Corporate Report for the year ended 30 June 2022
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Section B: Notes to the Group financial statements for the year ended 30 June 2022
Section B: Notes to the Group financial statements for the year ended 30 June 2022
B3 Basis of preparation (continued) Key accounting estimates and judgements Estimates and judgements are regularly made by management and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. The estimates and assumptions that have the most significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows: • Provision for income taxes and utilisation of tax losses; Note B7 • Fair value of derivatives and other financial instruments; Note B15 • Recoverability of goodwill, other intangibles assets and equity accounted investments; Note B16, Note B17 and Note B25 • Determination of CityLink and West Gate Tunnel cash generating unit; Note B17 • Provision for maintenance expenditure; Note B19 • Measurement of construction obligation liability; Note B20 • Measurement of promissory notes and concession notes; Note B21 • Assessment of control of STP JV; Note B25 • Assessment of control of TC; and Note B25 • Contingencies Note B28
KEY ESTIMATE AND JUDGEMENT The Group has made a number of estimates and judgements as at 30 June 2022 as a result of the uncertainty relating to the impacts of COVID-19, near-term interest rates and inflation. These estimates and judgements are included in the notes to the financial statements as applicable.
KEY ESTIMATE AND JUDGEMENT The Group continues to progress its assessment of the potential financial impacts of climate change and the transition to a low carbon economy. To date this assessment has been qualitative. The Group has also considered the potential financial reporting implications of the climate-related risks (threats and opportunities) identified at the date of this report. Consistent with the Group's strategic climate-related risk themes, while transition threats and opportunities have been identified, the focus of the assessment has been on acute and chronic physical risks (threats and opportunities) which may be more impactful over time. Physical climate-related threats include increased incidence of severe weather events such as extended rainfall and higher temperatures which may disrupt operations and increase operating and maintenance costs. Our assessment has indicated that climate change may have a financial impact on the Group particularly over the long-term. Certain assets and liabilities (in particular service concession intangible assets and maintenance provisions) are supported by cash flows that extend into the medium and long-term. With respect to the carrying amount of concession intangible assets, climate impacts on future cash flows are not expected to be significant enough to erode the excess in recoverable amount due to the existing headroom over carrying amount (which is also reducing over time through amortisation). As the Group continues to progress its assessment of the potential financial impacts of climate change and the transition to a low carbon economy, the identification of additional risks (threats and opportunities), the detailed development of the Group's response, and changes to the Group's climate change strategy may impact the Group's significant judgements and key estimates and result in material changes to financial results and the carrying amounts of certain assets and liabilities in future reporting periods.
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