Slide 1: ASX cover letter: Chorus inaugural full year result supplementary documents
Level 9, Datacom House, 68-86 Jervois Quay Wellington For personal use only New Zealand Companies Announcement Office Australian Securities Exchange 4th Floor, 20 Bridge Street Sydney, NSW 2000 Australia 27 August 2012 Dear Sir/Madam CHORUS INAUGURAL FULL YEAR RESULT, FY12: SUPPLEMENTARY DOCUMENTS F
Slide 2: Chorus announces inaugural result
STOCK EXCHANGE ANNOUNCEMENT 27 August 2012 For personal use only 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 o
Slide 3: Results summary and CEO comments
“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 unc
Slide 4: Chorus Inaugural Result, FY12
Chorus Inaugural Result, FY12 For personal use only 27 August 2012, Wellington
Slide 5: Disclaimer
Disclaimer For personal use only Forward-Looking Statements > This presentation may contain forward-looking statements regarding future events and the future financial performance f off Chorus, Ch i l di including fforward d llooking ki statements t t t regarding di iindustry d t ttrends, d strategi
Slide 6: Mark Ratcliffe, Chorus CEO
Mark Ratcliffe For personal use only Chorus CEO
Slide 7: Agenda
Agenda For personal use only > Update on strategic progress Andrew Carroll, CFO > Results > Comparison to scheme booklet > Dividend policy Mark Ratcliffe, CEO > Regulation > Looking ahead > Q&A
Slide 8: A successful seven months
A successful seven months For personal use only > EBITDA of $399 million > Total fixed line connections basically static at 1,776,000 > Steady broadband growth: ~50,000 ~50 000 connections > Progress with UFB and RBI roll out > RBI Phase 2 contract win > Aon Hewitt Australasia best employer: 85% sta
Slide 9: Deliver UFB and RBI agreements
Deliver UFB and RBI agreements • Meet key performance thresholds for UFB and RBI For personal use only • Deliver FTTP within UFB areas to ensure coverage reaches 75% of NZ by 2019 UFB > 225 work gangs now in the field > 1,179km of fibre laid > 57,000 end users within reach of UFB > 42,000 premises p
Slide 10: Transition to a fibre world
Transition to a fibre world • Improve service for customer loyalty and satisfaction For personal use only • Fibre products that enable customers to move to high bandwidth technology > More than 30 RSPs signed up for UFB > Retail offers launched in market > Fibre services trials on-going for most RSP
Slide 11: Drive copper and fibre network efficiencies
Drive copper and fibre network efficiencies For personal use only • Cost minimisation for efficient network operations • Deliver further capex optimisation > Plans in place to reducing cost per premises passed for UFB > Proactive maintenance delivering results with best ever network performance > Te
Slide 12: Andrew Carroll, Chorus CFO
Andrew Carroll For personal use only Chorus CFO
Slide 13: Income statement
Income statement For personal use only FY12 (7 months) $m Operating revenue 613 Operating expenses (214) Earnings before interest, interest tax, tax depreciation and amortisation 399 Depreciation and amortisation (189) Earnings before interest and income tax 210 Net interest expense (68) Net earning
Slide 14: Understanding Revenues
Understanding g Revenues For personal use only • core regulated products that are earlier technology or products Basic Copper with limited scope for further development e.g Baseband copper (UCLFS), Basic UBA, Naked UBA, UCLL, SLU, SLES • products enhanced to deliver higher speed capability and bette
Slide 15: Connections
Connections Fixed line connections Approx. No. of connections For personal use only Baseband copper 1,585,000 UCLL 97,000 SLU/SLES 19,000 Fibre 10,000 Naked Basic and Enhanced UBA 50,000 Legacy data services over copper 15,000 Totall fixed fi d li line connections i 1,776,000 000 Broadband connectio
Slide 16: FY12 Revenue (7 months)
FY12 Revenue ((7 months)) For personal use only Revenue category $m Basic copper 399 2012 $m $ Enhanced copper 89 Fibre 28 Value Added Network Services 18 Field Services 47 Infrastructure 14 Other 18 Total revenue $ $613m
Slide 17: Operating expenses
Operating expenses For personal use only FY12 (7 months) $m Labour costs 31 Provisioning 23 Network maintenance 52 Other direct costs 22 Electricity 11 Rents and rates 6 Property maintenance 8 Insurance 3 IT costs 30 Consultants 5 Other 23 Totall operating i expenses 2 214
Slide 18: Illustrative comparison to Scheme Book
Illustrative comparison to Scheme Book For personal use only > Need to be aware of challenges in comparing FY12 result with Scheme Book data (requires annualising, normalising and adjustments – refer Appendix 2 of management commentary) FY12 FY11 (Annualised, (pro forma, normalised) normalised and $
Slide 19: Capex overview
Capex overview For personal use only FY12 (7 months) FY13 guidance $m (unchanged) $m Fibre capex p 274 450 – 480 Copper capex 49 75 – 85 Common capex 23 35 - 45 G Gross capex 346 560 - 610 > FY 12 capex consistent with May guidance > FY13 guidance unchanged
Slide 20: FY12 gross capex by category
FY12 gross g o capex pe by b category tego For personal use only Common capex 23 Fibre capex $274m Information 12 UFB communal 162 technology 7% Building & engineering 10 services 14% UFB connections & 13 fibre layer 2 Other 1 Fibre products & 7 systems Copper capex 49 Other fibre 33 Network sustain
Slide 21: UFB build update
UFB build update For personal use only FY12 UFB communal build costs were $162m $ > Build work for 42,000 premises by 30 June > Another 10,000 premises recognised as work in progress, many were substantially complete > CPPP for year 1 work (including WIP to be completed in year 2) is unchanged at ap
Slide 22: Cash flow statement
Cash flow statement For personal use only Year 1 cash flow has been unusual > Chorus began effectively with nil working capital > No dividend payout due to seven month period FY12 (7 months) $m Cash flows from operating activities 332 Cash flows from investing activities (259) Cash flows from financ
Slide 23: Debt maturity profile
Debt maturity y profile p For personal use only As at 30 June debt of $1,609m comprising: > $1,105m syndicated bank facility > $513m Euro Medium Term Note ($677m mark to market) Board committed to investment grade BBB rating 800 Bank EMTN 700 600 $m 500 April 2020 400 300 200 100 0 Current Due 1‐2 D
Slide 24: FY12 and FY13 Dividend
FY12 and FY13 Dividend For personal use only > FY12 dividend of 14.6 cps, fully imputed. ▪ Record date: 21 September ▪ Payment date: 5 October > Expect FY13 dividend to be fully imputed 25.5 cps subject to no material adverse change in outlook > Given the current regulatory uncertainty, Chorus is un
Slide 25: Capital management
Capital management For personal use only > Chorus Board is committed to maintaining a ‘BBB’ long term credit rating from Standard & Poor’s and a ‘Baa2’ long term credit rating from Moody’s Investor Services > It is Chorus’ intention that in normal circumstances the ratio of net debt to EBITDA will n
Slide 26: Mark Ratcliffe, Chorus CEO
Mark Ratcliffe For personal use only Chorus CEO
Slide 27: Regulation: Which road forward?
Regulation: For personal use only Which road forward?
Slide 28: Key regulatory dates
Key regulatory dates For personal use only SEP OCT NOV DEC 2013 19 Sep: UCLL conference 29 Sep: Decision on UBA + UCLL backhaul competition p review 1 Oct: Draft decision on UBA cost-based review 1 Nov: UBA conference Nov: Systems transition plan 23 Nov: UCLL decision 30 Nov: UBA review decision Dec
Slide 29: Leading the market to fibre
Leading the market to fibre For personal use only > Best practice standalone business will be the standard > Fibre success is about building UFB and driving uptake > Our vision is to ensure New Zealand realises the benefits fibre can enable Manage Drive cost efficiencies Retain Sustain value growth
Slide 30: Chorus fibre network
Chorus fibre network What are you going to do with yours? For personal use only
Slide 31: Looking ahead
It’s been an inaugural “year” full of learning and hitting the ground running… For personal use only Looking g ahead: Increase efficiencies for seamless operations that earns ea ns uss the license to lead the fibre journey.
Slide 32: Any questions?
For personal use only Any questions?
Slide 33: Appendix (Rule 10.4) Preliminary Announcement — Full Year Results
Appendix 1 (Rule 10.4) Preliminary Announcement — Full Year Results Chorus Limited Results for announcement to the market Reporting Period Seven months to 30 June 2012 Previous Reporting Period None Amount (000s) | Percentage change Revenue from ordinary $613,000 N/A activities Profit (loss) from or
Slide 34: Preliminary Announcement - Full Year Results
1.1 1.2 1.3 (a) 1.3 (b) 1.3 (c) 1.3 (d) 1.3 (e) 1.3 (f) 1.3 (9g) 1.3(h) 1.3(i) 1.3 (j) 1.3 (k) 1.3 (I) 1.3 (m) Appendix | (Rule 10.4) Preliminary Announcement — Full Year Results PREMINILARY ANNOUNCEMENT - FULL YEAR RESULTS For the seven months ended 30 June 2012 Reporting Period and Previous Report
Slide 35: Preliminary Announcement - Full Year Results
1.3 (n) 3.1 3.2 3.3 3.4 Appendix 1 (Rule 10.4) Preliminary Announcement — Full Year Results Revaluation of Assets N/A Accounting Standards The financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand and the Financial Reporting Act 1993. They c
Slide 36: NZSX Listing Rules notice of event affecting securities
APPENDIX 7 — NZSX Listing Rules EMAIL: announce@nzx.com Notice of event affecting securi jsiaaialin paige ube wat N2SX ising Rule 7122. For iahs, NZSK itn Res 7 109d 7.1010. Gam coatewege [1] For change to allement, NZSX Listing Rule 7.12.1, @ separate advioe Is requited Fainane Stier [CHORUS LIMITE