annual report 2016 - ultrafast fibre · annual report 2016. letter to the shareholders pg4 about us...

ANNUAL REPORT 2016

LETTER TO THE SHAREHOLDERS pg4

ABOUT US pg6

CORPORATE STRUCTURE pg7

HEALTH & SAFETY pg9

GOVERNANCE & LEADERSHIP pg11

Governance pg12

Leadership pg14

Directors’ report / Statutory information pg16

OUR JOURNEY pg19

THE YEAR IN REVIEW pg23

Our network pg28

Network completion events pg30

50,000th connection pg32

Deloitte Fast50 Awards pg33

Supporting our communities pg34

FIBRE CASE STUDIES pg37

Boon Goldsmith Bhaskar Brebner (BGBB) Team Architects pg38

ACG Tauranga pg40

FINANCIALS pg43

DIRECTORY pg64

CONTENTS

1

Facts and figures are correct as of date of publication, referencing 2016 Financial Year (1 July 2015 to 30 June 2016).

32

LETTER TO THE SHAREHOLDERS The 2015/16 financial

year represents a turning

point for Ultrafast Fibre,

as we move from the build

phase to now operating and

managing our network.

Strong financial progress has

been made, with a positive EBITDA

result of $3.8 million profit from a $5.3

million loss in 2014/15. Our Net Loss

after tax was $6.9 million, predominantly

due to non-cash depreciation and

amortisation of $14 million.

Ultrafast Fibre’s strategic focus has

evolved to meet the changing needs

of the business and to continuously

improve our service offering. We

have been actively engaged with

the communities where we operate,

gaining insight from our customers

and stakeholders. In particular we

have prioritised improvements to our

customers’ experience during the

connection process, and we appreciate

there is still more to be done.

We continue to be highly motivated

by the opportunities and potential

for innovation that world-class fibre

technology brings. New Zealand is

moving away from last century legacy

technology to a 21st century solution,

and Ultrafast Fibre is proud to be a part

of this.

Demand for Ultra-Fast Broadband

(UFB) is steadily rising and our team

is connecting customers at a rate

of around 150 new connections per

working day. As at 30 June 2016 we

have 51,641 customer connections, an

increase of 30,532 connections from the

previous financial year. Our Tauranga

customers continue to lead the way, with

the highest uptake rate in the country at

around 32 per cent.

Increasingly businesses are making the

switch to UFB, and this is an ongoing

focus for our growth strategy. We believe

demand will only continue to rise as

the true benefits of high-speed internet

become more well-known.

Ultrafast Fibre has also grown this year,

from a team of 60 to now 115 full-time

staff. Our people are the key to our

success and this was recognised by

our award for Deloitte Fast50 ‘Fastest

Growing Technology Business’ – Central

North Island, and our twelfth place

national ranking overall.

We want to acknowledge our

shareholders and partners for their

commitment and contribution to our

business. We have appreciated working

with Crown Fibre Holdings for the

network rollout, and believe our recent

move to being fully owned by WEL

Networks Limited and Waipa Networks

Limited is a positive step for Ultrafast

Fibre’s future.

Looking ahead to the new financial year,

we are excited to continue to push the

boundaries and introduce new initiatives

to advance the fibre revolution.

Rodger Fisher, Chairman

William Hamilton, Chief Executive

Photo: Chairman Rodger Fisher and Chief Executive William Hamilton

54

After almost five years’ work, we

are delighted to have completed the build of our

entire fibre network this year, six months ahead of schedule and to budget. This early completion is a significant milestone for all the Ultrafast Fibre team, including

our shareholders, build partners, and Retail Service Providers.

Ultrafast Fibre is leading New Zealand’s fibre revolution. Our team is focused on enhancing the experiences of our customers, as they connect to our world-class Ultra-Fast Broadband (UFB) network and experience what it means to truly‘go faster’.Our vision is to enable more New Zealanders to tap into all the benefits that UFB brings. We believe that high-speed internet will enhance and in many ways revolutionise the way Kiwis communicate, work, play, learn and are entertained online.Established as a Local Fibre Company in 2010, Ultrafast Fibre built and now owns and operates the UFB network in the urban areas of Hamilton, Tauranga, Whanganui, New Plymouth, Tokoroa, Hawera, Cambridge and Te Awamutu.

Our 3,000km fibre network represents about 13 per cent of the Government’s national UFB1 initiative. It provides access to UFB technology for more than 195,000 households, schools, businesses and healthcare facilities in these areas.Ultrafast Fibre is passionate about working together as one team to get things done. We value our people’s health, safety and wellbeing and we have respect for each member of our team and the contribution they make to our business achieving its goals.Innovation is key to how we operate. The status quo is never good enough – we take a bold approach to New Zealand’s digital future.

Ultrafast Fibre Limited is fully owned by Waikato Networks Limited (WNL), a subsidiary of WEL Networks Limited (85 per cent shareholding) and its partner Waipa Networks Limited (15 per cent shareholding). In September 2016 WNL purchased all of the Government’s shares in Ultrafast Fibre and became the sole shareholder. Prior to this, Ultrafast Fibre was in the joint shareholding of WNL and Government agency, Crown Fibre Holdings Limited.Our business is governed by a Board of Directors and led by an Executive Management team.

Ultrafast Fibre works with key partners to grow and manage its UFB network. We outsource to Huawei Technologies (New Zealand) Company Ltd to operate the Layer 2 fibre network and to Broadspectrum Services (New Zealand) Limited to build and maintain the physical network.We provide wholesale fibre services to a large number of Retail Service Providers (RSPs), who in turn provide UFB products to End User customers, including households, schools, businesses, and healthcare facilities.

ABOUT US CORPORATE STRUCTURE

100%

48 RETAIL SERVICE PROVIDERS(RSPs)

END USER CUSTOMERS

85% 15%

76

HEALTH & SAFETYUltrafast Fibre considers the health, safety and wellbeing of our communities, team members and contractors as being central to everything we do. It is a continuous focus for our business and over the past year we have allocated more resources to improvements in this area.To meet our obligations under the Health and Safety at Work Act (2015), our team has developed a new Health and Safety Management System. This allows us to achieve the highest standards of governance and fulfil the requirements of the legislation.Our Health and Safety Manager has been tasked with ensuring the latest workplace training competencies deliver meaningful health and safety results across Ultrafast Fibre. We also have a specific and dedicated focus on aerial working practices.Ultrafast Fibre has engaged with PowerCo, WEL Networks, Waipa Networks and Chorus to confirm that the latest pole assessment and hazard identification processes are effective in allowing fibre, copper and power assets to coexist safely.

During the past financial year, we are pleased to have had no medical treatment or recordable injuries within the company. Externally, our contractor Broadspectrum significantly reduced the Total Recordable Injury Frequency Rate and Lost Time Injury Frequency Rate.However, there is always room for improvement. Within the wider build and provisioning environment there were five lost time injuries, 22 medical treatment injuries and 187 near-miss accidents (no injury) reported during the 12-month period.We were delighted that our recent company-wide survey results showed that Ultrafast Fibre staff are fully invested in our “go home safe” objectives. This work programme will be ongoing and is one that we are fully invested in for the benefit of our people.

98

GOVERNANCE & LEADERSHIPGovernance pg12

Leadership pg14

Directors’ report / Statutory information pg16

1110

RODGER FISHERIndependent Chairman

A highly experienced business leader, Rodger has chaired Ultrafast Fibre’s Board since its inception in 2011.

Rodger is also Chairman of The Property Group, Chairman of Eurotech Group, a Director and Deputy Chair of Ports of Auckland and a Director of Tenon (formerly Fletcher Forests). He is a former Chairman of the Civil Aviation Authority, Aviation Security Services and WEL Networks Limited.

Currently practicing as a business consultant, Rodger was previously Managing Director of Owens Group between 1987 and 1999. He is a Fellow of the Chartered Institute of Secretaries, the Chartered Institute of Transport, the Institute of Directors in New Zealand and the New Zealand Institute of Management.

GRAHAM MITCHELLDirector*

Graham is Chief Executive Officer of Crown Fibre Holdings Limited, the Government agency tasked with managing its $1.5 billion investment in UFB infrastructure.

He has considerable corporate finance experience from his time in previous roles with Telecom, Brierley Investments, Electricity Corporation and Transpower. Graham is the former CEO of Cogent Communications, part of the OneSource Group, and prior to this headed US telecommunications venture capital funded, Optical WDM OEM.

Graham spent 10 years at Telecom New Zealand, where he worked as Group General Manager of Business, Wholesale and Network Services and General Manager of the Internet and Directories Division, both in Australia.

SEAN WYNNEDirector*

Sean has been Chief Commercial Officer of Crown Fibre Holdings Limited since 2010, and has previously held positions across the legal, media and telecommunications sectors.

Prior to joining Crown Fibre Holdings, Sean was the CEO of twenty4media, an out of home media business that operates television networks for banks and airlines in Australasia. Sean is also the former CEO of Independent Newspapers Limited, where he was responsible for selling the company’s publishing interests to Fairfax Media for $1.25 billion and for its $2.5 billion merger with Sky Television.

Sean has previously worked for Saturn Communications and later TelstraSaturn, and also in private law practice.

GARTH DIBLEYDirector

Garth has extensive experience in the generation, retail, transmission, and distribution sectors of New Zealand’s electricity industry. He took up the position of Chief Executive at WEL Networks in September 2014.

Garth has previously held leadership roles at both Transpower and Meridian Energy. Appointed as General Manager Grid Performance at Transpower in 2010, he led the operations and asset maintenance functions of the national grid.

Prior to this, Garth was based at Meridian Energy, working as General Manager, Markets and Production and then General Manager, External Relations.

Garth has a Bachelor of Engineering (Mechanical) from the University of Canterbury and an MBA from Waikato University. He has completed executive training programmes at Kellogg and INSEAD business schools of management.

DANELLE DINSDALEDirector*

Danelle is a member of the Crown Fibre Holdings Limited Board, and has expertise in change management, infrastructure and technology projects. She has advised on Public Private Partnerships in the education, health and transport sectors.

Danelle returned to New Zealand after spending 14 years in the UK as a senior partner and Head of IT and Telecoms for global law firm DLA Piper. She has worked with innovation leaders including Cable and Wireless, Verizon, British Telecom, Accenture and ITV.

As an Independent Director Danelle also serves on the Boards for Medical Assurance Society NZ Ltd and Hawkes Bay Regional Investment Co. Ltd.

MARK FRANKLINDirector

Mark is Chief Executive of Stevenson Group, a position he has held since early 2010. Prior to his current role, Mark was founding Chief Executive of TZ1, the global carbon registry, and before that, Chief Executive of Vector - one of New Zealand’s largest companies.

Mark’s other directorships include Stevenson Group Ltd, WEL Networks, Auckland Chamber of Commerce, Chairman of Committee for Auckland and Precinct Management Ltd.

Mark was formerly a Director of NZ Rail Corporation (Kiwirail) and has also been a member of the Prime Minister’s Climate Change Leadership Forum and the Australia and New Zealand Joint Prime Minister’s Leadership Forum.

TONY STEELEDirector

A specialist business adviser and Chartered Accountant, Tony was Managing Partner of KPMG’s Hamilton office and a member of KPMG’s National Management Board for 11 years.

He is an Independent Director of Innovation Waikato Limited and Waikato Innovation Park Limited. Tony is Independent Chairman of Maisey Group (formerly Forlong and Maisey) Limited and sits on the boards of several Maisey Group subsidiaries in New Zealand and Australia. He is also a Director of WEL Networks Limited and Waikato Networks Limited.

Tony is a Fellow of both the Institute of Directors and Chartered Accountants Australia and New Zealand. He is an independent member of Hamilton City Council’s Audit and Risk Committee, and has been an Ultrafast Fibre Board Member since October 2014.

GOVERNANCE

* CFH Directors resigned from the Board on 6 September 2016 after Waikato Networks Limited had completed a transaction to purchase all of the shares in Ultrafast Fibre.

GOVERNANCE & LEADERSHIPGOVERNANCE & LEADERSHIP 1312

WILLIAM HAMILTONChief Executive

William was appointed Chief Executive in 2014, and with over 30 years’ experience as a director and executive he brings a wealth of commercial and strategic acumen to the business.

Formerly the General Manager, Operations, Fibre, and Customer Delivery for WEL Networks, he was instrumental in helping to successfully negotiate the UFB1 contract with Crown Fibre Holdings.

William’s career has spanned a range of industries, through his senior leadership roles for companies including Excel Corporation, Bayleys Real Estate, United Group and General Cable New Zealand. Prior to this, William was Managing Director of a large electrical contracting company for 13 years, before selling the business in 1999.

LYNDON TEMPLETONGeneral Manager, Build and Provisioning

Lyndon is a skilled Programme Manager with decades of experience leading high calibre projects in the telecommunications and finance industries.

As Ultrafast Fibre’s General Manager, Build and Provisioning, Lyndon is responsible for ensuring the company’s efficient and safe delivery of build and provisioning services to meet growing customer demands. He also leads the contract management of Ultrafast Fibre’s technology, supply, and logistical partners.

Prior to his role as General Manager, Lyndon managed the deployment of the communal network build under Waikato Networks Limited. He moved into the telecommunications industry in 2011, after working for ANZ and also Craigs Investment Partners in various project management roles.

RICHARD JEFFARESChief Operating Officer

Richard oversees all Ultrafast Fibre business operations, including the Program Management Office, IT, Network Operations Centre, Business Assurance and Service Desk teams.

Appointed Chief Operating Officer in 2014, Richard was formerly Chief Technology Officer at UK Broadband. He brings extensive data analytics and business intelligence knowledge from the banking, media, internet and telecoms sectors.

Richard has held leadership roles at Telstra, IBM, Inmarsat/ICO Global, Siemens AG, Credit Suisse, Cap Gemini and Motorola.

He holds a Master of Information Systems from Griffith University and is an active member of the Internet Engineering Task Force (IETF), Institute of Electrical and Electronics Engineers (IEEE) and Association for Computing Machinery (ACM).

HIRAMAI ROGERSHead of Legal and Regulatory Compliance

Hiramai joined Ultrafast Fibre in 2012, and established the company’s internal legal, commercial and regulatory functions. He provides legal services and advice to ensure the business’s long term commercial success, and to steer Ultrafast Fibre through the regulatory review process.

In addition to working with a number of key partners, Hiramai oversees the company’s secretarial function and the key services contract with RSPs. He is involved in representing Ultrafast Fibre via the Telecommunications Forum (TCF) and for other industry-related matters.

Hiramai has extensive experience in commercial and corporate law, working in both private practice and in-house roles in New Zealand and Dubai.

RICHARD RILEYChief Marketing Officer

As Chief Marketing Officer (CMO), Richard drives Ultrafast Fibre’s external reputation and leads its growth, sales and marketing strategy. He is responsible for ensuring delivery of exceptional customer experience and effective stakeholder and industry relationships.

Richard joined Ultrafast Fibre in 2011 and prior to becoming CMO, Richard was Ultrafast Fibre’s Programme Director, where he led the initiative to establish the Local Fibre Company business, a fast and stabilised UFB communal build, and the start of a scalable operational environment.

A senior manager for over 20 years across Australasian and European telecommunications and infrastructure with Vector, National Grid and Crown Castle, Richard has previously managed major commercial bid programmes, established and run PMOs and driven significant acquisition, governance, sales and marketing outcomes.

MARK PEACOCKChief Financial Officer

Mark has specialist expertise in management accounting and financial control. He joined Ultrafast Fibre as Chief Financial Officer in June 2015, coming from Orion Health where he was Accounting Manager.

Over his career Mark has gained experience across the telecommunications, financial management, and airline industries. He is a former Finance Manager at Spark Digital, Vodafone New Zealand and Chorus, and has worked as a Project Manager for Air New Zealand and JP Morgan. Prior to this, Mark was a tax consultant at PwC.

Mark is a Chartered Accountant and is admitted as a Barrister and Solicitor of the High Court of New Zealand.

GOVERNANCE & LEADERSHIPGOVERNANCE & LEADERSHIP

LEADERSHIP

1514

Year ended30 Jun 2016

$


$

R H Fisher 82,500 81,458

M X Franklin 40,000 40,000

D Dinsdale 40,000 40,000

A V Steele (appointed 1/10/14) 40,000 30,000

Hon R W Prebble (ceased 1/10/14) - 10,000

M Devlin (ceased 1/10/14) - 10,000

G W Dibley (appointed 27/5/15) - -

G R Mitchell - -

M S Wynne - -

202,500 211,458

Continuing EmployeesYear ended30 Jun 2016

$


$

$100000 - $109999 6 0

$110000 - $119999 3 0

$120000 - $129999 2 1

$130000 - $139999 2 0

$140000 - $149999 4 0

$150000 - $159999 1 3

$180000 - $189999 0 1

$190000 - $199999 1 0

$210000 - $219999 2 0

$230000 - $239999 1 0

$260000 - $269999 1 0

$310000 - $319999 1 0

$320000 - $329999 0 1

$460000 - $469999 1 0

Total 25 6


$


$

Crown Fibre Holdings Limited 141,028,529 151,553,089

Waikato Networks Limited 164,901,136 81,648,007

Her Majesty the Queen in Right of New Zealand 1 1

Total 305,929,666 233,201,097



R Fisher 11 11

M Franklin 11 11

Hon R W Prebble (ceased 1/10/14) 0 3

D Dinsdale 10 11

M Devlin (ceased 1/10/14) 0 3

G R Mitchell 11 10

M S Wynne 11 11

D E Smith (appointed 1/10/14, ceased 27/5/15) 0 4

A V Steele (appointed 1/10/14) 11 8

G W Dibley (appointed 27/5/15) 9 1

DIRECTORS’ REPORT / STATUTORY INFORMATION1. DIRECTORS’ REMUNERATION

5. EMPLOYEES REMUNERATION

7. SHAREHOLDERS

6. BOARD MEETINGS

Directors’ fees and other remuneration paid during the year were:

The number of employees (excluding Directors) whose income was within specified bands is as follows:

Number of Board meetings attended by each Director

2. DONATIONSDonations of $2,245 made by the Company during the year (2015 $1,850).

3. DIRECTORS’ INDEMNITIES AND INSURANCEThe Deeds of Indemnity given by the Company in favour of those Directors who held office at the beginning of the financial year to which this report relates, and to Directors appointed since the beginning of the financial year and who still hold office as Directors of the Company, remain in full force and effect on the same terms and conditions under which they were given.As permitted by, and to the extent permitted by, the Company’s Constitution, the Company has effected insurance for Directors and officers which, together with the Deeds of Indemnity, generally ensures that the Directors will not incur any monetary loss as a result of actions undertaken by them as Directors. The Directors and officers insurance comprises cover of $20 million and a Statutory Liability Insurance cover of $1 million has also been effected.

4. DIRECTORS’ TRANSACTIONS

All transactions in entities in which Directors disclosed an interest have been conducted on an ‘arm’s length’ basis in the normal course of business.

Refer to note 9 of the Financial Statements for detailed information on share capital.

GOVERNANCE & LEADERSHIPGOVERNANCE & LEADERSHIP 1716

Ultrafast Fibre has gone from strength to strength since the Company’s establishment in 2011. Join us in tracking our journey to becoming a key leader of New Zealand’s fibre revolution.

OUR JOURNEY

1918

Demand for fibre steadily grew, with

Ultrafast Fibre processing more than 100 service orders for

the first time.

Ultrafast Fibre was now

processing more than 5,000 service orders a month.

Ultrafast Fibre completed its first business connection.

Ultrafast Fibrehit another

milestone and connected its 500th

End User to the network.

Demandcontinued to rise

and Ultrafast Fibre was now processing

more than 500 service orders a month.

Ultrafast Fibrewas now processing

more than 1,000 service orders a

month.

Barely two monthslater, with systems and process improvement,

Ultrafast Fibre’s Service Desk team doubled

processing capacity and were now managing more

than 2,000 serviceorders a month.

To celebratethe completion of

the network build in Whanganui, Ultrafast

Fibre organised a three-day technology expo and workshop series for the

community called“Beyond Broadband”.

The network build was

completed in Te Awamutu.

May 2012

Ultrafast Fibre received its

first order for a residential

service.

The Tokoroa network

build was completed.

Ultrafast Fibre completed the

network build in Cambridge.

The communalbuild was completed for

New Plymouth, Tauranga, and Hamilton, bringing

to a close Ultrafast Fibre’s UFB network build

programme.

The network build in

Hawera was completed.

Communal build

commenced.

Ultrafast Fibre completed its

1,000th connection, doubling the number of connections to its network in less than

five months.

Oct 2013

Dec 2013 Jun 2016

Ultrafast Fibre completed its 3,000th

connection to its network.

Ultrafast Fibre complete

its 50,000th connection to its

network.

Sep 2014 Feb 2015Jul 2014

Nov 2014 Dec 2014Aug 2014May 2014 May 2015 Dec 2015Q2 2011

Nov 2012May 2012

Feb 2013 Jun 2013

March 2015 Ultrafast Fibre moved to its

new premises in Hamilton.

KEY

BUILD

ORDER

CONNECTION

OUR JOURNEY OUR JOURNEY 2120

THE YEAR IN REVIEWKey metrics pg27

Our network pg28

Network completion events pg30

50,000th connection pg32

Deloitte Fast50 Awards pg33

Supporting our communities pg34

2322

This year has brought many successes for Ultrafast Fibre, with our most significant achievement being the completion of our 3,000km fibre network. The completed network covers eight urban centres in the Central North Island, and it is important to us to engage and connect with all these communities where we operate. To mark the completion of our UFB network in our biggest cities, Ultrafast Fibre hosted a ‘Beyond Broadband’ Expo in New Plymouth, Tauranga and Hamilton. The events proved a great opportunity for residents to speak directly with experts and discover first-hand how to maximise the opportunities that our world-class fibre network offers.As the benefits of fibre broadband become more well-known, many more New Zealanders are connecting to the Ultrafast Fibre network. We were excited to celebrate our 50,000th connection in June 2016, and throughout the year to speak with so many businesses, teachers and families who are using fibre in innovative and inspiring ways.

Our engagement with our communities also extends to supporting initiatives that align with our values. This year we have been pleased to be involved with helping a range of sporting teams and community groups in the Waikato, Bay of Plenty and Taranaki regions.Ultrafast Fibre is growing rapidly as a business, and was recognised as the Deloitte Fast50 Fastest Growing Technology Business – Central North Island. This recognition was an enormous privilege for our team and gave us even more motivation to grow stronger.Health and safety has continued to be a key focus for us this year, and we have devoted extra resources to ensure we are meeting all our obligations under the new legislation.Overall, we are pleased with how Ultrafast Fibre has performed during the 2015/16 financial year, with good progress made in line with our Key Performance Indicators.

My neighbour used a different

company and her experience was not as

good as mine, so I believeyou are delivering a

well-rounded service.- End User, Hamilton

The service offers more than standard copper

lines. I had a really good connection with my copper VDSL, but my fibre connection blows it away.

- End User, Hawera

I understand it to be cheaper,

faster and more reliable than copper. Inevitably one must move onto the newer

technologies or be left behind. How many people still listen to eight track tape players in

their car?- End User, Cambridge

THE YEAR IN REVIEW THE YEAR IN REVIEW

We live up a driveway so there

was some distance to get the fibre into our house.

The contractors did a great job negotiating the storm water and sewage pipes as well as locating power and telephone cables. The technician who installed the fibreinto our house was friendly and

explained clearly what was involved in the installation.

- End User, Whanganui

Overall it has been a satisfying

experience. We are pleased with the speed of the connection and the approach given by workers during the

installation process.- End User, Tokoroa

Left to right: Tony Steele, Graham Mitchell, Margaret Devlin, Hamilton Mayor Julie Hardaker, Danelle Dinsdale, and William Hamiltonduring the preview of Ultrafast Fibre’s BeyondBroadband Expo in Hamilton.

I know this is the future and that’s why

I connected and hopefully I will keep learning and will

get the best out of it. My whole connection experience was

friendly, helpful, and deliveredas was promised.

- End User, Te Awamutu

Here’s what End User

customers are saying about

Ultrafast Fibre.

Very good service. One hundred

percent better than dealing with [company redacted] on previous connection. Loads

of information, kept to timings, quoted on first meeting. Good

communication with notificationof any changes to

schedule why.

- End User, Tauranga

2524

THE YEAR IN REVIEW

NET PROMOTER SCORE (NPS)*

Previous year’s NPS was +2.*FY 15/16 Annual Retail Service Provider

Survey provided by an independent market research agency

HEALTH & SAFETY

10

8

6

4

2

0

Nov-15 Feb-16 Apr-16 Jun-16

TRIFR

TRIFRLTIFR

LTI

Total Recordable Injury Frequency RateLost Time Injury Frequency Rate (Per one million hours worked (12 month rolling average) )Lost Time Injury

LTIFR

LTI

UPTAKE

Connections

* Includes small volume of non-CFH greenfields.

End Users Able to Connect

51,641/193,315* = 26.4%

+26

KEY METRICS

2726

WHANGANUITAURANGA

TOKOROA

HAWERA

OUR NETWORKCAMBRIDGE

NEW PLYMOUTH

TE AWAMUTU

2015 2016Uptake* 14.1% 26.1%

2015 2016Uptake* 11.9% 25.7%

2015 2016Uptake* 12.7% 23.1%

2015 2016Uptake* 18.1% 31.7%

2015 2016Uptake* 8.2% 20%

2015 2016Uptake* 9.2% 21.5%

2015 2016Uptake* 11.6% 23.4%

2015 2016Uptake* 9.1% 21%

HAMILTON

THE YEAR IN REVIEWTHE YEAR IN REVIEW

*Uptake: Percentage of connections against number of End Users able to connect. Includes small volume of non-CFH greenfields.

2928

HAMILTON

NEW PLYMOUTH

TAURANGA

• The city’s UFB network includes 350kms of fibre optic network.

• Around 26,000 premises are able to connect to UFB.• The Beyond Broadband Expo was held on 19 and 20

February 2016 at TSB Showplace.

• Play it Strange Trust brought their mobile recording studio to New Plymouth and recorded a live musical performance with a group of talented school children singing and playing ukuleles.

• To complete our biggest network, Ultrafast Fibre built 413 roadside cabinets and undertook 733kms of underground drilling and 112kms of aerial build.

• Approximately 55,000 premises are able to connect to UFB.

• The Beyond Broadband Expo was held in conjunction with The Waikato Show on 8 to 10 April 2016 at Claudelands Event Centre.

• The Cloud Speaker Series brought their workshop series to Hamilton for the first time, delivering

in-demand workshops on job management, e-commerce for businesses, and online payroll management.

• Ultrafast Fibre supported the annual Waikato Show’s Schools Day Out Programme by hosting OMGTech! and sponsoring free workshops for more than 150 school children around the Waikato. The students experienced five different modules on coding, game development, robotics, 3D printing, and deconstructing computer hardware.

• To build the network, Ultrafast Fibre completed approximately 680kms of underground drilling and 94kms of aerial build.

• Around 45,000 premises are able to connect to UFB.• The Beyond Broadband Expo was held on 11 and 12

March 2016 at Baycourt Community & Arts Centre.• The Cloud Speaker Series partnered with

Ultrafast Fibre in delivering a series of high calibre workshops on business solutions such as inventory

management, cloud accounting, retail management, and e-commerce, all free to public.

• OMGTech! partnered with Ultrafast Fibre to deliver exciting workshops for school-aged children on coding, game development, and robotics.

• PriorityOne conducted a mini Mash-up session for secondary school students, offering them an insight into the world of business solutions and app development.

NETWORK COMPLETION EVENTS

Waikato school children check out

Ultrafast Fibre’s fulfilment van.Future game developers brush up on basic coding skills.

OMGTech! workshop participants deconstructing computer hardware.

Children getting pointers from OMGTech! workshop

lead on basics of coding and game development.Communications Minister Amy Adams inspects theaward-winning robots of Otumoetai College’s Robotics team.

OMGTech! workshop attendees sign in before

commencing their workshop modules.

Communications Minister Amy Adams with Ultrafast Fibre

Chief Executive William Hamilton presenting a commemorative

plaque to New Plymouth Mayor Andrew Judd. Future musicians and recording artists on a videoconference with Jordan Luck, lead singer and songwriter for The Exponents.

Full capacity at a workshop on cloud computing for businesses.

Ultrafast Fibre celebrated one network build completion milestone after another, starting with New Plymouth, followed by Tauranga and Hamilton.Beyond Broadband is a multi-day technology expo and workshop series showcasing the power and capability

of fibre technology for home, education, and business use.Ultrafast Fibre was very proud to host Communications Minister Amy Adams for the three Beyond Broadband events which were also well-attended by local MPs, Mayors, and Councillors.

THE YEAR IN REVIEWTHE YEAR IN REVIEW 3130

In June 2016, Ultrafast Fibre welcomed its 50,000th connection, marking an important milestone in our work as a Local Fibre Company. Reaching this level of connectivity reflected our strength as a trusted infrastructure provider and our continued work in laying the foundation for our country’s digital future.The 50,000th connection was for a new Show Home as part of the 145-home Ridgedale housing development in Hamilton’s north, designed by Yeoman Property Group.All of Yeoman Property Group’s residential housing and mixed-use developments are now designed and built with access to the fibre network. The Group also uses fibre in its internal business operations.

Yeoman Property Group Project Manager Rebekah Kenny said UFB was “definitely the best-performing product when you are looking at internet”.Fibre was a selling point for their clients, she said, as they could see the advantages that came from having a fibre-option in their homes.Yeoman Property Group is a great example of how companies can harness the power of UFB to boost their business operations.All levels of business can reap the benefits of UFB, with easy access to their customers and clients across New Zealand and around the world.

The Ultrafast Fibre team was thrilled to be awarded the Deloitte Fast50 Fastest Growing Technology Business – Central North Island this year.The announcement was made at an event in Hamilton in October, where we were also confirmed as listed in the Deloitte Fast50 Index. Ultrafast Fibre went on to attend the National Awards, held in Auckland in November 2015, where we ranked twelfth overall.We were enormously privileged to receive the award, which acknowledged our impressive growth as a Local Fibre Company, both internally and externally.Deloitte private partner Bill Hale said the award-winning companies proved business success stories were thriving throughout the regions.

“These companies live and breathe innovation, challenge the status quo and have the determination and drive that’s seen them achieve phenomenal year-on-year growth,” he said.He said a common theme behind their success was the ability to identify and capitalise on a point of difference from competitors.Ultrafast Fibre Chief Executive William Hamilton said that as a young, local business on a mission, this was great recognition for Ultrafast Fibre and our pioneering shareholders, Waikato Networks Limited and Crown Fibre Holdings. “It adds even more motivation for us to grow stronger,” he said.

50,000TH CONNECTION DELOITTE FAST50 AWARDS

Ultrafast Fibre Chief Executive William Hamilton presenting a commemorative plaque to

Yeoman Property Group ProjectManager Rebekah Kenny.

Ultrafast Fibre Chief Marketing Officer Richard Riley (centre) accepting the award on behalf of Ultrafast Fibre, with Doug Wilson from Deloitte and Debbie Wilton from BNZ.

3332 THE YEAR IN REVIEWTHE YEAR IN REVIEW

As a Local Fibre Company, we take pride in showing our support for the communities where we operate. Over the past year Ultrafast Fibre has sponsored four sports teams across the Waikato and Taranaki regions.In August, we assisted the Sacred Heart Girls College Hockey Team to get to their National tournament in Carterton. The girls finished eighth overall in the play-offs for the Jenny Hair Cup. Sixteen-year-old Emma Hope scored five goals over the week and was named one of the top 10 goal scorers of the tournament.Ultrafast Fibre was pleased to provide practice jackets for the Hamilton Lawn Bowls Team in November, and

to supply the West Hamilton United Football Club new training jerseys in February for their competitions across multiple levels of football in the Waikato and Bay of Plenty regions.Most recently, we arranged a variety of new merchandise for the Taranaki U12 Football Team. It was great to be involved with a team further afield, and show our support for the Taranaki region.Ultrafast Fibre has also been involved with organisations outside of sport. In September 2015 we provided 100 pizza vouchers as part of goodie bags for a movie-screening fundraising evening to support Friends of the Bereavement Suite.

SUPPORTING OUR COMMUNITIES

THE YEAR IN REVIEWTHE YEAR IN REVIEW

“Thank you verymuch Ultrafast Fibre for giving the

team some money towards our tournament. We had a great time and played some great hockey... The team

really enjoy getting out there in all types of weather and playing the game

we love. Thanks again.”- Holly Stokes

Year 10 Sacred HeartGirls College

Taranaki Under 12 Football team

Hamilton West Football Club

3534

FIBRE CASE STUDIESBoon Goldsmith Bhaskar Brebner (BGBB) Team Architects pg38

ACG Tauranga pg40

FIBRE CASE STUDIESFIBRE CASE STUDIES 3736

BOON GOLDSMITH BHASKAR BREBNER (BGBB) TEAM ARCHITECTSNEW PLYMOUTH ARCHITECTS WORK ACROSS THE COUNTRY WITH UFB

Disjointed design

conversations over

patchy video calls are

a thing of the past for the

creative minds behind projects like

New Plymouth’s Govett Brewster Art

Gallery and Rotorua’s Energy Event

Centre.

Boon Goldsmith Bhaskar Brebner

(BGBB) Team Architects was one of

the first New Plymouth businesses to

connect to UFB when the cable was

laid down their stretch of the CBD.

Managing Director Glenn Brebner

says the seamless connectivity they

have been experiencing since then

means geographical distance is no

longer a barrier for the architects and

their clients. “For us it’s just about

assisting that seamless connectivity

so that we’re working in real-time with

our partners outside our region.”

More than half of their clients are

based outside of New Plymouth,

so UFB is crucial for their business

liaisons, he says.

“The fast and reliable internet speed

makes working with clients across the

country more feasible. We work with

some pretty contemporary software

systems and drawing files are

particularly large.

On some projects we’ll have

architects here in New Plymouth and

engineers down in Christchurch and

everyone needs to share a common

file. We need to be able to share

large files quickly and easily and UFB

allows that.”

The company is also part of the

national Team Architects group and

fortnightly Skype calls have been

smooth and seamless since switching

to UFB, Glenn says.

“Typically, we have about eight

people on the same call, from

different accounts. That sheer number

was causing us problems and we

could only connect by voice in New

Plymouth.

Calling with UFB, that’s no longer a

problem. We can connect by voice

and video and it works perfectly.”

Even when calling clients in Australia,

the UK and the Pacific, video

and voice are clear and have no

interruptions, he says.

“It has taken a disjointed and often

awkward call to the point where we

can now have a complex design

conversation face-to-face.”

“For us it’s justabout assisting that

seamless connectivity so that we’re working in real-

time with our partners outside our region.”

- Glenn BrebnerManaging Director


ACG TAURANGA

Shawn has worked all around the world and says that UFB is allowing his students to receive a “world-class” education.Course work, teaching and learning resources and class discussion ‘boards online’ interactive tools are all accessible through the school’s online learning portal, myACG.“If we experienced any kind of lag time with loading courses, it would become quite a frustrating environment,” Shawn says.“The students need to be able to view that content without any delay.”

“As the school grows, a fast and reliable connection will only become more important,” he adds.“We want to be ahead of the trend, so, as much as possible, we want to continue to use technology. “The students here are experiencing an education that I think is world-class.“I believe that the use of technology in the classroom and the access to technology is at a level that is comparable to the best international schools in the world,” says Shawn.

The online connectivity that students at ACG Tauranga are experiencing thanks to UFB is among the best in the world, Principal Shawn Hutchinson says.

STUDENTS CONNECT TO THE FUTURE WITH FIBRE

“I believe that theuse of technology in the

classroom and the access to technology is at a level that is comparable to the best international schools in

the world.”- Shawn Hutchinson

School Principal


FINANCIALS

4342

2016 2015

Notes $'000 $'000

Revenue from continuing operations 3 26,709 10,095

Other operating expenses 4 (36,901) (24,055)

Net operating loss (10,192) (13,960)

Income tax 5 3,243 3,979

Loss from continuing operations (6,949) (9,981)

Other comprehensive income:

Other comprehensive income - -

Total comprehensive loss for the year (6,949) (9,981)

STATEMENT OF COMPREHENSIVE INCOMEFor the year ended 30 June 2016

2016 2015

Notes $'000 $'000

ASSETS

Current assets

Cash and cash equivalents 6,086 1,886

Trade and other receivables 8 4,556 2,593

Prepaid Asset Purchases 3,516 -

Total current assets 14,158 4,479

Non-current assets

Property, plant and equipment 6 280,138 211,740

Intangible assets 7 2,878 1,011

Prepaid Asset Purchases 7,715 -

Deferred tax assets 10 13,959 10,716

Total non-current assets 304,690 223,467

Total assets 318,848 227,946

LIABILITIES

Current liabilities

Trade and other payables 11 42,160 19,774

Deferred income 5,047 2,311

Total current liabilities 47,207 22,085

Non-current liabilities

Total non-current liabilities - -

Total liabilities 47,207 22,085

Net assets 271,641 205,861

EQUITY

Contributed equity 9 305,930 233,201

Retained earnings (34,289) (27,340)

Total equity 271,641 205,861

BALANCE SHEETAs at 30 June 2016

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

The above balance sheet should be read in conjunction with the accompanying notes.

A V Steele, Director18 August 2016

R Fisher, Director18 August 2016

4544 FINANCIAL STATEMENTSFINANCIAL STATEMENTS

2016 2015

Notes $'000 $'000

Cash flows from operating activities

Receipts from customers 24,632 11,288

Payments to employees and suppliers (18,222) (15,306)

Interest received 72 85

Proceeds from disposal of other financial assets at fair value through profit or loss

3 -

Net cash inflow / (outflow) from operating activities 6,485 (3,933)

Cash flows from investing activities

Purchase of Layer 1 Network Assets (27,968) (53,004)

Purchase of Layer 2 Communal Assets (3,835) (8,727)

Purchase of End User Connection Assets (39,416) (14,053)

Purchase of other Property, Plant and Equipment (3,795) (1,749)

Net cash inflow / (outflow) from investing activities (75,014) (77,533)

Cash flows from financing activities

Proceeds from issue of 'A' Shares 25,562 52,570

Proceeds from issue of 'B' Shares 47,167 29,085

Net cash inflow / (outflow) from financing activities 72,729 81,655

Net increase (decrease) in cash and cash equivalents 4,200 189

Cash and cash equivalents at the beginning of the year 1,886 1,697

Cash and cash equivalents at end of year 6,086 1,886

Share CapitalRetained earnings

Total equity

Notes $'000 $'000 $’000

Balance as at 1 July 2014 151,548 (17,359) 134,189

Comprehensive income

Profit or loss for the year - (9,981) (9,981)

Total comprehensive income - (9,981) (9,981)

Transactions with owners

Issue of A and B shares 9 81,653 - 81,653

Total transactions with owners 81,653 - 81,653

Balance as at 30 June 2015 233,201 (27,340) 205,861

Balance as at 1 July 2015 233,201 (27,340) 205,861

Comprehensive income

Profit or loss for the year - (6,949) (6,949)

Total comprehensive income - (6,949) (6,949)

Transactions with owners

Issue of A and B shares 9 72,729 - 72,729

Total transactions with owners 72,729 - 72,729

Balance as at 30 June 2016 305,930 (34,289) 271,641

STATEMENT OF CASH FLOWSFor the year ended 30 June 2016

STATEMENT OF CHANGES IN EQUITYFor the year ended 30 June 2016

The above statement of cash flows should be read in conjunction with the accompanying notes.

The above statement of changes in equity should be read in conjunction with the accompanying notes.

FINANCIAL STATEMENTSFINANCIAL STATEMENTS 4746

NZ IFRS 16: Leases (Effective date: periods beginning on or after 1 January 2019).

NZ IFRS 16 - Leases - replaces the current guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Under NZ IAS 17, a lessee was required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). NZ IFRS 16 now requires a lessee to recognise a lease liability reflecting future lease payments and a 'right-of-use asset' for virtually all lease contracts. Included is an optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees. The company intends to adopt NZ IFRS 16 on its effective date and has yet to assess its full impact.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

Ultrafast broadband contract with Crown Fibre Holdings Limited and Waikato Networks Limited.

On 15 December 2010 Ultrafast Fibre Limited entered into an agreement with Crown Fibre Holdings Limited (CFH) and Waikato Networks Limited (WNL) relating to construction, deployment and operation of the UFB network for the Hamilton, Cambridge, Te Awamutu, Tokoroa, Tauranga, Hawera and New Plymouth candidate areas. This is part of the wider project by the Crown to provide a UFB network to 75% of the population in urban New Zealand.

The agreement sets out the key commercial terms of the relationship between CFH (the Crown entity that negotiated and administers the agreement), WNL (the partner responsible for the build and operation of the network) and the Company (Ultrafast Fibre Limited). This includes CFH and WNL having shareholdings in the Company that will reflect the level of each entity's investment in the deployment of the UFB network in each candidate area.

CFH and WNL have equal board representation on the Company's Board of Directors (up to three directors each) with an independent chairman appointed.

The deployment plans drive CFH's level of investment in the Company. As each stage of the deployment plan is completed by WNL the Company purchases the UFB network from WNL based on an agreed cost per premises passed (CPPP) for the number of premises passed by fibre optic cable upon successful user acceptance testing (UAT). CFH will in turn fund the purchase of each stage by way of subscribing to 'A' Shares in the Company, the price for which is the agreed CPPP.

In July 2014 amendments to the transaction documents were agreed between UFF and WNL. As a result of the changes, for the period up to 30 June 2016, as UFF connect customers to the network CFH will receive either CPPP paid from the sale of the 'A' Shares under the recycling mechanism, or dividend bearing Ordinary Shares, at the option of WNL. Post 1 July 2016, WNL will have an obligation to purchase 'A' Shares from CFH under the recycling mechanism up to an agreed level, then has the option to purchase 'A' Shares from CFH or allow CFH to convert its 'A' Shares into dividend bearing Ordinary Shares for the CPPP of a connected premise.

WNL is required to fund the cost to connect a premise and end customer (essentially fibre optic lead in from the street), the electronics necessary to light the optical fibre and operational costs. The cost of connections and Layer 2 expenditure is based on an agreed cost per premises connected for end user specific infrastructure (CPPC), cost per premises passed for communal Layer 2 infrastructure (CPPP L2) and cost per premises passed for end user specific Layer 2 infrastructure (CPPC L2). WNL generally receives 'B' Shares for funding these obligations with the exception of funding for connections. WNL can receive 'B' Shares for at least 50% of the connection assets and the balance in cash up to a maximum of 50%.

The percentage of shares and level of voting control held by WNL and CFH will change throughout the lifecycle of the project. All 'A' and 'B' class shares in the Company convert to ordinary shares 10 years from the establishment date.

Statutory base

The financial statements have been prepared in accordance with the requirements of the Companies Act 1993.

Critical accounting estimates

The preparation of financial statements in conformity with NZ IFRS RDR requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.

Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in New Zealand dollars, rounded to the nearest $1,000, which is the Company’s functional and presentation currency.

1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESUltrafast Fibre Limited is a Local Fibre Company set up to design, implement and provide ultra fast broadband (UFB) to retail (internet) service providers. It is part of the New Zealand Government's commitment to roll-out UFB in New Zealand. The Company was incorporated on the 15th December 2010.

Ultrafast Fibre Limited is a profit-oriented company incorporated in New Zealand under the Companies Act 1993.

The Company is a limited liability company incorporated and domiciled in New Zealand. The address of its registered office is Bell Gully, Vero Centre, 48 Shortland Street, Auckland 1140.

These financial statements have been approved for issue by the Board of Directors on 18 August 2016. Once issued the entity's owners do not have the power to amend these financial statements.

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation

The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (‘NZ GAAP’). They comply with New Zealand equivalents to International Financial Reporting Standards (‘NZ IFRS’) Reduced Disclosure Regime and other applicable Financial Reporting Standards, as applicable for profit-oriented entities.

The Company is eligible and has elected to report in accordance with Tier 2 for-profit accounting standards, NZ IFRS Reduced Disclosure Regime (NZ IFRS RDR) on the basis that the Company has no public accountability and is not a large for-profit public sector entity.

In applying NZ IFRS RDR, the Company has taken advantage of all disclosure concessions available.

New standards and interpretations effective in the year were not material to the company.

Standards and interpretations not yet adopted.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Company’s accounting periods beginning on or after 30 June 2016 or later periods but which the Company has not adopted early and are not expected to result in a material impact on the Company’s financial statements. The following new standards are applicable to the Company:

NZ IFRS 15: Revenue from contracts with customers (Effective date: periods beginning on or after 1 January 2017).

NZ IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces NZ IAS 18 'Revenue' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The Company intends to adopt NZ IFRS 15 on its effective date. This impact is yet to be assessed by the company.

NZ IFRS 9: Financial Instruments (Effective date: periods beginning on or after 1 January 2018).

NZ IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of NZ IFRS 9 was issued in September 2014. It replaces the guidance in NZ IAS 39 that relates to the classification and measurement of financial instruments. NZ IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in NZ IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. NZ IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under NZ IAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The Company intends to adopt NZ IFRS 9 on its effective date. This impact is yet to be assessed by the company.


(b) Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

UFB network assets are constructed by Waikato Networks Limited and are acquired by Ultrafast Fibre Limited once each stage is complete and a certificate of practical completion has been issued. Fibre network assets are recognised at cost which is the contract average cost per premise passed as per the Network Infrastructure Project Agreement (NIPA).

Amounts paid in advance for Layer 2 are presented as prepaid asset purchases until the asset is ready for intended use, at which point it is recognised in property, plant and equipment.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Ultrafast Fibre has capitalised labour costs against connection and software assets. Labour costs are capitalised in the period in which they are incurred and are directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation on assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(d)).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within revenue or other operating expenses in the statement of comprehensive income.

(c) Intangible assets

Computer software

Costs associated with maintaining computer software programmes are recognised as an expense when incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use;

• management intends to complete the software product and use or sell it;

• there is an ability to use or sell the software product;

• it can be demonstrated how the software product will generate probable future economic benefits;

• adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

• the expenditure attributable to the software product during its development can be reliably measured.

Computer Equipment 40%

Furniture, plant and equipment 12.6%

Vehicles 21%

UFB Network Assets

Layer 1 (provision of unlit optical fibre) 2.5 - 5%

Layer 2 (ethernet communication equipment) 8 - 20%

Connection assets 8%

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives (two to five years).

(d) Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(e) Financial assets

The Company classifies its financial assets as assets at fair value through profit or loss, or loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Company’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the balance sheet.

(f) Financial liabilities

Other financial liabilities at amortised cost

Other financial liabilities at amortised cost are non-derivative financial liabilities with fixed or determinable payments that are not quoted in an active market. They are included in current liabilities, except for maturities greater than 12 months after the reporting date which are classified as non-current liabilities. Other financial liabilities are classified as ‘trade and other payables’ in the balance sheet.

(g) Trade and other receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income within ‘other operating expenses’. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against ‘other operating expenses’ in the statement of comprehensive income.

(h) Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.


(i) Cash and cash equivalents

In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the balance sheet, bank overdrafts are shown within current liabilities.

(j) Contributed Equity

Issued shares consist of ‘A’ shares, ‘B’ shares and ‘Government’ shares and are classified as equity. (note 9).

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(k) Income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets are recognised on deductible temporary differences only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

(l) Goods and Services Tax (GST)

The statement of comprehensive income has been prepared so that all components are stated exclusive of GST. All items in the balance sheet are stated net of GST, with the exception of receivables and payables, which include GST invoiced.

(m) Employee benefits

(i) Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the reporting date are discounted to present value.

(ii) Bonus plans

The Company recognises a liability and an expense for bonuses, based on a formula that takes into consideration the profit attributable to the Company’s shareholders after certain adjustments. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(iii) Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulated sick leave expected to be settled within 12 months of the reporting date are recognised in ‘Trade and other payables’ in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(n) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

(o) Revenue recognition

Revenue is measured at fair value of the consideration received or receivable and represents amounts (net of GST) for goods or services supplied, estimated returns, rebates and discounts and after sales within the company are eliminated. The Company recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Company’s activities, as described below.

(i) Sale of network access services

Ultrafast Fibre Limited recognises revenue as it provides services to retail service providers. Billing for network access services are made on a monthly basis. Unbilled revenue from the date of connection to the billing cycle date is recognised in the month of service. Revenue is deferred in respect of the portion of the fixed monthly charges that have been billed in advance. Revenue from installations and connections are recognised upon completion of the installation or connection.

(ii) Faults and maintenance revenue, contracting sales and third party contributions

Sales of services, contracting sales and third party contributions are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

(iii) Interest income

Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables is recognised using the original effective interest rate.

(p) Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Lease incentives are included in deferred income and released over the period of the lease.

(q) Government grants

Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.

During the comparative period grants were received from the Government to fund network access assets to Ministry of Education funded schools. There are no unfulfilled conditions or contingencies attached to these grants.

Government grants are deducted from the carrying amount of the asset. The grants are recognised in profit or loss over the life of a depreciable asset as a reduced depreciation expense.


2016 2015

$'000 $'000

Other revenue

Sale of network access services 23,864 9,575

Faults and Maintenance Revenue 69 14

Third Party Contributions 2,460 421

Interest Received 72 85

Management fees received 241 -

Gain on sale of fixed asset 3 -

26,709 10,095

Expenses, excluding finance costs, included in the income statement classified by nature

Employee benefits expense 6,871 2,493

Depreciation and amortisation expense (notes 6 and 7) 14,005 8,642

Other operating expenses 5,239 2,912

Directors fees 212 211

Loss on Disposal of Assets 5 3

Donations 2 2

Rental and Operating Leases 1,300 1,116

Network Support Costs 8,661 8,208

Consultancy Costs 518 398

Audit expenses 88 70

36,901 24,055

Depreciation of Property, Plant and Equipment

Fibre Network Assets 12,986 8,479

Plant and equipment 61 13

Computer hardware 193 11

Motor vehicles 127 48

Total depreciation 13,367 8,551

Amortisation of software 638 91

Total amortisation 638 91

Total depreciation and amortisation 14,005 8,642

Auditors' fees

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

(a) Assurance services

Audit services

Audit and review of financial reports and other audit work - PwC 56 49

Other assurance services

Assurance procedures on disclosure information - PwC 24 21

Other services - PwC 8 -

Total remuneration for other assurance services 32 21

Total remuneration for assurance services 88 70

2 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSEstimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

a) Schedule 6 of the Network Infrastructure Project Agreement provides that, if the aggregate total communal build costs incurred by Waikato Networks Limited exceed the cap of CPPP x premises passed ($198.8 million) for the period from the date of commencement of the first Network Stage up to completion of all Network Stages in accordance with the Network Deployment Plan, Waikato Networks Limited will be entitled to make a claim for the additional costs up to a maximum of 10% of CPPP x premises passed ($19.8 million). Any additional communal build costs claimed by Waikato Networks Limited will be paid in B shares. The communal network build is expected to be completed in August 2016 at which point Waikato Networks Limited will be entitled to make a claim for any cost over run on the communal build, which is subject to approval by the Company and Crown Fibre Holdings Limited.

b) During 2016 Waikato Networks Limited submitted claims for $5.8 million to recover the balance due on non-standard single dwelling unit connections and multi dwelling unit connections as CPPC B shares in Ultrafast Fibre Limited. Waikato Networks Limited holds a balance of $23.9 million in unclaimed connection costs in addition to these costs. Ultrafast Fibre Limited have accrued the claimed and unclaimed connection costs at 75% of the total connection cost balance being $22.3 million which results in a liability to Waikato Networks Limited. This aligns with the 75% without prejudice payment from the prior year claims. All of the claimed and unclaimed connection costs are subject to negotiation.

c) In order to assess whether there are any indicators of impairment in the carrying value of the network infrastructure assets, management and the Board considered key assumptions such as the age of the network, the current uptake of connections and the forecast connection uptake. The forecast connection uptake is subjective given the business is only in its fourth year of operations. No impairment indicators were identified.

d) Included in the balance sheet at 30 June 2016 are deferred tax assets of $13.96M arising principally from the recognition of tax losses. NZ IAS 12 Income Taxes requires the recovery of the losses to be probable in order to be recognised in the balance sheet. For the losses to be recoverable the Company requires to have, within prescribed limits, continuity of ownership through to the period in which the losses are utilised.

The shareholders agreement provides for joint and equal control between Crown Fibre Holdings and Waikato Networks Limited throughout the concession period and control is not determined by the number of A shares held. This view was submitted to the Inland Revenue Department together with Enable, Northpower and Crown Fibre Holdings and a non-binding indicative view was received. Therefore the Company has continued to recognise the total deferred tax asset on the basis that recovery of the losses is probable due to continued shareholder continuity.

3 REVENUE

4 EXPENSES


2016 2015

$'000 $'000

Deferred tax (3,243) (3,979)

Total deferred tax (3,243) (3,979)

(a) Numerical reconciliation of income tax expense to prima facie tax payable

Profit from continuing operations before income tax expense (10,192) (13,960)

Income tax @ 28% (2,854) (3,909)

Tax effects of:

• Income not subject to tax - -

• Expenses not deductible for tax purposes 20 (5)

• Deferred revenue (418) (69)

• Adjustments in respect of prior years 9 4

Income tax expense/(benefit) (3,243) (3,979)

Computer software

Total

$'000 $'000

Year ended 30 June 2015

Opening net book amount 2 2

Additions 1,100 1,100

Amortisation charge (note 4) (91) (91)

Closing net book amount 1,011 1,011

At 30 June 2015

Cost 1,108 1,108

Accumulated amortisation and impairment (97) (97)

Net book amount 1,011 1,011

Computer software

Total

$'000 $'000


Opening net book amount 1,011 1,011

Additions 2,505 2,505

Amortisation charge (note 4) (638) (638)

Closing net book amount 2,878 2,878

At 30 June 2016

Cost 3,614 3,614

Accumulated amortisation and impairment (736) (736)

Net book amount 2,878 2,878

2016 2015

$'000 $'000

Government Grants

Cost - 1,154

Less government grant received - (1,094)

Net book amount - 60

FibreNetwork

Computer Equipment

Plant and Equipment

MotorVehicles

Total

$'000 $'000 $'000 $'000 $'000


Opening net book amount 127,606 10 13 120 127,749

Additions 91,897 136 339 210 92,582

Disposals - - - (40) (40)

Depreciation charge (note 4) (8,479) (11) (13) (48) (8,551)

Closing net book amount 211,024 135 339 242 211,740

At 30 June 2015

Cost 226,262 156 358 311 227,087

Accumulated depreciation (15,238) (21) (19) (69) (15,347)

Net book amount 211,024 135 339 242 211,740

FibreNetwork

Computer Equipment

Plant and Equipment

MotorVehicles

Total

$'000 $'000 $'000 $'000 $'000


Opening net book amount 211,024 135 339 242 211,740

Additions 80,474 597 291 475 81,837

Disposals - - - (72) (72)

Depreciation charge (note 4) (12,986) (193) (61) (127) (13,367)

Closing net book amount 278,512 539 569 518 280,138

At 30 June 2016

Cost 306,736 753 650 664 308,803

Accumulated depreciation (28,224) (214) (81) (146) (28,665)

Net book amount 278,512 539 569 518 280,138

5 INCOME TAX

7 NON-CURRENT ASSETS - INTANGIBLE ASSETS

6 NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT


2016 2015

$'000 $'000

Trade receivables 3,941 1,944

Related party receivables 351 248

Other receivables - 356

Prepayments 264 45

4,556 2,593

Bad and doubtful trade receivables

The Company has recognised $0 (2015: $25,342.70 gain) in respect of bad and doubtful trade receivables during the year ended 30 June 2016. The gain/(loss) has been included in ‘other operating expenses’ in the statement of comprehensive income.

No. of Shares $'000

'A' Shares

Balance at 1 July 2014 124,628 119,103

Shares issued during the year 47,044 52,569

Closing balance at 30 June 2015 171,672 171,672



'B' Shares

Balance at 1 July 2014 34,560 32,445





Total Shares

Balance at 1 July 2014 159,188 151,548





Each share class carries different rights. The 'A' Shares have the right to vote, acquire new shares and to participate in the distribution of surplus assets of the Company. 'A' Shares are not entitled to receive dividends unless deemed special dividends. The 'B' Shares do not have voting rights but are entitled to receive dividends. Both 'A' and 'B' shares automatically convert to Ordinary Shares on the 10th anniversary of the Company's incorporation. All Ordinary Shares carry equal voting rights.

The Government share has the right to acquire new shares and to participate in the distribution of the surplus assets of the Company.

The Government share does not have the right to vote or receive dividends.

No share class has the same rights as those attached to the Government share or ranks equally where consent is required by the Government shareholder. Shares do not have a par value.

8 CURRENT ASSETS - TRADE AND OTHER RECEIVABLES

9 CONTRIBUTED EQUITY

2016 2015

$'000 $'000

Tax losses 2,825 3,878

Provisions (190) 32

Deferred income 608 69

Total deferred tax assets 3,243 3,979

Movements:

At 1 July 10,716 6,737

Statement of Comprehensive Income charge (note 5) 3,243 3,979

At 30 June 13,959 10,716

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable.

2016 2015

$'000 $'000

Trade payables 1,063 1,144

Amounts due to related parties 39,163 18,341

Other Accruals 834 280

Other payables 1,073 -

Fringe benefit tax payable 27 9

42,160 19,774

(a) Capital commitments

Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:

2016 2015

$'000 $'000

Property, plant and equipment 217 31,207

217 31,207

Operating lease commitments

The Company leases power poles as part of the UFB network build. Operating leases held over properties give the company the right to renew the lease subject to a predetermination of the lease rental by the lessor.

The company leases property in Hamilton and Tauranga and entered these leases in February 2015 and October 2015 respectively.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

2016 2015

$'000 $'000

No later than 1 year 569 712

Later than 1 year and no later than 5 years 457 386

Later than 5 years 442 759

Total 1,468 1,857

10 NON-CURRENT ASSETS - DEFERRED TAX ASSETS

11 CURRENT LIABILITIES - TRADE AND OTHER PAYABLES

13 COMMITMENTS

12 CONTINGENCIESAs at 30 June 2016 the Company had no contingent liabilities or assets (2015:$Nil).


(a) Parent entities

Crown Fibre Holdings Limited holds 'A' Shares in Ultrafast Fibre Limited. There are no related party transactions with Crown Fibre Holdings Limited, other than the issue of shares.

Waikato Networks Limited holds shares in Ultrafast Fibre Limited. The UFB network was constructed by Waikato Networks Limited and once each stage was complete it was transferred to Ultrafast Fibre Limited. In addition Waikato Networks Limited charges management fees for IT services and Ultrafast Fibre charges Waikato Networks Limited management fees for operational services.

There were no transactions with WEL Networks Limited during the financial year.

No related party debts were forgiven or written off during 2016 or 2015.

(b) Directors

The names of persons who were directors of the company at any time during the financial year are as follows: R H Fisher, G W Dibley, D R Dinsdale, M X Franklin, G R Mitchell, A V Steele, and M S Wynne.

(c) Key management and personnel compensation

For the year ended 30 June 2016, total compensation for key management personnel amounted to $1,561,000 (2015: $1,202,000). The key management personnel are the directors of the company and the six executives with the greatest authority for the strategic direction and management of the company.

(d) Transactions with related parties

The following transactions occurred with Waikato Networks Limited.

Waikato Networks Limited is a construction company that is building the UFB network for Ultrafast Fibre Limited. At year end, Waikato Networks Limited owns 54% (2015: 35%) of Ultrafast Fibre Limited shares.

(a) Fair value estimation

The Directors estimate that the carrying amounts of financial instruments in the balance sheet equal their fair values.

(b) Capital risk management

The primary objective of the Company’s capital management is to ensure that it maintains an appropriate capital ratio in order to support its business and maximise shareholder value.

The Company manages and makes adjustments to its capital structure depending on changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

(c) Financial Instruments by category - Assets (loans and receivables)

14 RELATED PARTY TRANSACTIONS 15 FINANCIAL RISK MANAGEMENT

2016 2015

$'000 $'000

Sales of goods and services:

Sales of services:

Management fees 667 -

Revenue from provision of network access services 543 768

Other services provided 11 88

Sales to related parties 1,221 856

Purchases of goods and services

Purchase of Fibre assets 90,123 90,937

Network operations and maintenance 9,876 9,982

Management fees 1,118 1,312

Purchase of other assets 139 1,070

Payments to related parties 101,256 103,301

Closing balances

Trade receivables - WNL 351 248

Trade payables - WNL 39,163 18,341

2016 2015

$'000 $'000

Cash and cash equivalents 6,086 1,886

Trade and other receivables 4,293 2,548

10,379 4,434

(d) Financial Instruments by category - Liabilities at amortised cost

2016 2015

$'000 $'000

Trade and other payables 40,226 19,485

40,226 19,485

16 DIVIDENDS

No dividends were paid during 2016 or 2015.

17 EVENTS OCCURRING AFTER THE REPORTING PERIOD

At the date of signing these financial statements the shareholders were discussing a transfer of ‘A’ shares. No formal agreements have been signed at the date these financial statements were approved. There were no other events occurring subsequent to balance date which require adjustment to or disclosure in the financial statements.


PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New ZealandT: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz

Independent Auditor’s Reportto the readers of Ultrafast Fibre Limited’s financial statements for the year ended 30 June 2016

The Auditor-General is the auditor of Ultrafast Fibre Limited (the “Company”). The Auditor-General has appointed me, Paul Clark, using the staff and resources of PricewaterhouseCoopers, to carry out the audit of the financial statements of the company on her behalf.

OpinionWe have audited the financial statements of the Company on pages 2 to 21 that comprise the balance sheet as at 30 June 2016, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date and the notes to the financial statements that include accounting policies and other explanatory information.

In our opinion the financial statements of the company:

● present fairly, in all material respects: ● its financial position as at 30 June 2016; and● its financial performance and cash flows for the year then ended; and

● comply with generally accepted accounting practice in New Zealand in accordance with New Zealand Equivalents to International Financial Reporting Standards Reduced Disclosure Regime.

Our audit was completed on 18 August 2016. This is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board of Directors and our responsibilities, and explain our independence.

Basis of opinionWe carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and carry out our audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

Material misstatements are differences or omissions of amounts and disclosures that, in our judgement, are likely to influence readers’ overall understanding of the financial statements. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.

An audit involves carrying out procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including our assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the preparation of the company’s financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

An audit also involves evaluating:

PwC 2

Independent Auditor’s ReportUltrafast Fibre Limited

● the appropriateness of accounting policies used and whether they have been consistently applied;

● the reasonableness of the significant accounting estimates and judgements made by the Board of Directors;

● the adequacy of the disclosures in the financial statements; and

● the overall presentation of the financial statements.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements.

We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.

Responsibilities of the Board of DirectorsThe Board of Directors is responsible for the preparation and fair presentation of financial statements for the company that comply with generally accepted accounting practice in New Zealand and have been prepared in accordance with New Zealand Equivalents to International Financial Reporting Standards Reduced Disclosure Regime.

The Board of Directors’ responsibilities arise from the Companies Act 1993.

The Board of Directors is also responsible for such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is also responsible for the publication of the financial statements, whether in printed or electronic form.

Responsibilities of the AuditorWe are responsible for expressing an independent opinion on the financial statements and reporting that opinion to you based on our audit. Our responsibility arises from the Public Audit Act 2001.

IndependenceWhen carrying out the audit, we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the External Reporting Board.

In addition to the audit we have carried out assignments in the areas of advisory and other assurance services, which are compatible with those independence requirements. Other than the audit and these assignments, we have no relationship with or interests in the Company.

Paul ClarkPricewaterhouseCoopersOn behalf of the Auditor-General Auckland


DIRECTORYRegistered Office:

Physical Address:

Auditors:

Solicitors:

Insurance Brokers:

114 Maui StreetPuketeHamilton 3200

11 Ken Browne DriveTe RapaHamilton 3200Phone: 0800 833 622Web: www.ultrafastfibre co .nzEmail: [email protected]

PricewaterhouseCoopers, Auckland on behalf of the Office of the Auditor General

Simpson Grierson, AucklandTompkins Wake, Hamilton

JLT New Zealand, Auckland

6564

Ultrafast Fibre Limited

11 Ken Browne DriveTe Rapa

Hamilton 3200

0800 FIBRE LTD (0800 342 735)

www.ultrafastfibre.co.nz

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