TrustPower Limited Audited Financial Results

Media Statement from TrustPower Limited

Tuesday 10th May 2007

TrustPower Limited Audited Financial Results for the Year Ended 31 March 2007

TrustPower's consolidated operating surplus after tax was $97.4 million for the year ended 31 March 2007, representing a 20 per cent increase on the result for the 2006 financial year. Earnings before interest, tax, depreciation and amortisation grew by 6 per cent to $196.4 million from $185.6 million in the previous year. Operating revenue of $626.3 million decreased 7 per cent on the previous year as a result of lower energy prices charged to those customers paying spot market prices.

Total volume sold was 4,575 GWh compared with 4,724 GWh in the year to 31 March 2006. Customer numbers reduced slightly to 219,000 at 2007 year end versus 220,000 a year ago. The New Zealand electricity market for the early months of the 2007 financial year was characterised by lake storage levels and inflows well below average leading to higher spot electricity prices.

This situation turned around in the second half of the year following high inflows across the country in November and December causing national hydro storage to rise above average levels with a consequent drop in spot electricity prices. Generation production of 1,941 GWh for the year was up 8 per cent on the previous year but slightly down on long term average. Operating expenses including energy and line costs decreased 12 per cent on the previous year, primarily driven by lower electricity spot prices and the increased use of the Group's own generation production.

Net profit after tax, return on average shareholders' funds, was 8.6 per cent taking into account the revaluation of generation assets at year end (last year 9.2 per cent). Group operating cash flow was $135.5 million for the 2007 financial year versus $118.9 million in the previous year. TrustPower's balance sheet as at 31 March 2007 remains strong. Shareholders' funds have increased to $1,371.8 million from $896.5 million.

Generation assets have been independently revalued as at 31 March 2007 as required by Financial Reporting Standards. The revaluation has resulted in an uplift in the value of generation assets of $456 million and this is reflected in the asset revaluation reserve at balance date.

The revaluation was completed by Deloitte Corporate Finance on a discounted cash flow basis. The increase in generation asset values reflects the higher earning potential of TrustPower's renewable generation assets and the likely impact on future electricity prices of higher gas input costs for gas-fired generation following the run down of Maui's gas reserves and the possible impact of carbon charging on thermal generators. Included in accounts payable and accruals is an amount of $36.8 million relating to milestone payments due under the Tararua Stage III turbine supply contract.

A similar amount was held in year end cash balances following settlement of foreign exchange hedge contracts matching the turbine supply contract obligations. Debt (including subordinated bonds) to debt plus equity was 27.1 percent at year end 2007, being slightly lower than the 2006 year end position. TrustPower continues to maintain high levels of bank credit lines. Including subordinated bonds, the Company has $710.9 million of committed debt funding in place.

These debt facilities were drawn to $515.0 million as at 31 March 2007. TrustPower's New Zealand generation development programme continues to progress in line with expectations. The 93 MW Stage III expansion of the Tararua Wind Farm is progressing well. At the end of April, eighteen of the thirty one 3 MW turbines were operating. Full commissioning of the wind farm is expected to occur by 31 July 2007. The 5 MW enhancement to the Waipori hydro generation scheme is well advanced and target completion is now December 2007. The resource consent hearing for the proposed 72 MW Wairau hydro generation scheme in Marlborough finished in December 2006 after a six month hearing process. The consent decision is expected to be received shortly.

A resource consent hearing for the revised 46 MW hydro generation scheme at Arnold on the West Coast has been scheduled to commence in September 2007.

A resource consent hearing for the proposed 200 MW Lake Mahinerangi wind farm at Waipori in Otago is scheduled to commence mid May and is expected to take two to three weeks. TrustPower continues to hold the view that this project would be developed in 100 MW stages subject to granting of a resource consent and confirmation of satisfactory project economics.

TrustPower is investigating the potential for a wind farm of up to 185 MW at Kaiwera Downs near Gore in the South Island. Land access arrangements are nearing completion and wind monitoring is currently being undertaken. A resource consent application is expected to be lodged in the last quarter of 2007. Other hydro and wind opportunities continue to be actively investigated particularly in the North Island.

Good progress is being made on the development of the 88 MW Snowtown wind farm in South Australia. Landowner arrangements and key project contracts have been finalised. Civil works will commence shortly. The level of community support for the construction of the wind farm is very pleasing. Forty two 2.1 MW wind turbines are scheduled to be progressively commissioned between April and November 2008 under a fixed price Engineer Procure and Construct Contract with Suzlon Energy Australia Pty Ltd.

Other opportunities are being investigated in Australia. Expensed generation development costs for the year were $10.3 million compared with $15.0 million in 2006. This reflects the generation development opportunities being progressed, including preliminary design, environmental investigations and resource consent application costs.

The Government is currently reviewing around 3,000 submissions with respect to its draft New Zealand Energy Strategy to 2050 ("NZES"). TrustPower has made a combined submission on the NZES and related Energy Policy documents.

TrustPower supports the vision of the NZES to achieve a reliable and resilient system delivering sustainable, low emissions energy by providing a clear direction, maintaining security at competitive prices, maximising energy efficiency and adopting environmentally sustainable technologies.

TrustPower has the following key concerns in relation to the NZES:

i) There is an urgent need for clarity in respect to future generation alternatives and charges for greenhouse gas emissions in the energy sector. ii)

The 2004 and 2005 amendments to the Resource Management Act ("RMA") have been ineffective. Barriers which presently exist within the RMA consenting process need to be removed. TrustPower advocates a streamlined submission process, national guidance through National Policy Statements and a voluntary mechanism for direct referral of resource consent applications to the Environment Court. iii) The Government should consider what changes are necessary within the RMA process to remove barriers to electricity generators gaining access to land, including giving electricity generators requiring authority status where there is wide community support or a project is of national importance. iv)

Baseline information relating to relative costs of new demand and supply must be accurate. Some of the assumptions used in the draft NZES are incorrect, in particular the understatement of the cost of new entrant wind generation. v) The current proposal to continue to apply High Voltage Direct Current ("HVDC") charges to existing and new South Island generators will potentially mean no South Island renewable generation is built in the foreseeable future and this will have a major impact on the ability of the Government to meet its renewable energy objectives.

TrustPower's hope is that clear policy direction will be provided to the energy industry following the submission, review and consultation process on the draft NZES and that the policy direction is supportive to achieving the vision for the energy sector articulated in the draft document.

In early 2006 the Commerce Commission commenced a review into the market behaviour of generator/retailers. No target completion date has been advised. The Electricity Commission is also conducting a review of the effectiveness of how the current wholesale electricity market is operating. The Commission has advised that this review will be completed by the end of 2007. These reviews create an environment of continuing uncertainty for the electricity sector. While it is too early to make predictions about the 2008 financial year, it is worth noting that the Company is currently well positioned to meet its customers' needs this winter.

TrustPower's hydro storage levels are around average for this time of year and, together with contracted electricity hedges, should enable the Company to meet its electricity sales obligations within comfortable spot market purchasing risk parameters. Forecast capital expenditure in the 2008 financial year for committed generation development projects is expected to be around $150.0 million. Generation development costs to be expensed in the 2008 financial year are projected to be around $8.0 million.

The Directors are pleased to announce a fully imputed final dividend of 14 cents per share payable 8 June 2007 (record date of 25 May 2007). This together with an interim dividend of 13 cents per share provides a total payout of 27 cents per share for the 2007 financial year compared with 23 cents per share for the 2006 financial year, representing dividend growth of 17 per cent.

HM TITTER CHAIRMAN

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