NPAT up 351.6% on hedge gains, underlying earnings up 14%

On the cleaner operating reads, EBITDAF was up 16% to $905m and underlying NPAT up 14% to $359m. Operating cash flow rose 31% to $667m on revenue of $4.9b (+50.7%), although gentailer revenue is heavily influenced by wholesale pass-through and is not a reliable margin indicator.

Capex stepped up 10.4% to $349m, and free cash flow on a pre-lease basis came in at $318m versus $577m on the company's prior disclosure. The full-year dividend of 21.0cps (final 14.85cps) is above the prior 17.9cps, and at a 170.7% payout ratio it exceeds free cash flow pre-lease.

PBT grew 371.4% and NPAT 351.6%, but the release explicitly flags non-cash net gains on hedge instruments as the dominant driver. The relevant operating reads are EBITDAF up 16% to $905m and underlying NPAT up 14% to $359m. Anyone framing this as a 350%-plus profit year is misreading the result.

Dividend now runs ahead of free cash flow. The 21.0cps full-year dividend implies a payout of 137.1% of FCF pre-lease, versus 79.6% in FY23. Net debt rose to $1.1b from $1b, leaving net debt to EBITDAF at 1.2x (from 1.3x), so the balance sheet still supports the distribution near term, but reinvestment plus dividend is no longer self-funding from current period cash.

Capex intensity is rising into a build phase. Capex of $349m equals 7.2% of revenue, and the second-half pattern (HY24 NPAT $191m versus implied 2H NPAT of $238m) confirms an ordinary gentailer weighting rather than an unusual lift. With EBITDAF growth in the mid-teens and FCF compressed, Meridian is funding both growth and the dividend off debt capacity rather than current free cash.

The interim context shows HY24 EBITDAF of $443m alongside full-year EBITDAF of $905m, broadly consistent with a modestly second-half-weighted gentailer pattern. The release does not, on its own, indicate how much of the 16% EBITDAF lift is structural retail and wholesale customer gains versus a favourable hydrology or trading window, which matters because hedge and hydrology cycles can reverse the direction of next year's reported result without changing the underlying business.

EBITDAF growth of 16% paired with a 31% lift in operating cash flow improved cash conversion to 73.7% from 65.0%, which is a genuine quality signal and supports the underlying NPAT growth of 14%. The reported NPAT figure of $429m should not be used to anchor an earnings trajectory because the hedge fair value tailwind is non-cash and can reverse.

Against that, the company's disclosed free cash flow fell from $577m in FY23 to $318m on a pre-lease basis, even as operating cash flow rose. This suggests the prior FCF base was supported by items outside operating cash that did not repeat, and current capex is reshaping the cash profile. The 170.7% FCF payout ratio is the operative concern: at the current capex run-rate, the dividend depends on net debt capacity and the durability of EBITDAF, not on recurring free cash.

This briefing cannot assess hydrology conditions, hedge book composition, retail and wholesale channel margin mix, or the multi-year capex plan from the supplied data.