9365206758

Key Audit Matters

The Key Audit Matters we identif ied are:

•    Recoverability of non-current assets, including property, plant and equipment, intangible assets and investments

•    Valuation of former gas business environmental provisions

Key Audit Matters are those matters that, in our Professional judgment, were of most significance in our audit of the Financial Report of the current period.

These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

• Recognition of revenue

• Valuation and accounting for derivatives

Recoverability of non-current assets, including property, plant and aquipmcnt ($6,289111), intangible assets ($1,731m) and investmcnts ($1,237m)
Refer to the following notes to the financial report: Notę 2(n) Summary of significant accounting policies - Impairment of assets, Notę 3 Impairment assessment and Notę 4(i) Critical accounting estimates and judgements - Estimated recoverable amount of intangible assets with an indefinite useful life and associated tangible assets.
The key audit matter	How the matter was addressed in our audit
Recoverability of non-current assets is a key audit matter due to the: •    comp!ex naturę of the regulatory framework for determining revenue and expenditure applicable to each of the Group's regulated cash generating Units (CGUs); •    complexity in auditing the forward-looking assumptions applied to the • Group's discounted cash flow models for each CGU given the significant management assumptions involved. The key assumptions in the cash flow models included terminal values, expected Capital and operating expenditure, expected returns from futurę regulatory determinations, inflation, growth rates and discount rates; and •    challenges associated with auditing the Group's long term forecast cash flow models (up to 20 years), having regard to emerging regulatory change, technology and market changes and accounting standard reąuirements.	Our procedures included: •    involving our regulatory advisory specialists, and using our industry knowledge, to consider the impact of relevant regulatory developments and legał proceedings on management's discounted cash flow models for regulated CGUs; •    testing the key Controls over the cash flow models, including review and approval of key assumptions and business unit budgets which form the basis of the cash flow forecasts; •    assessing management's discounted cash flow model key assumptions by: -    comparing regulated cash flow assumptions to regulatory determinations relevant to the forecast cash flow period. We analysed attributes including allowable expenditures and rates of return, inflationary impacts, and trends influencing long-term projections of these; -    comparing non-regulated cash flows to customer contracts continuing into the forecast cash flow period. We also compared these to historical trends and performance; -    agreeing the relevant cash flow forecasts to the Board approved budgets;