FY21 PBT fell 30.2% as EBITDAF dropped 6.3% on a 15.7% revenue lift

Mercury acquisition is result context, with NZ$441m initial cash proceeds; operating metrics remain the main read.

Revenue rose 15.7% to NZ$2b but EBITDAF fell 6.3% to NZ$463.0m and profit before tax dropped 30.2% to NZ$173.0m. The cleaner operating read is PBT: top-line growth did not flow through to earnings, with EBITDAF margin compressing from roughly 27.9% to 22.6% of revenue.

Reported NPAT of NZ$141.0m looks like a sharp jump only because the prior-period comparable in the structured form is distorted; against the like-for-like NZ$207.0m figure in release excerpts, NPAT fell about 32%, broadly consistent with PBT.

Operating cash flow eased 5.1% to NZ$338.0m while capex stepped down 10.4% to NZ$250.0m, lifting free cash flow 16.5% to NZ$282.0m. Gross borrowings rose NZ$200.0m to NZ$1.5b and net debt/EBITDAF moved from 2.5x to 2.9x.

• EBITDAF down 6.3% on revenue up 15.7% points to negative operating leverage — consistent with the gentailer pattern of higher wholesale costs or hedge/generation mix absorbing customer-volume gains. This matters because revenue growth at this level should normally drop through, and it did not.

• Leverage drift and a stretched payout. Net debt/EBITDAF rose to 2.9x from 2.5x, and the full-year dividend of 17.0 cents represents a payout ratio of 164.1% of NPAT versus 61.8% prior. FCF of NZ$282.0m still covers the ordinary dividend, but the NPAT-based cover has thinned materially and guidance points to a further dividend step-up next year.

• Working capital absorbed cash. Trade debtors rose 29.0% to NZ$311.0m, lifting receivable days from 49.8 to 55.5 and adding roughly NZ$74.0m to operating working capital. This dampened cash conversion despite EBITDAF-to-OCF holding at 73.0% versus 72.1% prior.

First-half EBITDAF of NZ$294.0m implied a much weaker second half of about NZ$169.0m, and first-half NPAT of NZ$130.0m left only around NZ$11.0m for the second half. That is a sharp second-half deceleration in a seasonally hydrology-sensitive business and frames the FY21 outcome as front-half loaded rather than evenly earned.

Forward dividend guidance of 20.0 cents implies a further step-up from the 17.0 cents declared, which raises the bar for FY22 earnings recovery and cash generation given current leverage.

The effective tax rate moved modestly from 16.5% to 18.5%, so tax did not materially mask the underlying deterioration.

Cash quality is mixed. FCF rose to NZ$282.0m and equals 200.0% of reported NPAT, but a meaningful portion reflects lower capex (down NZ$29.0m) rather than stronger operating cash. The NZ$74.0m absorption into operating working capital, driven by a 5.7-day extension in receivable days, is a real drag and points to either customer-mix changes or collection timing that warrants monitoring. Capex intensity fell to 12.2% of revenue from 15.8%, which flatters near-term free cash but is unlikely to be the run-rate given disclosed growth-investment ambitions.

ROE fell to 3.4% from 5.5%, reinforcing that the equity base is being expanded faster than earnings — total equity rose NZ$447.0m while NPAT contracted on a like-for-like basis.

This briefing cannot assess hydrology conditions, hedge book positioning, segment-level margin movements, or the financial impact of post-balance-date strategic actions, none of which are disclosed in usable form here.