All right. Good morning, everybody, and welcome to the Drax 2019 Full Year Results Presentation. So I'm going to start with an operational review. I'll turn it over to Andy Skelton, our CFO, for a financial review, and then I'll come back at the end with an update on our biomass strategy.

Our purpose, as you know, is to enable a zero-carbon, lower-cost energy future. And our strategy supports that. It has 3 legs: to build a long-term future for sustainable biomass, to be the leading provider of power system stability and to give our customers control of their energy. And late last year, we added a further ambition: to become a carbon-negative company by 2030. With the right regulatory framework and government support, I am absolutely confident that we can do that.

During a year of significant change for Drax, we delivered strong performance. The group grew adjusted EBITDA by 64% to GBP 410 million. And within that, our hydro and gas generation assets delivered GBP 114 million, above the top end of our guidance range, which was GBP 90 million to GBP 110 million. We continue to be significantly cash generative, delivering GBP 413 million in net cash from operating activities. And over the last 3 years, we have delivered more than GBP 1 billion in net cash. We exceeded our target of 2x net debt to adjusted EBITDA, delivering 1.9x, and we grew our dividends per share by 13%.

Operationally, we grew our biomass self-supply business while reducing costs. We reduced our CO2 emissions by 47% relative to 2018, and we performed very well in the system support markets. Finally, I will spend the last section of the presentation discussing our strategic progress on biomass. We're making good progress with our biomass investments as well as the development of BECCS.

Alongside our results today, we made another very significant announcement, the end of coal generation at Drax Power Station. This is a major milestone on our journey to becoming a carbon-negative company. In the course of 10 years, we will have moved from reporting emissions of more than 22 million tonnes of CO2 per year to 0. Having not received the Capacity Market contract in the T-3 auction in January on our coal units, we've consulted with the government over the last month before making this decision. While very much in line with the U.K. government's objective of achieving net-zero by 2050, it's not an easy day for many of the Drax Power Station. And we will be working closely with our employees and their representatives over the next weeks and months. The closure will affect 200 to 230 roles and is the next step in the process of reshaping Drax Power Station to run safely and economically past 2027.

While we are still firming up the financial impact over the course of the first half of this year, we wanted to give you a first estimate. The closure costs are estimated to be between GBP 25 million and GBP 35 million. Ongoing operating expense savings will be between GBP 25 million and GBP 30 million -- GBP 35 million per year, and that's once those are completed at some point next year. The carrying value of the assets impacted is about GBP 240 million. We also have around GBP 100 million of coal inventories, which we expect to use before we close. And that will probably lead to a small short-term increase in coal generation this year before falling again to 0 next year.

By converting Drax Power Station from coal to sustainable biomass, we are now close to completing the largest decarbonization project in Western Europe. Through a combination of effective government policy, the technological innovation of our team and the support of our shareholders, Drax has reduced its CO2 intensity more than any other major utility in Europe. And I believe that the same combination can enable Drax to become the world's first carbon-negative company using BECCS to take CO2 out of the atmosphere and accelerating the U.K.'s path to net-zero. And just as we are delivering attractive returns from shareholders from our investments in renewable biomass, I believe that negative emissions will ultimately also be an extremely attractive financial opportunity.

None of that story would be true if we didn't source our biomass sustainably. We continued to be 100% committed to that and are also moving forward as science, understanding and regulation evolve. Since our Capital Markets Day in November last year, our Independent Advisory Board has met and issued its first report. Its purpose is to challenge our sustainability practices and policies to ensure that we are keeping up with best practice.

The IAB, led by a former Chief Science Adviser to the U.K. government, Sir John Beddington, noted that the criteria we defined for reducing the carbon emissions of our biomass have been designed to reflect the findings of a landmarked Forest Research report called Carbon Impacts of Biomass Consumed in the EU, and that they are an accurate interpretation of that report. For those of you who do not know Forest Research, they are widely viewed by a range of stakeholders across the spectrum as a strong guide to ensuring sustainability. And there's a significant amount of content in this area on our website, and I would encourage you all to have a look.

Safety, sustainability and good governance are at the core of what we do. We continue to have good safety performance, although we are constantly working to reinforce behaviors and bring down the number of recordable incidents.

With regards to ESG more broadly, we were very pleased when recently Norges recognized the commitments that Drax has made to reduce its carbon emissions by transitioning away from coal to renewables. Having previously excluded Drax from its investment universe, Norges confirmed that they will now include Drax. This is a reflection of our biomass transformation, and I believe that this morning's announcement on our plans for coal further evidence our commitment to reducing emissions on our path to becoming a carbon-negative business.

Equally, we are proud of the innovative ESG funding facility that we put in place last year. The cost of that funding is directly linked to our CO2 emissions, meaning that we will be financially rewarded for doing the right thing and moving off coal.

Finally, we are very much committed to the communities where we operate. Zero Carbon Humber, our cluster that is working with government to deliver CCS infrastructure to the Humberside, has the potential to save 55,000 heavy industrial jobs that otherwise would be challenged in a net-zero world. Along the same lines, we've announced today the Zero Carbon Skills Task Force. We will work with government, trade unions, other sectors and businesses in the North to establish a task force to enable people to capitalize on the skills and opportunities created as the U.K. moves towards a net-zero carbon economy.

Let me now talk about the performance of each of our 3 divisions, and I'll start with Generation. Earnings were strong at GBP 408 million of adjusted EBITDA, up 76% over 2018. After a difficult first quarter when biomass generation was limited because of bad weather in the Southeast of the U.S., we finished the year strong with record generation in November and December.

Our new hydro and gas generation assets performed extremely well, delivering GBP 114 million of EBITDA, ahead of our guidance of between GBP 90 million and GBP 110 million. I'm very pleased with the acquisition as it is delivering financially and very much in line with our strategy to be the leader in system support in the U.K. We're now the fourth largest generator in the U.K. with a multi-technology portfolio spread across the country. And I'd finally like to note that while biomass is very much at the core of what we do, it is notable that more than 25% of our Generation earnings come from hydro and thermal.

With the addition of our hydro and thermal assets, Drax' role in supporting the U.K. system has grown substantially. The value that we earn from flexibility increased in 2019 to GBP 129 million from GBP 79 million in 2018. And as you can see on the chart, the overall market for flexibility, for which the service cost a good proxy, has grown 30% over the last 2 years. We are well positioned to benefit from that. Our assets are well located from Scotland through Yorkshire to the Southeast and Brighton to help move power around the grid. And this market is changing in ways that we believe will offer us new opportunity.

In January, National Grid tendered for inertia and reactive power, 2 important ancillary services. And we won one of those contracts using one of the units that we have at Cruachan. It's a 6-year contract that we expect to deliver about GBP 5 million of incremental EBITDA to Drax.

Now historically, those non-generation services have been provided by a large-scale rotating plant such as coal and gas. When they would generate baseload power, the services would naturally be provided at the same time. And as a result of the change in the generation mix, we expect the system operator to take more actions to provide these important non-generation services. And it is telling that for the first time, the system operator is now actively tendering for those with longer-term contracts. And we expect further tenders of this type later this year and into the future.

Our Pellet Production business continues to grow nicely. EBITDA increased more than 50% through a combination of increased output and reduced cost. After a difficult first half due to bad weather in the Southeast of the U.S., we increased production year-on-year by 4%. Through a combination of more sawmill residues and improved logistics, we reduced the net cost by $5 per tonne. Those initiatives, which came in over the course of the year, if actually looked at on a full year basis, should deliver $17 per tonne this year.

As you know, we're also in the process of expanding our production at our 3 existing sites by 350,000 tonnes, and we are evaluating options for up to another 500,000 tonnes through satellite plants.

Our Customer business had a challenging year as it moves to focus on future earnings growth. EBITDA for the year was down to GBP 17 million versus GBP 28 million the year before. I would say that within that GBP 17 million, there are about GBP 8 million of restructuring costs. And those costs have allowed us to combine Haven and Opus, positioning us to share best practice across the Customer business.

Our focus on more profitable customers is bearing fruit as we increased our margin per megawatt hour while continuing to add customer meters. We've also added some quite interesting and attractive customers, so we feel quite good about the quality of portfolio that we have.

We have significantly improved our management of bad debt, allowing us to reduce our bad debt expense from GBP 31 million in 2018 to GBP 18 million last year.

2020 will be a year for our Customer business to focus on profitability by reducing its cost to serve, delivering operational excellence and continuing to improve customer quality, which we expect to drive increased margins and lower bad debt.

So with that, I will turn it over to Andy for the financial review.

Thanks, Will, and good morning, everyone. So I'll start with a summary on Slide 15.

Financial performance for 2019 has been strong. We've delivered adjusted EBITDA of GBP 410 million, in line with consensus and representing year-on-year growth of 64%. Integration of the hydro and gas assets has been successfully completed, and they've delivered strongly with GBP 114 million of adjusted EBITDA, above the top end of the guidance range of GBP 90 million to GBP 110 million. We continue to be strongly cash generative, and we've delivered over $1 billion of net cash from operating activities with an average conversion rate of over 120% in the last 3 years. After adjusting for the delayed receipt of Capacity Market payments, we've delivered a net debt to adjusted EBITDA ratio of 1.9x. This is ahead of our guidance of around 2x. Adjusted earnings per share of 29.9p has grown significantly from 10.4p in the prior period.

The Board's proposed a final dividend of 9.5p per share given a full year dividend of 15.9p per share, a total cost of GBP 63 million. This represents a 13% year-on-year increase on a pence per share basis. We believe that this level of dividend is sustainable through the business cycle, and we expect that it can increase further over time as our strategy delivers high future levels of EBITDA and cash.

So moving on to Slide 16 and stepping through delivery of the adjusted EBITDA growth in the period. In our Pellet Production business, adjusted EBITDA of GBP 32 million grew GBP 11 million or 52% in the year. We're making strong progress with our program of cost reduction initiatives that will deliver savings of $35 per tonne on an expanded self-capacity of around 1.85 million tonnes by the end of 2022. This program delivered a GBP 14 million benefit in the period, more than offsetting the impact of the restricted availability of raw material in the first quarter. The achieved cost of $161 per tonne compares to $166 per tonne in the prior period. Delivering further improvements in the cost of producing pellets is a key area of focus and a significant opportunity to deliver further EBITDA improvements.

In Generation, EBITDA of GBP 408 million increased GBP 176 million or 76% in the year. Of this, GBP 114 million was contributed by the hydro and thermal gas generation. The remaining GBP 62 million increase at Drax Power Station includes indexation of the biomass subsidies, the benefit and the power price achieved through flexible running of 4 biomass units throughout the year.

The ROC scheme provides flexibility to maximize generation across the 3 ROC units within an annual cap. So following the impact of restricted supplies in the first quarter, this allowed us to produce at higher levels in the remainder of the year, particularly to optimize generation in the higher-priced winter months. And as Will mentioned, November and December were consecutive record months for generation on the biomass units.

The benefit of the broader generation base is evident with our hydro operations performing strongly and the provision of the non-commodity-exposed system support services. So the value from flexibility grew GBP 50 million in the period to GBP 129 million. Of this, around GBP 30 million relates to buybacks on coal and constraint management activities that we don't expect to repeat in 2020.

Adjusted EBITDA of GBP 17 million for our Customers business reduced GBP 11 million year-over-year. Restructuring costs and investments in next-generation systems and the rollout of smart meters totaled around GBP 15 million. That's a GBP 9 million increase year-on-year. And we expect these equivalent costs to be around GBP 5 million in 2020. The restructuring costs relate to the integration of our Opus and Haven businesses where we believe they will drive alignment of decision-making, effective market segmentation and will deliver operational efficiencies.

The investments in the next-generation systems, including smart meters, support the aim of increasing operating leverage. We've now successfully implemented the new ERP system covering finance, procurement, financial reporting, in Haven and in Opus. We've experienced some challenges on the implementation of our customer care and billing system, and this project is now on hold.

We are steadily growing and improving the quality of our Customer portfolio with an increase in customer meters of 6% and the addition in the year of customers such as Severn Trent Water and Ford Motor Company. At the same time, we've increased the margin per megawatt hour as we focus on the quality of business. The volume decrease in the year of 8% reflects this focus as well as the impact of a mild winter.

Finally, we've maintained positive progress reducing the bad debt expense as a percentage of revenue. GBP 18 million expense in the period benefited from a GBP 3 million credit for the resolution of legacy balances and was GBP 13 million lower than the prior period, which was impacted by a one-off expense of GBP 3 million in respect of our SME business. But as we continue to focus on managing bad debt, our investments in the rollout of smart meters will be a big help. We continue to believe there's an opportunity for improved performance and earnings in our Customer business in future years.

So finally, on corporate and other costs, increased by GBP 16 million in the period, partly reflecting the expanded size of the group post our acquisition of the hydro and gas assets. During the year, we also increased investment to support innovation activities, including expanding our biomass fuel envelope and supporting our efforts on BECCS. Additionally, post the acquisition, we incurred some onetime costs to implement a new organization structure that we will -- believe will enable us to execute our strategy more effectively. The run rate of these costs reduced in the second half of the year. And as we look forward to 2020, we expect to increase the spend on innovation but maintain the corporate costs at a similar level.

So moving on to Slide 17, which provides an additional analysis of adjusted EBITDA across the group. Our Generation business consists of Drax Power Station, our hydro and gas businesses. This power station is the largest, with GBP 294 million of EBITDA delivered from 14 terawatt hours of generation. Coal represented just 0.6 terawatt hours or 4% of the power station's output in the year, and this is a good proxy for the contribution of coal to the power station's EBITDA.

Following the formal closure of the coal units by September 22, our Generation business will consist of sustainable biomass, hydro and thermal gas, all of which have flexibility to operate in both the power market and the provision of system support services where we expect to see future growth.

Our biomass units produce over 12% of the U.K.'s renewable electricity, supported by index-linked ROC and CfD contracts and underpinned by a robust hedging policy. They provide a strong base of high-quality earnings and cash flows.

Our hydro business represents 18% of the adjusted EBITDA. In the case of our Cruachan pump storage asset, its operation in the growing market for system support underpins a high level of earnings visibility today and in the longer term. The contribution of the newly acquired assets represents 2x cover on our dividend from non-biomass-related sources.

So turning to Page 18. So we've delivered the net debt to adjusted EBITDA ratio of 1.9x, which is ahead of the guidance we gave of around 2x. And that's when adjusting for the capacity market payments that have now been received. I'll talk about capital investments and debt service costs shortly. So on this slide, I'd like to highlight the effective rate of tax of 17% in the period benefits from relief arising from the U.K. patent box regime. We continue to expect our effective rate of tax will be marginally below the U.K. headline rate. Cash outflows of GBP 10 million in the year represent just payments on account during the period.

We've delivered working capital and other inflows in the period of around GBP 50 million. So this includes an inflow from the sale of ROCs using standard ROC sale and purchase agreement of around GBP 54 million; an inflow of GBP 84 million related to rebasing certain foreign currency exchange contracts within our multibillion-dollar derivatives portfolio. There was no impact to EBITDA of that rebasing. An inflow from improvements in payable terms of GBP 50 million; an offsetting inventory outflow of GBP 68 million, half of which was in building up biomass supplies ahead of the first quarter of this year following the restricted supplies in the start of last year; and obviously, an outflow in respect to the capacity market income where payments were deferred until the first quarter of this year. We continue to maintain our long-term target of net debt to adjusted EBITDA ratio of around 2x. And while there may be fluctuations in the cycle, our strong cash conversion provides us the ability to quickly delever.

So moving on to Slide 19, on capital expenditure in the year of GBP 172 million includes maintenance spend of GBP 59 million. There were 2 planned biomass outages at Drax Power Station, including the first for unit 4 following its conversion to biomass. We expect 2020 maintenance CapEx will be between GBP 60 million and GBP 70 million.

CapEx of GBP 15 million for the acquired assets includes an interim inspection at Shoreham, which allowed it to return to service for the more valuable winter period. Inspection work underpins the option for a turbine upgrade, which is anticipated in the 2020 CapEx spend, and in also 2020 includes a planned outage at Damhead Creek.

And our strategic investments of GBP 67 million include around GBP 20 million in our Pellet Production business in support of the target to reduce the cost and increase the volume of biomass self-supply. That includes the LaSalle railway spur, which reduces transportation costs; and the start of the expansion of our 3 pellet plants. At the power station, we spent GBP 13 million delivering the first of a 3-unit 3-year high-pressure turbine upgrade program with Siemens. The second turbine upgrade will be delivered in 2020. And this investment supports our target of reducing the cost of biomass generation.

In 2020, we expect investments in support of our self-supply targets will significantly increase and include around GBP 40 million in respect of delivering the 350,000-tonne pellet plant expansions, which will increase capacity to around 1.85 million tonnes by the end of the first half of 2021.

As Will mentioned, we're exploring options for satellite plants and the widening of our fuel envelope. On satellites, there's an opportunity to expand capacity by up to 500,000 tonnes, with each plant delivering around 40,000 tonnes at a cost of $10 million to $15 million. We expect to develop the first of these during 2020. These investments offer attractive returns before 2027 that are well in excess of our cost of capital.

So turning to Slide 20. At our recent Capital Markets Day, we announced our target to expand biomass self-supply capacity to 5 million tonnes by 2027 while reducing the cost of biomass by 30% to GBP 50 per megawatt hour. In delivering that 30% reduction, we outlined plans to deliver $35 per tonne cost savings on our self-supply capacity by the end of 2022. This equates to $64 million of equivalent cost savings, and I'd like to provide an update on our progress.

The Pellet Production EBITDA of GBP 32 million in the year benefited by $19 million or GBP 14 million in respect of savings from projects that were completed in 2019. These include the LaSalle railway spur, which was operational in May; the co-location of the Hunt Forest sawmill, which became operational in the first quarter at LaSalle, where volumes of the offtake agreements for our sawmill residues have been increasing through the year; also, activities at LaSalle to decommission the woodyard. We also benefited from a full year's run rate of the relocation of our head office in the States from Atlanta to Monroe.

In 2020, we expect the annual run rate of these projects that have already been delivered to be $26 million. That leaves $38 million to be delivered by 2022, and that will be delivered through the 350,000-tonne expansion at LaSalle, Amite and Morehouse, and as I say, expected to complete by the first half of '21; the woodyard decommissioning activities at Amite and Morehouse, and we've already undertaken a similar exercise and have the savings at LaSalle; sawmill co-locations at Amite and Morehouse, replicating the benefit again of the Hunt Forest co-location agreement already implemented at LaSalle; and then completion of the chambering yard at the Port of Baton Rouge; and finally, the increased use of dry shavings.

So moving on to Slide 21. Over the last 2 years, we've greatly improved our access to capital while maintaining a strong balance sheet that supports our strategy. In May, we issued an additional $200 million tap of the existing fixed rate November '25 U.S. bonds, and when swapped back to sterling, an effective interest rate of around 5%.

In July, we completed the refinancing of the GBP 400 million balance outstanding on the acquisition bridge facility, entering into new -- 2 new senior debt facilities. The first, a GBP 375 million private placement agreement; and the second, GBP 125 million ESG facility agreement. The GBP 375 million private placement with infrastructure lenders includes facilities with maturities between 2024 by extending out to 2029. The GBP 125 million ESG facility matures in 2022, but it includes a mechanism that adjusts our margin based on Drax carbon emissions against an annual benchmark, recognizing our continued commitment to reducing carbon emissions as part of our overall purpose. Together, these facilities extended the group's debt maturity profile beyond 2027 at a cost sub-3% and reduced the group's overall cost of debt to below 4%.

With the acquisition of our hydro and gas assets, the quality of our expanded generation portfolio continues to mitigate business risk. It delivers high-quality earnings and strong cash generation. This improved business risk allows cheaper access to credit. It's supportive of our trading strategy, and it's robust to low points in the commodity cycle. We've demonstrated the ability to access a wide range of debt markets, and we'll continue to explore further options to optimize our debt structure.

So moving on to Slide 22. We're committed to making disciplined capital allocation decisions, and we continue to think of our approach in 4 stages. Firstly, maintenance of a strong balance sheet, which we define as a target net debt to adjusted EBITDA of around 2x. Next, our continued investment in the core business to deliver our strategy. Thirdly, a sustainable and growing dividend. The 13% increase in the year on a pence per share basis is consistent with this objective, and whilst the precise level of growth will vary year-to-year, depending on the operating environment and investment needs of the business. Finally, consideration of a wide range of development projects across the group, which offer attractive returns but could require significant future investment as outlined in our Capital Markets Day, especially in respect to the objective of reducing pellet costs and expanding capacity.

Throughout, we'll maintain financial discipline, and we'll ensure a prudent capital structure. The recent investment-grade BBB flat rating from DBRS supports this and provides further confirmation of our improved business risk.

So finally, moving on to Slide 23 and summing up. In Pellet Production, we're focused on reducing the cost and expanding the capacity of biomass self-supply. This requires strong performance of the pellet plants to maximize the value of the cost savings from projects completed in 2019. We must also deliver on the ongoing projects as outlined earlier, including the 350,000-tonne expansion of our existing plants. Beyond this, we're increasing our investment in innovation to support our continuing work on BECCS and development of a wider fuel basket.

In Generation, our contracted position for 2020 is strong. And we need to continue delivering excellent operational performance while maximizing the value we deliver through system support services across our asset base. As we finalize plans for the closure of coal, we estimate the cost of closure to be GBP 25 million to GBP 35 million. We expect to provide for these costs in 2020 and that the cash outflows will happen through 2022. We estimate the OpEx run rate savings of GBP 25 million to GBP 35 million per annum once complete.

As plans are finalized for closing the coal units, we'll review the carrying value of impacted assets, estimated to be around GBP 240 million. Of this, around GBP 140 million are depreciated up till 2025. The remaining assets are depreciated over lives that extend to 2039. We expect to consume the coal inventory balance of around GBP 100 million through the time when the commercial coal generation ceases.

In our Customer business, we're focused on quality of business and on driving operational efficiency and delivering future earnings growth. So in conclusion, in 2019, we've delivered strongly against our financial targets, and we've developed and progressed our strategic plans, positioning us well for the opportunities ahead.

With that, I'll hand back to Will.

Thank you, Andy. Now I would like to just give you an update on our biomass strategy. So at our Capital Markets Day, we rolled out our new biomass strategy. I've summarized that here, including our ambition to create the world's largest, low-cost, sustainable biomass supply chain. To remind you, the goal is to increase self-supply to 5 million tonnes and to reduce the cost of biomass generation to GBP 50 per megawatt hour. And all of that is underpinned by our world-leading sustainability policy, the development of biomass trading capability and the development of carbon-negative technologies. And the strategy, we believe, has multiple benefits.

First, it will make biomass generation viable at Drax Power Station without subsidy. Secondly, it will deliver a world-leading biomass supply business with significant value in its own right. And thirdly, it will position us to deliver negative emissions at scale.

And let me remind you of some of the details of the plan. So over the next 7 years, between now and 2027, we will increase our self-supply from roughly 1.5 million tonnes today to 5 million tonnes and at the same time, reduce the cost of biomass power generation to GBP 50 per megawatt hour from around GBP 75 today. And we'll do that in several ways. First, a series of improvements and expansions at our existing plants, as outlined by Andy, that will deliver $35 a tonne or GBP 13 per megawatt hour of cost savings and 1.85 million tonnes by 2022. Secondly, expansion of our self-supply through satellite plants where we're looking at 500,000 tonnes of new capacity. Thirdly, we're looking at other attractive investment opportunities, which could deliver further additional capacity. And fourth, we're looking at the expansion of our fuel envelope to include other types of fuel such as bagasse. Finally, we are investigating a series of innovations that we can potentially apply across the supply chain to reduce cost, whether that be changes to fuel or changes to logistics.

Let me just give you an update on BECCS. First, as a reminder, Drax is going to be playing one role specifically in the whole carbon capture and storage value chain. So what we will do is we will be capturing the CO2. In order to do that, we're looking at several different options for how we do the carbon capture. The first one involves using proven amine-based technologies that can deliver and have been proven to deliver carbon capture at scale today. They've been operating in industry for over 30 years, and there are 2 reference plants in North America that are capturing over 1 million tonnes a year each.

The second alternative that we've talked about already is we are continuing our trials with C-Capture, which, potentially, over time, we expect to be a lower-cost alternative to those amine-based technologies. That process is going well, and we're currently testing the technology at a world-recognized carbon capture testing facility in Norway. And as we previously said, with the right support from government, we could have BECCS operational at scale and delivering negative emissions in the second half of this decade.

The other thing I wanted to mention is that we've established a carbon capture innovation hub at the Drax Power Station and are working with start-ups to investigate the usage of CO2 in both plastics and also in animal feeds. And we're also beginning to have discussions with large-scale users who are investigating in the production of synthetic fuels using a combination of CO2 that we capture and hydrogen that ultimately might be produced at or near the Drax Power Station.

During 2019, we launched Zero Carbon Humber, which is a partnership with Equinor and National Grid, committed to decarbonizing the U.K.'s most carbon-intensive industrial cluster around the Humber using BECCS, CCS and ultimately, hydrogen technology. In doing so, we have the opportunity to capture more than -- capture and store, I should say, more CO2 than anywhere else in the U.K., more than 40 million tonnes per year by 2045.

We also have the opportunity to safeguard 55,000 industrial jobs as well as create new green jobs in a strategically important industrial hub in the North. Since the launch, we've been working closely with a number of industrial players in the region to develop a detailed plan for the CCUS network, passing many of the CO2-emitting companies in the region and allowing us to achieve economies of scale in the transport and storage.

Decarbonizing industrial clusters is a critical policy area for the current government, and we expect significant funding to be announced over the course of 2020, including the GBP 800 million that was pledged in the conservative election manifesto as well as about GBP 132 million for the Industrial strategy Challenge Fund, which could support the development of the Zero Carbon Humber.

And talk a little bit about what we think is going to happen, some of the major milestones supporting CCS and BECCS over the course of this year. So as we start the year, we have a much more settled political picture than we've had in some time. The government is committed to the North of England and is also committed to net-zero. And we are working closely with Kwasi Kwarteng, who is the Energy Minister, and are excited about what we see coming over the course of this year. And let me highlight a couple of key events that we're waiting for.

The first one is an energy white paper that is expected in the first quarter and is expected to update the government's vision for CCUS as well as negative emissions in response to the Climate Change Committee's net-zero report. In the budget, the spring budget, expected in a couple of weeks, we're expecting an announcement from the government on the GBP 800 million -- or I should say, at least GBP 800 million in new funding for CCS infrastructure and, importantly, how that will be allocated. At this point, it's not exactly clear how they expect to spend that, and I'm happy to take questions on that in a minute.

Later in the year, the Treasury will issue its net-zero review, outlining innovative new ways to drive investment required to deliver net-zero. And finally, building on continued engagement with industry throughout 2020. And you can remember, this process began early last year. We expect the government in the fourth quarter to publish further details on the investment framework for CCUS, including possibly drafts of the types of support contracts that would be available to support carbon capture and storage. All of this work will culminate in COP 26, where we believe there's a very significant opportunity for the U.K. to take a world-leading position on carbon capture as well as on negative emissions. Let me add one important thing.

We've been doing more work on BECCS than anybody else to understand its potential, i.e., how much of it could be done on a global scale as well as its costs. And we believe very strongly that it has the potential to make a significant global impact on climate change, i.e., the amount of negative emissions could be quite material. And secondly, that we can deliver those negative emissions at a cost which is significantly lower than the one that one sees now publicly. So if you look at the Climate Change Committee's report, which calls for about 50 million tonnes of negative emissions from BECCS, those are based on their estimate of the costs. If we can do it for significantly cheaper than that, we think the opportunity could at least be that much or significantly more. So as you would expect, we are going to be sharing that work with the government as they work on their own views of future negative emissions.

So in summary, we have a clear purpose and 3 legs to our strategy that are designed to deliver that purpose. And I believe that we've got exciting opportunities in each one of those areas. First, on biomass, we have the opportunity for significant cost reduction and capacity expansion as we deliver those, and that's a critical objective for us this year. In line with that biomass strategy, we are working hard to make significant progress on BECCS to ensure that, that becomes a reality at the Drax Power Station in the mid-2020s. Thirdly, we have attractive opportunities to invest in providing power system stability. Again, we expect tenders -- more tenders for those types of investments later this year and new opportunities to potentially build synchronous compensators or to convert existing assets to synchronous compensators. Again, we expect that later this year. And finally, in our Customer business, we're very focused on driving future earnings through operational excellence and cost control.

So thank you very much, and I'm happy to take -- probably Andy is more happy. We're happy to take questions from anybody.

Elchin Mammadov, Bloomberg Intelligence. I have 3 questions, please. First of all, if possible, can you share with us your 2020 earnings guidance? You mentioned the leverage ratio, but either in terms of EBITDA, EBIT or net income. The second question is on CCS that you mentioned just now. What sort of level of support do you think is needed for commercial scale CCUS, I mean, given today's energy prices, either in terms of tonnes -- pounds per tonne of CO2 or per megawatt hour? And the final question is that, what's your view on the next T-4 capacity auction? I mean the price have been coming down. Just wanted to see your view on that.

Okay. Maybe I'll ask Andy to take the first one, and then I can take the other 2.

Yes. So at the start of this week, we published the company's view of the current consensus. And note that, that was GBP 433 million.

So on CCS, if you look at that Climate Change Committee report, they talked about a cost of -- the BECCS costs about GBP 150 a tonne of negative emissions, right? And as I said, I think we can do that for significantly less, right?

Third point on the T-4. I would be crazy to give you any sort of forecast. I mean I think the demand in the auction is lower. There is more newbuild entered. There are some -- potentially some of the nuclear assets might behave different than we expected. So I would say, anybody's guess. Obviously, GBP 6.44 from the point of view of a new project was not an attractive level. And we will continue -- I mean maybe to expand a bit on the sort of the intent maybe behind the question, I mean we still have, we think, 6 very attractive projects, the 2 combined cycles and the 4 open cycles. The Drax Power Station project is currently on hold while the judicial review takes place, and that project is not entered in the T-4. But we would be looking for -- we will -- again, we will wait until we get the right level of returns to make those projects interesting.

Mark?

It's Mark Freshney from Crédit Suisse. Two questions. Firstly, on the forward hedge position, it seems very strong. You alluded to GBP 30 million of buyback benefit. Surely, given where power is right now, there's substantial upside through trading that book through the year. So would that be included in your expectation of GBP 433 million or the consensus of GBP 433 million?

And just secondly, on cash flow conversion. You spoke about -- Andy, about, I think, 120% average cash conversion. Clearly, there's monetizing the coal stocks, which you indicated would happen this year, and you've given a number. But what else can you do? Can we expect any other positive working capital flows?

Okay. So firstly, on the hedge position and just noting that, that was a market consensus that we have published as opposed to a forecast from us. But on the hedge position, you're right, we're very well hedged for 2020. I think it's around GBP 54, so substantially better than the current commodity prices. But our ability to benefit from that is reflected in our expectations for next year.

On the cash conversion, you're right that 120% cash conversion, you can't continue to do that without delivering additional working capital benefits. When we look to next year, I think, broadly, the working capital we should expect to be neutral. Primarily, we have to offset the rebasing activities that we did this year. We also have -- we have an inflow from the capacity market, which will help in that regard, and we have the inventory balances on the coal that we'll consume before closure. But next year, I'd expect working capital to be broadly neutral.

Just to talk to, Mark. One, I think the GBP 30 million that Andy referenced was a combination of the coal buybacks as well as the constrained contracts that won't repeat. And I would say that on the coal sort of trading strategies, it will be harder for us to be flexible with those given the need we have to get through that coal stock.

It's Martin Young from Investec. I have couple of questions, if I may. And firstly, on the closure of the coal units, Drax, and the numbers that you've put out there. If we look at the OpEx, GBP 25 million to GBP 35 million of saving, is the best way to think of that as a small part of it coming through in 2022 with the full run rate in 2023? And then in respect of the indications you've given around depreciation, in particular, the GBP 140 million relating to assets that are being depreciated by 2025, should we be looking now effectively at about a GBP 25 million saving per annum in depreciation effective from 2020? So that was the first question.

The second question then relates to the raft of options you have for investments, both here and over in the U.S. Looking specifically at the OCGTs and the CCGTs, is it fair to say that they are potentially sort of slipping down the ranking and expansion of Cruachan and all the things you intend to do with biomass being afforded a higher priority and high likelihood of realization?

Do you want to take the first one?

Yes. So on timing of the savings, those -- the cost savings relate to redundancy, to pension costs and then to some site sort of rectification normalization costs. The coal units are integral part of the station at the moment. So when you stop operating the coal units, making them safe and making the station work with 4 units, there's some cost of -- to deliver that. But primarily, as the coal generation stops in '21, then that's when the headcount will start to reduce, and you'll get the savings delivered from there. There'll be some before, but primarily from '21 through '22.

On the depreciation, if you think of GBP 140 million being depreciated over 6 years, do the math, it's around GBP 25 million. The balance is over 20 years. There's an extra GBP 5 million. So you're around GBP 30 million a year of depreciation of savings if we were to impair the whole GBP 240 million that we need to review.

Can that potentially happen now in 2020?

Well, we expect to complete the review in 2020 as we finalize the plans for closure following today's announcement. So once that's made, there'll be savings from then on. There may be some cost of depreciation during the year until the point we make that decision.

So on the second question, which is about our raft of options. I think the -- maybe I'll just sort of describe a little bit the way we, as a Board, debate the topic because I think, really, there are multiple factors that go into the assessment. So there's clearly a sort of purpose-driven one, do -- how do the different investments apply to that. Further, there's strategic ones, do they -- are they consistent with our strategy. And the other one is, obviously, returns, size and risk, right?

So if I look at the sort of pellet expansion strategy, I think it ticks all those boxes very nicely. I mean it's -- the risk is, I think, very attractive given the fact that we have a known customer, et cetera. So very attractive on the risk basis. They are also -- they are moderately sized, which makes them, I think, also interesting. And the returns, very attractive, and they fundamentally support our purpose, right?

If I look at things like the Cruachan expansion, that is, again, consistent with all those things, other than the fact that, that would be a large investment and one that actually would probably require some sort of government framework to make that work, right?

And then if I look at the open cycles, I think they're very consistent with our strategy to be the lead supplier of system stability and support. Again, each one of them is reasonably moderately sized. So the risk, I think, is quite manageable. And the challenge is getting the right type of support in the capacity market to make the returns attractive, right?

Combined cycles, I would say, are -- probably in some ways, have a different nature given their size. Again, we think there are attractive opportunities there and attractive potential returns, depending on where the Capacity Market comes in.

I guess, in summary, I think you probably have assessed it now. I mean I think if you take all those factors, I think the way you're thinking about it is probably not inconsistent with how we are.

It's Iain Turner from Exane. I wanted to ask on the coal closure, why you've decided to do it now and why you wouldn't wait for the T-4 auction, just in case there's a bump-up of price. And then what does it mean about for the future of those units? I mean you've talked about conversion, but obviously, you've got the judicial review on that. Does this mean that you'll be sort of demolishing these units? Or do they sit there and waiting for a decision on possible CCGT conversion or further biomass conversion?

So I think -- I mean again, to be honest, our assessment of the likely outcomes, the sort of risk involved, the level of contract that they would require, I think the decision in terms of economically was quite clear. And if you combine that with some of the other stakeholder considerations, we felt like it was very much the right time to do this. I mean important to say, it was not taken lightly by any means. Good discussions with government, as I said. We will be having good extensive discussions with our unions and other employee representatives to make sure that we support our people through this in the right way. But we felt like it was the right time for ourselves and also for the system to come off coal, right?

To be honest, another important factor behind that is we've got 4 units running on biomass, right? So there is a future for the power station through 2027, and I am quite confident beyond that, right?

In terms of what we do with them now, the first step is -- well, probably 3 steps, right? The first thing is we will run them through 2021 as we run them now, right? And we have that coal stock to get through. Between March '21 and September of 2022, we will be available if needed by the system. I mean as we know, there has not been a Capacity Market event to date. So we are -- I mean we'll be ready, and if it happens, but I'm not sure it's a likely event. But we will be there to comply with our obligations.

The next point -- step in this is then we will make them safe, right? So we will make sure that we actually manage them in such a way, shut down things that need to be shut down, manage the assets so that actually they will be safe, but they won't be dismantled immediately. And then from that point on, there's a couple of options we've -- I mean repowering is still an option. Absolutely, we are looking at it, assuming that the judicial review comes out as we would expect, and we have our planning permission. So that's obviously still an opportunity.

The other thing is interesting is when we -- when this stability tender came out, one of the things that is possible to do is take a coal-fired power station, effectively disconnect the generator, turn it into a synchronous compensator and run it to provide no sort of megawatts but only inertia reactive power. And that's absolutely something we'll also look at, and we expect more tenders of that type.

Fraser, yes.

It's Fraser McLaren from the Bank of America. A couple of questions, please. Firstly, on supply. I'm interested in your view on the outlook for supply. I guess it's fair to say that it's not quite what as planned. So what's changed? And is it still required as part of the group?

And then secondly, you spoke about news flow that you expect from the government. At what point do you expect them? To speak about the actual carbon tax, what do you think that will entail? And what's the relationship between that outcome and the viability of BECCS?

Okay. Fine. So we have -- so thinking about the, first, supply business, right? I think the supply business, there's -- let me start with the back end of it first. I mean -- so fundamentally, our supply business is about -- as I said, providing customers control of their energy and being able to provide, for example, demand-side response or other types of system support services over time as that market develops. And so from a strategic perspective, I mean, that piece of it is fundamentally still something we are very confident of it. I mean we want to have a piece sort of both on the demand side and also on the supply side as the system evolves over time.

So for example, we're doing a lot of work around electric vehicle management, and we've got our first customers there, where, effectively, the first step is installing EV infrastructure for customers. And then over time, the potential to manage B2G-type services, we think, is quite an interesting angle for us, right?

The second thing, which is I think is a growing sort of leg to that business is more about, strategically, how do we help customers achieve their ESG objectives themselves, right? And so I think it's quite attractive to some players who are -- themselves have a very strong ESG agenda to work with us in a simple way to provide renewable or carbon-free power and/or gas. But also, as we become sort of more -- if we move more down the line of becoming a negative emissions company, they also -- we have interesting discussions with them around how we can share our ambition with them on those terms, right?

If I look at operation, how we performed, again, we haven't done as well as I would have liked. Quite disappointed with that in some ways. The -- what's happened there? I think a couple of things. I mean as I would say, integrating the 2 businesses, Haven and Opus, probably not as easy as we might have liked. I think some external factors have been quite difficult and things like last year, the mutualization of ROC payments, for example, sort of the -- I mean the price gap has not impacted us. But again, the environment for electricity supply and gas supply hasn't been that good, weather, there's a whole bunch of different things, right?

What I'm most excited about is Paul, who is here somewhere, who is now leading that business, very clear focus on how we can deliver through operational excellence. So what we've done, for example, at Haven, we put in place what we call 4E, or sort of excellence every day, effectively. And effectively, that plan really brings the people on -- sort of on the ground in -- to get more involved in how we solve problems for customers, right? And that's really delivering very interesting results at Haven, and now we're going to bring that across to Opus, right? So there's a series of things we need to get right, and that includes debt management where we're making improvement and involves cost to serve where we're also -- we need to make more improvements.

But again, the final point I would say is that, if you think about the top line sort of growth and the customer growth in that business, it's still -- I think we've got a very attractive portfolio, right? I mean as Andy mentioned, Ford Motor Company, Severn Trent. We've done a very interesting deal with Budweiser, where we're effectively doing a sort of a channel-type deal with them for pubs. So I think there's definitely attractive opportunities there. So that would be supply, neutral from the government.

Carbon tax, could be at the spring budget, could be later. Clearly, that's an important issue for us. The -- short term, there's been talk about replacing the EU ETS with something like a GBP 18 tax. So I think that's -- I don't want to -- I don't have a good crystal ball on this, so I'm not going to give you any real forecasts.

I think long term, the idea that sort of U.K. and European sort of carbon prices would converge, I think, is sort of economically a logical thing to have happened. How that happens? So for example, is there a U.K. ETS, as in the U.K. Emissions Trading System that is somehow linked to the European one? That would be our preference, either linked or combined. Now how all these negotiations go over the next year is anybody's guess. But I do think that economically, that's where the logic should get you, right? I mean again, if we're going to be part of the European system, and even if we're not linked, power prices, given interconnectors, should be impacted by where European taxes go anyway, right? And I mean, my very clear expectation is that European ETS prices will rise significantly if they're going to hit their sort of net-zero target by 2050 as well.

So that's what I'll say there. So viability of BECCS. I mean the -- maybe we can take this in a broader picture. I mean if the U.K., rest of the world is going to get to net-zero by 2050, there has to be some mechanism by which carbon emissions are either taxed or regulated such that they are less attractive, right? Equally, it would make a very good economic logic for the inverse to be true, i.e., for negative emissions to be incentivized, right? My own view is that a tax or government sort of levy is the most logical way to do that. That's all yet to happen, but I'm very convinced that if the world is going to get there, this has to be in place, right? So there has to be an economic logic that supports BECCS and supports getting to net-zero, and that's what we would expect to participate in. Exactly how it happens? To be determined.

It's Dom Nash, Barclays. So a couple of questions, please. I mean you have an ambition to reduce your biomass costs of GBP 50 a megawatt hour, and I think your aim was subsidy-free generation. But at that level, you'd only be a mid-merit peaking power station. You wouldn't be necessarily willing that hard. Your subsidy that contend in 2027, do you -- when does the conversation start with the government? Or when we will start to hear about whether or not there's going to be an extension of the subsidy in order to increase the output, particularly in light if you are going to go down about this route? And then the follow-up question on that is that you obviously -- you've got plans -- you're talking 2.2 million tonnes of pellet in if you had done the 2 extensions and the satellite plants, you still will build out another sort of 2.8 million tonnes. When will we get clarity on when you're going to press a button on that?

Okay. Maybe I'll take those. I mean I think the first best way for the government to help extend the life of the Drax Power Station is through BECCS, right? And so the discussions that we're having with them now are about that, how can they incentivize negative emissions. And we maybe don't make enough of the comment that most type -- most negative emissions technologies, direct air capture being the other obvious one, do not produce power. They are massive users of power. So there's lots of economic logic for why having Drax Power Station with negative emissions at the center of the U.K. system for a long time makes a ton of sense, right? So that's the first thing.

Second thing is, it's becoming so -- and that will be the next year or 2. At the same time, I'm already having discussions with some suppliers. So I mean, we don't highlight this, but obviously, if I go to a supplier and say, I can give you a contract through 2027, the time is getting short for that payback, right? So that's starting to become a topic.

The other one I have is with capital providers, right? I mean clearly, we will -- we have a sense of where the equity market sees things, but the debt markets, I mean, we are extending our debt profile beyond 2027. But as we do refinancings, we need to have answers to those questions, too. So it's not far away. But again, my discussion with the government, I think, the best alternative or the best solution to that for everyone now is BECCS, but it will be in the next -- take 1 or 2 years before we -- I think we should solve that.

And your second question was...

[indiscernible]

Oh, sorry, fine. So I think that as we talk about sort of half of the puzzle is existing. Well, there's 3 pieces. The existing capacity, I think we've got good plans there. Second piece is on potentially more pellets. I mean let's say, of that 5 million, between -- I was -- I think about it as sort of between 2 million and 3 million on pellets and between 2 million and 3 million potentially on other types of viable fuels.

So my -- we are going to be taking it to the Board for final investment decision. The satellite plants, we're also going to be going back to them this year and talking about bagasse and potentially a bagasse pelleting plant. And so I would hope to be coming to you at the mid-year with a discussion of both of those topics and more -- the beginnings of more clarity on how we get to that 5 million. Yes?

It's Alex Wheeler, RBC. Two questions for me, please. Firstly, on the value from flexibility, the GBP 129 million. If we take out the GBP 30 million not repeating for this year that Andy has already mentioned, then how do you expect that underlying number to trend going forward? And secondly, on the coal assets, is that going to sell on the coal capacity market contracts? Is that something that you would consider doing?

So I think on the first one, so you take out the GBP 30 million, you get to around GBP 100 million versus sort of around the GBP 90 million the year before. I mean we -- over the longer term, I should say -- so we expect that market to grow. No question, right? And that will be both through increased balancing market activity, could be increased contracted activity, as we described. Some of the things that we put into that stability pathfinder tender were actual investment projects where we actually invest capital. The returns are attractive, and we think there's good opportunities for earnings there. I would say that, by definition, this is a volatility play, right? So it's not going to be straight line. And so some years might be -- or some years we would expect will be better than others, right?

In terms of the -- I forgot the second question, apologies.

On the coal capacity market contracts.

Oh. Fine. So yes, there is. It is technically allowed to transfer those. And it is -- I think it has happened at least one other time. There are not a lot of buyers. So we will try to do that. If it makes economic sense, we'll do it, but I'm not holding my breath.

Adam Forsyth;Longspur Research;Analyst: Adam Forsyth from Longspur. I just wonder if you could share some of your experience with the tender in the synchronous market. Do you think there's enough participation for the pricing to be a reasonable guide for tenders going forward? And if so, how would that support further investment at Cruachan, particularly given your comments on needing a government framework? What do you see in terms of that? Is that -- would grid reform be sufficient there, grid charge reform be sufficient?

So I'll be, maybe, delicate about that. I think, on the -- it's not exactly clear to us exactly how that tender was set up or exactly how that tender -- how the winners were determined, right? So we've done a lot of back solving to try to get there. There's clearly a price -- I mean if we look at price per megawatt or per half hour of availability, I think you can get to a lot of the answers, but it's not exact, right? So there is some locational element, which is having an impact, which, to be honest, I'm not sure we -- I know we do not yet understand fully. And we were -- I mean we'd like -- we would ask grid to give more visibility and transparency because that would help. So the answer to your question is there enough information to have sort of certainty or real clarity on pricing, I'm not sure we're there yet. But it has been helpful because there is -- that having that tender has definitely made a big difference in moving us towards a more transparent picture, yes.

So if I think about sort of investments that we might do, I mean, the other problem is the tender of the contract is a 6-year deal, right? So I can make -- I can look at making adjustments to existing assets like a coal plant. So -- and we're talking about small tens of millions types of investments, where I potentially can get a return in 6 years and I can make it work. But again, we put one of those in and it didn't win. So it is -- but it is -- that's not far away, shall we say, right? And if we had more time, and when we have more time, I would expect that we will try to do that type of thing again.

Doing an expansion of Cruachan, so what we call a Cruachan 2, adding more turbines, et cetera, that is a very, very big project, which will not earn a return in 6 years. And this is not -- this revenue would not be sufficient for that. So that's the kind of thing why I say we need a framework. If we want to do that, we would need to have a really bilateral discussion with the government, U.K. or Scottish government, on how that might work.

Anything else? Thank you all for coming, and we'll be around if you wanted to ask any questions in private. Thank you.