Notes to the financial statements
20. Fair values
SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2 INPUTS) 2023 $M
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3 INPUTS) 2023 $M
SIGNIFICANT OBSERVABLE INPUTS (LEVEL 2 INPUTS) 2022 $M
SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3 INPUTS) 2022 $M
NOTE
Assets measured at fair value Derivative financial instruments Investment in private equity
112.1
–
22
164.3
–
– –
8.8
15.2
– –
12.2 79.8 92.0
60.9 69.7
Contingent consideration
6
Balance at 30 June
112.1
164.3
Liabilities measured at fair value Derivative financial instruments
160.8 160.8
– –
22
130.9 130.9
– –
Balance at 30 June
Policies
The table above provides the fair value measurement hierarchy of the group’s assets and liabilities that are measured at fair value. The group estimates all fair values using the discounted cash flows method. All assets and liabilities for which fair value is measured and disclosed in the financial statements are categorised within the fair value hierarchy, described as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; or Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices); or Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Fair value is calculated using the discounted cash flow method, estimated using observable interest yield curves and/or foreign exchange market prices. The carrying values of the financial instruments are the fair values excluding any interest receivable or payable, which is separately presented in the balance sheet in other receivables or other payables.
Derivative financial instruments
Investment in private equity
Fair value is calculated using the discounted cash flow method. In estimating the fair value, the group made assumptions on unobservable inputs, including, amongst others, forecasted future cash flows, an appropriate discount rate and terminal growth rate.
Contingent consideration
Fair value is calculated using the discounted cash flow method. The group made assumptions on unobservable inputs including, amongst others, future raw gas volume from the Kapuni gas field, future LPG prices, future oil prices, foreign exchange rates, and an appropriate discount rate. Further details on the inputs are as follows: — Future raw gas volume from the Kapuni gas field is based on published forecasts from the Ministry of Business, Innovation and Employment; — Future LPG prices are based on an independent financial institution’s commodity price forecasts; — Future oil prices are based on S&P Capital IQ forecast data; — Future natural gas prices are based on an independent expert’s commodity price forecast; — Future foreign exchange rates are based on an independent financial institution’s foreign exchange rate forecasts; and — Discount rate of 12.8% (2022: 9.7%), representing market discount rates as applicable to the remaining life of the Kapuni gas field.
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