Drax Group PLC Capital Markets Event and Trading Update (1264I)
15 June 2017 - 4:00PM
UK Regulatory
TIDMDRX
RNS Number : 1264I
Drax Group PLC
15 June 2017
15 June 2017
DRAX GROUP PLC
(Symbol: DRX)
Capital Markets Event and Trading Update
Capital markets event
Drax is today hosting a capital markets event for investors and
analysts.
The event will provide an update on the Group's strategy,
outlining a plan for 2025 EBITDA in excess of GBP425(1) million -
more than a third of which is expected to come from Retail
(>GBP80 million) and Biomass Supply (>GBP75 million)
operations. This will 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.
The event will 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(2)
and I&C(3) businesses;
Generation - visible biomass earnings, flexible operations, the
development of options for rapid response gas and long-term
opportunities to repurpose coal assets; and
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.
These activities are underpinned by safety, sustainability,
operational excellence and expertise in our markets. Drax is
committed to using research and innovation to help reduce supply
chain costs, identify new long-term opportunities and to maximise
value across the Group.
The event will be led by Dorothy Thompson, Group CEO, supported
by the senior management team from across the business.
Dividend policy and capital allocation
Following discussion with shareholders, Drax today announces a
new dividend policy.
Drax expects to pay a growing dividend consistent with
maintaining its credit rating and investing in its business.
Drax expects to recommend a dividend of GBP50m with regards to
the 2017 financial year. The Board is confident that this dividend
is sustainable and expects it to grow from this level as the
implementation of the strategy generates an increasing proportion
of stable earnings and cash flow. In determining the rate of growth
in dividends the Board will take account of future investment
opportunities and the less predictable cash flows from the Group's
commodity-based businesses.
If there is a build-up of capital in excess of the Group's
investment needs the Board will consider the most appropriate
mechanism to return this to shareholders.
Dorothy Thompson said:
"Britain's energy market is changing. Drax has embraced these
changes with a strategy which will help change the way energy is
generated, supplied and used for a better future.
"Through our operations in retail, generation and biomass supply
we expect to deliver a significant increase in high quality,
visible, contracted earnings for the Group.
"With the optimisation of our existing asset portfolio combined
with acquisitions across our markets the strategy is already
delivering, allowing the Group to create long-term opportunities in
all areas of the business.
"We are confident in the strategy and our ability to deliver
high quality earnings, growth and value for shareholders, supported
by a strong financial model and clear capital allocation policy,
including a sustainable dividend that we expect to grow from a
level of GBP50m in 2017."
Trading and Operational Performance
Since publishing our full year results on 16 February 2017,
trading conditions in the markets in which we operate have remained
unchanged and operational performance has been good.
These factors underpin our expectations for full year EBITDA(4)
, which remain unchanged.
Capital markets webcast and presentation material
The event will be webcast from 9.30am and the material made
available on the Group website at the same time. Joining
instructions for the webcast and presentation are included in the
links below.
http://cache.merchantcantos.com/webcast/webcaster/4000/7464/16531/90093/Lobby/default.htm
https://www.drax.com/investors/capital-markets-day/
Notes:
(1) Three business areas, including an assumed central cost, based on GBP21m actual in 2016.
(2) Small and Medium-sized Enterprise.
(3) Industrial and Commercial.
(4) EBITDA is defined as profit before interest, tax,
depreciation, amortisation and unrealised gains and losses on
derivative contracts.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Enquiries:
Drax Investor Relations:
Mark Strafford
+44 (0) 1757 612 491
+44 (0) 7730 763 949
Media:
Brunswick:
Simon Maine
Mike Smith
+44 (0) 207 404 5959
Drax External Communications:
Paul Hodgson
+44 (0) 1757 612 026
Website: www.drax.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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