Notes to and Forming Part of the Financial Statements

for the Year Ended 31 March 2004

ELECTRICITY DIVISION

15 Related Party Transactions

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.

Powerco paid consulting fees amounting to $36,992 (2003: $109,100) to Upson Associates Ltd, a company in which Mr B R Upson, a Director, has an interest, for work performed in the area of corporate development, finance and regulatory advice.

Powerco is also deemed to have a related party relationship with New Plymouth District Council. The New Plymouth District Council holds a 38.16% material interest in Powerco Limited. Powerco paid $143,122 (2003: $124,938) rent to the New Plymouth District Council at market rates. Rates have been paid to New Plymouth District Council to the value of $29,395 (2003: $7,147). Utility Rates have been paid to the New Plymouth District Council to the value of $21,143 (2003: $5,239). Other arms length transactions with the New Plymouth District Council amounted to $50,857 (2003: $365,954).

In the previous financial year ended 31 March 2003, Powerco had paid consulting fees amounting to $17,000 to Ogden Consulting Limited, a company in which Mr J H Ogden, a Director, has an interest, for work performed in the area of corporate finance and regulatory advice.

In the previous financial year ended 31 March 2003, Powerco paid consulting fees and brokerage amounting to 48% of the total fees paid for asset acquisition transactions (2002: 77%) to companies in the Macquarie New Zealand group companies in which Mr J H Ogden was a Director. Mr J H Ogden resigned as a Director of Macquarie New Zealand Limited on 30 April 2002, resigned as a Director of Macquarie Equities New Zealand Limited on 5 December 2002 and resigned as a consultant to Macquarie New Zealand Limited on 31 January 2003.

Powerco Limited has a related party relationship with a 100% subsidiary, Powerco Network Management Limited (PNML). PNML charges Powerco market rates for all services provided, including electricity network management and maintenance. The following amounts were paid to PNML for services provided for the full year ending 31 March 2004:

• Asset Management: $9,195,495
• Network Management Centre: $2,306,662
• Corporate Services: $7,103,829

These transactions are completed upon normal commercial terms. No amounts have been forgiven or written off in the year.

Powerco Limited has a related party relationship with a 100% subsidiary, Powerco Energy Services Limited (PES). PES charges Powerco market rates for electricity and gas maintenance and construction. The following amounts were paid to PES for services provided for the full year ending 31 March 2004:

• Network maintenance: $21,769,869
• Network construction:
  • $302,940
  • Construction of zone substations: $1,303,354
  • Construction of distribution lines and cables: $4,051,372
  • Construction medium voltage switchgear: $669,637
  • Construction of distribution transformers: $4,893,790
  • Construction of low voltage reticulation: $1,670,495
  • Construction of other system fixed assets: $131,150
  • Consumer connections and disconnections: $7,921,808

These transactions are completed upon normal commercial terms. No amounts have been forgiven or written off in the year.

16 Reconciliation of Operating Surplus After Taxation with cash inflow from operating activities

17 Comparative Information

The comparative information included was prepared under the revoked Electricity (Information Disclosure) Regulations 1999 and the revoked Electricity (Information Disclosure) Amendment Regulations 2000 and 2001.