AGM Statement

RNS Number : 8005E

Drax Group PLC

13 April 2011

 



13 April 2011

Drax Group plc

("Drax" or the "Company")

Symbol: DRX

AGM Statement

Drax holds its Annual General Meeting at 11:30am 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 performance in 2010, our strategic focus, returns to you, our shareholders and the composition of the Board.

Our principal performance indicators and operational achievements for 2010 are summarised on the screen, but let me just put these into context. The operational performance of Drax Power Station was exceptional, in fact, we delivered the best ever operational performance in the plant's history. This, along with starting the year with strong forward sales locking in higher average margins than for 2009, enhanced our profitability. And importantly, we were there, reliably generating electricity, during some of the coldest months on record at the beginning and the end of the year.

During the year, we continued our focus on maintaining a strong balance sheet through the tight management of costs and cash throughout the organisation, which as you can see was delivered without detriment to our operational performance.

So, despite witnessing some of the weakest spreads between the price of power and the cost of generation in two decades, our business performed well. The outlook, however, is challenging. Today's commodity markets place pressure on the margins available to coal-fired generators.

Reducing our emissions of carbon dioxide has continued to underpin our strategy. Our turbine upgrade project is now over two-thirds complete and due to be completed next year. And I was delighted to see our new biomass co-firing facility commissioned last Summer to time and in line with budget.

Our work on building our biomass operation made significant progress during 2010, in particular, through establishing critical supply chain logistics through investments in bespoke biomass rail wagons, and handling and storage facilities at the Port of Tyne.

Research and development into the use of biomass in electricity generation continues with a view to increasing the amount of biomass we burn. We stand ready to significantly expand our biomass operations and make a considerable contribution to meeting the UK's targets for carbon reduction and renewables, but we will only do so if the economics are attractive for our shareholders.

For that to be the case we require appropriate regulatory support and to that end we welcome the Government's ongoing review of the structure and levels of support for all renewable technologies. We are actively engaging with the Government to advance the case for generating increasing amounts of electricity from biomass - renewable electricity, which it must be said, can be sustainable, reliable and flexible, as well as cost effective compared to many other types of renewable power.

Politically, energy policy has remained a high priority following the change of Government last May. At the end of 2010 proposals were announced to reform the electricity market. The package of measures proposed will represent the biggest change the sector has seen since it was privatised in 1990. We believe positive progress on the reform is central to our success. Throughout the year we have maintained a good dialogue with the Government and we will continue this as the reform agenda takes shape.

Turning now to returns to our shareholders, as you're aware, a resolution is to be proposed to the meeting for payment of a final dividend of 17.9 pence per share. If the resolution is passed, a further £65 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 2010 to £116 million.

The final comment I'd like to make is about the composition of the Board. During the year, I was delighted to welcome Tony Thorne and Tim Cobbold to the Board as non-executive directors, bringing with them a wealth of experience in commercial and industrial matters. Mike Grasby one of our non-executive directors will step down from the board at the conclusion of this AGM. On behalf of the Board I'd like to thank Mike for his time and commitment to the Company since joining Drax in December 2003.   Mike's served the Company well as a Board member and as Chairman of the Health and Safety Committee. He leaves us with our very best wishes for his future."

Enquires:

Investor Relations

Michael Scott

[phone]

Media 

Melanie Wedgbury         

[phone]

Website: www.draxgroup.plc.uk

Notes:

(1)  The principal performance indicators and operational achievements for 2010 which were  "summarised on the screen" were as follows:

During 2010:

®  Total revenue from Generation was £1,648 million                     

      (2009: £1,476 million)

®  Gross Profit was £551 million

      (2009: £503 million)

®  EBITDA was £391 million

      (2009: £355 million)

®  Underlying earnings was 64 pence per share

      (2009: 58 pence per share)

®  Net cash was £204 million

      (2009: £54 million net debt)

®  Carbon dioxide emissions was 874 tonnes per GWh

      (2009: 815 tonnes per GWh)

®  High commercial despatch with a load factor of 80%

      (2009: 68%)

®  Total recordable injury rate was 0.26

      (2009: 0.17)

 

END

 

 

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