Chorus FY25: equity fell 32.6% as gross debt rose 19.5% on flat earnings

Total equity fell 32.6% to $567.0m, gross borrowings rose 19.5% to $3.1b, and net debt/EBITDA stepped up from 3.69x to 4.34x. Operating performance was essentially flat: revenue +0.4% to $1b, EBITDA +0.7% to $705.0m, and profit before tax unchanged at $21.0m.

NPAT swung from a $9.0m loss to a $4.0m profit (+144.4%), but this is a tax-line story rather than an operating one — the effective tax rate fell from 142.9% to 81.0% on a near-identical PBT.

Cash generation improved sharply: operating cash flow rose to $559.0m and gross capex eased 2.8% to $415.0m, lifting free cash flow from $86.0m to $354.0m. The board declared a 34.5 cps final dividend (FY25 total 57.5 cps), up 21.1% on the prior final.

• Despite the $354.0m of free cash flow, gross debt rose $512.0m and equity contracted $274.0m, taking net debt/EBITDA to 4.3x. With EBITDA effectively flat, deleveraging now depends almost entirely on cash discipline rather than earnings growth, and any further dividend or capex step-up would push the leverage ratio higher again.
• The NPAT print overstates progress. PBT was flat at $21.0m and the +144.4% NPAT move is a function of an 81.0% effective tax rate this year against 142.9% last year. The cleaner read is that group earnings did not grow; investors weighing the result against the dividend lift should anchor on PBT, not NPAT.
• The dividend was raised while debt funded part of the distribution envelope. FCF coverage of the 34.5 cps final looks comfortable on the 39.0% payout-vs-FCF measure, but the parallel rise in borrowings shows that group cash outflows in aggregate (dividends, lease payments, investment) still exceeded internally generated cash. That tension matters for the durability of the new dividend rate.

The release cites FY26 guidance and a "Horizon 2" outlook in the presentation, but no numeric anchors flow through to the calculation set.

The half-on-half shape is also unusual: HY25 carried 49.3% of full-year revenue and 49.1% of EBITDA — broadly even — but contributed $5.0m of NPAT against an implied 2H loss of around $1.0m. That suggests second-half operating earnings softened even as cash flow held up, which is worth watching into FY26.

OCF/EBITDA rose to 79.3% from 73.3%, capex intensity eased to 40.9% of revenue from 42.3%, and trade debtors fell to 95 days-equivalent of 34.2 (from 36.1). None of the FCF uplift relies on stretching working capital — receivables actually shortened.

The earnings result is lower quality. PBT is flat, NPAT is tax-flattered, and ROE — at 0.7% versus -1.1% — only looks improved because the equity base has shrunk by a third. The combination of a 21.1% higher final dividend, $512.0m of incremental gross borrowings, and a $274.0m equity reduction means the capital structure is doing more work than the income statement to support shareholder returns. Capex at over 40% of revenue also continues to absorb the bulk of operating cash, leaving limited headroom if either EBITDA softens or rates rise on the larger debt stack.

This briefing cannot assess the underlying drivers of the equity reduction, the FY26 capex and guidance envelope, or management's stated leverage tolerance, because those disclosures are not present in the supplied materials.