Continuing-ops PBT up 34% to $241.2m as gas distribution flips to a $6.2m loss

What changed

Reported revenue fell 3.3% to $1.1b, but on a continuing-operations basis (which excludes the prior year's gas trading contribution) revenue rose 8.9%. Adjusted EBITDA for continuing operations increased to $401.1m from $365.2m, PBT rose 33.9% to $241.2m, and NPAT jumped 89.3% to $167.7m – with continuing-ops NPAT more than doubling to $154.8m and the gas trading discontinued operation contributing a further $13.0m (prior: $11.1m).

Segment mix shifted materially. Electricity distribution revenue rose to $960.1m (87% of segment revenue) with EBIT roughly flat at $366.7m. Gas distribution revenue fell to $80.5m from $128.2m and swung from an $11.2m profit to a $6.2m loss. Capex fell to $470.1m from $510.1m, gross borrowings declined to $2b, and net debt eased to about $2.03b. Cash fell sharply to $23.3m from $77.4m. The final dividend is 13.0cps, unchanged, but the prior year also paid a 1.75c special that is not being repeated.

What matters

• PBT is the cleaner read, not NPAT. The effective tax rate on continuing operations fell to about 35.8% from an implied 57.0% prior year, and NPAT is further flattered by the $13.0m discontinued gas-trading gain. PBT growth of 33.9% is the more defensible measure of underlying progress; NPAT growth of 89.3% overstates it.
• Gas distribution has become an earnings drag. The segment moved from +$11.2m to –$6.2m EBIT on a 37% revenue decline, and its share of segment revenue fell from 11.2% to 7.3%. Electricity distribution, still at roughly 38% EBIT margin, is now carrying the group almost entirely.
• Leverage eased, but only modestly. Net debt/EBITDA improved to about 5.1x from 5.7x, helped by both higher EBITDA and slightly lower gross borrowings. This remains high in absolute terms, and cash on hand is thin at $23.3m.

Expectations

No forward work or quantified earnings guidance is disclosed in the supplied materials, and no stated targets are provided. HY25 contributed about 50.8% of FY25 revenue but approximately 74.2% of FY25 NPAT, so implied second-half NPAT was only about $43.3m versus $124.4m in the first half. The release does not explain the shape, but it is clearly a first-half-weighted profit outcome rather than a building run-rate. The filing supports a reading of strong regulated electricity performance and a weakening gas contribution; it does not support any specific FY26 trajectory.

Quality of result

The continuing-operations result looks reasonably durable at the operating line: adjusted EBITDA rose 9.8% on regulated electricity distribution, and capex intensity eased to 42.6% of revenue from 44.7%. However, several elements inflate the headline NPAT:

• The $13.0m discontinued gas-trading contribution is non-recurring by nature.
• The effective tax rate normalisation from roughly 57% to 36% contributes meaningfully to the NPAT step-up – PBT grew 33.9% versus NPAT's 89.3%.
• Disclosed operating working capital items fell roughly $36.7m, with trade debtors down to $69.7m from $91.5m, which would typically support reported cash flow even as the segment mix weakened.
• Operating cash flow and free cash flow were not disclosed in the supplied materials, so cash conversion of the EBITDA uplift cannot be verified.

The headline payout ratio of 77.5% vs 146.7% looks materially improved, but much of that apparent improvement is the tax and discontinued-operations mechanics rather than structural earnings cover.

Unresolved

• Operating cash flow and free cash flow are not provided in the supplied materials, so cash conversion of the EBITDA uplift and dividend cover on a cash basis cannot be tested.
• The reason gas distribution flipped to a loss (volume, regulatory reset, cost base, or write-through) is not explained in the excerpts.
• There is no statutory-to-adjusted EBITDA reconciliation in the supplied excerpts, and no breakdown of what drove the effective tax rate from about 57% to about 36%.
• The absence of a prior-year-equivalent 1.75c special dividend alongside a flat 13c final is a capital-allocation signal that is not addressed.
• No forward work programme, regulated revenue path, or FY26 guidance is disclosed.

This briefing cannot assess cash conversion, free cash flow adequacy, or dividend sustainability because operating cash flow was not supplied.

Key metrics

Segment breakdown

Analytical metrics

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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.