CNU
26/08/2013 08:30
FLLYR
REL: 0830 HRS Chorus Limited (NS)
FLLYR: CNU: CHORUS FULL YEAR RESULTS, FY13
STOCK EXCHANGE ANNOUNCEMENT
26 August 2013
Chorus announces FY13 full year result
o$171m NPAT
o15.5cps dividend for six months
oUFB rollout ahead of target and 18% complete
oNew guidance for FY14 capital expenditure and FY14 EBITDA outlook
Chorus Limited has today reported its financial result for the twelve months
ended 30 June 2013.
The fixed line communications infrastructure company reported a net profit
after tax (NPAT) of $171 million and earnings before interest, tax,
depreciation and amortisation (EBITDA) of $663 million for the period. The
result includes $1 million relating to insurance claims from the Canterbury
earthquakes.
Investment in fibre network, principally for the Ultra-Fast Broadband and
Rural Broadband Initiative programmes, accounted for $579 million, or 85%, of
Chorus' $681 million gross capital expenditure for the twelve months ended 30
June 2013.
Chief Executive Officer Mark Ratcliffe describes this as "a good operating
result, particularly with both the Ultra-Fast Broadband and Rural Broadband
Initiative programmes slightly ahead of target, a small increase in the
number of access lines and a 6% increase in copper broadband connections. On
the downside, capital expenditure demands continue to be significant and
regulatory headwinds remain."
"We are making rapid progress in building a fibre future for New Zealand with
more than 3,000 kilometres of fibre cabling deployed in just 12 months,
taking our total fibre network beyond 30,000 kilometres," Ratcliffe said.
At 30 June, the UFB network was within reach of 205,500 end-users, or 153,000
premises, and 51,200 rural end-users were within reach of better broadband.
"Achieving ongoing efficiency in the cost of the UFB network rollout and
ensuring UFB connections are made on a time and cost efficient basis is a key
focus. Spending almost two-thirds of our revenues on capital investment is an
extraordinary amount for any company," Ratcliffe said.
The average cost of completing the FY13 UFB network build was $2,935 per
premises passed. Chorus provided guidance that it expects to spend $660
million to $690 million on capital expenditure in FY14 and is again targeting
an average cost per premises passed of between $2,900 and $3,200 for the
year, reflecting the challenging mix of build areas planned for FY14.
Chorus now employs 763 permanent and fixed term employees directly, along
with a further 4,434 people who are either employed directly by its service
company partners or are sub-contracted by the service companies. This means
the overall workforce has doubled since Chorus' demerger from Telecom.
Chorus reports growth of 8,000 fixed line connections for the twelve month
period to a total of 1,784,000, including 90% growth in fibre connections to
19,000. Demand for fixed broadband connections continued to grow steadily,
with about 64,000 copper broadband connections added over the period.
Chorus also faces ongoing challenges with the current regulatory environment.
A Commerce Commission decision on copper line pricing in December has already
reduced EBITDA by $20 million on an annualised basis and a recent Government
discussion paper proposes a review of the telecommunications regulatory
framework with an immediate focus on copper pricing.
While the outcome of the Government's regulatory review is uncertain, all
potential options contained within the discussion paper imply reduced future
earnings for Chorus. The discussion paper suggests a potential decrease of
Chorus' pricing within a range of $2.48 to $7.48 per broadband connection per
month. Based on 30 June 2013 connection volumes, Chorus anticipates this
could imply a reduction in annual EBITDA in the range of $20 million to $100
million.
"While these regulatory headwinds remain, management is pleased with the
principled approach the Crown is taking to the regulatory review", said
Ratcliffe. "We're seeking a clearer, more aligned regulatory environment that
delivers the right incentives to encourage the transition to our fibre
network, and help New Zealand realise the productivity and economic benefits
UFB and RBI can deliver."
Any changes to regulated pricing will likely be a strong influence on Chorus'
future revenues and industry willingness to migrate to fibre. Against the
backdrop of these regulatory and capital expenditure challenges, Chorus'
current view is that its earnings outlook for FY14 is flat to low single
digit percentage decline in EBITDA (relative to normalised FY13 EBITDA of
$654 million).
The Chorus Board approved a fully imputed final dividend of 15.5 cents per
share to be paid on 11 October 2013. The Dividend Reinvestment Plan will
apply for eligible shareholders for this dividend.
Chorus' FY14 dividend guidance is unchanged. The Chorus Board will continue
to monitor developments and expects to reassess Chorus' optimal capital
management settings as the outcomes from the Government's regulatory
framework review become clearer.
ENDS
Results summary for the twelve months ending 30 June 2013:
o Chorus achieved EBITDA of $663 million.
o Gross capital expenditure was $681 million with 85%, or $579 million, spent
on fibre related projects.
o Fixed line connections increased by 8,000 to total 1,784,000.
o Fibre connections increased by 90% to total 19,000.
o Continued growth in broadband with 64,000 new copper broadband connections.
Chorus Chief Executive, Mark Ratcliffe, and Chief Financial Officer, Andrew
Carroll, will discuss the final results at a briefing in Wellington from
10.00am (NZ time). The webcast will be available at www.chorus.co.nz/webcast.
For further information:
Ian Bonnar
Corporate Affairs Manager
Phone: +64 9 358 6061
Mobile: +64 (27) 215 7564
Email: [email protected]
Brett Jackson
Investor Relations Manager
Phone: +64 4 498 9271
Mobile: +64 (27) 488 7808
Email: [email protected]
End CA:00240165 For:CNU Type:FLLYR Time:2013-08-26 08:30:47
