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Report on aspects of the initial public offering of Vertex Group Holdings Limited in 2002

The Directors
Vertex Group Holdings Limited
Unity Drive
North Harbour Industrial Estate
Albany
Auckland

20 March 2002

Dear Directors

Introduction

We are writing to confirm our understanding of your requirements of PricewaterhouseCoopers in respect of the proposed initial public offering of shares ("IPO") in Vertex Group Holdings Limited ("the Company") and its ultimate listing on the New Zealand Stock Exchange. This letter, its appendices and the attached Terms and Conditions together form the contract between us ("the Contract").

Background

In accordance with the Securities Act 1978 a registered prospectus must be prepared for any offer of shares to the New Zealand public.

We understand that a public offer will only be made in New Zealand. The prospectus in likely to include:

1. A prospective cash flow of the Group from the date of the prospectus through 30 September 2003.
2. Prospective financial information for the full year ending 31 March 2003 and the six months ending 30 September 2003. The prospective financial information will be prepared by the Directors on the basis of assumptions and accounting policies normally adopted by the group which will be set our in the prospectus. We understand that the prospective financial information will be in the form of forecasts.
3. Audited financial statements of the Group for the year ended 31 March 2002
4. Summary of financial statements of the Group for the periods ended 31 March 2002 and 31 March 2002.
5. Summary of financial statements pertaining to the acquisition of the business for the periods ended 31 March 1998, 31 March 1999, 31 March 2000 and September 2000.

Our responsibilities

Prospective Financial Information

We will be responsible for reporting on the prospective financial information, including cash flow forecasts prepared and presented by the Directors. Our report, in this respect will be along the following lines:

"In our opinion the prospective financial information on pages [...] to [...] and on [...] to [...] so far as accounting policies and calculation are concerned, has been properly compiled on the footing of the assumptions made or adopted by the Directors of the Company as set out on pages [...] to [...] of this prospectus and is presented on a basis consistent with the accounting policies normally adopted by the Group.

Actual results are likely to be different from the prospective financial information since anticipated events frequently do not occur as expected and the variation could be material. Accordingly, we express no opinion as to where the prospective financial information will be achieved."

In order to provide this report, we will carry out the following work on the prospective financial information prepared by the Directors:

• Check the numerical accuracy of the calculations and computations included in the prospective financial information.
• Confirm that the prospective financial information has been prepared using the accounting policies normally adopted by the Group and set out in the prospectus.
• Confirm that the prospective financial information has been prepared on the basis of the assumptions documented in the prospectus

Our work on the prospective financial information will be limited to the matters referred to above and will not constitute an audit. We will therefore not express an audit opinion on the prospective financial information.

Financial Statements

We have been appointed auditors of the annual financial statements of the Company. The terms of our audit engagement are set out in our letter of engagement dated 4 April 2002 which should be read in conjunction with this letter.

We will be responsible for reporting on the financial statements included in the prospectus as prepared and presented by the Directors. Our report will, inter alia, state:

1. The work done by us; and
2. The scope and limitations of our audit; and
3. The existence of any relationship (other than that of auditor) which we have with, or any interests which we have in, the company or any of its subsidiaries; and
4. Whether we have obtained all information and explanations that we require; and
5. Whether in our opinion, as far as appears from an examination of the proper accounting records have been kept by the Group; and
6. Whether or not, in our opinion, the financial statements that are required by clauses 23 to 38 of the First Schedule of the Securities Regulation 1983 and that are required to be audited:
   1. Comply with the regulations; and
   2. Subject to the regulations, comply with generally accepted accounting practice; and
   3. Give a true and fair view of the state of affairs of the Group as at 31 March 2002 and its financial performance and cash flows for the period ended on that date, taking into account information or explanations of the kind referred to in section 11(2) of the Financial Reporting Act 1993 (if any) and, if they do not, the respects in which they do not.

Summary of financial statements

Summary of financial statements pertaining to the acquisition of the business

We will be responsible for reporting whether the amounts stated in the summary of financial statements have been correctly taken from the audited financial statements from which they were extracted. We will also be responsible for reporting whether the amounts stated in the summary of financial statements pertaining to the acquisition of the business have been correctly taken from the management accounts of the acquired business form which they were extracted. We will undertake procedures to provide reasonable assurance that amounts stated by the Directors pursuant to clauses 8(2), 8(3) and have been correctly taken from the audited financial statements and management accounts from which they were extracted.

Responsibility for Prospectus and Investment Statement

We will take no responsibility for, nor will we report on any part of the prospectus other than those matters mentioned in this letter. The responsibility for preparing the prospectus including the preparation of the prospective financial information, rests with the Directors. However, generally accepted auditing standards require that we read any documents that contain our audit report. The purpose of this procedure is to consider whether other information in the document, including the manner of its presentation, is materially inconsistent with information covered by our audit report. We assume no obligation to perform procedures to verify such other information as part of our audit.

We will also assume no responsibility directly or indirectly for any information contained in the investment statement prepared pursuant to the Securities Regulation 1983.

Responsibilities of the Directors

The Directors are responsible for the financial statements, summary of financial statements, the summary of the financial statements pertaining to the acquisition of the business, and the prospective financial information included in the prospectus. In this regard, the Directors are responsible for establishing and maintaining internal controls and accounting records that:

• correctly report and explain the transactions of the Group
• enable the financial position of the Group to be determined with reasonable accuracy at any time
• enable the financial statements to be readily and properly audited.

The Directors are also responsible for:

• preparing prospective financial information, including the assumptions on which it is based, that comply with generally accepted accounting practice in New Zealand
• preparing financial statements that, subject to the Securities Regulations 1983, comply with generally accepted accounting practice in New Zealand, as defined in the Financial Reporting Act 1993
• preparing financial statements that give a true and fair view of the matters to which they relate, having regard to any information that may have been added by the Directors pursuant to section 11(2) of the Financial Reporting Act 1993
• making available to us all of the original accounting records and related information, and personnel to whom we may direct inquiries.

The audit of the financial statements or our report on the prospective financial information does not relieve Directors of these responsibilities.

We will request representation letters covering matters material to the financial statements, the preparation of the prospective financial information and the appropriateness of the assumptions applied by the Directors. This will include representation on the adoption of the going concern assumption in the preparation of the prospectus, including the key considerations made by the Directors as to its applicability.

Responsibility relating to the electronic distribution of our audit report

If the company intends to publish or reproduce, in printed form or electronically (e.g. on an Internet Web Site), or report together with the prospectus, or otherwise make reference to our firm in a document that contains other information, the Directors agree to:

• provide us with a draft of such a document to read
• obtain our approval for inclusion of our report

before the document is finalised and distributed.

Timetable

We expect our report to be completed by 20 May 2002.

The Team

We currently envisage that our team will be lead by Leo Folaiaki who will be the Engagement Partner responsible for the Services we are to provide to you. Further assistance will be provided by Doug Brown acting as Project Manager, Declan Mordaunt is our partner responsible for completing the taxation aspects of our Engaged Procedures.

Fees

Our fees will be based upon the time incurred to carry out our procedures at the agreed rates. In the limited time available, it is essential that we utilise experienced and senior resource, in order to minimise supervision time. The overall level of fee reflects the degree of skill involved as well as the risks associated with the proposed transaction.

At this stage it is extremely difficult to determine the likely time involved in performing the Engaged Procedures with any degree of accuracy. We will therefore provide you with a regular update of our costs to date and expected costs to complete.

This estimate has been prepared on the following basis:

1. The prospective financial information presented to us will be the final version approved by the Directors and that there will be no significant subsequent changes.
2. The prospective financial information will be supported by adequate work papers documenting the accounting policies and assumptions.
3. The draft prospectus provided to us will be the penultimate version with no significant subsequent changes required.
4. We will not be required to provide a comfort letter to the underwriters and or the directors.

In addition to these fees, our billings will include out of pocket expenses. Significant direct out of pocket expenses (e.g. travel) will be charged at cost. Similar incidental expenses (e.g. local courier, photocopying etc) will be recovered by way of a general charged based on actual time costs (currently 3%). In accordance with our standard terms of engagement we would seek to interim bill on a fortnightly basis. Invoices rendered are due and payable within 14 days of receipt.

Any additional services that you may request, and that we agree to provide, will be the subject of separate written arrangements.

Applicable law and governing jurisdiction

The Contract, when accepted by you, will be governed by, and construed in accordance with the laws of New Zealand. It is irrevocably agreed and accepted that the courts of New Zealand will have exclusive jurisdiction to settle any claim, difference of dispute, including, without limitation, claims for set-off or claims that may arise out of, or in connection with, this contract. Each party irrevocably waives any claim that the action has been brought in an inconvenient forum, or that such courts do not have jurisdiction.

Acceptance

Please record your agreement to the terms of this contract by signing the enclosed copy of this letter in the space provided and returning it to us.

If you require any further information, or wish to discuss the terms of our engagements further before replying, please do not hesitate to contact us.

Yours faithfully

PricewaterhouseCoopers
Assurance and Business Advisory Services

Client Acceptance The terms of the Contract are accepted by George Clark on behalf of Vertex Group Holdings Limited who represents that he is authorised to accept these terms on behalf of the Company Signed: Position: Date: