Board of Directors and Chief Executive from left to right: Mike McSherry (Chief Executive), Colin Notley, Martin Sawyers (Chairman), Tom Cockfield, Coraleen White CHAIRMANS REPORT Introduction Pleasing progress over the previous three years has continued for Buller Electricity Limited during the past year.  All key expectations have been met and the asset performance improved as planned.  The company can now look to the future from a solid base.  Management Asset management via the Geographical Information System is now fully operational.  Financial reporting systems have been altered to include divisional accounting.  This will ensure information is readily available to the board that adequately identifies the efficiencies of the contracting arm of the business.  While the Board has made progress over the past three years its job is an ongoing one and it does not intend to rest on its laurels.  Instead it remains committed to making an enemy of inefficiency and intends to continue advancing the company for the benefit of the shareholders.  Operations Continued expenditure on the network assets has been rewarded by a pleasing improvement in asset performance.  Automation of the network with the new SCADA system is improving fault response times and fault areas are reducing through continued sectionalizing of the network.  The electrical contracting business has developed into a viable operation but its continued success depends on attracting skilled staff to the region.  Morale amongst the staff is high and the training of staff continues to be a major role within the company.  Financial Despite the company facing increases in transmission charges and a reduction in line charge income, returns were close to budget.  This result follows last year's successful turnaround on the bottom line figure and is a consequence of the full commitment, dedication and sheer hard work of directors and staff.  It was pleasing to note the success of the investment policy implemented throughout the year.  Buller Grid Optimization Project A key risk for our company continues to be vulnerability to pricing by Transpower. In an effort to mitigate this risk the Board has approved to bypass some of Transpower's assets and connect direct to the Grid with a new substation at Robertson Street, due for commissioning in November 2003.  The Board is in the process of critically reviewing that decision in light of some changes to the electricity environment to ensure that the original assumptions are still valid.  ThePacific.Net Limited Whilst not as quickly as initially forecast, customer numbers continue to grow and the feedback regarding the product performance is positive.  As with any company in a start up phase an element of risk is involved and as is reflected in the result continued effort from the board will be required to give this investment every opportunity of success. Over the next year the board intends to fully review its investment and critically look at ways that it can be enhanced.  In time the board is of the view that with continued customer growth Buller Electricity's commitment to this company will be able to be at a much lower level in terms of operational involvement.  Board of Directors During the year F T Dooley resigned from his position as a director and was replaced by C H Notley. I would like to thank Frank for his dedication and hard work whilst a director for the company and welcome Colin and the skills he brings with him.  Reform The company remains vulnerable to industry reforms and the board and management over the past year have had to be increasingly vigilant to proposed regulatory changes and an increasing amount of board management and time has been required for the implementation of those changes. This will be an ongoing commitment over the next year and probably thereafter.  The cost of regulatory compliance cannot be understated. It is a significant risk both in terms of cost and viability.  No effort will be spared in ensuring the board manages the changes in the best interests of the company. Generation Recent Government announcements mean that generation opportunities are now more readily available to line companies. Over the past three years the board has investigated some generation opportunities.  Unfortunately those investigated to date have not proved economically attractive.  The board will continue to investigate those opportunities as they arise. Sponsorship For the financial year ended March 31 2003, Buller Electricity supported the community with sponsorship totaling $34,362 of which $25,600 was distributed in Personal Development Grants to 28 local students, 24 of whom received $1,000 towards their first year university and college costs, with the remainder representing various other categories such as sporting activities.  $3,150 was distributed by way of a Staff Sponsorship Scheme where each staff member was authorized $150 to assist any person or group engaged in any educational, cultural, community or sporting activity.  Each of the six Buller primary schools also received a $500 library donation for their contribution to the Educational Page.  The remainder was distributed by the Chief Executive through his discretionary fund. In addition to this Buller Electricity financed the advertising cost of the monthly Educational Page in the Westport News totaling $8,100 plus continues to financially support coaching and sporting promotional services for the young people of the area ($17,000).  Summary After the difficulties of last year this year has seen the board being able to implement many of the necessary key changes.  With the aid of dedicated staff many of those changes have been made and the direction is now beginning to shift to ways of increasing the viability of the business for the benefit of its owners - the consumers. For and on behalf of the Board W H M Sawyers Chairman