Refreshed Capital Allocation Framework

Channel Infrastructure NZ Limited (NZX:CHI) is pleased to announce that the Board has today refreshed its Capital Allocation Framework resulting in the following key changes:

• The dividend policy pay-out ratio has increased to 70-90% of Normalised Free Cash Flow from 60-70% of Normalised Free Cash Flow
• The Board expects to pay a total FY25 dividend of between 12.0 and 12.5 cents per share, towards the lower end of the policy range (up from 11.0 cents per share in FY24)
• The Board will undertake a review of Channel Infrastructure’s leverage range over the coming months to ascertain whether or not additional leverage can be accommodated within the target range whilst ensuring the preservation of the right balance between funding growth opportunities, enhancing returns and safeguarding Channel Infrastructure’s financial resilience.

At its Annual Shareholders Meeting today, Channel Infrastructure will also:

• Reiterate FY25 Guidance released in February, based on the financial performance to 30 April 2025
• Announce the proposed introduction of a Dividend Reinvestment Plan at the time of the FY25 Interim Dividend
• Announce that the Channel Board will consider a foreign-exempt dual-listing on the ASX should a significant growth opportunity convert in the next 12 to 24 months

Commenting, Chair James Miller said: “The Board is focused on a stable and growing dividend and being efficient with our shareholder’s capital. I’m delighted today to confirm that, alongside our plans to continue to invest in the resilience of our import terminal and in future growth, we are able to increase our dividend policy pay-out ratio.”

Capital Allocation Framework updated

Since 1 April 2022, Channel Infrastructure has undergone a significant transformation and is now a growth-focused infrastructure business with stable earnings, long-term customer contracts with PPI indexation and maintains credit metrics consistent with a shadow BBB+ investment grade credit rating. The conversion project has been significantly de-risked and is nearing completion, and the growth projects announced last year will generate an additional ~$8.5 million of fixed revenue, with limited additional operating expenditure, by 2027.

Over the last 18 months, Channel Infrastructure has undertaken a successful $100 million unsecured, unsubordinated retail bond issue in November 2023, a refinancing of the Company’s $235 million bank facilities and $50 million capital raise in November 2024. Given this demonstrated strong support from Channel’s debt and equity providers, the Company has a high degree of confidence over its ability to fund future growth.

The Board has refreshed the Capital Allocation Framework to reflect its confidence in the business outlook for Channel and the Company’s access to capital for growth initiatives, while seeking to be efficient with shareholder’s capital. The Board will today increase the dividend policy payout ratio to 70-90% from 60%-70% of Normalised Free Cash Flow.

Channel Infrastructure has an established track record of safe and reliable import terminal operations, and around 50% of our revenue is now fixed (other than PPI indexation). The demonstration of growth opportunities and the expected availability of capital means the Board can now review Channel’s leverage range over the coming months to ascertain whether or not additional leverage can be accommodated within the target range whilst ensuring preservation of the right balance between funding growth opportunities, enhancing returns and safeguarding Channel’s financial resilience.

There remains a significant pipeline of growth opportunities ahead of Channel. Any increase in target leverage would provide further flexibility for Channel in evaluating the optimal mix of funding for these opportunities.

The Board recognises that some shareholders would prefer the opportunity to increase their investment in Channel instead of receiving a cash dividend. Therefore, the Board intends to introduce a Dividend Reinvestment Plan ahead of the interim dividend payment in September. The details of the plan and amount of the discount (if any) are yet to be determined and will be released at the time of the half year results in August 2025.

The Board will also assess the merits of a foreign-exempt dual-listing on the ASX to access a broader pool of institutional and retail investors, if a significant growth opportunity should convert in the next 12 to 24 months.

FY25 Guidance reiterated

The Board today confirms that, based on Channel’s financial performance to 30 April 2025, it remains comfortable with the financial guidance provided in February. FY25 EBITDA from continuing operations is expected to be in the range of $89-94 million. Maintenance capital expenditure for FY25 is expected to be between 8-10% of revenue and the Normalised Free Cash flow conversion factor expected to be broadly in line with FY24. The Board also confirms today that, based on the new dividend policy, it expects to pay a total FY25 dividend of between 12.0 and 12.5 cents per share (up from 11.0 cents per share in FY24).

- ENDS -

Authorised by:

Chris Bougen
General Counsel and Company Secretary

Contact details
Investor Relations contact:
Anna Bonney
[email protected]

Media contact:
Laura Malcolm
[email protected]

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Announcement PDF