Governance and risk
Directors' Report
Financial statements
Assurance statements
Security holder information
Introduction Business performance Stakeholders Sustainability
Contents
Financial statement line items potentially impacted by climate-related transitions risks – R3 and R4 Time horizons 1 Short Medium Long-term Short Medium Long-term Short
Medium Long-term
Description Profit and Loss Revenue:
Balance Sheet Concession assets and equity-accounted investments: • Changes in traffic volumes, user behaviour, or regulatory responses associated with the transition to a lower- carbon economy could influence projected cash flows used in impairment assessments of concession assets and equity-accounted investments. Provisions: • Potential increases arising from contractual, regulatory or transition- related obligations. Financing liabilities: • Changes in borrowing costs or refinancing conditions.
Cash Flow Operating cash flows and capital expenditure: • Changes in toll revenue receipts arising from shifts in traffic volumes and demand. • Changes in operating cash outflows associated with compliance, decarbonisation and other transition- related activities. • Increased capital expenditure and project delivery costs arising from carbon pricing, supply chain changes, regulatory and policy developments, and strategic responses to the transition to a lower-carbon economy. Financing cash flows: • Changes in interest payments, debt raising costs and refinancing terms resulting from evolving investor and lender perceptions of transition-related risks.
• Changes in traffic volumes and network utilisation arising from the transition to a lower-carbon economy, including shifts towards alternative transport modes, could influence toll revenue. Operating costs: • Increased compliance, reporting and decarbonisation costs arising from regulatory requirements and evolving stakeholder and market expectations. • Costs associated with adapting operations and assets to changes in traffic demand and network utilisation. Finance costs: • Changes in the cost of debt arising from evolving investor and lender perceptions of transition-related risks.
Current and anticipated financial effects from transition risks The quantification of current and anticipated financial effects
expected to be material (less than 1%). See also scenario analysis in Section C4: Business resilience. These estimates are subject to uncertainty due to the use of scenario-based assumptions and have been prepared on the basis that emissions are calculated using an operational control approach, aligned with the organisational boundary applied for GHG emissions reporting. To date, there have been no identified impacts on the Group’s cost of debt attributable to climate-related factors. The Group has undertaken scenario analysis, informed by published literature and academic research, to assess the potential significance of future impacts on borrowing costs under different transition pathways. Based on this analysis, transition-related impacts on the Group’s cost of debt under the intermediate warming scenario are not expected to be material in the short to medium-term. Estimates of potential impacts over longer time horizons are subject to significant uncertainty regarding future financing markets, policy developments and investor preferences. Certain transition-related financial effects remain highly uncertain, including those arising from changing stakeholder expectations and potential structural changes to the transport system, the timing and extent of which are difficult to predict. Accordingly, the Group has concluded that the level of measurement uncertainty involved in estimating these effects is so high that the resulting quantitative information would not be useful. Examples include: • Government cost of living policies enacted or in place during the reporting period, including free and reduced public transport fares in Victoria and Queensland, which are relevant to R4. Where the Group has been able to reliably quantify the impacts of these policies on traffic revenue, those impacts have not been material; • Transition pressures across the value chain, particularly for emissions intensive materials, relevant to R3. The Group's exposure is dependent on future government policy settings, technological developments and industry innovation relating to low-carbon construction materials, which may affect construction costs, procurement availability and financing costs.
associated with R3 is described below, and the associated scenario analysis (relating to potential impacts on operating costs from changes in carbon pricing and on cost of debt) is described in Section C4: Business resilience. While the Group is not currently subject to carbon pricing, potential future carbon pricing impacts have been considered as part of this analysis. Quantification of the financial effects of R4 is currently not practicable due to data limitations, uncertainty and long- term assumptions, and the presence of offsetting factors influencing demand network utilisation. There have been no material effects on the Group’s financial position, financial performance or cash flows from transition risks, or associated activities to support progress towards GHG targets, in FY26 and the Group has not identified any significant risk of a material adjustment to the carrying amounts of the Group’s assets and liabilities for FY27. The Group purchased large-scale generation certificates (LGCs) on the spot market to support its renewable electricity and Scope 2 market-based emissions reduction objectives but this cost was not material in FY26 . 2 In the medium-term, activities supporting progress toward emissions targets include pursuit of IS ratings or climate-related targets for major projects in partnership with contractors and suppliers, supplier engagement via CDP, renewable electricity sourcing and ongoing fleet optimisation and renewal initiatives. This analysis indicates that no material financial effects are expected in the short to medium-term. Anticipated financial effects have been estimated with reference to the intermediate warming scenario, which provides a reasonable basis for quantification having regard to current policy and market signals, without implying a most likely outcome to the Group. Potential financial effects from carbon costs to the Group, based on applied shadow carbon pricing under the intermediate warming scenario, are estimated to average $13 million annually over the period FY31 to FY35. These impacts are primarily driven by Scope 2 and Scope 3 Category 1 (purchased goods and services) emissions. Cost increases associated with major construction projects are not
1 No material financial effects have been observed in the current period or are anticipated in the short-term. There is potential for anticipated financial effects to increase over the medium to long-term 2 LGCs are tradable certificates created for eligible large-scale renewable energy power stations, representing the amount of renewable energy generated by those facilities, as administered by the Clean Energy Regulator under the Australian Government’s Renewable Energy Target scheme
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