CHORUS LIMITED — Interim / Quarterly Report 2016

Feb 18, 2016

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Chorus Limited Level 10, 1 Willis Street P O Box 632 Wellington 6140 New Zealand

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

19 February 2016

Half Year Report – Supplementary Documents

Further to the filing of Chorus’ Appendices 4D and 3A.1, the following supplementary documents are attached in relation to Chorus’ FY16 half year results and report:

1. Media Release

2. Investor Presentation

3. Letter to shareholders

4. Dividend Reinvestment Plan Offer Document

5. NZX Appendix 1

6. NZX Appendix 7

This information should also be read in conjunction with Chorus' most recent annual financial report.

ENDS

For further information:

Nathan Beaumont Media and PR Manager Phone: +64 4 896 4352 Mobile: +64 (21) 243 8412 Email: Nathan.Beaumont@chorus.co.nz

Brett Jackson Investor Relations Manager Phone: +64 4 896 4039 Mobile: +64 (27) 488 7808 Email: brett.jackson@chorus.co.nz

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Chorus Limited Level 10, 1 Willis Street P O Box 632 Wellington 6140 New Zealand

MEDIA RELEASE

19 February 2016

Chorus interim FY16 result: dividend to resume

• Net profit after tax $33m (HY15: $64m)

• EBITDA $275m (HY15: $321m)

• Total fixed lines decreased by 33,000; broadband connections increased by 16,000

• Interim dividend of 8cps

• FY16 gross capex guidance unchanged

• FY16 EBITDA tracking to top half of guidance range

Chorus today reported net profit after tax (NPAT) for the six months ended 31 December 2015 of $33 million compared to $64 million for the same period in the prior year. Earnings before interest, tax, depreciation and amortisation (EBITDA) were $275 million.

Operating revenues were $479 million and operating expenses were $204 million.

Chorus chief executive Mark Ratcliffe said the financial result was, as expected, down sharply on the prior period because of lower regulated copper prices set by international benchmarking and charged from 1 December 2014.

“The final monthly aggregate copper pricing determined by the Commerce Commission, while an improvement on the initial benchmark pricing, only became effective on 16 December 2015. When combined with a reduction of about 25% on transaction charges we incur for service company activity, our EBITDA is currently around $50 million per annum below the equivalent level at demerger.

“We look forward to working with industry and government to develop a regulatory framework that builds on recent experiences to better align and deliver on the interests of consumers and investors,” he said.

Dividend

The conclusion of the copper pricing review process means Chorus can begin paying dividends to shareholders for the first time since late 2013. For FY16, Chorus expects to pay a dividend of 20 cents per share, subject to no material adverse changes in circumstance or outlook. An interim dividend of 8 cents per share will be paid on 5 April 2016 to all shareholders registered at 5pm on Tuesday 22 March 2016. A Dividend Reinvestment Plan will apply for the interim dividend at a discount rate of 3 per cent. Applications to participate must be received by 5pm on Wednesday 23 March 2016.

Operating update

Mr Ratcliffe said Chorus’ number one operational priority remains the improvement of the fibre connection process and experience for consumers.

Chorus connected 38,000 consumers to fibre in the six month period to December 2015. With the growing demand Chorus has increased its full year forecast from 80,000 connections to between 85,000 and 95,000 connections.

Chorus currently averages 450 connections on weekdays with an aim to increase that to at least 600 connections by July. Additional field crews are being added and processes streamlined to reduce late rescheduling and improve the field utilisation rate. Chorus has also proposed taking the leading role in managing the interaction with consumers during the fibre connection process, funding this support for retailers through to the end of December 2016.

At 31 December 2015, Chorus was 48 percent of the way through its ultra-fast broadband rollout. Build work was completed for 400,000 premises and there are 539,000 consumers within reach of its fibre network. Fibre uptake across all Chorus areas is 19 percent or 105,000 connections. Seven of its 24 rollout areas are complete, with Greymouth and Masterton finished in the current period.

The Rural Broadband Initiative will be completed by mid-year, with Chorus exceeding its contractual target and enabling about 107,000 consumers to benefit from upgraded fixed line broadband coverage.

Investments in the broadband network, combined with consumer uptake of better services, have seen the average broadband connection speed across the Chorus network increase from 10Mbps at demerger to 23Mbps. Approximately 41 percent of consumer and business fibre connections are on speeds of 100Mbps or greater, compared with about 30 percent at the end of June. Average VDSL peak speeds on the copper network have increased from 35Mbps to 50Mbps following changes to the frequencies used for transmission.

Mr Ratcliffe said the ongoing growth in broadband demand and associated increases in bandwidth consumption continue to provide confidence in the outlook for fixed line networks.

Operating results

Total fixed line connections decreased by 33,000 to 1,761,000 while broadband connections increased by 16,000 to 1,223,000. The decline in fixed lines was attributed to some copper lines being removed by a service provider where they had been previously retained alongside fibre connections, lines in non-Chorus UFB areas beginning to shift to alternative networks, and the seasonal variation that typically occurs over the summer holiday period.

Gross capital expenditure for the six months was $254 million. Total gross capex guidance of $580 to $630 million for FY16 remains unchanged. Chorus is tracking to the top half of its FY16 EBITDA guidance range of $580 to $600 million.

*EBITDA is a non-GAAP profit measure which provides comparable period on period information.

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ENDS

Chorus Chief Executive, Mark Ratcliffe, and Chief Financial Officer, Andrew Carroll, will discuss the final results at a briefing in Wellington from 10.00am (NZ time). The webcast will be available at www.chorus.co.nz/webcast.

For further information:

Nathan Beaumont Media & PR Manager Phone: +64 4 896 4352 Mobile: +64 (21) 243 8412 Email: nathan.beaumont@chorus.co.nz

Brett Jackson Investor Relations Manager Phone: +64 4 896 4039 Mobile: +64 (27) 488 7808 Email: brett.jackson@chorus.co.nz

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FY16 Half Year Result

19 February 2016

Disclaimer

• This presentation may contain forward-looking statements regarding future events and the future financial performance of Chorus, including forward looking statements regarding industry trends, regulation and the regulatory environment, strategies, capital expenditure, the construction of the UFB network, possible business initiatives, 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 presentation. 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 presentation, or any information provided orally or in writing in connection with it. Please read this presentation in the wider context of material published by Chorus and released through the NZX and ASX.

• Except as required by law or the NZX Main Board and ASX listing rules, Chorus is not under any obligation to update this presentation at any time after its release, whether as a result of new information, future events or otherwise.

• The information in this presentation should be read in conjunction with Chorus’ audited consolidated financial statements for the year ended 30 June 2015. This presentation includes a number of non-GAAP financial measures, including "EBITDA”. These measures may differ from similarly titled measures used by other companies because they are not defined by GAAP or IFRS. Although Chorus considers those measures provide useful information they should not be used in substitution for, or isolation of, Chorus' audited financial statements. Refer to the presentation appendices for further detail relating to EBITDA measures.

• This presentation does not constitute investment advice or a securities recommendation and has not taken into account any particular investor’s investment objectives or other circumstances. Investors are encouraged to make an independent assessment of Chorus.

2

Mark Ratcliffe, Chief Executive Officer

3

Agenda

Mark Ratcliffe, CEO

>	Connections and trends	5-6
>	UFB rollout and uptake	7-8
Andrew Carroll, CFO
>	Financial results	10-11
>	Capex	12-13
>	Guidance summary and managing for value	14-15
>	Capital management, FY16 dividend, debt	16-17
Mark Ratcliffe, CEO
>	Improving the fibre connection process	19-20
>	Regulatory overview	21-22
>	Looking ahead	23
Appendices		24-34

4

CHORUS H1 FY16 INVESTOR PRESENTATION

OVERVIEW

Net Profit After Tax : $ 33 million

Revenue : $ 479 million EBITDA : $ 275 million

Broadband connections 16,000

Fixed line connections 33,000

• Dual copper-fibre lines reduced from ~20,000 (30 June) to ~10,000

• Other UFB networks now past ~300,000 consumers and ~60,000 connects (FY15:~250,000 passed and ~35,000 connected)

• Q2 and Q3 typically subject to seasonal variation (e.g. tertiary students)

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5

CHORUS H1 FY16 INVESTOR PRESENTATION

CONNECTIONS TRENDS

• Fixed line trends

• fibre demand accelerating with 42% increase in fibre lines

• 13% growth in naked lines

• Broadband trends

• copper broadband reducing as consumers migrate to fibre

• VDSL connections slowing; naked VDSL steady

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Change in fixed line connections
Baseband Baseband
copper IP UCLL/SLU Naked lines Data Fibre
20
0
-20
-40
-60
Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16 Q2 FY16
Change in broadband connections
Enhanced Naked
Basic UBA UBA EUBA VDSL Naked VDSL Fibre
30
20
10
0
-10
-20
-30
-40
CHORUS H1 FY16 INVESTOR PRESENTATION 6
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FIBRE ROLLOUT: 48% COMPLETE

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• 539,000 consumers within reach of Chorus UFB fibre

• build complete for 400,000 premises

• Masterton and Greymouth completed in H1

• 105,000 connections within UFB deployed footprint (68,000 at 30 June)

• 19% uptake across UFB areas; Blenheim highest at 25%

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7

CHORUS H1 FY16 INVESTOR PRESENTATION

BANDWIDTH DEMAND & FIBRE UPTAKE

Mass market fibre uptake

Average throughput per user

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0.6
0.5
0.4
0.3
(Mbps)
0.2
0.1
0
ATPU (Mbps) Avg. 50% Growth
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• Bandwidth demand continues to exceed forecasts

• with average throughput per user now 500kbps+

• Average connection speed on network now 23Mbps

• vs 10Mbps in 2011

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3% [1%] [1%]
5%
31% 59%
30Mbps 100Mbps 200Mbps
Gigatown Education Business 100+
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• 41% of mass market fibre connections are

• 100Mbps plans or better; up from 30% at 30 June

8

CHORUS H1 FY16 INVESTOR PRESENTATION

Andrew Carroll, Chief Financial Officer

9

CHORUS H1 FY16 INVESTOR PRESENTATION

Income statement

	H1 FY16 $m	H2 FY15 $m
Operatingrevenue	479	479
Operatingexpenses	(204)	(198)
Earnings before interest, tax, depreciation and amortisation(EBITDA)	275	281
Depreciation and amortisation	(161)	(165)
Earnings before interest and income tax	114	116
Net interest expense	(67)	(78)
Net earnings before income tax	47	38
Income tax expense	(14)	(11)
Net earnings for theperiod	33	27

10

CHORUS H1 FY16 INVESTOR PRESENTATION

Revenue

	H1 FY16	H2 FY15
	$m	$m
Basic copper	230*	239
Enhanced copper	115*	112
Fibre	61	53
Value Added	17	17
Network Services
Field Services	43*	44
Infrastructure	10	10
Other	3	4
Total	479	479

• includes two weeks of the final copper pricing determination

Expenses

	H1 FY16 $m	H2 FY15 $m
Labour costs	38	35
Provisioning	31	30
Network maintenance	42	43
Other network costs	17	19
IT costs	33	34
Rents, rates and property maintenance	13	13
Regulatory levies	6	8
Electricity	7	7
Consultants	1	1
Insurance	2	2
Other	14	6
Total	204	198

11

CHORUS H1 FY16 INVESTOR PRESENTATION

Capex summary

Total capex of $254m for period (H2 FY15: $259m)

• Managing for cash initiatives and UFB cost focus helped offset increased connection volumes:

• reduced copper capex reflects restraint on discretionary proactive maintenance and shift in demand to fibre

• building & engineering spend typically higher in H2

• Fibre connections & layer 2 capex includes premium business fibre capex previously included in Other fibre connections & growth . H2 FY15 categories adjusted for comparative purposes.

Fibre capex	H1 FY16	H2 FY15
UFB communal	87	84
Fibre connections & layer 2	90	75*
Fibre products & systems	8	8
Other fibre connections & growth	16	19*
RBI	16	21
Subtotal	217	207
Copper capex Network sustain Copper connections Copper layer 2 Product Subtotal
	11	19
	4	5
	5	7
	3	1
	23	32
Common capex
Information technology	10	11
Building & engineering services	4	8
Other	0	1
Subtotal	14	12 20
TOTAL GROSS CAPEX	$254m	$259m

Fibre connections capex

• Volume of standard fibre connections tracking higher than expected, but H1 connections mix positive overall

Fibre connections & layer 2 capex	H1 connections (vs FY16 estimate)	H1 FY16 $90m	H2 FY15 $75m
Layer 2 (long run programme average of $100 per connection)		$11m	$8m
Premium business fibre connections	1,600 completed (FY16: 3,500)	$12m	$13m
Single dwelling units and apartments connections	38,000 completed (FY16: 80,000)	$38m	$27m
Backbone build: multi-dwelling units and rights of way	3,300 completed (FY16: 8,750)	$29m	$27m

Non-standard fibre connections

• Chorus and CFH have been discussing opportunities to extend the non standard installation fund and we’ve agreed a number of matters that enable us to confirm the fund will continue until end of 2016.

• We are continuing to explore opportunities to extend the fund beyond that date.

13

CHORUS H1 FY16 INVESTOR PRESENTATION

Guidance summary

Existin uidance H1 FY16 view g g Cost Per Premises FY16: $1,700 - $1,770 Tracking to bottom of guidance Passed (CPPP) range with $1,643 for 33,000 premises build complete in H1 Cost Per Premises FY16: $1,050 - $1,250 (excluding layer 2 and including Tracking to bottom of guidance Connected (CPPC) standard installations and some non-standard single range with $1,002 average in H1 dwellings) UFB connections & FY16: $195 – $225m (based on mass market 80,000 fibre No change to capex range. layer 2 capex connections and 8,750 backbone builds (FY16 backbone build Now anticipate 85,000 to 95,000 mix anticipated to be less expensive than FY15 for the same mass market fibre connections mix); ~3,500 premium business fibre connections). FY16 Gross capex $580 – $630m No change FY16 EBITDA $580-$600m including the additional cost of activity Chorus Tracking to top half of guidance is undertaking to improve the end-to-end fibre connection range process for customers

Current EBITDA outlook reflects

 VDSL and baseband IP uptake lower than expected to date, resulting in short term cost benefit

 some customer migration from legacy products, offsetting revenue growth

• increasing fibre provisioning costs as we take on industry support role

14

Return to managing for value vs cash

• FPP outcome has not restored Chorus’ financial position to demerger levels

Regulatory EBITDA impact (annualised)

UCLL UBA benchmarking UCLFS charges benchmarking Final FPP (from (from Dec 2012) (from April 2014) (from Dec 2014) Dec 2015) 0 -20 $50m gap remains -40 $m -60 -80 -100 -120 -140 -160 -180

Dec 2013 dividend withdrawn and managing for cash initiatives begin

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• No FPP appeals; now reviewing managing for cash initiatives

• reassessing proactive maintenance approach given growing fibre uptake

• reviewing IT separation capex

• applying value-based investment criteria for growth capex

• tight focus on cost management will continue

15

CHORUS H1 FY16 INVESTOR PRESENTATION

Capital management and FY16 dividend

• FY16 dividend of 20cps, subject to no material adverse changes in circumstances or outlook.

• FY16 interim dividend of 8 cps , fully imputed

• supplementary dividend of 1.41cps payable to non-resident shareholders

• record date : 22 March 2016

• payment date : 5 April 2016

• Dividend Reinvestment Plan applies with 3% discount to prevailing market price; open to New Zealand and Australian resident shareholders

• During the UFB build programme to 2020, the Board expects to be able to provide shareholders with modest long term dividend growth from a base of 20cps per annum, subject to no material adverse changes in circumstances or outlook.

• The Chorus Board considers that a ‘BBB’ credit rating from S&P or equivalent credit rating is appropriate for a company such as Chorus. It intends to maintain capital management policies and financial policies consistent with these credit ratings.

16

CHORUS H1 FY16 INVESTOR PRESENTATION

Debt

	As at 31 Dec 2015 $m
Borrowings	1,757
+ PV of CFH debt securities (senior)	59
+ Net Finance leases	131
Sub total	1,947
- Cash	(78)
Total net debt	1,869
Net debt/EBITDA	3.3 times

• Financial covenants require senior debt ratio to be no greater than 4.0 times and use underlying 12 month EBITDA

• Standard & Poor’s treatment includes Operating leases and uses 8.5% discount for PV of CFH debt securities

• At 31 December, debt of $1,757m comprised:

• $15m short term money market facility

• $1,065m long term bank facilities

• $677m (NZ$ equivalent at hedged rates) Euro Medium Term Note

Debt maturity profile

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800
April
700 2020
600 July
2016
500 Nov
400 2017 May
2019
300
200
100
0
Current Due 1-2 Due 2-3 Due 3-4 Due 4-5
year years years years years
Bank EMTN
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17

CHORUS H1 FY16 INVESTOR PRESENTATION

Mark Ratcliffe, Chief Executive Officer

18

CHORUS H1 FY16 INVESTOR PRESENTATION

OUR NUMBER ONE PRIORITY

Improving the fibre connection experience

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Progress to date
Average weekday fibre connections
Set up pre-visit contact team
600
Fibre crews increased to 380
500
Reduced RSP forecast variability
400
Reallocated service co. areas
300
Expanded role of MDU specialist 200 Average lead time for first site visit
appointment has reduced from 22 to 12
Improved fibre records accuracy 100
working days.
0
Sept Oct Nov Dec Jan
Daily new connections
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Target: 600 by July

19

CHORUS H1 FY16 INVESTOR PRESENTATION

OUR NUMBER ONE PRIORITY

Improving the fibre connection experience

Next steps

1. Recruit more field crews

2. Reduce field crew downtime: 85% utilisation rate in January

3. focus on reducing on-day reschedules (~30%)

4. Propose managing consumer interaction from RSPs receipt of fibre order to service activation

5. Will require additional staff; levels subject to RSP optin and timeframe for RSP transition to online portal

6. We are underwriting RSP support to end December 2016

7. Developing online order tracker

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20

CHORUS H1 FY16 INVESTOR PRESENTATION

REGULATORY OVERVIEW

Copper price relativity returns

$46.00 $44.00 $42.00 $40.00 $38.00

Copper vs fibre price paths

Commerce Commission recognised it costs more to provide network infrastructure in New Zealand:

 re-balancing of prices between copper line (UCLL) and broadband (UBA) services

• UCLL+UBA aggregate price path now more aligned to entry level 30Mbps fibre price

$36.00 $34.00

Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Copper UCLL + UBA Fibre: 100/20Mbps Fibre: 30/10Mbps

21

CHORUS H1 FY16 INVESTOR PRESENTATION

REGULATORY OVERVIEW

2020

Copper products : price paths for 5 years from Dec 16 2015

Fibre (UFB) products : contracted pricing with Government until end of rollout in Dec 2019

UFB 2: Government proposal to extend fibre from 75% to at least 80% of population by end of 2022

Future framework

Government review of post 2020 regulatory framework underway

• general industry consensus on need to change and improve current framework

• discussion document expressed “preliminary view” that a building block model is most appropriate pricing methodology for regulating UFB services

• our view that model should apply to fibre and copper

• we have proposed special access undertaking as simplest approach, possibly with a transitional period to 2030

• awaiting details on next phase of review

22

CHORUS H1 FY16 INVESTOR PRESENTATION

LOOKING AHEAD

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• Focus returns to running the business for long-term shareholder value

• Fibre demand is driving added cost at a provisioning level and bringing forward decisions on how we manage two networks

• Growing network competition and RSP cost-out focus continue

• Bandwidth demand and network capability provide confidence in continued growth of fixed line broadband

23

CHORUS H1 FY16 INVESTOR PRESENTATION

Appendices

24

Appendix A : Non statutory measure – adjusted EBITDA

• This appendix provides a high level summary of Chorus’ adjusted EBITDA. It has been prepared on the basis of the final pricing principle (FPP) determinations effective 16 December 2015.

• For comparative purposes this flows the pricing through both FY15 and H1 FY16 as though the pricing had changed on 1 July 2014.

				Adjusted H1 FY16 $m	Adjusted H1 FY16 $m	Adjusted H2 FY15 $m	Adjusted H1 FY15 $m	Adjusted H1 FY15 $m
	Adjusted operating revenue			538		540	533
	Operating expenses			(204)		(198)	(206)
	Adjusted EBITDA			334		342	327
		Statutory results $m	Add: UBA and UCLL price change $m		Less: transaction charge price change $m			Adjusted $m
H1 FY16 operating revenue		479	65		(6)			538
H2 FY15 operating revenue		479	67		(6)			540
H1 FY15 operating revenue		527	8		(2)			533

25

CHORUS H1 FY16 INVESTOR PRESENTATION

Appendix B : Illustrative Chorus pre-financing adjusted cash flows

1200 1000 800 600 Rural Broadband rollout ends FY16. UFB communal rollout ends Dec 2019. 400 Fibre connection capex subject to demand. 200 Other fibre, copper 0 FY15 FY15 Estimated Estimated Estimated FY15 Capex Adjusted Operating interest taxation dividend Note : Capex implications of Government’s future revenue expenses (excludes @20c per (includes full ineffectiveness) proposed UFB and RBI rollouts are unknown. (does not include share year of FPP depreciation and pricing) amortisation as non-cash) CHORUS H1 FY16 INVESTOR PRESENTATION 26

Appendix C : Copper product pricing summary

	Benchmark pricing	Pricing effective 16 December 2015
UCLL and UCLFS	$23.52	Year 1 - $29.75 Year 2 - $30.22 Year 3 - $30.70 Year 4 - $31.19 Year 5 - $31.68
Basic UBA uplift	$10.92	Year 1 - $11.44 Year 2 - $11.22 Year 3 - $11.01 Year 4 - $10.83 Year 5 -$10.67
UCLL + UBA = aggregate Basic UBA price	$34.44	Year 1 - $41.19 Year 2 - $41.44 Year 3 - $41.71 Year 4 - $42.02 Year 5 -$42.35
SLU	$14.21	Year 1 - $15.52 Year 2 - $15.70 Year 3 - $15.89 Year 4 - $16.07 Year 5 -$16.26

27

Appendix D : Chorus mass market fibre product pricing

Mass market fibre product pricing

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----- Start of picture text -----

$70.00
Accelerate: 200/200Mbps
$65.00
Accelerate: 200/100Mbps
$60.00
Accelerate: 200/20Mbps
$55.00
Evolve 4: 100/50Mbps
Accelerate: 100/100Mbps
$50.00
Accelerate: 100/50Mbps
$45.00
Accelerate: 100/20Mbps
$40.00
Evolve 1: 30/10Mbps
$35.00
$30.00
Note: Evolve products shown are the core UFB contracted products introduced in 2012.
Accelerate products are commercial products introduced by Chorus in mid 2014.
Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20
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28

Appendix E : Capex, Expenses, Revenue trends FY13-FY15

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30

Appendix F : Ultra-fast broadband (UFB) rollout

• Public private partnership to build fibre to 830,900 premises (approx. 1.1m consumers) by end 2019  Government to contribute up to $929m; $1,118 per premises passed

• Chorus issues Crown debt and equity securities to Government in return. Debt to be redeemed in tranches from 2025 to 2036 at latest. Increasing portion of equity securities attract dividend payments from 2025 onwards.

Cumulative rollout plan FY15-FY20

Annual rollout plan FY15-FY20

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----- Start of picture text -----

160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
FY15 FY16 FY17 FY18 FY19 FY20
Premises passed Consumers passed
----- End of picture text -----

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----- Start of picture text -----

1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
FY15 FY16 FY17 FY18 FY19 FY20
Premises uptake - contract target Premises passed
UFB consumers connected Consumers within reach
----- End of picture text -----

Note: Indicative plan only. Includes 45k greenfields premises

31

UFB rollout progress by area at 31 December 2015

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Regional fibre uptake relative to capable addresses –June to Dec 15 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% UFB Uptake June-15 UFB Uptake Sept-15 UFB uptake Dec 15

32

Appendix G : NZ fixed line market

• Significant changes in FY15: video content, RSP consolidation and new entrants

Pay TV Sky TV Electricity Deploying IP sector set-top boxes Subscription Neon Lightbox Netflix Quickflix video on Launched in NZ in March 2015 demand Retail Vodafone 2[o] Spark M2 Others Trustpower service + + + Callplus My $49 intro + Orcon Republic provider Worldxchange Snap + Woosh Now plan Fixed line HFC cable: Local Fibre Companies Chorus access Wellington + Enable Northpower network Christchurch~60k •• Copper broadband coverage to 97% lines (VDSL 60%)19% fibre uptake at 31 December 2015 Fibre past ~300k consumers and Ultrafast Fibre consumers ~60,000 connections at 31 Dec 2015

33

Appendix H : NZ dwelling and migration trends

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34

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Chorus Limited Level 10, 1 Willis Street P O Box 632 Wellington 6140 New Zealand

19 February 2016

Email: company.secretary@chorus.co.nz

Dear shareholder

Conclusion of the copper pricing process

As you will probably be aware, the regulatory uncertainty of the last few years required us to protect shareholder value by managing our business for cash. This necessitated the suspension of dividends in late 2013.

The Commerce Commission released its final determination on copper pricing on 15 December 2015. On 28 January 2016 we announced that we would not be initiating any legal appeals on the determination. The deadline for any party to lodge an appeal passed on 3 February 2016 with no appeals made.

While we were aware that some investors felt there may have been merit in further testing aspects of the determination in court, we believed the best long-term value for shareholders would be achieved by removing any ongoing legal uncertainty. Had we appealed on the issue of backdating, for example, other parties would likely have responded by challenging the final pricing itself, resulting in more months and perhaps even years of uncertainty.

Half year result and resumption of dividends

We have recently released our half year report for the six months to 31 December 2015. With the removal of the regulatory uncertainty referred to above, we have announced that for FY16 Chorus expects to pay a dividend of 20 cents per share, with an interim dividend of 8 cents per share to be paid on 5 April 2016. A final dividend of 12 cents per share will be declared in August, subject to no material adverse changes in circumstances or outlook.

Other highlights from the result include:

• Ultra-fast Broadband (UFB) build is now complete for 48% of planned premises, including seven towns, and the Rural Broadband Initiative (RBI) rollout is almost complete. These programmes have now brought better broadband within reach of about 646,000 consumers nationwide.

• Demand for fibre continues to increase and more than 112,000 mass market consumers have now been connected to fibre services. Growing numbers are opting for a 100Mbps service or better.

For more detail, you can read the full half year report and watch our result webcast at www.chorus.co.nz/investor-centre.

Dividend Reinvestment Plan reactivated

With the resumption of dividends we have also reactivated our Dividend Reinvestment Plan for New Zealand and Australian resident shareholders. The Plan provides a cost effective and convenient way for eligible shareholders to increase their investment in Chorus by reinvesting all or part of the net proceeds of dividends in further fully paid shares. A discount rate of 3% will apply for the interim dividend. We have elected not to offer participation to shareholders in other jurisdictions because of the additional costs and requirements this would entail.

If you do not wish to participate in the Plan you do not need to do anything and you will continue to receive future dividends as cash.

If you wish to participate in the Plan (and have not previously participated, or had previously withdrawn from it and now wish to participate) by 5pm (NZ time) 23 March 2016 you will need to either:

• log into Computershare at www.investorcentre.com/nz and update your reinvestment plan options in the ‘My Profile’ page; OR

• complete a Participation Notice and return it to Computershare by post; OR

• scan your completed Participation Notice and email it to Computershare at enquiry@computershare.co.nz

The full terms of the Plan are set out in the Offer Document which can be viewed at www.chorus.co.nz/financial-information/dividends. This is substantively the same as the previous August 2013 version, although some administrative amendments have been made to reflect the introduction of the Financial Markets Conduct Act 2013 and amendments to the ASX Listing Rules. There has been no substantive change to how the Plan operates. Copies of Chorus’ most recent annual report, financial statements and auditor’s report are available online at: www.chorus.co.nz/investor-centre.

Sale facility for shareholders with less than 100 shares

A significant number of our shareholders have very small parcels of shares as a result of the demerger process in 2011. We receive regular requests from these shareholders for assistance with the disposal of their shares. We have therefore decided to provide a facility so shareholders who hold less than 100 shares, and whose registered address is in Australia or New Zealand, can sell them in a cost effective manner. This will also help us to reduce our share registry and other associated costs.

Shareholders who meet the eligibility criteria will be sent more information shortly.

Looking ahead

Our number one operational priority is the improvement of the fibre connection process for consumers. There will be no let-up in our focus until we are consistently meeting demand and delivering a high-quality connection experience.

The ongoing growth in broadband demand and associated increases in bandwidth consumption continue to provide us with confidence in the outlook for fixed line networks. We look forward to working with industry and government to develop a regulatory framework that builds on recent experiences to better align and deliver on the interests of consumers and investors.

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We thank you for your support of Chorus.

Kind regards

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Patrick Strange Chairman Chorus Limited

Receive your Chorus communications online

You can help us reduce our environmental footprint and postage costs, and access documents quickly and easily, by choosing to receive communications from Chorus online. Simply log into www.investorcentre.com/nz select ‘My profile’ and click on the ‘update’ button on the communication preferences tile.

Financial Markets Conduct Act 2013 – Required notice

Chorus is already governed by the Financial Markets Conduct Act 2013 ( FMCA ) financial reporting and fair dealing requirements, amongst other things. Under the FMCA we are required to provide the following notice:

Chorus Limited (NZBN: 9429031035040), of Level 10, 1 Willis Street, Wellington, New Zealand, advises that it has elected to fully transition to the FMCA with effect from 31 March 2016. After that date, all of the requirements of FMCA will apply to Chorus. In particular Chorus’ share register will then be governed by Part 4 of the FMCA.

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Chorus Dividend Reinvestment Plan

Choose to have Chorus reinvest all or part of your future dividends in additional Chorus shares. It’s a cost effective and convenient way for you to increase your investment in Chorus.

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Offer Document

FEBRUARY 2016

P. a

Dear shareholder

This booklet provides details of the Chorus Dividend Reinvestment Plan, so that you can decide if you’d like to participate. If you do not wish to participate in the Plan you do not need to do anything, and you will continue to receive all future dividends as cash.

This document is important. If you do not understand it, or are in any doubt as to how to act, you should consult your financial adviser.

How the Dividend Reinvestment Plan works

The Plan enables eligible shareholders to choose to have Chorus reinvest all or part of their future dividend entitlements in additional Chorus shares (rather than receiving cash payments). This provides a cost effective and convenient way for shareholders to increase their investment in Chorus without brokerage charges.

Further details are provided in the terms and conditions attached.

Who can participate in the Plan?

Shareholders are eligible to participate in the Plan if they are resident in New Zealand or Australia. Chorus has elected not to offer participation under the Plan to shareholders who are resident outside of New Zealand or Australia. This is to avoid the risk of breaching overseas laws and because of the costs and requirements involved in ensuring the Plan’s compliance with laws of additional jurisdictions.

Any person residing outside New Zealand or Australia who participates in the Plan through a New Zealand or Australian resident nominee will be deemed to represent and warrant to Chorus that they can lawfully participate through their nominee.

How do you enrol in the Plan?

Please read the enclosed information carefully. You should consult your own financial adviser if you have any questions.

If you do wish to enrol in the Plan you can either:

• a. Go to www.investorcentre.com/nz and log in; or

• b. Complete and return a Participation Notice to Chorus’ share registrar, Computershare.

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Patrick Strange, Chairman

P. 1

Questions and answers

1. How do shareholders participate in the Plan?

Read this Offer Document and then confirm participation by either enrolling online or returning a Participation Notice to Chorus’ share registrar, Computershare.

2. What does it cost to participate?

There are no costs charged for eligible shareholders to participate in the Plan. Shares acquired under the Plan do not incur brokerage or commission costs.

3. How many shares do shareholders need to have to participate?

There is no minimum shareholding requirement.

4. Can I reinvest just some of my dividends?

Yes, shareholders can choose between full or partial participation in the Plan.

5. What price will shareholders pay for the shares?

The price of shares is based upon the volume weighted average sale price of Chorus shares sold on the NZX Main Board over a period of five Business Days starting on the “Ex Date”. The share price may be subject to a discount set by the Board from time to time.

6. Can shareholders still sell shares when they want?

Yes, shares can be sold at any time when shareholders participate in the Plan.

P. 2

7. Can shareholders opt out of the Plan in the future?

Yes. If shareholders choose to join the Plan, they can opt out of it in the future by informing Chorus’ share registrar, Computershare.

8. Can the Plan be changed or cancelled?

Yes, Chorus’ Board can change, suspend or cancel the Plan at its sole discretion. If that occurs, notice will be given through the NZX and ASX.

9. Are there any tax implications?

For New Zealand and Australian income tax purposes, dividends reinvested in shares under a dividend reinvestment plan are generally treated in the same manner as a cash dividend. Chorus will provide details of the dividend, taxes withheld and credits available so shareholders can complete their tax returns. It is recommended that each shareholder contact their professional tax adviser for more information about their specific circumstances. Refer to clause 15 of the Terms and Conditions.

P. 3

Terms and conditions

1. Introduction

The Plan enables Shareholders to reinvest the net proceeds of cash dividends payable or credited on all or some of their Shares by acquiring further fully paid Shares. The terms and conditions of the Plan (the “Terms and Conditions”) as determined by the Board are set out below.

Words defined on page 12 of this Offer Document have the same meaning in these Terms and Conditions.

2. Participation in the Plan

• (a) Subject to these Terms and Conditions, Chorus offers to all Shareholders the right to elect to participate in the Plan.

• (b) Chorus may, in its absolute discretion, elect not to offer participation under the Plan to Shareholders who are resident outside New Zealand or Australia if Chorus considers that to do so would risk breaching the laws of places outside New Zealand or Australia and/or the costs and requirements to comply with these laws would be unreasonable. The Board may, in its sole discretion, elect to amend this policy at any time.

• (c) If Chorus does amend this policy, then Shareholders who apply to participate in the Plan and who reside outside New Zealand or Australia will represent and warrant to Chorus that the offer of the Plan and their participation in it would not breach any laws in their country of residence.

• (d) Any person residing outside New Zealand or Australia who holds Shares through a New Zealand or Australian resident nominee should not allow their nominee to participate in the Plan if participation in respect of their Shares would be contrary to the laws of their country of residence.

• (e) Any person residing outside New Zealand or Australia who participates in the Plan through a New Zealand or Australian resident nominee will be deemed to represent and warrant to Chorus that they can lawfully participate through their nominee.

• (f) Chorus accepts, and shall have, no responsibility for determining whether a person is able to participate in the Plan under laws applicable outside of New Zealand or Australia.

P. 4

• (g) Additional Shares to be issued to a Shareholder under the Plan will be issued on the terms set out in this Offer Document and subject to the same rights as Shares acquired by all other Shareholders who participate in the Plan.

• (h) Normal cash dividend payments will be paid out to those Shareholders not participating in the Plan and on a Participant’s Non-Participating Shares, and will not be reinvested in further Shares.

• (i) Each time a Share is issued (or transferred) to a Participant under the Plan, the Participant will be deemed to have warranted to Chorus that the Participant is legally entitled to be issued (or transferred) that Share and that such issue (or transfer) does not result in the Participant or any other person breaching any law or provision in Chorus’ constitution.

3. Participation Notice

• (a) Election to participate in the Plan must be made on the prescribed Participation Notice or by electronic means specified by Chorus from time to time.

• (b) Participation will commence in relation to the net proceeds of cash dividends payable or credited on the first Election Date after receipt by the Registrar of a correctly completed Participation Notice, subject to any termination of the Plan becoming effective before then.

4. Degree of Participation

(a) Participation may be either full or partial.

• (b) In the case of full participation in the Plan, these Terms and Conditions will apply to the cash dividends payable or credited in respect of all the Participant’s Shares from time to time registered in the Participant’s name, until such number of Shares participating in the Plan is varied or participation in the Plan is terminated in accordance with clause 10 of these Terms and Conditions.

• (c) Partial participation applies only to the number or percentage of Shares nominated by the Participant in a Participation Notice, as varied from time to time in accordance with clause 10 of these Terms and Conditions. However, if at the relevant Record Date the number of Shares held by the Participant is less than the number of Participating Shares, then the provisions of the Plan will only apply to such lesser number of Shares.

• (d) If the Participation Notice does not indicate the degree of participation, it will be deemed to be an application for full participation provided it is otherwise correctly completed and signed.

• (e) A Participation Notice will not attach to the Shares in respect of which it has been given but will be personal to the Shareholder giving it.

• (f) Any Shares over which Chorus has a lien or charge under the Constitution or otherwise, for a sum which is presently payable, will not be eligible to participate in the Plan.

P. 5

5. Operation of the Plan

• (a) By accepting this offer, each Participant directs Chorus to apply the net proceeds of every cash dividend payable or credited on the Participating Shares held by the Participant on the relevant dividend’s Record Date as payment for the Shares to be issued to the Participant in accordance with the Plan. Such direction shall continue until the Participant or Chorus terminates the Participant’s participation in the Plan in accordance with these Terms and Conditions and shall not apply during any period in which Chorus suspends the Plan or after Chorus has terminated the Plan.

• (b) Notice of termination of, or variation in, participation in the Plan must be received prior to 5pm on the relevant Election Date (New Zealand time) to be effective for a particular dividend.

• (c) The number of Shares to be issued to the Participant in each case will be determined in accordance with clause 6 of these Terms and Conditions.

• (d) The Board will, on the day that a Participant would have otherwise received the net proceeds of cash dividends on Participating Shares, either issue new Shares or arrange the transfer of existing Shares to the Participant in accordance with clause 6 of these Terms and Conditions.

• (e) Additional Shares issued to the Participant under the Plan will, from the date of allotment, rank equally in all respects with all other fully paid Shares.

• (f) Additional Shares acquired by the Participant under the Plan will be registered on the register where the Participant already holds Shares.

6. Additional Share Entitlement

• (a) The number of Shares to be issued under the Plan as fully paid (or transferred) to a Participant in return for a cash dividend will be calculated in accordance with the following formula:

N = PS x D + B

P

Where:

N is the number of additional Shares which the Participant will receive;

PS is the number of Participating Shares;

D is the net proceeds per Share from Chorus (expressed in cents and decimals of cents, including any tax refunds and after deduction of any New Zealand withholding or other taxes, if any) of cash dividends paid or credited on each Share and which would otherwise have been paid to a Shareholder in cash if the Shareholder had not elected to participate in the Plan;

B is the amount, if any, held to the order of the Participant under the Plan in accordance with paragraph 6(e) below as a result of rounding Share entitlements when the Plan last operated; and

P. 6

P is the volume weighted average sale price (expressed in cents and decimals of cents), for a Share, calculated on all price setting trades of Shares which took place through the NZX Main Board over a period of five Business Days commencing on the Ex Date (less a discount (if any) at the discretion of the Board, as contemplated by paragraph 12(a)(i) of these Terms and Conditions).

• (b) If no sales of Shares occur during such period then the volume weighted average sale price will be deemed to be the sale price for a Share on the first price setting trade of Shares on the NZX Main Board which takes place after such period.

• (c) Any volume weighted average sale price so determined may be reasonably adjusted by the Board to allow for any bonus or dividend or other distribution expectation. If, in the opinion of the Board, any exceptional or unusual circumstances have artificially affected the volume weighted average sale price so determined, the Board may make such adjustments to that sale price as it considers reasonable.

• (d) Where the number calculated in accordance with the preceding provisions is not a whole number, then the number of Shares a Participant receives will be rounded down to the nearest whole number of Shares.

• (e) Any net proceeds per Share as described in the definition of “D” in clause 6(a) above which are not applied to acquire a part of a Share because of clause 6(d) above shall be held to the order of the Participant and applied under the Plan on the Participant’s behalf the next time the Plan operates.

• (f) Should the Participant:

• (i) terminate his or her participation in the Plan under clause 10(a)(ii) of these Terms and Conditions; or

• (ii) cease to be a shareholder of Chorus,

any amount above NZ$2.00, which at the time is held to the order of the Participant under clause 6(e), will be paid in cash to the Participant on the next dividend payment date. Amounts of NZ$2.00 or less which are held to the order of the Participant at that time shall be forfeited.

7. Statements to Participants

• (a) Chorus will send to each Participant, promptly after each dividend payment date, a statement detailing in respect of that Participant:

• (i) the number of Participating Shares as at the relevant Record Date;

• (ii) the amount of cash dividend reinvested in respect of Participating Shares and the amount of dividend paid in cash on the Non-Participating Shares (if applicable);

• (iii) the amount of any taxation deduction made;

• (iv) the number of Shares the Participant has received under the Plan;

• (v) advice as to the amount of any taxation credits;

P. 7

• (vi) advice as to the amount held to the order of the Participant under the Plan; and

• (vii) such other matters as are required by law with respect to dividends and/or their reinvestment.

• (b) Participants should contact the Registrar if they need to change their contact details.

8. No Brokerage or Commission Costs to Participants

No brokerage or commission costs will be payable by Participants in respect of the Shares they receive under the Plan.

9. Source of Additional Shares

• Additional Shares to be acquired by Participants under the Plan may, at the Board’s discretion, be:

• (a) new Shares issued by Chorus; or

• (b) existing Shares acquired by Chorus or its nominee or agent and transferred to Participants; or

• (c) any combination of (a) and (b) above.

10. Variation or Termination of Participation

• (a) A Participant may, at any time, by giving written notice to the Registrar and subject to any additional requirements determined by Chorus in its discretion:

• (i) increase or decrease the number or percentage of Participating Shares participating in the Plan; or

• (ii) terminate participation in the Plan.

• (b) Such alteration or termination will take effect immediately upon receipt by the Registrar of the written notice; provided that any notice received between an Election Date and the corresponding dividend payment date will take effect on the day following such dividend payment date.

• (c) If a Participant dies, receipt by the Registrar of a notice of death in a form acceptable to Chorus will be treated as notice under clause 10(a)(ii) of these Terms and Conditions. Death of one of two or more joint holders will not automatically terminate participation.

P. 8

11. Non-Participating Shares Transferred First

Where a Participant with partial participation disposes of part of his or her holding of Shares and that Participant has elected to participate in the Plan in respect of a specified number of Shares, then, unless the Participant advises the Registrar otherwise:

• (a) the Shares disposed of will be deemed to be the Participant’s Non-Participating Shares; except

• (b) if the number of Shares disposed of is more than the number of the Participant’s Non-Participating Shares, the balance will be attributed to Participating Shares.

12. The Board’s Discretion on Termination, Suspension and Modification

• (a) In addition to any other clauses in these Terms and Conditions granting the Board discretion, the Board may also in its sole discretion resolve:

• (i) that the price at which additional Shares are to be issued under the Plan shall contain a discount to market price;

• (ii) that participation in the Plan will not apply to the whole or a part of the net proceeds of any cash dividend and that the applicable part will be paid out in cash and not be reinvested;

• (iii) that a Participation Notice will cease to be of any effect;

• (iv) that the terms and conditions of the Plan be modified, suspended or terminated;

• (v) if the Plan is modified, then a Participation Notice will be deemed to be a Participation Notice under the Plan as modified unless such Participation Notice is subsequently changed or withdrawn by the Participant; and

• (vi) in the event of the subdivision, consolidation or reclassification of Shares into one or more new classes of Shares, that a Participation Notice will be deemed to be a Participation Notice in respect of the Shares as subdivided, consolidated or reclassified unless such Participation Notice is subsequently changed or withdrawn by the Participants.

• (b) Notice of any modification, suspension or termination by Chorus under clause 12(a) will be advised to NZX and ASX.

13. Stock Exchange Listing

Chorus will apply for Shares which may be issued under the Plan to be quoted on the NZX Main Board and the ASX promptly after they have been issued. NZX and the ASX Limited accept no responsibility for any statement in this Offer Document.

P. 9

14. No Inside Information

At each time the price for Shares is set under clause 6 of these Terms and Conditions, Chorus is required to, and will, ensure that it has no information that is not publicly available that would, or would be likely to, have a material adverse effect on the realisable price of the Shares if the information were publicly available.

15. Taxation

The taxation consequences for each Shareholder should they elect to participate in the Plan will differ depending upon their particular circumstances. Accordingly, each Shareholder should consult their own tax adviser as to the taxation implications of the Plan. Chorus does not accept any responsibility for the financial or taxation effects of a Shareholder’s participation or nonparticipation in the Plan.

16. Information for Australian Shareholders

• (a) The offer of Shares under the Plan does not require disclosure for the purposes of section 708 of the Corporations Act 2001 (Cth).

• (b) Australian resident Shareholders should note that Chorus is not licensed to provide financial product advice in relation to the Shares offered under the Plan. There is no cooling-off regime that applies in respect of the issue of Shares under the Plan.

17. Governing Law

The Plan and its operation and these Terms and Conditions will be governed by the laws of New Zealand.

18. Available Information

Copies of Chorus’ most recent annual report, financial statements and auditor’s report are available online at: www.chorus.co.nz/investor-centre.

A hard copy is also available free of charge on request from:

Chorus Limited Level 10 1 Willis Street P O Box 632 Wellington 6140 New Zealand

Email: company.secretary@chorus.co.nz Website: www.chorus.co.nz

Details of Chorus’ dividend policy from time to time will be available from www.chorus.co.nz

P. 10

19. Registrar’s Address

The contact details of the Registrar are as follows:

Computershare Investor Services Limited Private Bag 92119 Auckland 1142 Level 2, 159 Hurstmere Road, Takapuna, Auckland 0622 New Zealand Phone: 09 488 8777 Fax: 09 488 8787 Email: enquiry@computershare.co.nz

P. 11

Definitions

The following words have these meanings in this Offer Document:

ASX: Australian Securities Exchange operated by ASX Limited.

Board: Chorus’ Board of Directors.

Business Day: A day on which NZX is open for trading.

Chorus: Chorus Limited.

Constitution: Chorus’ constitution.

Election Date: The first Business Day after the Record Date or such later date set by the Board.

Ex Date: Has the meaning specified in the NZX Main Board listing rules.

Issue: In the case of existing Shares, includes transfer where the context requires.

Non-Participating Share: A Share registered in the name of a Participant, the dividends on which are not subject to the Plan, and in respect of a particular Election Date, the Non-Participating Shares that are not participating in the Plan on that date.

NZX: NZX Limited.

NZX Main Board: The main board equity security market operated by NZX.

Participant: Any eligible holder of Shares who has completed (and has not withdrawn) a Participation Notice which has been accepted by Chorus.

Participating Share: A Share registered in the name of a Participant, the net proceeds of cash dividends on which are subject to the Plan, and in respect of a particular Election Date, the Participating Shares participating in the Plan on that date.

Participation Notice: The Participation Notice for the Plan as approved by Chorus from time to time.

Plan: The Chorus Dividend Reinvestment Plan established by the Board pursuant to the Constitution on the terms and conditions set out in this Offer Document, as amended from time to time.

Record Date: The date and time fixed by the Board for determining entitlement to the relevant dividend.

Registrar: Computershare Investor Services Limited.

Shares: Ordinary Shares in Chorus.

Shareholders: Holders of Shares.

P. 12

ARBN 152 485 848

P. 2

Appendix 1 (Rule 10.3) Preliminary Announcement – Half Year Results

Chorus Limited	Chorus Limited
Results for announcement to the market
Reporting Period	Six months ended 31 December 2015
Previous Corresponding Period	Six months ended 31 December 2014

	Amount (000s)	Percentage change
Revenue from ordinary activities	$479,000	Down 9.1%
Profit (loss) from ordinary activities after tax attributable to security holders.	$33,000	Down 48.4%
Net profit (loss) attributable to security holders.	$33,000	Down 48.4%
Interim/Final Dividend	Amount per security	Imputed amount per security
Interim dividend	8.0 cps	1.41 cps
Record Date	22 March 2016
Dividend Payment Date	5 April 2016
Comments:	This announcement should be read in conjunction with the attached Half Year Report, financial statements for the six months ended 31 December 2015 contained in that report, media release and investor presentation.

2.3 (a) Statement of Financial Performance

Refer to Half Year Report.

2.3 (b) Statement of Financial Position

Refer to Half Year Report.

2.3 (c) Statement of Cash Flows

Refer to Half Year Report.

2.3 (d) Dividends

On 19 February 2016, the Board of Directors declared a fully imputed interim dividend for the 2016 financial year of 8.0 cents per ordinary share. The total interim dividend will be $34,541,353.

Appendix 1 (Rule 10.3) Preliminary Announcement – Half Year Results

2.3 (e) Dividend Reinvestment Plan

The dividend reinvestment plan (the Plan) was re-established which enables eligible shareholders to choose to have Chorus reinvest all or part of their dividend entitlements in additional Chorus shares (rather than receiving cash payments). There are no charges for participation in the Plan, there are no brokerage fees and additional shares are purchased at a discount to the prevailing market price. The Chorus Board has currently set this discount at 3% which is applied to the volume weighted average sale price for a share, calculated on all price setting trades of shares which take place through the NZX Main Board over a period of five Business Days commencing on the ex-dividend date.

The last date for receipt of an election notice to participate in the Plan for the interim dividend due for payment on 5 April 2016, is 23 March 2016.

2.3 (f)	31 December 2015	31 December 2014
Net tangible assets per security	$1.73	$1.48

2.3(g) Control of Entities gained or lost during year N/A 2.3(h) Details of associates or joint ventures N/A

3.1 Accounting Standards The condensed consolidated interim financial statements set out in the attached Half Year Report have been prepared in accordance with the New Zealand equivalent to International Accounting Standard No. 34: “Interim Financial Reporting” and Generally Accepted Accounting Practice in New Zealand. 3.2 Critical accounting policies Refer to attached Half Year Report. 3.3 Changes in accounting policies The condensed consolidated interim financial statements have been prepared using the same accounting policies and methods of computation as the financial statements for the year ended 30 June 2015.

APPENDIX 7 – NZSX Listing Rules

EMAIL: announce@nzx.com

Notice of event affecting securities

NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.

Number of pages including this one (Please provide any other relevant 1 details on additional pages)

Full name of Issuer Name of officer make this notic Contact phone number	Full name of Issuer Name of officer make this notic Contact phone number	CHORUS LIMITED	CHORUS LIMITED	CHORUS LIMITED	CHORUS LIMITED
		authori e	sed to							Authority for e.g. Director				event, s' resolution Dat	e
							ANDREW CARROLL									DIRECTORS' RESOLUTION
								Contact fax number
			(04)	896 4003						(04) 471 0013							19 2			2016
Nature of event Tick as appropriate				Bonus Issue Rights Issue			If ticked, state whether: Capital Ca	Taxable ll Dividend		/ Non Taxable Con If ticked, state F				version ull			Rights Issue Interest Renouncable
				non-renouncable			change			whether: Interim √ Y				ear	Special
EXISTING securitie Description of the class of securities			s affec	ted by this				If more than one security is affected by the event, use a se						parate form. ISIN
				ORDINARY		SHARE												NZCNUE0001S2
																		If	unknown, contact NZX
Details of securitie			s issue	d pursuant to	th	is event		If more than one class of security is to be iss						ued, use a sep ISIN	arate for			m for e	ach class.
Description of the class of securities Number of Securities to be issued following eve			nt
													Minimum Entitlement					If R	unknown, contact NZX atio, e.g 1 for 2 for
Conversion, Maturity, Call Payable or Exercise Date Strike price per security for an Strike Price available.				y issue in lieu or	da								Treatment of Fractions provide an OR explanation of the ranking
						te Enter N/A if not applicable
M	onies Associated with E			vent In dollars	an	Dividen d cents		d payable, Call payable, Exercise price, Convers Source of Payment					ion price, Redemption price, Application mone						y.
													RETAINED						EARNINGS
	Amount per security (does not include any ex			cluded income)	$0.080
	Excluded income per security (only applicable to listed PIEs)
	Currency Total monies				NZD						Supplementary Amount per security dividend in dollars and cents details - NZSX Listing Rule 7.12.7 Date Payable								$0.014100
					$34,481,860														5 April, 2016
T In is	axation the case of a taxable bonus sue state strike price										Amountper Security in Dollars and cents to six dec								imalplaces
									Resident Withholding Tax		Imputation Credits (Give details) $0.005556
							$				$0.005556								$0.031111
									Foreign Withholding Tax		FWP Credits (Give details) $
Timing (Refer Appendix 8 in th Record Date 5pm For calculation of entitlements - Notice Date Entitlement letters, call notices,					e NZ		SX Listing Rules)				Application Date Also, Call Payable, Dividend / Interest Payable, Exercise Date, Conversion Date. In the case of applications this must be the last business day of the week. Allotment Date For the issue of new securities.
							22 March, 2016								5 April, 2016
conversion notices mailed												Must be within 5 business days of application closing date.			5 April, 2016

OFFICE USE ONLY

Ex Date: Commence Quoting Rights: Security Code: Cease Quoting Rights 5pm: Commence Quoting New Securities: Security Code: Cease Quoting Old Security 5pm:

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