Chorus Roadshow Presentation October 2017

Transcription

1 Chorus Roadshow Presentation October 2017

2 TABLE OF CONTENTS 1. Introducing Chorus A fibre future New Zealand s Broadband Market FY18: What we re focused on Financial Highlights Appendices

3 NEW ZEALAND > Land mass of 268,000 square kilometres 1,600 kilometres long; 400 kilometres wide > NZ population approximately 4.79 million ~87% live in urban areas 100,000 record population growth in FY17 half of population growth in age group > Market orientated economy real economic growth, as measured by changes in Gross Domestic Product, has increased annually between 2% to 4% since official cash rate 1.75% 1Euro = 1.66NZD 1GBP =1.86NZD 3

4 KEY CHORUS HIGHLIGHTS Leading provider of fixed line communications infrastructure in N.Z. with significant network build experience Cornerstone partner in the Government s Ultra-Fast Broadband initiative, with UFB capex supported by Government financing Broadband emerging as 4 th utility, supported by growing bandwidth demand and streaming video trends Majority of revenues regulated or contracted to the Crown to 2020, with an expected shift to a building block regulatory framework thereafter Highly competitive retail broadband market driving fibre uptake, supported by population/premises growth Commitment to maintaining a BBB credit rating (S&P, or equivalent) Experienced management team with proven ability in rolling out and operating fixed line communications networks 4

5 AN OVERVIEW OF CHORUS > New Zealand s largest fixed line communications infrastructure business established in Dec 2011 following demerger from Telecom NZ listed on NZX and ASX: CNU ~NZ$1.6 billion market capitalisation (at 30 Sept 2017) S&P BBB stable; Moody s Baa2 stable > A nationwide copper and growing fibre network ~1.58m connections, including ~1.18m broadband halfway through 11-year fibre to the premises rollout streaming video services driving significant data consumption average NZ household consumed 162GB in Sept 2017 > ~1,000 employees, 80%+ engagement since 2012 supported by ~4,000 contractors and subcontractors first NZ employer to win supreme award in Aon Hewitt Best Employers awards Chorus Investor Roadshow October

6 THE CHORUS NETWORK Chorus-owned > We operate a nationwide wholesale access network of fibre optic and copper cables connecting homes and businesses cables typically connect back to our local telephone exchanges, often via broadband cabinets our fibre also provides backhaul to many mobile network sites/towers and retail service provider networks Common network assets Our copper network Our fibre network ~600 local exchanges ~11,000 cabinets ~280,000 poles ~30,000km duct network ~130,000km copper FTTN broadband footprint to ~90% of lines VDSL broadband to ~80% of lines Vectoring upgrade outside Chorus UFB areas ~46,000km fibre FTTP available to ~1.36m customers by Dec 22 point-to-point fibre in CBD areas fibre to multiple mobile provider cellsites 6

7 TRANSITION TO A REGULATED UTILITY MODEL > Existing copper regulatory framework uses benchmarking and Total Service Long Run Incremental Cost > Government policy preference to introduce a utility-style building block methodology for fibre networks > Draft legislation introduced to Parliament in August suggests the following regulatory framework from 2020: 87% of population where fibre will be available by end of 2022 Remaining 13% of population Fibre post 2020 utility framework Note: Legislative process subject to new Government, followed by the Commerce Commission process to set input methodologies 7

8 A Fibre Future Our public private partnership to deploy ultra-fast broadband 8

9 NEW ZEALAND IS TAKING FIBRE FURTHER > Ultra-fast broadband (UFB): a Government objective original objective (UFB1): fibre to premises covering 75% of population by 2020 subsequent agreements have extended coverage goal to 87% of population by the end of 2022 > From Auckland, New Zealand s largest city population: 1.495m (2016) > To Ahaura, in the South Island s West Coast population: 370 (2013) 9

10 A PUBLIC PRIVATE PARTNERSHIP > Chorus is a cornerstone partner in the UFB rollout requirement that Chorus split from Telecom NZ to participate: demerger in December 2011 Crown partnerships with four fibre companies: Chorus, Enable, Northpower, Ultrafast Fibre UFB1: to be completed by Dec 2019 Crown investment: $1.345b Premises* covered: ~1.174m Homes and businesses covered: ~1.526m Population covered: 75% Chorus UFB1 role ~830,900 premises to pass (includes ~44k greenfields) estimated communal capex of $1.75b to $1.8b Crown funding of up to $929m (50:50 equity/debt) connection capex subject to demand: ~1.1m homes and businesses FY18 average cost to connect: $1,050 - $1,200 (excluding layer 2 and including standard installations and some non-standard single dwellings and service desk costs) 10

11 FIBRE EXTENDED TO 87% OF POPULATION > The Government announced extensions to the UFB1 rollout in January and September 2017 fibre to reach another ~12% of population across ~370 towns and rural communities Chorus has increased its share of these additional UFB phases 140, ,000 Chorus rollout schedule indicative only* Premises to be passed by Chorus by Dec 2022 Customers able to connect by rollout end ~1,054,000* ~1.36 million Premises passed 100,000 80,000 Estimated communal capex to pass premises $2.26 to 2.37 billion 60,000 40,000 Crown funding Up to 1.33 billion (57:43 equity/debt) 20,000 * Includes estimated 43k greenfields premises for UFB1 - FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 UFB1 UFB2 & UFB2+ * UFB1 build ends Dec 2019 and UFB2 build ends Dec Detailed scheduling for UFB2 & UFB2+ to be completed by end

12 UFB ROLLOUT STAGES > The fibre rollout currently occurs in two stages Stage 1: communal network deployment the fibre network is built along the street to enable future connections from each property boundary the cost of this work is reported as cost per premises* passed (CPPP) Government funding is received for premises passed Stage 2: connection from boundary to Stage 1: premises Communal the connection to the home is built from the street to the premises when a request is received from the customer, via their retailer this is fully funded by Chorus and is reported as cost per premises connected (CPPC) Stage 2: Connection 2 fibre pairs fully ducted from the street to an Optical Network Terminal inside the home * A premises for the purposes of UFB contracts includes office buildings or multi-dwelling units that may have multiple tenants 12

13 UFB COSTS Fibre: average cost per premises Total fibre capex: communal vs connections $NZ FY13 FY14 FY15 FY16 FY17 Cost per premises connected Cost per premises passed $NZm Fibre connections + layer 2 UFB communal UFB communal - Crown financing FY12 FY13 FY14 FY15 FY16 FY17 > FY17 cost per premises passed (CPPP): $1,651 vs $1,550 - $1,650 guidance ($41m W.I.P) > FY17 cost per premises connected (CPPC) of $1,122* vs $1,100 - $1,250 guidance *excludes layer 2; includes standard installations and some non-standard single dwellings and service desk costs > $640m received as Crown financing to 30 June 2017 ($1,118 per premises passed x 572,000 premises) > Communal capex has reduced as build transitioned to less costly suburban areas > Connection capex subject to demand and connection type Includes capitalised service desk costs 13

14 New Zealand s broadband market 14

15 BROADBAND MARKET OVERVIEW > Demand for broadband continues to grow, helped by continued premises/population growth > The fibre rollout is a churn event with smaller retailers growing their share of overall market IDC Broadband market share by technology IDC - Broadband market share by retailer 1,600,000 1,400,000 1,200,000 1,000, , , , ,000-1,600,000 1,400,000 1,200,000 1,000, , , , ,000 - Chorus xdsl Chorus premium fibre Other fibre networks Vodafone cable Legacy fixed wireless, satellite Source: IDC Chorus mass market fibre Local fibre companies (UFB) Source: IDC Other xdsl Fixed (mobile) wireless Spark Vodafone Orcon Vocus 2degrees Trustpower ROM 15

16 MARKET DYNAMICS > Strong retail competition 100Mbps fibre as entry level plan bundled content (e.g. Netflix, Sky TV) and/or Vocus electricity (e.g. Trustpower, Vocus, Contact) differentiation based on unlimited data and product giveaways (e.g. smart TV, Netflix) > Our network competes with: Vodafone s HFC network in Christchurch, Wellington and Kapiti local fibre companies other fibre networks typically focused on the backhaul and business markets mobile and fixed wireless networks 16

17 CHORUS CONNECTION TRENDS > Total connections 1,582,000 at 30 September copper lines with no broadband declining (baseband copper and unbundled copper) Q1 slowdown in decline of broadband connections to 1,184, Sept Dec March June Sept Unbundled copper Baseband copper (no broadband) Fibre broadband (GPON) VDSL (includes naked) 105,000 99,000 90,000 82,000 76, , , , , , , , , , , , , , , , Baseband copper UCLL Copper ADSL Copper ADSL (includes naked) Data services (copper) Fibre premium (P2P) Total fixed line connections 847, , , , ,000 10,000 9,000 9,000 8,000 7,000 13,000 13,000 13,000 13,000 13,000 1,711,000 1,678,000 1,639,000 1,602,000 1,582, VDSL Fibre (GPON) 0 30-Jun Sep Dec Mar Jun Sep-17 Data services (copper) Fibre premium (P2P) Fibre broadband (GPON) VDSL Copper ADSL Unbundled copper (no broadband) Baseband copper (no broadband)

18 CONNECTIONS DRIVERS INDICATIVE CONNECTIONS BY ZONE AT 30 SEPT (note: zones not yet defined to reflect UFB2+ areas) Copper connections no broadband Broadband copper and fibre Chorus UFB1 & 2 areas 241, ,000 Non-UFB1 & 2 areas 62, ,000 Local Fibre Company UFB 1 & 2 areas 75, ,000 TOTAL 378,000 1,184,000 TOTAL 1,107, , ,000 1,562,000* *Excludes the 20k business fibre/copper data connections Growing connections Broadband penetration at an estimated 85% and continues to grow. Fibre established as the premium product and our expanding fibre footprint is expected to help win customers from wireless and HFC networks. Intense retail competition is helping broaden the market by providing customers with attractive plans and pricing (e.g. free smart TV; free Netflix). Population and premises growth is providing underlying market growth: Auckland city is projected to account for over half of NZ s expected population growth to 2040 with 400,000 new homes. Reducing connections Growing network competition as local fibre companies (LFCs) expand their fibre footprint: ~140k connections at 30 June 2017 (~85k FY16) out of planned footprint of ~450k customers. Fixed wireless (mobile) retailers actively encouraged their existing low data customers onto their own networks in FY17. Government funded Rural Broadband Initiative will extend wireless coverage to a further ~70k rural addresses. Continued migration of voice only lines to mobile/wireless and consolidation of multiple voice lines as technology options become more mainstream and population ages. 18

19 FIBRE UPTAKE HAS EXCEEDED EXPECTATIONS 39% uptake with 309,000 connections within UFB deployed footprint at 30 September 73% of mass market fibre plans now 100Mbpsor higher (FY16:54%) UFB uptake FY13-FY17 35% 24% 14% 8% 3% Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Customers connected % Uptake 35% 30% 25% 20% 15% 10% 5% 0% % of plans Total mass market fibre uptake by plan type Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 <100Mbps 100Mbps 200Mbps Gigabit Education Business 100Mbps+ 100/20Mbps $43/month 50/10Mbps $40.50/month 19

20 DEMAND HAS INCREASED EACH YEAR % First time fibre orders received as a % of fibre capable addresses (by rollout year) > 40,000 new fibre connections built in Q1, our highest ever quarter for build Chorus fibre connection activity - all NZ 0 FY12 FY13 FY14 FY15 FY16 Connections built and activated Additional connections completed Orders (net of cancellations and rejections in the month) 20

21 UFB1 UPTAKE BY REGION 50.00% ROLLOUT COMPLETED IN THESE AREAS 45.00% 40.00% 35.00% 39% AVERAGE UPTAKE % uptake relative to capable addresses 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 21

22 DATA DEMAND IS GROWING RAPIDLY > Streaming video is becoming mainstream 1 in 4 NZers using a streaming service in 2016 ~50% of Sky TV set-top boxes are now internet capable 4K TVs use 7GB per hour ~62% households on unlimited data plans 100% 80% 60% 40% 20% Share of residential connections by data cap 6% 5% 8% 33% 51% 62% Unlimited 100GB or more 50GB to 100GB 20GB to 50GB 5GB to 20GB Under 5GB 0% > Monthly average data usage per connection on our network grew 52% in FY17 to 162GB 300 GB we re forecasting ~680GB monthly average by Copper Fibre Average Source: Statistics NZ ISP Survey June

23 FIXED LINE NETWORKS DELIVER LOWEST COST PER GB > 51% increase in Chorus network traffic at ~9pm between June 2016 and June 2017 Chorus network traffic by time of day 23

24 FY18: What we re focused on 24

25 BETTER BROADBAND > Driving broadband uptake and retention Ask for better campaign continues to raise awareness of VDSL and fibre availability targeted incentives for retailers to migrate ADSL/UCLL connections to better broadband and win back off-net connections > Providing customers with a network that is fast, reliable and congestion free ~$20m investment in vectored VDSL in FY18 in areas outside our planned UFB footprint will significantly improve VDSL speed (e.g. ~100Mbps at 600m; 50Mbps at 1km) indicative footprint (outside UFB1 & 2 areas) is: ~40% would get >30Mbps ~30% would get >50Mbps ~20% would get >100Mbps 25

26 TRANSFORMING CUSTOMER EXPERIENCE & COST > We re reshaping Chorus to lift customer experience and reduce cost new executive structure emphasis on end-to-end customer experience to simplify systems and processes trialling new fibre migration methods with the aim of reducing customer effort to <1 day preparing for new regulatory framework and a post UFB rollout environment 26

27 DELIVERING THE FUTURE BROADBAND NETWORK > Ongoing operational focus on delivering our contracted UFB rollout on time and on budget > Continue to work towards a new regulatory framework that supports efficient private sector investment to meet network upgrades and increasing consumer demands Opex Initial RAB value Capex RAB Regulatory WACC Depreciation Return on capital Return of capital ANNUAL MAXIMUM ALLOWABLE REVENUE Anchor and price capped products: voice 100/20Mbps fibre direct fibre Asset lives Regulatory tax allowance NB. Symmetrical washup for unders or overs Building block cost stack 27

28 CREATING OPPORTUNITIES TO GROW > Identifying new open access business opportunities fixed line and 5G: we see a complementary future strong demand for trial data centre; more sites planned national backhaul contract with 2degrees emerging demand for smart locations (non-broadband access points) 28

29 Financial Highlights Financial overview and capital management 29

30 FINANCIAL SNAPSHOT Revenue ($m) EBITDA ($m) # Senior ND/EBITDA 1,073 1, x 2.9x 2.7x 3.1x 3.1x 3.0x 1,050 1,057 1,058 1,006 1,008 1, FY12 FY13 FY14 FY15* FY16* FY17 FY12 FY13 FY14 FY15* FY16* FY17 FY12 FY13 FY14 FY15* FY16* FY17 > Build of UFB network will increase leverage metrics through to completion of UFB1 in 2019 > FY12 results pro-forma post demerger *FY15 and FY16 earnings impacted by benchmarked pricing (effective 1 Dec to 15 Dec. 2015). Dotted bars reflect the FY revenue / EBITDA that would have been recorded if the FPP pricing was applied to these financial reporting periods. # EBITDA is a non-gaap financial measure 30

31 FY18 GUIDANCE SUMMARY UFB1 Cost Per Premises Passed (CPPP) FY18 guidance FY17 result $1,500 - $1,600 $1,651 UFB2 communal capex $50m - $70m (based on estimated starting premises of 30,000 to 40,000 and premises handed over of 5,000 to 15,000) UFB1 Cost Per Premises Connected (CPPC) Fibre connections & layer 2 capex $1,050 - $1,200 (excluding layer 2 and including standard installations and some nonstandard single dwellings and service desk costs) $260 $290m (based on mass market 152,000 fibre connections, 12,000 backbone builds and 2,500 premium business fibre connections and including service desk costs) $1,122 $258m FY18 Gross capex $780 $820m $639m FY18 EBITDA $ m $652m UFB1 Communal guidance: $ $1.8 billion UFB programme guidance Tracking toward the top half of this programme guidance, excluding additional splitter investment. As a result of higher than anticipated fibre uptake, Chorus is bringing forward the investment of additional splitters prior to 2020, and expects to spend up to $30 million on this capability by This additional expenditure is growth related. 31

32 CAPEX SUMMARY > FY18 GUIDANCE: $ 780m - $820m Historical gross capex and illustrative FY18 profile Fibre $590m-$625m ~$10m capitalisation (IFRS 15) Common Copper Fibre $780 - $820m ~$10m pole replacement programme in Chorus UFB areas $50-70m spend forecast for UFB2 communal Growth in forecast fibre connections $679m $597m $593m $639m Copper $125m-$145m ~$50m capitalisation of items previously expensed (IFRS 15) ~$20m VDSL vectoring investment ~$10m pole replacement programme across the balance of the network Common: $50m-$65m FY14 FY15 FY16 FY17 FY18 GUIDANCE 32

33 CAPITAL MANAGEMENT cps Chorus dividend profile Dividend suspended during copper pricing review FY12* FY13 FY14 FY15 FY16 FY17 FY18 > The Chorus Board considers that a BBB credit rating or equivalent credit rating is appropriate for a company such as Chorus. It intends to maintain capital management and financial policies consistent with these credit ratings. FY18 dividend guidance of 22cps, subject to no material adverse changes in circumstances or outlook. A Dividend Reinvestment Plan has been available to NZ and Australian resident shareholders with a 3% discount to prevailing market price. The FY17 final dividend was underwritten with 54% DRP uptake. FY12*: prorated for the post demerger period of seven months During the UFB build programme to 2020, the Board expects to be able to provide shareholders with modest dividend growth from a base of 20cps per annum, subject to no material adverse changes in circumstances or outlook. 33

34 DEBT PROFILE As at 30 June 2017 $m Borrowings 1,862 + PV of CFH debt securities (senior) 99 + Net Finance leases 154 Sub total 2,115 - Cash (170) Total net debt 1,945 Net debt/ebitda 2.98 times Financial covenants require senior debt ratio to be no greater than 4.75 times NZ $M Term debt profile at 30 June 2017 (NZ$m) CFH debt securities available Face value of CFH debt securities issued EUR EMTN NZ Bond GBP EMTN > At 30 June, debt of $1,862m comprised: Long term bank facilities $350m undrawn NZ bond $400m Euro Medium Term Notes $1,462m (NZ$ equivalent at hedged rates) 34

35 Appendices 35

36 UFB2 & UFB2+ DETAILS > The Government announced extensions to the UFB1 rollout in 2017 UFB2 announced January 2017 UFB2+ announced September 2017 Government UFB rollout UFB2: to be completed by Dec 2022 Crown investment: $307m Premises* covered: ~200k Homes and businesses covered: ~216k Population covered: 9% Chorus UFB2 role to pass ~168,000 premises = estimated communal capex of $370m to $410m* Crown funding of up to $298m (65:35 equity/debt) connection capex subject to demand: ~203,000 homes and businesses estimated cost of $1,500-$1,700 per connection (in 2017 dollars and including layer 2, backbone costs for MDUs and rights of way with 10 or fewer premises) UFB2+: to be completed by Dec 2022 Crown investment: $130m Premises* covered: ~60k Homes and businesses covered: ~60k Population covered 2% Chorus UFB2+ role to pass 54,500 premises = estimated communal capex of $135m to $155m* Crown funding of up to $109m (100% equity) connection capex subject to demand: ~60,000 homes and businesses estimated cost of $1,500-$1,700 per connection (in 2017 dollars and including layer 2, backbone costs for MDUs and rights of way with 10 or fewer premises) *includes rights of way with more than 10 premises 36

37 INCOME STATEMENT FY17 $m FY16 $m Operating revenue 1,040 1,008 Operating expenses (388) (414) Earnings before interest, tax, depreciation and amortisation (EBITDA) Depreciation and amortisation (339) (327) Earnings before interest and income tax Net interest expense (154) (140) Net earnings before income tax Income tax expense (46) (36) Net earnings for the year > FY16 EBITDA was impacted by five and a half months of benchmark copper pricing 37

38 REVENUE FY17 $m FY16 $m Basic copper * Enhanced copper * Fibre Value Added Network Services Field Services 76 83* Infrastructure Other 9 6 Total 1,040 1,008 * included ~6 months of the final copper pricing determination Note: simplifying revenue categories for FY18 EXPENSES FY17 $m FY16 $m Labour costs 74** 78 Provisioning Network maintenance Other network costs IT costs 60** 65 Rents, rates and property maintenance Regulatory levies Electricity Consultants 10 4 Insurance 3 3 Other Total ** These costs are impacted by a changed capitalisation approach in FY17 38

39 FY18 REVISED REVENUE REPORTING CATEGORIES Category Description FY17 $m Copper line (no broadband) Copper based broadband Revenues received for copper lines where no broadband service is provided by Chorus (i.e. voice only UCLL, SLU, SLES, Baseband IP, UCLFS lines). Revenues received for copper lines where an ADSL or VDSL broadband service is provided by Chorus, including the backhaul (tail extension services) relating to these services Data services (copper) Revenues received for the ~8,000 data services connections on copper. 32 Fibre broadband (GPON) Revenues for business and residential fibre connections on GPON. 123 Fibre premium (P2P) Revenues for enterprise/network grade bandwidth and direct (dark) fibre point-to-point (P2P) connections. Note: Includes regional backhaul previously included in Value Added Network Services and fibre backhaul for copper connections previously included in Basic Copper. 79 Value added network services Revenues for carrier grade data transport services and aggregation handover links. 34 Infrastructure No change 23 Field services No change 76 Other revenue No change 9 Total revenue 1,040 39

40 CHORUS WHOLESALE PRICING KEY SERVICES Regulated copper pricing: effective 16 December 2015 Copper line only Year 1 - $29.75 Year 2 - $30.22 Year 3 - $30.70 Year 4 - $31.19 Year 5 - $31.68 Copper line with broadband Year 1 - $41.19 Year 2 - $41.44 Year 3 - $41.71 Year 4 - $42.02 Year 5 - $42.35 Key mass market (GPON) fibre product pricing as at 01 July 2017 Voice only $25.00 UFB contracted products. 50/10Mbps FY17: $40.50 FY18: $41.50 FY19: $ /20Mbps FY17: $43 FY18: $44 FY19: $45 200/20Mbps FY17-FY19: $55 1Gbps residential FY17-FY19: $65 1Gbps business (SME) FY17-FY19: $75 Business 100/100Mbps to 1G/1G FY17-FY19: $175+ FY19 pricing applies until end of 2019 with subsequent pricing subject to regulatory framework. Commercial products. Prices subject to change on notice, but must be within UFB contracted price cap in Chorus UFB areas. UFB contracted product. FY19 pricing applies until end of 2019 with subsequent pricing subject to regulatory framework. Fibre premium point-to-point products High Speed Network Service 100Mbps to 1Gbps over Ethernet. $380+ Price capped in Chorus UFB areas until end of 2019 Premium/Bitstream 4 with subsequent pricing subject to regulatory Direct Fibre Access Layer 1 (unmanaged) dark fibre. $355 framework. Bandwidth Fibre Access Layer 1 bandwidth managed fibre. 100Mbps, 1Gbps or 10Gbps. $380+ Intra Candidate Area Backhaul Chorus Regional Transport Layer 1 or 2 fibre backhaul, used between local exchanges within UFB areas. Connecting New Zealand's major UFB centres with 10Gbps and 100GE bandwidth options. $450+ various Commercial products. Prices subject to change on notice, but must be within UFB contracted price cap in Chorus UFB areas. 40

41 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 2017 and NZX and ASX market releases. Includes non-gaap financial measures including "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. However, they should not be used in substitution for, or isolation of, Chorus' audited consolidated financial statements. The EBITDA information used in this presentation has been subject to audit. 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. Refer to the appendices of Chorus 2017 annual results investor presentation for further detail relating to EBITDA measures. 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 are made as to the accuracy or completeness of such information. 41