Mercury delivers special dividend on 2.3% operating earnings lift

Mercury [NZX:MCY], the electricity generator and distributor formerly known as Mighty River Power, has delivered a 2.3% lift in operating earnings and declared a special dividend, reflecting its limited capital needs and the sale of surplus land.

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% on the previous year.

Ebitdaf guidance for the year ending June 30, 2017, is $490 million, 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,"  chief executive Fraser Whineray said. "This includes the closure of Mercury's Southdown station in Auckland, meaning the company's electricity generation is now 100% renewable."

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

Both dividends are payable on September 30.

"We are pleased to be returning $252 million 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," Mercury chairwoman Joan Withers said.

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

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

(BusinessDesk)

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