2013 chorus annual report · 1,784,000fixed line connections p2 a good operating result p4...

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Chorus accepted in FTSE4Good Index (Corporate Sustainability, page 4) For a second year, Chorus received Aon Hewitt Employers Accreditation $171m Net profit after tax NPAT HIGHLIGHTS $663m Earnings before interest, income tax, depreciation and amortisation EBITDA 25.5 ANNUAL DIVIDEND Cents per share (see page 7 for details) 18% UFB PROGRAMME UFB completion 1,784,000 FIXED LINE CONNECTIONS P2 A good operating result P4 Management Commentary P18 Financial Statements P42 Governance & Disclosures 2013 Chorus Annual Report

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Chorus accepted in FTSE4Good Index

(Corporate Sustainability, page 4)

For a second year, Chorus received

Aon Hewitt Employers Accreditation

$171mNet profit after tax

NPAT

HIGHLIGHTS

$663mEarnings before interest, income tax, depreciation and amortisation

EBITDA

25.5ANNUAL DIVIDEND

Cents per share (see page 7 for details)

18%UFB PROGRAMME

UFB completion

1,784,000FIXED LINE CONNECTIONS

P2 A good operating result

P4 Management Commentary

P18 Financial Statements

P42 Governance & Disclosures

2013Chorus Annual Report

2

A good operating result

Report from chairman Sue Sheldon and CEO Mark Ratcliffe

Ultra-fast broadband build on track but regulatory headwinds and capital expenditure demands remain

Dear shareholder

The financial year ended 30 June 2013

was Chorus’ first full year of operation

as New Zealand’s largest wholesale

only fixed line communications

infrastructure company.

Revenue was $1,057m for the full financial

year, and our operational costs have

continued to increase as expected to

$394m. This resulted in earnings before

interest, depreciation, tax and amortisation

(EBITDA) of $663m and net profit after tax

(NPAT) of $171m for the period. Prior period

comparisons are challenging as this was

the first full year of operation for Chorus

and a normalised comparison is included

to assist shareholders.

Chorus has declared dividends totalling

25.5 cents per share for the financial year.

This has been a good operating result,

with both the Ultra-Fast Broadband (UFB)

and Rural Broadband Initiative (RBI)

programmes slightly ahead of target,

a small increase in the number of access

lines and a 6% increase in copper

broadband connections.

On the downside, capital expenditure

demands continue to be significant and

regulatory headwinds remain. We are

pleased with the principled approach the

Crown is taking to the regulatory review.

However, we note that while the outcome

of the Government’s regulatory review is

uncertain, all potential options contained

within the discussion paper imply reduced

future earnings for Chorus. The discussion

paper suggests a potential decrease of

Chorus’ pricing within a range of $2.48

to $7.48 per broadband connection per

month. Based on 30 June 2013 connection

volumes, Chorus anticipates this could

imply a reduction in annual EBITDA in the

range of $20 million to $100 million.

Overall fixed line connections remained

stable for the period, at about 1.8 million

lines, and the number of those copper

connections that provide broadband

services grew by more than 64,000 to

a total of 1.112 million lines.

By the end of June we had built fibre past

153,000 premises, surpassing the 149,000

targeted. This means we are now 18%

of the way through the UFB rollout and,

through UFB and other initiatives, have

added more than 3,000km of new fibre

infrastructure during the year.

Alongside Crown funding, Chorus is

investing a significant amount of its own

capital. In February we provided updated

guidance to the market that the total

estimated cost to build the communal

infrastructure for the network has increased

from $1.4 - $1.6 billion to $1.7 -$1.9 billion.

At this stage we are around 18% of the way

through the communal build programme

but have incurred over 25% of the estimated

cost of the programme for build completed.

To achieve a total programme cost within

this guidance range, we have put in place a

range of initiatives to drive cost savings and

efficiencies. We also expect less challenging

build in the second half of the programme.

This report is dated 29 August 2013 and is

signed on behalf of the Board of Chorus Limited: Sue Sheldon, Chairman Mark Ratcliffe, Director and CEO

A simple business

Fundamentally, Chorus is a simple

business. The core of the business is the

New Zealand wide network of fibre optic

and copper cables that connect homes

and businesses to each other.

The fibre network continues to grow rapidly

and Chorus now has about 32,000km

of fibre and 130,000km of copper cabling.

These cables typically connect back to local

telephone exchanges, of which Chorus

has about 600 nationwide. Chorus fibre

also connects many mobile phone towers

owned by mobile service providers, so even

mobile phone calls generally connect via

the Chorus network at some point.

Chorus has about 1.8 million connections

on the fixed line network, with about 1.1

million of these using a broadband service

provided by Chorus’ broadband equipment. The access network connects a home, business or structure to the telecommunications equipment – often a local exchange

Mobile service provider cell tower

Fibre-fed broadband cabinets provide broadband of at least 10Mbps to 80 percent of New Zealanders

Fibre to the premises enables ultra-fast broadband services

602

local exchanges

32,000km

fibre

Fibre backhaul links local exchanges to other

exchanges or retail service provider networks

Chorus Network Overview

KEY Fibre

Copper

About 7,000 cabinets provide interconnection

points for around 50% of the lines in the

Chorus network. A large number of these

cabinets are like mini telephone exchanges

and have electronic broadband equipment

installed in them.

In some cases, retail service providers

have chosen to install their own

broadband equipment in an

exchange and pay Chorus

just for the rental of the

access line. This is called

‘unbundling’ and about

7% of Chorus’ lines

have been unbundled.

While Chorus is undertaking one of the largest

infrastructure upgrades in New Zealand’s

history, it has been an ongoing concern that

the telecommunications industry faces

significant regulatory uncertainty.

In a move to address this uncertainty, a wide

ranging review of the regulation that applies

to the telecommunications sector was

announced in February and a consultation

document was released in early August.

When announcing the review, Minister Amy

Adams said “The options we are canvassing

give us an opportunity to provide clarity

and certainty during a period when

large investments are being made in a

once-in-a-many-generation upgrade

of our telecommunications infrastructure

that will deliver significant benefits for

New Zealanders well into the future.”

We welcome the review and the

opportunity now exists for the industry

to engage in the establishment of a

forward looking, coherent and stable policy

environment that ensures a sustainable

and efficient transition to fibre for the

years ahead.

Despite the twin challenges of regulatory

uncertainty and increased capital demands,

we are pleased with the progress Chorus

has made over the last 12 months.

New Zealand now has one of the fastest

growing rates of broadband penetration

in the OECD.

In May we announced new pricing and

specifications for very high speed copper

plans, using a technology known as VDSL.

This delivers higher quality broadband

to retail service providers at the same

regulated price as the standard copper

broadband product. Retail service providers

then take this product and develop their

own plans and pricing for end-users.

Faster copper-based technology forms an

important stepping stone to fibre. Like any

technology upgrade, the move to fibre will

be a long term transition, and VDSL has an

important role in the interim and in areas

where UFB is not being rolled out.

Chorus now employs 763 permanent

and fixed term employees directly, along

with a further 4,434 people who are either

employed directly by our service company

partners or are sub-contracted by the

service companies. This means the overall

workforce has doubled since Chorus’

demerger from Telecom.

We have been recognised for a second year

as one of the best employers in Australasia,

our people have retained a high level of

engagement with our business and our

culture promotes diversity and inclusiveness.

Health and safety will continue to be

a key focus for the company.

We have this year been accepted into a

globally recognised corporate sustainability

index and, in partnership with Downer, won

a Ministry for the Environment green award.

Chorus’ operational performance is good

and we will continue to work hard on your

behalf to address the challenges in the

year ahead.

3

Anne Urlwin, BCom, CA, F InstD, FNZIM, ACIS

Director since 1 December 2011; independent

Anne has more than 20 years’ directorship

experience across many sectors, including

energy, health, construction, regulatory services,

internet infrastructure, research, banking, forestry

and the primary sector, as well as education,

sports administration and the arts. She is a

director of Southern Response Earthquake

Services Ltd, Steel & Tube Holdings Ltd and

OnePath Life (NZ) Ltd. She is chairman of

Naylor Love Enterprises Ltd and an independent

chairman of Ngai Tahu Te Runanga Audit & Risk

Committee. Anne is a former chairman of Lakes

Environmental Ltd, the New Zealand Blood

Service and New Zealand Domain Name Registry,

and a former director of Meridian Energy.

Sue Sheldon CNZM, BCom, FCA

Chairman; director since 1 July 2011; independent

Sue is a professional company director. She is

chairman of Freightways and Paymark, deputy

chairman of the Reserve Bank of New Zealand

and a director of FibreTech Holdings and Contact

Energy. Sue is a former director of Telecom,

Smiths City Group and Meridian Energy, among

others. She has extensive experience as both

a chairman and member of audit and risk

committees and is a former president of the

New Zealand Institute of Chartered Accountants.

Sue was made a Companion of the New Zealand

Order of Merit for services to business in 2007.

Keith Turner, BE (Hons), ME, PhD

Director since 1 December 2011; independent

Dr Keith Turner was CEO of New Zealand

electricity generator and retailer Meridian Energy

for nine years from its establishment in 1999.

He is now chairman of Fisher and Paykel

Appliances, deputy chairman of Auckland

International Airport and a director of Spark

Infrastructure, an Australian listed company.

He is also chairman of Solar City New Zealand.

Keith has had an extensive career in electricity,

taking part in much of its reform, including

separation of Transpower from Electricity

Corporation of New Zealand Ltd (ECNZ) in 1992,

the separation of Contact Energy from ECNZ

in 1996 and the eventual break up of ECNZ

into three companies in 1999.

Clayton Wakefield, BSc (Computer Science), GradDip Mgmt

Director since 1 December 2011; independent

Clayton has over 30 years’ experience in the

banking, financial services, telecommunications

and technology industries. He is an executive

director and owner of Techspace, a leading

New Zealand independent IT advisory company

working with New Zealand’s major corporates.

From 2001 to 2007 he was Head of Technology

and Operations at ASB Bank. He was previously

a director and chairman of Electronic Transaction

Services and of Visa New Zealand and

also previously an independent director

of Endace Ltd.

Mark Ratcliffe, BA Accounting

Director since 9 December 2011; non-independent

Mark has been CEO of Chorus since it was

established in 2007 as an operationally separate

business unit within Telecom and was then

appointed as the first CEO of the listed entity

in 2011. In a 20 year career with Telecom, Mark

held finance, marketing, product development,

product management and IT roles and was

promoted to the executive team in 1999 where

he was CIO (including a period as joint CEO of

AAPT in Australia) and then COO Technology and

Wholesale before becoming CEO of Chorus. From

May 2010, he led the team that secured Chorus’

participation in the Government’s UFB initiative

and the demerger of Chorus and Telecom.

Prue Flacks, LLB, LLM

Director since 1 December 2011; independent

Prue is a director of Bank of New Zealand

and Mighty River Power, and a trustee of the

Victoria University Foundation. She is a barrister

and solicitor with extensive experience in

commercial law and, in particular, banking,

finance and securities law. Her areas of expertise

include corporate and regulatory matters,

corporate finance, capital markets, securitisation

and business restructuring. Prue is a consultant

to Russell McVeagh, where she was previously

a partner for 20 years.

Jon Hartley, BA Econ Accounting (Hons), Fellow ICA (England & Wales), Associate ICA (Australia), Fellow AICD

Director since 1 December 2011; independent

Jon is a Chartered Accountant and Fellow

of the Australian Institute of Company Directors.

He has held senior roles across a diverse range

of commercial and not for profit organisations in

several countries, including chairman of SkyCity,

director of Mighty River Power, CEO of Brierley

New Zealand and Solid Energy, and CFO of

Lend Lease in Australia. Jon is currently deputy

chairman of ASB Bank, Sovereign Assurance

Company and vice chairman of VisionFund

International. He is a director of VisionFund

Cambodia and a trustee of World Vision

New Zealand and of the Wellington City Mission.

Andrew Carroll, MCA (Hons)

Chief Financial Officer

Andrew joined Chorus after nine years with

Telecom where, as Head of Mergers & Acquisitions,

he was involved in the Gen-i acquisition and

the sale of Yellow Pages. Prior to this he worked

in investment banking for a decade. Andrew

worked closely with the Chorus team on the

UFB negotiations with Crown Fibre Holdings

and throughout the demerger process.

Mark RatcliffeChief Executive Officer See above.

Ewen Powell, BE

Chief Technology Officer

Ewen has nearly 20 years’ experience in

managing the technology, services and

partnerships that operate a national

communications network. Much of his career

was spent at Telecom where he was at the

forefront of a wide range of technology changes,

most recently driving the technology changes

required to achieve Chorus’ operational

separation requirements.

Irene LovejoyExecutive Assistant

Irene has worked with Chorus CEO Mark Ratcliffe

for more than 14 years, bringing a unique insight

that adds value to the development of the

Chorus executive team. Before joining Chorus,

Irene spent 22 years with Telecom where she

held roles in the marketing, technology and

corporate teams.

Nick WoodwardGeneral Manager, Customer Service

Nick’s career combines a wide range of IT,

sales and customer management experience in

the financial and telecommunications industries.

His roles have seen him work across the

United States and Europe for Hutchison 3G

UK and Household Bank in the United Kingdom.

Before joining Chorus, Nick headed up Telecom’s

Channel Planning and Operations group.

Vanessa Oakley, LLB (Hons), PGCert (MgtSt), PGCert (CompPolicy) (UK), GAICD, MInstD

General Counsel & Company Secretary

Vanessa has extensive experience in law and policy,

especially in relation to regulated infrastructure

businesses. A qualified lawyer in New Zealand and

England and Wales, Vanessa joined Chorus after

playing a key role in the UFB contract, legislative

and demerger processes. Prior to that she has held

roles in the public and private sectors including as

a key adviser to United Kingdom and New Zealand

regulators and across the Telecom group.

Victoria Crone, MCA

General Manager, Sales and Marketing

Victoria has extensive experience in bringing

telecommunications products and services to

market. She has held several senior business,

sales and marketing roles with Telecom,

including responsibility for the sales strategy

and operations for its retail business, managing

offerings for the business market and developing

Telecom’s proposition for next generation

products and services.

Sara Broadhurst^, BA, Dip (Bus), Dip (Psych), PG Dip (Psych)

General Manager, Human Resources

Sara joined Chorus in 2008, bringing more

than 10 years’ experience in human resources

in New Zealand and the United Kingdom from

a wide range of industries, including housing,

manufacturing, banking and not for profit

organisations. She previously held human

resources roles in New Zealand for

ANZ National Bank, EFTPOS and Barnardos.

Ed Beattie*

General Manager, IBuild

Ed has more than 30 years’ experience in

building and maintaining fixed line and mobile

telecommunications networks in New Zealand.

Most recently, he managed the delivery of the

successful Fibre to the Node programme and

played a lead role in the Christchurch crisis

response and restoration activities.

* During the year Ed Beattie assumed the role of General Manager IBuild after a reorganisation following the resignation of Chris Dyhrberg.

^ Sara Broadhurst left Chorus on 23 August 2013

DIRECTORS

EXECUTIVETEAM

4

As the largest copper and fibre network

operator in New Zealand, Chorus is subject

to regulation.

On 3 December 2012, the Commerce

Commission (Commission) released

two decisions:

• ThefinalbenchmarkedUnbundled

Copper Local Loop (UCLL) decision

reduced the price by 3.8% to $23.52

per month. Chorus and retail service

providers have applied for a ‘final

pricing principle’ review of the decision.

• ThedraftbenchmarkedUnbundled

Bitstream Access (UBA) decision

proposed a reduction in price of around

60% from $21.46 to $8.93 per month.

On 7 August 2013, the Government

released a discussion paper proposing

a phased approach to a review of the

telecommunications regulatory framework

with an immediate focus on copper

pricing. It proposes that Chorus’ combined

copper (UCLL and UBA) prices should be

roughly equivalent with Chorus’ contracted

entry level fibre prices.

There are three options proposed – which

generally differ in terms of whether the

Commission or Government selects the

appropriate price point between a range of

$37.50 – $42.50, how the UCLL and UBA

copper prices are set within that overall

cap and whether new pricing applies from

November 2014 or November 2015.

While the outcome of the Government’s

regulatory review is uncertain, all potential

options contained within the discussion

paper imply reduced future earnings for

Chorus. The discussion paper suggests

a potential decrease of Chorus’ pricing

within a range of $2.48 to $7.48 per

broadband connection per month.

Based on 30 June 2013 connection

volumes, Chorus anticipates this could

imply a reduction in annual EBITDA in

the range of $20 million to $100 million.

For UFB to be successful and for Chorus

to maintain its current capital management

settings, it is important to get an appropriate

mix of Layer 1 (UCLL/UCLFS) and Layer 2

(UBA) pricing. The outcomes of this process

and the Commission’s parallel processes

reviewing the UBA and UCLL prices

are uncertain.

Later phases of the regulatory review

are proposed to focus on the appropriate

regulatory framework once the UFB build

is complete in 2020 (amongst other things).

Submissions are due on 13 September.

On 9 July 2013 the Government also issued

a discussion document for the review of

the Telecommunications Service Obligation

(TSO). Chorus provides wholesale services

that enable the provision of the retail

TSO. Submissions on a number of potential

future options for the TSO were due on

20 August 2013.

For a complete overview of Chorus’

regulatory environment, please see

the competition and regulation section

in the Management Commentary.

Chorus and Vodafone are working

together to deliver the Government’s RBI

programme. This joint project is bringing

better broadband to rural schools, health

providers and tens of thousands of rural

residents. There are several elements to

this Government subsidised project. The

main task for Chorus is laying fibre, often

to exchange areas where there isn’t fibre

today. In addition, Chorus will deliver fibre

to 154 new Vodafone mobile sites that will

be used to deliver fixed wireless broadband

to rural communities.

As part of RBI, Chorus is laying approximately

3,350km of fibre and upgrading or installing

about 1,000 new broadband cabinets.

At 30 June 2013 Chorus had laid 2,150km

of fibre and brought 51,200 lines within

reach of better broadband.

Rural Broadband Initiative Regulatory environment

People

Total people numbers at 30 June 2013

2142 service company sub-contractors

763 Chorus permanent and fixed term employees

2292 service company employees

In May 2011, Chorus was selected by Crown Fibre Holdings Ltd (CFH) to roll out UFB in 24 of the 33 areas nationwide. This contract will see Chorus deploy around 17,000km of new fibre optic cables to areas covering around 70% of the UFB footprint.

Ultra-Fast Broadband

By 2020, Chorus will have drilled, dug

or hauled the new network past about

830,900 premises. With 60% to 70% of

deployment costs relating to civil work,

Chorus is using as much of its existing

duct and fibre network as possible.

Chorus is also working with councils

and utility companies to further reduce

deployment costs by, for example,

trench sharing and linking with footpath

replacement programmes where possible.

UFB – an inter-generational investment

Fibre can deliver high speed connectivity

over much greater distances than copper,

opening up possibilities and services that

aren’t yet perceived. Fibre is also easier

to maintain and will help future-proof the

network for continuing growth in demand

for bandwidth.

Alcatel Lucent’s Bell Labs estimated

in 2012 that the economic impact of

building the UFB and RBI networks is

$5.5 billion GDP growth over 20 years.

The Government’s UFB policy, through

public private partnerships with the

Crown, brings forward the network

investment ahead of demand and earlier

than would have otherwise been made

by the private sector alone. This means

New Zealand can realise the economic

and social benefits sooner.

205,500 end-users now within reach of UFB

End-users within reach of UFB (cumulative)

Premises passed with UFB (cumulative)

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Chorus aims to achieve a balance

between our economic, environmental

and social requirements that delivers our

needs of today without compromising our

needs of tomorrow. Chorus has this year

been accepted into the FTSE4Good index,

which measures the performance of

companies that meet globally recognised

corporate responsibility standards.

Environmental highlights

During the year Chorus established an

energy manager’s role as part of our

commitment to manage the energy that

made up 60% of our carbon footprint.

We also calculated our base year carbon

and submitted it to the Carbon Disclosure

Project, a leading global carbon benchmark.

In addition, Chorus, in partnership with

Downer, won the Ministry for the

Environment Green Ribbon Award for

waste minimisation through our efforts to

recycle approximately 2,400 UFB drums

and 20km of ducts.

Social highlights

Last year, 274 Chorus staff took the

opportunity to spend a day helping others

in our community, through our Volunteer

Day programme.

Starship children’s hospital was nominated

by Chorus people to receive a $50,000

donation from Chorus.

We also continued to combat graffiti with

our cabinet art programme, with another

35 cabinets now complete.

Corporate Sustainability

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le w

ith

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d a

nd

20

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ith

in r

each

at 3

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nnec

tions

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stab

le a

t 1,

784

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and

fo

r fi

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nec

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tead

ily w

ith

ab

ou

t

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elve

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rly

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h

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the

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mo

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g

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ne

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f 15

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sh

are

(25.

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ents

per

shar

e an

nu

al d

ivid

end

).

Ch

alle

ng

es•O

ngoingunce

rtaintyw

ith

the

reg

ula

tory

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mew

ork

that

Ch

oru

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per

ates

in

(th

e Te

leco

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icat

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s

Act

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d a

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t

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ewo

rk w

ith

th

e

Go

vern

men

t’s

UFB

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iati

ve.

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italexp

enditure

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the

year

was

$6

81

mill

ion

,

wit

h s

pec

ific

chal

len

ges

on

UFB

pro

gra

mm

e

dep

loym

ent

cost

s.

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in t

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wo

rk r

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ut

and

ensu

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ns

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d c

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m

Tele

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g r

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pro

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incl

ud

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on

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om

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7

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ile C

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nce

go

od

gro

wth

in b

road

ban

d

and

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re c

on

nec

tio

ns

ther

e ar

e a

ran

ge

of

chal

len

ges

fo

r th

e ye

ar

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d. T

hes

e in

clu

de:

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iththeregulatoryframew

ork,itslack

of

clea

r al

ign

men

t w

ith

th

e G

ove

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ve a

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th

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or-

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. An

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es t

o r

egu

late

d

pri

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g w

ill li

kely

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ron

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flu

ence

on

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oru

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and

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illin

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to m

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o fi

bre

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willalsobethefirstfull12m

onths

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the

Co

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on

’s r

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ctio

n in

UC

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bu

nd

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pp

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Low

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qu

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vice

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pri

cin

g, t

he

ann

ual

ised

imp

act

of

wh

ich

was

est

imat

ed t

o r

edu

ce C

ho

rus’

EB

ITD

A b

y ar

ou

nd

$2

0 m

illio

n p

er a

nn

um

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is li

kely

th

at t

he

sig

nifi

can

t re

gu

lato

ry

pro

gra

mm

es in

FY

14 w

ill a

lso

res

ult

in in

crea

sed

reg

ula

tory

an

d

con

sult

ant

cost

s in

FY

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•Thenee

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thedep

loym

entco

st

of

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wo

rk r

ollo

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and

en

d-u

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ns.

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sts.

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is m

ean

s th

ey a

re s

cru

tin

isin

g o

pp

ort

un

itie

s to

low

er t

hei

r

wh

ole

sale

co

sts

fro

m C

ho

rus

and

are

als

o c

on

sid

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g in

itia

tive

s

to d

rive

gre

ater

fixe

d t

o m

ob

ile s

ub

stit

uti

on

.

•Increa

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UFB

net

wo

rk b

uild

ers

had

pas

sed

ap

pro

xim

atel

y 76

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rem

ises

at 3

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un

e 2

013

an

d m

ay s

tart

to

gai

n g

reat

er m

arke

t sh

are

fro

m

Ch

oru

s as

th

eir

net

wo

rk f

oo

tpri

nts

dev

elo

p s

cale

. In

ad

dit

ion

,

seve

ral m

ob

ile n

etw

ork

op

erat

ors

hav

e b

egu

n o

ffer

ing

4G

cove

rag

e in

mai

n c

entr

es, o

ffer

ing

mo

bile

bro

adb

and

cap

abili

ty

that

may

be

mo

re c

om

pet

itiv

e ag

ain

st C

ho

rus’

fixe

d li

ne

off

erin

g.

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ost

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o IT

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n in

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)uptake

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his

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kely

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des

t n

ear

term

imp

act

on

earn

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s as

th

e co

st o

f th

e re

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men

ded

wir

ing

up

gra

de

is

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up

fro

nt,

wh

ile t

he

reve

nu

es a

re r

ecei

ved

ove

r ti

me.

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en t

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ve, C

ho

rus’

cu

rren

t vi

ew is

th

at t

he

earn

ing

s

ou

tlo

ok

for

FY14

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lat

to lo

w s

ing

le d

igit

per

cen

tag

e d

eclin

e

in E

BIT

DA

rel

ativ

e to

no

rmal

ised

FY

13 E

BIT

DA

of

$6

54

mill

ion

(see

no

rmal

ised

an

nu

alis

ed r

esu

lts

on

pag

e 12

).

EB

ITD

A

EB

ITD

A f

or

the

year

en

ded

30

Ju

ne

20

13 w

as $

66

3 m

illio

n,

rep

rese

nti

ng

aro

un

d 1

.2%

gro

wth

in E

BIT

DA

on

a n

orm

alis

ed b

asis

(see

no

rmal

ised

an

nu

alis

ed r

esu

lts

on

pag

e 12

). T

his

ref

lect

s

con

tin

ued

gro

wth

in d

eman

d f

or

Ch

oru

s’ b

asic

an

d e

nh

ance

d c

op

per

pro

du

cts,

incl

ud

ing

ste

ady

bro

adb

and

up

take

ove

r th

e ye

ar. D

eman

d

for

fibre

pro

du

cts

also

co

nti

nu

ed t

o g

row

, par

ticu

larl

y fo

r b

usi

nes

s

and

car

rier

co

nn

ecti

on

s. A

sig

nifi

can

t am

ou

nt

of

Ch

oru

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even

ues

are

fro

m r

egu

late

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rod

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s, w

hic

h g

ives

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le d

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etio

nar

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exib

ility

in r

even

ues

. Co

sts

hav

e g

row

n b

y ar

ou

nd

7.4

% r

elat

ive

to t

he

no

rmal

ised

20

12 r

esu

lt (s

ee n

orm

alis

ed a

nn

ual

ised

res

ult

s o

n

pag

e 12

), re

flec

tin

g in

crea

sed

pro

visi

on

ing

co

sts,

net

wo

rk

mai

nte

nan

ce c

ost

s an

d g

row

ing

sta

ff n

um

ber

s (a

sig

nifi

can

t

nu

mb

er o

f w

hic

h a

re w

ork

ing

on

th

e U

FB b

uild

an

d in

form

atio

n

tech

no

log

y (IT

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ject

s, w

hic

h a

re f

ully

cap

ital

ised

).

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om

par

iso

n o

f th

e n

orm

alis

ed f

ull

year

res

ult

s, r

elat

ive

to t

he

no

rmal

ised

an

nu

alis

ed s

even

mo

nth

res

ult

s en

ded

30

Ju

ne

20

12,

is in

clu

ded

in n

orm

alis

ed a

nn

ual

ised

res

ult

s o

n p

age

12.

Cap

ital

exp

end

itu

re

Cap

ital

exp

end

itu

re f

or

the

year

en

ded

30

Ju

ne

20

13 w

as

$6

81

mill

ion

, wh

ich

is c

on

sist

ent

wit

h t

he

mid

po

int

of

the

gu

idan

ce r

ang

e p

rovi

ded

in F

ebru

ary

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r ad

just

ing

fo

r an

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dit

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al

$14

mill

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of

year

th

ree

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bu

ild in

itia

ted

in t

his

fin

anci

al y

ear

(an

d

reco

gn

ised

as

wo

rk in

pro

gre

ss).

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pro

xim

atel

y 8

5%

of

this

cap

ital

exp

end

itu

re w

as f

ocu

sed

on

fib

re r

elat

ed in

vest

men

t, p

rin

cip

ally

on

the

UFB

an

d R

ura

l Bro

adb

and

Initi

ativ

e (R

BI)

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loym

ent

pro

gra

mm

es.

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iden

ds

Ch

oru

s w

ill p

ay a

div

iden

d o

f 15

.5 c

ents

per

sh

are

on

11 O

cto

ber

20

13 t

o a

ll sh

areh

old

ers

reg

iste

red

at

5.0

0p

m o

n

Frid

ay 2

7 Se

pte

mb

er 2

013

. Th

e sh

ares

will

be

qu

ote

d o

n a

n

ex-d

ivid

end

bas

is f

rom

25

Sep

tem

ber

20

13 o

n t

he

NZ

X M

ain

Bo

ard

an

d 2

3 S

epte

mb

er 2

013

on

th

e A

SX.

Th

e d

ivid

end

s w

ill b

e fu

lly im

pu

ted

(at

a ra

tio

of

28

/72

) in

lin

e w

ith

the

corp

ora

te in

com

e ta

x ra

te. I

n a

dd

itio

n, a

su

pp

lem

enta

ry d

ivid

end

of

2.7

35

3 c

ents

per

sh

are,

will

be

pay

able

to

sh

areh

old

ers

wh

o a

re

no

t re

sid

ent

in N

ew Z

eala

nd

.

Elig

ible

sh

areh

old

ers

will

be

able

to

par

tici

pat

e in

th

e D

ivid

end

Rei

nve

stm

ent

Pla

n f

or

the

Oct

ob

er 2

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div

iden

d. E

lect

ion

no

tice

s

to p

arti

cip

ate

in t

he

Div

iden

d R

ein

vest

men

t P

lan

mu

st b

e re

ceiv

ed

by

5.0

0p

m F

rid

ay 2

7 Se

pte

mb

er 2

013

.

Ch

oru

s’ F

Y14

div

iden

d g

uid

ance

is u

nch

ang

ed. T

he

Ch

oru

s B

oar

d w

ill

con

tin

ue

to m

on

ito

r d

evel

op

men

ts a

nd

exp

ects

to

rea

sses

s C

ho

rus’

op

tim

al c

apit

al m

anag

emen

t se

ttin

gs

as t

he

ou

tco

mes

fro

m t

he

Go

vern

men

t’s r

egu

lato

ry f

ram

ewo

rk r

evie

w b

eco

me

clea

rer.

In s

um

mar

y

Ch

oru

s M

anag

em

en

t C

om

me

nta

ry8

Ch

oru

s is

New

Zea

lan

d’s

larg

est

fixed

lin

e co

mm

un

icat

ion

s

infr

astr

uct

ure

ser

vice

s p

rovi

der

, su

pp

lyin

g a

bo

ut

90

% o

f al

l fixe

d

net

wo

rk c

on

nec

tio

ns

to r

etai

l ser

vice

pro

vid

ers.

Ch

oru

s h

as b

usi

nes

s

line

rest

rict

ion

s p

roh

ibit

ing

it f

rom

sel

ling

dir

ectl

y to

en

d-u

sers

.

Ch

oru

s is

fo

cuse

d o

n le

adin

g t

he

tran

siti

on

fro

m c

op

per

to f

ibre

-bas

ed s

ervi

ces.

Pu

blic

pri

vate

par

tner

ship

s an

d o

pen

acce

ss w

ho

lesa

le s

ervi

ces

are

at t

he

hea

rt o

f th

e in

du

stry

mo

del

est

ablis

hed

in la

te 2

011

. It

is a

tim

e o

f co

mp

lex

tran

siti

on

,

rep

rese

nti

ng

bo

th o

pp

ort

un

ity

and

ch

alle

ng

e fo

r C

ho

rus,

as

wel

l

as f

or

reta

il se

rvic

e p

rovi

der

s.

Ch

oru

s’ t

ota

l of

app

roxi

mat

ely

1,78

4,0

00

fix

ed li

ne

con

nec

tio

ns

at 3

0 J

un

e 2

013

rep

rese

nt

an in

crea

se o

f ap

pro

xim

atel

y 8

,00

0

lines

fro

m 3

0 J

un

e 2

012

. Rea

l gro

wth

of

10,0

00

lin

es in

th

e fir

st h

alf

was

off

set

by

a re

du

ctio

n o

f ap

pro

xim

atel

y 2

,00

0 li

nes

ove

r th

e si

x

mo

nth

s to

30

Ju

ne

20

13. T

he

rela

tive

ly s

tati

c n

atu

re o

f fix

ed li

ne

con

nec

tio

ns

con

tin

ues

to

ref

lect

th

e sl

ow

mig

rati

on

of

fixed

vo

ice

serv

ices

to

mo

bile

in N

ew Z

eala

nd

, rel

ativ

e to

oth

er c

ou

ntr

ies.

With

the

stro

ng

gro

wth

in m

ob

ile s

mar

t d

evic

es, f

ixed

net

wo

rks

glo

bal

ly

are

incr

easi

ng

ly s

een

as

com

ple

men

tary

to

su

pp

ort

ing

th

e m

ob

ile

exp

erie

nce

. Th

e in

stal

lati

on

of

fibre

net

wo

rk in

new

su

bd

ivis

ion

s

is a

lso

pro

vid

ing

so

me

nat

ura

l co

nn

ecti

on

gro

wth

.

New

Zea

lan

d’s

bro

adb

and

mar

ket

con

tin

ues

to

gro

w s

tead

ily w

ith

Ch

oru

s ad

din

g a

bo

ut

64

,00

0 c

op

per

bro

adb

and

co

nn

ecti

on

s

in t

he

twel

ve m

on

ths.

In J

uly

20

13, t

he

OE

CD

rep

ort

ed t

hat

New

Zea

lan

d w

as t

he

thir

d f

aste

st g

row

ing

bro

adb

and

mar

ket

in t

he

OE

CD

fo

r th

e ye

ar t

o D

ecem

ber

20

12, w

ith

to

tal b

road

ban

d

con

nec

tio

ns

incr

easi

ng

3.1

% t

o 1

.28

mill

ion

. Bro

adb

and

pen

etra

tio

n

per

10

0 in

hab

itan

ts w

as 2

8.6

%, a

hea

d o

f b

oth

th

e O

EC

D a

vera

ge

(26

.3%

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d A

ust

ralia

(25.

2%

)1 . T

he

Co

mm

issi

on

est

imat

es t

hat

bro

adb

and

pen

etra

tio

n in

crea

sed

to

aro

un

d 7

8%

of

ho

use

ho

lds

wit

h a

fix

ed li

ne

con

nec

tio

n2. T

he

pro

po

rtio

n o

f C

ho

rus’

co

pp

er li

nes

also

tak

ing

a b

road

ban

d s

ervi

ce in

crea

sed

fro

m 6

0%

to

63

% d

uri

ng

the

per

iod

.

In a

dd

itio

n t

o t

he

sig

nifi

can

t ch

ang

e ar

isin

g f

rom

th

e G

ove

rnm

ent’s

UFB

po

licy

and

th

e se

par

atio

n o

f C

ho

rus’

op

en a

cces

s n

etw

ork

fro

m r

etai

l, th

ere

is o

ther

on

go

ing

ch

ang

e in

th

e in

du

stry

. Th

ere

are

chan

ges

in t

he

ow

ner

ship

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tiat

ion

to

en

d-u

sers

and

op

t fo

r h

igh

er b

and

wid

th c

apab

ility

fro

m C

ho

rus.

Th

ere

wer

e

also

ap

pro

xim

atel

y 78

,00

0 n

aked

En

han

ced

UB

A c

on

nec

tio

ns

at

30

Ju

ne

20

13. A

s n

ote

d e

arlie

r, th

e p

rici

ng

of

UB

A s

ervi

ces

is

curr

entl

y u

nd

er r

evie

w (s

ee t

he

com

pet

itio

n a

nd

reg

ula

tion

sec

tio

n).

In J

un

e 2

013

Ch

oru

s b

egan

off

erin

g V

DSL

at

a p

rice

alig

ned

wit

h

the

curr

ent

En

han

ced

UB

A w

ho

lesa

le p

rice

of

$2

1.4

6. V

DSL

had

pre

vio

usl

y b

een

off

ered

as

a p

rem

ium

ser

vice

wit

h c

om

mer

cial

pri

cin

g o

f $

40

.00

an

d u

pta

ke h

ad b

een

min

imal

. Th

e n

ew V

DSL

pro

du

ct is

exp

ecte

d t

o p

rovi

de

mo

re N

ew Z

eala

nd

ers

wit

h t

he

op

po

rtu

nit

y to

en

joy

hig

her

sp

eed

co

nn

ecti

on

s, a

nd

als

o m

ake

New

Zea

lan

d a

mo

re a

ttra

ctiv

e m

arke

t fo

r th

e d

evel

op

men

t an

d

dep

loym

ent

of

hig

h b

and

wid

th a

pp

licat

ion

s. F

aste

r co

pp

er-b

ased

tech

no

log

y fo

rms

an im

po

rtan

t st

epp

ing

sto

ne

to f

ibre

. Lik

e an

y

tech

no

log

y u

pg

rad

e, t

he

mo

ve t

o f

ibre

will

be

a lo

ng

ter

m t

ran

siti

on

and

VD

SL h

as a

n im

po

rtan

t ro

le in

th

e in

teri

m. T

he

nu

mb

er o

f V

DSL

con

nec

tio

ns

had

incr

ease

d t

o 4

,00

0 b

y 3

0 J

un

e 2

013

wit

h r

etai

l

serv

ice

pro

vid

ers

beg

inn

ing

to

mar

ket

it m

ore

wid

ely.

VD

SL u

tilis

es

exis

tin

g c

op

per

bas

ed c

apab

ility

an

d c

an p

rovi

de

do

wn

load

sp

eed

s o

f

abo

ut

20

-50

Mb

ps

and

up

load

sp

eed

s o

f u

p t

o 2

0M

bp

s, s

ub

ject

to

an

end

-use

r’s d

ista

nce

fro

m t

he

bro

adb

and

eq

uip

men

t an

d li

ne

cap

abili

ty.

Ch

oru

s al

so b

egan

off

erin

g a

Bas

eban

d IP

ser

vice

in A

pri

l 20

13

that

en

able

s re

tail

serv

ice

pro

vid

ers

to d

eliv

er a

Vo

ice

ove

r In

tern

et

Pro

toco

l (V

oIP

) ser

vice

ove

r co

pp

er a

s ei

ther

a s

tan

dal

on

e se

rvic

e,

or

in c

on

jun

ctio

n w

ith

bro

adb

and

. Bas

eban

d IP

is c

urr

entl

y av

aila

ble

acro

ss a

bo

ut

10%

of

Ch

oru

s’ li

nes

an

d is

ch

arg

ed a

t $

23.

52

per

mo

nth

. Wh

ile in

itia

l co

nn

ecti

on

nu

mb

ers

hav

e b

een

lim

ited

, Ch

oru

s

has

rec

eive

d p

osi

tive

inte

rest

fro

m r

etai

l ser

vice

pro

vid

ers

and

is

con

sid

erin

g t

he

bu

sin

ess

case

fo

r fu

ture

exp

ansi

on

of

the

Bas

eban

d

IP f

oo

tpri

nt.

Fib

re

Fib

re r

even

ues

are

ear

ned

fro

m C

ho

rus’

exi

stin

g b

usi

nes

s fib

re

pro

du

cts

(su

ch a

s H

SNS

Pre

miu

m) a

nd

new

UFB

res

iden

tial

an

d

bu

sin

ess

fibre

ser

vice

s. T

his

cat

ego

ry a

lso

cap

ture

s U

FB b

ackh

aul,

and

Dir

ect

Fib

re, w

hic

h is

th

e eq

uiv

alen

t o

f d

ark

fibre

an

d c

an a

lso

be

use

d t

o d

eliv

er b

ackh

aul c

on

nec

tio

ns

to m

ob

ile s

ites

.

Ab

ou

t 2

05,

50

0 e

nd

-use

rs w

ere

wit

hin

rea

ch o

f th

e U

FB n

etw

ork

at 3

0 J

un

e 2

013

. Res

iden

tial

UFB

up

take

has

bee

n c

on

stra

ined

to

dat

e b

y th

e lim

ited

nu

mb

er o

f re

tail

serv

ice

pro

vid

ers

in t

he

mar

ket

and

rel

ativ

ely

smal

l siz

e o

f co

vera

ge

area

. Tel

eco

m, N

ew Z

eala

nd

’s

larg

est

reta

il b

road

ban

d p

rovi

der

, beg

an o

ffer

ing

res

iden

tial

fib

re

serv

ices

in M

arch

20

13 a

nd

Vo

daf

on

e h

as s

aid

it a

lso

inte

nd

s to

beg

in o

ffer

ing

res

iden

tial

fib

re s

ervi

ces

late

r in

20

13. T

og

eth

er, t

hes

e

two

pro

vid

ers

rep

rese

nt

~8

0%

of

the

fixed

lin

e b

road

ban

d m

arke

t.

Ch

oru

s is

co

nti

nu

ing

to

fo

cus

on

ed

uca

tin

g r

etai

l ser

vice

pro

vid

ers

and

New

Zea

lan

der

s ab

ou

t th

e b

enef

its

of

fibre

, su

pp

ort

ing

fib

re

tria

ls, a

nd

rem

ovi

ng

bar

rier

s to

ban

dw

idth

gro

wth

.

Fib

re c

on

nec

tio

ns

gre

w s

ign

ifica

ntl

y d

uri

ng

th

e tw

elve

mo

nth

per

iod

,

incr

easi

ng

by

90

% t

o 1

9,0

00

lin

es. T

his

gro

wth

ref

lect

ed n

ew d

eman

d

linke

d t

o t

he

on

go

ing

exp

ansi

on

of

the

UFB

fo

otp

rin

t an

d c

on

tin

ued

dem

and

fo

r n

ew b

usi

nes

s an

d c

arri

er c

on

nec

tio

ns

via

Ch

oru

s’

exis

tin

g f

ibre

net

wo

rk, i

ncl

ud

ing

Ch

oru

s’ f

ibre

in a

reas

wh

ere

it is

no

t th

e U

FB n

etw

ork

bu

ilder

.

Ab

ou

t 4

4%

of

Ch

oru

s’ f

ibre

co

nn

ecti

on

s w

ere

pre

do

min

antl

y

resi

den

tial

Nex

t G

ener

atio

n A

cces

s en

d-u

sers

(wh

ich

incl

ud

es

UFB

Bit

stre

am 2

an

d 3

an

d e

du

cati

on

co

nn

ecti

on

s) o

r p

re-U

FB

fibre

su

bd

ivis

ion

en

d-u

sers

. Ch

oru

s h

ad a

pp

roxi

mat

ely

6,3

00

fib

re

con

nec

tio

ns

wit

hin

th

e ar

eas

wh

ere

it h

ad d

eplo

yed

UFB

co

mm

un

al

net

wo

rk a

t 3

0 J

un

e 2

013

. Th

is t

ota

l in

clu

des

a c

om

bin

atio

n o

f

resi

den

tial

UFB

co

nn

ecti

on

s an

d n

ew, o

r p

re-U

FB, b

usi

nes

s fib

re

con

nec

tio

ns

wit

hin

th

e ar

eas

wh

ere

Ch

oru

s’ U

FB n

etw

ork

was

bu

ilt.

Dir

ect

Fib

re A

cces

s g

rew

to

ab

ou

t 2

0%

of

tota

l fib

re c

on

nec

tio

ns

by

30

Ju

ne

20

13. B

and

wid

th F

ibre

an

d H

SNS

Pre

miu

m f

ibre

co

nn

ecti

on

s

(als

o r

efer

red

to

as

Bit

stre

am 4

un

der

th

e U

FB a

gre

emen

t) a

cco

un

ted

for

the

rem

ain

ing

36

% o

f to

tal f

ibre

co

nn

ecti

on

s. T

o d

ate,

dem

and

for

bu

sin

ess

fibre

co

nn

ecti

on

s h

as b

een

pre

do

min

antl

y fo

r h

igh

er

gra

de

HSN

S P

rem

ium

co

nn

ecti

on

s ra

ther

th

an B

itst

ream

3 b

usi

nes

s

serv

ices

. Th

is m

ay c

han

ge

ove

r ti

me

as t

he

UFB

net

wo

rk m

akes

Bit

stre

am 3

bu

sin

ess

serv

ices

mo

re w

idel

y av

aila

ble

.

Val

ue

add

ed n

etw

ork

ser

vice

s

Th

e m

ain

rev

enu

e d

rive

r fo

r th

is c

ateg

ory

is c

arri

er n

etw

ork

ser

vice

s,

wh

ich

pro

vid

e n

etw

ork

co

nn

ecti

vity

acr

oss

bac

khau

l lin

ks. T

he

nat

ure

of

thes

e se

rvic

es m

ean

s vo

lum

es a

nd

rev

enu

es in

th

is c

ateg

ory

wer

e

larg

ely

un

chan

ged

. Ch

ang

es p

erio

d o

n p

erio

d a

re la

rgel

y re

late

d t

o

tim

ing

diff

eren

ces

in in

voic

ing

, wh

ich

are

no

t ex

pec

ted

to

rec

ur.

Infr

astr

uct

ure

Infr

astr

uct

ure

rev

enu

e re

late

s to

ser

vice

s th

at p

rovi

de

acce

ss t

o

Ch

oru

s’ n

etw

ork

ass

ets,

incl

ud

ing

civ

il w

ork

s an

d t

elec

om

mu

nic

atio

ns

exch

ang

e sp

ace.

It a

lso

incl

ud

es c

o-l

oca

tio

n o

f eq

uip

men

t an

d

acce

ss t

o p

ole

s.

Ch

oru

s p

rovi

des

co

mm

erci

al a

cces

s to

its

exch

ang

es, p

ole

s

and

oth

er in

fras

tru

ctu

re. C

o-l

oca

tio

n r

even

ue

der

ives

fro

m r

etai

l

serv

ice

pro

vid

ers

and

oth

er n

etw

ork

op

erat

ors

inst

allin

g t

hei

r

equ

ipm

ent

in C

ho

rus

exch

ang

es, a

s w

ell a

s le

ased

co

mm

erci

al

spac

e in

exc

han

ge

bu

ildin

gs.

Infr

astr

uct

ure

rev

enu

e g

rew

mo

des

tly

ove

r th

e p

erio

d, a

fter

allo

win

g f

or

tran

sact

ion

typ

es t

hat

wer

e in

clu

ded

in t

he

per

iod

to 3

0 J

un

e 2

012

bu

t w

ere

trea

ted

as

a re

du

ctio

n in

exp

ense

s fo

r

the

curr

ent

per

iod

. Th

is g

row

th o

ccu

rred

pri

mar

ily a

s th

e re

sult

of

incr

ease

d d

eman

d f

or

com

mer

cial

co

-lo

cati

on

to

en

able

ret

ail

serv

ice

pro

vid

ers

to in

terc

on

nec

t w

ith

Ch

oru

s’ U

FB f

oo

tpri

nt.

Fiel

d s

ervi

ces

Th

is c

ateg

ory

incl

ud

es w

ork

per

form

ed b

y C

ho

rus’

ser

vice

co

mp

any

tech

nic

ian

s p

rovi

din

g n

ew s

ervi

ces,

ch

arg

eab

le c

able

loca

tio

n

serv

ices

, mai

nta

inin

g r

etai

l ser

vice

pro

vid

er n

etw

ork

s an

d r

elo

cati

ng

Ch

oru

s’ n

etw

ork

on

req

ues

t. A

s C

ho

rus

uti

lises

ser

vice

co

mp

anie

s

to p

erfo

rm t

he

field

ser

vice

s’ w

ork

, th

ere

is a

dir

ect

cost

ass

oci

ated

wit

h a

ll fie

ld s

ervi

ces

reve

nu

es.

Pro

visi

on

ing

rev

enu

es a

re g

ener

ally

bas

ed o

n o

rder

s fo

r te

chn

icia

ns

to in

stal

l ser

vice

s an

d a

re d

rive

n b

y th

e n

um

ber

an

d n

atu

re o

f o

rder

s,

and

th

e ty

pe

of

wo

rk r

equ

ired

.

Mai

nte

nan

ce r

even

ues

are

gen

erat

ed w

hen

fau

lts

are

pro

ven

to

be

on

th

e re

tail

serv

ice

pro

vid

er’s

, rat

her

th

an C

ho

rus’

, net

wo

rk a

nd

are

dri

ven

by

the

nu

mb

er o

f re

po

rted

fau

lts

and

pro

acti

ve m

ain

ten

ance

pro

gra

mm

es p

erfo

rmed

on

beh

alf

of

reta

il se

rvic

e p

rovi

der

s.

Th

ese

reve

nu

es a

lso

incl

ud

e co

sts

reco

vere

d f

or

dam

age

to C

ho

rus’

net

wo

rk b

y th

ird

par

ties

.

Rev

enu

e in

th

is c

ateg

ory

is d

epen

den

t o

n t

hir

d p

arty

dem

and

or

dam

ages

to

a t

hird

par

ty’s

net

wo

rk. T

he

net

wo

rk m

ain

ten

ance

exp

ense

is d

iscu

ssed

in t

he

exp

end

iture

co

mm

enta

ry a

nd

has

a d

irec

t im

pac

t

on

th

e re

ven

ues

bill

ed t

o r

eco

ver

cost

s in

curr

ed. I

t is

th

eref

ore

diff

icu

lt t

o e

stab

lish

sp

ecifi

c tr

end

s in

th

is r

even

ue

cate

go

ry.

Oth

er

Th

is c

ateg

ory

incl

ud

es r

even

ues

fro

m t

he

resa

le o

f Te

leco

m’s

Inte

gra

ted

Ser

vice

s D

igit

al N

etw

ork

an

d v

oic

e re

late

d s

ervi

ces,

as w

ell a

s o

ne-

off

typ

e re

ven

ue

item

s. A

pp

roxi

mat

ely

$1

mill

ion

(30

Ju

ne

20

12: $

11 m

illio

n) w

as r

ecei

ved

fo

r C

hri

stch

urc

h e

arth

qu

ake

rela

ted

insu

ran

ce p

roce

eds.

3

For

bill

ing

pu

rpo

ses,

th

is t

ota

l in

clu

de

s in

stan

ce

s w

he

re U

CLF

S is

so

ld w

ith

UB

A c

on

ne

cti

on

s. A

lth

ou

gh

th

e U

CLF

S St

and

ard

Te

rms

De

term

inat

ion

c

on

tem

pla

tes

suc

h c

on

ne

cti

on

s as

nak

ed

UB

A c

on

ne

cti

on

s, t

he

pri

ce

ou

tco

me

is t

he

sam

e a

s if

th

ese

co

nn

ec

tio

ns

we

re b

ille

d f

or

nak

ed

UB

A a

nd

ze

ro f

or

UC

LFS/

Bas

eb

and

.

Rev

enu

e co

mm

enta

ry (c

on

t.)

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts10

* T

he

SLU

/SLE

S ac

ce

ss li

ne

cat

eg

ory

has

be

en

ad

just

ed

do

wn

by

abo

ut

7,0

00

c

on

ne

cti

on

s fo

r th

e c

urr

en

t p

eri

od

to

co

rre

ct

a d

ou

ble

co

un

tin

g o

f lin

es

that

o

cc

urr

ed

in p

rio

r p

eri

od

s.

^ A

pp

roxi

mat

ely

7,0

00

HS

NS

co

nn

ec

tio

ns

ove

r c

op

pe

r w

ere

om

itte

d in

err

or

fr

om

th

e ‘

dat

a se

rvic

es

ove

r c

op

pe

r’ c

ate

go

ry in

th

e 3

0 J

un

e 2

012

to

tal f

or

fi

xed

lin

e c

on

ne

cti

on

s.

A f

ibre

cat

ego

ry h

as b

een

intr

od

uce

d in

to t

he

bro

adb

and

co

nn

ectio

ns

sum

mar

y to

rep

rese

nt

tho

se f

ibre

co

nn

ecti

on

s th

at d

eliv

er t

he

equ

ival

ent

of

a la

yer

2 b

road

ban

d c

on

nec

tio

n. T

his

cat

ego

ry in

clu

des

Bit

stre

am 2

an

d 3

ser

vice

s o

n t

he

UFB

net

wo

rk a

s w

ell a

s su

bd

ivis

ion

s

con

nec

ted

via

Ch

oru

s’ n

on

-UFB

fib

re n

etw

ork

.

No

te:

Th

ere

may

be

fu

rth

er

adju

stm

en

ts b

etw

ee

n t

he

‘Bas

eb

and

Co

pp

er’

an

d

‘dat

a se

rvic

es

ove

r c

op

pe

r’ c

ate

go

rie

s in

fu

ture

as

Ch

oru

s c

on

tin

ue

s to

re

vie

w

the

cla

ssif

icat

ion

of

som

e le

gac

y c

on

ne

cti

on

s.

Ch

oru

s su

mm

ary

con

nec

tio

n f

acts

30

JU

NE

20

13C

ON

NE

CT

ION

S3

1 D

EC

20

12C

ON

NE

CT

ION

S3

0 J

UN

E 2

012

CO

NN

EC

TIO

NS

Tota

l fix

ed

lin

e co

nn

ec

tio

ns

1,78

4,0

00

1,79

3,0

00

1,77

6,0

00

Bas

eb

and

Co

pp

er

1,52

1,0

00

1,55

9,0

00

1,58

5,0

00

UC

LL12

2,0

00

109

,00

09

7,0

00

SLU

/SLE

S6

,00

0*

16,0

00

19,0

00

Nak

ed

Bas

ic /

En

han

ced

UB

A /

nak

ed

VD

SL

91,

00

072

,00

050

,00

0

Dat

a se

rvic

es

ove

r co

pp

er

25

,00

02

2,0

00

^15

,00

0

Fib

re19

,00

015

,00

010

,00

0

Tota

l Bro

adb

and

1,11

2,0

00

1,0

76,0

00

1,0

40

,00

0

Bas

ic U

BA

(w

ith

an

alo

gu

e v

oic

e s

erv

ice

)33

1,0

00

474

,00

06

19,0

00

Nak

ed

Bas

ic U

BA

11,0

00

9,5

00

11,0

00

En

han

ced

UB

A (

wit

h a

nal

og

ue

vo

ice

se

rvic

e)

68

0,0

00

530

,00

03

71,0

00

Nak

ed

En

han

ced

UB

A78

,00

06

0,5

00

39,0

00

VD

SL

2,0

00

NM

NM

Nak

ed

VD

SL

2,0

00

2,0

00

NM

Fib

re8

,00

0N

MN

M

Rev

enu

e co

mm

enta

ry (c

on

t.)

Exp

end

iture

co

mm

enta

ry

Op

erat

ing

exp

ense

s

20

13(1

2 M

ON

TH

S) $M

20

12(7

MO

NT

HS) $M

Lab

ou

r co

sts

67

31

Pro

visi

on

ing

512

3

Ne

two

rk m

ain

ten

ance

100

52

Oth

er

ne

two

rk c

ost

s3

72

2

Info

rmat

ion

te

ch

no

log

y co

sts

5230

Re

nt

and

rat

es

126

Pro

pe

rty

mai

nte

nan

ce12

8

Ele

ctr

icit

y13

11

Insu

ran

ce4

3

Co

nsu

ltan

ts6

5

Oth

er

40

23

Tota

l op

era

tin

g e

xpe

nse

s39

421

4

Op

erat

ing

exp

end

itu

re h

as in

crea

sed

by

7.4

% r

elat

ive

to a

nn

ual

ised

20

12 r

esu

lts

(see

no

rmal

ised

an

nu

alis

ed r

esu

lts

on

pag

e 12

),

refl

ecti

ng

on

go

ing

gro

wth

in t

he

lab

ou

r fo

rce,

incr

ease

d p

rovi

sio

nin

g

acti

vity

an

d g

reat

er n

etw

ork

mai

nte

nan

ce c

ost

s. A

reas

of

sig

nifi

can

t

chan

ge

incl

ud

e:

Lab

ou

r co

sts

of

$6

7 m

illio

n f

or

the

per

iod

rep

rese

nt

staf

f co

sts

that

are

no

t ca

pit

alis

ed. A

t 3

0 J

un

e 2

013

Ch

oru

s h

ad 7

63

per

man

ent

and

fix

ed t

erm

em

plo

yees

. Th

is w

as u

p f

rom

54

8 e

mp

loye

es a

t

30

Ju

ne

20

12 a

nd

incl

ud

es a

bo

ut

90

cu

sto

mer

ser

vice

s em

plo

yees

tran

siti

on

ed f

rom

Tel

eco

m in

late

Oct

ob

er. A

dd

itio

nal

peo

ple

hav

e

bee

n e

mp

loye

d t

o s

up

po

rt c

riti

cal p

rog

ram

mes

, su

ch a

s th

e U

FB

rollo

ut

and

IT s

yste

ms

tran

siti

on

(see

als

o IT

co

mm

enta

ry in

th

e

cap

ital e

xpen

ditu

re s

ecti

on

), an

d g

row

ing

leve

ls o

f o

per

atio

nal

acti

vity

, su

ch a

s co

mp

lex

pro

visi

on

ing

an

d f

ibre

pro

visi

on

ing

wo

rk.

It is

exp

ecte

d t

hat

fu

rth

er IT

sta

ff w

ill b

e re

qu

ired

to

su

pp

ort

th

e

syst

ems

tran

siti

on

ove

r th

e co

min

g t

wel

ve m

on

ths,

wit

h t

he

maj

ori

ty

of

cost

s re

lati

ng

to

th

ese

add

itio

nal

peo

ple

bei

ng

cap

ital

ised

.

Pro

visi

on

ing

co

sts

are

incu

rred

wh

ere

Ch

oru

s p

rovi

des

new

or

chan

ged

ser

vice

to

ret

ail s

ervi

ce p

rovi

der

s. T

he

tota

l pro

visi

on

ing

cost

is d

rive

n b

y th

e vo

lum

e o

f o

rder

s, t

he

typ

e o

f w

ork

req

uir

ed t

o

fulf

il th

em, t

ech

nic

ian

lab

ou

r, m

ater

ial a

nd

ove

rhea

d c

ost

s. W

hile

th

e

volu

me

of

pro

visi

on

ing

tru

ck r

olls

has

dec

reas

ed p

erio

d o

n p

erio

d,

ove

rall

cost

s h

ave

incr

ease

d d

ue

to a

Co

nsu

mer

Pri

ce In

dex

(CP

I)

pri

ce in

crea

se a

nd

ch

ang

e in

th

e m

ix o

f p

rod

uct

s b

ein

g p

urc

has

ed.

As

a p

rop

ort

ion

of

pro

visi

on

ing

co

sts

are

reco

vere

d f

rom

ret

ail

serv

ice

pro

vid

ers,

fie

ld s

ervi

ces

reve

nu

e h

as in

crea

sed

as

wel

l.

Net

wo

rk m

ain

ten

ance

co

sts

rela

te t

o f

ixin

g n

etw

ork

fau

lts

and

an

y

op

erat

ion

al e

xpen

dit

ure

ari

sin

g f

rom

th

e p

roac

tive

mai

nte

nan

ce

pro

gra

mm

e. W

her

e fa

ult

s ar

e o

n a

ret

ail s

ervi

ce p

rovi

der

’s n

etw

ork

(rat

her

th

an t

he

Ch

oru

s n

etw

ork

), C

ho

rus

char

ges

th

e re

tail

serv

ice

pro

vid

er f

or

this

ser

vice

. Net

wo

rk m

ain

ten

ance

co

sts

are

dri

ven

by

the

nu

mb

er o

f re

tail

serv

ice

pro

vid

er r

epo

rted

fau

lts,

th

e ty

pe

of

wo

rk r

equ

ired

to

fix

th

e fa

ult

s an

d t

he

exte

nt

of

Ch

oru

s’ p

roac

tive

mai

nte

nan

ce p

rog

ram

me.

On

e o

f th

e ke

y d

rive

rs f

or

rep

ort

ed f

ault

s is

th

e w

eath

er. D

uri

ng

th

e

year

en

ded

30

Ju

ne

20

13, s

ever

e w

eath

er e

ven

ts in

Au

gu

st 2

012

an

d

May

20

13 r

esu

lted

in a

n in

crea

sed

am

ou

nt

of

mai

nte

nan

ce r

equ

ired

on

th

e n

etw

ork

. Ab

ou

t 74

% o

f th

e m

ain

ten

ance

wo

rk w

as o

n t

he

Ch

oru

s n

etw

ork

an

d t

his

was

no

t re

cove

rab

le (c

om

par

ed t

o 7

1% o

n

the

Ch

oru

s n

etw

ork

in t

he

per

iod

to

30

Ju

ne

20

12).

Th

e le

vel,

typ

e

and

co

st o

f fa

ult

s is

aff

ecte

d b

y fa

cto

rs s

uch

as

rain

fall,

lig

htn

ing

,

net

wo

rk d

egra

dat

ion

, lab

ou

r co

sts,

mat

eria

l co

sts

and

net

wo

rk g

row

th.

Ch

oru

s n

etw

ork

fau

lts

are

typ

ical

ly m

ore

exp

ensi

ve t

han

ret

ail s

ervi

ce

pro

vid

er n

etw

ork

fau

lts

bec

ause

th

ey c

an s

pan

mu

ltip

le e

nd

-use

rs,

req

uir

e re

sto

rati

on

of

mo

re c

om

ple

x n

etw

ork

ele

men

ts a

nd

invo

lve

rein

stat

emen

t. In

ad

dit

ion

, th

e n

etw

ork

mai

nte

nan

ce c

har

ges

fro

m

serv

ice

com

pan

ies

incr

ease

d in

lin

e w

ith

CP

I du

rin

g t

he

per

iod

.

Bo

th p

rovi

sio

nin

g a

nd

net

wo

rk m

ain

ten

ance

co

sts

con

tain

an

elem

ent

of

serv

ice

com

pan

y o

verh

ead

. In

th

e ye

ar t

o 3

0 J

un

e 2

013

this

has

bee

n a

cco

un

ted

fo

r o

n a

str

aig

ht

line

bas

is. I

n t

he

pre

vio

us

per

iod

th

ey w

ere

acco

un

ted

fo

r o

n a

n a

ctiv

ity

bas

is.

Oth

er n

etw

ork

co

sts

rela

te t

o c

ost

s as

soci

ated

wit

h s

ervi

ce p

artn

er

con

trac

t co

sts,

en

gin

eeri

ng

ser

vice

s an

d t

he

cost

of

net

wo

rk s

par

es.

Info

rmat

ion

tec

hn

olo

gy

cost

s o

f $

52

mill

ion

rep

rese

nt

the

cost

s p

aid

dir

ectl

y b

y C

ho

rus

to t

hir

d p

arty

ven

do

rs, a

s w

ell a

s th

e o

per

atin

g

exp

end

itu

re c

om

po

nen

t o

f sy

stem

s cu

rren

tly

shar

ed w

ith

Tel

eco

m.

Ch

oru

s M

anag

em

en

t C

om

me

nta

ry

11

Du

rin

g t

he

year

en

ded

30

Ju

ne

20

13 C

ho

rus

star

ted

a n

um

ber

of

pro

ject

s to

en

able

mig

rati

on

fro

m T

elec

om

sys

tem

s. T

his

res

ult

ed

in a

sm

all a

mo

un

t o

f in

crea

sed

sp

end

bec

ause

Ch

oru

s is

est

ablis

hin

g

syst

ems

wh

ich

are

sti

ll p

aid

fo

r in

th

e Tr

ansi

tio

nal

Ser

vice

s A

gre

emen

t.

Ren

t an

d r

ates

, pro

per

ty m

ain

ten

ance

, ele

ctri

city

an

d in

sura

nce

cost

s re

late

to

th

e o

per

atio

n o

f C

ho

rus’

net

wo

rk e

stat

e (f

or

exam

ple

,

exch

ang

es, r

adio

sit

es a

nd

ro

adsi

de

cab

inet

s). T

he

pri

nci

pal

co

st is

elec

tric

ity,

use

d t

o o

per

ate

the

net

wo

rk e

lect

ron

ics,

an

d t

his

is

dep

end

ent

on

th

e n

um

ber

of

site

s, e

lect

rici

ty c

on

sum

pti

on

an

d

elec

tric

ity

pri

ces.

Ele

ctri

city

co

sts

wer

e d

ow

n c

om

par

ed t

o t

he

pre

vio

us

per

iod

larg

ely

du

e to

low

er n

atio

nal

ele

ctri

city

pri

ces.

In a

dd

itio

n t

o t

his

,

con

sum

pti

on

is lo

wer

th

an t

he

pre

vio

us

per

iod

as

a n

um

ber

of

ener

gy

savi

ng

init

iati

ves

hav

e re

du

ced

en

erg

y u

sag

e. C

ho

rus

hed

ges

its

elec

tric

ity

usa

ge

to m

inim

ise

vola

tilit

y in

ele

ctri

city

sp

ot

pri

ces.

Ab

ou

t 5

0%

of

Ch

oru

s’ r

equ

irem

ents

hav

e b

een

hed

ged

wit

h a

ro

llin

g

thre

e ye

ar h

ori

zon

.

Co

nsu

ltan

t co

sts

for

the

seve

n m

on

ths

to 3

0 J

un

e 2

012

was

sig

nifi

can

t as

a r

esu

lt o

f d

emer

ger

an

d t

he

wo

rk r

equ

ired

to

esta

blis

h C

ho

rus

as a

sta

nd

alo

ne

bu

sin

ess.

Th

ese

cost

s ar

e n

o

lon

ger

bei

ng

incu

rred

bu

t a

sig

nifi

can

t am

ou

nt

of

con

sult

ant

spen

d

was

req

uir

ed in

th

e ye

ar t

o 3

0 J

un

e 2

013

to

su

pp

ort

mu

ltip

le

stre

ams

of

reg

ula

tory

wo

rk.

‘Oth

er’ i

ncl

ud

es e

xpen

dit

ure

incu

rred

by

Ch

oru

s fo

r sh

ared

ser

vice

s

pro

vid

ed b

y Te

leco

m, t

og

eth

er w

ith

gen

eral

co

sts

such

as

adve

rtis

ing

,

trav

el, t

rain

ing

an

d le

gal

fee

s.

Dep

reci

atio

n a

nd

am

ort

isat

ion

20

13(1

2 M

ON

TH

S) $M

20

12(7

MO

NT

HS) $M

EST

IMA

TE

D

USE

FUL

LIFE

(YE

AR

S)

WE

IGH

TE

DA

VE

RA

GE

U

SEFU

L LI

FE(Y

EA

RS)

De

pre

ciat

ion

:

Co

pp

er

cab

les

66

41

10 -

30

22

Fib

re c

able

s29

1320

20

Du

cts

an

d m

anh

ole

s16

750

50

Cab

ine

ts33

155

- 14

10

Pro

pe

rty

148

5 -

5016

Ne

two

rk e

lec

tro

nic

s9

56

22

- 14

8

Oth

er

95

2 -

156

Less

: C

row

n f

un

din

g(4

)(1

)

Tota

l de

pre

ciat

ion

258

150

Am

ort

isat

ion

:

So

ftw

are

6

039

2 –

85

Oth

er

inta

ng

ible

s1

-6

- 2

020

Tota

l am

ort

isat

ion

61

39

Th

e w

eig

hte

d a

vera

ge

use

ful l

ife r

epre

sen

ts t

he

use

ful l

ife in

eac

h

cate

go

ry w

eig

hte

d b

y th

e n

et b

oo

k va

lue

of

the

asse

ts.

Du

rin

g t

he

year

en

ded

30

Ju

ne

20

13 $

672

mill

ion

of

net

wo

rk

asse

ts w

as c

apit

alis

ed. T

he

‘UFB

co

mm

un

al a

nd

UFB

co

nn

ecti

on

s

and

fib

re la

yer

2’ i

ncl

ud

ed in

‘fib

re’ c

apit

al e

xpen

dit

ure

was

larg

ely

cap

ital

ised

ag

ain

st t

he

net

wo

rk a

sset

s ca

teg

ori

es o

f fib

re c

able

s (3

5%

)

and

du

cts

and

man

ho

les

(56

%).

Th

e av

erag

e d

epre

ciat

ion

rat

e fo

r

UFB

co

mm

un

al in

fras

tru

ctu

re s

pen

d is

cu

rren

tly

37

year

s, r

efle

ctin

g

the

very

hig

h p

rop

ort

ion

of

lon

g li

fe a

sset

s b

ein

g c

on

stru

cted

(wit

h

du

cts

and

man

ho

les

hav

ing

a d

epre

ciat

ion

rat

e o

f 5

0 y

ears

).

Th

e d

epre

ciat

ion

pro

file

is e

xpec

ted

to

ch

ang

e, r

efle

ctin

g t

he

gre

ater

mix

of

lon

ger

dat

ed a

sset

s as

th

e U

FB a

nd

RB

I ro

llou

ts p

rog

ress

.

Th

e C

row

n f

un

din

g r

elea

se a

gai

nst

dep

reci

atio

n is

als

o e

xpec

ted

to

incr

ease

ove

r ti

me

as a

dd

itio

nal

cal

l no

tice

s ar

e is

sued

an

d f

un

din

g

is r

ecei

ved

fro

m t

he

Cro

wn

, wit

h t

he

asso

ciat

ed a

mo

rtis

atio

n t

o

dep

reci

atio

n in

crea

sin

g a

cco

rdin

gly

.

Soft

war

e a

nd

oth

er

inta

ng

ible

s la

rge

ly c

on

sist

of

the

so

ftw

are

com

po

nen

ts o

f bill

ing

, pro

visi

on

ing

an

d o

per

atio

nal

sys

tem

s (in

clu

din

g

Ch

oru

s sp

end

on

Tel

eco

m o

wn

ed s

yste

ms)

. A t

ota

l $4

2 m

illio

n o

f

cap

ital

exp

end

itu

re w

as s

pen

t o

n s

oft

war

e an

d o

ther

inta

ng

ible

s

du

rin

g t

he

year

, wh

ich

will

be

amo

rtis

ed o

ver

an a

vera

ge

of

five

year

s.

Net

fin

ance

exp

ense

20

13(1

2 M

ON

TH

S) $M

20

12(7

MO

NT

HS) $M

Fin

ance

inco

me

(7)

(4)

Fin

ance

exp

en

se

Inte

rest

on

syn

dic

ate

d b

ank

fac

ility

5832

Inte

rest

on

EM

TN

46

27

Oth

er

inte

rest

exp

en

se16

16

Cap

ital

ise

d in

tere

st(6

)(3

)

Tota

l fin

ance

exp

en

ses

exc

lud

ing

Cro

wn

fu

nd

ing

114

72

CFH

se

cu

riti

es

(no

tio

nal

inte

rest

) 1

-

Tota

l fin

ance

exp

en

se11

572

At

a m

inim

um

, Ch

oru

s ai

ms

to m

ain

tain

50

per

cen

t o

f it

s d

ebt

ob

ligat

ion

s at

a f

ixed

rat

e o

f in

tere

st. I

t h

as f

ully

hed

ged

th

e fo

reig

n

exch

ang

e ex

po

sure

on

th

e E

uro

Med

ium

Ter

m N

ote

(EM

TN

) wit

h

cro

ss c

urr

ency

inte

rest

rat

e sw

aps.

Th

e fl

oat

ing

inte

rest

on

th

ese

der

ivat

ives

has

bee

n h

edg

ed u

sin

g in

tere

st r

ate

swap

inst

rum

ents

.

Th

e ex

po

sure

to

flo

atin

g r

ate

inte

rest

on

th

e sy

nd

icat

ed b

ank

faci

lity

has

bee

n r

edu

ced

usi

ng

inte

rest

rat

e sw

aps.

As

at 3

0 J

un

e 2

013

, ap

pro

xim

atel

y 6

6%

(30

Ju

ne

20

12: 7

0%

)

of

the

ou

tsta

nd

ing

deb

t o

blig

atio

n w

as f

ixed

th

rou

gh

der

ivat

ive

or

fixed

rat

e d

ebt

arra

ng

emen

ts.

Oth

er in

tere

st e

xpen

se in

clu

des

fin

ance

leas

e in

tere

st o

f $

13 m

illio

n

(30

Ju

ne

20

12: $

9 m

illio

n) a

nd

$2

mill

ion

inte

rest

in r

elat

ion

to

sh

ared

and

net

wo

rk s

yste

ms.

In t

he

per

iod

en

din

g 3

0 J

un

e 2

012

th

ere

was

a n

on

-cas

h c

har

ge

of

$7

mill

ion

. Th

e n

on

-cas

h c

har

ge

refl

ects

the

mar

k to

mar

ket

imp

act

of

the

un

hed

ged

deb

t p

osi

tio

n f

rom

1 D

ecem

ber

20

11 t

o 1

4 F

ebru

ary

20

12, w

hen

th

e d

ebt

was

en

tere

d

into

a h

edg

e re

lati

on

ship

. At

14 F

ebru

ary

20

12, w

hen

th

e h

edg

ed

rela

tio

nsh

ip w

as in

itia

ted

, EM

TN

rel

ated

hed

ges

had

a f

air

valu

e o

f

$70

mill

ion

. Wh

ile t

he

hed

ge

rem

ain

s ef

fect

ive

any

futu

re g

ain

s o

r

loss

es w

ill b

e p

roce

ssed

th

rou

gh

th

e h

edg

e re

serv

e, h

ow

ever

th

e

$70

mill

ion

will

flo

w a

s in

effe

ctiv

enes

s to

inte

rest

exp

ense

in t

he

inco

me

stat

emen

t at

so

me

tim

e o

ver

the

life

of

the

der

ivat

ives

.

It w

ill b

e a

no

n-c

ash

ch

arg

e. N

eith

er t

he

dire

ctio

n, n

or

the

rate

of

the

imp

act

on

th

e in

com

e st

atem

ent

can

be

pre

dic

ted

. Fo

r th

e cu

rren

t

finan

cial

yea

r th

ere

has

bee

n n

o in

effe

ctiv

enes

s an

d t

her

efo

re n

o

imp

act

on

th

e in

com

e st

atem

ent

(30

Ju

ne

20

12: n

o in

effe

ctiv

enes

s).

Taxa

tio

n

Th

e 2

013

eff

ecti

ve t

ax r

ate

of

28

% e

qu

ates

to

th

e st

atu

tory

rat

e

of

28

%. T

her

e ar

e n

o m

ater

ial d

iffer

ence

s b

etw

een

net

ear

nin

gs

bef

ore

inco

me

tax

and

wh

at is

, or

will

be,

tax

able

fo

r th

e p

erio

d

to 3

0 J

un

e 2

013

.

Exp

end

iture

co

mm

enta

ry (c

on

t.)

Ch

oru

s M

anag

em

en

t C

om

me

nta

ry12

No

rmal

ised

an

nu

alis

ed r

esu

lts

Ind

icat

ive

com

par

iso

n o

f n

orm

alis

ed, a

nn

ual

ised

fu

ll

year

res

ult

s

Th

is s

ecti

on

pro

vid

es a

hig

h le

vel t

ren

d a

nal

ysis

of

the

no

rmal

ised

,

ann

ual

ised

fu

ll ye

ar r

esu

lts.

Th

e co

mm

enta

ry in

clu

ded

her

e is

fo

r

info

rmat

ion

pu

rpo

ses

on

ly. T

hes

e re

sult

s h

ave

no

t b

een

au

dit

ed.

Sum

mar

y

NO

RM

ALI

SED

FY

13

$M

NO

RM

ALI

SED

A

NN

UA

LISE

D

FY12

$

M%

Op

erat

ing

rev

enu

e1,

04

81,

013

3.5

Op

era

tin

g e

xpe

nse

s(3

94

)(3

67)

7.4

EB

ITD

A6

54

64

61.

2

Th

e ta

ble

ab

ove

sh

ow

s co

mp

arab

le u

nd

erly

ing

res

ult

s fo

r n

orm

alis

ed

FY13

wh

en c

om

par

ed t

o n

orm

alis

ed, a

nn

ual

ised

FY

12. T

he

det

ails

of

the

no

rmal

isat

ion

s an

d a

dju

stm

ents

will

be

dis

cuss

ed in

fu

rth

er d

etai

l

late

r in

th

is s

ecti

on

.

No

rmal

ised

FY

13 h

as s

ho

wn

go

od

rev

enu

e g

row

th a

nd

wh

ile

exp

ense

s h

ave

incr

ease

d t

her

e h

as s

till

bee

n s

olid

EB

ITD

A g

row

th

bet

wee

n t

he

two

per

iod

s.

Op

erat

ing

rev

enu

e

NO

RM

ALI

SED

FY

13

$M

NO

RM

ALI

SED

A

NN

UA

LISE

D

FY12

$

M%

Bas

ic c

op

pe

r6

23

66

5(6

.3)

En

han

ced

co

pp

er

215

152

41.

4

Fib

re6

04

82

5.0

Val

ue

ad

de

d n

etw

ork

se

rvic

es

37

3119

.4

Infr

astr

uc

ture

1724

(29

.2)

Fie

ld s

erv

ice

s8

58

14

.9

Oth

er

1112

(8.3

)

Tota

l op

era

tin

g r

eve

nu

e1,

04

81,

013

3.5

Th

e d

eclin

e in

bas

ic c

op

per

rev

enu

es is

slig

htl

y lo

wer

wh

en t

he

imp

act

of

the

UC

LFS

pri

ce c

han

ge

is e

xclu

ded

. Th

ere

has

bee

n

con

tinu

ed m

igra

tion

fro

m b

asic

co

pp

er t

o e

nh

ance

d c

op

per

, bu

t th

e

tota

l co

mb

ined

rev

enu

e fo

r th

ese

two

rev

enu

e st

ream

s h

as g

row

n

by

$2

0 m

illio

n (o

r 2

.6%

) ove

r th

e p

erio

d. T

his

ref

lect

s th

e o

ng

oin

g

incr

ease

in b

road

ban

d c

on

nec

tio

ns.

All

oth

er r

even

ue

cate

go

ries

are

un

chan

ged

, so

no

ad

dit

ion

al

com

men

tary

is r

equ

ired

.

Adjustmen

tsandnorm

alisationsoftheresu

lts

Bo

th t

he

curr

ent

and

pri

or

per

iod

res

ult

s co

nta

in a

nu

mb

er o

f

bal

ance

s th

at d

o n

ot

mak

e th

em d

irec

tly

com

par

able

in is

ola

tio

n.

Th

ese

bal

ance

s h

ave

bee

n r

emo

ved

fro

m t

he

bal

ance

s d

escr

ibed

abo

ve s

o t

hat

a m

ore

dir

ect

com

par

iso

n c

ou

ld b

e m

ade.

Th

e ad

just

men

ts m

ade

to t

he

bal

ance

s ar

e d

iscu

ssed

bel

ow

.

FY13

no

rmal

isat

ion

20

13

(12

MO

NT

HS) $M

LESS

: IN

SUR

AN

CE

P

RO

CE

ED

S $

M

LESS

: U

CLF

S $

M

NO

RM

ALI

SED

FY

13

$M

Op

era

tin

g r

eve

nu

e1,

057

(1)

(8)

1,0

48

Op

era

tin

g e

xpe

nse

s(3

94

)-

-(3

94

)

EB

ITD

A6

63

(1)

(8)

65

4

Incl

ud

ed in

th

e FY

13 is

$1

mill

ion

of

insu

ran

ce p

roce

eds

rece

ived

in

the

seco

nd

hal

f o

f th

e ye

ar. A

lso

ad

just

ed is

th

e im

pac

t o

f th

e ch

ang

e

in p

rice

on

UC

LFS

for

the

first

fiv

e m

on

ths

of

the

per

iod

(eff

ecti

vely

chan

gin

g t

he

pri

ce o

f U

CLF

S fo

r th

e w

ho

le y

ear

rath

er t

han

fro

m

1 D

ecem

ber

20

12).

FY12

no

rmal

ised

an

d a

nn

ual

ised

20

12

(7 M

ON

TH

S) $M

LESS

: IN

SUR

AN

CE

P

RO

CE

ED

S $

M

LESS

: U

CLF

S $

M

NO

RM

ALI

SED

2

012

$

M

NO

RM

ALI

SED

A

NN

UA

LISE

D

FY12

$

M

Op

era

tin

g r

eve

nu

e6

13(1

1)(1

1)59

11,

013

Op

era

tin

g e

xpe

nse

s(2

14)

--

(214

)(3

67)

EB

ITD

A39

9(1

1)(1

1)37

76

46

Th

e se

ven

mo

nth

res

ult

s fo

r 2

012

co

nta

in $

11 m

illio

n in

sura

nce

pro

ceed

s re

lati

ng

to

th

e C

ante

rbu

ry e

arth

qu

akes

. Th

ese

are

on

e-o

ff

in n

atu

re a

nd

no

t ex

pec

ted

to

rec

ur.

Als

o e

xclu

ded

is t

he

imp

act

of

the

red

uct

ion

in p

rice

of

UC

LFS,

wit

h t

he

resu

ltin

g n

um

ber

th

en

ann

ual

ised

to

pro

vid

e a

twel

ve m

on

th p

erio

d.

Ch

oru

s M

anag

em

en

t C

om

me

nta

ry

13

Cap

ital e

xpen

ditu

re c

om

men

tary

20

13(1

2 M

ON

TH

S) $M

20

12(7

MO

NT

HS) $M

Fib

re57

927

4

Co

pp

er

69

49

Co

mm

on

33

23

Gro

ss c

apit

al e

xpe

nd

itu

re6

81

34

6

Ch

oru

s re

po

rts

cap

ital

exp

end

itu

re in

th

ree

cate

go

ries

ref

lect

ing

its

core

net

wo

rk a

sset

an

d b

uild

pro

gra

mm

es.

•‘Fibre’includesspen

dspec

ifica

llyfocu

sedonfibreassets

(laye

r 0

an

d la

yer

1 U

FB n

etw

ork

ass

ets)

to

su

pp

ort

th

e fib

re

net

wo

rk (I

T d

eliv

erin

g fi

bre

pro

du

cts)

an

d p

rog

ram

mes

larg

ely

focu

sed

on

fib

re (U

FB a

nd

RB

I).

•‘Copper’includesspen

doncopperrelated

networkassetsan

d

sup

po

rtin

g c

apab

ility

(su

ch a

s la

yer

2 e

lect

ron

ics)

.

•‘Common’includesaran

geofspen

dunrelatedtonetwork

asse

t cl

asse

s, s

uch

as

Ch

oru

s’ e

nte

rpri

se s

yste

ms,

bu

ildin

gs

and

offi

ce e

qu

ipm

ent.

Gro

ss c

apit

al e

xpen

dit

ure

fo

r th

e tw

elve

mo

nth

s to

30

Ju

ne

20

13

was

$6

81

mill

ion

, wh

ich

is c

on

sist

ent

wit

h t

he

mid

po

int

of

the

gu

idan

ce r

ang

e p

rovi

ded

in F

ebru

ary

afte

r ad

just

ing

fo

r an

ad

dit

ion

al

$14

mill

ion

of

year

3 U

FB b

uild

init

iate

d in

th

is f

inan

cial

yea

r (a

nd

reco

gn

ised

in w

ork

in p

rog

ress

).

Fib

re c

apit

al e

xpen

dit

ure

20

13(1

2 M

ON

TH

S) $M

20

12(7

MO

NT

HS) $M

UFB

co

mm

un

al36

216

2

UFB

co

nn

ec

tio

ns

and

fib

re la

yer

231

13

Fib

re p

rod

uc

ts a

nd

sys

tem

s27

7

Oth

er

fib

re c

on

ne

cti

on

s an

d g

row

th53

33

RB

I10

659

Tota

l fib

re c

apit

al e

xpe

nd

itu

re57

927

4

Fib

re c

apit

al e

xpen

dit

ure

rep

rese

nts

ab

ou

t 8

5%

of

Ch

oru

s’ g

ross

cap

ital

exp

end

itu

re s

pen

d, m

ain

ly f

or

the

UFB

an

d R

BI p

rog

ram

mes

.

Sig

nifi

can

t p

rog

ress

was

mad

e in

co

nti

nu

ing

to

ram

p u

p t

he

pac

e

of

the

UFB

co

mm

un

al n

etw

ork

dep

loym

ent

du

rin

g t

he

twel

ve m

on

ths.

Bu

ild w

ork

has

bee

n c

om

ple

ted

fo

r ab

ou

t 15

3,0

00

pre

mis

es a

t

30

Ju

ne

20

13, e

xcee

din

g t

he

cum

ula

tive

tar

get

of

149

,00

0 p

rem

ises

pas

sed

an

d r

epre

sen

tin

g t

he

add

itio

n o

f 11

1,0

00

pre

mis

es p

asse

d

du

rin

g t

he

per

iod

. Th

ere

are

20

5,5

00

en

d-u

sers

ab

le t

o b

e

con

nec

ted

to

th

e U

FB n

etw

ork

.

In F

ebru

ary,

Ch

oru

s u

pd

ated

its

gu

idan

ce o

n t

he

esti

mat

ed c

ost

to b

uild

th

e U

FB c

om

mu

nal

net

wo

rk b

y th

e en

d o

f 2

019

, in

crea

sin

g

it f

rom

$1.

4 -

$1.

6 b

illio

n t

o $

1.7

- $

1.9

bill

ion

. Th

is r

evis

ed g

uid

ance

refl

ecte

d h

igh

er t

han

exp

ecte

d c

ost

per

pre

mis

es p

asse

d (C

PP

P) w

ith

the

rollo

ut

no

t ye

t st

and

ard

ised

, po

siti

ve r

esu

lts

in s

om

e ar

eas

bei

ng

off

set

by

extr

eme

cost

s in

a s

mal

l gro

up

of

area

s, s

ign

ifica

nt

vari

abili

ty

in r

egio

nal

co

mp

lian

ce r

equ

irem

ents

an

d c

ost

ben

efit

s fr

om

init

iati

ves

taki

ng

lon

ger

to

mat

eria

lise.

Th

e co

st o

f th

e d

eplo

ymen

t o

f U

FB c

om

mu

nal

net

wo

rk f

or

the

twel

ve m

on

ths

was

$3

62

mill

ion

. As

the

UFB

pro

gra

mm

e b

eco

mes

mo

re li

ke a

pro

du

ctio

n li

ne,

wo

rk in

an

y fin

anci

al y

ear

will

als

o in

clu

de

wo

rk s

ched

ule

d t

o b

e co

mp

lete

d in

th

e fo

llow

ing

dep

loym

ent

year

.

As

at 3

0 J

un

e 2

013

, $3

0 m

illio

n h

ad b

een

sp

ent

on

wo

rk in

pro

gre

ss

for

UFB

co

mm

un

al d

eplo

ymen

t sc

hed

ule

d t

o b

e co

mp

lete

d in

th

e

follo

win

g y

ear.

Th

e av

erag

e co

st p

er p

rem

ises

pas

sed

was

$2

,93

5 (w

hen

incl

ud

ing

3,70

0 ‘g

reen

field

s’ a

nd

exi

stin

g b

road

ban

d o

ver

fibre

pre

mis

es w

her

e

no

mat

eria

l cap

ex w

as in

curr

ed d

uri

ng

th

e tw

elve

mo

nth

s) o

r $

3,0

48

if o

nly

co

un

tin

g p

rem

ises

wh

ere

cap

ital

exp

end

itu

re w

as in

curr

ed a

s

par

t o

f th

is y

ear’s

bu

ild p

rog

ram

me.

Ch

oru

s h

as p

revi

ou

sly

pro

vid

ed g

uid

ance

of

an a

vera

ge

cost

to

con

nec

t st

and

ard

res

iden

tial

en

d-u

ser

pre

mis

es o

f $

90

0 t

o $

1,10

0

(rea

l) ac

ross

th

e U

FB r

ollo

ut.

As

exp

ecte

d, i

nit

ial c

ost

s ar

e ab

ove

th

is,

refl

ecti

ng

th

e st

art

up

nat

ure

of

this

pro

gra

mm

e an

d la

ck o

f vo

lum

e

to s

up

po

rt s

cale

eff

icie

nci

es. I

n N

ove

mb

er, C

ho

rus

ann

ou

nce

d t

hat

it w

as c

on

trib

uti

ng

$2

0 m

illio

n o

f fu

nd

ing

to

su

pp

ort

fre

e in

stal

lati

on

for

resi

den

tial

en

d-u

sers

in t

he

earl

y st

age

of

the

UFB

ro

llou

t.

Ch

oru

s al

read

y fu

nd

s th

e fir

st 1

5 m

etre

s o

f n

ew t

ren

chin

g t

o c

on

nec

t

a h

om

e, o

r u

p t

o 1

00

met

res

of

fibre

wh

ere

ther

e is

an

ava

ilab

le d

uct

,

or

a si

ng

le o

verh

ead

aer

ial s

pan

. Th

e fu

nd

ing

will

be

use

d t

o c

ove

r

the

incr

emen

tal c

ost

of

con

nec

tin

g r

esid

ence

s th

at a

re b

eyo

nd

th

ese

dis

tan

ces,

up

to

20

0 m

etre

s.

Inve

stm

ent

in f

ibre

rel

ated

pro

du

cts

and

sys

tem

s d

evel

op

men

t

was

$2

7 m

illio

n. T

his

sp

end

rel

ates

to

new

sys

tem

s to

imp

rove

the

ord

erin

g a

nd

pro

visi

on

ing

pro

cess

fo

r fib

re c

on

nec

tio

ns.

Cap

ital

exp

end

itu

re o

f $

53

mill

ion

on

oth

er f

ibre

co

nn

ecti

on

s an

d

gro

wth

ref

lect

s d

eman

d f

or

fibre

co

nn

ecti

on

s in

are

as w

her

e U

FB

has

no

t ye

t b

een

dep

loye

d, n

ew ‘g

reen

field

’ fib

re s

ub

div

isio

ns,

fib

re

lifec

ycle

inve

stm

ent

and

reg

ion

al b

ackh

aul c

on

nec

tio

ns

for

reta

il

serv

ice

pro

vid

er d

ata

traf

fic. C

ho

rus

exp

ects

to

see

a t

ran

siti

on

ove

r

tim

e b

etw

een

th

is c

ateg

ory

an

d U

FB r

elat

ed c

apit

al e

xpen

dit

ure

as t

he

UFB

net

wo

rk f

oo

tpri

nt

gro

ws.

Th

e R

ura

l Bro

adb

and

Init

iati

ve c

on

tin

ued

at

pac

e w

ith

2,1

50

kilo

met

res

of

fibre

laid

by

30

Ju

ne

20

13, b

rin

gin

g b

ette

r b

road

ban

d

wit

hin

rea

ch o

f 77

9 s

cho

ols

an

d 5

1,2

00

ru

ral e

nd

-use

rs s

ince

th

e

star

t o

f th

e p

rog

ram

me.

So

me

of

this

wo

rk w

as b

rou

gh

t fo

rwar

d

fro

m f

utu

re y

ears

of

the

rollo

ut

pro

gra

mm

e. T

he

RB

I is

sch

edu

led

to b

e co

mp

lete

d in

20

16 a

nd

Ch

oru

s’ r

ole

is t

o d

eplo

y n

etw

ork

du

ct a

nd

fib

re (l

arg

ely

gra

nt

fun

ded

, see

co

ntr

ibu

tion

s to

cap

ital

exp

end

iture

sec

tio

n b

elo

w) t

o c

on

nec

t sc

ho

ols

, ho

spit

als,

wir

eles

s

bro

adb

and

to

wer

s an

d o

ther

pri

ori

ty u

sers

in r

ura

l are

as. C

ho

rus

is a

lso

dep

loyi

ng

cab

inet

s an

d c

abin

et e

lect

ron

ics

to e

xpan

d it

s

bro

adb

and

fo

otp

rin

t as

par

t o

f th

e p

rog

ram

me.

Ch

oru

s ex

pec

ts

to r

ecei

ve a

pp

roxi

mat

ely

$2

36

mill

ion

in G

ove

rnm

ent

gra

nt

fun

din

g

for

the

RB

I, w

ith

th

e g

ran

t co

veri

ng

ab

ou

t 8

0-8

5%

of

Ch

oru

s’ a

nn

ual

RB

I cap

ital

exp

end

itu

re.

Co

pp

er c

apit

al e

xpen

dit

ure

20

13(1

2 M

ON

TH

S) $M

20

12(7

MO

NT

HS) $M

Ne

two

rk s

ust

ain

3320

Co

pp

er

con

ne

cti

on

s2

114

Co

pp

er

laye

r 2

812

Pro

du

ct

fixe

d7

3

Tota

l co

pp

er

cap

ital

exp

en

dit

ure

69

49

Co

pp

er c

apit

al e

xpen

dit

ure

was

$6

9 m

illio

n f

or

the

per

iod

, ref

lect

ing

the

on

go

ing

sh

ift in

fo

cus

to f

ibre

rel

ated

cap

ital

exp

end

itu

re.

Net

wo

rk s

ust

ain

ref

ers

to c

apit

al e

xpen

dit

ure

wh

ere

the

net

wo

rk

is b

ein

g u

pg

rad

ed o

r n

etw

ork

ele

men

ts s

uch

as

po

les,

cab

inet

s an

d

cab

les

are

rep

lace

d. T

his

is t

ypic

ally

wh

ere

ther

e is

ris

k o

f n

etw

ork

failu

re o

r d

egra

ded

ser

vice

fo

r en

d-u

sers

an

d n

etw

ork

rep

lace

men

t

is d

eem

ed m

ore

co

st e

ffec

tive

th

an r

eact

ive

mai

nte

nan

ce.

Cap

ital

exp

end

itu

re o

n c

op

per

co

nn

ecti

on

s o

ccu

rs w

her

e th

ere

is d

eman

d f

or

cop

per

co

nn

ecti

on

s fo

r re

sid

enti

al o

r b

usi

nes

s

end

-use

rs, s

uch

as

infil

l ho

usi

ng

or

new

bu

ildin

gs.

Dem

and

fo

r

cop

per

co

nn

ecti

on

s is

exp

ecte

d t

o d

ecre

ase

ove

r ti

me

as t

he

UFB

net

wo

rk f

oo

tpri

nt

exp

and

s an

d d

eman

d f

or

fibre

co

nn

ecti

on

s g

row

s.

Co

pp

er la

yer

2 r

efle

cts

inve

stm

ent

in n

etw

ork

ele

ctro

nic

s an

d

equ

ipm

ent

as a

co

nse

qu

ence

of

dem

and

fo

r b

road

ban

d c

apac

ity

and

gro

wth

. Th

is h

as r

edu

ced

fo

llow

ing

th

e co

ncl

usi

on

of

the

fibre

to

th

e

no

de

pro

gra

mm

e an

d is

exp

ecte

d t

o d

eclin

e fu

rth

er o

ver

tim

e in

lin

e

wit

h t

he

UFB

net

wo

rk r

ollo

ut

and

up

take

.

Cap

ital

exp

end

itu

re o

n ‘P

rod

uct

fix

ed’ i

s la

rgel

y d

rive

n b

y re

tail

serv

ice

pro

vid

er d

eman

d f

or

cop

per

rel

ated

pro

du

cts,

in t

he

curr

ent

year

th

is

larg

ely

rela

tes

to B

aseb

and

IP p

rod

uct

dev

elo

pm

ent.

Ch

oru

s M

anag

em

en

t C

om

me

nta

ry14

Co

mm

on

cap

ital

exp

end

itu

re

20

13(1

2 M

ON

TH

S) $M

20

12(7

MO

NT

HS) $M

Info

rmat

ion

te

ch

no

log

y16

12

Bu

ildin

g a

nd

en

gin

ee

rin

g s

erv

ice

s16

10

Oth

er

11

Tota

l co

mm

on

cap

ital

exp

en

dit

ure

332

3

Co

mm

on

cap

ital

exp

end

itu

re w

as $

33

mill

ion

. Ch

oru

s m

ade

a $1

6 m

illio

n in

vest

men

t in

info

rmat

ion

tec

hn

olo

gy

syst

ems

to

30

Ju

ne

20

13. T

his

sp

end

larg

ely

rela

tes

to c

han

ges

req

uir

ed

to e

xist

ing

sys

tem

s as

a r

esu

lt o

f th

e d

emer

ger

. Ch

oru

s is

co

nti

nu

ing

to u

nd

erta

ke a

sig

nifi

can

t p

rog

ram

me

of

IT s

yste

ms

dev

elo

pm

ent

as p

art

of

its

dem

erg

er c

om

mit

men

ts.

Bu

ildin

g a

nd

en

gin

eeri

ng

ser

vice

s re

flec

ts t

he

cap

ital

sp

ent

on

gro

wth

an

d p

lan

t re

pla

cem

ent

(eg

po

wer

an

d a

ir c

on

dit

ion

ing

)

at C

ho

rus

exch

ang

es, b

uild

ing

s an

d r

emo

te s

ites

.

‘Oth

er’ i

ncl

ud

es it

ems

such

as

off

ice

acco

mm

od

atio

n a

nd

eq

uip

men

t.

Co

ntr

ibu

tio

ns

to c

apit

al e

xpen

dit

ure

Ch

oru

s re

ceiv

es s

ign

ifica

nt

finan

cin

g a

nd

co

ntr

ibu

tio

ns

tow

ard

s it

s

gro

ss c

apit

al e

xpen

dit

ure

eac

h y

ear.

Du

rin

g t

he

year

to

30

Ju

ne

20

13,

Ch

oru

s re

ceiv

ed c

on

trib

uti

on

s fr

om

th

e fo

llow

ing

so

urc

es:

i) R

BI f

un

din

g: T

he

Cro

wn

is c

on

trib

uti

ng

gra

nt

fun

din

g o

f ab

ou

t

$2

36

mill

ion

to

war

ds

Ch

oru

s’ la

yer

0 a

nd

laye

r 1

cap

ital

sp

end

ove

r th

e fiv

e ye

ar R

ura

l Bro

adb

and

Init

iati

ve. T

he

gra

nt

is p

ayab

le

on

co

mp

leti

on

of

bu

ild w

ork

an

d w

ill v

ary

each

yea

r su

bje

ct t

o t

he

agre

ed b

uild

pro

gra

mm

e an

d t

he

gra

nta

ble

net

wo

rk t

hat

is b

uilt

.

For

the

year

en

ded

30

Ju

ne

20

13 $

90

mill

ion

was

rec

og

nis

ed.

ii)

Oth

er: C

ho

rus

is a

ble

to

rec

ove

r th

e co

st o

f o

ther

cap

ital

spen

d in

cer

tain

cir

cum

stan

ces.

Th

is in

clu

des

rep

laci

ng

net

wo

rk

dam

aged

by

thir

d p

arti

es, o

r in

stan

ces

wh

ere

cen

tral

or

loca

l

go

vern

men

t au

tho

riti

es a

sk C

ho

rus

to r

elo

cate

or

reb

uild

exi

stin

g

net

wo

rk. A

to

tal o

f $

12 m

illio

n w

as r

eco

gn

ised

in t

he

curr

ent

finan

cial

per

iod

an

d is

incl

ud

ed a

s p

art

of

Cro

wn

fu

nd

ing

giv

en

its

mo

des

t si

ze.

Cap

ital e

xpen

ditu

re c

om

men

tary

(co

nt.

)Lo

ng

ter

m c

apita

l man

agem

ent

Ch

oru

s’ p

rin

cip

al s

ou

rce

of

liqu

idit

y is

op

erat

ing

cas

h f

low

s

and

ext

ern

al b

orr

ow

ing

fro

m e

stab

lish

ed d

ebt

pro

gra

mm

es

such

as

the

EM

TN

an

d b

ank

faci

litie

s. C

ho

rus

also

issu

es d

ebt

and

equ

ity

secu

riti

es t

o C

FH a

s it

co

mp

lete

s re

leva

nt

UFB

mile

sto

nes

.

It a

lso

rec

eive

s g

ran

ts f

rom

th

e C

row

n in

rel

atio

n t

o it

s R

BI

bu

ild p

rog

ram

me.

Th

e C

ho

rus

Bo

ard

is c

om

mit

ted

to

mai

nta

inin

g a

‘BB

B’ l

on

g t

erm

cred

it r

atin

g f

rom

Sta

nd

ard

& P

oo

r’s a

nd

a ‘B

aa2

’ lo

ng

ter

m c

red

it

rati

ng

fro

m M

oo

dy’

s In

vest

ors

Ser

vice

. Ch

oru

s’ c

apit

al m

anag

emen

t

po

licie

s ar

e d

esig

ned

to

en

sure

th

at t

his

ob

ject

ive

is m

et in

exp

ecte

d

op

erat

ing

cir

cum

stan

ces.

It is

Ch

oru

s’ in

ten

tio

n t

hat

in n

orm

al

circ

um

stan

ces

the

rati

o o

f n

et d

ebt

to E

BIT

DA

will

no

t m

ater

ially

exce

ed 3

.5 t

imes

(net

deb

t in

clu

des

th

e se

nio

r p

ort

ion

of

CFH

deb

t

secu

riti

es a

nd

net

leas

e o

blig

atio

ns)

. Th

e ra

tio

fo

r n

et d

ebt

to E

BIT

DA

for

Ch

oru

s’ k

ey f

inan

cial

co

ven

ants

is 3

.75

tim

es.

At

30

Ju

ne

20

13, C

ho

rus

had

a lo

ng

ter

m c

red

it r

atin

g o

f B

BB

/sta

ble

by

Stan

dar

d &

Po

or’s

(30

Ju

ne

20

12: B

BB

/sta

ble

) an

d B

aa2

/neg

ativ

e

by

Mo

od

y’s

Inve

sto

rs S

ervi

ce (3

0 J

un

e 2

012

: Baa

2/s

tab

le).

Ch

oru

s M

anag

em

en

t C

om

me

nta

ry

15

Co

mp

etiti

on

an

d r

egu

latio

n

Sig

nifi

can

t ch

ang

es in

Ch

oru

s’ c

om

pet

itiv

e an

d r

egu

lato

ry

envi

ron

men

t th

at h

ave

occ

urr

ed in

th

e la

st y

ear

are

set

ou

t b

elo

w.

Th

is s

ho

uld

be

read

in c

on

jun

ctio

n w

ith

pre

vio

us

dis

clo

sure

s w

hic

h

are

avai

lab

le o

nlin

e at

: ww

w.c

ho

rus.

co.n

z/in

vest

or-

cen

tre.

Ch

oru

s O

pen

Acc

ess

Dee

ds

of

Un

der

taki

ng

Ch

oru

s is

bo

un

d b

y th

ree

op

en a

cces

s d

eed

s o

f u

nd

erta

kin

g (D

eed

s).

Th

e C

op

per

, Fib

re a

nd

Ru

ral B

road

ban

d In

itia

tive

un

der

taki

ng

s

rep

rese

nt

a se

ries

of

leg

ally

bin

din

g o

blig

atio

ns

focu

sed

aro

un

d t

he

pro

visi

on

of

serv

ices

on

a n

on

-dis

crim

inat

ory

or

equ

ival

ent

bas

is.

Ch

oru

s su

bm

itte

d a

tra

nsi

tio

n p

lan

to

th

e M

inis

ter

in la

te 2

012

rela

tin

g t

o t

he

acti

on

s re

qu

ired

to

mo

ve t

o e

nd

ing

th

e sh

arin

g

arra

ng

emen

ts b

etw

een

Tel

eco

m a

nd

Ch

oru

s, a

s re

qu

ired

by

the

Dee

ds.

Tele

com

mu

nic

atio

ns

Serv

ices

Ob

ligat

ion

s (T

SO)

and

Lev

ies

Th

e T

SO is

th

e re

gu

lato

ry m

ech

anis

m b

y w

hic

h u

niv

ersa

l

serv

ice

ob

ligat

ion

s fo

r re

sid

enti

al, l

oca

l acc

ess

and

cal

ling

ser

vice

s

are

imp

ose

d a

nd

ad

min

iste

red

. Ch

oru

s is

req

uir

ed t

o m

ain

tain

lines

an

d c

ove

rag

e o

blig

atio

ns,

an

d p

rovi

de

a vo

ice

inp

ut

serv

ice.

On

9 J

uly

20

13, t

he

Go

vern

men

t is

sued

a d

iscu

ssio

n d

ocu

men

t

on

th

e T

SO, a

s p

art

of

a sc

hed

ule

d r

evie

w, p

rop

osi

ng

a n

um

ber

of

po

ten

tial

fu

ture

op

tio

ns

for

the

TSO

, an

d in

viti

ng

vie

ws

on

an

y fu

rth

er

op

tio

ns.

Ch

oru

s is

mak

ing

su

bm

issi

on

s th

rou

gh

th

e re

view

pro

cess

.

Th

e G

ove

rnm

ent

is r

equ

ired

to

co

mp

lete

th

e re

view

by

the

end

of

20

13. T

her

e is

no

gu

aran

tee

or

cert

ain

ty o

f th

e o

utc

om

e o

f th

e

TSO

rev

iew

.

Th

e Te

leco

mm

un

icat

ion

s D

evel

op

men

t Le

vy (

TD

L) is

an

ind

ust

ry le

vy

of

$5

0 m

illio

n p

er y

ear

bet

wee

n F

Y10

an

d F

Y16

an

d $

10 m

illio

n e

ach

year

th

erea

fter

. On

27

Jun

e 2

013

, th

e C

om

mis

sio

n d

eter

min

ed t

hat

Ch

oru

s w

as li

able

fo

r $

6.4

mill

ion

of

the

TD

L fo

r FY

12.

Ch

oru

s is

als

o r

equ

ired

to

co

ntr

ibu

te t

ow

ard

s th

e C

om

mer

ce

Co

mm

issi

on

’s c

ost

s th

rou

gh

a T

elec

om

mu

nic

atio

ns

Reg

ula

tory

Levy

(T

RL)

. On

19

Ju

ly 2

013

, Ch

oru

s w

as d

eter

min

ed t

o b

e lia

ble

for

$6

90

,00

0 o

f th

e T

RL

for

FY12

.

UC

LL a

nd

SLU

pri

cin

g

Th

e te

rms,

incl

ud

ing

pri

ce, f

or

UC

LL a

nd

SLU

are

cu

rren

tly

reg

ula

ted

by

the

Co

mm

issi

on

. On

3 D

ecem

ber

20

12, t

he

Co

mm

issi

on

issu

ed

a fin

al d

ecis

ion

on

its

ben

chm

arki

ng

rev

iew

of

the

pri

ce C

ho

rus

can

ch

arg

e fo

r U

CLL

. Th

e fin

al a

vera

ged

UC

LL p

rice

of

$2

3.5

2

rep

rese

nte

d a

3.8

% d

rop

. Th

e U

CLL

pri

ce is

lin

ked

to

a n

um

ber

of

oth

er C

ho

rus

serv

ices

, mea

nin

g t

hat

th

e U

CLF

S an

d S

LU p

rice

s,

and

so

me

UB

A p

rice

s, w

ere

imp

acte

d b

y th

e d

ecis

ion

.

Aft

er t

he

final

dec

isio

n, C

ho

rus

app

lied

to

th

e C

om

mis

sio

n t

o r

evie

w

the

UC

LL p

rice

, usi

ng

a F

inal

Pri

cin

g P

rin

cip

le (F

PP

) of

Tota

l Ser

vice

Lon

g R

un

Incr

emen

tal C

ost

(T

SLR

IC).

Th

e ap

plic

atio

n w

as m

ade

on

th

e b

asis

th

at C

ho

rus

con

sid

ered

th

at t

he

init

ial p

rice

set

by

the

Co

mm

issi

on

in t

he

3 D

ecem

ber

20

12 d

ecis

ion

by

refe

ren

ce t

o

ben

chm

arki

ng

un

der

esti

mat

es t

he

TSL

RIC

of

pro

vid

ing

th

e U

CLL

in N

ew Z

eala

nd

. Tel

eco

m, V

od

afo

ne,

Cal

lPlu

s an

d K

ord

ia a

lso

mad

e

FPP

ap

plic

atio

ns

to t

he

Co

mm

issi

on

. Th

e C

om

mis

sio

n e

xpec

ts t

o

com

ple

te t

he

FPP

pro

cess

in D

ecem

ber

20

15.

UB

A p

rici

ng

Th

e te

rms,

incl

ud

ing

pri

ce, f

or

UB

A a

re c

urr

entl

y re

gu

late

d b

y

the

Co

mm

issi

on

. Un

der

th

e A

ct, t

he

Co

mm

issi

on

was

req

uir

ed

to r

evie

w t

he

UB

A p

rice

by

the

end

of

20

12. O

n 3

Dec

emb

er 2

012

,

the

Co

mm

issi

on

issu

ed a

dra

ft d

ecis

ion

on

UB

A p

rici

ng

pro

po

sin

g

a re

du

ctio

n in

pri

ce f

rom

$2

1.4

6 t

o $

8.9

3 p

er m

on

th b

ased

on

ben

chm

arki

ng

of

pri

cin

g in

tw

o c

ou

ntr

ies.

Ch

oru

s is

mak

ing

sub

mis

sio

ns

thro

ug

h t

he

ben

chm

arki

ng

pro

cess

.

Th

e C

om

mis

sio

n e

xpec

ts t

o c

om

ple

te t

he

UB

A b

ench

mar

kin

g p

roce

ss

in O

cto

ber

20

13. O

nce

th

e C

om

mis

sio

n is

sues

its

final

dec

isio

n, a

ny

par

ty c

an a

pp

ly f

or

an F

PP

TSL

RIC

rev

iew

of

the

UB

A p

rice

.

Un

bu

nd

led

Co

pp

er L

ow

Fre

qu

ency

Ser

vice

(UC

LFS)

To m

eet

its

TSO

req

uir

emen

ts, C

ho

rus

has

mad

e a

tech

no

log

y

neu

tral

vo

ice

inp

ut

serv

ice,

Bas

eban

d, a

vaila

ble

on

a c

om

mer

cial

bas

is. T

he

pri

cin

g o

f a

sub

set

of

this

ser

vice

, UC

LFS

(a v

oic

e in

pu

t

serv

ice

off

ered

ove

r th

e co

pp

er a

cces

s n

etw

ork

), is

set

at

the

aver

aged

UC

LL p

rice

as

det

erm

ined

by

the

Co

mm

issi

on

. Bec

ause

the

UC

LFS

pri

ce is

lin

ked

to

th

e U

CLL

pri

ce, a

new

UC

LFS

pri

ce

of

$2

3.5

2 p

er m

on

th a

pp

lied

fro

m 3

Dec

emb

er 2

012

(pre

vio

usl

y

$24

.46

per

mo

nth

). A

ny

chan

ge

to t

he

UC

LL p

rice

as

a re

sult

of

the

FPP

pro

cess

sh

ou

ld f

low

th

rou

gh

to

th

e U

CLF

S p

rice

.

Par

alle

l go

vern

men

t re

view

an

no

un

ced

Th

ere

is n

o c

erta

inty

aro

un

d t

he

ou

tco

me

of

Co

mm

issi

on

’s

pro

cess

es o

n a

ny

serv

ices

th

at a

re c

urr

entl

y u

nd

er r

evie

w o

r co

uld

be

revi

ewed

at

any

tim

e o

r w

het

her

th

e G

ove

rnm

ent’s

reg

ula

tory

revi

ew w

ill im

pac

t th

ose

pro

cess

es.

On

8 F

ebru

ary

the

New

Zea

lan

d G

ove

rnm

ent

ann

ou

nce

d t

hat

it w

as

bri

ng

ing

fo

rwar

d a

rev

iew

of

the

reg

ula

tory

fra

mew

ork

(reg

ula

tory

revi

ew) t

o “

…fo

cus

on

th

e lo

ng

-ter

m in

tere

sts

of

end

-use

rs o

f

tele

com

mu

nic

atio

ns

serv

ices

, tak

ing

into

acc

ou

nt

the

mar

ket

stru

ctu

re, t

ech

no

log

y d

evel

op

men

ts a

nd

co

mp

etit

ive

con

dit

ion

s in

the

tele

com

mu

nic

atio

ns

ind

ust

ry a

t th

e ti

me

of

the

revi

ew, i

ncl

ud

ing

the

imp

act

of

fibre

, co

pp

er, w

irel

ess

and

oth

er t

elec

om

mu

nic

atio

ns

net

wo

rk in

vest

men

t”4.

On

7 A

ug

ust

20

13, t

he

Go

vern

men

t re

leas

ed a

dis

cuss

ion

pap

er

on

th

e re

gu

lato

ry r

evie

w. I

n t

he

dis

cuss

ion

pap

er, t

he

Go

vern

men

t

pro

po

ses

to t

ake

a p

has

ed a

pp

roac

h t

o t

he

reg

ula

tory

rev

iew

– w

ith

an

imm

edia

te f

ocu

s o

n c

op

per

pri

cin

g. T

he

dis

cuss

ion

pap

er

pro

po

ses

that

co

pp

er (U

CLL

an

d U

BA

) pri

ces

sho

uld

be

rou

gh

ly

equ

ival

ent

wit

h c

on

trac

ted

en

try

leve

l fib

re p

rice

s (b

etw

een

$3

7.5

0-

$4

2.5

0).

Th

ere

are

thre

e o

pti

on

s p

rop

ose

d –

wh

ich

diff

er in

ter

ms

of

wh

eth

er t

he

Co

mm

issi

on

or

Go

vern

men

t se

lect

s th

e re

leva

nt

pri

ce

po

int

bet

wee

n $

37.

50

- $

42

.50

, ho

w t

he

UC

LL a

nd

UB

A c

op

per

pri

ces

are

set

wit

hin

th

at o

vera

ll ca

p a

nd

wh

eth

er n

ew p

rici

ng

ap

plie

s

fro

m N

ove

mb

er 2

014

or

No

vem

ber

20

15. W

hile

th

e o

utc

om

e o

f th

e

Go

vern

men

t’s r

egu

lato

ry r

evie

w is

un

cert

ain

, all

po

ten

tial

op

tio

ns

con

tain

ed w

ith

in t

he

dis

cuss

ion

pap

er im

ply

red

uce

d f

utu

re e

arn

ing

s

for

Ch

oru

s. T

he

dis

cuss

ion

pap

er s

ug

ges

ts a

po

ten

tial

dec

reas

e

of

Ch

oru

s’ p

rici

ng

wit

hin

a r

ang

e o

f $

2.4

8 t

o $

7.4

8 p

er b

road

ban

d

con

nec

tio

n p

er m

on

th. B

ased

on

30

Ju

ne

20

13 c

on

nec

tio

n v

olu

mes

,

Ch

oru

s an

tici

pat

es t

his

co

uld

imp

ly a

red

uct

ion

in a

nn

ual

EB

ITD

A in

the

ran

ge

of

$2

0 m

illio

n t

o $

100

mill

ion

.

Oth

er c

han

ges

are

als

o p

rop

ose

d in

clu

din

g g

ran

dfa

ther

ing

th

e

avai

lab

ility

of

the

Sub

Lo

op

Un

bu

nd

ling

(SLU

) ser

vice

. Lat

er p

has

es

of

the

reg

ula

tory

rev

iew

are

pro

po

sed

to

fo

cus

on

th

e ap

pro

pri

ate

reg

ula

tory

fra

mew

ork

on

ce t

he

UFB

bu

ild is

co

mp

lete

in 2

02

0

(am

on

gst

oth

er t

hin

gs)

. Ch

oru

s is

mak

ing

su

bm

issi

on

s th

rou

gh

the

revi

ew p

roce

ss.

Oth

er le

gis

lati

on

Ch

oru

s is

su

bje

ct t

o o

ther

leg

isla

tive

req

uir

emen

ts s

uch

as

the

req

uir

emen

ts o

f th

e C

om

mer

ce A

ct 1

98

6, F

air

Trad

ing

Act

19

86

,

as w

ell a

s te

leco

mm

un

icat

ion

s co

des

.

Ch

oru

s is

als

o s

ub

ject

to

th

e Te

leco

mm

un

icat

ion

s (In

terc

epti

on

Cap

abili

ty) A

ct 2

00

4 (t

he

Act

), w

hic

h r

equ

ires

net

wo

rk o

per

ato

rs

to e

nsu

re t

hat

eve

ry p

ub

lic t

elec

om

mu

nic

atio

ns

net

wo

rk t

hat

they

ow

n, c

on

tro

l or

op

erat

e, a

nd

eve

ry t

elec

om

mu

nic

atio

ns

serv

ice

that

th

ey p

rovi

de

in N

ew Z

eala

nd

, has

inte

rcep

tio

n c

apab

ility

mee

tin

g t

he

spec

ifica

tio

ns

set

ou

t in

th

e A

ct. I

n J

un

e 2

013

, th

e

Go

vern

men

t is

sued

a d

iscu

ssio

n p

aper

on

a r

evie

w o

f th

e A

ct.

Ch

oru

s m

ade

sub

mis

sio

ns

on

th

e d

iscu

ssio

n p

aper

on

13

Ju

ne

20

13.

Th

e re

qu

irem

ents

un

der

th

e A

ct h

ave

the

po

ten

tial

to

dri

ve s

ign

ifica

nt

com

plia

nce

co

sts.

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eh

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vt.n

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vid

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sum

ers

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du

stry

Litig

atio

n

Ch

oru

s h

as o

ng

oin

g c

laim

s, in

vest

igat

ion

s an

d in

qu

irie

s, n

on

e

of

wh

ich

are

cu

rren

tly

exp

ecte

d t

o h

ave

sig

nifi

can

t ef

fect

on

th

e

finan

cial

po

siti

on

or

pro

fitab

ility

of

Ch

oru

s.

Ch

oru

s ca

nn

ot

reas

on

ably

est

imat

e th

e ad

vers

e ef

fect

, if

any,

on

Ch

oru

s if

any

of

the

ou

tsta

nd

ing

cla

ims

or

inq

uir

ies

are

ult

imat

ely

reso

lved

ag

ain

st C

ho

rus’

inte

rest

. Th

ere

can

be

no

ass

ura

nce

th

at

such

cas

es w

ill n

ot

hav

e a

sig

nifi

can

t ef

fect

on

Ch

oru

s’ b

usi

nes

s,

finan

cial

po

siti

on

, an

d r

esu

lts

of

op

erat

ion

s o

r p

rofit

abili

ty.

UB

A a

nd

/or

B

ase

ban

d

Co

pp

er

o

r SL

ES

SLU

B

ackh

aul

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ffice

(e

xch

ang

e)

UB

A a

nd

/or

B

ase

ban

d

Co

pp

er

o

r SL

U

Re

tail

se

rvic

e

pro

vid

er’

s n

etw

ork

UB

A o

r U

CLL

B

ackh

aul

UB

A a

nd

/or

B

ase

ban

d

Co

pp

er

o

r U

CLL

Fib

re

Co

pp

er

Co

pp

er

fee

de

r

Co

pp

er p

rod

uct

ove

rvie

w

Ch

oru

s M

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em

en

t C

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me

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ER

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NT

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ICIN

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CL

GST

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b L

oo

p

Ext

en

sio

n

Se

rvic

e

Allo

ws

reta

il se

rvic

e p

rovi

de

rs t

o c

on

ne

ct

a su

b lo

op

UC

LL li

ne

fro

m a

cab

ine

t to

th

e lo

cal

exc

han

ge

so

th

ey

can

off

er

ph

on

e a

nd

/or

bro

adb

and

se

rvic

e f

rom

th

e

exc

han

ge

in c

abin

eti

sed

are

as.

Co

mm

erc

ial p

ric

ing

Co

mm

erc

ial p

ric

ing

Bas

eb

and

C

op

pe

r (U

CLF

S)

A v

oic

e in

pu

t se

rvic

e a

vaila

ble

on

all

cop

pe

r lin

es

that

are

in p

lace

be

twe

en

th

e p

rem

ise

s an

d t

he

exc

han

ge

,

irre

spe

cti

ve o

f c

abin

eti

sati

on

. Th

e U

nb

un

dle

d C

op

pe

r

Low

Fre

qu

en

cy

Se

rvic

e (

UC

LFS)

is a

su

bse

t o

f th

is s

erv

ice

.

$24

.46

pe

r m

on

th$

23

.52

pe

r m

on

th

UC

LL

Th

e u

nb

un

dle

d c

op

pe

r lo

cal

loo

p s

erv

ice

. Can

be

use

d b

y re

tail

serv

ice

pro

vid

ers

to

off

er

voic

e a

nd

bro

adb

and

se

rvic

es.

Ava

ilab

le o

n c

op

pe

r lin

es

be

twe

en

the

pre

mis

es

and

th

e e

xch

ang

e w

he

re t

he

re h

as b

ee

n

no

cab

ine

tisa

tio

n.

Urb

an $

19.8

4 p

er

mo

nth

No

n-u

rban

$3

6.6

3

pe

r m

on

th

Urb

an $

19.0

8 p

er

mo

nth

No

n-u

rban

$3

5.2

0

pe

r m

on

th

Ch

ang

es

to n

atio

nal

ly

ave

rag

ed

pri

ce o

f $

23

.52

fro

m D

ece

mb

er

20

14

Nak

ed

UB

AA

n u

nb

un

dle

d b

itst

ream

se

rvic

e t

hat

is t

ake

n s

tan

dal

on

e

(i.e

. wit

ho

ut

a vo

ice

se

rvic

e a

lso

be

ing

off

ere

d o

ver

the

line

). C

an b

e u

sed

by

reta

il se

rvic

e p

rovi

de

rs t

o o

ffe

r

bro

adb

and

se

rvic

es.

$4

5.9

2 p

er

mo

nth

(fo

r B

asic

UB

A o

r

En

han

ced

UB

A 0

)

$4

4.9

8 p

er

mo

nth

(fo

r B

asic

UB

A o

r

En

han

ced

UB

A 0

)

Su

b L

oo

p

UC

LL

Th

e u

nb

un

dle

d s

ub

loo

p s

erv

ice

. Can

be

use

d b

y re

tail

serv

ice

pro

vid

ers

to

off

er

voic

e a

nd

bro

adb

and

se

rvic

es.

Ava

ilab

le o

n c

op

pe

r lin

es

be

twe

en

th

e p

rem

ise

s an

d

cab

ine

t (i.

e. o

nly

on

cab

ine

tise

d li

ne

s).

Urb

an $

11.9

8 p

er

mo

nth

No

n-u

rban

$2

2.1

2

pe

r m

on

th

Urb

an $

11.5

2 p

er

mo

nth

No

n-u

rban

$2

1.2

6

pe

r m

on

th

Su

b-l

oo

p

bac

khau

lT

he

fib

re c

on

ne

cti

on

be

twe

en

a r

eta

il se

rvic

e p

rovi

de

r’s

UC

LL e

qu

ipm

en

t in

a d

istr

ibu

tio

n c

abin

et

and

th

e

asso

cia

ted

loc

al e

xch

ang

e.

Re

gu

late

d p

ric

ing

fo

rmu

laN

o c

han

ge

UC

LL

Bac

khau

l (c

om

me

rcia

l o

r re

gu

late

d

op

tio

ns)

En

able

s ac

cess

an

d in

terc

on

ne

cti

on

wit

h o

the

r U

CLL

serv

ice

s ac

ross

th

e w

ide

r ac

cess

ne

two

rk, b

etw

ee

n

mu

ltip

le e

xch

ang

es.

Giv

es

reta

il se

rvic

e p

rovi

de

rs a

cce

ss

to t

ran

smis

sio

n c

apac

ity

so t

he

y c

an a

gg

reg

ate

th

eir

traf

fic

be

twe

en

th

e lo

cal

exc

han

ge

to

th

e h

and

ove

r p

oin

t

wit

hin

th

eir

ow

n n

etw

ork

.

Pri

cin

g v

arie

s su

bje

ct

to

cap

acit

y an

d d

ista

nce

No

ch

ang

e

Un

bu

nd

led

B

itst

ream

A

cce

ss

Allo

ws

reta

il se

rvic

e p

rovi

de

rs d

ire

ct

acce

ss t

o h

igh

spe

ed

co

pp

er

bit

stre

am a

cce

ss li

nks

, en

ablin

g t

he

m t

o

use

Ch

oru

s’ e

qu

ipm

en

t to

de

live

r h

igh

sp

ee

d b

road

ban

d

serv

ice

s. R

eta

il se

rvic

e p

rovi

de

rs c

an c

ho

ose

be

twe

en

Bas

ic o

r E

nh

ance

d v

aria

nts

of

UB

A.

$2

1.4

6 p

er

mo

nth

(fo

r

Bas

ic U

BA

FS/

FS o

r

En

han

ced

UB

A 0

)

No

ch

ang

e

VD

SL

VD

SL

is t

he

th

ird

ge

ne

rati

on

of

DS

L ac

cess

te

ch

no

log

y

targ

ete

d t

ow

ard

s h

igh

ban

dw

idth

bro

adb

and

use

rs a

nd

can

de

live

r d

ow

nlo

ad s

pe

ed

s ar

ou

nd

20

-50

Mb

ps

and

up

load

sp

ee

ds

up

to

20

Mb

ps.

Var

ied

de

pe

nd

ing

on

com

me

rcia

l pri

cin

g t

erm

s

$2

1.4

6 p

er

mo

nth

wit

h

anal

og

ue

vo

ice

or

$4

4.9

8 p

er

mo

nth

wit

ho

ut

anal

og

ue

vo

ice

Pro

du

ct o

verv

iew

Re

tail

serv

ice

p

rovi

de

r’s

ne

two

rk

Co

mm

erc

ial

Bac

khau

l o

r IC

AB

S

Bu

sin

ess

fib

re(B

itst

ream

3, 3

a o

r 4

, D

ire

ct F

ibre

or

Ban

dw

idth

Fib

re A

cce

ss)

Re

sid

en

tial

o

r h

om

e

bu

sin

ess

fib

re(B

itst

ream

2)

Fib

re

CentralO

ffice

(e

xch

ang

e)

Fib

re p

rod

uct

ove

rvie

w

Ch

oru

s M

anag

em

en

t C

om

me

nta

ry

17

PR

OD

UC

TD

ESC

RIP

TIO

NC

UR

RE

NT

PR

ICIN

G (

EX

CL

GST

)

Dir

ec

t Fi

bre

Acc

ess

Off

ers

a f

ibre

op

tic

co

nn

ec

tio

n b

etw

ee

n a

n e

nd

-use

r an

d t

he

ir

reta

il se

rvic

e p

rovi

de

r’s

eq

uip

me

nt

in t

he

loc

al e

xch

ang

e.

Co

mm

on

ly k

no

wn

as

‘dar

k fi

bre

’, it

will

typ

ical

ly s

uit

tai

lore

d

solu

tio

ns

for

larg

e b

usi

ne

sse

s o

r b

usi

ne

sse

s w

ith

th

e in

-ho

use

reso

urc

es

to m

anag

e t

he

ir o

wn

se

rvic

es.

$3

55

pe

r m

on

th

Ban

dw

idth

Fib

re A

cce

ssA

ste

p u

p f

rom

Dir

ec

t Fi

bre

Acc

ess

, th

is s

erv

ice

inc

lud

es

the

inst

alla

tio

n o

f a

Ch

oru

s m

ed

ia c

on

vert

er

at a

po

int

(or

po

ints

)

in t

he

se

rvic

e a

nd

pro

vid

es

de

dic

ate

d b

and

wid

th f

rom

en

d-u

ser

pre

mis

es

wit

h n

o s

wit

ch

ing

or

add

itio

nal

late

nc

y.

Fro

m:

$3

80

pe

r m

on

th (

up

to

10

0M

bp

s

do

wn

load

sp

ee

ds)

; $

45

5 p

er

mo

nth

(up

to

1G

bp

s d

ow

nlo

ad s

pe

ed

s; a

nd

$1,

35

5 p

er

mo

nth

(u

p t

o 1

0G

bp

s

do

wn

load

sp

ee

ds)

.

Bit

stre

am 2

A

re

lati

vely

sim

ple

bu

t fl

exi

ble

UFB

se

rvic

e f

or

intr

od

uc

ing

en

d-u

sers

to

an

en

try

leve

l se

rvic

e, w

hile

giv

ing

th

e r

eta

il

serv

ice

pro

vid

er

the

ab

ility

to

bu

ild o

n t

he

se

rvic

e a

s th

e

en

d-u

ser

de

man

ds

inc

reas

e a

nd

de

velo

p. I

t su

pp

ort

s th

e

de

velo

pm

en

t o

f m

ass

mar

ket

resi

de

nti

al o

r sm

all t

o m

ed

ium

en

terp

rise

off

eri

ng

s, a

nd

inc

lud

es

the

ab

ility

to

de

live

r e

xist

ing

voic

e s

erv

ice

s o

ver

fib

re.

Up

to

30

Mb

ps

do

wn

stre

am /

10M

bp

s

up

stre

am p

lan

fo

r $

37.

50

pe

r m

on

th;

or

up

to

10

0M

bp

s d

ow

nst

ream

/ 5

0M

bp

s

up

stre

am p

lan

fo

r $

55

.00

pe

r m

on

th.

Bit

stre

am 3

& 3

aA

fle

xib

le U

FB s

erv

ice

de

sig

ne

d t

o s

up

po

rt b

usi

ne

ss-g

rad

e

app

licat

ion

s, li

ke v

irtu

al p

riva

te n

etw

ork

s. I

t d

eliv

ers

up

to

100

Mb

ps

of

de

dic

ate

d d

ow

nst

ream

an

d u

pst

ream

ban

dw

idth

and

is id

eal

fo

r m

ed

ium

bu

sin

ess

es

or

bra

nc

h o

ffic

es.

It

has

a

wid

e r

ang

e o

f co

mm

itte

d a

nd

exc

ess

info

rmat

ion

rat

e (

CIR

/

EIR

) o

pti

on

s.

Fro

m $

175

.00

pe

r m

on

th

Bit

stre

am 4

(al

so r

efe

rre

d t

o

as H

SN

S P

rem

ium

)A

pre

miu

m U

FB a

cce

ss s

erv

ice

off

eri

ng

hig

h p

erf

orm

ance

for

corp

ora

te e

nd

-use

rs a

nd

UFB

pri

ori

ty u

sers

. It

is id

eal

fo

r

sup

po

rtin

g c

om

ple

x b

usi

ne

ss-g

rad

e a

pp

licat

ion

s fo

r la

rge

bu

sin

ess

es,

or

corp

ora

te h

ub

s, a

nd

has

a w

ide

ran

ge

of

com

mit

ted

info

rmat

ion

rat

e (

CIR

) o

pti

on

s.

Fro

m $

38

0 p

er

mo

nth

(u

p t

o 1

00

Mb

ps

do

wn

load

sp

ee

ds)

;

$4

55

pe

r m

on

th (

up

to

1G

bp

s

do

wn

load

sp

ee

ds)

;

$1,

35

5 p

er

mo

nth

(u

p t

o 1

0G

bp

s

do

wn

load

sp

ee

ds)

.

CIR

can

be

pu

rch

ase

d f

rom

$10

fo

r u

p

to 1

0M

bp

s.

Ce

ntr

al O

ffic

e a

nd

C

o-l

oc

atio

nS

up

po

rts

the

inst

alla

tio

n o

f re

tail

serv

ice

pro

vid

er

ne

two

rk

eq

uip

me

nt

in t

he

fib

re e

xch

ang

e o

r C

en

tral

Off

ice

an

d p

rovi

de

fib

re-b

ase

d s

erv

ice

s to

en

d-u

sers

wh

o a

re c

on

ne

cte

d t

o t

he

fib

re n

etw

ork

.

Fro

m:

$2

15 p

er

mo

nth

to

$1,

90

0 p

er

mo

nth

de

pe

nd

ing

on

sit

e a

nd

re

qu

ire

me

nts

.

Intr

a C

and

idat

e A

rea

Bac

khau

l Se

rvic

e (

ICA

BS

)U

sed

by

reta

il se

rvic

e p

rovi

de

rs t

o e

xte

nd

a f

ibre

acc

ess

con

ne

cti

on

to

th

eir

eq

uip

me

nt

in a

no

the

r e

xch

ang

e, o

r

to c

on

ne

ct

foo

tpri

nts

in t

wo

exc

han

ge

s w

ith

in t

he

sam

e

can

did

ate

are

a.

Fro

m:

$4

50

pe

r m

on

th t

o

$1,

40

0 p

er

mo

nth

Pro

du

ct o

verv

iew

(co

nt.

)

Fin

anci

al

Stat

emen

ts

Ind

ep

en

de

nt

aud

ito

r’s

rep

ort

19

Inco

me

sta

tem

en

t

19

Stat

em

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f co

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en

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me

19

Stat

em

en

t o

f fi

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siti

on

2

0

Stat

em

en

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f ch

ang

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in e

qu

ity

20

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em

en

t o

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sh f

low

s

21

No

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to t

he

fin

anci

al s

tate

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Ch

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1,0

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66

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s 2

3 t

o 4

1 ar

e a

n in

teg

ral p

art

of

the

se f

inan

cia

l sta

tem

en

ts

To t

he

shar

eho

lder

s o

f C

ho

rus

Lim

ited

Rep

ort

on

th

e co

mp

any

and

gro

up

fin

anci

al s

tate

men

ts

We

hav

e au

dit

ed t

he

acco

mp

anyi

ng

fin

anci

al s

tate

men

ts o

f C

ho

rus

Lim

ited

(‘’th

e co

mp

any’

’) an

d t

he

gro

up

, co

mp

risi

ng

th

e co

mp

any

and

its

sub

sid

iary

, on

pag

es 1

9 t

o 4

1. T

he

finan

cial

sta

tem

ents

com

pri

se t

he

stat

emen

ts o

f fin

anci

al p

osi

tio

n a

s at

30

Ju

ne

20

13,

the

inco

me

stat

emen

ts a

nd

sta

tem

ents

of

com

pre

hen

sive

inco

me,

chan

ges

in e

qu

ity

and

cas

h fl

ow

s fo

r th

e ye

ar t

hen

en

ded

, an

d a

sum

mar

y o

f si

gn

ifica

nt

acco

un

tin

g p

olic

ies

and

oth

er e

xpla

nat

ory

info

rmat

ion

, fo

r b

oth

th

e co

mp

any

and

th

e g

rou

p.

Dir

ecto

rs’ r

esp

on

sib

ility

fo

r th

e co

mp

any

and

gro

up

fin

anci

al

stat

emen

ts

Th

e d

irec

tors

are

res

po

nsi

ble

fo

r th

e p

rep

arat

ion

of

com

pan

y an

d

gro

up

fin

anci

al s

tate

men

ts in

acc

ord

ance

wit

h g

ener

ally

acc

epte

d

acco

un

tin

g p

ract

ice

in N

ew Z

eala

nd

an

d In

tern

atio

nal

Fin

anci

al

Rep

ort

ing

Sta

nd

ard

s th

at g

ive

a tr

ue

and

fai

r vi

ew o

f th

e m

atte

rs

to w

hic

h t

hey

rel

ate,

an

d f

or

such

inte

rnal

co

ntr

ol a

s th

e d

irec

tors

det

erm

ine

is n

eces

sary

to

en

able

th

e p

rep

arat

ion

of

com

pan

y an

d

gro

up

fin

anci

al s

tate

men

ts t

hat

are

fre

e fr

om

mat

eria

l mis

stat

emen

t

wh

eth

er d

ue

to f

rau

d o

r er

ror.

Au

dit

or’

s re

spo

nsi

bili

ty

Ou

r re

spo

nsi

bili

ty is

to

exp

ress

an

op

inio

n o

n t

hes

e co

mp

any

and

gro

up

fin

anci

al s

tate

men

ts b

ased

on

ou

r au

dit

. We

con

du

cted

ou

r au

dit

in a

cco

rdan

ce w

ith

Inte

rnat

ion

al S

tan

dar

ds

on

Au

dit

ing

(New

Zea

lan

d) a

nd

Inte

rnat

ion

al S

tan

dar

ds

on

Au

dit

ing

. Th

ose

stan

dar

ds

req

uir

e th

at w

e co

mp

ly w

ith

eth

ical

req

uir

emen

ts a

nd

pla

n a

nd

per

form

th

e au

dit

to

ob

tain

rea

son

able

ass

ura

nce

ab

ou

t

wh

eth

er t

he

com

pan

y an

d g

rou

p fi

nan

cial

sta

tem

ents

are

fre

e fr

om

mat

eria

l mis

stat

emen

t.

An

au

dit

invo

lves

per

form

ing

pro

ced

ure

s to

ob

tain

au

dit

evi

den

ce

abo

ut

the

amo

un

ts a

nd

dis

clo

sure

s in

th

e co

mp

any

and

gro

up

finan

cial

sta

tem

ents

. Th

e p

roce

du

res

sele

cted

dep

end

on

th

e

aud

ito

r’s ju

dg

emen

t, in

clu

din

g t

he

asse

ssm

ent

of

the

risk

s o

f

mat

eria

l mis

stat

emen

t o

f th

e fin

anci

al s

tate

men

ts, w

het

her

du

e

to f

rau

d o

r er

ror.

In m

akin

g t

ho

se r

isk

asse

ssm

ents

, th

e au

dit

or

con

sid

ers

inte

rnal

co

ntr

ol r

elev

ant

to t

he

com

pan

y an

d g

rou

p’s

pre

par

atio

n o

f th

e fin

anci

al s

tate

men

ts t

hat

giv

e a

tru

e an

d f

air

view

of

the

mat

ters

to

wh

ich

th

ey r

elat

e in

ord

er t

o d

esig

n a

ud

it

pro

ced

ure

s th

at a

re a

pp

rop

riat

e in

th

e ci

rcu

mst

ance

s, b

ut

no

t

for

the

pu

rpo

se o

f ex

pre

ssin

g a

n o

pin

ion

on

th

e eff

ecti

ven

ess

of

the

com

pan

y an

d g

rou

p’s

inte

rnal

co

ntr

ol.

An

au

dit

als

o in

clu

des

eval

uat

ing

th

e ap

pro

pri

aten

ess

of

acco

un

tin

g p

olic

ies

use

d a

nd

th

e

reas

on

able

nes

s o

f ac

cou

nti

ng

est

imat

es, a

s w

ell a

s ev

alu

atin

g t

he

pre

sen

tati

on

of

the

finan

cial

sta

tem

ents

.

We

bel

ieve

th

at t

he

aud

it e

vid

ence

we

hav

e o

bta

ined

is s

uffi

cien

t

and

ap

pro

pri

ate

to p

rovi

de

a b

asis

fo

r o

ur

aud

it o

pin

ion

.

Ou

r fir

m h

as a

lso

pro

vid

ed o

ther

ass

ura

nce

an

d t

ax c

om

plia

nce

serv

ices

to

th

e co

mp

any

and

gro

up

. Th

ese

mat

ters

hav

e n

ot

imp

aire

d

ou

r in

dep

end

ence

as

aud

ito

r o

f th

e co

mp

any

and

gro

up

. Th

e fir

m

has

no

oth

er r

elat

ion

ship

wit

h, o

r in

tere

st in

, th

e co

mp

any

and

gro

up

.

Op

inio

n

In o

ur

op

inio

n t

he

finan

cial

sta

tem

ents

on

pag

es 1

9 t

o 4

1:

•co

mplyw

ithgen

erallyacc

eptedacc

ountingpractice

in N

ew Z

eala

nd

;

•co

mplyw

ithIn

ternationalFinan

cialRep

ortingStandards;

•giveatruean

dfairview

ofthefin

ancialpositionofthe

com

pan

y an

d t

he

gro

up

as

at 3

0 J

un

e 2

013

an

d o

f th

e fin

anci

al

per

form

ance

an

d c

ash

flo

ws

of

the

com

pan

y an

d t

he

gro

up

fo

r

the

year

th

en e

nd

ed.

Rep

ort

on

oth

er le

gal

an

d r

egu

lato

ry r

equ

irem

ents

In a

cco

rdan

ce w

ith

th

e re

qu

irem

ents

of

sect

ion

s 16

(1)(

d) a

nd

16

(1)(

e)

of

the

Fin

anci

al R

epo

rtin

g A

ct 1

99

3, w

e re

po

rt t

hat

:

•wehaveobtained

alltheinform

ationandexp

lanationsthat

we

hav

e re

qu

ired

; an

d

•inouropinion,p

roperacc

ountingrec

ordshavebee

nkep

t

by

Ch

oru

s Li

mit

ed a

s fa

r as

ap

pea

rs f

rom

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r ex

amin

atio

n

of

tho

se r

eco

rds.

25

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st 2

013

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e

Net

eff

ec

tive

po

rtio

n o

f ch

ang

es in

fai

r va

lue

of c

ash

flo

w h

ed

ges

17 -

-

(1

0)

(10

)

Tota

l co

mp

reh

en

sive

loss

-

(4)

(10

) (1

4)

Bal

ance

at

30

Ju

ne

20

12 5

81

(4)

(10

) 5

67

Th

e n

ote

s o

n p

age

s 2

3 t

o 4

1 ar

e a

n in

teg

ral p

art

of

the

se f

inan

cia

l sta

tem

en

ts

GR

OU

PP

AR

EN

T

(DO

LLA

RS

IN M

ILLI

ON

S)N

OT

E

YE

AR

E

ND

ED

3

0 J

UN

E 2

013 $M

SEV

EN

MO

NT

HS

EN

DE

D

30

JU

NE

20

12 $

M

YE

AR

E

ND

ED

3

0 J

UN

E 2

013 $M

SEV

EN

MO

NT

HS

EN

DE

D

30

JU

NE

20

12 $M

Cas

h f

low

s fr

om

op

era

tin

g a

cti

viti

es

Cas

h w

as p

rovi

de

d f

rom

/(ap

plie

d t

o):

Cas

h r

ece

ive

d f

rom

cu

sto

me

rs 9

67

530

-

-

Fin

ance

inco

me

7

4

10

6

48

Inte

rco

mp

any

div

ide

nd

re

ceiv

ed

-

-

86

-

Pay

me

nt

to s

up

plie

rs a

nd

em

plo

yee

s (3

78)

(14

7) (1

) (1

)

Taxa

tio

n p

aid

(65)

(20

) (

7) -

Inte

rest

pai

d o

n d

eb

t an

d d

eri

vati

ves

(10

8)

(35)

(99

) (2

5)

Ne

t c

ash

flo

ws

fro

m o

pe

rati

ng

ac

tivi

tie

s 4

23

332

8

5 2

2

Cas

h f

low

s ap

pli

ed

to

inve

stin

g a

cti

viti

es

Cas

h w

as a

pp

lied

to

:

Su

bsi

dia

ry f

un

din

g

-

-

(18

9)

(13)

Pu

rch

ase

of

ne

two

rk a

sse

ts a

nd

so

ftw

are

an

d in

tan

gib

le a

sse

ts (6

81)

(256

) -

-

Cap

ital

ise

d in

tere

st p

aid

(6)

(3)

-

-

Ne

t c

ash

flo

ws

app

lie

d t

o in

vest

ing

ac

tivi

tie

s (6

87)

(259

) (1

89

) (1

3)

Cas

h f

low

s fr

om

fin

anci

ng

ac

tivi

tie

s

Cas

h w

as p

rovi

de

d f

rom

/(ap

plie

d t

o):

Ne

t (r

ep

aym

en

t o

f)/p

roce

ed

s fr

om

fin

ance

leas

es

(1)

2

-

-

Cro

wn

fu

nd

ing

(in

clu

din

g C

FH s

ec

uri

tie

s) 1

98

2

5 1

05

12

Pro

cee

ds

fro

m d

eb

t 1

90

5

1 1

90

5

1

Re

pay

me

nt

of

de

bt

(10

0)

(51)

(10

0)

(51)

Div

ide

nd

s p

aid

(83)

-

(83)

-

Ne

t c

ash

flo

ws

fro

m f

inan

cin

g a

cti

viti

es

20

4

27

112

1

2

Ne

t c

ash

flo

w (6

0)

10

0

8

21

Cas

h a

t th

e b

eg

inn

ing

of

the

pe

rio

d 1

40

4

0

61

40

Cas

h a

t th

e e

nd

of

the

pe

rio

d14

80

1

40

6

9

61

Th

e n

ote

s o

n p

age

s 2

3 t

o 4

1 ar

e a

n in

teg

ral p

art

of

the

se f

inan

cia

l sta

tem

en

ts

Stat

emen

t o

f ca

sh fl

ow

sF

OR

TH

E Y

EA

R E

ND

ED

30

JU

NE

20

13

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts2

2

Stat

emen

t o

f ca

sh fl

ow

s, c

on

tinu

edR

EC

ON

CIL

IAT

ION

OF

NE

T E

AR

NIN

GS

/(L

OS

S)

TO

NE

T C

AS

H F

LO

WS

FR

OM

OP

ER

AT

ING

AC

TIV

ITIE

S

GR

OU

PP

AR

EN

T

(DO

LLA

RS

IN M

ILLI

ON

S)

YE

AR

E

ND

ED

3

0 J

UN

E 2

013 $M

SEV

EN

MO

NT

HS

EN

DE

D

30

JU

NE

20

12 $M

YE

AR

E

ND

ED

3

0 J

UN

E 2

013 $M

SEV

EN

MO

NT

HS

EN

DE

D

30

JU

NE

20

12 $M

Ne

t e

arn

ing

s/(l

oss

) fo

r th

e p

eri

od

171

1

02

87

(4)

Ad

just

me

nt

for:

De

pre

cia

tio

n c

har

ge

d o

n n

etw

ork

ass

ets

26

2 1

51

-

-

Am

ort

isat

ion

of

Cro

wn

fu

nd

ing

(4)

(1)

(1)

-

Am

ort

isat

ion

of

soft

war

e a

nd

oth

er

inta

ng

ible

ass

ets

61

39

-

-

De

ferr

ed

inco

me

tax

9

6

-

-

Oth

er

6

(4)

4

9

50

5 2

93

90

5

Ch

ang

e in

cu

rre

nt

asse

ts a

nd

liab

iliti

es:

Ch

ang

e in

tra

de

an

d o

the

r re

ceiv

able

s (

70)

(10

1) -

(6

)

Ch

ang

e in

tra

de

an

d o

the

r p

ayab

les

(3)

126

2

2

4

Ch

ang

e in

inco

me

tax

pay

able

/re

ceiv

able

(9)

14

(7

) (1

)

(82)

39

(5

) 1

7

Ne

t c

ash

flo

ws

fro

m o

pe

rati

ng

ac

tivi

tie

s 4

23

332

8

5 2

2

Th

e n

ote

s o

n p

age

s 2

3 t

o 4

1 ar

e a

n in

teg

ral p

art

of

the

se f

inan

cia

l sta

tem

en

ts

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

23

Rep

ort

ing

en

tity

an

d s

tatu

tory

bas

e

Ch

oru

s Li

mit

ed is

reg

iste

red

in N

ew Z

eala

nd

un

der

th

e C

om

pan

ies

Act

19

93

an

d is

an

issu

er f

or

the

pu

rpo

ses

of

the

Fin

anci

al R

epo

rtin

g

Act

19

93.

Ch

oru

s Li

mit

ed w

as e

stab

lish

ed a

s a

stan

dal

on

e, p

ub

licly

liste

d e

nti

ty o

n 1

Dec

emb

er 2

011

, up

on

its

dem

erg

er f

rom

Tel

eco

m

Co

rpo

rati

on

of

New

Zea

lan

d L

imit

ed (

Tele

com

). T

he

dem

erg

er w

as

a co

nd

itio

n o

f an

ag

reem

ent

wit

h C

row

n F

ibre

Ho

ldin

gs

Lim

ited

(CFH

) to

en

able

Ch

oru

s Li

mit

ed t

o b

e th

e C

row

n’s

Ult

ra-F

ast

Bro

adb

and

(UFB

) pro

vid

er in

24

reg

ion

s, r

epre

sen

tin

g a

pp

roxi

mat

ely

70%

of

the

UFB

co

vera

ge

area

. Ch

oru

s Li

mit

ed is

list

ed a

nd

its

ord

inar

y sh

ares

qu

ote

d o

n t

he

NZ

X m

ain

bo

ard

eq

uit

y se

curi

ty

mar

ket

(NZ

X M

ain

Bo

ard

) an

d o

n t

he

Au

stra

lian

Sto

ck E

xch

ang

e

(ASX

). A

mer

ican

Dep

osi

tary

Sh

ares

(AD

Ss),

each

rep

rese

nti

ng

fiv

e

ord

inar

y sh

ares

(an

d e

vid

ence

d b

y A

mer

ican

Dep

osi

tary

Rec

eip

ts

(AD

Rs)

), ar

e n

ot

liste

d b

ut

are

trad

ed o

n t

he

ove

r-th

e-co

un

ter

(OT

C) m

arke

t in

th

e U

nit

ed S

tate

s.

Th

e fin

anci

al s

tate

men

ts p

rese

nte

d a

re t

ho

se o

f C

ho

rus

Lim

ited

(th

e

Co

mp

any,

Par

ent

or

the

Par

ent

Co

mp

any)

to

get

her

wit

h it

s su

bsi

dia

ry

(th

e C

ho

rus

Gro

up

, Gro

up

or

Ch

oru

s).

Nat

ure

of

op

erat

ion

s

Ch

oru

s is

New

Zea

lan

d’s

larg

est

fixed

lin

e co

mm

un

icat

ion

s

infr

astr

uct

ure

ser

vice

pro

vid

er. C

ho

rus

mai

nta

ins

and

bu

ilds

a

net

wo

rk p

red

om

inan

tly

mad

e u

p o

f lo

cal t

elep

ho

ne

exch

ang

es,

cab

inet

s, c

op

per

an

d f

ibre

cab

les.

Ch

oru

s h

as a

pp

roxi

mat

ely

1.8

mill

ion

fix

ed li

ne

con

nec

tio

ns.

Th

ere

are

aro

un

d 1

30

,00

0

kilo

met

res

of

cop

per

cab

le a

nd

ab

ou

t 3

2,0

00

kilo

met

res

of

fibre

cab

le c

on

nec

tin

g h

om

es a

nd

bu

sin

esse

s to

loca

l exc

han

ges

,

and

ro

adsi

de

cab

inet

s th

rou

gh

ou

t th

e co

un

try.

Bas

is o

f p

rep

arat

ion

Th

ese

finan

cial

sta

tem

ents

hav

e b

een

pre

par

ed in

acc

ord

ance

wit

h g

ener

ally

acc

epte

d a

cco

un

tin

g p

ract

ice

in N

ew Z

eala

nd

an

d

the

Fin

anci

al R

epo

rtin

g A

ct 1

99

3. T

hey

co

mp

ly w

ith

New

Zea

lan

d

equ

ival

ents

to

Inte

rnat

ion

al F

inan

cial

Rep

ort

ing

Sta

nd

ard

s (N

Z IF

RS)

as a

pp

rop

riat

e fo

r p

rofit

-ori

ente

d e

nti

ties

. Th

ey a

lso

co

mp

ly w

ith

Inte

rnat

ion

al F

inan

cial

Rep

ort

ing

Sta

nd

ard

s.

Th

ese

finan

cial

sta

tem

ents

are

exp

ress

ed in

New

Zea

lan

d d

olla

rs,

wh

ich

is C

ho

rus’

fu

nct

ion

al c

urr

ency

. Ref

eren

ces

in t

hes

e fin

anci

al

stat

emen

ts t

o ‘$

’,‘N

Z$

’ an

d ‘N

ZD

’ are

to

New

Zea

lan

d d

olla

rs,

refe

ren

ces

to ‘U

SD’ a

re t

o U

S d

olla

rs, r

efer

ence

s to

‘AU

D’ a

re t

o

Au

stra

lian

do

llars

, ref

eren

ces

to ‘E

UR

’ are

to

Eu

ros

and

ref

eren

ces

to ‘G

BP

’ are

to

po

un

ds

ster

ling

. All

finan

cial

info

rmat

ion

has

bee

n

rou

nd

ed t

o t

he

nea

rest

mill

ion

, un

less

oth

erw

ise

stat

ed.

Mea

sure

men

t b

asis

Th

e m

easu

rem

ent

bas

is a

do

pte

d in

th

e p

rep

arat

ion

of

thes

e fin

anci

al

stat

emen

ts is

his

tori

cal c

ost

, mo

difi

ed b

y th

e re

valu

atio

n o

f fin

anci

al

inst

rum

ents

as

iden

tifie

d in

th

e sp

ecifi

c ac

cou

nti

ng

po

licie

s b

elo

w

and

th

e ac

com

pan

yin

g n

ote

s.

Spec

ific

acco

un

tin

g p

olic

ies

Ch

oru

s w

as e

stab

lish

ed a

s a

stan

dal

on

e p

ub

licly

list

ed e

nti

ty o

n

1 D

ecem

ber

20

11. T

he

acco

un

tin

g p

olic

ies

ado

pte

d h

ave

bee

n

app

lied

co

nsi

sten

tly

thro

ug

ho

ut

the

per

iod

s p

rese

nte

d in

th

ese

finan

cial

sta

tem

ents

. Cer

tain

co

mp

arat

ive

info

rmat

ion

has

bee

n

recl

assi

fied

to

co

nfo

rm w

ith

th

e cu

rren

t ye

ar’s

pre

sen

tati

on

.

Bas

is o

f co

nso

lidat

ion

Sub

sid

iari

es a

re f

ully

co

nso

lidat

ed f

rom

th

e d

ate

of

acq

uis

itio

n, b

ein

g

the

dat

e o

n w

hic

h t

he

Gro

up

ob

tain

s co

ntr

ol,

and

co

nti

nu

e to

be

con

solid

ated

un

til t

he

dat

e w

hen

su

ch c

on

tro

l cea

ses.

Th

e fin

anci

al

stat

emen

ts o

f th

e su

bsi

dia

ry a

re p

rep

ared

fo

r th

e sa

me

rep

ort

ing

per

iod

as

the

Par

ent

Co

mp

any,

usi

ng

co

nsi

sten

t ac

cou

nti

ng

po

licie

s.

All

intr

a-g

rou

p b

alan

ces,

tra

nsa

ctio

ns,

un

real

ised

gai

ns

and

loss

es

resu

ltin

g f

rom

intr

a-g

rou

p t

ran

sact

ion

s an

d d

ivid

end

s ar

e el

imin

ated

in f

ull.

Su

bsi

dia

ries

are

rec

ord

ed a

t co

st le

ss a

ny

imp

airm

ent

loss

es

in t

he

Par

ent

Co

mp

any

finan

cial

sta

tem

ents

.

Cri

tica

l acc

ou

nti

ng

est

imat

es a

nd

ass

um

pti

on

s

In p

rep

arin

g t

he

finan

cial

sta

tem

ents

man

agem

ent

has

mad

e

esti

mat

es a

nd

ass

um

pti

on

s ab

ou

t th

e fu

ture

th

at a

ffec

t th

e re

po

rted

amo

un

ts o

f as

sets

an

d li

abili

ties

at

the

dat

e o

f th

e fin

anci

al

stat

emen

ts a

nd

th

e re

po

rted

am

ou

nts

of

reve

nu

e an

d e

xpen

ses

du

rin

g t

he

per

iod

. Act

ual

res

ult

s co

uld

diff

er f

rom

th

ose

est

imat

es.

Est

imat

es a

nd

ass

um

pti

on

s ar

e co

nti

nu

ally

eva

luat

ed a

nd

are

bas

ed

on

his

tori

cal e

xper

ien

ce a

nd

oth

er f

acto

rs, i

ncl

ud

ing

exp

ecta

tio

ns

of

futu

re e

ven

ts t

hat

are

bel

ieve

d t

o b

e re

aso

nab

le u

nd

er t

he

circ

um

stan

ces.

Th

e p

rin

cip

al a

reas

of

jud

gem

ent

in p

rep

arin

g

thes

e fin

anci

al s

tate

men

ts a

re s

et o

ut

bel

ow

.

No

tes

to t

he

finan

cial

sta

tem

ents

Inform

ationaboutcriticalju

dgem

entsin

applyingacc

ounting

po

licie

s th

at h

ave

the

mo

st s

ign

ifica

nt

effec

t o

n t

he

amo

un

ts

reco

gn

ised

in t

he

fin

anci

al s

tate

men

ts is

incl

ud

ed in

th

e

follo

win

g n

ote

s:

Cro

wn

fu

nd

ing

(no

te 5

)

Ch

oru

s m

ust

exe

rcis

e ju

dg

emen

t w

hen

rec

og

nis

ing

Cro

wn

fun

din

g t

o d

eter

min

e if

con

dit

ion

s o

f th

e fu

nd

ing

co

ntr

act

hav

e

bee

n s

atis

fied

. Th

is ju

dg

emen

t w

ill b

e b

ased

on

th

e fa

cts

and

circ

um

stan

ces

that

are

evi

den

t fo

r ea

ch c

on

trac

t at

th

e ti

me

of

pre

par

ing

th

e fin

anci

al s

tate

men

ts.

Leas

es (n

ote

15

)

Det

erm

inin

g w

het

her

a le

ase

agre

emen

t is

a f

inan

ce le

ase

or

op

erat

ing

leas

e re

qu

ires

jud

gem

ent

as t

o w

het

her

th

e ag

reem

ent

tran

sfer

s su

bst

anti

ally

all

the

risk

s an

d r

ewar

ds

of

ow

ner

ship

to C

ho

rus.

Info

rmat

ion

ab

ou

t as

sum

pti

on

s an

d e

stim

atio

n u

nce

rtai

nti

es t

hat

haveasignifica

ntriskofresu

ltingin

am

aterialadjustmen

twithin

the

nex

t fi

nan

cial

yea

r ar

e in

clu

ded

in t

he

follo

win

g n

ote

s:

Net

wo

rk a

sset

s (n

ote

1)

Ass

essi

ng

th

e ap

pro

pri

aten

ess

of

use

ful l

ife a

nd

res

idu

al v

alu

e

esti

mat

es o

f n

etw

ork

ass

ets

req

uir

es a

nu

mb

er o

f fa

cto

rs t

o b

e

con

sid

ered

su

ch a

s th

e p

hys

ical

co

nd

itio

n o

f th

e as

set,

exp

ecte

d

per

iod

of

use

of

the

asse

t b

y C

ho

rus,

tec

hn

olo

gic

al a

dva

nce

s,

reg

ula

tio

n a

nd

exp

ecte

d d

isp

osa

l pro

ceed

s fr

om

th

e fu

ture

sal

e

of

the

asse

t.

CFH

sec

uri

ties

(no

te 4

)

Det

erm

inin

g t

he

fair

val

ue

of

the

CFH

sec

uri

ties

req

uir

es a

ssu

mp

tio

ns

on

exp

ecte

d f

utu

re c

ash

flo

w a

nd

dis

cou

nt

rate

bas

ed o

n f

utu

re lo

ng

dat

ed s

wap

cu

rves

.

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts2

4

No

te 1

– N

etw

ork

ass

ets

Dep

reci

atio

n is

ch

arg

ed o

n a

str

aig

ht-

line

bas

is t

o w

rite

do

wn

the

cost

of

net

wo

rk a

sset

s to

its

esti

mat

ed r

esid

ual

val

ue

ove

r

its

esti

mat

ed u

sefu

l life

. Est

imat

ed u

sefu

l liv

es a

re a

s fo

llow

s:

Co

pp

er

cab

les

10-3

0 y

ear

s

Fib

re c

able

s2

0 y

ear

s

Du

cts

an

d m

anh

ole

s5

0 y

ear

s

Cab

ine

ts5

-14

ye

ars

Pro

pe

rty

5-5

0 y

ear

s

Ne

two

rk e

lec

tro

nic

s2-

14 y

ear

s

Oth

er

2-15

ye

ars

Oth

er n

etw

ork

ass

ets

incl

ud

e m

oto

r ve

hic

les,

net

wo

rk m

anag

emen

t

and

ad

min

istr

atio

n s

yste

ms

and

rad

io in

fras

tru

ctu

re.

An

y fu

ture

ad

vers

e im

pac

ts a

risi

ng

in a

sses

sin

g t

he

carr

yin

g v

alu

e

or

lives

of

Ch

oru

s’ n

etw

ork

ass

ets

cou

ld le

ad t

o f

utu

re im

pai

rmen

t

loss

es o

r in

crea

ses

in d

epre

ciat

ion

ch

arg

es t

hat

co

uld

aff

ect

futu

re e

arn

ing

s.

An

item

of

net

wo

rk a

sset

s an

d a

ny

sig

nifi

can

t p

art

is d

erec

og

nis

ed

up

on

dis

po

sal o

r w

hen

no

fu

ture

eco

no

mic

ben

efit

s ar

e ex

pec

ted

fro

m it

s u

se o

r d

isp

osa

l. W

her

e n

etw

ork

ass

ets

are

dis

po

sed

of,

the

pro

fit o

r lo

ss r

eco

gn

ised

in t

he

inco

me

stat

emen

t is

cal

cula

ted

as

the

diff

eren

ce b

etw

een

th

e sa

le p

rice

an

d t

he

carr

yin

g v

alu

e o

f th

e as

set.

No

n-m

on

etar

y it

ems

that

are

mea

sure

d in

ter

ms

of

his

tori

cal c

ost

in

a fo

reig

n c

urr

ency

are

tra

nsl

ated

usi

ng

th

e ex

chan

ge

rate

s as

at

the

dat

es o

f th

e in

itia

l tra

nsa

ctio

ns.

Lan

d a

nd

wo

rk in

pro

gre

ss a

re n

ot

dep

reci

ated

.

GR

OU

P

AS

AT

30

JU

NE

20

13

CO

PP

ER

C

AB

LES

$M

FIB

RE

C

AB

LES

$M

DU

CT

S A

ND

M

AN

HO

LES

$M

CA

BIN

ET

S$

MP

RO

PE

RT

Y$

M

NE

TW

OR

K

ELE

CT

RO

NIC

S$

MO

TH

ER

$M

WO

RK

IN

PR

OG

RE

SS $M

TO

TA

L$

M

Co

st

Bal

ance

as

at 1

Ju

ly 2

012

2,3

93

56

7 7

91

38

0

475

1

,30

6

18

8

119

6

,219

Ad

dit

ion

s -

-

-

-

-

-

-

6

46

6

46

Oth

er

-

-

-

-

-

-

1

1

2

Dis

po

sals

(93)

-

-

-

-

-

-

-

(93)

Tran

sfe

rs 1

(1

) -

-

1

-

(1

) -

-

Tran

sfe

rs f

rom

wo

rk in

pro

gre

ss 4

8

18

6

30

1 2

9

25

71

12

(672

) -

Bal

ance

as

at 3

0 J

un

e 2

013

2,3

49

7

52

1,0

92

40

9

50

1 1

,377

2

00

9

4

6,7

74

Acc

um

ula

ted

De

pre

ciat

ion

Bal

ance

as

at 1

Ju

ly 2

012

(1,7

34

) (2

07)

(324

) (1

56)

(20

0)

(1,0

13)

(174

) -

(3

,80

8)

De

pre

cia

tio

n (6

6)

(29

) (1

6)

(33)

(14

) (9

5) (9

) -

(2

62)

Dis

po

sals

92

-

-

-

-

-

-

-

92

Bal

ance

as

at 3

0 J

un

e 2

013

(1,7

08

) (2

36)

(34

0)

(18

9)

(214

) (1

,10

8)

(18

3) -

(3

,978

)

Ne

t c

arry

ing

am

ou

nt

64

1 5

16

752

2

20

2

87

26

9

17

94

2

,79

6

GR

OU

P

AS

AT

30

JU

NE

20

12

CO

PP

ER

C

AB

LES

$M

FIB

RE

C

AB

LES

$M

DU

CT

S A

ND

M

AN

HO

LES

$M

CA

BIN

ET

S$

MP

RO

PE

RT

Y$

M

NE

TW

OR

K

ELE

CT

RO

NIC

S$

MO

TH

ER

$M

WO

RK

IN

PR

OG

RE

SS $M

TO

TA

L$

M

Co

st

Bal

ance

as

at 1

De

cem

be

r 2

011

2,3

68

4

92

70

5 3

72

46

9

1,2

83

18

5 6

9

5,9

43

Ad

dit

ion

s -

-

-

-

-

-

-

2

82

28

2

Dis

po

sals

-

-

-

(5)

-

(1)

-

-

(6)

Tran

sfe

rs f

rom

wo

rk in

pro

gre

ss 2

5 7

5 8

6

13

6

24

3

(2

32)

-

Bal

ance

as

at 3

0 J

un

e 2

012

2,3

93

56

7 7

91

38

0

475

1

,30

6

18

8

119

6

,219

Acc

um

ula

ted

De

pre

ciat

ion

Bal

ance

as

at 1

De

cem

be

r 2

011

(1,6

93)

(19

4)

(317

) (1

46

) (1

92)

(952

) (1

69

) -

(3

,66

3)

De

pre

cia

tio

n (4

1) (1

3) (

7) (1

5) (8

) (6

2) (5

) -

(1

51)

Dis

po

sals

-

-

-

5

-

1

-

-

6

Bal

ance

as

at 3

0 J

un

e 2

012

(1,7

34

) (2

07)

(324

) (1

56)

(20

0)

(1,0

13)

(174

) -

(3

,80

8)

Ne

t c

arry

ing

am

ou

nt

659

3

60

4

67

224

2

75

29

3 1

4

119

2

,411

No

te 1

– N

etw

ork

ass

ets

con

tinu

ed

In t

he

stat

emen

t o

f fin

anci

al p

osi

tio

n, n

etw

ork

ass

ets

are

stat

ed a

t

cost

less

acc

um

ula

ted

dep

reci

atio

n a

nd

an

y ac

cum

ula

ted

imp

airm

ent

loss

es. T

he

cost

of

add

itio

ns

to n

etw

ork

ass

ets

and

cap

ital

wo

rk in

pro

gre

ss c

on

stru

cted

by

Ch

oru

s in

clu

des

th

e co

st o

f al

l mat

eria

ls

use

d in

co

nst

ruct

ion

, dir

ect

lab

ou

r co

sts

spec

ifica

lly a

sso

ciat

ed w

ith

con

stru

ctio

n, i

nte

rest

co

sts

that

are

att

rib

uta

ble

to

th

e as

set,

res

ou

rce

man

agem

ent

con

sen

t co

sts

and

att

rib

uta

ble

ove

rhea

ds.

Rep

airs

an

d m

ain

ten

ance

co

sts

are

reco

gn

ised

in t

he

inco

me

stat

emen

t as

incu

rred

.

Est

imat

ing

use

ful l

ives

an

d r

esid

ual

val

ues

of

net

wo

rk a

sset

s

Th

e d

eter

min

atio

n o

f th

e ap

pro

pri

ate

use

ful l

ife f

or

a p

arti

cula

r as

set

req

uir

es m

anag

emen

t to

mak

e ju

dg

emen

ts a

bo

ut,

am

on

gst

oth

er

fact

ors

, th

e ex

pec

ted

per

iod

of

serv

ice

po

ten

tial

of

the

asse

t, t

he

likel

iho

od

of

the

asse

t b

eco

min

g o

bso

lete

as

a re

sult

of

tech

no

log

ical

adva

nce

s, t

he

likel

iho

od

of

Ch

oru

s ce

asin

g t

o u

se t

he

asse

t in

its

bu

sin

ess

op

erat

ion

s an

d t

he

effe

ct o

f g

ove

rnm

ent

reg

ula

tio

n.

Wh

ere

an it

em o

f n

etw

ork

ass

ets

com

pri

ses

maj

or

com

po

nen

ts

hav

ing

diff

eren

t u

sefu

l liv

es, t

he

com

po

nen

ts a

re a

cco

un

ted

fo

r

as s

epar

ate

item

s o

f n

etw

ork

ass

ets.

Wh

ere

the

rem

ain

ing

use

ful l

ives

or

reco

vera

ble

val

ues

hav

e

dim

inis

hed

du

e to

tec

hn

olo

gic

al, r

egu

lato

ry o

r m

arke

t co

nd

itio

n

chan

ges

, dep

reci

atio

n is

acc

eler

ated

. Th

e as

set’s

res

idu

al v

alu

es,

use

ful l

ives

, an

d m

eth

od

s o

f d

epre

ciat

ion

are

rev

iew

ed a

nn

ual

ly

and

ad

just

ed p

rosp

ecti

vely

, if

app

rop

riat

e.

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

25

Th

e P

aren

t d

oes

no

t h

old

an

y n

etw

ork

ass

ets.

Th

ere

are

no

res

tric

tio

ns

on

Ch

oru

s n

etw

ork

ass

ets

or

any

net

wo

rk a

sset

s p

led

ged

as

secu

riti

es f

or

liab

iliti

es. A

t 3

0 J

un

e 2

013

the

con

trac

tual

co

mm

itm

ent

for

acq

uis

itio

n a

nd

co

nst

ruct

ion

of

net

wo

rk a

sset

s w

as $

28

mill

ion

(30

Ju

ne

20

12: $

23

mill

ion

).

Dep

reci

atio

n

Ch

oru

s re

ceiv

es f

un

din

g f

rom

th

e C

row

n t

o f

inan

ce t

he

cap

ital

exp

end

itu

re a

sso

ciat

ed w

ith

th

e d

evel

op

men

t o

f th

e U

ltra

-Fas

t

No

te 1

– N

etw

ork

ass

ets

con

tinu

ed

Bro

adb

and

net

wo

rk, r

ura

l bro

adb

and

ser

vice

s an

d o

ther

ser

vice

s.

Th

e co

ntr

act

for

Ult

ra-F

ast

Bro

adb

and

is a

gre

ed b

etw

een

th

e P

aren

t

and

Cro

wn

Fib

re H

old

ing

s. T

he

Par

ent

rece

ives

th

e C

row

n f

un

din

g

dir

ectl

y, h

ow

ever

th

e co

nst

ruct

ion

of

the

net

wo

rk a

sset

s is

car

ried

ou

t b

y th

e su

bsi

dia

ry. F

un

din

g is

off

set

agai

nst

dep

reci

atio

n o

ver

the

life

of

the

asse

ts t

he

fun

din

g is

use

d t

o c

on

stru

ct. C

row

n f

un

din

g

rele

ased

ag

ain

st d

epre

ciat

ion

fo

r th

e cu

rren

t p

erio

d is

as

follo

ws:

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

De

pre

cia

tio

n c

har

ge

d o

n n

etw

ork

ass

ets

26

2 1

51

-

-

Less

: Cro

wn

fu

nd

ing

– U

ltra

-Fas

t B

road

ban

d (1

) -

(1

) -

C

row

n f

un

din

g –

Ru

ral B

road

ban

d I

nit

iati

ve (1

) -

-

-

C

row

n f

un

din

g –

oth

er

(2)

(1)

-

-

Tota

l de

pre

ciat

ion

258

1

50

(1)

-

Ref

er t

o n

ote

5 f

or

info

rmat

ion

on

Cro

wn

fu

nd

ing

.

Pro

per

ty E

xch

ang

es

Ch

oru

s h

as le

ased

pro

per

ty e

xch

ang

e sp

ace

ow

ned

by

Tele

com

sub

ject

to

fin

ance

leas

e ar

ran

gem

ents

. Th

ese

hav

e b

een

incl

ud

ed

in C

ho

rus’

net

wo

rk a

sset

s u

nd

er t

he

pro

per

ty c

ateg

ory

. As

at

30

Ju

ne

20

13 t

he

pro

per

ty e

xch

ang

e as

sets

cap

ital

ised

un

der

a

finan

ce le

ase

had

a c

ost

of

$15

7 m

illio

n (3

0 J

un

e 2

012

: $15

7 m

illio

n)

tog

eth

er w

ith

acc

um

ula

ted

dep

reci

atio

n o

f $

7 m

illio

n (3

0 J

un

e 2

012

:

$3

mill

ion

).

Net

wo

rk e

lect

ron

ics

Ch

oru

s h

as jo

int

arra

ng

emen

ts f

or

use

of

cert

ain

net

wo

rk e

lect

ron

ics

asse

ts w

ith

Tel

eco

m. T

he

equ

ipm

ent

use

d b

y C

ho

rus

is in

clu

ded

in

the

net

wo

rk e

lect

ron

ics

cate

go

ry o

f n

etw

ork

ass

ets.

As

at 3

0 J

un

e

20

13 t

he

equ

ipm

ent

cap

ital

ised

had

a c

ost

of

$16

mill

ion

(30

Ju

ne

20

12: $

16 m

illio

n) t

og

eth

er w

ith

acc

um

ula

ted

dep

reci

atio

n o

f $

7

mill

ion

(30

Ju

ne

20

12: $

3 m

illio

n).

Imp

airm

ent

At

each

rep

ort

ing

dat

e, C

ho

rus

revi

ews

the

carr

yin

g a

mo

un

ts o

f

its

net

wo

rk a

sset

s to

det

erm

ine

wh

eth

er t

her

e is

an

y in

dic

atio

n t

hat

tho

se a

sset

s h

ave

suff

ered

an

imp

airm

ent

loss

. If

any

ind

icat

ion

exi

sts,

the

reco

vera

ble

am

ou

nt

of

the

asse

t is

est

imat

ed t

o d

eter

min

e th

e

exte

nt,

if a

ny,

of

the

imp

airm

ent

loss

rec

og

nis

ed in

ear

nin

gs.

Sh

ou

ld

the

con

dit

ion

s th

at g

ave

rise

to

th

e im

pai

rmen

t lo

ss n

o lo

ng

er e

xist

,

and

th

e as

sets

are

no

lon

ger

co

nsi

der

ed t

o b

e im

pai

red

, a r

ever

sal

of

an im

pai

rmen

t lo

ss w

ou

ld b

e re

cog

nis

ed im

med

iate

ly in

ear

nin

gs.

No

imp

airm

ent

loss

on

th

e n

etw

ork

ass

ets

was

iden

tifie

d in

th

e

curr

ent

per

iod

(30

Ju

ne

20

12: n

il).

Cap

ital

ised

inte

rest

Fin

ance

co

sts

are

cap

ital

ised

on

qu

alify

ing

item

s o

f n

etw

ork

ass

ets

at a

n a

nn

ual

ised

rat

e o

f 6

.00

% (3

0 J

un

e 2

012

: 6.0

0%

). In

tere

st is

cap

ital

ised

fo

r th

e p

erio

d r

equ

ired

to

co

mp

lete

th

e n

etw

ork

ass

ets

and

pre

par

e fo

r it

s in

ten

ded

use

. In

th

e cu

rren

t ye

ar f

inan

ce c

ost

s

tota

llin

g $

6 m

illio

n (3

0 J

un

e 2

012

: $3

mill

ion

) hav

e b

een

cap

ital

ised

agai

nst

net

wo

rk a

sset

s.

Soft

war

e an

d o

ther

inta

ng

ible

ass

ets

are

init

ially

mea

sure

d a

t co

st.

Th

e d

irec

t co

sts

asso

ciat

ed w

ith

th

e d

evel

op

men

t o

f n

etw

ork

an

d

bu

sin

ess

soft

war

e fo

r in

tern

al u

se a

re c

apit

alis

ed w

her

e p

roje

ct

succ

ess

is p

rob

able

an

d t

he

cap

ital

isat

ion

cri

teri

a is

met

. Fo

llow

ing

init

ial r

eco

gn

itio

n, s

oft

war

e an

d o

ther

inta

ng

ible

ass

ets

are

stat

ed a

t

cost

less

acc

um

ula

ted

am

ort

isat

ion

an

d im

pai

rmen

t lo

sses

. So

ftw

are

and

oth

er in

tan

gib

le a

sset

s w

ith

a f

init

e lif

e ar

e am

ort

ised

fro

m t

he

dat

e th

e as

set

is r

ead

y fo

r u

se o

n a

str

aig

ht-

line

bas

is o

ver

its

esti

mat

ed u

sefu

l life

wh

ich

is a

s fo

llow

s

So

ftw

are

2–8

ye

ars

Oth

er

inta

ng

ible

s 6

-20

ye

ars

Oth

er in

tan

gib

les

mai

nly

co

nsi

st o

f la

nd

eas

emen

ts.

At

each

rep

ort

ing

dat

e, C

ho

rus

revi

ews

the

carr

yin

g a

mo

un

ts o

f it

s

soft

war

e an

d o

ther

inta

ng

ible

ass

ets

to d

eter

min

e w

het

her

th

ere

is

any

ind

icat

ion

th

at t

ho

se a

sset

s h

ave

suff

ered

an

imp

airm

ent

loss

.

If a

ny

ind

icat

ion

exi

sts,

th

e re

cove

rab

le a

mo

un

t o

f th

e as

set

is

esti

mat

ed t

o d

eter

min

e th

e ex

ten

t, if

an

y, o

f th

e im

pai

rmen

t lo

ss

reco

gn

ised

in e

arn

ing

s. S

ho

uld

th

e co

nd

itio

ns

that

gav

e ri

se t

o

the

imp

airm

ent

loss

no

lon

ger

exi

st, a

nd

th

e as

sets

are

no

lon

ger

con

sid

ered

to

be

imp

aire

d, a

rev

ersa

l of

an im

pai

rmen

t lo

ss w

ou

ld

be

reco

gn

ised

imm

edia

tely

in e

arn

ing

s.

Wh

ere

esti

mat

ed u

sefu

l liv

es o

r re

cove

rab

le v

alu

es h

ave

dim

inis

hed

du

e to

tec

hn

olo

gic

al c

han

ge

or

mar

ket

con

dit

ion

s, a

mo

rtis

atio

n

is a

ccel

erat

ed.

GR

OU

P

AS

AT

30

JU

NE

20

13SO

FTW

AR

E$

M

OT

HE

R

INT

AN

GIB

LES

$M

WO

RK

IN

PR

OG

RE

SS $M

TO

TA

L$

M

Co

st

Bal

ance

as

at 1

Ju

ly 2

012

36

7 6

3

4

40

7

Ad

dit

ion

s -

-

3

5 3

5

Dis

po

sals

(1)

-

-

(1)

Tran

sfe

rs f

rom

wo

rk in

pro

gre

ss 4

2 -

(4

2) -

Bal

ance

as

at 3

0 J

un

e 2

013

40

8

6

27

44

1

Acc

um

ula

ted

am

ort

isat

ion

Bal

ance

as

at 1

Ju

ly 2

012

(227

) -

-

(2

27)

Am

ort

isat

ion

(60

) (1

) -

(6

1)

Bal

ance

as

at 3

0 J

un

e 2

013

(28

7) (1

) -

(2

88

)

Ne

t c

arry

ing

am

ou

nt

121

5

2

7 1

53

GR

OU

P

AS

AT

30

JU

NE

20

12SO

FTW

AR

E$

M

OT

HE

R

INT

AN

GIB

LES

$M

WO

RK

IN

PR

OG

RE

SS $M

TO

TA

L$

M

Co

st

Bal

ance

as

at 1

De

cem

be

r 2

011

338

5

-

3

43

Ad

dit

ion

s -

-

6

4

64

Tran

sfe

rs f

rom

wo

rk in

pro

gre

ss 2

9

1

(30

) -

Bal

ance

as

at 3

0 J

un

e 2

012

36

7 6

3

4

40

7

Acc

um

ula

ted

am

ort

isat

ion

Bal

ance

as

at 1

De

cem

be

r 2

011

(18

8)

-

-

(18

8)

Am

ort

isat

ion

(39

) -

-

(3

9)

Bal

ance

as

at 3

0 J

un

e 2

012

(227

) -

-

(2

27)

Ne

t c

arry

ing

am

ou

nt

14

0

6

34

1

80

No

te 2

– S

oft

war

e an

d o

ther

inta

ng

ible

s

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts2

6

Th

e P

aren

t d

oes

no

t h

old

an

y so

ftw

are

and

oth

er in

tan

gib

le a

sset

s.

Th

ere

are

no

res

tric

tio

ns

on

Ch

oru

s so

ftw

are

and

oth

er in

tan

gib

le

asse

ts o

r an

y so

ftw

are

and

oth

er in

tan

gib

le a

sset

s p

led

ged

as

secu

riti

es f

or

liab

iliti

es. A

t 3

0 J

un

e 2

013

th

e co

ntr

actu

al c

om

mit

men

t

for

acq

uis

itio

n o

f so

ftw

are

and

oth

er in

tan

gib

le a

sset

s w

as $

10 m

illio

n

(30

Ju

ne

20

12: $

2 m

illio

n).

Shar

ed s

yste

ms

Ch

oru

s sh

ares

a n

um

ber

of

Info

rmat

ion

Tec

hn

olo

gy

(IT) s

yste

ms

wit

h T

elec

om

wit

h s

om

e sy

stem

s o

wn

ed b

y C

ho

rus

and

so

me

ow

ned

by

Tele

com

. Du

e to

th

e te

rms

of

the

go

vern

ance

fra

mew

ork

in p

lace

, th

ese

syst

ems

are

dee

med

to

be

join

tly

con

tro

lled

ass

ets,

as d

efin

ed in

NZ

IAS

31:

Inte

rest

s in

Jo

int

Ven

ture

s. F

or

asse

ts t

hat

it

do

es n

ot

ow

n, C

ho

rus

reco

gn

ises

its

shar

e o

f th

e jo

intl

y co

ntr

olle

d

asse

ts, a

s w

ell a

s a

liab

ility

fo

r th

e fu

ture

pay

men

ts d

ue,

sim

ilar

to

a fin

ance

leas

e. F

or

asse

ts t

hat

it d

oes

ow

n, C

ho

rus

der

eco

gn

ises

the

shar

e o

f th

e as

set

use

d b

y Te

leco

m, a

s w

ell a

s re

cog

nis

ing

a

rece

ivab

le f

or

the

futu

re r

ecei

pts

du

e. A

s at

30

Ju

ne

20

13 C

ho

rus

reco

gn

ised

join

tly

con

tro

lled

sys

tem

ass

ets

ow

ned

by

Tele

com

wit

h a

net

bo

ok

valu

e in

Ch

oru

s fin

anci

al s

tate

men

ts o

f $

3 m

illio

n

(30

Ju

ne

20

12: $

8 m

illio

n).

No

te 2

– S

oft

war

e an

d o

ther

inta

ng

ible

s co

ntin

ued

No

te 3

– D

ebt

Deb

t is

incl

ud

ed a

s n

on

-cu

rren

t lia

bili

ties

exc

ept

for

tho

se w

ith

mat

uri

ties

less

th

an 1

2 m

on

ths

fro

m t

he

rep

ort

ing

dat

e, w

hic

h a

re

clas

sifie

d a

s cu

rren

t lia

bili

ties

.

Deb

t is

init

ially

mea

sure

d a

t fa

ir v

alu

e, le

ss a

ny

tran

sact

ion

co

sts

that

are

dir

ectl

y at

trib

uta

ble

to

th

e is

sue

of

the

inst

rum

ents

. Deb

t is

sub

seq

uen

tly

mea

sure

d a

t am

ort

ised

co

st u

sin

g t

he

effe

ctiv

e in

tere

st

met

ho

d. T

he

wei

gh

ted

eff

ecti

ve in

tere

st r

ate

on

deb

t in

clu

din

g t

he

effe

ct o

f d

eriv

ativ

e fin

anci

al in

stru

men

ts w

as 5

.88

% (3

0 J

un

e 2

012

:

5.71

%).

GR

OU

P A

ND

PA

RE

NT

DU

E D

AT

E2

013 $M

20

12 $M

Syn

dic

ate

d b

ank

fac

ility

A2

3 N

ov

20

15 6

75

675

Syn

dic

ate

d b

ank

fac

ility

B2

3 N

ov

20

17 5

20

430

Eu

ro m

ed

ium

te

rm n

ote

s 6

Ap

r 2

02

0 5

09

5

13

Less

: sy

nd

icat

ed

loan

s fa

cili

ty f

ee

(7)

(9)

1,6

97

1,6

09

Cu

rre

nt

-

-

No

n-c

urr

en

t 1

,69

7 1

,60

9

Syn

dic

ated

ban

k fa

cilit

y

Ch

oru

s h

as in

pla

ce a

$1,

35

0 m

illio

n s

ynd

icat

ed b

ank

faci

lity

wit

h

two

tra

nch

es o

n m

arke

t st

and

ard

ter

ms

and

co

nd

itio

ns.

Th

e m

atu

rity

of

the

faci

lity

tran

ches

hav

e b

een

ext

end

ed b

y o

ne

year

wit

h n

ew

mat

uri

ty d

ates

in 2

015

an

d 2

017

. Th

e am

ou

nt

of

un

dra

wn

syn

dic

ated

ban

k fa

cilit

y th

at is

ava

ilab

le f

or

futu

re o

per

atin

g a

ctiv

itie

s is

$15

5

mill

ion

(30

Ju

ne

20

12: $

245

mill

ion

). T

he

syn

dic

ated

ban

k fa

cilit

y

is h

eld

wit

h b

ank

and

inst

itu

tio

nal

co

un

terp

arti

es r

ated

-A

to

AA

A,

bas

ed o

n r

atin

g a

gen

cy S

tan

dar

d &

Po

or’s

rat

ing

s.

Eu

ro M

ediu

m T

erm

No

tes

(EM

TN

)

GR

OU

P A

ND

PA

RE

NT

INT

ER

EST

RA

TE

20

13 $M

20

12 $M

26

0 m

illio

n G

BP

6.7

5%

50

9

513

Ch

oru

s u

tilis

es h

edg

ing

inst

rum

ents

to

man

age

the

inte

rest

rat

e

risk

ass

oci

ated

wit

h t

he

syn

dic

ated

ban

k fa

cilit

y. T

he

Gro

up

man

ages

inte

rest

rat

e ex

po

sure

wit

hin

Bo

ard

ap

pro

ved

par

amet

ers

set

ou

t

in t

he

trea

sury

po

licy.

Th

e ca

rryi

ng

val

ue

of

syn

dic

ated

ban

k fa

cilit

y ap

pro

xim

ates

its

fair

val

ue.

Ch

oru

s h

as in

pla

ce c

ross

cu

rren

cy in

tere

st r

ate

swap

s to

hed

ge

the

fore

ign

cu

rren

cy e

xpo

sure

to

th

e E

MT

N. T

he

cro

ss c

urr

ency

inte

rest

rate

sw

aps

enti

tle

Ch

oru

s to

rec

eive

GB

P p

rin

cip

al a

nd

GB

P f

ixed

cou

po

n p

aym

ents

fo

r N

ZD

pri

nci

pal

an

d N

ZD

flo

atin

g in

tere

st

pay

men

ts. T

he

flo

atin

g in

tere

st r

ate

exp

osu

re o

n t

he

NZ

D in

tere

st

pay

men

ts h

ave

bee

n h

edg

ed u

sin

g in

tere

st r

ate

swap

s.

Th

e fo

llow

ing

tab

le r

eco

nci

les

EM

TN

at

hed

ged

rat

es t

o E

MT

N

at s

po

t ra

tes

as r

epo

rted

un

der

IFR

S. E

MT

N a

t h

edg

ed r

ates

is a

no

n-G

AA

P m

easu

re a

nd

is n

ot

def

ined

in a

cco

rdan

ce w

ith

NZ

IFR

S.

GR

OU

P A

ND

PA

RE

NT

20

13 $M

20

12 $M

EM

TN

50

9

513

Imp

act

of

he

dg

ed

rat

es

use

d 1

68

1

64

EM

TN

at

he

dg

ed

rat

es

677

6

77

Sch

edu

le o

f m

atu

riti

es

GR

OU

P A

ND

PA

RE

NT

20

13 $M

20

12 $M

Cu

rre

nt

-

-

Du

e 1

to

2 y

ear

s -

-

Du

e 2

to

3 y

ear

s 6

75

675

Du

e 3

to

4 y

ear

s -

-

Du

e 4

to

5 y

ear

s 5

20

430

Du

e o

ver

5 y

ear

s 5

09

5

13

Tota

l du

e af

ter

on

e ye

ar 1

,70

4

1,6

18

Less

: sy

nd

icat

ed

loan

s fa

cili

ty f

ee

(7)

(9)

1,6

97

1,6

09

No

ne

of

Ch

oru

s’ d

ebt

has

bee

n s

ecu

red

ag

ain

st a

sset

s.

Ho

wev

er, t

her

e ar

e fin

anci

al c

ove

nan

ts a

nd

eve

nt

of

def

ault

tri

gg

ers,

as d

efin

ed in

th

e va

rio

us

deb

t ag

reem

ents

. Th

ere

hav

e n

ot

bee

n

any

trig

ger

eve

nts

or

bre

ach

es in

co

ven

ants

in t

he

curr

ent

per

iod

(30

Ju

ne

20

12: n

il).

Ch

oru

s N

ew Z

eala

nd

Lim

ited

(su

bsi

dia

ry) h

as p

rovi

ded

a g

uar

ante

e

to t

he

len

der

s in

res

pec

t o

f th

e C

ho

rus

Lim

ited

syn

dic

ated

ban

k

faci

lity

and

EM

TN

.

Ref

er t

o n

ote

21

for

info

rmat

ion

on

fin

anci

al r

isk

man

agem

ent.

Th

e fa

ir v

alu

e o

f E

MT

N, c

alcu

late

d b

ased

on

th

e p

rese

nt

valu

e o

f

futu

re p

rin

cip

al a

nd

inte

rest

cas

h fl

ow

s, d

isco

un

ted

at

mar

ket

inte

rest

rate

s at

bal

ance

dat

e, w

as $

58

1 m

illio

n (3

0 J

un

e 2

012

: $5

76 m

illio

n)

com

par

ed t

o a

car

ryin

g v

alu

e o

f $

50

9 m

illio

n (3

0 J

un

e 2

012

:

$5

13 m

illio

n).

No

te 3

– D

ebt

con

tinu

ed

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

27

No

te 4

– C

FH s

ecu

riti

es

Ch

oru

s re

ceiv

es f

un

din

g f

rom

th

e C

row

n t

o f

inan

ce c

on

stru

ctio

n

cost

s as

soci

ated

wit

h t

he

dev

elo

pm

ent

of

the

UFB

net

wo

rk. C

ho

rus

rece

ives

fu

nd

ing

at

a ra

te o

f $

1,11

8 f

or

ever

y p

rem

ises

pas

sed

(as

cert

ified

by

CFH

), in

ret

urn

Ch

oru

s is

sues

CFH

eq

uit

y se

curi

ties

,

CFH

deb

t se

curi

ties

an

d C

FH w

arra

nts

. Th

e eq

uit

y an

d d

ebt

secu

riti

es

issu

ed b

y C

ho

rus

hav

e an

issu

e p

rice

of

$1

and

are

issu

ed o

n a

50

:50

bas

is. F

or

each

pre

mis

es p

asse

d, $

55

9 o

f eq

uit

y se

curi

ties

an

d $

55

9

of

deb

t se

curi

ties

are

issu

ed b

y C

ho

rus

for

wh

ich

Ch

oru

s re

ceiv

es

$1,

118

fu

nd

ing

in r

etu

rn. C

FH w

arra

nts

are

issu

ed f

or

nil

valu

e.

Th

e to

tal c

om

mit

ted

fu

nd

ing

ava

ilab

le f

or

Ch

oru

s o

ver

the

per

iod

of

UFB

net

wo

rk c

on

stru

ctio

n is

exp

ecte

d t

o b

e $

92

9 m

illio

n.

Th

e C

FH e

qu

ity

and

deb

t se

curi

ties

are

rec

og

nis

ed in

itia

lly a

t fa

ir

valu

e p

lus

any

dir

ectl

y at

trib

uta

ble

tra

nsa

ctio

n c

ost

s. S

ub

seq

uen

tly

they

are

mea

sure

d a

t am

ort

ised

co

st u

sin

g t

he

effe

ctiv

e in

tere

st

met

ho

d. T

he

fair

val

ue

is d

eriv

ed b

y d

isco

un

tin

g t

he

$5

59

of

equ

ity

secu

riti

es a

nd

$5

59

of

deb

t se

curi

ties

per

pre

mis

es p

asse

d b

y th

e

effe

ctiv

e in

tere

st r

ate

bas

ed o

n m

arke

t ra

tes.

Th

e d

iffer

ence

bet

wee

n

fun

din

g r

ecei

ved

($1,

118

per

pre

mis

es p

asse

d) a

nd

th

e fa

ir v

alu

e o

f

the

secu

riti

es is

rec

og

nis

ed a

s C

row

n f

un

din

g. O

ver

tim

e, t

he

CFH

deb

t an

d e

qu

ity

secu

riti

es in

crea

se t

o f

ace

valu

e an

d t

he

Cro

wn

fun

din

g is

rel

ease

d a

gai

nst

dep

reci

atio

n a

nd

red

uce

s to

nil.

CFH

eq

uit

y se

curi

ties

CFH

eq

uit

y se

curi

ties

are

a c

lass

of

no

n in

tere

st b

eari

ng

sec

uri

ty

that

car

ry n

o r

igh

t to

vo

te a

t m

eeti

ng

s o

f h

old

ers

of

Ch

oru

s o

rdin

ary

shar

es, b

ut

enti

tle

the

ho

lder

to

a p

refe

ren

tial

rig

ht

to r

epay

men

t o

n

liqu

idat

ion

an

d a

dd

itio

nal

rig

hts

th

at r

elat

e to

Ch

oru

s’ p

erfo

rman

ce

un

der

its

con

stru

ctio

n c

on

trac

t w

ith

CFH

.

Div

iden

ds

will

bec

om

e p

ayab

le o

n a

po

rtio

n o

f th

e C

FH e

qu

ity

secu

riti

es f

rom

20

25

on

war

ds,

wit

h t

he

po

rtio

n o

f C

FH e

qu

ity

secu

riti

es t

hat

att

ract

div

iden

ds

incr

easi

ng

ove

r ti

me.

A g

reat

er

po

rtio

n o

f C

FH e

qu

ity

secu

riti

es a

ttra

ct d

ivid

end

s if

the

pro

po

rtio

n

of

pre

mis

es w

ith

a f

ibre

co

nn

ecti

on

wit

hin

Ch

oru

s’ c

ove

rag

e ar

ea a

t

30

Ju

ne

20

20

do

es n

ot

exce

ed 2

0%

. Th

e d

ivid

end

rat

e w

ill b

e eq

ual

to t

he

New

Zea

lan

d 1

80

-day

ban

k b

ill r

ate

plu

s a

mar

gin

of

6%

. CFH

equ

ity

inst

rum

ents

can

be

sett

led

by

issu

ing

Ch

oru

s sh

ares

val

ued

at

a 5

% d

isco

un

t to

th

e 2

0-d

ay v

olu

me

wei

gh

ted

ave

rag

e p

rice

fo

r

Ch

oru

s sh

ares

tra

ded

in o

rdin

ary

trad

ing

on

th

e N

ZX

Mai

n B

oar

d.

Th

e C

FH e

qu

ity

secu

riti

es a

re t

reat

ed a

s a

com

po

un

d f

inan

cial

inst

rum

ent

wit

h a

Cro

wn

fu

nd

ing

co

mp

on

ent

du

e to

th

e in

stru

men

t

incl

ud

ing

an

inte

rest

fre

e lo

an f

rom

a g

ove

rnm

ent

enti

ty. O

n in

itia

l

reco

gn

itio

n, t

he

fair

val

ue

of

the

liab

ility

co

mp

on

ent

of

the

com

po

un

d in

stru

men

t is

cal

cula

ted

usi

ng

mar

ket

inp

uts

wit

h n

o

resi

du

al a

mo

un

ts a

lloca

ted

to

eq

uit

y. U

nti

l th

e lia

bili

ty c

om

po

nen

t

of

the

com

po

un

d in

stru

men

t ex

pir

es t

he

CFH

eq

uit

y se

curi

ties

are

req

uir

ed t

o b

e d

iscl

ose

d a

s a

liab

ility

. Th

e d

iffer

ence

bet

wee

n t

he

face

valu

e o

f th

e C

FH e

qu

ity

secu

riti

es a

nd

th

e fa

ir v

alu

e o

f th

e lia

bili

ty

com

po

nen

t is

th

en r

eco

rded

as

Cro

wn

fu

nd

ing

.

Aft

er t

his

, th

e lia

bili

ty c

om

po

nen

t is

mea

sure

d a

t am

ort

ised

co

st u

sin

g

the

effe

ctiv

e in

tere

st m

eth

od

an

d t

he

Cro

wn

fu

nd

ing

is a

mo

rtis

ed t

o

dep

reci

atio

n o

n a

sys

tem

atic

bas

is o

ver

the

use

ful l

ives

of

the

rele

van

t

UFB

ass

ets.

CFH

deb

t se

curi

ties

CFH

deb

t se

curi

ties

are

un

secu

red

, no

n in

tere

st b

eari

ng

an

d c

arry

no

vo

tin

g r

igh

ts a

t m

eeti

ng

s o

f h

old

ers

of

Ch

oru

s o

rdin

ary

shar

es.

Ch

oru

s is

req

uir

ed t

o r

edee

m t

he

CFH

deb

t se

curi

ties

in t

ran

ches

fro

m 2

02

5 t

o 2

03

6 (a

t th

e la

test

) by

rep

ayin

g t

he

face

val

ue

to C

FH.

An

acc

eler

ated

rep

aym

ent

sch

edu

le a

pp

lies

if th

e p

rop

ort

ion

of

pre

mis

es w

ith

a f

ibre

co

nn

ecti

on

wit

hin

Ch

oru

s’ c

ove

rag

e ar

ea a

t

30

Ju

ne

20

20

do

es n

ot

exce

ed 2

0%

.

Th

e C

FH d

ebt

secu

riti

es a

re t

reat

ed a

s a

finan

cial

liab

ility

wit

h a

Cro

wn

fu

nd

ing

co

mp

on

ent

du

e to

th

e in

stru

men

t in

clu

din

g a

n

inte

rest

fre

e lo

an f

rom

a g

ove

rnm

ent

enti

ty. O

n in

itia

l rec

og

nit

ion

the

diff

eren

ce b

etw

een

th

e fa

ce v

alu

e o

f th

e C

FH d

ebt

secu

riti

es a

nd

thei

r fa

ir v

alu

e (c

alcu

late

d u

sin

g m

arke

t in

pu

ts) i

s re

cord

ed a

s C

row

n

fun

din

g. A

fter

th

is t

he

liab

ility

co

mp

on

ent

is m

easu

red

at

amo

rtis

ed

cost

usi

ng

th

e ef

fect

ive

inte

rest

met

ho

d a

nd

th

e C

row

n f

un

din

g is

amo

rtis

ed t

o d

epre

ciat

ion

on

a s

yste

mat

ic b

asis

ove

r th

e u

sefu

l liv

es

of

the

rele

van

t U

FB a

sset

s.

Th

e p

rin

cip

al a

mo

un

t o

f C

FH d

ebt

secu

riti

es c

on

sist

s o

f a

sen

ior

po

rtio

n a

nd

a s

ub

ord

inat

ed p

ort

ion

. Th

e se

nio

r p

ort

ion

ran

ks e

qu

ally

wit

h a

ll o

ther

un

secu

red

, un

sub

ord

inat

ed c

red

ito

rs o

f C

ho

rus,

and

has

th

e b

enef

it o

f an

y n

egat

ive

ple

dg

e co

ven

ant

that

may

be

con

tain

ed in

an

y o

f C

ho

rus’

deb

t ar

ran

gem

ents

. Th

e su

bo

rdin

ated

po

rtio

n r

anks

ab

ove

ord

inar

y sh

ares

of

Ch

oru

s. T

he

init

ial v

alu

e o

f

the

sen

ior

po

rtio

n is

th

e p

rese

nt

valu

e (u

sin

g a

dis

cou

nt

rate

of

8.5

%)

of

the

sum

rep

ayab

le o

n t

he

CFH

deb

t se

curi

ties

, an

d t

he

init

ial

sub

ord

inat

ed p

ort

ion

will

be

the

diff

eren

ce b

etw

een

th

e is

sue

pri

ce

of

the

CFH

deb

t se

curi

ty a

nd

th

e va

lue

of

the

sen

ior

po

rtio

n.

CFH

war

ran

ts

Ch

oru

s is

sues

CFH

war

ran

ts t

o C

FH f

or

nil

con

sid

erat

ion

alo

ng

wit

h

each

tra

nch

e o

f C

FH e

qu

ity

secu

riti

es. E

ach

CFH

war

ran

t g

ives

CFH

the

rig

ht,

on

a s

pec

ified

exe

rcis

e d

ate,

to

pu

rch

ase

at a

set

str

ike

pri

ce

a C

ho

rus

shar

e to

be

issu

ed b

y C

ho

rus.

A C

FH w

arra

nt

will

th

eref

ore

be

‘in t

he

mo

ney

’ to

th

e ex

ten

t th

at t

he

pri

ce t

hat

CFH

can

rea

lise

for

the

Ch

oru

s sh

are

exce

eds

the

pri

ce p

aid

to

exe

rcis

e th

e C

FH w

arra

nt.

Th

e st

rike

pri

ce f

or

a C

FH w

arra

nt

is b

ased

on

a t

ota

l sh

areh

old

er

retu

rn o

f 16

% p

er a

nn

um

on

Ch

oru

s sh

ares

ove

r th

e p

erio

d

Dec

emb

er 2

011

to

Ju

ne

20

36

. Th

eref

ore

, a h

old

er o

f a

CFH

war

ran

t

is o

nly

like

ly t

o e

xerc

ise

the

CFH

war

ran

t if

tota

l sh

areh

old

er r

etu

rn

on

Ch

oru

s sh

ares

has

exc

eed

ed 1

6%

per

an

nu

m o

ver

the

per

iod

Jun

e 2

02

5 t

o J

un

e 2

03

6.

GR

OU

P A

ND

PA

RE

NT

20

13 $M

20

12 $M

CFH

de

bt

sec

uri

tie

s 2

0

2

CFH

eq

uit

y se

cu

riti

es

10

1

Tota

l CFH

se

curi

tie

s 3

0

3

Th

e ca

rryi

ng

val

ue

of

CFH

deb

t an

d e

qu

ity

secu

riti

es a

pp

roxi

mat

es

its

fair

val

ue

and

incl

ud

es $

1 m

illio

n (3

0 J

un

e 2

012

: nil)

of

no

tio

nal

inte

rest

.

Key

ass

um

pti

on

s

Alt

ho

ug

h C

ho

rus

bel

ieve

s th

at t

he

esti

mat

e o

f th

e lia

bili

ty

com

po

nen

ts o

f th

e C

FH s

ecu

riti

es o

n in

itia

l rec

og

nit

ion

is

app

rop

riat

e, t

he

use

of

diff

eren

t m

eth

od

olo

gie

s o

r as

sum

pti

on

s

cou

ld le

ad t

o d

iffer

ent

mea

sure

men

ts o

f th

ese

com

po

nen

t p

arts

.

Th

e lia

bili

ty c

om

po

nen

ts o

f th

e C

FH s

ecu

riti

es h

ave

bee

n c

alcu

late

d

usi

ng

exp

ecte

d c

ash

flo

ws

dis

cou

nte

d a

t ri

sk-a

dju

sted

dis

cou

nt

rate

s. A

s th

e n

um

ber

of

CFH

sec

uri

ties

exp

ecte

d t

o b

e is

sued

incr

ease

s o

ver

tim

e th

e p

ote

nti

al im

pac

t o

f al

tern

ativ

e m

eth

od

olo

gie

s

and

ass

um

pti

on

s w

ill b

eco

me

incr

easi

ng

ly m

ater

ial.

Key

inp

uts

an

d

assu

mp

tio

ns

use

d in

th

ese

calc

ula

tio

ns

on

init

ial r

eco

gn

itio

n in

clu

de:

Dis

cou

nt

rate

On

init

ial r

eco

gn

itio

n, t

he

dis

cou

nt

rate

bet

wee

n 1

0.3

6%

to

10

.77%

(30

Ju

ne

20

12: 1

0.7

7% t

o 1

0.8

7%) f

or

the

CFH

eq

uit

y se

curi

ties

an

d

6.3

7% t

o 6

.95

% (3

0 J

un

e 2

012

: 6.6

5%

to

6.9

0%

) fo

r th

e C

FH d

ebt

secu

riti

es a

pp

lied

to

th

e ex

pec

ted

cas

h f

low

s is

bas

ed o

n lo

ng

dat

ed

NZ

sw

ap c

urv

es. T

he

swap

rat

es w

ere

adju

sted

fo

r C

ho

rus

spec

ific

cred

it s

pre

ads

(bas

ed o

n m

arke

t o

bse

rved

cre

dit

sp

read

s fo

r d

ebt

issu

ed w

ith

sim

ilar

cred

it r

atin

gs

and

ten

ure

). T

he

dis

cou

nt

rate

on

the

CFH

eq

uit

y se

curi

ties

is c

app

ed a

t C

ho

rus’

est

imat

ed c

ost

of

(ord

inar

y) e

qu

ity.

Exp

ecte

d c

ash

flo

ws

Tim

ing

of

pri

nci

pal

rep

aym

ents

an

d d

ivid

end

cas

h f

low

s h

as b

een

bas

ed o

n f

ore

cast

s th

at r

efle

ct e

con

om

ical

ly r

atio

nal

ou

tco

mes

giv

en

the

term

s o

f th

e C

FH d

ebt

and

eq

uit

y se

curi

ties

.

Rep

aym

ent

dat

es h

ave

bee

n b

ased

on

an

est

imat

e th

at t

he

pro

po

rtio

n o

f p

rem

ises

wit

h a

fib

re c

on

nec

tio

n w

ith

in C

ho

rus’

cove

rag

e ar

ea w

ill e

xcee

d 2

0%

at

30

Ju

ne

20

20

.

No

te 4

– C

FH s

ecu

ritie

s co

ntin

ued

At

bal

ance

dat

e C

ho

rus

had

issu

ed in

to

tal 2

,83

8,3

82

war

ran

ts

wh

ich

had

a f

air

valu

e an

d c

arry

ing

val

ue

that

ap

pro

xim

ated

zer

o

(30

Ju

ne

20

12: 2

72,2

07

war

ran

ts is

sued

). T

he

nu

mb

er o

f fib

re

con

nec

tio

ns

mad

e b

y 3

0 J

un

e 2

02

0 im

pac

ts t

he

nu

mb

er o

f w

arra

nts

that

co

uld

be

exer

cise

d. S

ho

uld

fib

re c

on

nec

tio

ns

at 3

0 J

un

e 2

02

0

exce

ed 2

0%

th

en t

he

nu

mb

er o

f w

arra

nts

th

at w

ou

ld b

e ab

le t

o b

e

exer

cise

d is

1,2

04

,971

(30

Ju

ne

20

12: 1

16,7

42

).

At

bal

ance

dat

e th

e co

mp

on

ent

par

ts o

f d

ebt

and

eq

uit

y in

stru

men

ts

incl

ud

ing

no

tio

nal

inte

rest

wer

e

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts2

8

Sen

siti

vity

an

alys

is

Ch

oru

s co

nsi

der

s th

at it

is r

easo

nab

ly p

oss

ible

th

at f

utu

re o

utc

om

es

may

be

diff

eren

t fr

om

th

e as

sum

pti

on

s ap

plie

d a

nd

co

uld

req

uir

e a

mat

eria

l ad

just

men

t to

th

e ca

rryi

ng

am

ou

nt

of

the

com

po

nen

t p

arts

of

the

CFH

sec

uri

ties

. Th

e n

um

ber

of

fibre

co

nn

ecti

on

s as

sum

ed t

o

AS

AT

30

JU

NE

20

13A

CT

UA

LA

LTE

RN

AT

IVE

O

UT

CO

ME

IM

PA

CT

ON

FIN

AN

CIA

L ST

AT

EM

EN

TS

CFH

de

bt

secu

riti

es

Fib

re c

on

ne

cti

on

pro

po

rtio

n ≥

20

%

< 2

0%

I

nc

reas

e C

FH d

eb

t se

cu

riti

es

liab

ility

by

$2

.9 m

illio

n

De

cre

ase

Cro

wn

fu

nd

ing

by

$2

.9 m

illio

n

CFH

eq

uit

y se

curi

tie

s

Fib

re c

on

ne

cti

on

pro

po

rtio

n ≥

20

%

< 2

0%

I

nc

reas

e C

FH e

qu

ity

sec

uri

tie

s lia

bili

ty b

y $

2.3

mill

ion

De

cre

ase

Cro

wn

fu

nd

ing

by

$2

.3 m

illio

n

AS

AT

30

JU

NE

20

12A

CT

UA

LA

LTE

RN

AT

IVE

O

UT

CO

ME

IM

PA

CT

ON

FIN

AN

CIA

L ST

AT

EM

EN

TS

CFH

de

bt

secu

riti

es

Fib

re c

on

ne

cti

on

pro

po

rtio

n≥

20

%<

20

%In

cre

ase

CFH

de

bt

sec

uri

tie

s lia

bili

ty b

y $

26

3,0

00

De

cre

ase

Cro

wn

fu

nd

ing

by

$2

63

,00

0

CFH

eq

uit

y se

curi

tie

s

Fib

re c

on

ne

cti

on

pro

po

rtio

n≥

20

%<

20

%In

cre

ase

CFH

eq

uit

y se

cu

riti

es

liab

ility

by

$2

21,

00

0

De

cre

ase

Cro

wn

fu

nd

ing

by

$2

21,

00

0

hav

e b

een

mad

e b

y 3

0 J

un

e 2

02

0 is

on

e o

f th

e ke

y se

nsi

tivi

ties

imp

licit

in t

he

mea

sure

men

t o

f th

e C

FH s

ecu

riti

es. A

ch

ang

e

in t

his

pro

po

rtio

n w

ou

ld r

esu

lt in

th

e fo

llow

ing

imp

act

on

th

e

finan

cial

sta

tem

ents

:

No

te 5

– C

row

n f

un

din

g

Fun

din

g f

rom

th

e C

row

n is

rec

og

nis

ed a

t fa

ir v

alu

e w

her

e th

ere

is r

easo

nab

le a

ssu

ran

ce t

hat

th

e fu

nd

ing

is r

ecei

vab

le a

nd

Ch

oru

s

com

plie

s w

ith

all

atta

ched

co

nd

itio

ns.

Cro

wn

fu

nd

ing

is t

hen

reco

gn

ised

in e

arn

ing

s as

a r

edu

ctio

n t

o d

epre

ciat

ion

exp

ense

on

a s

yste

mat

ic b

asis

ove

r th

e u

sefu

l life

of

the

asse

t th

e fu

nd

ing

was

use

d t

o c

on

stru

ct. T

he

accu

mu

late

d f

un

din

g h

as b

een

reco

gn

ised

as

follo

ws:

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Ult

ra-F

ast

Bro

adb

and

10

3 1

0

10

3 1

0

Ru

ral B

road

ban

d I

nit

iati

ve 1

07

18

-

-

Oth

er

18

8

-

-

22

8

36

1

03

10

Cu

rre

nt

6

2

2

-

No

n-c

urr

en

t 2

22

34

1

01

10

No

te 4

– C

FH s

ecu

ritie

s co

ntin

ued

Ult

ra-F

ast

Bro

adb

and

Ch

oru

s re

ceiv

es f

un

din

g f

rom

th

e C

row

n t

o f

inan

ce c

on

stru

ctio

n

cost

s as

soci

ated

wit

h t

he

dev

elo

pm

ent

of

the

UFB

net

wo

rk. D

uri

ng

the

year

th

e G

rou

p r

ecei

ved

$10

5 m

illio

n in

fu

nd

ing

fro

m C

FH

(30

Ju

ne

20

12: $

13 m

illio

n) w

hic

h e

qu

ated

to

94

,29

1 (3

0 J

un

e 2

012

:

11,3

88

) pre

mis

es p

asse

d. T

his

$10

5 m

illio

n o

f fu

nd

ing

was

allo

cate

d

as f

ollo

ws:

CFH

deb

t se

curi

ties

$15

mill

ion

, CFH

eq

uit

y se

curi

ties

$8

mill

ion

, Cro

wn

fu

nd

ing

$8

2 m

illio

n. A

fu

rth

er $

15 m

illio

n

GR

OU

P A

ND

PA

RE

NT

20

13 $M

20

12 $M

Acc

um

ula

ted

fu

nd

ing

re

cog

nis

ed

133

1

3

Less

: C

FH s

ec

uri

tie

s e

xclu

din

g n

oti

on

al in

tere

st (2

9)

(3)

Less

: ac

cu

mu

late

d a

mo

rtis

atio

n o

f fu

nd

ing

(1)

-

Ult

ra-F

ast

Bro

adb

and

fu

nd

ing

10

3 1

0

Co

nti

nu

ed r

eco

gn

itio

n o

f th

e fu

ll am

ou

nt

of

the

Cro

wn

fu

nd

ing

is

con

tin

gen

t o

n c

erta

in m

ater

ial p

erfo

rman

ce t

arg

ets

bei

ng

met

by

Ch

oru

s. T

he

mo

st s

ign

ifica

nt

of

thes

e m

ater

ial p

erfo

rman

ce t

arg

ets

rela

te t

o t

he

nu

mb

er o

f p

rem

ises

pas

sed

by

fibre

op

tic

cab

les

by

key

dat

es a

nd

co

mp

lian

ce w

ith

cer

tain

sp

ecifi

cati

on

s u

nd

er

use

r ac

cep

tan

ce t

esti

ng

by

CFH

.

Th

e ch

ang

e in

th

e U

ltra

-Fas

t B

road

ban

d C

row

n f

un

din

g b

alan

ce

is s

um

mar

ised

bel

ow

:

No

te 5

– C

row

n f

un

din

g c

on

tinu

ed

(30

Ju

ne

20

12: n

il) h

as b

een

acc

rued

in r

esp

ect

of

13,5

15 p

rem

ises

pas

sed

in a

reas

wh

ere

use

r ac

cep

tan

ce t

esti

ng

was

co

mp

lete

at

30

Ju

ne

20

13 b

ut

fun

ds

wer

e re

ceiv

ed p

ost

30

Ju

ne

20

13. T

he

$15

mill

ion

of

fun

din

g a

ccru

ed w

as a

lloca

ted

as

CFH

deb

t se

curi

ties

$2

mill

ion

, CFH

eq

uit

y se

curi

ties

$1

mill

ion

an

d C

row

n f

un

din

g

$12

mill

ion

.

Th

e co

mp

on

ent

par

ts o

f th

is f

un

din

g c

an b

e su

mm

aris

ed a

s fo

llow

s:

GR

OU

P A

ND

PA

RE

NT

20

13 $M

20

12 $M

Bal

ance

at

be

gin

nin

g o

f th

e p

eri

od

10

-

Fun

din

g r

ece

ive

d (

exc

lud

ing

CFH

se

cu

riti

es)

82

10

Fun

din

g a

ccru

ed

(e

xclu

din

g C

FH s

ec

uri

tie

s) 1

2 -

Am

ort

isat

ion

(1)

-

Bal

ance

at

en

d o

f th

e p

eri

od

10

3 1

0

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

29

Ru

ral B

road

ban

d In

itia

tive

Ch

oru

s re

ceiv

es C

row

n f

un

din

g f

rom

th

e M

inis

try

of

Bu

sin

ess,

Inn

ova

tio

n a

nd

Em

plo

ymen

t (M

BIE

) fo

r ca

pit

al e

xpen

dit

ure

incu

rred

un

der

th

e R

ura

l Bro

adb

and

Init

iati

ve.

Ch

oru

s is

en

titl

ed t

o c

laim

pay

men

t fo

r th

e g

ran

tab

le c

ost

s

attr

ibu

tab

le t

o t

he

rele

van

t m

ilest

on

es f

or

dep

loyi

ng

th

e ru

ral l

ink

or

rura

l cab

inet

s. T

he

MB

IE w

ill p

ay C

ho

rus

on

e d

olla

r o

f fu

nd

ing

fo

r

each

do

llar

of

gra

nta

ble

co

sts

incu

rred

by

Ch

oru

s u

p t

o a

max

imu

m

fun

din

g li

mit

of

aro

un

d $

23

6 m

illio

n. I

n a

dd

itio

n t

he

MB

IE r

eim

bu

rses

Ch

oru

s fo

r al

l cap

ital

exp

end

itu

re a

ttri

bu

tab

le t

o s

cho

ol l

ead

-in

s.

Du

rin

g t

he

year

Ch

oru

s re

cog

nis

ed $

90

mill

ion

in f

un

din

g f

rom

the

MB

IE (3

0 J

un

e 2

012

: $18

mill

ion

). T

he

com

po

nen

t p

arts

of

this

fun

din

g c

an b

e su

mm

aris

ed a

s fo

llow

s:

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Acc

um

ula

ted

fu

nd

ing

re

cog

nis

ed

10

8

18

-

-

Less

: ac

cu

mu

late

d a

mo

rtis

atio

n o

f fu

nd

ing

(1)

-

-

-

Ru

ral B

road

ban

d I

nit

iati

ve f

un

din

g 1

07

18

-

-

Th

e ch

ang

e in

th

e R

ura

l Bro

adb

and

Init

iati

ve f

un

din

g b

alan

ce is

su

mm

aris

ed b

elo

w:

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Bal

ance

at

the

be

gin

nin

g o

f p

eri

od

18

-

-

-

Fun

din

g r

eco

gn

ise

d 9

0

18

-

-

Am

ort

isat

ion

(1)

-

-

-

Bal

ance

at

en

d o

f th

e p

eri

od

10

7 1

8

-

-

Oth

er

Ch

oru

s re

ceiv

es f

un

din

g t

ow

ard

s th

e co

st o

f re

loca

tio

n o

f te

leco

mm

un

icat

ion

s eq

uip

men

t, s

cho

ol l

ead

-in

s an

d e

xten

din

g t

he

net

wo

rk

cove

rag

e to

ru

ral a

reas

. Th

e co

mp

on

ent

par

ts o

f th

is f

un

din

g c

an b

e su

mm

aris

ed a

s fo

llow

s:

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Acc

um

ula

ted

fu

nd

ing

re

cog

nis

ed

21

9

-

-

Less

: ac

cu

mu

late

d a

mo

rtis

atio

n o

f fu

nd

ing

(3)

(1)

-

-

Oth

er

fun

din

g 1

8

8

-

-

Th

e ch

ang

e in

th

e o

ther

fu

nd

ing

is s

um

mar

ised

bel

ow

:

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Bal

ance

at

the

be

gin

nin

g o

f p

eri

od

8

-

-

-

Fun

din

g r

eco

gn

ise

d 1

2 9

-

-

Am

ort

isat

ion

(2)

(1)

-

-

Bal

ance

at

en

d o

f th

e p

eri

od

18

8

-

-

No

te 7

– O

per

atin

g r

even

ue

No

te 6

– S

egm

enta

l rep

ort

ing

An

op

erat

ing

seg

men

t is

a c

om

po

nen

t o

f an

en

tity

th

at e

ng

ages

in b

usi

nes

s ac

tivi

ties

fro

m w

hic

h it

may

ear

n r

even

ues

an

d in

cur

exp

ense

s an

d f

or

wh

ich

op

erat

ing

res

ult

s ar

e re

gu

larl

y re

view

ed

by

the

enti

ty’s

ch

ief

op

erat

ing

dec

isio

n m

aker

an

d f

or

wh

ich

dis

cret

e

finan

cial

info

rmat

ion

is a

vaila

ble

.

Ch

oru

s’ C

hie

f E

xecu

tive

Off

icer

has

bee

n id

enti

fied

as

the

chie

f

op

erat

ing

dec

isio

n m

aker

fo

r th

e p

urp

ose

of

seg

men

tal r

epo

rtin

g.

Ch

oru

s h

as d

eter

min

ed t

hat

it o

per

ates

in o

ne

seg

men

t

pro

vid

ing

nat

ion

wid

e fix

ed li

ne

acce

ss n

etw

ork

infr

astr

uct

ure

.

Th

e d

eter

min

atio

n is

bas

ed o

n t

he

rep

ort

s re

view

ed b

y th

e C

hie

f

Exe

cuti

ve O

ffic

er in

ass

essi

ng

per

form

ance

, allo

cati

ng

res

ou

rces

and

mak

ing

str

ateg

ic d

ecis

ion

s.

All

of

Ch

oru

s’ o

per

atio

ns

are

pro

vid

ed in

New

Zea

lan

d, t

her

efo

re

no

geo

gra

ph

ic in

form

atio

n is

pro

vid

ed.

Two

Ch

oru

s cu

sto

mer

s m

et t

he

rep

ort

ing

th

resh

old

of

10 p

erce

nt

of

Ch

oru

s’ o

per

atin

g r

even

ue

in t

he

year

to

30

Ju

ne

20

13. T

he

tota

l

reve

nu

e fo

r th

e ye

ar e

nd

ing

30

Ju

ne

20

13 f

rom

on

e cu

sto

mer

was

$8

15 m

illio

n a

nd

fro

m t

he

oth

er c

ust

om

er w

as $

101

mill

ion

. In

th

e

seve

n m

on

ths

end

ed 3

0 J

un

e 2

012

on

e cu

sto

mer

met

th

e re

po

rtin

g

thre

sho

ld a

nd

acc

ou

nte

d f

or

$5

23

mill

ion

of

reve

nu

e.

Rev

enu

e is

rec

og

nis

ed t

o t

he

exte

nt

that

it is

pro

bab

le t

hat

th

e

eco

no

mic

ben

efit

s w

ill f

low

to

Ch

oru

s an

d t

he

reve

nu

e ca

n b

e

relia

bly

mea

sure

d, r

egar

dle

ss o

f w

hen

th

e p

aym

ent

is b

ein

g m

ade.

Rev

enu

e is

mea

sure

d a

t th

e fa

ir v

alu

e o

f th

e co

nsi

der

atio

n r

ecei

ved

or

rece

ivab

le.

Ch

oru

s re

cog

nis

es r

even

ue

as it

pro

vid

es s

ervi

ces

to it

s cu

sto

mer

s.

Bill

ing

s ar

e g

ener

ally

mad

e o

n a

mo

nth

ly b

asis

. Un

bill

ed r

even

ues

fro

m t

he

bill

ing

cyc

le d

ate

to t

he

end

of

each

mo

nth

are

rec

og

nis

ed

as r

even

ue

du

rin

g t

he

mo

nth

th

e se

rvic

e is

pro

vid

ed. R

even

ue

is

def

erre

d in

res

pec

t o

f th

e p

ort

ion

of

fixed

mo

nth

ly c

har

ges

th

at h

ave

bee

n b

illed

in a

dva

nce

. Rev

enu

e fr

om

inst

alla

tio

ns

and

co

nn

ecti

on

s

are

reco

gn

ised

up

on

co

mp

leti

on

of

the

inst

alla

tio

n o

r co

nn

ecti

on

.

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Bas

ic c

op

pe

r 6

31

39

9

-

-

En

han

ced

co

pp

er

215

8

9

-

-

Fib

re 6

0

28

-

-

Val

ue

ad

de

d n

etw

ork

se

rvic

es

37

18

-

-

Infr

astr

uc

ture

17

14

-

-

Fie

ld s

erv

ice

s 8

5 4

7 -

-

Oth

er

12

18

-

-

Inte

rco

mp

any

div

ide

nd

inco

me

-

-

86

-

Tota

l op

era

tin

g r

eve

nu

e 1

,057

6

13

86

-

No

te 5

– C

row

n f

un

din

g c

on

tinu

ed

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts3

0

No

te 8

– O

per

atin

g e

xpen

ses

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13

$M

20

12 $M

Lab

ou

r co

sts

(67)

(31)

-

-

Pro

visi

on

ing

(51)

(23)

-

-

Ne

two

rk m

ain

ten

ance

(10

0)

(52)

-

-

Oth

er

ne

two

rk c

ost

s (3

7) (2

2) -

-

Info

rmat

ion

te

ch

no

log

y co

sts

(52)

(30

) -

-

Re

nt

and

rat

es

(12)

(6)

-

-

Pro

pe

rty

mai

nte

nan

ce (1

2) (8

) -

-

Ele

ctr

icit

y (1

3) (1

1) -

-

Insu

ran

ce (4

) (3

) -

-

Co

nsu

ltan

ts (6

) (5

) -

(1

)

Oth

er

(40

) (2

3) (1

) -

Tota

l op

era

tin

g e

xpe

nse

s (3

94

) (2

14)

(1)

(1)

Lab

ou

r co

sts

Lab

ou

r co

sts

of

$6

7 m

illio

n (3

0 J

un

e 2

012

: $3

1 m

illio

n) r

epre

sen

ts

staf

f co

sts

rela

ted

to

no

n-c

apit

al e

xpen

dit

ure

.

Pen

sio

n c

on

trib

uti

on

s

Incl

ud

ed in

lab

ou

r co

sts

are

pay

men

ts t

o t

he

New

Zea

lan

d

Go

vern

men

t Su

per

ann

uat

ion

Fu

nd

of

$3

33,

00

0 (3

0 J

un

e 2

012

:

$14

9,0

00

) an

d c

on

trib

uti

on

s to

Kiw

iSav

er o

f $

1,11

2,0

00

(30

Ju

ne

20

12: $

34

6,0

00

). A

t 3

0 J

un

e 2

013

th

ere

wer

e

27

emp

loye

es in

New

Zea

lan

d G

ove

rnm

ent

Sup

eran

nu

atio

n F

un

d

(30

Ju

ne

20

12: 2

8 e

mp

loye

es) a

nd

54

5 e

mp

loye

es in

Kiw

isav

er

(30

Ju

ne

20

12: 3

35

em

plo

yees

). C

ho

rus

has

no

oth

er o

blig

atio

ns

to p

rovi

de

pen

sio

n b

enef

its

in r

esp

ect

of

emp

loye

es.

Ch

arit

able

an

d p

olit

ical

do

nat

ion

s

Oth

er c

ost

s in

clu

de

char

itab

le d

on

atio

ns

of

$5

0,0

00

(30

Ju

ne

20

12:

nil)

. Ch

oru

s h

as n

ot

mad

e an

y p

olit

ical

do

nat

ion

s (3

0 J

un

e 2

012

: nil)

.

Op

erat

ing

leas

es

Ren

t an

d r

ates

co

sts

incl

ud

e le

asin

g a

nd

ren

tal e

xpen

dit

ure

of

$5

mill

ion

fo

r p

rop

erty

, net

wo

rk in

fras

tru

ctu

re a

nd

item

s

of

equ

ipm

ent

(30

Ju

ne

20

12: $

3 m

illio

n).

Au

dit

or

rem

un

erat

ion

Incl

ud

ed in

oth

er e

xpen

ses

are

fees

pai

d t

o a

ud

ito

rs o

f $

43

0,0

00

for

the

aud

it a

nd

rev

iew

of

the

stat

uto

ry a

cco

un

ts (3

0 J

un

e 2

012

:

$5

50

,00

0),

$15

0,0

00

fo

r re

gu

lato

ry a

ssu

ran

ce s

ervi

ces

and

$5

8,0

00

in r

esp

ect

of

tech

nic

al a

cco

un

tin

g g

uid

ance

, oth

er a

ssu

ran

ce a

nd

tax

com

plia

nce

ser

vice

s.

No

te 9

– F

inan

ce e

xpen

se

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Inte

rest

on

syn

dic

ate

d b

ank

fac

ility

(58

) (3

2) (5

8)

(32)

Inte

rest

on

EM

TN

(46

) (2

7) (4

6)

(27)

Oth

er

inte

rest

exp

en

se (1

6)

(16

) -

(

7)

Cap

ital

ise

d in

tere

st 6

3

-

-

Tota

l fin

ance

exp

en

se e

xclu

din

g C

FH s

ecu

riti

es

(114

) (7

2) (1

04

) (6

6)

CFH

se

cu

riti

es

(no

tio

nal

inte

rest

) (1

) -

(1

) -

Tota

l fin

ance

exp

en

se (1

15)

(72)

(10

5) (6

6)

No

te 1

0 –

Tra

de

and

oth

er r

ecei

vab

les

Trad

e an

d o

ther

rec

eiva

ble

s ar

e in

itia

lly r

eco

gn

ised

at

the

fair

valu

e o

f th

e am

ou

nts

to

be

rece

ived

, plu

s tr

ansa

ctio

n c

ost

s (if

an

y).

Th

ey a

re s

ub

seq

uen

tly

mea

sure

d a

t am

ort

ised

co

st (u

sin

g t

he

effe

ctiv

e in

tere

st m

eth

od

) les

s im

pai

rmen

t lo

sses

.

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Trad

e r

ece

ivab

les

229

1

35

-

-

Oth

er

rece

ivab

les

51

62

32

18

Inte

rco

mp

any

rece

ivab

les

-

-

211

2

2

28

0

19

7 2

43

40

Pre

pay

me

nts

14

1

-

-

Trad

e an

d o

the

r re

ceiv

able

s 2

94

1

98

2

43

40

Trad

e re

ceiv

able

s ar

e n

on

-in

tere

st b

eari

ng

an

d a

re g

ener

ally

on

ter

ms

20

wo

rkin

g d

ays

or

less

.

Ch

oru

s m

ain

tain

s a

pro

visi

on

fo

r im

pai

rmen

t lo

sses

wh

en t

her

e is

ob

ject

ive

evid

ence

of

its

cust

om

ers

bei

ng

un

able

to

mak

e re

qu

ired

pay

men

ts. C

ho

rus

has

min

imal

pro

visi

on

fo

r d

ou

btf

ul d

ebt

in t

he

curr

ent

per

iod

an

d t

her

e h

ave

bee

n n

o s

ign

ifica

nt

ind

ivid

ual

imp

airm

ent

amo

un

ts r

eco

gn

ised

as

an e

xpen

se. T

rad

e re

ceiv

able

s

are

net

of

allo

wan

ces

for

dis

pu

ted

bal

ance

s w

ith

cu

sto

mer

s.

Oth

er in

tere

st e

xpen

se in

clu

des

$13

mill

ion

fin

ance

leas

e

inte

rest

exp

ense

s (3

0 J

un

e 2

012

: $9

mill

ion

). T

he

per

iod

en

ded

30

Ju

ne

20

12 in

clu

ded

a $

7 m

illio

n n

on

-cas

h c

har

ge

for

mar

k

to m

arke

t o

f d

eriv

ativ

es.

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

31

Th

e ag

ein

g p

rofil

e o

f tr

ade

rece

ivab

les

as a

t 3

0 J

un

e 2

013

is a

s fo

llow

s:

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

No

t p

ast

du

e 2

08

1

24

-

-

Pas

t d

ue

1-3

0 d

ays

13

10

-

-

Pas

t d

ue

31-

60

day

s 3

1

-

-

Pas

t d

ue

61-

90

day

s 1

-

-

-

Pas

t d

ue

ove

r 9

0 d

ays

4

-

-

-

22

9

135

-

-

No

te 1

0 –

Tra

de

and

oth

er r

ecei

vab

les

con

tinu

ed

Ch

oru

s h

as a

co

nce

ntr

ated

cu

sto

mer

bas

e co

nsi

stin

g p

red

om

inan

tly

of

a sm

all n

um

ber

of

reta

il se

rvic

e p

rovi

der

s. T

he

con

cen

trat

ion

of

Ch

oru

s’ c

ust

om

er b

ase

hei

gh

ten

s th

e ri

sk t

hat

a d

isp

ute

wit

h

a cu

sto

mer

, or

a cu

sto

mer

’s f

ailu

re t

o p

ay f

or

serv

ices

, will

hav

e

a m

ater

ial a

dve

rse

effe

ct o

n C

ho

rus’

co

llect

abili

ty o

f re

ceiv

able

s.

An

y d

isp

ute

s ar

isin

g t

hat

may

aff

ect

the

rela

tio

nsh

ip b

etw

een

the

par

ties

will

be

rais

ed b

y re

lati

on

ship

man

ager

s an

d f

ollo

w

the

Ch

oru

s d

isp

ute

res

olu

tio

n p

roce

ss. C

ho

rus

has

$2

1 m

illio

n

of

acco

un

ts r

ecei

vab

le t

hat

are

pas

t d

ue

bu

t n

ot

imp

aire

d

(30

Ju

ne

20

12: $

11 m

illio

n).

Th

e ca

rryi

ng

val

ue

of

trad

e an

d o

ther

rece

ivab

les

app

roxi

mat

e th

e fa

ir v

alu

e. T

he

max

imu

m c

red

it e

xpo

sure

is li

mit

ed t

o t

he

carr

yin

g v

alu

e o

f tr

ade

and

oth

er r

ecei

vab

les.

No

te 1

1 –

Tra

de

and

oth

er p

ayab

les

Trad

e an

d o

ther

pay

able

s ar

e in

itia

lly r

eco

gn

ised

at

fair

val

ue

less

tran

sact

ion

co

sts

(if a

ny)

. Th

ey a

re s

ub

seq

uen

tly

mea

sure

d a

t

amo

rtis

ed c

ost

usi

ng

th

e ef

fect

ive

inte

rest

met

ho

d.

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Trad

e p

ayab

les

12

1 1

47

-

-

Join

t ar

ran

ge

me

nts

11

21

-

-

Acc

rual

s 1

54

1

25

33

31

Pe

rso

nn

el a

ccru

al 1

7 1

4

-

-

Re

ven

ue

bill

ed

in a

dva

nce

27

30

-

-

Trad

e an

d o

the

r p

ayab

les

330

3

37

33

31

Cu

rre

nt

32

8

32

8

33

31

No

n-c

urr

en

t 2

9

-

-

Trad

e an

d o

ther

pay

able

s ar

e n

on

-in

tere

st b

eari

ng

an

d n

orm

ally

sett

led

wit

hin

30

day

ter

ms.

Th

e ca

rryi

ng

val

ue

of

trad

e an

d o

ther

pay

able

s ap

pro

xim

ate

thei

r fa

ir v

alu

es.

Join

t ar

ran

gem

ents

Cer

tain

net

wo

rk e

lect

ron

ic a

sset

s an

d s

har

ed s

yste

ms

ow

ned

by

Tele

com

are

req

uir

ed f

or

con

tin

ued

use

by

Ch

oru

s p

ost

dem

erg

er.

Th

e ri

gh

t to

use

th

ese

asse

ts h

ave

bee

n g

ran

ted

by

Tele

com

un

der

join

t ar

ran

gem

ents

ove

r th

e lif

e o

f th

e as

sets

.

No

te 1

2 –

Co

mm

itm

ents

Networkin

frastructureprojectagreem

ent

Ch

oru

s is

co

mm

itte

d t

o d

eplo

yin

g in

fras

tru

ctu

re f

or

pre

mis

es

in t

he

UFB

can

did

ate

area

s aw

ard

ed t

o C

ho

rus,

to

be

bu

ilt a

cco

rdin

g

to a

nn

ual

bu

ild m

ilest

on

es a

nd

to

be

com

ple

te b

y n

o la

ter

than

31

Dec

emb

er 2

019

. In

to

tal i

t is

exp

ecte

d t

hat

th

e co

mm

un

al

infr

astr

uct

ure

will

pas

s an

est

imat

ed 8

30

,90

0 p

rem

ises

. Ch

oru

s h

as

esti

mat

ed t

hat

it w

ill c

ost

$1.

7 -

$1.

9 b

illio

n t

o b

uild

th

e co

mm

un

al

UFB

net

wo

rk b

y th

e en

d o

f 2

019

.

Ru

ral B

road

ban

d In

itia

tive

As

par

t o

f th

e R

ura

l Bro

adb

and

Init

iati

ve P

has

e 1,

Ch

oru

s is

com

mit

ted

to

dep

loyi

ng

ap

pro

xim

atel

y 3,

100

kilo

met

res

of

fibre

to c

on

nec

t ap

pro

xim

atel

y 8

50

sch

oo

ls a

nd

en

able

ap

pro

xim

atel

y

57%

of

rura

l use

rs t

o a

cces

s b

road

ban

d s

pee

ds

of

at le

ast

5M

bp

s.

In a

dd

itio

n, u

nd

er p

has

e 2

of

the

Ru

ral B

road

ban

d In

itia

tive

, Ch

oru

s

will

be

dep

loyi

ng

a f

urt

her

25

0 k

ilom

etre

s o

f fib

re t

o c

on

nec

t

189

pro

vin

cial

sch

oo

ls, u

p t

o 1

81

rura

l pu

blic

lib

rari

es a

nd

45

ru

ral h

osp

ital

s an

d f

amily

hea

lth

cen

tres

.

Th

e es

tim

ated

co

st o

f th

e b

uild

is in

th

e ra

ng

e

of

$2

80

– $

29

5 m

illio

n.

Cap

ital

exp

end

itu

re

Ref

er t

o n

ote

1 a

nd

no

te 2

fo

r d

etai

ls o

f ca

pit

al e

xpen

dit

ure

com

mit

men

ts.

Leas

e co

mm

itm

ents

Ch

oru

s h

as b

uild

ing

, car

par

ks a

nd

sit

e lic

ense

s u

nd

er o

per

atin

g

leas

e ar

ran

gem

ents

. Th

e fu

ture

no

n c

ance

llab

le m

inim

um

op

erat

ing

leas

e co

mm

itm

ent

as a

t 3

0 J

un

e 2

013

fo

r th

e G

rou

p w

as $

26

mill

ion

(30

Ju

ne

20

12: $

19 m

illio

n).

No

te 1

3 –

Tax

atio

n

Cu

rren

t an

d d

efer

red

tax

is c

alcu

late

d o

n t

he

bas

is o

f th

e la

ws

enac

ted

or

sub

stan

tive

ly e

nac

ted

at

bal

ance

dat

e.

Def

erre

d t

axat

ion

is r

eco

gn

ised

in r

esp

ect

of

tem

po

rary

diff

eren

ces

bet

wee

n t

he

tax

bas

es o

f as

sets

an

d li

abili

ties

an

d t

hei

r ca

rryi

ng

amo

un

ts in

th

e fin

anci

al s

tate

men

ts. F

utu

re t

ax b

enef

its

are

reco

gn

ised

wh

ere

real

isat

ion

of

the

asse

t is

pro

bab

le.

Cu

rren

t an

d d

efer

red

tax

are

rec

og

nis

ed in

th

e in

com

e st

atem

ent,

exce

pt

wh

en t

he

tax

rela

tes

to it

ems

char

ged

or

cred

ited

to

oth

er

com

pre

hen

sive

inco

me,

in w

hic

h c

ase

the

tax

is a

lso

rec

og

nis

ed

in o

ther

co

mp

reh

ensi

ve in

com

e.

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts3

2

Inco

me

tax

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Inco

me

stat

em

en

t

Cu

rre

nt

inco

me

tax

Cu

rre

nt

pe

rio

d in

com

e t

ax (

exp

en

se)/

cre

dit

(62)

(34

) -

1

Ad

just

me

nts

in r

esp

ec

t o

f p

rio

r p

eri

od

s 6

-

-

-

De

ferr

ed

inco

me

tax

Ne

two

rk a

sse

ts, s

oft

war

e a

nd

oth

er

inta

ng

ible

s 2

(1

3) -

-

Em

plo

yee

en

titl

em

en

ts -

2

-

-

Oth

er

(6)

5

-

-

Ad

just

me

nts

in r

esp

ec

t o

f p

rio

r p

eri

od

s (5

) -

-

-

Inco

me

tax

(exp

en

se)/

cre

dit

re

cog

nis

ed

in in

com

e st

ate

me

nt

(65)

(40

) -

1

Oth

er

com

pre

he

nsi

ve in

com

e

Cu

rre

nt

inco

me

tax

Cu

rre

nt

pe

rio

d in

com

e t

ax e

xpe

nse

-

-

-

-

De

ferr

ed

inco

me

tax

Ch

ang

es

in f

air

valu

e o

f c

ash

flo

w h

ed

ge

s (4

) 4

(4

) 4

Inco

me

tax

(exp

en

se)/

cre

dit

re

cog

nis

ed

in o

the

r

com

pre

he

nsi

ve in

com

e (4

) 4

(4

) 4

No

te 1

3 –

Tax

atio

n c

on

tinu

ed

Th

e ta

xati

on

exp

ense

ch

arg

ed t

o e

arn

ing

s in

clu

des

bo

th c

urr

ent

and

def

erre

d t

ax a

nd

is c

alcu

late

d a

fter

allo

win

g f

or

adju

stm

ents

.

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Re

con

cili

atio

n o

f e

ffe

cti

ve t

ax r

ate

Ne

t e

arn

ing

s/(l

oss

) fo

r th

e p

eri

od

171

1

02

87

(4)

Ad

d:

Inco

me

tax

(e

xpe

nse

)/c

red

it (6

5) (4

0)

-

1

Ne

t e

arn

ing

s/(l

oss

) be

fore

inco

me

tax

236

1

42

87

(5)

Inco

me

tax

at

28

% (6

6)

(40

) (2

4)

1

Ad

just

me

nt

to t

axat

ion

No

n t

axab

le in

terc

om

pan

y d

ivid

en

ds

-

-

24

-

Ad

just

me

nts

in r

esp

ec

t o

f p

rio

r p

eri

od

s 1

-

-

-

(65)

(40

)-

1

For

the

year

en

ded

30

Ju

ne

20

13 t

he

effe

ctiv

e ta

x ra

te o

f

28

% e

qu

ates

to

th

e st

atu

tory

rat

e o

f 2

8%

(30

Ju

ne

20

12: 2

8%

).

No

te 1

3 –

Tax

atio

n c

on

tinu

ed

Mo

vem

ent

in d

efer

red

tax

bal

ance

du

rin

g t

he

per

iod

GR

OU

P

BA

LA

NC

E

1 JU

LY 2

012 $M

RE

CO

GN

ISE

D

IN P

RO

FIT

A

ND

LO

SS $M

RE

CO

GN

ISE

D

IN O

TH

ER

C

OM

PR

EH

EN

SIV

E

INC

OM

E$

M

BA

LA

NC

E

30

JU

NE

20

13 $M

(Ass

ets

)/li

abil

itie

s

Fair

val

ue

po

rtio

n o

f d

eri

vati

ves

16

-

-

1

6

Ne

two

rk a

sse

ts, s

oft

war

e a

nd

oth

er

inta

ng

ible

s 2

14

3

-

217

Em

plo

yee

en

titl

em

en

ts (4

) 3

-

(1

)

Fin

ance

leas

es

(35)

-

-

(35)

Oth

er

(10

) 3

-

(7

)

Ch

ang

es

in f

air

valu

e o

f c

ash

flo

w h

ed

ge

s (4

) -

4

-

Tota

l 1

77

9

4

19

0

GR

OU

P

BA

LA

NC

E

1 D

EC

EM

BE

R 2

011 $M

RE

CO

GN

ISE

D

IN P

RO

FIT

A

ND

LO

SS $M

RE

CO

GN

ISE

D

IN O

TH

ER

C

OM

PR

EH

EN

SIV

E

INC

OM

E$

M

BA

LA

NC

E

30

JU

NE

20

12 $M

(Ass

ets

)/li

abil

itie

s

Fair

val

ue

po

rtio

n o

f d

eri

vati

ves

16

-

-

1

6

Ne

two

rk a

sse

ts, s

oft

war

e a

nd

oth

er

inta

ng

ible

s 2

01

13

-

214

Em

plo

yee

en

titl

em

en

ts (2

) (2

) -

(4

)

Fin

ance

leas

es

(35)

-

-

(35)

Oth

er

(5)

(5)

-

(10

)

Ch

ang

es

in f

air

valu

e o

f c

ash

flo

w h

ed

ge

s -

-

(4

) (4

)

Tota

l 1

75

6

(4)

177

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

33

No

te 1

3 –

Tax

atio

n c

on

tinu

ed

PA

RE

NT

BA

LA

NC

E

1 JU

LY 2

012 $M

RE

CO

GN

ISE

D

IN P

RO

FIT

A

ND

LO

SS $M

RE

CO

GN

ISE

D

IN O

TH

ER

C

OM

PR

EH

EN

SIV

E

INC

OM

E$

M

BA

LA

NC

E

30

JU

NE

20

13 $M

(Ass

ets

)/li

abil

itie

s

Fair

val

ue

po

rtio

n o

f d

eri

vati

ves

16

-

-

1

6

Ch

ang

es

in f

air

valu

e o

f c

ash

flo

w h

ed

ge

s (4

) -

4

-

Tota

l 1

2 -

4

1

6

PA

RE

NT

BA

LA

NC

E

1 D

EC

EM

BE

R 2

011 $M

RE

CO

GN

ISE

D

IN P

RO

FIT

A

ND

LO

SS $M

RE

CO

GN

ISE

D

IN O

TH

ER

C

OM

PR

EH

EN

SIV

E

INC

OM

E$

M

BA

LA

NC

E

30

JU

NE

20

12 $M

(Ass

ets

)/li

abil

itie

s

Fair

val

ue

po

rtio

n o

f d

eri

vati

ves

16

-

-

1

6

Ch

ang

es

in f

air

valu

e o

f c

ash

flo

w h

ed

ge

s -

-

(4

) (4

)

Tota

l 1

6

-

(4)

12

Imp

uta

tio

n c

red

its

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Imp

uta

tio

n c

red

its

avai

lab

le f

or

sub

seq

ue

nt

rep

ort

ing

pe

rio

ds

63

33

5

-

Th

e im

pu

tati

on

cre

dit

am

ou

nt

rep

rese

nts

th

e b

alan

ce o

f th

e

imp

uta

tio

n c

red

it a

cco

un

t as

at

the

end

of

the

rep

ort

ing

per

iod

,

adju

ste

d f

or

imp

uta

tio

n c

red

its

that

will

ari

se f

rom

th

e p

aym

en

t

of

the

pro

visi

on

for

inco

me

tax.

Imp

uta

tion

cre

dits

are

ava

ilab

le fo

r

use

su

bje

ct t

o t

he

req

uir

emen

ts o

f th

e In

com

e Ta

x A

ct 2

00

7 b

ein

g

sati

sfie

d. F

or

the

pu

rpo

ses

of

the

Inco

me

Tax

Act

20

07

Tele

com

dem

erg

er t

ran

sact

ion

s d

o n

ot

giv

e ri

se t

o, a

nd

are

ign

ore

d f

or

the

pu

rpo

ses

of

calc

ula

tin

g a

vaila

ble

su

bsc

rib

ed c

apit

al o

f C

ho

rus.

No

te 1

4 –

Cas

h a

nd

cal

l dep

osi

ts

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Cas

h a

nd

cal

l de

po

sits

80

1

40

6

9

61

Cas

h a

nd

cal

l dep

osi

ts a

re h

eld

wit

h b

ank

and

fin

anci

al in

stit

uti

on

s

cou

nte

rpar

ties

rat

ed a

t a

min

imu

m o

f A

+, b

ased

on

rat

ing

ag

ency

Stan

dar

d &

Po

or’s

rat

ing

s. In

tere

st e

arn

ed o

n c

all d

epo

sits

is b

ased

on

th

e d

aily

dep

osi

t ra

te.

Th

ere

are

no

cas

h o

r ca

ll d

epo

sit

bal

ance

s h

eld

by

Ch

oru

s th

at

are

no

t av

aila

ble

fo

r u

se.

Th

e ca

rryi

ng

val

ues

of

cash

ap

pro

xim

ate

thei

r fa

ir v

alu

es.

Th

e m

axim

um

cre

dit

exp

osu

re is

lim

ited

to

th

e ca

rryi

ng

val

ue

of

cash

an

d c

all d

epo

sits

.

Cas

h d

eno

min

ated

in f

ore

ign

cu

rren

cies

are

ret

ran

slat

ed in

to

New

Zea

lan

d d

olla

rs a

t th

e sp

ot

rate

of

exch

ang

e at

th

e re

po

rtin

g

dat

e. A

ll d

iffer

ence

s ar

isin

g o

n s

ettl

emen

t o

r tr

ansl

atio

n o

f m

on

etar

y

item

s ar

e ta

ken

to

th

e in

com

e st

atem

ent.

Cas

h fl

ow

Cas

h f

low

s fr

om

der

ivat

ives

in c

ash

flo

w a

nd

fai

r va

lue

hed

ge

rela

tio

nsh

ips

are

reco

gn

ised

in t

he

cash

flo

w s

tate

men

t in

th

e sa

me

cate

go

ry a

s th

e h

edg

ed it

em.

For

the

pu

rpo

ses

of

the

stat

emen

t o

f ca

sh f

low

s, c

ash

is c

on

sid

ered

to b

e ca

sh o

n h

and

, in

ban

ks a

nd

cas

h e

qu

ival

ents

, in

clu

din

g b

ank

ove

rdra

fts

and

hig

hly

liq

uid

inve

stm

ents

th

at a

re r

ead

ily c

on

vert

ible

to k

no

wn

am

ou

nts

of

cash

wh

ich

are

su

bje

ct t

o a

n in

sig

nifi

can

t ri

sk

of

chan

ges

in v

alu

es.

No

te 1

5 –

Lea

ses

Ch

oru

s is

a le

ssee

of

cert

ain

net

wo

rk a

sset

s u

nd

er b

oth

op

erat

ing

and

fin

ance

leas

e ar

ran

gem

ents

. Lea

se c

ost

s re

lati

ng

to

op

erat

ing

leas

es a

re r

eco

gn

ised

on

a s

trai

gh

t-lin

e b

asis

ove

r th

e lif

e o

f th

e

leas

e. F

inan

ce le

ases

, wh

ich

eff

ecti

vely

tra

nsf

er t

o C

ho

rus

sub

stan

tial

ly a

ll th

e ri

sks

and

ben

efit

s o

f o

wn

ersh

ip o

f th

e le

ased

asse

ts, a

re c

apit

alis

ed a

t th

e lo

wer

of

the

leas

ed a

sset

’s f

air

valu

e

or

the

pre

sen

t va

lue

of

the

min

imu

m le

ase

pay

men

ts a

t in

cep

tio

n

of

the

leas

e. T

he

leas

ed a

sset

s an

d c

orr

esp

on

din

g li

abili

ties

are

reco

gn

ised

, an

d t

he

leas

ed a

sset

s ar

e d

epre

ciat

ed o

ver

thei

r

esti

mat

ed u

sefu

l liv

es.

Det

erm

inin

g w

het

her

a le

ase

agre

emen

t is

a f

inan

ce le

ase

or

an

op

erat

ing

leas

e re

qu

ires

jud

gem

ent

as t

o w

het

her

th

e ag

reem

ent

tran

sfer

s su

bst

anti

ally

all

the

risk

s an

d r

ewar

ds

of

ow

ner

ship

to

Ch

oru

s. J

ud

gem

ent

is r

equ

ired

on

var

iou

s as

pec

ts t

hat

incl

ud

e, b

ut

are

no

t lim

ited

to

, th

e fa

ir v

alu

e o

f th

e le

ased

ass

et, t

he

eco

no

mic

life

of

the

leas

ed a

sset

, wh

eth

er o

r n

ot

to in

clu

de

ren

ewal

op

tio

ns

in t

he

leas

e te

rm, a

nd

det

erm

inin

g a

n a

pp

rop

riat

e d

isco

un

t ra

te t

o c

alcu

late

the

pre

sen

t va

lue

of

the

min

imu

m le

ase

pay

men

ts.

Cla

ssifi

cati

on

as

a fin

ance

leas

e m

ean

s th

e as

set

is r

eco

gn

ised

in t

he

stat

emen

t o

f fin

anci

al p

osi

tio

n a

s n

etw

ork

ass

ets

wh

erea

s

for

an o

per

atin

g le

ase

no

su

ch a

sset

is r

eco

gn

ised

.

Ch

oru

s h

as e

xerc

ised

its

jud

gem

ent

on

th

e ap

pro

pri

ate

clas

sific

atio

n

of

net

wo

rk a

sset

leas

es, a

nd

has

det

erm

ined

a n

um

ber

of

leas

e

arra

ng

emen

ts a

re f

inan

ce le

ases

.

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts3

4

Fin

ance

leas

es

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

Ass

ets

/(li

abil

itie

s)

Exp

ec

ted

fu

ture

leas

e p

aym

en

ts:

Less

th

an o

ne

ye

ar (8

) (8

) -

-

Be

twe

en

on

e a

nd

fiv

e y

ear

s (3

1) (3

1) -

-

Mo

re t

han

fiv

e y

ear

s (3

87)

(39

5) -

-

Tota

l exp

ec

ted

fu

ture

leas

e p

aym

en

ts (4

26)

(43

4)

-

-

Less

: fu

ture

fin

ance

ch

arg

es

30

6

316

-

-

Pre

sen

t va

lue

of

exp

ec

ted

fu

ture

leas

e p

aym

en

ts (1

20

) (1

18)

-

-

Pre

sen

t va

lue

of

exp

ec

ted

fu

ture

leas

e p

aym

en

ts p

ayab

le:

Less

th

an o

ne

ye

ar 3

3

-

-

Be

twe

en

on

e a

nd

fiv

e y

ear

s 1

4

13

-

-

Mo

re t

han

fiv

e y

ear

s (1

37)

(13

4)

-

-

Tota

l pre

sen

t va

lue

of

exp

ec

ted

fu

ture

leas

e p

aym

en

ts (1

20

) (1

18)

-

-

Cla

ssif

ied

as:

Cu

rre

nt

asse

t -

fin

ance

leas

e r

ece

ivab

le 3

3

-

-

No

n-c

urr

en

t lia

bili

ty -

fin

ance

leas

e p

ayab

le (1

23)

(12

1) -

-

Tota

l (1

20

) (1

18)

-

-

Th

e ca

rryi

ng

val

ue

of

the

finan

ce le

ases

ap

pro

xim

ates

th

eir

fair

val

ue.

Pro

per

ty e

xch

ang

es

Ch

oru

s h

as le

ased

exc

han

ge

spac

e an

d c

om

mer

cial

co

-lo

cati

on

spac

e o

wn

ed b

y Te

leco

m w

hic

h is

su

bje

ct t

o f

inan

ce le

ase

arra

ng

emen

ts. C

ho

rus

in t

urn

leas

es e

xch

ang

e sp

ace

and

com

mer

cial

co

-lo

cati

on

sp

ace

ow

ned

by

Ch

oru

s to

Tel

eco

m u

nd

er

a fin

ance

leas

e ar

ran

gem

ent.

Th

e te

rm o

f th

e le

ases

wh

ere

Ch

oru

s

is le

ssee

is f

or

ten

yea

rs w

ith

mu

ltip

le r

igh

ts o

f re

new

al f

or

a fu

rth

er

twen

ty f

ive

year

s. T

he

term

of

the

leas

e w

her

e C

ho

rus

is le

sso

r is

fo

r

thre

e ye

ars

wit

h t

wo

rig

hts

of

ren

ewal

fo

r a

furt

her

th

ree

year

s ea

ch.

Op

erat

ing

leas

es

GR

OU

PP

AR

EN

T

20

13 $M

20

12 $M

20

13 $M

20

12 $M

No

n-c

ance

llab

le o

pe

rati

ng

leas

e re

nta

ls a

re p

ayab

le a

s fo

llo

ws:

Less

th

an o

ne

ye

ar 6

4

-

-

Be

twe

en

on

e a

nd

fiv

e y

ear

s 1

4

11

-

-

Mo

re t

han

fiv

e y

ear

s 6

4

-

-

Tota

l 2

6

19

-

-

Ch

oru

s h

as e

nte

red

into

leas

ing

arr

ang

emen

ts f

or

pro

per

ties

,

net

wo

rk in

fras

tru

ctu

re a

nd

oth

er it

ems

of

equ

ipm

ent

wh

ich

are

clas

sifie

d a

s o

per

atin

g le

ases

. Cer

tain

leas

es a

re s

ub

ject

to

Ch

oru

s

bei

ng

ab

le t

o r

enew

or

exte

nd

th

e le

ase

per

iod

bas

ed o

n t

erm

s th

at

wo

uld

th

en b

e ag

reed

wit

h t

he

less

or.

Th

ere

are

no

oth

er s

ign

ifica

nt

leas

e te

rms

that

rel

ate

to c

on

tin

gen

t re

nts

, pu

rch

ase

op

tio

ns

or

oth

er

rest

rict

ion

s o

n C

ho

rus.

PA

RE

NT

20

13 $M

20

12 $M

Sh

are

s at

co

st 5

38

538

Term

ad

van

ce 1

,70

0

1,7

00

Tota

l in

vest

me

nts

an

d a

dva

nce

s 2

,238

2

,238

Ch

oru

s N

ew Z

eala

nd

Lim

ited

inco

rpo

rate

d in

New

Zea

lan

d

is a

wh

olly

ow

ned

op

erat

ing

su

bsi

dia

ry o

f C

ho

rus

Lim

ited

.

Th

e in

vest

men

t in

th

e su

bsi

dia

ry is

car

ried

at

cost

less

an

y

imp

airm

ents

loss

es a

nd

co

mp

rise

s:

No

te 1

6 –

Inve

stm

ents

an

d a

dva

nce

s

Th

e fu

ll te

rm h

as b

een

use

d in

th

e ca

lcu

lati

on

of

finan

ce le

ase

pay

able

s an

d r

ecei

vab

les

as it

is li

kely

, du

e to

th

e sp

ecia

lised

nat

ure

of

the

bu

ildin

gs,

th

e le

ases

will

be

ren

ewed

to

th

e m

axim

um

ter

m.

Th

e p

ayab

le a

nd

rec

eiva

ble

un

der

th

ese

finan

ce le

ase

arra

ng

emen

ts

are

net

set

tled

in c

ash

. Th

e fin

ance

leas

e ar

ran

gem

ent

abo

ve r

efle

cts

the

net

fin

ance

leas

e re

ceiv

able

an

d p

ayab

le p

osi

tio

n.

Th

ere

wer

e n

o im

pai

rmen

t lo

sses

on

inve

stm

ents

an

d a

dva

nce

s

at 3

0 J

un

e 2

013

(30

Ju

ne

20

12: n

il).

No

te 1

5 –

Lea

ses

con

tinu

edN

ote

15

– L

ease

s co

ntin

ued

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

35

No

te 1

7 –

Eq

uit

y

Shar

e ca

pit

al

Mo

vem

ents

in C

ho

rus

Lim

ited

’s is

sued

ord

inar

y sh

ares

wer

e as

fo

llow

s:

GR

OU

P A

ND

PA

RE

NT

NU

MB

ER

OF

SHA

RE

S (M

ILLI

ON

S)2

013 M

20

12 M

Bal

ance

at

be

gin

nin

g o

f th

e p

eri

od

38

5 3

85

Div

ide

nd

Re

inve

stm

en

t P

lan

4

-

Bal

ance

at

the

en

d o

f th

e p

eri

od

38

9

38

5

Ch

oru

s Li

mit

ed h

as 3

89

,29

9,0

49

fu

lly p

aid

ord

inar

y sh

ares

(30

Ju

ne

20

12: 3

85,

08

2,1

23

fu

lly p

aid

ord

inar

y sh

ares

). T

he

issu

ed

shar

es h

ave

no

par

val

ue.

Th

e h

old

ers

of

ord

inar

y sh

ares

are

en

titl

ed

to r

ecei

ve d

ivid

end

s as

dec

lare

d f

rom

tim

e to

tim

e, a

nd

are

en

titl

ed

to o

ne

vote

per

sh

are

at m

eeti

ng

s o

f C

ho

rus

Lim

ited

. Un

der

Ch

oru

s

Lim

ited

’s c

on

stit

uti

on

, Cro

wn

ap

pro

val i

s re

qu

ired

if a

sh

areh

old

er

wis

hes

to

hav

e a

ho

ldin

g o

f 10

% o

r m

ore

of

Ch

oru

s Li

mit

ed o

rdin

ary

shar

es, o

r if

a sh

areh

old

er w

ho

is n

ot

a N

ew Z

eala

nd

nat

ion

al w

ish

es

to h

ave

a h

old

ing

of

49

.9%

or

mo

re o

f o

rdin

ary

shar

es.

In t

he

year

en

ded

30

Ju

ne

20

13 C

ho

rus

Lim

ited

imp

lem

ente

d a

Div

iden

d R

ein

vest

men

t P

lan

. Un

der

th

e P

lan

, elig

ible

sh

areh

old

ers

(th

ose

wh

o h

ave

an a

dd

ress

in N

ew Z

eala

nd

or

Au

stra

lia) c

an c

ho

ose

to h

ave

Ch

oru

s Li

mit

ed r

ein

vest

all

or

par

t o

f th

eir

futu

re d

ivid

end

s

in a

dd

itio

nal

Ch

oru

s Li

mit

ed s

har

es. I

n r

esp

ect

of

the

year

en

ded

30

Ju

ne

20

13, 4

,216

,92

6 s

har

es w

ith

a t

ota

l val

ue

of

$12

mill

ion

wer

e

issu

ed in

lieu

of

div

iden

ds.

Ch

oru

s Li

mit

ed is

sues

sec

uri

ties

to

CFH

bas

ed o

n t

he

nu

mb

er o

f

pre

mis

es p

asse

d. C

FH s

ecu

riti

es a

re a

cla

ss o

f se

curi

ty t

hat

car

ry n

o

rig

ht

to v

ote

at

mee

tin

gs

of

ho

lder

s o

f C

ho

rus

Lim

ited

ord

inar

y sh

ares

bu

t ca

rry

pre

fere

nce

on

liq

uid

atio

n. R

efer

to

no

te 4

fo

r ad

dit

ion

al

info

rmat

ion

on

CFH

sec

uri

ties

.

Sho

uld

Ch

oru

s Li

mit

ed r

etu

rn c

apit

al t

o s

har

eho

lder

s, a

ny

retu

rn o

f

cap

ital

th

at a

rose

on

dem

erg

er is

exp

ecte

d t

o b

e ta

xab

le a

s C

ho

rus

Lim

ited

had

zer

o a

vaila

ble

su

bsc

rib

ed c

apit

al o

n d

emer

ger

.

Th

e fo

llow

ing

div

iden

ds

wer

e d

ecla

red

an

d p

aid

by

Ch

oru

s Li

mit

ed

for

the

year

en

ded

30

Ju

ne

20

13 :

No

te 1

7 –

Eq

uity

co

ntin

ued

GR

OU

P A

ND

PA

RE

NT

20

13 $M

20

13C

EN

TS

PE

R

SHA

RE

20

12 d

ivid

en

d p

aid

56

1

4.6

20

13 in

teri

m d

ivid

en

d p

aid

39

1

0.0

Div

ide

nd

s p

aid

du

rin

g t

he

year

95

Fin

al d

ivid

en

d d

ec

lare

d s

ub

seq

ue

nt

to b

alan

ce d

ate

no

t p

rovi

de

d (

refe

r to

no

te 2

3)

60

15

.5

No

div

iden

d w

as p

aid

du

rin

g t

he

seve

n m

on

ths

end

ed 3

0 J

un

e 2

012

.

Res

erve

s

Cas

h fl

ow

hed

ge

rese

rve

Th

e ca

sh f

low

hed

ge

rese

rve

com

pri

ses

the

effe

ctiv

e p

ort

ion

of

the

cum

ula

tive

net

ch

ang

e in

th

e fa

ir v

alu

e o

f ca

sh f

low

hed

gin

g

inst

rum

ents

rel

ated

to

hed

ged

tra

nsa

ctio

ns

that

hav

e n

ot

yet

affe

cted

ear

nin

gs.

For

cash

flo

w h

edg

es, t

he

effe

ctiv

e p

ort

ion

of

gai

ns

or

loss

es f

rom

rem

easu

rin

g t

he

fair

val

ue

of

the

hed

gin

g in

stru

men

t is

rec

og

nis

ed

in o

ther

co

mp

reh

ensi

ve in

com

e an

d a

ccu

mu

late

d in

th

e ca

sh f

low

hed

ge

rese

rve.

Acc

um

ula

ted

gai

ns

or

loss

es a

re s

ub

seq

uen

tly

tran

sfer

red

to

th

e in

com

e st

atem

ent

wh

en t

he

hed

ged

item

aff

ects

the

inco

me

stat

emen

t, o

r w

hen

th

e h

edg

ed it

em is

a f

ore

cast

tran

sact

ion

th

at is

no

lon

ger

exp

ecte

d t

o o

ccu

r. A

lter

nat

ivel

y,

wh

en t

he

hed

ged

item

res

ult

s in

a n

on

-fin

anci

al a

sset

or

liab

ility

,

the

accu

mu

late

d g

ain

s an

d lo

sses

are

incl

ud

ed in

th

e in

itia

l

mea

sure

men

t o

f th

e co

st o

f th

e as

set

or

liab

ility

.

Th

e re

mea

sure

men

t g

ain

or

loss

on

th

e in

effe

ctiv

e p

ort

ion

of

a

cash

flo

w h

edg

e is

rec

og

nis

ed im

med

iate

ly in

th

e in

com

e st

atem

ent.

A r

eco

nci

liati

on

of

mo

vem

ents

in t

he

cash

flo

w h

edg

e

rese

rve

follo

ws:

GR

OU

P A

ND

PA

RE

NT

20

13 $M

20

12 $M

Op

en

ing

bal

ance

10

-

(Gai

n)/

loss

re

cog

nis

ed

in o

the

r co

mp

reh

en

sive

inco

me

(9)

10

Ne

t am

ou

nts

re

cla

ssif

ied

fro

m c

ash

flo

w h

ed

ge

re

serv

e t

o in

com

e s

tate

me

nt

-

-

Clo

sin

g b

alan

ce 1

1

0

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts3

6

Th

e p

erio

ds

in w

hic

h t

he

cash

flo

ws

asso

ciat

ed w

ith

cas

h

flo

w h

edg

es a

re e

xpec

ted

to

imp

act

earn

ing

s ar

e as

fo

llow

s:

No

te 1

7 –

Eq

uity

co

ntin

ued

No

te 1

8 –

Ear

nin

gs

per

sh

are

GR

OU

P A

ND

PA

RE

NT

AS

AT

30

JU

NE

20

13

WIT

HIN

1

YE

AR

$M

1-2

YE

AR

S$

M2

-3 Y

EA

RS

$M

3-4

YE

AR

S$

M4

-5 Y

EA

RS

$M

GR

EA

TE

R T

HA

N

5 Y

EA

RS

$M

Cro

ss c

urr

en

cy

inte

rest

rat

e s

wap

s -

-

-

-

-

1

Inte

rest

rat

e s

wap

s -

1

-

1

-

(2

)

Forw

ard

exc

han

ge

co

ntr

acts

-

-

-

-

-

-

Ele

ctr

icit

y co

ntr

acts

-

-

-

-

-

-

-

1

-

1

-

(1)

GR

OU

P A

ND

PA

RE

NT

AS

AT

30

JU

NE

20

12

WIT

HIN

1

YE

AR

$M

1-2

YE

AR

S$

M2

-3 Y

EA

RS

$M

3-4

YE

AR

S$

M4

-5 Y

EA

RS

$M

GR

EA

TE

R T

HA

N

5 Y

EA

RS

$M

Cro

ss c

urr

en

cy

inte

rest

rat

e s

wap

s -

-

-

-

-

(1

6)

Inte

rest

rat

e s

wap

s -

-

2

-

4

2

0

Forw

ard

exc

han

ge

co

ntr

acts

-

-

-

-

-

-

Ele

ctr

icit

y co

ntr

acts

-

-

-

-

-

-

-

-

2

-

4

4

Fair

val

ue

hed

ge

rese

rve

For

fair

val

ue

hed

ges

, gai

ns

or

loss

es f

rom

rem

easu

rin

g t

he

fair

valu

e o

f th

e h

edg

ing

inst

rum

ent

are

reco

gn

ised

in t

he

inco

me

stat

emen

t to

get

her

wit

h a

ny

chan

ges

in t

he

fair

val

ue

of

the

hed

ged

asse

t o

r lia

bili

ty.

Ch

oru

s d

id n

ot

hav

e an

y h

edg

ing

arr

ang

emen

ts d

esig

nat

ed

as a

fai

r va

lue

hed

ge

in t

he

curr

ent

year

(30

Ju

ne

20

12: n

il).

Th

e ca

lcu

lati

on

of

bas

ic e

arn

ing

s p

er s

har

e at

30

Ju

ne

20

13 is

bas

ed o

n t

he

net

ear

nin

gs

for

the

year

of

$17

1 m

illio

n (3

0 J

un

e 2

012

:

$10

2 m

illio

n),

and

a w

eig

hte

d a

vera

ge

nu

mb

er o

f o

rdin

ary

shar

es

ou

tsta

nd

ing

du

rin

g t

he

per

iod

of

38

6 m

illio

n (3

0 J

un

e 2

012

:

38

5 m

illio

n),

calc

ula

ted

as

follo

ws:

GR

OU

P

20

132

012

Bas

ic e

arn

ing

s p

er

shar

e

Ne

t e

arn

ing

s at

trib

uta

ble

to

ord

inar

y sh

are

ho

lde

rs (

$ m

illio

ns)

171

1

02

De

no

min

ato

r -

we

igh

ted

ave

rag

e n

um

be

r o

f o

rdin

ary

shar

es

(mill

ion

s) 3

86

3

85

Bas

ic e

arn

ing

s p

er

shar

e (d

oll

ars)

0.4

4

0.2

6

Dil

ute

d e

arn

ing

s p

er

shar

e

Ne

t e

arn

ing

s at

trib

uta

ble

to

ord

inar

y sh

are

ho

lde

rs (

$ m

illio

ns)

171

1

02

We

igh

ted

ave

rag

e n

um

be

r o

f o

rdin

ary

shar

es

(mill

ion

s) 3

86

3

85

Ord

inar

y sh

are

s re

qu

ire

d t

o s

ett

le C

FH e

qu

ity

sec

uri

tie

s (m

illio

ns)

25

2

De

no

min

ato

r -

dilu

ted

we

igh

ted

ave

rag

e n

um

be

r o

f sh

are

s (m

illio

ns)

411

3

87

Dil

ute

d e

arn

ing

s p

er

shar

e (d

oll

ars)

0.4

2 0

.26

CFH

eq

uit

y se

curi

ties

can

be

sett

led

by

issu

ing

Ch

oru

s sh

ares

val

ued

at a

5%

dis

cou

nt

to t

he

20

-day

vo

lum

e w

eig

hte

d a

vera

ge

pri

ce f

or

Ch

oru

s sh

ares

tra

ded

in o

rdin

ary

trad

ing

on

th

e N

ZX

Mai

n B

oar

d.

Th

e n

um

ber

of

ord

inar

y sh

ares

th

at w

ou

ld h

ave

bee

n r

equ

ired

to

sett

le a

ll C

FH e

qu

ity

secu

riti

es o

n is

sue

at 3

0 J

un

e 2

013

has

bee

n

use

d f

or

the

pu

rpo

ses

of

the

dilu

ted

ear

nin

gs

per

sh

are

calc

ula

tio

n.

Th

ere

was

no

dilu

tio

n e

ffec

t at

30

Ju

ne

20

12.

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

37

No

te 1

9 –

Rel

ated

par

ty t

ran

sact

ion

s

Tran

sact

ion

s w

ith

rel

ated

par

ties

Cer

tain

Ch

oru

s d

irec

tors

hav

e re

leva

nt

inte

rest

s in

a n

um

ber

of

com

pan

ies

wit

h w

hic

h C

ho

rus

has

tra

nsa

ctio

ns

in t

he

no

rmal

co

urs

e

of

bu

sin

ess.

A n

um

ber

of

Ch

oru

s’ d

irec

tors

are

als

o n

on

-exe

cuti

ve

dir

ecto

rs o

f o

ther

co

mp

anie

s. A

ny

tran

sact

ion

s u

nd

erta

ken

wit

h

thes

e en

titi

es h

ave

bee

n e

nte

red

into

ind

epen

den

tly

on

an

arm

’s

len

gth

co

mm

erci

al b

asis

.

Key

man

agem

ent

per

son

nel

co

mp

ensa

tio

n

GR

OU

PP

AR

EN

T

20

13

$’0

00

s2

012

$

’00

0s

20

13

$’0

00

s2

012

$

’00

0s

Sh

ort

te

rm e

mp

loye

e b

en

efi

ts 5

,49

4

3,1

08

-

-

Po

st e

mp

loym

en

t b

en

efi

ts -

-

-

-

Term

inat

ion

be

ne

fits

24

2 -

-

-

Oth

er

lon

g t

erm

be

ne

fits

650

5

42

-

-

Sh

are

bas

ed

pay

me

nts

-

-

-

-

6,3

86

3

,650

-

-

Th

is t

able

ab

ove

incl

ud

es r

emu

ner

atio

n o

f $

86

3,5

00

(30

Ju

ne

20

12:

$4

67,

00

0) p

aid

to

dir

ecto

rs f

or

the

per

iod

.

Par

ent/

sub

sid

iary

rel

atio

nsh

ip

Ch

oru

s Li

mit

ed is

th

e lis

ted

ho

ldin

g c

om

pan

y w

ith

th

e d

ebt

ob

ligat

ion

fo

r th

e E

MT

N a

nd

syn

dic

ated

ban

k fa

cilit

y an

d is

th

e is

suer

of

the

CFH

sec

uri

ties

. Ch

oru

s N

ew Z

eala

nd

Lim

ited

is a

n o

per

atio

nal

sub

sid

iary

pro

vid

ing

fix

ed a

cces

s an

d a

gg

reg

atio

n s

ervi

ces

in

New

Zea

lan

d. C

ho

rus

Lim

ited

pro

vid

es f

un

din

g t

o C

ho

rus

New

Zea

lan

d L

imit

ed f

or

the

op

erat

ion

an

d c

on

stru

ctio

n o

f th

e

net

wo

rk. C

ho

rus

New

Zea

lan

d L

imit

ed h

as p

rovi

ded

a g

uar

ante

e to

the

len

der

s in

res

pec

t o

f th

e C

ho

rus

Lim

ited

syn

dic

ated

ban

k fa

cilit

y

and

EM

TN

deb

t.

PA

RE

NT

20

13 $M

20

12 $M

Inte

rco

mp

any

div

ide

nd

86

-

Inte

rco

mp

any

inte

rest

inco

me

10

4

60

Inte

rco

mp

any

sho

rt t

erm

re

ceiv

able

211

2

2

Inte

rco

mp

any

term

ad

van

ce 1

,70

0

1,7

00

No

te 2

0 –

Der

ivat

ive

fin

anci

al in

stru

men

ts

Der

ivat

ive

fin

anci

al in

stru

men

ts

Ch

oru

s u

ses

der

ivat

ive

finan

cial

inst

rum

ents

to

red

uce

its

exp

osu

re t

o

flu

ctu

atio

ns

in f

ore

ign

cu

rren

cy e

xch

ang

e ra

tes,

inte

rest

rat

es a

nd

th

e

spo

t p

rice

of

elec

tric

ity.

Th

e u

se o

f h

edg

ing

inst

rum

ents

is g

ove

rned

by

the

trea

sury

po

licy

app

rove

d b

y th

e B

oar

d o

f D

irec

tors

.

Der

ivat

ives

are

init

ially

rec

og

nis

ed a

t fa

ir v

alu

e o

n t

he

dat

e a

der

ivat

ive

con

trac

t is

en

tere

d in

to a

nd

are

su

bse

qu

ently

rem

easu

red

to

fai

r va

lue.

Th

e fa

ir v

alu

es a

re e

stim

ated

on

th

e b

asis

of

the

qu

ote

d m

arke

t p

rice

s

for

sim

ilar

inst

rum

ents

in a

n a

ctiv

e m

arke

t o

r q

uo

ted

pri

ces

for

iden

tical

or

sim

ilar

inst

rum

ents

in in

acti

ve m

arke

ts a

nd

fin

anci

al in

stru

men

ts

valu

ed u

sin

g m

od

els

wh

ere

all s

ign

ifica

nt

inp

uts

are

ob

serv

able

.

Th

e m

eth

od

of

reco

gn

isin

g t

he

resu

ltin

g r

emea

sure

men

t g

ain

or

loss

dep

end

s o

n w

het

her

th

e d

eriv

ativ

e is

des

ign

ated

as

a

hed

gin

g in

stru

men

t. If

th

e d

eriv

ativ

e is

no

t d

esig

nat

ed a

s a

hed

gin

g

inst

rum

ent,

th

e re

mea

sure

men

t g

ain

or

loss

is r

eco

gn

ised

imm

edia

tely

in t

he

inco

me

stat

emen

t.

GR

OU

P A

ND

PA

RE

NT

20

13 $M

20

12 $M

No

n-c

urr

en

t d

eri

vati

ve a

sse

ts

Inte

rest

rat

e s

wap

s 7

-

Forw

ard

exc

han

ge

rat

e c

on

trac

ts -

-

Cro

ss c

urr

en

cy

inte

rest

rat

e s

wap

s -

2

Cu

rre

nc

y o

pti

on

s -

-

Ele

ctr

icit

y co

ntr

acts

-

-

7

2

No

n-c

urr

en

t d

eri

vati

ve li

abil

itie

s

Inte

rest

rat

e s

wap

s 2

3

2

Forw

ard

exc

han

ge

rat

e c

on

trac

ts -

-

Cro

ss c

urr

en

cy

inte

rest

rat

e s

wap

s 1

03

78

Cu

rre

nc

y o

pti

on

s -

-

Ele

ctr

icit

y co

ntr

acts

1

-

10

6

110

Th

e n

oti

on

al v

alu

es o

f co

ntr

act

amo

un

ts o

uts

tan

din

g a

re a

s fo

llow

s:

GR

OU

P A

ND

PA

RE

NT

CU

RR

EN

CY

MA

TU

RIT

Y2

013 $M

20

12 $M

Inte

rest

rat

e s

wap

sN

ZD

20

14-2

02

0 1

,24

2 1

,24

2

Forw

ard

exc

han

ge

rat

e c

on

trac

tsN

ZD

:AU

D2

013

3

-

NZ

D:E

UR

20

12-2

016

11

5

NZ

D:U

SD

20

12 -

4

Cro

ss c

urr

en

cy

inte

rest

rat

e s

wap

sN

ZD

:GB

P2

02

0 6

77

677

Cu

rre

nc

y o

pti

on

sN

ZD

:AU

D2

012

-

4

NZ

D:E

UR

20

12 -

6

NZ

D:U

SD

20

12 -

4

Ele

ctr

icit

y co

ntr

acts

NZ

D2

013

-20

15 7

-

1,9

40

1

,94

2

Cre

dit

ris

k as

soci

ated

wit

h d

eriv

ativ

e fin

anci

al in

stru

men

ts is

man

aged

by

ensu

rin

g t

hat

tra

nsa

ctio

ns

are

exec

ute

d w

ith

co

un

terp

arti

es w

ith

hig

h q

ual

ity

cred

it r

atin

gs

alo

ng

wit

h c

red

it e

xpo

sure

lim

its

for

diff

eren

t cr

edit

cla

sses

. Th

e co

un

terp

arty

cre

dit

ris

k is

mo

nit

ore

d

and

rev

iew

ed b

y th

e B

oar

d o

n a

reg

ula

r b

asis

.

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts3

8

No

te 2

1 –

Fin

anci

al r

isk

man

agem

ent

Fin

anci

al r

isk

man

agem

ent

Ch

oru

s’ f

inan

cial

inst

rum

ents

co

nsi

st o

f ca

sh, s

ho

rt-t

erm

dep

osi

ts,

trad

e an

d o

ther

rec

eiva

ble

s (e

xclu

din

g p

rep

aym

ents

), in

vest

men

ts

and

ad

van

ces,

tra

de

pay

able

s an

d c

erta

in o

ther

pay

able

s, s

ynd

icat

ed

ban

k fa

cilit

y, E

MT

N, d

eriv

ativ

e fin

anci

al in

stru

men

ts a

nd

CFH

secu

riti

es. F

inan

cial

ris

k m

anag

emen

t fo

r cu

rren

cy a

nd

inte

rest

rat

e

risk

is c

arri

ed o

ut

by

the

trea

sury

fu

nct

ion

un

der

po

licie

s ap

pro

ved

by

the

Bo

ard

. Ch

oru

s’ r

isk

man

agem

ent

po

licy,

ap

pro

ved

by

the

Bo

ard

, pro

vid

es t

he

bas

is f

or

ove

rall

risk

man

agem

ent.

Ch

oru

s d

oes

no

t h

old

or

issu

e d

eriv

ativ

e fin

anci

al in

stru

men

ts f

or

trad

ing

pu

rpo

ses.

All

con

trac

ts h

ave

bee

n e

nte

red

into

wit

h m

ajo

r

cred

itw

ort

hy

finan

cial

inst

itu

tio

ns.

Th

e ri

sk a

sso

ciat

ed w

ith

th

ese

tran

sact

ion

s is

th

e co

st o

f re

pla

cin

g t

hes

e ag

reem

ents

at

the

curr

ent

mar

ket

rate

s in

th

e ev

ent

of

def

ault

by

a co

un

terp

arty

.

Cu

rren

cy r

isk

Ch

oru

s’ e

xpo

sure

to

fo

reig

n c

urr

ency

flu

ctu

atio

ns

pre

do

min

antl

y

aris

e fr

om

th

e fo

reig

n c

urr

ency

deb

t an

d f

utu

re c

om

mit

men

t

to p

urc

has

e fo

reig

n c

urr

ency

den

om

inat

ed a

sset

s. T

he

pri

mar

y

ob

ject

ive

in m

anag

ing

fo

reig

n c

urr

ency

ris

k is

to

pro

tect

ag

ain

st

the

risk

th

at C

ho

rus

asse

ts, l

iab

iliti

es a

nd

fin

anci

al p

erfo

rman

ce

will

flu

ctu

ate

du

e to

ch

ang

es in

fo

reig

n c

urr

ency

exc

han

ge

rate

s.

Ch

oru

s en

ters

into

fo

reig

n e

xch

ang

e co

ntr

acts

, fo

reig

n c

urr

ency

op

tio

ns

and

cro

ss c

urr

ency

inte

rest

rat

e sw

aps

to m

anag

e th

e

fore

ign

exc

han

ge

exp

osu

re.

Ch

oru

s h

as is

sued

GB

P2

60

mill

ion

fo

reig

n c

urr

ency

deb

t in

th

e fo

rm

of

EM

TN

. Ch

oru

s h

as in

pla

ce c

ross

cu

rren

cy in

tere

st r

ate

swap

s

un

der

wh

ich

Ch

oru

s re

ceiv

es G

BP

26

0 m

illio

n p

rin

cip

al a

nd

GB

P f

ixed

cou

po

n p

aym

ents

fo

r $

677

mill

ion

pri

nci

pal

an

d f

loat

ing

NZ

D in

tere

st

pay

men

ts. T

he

exch

ang

e g

ain

or

loss

res

ult

ing

fro

m t

he

tran

slat

ion

of

EM

TN

den

om

inat

ed in

fo

reig

n c

urr

ency

to

New

Zea

lan

d d

olla

rs is

reco

gn

ised

in t

he

inco

me

stat

emen

t. T

he

mo

vem

ent

is o

ffse

t b

y th

e

tran

slat

ion

of

the

pri

nci

pal

val

ue

of

the

rela

ted

cro

ss c

urr

ency

inte

rest

rate

sw

ap.

As

at 3

0 J

un

e 2

013

, Ch

oru

s d

id n

ot

hav

e an

y si

gn

ifica

nt

un

hed

ged

exp

osu

re t

o c

urr

ency

ris

k (3

0 J

un

e 2

012

: no

sig

nifi

can

t u

nh

edg

ed

exp

osu

re t

o c

urr

ency

ris

k). A

10

% in

crea

se o

r d

ecre

ase

in t

he

exch

ang

e ra

te, w

ith

all

oth

er v

aria

ble

s h

eld

co

nst

ant,

has

min

imal

imp

act

on

pro

fit a

nd

eq

uit

y re

serv

es o

f C

ho

rus.

Pri

ce r

isk

In t

he

no

rmal

co

urs

e o

f b

usi

nes

s, C

ho

rus

is e

xpo

sed

to

a v

arie

ty

of

finan

cial

ris

ks w

hic

h in

clu

de

the

vola

tilit

y in

ele

ctri

city

pri

ces.

Ch

oru

s h

as e

nte

red

into

ele

ctri

city

sw

ap c

on

trac

ts t

o r

edu

ce

the

exp

osu

re t

o e

lect

rici

ty s

po

t p

rice

mo

vem

ents

. Ch

oru

s h

as

des

ign

ated

th

e el

ectr

icit

y co

ntr

acts

in c

ash

flo

w h

edg

e re

lati

on

ship

s.

A 1

0%

incr

ease

or

dec

reas

e in

th

e sp

ot

pri

ce o

f el

ectr

icit

y, w

ith

all o

ther

var

iab

les

hel

d c

on

stan

t, h

as m

inim

al im

pac

t o

n p

rofit

an

d

equ

ity

rese

rves

of

Ch

oru

s.

Inte

rest

rat

e ri

sk

Ch

oru

s h

as in

tere

st r

ate

risk

ari

sin

g f

rom

th

e cr

oss

cu

rren

cy

inte

rest

rat

e sw

ap c

on

vert

ing

th

e fo

reig

n d

ebt

into

a f

loat

ing

rat

e

New

Zea

lan

d d

olla

r o

blig

atio

n a

nd

th

e fl

oat

ing

rat

e o

n t

he

dra

wn

do

wn

po

rtio

n o

f th

e sy

nd

icat

ed b

ank

faci

lity.

Ch

oru

s ai

ms

to r

edu

ce

the

un

cert

ain

ty o

f ch

ang

es in

inte

rest

rat

es b

y en

teri

ng

into

inte

rest

rate

sw

aps

to f

ix t

he

effe

ctiv

e in

tere

st r

ate

to m

inim

ise

the

cost

of

net

deb

t an

d m

anag

e th

e im

pac

t o

f in

tere

st r

ate

vola

tilit

y o

n e

arn

ing

s.

Th

e in

tere

st r

isk

on

th

e cr

oss

cu

rren

cy in

tere

st r

ate

swap

s h

as b

een

hed

ged

usi

ng

inte

rest

rat

e sw

aps.

Th

e in

tere

st r

ate

exp

osu

re o

n t

he

syn

dic

ated

ban

kin

g f

acili

ty h

as b

een

hed

ged

up

to

$5

65

mill

ion

wit

h

the

rem

ain

ing

pay

ing

flo

atin

g in

tere

st.

Inte

rest

rat

e re

pri

cin

g a

nal

ysis

GR

OU

P

AS

AT

30

JU

NE

20

13

WIT

HIN

1

YE

AR

$M

1-2

YE

AR

S$

M2

-3 Y

EA

RS

$M

3-4

YE

AR

S$

M4

-5 Y

EA

RS

$M

GR

EA

TE

R T

HA

N

5 Y

EA

RS

$M

TO

TA

L$

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Flo

atin

g r

ate

Cas

h a

nd

de

po

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80

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bt

630

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d r

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t ar

ran

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8

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-

-

-

11

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bt

(aft

er

he

dg

ing

) -

3

50

-

215

-

6

77

1,2

42

CFH

se

cu

riti

es

-

-

-

-

-

30

3

0

Fin

ance

leas

e (

ne

t se

ttle

d)

(3)

(3)

(3)

(4)

(4)

13

7 1

20

715

3

50

(3)

211

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) 8

44

2

,113

GR

OU

P

AS

AT

30

JU

NE

20

12

WIT

HIN

1

YE

AR

$M

1-2

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AR

S $

M2

-3 Y

EA

RS

$M

3-4

YE

AR

S$

M4

-5 Y

EA

RS

$M

GR

EA

TE

R T

HA

N

5 Y

EA

RS

$M

TO

TA

L$

M

Flo

atin

g r

ate

Cas

h a

nd

de

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sits

14

0

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-

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-

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14

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bt

54

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54

0

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me

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11

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3

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bt

(aft

er

he

dg

ing

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3

50

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215

6

77

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se

cu

riti

es

-

-

-

-

-

3

3

Fin

ance

leas

e (

ne

t se

ttle

d)

(3)

(3)

(3)

(3)

(4)

13

4

118

68

8

4

350

(3

) 2

11

814

2

,06

4

No

te 2

1 –

Fin

anci

al r

isk

man

agem

ent

con

tinu

ed

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts

39

No

te 2

1 –

Fin

anci

al r

isk

man

agem

ent

con

tinu

ed

Th

e P

aren

t h

as f

loat

ing

rat

e ex

po

sure

s o

f ca

sh (3

0 J

un

e 2

013

:

$6

9 m

illio

n, 3

0 J

un

e 2

012

: $6

1 m

illio

n) a

nd

deb

t (3

0 J

un

e 2

013

:

$6

30

mill

ion

, 30

Ju

ne

20

12: $

54

0 m

illio

n) b

oth

of

wh

ich

are

du

e

wit

hin

on

e ye

ar. T

he

exp

osu

res

of

deb

t (a

fter

hed

gin

g) a

nd

CFH

secu

riti

es a

re t

he

sam

e as

fo

r th

e G

rou

p f

or

the

curr

ent

year

an

d

the

pri

or

per

iod

.

GR

OU

P A

ND

PA

RE

NT

20

13P

RO

FIT

OR

(L

OSS

) $

M

20

13

Eq

UIT

Y

$M

20

12P

RO

FIT

OR

(L

OSS

)$

M

20

12

Eq

UIT

Y

$M

100

bas

is p

oin

t in

cre

ase

(3

) (5

) (5

) 2

1

100

bas

is p

oin

t d

ec

reas

e 3

1

3 5

(2

3)

Cre

dit

ris

k

In t

he

no

rmal

co

urs

e o

f it

s b

usi

nes

s, C

ho

rus

incu

rs c

ou

nte

rpar

ty

cred

it r

isk

fro

m f

inan

cial

inst

rum

ents

, in

clu

din

g c

ash

, tra

de

and

oth

er r

ecei

vab

les,

fin

ance

leas

e re

ceiv

able

s an

d d

eriv

ativ

e

finan

cial

inst

rum

ents

.

Ch

oru

s h

as c

erta

in d

eriv

ativ

e tr

ansa

ctio

ns

that

are

su

bje

ct t

o b

ilate

ral

cred

it s

up

po

rt a

gre

emen

ts t

hat

req

uir

e C

ho

rus

or

the

cou

nte

rpar

ty t

o

No

te 2

1 –

Fin

anci

al r

isk

man

agem

ent

con

tinu

ed

GR

OU

PP

AR

EN

T

NO

TE

S2

013 $M

20

12 $M

20

13 $M

20

12 $M

Cas

h a

nd

cal

l de

po

sits

14 8

0

14

0

69

6

1

Trad

e a

nd

oth

er

rece

ivab

les

10 2

80

1

97

24

3 4

0

De

riva

tive

fin

anc

ial i

nst

rum

en

ts2

0 7

2

7

2

Fin

ance

leas

e r

ece

ivab

le15

3

3

-

-

Max

imu

m e

xpo

sure

to

cre

dit

ris

k 3

70

34

2 3

19

10

3

Ref

er t

o in

div

idu

al n

ote

s fo

r ad

dit

ion

al in

form

atio

n o

n c

red

it r

isk.

Liq

uid

ity

risk

Liq

uid

ity

risk

is t

he

risk

th

at C

ho

rus

will

en

cou

nte

r d

iffic

ult

y ra

isin

g

liqu

id f

un

ds

to m

eet

com

mit

men

ts a

s th

ey f

all d

ue

or

fore

go

ing

inve

stm

ent

op

po

rtu

nit

ies,

res

ult

ing

in d

efau

lts

or

exce

ssiv

e d

ebt

cost

s. P

rud

ent

liqu

idit

y ri

sk m

anag

emen

t im

plie

s m

ain

tain

ing

suff

icie

nt

cash

an

d t

he

abili

ty t

o m

eet

its

finan

cial

ob

ligat

ion

s.

Ch

oru

s’ e

xpo

sure

to

liq

uid

ity

risk

bas

ed o

n c

on

trac

tual

cas

h f

low

s

rela

tin

g t

o f

inan

cial

liab

iliti

es is

su

mm

aris

ed b

elo

w:

Sen

siti

vity

an

alys

is

As

at 3

0 J

un

e 2

013

a c

han

ge

of

100

bas

is p

oin

ts in

inte

rest

rat

e,

wit

h a

ll o

ther

var

iab

les

hel

d c

on

stan

t, w

ou

ld in

crea

se/(

dec

reas

e)

equ

ity

(aft

er h

edg

ing

) an

d e

arn

ing

s af

ter

tax

by

the

amo

un

ts

sho

wn

bel

ow

:

po

st c

olla

tera

l to

su

pp

ort

th

e va

lue

of

cert

ain

der

ivat

ives

.

As

at 3

0 J

un

e 2

013

no

co

llate

ral w

as p

ost

ed.

Th

e m

axim

um

exp

osu

re t

o c

red

it r

isk

at t

he

rep

ort

ing

dat

e

was

as

follo

ws:

GR

OU

P

AS

AT

30

JU

NE

20

13

CA

RR

YIN

G

AM

OU

NT

$M

CO

NT

RA

CT

UA

L C

ASH

FLO

W $M

LESS

TH

AN

1

YE

AR

$M

1-2

YE

AR

S$

M2

-3 Y

EA

RS

$M

3-4

YE

AR

S$

M4

-5 Y

EA

RS

$M

5+

YE

AR

S$

M

No

n d

eri

vati

ve f

inan

cial

liab

ilit

ies

Trad

e a

nd

oth

er

pay

able

s 2

86

2

86

2

83

3

-

-

-

-

Fin

ance

leas

e (

ne

t se

ttle

d)

120

4

26

7

8

8

8

8

38

7

De

bt

1,6

97

2,0

91

77

77

74

1 5

4

56

4

578

CFH

se

cu

riti

es

30

6

7 -

-

-

-

-

6

7

De

riva

tive

fin

anci

al li

abil

itie

s

Inte

rest

rat

e s

wap

s 2

7

5 1

3 1

2 1

2 1

0

9

19

Cro

ss c

urr

en

cy

inte

rest

rat

e s

wap

s

Infl

ow

s -

(

750

) (3

4)

(34

) (3

4)

(35)

(35)

(578

)

Ou

tflo

ws

10

3 9

38

37

37

37

37

38

7

52

Ele

ctr

icit

y co

ntr

acts

1

7

3

3

1

-

-

-

Forw

ard

exc

han

ge

co

ntr

acts

Infl

ow

s -

(1

4)

(10

) (2

) (2

) -

-

-

Ou

tflo

ws

-

14

1

0

2

2

-

-

-

GR

OU

P

AS

AT

30

JU

NE

20

12

CA

RR

YIN

G

AM

OU

NT

$M

CO

NT

RA

CT

UA

L C

ASH

FLO

W $M

LESS

TH

AN

1

YE

AR

$M

1-2

YE

AR

S$

M2

-3 Y

EA

RS

$M

3-4

YE

AR

S$

M4

-5 Y

EA

RS

$M

5+

YE

AR

S$

M

No

n d

eri

vati

ve f

inan

cial

liab

ilit

ies

Trad

e a

nd

oth

er

pay

able

s 2

93

29

5 2

85

7

3

-

-

-

Fin

ance

leas

e (

ne

t se

ttle

d)

118

4

34

8

8

8

8

7

3

95

De

bt

1,6

09

2

,024

7

4

74

7

37

50

4

72

617

CFH

se

cu

riti

es

3

6

-

-

-

-

-

6

De

riva

tive

fin

anci

al li

abil

itie

s

Inte

rest

rat

e s

wap

s 3

2 8

2 1

2 1

2 1

2 1

1 1

0

25

Cro

ss c

urr

en

cy

inte

rest

rat

e s

wap

s

Infl

ow

s -

(2

79)

(35)

(35)

(35)

(35)

(35)

(10

4)

Ou

tflo

ws

78

3

04

3

8

38

3

8

38

3

8

114

Ele

ctr

icit

y co

ntr

acts

-

-

-

-

-

-

-

-

Forw

ard

exc

han

ge

co

ntr

acts

Infl

ow

s -

(9

) (9

) -

-

-

-

-

Ou

tflo

ws

-

9

9

-

-

-

-

-

Ch

oru

s Fi

nan

cia

l Sta

tem

en

ts4

0

No

te 2

1 –

Fin

anci

al r

isk

man

agem

ent

con

tinu

ed

Th

e liq

uid

ity

risk

fo

r th

e P

aren

t is

th

e sa

me

as f

or

all d

iscl

osu

res

for

the

Gro

up

exc

ept

trad

e an

d o

ther

pay

able

s an

d f

inan

ce le

ases

.

Th

e ca

rryi

ng

am

ou

nt

of

trad

e an

d o

ther

pay

able

s in

th

e P

aren

t is

$33

mill

ion

(30

Ju

ne

2012

: $31

mill

ion

), w

hic

h is

eq

ual

to th

e co

ntr

actu

al

cash

flo

w a

nd

is a

ll p

ayab

le in

less

th

an o

ne

year

. Th

e P

aren

t d

oes

no

t

hav

e fin

ance

leas

es f

or

the

curr

ent

year

an

d t

he

pri

or

per

iod

.

Th

e g

ross

(in

flo

ws)

/ou

tflo

ws

of

der

ivat

ive

finan

cial

liab

iliti

es d

iscl

ose

d

in t

he

pre

vio

us

tab

le r

epre

sen

t th

e co

ntr

actu

al u

nd

isco

un

ted

cash

flo

ws

rela

tin

g t

o d

eriv

ativ

e fin

anci

al li

abili

ties

hel

d f

or

risk

man

agem

ent

pu

rpo

ses

and

wh

ich

are

usu

ally

no

t cl

ose

d o

ut

pri

or

to c

on

trac

tual

mat

uri

ty. T

he

dis

clo

sure

sh

ow

s n

et c

ash

flo

w a

mo

un

ts

for

der

ivat

ives

th

at a

re n

et c

ash

set

tled

an

d g

ross

cas

h in

flo

w a

nd

ou

tflo

w a

mo

un

ts f

or

der

ivat

ives

th

at h

ave

sim

ult

aneo

us

gro

ss c

ash

sett

lem

ent

(fo

r ex

amp

le f

orw

ard

exc

han

ge

con

trac

ts).

Ch

oru

s m

anag

es t

he

liqu

idit

y ri

sk b

y en

suri

ng

su

ffic

ien

t ac

cess

to c

om

mit

ted

fac

iliti

es, c

on

tin

uo

us

cash

flo

w m

on

ito

rin

g a

nd

mai

nta

inin

g p

rud

ent

leve

ls o

f sh

ort

ter

m d

ebt

mat

uri

ties

. At

bal

ance

dat

e, C

ho

rus

has

ava

ilab

le a

pp

roxi

mat

ely

$15

5 m

illio

n u

nd

er t

he

syn

dic

ated

ban

k fa

cilit

y fo

r it

s im

med

iate

use

(30

Ju

ne

20

12: $

245

mill

ion

). In

ad

dit

ion

, a $

10 m

illio

n o

verd

raft

fac

ility

was

est

ablis

hed

in t

he

curr

ent

year

to

man

age

sho

rt t

erm

cas

h f

un

din

g r

equ

irem

ents

.

Cap

ital

ris

k m

anag

emen

t

Ch

oru

s m

anag

es it

s ca

pit

al c

on

sid

erin

g s

har

eho

lder

s’ in

tere

sts,

th

e

valu

e o

f C

ho

rus

asse

ts a

nd

Ch

oru

s’ c

red

it r

atin

gs.

Th

e ca

pit

al C

ho

rus

man

ages

co

nsi

sts

of

cash

an

d d

ebt

bal

ance

s.

Th

e B

oar

d is

co

mm

itte

d t

o m

ain

tain

ing

a ‘B

BB

’ lo

ng

ter

m c

red

it r

atin

g

fro

m S

tan

dar

d &

Po

or’s

an

d a

‘Baa

2’ l

on

g t

erm

cre

dit

rat

ing

fro

m

Mo

od

y’s

Inve

sto

r Se

rvic

es. C

ho

rus’

cap

ital

man

agem

ent

po

licie

s ar

e

des

ign

ed t

o e

nsu

re t

hat

th

is o

bje

ctiv

e is

met

. It

is C

ho

rus’

inte

nti

on

that

in n

orm

al c

ircu

mst

ance

s th

e ra

tio

of

net

deb

t to

EB

ITD

A w

ill n

ot

mat

eria

lly e

xcee

d 3

.5 t

imes

.

Hed

ge

acco

un

tin

g

Ch

oru

s d

esig

nat

es a

nd

do

cum

ents

th

e re

lati

on

ship

bet

wee

n h

edg

ing

inst

rum

ents

an

d h

edg

ed it

ems,

as

wel

l as

the

risk

man

agem

ent

ob

ject

ive

and

str

ateg

y fo

r u

nd

erta

kin

g v

ario

us

hed

ge

tran

sact

ion

s.

At

hed

ge

ince

pti

on

(an

d o

n a

n o

ng

oin

g b

asis

), h

edg

es a

re a

sses

sed

to e

stab

lish

if t

hey

are

eff

ecti

ve in

off

sett

ing

ch

ang

es in

fai

r va

lues

or

cash

flo

ws

of

hed

ged

item

s. C

ho

rus

dis

con

tin

ues

hed

ge

acco

un

tin

g

if (a

) th

e h

edg

ing

inst

rum

ent

exp

ires

or

is s

old

, ter

min

ated

, or

exer

cise

d; (

b) t

he

hed

ge

no

lon

ger

mee

ts t

he

crit

eria

fo

r h

edg

e

acco

un

tin

g; o

r (c

) th

e h

edg

e d

esig

nat

ion

is r

evo

ked

.

Hed

ges

are

cla

ssifi

ed in

to t

wo

pri

mar

y ty

pes

: cas

h f

low

hed

ges

an

d

fair

val

ue

hed

ges

. Ref

er t

o n

ote

17

for

add

itio

nal

info

rmat

ion

on

cas

h

flo

w a

nd

fai

r va

lue

hed

ge

rese

rves

.

Fair

val

ue

Un

der

NZ

IFR

S, f

inan

cial

inst

rum

ents

are

eit

her

car

ried

at

amo

rtis

ed

cost

, les

s an

y p

rovi

sio

n f

or

imp

airm

ent

loss

es, o

r fa

ir v

alu

e. T

he

on

ly

sig

nifi

can

t va

rian

ces

bet

wee

n in

stru

men

ts h

eld

at

amo

rtis

ed c

ost

an

d

thei

r fa

ir v

alu

e re

late

s to

th

e E

MT

N.

For

tho

se in

stru

men

ts, r

eco

gn

ised

at

fair

val

ue

in t

he

stat

emen

t

of

finan

cial

po

siti

on

, fai

r va

lues

are

det

erm

ined

as

follo

ws:

Leve

l 1: Q

uo

ted

mar

ket

pri

ces

– f

inan

cial

inst

rum

ents

wit

h q

uo

ted

pri

ces

for

iden

tica

l in

stru

men

ts in

act

ive

mar

kets

.

Leve

l 2: V

alu

atio

n t

ech

niq

ues

usi

ng

ob

serv

able

inp

uts

– f

inan

cial

inst

rum

ents

wit

h q

uo

ted

pri

ces

for

sim

ilar

inst

rum

ents

in a

ctiv

e

mar

kets

or

qu

ote

d p

rice

s fo

r id

enti

cal o

r si

mila

r in

stru

men

ts in

inac

tive

mar

kets

an

d f

inan

cial

inst

rum

ents

val

ued

usi

ng

mo

del

s

wh

ere

all s

ign

ifica

nt

inp

uts

are

ob

serv

able

.

Leve

l 3: V

alu

atio

n t

ech

niq

ues

wit

h s

ign

ifica

nt

no

n-o

bse

rvab

le in

pu

ts

– f

inan

cial

inst

rum

ents

val

ued

usi

ng

mo

del

s w

her

e o

ne

or

mo

re

sig

nifi

can

t in

pu

ts a

re n

ot

ob

serv

able

.

Th

e re

leva

nt

finan

cial

ass

ets

and

fin

anci

al li

abili

ties

an

d t

hei

r

resp

ecti

ve f

air

valu

es a

re o

utl

ined

in n

ote

20

an

d a

re a

ll Le

vel 2

(30

Ju

ne

20

12: L

evel

2).

Cro

ss c

urr

ency

inte

rest

rat

e sw

aps

and

inte

rest

rat

e sw

aps

Fair

val

ue

is e

stim

ated

by

usi

ng

a v

alu

atio

n m

od

el in

volv

ing

dis

cou

nte

d f

utu

re c

ash

flo

ws

of

the

der

ivat

ive

usi

ng

th

e ap

plic

able

forw

ard

pri

ce c

urv

e (f

or

the

rele

van

t in

tere

st r

ate

and

fo

reig

n

exch

ang

e ra

te) a

nd

dis

cou

nt

rate

.

Ele

ctri

city

sw

aps

Fair

val

ue

is e

stim

ated

on

th

e A

SX f

orw

ard

pri

ce c

urv

e th

at r

elat

es

to t

he

der

ivat

ive.

Th

e ca

rryi

ng

am

ou

nts

of

finan

cial

ass

ets

and

liab

iliti

es in

eac

h o

f th

e N

Z IA

S 3

9 c

ateg

ori

es a

re a

s fo

llow

s:

GR

OU

P

AS

AT

30

JU

NE

20

13

FAIR

VA

LUE

T

HR

OU

GH

P

RO

FIT

A

ND

LO

SS $M

HE

LD T

O

MA

TU

RIT

Y$

M

LOA

NS

AN

D

RE

CE

IVA

BLE

S$

M

AV

AIL

AB

LE

FOR

SA

LE $M

DE

SIG

NA

TE

D

IN A

HE

DG

ING

R

EL

AT

ION

SHIP $M

OT

HE

R F

INA

NC

IAL

LIA

BIL

ITIE

S A

T

AM

OR

TIS

ED

CO

ST $M

Ass

ets

Cas

h a

nd

cal

l de

po

sits

-

-

80

-

-

-

Trad

e r

ece

ivab

les

-

-

229

-

-

-

Oth

er

rece

ivab

les

-

-

51

-

-

-

De

riva

tive

fin

anc

ial i

nst

rum

en

ts -

-

-

-

7

-

-

-

36

0

-

7

-

Liab

ilit

ies

Trad

e a

cco

un

ts p

ayab

le -

-

-

-

-

1

21

Join

t ar

ran

ge

me

nts

-

-

-

-

-

11

Acc

rual

s -

-

-

-

-

1

54

De

riva

tive

fin

anc

ial i

nst

rum

en

ts -

-

-

-

1

06

-

Fin

ance

leas

e (

ne

t se

ttle

d)

-

-

-

-

-

120

De

bt

-

-

-

-

-

1,6

97

CFH

se

cu

riti

es

-

-

-

-

-

30

-

-

-

-

10

6

2,1

33

GR

OU

P

AS

AT

30

JU

NE

20

12

FAIR

VA

LUE

T

HR

OU

GH

P

RO

FIT

A

ND

LO

SS $M

HE

LD T

O

MA

TU

RIT

Y$

M

LOA

NS

AN

D

RE

CE

IVA

BLE

S$

M

AV

AIL

AB

LE

FOR

SA

LE

$M

DE

SIG

NA

TE

D

IN A

HE

DG

ING

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cial

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IFR

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(20

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inan

cial

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rum

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ve f

or

per

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s b

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g o

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r af

ter

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nu

ary

20

15.

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and

ard

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ds

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ts r

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ed t

o t

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clas

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atio

n,

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sure

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t an

d d

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og

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of

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cial

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g o

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ter

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nu

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g f

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r in

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er a

n e

nti

ty s

ho

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ith

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al s

tate

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ts o

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e

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d p

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uid

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IFR

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ts

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ent.

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ents

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l are

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IFR

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rest

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en

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egin

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ter

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nu

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plie

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en

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e an

inte

rest

in s

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iari

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ran

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ents

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oci

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ated

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nti

ties

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ctiv

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um

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tity

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IFR

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t

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g o

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nu

ary

20

13.

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est

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hes

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ing

le f

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ewo

rk f

or

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suri

ng

fai

r va

lue

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ere

that

is r

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er s

tan

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ds

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is a

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licab

le t

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oth

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cial

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d n

on

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al it

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Th

e co

mp

any

is c

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entl

y re

view

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its

met

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log

ies

in d

eter

min

ing

fai

r va

lues

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d it

s im

pac

t o

n t

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finan

cial

sta

tem

ents

.

NZ

IAS

27

Sep

arat

e fi

nan

cial

sta

tem

ents

Eff

ecti

ve f

or

per

iod

s b

egin

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g o

n o

r af

ter

1 Ja

nu

ary

20

13.

Th

ese

amen

dm

ents

rem

ove

th

e ac

cou

nti

ng

an

d d

iscl

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re

req

uir

emen

ts f

or

con

solid

ated

fin

anci

al s

tate

men

ts a

s a

resu

lt o

f th

e

issu

e o

f N

Z IF

RS

10 C

on

solid

ated

fin

anci

al s

tate

men

ts a

nd

NZ

IFR

S 12

Dis

clo

sure

of

inte

rest

s in

oth

er e

nti

ties

.

No

te 2

4 –

New

sta

nd

ard

s, a

men

dm

ents

an

d in

terp

reta

tio

ns

to e

xist

ing

sta

nd

ard

s

hav

e b

een

pu

blis

hed

bu

t n

ot

yet

ado

pte

d

42

GOVERNANCE AT CHORUSChorus’ Board and management are committed to ensuring that our people act ethically,

with integrity and in accordance with our policies and values.

FrameworkChorus is incorporated in New Zealand and listed on the New Zealand and Australian

stock exchanges.

The governance practices and policies we have adopted therefore reflect, and are consistent

with, the:

• NZXListingRulesandCorporateGovernanceBestPracticeCode;

• NewZealandSecuritiesCommission’s(nowFinancialMarketsAuthority(FMA))

‘Corporate Governance in New Zealand Principles and Guidelines’; and

• ASXListingRulesandtheASXCorporateGovernanceCouncil’sPrinciples

and Recommendations.

The Board regularly reviews and assesses Chorus’ governance policies, processes and

practices to identify opportunities for enhancement and to ensure they reflect Chorus’

operations and culture.

Compliance with corporate governance codes, principles and recommendations

Chorus considers that during the reporting period:

• thecorporategovernanceprinciplesadoptedandfollowedbyitdidnotmateriallydiffer

from NZX’s Corporate Governance Best Practice Code; and

• itfollowedeachoftherecommendationssetbytheASXCorporateGovernanceCouncil.

Managing risk

Chorus has a Managing Risk Policy that mandates one framework for the management

of risk in Chorus to:

• ensuretheBoardsetstheriskappetiteandreviewsprincipalrisksannually;

• integrateriskmanagementinlinewiththeBoard’sriskappetiteintostructures,policies,

processes and procedures; and

• deliverregularprincipalriskreviewsandmonitoring.

A copy of Chorus’ Managing Risk Policy is available at http://www.chorus.co.nz/governance.

As part of its role, the Audit and Risk Management Committee (ARMC) is responsible for

assisting the Board to ensure that a risk management framework has been established and

for monitoring compliance with that framework. The ARMC and the Board regularly receive

reports on risk management and the effectiveness of Chorus’ management of its material

business risks.

Chorus requires its CEO and CFO to make an annual declaration in relation to Chorus’

financial statements relating to the matters set out in s295A of the Australian Corporations

Act 2001, namely that in their opinion:

• thefinancialrecordsofChorushavebeenproperlymaintained;

• thefinancialstatementsofChorusandaccompanyingnotessetoutinthisannualreport

comply with generally accepted accounting practice in New Zealand and International

Financial Reporting Standards; and

• thefinancialstatementsofChorusandaccompanyingnotessetoutinthisannualreport

give a true and fair view of the financial position and performance of Chorus.

The CEO and CFO also provide the Board with an assurance that the above declaration

is founded on a sound system of risk management and internal control and that system

is operating effectively in all material respects in relation to financial reporting risks.

The non-audit related fees paid to the auditor during the financial period (as detailed in Note 8

to the Financial Statements) were permitted non-audit services under Chorus’ External Auditor

Independence Policy.

Code of ethics

Chorus expects its directors and employees to conduct themselves in accordance with the

highest ethical standards. Chorus has Codes of Ethics for its directors and employees that set

the expected standards for their professional conduct. These codes are intended to facilitate

decisions that are consistent with Chorus’ values, business goals and legal and policy

obligations. The director Code of Ethics is available at www.chorus.co.nz/governance.

Chorus has communicated the Codes of Ethics to directors and employees and has provided

training to its employees. Chorus encourages its people to report any unethical behaviour

through a compliance function that investigates any such reports.

A whistle blowing policy allows for confidential reporting of serious misconduct or

wrongdoing and a fraud policy for the reporting of suspected fraud or corruption.

Chorus has not received any reports of serious instances of unethical behaviour during

the financial period.

Role of the Board and delegation of authorityThe Board is appointed by Chorus’ shareholders and has statutory responsibility for the

business and affairs of Chorus. The Board has overall responsibility for the strategy, culture,

governance and performance of Chorus working with, and through, the CEO.

As described in the Board Charter, to allow for the effective day-to-day management and

leadership of Chorus, the Board has delegated its authority, in part, to the CEO. The CEO

may, in turn, sub-delegate authority to other Chorus people. Formal policies and procedures

govern the parameters and operation of these delegations.

The Board has also appointed three standing Board Committees to assist it in carrying out

its responsibilities and has delegated some of its responsibilities, powers and authorities

to those Board Committees. Those Committees are described below. The Board may also

establish other ad-hoc or standing committees and delegate specific responsibilities, powers

and authorities to those committees and to particular directors.

The Board and Board Committee Charters and other key governance documents are available

on Chorus’ website at www.chorus.co.nz/governance. The annex to the Board Charter

contains a diagram that illustrates the key governance documents and the roles and

responsibilities of the Board and Board Committees.

Board membershipThe Board seeks to ensure that through its skills mix and composition it is positioned to add

value to Chorus, as outlined in the Board Charter.

The Board currently has seven directors (six independent directors and an executive director)

with a broad range of managerial, financial, accounting and industry experience. See page 3

for more information on the skills and experience of the directors.

The independence status of each director is noted in their biographies on page 3. For a

director to be considered independent, the Board must affirmatively determine that the

director does not have a disqualifying relationship (other than solely as a consequence of

being a director). The disqualifying relationships are set out in the Board Charter. While the

Board has not set financial materiality thresholds for determining independence, it considers

the materiality basis of all relationships having regard to the materiality to Chorus, the director

THE CHORUS BOARD

and the relevant person or organisation (eg customer, supplier or adviser) with which the

director is related. Materiality is assessed in the context of each relationship and from the

perspective of both parties to that relationship.

Board CommitteesEach standing Board Committee has a Board approved Charter and a chairman. The Board

Committees assist the Board by focusing on specific responsibilities in greater detail than

is possible for the Board as a whole.

Audit and Risk Management Committee

The ARMC assists the Board in ensuring oversight of all matters relating to risk management,

financial management and controls and the financial accounting, audit and reporting of Chorus.

All Committee members are non-executive directors. For information on Committee

members’ qualifications, see page 3.

Members: Anne Urlwin (chairman), Jon Hartley and Sue Sheldon.

Human Resources and Compensation Committee

The Human Resources and Compensation Committee (HRCC) assists the Board in overseeing

people policies and strategies, including:

• Chorus’remunerationframeworks;and

• reviewingcandidatesfor,andtheperformanceandremunerationof,theCEO.

Members: Clayton Wakefield (chairman), Prue Flacks and Keith Turner.

Nominations and Corporate Governance Committee

The Nominations and Corporate Governance Committee (NCGC) assists the Board

in promoting and overseeing continuous improvement of good corporate governance.

The NCGC’s role includes identifying and recommending suitable candidates for nomination

to be members of the Board and Board Committees, and establishing, developing and

overseeing a process for the Board to annually review and evaluate the performance

of the Board, its Committees and individual directors.

Members: Sue Sheldon (chairman), Prue Flacks and Jon Hartley.

Contents

Governance at Chorus 42

The Chorus Board 42

Diversity at Chorus 43

Governance & DisclosuresRemuneration at Chorus 44

Disclosures 45

Directory 48

43

Director restrictionsThe Chorus Constitution provides that no person who is an ‘associated person’ of a person

that provides telecommunications services in New Zealand (other than the services provided

by Chorus) shall be appointed or hold office as a director. NZX has granted Chorus a waiver

to allow the Chorus Constitution to include this restriction on the persons who may hold

office as director.

Board and Board Committee meeting attendanceThe table below sets out attendance at the Board and Board Committee meetings in the year

ended 30 June 2013.

BOARD MEETINGS

SPECIAL BOARD

MEETINGS ARMC HRCC NCGC

Total number of meetings held 9 5 5 7 2

Sue Sheldon (chairman) 9 5 5 7* 2

Anne Urlwin 9 5 5 5* -

Clayton Wakefield 9 5 1* 7 -

Jon Hartley 9 3 5 5* 2

Keith Turner 9 3 2* 7 -

Mark Ratcliffe 9 5 3^ 6^ 1^

Prue Flacks 9 5 4* 7 2

* Attended meetings as an observer and not as a Committee member.

^ Mark Ratcliffe is not a member of any Board Committees but attends all Board Committee meetings as CEO and as an observer, and may be asked to leave at any time.

Trading in Chorus sharesAll non-executive directors are encouraged to hold Chorus ordinary shares (Chorus Shares).

Directors are subject to limitations on their ability to deal in Chorus Shares and other relevant

Chorus securities (Chorus Securities) by Chorus’ Insider Trading Policy, the New Zealand

Securities Market Act 1988 and the Australian Corporations Act 2001. These limitations

prohibit directors from dealing in Chorus Securities while in possession of inside information.

As a matter of policy, Chorus also requires that directors, prior to dealing in Chorus Securities,

notify and obtain consent from the chairman and that trading may only occur in accordance

with Chorus’ Insider Trading Policy.

All changes in any interests in Chorus Securities held by directors are required to be reported

to the Board, the NZX and the ASX.

Director induction and educationThe Board seeks to ensure new directors are appropriately introduced to management and

the Chorus business, that all directors are acquainted with relevant industry knowledge and

economics and that they receive a copy of the Board and Board Committee Charters and the

key governance documents.

It is expected that all directors continuously educate themselves to ensure they have

appropriate expertise to effectively perform their duties.

In addition, visits to Chorus operations, briefings from key management, industry experts and

key advisers to Chorus, together with educational and stakeholder visits, briefings or meetings

are arranged for the Board.

Independent adviceA director may, with the chairman’s prior approval, take independent professional advice

(including legal advice). A director may request the attendance of such an adviser at a Board

or Board Committee meeting where this is necessary to fulfil their role and responsibilities

for Chorus. The costs of any such adviser is paid for by Chorus.

Review and evaluation of Board performanceThe chairman meets regularly with directors to discuss individual performance.

The Board has carried out, in the reporting period, an annual review of the Board’s

performance, that of individual directors and Board Committees utilising the Board evaluation

process developed and overseen by the NCGC.

Market disclosuresChorus is committed to providing timely, orderly, consistent and credible information

consistent with legal and regulatory requirements, to enable orderly behaviour in the market

and to promote investor confidence. Chorus believes it is imperative that disclosure be evenly

balanced during good times and bad and that all parties in the investment community have

fair access to this information.

DIVERSITY AT CHORUSDiversity and inclusiveness at ChorusChorus has a Board approved Diversity and Inclusiveness Policy. Chorus believes that

having a team of individuals working together who all have different experiences, views

and self-reflections makes it stronger and better as an organisation. Chorus defines diversity

as the characteristics that make one individual similar to or different from another. It defines

inclusiveness as the recognition that diverse backgrounds, experiences and perspectives lead

to a better experience of work for its people, makes teams stronger, leads to greater creativity

and performance, contributes to a more meaningful relationship with its retail service provider

customers and stakeholders, and ultimately leads to increased value to shareholders.

Valuing diversity is more than a moral imperative; it is also sensible business practice.

The focus of the policy is to leverage differences as a competitive advantage through

its attraction and development practices, develop inclusiveness as a core capability for

its people leaders and as a channel to its people, and to continue to recognise individual

contribution and performance.

The HRCC recommends measurable objectives to the Board that are set and assessed annually.

Chorus is a funder of DiverseNZ Inc. DiverseNZ Inc is a collaboration project with support

from the New Zealand public and private sectors to harness the economic benefit, business

gain and GDP uplift that results from diverse leadership and diversity of thought.

22%

25%9%

3%

16%11%

11%

3%

OR

GA

NISE

RSA

DV

ISE

RS

CONTROLLERS

EXPLORERS Working preferencesChorus uses a tool to assess the working

preferences of its people. This promotes

diversity of thought, working style and

contribution across teams, and understanding

of how to leverage differences.

The graphic here shows Chorus has

the full spectrum of working preferences

across the distribution. This fully validated

self-assessment tool is a Team Management

Index* of the 507 contributors who had

completed the workshops at the time

of preparing this data.

Diversity metrics as at 30 June 2013The Board has set the following measurable objectives for achieving greater diversity at Chorus

MEASURE DESCRIPTION ACTUAL AS AT 30 JUNE 2013 ACTUAL AS AT 30 JUNE 2012 BENCHMARK

Age profiles Median age 41.4 years 42.7 years 42 years. Statistics New Zealand

National Labour Force Projections

updated August 2012

Employee

satisfaction

Response to the diversity question

“The work environment is very open

and accepting of individual differences”

84% 83% 83% Aon Hewitt Best Employer

Ethnicity by role Organisational groupings by ethnicity Not currently available Not available People leader population distribution

= total company population

distribution

Flexible working

arrangements

Percentage of the population utilising

flexible working arrangements

4.3% working part-time hours 4.5% working part-time hours >4% working part-time hours

Gender by role Organisational groupings by gender 38% 62% all

33% 67% people leaders

40% 60% executive team

43% 57% Board

50% 50% non-executive Board

39% 61% all

34% 66% people leaders

40% 60% executive team

43% 57% Board

50% 50% non-executive Board

People leader population distribution

= total company population

distribution

Rookie ratio The previous year’s intake by age,

ethnicity and genderAverage age 37.2 years. Gender 41% 59%

Ethnicity not available

Average age 37.8 years. Gender 42% 58%

Ethnicity not available

No measure – for information

Internal hire rate The previous year’s appointments

identifying internal vs external hire rate

39% of all appointments have been internal.

61% of roles in layers 1-3 were recruited internally.

59% of all appointments have been internal.

86% of roles in layers 1-3 were recruited internally.

66% of roles in layers 1-3

Based on the annual review of the effectiveness of Chorus’ Diversity and Inclusiveness Policy

and Chorus’ measurable diversity objectives, the Board considers that overall Chorus is making

good progress towards achieving its diversity and inclusiveness objectives and has performed

well against the policy generally.

Chorus’ Diversity and Inclusiveness Policy can be found at www.chorus.co.nz/governance.

Chorus has embedded diversity and inclusiveness into its culture through

its values, communications, leadership and diversity dialogues.

* The distribution only reflects the Major Role preference of the 507 contributors – as opposed to a representation of their preference across all factors at all levels. For more information go to www.tms.co.nz

44

REMUNERATION AT CHORUSDirectors’ fees The total remuneration available to non-executive directors in the year ended

30 June 2013 was fixed at Chorus’ 2012 AGM at $980,000.

During the year ended 30 June 2013, the total remuneration earned by the directors

of Chorus (in their capacity as such) was as follows:

DIRECTOR TOTAL FEES $

Sue Sheldon (chairman) 208,000

Anne Urlwin 135,000

Clayton Wakefield 125,000

Jon Hartley 127,500

Keith Turner 145,500

Mark Ratcliffe -

Prue Flacks 122,500

Total 863,500

Notes:

(i) The figures shown are gross amounts and exclude GST where applicable.

(ii) Directors are entitled to be paid or reimbursed for reasonable travelling, accommodation

and other expenses incurred in relation to management of Chorus without requiring

authorisation of shareholders. Any such expenses are not included in the table above.

(iii) All non-executive directors receive a base fee.

(iv) Board Committee fees are not paid to the chairman of the Board.

(v) A fee for being a member of a Board Committee or the UFB Steering Committee

is paid in addition to the base fees.

(vi) Directors (other than the CEO) do not receive any other benefits.

(vii) Mark Ratcliffe, as CEO, does not receive any remuneration in his capacity as a director

of Chorus. The remuneration of the CEO is summarised below.

The HRCC reviews the remuneration of directors based on criteria developed

by that Committee.

Based on advice from independent consultants:

• fortheyearended30June2013theBoardused;and

• from1July2013theBoardhasset,

the Board fee structure below:

ANNUAL FEE STRUCTURE

YEAR TO 30 JUNE 2013

($)

ANNUAL FEE STRUCTURE

FROM 1 JULY 2013

($)

BASE FEES:

Chairman of the Board 208,000 214,000

Non-executive director 104,000 107,000

BOARD COMMITTEE FEES:

Audit and Risk Management Committee

Chairman 31,000 32,000

Member 15,500 16,000

Human Resources and Compensation Committee

Chairman 21,000 21,500

Member 10,500 11,000

Nominations and Corporate Governance Committee

Chairman 15,500 16,000

Member 8,000 8,500

UFB Steering Committee

Chairman Not applicable Not applicable

Member 31,000 32,000

Notes:

(i) With the exception of the chairman of the Board, directors receive a fee for each Board

Committee of which the director is the chairman or a member.

(ii) Directors may be paid an additional daily rate of $2,400 for additional work as determined

and approved by the chairman of the Board and where the payment is within the total fee

pool available for the relevant financial year based on advice of the General Counsel &

Company Secretary. No such fees were paid in the year ended 30 June 2013.

No director receives compensation in share options. No director (except the CEO) participates

in a bonus or profit-sharing plan.

No superannuation was paid to, or other scheme for retirement benefits exist for, any director

(except for the CEO) in the year ended 30 June 2013.

CEO remuneration

Remuneration package for the financial period

Mark Ratcliffe’s remuneration as CEO consists of a mixture of fixed remuneration, short term

incentives (STI) and long term incentives (LTI). The actual remuneration paid to Mark Ratcliffe

in the financial period is as follows:

Fixed remuneration (1 July 2012 - 30 June 2013) $782,971.16 (gross)

Short term incentive for the period (1 July 2012 - 30 June 2013) $661,000.00 (gross)

Long term incentive and non-taxable accommodation payments $358,508.10

Total remuneration received $1,802,479.26 (gross)

In addition, in the year to 30 June 2013, payments totalling $45,183.88 with regard

to KiwiSaver and medical insurance were made on behalf of Mark Ratcliffe.

The following LTI payments were made, or liabilities are due to be calculated and paid,

in the following manner. They are all cash payments:

GRANT YEAR

VESTING YEAR DETAIL POTENTIAL VALUE

2011 2012 Following a cash LTI payment of $200,000 (gross)

in December 2012, Mark Ratcliffe purchased shares

in Chorus, which he agreed to retain for the term of

his employment.

n/a (payment made/

shares purchased)

2011 2014 A cash LTI grant was made by Telecom in September

2011. Chorus carried across a liability for the value

of $250,000 (gross). The cash value was converted

into Equity Equivalent Units (EEUs) based on dividing

the target value by the volume weighted average

price (VWAP) of Chorus Shares for the first 20 days

of trading, following demerger. A number of post-

allocation performance hurdles have been introduced

by the Board for this grant. Performance against these

measures is considered annually but for the purposes

of the grant it is the collated three year performance

that determines the vesting multiplier on the grant.

A maximum of 82,281

EEUs converted back

into a cash value at

vesting based on share

price performance at

that time.

2012 2015 A cash LTI grant was made by Chorus in September

2012 for the value of $349,779 (gross). The cash value

was converted into EEUs based on dividing

the target value by the VWAP of Chorus Shares for

a defined 20 day trading period. A number of post-

allocation performance hurdles have been introduced

by the Board for this grant. Performance against these

measures is considered annually but for the purposes

of the grant it is the collated three year performance

that determines the vesting multiplier on the grant.

A maximum of 104,853

EEUs converted back

into a cash value at

vesting based on share

price performance at

that time.

The CEO remuneration package is reviewed annually by the HRCC and Board, after seeking

advice from external remuneration specialists and reviewing CEO and Chorus’ performance.

In future years, the target values may be revised as a result of future adjustments to the CEO

remuneration package and components.

Chorus remuneration modelThe Board reviews the remuneration model for Chorus and has established principles

of alignment to shareholder outcomes, simplicity, clarity and fairness, and remuneration

outcomes which are based on performance.

All Chorus employees have a fixed remuneration and STI component in their remuneration

packages. A limited number of employees also have an LTI component.

Fixed remuneration

The fixed remuneration model is informed and adjusted each year based on data from

multiple independent remuneration specialists. Employees’ fixed remuneration is based

on a matrix of their own performances and their current remuneration position in the

market range.

STI plan

STI values are calculated as a percentage of fixed remuneration and determined based

on the complexity of the roles. Employees’ STI payments are determined following review

of company performance and individual performance and may be paid out at a multiplier

of 0x to 2.8x. This model is focussed on articulating performance goals, driving for outcomes,

differentiating high performance and rewarding delivery.

LTI plan

Chorus operates an LTI plan for its executives and an identified number of senior leaders.

The Board has reviewed this model, on the basis of independent advice, and will be

introducing a new model in 2013. This will involve the incorporation of a new subsidiary

to act as trustee of the scheme.

Managing performanceChorus’ performance management process is based on all Chorus people having

performance and development plans for the year, which are regularly reviewed with their

people leaders. The performance plan is developed initially by the individual after participating

in ‘Line of Sight’ sessions, which enable them to link Chorus’ strategy with their day to day

work and focus areas. The performance plan includes both outcome based objectives and

behavioural measures, along with a development plan. End of year performance reviews are

undertaken for all Chorus people. In these the people leader for the individual seeks additional

feedback and participates in a peer review and moderation process, resulting in an overall

rating and remuneration recommendation that impacts the individual’s total reward (fixed

remuneration and target STI).

This same process has been undertaken for the Chorus executive team, with the CEO making

recommendations to the HRCC for the executive team and the chairman of the HRCC leading

the performance review of the CEO and making recommendations to the Board. This process

is consistent with that set out in the HRCC Charter and allows the Board to provide input into

these individuals’ performance outcomes, total reward approvals (fixed remuneration, target

STI and LTI) and development plans.

45

Employee remuneration rangeThe table alongside shows the number of employees and former employees who, in their

capacity as employees, received remuneration and other benefits in excess of $100,000

during the year to 30 June 2013.

Employees can choose to receive telephone concessions, including contributions

towards telephone line rental, national and international phone calls and online services.

In addition, certain employees receive contributions towards membership of the Marram

Trust (a community healthcare and holiday accommodation provider), contributions to the

Government Superannuation Fund (a legacy benefit provided to a small number of employees)

and, if the individual is a KiwiSaver member, a contribution of up to 3% of gross earnings

towards that individual’s KiwiSaver scheme. These amounts are not included in these

remuneration figures.

Any benefits received by employees that do not have an attributable value are

not included.

REMUNERATION RANGE $ (GROSS)

NUMBER OF EMPLOYEES

IN THE YEAR ENDED 30 JUNE 2013

(BASED ON ACTUAL PAYMENTS)

1,780,001-1,790,000 1

820,001-830,000 1

480,001-490,000 1

440,001-450,000 1

420,001-430,000 1

410,001-420,000 1

400,001-410,000 1

390,001-400,000 1

330,001-340,000 1

320,001-330,000 1

310,001-320,000 1

290,001-300,000 3

270,001-280,000 2

250,001-260,000 5

240,001-250,000 3

REMUNERATION RANGE $ (GROSS)

NUMBER OF EMPLOYEES

IN THE YEAR ENDED 30 JUNE 2013

(BASED ON ACTUAL PAYMENTS)

230,001-240,000 2

220,001-230,000 10

210,001-220,000 4

200,001-210,000 8

190,001-200,000 9

180,001-190,000 6

170,001-180,000 3

160,001-170,000 12

150,001-160,000 14

140,001-150,000 26

130,001-140,000 23

120,001-130,000 32

110,001-120,000 31

100,000-110,000 44

DISCLOSURESDirectors

Directors during the year ended 30 June 2013

Current directors are listed on page 3. No directors resigned during the year ended

30 June 2013.

Indemnities and insurance

As permitted by its Constitution, Chorus has entered into deeds of indemnity with each

of the directors for potential liabilities or costs they may incur for acts or omissions in their

capacity as directors.

Deeds of indemnity have also been given to certain senior staff for potential liabilities and

costs they may incur for acts or omissions in their capacity as employees of Chorus,

directors of Chorus subsidiaries or as directors of non-Chorus companies in which Chorus

holds interests.

Chorus has a directors’ and officers’ liability insurance policy in place. This provides insurance

for the liabilities of the directors and employees of Chorus for acts or omissions in their

capacity as directors or employees. It does not cover dishonest, fraudulent, malicious

or wilful acts or omissions.

Director interests in Chorus Shares

As at 30 June 2013, directors had a relevant interest (as defined in the Securities Markets Act

1988) in Chorus Shares as follows:

AS 30 JUNE 2013 TRANSACTIONS DURING THE REPORTING PERIOD

DIRECTOR SHARES INTERESTNUMBER OF SHARES PURCHASED (SOLD) CONSIDERATION DATE OF TRANSACTION

Sue Sheldon 15,000 Registered holder as trustee of family trust 15,000 $51,767.45 20 September 2012

Clayton Wakefield 19,647 Beneficial interest 10,000 $34,900.00 10 September 2012

7,000 $20,711.95 14 March 2013

643* $1,768.25 12 April 2013

Keith Turner 5,686 Legal and beneficial interest 186* $511.50 12 April 2013

Anne Urlwin 10,000 Director and shareholder of registered holder 10,000 $34,000.00 19 September 2012

Mark Ratcliffe 100,778 Beneficial interest 84,000 $248,747.40 12, 13 and 15 March 2013

Prue Flacks 10,118 Legal and beneficial interest 2,900 $10,004.84 6 September 2012

Trustee of family trusts 5,240 $18,168.30 6 September 2012

Legal and beneficial interest 98* $269.50 12 April 2013

Legal and beneficial interest 1,880 $4,888.00 31 May 2013

Total 161,229

* Purchased under Chorus’ Dividend Reinvestment Plan

As at 30 June 2013, directors had a relevant interest representing approximately 0.041%

of the Chorus Shares outstanding.

Interests Register

Directors disclosed, pursuant to section 140 of the Companies Act 1993, a change in,

or cessation of, interest in the following entities during the year ended 30 June 2013:

Sue Sheldon: Changes in interests: Paymark Ltd (chairman), Reserve Bank of New Zealand

(deputy chairman), Global Women Trust (trustee). Cessation of interests: Nil.

Anne Urlwin: Changes in interests: Ngai Tahu Te Runanga Audit & Risk Committee

(independent chairman), OnePath Insurance Services (NZ) Ltd (director), OnePath Life (NZ) Ltd

(director), Steel & Tube Holdings Ltd (director), Naylor Love Properties Ltd (director)*. Cessation

of interests: Lakes Environmental Ltd (chairman), SR 2 Ltd (director), SR 3 Ltd (director), SR 4

Ltd (director), SR 5 Ltd (director), SR 6 Ltd (director), SR 7 Ltd (director),

SR 8 Ltd (director), SR 9 Ltd (director), SR 10 Ltd (director), SR 11 Ltd (director).

Clayton Wakefield: Changes in interests: Nil. Cessation of Interests: Endace Ltd (director).

Jon Hartley: Changes in interests: Mission Foods Ltd (director). Cessation of interests: Mighty

River Power Ltd (director).

Keith Turner: Changes in interests: Nil. Cessation of interests: Waitaki Wind Ltd (director)*.

Mark Ratcliffe: Changes in interests: Telecom Corporation of New Zealand Ltd (shareholder).

Cessation of interests: Nil.

Prue Flacks: Changes in interests: Mighty River Power LTI Ltd (director). Cessation of interests:

BNZ Life Insurance Ltd (chairman)^, BNZ Insurance Services Ltd (chairman)^.

* Disclosed after 30 June 2013

^ Prue Flacks ceased to be a director of these companies after 30 June 2013.

Shares and shareholders

Stock exchange listings and American Depositary Receipts

Chorus Shares are quoted on the NZX Main Board and on the ASX. Chorus trades under

the ticker ‘CNU’.

American Depositary Shares (ADSs), each representing five ordinary shares and evidenced by

American Depositary Receipts (ADRs), are not listed but are traded on the over-the-counter

(OTC) market in the United States under the ticker symbol ‘CHRYY’. Chorus’ depositary is the

Bank of New York Mellon.

NZX waivers

A summary of all waivers granted and published by NZX within or relied upon by Chorus

in the 12 month period ending on the date two months before the date of this annual report,

is available on Chorus’ website at www.chorus.co.nz. This summary will be published for

12 months following publication of this annual report.

ASX disclosures

Chorus has been admitted to the official list of the ASX. As a result, Chorus is required

to make the following disclosures:

• Chorus’placeofincorporationisNewZealand.

• ChorusisnotsubjecttoChapters6,6A,6Band6CoftheAustralianCorporations

Act 2001 dealing with the acquisition of shares (including substantial shareholdings

and takeovers).

• Chorus’Constitutioncontainslimitationsontheacquisitionofsecurities,

as disclosed below.

• Chorususedthecashandassetsinaformreadilyconvertibletocashthatithad

at the time of admission in a way consistent with its business objectives as set out

in the scheme booklet.

Registration as a foreign company

Chorus has registered with the Australian Securities and Investments Commission (ASIC)

as a foreign company. Chorus has been issued an Australian Registered Body Number

(ARBN) of 152 485 848.

46

Quoted securities

As at 30 June 2013 there were 389,299,049 Chorus Shares on issue.

Each Chorus Share confers on its holder the right to attend and vote at a meeting of Chorus,

including the right to cast one vote on a poll on any resolution.

Non-standard designation

NZX has attached a ‘non-standard’ designation to the listing of the Chorus Shares owing

to the ownership restrictions in Chorus’ Constitution, as described below.

Chorus’ constitutional ownership restrictions

Chorus’ Constitution includes ownership restrictions that prohibit any person:

• fromhavingarelevantinterestin10%ormoreofChorusShares,unlessthepriorwritten

consent of the New Zealand Government is obtained; or

• otherthanaNewZealandnational,fromhavingarelevantinterestinmorethan49.9%of

Chorus Shares, unless the prior written consent of the New Zealand Government is obtained.

If the Board or the New Zealand Government determines there are reasonable grounds

for believing that a person has a relevant interest in voting shares in excess of the ownership

restrictions, the Board may, after following certain procedures, prohibit the exercise of voting

rights (in which case the voting rights shall vest in the chairman) and may force the sale of

shares. The Board may also decline to register a transfer of shares if it reasonably believes

the transfer would breach the ownership restrictions.

NZX has granted Chorus waivers allowing Chorus’ Constitution to include the power

of forfeiture, the restrictions on transferability of Chorus Shares and the Board’s power

to prohibit the exercise of voting rights relating to these ownership restrictions.

Chorus has been advised by the Crown that AMP Capital Holdings Ltd and its related

companies have been granted approval, should they choose to exercise it in future,

to acquire a relevant interest in 10% or more (but not exceeding 15%) of Chorus Shares.

Unquoted securities

SECURITY

NUMBER OF SECURITIES ISSUED

IN YEAR ENDED 30 JUNE 2013

TOTAL NUMBER OF SECURITIES ON

ISSUE AS AT 19 AUGUST 2013 HOLDER

PERCENTAGE HELD

CFH Equity

Securities52,708,669 71,729,203

Crown Fibre

Holdings Ltd 100%

CFH Debt

Securities52,708,669 71,729,203

Crown Fibre

Holdings Ltd 100%

CFH Warrants 2,838,382* 3,532,423*Crown Fibre

Holdings Ltd 100%

* The CFH warrants have been issued in two series, with different repayment schedules.

On 30 June 2020 one series will be cancelled depending on whether the 20% fibre up-take

threshold is met.

The CFH equity securities are a unique class of security that carry no right to vote at

meetings of holders of Chorus Shares but entitle the holder to a right to a repayment

preference on liquidation.

The CFH debt securities are unsecured, non-interest bearing and carry no voting rights

at meetings of holders of Chorus Shares.

The CFH warrants are an option to acquire Chorus Shares on a specified exercise date

at a set strike price.

The terms of the issue for each of the CFH equity securities, CFH debt securities and

the CFH warrants are summarised on pages 139-142 of the scheme booklet (available

here http://www.chorus.co.nz/file/4926/scheme-booklet.pdf).

Distribution of shareholders and shareholdings of Chorus Shares as at 19 August 2013

SIZE OF SHAREHOLDING NUMBER OF HOLDERS

NUMBER OF SHARES HELD

% OF CHORUS SHARES ISSUED

1 to 1,000 26,121 8,038,131 2.06

1,001 to 5,000 8,619 21,577,906 5.54

5,001 to 10,000 2,442 18,329,383 4.71

10,001 to 100,000 1,995 47,084,011 12.09

100,001 and over 112 294,269,618 75.60

Total 39,289 389,299,049 100

Substantial security holders as at 19 August 2013

As at 19 August 2013 Chorus had received notices under Section 26 of the Securities Markets

Act 1988 that the following shareholders were substantial security holders in respect of

Chorus Shares:

SUBSTANTIAL SECURITY HOLDERNUMBER OF

VOTING SECURITIESDATE

OF NOTICE

Accident Compensation Corporation 24,046,750 23 July 2013

Schroder Investment Management Australia Limited 38,288,978 4 February 2013

The Bank of New York Mellon Corporation 28,681,648 31 December 2012

Twenty largest holders of Chorus Shares as at 19 August 2013

RANK HOLDER NAME HOLDING %

1. National Nominees New Zealand Limited* 60,288,503 15.48

2. JP Morgan Chase Bank NA* 32,029,843 8.22

3. Accident Compensation Corporation* 23,341,750 5.99

4. JP Morgan Nominees Australia Limited 18,258,067 4.68

5. HSBC Nominees (New Zealand) Limited A/C State Street* 16,799,898 4.31

6. HSBC Nominees (New Zealand) Limited* 16,396,338 4.21

7. National Nominees Limited 11,758,593 3.02

8. FNZ Custodians Limited 11,361,287 2.91

9. Citibank Nominees (New Zealand) Limited* 9,664,089 2.48

10. Forsyth Barr Custodians Limited 7,891,023 2.02

11. BNP Paribas Nominees (NZ) Limited* 7,557,664 1.94

12. Westpac NZ Shares 2002 Wholesale Trust* 4,942,584 1.26

13. Citicorp Nominees PTY Limited 4,547,173 1.16

14. Forsyth Barr Custodians Limited 4,497,699 1.15

15. New Zealand Superannuation Fund Nominees Limited* 4,367,784 1.12

16. HSBC Custody Nominees (Australia) Limited 4,229,021 1.08

17. Premier Nominees Ltd – Onepath Wholesale Australasian Shr Fund* 3,828,928 0.98

18. Investment Custodial Services Limited 2,594,204 0.66

19. BT NZ Unit Trust Nominees Limited* 2,492,160 0.64

20. RBC Investor Services Australia Nominees PTY Limited 2,486,293 0.63

* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides

a custodial depository service which allows electronic trading of securities by its members.

As at 19 August 2013, 186,797,319 Chorus Shares (or 47.98% of the ordinary shares on issue)

were held through NZCSD.

Shareholders holding less than a marketable parcel

As at 19 August 2013, there were 6,071 shareholders holding between 1 and 99 Chorus

Shares (less than a minimum holding under the NZX Listing Rules) and, based on the market

price of A$2.55, there were 11,808 holders that held less than a marketable parcel of A$500

of Chorus Shares under the ASX Listing Rules.

On-market buy-back: There is no current on-market buy-back.

Net tangible assets per security

As at 30 June 2013, the consolidated net tangible assets per share was NZ$1.21 (30 June 2012:

0.90). Net tangible assets per share is a non-GAAP financial measure and is not prepared in

accordance with NZ IFRS.

Company Secretary

Vanessa Oakley

Donations

Chorus New Zealand Ltd made a donation of $50,000 to the Starship Foundation

in the financial period.

Subsidiaries

Chorus New Zealand Ltd

Directors: Mark Ratcliffe (Chairman), Andrew Carroll, Brian Hall, Vanessa Oakley

and Lucy Riddiford (as alternate director for Vanessa Oakley).

No directors of Chorus New Zealand Ltd resigned during the reporting period.

Director Remuneration:

The directors of Chorus New Zealand Ltd are all employees and do not receive any

remuneration in their capacity as directors.

Directors’ interests:

Mark Ratcliffe: Changes in interests: Telecom Corporation of New Zealand Ltd (shareholder),

Cessation of interests: Nil.

Andrew Carroll: Changes in interests: Nil. Cessation of interests: Nil.

Brian Hall: Changes in interests: Chorus Ltd (shareholder). Cessation of interests: Nil.

Lucy Riddiford: Changes in interests: Chorus Ltd (shareholder). Cessation of interests:

Telecom Corporation of New Zealand Ltd (shareholder).

Vanessa Oakley: Changes in interests: Nil. Cessation of interests: Nil.

Indemnities and Insurance:

See Indemnities and Insurance on page 45 for further information.

Other subsidiaries

The Board will be introducing a new long term incentive scheme for the CEO and Executive

in 2013. A new subsidiary will be incorporated to act as a trustee of the scheme.

Ch

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47

Glossary

Basic UBA Basic Unbundled Bitstream Access

CFH Crown Fibre Holdings Limited

Chorus Chorus Limited and, where the context requires, its subsidiary

Commission Commerce Commission

CPI Consumer Price Index

CPPP Cost per premises passed

DSL Digital Subscriber Line, a family of communications technologies allowing high-speed data over existing copper

EBITDA Earnings before interest, income tax, depreciation and amortisation

EMTN Euro Medium Term Note

Enhanced UBA Enhanced Unbundled Bitstream Access

FY Financial period – twelve months ended 30 June

HSNS Lite (Fibre) High Speed Network Service Lite over fibre

HSNS Lite (Copper) High Speed Network Service Lite over copper

HSNS Premium High Speed Network Service Premium (Bitstream 4)

IP Internet Protocol

MBIE Ministry of Business, Innovation and Employment

Naked UBA Broadband only UBA connections

POTS Plain Old Telephone Service

RBI Rural Broadband Initiative

Scheme booklet The Telecom demerger scheme booklet, published on 13 September 2011

SLES Sub Loop Extension Service

SLU Sub Loop Unbundling

TDL Telecommunications Development Levy

Telecom Telecom Corporation of New Zealand Limited and subsidiaries

TRL Telecommunications Regulatory Levy

TSO Telecommunications Service Obligation

UBA Unbundled Bitstream Access

UCLFS Unbundled Copper Low Frequency Service

UCLL Unbundled Copper Local Loop

UFB Ultra-Fast Broadband

VDSL Very High Speed Digital Subscriber Line

– a DSL technology

VoIP Voice over Internet Protocol

ARBN 152 485 848

RegisteredOffices

New Zealand

Level 9, North Tower

Datacom House,

68 - 86 Jervois Quay

Wellington 6011

New Zealand

Phone: +64 4 471 0220

Australia

C/- Allens Corporate Services Pty Limited

Level 5, Deutsche Bank Place

126 Phillip Street

Sydney

NSW 2000

Australia

Phone: +61 2 9230 4000

DIRECTORYRegistrars

New Zealand

Computershare Investor Services Limited

Private Bag 92119

Auckland 1142

New Zealand

Phone: +64 9 488 8777

Fax: +64 9 488 8787

Email: [email protected]

www.investorcentre.com/nz

Australia

Computershare Investor Services Pty Limited

GPO Box 3329

Melbourne 3001

Australia

Freephone: 1 800 501 366

Fax: +61 3 9473 2500

Email: [email protected]

www.investorcentre.com/nz

Depository

BNY Mellon Depositary Receipts

PO Box 43006

Providence, RI 02940-3006

United States

Phone: +1 201 680 6825

Email: [email protected]

www.bnymellon.com/shareowner

FORWARD LOOKING STATEMENTS AND DISCLAIMER

This annual report may contain forward looking statements regarding future

events and the future financial performance of Chorus, including forward

looking statements regarding industry trends, strategies, capital expenditure,

the construction of the UFB network, credit ratings and future financial and

operational performance. These forward looking statements are not

guarantees or predictions of future performance, and 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 expressed in the statements contained in this annual report.

No representation, warranty or undertaking, express or implied, is made

as to the fairness, accuracy or completeness of the information contained,

referred to or reflected in this annual report, or any information provided

orally or in writing in connection with it. Please read this annual report in

the wider context of material previously published by Chorus and released

through the NZX Main Board and ASX.

Except as required by law or the listing rules of the NZX Main Board and ASX,

Chorus is not under any obligation to update this annual report at any time

after its release to you, whether as a result of new information, future events

or otherwise.