Results due soon electricity prices only fell slightly recently boith DRX and BGY very volotile as brokers continue to change their minds i'm in and staying with good growth and 5%= yield protecting price

Results due 8/3 so expect some gains running up to that......


Drax Group PLC
01 February 2007


1 February 2007


DRAX GROUP PLC
('Drax')
(Symbol:DRX)

NOTICE OF RESULTS

Further to the reference made in the Trading Update released on 13 December
2006, Drax confirms that it will be announcing its preliminary results for the
year ended 31 December 2006 on Thursday 8 March 2007.

Drax also advises that the date set for its 2007 Annual General Meeting is
Thursday 26 April 2007.

Well it looks like the markets like the trading update, up 3.7% today.

My own feeling is that it will stay fairly static, over the next few weeks untill the results.
I still like the forward looking way that the company is heading and the healthy dividend.

Re Citywire (buy) and JP MORGAN (sell/avoid), I always find it strange that people are willing to pay several hundred pounds for full broker analysis.

Often in the past I have seen the same companies being tipped by different brokers/analysts for Buy/Sell/Hold. In todays volatile markets this is occurring on a much more regular basis.

Just goes to show that often us small private investors (as long as we do thorough research) are just as likely to be right.

Saying that if anyone wants to send me a few hundred quid, I will send by return a buy/sell or hold forecast on any share in the UK markets.

NOTE... The above is obviously a none serious comment as I don't want the FSA after me.
It does show though, that the experiment several years ago re a monkey sticking a pin in the financial pages, was about as accurate as the so called clever analysts. If I remember rightly the monkey beat several of the analysts in the picking of stocks, for a portfolio.
Now wheres me pin.

Read yesterday in The Telegraph that it is expected that 1 coal fired power station will be opened somewhere in the world 'every day' next year.
Due to the ever increasing demand for power and the ever increasing cost, it appears that 'King Coal' is a long way from dead.
When it comes to polluting the environment or having insufficient power there is no contest, especially when the newer mega powers like China are expected to take over from the USA as number 1 by 2030, (my own view is they won't, as the USA will I believe fight and win, this race to get back/retain the top).
So the new coal may well have to be cleaner, and as they say necessity is the mother of invention, surely we will see coal being used in ever increasing cleaner methods. UCG re coal and bio-fuels as supplements will have to become more efficient. Drax use of coal, with cleaner emissions coupled with their added use of bio-fuels place them in a good position in the battle of power supply.

The sp has been performing well today, at present showing a near 6% increase. Also volume is well up with recent buys at full price chasing the offer price.
OK I appreciate the sp often moves with the market in general, but the present increase must surely have news behind it.
Cant just be down to the shortage of gas reserves warning (8 days supply left in UK) can it. Just wondering if there is a supply contract looming.

The life of Brian (sorry mean't Drax).

Spoke to someone today who works at National Power re Drax and coal fired power stations. It appears that there are 2 such power stations earmarked for closure. He also stated that as Drax produces about 10% of the total amount of electricity this country requires, they will and I quote, "Be the last one to close, and as the production of electricity of sufficient quantity by other means is so far away, Drax will see him out".
He is about 45 ish, so hopefully Drax has at least another 30 years.
He could of course be wrong, but I am betting we are a long way from totally green energy, especially with an ever increasing demand.

Still confident in Drax but not the markets.

Sold today so probably won't post again for some time, although will look in regularly.
My reason for selling is not that I feel Drax are a poor investment, as I feel the company would without my reasons for selling be a good solid investment.
But I have sold as I consider the markets are about to head down in a big way, due to a combination of doubt in where this country is heading re the handing of the economy coupled with the turmoil in the EU (mainly the Pigs situation) and world economy.
Time will tell if I have made a prudent move or not.

"Drax initiated with buy rating at RBS, target 560p."

Broker note from RBS:
"Due to an weak international economy and a boost in US unconventional gas production, here is a surplus of LNG on world markets, which is depressing UK gas prices and looks set to continue for the next few years. This is bad news for Drax, as a coal-fired generator in a gas-priced power market. Our 2010 forecasts look intact but if current forward prices persist, our 2011 forecasts will be too high.
BUT, nevertheless, Drax looks cheap on conventional metrics.
At only 3.3x 2010 EV/EBITDA and 6x earnings, on our forecasts, Drax looks cheap on conventional measures. Our DCF-based price target is 560p, but this only tells part of the story: we find considerable hidden value in Drax.

We estimate Drax has around 275p/share of hidden value.
This hidden value arises from Drax.s coal stocks (46p/share); the carbon credits it will receive under the UK.s National Allocation Plan (74p/share); its historical tax losses (64p/share) and the value of its trading book, assembled when prices and spreads were significantly higher than today, (107p/share). Subtracting debt, we estimate this totals around 275p/share. This implies that the physical assets of Drax (the largest coal-fired power station in Western Europe, fully equipped with flue gas desulphurisation) are only being valued at 330m . around 10% of replacement cost, or 75% of the last three years. capex.

We believe Drax.s value will become apparent as UK generation market tightens.
The UK is scheduled to close 15% of its older coal and oil powers stations by 2015, and probably earlier in practice. The UK will still need Drax and other coal stations to run for most of the winter to meet demand. Therefore spreads will most likely have to rise in order to remunerate this important source of security of supply. We therefore rate Drax as a Buy on this longer-term view, although our 2011 and 2012 forecasts may get worse before the outlook for Drax gets better."

Interim Management Statement.

12 month high (470.90).

In which case shouldn't you be looking to lock in profit, or at least set a stop?

Harry - I've taken some profit here and FGP today.

Nice one. Also approaching the 2 year high at 480 ish. I can't imagine many private investors would be holding on much longer.

Running out of steam?

Harry - I closed the rest of mine earlier - so they will probably carry on up now!

It has carried on, though slowly. Coming up for divi (16p) 28th Sept '11.

Recent upgrades and SP targets......

08-11-11 07:38 Liberium-Upgrade 670P

02-11-11 Barclays Capital Upgrades 675P

31-10-11 Goldman Sachs 682p

DRX DRAX Top end of range of forecasts.

http://moneyam.uk-wire.com/cgi-bin/articles/201111150700250732S.html

Merrill Lynch upgrades Drax Group from neutral to buy, target price raised from 510p to 660p.

Societe Generale upgrades Drax Group from sell to hold, target price raised from 498p to 527p.

UPDATE 2-Drax sues Britain over U-turn on converting coal unit

* Shares in Drax fall 14 pct * Legal challenge will test new UK subsidy framework * Drax to continue with conversion regardless of outcome * Dong Energy biggest winner of subsidy contracts (Adds further Drax reaction, Dong Energy contracts, lobby group comment, background) By Karolin Schaps LONDON, April 23 (Reuters) - British electricity producer Drax DRX.L said it had started legal proceedings against the government over a decision not to support the conversion of one of its coal-burning units to biomass under a new subsidy scheme. The government's move is a blow to Drax's plans to modernise its polluting coal plant in Yorkshire, northern England, to burn more environment-friendly biomass after two units were short-listed in December to receive contracts under the new government scheme. "Nothing has changed, as far as our plans are concerned, between being deemed eligible in December and now. We have, therefore, commenced legal proceedings to challenge the decision," Drax Chief Executive Dorothy Thompson said in a statement on Wednesday. Shares in Drax were down 14 percent at 0926 GMT on Wednesday. The government is changing the way in which it supports renewable energy projects by replacing a mechanism for direct subsidy payments with a system whereby qualifying projects are guaranteed a minimum price at which they can sell electricity. Drax's legal challenge will set a precedent in testing the legal framework of the new subsidy regime, due to start in April 2015, and its outcome could sway other investors in UK biomass conversion projects. The government said the project for converting Drax's Unit 3 at the plant did not meet all its assessment criteria for the new contracts-for-difference (CfD) scheme. It recommended that Drax continue to use the current direct subsidy scheme, which analysts say is less lucrative. "We believe that this decision is disappointing. It has undoubtedly created some greater uncertainty," Angelos Anastasiou, a utilities analyst at Whitman Howard, said. Drax said that regardless of the outcome of the legal challenge, it would continue with the biomass conversion project. The government granted a CfD contract for the conversion of Drax's Unit 1, which will receive a guaranteed power price of 105 pounds ($180) per megawatt-hour from April 2015 when the new scheme is due to start, pending EU state aid clearance. The government also awarded investment contracts to seven other projects on Wednesday, including two biomass plants and five offshore wind farms. These included the Dudgeon offshore wind farm, proposed by Norway's Statoil STL.OL and Statkraft, SSE's Beatrice offshore wind farm and a third biomass conversion unit at Drax's coal-fired power plant. Denmark's Dong Energy was awarded contracts for its Walney Extension, Burbo Extension and Hornsea offshore wind projects, making it the biggest winner. "These contracts will allow us to deliver over 5 billion pounds of investment in the pipeline of projects we have in the UK," Brent Cheshire, Dong Energy's UK chairman, said in a statement. Britain's RenewableUK lobby group said it was important that all renewable energy projects receive support through the CfD scheme, not just those announced on Wednesday. "We need far more onshore and offshore wind projects over the next decade if we're not to find our energy security threatened," RenewableUK Chief Executive Maf Smith said.