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(i) 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 7(c) and
11(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, 11(d)(iv) and (v) contains
further detail on the process and valuation
technique.
(ii) Deferred tax recognition
The Group has recognised a net deferred tax
asset (as set out in note 7(e)) 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 5(g).
(iii) Access revenue - Hunter Valley Coal
provision
The timing of the ACCC approved Hunter
Valley Access Undertaking Agreement (HVAU)
process requires that a provision is held at the
close of each reporting period for Compliance
Assessments which remain open pending final
ACCC determination.
As at 30 June 2017 Compliance Assessments
which remain open relate to Calendar Years
2015, 2016 and H1 2017 (which is not due for
lodgement until 2018). During this financial
year the ACCC approved an extension of the
2011 HVAU until 31 December 2021 which
included a reset of key commercial parameters
of the calculation (remaining mine life and rate
of return). The ACCC decision was published
29 June 2017. The provision incorporates
application of the revised allocation
methodology as determined by the ACCC in
publishing the 2013 compliance assessment.
See note 6(d).
(iv) 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 7(f).
(v) Defined benefit plan
Various actuarial assumptions are required
when determining the Group’s defined benefit
obligations. See note 7(g)(iv).
(vi) Timing of project completion
The Group continues a substantial capital
investment program, with the continued
delivery being reliant on grant and equity
funding, industry demand, the availability
of requisite material, project resources and
applicable regulatory approvals. The timing
of the recognition of these projects as being
“ready for use” significantly impacts forward
forecasts and triggers the capitalisation and
depreciation processes.
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