17th Apr 2008 09:05
Drax Group PLC17 April 2008 17 April 2008 Drax Group plc ("Drax" or the "Company") Symbol: DRX AGM Statement Drax holds its AGM at 11:00am today at the City Presentation Centre, ChiswellStreet, London. At this meeting Gordon Horsfield, Chairman of Drax, will makethe following comments: " Let me first say one or two things by way of introduction in respect of: • the Company's financial and operational performance; • HM Revenue & Customs position on so-called "disguised interest"; • our strategic focus; • returns to shareholders; and • the composition of your Board. Taking each of these in turn, let me remind you of our principal performanceindicators and operational achievements. During 2007: • Total revenue from Generation was £1,247 million • Average achieved price of electricity was to £45.3 per MWh • Net sales were 24.9TWh • Gross Profit was £701 million • EBITDA was £506 million • Lost time injury rate was 0.34 • Plant availability performance was 86% • High commercial despatch with a load factor of 75% In a year which saw significant volatility in the commodity markets and majorplanned outages on two of our units I believe these results reflect great creditto everyone in the Drax team. Although financial markets tend to focus on thevalue of Drax based upon extrapolations of relevant commodity prices, ultimatelyit is the skills, commitment and performance of all our employees applied tothose market circumstances and to the physical assets for which they care thatdelivers the results and real value to our shareholders. Since our results presentation on 4 March, commodity market conditions for Draxhave been good. Power prices, underpinned by firm gas and oil prices, haverisen. Coal prices are at a similar level, whilst carbon prices have risen againsupported by firm gas prices. The combined effect has been an overall increasein the dark green spread continuing the improving trend we have seen over thelast nine months. Overall, we continue to trade in line with expectations reflecting our previously announced 2008 contracted position for power, but including deliveries already made in the year to date, of 20.5TWh and the market factors described above. I should now like to turn to a tax matter affecting the group. In ourpreliminary results statement on 4 March, we referred to an HM Revenue & Customs consultation document issued in December 2007 which was initially expected to lead to the introduction of new legislation concerning disguised interest from April 2008. However, following statements included in the Chancellor's 2008 Budget delivered to the House of Commons on 12 March, we now understand that the consultation period is to be extended, with a view to disguised interest legislation being introduced one year later, that is with effect from April 2009. As we previously stated, if introduced in the form currently envisaged, the newrules could adversely impact our tax rate in future years. However, until theconsultation process is complete and the proposed legislation is released, it isnot possible to predict with any certainty how, if and when enacted, these newrules might affect our future effective tax rate; we are therefore keeping thissituation under active review. Let me turn now to strategy. Over the last two years our attention has been ondelivering the strategy we set out upon listing the Company in December 2005.This was to focus initially on the better alignment of our trading andproduction strategies, developing fuel optionality and securing betteroperational performance all as a basis for delivering shareholder value. In partthis was also to be achieved as a direct result of removal of certain onerousrestrictions within the previous financing arrangements which restricted theability of the management team to deliver optimum performance from the business.We believe in the last two years we have successfully achieved this first step. Whilst maintaining the leading performances we have achieved in production andtrading, our strategic focus continues to be on delivering value growth for ourshareholders. The changes which have taken place within the regulatoryenvironment over recent times present both challenges and opportunities. We planto increase shareholder value through developing our core competencies todeliver significant fuel diversification and carbon abatement, which in the nearterm will be through the successful implementation of our two major investmentprogrammes, which will see our high and low pressure turbines upgraded, and ourburn of renewable biomass through co-firing significantly increased. Over the next decade we believe that the electricity wholesale market of GreatBritain will provide increasing returns to available capacity as the retirementof some of the older plant currently on the system occurs and reduces the marginof installed capacity above system demand. This will be positive for Drax; ourstrategic position and the focus we have given to our development programme makeus well placed to deliver value growth to our shareholders relative to thecommodity markets in which we operate. As you are aware a resolution is to be proposed to the meeting for payment of afinal dividend of 9.9 pence per share together with a special dividend of 7.8pence per share. If the resolution is passed, a further £60 million will bereturned to shareholders in May. When added to the interim dividend paid inOctober and the share buy-back programme undertaken in the last quarter of 2007,this brings the total return to shareholders in respect of 2007 to £160 million. The composition of your Board is undergoing some change, with two of its currentmembers leaving Drax during the course of 2008. Gordon Boyd, Finance Director has advised us that he has decided to leave Draxin the second half of this year. On behalf of the Board I should like to thankhim for his hard work and commitment and for the step changes in our businesscontrol systems and reporting which he helped achieve. He will leave with ourvery best wishes for his future. The process to find a successor is wellunderway. This is also the last AGM over which I will preside, as I am retiring as anon-executive director and Chairman of Drax at the close of this meeting. I amvery pleased that Charles Berry, who joined the Board in December 2005, willsucceed me as Chairman. It has been a privilege to serve as chairman of Drax and lead it through aperiod of significant change over nearly five years. I have gained enormoussatisfaction from drawing together an exceptionally talented team and to haveworked closely with its members as the business has developed. I have everyconfidence in the future of Drax and in the leadership which Charles will bringto the Board." Enquires: Investor RelationsAndrew Jones+44 (0) 1757 612 938 Media Drax Group plcMelanie Wedgbury+44 (0) 1757 612 438 Tulchan CommunicationsDavid Trenchard+44 (0) 20 7353 4200 Website: www.draxgroup.plc.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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