Meridian Energy Limited (NS) Analysis

Overview

As the country's main electricity generator and a significant retailer, Meridian is New Zealand's largest electricity company.

Meridian generates electricity from 100% renewable sources wind and water. The company generates approximately 30% of New Zealands electricity from its integrated chain of dams on the Waitaki River and Manapouri, which is the largest hydro power station in New Zealand, and four wind farms around the country.

Through the Meridian and Powershop brands, the company retails electricity to over 270,000 customer connections, including homes, businesses and farms around the country.

The company is committed to renewable energy and supporting the environments and communities where it operates. Meridian continues to focus on providing energy solutions that can help customers manage their energy use.

Meridian was incorporated in 1998 and began business in 1999, when Electricity Corporation of New Zealand Limited was split into three separate state enterprises: Meridian, Genesis and Mighty River. In this process, Meridian was allocated various South Island hydro assets. The company was listed on the NZX in October 2013 as part of the Governments Share Offer Programme. The Government retains 51% ownership of Meridian.

MEL has been granted Listing with a 'Non-Standard' ("NS") designation. This designation was granted because of provisions in MEL's constitution regulating the ownership and transfer of its Ordinary Shares due to the New Zealand government's shareholding. For further information, please see a copy of the waiver under Documents on Merdians' homepage on nzx.com

Performance

The following information was extracted from Meridian Energy Limited's half year results, released 26 February 2025

1H FY2025 saw a

-$154 million decrease in net profit before tax from the net change in fair value of hedges (-$2 million decrease in 1H FY2024).

Depreciation expense increased +$61 million (+37%) in 1H FY2025 from the June 2024 asset revaluation and completion of the Harapaki Wind Farm.

-$8 million of asset related adjustments were incurred in 1H FY2025, mainly impairments and transformer disposal loss

Below EBITDAF

-$154M decrease in NPBT1 from the net change in fair value of hedges2 (-$2M decrease in 1H FY24)

+$61M (+37%) increase in depreciation from June 2024 asset revaluation and Harapaki completion.

-$8M of asset related adjustments in 1H FY25, mainly impairments and transformer disposal losses.

+$13M increase in net finance costs from higher funding costs and completed Harapaki capitalisation.

Negative tax expense on pre-tax losses. Resulted in a -$121M net profit after tax.

-$5M underlying net profit after tax3 largely from lower EBITDAF and tax with higher depreciation, financing costs.

• Operating expenses $9M (6%) higher than 1H FY24.
• Growth in 1H FY25 from workforce changes, remuneration increases, transformer costs, retail transformation and finance and generation control system upgrades.
• Expecting FY25 operating costs of between $298M and $304M (previous guidance between $302M and $308M)