CHORUS LIMITED - Annual Report 2013

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Companies Announcement Office Australian Securities Exchange 4[th] Floor, 20 Bridge Street Sydney, NSW 2000 Australia

Chorus Limited Level 9 Datacom House 68-86 Jervois Quay P O Box 632 Wellington New Zealand

29 August 2013

Dear Sir/Madam

2013 ANNUAL REPORT

In accordance with the ASX Listing Rules, please find attached Chorus Limited’s 2013 Annual Report for release to the market.

Chorus Limited’s 2013 Annual Report is available to view or download at http://www.chorus.co.nz/annual-report.

Yours sincerely

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Vanessa Oakley

General Counsel & Company Secretary Chorus Limited

2013 Chorus Annual Report

HIGHLIGHTS NPAT $171m Net profit after tax EBITDA $663m Earnings before interest, income tax, depreciation and amortisation ANNUAL DIVIDEND 25.5 Cents per share (see page 7 for details) FIXED LINE CONNECTIONS 1,784,000 UFB PROGRAMME 18% UFB completion

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P2 A good operating result Chorus accepted in FTSE4Good Index P4 Management Commentary (Corporate Sustainability, page 4) P18 Financial Statements For a second year, Chorus received P42 Governance & Disclosures Aon Hewitt Employers Accreditation

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A good operating result

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

Report from chairman Sue Sheldon and CEO Mark Ratcliffe

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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.

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.

This report is dated 29 August 2013 and is signed on behalf of the Board of Chorus Limited:

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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.

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About 7,000 cabinets provide interconnection Fibre-fed broadband cabinets
provide broadband of at least Chorus Network Overview
points for around 50% of the lines in the 10Mbps to 80 percent of
Chorus network. A large number of these New Zealanders KEY Fibre
cabinets are like mini telephone exchanges Copper
and have electronic broadband equipment
installed in them.
Fibre to the premises
In some cases, retail service providers enables ultra-fast
have chosen to install their own broadband services
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 32,000km
fibre
have been unbundled.
Fibre backhaul links
Mobile service
local exchanges to other
provider
exchanges or retail service cell tower
provider networks
The access network connects a
602
home, business or structure to the
local exchanges telecommunications equipment –
often a local exchange
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Sue Sheldon CNZM, BCom, FCA Anne Urlwin, BCom, CA, F InstD, Clayton Wakefield, BSc DIRECTORS Chairman; director since 1 July 2011; independent FNZIM, ACIS (Computer Science), GradDip Mgmt Director since 1 December 2011; independent Director since 1 December 2011; independent Sue is a professional company director. She is chairman of Freightways and Paymark, deputy Anne has more than 20 years’ directorship Clayton has over 30 years’ experience in the chairman of the Reserve Bank of New Zealand experience across many sectors, including banking, financial services, telecommunications and a director of FibreTech Holdings and Contact energy, health, construction, regulatory services, and technology industries. He is an executive Energy. Sue is a former director of Telecom, internet infrastructure, research, banking, forestry director and owner of Techspace, a leading Smiths City Group and Meridian Energy, among and the primary sector, as well as education, New Zealand independent IT advisory company others. She has extensive experience as both sports administration and the arts. She is a working with New Zealand’s major corporates. a chairman and member of audit and risk director of Southern Response Earthquake From 2001 to 2007 he was Head of Technology committees and is a former president of the Services Ltd, Steel & Tube Holdings Ltd and and Operations at ASB Bank. He was previously New Zealand Institute of Chartered Accountants. OnePath Life (NZ) Ltd. She is chairman of a director and chairman of Electronic Transaction Sue was made a Companion of the New Zealand Naylor Love Enterprises Ltd and an independent Services and of Visa New Zealand and Order of Merit for services to business in 2007. chairman of Ngai Tahu Te Runanga Audit & Risk also previously an independent director Committee. Anne is a former chairman of Lakes of Endace Ltd. Environmental Ltd, the New Zealand Blood Service and New Zealand Domain Name Registry, and a former director of Meridian Energy.

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Keith Turner, BE (Hons), ME, PhD BE (Hons), ME, PhD Mark Ratcliffe, BA Accounting Director since 1 December 2011; independent Director since 9 December 2011; non-independent Dr Keith Turner was CEO of New Zealand Mark has been CEO of Chorus since it was electricity generator and retailer Meridian Energy established in 2007 as an operationally separate for nine years from its establishment in 1999. business unit within Telecom and was then He is now chairman of Fisher and Paykel appointed as the first CEO of the listed entity Appliances, deputy chairman of Auckland in 2011. In a 20 year career with Telecom, Mark International Airport and a director of Spark held finance, marketing, product development, Infrastructure, an Australian listed company. product management and IT roles and was He is also chairman of Solar City New Zealand. promoted to the executive team in 1999 where Keith has had an extensive career in electricity, he was CIO (including a period as joint CEO of taking part in much of its reform, including AAPT in Australia) and then COO Technology and separation of Transpower from Electricity Wholesale before becoming CEO of Chorus. From Corporation of New Zealand Ltd (ECNZ) in 1992, May 2010, he led the team that secured Chorus’ the separation of Contact Energy from ECNZ participation in the Government’s UFB initiative in 1996 and the eventual break up of ECNZ and the demerger of Chorus and Telecom. into three companies in 1999.

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

Keith Turner, BE (Hons), ME, PhD BE (Hons), ME, PhD Director since 1 December 2011; independent

Prue Flacks, LLB, LLM Director since 1 December 2011; independent

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 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.

Mark Ratcliffe EXECUTIVE Chief Executive Officer See above. TEAM

Ed Beattie[*]

Andrew Carroll, MCA (Hons) Chief Financial Officer

General Manager, IBuild

Andrew joined Chorus after nine years with Ed has more than 30 years’ experience in Telecom where, as Head of Mergers & Acquisitions, building and maintaining fixed line and mobile he was involved in the Gen-i acquisition and telecommunications networks in New Zealand. the sale of Yellow Pages. Prior to this he worked Most recently, he managed the delivery of the in investment banking for a decade. Andrew successful Fibre to the Node programme and worked closely with the Chorus team on the played a lead role in the Christchurch crisis UFB negotiations with Crown Fibre Holdings response and restoration activities. and throughout the demerger process.

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Ewen Powell, BE Irene Lovejoy Nick Woodward Chief Technology Officer Executive Assistant General Manager, Customer Service Ewen has nearly 20 years’ experience in Irene has worked with Chorus CEO Mark Ratcliffe Nick’s career combines a wide range of IT, managing the technology, services and for more than 14 years, bringing a unique insight sales and customer management experience in partnerships that operate a national that adds value to the development of the the financial and telecommunications industries. communications network. Much of his career Chorus executive team. Before joining Chorus, His roles have seen him work across the was spent at Telecom where he was at the Irene spent 22 years with Telecom where she United States and Europe for Hutchison 3G forefront of a wide range of technology changes, held roles in the marketing, technology and UK and Household Bank in the United Kingdom. most recently driving the technology changes corporate teams. Before joining Chorus, Nick headed up Telecom’s required to achieve Chorus’ operational Channel Planning and Operations group. separation requirements. Sara Broadhurst[^] , BA, Dip (Bus), Vanessa Oakley, LLB (Hons), PGCert (MgtSt), Victoria Crone, MCA Dip (Psych), PG Dip (Psych) PGCert (CompPolicy) (UK), GAICD, MInstD General Manager, Sales and Marketing General Manager, Human Resources General Counsel & Company Secretary Victoria has extensive experience in bringing Sara joined Chorus in 2008, bringing more Vanessa has extensive experience in law and policy, telecommunications products and services to than 10 years’ experience in human resources especially in relation to regulated infrastructure market. She has held several senior business, in New Zealand and the United Kingdom from businesses. A qualified lawyer in New Zealand and sales and marketing roles with Telecom, a wide range of industries, including housing, England and Wales, Vanessa joined Chorus after including responsibility for the sales strategy manufacturing, banking and not for profit playing a key role in the UFB contract, legislative and operations for its retail business, managing organisations. She previously held human and demerger processes. Prior to that she has held offerings for the business market and developing resources roles in New Zealand for roles in the public and private sectors including as Telecom’s proposition for next generation ANZ National Bank, EFTPOS and Barnardos. a key adviser to United Kingdom and New Zealand products and services. regulators and across the Telecom group.

* 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

Ultra-Fast Broadband

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.

By 2020, Chorus will have drilled, dug

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.

UFB – an inter-generational investment

or hauled the new network past about investment 830,900 premises. With 60% to 70% of Fibre can deliver high speed connectivity deployment costs relating to civil work, over much greater distances than copper, Chorus is using as much of its existing opening up possibilities and services that duct and fibre network as possible. aren’t yet perceived. Fibre is also easier Chorus is also working with councils to maintain and will help future-proof the and utility companies to further reduce network for continuing growth in demand deployment costs by, for example, for bandwidth. trench sharing and linking with footpath replacement programmes where possible. Alcatel Lucent’s Bell Labs estimated in 2012 that the economic impact of

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.

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205,500 end-users now
within reach of UFB
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250
200
150
100
50
0
FY12 FY13
Premises passed with
UFB (cumulative)
End-users within reach
of UFB (cumulative)
Thousand
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Rural Broadband Initiative

Regulatory environment

be used to deliver fixed wireless broadband to rural communities.

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

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.

People

Total people numbers at 30 June 2013

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763 Chorus permanent
and fixed term employees
2292 service
company
employees
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2142 service
company
sub-contractors
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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:

The final benchmarked Unbundled 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.
The draft benchmarked Unbundled 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.

Corporate Sustainability

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.

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Artist Monique Endt Location Huia Road, Woodlands Park, Auckland

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6 7 8 8 10 12 13 14 15 15 16
CONTENTS
Management Commentary Highlights & challenges In summary Overview of the telecommunications wholesale market Revenue commentary Expenditure commentary Normalised annualised results Capital expenditure commentary Long term capital management Competition and regulation Litigation Product overview
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2012 (7 MONTHS) $M 613 (214) 399 (189) 210 (68) 142 (40) 102 399 (11) 388
2013 (12 MONTHS) $M 1,057 (394) 663 (319) 344 (108) 236 (65) 171 663 (1) 662
• Chorus will pay a dividend for the six months ending 30 June 2013 of 15.5 cents per share (25.5 cents per share annual dividend). • Industry changes are driving ongoing retail service provider cost focus, including greater focus on mobile substitution.
nearly doubled, with fibre revenue now 5.7% of total revenue. focus on residential fibre is still developing, meaning uptake continues to grow incrementally.
• Fibre fixed line connections • Retail service provider
are stable at 1,784,000 and demand for fixed broadband connections continued to grow steadily with about 64,000 copper broadband connections added over the last twelve months. and migration from Telecom systems.
• Total fixed line connections • Start of major IT spend
insurance proceeds
Operating revenue Operating expenses Earnings before interest, income tax, depreciation and amortisation Depreciation and amortisation Earnings before interest and income tax Net interest expense Net earnings before income tax Income tax expense Net earnings for the period EBITDA Less: Underlying EBITDA
build is progressing ahead of schedule with 153,000 premises passed and 205,500 end-users within reach at 30 June 2013. in the cost of the UFB network rollout and ensuring UFB connections are made on a time and cost efficient basis.
• Ultra-Fast Broadband (UFB) • Achieving ongoing efficiency
announced that it is bringing forward its review of the telecommunications framework, alongside the already scheduled review of the Telecommunications Service Obligations (TSO). for the year was $681 million, with specific challenges on UFB programme deployment costs.
• The Government • Gross capital expenditure
underlying growth in EBITDA for the year ending 30 June 2013 when compared to normalised, annualised FY12 results. the regulatory framework that Chorus operates in (the Telecommunications Act 2001) and alignment of the framework with the Government’s UFB initiative.
• Chorus achieved modest • Ongoing uncertainty with
Highlights Challenges
Chorus reports earnings before interest, income tax, depreciation and amortisation (EBITDA) of $663 million for the year ending 30 June 2013. After adjusting for $1 million of insurance proceeds from the Canterbury earthquakes, underlying EBITDA is $662 million. Chief Executive Officer Mark Ratcliffe describes this as “a good operating result particularly with both the UFB and 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. However, management is pleased with the principled approach the Crown is taking to the regulatory review.”
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Outlook	While Chorus continues to experience good growth in broadband	and fibre connections there are a range of challenges for the year	ahead. These include:	• Ongoing uncertainty with the regulatory framework, its lack of clear alignment with the Government’s UFB initiative and the	• Ongoing uncertainty with the regulatory framework, its lack of clear alignment with the Government’s UFB initiative and the	• Ongoing uncertainty with the regulatory framework, its lack of clear alignment with the Government’s UFB initiative and the	absence of ft-for-purpose regulation. Any changes to regulated	absence of ft-for-purpose regulation. Any changes to regulated	pricing will likely be a strong infuence on Chorus’ future revenues	pricing will likely be a strong infuence on Chorus’ future revenues	and industry willingness to migrate to fbre.	and industry willingness to migrate to fbre.	• The year ending 30 June 2014 will also be the frst full 12 months	of the Commission’s reduction in UCLL and Unbundled Copper	Low Frequency Service (UCLFS) pricing, the annualised impact	of which was estimated to reduce Chorus’ EBITDA by around	$20 million per annum. It is likely that the signifcant regulatory	programmes in FY14 will also result in increased regulatory and	consultant costs in FY14.	consultant costs in FY14.		• The need to achieve further efciencies in the deployment cost	of the UFB network rollout and end-user connections.	• Even greater focus from retail service providers on input costs.	This means they are scrutinising opportunities to lower their	wholesale costs from Chorus and are also considering initiatives	to drive greater fxed to mobile substitution.	• Increased competitive pressure from other networks. The other	UFB network builders had passed approximately 76,000 premises	at 30 June 2013 and may start to gain greater market share from	Chorus as their network footprints develop scale. In addition,	several mobile network operators have begun ofering 4G	coverage in main centres, ofering mobile broadband capability	that may be more competitive against Chorus’ fxed line ofering.	• As noted at the half year, Chorus expects to incur incremental	IT costs as two IT systems are run in parallel.	• If Very High Speed Digital Subscriber Line (VDSL) uptake increases	materially, this is likely to have a modest near term impact on	earnings as the cost of the recommended wiring upgrade is	incurred up front, while the revenues are received over time.	Given the above, Chorus’ current view is that the earnings	outlook for FY14 is flat to low single digit percentage decline	in EBITDA relative to normalised FY13 EBITDA of $654 million	(see_normalised annualised results_on page 12).
Capital expenditure	Capital expenditure for the year ended 30 June 2013 was	$681 million, which is consistent with the mid point of the	guidance range provided in February after adjusting for an additional	$14 million of year three UFB build initiated in this financial year (and	recognised as work in progress). Approximately 85% of this capital	expenditure was focused on fibre related investment, principally on		the UFB and Rural Broadband Initiative (RBI) deployment programmes.				Dividends	Chorus will pay a dividend of 15.5 cents per share on	11 October 2013 to all shareholders registered at 5.00pm on	Friday 27 September 2013. The shares will be quoted on an	ex-dividend basis from 25 September 2013 on the NZX Main	Board and 23 September 2013 on the ASX.	The dividends will be fully imputed (at a ratio of 28/72) in line with			the corporate income tax rate. In addition, a supplementary dividend	of 2.7353 cents per share, will be payable to shareholders who are	not resident in New Zealand.	Eligible shareholders will be able to participate in the Dividend	Reinvestment Plan for the October 2013 dividend. Election notices	to participate in the Dividend Reinvestment Plan must be received	by 5.00pm Friday 27 September 2013.	Chorus’ FY14 dividend guidance is unchanged. The Chorus Board will	continue to monitor developments and expects to reassess Chorus’	optimal capital management settings as the outcomes from the	Government’s regulatory framework review become clearer.
EBITDA	EBITDA for the year ended 30 June 2013 was $663 million,	representing around 1.2% growth in EBITDA on a normalised basis	(see_normalised annualised results_on page 12). This reflects	continued growth in demand for Chorus’ basic and enhanced copper	products, including steady broadband uptake over the year. Demand	for fibre products also continued to grow, particularly for business		and carrier connections. A significant amount of Chorus’ revenues		are from regulated products, which gives little discretionary flexibility		in revenues. Costs have grown by around 7.4% relative to the	normalised 2012 result (see_normalised annualised results_on	page 12), reflecting increased provisioning costs, network	maintenance costs and growing staff numbers (a significant	number of which are working on the UFB build and information	technology (IT) projects, which are fully capitalised).	A comparison of the normalised full year results, relative to the		normalised annualised seven month results ended 30 June 2012,		is included in_normalised annualised results_on page 12.

2013 2012	(12 MONTHS) (7 MONTHS)	$M $M		631 399		215 89		60 28	37 18	17 14	85 47	12 18	1,057 613				• Delivering growth by driving demand for UFB services in line with	the Government’s objective to maximise fbre uptake. Chorus’	goal is to deliver products that support bandwidth growth and	goal is to deliver products that support bandwidth growth and	encourage adoption of higher speed fbre products of 100Mbps	encourage adoption of higher speed fbre products of 100Mbps	or more; and	or more; and	• Defning new market opportunities for Chorus’ connections and services.	• Defning new market opportunities for Chorus’ connections and services.	• Defning new market opportunities for Chorus’ connections and services.		_Product overview_on page 16 provides an overview of the significant	products and services that make up copper and fibre revenues.	products and services that make up copper and fibre revenues.		Basic copper		Basic copper incorporates core regulated products that, while	an important part of the portfolio, have limited scope for further	development by Chorus, or are founded on earlier technology and	product variants that are being superseded by enhanced copper	and fibre services. It includes most of Chorus’ layer 1 network	products and includes the copper voice input UCLFS, UCLL, SLU		and SLES, and Basic UBA (including broadband only naked Basic		UBA connections).	The migration from Basic UBA broadband services to enhanced		copper services and a shift in traditional voice volumes, as retail	service providers invest in Internet Protocol (IP) voice services is	contributing to a continuing decline in basic copper revenues.	contributing to a continuing decline in basic copper revenues.	The majority of basic copper revenues are derived from	Chorus’ Baseband Copper services (including UCLFS) which	retail service providers can use as an input into traditional voice	retail service providers can use as an input into traditional voice	offers. The Commission’s final decision on UCLL pricing resulted	offers. The Commission’s final decision on UCLL pricing resulted	in Baseband Copper pricing reducing from $24.46 to $23.52	from 1 December 2012. As a result basic copper revenues have	decreased by approximately $20 million on an annualised basis.	The historical impact of this reduction in revenues is analysed	further in_normalised annualised results_on page 12.	further in_normalised annualised results_on page 12.
				Basic copper		Enhanced copper		Fibre	Value added network services	Infrastructure	Field services	Other	Total revenue				Revenue overview	Chorus’ focus is on sustaining demand for connections and supporting		retail service providers and stakeholders by growing connections and		‘leading New Zealand to fibre’. Revenues and volumes have remained		relatively steady throughout the twelve months.		Unadjusted revenues were up slightly compared to the prior	period (annualised). After adjusting for changes in regulated (UCLFS)		pricing, revenues were up by around 3.5% on a like for like basis	(see_normalised annualised results_on page 12). Total fixed line		connections were stable, with a slight increase of 8,000 connections	(from 1,776,000 to 1,784,000). This included adjustments to allow for:		• approximately 7,000 High Speed Network Service (HSNS)	connections over copper previously omitted from the ‘data	services over copper’ category in the 30 June 2012 total for	fxed line connections; and	• excluding about 7,000 Sub Loop Unbundling (SLU)/Sub Loop		Extension Services (SLES) connections that were previously double		counted in the 30 June 2012 total for fxed line connections.		A summary of Chorus’ connection numbers for key products	is in_revenue commentary_on page 10.		Chorus’ product portfolio encompasses a broad range of broadband,		data and voice services. It includes a mix of regulated and commercial	copper and legacy products, and contractually agreed fibre products.	Chorus’ revenue strategy focuses on:		• Retaining value by sustaining demand for Chorus’ share		of market connections;
Chorus is New Zealand’s largest fxed line communications infrastructure services provider, supplying about 90% of all fxed network connections to retail service providers. Chorus has business line restrictions prohibiting it from selling directly to end-users. Other networks Chorus’ network competitors include Vodafone, Vector, FX Networks, Kordia and a range of regionally based fixed wireless network providers such as Woosh, CallPlus and Now. Vodafone is a significant						Chorus is focused on leading the transition from copper Chorus customer, but is also now Chorus’ largest fixed network		to fibre-based services. Public private partnerships and open competitor through its purchase of the TelstraClear cable network	access wholesale services are at the heart of the industry in Wellington, Kapiti and Christchurch connecting about 60,000	model established in late 2011. It is a time of complex transition, broadband end-users. It also has business fibre networks in all major	representing both opportunity and challenge for Chorus, as well as for retail service providers. central business areas and a national transport and backhaul network. Three local fibre companies Northpower, Ultrafast Fibre and		Chorus’ total of approximately 1,784,000 fixed line connections Enable Networks are also deploying fibre networks in public private	at 30 June 2013 represent an increase of approximately 8,000 partnerships with the Crown in 9 of the 33 UFB areas. It is expected		lines from 30 June 2012. Real growth of 10,000 lines in the first half they will deploy UFB fibre past about 365,000 premises. Chorus	was offset by a reduction of approximately 2,000 lines over the six expects its UFB network to have passed about 830,900 premises	months to 30 June 2013. The relatively static nature of fixed line by the end of 2019.		connections continues to reflect the slow migration of fixed voice		services to mobile in New Zealand, relative to other countries. With		the strong growth in mobile smart devices, fixed networks globally	are increasingly seen as complementary to supporting the mobile	experience. The installation of fibre network in new subdivisions		is also providing some natural connection growth.	New Zealand’s broadband market continues to grow steadily with		Chorus adding about 64,000 copper broadband connections		in the twelve months. In July 2013, the OECD reported that	New Zealand was the third fastest growing broadband market	in the OECD for the year to December 2012, with total broadband	connections increasing 3.1% to 1.28 million. Broadband penetration	per 100 inhabitants was 28.6%, ahead of both the OECD average	(26.3%) and Australia (25.2%)1. The Commission estimates that	broadband penetration increased to around 78% of households	with a fixed line connection2. The proportion of Chorus’ copper lines		also taking a broadband service increased from 60% to 63% during		the period.	In addition to the significant change arising from the Government’s		UFB policy and the separation of Chorus’ open access network	from retail, there is other ongoing change in the industry. There are		changes in the ownership of retail service providers (as already seen	in the purchase of TelstraClear by Vodafone in October 2012 and	Kordia’s sale of Orcon to private investors in April 2013) and the	evolution of online content offerings (as seen with Coliseum Sports		Media announcing in June 2013 that it has secured the broadcast		rights for the English Premier League and will use an online platform).					1 OECD Fid (id) bdbd biti 100 ihbitt b thl Db 2012 htt//d/ti/bdbd/dbdbdtlht

Infrastructure	Infrastructure revenue relates to services that provide access to Chorus’ network assets, including civil works and telecommunications exchange space. It also includes co-location of equipment and access to poles.	Infrastructure revenue relates to services that provide access to Chorus’ network assets, including civil works and telecommunications exchange space. It also includes co-location of equipment and access to poles.	Infrastructure revenue relates to services that provide access to Chorus’ network assets, including civil works and telecommunications exchange space. It also includes co-location of equipment and access to poles.	Infrastructure revenue relates to services that provide access to Chorus’ network assets, including civil works and telecommunications exchange space. It also includes co-location of equipment and access to poles.		Chorus provides commercial access to its exchanges, poles and other infrastructure. Co-location revenue derives from retail	Chorus provides commercial access to its exchanges, poles and other infrastructure. Co-location revenue derives from retail	service providers and other network operators installing their equipment in Chorus exchanges, as well as leased commercial space in exchange buildings.	service providers and other network operators installing their equipment in Chorus exchanges, as well as leased commercial space in exchange buildings.	Infrastructure revenue grew modestly over the period, after	allowing for transaction types that were included in the period to 30 June 2012 but were treated as a reduction in expenses for the current period. This growth occurred primarily as the result of increased demand for commercial co-location to enable retail service providers to interconnect with Chorus’ UFB footprint.	allowing for transaction types that were included in the period to 30 June 2012 but were treated as a reduction in expenses for the current period. This growth occurred primarily as the result of increased demand for commercial co-location to enable retail service providers to interconnect with Chorus’ UFB footprint.	allowing for transaction types that were included in the period to 30 June 2012 but were treated as a reduction in expenses for the current period. This growth occurred primarily as the result of increased demand for commercial co-location to enable retail service providers to interconnect with Chorus’ UFB footprint.	Field services		This category includes work performed by Chorus’ service company	technicians providing new services, chargeable cable location	services, maintaining retail service provider networks and relocating	Chorus’ network on request. As Chorus utilises service companies		to perform the field services’ work, there is a direct cost associated	with all field services revenues.			Provisioning revenues are generally based on orders for technicians	Provisioning revenues are generally based on orders for technicians	to install services and are driven by the number and nature of orders,	to install services and are driven by the number and nature of orders,		and the type of work required.		Maintenance revenues are generated when faults are proven to be		on the retail service provider’s, rather than Chorus’, network and are	driven by the number of reported faults and proactive maintenance	programmes performed on behalf of retail service providers.		These revenues also include costs recovered for damage to Chorus’	network by third parties.	Revenue in this category is dependent on third party demand or	damages to a third party’s network. The network maintenance expense		is discussed in the_expenditure commentary_and has a direct impact	on the revenues billed to recover costs incurred. It is therefore	difficult to establish specific trends in this revenue category.		Other	This category includes revenues from the resale of Telecom’s	This category includes revenues from the resale of Telecom’s		Integrated Services Digital Network and voice related services,	as well as one-off type revenue items. Approximately $1 million	(30 June 2012: $11 million) was received for Christchurch earthquake	related insurance proceeds.	related insurance proceeds.
About 205,500 end-users were within reach of the UFB network	at 30 June 2013. Residential UFB uptake has been constrained to	date by the limited number of retail service providers in the market	and relatively small size of coverage area. Telecom, New Zealand’s largest retail broadband provider, began offering residential fibre	services in March 2013 and Vodafone has said it also intends to		begin offering residential fibre services later in 2013. Together, these two providers represent ~80% of the fixed line broadband market. Chorus is continuing to focus on educating retail service providers and New Zealanders about the benefits of fibre, supporting fibre trials, and removing barriers to bandwidth growth.				Fibre connections grew significantly during the twelve month period,	increasing by 90% to 19,000 lines. This growth reflected new demand linked to the ongoing expansion of the UFB footprint and continued demand for new business and carrier connections via Chorus’	existing fibre network, including Chorus’ fibre in areas where it is not the UFB network builder.		About 44% of Chorus’ fibre connections were predominantly	residential Next Generation Access end-users (which includes	UFB Bitstream 2 and 3 and education connections) or pre-UFB	fibre subdivision end-users. Chorus had approximately 6,300 fibre	connections within the areas where it had deployed UFB communal	network at 30 June 2013. This total includes a combination of		residential UFB connections and new, or pre-UFB, business fibre	connections within the areas where Chorus’ UFB network was built.				Direct Fibre Access grew to about 20% of total fibre connections by		30 June 2013. Bandwidth Fibre and HSNS Premium fibre connections		(also referred to as Bitstream 4 under the UFB agreement) accounted		for the remaining 36% of total fibre connections. To date, demand		for business fibre connections has been predominantly for higher	grade HSNS Premium connections rather than Bitstream 3 business	services. This may change over time as the UFB network makes	Bitstream 3 business services more widely available.		Value added network services	The main revenue driver for this category is carrier network services,	which provide network connectivity across backhaul links. The nature	of these services means volumes and revenues in this category were largely unchanged. Changes period on period are largely related to			timing differences in invoicing, which are not expected to recur.
At 30 June 2013 there were approximately 1,521,000 Baseband price (currently $21.46) as Basic UBA services, Enhanced UBA uses	Copper lines3, a decrease of 64,000 lines from 30 June 2012. This an Internet Protocol technology platform that offers the potential for	reduction was offset by the migration of connections to Chorus’ a superior broadband experience and greater service differentiation.	other fixed line connection products. In particular, UCLL connections grew by 25,000 lines and ‘naked’ connections (naked Basic UBA, naked Enhanced UBA and naked VDSL) grew by 41,000 lines. Enhanced UBA connections were approximately 680,000 at 30 June 2013, an increase of 83% from 30 June 2012. A standard Enhanced UBA (with analogue voice) connection costs $21.46				The number of unbundled exchanges grew from 156 to 183 over the although Chorus can achieve higher revenue than this when	period. At 30 June 2013, approximately 128,000 access lines were retail service providers offer service differentiation to end-users	being used by retail service providers to deliver unbundled services to consumers. The total comprised 122,000 UCLL lines and 6,000 SLU lines (offered in conjunction with Chorus’ commercial SLES). and opt for higher bandwidth capability from Chorus. There were also approximately 78,000 naked Enhanced UBA connections at 30 June 2013. As noted earlier, the pricing of UBA services is	The number of SLU/SLES connections decreased by about 6,000 lines when allowing for 7,000 lines that had previously been double counted in the 30 June 2012 total. UCLL lines are currently charged at $19.08 for urban and $35.20 for non-urban following the Commission’s re-benchmarking of UCLL pricing in December 2012. currently under review (see the_competition and regulation_section). In June 2013 Chorus began offering VDSL at a price aligned with the current Enhanced UBA wholesale price of $21.46. VDSL had previously been offered as a premium service with commercial pricing of $40.00 and uptake had been minimal. The new VDSL			The urban and non-urban prices are expected to move to an product is expected to provide more New Zealanders with the	averaged price of $23.52 in December 2014 (noting that the opportunity to enjoy higher speed connections, and also make	pricing of these services are still subject to various processes New Zealand a more attractive market for the development and	– see the_competition and regulation_section). deployment of high bandwidth applications. Faster copper-based	Basic UBA is an early variant broadband service, delivered on a ‘best efforts’ basis using older generation technology. The number of Basic UBA connections had declined to about 331,000 connections at 30 June 2013. This reflects retail service provider systems upgrades and migration to the Enhanced UBA service. 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. The number of VDSL connections had increased to 4,000 by 30 June 2013 with retail service providers beginning to market it more widely. VDSL utilises existing copper based capability and can provide download speeds of										UBA pricing was set on a retail minus basis prior to demerger and about 20-50Mbps and upload speeds of up to 20Mbps, subject to an		the Commission is currently considering cost based pricing for UBA end-user’s distance from the broadband equipment and line capability.		services by reference to benchmarking. Any change to the UBA price would not come into effect until November 2014 at the earliest. The UBA price, and the date on which any change comes into effect may change as a result of the current regulatory review (see the _competition and regulation_section). Chorus also began offering a Baseband IP service in April 2013 that enables retail service providers to deliver a Voice over Internet Protocol (VoIP) service over copper as either a standalone service, or in conjunction with broadband. Baseband IP is currently available across about 10% of Chorus’ lines and is charged at $23.52 per							Enhanced copper month. While initial connection numbers have been limited, Chorus has received positive interest from retail service providers and is		Enhanced copper includes copper based next generation regulated and commercial products that deliver higher speed capability, a better end-user experience and can assist transition to fibre. considering the business case for future expansion of the Baseband IP footprint.			It includes Enhanced UBA, VDSL, Baseband IP voice input service Fibre	and HSNS Lite (Copper) for business data. Fibre revenues are earned from Chorus’ existing business fibre		Chorus’ enhanced copper category grew steadily over the period, products (such as HSNS Premium) and new UFB residential and	reflecting continued migration from Basic UBA to Enhanced UBA business fibre services. This category also captures UFB backhaul,	services and continued growth in new connections. While entry and Direct Fibre, which is the equivalent of dark fibre and can also	level Enhanced UBA services are charged at the same regulated be used to deliver backhaul connections to mobile sites.				3 For billing purposes, this total includes instances where UCLFS is sold with UBA connections. Although the UCLFS Standard Terms Determination	contemplates such connections as naked UBA connections, the price outcome is the same as if these connections were billed for naked UBA and	zero for UCLFS/Baseband.

	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M		67 31	67 31	51 23	51 23	100 52	100 52	37 22	37 22	52 30	52 30	12 6	12 6	12 8	12 8	13 11	13 11	4 3	4 3	6 5	6 5	40 23	40 23	394 214	394 214	programme. Where faults are on a retail service provider’s network	programme. Where faults are on a retail service provider’s network	(rather than the Chorus network), Chorus charges the retail service	provider for this service. Network maintenance costs are driven	by the number of retail service provider reported faults, the type of	work required to fix the faults and the extent of Chorus’ proactive	maintenance programme.	maintenance programme.		One of the key drivers for reported faults is the weather. During the	year ended 30 June 2013, severe weather events in August 2012 and	May 2013 resulted in an increased amount of maintenance required		on the network. About 74% of the maintenance work was on the		Chorus network and this was not recoverable (compared to 71% on	the Chorus network in the period to 30 June 2012). The level, type	and cost of faults is affected by factors such as rainfall, lightning,	network degradation, labour costs, material costs and network growth.	Chorus network faults are typically more expensive than retail service	provider network faults because they can span multiple end-users,	require restoration of more complex network elements and involve	service companies increased in line with CPI during the period.		Both provisioning and network maintenance costs contain an	element of service company overhead. In the year to 30 June 2013	this has been accounted for on a straight line basis. In the previous	period they were accounted for on an activity basis.	Other networkcosts relate to costs associated with service partner	contract costs, engineering services and the cost of network spares.		directly by Chorus to third party vendors, as well as the operating	expenditure component of systems currently shared with Telecom.
Operating expenses			Labour costs		Provisioning		Network maintenance		Other network costs		Information technology costs		Rent and rates		Property maintenance		Electricity		Insurance		Consultants		Other		Total operating expenses		Operating expenditure has increased by 7.4% relative to annualised		2012 results (see_normalised annualised results_on page 12),	reflecting ongoing growth in the labour force, increased provisioning	activity and greater network maintenance costs. Areas of significant	change include:		Labour costsof $67 million for the period represent staff costs		that are not capitalised. At 30 June 2013 Chorus had 763 permanent	and fixed term employees. This was up from 548 employees at	30 June 2012 and includes about 90 customer services employees		transitioned from Telecom in late October. Additional people have		been employed to support critical programmes, such as the UFB	rollout and IT systems transition (see also IT commentary in the	_capital expenditure_section), and growing levels of operational	activity, such as complex provisioning and fibre provisioning work.	It is expected that further IT staff will be required to support the	systems transition over the coming twelve months, with the majority	of costs relating to these additional people being capitalised.	Provisioning costsare incurred where Chorus provides new or	changed service to retail service providers. The total provisioning	cost is driven by the volume of orders, the type of work required to	fulfil them, technician labour, material and overhead costs. While the	volume of provisioning truck rolls has decreased period on period,	overall costs have increased due to a Consumer Price Index (CPI)	price increase and change in the mix of products being purchased.	As a proportion of provisioning costs are recovered from retail	service providers, field services revenue has increased as well.	Network maintenancecosts relate to fixing network faults and any	operational expenditure arising from the proactive maintenance
	30 JUNE 2013 CONNECTIONS 31 DEC 2012 CONNECTIONS 30 JUNE 2012 CONNECTIONS	1,784,000 1,793,000 1,776,000		1,521,000 1,559,000 1,585,000		122,000 109,000 97,000		6,000* 16,000 19,000		91,000 72,000 50,000		25,000 22,000^ 15,000		19,000 15,000 10,000		1,112,000 1,076,000 1,040,000		331,000 474,000 619,000		11,000 9,500 11,000		680,000 530,000 371,000		78,000 60,500 39,000		2,000 NM NM	2,000 2,000 NM	8,000 NM NM			A fibre category has been introduced into the broadband connections	summary to represent those fibre connections that deliver the		equivalent of a layer 2 broadband connection. This category includes	Bitstream 2 and 3 services on the UFB network as well as subdivisions		connected via Chorus’ non-UFB fibre network.		Note: There may be further adjustments between the ‘Baseband Copper’ and		‘data services over copper’ categories in future as Chorus continues to review	the classification of some legacy connections.
Chorus summary connection facts		Total fixed line connections		Baseband Copper		UCLL		SLU/SLES		Naked Basic / Enhanced UBA / naked VDSL		Data services over copper		Fibre		Total Broadband		Basic UBA (with analogue voice service)		Naked Basic UBA		Enhanced UBA (with analogue voice service)		Naked Enhanced UBA		VDSL	Naked VDSL		Fibre		* The SLU/SLES access line category has been adjusted down by about 7,000	connections for the current period to correct a double counting of lines that	occurred in prior periods.	^ Approximately 7,000 HSNS connections over copper were omitted in error		from the ‘data services over copper’ category in the 30 June 2012 total for	fixed line connections.

The depreciation profile is expected to change, reflecting the greater	mix of longer dated assets as the UFB and RBI rollouts progress.	The Crown funding release against depreciation is also expected to	increase over time as additional call notices are issued and funding	is received from the Crown, with the associated amortisation to	depreciation increasing accordingly.	Software and other intangibles largely consist of the software	components of billing, provisioning and operational systems (including	Chorus spend on Telecom owned systems). A total $42 million of	capital expenditure was spent on software and other intangibles	during the year, which will be amortised over an average of five years.				2013 2012	$M $M	(7) (4)		58 32	46 27	16 16	(6) (3)	114 72	1 -	115 72		into a hedge relationship. At 14 February 2012, when the hedged	relationship was initiated, EMTN related hedges had a fair value of	$70 million. While the hedge remains effective any future gains or	losses will be processed through the hedge reserve, however the	$70 million will flow as ineffectiveness to interest expense in the	income statement at some time over the life of the derivatives.	It will be a non-cash charge. Neither the direction, nor the rate of the	impact on the income statement can be predicted. For the current	financial year there has been no ineffectiveness and therefore no	financial year there has been no ineffectiveness and therefore no	impact on the income statement (30 June 2012: no ineffectiveness).	impact on the income statement (30 June 2012: no ineffectiveness).	Taxation	Taxation	The 2013 effective tax rate of 28% equates to the statutory rate	of 28%. There are no material differences between net earnings	before income tax and what is, or will be, taxable for the period	to 30 June 2013.
The weighted average useful life represents the useful life in each	category weighted by the net book value of the assets.	During the year ended 30 June 2013 $672 million of network assets was capitalised. The ‘UFB communal and UFB connections			and fibre layer 2’ included in ‘fibre’ capital expenditure was largely capitalised against the network assets categories of fibre cables (35%)	and ducts and manholes (56%). The average depreciation rate for	UFB communal infrastructure spend is currently 37 years, reflecting	the very high proportion of long life assets being constructed (with	ducts and manholes having a depreciation rate of 50 years).		Net fnance expense					Finance income	Finance expense	Interest on syndicated bank facility	Interest on EMTN	Other interest expense	Capitalised interest	Total finance expenses excluding Crown funding	CFH securities (notional interest)	Total finance expense		At a minimum, Chorus aims to maintain 50 percent of its debt	obligations at a fixed rate of interest. It has fully hedged the foreign	exchange exposure on the Euro Medium Term Note (EMTN) with	cross currency interest rate swaps. The floating interest on these	derivatives has been hedged using interest rate swap instruments.	The exposure to floating rate interest on the syndicated bank facility has been reduced using interest rate swaps.		As at 30 June 2013, approximately 66% (30 June 2012: 70%)		of the outstanding debt obligation was fixed through derivative		or fixed rate debt arrangements.		Other interest expense includes finance lease interest of $13 million	(30 June 2012: $9 million) and $2 million interest in relation to shared	and network systems. In the period ending 30 June 2012 there	was a non-cash charge of $7 million. The non-cash charge reflects	the mark to market impact of the unhedged debt position from	1 December 2011 to 14 February 2012, when the debt was entered
Consultant costsfor the seven months to 30 June 2012 was	significant as a result of demerger and the work required to	establish Chorus as a stand alone business. These costs are no	longer being incurred but a significant amount of consultant spend	was required in the year to 30 June 2013 to support multiple streams of regulatory work.		‘Other’includes expenditure incurred by Chorus for shared services	provided by Telecom, together with general costs such as advertising,	travel, training and legal fees.											WEIGHTED	2013 (12 MONTHS) 2012 (7 MONTHS) ESTIMATED USEFUL LIFE AVERAGE USEFUL LIFE	$M $M (YEARS) (YEARS)		66 41 10 - 30 22	29 13 20 20	16 7 50 50	33 15 5 - 14 10	14 8 5 - 50 16	95 62 2 - 14 8	9 5 2 - 15 6	(4) (1)		258 150				60 39 2 – 8 5		1 - 6 - 20 20	61 39
During the year ended 30 June 2013 Chorus started a number	of projects to enable migration from Telecom systems. This resulted	in a small amount of increased spend because Chorus is establishing	systems which are still paid for in the Transitional Services Agreement.		Rent and rates, property maintenance, electricity and insurance costs relate to the operation of Chorus’ network estate (for example,	exchanges, radio sites and roadside cabinets). The principal cost is	electricity, used to operate the network electronics, and this is	dependent on the number of sites, electricity consumption and	electricity prices.	Electricity costswere down compared to the previous period largely	due to lower national electricity prices. In addition to this,	consumption is lower than the previous period as a number of	energy saving initiatives have reduced energy usage. Chorus hedges	its electricity usage to minimise volatility in electricity spot prices.	About 50% of Chorus’ requirements have been hedged with a rolling	three year horizon.		Depreciation and amortisation				Depreciation:	Copper cables	Fibre cables	Ducts and manholes	Cabinets	Property	Network electronics	Other	_Less:_Crown funding		Total depreciation		Amortisation:		Software		Other intangibles	Total amortisation

									NORMALISED FY13 $M	NORMALISED FY13 $M	1,048	1,048	(394)	654											NORMALISED ANNUALISED	FY12 $M	FY12 $M	1,013 (367)	1,013 (367)	1,013 (367)	646	646
									LESS: UCLFS $M		(8)		-	(8)											NORMALISED	2012 $M		591 (214)			377
									LESS: INSURANCE PROCEEDS $M		(1)		-	(1)											LESS:	UCLFS $M		(11) -			(11)
									2013 (12 MONTHS) $M		1,057		(394)	663											LESS: INSURANCE	PROCEEDS $M		(11) -			(11)
Adjustments and normalisations of the results	Both the current and prior period results contain a number of	balances that do not make them directly comparable in isolation.	These balances have been removed from the balances described	above so that a more direct comparison could be made.	The adjustments made to the balances are discussed below.		FY13 normalisation				Operating revenue		Operating expenses	EBITDA	Included in the FY13 is $1 million of insurance proceeds received in		the second half of the year. Also adjusted is the impact of the change		in price on UCLFS for the first five months of the period (effectively		changing the price of UCLFS for the whole year rather than from	1 December 2012).		FY12 normalised and annualised	2012	(7 MONTHS) $M		Operating revenue 613 Operating expenses (214)			EBITDA 399		The seven month results for 2012 contain $11 million insurance		proceeds relating to the Canterbury earthquakes. These are one-off	in nature and not expected to recur. Also excluded is the impact	of the reduction in price of UCLFS, with the resulting number then	annualised to provide a twelve month period.
								NORMALISED FY13 $M NORMALISED ANNUALISED FY12 $M %		1,048 1,013 3.5		(394) (367) 7.4 654 646 1.2			Normalised FY13 has shown good revenue growth and while	expenses have increased there has still been solid EBITDA growth		between the two periods.						NORMALISED NORMALISED ANNUALISED	FY13 $M FY12 $M %	623 665 (6.3)	215 152 41.4		60 48 25.0	37 31 19.4		17 24 (29.2)	85 81 4.9	11 12 (8.3)		1,048 1,013 3.5
Indicative comparison of normalised, annualised full	year results	This section provides a high level trend analysis of the normalised,	annualised full year results. The commentary included here is for	information purposes only. These results have not been audited.		Summary				Operating revenue		Operating expenses EBITDA			The table above shows comparable underlying results for normalised	FY13 when compared to normalised, annualised FY12. The details of		the normalisations and adjustments will be discussed in further detail		later in this section.			Operating revenue			Basic copper	Enhanced copper		Fibre	Value added network services		Infrastructure	Field services	Other		Total operating revenue		The decline in basic copper revenues is slightly lower when the	impact of the UCLFS price change is excluded. There has been	continued migration from basic copper to enhanced copper, but the	total combined revenue for these two revenue streams has grown	by $20 million (or 2.6%) over the period. This reflects the ongoing	increase in broadband connections.	All other revenue categories are unchanged, so no additional	commentary is required.

2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.	2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Fibre 579 274 Copper 69 49 Common 33 23 Gross capital expenditure 681 346 Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of spend unrelated to network asset classes, such as Chorus’ enterprise systems, buildings and ofce equipment. Gross capital expenditure for the twelve months to 30 June 2013 was $681 million, which is consistent with the mid point of the guidance range provided in February after adjusting for an additional $14 million of year 3 UFB build initiated in this financial year (and recognised in work in progress). Fibre capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M UFB communal 362 162 UFB connections and fibre layer 2 31 13 Fibre products and systems 27 7 Other fibre connections and growth 53 33 RBI 106 59 Total fibre capital expenditure 579 274 Fibre capital expenditure represents about 85% of Chorus’ gross capital expenditure spend, mainly for the UFB and RBI programmes. Significant progress was made in continuing to ramp up the pace of the UFB communal network deployment during the twelve months. Build work has been completed for about 153,000 premises at 30 June 2013, exceeding the cumulative target of 149,000 premises passed and representing the addition of 111,000 premises passed during the period. There are 205,500 end-users able to be connected to the UFB network. In February, Chorus updated its guidance on the estimated cost to build the UFB communal network by the end of 2019, increasing it from $1.4 - $1.6 billion to $1.7 - $1.9 billion. This revised guidance reflected higher than expected cost per premises passed (CPPP) with the rollout not yet standardised, positive results in some areas being offset by extreme costs in a small group of areas, significant variability in regional compliance requirements and cost benefits from initiatives taking longer to materialise. The cost of the deployment of UFB communal network for the twelve months was $362 million. As the UFB programme becomes more like a production line, work in any financial year will also include work scheduled to be completed in the following deployment year. As at 30 June 2013, $30 million had been spent on work in progress for UFB communal deployment scheduled to be completed in the following year. The average cost per premises passed was $2,935 (when including 3,700 ‘greenfields’ and existing broadband over fibre premises where no material capex was incurred during the twelve months) or $3,048 if only counting premises where capital expenditure was incurred as part of this year’s build programme. Chorus has previously provided guidance of an average cost to connect standard residential end-user premises of $900 to $1,100 (real) across the UFB rollout. As expected, initial costs are above this, reflecting the start up nature of this programme and lack of volume to support scale efficiencies. In November, Chorus announced that it was contributing $20 million of funding to support free installation for residential end-users in the early stage of the UFB rollout. Chorus already funds the first 15 metres of new trenching to connect a home, or up to 100 metres of fibre where there is an available duct, or a single overhead aerial span. The funding will be used to cover the incremental cost of connecting residences that are beyond these distances, up to 200 metres. Investment in fibre related products and systems development was $27 million. This spend relates to new systems to improve the ordering and provisioning process for fibre connections. Capital expenditure of $53 million on other fibre connections and growth reflects demand for fibre connections in areas where UFB has not yet been deployed, new ‘greenfield’ fibre subdivisions, fibre lifecycle investment and regional backhaul connections for retail service provider data traffic. Chorus expects to see a transition over time between this category and UFB related capital expenditure as the UFB network footprint grows. The Rural Broadband Initiative continued at pace with 2,150 kilometres of fibre laid by 30 June 2013, bringing better broadband within reach of 779 schools and 51,200 rural end-users since the start of the programme. Some of this work was brought forward from future years of the rollout programme. The RBI is scheduled to be completed in 2016 and Chorus’ role is to deploy network duct and fibre (largely grant funded, see_contributions to capital_ _expenditure_section below) to connect schools, hospitals, wireless broadband towers and other priority users in rural areas. Chorus is also deploying cabinets and cabinet electronics to expand its broadband footprint as part of the programme. Chorus expects to receive approximately $236 million in Government grant funding for the RBI, with the grant covering about 80-85% of Chorus’ annual RBI capital expenditure. Copper capital expenditure 2013 (12 MONTHS) $M 2012 (7 MONTHS) $M Network sustain 33 20 Copper connections 21 14 Copper layer 2 8 12 Product fixed 7 3 Total copper capital expenditure 69 49 Copper capital expenditure was $69 million for the period, reflecting the ongoing shift in focus to fibre related capital expenditure. Network sustain refers to capital expenditure where the network is being upgraded or network elements such as poles, cabinets and cables are replaced. This is typically where there is risk of network failure or degraded service for end-users and network replacement is deemed more cost effective than reactive maintenance. Capital expenditure on copper connections occurs where there is demand for copper connections for residential or business end-users, such as infill housing or new buildings. Demand for copper connections is expected to decrease over time as the UFB network footprint expands and demand for fibre connections grows. Copper layer 2 reflects investment in network electronics and equipment as a consequence of demand for broadband capacity and growth. This has reduced following the conclusion of the fibre to the node programme and is expected to decline further over time in line with the UFB network rollout and uptake. Capital expenditure on ‘Product fixed’ is largely driven by retail service provider demand for copper related products, in the current year this largely relates to Baseband IP product development.
2013 (12 MONTHS) $M	579	69	33	681	pend unrelated to nterprise systems, welve months to 3 nt with the mid p ry after adjusting f ated in this financi	2013 (12 MONTHS) $M	362	31	27	53	106	579
	Fibre	Copper	Common	Gross capital expenditure Chorus reports capital expenditure in three categories reflecting its core network asset and build programmes. • ‘Fibre’ includes spend specifcally focused on fbre assets (layer 0 and layer 1 UFB network assets) to support the fbre network (IT delivering fbre products) and programmes largely focused on fbre (UFB and RBI). • ‘Copper’ includes spend on copper related network assets and supporting capability (such as layer 2 electronics). • ‘Common’ includes a range of s asset classes, such as Chorus’ e and ofce equipment. Gross capital expenditure for the t was $681 million, which is consiste guidance range provided in Februa $14 million of year 3 UFB build initi recognised in work in progress). Fibre capital expenditure			UFB communal	UFB connections and fibre layer 2	Fibre products and systems	Other fibre connections and growth	RBI

Chorus’ principal source of liquidity is operating cash flows	and external borrowing from established debt programmes	and external borrowing from established debt programmes	such as the EMTN and bank facilities. Chorus also issues debt and	equity securities to CFH as it completes relevant UFB milestones.	equity securities to CFH as it completes relevant UFB milestones.	It also receives grants from the Crown in relation to its RBI	It also receives grants from the Crown in relation to its RBI	build programme.	build programme.	The Chorus Board is committed to maintaining a ‘BBB’ long term	credit rating from Standard & Poor’s and a ‘Baa2’ long term credit	credit rating from Standard & Poor’s and a ‘Baa2’ long term credit	rating from Moody’s Investors Service. Chorus’ capital management	rating from Moody’s Investors Service. Chorus’ capital management	policies are designed to ensure that this objective is met in expected	operating circumstances. It is Chorus’ intention that in normal	circumstances the ratio of net debt to EBITDA will not materially	exceed 3.5 times (net debt includes the senior portion of CFH debt	securities and net lease obligations). The ratio for net debt to EBITDA	for Chorus’ key financial covenants is 3.75 times.		At 30 June 2013, Chorus had a long term credit rating of BBB/stable	by Standard & Poor’s (30 June 2012: BBB/stable) and Baa2/negative	by Moody’s Investors Service (30 June 2012: Baa2/stable).
			2013 2012	(12 MONTHS) (7 MONTHS)	$M $M		16 12		16 10	1 1		33 23				Building and engineering services reflects the capital spent	on growth and plant replacement (eg power and air conditioning)	at Chorus exchanges, buildings and remote sites.	‘Other’ includes items such as office accommodation and equipment.							ii)Other:Chorus is able to recover the cost of other capital	spend in certain circumstances. This includes replacing network	damaged by third parties, or instances where central or local	government authorities ask Chorus to relocate or rebuild existing	network. A total of $12 million was recognised in the current		fnancial period and is included as part of Crown funding given		its modest size.
Common capital expenditure							Information technology		Building and engineering services	Other		Total common capital expenditure				Common capital expenditure was $33 million. Chorus made	a $16 million investment in information technology systems to	30 June 2013. This spend largely relates to changes required	to existing systems as a result of the demerger. Chorus is continuing	to undertake a significant programme of IT systems development	as part of its demerger commitments.				Contributions to capital expenditure	Chorus receives significant financing and contributions towards its	gross capital expenditure each year. During the year to 30 June 2013,	Chorus received contributions from the following sources:	i)RBI funding:The Crown is contributing grant funding of about		$236 million towards Chorus’ layer 0 and layer 1 capital spend		over the fve year Rural Broadband Initiative. The grant is payable		on completion of build work and will vary each year subject to the	agreed build programme and the grantable network that is built.	For the year ended 30 June 2013 $90 million was recognised.

Other legislation	Chorus is subject to other legislative requirements such as the requirements of the Commerce Act 1986, Fair Trading Act 1986, as well as telecommunications codes.	Chorus is subject to other legislative requirements such as the requirements of the Commerce Act 1986, Fair Trading Act 1986, as well as telecommunications codes.	Chorus is subject to other legislative requirements such as the requirements of the Commerce Act 1986, Fair Trading Act 1986, as well as telecommunications codes.		Chorus is also subject to the Telecommunications (Interception	Capability) Act 2004 (the Act), which requires network operators	to ensure that every public telecommunications network that	they own, control or operate, and every telecommunications	service that they provide in New Zealand, has interception capability		meeting the specifications set out in the Act. In June 2013, the	Government issued a discussion paper on a review of the Act.		Chorus made submissions on the discussion paper on 13 June 2013.		The requirements under the Act have the potential to drive significant		compliance costs.
On 7 August 2013, the Government released a discussion paper	on the regulatory review. In the discussion paper, the Government	proposes to take a phased approach to the regulatory review	– with an immediate focus on copper pricing. The discussion paper	proposes that copper (UCLL and UBA) prices should be roughly	equivalent with contracted entry level fibre prices (between $37.50-	$42.50). There are three options proposed – which differ in terms of	whether the Commission or Government selects the relevant price	point between $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.			Other changes are also proposed including grandfathering the	availability of the Sub Loop Unbundling (SLU) service. 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). Chorus is making submissions through	the review process.					Litigation							Chorus has ongoing claims, investigations and inquiries, none	of which are currently expected to have significant effect on the	financial position or profitability of Chorus.		Chorus cannot reasonably estimate the adverse effect, if any, on	Chorus if any of the outstanding claims or inquiries are ultimately	resolved against Chorus’ interest. There can be no assurance that	such cases will not have a significant effect on Chorus’ business,	financial position, and results of operations or profitability.
After the final decision, Chorus applied to the Commission to review	the UCLL price, using a Final Pricing Principle (FPP) of Total Service	Long Run Incremental Cost (TSLRIC). The application was made	on the basis that Chorus considered that the initial price set by	the Commission in the 3 December 2012 decision by reference to	benchmarking underestimates the TSLRIC of providing the UCLL	in New Zealand. Telecom, Vodafone, CallPlus and Kordia also made	FPP applications to the Commission. The Commission expects to	complete the FPP process in December 2015.		UBA pricing		The terms, including price, for UBA are currently regulated by		the Commission. Under the Act, the Commission was required		to review the UBA price by the end of 2012. On 3 December 2012,		the Commission issued a draft decision on UBA pricing proposing	a reduction in price from $21.46 to $8.93 per month based on	benchmarking of pricing in two countries. Chorus is making		submissions through the benchmarking process.		The Commission expects to complete the UBA benchmarking process	in October 2013. Once the Commission issues its final decision, any	party can apply for an FPP TSLRIC review of the UBA price.		Unbundled Copper Low Frequency Service (UCLFS)		To meet its TSO requirements, Chorus has made a technology	neutral voice input service, Baseband, available on a commercial	basis. The pricing of a subset of this service, UCLFS (a voice input	service offered over the copper access network), is set at the	averaged UCLL price as determined by the Commission. Because	the UCLFS price is linked to the UCLL price, a new UCLFS price of $23.52 per month applied from 3 December 2012 (previously $24.46 per month). Any change to the UCLL price as a result of			the FPP process should flow through to the UCLFS price.		Parallel government review announced	There is no certainty around the outcome of Commission’s	processes on any services that are currently under review or could	be reviewed at any time or whether the Government’s regulatory	review will impact those processes.		On 8 February the New Zealand Government announced that it was	bringing forward a review of the regulatory framework (regulatory	review) to “…focus on the long-term interests of end-users of	telecommunications services, taking into account the market	structure, technology developments and competitive conditions in		the telecommunications industry at the time of the review, including		the impact of fibre, copper, wireless and other telecommunications		network investment”4.	4 http://beehive.govt.nz/release/review-provide-certainty-consumers-industry
Significant changes in Chorus’ competitive and regulatory	environment that have occurred in the last year are set out below.	This should be read in conjunction with previous disclosures which	are available online at: www.chorus.co.nz/investor-centre.		Chorus Open Access Deeds of Undertaking	Chorus is bound by three open access deeds of undertaking (Deeds).	The Copper, Fibre and Rural Broadband Initiative undertakings	represent a series of legally binding obligations focused around the	provision of services on a non-discriminatory or equivalent basis.			Chorus submitted a transition plan to the Minister in late 2012	relating to the actions required to move to ending the sharing		arrangements between Telecom and Chorus, as required by		the Deeds.		Telecommunications Services Obligations (TSO) and Levies				The TSO is the regulatory mechanism by which universal	service obligations for residential, local access and calling services	are imposed and administered. Chorus is required to maintain	lines and coverage obligations, and provide a voice input service.	On 9 July 2013, the Government issued a discussion document		on the TSO, as part of a scheduled review, proposing a number of	potential future options for the TSO, and inviting views on any further	options. Chorus is making submissions through the review process.	The Government is required to complete the review by the end	of 2013. There is no guarantee or certainty of the outcome of the	TSO review.	The Telecommunications Development Levy (TDL) is an industry levy	of $50 million per year between FY10 and FY16 and $10 million each	year thereafter. On 27 June 2013, the Commission determined that		Chorus was liable for $6.4 million of the TDL for FY12.	Chorus is also required to contribute towards the Commerce	Commission’s costs through a Telecommunications Regulatory	Levy (TRL). On 19 July 2013, Chorus was determined to be liable	for $690,000 of the TRL for FY12.		UCLL and SLU pricing	The terms, including price, for UCLL and SLU are currently regulated by the Commission. On 3 December 2012, the Commission issued a final decision on its benchmarking review of the price Chorus can charge for UCLL. The final averaged UCLL price of $23.52					represented a 3.8% drop. The UCLL price is linked to a number		of other Chorus services, meaning that the UCLFS and SLU prices,		and some UBA prices, were impacted by the decision.

		CURRENT PRICING (EXCL GST)	Commercial pricing				$23.52 per month				Urban $19.08 per month	Non-urban $35.20	per month	Changes to nationally	averaged price of $23.52	$44.98 per month	(for Basic UBA or	Enhanced UBA 0)		Urban $11.52 per month Non-urban $21.26	per month		No change			No change						No change					$21.46 per month with	analogue voice or	$44.98 per month without	analogue voice
	PREVIOUS PRICING (EXCL GST)	BEFORE DECEMBER 2012	Commercial pricing				$24.46 per month				Urban $19.84 per month	Non-urban $36.63	per month			$45.92 per month	(for Basic UBA or	Enhanced UBA 0)		Urban $11.98 per month Non-urban $22.12	per month		Regulated pricing formula			Pricing varies subject to	capacity and distance					$21.46 per month (for	Basic UBA FS/FS or	Enhanced UBA 0)			Varied depending on	commercial pricing terms
		DESCRIPTION	Allows retail service providers to connect a sub loop	UCLL line from a cabinet to the local exchange so they	can offer phone and/or broadband service from the	exchange in cabinetised areas.	A voice input service available on all copper lines that	are in place between the premises and the exchange,	irrespective of cabinetisation. The Unbundled Copper	Low Frequency Service (UCLFS) is a subset of this service.	The unbundled copper local loop service. Can be	used by retail service providers to offer voice and	broadband services. Available on copper lines between	the premises and the exchange where there has been	no cabinetisation.	An unbundled bitstream service that is taken standalone	(i.e. without a voice service also being offered over the	line). Can be used by retail service providers to offer	broadband services.	The unbundled sub loop service. Can be used by retail service providers to offer voice and broadband services.	Available on copper lines between the premises and	cabinet (i.e. only on cabinetised lines).	The fibre connection between a retail service provider’s	UCLL equipment in a distribution cabinet and the	associated local exchange.	Enables access and interconnection with other UCLL	services across the wider access network, between	multiple exchanges. Gives retail service providers access	to transmission capacity so they can aggregate their	traffic between the local exchange to the handover point	within their own network.	Allows retail service providers direct access to high	speed copper bitstream access links, enabling them to	use Chorus’ equipment to deliver high speed broadband	services. Retail service providers can choose between	Basic or Enhanced variants of UBA.	VDSL is the third generation of DSL access technology	targeted towards high bandwidth broadband users and	can deliver download speeds around 20-50Mbps and	upload speeds up to 20Mbps.
		PRODUCT	Sub Loop	Extension	Service		Baseband	Copper	(UCLFS)		UCLL					Naked UBA				Sub Loop UCLL			Sub-loop	backhaul		UCLL	Backhaul	(commercial	or regulated	options)		Unbundled	Bitstream	Access			VDSL
Product overview	Copper product overview												UBA and/or Baseband Copper or UCLL				UBA and/or Baseband Copper or SLES SLU Central Ofce (exchange) UBA and/or Baseband Copper or SLU Retail service provider’s network UBA or UCLL Backhaul						Backhaul		Fibre	Copper	Copper feeder

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Product overview (cont.)
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19 19 19 20 20 21 23-41
CONTENTS
Financial Statements Independent auditor’s report Income statement Statement of comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements
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SEVEN MONTHS ENDED 30 JUNE 2012 $M - (1) (1) - - (1) 62 (66) (5) 1 (4) SEVEN MONTHS ENDED 30 JUNE 2012 $M (4) (14) 4 (10) (14)
PARENT YEAR ENDED 30 JUNE 2013 $M 86 (1) 85 1 - 86 106 (105) 87 - 87 PARENT YEAR ENDED 30 JUNE 2013 $M 87 13 (4) 9 96
SEVEN MONTHS ENDED 30 JUNE 2012 $M 613 (214) 399 (150) (39) 210 4 (72) 142 (40) 102 0.26 0.26 SEVEN MONTHS ENDED 30 JUNE 2012 $M 102 (14) 4 (10) 92
GROUP YEAR ENDED 30 JUNE 2013 $M 1,057 (394) 663 (258) (61) 344 7 (115) 236 (65) 171 0.44 0.42 GROUP YEAR ENDED 30 JUNE 2013 $M 171 13 (4) 9 180
NOTES 7 8 1 2 9 13 18 18 NOTE 13
Income statement FOR THE YE AR ENDED 30 JUNE 201 3 (DOLLARS IN MILLIONS) Operating revenue Operating expenses Earnings/(loss) before interest, income tax, depreciation and amortisation Depreciation Amortisation Earnings/(loss) before interest and income tax Finance income Finance expense Net earnings/(loss) before income tax Income tax (expense)/benefit Net earnings/(loss) for the period Earnings per share Basic earnings per share (dollars) Diluted earnings per share (dollars) Statement of comprehensive income FOR THE YE AR ENDED 30 JUNE 201 3 (DOLLARS IN MILLIONS) Net earnings/(loss) for the period Other comprehensive income Effective portion of changes in fair value of cash flow hedges (pre-tax) Tax (expense)/ benefit on cash flow hedge Other comprehensive income/(loss) net of tax Total comprehensive income/(loss) for the period net of tax The notes on pages 23 to 41 are an integral part of these financial statements
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Independent auditor’s report	To the shareholders of Chorus Limited	Report on the company and group fnancial statements	We have audited the accompanying fnancial statements of Chorus We believe that the audit evidence we have obtained is sufcient	Limited (‘’the company’’) and the group, comprising the company and appropriate to provide a basis for our audit opinion.	and its subsidiary, on pages 19 to 41. The fnancial statements comprise the statements of fnancial position as at 30 June 2013, the income statements and statements of comprehensive income, changes in equity and cash fows for the year then ended, and a summary of signifcant accounting policies and other explanatory Our frm has also provided other assurance and tax compliance services to the company and group. These matters have not impaired our independence as auditor of the company and group. The frm has no other relationship with, or interest in, the company and group.	information, for both the company and the group. Opinion	Directors’ responsibility for the company and group fnancial In our opinion the fnancial statements on pages 19 to 41:	statements • comply with generally accepted accounting practice	The directors are responsible for the preparation of company and in New Zealand;	group fnancial statements in accordance with generally accepted • comply with International Financial Reporting Standards;	accounting practice in New Zealand and International Financial Reporting Standards that give a true and fair view of the matters to which they relate, and for such internal control as the directors determine is necessary to enable the preparation of company and • give a true and fair view of the fnancial position of the company and the group as at 30 June 2013 and of the fnancial performance and cash fows of the company and the group for	group fnancial statements that are free from material misstatement the year then ended.	whether due to fraud or error. Report on other legal and regulatory requirements	Auditor’s responsibility Our responsibility is to express an opinion on these company In accordance with the requirements of sections 16(1)(d) and 16(1)(e) of the Financial Reporting Act 1993, we report that:	and group fnancial statements based on our audit. We conducted • we have obtained all the information and explanations that	our audit in accordance with International Standards on Auditing we have required; and	(New Zealand) and International Standards on Auditing. Those • in our opinion, proper accounting records have been kept	standards require that we comply with ethical requirements and by Chorus Limited as far as appears from our examination	plan and perform the audit to obtain reasonable assurance about of those records.	whether the company and group fnancial statements are free from	material misstatement.	An audit involves performing procedures to obtain audit evidence	about the amounts and disclosures in the company and group	fnancial statements. The procedures selected depend on the	auditor’s judgement, including the assessment of the risks of 25 August 2013	material misstatement of the fnancial statements, whether due Wellington	to fraud or error. In making those risk assessments, the auditor	considers internal control relevant to the company and group’s	preparation of the fnancial statements that give a true and fair	view of the matters to which they relate in order to design audit	procedures that are appropriate in the circumstances, but not	for the purpose of expressing an opinion on the efectiveness of	the company and group’s internal control. An audit also includes	evaluating the appropriateness of accounting policies used and the	reasonableness of accounting estimates, as well as evaluating the	presentation of the fnancial statements.

GROUP PARENT A S AT 30 JUNE 201 3 FOR THE YE AR ENDED 30 JUNE 201 3 GROUP	TOTAL $M	TOTAL $M	527	171	171	171	9	9	9	180	(95)	(95)	(8)	8	12	(83)	624	624	624	624	624	624	624	624	624	624	624	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements	CFH securities 4 30 3 30 3 Crown funding 5 222 34 101 10 Total non-current liabilities 2,370 2,063 1,950 1,744 Total liabilities 2,709 2,407 1,985 1,775 Equity Share capital 17 447 435 593 581 Reserves 17 (1) (10) (1) (10) Retained earnings 178 102 (12) (4) Total equity 624 527 580 567 Total liabilities and equity 3,333 2,934 2,565 2,342 The notes on pages 23 to 41 are an integral part of these financial statements On behalf of the Board Sue Sheldon,Chairman Mark Ratclife,Director Authorised for issue on 25 August 2013 Balance at 30 June 2012 435 102 (10) 527 The notes on pages 23 to 41 are an integral part of these financial statements
	CASH FLOW HEDGE RESERVE $M		(10)	-			9			9	-		-	-	-	-	(1)
	RETAINED EARNINGS $M		102	171			-			171	(95)		(8)	8	-	(95)	178
	SHARE CAPITAL $M		435	-			-			-	-		-	-	12	12	447
	YEAR ENDED 30 JUNE 2013 (DOLLARS IN MILLIONS) NOTE Balance at 1 July 2012 Comprehensive income Net earnings for the year Other comprehensive income Net effective portion of changes in fair value of cash flow hedges 17									2 2,238 - - 2,240 2,342 Total comprehensive income Contributions by and (distributions to) owners: Dividends 17 Supplementary dividends Tax credit on supplementary dividends Dividend reinvestment plan 17 Total transactions with owners
PARENT	2012 $M	61			1	40		-	102	2		2,238	-	-	2,240		31	-	31	-	31	-	110	-	1,609	12	1,731	3	10	1,744	1,775	581	(10)	(4)	567	2,342
	2013 $M	69			8	243		-	320	7		2,238	-	-	2,245	2,565	33	-	33	2	35	-	106	-	1,697	16	1,819	30	101	1,950	1,985	593	(1)	(12)	580	2,565
UP	2012 $M	140			-	198		3	341	2		-	180	2,411	2,593	2,934	328	14	342	2	344	9	110	121	1,609	177	2,026	3	34	2,063	2,407	435	(10)	102	527	2,934
GRO	2013 $M	80			-	294		3	377	7		-	153	2,796	2,956	3,333	328	5	333	6	339	2	106	123	1,697	190	2,118	30	222	2,370	2,709	447	(1)	178	624	3,333
	(DOLLARS IN MILLIONS) NOTES	Current assets Cash and call deposits 14			Income tax receivable	Trade and other receivables 10		Finance lease receivable 15	Total current assets	Non-current assets Derivative financial instruments 20		Investments and advances 16	Software and other intangibles 2	Network assets 1	Total non-current assets	Total assets	Current liabilities Trade and other payables 11	Income tax payable	Total current liabilities excluding Crown funding	Current portion of Crown funding 5	Total current liabilities	Non-current liabilities Trade and other payables 11	Derivative financial instruments 20	Finance lease payable 15	Debt 3	Deferred tax payable 13	Total non-current liabilities excluding CFH securities and Crown funding	CFH securities 4	Crown funding 5	Total non-current liabilities	Total liabilities Equity Share capital 17		Reserves 17	Retained earnings	Total equity	Total liabilities and equity

PARENT	SEVEN MONTHS ENDED 30 JUNE 2012 $M	SEVEN MONTHS ENDED 30 JUNE 2012 $M			-	-	48	-	-	(1)	(1)	-	(25)	(25)	22	22				(13)	(13)	-	-	(13)		-	12	51	(51)	-	12	21	40	61
	YEAR ENDED 30 JUNE 2013 $M				-		106	86		(1)		(7)	(99)		85					(189)		-	-	(189)		-	105	190	(100)	(83)	112	8	61	69
UP	SEVEN MONTHS ENDED 30 JUNE 2012 $M				530		4	-		(147)		(20)	(35)		332					-		(256)	(3)	(259)		2	25	51	(51)	-	27	100	40	140
GRO	YEAR ENDED 30 JUNE 2013 $M				967		7	-		(378)		(65)	(108)		423					-		(681)	(6)	(687)		(1)	198	190	(100)	(83)	204	(60)	140	80
	(DOLLARS IN MILLIONS) NOTE		Cash flows from operating activities Cash was provided from/(applied to):		Cash received from customers		Finance income	Intercompany dividend received		Payment to suppliers and employees		Taxation paid	Interest paid on debt and derivatives		Net cash flows from operating activities		Cash flows applied to investing activities Cash was applied to:			Subsidiary funding		Purchase of network assets and software and intangible assets	Capitalised interest paid	Net cash flows applied to investing activities	Cash flows from financing activities Cash was provided from/(applied to):	Net (repayment of)/proceeds from finance leases	Crown funding (including CFH securities)	Proceeds from debt	Repayment of debt	Dividends paid	Net cash flows from financing activities	Net cash flow	Cash at the beginning of the period	Cash at the end of the period 14
	TOTAL $M	567		87		9			96		(95)			(8)		8		12	(83)		580
	CASH FLOW HEDGE RESERVE $M	(10)		-		9			9		-			-		-		-	-		(1)
	RETAINED EARNINGS $M	(4)		87		-			87		(95)			(8)		8		-	(95)		(12)
	SHARE CAPITAL $M	581		-		-			-		-			-		-		12	12		593
	YEAR ENDED 30 JUNE 2013 (DOLLARS IN MILLIONS) NOTE	Balance at 1 July 2012		Comprehensive income Net earnings for the year		Other comprehensive income Net effective portion of changes in fair value of cash flow hedges 17			Total comprehensive income		Contributions by and (distributions to) owners: Dividends 17			Supplementary dividends		Tax credit on supplementary dividends		Dividend reinvestment plan 17	Total transactions with owners

PARENT	SEVEN MONTHS ENDED 30 JUNE 2012 $M	(4)		-	-	-	-	9	5	(6)	24	(1)	17	22
	YEAR ENDED 30 JUNE 2013 $M	87		-	(1)	-	-	4	90	-	2	(7)	(5)	85
UP	SEVEN MONTHS ENDED 30 JUNE 2012 $M	102		151	(1)	39	6	(4)	293	(101)	126	14	39	332
GRO	YEAR ENDED 30 JUNE 2013 $M	171		262	(4)	61	9	6	505	(70)	(3)	(9)	(82)	423
	(DOLLARS IN MILLIONS)	Net earnings/(loss) for the period	Adjustment for:	Depreciation charged on network assets	Amortisation of Crown funding	Amortisation of software and other intangible assets	Deferred income tax	Other	Change in current assets and liabilities:	Change in trade and other receivables	Change in trade and other payables	Change in income tax payable/receivable

Information about critical judgements in applying accounting	policies that have the most signifcant efect on the amounts recognised in the fnancial statements is included in the	policies that have the most signifcant efect on the amounts recognised in the fnancial statements is included in the	following notes:	following notes:	Crown funding (note 5)	Crown funding (note 5)		Chorus must exercise judgement when recognising Crown	funding to determine if conditions of the funding contract have	been satisfied. This judgement will be based on the facts and	been satisfied. This judgement will be based on the facts and	circumstances that are evident for each contract at the time	circumstances that are evident for each contract at the time	of preparing the financial statements.	of preparing the financial statements.	Leases (note 15)	Leases (note 15)	Determining whether a lease agreement is a finance lease or	operating lease requires judgement as to whether the agreement	transfers substantially all the risks and rewards of ownership	transfers substantially all the risks and rewards of ownership	to Chorus.	to Chorus.		Information about assumptions and estimation uncertainties that	have a signifcant risk of resulting in a material adjustment within	the next fnancial year are included in the following notes:		Network assets (note 1)		Assessing the appropriateness of useful life and residual value	estimates of network assets requires a number of factors to be	considered such as the physical condition of the asset, expected	period of use of the asset by Chorus, technological advances,	regulation and expected disposal proceeds from the future sale	of the asset.		CFH securities (note 4)	Determining the fair value of the CFH securities requires assumptions	on expected future cash flow and discount rate based on future long		dated swap curves.
Measurement basis	The measurement basis adopted in the preparation of these financial	statements is historical cost, modified by the revaluation of financial		instruments as identified in the specific accounting policies below	and the accompanying notes.		Specifc accounting policies		Chorus was established as a standalone publicly listed entity on		1 December 2011. The accounting policies adopted have been		applied consistently throughout the periods presented in these		financial statements. Certain comparative information has been	reclassified to conform with the current year’s presentation.		Basis of consolidation	Subsidiaries are fully consolidated from the date of acquisition, being		the date on which the Group obtains control, and continue to be		consolidated until the date when such control ceases. The financial		statements of the subsidiary are prepared for the same reporting	period as the Parent Company, using consistent accounting policies.	All intra-group balances, transactions, unrealised gains and losses	resulting from intra-group transactions and dividends are eliminated	in full. Subsidiaries are recorded at cost less any impairment losses	in the Parent Company financial statements.		Critical accounting estimates and assumptions		In preparing the financial statements management has made	estimates and assumptions about the future that affect the reported	amounts of assets and liabilities at the date of the financial	statements and the reported amounts of revenue and expenses	during the period. Actual results could differ from those estimates.	Estimates and assumptions are continually evaluated and are based	on historical experience and other factors, including expectations of	future events that are believed to be reasonable under the		circumstances. The principal areas of judgement in preparing		these financial statements are set out below.
Reporting entity and statutory base	Chorus Limited is registered in New Zealand under the Companies	Act 1993 and is an issuer for the purposes of the Financial Reporting		Act 1993. Chorus Limited was established as a standalone, publicly	listed entity on 1 December 2011, upon its demerger from Telecom	Corporation of New Zealand Limited (Telecom). The demerger was		a condition of an agreement with Crown Fibre Holdings Limited	(CFH) to enable Chorus Limited to be the Crown’s Ultra-Fast		Broadband (UFB) provider in 24 regions, representing approximately		70% of the UFB coverage area. Chorus Limited is listed and its		ordinary shares quoted on the NZX main board equity security	market (NZX Main Board) and on the Australian Stock Exchange	(ASX). 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.			The financial statements presented are those of Chorus Limited (the	Company, Parent or the Parent Company) together with its subsidiary	(the Chorus Group, Group or Chorus).		Nature of operations	Chorus is New Zealand’s largest fixed line communications		infrastructure service provider. Chorus maintains and builds a	network predominantly made up of local telephone exchanges,	cabinets, copper and fibre cables. Chorus has approximately	1.8 million fixed line connections. There are around 130,000	kilometres of copper cable and about 32,000 kilometres of fibre	cable connecting homes and businesses to local exchanges,	and roadside cabinets throughout the country.		Basis of preparation	These financial statements have been prepared in accordance		with generally accepted accounting practice in New Zealand and		the Financial Reporting Act 1993. They comply with New Zealand		equivalents to International Financial Reporting Standards (NZ IFRS)	as appropriate for profit-oriented entities. They also comply with	International Financial Reporting Standards.	These financial statements are expressed in New Zealand dollars,	which is Chorus’ functional currency. References in these financial	statements to ‘$’,‘NZ$’ and ‘NZD’ are to New Zealand dollars,	references to ‘USD’ are to US dollars, references to ‘AUD’ are to	Australian dollars, references to ‘EUR’ are to Euros and references	to ‘GBP’ are to pounds sterling. All financial information has been	rounded to the nearest million, unless otherwise stated.

			TOTAL	$M	$M		6,219	6,219	646	646	2		(93)	-	-		6,774			(3,808)	(262)		92	(3,978)	2,796								TOTAL	$M			5,943		282	282	(6)	-	6,219		(3,663)	(151)	6	(3,808)	2,411
		WORK IN	PROGRESS	$M			119		646		1		-	-	(672)		94			-	-		-	-	94							WORK IN	PROGRESS	$M			69		282		-	(232)	119		-	-	-	-	119
			OTHER	$M			188			-	1		-	(1)	12		200			(174)	(9)		-	(183)	17								OTHER	$M			185			-	-	3	188		(169)	(5)	-	(174)	14
		NETWORK	ELECTRONICS	$M			1,306			-	-		-	-	71		1,377			(1,013)	(95)		-	(1,108)	269							NETWORK	ELECTRONICS	$M			1,283			-	(1)	24	1,306		(952)	(62)	1	(1,013)	293
GROUP			PROPERTY	$M			475			-	-		-	1	25		501			(200)	(14)		-	(214)	287				GROUP				PROPERTY	$M			469			-	-	6	475		(192)	(8)	-	(200)	275
			CABINETS	$M			380			-	-		-	-	29		409			(156)	(33)		-	(189)	220								CABINETS	$M			372			-	(5)	13	380		(146)	(15)	5	(156)	224
		DUCTS AND	MANHOLES	$M			791			-	-		-	-	301		1,092			(324)	(16)		-	(340)	752							DUCTS AND	MANHOLES	$M			705			-	-	86	791		(317)	(7)	-	(324)	467
		FIBRE	CABLES	$M			567			-	-		-	(1)	186		752			(207)	(29)		-	(236)	516							FIBRE	CABLES	$M			492			-	-	75	567		(194)	(13)	-	(207)	360
		COPPER	CABLES	$M			2,393			-	-		(93)	1	48		2,349			(1,734)	(66)		92	(1,708)	641							COPPER	CABLES	$M			2,368			-	-	25	2,393		(1,693)	(41)	-	(1,734)	659
				AS AT 30 JUNE 2013		Cost	Balance as at 1 July 2012		Additions		Other		Disposals	Transfers	Transfers from work in progress		Balance as at 30 June 2013		Accumulated Depreciation	Balance as at 1 July 2012	Depreciation		Disposals	Balance as at 30 June 2013	Net carrying amount									AS AT 30 JUNE 2012		Cost	Balance as at 1 December 2011		Additions		Disposals	Transfers from work in progress	Balance as at 30 June 2012	Accumulated Depreciation	Balance as at 1 December 2011	Depreciation	Disposals	Balance as at 30 June 2012	Net carrying amount
Depreciation is charged on a straight-line basis to write down	the cost of network assets to its estimated residual value over	its estimated useful life. Estimated useful lives are as follows:			Copper cables 10-30 years		Fibre cables 20 years	Ducts and manholes 50 years		Cabinets 5-14 years Property 5-50 years			Network electronics 2-14 years	Other 2-15 years		Other network assets include motor vehicles, network management		and administration systems and radio infrastructure.		Any future adverse impacts arising in assessing the carrying value	or lives of Chorus’ network assets could lead to future impairment		losses or increases in depreciation charges that could affect	future earnings.	An item of network assets and any significant part is derecognised	upon disposal or when no future economic benefits are expected	from its use or disposal. Where network assets are disposed of, the	profit or loss recognised in the income statement is calculated as the		difference between the sale price and the carrying value of the asset.			Non-monetary items that are measured in terms of historical cost in		a foreign currency are translated using the exchange rates as at the	dates of the initial transactions.		Land and work in progress are not depreciated.
In the statement of financial position, network assets are stated at	cost less accumulated depreciation and any accumulated impairment	losses. The cost of additions to network assets and capital work in		progress constructed by Chorus includes the cost of all materials		used in construction, direct labour costs specifically associated with	construction, interest costs that are attributable to the asset, resource	management consent costs and attributable overheads.			Repairs and maintenance costs are recognised in the income	statement as incurred.		Estimating useful lives and residual values of network assets	The determination of the appropriate useful life for a particular asset		requires management to make judgements about, amongst other		factors, the expected period of service potential of the asset, the	likelihood of the asset becoming obsolete as a result of technological	advances, the likelihood of Chorus ceasing to use the asset in its	business operations and the effect of government regulation.		Where an item of network assets comprises major components	having different useful lives, the components are accounted for	as separate items of network assets.	Where the remaining useful lives or recoverable values have		diminished due to technological, regulatory or market condition		changes, depreciation is accelerated. The asset’s residual values,		useful lives, and methods of depreciation are reviewed annually and adjusted prospectively, if appropriate.

The Parent does not hold any network assets. There are no restrictions on Chorus network assets or any network assets pledged as securities for liabilities. At 30 June 2013 the contractual commitment for acquisition and construction of network assets was $28 million (30 June 2012: $23 million). Depreciation Chorus receives funding from the Crown to finance the capital expenditure associated with the development of the Ultra-Fast Broadband network, rural broadband services and other services. The contract for Ultra-Fast Broadband is agreed between the Parent and Crown Fibre Holdings. The Parent receives the Crown funding directly, however the construction of the network assets is carried out by the subsidiary. Funding is offset against depreciation over the life of the assets the funding is used to construct. Crown funding released against depreciation for the current period is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Depreciation charged on network assets 262 151 - - Less: Crown funding – Ultra-Fast Broadband (1) - (1) - Crown funding – Rural Broadband Initiative (1) - - - Software and other intangible assets are initially measured at cost. The direct costs associated with the development of network and business software for internal use are capitalised where project success is probable and the capitalisation criteria is met. Following initial recognition, software and other intangible assets are stated at cost less accumulated amortisation and impairment losses. Software and other intangible assets with a finite life are amortised from the date the asset is ready for use on a straight-line basis over its estimated useful life which is as follows Software 2–8 years Other intangibles 6-20 years Other intangibles mainly consist of land easements. At each reporting date, Chorus reviews the carrying amounts of its software and other intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any indication exists, the recoverable amount of the asset is estimated to determine the extent, if any, of the impairment loss recognised in earnings. Should the conditions that gave rise to the impairment loss no longer exist, and the assets are no longer considered to be impaired, a reversal of an impairment loss would be recognised immediately in earnings. Where estimated useful lives or recoverable values have diminished due to technological change or market conditions, amortisation is accelerated. GROUP AS AT 30 JUNE 2013 SOFTWARE $M OTHER INTANGIBLES $M WORK IN PROGRESS $M TOTAL $M	The Parent does not hold any network assets. There are no restrictions on Chorus network assets or any network assets pledged as securities for liabilities. At 30 June 2013 the contractual commitment for acquisition and construction of network assets was $28 million (30 June 2012: $23 million). Depreciation Chorus receives funding from the Crown to finance the capital expenditure associated with the development of the Ultra-Fast Broadband network, rural broadband services and other services. The contract for Ultra-Fast Broadband is agreed between the Parent and Crown Fibre Holdings. The Parent receives the Crown funding directly, however the construction of the network assets is carried out by the subsidiary. Funding is offset against depreciation over the life of the assets the funding is used to construct. Crown funding released against depreciation for the current period is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Depreciation charged on network assets 262 151 - - Less: Crown funding – Ultra-Fast Broadband (1) - (1) - Crown funding – Rural Broadband Initiative (1) - - - Software and other intangible assets are initially measured at cost. The direct costs associated with the development of network and business software for internal use are capitalised where project success is probable and the capitalisation criteria is met. Following initial recognition, software and other intangible assets are stated at cost less accumulated amortisation and impairment losses. Software and other intangible assets with a finite life are amortised from the date the asset is ready for use on a straight-line basis over its estimated useful life which is as follows Software 2–8 years Other intangibles 6-20 years Other intangibles mainly consist of land easements. At each reporting date, Chorus reviews the carrying amounts of its software and other intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any indication exists, the recoverable amount of the asset is estimated to determine the extent, if any, of the impairment loss recognised in earnings. Should the conditions that gave rise to the impairment loss no longer exist, and the assets are no longer considered to be impaired, a reversal of an impairment loss would be recognised immediately in earnings. Where estimated useful lives or recoverable values have diminished due to technological change or market conditions, amortisation is accelerated. GROUP AS AT 30 JUNE 2013 SOFTWARE $M OTHER INTANGIBLES $M WORK IN PROGRESS $M TOTAL $M	The Parent does not hold any network assets. There are no restrictions on Chorus network assets or any network assets pledged as securities for liabilities. At 30 June 2013 the contractual commitment for acquisition and construction of network assets was $28 million (30 June 2012: $23 million). Depreciation Chorus receives funding from the Crown to finance the capital expenditure associated with the development of the Ultra-Fast Broadband network, rural broadband services and other services. The contract for Ultra-Fast Broadband is agreed between the Parent and Crown Fibre Holdings. The Parent receives the Crown funding directly, however the construction of the network assets is carried out by the subsidiary. Funding is offset against depreciation over the life of the assets the funding is used to construct. Crown funding released against depreciation for the current period is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Depreciation charged on network assets 262 151 - - Less: Crown funding – Ultra-Fast Broadband (1) - (1) - Crown funding – Rural Broadband Initiative (1) - - - Software and other intangible assets are initially measured at cost. The direct costs associated with the development of network and business software for internal use are capitalised where project success is probable and the capitalisation criteria is met. Following initial recognition, software and other intangible assets are stated at cost less accumulated amortisation and impairment losses. Software and other intangible assets with a finite life are amortised from the date the asset is ready for use on a straight-line basis over its estimated useful life which is as follows Software 2–8 years Other intangibles 6-20 years Other intangibles mainly consist of land easements. At each reporting date, Chorus reviews the carrying amounts of its software and other intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any indication exists, the recoverable amount of the asset is estimated to determine the extent, if any, of the impairment loss recognised in earnings. Should the conditions that gave rise to the impairment loss no longer exist, and the assets are no longer considered to be impaired, a reversal of an impairment loss would be recognised immediately in earnings. Where estimated useful lives or recoverable values have diminished due to technological change or market conditions, amortisation is accelerated. GROUP AS AT 30 JUNE 2013 SOFTWARE $M OTHER INTANGIBLES $M WORK IN PROGRESS $M TOTAL $M	The Parent does not hold any network assets. There are no restrictions on Chorus network assets or any network assets pledged as securities for liabilities. At 30 June 2013 the contractual commitment for acquisition and construction of network assets was $28 million (30 June 2012: $23 million). Depreciation Chorus receives funding from the Crown to finance the capital expenditure associated with the development of the Ultra-Fast Broadband network, rural broadband services and other services. The contract for Ultra-Fast Broadband is agreed between the Parent and Crown Fibre Holdings. The Parent receives the Crown funding directly, however the construction of the network assets is carried out by the subsidiary. Funding is offset against depreciation over the life of the assets the funding is used to construct. Crown funding released against depreciation for the current period is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Depreciation charged on network assets 262 151 - - Less: Crown funding – Ultra-Fast Broadband (1) - (1) - Crown funding – Rural Broadband Initiative (1) - - - Software and other intangible assets are initially measured at cost. The direct costs associated with the development of network and business software for internal use are capitalised where project success is probable and the capitalisation criteria is met. Following initial recognition, software and other intangible assets are stated at cost less accumulated amortisation and impairment losses. Software and other intangible assets with a finite life are amortised from the date the asset is ready for use on a straight-line basis over its estimated useful life which is as follows Software 2–8 years Other intangibles 6-20 years Other intangibles mainly consist of land easements. At each reporting date, Chorus reviews the carrying amounts of its software and other intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any indication exists, the recoverable amount of the asset is estimated to determine the extent, if any, of the impairment loss recognised in earnings. Should the conditions that gave rise to the impairment loss no longer exist, and the assets are no longer considered to be impaired, a reversal of an impairment loss would be recognised immediately in earnings. Where estimated useful lives or recoverable values have diminished due to technological change or market conditions, amortisation is accelerated. GROUP AS AT 30 JUNE 2013 SOFTWARE $M OTHER INTANGIBLES $M WORK IN PROGRESS $M TOTAL $M	The Parent does not hold any network assets. There are no restrictions on Chorus network assets or any network assets pledged as securities for liabilities. At 30 June 2013 the contractual commitment for acquisition and construction of network assets was $28 million (30 June 2012: $23 million). Depreciation Chorus receives funding from the Crown to finance the capital expenditure associated with the development of the Ultra-Fast Broadband network, rural broadband services and other services. The contract for Ultra-Fast Broadband is agreed between the Parent and Crown Fibre Holdings. The Parent receives the Crown funding directly, however the construction of the network assets is carried out by the subsidiary. Funding is offset against depreciation over the life of the assets the funding is used to construct. Crown funding released against depreciation for the current period is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Depreciation charged on network assets 262 151 - - Less: Crown funding – Ultra-Fast Broadband (1) - (1) - Crown funding – Rural Broadband Initiative (1) - - - Software and other intangible assets are initially measured at cost. The direct costs associated with the development of network and business software for internal use are capitalised where project success is probable and the capitalisation criteria is met. Following initial recognition, software and other intangible assets are stated at cost less accumulated amortisation and impairment losses. Software and other intangible assets with a finite life are amortised from the date the asset is ready for use on a straight-line basis over its estimated useful life which is as follows Software 2–8 years Other intangibles 6-20 years Other intangibles mainly consist of land easements. At each reporting date, Chorus reviews the carrying amounts of its software and other intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any indication exists, the recoverable amount of the asset is estimated to determine the extent, if any, of the impairment loss recognised in earnings. Should the conditions that gave rise to the impairment loss no longer exist, and the assets are no longer considered to be impaired, a reversal of an impairment loss would be recognised immediately in earnings. Where estimated useful lives or recoverable values have diminished due to technological change or market conditions, amortisation is accelerated. GROUP AS AT 30 JUNE 2013 SOFTWARE $M OTHER INTANGIBLES $M WORK IN PROGRESS $M TOTAL $M	407	407	35	(1)	-	441	(227)	(61)	(288)	153
					34		35	-	(42)	27	-	-	-	27
					6		-	-	-	6	-	(1)	(1)	5
					367		-	(1)	42	408	(227)	(60)	(287)	121
PARENT	2012 $M	-	-	-	-	-
	2013 $M	-	(1)	-	-	(1)
UP	2012 $M	151	-	-	(1)	150
GRO	2013 $M	262	(1)	(1)	(2)	258
		Depreciation charged on network assets	Less: Crown funding – Ultra-Fast Broadband	Crown funding – Rural Broadband Initiative	Crown funding – other	Total depreciation

			GROUP AND PARENT		INTEREST RATE 2013 $M 2012 $M		6.75% 509 513		The following table reconciles EMTN at hedged rates to EMTN	at spot rates as reported under IFRS. EMTN at hedged rates is a	non-GAAP measure and is not defined in accordance with NZ IFRS.					509 513	168 164	677 677	compared to a carrying value of $509 million (30 June 2012: $513 million).	compared to a carrying value of $509 million (30 June 2012: $513 million).				2013 2012		- -	- -	675 675	- -	520 430	509 513	1,704 1,618	(7) (9)		Chorus New Zealand Limited (subsidiary) has provided a guarantee	to the lenders in respect of the Chorus Limited syndicated bank	facility and EMTN.	Refer to note 21 for information on financial risk management.	Refer to note 21 for information on financial risk management.
Note 3_– Debt continued_	Euro Medium Term Notes (EMTN)						260 million GBP		Chorus has in place cross currency interest rate swaps to hedge the	foreign currency exposure to the EMTN. The cross currency interest	rate swaps entitle Chorus to receive GBP principal and GBP fixed	coupon payments for NZD principal and NZD floating interest	payments. The floating interest rate exposure on the NZD interest	payments have been hedged using interest rate swaps.		EMTN	Impact of hedged rates used	EMTN at hedged rates	The fair value of EMTN, calculated based on the present value of future principal and interest cash fows, discounted at market interest rates at balance date, was $581 million (30 June 2012: $576 million)			Schedule of maturities				Current	Due 1 to 2 years	Due 2 to 3 years	Due 3 to 4 years	Due 4 to 5 years	Due over 5 years	Total due after one year	Less: syndicated loans facility fee		None of Chorus’ debt has been secured against assets.	However, there are financial covenants and event of default triggers,	as defined in the various debt agreements. There have not been	any trigger events or breaches in covenants in the current period	(30 June 2012: nil).
	Shared systems	Chorus shares a number of Information Technology (IT) systems		with Telecom with some systems owned by Chorus and some	owned by Telecom. Due to the terms of the governance framework	in place, these systems are deemed to be jointly controlled assets,	as defined in NZ IAS 31: Interests in Joint Ventures. For assets that it	does not own, Chorus recognises its share of the jointly controlled	assets, as well as a liability for the future payments due, similar to	a finance lease. For assets that it does own, Chorus derecognises	the share of the asset used by Telecom, as well as recognising a	receivable for the future receipts due. As at 30 June 2013 Chorus	recognised jointly controlled system assets owned by Telecom	with a net book value in Chorus financial statements of $3 million	(30 June 2012: $8 million).				Debt is initially measured at fair value, less any transaction costs that are directly attributable to the issue of the instruments. Debt is	subsequently measured at amortised cost using the effective interest	method. The weighted effective interest rate on debt including the	effect of derivative financial instruments was 5.88% (30 June 2012:	5.71%).	GROUP AND PARENT	2013 2012	DUE DATE $M $M	23 Nov 2015 675 675	23 Nov 2017 520 430	6 Apr 2020 509 513	(7) (9)	1,697 1,609	- -	1,697 1,609		Chorus utilises hedging instruments to manage the interest rate	risk associated with the syndicated bank facility. The Group manages	interest rate exposure within Board approved parameters set out	in the treasury policy.		The carrying value of syndicated bank facility approximates its	fair value.
Note 2_– Software and other intangibles continued_	The Parent does not hold any software and other intangible assets.		There are no restrictions on Chorus software and other intangible	assets or any software and other intangible assets pledged as	securities for liabilities. At 30 June 2013 the contractual commitment	for acquisition of software and other intangible assets was $10 million (30 June 2012: $2 million).											Note 3 – Debt		Debt is included as non-current liabilities except for those with maturities less than 12 months from the reporting date, which are	classified as current liabilities.							Syndicated bank facility A	Syndicated bank facility B	Euro medium term notes	Less: syndicated loans facility fee		Current	Non-current	Syndicated bank facility	Chorus has in place a $1,350 million syndicated bank facility with	two tranches on market standard terms and conditions. The maturity	of the facility tranches have been extended by one year with new	maturity dates in 2015 and 2017. The amount of undrawn syndicated	bank facility that is available for future operating activities is $155	million (30 June 2012: $245 million). The syndicated bank facility	is held with bank and institutional counterparties rated -A to AAA,	based on rating agency Standard & Poor’s ratings.

	At balance date Chorus had issued in total 2,838,382 warrants		which had a fair value and carrying value that approximated zero	which had a fair value and carrying value that approximated zero	(30 June 2012: 272,207 warrants issued). The number of fibre	connections made by 30 June 2020 impacts the number of warrants	that could be exercised. Should fibre connections at 30 June 2020		exceed 20% then the number of warrants that would be able to be		exercised is 1,204,971 (30 June 2012: 116,742).			At balance date the component parts of debt and equity instruments	including notional interest were				GROUP AND PARENT	2013 2012	$M $M	20 2		10 1		30 3			credit spreads (based on market observed credit spreads for debt		issued with similar credit ratings and tenure). The discount rate on		the CFH equity securities is capped at Chorus’ estimated cost		of (ordinary) equity.			Expected cash fows		Timing of principal repayments and dividend cash flows has been	based on forecasts that reflect economically rational outcomes given	the terms of the CFH debt and equity securities.	Repayment dates have been based on an estimate that the proportion of premises with a fibre connection within Chorus’ coverage area will exceed 20% at 30 June 2020.
CFH warrants	Chorus issues CFH warrants to CFH for nil consideration along with		each tranche of CFH equity securities. Each CFH warrant gives CFH		the right, on a specified exercise date, to purchase at a set strike price	a Chorus share to be issued by Chorus. A CFH warrant will therefore	be ‘in the money’ to the extent that the price that CFH can realise for		the Chorus share exceeds the price paid to exercise the CFH warrant.		The strike price for a CFH warrant is based on a total shareholder		return of 16% per annum on Chorus shares over the period	December 2011 to June 2036. Therefore, a holder of a CFH warrant	is only likely to exercise the CFH warrant if total shareholder return	on Chorus shares has exceeded 16% per annum over the period	June 2025 to June 2036.					CFH debt securities		CFH equity securities		Total CFH securities			The carrying value of CFH debt and equity securities approximates		its fair value and includes $1 million (30 June 2012: nil) of		notional interest.				Key assumptions	Although Chorus believes that the estimate of the liability		components of the CFH securities on initial recognition is	appropriate, the use of different methodologies or assumptions	could lead to different measurements of these component parts.	The liability components of the CFH securities have been calculated using expected cash flows discounted at risk-adjusted discount rates. As the number of CFH securities expected to be issued increases over time the potential impact of alternative methodologies		and assumptions will become increasingly material. Key inputs and	assumptions used in these calculations on initial recognition include:		Discount rate	On initial recognition, the discount rate between 10.36% to 10.77%	(30 June 2012: 10.77% to 10.87%) for the CFH equity securities and	6.37% to 6.95% (30 June 2012: 6.65% to 6.90%) for the CFH debt	securities applied to the expected cash flows is based on long dated	NZ swap curves. The swap rates were adjusted for Chorus specific
compound instrument is calculated using market inputs with no	residual amounts allocated to equity. Until the liability component		of the compound instrument expires the CFH equity securities are		required to be disclosed as a liability. The difference between the face	value of the CFH equity securities and the fair value of the liability	component is then recorded as Crown funding.		After this, the liability component is measured at amortised cost using		the effective interest method and the Crown funding is amortised to		depreciation on a systematic basis over the useful lives of the relevant UFB assets.			CFH debt securities	CFH debt securities are unsecured, non interest bearing and carry	no voting rights at meetings of holders of Chorus ordinary shares.	Chorus is required to redeem the CFH debt securities in tranches	from 2025 to 2036 (at the latest) by repaying the face value to CFH.	An accelerated repayment schedule applies if the proportion of	premises with a fibre connection within Chorus’ coverage area at		30 June 2020 does not exceed 20%.		The CFH debt securities are treated as a financial liability with a	Crown funding component due to the instrument including an	interest free loan from a government entity. On initial recognition	the difference between the face value of the CFH debt securities and	their fair value (calculated using market inputs) is recorded as Crown		funding. After this the liability component is measured at amortised		cost using the effective interest method and the Crown funding is		amortised to depreciation on a systematic basis over the useful lives		of the relevant UFB assets.		The principal amount of CFH debt securities consists of a senior	portion and a subordinated portion. The senior portion ranks equally	with all other unsecured, unsubordinated creditors of Chorus,	and has the benefit of any negative pledge covenant that may be contained in any of Chorus’ debt arrangements. The subordinated portion ranks above ordinary shares of Chorus. The initial value of the senior portion is the present value (using a discount rate of 8.5%)		of the sum repayable on the CFH debt securities, and the initial	subordinated portion will be the difference between the issue price	of the CFH debt security and the value of the senior portion.
Chorus receives funding from the Crown to finance construction	costs associated with the development of the UFB network. Chorus	receives funding at a rate of $1,118 for every premises passed		(as certified by CFH), in return Chorus issues CFH equity securities,		CFH debt securities and CFH warrants. The equity and debt securities issued by Chorus have an issue price of $1 and are issued on a 50:50		basis. For each premises passed, $559 of equity securities and $559		of debt securities are issued by Chorus for which Chorus receives		$1,118 funding in return. CFH warrants are issued for nil value.		The total committed funding available for Chorus over the period	of UFB network construction is expected to be $929 million.	The CFH equity and debt securities are recognised initially at fair	value plus any directly attributable transaction costs. Subsequently	they are measured at amortised cost using the effective interest	method. The fair value is derived by discounting the $559 of equity	securities and $559 of debt securities per premises passed by the	effective interest rate based on market rates. The difference between	funding received ($1,118 per premises passed) and the fair value of	the securities is recognised as Crown funding. Over time, the CFH		debt and equity securities increase to face value and the Crown funding is released against depreciation and reduces to nil.			CFH equity securities	CFH equity securities are a class of non interest bearing security		that carry no right to vote at meetings of holders of Chorus ordinary		shares, but entitle the holder to a preferential right to repayment on		liquidation and additional rights that relate to Chorus’ performance		under its construction contract with CFH.		Dividends will become payable on a portion of the CFH equity securities from 2025 onwards, with the portion of CFH equity securities that attract dividends increasing over time. A greater portion of CFH equity securities attract dividends if the proportion of premises with a fibre connection within Chorus’ coverage area at 30 June 2020 does not exceed 20%. The dividend rate will be equal to the New Zealand 180-day bank bill rate plus a margin of 6%. CFH					equity instruments can be settled by issuing Chorus shares valued at a 5% discount to the 20-day volume weighted average price for Chorus shares traded in ordinary trading on the NZX Main Board.				The CFH equity securities are treated as a compound financial	instrument with a Crown funding component due to the instrument	including an interest free loan from a government entity. On initial	recognition, the fair value of the liability component of the

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2012 $M 13 (3) - 10 2012 $M - 10 - - 10
2013 $M 133 (29) (1) 103 2013 $M 10 82 12 (1) 103
GROUP AND PARENT GROUP AND PARENT
(30 June 2012: nil) has been accrued in respect of 13,515 premises passed in areas where user acceptance testing was complete at 30 June 2013 but funds were received post 30 June 2013. The $15 million of funding accrued was allocated as CFH debt securities $2 million, CFH equity securities $1 million and Crown funding $12 million. The component parts of this funding can be summarised as follows: The change in the Ultra-Fast Broadband Crown funding balance is summarised below:
Ultra-Fast Broadband Chorus receives funding from the Crown to finance construction costs associated with the development of the UFB network. During the year the Group received $105 million in funding from CFH (30 June 2012: $13 million) which equated to 94,291 (30 June 2012: 11,388) premises passed. This $105 million of funding was allocated as follows: CFH debt securities $15 million, CFH equity securities $8 million, Crown funding $82 million. A further $15 million Accumulated funding recognised Less: CFH securities excluding notional interest Less: accumulated amortisation of funding Ultra-Fast Broadband funding Continued recognition of the full amount of the Crown funding is contingent on certain material performance targets being met by Chorus. The most significant of these material performance targets relate to the number of premises passed by fibre optic cables by key dates and compliance with certain specifications under user acceptance testing by CFH. Balance at beginning of the period Funding received (excluding CFH securities) Funding accrued (excluding CFH securities) Amortisation Balance at end of the period
2012 $M 10 - - 10 - 10
PARENT 2013 $M 103 - - 103 2 101
IMPACT ON FINANCIAL STATEMENTS IMPACT ON FINANCIAL STATEMENTS
Increase CFH debt securities liability by $2.9 million Decrease Crown funding by $2.9 million Increase CFH equity securities liability by $2.3 million Decrease Crown funding by $2.3 million Increase CFH debt securities liability by $263,000 Decrease Crown funding by $263,000 Increase CFH equity securities liability by $221,000 Decrease Crown funding by $221,000 GROUP 20122013 $M$M 10 103 18 107 8 18 36 228 2 6 222 34
have been made by 30 June 2020 is one of the key sensitivities implicit in the measurement of the CFH securities. A change in this proportion would result in the following impact on the financial statements: on a systematic basis over the useful life of the asset the funding was used to construct. The accumulated funding has been recognised as follows:
< 20% < 20% < 20% < 20%
OUTCOME OUTCOME
ALTERNATIVE ALTERNATIVE
ACTUAL ≥ 20% ≥ 20% ACTUAL ≥ 20% ≥ 20%
Sensitivity analysis Chorus considers that it is reasonably possible that future outcomes may be different from the assumptions applied and could require a material adjustment to the carrying amount of the component parts of the CFH securities. The number of fibre connections assumed to AS AT 30 JUNE 2013 CFH debt securities Fibre connection proportion CFH equity securities Fibre connection proportion AS AT 30 JUNE 2012 CFH debt securities Fibre connection proportion CFH equity securities Fibre connection proportion Note 5 – Crown funding Funding from the Crown is recognised at fair value where there is reasonable assurance that the funding is receivable and Chorus complies with all attached conditions. Crown funding is then recognised in earnings as a reduction to depreciation expense Ultra-Fast Broadband Rural Broadband Initiative Other Current Non-current
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Rural Broadband Initiative Chorus receives Crown funding from the Ministry of Business, Innovation and Employment (MBIE) for capital expenditure incurred under the Rural Broadband Initiative. Chorus is entitled to claim payment for the grantable costs attributable to the relevant milestones for deploying the rural link or rural cabinets. The MBIE will pay Chorus one dollar of funding for each dollar of grantable costs incurred by Chorus up to a maximum funding limit of around $236 million. In addition the MBIE reimburses Chorus for all capital expenditure attributable to school lead-ins. During the year Chorus recognised $90 million in funding from the MBIE (30 June 2012: $18 million). The component parts of this funding can be summarised as follows: GROUP PARENT An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses and for which operating results are regularly reviewed by the entity’s chief operating decision maker and for which discrete financial information is available. Chorus’ Chief Executive Officer has been identified as the chief operating decision maker for the purpose of segmental reporting. Chorus has determined that it operates in one segment providing nationwide fixed line access network infrastructure. All of Chorus’ operations are provided in New Zealand, therefore no geographic information is provided. Two Chorus customers met the reporting threshold of 10 percent of Chorus’ operating revenue in the year to 30 June 2013. The total revenue for the year ending 30 June 2013 from one customer was $815 million and from the other customer was $101 million. In the seven months ended 30 June 2012 one customer met the reporting threshold and accounted for $523 million of revenue.	The determination is based on the reports reviewed by the Chief Executive Officer in assessing performance, allocating resources and making strategic decisions.	The determination is based on the reports reviewed by the Chief Executive Officer in assessing performance, allocating resources and making strategic decisions.	- - NT Note 7 – Operating revenue	- - NT Note 7 – Operating revenue	- - NT Note 7 – Operating revenue	- - NT Note 7 – Operating revenue	2012 $M - - - - network NT Revenue is recognised to the extent that it is probable that the economic benefits will flow to Chorus and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable. Chorus recognises revenue as it provides services to its customers. Billings are generally made on a monthly basis. Unbilled revenues from the billing cycle date to the end of each month are recognised as revenue during the month the service is provided. Revenue is deferred in respect of the portion of fixed monthly charges that have been billed in advance. Revenue from installations and connections are recognised upon completion of the installation or connection. GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Basic copper 631 399 - -	2012 $M - - - - network NT Revenue is recognised to the extent that it is probable that the economic benefits will flow to Chorus and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable. Chorus recognises revenue as it provides services to its customers. Billings are generally made on a monthly basis. Unbilled revenues from the billing cycle date to the end of each month are recognised as revenue during the month the service is provided. Revenue is deferred in respect of the portion of fixed monthly charges that have been billed in advance. Revenue from installations and connections are recognised upon completion of the installation or connection. GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Basic copper 631 399 - -	2012 $M - - - - network NT Revenue is recognised to the extent that it is probable that the economic benefits will flow to Chorus and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable. Chorus recognises revenue as it provides services to its customers. Billings are generally made on a monthly basis. Unbilled revenues from the billing cycle date to the end of each month are recognised as revenue during the month the service is provided. Revenue is deferred in respect of the portion of fixed monthly charges that have been billed in advance. Revenue from installations and connections are recognised upon completion of the installation or connection. GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Basic copper 631 399 - -	2012 $M - - - - network NT Revenue is recognised to the extent that it is probable that the economic benefits will flow to Chorus and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable. Chorus recognises revenue as it provides services to its customers. Billings are generally made on a monthly basis. Unbilled revenues from the billing cycle date to the end of each month are recognised as revenue during the month the service is provided. Revenue is deferred in respect of the portion of fixed monthly charges that have been billed in advance. Revenue from installations and connections are recognised upon completion of the installation or connection. GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Basic copper 631 399 - -	2012 $M - - - - network NT Revenue is recognised to the extent that it is probable that the economic benefits will flow to Chorus and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable. Chorus recognises revenue as it provides services to its customers. Billings are generally made on a monthly basis. Unbilled revenues from the billing cycle date to the end of each month are recognised as revenue during the month the service is provided. Revenue is deferred in respect of the portion of fixed monthly charges that have been billed in advance. Revenue from installations and connections are recognised upon completion of the installation or connection. GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Basic copper 631 399 - -	2012 $M - - - - network NT Revenue is recognised to the extent that it is probable that the economic benefits will flow to Chorus and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable. Chorus recognises revenue as it provides services to its customers. Billings are generally made on a monthly basis. Unbilled revenues from the billing cycle date to the end of each month are recognised as revenue during the month the service is provided. Revenue is deferred in respect of the portion of fixed monthly charges that have been billed in advance. Revenue from installations and connections are recognised upon completion of the installation or connection. GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Basic copper 631 399 - -	PARENT	2012 $M	-	-	-	-	-	-	-	-	-	-
														2013 $M	-		-	-	-	-	-	-	86	86
													UP	2012 $M	399		89	28	18	14	47	18	-	613
													GRO	2013 $M	631		215	60	37	17	85	12	-	1,057
															Basic copper		Enhanced copper	Fibre	Value added network services	Infrastructure	Field services	Other	Intercompany dividend income	Total operating revenue
																				- -			NT
PARENT	2012 $M	-	-	-		NT	2012 $M	-	-	-	-					NT	2012 $M		-	-	-			NT	2012 $M	-	-	-	-
	2013 $M	-	-	-		PARE	2013 $M	-	-	-	-	nd extending the				PARE	2013 $M		-	-	-			PARE	2013 $M	-	-	-	-
UP	2012 $M	18	-	18		UP	2012 $M	-	18	-	18	school lead-ins a :				UP	2012 $M		9	(1)	8			UP	2012 $M	-	9	(1)	8
GRO	2013 $M	108	(1)	107	ed below:	GRO	2013 $M	18	90	(1)	107	ations equipment, marised as follows				GRO	2013 $M		21	(3)	18			GRO	2013 $M	8	12	(2)	18
		Accumulated funding recognised	Less: accumulated amortisation of funding	Rural Broadband Initiative funding	The change in the Rural Broadband Initiative funding balance is summaris			Balance at the beginning of period	Funding recognised	Amortisation	Balance at end of the period	Other Chorus receives funding towards the cost of relocation of telecommunic coverage to rural areas. The component parts of this funding can be sum							Accumulated funding recognised	Less: accumulated amortisation of funding	Other funding	The change in the other funding is summarised below:				Balance at the beginning of period	Funding recognised	Amortisation	Balance at end of the period

PARENT	2012 $M	(32)	(27)	(7)	-	(66)	-	(66)						NT	2012 $M	-	18	22	40	-	40
	2013 $M	(58)	(46)	-	-	(104)	(1)	(105)						PARE	2013 $M	-	32	211	243	-	243
UP	2012 $M	(32)	(27)	(16)	3	(72)	-	(72)						UP	2012 $M	135	62	-	197	1	198
GRO	2013 $M	(58)	(46)	(16)	6	(114)	(1)	(115)						GRO	2013 $M	229	51	-	280	14	294
		Interest on syndicated bank facility	Interest on EMTN	Other interest expense	Capitalised interest	Total finance expense excluding CFH securities	CFH securities (notional interest)	Total finance expense								Trade receivables	Other receivables	Intercompany receivables		Prepayments	Trade and other receivables

PARENT	2012 $M	-	-	-	-	-	-	-	-	-	(1)	-	(1)
	2013 $M	-	-	-	-	-	-	-	-	-	-	(1)	(1)
UP	2012 $M	(31)	(23)	(52)	(22)	(30)	(6)	(8)	(11)	(3)	(5)	(23)	(214)
GRO	2013 $M	(67)	(51)	(100)	(37)	(52)	(12)	(12)	(13)	(4)	(6)	(40)	(394)
		Labour costs	Provisioning	Network maintenance	Other network costs	Information technology costs	Rent and rates	Property maintenance	Electricity	Insurance	Consultants	Other	Total operating expenses

The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	The ageing profile of trade receivables as at 30 June 2013 is as follows: GROUP PARENT 2013 $M 2012 $M 2013 $M 2012 $M Not past due 208 124 - - Past due 1-30 days 13 10 - - Past due 31-60 days 3 1 - - Past due 61-90 days 1 - - - Past due over 90 days 4 - - - 229 135 - - Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables. Any disputes arising that may affect the relationship between the parties will be raised by relationship managers and follow the Chorus dispute resolution process. Chorus has $21 million of accounts receivable that are past due but not impaired (30 June 2012: $11 million). The carrying value of trade and other receivables approximate the fair value. The maximum credit exposure is limited to the carrying value of trade and other receivables. Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method. GROUP PARENT Network infrastructure project agreement Chorus is committed to deploying infrastructure for premises in the UFB candidate areas awarded to Chorus, to be built according to annual build milestones and to be complete by no later than 31 December 2019. In total it is expected that the communal infrastructure will pass an estimated 830,900 premises. Chorus has estimated that it will cost $1.7 - $1.9 billion to build the communal UFB network by the end of 2019. Rural Broadband Initiative As part of the Rural Broadband Initiative Phase 1, Chorus is committed to deploying approximately 3,100 kilometres of fibre to connect approximately 850 schools and enable approximately 57% of rural users to access broadband speeds of at least 5Mbps. In addition, under phase 2 of the Rural Broadband Initiative, Chorus will be deploying a further 250 kilometres of fibre to connect 189 provincial schools, up to 181 rural public libraries and 45 rural hospitals and family health centres. The estimated cost of the build is in the range of $280 – $295 million. Capital expenditure Refer to note 1 and note 2 for details of capital expenditure commitments. Lease commitments Chorus has building, car parks and site licenses under operating lease arrangements. The future non cancellable minimum operating lease commitment as at 30 June 2013 for the Group was $26 million (30 June 2012: $19 million). Note 13 – Taxation Current and deferred tax is calculated on the basis of the laws enacted or substantively enacted at balance date. Deferred taxation is recognised in respect of temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Future tax benefits are recognised where realisation of the asset is probable. Current and deferred tax are recognised in the income statement, except when the tax relates to items charged or credited to other comprehensive income, in which case the tax is also recognised in other comprehensive income.	2012 $M - - 31 -	2012 $M - - 31 -	2012 $M - - 31 -	2012 $M - - 31 -	2012 $M - - 31 -	Revenue billed in advance 27 30 - - Trade and other payables 330 337 33 31 Current 328 328 33 31 Non-current 2 9 - - Trade and other payables are non-interest bearing and normally settled within 30 day terms. The carrying value of trade and other payables approximate their fair values. Joint arrangements Certain network electronic assets and shared systems owned by Telecom are required for continued use by Chorus post demerger. The right to use these assets have been granted by Telecom under joint arrangements over the life of the assets.	Revenue billed in advance 27 30 - - Trade and other payables 330 337 33 31 Current 328 328 33 31 Non-current 2 9 - - Trade and other payables are non-interest bearing and normally settled within 30 day terms. The carrying value of trade and other payables approximate their fair values. Joint arrangements Certain network electronic assets and shared systems owned by Telecom are required for continued use by Chorus post demerger. The right to use these assets have been granted by Telecom under joint arrangements over the life of the assets.	Revenue billed in advance 27 30 - - Trade and other payables 330 337 33 31 Current 328 328 33 31 Non-current 2 9 - - Trade and other payables are non-interest bearing and normally settled within 30 day terms. The carrying value of trade and other payables approximate their fair values. Joint arrangements Certain network electronic assets and shared systems owned by Telecom are required for continued use by Chorus post demerger. The right to use these assets have been granted by Telecom under joint arrangements over the life of the assets.	Revenue billed in advance 27 30 - - Trade and other payables 330 337 33 31 Current 328 328 33 31 Non-current 2 9 - - Trade and other payables are non-interest bearing and normally settled within 30 day terms. The carrying value of trade and other payables approximate their fair values. Joint arrangements Certain network electronic assets and shared systems owned by Telecom are required for continued use by Chorus post demerger. The right to use these assets have been granted by Telecom under joint arrangements over the life of the assets.
PARENT	2012 $M	-	-	-	-	-	-
	2013 $M	-	-	-	-	-	-				2013 $M	-	-	33	-	-	33	33	-
UP	2012 $M	124	10	1	-	-	135			UP	2012 $M	147	21	125	14	30	337	328	9
GRO	2013 $M	208	13	3	1	4	229	Any disputes arisi the parties will be the Chorus disput of accounts recei (30 June 2012: $1 receivables appro is limited to the c		GRO	2013 $M	121	11	154	17	27	330	328	2
		Not past due	Past due 1-30 days	Past due 31-60 days	Past due 61-90 days	Past due over 90 days		Chorus has a concentrated customer base consisting predominantly of a small number of retail service providers. The concentration of Chorus’ customer base heightens the risk that a dispute with a customer, or a customer’s failure to pay for services, will have a material adverse effect on Chorus’ collectability of receivables.	Note 11 – Trade and other payables Trade and other payables are initially recognised at fair value less transaction costs (if any). They are subsequently measured at amortised cost using the effective interest method.			Trade payables	Joint arrangements	Accruals	Personnel accrual	Revenue billed in advance	Trade and other payables	Current

Income tax GROUP PARENT Note 13_– Taxation continued_ Note 13_– Taxation continued_ Movement in deferred tax balance during the period GROUP	BALANCE 30 JUNE 2013 $M	BALANCE 30 JUNE 2013 $M	16	16	16	217	217	(1)	(1)	(35)	(7)	(7)	-	-	190	190	190	190	190	190	190	190	190	190	Changes in fair value of cash flow hedges - - (4) (4) Total 175 6 (4) 177	Changes in fair value of cash flow hedges - - (4) (4) Total 175 6 (4) 177	Changes in fair value of cash flow hedges - - (4) (4) Total 175 6 (4) 177	Changes in fair value of cash flow hedges - - (4) (4) Total 175 6 (4) 177	Changes in fair value of cash flow hedges - - (4) (4) Total 175 6 (4) 177	Changes in fair value of cash flow hedges - - (4) (4) Total 175 6 (4) 177	Changes in fair value of cash flow hedges - - (4) (4) Total 175 6 (4) 177
	RECOGNISED IN OTHER COMPREHENSIVE INCOME $M		-			-		-		-	-		4		4
	RECOGNISED IN PROFIT AND LOSS $M		-			3		3		-	3		-		9
	BALANCE 1 JULY 2012 $M		16			214		(4)		(35)	(10)		(4)		177
	(Assets)/liabilities Fair value portion of derivatives Network assets, software and other intangibles Employee entitlements
PARENT	2013 $M 2012 $M			- 1	- -				- -	- -		- -		- -		- 1			- -		(4) 4	(4) 4		PARENT	2013 $M 2012 $M		87 (4)	- 1	87 (5)	(24) 1		24 -	- -	- 1
UP	2012 $M			(34)	-				(13)	2		5		-		(40)			-		4	4		UP	2012 $M		102	(40)	142	(40)		-	-	(40)
GRO	2013 $M			(62)	6				2	-		(6)		(5)		(65)			-		(4)	(4)		GRO	2013 $M		171	(65)	236	(66)		-	1	(65)
		Income statement Current income tax		Current period income tax (expense)/credit	Adjustments in respect of prior periods		Deferred income tax		Network assets, software and other intangibles	Employee entitlements		Other		Adjustments in respect of prior periods		Income tax (expense)/credit recognised in income statement	Other comprehensive income	Current income tax	Current period income tax expense	Deferred income tax	Changes in fair value of cash flow hedges	Income tax (expense)/credit recognised in other comprehensive income	The taxation expense charged to earnings includes both current and deferred tax and is calculated after allowing for adjustments.			Reconciliation of effective tax rate	Net earnings/(loss) for the period	Add: Income tax (expense)/credit	Net earnings/(loss) before income tax	Income tax at 28%	Adjustment to taxation	Non taxable intercompany dividends	Adjustments in respect of prior periods

GROUP PARENT	2013 2012 2013 2012	$M $M $M $M		80 140 69 61		Cash fow	Cash flows from derivatives in cash flow and fair value hedge	relationships are recognised in the cash flow statement in the same	category as the hedged item.	For the purposes of the statement of cash flows, cash is considered		to be cash on hand, in banks and cash equivalents, including bank	overdrafts and highly liquid investments that are readily convertible		to known amounts of cash which are subject to an insignificant risk	of changes in values.											Chorus. Judgement is required on various aspects that include, but are not limited to, the fair value of the leased asset, the economic life	of the leased asset, whether or not to include renewal options in the lease term, and determining an appropriate discount rate to calculate	the present value of the minimum lease payments.	the present value of the minimum lease payments.	Classification as a finance lease means the asset is recognised	in the statement of financial position as network assets whereas	for an operating lease no such asset is recognised.	Chorus has exercised its judgement on the appropriate classification	of network asset leases, and has determined a number of lease	arrangements are finance leases.
				Cash and call deposits		Cash and call deposits are held with bank and financial institutions	counterparties rated at a minimum of A+, based on rating agency	Standard & Poor’s ratings. Interest earned on call deposits is based	on the daily deposit rate.	There are no cash or call deposit balances held by Chorus that	are not available for use.		The carrying values of cash approximate their fair values.		The maximum credit exposure is limited to the carrying value	of cash and call deposits.		Cash denominated in foreign currencies are retranslated into		New Zealand dollars at the spot rate of exchange at the reporting	date. All differences arising on settlement or translation of monetary	items are taken to the income statement.			Note 15 – Leases		Chorus is a lessee of certain network assets under both operating and finance lease arrangements. Lease costs relating to operating	leases are recognised on a straight-line basis over the life of the lease. Finance leases, which effectively transfer to Chorus	substantially all the risks and benefits of ownership of the leased assets, are capitalised at the lower of the leased asset’s fair value or the present value of the minimum lease payments at inception			of the lease. The leased assets and corresponding liabilities are	recognised, and the leased assets are depreciated over their	estimated useful lives.	Determining whether a lease agreement is a finance lease or an	operating lease requires judgement as to whether the agreement	transfers substantially all the risks and rewards of ownership to
PARENT	RECOGNISED	RECOGNISED IN OTHER	BALANCE IN PROFIT COMPREHENSIVE BALANCE	1 JULY 2012 AND LOSS INCOME 30 JUNE 2013	$M $M $M $M		16 - - 16	(4) - 4 -	12 - 4 16			PARENT		RECOGNISED	RECOGNISED IN OTHER	BALANCE 1 DECEMBER 2011 IN PROFIT AND LOSS COMPREHENSIVE INCOME BALANCE 30 JUNE 2012	$M $M $M $M				16 - - 16	- - (4) (4)	16 - (4) 12		GROUP PARENT	2013 2012 2013 2012	$M $M $M $M 63 33 5 -	use subject to the requirements of the Income Tax Act 2007 being satisfied. For the purposes of the Income Tax Act 2007 Telecom		demerger transactions do not give rise to, and are ignored for the	purposes of calculating available subscribed capital of Chorus.
						(Assets)/liabilities	Fair value portion of derivatives	Changes in fair value of cash flow hedges	Total										(Assets)/liabilities		Fair value portion of derivatives	Changes in fair value of cash flow hedges	Total	Imputation credits			Imputation credits available for subsequent reporting periods	The imputation credit amount represents the balance of the imputation credit account as at the end of the reporting period,		adjusted for imputation credits that will arise from the payment	of the provision for income tax. Imputation credits are available for

PARENT	2012 $M		-	-	-	-	-	-	-	-	-	-	-	-	-	-	-
	2013 $M		-	-	-	-
UP	2012 $M		4	11	4	19
GRO	2013 $M		6	14	6	26
		Non-cancellable operating lease rentals are payable as follows:	Less than one year	Between one and five years	More than five years	Total

PARENT	2013 $M 2012 $M			- -	- -	- -	- -	- -	- -		- -	- -	- -	- -	- -	- -	- -
UP	2012 $M			(8)	(31)	(395)	(434)	316	(118)		3	13	(134)	(118)	3	(121)	(118)
GRO	2013 $M			(8)	(31)	(387)	(426)	306	(120)		3	14	(137)	(120)	3	(123)	(120)
		Assets/(liabilities)	Expected future lease payments:	Less than one year	Between one and five years	More than five years	Total expected future lease payments	Less: future finance charges	Present value of expected future lease payments	Present value of expected future lease payments payable:	Less than one year	Between one and five years	More than five years	Total present value of expected future lease payments Classified as:	Current asset - finance lease receivable	Non-current liability - finance lease payable	Total

Note 17_– Equity continued_	Reserves	Cash fow hedge reserve	The cash flow hedge reserve comprises the effective portion the income statement, or when the hedged item is a forecast	The cash flow hedge reserve comprises the effective portion the income statement, or when the hedged item is a forecast	of the cumulative net change in the fair value of cash flow hedging transaction that is no longer expected to occur. Alternatively,	of the cumulative net change in the fair value of cash flow hedging transaction that is no longer expected to occur. Alternatively,	instruments related to hedged transactions that have not yet when the hedged item results in a non-financial asset or liability,	affected earnings. the accumulated gains and losses are included in the initial	affected earnings. the accumulated gains and losses are included in the initial	For cash flow hedges, the effective portion of gains or losses from remeasuring the fair value of the hedging instrument is recognised measurement of the cost of the asset or liability. The remeasurement gain or loss on the ineffective portion of a	For cash flow hedges, the effective portion of gains or losses from remeasuring the fair value of the hedging instrument is recognised measurement of the cost of the asset or liability. The remeasurement gain or loss on the ineffective portion of a	in other comprehensive income and accumulated in the cash flow cash flow hedge is recognised immediately in the income statement.	in other comprehensive income and accumulated in the cash flow cash flow hedge is recognised immediately in the income statement.	hedge reserve. Accumulated gains or losses are subsequently transferred to the income statement when the hedged item affects A reconciliation of movements in the cash flow hedge reserve follows:		GROUP AND PARENT		2013 $M 2012 $M Opening balance 10 -		(Gain)/loss recognised in other comprehensive income (9) 10		Net amounts reclassified from cash flow hedge reserve to income statement - -		Closing balance 1 10
Note 17 – Equity	Share capital	Movements in Chorus Limited’s issued ordinary shares were as follows:			GROUP AND PARENT		2013 2012	NUMBER OF SHARES (MILLIONS) M M		Balance at beginning of the period 385 385 Dividend Reinvestment Plan 4 -		Balance at the end of the period 389 385		Chorus Limited has 389,299,049 fully paid ordinary shares 30 June 2013, 4,216,926 shares with a total value of $12 million were	(30 June 2012: 385,082,123 fully paid ordinary shares). The issued issued in lieu of dividends.	shares have no par value. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of Chorus Limited. Under Chorus Limited’s constitution, Crown approval is required if a shareholder wishes to have a holding of 10% or more of Chorus Limited ordinary shares, or if a shareholder who is not a New Zealand national wishes Chorus Limited issues securities to CFH based on the number of premises passed. CFH securities are a class of security that carry no right to vote at meetings of holders of Chorus Limited ordinary shares but carry preference on liquidation. Refer to note 4 for additional information on CFH securities.				to have a holding of 49.9% or more of ordinary shares. Should Chorus Limited return capital to shareholders, any return of		In the year ended 30 June 2013 Chorus Limited implemented a Dividend Reinvestment Plan. Under the Plan, eligible shareholders capital that arose on demerger is expected to be taxable as Chorus Limited had zero available subscribed capital on demerger.				(those who have an address in New Zealand or Australia) can choose The following dividends were declared and paid by Chorus Limited	to have Chorus Limited reinvest all or part of their future dividends for the year ended 30 June 2013 :	in additional Chorus Limited shares. In respect of the year ended	GROUP AND PARENT	2013 $M 2013 CENTS PER SHARE	2012 dividend paid 56 14.6	2013 interim dividend paid 39 10.0	Dividends paid during the year 95		Final dividend declared subsequent to balance date not provided (refer to note 23) 60 15.5	No dividend was paid during the seven months ended 30 June 2012.

outstanding during the period of 386 million (30 June 2012:	385 million), calculated as follows:			GROUP	2013 2012	2013 2012		171 102	386 385	0.44 0.26		171 102		386 385	25 2	411 387	0.42 0.26			settle all CFH equity securities on issue at 30 June 2013 has been	used for the purposes of the diluted earnings per share calculation.	There was no dilution effect at 30 June 2012.
The calculation of basic earnings per share at 30 June 2013 is	based on the net earnings for the year of $171 million (30 June 2012:	$102 million), and a weighted average number of ordinary shares					Basic earnings per share	Net earnings attributable to ordinary shareholders ($ millions)	Denominator - weighted average number of ordinary shares (millions)	Basic earnings per share (dollars)	Diluted earnings per share	Net earnings attributable to ordinary shareholders ($ millions)		Weighted average number of ordinary shares (millions)	Ordinary shares required to settle CFH equity securities (millions)	Denominator - diluted weighted average number of shares (millions)	Diluted earnings per share (dollars)			CFH equity securities can be settled by issuing Chorus shares valued	at a 5% discount to the 20-day volume weighted average price for	Chorus shares traded in ordinary trading on the NZX Main Board.	The number of ordinary shares that would have been required to
				GREATER THAN	5 YEARS	$M	1	(2)	-	-	(1)				GREATER THAN 5 YEARS	$M	(16)	20	-		-	4
					4-5 YEARS	$M	-	-	-	-	-				4-5 YEARS	$M	-	4	-		-	4
			GROUP AND PARENT		2-3 YEARS 3-4 YEARS	$M $M	- -	- 1	- -	- -	- 1		GROUP AND PARENT		2-3 YEARS 3-4 YEARS	$M $M	- -	2 -	- -		- -	2 -
The periods in which the cash flows associated with cash	flow hedges are expected to impact earnings are as follows:			WITHIN	1 YEAR 1-2 YEARS	AS AT 30 JUNE 2013 $M $M	Cross currency interest rate swaps - -	Interest rate swaps - 1	Forward exchange contracts - -	Electricity contracts - -	- 1				WITHIN 1 YEAR 1-2 YEARS	AS AT 30 JUNE 2012 $M $M	Cross currency interest rate swaps - -	Interest rate swaps - -	Forward exchange contracts - -		Electricity contracts - -	- -		Fair value hedge reserve	For fair value hedges, gains or losses from remeasuring the fair	value of the hedging instrument are recognised in the income	statement together with any changes in the fair value of the hedged	asset or liability.

Transactions with related parties Certain Chorus directors have relevant interests in a number of companies with which Chorus has transactions in the normal course of business. A number of Chorus’ directors are also non-executive directors of other companies. Any transactions undertaken with these entities have been entered into independently on an arm’s length commercial basis. Key management personnel compensation GROUP PARENT Derivative fnancial instruments Chorus uses derivative financial instruments to reduce its exposure to fluctuations in foreign currency exchange rates, interest rates and the spot price of electricity. The use of hedging instruments is governed by the treasury policy approved by the Board of Directors. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to fair value. or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable. The method of recognising the resulting remeasurement gain or loss depends on whether the derivative is designated as a hedging instrument. If the derivative is not designated as a hedging instrument, the remeasurement gain or loss is recognised immediately	2013 $’000s 2012 $’000s 2013 $’000s 2012 $’000s Short term employee benefits 5,494 3,108 - - Post employment benefits - - - - Termination benefits 242 - - - Other long term benefits 650 542 - - Share based payments - - - - 6,386 3,650 - - This table above includes remuneration of $863,500 (30 June 2012: $467,000) paid to directors for the period. Parent/subsidiary relationship Chorus Limited is the listed holding company with the debt obligation for the EMTN and syndicated bank facility and is the issuer of the CFH securities. Chorus New Zealand Limited is an operational subsidiary providing fixed access and aggregation services in New Zealand. Chorus Limited provides funding to Chorus New Zealand Limited for the operation and construction of the network. Chorus New Zealand Limited has provided a guarantee to the lenders in respect of the Chorus Limited syndicated bank facility and EMTN debt. PARENT 2013 $M 2012 $M Intercompany dividend 86 - Intercompany interest income 104 60 Intercompany short term receivable 211 22 Intercompany term advance 1,700 1,700 The fair values are estimated on the basis of the quoted market prices for similar instruments in an active market or quoted prices for identical in the income statement. GROUP AND PARENT 2013 $M 2012 $M Non-current derivative assets Interest rate swaps 7 - Forward exchange rate contracts - - Cross currency interest rate swaps - 2 Currency options - - Electricity contracts - - 7 2 Non-current derivative liabilities Interest rate swaps 2 32 Forward exchange rate contracts - - Cross currency interest rate swaps 103 78 Currency options - - Electricity contracts 1 - 106 110 The notional values of contract amounts outstanding are as follows: GROUP AND PARENT CURRENCY MATURITY 2013 $M 2012 $M Interest rate swaps NZD 2014-2020 1,242 1,242 Forward exchange rate contracts NZD:AUD 2013 3 - NZD:EUR 2012-2016 11 5 NZD:USD 2012 - 4 Cross currency interest rate swaps NZD:GBP 2020 677 677 Currency options NZD:AUD 2012 - 4 NZD:EUR 2012 - 6 NZD:USD 2012 - 4 Electricity contracts NZD 2013-2015 7 - 1,940 1,942 Credit risk associated with derivative financial instruments is managed by ensuring that transactions are executed with counterparties with high quality credit ratings along with credit exposure limits for different credit classes. The counterparty credit risk is monitored and reviewed by the Board on a regular basis.	2013 $’000s 2012 $’000s 2013 $’000s 2012 $’000s Short term employee benefits 5,494 3,108 - - Post employment benefits - - - - Termination benefits 242 - - - Other long term benefits 650 542 - - Share based payments - - - - 6,386 3,650 - - This table above includes remuneration of $863,500 (30 June 2012: $467,000) paid to directors for the period. Parent/subsidiary relationship Chorus Limited is the listed holding company with the debt obligation for the EMTN and syndicated bank facility and is the issuer of the CFH securities. Chorus New Zealand Limited is an operational subsidiary providing fixed access and aggregation services in New Zealand. Chorus Limited provides funding to Chorus New Zealand Limited for the operation and construction of the network. Chorus New Zealand Limited has provided a guarantee to the lenders in respect of the Chorus Limited syndicated bank facility and EMTN debt. PARENT 2013 $M 2012 $M Intercompany dividend 86 - Intercompany interest income 104 60 Intercompany short term receivable 211 22 Intercompany term advance 1,700 1,700 The fair values are estimated on the basis of the quoted market prices for similar instruments in an active market or quoted prices for identical in the income statement. GROUP AND PARENT 2013 $M 2012 $M Non-current derivative assets Interest rate swaps 7 - Forward exchange rate contracts - - Cross currency interest rate swaps - 2 Currency options - - Electricity contracts - - 7 2 Non-current derivative liabilities Interest rate swaps 2 32 Forward exchange rate contracts - - Cross currency interest rate swaps 103 78 Currency options - - Electricity contracts 1 - 106 110 The notional values of contract amounts outstanding are as follows: GROUP AND PARENT CURRENCY MATURITY 2013 $M 2012 $M Interest rate swaps NZD 2014-2020 1,242 1,242 Forward exchange rate contracts NZD:AUD 2013 3 - NZD:EUR 2012-2016 11 5 NZD:USD 2012 - 4 Cross currency interest rate swaps NZD:GBP 2020 677 677 Currency options NZD:AUD 2012 - 4 NZD:EUR 2012 - 6 NZD:USD 2012 - 4 Electricity contracts NZD 2013-2015 7 - 1,940 1,942 Credit risk associated with derivative financial instruments is managed by ensuring that transactions are executed with counterparties with high quality credit ratings along with credit exposure limits for different credit classes. The counterparty credit risk is monitored and reviewed by the Board on a regular basis.	2013 $’000s 2012 $’000s 2013 $’000s 2012 $’000s Short term employee benefits 5,494 3,108 - - Post employment benefits - - - - Termination benefits 242 - - - Other long term benefits 650 542 - - Share based payments - - - - 6,386 3,650 - - This table above includes remuneration of $863,500 (30 June 2012: $467,000) paid to directors for the period. Parent/subsidiary relationship Chorus Limited is the listed holding company with the debt obligation for the EMTN and syndicated bank facility and is the issuer of the CFH securities. Chorus New Zealand Limited is an operational subsidiary providing fixed access and aggregation services in New Zealand. Chorus Limited provides funding to Chorus New Zealand Limited for the operation and construction of the network. Chorus New Zealand Limited has provided a guarantee to the lenders in respect of the Chorus Limited syndicated bank facility and EMTN debt. PARENT 2013 $M 2012 $M Intercompany dividend 86 - Intercompany interest income 104 60 Intercompany short term receivable 211 22 Intercompany term advance 1,700 1,700 The fair values are estimated on the basis of the quoted market prices for similar instruments in an active market or quoted prices for identical in the income statement. GROUP AND PARENT 2013 $M 2012 $M Non-current derivative assets Interest rate swaps 7 - Forward exchange rate contracts - - Cross currency interest rate swaps - 2 Currency options - - Electricity contracts - - 7 2 Non-current derivative liabilities Interest rate swaps 2 32 Forward exchange rate contracts - - Cross currency interest rate swaps 103 78 Currency options - - Electricity contracts 1 - 106 110 The notional values of contract amounts outstanding are as follows: GROUP AND PARENT CURRENCY MATURITY 2013 $M 2012 $M Interest rate swaps NZD 2014-2020 1,242 1,242 Forward exchange rate contracts NZD:AUD 2013 3 - NZD:EUR 2012-2016 11 5 NZD:USD 2012 - 4 Cross currency interest rate swaps NZD:GBP 2020 677 677 Currency options NZD:AUD 2012 - 4 NZD:EUR 2012 - 6 NZD:USD 2012 - 4 Electricity contracts NZD 2013-2015 7 - 1,940 1,942 Credit risk associated with derivative financial instruments is managed by ensuring that transactions are executed with counterparties with high quality credit ratings along with credit exposure limits for different credit classes. The counterparty credit risk is monitored and reviewed by the Board on a regular basis.	2013 $’000s 2012 $’000s 2013 $’000s 2012 $’000s Short term employee benefits 5,494 3,108 - - Post employment benefits - - - - Termination benefits 242 - - - Other long term benefits 650 542 - - Share based payments - - - - 6,386 3,650 - - This table above includes remuneration of $863,500 (30 June 2012: $467,000) paid to directors for the period. Parent/subsidiary relationship Chorus Limited is the listed holding company with the debt obligation for the EMTN and syndicated bank facility and is the issuer of the CFH securities. Chorus New Zealand Limited is an operational subsidiary providing fixed access and aggregation services in New Zealand. Chorus Limited provides funding to Chorus New Zealand Limited for the operation and construction of the network. Chorus New Zealand Limited has provided a guarantee to the lenders in respect of the Chorus Limited syndicated bank facility and EMTN debt. PARENT 2013 $M 2012 $M Intercompany dividend 86 - Intercompany interest income 104 60 Intercompany short term receivable 211 22 Intercompany term advance 1,700 1,700 The fair values are estimated on the basis of the quoted market prices for similar instruments in an active market or quoted prices for identical in the income statement. GROUP AND PARENT 2013 $M 2012 $M Non-current derivative assets Interest rate swaps 7 - Forward exchange rate contracts - - Cross currency interest rate swaps - 2 Currency options - - Electricity contracts - - 7 2 Non-current derivative liabilities Interest rate swaps 2 32 Forward exchange rate contracts - - Cross currency interest rate swaps 103 78 Currency options - - Electricity contracts 1 - 106 110 The notional values of contract amounts outstanding are as follows: GROUP AND PARENT CURRENCY MATURITY 2013 $M 2012 $M Interest rate swaps NZD 2014-2020 1,242 1,242 Forward exchange rate contracts NZD:AUD 2013 3 - NZD:EUR 2012-2016 11 5 NZD:USD 2012 - 4 Cross currency interest rate swaps NZD:GBP 2020 677 677 Currency options NZD:AUD 2012 - 4 NZD:EUR 2012 - 6 NZD:USD 2012 - 4 Electricity contracts NZD 2013-2015 7 - 1,940 1,942 Credit risk associated with derivative financial instruments is managed by ensuring that transactions are executed with counterparties with high quality credit ratings along with credit exposure limits for different credit classes. The counterparty credit risk is monitored and reviewed by the Board on a regular basis.	2013 $’000s 2012 $’000s 2013 $’000s 2012 $’000s Short term employee benefits 5,494 3,108 - - Post employment benefits - - - - Termination benefits 242 - - - Other long term benefits 650 542 - - Share based payments - - - - 6,386 3,650 - - This table above includes remuneration of $863,500 (30 June 2012: $467,000) paid to directors for the period. Parent/subsidiary relationship Chorus Limited is the listed holding company with the debt obligation for the EMTN and syndicated bank facility and is the issuer of the CFH securities. Chorus New Zealand Limited is an operational subsidiary providing fixed access and aggregation services in New Zealand. Chorus Limited provides funding to Chorus New Zealand Limited for the operation and construction of the network. Chorus New Zealand Limited has provided a guarantee to the lenders in respect of the Chorus Limited syndicated bank facility and EMTN debt. PARENT 2013 $M 2012 $M Intercompany dividend 86 - Intercompany interest income 104 60 Intercompany short term receivable 211 22 Intercompany term advance 1,700 1,700 The fair values are estimated on the basis of the quoted market prices for similar instruments in an active market or quoted prices for identical in the income statement. GROUP AND PARENT 2013 $M 2012 $M Non-current derivative assets Interest rate swaps 7 - Forward exchange rate contracts - - Cross currency interest rate swaps - 2 Currency options - - Electricity contracts - - 7 2 Non-current derivative liabilities Interest rate swaps 2 32 Forward exchange rate contracts - - Cross currency interest rate swaps 103 78 Currency options - - Electricity contracts 1 - 106 110 The notional values of contract amounts outstanding are as follows: GROUP AND PARENT CURRENCY MATURITY 2013 $M 2012 $M Interest rate swaps NZD 2014-2020 1,242 1,242 Forward exchange rate contracts NZD:AUD 2013 3 - NZD:EUR 2012-2016 11 5 NZD:USD 2012 - 4 Cross currency interest rate swaps NZD:GBP 2020 677 677 Currency options NZD:AUD 2012 - 4 NZD:EUR 2012 - 6 NZD:USD 2012 - 4 Electricity contracts NZD 2013-2015 7 - 1,940 1,942 Credit risk associated with derivative financial instruments is managed by ensuring that transactions are executed with counterparties with high quality credit ratings along with credit exposure limits for different credit classes. The counterparty credit risk is monitored and reviewed by the Board on a regular basis.	2013 $’000s 2012 $’000s 2013 $’000s 2012 $’000s Short term employee benefits 5,494 3,108 - - Post employment benefits - - - - Termination benefits 242 - - - Other long term benefits 650 542 - - Share based payments - - - - 6,386 3,650 - - This table above includes remuneration of $863,500 (30 June 2012: $467,000) paid to directors for the period. Parent/subsidiary relationship Chorus Limited is the listed holding company with the debt obligation for the EMTN and syndicated bank facility and is the issuer of the CFH securities. Chorus New Zealand Limited is an operational subsidiary providing fixed access and aggregation services in New Zealand. Chorus Limited provides funding to Chorus New Zealand Limited for the operation and construction of the network. Chorus New Zealand Limited has provided a guarantee to the lenders in respect of the Chorus Limited syndicated bank facility and EMTN debt. PARENT 2013 $M 2012 $M Intercompany dividend 86 - Intercompany interest income 104 60 Intercompany short term receivable 211 22 Intercompany term advance 1,700 1,700 The fair values are estimated on the basis of the quoted market prices for similar instruments in an active market or quoted prices for identical in the income statement. GROUP AND PARENT 2013 $M 2012 $M Non-current derivative assets Interest rate swaps 7 - Forward exchange rate contracts - - Cross currency interest rate swaps - 2 Currency options - - Electricity contracts - - 7 2 Non-current derivative liabilities Interest rate swaps 2 32 Forward exchange rate contracts - - Cross currency interest rate swaps 103 78 Currency options - - Electricity contracts 1 - 106 110 The notional values of contract amounts outstanding are as follows: GROUP AND PARENT CURRENCY MATURITY 2013 $M 2012 $M Interest rate swaps NZD 2014-2020 1,242 1,242 Forward exchange rate contracts NZD:AUD 2013 3 - NZD:EUR 2012-2016 11 5 NZD:USD 2012 - 4 Cross currency interest rate swaps NZD:GBP 2020 677 677 Currency options NZD:AUD 2012 - 4 NZD:EUR 2012 - 6 NZD:USD 2012 - 4 Electricity contracts NZD 2013-2015 7 - 1,940 1,942 Credit risk associated with derivative financial instruments is managed by ensuring that transactions are executed with counterparties with high quality credit ratings along with credit exposure limits for different credit classes. The counterparty credit risk is monitored and reviewed by the Board on a regular basis.	2013 $’000s 2012 $’000s 2013 $’000s 2012 $’000s Short term employee benefits 5,494 3,108 - - Post employment benefits - - - - Termination benefits 242 - - - Other long term benefits 650 542 - - Share based payments - - - - 6,386 3,650 - - This table above includes remuneration of $863,500 (30 June 2012: $467,000) paid to directors for the period. Parent/subsidiary relationship Chorus Limited is the listed holding company with the debt obligation for the EMTN and syndicated bank facility and is the issuer of the CFH securities. Chorus New Zealand Limited is an operational subsidiary providing fixed access and aggregation services in New Zealand. Chorus Limited provides funding to Chorus New Zealand Limited for the operation and construction of the network. Chorus New Zealand Limited has provided a guarantee to the lenders in respect of the Chorus Limited syndicated bank facility and EMTN debt. PARENT 2013 $M 2012 $M Intercompany dividend 86 - Intercompany interest income 104 60 Intercompany short term receivable 211 22 Intercompany term advance 1,700 1,700 The fair values are estimated on the basis of the quoted market prices for similar instruments in an active market or quoted prices for identical in the income statement. GROUP AND PARENT 2013 $M 2012 $M Non-current derivative assets Interest rate swaps 7 - Forward exchange rate contracts - - Cross currency interest rate swaps - 2 Currency options - - Electricity contracts - - 7 2 Non-current derivative liabilities Interest rate swaps 2 32 Forward exchange rate contracts - - Cross currency interest rate swaps 103 78 Currency options - - Electricity contracts 1 - 106 110 The notional values of contract amounts outstanding are as follows: GROUP AND PARENT CURRENCY MATURITY 2013 $M 2012 $M Interest rate swaps NZD 2014-2020 1,242 1,242 Forward exchange rate contracts NZD:AUD 2013 3 - NZD:EUR 2012-2016 11 5 NZD:USD 2012 - 4 Cross currency interest rate swaps NZD:GBP 2020 677 677 Currency options NZD:AUD 2012 - 4 NZD:EUR 2012 - 6 NZD:USD 2012 - 4 Electricity contracts NZD 2013-2015 7 - 1,940 1,942 Credit risk associated with derivative financial instruments is managed by ensuring that transactions are executed with counterparties with high quality credit ratings along with credit exposure limits for different credit classes. The counterparty credit risk is monitored and reviewed by the Board on a regular basis.
PARENT	2012 $’000s	- -	- -	- -	- -	- -	- -
	2013 $’000s
UP	2012 $’000s	3,108	-	-	542	-	3,650
GRO	2013 $’000s	5,494	-	242	650	-	6,386
		Short term employee benefits	Post employment benefits	Termination benefits	Other long term benefits	Share based payments

					TOTAL	$M		80		630		11	1,242	30	30	120	2,113					TOTAL	$M		140	540			21	1,242	3	118	2,064
				GREATER THAN	5 YEARS	$M		-		-		-	677	30		137	844				GREATER THAN	5 YEARS	$M		-	-			-	677	3	134	814
					4-5 YEARS	$M		-		-		-	-		-	(4)	(4)					4-5 YEARS	$M		-	-			-	215	-	(4)	211
		GROUP			3-4 YEARS	$M		-		-		-	215		-	(4)	211			GROUP		3-4 YEARS	$M		-	-			-	-	-	(3)	(3)
					2-3 YEARS	$M		-		-		-	-		-	(3)	(3)					2-3 YEARS	$M		-	-			3	350	-	(3)	350
					1-2 YEARS	$M		-		-		3	350		-	(3)	350					1-2 YEARS	$M		-	-			7	-	-	(3)	4
				WITHIN	1 YEAR	$M		80		630		8	-		-	(3)	715				WITHIN	1 YEAR	$M		140	540			11	-	-	(3)	688
Interest rate repricing analysis						AS AT 30 JUNE 2013	Floating rate	Cash and deposits		Debt		Fixed rate Joint arrangements	Debt (after hedging)	CFH securities		Finance lease (net settled)							AS AT 30 JUNE 2012	Floating rate	Cash and deposits	Debt		Fixed rate	Joint arrangements	Debt (after hedging)	CFH securities	Finance lease (net settled)
Price risk	In the normal course of business, Chorus is exposed to a variety		of financial risks which include the volatility in electricity prices.	Chorus has entered into electricity swap contracts to reduce		the exposure to electricity spot price movements. Chorus has	designated the electricity contracts in cash flow hedge relationships.	A 10% increase or decrease in the spot price of electricity, with	all other variables held constant, has minimal impact on profit and		equity reserves of Chorus. Interest rate risk Chorus has interest rate risk arising from the cross currency				interest rate swap converting the foreign debt into a floating rate	New Zealand dollar obligation and the floating rate on the drawn	down portion of the syndicated bank facility. Chorus aims to reduce	the uncertainty of changes in interest rates by entering into interest	rate swaps to fix the effective interest rate to minimise the cost of net	debt and manage the impact of interest rate volatility on earnings.	The interest risk on the cross currency interest rate swaps has been	hedged using interest rate swaps. The interest rate exposure on the syndicated banking facility has been hedged up to $565 million with		the remaining paying floating interest.
Financial risk management	Chorus’ financial instruments consist of cash, short-term deposits,		trade and other receivables (excluding prepayments), investments	and advances, trade payables and certain other payables, syndicated		bank facility, EMTN, derivative financial instruments and CFH	securities. Financial risk management for currency and interest rate	risk is carried out by the treasury function under policies approved by the Board. Chorus’ risk management policy, approved by the		Board, provides the basis for overall risk management.		Chorus does not hold or issue derivative financial instruments for trading purposes. All contracts have been entered into with major creditworthy financial institutions. The risk associated with these			transactions is the cost of replacing these agreements at the current	market rates in the event of default by a counterparty.	Currency risk		Chorus’ exposure to foreign currency fluctuations predominantly	arise from the foreign currency debt and future commitment	to purchase foreign currency denominated assets. The primary	objective in managing foreign currency risk is to protect against the risk that Chorus assets, liabilities and financial performance		will fluctuate due to changes in foreign currency exchange rates.	Chorus enters into foreign exchange contracts, foreign currency	options and cross currency interest rate swaps to manage the	foreign exchange exposure.		Chorus has issued GBP260 million foreign currency debt in the form	of EMTN. Chorus has in place cross currency interest rate swaps	under which Chorus receives GBP260 million principal and GBP fixed	coupon payments for $677 million principal and floating NZD interest payments. The exchange gain or loss resulting from the translation	of EMTN denominated in foreign currency to New Zealand dollars is	recognised in the income statement. The movement is offset by the	translation of the principal value of the related cross currency interest	rate swap.	As at 30 June 2013, Chorus did not have any significant unhedged	exposure to currency risk (30 June 2012: no significant unhedged	exposure to currency risk). A 10% increase or decrease in the	exchange rate, with all other variables held constant, has minimal	impact on profit and equity reserves of Chorus.

		5+ YEARS $M	-	-	387	387	578	578	67	19	(578)	752	-	-	-	-	-	-	-	-	-
		4-5 YEARS $M	-		8		564		-	9	(35)	38	-	-	-
		3-4 YEARS $M	-		8		54		-	10	(35)	37	-	-	-
P		2-3 YEARS $M	-		8		741		-	12	(34)	37	1	(2)	2
GROU		1-2 YEARS $M	3		8		77		-	12	(34)	37	3	(2)	2
	LESS THAN	1 YEAR $M	283		7		77		-	13	(34)	37	3	(10)	10
	CONTRACTUAL	CASHFLOW $M	286		426		2,091		67	75	(750)	938	7	(14)	14
	CARRYING	AMOUNT $M	286		120		1,697		30	2	-	103	1	-	-
		AS AT 30 JUNE 2013 Non derivative financial liabilities Trade and other payables Finance lease (net settled) Debt CFH securities Derivative financial liabilities Interest rate swaps Cross currency interest rate swaps Inflows Outflows Electricity contracts Forward exchange contracts Inflows
		2012 EqUITY $M		21		(23)		tives. g date							ENT	2012 $M	69 61	243 40	7 2	- -	319 103
		2012 PROFIT OR (LOSS) $M		(5)		5		support the value of certain deriva 3 no collateral was posted. posure to credit risk at the reportin							PAR	2013 $M
		2013 EqUITY $M		(5)		13									UP	2012 $M	140	197	2	3	342
		2013 PROFIT OR (LOSS) $M		(3)		3		post collateral to As at 30 June 201 The maximum ex was as follows:							GRO	2013 $M	80	280	7	3	370
				100 basis point increase		100 basis point decrease		Credit risk In the normal course of its business, Chorus incurs counterparty credit risk from financial instruments, including cash, trade and other receivables, finance lease receivables and derivative financial instruments. Chorus has certain derivative transactions that are subject to bilateral credit support agreements that require Chorus or the counterparty to							NOTES		Cash and call deposits 14	Trade and other receivables 10	Derivative financial instruments 20	Finance lease receivable 15	Maximum exposure to credit risk

				OTHER FINANCIAL LIABILITIES AT	AMORTISED COST $M					-		-	-	-	-			121	11	154	-		120	1,697	30 2,133						OTHER FINANCIAL LIABILITIES AT	AMORTISED COST	$M		-	-	-	-	-		147	21	125	-	118	1,609	3	2,023
				DESIGNATED IN A HEDGING	RELATIONSHIP $M					-		-	-	7	7			-	-	-	106		-	-	- 106						DESIGNATED IN A HEDGING	RELATIONSHIP	$M		-	-	-	2	2		-	-	-	110	-	-	-	110
e carryng amounts o nanca assets an ates n eac o te categores are as oows:		GROUP	FAIR VALUE	THROUGH PROFIT HELD TO LOANS AND AVAILABLE	AS AT 30 JUNE 2013 AND LOSS $M MATURITY $M RECEIVABLES $M FOR SALE $M		Assets			Cash and call deposits - - 80 -		Trade receivables - - 229 -	Other receivables - - 51 -	Derivative financial instruments - - - -	- - 360 -		Liabilities	Trade accounts payable - - - -	Joint arrangements - - - -	Accruals - - - -	Derivative financial instruments - - - -		Finance lease (net settled) - - - -	Debt - - - -	CFH securities - - - - - - - -			GROUP		FAIR VALUE	THROUGH PROFIT HELD TO LOANS AND AVAILABLE	AND LOSS MATURITY RECEIVABLES FOR SALE	AS AT 30 JUNE 2012 $M $M $M $M	Assets	Cash and call deposits - - 140 -	Trade receivables - - 135 -	Other receivables - - 62 -	Derivative financial instruments - - - -	- - 337 -	Liabilities	Trade accounts payable - - - -	Joint arrangements - - - -	Accruals - - - -	Derivative financial instruments - - - -	Finance lease (net settled) - - - -	Debt - - - -	CFH securities - - - -	- - - -
Hedges are classified into two primary types: cash flow hedges and	fair value hedges. Refer to note 17 for additional information on cash	flow and fair value hedge reserves.		Fair value	Under NZ IFRS, financial instruments are either carried at amortised	cost, less any provision for impairment losses, or fair value. The only		significant variances between instruments held at amortised cost and		their fair value relates to the EMTN.		For those instruments, recognised at fair value in the statement of financial position, fair values are determined as follows:			Level 1:Quoted market prices – financial instruments with quoted	prices for identical instruments in active markets.		Level 2:Valuation techniques using observable inputs – financial	instruments with quoted prices for similar instruments in active	markets or quoted prices for identical or similar instruments in	inactive markets and financial instruments valued using models	where all significant inputs are observable.		Level 3:Valuation techniques with significant non-observable inputs – financial instruments valued using models where one or more significant inputs are not observable.		The relevant financial assets and financial liabilities and their	respective fair values are outlined in note 20 and are all Level 2		(30 June 2012: Level 2).		Cross currency interest rate swaps and interest rate swaps	Fair value is estimated by using a valuation model involving	discounted future cash flows of the derivative using the applicable	forward price curve (for the relevant interest rate and foreign	exchange rate) and discount rate.	Electricity swaps	Fair value is estimated on the ASX forward price curve that relates	to the derivative.
The liquidity risk for the Parent is the same as for all disclosures	for the Group except trade and other payables and finance leases.	The carrying amount of trade and other payables in the Parent is	$33 million (30 June 2012: $31 million), which is equal to the contractual cash flow and is all payable in less than one year. The Parent does not		have finance leases for the current year and the prior period.		The gross (inflows)/outflows of derivative financial liabilities disclosed		in the previous table represent the contractual undiscounted		cash flows relating to derivative financial liabilities held for risk management purposes and which are usually not closed out prior to contractual maturity. The disclosure shows net cash flow amounts			for derivatives that are net cash settled and gross cash inflow and	outflow amounts for derivatives that have simultaneous gross cash		settlement (for example forward exchange contracts).	Chorus manages the liquidity risk by ensuring sufficient access	to committed facilities, continuous cash flow monitoring and	maintaining prudent levels of short term debt maturities. At balance	date, Chorus has available approximately $155 million under the	syndicated bank facility for its immediate use (30 June 2012: $245 million). In addition, a $10 million overdraft facility was established in the current year to manage short term cash funding requirements. Capital risk management				Chorus manages its capital considering shareholders’ interests, the	value of Chorus assets and Chorus’ credit ratings. The capital Chorus		manages consists of cash and debt balances.		The Board is committed to maintaining a ‘BBB’ long term credit rating from Standard & Poor’s and a ‘Baa2’ long term credit rating from		Moody’s Investor Services. Chorus’ capital management policies are	designed to ensure that this objective is met. It is Chorus’ intention	that in normal circumstances the ratio of net debt to EBITDA will not	materially exceed 3.5 times.	Hedge accounting	Chorus designates and documents the relationship between hedging	instruments and hedged items, as well as the risk management	objective and strategy for undertaking various hedge transactions.	At hedge inception (and on an ongoing basis), hedges are assessed	to establish if they are effective in offsetting changes in fair values or	cash flows of hedged items. Chorus discontinues hedge accounting	if (a) the hedging instrument expires or is sold, terminated, or exercised; (b) the hedge no longer meets the criteria for hedge	accounting; or (c) the hedge designation is revoked.

.					Note 23 – Post balance date events	Dividends securities $4 million, CFH equity securities $2 million and Crown	Dividends securities $4 million, CFH equity securities $2 million and Crown	On 25 August 2013, Chorus declared a dividend in respect funding $19 million. $15 million of this funding has been accrued	On 25 August 2013, Chorus declared a dividend in respect funding $19 million. $15 million of this funding has been accrued	of the year ended 30 June 2013. The total amount of the in the financial statements at 30 June 2013 representing the portion	dividend is $60 million, which represents a fully imputed dividend of the call notice where user acceptance testing was complete.	dividend is $60 million, which represents a fully imputed dividend of the call notice where user acceptance testing was complete.	of 15.5 cents per share. New debt arrangement	of 15.5 cents per share. New debt arrangement	CFH securities and Crown funding On 2 August 2013 Chorus entered into a new $250 million bank	Chorus issued a call notice on 5 July 2013 to CFH with an aggregate facility with a 2019 maturity date. The proceeds were used to reduce	issue price of $25 million which is allocated as follows: CFH debt drawings under existing syndicated bank facilities which mature in November 2015 and November 2017 respectively.	issue price of $25 million which is allocated as follows: CFH debt drawings under existing syndicated bank facilities which mature in November 2015 and November 2017 respectively.			Note 24 – New standards, amendments and interpretations to existing standards	Certain new standards, amendments and interpretations have been and equity accounted) or a joint operation (representing rights	published that have not been early adopted, and which are relevant to assets and obligations for liabilities, accounted for under	to Chorus are listed below. The financial statements impact of proportional consolidation).	to Chorus are listed below. The financial statements impact of proportional consolidation).	adoption of these standards has not yet been analysed but is not expected to be material. NZ IFRS 12 Disclosure of interest in other entities	adoption of these standards has not yet been analysed but is not expected to be material. NZ IFRS 12 Disclosure of interest in other entities	Effective for periods beginning on or after 1 January 2013.	NZ IFRS 9 (2010) Financial instruments	Effective for periods beginning on or after 1 January 2015. The standard applies to entities that have an interest in subsidiaries, joint arrangements, associates or unconsolidated structured entities.	Effective for periods beginning on or after 1 January 2015. The standard applies to entities that have an interest in subsidiaries, joint arrangements, associates or unconsolidated structured entities.		measurement and derecognition of financial assets and liabilities. that an entity must provide to meet those objectives.		NZ IFRS 10 Consolidated fnancial statements NZ IFRS 13 Fair value measurement	Effective for periods beginning on or after 1 January 2013. Effective for periods beginning on or after 1 January 2013.		of control as the determining factor in whether an entity should where that is required by other standards and is applicable to both	be included within the consolidated financial statements of the financial and non-financial items. The company is currently reviewing	parent company and provides additional guidance to assist in the its methodologies in determining fair values and its impact on the	determination of control where this is difficult to assess. financial statements.
		OTHER FINANCIAL	LIABILITIES AT	AMORTISED COST	$M			-	-		-		-	-	-		33	-	1,697	30	1,760			OTHER FINANCIAL	LIABILITIES AT	AMORTISED COST	$M		-	-		-	-	-	-		31	-	1,609	3	1,643
		DESIGNATED	IN A HEDGING	RELATIONSHIP	$M			-	-		-		-	7	7		-	106	-	-	106			DESIGNATED	IN A HEDGING	RELATIONSHIP	$M		-	-		-	-	2	2		-	110	-	-	110
			AVAILABLE	FOR SALE	$M			-	-		-		-	-	-		-	-	-	-	-				AVAILABLE	FOR SALE	$M		-	-		-	-	-	-		-	-	-	-		-
PARENT			LOANS AND	RECEIVABLES	$M		69		32	211		1,700		-	2,012		-	-	-	-	-	PARENT			LOANS AND	RECEIVABLES	$M		61	18	22		1,700	-	1,801		-	-	-	-		-
			HELD TO	MATURITY	$M			-	-		-		-	-	-		-	-	-	-	-				HELD TO	MATURITY	$M		-	-		-	-	-	-		-	-	-	-		-
	FAIR VALUE	THROUGH	PROFIT	AND LOSS	$M			-	-		-		-	-	-		-	-	-	-	-		FAIR VALUE	THROUGH	PROFIT	AND LOSS	$M		-	-		-	-	-	-		-	-	-	-		-
					AS AT 30 JUNE 2013	Assets	Cash and call deposits		Other receivables	Intercompany receivables		Investments and advances		Derivative financial instruments		Liabilities	Accruals	Derivative financial instruments	Debt	CFH securities							AS AT 30 JUNE 2012	Assets	Cash and call deposits	Other receivables	Intercompany receivables		Investments and advances	Derivative financial instruments		Liabilities	Accruals	Derivative financial instruments	Debt	CFH securities

Governance & Disclosures

Governance at Chorus 42 Remuneration at Chorus 44 The Chorus Board 42 Disclosures 45 Diversity at Chorus 43 Directory 48

GOVERNANCE AT CHORUS

Chorus’ Board and management are committed to ensuring that our people act ethically, with integrity and in accordance with our policies and values.

Framework

Chorus 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:

NZX Listing Rules and Corporate Governance Best Practice Code;
New Zealand Securities Commission’s (now Financial Markets Authority (FMA)) ‘Corporate Governance in New Zealand Principles and Guidelines’; and
ASX Listing Rules and the ASX Corporate Governance Council’s Principles 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:

the corporate governance principles adopted and followed by it did not materially differ from NZX’s Corporate Governance Best Practice Code; and
it followed each of the recommendations set by the ASX Corporate Governance Council.

Managing risk

Chorus has a Managing Risk Policy that mandates one framework for the management of risk in Chorus to:

ensure the Board sets the risk appetite and reviews principal risks annually;
integrate risk management in line with the Board’s risk appetite into structures, policies, processes and procedures; and
deliver regular principal risk reviews and monitoring.

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:

the financial records of Chorus have been properly maintained;
the financial statements of Chorus and accompanying notes set out in this annual report comply with generally accepted accounting practice in New Zealand and International Financial Reporting Standards; and
the financial statements of Chorus and accompanying notes set out in this annual report 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.

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

Chorus has not received any reports of serious instances of unethical behaviour during the financial period.

THE CHORUS BOARD

Role of the Board and delegation of authority

The 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 membership

The 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.

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 Committees

Each 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’ remuneration frameworks; and
reviewing candidates for, and the performance and remuneration of, the CEO.

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

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

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.

Director restrictions

The 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 attendance

The table below sets out attendance at the Board and Board Committee meetings in the year ended 30 June 2013.

		SPECIAL
	BOARD	BOARD
	MEETINGS	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 shares

All 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.

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 education

The 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 advice

A 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 performance

The 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 disclosures

Chorus 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.

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.

DIVERSITY AT CHORUS

Diversity and inclusiveness at Chorus

Chorus 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.

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Working preferences
Chorus uses a tool to assess the working
preferences of its people. This promotes 11%
diversity of thought, working style and 11% 16%
contribution across teams, and understanding
of how to leverage differences. 3% 22%
The graphic here shows Chorus has
the full spectrum of working preferences 3% 25%
across the distribution. This fully validated 9%
self-assessment tool is a Team Management
Index [] of the 507 contributors who had
completed the workshops at the time
of preparing this data.
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X R
O E
E S
C RS
O
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E A
SI N
V I
DA RES
S
----- End of picture text -----*

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

Diversity metrics as at 30 June 2013

The Board has set the following measurable objectives for achieving greater diversity at Chorus

MEASURE	DESCRIPTION	ACTUAL AS	ACTUAL AS	AT 30 JUNE 2013	AT 30 JUNE 2013			ACTUAL AS	ACTUAL AS	AT 30 JUNE 2012	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	Response to the diversity question	84%						83%						83% Aon Hewitt Best Employer
satisfaction	“The work environment is very open
	and accepting of individual differences”
Ethnicity by role	Organisational groupings by ethnicity	Not currently available						Not available						People leader population distribution
														= total company population
														distribution
Flexible working	Percentage of the population utilising	4.3% working part-time			hours			4.5% working part-time			hours			>4% working part-time hours
arrangements	flexible working arrangements
Gender by role	Organisational groupings by gender	38%		62%	all			39%		61%	all			People leader population distribution
		33%		67%	people leaders			34%		66%	people leaders			= total company population
		40% 43%		60% 57%	executive Board	team		40% 43%		60% 57%	executive Board	team		distribution
		50%		50%	non-executive Board			50%		50%	non-executive Board
Rookie ratio	The previous year’s intake by age, ethnicity and gender	Average age 37.2 years.			Gender 41%		59%	Average age 37.8 years.			Gender 42%		58%	No measure – for information
		Ethnicity not available						Ethnicity not available
Internal hire rate	The previous year’s appointments	39% of	all appointments have been internal.					59% of	all appointments have been internal.					66% of roles in layers 1-3
	identifying internal vs external hire rate	61% of	roles in layers 1-3 were recruited internally.					86% of	roles in layers 1-3 were recruited internally.

Based on the annual review of the effectiveness of Chorus’ Diversity and Inclusiveness Policy Chorus’ Diversity and Inclusiveness Policy can be found at www.chorus.co.nz/governance. 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.

REMUNERATION AT CHORUS

CEO remuneration

Remuneration package for the financial period

Directors’ 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:

for the year ended 30 June 2013 the Board used; and
from 1 July 2013 the Board has set,

the Board fee structure below:

	ANNUAL FEE	ANNUAL FEE
	STRUCTURE	STRUCTURE
	YEAR TO	FROM
	30 JUNE 2013	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.

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)	Fixed remuneration (1 July 2012 - 30 June 2013)	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 Ratclife.
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	VESTING
YEAR	YEAR	DETAIL	POTENTIAL VALUE
2011	2012	Following a cash LTI payment of $200,000 (gross)	n/a (payment made/
		in December 2012, Mark Ratcliffe purchased shares	shares purchased)
		in Chorus, which he agreed to retain for the term of
		his employment.
2011	2014	A cash LTI grant was made by Telecom in September	A maximum of 82,281
		2011. Chorus carried across a liability for the value	EEUs converted back
		of $250,000 (gross). The cash value was converted	into a cash value at
		into Equity Equivalent Units (EEUs) based on dividing	vesting based on share
		the target value by the volume weighted average	price performance at
		price (VWAP) of Chorus Shares for the first 20 days	that time.
		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.
2012	2015	A cash LTI grant was made by Chorus in September	A maximum of 104,853
		2012 for the value of $349,779 (gross). The cash value	EEUs converted back
		was converted into EEUs based on dividing	into a cash value at
		the target value by the VWAP of Chorus Shares for	vesting based on share
		a defined 20 day trading period. A number of post-	price performance at
		allocation performance hurdles have been introduced	that time.
		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.

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 model

The 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 performance

Chorus’ 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.

Employee remuneration range

The 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

DISCLOSURES

Directors

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.

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:

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,

	AS 30 JUNE 2013	TRANSACTIONS DURING THE REPORTING PERIOD
DIRECTOR	SHARES INTEREST	NUMBER 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 Trustee of family trusts Legal and beneficial interest Legal and beneficial interest	2,900 $10,004.84 6 September 2012
		5,240 $18,168.30 6 September 2012
		98* $269.50 12 April 2013
		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’ place of incorporation is New Zealand.
Chorus is not subject to Chapters 6, 6A, 6B and 6C of the Australian Corporations Act 2001 dealing with the acquisition of shares (including substantial shareholdings and takeovers).
Chorus’ Constitution contains limitations on the acquisition of securities, as disclosed below.
Chorus used the cash and assets in a form readily convertible to cash that it had 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.

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:

• from having a relevant interest in 10% or more of Chorus Shares, unless the prior written consent of the New Zealand Government is obtained; or

other than a New Zealand national, from having a relevant interest in more than 49.9% 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

	NUMBER OF	TOTAL NUMBER
	SECURITIES ISSUED	OF SECURITIES ON
	IN YEAR ENDED	ISSUE AS AT		PERCENTAGE
SECURITY	30 JUNE 2013	19 AUGUST 2013	HOLDER	HELD
CFH Equity Securities	52,708,669	71,729,203	Crown Fibre Holdings Ltd	100%
CFH Debt Securities	52,708,669	71,729,203	Crown Fibre Holdings Ltd	100%
CFH Warrants	2,838,382*	3,532,423*	Crown Fibre Holdings Ltd	100%

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

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		NUMBER OF	% OF CHORUS
SHAREHOLDING	NUMBER OF HOLDERS	SHARES HELD	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:

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:

	NUMBER OF	DATE
SUBSTANTIAL SECURITY HOLDER	VOTING SECURITIES	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

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.

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

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Registered Offices

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

ARBN 152 485 848

Registrars

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.

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AI assistant

CHORUS LIMITED — Annual Report 2013

64680_rns_2013-08-28_4372a82f-0dda-41e2-bf4b-fb1a7dd6c867.pdf

2013 ANNUAL REPORT

Vanessa Oakley

2013 Chorus Annual Report

A good operating result

A simple business

Ultra-Fast Broadband

Rural Broadband Initiative

Regulatory environment

People

Corporate Sustainability

Environmental highlights

Social highlights

Governance & Disclosures

Contents

GOVERNANCE AT CHORUS

Framework

Compliance with corporate governance codes, principles and recommendations

Managing risk

Code of ethics

THE CHORUS BOARD

Role of the Board and delegation of authority

Board membership

Board Committees

Audit and Risk Management Committee

Human Resources and Compensation Committee

Nominations and Corporate Governance Committee

Director restrictions

Board and Board Committee meeting attendance

Trading in Chorus shares

Director induction and education

Independent advice

Review and evaluation of Board performance

Market disclosures

DIVERSITY AT CHORUS

Diversity and inclusiveness at Chorus

Diversity metrics as at 30 June 2013

REMUNERATION AT CHORUS

CEO remuneration

Remuneration package for the financial period

Directors’ fees

Chorus remuneration model

Fixed remuneration

STI plan

LTI plan

Managing performance

Employee remuneration range

DISCLOSURES

Directors

Directors during the year ended 30 June 2013

Indemnities and insurance

Director interests in Chorus Shares

Interests Register

Shares and shareholders

Stock exchange listings and American Depositary Receipts

NZX waivers

ASX disclosures

Registration as a foreign company

Non-standard designation

Chorus’ constitutional ownership restrictions

Shareholders holding less than a marketable parcel

Net tangible assets per security

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

Substantial security holders as at 19 August 2013

Company Secretary

Vanessa Oakley

Donations

Subsidiaries

Chorus New Zealand Ltd

Director Remuneration:

Directors’ interests:

Indemnities and Insurance:

Other subsidiaries

Glossary

DIRECTORY

Registered Offices

Registrars

New Zealand

CHORUS LIMITED Annual Report 2013