Drax and CSR

Conducting our operations within a framework that reflects the legislative and regulatory requirements is only part of how we manage and run our business. At Drax we are acutely aware of society’s expectations of a large and highly visible power station and we endeavour to address those expectations through voluntary policies. The Board has ultimate control of policies in respect of both the wider corporate and social responsibility and in relation to environmental and health and safety matters. The Board’s policies are implemented by dedicated specialists who make sure effective processes and procedures are in place to assure compliance and to identify and to report on risks and opportunities.

As a responsible business, we continue to invest, not only to comply with the increasingly stringent environmental and health and safety requirements, but, where practicable, to go further. In September, we were pleased to have our efforts recognised through joining the FTSE4Good Index Series, which is designed to measure the performance of companies that meet globally recognised corporate responsibility standards and facilitate investment in those companies.

For us, corporate and social responsibility is about achieving a balance between the commercial and regulatory rigours of the competitive sector within which we operate and our commitment to our wider stakeholder group. These range from shareholders, through Government and the media to non-Governmental organisations, opinion formers and the local community, not forgetting our customers and suppliers. Communication with all our stakeholders is considered to be an essential part of our business and we aim to be open and transparent in all that we do. We fulfil our communication commitments through an investor relations programme and a wide-ranging external relations programme.

Investor relations

Drax is committed to delivering shareholder value. We communicate our results and prospects to our shareholders in an accurate and timely manner using a variety of channels. In addition to the Annual General Meeting, we communicate through our Annual Report and Accounts, Interim Report and Trading Updates. All of these documents are available through the Investors Centre on our website at www.draxgroup.plc.uk. Significant matters relating to the trading and development of the business are disseminated to the market by way of announcements via a regulatory information service and those announcements appear as soon as practicable on our website.

Face-to-face meetings are held with our major institutional shareholders to assist them in understanding the information announced to the market and to ensure that the Board is aware of investors’ views and concerns. In 2006, a formal meeting programme was delivered in both the UK and US after each of the Preliminary and Interim Results announcements.

The year has seen a ten-fold increase in the number of shareholders on the register and a marked increase in the number of private investors. We continue to develop the Investor Centre within the corporate website to address the needs of the private investor.

External relations

Through our external relations programme we engage with all of our key stakeholder groups from the Government, through the media to our local community. We maintain channels of communication with all groups which facilitate a ready flow of information, whether on matters of policy, financial results or community initiatives.

A key focus for 2006 was the Government’s Energy Review launched in January. The Review represented the single biggest opportunity, since the Energy White Paper of 2003, for those with an interest in the energy sector to influence energy policy. Considerable effort was made to engage fully with the Government, utilising all available channels, to ensure that our position was fully argued and understood. The Government’s report on the Energy Review, published in July, contained much to be welcomed with its recognition of the valuable contribution and long-term role of coal-fired generation in the energy mix of this country and its acknowledgement of the contribution that co-firing renewable biomass materials with coal can make to carbon abatement, given a sympathetic regulatory environment.

We also took the opportunity to engage with the Opposition on several fronts, including their energy review which was conducted in parallel with the Government’s own review.

No political donations were made in the UK or elsewhere during 2006 and the Company’s contact with those active in the political arena has been and will continue to be aimed only at the promotion of the Company’s business interests.

Suppliers

As in previous years, we encouraged local and national companies to bid for contracts to supply the many goods and services required by the Group. In making purchases, we are mindful that some companies or indeed countries may have poor ethical standards or human rights issues. Covering, as we do, a varied marketplace, with a number of indirect manufacturers supporting the end product, it is impossible for us to be certain that we do not indirectly trade with certain companies or countries whose standards are poor. However, we do not knowingly support or trade with such companies or countries.