Table of Contents
What changed
Revenue rose 4.7% to $1.3b but did not translate into earnings growth. Adjusted EBITDA eased 0.7% to $510.0m, PBT fell 7.0% to $237.8m, and NPAT dropped 16.7% to $160.9m. The gap between PBT and NPAT reflects a higher implied effective tax rate (≈32.3% versus ≈24.4%), so PBT is the cleaner year-on-year read and it is already down.
Segment mix explains most of the operating deterioration. Regulated Networks lifted revenue to $831.5m and segment profit to $357.6m (from $337.3m), while Gas Trading swung from a $15.4m profit on $209.0m of revenue to a $29.7m loss on $201.9m — roughly a $45m adverse swing that absorbed Networks' gains. Metering margin also eased (≈33.1% from ≈36.0%).
On the balance sheet, gross borrowings rose $221.0m to $3.3b and net debt climbed to ≈$3.3b. Net debt/EBITDA moved from ≈5.9x to ≈6.4x. Final dividend is unchanged at 8.5cps (full-year dividend 16.75cps, flat).
What matters
- Gas Trading loss is the swing factor: a segment contributing ≈15% of revenue flipped to a loss-making margin of about -14.7%. This single segment effectively explains the flat EBITDA despite a strong Regulated Networks result.
- Leverage is moving the wrong way: net debt/EBITDA deteriorated by roughly half a turn as capex of $545.9m exceeded operating cash flow of $518.8m, leaving pre-lease free cash flow at about -$27.1m. Capex intensity remains high at ≈40.7% of revenue.
- Tax rate normalisation is amplifying the headline decline: the effective tax rate jump from 24.4% to 32.3% nearly doubles the PBT decline at the NPAT line, a non-operating driver readers should separate from underlying performance.
Expectations
No quantified company guidance or forward-work metric was disclosed in the supplied excerpts, and no stated target is on file. On seasonality, the interim step shows HY22 NPAT of $114.5m versus a full-year $160.9m, implying a second-half NPAT of only ≈$46.4m — a sharply weaker H2 than H1. Revenue split was roughly even (H1 at 51.1% of full year), so the H2 weakness is margin- and mix-driven rather than volume-driven, consistent with the Gas Trading deterioration compounding through the second half.
Quality of result
The result is lower quality than the 4.7% revenue line suggests. Adjusted EBITDA is a non-GAAP measure and the excerpts do not include a full bridge of adjustments. Operating cash flow at ≈101.7% of EBITDA is respectable, but it was outspent by capex and pre-lease FCF was negative, so the dividend is not covered by internally generated cash this year. Inventory days roughly doubled (3.5 to 6.6) on an inventory build from $12.4m to $24.2m — not large in absolute terms, but a working-capital headwind rather than a tailwind. Segment profit concentration in Regulated Networks (≈62% revenue share, ≈43% margin) is a durable feature; the Gas Trading loss is the main uncertainty on whether FY22 earnings represent a durable base.
Unresolved
- What drove Gas Trading to a $29.7m loss — wholesale pricing, hedging, or one-off contract costs — and is it structural or cyclical?
- Why did the effective tax rate rise by almost 8 percentage points, and is ≈32% the new run rate?
- Current trade debtors were not provided, so full operating working-capital movement and the driver of the modest cash build cannot be reconstructed.
- With net debt/EBITDA at ≈6.4x and capex still exceeding operating cash flow, what is the funding path and is the flat dividend sustainable through the current capex cycle?
This briefing cannot assess regulatory price-path settings, hedging positions behind the Gas Trading loss, or management's forward capex and funding plans, none of which are in the supplied excerpts.
Key metrics
| Metric | FY22 | FY21 | Change |
|---|---|---|---|
| Revenue | $1.3b | $1.3b | +4.7% ↑ |
| EBITDA | $510m | $513.5m | -0.7% ↓ |
| Net profit after tax | $160.9m | $193.2m | -16.7% ↓ |
| Net cash inflow from operating activities | $518.8m | — | — |
| Final dividend per share | 8.5c | 8.5c | flat |
| Cash and cash equivalents | $22.5m | $17.4m | +29.3% ↑ |
| Total assets | $6.8b | $6.5b | +4.5% ↑ |
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Regulated Networks | $831.5m | $767.5m | $357.6m | +2.1pp |
| Gas Trading | $201.9m | $209m | −$29.7m | -1.3pp |
| Metering | $235.6m | $227m | $78.1m | -0.1pp |
Analytical metrics
| Metric | FY22 | FY21 | Context |
|---|---|---|---|
| PBT growth | -7.0% | — | cleaner earnings measure |
| Effective tax rate | 32.3% | 24.4% | — |
| OCF / EBITDA (cash conversion) | 101.7% | — | stable |
| FCF pre-lease | −$27.1m | — | — |
| FCF / NPAT | -16.8% | — | complementary conversion metric |
| Capex % revenue | 40.7% | 41.4% | — |
| Capex | $545.9m | $529.5m | +$16.4m |
| Inventory days | 6.6 | 3.5 | +3.1 days |
| Trade debtors | — | $60.2m | — |
| Net debt | $3.3b | $3.1b | +$215.9m |
| Net debt / EBITDA | 6.41x | 5.95x | Weakening |
| Gross borrowings | $3.3b | $3.1b | +$221m |
| ROE (annualised) | 6.8% | 8.1% | Weakening |
| HY22 share of FY22 revenue | 51.1% | — | Other half was 48.9% |
| HY22 share of FY22 EBITDA | 51.7% | — | Other half was 48.3% |
| HY22 share of FY22 NPAT | 71.2% | — | Other half was 28.8% |
| Profit from continuing operations | $160.9m | $193.2m | −$32.3m |
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.
Source-backed analysis from the filing set attached to this briefing.