PBT recovered 288.7% from a hedge-crisis loss, masking revenue's 11% decline

Annolyse's historical baseline classifies this PBT growth rate as above its normal range (three-period mean -43.6%), which signals the comparison is being flattered by an unusually weak prior base rather than a repeatable step-change.

Revenue fell 11.0% to NZ$2b, below the historical range (three-period mean +12.1%), even as EBITDAF nearly doubled to NZ$506.0m on record wind generation and the second-best lake inflows on record. Gross borrowings rose 118.8% to NZ$3.6b, lifting total assets 16.5% to NZ$15.1b, above the historical range (mean NZ$11b), while net debt/EBITDA improved to 3.33x from 6.01x.

The 288.7% PBT and 287.6% NPAT growth headlines are mathematically real but economically distorted by last year's hedging crisis; the effective tax rate also swung to -28.4% from 27.0%, adding noise to the NPAT read. Investors comparing this half to consensus growth expectations should anchor to the underlying generation and margin recovery rather than the percentage itself.

Debt-funded balance-sheet expansion. Gross borrowings more than doubled to NZ$3.6b and total assets are now above Meridian's historical range, funding a growth capital programme (indicative capex NZ$315m-NZ$345m, 85MW/360GWh, FID targeted Q4 2026). Leverage still improved to 3.33x net debt/EBITDA because EBITDAF recovery outpaced the debt increase, but the direction of gross debt matters for financial flexibility if hydrology turns again.

Segment mix is uneven. Wholesale contributed a NZ$563.0m result while Retail was a NZ$21.0m loss and Other/unallocated a NZ$36.0m loss, despite record retail sales volumes up 12%. This means volume growth in retail is not yet translating into segment profit, which matters for anyone assessing the durability of the EBITDAF recovery beyond wholesale generation conditions.

Meridian's own second-half shape context shows the prior comparable half (HY25) represented only 26.8% of FY25's full-year NPAT, illustrating how skewed hydrology-driven half-year results can be; that pattern was itself a loss year, so it cannot be used to infer this year's second-half trajectory.

Absent forward guidance, the release supports a read on operating recovery from an unusually poor prior half but does not support extrapolating the 288.7% PBT growth rate or the current EBITDAF level into the full year.

This is a durable quality signal because it reflects lower hedge-cost cash outflows and better generation conditions rather than working-capital timing; trade debtors were broadly flat at NZ$295.0m versus NZ$297.0m.

That said, the scale of the NPAT and PBT growth rates is inflated by comparison against a genuinely distressed prior half, so the headline percentages should not be read as evidence of a structurally higher earnings run-rate. The interim dividend of 6.4 cents per share compares to a 6.15 cents prior interim component; this is the current declared instalment only and should not be read as a statement about full-year dividend policy.

This briefing cannot assess forward hydrology risk, wholesale price forecasts, or the sustainability of the current EBITDAF level beyond the information disclosed in this half-year release.