TrustPower Results for the Six Months to September

TrustPower Limited Unaudited Financial Results for the Six Months Ended 30 September 2010

The first half result for the 2010 financial year was satisfactory given challenging market conditions. High hydro inflow and storage throughout the period contributed to low spot electricity prices. Competition for residential customers remained intense, particularly in the South Island where North Island based SOE generator/retailers reacted to the imposed asset swaps and long term hedging arrangements required by the Ministerial Review by seeking to acquire larger numbers of South Island customers. This acquisition activity was expected and is likely to continue in the near term.

TrustPower's consolidated underlying surplus after tax was $63.8 million for the six months ended 30 September 2010 (a decrease of 12 per cent) compared with $72.5 million for the same period last year. Underlying surplus after tax excludes fair value movements on financial instruments and the impact of one-off adjustments relating to the change of company tax rate and the removal of depreciation deductibility for long life buildings both of which take effect from 1 April 2011.

Earnings before interest, tax, depreciation, amortisation and fair value movements on financial instruments ("EBITDAF") decreased by 5 per cent to $147.7 million from $154.9 million in the previous year. The primary drivers of reduced EBITDAF compared with prior period were lower revenue from the Snowtown wind farm due to low wind conditions, lower retail customer demand caused by a milder winter and lower South Island energy costs during winter 2009 which improved the prior period result.

Profit after tax attributable to the shareholders of the Company was $59.7 million for the half year compared with $82.4 million for the prior period. This includes the impact of fair value movements on financial instruments and the one-off adjustments due to changes to the company tax rate and deductibility of depreciation on buildings as noted above.

Operating revenue of $403.5 million was down 1 per cent on the prior period. Total electricity volume sold by the Company in New Zealand was 2,141 GWh compared with 2,207 GWh in the prior year. Customer numbers decreased to 222,000 as at 30 September 2010 from 225,000 as at 31 March 2010. The Company was successful in countering some of the impact of increased retail competition through successful acquisition campaigns in North Canterbury, Tasman and Northland as well as increasing sales to the commercial time of use market. Mass market sales were down 10 per cent versus prior period primarily due to a noticeable drop in customer usage due to milder winter conditions experienced through many parts of the country. Time of use sales were up 5 per cent on prior period as the company successfully placed more product into this market.

The Company's total New Zealand generation production of 1,229 GWh for the first six months was up 173 GWh (16 per cent) on the prior period. North and South Island hydro production was up significantly while wind production at the Tararua Wind Farm was in line with prior period.

The Snowtown Wind Farm in South Australia produced 151 GWh which was 19 per cent down on prior period. Wind generators across South Australia were similarly impacted by low wind resource.

Group operating cash flow was $108.5 million for the half year compared with $110.1 million in the prior half year.

As the result of the change in company tax rate and removal of depreciation for long life buildings outlined in the May 2010 Budget announcement, a one-off adjustment to deferred tax liabilities has been made. This has resulted in a one-off non cash net increase to tax expense for the reporting period of $6.3 million.

Debt (including subordinated bonds) to debt plus equity was 35 per cent at 30 September 2010 versus 34 per cent in the previous year.

TrustPower has recently completed a successful retail issue of 7 year Senior Bonds to New Zealand investors raising $75 million. The bonds will mature on 15 December 2017 and will pay a quarterly interest rate of 7.1%.

TrustPower continues to maintain high levels of committed credit facilities. Including subordinated bonds the Company currently has just over NZD equivalent of 1.1 billion of committed debt funding in place. As at 30 September 2010 Group net debt was $740 million.

Stage 1 of the 36MW Mahinerangi Wind Farm remains on schedule for commissioning in May 2011. Around $12 million has been spent to date on this project.

The installation of pumping equipment at the Highbank hydro generation scheme in Canterbury which will be used to provide additional irrigation capacity to local irrigators is expected to be completed by December 2010.

Progress continues be made on a range of growth options in New Zealand and Australia.

Final conditions for the Arnold hydro consent are expected to be approved shortly and if in line with expectation it is likely the Company will commence further feasibility work with respect to geotechnical studies and detailed civil design.

The judgement for the Wairau hydro consent appeal is still awaited and is expected to be received shortly.

During the period TrustPower was successful in acquiring the development rights for a potential wind farm near Waverly. Further feasibility work is in progress with the expectation of making a resource consent application in 2011 if initial positive expectations of wind resource and other key project criteria are validated.

In Australia, the TrustPower Group has been granted approval for an amended planning consent to erect up to another 102 wind turbines at the Snowtown Wind Farm. Discussions with a range of counterparties in relation to a Stage II development are being actively progressed.

The Directors are pleased to announce an interim dividend of 19 cents per share, partially imputed to 13 cents per share, payable 10 December 2010 (record date of 26 November 2010).

While the first half market and climatic conditions were challenging, the Company is currently expecting to achieve a full year EBITDAF result in line with the 2010 financial year result. The Company remains well positioned to meet its customers' needs and to pursue further development of renewable generation opportunities when it is economically justifiable.

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