AGM Statement

RNS Number : 2494R

Drax Group PLC

28 April 2009

 



28 April 2009

Drax Group plc

('Drax' or the 'Company')

Symbol: DRX

AGM Statement

Drax holds its Annual General Meeting at 11:00am today at the City Presentation Centre, Chiswell Street, London. At this meeting Charles Berry, Chairman of Drax, will make the following comments:

'Let me first say one or two things by way of introduction in respect of:

• the Company's financial and operational performance;

• our strategic focus; and

• returns to shareholders.

Taking each of these in turn, let me remind you of our principal performance indicators and operational achievements.

During 2008: 

• Total revenue from Generation was £1,753 million 

• Average achieved price of electricity was to £58.3 per MWh 

• Net sales were 25.4TWh 

• Gross Profit was £683 million 

• EBITDA was £454 million 

• Lost time injury rate was 0.10 

• Plant availability performance was 86% 

• High commercial despatch with a load factor of 76% 

I believe these results are to the credit of everyone at Drax and reflect their drive and commitment which have contributed to the advances we've made. For us, last year was characterised by extreme movements in commodity market prices, which introduces an element of uncertainty to the business. However, the market fundamentals for generators have remained strong amidst a backdrop of generation capacity issues, and it's this that's allowed Drax to demonstrate the strength of its strategic role within the UK power generation sector. 

Since we announced our results, there has been further pressure on margins. However, the impact on our own profit for 2009, is partially mitigated by the strong forward contracting position we had in place as we entered the year. Looking ahead to 2010, current commodity prices would indicate a strengthening of margins.

Let me turn now to strategy.  

In October 2008, we announced our decision to develop a 900MW dedicated biomass-fired generation business which builds on the competence and focus that have been developed at Drax over recent years. We're embarking on this path in strategic partnership with Siemens Project Ventures, a key manufacturer in our sector, and we're delighted to be furthering the excellent working relationship with them that we already enjoy.

The intention is to develop three 300MW dedicated biomass-fired generation plants in the UK. Since our announcement we've been progressing the evaluation of potential sites for the developments and, so far, have accepted Grid connection dates for two sites, one at the Port of Immingham and the other at the site of Drax Power Station itself. 

Once operational, the new developments combined with our increased biomass co-firing capability at Drax Power Station will mean that almost 30% of our generation capacity will be fuelled by renewable sources. Importantly, these sources will be both reliable and sustainable, and, with high availability, will be there to meet the demands of end users. On current estimates, Drax would be responsible for around 15% of the UK's renewable electricity, equivalent to the output of some 2,000 wind turbines, and for producing around 10% of the UK's total electricity, enough to power around seven million homes.

We believe our strategy should provide a diversified and sustainable business growth path and deliver value with a clear focus on return on investment. Given the outlook for the UK power generation market and the incentives to invest in renewable generation, we firmly believe this strategy is right. We're now in the advanced feasibility stage of developing and planning, but we've been clear to our investors that we'll only commit to investment once it can be plainly demonstrated that we'll secure attractive returns.

Continuing with the biomass theme I'm pleased to report that construction of our biomass pellet plant at Goole, some three miles from Drax Power Station, is now complete and is being commissioned with the expectation that the first batch of locally sourced straw will be processed on 1 May. The straw will be used to fuel our co-firing facility at Drax Power Station. 

On 6 March, we also announced that we'd acquired a small electricity supply business, Haven Power, from the Welsh Power Group. The acquisition is entirely in line with our strategy to extend our trading capabilities and options for routes to market. Haven serves small and medium sized business customers, but has the capacity to grow significantly from this base. It currently supplies 0.7TWh per annum.

As you're aware, a resolution is to be proposed to the meeting for payment of a final dividend of 38.3 pence per share. If the resolution is passed, a further £130 million will be returned to shareholders in May. When added to the dividends paid last October this brings the total return to shareholders in respect of 2008 to £180 million.' 

Enquires:

Investor Relations
Andrew Koss

[phone]

Media 

Melanie Wedgbury          

[phone]

Website: www.draxgroup.plc.uk

 

END

 

 

AGMMGGZDNNLGLZM