REG - Drax Group Plc - Half-year Report
Thu 07:01
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RNS Number : 2861T Drax Group PLC 31 July 2025
31 July 2025
DRAX GROUP PLC (Symbol: DRX)
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2025
Leading dispatchable renewable power generator, delivering for the UK system
and for shareholders
Six months ended 30 June H1-25 H1-24
Key financial performance measures
Adjusted EBITDA((1/2/3)) (£ million) 460 515
Net debt((4)) (£ million) 1,062 1,159
Adjusted basic EPS((1)) (pence) 65.6 65.6
Dividend per share (pence) 11.6 10.4
Total financial performance measures
Operating profit (£ million) 301 518
Profit before tax (£ million) 281 463
Drax Group CEO, Will Gardiner, said: "Drax is the leading dispatchable
renewable power company in the UK, delivering 5% of the UK's power and
significantly more when the system needs it. Thousands of our colleagues at
Drax and in our supply chain work tirelessly to ensure our assets continue to
help keep the lights on for millions of this country's households and
countless businesses, no matter the weather.
"During the first half of the year, we made significant progress towards
ensuring we continue to play an important role in UK energy security through
this decade and beyond, reaching a heads of terms with the UK Government on a
low-carbon dispatchable CfD. We expect to sign a final agreement later this
year and look forward to continuing to play a critical role in the UK system
into the future.
"Across the Group we are confident in our ability to generate significant free
cash flow through 2031 and are focused on aligning the business to deliver.
"The energy transition is creating significant value opportunities aligned
with the UK's energy needs and we will continue to explore investing in those
in a disciplined fashion consistent with our capital allocation policy."
Highlights
· Strong operational and financial performance across the Group
· High levels of renewable generation and system support - 5% of UK
power, 11% of UK renewables
· Record levels of pellet production - 5% increase vs. H1-24
· Strong balance sheet
· £726 million of cash and committed facilities, with debt
maturities profiled towards 2030
· 1.1x Net debt to Adj. EBITDA((5))
· Sustainable and growing dividend - interim dividend of 11.6 pence
per share (H1-24: 10.4 pence per share)
· Expected full year dividend up 11.5% to 29.0 pence per share
(2024: 26.0 pence per share)
· Return of surplus capital beyond investment requirements, in line
with capital allocation policy
· £300 million share buyback programme ongoing, c.£272 million
complete
· Additional £450 million three-year buyback extension to follow
current buyback, supported by cash flow from c.£0.5 billion working capital
inflow from end of Renewables Obligation scheme in 2027
Progress on low-carbon dispatchable CfD Heads of Terms for Drax Power Station
· Legislation in place and CMA review of Gov. process for CfD
compatibility with subsidy control framework complete
· Negotiation of final contract in progress
Full year 2025 expectations for Adj. EBITDA unchanged
· Analyst consensus for 2025 Adj. EBITDA is £899 million, with a
range of £889-910 million((6))
Targeting post 2027 Adj. EBITDA of £600-700m pa - FlexGen, Pellet Production
and Biomass Generation((7))
· FlexGen & Energy Solutions - pumped storage, hydro, Open
Cycle Gas Turbines (OCGTs) and Energy Solutions
· Opportunity from continued rollout of intermittent renewables and
growing system support need
· Pellet Production - current annual EBITDA supported via
low-carbon CfD, opportunities for further improvement
· Opportunities for sales in existing and new markets, including
Sustainable Aviation Fuel (SAF) and own-use
· Positioned to capture value in supply chain as a producer, user
and seller of biomass in the global market
· Biomass Generation - targeting average Adj. EBITDA of £100-200
million pa (Apr-27 to Mar-31)
High quality assets and post 2027 EBITDA targets underpin increased visibility
on free cash flow (2025-2031)((8))
· Includes c.£0.5 billion working capital inflow from Renewables
Obligation scheme, supporting buyback extension
· Expect significant free cash flow post dividend and buybacks to
support investment for growth, subject to returns
Disciplined capital allocation policy supports investment for growth and
returns to shareholders
· Strong balance sheet
· Investment to maintain and grow asset base
· Investment in maintaining good operations from existing asset
base
· FlexGen - OCGT commissioning from H2-25, opportunities for pumped
storage and short duration storage
· Pellet Production - any further investment subject to greater
visibility on post 2027 biomass demand, incl. SAF
· Biomass Generation - development of options for 4GW of grid
access (incl. 1.3GW of current non-biomass capacity) and potential for >1GW
data centre at Drax Power Station (participating in North Yorkshire AI growth
zone application)
· Carbon removals - development of options for carbon removals from
biomass and other technologies - agreement between Elimini and HOFOR to
support development of BECCS in Denmark and associated marketing agreement for
CDRs
· Sustainable and growing dividend
· Nine consecutive years of growth since 2017 with average annual
increase >11% pa
· Return of surplus capital beyond current investment requirements
· c.£472 million of share buybacks since 2017 - c.83 million
shares purchased for an average price of £5.68/share
· c.£28 million outstanding on current £300 million share buyback
· Additional £450 million three-year buyback extension to follow
current buyback, supported by cash flow from c.£0.5 billion working capital
inflow from end of Renewables Obligation scheme in 2027
· The total number of voting rights in Drax Group, excluding
treasury shares, as at 29 July 2025 was c.348.9 million
Sustainability - three major publications in H1-25
· Sustainability Framework - climate positive, nature positive,
people positive roadmap by 2030
· Biomass Sourcing Policy - articulates commitment to sustainable
sourcing
· Climate Transition Plan - lays out climate ambitions, targets and
delivery plan
Operational and financial review
£ million H1-25 H1-24
Adj. EBITDA 460 515
Pumped Storage and Hydro 64 76
Energy Solutions - Industrial & Commercial (I&C) 25 36
Energy Solutions - Small and Medium-sized Enterprise (SME) (7) (14)
Flexible Generation & Energy Solutions 81 98
Pellet Production 74 65
Biomass Generation 332 393
Elimini (16) (20)
Innovation, Capital Projects and Other (11) (21)
Flexible Generation & Energy Solutions (FlexGen) - flexible generation and
system support services
· Pumped Storage and Hydro
· Strong system support performance, inclusive of major planned
outages
· Planned outage programme - units 3 and 4 inlet valve upgrade and
units 1 and 2 super grid transformer
· OCGTs - all three units delayed due to grid connections, first
unit (Hirwaun) expected to commission in late 2025
· Energy Solutions
· I&C - maintaining margin in line with H1-24, some reduction
in volume
· Continued development of system support services via demand-side
response, and electric vehicle services
· Sale of majority of Opus Energy's meter points completed
September 2024, with remaining meter points sale completed May 2025 - reflects
focus on core I&C business and exit from SME market
Pellet Production - North American supply chain supporting UK energy security
and sales to third parties
· Continued improvement in operational and financial performance
· 5% increase in production vs H1-24 (2.1Mt, H1-24: 2.0Mt),
including benefit of Aliceville expansion (commissioned in H1-24)
· 14% increase in Adj. EBITDA vs. H1-24 (£74 million, compared
with H1-24: £65 million)
· Potential long-term offtake opportunity for biomass sales into
new SAF market
· Heads of terms agreed with Pathway Energy for 1Mt pa multi-year
biomass sales from 2029
Biomass Generation - UK energy security with dispatchable renewable generation
and system support services
· Increased level of renewable generation and continuing system
support role
· Lower achieved power prices vs. H1-24, partially offset by
reduction in Electricity Generator Levy
· 7.1TWh (H1-24: 7.0TWh) - reflects demand for dispatchable
generation at times of lower renewable output
· No major planned outages in 2025
· Strong contracted power
· As at 28 July 2025 c.£2.1 billion of forward power sales between
2025 and Q1 2027 on RO biomass, pumped storage and hydro generation assets -
22.5TWh at an average price of £94.2/MWh((9/10))
· RO generation - fully hedged in 2025 and 2026
· A further 5.1TWh of CfD generation contracted for 2025 and 2026
Contracted power sales as at 28 July 2025 2025 2026 2027
Net RO, hydro and gas (TWh)((9)) 10.5 10.2 1.8
Average achieved £ per MWh((10)) 113.7 76.8 79.2
CfD (TWh) 4.3 0.8 -
Other financial information
Capital investment
· Capital investment of £59 million (H1-24: £141 million)
· Growth - £26 million - phasing of OCGT investment to align with
delayed commissioning and operations, and Cruachan units 3 and 4 inlet valve
upgrade and units 1 and 2 super grid transformers
· Maintenance and other - £33 million, no major planned biomass
outage
· 2025 expected capital investment of c.£150-190 million
· Growth - c.£60 million, primarily OCGTs and Cruachan inlet
valves and super grid transformers
· Maintenance and other - c.£110 million, pellet plant maintenance
weighted towards H2-25
Cash and balance sheet
· Cash generated from operations of £378 million (H1-24: £400
million)
· Net working capital outflow of £102 million (H1-24: £93
million), including increase in renewable assets
· Net debt at 30 June 2025 of £1,062 million (31 December 2024:
£992 million), including cash and cash equivalents of £276 million (31
December 2024: £356 million)
· £450 million Revolving Credit Facility extended to 2028 during
H1-25 and c.£171 million term-loans extension completed July 2025
Notes:
(1) Financial performance measures prefixed with "Adjusted/Adj." are
stated after adjusting for exceptional items and certain remeasurements
(including certain costs in relation to the disposal of the Opus Energy SME
meters and change in fair value of financial instruments).
(2) Earnings before interest, tax, depreciation, amortisation, other gains
and losses and impairment of non-current assets, excluding the impact of
exceptional items and certain remeasurements, earnings from associates and
earnings attributable to non-controlling interests.
(3) In January 2023 the UK Government introduced the Electricity Generator
Levy (EGL) which runs to 31 March 2028. The EGL applies to the three biomass
units operating under the RO scheme and run-of-river hydro operations. It does
not apply to the Contract for Difference (CfD) biomass or pumped storage hydro
units. EGL is included in Adj. EBITDA and was £nil in H1-25 (H1-24: £114
million).
(4) Net debt is calculated by taking the Group's borrowings, adjusting for
the impact of associated hedging instruments, lease liabilities and
subtracting cash and cash equivalents. Net debt excludes the share of
borrowings, lease liabilities and cash and cash equivalents attributable to
non-controlling interests. Borrowings includes external financial debt, such
as loan notes, term-loans and amounts drawn in cash under revolving credit
facilities. Net debt does not include financial liabilities such as pension
obligations, trade and other payables, working capital facilities linked
directly to specific payables that provide short extension of payment terms of
less than 12 months and balances related to supply chain finance. Net debt
includes the impact of any cash collateral receipts from counterparties or
cash collateral posted to counterparties. Net debt excluding lease liabilities
was £959 million (31 December 2024: £876 million).
(5) 1.1x Net debt to Adj. EBITDA, on last twelve months (LTM) basis.
(6) As of 28 July 2025, analyst consensus for 2025 Adj. EBITDA was £899
million, with a range of £889-910 million. The details of this consensus are
displayed on the Group's website.
Consensus - Drax Global (https://www.drax.com/investors/consensus/)
(7) Excludes Options for Growth, including development expenditure in
Elimini, Innovation, Capital Projects and Other.
(8) Includes targets for post Adj. EBITDA, c.£0.5 billion working capital
inflow from end of RO scheme, committed and maintenance capex, interest, taxes
and EGL.
(9) Presented net of cost of closing out gas positions at maturity and
replacing with forward power sales.
(10) Includes de minimis structured power sales in 2025, 2026 and 2027
(forward gas sales as a proxy for forward power), transacted for the purpose
of accessing additional liquidity for forward sales from RO units and highly
correlated to forward power prices.
Forward Looking Statements
This announcement may contain certain statements, expectations, statistics,
projections and other information 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, beliefs, 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
statements, expectations, statistics and projections and other information
reflected in such statements are reasonable, they reflect Drax's current view
and no assurance can be given that they will prove to be correct. Such events
and statements involve risks and uncertainties. Actual results and outcomes
may differ materially from those expressed or implied by those forward-looking
statements.
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
include, but are not limited to, factors such as: future revenues being lower
than expected; increasing competitive pressures in the industry; uncertainty
as to future investment and support achieved in enabling the realisation of
strategic aims and objectives; and/or general economic conditions or
conditions affecting the relevant industry, both domestically and
internationally, being less favourable than expected, including the impact of
prevailing economic and political uncertainty; the impact of conflicts around
the world; the impact of cyber-attacks on IT and systems infrastructure
(whether operated directly by Drax or through third parties); the impact of
strikes; the impact of adverse weather conditions or events such as wildfires;
and changes to the regulatory and compliance environment within which the
Group operates. 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.
Results presentation webcast arrangements
Management will host a webcast presentation for analysts and investors at
9:00am (UK time) on Thursday 31 July 2025.
The presentation can be accessed remotely via a live webcast link, as detailed
below. After the meeting, the webcast recording will be made available and
access details of this recording are also set out below.
A copy of the presentation will be made available from 7:00am (UK time) on
Thursday 31 July 2025 for download at:
https://www.drax.com/investors/announcements-events-reports/presentations/
(https://www.drax.com/investors/announcements-events-reports/presentations/)
Event Title: Drax Group plc - Half Year Results 2025
Event Date: Thursday 31 July 2025
9:00am (UK time)
Webcast Live Event Link: https://secure.emincote.com/client/drax/drax033
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Start Date: Thursday 31 July 2025
Delete Date: Saturday 1 August 2026
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For further information, please contact: Christopher.Laing@fticonsulting.com
(mailto:Christopher.Laing@fticonsulting.com)
Website: www.drax.com (http://www.drax.com)
CEO's review
Introduction
Energy security, affordability and decarbonisation - the energy trilemma -
remain important themes in 2025 and at Drax we are continuing to play our part
in addressing these issues.
In the first half of 2025 we have delivered a strong operational and
financial performance, providing the reliable renewable electricity,
flexibility and system support services that the grid needs. Our dispatchable
24/7 generation portfolio, backed up by our resilient North American supply
chain, enables us to operate the UK's largest single source of renewable
power, and through our flexibility we are an enabler of more renewables on the
system, supporting lower overall system costs and decarbonisation.
We see more opportunities to support these efforts, and to that end we are
continuing to develop options for investment in flexible generation and
biomass, where we remain excited by the long-term global potential, including
carbon removals and sustainable aviation fuels.
To support the realisation of these opportunities, across the Group we are
continuing to develop the capabilities to support growth and value creation.
Summary of H1 2025
Adj. EBITDA of £460 million primarily reflects strong renewable power
generation and system support performance in Biomass Generation.
Our balance sheet is strong, with total cash and committed facilities of £726
million and Net debt of £1,062 million. Net debt to Adj. EBITDA on a last
twelve months basis is 1.1 times, significantly below our long-term target of
around 2 times.
We expect to propose a dividend for the 2025 financial year of 29.0 pence per
share, an 11.5% increase on 2024, consistent with our policy to pay a dividend
which is sustainable and expected to grow. As has been our practice since we
implemented the policy in 2017, 40% of the expected full year dividend will be
paid for the first six months of 2025, being 11.6 pence per share.
In addition to delivering a strong operational and financial performance and
value for shareholders, the Group has remained focused on the development of
its sustainability programme, launching a new sustainability framework,
biomass sourcing policy and a climate transition plan.
Low-carbon dispatchable CfD agreement for Drax Power Station (DPS)
In February 2025 Drax agreed a non-binding heads of terms with the UK
Government with regards to a low-carbon dispatchable CfD for DPS which would
cover the period April 2027 to March 2031.
In June 2025, the UK Houses of Parliament voted on the secondary legislation
required to enable the UK Government to enter into low-carbon dispatchable CfD
agreements with biomass generators, which passed into law in June. The
Competition and Markets Authority review of government process for CfD
compatibility with subsidy control framework completed in July. Negotiations
on the precise details of the final contract for DPS are ongoing.
Under the proposed agreement the CfD scheme will apply to up to c.6TWh of
power annually from DPS, paid against a season ahead reference price (as per
the current CfD scheme). Drax will then seek to maximise generation from its
four biomass units at times of high demand and reduce generation at times of
low demand, using the station's flexibility to support UK energy security. The
proposed agreement also allows for system support and ancillary services.
Drax is targeting average Adj. EBITDA from DPS of £100-200 million pa during
the agreement period, which is inclusive of any impact of a proposed gain
share mechanism. This target excludes any benefit from incremental merchant
generation above the CfD threshold.
Continuing to target post-2027 Adj. EBITDA of £600-700 million pa from
Flexible Generation and Energy Solutions (FlexGen), Pellet Production and
Biomass Generation operations
Taking DPS together with the Group's FlexGen and Pellet Production businesses,
the Group is targeting post-2027 Adj. EBITDA of £600-700 million pa. This is
before development expenditure in Elimini, Innovation, Capital Projects and
Other.
Capital discipline, growth and returns to shareholders
Capital discipline is central to our approach and, in line with our capital
allocation policy, in August 2024 we launched a £300 million share buyback
programme, which has to date bought back £272 million worth of shares.
Our balance sheet is strong and we are investing to maintain a strong
operational performance and pay a sustainable and growing dividend. Inclusive
of the Group's target for post 2027 Adj. EBITDA of £600-700 million pa from
FlexGen, Pellet Production and Biomass Generation, we now have greater
visibility of cash flows through to 2031.
Looking to the future, we stand ready to invest in opportunities for growth
subject to the right risk-return balance. In the short term, those
opportunities are not sufficiently developed and so, in line with the Group's
capital allocation policy and the benefit of working capital inflows
associated with the end of the Renewables Obligation scheme in 2027, we expect
to extend the current share buyback programme for the purchase of an
additional £450 million of Drax shares over a three-year period. The
programme is expected to follow the current share buyback and complete by the
end of 2028.
The Group continues to see capital returns as an effective investment in the
business, to create value for shareholders, which is complementary to a strong
balance sheet and the continued development of opportunities for growth.
FlexGen operations
The UK's plans to achieve net zero by 2050 will require the electrification of
sectors such as heating and transport, resulting in a significant increase in
demand for electricity in addition to new demand areas like data centres. We
believe that intermittent renewable and inflexible low-carbon energy sources
- wind, solar, and nuclear - could help meet this demand. However, this will
only be possible if other power sources can provide the dispatchable power and
non-generation system support services required to ensure security of supply.
We believe that the retirement of older thermal generation assets and
increased reliance on intermittent renewables, as well as an increase in power
demand, will drive a growing need for dispatchable power and system support
services, creating long-term earnings opportunities for, and value from, the
Group's FlexGen assets. Whilst we believe that the trend is clear it is hard
to forecast from year to year, being dependent on weather and renewable
activity as much as underlying commodity prices.
Pumped storage and hydro
The Group's pumped storage and hydro business performed well, with Adj. EBITDA
of £64 million (H1 2024: £76 million) - a good performance in line with the
Group's target for post-2027 Adj. EBITDA, which reflects continued demand for
dispatchable and renewable power generation and support services.
H1 2025 also included a major programme of planned outage works at Cruachan
Power Station, including an upgrade of the main inlet valves on units 3 and 4.
In the second half of 2025, the main inlet valves for units 1 and 2 are
expected to be replaced.
Work is ongoing on the £80 million investment to refurbish and upgrade units
3 and 4 through 2027, underpinned by a 15-year Capacity Market agreement worth
over £220 million (c.£15 million Adj. EBITDA pa), and is expected to add
40MW of additional capacity by 2027 and improve unit operations.
OCGTs
Commissioning of the first of three new-build OCGT sites in England and Wales
is expected to commence in the second half of 2025. This is later than
originally planned, primarily due to delays in grid connection by the relevant
authorities. The OCGTs will provide combined capacity of c.900MW and be
remunerated under 15-year Capacity Market agreements, worth over £260
million, in addition to revenues from peak power generation and system
support services.
Energy Solutions
Adj. EBITDA of £18 million was down 18% on H1 2024 (£22 million), which
reflects a good underlying performance in our Industrial & Commercial
(I&C) and renewables services businesses, and a loss-making Small &
Medium-sized Enterprise (SME) business.
In May 2025, Drax completed the sale the remaining non-core Opus SME customer
meter points. The sale is expected to be supportive of the Group's target for
post-2027 Adj. EBITDA, with a leaner, more focused I&C business model,
which can better support customers with their energy needs and decarbonisation
objectives.
Pellet Production
Adj. EBITDA of £74 million (H1 2024: £65 million) was an increase of 14%,
which reflects an increase in production, including the benefit from an
expansion of the Aliceville pellet plant (commissioned in H1 2024).
As a part of the Group's post 2027 targets, the proposed low-carbon
dispatchable CfD agreement at DPS is expected to utilise c.2Mt of own-use
pellets from the US South (in addition to third-party volumes). This, together
with existing sales to third parties, primarily in Asia, provides a good
underpin to the current level of earnings from Pellet Production.
In order to support long-term earnings growth and maximise the value of Pellet
Production, Drax is continuing to assess options for own-use and third-party
sales, from existing and new markets, including Sustainable Aviation Fuel
(SAF), which could represent a major market opportunity for biomass pellets.
Drax is continuing its engagement with Pathway Energy LLC (Pathway), which is
developing a SAF project in Port Arthur, Texas. As a part of its process with
Pathway, Drax has agreed heads of terms on a multi-year agreement that could
see Drax supply c.1Mt pa of sustainable biomass for the production of SAF at
the Port Arthur project. The project could provide an attractive home market
for the Group's US pellet production, with pricing expected to be consistent
with the Group's target for post-2027 Adj. EBITDA.
Biomass Generation
Adj. EBITDA of £332 million was a decrease of 16% on H1 2024 (£393 million).
This reflects a combination of lower forward contracted prices compared to H1
2024, partially offset by a continued high level of generation, demand for
system support services and value from renewables. In addition, there are no
major planned outages in 2025.
Between April 2024 and March 2025 (the most recent period for which data is
available) DPS generated over 5% of the UK's electricity and 11% of its
renewable power. During this period, it produced on average 19% of the UK's
renewable power at times of peak demand and on certain days over 50%. During
H1 2025, low wind speeds led to lower levels of wind generation and higher
demand for power from DPS, illustrating its ongoing importance to security of
supply in the UK.
The Group remains focused on opportunities to maximise value from its asset
base and in March 2025 entered into a 20-year joint venture agreement with
Power Minerals Limited which will allow for the development of a facility
adjacent to DPS which will process pulverised fuel ash into a material which
can be sold to the construction industry and used in the production of cement
with a lower carbon footprint.
The new facility is expected to begin operations by the end of 2026 and Drax
believes the project could generate incremental Adj. EBITDA of c.£5 million
pa for Drax post 2027 through to 2046. There is no capital investment required
by Drax.
Opportunities for investment in growth and value creation
The Group remains focused on opportunities for growth and value creation
across its strategies for FlexGen, biomass and carbon removals.
The Group's balance sheet is strong, with increasing visibility of cash flows
through 2031, which can support investment. In the current environment the
regulatory, political and commercial frameworks to support large-scale capital
investment in BECCS and pumped storage hydro are not sufficiently developed to
provide an appropriate risk-return balance and so whilst we continue to see
these as important options, which can provide pragmatic solutions to the
energy trilemma, we do not expect these projects to be operational before the
2030s. This will allow free cash flows to be deployed in short and medium-term
investments for growth and value in other areas, including maximising the
value of the existing asset base.
DPS - generation and energy security
DPS is the largest power station in the UK and the country's largest single
source of renewable power.
The 4GW site comprises four fully flexible and independent biomass units
providing 2.6GW of capacity for secure 24/7 renewable power and a wide range
of system support services, in addition to a further 1.3GW of grid access.
NESO's Future Energy Scenarios indicate a doubling of power demand by 2050,
via electrification and new sources of demand, including data centres. In
addition, capacity growth will predominantly come from intermittent renewables
and inflexible nuclear, helping the system to decarbonise but placing
additional pressures and costs on the management of the system and security of
supply.
We believe that the size, flexibility, and location of the site make it an
important long-term part of the UK energy system and the Group is focused on
options to maximise value from the 4GW site, which could utilise multiple
generation technologies including its existing biomass generation as well as
new-build battery, solar and other dispatchable generation sources.
DPS - data centre
We have continued to engage with data centre developers in relation to the
potential to co-locate a data centre at DPS, with a view to utilising the
station's large-scale dispatchable power generation and cooling solutions to
provide a long-term behind-the-meter power purchase and services agreement to
a data centre.
As part of the development of this option, Drax is a participant in the North
Yorkshire AI growth zone application to the UK Government, which is aiming to
support accelerated planning and the development of AI growth zones across the
UK.
The development of a data centre option could also be supportive of a
long-term option for large-scale high-integrity carbon removals.
FlexGen - batteries
In line with our ambition to be a UK leader in flexible renewable
generation, the Group continues to assess opportunities for investment in
FlexGen. We see batteries as an important adjacent technology to our FlexGen
portfolio, adding fast response capabilities to our long duration pumped
storage and OCGT assets, which could allow the portfolio to provide a wider
range of system support services to the grid.
The Group is continuing to assess organic and inorganic opportunities for
incremental capital investment in this area. Any investment would be subject
to the Group's capital allocation policy and appropriate returns on capital.
FlexGen - pumped storage
In 2024, Drax completed initial design and engineering work on an option for a
600MW expansion of Cruachan (Cruachan II). Drax believes that the Cruachan II
project is well aligned with the long-term system need for flexible generation
and energy storage and, given its location, is well placed to support system
constraints between Scotland and England.
In April 2025, the UK Government invited applications from developers for the
first phase of a cap and floor scheme, intended to incentivise the development
of new long duration capacity.
The projected cost of Cruachan II has risen over the past two years, whilst at
the same time the recoverability of all capital invested in the project
remains unclear. Therefore, Drax did not participate in the first phase of the
cap and floor scheme but will retain the option for potential future
development, subject to an appropriate balance of risk and return.
In addition to the Cruachan II project and existing upgrade of units 3 and 4,
Drax is continuing to assess opportunities for incremental investment in the
existing Cruachan site.
Elimini
The Group continues to see carbon removals via biomass and other technologies
as a cost-effective way to deliver both energy security and high integrity
carbon removals at scale.
The current regulatory environment in the UK and US makes the risk-return
profile on large-scale capital projects less attractive in the short-term.
However, the Group continues to see significant opportunity and is working to
develop capital-light models, which can support the development of the Carbon
Dioxide Removal (CDR) certificates market and to progress wholesale and
origination market opportunities for the sale of CDRs.
In this regard, in July 2025, Elimini entered into an agreement with HOFOR (a
Danish energy provider), which would see Elimini use its experience to support
HOFOR in the development of an option to add BECCS to its existing
Amagerværket biomass combined heat and power plant in Copenhagen. Elimini
would also lead the sales and marketing pathway for the sale of CDRs from the
project.
Outlook
We are continuing to target post-2027 Adj. EBITDA of £600-700 million pa from
our FlexGen, Pellet Production and Biomass Generation businesses, maximising
value from the business today, while continuing to identify opportunities for
growth across our strategies for FlexGen, biomass and carbon removals.
We will continue to apply our capital allocation policy with a focus on
balance sheet strength, investment in the core business, a sustainable and
growing dividend, and to the extent there are residual cash flows beyond the
current needs of the Group, additional returns to shareholders.
Through a disciplined approach to capital allocation and development costs, we
expect to create opportunities for investment in growth and value creation,
underpinned by strong cash generation and attractive returns for shareholders.
Will Gardiner
CEO
CFO's financial review
Six months ended 30 June
2025 2024
Financial performance (£m) Total gross profit 754 979
Operating expenses (320) (348)
Depreciation, amortisation and impairment of non-current assets (136) (108)
Other 3 (5)
Total operating profit 301 518
Exceptional items and certain remeasurements 21 (115)
Adjusted operating profit 322 402
Adjusted depreciation, amortisation and similar charges and share of losses 138 113
from associates
Adjusted EBITDA 460 515
Capital expenditure (£m) Capital expenditure 59 141
Cash and Net debt (£m unless otherwise stated) Cash generated from operations 378 400
Net debt 1,062 1,159
Net debt to Adjusted EBITDA((1)) (times) 1.1 1.0
Cash and committed facilities 726 515
Earnings (pence per share) Adjusted basic 65.6 65.6
Total basic 61.2 88.1
Distributions (pence per share) Interim dividend 11.6 10.4
Throughout this document we distinguish between Adjusted measures and Total
measures, which are calculated in accordance with International Financial
Reporting Standards (IFRS). We calculate Adjusted financial performance
measures, which exclude income statement volatility from derivative financial
instruments and the impact of exceptional items. This allows management and
stakeholders to better compare the performance of the Group between the
current and previous period without the effects of this volatility and one-off
or non-operational items. Adjusted financial performance measures are
described in more detail in the APMs glossary, with a reconciliation to their
closest IFRS equivalents in note 6. Tables in this financial review may not
add down or across due to rounding.
(1) Adjusted EBITDA calculated on a last twelve months (LTM) basis.
Introduction
Adjusted EBITDA of £460 million represents strong operational and financial
performance across all segments of our business. The expected decrease
compared to £515 million in H1 2024 primarily reflects a lower achieved power
price. During the period, we generated cash from operations of £378 million,
a slight decrease on H1 2024 (£400 million). Our Net debt: last twelve months
Adjusted EBITDA ratio of 1.1 times (H1 2024: 1.0 times) remains significantly
below our long-term target of around 2 times and during the period we have
further strengthened our balance sheet, extending the average maturity of our
debt to late 2027 and extending the Revolving Credit Facility (RCF) by a year
to 2028.
Capital allocation
Our capital allocation policy remains focused on balance sheet strength,
investment in the core business, a sustainable and growing dividend and, to
the extent there are residual cash flows beyond the current needs of the
Group, additional returns to shareholders.
Maintain credit rating
During the first half of 2025 the Group extended the maturity of the undrawn
£450 million RCF and during July two term loans totalling c.£171 million
were extended from 2027 to 2028.
During the second quarter of 2025, the Group's Issuer Credit Ratings were
reaffirmed as 'BB+' by Fitch and S&P and as 'BBB (low)' by DBRS, with a
Stable Outlook in each case.
Invest in core business - capital expenditure
Capital expenditure of £59 million (H1 2024: £141 million) consists of £26
million of growth expenditure, £25 million of maintenance, and £8 million of
Other (including HSE and IT). Of the £26 million growth expenditure, £5
million related to the OCGTs (H1 2024: £46 million). The first of the three
OCGTs is now expected to commission during late 2025. Growth expenditure also
included £7 million in relation to the ongoing upgrade of Cruachan units 3
and 4 (H1 2024: £15 million). Capitalised spend on UK BECCS was less than £1
million (H1 2024: £2 million).
Sustainable and growing dividend
The Board expects to propose a dividend for the 2025 financial year of 29.0
pence per ordinary share, an 11.5% increase on 2024, consistent with our
policy to pay a dividend which is sustainable and expected to grow. As has
been our practice, 40% of the expected full year dividend, or 11.6 pence per
ordinary share will be paid as an interim dividend. The interim dividend will
be paid on 24 October 2025 with a record date of 26 September 2025 (ISIN:
GB00B1VNSX38, TIDM: DRX).
Return surplus capital beyond current investment requirements
To the extent there is cash in the business in excess of current investment
requirements we will look to return this to shareholders. In July 2024, we
announced a £300 million share buyback programme, which as of 30 June 2025
was £260 million complete.
In line with our policy and reflecting the expected capital requirements of
the Group, we are extending this buyback programme and will purchase an
additional £450 million of Drax shares over a three-year period. The
extension will follow the current buyback programme and is expected to be
complete by the end of 2028.
Financial performance
Adjusted EBITDA by business
Flexible Generation & Energy Solutions (FlexGen)
Adjusted EBITDA in our Hydro business of £64 million reduced compared to H1
2024 (£76 million), reflecting planned outage work at Cruachan and
comparatively low levels of rainfall for the run-of-river schemes.
Adjusted EBITDA in Energy Solutions of £18 million (H1 2024: £22 million)
comprised £25 million from our Industrial and Commercial (I&C) and
renewables services business (H1 2024: £36 million) partially offset by a
loss of £7 million from our Small and Medium-sized Enterprise (SME) business
(Opus) (H1 2024: a loss of £14 million). I&C and renewables services
earnings reflect a consistent margin on contracted power prices. The sale of
the remaining meter points in the SME business completed in H1 2025. The wind
down of this business will be substantially complete by the end of 2025.
Pellet Production
Adjusted EBITDA of £74 million increased 14% from H1 2024 (£65 million).
Production in the period totalled 2.1Mt (H1 2024: 2.0Mt) and shipments
totalled 2.5Mt (H1 2024: 2.5Mt). Of the 2.5Mt shipped, 1.5Mt was to Drax
Power Station (DPS) (H1 2024: 1.5Mt). During the period, 0.4Mt of pellets were
acquired from third parties (H1 2024: 0.5Mt).
Biomass Generation
Adjusted EBITDA from Biomass Generation was £332 million (H1 2024: £393
million), primarily reflecting a lower achieved power price. DPS produced
7.1TWh (H1 2024: 7.0TWh) of electricity, providing dispatchable, renewable
generation when the grid needed it most.
We have power hedges in place to Q1 2027 and are progressing the finalisation
of the CfD for the period Q2 2027 to Q1 2031. This gives us strong visibility
over cash flows from DPS and free cashflow in the Group. In the short term, as
we develop these options, we are realising cash flows at a greater rate than
we depreciate the DPS assets. Accordingly, the headroom on the impairment
analysis included in the 2024 Annual report and accounts, page 185, is
reducing. We will continue to be disciplined in the allocation of capital,
including any investment in DPS to generate cash flows beyond Q1 2031.
Options for Growth (Innovation, Capital Projects, and Other)
Development expenditure in H1 2025 totalled £34 million (H1 2024: £32
million). Of this, £16 million related to Elimini (our carbon removals
business) (H1 2024: £20 million). As communicated during H1 2025, Drax will
not participate in this first phase of the cap and floor scheme for the
Cruachan expansion but will retain the option for potential future
development, subject to an appropriate balance of risk and return. We will
continue to be disciplined with development expenditure.
In Other, intra-group eliminations moved to a credit of £7 million in H1 2025
from a charge of £9 million in H1 2024, because of a change in the volume of
pellets in transit.
Total operating profit
Total operating profit of £301 million compared to £518 million in H1 2024.
In addition to the factors discussed above, Exceptional items and certain
remeasurements also reduced, from a credit of £115 million in H1 2024 to a
charge of £21 million in H1 2025. This was attributable to gas prices and
foreign exchange movements. The Exceptional items in operating expenses in H1
2025 relate to the disposal of the SME customer book. Further information on
Exceptional items and certain remeasurements can be found in note 6
(Alternative performance measures).
Depreciation, amortisation and impairments of £136 million is above H1 2024
(£108 million), driven by an increase in the Biomass Generation business and
impairments of certain Pellet Production assets of £14 million.
Profit after tax and Earnings per share
Total net finance and foreign exchange costs for H1 2025 were £21 million, a
reduction from H1 2024 (£54 million). Of the difference £23 million is
attributable to foreign exchange movements. At 30 June 2025 the weighted
average interest rate payable on the Group's borrowings was 5.4% (31 December
2024: 5.4%).
The expected effective tax rate for 2025 of 22% is below 2024 (30%) and
reflects a lower amount of EGL, which is not allowable for tax purposes. Lower
assessable profits meant the H1 2025 EGL charge of £nil was significantly
lower than the H1 2024 charge of £114 million. The tax impact of this
reduction in EGL was 6%. The effective tax rate is below the headline
corporation tax rate in the UK of 25% because of benefits from Patent Box and
research and development tax credits.
Adjusted basic EPS was 65.6 pence (H1 2024: 65.6 pence) and Total basic EPS
was 61.2 pence (H1 2024: 88.1 pence). The average number of shares used in
deriving these calculations was 360.7 million (H1 2024: 386.0 million).
The number of outstanding shares at 30 June 2025 was 351.0 million,
a 5% reduction on 31 December 2024 (369.9 million), reflecting the ongoing
share buyback.
Cash and Net debt
Net cash movements
Cash generated from operations, inclusive of working capital, was £378
million (H1 2024: £400 million). The net working capital outflow of £102
million was broadly in line with H1 2024 (£93 million) and predominantly
reflects a build-up of ROC assets in the first half of the year, which
reverses in the second half as the previous year's ROCs are settled.
Cash outflows on purchases of property, plant and equipment and intangibles
include repayments of deferred letters of credit from previous periods. This
led to a cash outflow of £144 million, more than the amount capitalised in
the period of £59 million.
Liquidity
30 June 31 December 2024 30 June
2025 £m 2024
£m £m
Cash and cash equivalents 276 356 263
RCF available but not utilised 450 450 252
Cash and committed facilities 726 806 515
Cash and committed facilities at 30 June 2025 provided substantial headroom
over our short-term liquidity requirements. No cash has been drawn under our
revolving credit facilities (RCFs) since 2018.
Net debt and Net debt to Adjusted EBITDA
30 June 31 December 2024 30 June 2024
2025 £m £m
£m
Cash and cash equivalents 276 356 263
Current borrowings (291) (119) (120)
Non-current borrowings (908) (1,058) (1,143)
Impact of hedging instruments and NCI (36) (55) (35)
Lease liabilities (103) (117) (123)
Net debt (1,062) (992) (1,159)
LTM Adjusted EBITDA 1,010 1,064 1,107
Net debt to Adjusted EBITDA 1.1 0.9 1.0
Going concern and viability
The Group's financial performance in H1 2025 was strong. Cash and committed
facilities at 30 June 2025 provided substantial headroom over our short-term
liquidity requirements.
The Group refreshes its business plan and forecasts throughout the year,
including scenario modelling designed to test the resilience of the Group's
financial position and performance to several possible downside cases. Based
on its review of the latest forecast, the Board is satisfied that the Group
has sufficient headroom in its cash and committed facilities and covenants
headroom, combined with available mitigating actions, to be able to meet its
liabilities as they fall due across a range of scenarios. Consequently, the
Directors have a reasonable expectation that the Group will continue in
existence for a period of at least twelve months from the date of the approval
of the interim financial statements and have therefore adopted the going
concern basis.
Andy Skelton
CFO
The contents of the CEO's review and CFO's financial review were approved by
the Board on 30 July 2025.
Principal risks and uncertainties
The Group's financial and operating performance, as well as the realisation of
its strategy, is subject to various risks and uncertainties. The nature of
these risks ranges from those which are not directly within the Group's
control, such as the wider economic and political environment, to others which
the Group is better placed to influence, such as the development and execution
of our strategy or management of health and safety. We seek to address the
potential impact of all risks faced by the Group through the application of
policies approved by the Board and management, applying the Group's risk
management framework and appropriate mitigations.
The Audit Committee, as part of its half year processes, considered reports
from management reviewing the Group's Principal Risks and Uncertainties and
how these might evolve during the second half of 2025. This review took
account of the recent unrest in the Middle East, broader geopolitical
instability and the introduction of new or increased US tariffs. These areas
are discussed further below.
As a result of its assessment, and consideration of the below factors, the
Board is satisfied that the Group's Principal Risks, as reported in the 2024
Annual report and accounts, remain materially unchanged and are not currently
expected to materially change during the remainder of 2025.
Large-scale capital projects continue to be central to the Group's strategy
and are therefore considered to be an emerging risk. This is despite ongoing
challenges with regards to increasing costs and delays in the establishment of
appropriate government support mechanisms which have resulted in some projects
being delayed or paused. The business is currently undertaking the annual
review of its strategy.
Further details of the Group's Principal Risks and Uncertainties can be found
on pages 70-83 of the Group's 2024 Annual report and accounts, which is
available at www.drax.com (http://www.drax.com) .
US trade tariffs
The evolving status of tariffs imposed by the US Government is being closely
monitored and we continue to liaise with appropriate trade bodies, business
groups, US federal government and UK government to understand potential
scenarios and possible impacts on the Group.
To date the business has not been materially impacted by tariffs implemented
or announced by the US, or by other countries in response. This includes the
current proposal related to US port fees though it is noted that the US port
fees plan remains subject to change ahead of its finalisation which is
expected during H2 2025, as well as US tariffs placed on Canadian lumber which
has the potential to limit the availability, or increase the price of, fibre.
We also continue to monitor the potential broader impacts of US tariffs on the
global economy, such as heightened inflation, increased interest rates, and
volatility in foreign exchange rates and commodity prices.
As a result of the above considerations, the Board does not believe there has
been a material change in the Group's Principal Risks as a result of newly
announced or implemented trade tariffs during H1 2025.
Middle East conflict
Despite the current Iran-Israel ceasefire, the possible implications for the
Group of the recent conflict in the Middle East and the potential for this to
re-escalate have been considered, including market volatility, supply chain
disruption should the Strait of Hormuz be closed, and pricing pressures.
Current assessments indicate that the likelihood of this having a material
impact on the business is low. However, should this risk crystallise, it has
the potential to impact our operational ability to deliver our hedged
positions. Buying back these hedged positions, as a result of supply chain
disruption, could result in a material financial cost to the Group depending
on movements in relevant power prices.
We continue to closely monitor the situation, noting that tensions in the
Middle East are reflective of a broader increase in geopolitical volatility in
recent years. As a result of the above considerations, the Board does not
believe there has been a material change in the Group's Principal Risks as a
result of recent conflict in the Middle East.
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
a) The Condensed consolidated interim financial statements have been prepared
in accordance with IAS 34 "Interim Financial Reporting";
b) The interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
c) The interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions and changes
therein).
By order of the Board
Will Gardiner
Chief Executive Officer
30 July 2025
Condensed consolidated interim financial statements
Introduction
The Condensed consolidated interim financial statements provide information
about the financial performance (Condensed consolidated income statement and
Condensed consolidated statement of comprehensive income), financial position
(Condensed consolidated balance sheet), reserves (Condensed consolidated
statement of changes in equity), and cash flows (Condensed consolidated cash
flow statement) of Drax Group plc (the Company) together with all the entities
controlled by the Company (collectively, the Group).
The notes to the Condensed consolidated interim financial statements provide
additional information on certain items in the Condensed consolidated income
statement, Condensed consolidated statement of comprehensive income, Condensed
consolidated balance sheet, Condensed consolidated statement of changes in
equity, and Condensed consolidated cash flow statement. In general, the
additional information in the notes to the Condensed consolidated interim
financial statements is either required by International Financial Reporting
Standards (IFRS), other regulations or has been included to facilitate
increased understanding of the condensed consolidated primary statements.
Basis of preparation
The Condensed consolidated interim financial statements have been prepared
using accounting policies consistent with the United Kingdom adopted
International Accounting Standards in accordance with UK adopted IAS 34
'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority. The
information provided in this report in respect of the year ended 31 December
2024 does not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006 but is derived from those accounts. A copy of the statutory
accounts for that year has been delivered to the Registrar of Companies. The
Independent Auditor's report on those accounts was not qualified, did not draw
attention to any matters by way of emphasis and did not contain statements
under Section 498(2) or (3) of the Companies Act 2006.
The Condensed consolidated interim financial statements have been prepared on
the going concern basis and on the historical cost basis, except for certain
assets and liabilities that have been measured at fair value, principally
derivative financial instruments, and the assets and liabilities of the
Group's defined benefit pension scheme, measured at fair value and using the
projected unit credit method respectively.
The accounting policies adopted in the preparation of the Condensed
consolidated interim financial statements are consistent with those followed
in the preparation of the Group's 2024 Annual report and accounts, except for
the adoption of new standards, interpretations and amendments effective as of
1 January 2025.
The adoption of new standards, interpretations and amendments in the current
period has not had a material impact. The Group has not early-adopted any
standard, interpretation or amendment that has been issued but was not
effective at 30 June 2025. A full listing of new standards, amendments, and
pronouncements under IFRS applicable to these Condensed consolidated interim
financial statements is presented in note 12.
Going concern
In assessing going concern the Directors have considered the period up to
September 2026, which reflects a period of at least 12 months from the date of
signing the Condensed consolidated interim financial statements. The Group's
business activities, along with future developments that may affect its
financial performance, financial position and cash flows, are discussed in the
CEO's review, and current market conditions and financial performance are
considered in the CFO's financial review.
The going concern assessment primarily focuses on cash flow forecasts,
available liquidity and continued compliance with banking covenants over the
period being assessed. At 30 June 2025, the Group had cash and committed
facilities of £726.0 million (see note 6) and borrowings of £1,198.9 million
(see note 7).
Based on the assessment performed, the Group is expected to have continued
significant liquidity headroom and strong financial covenant headroom. The
Directors have therefore concluded that they have a reasonable expectation
that the Group will continue to meet its liabilities as they fall due for a
period of at least 12 months from the date these Condensed consolidated
interim financial statements were authorised for issue and have therefore
adopted the going concern basis of preparation.
The Condensed consolidated interim financial statements were approved by the
Board on 30 July 2025.
Judgements and estimates
The preparation of financial statements requires judgement to be applied in
forming the Group's accounting policies. It also requires the use of estimates
and assumptions that affect the reported amounts of assets, liabilities,
income and expenditure. Actual results may subsequently differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis, with
revisions recognised in the period in which the estimates are revised and in
any future periods affected. Judgements are also reviewed on an ongoing basis
to ensure they remain appropriate, factoring in any changes or new
information. As part of these reviews, the Group considers whether there are
any new critical accounting judgements or key sources of estimation
uncertainty, and whether the previously disclosed critical accounting
judgements and key sources of estimation uncertainty are still appropriate to
be disclosed as such.
These reviews have concluded that the critical accounting judgements and key
sources of estimation uncertainty applicable to the preparation of the
Condensed consolidated interim financial statements are the same as those
described on pages 163-164 of the Group's 2024 Annual report and accounts. In
each case, judgements have been applied consistently and estimates have been
made using a consistent methodology, with inputs and assumptions updated as
appropriate to reflect the Group's latest forecasts and prevailing market
conditions at the reporting date.
Comparative information
The Group provides comparative financial information in these Condensed
consolidated interim financial statements for the six months ended 30 June
2024 and as at 31 December 2024. Where included within text, Condensed
consolidated income statement comparatives refer to the six months ended 30
June 2024 and Condensed consolidated balance sheet comparatives are as at 31
December 2024, unless otherwise stated.
Alternative performance measures
The Group uses alternative performance measures (APMs) throughout the
Condensed consolidated interim financial statements that are not defined
within IFRS but provide additional information about the Group's financial
performance and position that is used by the Board to evaluate the Group's
financial performance. These measures have been defined internally and may
therefore not be comparable to similar APMs presented by other companies.
Additionally, certain information presented is derived from amounts calculated
in accordance with IFRS but is not itself a measure defined by IFRS. Such
measures should not be viewed in isolation or as an alternative to the
equivalent IFRS measure.
Defined below are the key APMs used by the Board to assess financial
performance. Other APMs include Adjusted diluted earnings per share (Adjusted
diluted EPS), cash and committed facilities, and capital expenditure. The APMs
and their definitions are consistent with those presented as at 31 December
2024, apart from Capital expenditure which now excludes capitalised interest
and plant spares (see the capital expenditure by segment table in note 2 for
further details of this change). See the APMs glossary table at the end of
this report for full details of all APMs used, including the APM's closest
IFRS equivalent, the reason why the APM is used by the Group and a definition
of how each APM is calculated. See note 6 for further details and calculations
of the Group's APMs.
Adjusted results
The Group's financial performance for the period, measured in accordance with
IFRS, is shown in the Total results column on the face of the Condensed
consolidated income statement. Exceptional items and certain remeasurements
are deducted from the Total results in arriving at the Adjusted results for
the period. The Group's Adjusted results are consistent with the way the Board
assesses the performance of the Group. Adjusted results are intended to
reflect the underlying trading performance of the Group and are presented to
assist users of the Condensed consolidated interim financial statements in
evaluating the Group's trading performance and progress against strategic
objectives.
Exceptional items and certain remeasurements
Exceptional items are those transactions that, by their nature, do not reflect
the trading performance of the Group in the period. For a transaction to be
considered exceptional, management considers the nature of the transaction,
the frequency of similar events, any related precedent, and commercial
context. The application guidance for this policy includes de minimis
thresholds for classifying items as exceptional. Presentation of a transaction
as exceptional is approved by the Audit Committee in accordance with an agreed
policy.
The policy is reviewed by the Audit Committee biennially, with the last review
taking place during April 2025. This review did not result in any changes to
the policy.
Certain remeasurements comprise fair value gains or losses on derivative
contracts to the extent that those contracts do not qualify for hedge
accounting, or hedge accounting is not effective. Under IFRS, these are
recorded in revenue, cost of sales, interest payable and similar charges or
foreign exchange gains or losses. The Group's forward contracting activity is
for the purpose of economic hedging and, therefore, the contracted price at
delivery or maturity is relevant to the Group and its performance, rather than
how the contracted price compares to the prevailing market price at each
reporting date or on maturity, as the Group is not seeking to make trading
profits on these contracts through market price movements.
The impact of excluding these fair value remeasurements from Adjusted results
is to reflect commodity sales and purchases at contracted prices (the price
paid or received in respect of delivery of the commodity in question) in
Adjusted results in the period the transaction takes place, and also take into
account the impact of associated financial derivative contracts (such as
forward foreign currency purchases) in Adjusted results on maturity, being the
period these contracts are intending to economically hedge.
Further information on exceptional items and certain remeasurements in the
current and comparative periods is included in note 6.
Adjusted EBITDA
Adjusted EBITDA is a primary measure used by the Board to assess the financial
performance of the Group as it provides a more comparable assessment of the
Group's trading performance year-on-year. It is also a key metric used by the
investor community to assess the performance of the Group's operations.
The Group defines Adjusted EBITDA as earnings before interest, tax,
depreciation, amortisation, other gains or losses and impairment of
non-current assets, excluding the impact of exceptional items and certain
remeasurements (defined above). Adjusted EBITDA excludes any earnings from
associates and Adjusted EBITDA directly attributable to non-controlling
interests.
Adjusted basic earnings per share
Adjusted basic earnings per share (Adjusted basic EPS) is Adjusted profit
attributable to the owners of the parent company divided by the weighted
average number of ordinary shares outstanding during the period. Repurchased
shares held in the treasury shares reserve are not included in the weighted
average calculation of shares. This is the same denominator used when
calculating Total basic earnings per share (Total basic EPS). This metric is
used in discussions with the investor community.
Borrowings
Borrowings includes external financial debt, such as loan notes, term loans
and amounts drawn in cash under revolving credit facilities (RCFs) (see note
7). Borrowings does not include other financial liabilities such as pension
obligations, trade and other payables, and working capital facilities linked
directly to specific payables (such as credit cards and deferred letters of
credit) that provide a short extension of payment terms of less than 12 months
(see note 8). The Group does not include balances related to supply chain
financing in borrowings (and therefore Net debt), as there are no changes to
the Group's payment terms under this arrangement, nor would there be if the
arrangement was to cease.
Net debt
The Group defines Net debt as borrowings (see note 7) and lease liabilities
less cash and cash equivalents. Borrowings denominated in foreign currencies,
where the Group has entered into hedging arrangements associated with this
currency exposure, are translated at the hedged rate for the purposes of
calculating Net debt. Net debt excludes the share of borrowings, lease
liabilities and cash and cash equivalents attributable to non-controlling
interests. See note 6 for further details on the Group's definition of Net
debt.
Net debt is a key metric used by debt rating agencies and the investor
community, often in conjunction with other financial measures (e.g. Adjusted
EBITDA), to measure a company's ability to repay its debt or assess its
leverage against peers or relevant benchmarks.
Net debt to Adjusted EBITDA ratio
This metric is the ratio of Net debt to Adjusted EBITDA on a last twelve
months (LTM) basis, expressed as a multiple. The Group has a long-term target
for Net debt to Adjusted EBITDA of around 2.0 times.
The Net debt to Adjusted EBITDA ratio gives an indication of the size of the
Group's Net debt in relation to its trading performance and is a key metric
used by debt rating agencies and the investor community to assess the
performance of the Group's operations.
Condensed consolidated income statement
Six months ended 30 June Six months ended 30 June
2025 (Unaudited) 2024 (Unaudited)
Notes Exceptional items and certain remeasure- Total Exceptional items and certain remeasure- Total
ments results
ments results
Adjusted results(()(1))
£m
£m
Adjusted results(()(1))
£m
£m
£m
£m
Revenue 3 2,601.1 45.9 2,647.0 3,062.8 95.5 3,158.3
Cost of sales (1,827.8) (65.2) (1,893.0) (2,085.5) 19.7 (2,065.8)
Electricity Generator Levy - - - (113.7) - (113.7)
Gross profit 773.3 (19.3) 754.0 863.6 115.2 978.8
Operating and administrative expenses (309.7) (3.4) (313.1) (333.1) - (333.1)
Impairment losses on financial assets (2.7) (4.2) (6.9) (15.3) - (15.3)
Depreciation (114.4) - (114.4) (99.7) - (99.7)
Amortisation (7.2) - (7.2) (8.6) - (8.6)
Impairment of non-current assets (14.4) - (14.4) - - -
Other (losses)/gains (2.1) 6.0 3.9 (3.4) - (3.4)
Share of losses from associates (0.7) - (0.7) (1.1) - (1.1)
Operating profit 322.1 (20.9) 301.2 402.4 115.2 517.6
Foreign exchange gains/(losses) 4 12.0 - 12.0 (11.1) 0.4 (10.7)
Interest payable and similar charges 4 (42.3) - (42.3) (54.2) (0.2) (54.4)
Interest receivable and similar gains 4 9.8 - 9.8 10.7 - 10.7
Profit before tax 301.6 (20.9) 280.7 347.8 115.4 463.2
Total tax charge 5 (65.2) 5.2 (60.0) (95.2) (28.8) (124.0)
Profit for the period 236.4 (15.7) 220.7 252.6 86.6 339.2
Attributable to:
Owners of the parent company 236.5 (15.7) 220.8 253.1 86.6 339.7
Non-controlling interests (0.1) (0.1) (0.5) - (0.5)
-
Earnings per share Pence Pence Pence Pence
For net profit for the period attributable to owners of the parent company
- Basic 65.6 61.2 65.6 88.1
- Diluted 64.3 60.0 64.9 87.1
((1) ) (Adjusted results are stated after adjusting for exceptional
items and certain remeasurements. See note 6 for further details.)
Condensed consolidated statement of comprehensive income
Six months ended 30 June
2025 2024
(Unaudited) (Unaudited)
£m £m
Profit for the period 220.7 339.2
Items that will not subsequently be reclassified to profit or loss:
Remeasurement of defined benefit pension scheme 4.8 6.0
Deferred tax on remeasurement of defined benefit pension scheme (1.2) (1.5)
Items that may subsequently be reclassified to profit or loss:
Exchange differences on translation of foreign operations (85.6) (3.9)
Exchange differences on translation of foreign operations attributable to (0.3) (0.3)
non-controlling interests
Net fair value losses on financial assets at fair value through other (10.2) -
comprehensive income
Net fair value losses on financial assets at fair value through other 10.2 -
comprehensive income reclassified to profit or loss
Net fair value (losses)/gains on cost of hedging (8.4) 16.4
Deferred tax on cost of hedging 2.1 (4.1)
Net fair value gains on cash flow hedges 31.5 48.9
Net gains on cash flow hedges reclassified to profit or loss (90.3) (181.1)
Deferred tax on cash flow hedges 14.7 33.0
Other comprehensive expense for the period (132.7) (86.6)
Total comprehensive income for the period attributable to equity holders 88.0 252.6
Attributable to:
Owners of the parent company 88.4 253.4
Non-controlling interests (0.4) (0.8)
Condensed consolidated balance sheet
As at 30 June As at 31 December
Notes 2025 2024
(Unaudited) (Audited)
£m
£m
Assets
Non-current assets
Goodwill 402.4 415.1
Intangible assets 64.0 68.1
Property, plant and equipment 2,693.7 2,802.0
Right-of-use assets 90.7 100.9
Investments 3.1 3.6
Retirement benefit surplus 30.6 24.7
Deferred tax assets 47.2 48.6
Derivative financial instruments 11 31.9 81.7
3,363.6 3,544.7
Current assets
Inventories 269.3 302.0
Renewable certificate assets 896.5 540.0
Trade and other receivables and contract assets 344.3 470.3
Derivative financial instruments 11 119.2 175.6
Cash and cash equivalents 276.0 356.0
1,905.3 1,843.9
Liabilities
Current liabilities
Trade and other payables and contract liabilities (1,326.5) (1,289.1)
Lease liabilities (24.0) (26.0)
Current tax liabilities (14.2) (9.6)
Borrowings 7 (290.5) (119.0)
Provisions (15.1) (20.2)
Derivative financial instruments 11 (203.0) (71.1)
(1,873.3) (1,535.0)
Net current assets 32.0 308.9
Non-current liabilities
Borrowings 7 (908.4) (1,057.7)
Lease liabilities (78.9) (90.5)
Provisions (73.0) (75.7)
Deferred tax liabilities (275.3) (280.4)
Derivative financial instruments 11 (66.1) (262.2)
(1,401.7) (1,766.5)
Net assets 1,993.9 2,087.1
Shareholders' equity
Issued equity 9 49.8 49.4
Share premium 447.2 443.8
Hedge reserve (39.0) (7.9)
Cost of hedging reserve (2.5) 6.9
Other reserves 241.5 467.0
Retained profits 1,291.8 1,118.1
Total equity attributable to owners of the parent company 1,988.8 2,077.3
Non-controlling interests 5.1 9.8
Total shareholders' equity 1,993.9 2,087.1
Condensed consolidated statement of changes in equity
Issued equity Share premium Hedge reserve Cost of hedging reserve Other reserves((1)) Retained profits Non-controlling interests Total
£m £m £m £m £m £m £m £m
Six months ended 30 June 2025 (Unaudited)
At 1 January 2025 49.4 443.8 (7.9) 6.9 467.0 1,118.1 9.8 2,087.1
Profit/(loss) for the period - - - - - 220.8 (0.1) 220.7
Other comprehensive (expense)/income - - (44.1) (6.3) (85.6) 3.6 (0.3) (132.7)
Total comprehensive (expense)/income for the period - - (44.1) (6.3) (85.6) 224.4 (0.4) 88.0
Equity dividends paid - - - - - (55.7) - (55.7)
Issue of share capital 0.4 3.4 - - - - - 3.8
Distributions to non-controlling interests - - - - - - (0.7) (0.7)
Acquisition of non-controlling interests without a change in control - - - - - 2.9 (3.6) (0.7)
Repurchase of own shares - - - - (140.5) (4.3) - (144.8)
Total transactions with owners in their capacity as owner 0.4 3.4 - - (140.5) (57.1) (4.3) (198.1)
Movements on cash flow hedges released directly from equity - - 17.4 - - - - 17.4
Deferred tax on cash flow hedges released directly from equity - - (4.4) - - - - (4.4)
Movements on cost of hedging released directly from equity - - - (4.1) - - - (4.1)
Deferred tax on cost of hedging released directly from equity - - - 1.0 - - - 1.0
Movements in equity associated with share-based payments - - - - 0.6 6.4 - 7.0
At 30 June 2025 49.8 447.2 (39.0) (2.5) 241.5 1,291.8 5.1 1,993.9
( )
Issued equity Share premium Hedge reserve Cost of hedging reserve Other reserves((1)) Retained profits Non-controlling interests Total
£m £m £m £m £m £m £m £m
Six months ended 30 June 2024 (Unaudited)
At 1 January 2024 49.1 441.2 207.4 18.7 588.2 666.4 12.0 1,983.0
Profit/(loss) for the period - - - - - 339.7 (0.5) 339.2
Other comprehensive (expense)/income - - (99.2) 12.3 (3.9) 4.5 (0.3) (86.6)
Total comprehensive (expense)/income for the period - - (99.2) 12.3 (3.9) 344.2 (0.8) 252.6
Equity dividends paid - - - - - (53.7) - (53.7)
Issue of share capital 0.3 1.8 - - 0.2 - - 2.3
Contributions from non-controlling interests - - - - - - 0.3 0.3
Total transactions with owners in their capacity as owner 0.3 1.8 - - 0.2 (53.7) 0.3 (51.1)
Movements on cash flow hedges released directly from equity - - 0.7 - - - - 0.7
Deferred tax on cash flow hedges released directly from equity - - (0.2) - - - - (0.2)
Movements on cost of hedging released directly from equity - - - (26.0) - - - (26.0)
Deferred tax on cost of hedging released directly from equity - - - 6.5 - - - 6.5
Movements in equity associated with share-based payments - - - - - 8.8 - 8.8
At 30 June 2024 49.4 443.0 108.7 11.5 584.5 965.7 11.5 2,174.3
((1) Other comprehensive expense in respect of other reserves
relates wholly to movements in the translation reserve.)
Condensed consolidated cash flow statement
Six months ended 30 June
Notes 2025 2024
(Unaudited) (Unaudited)
£m £m
Cash generated from operations 8 377.5 399.9
Income taxes paid (48.9) (69.7)
Interest paid (50.8) (42.0)
Interest received 9.1 8.6
Net cash from operating activities 286.9 296.8
Cash flows from investing activities
Purchases of property, plant and equipment (139.5) (188.3)
Purchases of intangible assets (4.3) (4.6)
Proceeds from the sale of property, plant and equipment 2.0 -
Distributions to associates (0.4) (1.0)
Net cash used in investing activities (142.2) (193.9)
Cash flows from financing activities
Equity dividends paid (55.7) (53.7)
(Distributions to)/contributions from non-controlling interests (0.7) 0.3
Proceeds from issue of share capital 3.5 2.2
Repurchase of own shares 9 (140.5) -
Drawdown of borrowings - 681.8
Repayment of borrowings - (829.2)
Net payment of financing derivatives - (6.7)
Payment of principal of lease liabilities (13.6) (14.2)
Other financing costs paid - (7.7)
Net cash absorbed by financing activities (207.0) (227.2)
Net decrease in cash and cash equivalents (62.3) (124.3)
Cash and cash equivalents at beginning of the period 356.0 379.5
Effect of changes in foreign exchange rates (17.7) 7.6
Cash and cash equivalents at end of the period 276.0 262.8
Notes to the Condensed consolidated interim financial statements
1. General information
These notes provide additional information about the disclosures within the
Condensed consolidated interim financial statements. Further information can
be found in the Group's 2024 Annual report and accounts on pages 172-266.
Drax Group plc (the Company) is a public company, limited by shares,
incorporated in the United Kingdom under the Companies Act 2006 and registered
in England and Wales. The Company and its subsidiaries (collectively, the
Group) have four principal activities as outlined in note 2.
The Group's activities are principally based within the UK, US and Canada. The
address of the Company's registered office and principal establishment is Drax
Power Station, Selby, North Yorkshire, YO8 8PH, United Kingdom.
2. Segmental reporting
Reportable segments are presented in a manner consistent with internal
reporting provided to the chief operating decision maker which is considered
to be the Board. In the second half of 2024 the way the Board reviews
performance changed and the segments were updated to reflect this. The
Generation segment, which was previously presented as one segment, was
separated into two segments, being Biomass Generation and Flexible Generation.
Further information on this change can be found on page 172 of the 2024 Annual
report and accounts.
The Board reviews the performance of each of these businesses separately, and
each represents a reportable segment:
- Pellet Production: production and subsequent sale of biomass
pellets from the Group's processing facilities in North America
- Biomass Generation: generation and sale of electricity from
biomass assets in the UK
- Flexible Generation: generation and sale of electricity from
pumped storage, run-of-river hydro and OCGT assets, and the processing and
sale of waste-derived pellets, in the UK
- Energy Solutions: supply of electricity to non-domestic customers
in the UK
Operating costs that can be reasonably allocated to the activities of a
reportable segment are included within the results of that reportable segment.
Central corporate and commercial functions provide certain specialist and
shared services, including optimisation of the Group's positions. Central
corporate and commercial function costs that cannot be reasonably allocated to
the activities of a reportable segment are included within Innovation, capital
projects and other. Innovation, capital projects and other is not a reportable
segment as it does not earn revenues, however it is included in the
information presented below to enable reconciliation of the segmental amounts
presented to the consolidated IFRS results recognised in these Condensed
consolidated interim financial statements.
Given the principal activity of the Group is a generator and seller of
electricity, the Condensed consolidated income statement includes all revenue
from sales of electricity during the period. Where electricity is purchased
rather than generated to fulfil a sale, either due to operational or other
requirements, the cost of this purchase is recorded within cost of sales.
When defining gross profit within the Condensed consolidated interim financial
statements, the Group follows the principal trading considerations applied by
its Pellet Production, Biomass Generation, Flexible Generation and Energy
Solutions businesses when making a sale. In respect of the Pellet Production
business, this reflects the direct costs of production, being fibre, fuel and
drying costs, direct freight and port costs, or third-party pellet purchases.
In respect of the Biomass Generation and Flexible Generation businesses, this
reflects the direct costs of the commodities required to generate electricity
or the direct cost of purchasing electricity, the relevant grid connection
costs that arise, and Electricity Generator Levy (EGL) arising on applicable
renewable and low-carbon generation. In respect of the Energy Solutions
business, this reflects the direct costs of supply, being the costs of the
electricity or gas supplied, together with costs levied on suppliers such as
network costs, broker costs and renewables incentive mechanisms.
Accordingly, cost of sales excludes indirect overheads and staff costs
(presented within operating and administrative expenses), and depreciation
(presented separately on the face of the Condensed consolidated income
statement).
Seasonality of trading
The primary activities of the Group are affected by seasonality. Demand in the
UK for electricity and gas is typically higher in the winter period (October
to March) when temperatures are lower, which drives higher prices and higher
generation. Conversely, demand is typically lower in the summer months (April
to September) when temperatures are milder, and therefore prices and levels of
generation are generally lower.
This trend is experienced by all of the Group's UK-based businesses, as they
operate within the UK electricity market. It is most notable within the
Biomass Generation business due to its scale and the flexible operation of its
thermal generation plant.
The Pellet Production business incurs certain costs that are higher in winter
months due to the impact of weather conditions, such as fibre drying costs and
heating costs. Production volumes and margins are typically higher in the
summer months. The Pellet Production business is protected from demand
fluctuations due to seasonality by regular production and dispatch schedules
under its contracts with customers, both intra-group and externally.
Segment revenues and results
The following is an analysis of the Group's performance by reportable segment
for the six months ended 30 June 2025. Revenue for each segment is split
between sales to external parties and inter-segment sales. Inter-segment sales
are eliminated in the intra-group eliminations column along with any
adjustment required for unrealised profits (primarily inventory purchased by
the Biomass Generation segment from the Pellet Production segment that is
still held as inventory at the reporting date).
Adjusted EBITDA by reportable segment is presented in note 6.
The accounting policies applied for the purpose of measuring the reportable
segments' profits or losses, assets and liabilities are the same as those used
in measuring the corresponding amounts in the Group's 2024 Annual report and
accounts.
Six months ended 30 June 2025 (Unaudited)
Pellet Production Biomass Generation Flexible Generation £m Energy Solutions Innovation, capital projects and other Intra-group eliminations Exceptional items and certain remeasure- Total results
£m
£m
£m
£m £m £m ments
£m
Adjusted results
£m
Revenue
External sales 162.4 975.8 40.0 1,422.9 - - 2,601.1 45.9 2,647.0
Inter‑segment sales 286.2 951.8 47.5 - - (1,285.5) - - -
Total revenue 448.6 1,927.6 87.5 1,422.9 - (1,285.5) 2,601.1 45.9 2,647.0
Cost of sales (266.5) (1,477.6) (8.4) (1,370.1) - 1,294.8 (1,827.8) (65.2) (1,893.0)
Gross profit 182.1 450.0 79.1 52.8 - 9.3 773.3 (19.3) 754.0
Operating and administrative expenses (107.9) (117.5) (15.6) (32.5) (33.4) (2.8) (309.7) (3.4) (313.1)
Impairment losses on financial assets - (0.3) - (2.4) - - (2.7) (4.2) (6.9)
Depreciation (50.3) (51.8) (8.9) (0.4) (2.8) (0.2) (114.4) - (114.4)
Amortisation (2.2) (2.2) - (2.2) (0.6) - (7.2) - (7.2)
Impairment of non-current assets (14.4) - - - - - (14.4) - (14.4)
Other (losses)/gains (2.5) 0.4 - - - - (2.1) 6.0 3.9
Share of losses from associates (0.7) - - - - - (0.7) - (0.7)
Operating profit/(loss) 4.1 278.6 54.6 15.3 (36.8) 6.3 322.1 (20.9) 301.2
Six months ended 30 June 2024 (Unaudited)
Pellet Production Restated((1)) Restated((1)) Flexible Generation £m Energy Solutions Innovation, capital Restated((1)) Intra-group eliminations Exceptional items and certain remeasure-
£m
Biomass Generation £m projects £m ments Total
£m
£m
and other results
£m
£m Adjusted results
£m
Revenue
External sales 160.8 799.8 35.7 2,066.5 - - 3,062.8 95.5 3,158.3
Inter‑segment sales 281.1 1,466.2 83.5 - - (1,830.8) - - -
Total revenue 441.9 2,266.0 119.2 2,066.5 - (1,830.8) 3,062.8 95.5 3,158.3
Cost of sales (270.2) (1,627.4) (20.6) (1,988.9) - 1,821.6 (2,085.5) 19.7 (2,065.8)
Electricity Generator Levy - (106.2) (7.5) - - - (113.7) - (113.7)
Gross profit 171.7 532.4 91.1 77.6 - (9.2) 863.6 115.2 978.8
Operating and administrative expenses (107.1) (137.8) (14.8) (42.1) (31.9) 0.6 (333.1) - (333.1)
Impairment losses on financial assets - (2.0) - (13.3) - - (15.3) - (15.3)
Depreciation (47.1) (44.0) (8.1) (0.3) (1.4) 1.2 (99.7) - (99.7)
Amortisation (2.3) (1.0) - (5.0) (0.3) - (8.6) - (8.6)
Other losses (2.4) (1.0) - - - - (3.4) - (3.4)
Share of losses from associates (0.6) - - - (0.5) - (1.1) - (1.1)
Operating profit/(loss) 12.2 346.6 68.2 16.9 (34.1) (7.4) 402.4 115.2 517.6
((1) Comparative amounts have been restated to reflect the updated
presentation of reporting Biomass Generation and Flexible Generation
separately. See page 172 of the 2024 Annual report and accounts for further
details on this restatement. )
Capital expenditure by segment
Assets and working capital are monitored on a consolidated basis; however,
capital expenditure is monitored by reportable segment.
Six months ended 30 June
2025 Restated((1))
(Unaudited) 2024
(Unaudited)
Capital Capital Capital Capital
expenditure on expenditure on property, expenditure on expenditure on property,
intangible plant and intangible plant and
assets equipment assets equipment
£m £m £m £m
Pellet Production - 22.3 - 44.7
Biomass Generation((2)) - 9.6 0.4 25.8
Flexible Generation((2)) - 17.1 - 62.4
Energy Solutions 1.2 0.3 1.9 -
Innovation, capital projects and other 2.9 5.8 1.3 4.2
Total 4.1 55.1 3.6 137.1
((1) The definition of Capital expenditure has been updated in the
current period to align with the current way the information is presented to
the Board. Capitalised interest and plant spares are now excluded from the
definition of capital expenditure. Comparative amounts have been restated to
reflect this change. In the six months to 30 June 2024 there was £3.1 million
of capitalised interest (Pellet Production £1.3 million, and Flexible
Generation £1.8 million) and £2.8 million of capital plant spare additions
(Biomass Generation £2.4 million, and Flexible Generation £0.4 million)
which were included in the amounts recognised in the 2024 Condensed
consolidated financial statements, but have been restated to exclude these
amounts in the table above.)
((2) Comparative amounts have been restated to reflect the updated
presentation of reporting Biomass Generation and Flexible Generation
separately. See page 172 of the 2024 Annual report and accounts for further
details on this restatement.)
( )
Geographical analysis of revenue and non-current assets
Revenue (based on location of customer)
Six months ended 30 June
2025 2024
(Unaudited) (Unaudited)
£m £m
North America (Canada and US) 3.4 4.6
Europe (excluding UK) 2.5 13.8
Asia 127.9 122.7
UK 2,513.2 3,017.2
Total 2,647.0 3,158.3
( )
Non-current assets(()(1)) (based on asset's location)
As at 30 June As at 31 December 2024
2025 (Audited)
(Unaudited)
£m £m
Canada 328.5 356.5
US 609.5 698.9
Asia 0.2 0.2
UK 2,315.7 2,334.1
Total 3,253.9 3,389.7
((1) Non-current assets comprise goodwill, intangible assets,
property, plant and equipment, right-of-use assets and investments.)
3. Revenue
Revenue represents amounts receivable for goods or services provided to
customers in the normal course of business, net of trade discounts, VAT and
other sales-related taxes and excludes transactions between Group companies.
Given the principal activity of the Biomass Generation and Flexible Generation
segments is as generators and sellers of electricity, the Condensed
consolidated income statement includes all revenue from sales of electricity
during the period. In a majority of cases the Group is acting as principal in
these sales contracts under IFRS. In the instance where electricity is
purchased rather than generated to fulfil a sale, either for operational or
other reasons, the cost of this purchase is recorded within cost of sales. If
external purchases of electricity were presented net within external revenue
this would have reduced external revenue in Total results by £579.9 million
to £2,067.1 million (six months ended 30 June 2024: by £563.8 million to
£2,594.5 million) with a corresponding decrease in external cost of sales.
Where the Group enters into sleeved electricity trades, the Group is primarily
acting as an agent under IFRS rather than a principal. As such, these
transactions are presented net within revenue.
During the period, the Group made sales (and subsequent purchases) of
Renewables Obligation Certificates (ROCs) to help optimise the Group's working
capital position. External sales of renewable certificates in the table below
includes £54.1 million of such sales (six months ended 30 June 2024: £50.8
million), with a similar value reflected in cost of sales.
For further details on the revenue streams listed below see pages 175-177 of
the Group's 2024 Annual report and accounts.
The sources of revenue were as follows:
Six months ended 30 June 2025 (Unaudited)
External Inter-segment Total
£m £m £m
Pellet Production
Pellet sales 158.6 286.2 444.8
Other income 3.8 - 3.8
Total Pellet Production 162.4 286.2 448.6
Biomass Generation
Electricity and gas sales 821.3 911.5 1,732.8
Renewable certificate sales 81.4 13.0 94.4
CfD income 57.1 - 57.1
Ancillary services 9.1 - 9.1
Other income 6.9 27.3 34.2
Total Biomass Generation 975.8 951.8 1,927.6
Flexible Generation
Electricity sales 12.8 47.5 60.3
Ancillary services 13.0 - 13.0
Other income 14.2 - 14.2
Total Flexible Generation 40.0 47.5 87.5
Energy Solutions
Electricity and gas sales 1,409.5 - 1,409.5
Renewable certificate sales 13.4 - 13.4
Total Energy Solutions 1,422.9 - 1,422.9
Elimination of inter-segment sales - (1,285.5) (1,285.5)
Total consolidated revenue in Adjusted results 2,601.1 - 2,601.1
Certain remeasurements 45.9 - 45.9
Total consolidated revenue in Total results 2,647.0 - 2,647.0
Restated(()(1))
Six months ended 30 June 2024 (Unaudited)
External Inter-segment Total
£m £m £m
Pellet Production
Pellet sales 157.0 281.1 438.1
Other income 3.8 - 3.8
Total Pellet Production 160.8 281.1 441.9
Biomass Generation
Electricity and gas sales 685.2 1,423.3 2,108.5
Renewable certificate sales 80.1 21.5 101.6
CfD income 22.8 - 22.8
Ancillary services 10.5 - 10.5
Other income 1.2 21.4 22.6
Total Biomass Generation 799.8 1,466.2 2,266.0
Flexible Generation
Electricity sales 10.2 83.5 93.7
Ancillary services 11.7 - 11.7
Other income 13.8 - 13.8
Total Flexible Generation 35.7 83.5 119.2
Energy Solutions
Electricity and gas sales 2,030.2 - 2,030.2
EBRS and EBDS income 14.6 - 14.6
Renewable certificate sales 21.7 - 21.7
Total Energy Solutions 2,066.5 - 2,066.5
Elimination of inter-segment sales - (1,830.8) (1,830.8)
Total consolidated revenue in Adjusted results 3,062.8 - 3,062.8
Certain remeasurements 95.5 - 95.5
Total consolidated revenue in Total results 3,158.3 - 3,158.3
( )
((1) Comparative amounts have been restated to reflect the updated
presentation of reporting Biomass Generation and Flexible Generation
separately. See page 172 of the 2024 Annual report and accounts for further
details on this restatement.)
4. Net finance costs
Net finance costs reflect expenses incurred in managing the Group's capital
structure (such as interest payable on borrowings) as well as foreign exchange
gains and losses, the unwinding of discounts on provisions for reinstatement
of the Group's sites at the end of their useful economic lives, and interest
on lease liabilities. These are offset by interest income that the Group
generates through use of short-term cash surpluses, for example through
investment in money market funds, and interest income on the Group's defined
benefit pension scheme surplus.
Six months ended 30 June
2025 2024
(Unaudited) (Unaudited)
£m £m
Interest payable and similar charges:
Interest payable (53.5) (55.9)
Unwinding of discount on provisions (1.4) (1.4)
Capitalised interest 12.6 3.1
Total interest payable and similar charges included in Adjusted results (42.3) (54.2)
Interest receivable and similar gains:
Interest income on bank deposits 9.1 8.4
Interest income on defined benefit pension surplus 0.7 0.4
Other interest income - 0.2
Gain on repurchase of loan notes - 1.7
Total interest receivable and similar gains included in Adjusted results 9.8 10.7
Foreign exchange gains/(losses) included in Adjusted results 12.0 (11.1)
Net finance costs included in Adjusted results (20.5) (54.6)
Certain remeasurements on financing derivatives - 0.2
Net finance costs included in Total results (20.5) (54.4)
The £12.6 million (six months ended 30 June 2024: £3.1 million) of
capitalised interest has been included within the cost of qualifying assets in
property, plant and equipment during the period. These charges represent fees
payable on deferred letters of credit that have been used specifically to
finance the construction of certain qualifying asset amounts, and general
borrowing costs capitalised on the construction of all other qualifying asset
amounts not financed using specific borrowings.
Foreign exchange gains and losses within net finance costs arise on the
retranslation of balances denominated in foreign currencies to prevailing
rates at the reporting date.
The Group has a number of intercompany balances denominated in the functional
currency of certain foreign subsidiaries, that are owed to or receivable from
a sterling functional currency entity. A foreign exchange gain of £9.9
million (six months ended 30 June 2024: £2.1 million) has been recognised on
the retranslation of these intercompany balances in the income statement of
the sterling functional currency entity. This gain (six months ended 30 June
2024: gain) is recognised within the Condensed consolidated income statement
and within the foreign exchange gains included in Adjusted results line in the
table above. Conversely, within the net gain or loss on translating the net
assets of the foreign subsidiaries into the Group's sterling presentational
currency, there is a foreign exchange loss (six months ended 30 June 2024:
loss) relating to the translation of the foreign subsidiaries' intercompany
loans. This impacts the translation reserve with the movement recognised in
other comprehensive income.
5. Taxation
The tax charge for the period includes both current and deferred tax. The tax
charge is based upon the expected tax rate for the full year, which is applied
to taxable profits for the period, together with any charge or credit in
respect of prior periods and the tax effect of any exceptional items and
certain remeasurements (see note 6).
Current tax includes UK corporation tax, corporate income tax in Canada, and
US income tax. It is calculated as the income taxes payable on taxable
profits, or recoverable in respect of tax losses, for the period. Deferred tax
is calculated as the income taxes payable or recoverable in future accounting
periods in respect of temporary differences which may be taxable or allowed as
deductible. Temporary differences themselves represent the difference between
the carrying amount of an asset or liability in the Condensed consolidated
interim financial statements and the relevant tax base thereon.
Six months ended 30 June
2025 2024
(Unaudited) (Unaudited)
£m
£m
Tax charge comprises:
Current tax
- Current period charge 53.6 48.0
Deferred tax
- Current period charge 6.4 76.0
Tax charge 60.0 124.0
( )
The majority of the Group's anticipated full year profit is UK-based. The
headline statutory rate of taxation on UK profits for 2025 is 25.0% (2024:
25.0%).
The expected full year effective tax rate of 21.6% (2024: 27.4%) is lower than
(2024: higher than) the main rate of tax primarily due to Patent Box. In the
prior year, the rate was higher mainly due to the Electricity Generator Levy
(EGL) which is disallowable for corporation tax, therefore increasing the
effective tax rate. The Group anticipates the EGL charge for the full year to
be £nil (year ended 31 December 2024: £160.8 million) due to significantly
lower power prices. The primary current tax rate benefit is in respect of UK
corporation tax relief for full expensing of qualifying capital expenditure,
particularly in relation to the OCGT Hirwaun Power Limited which is due to
commence trading in 2025.
The Group is within the scope of the Organisation for Economic Co-operation
and Development's (OECD's) Global Anti-Base Erosion Rules, which provide for
an internationally co-ordinated system of taxation to ensure that large
multinational groups pay a minimum level of corporate income tax in countries
in which they operate, referred to as Pillar Two. The legislation implementing
the rules in the UK was substantively enacted on 20 June 2023 and applied to
the 2024 financial year onwards.
The Group has applied the temporary exemption under IAS 12 in relation to the
accounting for deferred taxes arising from the implementation of the Pillar
Two rules, so that the Group neither recognises nor discloses information
about deferred tax assets and liabilities related to Pillar Two. The Group
expects to fall within the Transitional Country by Country Reporting Safe
Harbour for all jurisdictions in 2025, such that the expected top-up tax
payable over the transitional period is expected to be £nil, based on the
latest medium-term forecasts up to and including the year ended 31 December
2026.
The Group continues to monitor developments in the UK and outside of the UK to
ensure ongoing compliance with its administrative obligations under these
rules along with the reassessments of the latest forecasts to confirm the
Group's exposure to Pillar Two.
Following the announcement of the 'One Big Beautiful Bill Act' in the US, the
Group is currently reviewing the recent changes to the US tax system. The
removal of Section 899, the so called 'revenge tax' which would have increased
tax payable in the US by companies in certain countries, is positive news for
the Group. Currently, the Group has not identified any issues which would be
expected to have a material impact either on the effective tax rate or on tax
payments expected to be made. However, the Group is still working through the
detail with advisers and will provide any further guidance within the Group's
2025 Annual report and accounts.
6. Alternative performance measures
This note contains information and reconciliations to the closest IFRS
equivalent of the Group's alternative performance measures (APMs). The APMs
glossary table to these Condensed consolidated interim financial statements
provides details of all APMs used, each APM's closest IFRS equivalent, the
reason why the APM is used by the Group and a definition of how each APM is
calculated.
The Group presents Adjusted results in the Condensed consolidated income
statement. Management believes that this approach is useful as it provides a
clear and consistent view of underlying trading performance. Exceptional items
and certain remeasurements are excluded from Adjusted results and are
presented in a separate column in the Condensed consolidated income statement.
Management believes that this presentation provides useful information about
financial performance and is consistent with the way the Board assesses the
performance of the Group.
The Group has a policy and framework for the determination of transactions to
be presented as exceptional. Exceptional items are excluded from Adjusted
results as they are transactions that are deemed to be one-off or unlikely to
reoccur in future years due to their nature, size, the expected frequency of
similar events, or the commercial context. Excluding these amounts provides
users of the Condensed consolidated interim financial statements with a more
representative view of the financial performance of the Group, and enables
comparison with other reporting periods as it excludes amounts from activities
or transactions that are not likely to reoccur. All transactions presented as
exceptional are approved by the Audit Committee. See the Audit Committee
report on pages 112-125 of the Group's 2024 Annual report and accounts for
further details.
The following transaction was designated as an exceptional item and presented
separately during the current period:
- Costs and credits arising as a result of the transactions to sell
the non-core Opus Energy small and medium-sized enterprise (SME) customer
meter points and related strategic restructuring of the Energy Solutions
business
No items were designated as exceptional in the six-month period ended 30 June
2024.
Certain remeasurements comprise gains or losses on derivative contracts to the
extent that those contracts do not qualify for hedge accounting, or hedge
accounting is not effective, and those gains or losses are either i)
unrealised and relate to derivative contracts with a maturity in future
periods, or ii) are realised in relation to the maturity of derivative
contracts in the current period. Gains and losses on derivative contracts
prior to maturity generally reflect the difference between the contracted
price and the current market price.
The Group is entering into forward contracts as economic hedges to secure
prices and rates, and lock in value for its future expected pellet production,
generation or energy supply activities. The effect of excluding certain
remeasurements from Adjusted results is that commodity sales and purchases are
recognised in the period they are intended to hedge, at their contracted
prices, i.e. at the all-in hedged amount paid or received in respect of the
delivery of the commodity in question. It also results in the total impact of
associated financial contracts being recognised in the period they are
intended to hedge. Management believes this better reflects the performance of
the Group, as it more accurately represents the intention of entering into the
underlying derivative contracts.
Six months ended 30 June
2025 2024
(Unaudited) (Unaudited)
£m
£m
Exceptional items:
Opus Energy sale of meter points and restructuring (1.6) -
Exceptional items included in operating profit (1.6) -
Tax on exceptional items 0.4 -
Exceptional items after tax (1.2) -
Certain remeasurements:
Net certain remeasurements included in revenue 45.9 95.5
Net certain remeasurements included in cost of sales (65.2) 19.7
Certain remeasurements included in operating profit (19.3) 115.2
Net certain remeasurements included in interest payable and similar charges - (0.2)
Net certain remeasurements included in foreign exchange gains and losses - 0.4
Certain remeasurements included in profit before tax (19.3) 115.4
Tax on certain remeasurements 4.8 (28.8)
Certain remeasurements after tax (14.5) 86.6
Reconciliation of profit for the period:
Adjusted profit for the period 236.4 252.6
Exceptional items after tax (1.2) -
Certain remeasurements after tax (14.5) 86.6
Total profit for the period 220.7 339.2
( )
Opus Energy sale of meter points and related restructuring
In May 2025 the Group completed the sale of its non-core SME customer meter
points, a process which commenced in 2024 with the sale of the majority of its
SME customer meter points to EDF Energy Customers Limited (see page 193 of the
Group's 2024 Annual report and accounts for further details on this sale and
restructuring) and concluded with the sale of the residual SME customer meter
points and related receivables to Pozitive Energy Limited. An employee
consultation process has also been completed resulting in a reduction in
headcount to reflect a focus on core industrial and commercial (I&C) and
renewables services.
The table below details the amounts recognised in the six months to 30 June
2025 on the sale of the non-core SME customer meter points and related
receivables to Pozitive Energy Limited and additional amounts recognised
relating to the restructuring of the Energy Solutions business that commenced
in the prior year. The table below also includes any amounts recognised in the
six months to 30 June 2025 in relation to the sale of the non-core SME
customer meter points to EDF in the prior year. These amounts have continued
to be classified as exceptional and predominantly relate to updates to initial
estimates based on updated information now available:
Six months ended
30 June 2025
(Unaudited)
£m
Consideration received for customer meter points 3.8
Net liabilities disposed of directly related to the transferred customers 2.2
Profit on disposal of customer meter points - included in other gains and 6.0
losses
Other losses incurred as a direct result of the transaction and restructuring
Redundancy, transaction and migration costs - included in operating and (2.2)
administrative expenses
Fair value movements on receivables relating to customers transferred to EDF - (1.2)
included in operating and administrative expenses
Impairment of trade receivables - included in impairment losses on financial (4.2)
assets
Net loss recognised as a result of the transaction (1.6)
For each item designated as exceptional or as a certain remeasurement, the
table below summarises the impact of the item on the Adjusted and Total profit
for the period, basic EPS and net cash from operating activities.
Six months ended 30 June 2025 (Unaudited)
Revenue £m Profit before tax Profit for the period Basic earnings per share Net cash from operating activities
Gross profit £m Operating profit £m £m Pence £m
£m Tax charge
£m
Total results IFRS measure 2,647.0 754.0 301.2 280.7 (60.0) 220.7 61.2 286.9
Certain remeasurements:
Net fair value remeasurement on derivative contracts (45.9) 19.3 19.3 19.3 (4.8) 14.5 4.1 -
Exceptional items:
Opus Energy sale of meter points and restructuring 1.6 1.6 (0.4) 1.2 0.3 (0.1)
- -
Total (45.9) 19.3 20.9 20.9 (5.2) 15.7 4.4 (0.1)
Adjusted results 2,601.1 773.3 322.1 301.6 (65.2) 236.4 65.6 286.8
( )
Six months ended 30 June 2024 (Unaudited)
Profit before tax Profit for the period Basic earnings per share Net cash from operating activities
Revenue Gross profit £m Operating profit £m £m Pence £m
£m £m Tax charge
£m
Total results IFRS measure 3,158.3 978.8 517.6 463.2 (124.0) 339.2 88.1 296.8
Certain remeasurements:
Net fair value remeasurement on derivative contracts (95.5) (115.2) (115.2) (115.4) 28.8 (86.6) (22.5)
-
Adjusted results 3,062.8 863.6 402.4 347.8 (95.2) 252.6 65.6 296.8
( )
Adjusted EBITDA is a key measure of financial performance for the Group. A
reconciliation from Adjusted operating profit from the Condensed consolidated
income statement is shown below:
Six months ended 30 June
2025 (Unaudited) 2024 (Unaudited)
Attributable to Attributable to
Owners of the parent company Non-controlling interests Total Owners of the parent company Non-controlling interests Total
£m
£m
£m
£m
£m
£m
Adjusted operating profit/(loss) 322.2 (0.1) 322.1 402.8 (0.4) 402.4
Depreciation 113.8 0.6 114.4 99.2 0.5 99.7
Amortisation 7.2 - 7.2 8.6 - 8.6
Other losses 2.1 - 2.1 3.4 - 3.4
Share of losses from associates 0.7 - 0.7 1.1 - 1.1
Impairment of non-current assets 14.4 - 14.4 - - -
Adjusted EBITDA 460.4 0.5 460.9 515.1 0.1 515.2
( )
Six months ended 30 June
2025 Restated((1))
(Unaudited) 2024
£m
(Unaudited)
£m
Segment Adjusted EBITDA:
Pellet Production 73.7 64.5
Biomass Generation 332.2 392.6
Flexible Generation 63.5 76.3
Energy Solutions 17.9 22.2
Innovation, capital projects and other (33.4) (31.9)
Intra-group eliminations 6.5 (8.6)
Total Adjusted EBITDA 460.4 515.1
((1) Comparative amounts have been restated to reflect the updated
presentation of reporting Biomass Generation and Flexible Generation
separately. See page 172 of the 2024 Annual report and accounts for further
details on this restatement.)
Net debt
Net debt is calculated by taking the Group's borrowings (see note 7),
adjusting for the impact of associated hedging instruments, adding lease
liabilities and subtracting cash and cash equivalents. Net debt excludes the
share of borrowings, lease liabilities and cash and cash equivalents
attributable to non-controlling interests.
The Group has entered into cross-currency interest rate swaps, fixing the
sterling value of the principal repayments and interest in respect of the
Group's euro (EUR) denominated debt. The Group has also entered fixed rate
foreign exchange forwards to fix the sterling value of the principal repayment
of the Canadian dollar (CAD) denominated debt and certain EUR denominated debt
(see note 7). See note 11 for further details of the hedging instruments used
by the Group. For the purpose of calculating Net debt, hedged borrowings
balances are translated at the hedged rate, rather than the rate prevailing at
the reporting date, which impacts the carrying amount of the Group's
borrowings. This is to take into account the effect of financial instruments
entered into to hedge movements in, for example, foreign exchange rates in
relation to debt principal repayments. The impact of translating borrowings at
the hedged rate rather than rate prevailing at the reporting date is
recognised in the impact of hedging instruments line below. Borrowings that
have no hedging instruments attributed to them are translated at the rate
prevailing at the reporting date.
The inclusion of lease liabilities is consistent with covenant requirements
and the way debt is assessed by the Group's lenders. Net debt also includes
the impact of any cash collateral receipts from counterparties or cash
collateral posted to counterparties.
As at As at
30 June 2025 (Unaudited) 31 December 2024
£m
(Audited)
£m
Borrowings (note 7) (1,198.9) (1,176.7)
Lease liabilities (102.9) (116.5)
Cash and cash equivalents 276.0 356.0
Net cash, borrowings and lease liabilities (1,025.8) (937.2)
Non-controlling interests' share of cash and cash equivalents in non-wholly (0.5) (0.8)
owned subsidiaries
Non-controlling interests' share of lease liabilities in non-wholly owned 0.4 0.5
subsidiaries
Impact of hedging instruments (35.6) (54.2)
Net debt (1,061.5) (991.7)
( )
The table below reconciles Net debt in terms of changes in these balances
across the period:
Six months ended Year ended
30 June 2025 31 December 2024
(Audited)
(Unaudited)
£m
£m
Net debt at beginning of the period (991.7) (1,219.7)
Decrease in cash and cash equivalents (80.0) (23.5)
Decrease/(increase) in non-controlling interests' share of cash and cash 0.3 (0.5)
equivalents in non-wholly owned subsidiaries
(Increase)/decrease in borrowings (22.2) 248.6
Decrease in lease liabilities 13.6 19.3
(Decrease)/increase in non-controlling interests' share of lease liabilities (0.1) 0.5
in non-wholly owned subsidiaries
Movement in the impact of hedging instruments 18.6 (16.4)
Net debt at end of the period (1,061.5) (991.7)
As explained in the Basis of preparation, the Group has a long-term target for
Net debt to Adjusted EBITDA ratio of around 2.0 times. Adjusted EBITDA in the
table below is expressed on a last twelve months (LTM) basis.
As at As at
30 June 2025 31 December 2024
(Unaudited) (Audited)
Net debt (£m) (1,061.5) (991.7)
Adjusted EBITDA LTM basis (£m) 1,009.5 1,064.2
Net debt to Adjusted EBITDA ratio 1.1 0.9
Cash and committed facilities
The table below reconciles the Group's available cash and committed
facilities:
As at As at
30 June 2025 31 December 2024
(Unaudited) (Audited)
£m
£m
Cash and cash equivalents 276.0 356.0
RCF available but not utilised((1)) 450.0 450.0
Total cash and committed facilities 726.0 806.0
((1) ) (As at 30 June 2025, the Group had no cash or non-cash
drawings under the RCF (31 December 2024: no cash or non-cash drawings under
the RCF).)
Further commentary on cash and committed facilities is contained within the
CFO's financial review.
Adjusted basic EPS and Adjusted diluted EPS
Six months ended 30 June
2025 2024
(Unaudited) (Unaudited)
Number of shares (millions):
Weighted average number of ordinary shares for the purposes of calculating 360.7 386.0
basic earnings per share
Effect of dilutive potential ordinary shares under share plans 7.2 4.3
Weighted average number of ordinary shares for the purposes of calculating 367.9 390.3
diluted earnings per share
Six months ended 30 June
2025 2024
(Unaudited) (Unaudited)
Adjusted results Total results Adjusted results Total results
Profit for the period attributable to owners of the parent company (£m) 236.5 220.8 253.1 339.7
Earnings per share - basic (pence) 65.6 61.2 65.6 88.1
Earnings per share - diluted (pence) 64.3 60.0 64.9 87.1
Details of capital expenditure, another APM used by the Group, are disclosed
in note 2.
7. Borrowings
The Group's borrowings at each reporting date were as follows:
As at 30 June 2025 (Unaudited) As at 31 December 2024 (Audited)
Effective sterling interest rate((1)) Principal Year of maturity Amortised cost Effective sterling interest rate((1)) Principal Year of maturity Amortised cost
% Value £m % Value £m
m m
Non-current secured borrowings:
5.875% EUR loan notes 2029 7.5% €350.0 2029 300.9 7.5% €350.0 2029 289.5
UK infrastructure private placement facility (2019) 3.0% £50.0 2029 49.5 3.0% £50.0 2029 49.5
UK infrastructure private placement facility (2020) 2.6% €31.5 + £98.0 2027 - 2030 124.3 2.5% €101.5 + £98.0 2026 - 2030 181.0
CAD term loan facility - - n/a - 6.1% C$200.0 2026 111.0
GBP and EUR term loan facility (2024) 5.5% €185.0 + £100.0 2027 - 2029 258.1 5.5% €185.0 + £100.0 2027 - 2029 251.9
£125m GBP term loan facility (2024) 6.2% £125.0 2027 - 2029 125.5 6.2% £125.0 2027 - 2029 124.9
£50m GBP term loan facility (2024) 5.5% £50.0 2028 50.1 5.5% £50.0 2028 49.9
Current secured borrowings:
2.625% EUR loan notes 2025 4.6% €143.8 2025 123.5 4.6% €143.8 2025 119.0
UK infrastructure private placement facility (2020) 2.1% €70.0 2026 60.1 - - n/a -
CAD term loan facility 6.1% C$200.0 2026 106.9 - - n/a -
Total borrowings 1,198.9 1,176.7
Current 290.5 119.0
Non-current 908.4 1,057.7
((1) The effective sterling interest rate includes the impact of
any interest rate and cross-currency interest rate swaps.)
The effective sterling interest rate gives the rate that the Group has fixed
the sterling interest payments at on each of the facilities, using a
combination of interest rate swaps and cross-currency interest rate swaps.
Cross-currency interest rate swaps as well as foreign currency forward
contracts are used to fix the sterling repayment of the principal.
During 2024, the Group refinanced a number of existing facilities to extend
the Group's average debt maturity profile. Further details of this refinancing
activity is provided in the Group's 2024 Annual report and accounts on pages
217-218.
During July 2025, the Group has agreed with the lenders of the GBP and EUR
term loan facility (2024) to extend the maturity of the €135.0 million and
£50.0 million tranches that were due to mature in 2027 by one year to 2028.
The Group has a committed £450.0 million revolving credit facility (RCF).
During the period, the maturity of the facility was extended from August 2027
to August 2028. The facility has a customary margin grid referenced over SONIA
with adjustments linked to certain Scope 1, 2 and 3 carbon emissions which are
based on the Group's 2030 SBTi targets. No cash has been drawn since its
inception and it remained undrawn as at 30 June 2025.
See note 6 for further details on the Group's cash and committed facilities.
The Group has complied with the financial covenants of its borrowing
facilities during the current period and prior year. The Group has significant
headroom against these covenants and expects to remain compliant in future
periods under all reasonably possible downside scenarios.
The weighted average interest rate payable at the reporting date on the
Group's borrowings was 5.39% (31 December 2024: 5.39%).
Reconciliation of borrowings
The tables below show the movement in borrowings during the current and
comparative periods:
Six months ended 30 June 2025 (Unaudited)
Opening amortised cost Amounts drawn Transaction Amounts repaid Cash interest payments Non-cash movements Closing amortised cost
£m £m costs £m £m £m £m
£m
2.625% EUR loan notes 2025 119.0 - - - (1.6) 6.1 123.5
5.875% EUR loan notes 2029 289.5 - - - (8.6) 20.0 300.9
UK infrastructure private placement facility (2019) 49.5 - - - (1.6) 1.6 49.5
UK infrastructure private placement facility (2020) 181.0 - - - (4.3) 7.7 184.4
CAD term loan facility 111.0 - - - (2.9) (1.2) 106.9
GBP and EUR term loan facility (2024) 251.9 - - - (6.7) 12.9 258.1
£125m GBP term loan facility (2024) 124.9 - - - (4.1) 4.7 125.5
£50m GBP term loan facility (2024) 49.9 - - - (1.5) 1.7 50.1
Total borrowings 1,176.7 - - - (31.3) 53.5 1,198.9
Non-cash movements on borrowings comprises foreign exchange losses of £20.1
million and interest costs of £33.4 million.
Year ended 31 December 2024 (Audited)
Opening amortised cost Amounts drawn Transaction Amounts repaid Cash interest payments Non-cash movements Closing amortised cost
£m £m costs £m £m £m £m
£m
2.625% EUR loan notes 2025 215.7 - - (88.7) (4.4) (3.6) 119.0
6.625% USD loan notes 2025 391.5 - - (393.9) (13.0) 15.4 -
5.875% EUR loan notes 2029 - 298.8 (4.4) - (7.8) 2.9 289.5
UK infrastructure private placement facility (2019) 49.5
373.9 - - (325.0) (10.9) 11.5
UK infrastructure private placement facility (2020)
206.4 - (0.8) (21.6) (11.5) 8.5 181.0
CAD term loan facility 117.8 - (0.1) - (6.6) (0.1) 111.0
GBP and EUR term loan facility (2024) - 258.0 (2.0) - (9.9) 5.8 251.9
£125m GBP term loan facility (2024) - 125.0 (1.3) - (3.7) 4.9 124.9
£50m GBP term loan facility (2024) - 50.0 (0.4) - (0.6) 0.9 49.9
Collateral facility 120.0 - - (120.0) (6.4) 6.4 -
Total borrowings 1,425.3 731.8 (9.0) (949.2) (74.8) 52.6 1,176.7
Non-cash movements in borrowings comprises foreign exchange gains of £30.7
million, interest costs of £85.0 million and gains on extinguishment of £1.7
million.
8. Cash generated from operations
The table below reconciles the Group's profit for the period to the amount of
cash generated from the Group's operations.
Six months ended 30 June
2025 2024
(Unaudited) (Unaudited)
£m £m
Profit for the period 220.7 339.2
Adjustments for:
Interest payable and similar charges 42.3 54.4
Interest receivable and similar gains (9.8) (10.7)
Tax charge 60.0 124.0
Research and development tax credits - (1.0)
Share of losses from associates 0.7 1.1
Depreciation of property, plant and equipment 100.7 86.1
Depreciation of right-of-use assets 13.7 13.6
Amortisation of intangible assets 7.2 8.6
Impairment of non-current assets 14.4 -
Losses on disposal of fixed assets 2.8 -
Other losses - 4.6
Certain remeasurements of derivative contracts((1)) 8.0 (120.5)
Non-cash charge for share-based payments 7.2 8.8
Effect of changes in foreign exchange rates 12.3 (15.7)
Operating cash flows before movement in working capital 480.2 492.5
Changes in working capital:
Decrease in inventories 26.5 3.6
Increase in renewable certificate assets (356.5) (688.0)
Decrease in receivables 157.6 318.4
Increase in payables 119.4 212.1
Net movement in derivative-related collateral (43.4) 61.4
Decrease in provisions (5.9) -
Total cash absorbed by working capital (102.3) (92.5)
Pension service charge less contributions paid (0.4) (0.1)
Cash generated from operations 377.5 399.9
((1) Certain remeasurements of derivative contracts includes the
effect of non-cash unrealised gains and losses recognised in the Condensed
consolidated income statement and their subsequent cash realisation. It also
includes the cash impact of deferring gains and losses on derivative contracts
designated into hedge relationships under IFRS 9, where the gain or loss is
held in the hedge reserve and then released to the Condensed consolidated
income statement in the period the hedged transaction occurs.)
The most significant factors contributing to cash generated from operations
are explained in further detail below.
The £8.0 million inflow due to the adjustment for certain remeasurements of
derivative contracts (six months ended 30 June 2024: £120.5 million outflow)
relates to unrealised fair value losses on open derivatives, being offset by
cash payments on maturing trades where derivative losses had been recognised
in a previous period.
The Group actively manages its liquidity requirements. This includes managing
collateral associated with the hedging of power and other commodities, as well
as other contractual arrangements. In certain situations, the Group is able to
use non-cash collateral, such as letters of credit and surety bonds, in place
of cash collateral.
The Group has had a net cash outflow of £43.4 million from the movement in
derivative-related cash collateral during the six months ended 30 June 2025
(six months ended 30 June 2024: £61.4 million inflow), as trades have matured
and mark-to-market net liabilities have increased. As at 30 June 2025 the
Group had posted £38.3 million (as at 31 December 2024: £4.7 million) of
cash collateral payments, recognised in receivables and held no cash
collateral receipts (as at 31 December 2024: £9.8 million), recognised in
payables.
The Group had also utilised £14.5 million (as at 31 December 2024: £14.5
million) of letters of credit and £20.0 million (as at 31 December 2024:
£30.0 million) of surety bonds to cover commodity trading collateral
requirements.
The Group has a strong focus on cash flow discipline and managing liquidity.
The Group enhances its working capital position by managing payables,
receivables, inventories and renewable certificate assets to ensure that
working capital committed is closely aligned with operational requirements.
The impact of these actions on the cash flows of the Group is explained
further below.
The table below sets out the key arrangements utilised by the Group to manage
working capital:
As at As at Working capital inflow/
30 June 31 December (outflow) in the period
2025 2024 (Unaudited)
£m
(Unaudited) (Audited)
£m
£m
Receivables monetisation 367.8((1)) 400.0((1)) (32.2)
ROC monetisation sales - - -
Supply chain finance scheme (30.5) (38.4) (7.9)
Deferred letters of credit (132.2) (150.3) (18.1)
( )
((1) As at 30 June 2025 the Group had sold £292.2 million (31
December 2024: £386.3 million) of receivables under this facility. At 30 June
2025 the Group had recognised an amount payable to the facility provider of
£75.6 million (31 December 2024: £13.7 million), being the movement in the
receivables sold compared to the prior month. This amount was paid to the
facility provider in July 2025 (31 December 2024: January 2025), therefore as
at 30 June 2025 the utilisation of the facility was £367.8 million (31
December 2024: £400.0 million).)
None of the balances in the table above are included within the Group's
definition of Net debt or borrowings (see note 6 for further details on Net
debt and note 7 for further details on borrowings). The Energy Solutions
business has access to a monetisation facility which enables it to accelerate
cash flows associated with amounts receivable from energy supply customers on
a non-recourse basis. The non-recourse nature means that there is no future
liability associated with the underlying receivables once sold. Through
standard ROC sales and ROC purchase arrangements the Group is able to manage
the working capital cycle of inflows and outflows of these assets. The
deferred letters of credit facilities are linked directly to specific payables
that provide a short extension of payment terms of less than 12 months. The
supply chain finance facility does not directly impact the Group's working
capital, as payment terms remain unaltered with the Group and would remain the
same should the facility fall away. The impact of these facilities on the cash
flows of the Group is explained further below.
During the six months to 30 June 2025 there was a £356.5 million outflow due
to a combination of generation, utilisation, purchases and sales of renewable
certificates (six months ended 30 June 2024: £688.0 million). The outflow is
predominantly due to an increase in the value of renewable certificates
generated and still held by the Group. The Group had not monetised any ROCs
from using these standard renewable certificate sales as at the current or
comparative reporting dates.
The £157.6 million cash inflow due to a decrease in receivables in the six
months ended 30 June 2025 (six months ended 30 June 2024: £318.4 million) is
largely the result of lower power prices across the Biomass Generation,
Flexible Generation and Energy Solutions businesses.
The receivables monetisation facility has a limit of £400.0 million which was
due to reduce to £300.0 million in March 2025, with maturity of the overall
facility in January 2027. During the period the maturity was extended to March
2030. The Group now has the option to set the facility limit between £300.0
million and £400.0 million, subject to lender approval. The limit was £400.0
million as at 30 June 2025 (31 December 2024: £400.0 million). Utilisation of
the facility was £367.8 million at 30 June 2025 (as at 31 December 2024:
£400.0 million) resulting in a cash outflow of £32.2 million in the six
months ended 30 June 2025 (six months ended 30 June 2024: no cash flow
impact). On 7 July 2025, upon the Group's request, the lender has agreed to
reduce the facility limit to £350.0 million from 5 August 2025 in line with
the lower receivables balances in the Energy Solutions business.
Payables have increased since 31 December 2024 with a cash inflow of £119.4
million in the six months ended 30 June 2025 (six months ended 30 June 2024:
£212.1 million). This increase is predominantly due to an increase in
renewable certificate accruals as a result of being further through the
compliance periods. Certain of the Group's suppliers are able to access a
supply chain finance facility provided by a bank, for which funds can be
accelerated in advance of normal payment terms. At 30 June 2025, the Group had
trade payables of £30.5 million (as at 31 December 2024: £38.4 million)
related to this supply chain finance facility.
The Group also utilises deferred letters of credit which provide a working
capital benefit for the Group due to a short extension of payment terms of
less than 12 months. The amount outstanding under deferred letters of credit
at 30 June 2025 was £132.2 million (as at 31 December 2024: £150.3 million).
Of the total deferred letters of credit, £65.2 million (as at 31 December
2024: £92.8 million) were utilised for capital expenditure and £67.0 million
(as at 31 December 2024: £57.5 million) were utilised for trade payables.
Utilisation of deferred letters of credit has impacted the purchases of
property, plant and equipment line in the Condensed consolidated cash flow
statement and the movement in payables line above.
9. Share capital
The Group's ordinary share capital reflects the total number of shares in
issue, which are publicly traded on the London Stock Exchange.
Issued equity
The movement in allotted and fully paid share capital of the Company during
the period was as follows:
Six months ended 30 June 2025 (Unaudited)
£m Number
Issued and fully paid:
At 1 January 2025 49.4 427,770,766
Issue of shares 0.4 3,743,489
At 30 June 2025 49.8 431,514,255
The Company has only one class of shares, which are ordinary shares of 11
pence each, carrying no right to fixed income. Throughout the period, shares
were issued in satisfaction of options vesting in accordance with the rules
of the Group's employee share schemes. For further details of the schemes,
refer to pages 230-233 in the Group's 2024 Annual report and accounts.
On 26 July 2024, the Group announced a £300 million share buyback programme.
As at 30 June 2025, £255.9 million of shares have been repurchased under this
programme, of which £140.5 million of shares have been repurchased in the six
months to 30 June 2025 and recognised as treasury shares. Additionally, a
liability of £4.3 million has been recognised as a debit to retained earnings
in respect of shares purchased under the programme but where the transaction
had not been settled as at the reporting date. The shares purchased by the
Group have not been cancelled and so continue to be included in the issued
shares in the above table. See page 198 in the Group's 2024 Annual report and
accounts for further details.
10. Financial risk management
The Group's activities expose it to a variety of financial risks, including
commodity price risk, foreign currency risk, interest rate risk, liquidity
risk, inflation risk, counterparty risk and credit risk. The Group's overall
risk management programme focuses on the unpredictability of commodity and
financial markets and seeks to manage potential adverse effects on the Group's
financial performance.
The Group uses derivative financial instruments to hedge certain risk
exposures. Risk management is overseen by the Risk management committees which
identify, evaluate and manage financial risks in close coordination with the
Group's trading and treasury functions, under policies approved by the Board.
See pages 243-259 of the Group's 2024 Annual report and accounts for further
details on the Group's financial risk management.
11. Fair value financial instruments
The Group makes use of derivative financial instruments to manage its exposure
to the financial risks set out in note 10.
The own-use exemption within IFRS 9 applies to certain commodity contracts
that are entered into and held for the purpose of physical receipt or delivery
in accordance with the Group's expected purchase, sale or usage requirements.
Certain other contracts are outside the scope of IFRS 9 as there is not a
sufficiently liquid market for the commodity to bring the contracts into
scope. In both cases, these contracts are excluded from the requirement to
apply fair value mark-to-market accounting.
Contracts for non-financial assets which do not qualify for the own-use
exemption (principally wholesale power, gas and carbon emissions allowances)
and financial contracts (principally foreign exchange, interest,
cross-currency interest, inflation, financial oil and financial freight) are
accounted for as derivatives in accordance with IFRS 9 and are recorded in the
Condensed Consolidated balance sheet at fair value. Changes in the fair value
of derivative financial instruments are reflected through other comprehensive
income within the Condensed consolidated statement of comprehensive income and
retained within the hedge reserve, to the extent that the contracts are
designated as effective hedges in accordance with IFRS 9, or in the Condensed
consolidated income statement where the hedge accounting requirements are not
met, or the hedges are ineffective. Movements on these derivatives are
excluded from Adjusted results in the Condensed consolidated income statement
until the relevant contract matures. See note 6 for further details on the
timing and recognition of derivative contracts in Adjusted results.
For financial reporting purposes, the Group has classified derivative
financial instruments into the following categories:
· Commodity contracts - Forward contracts for the sale or purchase
of a commodity which may or may not be settled through physical delivery of
the commodity
· Foreign currency exchange contracts - Currency-related contracts
including forwards, swaps, vanilla options and structured option products
· Interest rate and cross-currency contracts - Contracts that swap
one interest rate for another in a single currency, including
floating-to-fixed interest rate swaps, and contracts which swap interest and
principal cash flows in one currency for another currency, including
fixed-to-fixed and floating-to-fixed cross-currency interest rate swaps
· Inflation rate contracts - Swap contracts, such as
floating-to-fixed, that are linked to an inflation index such as the UK Retail
Price Index (RPI) or the UK Consumer Price Index (CPI)
The table below details the carrying amounts recognised in respect of the
Group's derivative financial instruments:
As at 30 June 2025 As at 31 December 2024
(Unaudited) (Audited)
£m £m
Derivative assets
Commodity contracts 113.4 153.5
Foreign currency exchange contracts 32.8 96.7
Interest rate and cross-currency contracts 4.9 7.1
Total derivative assets 151.1 257.3
Split between:
Non-current assets 31.9 81.7
Current assets 119.2 175.6
Derivative liabilities
Commodity contracts (49.5) (81.8)
Foreign currency exchange contracts (98.4) (36.9)
Interest rate and cross-currency contracts (22.2) (30.6)
Inflation rate contracts (99.0) (184.0)
Total derivative liabilities (269.1) (333.3)
Split between:
Non-current liabilities (66.1) (262.2)
Current liabilities (203.0) (71.1)
Total net derivative financial instruments (118.0) (76.0)
IFRS 13 requires categorisation of the Group's financial instruments measured
at fair value, including the derivative financial instruments detailed in the
table above, in accordance with the following hierarchy in order to explain
the basis on which their fair values have been determined:
· Level 1 - Fair value measurements derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities
· Level 2 - Fair value measurements derived from inputs, other than
quoted prices, included within Level 1, that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices)
· Level 3 - Fair value measurements derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
Categorisation within this fair value measurement hierarchy has been
determined on the basis of the lowest level input that is significant to the
fair value measurement of the relevant asset or liability.
The table below details the carrying amounts of fair value financial
instruments including their levels in the fair value hierarchy:
As at 30 June 2025 As at 31 December 2024
(Unaudited) (Audited)
£m £m
Assets
Level 2:
Derivative financial instruments (as above) 151.1 257.3
Level 3:
Contingent consideration((1)) 9.4 9.4
Total assets 160.5 266.7
Liabilities
Level 2:
Derivative financial instruments (as above) (269.1) (333.3)
Total liabilities (269.1) (333.3)
(
(1) Contingent consideration is presented within Trade and other receivables
and contract assets within the Condensed consolidated balance sheet.
)
There have been no transfers during the current or prior period between Level
1, 2 or 3 category inputs.
The Group has a large portfolio of commodity and financial contracts
(including forward power sales, financial gas sales and financial oil
purchases) and also has a large portfolio of forward currency contracts which
fix the sterling cost of future biomass purchases denominated in foreign
currencies. The Group has entered into a number of inflation swap contracts in
order to hedge annual price increases in certain elements of its generation
activities, such as its CfD revenue and Capacity Market revenue, both linked
to UK CPI. The Group also has a number of interest rate and cross-currency
interest rate swaps to hedge the interest rate and foreign exchange risk on
the Group's borrowings.
Fair value measurement
· Commodity contracts - The fair value of open commodity contracts
that do not qualify for the own-use exemption, or are otherwise outside of the
scope of IFRS 9, is calculated by reference to forward commodity market prices
at the reporting date.
· Foreign currency exchange contracts - The fair value of foreign
currency exchange contracts is determined using forward currency exchange
market rates at the reporting date.
· Interest rate and cross-currency contracts - The fair value of
interest rate swaps is calculated by reference to forward market curves at the
reporting date for the relevant interest index. The fair value of
cross-currency interest rate swaps is calculated using the relevant forward
currency exchange market rates for fixed-to-fixed swaps and by using the
relevant forward currency exchange market rates and interest index for
floating-to-fixed swaps.
· Inflation rate contracts - The fair value of inflation rate swaps
is calculated by reference to forward market curves at the reporting date for
the relevant inflation index.
Given the maturity profile of all these contracts, liquid forward market price
curves are available for the duration of the contracts.
The fair values of all derivative financial instruments are discounted to
reflect both the time value of money and credit risk inherent within the
instrument.
The fair value of commodity contracts, foreign currency exchange contracts,
interest rate swaps, cross-currency interest rate swaps and inflation rate
contracts are largely determined by comparison between observable, liquid,
forward market prices or rates, and the trade price or rate; therefore, these
contracts are categorised as Level 2 in the IFRS 13 fair value hierarchy.
Credit risk is not a significant input to the fair value calculations.
Level 3 fair values
The contingent consideration receivable by the Group relates to the sale of
the Combined Cycle Gas Turbine (CCGT) portfolio in 2021. The gross nominal
value of £29.0 million is contingent on certain triggers in respect of the
option to develop the Damhead Creek 2 land disposed of as part of the sale of
these assets. The fair value measurement for the contingent consideration has
been categorised as Level 3 based on the inputs to the valuation technique
used. The fair value was measured at £9.4 million as at 30 June 2025 (31
December 2024: £9.4 million) and there have been no significant changes to
the inputs or valuation techniques used since 31 December 2024. For further
details on the valuation process, valuation technique, and the observable and
unobservable inputs used, please see pages 241-242 of the Group's 2024 Annual
report and accounts.
A reconciliation of the contingent consideration is detailed below:
Six months ended 30 June 2025 Year ended 31 December 2024
(Unaudited) (Audited)
£m
£m
Balance at beginning of the period 9.4 9.2
Net change in fair value - 0.2
Balance at end of the period 9.4 9.4
There are no reasonably possible changes to unobservable inputs to the fair
value calculation that would have a material impact on the fair value
measurement of the contingent consideration.
12. Adoption of new and amended accounting standards
The following amendment became effective for the first time in 2025. The Group
adopted the following from 1 January 2025:
- IAS 21 (amended) - Lack of Exchangeability - effective from 1
January 2025
The adoption of this amendment in the current period has not had a material
impact on these Condensed consolidated interim financial statements.
At the date of approval of this report, the following new or amended standards
and relevant interpretations, which have not been applied in these Condensed
consolidated interim financial statements, were in issue but not yet
effective:
- IFRS 10 (amended) - Consolidated Financial Statements - effective
date deferred indefinitely((1))
- IAS 28 (amended) - Investments in Associates and Joint Ventures
(2011) - effective date deferred indefinitely((1))
- IFRS 9 (amended) and IFRS 7 (amended) - Amendments to the
Classification and Measurement of Financial Instruments - effective from 1
January 2026
- IFRS Accounting Standards - Annual Improvements to IFRS Accounting
Standards - Volume 11 - effective from 1 January 2026
- IFRS 9 (amended) and IFRS 7 (amended) - Contracts Referencing
Nature-dependent Electricity - effective from 1 January 2026
- IFRS 18 - Presentation and Disclosure in Financial Statements -
effective from 1 January 2027((1))
- IFRS 19 - Subsidiaries without Public Accountability: Disclosures
- effective from 1 January 2027((1))
((1) Pending endorsement by the UK Endorsement Board (UKEB).)
On 9 April 2024, the International Accounting Standards Board (IASB) issued
IFRS 18 Presentation and Disclosure in Financial Statements, which is expected
to be effective for periods commencing on or after 1 January 2027, subject to
UK endorsement, with early adoption permitted. The standard will replace IAS 1
Presentation of Financial Statements. Whilst IFRS 18 will not directly impact
recognition or measurement, it will impact how amounts are presented, with the
principal changes being:
- Categorisation of all income and expenditure into three new
defined categories: Operating, Investing and Financing
- Introduction of two new defined subtotals to be presented within
the income statement: Operating profit and Profit before financing and income
taxes
- New disclosure requirement for Management Performance Measures
(MPMs)
- New requirements regarding the aggregation and disaggregation of
information to be presented in the financial statements
The Group is considering the impact of applying IFRS 18.
Adoption of other new or amended standards and relevant interpretations in
future periods is not expected to have a material impact on the Consolidated
financial statements of the Group. The Group will continue to monitor the
developments of these new or amended standards as and when they are endorsed
for use in the United Kingdom.
13. Post balance sheet events
On 30 July 2025, the Board approved to extend the current share buyback
programme with the purchase of an additional £450.0 million over a three-year
period. The additional share buyback is expected to follow the current share
buyback and complete by the end of 2028.
Independent review report to Drax Group plc
Report on the Condensed consolidated interim financial statements
Our conclusion
We have reviewed Drax Group plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Half Year Results of
Drax Group plc for the 6 month period ended 30 June 2025 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed consolidated balance sheet as at 30 June 2025;
· the Condensed consolidated income statement and Condensed
consolidated statement of comprehensive income for the period then ended;
· the Condensed consolidated statement of changes in equity for the
period then ended;
· the Condensed consolidated cash flow statement for the period then
ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year Results of Drax
Group plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half Year Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Year Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half Year Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half Year Results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half Year Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Leeds
30 July 2025
Alternative performance measures (APMs) glossary table
The measures described below are used throughout the Condensed consolidated
interim financial statements and are measures that are not defined within IFRS
but provide additional information about financial performance and position
that is used by the Board to evaluate the Group's trading performance. These
measures have been defined internally and may therefore not be comparable to
APMs presented by other companies. Additionally, certain information presented
is derived from amounts calculated in accordance with IFRS but is not itself a
measure defined under IFRS. Such measures should not be viewed in isolation or
as an alternative to the equivalent IFRS measure.
APM Closest IFRS Purpose Definition
equivalent measure
Adjusted results Total results The Group's Adjusted results are consistent with the way the Board assesses Total results measured in accordance with IFRS excluding the impact of
the performance of the Group. Adjusted results are intended to reflect the exceptional items and certain remeasurements.
underlying trading performance of the Group's businesses and are presented to
assist users of the Condensed consolidated interim financial statements in Exceptional items and certain remeasurements are defined in note 6.
evaluating the Group's trading performance and performance against strategic
objectives on a consistent basis.
Adjusted results excludes exceptional items and certain remeasurements.
Exceptional items are those transactions that, by their nature, do not reflect
the trading performance of the Group in the period.
Certain remeasurements comprise fair value gains and losses that do not
qualify for hedge accounting (or hedge accounting is not effective). The
Group's forward contracting activity is for the purpose of economic hedging
and therefore by excluding the volatility caused by recognising fair value
gains and losses prior to maturity of the contracts, the Group can reflect
these contracts at the contracted prices on maturity, reflecting the intended
purpose of entering these contracts and the Group's underlying performance.
Adjusted results are the metrics used in the calculation of Adjusted basic EPS
and Adjusted diluted EPS.
Adjusted EBITDA Operating profit((1)) Adjusted EBITDA is the primary measure used by the Board to assess the Earnings before interest, tax, depreciation, amortisation, other gains and
financial performance of the Group as it provides a more comparable assessment losses and impairment of non-current assets, excluding the impact of
of the Group's year-on-year trading performance. It is also a key metric used exceptional items and certain remeasurements (defined in note 6).
by the investor community to assess the performance of the Group's
operations. Adjusted EBITDA excludes any earnings from associates or attributable to
non-controlling interests.
Adjusted basic EPS Basic EPS Adjusted basic EPS represents the amount of Adjusted earnings (Adjusted profit Adjusted basic EPS is calculated by dividing the Group's Adjusted earnings
after tax) attributable to each ordinary share outstanding. (Adjusted profit after tax) attributable to owners of the parent company by
the weighted average number of ordinary shares outstanding during the period.
Adjusted diluted EPS Diluted EPS Adjusted diluted EPS demonstrates the impact upon the Adjusted basic EPS if Adjusted diluted EPS is calculated by dividing the Group's Adjusted earnings
all outstanding share options, that are expected to vest on their future (Adjusted profit after tax) attributable to owners of the parent company by
maturity dates and where the shares are considered to be dilutive, were the weighted average number of ordinary shares outstanding during the period
exercised and treated as ordinary shares as at the reporting date. and dilutive potential ordinary shares outstanding under share plans during
the period.
Borrowings n/a((2)) Borrowings provides information relating to the Group's use of debt. It is a Borrowings includes external financial debt, such as loan notes, term loans
key measure of leverage and provides information on the sources of liquidity and amounts drawn in cash under revolving credit facilities (RCFs) (see note
for the Group. 7). Borrowings does not include other financial liabilities such as pension
obligations, trade and other payables and working capital facilities linked
directly to specific payables (such as credit cards and deferred letters of
credit) that provide a short extension of payment terms of less than 12
months.
Net debt Borrowings((2)) and lease liabilities less cash and cash equivalents Net debt is a key measure of the Group's liquidity and its ability to manage Borrowings (as defined above) including the impact of hedging instruments, and
its financial obligations. lease liabilities calculated in accordance with IFRS 16 less cash and cash
equivalents.
Net debt is used as a basis by debt rating agencies to assess credit risk, and
in the calculation of the Group's financial covenant requirements. Net debt excludes the proportion of cash, lease liabilities and borrowings in
non-wholly owned entities that would be attributable to the non-controlling
The impact of hedging instruments included within Net debt shows the economic interests.
substance of the Net debt position, in terms of actual expected future cash
flows to settle that debt. Net debt includes the impact of foreign currency hedging instruments, meaning
that any borrowings that have associated hedging instruments in place are
adjusted to reflect those borrowings at the hedged rate.
Net debt includes the impact of any cash collateral receipts from
counterparties or cash collateral posted to counterparties.
Net debt to Adjusted EBITDA ratio Borrowings((2)) and lease liabilities less cash and cash equivalents divided The Net debt to Adjusted EBITDA ratio is a debt ratio that gives an indication Net debt divided by Adjusted EBITDA for the last twelve months, expressed as a
by operating profit((1)) of how many years it would take the Group to pay back its debt if Net debt and multiple.
Adjusted EBITDA are held constant.
The Group has a long-term target for Net debt to Adjusted EBITDA of around 2.0
times.
Cash and committed facilities Cash and cash equivalents This is a key measure of the Group's available liquidity and the Group's Total cash and cash equivalents plus the value of the Group's committed but
ability to manage its current obligations. undrawn facilities (including the Group's RCF, loan facilities and the Energy
Solutions non-recourse trade receivables monetisation facility, to the extent
It shows the value of cash available to the Group in a short period of time. that there are eligible receivables available to utilise undrawn amounts).
Capital expenditure((3)) Property, plant and equipment (PPE) additions and intangible asset additions Used to show the Group's total investment in PPE and intangible assets in a PPE additions plus intangible asset additions, excluding capitalised borrowing
period. costs and capital plant spare additions.
((1) Operating profit is presented on the Group's Condensed consolidated
income statement; however, it is not defined per IFRS. Operating profit is a
generally accepted measure of profit.)
((2) Borrowings are presented in the Group's Condensed consolidated
balance sheet; they are a commonly used balance sheet line item heading,
however borrowings are not defined by IFRS and therefore the Group's
borrowings may not be comparable to borrowings presented by other companies.)
((3) The definition of Capital expenditure has been updated in the current
period to align with the way the information is currently presented to the
Board. The definition now excludes capitalised borrowing costs and capital
plant spare additions.) (See the capital expenditure by segment table in note
2 for further details of this change.)
Glossary
Ancillary services
Services provided to National Grid used for balancing supply and demand or
maintaining secure electricity supplies within acceptable limits. They are
described in Connection Condition 8 of the Grid Code.
Availability
Average percentage of time the units were available for generation.
BECCS
Bioenergy with carbon capture and storage, with carbon resulting from power
generation captured and stored.
Biomass
Organic material of non-fossil origin, including organic waste, that can be
converted into bioenergy through combustion. The Group uses sawmill and other
wood industry residues and forest residuals (which includes low-grade
roundwood, thinnings, branches and tops) in the form of compressed wood
pellets, to generate electricity at Drax Power Station or sell the pellets to
third parties.
Capacity Market
Part of the UK Government's Electricity Market Reform, the Capacity Market is
intended to ensure security of electricity supply by providing a payment for
reliable sources of capacity.
Carbon capture and storage (CCS)
The process of trapping or collecting carbon emissions from a large-scale
source and then permanently storing them.
CDRs
Carbon dioxide removals.
Contracts for Difference (CfD)
A mechanism to support investment in low-carbon electricity generation. The
CfD works by stabilising revenues for generators at a fixed price level known
as the "strike price". Generators will receive revenue from selling their
electricity into the market as usual; however, when the market reference price
is below the strike price, they also receive a top-up payment for the
additional amount. Conversely, if the reference price is above the strike
price, the generator must pay back the difference.
Dispatchable power
An electricity generator produces dispatchable power when the power can be
ramped up and down, or switched on or off, at short notice to provide (or
dispatch) a flexible response to changes in electricity demand. Biomass,
pumped storage, coal, oil, and gas electricity generation can meet these
criteria and hence can be dispatchable power sources. Nuclear can be
dispatched against an agreed schedule but is not flexible. Wind and solar
electricity cannot be scheduled and hence are not dispatchable. An electricity
system requires sufficient dispatchable power to operate and remain safe.
EBDS
The UK Government's Energy Bills Discount Scheme.
EBRS
The UK Government's Energy Bill Relief Scheme.
EGL
The Electricity Generator Levy.
ESG
Environmental, Social and Governance.
Forced outage/Unplanned outage
Any reduction in plant availability, excluding planned outages.
FSC®
Forest Stewardship Council: an international non-governmental organisation
which promotes responsible management of the world's forests.
IFRS
International Financial Reporting Standards.
Mt pa
Million tonnes per annum.
MWh
Megawatt hour.
NESO
National Energy System Operator.
Open Cycle Gas Turbine (OCGT)
A free-standing gas turbine, using compressed air, to generate electricity.
Planned outage
A period during which scheduled maintenance is executed according to the plan
set at the outset of the year.
REGO
The Renewable Energy Guarantees of Origin (REGO) scheme provides certificates
called REGOs which demonstrate electricity has been generated from renewable
sources.
ROC
A Renewables Obligation Certificate (ROC) is a certificate issued to an
accredited generator for electricity generated from eligible renewable
sources.
Summer
The calendar months April to September.
Sustainable biomass
Biomass which complies with the definition of "sustainable source", Schedule
3, Land Criteria, UK Renewables Obligation Order 2015.
System operator
National Grid Electricity Transmission. Responsible for the co-ordination of
electricity flows onto and over the transmission system, balancing generation
supply and user demand.
Total Recordable Incident Rate (TRIR)
The frequency rate is calculated on the following basis: (fatalities, lost
time injuries and worse than first aid injuries)/hours worked x 100,000.
TWh
Terawatt hour.
Winter
The calendar months October to March.
Drax Group plc
Drax Power Station
Selby
North Yorkshire YO8 8PH
Telephone: +44 (0)1757 618381
www.drax.com
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