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Meridian Energy earnings rise 5 per cent

NZN 23/08/2016 Pattrick Smellie

Meridian Energy has followed its fellow part-privatised counterpart, Mercury Energy, by declaring a special dividend for shareholders in a sector where strong cashflows are not currently required for new investment.

Meridian declared a 5 per cent increase in earnings before interest, tax, depreciation, amortisation, and changes in the value of financial instruments at $560 million for the year to June 30, reflecting a $39m increase in New Zealand electricity sales to $939m, and a lift from $54m the previous year to $70m in the latest year in international sales, mainly in Australia.

"It was pleasing to deliver another year of growth, with aggregate demand in the core New Zealand market remaining flat," said chief executive Mark Binns in a statement to the NZX.

"The strong operational performance has been delivered by an improved retail performance in both New Zealand and Australia, higher generation prices in Australia and strong generation volumes in New Zealand."

Electricity companies tend to prefer the ebitdaf earnings measure because of the volatile impact of changes in the value of financial instruments, such as electricity hedge contracts, from year to year. However, it was a far larger tax bill that made the largest contribution to a fall in net profit after tax, which was down 25 per cent at $185m. Meridian declared $71m in tax liabilities for the latest financial year, compared with $2 million the previous year.

Meridian directors declared a final dividend of 8.4 cents per share, 90 per cent imputed, to deliver a near 5 per cent increase in total ordinary dividends for the year of 13.5 cents per share. On top of that, a final special dividend of 2.44 cents per share was also declared "as part of the company's capital management programme".

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