EBITDAF fell 42% on record-low inflows, swinging Meridian to a $121m loss

EBITDAF fell from $443m to $257m (-42%) and the group swung from a $191m profit to a $121m loss, with PBT down 163.9% and NPAT down 163.4%. Management describes "year record low inflows and an unexpected and unprecedented shortage of domestic gas," which forced calling the largest NZAS demand-response option.

Revenue rose 6.8% to $2.3b (within Annolyse's historical range of -11.0% to +38.1%), but the price/cost squeeze meant top-line growth could not protect earnings.

Net debt/EBITDA reached 6.0x, materially above the supplied historical range of 2.2x–3.3x and a mean of 2.7x. Operating cash flow collapsed to $50m from $303m, and total assets expanded 27.4% to $13b, reflecting the acquisition overlay flagged for the period.

At 6.0x EBITDAF, leverage is 3.3x above the historical mean and well outside the 2.2x–3.3x band. Some of this is the EBITDAF denominator collapsing on a one-period shock, but net debt itself rose to roughly $1.5b from $1.2b. This matters because financial flexibility is now tighter at exactly the moment management is funding both an acquisition and a capex programme running at 4.6% of revenue.

Cash conversion fell sharply and the gap is not working-capital noise. OCF/EBITDAF dropped to 19.5% from 68.4%. Operating working capital moved by only -$5.2m, so the conversion gap is driven primarily by the earnings collapse and hedge/derivative cash flows associated with the dry-period response, not a build in receivables or inventory. Debtor days actually fell to 24.0 from 39.5. This means the cash-flow weakness reflects the operating shock directly, not a timing issue that reverses in the second half.

The acquisition complicates like-for-like reading. Total equity rose by roughly $2b and total assets by $2.8b, while gross borrowings barely moved ($2.8b vs $2.8b on the supplied basis). The asset base, depreciation, and forward earnings power are not on a like-for-like footing with HY24, which means future ratios should be re-anchored once a clean period of post-acquisition trading is available.

FY24 delivered $905m EBITDAF and $667m of operating cash, of which the HY24 share was 49% and roughly 45% respectively; on that shape, a typical second half would not, on its own, recover the $186m EBITDAF gap opened in HY25.

The interim dividend was held at 6.15 cents per share. Held flat against an underlying $5m loss (versus $175m underlying profit prior), payout is being supported by the balance sheet rather than current-period earnings, which matters for how investors should read the dividend signal.

The effective tax rate moved to -28.0% from +27.4%, but PBT and NPAT growth are essentially identical (-163.9% vs -163.4%, a 0.5pp gap), so the cleaner read is PBT, and PBT confirms the operating story. Underlying NPAT cited in the release fell to a $5m loss from $175m, consistent with the headline movement and with a hydrology/gas event rather than a one-off accounting item.

The working-capital line is not flattering the result either: receivables shrank, debtor days improved, and operating working capital absorbed only $5m. This means there is little timing benefit to reverse and little timing penalty to recover. The earnings hit is being recognised in the period it economically occurred, which is good for transparency but bad for any expectation of automatic snap-back. Capex at $104m (4.6% of revenue) and the acquisition overlay together explain why free cash flow before leases was -$54m despite a positive OCF print.

This briefing cannot assess hydrological inflow trajectories, hedge-book mark-to-market dynamics, or the standalone economics of the acquisition without disclosures not contained in the supplied release.