Drax reveals trading conditions have improved

Drax, which runs a coal-fired power station in North Yorkshire, has cheered investors with news that since its half year results at the end of July, its trading conditions have generally improved, with full year expectations unchanged on the back of a continued good operating performance.

Drax, which runs a coal-fired power station in North Yorkshire, has cheered investors with news that since its half year results at the end of July, its trading conditions have generally improved, with full year expectations unchanged on the back of a continued good operating performance.

However, the domestic coal market, where some of its suppliers continue to face challenges, has continued to result in tough market conditions.

The firm said that it has taken advantage of better dark green spreads - the indicators for coal-fired generation of electricity - since the half year point to strengthen its contracted position for the next and the following year.

The company's positions under contract for this and the next two years are 26.9 terawhatts (twh) in 2012, 20.3twh in 2013 and 7.3twh in 2014, with fixed price power sales at 25.3twh at £51.5 per megawhatts (mwh) in 2012, 17.7twh at £51.8/mwh in 2013 and 4.7twh at £54.1/mwh in 2014.

Drax also announced its plans to raise around £180m through the placement of just under 36.5m new shares to help fund the £650m - £700m required to carry out its plans to turn the company into a predominantly biomass-fuelled generator. The new shares represent around 9.99% of the exisiting issued share capital. The placing price has yet to be determind.

Dorothy Thompson, Chief Executive of Drax said: "This is a hugely exciting time for Drax and our shareholders. We now have the mandate, means and expertise to become a large renewable electricity generator. We will do this by transforming the largest coal plant in the UK into a power plant fuelled predominantly with sustainable biomass. The placing is one of the key building blocks in this transformation.

"The benefits are multiple - securing jobs at Drax and across the UK in the supply chain, providing reliable cost effective renewable power for the consumer in line with government's policy and with our confident belief that this will deliver attractive returns for our shareholders when the transformation is complete."

NR

Recommended

The top funds to invest in
Funds

The top funds to invest in

As market volatility and recessionary fears continue, here are the most popular funds, stocks and trusts investors are putting their money into accord…
2 Feb 2023
The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves takes a look at the companies with the highest dividend yields in the UK’s blue-chip index
23 Jan 2023
The top ten dividend stocks in the FTSE 250
Share tips

The top ten dividend stocks in the FTSE 250

The average FTSE 250 dividend yield is around 4%, but many stocks yield much more. Rupert Hargreaves picks the best FTSE 250 stocks for income investo…
17 Jan 2023
Investing trends to watch out for in 2023: what analysts say
Investment strategy

Investing trends to watch out for in 2023: what analysts say

What are sensible strategies for high inflationary times? We ask analysts to find out.
22 Dec 2022

Most Popular

Best savings accounts – February 2023
Savings

Best savings accounts – February 2023

Interest rates on cash savings are making a comeback. We look at the best savings accounts on the market now
3 Feb 2023
The best one-year fixed savings accounts - February 2023
Savings

The best one-year fixed savings accounts - February 2023

Earn almost 5% on one-year fixed savings accounts.
3 Feb 2023
After slumping 42% last year, what's next for Scottish Mortgage?
Investment trusts

After slumping 42% last year, what's next for Scottish Mortgage?

After a spectacular couple of decades, the Scottish Mortgage Investment Trust fell by 42% last year. We take a look at the trust's performance and dis…
3 Feb 2023