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Trading statements

Drax unveils new dividend policy

15 June 2017 07:30

Drax has announces a new dividend policy following talks with shareholders.

The group said it expected pay a growing dividend consistent with maintaining its credit rating and investing in its business. Drax said it expected to recommend a dividend of £50m for the 2017 financial year.

It said the board was confident that this dividend was sustainable and expected it to grow from this level as the implementation of the strategy generated an increasing proportion of stable earnings and cash flow.

It said that in determining the rate of growth in dividends the board would take account of future investment opportunities and the less predictable cash flows from the group's commodity-based businesses.

Drax said it would be hosting a capital markets event for investors and analysts today which would provide an update on the group's strategy, outlining a plan for 2025 EBITDA in excess of £425 million - more than a third of which was expected to come from Retail (>£80m) and Biomass Supply (>£75m) operations.

It said this would be delivered by maximising the opportunities from the existing portfolio of assets and targeted value creative investment in long-term growth opportunities, underpinned by a robust financial model and capital allocation plan. It said the event would provide further insight into the group's three areas of operation and how these support the strategy:

Retail - an annuity-like income stream with profitable SME and I&C businesses

Generation - visible biomass earnings, flexible operations, the development of options for rapid response gas and long-term opportunities to repurpose coal assets

Biomass Supply - lower cost, good quality pellets, with visible earnings and the capacity to provide at least 30 per cent of the Group's fuel requirements.

Story provided by StockMarketWire.com

Related Company: DRX

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