VECTOR Limited

Electricity Lines Business

Notes to the Financial Statements

For the year ended 31 March 2003

| | 2003
($000) | 2002
($000) |
|----------------|-----------|-----------|
| | | |

14. PROPERTY, PLANT AND EQUIPMENT - CONTINUED

Capital works under construction
| | 32,493 | 11,511 |

Total net book value
| | 1,944,985| 926,687 |

The directors consider that the fair value of the land and buildings is equal to their book value.

As indicated in the accounting policies finance costs are capitalised to property, plant and equipment while under construction. During the year $0.5 million (2002: $0.3 million) of finance costs were capitalised.

During the year the VECTOR Group, of which the electricity line business is the predominant activity, acquired property, plant and equipment as part of its acquisition of UnitedNetworks Limited (refer note 22). Assets acquired were initially recorded at the fair value at the time of acquisition. At 31 March 2003, the VECTOR Group, of which the electricity line business is the predominant activity, revalued its system fixed assets to bring all these assets onto a common revaluation cycle. It is the present intention of the directors to revalue system fixed assets on a three year cycle.

In previous years, distribution systems were also revalued on the basis of depreciated replacement cost using regulatory values and lives as used in the determination of optimised deprival value (ODV), whereas for 2003 the VECTOR Group, of which the electricity line business is the predominant activity, has determined replacement cost by reference to current replacement costs and estimated lives pertaining to asset categories. The effect of this has been to increase the amount of the revaluation by $155.1 million. This valuation was undertaken in conjunction with Meritec Limited consulting engineers.

The independent valuation of property assets based on market values was undertaken by Trevor Walker a registered valuer with Telfer Young (Auckland) Limited on 31 March 2003.

All valuations are based on the highest and best uses of assets.

15. ACCOUNTS RECEIVABLE

| | 2003
($000) | 2002
($000) |
|--------------------------|---------|---------|
| Accounts receivable | 57,091 | 32,026 |
| Provision for doubtful debts| (1,222)| - |
| | 55,869 | 32,026 |
| Other receivables | 3,087 | 1,861 |

Balance at end of year
| | 58,956 | 33,887 |

16. SHORT TERM INVESTMENTS

| | 2003
($000) |
|--------------------------|---------|
| Surplus property held for sale | 8,220 |

Balance at end of year
| | 8,220 |

Following the acquisition of UnitedNetworks Limited, the VECTOR Group, of which the electricity line business is the predominant activity, has identified properties surplus to requirements and intends to offer them for sale. The surplus property is held at the lower of cost or net realisable value. The properties were independently valued on 31 March 2003 by Trevor Walker a registered valuer with Telfer Young (Auckland) Ltd. Trevor Walker is a member of the New Zealand Institute of Valuers. The basis of valuation was market value less the estimated costs of disposal, based on the properties highest and best use. The valuations did not indicate any impairment in value.