5 April 2011 – Eurobond tax position agreed

Drax has reached agreement with HM Revenue & Customs in relation to the group’s Eurobond financing structure.  This will result in the release of £180 million cash tax relief for the business.  A number of other minor legacy tax issues have also been agreed.

This agreement provides certainty over cash tax relief for the group both near term and in the future, mainly due to the resolution of the Eurobond position.  Cash of £117m which was ring fenced on the balance sheet at 31 December has now been released to the business.  Remaining agreed losses with a cash tax value of approximately £63m will be realised over the coming years.  We believe this is a sound business which will create shareholder value moving forward and therefore continue to rate the shares as a BUY.