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The following is an excerpt from a S-1/A SEC Filing, filed by NRG ENERGY INC on 12/3/1997.
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NRG ENERGY, INC. - S-1/A - 19971203 - AUDITORS_OPINION

REPORT OF DELOITTE & TOUCHE GMBH, INDEPENDENT AUDITORS

To the Shareholders
Saale Energie GmbH
Schkopau, Germany

We have audited the accompanying balance sheet of Saale Energie GmbH (SEG) as of December 31, 1996, and the related statements of operations and of cash flows for the year then ended. These financial statements are the responsibility of SEG's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Germany and the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Saale Energie GmbH as of December 31, 1996, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in Germany.

Generally accepted accounting principles in Germany vary in certain significant respects from generally accepted accounting principles in the United States of America. Application of generally accepted accounting principles in the United States of America would have affected the results of operations for the year ended December 31, 1996 and shareholders' equity as of December 31, 1996 to the extent summarized in Note C to the financial statements.

Halle, Germany
October 31, 1997

DELOITTE & TOUCHE GmbH
Wirtschaftsprufungsgesellschaft

(Roder)

F-118

SAALE ENERGIE GMBH

STATEMENT OF OPERATIONS
(IN THOUSANDS DM)

                                                          YEAR ENDED
                                                         DECEMBER 31,
                                                             1996
                                                        --------------
Sales revenue .........................................     161,309
Other operating income.................................           3
                                                        --------------
Total revenue .........................................     161,312
Cost of materials and service purchased ...............     170,897
Depreciation of intangible and tangible fixed assets  .           1
Other operating expenses ..............................       1,060
                                                        --------------
Total operating expenses ..............................     171,958
Results from operations................................     (10,646)
                                                        --------------
Income from companies in which participations are
 held..................................................       6,581
Interest expense (net) ................................      (3,845)
                                                        --------------
Results from ordinary activities ......................      (7,910)
Income tax ............................................         (40)
                                                        --------------
Net loss ..............................................      (7,870)
                                                        ==============

See accompanying Notes to Financial Statements

F-119

SAALE ENERGIE GMBH

BALANCE SHEET
(IN THOUSANDS DM)

                                                 AT DECEMBER 31,
                                         NOTE         1996
                                      --------- ---------------
ASSETS
 Contributions outstanding...........                    713
 NON-CURRENT ASSETS
 FIXED ASSETS
 Tangible assets
  Factory and office equipment ...... B                    2
 FINANCIAL ASSETS
 1.Subsidiaries...................... B, E                49
 2.Participations ................... B, E           200,677
 3.Loans granted to participations .. B, F            82,200
                                                ---------------
 TOTAL NON-CURRENT ASSETS ...........                282,928
 CURRENT ASSETS
 INVENTORIES
  Raw materials and supplies......... B                  325
 RECEIVABLES AND OTHER ASSETS
 1.Trade receivables ................ B, D, G         24,764
 2.Other assets...................... B, G            14,549
 CHEQUES, CASH-IN-HAND, BANK
  BALANCES .......................... B               28,748
                                                ---------------
 TOTAL CURRENT ASSETS ...............                 68,386
                                                ---------------
TOTAL ASSETS ........................                352,027
                                                ===============
SHAREHOLDERS' EQUITY AND LIABILITIES
 Shareholders' Equity................ H
 Subscribed capital..................                  1,000
 Capital reserve.....................                 48,041
 Net loss for the year...............                 (7,870)
 Profit/loss carried foreward .......                 (3,513)
                                                ---------------
 TOTAL SHAREHOLDERS' EQUITY .........                 37,658
 PROVISIONS
 1.Taxation accruals ................                     --
 PROVISIONS
  Other accruals..................... B                   40
 LIABILITIES
 1.Trade payables.................... B, I             8,836
 2.Payables to shareholders.......... B, I            92,084
 3.Payables to subsidiaries.......... B, I             4,375
 4.Payables to participations ....... B, I           174,885
 5.Other payables.................... B, I            34,149
                                                ---------------
TOTAL SHAREHOLDERS' EQUITY AND
 LIABILITIES ........................                352,027
                                                ===============

See accompanying Notes to Financial Statements

F-120

SAALE ENERGIE GMBH

STATEMENT OF CASH FLOWS
(IN THOUSANDS DM)

                                                                 YEAR ENDED
                                                             DECEMBER 31, 1996
                                                             -----------------
Cash flows from operating activities:
Net loss for the year.......................................       (7,870)
Adjustments to reconcile net loss to net cash provided by
 operating activities:
 Depreciation on tangible assets and current asset
  write-offs................................................            4
 Change in assets and liabilities:
  Inventories...............................................          384
  Short-term trade receivables .............................      (24,647)
  Other assets..............................................      (14,415)
  Decrease in accruals......................................       (1,535)
  Short-term trade payables.................................        8,218
  Interest payable..........................................        3,583
  Other liabilities.........................................      114,597
                                                             -----------------
CASH PROVIDED BY OPERATING ACTIVITIES ......................       78,319
                                                             -----------------
Cash flows from investing activities:
Increase in participations..................................      (82,658)
                                                             -----------------
CASH USED FOR INVESTING ACTIVITIES .........................      (82,658)
                                                             -----------------
Cash flows from financing activities:
Increase in capital reserve.................................        1,600
Increase in other payables..................................       25,468
Increase in payables to shareholders........................        4,132
                                                             -----------------
CASH PROVIDED BY FINANCING ACTIVITIES.......................       31,200
                                                             -----------------
NET INCREASE IN CASH .......................................       26,861
CASH AT BEGINNING OF YEAR ..................................        1,887
                                                             -----------------
CASH AT END OF YEAR ........................................       28,748
                                                             =================

See accompanying Notes to Consolidated Financial Statements

F-121

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS DM)

NOTE A ORIGINATION AND NATURE OF BUSINESS

ORIGINATION According to the Articles of Association, Saale Energie Gmbh ("SEG") was established on November 11, 1993. The company's shares are held at 50% by NRGenerating International B.V., Amsterdam and at 50% by PowerGen Holdings B.V., Rotterdam.

NATURE OF BUSINESS: The operations of SEG include all activities relating to the direct and indirect acquisition, ownership, administration and operation of power generating facilities located in Schkopau, including the purchase of fuel and the sale of energy produced in the facilities. The business of the company further constitutes all activities relating to the supply of management, maintenance and consulting services in respect of power stations and related plants. The company is authorized to take all other actions and engage in all other businesses which appear to be necessary and useful in order to carry into effect the purpose of the company. In particular it is authorized to hold, acquire and create subsidiaries, branches, companies and interest in other enterprises.

NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of SEG have been prepared in accordance with the German Commercial Code, which represents accounting principles generally accepted in Germany ("German GAAP"). German GAAP vary in certain significant respects from accounting principles generally accepted in the United States of America ("US GAAP"). Application of US GAAP would have affected the result of operations for the year ended December 31, 1996 to the extent summarized in Note C to the financial statements. All amounts herein are shown in thousands of Deutsche Mark ("DM") unless otherwise stated.

SEG was not required to prepare consolidated financial statements for 1996. SEG owns a 98% share of its subsidiary Saale Energie Service GmbH. The company is included at cost in SEG's financial statements. Furthermore, SEG holds a 41.1% share in the Kraftwerk Schkopau GbR and a 44.4% share in the Kraftwerk Schkopau Betriebsgesellschaft mbH. These companies are included at cost and referred to as participations in these financial statements.

USE OF ESTIMATES: The preparation of financial statement in conformity with generally accepted accounting principles necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

TOTAL COST METHOD: The income statement has been presented according to the total cost (or type of expenditure) format as commonly used in Germany. According to this format, production and all other expenses incurred during the period are classified by type of expenses.

REVENUE RECOGNITION: Revenue is recognized when title passes or services are rendered, net of discounts, customer bonuses and rebates granted.

FIXED ASSETS: Fixed tangible assets are recorded on the basis of acquisition or manufacturing cost and subsequently reduced by scheduled depreciation charges over the assets' useful lives.

FINANCIAL ASSETS: Inventories are accounted for at historical purchase cost.

RECEIVABLES AND OTHER ASSETS: All receivables are recorded at nominal value. No provision for doubtful accounts has been recorded.

BANK BALANCES: Bank balances include current accounts.

ACCRUALS AND LIABILITIES: Accruals have been recorded for known obligations at the balance sheet date at the amounts of the estimated liability. Liabilities are valued at the amounts outstanding.

F-122

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE C SIGNIFICANT DIFFERENCES BETWEEN GERMAN AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES

SEG's financial statements comply with German GAAP, which differs in certain significant respects from US GAAP. The differences that would have a significant effect on net income and shareholders' equity are set out below.

1. CONSOLIDATION

SEG was not required to prepare consolidated financial statements for 1996. If US GAAP had been applied, SEG would be required to prepare consolidated financial statements including the financial statements of Saale Energie Service GmbH (SES), its 98% owned subsidiary.

US GAAP financial statements would therefore include the 1996 operating results of SES, net of minority interest, and would exclude the dividend income received by SEG.

2. ACCOUNTING FOR LONG TERM SERVICE AND SUPPLY AGREEMENTS

For German GAAP purposes the amounts billed to SEG resulting from the use and benefit agreement between SEG and Kraftwek Schkopau GbR were recorded as expenses of the period. Parallel, the amounts attributable to the long-term electricity supply contract were recorded as revenue in the period they were received. See Note D.

In accordance with US GAAP, these agreements would be considered as leasing agreements. The use and benefit agreement would be considered as a capital lease and the long-term sales agreement as it relates to capacity availability is treated as a direct financing lease arrangement. The revenues and expenses recorded based upon current billings would be replaced by the amortization of unearned direct finance lease income and interest expense on lease obligations in accordance with US GAAP.

The net present value of the minimum lease payments to be made by VEAG under the terms of the agreement amounts to DM875.272, whereas the net present value of the lease obligation liable to GbR over the minimum period of 25 years is DM728.240 at December 31, 1996.

3. OUTSTANDING CONTRIBUTIONS BY SHAREHOLDERS'

As of December 31, 1996 contributions from shareholders were outstanding at DM713, which were not deducted from German shareholders' equity. US GAAP shareholders' equity has to be reduced by the outstanding contributions.

4. DEFERRED TAXES

Under German GAAP, SEG did not accrue for income tax, because of net operating losses in 1996. Deferred tax assets and liabilities have not been recorded, because under German GAAP they are only recognized to the extent that deferred tax liabilities exceed deferred tax assets. Deferred tax assets are not recorded for operating loss carryforwards.

For US GAAP accounting purposes, mainly due to the application of lease accounting, the financial values differ significantly from the tax basis.

F-123

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of SEG's deferred tax liabilities and assets at December 31, 1996, that result from carryforwards and temporary differences between the US GAAP financial statement basis and tax basis of assets and liabilities are summarized as follows:

                                                    1996
                                                   ------
Deferred tax liability
 lease accounting ................................  17.6
 investment in GbR ...............................  50.2
                                                   ------
  Total deferred liability .......................  67.8
                                                   ------
Deferred tax assets operating loss carryforwards    54.7
                                                   ------
Net deferred tax liability .......................  13.1
                                                   ======

Because all differences in the opening balances between German and US GAAP are taxable for German tax purposes these differences, which result in a net taxable difference, would be considered to be temporary in accordance with US GAAP.

RECONCILIATION TO US GAAP

The following is a summary of the significant adjustments to net income for the year 1996 which will be required if US GAAP had been applied instead of German GAAP.

                                                              YEAR ENDED
                                                             DECEMBER 31,
                                                     NOTE        1996
                                                    ------ --------------
Net loss as reported in the income statement under
 German GAAP ......................................             (7,870)

Adjustments required to conform with US GAAP:
 Consolidation of SES .............................   (1)          (40)
 Lease adjustment .................................   (2)       31,536
 Deferred taxes ...................................   (4)      (14,101)
                                                           --------------
Net income in accordance with US GAAP .............              9,525
                                                           ==============

The following is a summary of the significant adjustments to shareholders' equity as of December 31, 1996 which will be required if US GAAP had been applied instead of German GAAP.

                                                                      YEAR ENDED
                                                                     DECEMBER 31,
                                                             NOTE        1996
                                                            ------ --------------
Shareholders' equity as reported in the balance sheet
 under German GAAP ........................................             37,658
Adjustments required to conform with US GAAP:
 Consolidation of SES .....................................   (1)        3,277
 Lease adjustment .........................................   (2)       31,536
 Outstanding contributions ................................   (3)         (713)
 Deferred taxes ...........................................   (4)      (13,087)
                                                                   --------------
Shareholders' equity in accordance with US GAAP  ..........             58,671
                                                                   ==============

F-124

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE D LONG-TERM SALES AND SERVICE AGREEMENTS

According to a long-term electricity supply contract between SEG and Vereinigte Energie AG (VEAG), SEG supplies its total available electricity capacity to VEAG. The contract was closed for a 25 years period starting at the date of commissioning of the power plant. In terms of the contract VEAG is obliged to pay on a monthly basis a price that covers (1) the availability of electrical supply capacity and (2) the operating cost incurred to produce the electricity. Under the terms of this agreement VEAG has agreed to make payments of DM2,142.7 million over the period of the agreement (25 years). In 1996 SEG's sales revenues of DM161,309 solely relate to sales made to VEAG.

SEG has a use and benefit agreement with Kraftwerk Schkopau GbR (GbR), under which GbR grants SEG a notional share of 400 MW (power share) in the total net capacity of the power station for its sole use. The SEG power share encompasses all equipment and installations of the power station. In return SEG has obliged to pay all costs of GbR related to the SEG-power share as stipulated in the agreement plus profit mark-up plus value added tax. In 1996 the SEG has recorded expenses of DM95,797 related to this agreement.

In order to manage and operate its share in the power plan SEG closed a contract with Kraftwerk Schkopau Betriebsgesellschaft mbH (KSB) on December 10, 1993. In terms of this contract, SEG commissions KSB with the conversion of coal using its power share of 400 MW of the Schkopau power plant, and KSB accepts responsibility for all costs of operating and maintaining the power plant. In terms of the contract SEG is obliged to pay for KSB's services.

NOTE E INVESTMENTS IN SUBSIDIARIES AND PARTICIPATIONS

SEG holds a 98% share in Saale Energie Service GmbH (SES). The investment is accounted for at its historical acquisition cost of DM49. The business of the company comprises of all activities relating to the supply of management, maintenance and consulting services in respect of power stations and related plants, especially for the lignite power stations of the Mitteldeutsche Braunkohlengesellschaft mbH (MIBRAG) and its subsidiaries.

A 41.1% participation in the Kraftwerk Schkopau GbR (GbR), which is the owner of the Schkopau power plant, is held by SEG, and is recorded at cost.

SEG's 44.4% share in the Kraftwerk Schkopau Betriebsgesellschaft mbH (KSB) has been recorded at the historical acquisition cost of DM22. SEG has assigned its share in KSB to C & L Deutschland Revision AG in security for VEBA Vereinigte Kraftwerke Ruhr AG (VKR).

NOTE F LOAN TO KRAFTWERK SCHKOPAU GBR

In terms of the loan agreement between the participants of the GbR, SEG has granted a loan of DM98 million to GbR, of which DM16,440 was drawn during 1996. The balance outstanding at December 31, 1996 was DM82,200. The loan is unsecured and bears interest at a fixed rate of 7% p.a. The loan has been granted for an indefinite period and the repayment terms are not fixed.

NOTE G RECEIVABLES AND OTHER ASSETS

The trade receivables of DM25, as reported on December 31, 1996, relate solely to power supplies to VEAG. The other assets are mainly receivables from tax authorities.

NOTE H CHANGE IN SHAREHOLDERS' EQUITY

The Shareholders' equity of SEG changed in 1996 solely by the net loss of 1996 (DM7,870) from DM45,528 to DM37,658.

F-125

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE I LIABILITIES

The maturity periods of the liabilities are as follows (in DM):

                                                MATURITY PERIOD  MATURITY PERIOD  TOTAL BALANCE
                                                  OF LESS THAN       BETWEEN          AS OF
                                                     1 YEAR       1 AND 5 YEARS   DEC. 31, 1996
                                                --------------- ---------------  ---------------
1)Trade payables ..............................       8,836               --           8,836
2)Payables to shareholding companies  .........       6,387           85,697          92,084
3)Payables to subsidiaries ....................          --            4,375           4,375
4)Payables to companies in which participants
 are held .....................................     174,884               --         174,884
5)Other liabilities ...........................          --           34,150          34,150
                                                --------------- ---------------  ---------------
                                                    190,107          124,222         314,329
                                                =============== ===============  ===============

2) PowerGen plc., London and NRGenerating B.V., Amsterdam granted a loan to SEG for the partial funding of its financial requirements at a total amount of DM148,054. The loans are not collateralized and bear interest at a fixed rate of 7.5% p.a. The loans are granted for an indefinite period and no fixed repayment terms have been set.

The loans from shareholding companies comprise as follows (in DM:)

                         DEC. 31, 1996
                        ---------------
NRGENERATING B.V.
Loan ..................      42,860
Interest ..............       3,169
Miscellaneous credits            59
                        ---------------
                             46,088
                        ---------------
POWERGEN PLC.
Loan ..................      42,819
Interest ..............       3,167
Miscellaneous credits            10
                        ---------------
                             45,996
                        ===============
                             92,084
                        ===============

3) In terms of the loan agreements dated February 7, 1996 and September 25, 1996 SES granted to SEG loans amounting DM6,500 and DM1,000 respectively. DM3,368 was repaid during 1996. The unsecured loans bear interest at a variable rate equal to the German Central Bank's discount rate plus 2% p.a. Included in the balance as of December 31, 1996 are interest payable of DM243. The loans can be called up at any time.

4) The liability as of December 31, 1996 comprises as follows (in DM):

a)Kraftwerk Schkopau GbR (GbR) ....................... 168,912
b)Kraftwerk Schkopau Betriebsgesellschaft mbH (KSB)  .   5,973
                                                      ---------
                                                       174,885
                                                      =========

a) The payables to GbR comprise of two components. DM110,109 refer to the fees due for 1996 in terms of the use and benefit agreement dated December 10, 1993 and represent SEG's share in the power plant's expenses. DM58,803 result from SEG's obligation to reimburse its share

F-126

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

in the shortfall achieved in the 1995 financial statement of the GbR as well as the shortfall achieved in 1996 up to the commissioning date of the power plant (March 31).

b) The liability mainly arises from the regulations of the coal conversion contract, closed on December 10, 1993 between SEG and KSB. In terms of this contract SEG commissions KSB with the conversion of coal using its power share of 400 MW of the Schkopau power plant, and KSB accepts responsibility for all costs of operating and maintaining the power plant. In terms of the contract SEG is obliged to pay for KSB's services.

5) VEBA Vereinigte Kraftwerke Ruhr AG (VKR), the other participant of the GbR, granted a loan up to DM50 million to SEG for purposes of funding the interest due during the construction period of the power plant. DM8,682 and DM25,468 has been drawn by SEG during 1995 and 1996 respectively. A variable interest rate of 3 month LIBOR plus 1.5% p.a. was agreed upon.

NOTE J OTHER FINANCIAL COMMITMENTS

In order to provide the GbR with own funds, the two participants of the GbR closed on December 10, 1993 a financing agreement. In terms of this agreement SEG is obliged to contribute DM82 million to the GbR, which is already fulfilled. SEG is also required to grant a loan of DM98 million in total to the GbR, of which DM82 million have been called up as of December 31, 1996. The remaining DM16 million can be called up any time.

For financial commitments relating to the leased assets and lease commitments see note C.

NOTE K RELATED PARTY TRANSACTIONS

SEG has a long-term coal supply agreement with MIBRAG, a company in which SEG's parent companies each have one-third ownership. Under the terms of this agreement MIBRAG delivers raw brown coal to the power station in Schkopau until 2010 at market prices paid by SEG. The annual volume of coal to be delivered by MIBRAG was not fixed in the agreement.

Additionally, SES, a subsidiary of SEG, and MIBRAG entered into a consulting and management agreement. This agreement determines certain consultancy services provided by SES. MIBRAG is obliged to pay the cost-related remuneration for these services. In 1996 MIBRAG paid DM7,894 to SES.

F-127

SAALE ENERGIE GMBH

STATEMENT OF OPERATIONS (UNAUDITED)
(IN THOUSANDS DM)

                                                          YEAR ENDED      YEAR ENDED
                                                         DECEMBER 31,    DECEMBER 31,
                                                             1995            1994
                                                        -------------- --------------
Sales revenue..........................................        101             --
Other operating income.................................
                                                        -------------- --------------
Total revenue..........................................        101             --
Cost of materials......................................      1,223             --
Depreciation of intangible and tangible fixed assets ..         --             --
Other operating expenses...............................        241            311
                                                        -------------- --------------
Total operating expenses...............................      1,464            311
Results from operations................................     (1,363)          (311)
                                                        -------------- --------------
Income from companies in which participations are
 held..................................................         --             --
Interest expense (net).................................     (2,375)           578
                                                        -------------- --------------
Results from ordinary activities.......................     (3,738)           267
Income tax.............................................         --             40
                                                        -------------- --------------
Net loss...............................................     (3,738)           227
                                                        ============== ==============

See accompanying Notes to Financial Statements

F-128

SAALE ENERGIE GMBH

BALANCE SHEET (UNAUDITED)
(IN THOUSANDS DM)

                                                    AT DECEMBER 31, AT DECEMBER 31,
                                             NOTE        1995             1994
                                           ------- ---------------  ---------------
ASSETS
 Contributions outstanding................                  713             713
 NON-CURRENT ASSETS
 Fixed assets
 Tangible assets
  Factory and office equipment............ B                  3               4
 Financial assets
 1. Subsidiaries.......................... B,D               49              49
 2. Participations........................ B,D          136,867          44,682
 3. Loans granted to participations ...... B,E           65,760          24,660
                                                   ---------------  ---------------
 TOTAL NON-CURRENT ASSETS.................              202,679          69,395
 CURRENT ASSETS
 Inventories
  Raw materials and supplies.............. B                712               0
 Receivables and other assets
 1. Trade receivables..................... B,C,F            117               0
 2. Other assets.......................... B,F              134              28
 Cheques, cash-in-hand, bank balances .... B              1,887           1,246
                                                   ---------------  ---------------
 TOTAL CURRENT ASSETS.....................                2,850           1,274
                                                   ---------------  ---------------
TOTAL ASSETS..............................              206,242          71,382
                                                   ===============  ===============
SHAREHOLDERS' EQUITY AND LIABILITIES
 SHAREHOLDERS' EQUITY
 Subscribed capital.......................                1,000           1,000
 Capital reserve..........................               48,040          31,125
 Net profit/loss for the year.............               (3,738)             (2)
 Profit/Loss carried foreward.............                  225             227
                                                   ---------------  ---------------
 TOTAL SHAREHOLDERS' EQUITY...............               45,527          32,350
 Provisions
  Tax accruals............................                   40              40
  Other accruals.......................... B              1,535             151
 Liabilities
 1. Trade payables........................ B,G              618              38
 2. Payables to shareholders.............. B,G           87,125          28,348
 3. Payables to participations............ B,G           56,212               0
 4. Other payables........................ B,G           15,185          10,455
                                                   ---------------  ---------------
TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES...............................              206,242          71,382
                                                   ===============  ===============

See accompanying Notes to Financial Statements

F-129

SAALE ENERGIE GMBH

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS DM)

                                                                      YEAR ENDED      YEAR ENDED
                                                                     DECEMBER 31,    DECEMBER 31,
                                                                         1995            1994
                                                                    -------------- --------------
Cash flows from operating activities:
Net loss (1994: profit) for the year...............................      (3,738)           227
Adjustments to reconcile net loss to net cash provided by
 operating activities:
 Depreciation on intangible and tangible assets....................           4
 Change in assets and liabilities:
  Inventories......................................................        (712)             0
  Short-term receivables and other assets..........................        (223)           (28)
  Increase in accruals.............................................       1,384            191
  Short-term payables..............................................         578             38
  Other liabilities................................................       1,048            456
                                                                    -------------- --------------
CASH PROVIDED BY OPERATING ACTIVITIES..............................      (1,659)           884
                                                                    -------------- --------------
Cash flows from investing activities:
Increase in financial investments..................................     (77,074)       (69,346)
                                                                    -------------- --------------
CASH USED FOR INVESTING ACTIVITIES.................................     (77,074)       (69,346)
                                                                    -------------- --------------
Cash flows from financing activities:
Additional paid-in capital.........................................      16,915         31,126
Increase in long-term liabilities..................................      62,459         38,346
                                                                    -------------- --------------
CASH PROVIDED BY FINANCING ACTIVITIES..............................      79,374         69,472
                                                                    -------------- --------------
NET INCREASE IN CASH...............................................         641          1,010
CASH AT BEGINNING OF YEAR..........................................       1,246            236
                                                                    -------------- --------------
CASH AT YEAR-END...................................................       1,887          1,246
                                                                    ============== ==============

See accompanying notes to Consolidated Financial Statements

F-130

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS DM)

NOTE A ORIGINATION AND NATURE OF BUSINESS

ORIGINATION: According to the Articles of Association, Saale Energie GmbH ("SEG") was established on November 11, 1993. The company's shares are held at 50% by NRGenerating International B.V., Amsterdam and at 50% by PowerGen Holdings B.V., Rotterdam.

NATURE OF BUSINESS: The operations of SEG include all activities relating to the direct and indirect acquisition, ownership, administration and operation of power generating facilities located in Schkopau, including the purchase of fuel and the sale of energy produced in the facilities. The business of the company further constitutes all activities relating to the supply of management, maintenance and consulting services in respect of power stations and related plants. The company is authorized to take all other actions and engage in all other businesses which appear to be necessary and useful in order to carry into effect the purpose of the company. In particular it is authorized to hold, acquire and create subsidiaries, branches, companies and interest in other enterprises.

NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of SEG have been prepared in accordance with the German Commercial Code, which represents accounting principles generally accepted in Germany ("German GAAP"). German GAAP vary in certain significant respects from accounting principles generally accepted in the United States of America ("US GAAP").

SEG was not required to prepare consolidated financial statements for 1994 and 1995. SEG owns a 98% share of its subsidiary Saale Energie Service GmbH. The company is included at cost in SEG's financial statements. Furthermore, SEG holds a 41.1% share in the Kraftwerk Schkopau GbR and a 44.4% share in the Kraftwerk Schkopau Betriebsgesellschaft mbH. These companies are included at cost and referred to as participations in these financial statements.

USE OF ESTIMATES: The preparation of financial statement in conformity with generally accepted accounting principles necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

TOTAL COST METHOD: The income statement has been presented according to the total cost (or type of expenditure) format as commonly used in Germany. According to this format, production and all other expenses incurred during the period are classified by type of expenses.

REVENUE RECOGNITION: Revenue is recognized when title passes or services are rendered, net of discounts, customer bonuses and rabates granted.

FIXED ASSETS: Fixed tangible assets are recorded on the basis of acquisition or manufacturing cost and subsequently reduced by scheduled depreciation charges over the assets' useful lives.

FINANCIAL ASSETS: The long-term loans and investments are recorded at cost.

INVENTORIES: Inventories are accounted for at historical purchase cost.

RECEIVABLES AND OTHER ASSETS: All receivables are recorded at nominal value. No provision for doubtful accounts has been recorded.

BANK BALANCES: Bank balances include current accounts.

ACCRUALS AND LIABILITIES: Accruals have been recorded for known obligations at the balance sheet date at the amounts of the estimated liability. Liabilities are valued at the amounts outstanding.

F-131

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

NOTE C LONG-TERM SALES AND SERVICE AGREEMENTS

According to a long-term electricity supply contract between SEG and Vereinigte Energie AG (VEAG), dated December 7, 1993, SEG supplies its total available electricity capacity to VEAG. The contract was closed for a 25 years period starting at the date of commissioning of the power plant. In terms of the contract VEAG is obliged to pay on a monthly basis a price that covers (1) the availability of electrical supply capacity and (2) the operating cost incurred to produce the electricity. SEG began to supply such available capacity in late 1995.

SEG has a use and benefit agreement with Kraftwerk Schkopau GbR (GbR), under which GbR grants SEG a notional share of 400 MW (power share) in the total net capacity of the power station for its sole use. The SEG power share encompasses all equipment and installations of the power station.

In order to manage and operate its share in the power plant SEG closed a contract with Kraftwerk Schkopau Betriebsgesellschaft mbH (KSB) on December 10, 1993. In terms of this contract, SEG commissions KSB with the conversion of coal using its power share of 400 MW of the Schkopau power plant, and KSB accepts responsibility for all costs of operating and maintaining the power plant. In terms of the contract SEG is obliged to pay for KSB's services.

NOTE D INVESTMENTS IN SUBSIDIARIES AND PARTICIPATIONS

SEG holds a 98% share in Saale Energie Service GmbH (SES). The investment is accounted for at its historical acquisition cost of DM 49. The business of the company comprises of all activities relating to the supply of management, maintenance and consulting services in respect of power stations and related plants, especially for the lignite power stations of the Mitteldeutsche Braunkohlengesellschaft mbH (MIBRAG) and its subsidiaries.

A 41.1% participation in the Kraftwerk Schkopau GbR (GbR), which is the owner of the Schkopau power plant, is held by SEG, and is recorded at cost.

SEG's 44.4% share in the Kraftwerk Schkopau Betriebsgesellschaft mbH (KSB) has been recorded at the historical acquisition cost of DM 22. SEG has assigned its share in KSB to C & L Deutschland Revision AG in security for VEBA Vereinigte Kraftwerke Ruhr AG (VKR).

NOTE E LOAN TO KRAFTWERK SCHKOPAU GBR

In terms of the loan agreement between the participants of the GbR, SEG has granted a loan of DM 98 million to GbR, of which DM 41,100 was drawn during 1995 (1994: DM 24,660). The balance outstanding at December 31, 1995 was DM 65,760 (1994: DM 24,660). The loan is unsecured and bears interest at a fixed rate of 7% p.a. The loan has been granted for an indefinite period and the repayment terms are not fixed.

NOTE F RECEIVABLES AND OTHER ASSETS

The trade receivables of DM 117, as reported on December 31, 1995 (1994:
DM 0) relate solely to power supplies to VEAG. The other assets are mainly receivables from tax authorities.

F-132

SAALE ENERGIE GMBH

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

NOTE G LIABILITIES

The maturity periods of the liabilities are as follows (in DM):

                                       MATURITY PERIOD  MATURITY PERIOD  TOTAL BALANCE
                                         OF LESS THAN      MORE THAN         AS OF
DECEMBER 31, 1995                           1 YEAR          1 YEAR       DEC. 31, 1995
-------------------------------------  --------------- ---------------  ---------------
1) Trade payables ....................         617               --             617
2) Payables to shareholding
 companies............................          --           87,126          87,126
3) Payables to companies in which
 participations are held..............      27,800           28,412          56,212
4) Other liabilities .................       6,504            8,681          15,185
                                       --------------- ---------------  ---------------
                                            34,921          124,219         159,140
                                       =============== ===============  ===============

                                        MATURITY PERIOD  MATURITY PERIOD  TOTAL BALANCE
                                          OF LESS THAN      MORE THAN         AS OF
DECEMBER 31, 1994                            1 YEAR          1 YEAR       DEC. 31, 1994
--------------------------------------  --------------- ---------------  ---------------
1) Trade payables .....................          38              --               38
2) Payables to shareholding companies        28,348              --           28,348
4) Other liabilities ..................       5,455           5,000           10,455
                                        --------------- ---------------  ---------------
                                             33,841           5,000           38,841
                                        =============== ===============  ===============

2) PowerGen plc., London and NRGenerating B.V., Amsterdam granted a loan to SEG for the partial funding of its financial requirements at an total amount of DM 148,054. The loans are not collateralized and bear interest at a fixed rate of 7.5% p.a The loans are granted for an indefinite period and no fixed repayment terms have been set.

The loans from shareholding companies comprise as follows (in DM):

                     DEC. 31, 1995    DEC. 31, 1994
                    --------------- ---------------
NRGenerating B.V.        43,603          14,209
PowerGen plc. .....      43,522          14,138
                    --------------- ---------------
                         87,125          28,347
                    =============== ===============

3) The liability as of December 31,1995 of DM 58,803 result from SEG's obligation to reimburse its share in the shortfall achieved in the 1995 financial statement of the GbR.

4) The balance is mainly comprised of a loan granted to SEG by VEBA Vereinigte Kraftwerke Ruhr AG and the outstanding portion of the purchase price to VKR for the shares in Kraftwerk Schkopau GbR.

VEBA Vereinigte Kraftwerke Ruhr AG (VKR), the other participant of the GbR, granted a loan up to DM 50 million to SEG for purposes of funding the interest due during the construction period of the power plant. DM 8,682 has been drawn by SEG during 1995. A variable interest rate of 3 month LIBOR plus 1.5% p.a. was agreed upon.

The purchase price for 41.1% in the shares of GbR was in total DM 20,000. The outstanding balance as of December 31, 1995 was DM 5,000, as of December 31,1994 DM 10,000.

NOTE H OTHER FINANCIAL COMMITMENTS

In order to provide the GbR with own funds, the two participants of the GbR closed on December 10, 1993 a financing agreement. In terms of this agreement SEG is obliged to contribute DM 82 million to the GbR, which is already fulfilled. SEG is also required to grant a loan of DM 98 million in total to the GbR, of which DM 66 million have been called up as of December 31, 1995 (1994: DM 25 million). The remaining amount can be called up any time.

F-133

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

PROFIT AND LOSS STATEMENT

FOR THE YEAR ENDED 30 JUNE 1997

                                                           30 JUNE 1997    30 JUNE 1996
                                                  NOTES          $               $
                                                 ------- ---------------  --------------
OPERATING REVENUE ..............................     2       459,899,793    574,009,434
                                                         ---------------  --------------
Operating Profit before Income Tax .............     3        52,179,438    185,233,791
Income Tax Attributable to Operating Profit  ...     5        21,659,694     67,547,498
                                                         ---------------  --------------
OPERATING PROFIT AFTER INCOME TAX ..............              30,519,744    117,686,293
                                                         ---------------  --------------
Extraordinary Item--Profit on sale of business .     4     1,335,852,636              0
Income Tax Attributable to Extraordinary Item ..     5       383,195,543              0
                                                         ---------------  --------------
PROFIT ON EXTRAORDINARY ITEM AFTER INCOME TAX  .    --       952,657,093              0
                                                         ---------------  --------------
OPERATING PROFIT AND EXTRAORDINARY PROFIT AFTER
 INCOME TAX ....................................             983,176,837    117,686,293
                                                         ---------------  --------------
Retained Earnings at Beginning of Period .......    14        50,618,229     50,618,229
Dividends Paid or Payable.......................           1,033,795,086    117,686,293
                                                         ---------------  --------------
RETAINED EARNINGS AT END OF PERIOD..............    14                 0     50,618,229
                                                         ---------------  --------------

This Profit and Loss Statement should be read in conjunction with the Notes To And Forming Part of the Financial Statements

F-134

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

BALANCE SHEET

AS AT 30 JUNE 1997

                                          30 JUNE 1997    30 JUNE 1996
                                 NOTES         $               $
                                ------- --------------  ---------------
CURRENT ASSETS
 Cash..........................   15.1         15              657,800
 Receivables...................      6          0           73,048,889
 Inventories...................      7          0            3,559,857
 Other assets .................      8          0            1,714,627
                                        --------------  ---------------
TOTAL CURRENT ASSETS...........                15           78,981,173
NON-CURRENT ASSETS
 Receivables...................      6          0            1,574,810
 Inventories...................      7          0           13,176,115
 Other assets .................      8          0            5,662,559
 Investments...................      9          0                  100
 Property, plant and
 equipment.....................     10          0        3,159,101,974
                                        --------------  ---------------
TOTAL NON-CURRENT ASSETS ......                 0        3,179,515,558
                                        --------------  ---------------
TOTAL ASSETS ..................                15        3,258,496,731
                                        --------------  ---------------
CURRENT LIABILITIES
 Creditors and borrowings .....     11          0        2,039,618,476
 Provisions....................     12          0            9,110,358
                                        --------------  ---------------
TOTAL CURRENT LIABILITIES .....                 0        2,048,728,834
NON-CURRENT LIABILITIES  ......
 Creditors and borrowings .....     11          0        1,057,832,534
 Provisions....................     12          0          101,317,119
                                        --------------  ---------------
TOTAL NON-CURRENT LIABILITIES
                                                0        1,159,149,653
                                        --------------  ---------------
TOTAL LIABILITIES .............                 0        3,207,878,487
                                        --------------  ---------------
NET ASSETS ....................                15           50,618,244
                                        --------------  ---------------
EQUITY
 Share capital.................     13         15                   15
 Retained earnings ............     14          0           50,818,229
                                        --------------  ---------------
TOTAL EQUITY ..................                15           50,618,244
                                        --------------  ---------------

This Balance Sheet should be read in conjunction with the Notes To And Forming Part of the Financial Statements

F-135

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 1997

                                                             30 JUNE 1997     30 JUNE 1996
                                                    NOTES          $               $
                                                   ------- ---------------  ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
 Receipts from customers..........................             447,989,416     661,857,250
 Payments to suppliers and employees..............            (132,408,127)   (252,601,057)
 Income tax paid..................................            (484,975,104)              0
                                                           ---------------  ---------------
NET CASH FLOW (USED IN) PROVIDED BY OPERATING
 ACTIVITIES ......................................   15.2     (179,393,815)    409,256,193
                                                           ---------------  ---------------
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES
 Proceeds from sale of the business...............   15.3    4,484,928,944               0
 Cash balance transferred on sale of business ....             (22,412,523)              0
 Payments to acquire property, plant and
  equipment.......................................             (14,813,737)     (8,356,243)
 Proceeds from sale of property, plant and
  equipment ......................................                       0          34,091
 Proceeds from sale of investments................                       0         223,296
 Dividends received...............................                       0         127,400
                                                           ---------------  ---------------
NET CASH FLOW (USED IN) FROM INVESTING
 ACTIVITIES.......................................           4,447,702,684      (7,971,456)
                                                           ---------------  ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Interest and other items of a similar nature
  received........................................               3,063,264       1,907,373
 Interest and other costs of finance paid ........            (109,537,439)   (115,063,116)
 Hedging receipts associated with borrowings .....              12,007,845      20,764,959
 Hedging payments associated with borrowings .....             (19,553,416)    (30,861,150)
 Buyback of swaps.................................             (79,619,663)     (7,906,790)
 Proceeds from borrowings.........................           1,222,785,627      86,056,400
 Repayment of borrowings..........................          (1,129,666,657)    (36,221,000)
 Repayment of shareholder loan....................          (1,917,491,710)              0
 Buyback of borrowings............................          (1,157,854,106)   (264,281,672)
 Dividends paid...................................          (1,095,481,066)    (56,000,000)
                                                           ---------------  ---------------
NET CASH FLOW USED IN FINANCING ACTIVITIES .......          (4,268,346,521)   (401,604,996)
                                                           ---------------  ---------------
NET INCREASE/(DECREASE) IN CASH HELD..............                 (37,652)       (320,259)
                                                           ---------------  ---------------
CASH AT BEGINNING OF PERIOD.......................                  37,667         357,926
                                                           ---------------  ---------------
CASH AT END OF PERIOD.............................   15.1               15          37,667
                                                           ---------------  ---------------

This Statement of Cashflows should be read in conjunction with the Notes To And Forming Part of the Financial Statements

F-136

QUIET LIFE LIMITED
ACN 065 381 240
(FORMERLY LOY YANG POWER LTD, NAME CHANGED 13 MAY 1997)

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.1 BASIS OF ACCOUNTING

The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Law and applicable Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Censensus Views) have also been complied with.

The report is prepared in accordance with the historical cost convention, except for certain assets which, as noted, are at valuation. The accounting policies are consistent with those of the previous year.

1.2 SIGNIFICANT CHANGE IN AFFAIRS

CHANGE OF COMPANY NAME

The company (A.C.N. 065 381 240) changed its name from Loy Yang Power Ltd. to Quiet Life Limited on 13 May 1997.

SALE OF BUSINESS

On 12 May 1997 the company ceased trading and sold all of its cash, receivables, inventories, property, plant and equipment, and contract liabilities and certain creditors (refer note 15.3). All employees were allocated to the new owner with existing employment conditions. The proceeds from the sale were used to extinguish all of the company's debt finance, pay income tax liabilities and to pay a dividend to shareholders equal to the value of retained earnings.

1.3 PRIOR PERIOD COMPARISONS

Comparative information is reclassified where appropriate, to enhance comparability.

1.4 PROPERTY, PLANT AND EQUIPMENT

COST AND VALUATION

Property, plant and equipment were carried at cost.

DEPRECIATION AND AMORTISATION

Depreciation or amortisation was provided for all fixed assets other than freehold land. The majority of assets were depreciated using the straight line method to write off the cost of assets over their expected service lives. The expenditure associated with mine development costs was amortised on a units of production basis. Depreciation or amortisation for all assets commenced on the first day of the month closest to the in-service date.

Changes in depreciation rates and/or depreciable amounts were dealt with on a prospective basis.

1.5 RECOVERABLE AMOUNTS

Non-current assets values did not exceed their recoverable amount. Where carrying values exceeded their recoverable amount, assets were revalued downwards to the lower value. The expected net cash flows included in determining the recoverable amounts of non-current assets were discounted to their present value using a market determined risk adjusted discount rate.

F-137

QUIET LIFE LIMITED
ACN 065 381 240
(FORMERLY LOY YANG POWER LTD, NAME CHANGED 13 MAY 1997)

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

1.6 INVENTORIES

Costs were assigned to inventories using the average cost method. Inventories were valued at lower of cost and net realisable value. An estimate of items which are likely to be utilised in the next twelve months was classified as current.

1.7 ACCOUNTING FOR INCOME TAX

The company was until 12 May 1997 subject to the Victorian State Government Tax Equivalent System (VTES) pursuant to Section 88 of the State Owned Enterprises Act 1992. On the 12 May 1997 the company settled its final VTES liability of $494,975,104. The Department of Treasury and Finance advised on 12 May 1997 that as "the sale transaction involves the transfer of ownership of Loy Yang Power's assets the company will effectively become a "shell" after the transaction. Accordingly, and consistent with this Department's policy on the non-applicability of a Victorian Tax Equivalent System to non-trading shell entities. Loy Yang Power will cease to be subject to a VTES effective from the 12 May 1997 and this Department considers this to be the final transaction under VTES".

The company has adopted the liability method of tax-effect accounting whereby income tax is regarded as an expense and is matched with the accounting profit after allowing for permanent differences.

To the extent that timing differences occur between the time items are recognised in the accounts and when items are taken into account in determining taxable income, the net related taxation benefit or liability is disclosed as a future income tax benefit or a provision for deferred income tax. These account balances are calculated with reference to the rates of income tax which are expected to apply when those timing differences reverse.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. The future income tax benefit arising from tax losses is only carried forward as an asset when the benefit is virtually certain of being realised.

1.8 DOUBTFUL DEBTS

The value of estimated doubtful debts was reviewed annually on an individual debtor basis, and appropriate provision made where necessary.

1.9 NEGOTIABLE SECURITIES

Where interest was paid in advance on negotiable securities the interest was recognised as an asset and progressively charged to the Profit and Loss Statement over the applicable interest period. Interest payable in arrears was progressively charged to the Profit and Loss Statement over the applicable interest period and recognised as a liability.

Discounts and premiums on face value on the issue of negotiable securities were recognised as variations of the liability to which they relate. The variations were amortised over the term of the issue, using the effective yield method.

Changes in the capital value of the outstanding liability on index linked securities were recognised as variations in the book value of the liability and charged to the Profit and Loss Statement.

Any gains or losses arising from the buyback of negotiable securities issued by the company were charged to the Profit and Loss Statement as incurred or earned.

F-138

QUIET LIFE LIMITED
ACN 065 381 240
(FORMERLY LOY YANG POWER LTD, NAME CHANGED 13 MAY 1997)

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

1.10 DERIVATIVES

The company was exposed to changes in interest rates and commodity prices from its activities. It was the company's policy to use derivative financial instruments to hedge these risks. The company did not enter, hold or issue derivative financial instruments for trading or speculative purposes.

Derivative financial instruments included forward rate agreements, futures, options, interest rate swaps and their Treasury Corporation of Victoria equivalents.

Gains and losses arising from the early termination of general hedges were amortised over the period of the hedge. The exception to this was bond futures where gains and losses were amortised over the average term to maturity of existing fixed.

Gains and losses arising from the early termination of specific hedges were amortised over the shorter of the period of the borrowing being hedged or the period of the hedge.

1.11 EMPLOYEE ENTITLEMENTS

WAGES, SALARIES AND LEAVE

Provision was made for employee entitlement benefits accumulated as a result of employees rendering services up to the sale date. These benefits included wages and salaries, annual leave and associated oncosts.

Liabilities arising in respect of wages and salaries, annual leave and any other employee entitlements expected to be settled within twelve months of the sale date were measured at their nominal amounts. All other employee entitlement liabilities were measured at the present value of their estimated future cash outflows to be made in respect of services provided by employees up to the sale date. In determining the present value of future cash outflows, the interest rates attaching to Federal Government Guaranteed Securities which had terms to maturity approximating the terms of the related liability were used.

Employee entitlement expenses and revenues arising in respect of the following categories:

o Wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave entitlements; and

o other types of employee entitlements,

were charged to the Profit and Loss Statement on a net basis in their respective categories.

SUPERANNUATION

The company contributed towards the Victorian Electricity Industry (VEI) Superannuation Fund on behalf of its employees. These contributions were charged to the Profit and Loss Statement as the liability was recognised (refer note 17.2).

1.12 PROVISION FOR SITE RESTORATION--POWER STATION AND MINE

Recognition of a liability for the cost of restoring the power station and mine sites to an acceptable environmental standard at the end of their useful lives was provided for up until the sale date (refer note 12). This liability included costs of reclamation, plant closure and dismantling, and waste site closure.

The liability was recognised on a gradual basis and was calculated by discounting the estimated future site restoration costs to their net present value. Annual increments to the liability for each site were charged to the Profit and Loss Statement over the estimated remaining life of each site.

F-139

QUIET LIFE LIMITED
ACN 065 381 240
(FORMERLY LOY YANG POWER LTD, NAME CHANGED 13 MAY 1997)

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

Expected future payments for site restoration were discounted using interest rates attaching, as at the reporting date, to Federal Government Guaranteed Securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

Cost estimates were based on the assumption that current legal requirements and/or technologies could not change significantly over the life of the power station and mine sites.

Changes in estimates were dealt with on a prospective basis.

The company's obligations for site restoration were transferred to the purchaser of the company's business.

1.13 CASH

For the purpose of the Statement of Cash Flows, cash includes cash on hand and in banks, investments in money market instruments and short-term deposits and securities, net of outstanding overdrafts.

F-140

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

                                                                 30 JUNE 1997    30 JUNE 1996
                                                                      $               $
                                                               --------------- --------------
2 OPERATING REVENUE COMPRISES
Sales revenue ................................................    441,012,062    557,499,891
Interest revenue (refer note 24.5 for related party
 component)...................................................      3,057,422      1,845,183
Proceeds from the sale of non-current assets..................        825,741        587,326
Dividend revenue..............................................              0        127,400
Other revenue.................................................     15,004,568     13,949,634
                                                               --------------- --------------
                                                                  459,899,793    574,009,434
                                                               =============== ==============

----------------------------------------------   ..............................................
3 OPERATING PROFIT BEFORE INCOME TAX
The operating profit before income tax is arrived at after
charging/(crediting) the following items:

DEPRECIATION, AMORTISATION AND DIMINUTION
Plant and equipment...........................................     82,841,704     96,218,635
Development of mine (amortisation) ...........................      1,032,676      1,057,471
Leased plant and equipment (amortisation).....................      7,488,422      8,678,171
Buildings.....................................................        304,364        320,654
                                                               --------------- --------------
TOTAL DEPRECIATION, AMORTISATION AND DIMINUTION ..............     91,667,166    106,274,931
                                                               --------------- --------------
AMOUNTS SET ASIDE TO PROVISIONS
Employee entitlements ........................................      4,926,554      4,492,052
Site restoration--power station...............................        596,917        486,338
Site restoration--mine........................................        225,033        246,940
                                                               --------------- --------------
TOTAL AMOUNT SET ASIDE TO PROVISIONS .........................      5,747,504      5,225,330
                                                               --------------- --------------
FINANCE CHARGES (REFER NOTE 24.5) ............................    181,865,292    126,710,973
GOVERNMENT MINING ROYALTIES INCURRED .........................      8,552,827      9,241,836
ENERGY CONSUMPTION LEVY ......................................         14,419         29,731
SUPERANNUATION CONTRIBUTIONS .................................      2,320,442      2,697,272
RENTAL OPERATING LEASES ......................................        247,000        419,000
LOSS (PROFIT) ON SALE OF NON-CURRENT ASSETS ..................        947,326        (50,803)
RESEARCH AND DEVELOPMENT EXPENDITURE .........................        523,566        518,760

----------------------------------------------   ..............................................
4 PROFIT ON EXTRAORDINARY ITEM
Profit on sale of business (refer note 15.3)..................  1,335,852,636              0
Applicable income tax ........................................    383,195,543              0
                                                               --------------- --------------
                                                                  952,657,093              0
                                                               --------------- --------------

Disclosure of the net assets and liabilities sold can be found in note 15.3.

F-141

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

                                                                  30 JUNE 1997    30 JUNE 1996
                                                                       $               $
                                                                --------------- --------------
5 INCOME TAX
5.1 INCOME TAX EXPENSE
The prima facie tax on operating profit differs from the
income tax provided in the accounts as follows:
Prima facie income tax expense on operating profit ............     18,784,598     66,684,165
Increase in income tax expense due to permanent differences
 Depreciation on buildings.....................................              0        448,098
 Tax on provisions not carried forward.........................        395,157        620,720
 Provisions for restoration--non-deductible....................        125,468        175,082
 Non-deductible expenditure....................................      2,499,703              0
 Entertainment and other non-deductible items .................         79,411         30,561
 Under/(over) provision last year .............................        211,418              0
Decrease in income tax expense due to permanent differences ...
 Tax exempt income.............................................              0       (292,629)
 Research and development concession ..........................        (58,833)       (93,377)
 General investment allowance .................................              0        (25,122)
 Depreciation on buildings.....................................       (377,218)             0
                                                                --------------- --------------
TOTAL INCOME TAX EXPENSE ATTRIBUTABLE TO OPERATING PROFIT .....     21,658,694     67,547,498
                                                                =============== ==============
Prima facie income tax expense on extraordinary item ..........    480,906,949              0
Decrease in income tax expense due to permanent differences ...
 Non-assessable income on sale of business ....................    (97,711,406)             0
                                                                --------------- --------------
TOTAL INCOME TAX EXPENSE ATTRIBUTABLE TO
 EXTRAORDINARY ITEM............................................    383,196,543              0
                                                                =============== ==============
Total income tax expense is made up of:
 Increase/(decrease) in provision for deferred income tax  ....   (136,405,995)    85,298,790
 Income tax paid...............................................    494,975,104              0
 (Increase)/decrease future income tax benefit.................     46,286,128    (17,751,292)
                                                                --------------- --------------
                                                                   404,855,237     67,547,498
                                                                =============== ==============
5.2 ANALYSIS OF TAX BALANCES CARRIED FORWARD

CURRENT
Future income tax benefit, balance at end of year  ............              0      1,019,366
Less: provision for deferred income tax, balance at end of
 year..........................................................              0        451,107
                                                                --------------- --------------
NET FUTURE INCOME TAX BENEFIT (REFER NOTE 8)...................              0        568,259
                                                                =============== ==============
NON-CURRENT
Provision for deferred income tax, balance at end of year .....              0    135,954,868
Less: future income tax benefit, balance at end of year  ......              0     45,266,762
                                                                --------------- --------------
NET PROVISION FOR DEFERRED INCOME TAX (REFER NOTE 12)  ........              0     90,688,126
                                                                =============== ==============

F-142

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

                                                             30 JUNE 1997    30 JUNE 1996
                                                                   $              $
                                                            -------------- --------------
6 RECEIVABLES

CURRENT
Trade debtors (refer note 24.6 for related party
 component)................................................        0          69,683,560
Other debtors (refer note 24.6 for related party
 component)................................................        0           3,365,329
                                                            -------------- --------------
                                                                   0          73,048,889
                                                            ============== ==============
NON-CURRENT
Trade debtors (refer note 24.6 for related party
 component)................................................        0           1,574,810
                                                            ============== ==============

-----------------------------------------------------------------------------------------
7 INVENTORIES

CURRENT
General purpose and maintenance stocks at cost.............        0           3,559,857
Less: inventory diminution.................................        0                   0
                                                            -------------- --------------
                                                                   0           3,559,857
                                                            ============== ==============
NON-CURRENT
General purpose and maintenance stocks at cost.............        0          13,664,090
Less: inventory diminution.................................        0             487,975
                                                            -------------- --------------
                                                                   0          13,175,115
                                                            ============== ==============

-----------------------------------------------------------------------------------------
8 OTHER ASSETS

CURRENT
Prepayments................................................        0           1,146,368
Future income tax benefit (refer note 5.2).................        0             568,259
                                                            -------------- --------------
                                                                   0           1,714,627
                                                            ============== ==============
NON-CURRENT
Unamortised interest rate swap termination losses .........        0           4,827,954
Unamortised futures termination losses.....................        0             834,605
                                                            -------------- --------------
                                                                   0           5,662,559
                                                            ============== ==============

-----------------------------------------------------------------------------------------
9 INVESTMENTS

9.1 NON-CURRENT INVESTMENTS AT COST COMPRISE:
 Unlisted shares in associated companies...................        0                 100
                                                            -------------- --------------
                                                                   0                 100
                                                            ============== ==============
9.2 NON-CURRENT INVESTMENTS IN UNLISTED ASSOCIATED COMPANIES
    PowerWorks Pty. Ltd.
    PowerWorks Pty. Ltd.'s principal activity is to promote the
    electricity
    industry to the public
    Ownership interest.....................................        0%                 33%
    Investment carrying amount.............................        0                 100

F-143

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

                                                              30 JUNE 1997    30 JUNE 1996
                                                                    $               $
                                                             -------------- ---------------
The above investment comprised an interest in the ordinary
share capital of the associate.
The balance date of the associate is 30 June, and the
associate is incorporated in Australia.
There were no material post-balance day events or
dissimilar accounting policies.

-----------------------------------------------------------------------------------------
10 PROPERTY, PLANT AND EQUIPMENT
Land at cost................................................        0             1,588,736
                                                             -------------- ---------------
                                                                    0             1,588,736

Buildings at cost...........................................        0             8,237,289
Less: accumulated depreciation..............................        0               457,278
                                                             -------------- ---------------
                                                                    0             7,780,011

Plant and equipment at cost.................................        0         2,986,003,023
Less: accumulated depreciation..............................        0           136,300,056
                                                             -------------- ---------------
                                                                    0         2,849,702,967

Plant and equipment under lease at cost*....................        0           274,987,931
Less: accumulated amortisation..............................        0            12,314,861
                                                             -------------- ---------------
                                                                    0           262,673,070
                                                             -------------- ---------------

Mine development at cost....................................        0            38,841,697
Less: accumulated amortisation..............................        0             1,484,507
                                                             -------------- ---------------
                                                                    0            37,357,190

TOTAL PROPERTY, PLANT AND EQUIPMENT AT COST.................        0         3,309,658,676
TOTAL ACCUMULATED DEPRECIATION/AMORTISATION.................        0           150,556,702
                                                             -------------- ---------------
TOTAL WRITTEN DOWN AMOUNT...................................        0         3,159,101,974
                                                             ============== ===============

* At 30 June 1996 and until [the] 12 May 1997 the company recorded as an asset plant and equipment which was under lease to either the State Electricity Commission of Victoria or Generation Victoria. The plant was operated in accordance with licences approved by the lessor pending a formal novation of the arrangement. The company's interest in the leased plant was transferred to the purchasers of the business on 12 May 1997.

F-144

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

                                                                     30 JUNE 1997    30 JUNE 1996
                                                                          $                $
                                                                   --------------- ---------------
11 CREDITORS AND BORROWINGS
CURRENT
Trade creditors (refer note 24.6 for related party component) ....              0       35,137,803
Bank overdraft (refer note 15.1)..................................              0          620,133
Shareholder loan (interest free)..................................              0    1,917,491,710
Interest accrued (refer note 24.6 for related party component) ...              0       23,764,619
Dividend payable (refer note 24.6 for related party component) ...              0       61,686,000
Other loans (refer note 19).......................................              0           48,889
Other liabilities (refer note 24.6 for related party component
 and note 17.1 for Accrued Salaries and Wages)....................              0          869,322
                                                                   --------------- ---------------
                                                                                0    2,039,618,478
                                                                   =============== ===============
NON-CURRENT
Loans (refer note 19).............................................              0    1,057,832,534
                                                                   --------------- ---------------
                                                                                0    1,057,832,534
                                                                   =============== ===============

-----------------------------------------------------------------------------------------
12 PROVISIONS

CURRENT
Employee entitlements (refer note 17).............................              0        7,475,772
Site restoration--mine............................................              0          140,000
Redundancies (refer note 17)......................................              0        1,494,586
                                                                   --------------- ---------------
                                                                                0        9,110,358
                                                                   =============== ===============
NON-CURRENT
Employee entitlements (refer note 17).............................              0        5,926,654
Site restoration--power station...................................              0        3,734,339
Site restoration--mine............................................              0          968,000
Deferred income tax (refer note 5.2)..............................              0       90,688,128
                                                                   --------------- ---------------
                                                                                0      101,317,119
                                                                   =============== ===============

-----------------------------------------------------------------------------------------
13 SHARE CAPITAL

AUTHORISED CAPITAL:
500,000,000 Ordinary Shares of $1.00 each.........................    500,000,000      500,000,000
ISSUED AND PAID UP CAPITAL:
15 ordinary shares of $1.00 each, fully paid......................             15               15

-----------------------------------------------------------------------------------------
14 RETAINED EARNINGS

Balance at beginning of year......................................     50,618,229       50,617,937
Transfer from profit and loss.....................................    983,176,837      117,688,293
                                                                   --------------- ---------------
Total available for appropriation.................................  1,033,795,066      168,304,229
Interim dividend paid.............................................              0       56,000,000
Final dividend paid (1998 Payable)................................  1,033,795,066       61,686,000
                                                                   --------------- ---------------
BALANCE AT END OF YEAR ...........................................              0       50,618,229
                                                                   =============== ===============

F-145

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

15 STATEMENT OF CASH FLOWS

                                                          30 JUNE 1997    30 JUNE 1996
                                                               $               $
                                                        --------------- --------------
15.1 RECONCILIATION OF CASH

Cash at the end of the financial year as shown in the
Statement of Cash Flows is reconciled to the related items
in the Balance Sheet as follows:

CASH
 Cash on hand..........................................             15          7,800
 Short term deposits and securities ...................              0        650,000
                                                        --------------- --------------
                                                                    15        657,800
OVERDRAFT
 Bank overdraft .......................................              0       (620,133)
                                                        --------------- --------------
                                                                     0       (620,133)
                                                        --------------- --------------
                                                                    15         37,667
                                                        =============== ==============
15.2 RECONCILIATION OF NET CASH FLOWS FROM OPERATING
     ACTIVITIES WITH OPERATING PROFIT AFTER INCOME TAX

Operating profit after income tax .....................     30,619,744    117,686,293
                                                        --------------- --------------
NON-CASH REVENUES AND EXPENSES, AND REVENUES AND
 EXPENSES ASSOCIATED WITH FINANCING OR INVESTING
 ACTIVITIES:
Depreciation and amortisation expense .................     91,667,166    106,274,931
Income tax expense on operating profit ................              0     67,547,498
Income tax expense on extraordinary item ..............   (383,195,543)             0
Interest revenue received .............................     (3,057,422)    (1,845,183)
Finance charges .......................................    181,865,292    126,710,973
Dividend revenue received .............................              0       (127,400)
Loss/(profit) on sold and scrapped non-current assets          947,326        (50,803)
                                                        --------------- --------------
                                                          (111,773,181)   298,510,016
ADJUST FOR MOVEMENTS IN ASSETS AND LIABILITIES
Decrease in operating expenditure accruals ............    (16,467,837)   (30,126,579)
Decrease in deferred income tax .......................    (90,688,126)             0
Increase/(decrease) in provisions .....................      1,581,423     (4,693,920)
Increase/(decrease) in trust funds and deposits  ......         40,956       (711,010)
Decrease in future income tax benefit .................        568,259              0
Decrease in accounts receivable/accrued revenue .......     14,356,026     28,954,710
Increase in prepayments ...............................     (7,637,788)      (136,169)
Decrease/(increase) in inventory ......................        106,709       (227,148)
                                                        --------------- --------------
                                                           (98,140,378)    (6,940,116)
                                                        --------------- --------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES  ..   (179,393,815)   409,256,193
                                                        --------------- --------------

F-146

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

15.3 SALE OF BUSINESS

On 12 May 1997, the Company sold all of its business operations. Details of the sale are as follows:

                                                      30 JUNE 1997    30 JUNE 1996
                                                           $               $
                                                    --------------- --------------
PROCEEDS FROM SALE OF THE BUSINESS
Cash ..............................................  4,484,928,944             0
                                                    --------------- --------------
                                                     4,484,928,944             0
                                                    --------------- --------------
BOOK VALUE OF NET ASSETS SOLD
Cash ..............................................     22,412,523             0
Receivables .......................................     60,261,829             0
Inventories .......................................     16,586,135             0
Other assets ......................................      8,215,997             0
Property, plant and equipment .....................  3,083,386,814             0
Creditors and borrowings ..........................    (21,034,475)            0
Provisions ........................................    (20,752,516)            0
                                                    --------------- --------------
                                                     3,149,076,308             0
                                                    --------------- --------------
PROFIT ON SALE OF BUSINESS (REFER NOTE 4)  ........  1,335,852,636             0
                                                    --------------- --------------
16 EXPENDITURE COMMITMENTS

16.1 CAPITAL EXPENDITURE COMMITMENTS

Outstanding contract commitments for capital expenditure
contracted for at balance date but not provided for comprises
the following:
Payable not later than one year ...................              0       946,000
                                                    --------------- --------------
                                                                 0       946,000
                                                    --------------- --------------
16.2 NON-CAPITAL EXPENDITURE COMMITMENTS

Outstanding contract commitments for non-capital expenditure
contracted for at balance date but provided for comprises
the following:

Payable not later than one year ...................              0     6,524,000
Payable greater than one and less than two years  .              0     1,566,000
                                                    --------------- --------------
                                                                 0     8,090,000
                                                    --------------- --------------
16.3 LEASE EXPENDITURE COMMITMENTS

Outstanding operating lease (non-cancellable) commitments
at balance date but not provided for comprises the following:

Payable not later than one year ...................              0       138,000
Payable greater than one and less than two years  .              0       145,000
Payable greater than two and less than five years                0       169,000
                                                    --------------- --------------
                                                                 0       452,000
                                                    --------------- --------------

F-147

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

16.4 ASSET SALE OBLIGATIONS

The buyers of the company's business were given certain warranties and indemnities that may result in part of the sale price being refunded. The company has been indemnified against these obligations by the State Electricity Commission of Victoria for the purpose of ensuring that it did not pay, and is not perceived to pay, a dividend out of its capital. The indemnity shall in no way limit the company's rights against the Buyers pursuant to the Asset Sale Agreement.

F-148

QUIETLIFE LIMITED
ACN 065 381 240

(formerly Loy Yang Power Ltd. name changed 13 May 1997)

                                                                     30 JUNE 1997    30 JUNE 1996
                                                                           $              $
                                                                    -------------- --------------
17 EMPLOYEE ENTITLEMENTS
17.1 AGGREGATE EMPLOYEE ENTITLEMENT

Current
Accrued Wages & Salaries (refer note 11) ..........................        0             185,083
Provision Employee Entitlements (refer note 12) ...................        0           7,475,772
Provision Redundancies (refer note 12) ............................        0           1,494,586

Non current
Provision Employee Entitlements (refer note 12) ...................        0           5,926,654
                                                                    -------------- --------------
                                                                           0          15,082,085
                                                                    -------------- --------------
Accrued Wages and salaries ........................................        0             185,083
Recreation leave ..................................................        0           6,662,680
Long service leave ................................................        0           6,739,746
Redundancies ......................................................        0           1,494,586
                                                                    -------------- --------------
                                                                           0          15,082,095
                                                                    -------------- --------------
The amounts for long service leave were measured at their present
values. The following assumptions were adopted in measuring the
present values of the entitlements which were not expected to be
paid or settled within 12 months of balance date.

Long Service Leave:
Weighted average rates of increase in annual employee entitlements
 to settlement of the liabilities .................................        0                 2.9%
Weighted average discount rates ...................................        0                 8.7%
Weighted average terms to settlement of the liabilities  ..........        0             11 Years

17.2 SUPERANNUATION FUND
All permanent and directly hired casual employees of the company
were entitled to benefits on termination from the Victorian
Electricity Industry Superannuation Fund. All casual and permanent
employees engaged after 3 October 1994 were members of an
accumulation fund. Division D or other external accumulation
funds. All other permanent employees were members of Division B or
C of the Fund which provided defined benefits in the form of
pensions (Division B) or lump sums (Division C).

Both defined benefit schemes are closed to new members. The
company contributed to the Fund at the rate of 9.75%.

The effective date of the most recent detailed valuation of the
Fund was 30 June 1996. The review was undertaken by William M.
Mercer Pty. Ltd. Based on that assessment, the situation for the
company as at 30 June 1996 was:

Present value of employees accured benefits .......................        0          54,100,000#

                                     F-149

                              QUIETLIFE LIMITED
                               ACN 065 381 240

           (formerly Loy Yang Power Ltd. name changed 13 May 1997)

                                                                     30 JUNE 1997    30 JUNE 1996
                                                                           $              $
                                                                    -------------- --------------
Net market value of assets held by the fund to meet future benefit
payments ..........................................................            0      54,600,000#

Excess/(deficit) of present value of employees' benefits over
assets held to meet future benefit payments .......................            0         500,000#

Vested benefits ...................................................            0      49,300,000#

The present value of employees' accrued benefits is equal to the
past membership liability calculated in accordance with Australian
Accounting Standard AAS25 "Financial Reporting by Superannuation
Plans".

(Vested benefits are those benefits which would have been paid on
voluntary termination from the Fund.)

The Company's obligation in respect of superannuation were
transferred on 12 May 1997 to the purchasers of the business.

Employer contributions to the fund ................................    1,910,364       2,697,272

Additional contributions to the fund to compensate for differences
between the resignation and retrenchment benefit, in relation to
voluntary retrenchments. ..........................................      244,964       1,228,000

#Note: Asset and benefit figures were unaudited at the time of
 signing the 1995/96 report. The last full audit was conducted at
 30 June 1995.

18 TREASURY

18.1 DERIVATIVES

The company's derivative products were dealt through Treasury
Corporation of Victoria (TCV). The only derivative products
outstanding as at 30 June 1996 were Interest Rate Swaps. There
were no derivatives outstanding at 30 June 1997.

INTEREST RATE SWAPS

Under these swaps, the company agreed with the counterparty to
exchange, at specified intervals, the difference between the
fixed-rate and floating-rate interest amounts calculated by
reference to an agreed notional amount. The notional principal
amounts were not exchanged by the parties.

The maturity profile of these swaps in notional principal terms
 is:
  Later than two years and not later than five years  .............            0      25,000,000
  Later than five years ...........................................            0     195,000,000
                                                                    -------------- --------------
                                                                               0     220,000,000
                                                                    -------------- --------------

                                     F-150

                              QUIETLIFE LIMITED
                               ACN 065 381 240

           (formerly Loy Yang Power Ltd. name changed 13 May 1997)

                                                                     30 JUNE 1997    30 JUNE 1996
                                                                           $              $
                                                                    -------------- --------------
The following table indicates the type of swaps held by the
company and their weighted average interest rates.

Pay-fixed swaps--notional principal amount ........................        0         220,000,000
Average pay rate--specific cost ...................................        0                12.6%
Average receive rate ..............................................        0                 7.6%

F-151

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

                                                              30 JUNE 1997    30 JUNE 1996
                                                                    $               $
                                                             -------------- ---------------
19  LOANS (REFER NOTE 24.6)
19.1 LOAN COMPONENTS
CURRENT LOANS (EXCLUDING SHAREHOLDER LOAN)
Premium/(discount) on loans.................................          0                   0
Fixed interest loans........................................          0              48,889
Fixed interest bonds........................................          0                   0
                                                             -------------- ---------------
                                                                      0              48,889
NON-CURRENT LOANS
Premium/(discount) on loans.................................          0          38,899,024
Floating rate notes.........................................          0         249,745,325
Fixed interest bonds........................................          0         626,695,000
Capital indexed bonds.......................................          0         142,428,804
Fixed interest loans........................................          0              64,381
                                                             -------------- ---------------
                                                                      0       1,057,832,534
                                                             -------------- ---------------
                                                                      0       1,057,881,423
                                                             ============== ===============
Liabilities in years of maturity, at face value are:
Not later than one year.....................................          0              48,889
Later than one year and not later than two years ...........          0         353,784,325
Later than two years and not later than five years .........          0         327,721,000
Later than five years.......................................          0         337,429,000
                                                             -------------- ---------------
                                                                      0       1,018,983,214
Plus unamortised adjustments to face value (refer note
 19.2)......................................................          0          38,899,024
                                                             -------------- ---------------
                                                                      0       1,057,882,238
                                                             -------------- ---------------
19.2 ADJUSTMENTS TO FACE VALUE OF LOANS

Current (discount)/premium..................................          0                   0
Non-Current (discount)/premium..............................          0          38,899,024
                                                             -------------- ---------------
                                                                      0          38,899,024
                                                             -------------- ---------------

-------------------------------------------------------------------------------------------

20 AUDITORS' REMUNERATION

Amounts received, or due and receivable, by the
Auditor-General for auditing the financial statements;
Total amount payable for annual audit fee...................     51,000              52,000

F-152

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

                                                                      30 JUNE 1997      30 JUNE 1996
                                                                            $                $
                                                                    ---------------- ----------------
21 DIRECTORS' REMUNERATION

Amounts paid, or due and payable to the directors of the company ..      137,203          161,500

The number of directors of the company whose annual remuneration
(including superannuation contributions, falls within the
following bands:

$ BAND LEVELS                                                           DIRECTORS        DIRECTORS
-------------                                                       ---------------- -----------------
     $0 -$10,000...................................................         3                0
$20,000 -$29,999...................................................         3                3
$30,000 -$59,999...................................................         1                1

During the year period ended 9 May 1997 the company paid premiums
for the indemnification and insurance of all directors and
officers to the full extent permitted by Corporations Law.

------------------------------------------------------------------------------------------------------
22 EXECUTIVES' REMUNERATION

The number of executives whose remuneration falls within the
following bands is set out below:

$ BAND LEVELS                                                          EXECUTIVES        EXECUTIVES
------------------------------------------------------------------  ---------------- ----------------
$100,000 -$109,999.................................................             1               0
$110,000 -$119,999.................................................             0               2
$120,000 -$129,999.................................................             0               1
$130,000 -$139,999.................................................             1               3
$140,000 -$149,999.................................................             1               0
$150,000 -$159,999.................................................             1               0
$160,000 -$169,999.................................................             1               0
$170,000 -$179,999.................................................             0               0
$190,000 -$199,999.................................................             2               0
$210,000 -$219,999.................................................             0               1
$280,000 -$289,999.................................................             1               0

Total remuneration paid, or due and payable by the company or
related entities by executive officers of the company whose
remuneration exceeds $100,000......................................     1,386,261         974,040

-----------------------------------------------------------------------------------------------------

23 SEGMENTS

The company operated entirely in Australia in the production and
sale of electricity and coal.

F-153

                              QUIET LIFE LIMITED
                               ACN 065 381 240
           (formerly Loy Yang Power Ltd, name changed 13 May 1997)

                                 30 JUNE 1997      30 JUNE 1996
                                      $                $
                              ---------------- ----------------


24   RELATED PARTY DISCLOSURES

24.1 DIRECTORS OF QUIET LIFE LTD. COMMENCEMENT RESIGNATION

DIRECTORS OF QUIET LIFE LTD. DURING THE FINANCIAL YEAR WERE:

Mr. C. Little..........      30 January 1995     13 June 1997
Mr. D. Swan............      30 January 1995       9 May 1997
Mr. J. C. Richards ....      30 January 1995       9 May 1997
Mr. J. S. Grigg........           1 May 1995       9 May 1997
Mr. G. Brooke..........           9 May 1997        --
Mr. G. J. Greaves......           9 May 1997        --
Mr. H. De Jong.........         13 June 1997        --

All directors are non executive.

24.2 TRANSACTIONS WITH DIRECTOR-RELATED ENTITIES

There were no transactions with director-related entities other than transactions on normal commercial terms with the SECV and Department of Treasury and Finance (refer Note 24.4 for related party transactions).

24.3 RESPONSIBLE PERSON AND RELATED PARTIES

The company is a wholly owned subsidiary of the State Electricity Commission of Victoria; an entity which is 100% controlled by the Victorian Government. Statutory Corporations and any other corporate entities owned by the Victorian State government are related parties.

24.4 RELATED PARTY TRANSACTION CATEGORIES

The following types of related party transactions were transacted during the year, on normal commercial terms:

Electricity transmission costs
Electricity pool costs
Council rates
Dividends
Auditing services
Brown Coal Royalties
Technical services
Payroll tax
Briquette purchases
Electricity sales revenue
Coal sales revenue
Water purchases and waste water disposals

F-154

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

Land Tax
Land leases
Provision of loan facilities
Gas purchases
Superannuation payments
Victorian equivalent income tax
Vehicle registration charges

In addition there was an interest free loan from the shareholder (Note 11).

24.5 OPERATING PROFIT AND LOSS TRANSACTIONS WITH RELATED PARTIES

Interest revenue...................................     3,057,422        1,163,621
Interest expense...................................   181,865,292      126,710,973
Dividend Revenue...................................            --          127,400

24.6 RECEIVABLES AND PAYABLES AT BALANCE DATE

AGGREGATE RELATED PARTY RECEIVABLES AT BALANCE DATE

Current..........................................................        0             57,507,840
Non-current .....................................................        0              1,566,127
                                                                   --------------- ---------------
                                                                         0             59,073,967
                                                                   =============== ===============

AGGREGATE RELATED PARTY PAYABLES AT BALANCE DATE

Current..........................................................        0          1,994,184,280
Non-current......................................................        0          1,058,296,080
                                                                  --------------- ---------------
                                                                         0          3,052,480,360
                                                                  =============== ===============

-------------------------------------------------------------------------------------------------

25.0 INTERESTS HELD

There were no interests held in any related party other than those disclosed as investments in Note 9 (1996 only).

25.1 ANNUAL FINANCIAL STATEMENT CONSOLIDATION ELIMINATION ENTRIES

During the 1996/97 financial year, transactions were undertaken with other State Government controlled entities, giving rise to the need for elimination entries in relation to resultant account balances.

F-155

QUIET LIFE LIMITED
ACN 065 381 240
(formerly Loy Yang Power Ltd, name changed 13 May 1997)

The aggregate eliminations included within the consolidation worksheets required to be prepared for input to the State's Annual Financial Statements are as follows:

                                                                     INTER            INTRA
                                                                --------------- ---------------
Assets.........................................................              0          0
Liabilities....................................................              0          0
Revenues.......................................................     77,830,616          0
Expenses.......................................................    589,378,744          0
Dividends Paid.................................................  1,095,481,066          0
                                                                --------------- ---------------
The preparation of prior period comparative information has
not been practicable or relevant for this financial year.

F-156

AUDITOR-GENERAL'S REPORT

AUDIT SCOPE

The accompanying financial statements of Quiet Life Limited (formerly Loy Yang Power Limited) for the year ended 30 June 1997, comprising a profit and loss statement, balance sheet, statement of cash flows and notes to the financial statements, have been audited. The company's directors are responsible for the preparation and presentation of the financial statements and the information they contain. An independent audit of these financial statements has been carried out in order to express an opinion on them to the members of the company as required by the Corporations Law and Audit Act 1994.

The audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial statements are free of material misstatement. The audit procedures included an examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with the basis on which the accounts have been prepared, namely applicable Accounting Standards, other mandatory professional reporting requirements and comply with the Corporations Law, so as to present a view which is consistent with my understanding of the company's financial position and the results of its operations and its cash flows.

The audit opinion expressed on the financial statements has been formed on the above basis.

AUDIT OPINION

In my opinion, the financial statements of Quiet Life Limited (formerly Loy Yang Power Limited) are properly drawn up:

(a) so as to give a true and fair view of:

(i) the company's state of affairs as at 30 June 1997 and of its profit and cash flows for the financial year ended on that date; and

(ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of the Corporations Law to be dealt with in the financial statements;

(b) in accordance with the Corporations Law; and

(c) in accordance with applicable Accounting Standards and other mandatory professional reporting requirements.

                                          /s/ C.A. BARAGWANATH
                                          -----------------------------------
                                            C.A. BARAGWANATH
                                            Auditor-General

MELBOURNE
29/8/1997

F-157

LOY YANG POWER ANNUAL REPORT 1995/96

PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 30 JUNE 1996

                                                       30 JUNE 1996   30 JUNE 1995
                                              NOTES       $'000           $'000
                                             ------- --------------  --------------
OPERATING REVENUE...........................     2       574,009         244,275
                                                     --------------  --------------
Operating Profit before Income Tax..........     3       185,233          79,579
Income Tax Attributable to Operating
 Profit.....................................     4        67,547          29,861
                                                     --------------  --------------
OPERATING PROFIT AFTER INCOME TAX...........             117,686          50,618
                                                     --------------  --------------
Retained Profits at beginning of year ......    13        50,618               0
Dividends Paid or Payable...................             117,686               0
                                                     --------------  --------------
Retained Profits at End of Year.............              50,618          50,618
                                                     --------------  --------------

This Profit and Loss Statement should be read in conjunction with the Notes to and forming part of the Financial Statements.

F-158

FINANCIAL STATEMENTS 1995/96

BALANCE SHEET AS AT 30 JUNE 1996

                                         30 JUNE 1996   30 JUNE 1995
                                NOTES       $'000           $'000
                               ------- --------------  --------------
CURRENT ASSETS
Cash..........................   14.1           658           1,015
Receivables...................      5        73,048         100,577
Inventories...................      6         3,560           4,043
Other assets..................      7         1,715           4,155
                                       --------------  --------------
TOTAL CURRENT ASSETS..........               78,981         109,790
NON-CURRENT ASSETS
Receivables...................      5         1,575           3,132
Inventories...................      6        13,176          20,101
Other assets..................      7         5,663               0
Investments...................      8             0             128
Property, plant and
 equipment....................      9     3,159,102       3,245,997
                                       --------------  --------------
TOTAL NON-CURRENT ASSETS .....            3,179,516       3,269,358
                                       --------------  --------------
TOTAL ASSETS..................            3,258,497       3,379,148
                                       --------------  --------------
CURRENT LIABILITIES
Creditors and borrowings .....     10     2,039,619       2,113,681
Provisions....................     11         9,110          15,060
                                       --------------  --------------
TOTAL CURRENT LIABILITIES ....            2,048,729       2,128,741

NON-CURRENT LIABILITIES
Creditors and borrowings .....     10     1,057,833       1,164,699
Provisions....................     11       101,317          35,090
                                       --------------  --------------
TOTAL NON-CURRENT
 LIABILITIES..................            1,159,150       1,199,789
                                       --------------  --------------
TOTAL LIABILITIES.............            3,207,879       3,328,530
                                       --------------  --------------
NET ASSETS....................               50,618          50,618
                                       --------------  --------------

EQUITY
Share capital.................     12             0               0
Retained earnings.............     13        50,618          50,618
                                       --------------  --------------
TOTAL EQUITY..................               50,618          50,618
                                       --------------  --------------

This Balance Sheet should be read in conjunction with the Notes to and forming part of the Financial Statements.

F-159

LOY YANG POWER ANNUAL REPORT 1995/96

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 1996

                                                                 30 JUNE 1996   30 JUNE 1995
                                                        NOTES       $'000           $'000
                                                       ------- --------------  --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers...............................              661,857        262,004
Payments to suppliers and employees...................             (252,601)       (98,270)
                                                               --------------  --------------
NET CASH FLOW FROM OPERATING ACTIVITIES ..............   14.2       409,256        163,734
                                                               --------------  --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire property, plant and equipment ....               (8,356)        (5,447)
Proceeds from sale of property, plant and equipment ..                   34            117
Proceeds from sale of investments.....................                  223              0
Dividends received....................................                  127              0
Net cash allocated....................................                    0           (629)
                                                               --------------  --------------
NET CASH FLOW USED IN INVESTING ACTIVITIES............               (7,972)        (5,959)
                                                               --------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest and other items of a similar nature
 received.............................................                1,907            832
Interest and other costs of finance paid..............             (115,063)       (70,817)
Hedging receipts associated with borrowings ..........               20,765         10,980
Hedging payments associated with borrowings ..........              (30,861)       (15,490)
Buyback of swaps......................................               (7,905)             0
Proceeds from borrowings..............................               86,056         49,706
Repayment of borrowings...............................              (36,221)       (47,170)
Buyback of borrowings.................................             (264,282)       (85,458)
Dividends paid........................................              (56,000)             0
                                                               --------------  --------------
NET CASH FLOW USED IN FINANCING ACTIVITIES............             (401,604)      (157,417)
                                                               --------------  --------------
NET INCREASE/(DECREASE) IN CASH HELD..................                 (320)           358
                                                               --------------  --------------
CASH AT BEGINNING OF YEAR.............................                  358              0
                                                               --------------  --------------
CASH AT END OF YEAR...................................   14.1            38            358
                                                               --------------  --------------

This Statement of Cash Flows should be read in conjunction with the Notes to and forming part of the Financial Statements.

F-160

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.1 BASIS OF ACCOUNTING

The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Law which include disclosures required by Schedule S and applicable Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with.

The report is prepared in accordance with the historical cost convention, except for certain assets which, as noted, are at valuation. The accounting policies are consistent with those of the previous year.

1.2 PRIOR PERIOD COMPARISONS

Loy Yang Power Ltd. was incorporated for the twelve months ended 30 June 1995, however the company did not commence trading in its principal activities until 1 February 1995 when substantially all the assets and liabilities of the business were vested in the company pursuant to an Allocation Statement made under the Electricity Industry (Further Amendment) Act 1994.

As a result, comparative profit and loss and cash flow figures reflect five months trading from 1 February 1995 to 30 June 1995.

Comparative information is reclassified where appropriate, to enhance comparability.

1.3 PROPERTY, PLANT AND EQUIPMENT

COST AND VALUATION

Property, plant and equipment are carried at cost.

DEPRECIATION AND AMORTISATION

Depreciation or amortisation is provided for all fixed assets other than freehold land. The majority of assets are depreciated using the straight line method to write off the cost of assets over their expected service lives. The expenditure associated with mine development costs is amortised on a units of production basis. Depreciation or amortisation for all assets commences on the first day of the month closest to the in-service date.

Changes in depreciation rates and/or depreciable amounts are dealt with on a prospective basis.

1.4 RECOVERABLE AMOUNTS

Non-current assets values do not exceed their recoverable amount. Where carrying values exceed their recoverable amount, assets are revalued downwards to the lower value. The expected net cash flows included in determining the recoverable amounts of non-current assets have been discounted to their present value using a market determined risk adjusted discount rate.

1.5 INVENTORIES

Costs are assigned to inventories using the average cost method. Inventories are valued at lower of cost and net realisable value. As estimate of items which are likely to be utilised in the next twelve months is classified as current.

F-161

LOY YANG POWER ANNUAL REPORT 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.6 ACCOUNTING FOR INCOME TAX

Loy Yang Power Ltd. is subject to the Victorian State Government Tax Equivalent System pursuant to Section 88 of the State Owned Enterprises Act 1992.

Loy Yang Power Ltd. has adopted the liability method of tax-effect accounting whereby income tax is regarded as an expense and is managed with the accounting profit after allowing for permanent differences.

To the extent that timing differences occur between the time items are recognised in the accounts and when these are taken into account in determining taxable income, the net related taxation benefit or liability is disclosed as a future income tax benefit or a provision for deferred income tax. These account balances are calculated with reference to the rates of income tax which are expected to apply when those timing differences reverse.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. The future income tax benefit arising from tax losses is only carried forward as an asset when the benefit is virtually certain of being realised.

1.7 DOUBTFUL DEBTS

The value of estimated doubtful debts is reviewed annually on an individual debtor basis, and appropriate provision is made where necessary.

1.8 NEGOTIABLE SECURITIES

Where interest is paid in advance on negotiable securities the interest is recognised as an asset and progressively charged to the Profit and Loss Statement over the applicable interest period. Interest payable in arrears is progressively charged to the Profit and Loss Statement over the applicable interest period and recognised as a liability.

Discounts and premiums on face value on the issue of negotiable securities are recognised as variations of the liability to which they relate. The variations are amortised over the term of the issue, using the effective yield method.

Changes in the capital value of the outstanding liability on index linked securities are recognised as variations in the book value of the liability and are charged to the Profit and Loss Statement.

Any gains or losses arising from the buyback of negotiable securities issued by Loy Yang Power Ltd. are charged to the Profit and Loss Statement as incurred or earned.

1.9 DERIVATIVES

Loy Yang Power Ltd. is exposed to changes in interest rates and commodity prices from its activities. It is Loy Yang Power Ltd.'s policy to use derivative financial instruments to hedge these risks. Loy Yang Power Ltd. does not enter, hold or issue derivative financial instruments for reading or speculative purposes.

Derivative financial instruments include forward rate agreements, futures, options, interest rate swaps and their Treasury Corporation of Victoria equivalents.

Gains and losses arising from the early termination of general hedges are amortised over the period of the hedge. The exception to this is bond futures where gains and losses are amortised over the average term to maturity of existing fixed debt.

Gains and losses arising from the early termination of specific hedges are amortised over the shorter of the period of the borrowing being hedged or the period of the hedge.

F-162

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.10 EMPLOYEE ENTITLEMENTS

WAGES, SALARIES AND LEAVE

Provision is made for employee entitlement benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave and associated oncosts.

Liabilities arising in respect of wages and salaries, annual leave and any other employee entitlements expected to be settled within twelve months of the reporting date are measured at their nominal amounts. All other employee entitlement liabilities are measured at the present value of their estimated future cash outflows to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the interest rates attaching to Federal Government Guaranteed Securities which have terms to maturity approximating the terms of the related liability are used.

Employee entitlement expenses are revenues arising in respect of the following categories:

o wages and salaries, non-monetary benefits, annual leave, long service leave, sick leave and other leave entitlements; and

o other types of employee entitlements;

are charged to the Profit and Loss Statement on a net basis in their respective categories.

SUPERANNUATION

Loy Yang Power Ltd. contributes towards the Victorian Electricity Industry (VEI) Superannuation Fund on behalf of its employees. These contributions are charged to the Profit and Loss Statement as the liability arises (refer note 17.2).

1.11 PROVISION FOR SITE RESTORATION: POWER STATION AND MINE

Recognition of a liability for the cost of restoring the power station and mine sites to an acceptable environmental standard at the end of their useful lives has been provided for in these accounts (refer notes 11 and 16). This liability includes costs of reclamation, plant closure and dismantling, and waste site closure.

The liability is recognised on a gradual basis and is calculated by discounting the estimated future site restoration costs to their net present value. Annual increments to the liability for each site are charged to the Profit and Loss Statement over the estimated remaining life of each site.

Expected future payments for site restoration are discounted using interest rates attaching, as at the reporting date, to Federal Government Guaranteed Securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

Cost estimates are based on the assumption that current legal requirements and/or technologies will not change significantly over the life of the power station and mine sites.

Changes in estimates are dealt with on a prospective basis.

1.12 CASH

For the purpose of the Statement of Cash Flows, cash includes cash on hand and in banks, investments in money market instruments and short-term deposits and securities, net of outstanding overdrafts.

F-163

LOY YANG POWER ANNUAL REPORT 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                            30 JUNE 1996    30 JUNE 1995
                                                                $'000          $'000
                                                           -------------- --------------
2 OPERATING REVENUE COMPRISES
Sales revenue.............................................     557,500        238,468
Interest revenue (refer note 25.5) .......................       1,845            637
Proceeds from the sale of non-current assets..............         587            117
Dividend revenue..........................................         127              0
Other revenue.............................................      13,950          5,053
                                                           -------------- --------------
                                                               574,009        244,275
                                                           ============== ==============
-----------------------------------------------------------------------------------------

3 OPERATING PROFIT

The operating profit before income tax is arrived at
after charging/(crediting) the following items:

DEPRECIATION, AMORTISATION AND DIMINUTION

Plant and equipment.......................................      96,219         40,255

Development of mine (amortisation)........................       1,058            427

Leased plant and equipment (amortisation).................       8,678          3,637

Buildings.................................................         320            137

Diminution in value of inventories........................           0            727
                                                           -------------- --------------
TOTAL DEPRECIATION, AMORTISATION AND DIMINUTION ..........     106,275         45,183
                                                           ============== ==============
AMOUNTS SET ASIDE TO PROVISIONS

Bad and doubtful debts....................................           0              0

Employee entitlements.....................................       4,492          1,170

Site restoration--power station...........................         486            430

Site restoration--mine ...................................         247            356
                                                           -------------- --------------
TOTAL AMOUNT SET ASIDE TO PROVISIONS .....................       5,225          1,956
                                                           ============== ==============

INTEREST EXPENSE (REFER NOTE 25.5)........................     126,711         59,145

GOVERNMENT MINING ROYALTIES INCURRED......................       9,242          3,654

ENERGY CONSUMPTION LEVY...................................          30              7

SUPERANNUATION CONTRIBUTIONS..............................       2,697          1,194

RENTAL OPERATING LEASES...................................         419            233

PROFIT/(LOSS) ON SALE OF NON-CURRENT ASSETS...............          51            (16)

RESEARCH AND DEVELOPMENT EXPENDITURE......................         519              0

F-164

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                         30 JUNE 1996    30 JUNE 1995
                                                                             $'000          $'000
                                                                        -------------- --------------
4 INCOME TAX
4.1 INCOME TAX EXPENSE
The prima facie tax on operating profit differs from the income tax
provided in the accounts as follows:

Prima facie income tax expense calculated at 36% (1995: 33%) on the
operating profit.......................................................      66,684         26,261
Increase in income tax expense due to permanent differences
 Depreciation on buildings.............................................         448            281
 Tax on provisions not carried forward.................................         621            280
 Provisions for restoration--non-deductible ...........................         175            142
 Entertainment and other non-deductible items .........................          31            444

Decrease in income tax expense due to permanent differences
 Tax exempt income.....................................................        (293)             0
 Research and development concession...................................         (94)             0
 General investment allowance..........................................         (25)             0
 Depreciation on buildings.............................................           0           (328)

Add: Restatement of deferred tax balances due to change in income tax
rate...................................................................           0          1,881
                                                                        -------------- --------------
TOTAL INCOME TAX EXPENSE ATTRIBUTABLE TO OPERATING PROFIT  ............      67,547         28,961
                                                                        ============== ==============
Total income tax expense is made up of:
 Deferred income tax provision.........................................      85,298         51,107
 Less: future income tax benefit.......................................      17,751         22,146
                                                                        -------------- --------------
                                                                             67,547         28,961
                                                                        ============== ==============
4.2 ANALYSIS OF TAX BALANCES CARRIED FORWARD
CURRENT
Future income tax benefit, balance at end of year......................       1,019          3,505
Less: provision for deferred income tax, balance at end of year .......         450            360
                                                                        -------------- --------------
NET FUTURE INCOME TAX BENEFIT (REFER NOTE 7)...........................         569          3,145
                                                                        ============== ==============
NON-CURRENT
Provision for deferred income tax, balance at end of year .............     135,955         50,747
Less: future income tax benefit, balance at end of year................      45,267         25,030
                                                                        -------------- --------------
NET PROVISION FOR DEFERRED INCOME TAX (REFER NOTE 11) .................      90,688         25,717
                                                                        ============== ==============
The future income tax benefit will only be obtained if:
a)future assessable income is derived of a nature and of an amount
  sufficient to enable the benefit to be realised;
b)the conditions for deductibility imposed by tax legislation continue
  to be complied with; and
(c)no changes in tax legislation adversely affect Loy Yang Power Ltd.
   in realising the benefit.
------------------------------------------------------------------------------------------------------

5 RECEIVABLES
CURRENT
Trade debtors (refer note 25.6)........................................      69,684         97,843
Other debtors (refer note 25.6)........................................       3,364          2,734
                                                                        -------------- --------------
                                                                             73,048        100,577
                                                                        ============== ==============
NON-CURRENT
Trade debtors (refer note 25.6)........................................       1,575          3,132
Other debtors (refer note 25.6)........................................           0              0
                                                                        -------------- --------------
                                                                              1,575          3,132
                                                                        ============== ==============

F-165

LOY YANG POWER ANNUAL REPORT 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                        30 JUNE, 1996    30 JUNE, 1995
                                                                            $'000            $'000
                                                                       --------------- ---------------
6 INVENTORIES
CURRENT
General purpose and maintenance stocks at cost........................       3,560           4,043
Less: inventory diminution............................................           0               0
                                                                       --------------- ---------------
                                                                             3,560           4,043
                                                                       =============== ===============
NON-CURRENT
General purpose and maintenance stocks at cost........................      13,664          20,828
Less: inventory diminution............................................         488             727
                                                                       --------------- ---------------
                                                                            13,176          20,101
                                                                       --------------- ---------------
A review undertaken during the year identified 57.6 million of items
that should correctly be identified as depreciable spares. This
amount has been transferred to property, plant and equipment.
-------------------------------------------------------------------------------------------------------

7 OTHER ASSETS
Current
Prepayments...........................................................       1,146           1,010
Future income tax benefit (refer note 4.2)............................         569           3,145
                                                                       --------------- ---------------
                                                                             1,715           4,155
                                                                       --------------- ---------------
NON-CURRENT
Unamortized interest rate swap termination losses.....................       4,828               0
Unamortized futures termination losses................................         835               0
                                                                       --------------- ---------------
                                                                             5,663               0
                                                                       --------------- ---------------
-------------------------------------------------------------------------------------------------------

8 INVESTMENTS
8.1 NON-CURRENT INVESTMENTS AT COST COMPRISE:
Unlisted shares.......................................................           0             128
Unlisted shares in associated companies...............................           0               0
                                                                       --------------- ---------------
                                                                                 0             128
                                                                       --------------- ---------------
8.2 NON-CURRENT INVESTMENTS IN UNLISTED ASSOCIATED COMPANIES
PowerWorks Pty. Ltd. .................................................
PowerWorks Pty. Ltd's principal activity is to promote the
 electricity industry to the public
Ownership interest....................................................        33.3%           33.3%
Investment carrying amount............................................         0.1             0.1
The above investment is held by Loy Yang Power Ltd. and is comprised
of interest in the ordinary share capital of the associate.
 The balance date of the associate is 30 June, and the associate is
incorporated in Australia.
 There are no material post-balance day events or dissimilar
accounting policies.
 During the period, unlisted shares held at cost were sold for
$223,296

F-166

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                         30 JUNE 1996    30 JUNE 1995
                                                                             $'000          $'000
                                                                        -------------- --------------
9 PROPERTY, PLANT AND EQUIPMENT AT COST
Land at cost...........................................................        1,589          1,589
                                                                        -------------- --------------
                                                                               1,589          1,589
Buildings at cost                                                              8,237          8,237
Less: accumulated depreciation.........................................          457            137
                                                                        -------------- --------------
                                                                               7,780          8,100
Plant and equipment at cost............................................    2,986,003      2,966,792
Less: accumulated depreciation.........................................      136,300         40,250
                                                                        -------------- --------------
                                                                           2,849,703      2,926,542
Plant and equipment under lease at cost (refer note 15.3) .............      274,988        274,988
Less: accumulated amortisation.........................................       12,315          3,637
                                                                        -------------- --------------
                                                                             262,673        271,351
Mine development at cost...............................................       38,842         38,842
Less: accumulated amortisation.........................................        1,485            427
                                                                        -------------- --------------
                                                                              37,357         38,415
Total Fixed Assets at Cost.............................................    3,309,659      3,290,448
Total Accumulated Depreciation/Amortisation............................      150,557         44,451
                                                                        -------------- --------------
Total Written Down Amount..............................................    3,159,102      3,245,997
                                                                        -------------- --------------
------------------------------------------------------------------------------------------------------

10 CREDITORS AND BORROWINGS
CURRENT
Trade creditors (refer note 25.6)......................................       35,138         61,047
Bank overdraft (refer note 14.1).......................................          620            657
Shareholder loan*......................................................    1,917,492      1,917,492
Interest accrued (refer note 25.6).....................................       23,765         30,819
Dividend payable (refer note 25.6).....................................       61,686              0
Other loans (refer note 20)............................................           49        102,091
Other liabilities (refer note 25.6)....................................          869          1,580
                                                                        -------------- --------------
                                                                           2,039,619      2,113,681
                                                                        -------------- --------------
NON-CURRENT
Loans (refer note 20)..................................................    1,057,833      1,164,699
                                                                        -------------- --------------
                                                                           1,057,833      1,164,699
                                                                        -------------- --------------
There are no guarantees or securities over assets with respect to
borrowings.
*In accordance with the Electricity Industry (Further Amendment) Act
1994 section 153F and the Electricity Industry (Amendment) Act 1995
section 153W, the shareholder loan is an amount owing to the State
Electricity Commission of Victoria and, whilst the loan holds a legal
obligation, it holds no interest payable and no term is specified for
repayment. Loy Yang Power Ltd., however, will be making repayments
against the shareholder loan in 1996/97.

F-167

LOY YANG POWER ANNUAL REPORT 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                   30 JUNE 1996    30 JUNE 1995
                                                       $'000          $'000
                                                  -------------- --------------
11 PROVISIONS
CURRENT
Employee entitlements (refer note 17)............       7,476          7,587
Uninsured losses.................................           0             75
Site restoration--mine (refer note 16)...........         140             60
Redundancies.....................................       1,494          7,338
                                                  -------------- --------------
                                                        9,110         15,060
                                                  -------------- --------------
NON-CURRENT
Employee entitlements (refer note 17)............       5,927          5,219
Site restoration--power station (refer note 16) .       3,734          3,248
Site restoration--mine (refer note 16)...........         968            906
Deferred income tax (refer note 4.2).............      90,688         25,717
                                                  -------------- --------------
                                                      101,317         35,090
                                                  -------------- --------------
--------------------------------------------------------------------------------

12 SHARE CAPITAL
AUTHORISED CAPITAL
500,000,000 Ordinary Shares of $1.00 each .......     500,000        500,000

ISSUED AND PAID UP CAPITAL
15 ordinary shares of $1.00 each, fully paid ....           0              0
(Balance not shown due to rounding)
--------------------------------------------------------------------------------

13 RETAINED EARNINGS
Balance at Beginning of Year.....................      50,618              0
Transfer from profit and loss....................     117,686         50,618
                                                  -------------- --------------
Total available for appropriation................     168,304         50,618
Interim dividend paid............................      56,000              0
Final dividend payable...........................      61,686              0
                                                  -------------- --------------
BALANCE AT END OF YEAR...........................      50,618         50,618
                                                  -------------- --------------

F-168

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                         30 JUNE 1996    30 JUNE 1995
                                                                             $'000          $'000
                                                                        -------------- --------------
14 STATEMENT OF CASH FLOWS
14.1 RECONCILIATION OF CASH
Cash at the end of the financial year as shown in the Statement of
Cash Flows is reconciled to the related items in the Balance Sheet as
follows:
CASH
Cash on hand...........................................................           8              8
Short term deposits and securities.....................................         650          1,007
                                                                        -------------- --------------
                                                                                658          1,015
OVERDRAFT
Bank overdraft.........................................................        (620)          (657)
                                                                        -------------- --------------
                                                                               (620)          (657)
                                                                        -------------- --------------
                                                                                 38            358
                                                                        -------------- --------------
Loy Yang Power Ltd. has a bank overdraft facility of $5 million (1995:
$10 million) arranged with the National Australia Bank. $4.4 million
of the facility is available at 30 June 1996.

14.2 RECONCILIATION OF NET CASH FLOWS FROM OPERATING ACTIVITIES

Operating profit after income tax......................................     117,686         50,618
                                                                        -------------- --------------
Non-cash revenues and expenses, and revenues and expenses associated
with financing or investing activities:
Depreciation and amortisation expense..................................     106,275         44,456
Income tax expense.....................................................      67,547         28,961
Interest revenue received..............................................      (1,845)          (912)
Finance charges........................................................     126,711         59,145
Dividend revenue received..............................................        (127)             0
Loss/(profit) on sold and scrapped non-current assets..................         (51)            16
                                                                        -------------- --------------
                                                                            298,510        131,666
ADJUST FOR MOVEMENTS IN ASSETS AND LIABILITIES
Increase/(decrease) in operating expenditure accruals..................     (30,126)        29,572
Increase/(decrease) in provisions......................................      (4,694)        (8,343)
Increase/(decrease) in trust funds and deposits........................        (711)         1,308
Decrease/(increase) in accounts receivable/accrued revenue ............      28,954        (41,753)
Decrease/(increase) in prepayments.....................................        (136)         1,474
Decrease/(increase) in inventory.......................................        (227)          (808)
                                                                        -------------- --------------
                                                                             (6,940)       (18,550)
                                                                        -------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES..............................     409,256        163,734
                                                                        -------------- --------------

F-169

LOY YANG POWER ANNUAL REPORT 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                   30 JUNE 1996    30 JUNE 1995
                                                                       $'000          $'000
                                                                  -------------- --------------
15 EXPENDITURE COMMITMENTS
15.1 CAPITAL EXPENDITURE COMMITMENTS
Outstanding contract commitments for capital expenditure
contracted for at balance date but not provided for comprises
the following:
Payable not later than one year..................................        946            596
                                                                  -------------- --------------
                                                                         946            596
                                                                  -------------- --------------
15.2 NON-CAPITAL EXPENDITURE COMMITMENTS
Outstanding contract commitments for non-capital expenditure
contracted for at balance date but not provided for comprises
the following:
Payable not later than one year..................................      6,524          3,938
Payable greater than one and less than two years.................      1,566              0
                                                                  -------------- --------------
                                                                       8,090          3,938
                                                                  -------------- --------------
15.3 LEASE EXPENDITURE COMMITMENTS
Outstanding operating lease (non-cancellable) commitments at
balance date but not provided for comprises the following:
Payable not later than one year..................................        138              0
Payable greater than one and less than two years.................        145              0
Payable greater than two and less than five years................        169              0
                                                                  -------------- --------------
                                                                         452              0
                                                                  -------------- --------------

Loy Yang Power Ltd. holds $263 million of plant disclosed as leased assets in note 9. The leases for these assets have not yet been novated to Loy Yang Power Ltd., and they remain with the current lessees being either the State Electricity Commission of Victoria or Generation Victoria. As a consequence Loy Yang Power Ltd. has no lease liability in respect to these leases. Loy Yang Power Ltd. and the State Electricity Commission of Victoria are progressing issues to achieve their formal novation to Loy Yang Power Ltd. The lessors have given their conditional consent for Loy Yang Power Ltd. to use the assets until such time as the leases are formally novated.

Included in the above is a lease relating to an individual asset valued at $67.7 million (written down value) which has an expiry date of 31 December 1999 unless not renewed by the lessor with effect from 30 June 1996. The renewal option is yet to be exercised. The lessor's consent for Loy Yang Power Ltd. to use the asset continues.


16 SITE RESTORATION COSTS--POWER STATION AND MINE Provision for site restoration of the power station and mine sites of $4.8 million has been provided for in the accounts as at 30 June 1996. The total net present value of estimated future cash outflows for site
restoration is $26 million.

F-170

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                    30 JUNE 1996    30 JUNE 1995
                                                                        $'000          $'000
                                                                   -------------- --------------
17 EMPLOYEE ENTITLEMENTS
17.1 AGGREGATE EMPLOYEE ENTITLEMENT
Wages and salaries................................................        185             219
Recreation leave..................................................      6,663           6,176
Long service leave................................................      6,740           6,630
Redundancies......................................................      1,494           7,338
                                                                   -------------- --------------
                                                                       15,082          20,363
                                                                   -------------- --------------
The amounts for long service leave are measured at their present
values. The following assumptions were adopted in measuring the
present values of the entitlements which are not expected to be
paid or settled within 12 months of balance date.

LONG SERVICE LEAVE
Weighted average rates of increase in annual employee
entitlements to settlement of the liabilities ....................      2.9%            4.0%
Weighted average discount rates ..................................      8.7%            8.8%
Weighted average terms to settlement of the liabilities  .........    11 years        11 years

17.2 SUPERANNUATION FUND All permanent and directly hired casual employees of Loy Yang Power Ltd. are entitled to benefits on termination from the Victorian Electricity Industry Superannuation Fund. All casual and permanent employees engaged after 3 October 1994 are members of an accumulation fund, Division D or other external accumulation funds. All other permanent employees are members of Division B or C of the Fund which provide defined benefits in the form of pensions (Division B) or lump sums (Division C). Both defined benefit schemes are closed to new members. During July 1995 the company contributed to the Fund at the rate of 10% for the defined benefit schemes, and thereafter at a rate of 9.75%. Contributions in excess of those required by the Superannuation Guarantee Charge Act 1992 (6%) are not legally enforceable.

F-171

LOY YANG POWER ANNUAL REPORT 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                         30 JUNE 1996    30 JUNE 1995
                                                                             $'000          $'000
                                                                        -------------- --------------
17 EMPLOYEE ENTITLEMENTS (CONTINUED)
17.2 SUPERANNUATION FUND (CONTINUED)
The effective date of the most recent detailed valuation of the Fund
was 30 June 1996. The review was undertaken by William M. Mercer Pty
Ltd. Based on that assessment, the situation for the company as at 30
June 1996 was:

Present value of employees accrued benefits............................     54,100*         45,800

Net market value of assets held by the fund to meet future benefit
payments...............................................................     54,600*         47,500
Excess/(deficit) of present value of employees' benefits over assets
held to meet future benefit payments...................................        500*          1,700

Vested benefits........................................................     49,300*         45,700

The present value of employees' accrued benefits is equal to the past
membership liability calculated in accordance with Australian
Accounting Standard AAS25 "Financial Reporting by Superannuation
Plans". (Vested benefits are those benefits which would have been paid
on voluntary termination from the Fund.)

Employer contributions to the fund.....................................      2,697           1,194
Additional contributions to the fund to compensate for differences
between the resignation and retrenchment benefit, in relation to
voluntary retrenchments................................................      1,228           1,140


*Note: Asset and benefit figures are unaudited at the time of signing this report. The last full audit was conducted at 30 June 1995.

18 CONTINGENT EVENTS
18.1 Loy Yang Power Ltd. was allocated its assets and liabilities from Generation Victoria through an allocation statement in accordance with the Electricity Industry (Further Amendment) Act 1994. Under section 153B of this Act, the allocation statement may be amended at any time at the direction of the Victorian Government Treasurer and relevant Minister.

18.2 Upon the disaggregation of the State Electricity Commission of Victoria (SECV) on 3 January 1994, Generation Victoria entered into a contract with the SECV to meet the SECV's obligations under its contracts for the supply of coal and infrastructure services to the Loy Yang B Joint Venture in consideration of receipt of all SECV's revenues under those contracts. Upon the disaggregation of Generation Victoria on 31 January 1995, Generation Victoria's rights and obligations were allocated to Loy Yang Power Ltd.

Under the contract Loy Yang Power Ltd. is directly liable to the SECV to use its "best endeavours", backed by an indemnity in favour of the SECV for performance of these obligations, subject only to force majeure relief. A failure by Loy Yang Power Ltd. to use its "best endeavours" may result in liabilities being imposed on Loy Yang Power Ltd. At the time of preparation of this report, Loy Yang Power Ltd. is not aware of any breaches of performance obligations on its part.

The SECV remains the contracting party under the contracts with the Loy Yang B Joint Venture.

F-172

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                         30 JUNE 1996    30 JUNE 1995
                                                                             $'000          $'000
                                                                        -------------- --------------
19 TREASURY
19.1 LOY YANG POWER LTD. DERIVATIVES
Loy Yang Power Ltd.'s derivative products are dealt through Treasury
Corporation of Victoria (TCV). The only derivative products
outstanding as at 30 June 1996 were Interest Rate Swaps.

INTEREST RATE SWAPS
Under these swaps, Loy Yang Power Ltd. agrees with the counterpart to
exchange, at specified intervals, the difference between the
fixed-rate and floating-rate interest amounts calculated by reference
to an agreed notional amount. The notional principal amounts are not
exchanged by the parties.

The maturity profile of these swaps in notional principal terms is:
 Later than two years and not later than five years....................      25,000         33,744
 Later than five years.................................................     195,000        245,000
                                                                        -------------- --------------
                                                                            220,000        278,744
                                                                        -------------- --------------
The following table indicates the type of swaps held by Loy Yang Power
Ltd. and their weighted average interest rates.
 Pay-fixed swaps: notional principal amount............................     220,000        278,744
 Average pay rate: Loy Yang Power Ltd. specific cost...................        12.6%          12.5%
 Average receive rate..................................................         7.6%           7.7%

Loy Yang Power Ltd.'s credit exposures on these swaps is nil as the
counterpart in each case is TCV.

VIC INTEREST RATE FORWARDS & VIC HOTSTOCK FORWARDS

The maturity profile in notional principal amount terms, of these
Interest Rate and Hotstock Forwards is:
 Not Later than one year...............................................           0         90,000
                                                                        -------------- --------------
                                                                                  0         90,000
                                                                        -------------- --------------

Both Vic Interest Rate Forwards and Vic Hotstock Forwards were created by TCV for use by their Participating Authorities following the State Treasurer's instructions that TCV Participating Authorities were to no longer deal in derivative products directly with the financial markets from 1 July 1995.

Vic Interest Rate Forwards are similar to Bill Futures except that there are no initial and variation margins to be paid by either counterpart. Vic Hotstock Forwards are similar to Bond Futures except the maturity dates are specific to TCV's physical hotstocks.

F-173

LOY YANG POWER ANNUAL REPORT 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                              30 JUNE 1996    30 JUNE 1995
                                                                  $'000          $'000
                                                             -------------- --------------
20 LOANS (refer note 25.6)

20.1 LOAN COMPONENTS

CURRENT LOANS

Premium/(discount) on loans.................................            0          1,782

Fixed interest loans........................................           49             88

Fixed interest bonds........................................            0        100,221
                                                             -------------- --------------
                                                                       49        102,091

NON-CURRENT LOANS

Premium/(discount) on loans ................................       38,899         39,055

Floating rate notes ........................................      249,745        334,746

Fixed interest bonds .......................................      626,695        654,895

Capital indexed bonds ......................................      142,429        135,890

Fixed interest loans .......................................           65            113
                                                             -------------- --------------
                                                                1,057,833      1,164,699
                                                             -------------- --------------
                                                                1,057,882      1,266,790
                                                             -------------- --------------

Liabilities in years of maturity, at face value are:

 Not later than one year....................................           49        100,309

 Later than one year and not later than two years ..........      353,784         21,249

 Later than two years and not later than five years  .......      327,721        813,505

 Later than five years......................................      337,429        290,890
                                                             -------------- --------------
                                                                1,018,983      1,225,953
                                                             -------------- --------------
Plus unamortised adjustments to face value (refer note
 20.2)......................................................       38,899         40,837
                                                             -------------- --------------
                                                                1,057,882      1,266,790
                                                             -------------- --------------

20.2 ADJUSTMENTS TO FACE VALUE OF LOANS

Current (discount)/premium..................................            0          1,782

Non-Current (discount)/premium..............................       38,899         39,055
                                                             -------------- --------------
                                                                   38,899         40,837
                                                             -------------- --------------

F-174

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                                30 JUNE 1996    30 JUNE 1995
                                                                                    $'000          $'000
                                                                               -------------- --------------
20 LOANS (CONTINUED)
20.3 SECURITY--LOANS
All loan funding for Loy Yang Power Ltd. is arranged via Treasury Corporation of
Victoria (TCV). Legal inability to the end investor for Loy Yang Power Ltd. loans
rests with TCV.
These loans are guaranteed by the State Government of Victoria. In return Loy Yang
Power Ltd. pays a financial accommodation levy to the State Government which increases
the cost of debt to reflect market rates, based on an assessment of credit risk.
For debt novated to TCV, back-to-back loans have been established between Loy Yang
Power Ltd. and TCV. Pursuant to Section 36D of the Treasury Corporation of Victoria
(Debt Centralisation) Act 1993, Loy Yang Power Ltd. will reimburse TCV for all
settlement amounts relating to these loans.
-------------------------------------------------------------------------------------------------------------

21 AUDITORS' REMUNERATION
Amounts received, or due and receivable, by the Auditor-General for auditing the
financial statements:
Total amount payable for annual audit fee ...................................         52             62
-------------------------------------------------------------------------------------------------------------

22 DIRECTORS' REMUNERATION
Amounts received, or due and receivable, by the directors of
Loy Yang Power Ltd. .........................................................        162             56
The number of directors of Loy Yang Power Ltd. whose annual remuneration (including
superannuation contributions) falls within the following bands:

 $ Band levels                                                                       Directors      Directors
---------------------------------------------------------------------------------  ------------- -------------
$30,000 -$39,999 ................................................................        3              3
$60,000 -$69,999 ................................................................        1              1
During the year Loy Yang Power Ltd. paid premiums for the indemnification and insurance
of all directors and officers of Loy Yang Power Ltd. to the full extent permitted by
Corporations Law.
The directors have applied ASC Class Order 95/741 in the disclosure of directors'
remuneration.
---------------------------------------------------------------------------------------------------------------

23 EXECUTIVES' REMUNERATION
The number of executives of Loy Yang Power Ltd. whose remuneration falls within the
following bands is set out below:

 $ BAND LEVELS                                                                    EXECUTIVES      EXECUTIVES
------------------------------------------------------------------------------  -------------- --------------
$100,000 -$109,999 ...........................................................          0              1
$110,000 -$119,999 ...........................................................          2              4
$120,000 -$129,999 ...........................................................          1              0
$130,000 -$139,999 ...........................................................          3              1
$200,000 -$209,999 ...........................................................          0              1
$210,000 -$219,999 ...........................................................          1              0

Total remuneration received, or due and receivable, from Loy Yang Power Ltd.
or related entities by executive officers of Loy Yang Power Ltd. whose
remuneration exceeds $100,000: ...............................................        974            890

1994/95 amounts represent annual equivalents.

1995/96 amounts represent 12 months actual.

F-175

LOY YANG POWER ANNUAL REPORT 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

24 SEGMENTS

Loy Yang Power Ltd. operated entirely in Australia in the production and sale of electricity and coal.


25 RELATED PARTY DISCLOSURES

25.1 DIRECTORS OF LOY YANG POWER LTD.

Directors of Loy Yang Power Ltd. during the financial year were:

Mr. C. Little
Mr. D. Swan
Mr. J. C. Richards
Mr. J. S. Grigg

All directors are non executive.

25.2 TRANSACTIONS WITH DIRECTOR-RELATED ENTITIES

There were no transactions with director-related entities.

25.3 WHOLLY OWNED GROUP

The wholly owned group comprises the ultimate holding entity of Loy Yang Power Ltd., the Victorian State Government, and therefore all Victorian State Government Departments, Statutory Corporations and any other corporate entities owned by the Victorian State Government are related parties.

25.4 RELATED PARTY TRANSACTION CATEGORIES

The following types of related party transactions were transacted during the year, on normal commercial terms:

Electricity purchases
Electricity transmission costs
Electricity pool costs
Council rates
Auditing services
Brown Coal Royalties
Technical services
Payroll tax
Briquette purchases
Electricity sales revenue
Coal sales revenue
Water purchases and waste water disposals Loans from shareholder
Land leases
Provision of loan facilities
Gas purchases
Superannuation payments

F-176

FINANCIAL STATEMENTS 1995/96

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED)

                                                                                30 JUNE 1996    30 JUNE 1995
                                                                                    $'000          $'000
                                                                               -------------- --------------
25 RELATED PARTY DISCLOSURES (continued)

25.5 OPERATING PROFIT AND LOSS TRANSACTIONS WITH RELATED PARTIES

Interest revenue..............................................................        1,164            371

Dividend revenue..............................................................          127              0

Interest expense .............................................................      126,711         58,707

25.6 RECEIVABLE AND PAYABLES AT BALANCE DATE

AGGREGATE RELATED PARTY RECEIVABLES AT BALANCE DATE

Current ......................................................................       57,508         99,469

Non-current...................................................................        1,566          3,132
                                                                               -------------- --------------
                                                                                     59,074        102,601
                                                                               -------------- --------------
AGGREGATE RELATED PARTY PAYABLES AT BALANCE DATE

Current ......................................................................    1,994,185      2,097,008

Non-current...................................................................    1,058,296      1,164,997
                                                                               -------------- --------------
                                                                                  3,052,481      3,262,005
                                                                               -------------- --------------
25.7 INTERESTS HELD

There are no interests held in any related party other than those disclosed
as investments in note 8.

F-177

LOY YANG POWER ANNUAL REPORT 1995/96

AUDITOR-GENERAL'S REPORT

AUDIT SCOPE

The accompanying financial statements of Loy Yang Power Limited for the year ended 30 June 1996, comprising a profit and loss statement, balance sheet, statement of cash flows and notes to the financial statements, have been audited. The company's directors are responsible for the preparation and presentation of the financial statements and the information they contain. An independent audit of these financial statements has been carried out in order to express an opinion on them to the manager of the company, as required by the Corporations Law and Audit Act of 1996.

The audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial statements are free of material misstatement. The audit procedures included an examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with the basis on which the accounts have been prepared, namely applicable Accounting Standards, other mandatory professional reporting requirements and comply with the Corporations Law, so as to present a view which is consistent with my understanding of the company's financial position and the results of its operations and its cash flows.

The audit opinion expressed in the financial statements has been formed on the above basis.

AUDIT OPINION

In my opinion, the financial statements of Loy Yang Power Limited are properly drawn up:

a) so as to give a true and fair view of:

i) the company's state of affairs as at 30 June 1996 and of its profit and cash flows for the financial year ended on that date; and

ii) the other matters required by Divisions 1, 4A and 4B of Part 3.6 of the Corporations Law to be dealt with in the financial statements,

b) in accordance with the Corporations Law, and

c) in accordance with applicable Accounting Standards and other mandatory professional reporting requirements.

/s/ C.A. Baragwanath
C.A. Baragwanath
Auditor-General

Melbourne, 29 August 1996

End of Audited Financial Statements

F-178

[ARTHUR ANDERSEN LETTERHEAD]

27 November 1997

NRG Energy Inc
1221 Nicollet Mall
Suite 700
Minneapolis MN 55403-2445
UNITED STATES OF AMERICA

Dear Sirs/Mesdames

LOY YANG POWER -- REPORT ON US GAAP RECONCILIATION AND PRIOR YEAR AUDIT WORKPAPERS

At your request, we have performed the agreed-upon procedures set out below with respect to Loy Yang Power Limited for the period 1 February 1995 to 30 June 1995, the financial year ended 30 June 1996, and the period from 1 July 1996 to 12 May 1997. These financial periods were covered by financial statements for the financial years ended 30 June 1995 and 30 June 1996 of Loy Yang Power Limited, and for the financial year ended 30 June 1997 for Quite Life Limited (formerly Loy Yang Power Limited). Each of these financial statements was subject to audit by the Victorian Auditor-General's Office.

The procedures performed were as follows:

o We audited the reconciliations of both the operating profit after tax for each of the financial periods listed above and shareholders equity as at 30 June 1995, 30 June 1996 and 12 May 1997, from Australian generally accepted accounting principles ("GAAP") to United States ("US") GAAP.

o We reviewed the workpapers of the Victorian Auditor-General's Office for the purpose of determining whether the audit procedures performed in support of the audit opinions on the financial statements as described above were in accordance with US generally accepted auditing standards ("GAAS").

The following statements are made as a result of the performance of these agreed-upon procedures.

AUDIT OF US GAAP RECONCILIATION

We have audited the reconciliation of operating profit after tax of Loy Yang Power Limited for the period from 1 February 1995 to 30 June 1995, the financial year ended 30 June 1996, and the period from 1 July 1996 to 12 May 1997, and of shareholders equity as at 30 June 1995, 30 June 1996 and 12 May 1997, from Australian GAAP to US GAAP, as set out in Schedule 1.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance of whether the US GAAP reconciliations are free of material misstatement. Our procedures included the examination of the audited financial statements for each of the financial period listed above of Loy Yang Power Limited in order to identify the application of accounting polices which would be inconsistent with US GAAP, and the examination of the US GAAP reconciliation including examination, on a test basis, of evidence supporting the amounts of the reconciling items. These procedures have been undertaken to form an opinion whether, in all material respects, the US GAAP reconciliations are presented fairly, and represent an amount of operating profit after tax and shareholders equity in accordance with US GAAP. The audit opinion expressed in this report has been formed on the above basis.

F-179

In our opinion, the US GAAP reconciliations of Loy Yang Power Limited are properly drawn up to give a true and fair view of:

o Operating profit after tax for the period from 1 February 1995 to 30 June 1995, the financial year ended 30 June 1996, and the period from 1 July 1996 to 12 May 1997 under US GAAP; and

o Shareholders equity as at 30 June 1995, 30 June 1996 and 12 May 1997 under US GAAP.

REVIEW OF WORKPAPERS OF THE VICTORIAN AUDITOR-GENERAL'S OFFICE

We have reviewed the workpapers of the Victorian Auditor-General's Office in support of the audit opinions expressed by the Auditor-General on the financial statements for the financial years ended 30 June 1995 and 30 June 1996 for Loy Yang Power Limited, and for the financial year ended 30 June 1997 for Quite Life Limited (formerly Loy Yang Power Limited).

Our review has been conducted in accordance with Australian Auditing Standards in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the audits performed by the Auditor-General were not performed in accordance with US GAAS. Our procedures involved the examination of the workpapers of the Auditor-General for each of the financial statements listed above, and an assessment of whether the procedures documented therein would constitute an audit in accordance with US GAAS. As our review does not constitute an audit made in accordance with Australian auditing standards, we do not express an opinion on whether the audit has been performed in accordance with US GAAS.

Based on our review however, nothing has come to our attention that causes us to believe that the audits performed by the Auditor-General on the financial statements for the financial years ended 30 June 1995 and 30 June 1996 for Loy Yang Power Limited, and for the financial year ended 30 June 1997 for Quite Life Limited (formerly Loy Yang Power Limited), have not been performed in accordance with US GAAS.

This report has been prepared to assist you with your reporting obligations to the Securities Exchange Commission, and is not to be used for any purpose.

If you have any queries in relation to the above, please do not hesitate to contact either Mr Michael Perry (613) 9286 8734 or Mr Scott Ward (613) 9286 8194.

Yours faithfully

/s/ Arthur Andersen

Enc

F-180

SCHEDULE 1

LOY YANG POWER LIMITED

US GAAP Reconciliation

                                                                A$'000         A$'000          A$'000
                                                               PERIOD TO       YEAR TO       PERIOD TO
                                                              12 MAY 1997   30 JUNE 1996    30 JUNE 1995
                                                            -------------  -------------- --------------
Operating profit and extraordinary items under
 Australian GAAP ......................................         983,177        117,686         50,618
Less: Extraordinary gain on sale of business net of
 tax...................................................  7     (952,657)
Add: Loss on buy-back of debt securities ..............  7       82,576
                                                            -------------  -------------- --------------
Operating profit before sale of business under
 Australian GAAP.......................................         113,096        117,686         50,618
Add/(less): US GAAP adjustments
 Provision for redundancies ...........................  1         (650)        (3,740)        (5,053)
 Pension plan .........................................  2        1,472           (768)          (320)
 Tax rate change ......................................  3                      (1,881)         1,881
 Revaluation of property, plant & equipment  ..........  4        4,435          5,142          2,151
 Reclassification of spares ...........................  5                      (1,830)
 Shareholder loan .....................................  6      (81,022)       (76,311)       (32,838)
                                                            -------------  -------------- --------------
Operating profit before sale of business under US GAAP           57,331         38,298         16,439
                                                            =============  ============== ==============

                                                                A$'000         A$'000          A$'000
                                                                  AT             AT              AT
                                                              12 MAY 1997   30 JUNE 1996    30 JUNE 1995
                                                            -------------  -------------- --------------
Shareholders equity under Australian GAAP .............                0        50,618         50,618

Less: Extraordinary gain on sale of business net of
 tax...................................................  7      (952,657)
Add: Dividend paid on sale of business ................  7     1,033,795
Add: Loss on buy-back of debt securities ..............  7        82,576
                                                            -------------
Shareholders equity before sale of business under
 Australian GAAP ......................................          163,714        50,618         50,618
Add/(less): US GAAP adjustments
 Provision for redundancies ...........................  1        (9,443)       (8,793)        (5,053)
 Pension plan .........................................  2         1,792           320          1,088
 Dividend payable .....................................  8       (61,686)       61,686
 Tax rate change ......................................  3                                      1,881
 Revaluation of property, plant & equipment  ..........  4        11,728         7,293          2,151
 Reclassification of spares ...........................  5        (1,830)       (1,830)
 Shareholder loan .....................................  6                      61,022        137,334
                                                            -------------  -------------- --------------
Shareholders equity before sale of business under US
 GAAP .................................................          104,275       170,316        188,019
                                                            =============  ============== ==============

F-181

LOY YANG POWER LIMITED

US GAAP Reconciliation -- Footnotes

1. PROVISION FOR REDUNDANCIES

A provision for labour redundancies was recognised on the commercialisation of the company on 1 February 1995. In accordance with Australian GAAP, a provision for redundancies can be recognised where positions have been identified as being surplus to requirements, provided the circumstances are such that a constructive liability exists. Under US GAAP, a provision for redundancies can only be recognised in certain restricted circumstances. In particular, a provision redundancies involving voluntary severance offers is restricted to employees who have accepted those offers. Where the conditions for recognition of a redundancy provision do not exist, redundancy benefits paid are expensed as incurred.

2. CONTRIBUTIONS TO PENSION PLANS

Under Australian GAAP, contributions made to pension plans are expensed when due. Under US GAAP, the net periodic pension cost is charged against the profit and loss account in accordance with US Statement of Financial Accounting Standards No. 87.

3. RESTATEMENT OF DEFERRED TAX BALANCES FOR TAX RATE CHANGE

The company's deferred tax balances were restated at 30 June 1995 following the increase in the Australian company tax rate from 33% to 36% announced by the Australian Treasurer in Parliament on 19 May 1995. This increase was applicable to the company from 1 July 1995. Under Australian GAAP, such an announcement is normally acceptable as adequate evidence that the change will occur. Under US GAAP, a change of tax rate is not recognised until it has been enacted.

4. UPWARD REVALUATIONS OF PROPERTY, PLANT AND EQUIPMENT

Upward revaluations of property, plant and equipment to an amount above historical cost are permitted under Australian GAAP, which result in an increase in depreciation expense charged against the profit and loss account. Since US GAAP does not permit property, plant and equipment to be valued at an amount above historical cost, the company's depreciation expense has been restated to reflect historical cost depreciation.

5. CHANGE IN ACCOUNTING POLICY

Under Australian GAAP, a change in accounting policy which resulted in non-depreciable inventory being classified as depreciable property, plant and equipment was brought to account through prospective adjustment to depreciation charged to the profit and loss account. Under US GAAP, a charge to the profit and loss account made in the period of reclassification, representing a retrospective adjustment for depreciation charges incurred to date.

6. SHAREHOLDER LOAN

Under Australian GAAP, non-interest bearing debt is recognised as the amount of principal due for repayment, and no interest expense is charged to the profit and loss account. Under US GAAP, a notional interest cost is recognised through adjusting the carrying value of the debt to the present value of future obligations for principal repayments.

7. REVERSAL OF RESULT FROM SALE OF BUSINESS

The result from the sale of the business, including the final dividend to the State Electricity Commission of Victoria, and the loss incurred on the buy back of debt securities has been reversed in determining the results of operations and shareholder equity under Australian GAAP.

8. DIVIDEND PAYABLE

Under Australian GAAP, dividends are recognised in the period to which they relate and provision for dividends payable is made where a constructive liability exists for the payment of such dividends at year end. Under US GAAP, a dividends are recognised in the period in which they are declared and become legally payable.

F-182

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THIS OFFERING, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY NRG. THE INFORMATION CONTAINED HEREIN IS AS OF THE DATE HEREOF AND SUBJECT TO CHANGE, COMPLETION OR AMENDMENT WITHOUT NOTICE. DELIVERY OF THIS PROSPECTUS AT ANY TIME SHALL NOT CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF NRG SINCE THE DATE HEREOF OR THAT THE INFORMATION SET FORTH HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE NOTES OFFERED HEREBY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON.

TABLE OF CONTENTS

                                          PAGE
                                         ------
Summary.................................     3
Risk Factors............................    16
Use of Proceeds ........................    24
The Exchange Offer .....................    25
Capitalization .........................    32
Selected Consolidated Financial Data  ..    33
Selected Pro Forma Condensed Financial
 Data ..................................    36
Management's Discussion and Analysis of
 Financial Condition and Results of
 Operations ............................    38
Business ...............................    47
Regulation .............................    81
Management .............................    86
Ownership of Capital Stock .............    92
Certain Transactions ...................    93
Certain Indebtedness ...................    95
Description of Notes ...................    96
Certain Federal Income Tax
 Considerations ........................   106
Ratings ................................   108
Plan of Distribution ...................   109
Legal Matters ..........................   110
Experts ................................   110
Index to Consolidated Financial
 Statements.............................   F-1

UNTIL , ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.

$250,000,000

NRG ENERGY INC.

7 1/2% SENIOR NOTES
DUE 2007

[GRAPHIC OF NRG LOGO]

PROSPECTUS

DATED , 1997


PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is an estimate of all expenses in connection with the issuance and distribution of the securities being registered hereby:

SEC Registration Fee....  $ 75,758
Accountants' fees and
expenses................   100,000
Attorney's fees and
expenses................   150,000
Printing expenses.......   100,000
Miscellaneous...........    19,242
                         ---------
Total...................  $445,000
                         =========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As authorized by Section 145 of the General Corporation Law of the State of Delaware, each director and officer of NRG may be indemnified by NRG against expenses (including attorney's fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred in connection with the defense or settlement of any threatened, pending or completed legal proceedings in which he is involved by reason of the fact that he is or was a director or officer of NRG if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of NRG and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. However, if the legal proceeding is by or in the right of NRG, the director or officer may not be indemnified in respect of any claim, issue or matter as to which he shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to NRG unless a court determines otherwise.

In addition, Article VI of NRG's By-Laws provides that NRG shall indemnify and hold harmless, to the fullest extent permitted by applicable law, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding") by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of NRG or is or was serving at the request of NRG as a director, officer, employee or agent of another company or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person. NRG shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board of Directors of NRG.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On June 12, 1997, NRG sold $250,000,000 aggregate principal amount of its 7-1/2% Senior Notes Due 2007 (the "Old Notes") to Salomon Brothers Inc, ABN AMRO Chicago Corporation and Chase Securities Inc. (the "Initial Purchasers") for $250,000,000 less the aggregate discount to Initial Purchasers of $1,625,000. Such transaction was exempt from the registration requirements of the Securities Act of 1933, in reliance on Section 4(2) of the Securities Act on the basis that such transactions did not involve a public offering. In accordance with the agreement pursuant to which the Initial Purchasers purchased the Old Notes, such Initial Purchasers agreed to offer and sell the Old Notes only to "qualified institutional buyers" (as defined in Rule 144A under the Securities Act) and pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act.

On January 29, 1996, NRG sold $125,000,000 aggregate principal amount of its 7.625% Senior Notes Due 2006 (the "1996 Notes") to Bear, Stearns & Co. Inc. and Merrill Lynch & Co. (the "1996 Note Initial Purchasers") for $125,000,000 less the aggregate discount to 1996 Note Initial Purchasers of

II-1


$812,500. Such transaction was exempt from the registration requirements of the Securities Act of 1933, in reliance on Section 4(2) of the Securities Act on the basis that such transactions did not involve a public offering. In accordance with the agreement pursuant to which the 1996 Note Initial Purchasers purchased the 1996 Notes, such 1996 Note Initial Purchasers agreed to offer and sell the 1996 Notes only to "qualified institutional buyers" (as defined in Rule 144A under the Securities Act), a limited number of institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act.

II-2


ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 EXHIBIT
-----------
 3.1         Certificate of Incorporation of NRG.*
 3.2         By-Laws of NRG.*
 4.1         Indenture, dated as of June 1, 1997, between NRG and Norwest Bank Minnesota, National Association.*
 4.2         Form of Exchange Notes.*
 4.3         Registration Rights Agreement, dated as of June 12, 1997, by and among NRG, Salomon Brothers Inc, ABN AMRO
             Chicago Corporation and Chase Securities Inc.*
 5.1         Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP as to legality of the Exchange Notes to be
             issued by NRG.
 5.2         Opinion of James J. Bender, Vice President and General Counsel of NRG.
 10.1        Employment Contract, dated as of June 28, 1995, between NRG and David H. Peterson.*
 10.2        Indenture, dated as of January 31, 1996, between NRG and Norwest Bank Minnesota, National Association, as
             Trustee.*
 10.3        Revolving Credit Agreement, dated as of March 17, 1997, among NRG, the banks party thereto and ABN AMRO Bank,
             N.V. as Agent.*
 10.4        Note Agreement, dated August 20, 1993, among NRG Energy Center, Inc. and each of the purchasers named therein.*
 10.5        Master Shelf and Revolving Credit Agreement, dated August 20, 1993 among NRG Energy Center, Inc., The Prudential
             Insurance Company of America and each Prudential Affiliate which becomes party thereto.*
 10.6        Energy Agreement, dated February 12, 1988 between NRG (formerly known as Norenco Corporation) and Waldorf
             Corporation (the "Energy Agreement").*
 10.7        First Amendment to the Energy Agreement, dated August 27, 1993.*
 10.8        Second Amendment to the Energy Agreement, dated January 31, 1996.*
 10.9        Third Amendment to the Energy Agreement, dated August 25, 1997.*
 10.10       Construction, Acquisition and Term Loan Agreement, dated September 2, 1997 by and among NEO Landfill Gas,
             Inc., as Borrower, the lenders named on the signature pages, Credit Lyonnais New York Branch, as
             Construction/Acquisition Agent and Lyon Credit Corporation, as Term Agent.*
 10.11       Guaranty, dated September 12, 1997 by NRG in favor of Credit Lyonnais New York Branch as agent for the
             Construction/Acquisition Lenders.*
 10.12       Construction, Acquisition and Term Loan Agreement, dated September 2, 1997 by and among Minnesota Methane
             LLC, as Borrower, the lenders named on the signature pages, Credit Lyonnais New York Branch, as
             Construction/Acquisition Agent and Lyon Credit Corporation, as Term Agent.*
 10.13       Guaranty, dated September 12, 1997 by NRG in favor of Credit Lyonnais New York Branch as agent for the
             Construction/Acquisition Lenders.*
 10.14       Non Operating Interest Acquisition Agreement, dated as of September 12, 1997, by and among NRG and NEO Corporation.*
 12.1        Computation of ratio of earnings to fixed charges.
 21          Subsidiaries of NRG.*
 23.1        Consent of Price Waterhouse LLP.
 23.2        Consent of Deloitte & Touche LLP.
 23.3        Consent of Price Waterhouse Nederland BV.
 23.4        Consent of Coopers & Lybrand L.L.P.
 23.5        Consent of Deloitte & Touche GmbH (MIBRAG).
 23.6        Consent of Deloitte & Touche GmbH (SEG).
 23.7        Consent of the Australian Auditor General.
 23.8        Consent of Arthur Andersen LLP.
 23.9        Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1).
 23.10       Consent of James J. Bender (included in Exhibit 5.2).
 24          Power of Attorney of certain officers and directors of NRG.*
 25          Form T-1 Statement of Eligibility of Norwest Bank Minnesota, National Association to act as trustee under
             the Indenture.*
 27          Financial Data Schedule.
 99.1        Form of Letter of Transmittal.*
 99.2        Form of Notice of Guaranteed Delivery.*
 99.3        Form of Exchange Agent Agreement.*


* Previously filed.

II-3


ITEM 17. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by the controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-4


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, NRG Energy, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, in the State of Minnesota, on the 3rd day of December, 1997.

NRG Energy, Inc.

By: /s/ VALORIE A. KNUDSEN
    -------------------------------
    Valorie A. Knudsen
    Vice President, Finance

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the dates indicated:

            Signature                      Title                     Date
 -------------------------------  ---------------------------- ------------------
                *                 Chairman of the Board,       December 3, 1997
 -------------------------------   President and Chief
        David H. Peterson          Executive Officer
                *
 -------------------------------  Executive Vice President     December 3, 1997
        Leonard A. Bluhm           and Chief Financial
                *                  Officer
 -------------------------------
        Gary R. Johnson           Director                     December 3, 1997
                *
 -------------------------------
        Cynthia L. Lesher         Director                     December 3, 1997
                *
 -------------------------------
        Edward J. McIntyre        Director                     December 3, 1997
                *
 -------------------------------
        John A. Noer              Director                     December 3, 1997

*By:/s/ VALORIE A. KNUDSEN
    ----------------------------
    Attorney-in-fact

II-5


EXHIBIT INDEX

  EXHIBIT NO.                                         DESCRIPTION                                        PAGE NO.
---------------  ------------------------------------------------------------------------------------ ------------
       3.1       Certificate of Incorporation of NRG.*
       3.2       By-Laws of NRG.*
       4.1       Indenture, dated as of June 1, 1997, between NRG and Norwest Bank Minnesota, National
                 Association.*
       4.2       Form of Exchange Notes.*
       4.3       Registration Rights Agreement, dated as of June 12, 1997, by and among NRG, Salomon Brothers
                 Inc, ABN AMRO Chicago Corporation and Chase Securities Inc.*
       5.1       Opinion and consent of Skadden, Arps, Slate, Meagher & Flom LLP as to legality of the
                 Exchange Notes to be issued by NRG.
       5.2       Opinion of James J. Bender, Vice President and General Counsel of NRG.
      10.1       Employment Contract, dated as of June 28, 1995, between NRG and David H. Peterson.*
      10.2       Indenture, dated as of January 31, 1996, between NRG and Norwest Bank Minnesota, National
                 Association, as Trustee.*
      10.3       Revolving Credit Agreement, dated as of March 17, 1997, among NRG, the banks party thereto
                 and ABN AMRO Bank, N.V. as Agent.*
      10.4       Note Agreement, dated August 20, 1993, among NRG Energy Center, Inc. and each of the purchasers
                 named therein.*
      10.5       Master Shelf and Revolving Credit Agreement, dated August 20, 1993 among NRG Energy Center,
                 Inc., The Prudential Insurance Company of America and each Prudential Affiliate which
                 becomes party thereto.*
      10.6       Energy Agreement, dated February 12, 1988 between NRG (formerly known as Norenco Corporation)
                 and Waldorf Corporation (the "Energy Agreement").*
      10.7       First Amendment to the Energy Agreement, dated August 27, 1993.*
      10.8       Second Amendment to the Energy Agreement, dated January 31, 1996.*
      10.9       Third Amendment to the Energy Agreement, dated August 25, 1997.*
      10.10      Construction, Acquisition and Term Loan Agreement, dated September 2, 1997 by and among
                 NEO Landfill Gas, Inc., as Borrower, the lenders named on the signature pages, Credit
                 Lyonnais New York Branch, as Construction/Acquisition Agent and Lyon Credit Corporation,
                 as Term Agent.*
      10.11      Guaranty, dated September 12, 1997 by NRG in favor of Credit Lyonnais New York Branch
                 as agent for the Construction/Acquisition Lenders.*
      10.12      Construction, Acquisition and Term Loan Agreement, dated September 2, 1997 by and among
                 Minnesota Methane LLC, as Borrower, the lenders named on the signature pages, Credit Lyonnais
                 New York Branch, as Construction/Acquisition Agent and Lyon Credit Corporation, as Term
                 Agent.*
      10.13      Guaranty, dated September 12, 1997 by NRG in favor of Credit Lyonnais New York Branch
                 as agent for the Construction/Acquisition Lenders.*
      10.14      Non Operating Interest Acquisition Agreement, dated as of September 12, 1997, by and among
                 NRG and NEO Corporation.*
      12.1       Computation of ratio of earnings to fixed charges.
      21         Subsidiaries of NRG.*
      23.1       Consent of Price Waterhouse LLP.
      23.2       Consent of Deloitte & Touche LLP.
      23.3       Consent of Price Waterhouse Nederland BV.
      23.4       Consent of Coopers & Lybrand L.L.P.
      23.5       Consent of Deloitte & Touche GmbH (MIBRAG).
      23.6       Consent of Deloitte & Touche GmbH (SEG).
      23.7       Consent of The Australian Auditor General.
      23.8       Consent of Arthur Andersen LLP.
      23.9       Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1).
      23.10      Consent of James J. Bender (included in Exhibit 5.2).
      24         Power of Attorney of certain officers and directors of NRG.*
      25         Form T-1 Statement of Eligibility of Norwest Bank Minnesota, National Association to act
                 as trustee under the Indenture.*
      27         Financial Data Schedule.
      99.1       Form of Letter of Transmittal.*
      99.2       Form of Notice of Guaranteed Delivery.*
      99.3       Form of Exchange Agent Agreement.*


* Previously filed.

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
TEL: (212) 735-3000
FAX: (212) 735-2000

December 2, 1997

NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, Minnesota 55403

Re: NRG Energy, Inc.
Registration Statement on Form S-1

Ladies and Gentlemen:

We have acted as special counsel to NRG Energy, Inc., a Delaware corporation ("NRG"), in connection with the issuance by NRG of $250,000,000 aggregate principal amount of NRG's 7-1/2% Senior Notes due 2007 (the "New Notes") to be issued under the Indenture, dated as of June 1, 1997 (the "Indenture"), between NRG and Norwest Bank Minnesota, National Association, as Trustee (the "Trustee"), in exchange for a like principal amount of NRG's existing 7-1/2% Senior Notes due 2007 (the "Old Notes").

This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Act").

In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement on Form S-1 (File No. 333-33397) as filed with the Securities and Exchange Commission (the "Commission") on August 12, 1997 under the Act, Amendment No. 1 thereto as filed with the Commission on October 9, 1997, Amendment


NRG Energy, Inc.
December 2, 1997

Page 2

No. 2 thereto as filed with the Commission on November 12, 1997 and Amendment No. 3 thereto with which this opinion is being filed (such Registration Statement, as so amended, being hereinafter referred to as the "Registration Statement"); (ii) an executed copy of the Indenture; (iii) the form of the New Notes; (iv) the Form T-1 Statement of Eligibility of the Trustee filed as an exhibit to the Registration Statement; (v) the Certificate of Incorporation of NRG, as presently in effect; (vi) the By-Laws of NRG, as presently in effect; and (vii) certain resolutions of the Board of Directors of NRG and the Pricing Committee of the Board of Directors of NRG in each case relating to the issuance and sale of the Old Notes and the issuance and exchange of the Old Notes for the New Notes and related matters. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of NRG and such agreements, certificates of public officials, certificates of officers or other representatives of NRG and others, and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein.

In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents. In making our examination of documents executed or to be executed by parties other than NRG, we have assumed that such parties had or will have the power, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and the validity and binding effect thereof. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of NRG and others.

Members of our firm are admitted to the bar in the State of New York, and we do not express any opinion

2

NRG Energy, Inc.
December 2, 1997

Page 3

as to the laws of any other jurisdiction other than the Delaware General Corporation Law (the "DGCL").

Based upon and subject to the foregoing, we are of the opinion that when (i) the Registration Statement becomes effective under the Act and the Indenture has been qualified under the Trust Indenture Act of 1939, as amended; (ii) the New Notes, upon consummation of the exchange offer described in the Registration Statement (the "Exchange Offer"), have been duly executed and authenticated in accordance with the terms of the Indenture; and
(iii) the New Notes issuable upon consummation of the Exchange Offer have been duly delivered against receipt of Old Notes surrendered in exchange therefor pursuant to the terms of the Exchange Offer, the New Notes issuable upon consummation of the Exchange Offer will constitute valid and binding obligations of NRG entitled to the benefits of the Indenture and enforceable against NRG in accordance with their terms, except to the extent that enforcement thereof may be limited by (1) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and (2) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).

In rendering our opinion set forth above, we have relied without independent investigation upon the opinion of James J. Bender, Vice President and General Counsel to NRG, dated the date hereof, to be filed as Exhibit 5.2 to the Registration Statement, that the execution and delivery by NRG of the Indenture and the New Notes and the performance by NRG of its obligations thereunder do not and will not violate, conflict with or constitute a default under (i) any agreement or instrument to which NRG or any of its properties is subject (except that we do not make the assumption set forth in this clause (i) with respect to the Certificate of Incorporation or By-laws of NRG), (ii) any judicial or regulatory order or decree of any governmental authority or (iii) any consent, approval, license, authorization or validation of, or filing, recording or registration with any governmental authority.

3

NRG Energy, Inc.
December 2, 1997

Page 4

We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also consent to the reference to our firm under the caption "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission.

Very truly yours,

/S/ SKADDEN, ARPS, SLATE,
    MEAGHER & FLOM LLP

4

NRG Energy, Inc. 1221 Nicollet Mall, Suite 700 Minneapolis, MN 55403-2445

December 2, 1997

Ladies and Gentlemen:

I am Vice President and General Counsel of NRG Energy, Inc., a Delaware corporation (the "Company"), and have acted as such in connection with the issuance by the Company of $250,000,000 aggregate principal amount of NRG's 7-1/2% Senior Notes due 2007 (the "New Notes") to be issued under the Indenture, dated as of June 1, 1997 (the "Indenture"), between the Company and Norwest Bank Minnesota, National Association, as trustee, in exchange for a like principal amount of NRG's existing 7-1/2% Senior Notes due 2007.

This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Securities Act").

In connection with this opinion, I have examined originals or copies, certified or otherwise identified to my satisfaction, of (i) the registration statement on Form S-1 (File No. 333-33397) of the Company relating to the New Notes, filed with the Securities and Exchange Commission (the "Commission") on August 12, 1997 under the Securities act of 1933 (the "Securities Act"), Amendment No. 1 thereto filed with the Commission on October 9, 1997, Amendment No. 2 thereto filed with the Commission on November 12, 1997 and Amendment No. 3 thereto with which this opinion is being filed (such registration statement, as so amended, being hereinafter referred to as the "Registration Statement") and such other documents, corporate records, certificates of such public officials and other instruments as I have deemed necessary or advisable to enable me to render the opinion set forth below. In my examination, I have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified or photostatic copies, as the au-


thenticity of the originals of such copies. As to any facts material to this opinion, I have relied upon statements and representations of officers and other representatives of the Company, public officials and others.

Based on the foregoing examination, and in reliance thereon, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, I am of the opinion that neither the execution and delivery by the Company of the Indenture and the New Notes, nor the performance by the Company of its obligations thereunder do not and will not conflict with, result in a breach or violation of, or constitute a default under (i) any law, (ii) the terms of any indenture or other agreement or instrument known to me and to which the Company is a party or bound, (iii) any judgment, order or decree known to me to be applicable to the Company of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or (iv) any consent, approval, license authorization or validation of, or filing, recording or registration known to me to be applicable to the Company of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over NRG.

I am admitted to the Bar of the State of Minnesota and I do not express any opinion as to the laws of any other jurisdiction other than the Delaware General Corporation Law and federal laws of the United States.

I hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement and to the reliance on this opinion by Skadden, Arps, Slate, Meagher & Flom LLP in rendering its opinion dated the date hereof. I also consent to the reference to me under the caption "Legal Matters" in the Registration Statement. In giving this consent, I do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission.

Very truly yours,

/S/ James J. Bender

2

EXHIBIT 12.1

NRG ENERGY, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands)

                                                                                      NINE MONTHS ENDED
                                         FOR THE YEAR ENDED DECEMBER 31,                SEPTEMBER 30,
                             ---------------------------------------------------------------------------
                                1992       1993      1994        1995       1996       1996       1997
                             ---------- --------  ---------- ----------  ---------- ---------  ---------
Income (loss) before Income
 taxes .....................   $(5,307)   $4,528   $ 32,010    $ 40,011   $ 14,323    $ 6,911   $ 3,274
Undistributed equity in
 operating earnings of
 unconsolidated affiliates .      (633)     (674)   (18,511)    (20,074)   (17,827)    (8,408)   (2,662)
Equity in gain from project
 termination settlements            --        --     (9,685)    (29,850)        --         --        --
Cash distributions from
 project termination
 settlements ...............        --        --      9,685      14,179     15,671     15,671        --
                             ---------- --------  ---------- ----------  ---------- ---------  ---------
                                (5,940)    3,654     13,498       4,266     12,167     14,174       612
Interest expense ...........     1,622     2,679      6,682       7,089     15,430     11,303    19,815
Interest capitalized .......        --        --         45         253        364        332        87
Amortization of debt
 issuance costs ............        44        41         42          41        149        122       304
Reasonable approximation of
 the interest factor of
 rental expense ............        33        50         59         265        247        167       236
                             ---------- --------  ---------- ----------  ---------- ---------  ---------
 Total fixed charges .......     1,699     2,770      6,828       7,648     16,190     11,924    20,442
Earnings ...................   $(4,241)   $6,424   $ 20,327    $ 11,914   $ 28,357    $26,098   $21,054
                             ========== ========  ========== ==========  ========== =========  =========
Ratio of earnings to fixed
 charges (B)(C).............   (A)          2.32       2.98        1.56       1.75       2.19      1.03


(A) Due primarily to the loss incurred in 1992, NRG was unable to fully cover fixed charges. Earnings did not cover fixed charges by $5,940. (B) The 1995 ratio of earnings to fixed charges calculation includes the effect of an equity gain and cash distribution from a project termination settlement. If the project termination had not occurred, NRG would have been unable to fully cover fixed charges and earnings would not have covered fixed charges by $9,913.
(C) The 1996 ratio of earnings to fixed charges calculations include the effect of a cash distribution from a 1995 project termination settlement. If the project termination had not occurred, NRG would have been unable to fully cover fixed charges and earnings would not have covered fixed charges by $1,497 for the nine months ended September 30, 1996, and $3,504 for the year ended December 31, 1996.

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-1 of our report dated April 8, 1997 relating to the financial statements of NRG Energy, Inc. for the two years ended December 31, 1996, which appears in such Prospectus. We also consent to the reference to us under the heading "Experts" in such Prospectus.

Price Waterhouse LLP
Minneapolis, Minnesota
November 26, 1997


EXHIBIT 23.2

INDEPENDENT AUDITOR'S CONSENT

We consent to the use in this Registration Statement of NRG Energy, Inc. on Form S-1 of our report dated March 24, 1995, appearing in the Prospectus, which is a part of this Registration Statement, and to the reference to us under the heading "Experts" in such Prospectus.

Deloitte & Touche LLP
Minneapolis, Minnesota
November 26, 1997


EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-1 of our reports dated March 21, 1997 relating to the financial statements of Sunshine State Power BV and Sunshine State Power (No. 2) BV for the three years ended December 31, 1996, which appears in such Prospectus. We also consent to the reference to us under the heading "Experts" in such Prospectus.

Price Waterhouse Nederland BV
Amsterdam, The Netherlands
November 26, 1997


EXHIBIT 23.4

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Amendment No. 3 to Registration Statement on Form S-1 (File No. 333-33397) of our report dated February 29, 1996 on our audits of the financial statements of San Joaquin Valley Energy Partners I, L.P. We also consent to the reference of our firm under the caption "Experts."

                                          /s/ Coopers & Lybrand L.L.P.

Sacramento, California
November 26, 1997


EXHIBIT 23.5

FOR MIBRAG November 26, 1997

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 3 to Registration Statement No. 333-33397 of NRG Energy, Inc. on Form S-1 of our report dated October 24, 1997 (relating to the financial statements of Mitteldeutsche Braunkohlengesellschaft mbH as of December 31, 1996, 1995 and 1994 and for each of the years in the three-year period ended December 31, 1996 presented separately herein) appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such Prospectus.

DELOITTE &
TOUCHE GmbH

Wirtshaftsprufungsgesellschaft


EXHIBIT 23.6

FOR SAALE ENERGIE GMBH November 26, 1997

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 3 to Registration Statement No. 333-33397 of NRG Energy, Inc. on Form S-1 of our report dated October 31, 1997 (relating to the financial statements of Saale Energie GmbH as of and for the year ended December 31, 1996 presented separately herein) appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such Prospectus.

DELOITTE &
TOUCHE GmbH

Wirschaftsprufungsgesellschaft


EXHIBIT 23.7

CONSENT OF AUDITOR-GENERAL

I hereby consent to the use in the Prospectus constituting part of the Registration Statement on Form S-1 of the following reports which appear in such Prospectus:

DATE OF REPORT        ENTITY                     FINANCIAL YEAR ENDED
6 September 1995      Loy Yang Power Limited     30 June 1995
29 August 1996        Loy Yang Power Limited     30 June 1996
29 August 1997        Quiet Life Limited*        30 June 1997

*Name changed on 13 May 1997, formerly Loy Yang Power Limited.

I also consent to the reference to my name under the heading of "Experts" in such Prospectus, being that of auditor of the above entities.

                                          /s/ C. Baragwanath
MELBOURNE                                     C. BARAGWANATH


24/11/1997                                    Auditor-General


EXHIBIT 23.8

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 3 to Registration Statement No. 333-33397 of NRG Energy, Inc. on Form S-1 of our report dated 27 November 1997 (relating to Loy Yang Power Limited on certain agreed upon procedures covering the period from 1 February 1995 to 30 June 1995, the financial year ended 30 June 1996, and the period from 1 July 1996 to 12 May 1997) appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading "Experts" in such prospectus.

/s/ Arthur Andersen
Chartered Accountants


/s/ Michael S. Perry
Michael S. Perry
Partner

December 1, 1997


ARTICLE 5


PERIOD TYPE 9 MOS
FISCAL YEAR END DEC 31 1997
PERIOD START JAN 01 1997
PERIOD END SEP 30 1997
CASH 19,294
SECURITIES 0
RECEIVABLES 14,138
ALLOWANCES 0
INVENTORY 2,624
CURRENT ASSETS 118,738
PP&E 241,767
DEPRECIATION 76,852
TOTAL ASSETS 1,066,816
CURRENT LIABILITIES 77,748
BONDS 474,427
PREFERRED MANDATORY 0
PREFERRED 0
COMMON 1
OTHER SE 481,278
TOTAL LIABILITY AND EQUITY 1,066,816
SALES 65,081
TOTAL REVENUES 82,840
CGS 32,863
TOTAL COSTS 32,863
OTHER EXPENSES 7,096
LOSS PROVISION 0
INTEREST EXPENSE 19,815
INCOME PRETAX 3,274
INCOME TAX (11,140)
INCOME CONTINUING 14,414
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET INCOME 14,414
EPS PRIMARY 0
EPS DILUTED 0
BROKERAGE PARTNERS