Amended: Annual Report (substantial product holder list)
Chorus Limited
Level 10, 1 Willis Street
P O Box 632
Wellington
New Zealand
Email: company.secretary@chorus.co.nz
STOCK EXCHANGE ANNOUNCEMENT
27 August 2024
Amended: Chorus Annual Report (substantial product holder list)
Further to the release of Chorus' Annual Report 2024 yesterday, we have corrected
the substantial product holder list on page 90 to include Mitsubishi UFJ Financial
Group, Inc.
Authorised by:
Katrina Smidt
Acting Chief Financial Officer
ENDS
For further information:
Brett Jackson
Investor Relations Manager
Phone: +64 4 896 4039
Mobile: +64 (27) 488 7808
Email: Brett.Jackson@chorus.co.nz
Vicki Gan
Media and Content Manager
Mobile: +64 (22) 075 0159
Email: vicki.gan@chorus.co.nz
---
Annual Report
2024
For the 12 months ended 30 June 2024
1 Board and management overview
11 Management commentary
20 Consolidated financial statements
66 Governance and disclosures
95 Glossary
1 Earnings before interest, income tax, depreciation and amortisation (EBITDA) is a non-GAAP profit measure without a standardised meaning for comparison between companies.
We monitor EBITDA as a key performance indicator and we believe it assists investors in assessing the performance of the core operations of our business.
2 3% reduction in electricity use in FY24 against FY23.
3 39% reduction in scope 1 &2 emissions against our base year of FY20.
4 As at 31 December.
About this report
Our 2024 Annual Report covers the financial year ended 30 June 2024 (FY24)
and includes aspects of our environmental, social and governance (ESG)
performance. For additional ESG reporting, including emissions and climate-
related information, please refer to our separate 2024 Sustainability Report
and Climate Statements available at
company.chorus.co.nz/sustainability.
This report is dated 26 August 2024 and is signed on behalf of the
Board of Chorus Limited by Mark Cross, Board Chair, and
Kate Jorgensen, Chair of the Audit & Risk Management Committee.
Mark Cross
Chair
Kate Jorgensen
Chair Audit & Risk Management
Committee
+
3%
+
4%
REVENUE
EBITDA
1
-
39%
SCOPE 1 & 2 EMISSIONS
3
-
3%
ELECTRICITY USE
2
+
12%
DIVIDEND
Overview FY24
-
6%
CAPITAL EXPENDITURE
CAPITAL EXPENDITURE ($ million)
427
663
672
492
454
FY23
FY21
FY20
FY22
FY24
1,284
1,141
4,426
4,771
1,4163,997
CORE RABFINANCIAL LOSS ASSET
REGULATORY ASSET BASE-RAB ($ million)
2022
2021
2023
EBITDA
1
($ million)
700
648
657
675
672
FY23
FY21
FY20
FY22
FY24
DIVIDEND (cents per share)
47.5
24
25
35
42.5
FY23
FY21
FY20
FY22
FY24
REVENUE ($ million)
FY23
980
FY21
955
FY20
959
FY22
965
FY24
1,010
FIBRE CONNECTIONS
1,084,000
751,000
871,000
959,000
1,031,000
FY23
FY21
FY20
FY22
FY24
4
1 Chorus Annual Report 2024 Chorus Annual Report 2024
On behalf of your Board, I’m pleased to report that Chorus has delivered another steady financial result in a challenging macroeconomic
environment and we maintained solid momentum in our shift to becoming a simpler all-fibre digital infrastructure company.
We’ve announced a final unimputed dividend for the
year of 28.5 cents per share, bringing total dividends
for FY24 to 47.5 cents per share. For FY25 we’ve
provided dividend guidance of a 21% increase to 57.5
cents per share, unimputed, subject to no material
adverse changes in circumstances or outlook.
Fibre momentum continues
The OECD has said the shift to a post-pandemic digital future
requires high-quality broadband networks characterised by
high speeds, high reliability and low latency. It’s therefore not
surprising that the OECD reports an accelerating international
shift to fibre networks, with fibre the dominant fixed network
technology. By December 2023, 42.5% of total fixed broadband
subscriptions in OECD countries were on fibre, with cable falling
to 29.6% and copper falling to 20.3%.
5
Fibre now comprises 87% of our total fixed line connections and
demand for fibre broadband grew to more than 71% of addresses
passed, up from 69% at the end of FY23. Average monthly data
usage on fibre was 623 gigabytes in June 2024, above the peaks
last seen during the COVID lockdowns in 2021. The proportion of
fibre customers consuming more than 1 terabyte of data (1,000
gigabytes) a month lifted to 16%.
Fibre’s capability relative to other technologies is clear when you
consider the scale of data growth it has absorbed. Total data
traffic on our combined fibre and copper network has grown 12%
in the last two years, from 7,140 petabytes (PB) to 7,974 PB. Within
that total, the proportion carried by our fibre network has grown
from 87% to 94%. Despite this growth, fibre’s electricity efficiency
relative to other technologies means we’ve been able to reduce
our overall electricity consumption and lower our emissions.
As customers typically have a choice of technologies, we’re
also very focused on customer experience. We were therefore
pleased to see strong improvements in end customer satisfaction
through the year. A range of initiatives saw satisfaction with fault
restoration increase from 7.8 to 8.6
out of ten, while satisfaction
with intact provisioning on an existing fibre connection rose
f ro m 7. 3 to 7.7.
Capital management review
As I noted in last year’s Annual Report, the prioritisation of long-
term shareholder value, through capital allocation, is one of your
Board’s most important responsibilities.
During the year the Board initiated various value maximisation
initiatives with management. These included a refreshed internal
investment framework, reflecting a post-rollout operating
environment, to guide the allocation of cash flows and a review
of our capital management settings. Other areas of focus are fit-
for-purpose regulatory settings and operating efficiencies as the
copper network is shut down.
In February 2024 we announced a review to ensure our existing
capital management framework is fit for purpose, as we prepare
to enter the new regulatory period in 2025. Our review included
consideration of regulatory settings, shareholder feedback,
comparable company benchmarks, macroeconomic factors and
Chorus’ financial outlook.
Shareholder feedback was that investors value the predictable
growing dividends that come from the robust cash flows
generated as an owner-operator of essential infrastructure.
Investors anticipate a higher proportion of free cash flow
following the conclusion of the ultra-fast broadband (UFB) rollout
and the slowing number of fibre installations as a shrinking pool
of customers are left to migrate from copper.
Our capital management settings remain largely unchanged
following the review. We are committed to maintaining a capital
structure reflective of a regulated utility business and operating
within the parameters of our investment grade BBB credit rating.
However, a key conclusion from our review is that we will now
target a higher dividend payout range of 70% to 90% of our
net operating free cash flows, after sustaining capex. This is an
increase from the prior 60% to 80% range and reflects the greater
clarity we have for cash flows through the next regulatory period
as fibre investment tapers.
Our intention is to provide shareholders with a sustainable
dividend that grows at the rate of inflation. This will ensure an
appropriate return to shareholders on the significant investment
made in Chorus’ network since the beginning of the UFB rollout
in 2011.
The dividend will be accommodated within the revised payout
range, while continuing to allow for discretionary investment
such as fibre installations. Discretionary growth investment
can also be supported by the headroom in our balance sheet
capacity up to our internal limit of 4.75 times net debt/EBITDA,
which provides a buffer to our credit rating threshold of 5.0
times. Any discretionary investment will be subject to our
internal investment framework and restricted to activities that are
adjacent to, or have synergies with, our core business.
Dear Investors,
5 https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/broadband-statistics/data/1-3-fixed-and-mobile-subscriptions-by-technology.xls
2 Chorus Annual Report 2024
Becoming a simpler all-fibre business by exiting copper
In 2012, when we began building our fibre network under the
public-private partnership with government, Chorus had close
to 1.8 million copper connections. On 30 June 2024 there were
just 157,000 remaining. Of these, approximately 45,000 were in
our fibre areas where we will switch off copper in less than two-
and-a-half years. The remainder are in areas where other fibre,
wireless and satellite network providers now have greater market
share than Chorus.
This market fragmentation, together with the shift to regulated
revenues under the new fibre regime, means Chorus cannot
cross-subsidise rural network costs with urban revenues.
Customers are rightly choosing newer, better, technologies and
copper’s looming obsolescence is evident from global network
trends. Norway shut its retail copper network in December 2022
and the European Union is consulting on a 2030 target for the
complete shutdown of copper networks. Copper networks will
soon join the long list of other outdated technologies like dial-
up, 2G mobile and analogue TV.
It’s against this backdrop that the Commerce Commission
announced an investigation into the potential deregulation of
copper services. This is expected to be concluded by the end
of 2025.
We believe that fibre should and could go further to reduce the
digital divide between urban and non-urban areas. In February,
we announced plans to extend fibre to 10,000 more homes and
businesses across 59 communities. About 25% of customers
in these communities have already registered their interest in
connecting to fibre following the announcement and interest is
growing rapidly as work gets underway.
While we believe further expansion of Chorus’ fibre network
would offer significant benefits to more New Zealanders, we
are very mindful of the need to exercise capital discipline on
behalf of our shareholders. Our original regulatory proposal had
contemplated taking fibre to another 30,000 premises, but we
chose to put this additional investment on hold in the absence
of clarity on the pricing, market and regulatory changes needed
to make the commercial case for further investment.
The chart below shows just how much Chorus’ network
environment has changed.
CEO transition and governance
We appreciate the efforts of the wider Chorus team over FY24.
It has been a period of significant change as the organisation
evolves into its next phase.
In April, we said bon voyage to Chief Executive, JB Rousselot,
who led Chorus from November 2019 through to April 2024.
During JB’s tenure, Chorus completed the government-
supported UFB rollout, saw fibre connect more than one
million New Zealand homes and businesses, and navigated
the challenges of COVID-19. We’re grateful for his passionate
advocacy of both fibre and customer transparency.
Mark Aue, previously our Chief Operating Officer, stepped into
the CEO role in April 2024. Mark joined Chorus in April 2023,
having previously been the CEO of 2Degrees and, before this,
the CFO of Vodafone NZ (now One NZ). His deep understanding
of Chorus and the telecommunications industry, together with
his proven leadership and innovation track record, make him
the ideal person to lead Chorus into its next chapter. Mark’s
immediate focus is on implementing our new operating model,
in place since February, to deliver key initiatives with better focus
and prioritisation.
The Board is working with Mark and his executive team to
ultimately provide improved customer and shareholder
outcomes. We look forward to updating you on Chorus’
progress at our annual meeting in October.
Board succession is an ongoing focus for us. Director Miriam
Dean is scheduled to be up for re-election this year, and Murray
Jordan will retire after the September meeting. We thank Murray
for the valuable contribution he has made to the Board over the
last nine years, and in particular the important work he has done
as chair of our People, Performance and Culture Committee.
We were also pleased to welcome our new director,
Neal Barclay, in August. He brings valuable insights both as an
experienced CEO and former CFO, and from his work across
energy and communications infrastructure. He will be up for
election by shareholders at the annual meeting.
Thank you to our customers, our shareholders, our people and
my colleagues for your continuing support of Chorus.
Mark Cross
Chair
COPPERFIBRE
0
200,000
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
400,000
600,000
800,000
1,000,000
1,400,000
1,200,000
1,800,000
1,600,000
Number of connections
Becoming an all fibre business
3 Chorus Annual Report 2024
Operating highlights
FY22FY23 FY24
Fixed line connections
6
1,304,0001,271,0001,241,00
Data traffic (petabytes)
7, 14 0 7, 4 02 7, 974
Average revenue per user
$50.67$53.25$55.71
Chorus delivered a strong financial result, underpinned by our first normal operating period
after the pandemic, workforce and weather challenges of the last few years.
Demand for fibre broadband grew by another 53,000 connections in the year, while
copper connections reduced by 83,000 connections. This reflected the acceleration of
our programme to retire the copper network in our fibre areas and diminishing customer
demand for copper services in areas where alternative networks are available.
Data demand across our network grew almost 8% in the year to 7,974 petabytes. Our fibre
network carried 94% of this traffic, with average monthly usage for fibre connections
growing 6.5% to 623GB through the year.
Inflation-linked price changes, together with ongoing growth in the uptake of high-speed
fibre plans, lifted revenues from $980 million to $1,010 million. Average revenue per user
(ARPU) on GPON fibre services rose from $53.25 to $55.71 through the year.
Tight cost management and reducing copper network costs helped offset inflationary
pressure across various expense lines. However, operating expenditure of $310 million was
$2 million higher than FY23, despite the prior period including one-off cyclone-related
costs of $6 million.
Our operating results produced FY24 EBITDA of $700 million. This was at the top of our
EBITDA guidance range of $680 million to $700 million and up $28 million from the prior year.
A net loss after tax of $9 million was reported compared to a profit of $25 million in FY23.
This was due to a combination of a one-off $15 million non-cash tax expense following
the removal of deductibility of tax depreciation for buildings, a $14 million increase in
depreciation from our accelerated depreciation of copper assets, and higher interest costs.
Gross capital expenditure of $427 million was down from $454 million in FY23. This was
within our guidance range of $400 million to $440 million and reflects the slowdown in
new property developments from post-COVID highs, as well as reducing fibre installation
volumes as we pass the peak of copper customer migration. Net capital expenditure was
$372 million when excluding capital contributions for roadworks, property development
and government-backed deployment.
Borrowings at the end of FY24 were 4.42 times net debt/EBITDA and remain well within our
business tolerance level of 4.75 times and ratings agency threshold of 5.0 times.
6 Includes several thousand partly subsidised education connections from FY24.
7 A new measure to calculate fibre uptake was adopted in FY24 to better reflect Chorus’ expanding fibre
footprint beyond the original UFB rollout areas. It includes addresses outside of local fibre company areas
that have been passed by Chorus fibre.
1.1 Winning in our core fibre business
FY22FY23 FY24
All fibre connections
959,0001,031,0001,084,00
Addresses passed 1,428,0001,477,0001,506,000
Fibre uptake
(% of addresses passed)
7
66.7%69.3%71.4%
Customer satisfaction:
fault restoration
(3 month average)
8.2/107.7/108.6/10
(target 8.1)
Customer satisfaction:
intact provisioning
(3 month average)
7. 3/107. 3/107.7/10
(target 7.6)
By the end of June, fibre uptake had reached 71.4%, up from 69.3% in FY23, across a
footprint of 1,506,000 addresses. This footprint grew by 29,000 addresses in FY23,
compared to 49,000 addresses the year before, due to the end of the UFB rollout and
slowing new property development.
Our objective is to achieve 80% fibre uptake, and we continue to refine our active
wholesaler strategy to help achieve this goal.
Cost-of-living pressures combined with increased retailer marketing saw demand
for our entry level 50 megabits per second (Mbps) plan grow from 16,000 to 47,000
connections during the year. This plan provides superior performance to 4G fixed
wireless technology and enables low data users to experience fibre with the potential
to upgrade to higher speed plans in the future.
We continue to see growth in uptake of our gigabit and multi-gigabit plans and they
now comprise 25% of our customer base, up from 24% last year. This shift underscores
New Zealanders’ growing appetite for high-speed, reliable connectivity. About 64% of
residential connections are on our popular 300Mbps plan.
4 Chorus Annual Report 2024
1.2 Growing new revenues
FY22FY23 FY24
Smart locations
+19%+19%+16%
Edge Centre575783
Greenfields – lots passed22,00033,00027,000
Demand for fibre connectivity to street-based devices (e.g. traffic cameras, digital
billboards) continued to grow. We increased the number of ‘smart locations’ by another
16% in FY24. Smart city and utility requirements are expected to drive increased demand for
Internet of Things (IoT) connectivity in the coming years.
The rapid increase seen in demand for large scale data centres in New Zealand is also
translating into growing interest in our regional network co-location space. We have five
EdgeCentre co-location sites in our exchange buildings in Auckland, Tauranga, Wellington
and Christchurch. During FY24 we increased the available space from 57 to 83 racks and we
are evaluating further expansion of our service.
Legacy enterprise fibre connections are declining as the technology platforms reach end of
service and customers migrate to alternative services. We had continued growth in direct,
or dark, fibre connections. Demand for fibre backhaul to cellsites, data centres and other
network sites also grew.
We experienced a period of record housing development activity in the wake of the COVID
pandemic, but this demand slowed during FY24 because of macroeconomic factors. The
slowdown in demand meant we saw a reduction in the number of lots passed by fibre,
down by approximately 6,000 lots from FY23.
1.3 Optimising our non-fibre assets
FY22FY23 FY24
Copper connections remaining
345,000240,000157,000
Withdrawal notices (cumulative)
10,00030,00082,000
Broadband cabinets closed
(cumulative, in fibre areas)
1305441,253
Properties and surplus leases
exited
1485
Optimisation of our legacy copper network is continuing as we evolve to become a
simpler all-fibre business. The number of connections on our copper network reduced
by 35% in FY24 and is down 55% in the last two years.
Much of this reduction has been driven by the acceleration of our copper withdrawal
programme. We’ve now provided 82,000 copper customers with at least six months’
notice of service withdrawal, with 52,000 notices issued in FY24. This enabled us to
close another 700 broadband cabinets during the year. We expect to close the copper
network in our fibre areas by the end of 2026, with just 45,000 connections remaining
at the end of FY24.
Approximately 92,000 copper connections remain in areas where fibre isn’t available,
down from 112,000 at the start of FY24. Chorus has a legacy Telecommunications
Service Obligation (TSO) that requires us to provide Spark with basic telephone services
for premises connected to the network in 2001. With a dwindling number of rural
premises connected to copper, and even fewer TSO qualifying premises, we believe the
regulatory regime is no longer fit for purpose.
Technology has moved on significantly since 2001. Customers are migrating to satellite
or government-subsidised fixed wireless providers for improved services. Mobile
network operators are also partnering with low-earth-orbit satellite providers with a
view to delivering mobile services well beyond current cellsite coverage.
In April 2024, the Commerce Commission acknowledged this unprecedented
technological change, describing satellite services as a “game-changer”, and
announced an investigation into whether copper services should be deregulated
outside fibre areas. This is expected to be concluded by the end of 2025.
5 Chorus Annual Report 2024
1.4 Developing our long-term future
FY22FY23 FY24
Health & Safety:
Recordable injuries
1888
Electricity use (gigawatt hours)
817 7. 475.1
Emissions
Scope 1 & 2 (tonnes CO
2
e)
10,456*6,544*6,387
Waste – tonnes (% recycled)
287 (67%)368 (87%)339 (93%)
Gender diversity (all Chorus)
41%F/59%M42%F/58%M42%F/58%M
Employee engagement (out of 10)
8.58.78.6
Details of our work in the Sustainability area can be found in our standalone 2024
Sustainability Report. This year also marks our first year preparing mandatory Climate
Statements containing our climate-related disclosures for FY24, (prepared in accordance
with the requirements of the Aotearoa New Zealand Climate Standards). Copies of our
Sustainability Report and Climate Statements are available, at
company.chorus.co.nz/
sustainability.
We’ve been operating our copper and fibre networks in parallel for some years now. The
withdrawal of copper services and removal of unused copper network equipment helped us
reduce electricity usage by another 3% in FY24 (against FY23). The energy efficiency of fibre
networks meant we achieved this outcome despite our network carrying 8% more data traffic
than the year before.
The reduction in electricity usage, together with 87% of renewable generation in the
electricity grid
8
, saw our Scope 1 and 2 emissions reduce to 6,387 tonnes CO
2
e in FY24. This
represents a 39% reduction since our FY20 base year, meaning we are making good progress
(as shown in Figure 1) towards our science-aligned target of a 62% reduction in our scope 1
and 2 emissions by FY30
9
, from our FY20 base year.
The number of hours worked by our service companies continued to reduce as fibre network
activity diminishes following the end of the UFB rollout and the peak of copper migration
activity. Injury frequency rates remained low, consistent with the year before. Eight injuries
were recorded across Chorus and our service company people. These were of minor severity
and included strains, sprains, and lacerations caused by manual handling activities, as well as
slips, trips, falls, and vehicle accidents.
Our aspiration is for Chorus to be a diverse and inclusive employer of choice. The
Board sets measurable objectives to promote diversity and inclusion with an overall
objective of a 40:40:20 gender ratio. Women represented 42% of all employees in
FY24, consistent with FY23. At 30 April 2024, women executives increased to 42%, up
from 14%. Our commitment to diversity, equity, and inclusion was recognised with wins
in the HRNZ Awards and the Newmarket Business Association awards, as well as being
a finalist in the Deloitte Top 200 Awards.
Employee engagement remained strong, despite the challenge of changes to our
operating model during FY24. Overall engagement was 8.6 out of ten, down slightly
from 8.7 in FY23, but we maintained our position within the top 10% of the international
technology company sector we benchmark ourselves against. Our Net Promoter Score
was 65, down from 70 in FY23, placing us in the top 5% of the technology sector.
Digital equity remains a cornerstone of our social sustainability efforts. We continued
to support approximately 2,800 students by working with the Ministry of Education
to subsidise internet connections. We also worked with local organisations to support
digital literacy in under-served communities. This included funding Digital Seniors
Hubs nationwide (588 hubs across 21 locations) and funding the Hapori Connect
programme (through Katoa Connect) with 100 people graduating in FY24.
8 MBIE, NZ Energy Quarterly, March 2024
9
O
ur emissions reduction target is science-aligned, following guidance from the Science Based Targets Initiative
(SBTi) for the Information Communications Technology (ICT) Sector.
* Prior years emissions (FY22 and FY23) restated using retrospective emissions factor updates
released by Ministry for the Environment in FY24, and reflecting improved data quality.
6 Chorus Annual Report 2024
0
10
5
Kilotonnes CO
2
e
FY20FY21FY22FY23FY24
Scope 1Scope 2
Scope 1 & 2 emissions reduction from FY20 base year
Figure 1:
7 Chorus Annual Report 2024
Kiwis keep using more data each year, consistent with bandwidth trends overseas.
Much of that data usage occurs in evening peak times due to activity such as video streaming and gaming. Video
streaming on multiple devices at the same time generates frequent high-volume bursts of data within a household.
Gaming updates often create above average peak time traffic on the Chorus network.
What are the
data use trends
on our fibre
network?
7 Chorus Annual Report 2024
Average day
3 November 2023
3 December 2023
24 May 2024
Peak days on fibre network in FY24
0
1
2
3
4
5
12.00AM6.00AM6.00PM
12.00PM
12.00AM
Traffic (Tbps)
Average monthly data usage per connection (GB)Average daily network traffic per year
Peak traffic days in FY24
Average daily usage per year
Time of day
20212024202220202023
0
0.5
1.0
1.5
2.0
2.5
3.5
3.0
Average daily usage (Tbps)
12:00AM12:00PM4:00AM4:00PM12:00AM8:00PM8:00AM
Network traffic vs Electricity (GwH)
Network traffic vs Electricity (GwH)
FY20FY21FY22FY23FY24FY25FY28
00
5,00050
4,00040
3,00030
2,00020
1,00010
707,000
606,000
80
8,000
90
9,000
Copper data usage (PB)
Electricity (GwH)
Fibre data usage (PB)
Projected electricity use
Data usage (PB)
Electricity (GwH)
Monthly data usage (GB)
0
100
200
300
400
500
700
600
Average monthly upload data usage (GB)
DEC ‘15DEC ‘15DEC ‘15DEC ‘15DEC ‘16DEC ‘16DEC ‘16DEC ‘16DEC ‘16DEC ‘16JUN ‘15JUN ‘15JUN ‘15JUN ‘15JUN ‘16JUN ‘16JUN ‘16JUN ‘16JUN ‘16JUN ‘16
3.34 Tbps
Peak days/data
8PM–12AM
20212024202220202023
12AM12PM4AM4PM12AM8PM8AM
0
1
2
3
4
5
Traffic (Tbps)
Average day
3 November 2023
3 December 2023
24 May 2024
12AM6AM6PM
12PM
12AM
Target
FY25
FY28
DEC ‘14
DEC ‘18
DEC ‘16
DEC ‘20
DEC ‘15
DEC ‘19
DEC ‘17
DEC ‘21
DEC ‘22
DEC ‘23
JUN ‘15
JUN ‘19
JUN ‘17
JUN ‘21
JUN ‘16
JUN ‘20
JUN ‘18
JUN ‘22
JUN ‘23
JUN ‘24
0
100
200
300
400
500
700
600
Average monthly data usage (GB)
FY20FY21FY22FY23FY24
Copper data usage (PB)
Electricity (GwH)
Fibre data usage (PB)
Projected electricity use
0
5,000
4,000
3,000
2,000
1,000
7,000
6,000
8,000
9,000
Data usage (PB)
0
50
40
30
20
10
70
60
80
90
Electricity (GwH)
0
0.5
1.0
1.5
2.0
2.5
3.5
3.0
Traffic (Tbps)
8 Chorus Annual Report 2024
Advances in customer-facing technology and services, together with new ways to use data and changing
customer habits, are all combining to drive increased bandwidth demand.
Everything from homes to cars, to factories and hospitals, are becoming digitally smart. This Internet of Things is forecast
to drive 1 Yottabyte* of data per year within a decade. Fibre is meeting the need for high-quality broadband because of its
efficiency in carrying more data at multi-gigabit speeds, together with its high reliability and fast response time.
What’s driving
data growth?
1YB* of data = 1 million trillion megabytes or the amount of data that would fit on DVDs stacked all the way to Mars. (225 million km)
4K ULTRA HD
HIGH DEFINITION
QUALITY NEEDS
MORE
DATA
IF ALL
STREAMING
IS 4K,
DATA USE
~1 ,200GB
A MONTH
IF ALL TV
SHIFTS TO
4K ONLINE,
DATA USAGE X3
~2,000GB
A MONTH
STREAMING
50% OF CHORUS
TRAFFIC AND GROWING
DAILY ONLINE
VIDEO REACH
HAS SURPASSED
LINEAR TV
60+ AGE GROUP
STREAMING MORE
SPEED/CAPABILITY
MULTI-GIGABIT
SERVICES
25% OF
CHORUS USERS
ON 1GBPS
AND 2GBPS+
IN MARKET
GOOGLE FIBER
LAUNCHED
20GBPS
MULTI-SCREENS
PROFLIFERATION OF
CONNECTED
HOUSEHOLD DEVICES
AVERAGE ~20
CONNECTED
DEVICES
PER HOME
TODAY
NUMBER OF
DEVICES
EXPECTED TO
DOUBLE EVERY
5 YEARS
++++
WIFI ADVANCES
IN-HOME UPGRADES
TO WIFI 7 REDUCES
CONSTRAINT ON FIBRE
46GBPS
THROUGHPUT
(VS 9.6GBPS
ON WIFI 6)
UP TO
100X LESS
LATENCY
(THAN WI-FI 6)
AND 5X MORE
CAPACITY
Chorus has built an amazing infrastructure asset
that other countries are now busy replicating with
their own rollouts. We’re proud of how our network
connectivity is helping enable both current and future
generations to grow.
We’ve exceeded the original expectations for fibre uptake and
New Zealand is ranked 17th in the world for fibre penetration.
10
That is recognition of Chorus as the great network builder, and
we’re now shifting our focus to being the great network operator.
This shift began in FY24 with the transition to a new operating
model to enable us to execute our strategies more effectively.
This includes continuing to drive fibre uptake, looking to grow
new revenues by leveraging our network assets, and retiring our
legacy copper network.
The retirement of copper services in our fibre areas is close
to being realised and in FY25 we’ll be working to shift the
remaining 45,000 customers who already have our fibre at
their gate. This is a major step towards our goal of becoming a
simpler business.
Our objective remains to achieve 80% fibre uptake. With uptake
already above 71% and our copper migration activity coming
to an end, this means we need to work harder to help other
customers discover the benefits of fibre. We know, for example,
there is a large group of urban customers who were converted
to 4G fixed wireless services some years ago when copper was
their only option.
While 5G fixed wireless is now a reality in market, Commerce
Commission reporting shows that 5G’s broadband performance
is highly variable. Equally, we continue to see the prevalence
of Low Earth Orbit Satellites (LEOs) with Starlink providing a
markedly improved alternative to copper based broadband,
particularly in regional or rural areas. We’ve long acknowledged
that copper is no longer future fit for purpose and continue to
encourage regulatory change to enable a managed exit from
copper in non-fibre areas.
Whilst there are natural use cases for multiple technologies
in market, we believe that fibre has both a technological and
competitive advantage. Our role now shifts the conversation
to raise awareness and education about fibre. Historically,
broadband focus has principally been on download speed. This
needs to shift to attributes of quality, consistency and reliability.
Fibre displays all of these characteristics, setting it apart from
other alternatives.
Taking fibre further
We’ve been delighted with the strong pre-registration interest
we’ve received from communities within the 10,000 addresses
footprint expansion we started building in early 2024.
We believe that fibre could and should go further, but the
commercial case for further investment is challenging given
current regulatory policies and commercial returns. While
satellite and fixed wireless services can help fill coverage gaps,
the reality is that they are not fibre-like when it comes to
reliability and capability. New Zealand shouldn’t short-change
customers with something that is deemed ‘good enough’ for
today’s needs, when history tells us future online services will
demand significantly more. Having broadband technology that
can scale quickly to rising demand is imperative.
Regulatory reset
FY25 is a significant reset point for Chorus at a regulatory level.
We are finishing our initial three-year regulatory period under
the utility-style framework for fibre. During this time, we’ve
continued to make significant investment in enabling fibre
services. This helped lift the value of our regulated asset base
(RAB) from $5.4 billion to $5.9 billion by January 2024.
The next regulatory period will run for four years from January
2025 to December 2028. The Commerce Commission has set
our weighted average cost of capital (WACC) at 7.68%, before
tax, for this period. This is a significant step up from our initial
three-year WACC of 4.72%, which was set in the wake of the
pandemic and reflected all-time lows in risk-free rates.
The larger RAB and an improved WACC means our maximum
allowable revenue will increase in the new period. The final
revenue decision is expected later in 2024. The Commission has
approved $1.14 billion of capital expenditure and $790 million
of operating expenditure for the next regulatory period. They’ve
also proposed that regulatory depreciation of some core RAB
assets may be slowed. This would help smooth revenues into
future years, given the expected step-up in allowed revenues in
the short-term.
Developing our long-term strategy
Our immediate focus in Horizon 1 (FY25) is both cementing
and leveraging our new operating model, becoming future
fit for purpose. With the regulatory clarity we now have,
Horizon 2 (FY26– FY29) will focus on delivering effective asset
management and prudent, efficient fibre investment. As well as
driving simplification of our business, we want to identify and
scale growth in adjacent opportunities where we have a right
to play. At the same time recognising the need to leverage our
core assets more effectively and divest from non-core assets as
rapidly as possible.
Looking further ahead to Horizon 3 (FY30 and beyond), we see
a single future state technology with the complete retirement
of our copper network and truly becoming an all-fibre
infrastructure business.
As Chorus transitions into these new Horizons we’re excited
about the possibilities of change and the role we play in
unleashing potential through connectivity and enabling better
futures for Aotearoa.
10 Based on FTTH Council Europe data at September 2023.
Mark Aue
Chief Executive
Outlook
9 Chorus Annual Report 2024
10 Chorus Annual Report 2024
We believe New Zealand was fortunate to begin investing in fibre in 2011.
In the wake of the COVID pandemic, other countries are now making the shift to fibre.
Demand for high-quality broadband networks - characterised by high speeds, high reliability and low latency –
continues to grow as data hungry digital applications become integral to economies and daily life.
Looking
ahead to
2030
71% FIBRE UPTAKE
ON OUR NETWORK
80% FIBRE UPTAKE
ON OUR NETWORK
MULTI GIGABIT
PLANS HAVE GONE
MAINSTREAM
1,000GB+
PER MONTH HAS
BECOME THE NORM
16% OF FIBRE USERS
CONSUME 1,000GB+
PER MONTH
BROADCAST TV
HAS SHIFTED TO
STREAMING
ALL–FIBRE
BUSINESS AS DEMAND
FOR COPPER FADES
25% REDUCTION
IN ELECTRICTY USE
FROM 2020 AS FIBRE
ENABLES EFFICIENCY
25% OF CUSTOMERS
ON 1 GIGABIT PLAN
OR FASTER
1
GBps
2+
GBps
ELECTRICITY USE
REDUCING AS COPPER
SWITCHES OFF
<160,000
COPPER LINES
REMAINING
STREAMING
50% OF CHORUS TRAFFIC
IS VIDEO
WHAT’S ON OUR HORIZON FOR 2030
TODAY
12 In summary
13 Revenue commentary
14 Expenditure commentary
15 Depreciation and amortisation expense
16 Finance income and expense
17 Capital expenditure commentary
19 Long term capital management
Management
commentary
11 Chorus Annual Report 2024
In summary
2024
$M
2023
$M
Operating revenue 1,010 980
Operating expenses (310)(308)
Earnings before interest, income tax, depreciation and amortisation 700 672
Depreciation and amortisation (462)(446)
Earnings before interest and income tax 238 226
Net finance expense (217)(195)
Net earnings before income tax 21 31
Income tax expense (30)(6)
Net (loss)/earnings for the year (9)25
We report earnings before interest, income tax, depreciation and amortisation (EBITDA) of $700 million for the year ended 30 June 2024 (FY24), an increase of $28 million from reported FY23 EBITDA
of $672 million.
Revenues increased by $30 million to $1,010 million. This was driven by inflation-related price
increases to some services and continued growth in uptake of higher value fibre services.
Operating expenses of $310 million were $2 million greater than FY23 on a reported basis,
or $8 million higher when allowing for extreme weather event costs of $6 million in FY23.
Although the weather was more favourable in FY24, tight cost management was needed to
constrain the overall impact of inflationary cost increases across multiple expense lines.
A net loss after tax of $9 million was reported compared to a profit of $25 million in FY23. This was
due to a combination of a one-off $15 million non-cash tax expense following the removal of
deductibility of tax depreciation for buildings, an $11 million increase in depreciation from our
accelerated depreciation of copper assets and higher interest costs.
Capital expenditure was $427 million in FY24. This was a $27 million decrease from FY23, largely
due to reduced activity for fibre installations and new property development. We will pay a final
dividend of 28.5 cents per share on 8 October 2024, in line with guidance of a full-year dividend of
47.5 cents per share.
Connections
Connections
2024
Connections
2023
Connections
2022
Fibre broadband (GPON)1,074,000 1,021,000 949,000
Fibre premium (P2P)10,000 10,000 10,000
Copper VDSL55,000 83,000 118,000
Copper ADSL56,000 84,000 122,000
Data services over copper
1,000 1,000 2,000
Unbundled copper- - 1,000
Baseband copper45,000 72,000 102,000
Total fixed line connections1,241,000
11
1,271,000 1,304,000
11 Includes several thousand partly subsidised education connections.
12 Chorus Annual Report 2024Management commentary
Revenue commentary
2024
$M
2023
$M
Fibre broadband (GPON)697 622
Fibre premium (P2P)69 68
Copper based broadband83 117
Copper based voice28 39
Data services copper3 4
Field services products67 70
Infrastructure33 31
Value added network services26 26
Other4 3
Total revenue1,010 980
Revenue overview
Chorus’ product portfolio encompasses a range of wholesale broadband, data and voice
services across a mix of regulated and commercial products. Revenues of $1,010 million were up
$30 million from $980 million in FY23, with strong growth in fibre revenues more than offsetting
the continued decline in copper connections and associated revenues.
We ended FY24 with total fixed line connections of 1,241,000, down 30,000 lines from the
prior year. This reduction is largely driven by the migration of copper connections to alternative
networks in areas where Chorus does not have fibre available.
Fibre broadband (GPON)
Fibre broadband revenue continued to grow and accounted for 69% of total revenues, up from
63% in FY23. Fibre broadband connections grew by 53,000 to 1,074,000, lifting fibre uptake to
71.4% of passed addresses from 69.3% in FY23. Average monthly revenue per fibre user grew
from $53.25 to $55.71 in FY24. An inflation-related price increase was applied to some services in
October 2023. Uptake of our 50Mbps Home Fibre Starter service, which we held at $35 per month
given the cost-of-living crisis, grew by 31,000 connections in FY24. Uptake of higher value multi-
gigabit Hyperfibre and 1 Gbps services grew by 1% to 25% of residential fibre connections.
Copper based revenues
Connection revenues across copper broadband and voice services continued to decline as
customers migrate to fibre or alternative services. A 5.65% inflation-related price increase was
applied to services in mid-December 2023.
Field services products
Field services products revenues decreased by $3 million compared to FY23. This was driven by
a slowdown in new property development demand after a post-COVID period of record growth,
partly offset by an increase in roadworks activity.
Infrastructure
Continued growth in demand for co-location space in exchanges contributed to a $2 million
increase in revenues.
Data services copper
Data services copper connections continue to decline as customers migrate from legacy services
to cheaper fibre-based or alternative services.
Other
Other of $4 million was largely the result of ongoing optimisation of our property footprint.
13 Chorus Annual Report 2024Management commentary
Expenditure commentary
Operating expenses
2024
$M
2023
$M
Labour costs80 76
Network maintenance53 60
Information technology costs44 42
Other network costs37 37
Rent, rates and property maintenance27 26
Electricity22 19
Advertising11 13
Regulatory levies9 9
Consultants6 9
Insurance5 5
Provisioning1 1
Other expenses15 11
Total expenditure310 308
Total operating expenses of $310 million in FY24 were up $2 million compared to $308 million
reported in FY23.
Labour
Labour costs of $80 million represent staff costs that are not capitalised and included a $2 million
cost for operating model changes.
At 30 June 2024, we had 846 permanent and fixed term employees, in line with FY23. We continue
to look at opportunities to insource external contractors.
We capitalise labour costs and the associated overheads in relation to fibre build and
connection activity. About 47% of labour costs were capitalised.
Network maintenance
Network maintenance costs decreased by $7 million, although FY23 included $3 million of extreme
weather costs. Weather conditions were more favourable in FY24 and the migration of copper
customers continued to drive total fault volumes down, but savings were partly offset by inflationary
increases in the cost to repair copper and fibre faults.
Information technology
Information technology costs increased after FY23 benefited from the release of a $2 million
software provision.
Other network costs
Other network costs were up slightly when allowing for $2 million of extreme weather costs
recognised in FY23. Activity to exit copper assets increased, lifting network and property
optimisation spend to $4 million in FY24.
Electricity
Electricity costs were up $3 million due to higher average spot prices. This was despite electricity
usage falling as legacy network equipment was powered down.
Rent, rates and property maintenance
Inflation and an increase in maintenance work lifted these costs $2 million when adjusting for
$1 million of extreme weather costs incurred in FY23.
Advertising
Advertising spend was $2 million lower in FY24 due to targeted campaign activity.
Consultants
Consultant spend reduced by $3 million as a result of reduced regulatory related spend, increased
insourcing and cost management.
Other expenses
Provisions were increased for doubtful debts given macroeconomic conditions and additional long-
term market research was undertaken throughout the year.
14 Chorus Annual Report 2024Management commentary
Depreciation and amortisation expense
2024
$M
2023
$M
Estimated useful
life (years)
Weighted average
useful life (years)
Depreciation
Fibre cables
13512820 – 3020
Ducts, poles, and manholes
806420 – 5049
Copper cables747610 – 2522
Cabinets17185 – 2019
Network electronics70672 – 2510
Right of use assets14134 – 5019
Other13144 – 1015
Buildings245049
Less: crown funding(31)(29)
Total depreciation374355
Amortisation expense
Software and other intangibles
5761
Customer acquisition assets3130
Total amortisation expense8891
Total depreciation and
amortisation expense
462446
During FY24, $427 million of expenditure on network assets, software and customer acquisition
was capitalised.
In FY24, Chorus accelerated the depreciation profile of certain copper duct assets. This drove
a net $11 million increase of depreciation expense compared to FY23, with $90 million of total
depreciation across all copper assets in FY24. Copper cables in Chorus UFB areas will be fully
depreciated by June 2025. Copper cables, copper-related ducts and poles in local fibre company
areas will be fully depreciated by June 2026. Copper cables and poles in non-fibre areas will be
fully depreciated by June 2032.
Software and other intangibles largely consist of the software components of billing, provisioning
and operational systems.
Chorus expects that incremental costs incurred in acquiring new contracts with new and existing
customers are recoverable. These costs are capitalised as customer acquisition assets and
amortised against revenue or within amortisation expense, depending on their nature. In the
period to 30 June 2024, $31 million was recognised as amortisation expense.
The offset of Crown funding against depreciation will continue to amortise as a credit to the
associated depreciation expense.
The weighted average useful life represents the useful life in each category weighted by the net
book value of the assets.
15 Chorus Annual Report 2024Management commentary
Finance income and expense
(Income)/expense
2024
$M
2023
$M
Finance income(5) (4)
Finance expense
Interest on syndicated bank facility9 2
Interest on European Medium Term Notes88 93
Interest on Australian Medium Term Notes19 –
Interest on fixed rate NZD Bonds3832
Other interest expense
25 35
Capitalised interest(1)(1)
Interest costs178 161
Ineffective portion of changes in fair value of cash flows hedges(3)(7)
Total finance expenses excluding CIP securities (notional interest)175 154
CIP securities (notional) interest47 45
Total finance expense222199
Finance expenses were $23 million higher than FY23 due to higher interest rates and an increase in
total debt. The weighted effective interest rate increased from 5.40% in FY23 to 5.77% in FY24 and
AUD300 million medium term notes were issued in September 2023.
Chorus fully hedges the foreign exchange exposure on all foreign debt with cross currency interest
rate swaps. Approximately 70% of our floating interest rate exposure was hedged with fixed interest
rate swaps.
Other interest expense includes lease interest of $11 million (FY23: $11 million) and amortisation
arising from the difference between fair value and proceeds realised from interest rate swap resets
of $7 million (FY23: $7 million).
Taxation
The FY24 effective tax rate is 143% (FY23: 19%).
Tax expense includes a one-off deferred tax expense of $15 million, following a law change for
deductibility of depreciation on commercial buildings. Excluding this change, the normalised
effective tax rate for FY24 was 71% (FY23 normalised: 51%). This is higher than the statutory tax rate
of 28% due to permanent differences between tax and accounting arising from the tax treatment
of the grants received for Crown project-related funding.
The interest expense and depreciation credit recognised in the income statement for CIP
securities are non-taxable as confirmed by binding IRD rulings. Government grants have also been
received for funding of specific projects. The amortisation of the government grants, along with
the accounting depreciation recognised in the income statement, are non-taxable and no tax
depreciation is claimed on the assets.
16 Chorus Annual Report 2024Management commentary
2024
$M
2023
$M
Fibre344 355
Copper23 33
Common
6066
Gross capital expenditure427 454
Gross capital expenditure in FY24 was $427 million, down $27 million from FY23. Within this
total, there was $222 million of discretionary growth capital expenditure and $205 million of
sustaining capital expenditure to maintain, replace or improve an existing copper or fibre asset.
This investment was supported by $12 million of Crown funding (e.g. government grants for
regional network upgrades) and $43 million of customer contributions (e.g. roadworks and new
property development contributions).
Fibre capital expenditure
2024
$M
2023
$M
UFB Communal– 5
Fibre installations & layer 2182193
Fibre products & systems1210
Other fibre & growth93105
Fibre sustain1812
Customer acquisition costs3930
Total fibre capital expenditure344355
Fibre-related capital expenditure reduced by $11 million to $344 million. UFB communal network
spend ended in FY23 and installation spend reduced with about 87,000 fibre installations
completed nationwide in FY24, down from 92,000 in FY23. The average cost per premises
installed in UFB areas was $1,132 and was within the FY24 guidance range of $1,100 to $1,250.
Layer 2 spend of $50 million was driven by increased transport spend to support growing
bandwidth demand and equipment upgrades to enable multi-gigabit Hyperfibre services.
Other fibre and growth decreased by $12 million compared to FY23. A slowdown in housing
growth saw new property development spend reduce by $18 million to $50 million, while
$4 million was invested to begin extending fibre to the approximately 10,000 existing premises
announced in February 2024.
Fibre sustain spend increased by $6 million to $18 million as a result of lifecycle work on some
older cable routes, and increased roadworks activity attributable to fibre. About $2 million of
investment was completed to replace network damaged by Cyclone Gabrielle in February 2023
and a $3 million accounting provision for network lifecycle activity was released in FY24.
Customer acquisition costs increased by $9 million in FY24 as retailers used our incentive offers to
grow fibre connections and upgrade customers to higher speed fibre products.
Capital expenditure commentary
17 Chorus Annual Report 2024Management commentary
Capital expenditure commentary continued
Copper capital expenditure
2024
$M
2023
$M
Network sustain1927
Copper connections–1
Copper layer 211
Customer acquisition costs34
Total copper capital expenditure2333
Copper capital expenditure continued to decrease given the planned shutdown of the copper
network in our fibre areas by the end of 2026. Network sustain benefitted from the release of a $6
million accounting provision for network lifecycle activity. The reported $19 million included about
$12 million of grant-funded rural network upgrades and contribution-funded roadworks activity.
About $1 million of investment was completed to replace network damaged by Cyclone Gabrielle in
February 2023.
Common capital expenditure
2024
$M
2023
$M
Information technology4044
Building and engineering services2022
Total common capital expenditure6066
Information technology spend and building and engineering services decreased in FY24 following
lifecycle project spend in FY23.
18 Chorus Annual Report 2024Management commentary
Long term capital management
We will pay a final unimputed dividend of 28.5 cents per share on 8 October 2024 to all
shareholders registered at 5.00pm 16 September 2024. The shares will be quoted on an
ex-dividend basis from 17 September 2024. As the dividend is unimputed, there will be no
supplementary dividend payable to shareholders outside of New Zealand.
The dividend reinvestment plan will not be available for the final dividend.
Dividend guidance for FY25 has been set at 57.5 cents per share, subject to no material adverse
changes in circumstance or outlook. The FY25 dividend will be unimputed.
The Board considers that a ‘BBB’ or equivalent credit rating is appropriate for a company such as
Chorus. It intends to maintain capital management and financial policies consistent with these
credit ratings. It is Chorus’ intention that in normal circumstances the ratio of net debt to EBITDA
will not materially exceed 4.75 times. At 30 June 2024, we had a long-term credit rating of
BBB/stable outlook by Standard & Poor’s and Baa2/stable by Moody’s Investors Service.
Chorus completed a $150 million share buyback programme in September 2023. The programme
commenced in February 2022 and resulted in the cancellation of 19 million shares.
19 Chorus Annual Report 2024Management commentary
21 Independent Auditor’s Report
24 Consolidated income statement
24 Consolidated statement of comprehensive income
25 Consolidated statement of financial position
26 Consolidated statement of financial position (continued)
27 Consolidated statement of changes in equity
28 Consolidated statement of cash flows
29 Consolidated statement of cash flows (continued)
30 Consolidated statement of cash flows (continued)
31 Notes to the consolidated financial statements
Consolidated
financial statements
20 Chorus Annual Report 2024
Independent Auditor’s Report
To the shareholders of Chorus Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial statements of Chorus Limited
(the ’company’) and its subsidiaries (the ‘Group’) on pages 24 to 65 present fairly, in all material
respects:
i. the Group’s financial position as at 30 June 2024 and its financial performance and cash
flows for the year ended on that date;
ii. in accordance with New Zealand Equivalents to International Financial Reporting Standards
(NZ IFRS) and International Financial Reporting Standards issued by the New Zealand
Accounting Standards Board.
We have audited the accompanying consolidated financial statements which comprise:
— the consolidated statement of financial position as at 30 June 2024;
— the consolidated income statement, statements of other comprehensive income, changes in
equity and cash flows for the year then ended;and
— notes, including a summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand)
(‘ISAs (NZ)’). We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1
International Code of Ethics for Assurance Practitioners (Including International Independence
Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board
and the International Ethics Standards Board for Accountants’ International Code of Ethics for
Professional Accountants (including International Independence Standards) (‘IESBA Code’), and
we have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the Auditor’s responsibilities for the
audit of the consolidated financial statements section of our report.
Our firm has also provided other services to the group in relation to regulatory assurance. Subject
to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters
have not impaired our independence as auditor of the group. The firm has no other relationship
with, or interest in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to
determine the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, both individually and on the consolidated financial statements as a whole. The
materiality for the consolidated financial statements as a whole was set at $9.0 million determined
with reference to a benchmark of Group revenue. We chose the benchmark because, in our view,
this is a key measure of the Group’s performance.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements in the current period. We summarise
below those matters and our key audit procedures to address those matters in order that the
shareholders as a body may better understand the process by which we arrived at our audit
opinion. Our procedures were undertaken in the context of and solely for the purpose of our
statutory audit opinion on the consolidated financial statements as a whole and we do not express
discrete opinions on separate elements of the consolidated financial statements.
Consolidated financial statements21 Chorus Annual Report 2024
The key audit matterHow the matter was addressed in our audit
Recoverability of assets
Refer to Note 1 and 2 to the Financial Statements.
Capitalisation and the carrying value of assets are a key
audit matter due to the significance of assets to the Group’s
consolidated statement of financial position, and due to the
judgement involved in determining the carrying value of the
assets, principally:
—decision to capitalise or expense costs relating to the
network and IT spend. This depends on whether the
expenditure is to enhance the network (capitalise) or to
maintain the current operating capability of the network
(expense);
—estimation of the useful life of the asset once the costs are
capitalised;
—obsolescence and impairment risk; and
—uncertainty of the impact of ongoing technological change,
transitioning to a new regulated
—model, movement towards a fibre future and retail service
provider/local fibre company behaviour.
Our audit procedures included:
—examining that the controls to recognise capital projects in the fixed asset register, to monitor labour costs capitalised throughout
the year and the approval of the asset life annual review are effective.
—assessing the nature of costs incurred in capital projects by checking a sample of costs to invoice to determine whether the
description of the expenditure met the capitalisation criteria.
—assessing, on a sample basis, whether internal projects meet the criteria for capitalisation.
—assessing whether labour rates applied in capitalising employee and contractor time for a sample of personnel were consistent with
employee career level and contracts or invoices.
—examining, on a sample basis, that labour costs capitalised, at an individual employee/contractor level did not exceed an individual’s
salary or invoiced time.
—assessing, on a sample basis, whether the accruals recorded for assets under construction were calculated in accordance with the
progress of construction and the arrangements with external suppliers.
—assessing the useful economic lives of the assets, by comparing to our knowledge of the business and its operations and industry
benchmarks.
—ansuring the revised useful lives of identified asset groups and accelerated depreciation is accurately recorded.
—performing data analytical procedures over capitalised labour spend for the period and useful lives of assets in the fixed asset register
to identify any unusual trends.
Chorus Funding
Refer to Note 4, 6, 7 and 19 to the Financial Statements.
At 30 June 2024, Chorus had external borrowings of $2,626
million (30 June 2023: $2,528 million), Crown funding of
$929 million (30 June 2023: $948 million), CIP securities of
$744 million (30 June 2023: $697 million) and net derivative
financial assets of $27 million (30 June 2023: Net derivative
financial assets of $65 million).
The external borrowings, CIP securities, cross-currency
and interest rate derivatives are a key audit matter due to
their significance to the Group’s consolidated statement of
financial position and the complexity and judgement involved
in determining the appropriate valuation and accounting
treatment for the CIP securities and cross-currency and
interest rate derivatives.
Our audit procedures included:
—engaging our financial instrument specialists to independently value all interest rate derivatives using valuation models and inputs from
those utilised by management.
—agreeing the terms of the derivatives to the confirmation provided by the derivative counterparty.
—examining the hedge documentation for new debt instruments and associated derivatives against the requirements of IFRS 9.
—evaluating the hedge effectiveness of the interest rate derivatives hedging the EUR and AUD denominated Medium Term Notes, the
NZD Bond 2028 and the NZD Bond 2030. In all instances, our financial instrument specialists assessed the effectiveness of these
hedges by independently modelling the future changes in the value of these instruments to assess whether the underlying derivatives
were effective.
—assessing for changes to the accounting treatment of the CIP securities. We read the underlying loan agreement and analysed the
various features of the loan agreement to determine whether the CIP securities were a debt or equity instrument.
—verifying the carrying amount of CIP securities is in-line with the accounting models including current and non-current classification.
—confirming debt to external support, sighting repayments and reviewing compliance with covenant requirements.
22 Chorus Annual Report 2024Consolidated financial statements
Other information
The Directors, on behalf of the Group, are responsible for the other information included in the
entity’s Annual Report information includes Chorus’ operating, marketing and regulatory overviews,
management commentary and disclosure relating to corporate governance and statutory information.
Our opinion on the consolidated financial statements does not cover any other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears
materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in
the independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the shareholders as a body for our audit work,
this independent auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated financial statements
The Directors, on behalf of the Group, are responsible for:
—the preparation and fair presentation of the consolidated financial statements in accordance
with generally accepted accounting practice in New Zealand (being New Zealand Equivalents to
International Financial Reporting Standards) and International Financial Reporting Standards issued by
the New Zealand Accounting Standards Board;
—implementing necessary internal control to enable the preparation of a consolidated set of financial
statements that is free from material misstatement, whether due to fraud or error; and
—assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend
to liquidate or to cease operations or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objective is:
—to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error; and
—to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is
located at the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz / standards-for-assurance-practitioners / auditors-responsibilities / audit-report-1 /
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor’s report is David Gates.
For and on behalf of
KPMG
Wellington
26 August 2024
23 Chorus Annual Report 2024Consolidated financial statements
The accompanying notes
are an integral part of these
consolidated financial statements.
Consolidated
income
statement
For the year ended
30 June 2024
Note
2024
$M
2023
$M
Operating revenue9 1,010 980
Operating expenses10 (310) (308)
Earnings before interest, income tax, depreciation and amortisation 700 672
Depreciation
1,7 (374) (355)
Amortisation2,3 (88) (91)
Earnings before interest and income tax 238 226
Finance income 5 4
Finance expense
4 (222) (199)
Net earnings before income tax 21 31
Income tax expense14 (30) (6)
Net (loss) / earnings for the year (9) 25
Earnings per share
Basic (loss)/earnings per share (dollars)
17 (0.02) 0.06
Diluted (loss)/earnings per share (dollars)17 (0.02) 0.05
Consolidated
statement of
comprehensive
income
For the year ended
30 June 2024
Note
2024
$M
2023
$M
Net (loss)/earnings for the year (9) 25
Other comprehensive income
Movements in effective cash flow hedges
19 (12) 3
Amortisation of de-designated cash flow hedges transferred to Income statement19 5 5
Movement in cost of hedging reserve19 (9) (3)
Items that will be reclassified subsequently to Income statement when specific conditions
are met net of tax
(16) 5
Net revaluation of land and buildings1 7 265
Items that will not be reclassified subsequently to Income statement when specific
conditions are met net of tax
7 265
Total comprehensive (loss) / income for the year net of tax (18) 295
24 Chorus Annual Report 2024Consolidated financial statements
The accompanying notes
are an integral part of these
consolidated financial statements.
Consolidated
statement
of financial
position
As at 30 June 2024
Note
2024
$M
2023
$M
Current assets
Cash and call deposits
15 45 76
Trade and other receivables11 154 153
Derivative financial instruments19 1 43
Assets held for sale– 1
Total current assets 200 273
Non-current assets
Derivative financial instruments
19 98 116
Trade and other receivables114–
Customer acquisition assets3 67 60
Software and other intangible assets2 142 146
Network assets1 5,126 5,213
Land and buildings1 375 357
Total non-current assets 5,812 5,892
Total assets 6,012 6,165
Current liabilities
Trade and other payables
12 230 280
Lease payable5 12 13
Derivative financial instruments19– 1
Debt4 110 368
Total current liabilities excluding Crown funding 352 662
Crown Infrastructure Partners (CIP) securities6 160–
Crown funding7 28 28
Total current liabilities 540 690
25 Chorus Annual Report 2024Consolidated financial statements
The accompanying notes
are an integral part of these
consolidated financial statements.
Note
2024
$M
2023
$M
Non-current liabilities
Trade and other payables
12 13 11
Deferred tax liability14 386 363
Derivative financial instruments19 72 93
Lease payable5 159 168
Debt4 2,516 2,160
Total non-current liabilities excluding CIP and Crown funding 3,146 2,795
Crown Infrastructure Partners (CIP) securities6 584 697
Crown funding7 901 920
Total non-current liabilities 4,631 4,412
Total liabilities 5,171 5,102
Equity
Share capital
16 578 589
Reserves1,19 322 331
Retained earnings(59) 143
Tot al e quit y 841 1,063
Total liabilities and equity 6,012 6,165
The consolidated financial statements are approved and signed on behalf of the Board.
Consolidated
statement
of financial
position
(continued)
As at 30 June 2024
Authorised for issue on 26 August 2024
Mark Cross
Chair
Kate Jorgensen
Chair, Audit & Risk Management Committee
26 Chorus Annual Report 2024Consolidated financial statements
The accompanying notes
are an integral part of these
consolidated financial statements.
Note
Share capital
$M
Revaluation
reserve
$M
Other reserves
$M
Retained
earnings
$M
Total
$M
Balance at 1 July 2022 682– 60 287 1,029
Comprehensive income
Net earnings for the year
– – – 25 25
Other comprehensive income
Movement in cash flow hedge reserve
19– – 3– 3
Amortisation of de-designated cash flow hedges transferred to Income statement19– – 5– 5
Movement in cost of hedging reserve19– – (3)– (3)
Movement in revaluation reserve1– 265– – 265
Total comprehensive income– 265 5 25 295
Contributions by and (distributions to) owners:
Dividends
16– – – (169) (169)
Dividend reinvestment plan16 9– – – 9
Share buy-back16 (101)– – – (101)
Shares issued under LTI scheme (1)– 1– –
Total transactions with owners (93)– 1 (169) (261)
Balance at 30 June 2023 589 265 66 143 1,063
Comprehensive income
Net loss for the year
– – – (9) (9)
Other comprehensive income
Movement in cash flow hedge reserve
19– – (12)– (12)
Amortisation of de-designated cash flow hedges transferred to Income statement19– – 5– 5
Movement in cost of hedging reserve19– – (9)– (9)
Movement in revaluation reserve1– 7– – 7
Total comprehensive income
– 7 (16) (9) (18)
Contributions by and (distributions to) owners:
Dividends
16– – – (193) (193)
Share buy-back16 (11)– – – (11)
Total transactions with owners (11)– – (193) (204)
Balance at 30 June 2024 578 272 50 (59) 841
Consolidated
statement of
changes in
equity
For the year ended
30 June 2024
27 Chorus Annual Report 2024Consolidated financial statements
The accompanying notes
are an integral part of these
consolidated financial statements.
Note
2024
$M
2023
$M
Cash flows from operating activities
Cash was provided from / (applied to):
Receipts from customers
1,007 973
Payment to suppliers and employees (334) (311)
Interest paid (165) (138)
Interest received 5 4
Taxation paid – (4)
Net cash flows provided from operating activities 513 524
Cash flows applied to investing activities
Cash was provided from / (applied to):
Purchase of network and intangible assets
(442) (495)
Disposal of network and intangible assets 1–
Capitalised interest paid (1) (1)
Net cash flows applied to investing activities (442) (496)
Cash flows from financing activities
Cash was provided from / (applied to):
Payment of lease liabilities
(16) (15)
Crown funding (including CIP securities) 12 84
Proceeds from debt 574 811
Repayment of debt (468) (659)
Repurchase of shares (11) (101)
Dividends paid (193) (160)
Net cash flows applied to financing activities (102) (40)
Net cash flows (31) (12)
Cash at the beginning of the year 76 88
Cash at the end of the year15 45 76
Consolidated
statement of
cash flows
For the year ended
30 June 2024
28 Chorus Annual Report 2024Consolidated financial statements
The accompanying notes
are an integral part of these
consolidated financial statements.
Notes
2024
$M
2023
$M
Net (loss)/earnings for the year(9)25
Adjustment for:
Depreciation of network assets
1405384
Amortisation of Crown funding7(31)(29)
Amortisation of software and other intangible assets25761
Amortisation of customer acquisition assets33533
Movements in tax14302
Ineffective portion of changes in fair value of cash flow hedges4(3)(7)
Amortisation of non-cash finance expenses410
CIP securities (notional) interest44745
Other55
540529
Change in current assets and liabilities:
Increase in trade and other receivables
11(5)(27)
(Decrease) / increase in operating trade payables12(22)22
(27)(5)
Net cash flows from operating activities513524
Consolidated
statement of
cash flows
(continued)
Reconciliation of
net (loss) / earnings to
net cash flows from
operating activities
29 Chorus Annual Report 2024Consolidated financial statements
The accompanying notes
are an integral part of these
consolidated financial statements.
Debt
$M
Crown funding
$M
CIP securities
$M
Lease payable
$M
Share capital
$M
Retained earnings
$M
Balance at 1 July 2022 2,322 936 613 187 682 287
Movements from financing cash flows
Payment of lease liabilities
– – – (15)– –
Proceeds from debt
811 45 39– – –
Repayment of debt (659)– – – – –
Repurchase of shares– – – – (101)–
Dividends paid– – – – – (160)
Total changes from financing cash flows 152 45 39 (15) (101) (160)
Other cash flows
Interest paid on leases
– – – (11)– –
Non-cash movements
Movements in fair value (including foreign exchange rates)
50– – – – –
Transaction costs and amortisation related to financing 4 (29) 45– – –
Accruals– (4)– – (1)–
Dividend reinvestment plan– – – – 9 (9)
Lease movements– – – 20– –
Net earnings for the year ended 30 June 2023– – – – – 25
Balance at 30 June 2023 2,528 948 697 181 589 143
Movements from cash flows
Payment of lease liabilities
– – – (16)– –
Proceeds from debt 574 12– – – –
Repayment of debt (468)– – – – –
Repurchase of shares– – – – (11)–
Dividends paid– – – – – (193)
Total changes from financing cash flows 106 12– (16) (11) (193)
Other cash flows
Interest paid on leases
– – – (11)– –
Non-cash movements
Movements in fair value (including foreign exchange rates)
(12)– – – – –
Transaction costs and amortisation related to financing 4 (31) 47– – –
Lease movements– – – 5– –
Net loss for the year ended 30 June 2024– – – – – (9)
Balance at 30 June 2024 2,626 929 744 159 578 (59)
Consolidated
statement of
cash flows
(continued)
Reconciliation of
movements of liabilities
to cash flows arising
from financing activities
30 Chorus Annual Report 2024Consolidated financial statements
Notes to the
consolidated
financial
statements
Reporting entity and statutory base
Chorus includes Chorus Limited together with its subsidiaries.
Chorus is New Zealand’s largest fixed line communications infrastructure business.
It maintains and builds a network predominantly made up of fibre and copper cables,
local telephone exchanges and cabinets.
Chorus Limited is a profit-oriented company registered in New Zealand under the
Companies Act 1993 and is a FMC Reporting Entity for the purposes of the Financial
Markets Conduct Act 2013. Chorus Limited was established as a standalone, publicly
listed entity on 1 December 2011, upon its demerger from Spark New Zealand Limited
(Spark, previously Telecom Corporation of New Zealand Limited). The demerger was
a condition of an agreement with Crown Infrastructure Partners Limited (previously
Crown Fibre Holdings) to enable Chorus Limited to provide the majority of the
Crown’s Ultra-Fast Broadband (UFB). Chorus Limited is listed and its ordinary shares
are quoted on the NZX main board equity security market (NZX Main Board) and on
the Australian Stock Exchange (ASX). Chorus has bonds quoted on the NZX and ASX
debt markets. American Depositary Shares, each representing five ordinary shares
(and evidenced by American Depositary Receipts), are not listed but are traded on the
over-the-counter market in the United States.
These consolidated financial statements (financial statements) have been prepared in
accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP)
and Part 7 of the Financial Markets Conduct Act 2013. They comply with New Zealand
equivalents to International Financial Reporting Standards (NZ IFRS) as appropriate for
profit-oriented entities, and with International Financial Reporting Standards.
These financial statements are expressed in New Zealand dollars. All financial
information has been rounded to the nearest million, unless otherwise stated.
The measurement basis adopted in the preparation of these financial statements
is historical cost, modified by the revaluation of financial instruments and land
and building assets as identified in the specific accounting policies below and the
accompanying notes.
Some comparatives have been restated to reflect the current year classification.
This has led to no impact on working capital, the consolidated statements of
cash flows, or equity.
Accounting policies and standards
Accounting policies that summarise the measurement basis used which are relevant
to the understanding of the financial statements are provided throughout the
accompanying notes.
The accounting policies adopted and methods of computation have been applied
consistently throughout the periods presented in these financial statements.
No new standards, amendments or interpretations to existing standards that are not
yet effective have been early adopted by Chorus in these financial statements.
Climate impact
In preparing the financial statements, management has considered climate-related
matters and disclosed as required when the effect of those matters is material in the
context of the financial statements taken as a whole. In the year ended 30 June 2024
there was no material impact from climate related matters.
Accounting estimates and judgements
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 experience
and other factors, including macro-economic and market factors, and expectations
of future events that may have an impact on Chorus. All judgements, estimates,
and assumptions are believed to be reasonable based on the most current set of
circumstances available to Chorus. The principal areas of judgement in preparing
these financial statements are set out below.
Network assets (note 1)
Assessing the carrying value of network assets for impairment considerations which
includes assessing the appropriateness of useful life and residual value estimates of
network assets, the physical condition of the asset, technological advances, regulation
and expected disposal proceeds from the future sale of the asset.
31 Chorus Annual Report 2024Notes to the consolidated financial statements
Land and buildings (note 1)
Land and buildings are recorded at fair value. Fair value relating to land and buildings is determined
based on a periodic independent valuation using a combination of both an optimised depreciated
replacement cost and a market valuation approach. The valuation technique applied to each asset is
determined by the independent valuer, with input and review by Chorus management who are familiar
with the nature of the assets. Valuations are performed every three years, or more frequently where
indicators exist that the carrying amount of the asset materially differs from its fair value at the end
of the reporting period. This may be the result of external factors (e.g. a volatile property market) or
internal factors. In these instances where indicators of material difference exist, a desktop valuation may
be obtained to appropriately adjust the carrying value of the assets. The underlying assumptions used in
the valuation are reviewed at each reporting date to ensure the carrying value is not materially different
from the fair value.
Customer acquisition assets (note 3)
Assessing the carrying value of customer acquisition assets for impairment considerations which includes
assessing the appropriateness of useful life, contract terms, revenue and customer connections data.
Leases (note 5)
A significant portion of lease contracts contain options for extension, which in turn require management
to apply judgement in assessing if these extensions are likely to be exercised.
Crown Infrastructure Partners (CIP) securities (note 6)
On initial recognition, determining the fair value of the CIP securities required Chorus to make
assumptions on expected future cash flows and discount rates based on future long dated swap curves.
The associated UFB build was completed in the year ended 30 June 2023.
Financial risk management (note 19 and 20)
Accounting judgements have been made in determining hedge designation and the fair value of
derivatives and borrowings. The fair value of derivatives and borrowings are determined based on valuation
models that use forward-looking estimates and market observable data, to the extent that it is available.
Non-GAAP measures
Chorus uses non-GAAP measures that are not prepared in accordance with NZ IFRS. Chorus believes
these non-GAAP measures provide useful information to users of the financial statements to assist in
understanding the financial performance of Chorus. These measures are also used internally to evaluate
the performance of Chorus and monitored for compliance against debt covenants.
These measures should not be viewed in isolation or as a substitute for measures reported in
accordance with NZ IFRS as they are not uniformly defined or utilised by all companies in New Zealand
or the telecommunications industry.
Earnings before interest and income tax (EBIT) and earnings before interest, income tax,
depreciation and amortisation (EBITDA)
Chorus calculates EBIT by adding back finance expense and income tax to, and subtracting finance
income from, net (loss) / earnings. EBITDA adds back depreciation and amortisation expense to EBIT.
A reconciliation of EBIT and EBITDA is provided below based on amounts taken from, and consistent
with, those presented in the financial statements.
Year ended 30 June
2024
$M
2023
$M
Net (loss) / earnings for the year reported under NZ IFRS(9) 25
Add back: income tax expense
30 6
Add back: finance expense222 199
Subtract: finance income(5) (4)
EBIT238 226
Add back: depreciation 374 355
Add back: amortisation88 91
EBITDA700 672
32 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 1 – Network assets, land and buildings
Network assets
In the Consolidated statement of financial position, network assets, except land and buildings, are stated
at cost less accumulated depreciation and any accumulated impairment losses. The cost of additions
to network assets and 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 Consolidated income statement as incurred. If the
useful life of the asset is extended or the asset is enhanced then the associated costs are capitalised.
Land and buildings
Land and buildings are carried at a revalued amount. The revalued amount represents the fair value of
each land and building asset at the date of revaluation less any subsequent accumulated depreciation
and subsequent accumulated impairment losses. If an asset’s carrying amount is increased as a
result of a revaluation, the increase is recognised in the Consolidated statement of comprehensive
income and accumulated within the revaluation reserve in equity. An increase shall be recognised
in the Consolidated income statement to the extent it reverses a revaluation decrease of the same
asset previously recognised in profit or loss. If an asset’s carrying amount is decreased as a result
of a revaluation, the decrease is first recognised in the Consolidated statement of comprehensive
income (and the revaluation reserve) to the extent any credit balance exists in relation to that asset.
Any additional decrease in the asset’s carrying amount is recognised in the Consolidated income
statement as an expense. The attributable revaluation surplus remaining in the asset revaluation reserve
relating to land or buildings disposed of, net of any related deferred taxes, is transferred directly to
retained earnings on the derecognition of the relevant asset.
Using the last independent external valuation performed for the year ended 30 June 2023 as a base,
further work was performed to assess the value at balance date. An increase in the land value of 2.6%
was adopted based on the QV House Index annual change in prices. There were no other changes to
key inputs.
Estimating useful lives and residual values of network assets and buildings
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, and the likelihood
of Chorus ceasing to use the asset in business operations.
Where an item of network assets or buildings comprises major components having different useful lives,
the components are accounted for as separate items of network assets or buildings.
Where the remaining useful lives or recoverable values have diminished due to technological, regulatory
or market condition changes, depreciation is accelerated. The assets’ residual values, useful lives,
and methods of depreciation are reviewed annually and adjusted prospectively, if appropriate.
Depreciation is charged on a straight-line basis to write down the cost of network assets to their
estimated residual value over their estimated useful life. Estimated useful lives are as follows:
Estimated useful life
Fibre cables
20 – 30 years
Ducts, poles, and manholes20 – 50 years
Buildings50 years
Copper cables10 – 25 years
Cabinets5 – 20 years
Network electronics2 – 25 years
Right of use assets4 – 50 years
Other4 – 10 years
Other network assets include motor vehicles, test instruments, furniture and fittings, tools, and plant.
An item of network assets and any significant part is derecognised upon disposal or when no future
economic benefits are expected from its use. Where network assets are disposed of, the profit or loss
recognised in the Consolidated 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. Work in progress is reviewed on a regular basis to ensure
that costs represent future assets.
33 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 1 – Network assets, land and buildings continued
30 June 2024
Fibre
cables
$M
Ducts, manholes,
and poles
$M
Copper
cables
$M
Cabinets
$M
Network
electronics
$M
Right of use
assets
$M
Other
$M
Work in
progress
$M
Land and
buildings
$M
Total
$M
Gross carrying amount
Balance at 1 July 2023
2,797 3,279 2,426 74 8 1,832 244 299 177 357 12,159
Additions 129 87 4 17 80 6 12 94 14 443
Disposals– (1)– – (2)– (2)– – (5)
Transfers from work in progress– – – – – – – (116)– (116)
Net revaluations through OCI– – – – – – – – 7 7
Other– – – – – – – 4 (1) 3
Balance at 30 June 2024 2,926 3,365 2,430 765 1,910 250 309 159 377 12,491
Accumulated depreciation–
Balance at 1 July 2023 (1,092) (842) (2,248) (543) (1,554) (96) (214)– – (6,589)
Depreciation (135) (80) (74) (17) (70) (14) (13)– (2) (405)
Disposals– – – – 2– 2– – 4
Balance at 30 June 2024 (1,227) (922) (2,322) (560) (1,622) (110) (225)– (2) (6,990)
Net carrying amount 1,699 2,443 108 205 288 140 84 159 375 5,501
34 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 1 – Network assets, land and buildings continued
30 June 2023
Fibre
cables
$M
Ducts, manholes,
and poles
$M
Copper
cables
$M
Cabinets
$M
Network
electronics
$M
Right of use
assets
$M
Other
$M
Work in
progress
$M
Land and
buildings
$M
Total
$M
Gross carrying amount
Balance at 1 July 2022
2,663 3,160 2,424 731 1,762 234 295 141 184 11,594
Additions 134 119 2 17 78 7 7 158 5 527
Disposals– – – – (8) (1) (3)– (1) (13)
Transfers from work in progress– – – – – – – (122)– (122)
Net revaluations through OCI– – – – – – – – 169 169
Other– – – – – 4– – – 4
Balance at 30 June 2023 2,797 3,279 2,426 74 8 1,832 244 299 177 357 12,159
Accumulated depreciation–
Balance at 1 July 2022 (964) (778) (2,172) (525) (1,495) (84) (202)– (109) (6,329)
Depreciation (128) (64) (76) (18) (67) (13) (14)– (4) (384)
Disposals– – – – 8 1 2– – 11
Net revaluations through OCI– – – – – – – – 113 113
Balance at 30 June 2023 (1,092) (842) (2,248) (543) (1,554) (96) (214)– – (6,589)
Net carrying amount 1,705 2,437 178 205 278 148 85 177 357 5,570
There are no restrictions on Chorus’ network assets or any network assets pledged as securities
for liabilities. At 30 June 2024 the contractual commitments for acquisition and construction of the
network assets was $53 million (30 June 2023: $50 million).
Land and buildings at historical cost
If land and buildings were stated on an historical cost basis, the amounts would be as follows:
Year ended 30 June
2024
$M
2023
$M
Land and buildings (at cost)200188
Buildings accumulated depreciation(115)(113)
Net carrying amount8575
Crown funding
Chorus received funding from the Crown to finance the capital expenditure associated with the
development of the UFB network and continues to receive funding for other services. Where funding is
used to construct assets, it is offset against depreciation over the life of the assets constructed.
Refer to note 7 for information on Crown funding.
35 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 1 – Network assets, land and buildings continued
Impairment
The carrying amounts of non-financial assets including network assets, land and buildings, software and
other intangibles, and customer acquisition assets are reviewed at the end of each reporting period for
any indicators of impairment.
If any such indication exists, the recoverable amount of the asset is estimated. An impairment loss is
recognised in earnings whenever the carrying amount of an asset exceeds its estimated recoverable
amount. 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.
The recoverable amount is the greater of an assets value in use and fair value less costs to sell.
Chorus’ assets do not generate independent cash flows and are therefore assessed from a single
cash-generating unit perspective.
Capitalised interest
Finance costs are capitalised on qualifying items of network assets and software assets at an annualised
rate of 5.8% (30 June 2023: 4.0%). Interest is capitalised over the period required to complete the
assets and prepare them for their intended use. In the current year finance costs totalling $1 million
(30 June 2023: $1 million) have been capitalised against network assets and software assets.
Right of use assets
A right of use asset is recognised on commencement of a lease. The right of use asset is initially
measured at cost, which is made up of the initial lease liability amount adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate
of costs to remove the underlying asset or to restore the underlying asset or the site on which it is
located, less any lease incentives received. The right of use asset is subsequently depreciated using
the straight-line method until the assumed end of the lease term. The right of use asset is periodically
adjusted for certain remeasurements of the lease liability.
Movements in right of use assets for the period are presented below:
Fibre
cables
$M
Ducts, manholes,
and poles
$M
Property
$M
Total
$M
Balance 1 July 2022
7 48 95 150
Additions– 4 3 7
Disposals–– (1) (1)
Other–– 4 4
Depreciation charge (1) (4) (7) (12)
Balance at 30 June 2023 6 48 94 148
Additions– 4 1 5
Depreciation charge (1) (4) (8) (13)
Balance at 30 June 2024 5 48 87 140
Property exchanges
Chorus has leased exchange space and commercial co-location space owned by Spark which is subject
to lease arrangements (included within right of use assets). Chorus in turn leases exchange space and
commercial co-location space owned by Chorus to Spark under an operating lease arrangement.
36 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 2 – Software and other intangible assets
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:
Estimated useful life
Software
2–10 years
Other intangibles20 –35 years
Other intangibles mainly consists of land easements.
Where estimated useful lives or recoverable values have diminished due to technological change or
market conditions, amortisation is accelerated.
There are no restrictions on software and other intangible assets, or any intangible assets pledged as
securities for liabilities.
30 June 2024
Software
$M
Other intangibles
$M
Work in progress
$M
Total
$M
Cost
Balance at 1 July 2023
955 6 28 989
Additions 48– 53 101
Disposals
(4)– – (4)
Transfers from work in progress– – (48) (48)
Balance at 30 June 2024 999 6 33 1,038
Accumulated amortisation
Balance at 1 July 2023
(842) (1)– (843)
Amortisation (56) (1)– (57)
Disposals 4– – 4
Balance at 30 June 2024 (894) (2)– (896)
Net carrying amount 105 4 33 142
30 June 2023
Software
$M
Other intangibles
$M
Work in progress
$M
Total
$M
Cost
Balance at 1 July 2022
918 6 17 941
Additions 44– 55 99
Disposals
(7)– – (7)
Transfers from work in progress– – (44) (44)
Balance at 30 June 2023 955 6 28 989
Accumulated amortisation
Balance at 1 July 2022
(788) (1)– (789)
Amortisation (61)– – (61)
Disposals 7– – 7
Balance at 30 June 2023 (842) (1)– (843)
Net carrying amount 113 5 28 146
At 30 June 2024 the contractual commitment for acquisition of software and other intangible assets was
$9 million (30 June 2023: $4 million).
37 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 3 – Customer acquisition assets
Customer acquisition costs are incremental costs incurred in acquiring new contracts with new and
existing customers that Chorus expects are recoverable and are capitalised as customer acquisition
assets. These represent various costs including commissions and incentives for customers to connect
to the fibre network. Following initial recognition, customer acquisition assets are stated at cost less
accumulated amortisation and impairment losses. Customer acquisition assets have a finite life and are
amortised from the month that costs are capitalised on a straight-line basis over the average connection
life which is as follows:
Average connection life
New connections and migrations
1–4 years
Customer incentives1 year
Customer acquisition assets are amortised to the Consolidated income statement, either as amortisation
expense or against operating revenue, based on the nature of the specific costs capitalised.
New connections
and migrations
$M
Customer
incentives
$M
Total
$M
Balance at 1 July 2022 (net carrying amount) 58 1 59
Additions 30 4 34
Amortisation to amortisation expense (30)– (30)
Amortisation to operating revenue– (3) (3)
Balance at 30 June 2023 (net carrying amount) 58 2 60
Additions 38 4 42
Amortisation to amortisation expense (31)– (31)
Amortisation to operating revenue– (4) (4)
Balance at 30 June 2024 (net carrying amount) 65 2 67
38 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 4 – Debt
Debt is classified as non-current liabilities except for those with maturities less than 12 months from
the reporting date, which are classified as current liabilities. 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. Some borrowings are designated in fair
value hedge relationships, which means that any change in market interest and foreign exchange rates
result in a change in the fair value adjustment on that debt.
The weighted effective interest rate on debt including the effect of derivative financial instruments and
facility fees was 5.77% (30 June 2023: 5.40%).
Due date
2024
$M
2023
$M
Syndicated bank facilities 110–
Euro medium term notes EUROct 2023– 368
Euro medium term notes EURDec 2026 488 473
Euro medium term notes EURSep 2029 857 853
Australian medium term notes AUDSep 2030 326 –
Fixed rate NZD BondsDec 2027 200 200
Fixed rate NZD BondsDec 2028 502 500
Fixed rate NZD Bonds
Dec 2030 160 153
Less: facility fees (17) (19)
Total Debt 2,626 2,528
Current 110 368
Non-current 2,516 2,160
Syndicated bank facilities
As at 30 June 2024 Chorus had a $450 million committed syndicated facility on market standard terms
and conditions (30 June 2023: $450 million). The facility is held with banks that are rated A to AA-, based
on Standard & Poor’s ratings. As at 30 June 2024 $110 million was drawn down (30 June 2023: nil).
Medium Term Notes (MTN)
Face valueInterest rate
2024
$M
2023
$M
EUR 209 million
1.13%– 368
EUR 300 million
0.88% 488 473
EUR 500 million3.63% 857 853
AUD 300 million5.97% 326–
AUD MTN (AMTN) 2030 issuance
Chorus issued AUD 300 million of AMTN in September 2023 at a fixed interest rate of 5.97% for 7 years.
Consistent with the Chorus Treasury Policy, the debt has been fully hedged with cross currency interest
rate swaps to hedge the foreign currency exposure, which entitles Chorus to receive AUD 300 million
and AUD fixed coupon payments for NZD 325 million principal and NZD floating interest payments.
Euro MTN (EMTN) 2023 tender
The October 2023 EMTN was repaid and settled on 18 October 2023.
Chorus has in place cross currency interest rate swaps to hedge the foreign currency exposure to the
MTNs. The cross currency interest rate swaps entitle Chorus to receive EUR or AUD principal and EUR or
AUD fixed coupon payments for NZD principal and NZD floating interest payments.
The EUR 500 EMTN cross currency interest rate swaps (notional amount EUR 500 million) are partially
hedged for the NZD interest payments using interest rate swaps. The EUR 300 cross currency interest
rate swaps (notional amount EUR 300 million) are fully hedged for the NZD interest payments using
interest rate swaps. The AUD 300 cross currency swaps (notional amount AUD 300 million) are partially
hedged for the NZD interest payments using interest rate swaps.
39 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 4 – Debt continued
The following table reconciles MTNs at hedged rates to MTNs carrying value based on spot rates as
reported under NZ IFRS. MTNs at hedged rates is a non-GAAP measure and is not defined by NZ IFRS:
2024
EUR 500
$M
2023
EUR 500
$M
2024
EUR 300
$M
2023
EUR 300
$M
2024
EUR 209
$M
2023
EUR 209
$M
EMTN (at carrying value)
857853488473– 368
Impact of fair value hedge23384062– 4
Impact of hedged rates used(60)(71)(14)(21)– (44)
EMTN at hedged rates (non-GAAP measure)820820514514– 328
EMTN at fair value903868497475– 369
2024
AUD 300
$M
2023
AUD 300
$M
AMTN (at carrying value)
326–
Impact of fair value hedge 3–
Impact of hedged rates used (4)–
AMTN at hedged rates (non-GAAP measure) 325–
AMTN at fair value339–
The fair value of MTNs is calculated based on the present value of future principal and interest cash
flows, discounted at market interest rates at balance date and is determined using Level 2 of the fair
value hierarchy as described in note 20.
Fixed rate NZD bonds
Due dateInterest rate
2024
$M
2023
$M
Fixed rate NZD Bonds Dec 20271.98% 200 200
Fixed rate NZD Bonds Dec 20284.35% 502 500
Fixed rate NZD Bonds Dec 20302.51% 160 153
Total fixed rate NZD Bonds 862 853
The fixed rate on the 2030 NZD Bonds has been swapped to a floating rate using interest rate swaps,
creating a fair value hedge which has a fair value of $160 million at balance date (notional amount
$200 million). This hedging relationship was entered into to comply with the Chorus Treasury Policy
which does not allow for greater than 70% of term debt to be subject to fixed interest rates beyond a
three-year time period.
The fixed rate on the 2028 NZD Bonds has been swapped to a floating rate using interest rate swaps,
creating a fair value hedge which has a fair value of $502 million (notional amount $500 million).
This hedging relationship was entered into to fix the rate reset with forward start interest rate swaps on
6 December 2023.
At 30 June 2024, Chorus had $900 million of unsecured, unsubordinated debt securities (30 June 2023:
$900 million).
40 Chorus Annual Report 2024Notes to the consolidated financial statements
Schedule of maturities
2024
$M
2023
$M
Current 110 368
Due one to two years– –
Due two to three years 488–
Due three to four years 200 673
Due four to five years 502–
Due over five years 1,343 1,506
Total due 2,643 2,547
Less: facility fees (17) (19)
2,626 2,528
No debt has been secured against assets, however there are financial covenants and event of default
triggers as defined in the various debt agreements. During the current year Chorus complied with the
requirements set out in its financing agreements (30 June 2023: complied).
Refer to note 20 for information on financial risk management.
Finance expense
2024
$M
2023
$M
Interest on syndicated bank facility92
Interest on EMTN8893
Interest on AMTN19–
Interest on fixed rate NZD bonds3832
Ineffective portion of changes in fair value of cash flow hedges(3)(7)
Other interest expense2535
Capitalised interest
(1)(1)
Total finance expense excluding CIP securities (notional) interest175154
CIP securities (notional) interest
4745
Total finance expense222199
Other interest expense includes $11 million lease interest expense (30 June 2023: $11 million),
and $7 million of amortisation arising from the difference between fair value and proceeds realised
from the swaps reset (30 June 2023: $7 million).
Note 4 – Debt continued
41 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 5 – Leases
Chorus is a lessee of certain network assets under lease arrangements. For all leases Chorus recognises
assets and liabilities in the Consolidated statement of financial position, except those determined to be
short-term or low value. On inception of a new lease, the lease payable is measured at the present value
of the remaining lease payments, discounted at Chorus’ incremental borrowing rate at that date. Lease
costs are recognised through interest expense over the life of the lease. The corresponding right of use
asset incurs depreciation over the estimated useful life of the asset.
Chorus’ discounted cash flows by category are summarised below:
2024
$M
2023
$M
Fibre cables 10 11
Ducts, manholes and poles 53 52
Property 108 118
Total lease payable 171 181
Current 12 13
Non-current 159 168
Extension options
Most leases contain extension options exercisable by Chorus up to one year before the end of the non-
cancellable contract period. Where practicable, Chorus seeks to include extension options in new leases
to provide operational flexibility. The extension options held are exercisable only by Chorus and not by
the lessors. Chorus assesses at lease commencement whether it is reasonably certain the extension
options will be exercised, and where it is reasonably certain, the extension period has been included in
the lease liability calculation. Chorus reassesses whether it is reasonably certain to exercise the options if
there is a significant event or significant change in circumstances within its control.
The amounts recognised in the Consolidated income statement and the Consolidated statement of cash
flows relating to leases are summarised below:
2024
$M
2023
$M
Amounts recognised in Consolidated income statement:
Interest on lease payable
1111
Amounts recognised in Consolidated statement of cash flows:
Principal payments
(16)(15)
Lease interest(11)(11)
42 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 6 – Crown Infrastructure Partners (CIP) securities
Ultra-Fast Broadband (UFB)
Chorus received Crown funding to finance construction costs associated with the development of the
UFB network. Funding was received for every premise passed and certified by CIP.
Funding was received over two phases. Phase one of the build (UFB1) was completed in December
2019 with a total of $924 million of funding received. Phase two (UFB2 and UFB2+) was completed in
December 2022 with a total $411 million of funding received.
In return for funding under both phases, CIP equity securities and CIP debt securities were issued.
Under UFB1 CIP warrants were also issued.
The CIP 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 equity securities and debt securities per premises
passed by the effective rate based on market rates. The difference between funding received and the
fair value of the securities is recognised as Crown funding. Over time, the CIP debt and equity securities
increase to face value and the Crown funding is released against depreciation and reduces to nil.
CIP debt securities
CIP 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 CIP debt securities in tranches from
2025 by repaying the face value to the holder.
The principal amount of CIP 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 below all other Chorus indebtedness but above ordinary
shares of Chorus. The initial value of the senior portion is the present value of the sum repayable on the
CIP debt securities, and the initial subordinated portion will be the difference between the issue price of
the CIP debt security and the value of the senior portion.
CIP equity securities
CIP 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 CIP.
For UFB1 equity securities, dividends will become payable on a portion of the CIP equity securities from
2025 onwards, with the portion of CIP equity securities that attract dividends increasing over time.
For UFB2 and UFB2+ equity securities, dividends will become payable from 2030.
CIP equity securities can be redeemed by Chorus at any time by payment of the issue price or issue
of new ordinary shares (at a 5% discount to the 20 – day volume weighted average price) to the holder.
In limited circumstances CIP equity securities may be converted by the holder into voting preference or
ordinary shares.
The CIP equity securities are required to be disclosed as a liability until the liability component of the
compound instrument expires.
43 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 6 – Crown Infrastructure Partners (CIP) securities continued
CIP warrants
Under UFB1 Chorus issued warrants to CIP for nil consideration along with each tranche of CIP equity
securities. Each CIP warrant gives CIP the right, on a specified exercise date, to purchase at a set strike
price a Chorus share to be issued by Chorus. The strike price for a CIP warrant is based on a total
shareholder return of 16% per annum on Chorus shares over the period December 2011 to June 2036.
At 30 June 2024, Chorus had issued a total 16,407,227 warrants which had a fair value and carrying value
that approximated zero (30 June 2023: 15,622,325 warrants issued). The number of fibre connections
made by 30 June 2024 impacts the number of warrants that could be exercised.
At 30 June 2024, the component parts of CIP debt and equity instruments, including notional interest, were:
20242023
CIP debt
securities
$M
CIP equity
securities
$M
Total CIP
securities
$M
CIP debt
securities
$M
CIP equity
securities
$M
Total CIP
securities
$M
Fair value on initial recognition
Balance at 1 July
228 250 478 189 250 439
Additional securities recognised at fair
value
––– 39– 39
Balance at 30 June 228 250 478 228 250 478
Accumulated notional interest
Balance at 1 July
96 123 219 78 96 174
Notional interest 19 28 47 18 27 45
Balance at 30 June 115 151 266 96 123 219
Total CIP securities 343 401 74 4 324 373 697
Current 81 79 160–––
Non-current 262 322 584 324 373 697
CIP at fair value 351 444 795 320 375 695
Key assumptions in calculations on initial recognition
On initial recognition, a discount rate is used for the CIP debt securities. No CIP debt securities were
issued in the year (30 June 2023: $39m was recognised using discount rates between 6.16% and 7.36%).
The discount rate was used for the CIP equity securities and to discount the expected cash flows, based
on the NZ swap curve. The swap rates were adjusted for Chorus specific credit spreads (based on
market observed credit spreads for debt issued with similar credit ratings and tenure). The discount rate
on the CIP equity securities is capped at Chorus’ estimated cost of (ordinary) equity.
44 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 7 – Crown funding
Funding from the Crown is recognised at fair value where there is reasonable assurance that the funding
is receivable and all attached conditions will be complied with. Crown funding is then recognised in
earnings as a reduction to depreciation expense on a systematic basis over the useful life of the asset the
funding was used to construct.
20242023
UFB
$M
WCSNB
$M
RBI
$M
Other
$M
Total
$M
UFB
$M
WCSNB
$M
RBI
$M
Other
$M
Total
$M
Fair value on initial recognition
Balance at 1 July
860 42 242 16 1,160 821 40 242 16 1,119
Additional funding recognised at fair value– 8– 4 12 39 2–– 41
Balance at 30 June 860 50 242 20 1,172 860 42 242 16 1,160
Accumulated amortisation of funding
Balance at 1 July
(132) (1) (69) (10) (212) (112)– (61) (10) (183)
Amortisation (21) (1) (8) (1) (31) (20) (1) (8)– (29)
Balance at 30 June (153) (2) (77) (11) (243) (132) (1) (69) (10) (212)
Total Crown funding 707 48 165 9 929 728 41 173 6 948
Current 28 28
Non-current 901 920
Crown funding largely comprises project-related government funding for the Ultra-Fast Broadband
(UFB) build, West Coast Southland Network Build (WCSNB), and Rural Broadband Initiative (RBI) projects.
45 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 8 – Segmental reporting
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 (CEO) 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 communications
infrastructure. The determination is based on the reports reviewed by the CEO in assessing
performance, allocating resources and making strategic decisions.
All of Chorus’ operations are provided in New Zealand, therefore no geographic information is provided.
Three Chorus customers met the reporting threshold of 10 percent of Chorus’ operating revenue in the
year to 30 June 2024. The total revenue for the year ended 30 June 2024 from these customers was
$327 million (30 June 2023: $330 million), $193 million (30 June 2023: $198 million) and $219 million
(30 June 2023: $146 million).
46 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 9 – Operating revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes
amounts collected on behalf of third parties. Chorus recognises revenue when it transfers control of a
product or service to a customer and cash collection is considered probable. Revenue is presented net
of rebates and customer incentives.
Chorus services provided to
customers
Nature, performance obligation and timing of revenue
Fibre and copper connectionsProviding access to the Chorus fixed lines network to enable
connections to the internet. Chorus recognises revenue as it
provides this service to its customers at a point in time. 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.
Value added network servicesProviding enhanced access to the Chorus fixed line
network to enable internet access, through backhaul
and handover link services to connect across wider areas
and to higher quality levels. Recognition is the same
as described for fibre and copper connections above.
InfrastructureProviding physical storage and site-sharing rental services for co-
location of third party or shared assets. This is billed and recognised
on a monthly basis, based on a point in time.
Field servicesProviding services in the field to protect, strengthen, and increase
the available network – for example, installation services, wiring
and consultation services. This is billed and recognised as the
service is provided over time. Revenue from installation of
connections is recognised upon completion of the connection.
Revenue by service
2024
$M
2023
$M
Fibre broadband (GPON)
697 622
Fibre premium (P2P)
69 68
Copper based broadband 83 117
Copper based voice 28 39
Data services copper
3 4
Field services products 67 70
Infrastructure 33 31
Value added network services 26 26
Other
4 3
Total operating revenue 1,010 980
Amounts collected on behalf of third parties
Revenue above is exclusive of amounts collected on behalf of, and paid to third parties, which totalled
$13 million in the year (30 June 2023: $19 million). Any amounts collected but not yet passed to the third
party are recognised within trade and other payables.
47 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 10 – Operating expenses
2024
$M
2023
$M
Labour
80 76
Network maintenance 53 60
Information technology costs 44 42
Other network costs 37 37
Electricity 22 19
Rent and rates
13 12
Property maintenance
14 14
Advertising
11 13
Regulatory levies 9 9
Consultants 6 9
Insurance
5 5
Provisioning 1 1
Other 15 11
Total operating expenses 310 308
Labour
Labour of $80 million (30 June 2023: $76 million) represents employee costs which are not capitalised.
Pension contributions
Included in labour costs are payments to the New Zealand Government Superannuation Fund of
$226,000 (30 June 2023: $297,000) and contributions to KiwiSaver of $3.1 million (30 June 2023: $3.3
million). At 30 June 2024 there were 10 employees in the New Zealand Government Superannuation
Fund (30 June 2023: 11 employees) and 765 employees in KiwiSaver (30 June 2023: 758 employees).
Chorus has no other obligations to provide pension benefits in respect of employees.
Charitable and political donations
Other costs include charitable donations of $771,000 towards digital inclusion and health initiatives
(30 June 2023: $407,000 towards digital inclusion and health initiatives). Chorus has not made any
political donations (30 June 2023: nil).
Auditor remuneration
Included in other expenses are fees paid to auditors:
2024
$000’s
2023
$000’s
Audit and review of statutory financial statements 644 640
Regulatory audit and assurance work
12
645 490
Total other services 645 490
Total fees paid to the auditor 1,289 1,130
12 Regulatory audit and assurance work includes $72,000 of assurance fees for climate related disclosures and
$555,000 in relation to fibre regulation (30 June 2023: regulatory audit and assurance work relates to fibre
regulation).
48 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 11 – Trade and other receivables
Trade and other receivables are initially recognised at the fair value of the amounts to be received, plus
transaction costs (if any). They are subsequently measured at amortised cost (using the effective interest
method) less impairment losses.
2024
$M
2023
$M
Trade receivables 100 98
Other receivables
48 44
Prepayments 10 11
Trade and other receivables 158 153
Current 154 153
Non-current4–
Included within other receivables is $43 million of interest receivable (30 June 2023: $37 million).
Trade receivables are non-interest bearing and are generally on terms of 20 working days or less.
Chorus applies the simplified approach in providing for expected credit losses prescribed by NZ
IFRS 9, which permits the use of the lifetime expected credit loss provision for all trade receivables.
The provision for impairment losses are either individually or collectively assessed based on number of
days overdue. Chorus takes into account the historical loss experience and incorporate forward looking
information and relevant macroeconomic factors.
Chorus maintains a provision for impairment losses when there is objective evidence of its customers
being unable to make required payments and makes a provision for doubtful debt where debt is more
than 60 days overdue. There have been no significant individual impairment amounts recognised as an
expense during the period. Trade receivables are net of allowances for disputed balances with customers.
The ageing profile of trade receivables is as follows:
2024
$M
2023
$M
Not past due 90 94
Past due 1 – 30 days 8 4
Past due 31 – 60 days 2–
100 98
Chorus has a concentrated customer base consisting predominantly of a small number of retail service
providers. The concentrated 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 the collectability of receivables.
Any disputes arising that may affect the relationship between the parties will be raised by relationship
managers and follow a dispute resolution process. Chorus has $10 million of accounts receivable
that are past due but not impaired (30 June 2023: $4 million). The carrying value of trade and other
receivables approximates the fair value. The maximum credit exposure is limited to the carrying value of
trade and other receivables.
49 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 12 – 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 and other payables
are non-interest bearing and are normally settled within 30-day terms. The carrying value of trade and
other payables approximates their fair values.
2024
$M
2023
$M
Trade payables
48 66
Operating expenditure accruals 74 79
Capital expenditure accruals 15 38
Personnel accruals 20 18
Revenue billed in advance 86 90
Trade and other payables 243 291
Current 230 280
Non-current 13 11
Note 13 – Commitments
Capital expenditure
Refer to note 1 and note 2 for details of capital expenditure commitments.
Lease commitments
Refer to note 5 for details of lease commitments.
50 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 14 – Taxation
Income tax expense
Income tax expense for the current year comprises current and deferred tax, and is recognised in the
Consolidated income statement, except to the extent it relates to items recognised in the Consolidated
statement of other comprehensive income or directly in equity.
2024
$M
2023
$M
Recognised in Consolidated income statement
Net earnings before tax
21 31
Tax at 28% 6 9
Tax effect of adjustments
Other non-taxable items
9 7
Deferred tax impact from reversal of depreciation on buildings15–
Building life reassessment
– (10)
Tax expense recognised in Consolidated income statement 30 6
Comprising:
Current tax expense / (benefit)
– Current year
12 5
– Adjustments in respect of prior periods
1 (1)
Deferred tax expense
– Adjustments in respect of prior periods
– 1
– Depreciation, provisions, accruals, leases & other 17 1
30 6
Recognised in other comprehensive income
Net movement in hedging related reserves
(6) 2
Net revaluation of buildings – 17
Tax expense recognised in other comprehensive income (6) 19
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amount used for taxation purposes. The amount
of the deferred tax is based on the expected manner of realisation of the carrying amount of assets and
liabilities, using the tax rates enacted or substantially enacted at reporting year end. A deferred tax asset
is recognised only to the extent it is probable it will be utilised.
The movement in the deferred tax assets and liabilities for the period, is presented below.
Deferred tax liability / (asset)
Changes
in other
reserves
$M
Lease
payable
$M
Fixed &
intangible
assets
$M
Other
$M
Unused
tax credits
$M
Total
deferred
tax liability
$M
Balance at 1 July 2022 22 (50) 355 42 (27) 342
Prior period adjustment– – – 1– 1
Recognised in Consolidated income statement– 1 5 5– 11
Recognised in Consolidated statement of
comprehensive income
2– 17– – 19
Building life reassessment– – (10)– – (10)
Balance at 30 June 2023 24 (49) 367 48 (27) 363
Balance at 1 July 2023 24 (49) 367 48 (27) 363
Recognised in the Consolidated statement of
financial position
– – – – 12 12
Recognised in Consolidated income statement– 3 1 (2)– 2
Recognised in Consolidated statement of
comprehensive income
(6)– – – – (6)
Building life reassessment– – 15– – 15
Balance at 30 June 2024 18 (46) 383 46 (15) 386
Imputation credits
Chorus has an imputation credit account balance of $268,000 as at 30 June 2024 (30 June 2023:
$135,000). The account balance was positive as at 31 March 2024 and 31 March 2023.
51 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 15 – Cash, call deposits, and cash overdraft
Cash and call deposits are held with bank and financial institution counterparties rated at a minimum of A,
based on rating agency Standard & Poor’s ratings.
There are no cash or call deposit balances held that are not available for use. Chorus has a $10 million
overdraft facility which is used in the normal course of operations.
The carrying values of cash and call deposits approximate their fair values. The maximum credit
exposure is limited to the carrying value of cash and call deposits.
Cash and call deposits denominated in foreign currencies are translated 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 Consolidated income statement.
Cash flow
Cash flows from derivatives in cash flow and fair value hedge relationships are recognised in the
Consolidated statement of cash flows in the same category as the hedged item.
For the purposes of the Consolidated 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.
52 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 16 – Equity
Share capital
Movements in Chorus Limited’s issued ordinary shares were as follows:
2024
Number of shares
(millions)
2023
Number of shares
(millions)
Balance 1 July 435 446
Dividend reinvestment plan– 1
Share buyback (1) (12)
Balance at 30 June 434 435
Chorus Limited has 433,887,294 fully paid ordinary shares (30 June 2023: 435,334,308). The issued
shares have no par value. The holders of ordinary shares are entitled to receive dividends as declared 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’s
ordinary shares, or if a shareholder who is not a New Zealand national wishes to have a holding of 49.9%
or more of ordinary shares.
Chorus Limited issued securities to CIP under its fibre rollout agreement. CIP securities are a class of
security that carry no right to vote at meetings of holders of Chorus Limited ordinary shares but carry a
preference on liquidation. Refer to note 6 for additional information on CIP securities.
Should Chorus Limited return capital to shareholders, any return of capital that arose on demerger may
be taxable as Chorus Limited had zero available subscribed capital on demerger.
Dividends
On 10 October 2023 and 16 April 2024, dividends of 25.5 cents per share and 19 cents per share respectively
were paid to shareholders. These two dividend payments totalled $193 million (30 June 2023: 38 cents,
$169 million).
No dividend reinvestment plan was available in the year ended 30 June 2024 (30 June 2023: 1,160,865
shares, with a value of $9 million, were issued in lieu of dividends).
Share buyback
Chorus completed a $150 million share buyback programme in September 2023. The programme
commenced in February 2022 and resulted in the cancellation of 18,986,306 shares.
Long-term performance share scheme
Chorus operates a long-term performance share scheme for selected key management personnel
under which key senior management are issued share-rights.
The scheme is equity settled and treated as an option plan for accounting purposes. Each tranche of each
grant is valued separately. The absolute performance hurdle is valued using Monte Carlo simulations.
In August 2023, Chorus issued a tranche of share rights under the scheme. The shares have a vesting
date of 25 August 2026. The grant carries two performance hurdles;
1. For 50% of the performance share rights to vest, Chorus total shareholder return must equal or
exceed 23.19% over the vesting period, using a hurdle rate of 7.2% that compounds annually.
2. For 100% of the performance share rights to vest, Chorus total shareholder return must equal or
exceed 25.97% over the vesting period, using a hurdle rate of 8% that compounds annually.
A total of 135,719 share rights were issued in the tranche.
The combined option cost for the year ended 30 June 2024 of $290,000 has been recognised in the
Consolidated income statement (30 June 2023: $524,000).
Reserves
Refer to note 19 for information on the cash flow hedge reserve and cost of hedging reserve.
53 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 17 – Earnings per share
The calculation of basic earnings per share at 30 June 2024 is based on the net losses for the year of
$9 million (30 June 2023: net earnings $25 million), and a weighted average number of ordinary shares
outstanding during the period of 435 million (30 June 2023: 443 million), calculated as follows:
20242023
Basic earnings per share
Net (loss) / earnings attributable to ordinary shareholders ($ millions)
(9) 25
Denominator – weighted average number of ordinary shares (millions) 435 443
Basic (loss)/earnings per share (dollars) (0.02) 0.06
Diluted earnings per share
Net (loss) / earnings attributable to ordinary shareholders ($ millions)
(9) 25
Weighted average number of ordinary shares (millions)
435 443
Ordinary shares required to settle CIP equity securities (millions)
108 95
Ordinary shares required to settle CIP warrants (millions) 16 16
Denominator – diluted weighted average number of shares (millions) 559 554
Diluted (loss)/earnings per share (dollars) (0.02) 0.05
The number of ordinary shares that would have been required to settle all CIP equity securities and CIP
warrants on issue at 30 June has been used for the purposes of the diluted earnings per share calculation.
54 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 18 – Related parties
Subsidiaries
The financial statements include Chorus Limited and it subsidiaries as listed below:
Name of entityLocation2024 ownership2023 ownership
Chorus New Zealand LimitedNew Zealand100%100%
All day-to-day operations of the business occur within Chorus New Zealand Limited including the
building and maintenance of the network, sales and marketing, and the supporting corporate function.
Transactions with related parties
Key management personnel are defined as those persons having authority and responsibility for
planning, directing, and controlling the activities of the Group, directly or indirectly, and include the
Directors, the Chief Executive, and his direct reports. Certain key management personnel have interests
in a number of companies that Chorus has transactions with the normal course of business.
Key management personnel compensation
2024
$000’s
2023
$000’s
Short term employee benefits 8,203 6,588
Termination benefits 1,075–
Share based payments– 1,638
9,278 8,226
2024
$000’s
2023
$000’s
Director’s fees 1,085 1,084
The performance hurdles were not met for the long-term performance share scheme and there were
no share based payments made in the period ended 30 June 2024.
Refer to note 16 for details of long-term incentives.
55 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 19 – Derivatives and hedge accounting
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. Derivatives are held at fair value with an
adjustment made for credit risk in accordance with NZ IFRS 9: Financial Instruments. The derivatives are
considered Level 2 investments as defined in note 20.
Treatment of any fair value gains or losses 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 in the Consolidated income statement.
Hedge accounting
Chorus designates derivatives held for hedging as either:
—Cash flow hedges (of highly probable forecast transactions); or
—Fair value hedges (of the fair value of recognised assets, liabilities or firm commitments).
At inception each hedge relationship is formalised in hedge documentation.
Derivatives in hedge relationships are designated based on a 1:1 hedge ratio. In these hedge
relationships the main source of ineffectiveness is the effect of the credit risk on the fair value of the
derivatives, which is not reflected in the change in the fair value of the hedged item attributable to
changes in foreign exchange and interest rates.
Hedge accounting is discontinued when the hedge instrument expires or is sold, terminated, exercised,
or no longer qualifies for hedge accounting. On discontinuation, any cumulative gain or loss previously
recognised in Other comprehensive income is recognised in the Consolidated income statement either at
the same time as the forecast transaction, or immediately if the transaction is no longer expected to occur.
Cash flow hedges
Under a cash flow hedge, the effective portion of gains or losses from remeasuring the fair value of
the hedging instrument is recognised in Other comprehensive income and accumulated in the cash
flow hedge reserve. Accumulated gains or losses are subsequently transferred to the Consolidated
income statement when the hedged item affects the Income statement, or when the hedged item is a
forecast transaction that is no longer expected to occur. Alternatively, when the hedged item results in a
non-financial asset or liability, the accumulated gains and losses are included in the initial measurement
of the cost of the asset or liability.
Differences in the hedged values will flow to finance expense in the Income statement over the life
of the derivatives as ineffectiveness. Neither the magnitude or direction of these differences can be
predicted as they are influenced by external market factors. In the current year, ineffectiveness was
credit $3 million across the hedge relationships (30 June 2023: credit $7 million). Refer to note 4.
As long as the existing cash flow hedge relationships remain effective, any future gains or losses will be
processed through the hedge equity reserves.
A reconciliation of movements in the cash flow hedge reserve is outlined below:
2024
$M
2023
$M
Balance at 1 July
(71) (63)
Changes in cash flow hedges 16 (3)
Amortisation of de-designated cash flow hedges transferred to Income
statement
(7) (7)
Dedesignated swaps reclassified to the income statement
– (1)
Tax expense (3) 3
Closing balance at 30 June (65) (71)
Fair value hedges
Under a fair value hedge, the hedged item is revalued at fair value in respect of the hedged risk.
This revaluation is recognised in the Consolidated income statement to offset the mark-to-market
revaluation of the hedging derivative, except for any adjustment on the hedging derivative relating to
credit risk.
Once hedging is discontinued, the fair value adjustment to the carrying amount of the hedged item
arising from the hedged risk is amortised through the Income statement from that date through to
maturity of the hedged item. If the hedged item is derecognised any corresponding fair value hedge
adjustment is immediately recognised in the Consolidated income statement.
To hedge the interest rate risk and foreign currency risk on the EUR EMTNs, Chorus uses cross currency
interest rate swaps. For hedge accounting purposes, these swaps were aggregated and designated as
two cash flow hedges and a fair value hedge. Chorus hedges the EUR EMTNs for Euro fixed rate interest
to Euro floating rate interest via a fair value hedge. In this case, the change in the fair value of the hedged
risk is also attributed to the carrying value of the EMTNs (refer to note 4).
56 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 19 – Derivatives and hedge accounting continued
To hedge the interest rate risk and foreign currency risk on the AUD AMTNs, Chorus uses cross currency
interest rate swaps. For hedge accounting purposes, these swaps were aggregated and designated as
two cash flow hedges and a fair value hedge. Chorus hedges a portion of the AUD AMTNs for AUD fixed
rate interest to AUD floating rate interest via a fair value hedge. In this case, the change in the fair value
of the hedged risk is also attributed to the carrying value of the AMTNs (refer to note 4).
Cost of hedging
The cost of hedging reserve captures changes in the fair value of the cost to convert foreign currency to
NZD of Chorus’ cross currency interest rate swaps on the EUR EMTNs and AUD AMTN.
A reconciliation of movements in the cost of hedging reserve is outlined below:
2024
$M
2023
$M
Balance at 1 July 6 3
Change in currency basis spreads (when excluded from the designation) 13 7
Dedesignated swaps reclassified to the income statement– (3)
Tax (benefit) / expense (4) (1)
Closing balance at 30 June 15 6
Derivatives
Interest rate swaps
As at 30 June 2024 Chorus holds all interest rate swaps in designated hedging relationships.
All interest rate swaps which are designated as cash flow hedges are held in effective hedging
relationships and their unrealised gains or losses are recognised in the cash flow hedge reserve.
Chorus has also entered into four interest rate swaps which are designated as fair value hedges.
They have a combined face value $700 million and were entered in conjunction with the 10 year NZD
bonds issued on 6 December 2018 and 2 December 2020, with the intention of swapping the interest
exposure from a fixed to a floating rate.
Restructured interest rate swaps
Three interest rate swaps have been restructured: two in December 2018 and one in February 2020.
The two December 2018 restructured interest rate swaps have a combined face value of $500 million
and were reset in conjunction with the resettable NZD fixed rate bond issued in December 2018 to
hedge interest rate exposure from December 2023. As part of the restructure the original hedge
relationship was discontinued and on termination there was a net present value of $14 million
recognised in the cash flow hedge reserve.
This amount was held in the cash flow hedge reserve as the hedged item still exists and is amortised
over the original hedge period. The unamortised balance of the original fair values at 30 June 2024 is
$4 million (30 June 2023: $6 million).
The interest rate swap restructured in February 2020 had a face value of $200 million and was reset
to be in conjunction with the EUR 300 million EMTN issued in December 2019 to hedge interest rate
exposure from April 2020. The original hedge relationship was discontinued and on termination had a
net present value of $27 million. This amount was held in the cash flow hedge reserve as the hedged
item still exists and will be amortised over the original hedge period. The unamortised balance of the
original fair values at 30 June 2024 was $8 million (30 June 2023: $12 million).
Cross currency interest rate swaps
Chorus enters into cross currency interest rate swaps to hedge the foreign currency and foreign interest
rate risks on the EUR and AUD MTNs. Using the cross currency interest rate swaps, Chorus will pay
New Zealand Dollar floating interest rates and receive EUR or AUD nominated fixed interest with coupon
payments matching the underlying notes.
In October 2023, Chorus repaid and settled the residual EUR 209 million. Concurrently, an equal
nominal amount of cross currency interest rate swaps (CCIRS) which hedged the debt were exited to
ensure the hedging relationship remains fully effective.
Chorus also issued AUD 300 million of AMTN in September 2023 for a term of 7 years at an interest rate
of 5.97%. Consistent with the Chorus Treasury Policy, the debt has been fully hedged with CCIRS to
hedge the foreign currency exposure, which entitle Chorus to receive AUD 300 million and AUD fixed
coupon payments for NZD 325 million principal and NZD floating interest payments.
Chorus continues to hold cross currency interest rate swaps in relation to the EMTN EUR 300 million issued in
December 2019 and EMTN EUR 500 million issued in September 2022. This is unchanged in the current year.
Chorus designated the MTNs and cross currency interest rate swaps into three-part hedging
relationships for each issue:
—a fair value hedge of EUR or AUD benchmark interest rates,
—a cash flow hedge of margin, and
—a cash flow hedge of the principal exchange.
Under the cross currency swaps Chorus will pay and receive the following on maturity:
Maturity
Principal – receive leg
(EUR M)
Principal – receive leg
(AUD M)
Principal – pay leg
($M)
EUR EMTN 300Dec 2026 300– 514
EUR EMTN 500Sep 2029 500– 820
AUD AMTN 300Sep 2030– 300 325
57 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 19 – Derivatives and hedge accounting continued
Hedging instruments used (pre-tax):
Life to date values as at
30 June 2024
Year to date values recognised during the year ended
30 June 2024
Carrying amount of the
hedging instrumentHedge effectiveness in reserves
Hedge
effectiveness
Hedge
ineffectiveness
Currency
Maturity
yearsAverage rate
Nominal
amount of
the hedging
instrument
$M
Assets
$M
Liabilities
$M
Change in
value used for
calculating
hedge
ineffectiveness
$M
Cost of
hedging
reserve
$M
Cash flow
hedge (OCI)
$M
Cash flow
hedge
reclassified to
the Income
statement
$M
Fair value
hedge
recognised in
the Income
statement
$M
Recognised
in the Income
statement
$M
Cash flow hedges
Interest rate swaps (including forward
starting)
NZD2 – 62.42% 1,114 69– 69– (20)– – –
Restructured interest rate swaps 2018
(forward starting)
NZD54.41% 500 1– 18– (1) 2– –
Restructured interest rate swap 2020NZD33.35% 200 7– 34– (7) 4– 4
Forward exchange rate contractsNZD:USD1 – 20.6160 41 1– 1– 1 (1)– –
Electricity futuresNZD1 – 2NA NA – – – – 2– – –
Fair value hedges
Interest rate swaps
NZD4 – 7Floating 700 2 (39) (37)– – – 8–
Fair value and cash flow hedges
Cross currency interest rate swaps
NZD:EURN/A Floating– – – – – (44) 44 4–
Cross currency interest rate swapsNZD:EUR3Floating 514– (33) (29) (5) (6) 6 22–
Cross currency interest rate swapsNZD:EUR6Floating 820 18– 34 (15) (5) 10 15 (1)
Cross currency interest rate swapsNZD:AUD7Floating 325 1– 2 (1) 4 (3) (3)–
Total hedged derivatives 4,214 99 (72) 92 (21) (76) 62 46 3
Current 1–
Non-current 98 (72)
58 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 19 – Derivatives and hedge accounting continued
Life to date values as at
30 June 2023
Year to date values recognised during the year ended
30 June 2023
Carrying amount of the hedging
instrumentHedge effectiveness in reserves
Hedge
effectiveness
Hedge
ineffectiveness
Currency
Maturity
yearsAverage rate
Nominal
amount of
the hedging
instrument
$M
Assets
$M
Liabilities
$M
Change in
value used for
calculating
hedge
ineffectiveness
$M
Cost of
hedging
reserve
$M
Cash flow
hedge (OCI)
$M
Cash flow
hedge
reclassified to
the Income
statement
$M
Fair value
hedge
recognised in
the Income
statement
$M
Recognised
in the Income
statement
$M
Cash flow hedges
Interest rate swaps (including forward
starting)
NZD1 – 72.53% 1,464 89– 89– 12– – –
Restructured interest rate swaps 2018
(forward starting)
NZD64.41% 500 2– 19– 11 2– –
Restructured interest rate swap 2020NZD43.35% 200 10– 38– 1 4– 4
Forward exchange rate contractsNZD:USD1 – 2 0.6202 36 1– 1– 1 (6)– –
Forward exchange rate contracts
NZD:SEK1 – 2 0.0315– – – – – – – – –
Electricity futuresNZD1 – 2 NA NA – (2)– – (2) (3)– –
Fair value hedges
Interest rate swaps
NZD8 Floating 200– (45) (45)– – – – –
Fair value and cash flow hedges
Cross currency interest rate swaps
NZD:EUR<1 Floating 328 39– 40 (1) 22 (21) 1–
Cross currency interest rate swapsNZD:EUR4 Floating 514– (47) (45) (2) 31 (31) (21) 2
NZD:EUR7 Floating 820 18– 22 (5) 60 (71) (38) 1
Total hedged derivatives 4,062 159 (94) 119 (8) 136 (126) (58) 7
Current 43 (1)
Non-current 116 (93)
All hedging instruments can be found in the derivative financial assets and liabilities within the
Consolidated statement of financial position. Items taken to the Consolidated income statement have
been recognised in finance expenses (refer note 4).
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.
59 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 20 – Financial risk management
Chorus’ activities expose it to a variety of financial risks, including market risk (currency risk, electricity
price risk and interest rate risk) credit risk and liquidity risk. Financial risk management for currency and
interest rate risk is carried out by the Treasury function under policies approved by the Board. Chorus’
Treasury Policy, approved by the Board, provides the basis for overall financial risk management.
Chorus uses derivatives to hedge its financial risk exposures and does not hold or issue derivative
financial instruments for trading purposes. 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.
A summary of the financial risks that impact Chorus, how they arise and how they are managed is
presented below:
Nature and exposure to ChorusHow the risk is managed
Market risk
Electricity price risk
Chorus is exposed to electricity price volatility through the purchase of electricity
at spot prices.
Chorus has entered into fixed electricity futures contracts to reduce the exposure to electricity spot price movements.
These contracts are designated as cash flow hedge relationships. A 10% increase or decrease in the spot price of electricity,
with all other variables held constant, would have minimal impact on profit and equity reserves of Chorus.
Currency risk
Chorus’ exposure to foreign currency fluctuations predominantly arises from
foreign currency debt and future commitments 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 has EUR 800 million and AUD 300 million foreign currency debt in the
form of MTNs.
Chorus enters into forward foreign exchange contracts and cross currency interest rate swaps to manage the foreign
exchange exposure.
The EUR and AUD MTNs have in place cross currency interest rate swaps under which Chorus receives principal and
fixed coupon payments in EUR and AUD for principal and floating NZD interest payments. The exchange gain or loss
resulting from the translation of MTNs denominated in foreign currency to NZD 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 2024, Chorus did not have any significant unhedged exposure to currency risk (30 June 2023: no significant
unhedged exposure to currency risk). A 10% increase or decrease in the exchange rate, with all other variables held constant,
would have minimal impact on profit and equity reserves of Chorus.
Interest rate risk
Chorus is exposed to interest rate risk arising from the cross currency interest
rate swaps converting the foreign debt into a floating rate NZD obligation as well
as loans under the syndicated bank facility which are subject to floating interest
rates. Chorus is also exposed to changes in the fair value of the fixed interest
2030 and 2028 NZD Bond due to fluctuations in the benchmark interest rate.
Where appropriate, 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 rate risk on a portion of the EUR and AUD cross currency interest rate swaps has been hedged using interest rate
swaps. Refer to note 19 for further information.
Other risks
Credit risk
In the normal course of business, Chorus incurs counterparty credit risk from
financial instruments, including cash, trade and other receivables, and derivative
financial instruments.
Credit risk is managed by entering into contracts with creditworthy financial institutions.
Refer to individual notes for additional information on credit risk.
Chorus has certain derivative transactions that are subject to bilateral credit support agreements that require Chorus or the
counterparty to post collateral to support the value of certain derivatives. As at 30 June 2024 no collateral was posted.
Liquidity risk
Liquidity risk is the risk that Chorus will encounter difficulty raising liquid funds
to meet commitments as they fall due or foregoing investment opportunities,
resulting in defaults or excessive debt costs. Prudent liquidity risk management
implies maintaining sufficient cash and the ability to meet its financial obligations.
Chorus manages liquidity risk by ensuring sufficient access to committed facilities, continuous cash flow monitoring and
maintaining prudent levels of short-term debt maturities.
60 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 20 – Financial risk management continued
Interest rate risk
Analysis of Chorus’ interest rate repricing is outlined below:
30 June 2024
Within 1
Year
$M
1 – 2 Years
$M
2 – 3 Years
$M
3 – 4 Years
$M
4 – 5 Years
$M
Greater
than
5 years
$M
Total
$M
Floating rate
Debt (after hedging)
545– – – – – 545
Fixed rate
Debt (after hedging)
110– – 514 200 1,300 2,124
CIP securities 160– – – – 584 74 4
815– – 514 200 1,884 3,413
30 June 2023
Floating rate
Debt (after hedging)
370– – – – – 370
Fixed rate
Debt (after hedging)
328– – 514 200 1,150 2,192
CIP securities– 150– – – 547 697
698 150– 514 200 1,697 3,259
Interest rate sensitivity analysis
A reasonably possible change of 100 basis points in interest rates at the reporting date would have
increased / (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that
all other variables, in particular foreign currency exchange rates, remain constant.
2024
$M
Profit / (loss)
2024
$M
Equity (increase) /
decrease
2023
$M
Profit / (loss)
2023
$M
Equity (increase) /
decrease
100 basis point increase 124 1 1
100 basis point decrease(1)(26) (1) (2)
Credit risk
The maximum exposure to credit risk at the reporting date was as follows:
Notes
2024
$M
2023
$M
Cash and call deposits15 45 76
Trade and other receivables11 158 153
Derivative financial instruments1999 159
Maximum exposure to credit risk 302 388
Refer to individual notes for additional information on credit risk.
61 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 20 – Financial risk management continued
Liquidity risk
Chorus manages 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
had available $450 million under the syndicated bank facilities (30 June 2023: $450 million). To enable
Chorus to meet its potential working capital requirements as needed $110 million of the facilities have
been drawn down as at 30 June 2024 (30 June 2023: nil) and disclosed as a current liability.
The gross (inflows) / outflows of derivative financial liabilities disclosed in the table below 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).
30 June 2024
Carrying
amount
$M
Contractual
cashflow
$M
Within 1
Year
$M
1 – 2
Years
$M
2 – 3
Years
$M
3 – 4
Years
$M
4 – 5
Years
$M
5+
Years
$M
Non-derivative financial liabilities
Trade and other payables
243 243 230 13– – – –
Leases (net settled) 171 285 23 21 20 19 17 185
Debt 2,626 2,423 80 80 377 275 558 1,053
CIP securities 74 4 1,335 171– – – – 1,164
Derivative financial liabilities
Interest rate swaps
Outflows
39 48 7 7 8 8 7 11
Cross currency interest rate
swaps:
Inflows
– (568) (5) (5) (558)– – –
Outflows 33 600 37 33 530– – –
Forward exchange contracts:
Inflows
– (20) (17) (3)– – – –
Outflows– 19 16 3– – – –
30 June 2023
Carrying
amount
$M
Contractual
cashflow
$M
Within 1
Year
$M
1 – 2
Years
$M
2 – 3
Years
$M
3 – 4
Years
$M
4 – 5
Years
$M
5+
Years
$M
Non derivative financial liabilities
Trade and other payables
291 291 280 11– – – –
Leases (net settled) 181 310 24 23 22 21 19 201
Debt 2,528 2,114 751 31 31 328 226 747
CIP securities 697 1,338– 171– – – 1,167
Derivative financial liabilities
Interest rate swaps
Outflows
45 55 10 9 7 6 6 17
Cross currency interest rate
swaps:
Inflows
– (589) (5) (5) (5) (574)– –
Outflows 47 635 39 36 31 529– –
Forward exchange contracts:
Inflows
– (13) (13)– – – – –
Outflows– 12 12– – – – –
62 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 20 – Financial risk management continued
Master netting arrangements
Chorus enters into derivative transactions under the International Swaps and Derivatives Association
(ISDA) master agreements. The ISDA agreements do not meet the criteria for offsetting in the Statement
of financial position, as Chorus does not currently have any legally enforceable right to offset recognised
amounts. Under the ISDA agreements the right to offset is enforceable only on the occurrence of
future events such as a default on the bank loans or other credit events. The potential net impact of
this offsetting is shown below. Chorus does not hold, and is not required to post, collateral against its
derivative positions.
Net derivatives after applying rights of offset under ISDA agreements are as opposite:
30 June 2024
Gross amounts
of financial
instruments in
the statement of
financial position
$M
Related financial
instruments that
are not offset
$M
Net amount
$M
Financial assets
Other investments including derivatives
Interest rates swaps
71 (39) 32
Cross currency interest rate swaps 19 (33) (14)
Restructured interest rate swaps 8– 8
Forward exchange contracts 1– 1
99 (72) 27
Financial liabilities
Interest rates swaps
(39) 39–
Cross currency interest rate swaps (33) 33–
(72) 72–
30 June 2023
Financial assets
Other investments including derivatives
Interest rates swaps
89 (45) 44
Cross currency interest rate swaps 57 (47) 10
Restructured interest rate swaps 12– 12
Forward exchange contracts 1– 1
159 (92) 67
Financial liabilities
Interest rates swaps used for hedging
(45) 45–
Cross currency interest rate swaps (47) 47–
Restructured interest rate swaps
(2)– (2)
(94) 92 (2)
63 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 20 – Financial risk management continued
Fair value
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 relate to the EMTN and the 2030 NZD Bond.
For those instruments recognised at fair value in the statement of financial position, fair values are
determined as follows:
Level 1Fair value is determined using unadjusted quoted prices from an active market for identical
assets and liabilities. A market is regarded as active if quoted prices are readily and regularly
available from an exchange, a dealer, a broker, an industry group, a pricing service or
a regulatory agency and those prices represent actual and regularly occurring market
transactions on an arm's length basis.
Level 2Fair value is determined 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. Where quoted prices are not available, the fair value of financial
instruments is valued using models where all significant inputs are observable.
Level 3Fair value is determined using significant non-observable inputs. Financial instruments are
valued using models where one or more significant inputs are not observable.
All financial instruments held at fair value are Level 2 instruments. Relevant financial assets and financial
liabilities and their fair values are detailed in note 19.
Valuation of level 2 derivatives
The fair values of level two derivatives are determined using discounted cash flow models. The key
inputs in the valuation models are:
InstrumentValuation input
Cross-currency interest rate swapsForward curve for the relevant interest rate and foreign
exchange rate
Interest rate swapsForward interest rate curve
Electricity swapsASX forward price curve
Foreign exchange contractsForward foreign exchange rate curves
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.
Hedges are classified into two primary types: cash flow hedges and fair value hedges. Refer to note 19
for additional information on cash flow and fair value hedge reserves.
Capital risk management
Chorus manages its capital considering shareholders’ interests, the value of its assets, and credit ratings.
The capital Chorus manages consists of cash and debt balances.
The Chorus Board’s broader capital management objectives include maintaining an investment
grade credit rating with headroom. In the longer term, the Board continues to consider a ‘BBB’ rating
appropriate for a business such as Chorus.
64 Chorus Annual Report 2024Notes to the consolidated financial statements
Note 21 – Contingent liabilities
There are no contingent liabilities as at 30 June 2024.
Note 22 – Subsequent events
Dividends
On 26 August 2024 Chorus declared a unimputed dividend of 28.5 cents per share in respect of the year
ended 30 June 2024.
65 Chorus Annual Report 2024Notes to the consolidated financial statements
67 Corporate governance
framework
67 Our Board
76 Board committees
77 Ethical standards
78 Reporting and
disclosure
79 Remuneration and
performance
87 Risk management
88 Auditors
89 Shareholder rights
and relations
89 Additional disclosures
95 Glossary
Governance
and disclosures
66 Chorus Annual Report 202466
Corporate governance framework
This statement outlines the key aspects of our corporate governance
framework. It is current at, and was approved by our Board on,
23 August 2024.
As a New Zealand company listed on the NZX, our corporate governance policies and
practices meet or exceed the standards of that market. We have adopted and fully followed
the recommendations set out in the NZX Corporate Governance Code (NZX Code).
Our Board regularly reviews and assesses our governance policies, processes and practices
to identify opportunities for enhancement.
Chorus is, for the fourth year, publishing its sustainability report (Sustainability Report),
reflecting our ambition to support New Zealand in its transition to be more sustainable.
The Sustainability Report contains information on our sustainability strategy, including our
environmental focus, our commitment to strengthening the digital capability in Aotearoa,
and our commitment to helping our people thrive.
Aotearoa has also implemented a new mandatory climate-related disclosures regime.
Chorus Limited is a climate reporting entity under the new regime for the purposes of
the Financial Markets Conduct Act 2013 (FMCA). A copy of the group Climate Statements
prepared by Chorus is available at company.chorus.co.nz/sustainability.
Our corporate governance practices and reporting against the recommendations set out
in the NZX Code, are outlined on the following pages (refer to the index below), in our
Sustainability Report and available at company.chorus.co.nz/about/governance.
NZX Corporate Governance Code PrinciplesPages
Principle 1Ethical Standards77
Principle 2Board Composition & Performance69 – 75, 84
Principle 3Board Committees76 – 77
Principle 4Reporting & Disclosure78
Principle 5Remuneration79 – 86
Principle 6Risk Management87–8 8
Principle 7Auditors88
Principle 8Shareholder Rights & Relations89
Our Board’s role
Our Board is appointed by shareholders and has overall responsibility for strategy, culture,
health and safety, governance and performance.
Board membership
Our Board’s skills, experience and composition support effective governance and decision
making, positioning it to drive shareholder value.
Our Board regularly assesses its composition utilising a skills matrix and annual evaluation
processes. Training is provided or recruitment undertaken if new or additional skills or
experience are required. This ensures diversity of thought, skills and expertise and that our
Board remains aligned with our strategic direction.
Our constitution provides for a minimum of five and a maximum of 12 directors.
As at 30 June 2024 we had seven directors all of whom are independent directors. We have
four male directors and three female directors. Our CEO is not a director on our Board.
Directors are not appointed for specified terms. However, the NZX listing rules require
that no director’s term exceeds three years, requiring all directors to stand for re-election
before their third anniversary. Due to Chorus’ succession planning, Chorus has at least one
director standing for re-election each year. Kate Jorgensen and Jack Matthews both stood
for re-election in 2023.
Miriam Dean is due to stand for re-election in 2024.
Murray Jordan has decided to retire from the Board, effective as at 30 September 2024
after serving on the Board for nine years.
Our Board
67 Chorus Annual Report 2024Governance and disclosures
0–3 YEARS
223
4–6 YEARS6+ YEARS
MALEFEMALE
28.5%
28.5%
43%
Director
tenure
Independence
100%
Expertise and experience matrix
The following table reflects the strengths of the current Board based on a mix of
key skills and experiences that are currently relevant for Chorus.
Skill/experienceDescriptionCombined Board
Capital markets
and investment
Capital markets, market regulation, capital investment and the
investor experience
Communications
connectivity and
technology
Communications connectivity, adopting new technologies,
leveraging and implementing technologies
Governance –
financial, audit,
legal, listed company
High corporate governance standards including in listed companies
Understanding financial business drivers, and/or experience
implementing or overseeing financial accounting, external
reporting and internal financial controls
Physical infrastructure
and operations
including contracting,
safety and risk
Physical infrastructure operations, including contracting
Commitment and experience in management of workplace safety
Experience anticipating and identifying key risks and monitoring
the effectiveness of risk management frameworks and controls
Governance –
executive experience
in large businesses
Executive experience in leading large businesses, developing and
implementing strategy and strategic objectives, assessing business
plans and driving execution
Infrastructure
regulation
Current and developing regulatory environment, complexities and
actual and potential impacts
Expertise identifying and managing legal, regulatory, public policy
and corporate affairs issues
Customer
experience
Customer-led transformation, customer focus (at both a retailer
and customer level) and/or customer centric organisations in
competitive industries
SOME EXPERIENCEMODERATE EXPERIENCESUBSTANTIAL EXPERIENCE
57%43%
Board gender
diversity
68 Chorus Annual Report 2024Governance and disclosures
Board composition and performance
(NZX Code Recommendations 2.1 – 2.10)
Board Charter
(NZX Code Recommendation 2.1)
The Board has a written charter outlining the roles and responsibilities of the Board and management. A copy of the Board Charter is available at company.chorus.co.nz/about/governance
Summary
13
of our Board’s roles and responsibilities:
Strategic objectives and
financial performance
• Approving strategies developed by Management in support of Chorus’ purpose to achieve its strategic objectives
• Monitoring the execution of strategies by Management
• Approving the annual budget and financial plans
• Approving major corporate initiatives
• Approving expenditure or actions that exceed the limits delegated to the CEO
Culture• Overseeing the effectiveness of Management plans to build and support a corporate culture that champions a safe, fair and inclusive workplace
• Receiving reports from Management regarding Chorus’ culture, including employee wellbeing
Risk management• Overseeing the process for identifying significant risks facing Chorus
• Overseeing systems of risk management and internal control and compliance (including compliance with Chorus’ legal and regulatory obligations)
• Ensuring that appropriate controls, monitoring and reporting mechanisms are in place
• Overseeing the effective monitoring and management of health and safety
Financial reporting• Approving Chorus’ financial statements
• Overseeing the integrity of Chorus’ accounting and corporate reporting systems including liaising with Chorus’ external auditor
Monitoring Management’s
performance and succession
planning
• Considering the appointment, replacement and performance of the CEO
• Considering the appointment and replacement of the CFO and the General Counsel
• Overseeing succession plans for the CEO and their direct reports
Board performance and
succession planning
• Reviewing the needs, size, independence, qualifications, skills, experience and composition of the Board to ensure the right Directors with the right skills sit
around the boardroom table
• Identifying and nominating or appointing Director candidates and overseeing Director induction and ongoing professional development
• Carrying out Board succession planning, including for the Board Chair
• Establishing, developing and overseeing evaluation processes to annually assess Board, Board Committee and individual Director performance
Continuous Disclosure• Overseeing the process for making timely and balanced disclosure of all material information concerning Chorus
Remuneration• Approving Chorus’ remuneration policy and framework and satisfying itself that Chorus’ remuneration policy is aligned with Chorus’ purpose, values, strategic
objectives, and risk appetite
• Approving material changes to employee short and long term incentive plans
Governance and Sustainability• Monitoring the effectiveness of Chorus’ governance policies and practices including ensuring that an appropriate framework exists for information to be
reported by Management to the Board
• Approving Chorus’ sustainability strategy
• Overseeing the social, ethical, and environmental impact of Chorus’ activities
Stakeholder Management• Monitoring the relationships between Chorus and key stakeholders to ensure they are productive and healthy.
13 Summary primarily drawn from the Board Charter.
69 Chorus Annual Report 2024Governance and disclosures
Our Board and management are committed to ensuring our people act
ethically, with integrity and in accordance with our policies and values.
Our Board
(NZX Code Recommendation 2.4)
Mark Cross
Joined: 1 November 2016
Last elected: 2022 Annual Meeting
Status: Independent
Chorus role: Chair (October 2022)
Experience: Mark is an experienced director
with more than 20 years of international
experience in corporate finance and
investment banking
Chartered Fellow Institute of Directors NZ,
Member of Chartered Accountants A&NZ,
Member, Australian Institute of Company
Directors
Previous roles: Chair – Milford Asset
Management; Director – Z Energy, Genesis
Energy, Argosy Property
Current roles outside Chorus: Director
and Audit & Risk Management Committee
Chair – Xero; Board member and investment
committee chair – Accident Compensation
Corporation (ACC); Director and Audit & Risk
Committee Chair – Fisher & Paykel Healthcare
(effective 1 October 2024).
Miriam Dean
Joined: 27 October 2021
Last elected: 2021 Annual Meeting
Status: Independent
Chorus role: Non-executive director / member
of People, Performance and Culture
Committee
Experience: As a King’s Counsel and
independent director, Miriam has extensive
experience in commercial dispute resolution
and governance, with a specialty in
competition, consumer and regulatory law.
Miriam also has significant experience in the
infrastructure and regulatory sectors
Previous roles: Director – Crown
Infrastructure Partners; Chair – NZ on Air;
Deputy chair – Auckland Council Investments;
Deputy chair – Commerce Commission
Current roles outside Chorus: Director
– Crown Infrastructure Delivery; Chair –
Banking Ombudsman Scheme; Deputy
chair – Real Estate Institute of New Zealand;
Member of a number of central and local
government-related advisory boards.
Will Irving
Joined: 26 October 2022
Last elected: 2022 Annual Meeting
Status: Independent
Chorus role: Non-executive director / member
of Audit and Risk Management Committee
Experience: Will has more than 25 years of
telecommunications industry experience
having held a range of senior roles in the
telecommunications industry in Australia
ranging across strategy, wholesale, small and
medium business customer sales and service,
and as a lawyer
Previous roles: Interim CEO – Telstra InfraCo;
Group Executive – Telstra Wholesale; Group
Managing Director – Telstra Business. Prior to
his commercial management roles, Will was
Group General Counsel of Telstra
Current roles outside Chorus: Chief Strategy
and Transformation Officer – NBN Co Limited
(company established to design, build and
operate Australia’s wholesale broadband
access network).
Sue Bailey
Joined: 31 October 2019
Last elected: 2022 Annual Meeting
Status: Independent
Chorus role: Non-executive director / member
of People, Performance and Culture
Committee
Experience: Sue is an experienced director
with a career of more than 30 years in
telecommunications spanning fixed
telephony, mobile and broadband services.
Responsibilities included product and
brand marketing, customer lifecycle
management, strategy and leading large scale
transformation
Member of the Australian Institute of
Company Directors
Previous roles: Member of the Executive
leadership team – Optus. CEO – Virgin Mobile
Australia. Senior Vice President – Virgin
Mobile USA
Current roles outside Chorus: Director –
Careflight.
70 Chorus Annual Report 2024Governance and disclosures
Murray Jordan
Joined: 1 September 2015
Last elected: 2021 Annual Meeting
Status: Independent
Chorus role: Non-executive director / Chair
of the People, Performance and Culture
Committee
Experience: Murray has extensive experience
in the management of highly customer
focused organisations (such as Foodstuffs),
and management in the property investment
and development sectors
Previous roles: Managing director –
Foodstuffs North Island
Current roles outside Chorus: Director –
Deakin TopCo Pty Ltd (trading as Levande),
Metlifecare, Metcash Limited, Southern
Cross Medical Care Society, Southern Cross
Healthcare Limited, and Stevenson Group.
Jack Matthews
Joined: 1 July 2017
Last elected: 2023 Annual Meeting
Status: Independent
Chorus role: Non-executive director / member
of the Audit and Risk Management Committee
Experience: Jack is an experienced
director who has held a number of senior
leadership positions within the media,
telecommunications and technology
industries in Australia and New Zealand
Previous roles: Director – Crown
Infrastructure Partners, Plexure Group,
The Network for Learning, APN Outdoor
Group and Trilogy International. CEO –
TelstraSaturn, Fairfax Media’s Metro Division,
Fairfax Digital. Chief Operating Officer –
Jupiter TV (Japan)
Current roles outside Chorus: Chair –
Lodestone Energy.
Kate Jorgensen
Joined: 1 July 2020
Last elected: 2023 Annual Meeting
Status: Independent
Chorus role: Non-executive director / Chair of
the Audit and Risk Management Committee
Experience: Kate has extensive experience
in strategic, commercial, financial, and
audit matters, with several senior leadership
positions held in NZ’s telecommunications,
infrastructure, and construction industries.
Kate holds a Masters in Technological Futures
and a Bachelor of Business. Member of
Chartered Accountants A&NZ, and Chartered
Member of the Institute of Directors NZ
Previous roles: CFO – Vodafone NZ, KiwiRail,
and Fletcher Building’s infrastructure division
Current roles outside Chorus: Director
– Kiwibank. Director – Suncorp NZ (Vero
Insurance, Vero Liability and Asteron Life).
Our Board and management are committed to ensuring our people act
ethically, with integrity and in accordance with our policies and values.
Our Board
71 Chorus Annual Report 2024Governance and disclosures
Our Board continued
DirectorAppointedLast elected at ASM
Miriam Dean20212021
Murray Jordan20152021
Mark Cross20162022
Sue Bailey20192022
Will Irving20222022
Kate Jorgensen20202023
Jack Matthews20172023
Miriam Dean is retiring by rotation and standing for re-election
at our 2024 Annual Shareholders’ Meeting (ASM). Murray Jordan
has decided to retire from the Board, effective as at
30 September 2024.
Our Board has determined that collectively its directors have
the requisite range of strategic, financial, and industry skills and
experience in the key areas set out on page 68.
A summary of current directors skills, experience
and qualifications is set out on our website at
company.chorus.co.nz/about/governance/board-of-directors.
As the Chorus business evolves, so too does the Board. Chorus’
beginnings were focused on infrastructure build and project
management. With the success of the build, we are now focused
on connecting customers, delivering excellent customer
experience as well as future connectivity and non-regulated
revenue opportunities. The Board is also focused on the
increasing risks and opportunities of climate change, and how
that fits into Chorus' overall strategy. The Board considers it is
important to balance both specialist expertise and the ongoing
need for strong general commercial expertise.
Appointment
(NZX Code Recommendations 2.2 & 2.3)
Our Board may appoint additional directors to our Board or
to fill a casual vacancy. Any director appointed by the Board is
required to stand for election at the next ASM.
The independence, qualifications, skills and experience needed
for the future and those of existing Board members are reviewed
by the Board before appointing new directors. External advisors
are also engaged to identify potential candidates.
To be eligible for selection, candidates must demonstrate
appropriate qualities and satisfy our Board they will commit the
time needed to be fully effective in their role.
Appropriate checks are undertaken before a candidate is
appointed or recommended for election as a director, including
as to the person’s character, experience, education, criminal
record and bankruptcy history.
Shareholders may also nominate candidates for appointment
to our Board. In addition, under our UFB agreements, CIP is
entitled to nominate one person as an independent director.
CIP have never exercised this entitlement. Should this occur,
our Board must consider this nomination in good faith, but the
appointment (and removal) of any such person as a director is to
be made by shareholders in the same way as other directors.
We have written agreements with each non-executive
director setting out the terms of their appointment, including
obligations and responsibilities, compliance with our policies
(including code of ethics and securities trading) and ongoing
professional development.
No person who is an ‘associated person’ (as defined in Chorus’
Constitution) of a telecommunications services provider in
New Zealand may be appointed or hold office as a director.
Minimum shareholding policy
Chorus’ Minimum Shareholding Policy sets the expectation on
directors to hold, at a minimum, shares equal in value to one
year’s director base fee (after tax). If not held at their date of
appointment, the policy expects directors to accumulate this
holding over the first three years from that date.
Diversity, equity and inclusion policy
(NZX Code Recommendation 2.5)
Information about Chorus’ approach to diversity, equity and
inclusion is found on page 84 of this report.
72 Chorus Annual Report 2024Governance and disclosures
Director induction and professional development
(NZX Code Recommendation 2.6)
Our director induction programme ensures new directors
are appropriately introduced to management and our business,
provides directors with relevant industry knowledge and familiarises
them with key governance documents and key stakeholders.
Our directors are expected to continue ongoing professional
development to ensure they maintain appropriate expertise to
effectively perform their duties.
We hold dedicated Board education sessions covering a range of
topical matters, both technical and cultural.
Visits to our operations, briefings from key management,
industry experts and key advisers, together with educational and
stakeholder visits, are also arranged for our Board.
Review and evaluation of Board performance
(NZX Code Recommendation 2.7)
Our Board evaluates its performance each year. As part of this
process our chair meets with directors individually to discuss
their performance. The Board undertook a formal Board
performance evaluation in late 2023 with an external consultant.
The review confirmed that the board is operating well with
actions identified to further enhance our governance focus
and outcomes.
Our Board also formally engages in annual reviews of our Board
chair, and chairs of our standing Board committees.
In addition to Board performance reviews, our Board takes a
future focused approach to future Board capability, composition
and the potential contribution of each existing director.
Independent advice
A director may, with our chair’s prior approval, obtain
independent professional advice (including legal advice)
and request the attendance of advisers at Board and Board
committee meetings. No external advice was sought this year.
Independence
(NZX Code Recommendations 2.4 & 2.8)
As at 30 June 2024, all our directors, including our Board chair,
are independent directors.
When assessing independence, our Board will consider whether
a director is free of material relationships with Chorus (other
than as a director) and other relationships that could influence,
or could reasonably be perceived to influence, the director’s
capacity to bring an independent view to decisions about Chorus.
Our Board has not set financial materiality thresholds for
determining independence, but considers materiality in the
context of each relationship and from the perspective of the
parties to that relationship.
Delegation of authority
Our Board has overall responsibility for strategy, culture, health
and safety, governance and performance.
Implementation of our Board approved strategy, business plan
and governance frameworks, and responsibility for developing
our culture and health and safety practices, is delegated by the
Board to management through the CEO.
As such our CEO (with the support of his executive team) is
responsible for Chorus’ day-to-day management, operations
and leadership, reporting to the Board on key performance,
management and operational matters.
Our CEO sub-delegates authority to his executive team and they
sub-delegate their authority to other Chorus employees within
specified financial and non-financial limits.
Formal policies and procedures govern the parameters and
operation of these delegations.
Our CEO is not a director on our Board.
Our Board continued
73 Chorus Annual Report 2024Governance and disclosures
Director interests and trading
(NZX Code Recommendation 2.4)
As at 30 June 2024, directors had a relevant interest (as defined in the Financial Markets Conduct Act 2013) in approximately 0.069% of shares as follows:
Current Directors
Interest as at 30 June 2024Transactions during the reporting period
DirectorSharesInterestNumber of sharesNature of transactionConsiderationDate
Mark Cross40,711Beneficial owner as beneficiary of Alpha Investment Trust;
power to exercise voting rights and acquire/dispose of
financial products as director of trustee.
10,000On market acquisition$79,04528 February 2024
Sue Bailey50,000Registered holder and beneficial owner2,048On market acquisition$15,6298 September 2023
2,952On market acquisition$21,93811 September 2023
5,000On market acquisition$36,25227 October 2023
5,000On market acquisition$35,29030 October 2023
Miriam Dean10,000Registered holder and beneficial owner of ordinary shares
as trustee and beneficiary of the Miriam Dean Trust
5,000On market acquisition$38,50026 September 2023
Will Irving40,000Registered holder and beneficial owner10,000On market acquisition$78,82428 February 2024
Murray Jordan124,010Registered holder and beneficial owner of ordinary shares
as trustee and beneficiary of Endeavour Trust
––––
Kate Jorgensen12,975Registered holder and beneficial owner
––––
Jack Matthews19,881Registered holder and beneficial owner––––
As at 30 June 2024, directors had a relevant interest (as defined in the Financial Markets Conduct Act 2013) in approximately 0.024% of Chorus’ NZX bonds maturing December 2028 as follows:
Interest as at 30 June 2024Transactions during the reporting period
DirectorBondsInterestNumber of bondsNature of transactionConsiderationDate
Miriam Dean20,000Registered holder and beneficial owner as trustee and
beneficiary of the Miriam Dean Trust
––––
Murray Jordan100,000Registered holder and beneficial owner as trustee and
beneficiary of Endeavour Trust
––––
74 Chorus Annual Report 2024Governance and disclosures
Changes in Director interests to 30 June 2024
Mark CrossNone
Sue BaileyNone
Miriam DeanNone
Will IrvingNone
Murray JordanNone
Kate JorgensenNone
Jack MatthewsBecame a director of Lodestone Solar 2 Limited
1
Became a director of Lodestone Retail Limited
2
Became a director of Lodestone Nominee Limited
3
Notes:
1 From 13 December 2023.
2 From 7 May 2024.
3 From 21 November 2023.
Board chair
(NZX Code Recommendations 2.9 & 2.10)
Our chair is elected by the Board and must be a non-executive, independent director.
The chair’s responsibilities include:
• Leading the Board;
• Setting the agenda for Board meetings in consultation with the CEO;
• Facilitating the effective contribution of all directors;
• Promoting constructive relationships between directors and management; and
• Leading stakeholder relationships
The chair’s other commitments must not hinder his or her effective performance in the role.
Board and Board committee meeting attendance in the year ended 30 June 2024
(NZX Code Recommendation 2.4)
Regular Board
meetings
Other Board
meetings
1
ARMCPPCCRegulatory
Sub-Committee
3
Total number of
meetings held
84441
Mark Cross
2
841
Sue Bailey8441
Miriam Dean8441
Will Irving8441
Murray Jordan7341
Kate Jorgensen8441
Jack Matthews8441
Notes:
1 Includes dedicated Board education, and strategy and business planning, meetings. Directors also have health and
safety site visits each year.
2 Mark Cross, as Board chair, attends all Board committee meetings. As he is no longer a formal member of the ARMC
or PPCC (following his appointment as Board Chair in October 2022), that attendance is not noted in the table.
3 The Regulatory Sub-Committee was disestablished in the first quarter of FY24, with regulatory responsibilities now
being undertaken by the Board.
Director interests and trading continued
75 Chorus Annual Report 2024Governance and disclosures
Board committees
(NZX Code Recommendations 3.1 – 3.6)
Two standing Board committees assist our Board in carrying out its responsibilities. Some Board
responsibilities, powers and authorities are delegated to those committees.
Board committees assist our Board by focusing on specific responsibilities in greater detail than is
possible for the Board as a whole. Each standing Board committee has a Board approved charter
and chair. Committee members are appointed by our Board. Chorus employees attend Committee
meetings at the invitation of the Committee.
Other committees may be established and specific responsibilities, powers and authorities
delegated to those committees and/or to particular directors.
(NZX Code Recommendations 3.4)
The Nominations and Corporate Governance Committee was disestablished in 2022, with its’
responsibilities for director appointment, evaluation, succession planning, education and Board
governance now undertaken by the Board. It was disestablished to streamline the governance
framework following an internal review of the committees.
The Regulatory Sub-Committee was disestablished in the first quarter of FY24, with regulatory
responsibilities now being undertaken by the Board.
Our
Shareholders
Chorus
Limited Board
CEO
Executive
Team
Our
People
Audit and Risk
Management Committee
People, Performance and
Culture Committee
Audit and Risk Management Committee (ARMC)
(NZX Code Recommendations 3.1)
RoleOur ARMC assists our Board in overseeing our risk and financial management,
accounting, audit and financial reporting
MembersKate Jorgensen (chair), Jack Matthews, Will Irving
IndependenceAll committee members are non-executive independent directors. The Board chair
cannot also be the ARMC chair.
Responsibilities• Overseeing the quality and integrity of external financial and non-financial
reporting, financial management, internal controls and accounting policy
and practice
• Regularly reviewing principal risk reporting
• Recommending to our Board the appointment, and if necessary removal,
of the external auditor
• Assessing the adequacy of the external audit and independence of the
external auditor
• Reviewing and monitoring the internal audit plan and reporting
• Overseeing the independence and objectivity of the internal audit function
• Reviewing compliance with applicable laws, regulations and standards
• Overseeing and monitoring progress in the implementation of Chorus' climate
strategy, including oversight of climate-related risks and opportunities and
reviewing Chorus’ compliance with the climate-related disclosures regime.
People, Performance and Culture Committee (PPCC)
(NZX Code Recommendation 3.3)
RoleOur PPCC assists our Board in overseeing people, culture and related policies
and strategies
MembersMurray Jordan (chair), Miriam Dean, Sue Bailey
IndependenceAll committee members are non-executive independent directors
Responsibilities• Reviewing people and remuneration strategies, structures and policies
• Approving annual remuneration increase guides and budgets
• Reviewing candidates for, and the performance and remuneration of, our CEO
• Approving, on the recommendation of our CEO, the appointment of our
CEO’s executive direct reports (except our CFO and General Counsel whose
appointment is approved by our Board)
• Reviewing our CEO’s performance evaluation of his executive direct reports
• Developing and annually reviewing and assessing diversity, equity and inclusion
and its reporting
• Overseeing recruitment, retention and termination policies and procedures for
senior management
• Making recommendations (including proposing amendments) to our Board with
respect to senior executive (including CEO) incentive remuneration plans / policies
• Annually reviewing non-executive director remuneration.
76 Chorus Annual Report 2024Governance and disclosures
Board committees continued
Takeovers protocol
(NZX Code Recommendation 3.6)
We have a takeovers protocol setting out the procedure to be followed if there is a takeover
offer, including managing communications between insiders and the bidder and engagement
of an independent adviser. The protocol includes the option of establishing an independent
takeover committee, and the likely composition and implementation of that committee.
Ethical standards
Codes of ethics
(NZX Code Recommendation 1.1)
Directors and employees are expected to act honestly and with high standards of personal
integrity. Codes of ethics for our directors and employees set the expected minimum standards for
professional conduct. These codes facilitate behaviours and decisions that are consistent with our
values, business goals and legal and policy obligations, including in respect of:
• Conflicts of interest;
• Gifts and personal benefits;
• Anti-bribery and corruption;
• Use of corporate property, opportunities and information;
• Confidentiality;
• Compliance with laws and policies; and
• Reporting unethical behaviour.
We have communicated our codes of ethics and provided annual training to our directors and
employees. Our people are also encouraged to report any unethical behaviour, including annual
reporting of any potential conflicts.
This process is subject to internal audit. All reported breaches are investigated.
Chorus has a dedicated whistle-blower email address and phone number monitored by PwC as
part of our risk management framework to allow confidential reporting of serious misconduct or
wrongdoing and suspected fraud or corruption. For more information, see the ‘Thriving People’
section of our Sustainability Report available at https://company.chorus.co.nz/sustainability.
Trading in Chorus securities
(NZX Code Recommendation 1.2)
All trading in Chorus securities by directors and employees must be in accordance with our Securities
Trading Policy. That policy prohibits trading in Chorus securities while in possession of inside
information and requires, amongst other things:
• Directors to notify, and obtain consent from, the chair (or in the chair’s case, the ARMC chair)
before trading; and
• Employees identified as potentially coming across market sensitive information in the course of
their employment (“restricted persons”), to obtain consent from our General Counsel (or in our
General Counsel’s case, our Board chair) before trading.
Trading in Chorus shares or NZX listed bonds by directors is disclosed to our Board, the NZX and
ASX. Trading by “senior managers” as that term is defined in the FMCA, is disclosed to the NZX.
(NZX Code Recommendations 1.1 & 1.2)
77 Chorus Annual Report 2024Governance and disclosures
Reporting and disclosure
(NZX Code Recommendations 4.1 – 4.4)
Chorus reviews its disclosure regularly as a key measure of
good governance.
The Board’s aim is to improve our disclosures each year,
including our remuneration reporting, based on market research
and feedback from investors and other stakeholders.
Market disclosures
(NZX Code Recommendation 4.1)
We are committed to providing timely, factual and accurate
information to the market consistent with our legal and
regulatory obligations.
We have a Board approved Disclosure Policy and a CEO
approved Market Disclosure Policy setting out our disclosure
practices and processes in more detail.
Our disclosure policies are designed to ensure:
• Roles of directors, executives and employees are clearly set out.
• Appropriate reporting and escalation mechanisms
are established.
• There are robust and documented confidentiality protocols in
place where appropriate.
• Only authorised spokespersons comment publicly, within the
bounds of information which is either already publicly known
or non-material.
Key Governance Documents
(NZX Code Recommendation 4.2)
Chorus’ website has a dedicated governance section that
contains information about our Board, the Board committees
(including the Board and committee charters) and key policies
that outline our core governance structures and processes.
These include policies and codes covering areas such as ethics,
health & safety, modern slavery, diversity, equity and inclusion,
compliance, remuneration, risk management and whistle
blowing. The governance section can be found at
https://company.chorus.co.nz/about/governance.
Reporting
(NZX Code Recommendation 4.3)
Chorus’ financial reports are prepared in a manner that is
balanced, clear and objective. The financial statements in this
Annual Report are prepared in accordance with NZ GAAP and
comply with NZ IFRS.
Non-financial disclosures
(NZX Code Recommendation 4.4)
In addition to the Annual Report containing our financial statements,
we publish a Sustainability Report which contains information
on our sustainability strategy, including our environmental focus,
our commitment to strengthening the digital capability in Aotearoa,
and our commitment to helping our people thrive.
This year also marks our first Climate Statements prepared under
the new mandatory climate-related disclosures regime. Copies
of our Climate Statements and the Sustainability Report can be
found at
https://company.chorus.co.nz/sustainability.
Our approach to tax
We take our tax obligations seriously and work closely with
Inland Revenue to ensure we meet our tax obligations.
We obtain external advice and Inland Revenue’s views (through
informal correspondence, determinations or rulings) in respect
of unusual or material transactions.
As we operate only in New Zealand all our tax is paid in
New Zealand at the prevailing corporate tax rate (currently
28%). We have paid all taxes we owe and all tax compliance
obligations are up to date.
78 Chorus Annual Report 2024Governance and disclosures
Remuneration and performance
Our remuneration model
(NZX Code Recommendation 5.1)
Our remuneration model is designed to enable the achievement of our strategy, whilst ensuring
that remuneration outcomes are aligned with employee and shareholder interests. The PPCC
assists the Board in overseeing Chorus’ people, culture and related policies and strategies.
There were no material changes to Chorus’ remuneration strategy or policy in FY24. The policy is
designed around six guiding principles:
Our remuneration policy sets out our approach to remuneration for both directors and employees
(including the CEO and his direct reports).
(NZX Code Recommendation 5.2)
The CEO and members of the executive leadership team have the potential to earn a short term
incentive (STI) and a long term incentive (LTI). Both STI and LTI are deemed at risk because the
outcome is determined by performance against a combination of pre-determined financial and
non-financial objectives.
Fixed remuneration
Fixed remuneration (not at risk) consists of base salary and other benefits including KiwiSaver.
Fixed remuneration is adjusted each year based on data from independent remuneration
specialists. Employees’ fixed remuneration is based on a combination of their own performance
and their current position when compared to the market.
Short term incentive
Senior employees were invited to participate in the FY24 STI scheme. The FY24 STI is an at risk
component payment, that is set as a percentage of base remuneration, from 15% to 30% based
on the complexity of the role. The CEO’s STI is set at a higher percentage of base remuneration
(currently 50% - see page 82 for CEO performance measures). STI payments are determined
following a review of company and individual performance and paid out at an individual multiplier
of between 0x and 1.25x for the CEO and executive leadership team, and between 0x and 1.4x for
all other employees.
Company performance goals are set and reviewed annually by our Board to align with shareholder
value with a continued emphasis on customer experience and revenue growth for the FY24 STI
measures. See figure 1.
A gateway goal is fundamental to the STI structure. This ensures a preliminary threshold of financial
success and affordability, before any other measures can be considered for potential STI payments.
If the gateway goal is not achieved, no STI is payable.
The STI payment is at the ultimate discretion of the Board and is based on performance against key
financial and non-financial measures. Some of the non-financial measures include implementing
and leveraging the new operating model, progressing the long term rural strategy, delivering on
growth opportunities and implementing our sustainability plan. Separate Board targets associated
with D,E&I and health & safety are also considered.
As an example of how the STI is calculated, an employee with base remuneration of $100,000 and
an STI element of 15% may receive between $0 and $29,400 depending on the level of company
performance (0x to 1.4x multiplier) multiplied by their individual performance (0x to 1.4x multiplier).
Individual performance is assessed by what employees achieve within their role and how they
perform their role.
(NZX Code Recommendations 5.1 – 5.3)
79 Chorus Annual Report 2024Governance and disclosures
1
2
3
4
5
6
Fair to all – employees and shareholders,
sharing in the success of Chorus.
Supports a Performance focused culture.
Valued by our people.
Simple to understand and administrate.
Market — aligned with our competitors.
Point of difference — how we know it is
Chorus.
Commitment to pay equity and alignment with
our shareholders’ expectations.
Rewards aligned with performance.
We have a diverse workforce and aim to provide
an appropriate suite of rewards that provide value,
now and in the future.
Simplicity promotes understanding, clarity and
perceptions of fairness.
We ensure we are not over or underpaying our
people through robust market analysis that guides
our decisions on remuneration.
Supports Chorus’ strategy, values, purpose and
employee value proposition.
Remuneration principles What does this mean?
Long term incentives
Chorus offers an executive LTI share scheme to align the interests of executives and
shareholders and encourage longer term decision making. This at risk payment is
described in Note 16 of the financial statements on page 53.
To further align executive and shareholder interests,a minimum shareholding policy was
introduced in 2019. Executives are expected to hold a minimum of 25% of their after tax
base remuneration in Chorus shares. The CEO is expected to hold 30% of his/her after tax
base remuneration in Chorus shares.
The LTI scheme for the 2023 grant is an absolute rather than a relative return based
scheme. A blended total shareholder return rate was adopted which primarily reflects
the regulated WACC set for Chorus’ fibre assets. This incorporates a weighted cost of
equity calculation, proportional to the regulated versus non-regulated components of the
business and based on relative enterprise value. A 0.75% stretch percentage was added to
the weighted cost of equity calculation to determine the three-year performance hurdle.
As a result of the independent review of the 2023 grant the Board decided to remove the
retesting provision. The vesting method was changed from cliff vesting where a grant
100% vests on reaching the performance hurdle, to progressive vesting where the grant
vests in stages on meeting agreed hurdles.
Remuneration and performance continued
Figure 1:
FY24 STI Targets and Results
80 Chorus Annual Report 2024Governance and disclosures
Targets
FY24 targetFY24 actualFY24 achieved
40%
EBITDA: gateway hurdle of $649m EBITDA. Year end target aligned with objective of modest underlying
EBITDA growth.
$690m$700mExceeded target
20%
Strategy and execution: qualitative assessment by Board based on long-term business initiatives including
implementing and leveraging the new operating model, progressing the long term rural strategy, delivering on
growth opportunities and implementing our sustainability plan.
VariousAs assessed
by the Board
Met target
20%
Revenue growth: grow FY24 revenue by at least 3%
$980m
+3%
$1,010m
+3.1%
Exceeded target
10%
Customer experience: intact fibre connection as measured by average customer scores (target of 7.6
over three months to 30 June)
7.67. 7Exceeded target
10%
Customer experience: fibre fault restoration as measured by average customer scores (target of 8.1 over
three months to 30 June)
8.18.6Exceeded target
Chief Executive Officer employment agreement and remuneration
(NZX Code Recommendation 5.3)
With J B Rousselot stepping down as CEO in April 2024, Mark Aue’s appointment as CEO took
effect from 15 April 2024. His employment agreement reflects standard conditions that are
appropriate for a senior executive of a listed New Zealand company. The employment agreement
may be terminated by:
— either he or Chorus giving six months’ notice in writing;
— C
horus without notice in the case of serious misconduct, serious breach (including substantial
non-performance) or other cause justifying summary dismissal; or
— C horus immediately, if the Board forms the view that substantial incompatibility and/or
irreconcilable differences have developed with him, or the Board otherwise wishes to terminate
his employment when he is not at fault (including a redundancy situation or medical incapacity).
Our CEO has a significant portion of his remuneration linked to performance and at risk. His total
remuneration is determined using a range of external factors, including advice from remuneration
specialists, and is annually reviewed by the PPCC and Board. During the CEO appointment process
PwC was commissioned by the Board to provide external market benchmarking advice that was
reflected in the remuneration package offer.
CEO remuneration package
The scenario chart below demonstrates the elements of the CEO remuneration design for
Mark Aue for FY25. Compared to the previous CEO, Mark Aue’s remuneration package has been
r
ebalanced with a higher weighting to LTI. The on-plan scenario includes on-target STI and the
threshold payment for the LTI. The maximum scenario includes maximum STI (both individual and
company multiplier) and 100% LTI vesting.
CEO remuneration for FY23 and FY24 was:
CEOFixed remunerationSTILTITotal remuneration
Mark Aue
14
FY24 $274,939
$194,893
15
–$469,832
J B Rousselot
FY24$1,766,150$1,253,070
15
–$3,019,220
J B Rousselot
FY23$1,338,750$1,138,607
16
$532,369
17
$3,009,726
Other benefits paid to Mark Aue: Chorus KiwiSaver contribution FY24 $8,215.
Other benefits paid to J B Rousselot: Chorus KiwiSaver contribution FY24 $52,097.
As JB Rousselot was CEO for the majority of FY24 (until 14 April 2024), the Board agreed that he
would be granted ‘good leaver’ status for the 2024 STI and the 2021 LTI (due to vest in August 2024
subject to meeting the 2021 LTI hurdle). Both the STI and the 2021 LTI (if it vests) will be paid in
FY25. Mr Rousselot forfeited both the 2022 and 2023 LTI grants.
Five year summary of CEO remuneration:
CEOTotal remuneration
% STI awarded
against maximum
% LTI awarded
against maximum
Span of LTI
performance period
Mark AueFY24
18
$469,83282%n/a—
J B RousselotFY24$3,019,22069%n/a—
FY23
$3,009,72665%100%2019–2022
FY22$2,442,50067%——
FY21$2,018,75047%——
FY20
19
$1,425,25366%——
14 Pro-rated from start date of 15 April 2024
15 FY24 STI was earned in FY24 but due to be paid in FY25
16 FY23 STI was earned in FY23 but paid in FY24
17
The 2019 LTI grant of $319,829 worth of share rights vested in August 2022 at a value of $532,369
18 Pro-rated from start date of 15 April 2024
19 Pro-rated from start date of 20 November 2019.
Remuneration and performance continued
Done
3,500,000
3,000,000
0
FIXEDON-PLANMAXIMUM
2,500,000
2,000,000
1,500,000
1,000,000
500,000
100%
56%
28%
16%
41%
36%
23%
Base
STILTI
81 Chorus Annual Report 2024Governance and disclosures
CEO STI & LTI Schemes
Mark Aue (CEO from 15 April 2024)
The table below outlines Mr Aue’s STI scheme for the period ending 30 June 2024.
20
No LTI has
been granted to the CEO since his appointment took effect on 15 April 2024. His first grant as
CEO will be in August 2024, with the grant value equivalent to 55% of base salary. Mr Aue received
a grant in November 2023 in his capacity as Chief Operating Officer. This is not due to vest until
August 2026.
DescriptionPerformance measures% achieved
STISet at 50% of base
remuneration. Based
on key financial
and non-financial
performance measures.
• Company performance – see FY24 STI
Targets on page 80 for weightings.
• Individual performance – based on
business fundamentals (both financial and
non-financial), customer experience and
strategic initiatives including health and
safety, sustainability and D, E & I.
82%
20 The STI payment earned in FY24 will be paid in FY25 and is pro-rated for the period Mark Aue was CEO.
Remuneration and performance continued
DescriptionPerformance measures% achieved
STISet at 75% of base
remuneration. Based on
key financial and non-
financial performance
measures.
• Company performance – see
FY24 STI Targets on page 80
for weightings.
• Individual performance
– based on business
fundamentals (both financial
and non-financial), customer
experience and strategic
initiatives including health and
safety, sustainability and DE&I.
69%
LTI – 2019Three-year grant
made November 2019,
equivalent to 33% of
base remuneration.
• Chorus TSR performance over
grant period must exceed
10.35% on an annualised basis,
compounding.
100% vested in
August 2022.
LTI – 2020Three-year grant made
August 2020, equivalent
to 33% of base
remuneration.
• Chorus TSR performance over
grant period must exceed
9.65% on an annualised basis,
compounding.
Did not meet the
performance hurdle in
August 2023. Subject to
retesting
23
up to August
2024.
LTI – 2021Three-year grant made
August 2021, equivalent
to 33% of base
remuneration.
• Chorus TSR performance over
grant period must exceed
6.2%
22
on an annualised basis,
compounding.
Assessed August 2024
with possible retesting
23
up to August 2025.
21 The STI payments earned in FY24 will be paid in FY25.
22 A blended rate which incorporates a weighted cost of equity calculation proportional to the regulated versus
non regulated components of the business, based on relative Enterprise Value has been used. A 0.75% stretch
percentage is added to determine the three-year performance hurdle.
23 If the performance hurdles are not met by the initial vesting date, they are assessed monthly for a period of 12
months (noting the hurdle continues to increase).
JB Rousselot (CEO to 14 April 2024)
The table below outlines JB Rousselot’s STI and LTI schemes for the period ending 14 April 2024
21
:
82 Chorus Annual Report 2024Governance and disclosures
Executive shareholding
For the year ended 30 June 2024, Chorus executives held shares in Chorus as shown in the table below.
ExecutiveCurrent Holdings
24
Shares Rights Eligible to Convert in 2024
25
Elaine Campbell28,58934,769
Ewen Powell76,91431,567
Mark Aue
26
––
Julian Kersey
26
––
Jo Mataira
26
––
Darren McLean
26
––
Kristel McMeekin
26
––
Anna Mitchell
26
––
Mike Shirley
26
––
Katrina Smidt
26
––
Marcus Wofinden
26
1,175–
Tot al106,678 66,336
Remuneration and performance continued
24 As at 30 June 2024.
25 The 2020 LTI grant did not meet the 2020 LTI hurdle on the vesting date (August 2023). It is re-tested each month
for a period of 12 months (ending August 2024), noting that the compounding performance hurdle continues to
increase each month. If the 2021 LTI hurdle is met, those share rights will be converted to shares in Q2 FY25. In
addition, this will also include any share rights in lieu of dividends not yet distributed. The re-testing regime has
been removed for the 2023 and all future grants.
26 A number of new executives were appointed in FY24 so have received one grant of share rights under the LTI
that are not eligible to convert into shares until 2026. Given the recent appointments, new executives are not yet
required to hold a minimum number of Chorus shares,
83 Chorus Annual Report 2024Governance and disclosures
Total Shareholder Return (TSR) performance
The graph above shows Chorus’ TSR performance against the NZX50 between 30 June 2019 and 30 June 2024. For an LTI
grant to vest, Chorus’ TSR performance over the three year grant period must meet or exceed the LTI performance target
on an annualised basis, compounding.
30 June
2019
30 June
2020
30 June
2021
30 June
2022
30 June
2024
30 June
2023
Chorus
NZX50
Percentage return
-50.00
0.00
50.00
100.00
150.00
Diversity, Equity and Inclusion
(NZX Code Recommendation 2.5)
Chorus’ Diversity, Equity and Inclusion Policy (available in the Governance section of our website)
provides a framework for our current and future diversity and inclusion initiatives. Each year,
the Chorus Board approves measurable objectives to promote diversity, equity and inclusion (D, E
& I). An overview of the agreed FY25 D, E & I measures and the outcomes achieved can be found in
our Sustainability Report.
We had four male and three female directors at 30 June 2024 (30 June 2023: four male and three
female directors).
Our executive team comprising of the CEO and his leadership team had six males and five females
at 30 June 2024 which achieves our measure of 40:40:20 gender ratio (30 June 2023: six males
and one female).
Based on the annual review of effectiveness of our Diversity, Equity & Inclusion (D, E & I) Policy
and our measurable diversity metrics and objectives, our Board considers that overall we continue
to make good progress towards achieving our D, E & I objectives, including meeting our gender
ratio target of 40:40:20 at Board and Executive level and continuing to reduce our gender pay gap.
Further evidence of our commitment has been the external recognition received over the course
of the year in relation to our progress. The Board believe that we have performed well against the
policy generally and look forward to our continued focus in the year ahead as we foster a culture
of equity and inclusion where everyone can thrive at Chorus.
Median Pay Gap
The median pay gap is 10.2 times and represents the number of times greater the CEO’s base salary
of $1,300,000 (annualised) is to an employee paid $128,000 (i.e. the median of all Chorus employees).
The gap is 15.2 times when including the FY24 STI target for the CEO.
Gender pay equity
We monitor and report on remuneration outcomes by gender to ensure pay equity at Chorus and
have supported pay gap campaigns led by “Mind the Gap” and Global Women.
We conduct gender pay equity analysis for like positions each year and no indications of gender
bias across similar positions were identified in FY24.
We report on gender pay gap via two different methods. First, at a total company level, where
we compare the median hourly rate for women to the rate for men – irrespective of role. By this
measure, as of 30 April 2024, the median, gender pay gap was an aggregate total of -18.4%,
compared to -19.0% in the same period last year.
The second method is by career level, comparing the median hourly rate for women to the rate
for men, across our nine career levels (salary bands). Our target is a pay gap no greater than -2% at
each career level. We achieved this in six of the nine career levels. In five of the nine career levels,
on average females are paid higher than males.
We’ve committed to report our ethnicity pay gap publicly once a standard, consistent
methodology is determined in Aotearoa.
Remuneration and performance continued
Figure 2:
Gender by role - FY22 - FY24 (as of 30 April 2024)
84 Chorus Annual Report 2024Governance and disclosures
20%
40%
60%
80%
100%
0
2024
2023
14
2022
2024
2023
2022
2024
61
39
2023
2022
2023
2024
2022
59
41
42
5858
42
144
57
43
64
36
8686
1414
57
43
57
43
ALL CHORUSEXECUTIVEPEOPLE LEADERSDIRECTORS
61
39
55
45
57
43
Remuneration and performance continued
Employee remuneration range during the year ended 30 June 2024
The table to the right shows the number of employees and former employees who received
remuneration and other benefits in excess of $100,000 during the year ended 30 June 2024.
This includes STI and LTI paid during FY24, as well as other benefits such as insurance and a
broadband concession. The table excludes any benefits that do not have an attributable value and
contributions employees may receive towards:
—the Marram Trust - a community healthcare and holiday accommodation provider
—the Government Superannuation Fund - a legacy benefit provided to a small number of
employees
—KiwiSaver accounts - 3% of gross earnings
The remuneration paid to, and other benefits received by, JB Rousselot in his capacity as CEO
until his resignation effective 14 April 2024 and Mark Aue’s CEO remuneration from 15 April 2024 –
30 June 2024 are detailed on page 81.
Chorus does not have any permanent employee earning less than the 2023/2024 Living Wage of
$27.80 per hour.
Actual PaymentCount
2,620,000 – 2,630,0001
1,230,000 – 1,240,0001
1,050,000 – 1,060,0001
780,001 – 790,0001
650,001 – 660,0001
640,001 – 650,0001
460,001 – 470,0001
450,001 – 460,0001
440,001 – 450,0001
430,001 – 440,0001
420,001 – 430,0002
410,001 – 420,0001
400,001 – 410,0001
390,001 – 400,0001
380,001 – 390,0001
370,001 – 380,0002
360,001 – 370,0005
350,001 – 360,0001
320,001 – 330,0002
310,001 – 320,0006
300,001 – 310,0003
Actual PaymentCount
290,001 – 300,0004
280,001 – 290,0004
270,001 – 280,0006
260,001 – 270,0005
250,001 – 260,0008
240,001 – 250,00014
230,001 – 240,00022
220,001 – 230,00012
210,001 – 220,00021
200,001 – 210,00017
190,001 – 200,00015
180,001 – 190,00018
170,001 – 180,00028
160,001 – 170,00031
150,001 – 160,00045
140,001 – 150,00055
130,001 – 140,00056
120,001 – 130,00060
110,001 – 120,00063
100,000 – 110,00049
G ran d Tot al
568
85 Chorus Annual Report 2024Governance and disclosures
Remuneration and performance continued
Director remuneration
(NZX Code Recommendation 5.1)
Fee structure
Total remuneration available to directors (in their capacity as such) in the year ended 30 June 2024
was fixed at our 2019 annual shareholders’ meeting at $1,169,042. The PPCC recommended and
the Board approved a 5% increase in director and committee base fees in the year to 30 June 2024.
This increase fell within the total fee pool of $1,169,042.
The Regulatory Sub-Committee was disestablished in FY24. Compared to FY23, the net effect of
the 5% increase and removal of the Regulatory Sub-Committee fees was a reduction in individual
base fees.
Annual fee structureYear ended 30 June 2024 $Year ended 30 June 2023 $
Board fees:
Board chair234,833223,650
Non-executive director119,700114,000
Board committee fees:
Audit and Risk Management Committee
Chair34,23032,600
Member1 7, 1 1 516,300
People, Performance and Culture Committee
Chair24,04522,900
Member12,33711,750
Regulatory Sub-Committee (per meeting)
Chair
––
Member2,4002,400
Notes:
1 The Board chair receives Board chair fees only. Other directors receive committee fees in addition to their Board fees.
There was a 5% increase in director and committee base fees in the year to 30 June 2024.
2 Directors do not participate in a bonus or profit-sharing plan, do not receive compensation in share options, and do
not have superannuation or any other scheme entitlements or retirement benefits.
3 Directors were paid $2,400 per meeting of the Regulatory Sub-Committee. There was one meeting in FY24.
The Regulatory Sub-Committee was disestablished in FY24.
4 Directors may be paid an additional daily rate of $2,400 for additional work as determined and approved by our
chair and where the payment is within the total fee pool available. There were no such fees paid in the year to
30 June 2024.
Fees paid to Directors (in their capacity as such) in the year ended 30 June 2024
DirectorTotal fees $ Board feesARMCPPCC
Regulatory
Sub-Committee
Mark Cross
234,833234,833–––
Sue Bailey134,438119,700–12,3382,400
Miriam Dean134,438119,700–12,3382,400
Will Irving139,215119,70017, 1 1 5–2,400
Murray Jordan146,145119,700–24,0452,400
Kate Jorgensen156,330119,70034,230–2,400
Jack Matthews
139,215119,70017, 1 1 5–2,400
1,084,613953,03368,46048,72014,400
Notes:
1 Amounts are gross and exclude GST (where applicable).
2 Mark Cross was appointed as chair, effective 26 October 2022. As a result, he received Board Chair fees only from
that date.
3 Directors did not receive any fees or other benefits for additional work during the year ended 30 June 2024.
4 Directors are entitled to be reimbursed for travel and incidental expenses incurred in performance of their duties in
addition to the above fees.
5 The total fee pool available to directors is $1,169,042.
6 The Regulatory Sub-Committee was disestablished during the year ended 30 June 2024.
Fee structure from 1 July 2024
Our PPCC reviews non-executive director remuneration annually based on criteria developed by
that committee including internal benchmarking analysis. At the date of this Annual Report, a market
review of Director fees is being carried out by PwC for the Board. The outcomes of this review
will determine whether an increase to the fee pool (last increased in 2019) will be sought at the
forthcoming Annual Shareholders’ Meeting in October.
86 Chorus Annual Report 2024Governance and disclosures
Risk management
Like all businesses, we are exposed to a range of risks.
Our risk management activities aim to ensure we
identify, prioritise and manage key risks so we can
execute our strategies and achieve our goals.
Risk management
(NZX Code Recommendation 6.1)
No business can thrive without taking on risk. Effective risk
management is about informed risk taking and appropriate and
active management of risks.
We seek to understand and respond to our current and future
business environment, and to actively seek and robustly evaluate
opportunities and initiatives which protect and achieve our business
strategies. We strive to understand, meet and appropriately balance
stakeholders’ expectations to deliver value to shareholders and a
sustainable environment for Chorus in the long term.
Our Board
Our Board is ultimately responsible for risk management
governance:
• Annually setting risk appetite and determining principal risks;
• Participating in discussions concerning elements of risk
including emerging and unforeseen risks;
• Approving and regularly reviewing our Managing Risk Policy
and supporting framework;
• Promoting a culture of managing risk; and
• Through our ARMC, providing risk oversight and monitoring.
Risk appetite
Our risk appetite sets our tolerable levels of risk. It forms
a dynamic link between strategy, target setting and risk
management and sets boundaries for day-to-day decision
making and reporting.
Risk management processes
Our Managing Risk Policy sets out how we manage
our risks, including by:
• Having a single risk management framework;
• Providing the CEO and executive team with discretion to
manage risk within the guidance provided in our framework;
• Balancing the level of control implemented to mitigate
identified risks with our commitment to comply with external
regulation and governance requirements and Chorus’ value
and growth aspirations; and
• Meeting good practice standards for risk management
processes and related governance.
Principal risks
Principal risks are owned by relevant executives. This promotes
integration into operations and executives planning and a culture
of proactive risk management. Notwithstanding individual
ownership, our CEO and executive hold collective responsibility
for considering how risk and events interrelate and for managing
our overall risk profile.
Principal risks are reported to our ARMC quarterly and, if
necessary, also by exception. Principal Risk owners support
the regular reporting from the Head of Risk, Internal Audit
& Compliance by providing updates on the risks they own.
Our ARMC reports to our Board.
Principal risks are assessed with each responsible executive and
collectively with the executive team before being reported to
the ARMC. This allows for constructive challenge and debate.
Underlying risk assessment and monitoring practices are
undertaken by each principal risk owner with assistance from
our Risk, Internal Audit & Compliance team.
Our Board also receives management and other internal and
external reporting over risk positions and our risk management
operation (including from internal audit plans approved by the
ARMC) through our overall governance framework.
Principal risks are our key risks to the achievement of our
strategy. These are assessed on a risk profile identifying
likelihood of occurrence and potential severity of impact.
Current principal risk categories are identified via a
comprehensive enterprise risk management framework
encompassing financial and non-financial risks.
They include anticipating and responding to:
• Health, safety and wellbeing risks: Working to keep safe the
people we owe duties to.
• Commercial and financial sustainability risks: Maintaining
appropriate capital management and credit settings.
• Core services risks: Core service availability and network
resilience.
• People and skills risks: Ensuring Chorus attains and retains
employees with the capabilities to achieve its strategic
objectives.
• Legal, regulatory and contractual risks: Working within the
regulatory and legal environment.
• Stakeholder and customer confidence / reputation risks:
Attaining and retaining a positive reputation with key
stakeholders and customers.
• Innovation risks: Identify and pursue innovation and
opportunities that will enhance Chorus.
(NZX Code Recommendations 6.1 & 6.2)
87 Chorus Annual Report 2024Governance and disclosures
In addition to Principal Risks, the Chorus Board or ARMC
regularly receive updates on, and discuss with the Executive:
• Unforeseen risks which are ‘black swan’ events which
have not been otherwise identified through normal risk
processes;
• Emerging risks which are risks that are known to some degree
but are not likely to materialise or have an impact in the near
term;
• Business unit risks which are risks to the achievement of
functional area strategies. The risks are managed at the
business unit level and reported to the ARMC if a material
risk is out of risk tolerance level.
Chorus’ climate related risk and opportunity framework
uses the same approach, principles, tolerances, impact
and likelihood scales used in Chorus’ enterprise-wide risk
management processes, and in line with the risk management
policy endorsed by the Chorus Board.
Our climate-related risks and opportunities (as well as Chorus’
other climate-related disclosures) are available in our Climate
Statements available at company.chorus.co.nz/sustainability.
(NZX Code Recommendation 6.2)
Reporting on our management of health and safety risks is
included in our Sustainability Report at company.chorus.
co.nz/sustainability.
Auditors
(NZX Code Recommendations 7.1 – 7.3)
External auditor
(NZX Code Recommendation 7.1)
Our Board and ARMC monitor the ongoing independence
and quality of our external auditor (KPMG). Our ARMC also
meets with our external auditor without management present
at least once per year. Our ARMC charter and External Auditor
Independence Policy amongst other things:
• Prohibit the provision of certain non-audit services by our
external auditor;
• Require ARMC approval of all audit and permitted non-audit
services;
• Require our client services partner and lead/engagement
partner to be rotated every five years (with a five year cooling
off period) and other audit partners to be rotated every seven
years (with a two year cooling off period);
• Require our ARMC to review our external auditor’s fees half
yearly (including the ratio of fees for audit vs. non-audit
services); and
• Impose restrictions on the employment of former external
audit personnel.
KPMG provided a limited assurance review of our Scope 1, 2 and
3 emissions inventory for the FY24 period for the purposes of
our FY24 Climate Statements. In addition, KPMG has provided
Regulatory audit and assurance work in relation to fibre
regulation 2023/24.
KPMG did not provide any other non-audit assurance services
in the year to 30 June 2024. Any additional non-audit services
would be provided in accordance with our ARMC charter and
External Auditor Independence Policy. They should not affect
KPMG’s independence, including because:
• They are approved only where we are satisfied the services
would not compromise KPMG’s independence; and
• They do not involve KPMG acting in a managerial or
decision-making capacity.
KPMG confirm their independence via independence
declarations every six months.
(NZX Code Recommendation 7.2)
Our external auditors attend our ASM each year.
Internal audit
(NZX Code Recommendation 7.3)
We operate a co-sourced internal audit model with our Head of
Risk, Internal Audit & Compliance and her team supported by
external advisors PricewaterhouseCoopers to provide additional
resource and specialist expertise as required.
The responsibilities of our internal audit function include:
• Assisting our ARMC and Board in their assessment of internal
controls and risk management;
• Developing an internal audit plan for review and approval by
the ARMC each year;
• Executing the plan and reporting progress against it,
significant changes, results and issues identified; and
• Escalating issues as appropriate (including to our ARMC and/or
Board chairs).
Our executive team and ARMC monitor key outstanding internal
audit issues and recommendations as part of regular reporting
and review, including the timeliness of resolution.
Our ARMC has direct and unrestricted access to our internal
audit function. The ARMC or the Head of Risk, Internal Audit &
Compliance can request a meeting without management present.
Our Head of Risk, Internal Audit & Compliance has a
management reporting line to our General Counsel and a direct
reporting line to our ARMC, attending every ARMC meeting.
Our ARMC reviews the remuneration and incentive
arrangements of our Head of Risk, Internal Audit & Compliance
and our Risk & Assurance Manager each year.
Risk management continued
88 Chorus Annual Report 2024Governance and disclosures
Shareholder rights and relations
We are committed to fostering constructive and open relationships with shareholders:
• Communicating effectively with them;
• Giving ready access to balanced and understandable information;
• Making it easy for shareholders to participate in general meetings; and
• Maintaining an up to date website providing information about our business.
Our investor relations programme is designed to further facilitate two-way communication
with shareholders, provide them and other market participants with an understanding of our
business, governance and performance and an opportunity to express their views. As part of
this programme we enable investors and other interested parties to ask questions and obtain
information. We meet with investors and analysts and undertake formal investor presentations.
Our annual and half year results presentations are made available to all investors via webcast.
Our website
(NZX Code Recommendation 8.1)
Our key financial, operational and governance information is available at
company.chorus.co.nz/investors.
Annual shareholder’s meeting
(NZX Code Recommendations 8.2 & 8.3)
Since 2020 we have encouraged shareholder participation in the annual shareholders meeting
by providing a webcast to enable shareholders to watch proceedings online, as well as vote and
ask questions.
We enable shareholders to vote by proxy ahead of meetings without having to physically attend
or participate in those meetings and adopt the one share one vote principle, conducting voting
at shareholder meetings by poll.
We consider that shareholders should be entitled to vote on decisions which would change the
essential nature of our business.
Shareholders are also able to ask questions of, and express their views in respect of, our Board,
management and auditors (including via appointed proxies) at and before annual meetings.
We encourage shareholders to communicate with us and our share registrar electronically,
including by providing email communication channels and online contact details and
instructions on our website.
Additional disclosures
Group structure
As at 30 June 2024, Chorus Limited has one wholly owned subsidiary: Chorus New Zealand Limited
(CNZL).
Chorus Limited
Chorus New Zealand Limited
Chorus Limited is the entity listed on the NZX and ASX. It is also the borrowing entity under the
group’s main financing arrangements and the entity which has partnered with the Crown for the
UFB build.
CNZL undertakes (and is the contracting entity for) Chorus’ operating activities and is the
guarantor of Chorus Limited’s borrowing. CNZL also employs all Chorus people. CNZL has its own
constitution but its Board is the same as the Chorus Limited Board.
Disclosures in respect of CNZL are set out in the “Subsidiaries” section on page 94.
Indemnities and insurance
Chorus indemnifies directors under our constitution for liabilities and costs they may incur for
their acts or omissions as directors (including costs and expenses of defending actions for actual
or alleged liability) to the maximum extent permitted by law. We have also entered into deeds of
indemnity with each director under which:
• Chorus indemnifies the director for liabilities incurred in their capacity as a director and as
officers of other Chorus companies.
• Directors are permitted to access company records while directors and after they cease to hold
office (subject to certain conditions).
Deeds of indemnity have also been entered into on similar terms with certain senior employees
for liabilities and costs they may incur for their acts or omissions as employees, directors of
subsidiaries or as directors of non-Chorus companies in which Chorus holds interests.
We have a directors’ and officers’ liability insurance policy in place covering directors and senior
employees for liability arising from their acts or omissions in their capacity as directors or
employees on commercial terms. The policy does not cover dishonest, fraudulent, malicious or
wilful acts or omissions.
(NZX Code Recommendations 8.1 – 8.3)
89 Chorus Annual Report 2024Governance and disclosures
Director changes
There were no director changes in the year to 30 June 2024. Murray Jordan has decided to retire
as a director, effective as at 30 September 2024.
Director restrictions
No person who is an ‘associated person’ of a telecommunications services provider in
New Zealand may be appointed or hold office as a director. NZX has granted a waiver to allow this
restriction to be included in our constitution.
Securities and security holders
Ordinary shares
Chorus Limited’s shares are quoted on the NZX and on the ASX and trade under the ‘CNU’ ticker.
There were 433,887,294 ordinary shares on issue at 30 June 2024. Each share confers on its
holder the right to attend and vote at a shareholder meeting (including the right to cast one vote
on a poll on any resolution).
Constitutional ownership restrictions
As part of the establishment of Chorus we inherited an obligation to obtain Crown approval prior
to any person:
•
H
aving a relevant interest in 10% or more of our shares; or
•
O
ther than a New Zealand national, having a relevant interest in more than 49.9% of our shares.
On each request the Crown has provided approval, currently:
•
L1 Capital Pty Ltd can hold a relevant interest in up to 15% of our shares.
•A
MP Capital Holdings Limited can hold a relevant interest in up to 15% of our shares, and
•
U
niSuper Limited can hold a relevant interest in up to 20% of our shares.
If our Board or the Crown determines there are reasonable grounds for believing a person has
a relevant interest in our shares in excess of the ownership restrictions, our Board may, after
following certain procedures, prohibit the exercise of voting rights (in which case the voting
rights vest in our chair) and may force the sale of shares. Our Board may also decline to register a
transfer of shares if it reasonably believes the transfer would breach the ownership restrictions.
NZX has granted waivers allowing our constitution to include the power of forfeiture, the
restrictions on transferability of shares and our Board’s power to prohibit the exercise of voting
rights relating to these ownership restrictions. ASX has also granted a waiver in respect of the
refusal to register a transfer of shares which is or may be in breach of the ownership restrictions.
Shareholder distribution as at 30 June 2024
HoldingNumber of holders Total number of shares held% of shares issued
1 to 999
9,9774,074,8570.94
1,000 to 4,9996,23814,563,2393.36
5,000 to 9,9991,73011,466,9162.64
10,000 to 99,9991,26026,072,5116.01
100,000 and over80377,709,7718 7. 0 5
Tot al19,285433,887,294100.00
Unmarketable Parcels
Minimum Parcel SizeHoldersUnits
Minimum $1,000.00 parcel at $7.6900 per unit
13162935,823
Substantial holders
As at 30 June 2024, we have received substantial product holder notices from shareholders as
follows:
Notices received as at 30 June 2024
Number of
ordinary shares held
% of shares on
issue
UniSuper Limited5 7, 8 93 ,6 4 413.34%
L
1 Capital Pty Ltd45,287,23510.44%
Additional disclosures continued
90 Chorus Annual Report 2024Governance and disclosures
Mitsubishi UFJ Financial Group,
Inc
22,196,5615.
12%
Additional disclosures continued
Twenty largest shareholders as at 30 June 2024
RankHolder nameHolding%
1Citicorp Nominees Pty Limited55,484,44712.79
2BNP Paribas Nominees Pty Ltd <Agency Lending A/C>46,245,71710.66
3JP Morgan Nominees Australia Limited45,350,47310.45
4HSBC Custody Nominees (Australia) Limited40,659,2539.37
5BNP Paribas Nominees (NZ) Limited – NZCSD <BPSS40>25,469,4315.87
6BNP Paribas Noms Pty Ltd14,940,9913.44
7Citibank Nominees (New Zealand) Limited – NZCSD <CNOM90>12,902,1562.97
8Accident Compensation Corporation – NZCSD <ACCI40>12,613,8842.91
9HSBC Nominees (New Zealand) Limited – NZCSD <HKBN90>12,413,6592.86
10Custodial Services Limited <A/C 4>9,019,1012.08
11Forsyth Barr Custodians Limited <1-Custody>8,863,4712.04
12New Zealand Depository Nominee Limited <A/C 1 Cash Account>8,859,0322.04
13ANZ Wholesale Australasian Share Fund – NZCSD <PNAS90>8,067,8501.86
14
Generate Kiwisaver Public Trust Nominees Limited <NZCSD>
< NZP T4 4>
7,888,4381.82
15
Tea Custodians Limited Client Property Trust Account – NZCSD
<T E AC4 0 >
7,664,6841.77
16JBWere (NZ) Nominees Limited <NZ Resident A/C>7,059,7041.63
17
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited
– NZCSD <SUPR40>
5,023,9071.16
18FNZ Custodians Limited4,788,3521.10
19Simplicity Nominees Limited – NZCSD4,486,2491.03
20National Nominees Limited4,161,2770.96
Total Top 20 Holders Of Ordinary Shares341,962,07678.81
Total Remaining Holders Balance91,925,21821.19
Twenty largest bondholders (December 2027) as at 30 June 2024
RankHolder nameHolding%
1Custodial Services Limited <A/C 4>60,832,00030.42
2FNZ Custodians Limited25,402,00012.70
3
Tea Custodians Limited Client Property Trust Account – NZCSD
<T E AC4 0 >
17,881,0008.94
4BNP Paribas Nominees (NZ) Limited – NZCSD <BPSS40>15,324,0007.6 6
5Forsyth Barr Custodians Limited <1-Custody>14,167,0007.0 8
6HSBC Nominees (New Zealand) Limited – NZCSD <HKBN90>8,600,0004.30
7Pin Twenty Limited <Kintyre A/C>7,000,0003.50
8JBWere (NZ) Nominees Limited <NR USA A/C>4,720,0002.36
9FNZ Custodians Limited <DTA Non Resident A/C>4,446,0002.22
10JBWere (NZ) Nominees Limited <NZ Resident A/C>4,322,0002.16
11Investment Custodial Services Limited <A/C C>3,187,0001.59
12Forsyth Barr Custodians Limited <A/C 1 NRLAIL>2,176,0001.09
13
HSBC Nominees (New Zealand) Limited A/C State Street – NZCSD
<HKBN45>
2,000,0001.00
14Forsyth Barr Custodians Limited <Account 1 E>1,778,0000.89
15Adminis Custodial Nominees Limited1,545,0000.77
16Custodial Services Limited <A/C 12>1,529,0000.76
17ANZ Wholesale NZ Fixed Interest Fund – NZCSD1,499,0000.75
18JBWere (NZ) Nominees Limited <NR USA AIL A/C>1,400,0000.70
19NZX WT Nominees Limited <Cash Account>1,327,0000.66
20FNZ Custodians Limited <DRP NZ A/C>1,115,0000.56
Total Top 20 Holders Of 1.98% Fixed Rate Bonds 02/12/2027180,250,00090.13
Total Remaining Holders Balance19,750,0009.88
91 Chorus Annual Report 2024Governance and disclosures
Additional disclosures continued
Twenty largest bondholders (December 2028) as at 30 June 2024
RankHolder nameHolding%
1Custodial Services Limited <A/C 4>109,584,00021.92
2Forsyth Barr Custodians Limited <1-Custody>92,154,00018.43
3JBWere (NZ) Nominees Limited <NZ Resident A/C>40,985,0008.20
4
HSBC Nominees (New Zealand) Limited O/A Euroclear Bank –
NZCSD <HKBN95>
30,359,0006.07
5FNZ Custodians Limited26,946,0005.39
6
Tea Custodians Limited Client Property Trust Account – NZCSD
<T E AC4 0 >
24,034,0004.81
7BNP Paribas Nominees (NZ) Limited – NZCSD <BPSS40>17,686,0003.54
8Citibank Nominees (New Zealand) Limited – NZCSD <CNOM90>15,074,0003.01
9JBWere (NZ) Nominees Limited <Res Inst A/C>15,000,0003.00
10Forsyth Barr Custodians Limited <Account 1 E>9,623,0001.92
11
Generate Kiwisaver Public Trust Nominees Limited <NZCSD>
< NZP T4 4>
9,187,0001.84
12ANZ Bank New Zealand Limited – NZCSD <NBNZ40>5,817,0001.16
13JBWere (NZ) Nominees Limited <44625 A/C>4,600,0000.92
14
HSBC Nominees (New Zealand) Limited A/C State Street – NZCSD
<HKBN45>
4,250,0000.85
15JBWere (NZ) Nominees Limited <44626 A/C>4,000,0000.80
16Forsyth Barr Custodians Limited <A/C 1 NRLAIL>3,570,0000.71
17JBWere (NZ) Nominees Limited <NR USA A/C>3,334,0000.67
18RGTKMT Investments Limited3,000,0000.60
19FNZ Custodians Limited <DTA Non Resident A/C>2,988,0000.60
20NZX WT Nominees Limited <Cash Account>2,640,0000.53
Total Top 20 Holders Of 6.38% Fixed Rate Bonds 06/12/2028424,831,00084.97
Total Remaining Holders Balance75,169,00015.03
Twenty largest bondholders (December 2030) as at 30 June 2024
RankHolder nameHolding%
1Custodial Services Limited <A/C 4>46,157,00023.08
2FNZ Custodians Limited19,753,0009.88
3Accident Compensation Corporation – NZCSD <ACCI40>17,500,0008.75
4
Tea Custodians Limited Client Property Trust Account – NZCSD
<T E AC4 0 >
16,537,0008.27
5ANZ Bank New Zealand Limited – NZCSD <NBNZ40>16,509,0008.25
6BNP Paribas Nominees (NZ) Limited – NZCSD <BPSS40>12,727,0006.36
7Forsyth Barr Custodians Limited <1-Custody>9,772,0004.89
8HSBC Nominees (New Zealand) Limited – NZCSD <HKBN90>9,561,0004.78
9Citibank Nominees (New Zealand) Limited – NZCSD <CNOM90>7,204,0003.60
10NZPT Custodians (Grosvenor) Limited – NZCSD <NZPG40>5,100,0002.55
11
HSBC Nominees (New Zealand) Limited O/A Euroclear Bank –
NZCSD <HKBN95>
5,000,0002.50
12CML Shares Limited2,800,0001.40
13FNZ Custodians Limited <DTA Non Resident A/C>2,326,0001.16
14Forsyth Barr Custodians Limited <Account 1 E>2,083,0001.04
15Investment Custodial Services Limited <A/C C>2,072,0001.04
16JBWere (NZ) Nominees Limited <NZ Resident A/C>1,858,0000.93
17ANZ Wholesale NZ Fixed Interest Fund – NZCSD1,735,0000.87
18Mint Nominees Limited – NZCSD <NZP440>1,647,0000.82
19Queen Street Nominees Acf Pie Funds – NZCSD1,500,0000.75
20Forsyth Barr Custodians Limited <Account 1 Nrl>1,155,0000.58
Total Top 20 Holders Of 2.51% Fixed Rate Bonds 02/12/2030182,996,00091.50
Total Remaining Holders Balance17,004,0008.50
92 Chorus Annual Report 2024Governance and disclosures
Additional disclosures continued
Debt listings
Chorus Limited has the following bonds on issue:
• $200 million bonds traded on the NZX debt market (the NZDX) maturing December 2027;
• $500 million bonds traded on the NZX debt market maturing December 2028;
• $200 million bonds traded on the NZX debt market maturing December 2030;
• EUR 209 million EMTNs traded on the ASX maturing October 2023;
• EUR 300 million EMTNs traded on the ASX, maturing December 2026;
• EUR 500 million EMTNs traded on the ASX, maturing September 2029; and
• AUD 300 million wholesale AMTNs, maturing 18 September 2030.
American depositary receipts
American Depositary Shares, each representing five shares and evidenced by American Depositary
Receipts, are not listed but are traded on the over-the-counter market in the United States under
the ticker ‘CHRYY’ with Bank of New York Mellon as depositary bank. As at 30 June 2024 Chorus
had 849,198 ADRs on issue.
NZX bondholder distribution as at 30 June 2024
December 2027 maturity
HoldingNumber of holdersTotal number of bonds held% of bonds issued
1 – 5,000945,0000.02
5,000 to 9,9991069,0000.03
10,000 to 99,9991393,959,0001.98
100,000 and over63195,927,00097.9 6
Tot al221200,000,000100.00
Unmarketable Parcels
Minimum Parcel SizeHoldersUnits
Minimum $1,000.00 parcel at $0.8900 per unit
1,12400
December 2028 maturity
HoldingNumber of holdersTotal number of bonds held% of bonds issued
1 – 5,00051255,0000.05
5,000 to 9,99925203,0000.04
10,000 to 99,99996328,724,0005.74
100,000 and over161470,818,00094.16
Tot al1,200500,000,000100.00
Unmarketable Parcels
Minimum Parcel SizeHoldersUnits
Minimum $1,000.00 parcel at $1.0500 per unit
95300
December 2030 maturity
HoldingNumber of holdersTotal number of bonds held% of bonds issued
1 – 5,000945,0000.02
5,000 to 9,999649,0000.02
10,000 to 99,9992246,506,0003.25
100,000 and over48193,400,00096.70
Tot al287200,000,000100.00
Unmarketable Parcels
Minimum Parcel SizeHoldersUnits
Minimum $1,000.00 parcel at $0.8400 per unit
1,19100
Unquoted securities
Crown Infrastructure Partners (CIP) Securities
The terms of issue for the CIP1 and CIP2 securities are set out in the subscription agreements
between Chorus Limited and CIP. These terms are summarised in note [6] of our consolidated
financial statements and on our website at company.chorus.co.nz/reports.
SecurityNumber issued in the year
ended 30 June 2024
Total on issue at
30 June 2024
HolderPercentage held
CIP1 equity securities–462,052,071CIP100%
CIP1 debt securities–462,052,071CIP100%
CIP1 equity warrants74 4,90216 , 4 07, 2 27CIP100%
CIP2 equity securities–306,423,177CIP100%
CIP2 debt securities–104,852,093CIP100%
93 Chorus Annual Report 2024Governance and disclosures
Additional disclosures continued
Other disclosures
New NZX listing rules
NZX updated its listing rules from 24 May 2024.
NZX waivers
On 28 March 2019 Chorus applied for the continuation of existing and still required waivers and
rulings. On 3 April 2020 a waiver from NZX listing rule 2.3.2, 4.1.1, 4.1.2, 4.2.1, 4.14, 6.6.1, 8.1.5 and
a ruling from NZX on listing rule 4.9.1 were granted.
A summary of all waivers relied on by Chorus in the 12 months ending 30 June 2024 is available
on our website at company.chorus.co.nz/investors/services/your-shareholding
Non-standard designation
NZX has attached a ‘non-standard’ designation to Chorus Limited because of the ownership
restrictions in our constitution (described above).
ASX disclosures
Chorus Limited and its subsidiaries are incorporated in New Zealand. Chorus has a ‘foreign
exempt’ listing on ASX, meaning our primary obligation is to comply with the NZX listing rules
(as our home exchange).
Chorus Limited 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).
Our constitution contains limitations on the acquisition of securities, as described above.
For the purposes of ASX listing rule 1.15.3 Chorus Limited continues to comply with the NZX
listing rules.
Registration as a foreign company
Chorus Limited has registered with the Australian Securities and Investments Commission
as a foreign company and has been issued an Australian Registered Body Number (ARBN) of
152 485 848.
Net tangible assets per security
As at 30 June 2024, consolidated net tangible assets per share was $1.23 (30 June 2023: $1.60).
Net tangible assets per share is a non-GAAP financial measure and is not prepared in accordance
with NZ IFRS.
Revenue from ordinary activities and net profit
In the year ended 30 June 2024:
• Revenue from ordinary activities increased 3.1% to $1,010 million (30 June 2023: $980 million);
and
• Profit from ordinary activities after tax, and net profit, attributable to shareholders decreased
136% to a loss of [$9] million (30 June 2023: $25 million).
Subsidiaries
Chorus New Zealand Limited (CNZL)
Directors as at 30 June 2024: Mark Cross, Miriam Dean, Murray Jordan, Jack Matthews, Sue Bailey,
Kate Jorgensen, Will Irving.
Current CNZL directors are also Chorus Limited directors and do not receive any remuneration in
their capacity as CNZL directors.
Other subsidiaries
Chorus Limited has no other subsidiaries.
94 Chorus Annual Report 2024Governance and disclosures
Glossary
AMTNAustralian Medium Term Notes.
Backbone networkFibre cabling and other shared network
elements required either in the common
areas of multi-dwelling units to connect
individual apartments/offices, or to serve
premises located along rights of way.
BackhaulThe portion of the network that links
local exchanges to other exchanges
or retail service provider networks.
BasebandA technology neutral voice input service
that can be bundled with a broadband
product or provided on a standalone basis.
BoardChorus Limited’s Board of Directors.
ChorusChorus Limited and it’s subsidiary
Chorus New Zealand Limited.
CIPCrown Infrastructure Partners,
the Government organisation that
manages New Zealand’s rollout of
Ultra-Fast Broadband infrastructure.
CommissionCommerce Commission –
the independent Crown entity
whose responsibilities include
overseeing the regulation of the
telecommunications sector.
ConstitutionChorus Limited’s Constitution.
Direct fibre accessAlso known as ‘dark’ fibre, a fibre service
that provides a point to point fibre
connection and can be used to deliver
backhaul connections to mobile sites.
DirectorA director of Chorus Limited.
EBITDAEarnings before interest, income tax,
depreciation and amortisation.
EMTNEuropean Medium Term Notes.
FYFinancial year – twelve months
ended 30 June. e.g. FY24 is from
1 July 2023 to 30 June 2024.
GbpsGigabits per second. A measure of
the average rate of data transfer.
GigabitThe equivalent of 1 billion bits. Gigabit
Ethernet provides data transfer rates
of about 1 gigabit per second.
GPONGigabit Passive Optical Network.
ITInformation Technology.
Layer 2The data link layer, including broadband
electronics, within the Open Systems
Interconnection model. Layer 1 is the
physical cables and co-location space.
MbpsMegabits per second – a measure of
the average rate of data transfer.
NZ IFRSInternational Financial Reporting
Standards – the rules that the financial
statements have to be prepared by.
P2PWhere two parties or devices are
connected point-to-point via fibre.
PetabyteOne million gigabytes (GB), which
is a measure of data volume.
RABRegulatory Asset Base refers to
the value of total investment by a
regulated utility in the assets which
will generate revenues over time.
RBIRural Broadband Initiative – refers to
the Government programme to improve
and enhance broadband coverage in
rural areas between 2011 and 2016.
ShareMeans an ordinary share in Chorus.
TSOTelecommunications Services Obligation –
a universal service obligation under which
Chorus must maintain certain coverage
and service on the copper network.
TSRTotal shareholder return.
UFBUltra-Fast Broadband refers to the
Government programme to build a fibre
to the premises network. UFB1 refers to
the original phase of the rollout to 75% of
New Zealanders. UFB2 and UFB2+ were
subsequent phases announced in 2017.
VDSLVery High Speed Digital Subscriber Line –
a copper-based technology that provides
a better broadband connection than ADSL.
95 Chorus Annual Report 2024
96
This annual report:
• May contain forward looking statements. These statements are not guarantees or predictions
of future performance. They 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.
• Includes statements relating to past performance. These should not be regarded as reliable
indicators of future performance.
• Is current at its release date. Except as required by law or the NZX and ASX listing rules, Chorus
is not under any obligation to update this annual report or the information in it at any time,
whether as a result of new information, future events or otherwise.
• Contains 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.
Although Chorus considers those measures provide useful information they should not be used
in substitution for, or isolation of, Chorus’ audited financial statements.
• May contain information from third parties Chorus believes reliable. However, no
representations or warranties are made as to the accuracy or completeness of such information.
• Should be read in the wider context of material previously published by Chorus and released
through the NZX and ASX.
• Does not constitute investment advice or an offer or invitation to purchase Chorus securities.
Disclaimer
96 Chorus Annual Report 2024
ARBN 152 485 848
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