Hedge gains inflate NPAT growth to 351.6% versus 14% underlying rise

The cleaner operating gauges moved far more modestly: issuer-labelled EBITDAF rose 16% to $905.0m and underlying net profit rose 14% to $359.0m, both a fraction of the headline growth rates. This matters because an investor reading only the reported PBT/NPAT lines would materially overstate the year's operating improvement.

Revenue grew 50.7% to $4.9b, largely a pass-through of higher wholesale and retail pricing rather than volume-driven margin expansion, since segment-level current-period detail was not disclosed. Trade debtors rose 60.5% to $536.0m against prior-year $334.0m, a working-capital build that receivable days (40.3 versus 37.8) only partly explains.

The gap between 371.4% PBT growth and 16% EBITDAF growth is the single largest read-through issue this year: it means the profit and loss statement is dominated by fair-value hedge movements that do not represent cash economics. For anyone assessing the business, EBITDAF and underlying net profit, not headline PBT/NPAT, are the more reliable operating signals.

Dividend coverage lags cash generation. The current payout ratio against NPAT is 126.5% (down from 483.8% prior, reflecting the smaller NPAT base last year), but the more telling figure is the 137.1% payout ratio against free cash flow pre-lease, meaning the dividend was not covered by free cash flow this year. This matters because sustained dividend growth built on non-cash-inflated earnings, rather than free cash flow, raises questions about future funding of both dividends and the $349.0m capital programme.

Leverage and balance-sheet scale. Net debt to EBITDA improved marginally to 1.2x from 1.3x, and gross borrowings rose only 9.0% to $1.3b against a 35.1% increase in total assets, so leverage is not obviously stretched. However, total assets and equity both grew over 35%, consistent with asset revaluation effects that can also flow through the hedge-driven PBT line, reinforcing the need to separate accounting gains from cash generation.

The half-year Meridian result showed EBITDAF up only 4% and NPAT of $191.0m, while full-year underlying net profit rose 14% to $359.0m, indicating the underlying business grew steadily through the year even as reported PBT and NPAT growth rates were amplified by hedge accounting in the second half.

This gap matters because a reader relying on the 371.4% PBT growth figure alone would expect a step-change in the underlying business that the EBITDAF and underlying-profit measures do not support.

However, the quality of the reported earnings growth is weaker: PBT and NPAT growth are inflated by non-cash hedge gains that will reverse or vary with future market pricing, so the 371.4% and 351.6% headline growth rates should not be read as a repeatable earnings trajectory.

• Capex rose 10.4% to $349.0m against 7.2% of revenue, a moderate step-up in capital intensity
• Dividend payout of 137.1% against free cash flow pre-lease signals reliance on balance-sheet capacity rather than current-year cash generation to fund distributions

This briefing cannot assess segment-level margin or volume drivers for FY24, since current-period segment revenue and result figures were not disclosed in the supplied data.