WE’RE IN IT FOR YOU.

GENESIS ENERGY ANNUAL REPORT 2013 WE

“We’re committed to making Genesis Energy a profitable business for our shareholders” WE’RE IN IT TO MAKE ENERGY WE POWER UP WORK FOR EVERYONE.

From a reliable generating foundation and great customer experience, we deliver consistent returns for our shareholder and practical solutions for every energy user. YOU POWER UP We’re Genesis Energy and we’re in it for you.

2 / AT A GLANCE HIGHLIGHTS 6 / CHAIRMAN’S REPORT 8 / CHIEF EXECUTIVE’S REPORT 10 / CHAIRMAN AND CHIEF EXECUTIVE’S REPORTS IN TE REO 12 / BUSINESS REVIEWS 28 / BOARD AND EXECUTIVE PROFILES 32 / CHIEF FINANCIAL OFFICER’S REPORT 34 / FINANCIAL STATEMENTS “Genesis Energy provides 78 / INDEPENDENT AUDITOR’S REPORT online services to make 79 / CORPORATE GOVERNANCE customers’ lives easier” 83 / STATUTORY INFORMATION 86 / DISCLOSURE OF MANAGEMENT APPROACH 90 / ABOUT THIS REPORT 93 / gLOBAL REPORTING INITIATIVE TABLE YOU 96 / ASSURANCE REPORT 97 / DIRECTORY

genesis energy annual report 2013 / 1 TOTAL CUSTOMER ACCOUNTS Huntly Unit 5 gas turbine – first major overhaul finds unit 2012/2013 we’re in excellent condition after AT A GLANCE in iT 668,485 50,000 hours of service for GROWTH. 3% 50 SCHOOLGEN SCHOOLS now participating in the solar programme

Tekapo Canal Stage One completed ahead of schedule and in time for winter m $105NET PROFIT AFTER TAX

WE DELIVER Focus on service improves ON STRATEGY. customer satisfaction

Energy Online wins YOU SEE ROY MORGAN THE RESULTS. PROVIDER MYMETER OF THE YEAR Energy information in 2012 Customer in your pocket DECREA68%SE IN TOTAL RECORDABLE Satisfaction Awards INJURY FREQUENCY RATE

MYENERGY MYTIME TARIFF 2.36 New Zealand’s first COACH time-based electricity tariff INCIDENTS PER MILLION Online coaching for customers HOURS WORKED

RESOURCE CONSENTS granted to Castle Hill Wind Farm project in 7,212GWh northern Wairarapa GENERATING from hydro, thermal and wind resources

Whio Forever programme on Fifteen Tomorrow Street residents made track to protect 400 pairs of average energy savings of 18% while testing whio, three years ahead of efficient appliances and monitoring services schedule. Managed by DOC; provided by Genesis Energy supported by Genesis Energy

genesis energy annual report 2013 / 3 we’re in iT TO Debt to equity % $M PERFORM. 50 1500

40 1200 Dividend

NPAT 30 900

20 600 $114m Based on Company’s commercial value of $105m 10 300 Debt $M Continued customer growth $2,050m, dividend D/(D+E)% and Kupe contribution 0 0 represents a net yield delivered an improved profit 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 of 5.6%

Five-Year Summary Financial Information Year 30 June 2009 30 June 2010 30 June 2011 30 June 2012 30 June 2013 Property, Plant and ended $000 $000 $000 $000 $000 Equipment $2,801M Operating revenue 1,957 1,895 1,835 2,265 2,070 Oil and Gas $392M Operating expenses 1,755 1,646 1,542 1,878 1,734 TOTAL ASSETS Intangible Assets $123M Earnings before net finance expense, taxation, 202 249 293 387 336 depreciation, depletion, amortization, fair value changes $3,751m Current Assets 44% and other gains and losses $393M The Company’s share Other gains (losses) and impairment (29) (25) (21) (27) 23 Other Term of gas customers Assets $43M grew with a successful 173 224 272 366 359 dual fuel promotion to retail customers Depreciation, depletion and amortization 88 93 144 152 135 TOTAL REVENUE Revaluation loss 261 – 97 – (1) Profit (loss) before net finance expense and income tax (176) 132 31 208 225 $2,070m EBITDAF Finance costs (less finance income) 13 25 49 89 79 Profit before income tax (189) 107 (18) 120 146 Electricity $1,744M 400 27% Genesis Energy Income tax (53) 38 (1) 34 41 Gas $212M consolidated its electricity Profit (loss) for the year (136) 69 (16) 86 105 Petroleum $81M 300 market share further Total assets 2,585 2,532 3,677 3,636 3,751 Other $33M 200 Total liabilities 1,192 1,087 1,965 1,835 1,802 Total equity 1,393 1,445 1,712 1,800 1,950 100 Total dividends paid to shareholder 36 39 – – 57

0 Operating cash flow 263 243 246 363 298 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 Investing cash flow (239) (83) (868) (69) (173)

EBITDAF

$336m Kupe financial contribution EBITDAF impacted by Tekapo planned outage and lower wholesale 150 electricity prices 120

90 finance cost 60

30 2012/2013 $79m 2011/2012 Borrowing costs down $10m 0 Gas Petroleum Other Total Operating EBITDAF Profit FINANCIAL reflecting lower average debt level Revenue Revenue Revenue Revenue Expenses before HIGHLIGHTS Income tax

genesis energy annual report 2013 / 5 Rt Hon Dame Jenny Shipley CHAIRMAN’S / Chairman REPORT

“Genesis Energy enjoys strong and diversified earnings, has well- maintained assets and a loyal and growing customer base.”

WE’RE IN IT WE POWER TO BENEFIT EVERYONE.

The Board is pleased Genesis Energy continues Durable financial has disciplined control of While we have achieved and for the immediate to be New Zealand’s largest performance operating costs and capital this significant milestone, future. Continual operational to present Genesis energy retailer, selling expenditure, active risk- we know it is not all about improvement and getting The Company is pleased electricity, natural gas and management and valued the metrics but about things right for our customers Energy’s Annual to report a Net Profit After LPG to more customers in products and services continuous improvement. will benefit them as well Report for 2012/2013, Tax (NPAT) of $105 million, more places across New designed to meet its Our ongoing focus is to as the Company’s financial an improvement of 21 per a financial year in Zealand than any other energy financial objectives. build a strong foundation performance. cent on the year before company. Our drive to attract that sets out clear health which our focus on (2012: $86 million restated). During the year the Genesis Energy enjoys strong and retain valuable customers and safety accountabilities YOU PRODUCE customer experience, This is a strong result Company completed the first and diversified earnings, has by providing beneficial tariffs and expectations for all considering the unfavourable stage of the Tekapo Canal well-maintained assets and a our diverse portfolio and new services was a key Genesis Energy employees, market conditions throughout Remediation Project on loyal and growing customer factor in drawing almost contractors and the public. of assets and efficient the year. time and within budget. The base. The future of Genesis 20,000 additional customers trading delivered decision to invest between Outlook Energy is encouraging. to our Genesis Energy and Revenues decreased nine $145 million and $155 million a strong net profit Energy Online brands in the per cent from $2,265 million New Zealand is well served was made in order to ensure year under review. to $2,070 million, as lower with power generation against challenging the Canal’s long-term future, wholesale prices suppressed capacity, and Genesis Energy While the New Zealand securing our ability to market conditions. generation output from has multiple options for future wholesale electricity market generate electricity at both the Company’s generation thermal and renewable once again experienced Tekapo hydro stations for DAME JENNY SHIPLEY, DNZM fleet and warmer weather generation development. Chairman volatile conditions influenced years to come. impacted retail sales of However, we have no “Genesis Energy continues to by, at first, high rainfall then electricity and natural gas. Proud health and plans to construct new be New Zealand’s largest energy drought, Genesis Energy’s Earnings before net finance safety record assets in the intermediate retailer, selling electricity, enviable mix of hydro, thermal expense, income tax, future when we are able natural gas and LPG to more and wind generation plant The Board and senior depreciation, amortisation, to meet customer demand customers in more places across across New Zealand provided management of Genesis fair value changes and effectively from the New Zealand than any other the flexibility to generate Energy are committed to other gains and losses wholesale electricity market. energy company.” electricity whatever the the health, safety and (EBITDAF) were down weather or hydro storage well-being of our employees Encouraging more 13 per cent from $387 levels. These flexible assets, and contractors. Our efforts residential and small million to $336 million. in combination with our to keep our people safe business customers to strategic investment in the With a focus on have resulted in a record join and stay with Genesis Kupe Oil and Gas field, enabled maintaining and growing low injury rate and fewer Energy and continued us to deliver consistent its business in New employees hurt at work optimisation of our assets earnings to our shareholder Zealand, Genesis Energy this year: a record of which remains our focus now and value for our customers. we’re proud.

genesis energy annual report 2013 / 7 Albert Brantley / Chief Executive CHIEF EXECUTIVE’S REPORT

project execution allowed the Canal remediation works to be completed ahead of schedule with only five minor first aid incidents. A second, this was the work done shorter outage of the canal jointly by -Tainui, is planned for the coming Genesis Energy and Waahi summer construction season. Whaanui Trust during this WE’RE Huntly’s Unit 5 went into year to rehabilitate Lake commercial operation in July Waahi at Huntly. 2007. In October 2012 the The Company’s partnership unit was disassembled for the IN IT with a number of first time since commissioning environmental initiatives for its scheduled 50,000 hour also achieved notable WE GENERATE major inspection. The unit TO results during the year. was found to be in excellent Such as our ongoing work condition after five years of with the Department of trouble-free operation. MAKE A REAL Conservation on the National The costs of maintaining and Whio Recovery Programme running the and gas resulting in approximately DIFFERENCE. units at Huntly have been 156 additional whio pairs steadily increasing in recent being protected.

Genesis Energy The diversification of the seeking to grow their customer customers, retail sales of years while their frequency of Outlook Genesis Energy business portfolios. Genesis Energy electricity and natural gas dispatch into the wholesale Genesis Energy is committed has again delivered continues to be our defining responded to this challenge were down at 5,354GWh market has been decreasing to achieving its targets, attribute, as well as our with a successful brand (2012: 5,429GWh) and 5.0PJ as new, lower cost-to-run a strong financial and build shareholder value and strength. The quality of our refresh, attractive campaigns (2012: 5.4PJ), respectively. generation entered the market. business performance customer loyalty through people, our diverse portfolio to acquire dual fuel customers Bottled LPG sales were up After 30 years of outstanding the implementation of its in 2012/2013 and our well-defined strategy and a suite of new services 22 per cent to 2,445 tonnes service, one of the four 250 business plan. of building our customer based on our prominent and LPG customer numbers against a backdrop MW coal/gas fired generators base while seeking greater position in the market with by 27.6 per cent, reaching Although the Company’s at YOU PERCOLATE of challenging efficiencies and greater cost over 60 per cent of our 9,708 by year’s end. performance was impacted by was placed into long term operating and control from our assets, is what electricity customers having the long, hot and dry summer, Generation output was storage in December 2012, sets us apart from our peers. Advanced Meters. and by planned maintenance climatic conditions. suppressed due to a wide with another one planned for outages, overall, our strong, Our continuing focus on In line with our customer- range of factors. High inflows storage in the near future. diversified business shielded safety during a busy year of focused strategy, into southern hydro lakes Genesis Energy’s share of the final result from extremes engineering projects at Huntly Genesis Energy is continuing in the first half of the year gas and oil production from in the wholesale market. We and Tekapo was rewarded by to invest in new and practical resulted in softer wholesale the Kupe field continues to have produced a pleasing an exemplary safety record. energy solutions that are prices, which resulted in our provide a steady source of financial result and anticipate Our total recordable injury valued by our customers. traders buying output more revenue to the Company. consistent and reliable frequency rate declined by Our practical innovations and cheaply from the wholesale earnings in the coming year. 68 per cent to 2.36 incidents ways to save on energy bills market rather than generating Strong relationships per million hours worked from are winning new customers it ourselves. At Genesis Energy we believe 7.32 in 2011/2012. However, we and reducing our customer Two significant maintenance that you are as good as your are not resting on our laurels turnover rate to well below outages also impacted word. It is important that we and will continue to establish the industry average. the Company’s generation are easy to deal with and international best practice in Operational performance output. These were the major have great relationships ALBERT BRANTLEY this area. Chief Executive planned overhaul of Unit 5, with our neighbours. We The varied climatic conditions A committed customer focus a combined cycle gas turbine work hard to build strong of the year – with high at the Huntly Power Station, relationships with customers, From a retail market rainfall in the first half and a in October and the 14 week iwi and the community, perspective, 2012/2013 was significant drought and warm outage of the Tekapo Canal and to support and manage characterised by increasingly temperatures in the second and power stations during the environments in which tactical and aggressive half – impacted both our retail January to April. we operate. An example of marketing campaigns. As the and generation businesses. opportunity for growth by Excellent construction While our customer base building new assets diminishes conditions during the summer grew by a net 20,000 new for our competitors, all are now months combined with good

genesis energy annual report 2013 / 9 Te Pūrongo a te Tiamana.

E hari ana Poari ki te Ahakoa i whai pānga te mākete puta noa i te tau. I heke ngā I tēnei tau i tutuki i te ehara ko ngā tatauranga noa tuku i te Pūrongo ā-Tau a hiko rarawe o Aotearoa ki ngā whiwhinga mā te iwa ōrau mai Kamupene te wāhanga tuatahi iho te mea nui engari ko te Genesis Energy mō te tau āhuatanga etoeto nā te kaha i te $2,265 miriona ki te $2,070 o te Kaupapa Whakapai i te whakapai haere tonu. o te ua i te tuatahi, whai muri miriona, nā te iti ake o ngā Kōawa o Tekapo i te wā tika me 2012/2013, he tau pūtea Ko tā mātau aronga haere tonu utu rarawe i noho pāraharaha te tahua tika. Ko te whakatau tēnei i whiwhi moni hua more ko te taurakitanga, i ora ai a ko te waihanga i tētahi tūāpapa ngā putanga pūhiko mai i ngā ki te haumi i waenga i te $145 kaha i roto i ngā āhuatanga Genesis Energy nā te kohinga kaha e āta whakatakoto ana i whakanaonga a te Kamupene whakapātaritari o te mākete whakanaonga wai hiko, ngāwha miriona me te $155 miriona i ngā kawenga takohanga me me te arotautanga haere tonu me te āhuarangi mahana i whai nā tō mātau aronui ki te me te hau puta noa i Aotearoa whāia hei whakapūmau i te ngā tūmanako hauora me o ā mātau rawa tā mātau pānga ki ngā hokohoko hiko, wheako kiritaki, ā mātau rawa i kaha ai te whakaputa hiko oranga wā roa o te Kōawa, e te haumaru mō ngā kaimahi aronui ināianei, pae tata hoki. kapuni hoki. kōpaki rawa kanorau me ahakoa te āhuarangi me te toitū ana tō mātau āheinga ki me ngā kaikirimana katoa a Ko te whakapai haere ake i tētahi tauhokohoko māia. nui o ngā putunga wai hiko. Ko ngā moni utunga i mua i ngā te whakanao hiko i ngā teihana Genesis Energy, tae atu hoki ngā whakahaerenga me te Ko Genesis Energy tonu te Nā ēnei rawa ngāwari, me whakapaunga pūtea more, tāke wai hiko e rua i Tekapo i roto i ki te iwi whānui. whakarite kei te tika ngā mahi kaihoko nui rawa i Aotearoa, te whai ngātahi o tā mātau moni whiwhi, hekenga uara, ngā tau maha e tū mai. kia whiwhi ko ā mātau kiritaki haumi rautaki ki te papa Hinu Tirohanga e nui atu i ētahi atu kamupene whakaitinga wāriu rawa, ngā He whakatutukitanga hauora kia whai whaihua ai rātau tae He tino pai te kaha whakanaonga mō te hiko, kapuni me te me te Kapuni o Kupe, e taea huringa uara tika me ētahi atu me te haumaru kōhure atu hoki ki te whakatutuktianga ai e mātau te tuku whiwhinga hua, hapa hoki (EBITDAF) i hiko o Aotearoa, ā, he maha ngā LPG ki ngā kiritaki maha rawa E pūmana ana te Poari me ngā pūtea a te Kamupene. aumou me te uara ki ngā heke mā te 13 ōrau mai i te kōwhiringa a Genesis Energy puta noa i ngā wāhi maha kaiwhakahaere matua o Genesis E kaha ana, e whānui hoki ngā $387.3 miriona ki te $336 mō ngā whakawhanaketanga rawa o Aotearoa. kaiwhaipānga me ngā kiritaki. whiwhinga a Genesis Energy, Energy ki te hauora, haumaru whakanaonga ngāwhā me te miriona. I runga i te aronui ki e tiakina paitia ngā rawa me te Ko tā mātau kōkiri ki te Whakatutukitanga pūtea me te oranga o ā mātau hangarua a muri ake. Engari, te poipoi me te whakatipu i whai i tētahi tūāpapa kiritaki kumekume mai me te pupuri mauroa kaimahi, kaikirimana. kāore mātau i te waihanga tana pakihi i Aotearoa, kua tipu haere tonu. He ora te ao i ngā tino kiritaki mā te E hari ana te Kamupene ki te Nā runga i ō mātau kaha ki te rawa hou i roto i te wā poto i whakatoatoa te āhua o te anamata mō Genesis Energy. whakarato utu here whai pūrongo i te Hua More i Muri whakahaere a Genesis Energy tiaki i ā mātau tāngata i tino iti te mea e taea tonu e mātau painga me ngā ratonga hou o te Tāke (NPAT) o te $104.5 i ngā utu whakahaerenga me rawa ngā wharanga, ā, i iti ake te whakarato māia i ā mātau te āhuatanga matua i whiwhi miriona, he pikitanga o te 21 ngā whakapaunga rawa, ngā te wharanga o ngā kaimahi i te kiritaki mai i te mākete rarawe. kiritaki hou tata ki te 20,000 ōrau mai i te tau o mua atu whakahaere mōrea hihiri me mahi i tēnei tau, he tutukitanga Ko te whakatītina haere kia nui ki ā mātau kamupene (2012: $86 miriona). ngā hua me ngā ratonga whai whakaharahara mō mātau. ake te uru mai me te noho mai KAHURANGI JENNY SHIPLEY, Genesis Energy me Energy He hua kaha tēnei ahakoa uara i waihangatia ai kia tutuki Ahakoa tēnei tutukitanga hira o ngā kiritaki whare, pakihi iti DNZM Online i te tau e arotakehia ana. ngā āhuatanga mākete kōaro ana whāinga pūtea. ā mātau, e mōhio ana mātau hoki ki roto i a Genesis Energy Tiamana

Te Pūrongo a te Manahautū.

Kua whakaratohia anō ki ngā maikitanga 2.36 mō ia E ai ki tā mātau rautaki aronga 5,354GWh (2012: 5,429GWh) Nā ngā āhuatanga hanganga Rāhui Pōkeka i roto i ngā tau E whakapau kaha ana mātau ki o te Kamupene, me ngā e Genesis Energy tētahi miriona haora mahi mai i te 7.23 kiritaki, kei te haumi tonu a me te 5.0PJ (2012: 5.4PJ). tino pai rawa i ngā marama tata, ā, e heke haere ana te auau te waihanga whanaungatanga whakaritenga whakawetotanga whakatutukitanga pūtea, pakihi i te tau 2011/2012. Engari, e kore Genesis Energy ki ngā hīraunga I piki ngā hokohoko o ngā o te raumati me te pai o te o te tuku i ēnei ki te mākete kaha me ngā kiritaki, Iwi me te whakatikatika, nā te pakihi kaha hoki mō te tau 2012/2013 mātau e kiriora, ā, ka whai tonu whakanao pūngao hou, Pātara LPG mā te 22 ōrau ki whakatinana i te kaupapa i rarawe nā te uru mai o ngā hapori, me te tautoko me te kanorau kaha i āraihia te hua i roto i ngā āhuatanga mātau ki te whakatinana i ngā whaitake hoki e uaratia ana e te 2,445 tana me ngā kiritaki oti pai ai ngā mahi whakapai whakanaonga hou ki te mākete whakahaere i ngā taiao e mahi whakamutunga mai i ngā whakapātaritari o te ahumahi, mahinga pai rawa o te ao i roto i ā mātau kiritaki. Nā ā mātau LPG mā te 27.6 ōrau, ki te 9,708 i te Kōawa i mua o te rā i e hou ake, e iti ake hoki te utu ana mātau. Ko tētahi tauira āhuatanga tino rerekē i roto āhuarangi hoki. tēnei wāhanga. auahatanga, tikanga whaitake i te mutunga o te tau. I noho whakaritea, ā, e rima noa ki te whakahaere. I muri i ngā o tēnei ko te mahi ngātahi a i te mākete rarawe. hoki hei whakaiti i ngā utu iho ngā wharanga tino paku tau 30 o te whakarato kōhure ki Waikato-Tainui, Genesis Energy Ko ngā mahi whakaputa kē i te Pūmau ki te Aronga Kiritaki pāraharaha ngā putanga pūhiko Kua whakaputahia e mātau pakihi Genesis Energy e noho pūngao kei te whiwhi kiritaki nā ngā āhuatanga whānui nei. Kua whakaritea anō he Aotearoa, i whakaputuhia mō te me Waahi Whaanui Trust i tēnei tētahi hua pūtea pai, ā, E ai ki te tirohanga mākete, i te tonu tō mātau huanga matua, hou mātau me te whakaiti hoki maha. Nā ngā rerenga wai teitei whakawetotanga tuarua, poto wā roa tētahi o ngā whakahiko tau ki te whakahaumanu ake i te e tūmanakohia ana ngā tau 2012/2013 i tino puta ngā kaha hoki. Ko te kounga o ā i te wehenga atu o ngā kiritaki ki ngā roto wai hiko o te tonga i ake mō te wāhanga hanganga o waro/kapuni 250 MW e whā i Roto o Wāhi i Rāhui Pōkeka. whiwhinga aumou, tika hoki kaupapa whakahau hokohoko mātau tāngata, tā mātau kōpaki ki raro rawa atu o te toharite te wāhanga tuatahi o te tau i iti tēnei raumati. te Teihana Hiko o Rāhui Pōkeka I tino whai hua te pātuitanga o i roto i te e tū mai. rauhanga ake, whakatuki hoki. kanorau me tā mātau rautaki ahumahi. ake ngā utu rarawe, i tahuri ai ā I uru te te Wāhanga 5, te i te marama o Hakihea 2012, te Kamupene me ētahi kaupapa Ina iti haere te whai wāhitanga tino mārama mō te whakanui mātau kaihokohoko ki te hoko pukuhiko kāpuni kakama i te ā, kua whakarite anō ki te taiao i tēnei tau. Pērā i ā mātau o ngā kaiwhakataetae mō te Whakatutukitanga ake i ā mātau kiritaki i a mātau putanga mai i te mākete rarawe Teihana Hiko o Rāhui Pōkeka, whakaputu i tētahi atu i roto i te mahi me Te Papa Atawhai mō tipu ma ngā rawa hou, kei te aro Whakahaerenga e rapu māiatanga nui ake me tēnā i te whakanao haere tonu. ki ngā mahi arumoni i te wā tūtata. te Kaupapa Whakaora Whio katoa rātau ki te whakatipu i ā Nā te tino rerekē o te āhuarangi te whakahaere pai ake i ngā Hōngongoi 2007. I te Whiringa- Nā te wāhanga whakanaonga ā-Motu, ā, i rāhuitia ai ngā whio rātau kōpaki kiritaki. I urupare i tēnei tau - me te tino kaha o I whai pānga anō ngā whakapaunga o ā mātau rawa, ā-nuku 2012 i wetewete mai kapuni me te hinu a Genesis takirua tata ki te 156. ALBERT BRANTLEY a Genesis Energy ki tēnei wero te ua i te wāhanga tuatahi me whakawetotanga whakatikatika Manahautū te take e tino pai rawa atu mātau te wāhanga mō te wā tuatahi Energy mai i te papa o Kupe i mā te whakahōu momoho tētahi tino taurakitanga me e rua i whakaritea ki te putanga Tirohanga i ō mātau kaiwhakataetae. pūhiko o te Kamupene. Arā mai i tōna whakaritenga mō aumou ai ngā whiwhinga ki te i te waitohu, ngā whakahau ngā pāmahana mahana i te E pūmau ana a Genesis Energy Nā te aronui tonu ki te taha ko te whakatikatikatanga nui tana ārohitanga matua 50,000 Kamupene mai i reira. kumekume hei whakaemi i wāhanga tuarua - i whai pānga ki te whakatutuki i ana whāinga haumaru i te tau e pokea o te pukuhiko kāpuni kakama haora. I kitea i te tino pai rawa ngā kiritaki kora taharua me ki ā mātau pakihi hokohoko me Ngā whanaungatanga kaha me te waihanga uara kaiwhai ana mātau e ngā kaupapa Wāhanga 5 i te Teihana Hiko o atu tōna āhua i muri i te rima tētahi huihuinga ratonga te whakanaonga. E whakapono ana mātau i pānga, kiritaki pūmau hoki hangatanga i Rāhui Pōkeka me Rāhui Pōkeka i te Whiringa-ā- tau e haruru pai ana me te kore hou e ai ki tō mātau tūranga Ahakoa i tipu haere te nui Genesis Energy ki te mana o mā te whakatinanatanga o te Tekapō, i whaihua ai tā mātau nuku me te whakawetotanga raruraru. mataho i roto i te mākete me te o ā mātau kiritaki mā te te kupu. He mea nui ki a mātau mahere pakihi. whakatutukitanga haumaru. whakaurutanga o ngā Pūrere 14 wiki o te Kōawa o Tekapō E āta piki haere ngā utu o te 20,000 kiritaki hou, i heke kia ngāwari tā mātau mahi tahi Ahakoa i whai pānga te I heke te auautanga o ngā Ine Matatau e ā mātau kiritaki me ngā teihana hiko mai i te tiaki me te whakahaere i ngā ngā hokohoko o te hiko me me te whai whanaungatanga raumati wera, maroke me te wharanga i tuhia mā te 68 ōrau hiko 60 ōrau. Kohitātea ki te Paenga-whāwhā. wāhanga waro me te kapuni i te kapuni ki ngā kiritaki ki te pai me ō mātau hoa nohotata. roa ki te whakatutukitanga

genesis energy annual report 2013 / 11 Key Generation BUSINESS Assets we’re Electricity Market REVIEW. Share in iT TO

20% DELIVER. Northland 668,485 Genesis Energy doesn’t just Genesis Energy customers CUSTOMER ACCOUNTS deliver energy. Underpinned enjoy: by a strong customer service • Friendly Kiwi service from ethic, Genesis Energy delivers our customer contact competitive pricing, the 18% centre in Hamilton Huntly right tools and the latest Power Station product innovations. • Online bills and online services based on A continued focus on customer 1,448MW Advanced Meter data service and a compelling customer proposition resulted • The highest penetration in Genesis Energy increasing of Advanced Meters 48% its electricity, natural gas and • New energy usage apps Waikato 13% LPG customer base by 20,000 on smartphones and tablets Gisborne accounts, despite significant 27% competition. • Pricing options that reflect ELECTRICITY Waikaremoana their lifestyles Hydro Scheme However, warm weather conditions, particularly in • Combined bills for electricity MARKET SHARE 48% and gas customers Taranaki 138MW April and May 2013, reduced customer demand for • New Zealand’s first 43% electricity and gas. LPG sales Advanced Meter Manawatu/ Tongariro were up 22 per cent as the time-of-day pricing 44% Whanganui Hydro Scheme Company continued its drive GAS MARKET to acquire more bottled LPG • Smart appliance and solar 362MW customers. power offers from global SHARE technology leaders. 6.5% Kupe Gas Marlborough and Oil Field During the year, Genesis Energy Genesis Energy maintained 50% consolidated its position an average churn rate of Wellington 31% share as the largest New Zealand its electricity customers of

4.5%West Coast electricity and gas retailer approximately 16 per cent Hau Nui with a 27 per cent share of (on an annualised basis) Wind Farm the electricity retail market during the past three months, and a 44 per cent share which was three percentage 8.65MW of the reticulated gas market points lower than the (by customer accounts). industry average. Customer satisfaction, based on regular 20% Practical innovations and Canterbury surveys, has also improved in smart energy solutions are the past year to 94 per cent Tekapo winning new customers from 93 per cent a year ago. Hydro Scheme and further reducing 185MW customer turnover rate. GAS 115,003

LPG 9,708

15%Otago TOTAL CUSTOMERS ELECTRICITY1 668,485 543,774

6.4%Southland

1. Excluding vacant properties with ICPs (installation control points). POWER STATIONS 10GENERATING CAPACITY 2,142MW

genesis energy annual report 2013 / 13 We asked our New offers customers During the year, Genesis Energy what works advanced further towards providing customers with for them practical products with the credit issues, we work closely roll out of a time differential On 6 May 2012, Genesis Energy with Work and Income electricity price for customers The Company is focused on officially launched ‘Tomorrow New Zealand and the New in Christchurch and Hamilton driving ongoing reductions in Street’ as New Zealand’s Zealand Federation of Family and two new digital-based the cost to serve customers first advanced energy Budgeting Services. We services. while providing them with neighbourhood. The programme also have programmes to Genesis Energy uses an uses a mixture of research a simple engagement that comprises 15 households, and The MyTime package offered support customers facing independent market research methodologies and advanced responds to their needs. one school, on Auckland’s Genesis Energy residential severe hardship as well as company to track customer metering technology to North Shore. The houses are customers the ability to save programmes to support In the course of the year, satisfaction levels and obtain energy usage data all located close together and money by switching energy- vulnerable and medically Genesis Energy received other customer indicators. for tracking total energy each house has become a hungry appliances on late in dependent customers. 1.29 million calls. Customer satisfaction has use, and usage behaviour. consumer-participant in the the evening or early in the improved to 94 per cent The project is a way Delivering great customer real-world testing of a diverse morning to take advantage of (up from 93 per cent in 2012). for Genesis Energy to Tomorrow Street initiative Customer service is an essential part range of energy-saving off-peak and shoulder rates. demonstratein a real world includes 15 households. of maintaining customer Customer satisfaction is technologies and customer Service context new tools to reduce In addition, Genesis Energy loyalty. Energy Online’s based on the survey question: centric products. residential energy use. launched the MyEnergyCoach Genesis Energy’s contact focus on delivering great “Thinking about all aspects of With a clear focus on customer These tools include a online service for customers, centre in Hamilton, and its customer service was the service provided to you, innovation, Genesis Energy has multi-rate usage tariff, and the MyMeter smart phone online services play a major recognised in 2012 by being how satisfied are you with committed to this ambitious and advanced hardware and tablet app’ which helps role in ensuring that the awarded the Roy Morgan the overall performance of qualitative and quantitative such as heat pump water our customers to decide Company continues to meet Electricity Provider of the Genesis Energy, where 0 is research project for a duration heating and photovoltaic their energy goals, assess the high standards it has Year in 2012 for the Customer extremely dissatisfied and 10 of 18 months. Tomorrow Street solar installations. 15 their homes’ current energy set for customer service. Satisfaction Award. is extremely satisfied?”. performance and create a Retail customers and sales BRAND Innovation customised energy plan.

REFRESHED is at the MyMeter makes it simple Year ending Per cent TO REFLECT core of the to set up usage alerts and March Units 2011/2012 2012/2013 change keep an eye on current and 1 BUSINESS Tomorrow estimated monthly usage. Electricity Customers (000s) 529,342 543,774 2.7 MyMeter can be used DIRECTION Street GWh sales 5,429 5,354 –1.4 anywhere, anytime. The Company has maintained project Gas Customers1 (000s) 111,578 115,003 3.1 its market leadership The results from Tomorrow with its strong dual brand ADDRESSING PJ sales 5.4 5.0 –7.4 Street were impressive with model, including Energy the average overall savings ACCESS TO Online, and by continuing to LPG Customers (000s) 7,610 9,708 27.6 for all households recorded provide a great experience ENERGY at 17.7 per cent from April Kilotonnes sales 2,002 2,445 22.1 to its customers. 2012 to June 2013. While Genesis Energy continues to 1 Excluding vacant properties with ICPs (installation control points). On 24 March 2013, Genesis this saving in any one month offer a range of services to improve or maintain customer Numbers above are per product. Note that some customers purchase more than one product and therefore could fit Energy launched a refresh would be a great achievement into more than one category. of its brand with the tagline on its own, these savings access to electricity, gas and ‘We’re in it for you’. The “With MyTime Tariff, continued through the year. customer support services. statement reflects a customers can save money “Eight of the 15 Tomorrow The findings from Tomorrow Our Customer Contact continuation of the strategy by shifting energy use to Street households saved Street have directly led to the Centre in Hamilton offers to place Genesis Energy’s later in the evening.” more than 30% on their development and roll out of an interpretation service for customers and the communities energy consumption in new products and services customers who speak English in which it operates at the March 2013 compared for our customers, including as a second language. centre of its business. with that of March 2012.” the MyMeter app, solar power We also offer a broad range offers and MyEnergyCoach. of payment options, including EvenPay, which gives customers certainty over 12 months of even-sized payments. In order to help our customers who have budgeting and

genesis energy annual report 2013 / 15 we’re in iT TO PROVIDE ENERGY. 3,000 Installed capacity and output Maintenance The Company maintains 2,750 2012/2013 14 by station (GWh) programmes disciplined investment in its WEEKS 2,500 2011/2012 power stations and hydro Tekapo Hydro Scheme closed The Company’s asset- schemes to deliver flexibility for canal remediation works 2,2503,000 management strategy is and adaptability from its 2012/2013 2,0002,750 geared to create a better electricity generating assets. balance between reliability 2011/2012 This gives Genesis Energy the 1,7502,500 and flexibility to maximise ability to move quickly, adapt value. The programme 1,5002,250 to variations in weather and requires sensible investment meet the changing needs of 1,2502,000 in maintaining the Company’s customers and the market. Kupe generation assets. 1,0001,750 While the Company’s performance generation portfolio can 1,500750 Tekapo Canal take advantage of its diverse Genesis Energy holds a 31 per 5001,250 locations and fuel types to cent interest in the Kupe Oil remediation reduce some of the wholesale and Gas field. The Company 1,000 250 Genesis Energy acquired market variability, the also holds supply contracts for 750 the Tekapo Hydro Scheme Company’s overall trading 100 per cent of the Kupe gas. 0 Huntly Units Huntly Huntly Tokaanu Rangipo Mangaio Tuai Piripaua Kaitawa Tekapo A Tekapo B Hau Nui in June 2011, knowing that position was impacted by 1 to 4 Unit 5 Unit 6 (240MW) (120MW) (2MW) (60MW) (42MW) (36MW) (25MW) (160MW) Wind Farm Kupe has now been in 500 the Tekapo Canal required weather extremes during (4x250 MW) (400MW) (48MW) (8.65MW) commercial production for major remediation work if it the reporting year. 250 three years and has been a key were to continue in reliable Higher-than-average water contributor to the Company’s 0 service for years to come. Huntly Units Huntly Huntly Tokaanu Rangipo Mangaio Tuai Piripaua Kaitawa Tekapo A Tekapo B Hau Nui inflows into hydro lakes in revenue over the last 12 1 to 4 Unit 5 Unit 6 (240MW) (120MW) (2MW) (60MW) (42MW) (36MW) (25MW) (160MW) Wind Farm Early engineering design (4x250 MW) (400MW) (48MW) (8.65MW) the first half of the year and In December 2012, after 30 A second dual fuel unit months. Genesis Energy’s and scoping work for the reduced customer demand years of service, Huntly Power remains scheduled for Kupe investment is capable Generation outputs remediation work started the suppressed wholesale prices Station’s Unit 3 was placed long-term storage by the of further significant upside day the scheme was acquired. and subsequently output into long-term storage, as end of 2014 and, as it did in value. Per cent The Tekapo Canal remediation from Genesis Energy’s plant. previously signalled. The Unit with Unit 3, the Company Generation GWh 2011/2012 2012/2013 change Genesis Energy’s share of works require the building However, the second half of is available to be returned to has commenced a reduced the sales for 2012/13 period of temporary coffer dams, the year was dominated by service should the need arise. maintenance programme in Total Generation 8,467 7,212 -14.8 of operations of the Kupe bridge repairs, the de- low inflows into the North At some future point in time anticipation of the process. Oil and Gas field included watering of sections of the and South Island hydro lakes final decommissioning will Gas 3,041 2,732 -10.2 The remaining two dual 5.6PJ of gas, 509 kilo-barrels man-made canal, repair of the until significant rain in June occur, and a return to service fuel units continue to offer of oil and 24 kilotonnes of canal surface and a culvert, returned most catchments to will not be possible. Coal 2,613 2,259 -13.6 economic value within the LPG. Kupe contributed $109 and installation of a new liner average levels. generation portfolio. The million, or a third of the Hydro 2,788 2,200 -21.1 material sourced from Carpi In addition, the planned Company will continue to Company’s EBITDAF. Genesis Tech BV. closure of the Tekapo invest in plant flexibility, Energy’s share of LPG and oil Wind 25 21 -16.0 The project, estimated to cost Hydro Scheme for 14 weeks’ explore enhancement production is proportionate between $145 million and remedial work affected the opportunities, improve to its 31 per cent shareholding Thermal 5,654 -11.7 4,991 $155 million, is a significant Company’s total generation outage planning, trading in Kupe. However, 100 per civil engineering project for output which was down strategy and fuel strategy cent of total gas output from Renewable 2,813 2,221 -21.1 the Company and the country. almost 15 per cent compared and reduce overheads in Kupe has been contracted The Tekapo Canal provides to the previous year. order to optimise these by Genesis Energy. Gas in North Island 7,582 6,431 -15.2 all the water for the 160MW assets in the market. excess of the requirements While drought conditions in Tekapo B power station, of the generation fleet is South Island 885 781 -11.8 April and May pushed the which discharges directly sold onto the wholesale average wholesale price into Lake Pukaki. market or bilateral deals are beyond $150 per megawatt negotiated with a number hour, the average price of counterparties including received per megawatt hour some of New Zealand’s for the year was $75.60, major businesses. down from $91.10 in the previous year.

genesis energy annual report 2013 / 17 In the reporting period, Genesis Energy completed 70 designs of the remediation work, agreed terms with YEARS contractors, consulted with After 70 years of service, stakeholders, gained consents the two original transformers for the project and completed Huntly Unit 5 gas turbine at Piripaua Power Station Stage One of the works. removed for inspection were replaced On 10 January 2013, the Tekapo Canal was closed and the Tekapo Canal remediation works formally began. The Work proceeded at a high Piripaua work required both Tekapo pace through January, transformer A and B stations being February and March. The withdrawn from the electricity exceptionally dry conditions upgrade market for 14 weeks. A this past season along with After 70 years of service, second shorter outage is good project management the two original generator planned for the next summer led to the completion of the transformers at Piripaua Power construction season. first phase ahead of time. Station were replaced during In partnership with Fish All four coffer dams were 2012/2013. Replacement and Game and Ngai Tahu, removed by 10 April 2013, transformers were installed the Company successfully and the Tekapo Canal was and other maintenance work salvaged 800 salmon and brought back into service was undertaken during a four- trout, and thousands of native for generation at 10am month outage at the station fish from the dewatered on 12 April 2013, nine days within the Waikaremoana sections of the Canal. ahead of schedule. Hydro Scheme.

Unit 5 – 24-hour-a-day, seven-day- Employee a-week work programme. first major Staff from Genesis Energy, achievement Mitsubishi Heavy Industries, Amitoj Singh, an electrical inspection Progen, Electromech and engineer at Huntly Power Unit 5, the combined cycle Singers were involved. 800 Station won the Electrical gas turbine at the Huntly SALMON AND TROUT The outage started on Engineers Association (EEA) Power Station, went into recovered from dewatered 15 October 2012 and finished ‘Professional Development’ commercial operation in July sections of the Tekapo Canal on 21 November 2012. The Award. The EEA is highly 2007. In October 2012, the size and scope of this type of selective over whom they unit was disassembled for the engineering outage presented recognise for this award and first time since commissioning an opportunity to introduce apply a tight set of criteria. for its programmed 50,000 new initiatives in the drive The judging panel considers hour major inspection. to provide a safer work the character, academic The inspection required the environment and resulted in achievements and leadership removal of the gas turbine, zero recordable injuries. potential of the entrant. steam turbine and generator rotors for the first time since they were assembled. In addition, Genesis Energy implemented preventative maintenance strategies and 50,000 inspections on the balance HOURS OF SERVICE of plant systems. A multitude Huntly Unit 5 gas turbine – first of highly skilled personnel major overhaul finds the unit was required to complete this in excellent condition after work, with up to 130 people 50,000 hours of service on site during the day and 65 on nights supporting the

genesis energy annual report 2013 / 19 we’re in iT TO generate RESPONSIBLY.

Genesis Energy takes a whole-of-company approach to addressing its impact on The total indirect energy Carbon intensity profile climate change, both through consumed (purchased of our generation portfolio the Company’s own activities electricity) to run our business ENvironmental and emissions and through in 2012/2013 was 13,057 GJ the activities of its customers management 1000 (7 per cent lower than it was in and stakeholders. 2011/2012). With this decrease, Genesis Energy manages and Genesis Energy’s Greenhouse Scope 2 emissions are 13 per operates an Environmental 900 Gas Inventory has been cent lower than they were Management System prepared in alignment with last year due to lower (‘EMS’) which ensures that 800 the World Business Council consumption at both our environmental and social as required under the for Sustainable Development generation and our office sites. awareness is core to the Resource Management Act 700 /GWh Greenhouse Gas Protocol operation of the Company. (1991) and via agreements 2 Given the nature of the (GHG Protocol) and is shown Genesis Energy’s Environmental with affected parties, iwi, electricity market in New in the table below. Values (in respect to and key stakeholders. 600 Zealand, it is not possible to

environmental and stakeholder CO Tonnes The Company’s total exactly identify the primary The environmental effects WE OPTIMISE management) form the 500 generation emissions were energy source of purchased of generating power are Company’s Environmental 12 per cent lower in 2012/2013 electricity. Therefore, the assessed and managed on Policy and its commitment than they were in 2011/2012, primary energy source has a real time basis via a range 400 to compliance with all and 24 per cent higher than been estimated using the of monitoring networks and environmental legislation. they were in 2010/2011. The Energy in New Zealand 2012 operational practices that 300 2012/2013 result reflects Calendar Year publication The Company manages ensure adverse effects on Jul 00 Jul 01 Jul 02 Jul 03 Jul 04 Jul 05 Jul 06 Jul 07 Jul 08 Jul 09 Jul 10 Jul 11 Jul 12 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 lower total direct energy from the Ministry of Business, environmental effects the environment are avoided, consumption of fuel (coal Innovation and Employment. through resource consents remedied or mitigated. Total Thermal

and gas) at our generation Genesis Energy emissions profile Genesis Energy 2012/2013 indirect energy 2012/2013 (electricity) consumption by primary source sites (down from 51 PJs last year to 45 PJs in 2012/2013. Genesis Energy Per cent electricity These results are a reflection 2010/20111 2011/2012 2012/2013 change NZ electricity consumption by of lower demand of thermal Scope 1: Direct GHG emissions (tCO e) Primary source of generation by primary source generation due to firmer 2 primary source (%)1 (GJ) national hydro conditions and Generation 2,477,137 3,736,488 3,276,467 -12 Hydro 52.8 6,890 changing market dynamics. Petrol (fleet fuel use) 202 193 18 This demand has resulted in 228 Gas 19.6 2,563 YOU ENERGISE decreased generation from Diesel (fleet fuel use) 116 144 145 0 Coal 7.7 1,011 the Company’s coal-fired and Total Scope 1 2,477,456 3,736,826 3,276,840 -12 Geothermal 13.6 1,778 gas-fired plants. Wind 4.8 625 The carbon intensity of the Scope 2: Indirect GHG emissions from consumption of purchased electricity (tCO e) Bioenergy 1.3 175 Company’s thermal plant is 2 Other thermal 0.1 14 calculated by dividing annual Purchased electricity – generation facilities 124 173 131 -24 CO emissions (tCO e) by the Total 100 13,057 2 2 Purchased electricity – offices 450 363 337 -7 annual net generation (GWh). 1 Source: Energy in New Zealand 2012 Calendar Year Edition from the Total Scope 2 574 536 468 -13 Our vehicle fleet’s fuel use of Ministry of Business Innivation and Employment: Figure F.2a p.63. petrol and diesel increased Scope 3: Other indirect GHG emissions (tCO2e) from 4,674 GJ to 5,178 GJ. Air travel 277 415 488 18 This is a reflection of increased business activity Rental cars and mileage3 53 46 93 103 in 2012/2013. Total Scope 3 330 461 581 26

Total Scope 1, 2 and 32 2,478,360 3,737,822 3,277,889 -12

1 SF6, methane (CH) and nitrous oxide (NO) are not included in our emissions profile. 2 Note that all of the emissions in this inventory are on an operational control basis. There are no relevant emissions to be identified by Genesis Energy on an equity basis. 3 Mileage volume has been recalculated in 2012/2013 to reflect a correction to the cost-to-kilometre ratio of 0.839. Lower 12% total generation Taking this correction into account, the actual increase is 92% over the last year (not 103%). 2011/12 is: emissions in 2012/2013 Rental cars and mileage revision: 48 93 94 compared to 2011/2012

genesis energy annual report 2013 / 21 we’re in iT for the health and well-being of our TEKAPO employees. CANAL At Genesis Energy, workplace health and safety is non- The Tekapo Canal negotiable. Genesis Energy Remediation Project works to embed workplace continued our safety focus. health and safety in the This work involved four major site, the Company is pleased DNA of our people and the contractors, Carpitech NZ, to report that there were no contractors we employ. Fulton Hogan, Taylors and Lost-Time Injuries, no medical The Company values its a Hungarian subsidiary of treatment injuries and only five people and human life above Safe Carpitech which carried out first-aid injuries in six months. all else and is targeting world- the highly technical liner However, an incident of a truck adhered to by its own class performance in health employee installation works. In addition, driver losing control of his employees, but also being and safety by 2014/2015. It numerous smaller contractors vehicle and rolling off the canal embraced by contractors. achievement and suppliers made up the road was of concern and was recognises that excellence More than 400 workers balance of the workforce fully investigated. There was is integral to excellence in Staff enthusiasm and received a safety induction for which reached more than no injury in this incident. other business parameters, commitment to health and the site and all contributed to 400 at its peak. such as quality, productivity safety is exemplified by This result is a reflection of the success of the project’s 400 and profitability. It is also vital Louisa George, Industrial With more than 60 items Genesis Energy’s priority safety performance, reflecting Workers inducted to Genesis Energy’s people Chemist in the Chemical and of mobile plant on a on health and safety in the the health and safety culture onto the Tekapo Canal and, ultimately, to the future Water Services team, who won geographically challenging workplace not only being on site. Remediation Project success of the business. the Safeguard New Zealand

A combination of efforts has Workplace Health and Safety HEALTH AND Health and safety metrics helped drive down safety Award for 2013, in the Most Genesis Energy Total Recordable SAFETY POLICY 2010/2011 2011/2012 2012/2013 incidents to a record low Total Injury Frequency Rate1 Influential Employee category. Workforce Injury Rate – Total Injuries x 200,000/hours worked 18.38 14.27 Recordable Injury Frequency Louisa is seen as a role Genesis Energy is committed 8.28 Rate (injuries per million 2009/ 2010/ 2011/ 30 June model for health and safety to ensuring zero injuries to Occupational Disease Rate – hours worked) of 2.36 (7.32 in 2010 2011 2012 2013 at the Huntly site. She is a all employees and others Total cases of occupational disease x 200,000/hours worked 0 0 0 2011/2012). Fatalities 0 0 0 0 key influencer and champion who may be affected by the in leading improvements in Per cent lost days (Lost days / total days worked) 0.01% 0.01% 0.01% ZIP (Zero Incident Process) Total recordable injury 33.0 31.0 7.32 2.36 Company’s operations. health and safety at Genesis is at the heart of Genesis frequency rate Per cent absent days (Absentee days / total days worked) 5.09% 4.50% Energy, particularly in the Genesis Energy believes 4.53% Energy’s health and safety % change year on year 6.06 76.00 68.00 critical areas of safe hazardous that outstanding business strategy. This programme is Lost Time Injury Frequency Rate (LTIFR) substances management performance requires (Lost time injuries x 1,000,000 / actual hours worked) 4.35 3.66 provided by Sentis, a world- 1 Total recordable injury frequency rate: Lost-time injuries + Restricted work 1.18 injuries + Medically treated injuries) x 1,000,000/actual hours worked. and safety management of outstanding health, safety and leader in the application confined spaces. well-being performance, and Total Recordable Injury Frequency Rate (TRIFR) of psychology to safety, that all injuries are preventable. ((Lost time injuries + Restricted work injuries + Medically treated injuries) x 1,000,000 / actual hours worked) 31.00 7.32 2.36 leadership development and By the end of June 2013 Since the introduction of This is a critical success factor wellbeing in the workplace. ZIP all scheduled ZIP refresher the I.SEE.IT tool in October for Genesis Energy. Note: “Workforce” is defined as permanent and fixed term employees. Employees as at 30th June 2013 focuses on the psychological training was completed, and 2012, near miss and safety This means: and cognitive behaviours of plans are underway to ensure observation reporting has staff as the core drivers to this training continues and increased by 80 per cent • Implementing Safety Practice and Company duty, to both themselves with a broad range of enable practical workplace that the ZIP principles are fully on October, November Management Systems that: Standards and those around them, opportunities for employee health and safety change. embedded in how employees and December 2012 when to ensure safe practices participation – Minimise exposure to • Setting clear and achievable work at Genesis Energy. compared with the same are adhered to at all times As of 30 June 2013, 837 critical health and safety health, safety and well- • Requiring contractors, period for the previous year. current employees had In tandem with ZIP, the risks for all employees being improvement targets • Establishing health, safety consultants and visitors to Near miss reporting has completed ZIP training. I.SEE.IT reporting tool is and others who may for the Company which are and well-being assurance manage health and safety increased by 189 per cent adding considerable value be affected by the regularly reviewed processes to verify that key in line with this Policy and the reporting of safety to the Company’s health Company’s operations health and safety risks are observations has increased by • Ensuring all employees, • Ensuring all contractors and safety performance. identified and managed 392 per cent. Learning from – Are designed to achieve visitors and contractors undertake relevant health in an effective and timely these incidents is part of the continuous performance conform to Genesis and safety induction manner continuous improvement cycle. improvements Energy’s health and safety training and task-specific requirements • Taking a proactive training depending on their 2.36Industry-leading – Ensure compliance with approach to both mental expected activities. relevant legislation, • Ensuring every individual Total Recordable Injury and physical wellbeing, Frequency Rate Approved Codes of understands that it is their

genesis energy annual report 2013 / 23 Employee Age and gender profile of workforce Workforce by employment type Permanent employees by gender Turnover of permanent employees (voluntary Volunteering and non-voluntary) by age and gender

To ensure the commitment Total Permanent 40 31+ years to supporting communities Employees 200 (including new of service is shared by the whole recruits) 1000 26-30 years organisation, Genesis Energy New Permanent Employee of service employees are encouraged 150 Recruits (in PERMANENT to take one day every year to reporting period) 800 35 21-25 years FULL TIME of service volunteer for a community or Departed EMPLOYEES environment group. 100 Permanent 92% 16-20 years Employees 600 of service TOTAL WORKFORCE PERMANENT In 2012/2013, 45 per cent or PART TIME 11-15 years 431 of employees volunteered EMPLOYEES 50 30 of service for a day and participated 990 5% 400 in community projects such Number of employees FIXED TERM 6-10 years CONTRACT of service as Manurewa Guide Dog 0 200

EMPLOYEES Number of permanent employees Female Services, the Kaipatiki Project 3% 1-5 years of service to preserve native bush in Male 25 -50 0 Auckland, and Graceland’s M F M F M F M F M F M F 2010/2011 2011/2012 2012/2013 Under 1 year youth group. Under 25 25-34 35-44 45-54 55-64 65+ of service

20 Gender and Workforce employment type by gender Gender diversity – board, executive Turnover of permanent employees diversity and senior management (voluntary and non-voluntary) Number of employees Genesis Energy practises 15 and promotes respect for 100% 100% 1000 everyone in the workplace and within the communities in 80 80 800 which the Company operates. 10 Policies and procedures have been implemented to provide 60 60 600 a workplace that is free from discrimination, harassment, 40 40 400 victimisation, vilification 5 and bullying. Employment Turnover opportunities are based 20 20 200 Permanent Employees on merit with candidates Female Female Percentage of each employment type of each employment Percentage Departed Male Male evaluated according to their 0 Permanent Employees 0 0 0 job related qualifications, Total Workforce Total Permanent Permanent Fixed Term Board Executive Senior Under 25 25-34 35-44 45-54 55-64 65+ skills, experience and (Permanent Permanent Full Time Part Time Contract Management Male Female Male Female Male Female Male Female Male Female Male Female & Fixed Term Employees Employees Employees Employees general abilities. This equal Employees) -200 Age and Gender of Employees opportunities approach 2010/2011 2011/2012 2012/2013 has given Genesis Energy a diverse workforce. In the 2012/2013 period, we experienced an unchanged staff turnover rate of 17 per cent.

genesis energy annual report 2013 / 25 we’re in iT WE for OUR WE BUILD COMMUNITIES gave 100 students from schools within the Tongariro CAPABILITY Energy Trust, continued Power Scheme area the AND OUR to have great results with chance to learn valuable life their mobile Curtain Bank. skills at the Tongariro Centre. ENVIRONMENT. Over the year, they supported 609 families with more At Genesis Energy, we believe KIWI CAN than 1,700 curtains. And in it is important that we are Christchurch the Community Genesis Energy continued Releasing Whio juveniles easy to deal with and have Energy Action Charitable support for the Foundation great relationships with Trust’s Curtain Bank supplied for Youth Development’s our neighbours, customers, curtains to 345 households, Kiwi Can programme in a iwi and community. We a 25 per cent increase over number of Huntly primary work hard to build these 2010 (note: the Curtain Bank schools. This programme has relationships and the brand was closed during 2011 as a delivered significant results line – ‘We’re in it for you’ – result of the earthquakes). is a reflection of the way with teachers noting that we view our business and pupils were more positive stakeholder relationships. and engaged in their learning. GENESIS 156Additional Whio pairs Education has always been a ONCOLOGY protected in 2012/2013 key focus of Genesis Energy’s PROTECTING TRUST community investment THE WHIO programme. During the year The Genesis Oncology Trust the Company’s Schoolgen The Company’s partnership entered into its tenth year initiative achieved a significant with a number of and distributed $1.445 million milestone when selecting its environmental initiatives to cancer research in the 50th school to receive a free also achieved notable results reporting period, of which 2kW array of photovoltaic during the year. A prime $86,411 went to professional

panels. To accommodate the example is our ongoing work education for 37 cancer growing number of schools with the Department of researchers and clinicians in the programme, and an Conservation on the National from all over New Zealand. increase in the use of tablet Whio Recovery Programme The Trust is supported by devices in the classroom, the resulting in over 3,620 contributions made by Schoolgen website (www. predator traps purchased, Genesis Energy customers. schoolgen.co.nz) has been 1,150km of trap line laid and rebuilt. Students now have approximately 378 whio pairs access to real-time data, protected. This hard work stakeholder graphs, interactive maps has meant that instead of relations and widgets to help them reaching the long-term target understand and monitor of 400 protected whio pairs Building and maintaining solar power generation. by 2019, this number will be relationships with a diverse m The Schoolgen programme achieved as early as 2016. range of stakeholders $1.4 creates and supplies within the communities Distributed by the educational resources and in which we operate and Genesis Oncology Trust provides teaching support curtains service customers is based to cancer research so that schools across the banked on the concept that together we can achieve more. country can develop their Children attending Whio students’ understanding of Genesis Energy continued An example of this during Open Day at Auckland Zoo energy and energy efficiency its backing for Curtain Bank this year was the work done through hands-on learning. programmes in Auckland, jointly by Waikato-Tainui, Christchurch and Wellington. Genesis Energy and Waahi In addition, the Company The VisionWest Curtain Bank Whaanui Trust to rehabilitate provided support for the in Auckland distributed 713 Lake Waahi. Genesis Energy ‘Hillary Step’ programme curtains to 162 families, with a also supported the first developed by the Sir Edmund substantial number going to Raukotahi Whananui Iwi YOU USE IT Hillary Outdoor Pursuits families moving out of Summit run by the Whanganui WISELY Centre. This investment the Auckland Refuge Centre. River Maori Trust Board which enables students from low The Wellington Curtain Bank, focused on capacity-building decile schools to participate run by the Sustainable and community. in a week-long outdoor education programme. Genesis Energy’s funding YOU

genesis energy annual report 2013 / 27 05 Previously, John was a consulting engineer who held we’re THE Graeme Milne Director and Managing Director ONZM, BTech (Biotech) Hons positions in international in iT BOARD. Appointed 1 May 2009 consulting engineering companies for 30 years. These Graeme is a professional included being Managing for RESULTS. 01 director and is the Chairman Director of Connell Wagner Joanna was previously a of a number of New Zealand Chairman of the Board – (NZ) Limited (now Aurecon) KPMG partner, Chairman of the based entities, including Synlait Rt Hon Dame Jenny Shipley and Managing Director of Financial Reporting Standards Milk Limited, New Zealand DNZM Connell Mott MacDonald Board and a member of the Pharmaceuticals Limited, based in London. John has Appointed 1 November 2009 Securities Commission. Waikato District Health Board experience in a broad range of Dame Jenny has been and Terracare Fertilisers Limited. industries including the design Chairman of Genesis Energy He holds directorships in 03 of power generation projects in since November 2009 and is the Institute of Rare Disease a hands-on design role or at a also Chairman of Momentum Alison Andrew Research Limited, Alliance 04 02 07 governance level. 08 Holdings Limited, Seniors BE (Hons), MBA Group Limited and Farmers Money International Limited 01 Appointed 16 July 2012 Mutual Group. 06 05 03 and the Financial Services 08 Alison is the Executive Global Previously, Graeme was the Council of New Zealand. Dame Head of Chemicals for Orica CEO of a number of companies Rukumoana Schaafhausen Jenny is a Director of Trans- Pty Limited and is Chair including what was at the time LLB Tasman Resources Limited of Orica NZ Limited, Orica the largest dairy company in and is Director of Hong Kong Appointed 16 May 2010 Investments (NZ) Limited New Zealand and also for a and Shanghai-listed China Rukumoana serves as a Director and Orica NZ Superfunds period, what was the largest Construction Bank which is a and executive member on a Securities Limited. Alison is also meat company in the country, Fortune 500 company from number of boards including a Director of Australian entities the NZX-listed Richmond which she will retire on the Regional Facilities Auckland Orica Explosives Holdings Pty Limited. He has worked at completion of her six-year term Limited and Waikato-Tainui Limited, Orica Investments Pty various times in Germany, in the second half of 2013. Dame Te Kauhanganui Incorporated Limited and Orica Australia the UK and Australia. Graeme Jenny is also a member of the (the Trustee of the Waikato Pty Limited. Alison is Chair of was a Director of listed lines Canterbury Earthquake Recovery Raupatu Lands Trust and the Advisory Board for the company Horizon Energy Authority Review Panel. Waikato Raupatu River Trust). Auckland University Chemicals Distribution Limited for seven Rukumoana Chairs the Dame Jenny was Prime Minister and Engineering Department years prior to joining the Board Te Kauhanganui Incorporated’s of New Zealand from 1997 to and Director of the Plastics of Genesis Energy . Group Audit and Risk and 1999 and in the preceding and Chemicals Industries Investment Committees. seven years she was a Minister Association. Alison has 06 of various portfolios in the New experience in various industries Rukumoana has practised as Zealand Government. Dame including chemicals, dairy, John Dell a lawyer for a number of years Jenny is Chair of Global Women paper and forest, oil and energy, BCom (Hons), CA in the areas of governance and NZ, Co-Chair of Women property and previously worked previously holding a number Appointed 1 May 2010 Corporate Directors and a as Group Counsel for a large-scale of senior executive positions John is a professional director, member of the World Women’s property development company. at Fonterra Co-operative and with current appointments Leadership Council. Dame Rukumoana is of Waikato-Tainui Fletcher Challenge. including Higgins Group Jenny is Vice President of the descent. Holdings Limited, Viridian Glass Club of Madrid. 04 GP Limited and Unimarket Holdings Limited. John has Robert Fisher 02 Andrew Clements experience in executive finance ONZM, LLB Dip TP BCom Deputy Chairman of the and strategic management Appointed 16 July 2012 Appointed 1 November 2010 Board – Joanna Perry having previously held executive and retired 20 August 2012 Andrew, known as Clem, is an positions as Chief Financial MNZM, MA Econ (Cantab), FCA Rob served as a Genesis Energy investor and professional director. Officer and Chief Executive Director for nearly two years. Appointed 1 May 2007 Officer of Tenon Limited Clem is currently Chairman of Having had a 40 year legal Joanna is a professional (formerly named Fletcher Orion Corporation Limited, career, Rob was previously Director whose current director Challenge Forests Limited) New Zealand Assets engaged under contract appointments include Trade and as Chief Financial Officer Management Limited, to the Auckland Transition Me Group Limited, Partners of Limited. Amadeus Asset Administration Agency (ATA) as General Group Holdings Limited, Kiwi Prior to his corporate roles, Limited and the New Zealand Legal Counsel and is currently Income Property Limited, The John worked for international CHAIRMAN DAME JENNY SHIPLEY Football Foundation. Clem is a General Counsel of Watercare Co-operative Bank Limited, accountancy and consultancy Director of NZX listed Ryman Services Limited. Prior to taking HAS LED THE BOARD FOR FOUR Rowing New Zealand and firm KPMG. Healthcare Limited and was up General Counsel roles Rob Sport New Zealand. Joanna is YEARS, WHILE GENESIS ENERGY previously Managing Director was a partner in the Local an Independent Adviser to the of Emerald Capital Limited, a 07 Government and Environment HAS ACHIEVED ASSET GROWTH Board of Tainui Group Holdings Canadian owned investment workgroup of Simpson Grierson. Limited, is Chairman of the John Leuchars AND CONSISTENT EARNINGS, company until 2008. Clem’s prior He was Chairman of the firm Investment Advisory Panel of ME, BCA, FIPENZ experience includes nine years for 10 years until 2009. Rob has the Primary Growth Partnership with Goodman Fielder Wattie Appointed 16 July 2012 provided strategic advice and and Chairman of the Audit in various financial and general John is a professional Director expertise to both private and Committee of the Victorian management positions in New and currently is Director of public bodies in the consenting Auditor General’s Office and is Zealand and Asia, following KiwiRail Holdings Limited of large infrastructure projects. a member of the International corporate money market and (KiwiRail) and a number of Financial Reporting Standards foreign exchange positions in private investment companies. Interpretations Committee. New Zealand and London.

genesis energy annual report 2013 / 29 we’re THE in iT EXECUTIVE TO DELIVER. TEAM.

01 03 05 07 Chief Executive – Chief Operating Officer – General Manager General Manager Albert Brantley Michael Fuge Corporate Affairs – People and Safety – 03 BSc, P.Geol, F.AuSIMM MCom (Hons), BEng (Hons), MIPENZ Dean Schmidt BA (Hons) Andrew Steele BCom 05 02 07 06 Albert is responsible for the Mike has overall responsibility As General Manager Andrew leads the People leadership, strategic direction for the operational divisions Corporate Affairs Dean leads and Capability, Health, 04 and management of all of of the Company, including the Genesis Energy’s corporate Safety and Quality, Internal 01 Genesis Energy’s business Retail, Generation and Trading communications, government Communications and Property interests. Appointed in arms, as well as oversight of and regulatory affairs, public and Administration teams at 2008, Albert has an in-depth the company’s shareholding relations and community Genesis Energy. knowledge of the energy in the Kupe field development. investment programmes. Before joining Genesis Energy, sector with more than 35 years’ Mike has an extensive Dean joined Genesis Energy Andrew worked in a number of experience, both in New Zealand international background in August 2012 and brings listed company senior executive and internationally, in technical, in upstream energy and political, private sector and roles across New Zealand and operational and senior telecommunications having State-owned Enterprise Australia including QSuper, management positions. worked in senior roles in experience to the Company. Suncorp, Fonterra and Telecom Albert’s experience has largely Shell International, Shell UK Dean has served as Head of New Zealand. In addition, been in heavy industry, including Exploration and Production, Corporate Affairs at Television Andrew developed utility sector oil and gas infrastructure Petroleum Development Oman, New Zealand, Group Corporate experience through his own development as well as the Brunei Shell Petroleum and with Affairs Manager for New Zealand trans-Tasman specialist people mining and power sectors. He working experience in Malaysia, Post Group and Head of management consultancy and has considerable experience Nigeria, Syria and Singapore. Government and Community in previous roles in New Zealand leading operationally complex He most recently was a senior Relations at Telecom and the United Kingdom. businesses requiring a high level general manager with Telecom New Zealand during periods of of stakeholder, political, regulatory New Zealand. regulatory and business change. and environmental management Prior to these roles, Dean spent across a number of geographies. 04 a number of years working as a private sectretary in the 02 General Manager Strategy New Zealand Parliament. and Business Technology – Chief Financial Officer – Sheridan Broadbent 06 Andrew Donaldson BMS, CA BCom, MInstD As Chief Financial Officer, Sheridan heads the Strategy and General Counsel and Andrew is responsible for Business Technology portfolio Company Secretary – directing all financial aspects at Genesis Energy, leading Maureen Shaddick of the Company. Andrew was the enterprise-wide Portfolio LLB, BA appointed in 2010 and brings Delivery Office, the Generation As General Counsel, Maureen is national and international and Market Development responsible for management of experience and expertise to functions and the Information the provision of legal services Genesis Energy. Technology business. to Genesis Energy along with Andrew has served as a Director With a background in large providing legal compliance and on a number of companies, general management roles in the regulatory support. Maureen is and, prior to joining Genesis communications and engineering also the Company Secretary to Energy, was Chief Executive sectors in New Zealand and the Genesis Energy Board. of SmartPay, an NZX-listed Australia with organisations Prior to joining Genesis Energy company. Before that, Andrew such as Telecom New Zealand in 1999, Maureen worked as a was the Managing Director and Downer EDI, Sheridan commercial lawyer focused of Brightstar NZ and Finance is also responsible for driving on heavy industry and property Director for multinationals the Company’s long-term and construction law in both CHIEF EXECUTIVE such as Tiscali UK and Atlas strategic direction. private practice and in-house Venture UK and at Telecom Albert Brantley has led In addition to her role with roles in New Zealand, Dubai New Zealand Retail. the Company for five years, Genesis Energy, Sheridan and London. partook in the Aspiring Director delivering a New Zealand- programme as an observer focused energy company. to the Auckland International Airport Limited Board for the 2013 calendar year.

genesis energy annual report 2013 / 31 Andrew Donaldson CHIEF / Chief Financial Officer FINANCIAL OFFICER’S REPORT

Performance targets: year ended 30 June 2013

Full year actual 2013 Full year target 2013

Financial performance OUR Return on capital employed (%) 9.1 10.1 Consolidated shareholder funds: total assets (%) 51.9 51.3 BUSINESS. Gearing ratio (Net Debt to Net Debt + Equity) (%) 33.9 34.1 21.0% FFO to interest cover ratio (#) 5.5 Greater than 5.0 The Company delivered an OUR increased NPAT (up 21 per Generator efficiency ($) $46.65 Increase over previous year cent) against variable market conditions and increased Non-financial performance retail competition 25% improvement FOCUS. year on year Total Recordable Injury Frequency Rate 2.36 Actual: 68% improvement

For the financial year under successfully completed in As a result, debt has been 25% improvement The Company Serious incidents 0 year on year review, the contribution from April 2013 following a 14-week re-profiled with reduced achieved consistency our 31 per cent equity share outage. The final stage of the cost and longer maturity. 33.9% 20% improvement with Net Profit of the Kupe Oil and Gas Field project is due to commence The Company believes that Gearing reduced to 33.9 per year on year After Tax for the was significant. While gas and in the 2013/2014 summer gearing of 33.9 per cent cent, an appropriate level to Near-miss reporting 790 Actual: 5% improvement petroleum revenue from Kupe construction season. at balance date is at an maintain a BBB+ rating Customer satisfaction1 94% 90% year ended 30 June was down slightly compared appropriate level to maintain Debt 2013 in line with to the previous year, the its BBB+ rating. Power Station availability: overall EBITDAF contribution Following the $821 million Performance against expectations of from Kupe was up from $95 purchase of the Tekapo A Hydro 83% 86% Statement of Corporate Intent and B hydro power stations $105 million. million to $109 million, due Thermal – Huntly Units 1 to 4 71% 79% mainly to the Company’s from in June For the year ended 30 June 2013 2011, the Company was highly – Huntly Unit 5 90% The Company’s diverse share in an insurance payment Genesis Energy’s Statement 87% geared. However, repayment asset portfolio of thermal to the Kupe joint venture. of Corporate Intent (SCI) of debt over the past two – Huntly Unit 6 86% 80% generation, North and South for the three years to June Capital expenditure years has significantly Island hydro, and our share of 2015, issued pursuant to 1 Based on the survey question: “Thinking about all aspects of the service provided to you, how satisfied are you Genesis Energy has a improved our debt position. Kupe earnings achieved this Section 14 of the State- with the overall performance of Genesis Energy, where 0 is extremely dissatisfied and 10 is extremely satisfied?” disciplined approach to stability despite the impact of The decision by Standard Owned Enterprises Act 1986, capital expenditure and, with variable weather conditions & Poor’s to change the incorporates financial and no significant construction and planned maintenance equity treatment of the non-financial performance developments in the near term, outages affecting generation Capital Bonds necessitated targets for the year ended is focused on maintenance volumes during the year. modifications to the bonds 30 June 2013. designed to keep our assets in to reflect the new treatment. The Company’s EBITDAF service over the long term. For the financial year to the Genesis Energy chose to offer was lower than it was in end of June 2013, Genesis For the full year to the existing holders a preferential the previous year, but the Energy performed well end of June 2013, capital right to the modified bonds. financial focus continues to against many of its financial expenditure was $167 million. We consider it important be on maintaining margins and non-financial SCI targets. This included approximately to have equity content and generating consistent $105 million of the $145 instruments in our long-term returns. This focus has million to $155 million that we capital structure. Also, given resulted in a structure that have previously announced our reduced debt profile, allows the Company to react is expected to be spent on we took the opportunity to quickly to variable wholesale the Tekapo Canal remediation reduce the amount of Capital prices and outputs. work. The first of two Bonds from $275 million to ANDREW DONALDSON Chief Financial Officer stages of this project was $200 million.

genesis energy annual report 2013 / 33 Comprehensive FINANCIAL income statement STATEMENTS

FOR THE YEAR ENDED For the year ended 30 JUNE 2013 30 JUNE 2013

Group 2013 Group 2012 Parent 2013 Parent 2012 Genesis Power Limited and Subsidiaries Note $000 $000 $000 $000 Contents Operating revenue Comprehensive income statement 35 Electricity revenue 1,743,874 1,923,246 1,743,874 1,846,842 Statement of changes in equity 36 Gas revenue 212,467 235,786 212,467 235,361

Balance sheet 37 Petroleum revenue 80,516 85,804 16,005 20,776 Other revenue 7 33,370 19,990 12,623 15,251 Cash flow statement 38 2,070,227 2,264,826 1,984,969 2,118,230 Notes to the financial statements Operating expenses Note Electricity purchases, transmission and distribution (919,974) (1,004,901) (919,974) (939,456) 1 General information 40 Gas purchases and transmission (217,211) (249,386) (217,216) (249,035) 2 Summary of accounting policies 40 3 Prior period adjustment 44 Petroleum production, marketing and distribution (31,501) (35,046) (18,681) (23,985) 4 Adoption of new and revised accounting standards, Fuels consumed (259,883) (288,428) (303,526) (334,101) interpretations and amendments 44 Employee benefits (83,551) (80,753) (83,551) (79,939) 5 Accounting standards, interpretations and amendments in issue not yet effective 44 Other operating expenses 8 (221,658) (219,023) (216,390) (208,806) 6 Segment reporting 45 (1,733,778) (1,877,537) (1,759,338) (1,835,322) 7 Other revenue 46 Earnings before net finance expense, income tax, depreciation, 8 Other operating expenses 47 depletion, amortisation, impairment, fair value changes and other gains and losses 336,449 387,289 225,631 282,908 9 Depreciation, depletion and amortisation 47 10 Impairment of non-current assets 47 Depreciation, depletion and amortisation 9 (134,964) (152,097) (93,323) (92,620) 11 Change in fair value of financial instruments 47 Impairment of non-current assets 10 (6,579) (12,369) (6,579) (12,369) 12 Other gains (losses) 48 Revaluation of generation assets 22 1,006 - 1,006 - 13 Finance revenue 48 Change in fair value of financial instruments 11 30,452 (11,318) 33,026 (20,961) 14 Finance expense 48 Other gains (losses) 12 (1,553) (3,118) (1,601) (3,504) 15 Income tax 48 (178,902) (129,454) 16 Deferred tax liability 49 (111,638) (67,471) 17 Dividends 50 Profit before net finance expense and income tax 224,811 208,387 158,160 153,454 18 Share capital 50 Finance revenue 13 741 2,774 18,406 24,874 19 Cash and cash equivalents 50 Finance expense 14 (79,255) (91,350) (84,309) (97,701) 20 Receivables and prepayments 50 Profit before income tax 146,297 119,811 92,257 80,627 21 Inventories 52 Income tax (expense) 15 (41,773) (33,418) (26,638) (23,031) 22 Property, plant and equipment 52 23 Oil and gas assets 55 Net profit for the year 104,524 86,393 65,619 57,596 24 Intangible assets 56 Other comprehensive income 25 Investments in subsidiaries 58 Items that may be reclassified subsequently to profit or loss: 26 Investments in associates 58 Change in cash flow hedge reserve 32 (8,201) (2,571) (6,373) (2,315) 27 Jointly controlled assets and entities 58 Income tax credit relating to items that may be reclassified 15 2,296 720 1,784 648 28 Related-party transactions 59 29 Payables and accruals 61 Total items that may be reclassified subsequently to profit or loss (5,905) (1,851) (4,589) (1,667) 30 Borrowings 61 Items that will not be reclassified subsequently to profit or loss: 31 Provisions 63 Change in asset revaluation reserve 22 154,567 – 154,567 – 32 Derivatives 64 Income tax (expense) relating to items that will not be reclassified 15 (43,030) – (43,030) – 33 Financial risk-management 67 Total items that will not be reclassified subsequently to profit or loss 111,537 – 111,537 – 34 Commitments 77 35 Contingent assets and liabilities 77 Total other comprehensive income for the year 105,632 (1,851) 106,948 (1,667) 36 Events occurring after balance date 77 Total comprehensive income for the year 210,156 84,542 172,567 55,929

The above statements to be read in conjunction with the accompanying notes.

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 35 STATEMENT OF BALANCE CHANGES IN EQUITY SHEET

For the year ended AS AT 30 JUNE 2013 30 JUNE 2013 Group 2013 Group 2012 Parent 2013 Parent 2012 Group Genesis Power Limited and Subsidiaries Note $000 $000 $000 $000 Asset Current assets revaluation Cash flow Retained Cash and cash equivalents 19 22,663 24,828 13,965 16,759 Share capital reserve hedge reserve earnings Total Genesis Power Limited and Subsidiaries Note $000 $000 $000 $000 $000 Receivables and prepayments 20 267,984 309,843 359,005 487,152 Balance as at 1 July 2011 540,565 694,781 (957) 477,623 1,712,012 Inventories 21 77,226 127,146 76,771 125,372 Net profit for the year – – – 86,393 86,393 Emission units on hand 24 1,649 868 1,649 868 Other comprehensive income Tax receivable 4,688 – 16,508 1,249 Change in cash flow hedge reserve 32 – – (2,571) – (2,571) Derivatives 32 19,246 15,377 19,831 16,200

Income tax credit (expense) relating to other Total current assets 393,456 478,062 487,729 647,600 comprehensive income 15 – – 720 – 720 Non-current assets Total comprehensive income for the year – – (1,851) 86,393 84,542 Property, plant and equipment 22 2,800,145 2,580,654 2,791,864 2,579,671 Revaluation reserve reclassified to retained earnings Oil and gas assets 23 391,855 429,150 – – on disposal of assets – (549) – 549 – Intangible assets 24 122,564 118,232 122,564 118,232 Balance as at 30 June 2012 540,565 694,232 (2,808) 564,565 1,796,554 Inventories 21 36,930 – 36,930 – Net profit for the year – – – 104,524 104,524 Investments in subsidiaries 25 – – 50,573 50,573 Other comprehensive income Receivables and prepayments 20 715 1,171 715 1,171 Change in cash flow hedge reserve 32 – – (8,201) – (8,201) Derivatives 32 5,574 22,913 5,578 22,979 Change in asset revaluation reserve 22 – 154,567 – – 154,567 Total non-current assets 3,357,783 3,152,120 3,008,224 2,772,626 Income tax (expense) credit relating to other comprehensive income 15 – (43,030) 2,296 – (40,734) Total assets 3,751,239 3,630,182 3,495,953 3,420,226

Total comprehensive income for the year – 111,537 (5,905) 104,524 210,156 Current liabilities Revaluation reserve reclassified to retained earnings Payables and accruals 29 224,815 288,342 212,882 277,645 on disposal of assets – 612 – (612) – Tax payable – 5,715 – – Dividends paid 17 – – – (57,000) (57,000) Borrowings 30 412,925 16,494 412,925 16,494 Balance as at 30 June 2013 540,565 806,381 (8,713) 611,477 1,949,710 Provisions 31 12,381 12,925 12,381 12,925

Parent Derivatives 32 17,507 11,425 18,945 16,559 Total current liabilities 667,628 334,901 657,133 323,623 Balance as at 1 July 2011 540,565 694,781 (3,122) 387,805 1,620,029 Non-current liabilities Net profit for the year – – – 57,596 57,596 Payables and accruals 29 631 479 631 479 Other comprehensive income Borrowings 30 611,957 1,002,986 611,957 1,002,986 Change in cash flow hedge reserve 32 – – (2,315) – (2,315) Provisions 31 117,729 110,247 65,158 62,800 Income tax credit (expense) relating to other comprehensive income 15 – – 648 – 648 Deferred tax liability 16 381,565 320,723 313,259 255,109 Derivatives 32 64,292 65,282 Total comprehensive income for the year – – (1,667) 57,596 55,929 22,019 22,301 1,498,727 1,386,656 Effect of amalgamation of subsidiaries 25 – – – 33,989 33,989 Total non-current liabilities 1,133,901 1,013,306 Total liabilities 1,801,529 1,833,628 1,670,439 1,710,279 Revaluation reserve reclassified to retained earnings on disposal of assets – (549) – 549 – Shareholder’s equity Balance as at 30 June 2012 540,565 694,232 (4,789) 479,939 1,709,947 Share capital 18 540,565 540,565 540,565 540,565 Net profit for the year – – – 65,619 65,619 Reserves 1,409,145 1,255,989 1,284,949 1,169,382 Other comprehensive income Total equity 1,949,710 1,796,554 1,825,514 1,709,947 Change in cash flow hedge reserve 32 – – (6,373) – (6,373) Total equity and liabilities 3,751,239 3,630,182 3,495,953 3,420,226 Change in asset revaluation reserve 22 – 154,567 – – 154,567 Income tax (expense) credit relating to other The Directors of Genesis Power Limited authorise these financial statements for issue on behalf of the Board. comprehensive income 15 – (43,030) 1,784 – (41,246) Total comprehensive income for the year – 111,537 (4,589) 65,619 172,567 Revaluation reserve reclassified to retained earnings on disposal of assets – 612 – (612) – Rt Hon Dame Jenny Shipley DNZM Joanna Perry MNZM Dividends paid 17 – – – (57,000) (57,000) Chairman of the Board Chairman of the Audit Committee Balance as at 30 June 2013 540,565 806,381 (9,378) 487,946 1,825,514 Date: 28 August 2013 Date: 28 August 2013

The above statements to be read in conjunction with the accompanying notes. The above statements to be read in conjunction with the accompanying notes.

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 37 CASH FLOW CASH FLOW STATEMENT STATEMENT continued

For the year ended For the year ended 30 JUNE 2013 30 JUNE 2013

Group 2013 Group 2012 Parent 2013 Parent 2012 Group 2013 Group 2012 Parent 2013 Parent 2012 Genesis Power Limited and Subsidiaries Note $000 $000 $000 $000 Genesis Power Limited and Subsidiaries Note $000 $000 $000 $000 Cash flows from operating activities Reconciliation of profit (loss) to net cash inflow from operating activities Cash was provided from: Profit (loss) for the year 104,524 86,393 65,619 57,596 Receipts from customers 2,103,789 2,168,989 2,043,679 2,022,569 Items classified as investing/financing activities Interest received 741 2,774 621 2,654 Net (gain) loss on disposal of property, plant and equipment 12 266 561 266 561 2,104,530 2,171,763 2,044,300 2,025,223 Interest and other finance charges paid 74,341 87,057 81,794 94,956 Cash was applied to: Interest received from subsidiaries 13 – – (17,785) (22,220) Payments to suppliers and related parties 1,690,965 1,692,117 1,722,834 1,649,139 Other items classified as investing/financing activities – 2,517 (1) 2,520 Payments to employees 83,166 79,666 83,166 78,852 74,607 90,135 64,274 75,817 Tax paid 32,068 36,680 32,068 36,680 Non-cash items 1,806,199 1,808,463 1,838,068 1,764,671 Depreciation, depletion and amortisation expense 9 134,964 152,097 93,323 92,620 Net cash inflows from operating activities 298,331 363,300 206,232 260,552 Revaluation of generation assets 22 (1,006) – (1,006) – Cash flows from investing activities Impairment of non-current assets 10 6,579 12,369 6,579 12,369 Cash was provided from: Change in fair value of financial instruments 11 (30,452) 11,318 (33,026) 20,961 Proceeds from disposal of property, plant and equipment – 232 – 232 Deferred tax expense 15 20,108 3,217 16,904 1,051 Receipts of principal from finance lease receivable 5,606 8,476 – – Change in capital expenditure accruals 10,624 15,490 8,217 15,490 Net advances received from subsidiaries – – 86,522 125,418 Change in rehabilitation and contractual arrangement provisions (3,984) (16,404) (1,352) 3,687 5,606 8,708 86,522 125,650 Transfer of tax losses within the Group – – (7,074) (6,636) Cash was applied to: Effect of amalgamation of subsidiaries – – – (10,808) Purchase of property, plant and equipment 161,911 65,256 151,908 64,752 Other non-cash items 1,544 – 1,544 – Purchase of oil and gas assets 459 4,669 – 2,104 138,377 178,087 84,109 128,734 Purchase of intangibles (excluding emission units) 15,823 8,238 15,823 8,237 Movements in working capital Purchase of shares in subsidiaries – – – 20,820 Change in receivables and prepayments (excluding advances 178,193 78,163 167,731 95,913 to subsidiaries and finance lease receivable) 35,454 (94,921) 59,396 (102,681) Net cash (outflows) inflows from investing activities (172,587) (69,455) (81,209) 29,737 Change in inventories 12,990 41,116 11,671 42,341 Cash flows from financing activities Change in emission units on hand (781) 3,039 (781) 3,039 Cash was provided from: Change in payables and accruals (63,375) 47,359 (64,611) 64,164 Proceeds from borrowings 120,000 – 120,000 – Change in tax receivable/payable (10,403) (6,551) (15,259) (5,462) 120,000 – 120,000 – Change in provisions 6,938 18,643 1,814 (2,996) Cash was applied to: (19,177) 8,685 (7,770) (1,595) Repayment of borrowings 116,000 205,000 116,000 205,000 Net cash inflow from operating activities 298,331 363,300 206,232 260,552 Interest paid and other finance charges 71,230 81,664 71,138 81,601 Repayment of principal on finance lease liabilities 3,679 3,461 3,679 3,461 Ordinary dividend paid 57,000 – 57,000 – 247,909 290,125 247,817 290,062 Net cash (outflows) inflows from financing activities (127,909) (290,125) (127,817) (290,062) Net increase (decrease) in cash and cash equivalents (2,165) 3,720 (2,794) 227 Cash and cash equivalents at 1 July 24,828 21,108 16,759 13,876 Cash transferred on amalgamation of subsidiary – – – 2,656 Cash and cash equivalents at 30 June 19 22,663 24,828 13,965 16,759

The above statements to be read in conjunction with the accompanying notes. The above statements to be read in conjunction with the accompanying notes.

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 39 NOTES TO THE FINANCIAL STATEMENTS

2. Summary of accounting policies continued

1. General information out below. These policies have valuation and the carrying value is used to account for the ownership have passed or when income tax is recognised in generation assets. Generation All other categories of property, plant and equipment Genesis Power Limited been consistently applied to of generation assets is disclosed acquisition of subsidiaries. the service has been rendered other comprehensive income. assets are recognised in (the ‘Parent’) is a company all years presented, unless in note 22. Investments in subsidiaries to the customer. Current tax is the expected tax the balance sheet at their All other categories of property, otherwise stated. revalued amounts, being the plant and equipment, with registered under the Companies Depletion of oil and gas are recognised at cost less (d) Foreign currency payable on taxable income for Act 1993. The Parent became These financial statements are producing assets impairment in the Parent’s transactions the year, using tax rates enacted fair value at the date of their the exception of land and revaluation, less any subsequent capital work in progress, a state-owned enterprise on prepared under the historical- Depletion of oil and gas financial statements. When a Transactions denominated in a or substantially enacted at the accumulated depreciation are recognised at cost less 16 December 1998 pursuant to cost convention, modified by producing assets is based on subsidiary is amalgamated, the foreign currency are converted end of the reporting period, and impairment losses. The accumulated depreciation and the State-Owned Enterprises the revaluation of derivatives the proven reserves to which amalgamation is performed on a at the exchange rate in effect at together with any unpaid tax underlying assumptions used any accumulated impairment Act 1986. The Parent is wholly and generation assets. the assets relate. Proven reserve line-by-line basis on the date the the date of the transaction. At or adjustment to tax payable in in the revaluation are reviewed losses. Land and capital work in owned by Her Majesty the estimates can change over time. amalgamation takes effect. The balance date monetary assets respect of previous years. Critical accounting estimates annually and revaluations are progress are not depreciated. Queen in Right of New Zealand and judgements The proven reserve estimates net profit of the subsidiary up to and liabilities denominated in Deferred tax is calculated performed with sufficient (the ‘Crown’). The liabilities of used to deplete the oil and the date of the amalgamation foreign currencies are translated using the balance sheet liability Depreciation The preparation of financial regularity, not exceeding five the Parent are not guaranteed gas producing assets and the is recognised directly in equity. at the closing rate. Exchange method, providing for temporary For generation assets carried statements requires years, to ensure the carrying in any way by the Crown. carrying value of the assets is All inter-entity balances are gains and losses arising from differences between the at fair value, their fair value, less management to make estimates amount does not differ The Parent is an issuer for disclosed in note 23. eliminated on amalgamation. these translations and the carrying amounts of assets and any estimated residual value, and assumptions that affect materially from that which the purposes of the Financial Valuation of rehabilitation and Jointly controlled assets and settlement of these items are liabilities for financial reporting is charged to profit or loss on the application of policies and would be determined using fair Reporting Act 1993. restoration provision jointly controlled entities recognised in profit or loss, purposes and the amounts a straight-line basis over its the reported amounts of assets, values at the balance date. Genesis Power Limited and liabilities, revenues and expenses. The financial statements include Where the Group invests in except when deferred in equity used for taxation purposes. estimated remaining useful life. its subsidiaries, interests in jointly controlled assets or where cash flow hedging is The amount of deferred tax Any increase in the revaluation Where a generation asset’s The estimates and associated an estimate of the liability in associates and jointly controlled jointly controlled entities, the applied (refer to the derivatives provided is based on the of individual generation remaining useful life changes, the assumptions are based on relation to the abandonment entities (together the ‘Group’) Group’s share of revenue, accounting policy (r) below). expected manner of realisation assets is recognised in other depreciation charge is adjusted historical experience and and restoration of generation are designated as profit oriented expenditure, assets and liabilities or settlement of the carrying comprehensive income, unless it prospectively. The estimated various other factors that and oil and gas production sites. (e) Finance expense entities for financial reporting Such estimates are measured is included in the appropriate amounts of assets and liabilities, reverses a revaluation decrease remaining useful lives of generation are reasonable under the Finance expense includes purposes. at the present value of the cash categories within the Group using tax rates enacted or for the same asset previously assets used in the depreciation circumstances. Actual results interest, bank and facility fees, recognised in profit or loss, in The Group’s core business flows expected to settle the financial statements on a substantially enacted at the end calculation are as follows: may differ from these estimates. transaction costs and time which case it is recognised in is located in New Zealand obligation. The key assumptions proportionate line-by-line basis. of the reporting period. The estimates and underlying value of money adjustments on profit or loss to the extent of the Estimated remaining useful life and involves the generation used in the calculation and Associates assumptions are reviewed on provisions. Interest, bank and (g) Receivables decrease previously recognised Generation assets up to of electricity, retailing and the carrying value of the 80 years an ongoing basis. Revisions Associates are all entities over facility fees and transaction Receivables are initially in profit or loss. A decrease trading of energy, and the rehabilitation and restoration to accounting estimates are which the Group has significant costs are recognised in profit recognised at fair value and in carrying amount arising on For all other property, plant and development and procurement provision is disclosed in note 31. recognised in the period in influence but not control. or loss over the period of the are subsequently measured the revaluation of individual equipment carried at cost, their of fuel sources. To support Valuation of electricity which the estimate is revised Associates are recognised in the borrowings using the effective at amortised cost less any generation assets is recognised cost, less any estimated residual these functions, the Group’s derivatives if the revision affects only that Parent’s financial statements at interest rate method, unless allowance for doubtful in profit or loss to the extent value, is charged to profit or scope of business includes The valuation of electricity period, or in the period of the cost and in the Group financial such costs relate to funding receivables. Receivables which that it exceeds the balance, if loss on a straight-line basis over retailing and trading of related derivatives classified as level revision and future periods if the statements using the equity capital work in progress. Time are known to be uncollectible any, held in the asset revaluation their estimated useful lives. The complementary products three financial instruments is revision affects both current and method which recognises the value of money adjustments are written off. An allowance reserve relating to a previous estimated useful lives of different designed to support its key based on forecasted internally future periods. Group’s share of net profit in on provisions are recognised in for doubtful receivables is revaluation of that asset. Any classes of property plant and energy business. generated electricity price profit or loss and its share of Significant areas of estimation profit or loss up to the point the established when there is accumulated depreciation at equipment are as follows: paths which incorporate a post acquisition movements in Basis of preparation in these financial statements are provision is used or released. objective evidence that the the date of the revaluation is number of assumptions. The reserves in other comprehensive These financial statements as follows: Finance expense on capital Group will not be able to collect eliminated against the gross Estimated useful life key assumptions used in the income. are prepared in accordance work in progress (qualifying amounts due. The allowance carrying value of the asset so Buildings and 10 to 50 Revenue estimates for unread valuation and the carrying value with New Zealand Generally Transactions and balances assets) is capitalised during for doubtful receivables is the that the gross carrying amount improvements years gas and electricity meters of electricity derivatives classified Accepted Accounting Practice eliminated on consolidation the construction period. difference between the carrying after revaluation equals the Other plant and three to 15 The financial statements as level three financial instruments equipment years (‘NZ GAAP’), New Zealand Intercompany transactions, The capitalisation rate used value and the estimated revalued amount. include an accrual for unread is disclosed in note 33. Equivalents to International balances, revenue and to determine the amount recoverable amount. Leased plant and 20 to 25 gas and electricity meter Subsequent additions equipment years expenditure between Group Financial Reporting Standards revenue at balance date. The 2. Summary of of finance expense to be (h) Inventories to generation assets are companies are eliminated on (‘NZ IFRS’), and other applicable accrual involves estimating the accounting policies capitalised is based on the Inventories are recognised at the recognised at cost. Cost The estimated useful lives of New Zealand Financial consolidation. weighted average finance includes the consideration given assets are reviewed annually. consumption for each unread (a) Basis of consolidation lower of cost and net realisable Reporting Standards as meter based on the customer’s (b) Goods and Services Tax expenses incurred by the Group. value. Cost is determined to acquire the asset plus any An asset’s carrying amount is The consolidated financial written down immediately to appropriate for profit‑oriented past consumption history. The (‘GST’) (f) Income tax using the weighted average other costs incurred in bringing entities. These financial statements include the Parent the asset to the location and its recoverable amount if the key assumptions used in the The financial statements are Income tax on the profit or loss cost basis which includes statements comply with and its subsidiaries, associates condition necessary for its carrying amount is greater than calculation and the carrying prepared on a GST-exclusive for the year comprises current expenditure incurred in bringing International Financial Reporting and jointly controlled assets intended use including major its estimated recoverable amount. value of accrued revenue is basis with the exception of and deferred tax. Income tax is each inventory to its present Standards (‘IFRS’). and entities. inspection costs, resource Gains and losses on the disposal disclosed in note 20. receivables and payables, which the tax payable on the current location and condition, including The financial statements are Subsidiaries consent and relationship or retirement of an item of Valuation of generation assets include GST where GST has year’s taxable income, based on shipping and handling. Net prepared in accordance with Subsidiaries are all those entities agreement costs. The cost property, plant and equipment The Group’s generation assets been invoiced. the income tax rate, adjusted for realisable value is the estimated the Financial Reporting Act over which the Group has the of assets constructed by the is determined as the difference are carried at fair value. The (c) Revenue recognition changes in deferred tax assets selling price in the ordinary 1993 and the Companies Act power to govern the financial Group includes the cost of all between the sale proceeds fair value is based on the and liabilities attributable to course of business less the 1993, and are presented in and operating policies (control). Revenue is measured at the materials and direct labour and the carrying amount of present value of the estimated temporary differences. Income estimated costs necessary to New Zealand dollars rounded Subsidiaries are consolidated fair value of the consideration used in construction, resource the asset. The gain or loss is future cash flows of the assets, tax is recognised in profit or make the sale. to the nearest thousand. The from the date control is acquired. received or receivable net of consent costs, finance expenses recognised in profit or loss. excluding any reduction loss except to the extent that (i) Property, plant and equipment accounting policies adopted They are de-consolidated from prompt-payment discounts. and an appropriate proportion Any balance attributable to for costs associated with it relates to items recognised in the preparation of these the date control ceases. The Revenue is recognised when the Generation assets of applicable variable and the disposed asset in the asset rehabilitation and restoration. directly in other comprehensive financial statements are set acquisition method of accounting significant risks and rewards of Generation assets include land fixed overheads. revaluation reserve is transferred The key assumptions used in the income, in which case the and buildings associated with to retained earnings.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 41 NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. Summary of accounting policies continued 2. Summary of accounting policies continued

(j) Oil and gas assets Other oil and gas assets case of government granted current market assessments of payable to third parties are • Interest rate swaps and Amounts accumulated in other Financial instruments held Other oil and gas assets include units and units receivable the time value of money. This recognised at the average cost options; comprehensive income are for trading (derivatives not Exploration and evaluation designated as hedges) expenditure land, buildings, storage facilities, from third parties. Emission discount rate is adjusted for the of emission units on hand up to • Foreign exchange swaps and reclassified to profit or loss in • Foreign exchange options All exploration and evaluation sales pipeline, motor vehicles units receivable from Group risks specific to the asset where the amount of emission units options; the period when the hedged entities are recognised using the estimated cash flows have on hand at the recognition date. item will affect the profit or loss. • Electricity swaps and options costs, including directly and the ongoing costs of • Electricity swaps and options; the weighted average cost of not been adjusted. Where the emission obligation However, when the forecast attributable overheads, general continuing to develop reserves and • Oil swaps and options for production. The cost of emission obligations incurred exceeds the level of units on transaction that is hedged permit activity and geological For the purposes of assessing Financial liabilities measured by the Group on the date the hand, the excess obligation • Oil swaps and options. results in the recognition of a and geophysical costs are other oil and gas assets less impairment, assets are grouped at amortised cost Derivatives are initially recognised expensed as incurred except for any estimated residual value receivable is recognised. The at the lowest levels for which over the units on hand is non-financial asset (for example, at fair value on the date a • Payables the costs of drilling exploration is charged to the profit or loss difference between cost and fair there are separately identifiable measured at the contract price inventory) or liability, the gains derivative contract is entered • Borrowings wells and the costs of acquiring on a straight-line basis over value of government granted cash flows (cash-generating where forward contracts exist and losses previously deferred in into and are subsequently new interests. The costs of their estimated useful lives. The units is treated as revenue. units). Non-financial assets other or the market price for any the cash flow hedge reserve are (t) Leases remeasured to their fair value. drilling exploration wells is estimated useful lives of other Emission units are not revalued than goodwill that have been obligation not covered by units reclassified from the cash flow Leases are classified as finance The method of recognising the initially capitalised pending the oil and gas assets are as follows: subsequent to initial recognition. impaired are reviewed for possible on hand or forward contracts. hedge reserve and included in leases whenever the terms of resulting gain or loss depends determination of the success Emission units receivable are reversal of the impairment at Emission units payable to Group the initial measurement of the the lease transfer substantially Estimated useful life on whether the derivative of the well. Costs are expensed accounted for in the period in each reporting date. entities are recognised using cost of the asset or liability. all the risks and rewards of Buildings 50 years which they are earned within the weighted average cost of is designated as a hedging immediately where the well Where an impairment loss When a hedging instrument ownership to the lessee. All Storage facilities 25 years receivables and prepayments emission obligations incurred instrument and if so the nature of does not result in a successful subsequently reverses, the expires or is sold, terminated other leases are classified as Sales pipeline 25 years and are transferred to by the Group on the date the the item being hedged. discovery. Costs incurred before carrying amount of the asset or exercised, or when a hedge operating leases. When assets Motor vehicles five years intangibles when the emission obligation is recognised. the Group has obtained the is increased to the revised For the purpose of hedge no longer meets the criteria are leased under a finance legal rights to explore an area units are received. Emission accounting, hedges are for hedge accounting, the (k) Intangible assets estimate of its recoverable (p) Borrowings lease, the present value of the units on hand are assessed as classified as: cumulative gain or loss at are expensed as incurred. amount, but only to the extent Borrowings are initially minimum lease payments is Goodwill having an indefinite useful life that time remains in the cash Exploration and evaluation the carrying amount of the recognised at fair value, net • Cash flow hedges where the recognised as either a payable Goodwill represents the excess and are not amortised but are flow hedge reserve and is expenditure assets are not asset at the date the impairment of transaction costs incurred. Group hedges the exposure or receivable in the balance of the cost of a business subject to annual impairment reclassified to profit or loss amortised, instead they are is reversed does not exceed Borrowings are subsequently to variability in cash flows sheet. Repayments are allocated combination over the fair value testing or whenever there are when the transaction occurs. assessed annually for indicators what the amortised cost would measured at amortised cost. that is attributable either to between the capital and interest of the Group’s share of the net indicators of impairment. If the forecast transaction is of impairment. Any impairment have been had the impairment Any difference between the a particular risk associated over the term of the lease in identifiable assets, liabilities no longer expected to occur, is recognised in profit or loss. Naming rights not been recognised. A proceeds (net of transaction with a recognised asset or order to reflect a constant and contingent liabilities of the the cumulative gain or loss Once commercial approval Naming rights are assets reversal of an impairment loss costs) and the redemption liability or to a highly probable periodic rate of return on the acquired subsidiary/associate at recognised in the cash flow has been obtained for the with finite lives. These assets is recognised in profit or loss amount is recognised in profit forecast transaction; or net investment outstanding in the date of acquisition. Goodwill hedge reserve is reclassified development of a project the are recognised at cost less immediately, unless the relevant or loss over the period of the • Fair value hedges where the respect of the lease. Payments on the acquisition of subsidiaries immediately to profit or loss. accumulated expenditure accumulated amortisation and asset is carried at fair value, in borrowings using the effective Group hedges the exposure made under operating leases is included in intangible assets. in relation to the project is impairment losses. Amortisation which case the reversal of the interest method. to changes in fair value of a Fair value hedges (net of any incentives received Goodwill on the acquisition transferred to oil and gas is charged to profit or loss on impairment loss is treated as a recognised asset or liability. Changes in the fair value of from the lessor) are charged of associates is included in Borrowings are classified as development assets. a straight-line basis over the revaluation increase. Impairment The Group documents at the derivatives that are designated to profit or loss on a straight- the investment in associates. current liabilities unless the estimated useful life of the asset of goodwill is not reversed. inception of the transaction and qualify as fair value hedges line basis over the lease term. Oil and gas producing assets Goodwill is assessed as having Group has an unconditional from the date it is available for the relationship between the are recorded in profit or loss, Receipts from operating leases Oil and gas producing assets an indefinite useful life and is (m) Payables and accruals right to defer settlement of the use. The useful life is based on hedging instruments and together with any changes in are recognised in profit or loss include costs associated not amortised but is subject to Payables and accruals are liability for at least 12 months the contract period which ranges hedged items, as well as its the fair value of the hedged on a straight-line basis over the with the production station annual impairment testing or recognised when the Group after the balance date. between one and 15 years. risk-management objective and asset or liability that are lease term. transferred from development whenever there are indications becomes obligated to make (q) Provisions attributable to the hedged risk. expenditure and mining (l) Impairment of assets future payments resulting strategy for undertaking various (u) Statement of cash flows of impairment. Provisions are recognised when licences. Depletion of oil and gas Assets that have indefinite from the purchase of goods or hedge transactions. The Group Derivatives that do not qualify The following definitions are used Computer software the Group has a present obligation producing assets is based on useful lives are not subject to services, and are subsequently also documents its assessment, for hedge accounting in the statement of cash flows: Items of computer software (legal or constructive) as a result the amount of units produced amortisation and are tested carried at amortised cost. both at hedge inception and on Changes in the fair value of any are assets with finite lives. of a past event, it is probable Operating activities during the period in comparison annually for impairment. Assets an ongoing basis, of whether derivatives that do not qualify These assets are recognised (n) Employee benefits that the Group will be required Operating activities include to the total expected to be that are subject to depletion, the derivatives that are used in for hedge accounting are at cost less accumulated to settle the obligation and a all transactions and other produced from the proven depreciation or amortisation A liability for employee hedging transactions have been recognised immediately in profit amortisation and impairment reliable estimate can be made events that are not investing or reserves. Proven reserves are are reviewed for impairment benefits (wages and salaries, and will continue to be highly or loss. losses. Amortisation is charged of the amount of the obligation. financing activities. the estimated quantities of oil annually, or whenever events annual and long-service leave effective in offsetting changes to profit or loss on a straight- The amount recognised as the (s) Financial instruments and gas which geological and or changes in circumstances and employee incentives) is in fair values or cash flows of Investing activities line basis over the estimated provision is the best estimate of For financial reporting purposes, engineering data demonstrate indicate that the carrying recognised when it is probable hedged items. Investing activities are those useful life of each asset from the the consideration required to settle the Group designates its with reasonable certainty to be amount may not be recoverable. that settlement will be required Cash flow hedges activities relating to the date it is available for use. The and the amount is capable the present obligation at the end financial instruments into the recoverable in future years from If an asset’s carrying value The effective portion of acquisition, holding and estimated useful life is between of being measured reliably. of the reporting period taking into following categories: known reservoirs, under existing exceeds its recoverable amount, changes in the fair value of disposal of property, plant and one and four years. Provisions made in respect of account the risks and uncertainties economic and operating the difference is recognised derivatives that are designated Loans and receivables equipment, oil and gas assets, employee benefits are measured surrounding the obligation. conditions. Proven reserves are Emission units as an impairment loss in profit and qualify as cash flow • Cash and cash equivalents intangible assets (excluding using the remuneration rate Where a provision is measured defined as those which have a Emission units are purchased or loss. hedges are recognised in • Receivables emission units) and investments. expected to apply at the time of using the cash flows estimated 90 per cent likelihood of being (or granted by the Crown) to Financing activities The recoverable amount is the to settle the present obligation, other comprehensive income Financial instruments designated delivered. The proven oil and meet the Group’s emission settlement. higher of an asset’s fair value less its carrying amount is the present and accumulate in the cash at fair value through profit or loss Financing activities are those gas reserves used to deplete obligation. Emission units costs to sell, and the asset’s value (o) Emission obligations value of those cash flows. flow hedge reserve. The • Foreign exchange swaps activities that result in changes the oil and gas producing assets on hand and receivable are in use. In assessing value in use, Emission obligations are gain or loss relating to the to the size and composition is reviewed annually and is (r) Derivatives • Interest rate swaps and initially recognised at fair the estimated future cash flows recognised as a liability when ineffective portion is recognised of the capital structure of the disclosed in note 23. options value. Fair value is cost in the are discounted to their present the Group incurs the emission The Group has the following immediately in profit or loss. Group. They include both equity • Electricity swaps case of purchased units or value at a rate that reflects obligation. Emission units derivatives: and debt not falling within the the initial market value in the

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 43 NOTES TO THE FINANCIAL STATEMENTS CONTINUED

2. Summary of accounting policies continued definition of cash. Dividends and hedging instruments related to 4. Adoption of new and method. The initial assessment 6. Segment reporting interest paid in relation to the hedge transactions that have revised accounting by the Group indicates that For management purposes, the Group is currently organised into four segments as follows: capital structure are included in not yet occurred. standards, interpretations the jointly controlled assets financing activities. and amendments Segment Activity (w) Dividends and entities held by the Group Taxation credits (debits) There have been no new and (refer to note 26) are likely to Provision is made for the Customer experience Supply of energy (electricity, gas and LPG) to end-user customers as well as related services. disclosed in operating activities revised accounting standards, be classified as joint operations amount of dividends declared include the net amount of interpretations or amendments under NZ IFRS 11 and hence the Energy management Generation and trading of electricity and related products. The segment includes electricity sales to on or before the end of the GST paid/received during effective during the year which standard is unlikely to have a the wholesale electricity market, derivatives entered into to fix the price of electricity, and wholesale financial year but not distributed the year and net advances have a material impact on the material impact on the Group’s gas and coal sales. at balance date. and loans to subsidiaries Group’s accounting policies or financial statements. Oil and gas Exploration, development, production and sale of gas, LPG and light oil. disclosed in investing activities disclosures. NZ IFRS 12 Disclosure of 3. Prior period adjustment Corporate Head office functions including new generation investigation and development, fuel management, include the net amount paid/ Interests in Other Entities is The comparative results for the 5. Accounting standards, information systems, human resources, finance, corporate relations, property management, legal, received during the year. GST effective for annual reporting Group and Parent have been interpretations and corporate governance and the finance lease receivable relating to the Kinleith cogeneration plant. and advances and loans to periods beginning on or after restated for a prior period error amendments in issue Corporate revenue is made up of finance lease income, property rental and miscellaneous income. subsidiaries are disclosed on a 1 January 2013. The Group is relating to Wholesale contract not yet effective net basis as the gross amounts therefore required to adopt this revenues that were misstated. NZ IFRS 9 Financial Instruments The segments are based on the different products and services offered by the Group. No operating segments have been aggregated. do not provide meaningful standard by 30 June 2014. The error was detected during is effective for annual reporting information for financial NZ IFRS 12 introduces extensive the current financial year periods beginning on or after Group statement purposes. new disclosure requirements. and, in accordance with the 1 January 2015. The Group is Inter- The Group has yet to determine (v) Capital and reserves requirements stated in NZ IAS therefore required to adopt this Customer Energy segment the impact this standard will experience management Oil and gas Corporate items Total Asset revaluation reserve 8 ‘Accounting Policies, Changes standard by 30 June 2016. The have on the financial statement year ended 30 JUNE 2013 $000 $000 $000 $000 $000 $000 in Accounting Estimates and standard is not expected to The asset revaluation reserve disclosures. is used to record movements Errors’ certain comparative have a material impact on the Operating revenue NZ IFRS 13 Fair Value in the fair value of generation figures have been restated as Group’s financial statements. Electricity revenue Measurement is effective 1,115,418 1,120,523 – – (492,067) 1,743,874 assets in accordance with the shown below. The error had NZ IFRS 10 Consolidated for annual reporting periods Gas revenue 124,669 133,393 46,788 – (92,383) 212,467 property, plant and equipment the effect of overstating the Financial Statements is beginning on or after 1 January accounting policy. Group and Parent’s profit for the effective for annual reporting Petroleum revenue – – 80,516 – – 80,516 2013. The Group is therefore previous year. The error has been periods beginning on or after Cash flow hedging reserve required to adopt this standard Other revenue 2,848 8,984 18,714 2,824 – 33,370 corrected by restating for each 1 January 2013. The Group is The cash flow hedge reserve by 30 June 2014. NZ IFRS 13 Total revenue 1,242,935 1,262,900 146,018 2,824 (584,450) 2,070,227 affected financial statement line therefore required to adopt comprises the effective portion establishes a single framework item the prior period presented this standard by 30 June 2014. Operating expenses of the cumulative net change for measuring fair value which as described below. NZ IFRS 10 introduces a single in the fair value of cash flow it applies to both financial and Electricity purchase, transmission and distribution (947,776) (464,265) – – 492,067 (919,974) basis for consolidation for non-financial items measured all entities regardless of the Gas purchase and transmission (111,724) (154,278) – – 48,791 (217,211) Group and Parent at fair value. It also introduces type of investment it is. The Petroleum production, marketing and distribution – – (31,501) – – (31,501) 2012 a number of new disclosure standard is not expected to $000 requirements. The Group has two Fuel consumed – (303,526) 51 – 43,592 (259,883) have a material impact on the categories of assets and liabilities Impact on profit: Group’s financial statements. Employee benefits (24,964) (34,120) (7) (24,460) – (83,551) carried at fair value being (Decrease) in electricity revenue (5,356) Other operating costs (117,540) (83,319) (5,386) (15,413) – (221,658) NZ IFRS 11 Joint Arrangements generation assets and derivatives. Decrease in income tax expense 1,500 is effective for annual reporting The Group has yet to determine Earnings before net finance expense, income periods beginning on or after the impact this standard will tax, depreciation, depletion, amortisation, Net (decrease) in profit for the year (3,856) 1 January 2013. The Group is impairment, fair value changes and other gains have on these balances and and losses 40,931 223,392 109,175 (37,049) – 336,449 therefore required to adopt Represented by changes in the following balance associated disclosures. this standard by 30 June Depreciation, depletion and amortisation (3,990) (77,891) (40,387) (12,696) – (134,964) sheet line items: All other standards, 2014. NZ IFRS 11 classifies joint Impairment of non-current assets interpretations and amendments (2,346) (4,233) – – – (6,579) (Decrease) in cash and cash equivalents (5,356) arrangements as either joint approved but not yet effective Revaluation of generation assets – 1,006 – – – 1,006 Decrease in tax payable 1,500 operations or joint ventures. in the current year are either not NZ IFRS 11 requires joint Change in fair value of financial instruments – 33,497 (2,573) (472) – 30,452 Net (decrease) in total equity (3,856) applicable to the Group or are operators to recognise assets, not expected to have a material Other gains (losses) – (1,455) 49 (147) – (1,553) liabilities, revenue and expenses Impact on cash flow statement: impact on the Group’s financial Profit (loss) before net finance expense and in relation to their interests in statements and therefore have income tax 34,595 174,316 66,264 (50,364) – 224,811 Net (decrease) in receipts from customers (5,356) the joint operation whereas not been discussed. Finance revenue 135 – 121 485 – 741 (Decrease) in cash and cash equivalents joint ventures are required to be at 30 June 2012 (5,356) accounted for using the equity Finance expense (248) (2,908) (2,491) (73,608) – (79,255)

The corresponding notes have also been restated to reflect the Profit (loss) before income tax 34,482 171,408 63,894 (123,487) – 146,297 changes above. Other segment information Capital expenditure 5,402 145,576 3,091 13,114 – 167,183

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 45 NOTES TO THE FINANCIAL STATEMENTS CONTINUED

6. Segment reporting continued 8. other operating expenses

Group Group 2013 Group 2012 Parent 2013 Parent 2012 Note $000 $000 $000 $000 Inter- Customer Energy segment Other operating expenses include: experience management Oil and gas Corporate items Total Year ended 30 JUNE 2012 $000 $000 $000 $000 $000 $000 Auditor's remuneration: 1 Operating revenue – Audit services (Deloitte) 350 452 350 452 2 Electricity revenue 1,081,485 1,313,589 – – (471,828) 1,923,246 – Other services (Deloitte) 51 51 51 51 Gas revenue 121,956 162,043 48,351 – (96,564) 235,786 Directors' fees 480 534 480 534 Petroleum revenue – – 85,804 – – 85,804 Bad debts 6,437 8,501 6,437 8,191 Other revenue 3,922 10,825 102 5,141 – 19,990 Allowance for doubtful receivables 20 (1,041) (1,884) (1,041) (2,037) Total revenue 1,207,363 1,486,457 134,257 5,141 (568,392) 2,264,826 Donations 316 229 316 229 Operating expenses Employee benefits expense – defined contributions 2,735 2,566 2,735 2,566 Electricity purchase, transmission and distribution (895,762) (580,967) – – 471,828 (1,004,901) Inventory write-downs 31 928 31 928 Gas purchase and transmission (118,802) (181,470) – – 50,886 (249,386) Rental expenses on operating leases 8,298 8,203 8,298 7,980

Petroleum production, marketing and distribution – – (35,046) – – (35,046) 1 The 31 December 2011 half-year review fee is included in the 2012 audit services fee for Deloitte disclosed above. Fuel consumed – (334,106) – – 45,678 (288,428) 2 During the year, other services provided by Deloitte related to Trustee Reporting and review of the Global Reporting Initiative (‘GRI’) Employee benefits (29,119) (30,869) – (20,765) – (80,753) report (2012: GRI report and Trustee reporting). Other operating costs (110,342) (87,532) (4,299) (16,850) – (219,023) 9. Depreciation, depletion and amortisation Earnings before net finance expense, income tax, depreciation, amortisation, fair value changes and Group 2013 Group 2012 Parent 2013 Parent 2012 other gains and losses 53,338 271,513 94,912 (32,474) – 387,289 Note $000 $000 $000 $000 Depreciation, depletion and amortisation (4,890) (77,486) (56,297) (13,424) – (152,097) Depreciation of property, plant and equipment 22 80,571 80,373 80,571 80,259 Impairment of non-current assets – (12,145) (24) (200) – (12,369) Depreciation and depletion of oil and gas assets 23 40,386 56,297 – – Change in fair value of financial instruments – (18,716) 9,643 (2,245) – (11,318) Amortisation of intangibles 24 12,752 12,462 12,752 12,361 Other gains (losses) – (2,470) 387 (1,035) – (3,118) Amortisation of finance lease receivable reset adjustment 1,255 2,965 – – Profit (loss) before net finance expense and income tax 48,448 160,696 48,621 (49,378) – 208,387 134,964 152,097 93,323 92,620

Finance revenue 67 – 110 2,597 – 2,774 10. Impairment of non-current assets Finance expense (480) (3,413) (1,549) (85,908) – (91,350) Profit (loss) before income tax 48,035 157,283 47,182 (132,689) – 119,811 Group 2013 Group 2012 Parent 2013 Parent 2012 Note $000 $000 $000 $000 Other segment information Impairment of property, plant and equipment 22 6,579 12,345 6,579 12,345 Capital expenditure 4,219 40,800 23,252 11,350 – 79,621 Impairment (reversal) of oil and gas assets 23 – 24 – 24

Inter-segment revenue 6,579 12,369 6,579 12,369 Sales between segments is based on transfer prices developed in the context of long-term contracts. Impairment of property, plant and equipment relates to expenditure of a capital nature on Huntly units 1 to 4 and 6 included in the Energy Geographic information management segment. The expenditure is immediately impaired when incurred as the fair value of these units is nil (refer to note 22). All business segments operate within New Zealand. Impairment of oil and gas assets in the prior year relates to the exploration and evaluation assets relating to Mangatoa gas and condensate Major customer information field which was not economic to develop further. The amount written off represents capitalised exploration expenditure on that field to date The Group has no individual customers that account for 10 per cent or more of the Group’s external revenue (2012: none). and includes allowances for restoration and rehabilitation.

7. other revenue 11. change in fair value of financial instruments

Group 2013 Group 2012 Parent 2013 Parent 2012 Group 2013 Group 2012 Parent 2013 Parent 2012 $000 $000 $000 $000 Note $000 $000 $000 $000 Other operating revenue 9,852 12,727 9,852 12,727 Change in fair value of derivatives 32 32,803 (7,980) 35,377 (17,623) Finance and operating lease income 3,215 5,923 1,076 1,234 Fair value interest rate risk adjustment on borrowings 30 (2,351) (3,338) (2,351) (3,338) Government grants 17 67 17 67 30,452 (11,318) 33,026 (20,961) Miscellaneous income 1,686 1,273 1,678 1,223 Insurance compensation 18,600 – – – 33,370 19,990 12,623 15,251

The insurance proceeds relate to the Group’s share in an insurance settlement payment to the Kupe Joint Ventures Oil and Gas Project for claims in respect of its offshore subsea utilities umbilical cable and umbilical clamps during the construction phase of the project.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 47 12. other gains (losses) 15. Income tax continued Reconciliation of income tax expense (credit) on pre-tax accounting profit to income tax expense (credit) Group 2013 Group 2012 Parent 2013 Parent 2012 $000 $000 $000 $000 Group 2013 Group 2012 Parent 2013 Parent 2012 Net gain (loss) on financial liabilities measured at amortised cost: Note $000 $000 $000 $000 – Net realised foreign exchange (loss) (351) (830) (213) (1,166) Profit (loss) before income tax 146,297 119,811 92,257 80,627 – Net unrealised foreign exchange gain 188 52 2 2 Income tax at 28% 40,963 33,547 25,832 22,576 Other gains (losses): Tax effect of adjustments:

– Net (loss) on disposal of property, plant and equipment (266) (561) (266) (561) – Under (over) provided in prior years 380 (1,281) 377 (696) – Net (loss) on disposal of emission units (1,124) (1,779) (1,124) (1,779) – Non taxable/deductible items 430 1,152 429 1,151 (1,553) (3,118) (1,601) (3,504) 41,773 33,418 26,638 23,031

13. Finance revenue Income tax recognised directly in other comprehensive income

Group 2013 Group 2012 Parent 2013 Parent 2012 Cash flow hedges 32 (2,296) (720) (1,784) (648) Note $000 $000 $000 $000 Revaluation of generation assets 43,030 – 43,030 – Interest from other loans and receivables and short-term deposits 741 2,774 621 2,654 16 40,734 (720) 41,246 (648) Interest from subsidiaries 28 – – 17,785 22,220 Imputation credits 741 2,774 18,406 24,874 Imputation credits available for use in subsequent reporting periods 294,505 290,644 14. Finance expense 297,151 261,386

Group 2013 Group 2012 Parent 2013 Parent 2012 16. Deferred tax liability Note $000 $000 $000 $000 Interest on borrowings (excluding Capital Bonds) 46,049 61,281 46,049 61,281 Group Interest on Capital Bonds 29,214 23,414 29,214 23,414 Property, Finance plant and Oil and gas lease Interest on finance lease liabilities 819 819 599 599 equipment assets Provisions liabilities Other Total Interest on other loans and payables 220 234 220 222 Note $000 $000 $000 $000 $000 $000 Interest on advances from subsidiaries 28 – – 7,545 7,962 Balance as at 1 July 2011 414,614 (50,985) (28,343) (6,109) (10,951) 318,226 Total interest expense 76,082 85,748 83,627 93,698 Amount recognised in profit or loss 15 (1,208) 14,926 (5,792) 559 (5,268) 3,217 Amount recognised in other comprehensive Other finance charges 486 1,762 486 1,711 income 15 – – – – (720) (720)

Time value of money adjustments on provisions 31 5,006 4,293 2,515 2,745 Balance as at 30 June 2012 413,406 (36,059) (34,135) (5,550) (16,939) 320,723 81,574 91,803 86,628 98,154 Amount recognised in profit or loss 15 (2,469) 15,412 836 632 5,697 20,108 Capitalised finance expenses 22 (2,319) (453) (2,319) (453) Amount recognised in other comprehensive 79,255 91,350 84,309 97,701 income 15 43,030 – – – (2,296) 40,734 Balance as at 30 June 2013 453,967 (20,647) (33,299) (4,918) (13,538) 381,565 Weighted average capitalisation rate 0.2% 0.0% 0.2% 0.0% Parent Interest on Capital Bonds includes $4.6 million of accelerated bond issue amortisation costs. These costs were accelerated following the capital bond modification process. Refer to note 30 for further details. Property, Finance plant and lease 15. Income tax equipment Provisions liabilities Other Total Note $000 $000 $000 $000 $000 Group 2013 Group 2012 Parent 2013 Parent 2012 Balance as at 1 July 2011 291,674 (18,117) (6,109) (11,951) 255,497 Note $000 $000 $000 $000 Amount recognised in profit or loss 15 7,859 267 559 (7,634) 1,051 Income tax expense (credit) Amount recognised in other comprehensive income 15 – – – (648) (648) Current tax Effect of amalgamation of subsidiaries (50) – – (741) (791) – Current year 20,683 29,633 8,864 21,123 Balance as at 30 June 2012 299,483 (17,850) (5,550) (20,974) 255,109 – Under (over) provided in prior years 982 568 870 857 Amount recognised in profit or loss 15 7,727 (729) 632 9,274 16,904 Deferred tax Amount recognised in other comprehensive income 15 43,030 – – (1,784) 41,246 – Current year (excluding change in tax rate) 20,710 5,066 17,397 2,604 Balance as at 30 June 2013 350,240 (18,579) (4,918) (13,484) 313,259 – Under (over) provided in prior years (602) (1,849) (493) (1,553) Income tax expense (credit) 41,773 33,418 26,638 23,031 Current tax 21,665 30,201 9,734 21,980 Deferred tax 16 20,108 3,217 16,904 1,051 41,773 33,418 26,638 23,031

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 49 16. Deferred Tax Liability continued 20. Receivables and prepayments continued Unrecognised deferred tax assets and liabilities Movement in the allowance for doubtful receivables Taxable temporary differences in relation to investments in subsidiaries for which deferred tax liabilities have not been recognised amounts to Group 2013 Group 2012 Parent 2013 Parent 2012 $33.5 million (2012: $25.7 million). Note $000 $000 $000 $000 During the year, Stage One of the Tekapo Canal Remediation Project was completed. While it is Management’s view that the remediation costs are (9,718) (9,244) deductible as repairs and maintenance, they accept that there is a potential risk that these costs may be considered by the Inland Revenue to be capital Balance at 1 July (7,937) (7,937) in nature for tax purposes. Consequently, as a prudent measure, at 30 June 2013 Management treated the costs as capital in nature. Further work is Amounts written off (recovered) during the year 182 (262) 182 (889) to be done to finalise the treatment of this expenditure for tax return purposes. Potentially if the expenditure is determined to be fully deductible as Decrease in allowance recognised in expenditure 8 1,041 1,884 1,041 2,037 repairs and maintenance it could reduce tax payable and increase deferred tax liabilities by up to $29.4 million (2012: Nil). Decrease in allowance recognised in other revenue 147 159 147 159 Tax depreciation deductions are disallowed for buildings with estimated useful lives of 50 years or more from 1 July 2011. As a result, adjustments Balance at 30 June (6,567) (7,937) (6,567) (7,937) to deferred tax liabilities totalling $12.4 million were made in the 2010 and 2011 year relating to generation powerhouse assets, offices and leasehold improvements. While it is Management’s view that powerhouse assets should not be captured, they accept that there is a potential risk that a portion Changes in the allowance for occupier debt is recognised in other revenue in profit or loss. All other allowances for doubtful receivables is recognised in of the asset may be considered by the Inland Revenue to be a building for tax purposes with the balance more appropriately being identified as plant. the allowance for doubtful receivables expense within other operating expenses in profit or loss. Consequently, as a prudent measure, a deferred tax liability was recognised. In the event that powerhouse assets are not deemed to be buildings by the The total value of individually impaired receivables included in the allowance for doubtful receivables was $0.9 million for the Group and $0.9 million for Inland Revenue, deferred tax liabilities may be reduced by the amount previously recognised. the Parent (2012: $1.6 million and $1.6 million respectively). Receivables past due but not impaired 17. Dividends Included in trade receivables are receivables that are past due but not impaired. These relate to customers who pay outside normal A fully imputed dividend of $57.0 million (10.5 cents per share) was paid during the year (2012: nil). commercial terms and for whom there is no recent history of default. Below is the value of receivables past due that have not been impaired A fully imputed final dividend of $57.0 million (10.5 cents per share) was declared subsequent to balance date. or provided for in the allowance for doubtful receivables:

18. Share capital Group 2013 Group 2012 Parent 2013 Parent 2012 The share capital is represented by 540,565,000 (2012: 540,565,000) ordinary shares authorised, issued and fully paid. All shares have equal $000 $000 $000 $000 voting rights and share equally in dividends and any surplus on winding up. The shares have no par value. Age category

19. cash and cash equivalents 30–60 days 1,917 2,411 1,917 2,411 60–90 days 680 706 680 706 Group 2013 Group 2012 Parent 2013 Parent 2012 >90 days 2,152 1,679 2,152 1,679 $000 $000 $000 $000 Total receivables past due but not impaired or provided for 4,749 4,796 4,749 4,796 Cash at bank and on hand 22,663 17,728 13,965 9,659 Short-term deposits – 7,100 – 7,100 Finance lease receivable On 1 April 1999, Kinleith Cogeneration Limited (a subsidiary company) purchased a finance lease receivable from the Electricity Corporation 22,663 24,828 13,965 16,759 of New Zealand (‘ECNZ’) at book value as at that date. The lease related to a 15 year lease of a cogeneration plant. The Group undertook a review of the net asset values at the time of acquisition. This review resulted in an increase in the value of the finance lease receivable by 20. Receivables and prepayments $38.2 million, known as a reset adjustment. Since acquisition date, the reset adjustment was amortised to profit or loss over the remaining term of the lease, at a rate that resulted in the net investment in the finance lease approximating fair value. The amortisation of the reset Group 2013 Group 2012 Parent 2013 Parent 2012 adjustment is disclosed in note 9. The lease expired in January 2013. Note $000 $000 $000 $000

Trade receivables 163,268 223,042 152,295 218,417 Group 2013 Group 2012 $000 $000 Accrued revenue for unread gas and electricity meters 78,048 73,368 78,048 73,368 Gross investment in finance lease: Allowance for doubtful receivables (6,567) (7,937) (6,567) (7,937) Not later than one year – 7,639 234,749 288,473 223,776 283,848 – 7,639 Net advances to (from) subsidiaries 28 – – 123,799 193,006 Unearned finance revenue – (2,033) Finance lease receivable – 6,861 – – Present value of future minimum lease receipts – 5,606 Emission units receivable 778 2,937 778 2,937 Unamortised finance lease receivable reset adjustment – 1,255 Other receivables 19,100 334 159 192 Net investment in finance lease – 6,861 Prepayments 14,072 12,409 11,208 8,340 The present value of future minimum lease receipts may be analysed as follows: Total 268,699 311,014 359,720 488,323 Not later than one year – 5,606 Current 267,984 309,843 359,005 487,152 Present value of future minimum lease receipts – 5,606 Non-current 715 1,171 715 1,171 The net investment in finance lease may be analysed as follows: Total 268,699 311,014 359,720 488,323 Not later than one year – 6,861 Estimating accrued revenue for unread gas and electricity meters Net investment in finance lease – 6,861 The key assumptions used to calculate the accrual for unread gas and electricity meters are volume and price. Where possible, the Group estimates the volume of gas and electricity consumed since the last meter reading up to balance date based on the volume recorded in Impairment of emission units receivable the last two actual meter readings. The accrual is also compared to electricity purchases and line losses for consistency. Given the accrual During the year, the Group wrote down the value of its emission units receivable by $1.9 million (2012: $6.6 million) to reflect the net involves estimating the volume of gas and electricity consumed, actual invoices could be materially different to the accrual recognised at recoverable value of the asset. The Group’s accounting policy for emission obligations is to recognise the liability at the average cost of its balance date. If the volume estimated at balance date was to increase or decrease by 15 per cent, the accrual would increase or decrease emission units on hand and receivable; consequently, the Group wrote down its emission obligation by the same amount. The write-down by $11.7 million. While a change in volume estimates would have an impact on accrued revenue, it would also have an impact on accrued of both the emission units on hand and receivable, and the emission obligation was offset in the profit and loss as this reflects the substance expenses. There have been no significant changes in the assumptions used to calculate the accrual in comparison to the prior year. of the transaction. There was no overall impact on net profit as a result of the write-down.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 51 21. Inventories 22. Property, plant and equipment continued

Group 2013 Group 2012 Parent 2013 Parent 2012 Parent $000 $000 $000 $000 Other Fuel 94,538 105,995 94,538 105,995 Buildings property, Petroleum products 472 1,801 17 27 Generation and plant and Capital work assets improvements equipment in progress Total Consumables and spare parts 19,146 19,350 19,146 19,350 Note $000 $000 $000 $000 $000 Total 114,156 127,146 113,701 125,372 Carrying value at 1 July 2011 2,540,696 1,637 21,387 62,653 2,626,373 Current 77,226 127,146 76,771 125,372 Additions – – – 46,728 46,728 Non-current – – 36,930 36,930 Capitalised finance expenses 14 – – – 453 453 Total 114,156 127,146 113,701 125,372 Change in rehabilitation and contractual arrangement assets (927) – – – (927) Fuel inventories consist mainly of coal used in electricity production. The amount of fuel inventories (excluding natural gas) expensed during Transfer to (from) capital work in progress 66,944 – 15,942 (82,886) – the year was $119.6 million (2012: $132.6 million). Assets transferred on amalgamation of subsidiaries – – 448 – 448 Petroleum products consist of LPG and light crude oil held for resale, produced from the Kupe production facility. The amount of petroleum products expensed during the year was $17.8 million (2012: $18.8 million). Disposals (800) – – – (800) Consumables and spare parts are held to service or repair operating plant. Consumables and spare parts relating to Huntly units 1 to 4 and Impairment 10 (12,345) – – – (12,345) 6 are impaired when incurred as the fair value of these units is nil. During the year, $0.005 million (2012: $0.9 million) of consumables and Depreciation expense 9 (73,801) (47) (6,411) – (80,259) spare parts relating to Huntly were impaired. Carrying value at 30 June 2012 2,519,767 1,590 31,366 26,948 2,579,671 22. Property, plant and equipment Additions – – – 137,391 137,391 Revaluation gains (losses) 155,573 – – – 155,573 Group Other Capitalised finance expenses 14 – – – 2,319 2,319 Buildings property, Change in rehabilitation and contractual arrangement assets 4,060 – – – 4,060 Generation and plant and Capital work assets improvements equipment in progress Total Transfer to (from) capital work in progress 109,455 1,588 4,143 (115,186) – Note $000 $000 $000 $000 $000 Impairment 10 (6,579) – – – (6,579) 2,540,696 1,637 21,949 63,131 2,627,413 Carrying value at 1 July 2011 Depreciation expense 9 (73,686) (128) (6,757) – (80,571) Additions – – – 47,233 47,233 Carrying value at 30 June 2013 2,708,590 3,050 28,752 51,472 2,791,864 Capitalised finance expenses 14 – – – 453 453 Change in rehabilitation and contractual arrangement assets (927) – – – (927) Summary of cost and accumulated depreciation and impairment Transfer to (from) capital work in progress 66,944 – 15,960 (82,904) – As at 30 June 2012 Disposals (800) – – – (800) Cost – 2,024 88,945 5,837 96,806 Impairment 10 (12,345) – – – (12,345) Fair value 2,605,041 – – 21,111 2,626,152 Depreciation expense 9 (73,801) (47) (6,525) – (80,373) Accumulated depreciation and impairment (85,274) (434) (57,579) – (143,287) Carrying value at 30 June 2012 2,519,767 1,590 31,384 27,913 2,580,654 Carrying value at 30 June 2012 2,519,767 1,590 31,366 26,948 2,579,671 Additions – – – 144,689 144,689 As at 30 June 2013 Revaluation gains (losses) 155,573 – – – 155,573 Cost – 3,613 93,088 51,472 148,173 Capitalised finance expenses 14 – – – 2,319 2,319 Fair value 2,708,590 – – – 2,708,590 Change in rehabilitation and contractual arrangement assets 4,060 – – – 4,060 Accumulated depreciation and impairment – (563) (64,336) – (64,899) Transfer to (from) capital work in progress 109,455 1,588 4,143 (115,186) – Carrying value at 30 June 2013 2,708,590 3,050 28,752 51,472 2,791,864 Impairment 10 (6,579) – – – (6,579) Depreciation expense 9 (73,686) (128) (6,757) – (80,571) Valuation of generation assets Carrying value at 30 June 2013 2,708,590 3,050 28,770 59,735 2,800,145 Generation assets carried at fair value, were revalued at 30 June 2013 to $2,708.6 million. They form a major part of the total generation site assets. Summary of cost and accumulated depreciation and impairment Total generation site assets are valued at $2,752.0 million and comprise the generation assets carried at fair value, and certain other As at 30 June 2012 property, plant and equipment and capital works in progress of $15.1 million and $28.1 million respectively, both of which are carried at cost. Cost – 2,024 88,963 6,802 97,789 Fair value of generation assets is determined using a discounted cash flow model. The valuation was based on the present value of the estimated future cash flows of the assets. The valuation was prepared by the Group and was independently reviewed by Fair value 2,605,041 – – 21,111 2,626,152 PricewaterhouseCoopers (‘PwC’) which has the appropriate qualifications and experience in valuing generation assets. Accumulated depreciation and impairment (85,274) (434) (57,579) – (143,287) Carrying value at 30 June 2012 2,519,767 1,590 31,384 27,913 2,580,654 As at 30 June 2013 Cost – 3,613 93,106 59,735 156,454 Fair value 2,708,590 – – – 2,708,590 Accumulated depreciation and impairment – (563) (64,336) – (64,899) Carrying value at 30 June 2013 2,708,590 3,050 28,770 59,735 2,800,145

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 53 22. Property, plant and equipment continued 23. Oil and gas assets The net change in fair value was a $155.6 million increase in the book value of generation assets. The key assumptions and judgements in the valuation model were: Group Exploration Oil and gas Assumptions Method of determination and evaluation producing Other oil and Wholesale electricity price path In-house market modelling of the wholesale electricity market cross-checked against publicly available price paths expenditure assets gas assets Total Note $000 $000 $000 $000 Projected generation output In-house market modelling of the wholesale electricity market Carrying value at 1 July 2011 862 444,690 17,238 462,790 Fuel and emissions costs Prices from existing fuel and emission contracts and in-house market modelling where contracted volumes do not fully cover projected requirements Additions 361 2,087 141 2,589 Projected operational and capital In-house business plans and projections based on contracted positions and asset-management plans Change in rehabilitation asset – 20,092 – 20,092 expenditure Impairment 10 (24) – – (24) Capacity and life assumptions for In-house assessments and asset-management plans. Depreciation and depletion expense 9 – (55,396) (901) (56,297) each generation asset Carrying value at 30 June 2012 1,199 411,473 16,478 429,150 Discount rate Pre-tax equivalent discount rate scenarios ranging between 11.3 per cent and 12.8 per cent Additions 92 367 – 459 The selection of variables used to value generation assets requires significant judgement and therefore there is a range of reasonably Change in rehabilitation asset – 2,632 – 2,632 possible assumptions that could be used in estimating the fair value of these assets. The key assumptions driving potential changes to the forecast internally generated price path are changes in demand, hydrology and new-generation build. Any one of these factors could result Depreciation and depletion expense 9 – (39,493) (893) (40,386) in a change to the price path. If the price path and/or generation output volumes increased by 10 per cent, this would result in the carrying Carrying value at 30 June 2013 1,291 374,979 15,585 391,855 value of the generation assets increasing to $3,236 million. If the price path decreased by 10 per cent, the carrying value would decrease to $2,269 million. If the discount rate decreased by 1 per cent, this would result in the carrying value of the generation assets increasing to Summary of cost and accumulated depreciation and impairment $3,175 million. If the discount rate increased by 1 per cent, then the carrying value would decrease to $2,425 million. As at 30 June 2012 The valuation was calculated by generating site except for the Huntly site where it was calculated by type of unit (units 1–4, unit 5 and Cost 19,716 533,388 18,511 571,615 unit 6). For those sites where the valuation was less than the carrying value prior to revaluation, the change was recognised in the Accumulated depreciation, depletion and impairment (18,517) (121,915) (2,033) (142,465) revaluation reserve up to the value that was previously recorded in the revaluation reserve prior to the revaluation. Any remaining difference between the change in fair value and the revaluation reserve for these sites was recognised in profit or loss. For those sites where the Carrying value at 30 June 2012 1,199 411,473 16,478 429,150 valuation was higher than was the carrying value, the change in fair value was recognised in the asset revaluation reserve. As at 30 June 2013 As a consequence of the revaluation, accumulated depreciation on revalued assets was reset to nil at 30 June 2013, and a revaluation Cost 19,808 536,387 18,511 574,706 surplus of $154.6 million was recognised in the revaluation reserve and a revaluation gain of $1.0 million was recognised in profit or loss. Accumulated depreciation, depletion and impairment (18,517) (161,408) (2,926) (182,851) The surplus arose in part as a result of the exclusion of corporate overheads, a small reduction in the weighted average cost of capital, offset by a reduction in the short term electricity price path. Carrying value at 30 June 2013 1,291 374,979 15,585 391,855

Reconciliation of changes to the fair value of assets Change in rehabilitation asset The change in rehabilitation asset relates to the rehabilitation and restoration provision for the Kupe Joint Venture onshore and offshore Group and Parent facility. In 2013, the key assumption around long-term inflation was reviewed resulting in the year-end provision being adjusted by Generation assets $2.6 million (2012: $20.1 million adjustment relating to a review of the estimated removal costs). $000 The Group has a 31 per cent interest in the Kupe Joint Venture. Kupe production facilities commenced commercial operations on Carrying value at 30 June 2013 prior to revaluation 2,553,017 22 March 2010. Gain recognised in other comprehensive income 154,567 The table below presents the proven oil and gas reserves used to deplete the oil and gas producing assets. The Group has a 31 per cent Gain recognised in profit or loss 1,006 interest in the reserves shown; Net gain on revaluation 155,573 Kupe permit Fair value at 30 June 2013 2,708,590 Total petajoules Sales gas petajoules LPG kilotonnes Light oil kilobarrels equivalent Generation assets carried at historical cost 2013 2012 2013 2012 2013 2012 2013 2012 The table below presents the carrying value of generation assets as if they were recognised on the historical-cost basis: Kupe – proven (P90) 247.9 213.0 1,048.0 834.9 14,817.0 11,647.0 379.7 317.2 Group and Parent Kupe – proven and probable (P50) 322.7 272.7 1,368.3 1,113.8 18,302.0 18,644.0 489.1 431.4 2013 2012 Because the geology of the Kupe oil and gas field subsurface cannot be examined directly, an indirect technique known as volumetrics has $000 $000 been used to estimate the size and recoverability of the reserve. Reserve estimates contain uncertainty and these are reviewed periodically. Cost 2,555,730 2,444,550 In July 2012, Origin Energy (as operator of the Kupe Joint Venture) announced revised estimates of the Kupe reserves, which Genesis Energy Accumulated depreciation and impairment (874,249) (802,804) had independently reviewed. There are high levels of uncertainty in terms of accessibility of reserves through sealing faults and pressure support. Proven reserve estimates have a 90 per cent likelihood of being delivered. A reduction of 10 per cent in these reserves would Carrying value at 30 June 1,681,481 1,641,746 impact depletion charges by up to $5.8 million per annum at current production rates. Resource consents The Group requires resource consents (authorisations to use land, water and air) to enable it to operate its thermal, hydro and stations. The duration of resource consents varies up to a maximum of 35 years. During the prior year, the resource consents relating to the operation of the Huntly Power Station were extended to 30 June 2037.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 55 24. Intangible assets 24. Intangible assets continued

Group Parent Computer Emission Naming Computer Emission Naming Goodwill software units rights Total Goodwill software units rights Total Note $000 $000 $000 $000 $000 Note $000 $000 $000 $000 $000 Carrying value at 1 July 2011 102,599 15,263 3,907 3,576 125,345 Carrying value at 1 July 2011 99,866 15,043 3,907 3,576 122,392 Additions – 6,418 18,508 2,836 27,762 Additions – 6,418 18,508 2,836 27,762 Disposed or surrendered – 2 (14,791) – (14,789) Assets transferred on amalgamation of subsidiaries 2,733 121 – – 2,854 Impairment – – (6,756) – (6,756) Disposed or surrendered – – (14,791) – (14,791) Amortisation expense 9 – (10,741) – (1,721) (12,462) Impairment – – (6,756) – (6,756)

Carrying value at 30 June 2012 102,599 10,942 868 4,691 119,100 Amortisation expense 9 – (10,640) – (1,721) (12,361) Additions – 15,823 22,185 1,261 39,269 Carrying value at 30 June 2012 102,599 10,942 868 4,691 119,100 Disposed or surrendered – – (5,361) – (5,361) Additions – 15,823 22,185 1,261 39,269 Impairment – – (16,043) – (16,043) Disposed or surrendered – – (5,361) – (5,361) Amortisation expense 9 – (10,971) – (1,781) (12,752) Impairment – – (16,043) – (16,043) Amortisation expense 9 – (10,971) – (1,781) (12,752) Carrying value at 30 June 2013 102,599 15,794 1,649 4,171 124,213 Carrying value at 30 June 2013 102,599 15,794 1,649 4,171 124,213 Summary of cost and accumulated depreciation and impairment Summary of cost and accumulated depreciation and impairment As at 30 June 2012 As at 30 June 2012 Cost 102,599 91,624 7,624 10,017 211,864 Cost 102,599 91,624 7,624 10,017 211,864 Accumulated amortisation and impairment – (80,682) (6,756) (5,326) (92,764) Accumulated amortisation and impairment – (80,682) (6,756) (5,326) (92,764) Carrying value at 30 June 2012 102,599 10,942 868 4,691 119,100 Carrying value at 30 June 2012 102,599 10,942 868 4,691 119,100 Current – – 868 – 868 Current – – 868 – 868 Non-current 102,599 10,942 – 4,691 118,232 Non-current 102,599 10,942 – 4,691 118,232 Carrying value at 30 June 2012 102,599 10,942 868 4,691 119,100 Carrying value at 30 June 2012 102,599 10,942 868 4,691 119,100 As at 30 June 2013 As at 30 June 2013 Cost 102,599 107,447 17,692 10,099 237,837 Cost 102,599 107,447 17,692 10,099 237,837 Accumulated amortisation and impairment – (91,653) (16,043) (5,928) (113,624) Accumulated amortisation and impairment – (91,653) (16,043) (5,928) (113,624) Carrying value at 30 June 2013 102,599 15,794 1,649 4,171 124,213 Carrying value at 30 June 2013 102,599 15,794 1,649 4,171 124,213 Current – – 1,649 – 1,649 Current – – 1,649 – 1,649 Non-current 102,599 15,794 – 4,171 122,564 Non-current 102,599 15,794 – 4,171 122,564 Carrying value at 30 June 2013 102,599 15,794 1,649 4,171 124,213 Carrying value at 30 June 2013 102,599 15,794 1,649 4,171 124,213

Impairment testing of goodwill For the purpose of impairment testing, goodwill has been allocated to the Customer experience cash-generating unit (‘CGU’). The impairment test is based on an estimated discounted cash flow analysis (value in use). Estimated future cash flow projections are based on the Group’s five-year business plan for the Customer experience business unit and are extrapolated using a 2 per cent year-on-year growth rate (2012: 2 per cent). The estimated future cash flow projections are discounted using pre-tax equivalent discount rate scenarios ranging between 11 per cent and 12.8 per cent (2012: 11.8 per cent and 13.1 per cent). Any reasonably possible further change in key assumptions on which the recoverable amount is based is not expected to cause the carrying value of the Customer experience goodwill to exceed its recoverable amount. Key assumptions in the value-in-use calculation were:

Assumptions Method of determination Customer numbers and customer churn Review of actual customer numbers and historical data regarding movements in customer numbers (the historical analysis is considered against expected market trends and competition for customers) Gross margin Review of actual gross margins and consideration of expected market movements and impacts Cost to serve Review of actual costs to serve and consideration of expected future costs

Impairment of emission units During the year, the Group wrote down the value of its emission units on hand by $16.0 million (2012: $6.8 million) to reflect the net recoverable value of the asset. Refer to note 20 for the impact on net profit.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 57 25. Investments in subsidiaries 27. Jointly controlled assets and entities continued On 1 March 2012, Energy Online Limited was amalgamated into the Parent. The amalgamation resulted in an increase in the Parent’s assets The table below reflects the Group’s share of jointly controlled assets and entities. of $55.8 million, an increase in liabilities of $21.8 million and an increase in retained earnings of $34.0 million. During 2012, Genesis Power Investments Limited, GP No. 1 Limited, GP No. 2 Limited and GP No. 5 Limited issued additional share capital of Group $20.8 million to the Parent. 2013 2012 $000 $000 Interest held Current assets 2012 2013 Cash and cash equivalents 8,692 8,054 Name of entity Principal activity % % Receivables and prepayments 626 615 Genesis Power Investments Limited Holding company 100 100 Inventories 848 895 Kinleith Cogeneration Limited Special-purpose finance company 100 100 Total current assets 10,166 9,564 Kupe Holdings Limited Joint venture holding company 100 100 Non-current assets GP No. 1 Limited Joint venture holding company 100 100 Oil and gas assets 467,033 459,194 GP No. 2 Limited Joint venture holding company 100 100 Total non-current assets 467,033 459,194 GP No. 5 Limited Joint venture holding company 100 100 Total share of assets employed in joint venture 477,199 468,758 All subsidiaries have a 30 June balance date and are incorporated in New Zealand. Current liabilities Movements in the carrying value of investments in subsidiaries is set out below: Payables and accruals (8,797) (8,613) Parent Total share of liabilities employed in joint venture (8,797) (8,613) 2013 2012 $000 $000 Revenue 998 282 Carrying value at 1 July 50,573 29,753 Petroleum production, marketing and distribution (19,410) (24,668) Acquisition of shares in existing subsidiaries – 20,820 Share of loss (18,412) (24,386) Carrying value at 30 June 50,573 50,573 The Group’s share of capital expenditure commitments relating to joint ventures is disclosed in note 34.

26. Investments in associates 28. Related-party transactions Shareholder and entities controlled and related to the shareholder Interest held The Crown owns 100 per cent of the shares of the Parent. The Parent and Group transact with other Crown-controlled and related entities 2013 2012 independently and on an arm’s-length basis for the purchase of coal and the use of coal-handling facilities, emission activities including Name of entity Principal activity % % emission unit purchases and sales, scientific consultancy services, electricity transmission, postal services and energy-related products Gasbridge Limited Agency for joint venture 50 50 (including electricity derivatives). All transactions with Crown-controlled and related entities are based on commercial terms and conditions and relevant market drivers. All associates have a 30 June balance date and are incorporated in New Zealand. During the 2012 year, Energyhedge Limited was There were no individually significant transactions with the Crown and Crown-controlled and related entities during the year (2012: nil). de-registered. The carrying value of the investment in associates at year-end was nil (2012: nil) and there were no movements in the Other transactions with Crown-controlled and related entities which are collectively but not individually significant relate to the purchase investment in associates during the year (2012: nil). The Group’s share of the net profit for Gasbridge Limited was nil (2012: nil). of coal and electricity derivatives. Approximately 84 per cent (2012: 91 per cent) of the coal acquired by the Group during the year was The Group’s share of assets and liabilities was $0.001 million (2012: $0.001 million). supplied by Crown-controlled and related entities under coal supply agreements which expire in August 2014. Approximately 29 per cent (2012: 97 per cent) of the value of electricity derivatives held by the Group at year-end are held with Crown-controlled and related entities. 27. Jointly controlled assets and entities The contracts expire at various times with the latest one being December 2025. The Group has a 31 per cent interest in the Kupe production facility and Petroleum Mining Permit 38146 held by the Kupe Joint Venture. Key management personnel compensation The Group has a 50 per cent interest in the Gasbridge Joint Venture. The Gasbridge Joint Venture was established to investigate the feasibility of developing facilities to import Liquefied Natural Gas at the Port of Taranaki. The Joint Venture has delayed this investigation The key management personnel of the Group consist of the Directors and the Executive Management team. Key management personnel until further notice. compensation is as follows:

Interest held Group 2013 2012 2013 2012 Name of entity Principal activity % % $000 $000 Kupe Joint Venture Petroleum production and sale 31 31 Short‑term benefits 5,016 5,251 Gasbridge Joint Venture Liquefied natural gas importation development 50 50 Post‑employment benefits 160 158 Termination benefits 250 – Total key management personnel compensation 5,426 5,409

Other transactions with key management personnel or entities related to them Key management personnel and their families may purchase gas and electricity from the Group on an arm’s-length basis. No other transactions took place between key management personnel and the Group or Parent (2012: nil). As at 30 June 2013, the balance payable to key management personnel was $0.02 million (2012: $0.02 million).

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 59 28. Related-party transactions continued 28 Related-party transactions continued Subsidiaries Other environmental restoration and enhancement, and charitable trusts Subsidiaries of the Group are disclosed in note 25. Transactions between the Parent and its subsidiaries are disclosed below: The Group has identified a number of other trusts established for charitable or environmental enhancement and restoration purposes which fall within the scope of the definition of related parties. During the year, the Group made payments of $0.8 million (2012: $0.1 million) Parent to these trusts.

Transaction value (inflow Outstanding balance 29. Payables and accruals (outflow)) for the year (payable) receivable ended 30 June as at 30 June Group 2013 Group 2012 Parent 2013 Parent 2012 2013 2012 2013 2012 $000 $000 $000 $000 Name Transaction $000 $000 $000 $000 Trade payables and accruals 215,013 268,631 203,098 258,016 GP No. 1 Limited No interest is charged on the advance to/from GP No. 1 Limited. – – (610) (610) Employee benefits 6,160 5,775 6,160 5,775 Genesis Power Investments Limited, Interest is charged to the Parent on advances from Emission obligations 4,273 14,415 4,255 14,333 Energy Online Limited and Kinleith subsidiaries. The advances are unsecured and have 288,821 278,124 Cogeneration Limited no repayment terms or conditions. Interest is charged Total 225,446 213,513 at a rate equal to the Parent's average finance expense. Current 224,815 288,342 212,882 277,645 Interest charged is added to the advance account. The outstanding balance includes interest and Non-current 631 479 631 479 advances payable. (7,962) (102,407) (7,545) (114,401) Total 225,446 288,821 213,513 278,124 Kupe Holdings Limited, GP No. 2 Interest is charged by the Parent on advances to Limited and GP No. 5 Limited subsidiaries. The advances are unsecured and have Trade payables and accruals consist mainly of amounts owing to suppliers for goods and services supplied in the ordinary course of no repayment terms or conditions. Interest is charged business, and amounts owing to NZX Limited for wholesale electricity purchases from the market. at a rate equal to the Parent's average finance expense. Interest charged is added to the advance account. 30. Borrowings The outstanding balance includes interest and advances receivable. 17,785 22,220 238,810 296,023 Group 2013 Group 2012 Parent 2013 Parent 2012 Supply agreement for the purchase of LPG and gas $000 $000 $000 $000 produced from the Kupe Joint Venture. The contract continues until the total quantity of LPG and gas under Revolving credit 189,526 307,438 189,526 307,438 the contract has been paid or delivered. (61,400) (68,400) (7,200) (6,500) Wholesale term notes 321,366 200,699 321,366 200,699 The Parent has entered into foreign currency swaps Retail term notes 228,700 228,005 228,700 228,005 with the Kupe companies. 27 (2,443) (83) (2,116) Capital Bonds 279,691 274,058 279,691 274,058 The Parent has entered into oil swaps and options with the Kupe companies. 3,788 (1,211) (1,048) (3,119) Finance lease liabilities 5,599 9,280 5,599 9,280 Genesis Power Investments Limited, The Parent acquired additional share capital in these Total 1,024,882 1,019,480 1,024,882 1,019,480 GP No. 1 Limited, GP No. 2 Limited subsidiaries (refer to note 24). Current 412,925 16,494 412,925 16,494 and GP No.5 Limited – (20,820) – – Non-current 611,957 1,002,986 611,957 1,002,986 Genesis Power Investments Limited, Transfer of tax losses/(deposits). Energy Online Limited, Kinleith Total 1,024,882 1,019,480 1,024,882 1,019,480 Cogeneration Limited, Kupe Holdings Limited, GP No. 1 Limited, GP No. 2 Refinancing of revolving credit Limited and GP No. 5 Limited (7,074) (6,636) – – No significant changes to the revolving credit arrangements occurred during the year. Associates Group 2012 Parent 2012 Associates of the Group are disclosed in note 26. There were no transactions with associates during the year (2012: nil). Group 2013 Parent 2013 $000 $000 $000 $000 Jointly controlled assets and entities Revolving credit Jointly controlled assets and entities of the Group are disclosed in note 27. There were no transactions with jointly controlled assets and Expiring 2014 – 125,000 – 125,000 entities during the year (2012: nil). Expiring 2015 200,000 100,000 200,000 100,000 Other related parties Expiring 2016 125,000 150,000 125,000 150,000 Genesis Oncology Trust The Group has a sponsorship agreement with the Genesis Oncology Trust (the ‘Trust’). The annual sponsorship paid to the Trust was Expiring 2017 150,000 150,000 150,000 150,000 $0.2 million (2012: $0.2 million). In 2013, the Group made additional donations of $0.3 million (2012: $0.2 million). The total amount Total available revolving credit facility 475,000 525,000 475,000 525,000 outstanding at year-end was $0.2 million (2012: $0.2 million). Revolving credit drawn down at 30 June (excluding accrued interest) 189,000 305,000 189,000 305,000 The Group provides the Trust with accounting and administrative support free of charge. Albert Brantley (Chief Executive of Genesis Power 220,000 220,000 Limited) is the Chairman of the Trust. Maureen Shaddick (General Counsel and Company Secretary of Genesis Power Limited) is the Deputy Total undrawn revolving credit facility 286,000 286,000 Chair of the Trust. The Trust acquired 300,000 Capital Bonds from Genesis Power Limited during 2011 which have yet to be repaid. Revolving credit Gas Industry Company Limited Drawn down 189,000 305,000 189,000 305,000 The Group has a 12.5 per cent share in the Gas Industry Company Limited which is an industry-owned entity established to fulfil the role of Accrued interest 526 2,438 526 2,438 the industry body under the Gas Act 1992. The entity, as the industry body, is the co-regulator of the gas industry, working with both the Government and the gas industry to develop outcomes that meet the Government’s policy objectives as stated in the Government’s April Total Revolving credit 189,526 307,438 189,526 307,438 2008 Policy Statement on Gas Governance. During the year, the Group made payments to the Gas Industry Company Limited in the form of levies and cost reimbursements totalling $1.9 million (2012: $1.8 million).

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 61 30. Borrowings continued 30. Borrowings continued Security Group 2013 Group 2012 Parent 2013 Parent 2012 Note $000 $000 $000 $000 Except for finance leases, all of the Parent and Group’s borrowings are unsecured. The Parent and Group borrow under a negative pledge arrangement, which does not permit the Parent or Group to grant any security interest over its assets, unless it is an exception permitted Wholesale term notes within the negative pledge. Expiring 2017 125,000 125,000 125,000 125,000 Finance lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in Expiring 2020 120,000 70,000 120,000 70,000 the event of default. Expiring 2023 70,000 – 70,000 – 31. Provisions Fair value interest rate risk adjustment 11 2,351 3,338 2,351 3,338 Rehabilitation and restoration Accrued interest 4,490 2,782 4,490 2,782 The rehabilitation and restoration provision relates to the Meremere generation site, the Huntly ash ponds, the Tekapo Site Establishment Capitalised issue costs (475) (421) (475) (421) Area (SEA) and Kupe production facilities. These sites require remediation as a result of past and present operations. Different methods and Total wholesale term notes 321,366 200,699 321,366 200,699 techniques can be used to remediate the sites. The provision represents the present value of the Group’s best estimate of future expenditure Retail term notes to be incurred based on the Group’s assessment of the most appropriate methods to remediate the sites at balance date. Key assumptions include: an estimate of when the rehabilitation and restoration is likely to take place, the possible remediation alternatives available, the Expiring 2014 120,000 120,000 120,000 120,000 expected expenditures attached to each alternative and the foreign currency exchange rate at balance date. Expiring 2016 105,000 105,000 105,000 105,000 The assumptions used to estimate the rehabilitation and restoration provision requires a balanced judgement as there is a range of possible Accrued interest 4,903 4,911 4,903 4,911 assumptions that could be used in estimating the carrying value of these obligations. The key assumption that could have a material impact Capitalised issue costs (1,203) (1,906) (1,203) (1,906) on the Meremere generation site rehabilitation estimate relates to the extent of rehabilitation required at the end of the lease. The extent Total retail term notes 228,700 228,005 228,700 228,005 of rehabilitation depends on the effectiveness of the historical rehabilitation work and the rehabilitation obligations under the lease. The current assumption is that the current remediation work with some further tidy up at the end of the lease in 2017 is sufficient. If future Capital Bonds monitoring indicates that the clay caps need further remediation work the provision would need to increase by up to $1.8 million. The site is Expiring 2014 275,000 – 275,000 – monitored regularly and the rehabilitation plan amended as necessary. Expiring 2042 – 275,000 – 275,000 The key assumption that could have a material impact on the Huntly ash ponds rehabilitation estimate relates to the extent of rehabilitation Accrued interest 4,897 4,919 4,897 4,919 work required. The current assumption is that all the ash would be removed from the ponds but, if some of the ash were capped in situ, the provision could decrease by $2.7 million. The rehabilitation work on the ash ponds is estimated to be completed within the next 13 years. Capitalised issue costs (206) (5,861) (206) (5,861) The key assumptions that could have a material impact on the Kupe production facilities rehabilitation estimate relate to foreign exchange Total Capital Bonds 279,691 274,058 279,691 274,058 rates, scrap steel prices, labour rates, concrete removal costs, offshore supply vessel and jack-up rig rates and associated mobilisation and The Parent may redeem all or some of the Capital Bonds on a reset date or on any quarterly interest payment date after the first reset date demobilisation costs. The majority of costs are based in US dollars and therefore are sensitive to fluctuations in foreign exchange rates. which is 16 July 2018. On the first reset date and every five years thereafter, the interest rate will reset to be the sum of the five-year swap Given the equipment required to complete the rehabilitation comes from overseas the mobilisation and demobilisation costs can fluctuate rate on the relevant reset date plus a margin of 2.40 per cent. Redemptions on a reset date are at par; redemptions on a quarterly interest significantly depending on the volume of other work the contractor has at the time the rehabilitation is required to be completed. If the payment date must be at the greater of par or market value. foreign exchange rate was to decrease by 10 per cent and if the transportation costs for the mobilisation and demobilisation were unable to The Parent completed a modification process for the Capital Bonds on 15 July 2013. Effective from 15 July 2013, the principal amount of be shared with other entities, the provision would increase by $15.7 million. Also affecting the provision are regulations around the removal Capital Bonds outstanding will reduce from $275 million to $200 million and the interest rate will be modified from 8.50 per cent to 6.19 of the subsea pipeline. Currently, there are no regulations around this and, as such, the provision assumes the subsea pipeline will be flushed per cent. As at 30 June 2013, the total $275 million of Capital Bonds was classified as current, resulting in negative working capital for both and left in situ. The rehabilitation is estimated to be completed in approximately 12 years. Group and Parent. Subsequent to 15 July 2013, the modified $200 million has been classified as term, expiring on 15 July 2041, and working During the year, a rehabilitation provision for the Tekapo SEA was created. The SEA was created for undertaking the Tekapo Canal capital returned to a positive value for both Group and Parent. Remediation Project. Upon completion of the project, Genesis Energy is required by resource consents to rehabilitate the SEA to bare land Finance lease liabilities suitable for farming. The provision represents the present value of the best estimate of future cash flows to be incurred during remediation of the SEA. The rehabilitation work is expected to be completed within the next three years. The Parent leases certain equipment relating to the importation of coal situated at the under a finance lease arrangement. The lease has a term of eight years with a renewal option for a further three terms of five years. The Parent does not have any right to Contractual arrangements purchase the leased assets at the end of the lease. There are no restrictions imposed by this lease, such as those concerning dividend The contractual arrangements provision relates to relationship and sponsorship agreements with various parties. The provision represents distributions, additional debt financing and further leasing arrangements. the present value of the best estimate of cash flows required to settle the Group’s obligations under the agreements. The timing of the outflows is between 10 and 35 years. Group 2013 Group 2012 Parent 2013 Parent 2012 $000 $000 $000 $000 Other provisions Future minimum lease payments are as follows: Other provisions represent the present value of the customer loyalty programme ‘Brownie Points’ and other minor provisions. A provision has been recognised for 73.9% of the full liability of the Brownie Points programme as this reflects the estimated redemption rate. The Not later than one year 4,280 4,280 4,280 4,280 timing of the outflows is dependent on customers redeeming their points after achieving a minimum rewards points balance. Unredeemed Later than one year but not later than five years 1,783 6,063 1,783 6,063 rewards points expire after a period of three years. Future minimum lease payments 6,063 10,343 6,063 10,343 Future finance charges on finance leases (464) (1,063) (464) (1,063) Present value of future minimum lease payments 5,599 9,280 5,599 9,280 The present value of future minimum lease payments are as follows: Not later than one year 3,958 3,681 3,958 3,681 Later than one year but not later than five years 1,641 5,599 1,641 5,599 Present value of future minimum lease payments 5,599 9,280 5,599 9,280

The weighted average effective interest rate implicit in the leases is 7.05 per cent (2012: 7.05 per cent).

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 63 31. Provisions continued 32. Derivatives continued Net carrying value of derivatives Group 2013 Group 2012 Parent 2013 Parent 2012 $000 $000 $000 $000 Group 2013 Group 2012 Parent 2013 Parent 2012 Rehabilitation and restoration $000 $000 $000 $000 Balance at 1 July 59,925 38,329 12,478 12,521 Cash flow hedges designated at fair value through profit or loss Foreign exchange swaps (3,002) 1,082 (3,085) (1,034) Provisions made during the year 7,850 23,071 5,218 2,980 Interest rate swaps and options (4,075) (10,066) (4,075) (10,066) Provisions reversed during the year (425) – (425) – Electricity swaps (6,319) 4,189 (6,319) 4,189 Provisions used during the year (3,788) (3,572) (3,789) (3,572) Oil swaps 1,327 645 – – Time value of money adjustment 2,865 2,097 374 549 Fair value hedges designated at fair value through profit or loss Balance at 30 June 66,427 59,925 13,856 12,478 Interest rate swaps and options 2,351 3,338 2,351 3,338 Contractual arrangements Derivatives not designated as hedges Balance at 1 July 54,771 56,071 54,771 56,071 Foreign exchange options – 20 – 20 Provisions made during the year 3,509 5,308 3,509 5,308 Electricity swaps and options (4,709) (39,109) (4,709) (39,109) Provisions reversed during the year (55) (3,580) (55) (3,580) Oil swaps and options (279) 2,474 – – Provisions used during the year (4,577) (5,224) (4,577) (5,224) Total (14,706) (37,427) (15,837) (42,662) Time value of money adjustment 2,141 2,196 2,141 2,196 Carrying value of derivatives by balance sheet classification Balance at 30 June 55,789 54,771 55,789 54,771 Current assets 19,246 15,377 19,831 16,200 Other provisions Non-current assets 5,574 22,913 5,578 22,979 Balance at 1 July 8,476 10,129 8,476 10,129 Current liabilities (17,507) (11,425) (18,945) (16,559) Provisions made during the year 4,943 4,943 4,542 4,542 Non-current liabilities (22,019) (64,292) (22,301) (65,282) Provisions reversed during the year (3,311) (3,248) (3,311) (3,248) Total (14,706) (37,427) (15,837) (42,662) Provisions used during the year (1,813) (3,348) (1,813) (3,348) Derivatives that are settled within 12 months are treated as current. Balance at 30 June 7,894 8,476 7,894 8,476 Change in carrying value of derivatives Total 130,110 123,172 77,539 75,725 Group Current 12,381 12,925 12,381 12,925 Foreign Non-current 117,728 110,247 65,158 62,800 Interest rate exchange Electricity Oil swaps swaps and swaps and swaps and Total 130,110 123,172 77,539 75,725 and options options options options Total Note $000 $000 $000 $000 $000 32. Derivatives Balance as at 1 July 2011 (7,160) 1,426 573 (21,089) (26,250) The Group’s activities expose it to a variety of financial risks: market risk (including price risk, currency risk and interest rate risk), credit risk and liquidity Total change recognised in electricity and petroleum revenue (9,068) – – 36,518 27,450 risk. The Group uses the following derivatives to hedge its financial risk exposures: Net change in derivatives not designated as hedges 9,643 – (2,247) (18,714) (11,318) • Interest rate swaps and options Net change in fair value hedges – 3,338 – – 3,338 • Foreign exchange swaps and options Total change recognised in the change in fair value • Electricity swaps and options of financial instruments 11 9,643 3,338 (2,247) (18,714) (7,980) • Oil swaps and options. Gain (loss) recognised in other comprehensive income 636 (10,103) 2,515 13,074 6,122 Settlements 9,068 (1,389) (87) (3,256) 4,336 Sales (option fees) – – – (41,453) (41,453) Purchases (option fees) – – 348 – 348 Balance as at 30 June 2012 3,119 (6,728) 1,102 (34,920) (37,427) Total change recognised in electricity and petroleum revenue (2,353) – – 36,479 34,126 Net change in derivatives not designated as hedges (2,599) (492) (20) 36,852 33,741 Net change in fair value hedges – (989) – – (989) Ineffective gain (loss) on cash flow hedges – – 67 (16) 51 Total change recognised in the change in fair value of financial instruments 11 (2,599) (1,481) 47 36,836 32,803 Gain (loss) recognised in other comprehensive income 528 5,957 (530) 18,165 24,120 Settlements 2,353 – (3,620) (23,496) (24,763) Sales (option fees) – – – (44,092) (44,092) Purchases (option fees) – 528 – – 528 Balance as at 30 June 2013 1,048 (1,724) (3,001) (11,028) (14,705)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 65 32. Derivatives continued 32. Derivatives continued

Parent Parent Foreign Interest rate Foreign Interest rate exchange Electricity swaps and exchange Electricity swaps and swaps and swaps and options swaps swaps Total options options options Total Note $000 $000 $000 $000 Note $000 $000 $000 $000 Balance as at 1 July 2011 1,027 (2,341) (1,808) (3,122) Balance as at 1 July 2011 1,426 (2,434) (21,089) (22,097) Total reclassified from the cash flow hedge reserve to profit or loss (1,390) 2,440 (6,373) (5,323) Total change recognised in electricity revenue – – 36,518 36,518 Total reclassified from the cash flow hedge reserve to the cost of assets – (842) – (842) Net change in derivatives not designated as hedges – (2,247) (18,714) (20,961) Effective gain (loss) on cash flow hedges recognised directly in the cash flow Net change in fair value hedges 3,338 – – 3,338 hedge reserve (10,103) 879 13,074 3,850

Total change recognised in the change in fair value of financial instruments 11 3,338 (2,247) (18,714) (17,623) Total change in cash flow hedge reserve (11,493) 2,477 6,701 (2,315) Gain (loss) recognised in other comprehensive income (10,103) 879 13,074 3,850 Income tax on change in cash flow hedge reserve 15 3,218 (694) (1,876) 648

Settlements (1,389) 2,440 (3,256) (2,205) Balance as at 30 June 2012 (7,248) (558) 3,017 (4,789) Sales (option fees) – – (41,453) (41,453) Total reclassified from the cash flow hedge reserve to profit or loss – 1,450 (28,431) (26,981) Purchases (option fees) – 348 – 348 Total reclassified from the cash flow hedge reserve to the cost of assets – (2,065) – (2,065)

Balance as at 30 June 2012 (6,728) (1,014) (34,920) (42,662) Effective gain (loss) on cash flow hedges recognised directly in the cash flow hedge reserve 5,957 (1,449) 18,165 22,673 Total change recognised in electricity revenue – – 36,479 36,479 Total change in cash flow hedge reserve 5,957 (2,064) (10,266) (6,373) Net change in derivatives not designated as hedges (492) (20) 36,853 36,341 Income tax on change in cash flow hedge reserve 15 (1,668) 578 2,874 1,784 Net change in fair value hedges (989) – – (989) Balance as at 30 June 2013 (2,959) (2,044) (4,375) (9,378) Ineffective gain (loss) on cash flow hedges – 41 (16) 25

Total change recognised in the change in fair value of financial instruments 11 (1,481) 21 36,837 35,377 The gain (loss) on interest rate swaps and options is recognised in finance expenses, the gain (loss) on foreign exchange swaps and options is recognised in other operating expenses and the gain (loss) on electricity swaps and options is recognised in electricity revenue in the Gain (loss) recognised in other comprehensive income 5,957 (1,449) 18,165 22,673 profit or loss. Settlements – (643) (23,496) (24,139) Sales (option fees) – – (44,093) (44,093) 33. Financial risk-management Purchases (option fees) 528 – – 528 Risk-management The Group’s overall risk-management program focuses on the unpredictability of financial markets and seeks to minimise financial risk to the Balance as at 30 June 2013 (1,724) (3,085) (11,028) (15,837) Group. The Board of Directors (the ‘Board’) has established policies which provide an overall risk-management framework, as well as policies Reconciliation of movements in the cash flow hedge reserve covering specific areas, such as electricity and oil price risk, foreign exchange risk, interest rate risk, credit risk, use of derivatives, and the investment of excess liquidity. Trading in financial instruments, including derivatives, for speculative purposes is not permitted by the Board. Interest rate, foreign exchange and oil price exposures are managed by the central Treasury function (‘Treasury’) and electricity exposures are Group managed by the Risk Management Group (‘Risk’). Treasury and Risk identify, evaluate and hedge financial risks in close co-operation with the Interest rate Foreign Group’s operating units. Compliance with policies and exposure limits is independently reviewed by the Group’s internal auditor. Oil swaps swaps and exchange Electricity and options options swaps swaps Total Price risk Note $000 $000 $000 $000 $000 The Group is exposed to movements in the spot price of electricity arising through the sale and purchase of electricity to and from the market. Balance as at 1 July 2011 – 1,027 (175) (1,809) (957) The Group is also exposed to movements in the spot price of light crude oil arising from sales of its share of oil from the Kupe production. Total reclassified from the cash flow hedge reserve to profit or loss – (1,390) (88) (6,373) (7,851) The Group has limited exposure to changes in the sale price for gas and LPG as most of the volume is forward sold. Electricity sales and purchases Total reclassified from the cash flow hedge reserve to the cost of assets – – (842) – (842) The Group manages price risk in relation to electricity sales and purchases by entering into electricity swaps and options. Electricity swaps and options are either traded on the ASX or negotiated bilaterally with other energy companies and major customers. Electricity options Effective gain (loss) on cash flow hedges recognised directly in the cash flow hedge reserve 636 (10,103) 2,515 13,074 6,122 are entered into as needs are identified and as counterparties seek to hedge their electricity purchase exposure. At balance date, the Group had electricity option contracts giving the counter party the right to exercise a call option and electricity cap contracts. Total change in cash flow hedge reserve 636 (11,493) 1,585 6,701 (2,571) The aggregate notional face value of the outstanding electricity swaps and options at balance date was $1,858.6 million (2012: $1,879.7 million). Income tax on change in cash flow hedge reserve 15 (178) 3,218 (444) (1,876) 720 Light crude oil sales Balance as at 30 June 2012 458 (7,248) 966 3,016 (2,808) The Group manages price risk in respect of oil sales by entering into oil options, which provide a minimum price for future oil sales or oil Total reclassified from the cash flow hedge reserve to profit or loss – – (1,527) (28,431) (29,958) price swap contracts which provide a fixed price for future oil sales. The Group’s Treasury policy sets minimum and maximum control limits ranging from between 50 per cent and 75 per cent for the first 12 months to between 25 per cent and 50 per cent for months 13 to 24. Total reclassified from the cash flow hedge reserve to the cost of assets – – (2,363) – (2,363) The aggregate notional value of the outstanding oil swaps and options at balance date was USD 51.4 million (2012: USD 64.0 million). Effective gain (loss) on cash flow hedges recognised directly in The value of electricity and oil swaps and options are sensitive to changes in forward prices and oil swaps and options are also sensitive the cash flow hedge reserve 528 5,957 (530) 18,165 24,120 to movements in foreign exchange rates. The table below summarises the impact an increase/decrease in these assumptions would have on the Group’s post-tax profit or loss for the year and on the Group’s cash flow hedge reserve. The sensitivity analysis is based on the Total change in cash flow hedge reserve 528 5,957 (4,420) (10,266) (8,201) assumption that the relevant market prices (future electricity and oil price paths) had increased/decreased by 10 per cent with all other Income tax on change in cash flow hedge reserve 15 (148) (1,668) 1,238 2,874 2,296 variables held constant. A positive number represents an increase in profit or the cash flow hedge reserve. Balance as at 30 June 2013 838 (2,959) (2,216) (4,376) (8,713) There have been no changes in the methods and assumptions used in the sensitivity calculations from the previous year.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 67 33. Financial risk-management continued 33. Financial risk-management continued The value of foreign exchange swaps and options are sensitive to changes in the forward prices of currencies. The table below summarises Group 2013 Group 2012 Parent 2013 Parent 2012 the impact an increase/decrease in foreign exchange rates would have on the Group’s post tax profit or loss for the year and on the Group’s $000 $000 $000 $000 cash flow hedge reserve. The sensitivity analysis is based on the assumption that the New Zealand dollar had weakened/strengthened by Electricity swaps and options 10 per cent against the currencies with which the Group has foreign currency risk with all other variables held constant. A positive number Post-tax impact on profit or loss represents an increase in profit or the cash flow hedge reserve. +10% (9,393) (26,662) (9,393) (26,662) There have been no changes in the methods and assumptions used in the sensitivity calculations from the previous year. –10% 7,644 21,210 7,644 21,210 % change Group 2013 Group 2012 Parent 2013 Parent 2012 Post-tax impact on cash flow hedge reserve (equity) Currency of contract in rate $000 $000 $000 $000 +10% 3,385 (24,196) 3,385 (24,196) Post-tax impact on profit or loss –10% (3,385) 24,196 (3,385) 24,196 United States dollar +10% – 1 – 1 Oil swaps and options –10% – (1) – (1) Post-tax impact on profit or loss Total foreign exchange swaps and options +10% – 1 – 1 +10% (756) (3,336) – – Total foreign exchange swaps and options –10% – (1) – (1) –10% 756 3,338 – – Post-tax impact on cash flow hedge reserve (equity) Post-tax impact on cash flow hedge reserve (equity) United States dollar +10% 2,033 2,514 618 (128) +10% (3,130) (521) – – –10% (2,494) (3,020) (788) 160 –10% 3,131 521 – – Australian dollar +10% (340) (8) (340) (8) Foreign currency risk –10% 485 10 485 10 The Group is exposed to foreign currency risk as a result of capital and operational transactions denominated in a currency other than the Euro +10% 18 (817) 18 (817) Group’s functional currency (including the purchase of coal, capital equipment and maintenance, and the sale of gas and petroleum). The currencies giving rise to this risk are primarily the United States dollar, Australian dollar, Euro and Japanese yen. –10% (22) 1,001 (22) 1,001 The Group uses foreign exchange swaps and options to manage foreign exchange risk. All significant capital project commitments and all Japanese yen +10% (1,105) (1,301) (1,105) (1,301) capital purchase orders where exposure and currency levels are confirmed are hedged. All sales, operational commitments and purchase orders –10% 1,345 1,598 1,345 1,598 denominated in foreign currency over the equivalent of $500,000 NZD are also hedged in accordance with the Group’s Treasury policy. For British pound sterling +10% (12) (12) ongoing operating commitments the equivalent of at least the next 12 months exposure must be hedged. For the currency exposure arising (40) (40) from the sale of oil and gas, the policy sets minimum and maximum control limits ranging from between 50 per cent and 80 per cent for –10% 50 13 50 13 the first 12 months to between 25 per cent and 50 per cent for months 13 to 24. Swiss Franc +10% (248) – (248) – The following table details the foreign exchange swaps and options outstanding at balance date. A positive number represents a buy –10% 305 – 305 – contract and a negative number represents a sell contract. Total foreign exchange swaps and options +10% 318 376 (1,097) (2,266) Group Total foreign exchange swaps and options –10% (331) (398) 1,375 2,782 Foreign amount Face value Fair value Interest rate risk 2013 2012 2013 2012 2013 2012 Currency of contract ’000 ’000 $000 $000 $000 $000 The Group is exposed to interest rate risk as a portion of borrowings have floating interest rates. The Group uses interest rate swaps and options to manage interest rate risk. The Group’s policy sets maximum and minimum control limits for fixed interest rate exposure which United States dollar (23,638) (23,924) (30,970) (32,941) (33) 2,150 range from between 50 per cent and 100 per cent of projected debt with an age profile of less than one year to a maximum of 50 per cent Australian dollar 5,237 98 6,521 122 (346) 2 for projected debt with an age profile of greater than five years. Euro (150) 7,869 (266) 12,931 (4) (433) The following table details the notional principal amounts and the remaining terms of interest rate swaps and options outstanding at Japanese yen 1,251,074 1,227,123 19,399 20,473 (2,694) (620) balance date: British pound sterling 310 87 587 168 28 3 Group and Parent Swiss franc 2,710 – 3,725 – 47 – Average contracted Notional principal Total foreign exchange swaps and options (1,004) 753 (3,002) 1,102 fixed interest rates amount Fair value 2013 2012 2013 2012 2013 2012 Parent % % $000 $000 $000 $000 Foreign amount Face value Fair value Not later than one year 3.75 2.93 200,000 200,000 1,707 (92)

2013 2012 2013 2012 2013 2012 Later than one year and not later than two years – 3.51 – 50,000 – (545) Currency of contract ’000 ’000 $000 $000 $000 $000 Later than two years and not later than five years 8.10 8.10 25,000 25,000 2,351 3,338 United States dollar (7,138) 7,576 (9,293) 9,322 (116) 34 Later than five years 5.25 5.32 180,000 180,000 (5,782) (9,429) Australian dollar 5,237 98 6,521 122 (346) 2 4.69 4.70 405,000 455,000 (1,724) (6,728) Euro (150) 7,869 (266) 12,931 (4) (433) Japanese yen 1,251,074 1,227,123 19,399 20,473 (2,694) (620) The value of interest rate swaps and options are sensitive to changes in forward interest rates. The table below summarises the impact British pound sterling 310 87 587 168 28 3 an increase/decrease in interest rates would have on the Group’s post-tax profit or loss for the year and on the Group’s cash flow hedge reserve. The sensitivity analysis is based on the assumption that interest rates had been 100 basis points higher/lower with all other variables Swiss franc – – – 2,710 3,725 47 held constant. A positive number represents an increase in profit or the cash flow hedge reserve. Total foreign exchange swaps and options 20,673 43,016 (3,085) (1,014) There have been no changes in the methods and assumptions used in the sensitivity calculations from the previous year.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 69 33. Financial risk-management continued 33. Financial risk-management continued The table below details the Group’s liquidity analysis for its financial liabilities and derivatives. The table has been drawn up based on the Group and Parent undiscounted cash inflows (outflows) for all financial liabilities and derivatives. The amounts in the table are the undiscounted contractual 2013 2012 cash flows. Where the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the internally $000 $000 generated forward price curves existing at balance date. As the amounts included in the tables are contractual undiscounted cash flows, Post-tax impact on profit these amounts will not reconcile to the amounts disclosed in the balance sheet. +1% (710) (808) Group –1% 521 766 Weighted Post-tax impact on cash flow hedge reserve (equity) average Total +1% 5,825 5,550 effective Less than More than contractual interest rate 1 year 1 to 2 years 2 to 5 years 5 years cash flows –1% (4,665) (5,021) As at 30 June 2013 % $000 $000 $000 $000 $000 Non-derivative financial liabilities Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Group. The Group Trade and other payables Non-bearing (223,019) – – – (223,019) is exposed to credit risk in the normal course of business arising from trade receivables, finance leases (where the Group is lessor), and Revolving credit 4.3 (7,563) (81,995) (103,608) – (193,166) with banks and financial institutions where short term deposits are held. The Group is also exposed to credit risk arising from derivative Wholesale term notes 6.7 (19,817) (21,119) (155,272) (234,271) (430,479) counterparties defaulting on their contractual obligations. Retail term notes 7.8 (136,733) (16,733) (121,065) – (274,531) The Group is a producer and retailer of electricity and gas. In terms of wholesale sales to the national grid, credit risk is significantly reduced as the Group purchases from the grid for its retail customer base with credit risk being limited to the net position on settlement. In addition, Capital Bonds 9.1 (276,951) – – – (276,951) market security requirements in place ensure that there is no significant credit risk for any one participant. Market participants are required Finance lease payable 7.1 (4,280) (1,783) – – (6,063) to provide letters of credit to the market clearing agent (NZX Limited) which would be called upon should any market participant default. (668,363) (121,630) (379,945) (234,271) (1,404,209) Credit risk exposure arising from the supply of electricity and gas to the retail market is mitigated due to the Group’s large customer base and, in respect of its larger customers, the diverse range of industries they represent throughout New Zealand. The Group has adopted a Derivative assets (liabilities) policy of dealing only with creditworthy trade counterparties and obtaining collateral, where appropriate, as a means of mitigating the risk Net settled derivatives of financial loss from defaults. The Group also minimises its exposure to credit risk in this area through the adoption of counterparty credit Interest rate swaps and options (cash flow hedges) (1,015) (670) (2,864) (1,233) (5,782) limits, and active credit management practices such as monitoring the size and nature of exposures and mitigating the risk deemed to be over acceptable levels. Interest rate swaps and options (fair value hedges) 741 560 1,050 – 2,351 A bond is held as collateral from post paid electricity customers where their credit profile does not meet the standard set by the Group. Electricity swaps (cash flow hedges) (4,154) (742) (2,483) 1,060 (6,095) The bond is managed in accordance with the terms and conditions outlined in the supply agreement with individual customers. The bond Electricity swaps and options (not designated as hedges) 6,807 (8,190) (3,326) – (4,933) is returned to the customer at cessation of supply. The value of collateral held at balance date was $4.4 million (2012: $5.0 million). The Oil swaps (cash flow hedges) carrying value of the bond is considered to approximate its fair value. 1,049 278 – – 1,327 Derivative counterparties and cash transactions are limited to high-credit-quality financial institutions and other organisations. The Group’s Oil swaps and options (not designated as hedges) (279) – – – (279) exposure and the credit ratings of its counterparties are continuously monitored, and the aggregate value of transactions concluded is Gross settled derivatives spread amongst approved counterparties. The Group has no significant concentration of credit risk with any one financial institution. Foreign exchange swaps (cash flow hedges) The carrying amounts of financial assets recognised in the balance sheet best represents the Group’s maximum exposure to credit risk at – Inflows the reporting date. 405 218 – – 623 – Outflows (3,521) (104) – – (3,625) Liquidity risk The Group’s liquidity risk arises from its ability to readily attract cost-effective funding, which is largely driven by its credit standing 33 (8,650) (7,623) (173) (16,413) (Standard & Poor’s = BBB+). Prudent liquidity risk-management implies maintaining sufficient cash and marketable securities, the The foreign exchange swaps cash flows above include $0.7 million inflow in the less-than-one-year category in relation to capital projects availability of funding through an adequate amount of committed credit facilities and the spreading of debt maturities. which would not be recognised in profit or loss. Liquidity risk is monitored by continuously forecasting cash flows and matching the maturity profiles of financial assets and liabilities. The parent completed a modification process for the Capital Bonds on 15 July 2013. The modified $200 million has been classified as term, expiring 15 July 2041. Refer to note 30 for further details. The net liquidity risk position under one year is positive when taking into account non-derivative financial assets and undrawn funding facilities.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 71 33. Financial risk-management continued 33. Financial risk-management continued

Group Parent Weighted Weighted average Total average Total effective Less than More than contractual effective Less than More than contractual interest rate 1 year 1 to 2 years 2 to 5 years 5 years cash flows interest rate 1 year 1 to 2 years 2 to 5 years 5 years cash flows As at 30 June 2012 % $000 $000 $000 $000 $000 As at 30 June 2013 % $000 $000 $000 $000 $000 Non-derivative financial liabilities Non-derivative financial liabilities Trade and other payables Non-bearing (285,016) – – – (285,016) Trade and other payables Non-bearing (211,086) – – – (211,086) Revolving credit 4.4 (13,376) (13,376) (333,085) – (359,837) Revolving credit 4.3 (7,563) (81,995) (103,608) – (193,166) Wholesale term notes 7.4 (14,449) (14,449) (165,653) (87,430) (281,981) Wholesale term notes 6.7 (19,817) (21,119) (155,272) (234,271) (430,479) Retail term notes 7.8 (16,733) (136,733) (121,065) – (274,531) Retail term notes 7.8 (136,733) (16,733) (121,065) – (274,531) Capital Bonds 9.1 (23,375) (23,375) (70,125) (837,281) (954,156) Capital Bonds 9.1 (276,951) – – – (276,951) Finance lease payable 7.1 (4,280) (4,280) (1,783) – (10,343) Finance lease payable 7.1 (4,280) (1,783) – – (6,063) (357,229) (192,213) (691,711) (924,711) (2,165,864) (656,430) (121,630) (379,945) (234,271) (1,392,276) Derivative assets (liabilities) Derivative assets (liabilities) Net settled derivatives Net settled derivatives Interest rate swaps and options (cash flow hedges) (1,522) (1,022) (3,613) (4,988) (11,145) Interest rate swaps and options (cash flow hedges) (1,015) (670) (2,864) (1,233) (5,782) Interest rate swaps and options (fair value hedges) 790 728 2,036 – 3,554 Interest rate swaps and options (fair value hedges) 741 560 1,050 – 2,351 Electricity swaps (cash flow hedges) 4,804 2,045 (717) 5,948 12,080 Electricity swaps (cash flow hedges) (4,154) (742) (2,483) 1,060 (6,319) Electricity swaps and options (not designated as hedges) 1,362 5,043 (3,621) – 2,784 Electricity swaps and options (not designated as hedges) 6,807 (8,190) (3,326) – (4,709) Oil swaps (cash flow hedges) – 671 – – 671 Gross settled derivatives Oil swaps and options (not designated as hedges) 2,216 286 12 – 2,514 Foreign exchange swaps (cash flow hedges)

Gross settled derivatives - Inflows 3,944 258 – – 4,202 Foreign exchange swaps (cash flow hedges) - Outflows (7,038) (104) – – (7,142) – Inflows 2,451 234 – – 2,685 (715) (8,888) (7,623) (173) (17,399)

– Outflows (1,180) (407) – – (1,587) The foreign exchange swaps and options cash flows above include $0.7 million inflow in the less-than-one-year category in relation to Foreign exchange options (not designated as hedges) capital projects which would not be recognised in profit or loss. – Inflows 7,317 – – – 7,317 The Parent completed a modification process for the Capital Bonds on 15 July 2013. The modified $200 million has been classified as term, expiring 15 July 2041. Refer to note 30 for further details. – Outflows (7,512) – – – (7,512) The net liquidity risk position under one year is positive when taking into account non-derivative financial assets and undrawn funding facilities. 8,726 7,578 (5,903) 960 11,361

The foreign exchange swaps and options cash flows above include $0.4 million outflow in the less-than-one-year category in relation to capital projects which would not be recognised in profit or loss.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 73 33. Financial risk-management continued 33. Financial risk-management continued Fair values Parent The carrying value of financial assets and liabilities in the balance sheet approximates their fair values with the exception of the finance Weighted lease receivable, wholesale term notes, retail term notes and Capital Bonds. A comparison of the fair value and carrying value of these average Total instruments is disclosed below: effective Less than More than contractual interest rate 1 year 1 to 2 years 2 to 5 years 5 years cash flows As at 30 June 2012 % $000 $000 $000 $000 $000 Group Parent Non-derivative financial liabilities Carrying value Fair value Carrying value Fair value $000 $000 $000 $000 Trade and other payables Non-bearing (274,319) – – – (274,319) As at 30 June 2013 Revolving credit 4.4 (13,376) (13,376) (333,085) – (359,837) Wholesale term notes (321,366) (333,366) (321,366) (333,366) Wholesale term notes 7.4 (14,449) (14,449) (165,653) (87,430) (281,981) Retail term notes (228,700) (241,409) (228,700) (241,409) Retail term notes 7.8 (16,733) (136,733) (121,065) – (274,531) Capital Bonds (279,691) (275,000) (279,691) (275,000) Capital Bonds 9.1 (23,375) (23,375) (70,125) (837,281) (954,156) As at 30 June 2012 Finance lease payable 7.1 (4,280) (4,280) (1,783) – (10,343) Finance lease receivable 6,861 7,541 – – (346,532) (192,213) (691,711) (924,711) (2,155,167) Wholesale term notes (200,699) (215,640) (200,699) (215,640) Derivative assets (liabilities) Retail term notes (228,005) (247,053) (228,005) (247,053) Net settled derivatives Capital Bonds (274,058) (296,450) (274,058) (296,450)

Interest rate swaps and options (cash flow hedges) (1,522) (1,022) (3,613) (4,988) (11,145) The fair values of financial assets and liabilities are determined as follows: Interest rate swaps and options (fair value hedges) 790 728 2,036 – 3,554 • The fair values of financial assets and liabilities with standard terms and conditions and traded on active liquid markets are determined Electricity swaps (cash flow hedges) 4,804 2,045 (717) 5,948 12,080 with reference to quoted market prices. • Where market prices are not available, estimated discounted cash flow analyses using the applicable yield curve or available forward price Electricity swaps and options (not designated as hedges) 1,362 5,043 (3,621) – 2,784 data for the duration of the instruments is used. Gross settled derivatives • Where the fair value of a derivative is calculated as the present value of the estimated future cash flows of the instrument, the two key Foreign exchange swaps (cash flow hedges) types of variables used are: - Inflows 2,697 259 – – 2,956 (i) Future price curve (for the relevant underlying interest rates, foreign exchange rates or commodity prices) - Outflows (3,583) (418) – – (4,001) (ii) Discount rates. Foreign exchange options (not designated as hedges) Financial instruments fair value hierarchy - Inflows 7,317 – – – 7,317 The Group’s financial instruments are categorised into one of three levels as follows: – the fair value is determined using unadjusted quoted prices from an active market for identical assets and liabilities. A market - Outflows (7,512) – – – (7,512) Level one is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or 4,353 6,635 (5,915) 960 6,033 regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s-length basis. The foreign exchange swaps and options cash flows above include $0.4 million outflow in the less-than-one-year category in relation to Level two – the fair value is derived from inputs other than quoted prices included within level one that are observable for the asset or liability, capital projects which would not be recognised in profit or loss. either directly (i.e. as prices) or indirectly (i.e. derived from prices). Financial instruments in this level include interest rate swaps and options, foreign exchange swaps and options, and oil swaps and options and electricity derivatives which are valued using observable electricity price paths. Capital risk-management Level three – the fair value is derived from inputs that are not based on observable market data. Financial instruments included in this level The Group manages its capital in a prudent manner to ensure that entities in the Group will be able to continue as a going concern while include electricity derivatives which are valued using internally generated electricity price paths. maximising the return to shareholder through the appropriate balance of debt and equity. This is achieved by ensuring that the level and There were no transfers between levels one, two and three during the year (2012: nil). timing of its capital investment programmes, equity raisings and dividend distributions are consistent with the Group’s capital structure strategy. This strategy remains unchanged from previous years. The capital structure of the Group consists of debt, which includes the Group 2013 Group 2012 Parent 2013 Parent 2012 borrowings disclosed in note 30, cash and cash equivalents as disclosed in note 19 and equity attributable to the shareholder of Genesis Note $000 $000 $000 $000 Power Limited, comprising issued capital, reserves and retained earnings as disclosed in the balance sheet. During 2013, the Parent issued wholesale term notes which are included in the borrowings disclosed in note 30. The Group’s Capital Bonds are treated as 50 per cent Level 2 equity by Standard & Poor’s for credit rating assessment purposes. This treatment supports the Group’s strategy of managing its capital in a Derivatives prudent manner. – Interest rate swaps and options (1,724) (6,728) (1,724) (6,728) Under the Group’s debt funding facilities, the Group has given undertakings that the ratio of debt to equity will not exceed a prescribed level – Foreign exchange swaps and options (3,002) 1,102 (3,085) (1,014) and the interest cover will not be below a prescribed level. For the purpose of these undertakings, the Capital Bonds and related interest – Oil swaps and options 1,048 3,119 – – costs are treated as 50 per cent equity. The covenants are monitored on a regular basis to ensure they are complied with. There were no breaches in covenants during the year (2012: nil). – Electricity swaps (not designated as hedges) (1,895) 2,138 (1,895) 2,138 (5,573) (369) (6,704) (5,604) Level 3 Derivatives – Electricity swaps (cash flow hedges) (6,319) 4,189 (6,319) 4,189 – Electricity swaps and options (not designated as hedges) (2,814) (41,247) (2,814) (41,247) (9,133) (37,058) (9,133) (37,058) Total derivatives 32 (14,706) (37,427) (15,837) (42,662)

A reconciliation of movements in level three instruments has been disclosed in note 32.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 75 33. Financial risk-management continued 34. Commitments Valuation of interest rate swaps and options Capital commitments The valuation of interest rate swaps and options is based on a forward interest rate price curve discounted at the forward interest rate price curve at balance date. The forward interest rate price curve used in the valuation ranged from 2.5 per cent to 5.4 per cent Group 2013 Group 2012 Parent 2013 Parent 2012 $000 $000 $000 $000 (2012: 2.5 per cent to 4.8 per cent) and the forward interest rate price curve at balance date used in the valuation ranged from 2.5 per cent to 4.8 per cent (2012: 2.5 per cent to 4.8 per cent). Not later than one year 36,146 22,496 36,146 17,033 Valuation of foreign exchange swaps and options Later than one year but not later than five years 4,709 8,468 4,709 8,468 The valuation of foreign exchange swaps is based on forward foreign exchange rate curves at balance date, discounted at the forward Total capital commitments 40,855 30,964 40,855 25,501 interest rate price curve at balance date. The underlying spot foreign exchange rates used in the valuation were USD 0.77, AUD 0.85, JPY The capital commitments disclosed above include no amounts in relation to Kupe Joint Venture (2012: $5.5 million). 76.7, EUR 0.59, GBP 0.51, CHF 0.73 (2012: USD 0.80, AUD 0.78, JPY 63.6, EUR 0.63 and GBP 0.51) and the forward interest rate curve used in the valuation ranged from 2.5 per cent to 4.8 per cent (2012: 2.5 per cent to 4.8 per cent). Options are valued based on the valuation Operating lease commitments obtained from counterparty banks. Where the Group is lessee Valuation of oil swaps and options The Group leases building accommodation for its Customer experience and Corporate offices, and land for its generation sites under The valuation of oil swaps is based on the forward oil price and foreign exchange rate curves at balance date discounted at the forward operating lease arrangements. The Group also leases vehicles and certain office equipment. These leases are of a rental nature and are on interest rate price curve at balance date. The average forward oil price used in the valuation was USD 98.76 (2012: USD 97.43), the foreign normal commercial terms and conditions. These leases have varying lease periods of up to 20 years. In some cases, renewal rights exist with exchange rate curve was USD 0.77 (2012: USD 0.80) and the forward interest rate price curve used in the valuation ranged from 2.5 per cent market review clauses. The Group does not have any options to purchase the leased assets at the expiry of the lease period. to 4.8 per cent (2012: 2.5 per cent to 4.8 per cent). Oil options are based on the valuations obtained from counterparty banks converted to New Zealand dollars using the spot rate at the valuation date. The spot rate used in the valuations was USD 0.77 (2012: USD 0.80). Group 2013 Group 2012 Parent 2013 Parent 2012 $000 $000 $000 $000 Valuation of electricity swaps and options Not later than one year 9,133 9,617 8,439 7,227 The valuation of electricity swaps in level two is based on the ASX forward price curve that relates to the derivative. Later than one year but not later than five years 29,852 29,270 27,876 22,101 The valuation of electricity swaps in level three is based on a forecasted internally generated electricity price path which incorporates Later than five years 22,797 17,257 20,081 15,594 assumptions relating to electricity demand, 79 years of historical hydrological inflow data and existing and future generation plant. 56,144 44,922 The valuation of electricity options is based on a discounted cash flow model over the life of the agreement. The key assumptions in the Total operating lessee commitments 61,782 56,396 model are: the callable volumes, strike price and option fees outlined in the agreement, the forecasted internally generated electricity price Lease commitments are disclosed exclusive of GST. path, day one gains and losses, emission credits and the discount rate. The options are deemed to be called when the internally generated price path is higher than are the strike prices after taking into account obligations relating to the specific terms of each contract. The 35. Contingent assets and liabilities discount rate used in the model was 2.5 per cent to 4.8 per cent (2012: 2.5 per cent to 4.8 per cent) and the emission credit price used The Group and Parent had contingent assets and liabilities at 30 June 2013 in respect of: ranged between $7.92 and $15.43 (2012: $7.92 and $15.43). Land claims, law suits and other claims The selection of variables used to value the electricity swaps and options for level three requires significant judgement and, therefore, there is a range of reasonable assumptions that could be used in estimating the fair value of these derivatives. The key assumptions driving The Parent acquired interests in land and leases from ECNZ on 1 April 1999. These interests in land and leases may be subject to claims to potential changes to the forecasted internally generated price path are changes in demand, hydrology and new-generation build. Any one the Waitangi Tribunal and may be resumed by the Crown. The Parent would expect to negotiate with the new Maori owners for occupancy of these factors could result in a change to the price path. If the price path increased by 10 per cent, this would result in the carrying value and usage rights of any sites resumed by the Crown. Certain claims have been brought to or are pending against the Parent, ECNZ and the of the electricity derivatives increasing to $16.6 million liability (2012: $107.6 million liability). If the price path decreased by 10 per cent, the Crown under the Treaty of Waitangi Act 1975. Some of these claims may affect land and leases purchased by the Parent or its subsidiaries carrying value would decrease to $4.1 million liability (2012: $26.7 million asset). from ECNZ. In the event that land is resumed by the Crown, the resumption would be affected by the Crown under the Public Works Act 1981 and compensation would be payable to the Company. Deferred ‘day 1’ gains (losses) The Board of Directors cannot reasonably estimate the adverse effect (if any) on the Parent if any of the foregoing claims are ultimately Where the Group estimates fair values of derivatives using forecasted internally generated future price paths, as is the case with electricity resolved against it, or any contingent or currently unknown costs or liabilities crystallise. There can be no assurances that these claims will derivatives, the instrument is fair valued at inception and the difference arising between the estimated fair value and its cost (nil) is a not have a material adverse effect on the Group’s business, financial condition or results of operations. deferred day 1 gain (loss). For electricity options, the valuation adjustment is effectively amortised based on expected call volumes over the There are no other known material contingent assets or liabilities (2012: nil). term of the contract. The carrying value of derivatives is disclosed net of the day 1 adjustments. The following table details the movements and amounts of deferred ‘day 1’ gains (losses) included in the fair value of electricity derivatives 36. Events occurring after balance date held at balance date: Subsequent to balance date, the Environment Court issued revised resource consents for the Group’s Castle Hill Wind Farm. Negotiations with landowners and community groups appealing the wind farm have now been resolved by mutual consent. The Group is consented to Group 2013 Group 2012 Parent 2013 Parent 2012 $000 $000 $000 $000 erect up to 286 three-megawatt turbines. The Parent completed a modification process for the Capital Bonds on 15 July 2013. Effective from 15 July 2013, the principal amount of Balance at 1 July 40,178 47,017 40,178 47,017 Capital Bonds reduced from $275 million to $200 million. Refer to note 30 for further information. Deferred day 1 gains (losses) on new derivatives 3,586 3,942 3,586 3,942 The Parent, subsequent to balance date, declared a final fully imputed dividend of $57.0 million (10.5 cents per share). In addition, certain Deferred day 1 gains (losses) realised during the year (17,807) (10,781) (17,807) (10,781) subsidiary companies have declared fully imputed intercompany dividends totalling $96.8 million. Balance at 30 June 25,957 40,178 25,957 40,178 Subject to shareholder approval and completion of the relevant Companies Office processes, the Company proposes to change its legal name on 9 September 2013 from ‘Genesis Power Limited’ to ‘Genesis Energy Limited’. There have been no other significant events subsequent to balance date.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013 genesis energy annual report 2013 / 77 INDEPENDENT CORPORATE AUDITOR’S GOVERNANCE. REPORT.

TO THE SHAREHOLDERS OF GENESIS POWER LIMITED Introductory comment • A good employer; and effectively and in the best • Approve and regularly review AND GROUP’S REPORT ON THE FINANCIAL STATEMENTS This section provides an • An organisation that exhibits interests of the Company. the Company’s internal FOR THE YEAR ENDED 30 JUNE 2013 overview of Genesis Energy’s a sense of social responsibility All appointments to the Board decision-making and strategic policies and procedures; The Auditor-General is the auditor of Genesis Power Limited (the An audit also involves evaluating: corporate governance by having regard to the are made in accordance information including policies, interests of the community with section 36 (1)(a)(i) of • Establish systems and Company) and Group. The Auditor-General has appointed me, – the appropriateness of accounting policies used and whether processes and practices, which in which it operates and the Companies Act and processes so that Genesis Ian Marshall, using the staff and resources of Deloitte, to carry out they have been consistently applied; the audit of the financial statements of the Company and Group, have been adopted and have by endeavouring to Genesis Energy’s Constitution Energy’s business is – the reasonableness of the significant accounting estimates and on her behalf. been implemented by the accommodate or encourage (‘Constitution’). The Constitution conducted in a ethical, judgements made by the Board of Directors; Board. Genesis Energy has these when able to do so. provides that Directors are responsible and safe manner; We have audited the financial statements of the Company and – the adequacy of all disclosures in the financial statements; and a strong focus on corporate appointed for an initial fixed Group on pages 35 to 77, that comprise the balance sheet as at Shareholder • Implement effective audit, – the overall presentation of the financial statements. governance and aims to term not exceeding three risk-management and 30 June 2013, the comprehensive income statement, statement As Genesis Energy is an SOE, comply with international best years. Shareholding Ministers compliance systems; of changes in equity and cash flow statement for the year ended We did not examine every transaction, nor do we guarantee all shares in the Company are practice corporate governance may choose to renew Director on that date and the notes to the financial statements that include complete accuracy of the financial statements. Also we did not owned by the Crown. The • Safeguard the reputation of principles, as they apply within appointments for further fixed accounting policies and other explanatory information. evaluate the security and controls over the electronic publication of shares in the Company are Genesis Energy and its brand; New Zealand. Genesis Energy terms of up to three years. the financial statements. held in equal proportions by and recognises that an effective Opinion In accordance with the Financial Reporting Act 1993, we report that the Minister of Finance and Composition of the Board and corporate governance culture is • Select and review the we have obtained all the information and explanations we have the Minister for State-Owned Directors holding office Financial statements critical to its success. performance of the Chief In our opinion the financial statements of the Company and Group required. We believe we have obtained sufficient and appropriate Enterprises. As at 30 June 2013, At year-end 30 June 2013, the Executive and participate in The Board supports the on pages 35 to 77: audit evidence to provide a basis for our audit opinion. shareholding Ministers were Hon Board comprised eight non- the appointment of other key principles set out in the Code Bill English (Minister of Finance) executive Directors. roles within the business. – comply with generally accepted accounting practice in Responsibilities of the Board of Directors of Practice for Directors issued and Hon Tony Ryall (Minister for The names of the Directors New Zealand; The Board of Directors is responsible for preparing financial by the Institute of Directors The Board delegates to the State-Owned Enterprises). of Genesis Power Limited, Chief Executive responsibility for – comply with International Financial Reporting Standards; and statements that: in New Zealand (‘IoD Code’), Governance of the Company trading as Genesis Energy implementing the Company’s – comply with generally accepted accounting practice in the Corporate Governance – give a true and fair view of the Company and Group’s: (and its subsidiaries), during strategy and managing the New Zealand; and in New Zealand Principles The Board operates within – financial position as at 30 June 2013; and the accounting period of 1 July day-to-day operations of the and Guidelines issued by the the parameters of all relevant – give a true and fair view of the Company and Group’s financial 2012 to 30 June 2013, including Company. Specific delegations – financial performance and cash flows for the year ended former Securities Commission legislation, including but not position, financial performance and cash flows. the details of their dates of of responsibilities to the on that date. and endorsed by the Financial limited to the SOE Act. The The Board of Directors is also responsible for such internal control appointment and qualifications Chief Executive and senior Other legal requirements Markets Authority (‘Principles’) Board also adheres to the Crown are set out on page 29. management are recorded in as it determines is necessary to enable the preparation of financial and the New Zealand Stock Ownership Monitoring Unit’s In accordance with the Financial Reporting Act 1993 we report the Delegations of Authority statements that are free from material misstatement, whether due Exchange’s Corporate (‘COMU’) Owner’s Expectations Governance responsibilities of that, in our opinion, proper accounting records have been kept Policy. These delegations are to fraud or error. The Board of Directors is also responsible for Governance Best Practice Code Manual (‘Owner’s Expectations the Board by the Company and Group as far as appears from an examination subject to annual review by the the publication of the financial statements, whether in printed or (within the Main Board and Manual’). The Owner’s The Board is responsible for the of those records. Board. Under the Delegations electronic form. Debt Market Listing Rules). Expectations Manual sets out governance, proper direction Our audit was completed on 28 August 2013. This is the date at of Authority Policy, specific The Board of Directors’ responsibilities arise from the State-Owned While recognising that the the shareholding Ministers’ and control of activities which our opinion is expressed. functions, decisions and powers Enterprises Act 1986 and the Financial Reporting Act 1993. IoD Code and the Principles expectations for the Company of Genesis Energy and its The basis of our opinion is explained below. In addition, we outline are reserved for the Board. Responsibilities of the Auditor are guidelines which do not and the Board, including subsidiaries. the responsibilities of the Board of Directors and our responsibilities, The Board maintains ongoing purport to determine the reporting and accountability In the year in review, a Board and explain our independence. We are responsible for expressing an independent opinion on the oversight of all of Genesis detailed course of conduct requirements to the Crown and Charter was adopted by financial statements and reporting that opinion to you based on our Energy’s activities. Basis of opinion by Directors on any particular the New Zealand public and Directors that describes the audit. Our responsibility arises from section 15 of the Public Audit Annually, the Board holds We carried out our audit in accordance with the Auditor-General’s matter, Directors support the financial governance obligations. Board’s specific role and Act 2001 and section 19(1) of the State-Owned Enterprises Act 1986. strategic planning workshops Auditing Standards, which incorporate the International Standards need for the highest standards The latest Statement of responsibilities, and sets out the with the senior management on Auditing (New Zealand). Those standards require that we Independence of governance, behaviour and Corporate Intent is available to values, principles and practices accountability and report on the that underpin the function of team, and reviews strategic comply with ethical requirements and plan and carry out our When carrying out the audit we followed the independence the public and can be accessed matters set out in the IOD Code the Genesis Energy Board. The initiatives regularly throughout audit to obtain reasonable assurance about whether the financial requirements of the Auditor-General, which incorporate the on the Genesis Energy website: and Principles in this statement. principal functions of the Board the year. statements are free from material misstatement. independence requirements of the External Reporting Board. www.genesisenergy.co.nz/ about-us/investor-centre are to: Board self-review Material misstatements are differences or omissions of amounts In addition to the audit we have carried out other assurance The Company and objectives • Approve the strategic direction and disclosures that, in our judgment, are likely to influence assignments in respect of trustee reporting and review of the Genesis Energy is a State- Board of Directors Directors carry out an annual and the corresponding shareholder’s overall understanding of the financial statements. If Global Reporting Initiative Report, which are compatible with those owned enterprise (‘SOE’) performance review and Appointment and Term of business strategies and we had found material misstatements that were not corrected, we independence requirements. Principals and employees of our firm pursuant to the State-Owned Directors evaluation of the Board and of objectives that give effect the Chairman, with Directors’ would have referred to them in our opinion. also deal with Genesis Power Limited on arm’s length terms within Enterprises Act 1986 (‘SOE Shareholding Ministers appoint to this strategic direction; views sought and discussed on An audit involves carrying out procedures to obtain audit evidence the ordinary course of trading activities of the Group. Other than Act’) and is wholly owned by Directors based on their issues relating to Board process, about the amounts and disclosures in the financial statements. the audit, these assignments and arm’s length transactions, we Her Majesty the Queen in Right unique skill sets, to oversee the • Oversee the operation of efficiency and effectiveness. The procedures selected depend on our judgement, including have no relationship with or interests in Genesis Power Limited of New Zealand (the ‘Crown’). management and the business Genesis Energy’s business The Chairman engages with our assessment of risks of material misstatement of the financial or any of its subsidiaries. Genesis Energy is a limited affairs of Genesis Energy and to and ensure it is being individual Directors to evaluate statements whether due to fraud or error. liability company registered protect and enhance the value managed appropriately; and discuss performance In making those risk assessments, we consider internal control under the Companies Act 1993 of the assets of the Company, in • Monitor the financial and plan their training and relevant to the preparation of the Company and Group’s financial (‘Companies Act’). the interests of its shareholder. performance; professional development statements that give a true and fair view of the matters to which The principal statutory objective • Monitor the integrity of In appointing the Board, the needs for the next financial they relate. We consider internal control in order to design audit of Genesis Energy is to “operate reporting, consistent with Chairman and the Deputy year. The Board’s self-review procedures that are appropriate in the circumstances but not for as a successful business” and, to all legal and regulatory Chairman, the Crown seeks to and evaluation processes are the purpose of expressing an opinion on the effectiveness of the Ian Marshall this end, be: requirements; maintain the balance of skill, conducted by utilising a range Company and Group’s internal control. Deloitte • As profitable and efficient as knowledge, experience and • Set specific limits of authority of tools including evaluation On behalf of the Auditor-General comparable businesses that perspective among Directors through delegation to Hamilton, New Zealand templates, online questionnaires are not owned by the Crown; to enable the Board to work management;

genesis energy annual report 2013 / 79 Meetings and attendance generated from the Institute Board’s responsibility and ad- • Compliance with applicable Audit the actions and behaviours of Directors and one-on-one hoc committees to consider laws, regulations and The Board has adopted a policy Mixed identified as being important Director and whole-of-Board or monitor proposed business standards. to prevent its auditors providing Ownership to the Company and contribute discussions. High-level outcomes projects where it determines The Chairman of the Audit services on any matters Model Board to the success and culture of from this process are required that a committee will enhance Board Audit Remuneration Oversight Genesis Energy. Committee is a chartered that may compromise audit Directors attendance Committee Committee Committee to be reported to COMU. the Board’s effectiveness, while accountant and is not the independence. Genesis Energy expects all retaining Board responsibility. Rt Hon Dame Jenny Shipley 10 4 5 5 Board training and development Chairman of the Board. personnel to carry out their External audit Chairman of the Board All Board committees observe duties in accordance with best The Board is committed The Board has established In accordance with section 19 the same rules of conduct and Member of the Audit Committee: practice ethical and professional to continued professional Terms of Reference for the of the SOE Act, the Office of procedure as does the Board, Member of the Remuneration Committee requirements. This means that development to enable Audit Committee which are the Controller and Auditor- unless the Board determines Member of the Mixed Ownership Model Board all Genesis Energy people are Directors to maintain the reviewed annually. General is required to express otherwise. Following each Oversight Committee. required to act legally, ethically knowledge and skill set Remuneration Committee an opinion on Genesis Energy’s committee meeting, the Joanna Perry 9 5 5 and with integrity, in a manner required for the office of financial statements and, committee is required to report The Remuneration Committee Deputy Chairman of the Board consistent with Genesis Energy’s Director. Directors are given has the power to recommend to pursuant to section 15 of the back on its proceedings to the Chairman of Audit Committee Values and the Company’s the opportunity to participate the Board and is scheduled to Public Audit Act 2001, has next meeting of the full Board. Member of the Mixed Ownership Model Board policies and procedures. In in training and development meet no less than twice a year, appointed Ian Marshall of The current standing Oversight Committee. the year in review, a Code programmes made available with additional meetings being Deloitte to undertake the audit committees comprise the 1 9 1 of Conduct and Ethics was by COMU, the Institute of convened when required. on its behalf. Graeme Milne Audit Committee and the developed and adopted by Directors, the Company and The Audit Committee meets John Dell3 9 3 5 6 Remuneration Committee. The principal purpose of the the Board which formalises the other providers. Board members regularly with the external Chairman of the Mixed Ownership Model Genesis Energy does not have Remuneration Committee is to: expectation and the standard may attend specific industry auditor and the Board requires Board Oversight Committee a Nominations Committee as • Assist the Board in of ethical behaviour. conferences and workshops to regular financial reports and Member of the Remuneration Committee the appointment of Directors the discharge of its To provide additional guidance keep abreast of developments information from management Member of the Audit Committee unique to the business of is administered by the Crown. responsibilities relative to on conduct and behaviours, throughout the year to enable 2 9 1 In the year under review, the the setting and review of Rukumoana Schaafhausen the Company has the following the Company. the Board to have a true and fair Board maintained a temporary the terms of employment Alison Andrew (appointed 16 July 2012) 8 policies and standards: Directors visit Genesis Energy view of the financial position of committee (which was and remuneration of the 4 5 Compliance, Harassment sites and operations, attend the Company and Andrew Clements (appointed 16 July 2012) 9 2 1 constituted in 2011) to oversee Company’s Chief Executive; Prevention, Conflicts of Interest, stakeholder and iwi engagement its subsidiaries. Chairman of the Remuneration Committee preparatory work required by • Review the terms Continuous Disclosure, Fraud, events and attend briefings In the year under review, Member of the Mixed Ownership Model Board the Government in relation of employment and Oversight Committee Privacy, Insider Trading, from senior managers and Deloitte also provided certain to the Mixed Ownership remuneration of direct reports Protected Disclosures, Gifts industry experts. services involving assurance in John Leuchars (appointed 16 July 2012)3 10 2 Model programme and the to the Chief Executive; and Received, Employee Travel All new Directors are provided relation to the application of the Member of the Audit Committee proposed initial public offering • Set and review policy in Expense and Reimbursement, with an induction pack of the Company (‘the Mixed Global Reporting Initiative in the Rob Fisher (retired on 20 August 2012) 1 Directors’ Fee and containing a Directors’ Duties relation to Directors’ fees 2013 Annual Report. The value Ownership Model Board Note 1 – Graeme Milne was a co-opted as a member of the Audit Committee in August 2012. Reimbursement, and Guidelines Guide, governance information, and expenses. of additional services is detailed Oversight Committee’). Note 2 – Rukumoana Schaafhausen attended an Audit Committee meeting in August 2012. on Probity and use of Company key policies and all relevant The Board has established in the Financial Statements. Note 3 – John Dell and John Leuchars joined the Audit Committee in September 2012. Details of the membership and assets and information. information necessary to Terms of Reference for the Note 4 – Andrew Clements joined the Remuneration Committee in September 2012. number of meetings during the Internal audit prepare each new Director Remuneration Committee which Note 5 – Andrew Clements joined the Mixed Ownership Model Board Oversight Committee in June 2013. Conflicts of interest year in review are set out under Genesis Energy outsources its for their role. Directors also are reviewed annually. The principles that govern the Meetings and Attendance. internal audit function which Risk-management Management undertakes regular priority for the Board. Genesis participate in an induction management of conflicts of Mixed Ownership Model Board monitors the Company’s The Board requires the reporting to apprise the Audit Energy is committed to ensuring programme, designed to Audit Committee Oversight Committee interest are addressed in many internal control systems Company to operate rigorous Committee and the Board of that the Company conducts its provide new Directors with an The Audit Committee has the In the year under review, the sources (i.e. the Constitution, and risk-management, and processes for risk-management the Company’s key risks and the business in a lawful, professional overview of Genesis Energy, its power to recommend to the Mixed Ownership Model Board the Board Charter, the Code the integrity of the financial and internal control. Genesis treatment of those risks. and ethical manner. operations and the environment Board and is scheduled to Oversight Committee was of Conduct and Ethics, the information reported to the Energy utilises a comprehensive, While the Board acknowledges Genesis Energy has sought to and markets in which Genesis meet no fewer than four times tasked with providing oversight Owner’s Expectations Manual Board. Internal audit operates enterprise-wide risk- that it is responsible for the embed responsibility for ‘doing Energy operates. a year. The principal purpose of the preparatory work and a range of Company both with and independently management framework. overall control framework of the right thing’ within its culture. of the Audit Committee is to required to ready the Company policies) and the Board has Board meetings from management and Genesis Energy, it recognises The Genesis Energy Compliance assist the Board in the proper for an initial public offering The Company’s management adopted a specific Conflicts The Board schedules a minimum reports its findings directly that no cost-effective internal Policy (supported by the Code and efficient discharge of its under the Government’s Mixed actively participates in the of Interest Policy that provides of 10 meetings of Directors each to the Audit Committee. The control system will preclude all of Conduct and Ethics) provides responsibilities and to exercise Ownership Model programme. identification, assessment and guidance on identifying and Audit Committee reviews the errors and irregularities. all Genesis Energy personnel year at which Directors receive due care and skill in relation to monitoring of existing risks as dealing with conflicts of interest. written monthly information Attendance at meetings annual internal audit plan and well as identifying new risks. Written policies, standards, with a clear understanding oversight of: The Conflicts of Interest Policy and monitoring reports, and For the year ended 30 June recommends the same for Particular attention is given procedures and guidelines, that they must carry out their • The integrity of external aims to help Directors and reports on matters requiring 2013, there were ten Board acceptance by the Board. to the electricity market risks organisational structures responsibilities and business financial reporting; employees understand what Directors’ approval from the meetings, five Audit Committee Internal audit reports are made that could impact on Genesis allocating responsibilities, a activities in a way that complies a conflict of interest is and Chief Executive and senior • Financial management; meetings, five Remuneration available to the external auditor. Energy. All trading activities programme of internal audit, with any applicable laws, when it may arise, and sets management. The Board calls • Internal control systems; Committee meetings and six are consistent with the regular reporting and the regulations, industry codes, The Company has appointed out a procedure for managing additional meetings of Directors Mixed Ownership Model Board requirements and procedures careful selection and training standards and organisational • Accounting policy and Ernst & Young as its internal conflicts of interest. The ultimate as required. Oversight Committee meetings. stipulated in the Company’s of qualified personnel, all form policies and procedures. practice; auditor. The Audit Committee purpose of the Conflicts of Attendances at Board and Market Risk Policy and credit part of the control framework Board committees • Risk-management meets regularly with the Ethical behaviour Interest Policy is to protect the Committee meetings are shown internal auditor. risks are managed through the overseen by the Board. For efficiency, the Board frameworks and monitoring Genesis Energy is a values- integrity of decision-making in the table on the next page. Credit Risk Policy. Both of these specifically delegates some of compliance within those Both the internal auditor and Compliance based organisation, with four at Genesis Energy and the All Directors attended a joint policies are approved by the its roles to Board committees. frameworks; the external auditor have Compliance with legal, key values that underpin the reputation of the Company, Board and senior management Board and are subject to regular The Board may constitute • Related-party transactions; unrestricted access to the Audit regulatory and electricity Genesis Energy business those who work for it and strategy planning workshop which oversight by a committee of standing committees that and Committee and to the Board. industry requirements is a (‘Values’). The Values are those who own it. senior managers. focus on specific areas of the was held on 26 November 2012. genesis energy annual report 2013 / 81 STATUTORY DISCLOSURES.

The Company also prohibits diversity-related initiatives. tabling in Parliament. Before the commercial value of the Disclosures of interest Jenny Shipley • Chair Seniors Money International Limited any Director providing services, The Company recognises SCI is finalised, the Company is Company. The SOE Continuous The general disclosures of • Chair of Momentum Holdings Limited in any capacity, to the Company that working towards gender required to provide shareholding Disclosure Rules further interest made by Directors • Chair of Financial Services Council except with the prior written balance is important for the Ministers with a draft SCI, require public announcement of Genesis Energy and its • Chair and Trustee of NZ Global Women approval of the shareholding attraction and retention of the supported by the Company’s of comparative financial subsidiaries, pursuant to section • Managing Director of Jenny Shipley New Zealand Limited Ministers. best talent. business plan, to enable performance information no 140(2) of the Companies Act • Director of Trans-Tasman Resources Limited shareholding Ministers and their later than 60 days after the Each Director is required to fully This approach is consistent with are shown to the right. • Director of China Construction Bank Corporation disclose all relationships he or Genesis Energy’s support for advisers to assess the SCI. In end of each half and full-year There were no declarations • Member of Canterbury Earthquake Recovery Authority Review Panel addition, shareholding Ministers period. All disclosures made by she has with Genesis Energy the NZX’s new Diversity Listing of interest made pursuant to expect to receive quarterly the Company under the SOE • Trustee of Heart Health Research Trust (retired as Chair April 2013)* (and all of its subsidiaries) and Rule which was formalised section 140(1) of the Companies reports from the Company. The Continuous Disclosure Rules • Director Mainzeal Group Limited (resigned February 2013)* all relevant private or other at the end of 2012. For the Act entered in the Interests quarterly report is required to are placed on the Company’s • Chair Mainzeal Property and Construction Limited (resigned December 2012)* business interests to the Board purpose of this Annual Report, Register of Genesis Energy fully and accurately summarise website and Treasury’s website. (which will include relationships Genesis Energy is reporting or its subsidiary companies. Joanna Perry • Director and Shareholder of JMGP Limited with competitors or third-party on diversity, consistent with the Company’s performance With the listing of the • Director of Kiwi Income Property Limited No Director of Genesis Energy suppliers to the Board), in order the requirements of the NZX against budget, identify the Company’s Capital Bonds in • Director of The Co-operative Bank Limited is a shareholder of Genesis that the Board may assess Diversity Listing Rule and cause of major variances, signal May 2011, the Company also • Director of Rowing New Zealand Energy or any of its the Director’s independence records that, as at 30 June 2013, any potential developing issues, became subject to NZDX • Director of Partners Life Limited subsidiary companies. or an interest in any particular in relation to Genesis Energy’s: highlight major achievements Continuous Disclosure Rules. • Director of Partners Group Holdings Limited for the quarter and provide a transaction or issue. All • Board of Directors, four out These rules also require the Interests register entries • Director of Sport New Zealand clear statement of the outlook disclosures of interest (including of eight Directors were women immediate disclosure of Material In accordance with section • Director of Group Limited for the rest of the financial the nature and extent of any (for the previous year, at Information to the NZX unless 211(1)(e) of the Companies Act, • Chairman of the Audit Committee of the Victorian Auditor General’s Office year. Accordingly, the Board interest) are recorded in 30 June 2012, three out of six certain limited exceptions particulars of the entries in the • Member of the International Financial Reporting Standards Interpretations has approved practices the Disclosure of Interests Directors were women); and apply. In broad terms, Material Interests Register of Genesis Committee (IFRIC) Register of the Company which which endeavour to ensure Information means information • Member of Investment Advisory Panel of Primary Growth Partnership • Officers, two out of the seven Energy made during the is tabled and reviewed at the shareholding Ministers are, to which a reasonable person • Independent Advisor to the Board of Tainui Group Holdings Limited positions were held by women accounting period are as set out beginning of each Board meeting. the extent there is no conflict would expect, if it were in the table to the right. New or (for the previous year, at Graeme Milne • Chairman of New Zealand Pharmaceuticals Limited with other regulatory disclosure available to the market, to adjusted entries made during Performance-based 30 June 2012, two out of • Chairman of Synlait Milk Limited obligations, informed well in have a material effect on the the accounting period are remuneration six officer positions were • Chairman of Terracare Fertilisers Limited advance of any material or price of the Company’s Capital marked with an asterisk (*). A percentage of the Chief held by women). • Chairman of Waikato District Health Board significant events, transactions Bonds. Disclosures made by Executive’s total remuneration • Chairman of Johnes Disease Research Consortium Stakeholder and iwi engagement and other issues relating to the Company under the NZDX and that of each of the • Chairman of Rural Broadband Initiative National Advisory Committee The Board requires the Company that may be Continuous Disclosure Rules are Company’s officers is linked • Director of New Zealand Institute for Rare Disease Research Limited management to provide contentious or could attract placed on the NZX’s website. to the achievement of • Director of Farmers Mutual Group regular reporting on the nature wide public interest, whether performance objectives and A Board-approved policy and extent of stakeholder, positive or negative. COMU • Member of the Massey University School of Engineering Advanced Technology financial, strategic, health establishes the internal processes Advisory Board community and iwi and hapu acts as the liaison between and safety, stakeholder and for identifying, reporting and • Partner of G.R. & J. A. Milne engagement and consultation shareholding Ministers and organisational targets which the timely disclosure of Material • Trustee of Rockhaven Trust pertinent to the Company’s the Company and facilitates are agreed and reviewed on an Information under the SOE • Member of the NZ Meat Industry Strategy Coordination Group business interests and the quarterly meetings. annual basis. The Board, through Continuous Disclosure Rules (term concluded April 2013)* communities in which it the Remuneration Committee, Continuous disclosure and the NZDX Listing Rules. • Member of the Industrial Research Ltd End User Panel (term concluded March 2013)* operates. The Company seeks agrees the Chief Executive’s With the aim of increasing • Chairman of District Health Boards Shared Services Executive to establish opportunities at performance objectives, targets the transparency of SOEs and (term concluded March 2013)* various Board, management and relevant weightings and to provide the public with • Director of Alliance Group Ltd (appointed March 2013)* and operational levels of the undertakes a six-monthly and a more continuous flow of business to facilitate ongoing John Dell • Managing Director and Shareholder of Japad Trading Limited annual review of the Chief information regarding SOE and regular consultation. The • Managing Director and Shareholder of Japad Limited Executive’s performance. performance, shareholding • Managing Director of Japad Long Term Investments Limited Company carries out customer, Ministers require a number of Gender and diversity • Non-Executive Director of Higgins Group Holdings Limited stakeholder and employee the larger SOEs to comply with • Non-Executive Director of Unimarket Holdings Limited Genesis Energy is committed to surveys on a regular basis and, the SOE Continuous Disclosure • Non-Executive Director of EGS Investments Limited and its subsidiaries ensuring an inclusive workplace as required by the Board, from Rules. The Rules require the • Non-Executive Director of Perpetual Capital Management Limited that embraces and promotes time to time. immediate disclosure of • Non-Executive Director of Viridian Glass GP Limited diversity through a number The Company held an ‘Material Information’ which • Trustee of Japad Family Trust of initiatives including a focus Annual Public Meeting on includes information that • Trustee of Japad Investment Trust on equal opportunity. For the 23 October 2012. would have a material effect year in review the Company • Trustee of The Otago Trust Shareholder relationship on the Company’s commercial developed a Diversity Policy valuation, information in relation • Trustee of Cuthby Trust The SOE Act provides a (which was adopted by the to dividends that are different • Trustee of Newcastle Trust comprehensive outline of an Board in August 2013) which from that in the Company’s • Director Regional Facilities Auckland Limited SOE’s reporting responsibilities Rukumoana sets out the Company’s most recent SCI and Material Schaafhausen and accountability. The business • Director Schaafhausen Inc Limited commitment to diversity and Transactions, being transactions planning process culminates • Executive Member of Waikato-Tainui Te Kauhanganui Incorporated, the trustee provides a structure for and the value of which is greater of the Waikato Raupatu Lands Trust and Waikato Raupatu River Trust in the delivery of a final SCI for complements Genesis Energy’s than 5 per cent of the current • Trustee, NZ Centre for Social Innovation

genesis energy annual report 2013 / 83 Indemnity and insurance None of the Directors of the subsidiary companies received any Alison Andrew • Employed by Orica Pty Limited as Global Head of Chemicals Record of employees earning over $100,000 in year ending 30 June 2013 remuneration or other benefits during the period specifically in • Chair of Orica NZ Limited In accordance with section $1,350,000 — $1,360,000 1 relation to their duties as Directors of these companies, other than • Chair of Orica Investments (NZ) Limited 162 of the Companies Act and the benefit of an indemnity from Genesis Energy and the benefit $640,000 — $650,000 1 • Chair of Orica NZ Superfunds Securities Limited the Company’s constitution, Genesis Energy has indemnified of insurance cover in respect of all liabilities to persons (other than $590,000 — $600,000 1 • Chair of the Advisory Board, The University of Auckland Chemical and Materials the Company or related body corporate), to the extent permitted Engineering Department and arranged insurance for all $520,000 — $530,000 1 by law, which arise out of the performance of their normal duties • Director of Orica Explosives Holdings Pty Limited (appointed February 2013)* current and former Directors and executive officers of the as Directors unless the liability relates to conduct involving a lack of $480,000 — $490,000 1 • Director of Plastics & Chemicals Industries Association (appointed January 2013)* Company and its subsidiary good faith. $430,000 — $440,000 1 • Director of Orica Investments Pty Limited (appointed February 2013)* companies in respect of all • Director of Orica Australia Pty Limited (appointed February 2013)* Director Total $420,000 — $430,000 1 liabilities to persons (other • Chair of Orica NZ Securities Limited (term concluded January 2013)* than the Company or a related Jenny Shipley $111,429.86 $360,000 — $370,000 1 • Chair of Orica NZ Finance Limited (term concluded January 2013)* body corporate), to the extent Joanna Perry $73,498.08 $310,000 — $320,000 4 • Chair of Orica Fiji Limited (term concluded January 2013)* permitted by law, which arise $270,000 — $280,000 1 • Deputy Chair of NZ Forest Research Institute Limited out of the performance of their John Dell $60,811.38 (term concluded September 2012)* normal duties as Directors or Graeme Milne $46,118.40 $250,000 — $260,000 2 • Director of Responsible Care NZ (term concluded January 2013)* executive officers unless the Rukumoana Schaafhausen $46,118.40 $240,000 — $250,000 2 Andrew Clements • Chair of Orion Corporation Limited liability relates to conduct $230,000 — $240,000 1 • Chair of New Zealand Assets Management Limited involving a lack of good faith. Alison Andrew (term commenced 16 July 2012) $44,229.32 $210,000 — $220,000 2 • Chair of Amadeus Asset Administration Limited The Company also holds Andrew Clements (term commenced 16 July 2012) $47,765.24 • Chair of New Zealand Football Foundation prospectus liability insurance $200,000 — $210,000 1 John Leuchars (term commenced 16 July 2012) $47,979.35 in relation to its Retail Bond • Principal, Director and Shareholder of Zeus Management Limited $190,000 — $200,000 2 • Principal, Director and Shareholder of Jacon Investments Limited issue in December 2008 and Rob Fisher (term concluded 20 August 2012) $7,556.32 $180,000 — $190,000 6 • Director of Limited Capital Bond issue in April 2011. Remuneration of employees • Director of RDGP Limited In authorising the insurances $170,000 — $180,000 10 to be effected, each Director In accordance with section 211(1)(g) of the Companies Act, the • Director of Antipodes Wing Limited $160,000 — $170,000 11 signed a certificate stating that, number of employees, or former employees, of Genesis Energy • Trustee of the Mt Wellington Stadium Charitable Trust in their opinion, the cost of the not being Directors of Genesis Energy who, during the accounting $150,000 — $160,000 16 • Chair of Revera Limited (term concluded May 2013)* insurance is fair to the Company. period, received remuneration and any other benefits in their $140,000 — $150,000 24 • Director of The New Zealand Refining Company Limited (term concluded May 2013)* capacity as employees the value of which was or exceeded Use of Company information $130,000 — $140,000 44 John Leuchars • Director and Shareholder of Leuchars Holdings Limited $100,000 per annum is listed in the table at right. No notices have been received • Director and Shareholder of Nuf Investments Pty Limited $120,000 — $130,000 33 by the Board of Genesis Credit rating • Director and Shareholder of Nuf Superannuation Pty Limited $110,000 — $120,000 36 Energy under section 145 As at the date of this Annual Report, Standard & Poor’s long-term • Director and Shareholder of Nuf Pty Limited of the Companies Act with credit rating for Genesis Energy was BBB+ Stable. $100,000 — $110,000 68 • Committee member of the Saint Kentigern Trust Board regard to the use of Company Total staff earning over $100,000 271 • Director of KiwiRail Holdings Limited – trading as KiwiRail (appointed October 2012)* information received by Stock Exchange Listings • Director of New Zealand Railways Corporation – trading as KiwiRail Directors in their capacities as Genesis Energy has subordinated, unsecured Capital Bonds that are Employees included who are no longer at Genesis Energy as at (term concluded December 2012)* Directors of the Company or its listed on the New Zealand Debt Market Exchange (‘NZDX’). 30 June 2013 number 18. Rob Fisher (retired • Chairman of NZRU Appeal Council subsidiary companies. Distribution of holders of quoted securities 20 August 2012) • Chairman of NZ Goodbooks Remuneration of Directors Distribution of holders of quoted securities • Director/Shareholder of Omega Talent for Auckland Limited Shareholding Ministers advise Investor Range at 27 August 2013 • Director/Shareholder of Potters Park Limited the Board of the total allowance Security Code - GPFLA • Director/Shareholder of Director Property Fund Limited for fees available to Directors Range Holder % of holders Issued capital % issued capital • Trustee of Eden Park Trust of Genesis Energy and its • Trustee of Watercare Harbour Clean Up Trust subsidiary companies. The 1 to 1,000 0 0% 0 0% • Board Member of Sport and Recreation New Zealand table to the right sets out the 1,001 – 5,000 164 5.90% 820,000 0.41% • General Counsel of Watercare Services Limited total remuneration before 5,001 – 10,000 564 20.29% 5,387,000 2.69% withholding tax and excluding Directors of subsidiary companies GST (including remuneration 10,001 – 50,000 1,673 60.18% 46,317,000 23.16% During the year in review: for Audit, Remuneration and 50,001 – 100,000 248 8.92% 20,859,000 10.43% • The Chairman of Genesis Energy Rt Hon Dame Jenny Shipley, the Chief Executive of Genesis Energy Mixed Ownership Model Greater than 100,000 131 4.71% 126,617,000 63.31% Albert Brantley and the General Counsel and Company Secretary of Genesis Energy Maureen Board Oversight committee Shaddick, were Directors of the following wholly-owned subsidiaries: Genesis Power Investments membership) and the value Totals 2,780 100.00% 200,000,000 100.00% Limited, Kinleith Cogeneration Limited, Kupe Holdings Limited, GP No. 1 Limited, GP No. 2 Limited and of other benefits received GP No. 5 Limited; and from Genesis Energy by each Director and former Director of • Albert Brantley and Maureen Shaddick are Directors of Gasbridge Limited in connection with the Company during the period Genesis Energy’s 50 per cent ownership of Gasbridge Limited. 1 July 2012 to 30 June 2013.

genesis energy annual report 2013 / 85 DISCLOSURE OF MANAGEMENT APPROACH.

Indirect economic impacts practices that ensure adverse natural gas due to our investment for other waste-stabilisation The successful delivery of the Health and Safety, are available employees, contractors Economic Genesis Energy’s operations effects on the environment are in the Kupe gas field. purposes. The management of Company’s business strategy and accessible by all staff on and suppliers are working Market presence and economic performance avoided, remedied or mitigated. Genesis Energy must accurately ash is authorised and managed and objectives is sustained by the Company’s internal website in safe and healthy work The Company manages by resource consents. the Company’s four corporate (‘Gennet’ intranet site). environments. This includes Genesis Energy plays an produce a wide range of indirect report and file an Annual Emission environmental effects through values. These values influence providing adequate health and important socio-economic role economic impacts on a broad Report to the Ministry for the Goals and performance People policy and human resource consents as required the day-to-day behaviour and safety knowledge, training and in providing a range of essential range of stakeholders and the Environment. Emission units resources advisory under the Resource Management The Company’s environmental actions in Genesis Energy: appropriate processes and energy services (electricity, gas New Zealand economic system. may be purchased from within responsibility sits with the Act (1991) and via agreements performance measures and systems. The Company adheres and LPG) to residential and New Zealand or from the global • Respect: We treat people and People and Capability team, led with affected parties, iwi, targets include: to best practice and legislative business consumers across New market. Genesis Energy must places as we wish to be treated. by the General Manager People Environment and key stakeholders. • Zero abatement, infringement requirements through its Zealand. These energy services surrender emission units that it • Drive: We achieve with energy, and Safety. Responsibility for and enforcement notices policies and procedures. are consumed directly and also Genesis Energy is committed As well as managing the has purchased (either nationally courage and commitment. performance management, to achieving excellence in all its environmental effects from or internationally) to settle any under the Resource coaching and guidance of Genesis Energy aims to target used as inputs into the production • Imagine: We challenge today environmental practices and its generation and other obligations under the scheme. Management Act; and teams is delegated to the world-class performance in of other goods and services. and change tomorrow. to ensuring that environmental day-to-day activities, the • Annual publication of managers of those teams, with health and safety by 2014/2015. Genesis Energy continues to Genesis Energy does not and social awareness are the Company is also committed to Environmental Performance • Support: We work together, comprehensive management To achieve this goal, the focus on protecting and growing receive a free allocation of cornerstones of its business. a variety of community-based Reports . take responsibility and training and support given to Company has developed a its market share. However, emission units under the ETS. Achieving full regulatory environmental initiatives and have fun. the managers of teams on an comprehensive Health and customer growth aspirations will However, as a transitionary In 2012/2013, the Company had compliance is considered to assists customers to manage Genesis Energy aims to become ongoing basis. Compliance with Safety management framework, continue to be balanced by the measure, all participants no abatement, infringement be the minimum standard that their environmental impacts. the “place where talent wants performance-management alongside a three-year strategic Company’s risk position. under the ETS were required and enforcement notices under Genesis Energy must strive to surrender one emission the Resource Management Act. to work”. The Company will principles and processes plan for Health and Safety. Genesis Energy (including Materials to achieve in the operation of unit for every two tonnes of Genesis Energy also regularly continue to focus on attracting is monitored centrally, but All employees are represented Energy Online) has increased its Genesis Energy manages its business. Genesis Energy’s CO e calculated in the Annual reviews and publicly reports the best and most capable coached and driven locally by in formal joint management and number of electricity customers its fuel requirements via 2 Environmental Values are to: Emission Report. on its environment systems people to its business and managers and teams. employee committees. Every by 14,432 from 529,342 to long-term contracts and a ensure that they stay by putting • Act with integrity at all times; The Government completed a and performance. People site has a safety committee that 543,774 and increased its gas coal stockpile to enable the in place appropriate practices • Foster close relationships review of the ETS in 2011/2012. meets monthly and has manager customers by 3,425 from 111,578 Company to provide energy, Responsibilities and training (such as performance related Genesis Energy has an integrated with the community and Following this review, the and employee representation. to 115,003 in 2012/2013. The both as a primary fuel (gas and Genesis Energy has dedicated pay and training) and systems performance framework stakeholders, so that their Government has decided to keep Company is the largest electricity LPG) and as electricity to its staff for the environmental and by creating and maintaining ‘Performance Excellence views can be incorporated into the ‘one-for-two’ obligation and (27.2 per cent market share) customers. The Company holds management and sustainability a culture (where people feel Process’ that links performance Human Rights and gas (43.7 per cent market environmental decision making; a 31 per cent equity interest the $25 ‘fixed-price option’ until to fixed pay, provides career performance aspects of its valued and supported) that Genesis Energy conducts share) retailer in New Zealand. • Acknowledge that our activities in the Kupe oil and gas field at least 2015. The Government pathways and creates business. The Company’s ensures its ongoing success. its business in New Zealand Genesis Energy has increased affect both the environment (located off the Taranaki coast) has also kept access to the global transparency for development Environmental Manager is The Company will also enhance where rules and regulations its LPG customers by 2,098 and the communities within and has entitlements for 100 market unrestricted for the and progression. All employees responsible for managing the its workplace by focusing on governing basic human rights from 7,610 to 9,708 in 2012/2013. which we operate; per cent of the gas and LPG purchase of emission units valid receive regular performance environmental issues (including the health, safety and well- have a long history and are Genesis Energy’s customers can production. Other procurement under the ETS. and career development • Respect the role of tangata resource consents, compliance being of its people and by well established. Genesis be categorised as residential is undertaken in accordance reviews. In 2012/2013, 91 per whenua as kaitiaki of the Waste and environmental issues) ensuring they have a work Energy complies with New (592,501) and business (75,984) with a Purchasing Policy. cent (as at 31 July 2013) of natural resources and taonga Genesis Energy’s operations related to its generation assets environment that encourages Zealand legislation regarding customers receiving one or more eligible employees received within the rohe; Water produce a variety of different and reports to the General collaboration, teamwork and human rights in areas including electricity, gas or LPG products. Manager Generation Assets. innovation. performance reviews. • Investigate to better Genesis Energy uses water waste streams. The Company’s diversity, discrimination, The generation site managers Genesis Energy has a range of Economic performance understand the nature of resources as fuel for its hydro approach to waste is, in order Genesis Energy is committed freedom of association, child have the overall accountability internal programmes focused Genesis Energy’s Statement our environmental effects – power stations and as cooling of decreasing preference, to to providing an environment labour, redundancies and health, for environmental performance on leadership development, of Corporate Intent (SCI) sets and share this information water for the Huntly Power avoid, reduce, re-use, recycle where all individuals are treated safety and environment. These of the assets. skills training and managing out the Company’s intentions, with the community and Station. Water use is authorised and dispose of wastes. fairly, where capability and human rights issues are handled for performance along with activities and performance stakeholders; and and managed via resource Waste-collection processes In addition, all staff members achievement (i.e., the principle as a normal, day-to-day part of comprehensive wellness and objectives, indicators and • Seek environmental consents granted under the at Genesis Energy’s offices receive environmental and of merit) is rewarded and business and internal policies. safety programmes. The targets for the forthcoming improvements in all aspects Resource Management Act 1991. involve segregation of paper, sustainability-awareness training recognised, and where the In 2012/2013, Genesis Energy had Company also engages external three financial years. The of our business. The Company has extensive cardboard, common domestic as part of their induction. insights of diverse people no incidents of discrimination. recyclables and organic Additional environmental training are encouraged and valued. training agencies to provide Company reports its economic Genesis Energy manages and hydrology and environmental Genesis Energy has the matter. At the generation occurs for staff and contractors Genesis Energy believes that specialist and leadership performance against the SCI operates an Environmental monitoring networks around its philosophy that its success sites, opportunities to re-use to varying levels, dependent on embracing diversity is essential development as required. in quarterly operational and Management System generation assets which collect is primarily dependent on its or recycle wastes are sought, their roles and responsibilities. to the achievement of its long performance statements (‘EMS’) which ensures that flow, water level, rainfall, water Health and safety employees. The Company and hazardous wastes are term strategy and commercial to shareholding Ministers, environmental and social quality, water temperature and Genesis Energy is committed to works hard to develop a culture disposed of in accordance success. Genesis Energy takes government officials and awareness is core to the sediment data. Discharges to excellence in the management that attracts and retains the with regulations using Labour a holistic view of diversity that the public, through its half- operation of the Company. The water are also authorised by of the work environment and right people. As an integral licensed waste-management Genesis Energy’s approach is anchored around diversity year and annual reports as EMS encompasses a number resource consents. procedures to provide for the policy, all employees are actively contractors. to labour is based on the of thought, and includes those well as periodically under of different business systems safety and well-being of all involved in the implementation Emissions principles of treating people differences in people resulting the Company’s continuous to achieve this, which are well The combustion of coal at employees and contractors. of the following key issues: Genesis Energy takes a whole-of- fairly and with respect, from employee experiences disclosure policy. Company-wide integrated with other core the Huntly Power Station The Company manages its company approach to address providing clear expectations and capabilities and family • To treat all employees, performance is also reported to business systems. It applies to produces ash as a by-product. design, process and behavioural its impact on climate change, and rewards for performance, and cultural heritage. Diversity customers, suppliers and the Board on a monthly basis. all activities involving the use of The Company is actively safety to a high standard and both through the Company’s sustaining a diverse and encompasses differences that subcontractors as individuals, Genesis Energy’s activities and natural and physical resources investigating options for is a Tertiary Accredited ACC own activities and emissions inclusive environment and relate to gender, marital status, respecting individual rights performance are monitored and the environment, from the beneficial re-use of the ash and, provider, in addition to holding and through the activities of its a relentless pursuit of zero religious belief, colour, race, and beliefs; and reviewed externally by the conceptual stage of any project at present, supplies some of the AS/NZS 4801 certification for customers and stakeholders. harm for its people, places ethnicity or national origin, • To provide all employees and Crown Ownership Monitoring through to normal operational ash as an additive for cement its health and safety standards. Genesis Energy has mandatory production. The remaining and communities. The success disability, age, political opinion, contractors with a zero harm Unit on behalf of shareholding activities of Genesis Energy. At Genesis Energy, the safety obligations under the Emission ash is pumped to dedicated of the business is supported employment status, family work environment; Ministers (www.comu.govt.nz). The environmental effects of goal is zero harm. This means Trading Scheme (ETS). The ash-settling ponds, and then by strong values, policies and status or sexual orientation. • To foster good relations Shareholding Ministers provide generating power are assessed ensuring the Executive Company has obligations as a transported to a municipal procedures that drive Genesis These policies, including between employees and formal expectations and and managed on a real-time Management team, all Stationary Energy and Industrial landfill facility where it is used Energy every day. Performance, Training and management through open feedback on performance basis via a range of monitoring Process participant for importing for daily-cover (to substitute for during the business planning networks and operational and purchasing coal, and mining the use of imported soils) and process each year. genesis energy annual report 2013 / 87 communication at all levels of best achieved through the Responsibility, monitoring take one working day per stability from public policy and appeal rights under the RMA, new • Employers and Manufacturers the Company and to treat all understanding that embracement Product and follow-up year to volunteer their energy regulation and applies a principled environmental limits, and new Association (Northern) Inc. employees equally; of diversity provides. Responsibility The Genesis Energy Leadership and skills for a community or and constructive approach when processes for decision making. • New Zealand Association of Team has the operational environmental project. During engaging in regulatory processes. • To establish appropriate Employment relations Genesis Energy’s main products Genesis Energy is a plenary Accredited Employers Inc. responsibility for product 2012/2013, 45 per cent of Genesis Genesis Energy seeks to promote objectives and standards for and leadership are electricity, gas and bottled member of the Land and Water • Waikato and Bay of Plenty responsibility issues. These Energy’s employees participated well thought through and all jobs; Genesis Energy maintains liquefied petroleum gas (LPG). Forum. We have also made Civil Defence Lifelines issues including risks and in a community or environmental considered policy developments, submissions to Government • To provide career guidance strong relationships with its • Business Leaders’ Health and Customer health and safety impacts on customers are project. The Company’s target which the Company expects on the Freshwater Reform and support employees to employees and undertakes to Safety Forum. monitored on a daily basis was 40 per cent. to be in the long-term interest progress in their careers; address workplace grievances Genesis Energy does not control programme and the proposed through the Company’s various of its customers. changes to the RMA that seek • EqualEmployment • To provide training and staff promptly and to provide fair the use of its products. However, Iwi interactions with customers Genesis Energy participated to give effect to elements of Opportunities Trust. development opportunities, outcomes. The Company the Company advises its Genesis Energy seeks to have and are addressed by the in a number of regulatory that programme. Our focus is encourage internal complies at all times with customers on how to use these proactive and constructive Anti-competitive behaviour Leadership Team. processes during the year ending on ensuring that the Company promotions and provide the good-faith provisions of products safely. It also works relationships with iwi where Genesis Energy is cognisant June 2013. In particular, we has certainty around the ability continuity of employment the Employment Relations actively to promote energy Training and awareness there are mutual interests fully of the requirements of participated in the continuing to access water for existing where possible; Act 2000. Genesis Energy efficiency in its own operations within their rohe. The types New Zealand’s competition The Company has a wide range Freshwater Reform programme, and future assets, under any establishes appropriate and provides customers with of relationships that Genesis law legislation, the Commerce • To maintain open and honest of training programmes and the Wholesale Advisory Group’s proposed allocation regime. objectives and standards for advice, products and services Energy has with iwi are many Act 1986. The Company’s legal lines of communication options for employees that work on pivotal pricing behavior, all jobs and rewards its and support to improve their and varied; from being a Proposed Transmission Pricing personnel ensure that employees between all employees and support its interactions with the Electricity Authority’s employees on the basis of energy efficiency. tenant on Maori-owned land, Methodology are aware of the statute’s be prepared to listen and take customers including online- review of the Transmission their ability and willingness Genesis Energy recognises its to agreements on how the The Transmission Pricing requirements through general and a responsible and reasonable based (‘My Learning’) policy Pricing Methodology, and the to contribute to the success role is to supply customers two parties will work together Methodology establishes how business team-specific training approach to employment awareness and contact centre development of the Canterbury of the Company, recognising with reliable energy; however, to address the effects of the transmission assets are paid and that the Company complies relationship issues; and training programmes. Proposed Land and Water that ‘reward’ covers a range of circumstances or events Company’s activities on iwi, to for by the sector. Under the comprehensively and in a timely • To be a caring employer Regional Plan. We also secured benefits including promotion, beyond its control may cause proactive initiatives that support current methodology, the manner with all information and support employees in representation for Genesis Energy training and remuneration. power supply to be interrupted. Society hapu/iwi development while majority of transmission assets requests issued by the Commerce practical and reasonable ways. on the Authority’s influential Genesis Energy expects each To ensure the safety of its Genesis Energy plays an creating wider environmental are paid for by end-users via an Commission (the responsible A list of the Company’s policies Wholesale Advisory Group. of its employees to be responsible customers who are medically important role in society, and community benefits. Local ‘interconnection charge’. South enforcement authority). and standards including those for their own performance and dependent on electricity or providing essential energy hapu and iwi relationships Genesis Energy made 100 Island generators (including relating to human rights, ethical Compliance take accountability for their vulnerable because of their products and services to are fostered at a variety of submissions on national policy Genesis Energy) bear the cost behaviours and gender and A statement on Compliance individual actions. reliance on electricity, Genesis customers, as a major employer, levels within Genesis Energy, or regulatory issues during of the High Voltage DC link. diversity are outlined in the (outlining the Company’s Genesis Energy consults its Energy asks customers to working with key stakeholders including engagement by senior the year ending June 2013. The Authority’s proposed Corporate Governance Statement. compliance with any employees about change identify if they, or someone in and as a corporate citizen. management and Directors. We made 19 submissions on Transmission Pricing applicable laws, regulations, Diversity and encourages employees their household, are medically regional and local regulatory Methodology (‘Proposed TPM’) dependent or vulnerable Stakeholders and local Corruption issues during the same industry codes, standards and Building a more diverse to participate in developing changes this allocation. It seeks because that person is reliant communities Genesis Energy is aware of period. Notable regulatory organisational policies and workforce enables Genesis the Company’s management to impose a greater share of on electricity, so the Company Genesis Energy recognises that the risks of corrupt practices issues on which the Company procedures) is made within Energy to get the best from strategies and future direction. transmission costs on generators can include this important its business operations impact including bribery, fraud, made submissions include the Corporate Governance its employees and deliver The Company’s leaders are as a group – not just South information on the customer’s both its stakeholders and the collusion, conflicts of interest the Electricity Authority’s Statement. greater value to its customers. supported and provided with Island generators. It creates a Genesis Energy account. local communities in which and money laundering. proposed Transmission Pricing volatile monthly Scheduling Responsibility, monitoring The commitment to diversity the opportunities to grow, with it operates. The Company is Genesis Energy is committed Methodology, the review of Marketing communications Pricing Dispatch charge and follow-up leads to greater diversity of continued exposure to a wide committed to engaging with, to promoting a culture with pivotal pricing behaviour, payable by both generators The Genesis Energy Executive thought within the Company, variety of experiences and Information to customers supporting and adding value a strong ethical base that proposed arrangements to and consumers. Any residual has the operational responsibility which will provide broader development to ensure ongoing is generally communicated to its stakeholders and local supports integrity in business address insolvent retailers, costs are then shared equally by for Society issues. These issues perspectives on decision making, improvements in leadership and in brochures, newsletters, communities in many ways – from and achieves this by the many the gas critical contingency generators and end consumers. including risks and impacts on will increase and strengthen Company culture. advertising communications formal meetings, continuous policies in place to demonstrate regulations, the Government’s local communities are monitored customer relationships, will lead and other marketing material, disclosure of information, and that corrupt behaviour is not Freshwater Reform programme, Genesis Energy made Responsibilities and on a daily basis through the to increased innovation and monitoring of human rights and via the website, including participating in the creation of tolerated within the Company and the Proposed Canterbury submissions on the proposal and Company’s various interactions will remove barriers to success policies and procedures each customer’s ‘My Account’ public policy, legislation and and that there is a mechanism Regional Land and Water Plan. participated in the Authority’s and effective risk management. TPM conference on 29–31 May with local communities The Genesis Energy Board, portal, and the Company’s regulation, to supporting a wide for dealing with the reporting Genesis Energy believes that Copies of the Company’s 2013. Our key focus is to mitigate and other stakeholders and Leadership Team and mobile App. range of community activities and investigation of any such workplace diversity principles submissions are available online the volatility in the Proposal, addressed by the Company employees are responsible for and organisations. incidents. Key policies deal with; should be integrated into all Customer privacy at www.genesisenergy.co.nz highlighting the unnecessary through its policies and the implementation of human Fraud, Protected Disclosures aspects of the Company’s Genesis Energy takes customer Genesis Energy also shows Freshwater Reform cost that this will eventually initiatives and through rights policies and procedures. its community support (Whistleblowing), Compliance, business, to achieve modelling privacy seriously in regards Genesis Energy depends upon impose on end consumers. We the behaviour of both the The Genesis Energy Leadership through financial sponsorship Insider Trading, Continuous and reinforcement of the Genesis to what the Company uses having access to resources for will remain actively involved in Company and its employees. Team has the operational agreements, provision of Disclosure, Gifts Received and Energy values and desired the information for and how our generation assets to operate. the debate as it continues. responsibility for these policies. materials and services and Conflicts of Interest. For the Training and awareness behaviours. The promotion of securely the information is In particular, our thermal Human rights policies are management support and year in review, the Board of Memberships in associations 2013 The Company has a wide range equal employment opportunities kept. Genesis Energy ensures and hydro generation assets reviewed and updated by the advice. Examples of such Directors formalised a Code Genesis Energy maintains of training programmes and to all will be essential parts of the that information relating to our rely upon access to water to People and Safety business unit initiatives include the Genesis of Conduct and Ethics and a corporate memberships of the options for employees that Genesis Energy recruitment and customers is held and used in generate electricity. This access on a regular basis depending on Oncology Trust, Schoolgen and Board Charter, both of which following industry and business support its interactions with selection processes, and will be accordance with the Privacy to water is currently provided the subject matter. A policies support of the West Auckland, are cornerstone documents that bodies: local communities and society. incorporated in the Company’s Act 1993. Genesis Energy by way of resource consents and procedures audit process is Wellington and Christchurch reinforce Genesis Energy’s high These include competency development and talent has a Privacy Policy which granted under the Resource • New Zealand Wind repeated on an ongoing basis. Curtain Banks, and environmental expectation of ethical conduct based training in a range of management approaches, and is published on the Genesis Management Act 1991 (‘RMA’). Energy Association The People and Safety business sponsorship programmes like from Directors and employees. areas including communication, remuneration practices. Genesis Energy website. The Government has • BusinessNZ Major Energy believes that enhanced unit monitors human rights cases the National Whio Recovery Public policy Companies Group social and cooperative skills and and issues within the Company Compliance project that is carried out in announced a programme of online-based (‘My Learning’) customer service, communication Participation in public policy • Gas Industry Company and follows the Company’s A statement on Compliance partnership with the Department reform aimed at improving policy awareness programmes. and product innovation can Genesis Energy seeks to engage how the water resourced is • Coal Association of best be achieved through a human rights policies and (outlining the Company’s of Conservation. Because each procedures to respond to any compliance with any applicable community is unique, Genesis and be involved in the creation managed. This Freshwater New Zealand workforce that appreciates of sound and appropriate public Reform programme builds on and reflects the diversity of its alleged human rights breaches laws, regulations, industry codes, Energy also lends support • Marketing Association and/or personal grievances. standards and organisational via localised community policy, legislation and regulation. the work completed by the of New Zealand customer base, and meaningful Like most businesses, Genesis Land and Water Forum. It The Company will investigate, policies and procedures) is sponsorships and initiatives. In • Trans-Tasman Business Circle engagement with stakeholders Energy seeks certainty and includes potential changes to and the communities in which conduct mediation and seek made within the Corporate addition, every Genesis Energy Genesis Energy operates can appropriate remediation. Governance Statement. employee is encouraged to genesis energy annual report 2013 / 89 ABOUT THIS REPORT.

Producing an online integrated Guidelines Version 3.1 (G3.1) and Our key stakeholder and interests are constantly relationships Issues of high significance to report, containing financial the Electricity Utility Sector reviewed to ensure all issues Stakeholder groups stakeholders and Genesis Energy Where to find discussion and non-financial performance Supplement (2009). The Report Genesis Energy’s many diverse relevant to stakeholders are and how we engage in 2012/2013 How we respond to stakeholder concerns in the Annual Report information, is a key part of the meets the requirements of stakeholders are key to the collated and considered. The Employees • Providing a safe and great place • Competitive salaries and staff benefits Chief Executive’s Report process to define what being Application Level B+. successful provision of energy mechanisms we use to engage • Commitment to attract, recruit and to work • Continued to implement employee Our People a sustainable organisation We have reviewed GRI’s and utility solutions to grow the with our stakeholders are retain the right person – job fit and • Enhancing the customer development initiatives Customer Experience means to us. It helps promote prosperity of our customers. illustrated in the following table. G3.1 Reporting Principles for organisational fit experience • Continued support of employee discussion both within the Defining Report Content and It is crucial that we engage • Regular meetings/briefings volunteering programme Company and with our Identifying material Quality, with emphasis on with our stakeholders in an • Surveys • Continuous improvement of stakeholders. As such, the target report content ensuring we provide a material effective dialogue and develop • Training and development Wellness programme audience for our Annual Report Stakeholder and business representation of Genesis relationships built on mutual • Employee newsletters • Rewards and Recognition programme is all of our stakeholders. issues, such as risks and Energy’s financial and non- respect and a desire to find • Flexible ways of working opportunities, are key inputs • Intranet financial performance. We have balanced outcomes. • Commitment to health and safety Introduction for the identification of material drawn upon the outcomes We identify our stakeholders as management issues for Genesis Energy. As a Genesis Energy’s seventh annual of our informal and formal any group which has an interest • Implementation of a sustainable part of this analysis, we assess integrated report covering stakeholder engagement to or concern relating to Genesis business model the significance of all issues to economic, environmental and inform materiality. Energy. We operate an open- social performance covers our both our stakeholders and our Generation communities • Developing and maintaining • Provided community updates on About this Report In addition to guiding principles door policy at Genesis Energy robust stakeholder relationships the activities on generation sites via financial year from 1 July 2012 business to identify the most • Consultation with communities Corporate Governance on report content and quality, and do not seek to exclude any on issues in a timely manner newsletters and meetings to 30 June 2013. Our previous significant issues. The issues • Consistent and transparent Statement the GRI includes a suite of stakeholder groups from our disclosure of Company • Held an Annual Meeting integrated report was published of high significance to our • Community meetings on topics The entire Annual Report performance indicators relating engagement processes. of interest information • Consulted in an open and transparent in 2012. stakeholders and our business to company profile, strategy, manner on our projects Genesis Energy has a range of are illustrated in the table below. • Newsletters and reporting governance, stakeholder • Targeting 100 per cent resource Report technical standards formal and informal stakeholder This analysis has informed the • Compliance with resource engagement and environmental, relationships that enables consents consent compliance The content of the Annual content of our Annual Report. economic and societal the Company to identify and • Being cognisant of the impacts • Environmental Management Systems Report has been prepared in performance. The indicators assess stakeholder needs of our operations and ensuring • Implementation of a sustainable accordance with the Global accompany performance and concerns. Stakeholder the community understands business model Reporting Initiative (GRI) these impacts and the actions information in the Report and in groups and their key concerns • Preference for hiring locally we undertake to minimise and Sustainability Reporting the GRI Index. • Continued to support activities in the mitigate them communities in which we operate • Relationships with local communities Issues of high significance to • Involvement of the community in Stakeholder groups stakeholders and Genesis Energy Where to find discussion key milestones and how we engage in 2012/2013 How we respond to stakeholder concerns in the Annual Report • Investment in the communities Shareholder • Enhanced financial returns • Business strategy with a commitment to Financial Statements in which we operate via local sponsorships and other support • Briefings with Ministers and • Good governance improve performance of the business Corporate Governance officials • Business strategy with a commitment to • Consistent and transparent Disclosure of Government stakeholders • Developing and maintaining • Business strategy with a commitment to About this Report • Analyst briefings reduce carbon intensity of business disclosure of Company Management Approach • Open and detailed engagement robust stakeholder relationships increase performance of the business Corporate Governance • Annual Meeting information • Implementation of a business model The entire Annual Report and contribution on policy issues • Consistent and transparent • Implementation of a sustainable business Statement focused on driving performance across • Accurate, timely and informative relating to our business disclosure of Company model to drive performance the entire business The entire Annual Report Quarterly Operational and • Policy submissions information • Policy submissions • Produced clear and comprehensive Performance Reports, Half-year • Participation in working groups, Quarterly Operational & Performance • Produced clear and comprehensive and Annual Reports conferences and meetings Reports, Half-year and Annual Reports Quarterly Operational & Performance • Release of disclosure statements Reports, Half-year and Annual Reports as required • Released relevant continuous disclosure reports to the shareholder as required • Held an Annual Meeting • Held an Annual Meeting Non-governmental organisations • Developing and maintaining • Resource consent agreements About this Report • Meetings on topics of interest robust stakeholder relationships • Implementation of a sustainable business Corporate Governance Customers • Developing products and services • Continuous improvement of customer Customer Innovation • Partnerships and funding for • Consistent and transparent model Statement • Surveys/market research that customers value service Customer Experience community projects disclosure of Company • Held an Annual Meeting The entire Annual Report • Customer newsletters • Enhancing the customer • Committed to following Electricity Our Assets information experience Commission’s disconnection and vulnerable • Membership of organisations • Retail processes that support a • Ensuring the reliability of energy customer guidelines positive customer experience Tangata whenua • Developing and maintaining • Acknowledge that tangata whenua have About this Report generation • Deployment of advanced meters • Development of innovative • Regular formal and informal robust stakeholder relationships concerns about how the power schemes Corporate Governance product offerings • Tools, advice and product offers for energy meetings • Consistent and transparent were developed Statement efficiency and carbon footprint reduction disclosure of Company • Acknowledge that ongoing activities impact The entire Annual Report • Held an Annual Meeting information on tangata whenua values • Third-party agreements • Respect role of tangata whenua as kaitiaki of the natural resources and taonga within their rohe

genesis energy annual report 2013 / 91 GLOBAL REPORTING INITIATIVE (GRI).

Disclosure Index and the Electricity Utility Sector party independent assurance selected GRI performance Issues of high significance to Stakeholder groups stakeholders and Genesis Energy Where to find discussion The content of the Annual Supplement (2009). provider and Genesis Energy’s indicators. and how we engage in 2012/2013 How we respond to stakeholder concerns in the Annual Report Report has been prepared in The Annual Report meets the financial auditor on behalf of the requirements of Application Office of the Auditor-General. Energy Sector • Developing and maintaining • Policy submissions About this Report accordance with the Global Level B+. A limited level of assurance has • Submissions on energy sector robust stakeholder relationships • Participation in working groups, conferences Corporate Governance Reporting Initiative (GRI) policy • Consistent and transparent and forums of mutual interest Statement Sustainability Reporting The Annual Report has been been given over the application • Participation in utility forums disclosure of Company The entire Annual Report Guidelines Version 3.1 (G3.1) assured by Deloitte, a third- of the GRI principles and information

Society • Consistent and transparent • Implementation of a sustainable The entire Annual Report • Media releases disclosure of Company business model information • Public meetings • Held an Annual meeting Report application level C C+ B B+ A A+ • Annual Meeting G3 Profile Disclosures Report on: Report on all criteria listed for Same as requirement for Level B • Advertising 1.1 level C plus: 2.1–2.10 1.2

SURES 3.1–3.8 3.9, 3.13

External assurance Scope Data How you can help O 3.10–3.12 4.5–4.13 O UTPUT For the fifth time, the Annual This Report covers the There is much historical We appreciate and value your 4.1–4.4 4.16–4.17 4.14–4.15 Report has been the subject of performance of the Genesis information that may meet feedback; if you have any a limited assurance review, in Power Limited group of GRI indicator requirements; comments or suggestions, G3 Management Not required Management Approach Disclosures Management Approach accordance with the ISAE3000 companies (Genesis Power however, this is not included in please contact Genesis Energy’s Approach Disclosures for each Indicator Category Disclosures for each Indicator Category

assurance standard, by Deloitte. Limited trading as Genesis the Report as it does not meet Public Affairs Manager by O UTPUT

The assurance scope included Energy and its wholly-owned the GRI principle of timeliness or telephone on +64 9 951 9280. DIS C L STANDARD G3 Performance Indicators Report on a minimum Report on a minimum of 20 Report on each core G3 and application of the GRI principles, subsidiaries, such as would be repeating information and Sector Supplement of 10 Performance Performance Indicators, including at Sector Supplement Indicator profile disclosures, management Energy Online (EOL) ) over found in earlier Annual Reports. Performance Indicators Indicators, including at least one from each of: economic, with due regard to the Materiality least one from each of: environmental, human rights, labour, Principle by either: (a) reporting approach and selected which Genesis Energy had Comparisons to historical data

O UTPUT economic, social and society and product responsibility on the Indicator; or (b) explaining

performance indicators. operational control during have been included only where environmental ASSURED REP O RT EXTERNALLY ASSURED REP O RT EXTERNALLY the reason for its omission ASSURED REP O RT EXTERNALLY The Application Level B+ of the reporting period. appropriate. Where historical the GRI has been third-party Other joint ventures and data have been restated, the checked by Deloitte. investments are not included implications of this restatement GRI Reference Description Location of disclosure in 2013 Annual Report Our financial statements have for the purposes of non- are noted. again been audited by Deloitte financial reporting as they are Our systems for data collection Strategy and Analysis on behalf of the Auditor-General. largely operated by external and accountability continue 1.1 Statement from the Chief Executive and Chairman Chairman's Report and Chief Executive's Report organisations and are outside to grow more sophisticated Refer to page 93 of this Report 1.2 Description of key impacts, risks and opportunities Throughout the Report for the full GRI disclosure Index of our control, such as the Kupe as we strive for continuous Chairman’s Report and Chief Executive’s Report and to page 96 for the GRI Joint Venture. The Kupe facilities improvement in this area. A About this Report assurance statement provided are managed by Origin Energy sample of the data collected as the Operator on behalf of the was also subject to the by Deloitte. Organisational Profile joint venture. Also outside of assurance review undertaken this Report are outsourced field by Deloitte. 2.1 Name of the reporting organisation Throughout the Report. services contractors. 2.2 Primary brands, products and/or services Disclosure of Management Approach/Economic

2.3 Operational structure of the organisation Financial Statements and Notes

2.4 Location of organisation's headquarters Directory

2.5 Countries in which the organisation operates Disclosure of Management Approach/Economic

2.6 Nature of ownership and legal form Corporate Governance Statement

2.7 Nature of markets served Disclosure of Management Approach/Economic

2.8 Scale of the reporting organisation Financial Statements and Notes

2.9 Significant changes in size, structure or ownership Chairman's Report and Chief Executive's Report

2.10 Awards received in the reporting period Business Review

Report Parameters 3.1 Reporting period About this Report

3.2 Date of most recent previous report (if any) About this Report

3.3 Reporting cycle (annual, biennial, etc.) About this Report

3.4 Contact point for questions regarding the report or its contents Directory/About this Report

3.5 Process for defining report content About this Report

3.6 Boundary of the report About this Report

3.7 Specific limitations on the scope or boundary of the report About this Report

genesis energy annual report 2013 / 93 GRI Reference Description Location of disclosure in 2013 Annual Report GRI Reference Description Location of disclosure in 2013 Annual Report 3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, About this Report LABOUR outsourced operations and other entities Management Labour Disclosure of Management Approach/Labour 3.9 Data measurement techniques and the bases of calculations About this Report approach

3.1 Explanation of the effect of any re-statements About this Report LA1 Total workforce by employment type and employment contract, Business Review and broken down by gender 3.11 Significant scope, boundary or measurement changes About this Report 3.12 Table identifying the location of the GRI Disclosures in the report About this Report LA2 Total number and rate of new employee hires and employee turnover Business Review by age group and gender 3.13 External assurance policy and practice About this Report LA6 Percentage of total workforce represented in formal joint management- Disclosure of Management Approach/Labour Governance, Commitments and Engagement worker health and safety committees that help monitor and advise on occupational health and safety programmes 4.1 Governance structure of the organisation Corporate Governance Statement LA7 Rates of injury, occupational diseases, lost days, and absenteeism and Business Review 4.2 Indicate whether the Chair of the highest governance body is also an Corporate Governance Statement number of work-related fatalities, by region and by gender executive officer LA12 Percentage of employees receiving regular performance and career Disclosure of Management Approach/Labour 4.3 The number and gender of members of the highest governance body that Corporate Governance Statement development reviews are independent and/or non-executive members EU16 Policies and requirements regarding health and safety of employees and Business Review 4.4 Mechanisms to provide recommendations to the Board Corporate Governance Statement employees of contractors and subcontractors 4.5 Linkage between performance and compensation Corporate Governance Statement EU18 Percentage of contractor and subcontractor employees that have Business Review 4.6 Avoiding conflicts of interest Corporate Governance Statement undergone relevant health and safety training 4.7 Qualifications and expertise of members of the Board Board Profiles HUMAN RIGHTS 4.8 Statement of purpose, vision, values and objectives relevant to economic, Chairman's Report and Chief Executive's Report Management Human rights Disclosure of Management Approach/ social and environmental performance approach Human Rights

4.9 Board-level processes for identifying and managing risks and opportunities Corporate Governance Statement HR4 Total number of incidents of discrimination and corrective actions taken Disclosure of Management Approach/ Human Rights 4.1 Processes for evaluating the Board's own performance Corporate Governance Statement 4.11 How the precautionary approach is addressed Corporate Governance Statement SOCIETY 4.12 External charters No subscriptions to external charters Management Society Disclosure of Management Approach/Society approach 4.13 Memberships to associations Disclosure of Management Approach/Society SO5 Public policy positions and participation in public policy development Disclosure of Management Approach/Society 4.14 List of stakeholder groups engaged by the organisation About this Report and lobbying Corporate Governance Statement SO6 Total value of financial and in-kind contributions to political parties, No contributions made 4.15 Identification and selection of stakeholders About this Report politicians and related institutions by country 4.16 Approaches to stakeholder engagement About this Report SO7 Total number of legal actions for anti-competitive behaviour, anti-trust and No legal actions were taken during the monopoly practices and their outcomes reporting period. Corporate Governance Statement 4.17 Key topics and concerns that have been raised through About this Report SO8 Monetary value of significant fines and total number of non-monetary No significant fines or non-monetary sanctions stakeholder engagement sanctions for non-compliance with laws and regulations during the reporting period EU1 Installed capacity (MW), broken down by primary energy source and by Business Review PRODUCT RESPONSIBILITY regulatory regime Management Product responsibility Disclosure of Management Approach/ EU2 Net Energy output broken down by primary energy source and by Business Review approach Product Responsibility regulatory regime EU23 Programmes, including those in partnership with Government, to improve Business Review or maintain access to electricity and customer support services EU5 Allocation of CO2e emissions allowances or equivalent, broken down by Disclosure of Management Approach/ carbon trading framework Environmental EU24 Practices to address language, cultural, low literacy and disability Business Review ECONOMIC related barriers to accessing and safely using electricity and customer support services Management Economic Disclosure of Management Approach/Economic approach PR5 Practices related to customer satisfaction, including results of surveys Business Review measuring customer satisfaction Performance Indicators The GRI Application Level B+ has been third-party checked by Deloitte. The full assurance statement from Deloitte is on page 96. EC1 Direct economic value generated and distributed, including revenues, operating Financial Statements and Notes costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments EC4 Significant financial assistance received from government No financial assistance was received from the Government ENVIRONMENT Management Environment Disclosure of Management Approach/Environment approach

Performance Indicators EN3 Direct energy consumption by primary energy source Business Review EN4 Indirect energy consumption by primary source Business Review EN16 Total direct and indirect greenhouse gas emissions by weight (i.e. Scope 1 Business Review and 2 emissions as defined by the GHG Protocol) EN17 Other relevant indirect greenhouse gas emissions by weight (i.e. Scope 3 Business Review emissions as defined by the GHG Protocol) EN23 Total number and volume of significant spills No significant spills during the reporting period EN28 Monetary value of significant fines and total number of non-monetary No significant fines or non-monetary sanctions for sanctions for non-compliance with environmental laws and regulations non-compliance during the reporting period

genesis energy annual report 2013 / 95 INDEPENDENT DIRECTORY. ASSURANCE REPORT.

TO THE DIRECTORS OF GENESIS POWER LIMITED

We have been engaged by the Directors to conduct a limited assurance Considering the risk of material error, we planned and performed the work Board of EXECUTIVE Address engagement over selected aspects of the Genesis Power Limited’s Annual to obtain all the information and explanations considered necessary to Directors MANAGEMENT of office Report for the financial year ending 30 June 2013 as described below provide sufficient evidence to support our assurance conclusions. together (the “GRI Content” on pages 1 to 95): The evaluation criteria used for our assurance are based on: Chairman team Corporate Office Rt Hon Dame Jenny Shipley DNZM 660 Great South Road • Global Reporting Initiative Sustainability Reporting Guidelines (GRI G3.1) • The GRI G3.1 Sustainability Reporting Guidelines for Level B+ application Chief Executive Reporting Principles (with consideration to the Electric Utility Sector PO Box 17188, Greenlane, Auckland 1546 (with consideration to the Electric Utility Sector Supplement (EUSS) Directors Albert Brantley Supplement (EUSS) where applicable) – providing limited assurance where applicable) Telephone: 64 9 580 2094 whether management’s assertion that the GRI G3.1 Reporting Principles Joanna Perry MNZM (Deputy Chairman) General Counsel and Company Secretary • Relevant reporting guidelines and methodologies for selected GRI G3.1 Facsimile: 64 9 580 4894 have been applied in defining the report content is fairly stated; Maureen Shaddick Indicator Protocols as set out in the GRI Content (with consideration to Graeme Milne ONZM • GRI G3.1 Application Level (with consideration to the Electric Utility Chief Operating Officer the Electric Utility Sector Supplement (EUSS) where applicable). John Dell Sector Supplement (EUSS) where applicable) – providing limited Michael Fuge Our procedures included: assurance as to whether management’s assertion that the GRI Content Rukumoana Schaafhausen Chief Financial Officer Auditor meets the GRI G3.1 application level B+ requirements is fairly stated; • Understanding and analysing the process for preparing the GRI Content; Andrew Clements Andrew Donaldson Ian Marshall of Deloitte has been • GRI G3.1 Profile Disclosures and Selected Indicators (with consideration • Assessing the GRI Content against the requirements GRI G3.1 ‘B+’ John Leuchars appointed to perform the audit on to the Electric Utility Sector Supplement (EUSS) where applicable) – application level; GM Strategy and Business Technology behalf of the Auditor-General. providing limited assurance as to whether information reported under • Interviewing the senior executives and group level business sustainability Alison Andrew Sheridan Broadbent the requirements of GRI Profile Disclosures and Selected Indicator and public affairs teams responsible for preparing the GRI Content ; GM Corporate Affairs Protocols is fairly stated. • Analysing the process of compiling and validating information received Dean Schmidt This report is limited solely to the GRI content as described above and is from data owners for inclusion in the GRI Content; and GM People and Safety Bank provided solely to the Directors of Genesis Power Limited (the “Directors”) • Reviewing the GRI Content against the findings of our work and, as Andrew Steele in accordance with our letter of engagement dated 20 February 2013. necessary, providing recommendations for improvement. Our work has been undertaken so that we might state to the Directors Other than in our capacity as auditors of the statutory financial statements those matters we are required to state to them in this report and for no on behalf of the Auditor-General and trustee reporting, we have no other purpose. To the fullest extent permitted by law, we do not accept or relationship with or interests in the Company or any of its subsidiaries. assume duty, responsibility or liability to anyone other than the Directors for Furthermore, principals and employees of our firm deal with the Company Solicitors our work, for this independent assurance report, or for the conclusions we on arm’s-length terms within the ordinary course of the Company’s trading Russell McVeagh have formed including, without limitation, liability for negligence. activities. Other than this limited assurance engagement, trustee reporting, Directors’ Responsibility the financial statutory audit and arm’s-length transactions, we have no relationship with or interests in the Company, or any of its subsidiaries. The Directors are responsible for: For further information, email: • The preparation and compilation of the GRI Content, including Opinion [email protected] adherence to the GRI G3.1 principles for defining report content Based on the procedures performed, in all material respects, in relation to and compliance with the disclosure requirements of the GRI G3.1; the GRI Content on pages 1 to 95: • The identification of stakeholders and material issues and for • GRI G3.1 Reporting Principles (with consideration to the Electric Utility determining the objectives in respect of sustainability performance; Sector Supplement (EUSS) where applicable) – nothing has come to • Establishing and maintaining appropriate performance management our attention to suggest that Genesis Power Limited’s self declaration of and internal control systems from which the reported information is the application of the GRI G3.1 Reporting Principles for defining report derived; and content is not fairly stated; • The fair presentation of the information and statements contained • GRI G3.1 Application Level (with consideration to the Electric Utility within the GRI Content. Sector Supplement (EUSS) where applicable) – nothing has come to our attention to suggest that Genesis Power Limited’s self declaration of GRI Auditor’s Responsibility application level B+ is not fairly stated ; It is our responsibility to independently express an opinion on the reliability • GRI G3.1 Profile Disclosures and Selected Indicators (with consideration of management’s assertions on selected subject matters as outlined above. to the Electric Utility Sector Supplement (EUSS) where applicable) We conducted our limited assurance engagement in accordance with – nothing has come to our attention to suggest that the information International Standard on Assurance Engagements (New Zealand) 3000: provided in the GRI Content to meet the requirements of the GRI Profile Assurance Engagements Other than Audits or Reviews of Historical Disclosures and the GRI Indicator Protocols identified is not fairly stated. Financial Information (‘ISAE (NZ) 3000’). To achieve limited assurance the ISAE (NZ) 3000 requires that we review the processes, systems and competencies used to compile the information on which we provide limited assurance. It does not include detailed testing of source data or the operating effectiveness of processes and internal controls. A limited assurance engagement is substantially less in scope than a reasonable Chartered Accountants assurance engagement conducted in accordance with ISAE(NZ) 3000 Dunedin, New Zealand and consequently does not enable us to obtain assurance that we would 3 September 2013 become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we will not express an opinion providing reasonable assurance.

The Assurance Statement opposite relates to the Global Reporting Initiative G3.1 (GRI G3.1) content within the Annual Report 2013 of Genesis Power Limited for the 12 months ended 30 June 2013 included on Genesis Power Limited’s website. Genesis Power Limited is responsible for the maintenance and integrity of the Genesis Power Limited website. We have not been engaged to report on the integrity of the Genesis Power Limited website. We accept no responsibility for any changes that may have occurred to the Annual Report 2013 since it was initially presented on the website. The Assurance Statement refers only to the Global Reporting Initiatives G3.1 (GRI G3.1) content within the Annual Report named above. It does not provide an opinion on any other information which may have been hyperlinked to/from this Annual Report. If readers of this report are concerned with the inherent risks arising from electronic data communications they should refer to the published pdf copy of the reviewed Annual Report and related Assurance Statement dated 3 September 2013 to confirm the information included in the Annual Report presented on this website. Legislation in New Zealand governing the preparation and dissemination of Annual Reports that report on sustainability performance may differ from legislation in other jurisdictions. This report is printed on: Cover stock: SUPERWHITE IVORY BOARD Produced with ECF (Elemental Chlorine Free) pulp. manufactured under the ISO 14001 Environmental Management System. pH neutral and ISO 9706 long life. Text stock: Advance Laser produced from ECF (Elemental Chlorine Free) pulp sourced from farmed Eucalyptus trees. It is manufactured under the ISO 14001 Environmental Management System.