Trustpower Limited

133 APPENDIX 2 SCHEME BOOKLET Demerger of Trustpower Limited Trustpower Limited Independent Adviser’s Report Prepared in Relation to the Proposed Demerger of Trustpower Limited August 2016 Statement of Independence Northington Partners Limited confirms that it: . Has no conflict of interest that could affect its ability to provide an unbiased report; and . Has no direct or indirect pecuniary or other interest in the proposed transaction considered in this report, including any success or contingency fee or remuneration, other than to receive the cash fee for providing this report. Northington Partners Limited has satisfied the Takeovers Panel, on the basis of the material provided to the Panel, that it is independent under the Takeovers Code and the Panel’s requirements for schemes of arrangements involving Code companies for the purposes of preparing this report. 134 APPENDIX 2 SCHEME BOOKLET Demerger of Trustpower Limited AbbreviationsTable of Contents and Definitions A$ 1.0 AssessmentAustralian of the dollars Merits of the Proposed Demerger ......................................................... 4 1.1. Introduction ............................................................................................................................ 4 ASX ASX Limited, or the financial market operated by the ASX Limited as the context requires 1.2. Key Conditions....................................................................................................................... 5 BEL Bay Energy Limited 1.3. Proposed Demerger Timetable.............................................................................................. 6 CAGR Compound average growth rate 1.4. Regulatory Requirements and Scope of this Report.............................................................. 6 Code 1.5. Basis ofThe Evaluation Takeovers................................ Code ................................................................................ 6 EBITDA1.6. SummaryEarnings of Our before Assessment interest, tax, of depreciation the Proposed and amortisationDemerger for Trustpower Shareholders....... 7 EBITDAF1.7. SummaryEarnings of Our before Assessment interest, tax, of depreciation, the Proposed amortisation Demerger and forfair Trustpowervalue adjustments Creditors .............. 8 EV 1.8. ApprovalEnterprise or Rejection Value of the Scheme of Arrangement ........................................................... 8 FY 2.0 Profile ofFinancial Trustpower year ending and 31Rationale March for the Proposed Demerger....................................... 9 GWh 2.1. OverviewGigawatt................................ hour, a measurement................................ of electrical energy being................................ 1,000 MW of electrical................................ energy used 9 2.2. Significantcontinuou Historicalsly for Eventsone hour................................................................................................. 10 GSP 2.3. Capital GSPStructure Energy and Pty LimitedOwnership ......................................................................................... 11 Independent2.4. Share PriceThis report Performance prepared by and Northington Liquidity Partners................................................................................ 11 Adviser’s2.5. ReportHistoric Financial Results..................................................................................................... 13 Infigen2.6. Key IssuesInfigen and Energy Outlook Limited....................................................................................................... 16 Infratil 2.7. RationaleInfratil for Limitedthe Proposed Demerger ................................................................................. 18 KCE3.0 Effect of Kingthe ProposedCountry Energy Demerger Limited ......................................................................................... 19 LGC 3.1. SeparationLarge Process-scale generation................................ certificates created................................ under Australia’s RET................................ scheme, with one LGC.............. 19 3.2. Ownershiprepresenting and Structure one MWh................................ of renewable electricity..................................................................... 21 MW 3.3. Profile ofMegawatt, Tilt Renewables a unit of power................................ being one million watts.................................................................... 23 MWh 3.4. Profile ofMegawatt New Trustpower hour, a measurement................................ of electrical energy................................ being one million watts................................ of electrical energy .... 27 4.0 Assessmentused ofcontinuously the Merits for oneof the hour Proposed Demerger for Trustpower Shareholders ..... 32 Northington4.1. PartnersAdvantagesNorthington and Benefits Partners Limited..................................................................................................... 32 NPAT 4.2. PotentialNet Value Profit AfterImpacts Tax of the Demerger............................................................................. 34 NZ$ 4.3. Risks, DisadvantagesNew Zealand dollars and Costs ......................................................................................... 37 NZX 4.4. Impact NZXon Initial Limited Capital Structure and Funding Costs ......................................................... 41 4.5. Dividend Consequences ...................................................................................................... 42 NZX Main Board The main board equity securities market operated by NZX 4.6. Tax Considerations .............................................................................................................. 43 PPA Power purchase agreement, being an agreement for the purchase of electricity and LGCs (if 4.7. Alternativesapplicable) to Proposed Demerger..................................................................................... 45 Origin 4.8. ConclusionOrigin................................ Energy Limited ........................................................................................... 46 5.0 Assessment of the Merits of the Proposed Demerger for Trustpower’s Creditors ......... 48 Proposed Demerger The proposal to divide Trustpower into two separate entities, being Tilt Renewables and New 5.1. BackgroundTrustpower................................, as described in the................................ Scheme Booklet .......................................................... 48 RET 5.2. Impact Australiaon Creditors’’s Renewable Terms Energy................................ Target, a scheme ................................to incentivise investment................................ in renewable energy .. 48 Scheme5.3. of Likely ImpactThe scheme on Payment of arrangement of Debts being When contemplated Due................................ by Trustpower under Part................................ 15 of the Companies.... 48 ArrangementAppendix 1. RegulatoryAct 1993 Requirements and Scope of this Report ........................................... 52 SchemeAppendix Booklet 2. ShareTrustpower’s Price Notice Performance of Meeting andSince Scheme Announcement Booklet in relation of tothe the Proposed Proposed Demerger Demerger .... 54 Appendix 3. Comparableincluding the procedural Company notes Information and this Independent................................ Adviser’s Report........................................ 55 SeparationAppendix Deed 4. AustralianA Deed entered Renewable into between Energy Trustpower, Transactions BEL and TANZL................................ which governs the Proposed......................... 61 Appendix 5. SourcesDemerger of Information Used in this Report ......................................................... 62 Tilt RenewablesAppendix 6. AustralianTilt Renewables RET Limited, Scheme previously Overview named ................................Australasian Renewables................................ Limited (and Trustpower......... 63 Australia (New Zealand) Limited prior to 8 July 2016), which under the Proposed Demerger will Appendix 7. Declarations,(together with its Qualificationssubsidiaries) hold Trustpower’sand Consents Australian................................and New Zealand wind.......................... farm assets 64 and wind farm and solar development projects. TECT Tauranga Energy Consumer Trust Trustpower or Trustpower Limited Company New Trustpower BEL, which under the Proposed Demerger will (together with its subsidiaries) retain ownership of the assets of Trustpower not transferred to Tilt Renewables TWP Tararua Wind Power Limited TrustpowerTrustpower Limited Limited – Independent – Independent Adviser’s Adviser’s Report Report PagePage | 3 | 2 AbbreviationsTable of Contents and Definitions 135 APPENDIX 2 SCHEME BOOKLET Demerger of Trustpower Limited Abbreviations and Definitions A$ Australian dollars ASX ASX Limited, or the financial market operated by the ASX Limited as the context requires BEL Bay Energy Limited CAGR Compound average growth rate Code The Takeovers Code EBITDA Earnings before interest, tax, depreciation and amortisation EBITDAF Earnings before interest, tax, depreciation, amortisation and fair value adjustments EV Enterprise Value FY Financial year ending 31 March GWh Gigawatt hour, a measurement of electrical energy being 1,000 MW of electrical energy used continuously for one hour GSP GSP Energy Pty Limited Independent This report

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