EPS beat, EBITDA slightly below our estimates Drax has reported 1H23 results this morning. Adjusted EBITDA (excl. EGL) was £453m, up 101% vs. 1H22A but below our estimate of £481m. EPS of 46p, up 130% vs. 1H22A (INVe 39.7p). Dividend of 9.2p, up 9.5% vs.1H22A (INVe 9.3p). Net debt of £1,274m was in line with our estimate of £1,250m. At a divisional level, generation posted EBITDA of £457m (INVe £468m), pellet production posted EBITDA of £48m (INVe £54m), and B2B posted EBITDA of £37m (INVe £27m). Drax has alluded to a strong system support role, the latter in line with our thesis that flexibility will be increasingly important in a system that has more volatility and intermittency. A presentation is already available and a webcast will be held at 8.30am (Link) FY guidance in line with consensus Guidance for FY23 Adjusted EBITDA remains in line with analyst consensus, the latter now at £1,172m (INVe £1,180m). This compares to that which Drax’s communicated on 23rd May, where Drax expected this metric to be in line with analyst consensus of £1,162m (range £1.1-1.2bn). The FY dividend is expected to be 23.1p, slightly below our pre-existing 23.2p estimate. Hedged positions are now: FY23 – 11.7TWh ROC/hydro/gas output @ £162.7/MWh (vs. 12.5TWh @ £158.6/MWh). FY24 - 11.2TWh @ £147.5/MWh (vs. 10.5TWh @ £149.1/MWh). FY25 – 5.2TWh @ £126.2/MWh (vs. 3.2TWh @ £137.3/MWh). Average prices (ex CFD) in our pre-existing estimates are £157.2/MWh (FY23E), £156.3/MWh (FY24E), and £120.5/MWh (FY25E), albeit with material open volume in 2025. Ongoing discussions with the UK government re BECCS Discussions with the UK government re a post 2027 bridging mechanism and BECCS are ongoing.