Preliminary Results - Part 1

RNS Number : 6082B

Drax Group PLC

22 February 2011

 



22 February 2011                                       DRAX GROUP PLC

(Symbol: DRX)

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

Drax generates the highest renewable output from a single UK facility

Year ended 31 December	2010	2009	% Yr on Yr
Key financial performance measures
EBITDA (1) (£ million)	391	355	10%
Underlying earnings per share (2) (pence)	64	58	10%
Total dividends (3) (pence per share)	32.0	13.7	134%
Statutory accounting measures
Profit before tax (£ million)	255	158
Reported earnings per share (pence)	52	31

Highlights

·     Operational excellence delivered record plant performance, enhancing profitability

·     Improved 2010 profits underpinned by strong hedge and tight cost management

·     Pressure on coal generation margins due to challenging commodity market conditions

·     Continuing progress in biomass operations

-  Drax Power Station generated the highest renewable output from a single UK facility in 2010, despite operating co-firing at less than full capacity due to low regulatory support

·     Ready to expand renewable biomass capacity with appropriate regulatory support

-  Expect increasing clarity on important regulatory issues through 2011

Dorothy Thompson, Chief Executive of Drax, said:

"We have delivered an excellent performance across the business in 2010. We began the year with a strong hedged position, contracted at higher average margins than for 2009. Our record operational performance and continued tight cost control have further enhanced profitability.

"We continue to make progress in our biomass operations. Drax Power Station generated around 7% of the UK's renewable power in 2010, which is more than twice as much as any other facility in the UK. This was despite not using our renewable facilities at full capacity because of low regulatory support for biomass.

"We believe reliable and flexible electricity generation from biomass could and should make a significant contribution to meeting the UK's demanding climate change targets at relatively low cost. With appropriate regulatory support, we stand ready to expand our biomass capability significantly, increasing our renewable output from today's level."

2010 Review

Financial

·     Underlying earnings per share for 2010 up 10% at 64 pence

-  EBITDA and underlying earnings per share both increased more than 20%, excluding the one-off £31 million profit on the close out of foreign exchange derivative contracts recognised in 2009

·     Continued drive on cost and cash management

-  Achieved targeted cost efficiencies and capital expenditure reductions

·     Strong balance sheet

-  Net cash at 31 December 2010 of £204 million, including £117 million of ring fenced tax cash (31 December 2009: net debt of £54 million)

·     Total dividends of 32.0 pence per share, or £117 million (2009: 13.7 pence per share, or £50 million)

-  In line with our policy to distribute 50% of underlying earnings

Operations

Year ended 31 December	2010	2009
Key operational performance measures
Forced outage rate (%)	3.4	6.5
Availability (%)	92.1	89.1
Electrical output (net sales) (TWh)	26.4	22.6

·      Excellent safety and record operational performance

·     Higher than expected output due to unseasonably cold weather and high plant availability

-  Incremental volume at low margins

·     Turbine upgrade project now more than two-thirds complete

·     Co-firing facility commissioned - on time and to budget

-  Capability to produce 500MW of renewable power (or 12.5% of our output) from co-firing biomass now proven

Notes:

(1)   EBITDA is profit before interest, tax, depreciation, amortisation and gains/losses on disposal of property, plant and equipment and unrealised gains/losses on derivative contracts. 2009 EBITDA includes £31 million profit on the close out of foreign exchange derivative contracts.

(2)   Underlying earnings per share excludes unrealised losses on derivative contracts totalling £61 million (2009: £130 million) and the associated tax credit.

(3)   Total dividends represents amounts paid and proposed in respect of each financial year, based on the number of shares in issue as at 31 December 2010 and 31 December 2009 respectively.

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Forward Looking Statements

This announcement may contain certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of Drax Group plc ("Drax") and its subsidiaries (the "Group") are not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although Drax believes that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, many of which are beyond the control of the Group, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, factors such as: future revenues being lower than expected; increasing competitive pressures in the industry; and/or general economic conditions or conditions affecting the relevant industry, both domestically and internationally, being less favourable than expected. We do not intend to publicly update or revise these projections or other forward-looking statements to reflect events or circumstances after the date hereof, and we do not assume any responsibility for doing so.

 

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Management Presentation and Conference Call

Management will host a presentation for analysts and investors at 9:00am (UK Time) today, Tuesday 22 February 2011, at UBS, 1 Finsbury Avenue, London EC2M 2PP.

The meeting can also be accessed remotely via a conference call or alternatively via a live webcast, as detailed below.  After the meeting, a video webcast and recordings of the call will be made available and access details for these recordings are also set out below.

A copy of the presentation will be made available from 7am (UK time) on Tuesday 22 February 2011 for download at:

www.draxgroup.plc.uk>>investors>>results and reports>>IR presentations>>2011

or use the link http://www.draxgroup.plc.uk/investor/results_and_reports/presentations

Event Title:	Drax Group plc: Preliminary Results
Event Date:	Tuesday 22 February 2011
Event Time	9am (UK time)
UK Call In Number	0800 368 1916
International Call In Number	+ 44 (0)20 3140 0722
US Call In Number:	[phone]
Webcast live event link	http://cache.cantos.com/webcast/static/ec2/4000/5275/6662/8308/Lobby/default.htm
Instant Replay
UK Call In Number	0800 368 1890
International Call In Number	[phone]
US Call In Number:	[phone]
Passcode:	376211#
Start Date:	Tuesday 22 February 2011
Delete Date:	Monday 21 March 2011
Video Webcast
Start Date:	Tuesday 22 February 2011
Delete Date:	Monday 20 February 2012
Archive Link:	http://cache.cantos.com/webcast/static/ec2/4000/5275/6662/8308/Lobby/default.htm

For further information please contact:

	On the day	Thereafter
Drax Group plc Michael Scott, Investor Relations     Melanie Wedgbury, Media Contact	[phone] [phone]	[phone] [phone]
Brunswick Nina Coad	[phone]
Website: www.draxgroup.plc.uk

 

END

 

 

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