £93 million
    (2015: £187 million)
  • Underlying basic earnings – 5 pence per share
    (2015: 11 pence per share)
  • Total recordable injury rate – 0.22
    (2015: 0.31)
  • Percentage of UK renewable electricity generated – 16% (1)
    (2015: 16%)
  • Biomass generation – 65%
    (2015: 43%)

Note

(1)    Drax estimates that it produced around 16% of the renewable electricity generated under support schemes covered by the Levy Control Framework. 

Preliminary results for the 12 months ended 31 December 2016

16 February 2017

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

Twelve months ended 31 December

2016

2015

Key financial performance measures

EBITDA (£ million)

140

169

Underlying earnings (£ million)

21

46

Underlying earnings per share (pence)

5.0

11.3

Total dividends (pence per share)

2.5

5.7

Net debt (£ million)

93

187

Statutory accounting measures

Profit before tax (£ million)

197

59

Reported basic earnings per share (pence)

48

14

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.”

NOTES FOR ANALYSTS AND EDITORS

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

Chief Executive comments on full year results

Dorothy Thompson, (2005-2017 Chief Executive, Drax Group)

Investors

We are playing a vital role in helping change the way energy is generated, supplied and used as the UK moves 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.

Related documents:

Completion of the acquisition of Opus Energy Group Limited

10 February 2017

Investors
RNS Number : 6124W
Drax Group PLC
(Symbol: DRX) 

Drax Group plc (“Drax”) is pleased to announce that it has today completed the acquisition of the entire issued share capital of Opus Energy Group Limited (the “Acquisition”).

The Acquisition was originally announced on 6 December 2016.

Dorothy Thompson, Chief Executive, Drax Group, said:

 “Today we took another step forward in delivering our Group-wide strategy.  This addition to our existing retail offer will see our challenger brands, Opus Energy and Haven Power, working to provide the UK’s businesses with affordable, reliable and renewable energy.”

Enquiries:

Drax Investor Relations 

+44 (0) 1757 612 491

Mark Strafford

J.P. Morgan Cazenove (acting as exclusive financial adviser to Drax in connection with the proposed acquisition of Opus Energy and as Drax’s corporate broker):

+44 (0) 207 742 6000

Robert Constant

Carsten Woehrn

Wendy Hohmann

Drax Media

+44 (0) 1757 612 026

 Paul Hodgson

Website: www.drax.com/uk

Note:

(1)   J.P. Morgan Limited (which conducts its UK investment banking activities as J.P. Morgan Cazenove), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Drax and for no one else in connection with the Acquisition and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Acquisition and will not be responsible to anyone other than Drax for providing the protections afforded to customers of J.P. Morgan Cazenove or for affording advice in relation to the Acquisition, the contents of this document or any transaction, arrangement or other matter referred to in this document.

END

European Commission Approves CfD Contract

19 December 2016

Investors
Drax biomass storage domes
RNS Number : 2424S
Drax Group PLC
(Symbol:DRX)

Drax confirms that the European Commission (EC) has today approved the CfD Investment Contract(1), awarded to Drax by the UK Government, for its third biomass unit conversion.

https://europa.eu/rapid/press-release_IP-16-4462_en.htm

The strike price remains £100/MWh(2) and there are no changes to the terms of the contract.

The unit will commence operating as a fully converted biomass unit under this contract in the coming days, having previously operated as a co-firing unit under the Renewables Obligation.

Approval of this contract was a condition of the proposed acquisition of Opus Energy and today’s announcement represents a positive step towards the completion of this process.

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

“We are pleased the European Commission has completed its review of the contract and approved it in line with our expectations. We now look forward to fully converting the unit to run on sustainable biomass.

“Drax is already playing a vital role in helping change the way energy is generated, supplied and used as the UK moves to a low carbon future.

“With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal and through rapid response gas projects to plug the gaps created by intermittent renewables.

“Our plans for greater diversification will deliver a package of reliable, affordable electricity to the UK’s households and businesses.”

Enquiries:

Drax Investor Relations: Mark Strafford

+44 (0) 1757 612 491

Media:

Drax External Communications: Paul Hodgson

+44 (0) 1757 612 026

Website: www.drax.com/uk

 

Notes:

(1)   The Government introduced Contracts for Difference (CfDs), which are long-term contracts, to support the development of low carbon electricity generation. To avoid an investment hiatus in the renewables sector before CfDs become available under the enduring regime, the Government introduced a scheme for Investment Contracts under the Final Investment Decision Enabling (“FID Enabling”) for Renewables mechanism. These were ‘early’ CfDs intended to provide greater confidence for investors in advance of the enduring CfD.

(2)   Price in 2012 terms.

END