Manawa Energy Limited Analysis

Overview

Manawa Energy has been listed on the NZX since 1994 (formerly under NZX: TPW).

Manawa Energy is one of Aotearoa New Zealand’s largest renewable electricity generators. Our goal is to develop renewable generation to support our country’s ambitions for a thriving, low-emissions and climate-resilient future.

Manawa Energy also operates a commercial and industrial electricity business with approximately 680 customers at more than 14,000 electricity connections nationally, currently supplying approximately 1,250GWh per annum.

(Figures quoted are accurate as at May 2022)

Performance

The following information was extracted from Manawa Energy Limited's full year results, released on 16 May 2025:

FY25 Interim Financial Results Summary

Key points:

• Profit after tax(2) of $0.3m, down from $24.1m in FY24, driven by extremely challenging market conditions, a material bad debt expense, and a $30.0m non-cash fair value loss on financial instruments;

• Normalised EBITDAF(2,3) fell $53.7m to $91.3m, and underlying earnings(4) fell $34.5m to $31.5m;

• Manawa’s total production volumes were 281GWh (15%) lower than the pcp, driven primarily by two prolonged periods of very low hydro inflows. Wind offtake volumes were 60GWh lower than expected, with total production including planned outages and changes in storage and purchased wind volumes 384GWh (20%) below long-run expectations;

• Significant milestones were reached on the major asset refurbishment and enhancement programme during the year including the commissioning of two new turbines at Matahina, completion of the generator replacement project at Waipori, completion of the Highbank ‘pumps as turbines’ project, completion of significant dam safety works at Arnold, restoration of both Esk scheme stations, Bream Bay station capacity restoration to 8MW (from 4.5MW), and commencement of the Highbank complete unit replacement project;

• Two key new development projects and two existing asset reconsenting projects were included in the Fast Track Approvals Act schedule, and the proposed Argyle Solar Farm was fully consented; and

• The Commerce Commission has now cleared the proposed acquisition of Manawa by Contact Energy via a Scheme of Arrangement.

(2) From continuing operations

(3) Normalised EBITDAF (earnings before interest, tax, depreciation, amortisation, fair value movements of financial instruments, and asset impairments) is a non-GAAP measure. Normalised EBITDAF excludes transaction costs (for the proposed acquisition of Manawa by Contact Energy). For more detail, please refer to the FY25 annual results presentation.

(4) ‘Underlying earnings’ is a non-GAAP financial measure. For more detail, please refer to Manawa Energy’s FY25 Annual Report.

Financial results reflective of conditions

The challenging conditions throughout most of FY25 materially impacted Manawa’s financial results. Normalised EBITDAF from continuing operations of $91.3m was down $53.7m on FY24 – driven by a $48.8m unfavourable net energy margin and a $6.8m bad debt expense (referred to above). Total operating costs (excluding bad debt expense and new development investment) were $3.1m favourable compared to the prior period, reflecting prudent cost management and project reprioritisation.

Profit after tax of $0.3m (down $23.8m from FY24) was impacted by the reduction in EBITDAF noted above, as well as a $30.0m non-cash fair value loss on financial instruments. Total capital expenditure for the period of $52.5m was reflective of the ongoing investment in major asset refurbishment and enhancement projects across the portfolio. Whilst still elevated, this was $17.0m lower than the prior period.

Net Debt as of 31 March 2025 of $501.1m is $49.1m higher than the same time last year – reflecting the reduction in earnings and ongoing elevated capital investment.

Given the Board’s expectation that the Scheme will be implemented in July 2025, it has decided not to declare a final dividend for FY25 or provide earnings guidance for FY26.