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
B18 Concession financial asset The Group’s concession financial asset only relates to A25 as at 30 June 2022 and 30 June 2021.
Note
2022
2021
$M 358
$M 358
Opening carrying value
Additional finance income recognised
B13
23
23
Cash received
(29)
(27)
Foreign exchange movements and other adjustments
17
4
Closing carrying value
369
358
Including: Current asset
B8
30
28
Non-current asset
339 369
330 358
Total concession financial asset
The financial asset model within IFRIC 12 applies to service concession arrangements whereby the Group has an unconditional contractual right to receive cash or another financial asset as the consideration for the construction services provided to the grantor of the concession. The unconditional contractual right to receive cash or another financial asset arises under two scenarios: • the respective government authority guarantees to pay the Group specified amounts throughout the term of the concession arrangement (such as availability payments) provided certain asset operating conditions are met; or • the respective government authority guarantees to pay the Group any shortfall between amounts received from users of the asset and an amount specified within the concession agreement (guaranteed toll revenue arrangements). For amounts received under these arrangements the traffic risk is not borne by the Group. The portion of concession arrangements accounted for under the financial asset model in IFRIC 12 are presented as a financial receivable within the Group’s consolidated balance sheet. The Group classifies its concession financial asset at amortised cost as the objective of the Group’s business model is to collect the contractual cash flows and the contractual terms give rise to cash flows that are solely payments of principal and interest. As at 30 June 2022, having assessed the impacts from the economic uncertainty relating to COVID-19, near-term interest rates and inflation, management do not consider there to be evidence of a significant increase in credit risk since the initial recognition of these balances. This is mainly due to there being no significant change in the nature of or the collectability of these balances. The loss allowance for this concession financial asset continues to be limited to 12 months of expected losses. These balances continue to have low credit risk as they have a low risk of default and the government counterparty has a strong capacity to meet its contractual cash flow obligations in the near-term. Applying the expected credit loss model to the Group’s concession financial asset at amortised cost resulted in a $nil loss allowance being recorded (2021: $nil). The fair value of the receivable is determined at the inception of the service concession arrangement based on the discounted present value of cash flows to be received over the concession life. A portion of the receivable is recognised with corresponding revenue recorded for construction services based on the progress of the construction services provided in each period. Post completion of construction services, interest income is recorded to recognise the unwind of discounted future cash flows, while also increasing the receivable balance. Amounts received from the respective government authority are offset against the financial asset receivable. The concession asset of the A25 asset in Canada is accounted for using a bifurcated model, being: • Financial asset model for the income streams of an unconditional contractual right to receive cash from MTQ, including the availability payments and the minimum guaranteed toll income; and • Intangible asset model for the remaining income streams (refer to Note B17).
169 169
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