Chorus announces inaugural result

Media Release - 27 August 2012

Chorus announces inaugural result $399m EBITDA and 14.6 cps dividend for seven months

Chorus Limited today reported its inaugural profit result for the seven months to 30 June 2012, following its establishment as a standalone company on 1 December 2011.

The telecommunications infrastructure provider reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $399 million for the period. Fixed line connections remained largely static at 1,776,000 while broadband connections grew steadily to total 1,040,000.

Earnings before interest and tax (EBIT) were $210 million. The result includes unusual income of $11 million relating to insurance claims from the Canterbury earthquakes.

Net profit after tax (NPAT) for the period was $102 million, with adjusted NPAT of $94 million.

The Chorus Board approved a final dividend of 14.6 cents per share to be paid on 5 October 2012. The dividend will be fully imputed with a supplementary dividend paid to non resident shareholders. The Board also anticipates that Chorus will pay a fully imputed full year dividend of 25.5 cents per share for FY13, subject to there being no material or adverse changes in circumstances or operating outlook over that period.

Chief Executive Mark Ratcliffe said the result reflected a pleasing start to Chorus’ busy first seven months of operations as a publicly listed company.

“We’ve focused on supporting our customers during what is a period of complex industry transition and it has been good to see their success in adding about 50,000 broadband connections to the network.

“Our rollout of the ultra-fast broadband network is also gaining momentum with about 57,000 end users already within reach and we’re working closely with our customers to facilitate the transition to fibre as this network continues to grow.”

Fibre related capital expenditure, principally for the ultra-fast broadband rollout and Rural Broadband Initiative, accounted for 79% of Chorus’ $346 million gross capital expenditure. This was within Chorus’ guidance of $335 million to $355 million for the period. Chorus expects to spend $560 million to $610 million in gross capital expenditure in FY13.

“While fibre demand is uncertain, there are early signs that it is emerging. We’ve begun, for example, to see new growth in demand for our high grade business fibre service following the introduction of UFB pricing.

“While fibre prices are set and provide certainty, copper pricing remains highly uncertain at a time of significant transition for the industry and significant investment through public private partnerships. This means the regulatory framework and pending regulatory processes remain central to how incentivised or aligned the industry will be in making choices that support the Crown’s UFB policy. We continue to remain highly engaged with the Commerce Commission in the regulatory processes”, Ratcliffe said.

Results summary

· Chorus achieved solid EBITDA for the seven months ending 30 June of $399 million

· In line with the demerger scheme booklet, Chorus will pay a prorated dividend for the seven months of 14.6 cents per share

· A fully imputed dividend of 25.5 cents is anticipated for FY13

· Gross capital expenditure for the seven months was $346 million with 79%, or $274 million, spent on fibre related projects

· There were 1,776,000 total fixed connections on Chorus’ network at 30 June

· Demand for broadband grew steadily with about 50,000 connections added since demerger, for a total of 1,040,000 connections

Chorus’ Chief Executive, Mark Ratcliffe, and Chief Financial Officer, Andrew Carroll, will discuss the results at a briefing in Wellington from 10am (NZ time). The webcast will be available at: www.chorus.co.nz/webcast

ENDS

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