HORIZON ENERGY DISTRIBUTION LIMITED - Lines Business

NOTES TO THE FINANCIAL STATEMENTS

20 SEGMENTAL

The Company operates predominantly in one industry, the distribution of electricity. Its operations are carried out solely in New Zealand and are therefore within one geographical segment for reporting purposes.

21 EVENTS OCCURRING AFTER BALANCE DATE

Dividend Declarations

On 28 May 2007 the Directors declared a final fully imputed dividend of 9.0 cents (2006: 7.5 cents fully imputed) per ordinary share. As this event occurred after balance date the financial effect has not been recognised in the financial statements.

22 ARBITRATION PROCEEDINGS

In the Company’s 2006 Information Disclosure Accounts, Awards totalling $1.74m were recognised as revenue in relation to proceedings initiated by Horizon Energy against a supplier for the level of fees charged for services between 1 April 2004 and 31 March 2006.

The characteristics of the Awards combined with the Company’s regulatory obligations resulted in the Board of Directors resolving to refund $0.93 million of the Awards to electricity consumers in the Eastern Bay of Plenty during the year ended 31 March 2007. This amount has been expensed in these Information Disclosure Accounts.

23 NEW ZEALAND EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS

In December 2002 the New Zealand Accounting Standards Review Board (ASRB) announced that New Zealand entities required to comply with NZ GAAP under Financial Reporting Act 1993 would be required to apply International Financial Reporting Standards (IFRS) for financial periods commencing on or after 1 January 2007 with earlier adoption permitted from 1 January 2005. The new standards that have been approved by the ASRB for application in New Zealand are referred to as New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) as certain adaptations have been made to reflect New Zealand circumstances.

The Company will transition to NZ IFRS and publish its first set of annual financial statements prepared under NZ IFRS for the year ending 31 March 2008.

The Company has substantially finalised its accounting policies under NZ IFRS and quantified the material adjustments that will be required in the opening Statement of Financial Position as at 1 April 2006 on adoption of NZ IFRS.

The key differences between current NZ GAAP and NZ IFRS identified as affecting the Company’s opening Statement of Financial Position and retained earnings at 1 April 2006 have been quantified for statutory reporting purposes however these are subject to final quantification and any changes in applicable NZ IFRS standards which may occur before the date of issue of the 31 March 2008 NZ IFRS financial statements. These differences are reported in the Company’s 31 March 2007 Statutory Accounts.

The impact of NZ IFRS on future profits for statutory reporting purposes is principally from the amortisation of capital contributions received from government and the recognition of the movement in fair values of derivative financial instruments. These profit impacts have not been quantified for the purposes of the Information Disclosure Accounts.

The Company has not quantified any differences between current NZ GAAP and NZ IFRS in relation to the impact under the Company’s Information Disclosure Requirements obligations (Information Disclosure Accounts). This is due to the uncertainty that exists as to whether the Company would be reporting these regulatory accounts under current GAAP and whether future regulatory accounts will be reported under NZ IFRS.