680 NEW ZEALAND GAZETTE, No. 24 28 FEBRUARY 2012

VECTOR LIMITED & SUBSIDIARIES

GAS TRANSMISSION ACTIVITIES

STATEMENT OF ACCOUNTING POLICIES

FOR THE YEAR ENDED 30 JUNE 2011

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

H) IDENTIFIABLE INTANGIBLE ASSETS (CONTINUED)

Other identifiable intangible assets

Other identifiable intangible assets include easements and intellectual property assets.

Easements are perpetual rights to use land owned by others for a stated purpose and are classified as intangible assets. Easements are not amortised.

Intellectual property assets include engineering standards, pricing and billing models, customer contracts and relationships and designations and other existing use rights. Intellectual property assets are amortised on a straight line basis over their useful lives.

I) DEPRECIATION

Depreciation of property, plant and equipment other than freehold land is calculated on a straight line basis so as to expense the cost of the property, plant and equipment, less any expected residual value, to the statement of comprehensive income over its useful economic life.

Depreciation commences when the item of property, plant and equipment is brought into productive use, or when such items become available for use.

| | ESTIMATED |
| | USEFUL LIVES |
| | YEARS |
|--------------------------------|---------------|
| Pipelines, compressors and gate stations | 10 – 100 |
| Plant, vehicles and equipment | 3 – 40 |
| Buildings | 40 – 100 |

J) LEASED ASSETS

Finance leases

Property, plant and equipment under finance leases, where substantially all the risks and rewards of ownership are assumed by the gas transmission activities as lessee, are recognised as non-current assets in the statement of financial position. Leased property, plant and equipment are recognised initially at the lower of the present value of the minimum lease payments or their fair value. A corresponding liability is established and each lease payment apportioned between the reduction of the outstanding liability and the finance expense. The finance expense is charged to the statement of comprehensive income in each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Leased property, plant and equipment are depreciated over the shorter of the lease term and the useful life of equivalent owned property, plant and equipment.

Operating leases

Payments made under operating leases, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased property, plant and equipment are recognised in the statement of comprehensive income on a straight-line basis over the lease term. Lease incentives received are recognised as an integral part of the total lease expense over the term of the lease. Property, plant and equipment used under operating leases are not recognised in the statement of financial position.

Leasehold improvements

The cost of improvements to leasehold property are capitalised and depreciated over the unexpired period of the lease or the estimated useful life of the improvements, whichever is the shorter.

K) PROVISIONS

Employee entitlements

Employee entitlements to salaries and wages, annual leave, long-term leave and other benefits are recognised when they accrue to employees.