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Toll NZ Update

January 31, 2007

Toll NZ Update

As a result of a number of changes occurring in the Toll Holdings Group and the current trading outlook, an update is provided in respect of the Toll NZ business.

Impact of Restructure

On 13 December 2006, Toll Holdings' directors announced a planned restructure of the group. The impact of the restructure will be the separation of port and rail infrastructure assets into a separately managed Infrastructure Company (Infrastructure Co). Remaining aspects including Toll Australia, Toll NZ, Toll Asia and the investment in Virgin Blue will continue with the network and supply chain business of Toll Holdings. It is expected that the proposal for the restructure will be put to the Toll Holdings' shareholders for approval via schemes of arrangement during the first half of 2007.

The current New Zealand port and stevedoring operations of Toll Holdings conducted through the Toll/Owens joint venture between Toll and Port of Tauranga will be owned by Infrastructure Co. Toll NZ and Toll Owens have co-operated effectively in the past to support major customer solutions, for example the use of port and rail operations to deliver imported coal by the Huntly Power Station. It is expected that the same level of cooperation will prevail following the restructure, where Toll NZ can bring its land based logistics capability to produce highly efficient customer outcomes.

Board of Directors

The Board of Toll NZ has appointed Mr John Ludeke to its Board. Mr Ludeke is currently director of Australian transport operations for Toll Holdings.

Upon implementation of the Toll Holdings' Group restructure, current Chairman Mr Mark Rowsthorn plans to resign in order to take up the position of Infrastructure Co Chief Executive. It is anticipated that Mr Ludeke will thereafter assume the role of Chairman of Toll NZ.

Trading Update

As advised at the Toll NZ AGM, trading has been impacted by the slow down in the NZ domestic economy combined with persistently high exchange rates affecting export levels, and lower margins particularly in the Interislander and Toll Rail businesses. Underlying EBIT to 31st December 2006 is currently ahead of budget, however it will be lower than the previous corresponding period. Whilst economic conditions remain patchy, based on current forecasts, it is expected that the second half result will be improved through a range of initiatives being implemented.

Negotiations with the Crown

Toll NZ has been involved in ongoing discussions with the Crown in order to design a long term sustainable track access regime which will encourage greater use of rail and support long term capital investment horizons.

Whilst discussions are generally positive Toll NZ is still concerned that the Crown appears to be unwilling to recognise the inequality of the funding support between road and rail and the need to adopt a more commercial approach to track access management.

Toll NZ stands ready to implement a major rail fleet re-equipment programme once viable long term track access arrangements are established.

ENDS

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