ANNUAL REPORT 2013 Contents

1 1 = 3 The Power of Working Together ANNUAL REPORT 2013 Contents 02 Who We Are 03 Highlights & Strategic Focus 04 Directors’ Report 07 Board of Directors 08 Chief Executive’s Report 10 Leadership Team 12 Snowtown Stage II 14 Reliable Irrigation 16 Fibre Services Shine 18 Powering Locals 20 Shared Understanding 22 Safety First 23 Stakeholders with Vision 24 About our Sustainability Report 25 Sustainability Outlook 26 Our People 27 Our Environment 28 Our Community 29 Our Customers 30 Our Economic Performance 32 Stakeholder Interaction 34 Corporate Governance Statement 37 Financial Statements 2013 38 Auditors’ Report 76 Statutory Information 79 Security Holder Information 81 Directory 81 Financial Calendar TRUSTPOWER ANNUAL REPORT 2013 01 TrustPower Our Industry Partners Our Customers Our Local Communities Our Staff Our Environment Better Results We believe that working collaboratively will consistently deliver better results. Hence we’re always looking for opportunities to bring together teams of talented people to work simultaneously to make things better. 02 These assets produce an average of 2,800GWh per year. Our first Who We Are irrigation asset, a pumping facility using water from our Highbank hydro generation scheme, has completed its first full season of operation. We own 630MW of hydro and wind generation spread We supply electricity to around 206,000 customers and provide 43,000 telecommunications services to 26,000 customers throughout throughout New Zealand as New Zealand. We have 481 full time equivalent employees working well as the 100MW Snowtown throughout New Zealand and three employees in Adelaide. Around 65% Wind Farm in South Australia. of New Zealand employees are based in our Tauranga head office. GENERATION SCHEMES 1 Kaimai ......................................... 2 Matahina .................................... 1 3 Wheao/Flaxy ............................ 4 Hinemaiaia ................................. 5 Mangorei .................................... 6 Motukawa .................................. 7 Patea ........................................... 8 Tararua Wind Farm .................. 2 9 Cobb ........................................... 5 10 Waihopai .................................... 3 1 11 4 Argyle/Wairau .......................... 6 2 12 Arnold ......................................... 3 13 7 Kumara/Dillmans/Duffers ...... 14 4 Kaniere Forks/McKays Creek 6 8 15 Coleridge ................................... 10 5 16 9 Highbank .................................... 7 17 Montalto ..................................... 11 18 Wahapo ...................................... 12 19 Paerau/Patearoa ...................... 8 20 Waipori/Deep Stream ............ 9 21 13 Mahinerangi Wind Farm ......... 15 22 14 Snowtown Wind Farm ............ 11 16 10 12 RETAIL CUSTOMERS 17 13 Far North ..................................... 1 14 18 Counties .......................................2 18 Waipa ............................................3 15 19 Central Waikato ........................ 4 16 17 Southern Thames Valley ..........5 20 21 Tauranga/Rotorua/Taupo ....... 6 Gisborne .......................................7 23 22 Wairoa ..........................................8 24 Hawke’s Bay ............................... 9 19 21 New Plymouth .......................... 10 25 20 Wanganui/Taranaki ..................11 Manawatu ..................................12 26 Wellington .................................13 Marlborough .............................14 Tasman/Nelson ........................15 Buller ..........................................16 West Coast ................................17 Rangiora .....................................18 Christchurch ..............................19 Ashburton ................................ 20 Timaru ........................................21 22 Oamaru ..................................... 22 Central Otago .......................... 23 Otago .........................................24 Dunedin ..................................... 25 Invercargill/Southland ...........26 TRUSTPOWER ANNUAL REPORT 2013 03 Earnings before interest, tax, depreciation, amortisation and fair value movements of financial instruments were HIGhliGhts $294.8 million 2013 a credible performance given lower New Zealand generation production versus prior year and a challenging retail environment. Commenced construction of the A$439 million 270MW Snowtown Stage II Wind Farm development, TrustPower’s largest ever investment. Approval for variation to the Rakaia River Water Conservation Order is an important step forward in realising TrustPower’s Irrigation Strategy in Canterbury. Progress construction of Snowtown Stage 2 Wind Farm to schedule and budget. STRATEGIC Refresh retail brand and develop FOCUS capability to deliver multi product retailing proposition. 2014 Progress irrigation opportunities in Canterbury and other New Zealand regions. Progress development approval applications for a further 570MW of wind investment in Victoria and New South Wales. 04 DIRECTORS’ REPORT BRUCE HARKER Financial Performance experience lower levels of customer churn than Chairman the market overall and in the final quarter achieved TrustPower produced a solid operating performance modest customer gains. for the 2013 financial year. Good progress was made in implementing the Group’s growth agenda The Group’s New Zealand generation production demonstrated by the Group’s commitment to invest of 2,330GWh was down 352GWh (10%) on the in the 270MW Snowtown Stage 2 Wind Farm in previous year and 4% below the expected long term average. Total hydro production was down Notes South Australia. 243GWh (13%) on the previous year due to lower 1. Underlying Earnings is a TrustPower’s consolidated profit after tax was than average inflows into both North and South non GAAP (Generally $123.4 million for the year ended 31 March 2013. Island catchments particularly during the first and Accepted Accounting This represents a decrease of 6% compared with final quarters but was only 1% below the expected Principles) financial measure. $131.7 million for the same period last year. TrustPower believes that long term average. TrustPower actively used its this measure is an important Underlying earnings1 after tax excluding fair value South Island storage lakes to support generation additional financial measure movements on financial instruments and one-off output. New Zealand wind production ended to disclose as it excludes impairment charges were $127.3 million compared 10GWh lower than the previous year following a movements in the fair value with $135.3 million in the previous year, a decrease poor final quarter and was down 11% on expected of financial instruments of 6%. long term average. which can be volatile year The Snowtown Wind Farm in South Australia to year depending on Earnings before interest, tax, depreciation, movement in long term amortisation, fair value movements of financial produced 386GWh which was 10GWh (3%) higher interest rates and or instruments and asset impairments (EBITDAF)2 than the previous year and within 1% of expected electricity futures prices. were $294.8 million, compared with $300.1 million long term average. Also excluded in this measure achieved in the previous year representing a Underlying return on average equity, adjusted for are items considered to be decrease of 2%. As reported in the half year result fair value movements on financial instruments and one off and not related to approximately $3.9 million was included in other impairment charges, was 8.2% (9.6% in the core business such as operating expenses during the year relating to the previous year). changes to the company cost of transacting currency options to hedge tax rate or impairment of currency exposure prior to the Group committing Group operating cash flow remained solid at generation assets. to the Snowtown Stage 2 Wind Farm investment. $241.1 million for the 2013 financial year versus A full reconciliation between $268.3 million in the prior year. profit after tax attributable The Group operating performance was considered to the shareholders of the satisfactory given lower New Zealand generation Financial Position Company and underlying production and a challenging retail environment, TrustPower’s balance sheet as at 31 March 2013 earnings after tax is provided where pressure on margins and lower customer remains in good shape, with shareholders’ funds of in Note 3 to the consolidated demand was experienced. Financial Statements. $1.56 billion and total assets of close to $3 billion. Operating revenue was in line with prior period at Net debt (including subordinated bonds) to net debt 2. EBITDAF is a non GAAP $805.5 million. Operating expenses including financial measure but is plus equity increased to 37.0% from 33.3% at prior energy and line costs increased 1%. commonly used within the year end, as a result of increased borrowing levels electricity industry as a Total electricity volume sold by the Company in to finance the development of the Snowtown measure of performance as New Zealand through mass market retailing and Stage 2 Wind Farm. TrustPower continues to it shows the level of earnings time of use sales was 3,683GWh, compared with maintain conservative levels of committed credit before impact of gearing 3,960GWh in the year to 31 March 2012. This facilities. As at 31 March 2013 Group net debt was levels and non-cash charges 277GWh reduction in sales volume was partially $911.4 million. TrustPower has recently accepted such as depreciation

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