Governance and risk
Directors' Report
Financial statements
Assurance statements
Security holder information
Introduction Business performance Stakeholders Sustainability
Contents
Road pavements are a material asset component under the Group’s concessions, with climate-related impacts on pavement performance assessed using an engineering approach. The Group’s pavement Asset Life Cycle Models are developed based on strategies that guide performance predictions and align with concession deed requirements. The performance predictions are based on pavement age, type, condition, loading, environment, climate influences and maintenance strategies. In some cases, pavement asset replacement is driven by age-based concession deed schedules. For the remainder of pavement assets, the Asset Life Cycle Models allow for variable performance and, as a result, pavement resurfacing is expected to occur before any significant climate-related impacts materialise. While the Group's physical assets demonstrate a high degree of resilience to climate-related risks, the resilience of the Group's concession assets also depends on their sustained ability to generate toll revenue over the concession life. The value of the Group's concession assets depends, in part, on the ongoing availability, safety and performance of the underlying infrastructure, which are important factors supporting the continued operation and use of the road network. While long-term physical asset resilience provides an important indicator of the resilience of the Group's concession assets, uncertainty regarding future transition pathways and customer behaviour makes it difficult to determine the timing, nature and magnitude of any potential climate-related adaptations to the Group's strategy and business model over the long-term. Notwithstanding this uncertainty, the resilience of the Group's portfolio is supported by the essential role its assets play in urban transport networks, together with long-term macroeconomic drivers such as population growth and economic activity. Climate-related physical risks may affect concession asset value through impacts on asset availability (e.g. temporary closures or reduced lane capacity), operating costs (including maintenance and rehabilitation), and traffic demand. The Group’s design standards, asset management practices and maintenance obligations under concession deeds are key mitigants, supporting continued operability and service levels even under more extreme climate conditions. In addition, concession agreements typically include requirements to maintain defined performance standards, with asset lifecycle management practices designed to ensure compliance over time. Climate-related risks are primarily expected to manifest through potential increases in maintenance and capital expenditure rather than sustained loss of service or revenue interruption. Historical experience during extreme weather events, including Ex-Tropical Cyclone Alfred and the 2022 Brisbane flooding, suggests that although short-term disruptions may occur, assets are typically restored quickly or remain operational, supporting traffic and toll revenue recovery and demonstrating strong resilience. Concession agreements also typically mandate property insurance covering the concession assets on a replacement value basis against physical loss or damage including by earthquake, fire, lightning, storm and tempest. The Group’s property insurance coverage has provided cost recovery of past insured damage caused by extreme weather events, which further supports the resilience of the Group’s concession assets.
These attributes support asset and business resilience to physical and transition risks and support the achievement of the Group’s emissions reduction targets by improving network efficiency, reducing energy consumption and lowering emissions intensity across operations and the value chain. In addition they assist in positioning the Group to benefit from evolving transport systems and technologies, supporting delivery of its long-term decarbonisation objectives, including its FY50 net zero target. Scenario analysis As part of the Group’s climate resilience assessment, scenario analysis undertaken during FY26 is used to explore key uncertainties and to provide insights into how different climate scenarios could affect the Group’s assets, operations and long-term performance. This section provides an overview of the scenario framework used to assess risk exposures and emerging trends across three climate- related scenarios and multiple time horizons. It further describes the potential strategic implications for the Group and the outputs of financial risk modelling for selected physical and transition climate- related risks and opportunities. The Group’s approach to scenario analysis continues to evolve. As part of the Group’s mitigation strategy it retains the ability to adjust its financial capacity in response to higher than anticipated climate-related impacts, supporting financial resilience under adverse scenarios. Refer to the Section C4: Capacity to adjust strategy and business model. a. Scenario framework: long-term risk exposure and strategic implications Climate scenarios represent a range of plausible future climate outcomes based on different assumptions about global policy, technology and behavioural change. They are not forecasts, but are used to assess the resilience of the Group’s strategy and business model under varying conditions. The Group has used climate scenarios to support the identification and management of climate-related physical and transition risks and opportunities in both qualitative and quantitative capacities, including asset-level and major project-specific physical risk assessments, group- wide strategic risk assessments and major project decarbonisation pathway analysis. Preliminary quantitative scenario analysis was also undertaken in FY26 for R1 and R3, discussed below, based on available data and methodological feasibility. To the extent possible the Group has sought to use consistent scenario parameters for physical and transition risk assessment purposes from credible sources reflecting the latest available climate science and produced by established research bodies, such as the Intergovernmental Panel on Climate Change and Network for Greening the Financial System (NGFS). In some cases, more than one scenario has been used under different warming levels and emissions pathways, based on data availability and applicability to the Group.
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