3598

NEW ZEALAND GAZETTE

No. 133

VECTOR Limited

Electricity Lines Business

Statements of Accounting Policies

For the year ended 31 March 2003

Reporting entity

The accounts prepared are the consolidation of the 12 months ended 31 March 2003 of the electricity line business activity of VECTOR Limited and the period 11 October 2002 to 31 March 2003 of the electricity line business activity of UnitedNetworks Limited.

VECTOR Limited is an issuer for the purpose of the Financial Reporting Act 1993 and its financial statements comply with that Act.

All prior year comparative numbers are as disclosed for the electricity line business activity of VECTOR Limited.

VECTOR Limited and UnitedNetworks Limited are companies registered under the Companies Act 1993.

Statutory base

The financial statements have been prepared in accordance with the requirements of the Companies Act 1993, Financial Reporting Act 1993, Electricity (Information Disclosure) Regulations 1999, Electricity (Information Disclosure) Amendment Regulations 2000, and Electricity (Information Disclosure) Amendment Regulations 2001.

Measurement base

The financial statements are prepared on the basis of historical cost modified by the revaluation of certain assets as identified in specific accounting policies below.

The avoidable cost allocation methodology (ACAM) used for allocating costs, assets and liabilities between "line" and "other" activities is in accordance with the Electricity Information Disclosure Handbook 30 June 2000.

Specific accounting policies

The financial statements are prepared in accordance with New Zealand generally accepted accounting practice. The following specific accounting policies that materially affect the measurement of financial performance, financial position and cash flow have been applied.

a) Comparatives

Comparatives were prepared in accordance with the Electricity (Information Disclosure) Regulations 1999 as amended by the Electricity (Information Disclosure) Amendment Regulations 2000 and the Electricity (Information Disclosure) Amendment Regulations 2001 and also the Electricity Information Disclosure Handbook 30 June 2000.

b) Basis of consolidation

Purchase method of consolidation is used.

Acquisition or disposal during the year

Where an entity becomes or ceases to be a part of the VECTOR Group, of which the electricity line business is the predominant activity, during the year, the results of the entity are included in the consolidated results from the date that control or significant influence commenced or until the date that control or significant influence ceased. When an entity is acquired all identifiable assets and liabilities are recognised at their fair value at acquisition date. The fair value does not take into consideration any future intentions by the VECTOR Group, of which the electricity line business is the predominant activity. Where an entity that is part of the VECTOR Group, of which the electricity line business is the predominant activity, is disposed of the gain or loss recognised in the statement of financial performance is calculated as the difference between the sale price and the carrying amount of the entity.

Goodwill arising on acquisition

Goodwill arising on acquisition of a subsidiary or associate represents the excess of the purchase consideration over the fair value of the identifiable net assets acquired. Goodwill is amortised to the statements of financial performance on a straight line basis over the period during which benefits are expected to be derived - a maximum of 20 years.

Transactions eliminated on consolidation

The effects of intra-group transactions are eliminated in preparing the consolidated financial statements.