NGC HOLDINGS LIMITED

GAS WHOLESALING ACTIVITIES

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

1. OPERATING SURPLUS / (DEFICIT) BEFORE INCOME TAX

| NOTE | 2007
| | $000 | 2006
| | | $000 |

Operating surplus / (deficit) before income tax includes:

• Audit fees | 10 | 10 |
• Depreciation – plant, vehicles and equipment | 138 | – |
• Operating leasing costs | 11 | – |
• Provision release | – | (1,200) |

2. INCOME TAX EXPENSE

| | 2007 |
| | $000 | 2006
| | | $000 |

Operating surplus/(deficit) before income tax | 45,286 | (5,492) |
Prima facie tax at 33% | 14,944 | (1,812) |
Plus/(less) tax effect of permanent differences:

• Prior period adjustment | 162 | (162) |
• Adjustment to deferred tax for change in company tax rate | 128 | – |
• Other permanent differences | 43 | 163 |

Income tax expense/(benefit) | 15,277 | (1,811) |

The income tax expense/(benefit) is represented by:

• Current tax expense | 15,280 | 1,263 |
• Deferred tax | 3 | (3,074) |

Total | 15,277 | (1,811) |

In May 2007, the Government changed the corporate tax rate to 30% effective from the 2008/2009 income year. In accordance with SSAP 12, the deferred tax asset has been restated, reflecting the change in corporate tax rate, which applies from 1 July 2008. The impact of the deferred tax restatement is a reduction in the deferred tax asset of $128,000 and a corresponding debit to income tax expense in the statement of financial performance.

3. DEFERRED TAX

| | 2007 |
| | $000 | 2006
| | | $000 |

Balance at the beginning of the year | 878 | (2,196) |
Decrease relating to change in company tax rate | (128) | – |
On net surplus for the year | 131 | 3,074 |

Balance at the end of the year | 881 | 878 |

The decrease in the deferred tax asset of $128,000 resulting from the charge in the corporate tax rate to 30% effective from the 2008/2009 income year is explained in Note 2 above.

4. GAS CONTRACTS AND PREPAID GAS

| | 2007 |
| | $000 | 2006
| | | $000 |

Current:
Maui prepaid gas | 4,210 | 7,950 |

Total | 4,210 | 7,950 |

Non-current:
Maui prepaid gas | – | 4,932 |

Total | – | 4,932 |