REPORT OF THE AUDITOR-GENERAL

TO THE READERS OF THE FINANCIAL STATEMENTS OF ELECTRA LIMITED (LINES BUSINESS) FOR THE YEAR ENDED 31 MARCH 2004

We have audited the financial statements of Electra Limited (Lines Business) on pages 2 to 18. The financial statements provide information about the past financial performance of Electra Limited (Lines Business) and its financial position as at 31 March 2004. This information is stated in accordance with the accounting policies set out on pages 5 to 7.

Directors' Responsibilities

The Commerce Commission's Electricity Information Disclosure Requirements 2004 made under section 57T of the Commerce Act 1986 require the Directors to prepare financial statements which give a true and fair view of the financial position of Electra Limited (Lines Business) as at 31 March 2004, and the results of its operations and cash flows for the year ended on that date.

Auditor's Responsibilities

Section 15 of the Public Audit Act 2001 and Regulation 30 of the Electricity (Information Disclosure) Requirements 2004 require the Auditor-General to audit the financial statements. It is the responsibility of the Auditor-General to express an independent opinion on the financial statements and report that opinion to you.

The Auditor-General has appointed Fred Hutchings of PricewaterhouseCoopers to undertake the audit.

Basis of Opinion

An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also includes assessing:

• the significant estimates and judgements made by the Directors in the preparation of the financial statements; and
• whether the accounting policies are appropriate to Electra Limited's (Lines Business) circumstances, consistently applied and adequately disclosed.

We conducted our audit in accordance with the Auditing Standards published by the Auditor-General, which incorporate the Auditing Standards issued by the Institute of Chartered Accountants of New Zealand. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to obtain reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements.

We have carried out other assignments for Electra Limited in the areas of taxation compliance and other assurance services. Other than these assignments and in our capacity as auditor acting on behalf of the Auditor-General, we have no relationship with or interests in Electra Limited.

Unqualified Opinion

We have obtained all the information and explanations we have required.

In our opinion -

• proper accounting records have been maintained by Electra Limited (Lines Business) as far as appears from our examination of those records; and
• the financial statements of Electra Limited (Lines Business) on pages 2 to 18:
  (a) comply with generally accepted accounting practice in New Zealand; and
  (b) give a true and fair view of Electra Limited (Lines Business)'s financial position as at 31 March 2004 and the results of its operations and cash flows for the year ended on that date; and
  (c) comply with the Electricity (Information Disclosure) Requirements 2004.

Our audit was completed on 8 December 2004 and our unqualified opinion is expressed as at that date.

Fred Hutchings
On behalf of the Auditor-General
Wellington, New Zealand

PricewaterhouseCoopers
113 – 119 The Terrace
PO Box 243
Wellington, New Zealand
Telephone +64 4 462 7000
Facsimile +64 4 462 7001
www.pwc.com/nz