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Mercury pays dividend on earnings lift

NZN 22/08/2016 Pattrick Smellie

Mercury, the electricity generator and distributor formerly known as Mighty River Power, has delivered a 2.3 per cent lift in operating earnings and declared a special dividend.

On an earnings before interest, tax, depreciation, amortisation and financial instrument valuation movements basis, Mercury made $493 million in the year ended June 30, up 2.3 per cent on the previous year.

Ebitdaf guidance for the year ending June 30, 2017, is $490m, subject to caveats against unforeseen circumstances, including inflows to its hydro catchment in the central North Island.

"The overall picture of the New Zealand electricity market remains healthy, with steady demand growth over the past two years and a well-balanced market with significant thermal generation retired in 2015," said chief executive Fraser Whineray.

"This includes the closure of Mercury's Southdown station in Auckland, meaning the company's electricity generation is now 100 per cent renewable."

The company will pay a final fully-imputed ordinary dividend of 8.6 cents per share, to give a total fully-imputed ordinary dividend of 14.3 cents per share for the year, in line with guidance and constituting 100 per cent of free cash flow. Also declared was an unimputed special dividend of 4 cents per share, reflecting proceeds from "non-core land sales and the current limited requirement for growth capital".

"We are pleased to be returning $252m to our shareholders for the full year, underscoring the strength of our company in a period of significant change and progress for the business, including our rebranding to Mercury at the end of July," said Mercury chairwoman Joan Withers.

Ordinary dividend guidance has been set for the current financial year at 14.6 cents per share, with the company intending to continue to offer full imputation credits on ordinary dividends.

Net profit after increased $113m to $160m after impairments in the previous year depressed results. Underlying earnings after tax rose 4.8 per cent to $152m.

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