Independent Auditor’s Report
The key audit matter
How the matter was addressed in our audit
Sale of 50% interest in the Vector Metering business Refer to Note 5 and Note 15 of the financial statements.
The sale of the group’s interest in Vector’s New Zealand and Australian metering businesses (Vector Metering business), the reclassification of the associated assets and liabilities to held for sale and recognition of the 50% investment in Vector Metering business that was restructured as a joint venture (together called ‘sale of 50% interest’) is a key audit matter due to: • the significance of the sale transaction to the financial statements of the group; • the significant judgment used to determine the fair value of the proceeds which included a shareholder loan receivable and shares received, and the resulting gain on sale; • the complexity in accounting for the sale. Significant judgement was applied in determining the assets and liabilities (including goodwill) associated with the sale of the Vector Metering business to be derecognised and determining the accounting treatment of the remaining investment held by the group.
Our audit procedures in this area included: Obtaining the executed share sale agreement to understand the key terms and conditions of the sale and the basis for the accounting treatment adopted. Inspecting the executed shareholder’s agreement for control considerations and assessing the appropriateness of the treatment of the joint arrangement as an investment in Joint Venture in compliance with NZ IFRS 11 Joint Arrangements. Assessing the accounting treatment applied by the group for compliance with NZ IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which included: Assessing whether the date the Vector Metering business was designated as held for sale is appropriate based on the
decisions taken by the directors and the status of the sale process at that date; Considering whether the disposal represents a discontinued operation; and Evaluating the completeness of assets and liabilities identified by the group as being disposed of in the share sale.
Assessing the appropriateness of the accounting policy choice selection of NZ IFRS 10 Consolidated Financial Statements to account for the resulting gain on sale of 50% interest in the Vector Metering business (for loss of control). Challenging judgements applied by the group in determining the gain on sale of 50% interest. Assessing the adequacy of the disclosure of the transaction in the financial statements using our understanding obtained from our testing and against the requirements of the accounting standards. As a result of our procedures, we have no matters to report.
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