CHORUS LIMITED Chorus Limited has today reported a net profit after tax (NPAT) of $148 million and earnings before interest, tax, depreciation and amortisation (EBITDA ) of $649 million for the year ended 30 June 2014.
- $148m NPAT
- Reduction in regulated prices from 1 December 2014 will cause significant funding gap
- Fundamental review of the business completed and wide ranging actions underway to help secure a sustainable future
- No final dividend
- UFB and RBI rollouts ahead of schedule
- Major IT projects delivered
Chorus Limited has today reported a net profit after tax (NPAT) of $148 million and earnings before interest, tax, depreciation and amortisation (EBITDA ) of $649 million for the year ended 30 June 2014.
Operating revenue for the period was $1,058 million and operating expenses were $409m. Depreciation and amortisation for the period was $322 million, delivering earnings before interest and tax (EBIT ) of $327m.
"Chorus has delivered a solid financial performance during the year, but this success has been overshadowed by the need to reshape Chorus operationally and financially to address the challenges posed by the ongoing uncertainty with the regulatory framework and revised copper pricing," said Mark Ratcliffe, Chorus CEO.
"Chorus has a credible but demanding plan through to 2020 to manage this shortfall, and has implemented a number of operational initiatives with more in train.
"A top to bottom review of the company was completed in February and we are now five months into a wide range of activities to help put Chorus back on a sustainable footing.
"We have worked closely with Crown Fibre Holdings to negotiate amendments to our contract to roll out fibre that give Chorus additional flexibility, as well as a funding backstop.
"We have presented our banks with a credible plan and they have supported us with some important changes to our funding arrangements. We have also stopped the payment of a dividend until a dividend policy is financially sustainable and there is sufficient certainty around Chorus' outlook.
"We have developed an innovative range of commercial broadband products to enhance end-user choice and lift copper broadband beyond a best efforts service ahead of demand. We await regulatory guidance on their implementation.
"And at the same time we have reviewed our entire cost structure and this has required us to focus our limited available cash in areas that deliver short term cash rather than the best long term outcomes.
"In addition, Chorus has successfully delivered several large IT projects as the system separation from Spark continues.
"While good progress has been made, the funding gap remains very challenging and more will need to be done to return Chorus to stability," he said. Operating performance
Broadband continued to grow during the period, with total broadband connections increasing by 51,000 to 1,163,000 during the period. Fibre broadband connections have more than doubled to 42,000.
Total lines remained largely static, reducing by 3,000 during the period to 1,781,000. 31% of Chorus' Ultra-fast Broadband (UFB ) rollout is now complete, meaning 353,000 end users are now within reach of Chorus UFB . The average cost per premises passed of $2,948 was at the bottom end of the guidance range previously given of $2,900 to $3,200.
The standard cost to connect premises averaged $1,680 during the period, and Chorus remains focused on reducing these costs.
"In particular, the process to connect premises in multi-dwelling units currently averages $6,500 per building in addition to the standard connection costs. This will be an area where Chorus will work with the industry to seek solutions that remove blockages in the current processes that drive cost and complexity," he said.
The Rural Broadband Initiative build is also ahead of schedule, delivering better broadband for more than 70,000 rural fixed lines.
Regulation
"Chorus remains of the view that today's regulatory framework is not appropriate for the new industry structure or the Government's policy objectives. The new regulatory environment that comes into effect from 2020 will be critical for the sustainability of the industry.
"We continue to engage in the Final Pricing Principle (FPP) regulatory processes that are currently underway to finalise the price Chorus can charge for its copper lines and copper broadband service. The outcome of those processes will ultimately determine if a fair rate of return will be achieved for network investment in the short to medium term.
"These processes are currently scheduled for completion in April 2015 and a sustainable FPP outcome should give certainty to all industry participants through to the enactment of the new regulatory regime in 2020," he said.
FY15 Guidance
EBITDA : $590 million to $605 million
Gross Capex: $590 million to $640 million
Chorus' broader capital management objectives are:
- Maintain an investment grade rating with headroom. In the longer term, the Board continues to consider a "BBB" rating appropriate for a business like Chorus
- Setting a financially sustainable dividend policy once sufficient certainty is achieved
Dividend
No dividends will be paid until the later of the conclusion of the Commerce Commission 's FPP review processes or 30 June 2015.
Results summary for the year ending 30 June 2014:
- Net Profit After Tax of $148 million
- EBITDA of $649 million
- Revenue of $1,058 million
- Total fixed line connections largely stable at 1,781,000
- UFB and RBI fibre rollouts ahead of schedule
- A wide range of activities underway to help secure a sustainable future
- No final dividend
ENDS
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
Mobile: +64 (27) 215 7564
Email: ian.bonnar@chorus.co.nz
Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 (27) 488 7808
Email: brett.jackson@chorus.co.nz
|
distributed by
|
