Drax unveils new dividend policy as it embraces changing energy market

As a statement of confidence in its transformation from a generator of coal power to biomass energy, Drax has announced a new dividend policy that will see it pay out £50m this year grow from there on.

Yorkshire-based Drax plans to lift adjusted operating profits above £425m by 2025 from the £140m last year, with more than a third expected to come from its retail business and biomass supply.

"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," said chief executive Dorothy Thompson, ahead of a capital markets event being held by the company for investors and analysts on Thursday.

She said the group's retail, generation and biomass businesses would deliver a "significant increase in high quality, visible" contracted earnings and cash flow for shareholders, suggesting possible cash returns "if there is a build-up of capital in excess of the group's investment needs".

She added: "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."

Drax said trading conditions since February's final results have remained unchanged and operational performance has been good.