Tag: investors

Satisfaction of the conditions for the redemption in full of senior secured floating rate notes due May 2022

27 April 2018

Investors
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE IN OR INTO AUSTRALIA, CANADA OR JAPAN OR IN ANY OTHER JURISDICTION IN WHICH OFFERS OR SALES OF SECURITIES WOULD BE PROHIBITED BY APPLICABLE LAW. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS RELEASE. 

On 26 April 2018, Drax Group plc’s (“Drax”) indirect wholly owned subsidiary, Drax Finco plc, completed and settled its offering (the “Offering”) of U.S. dollar denominated senior secured notes due November 2025 (the “Notes”), in an aggregate principal amount of $300.0 million.

Further to the notice of conditional redemption published on April 13, 2018 (the “Notice”), the funds are sufficient, together with cash on hand, to pay the Redemption Price (as defined in the Notice) for all of the outstanding £200,000,000 Senior Secured Floating Rate Notes due 2022 (the “Notes”), including applicable premium, in full, and to pay all related expenses in respect of the redemption on or prior to the Redemption Date (as defined in the Notice), which Notes have been conditionally called to be redeemed on 1 May 2018. As such, the Refinancing Condition (as defined in the Notice) has been satisfied, and the redemption of the Notes will occur on 1 May 2018.

Accrued and unpaid interest on the Notes from 1 February 2018 to, but not including, 1 May 2018 will be paid to holders of record on 15 April 2018 in the aggregate amount of £2,230,180.27.

Enquiries:

Drax Investor Relations:

Mark Strafford

+44 (0) 1757 612 491

Media:

Drax External Communications:

Ali Lewis

+44 (0) 1757 612 165

Website: www.drax.com

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 persons who (i) 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”).

Manufacturer target market (MiFID II product governance) is eligible counterparties and professional clients only (all distribution channels). No PRIIPs key information document (KID) has been prepared as the Notes are not available to retail investors in the European Economic Area.

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

25 April 2018

Investors
RNS Number : 0475M
Drax Group PLC

Drax holds its Annual General Meeting at 11:30am today at The Grand Hotel & Spa, Station Rise, York YO1 6GD. At this meeting Philip Cox CBE, Chairman of Drax Group, and Will Gardiner, Chief Executive Officer (CEO) of Drax Group, will make the following comments:

Philip Cox CBE, Chairman, said:

Photo of Philip Cox CBE“2017 was an important year for the Group with the development of our strategy, a new dividend policy and the departure of Dorothy Thompson who announced her intention to stand down as CEO. I would like to thank Dorothy for her enormous contribution to the Group over the last 13 years.

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

Will Gardiner, CEO, said:

“I am very pleased to have taken over as CEO of the Drax Group. I have greatly enjoyed working alongside Dorothy Thompson for the past two years as CFO. Having worked closely with the Board and executive team, I know that I will be leading a great team. I have also worked closely on developing our strategy and I look forward to continuing to deliver it and taking advantage of the opportunities ahead.

In 2017 we made significant progress with the strategy we announced in December 2016. We completed the acquisition of Opus Energy – a leading challenger brand in the UK Small and Medium-sized Enterprise (SME) energy market; we acquired a third biomass pellet plant (LaSalle Bioenergy), which significantly increases our pellet production capacity; and we continued to develop options for flexible gas generation at four sites around the UK as well as the exploration of coal-to-gas repowering at Drax Power Station. To support our strategy, we completed a refinancing in May and announced a new dividend policy in June.

We have a major role to play in supporting the UK energy system, as it becomes increasingly ambitious in decarbonising. With confirmation of Government support for further biomass generation at Drax Power Station we are working on a fourth biomass unit conversion.

Through this flexible, low-carbon and customer-focused approach we aim to deliver higher quality earnings, with a reduction in commodity exposure alongside opportunities for growth.

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. Biomass is a challenging fuel to manage. We work very hard to manage it carefully, but unfortunately, in December, we had a fire at Drax Power Station.  It cost us several weeks of production but most importantly, no one was hurt.  We are currently incorporating the lessons learned from that incident in our operations to ensure that we operate as safely as we can.

Our financial performance, which we measure with reference to EBITDA, was £229 million in 2017, significantly ahead of 2016 (£140 million).

This increase was principally from producing high levels of renewable power from sustainable biomass and growth in our Energy Supply and Pellet Production businesses. I am very pleased that all three of our businesses generated positive EBITDA(1) last year for the first time.

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.

For 2017 we are recommending a total basic dividend of £50 million (12.3 pence per share) inclusive of a final dividend of £30 million, equivalent to 7.4 pence per share.

We are also currently undertaking a £50 million share buy-back programme. This is consistent with our capital allocation policy and commitment to returns to shareholders.

Sustainability remains at the heart of the business, both the specific sustainability of biomass and more broadly the long-term sustainability of the Group.

Biomass sustainability is in the financial and long-term interests of the business and we always strive to ensure all our pellets comply with our policy. It is fundamental to us that the biomass we use is sustainable and meets statutory requirements. We have a dedicated sustainability team whose role is to ensure the wood pellets we manufacture and use to generate electricity meet the requirements we have set ourselves in our Sustainability Policy and the criteria for sustainable biomass as established by the UK government.”

Philip Cox CBE, Chairman, added:

“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 and during a time of transition their role is especially important.

The Board has been complemented by the appointment of two new Non-Executives. 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.

As a Board, we are well aware that, to achieve our strategic objectives, our commitment to diversity is crucial and reducing our gender pay gap is an important part of this.

We must do more to attract, retain and progress women to ensure we’re an employer of choice for everyone who sees their future in energy. In this context, we are supportive of the goals of Hampton Alexander.

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.”

Enquires:

Investor Relations

Mark Strafford        +44 (0) 1757 612491

Media

Ali Lewis                +44 (0) 1757 612165

Website: www.drax.com

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. The principal performance indicators and operational achievements for 2017 which were “summarised on the screen” were as follows:

During 2017:

  • Total revenue – £3,685 million
    (2016: £2,950 million)

    • EBITDA – £229 million
      (2016: £140 million)
    • Gross Profit – £545 million
      (2016: £376 million)
    • Net debt – £367 million
      (2016: £93 million)
  • Total recordable injury rate – 0.27
    (2016: 0.22)
  • Total dividend – 12.3p
    (2016: 2.5p)
  • % of UK Renewable Electricity Generated – 15%
    (2016: 16%)
  • Wood pellets produced – 822kt
    (2016: 607kt)
  • Meter Points – 376k
    (2016:41k)

Share Repurchase Programme

20 April 2018

Investors
RNS Number : 5390L
Drax Group PLC

Drax Group plc (the Company) today announces that it is commencing a £50 million share buy-back programme of the Company’s shares of 11 16/29 pence each (the Programme). The purpose of the Programme is to reduce the Company’s share capital. The shares purchased by the Company will be held in treasury pending cancellation or re-issue.

The maximum number of shares that may be repurchased by the Company under the Programme is 40,670,254. The Programme is expected to be completed no later than 21 January 2019.

The Company has entered into an agreement with J.P. Morgan Securities plc (JPMS plc) pursuant to which it has issued an irrevocable instruction to JPMS plc to manage the Programme. JPMS plc will carry out the Programme through the acquisition of ordinary shares in the Company within certain pre-defined parameters for subsequent repurchase by the Company. The arrangement agreed is in accordance with Chapter 12 of the UKLA Listing Rules and Article 5 of the Market Abuse Regulation 596/2014/EU dealing with buy-back programmes.

JPMS plc may undertake transactions in shares (which may include sales and hedging activities, in addition to purchases which may take place on any available trading venue or on an over the counter basis) in order to manage its market exposure under the Programme. Disclosure of such transactions will not be made by JPMS plc as a result of or as part of the Programme, but JPMS plc will continue to make any disclosures it is otherwise legally required to make.

Enquiries:

Investor Relations:

Mark Strafford

+44 (0) 1757 612 491

Media:

Ali Lewis

+44 (0) 1757 612 165

Website: www.drax.com

END

 

Europe’s kicking its coal habit

19 April 2018

Power generation

From Roman mines to the fuel behind the continent-wide industrial revolution, Europe has a long history with coal. But with reducing carbon and other greenhouse gas emissions, now firmly on the global agenda, Europe’s love for coal is rapidly declining.

Collectively, the EU aims for renewable sources to account for 20% of gross final energy consumption by 2020 and 27% by 2030. Countries in and outside the EU, as well as businesses and organisations, are setting ambitious targets to phase out coal as part of the UK and Canada-led Powering Past Coal Alliance, which Drax recently signed up to.

European CountriesCoal-free date
(according to Europe Beyond Coal *updated September 2020*)
Austria 🇦🇹 2020
France 🇫🇷 2022
Portugal 🇵🇹2023
UK 🇬🇧2024
Ireland 🇮🇪 Italy 🇮🇹 2025
Greece 🇬🇷2028
Finland 🇫🇮 Netherlands 🇳🇱 2029
Denmark 🇩🇰 Hungary 🇭🇺 Portugal 🇵🇹2030
Germany 🇩🇪2038
Czech Republic 🇨🇿 Spain 🇪🇸Phase out under discussion
Bosnia Herzegovina🇧🇦 Bulgaria 🇧🇬 Croatia 🇭🇷 Kosovo🇽🇰Montenegro 🇲🇪 Poland 🇵🇱 Romania🇷🇴Serbia🇷🇸 Slovakia 🇸🇰Slovenia 🇸🇮 Spain 🇪🇸 Turkey 🇹🇷No phase out date
Belgium 🇧🇪 Cyprus 🇨🇾 Estonia 🇪🇪 Iceland 🇮🇸 Latvia 🇱🇻 Lithuania 🇱🇹 Luxembourg 🇱🇺 Malta 🇲🇹 Norway 🇳🇴 Sweden 🇸🇪Switzerland 🇨🇭No coal in electricity mix

This movement is not only being fuelled by an increased capacity in wind and solar generation, but also by other low-carbon energy sources enabling countries to kick their coal habits.

Aiming for 100% renewable

As myth after myth is dispelled about renewables, there are countries proving it is possible to power a modern developed nation entirely through renewable energy sources.

Up in the northern-most reaches of Europe, Iceland already generates all its electricity from renewable sources. This is split between 75% hydropower and 25% geothermal power. Geothermal not only offers a renewable source of electricity but also hot water for heating the volcanic island nation.

A geothermal power station steams on a cold day in Iceland

Hydropower is also a key contributor to Norway’s renewable ambitions. With more than 31 gigawatts (GW) of installed hydropower capacity, Norway is able to rely on it as a source of electricity and export its plentiful oil and natural gas reserves to countries still dependent on fossil fuels.

Many parts of Europe are well suited to hydropower, with reliable rainfall and the mountainous topography necessary to construct dams and power stations. Parts of Austria, Romania and Georgia also make substantial use of hydropower as a source of electricity.

Artificial Lake behind the Bicaz Dam at sunset, Romania

For countries without this access to large-scale hydropower, it’s the increased installation of renewables that holds the key to eliminating the need for coal.

Growing renewable generation

Last year saw electricity generation from renewable sources overtake that from coal for the first time thanks to continuous expansion of wind, solar and biomass capacity around the continent.

Between 2010 and 2017, generation from wind, solar and biomass installations in EU countries more than doubled from 302 terawatt hours (TWh) to 670 TWh, according to Eurostat, driven primarily by an increase in wind capacity. As a source of renewable electricity wind has already proved capable of generating major portions of a country’s demand –managing to meet 44% of Denmark’s overall demand in 2017. This was after previously producing a 40% electricity surplus one day for the country, allowing it to export the emission-free electricity to neighbours.

Wind turbines on the east coast of Sweden

Across the EU, generation from wind more than doubled from 150 TWh to 364 TWh from 2010 to last year, while solar generation grew five times from 23 TWh to 119 TWh and biomass jumped from 129 TWh to 196 TWh. By contrast, coal and lignite fell from 818 TWh to 669 TWh.

These renewable electricity sources, along with hydropower, now account for 30% of EU countries’ collective electricity generation. And while coal generation continues to drop, other low carbon energy sources, particularly nuclear, still play essential roles in many European energy systems.

From coal to low carbon

Sweden is one of the leaders in renewable electricity generation, setting 2040 as the date to move to totally renewable energy. However, while it currently counts 6.5 GW of wind capacity installed and has already exceeded its 2020 renewable generation goals, the country’s 10 nuclear reactors still make up 40% of its electricity output. Sweden aims to phase-nuclear out of its energy mix, but this will force it to import more power from neighbours to meet demand.

France is even more dependent, with nuclear making up 75% of its electricity production and earning more than €3 billion a year for the country in exports. It aims to reduce its nuclear generation to 50% with president Emmanuel Macron claiming continued nuclear generation offers “the most carbon-free way to produce electricity with renewables.”

Fessenheim Nuclear and Hydroelectric Power Plants in Alsace, France

As a reliable and low-carbon source of electricity, the most modern nuclear power stations add a certain amount of flexibility to grids enabling greater adoption of intermittent renewable sources. Across the EU nuclear made up a quarter of electricity generation in 2017.

Gas in the transition

Much more flexible than nuclear, gas plays an essential role in many countries. It accounted for 19% of electricity generation in the EU last year and produces around half the CO2 and just one tenth of the air pollutants of coal. Gas turbines can begin generating electricity at full power in just 30 minutes from a cold start, or 10 minutes from warm standby, allowing it to plug any gaps in demand left by intermittent renewables. Its ability to provide many system services such as reserve power and frequency response will see it play an important transition role over the coming decades, until cleaner technologies are able to take over.

Artist’s impression of a Drax rapid-response gas power station (OCGT) with planning permission

Coal is not gone yet, making up 11% of EU’s electricity generation in 2017, but the momentum behind decarbonisation is keeping Europe on track to meet its ambitious emissions target and take the final step away from coal.

The Beast from the East

Iain Staffell, Imperial College London

18 April 2018

Opinion

Thursday 1 March was the coldest spring day on record, averaging –3.8°C. The six days from 26 February to 3 March (highlighted in blue) were the coldest Britain has been since Christmas 2010.

This pushed electricity demand up 10%, as people used more electric heating to keep warm. The evening peak demand on 1 March was the highest in three years, and so was not stretching the system to its limits.

Electricity prices rose to five times the average for the quarter. They peaked at £990 per megawatt hour (MWh) for half an hour, and also fell to –£150 per MWh as the market became volatile.

Coal generation surged for the weeks surrounding the cold spell. Not because more output from conventional plants was needed, but rising gas prices made it more economical to burn than gas. Total generation from fossil fuels remained around 20–25 GW.

Biomass and hydro ran solidly throughout the cold spell. Wind output was particularly high when it was most needed, ranging from 11.8 to 13.8 GW during 1 March. Whilst wind certainly helped, the lights would not have gone off without it, as up to 19 GW of spare gas capacity was available if needed.

Britain’s links to other countries were not so helpful. We exported to France through much of the cold spell. French electricity demand is more impacted by temperature than British, as more French homes use electric heating.

Looking in more detail at the UK’s links to other countries:

  • Britain had been largely importing from France all year, but then exported solidly through 27–28 February, when power prices were higher in France.
  • Prices remained lower in the Netherlands, so Britain continued importing from them.
  • Britain and Ireland traded power back and forth to help balance their systems. On 3 March the East-West link between North Wales and Dublin was taken offline for (unrelated) maintenance.

Download the PDF version

Read the press release

Explore this data live on the Electric Insights website

Commissioned by Drax, Electric Insights is produced independently by a team of academics from Imperial College London, led by Dr Iain Staffell and facilitated by the College’s consultancy company – Imperial Consultants.

The electric transport revolution

16 April 2018

Electrification

With rapid technological improvements and falls in battery prices, improving performance and reducing the cost, experts predict that by 2050, 90% of new-build cars will be powered by electricity.

However, it’s not only roads where transport is decarbonising; electricity may soon power more of the world’s trains, plus its planes and boats.

Taking trains forward

The electrification of the rail industry has arguably been in the making for a lot longer than EVs but there’s still progress to be made. Trains are already one of the most-efficient modes of long-distance transport, and Network Rail claims electric models’ carbon emissions are 20% to 35% lower than diesel trains. Electric trains also accelerate and brake faster than diesel-powered models, and cause less wear to tracks.

Electrified trains are already commonplace in many parts of the world – Japan’s famously fast and reliable Shinkansen railways are electric. Meanwhile in the UK, less than 50% of the rail network is electrified, with Transport Secretary Chris Grayling’s recent ‘pause’ on development casting doubts on previous ambitious plans to electrify 850-miles of track.

Nevertheless, advancements are still being made to enable the sector to utilise solar energy as an alternative to the national power grid. The concept would prove cost effective and reduce the carbon footprint of trains even further.

According to a report by climate change charity 10:10 and researchers at Imperial College’s Energy Futures Lab, rail companies could cut their annual running costs by millions of pounds through installing their own trackside solar panels to power electric trains directly. With companies spending around £500 million a year on power, the savings on self-generation would enable them to cut fares for passengers, as well as emissions.

Take off for electric planes

Of all transport modes, air travel has made the least progress in electrification but there’s hope yet. Airbus, Rolls-Royce and Siemens recently teamed up to develop the technology needed to create electrically-powered aircraft. The companies plan to fly a demonstrator aircraft with one of its existing jet engines replaced by an electric unit in 2020.

Paul Stein, chief technology officer at Rolls-Royce, said: “Aviation is the last frontier of the electrification of transport. It could lead to a step change in the way we fly with greater efficiency and less noise.”

These proposed hybrid-electric aircraft are not powered by on-board batteries like EVs but with a gas turbine that generates electricity to drive the propellers. This could reduce fuel consumption by up to 10%, predicted Mark Cousin, head of flight demonstration at Airbus.

Moving to electric aircraft would also help the aviation industry meet EU targets of a 60% reduction in emissions of carbon dioxide (CO2) by 2020, as well as 90% less nitrogen oxides and a noise reduction of around 75%.

UK-based airline EasyJet also announced it could be flying electric planes within a decade and is teaming up with US firm Wright Electric to build battery-powered aircraft.

According to EasyJet, the move would enable battery-powered aeroplanes to travel short-haul routes such as London to Paris and Amsterdam, and Edinburgh to Bristol. Wright Electric is aiming for an aircraft range of 335 miles, which would cover the journeys of about a fifth of EasyJet passengers. The challenge comes in making lithium-ion batteries light and safe enough for the air.

The airline said this was the next step in making air travel less harmful for the environment, after cutting carbon emissions per passenger kilometre by 31% between 2000 and 2016. Wright Electric claims that electric planes will save up to 15% in fuel burn and CO2 emissions, be 50% quieter and 10% cheaper for airlines to buy and operate, with the cost saving potentially passed on to passengers.

Testing new waters

There’s a lot of buzz coming out of the maritime industry too. Every year marine transport emits 1,000 million tonnes of CO2, which is why the International Maritime Organization (IMO) has agreed that a reduction of 50% should come by 2050 compared with 2008 levels. Although the deal fell short of more ambitious targets preferred by those ranging from the European Union to environmental NGOs, the IMO did also commit to pursue efforts toward phasing out CO2 emissions entirely.

As Paris Agreement goals to cut carbon dioxide emissions loom, businesses around the world are innovating.

 

Small fleets of battery-powered boats designed for fjords and inland waterways in Norway, Belgium and the Netherlands are preparing to set sail, including some able to run autonomously without a crew.

Dutch company Port-Liner is also gearing up to launch the first fully-electric, emission-free barges in Europe. Dubbed ‘Tesla’ ships, Port-Liner Chief Executive Officer Ton van Meegen claims these barges would be the first in the world to sail on carbon-neutral batteries. The first six barges alone are expected to remove 23,000 trucks from the roads annually in the Netherlands, replacing them with zero-emission methods of transport.

China also recently launched an electric cargo ship to haul coal which, whilst not doing much for its ambitions to cut pollution, will at least eliminate shipping emissions from diesel engines. Electric ships may not yet be the norm globally but progress is underway to cut the 2.5% of global greenhouse emissions that result from the maritime transport industry.

Once a far-flung fantasy in some areas, electrified transport is fast becoming a reality. EVs and rail are leading the way, but it’s clear the electric transport revolution has a long way to travel.

Sustainability reporting 2017

Sustainable business

Sustainability information

Our Approach

Through our integrated value chain and flexible lower-carbon energy proposition … [Read more]

Achieve together with our people

We are nothing without our people and we take our commitment to provide a safe and healthy workplace … [Read more]

Drax Group sustainability team

Deliver for our customers

We focus relentlessly on improving our service and developing stronger relationships with our customers … [Read more]

A lower-carbon company

We are committed to enabling a low-carbon future by moving away from coal … [Read more]

Responsible sourcing

Our commitment to sourcing natural resources responsibly is underpinned by our sustainability policy … [Read more]

Reduce our environmental impact

Our responsibility for the environment as a major power supplier goes beyond reducing carbon dioxide … [Read more]

Positive social impact

Our contribution to the community takes many forms, from our direct role in areas … [Read more]

Sustainability case studies

Building a sustainable business

The boundaries between users, suppliers and generators are blurring, writes CEO Will Gardiner … [Read more].

The sustainable development goals

Improved performance has guided our business purpose for over four decades … [Read more]

Commitment to the UNGC

Reporting on the 10 principles of the UN Global Compact … [Read more]

Drax Biomass invests in greenhouse gas efficiencies

Truck dumps, a new train line and use of sawmill residues are helping our own biomass producer … [Read more].

Gamlingay community turbine

Opus Energy works with thousands of renewable electricity generators. Find out more in this purchase power agreement … [Read more]

Partnering to build a Northern Powerhouse

We are passionate about supporting the economy of the North of England … [Read more]

Customer service excellence

Excellent customer service is at the heart of our business … [Read more]

Collaborating for biodiversity protection and enhancement

Drax is committed to protecting biodiversity and playing an active role in habitat enhancement … [Read more]

Drax Biomass creates value in the United States

In many US States, including those in which Drax Biomass operates, there is a system of local taxation … [Read more]

American Tree Farm

The oldest sustainable family woodland system in the US … [Read more]

People strategy

We continue to strengthen, develop and deliver our people strategy across the Group … [Read more]

Listening to local communities

We strive to make a positive impact on local communities to ensure we understand the potential impacts … [Read more]

The Sustainable Biomass Program

The Sustainable Biomass Program’s (SBP) vision is an economically, environmentally and socially sustainable … [Read more]

Working with our suppliers

Working with Pinewells, a supplier of sustainable wood pellets in Portugal … [Read more]

The Bettercoal initiative

Ensuring industry respects people’s rights and makes a positive contribution to the social and economic … [Read more]

Restoring Brickmakers’ Wood

Haven Power employees have worked with the Eden-Rose Coppice Trust to help transform a woodland … [Read more]

Chairman’s statement

Philip Cox, Chairman, Drax Group

Annual report

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