Drax reduces 2014 interim dividend by 46%

DividendMax Ltd.

Drax reduces 2014 interim dividend by 46%


EBITDA for H1 2014 down 15% at £102 million

- Year on year reduction reflects increasing cost of UK carbon tax

Underlying earnings per share decreased 46% to 9.4 pence

- Higher depreciation and finance costs, reflecting biomass investment and associated financing

- Reported basic loss per share of 2 pence includes unrealised losses on derivative contracts of £56 million (and the associated tax), principally related to foreign currency hedging programme

H1 2014 effective tax rate on underlying profits of 16%

- Expect full year tax rate on underlying profits to be close to or just below standard corporate rate

Capital investment on track

- H1 2014 capital investment of £123 million

- Full year capital investment guidance unchanged at c.£200 million

Evaluating options for further value enhancing, biomass related capital investment

- Supply chain - potential 3rd US Gulf pellet plant and US East coast pellet operations

- Fourth unit conversion - dependent on regulatory support

Interim dividend of 4.7 pence per share, or £19 million (H1 2013: 8.7 pence per share,
or £35 million), in line with policy to distribute 50% of underlying earnings

Strong balance sheet

- Net debt of £38 million includes additional £100 million M&G loan facility concluded in May 2014

Companies mentioned