AGM Statement

RNS Number : 5111K

Drax Group PLC

21 April 2010

 



21 April 2010

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 performance in 2009, our strategic focus, returns to you, our shareholders and the composition of the Board.

Our principal performance indicators and operational achievements for 2009 are summarised on the screen⁽¹⁾, but let me just put these into context. Like many businesses, our business hasn't been immune to the economic recession, but despite operating in poor market conditions we delivered earnings marginally above market expectations, albeit that they were lower than those for 2008 reflecting the commodity market movements.

During the year, we took actions to help protect shareholder value. We strengthened our capital structure through a share placing raising £106 million of equity which we used to prepay part of our term debt, we then refinanced the remaining term debt, extending its maturity date to December 2012.

With a focus on strong financial management across the entire business we set ourselves the target to save £10 million of operating expenses. We were pleased to report that we exceeded that target and delivered £14 million in savings.

Operationally, we maintained our leadership position in the UK coal-fired sector. Our advances in efficiency improvements, which we delivered through a variety of project work, underpin this position. We benefited further from the reliability and flexibility of the power station. The worth of both of these was demonstrated clearly through our ability to capture value, despite the poor market conditions, in the real-time market which is the mechanism used by the System Operator to match supply and demand on a minute-by-minute basis.

We continued to work hard on our two major strategic carbon abatement projects at the power station to upgrade our high and low pressure turbines and to construct the largest biomass co-firing facility in the world. Both projects remain on schedule, and will give us the capability to deliver significant savings in CO₂ emissions of up to 17.5% by 2011, compared to 2006 levels.

Throughout 2009 we made steady progress on our dedicated biomass-fired generation business and we remain very encouraged by the value potential of developing this aspect of the business and we expect to be able to prove the long-term investment case for the first dedicated biomass-fired generation plant towards the end of 2010.

We believe biomass has much to offer the energy sector, and as far as electricity generation is concerned it's not only a sustainable fuel source, but it's a reliable one which means it can make an important contribution to security of supply or keeping the lights on. We've therefore continued to press for the appropriate regulatory regime to incentivise the uptake of biomass technologies. Over the last few months we've been raising our concerns with Government and have advocated the case for biomass. This engagement will continue after the General Election.

This time last year I advised you that we'd acquired Haven Power, a small electricity supply company serving business customers. Having an alternative route to market for our power complements our existing trading capabilities. I'm delighted to report that Haven's already adding value to the Drax business through the growth of its customer base and with that, sales which saw a 50% increase in the year. We intend to continue in this vein and, following a promising venture into sales to larger business customers, over the next few years we expect to increase our presence in the larger "industrial and commercial" segment of the electricity supply market.

Looking to this year, we started 2010 with more certainty over the earnings for the year following action taken last year to accelerate our forward sales when we saw the opportunity to lock in better margins than for 2009.  We'll nevertheless continue our focus on financial management ever mindful of the commodity markets in which we operate.

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 9.6 pence per share. If the resolution is passed, a further £35 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 2009 to £50 million.

The final comment I'd like to make is about the composition of the Board. Jamie Dundas one of our non-executive directors advised us at the end of last year that he'd decided to step down from the board at the conclusion of this AGM. On behalf of the Board I'd like to thank Jamie for his time and commitment to the Company since joining the board in December 2005.   Jamie's served the Company well as a Board member and as Chairman of the Audit Committee until April of last year. We're sorry to see him go and he leaves us with our very best wishes for his future. The process to find a new non-executive director is well underway and we expect to make a formal announcement in the near 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 2009 which were summarised on the screen were as follows:

During 2009:

®  Total revenue from Generation was £1,476 million

      (2008: £1,753 million)

®  Average achieved price of electricity was to £52.0 per MWh

      (2008: £58.3 per MWh)

®  Net sales were 22.6TWh

      (2008: 25.4TWh)

®  Gross Profit was £506 million

      (2008: £623 million)

®  EBITDA was £355 million

      (2008: £454 million)

®  Lost time injury rate was 0.09

      (2008: 0.10)

®  Plant availability performance was 89%

      (2008: 86%)

®  High commercial despatch with a load factor of 68%

      (2008: 76%)

 

END

 

 

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