AGM Statement

RNS Number : 3147F

Drax Group PLC

23 April 2014

 



23 April 2014

Drax Group plc

("Drax" or the "Company")

Symbol: DRX

AGM Statement

Drax holds its Annual General Meeting at 11:30am today at The Grocers' Hall, Princes 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. Our commitment to becoming a leading provider of sustainable power is stronger than ever. As a Group we made significant progress in this respect during 2013, from starting the construction of wood pellet plant and port facilities in the US, through the conversion of our first generating unit at Drax Power Station to burn sustainable biomass in place of coal, to increasing sales of renewable power to business customers in the UK.

As a Group we are working hard to provide power which is secure and reliable, cost effective and low carbon.

Our achievements in 2013 position us well to secure an attractive future for our business and you our shareholders.

Our principal performance indicators and operational achievements for 2013 are summarised on the screen, but let me just put these into context.

Good operations and good progress on our biomass transformation underpinned our earnings for last year, which were slightly ahead of market expectations. They were, however, lower than those in the previous year due to the increased carbon costs stemming from the cessation of allowances under the European emissions trading system and the introduction of the Government's carbon tax.

We delivered high generation output for the fourth consecutive year and benefited from the high availability and reliability of our generating plant. The carbon footprint of our generation activity saw a significant reduction as a result of converting our first generating unit to biomass - some 1.6 million tonnes of sustainable biomass were burnt during the year.

Across the Group our safety statistics have continued to be industry-leading. However, we experienced weaker performance in our construction activities, particularly at two of our US sites which is behind the increase in the total recordable injury rate year on year. Working closely with our contractors we have significantly increased the safety management at these sites.

Haven Power, our electricity retail company, delivered significant growth in a highly competitive market place with a 59% increase in sales volume. Excellence in customer service is how we set out to differentiate ourselves in the retail market and we are recognised as a consistent high performer in an external survey.

But when I reflect on 2013 I think, not surprisingly, that our biomass transformation takes centre stage. The challenges Drax has faced on this journey, a journey which is not over yet, have been complex and varied. They have come in many forms from engineering and logistics to sustainability and public perception.

No one has ever converted a power station like this before and there are no 'off-the-shelf' answers. What we have seen at Drax Power Station is without doubt a feat of engineering with safe and reliable operations hard-wired into every decision taken. We have delivered better performance than we initially thought possible and with further investment we can improve it further.

The fascinating fact about our story is that our reach goes beyond the power station, both upstream and downstream. Recognising that the biomass supply chain is in its infancy we have been instrumental in developing the upstream operations, whether through investment in US pellet plants or working closely with UK ports and rail wagon desiners and manufacturers. Downstream, through supplying renewable power to business customers, we are able to assist those businesses in meeting their sustainability commitments.

Becoming a leading provider of sustainable power is a Group-wide effort and one we are all focused on. I started by saying that our commitment to this aim is stronger than ever.

Our path has not been without its challenges, indeed earlier today we put out a statement informing that the Department for Energy & Climate Change (DECC) has advised that today we will be awarded an Investment Contract for the third unit conversion, as expected. However, we've been told that the second unit conversion is no longer eligible for an Investment Contract.

We don't understand the basis for the decision as nothing has changed as far as our plans are concerned between December and now. External legal advice confirms that we've a good case for challenging this decision in the Courts. Accordingly, proceedings have commenced.

Whereas we're clearly disappointed with the news, as we firmly believe that the early CfD provides a mechanism that will bring forward the delivery of substantial renewable power, we must now fully evaluate the options that are left open to us. One thing that we are certain of, however, is that our strategy to become a predominantly biomass-fuelled generator through converting initially three of our six generating units remain unchanged.

I hope that when you consider what we have already overcome and what we achieved last year you can see why our commitment is still strong and trust that you will continue to support our transformation.

Finally, turning to returns to you our shareholders, as you're aware, a resolution is to be proposed to the meeting for payment of a final dividend of 8.9 pence per share. If the resolution is passed, this equates to returning a further £36 million to shareholders in May.  When added to the dividends paid last October this brings the total return to shareholders in respect of 2013 to £71 million. "

Enquires:

Investor Relations

Michael Scott         [phone]

Mark Strafford        [phone]

Media 

Melanie Wedgbury [phone]

Website: www.drax.com

Notes:

(1)  The principal performance indicators and operational achievements for 2013 which were  "summarised on the screen" were as follows:

During 2013:

®  Total revenue - £2,062 million

(2012: £1,780 million)

®  EBITDA - £230 million

      (2012: £298 million)

®  Gross Profit was £445 million

      (2012: £511 million)

®  Net cash - £71 million

      (2012: £311 million)

®  Underlying basic earnings - 35 pence per share

      (2012: 52 pence per share)

®  Carbon dioxide emissions - 725 tonnes per t/GWh

      (2012: 784 tonnes per t/GWh)

®  Load factor - 80%

      (2012: 82%)

®  Total recordable injury rate  - 0.29

      (2012: 0.17)

 

END

 

 

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