NOTES TO THE FINANCIAL STATEMENTS continued
12. Investments:// CONTINUED 12.3 Interest in joint operation
INTEREST HELD
JOINT OPERATION
PRINCIPAL ACTIVITY
BALANCE DATE
2018
2017
Kapuni Energy Joint Venture Cogeneration plant operator
30 June
50%
50%
Policies
A joint operation is where Vector is a party to a joint arrangement, and has rights to the assets and obligations for the liabilities relating to the arrangement. Vector has assessed that the contractual arrangement governing the Kapuni Energy Joint Venture, of which Vector Kapuni Limited is a party, meets the criteria of a joint arrangement, and that the rights and obligations conferred by that contract meet the classification of a joint operation. The interest in the joint operation is reported in the financial statements using the proportionate method. mPrest Systems (2003) Limited On 4 October 2017, Vector invested $14.0 million (US $10.0 million) into mPrest Systems (2003) Limited. The investment is accounted for as a financial asset at fair value through other comprehensive income (“OCI”) on the Balance Sheet. At 30 June 2018, Vector holds 7.8% of the issued shares in mPrest Systems (2003) Limited. The group has determined the fair value of the asset as $15.0 million at 30 June 2018, with the upward movement of $1.0 million recognised in OCI. There have been no purchases, disposals, issues or settlements made during the year. For fair value measurement purposes, the financial asset is classified as level 3 on the fair value hierarchy (see Note 20 for explanations of various levels in the hierarchy). The table below provides information on how the fair value of the asset is determined.
12.4 Other investments
FAIR VALUE 2018 $M
SENSITIVITY OF FAIR VALUE TO CHANGES IN INPUT A 10% change in the multiple used will result in a $1.6 million change in the fair value.
VALUATION TECHNIQUE Market comparable companies approach
SIGNIFICANT UNOBSERVABLE INPUT Enterprise value / revenue multiple – a multiple inferred from financial information of comparable public companies operating in the same geography.
DESCRIPTION
RANGE
Offshore private equity investment
Enterprise value / revenue multiple (times) 3.2 - 4.0
$15.0
The group’s team of valuation specialists is responsible for establishing the appropriate valuation techniques and inputs into the valuation models, including an assessment of any inputs obtained from third party or market sources. The valuation team report to the chief financial officer, and any significant valuation issues are reported to the group’s audit committee.
85
Vector://AR 18
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