Chorus half year result & CEO transition
Chorus Limited
Level 10, 1 Willis Street
P O Box 632
Wellington 6140
New Zealand
Email: company.secretary@chorus.co.nz
STOCK EXCHANGE ANNOUNCEMENT
27 February 2024
Chorus half year result & Chief Executive Officer transition
The following are attached in relation to Chorus’ half year result for the period to
31 December 2023:
1. Media Release
2. Investor Presentation
3. Letter to investors
4. Management Commentary and Financial Statements (including auditor review
report)
5. NZX Results Announcement
6. NZX Distribution Notice.
Chief Executive Officer JB Rousselot and Chief Operating Officer Mark Aue will discuss
the half year result by webcast at 10.00am New Zealand time today. The webcast will
be available at www.chorus.co.nz/webcast.
Chorus also announces that JB Rousselot has advised the board he is stepping down
as Chief Executive Officer of Chorus effective from 15 April 2024. Chief Operating
Officer Mark Aue has been appointed Chief Executive Officer from that date. More
detail on the CEO transition is set out in the media release accompanying Chorus' half
year financial results.
Authorised by:
Mark Aue
Chief Operating Officer
ENDS
For further information:
Steve Pettigrew
Head of External Communications
Mobile +64 (27) 258 6257
Email: steve.pettigrew@chorus.co.nz
Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 (27) 488 7808
Email: brett.jackson@chorus.co.nz
---
Page 1 of 4
27 February 2024
Solid financial performance as Chorus progresses towards a simpler digital infrastructure
company and transitions CEO
Key results
• Increase in fibre connections: by 31,000 to a total of 1,062,000
• Fibre uptake increased to 70.6%
• 25% of residential fibre connections on gigabit or higher plans
• Operating revenue $503m (HY23: $487m)
• EBITDA $347m (HY23: $342m)
• Net profit after tax $5m (HY23: $9m)
• Unimputed interim dividend of 19 cents per share
• JB Rousselot steps down as CEO in April 2024. Mark Aue appointed CEO
Chorus has released its financial results for the six months ended 31 December 2023,
showing a solid result in its first normal operating period following the pandemic, workforce
and weather challenges of the last few years. Demand for fibre broadband continues to
grow with uptake passing 70 per cent and data consumption back at levels last seen during
the pandemic lockdowns.
EBITDA was $347 million for the six months ending 31 December 2023 (HY24), a $5 million
increase on HY23 EBITDA of $342 million.
Operating revenues were up $16 million from the prior period to $503 million. Operating
expenses were $156 million, up $11 million from HY23, largely reflecting inflation-linked
cost increases and some one-off costs for operating model changes.
Net profit after tax (NPAT) decreased by $4 million to $5 million compared to HY23 at $9
million, primarily due to higher interest rates and the accelerated depreciation of copper
assets in areas where fibre is available.
Growth in fibre uptake drives simplification of Chorus’ business
In the six months to 31 December 2023, Chorus fibre connections grew by 31,000 to
1,062,000, while the number of premises passed by fibre grew to 1,493,000 addresses.
Chorus CEO JB Rousselot said the growth in fibre uptake is driving Chorus’ evolution towards
becoming a simpler, pure fibre digital infrastructure company.
Page 2 of 4
"Over the last 12 months, copper connections dropped by 94,000, and fibre grew from 78
per cent of Chorus' connections to 85 per cent. This shift has seen network fault volumes
drop by 15 per cent, and we expect these fault volumes to fall further as we look to fully
retire copper in urban fibre areas by the end of 2026.
"Our objective remains to achieve 80 per cent fibre uptake, and we are continuously
refining our active wholesaler strategy to help achieve this.”
Home Fibre Starter plan doubles connections
Chorus' 50 Mbps 'Home Fibre Starter' plan has seen impressive uptake, doubling
connections in the half year. "This plan has been a key part of our strategy, particularly in
addressing cost-of-living pressures and providing a superior alternative to wireless
technologies," Rousselot commented.
"We're also pleased to see the continued growth in uptake of our gigabit and multi-gigabit
plans, now comprising 25 per cent of our customer base. This shift underscores New
Zealanders' growing appetite for high-speed, reliable connectivity."
Evening data usage surges
A Chorus fibre connection's average monthly data usage is now 599 gigabytes. However,
average data usage and throughput are only part of the picture, with significant data surges
during evening peak hours. Chorus invests in capacity to keep ahead of this demand
maintaining at least 50 per cent headroom above the average to meet peak usage driven by
major updates to popular online platforms like Fortnite.
Speaking about this data growth, Chorus CEO JB Rousselot said, "Fibre's ability to seamlessly
cope with this corresponding growth in average monthly data usage and peak evening
surges reflects our commitment to provide Kiwi homes and businesses with a congestion-
free, reliable and high-capacity broadband network.”
Extending the fibre footprint
In the first significant expansion of New Zealand's fibre network since the completion of
Ultra-Fast Broadband (UFB) in December 2022, Chorus has begun extending fibre to 10,000
more homes and businesses.
"The extension to these 10,000 premises in 59 locations includes communities adjacent to
our fibre footprint and places like Milford Sound, where we've completed a government-
funded backhaul link into the township.
"About 60 per cent of the homes and businesses we intend to pass are not on the Chorus
network, and a pre-registration initiative has shown strong interest in connecting to fibre.
One of the initial build locations, Waiau Pa, already has more than half of the homes and
businesses expressing interest to connect and a second, Otaramarae, is at 40 per cent."
Page 3 of 4
"We believe that fibre should and could go further, and we'll keep investigating ways to do
more. But for now, any further investment is contingent on pricing, market and regulatory
changes that make a commercial case for further investment."
Second regulatory period fibre investment plans
Chorus’ next four-year regulatory period starts in January 2025 and the company lodged its
expenditure proposal in November. The total expenditure proposal for the period is
approximately $1.3 billion. The Commerce Commission’s draft decision on the proposal is
expected soon, with its final decision in the second quarter of the calendar year.
Leadership transition
JB Rousselot, who has served as Chorus’ CEO since November 2019, will step down from his
role on 15 April 2024. Rousselot has been instrumental in steering Chorus through a period
of substantial growth and simplification of the company’s operating model. He is leaving
Chorus in great shape and well prepared to adapt to the challenges and opportunities of the
future. JB leaves to pursue non-executive director roles.
Mark Aue, currently Chief Operating Officer, has been appointed as the new CEO effective
15 April 2024. Aue joined Chorus in April 2023, having been most recently the CEO of
2Degrees and, before this, the CFO of Vodafone NZ (now One NZ).
Reflecting on Rousselot’s tenure, Mark Cross, Chair of Chorus, said, “JB has been an
exceptional leader for Chorus and fully embraced New Zealand’s culture during his time
here. Under his guidance, Chorus completed the government-supported Ultra-Fast
Broadband programme, saw fibre reach more than one million New Zealand homes and
businesses and he led the business through its greatest test, COVID-19. We are grateful for
his passionate advocacy of fibre and consumer transparency.”
On Aue’s appointment, Cross remarked, “I am delighted to be passing the leadership of
Chorus to a fellow Kiwi. Mark’s appointment as CEO comes at a pivotal time for Chorus. His
deep understanding of Chorus and the telecommunications industry, combined with a
proven leadership and innovation track record, makes him the ideal person to lead Chorus
into its next chapter.
“Mark’s focus on the customer, and growing fibre connections, will be a core part of Chorus’
future. His appointment represents the fruition of ongoing strategic succession planning
overseen by the Board,” said Cross.
Rousselot will work closely with Aue during the transition period to ensure a seamless
leadership handover.
Interim dividend and capital management
Chorus has confirmed it will pay an unimputed interim dividend of 19 cents per share in
April 2024. The dividend reinvestment plan remains suspended.
Page 4 of 4
Chorus completed its $150 million share buyback in the year's first half. There are now just
under 434 million shares on issue, with about 19 million shares cancelled through the
buyback.
FY24 guidance
• EBITDA: unchanged $680m to $700m; tracking towards top half of guidance
• Capital expenditure: unchanged $400m to $440m; tracking towards top half of
guidance
• Dividend: 47.5 cents per share, with 19 cents to be paid on 16 April 2024
ENDS
Chorus Chief Executive JB Rousselot and Chief Operating Officer Mark Aue will discuss the
half-year results at a briefing in Wellington from 10.00 am on Tuesday, 27 February
2024 (NZDT). The webcast will be available at www.chorus.co.nz/webcast.
For further information:
Steve Pettigrew
External communications manager
m: +64 (27) 258 6257 | e: steve.pettigrew@chorus.co.nz
Brett Jackson
Investor relations manager
m: +64 (27) 488 7808 | e: brett.jackson@chorus.co.nz
---
HY24 RESULTS
27 February 2024
27 February 2024
Disclaimer
This presentation:
• Is provided for general information purposes and does not constitute investment advice or an offer of or invitation to purchase Chorus
securities.
• Includes forward-looking statements. These statements are not guarantees or predictions of future performance. They involve known
and unknown risks, uncertainties and other factors, many of which are beyond Chorus’ control, and which may cause actual results to
differ materially from those contained in this presentation.
• Includes statements relating to past performance which should not be regarded as reliable indicators of future performance.
• Is current at the date of this presentation, unless otherwise stated. Except as required by law or the NZX Main Board and ASX listing
rules, Chorus is not under any obligation to update this presentation, whether as a result of new information, future events or otherwise.
• Should be read in conjunction with Chorus’ audited consolidated financial statements for the year to 30 June 2023 and NZX and ASX
market releases.
• Includes non-GAAP financial measures such as "EBITDA”. These measures do not have a standardised meaning prescribed by GAAP and
therefore may not be comparable to similar financial information presented by other entities. They should not be used in substitution for,
or isolation of, Chorus' audited consolidated financial statements. We monitor EBITDA as a key performance indicator and we believe it
assists investors in assessing the performance of the core operations of our business.
• Has been prepared with due care and attention. However, Chorus and its directors and employees accept no liability for any errors or
omissions.
• Contains information from third parties Chorus believes reliable. However, no representations or warranties (express or implied) are
made as to the accuracy or completeness of such information.
HY24 RESULTS
2
Agenda
>HY24 overview 4
>Fibre uptake, data usage 5-8
>Financial results 9-13
>Capex 14-15
>FY24 guidance, capital management 16-18
>Regulatory update 19
>Strategic priorities 20-26
Appendices
▪A: Connections, market trends, pricing 27-29
▪B: Additional financial & regulatory information 30-35
27 February 2024
JB Rousselot, CEO
Mark Aue, COO
JB Rousselot, CEO
HY24 RESULTS
3
27 February 2024
HY24 RESULTS
4
27 February 2024
HY24 RESULTS
Fibre uptake grew 1.2%
▪70.6% fibre uptake across 1,493,000
passed addresses*
ouptake +1.2% in HY24
o1,054,000 active fibre connections**
o+16,000 addresses passed
▪1,256,000 fibre installed addresses
o~49,000 installations in HY24
o238,000 addresses passed by fibre, but
fibre socket not yet installed
64.0
65.0
66.0
67.0
68.0
69.0
70.0
71.0
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
30-Jun-2231-Dec-2230-Jun-2330-Dec-23
Fibre connectedInactive fibre sockets***
Fibre socket not yet installedFibre uptake (%)
%
*based on independent address data and Chorus network data for addresses passed by fibre; excludes Chorus fibre in LFC areas
** includes ~7k fibre premium connections to addresses; excludes smart location (GPON) connections and connections in LFC areas
*** not active on 31 December 2023
5
27 February 2024
Continued broadband growth in Chorus fibre zone
* excludes ~13k fibre premium and data services (copper) and smart location (GPON) connections
-4
-5
-6
-3
-1
-1
-1
-1
-2
-1
-1
-1
-8
-10
-11
-9
-4
-5
-6
-5
-2
-2
-2
-2
11
18
19
16
-20020
Q2 FY24
Q1 FY24
Q4 FY23
Q3 FY23
Q2 FY24
Q1 FY24
Q4 FY23
Q3 FY23
Q2 FY24
Q1 FY24
Q4 FY23
Q3 FY23
Copper line only
Copper broadband
Fibre broadband
Quarterly change (’000s) by zone
HY24 RESULTS
Other fibre
company (LFC)
zone
Copper lines (no broadband)10,000Local Fibre Company and fixed wireless provider
activity is driving a gradual decline in copper
connections.
Copper broadband lines15,000
Fibre broadband lines (GPON)3,000
TOTAL28,000
Non-fibre
addresses (i.e.
Chorus fibre not
available)
Copper lines (no broadband)20,000Ongoing decline in copper connections due to
mobile/fixed wireless/satellite footprint
expansion.
Copper broadband lines81,000
TOTAL101,000
Chorus fibre zoneCopper lines (no broadband)27,000Covers all addresses outside of LFC UFB rollout
zone where Chorus fibre is available. Fibre
footprint is growing as a result of new property
development. Copper connections are reducing
as Chorus retires its copper network.
Copper broadband lines40,000
Fibre broadband lines (GPON)1,047,000
TOTAL1,114,000
6
Connection changes by Zone (indicative as at 31 Dec*)
>Home Fibre Starter (50Mbps) uptake doubled to 30k connections
>1Gbps connections grew to 25% of residential plans; connections below 300Mbps are 10% of residential plans
>~3k Hyperfibre connections with 85% residential consumers
>75% of mass market business plans are on 500Mbps or above
27 February 2024
Residential 1Gbps uptake lifts to 25%
HY24 RESULTS
7
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
Dec 2022June 2023Dec 2023
Residential
2Gbps+1Gbps300Mbps200Mbps100Mbps<100MbpsVoice
0
20000
40000
60000
80000
100000
120000
Dec 2022June 2023Dec 2023
Business
2Gbps+1Gbps500Mbps300Mbps200Mbps100Mbps<100MbpsVoice
Peak time data usagekeeps setting new records
>monthly average data usage on fibre 599GB in December
>16% of broadband connections using more than 1 terabyte of data
>record peak time throughput of 5.3Tbps in December; up 35% from Dec 2022
27 February 2024
282
599
200
250
300
350
400
450
500
550
600
650
Jun-20
Sep-20
Dec-20
Mar-21
Jun-21
Sep-21
Dec-21
Mar-22
Jun-22
Sep-22
Dec-22
Mar-23
Jun-23
Sep-23
Dec-23
CopperFibre
Data
usage
(GB)
Monthly average data usage per connection*
* includes upstream traffic
HY24 RESULTS
8
HY24 RESULTS
Financial performance
Mark Aue, Chief Operating Officer
27 February 2024
Income statement
27 February 2024
>total borrowings increased and weighted
effective interest rate on debt increased from
5.4% to 5.8% in HY24 (note: HY23 included
$11m of non-recurring costs to support
refinancing)
HY24 RESULTS
H1
FY24
unaudited
$m
H2
FY23
unaudited
$m
H1
FY23
unaudited
$m
Operating revenue503493487
Operating expenses(156)(163)(145)
Earnings before interest, tax,
depreciation and amortisation
(EBITDA)
347330342
Depreciation and amortisation(228)(224)(222)
Earnings before interest and income tax119106120
Net interest expense(107)(92)(103)
Net earnings before income tax121417
Income tax expense(7)2(8)
Net earnings5169
>HY24 underlying EBITDA of $349m when
exclude one-off operating model change costs
>increase from accelerated copper cable/duct
depreciation in fibre areas
10
>continued revenue growth as fibre uptake rises
>inflation-linked cost increases drove HY24 vs
HY23 cost growth; H2 FY23 included $6m for
extreme weather costs
H1
FY24
unaudited
$m
H2
FY23
unaudited
$m
H1
FY23
unaudited
$m
Fibre broadband (GPON)341320302
Fibre premium (P2P)353434
Copper based broadband455562
Copper based voice151821
Data services copper122
Field services343337
Infrastructure161615
Value added network
services
131313
Other321
Total503493487
27 February 2024
▪copper revenues declining as customers migrate to
Chorus fibre or competing fibre/wireless networks
▪CPI increase of 5.95% applied to some services from
mid-December
>growing fibre uptake and ARPU: $56.05 end of HY24 vs
$53.38 end of HY23; average CPI of 6% from 1 October
Revenue
HY24 RESULTS
>HY24 includes $2m from property optimisation
>greenfields revenue $14m in HY24 vs $20m in HY23
11
>HY24 includes $2m for operating model changes effective 1
Feb 2024
>reducing fault volumes but higher average cost per fault
H1
FY24
unaudited
$m
H2
FY23
unaudited
$m
H1
FY23
unaudited
$m
Labour 393838
Network maintenance273228
IT232220
Other network costs192116
Rent, rates and property
maintenance
141511
Electricity10109
Provisioning001
Insurance332
Consultants354
Regulatory levies536
Other131410
Total156163145
27 February 2024
Expenses
HY24 RESULTS
>HY23 included release of $2m software provision
12
>~$2m for copper network decommissioning in HY24
>CPI impact and increased maintenance work
>higher electricity prices offsetting declining usage
27 February 2024
HY24 RESULTS
Underlying EBITDA
H1
FY24
unaudited
$m
H2
FY23
unaudited
$m
H1
FY23
unaudited
$m
REPORTED EBITDA347330342
Reported operating revenue
▪extreme weather credit
Underlying operating revenue
503
503
493
1
494
487
487
Reported operating expenses
▪extreme weather costs
▪operating model change
Underlying operating expenditure
156
(2)
154
163
(6)
(3)
154
145
145
UNDERLYING EBITDA349340342
13
27 February 2024
Gross capex: $232 million (HY23 $222m)
>greenfields $31m (HY23 $38m)
>$12m incentive spend subject to connection
volumes and retailer activity
>49,000 installations; Layer 2 spend $36m for multi-
gigabit services and increased network capacity
HY24 RESULTS
FibrecapexH1 FY24
$m
H2 FY23
$m
H1 FY23
$m
Communal network005
Fibre installations & layer 210893100
Fibre products & systems655
Other fibre& growth415253
Network sustain1284
Customer acquisition 201515
Subtotal187173182
▪Average cost per premises installation: $1,101 vs $1,100 - $1,250 guidance (excludes layer 2 and
includes standard installations, some non-standard single dwellings and service desk costs)
14
>increased roadworks activity attributable to fibre;
cable route lifecycle projects; $1m cyclone recovery
27 February 2024
Capex: Copper and Common
HY24 RESULTS
CoppercapexH1 FY24
$m
H2 FY23
$m
H1 FY23
$m
Network sustain11189
Copperconnections-1-
Copper layer2--1
Customer acquisition 113
Subtotal122013
Commoncapex
H1 FY24
$m
H2 FY23
$m
H1 FY23
$m
Informationtechnology222420
Building& engineering services11157
Subtotal333927
>HY24 includes ~$2m for ongoing rural cabinet
upgrade project (largely grant funded) and $1m for
cyclone recovery
>network resilience projects and EdgeCentre
investment
15
>EBITDA: $680m to $700m* [unchanged]
▪tracking to upper half of range
>GROSS CAPEX: $400m to $440m [unchanged]
▪tracking to upper half of gross capex range
▪fibre, copper, common and sustaining capex
sub-category ranges are unchanged
27 February 2024
FY24 guidance and dividend -unchanged
HY24 RESULTS
16
>FY24 dividend guidance of 47.5cps* [unchanged]
▪FY24 interim dividend 19cps, unimputed
•record date: 19 March 2024
•payment date: 16 April 2024
•no Dividend Reinvestment Plan available
>$150m share buyback completed in September 2023
▪~19m shares purchased since February 2022
▪~434 million shares on issue at 31 December
>Chorus is undertaking a capital management review and
expects to provide an update at the FY24 results.
▪this review will consider PQP2 settings, shareholder
feedback, comparable company benchmarks and
macroeconomic factors.
▪as noted previously, Chorus is committed to growing
shareholder value and delivering a sustainable, growing
dividend through time.
* subject to no material adverse changes in circumstances or outlook
27 February 2024
Net debt/EBITDA
As at31 Dec 2023 ($m)
Borrowings2,709
+ PV of CIP debt securities
(senior)
290
+ Net leases payable179
Sub total3,178
-Cash87
Total net debt3,091
Net debt/EBITDA*4.56x
>~70% of interest rate exposure fixed at 31 December
▪net ~$750m forward start fixed interest rate swapsstarted in HY24
▪~70% fixed over next 3 years
*Based on S&P and bank covenant methodologies
HY24 RESULTS
17
>ND/EBITDA increased from 4.39x (FY23) to 4.56x
▪borrowings increased from $2,561 million (FY23)
▪ratings agency thresholds: Moody’s 5.25x, S&P 5.0x
▪the Board considers that a ‘BBB’ credit rating or equivalent is
appropriate for a company such as Chorus
▪intention that in normal circumstances the ratio of net debt to
EBITDA will not materially exceed 4.75x
▪financial covenants require senior debt ratio to be no greater
than 5.5x
Bond
Amount
(NZ$m)
Current hedge profile
EMTN 2026
514100% fixed for life of bond at 3.39%
NZD 2027
200100% fixed for life of bond at 1.98%
NZD 2028
500100% fixed for life of bond at 6.21% from Dec 2023
EMTN 2029
820
Swapped to a margin over floating (BKBM) through cross
currency interest rate swaps. ~50% fixed at 6.3% from
Dec 2023
NZD 2030
200100% fixed at 2.5% from Oct 2023
AMTN 2030
325
Swapped to a margin of 1.73% over floating (BKBM)
through cross currency interest rate swaps.
18
>At 31 December, debt of $2,709m comprised:
▪Long term bank facilities of $450m ($150m drawn)
▪NZ bonds: $900m
▪Euro Medium Term Notes $1,334m (NZ$ equivalent at hedged rates)
▪AUD Medium Term Notes $325m (NZ$ equivalent at hedged rates)
NZ
$M
200
500
200
514
820
325
85
105
167
210
85
112
207
364
0
100
200
300
400
500
600
700
800
900
2024202520262027202820292030203120322033203420352036
NZ BondEUR MTNAUD MTN
Crown debt securitiesCrown equity securities
Crown financing and debt profile
27 February 2024
HY24 RESULTS
Crown
securities
$m
30
June
2025
30
June
2030
30
June
2033
30
June
2036TOTAL
Equity securities
(cumulative total)
85.3197.0404.0768.5768.5
Debt securities
(maturity profile)
85.3104.7166.7210.2566.9
Crown equity securities
▪unique class of security with no voting rights but a repayment
preference on liquidation
▪an increasing portion attract dividend payments from 30 June 2025
onwards based on 180-day NZ bank bill rate, plus 6% p.a. margin
▪redeemable by cash payment of total issue price or the issue of Chorus
shares (at a 5% discount to the 20-day VWAP for Chorus shares)
Crown debt securities
•unsecured, non-interest bearing and carry no voting rights
•to be redeemed in tranches from 30 June 2025 to 2036 by repaying
the issue price to the holder
18
27 February 2024
HY24 RESULTS
Regulatory update
19
WACC parameterPQP1
1
WACC
(1 July 2021)
ID
2
WACC
(1 Jan 2024)
Risk-free rate0.51%5.09%
Average debt premium1.70%1.45%
Cost of debt2.54%6.87%
Cost of equity5.62%8.92%
Mid-point vanilla WACC4.72%8.32%
Mid-point post-tax WACC4.52%7.77%
Source: Commerce Commission
1. PQP1: first price-quality regulatory period from 2022-2024
2. ID: Information Disclosure. Latest calculated WACC is used for
reporting purposes only.
2024
timetable
Detail
Q1 2024▪Draft determination of Chorus’ PQP2 expenditure
allowance
▪Draft fibre Input Methodologies (IM) amendments
Q2 2024▪Chorus Information Disclosure reporting for 2023 year
▪Final fibre IM amendments
▪Final determination of PQP2 expenditure allowances
▪Draft determination of PQP2 revenue path and quality
standards
▪WACC determination
Q4 2024▪Final determination of PQP2 revenue path and quality
standards
>Recent events
▪18 Jan: notice of consultation on amendments to fibre Input
Methodologies with reference to market risk premium (note:
recent electricity, gas and airports sector review reduced
premium from 7.5% to 7.0%)
▪5 Feb: Chorus update to PQP2 expenditure proposal reduced
capex from ~$1.5bn to ~$1.3bn (nominal)
>Recent Commerce Commission reporting
update indicates materially higher WACC
▪The PQP2 WACC risk-free rate is expected to be based on
the average interpolated 4-year government bond yield
(bid yield to maturity) during the March to May period
Simplifying our future
JB Rousselot, Chief Executive Officer
27 February 2024
HY24 RESULTS
27 February 2024
HY24 RESULTS
21
Becoming a simpler business
>Copper complexity is diminishing
▪copper connections reduced by 94k in 2023; fibre now 85% of
connections
▪migration to fibre reduced total faults 15% (HY23 vs HY24)
▪network and property optimisation activity ramping up
▪just 100k copper connections remain in non-fibre areas
>Fine tuning our fibre business
▪simpler product stack delivering business connection growth
▪‘intacts’ customer experience lifted from 7.2 to 7.6 in HY24
▪new operating model: value streams driving strategic outcomes
▪regulatory settings (2025-2028) should better reflect our fibre-
centric business
2024 will see large steps in our evolution as a digital infrastructure company
Moving from legacy copper
To an all-fibre network
27 February 2024
HY24 RESULTS
22
>Active wholesaler initiatives keep evolving
▪continue targeting UFB2 areas and inactive fibre socket base
▪tailwind from copper withdrawal will slow as customer pool shrinks
▪consultation underway to sharpen retailer incentives
▪tailoring migration activity to customer groups (e.g. retirement
villages)
>Consumer perception of fibre’s premium value remains strong
▪Home Fibre Starter 50Mbps supporting copper migration, cost of
living needs and wireless winback
▪1Gig plans continue to capture high share of net growth
▪growing retailer support for Hyperfibre (2-4Gbps)
▪regulator needs to protect consumers with product transparency
Pushing towards 80% uptake
27 February 2024
HY24 RESULTS
Fibre expansion confirmed for 10k premises
>Fibre expansion: 10k premises rollout confirmed for
communities adjacent to existing fibre network
▪~$40m communal rollout cost with majority of build in FY25
▪winback opportunity: ~60% of premises are offnet
>New property development: fibre extended to ~15k lots in
HY24; sector slowing from post-COVID highs
>Edge Centre: extra Auckland capacity added; >50% pre-sold
>Smart locations (e.g. traffic cameras): steady growth in
demand for fibre connectivity
23
New Property Pipeline
27 February 2024
HY24 RESULTS
0
20
40
60
80
100
120
Copper voice
Copper broadband
Connections
(thousands)
Chorus fibre
zone
LFC fibre zone
Non fibre
zone
Copper connections able to be withdrawn with 6
months’ notice where fibre available
24
>~47,000 copper withdrawal notifications
issued (cumulative) in fibre areas
▪copper service ceased for ~36,000 notified
connections
▪826 copper broadband cabinets closed;
1,435 under closure notice
▪broadband retention rate of 82% across
closed cabinets
>ongoing connection reduction in rural
areas underlines copper’s limited
technology horizon
▪Australian Government review to
modernise Universal Service Obligation and
consider alternative technologies
Copper connections now weighted to rural
27 February 2024
HY24 RESULTS
25
The future is resilient, reliable, gigabit broadband
“High performing, resilient communications networks and
services are critical for economic and social prosperity...
In line with previous UFB investments, expanding the capacity
of New Zealand’s telecommunications in areas that do not
have fibre is likely to pay long term economic dividends and
have low investment risks.
It is also likely to provide better value for money over the life
of the underlying fibre assets because it negates the need to
maintain ongoing funding for wireless rural networks that will
face ongoing capacity issues as New Zealanders do more
economic and social activities online.”
Source: Ministry of Business, Innovation & Employment - Briefing for
the Incoming Minister for Media and Communications
27 February 2024
HY24 RESULTS
26
A solid HY24
>data growth, plan mix and incentives driving
fibre uptake
>EBITDA lift from revenue growth and good
cost control
>PQP2 expenditure submission lodged and draft
decision due soon
>fibre extension confirmed for 10,000 premises
>business evolving to a simpler all fibre future
>seamless CEO transition
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
31-Dec-2231-Mar-2330-Jun-2330-Sep-2331-Dec-23
27 February 2024
31 Dec
2022
31 March
2023
30 June
2023
30 Sept
2023
31 Dec
2023
Unbundled copper
(no broadband)
not
material
not
material
not
material
not
material
not
material
Baseband copper
(no broadband)
85,00080,00072,00064,00057,000
Copper ADSL
(includes naked)
102,00094,00084,00075,00068,000
VDSL
(includes naked)
100,00092,00083,00075,00068,000
Fibre broadband
(GPON)
986,0001,002,0001,021,0001,041,0001,052,000
Data services
(copper)
1,0001,0001,0001,0001,000
Fibre premium (P2P)11,00010,00010,00010,00010,000
Total connections
1,285,0001,279,0001,271,0001,266,000*1,256,000*
Fibre (GPON)
VDSL
Copper ADSL
Baseband copper
>1,188,000* broadband connections comprises:
▪1,052,000 fibre (GPON) connections
▪136,000 VDSL/ADSL (copper) connections
>CPI increase of 5.65% applied to copper baseband and copper broadband services from mid-December
Business premium
* Includes 1k DSL and 1k GPON partly subsidised education connections that were previously excluded from broadband totals
HY24 RESULTS
27
Appendix A: Connections data, market trends, pricing
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
NZ broadband market –by retailer
SparkOne2degrees (incl Vocus)Mercury (incl Trustpower)ContactOthers
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
NZ broadband market –by technology
Chorus xDSLChorus mass market fibreChorus premium fibre
Local fibre companies (UFB)Other fibre networksOne cable
Fixed (mobile) wirelessLegacy fixed wireless, satellite
Source: IDC
HY24 RESULTS
27 February 202428
27 February 2024
HY24 RESULTS
Fibre plan -consumerCurrent wholesale price Price before 1 Oct 2023Notes
Voice line$29.11$27.45
Home starter 50/10Mbps$35$35
Applies where retail price is $60. Price
reduced to $35 from 1 Feb 2022
50/10Mbps$50.43$47.28
100/20Mbps
300/100Mbps
$53.54$50.50
100Mbps is anchor service. 300Mbps
plan introduced late 2021.
1Gbps $61.86$58
Hyperfibre 2Gbps$70$70
Hyperfibre 4Gbps$85$85
Hyperfibre 8Gbps$110$110
Copper pricingCurrent wholesale price Price before 16 Dec 2023 Notes
Copper line$38.21$36.17
Annual CPI adjustment mid-
December 2023
Copper broadband$51.08$48.35
29
Appendix B: Additional financial & regulatory
information
27 February 2024
HY24 RESULTS
30
Capital management framework
>Key principles and components of our capital management framework
include:
▪growing shareholder value and delivering a sustainable, growing dividend
through time
▪operating within our investment grade, BBB, 5x net debt/EBITDA ceiling
(internal limit 4.75x)
>Investment in discretionary growth capex:
▪can be phased to fit the parameters of the dividend policy and debt limits
▪will be subject to business casing, market conditions and regulatory
settings/approvals
▪includes RAB investment (e.g. new fibre installations, greenfields growth
and footprint expansion) and non-RAB investment
>Chorus expects the core RAB value (i.e. excluding the Financial Loss
Asset) to be at least maintained in the longer term
27 February 2024
Fibrecapex: sustainingH1 FY24 $mH1 FY23 $m
Layer 23623
Fibre products & systems62
Network sustain124
Other fibre1013
Customer acquisition costs*88
Subtotal7250
Coppercapex: sustaining
Network sustain119
Copperconnections--
Copper layer2-1
Customer acquisition costs*13
Subtotal1213
>Of HY24 $232m gross capex, $116m was sustaining
capex and $116m was non-sustaining/growth capex
HY24 RESULTS
*Relates to provisioning, systems and service desk costs
Non-sustaining capexH1 FY24 $mH1 FY23 $m
UFB communal05
Fibre installations7277
Greenfield growth3141
Footprint expansion02
Customer acquisition (incentives)127
EdgeCentre Colocation1-
Subtotal116132
31
Commoncapex: sustaining
Informationtechnology2220
Building& engineering services107
Subtotal3227
Sustaining capex
▪copper faults continue to fall in Chorus fibre areas as we withdraw copper services
▪non-fibre areas (~13% of population) make up the majority of copper network faults and reactive costs
▪H2 FY23 copper reactive fault spend included Cyclone Gabrielle costs
27 February 2024
0
5,000
10,000
15,000
20,000
25,000
Chorus UFBLFC UFBRoNZ (non-
UFB)
Copper –fault volumes by area
H1 FY22
H2 FY22
H1 FY23
H2 FY23
H1 FY24
0
2
4
6
8
10
12
Chorus UFB LFC UFB Rest of NZ (non
UFB)
Copper -reactive fault spend
by area
Note:
▪reactive maintenance excludes spend on proactive maintenance and customer networks (i.e. premises wiring, no fault found, cancellations)
$m
# of
faults
HY24 RESULTS
Maintenance trends
32
27 February 2024
HY24 RESULTS
Maximum Allowable Revenue (MAR)
Source: Commerce Commission, price-quality path final decision, 16 Dec 2021
>MAR totals reflect draft starting RAB and allocations in 2021. Changes in
the final RAB announced in October 2022 will be reflected in the next
regulatory period wash-up.
Pass-through costs14.214.515.5
TOTAL$690.2$747.4$789.5
>PQP1 vanilla WACC of 4.72% (used 0.51% risk-free rate), would be 8.32% if
recalculated at 1 Jan 2024 using recent rates.
>forecast CPI used for revaluations in 2022 was 1.8% (vs 7.22% actual). 2023
forecast was 2.2% (vs 4.66% actual) and 2024 forecast is 2.13%. Higher
revaluation rates during RP1 will be reflected in the opening RAB for PQP2.
>the estimated benefit of Crown debt and equity is deducted from the
MAR. This amount will vary between regulatory periods depending on the
WACC.
>cost allocations will need to be addressed in RP2 given the increasing
dominance of fibre in Chorus’ business operations.
>reflects an implied 14-year asset life through regulatory process.
>reflects asset life of 14.2 years and tilted annuity depreciation (-13% tilt
rate)
>tax building block commences from ~FY27 and grows to ~$100m
>CPI forecast assumptions were 2.71% in 2022, 2.17% in 2023, 2.04% in
2024. The 2023 and 2024 MAR will be updated for preceding June
forecasts and then for actual CPI as part of the RP2 wash-up process.
33
RAB movements for 2022 ID year
Table that shows starting RAB (split Core vs FLA?) and a waterfall for movements in period (e.g.
final RAB, depreciation, new assets (net of contrib?), CPI = end of 2022 RAB
ComponentCore RAB
$m (nominal)
Financial Loss
Asset (FLA)
$m (nominal)
Notes
Opening RAB (1 January 2022)4,0321,416
October 2022 final RAB decision total of $5,413m (core $3,997m and FLA
$1,416m) updated for 2022 allocation factors.
lessDepreciation(277)(234)
FLA depreciation is diminishing valueand the core RAB is straight-line.
Assets start depreciating the regulatory year after commissioning.
plusRevaluations287102
7.22% actual inflation in the December quarter versus forecast 1.8% used in
the initial 2022 MAR. The ID RAB rolls forward into RP2 and will be reflected
in the RP2 MAR.
plusAssets commissioned356
Amount is net of $52m capital contributions
plusAdjustment resulting from
asset allocation
28
An upwards adjustment reflects a greater proportion of shared assets being
attributable to fibre (due to differences in allocations drivers such as
revenues and connections) than was forecast for the opening RAB in 2023.
Total closing RAB value
(31 Dec 2022)
4,4261,284
NOTE:
1. RAB movements do not affect the RP1 MAR. The ID RAB closing value will be the basis of the opening RAB for RP2.
2. RAB movement calculations are subject to Commerce Commission review and approval.
34
Closing RAB of $5,710m
HY24 RESULTS
27 February 2024
2022 MAR wash-up balance of $46.8m
35
DescriptionRevenue
$m (nominal)
Wash-up
$m (nominal)
Notes
Building blocks revenue
Pass-through costs
Forecast total allowable revenue 2022
676.1
14.2
690.2
2022 MAR was set on the basis of2021 forecasts.
Less 2022 FFLAS revenue received(667.2)23.0
Chorus under-earnt initial MAR allowance by $23m.
PlusInitial RAB true-up8.5
MAR adjustment to reflect increased allocation of shared
assets in the final RAB decision: expect ~$30m smoothed
across RP1.
PlusPass-through costs 1.5
Actual pass-through cost of $15.7m versus forecast $14.2m.
PlusCrown financing benefit 0.1
Reflects lower Crown financing balance than forecast.
PlusCost allocators13.7
Previously forecast cost inputs (e.g. totex, connections and
data traffic) have been updated for actuals in the period.
Total wash-up balance for 202246.8
The wash-up balance is rolled forward each year using the
post-tax WACC as the time-value of money to preserve NPV
neutrality. The RP1 balance will be added to the RP2 MAR.
Updated total allowable revenue 2022714
NOTE:
1.The regulations omitted a 2022 wash-up for actual CPI. The 2023 and 2024 MAR will be updated for forecast CPI changes as part of in-period smoothing.
The 2023 MAR used 2.17% forecast CPI and will be updated for 3.37% (June 2022 forecast) with actual CPI applied via the wash-up process for RP2.
2.There was no wash-up required for individual capex proposals in 2022.
3.A wash-up for connection capex differences vs forecast will occur at the end of 2024.
4.All wash-up estimates are subject to Commerce Commission review and approval.
HY24 RESULTS
27 February 2024
---
Our financial results for the six months ended
31 December 2023 show a solid result in our
first normal operating period following the
pandemic, workforce and weather challenges of
the last few years. Demand for fibre broadband
continues to grow, with uptake passing 70% and
data consumption back at levels last seen during
the pandemic lockdowns.
Growth in fibre uptake drives simplification
The growth in fibre uptake is driving Chorus’ evolution towards
becoming a simpler, pure fibre digital infrastructure company.
Over the last 12 months, fibre grew from 78 per cent of Chorus’
connections to 85 per cent. This reflects both the growth in fibre
uptake and copper connections dropping by 94,000 lines. This shift
has seen network fault volumes drop by 15 per cent because fibre
connections require much less maintenance than our legacy copper
connections. We expect these fault volumes to fall further as we
look to fully retire copper in urban fibre areas by the end of 2026.
Our objective remains to achieve 80 per cent fibre uptake, and
we are continuously refining our active wholesaler strategy to
help achieve this. Our 50 Mbps ‘Home Fibre Starter’ plan has seen
impressive uptake, doubling connections in the half year. This
plan has been a key part of our strategy, particularly in addressing
cost-of-living pressures and providing a superior alternative
to wireless technologies. It also provides an entry point for
consumers to experience fibre and to upgrade to higher speed
plans in the future.
“We’re also pleased to see the continued growth in uptake of
our gigabit and multi-gigabit plans, now comprising 25 per cent
of our customer base. This shift underscores New Zealanders’
growing appetite for high-speed, reliable connectivity.
EBITDA was $347 million for the six months ending 31 December
2023 (HY24), a $5 million increase on HY23 EBITDA of $342
million. Operating revenues were up $16 million from the prior
period to $503 million. Operating expenses were $156 million,
up $11 million from HY23, largely reflecting inflation-linked cost
increases and some one-off costs for operating model changes.
Net profit after tax (NPAT) decreased by $4 million to $5 million
compared to HY23 at $9 million, primarily due to higher interest
rates and the accelerated depreciation of copper assets in areas
where fibre is available.
We’ve confirmed we’ll pay an unimputed interim dividend of 19
cents per share on 16 April 2024. The dividend reinvestment plan
remains suspended.
We completed our $150 million share buyback in September.
There are now just under 434 million shares on issue, with about
19 million shares cancelled through the buyback.
dear investors
FY24 half year results
1 HY24 totals include about 2,000 partly subsidised education
connections previously excluded from connections data.
2 Earnings before interest, income tax, depreciation and amortisation
(EBITDA) is a non-GAAP profit measure without a standardised meaning
for comparison between companies. We monitor EBITDA as a key
performance indicator and we believe it assists investors in assessing
the performance of the core operations of our business.
HY24: Six months ended 31 December 2023
FY23: Year ended 30 June 2023
HY23: Six months ended 31 December 2022
Dividend
HY24
19cps
HY23
17cps
Net profit after tax
HY24
$5m
HY23
$9m
Fixed line connections
1
HY24
1,256,000
FY23
1,271,000
EBITDA
2
HY24
$347m
HY23
$342m
Half year result overview
Fibre connections
1
HY24
1,062,000
FY23
1.031,000
Broadband connections
1
HY24
1,188,000
FY23
1,188,000
Extending the fibre footprint
In early February, we announced that we are continuing to reduce
the digital connectivity divide between urban and non-urban
areas. Work has begun to build fibre to 10,000 more homes and
businesses across 59 communities nationwide.
About 60 per cent of the homes and businesses we intend to pass
are not on the Chorus network.
We’re already seeing strong interest in fibre through a pre-
registration initiative targeting some of the initial communities in
our rollout plan.
We believe that fibre should and could go further, and we’ll
keep investigating ways to do more. But for now, any further
investment is contingent on pricing, market and regulatory
changes that make a commercial case for further investment.
Thinking ahead for network resilience
This time last year our network teams were busy restoring
services in areas devastated by Cyclone Gabrielle. In the wake of
that event, our team has been busy considering how we might
make our network more resilient for the future.
One initiative is the development of two mobile exchanges on
wheels, or MEOWs. Repairing and reinstating an entire exchange
building could take months, depending on the damage. Using six
metre long ‘datablok’ containers, a MEOW can be transported by
road and can connect up to 25,000 fibre connections. This means
we can get services back up and running within a few days of a
disaster affecting one of our existing exchange buildings.
An underground directional drilling machine in Waiau Pa, South Auckland, for the recently announced fibre rollout.
Two containerised emergency exchanges have been built and are on standby for future disasters. One is stored in the North Island and the other in the South Island.
Keeping ahead of the game on bandwidth
The proportion of “power users” consuming more than one
terabyte of data – 1,000 gigabytes in a month – was 16% in
December.
Data usage across all our fibre customers averaged 599 gigabytes.
That’s back near the record usage levels we last saw during
COVID lockdowns in late 2021 and shows the ongoing growth in
everyday data usage. That growth is happening even with much
lower data users joining fibre from copper.
As we’ve noted before, average usage would double if all current
video streaming traffic was in 4K quality. For now, we’re lagging
other countries when it comes to things like the broadcast of
mainstream sports in 4K quality.
The average data usage doesn’t tell you the full story. More and
more usage is happening in evening peak times. This means our
network capacity is having to flex a lot more. If you look at the
chart on the right, you can see how an average evening – the dark
red line – peaks around 3.8 terabits per second downloads.
That is well and truly eclipsed on evenings when applications like
Fortnite require upgrades that drive record peaks of 5.3 terabits
per second. The peak in December 2023 was 35% higher than the
peak in December 2022. For fibre consumers, that Fortnite update
should have taken about five minutes on a one gigabit plan or less
than 15 minutes on a 300 megabits plan. Compare that to about
one and a half hours on an average 4G fixed wireless plan.
We invest in capacity to keep ahead of this demand, maintaining
at least 50 per cent headroom above the average to meet forecast
peak usage. Fibre’s advantage over other technologies is that
we can achieve significantly greater capacity relatively easily by
changing out the electronics on either end of the fibre cable to
a home or business. With 99.999% reliability and latency below
five milliseconds, fibre is the leading technology to meet the
increasing demands of an ultra-digital future.
Peak time traffic – Terabits per second
Mark Cross, Chair
Leadership transition
JB Rousselot, who has served as Chorus’ CEO since November
2019, will step down from his role on 15 April 2024. JB has been
instrumental in steering Chorus through a period of substantial
growth and simplification of the company’s operating model.
JB has been an exceptional leader for Chorus and fully embraced
New Zealand’s culture during his time. Under his guidance,
Chorus completed the government-supported Ultra-Fast
Broadband programme, saw fibre reach more than one million
New Zealand homes and businesses, and he led the company
through its greatest test, COVID-19. We are grateful for his
passionate advocacy of both fibre and consumer transparency.
Taking over from JB is Mark Aue, currently Chief Operating Officer;
he will start as the new CEO on 15 April 2024. Mark joined Chorus
in April 2023, having been most recently the CEO of 2Degrees
and, before this, the CFO of Vodafone NZ (now One NZ).
We’re delighted to be passing the leadership of Chorus to a Kiwi.
Mark’s appointment as CEO comes at a pivotal time. His deep
understanding of Chorus and the telecommunications industry
and his proven leadership and innovation track record make him
the ideal person to lead Chorus into its next chapter. Mark’s focus
on the customer and growing fibre connections will be a core
part of Chorus’ future.
JB leaves Chorus in great shape and well-prepared to adapt to
the challenges and opportunities of the future, and we thank him
for this. He will work closely with Mark in the weeks ahead to
ensure a seamless leadership handover.
Looking ahead
If you’d like more detail on our financial results, please watch the
recorded half year results briefing webcast. This will be available
at www.chorus.co.nz/reports within a day of our
results announcement.
Chorus’ next four-year regulatory period starts in January 2025,
and we’ve lodged an expenditure proposal of approximately
$1.3 billion with the Commerce Commission. A draft decision
on this is expected by the end of March, and a final decision on
the revenue we’re allowed to earn from the fibre network is due
towards the end of the year.
I look forward to updating you in August on Chorus’ continuing
progress in enabling New Zealand’s digital future.
Thank you for your ongoing support of Chorus.
Peak time traffic - Terabits per second
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
5.3 Tbps
4.00PM
8.00PM
12.00AM
03.11.202319.11.202303.12.2023
Traffic (Tbps)
Directory
Registered Offices
NEW ZEALAND
Level 10, 1 Willis Street
Wellington, New Zealand
P: +64 800 600 100
AUSTRALIA
C/– Allens Corporate Services Pty Limited
Level 28, Deutsche Bank Place, 126 Phillip Street,
Sydney, NSW 2000, Australia
P: +61 2 9230 4000
https://company.chorus.co.nz/reports
ARBN 152 485 848
---
For the six months ended 31 December 2023
01 Half year result overview
02 Management commentary
04 Financial statements
Half Year
Results
2024
1 Chorus Half Year Results 2024
Fibre connections
1
1,062,000
HY24
1,031,000
FY23
EBITDA
2
HY18
$347m
HY24
$342m
HY23
Fixed line connections
1
HY24
1,256,000
FY23
1,271,000
Dividend
19cps
HY24
17cps
HY23
Broadband connections
1
1,188,000
HY24
1,188,000
FY23
Net profit after tax
$5m
HY24
HY18
$9m
HY23
Half year result overview
HY24: Six months ended 31 December 2023
FY23: Year ended 30 June 2023
HY23: Six months ended 31 December 2022
1 HY24 totals include about 2,000 partly subsidised education connections previously excluded from connections data.
2 Earnings before interest, income tax, depreciation and amortisation (EBITDA) is a non-GAAP profit measure without a standardised meaning for comparison
between companies. We monitor EBITDA as a key performance indicator and we believe it assists investors in assessing the performance of the core operations
of our business.
1
2 Chorus Half Year Results 2024Management commentary
HY24 Management
commentary
We report earnings before interest, income tax, depreciation, and amortisation
(EBITDA) of $347 million for the six months ended 31 December 2023 (HY24).
Net earnings decreased by $4 million to $5 million due to increased interest
costs and the accelerated depreciation of copper assets in areas where fibre
is available.
Operating revenue
Revenues of $503 million were up $16 million from HY23 revenues. We ended HY24 with 1,256,000
fixed line connections, down 15,000 lines in the six months.
Fibre revenues
Fibre broadband revenues grew by $39 million compared to HY23 and account for 68% of total
revenues compared to 62% in the prior period. Average monthly revenue per fibre user grew from
$53.38 in December 2022 to $56.05 in December 2023. An inflation-related price increase was
applied to some services in October 2023 and uptake of the higher value Hyperfibre and 1 Gbps
services grew by 1% to 25% of residential fibre connections. Uptake of our 50Mbps Home Fibre
Starter service, which we have held at $35 per month given the cost of living crisis, grew by 15,000
connections in HY24.
Overall fibre uptake reached 70.6% of addresses where Chorus fibre is available, excluding local
fibre company areas, up from 67.8% at the end of HY23. Total fibre connections, including fibre
premium services, increased by 31,000 in HY24 to 1,062,000 and comprise 85% of Chorus’
total connections.
Copper based revenues
Connection revenues across copper voice and data services continued to decline as consumers
migrate to fibre or alternative services. A 5.65% inflation-related price increase was applied to
copper voice and broadband services in mid-December 2023.
Field services and other revenues
Field services products revenue decreased by $3 million largely due to slowing new property
development demand. Other revenue was up $2 million compared to HY23 following the sale
of property assets.
CONNECTIONS
31 DECEMBER 2023
CONNECTIONS
31 DECEMBER 2022
CONNECTIONS
30 JUNE 2023
Fibre broadband (GPON) 1,052,000 986,000 1,021,000
Fibre premium (P2P) 10,000 11,000 10,000
Copper VDSL 68,000 100,000 83,000
Copper ADSL 68,000 102,000 84,000
Data services over copper 1,000 1,000 1,000
Baseband copper 57,000 85,000 72,000
Unbundled copper 0 Immaterial Immaterial
Total fixed line connections
*
1,256,000 1,285,000 1,271,000
* 31 December 2023 totals include about 2,000 partly subsidised education connections on copper and fibre
broadband. These subsidised connections were previously excluded from connections data.
Expenses
Total operating expenses were $156 million in HY24, up $11 million from HY23. This difference
reflected inflation-linked cost increases across multiple expense lines, the release of a favourable $2
million software provision in HY23 and one-off operating model costs of $2 million incurred in HY24.
Labour
Labour costs of $39 million represent staff costs that are not capitalised and were up $1 million
from HY23. HY24 labour costs include $2 million for operating model changes with a new
organisational structure to apply from 1 February 2024.
At the end of HY24 we had 852 permanent and fixed term employees, up from 810 at the end of
HY23. This increase was largely due to IT contractors becoming full-time employees.
3 Chorus Half Year Results 2024Management commentary
Network maintenance
Network maintenance costs decreased by $1 million in HY24 compared to HY23. Overall fault
volumes are trending down as copper connections reduce and more consumers are connected
to the newer fibre network, but the reduction in fault volumes was largely offset by inflationary
increases in the cost to repair copper and fibre faults.
Information technology
Information technology costs were up $3 million from HY23, with HY23 benefitting from the
release of a $2 million software provision.
Other network costs
Other network costs were up $3 million from HY23 as activity to exit copper assets increased and
more network and property optimisation costs were incurred.
Rent, rates, and property maintenance
These costs were up $3 million from HY23 because of inflation and an increase in maintenance work.
Depreciation and amortisation
Accelerated depreciation of copper cables and ducts drove a $6 million increase of depreciation
expense compared to HY23. Copper cables in Chorus UFB1 and UFB2 rollout areas will be fully
depreciated by June 2025 and June 2026 respectively. Copper cables and copper ducts in local
fibre company areas will be fully depreciated by June 2026.
Finance expense
HY24 finance costs were $16 million higher when excluding $11 million of non-recurring costs
that were incurred in HY23 to support debt refinancing. The drivers for increased finance costs
were rising interest rates and an increase in total debt. Our weighted average effective interest rate
increased from 4.4% to 5.8% between HY23 and HY24.
An AUD300 million medium term note was issued in HY24. Chorus fully hedges the foreign
exchange exposure on all foreign debt with cross-currency interest rate swaps.
Approximately 70% of our floating interest rate exposure was hedged with fixed interest rate swaps
at the end of HY24.
Capital expenditure
Gross capital expenditure for HY24 was $232 million, up from $222 million in HY23. Fibre-related
investment was up $5 million to $187 million.
HY24 fibre installation volumes of 49,000 were about 2,000 installations higher than in HY23, but
the mix of work and lower spend on backbone installation (to connect rights of way or multi-
dwelling units) meant overall installation spend was $5 million lower at $72 million. The average
cost per premises installed during HY24 was $1,101.
Fibre layer 2 spend was up $13 million to $36 million in HY24. This was driven by equipment
upgrades to enable Hyperfibre multi-gigabit services and increased transport spend to support
growing bandwidth demand.
Other fibre and growth investment reduced from $53 million in HY23 to $41 million in HY24
largely because housing growth continued to slow from record highs in prior periods.
Customer acquisition costs on fibre were up $5 million between periods as retail service providers
used our incentive offers to grow fibre connections and upgrades to higher speed fibre products.
Total copper capital expenditure decreased by $1 million to $12 million in the current period.
HY24 includes $2 million of rural cabinet upgrades that are largely grant funded.
Total common capital expenditure was $6 million higher in HY24 than HY23 due to network
resilience upgrades and investment in new EdgeCentre Colocation capacity.
Dividends, equity and capital management
We will pay an unimputed interim dividend of 19 cents per share on 16 April 2024 to all holders
registered at 5:00pm on 19 March 2024.
The dividend reinvestment plan will not be available for the interim dividend.
A final unimputed dividend of 28.5 cents per share is expected to be declared in August 2024,
subject to no material adverse changes in circumstances or outlook.
The Board considers that a ‘BBB’ or equivalent credit rating is appropriate for a company such as
Chorus. It intends to maintain capital management policies and financial policies consistent with
these credit ratings. At 31 December 2023, Chorus had a long-term credit rating of BBB/stable
outlook by Standard & Poor’s and Baa2/stable by Moody’s Investors Service.
Chorus completed a $150 million share buyback programme in September 2023. The programme
commenced in February 2022 and resulted in the cancellation of 19 million shares.
4 Chorus Half Year Results 2024Financial statements
Notes
SIX MONTHS ENDED
31 DECEMBER 2023
UNAUDITED $M
SIX MONTHS ENDED
31 DECEMBER 2022
UNAUDITED $M
YEAR ENDED
30 JUNE 2023
AUDITED $M
Fibre broadband (GPON) 341 302 622
Fibre premium (P2P)
35 34 68
Copper based broadband
45 62
117
Copper based voice
15 21 39
Data services copper
1 2 4
Field services products
34 37 70
Infrastructure
16 15 31
Value added network services
13 13 26
Other
3 1 3
Total operating revenue
503 487 980
Labour
(39) (38) (76)
Network maintenance
(27) (28) (60)
Information technology
(23) (20) (42)
Other network costs
(19) (16) (37)
Electricity
(10) (9) (19)
Rent and rates
(6) (6) (12)
Property maintenance
(8) (5) (14)
Advertising
(6) (5) (13)
Regulatory levies
(5) (6) (9)
Consultants
(3) (4) (9)
Insurance
(3) (2) (5)
Provisioning
- (1) (1)
Other
(7) (5) (11)
Total operating expenses
(156) (145)
(308)
Earnings before interest, income tax, depreciation and amortisation 347 342
672
Depreciation1, 6 (185) (175) (355)
Amortisation
2, 3 (43) (47) (91)
Earnings before interest and income tax
119 120
226
Finance income 2 1 4
Finance expense
(109) (104) (199)
Net earnings before income tax
12 17
31
Income tax expense (7) (8) (6)
Net earnings for the period
5 9
25
Earnings per share
Basic earnings per share (dollars)
0.020.04 0.06
Diluted earnings per share (dollars)
0.010.03 0.05
Condensed
consolidated
income
statement
For the six months ended
31 December 2023
Financial statements
The accompanying notes
are an integral part of these
consolidated financial
statements.
5 Chorus Half Year Results 2024Financial statements
Condensed
consolidated
statement of
comprehensive
income
For the six months ended
31 December 2023
The accompanying notes
are an integral part of these
consolidated financial
statements.
Notes
SIX MONTHS ENDED
31 DECEMBER 2023
UNAUDITED $M
SIX MONTHS ENDED
31 DECEMBER 2022
UNAUDITED $M
YEAR ENDED
30 JUNE 2023
AUDITED $M
Net earnings for the period 5 9 25
Other comprehensive income
Movements in effective cash flow hedges
9 (22) 12 3
Amortisation of de-designated cash flow hedges transferred to Income
statement
9 3 3 5
Movement in cost of hedging reserve9 (8) (5) (3)
Items that will be reclassified subsequently to the income statement when
specific conditions are met, net of tax
(27)105
Net revaluation of land and buildings - - 265
Items that will not be reclassified subsequently to the income statement
when specific conditions are met, net of tax
--265
Total comprehensive income for the period net of tax (22) 19 295
6 Chorus Half Year Results 2024Financial statements
Notes
31 DECEMBER 2023
UNAUDITED $M
31 DECEMBER 2022
UNAUDITED $M
30 JUNE 2023
AUDITED $M
Current assets
Cash and call deposits
87 172 76
Trade and other receivables 152 151 153
Derivative financial instruments9 - 24 43
Assets held for sale--1
Total current assets 239 347 273
Non-current assets
Derivative financial instruments
9 107 104 116
Trade and other receivables - 1 -
Customer acquisition assets3 66 61 60
Software and other intangible assets2 146 144 146
Network assets1 5,206 5,191 5,213
Land and buildings135775357
Total non-current assets 5,882 5,576 5,892
Total assets 6,121 5,923 6,165
Current liabilities
Trade and other payables
240 259 280
Lease payable 12 14 13
Derivative financial instruments9 1 2 1
Debt4 150 344 368
Total current liabilities excluding Crown funding 403 619 662
Crown funding6 27 27 28
Total current liabilities 430 646 690
Non-current liabilities
Trade and other payables
2 6 11
Deferred tax liability 359 354 363
Derivative financial instruments 82 169 93
Lease payable 167 168 168
Debt4 2,526 2,068 2,160
Total non-current liabilities excluding CIP and Crown funding 3,136 2,765 2,795
Crown Infrastructure Partners (CIP) securities5 721 660 697
Crown funding6 915 922 920
Total non-current liabilities 4,772 4,347 4,412
Total liabilities 5,202 4,993 5,102
Equity
Share capital
578 656 589
Reserves 304 71 331
Retained earnings 37 203 143
Tot al e quit y 919 930 1,063
Total liabilities and equity 6,121 5,923 6,165
Condensed
consolidated
statement
of financial
position
For the six months ended
31 December 2023
The accompanying notes
are an integral part of these
consolidated financial
statements.
The financial statements
are approved and signed
on behalf of the Board.
Authorised for issue on
26 February 2024
Mark Cross
Chair
Kate Jorgensen
Chair, Audit and Risk
Management Committee
7 Chorus Half Year Results 2024Financial statements
Condensed
consolidated
statement
of changes
in equity
For the six months ended
31 December 2023
Notes
Share
capital
$M
Revaluation
reserve
$M
Other
reserves
$M
Retained
earnings
$M
Total
$M
Balance at 1 July 2022 682 - 60 287 1,029
Comprehensive income
Net earnings for the period
- - - 25 25
Other comprehensive income
Movement in cash flow hedge reserve
- - 3 - 3
Amortisation of de-designated cash flow hedges transferred to
income statement
- - 5 - 5
Movement in cost of hedging reserve - - (3)- (3)
Movement in revaluation reserve265--265
Total comprehensive income - 265 5 25 295
Contributions by and (distributions to) owners
Dividends
8 - -- (169) (169)
Dividend reinvestment plan 9 -- - 9
Share buy-back (101) -- - (101)
Shares issued under LTI scheme (1) - 1 - -
Total transactions with owners (93) -1 (169) (261)
Balance at 30 June 2023 (AUDITED) 589 265 66 143 1,063
Comprehensive income
Net earnings for the period
- - - 5 5
Other comprehensive income
Movement in cash flow hedge reserve
- - (22) - (22)
Amortisation of de-designated cash flow hedges transferred to
income statement
- - 3 - 3
Movement in cost of hedging reserve - - (8) - (8)
Total comprehensive income - - (27) 5 (22)
Contributions by and (distributions to) owners
Dividends
8 - -- (111) (111)
Share buy-back (11) - - - (11)
Total transactions with owners (11) -- (111) (122)
Balance at 31 December 2023 (UNAUDITED) 578 265 39 37 919
The accompanying notes
are an integral part of these
consolidated financial
statements.
8 Chorus Half Year Results 2024Financial statements
Condensed
consolidated
statement
of changes
in equity
(continued)
For the six months ended
31 December 2023
The accompanying notes
are an integral part of these
consolidated financial
statements.
Notes
Share
capital
$M
Revaluation
reserve
$M
Other
reserves
$M
Retained
earnings
$M
Total
$M
Balance at 1 July 2022 682 - 60 287 1,029
Comprehensive income
Net earnings for the period
- - - 9 9
Other comprehensive income
Movement in cash flow hedge reserve
- - 12 - 12
Amortisation of de-designated cash flow hedges transferred to
income statement
- - 3 - 3
Movement in cost of hedging reserve - - (5)- (5)
Total comprehensive income - - 10 9 19
Contributions by and (distributions to) owners
Dividends
8 - -- (93) (93)
Dividend reinvestment plan 9 -- - 9
Share buy-back (34) -- - (34)
Shares issued under LTI scheme (1) - 1 - -
Total transactions with owners (26) -1 (93) (118)
Balance at 31 December 2022 (UNAUDITED) 656 - 71 203 930
9 Chorus Half Year Results 2024Financial statements
Condensed
consolidated
statement
of cash flows
For the six months ended
31 December 2023
The accompanying notes
are an integral part of these
consolidated financial
statements.
SIX MONTHS ENDED
31 DECEMBER 2023
UNAUDITED $M
SIX MONTHS ENDED
31 DECEMBER 2022
UNAUDITED $M
YEAR ENDED
30 JUNE 2023
AUDITED $M
Operating cash flows
Cash was provided from/(applied to):
Receipts from customers
500 471 973
Interest received 2 1 4
Payments to suppliers and employees (177) (165) (311)
Taxation paid - (4) (4)
Interest paid (82) (65) (138)
Net operating cash flows 243 238 524
Investing cash flows
Cash was provided from/(applied to):
Purchase of network and intangible assets
(259)(238) (495)
Capitalised interest paid (1) - (1)
Net investing cash flows(260)(238)(496)
Financing cash flows
Cash was provided from/(applied to):
Payment of lease liabilities
(7) (7) (15)
Crown funding (including CIP securities) 11 53 84
Proceeds from debt 474 811 811
Repayment of debt (328) (655) (659)
Repurchase of shares (11) (34) (101)
Dividends paid (111) (84) (160)
Net financing cash flows 28 84 (40)
Net cash flows 11 84 (12)
Cash at the beginning of the period 76 88 88
Cash at the end of the period 87 172 76
10 Chorus Half Year Results 2024Notes
Notes to the
consolidated financial statements
Reporting entity and statutory base
Chorus includes Chorus Limited together with its subsidiary Chorus New Zealand Limited as at and for
the six months ended 31 December 2023.
Chorus is New Zealand’s largest fixed line communications infrastructure business. It maintains
and builds a network predominantly made up of fibre and copper cables, local telephone exchanges
and cabinets.
Chorus Limited is a profit-orientated company registered in New Zealand under the Companies Act
1993 and a FMC Reporting Entity for the purposes of the Financial Markets Conduct Act 2013.
The condensed consolidated interim financial statements (“financial statements”) have been prepared
in accordance with the New Zealand Equivalent to International Accounting Standard 34 Interim
Financial Reporting and Generally Accepted Accounting Practice in New Zealand (NZ GAAP). These
financial statements do not include all of the information required for the full annual consolidated
financial statements and should be read in conjunction with the consolidated financial statements of
Chorus as at and for the year ended 30 June 2023.
These financial statements are expressed in New Zealand dollars. All financial information has been
rounded to the nearest million, unless otherwise stated.
The measurement basis adopted in the preparation of these financial statements is historical cost,
modified by the revaluation of financial instruments and land and buildings as identified in the specific
accounting policies disclosed in the notes to the consolidated financial statements for the year ended
30 June 2023 and described in note 9 to these financial statements.
Accounting policies and standards
The accounting policies adopted and methods of computation have been applied consistently
throughout the periods presented in these financial statements. No changes in accounting policies
have occurred during the period.
The financial statements for the six months ended 31 December 2023 and comparative information
for the six months ended 31 December 2022 are unaudited. The comparative information for the year
ended 30 June 2023 is audited.
Accounting estimates and judgements
In preparing the financial statements, management have made estimates and assumptions about the
future that affect the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the period. Actual results could differ
from those estimates.
In preparing the financial statements, the significant judgements made by management in applying
Chorus’ accounting policies were the same as those that applied to the consolidated financial
statements as at and for the year ended 30 June 2023.
Land and buildings
Chorus adopted a revaluation policy for measuring land and building at fair value, as at 30 June 2023.
Previously, Chorus measured land and buildings at depreciated historical cost.
Land and buildings are recorded at fair value. Fair value relating to land and buildings is determined
based on a periodic independent valuation using a combination of both an optimised depreciated
replacement cost, capitalised income, and a market valuation approach. The valuation technique
applied to each asset is determined by the independent valuer, with input and review by Chorus
management who are familiar with the nature of the assets. Valuations are performed every three
years, or more frequently where indicators exist that the carrying amount of the asset materially
differs from its fair value at the end of the reporting period. This may be the result of external factors
(e.g. a volatile property market) or internal factors. As at 31 December there were no indicators. In
these instances where indicators of material difference exist, a desktop valuation may be obtained to
appropriately adjust the carrying value of the assets. The underlying assumptions used in the valuation
are reviewed at each reporting date to ensure the carrying value is not materially different from the
fair value.
The Company adopted a fair value approach on 30 June 2023. The movement in fair value of $282
million (excluding deferred tax) had been recognised as at that date. There was no movement in
fair value as at 31 December 2023. The 31 December prior period comparatives are recognised at
historical cost less accumulated depreciation.
Net current liability position
As at 31 December 2023 Chorus has a net current liability position of $191 million (30 June 2023:
$417 million). Chorus has sufficient short term funds, undrawn facilities and forecast positive
cashflows available to meet the current liability obligations.
11 Chorus Half Year Results 2024Notes
Earnings before interest and income tax (EBIT) and earnings before interest,
income tax, depreciation and amortisation (EBITDA)
Chorus calculate EBIT by adding back finance expense, income tax, and subtracting finance income
from net earnings. EBITDA adds back depreciation and amortisation expense to EBIT. A reconciliation
of EBIT and EBITDA is provided below and based on amounts taken from, and consistent with, those
presented in the financial statements.
Period ended 31 December
SIX MONTHS ENDED
31 DECEMBER 2023
UNAUDITED $M
SIX MONTHS ENDED
31 DECEMBER 2022
UNAUDITED $M
YEAR ENDED
30 JUNE 2023
AUDITED $M
Net earnings reported under NZ IFRS 5 9 25
Add back: income tax expense 7 8 6
Add back: finance expense 109 104 199
Subtract: finance income (2) (1) (4)
EBIT 119 120 226
Add back: depreciation 185 175 335
Add back: amortisation 43 47 91
EBITDA 347 342 672
12 Chorus Half Year Results 2024Notes
Note 1 – Network assets
31 DECEMBER 2023
UNAUDITED $M
31 DECEMBER 2022
UNAUDITED $M
30 JUNE 2023
AUDITED $M
Cost
Opening balance
12,159 11,594 11,594
Additions 194 190 405
Disposals - (11) (9)
Net revaluations through other
comprehensive income
--169
Closing balance 12,353 11,773 12,159
Accumulated depreciation
Opening balance
(6,589) (6,329) (6,329)
Depreciation (201) (189) (384)
Disposals - 11 11
Net revaluations through other
comprehensive income
--113
Closing balance (6,790) (6,507) (6,589)
Net carrying amount 5,563 5,266 5,570
There are no restrictions on Chorus network assets or any network assets pledged as security
for liabilities.
Crown funding
Chorus receives funding from the Crown to finance the capital expenditures associated with the
development of the UFB network and other services. Where funding is used to construct assets it is
offset against depreciation over the life of the assets constructed. Refer to note 6 for information on
Crown funding.
Additions
Additions also includes the net movement within capital work in progress during the period.
Capital commitments
At 31 December 2023 the contractual commitment for acquisition of network assets was $41 million
(31 December 2022: $53 million, 30 June 2023: $50 million).
Note 2 – Software and other intangibles
31 DECEMBER 2023
UNAUDITED $M
31 DECEMBER 2022
UNAUDITED $M
30 JUNE 2023
AUDITED $M
Cost
Opening balance
989 941 941
Additions 28 24 55
Disposals (4) (7) (7)
Closing balance 1,013 958 989
Accumulated amortisation
Opening balance
(843) (789) (789)
Amortisation (28) (32) (61)
Disposals 4 7 7
Closing balance (867) (814) (843)
Net carrying amount 146 144 146
There are no restrictions on Chorus software and other intangible assets, or any pledged as security
for liabilities.
Capital commitments
At 31 December 2023, the contractual commitment for acquisition of software and other intangible
assets was $11 million (31 December 2022: $7 million; 30 June 2023: $4 million).
13 Chorus Half Year Results 2024Notes
Note 3 – Customer acquisition assets
31 DECEMBER 2023
UNAUDITED $M
31 DECEMBER 2022
UNAUDITED $M
30 JUNE 2023
AUDITED $M
Opening balance (net carrying amount) 60 59 59
Additions 23 18 34
Amortisation to amortisation expense (15) (15) (30)
Amortisation to operating revenue (2) (1) (3)
Closing balance (net carrying amount) 66 61 60
Amortisation of customer acquisition assets
Customer acquisition assets are amortised to the consolidated income statement, either as amortisation
expense or operating revenue, based on the nature of the specific costs capitalised.
Note 4 – Debt
Due Date
31 DECEMBER
2023
UNAUDITED $M
31 DECEMBER
2022
UNAUDITED $M
30 JUNE 2023
AUDITED $M
Syndicated bank facility 150 - -
Euro medium term notes (EMTN) EUROct 2023 - 344 368
Euro medium term notes (EMTN) EURDec 2026 484 443 473
Euro medium term notes (EMTN) EURSep 2029 870 799 853
Australian medium term notes (AMTN) AUDSep 2030329--
Fixed rate NZD BondsDec 2027 200 200 200
Fixed rate NZD BondsDec 2028 500 500 500
Fixed rate NZD BondsDec 2030 161 148 153
Less: facility fees (18) (22) (19)
Total debt 2,676 2,412 2,528
Current 150 344 368
Non-current 2,526 2,068 2,160
As at 31 December 2023 Chorus had a $450 million committed syndicated facility on standard market
terms and conditions (30 June 2023: $450 million). The facility is comprised of a single tranche that
expires in April 2026, and is held with banks that are rated A to AA-, based on Standard & Poor’s ratings.
As at 31 December 2023 there was $150 million drawn down from this facility (30 June 2023: nil).
EMTN 2023 tender
The October 2023 EMTN was repaid and settled on 18 October 2023.
AMTN 2030 issuance
Chorus also issued AUD 300 million of AMTN in September 2023 at a fixed interest rate of 5.974% for 7
years. Consistent with the Chorus Treasury Policy, the debt has been fully hedged with cross-currency
interest rate swaps (CCIRS) to hedge the foreign currency exposure, which entitles Chorus to receive
AUD 300 million and AUD fixed coupon payments for NZD 325 million principal and NZD floating
interest payments.
14 Chorus Half Year Results 2024Notes
Note 5 – Crown Infrastructure Partners (CIP) securities
31 DECEMBER 2023
UNAUDITED $M
31 DECEMBER 2022
UNAUDITED $M
30 JUNE 2023
AUDITED $M
Fair value on initial recognition
Opening balance
478 439 439
Additional securities recognised at fair value - 26 39
Closing balance 478 465 478
Accumulated notional interest
Opening balance
219 174 174
Notional interest 24 21 45
Closing balance 243 195 219
Total CIP securities 721 660 697
Note 6 – Crown funding
Funding from the Crown is recognised at fair value where there is reasonable assurance that the funding
is receivable and all attached conditions will be complied with. Crown funding is then recognised in
earnings as a reduction to depreciation expense on a systematic basis over the useful life of the asset
the funding was used to construct.
31 DECEMBER 2023
UNAUDITED $M
31 DECEMBER 2022
UNAUDITED $M
30 JUNE 2023
AUDITED $M
Fair value on initial recognition
Opening balance
1,160 1,119 1,119
Additional funding recognised at fair value 10 27 41
Closing balance 1,170 1,146 1,160
Accumulated amortisation
Opening balance
(212) (183) (183)
Amortisation (16) (14) (29)
Closing balance(228)(197)(212)
Total Crown funding 942 949 948
Current 27 27 28
Non-current 915 922 920
Crown funding largely comprises project-related government funding for the Ultra-Fast Broadband
(UFB) build, West Coast Southland Network Build (WCSNB) and Rural Broadband Initiative (RBI) projects.
15 Chorus Half Year Results 2024Notes
Note 7 – Segmental reporting
Chorus has determined that it operates in one segment providing nationwide fixed line communications
infrastructure. The determination is based on the reports reviewed by the CEO in assessing performance,
allocating resources and making strategic decisions.
Note 8 – Equity
Dividends
On 10 October 2023 an unimputed final dividend of 25.5 cents per share, totalling $111 million, was paid
to shareholders.
Share buyback
Under the on-market share buyback programme announced in February 2022, 1,447,014 shares were
repurchased from the market in the 6 months to 31 December 2023 for a total of $11 million. This ended
the programme, with a total value of $150 million in shares repurchased.
Long-term performance share scheme
Performance share rights issued in August 2020 were assessed in August 2023 and the performance hurdles
were not met. Retesting will be undertaken until August 2024, to determine if the rights vest or lapse.
In August 2023, Chorus issued a new tranche of performance share rights. The rights have a vesting
date of 25 August 2026. The retesting regime was removed for the 2023 grant. The 2023 grant has two
performance hurdles;
1. Chorus TSR must equal or exceed 23.19% p.a. over the vesting period on an annualised basis,
compounding for 50% of the performance share rights to vest.
2. Chorus TSR must equal or exceed 25.97% p.a. over the vesting period on an annualised basis,
compounding for 100% of the performance share rights to vest.
The combined option cost for the six months to 31 December 2023 of $230,000 has been recognised in
the consolidated income statement (31 December 2022: $227,000; 30 June 2023: $524,000).
Note 9 – Derivative financial instruments
Finance expense includes any unrealised ineffectiveness arising from the hedge accounting relationships.
Cross-currency interest rate swaps (CCIRS)
In conjunction with the issuance of the Euro Medium Term Notes and Australian Medium Term Notes (MTN),
Chorus enters into CCIRS to hedge the foreign currency and foreign interest rate risks associated with the
issuances. Using the CCIRS, Chorus pay NZD floating interest rates and receive EUR/AUD nominated fixed
interest with coupon payments matching the underlying notes. The medium term notes and CCIRS are
each designated into three part hedging relationships for issue: a fair value hedge of EUR/AUD benchmark
interest rates, a cash flow hedge of the margin and a cash flow hedge of the principal exchange.
Per note 4, an issuance of debt was undertaken in September 2023, where four new CCIRS were entered to
hedge AUD 300 million of AMTN issued. In addition, the remainder of the EMTN 2023 was repaid and four
CCIRS were settled.
Due Date
Aggregate
amount $MPay leg $MReceive leg $M
Hedged item
Euro medium term notes EUR
Dec 2026EUR 300NZD 514EUR 300
Euro medium term notes EURSep 2029EUR 500NZD 820EUR 500
Australian term notes AUDSep 2030AUD 300NZD 325AUD 300
Interest rate swaps
As at 31 December 2023 Chorus holds all interest rate swaps in designated hedging relationships. All
are held in effective hedging relationships and for those which are designated as cash flow hedges,
unrealised gains or losses are recognised in the cash flow hedge reserve.
Restructured interest rate swaps
Three interest rate swaps have been restructured. Two interest rate swaps restructured in December
2018 were reset in conjunction with the resettable NZD fixed rate bond issued on 6 December 2018 to
hedge interest rate exposure from December 2023. The forward dated interest rate swap restructured in
February 2020 was reset in conjunction with the EUR 300 million EMTN issued on 5 December 2019, to
hedge interest rate exposure from April 2020.
As part of these restructures, the original hedge relationships were discontinued and on the dates
of termination the net present value ($14 million and $27 million respectively) of these swaps was
recognised in the cash flow hedge reserve as the hedged item still exists and is amortised over the
original hedge period.
The balance at 31 December 2023 was $8.7 million and $16.7 million respectively.
16 Chorus Half Year Results 2024Notes
Note 10 – Related party transactions
The gross remuneration paid to directors and key management personnel during the six months to
31 December 2023 was $6.1 million (31 December 2022: $6.6 million, 12 months to 30 June 2023:
$9.3 million). In the six months ended 31 December 2023 there was $1.1 million in termination benefits
paid to key management personnel. In addition, as referred to in note 8, the performance hurdles were
not met for the long-term performance share scheme and there were nil share based payments made
in the period. 31 December 2022 comparative has been updated for consistency.
Note 11 – Post balance date events
Dividends
On 26 February 2024 Chorus declared an interim dividend in respect of the six month period ended
31 December 2023. The total amount of the dividend is $82 million, which represents an unimputed
dividend of 19 cents per ordinary share.
17 Chorus Half Year Results 2024Independent review
Independent review report
To the shareholders of Chorus Limited
Report on the consolidated interim financial statements
Conclusion
Based on our review, nothing has come to our attention
that causes us to believe that the consolidated interim financial statements on pages 4 to 16
do not:
i. present, in all material respects the Group’s financial position as at 31 December 2023 and
its financial performance and cash flows for the 6 month period ended on that date in
compliance with NZ IAS 34 Interim Financial Reporting.
We have completed a review of the accompanying consolidated interim financial statements
which comprise:
—the consolidated statement of financial position as at 31 December 2023;
—the consolidated income statement, consolidated statements of comprehensive income,
changes in equity and cash flows for the 6 month period then ended; and
—notes, including a summary of significant accounting policies and other explanatory
information.
Basis for conclusion
A review of consolidated interim financial statements in accordance with NZ SRE 2410 Review of
Financial Statements Performed by the Independent Auditor of the Entity (“NZ SRE 2410”) is a limited
assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily
of persons responsible for financial and accounting matters, and applying analytical and other
review procedures.
As the auditor of Chorus Limited, NZ SRE 2410 requires that we comply with the ethical
requirements relevant to the audit of the annual financial statements.
Our firm has also provided other services to the group in relation to regulatory assurance services.
Subject to certain restrictions, partners and employees of our firm may deal with the Group on
normal terms within the ordinary course of trading activities of the business of the Group. These
matters have not impaired our independence as reviewer of the Group. The firm has no other
relationship with, or interest in, the Group.
Use of this Independent Review Report
This report is made solely to the shareholders as a body. Our review work has been undertaken
so that we might state to the shareholders those matters we are required to state to them in the
Independent Review Report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the shareholders as a body for our
review work, this report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated interim financial
statements
The Directors, on behalf of the Group, are responsible for:
—the preparation and fair presentation of the consolidated interim financial statements in
accordance with NZ IAS 34 Interim Financial Reporting;
—implementing necessary internal control to enable the preparation of consolidated interim
financial statements that are free from material misstatement, whether due to fraud or error;
and
—assessing the ability to continue as a going concern. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the review of the consolidated interim
financial statements
Our responsibility is to express a conclusion on the consolidated interim financial statements
based on our review. We conducted our review in accordance with NZ SRE 2410. NZ SRE 2410
requires us to conclude whether anything has come to our attention that causes us to believe
that the consolidated interim financial statements are not prepared, in all material respects, in
accordance with NZ IAS 34 Interim Financial Reporting.
The procedures performed in a review are substantially less than those performed in an audit
conducted in accordance with International Standards on Auditing (New Zealand). Accordingly, we
do not express an audit opinion on these interim consolidated financial statements.
This description forms part of our Independent Review Report.
KPMG
Wellington
26 February 2024
Directory
Registered Offices
NEW ZEALAND
Level 10, 1 Willis Street
Wellington, New Zealand
P: +64 800 600 100
AUSTRALIA
C/– Allens Corporate Services Pty Limited
Level 28, Deutsche Bank Place, 126 Phillip Street,
Sydney, NSW 2000, Australia
P: +61 2 9230 4000
https://company.chorus.co.nz/reports
ARBN 152 485 848
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at June 2023
Results for announcement to the market
Name of issuer Chorus Limited
Reporting Period 6 months to 31 December 2023
Previous Reporting Period 6 months to 31 December 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$503,000 Up 3%
Total Revenue $503,000 Up 3%
Net profit/(loss) from
continuing operations
$5,000 Down 44%
Total net profit/(loss) $5,000 Down 44%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.19000000
Imputed amount per Quoted
Equity Security
NZ$0.0000000
Record Date 19 March 2024
Dividend Payment Date 16 April 2024
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.38 $1.35
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
This announcement should be read in conjunction with the
attached management commentary and financial statements for
the six months ended 31 December 2023, media release and
investor presentation.
Authority for this announcement
Name of person
authorised
to make this announcement
Mark Aue, Chief Operating Officer
Contact person for this
announcement
Brett Jackson
Investor Relations Manager
Contact phone number
+64 27 488 7808
+64 4 896 4039
Contact email address Brett.Jackson@chorus.co.nz
Date of release through MAP
27/02/2024
Unaudited, but reviewed financial statements accompany this announcement. The auditors
have issued a clean review report.
---
Distribution Notice
Updated as at June 2023
Please note: all cash amounts in this form should be provided to 8 decimal places, including zeros (ie 0.01001000)
Section 1: Issuer information
Name of issuer Chorus Limited
Financial product name/description Ordinary shares
NZX ticker code CNU
ISIN (If unknown, check on NZX
website)
NZCNUE0001S2
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 19/03/2024
Ex-Date (one business day before the
Record Date)
18/03/2024
Payment date (and allotment date for
DRP)
16/04/2024
Total monies associated with the
distribution
1
$ 82,438,586
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$ 0.19000000
Gross taxable amount
3
$ 0.19000000
Total cash distribution
4
$ 0.19000000
Excluded amount (applicable to listed
PIEs)
$ 0.00000000
Supplementary distribution amount $ 0.00000000
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed
Fully imputed
Partial imputation
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.
No imputation
If fully or partially imputed, please
state imputation rate as % applied
6
% N/A
Imputation tax credits per financial
product
$ N/A
Resident Withholding Tax per
financial product
$ 0.06270000
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
N/A N/A
Date strike price to be announced (if
not available at this time)
N/A
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
N/A
DRP strike price per financial product
$
N/A
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
N/A
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Mark Aue
Chief Operating Officer
Contact person for this
announcement
Brett Jackson
Investor Relations Manager
Contact phone number
+64 27 488 7808
+64 4 896 4039
Contact email address Brett.Jackson@chorus.co.nz
Date of release through MAP
27/02/2024
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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