This letter answers the questions raised in your Official Information request.

The decision to buy Shares in National Mail was made by the Equity Manager. It was not made on the basis of any specific broker recommendation or information. The Equity Manager had visited the company on three occasions - once before the initial listing and twice subsequent to that. During those visits he had developed a high regard for the Chief Executive but had doubts about the business as an investment proposition.

However, on the basis of his understanding of the cash burn rate and the known cash reserves the Equity Manager believed it was worth keeping an eye on the company as a potential investment. The slide in the share price, the appointment of a strong independent director in the form of Peter Fitzsimmons and anecdotal information from contracted and trial customers all contributed to a change of view. As a result, the Equity Manager bought the shares, being fully aware of the risks involved, but believing that the potential rewards justified the risk.

There are no written documents recommending a purchase of National Mail shares, and no specific authorisation documents in relation to the purchase (as the purchase was within the Equity Manager's delegated authority). We will mail you copies of the broker contract note and the bargain entry audit report (from ACC's investment accounting system) in relation to this purchase.

ACC employees are allowed to privately deal with brokers that ACC deals with. ACC deals with all the major NZ stockbrokers (about 13 in total), so it would be impractical to prevent ACC staff from dealing with these brokers. Staff directly involved with the investment area are subject to rules as to when they may deal in particular stocks, and are required to report all personal transactions to management.

Yours Sincerely

Nicholas Bagnall Investment Strategist