26 NOVEMBER NEW ZEALAND GAZETTE 4425

4. Fixed Assets

| | 2003 |
| | Cost/ Accumulated Net Book Depreciation |
| | Valuation Depreciation Value Charge |
|-------------------------------|--------------|--------------|-----------|---------------|
| Pipelines, Compressors and Gate | 443,053 - 443,053 9,025 |
| Stations |
| Plant and Equipment | 17,089 12,997 4,092 1,193 |
| Motor Vehicles | 2,017 1,067 950 226 |
| Freehold Land and Buildings | 4,229 874 3,355 64 |
| Construction in Progress | 845 - 845 - |
| | 467,233 14,938 452,295 10,508 |

| | 2002 |
| | Cost/ Accumulated Net Book Depreciation |
| | Valuation Depreciation Value Charge |
|-------------------------------|--------------|--------------|-----------|---------------|
| Pipelines, Compressors and Gate | 378,820 17,307 361,513 8,741 |
| Stations |
| Plant and Equipment | 14,052 11,808 2,244 494 |
| Motor Vehicles | 1,945 971 974 223 |
| Freehold Land and Buildings | 4,212 810 3,402 64 |
| Construction in Progress | 5,358 - 5,358 - |
| | 404,387 30,896 373,491 9,522 |

Pipelines, compressors and gate stations were revalued as at 30 June 2003 using the optimised deprival valuation (ODV) methodology. As a result, the valuation of pipelines, compressors, gate stations and gas meters increased by $87.87 million from the pre-revaluation amounts. NGC has been completing regular revaluations of these assets since 1994 using the ODV methodology. The major assumptions resulting in the increase from the 2000 revaluation included an increase in construction rates for measure and value contracts, an increase in the Capital Goods Price Index for pipelines, a reduction in the amount of optimisation of the Kapuni to Rotowaro transmission line resulting from a change from a 5-year load growth projection to a 15-year load growth projection and increases in the value of easements. The valuation was reviewed and certified by Meritec Limited, the legal entity that employed its Senior Business Consultant, Guenter Wabnitz, as the person with primary responsibility for the review of NGC’s valuation.

The independent valuer was engaged by NGC on the basis of his experience in valuations of infrastructure assets and technical and commercial expertise in New Zealand’s gas and energy sector. Meritec Limited is an independent consulting firm and has no commercial interest in NGC.

The qualifications of Guenter Wabnitz relevant to this valuation review are:

• Commercial valuations of most of New Zealand’s gas networks, for ODV, due diligence, insurance, district valuation roll and other purposes.

• Over 20 years experience in management, design and operations of gas production, processing and transportation systems in New Zealand, Australia, Asia and Europe.

Based on the latest Government valuations the Directors estimate that the fair valuation of land and buildings is approximately equivalent to their net book value as at 30 June 2003.