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(iii) Fair value
In order to comply with relevant accounting
standards the Group undertook a fair value
assessment of the infrastructure assets, the
results of which are detailed in notes 8(b) and
12(d)(iii). Key assumptions when completing
the assessment are: the forecast data
including, revenue expense and capital cash
flows and the discount rate used. Therefore,
management has reviewed the cash flow and
made adjustments to account for any known
variables and to ensure a market participant
would view the positions taken as reasonable.
In addition, the discount rate used is compiled
with the support of an external market
specialist. Note 12(d)(iv) and (v) contains
further detail on the process and valuation
technique.
(iv) Deferred tax recognition
The Group has recognised a net deferred tax
asset as set out in note 8(c). The Group has
recognised a deferred tax asset in relation to
deductible temporary differences to the extent
that a deferred tax liability exists in relation
to taxable temporary differences, which are
expected to reverse over the same periods.
In addition, an excess deferred tax asset
has been recognised to the extent that it is
probable that taxable profit will be available
against which the deductible temporary
differences can be utilised. The recognition
of the net deferred tax asset is considered
appropriate following an assessment of the
overall forecast accounting profit and tax
payable position of the Group over the next
five years. See note 21(k).
(v) Incident recognition
The provision for incidents recognises the
Group’s estimated liability with respect to
costs associated with damage caused by
incidents such as force majeure, derailments,
including the potential for third party and/or
insurance recoveries. See note non-financial
assets 8(e) and 21(h).
(vi) Provisions - Short term employee
benefits
Short term employee benefit obligations are
measured on an undiscounted basis and are
expensed as the related service is provided.
A liability is recognised for the amount
expected to be paid under short term cash
bonus if the Group has a present legal or
constructive obligation to pay this amount
as a result of past service provided by the
employee and the obligations can be
measured reliably. See note 8(e) & 21(s)(i).
(vii) Provisions - Long service leave
The Group’s net obligation in respect of long
term employee benefits is the amount of
future benefit that employees have earned
in return for their service in the current and
prior periods. For long service leave the
future benefit is altered to take into account
the probability of reaching entitlement and
inflationary increases. These benefits are
discounted to determine its present value.
The discount for long service leave is the
yield proximate to the reporting date on the
Australian Corporate Bond market. See note
8(e) & 21(s)(ii).
(viii) Access revenue - Hunter Valley
Coal provision
Driven by the ACCC analysis of the Hunter
Valley Access Undertaking 2013 Annual
Compliance Assessment a provision was made
in respect of the over recovery of constrained
coal network revenue for calendar years
2013, 2014, 2015 and 2016. The methodology
used by the ACCC is forecast to be applied
to the calculation from 2013 onwards.
The review requires a detailed reallocation
of capital charges between customers
originating in different pricing zones which
has a subsequent impact on the revenue
calculations. The final amount for each year
will be determined through ACCC Annual
Compliance Assessments. Note that, as the
costs are reallocated to different customers
ARTC has the ability to treat any shortfall in
the collection of its revenue ceiling (in Pricing
Zone 3) as a capitalised loss which can be
recovered through access charges in future
years. See note 5(a) and 6(e).
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