Financial statements
Section B: Notes to the Group financial statements for the year ended 30 June 2024
Section B: Notes to the Group financial statements for the year ended 30 June 2024
B14
Financial risk management and derivatives (continued)
Market risk (continued) Interest rate risk (continued) Sensitivity
Sensitivity analysis on the impacts to profit after tax from movements in benchmark interest rates on floating rate instruments after hedging is as follows. A sensitivity range of plus and minus 100 basis points has been selected as a reasonably possible shift in interest rates. This is not a forecast or prediction of future market conditions. Movement in post-tax profit 2024 2023 $M $M Interest rates +100bps (4) 17 Interest rates –100bps 4 (17) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss. The Group actively monitors concentrations of credit risk from operating activities, and has policies in place to ensure that transactions are made with commercial customers with an appropriate credit history. The Group is exposed to credit risk with its financial counterparties through entering into financial transactions in the ordinary course of business. These include funds held on deposit, cash investments and the use of derivative financial instruments. The Group manages its counterparty credit risks by dealing with counterparties that are investment grade, use of counterparty credit exposure limits, limiting the amount of credit exposure to any single counterparty and maintaining a diversity of counterparties. Financial counterparties are assessed considering credit ratings provided by multiple independent ratings agencies. Counterparty credit risk exposures are minimised through the netting of offsetting exposures and are monitored daily across the Group. An International Swaps and Derivatives Association (ISDA) agreement must be in place between the Transurban dealing entity and the counterparty prior to executing any derivatives and netting provisions are included in the event of default. Transurban Finance Company Pty Ltd (Transurban’s corporate borrowing entity) maintains all required Group counterparty credit risk metrics under the Board approved Group Treasury Policy. Credit quality of trade and related party receivables is assessed having regard to potential risk of default, relevant economic indicators and any changes to the nature and collectability of balances. Refer to Notes B7 and B29 for further information. Liquidity risk The Group manages its liquidity risk in accordance with the liquidity policies approved by the Board. The Group maintains sufficient cash balances and access to committed undrawn borrowing facilities to maintain short-term flexibility and enable the Group to meet financial commitments in a timely manner. The Group monitors liquidity by monitoring rolling forecasts of liquidity position on the basis of expected cash flows and liquidity metrics. Rolling forecasts consider operating expenses, committed capital expenditure, debt maturities and payments to security holders. Long-term liquidity requirements are refreshed semi-annually as part of the Group’s funding plan updates and annual strategic planning process. Liquidity risk is also managed by maintaining a minimum level of liquidity comprising cash balances plus committed undrawn borrowing facilities at the Group’s corporate level. This protects against potential changes in short-term commitments and additionally a liquidity buffer is held which supports the Group’s forecasted annual operating costs and committed capital expenditures. Transurban Finance Company Pty Ltd (Transurban’s corporate borrowing entity) maintains all required Group liquidity metrics under the Board approved Group Treasury Policy. Financing arrangements The Group had access to the following undrawn working capital and general purpose borrowing facilities at the end of the reporting period: 2024 2023 $M $M Floating rate Expiring within one year 56 — Expiring beyond one year 2,650 2,713 2,706 2,713 As at 30 June 2024, the Group has letter of credit facilities and general credit facilities in place with an undrawn capacity of $212 million (2023: $197 million). The facilities are committed for the duration of the facility and the undrawn portion cannot be withdrawn by the lenders.
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