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Audited Financial Results to March 2006

Media Statement from TrustPower Limited

Friday 12 May 2006.

TrustPower Limited Audited Financial Results for the Year Ended 31 March 2006

TrustPower's consolidated operating surplus after tax was $81.4 million for the year ended 31 March 2006, representing an 11 per cent increase on the result for the 2005 financial year.

Earnings before interest, tax, depreciation and amortisation grew by 7 per cent to $185.6 million from $173.3 million in the previous year.

Operating revenue of $677.0 million increased 11 per cent on the previous year as a result of substantially higher energy prices charged to those customers paying spot market prices. Total volume sold was 4,724 GWh compared with 5,873 GWh in the year to 31 March 2005, a decrease of close to 20 per cent. This reduction is primarily due to a major industrial customer trading directly through the wholesale market rather than using TrustPower as its agent. Customer numbers reduced slightly to 220,000 at 2006 year end versus 225,000 a year ago.

The New Zealand electricity market for most of the 2006 financial year was characterised by lake storage levels and inflows well below average leading to significantly higher spot electricity prices particularly during the last half of the financial year.

Generation production of 1,791 GWh for the year was down 14 per cent on the previous year and 8 per cent on long term average. Lower generation production was primarily driven by low hydro catchment inflows over the course of the year which became more pronounced during the last two quarters. Lower hydro production was partially offset by a strong performance from the Tararua wind farm which produced 268 GWh during the year representing 45 per cent of capacity utilisation and slightly above long term expected production.

Operating expenses including energy and line costs increased 10 per cent on the previous year, again primarily driven by higher wholesale electricity spot prices together with material increases in wholesale market fees and increasing costs relating to a number of project developments and resource consent applications the Company has been progressing in relation to its generation development programme.

Net profit after tax return on average shareholders' funds was 9.2 per cent (last year 8.4 %).

Group operating cash flow was $118.9 million for the 2006 financial year versus $110.0 million in the previous year.

TrustPower's balance sheet as at 31 March 2006 remains strong. Shareholders' funds have increased to $896.5 million from $882.8 million. Net debt (including subordinated bonds) to net debt plus equity was 28.4 per cent at year end 2006, being slightly lower than 2005.

Debtors and creditors levels at year end were significantly higher than the previous year end due to high wholesale electricity prices. The Company also had $16 million of cash placed on deposit with The Market Company to support its wholesale market prudential requirements.

TrustPower continues to maintain high levels of bank credit lines. Including subordinated bonds the Company now has $710.9 million of committed debt funding in place. These debt facilities were drawn to $366.8 million as at 31 March 2006.

In early April the Company announced that it had completed the negotiation on a $110.9 million Export Credit Agency guaranteed long term debt facility to partially fund the Stage III expansion of the Tararua Wind Farm. This facility will be drawn down over the next twelve months as the wind farm construction is progressed. The establishment of this facility has enabled the Company to lengthen the maturity profile of its debt facilities.

TrustPower's New Zealand generation development programme continues to progress in line with expectations.

The 93 MW Stage III expansion of the Tararua Wind Farm is progressing well with civil work well advanced and all key project contracts finalised. Target dates for commissioning of first turbines and final completion remain scheduled for February 2007 and July 2007 respectively. All foreign exchange commitments with respect to the project have been hedged at favourable rates.

The Board has recently approved a 5 MW enhancement to the Waipori hydro generation scheme subject to finalisation of landowner agreements and satisfactory tenders for key contracts. The enhancement is expected to cost around $20 million and produce 22 GWh per annum. Target completion is October 2007.

A resource consent hearing for the proposed 72 MW Wairau hydro generation scheme in Marlborough has been confirmed to start in mid June.

A resource consent application for a revised 46 MW hydro generation scheme at Arnold on the West Coast was lodged at the end of March.

The Company expects to lodge a resource consent application for a wind farm at Waipori in Otago for up to 300 MW within the next month. It is likely that development of this project will be completed in stages.

TrustPower has recently announced that it is not progressing identified wind farm opportunities in Marlborough any further due to marginal wind resource and unattractive project economics.

Other hydro and wind opportunities throughout New Zealand continue to be actively investigated.

Despite actively pursing its New Zealand generation development programme, the Company is becoming increasingly concerned and frustrated with the regulatory environment particularly with respect to renewable generation investment.

The uncertainty created by the withdrawal of the Government's carbon tax policy and lack of any further policy direction on carbon emission pricing makes it difficult for many generation development proposals currently under consideration to be progressed.

The recent decision by the Electricity Commission to maintain the status quo with respect to pricing of the High Voltage Direct Current ("HVDC") linking the North and South Islands is also concerning. This has potentially major negative implications for developers of new South Island generation as the decision implies that new investment will not only be charged for HVDC costs on the same basis as existing generation, but will be liable to pay for the proposed HVDC upgrade. The biggest unknowns are whether the HVDC upgrade will be approved and if so when. A decision to proceed will cause a significant additional financial burden for South Island generators and new South Island generation projects will be economically challenged. This is not an encouraging policy signal for the numerous renewable generation projects located in the South Island that have been identified by TrustPower and others.

Given the ongoing debate over security of supply in the sector, TrustPower believes that a more encouraging policy response on the above matters is necessary to create the right investment environment for renewable generation investment.

Expensed generation development costs for the year were $15.0 million compared with $5.1 million in 2005. This reflects the opportunities being progressed, the preliminary design, environmental investigations and resource consent application costs, and expenditure incurred on the Australian wind farms.

Progress in Australia remains slow, however, TrustPower is focussed on ensuring that its options for the Myponga and Snowtown wind sites are preserved, in particular through the extension of existing landowner arrangements and the pursuit of a suitable turbine supplier for Snowtown.

TrustPower recently concluded the purchase of the development rights to the wind farm site immediately adjacent to TrustPower's Snowtown site. The combined site could accommodate a 335 MW wind farm. The acquired site is at the same stage of development as TrustPower's existing site with design, planning consents and other regulatory requirements jointly obtained.

While it is too early to make predictions about the 2007 financial year, it is worth noting that the Company is currently well positioned to meet its customers' needs this winter. Good inflows into TrustPower's hydro catchments during late April have improved the Company's hydro storage levels and, together with contracted electricity hedges, should enable the Company to meet its electricity sales obligations within comfortable spot market purchasing risk parameters.

TrustPower has a significant capital expenditure programme for the 2007 financial year which includes the majority of the $166 million committed at year end 2006 to be spent on Tararua Wind Farm Stage III but for which payment is not yet due.

Generation development costs expected to be expensed in the 2007 financial year are about $7 million.

The Directors are pleased to announce a fully imputed final dividend of 12 cents per share payable 9 June 2006 (record date of 26 May 2006). This together with an interim dividend of 11 cents per share provides a total payout of 23 cents per share for the 2006 financial year compared with 19.5 cents per share for the 2005 financial year, representing growth of 18 per cent.



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