Annual Report 2018-2019
Tunnel box construction in Lower Queen Street
Contents EXECUTIVE REPORT
CRL Ltd Board
6
PROJECT OVERVIEW
Project Benefits
10-11
Project Delivery
12-13
Link Alliance
15
Statement of Performance
16-19
Progress Highlights
20-21
CRL Station Design
26-27
Health and Safety
28-29
Communication and Engagement
31
PROJECT OVERVIEW
Sustainability 22-25
CRL Ltd as a good employer
EXECUTIVE REPORT
Foreword 4-5
32-33
FINANCIAL
36
Statement of Responsibility
37
Statement of Financial Performance
38
Statement of Financial Position
39
Statement of Changes in Equity
40
Statement of Cash Flows
41
Notes to the Financial Statements Directors’ Interests Audit Report
FINANCIAL
Corporate Directory
42-57 58 59-62
3
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
FOREWORD
We are pleased to present City Rail Link Limited’s 2018-2019 Annual Report Progress during the past year towards completion of the City Rail
Alliance would deliver significant opportunities for the project.
Link (CRL) project was dominated by the announcement in April
This was well received from the contracting industry.
by City Rail Link Limited (CRL Ltd) of three critical milestones: naming the preferred bidder for the substantive C3 contract, details of a $75 million Early Works Contract to maintain project momentum, and the revised cost envelope for the entire project. The announcement reflects the huge amount of ground covered by CRL Ltd during a challenging year, and now sets the company’s focus firmly on late 2024 and the completion of the project. The project’s sponsors, the Crown and Auckland Council, approved CRL Ltd’s revised cost envelope to $4.4 billion, a $1 billion increase on the previous 2014 estimate of $3.4 billion. Sponsors’ approval of the revised cost envelope shows their commitment to future-proofing the project. The revised estimate followed a rigorous and comprehensive
to opt for the Alliance model with its opportunities for greater design, delivery innovation and flexibility, attracted two worldclass, competitive bids from greatly experienced New Zealand and international companies. The successful bidder was the Link Alliance. Ahead of signing the formal Project Alliance Agreement for C3, CRL Ltd and the Link Alliance negotiated a $75 million Early Works Contract to be delivered over a three-month period. The contract included work relating to design, consents, permitting, utilities and mobilisation. Construction on the CRL continued at pace at all sites.
review of project costs by two international assessors to ensure
CRL Ltd celebrated the breakthrough from the Albert Street (C2)
the project delivers the best value for Auckland.
tunnels to the tunnels at the Commercial Bay site. Construction
It reflects the significant changes that have impacted the scale and complexity of the CRL project over the past five years. These included unforeseen competitive pressures in the
of the Albert Street tunnel boxes will be completed in early July 2019, and back-filling the Albert Street trench will be completed in late winter, ahead of the enhancement of Albert Street itself.
construction market and changes to the scope of the project
Bulk excavation of the 14-metre-deep Lower Queen Street (C1)
such as the commitment to capacity for nine carriage trains.
trench has been completed, allowing contractors to expose the
These also included greater accuracy with cost escalation
tunnels at this end of the Commercial Bay site. Tunnel boxes are
estimates and an increase in risk allowance and unplanned event
being constructed inside the trench, and under the adjoining
contingencies.
heritage-listed Chief Post Office building.
CRL Ltd’s delivery programme continued to be challenged by
The C1 and C2 milestones provided an opportunity for CRL Ltd
a rapidly changing market. Infrastructure pipelines remained
to give Aucklanders a rare glimpse of our progress underground.
at unprecedented levels in order to cope with rapid growth, both here and overseas as the capacity to deliver the work was stretched. This was also exacerbated by financial challenges within the local construction industry. CRL Ltd adapted quickly to a changing environment with a decision to proceed with a single Alliance to deliver the stations, tunnels and rail systems under one, larger C3 Contract. CRL Ltd believed combining several contracts into a single 4
Switching to a single contract, together with CRL Ltd’s decision
At Mt Eden (C6), the micro-sized tunnel boring machine, Jeffie, successfully completed her 423-metre-long journey, travelling 17m below city streets, excavating a new stormwater main to replace the existing one that was in the path of the future tunnels. CRL Ltd and KiwiRail continued to work together to deliver improvements on the wider Auckland rail network that are necessary to maximise the benefits that the CRL will deliver.
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
EXECUTIVE REPORT
Safety is a core value for both the public and our own teams as we work around the busy city streets, live rail lines, and constrained construction environments.
The City Rail Link project will
CRL Ltd was proud to have been recognised by the NZI Sustainable Business Network as winner of the Network’s Efficiency Champion award. Its commitment to sustainability
change the way people live,
includes reducing the use of carbon fuels, re-using waste materials, and training.
travel and work in the city.
The challenge ahead is to continue to push on and build on recent successes. CRL Ltd’s partnership with Mana Whenua continues to grow as we work together to get the best possible outcomes which are important to Auckland. CRL Ltd is mindful of the effect the project can have on people’s lives and has heard the concerns from communities and businesses as it works with them to find ways to reduce construction impacts. CRL Ltd is committed to being the best neighbour possible. CRL Ltd acknowledges the support and feedback it gets from its Community Liaison Groups, from its stakeholders and from wider organisations like Auckland Transport, Auckland Council and the Crown. It also acknowledges the support and commitment from its own team at CRL Ltd, and from its contractors. They have achieved much and have much to be proud of. CRL Ltd’s three big milestones mark a significant turning point. Construction right across the city is increasing significantly as much larger programmes of work come on stream. The result will be transformational. The City Rail Link project will change the way people travel, live and work in their city.
Dr Sean Sweeney
Sir Brian Roche KNZM
Chief Executive Officer
Board Chair
City Rail Link Limited
City Rail Link Limited
5
CITY RAIL LINK LIMITED BOARD
Chair - Sir Brian Roche Sir Brian is involved with a number of boards in the public and private sectors and is currently Chair of New Zealand Transport Agency. He was the Chief Executive of the New Zealand Post Group, and has been involved in a number of infrastructure projects.
Directors Anne Urlwin is a professional director and chartered accountant with wide-ranging governance experience, including in the infrastructure and construction sectors. Her current roles include directorships of Chorus Ltd, Steel & Tube Holdings Ltd, Summerset Group Holdings Ltd and Tilt Renewables Ltd, and she is Deputy Chair of Southern Response Earthquake Services Ltd. Anne was formerly Chair of national commercial construction group Naylor Love and has served on a number of central and local government entity boards.
Brian Harrison has a legal background with extensive domestic and international experience advising corporates, financiers, multilaterals and government bodies on major projects and infrastructure in a broad range of sectors, including rail, road, aviation, ports, property and public-private partnerships. His roles have included managing and executing complex projects with responsibility for overall corporate structures and governance, procurement and contract negotiation, capital and debt structuring and analysis and advice on execution and risk allocation.
Karen Jordan is a Fellow of the Chartered Institute of Management Accountants and a project manager with over 20 years corporate general management experience in Financial Times Stock Exchange Top 20 infrastructure companies. She has extensive commercial operations and asset management expertise; latterly with United Kingdom National Grid PLC across a £1 billion per annum construction programme. Prior to moving permanently to New Zealand, she was Director of Contract Management for UK Defence, with responsibilities across a multi-billion-pounds project delivery portfolio. She is an independent member of the New Zealand Defence Force Risk and Assurance Committee and is currently the Chair of Waimea Water Ltd’s Board, providing governance on her doorstep in the construction of Tasman’s Community Dam.
Russell Black is a civil engineer with extensive client delivery management experience on major infrastructure projects - predominantly urban and underground railways in Hong Kong, Singapore, London and China. Russell provides client governance and consultancy services on Australian urban rail projects.
SENIOR LEADERSHIP TEAM
EXECUTIVE REPORT
Left to right:
Sandip Ranchhod (General Manager Programme Procurement)
Rob Mair (General Manager Health, Safety, Environment & Sustainability)
Victoria Jessop (General Manager Corporate Relations & Communications)
Russell McMullan (Project Systems Assurance Manager)
Sumi Eratne (Programme Delivery Director)
Steve Brunell (Programme Performance & Controls Director)
Caroline Beaumont (General Counsel)
Rhys Clark (Chief Financial Officer – resigned 10 May 2019)
Sean Sweeney (Chief Executive Officer)
Absent:
Moira Manning (General Manager People & Capability)
Patrick Brockie (Chief Financial Officer – from 16 May 2019)
7
Tunnel box construction underneath the Chief Post Office heritage building
Project Overview Project Benefits
10-11
Project Delivery
12-13
Link Alliance
15
Statement of Performance
16-19
Progress Highlights
20-21
Sustainability 22-25 26-27
Health and Safety
28-29
CRL Ltd as a good employer Communication and Engagement
31 32-33
PROJECT OVERVIEW
CRL Station Design
9
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Parnell Station
Redeveloped Britomart Station
New Aotea Station
New Karangahape Station
Redeveloped Mt Eden Station
Continues to Western Line
CITY RAIL LINK DELIVERING SIGNIFICANT BENEFITS FOR AUCKLAND • D ouble the number of people within 30 minutes travel of New Zealand’s biggest employment hub
When the City Rail Link opens in 2024, Britomart Station will no
• Significant travel time savings
the capacity of Auckland’s rail network to carry up to 54,000
• New and improved connections • A train at least every 10 minutes during peak times – just turn up and go
10
longer be a dead-end but a two-way through station. This doubles passengers an hour, enabling more trains to run more often. The CRL is a 3.45km twin-tunnel underground rail link that runs between the redeveloped Britomart Station and a redeveloped Mt Eden Station, where it connects with the existing Western
• M oves the equivalent capacity of three Auckland Harbour Bridges or 16 extra traffic lanes into the city centre at peak times
Line. The project also includes two new underground stations
• E ases congestion on our roads by providing commuters with an attractive alternative to their car
It is not. Think of it like the Waterview Tunnel, joining up
to be built in the inner city. The biggest myth about CRL is that it’s just an inner-city “loop”. motorways, except the CRL joins with other lines on the rail
• S ignificant commercial and residential development opportunities around the stations
network. For example, a Western Line train entering Britomart
• Attractive new public spaces around CRL stations
Once the CRL is in place, the entire Auckland rail network will
• J ob creation for up to 1,600 people at peak construction.
operate more efficiently, allowing more trains to run more often.
will leave as an Onehunga Line service and vice versa.
It will also enable new services to run between west and south Auckland avoiding the city centre altogether.
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Continues to Eastern Line
Newmarket Station
Continues to Southern and Onehunga Lines
Grafton Station
CRL/Underground Track Existing Track New/Redeveloped CRL Stations
PROJECT BENEFITS
Existing Stations
Redeveloped Lower Queen Street
Britomart Station entrances
Provision for nine-car electric trains Continues underground to Mt Eden Station via the new Aotea and Karangahape stations.
Existing platforms Connects to the existing rail network
11
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
PROJECT DELIVERY The project was initially split into eight delivery contracts. Four of these are underway (C1, C2, C6, C8), and the DSC Contract has been completed. The expected milestones agreed in the Project Delivery Agreement (PDA) and Statement of Intent (SOI) have been included in the information below and progress up to 30 June 2019 for each is noted. The PDA and SOI originally anticipated Design and Construct contract models for contracts C3, C5 and C7. These have been changed to an overarching contract to be delivered by the Link Alliance. C1
Britomart Station/Lower Queen St contract delivered by Downer Soletanche Bachy Joint Venture
C3
Alliance delivered by the Link Alliance (Vinci
passenger facility and construction of tunnels from below
Construction Grands Projets SAS, Downer, Soletanche Bachy, WSP Opus, AECOM, Tonkin+Taylor)
Britomart Station to the former Downtown Shopping
Includes mining tunnels on Albert St from just south
Centre (DSC) site. The SOI target date moved from July
of Wyndham St to the Western Line at Mt Eden,
2020 because of increased urban realm works.
building two new CRL underground stations (Aotea and
Includes creation of temporary Britomart Station
Milestone
Commence
Completion
Target Delivery Date
Underway
July 2021
Karangahape) and redeveloping Mt Eden Station (original C3 scope). Western Line works, including connection of tunnels to existing live rail corridor environment and linewide systems (original C5 scope). Rail systems
C2
integration, testing and commissioning from Britomart
lbert St (Customs to Wyndham St) delivered by A Connectus Joint Venture (McConnell Dowell/ Hawkins)
Station to Mt Eden Station (original C7 scope).
Includes trenching and tunnelling from the Downtown Shopping Centre site (corner Customs and Albert Sts) to the Wyndham St intersection on Albert St, the pipe-jack contract for the relocation of the stormwater main on Albert St and strengthening the Ōrākei Main Sewer that intersects it. The SOI target date moved from November 2019 because of increased urban realm works. Milestone
Commence
Completion
Target Delivery Date
Underway
December 2020
Milestone
Commence
Completion
Contract award for main stations & tunnels
Underway
July 2019
Contract award for Western Line works
Underway
October 2019
Contract award for system integration, testing & commissioning
Underway
October 2019
Target Delivery Date
Underway
October 2024
Mt Eden Station Britomart Station
Queen Street
Aotea Station
12
Karangahape Station
Currently Already Let/Under Construction:
Contract 3 - Alliance:
Contract 6 - Mt Eden Stormwater Main
Western Line connection
DSC - Downtown Shopping Centre (completed)
Contract 1 - Britomart Station/Lower Queen St Contract 2 - Albert St (Customs to Wyndham Sts)
Stations and tunnels
--- Rail Systems
C ontract 8 - Wider network improvements (not shown):
• Strand (completed) • Ōtāhuhu/Newmarket/Henderson improvements
Contract 9 - Britomart East
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
C6 Mt
Eden Stormwater Main delivered by March Bessac Joint Venture Includes stormwater line replacement in Mt Eden, prior to start of C3 works. Works, which are near completion, have been delayed from the SOI April 2019 target date due to adverse geotechnical conditions.
C8
Milestone
Commence
Completion
Target Delivery Date
Underway
August 2019
ider network improvements delivered by W KiwiRail and CRL Ltd Includes additional platforms and turn-back facilities at The Strand, Ōtāhuhu, Newmarket and Henderson. The Strand works are complete. The SOI target completion date of January 2020 was delayed due to C8 Ōtāhuhu Station works revised procurement strategy. This date also excludes Henderson and
C9
Milestone
Commence
Completion
The Strand
Completed
January 2019
Ōtāhuhu Station target delivery date
Underway
September 2020
Newmarket design finalised
Underway
May 2020
Henderson design finalised
Underway
September 2020
PROJECT DELIVERY
Newmarket works.
Britomart East Includes additional connections, stairs, platform widening and track modifications at the eastern end of Britomart once the CRL is operational. A scoping exercise is expected to be undertaken from 2021.
DSC being delivered by Precinct Properties Includes construction of the CRL tunnels below the Commercial Bay retail and tower development site. The work was behind programme (initial target date July 2018) because of above-ground works undertaken by Precinct. The tunnels are now complete. Milestone
Completed
Delivery date
April 2019
Up to 1,600 people will be employed on the CRL project at peak construction 13
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
A section of the Albert St tunnel looking south 14
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
LINK ALLIANCE TO DELIVER MAIN TUNNELS AND STATIONS
High performance companies with the
The Link Alliance companies, together with CRL Ltd, will work as one to design and construct C3. Individually, each entity contributes a wealth of international and national experience in the infrastructure industry to the Alliance.
combined expertise
CRL Ltd chose the alliance model after a comprehensive review of project
to successfully deliver
costs and its procurement process to ensure that it had the best possible firms
complex and challenging projects were awarded CRL Ltd’s main C3 contract – the tunnels and stations – under an
Alliances are particularly successful at delivering complex high-risk projects with many unknowns. Internationally, major construction companies are moving away from “black letter” highly legal forms of contracting with nearly all the project risks being pushed onto the contractor. In New Zealand, alliances have delivered several big roading projects, notably in Auckland the Waterview tunnels, the Newmarket Viaduct replacement, and the Northern Gateway Toll Road. Alliance culture is based on collaboration, risk sharing and no-blame, no litigation values. It provides the flexibility for joint problem solving and innovation to drive value for money outcomes for a project’s client. At the same time, companies share commercial and construction risks with their alliance partners – they all win or lose together.
LINK ALLIANCE
alliance model.
bidding for C3.
Alliances ensure that decisions made are best for a project, rather than best for any company. They must work together with common objectives – for the Link Alliance that means delivering CRL on time, in scope and on budget. The construction and design companies in the Link Alliance are: Vinci Construction Grands Projets SAS, Soletanche Bachy International NZ Ltd, Downer NZ Ltd, WSP Opus (NZ) Ltd, AECOM New Zealand Ltd and Tonkin+Taylor Ltd. The Alliance board (referred to as the Project Alliance Board) overseeing work on C3 includes representatives from CRL Ltd, the six construction and design companies, Auckland Transport and KiwiRail.
15
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
CRL Ltd CEO Sean Sweeney and Head of Delivery Scott Elwarth check progress at the C2 project
STATEMENT OF PERFORMANCE This section describes the 2018-2019 progress made towards achieving the identified performance measures included under CRL Ltd’s six output areas. These are outlined in the Statement of Performance Expectations. DELIVERY PROGRAMME
KPI 2019
Actual 2019
Deliver a quality
Complete the construction
Partially achieved. Unforeseen ground conditions impacted the
underground rail link in a
of C6
reception shaft construction for the Tunnel Boring Machine.
timely manner
Completion is expected in August 2019 (SOI target date April 2019). Complete C7 procurement
Partially achieved. Due to the disestablishment of the C7 consortium, it was decided that, to preserve project momentum, C7 scope of works should be transitioned in to the C3 works package. This is planned to be completed in October 2019 (SOI target June 2019).
Complete C3 procurement
Partially achieved. Link Alliance (Vinci Construction Grands Projets SAS, Downer, Soletanche Bachy, WSP Opus, Aecom and Tonkin+Taylor) announced as preferred contractor in April 2019. An Early Works Contract was initiated to bridge the gap through to the formal signing of the Project Alliance Agreement (PAA) on 19 July 2019 (SOI target June 2019).
Resolve all open
Achieved. Open NCRs (recorded deviations and associated
Non-Conformance
corrective action to meet contractual requirements) are monitored
Reports (NCR)
and reported against on a monthly basis. At any point, recent NCRs may still be under action. 91% of NCRs have been closed since project commencement.
16
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
HEALTH AND SAFETY
KPI 2019
Actual 2019
Build an underground
90% minimum compliance
Achieved. All contractors are audited on a six-monthly basis.
rail link that is safe for
in all construction health
For the most recent health and safety audit, all contractors met
constructors, operators,
and safety audits in line with
the minimum compliance standard and developed action plans
maintainers and users
current contracts, to be
in response to audit findings.
reviewed for future contracts 95% of incidents investigated
Achieved. 100% of incidents resulting in, or which could have
and reported, with actions
resulted in injury were investigated. 97% of incidents closed
assigned and closed out
out within two weeks. A small number of actions took longer to
within two weeks
close out. However, these were to agreed timescales.
Total Recordable Injury
Achieved. For the financial year 2018-19, the average CRL Ltd
Frequency Rate (TRIFR)
TRIFR was 6.7 per million hours worked.
between 6-8 per million hours worked 75% of CRL Ltd staff
Not achieved. A 57% response rate for the annual wellbeing
completed annual wellbeing
survey completed in December 2018. The overall wellbeing
surveys
profile score was 76%.
KPI 2019
Actual 2019
Achieve sustainability
An “Excellent” Infrastructure
C1 and C2 on target to achieve the targeted “Excellent” as-built
excellence including social
Sustainability (IS) rating
ratings. CRL Ltd has started collating evidence to ensure a timely
outcomes
submission for verification by the Infrastructure Sustainability Council of Australia (ISCA) at the completion of construction. An “Excellent” rating has also been included as a Minimum
STATEMENT OF PERFORMANCE
SUSTAINABILITY AND SOCIAL OUTCOMES
Requirement for C3. Aspiring to zero waste
Combined diversion of waste from landfill for C1 and C2
to landfill
is tracking at 96%. This includes general construction and demolition waste, spoil and waste arising from related offices. Note: contaminated spoil and hazardous waste is excluded from figures. C6 and C8 are monitored but excluded due to materiality.
Developing a carbon footprint
All construction energy and materials-related carbon emissions (measured in tCO2e) are being tracked against detailed design projections for C1 and C2. Total reductions to date are just under 6,000tCO2e, or 21%. Please also refer to the graph on page 23.
Monthly reporting to track
All contracts report on sustainability monthly (including
progress
materials, energy and water tracking), with social outcomes reporting commencing from July 2019 across the C1, C2 (pilot programme) and now the Link Alliance contract. The annual CRL Sustainability Report was released in December 2018. 17
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
STATEMENT OF PERFORMANCE
FUNDING ENVELOPE
KPI 2019
Actual 2019
Achieve fiscal efficiency
Track monthly, quarterly and yearly budgets in relation
Achieved
to the level of activities agreed Meet statutory and other agreed financial reporting
All statutory deadlines have been met
requirements COMMUNITY & STAKEHOLDER ENGAGEMENT
KPI 2019
Actual 2019
Communities and
Track monthly, quarterly and
As part of information tracking, CRL Ltd sends out a monthly
stakeholders are
annual information provision
newsletter, has at least quarterly Community Liaison Group
informed about the
meetings, monthly Mana Whenua Forums and contractors
project, understand
send weekly updates to directly impacted stakeholders.
the likely effects
CRL Ltd has also implemented a stakeholder management
on them and have
database (Darzin) to provide meaningful insights into how it
opportunities to
engages with stakeholders along with key concerns and issues.
engage with the project
Track social media engagement
Social media channels such as Facebook, LinkedIn, YouTube and Instagram are attracting large audiences (currently 18,000 and growing). The website is getting more than 47,000 views per month with a 67% growth in web traffic month-on-month to date. CRL Ltd runs monthly reporting regarding media engagement through its Isentia monitoring service.
Compliance with consent
CRL construction has demonstrated a high level of compliance
conditions
across a range of environmental indicators – including traffic, noise, vibration, dust and ground settlement. Monitoring results, and environmental performance in general, is reported to Auckland Council monthly and also to the community through regular Community Liaison Group meetings.
OVERSITE DEVELOPMENT Submit a proposal
One working day response to
CRL Ltd is diligent in ensuring that public enquiries are
public enquiries
acknowledged within one working day.
KPI 2019
Actual 2019
CRL Ltd obtained sponsor approval to progress with below deliverables
Achieved
Monthly reporting on progress of development opportunities
Achieved
Deliver development options to the shareholders by mid-2020
In progress
Commence development of master plans for CRL station precincts by mid-2020
In progress
Develop CRL value creation and capture strategy by mid-2020
In progress
to sponsors on development master planning and value capture opportunities within the project
18
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
STATEMENT OF PERFORMANCE
OUTPUT CLASS STATEMENT – CITY RAIL LINK DEVELOPMENT $(000) REVENUE
Actual 2019
Budget 2019
Actual 2018
Total revenue
3,819
2,178
3,585
Total expenses
29,115
15,383
36,868
(25,296)
(13,205)
(33,283)
Net surplus/(deficit)
This table describes the 2018-2019 results against the appropriation – Auckland City Rail Link (Non-Departmental Capital Expenditure).
ASSESSMENT OF PERFORMANCE CITY RAIL LINK LIMITED
Actual 2019
Deliver the Auckland City
Progressing activities described on pages 12 and 13
Rail Link project by 2024
against SOI targets (taken from schedule 5 of the PDA)
Target 2019 100%
STATEMENT OF PERFORMANCE
The Crown is a 51% shareholder of CRL Ltd and funds CRL Ltd on 50:50 basis with Auckland Council. The Crown and Auckland Council fund CRL Ltd by subscribing to equity in the company. An explanation of the variances from budget can be found in note 17 of the Financial Statements in this Annual Report.
19
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
PROGRESS HIGHLIGHTS
JULY 2018
AUGUST 2018
SEPTEMBER 2018
Tunnel excavation under the Customs
Excavation on the 14m deep trench
Requests for Proposal were issued
St and Albert St intersection started.
that will contain the project’s twin rail
to two short-listed tenderers for CRL
This paved the way for construction
tunnels under Britomart Station and
Ltd’s main C3 stations and tunnels
of the tunnel box section linking the
Lower Queen St began. This followed
contract. Both tenderers were made
Albert St trench with tunnels being
careful preparation work to protect the
up of world-class firms with a wealth
built under the Commercial Bay
Chief Post Office building and support
of experience delivering major
development.
the ground before trenching and
infrastructure projects in New Zealand
tunnelling construction.
and overseas.
JANUARY 2019
FEBRUARY 2019
MARCH 2019
Jeffie – the micro tunnel boring
Works were completed to deliver wider
CRL contractors poured the last base
machine – started her 423m pipe-jack
rail network improvements at The
slab underneath the intersection of
journey from Water St to Nikau St
Strand stabling yard in Parnell. These
Albert and Customs Sts. This was the
installing a replacement stormwater
improvements simplified train access to
final base slab of 29 to be built – and
main under Mt Eden, Jeffie tunnelled
the stabling facility. A new track cross-
together makes up over 3,000 cubic
at a depth of about 17m. During her
over point was constructed to give trains
metres of concrete.
journey, she removed more than
easier access to the stabling yard and
2,000 cubic metres of spoil, installed
will enable the rail network to run more
208 concrete pipe-jacks and made a
efficiently once the CRL is operational
sweeping curve underground to avoid a
in 2024.
field of hard volcanic basalt rock. 20
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOVEMBER 2018
DECEMBER 2018
Backfilling of the Albert St trench
The 4,000 tonne weight of the
The project celebrated the
began. This milestone marked the
106-year-old Chief Post Office building
breakthrough from the Albert St
start of the last stage of Albert St
was transferred onto temporary
trench to CRL tunnels built under
underground works before the road is
foundations. This enabled tunnelling
the neighbouring Commercial Bay
reinstated and returned to road users
works to safely begin under the Chief
development site in downtown
and pedestrians.
Post Office building, while protecting
Auckland.
the heritage features of the building.
APRIL 2019
MAY 2019
JUNE 2019
CRL contractors started building a
CRL sponsors, Auckland Council and
After being closed for three years, the
new section of rail to a third platform
the New Zealand Government, agreed
Wyndham St West intersection with
at ĹŒtÄ huhu Station in preparation for
to provide their share of the additional
Albert St re-opened successfully.
increased train services once the CRL
$1 billion funding shortfall required to
This reopening allowed people to
opens. This will include a new 1.3km long
complete the project. This followed CRL
easily travel east-west across Albert St
section of track, four new cross-over
Ltd naming the Link Alliance as preferred
in either direction again.
points, new overhead line and signalling
bidder for the C3 contract in April.
PROGRESS HIGHLIGHTS
OCTOBER 2018
equipment.
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CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
CRL Ltd won the 2018 Sustainable Business Network’s “Efficiency Champion” and “Supreme” awards for sustainability work undertaken to date on the project
SUSTAINABILITY The vision for the CRL project is that it will be designed, constructed and operated to the highest sustainability standards, and sets the benchmark for delivering sustainable infrastructure in New Zealand. CRL Ltd and its contractors will continue to build New Zealand’s largest transport infrastructure development without using unnecessary resources or generating unnecessary waste, while continuing to enhance social outcomes for communities and conserve the heritage of Tāmaki Makaurau.
CRL Ltd is delivering its sustainability targets by focusing on:
RESOURCE CONSUMPTION
22
WASTE
COMMUNITY BENEFIT
GOOD GOVERNANCE
MANA WHENUA
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
PROGRESS TO DATE Resource consumption and waste C1 and C2 are on track to achieve targeted reductions in energy and materials-related greenhouse gas emissions (our carbon footprint), with further efficiencies having been identified during construction. Ambitious reduction targets were also included in C3 tender documents. The Link Alliance included a number of initiatives in their proposed design and construction methodology aimed at achieving these targets. CRL Ltd is working with the Link Alliance on embedding sustainability into their design and construction planning. Water savings have been more modest than projected, meaning that both C1 and C2 are unlikely to meet their initial targets. Water use on both contracts is still less than would be expected for a businessas-usual construction approach. Both contracts have implemented water re-use initiatives, reducing potable water use on-site. C1 water re-use has been particularly successful. Since March, 100% of its construction site water has come from non-potable sources. More than 204,000 tonnes of spoil, construction and demolition waste were diverted from landfill for recycling or reuse this financial
Recycled crushed concrete used as backfill for the Albert St tunnel by CRL Ltd’s contractor, Connectus
SUSTAINABILITY
year. C1 has diverted 97% of construction and demolition waste and 100% spoil from landfill. C2 has diverted 94% of construction and demolition waste and 97% spoil from landfill. Adopting an aspirational goal of zero waste to landfill is ensuring CRL Ltd and its contractors maintain exemplary levels of waste diversion. So far C2 has used over 46,000 tonnes of recycled crushed concrete instead of virgin aggregates for backfilling the Albert St tunnel, closing the loop on construction and demolition waste and reducing transport emissions and cost.
CARBON FOOTPRINT
RESOURCE USE TRACKING TO 30 JUNE 2019 Materials emissions reduction
Target 12%
Energy emissions reduction
Target 30%
Water use reduction
Target 25%
Achieved 29%
Achieved 59%
Achieved 15%
Construction and demolition waste diverted from landfill
Target 90% Achieved 96% Target 95%
Spoil diverted from landfill
Achieved 98%
0
20
40
60
80
100
* Graph compiled from contractor monthly reporting 23
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Paoa ki uta, Paoa ki tai, Paoa ki tua
Ngāti Maru
City Rail Link has a collaborative working relationship with eight Iwi who identified their interest in the project
City Rail Link has a collaborative SOCIAL OUTCOMES working relationship with eight iwi w identified their interest in the proje CRL Ltd has made excellent progress delivering on its
Social Outcomes Strategy. This past year has seen CRL
Ltd developing and strengthening relationships with Mana Whenua, government agencies, community groups and
education providers to address skill shortages so that its future workforce is ready when jobs become available.
Infrastructure Sustainability rating & supporting Mana Whenua outcomes
CRL Ltd uses the Infrastructure Sustainability Council of Australia’s Infrastructure Sustainability (IS) rating tool to independently verify sustainability performance.
Through each step of the sustainability journey, CRL Mana A social cultural valuesoutcomes, assessment includedWhenua in input has been • sought. The existence of the urban To achieve its procurement CRL Ltdis includes CRL Ltd worked closely with
environ the CRL planning documentation. supplier diversity clauses in all tender documents. It also CRL Mana Whenua to•ensure the IS tool’s sustainability Thethat modern (post 1840) landscape It summarises the matters iwi have identified continues to work with He Waka Eke Noa to encourage criteria align with Te Ao Māori (the Māori world view), resulting important to Mana Whenua as a sy in their individual Māori Values Assessments in a custom-made CRL IS manual, titled Mahi Rauora Aratohu. the wider inclusion of Māori and Pasifika businesses in the of partnership and mutual benefit provides recommendations to manage constructionand industry. This manual, which embeds cultural values across the IS or avoid adverse effects on their values. • The CRL is a major public transport framework, was mandated in the tender documents for C3 At peak construction, the CRL project will employ up to project that will benefit Aucklander Both physical and metaphysical elements and will be used by the Link Alliance to guide its approach to 1,600 people. Employment opportunities will continue to including Mana Whenua and visitor such as mauri, tapu, whakapapa and mana sustainability during design and construction. be enhanced across the project, particularly for rangatahi are being considered. • The strong focus and those who experience barriers, disadvantage and To date, we have achieved “Leading” design ratingson for kaitiakitanga, C1 and outcomes. C2. Both contracts are onsustainability track to achieve atand least social “Excellent” discrimination. One way CRL Ltd is doing this is through its as helping Some factors that iwi have identified Progressivemitigate Employment Programme, which is being piloted are: as-built ratings once construction is complete. the impacts of the project with six rangatahi. Rangatahi are provided with meaningful work and are paid the living wage. They are paired with CRL Ltd staff mentors and are provided pastoral care with our delivery partners. CRL Ltd also continues to strengthen and create relationships with Auckland’s future workforce through tours, training and presentations to tamariki and rangatahi.
24
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
SUSTAINABILITY SOCIAL OUTCOMES Tunnel construction under Lower Queen St
25
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Concept design for redeveloped Mt Eden (Maungawhau) Station
CRL’S LEGACY: MORE THAN TRAINS AND TUNNELS Designing stations with CRL Mana Whenua The CRL project‘s two new underground stations and the upgrade of the existing Mt Eden (Maungawhau) station will be more than busy destinations for rail passengers. When they
Mana
open they will also become visual “storyboards” for the unique
The need for relevant Mana Whenua groupings to
and rich cultural heritage of Tāmaki Makaurau.
have individual and collective formal relationships
The design of all three stations will be influenced by historic and modern ties Mana Whenua have with Tāmaki Makaurau and wider Aotearoa. While designs have not been finalised, some features have already been identified. At Aotea Station there will be seven skylights that represent the seven stars of Matariki (part of the response to Rongo-mā-Tāne (atua of kūmura and cultivated food); at the new Karangahape Station, there will be a reflection of Tāne-mahuta (atua of the forests and birds) through a representation of the ancient kauri forest; and at Mt Eden Station, volcanic fields of Tāmaki Makaurau will be acknowledged along with Rūaumoko, atua of earthquakes and volcanoes. Interior designs will reflect traditional Māori weaving patterns and carvings. The CRL project and CRL’s Mana Whenua Forum have been working together on station designs since 2012. There is agreement on six key design principles, which have been incorporated into the design framework from station entrance to platform.
26
Station design principles:
with key stakeholders
Whakapapa/Whakamana Names and naming as a means of reconnecting Mana Whenua narratives to the place
Tohu The acknowledgement of wider Mana Whenua cultural landmarks
Taiao Bring landscape elements, such as water, trees, birds, and insects, back into urban areas
Mauri toi Re-inscribing Mana Whenua narratives into built architecture, landscape architecture and urban design
Ahi kā Exploring opportunities to facilitate a meaningful living presence for Mana Whenua.
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Design principles sit along alongside other design drivers to
CRL Mana Whenua and CRL Ltd share a common objective.
deliver stations that balance between function, sustainability,
As Mana Whenua, design is a unique point of difference they
engineering demands, safety, performance objectives and
bring to Tāmaki Makaurau for all to see and appreciate. All
cost – while reflecting the local culture, context and future city
New Zealanders will easily recognise the stories and the
aspirations.
designs in the stations as something that is unique and special to this country.
Historic natural treasure returned to the light During Jeffie’s 423m journey under Mt Eden to divert a stormwater main, the tunnel boring machine encountered an ancient tree estimated to be between 20,000-40,000 years old. CRL Mana Whenua Forum Kaitiaki believe the tree is likely to be whau (Entelea arborescens), and are discussing the fragments’ inclusion in the Maungawhau (Mt Eden) station. This will keep the tree as close as possible to where it was found, enhancing its mauri.
TAMARIKI “DRAW THE LINE” FOR CRL DESIGN
As well as tying station design to the history of Tāmaki Makaurau, CRL Ltd is committed to ensuring that Auckland’s tamariki are forever part of the CRL project. Auckland’s young people have a big stake in the success of the CRL project and Year 6 students from each of the city’s 540 primary schools were asked to paint and draw images. These will be fired onto ceramic tiles and used as permanent wall linings in the Aotea Station. CRL Ltd is working with the Ministry of Education, schools, and Auckland Council’s Sustainable Schools programme to encourage children to use their skills as artists and dreamers and imagine where they would like to go on a CRL train. Year six children – 11-year-olds – were being asked to contribute because they will be leaving school when the project opens in 2024 and as young adults will be among the first to enjoy the benefits the project delivers for Auckland. Two copies of each artwork will be fired on to ceramic tiles. One tile will be used at the station and the other will be returned to the pupil’s school as their reminder of the contribution they have made to the project. The CRL project will provide world-class design and art experiences for all at its stations. As well as the history of Tamaki Makaurau being embedded into station designs, there will be increasing opportunity for both temporary and permanent artworks to be displayed at the stations and along the corridor of CRL works.
Artwork from Auckland’s Year 6 students for Aotea Station 27
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
CRL project workers at Albert St tunnels
HEALTH AND SAFETY
is safe for contractors,
The delivery of the country’s first underground passenger railway presents significant health and safety challenges for all involved. It also provides a welcome opportunity to help the construction industry to set a new benchmark for safety performance in New Zealand.
operators, maintainers
To date, CRL Ltd has focused its efforts on establishing strategies and systems to
and users.
achieve industry-leading health and safety performance across the lifespan of the
CRL Ltd aims to build an underground rail link that
project. Central to this effort was the development and publication of the CRL Health & Safety Strategy. This strategy was developed in consultation with the CRL Mana Whenua Forum to ensure the incorporation of Tikanga Māori values. In pursuit of CRL Ltd’s health and safety vision, four key areas to drive improvements have been identified:
Enhance the maturity of the safety, health and environmental management systems CRL has selected the Risk Management Maturity Model (RM3) to assess the maturity of its health and safety management systems. RM3 is an externally validated safety benchmarking system and is well suited to large, complex railway infrastructure projects involving multiple contracts. Working closely with its suppliers, CRL Ltd will use RM3 to drive a systematic analysis of its overall approach to managing health and safety risks. During 2019, it launched a new Supplier Health & Safety Standard. Compliance will help support RM3 Level 3 (Standardised) by June 2020.
Supporting and embedding safer working behaviours CRL Ltd has partnered with its contractors to develop and promote practices aimed at better understanding and influencing safer working behaviours. CRL Ltd has adopted ConstructSafe, a recognised, industry-led minimum construction competency standard. We are partnering with our contractors and other industry bodies to design and implement a far-reaching safety induction and engagement campaign involving a behavioural safety training and recognition program.
28
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
CRL worker tying steel reinforcement for tunnel box construction in Lower Queen St
CRL Ltd has worked with contractors to adopt and implement a new data management system for the efficient collection and analysis of health, safety and environment data. This was rolled out from mid-2019 and will be fully in place by December 2019. The current industry standard measurement of health and safety performance is the Total Recordable Injury Frequency Rate (TRIFR). Over the last financial year, the average TRIFR rate was 6.7 per million hours worked on the CRL project. The TRIFR for the last financial year (shown below) indicates that, overall, there is broadly stable performance. However there are still a number of avoidable incidents occurring which result or could have resulted in injury. CRL Ltd continues to work closely with contractors to ensure that lessons are learned from these events and that meaningful and sustained safety improvements are adopted as a result. Over the last financial year, 100% of incidents resulting in, or which could have resulted in injury, were investigated. Relevant actions were
closed within two weeks. For the small number of actions that took longer to close out, these were to agreed timescales.
Enable continuous health & safety improvement CRL Ltd has developed and issued a revised set of minimum requirements for health and safety throughout its supply chain to ensure that leading safety management practices are adopted at each CRL construction site. We will continue working with contractors through our safety leadership group to ensure relevant lessons from incidents are shared and effective health and safety improvement programmes are adopted. CRL Ltd also plays an active role in several New Zealand construction industry health and safety initiatives.
HEALTH AND SAFETY
Establish improved health and safety performance measurement
Working in partnership with our supply chain, CRL Ltd will adopt the successful Mates in Construction programme, aimed at providing help and support between workplace peers for those experiencing mental health issues, and for contributing to industry led initiatives to tackle issues surrounding drug and alcohol misuse and its effects on workplace health and safety.
INJURIES ROLLING 12 MONTHS TRIFR (per million hours)
29
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
CRL workers in Albert St tunnels 30
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
CRL LTD AS A GOOD EMPLOYER Guiding principles:
Mahaia te mahi hei painga
The CRL is a game changer for Auckland. Our staff tell us that the strongly defined vision, objectives and values for this project provide a clear sense of direction, empowerment and unity.
hei oranga mō tātou katoa
Our policies and processes support the attraction, retention and development of
• To do the good work for the good of everyone
skilled employees and we provide a well-equipped and welcoming place to work.
• Employee wellbeing health and safety
Kotahitanga • United team leadership and workspace culture
CRLL AS A GOOD EMPLOYER
CRL Ltd staff taking part in Te Reo lessons with Jamie Cowell, AUT University
The successful delivery of the CRL project is reliant on the technical, commercial and financial expertise of the CRL Ltd team. We pride ourselves on creating a workplace that people are proud to be part of, inspires them and has wellbeing and learning at its centre. Our values are our guiding principles. CRL Ltd is proud to have attracted, retained and developed a great team of skilled and diverse employees. We are a close team of local and international
Whakāro ā iwi
infrastructure specialists, and pride ourselves on working collaboratively while
• Cultural diversity and social responsibility
relying on each other’s expertise to achieve team outcomes.
• We will connect our past to our future
Having the right people at the right time on the CRL project and providing employees with opportunity for growth and change is a key focus for CRL Ltd.
Kaiārahi ā mahi
This has been increasingly important as a project alliance model delivering the main tunnels and stations work.
• We will deliver value for money for our people and our customers
31
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Mana Whenua during dawn blessing for C6 Mt Eden stormwater realignment works
COMMUNICATION & ENGAGEMENT The benefits of the City Rail Link for Auckland once its built are significant. This year has seen public interest in the CRL project increase dramatically – both from New Zealand and overseas.
• Business support packages including business mentoring, Chamber of Commerce membership and social media training
CRL Ltd remains committed to working with and engaging its partners, contractors and the community. The scale, design and engineering feats of the CRL project have attracted widespread attention. As well as this, CRL Ltd recognises that building a project of this scale in the middle of a busy city comes with significant impacts on its neighbours, and it takes its responsibility to be a good neighbour very seriously. CRL Ltd works together with contractors and stakeholders to continue finding ways to manage impacts of the project on neighbours when faced with programme delays, changed construction environment and the start of the Albert St reinstatement.
• Trader directory for our workers, encouraging them to shop locally and use local services and facilities • Increased face-to-face engagement with businesses to enable them to plan their business throughout upcoming construction works • Street cleaning and maintenance along the entirety of Albert St works • Business advertising on hoardings and providing temporary signage to businesses • Additional wayfinding on construction fencing and increased Perspex windows. Wayfinding character -
CRL Ltd has implemented a number of immediate measures to
CRL Cindy – was developed to help people navigate
support businesses affected by works along Albert St, including:
construction works • Planning new street activations and events, construction tours, community and stakeholder events • Working closely with businesses affected by works and contractors to identify opportunities to reduce impacts from construction programme and methodology • Meet-the-neighbours online series, profiling business owners, and the challenges and opportunities they face by being a CRL neighbour.
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CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
CRL Mana Whenua Forum
Engagement
CRL Ltd’s partnership with the eight Iwi Mana Whenua
Because of the huge number who have a stake in the project
represented on the CRL Mana Whenua Forum continues
– including our neighbours – CRL Ltd and its contractors have
to add to the integrity of the CRL project and to benefit the
held around 1,000 meetings with them over the year. CRL
project as a whole.
Ltd has also held a number of events to mark the project’s
The CRL Mana Whenua Forum meet monthly and Mana Whenua provision of Māori mātauranga across all relevant stages of the project are highlighted throughout this Annual Report.
milestones, including the breakthrough celebration for C6 Mt Eden stormwater diversion, the breakthrough celebration between C2 Albert St works and the tunnels under the Precinct properties, and the opening of The Strand station. Due to the huge interest in construction works, in the last
Community Liaison Groups The CRL project’s four Community Liaison Groups (CLGs) have been representing the community across the C1/C2, Aotea, Karangahape and Mt Eden areas since 2016. CLGs meet regularly and include residents, businesses and property owners affected by the project. They are an avenue for local community representation to understand and
and C2 sites, including Auckland’s rangatahi. CRL Ltd staff also regularly present on the project to schools, universities and at industry events. CRL Ltd continues to comply with its communication and engagement consent conditions, works towards responding to enquiries within one working day and closing these out within a week.
feedback on the effects of construction and to provide input into the preparation of management plans designed to help minimise the impacts of construction.
ENGAGEMENT
share what is happening in the community, monitor and give
year CRL Ltd has shown around 500 people through the C1
Digital presence & media 10K+ Facebook followers 6K+ LinkedIn followers 1K+ Instagram followers Online platforms and media interest continues to grow, with more people wanting to know about how the CRL project is tracking.
A competition to name the CRL project’s mini Tunnel Boring Machine has been its most popular and widely
To keep people better informed, CRL Ltd has taken a more
shared online engagement to date. Over 30,000 people
proactive approach to media engagement, regularly providing
participated in naming the TBM!
media releases and media access to our sites. This year CRL Ltd received around 10 media enquiries a month and is committed to fronting up in a way that is open, honest and transparent even when discussing challenging topics. CRL’s website attracts visitors from New Zealand and across the world, with more than 47,000 views each month. The readership for the CRL Connections monthly newsletter has also grown over the last year, and now has almost 4,000 subscribers.
33
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Tunnel box construction underneath the Customs St traffic deck near the Albert and Customs Sts intersection 34
Financial Corporate Directory
36
Statement of Responsibility
37
Statement of Financial Performance
38
Statement of Financial Position
39
Statement of Changes in Equity
40
Statement of Cash Flows
41
Notes to the Financial Statements Directors’ Interests Audit Report
42-57 58 59-62
FINANCIAL 35
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
CORPORATE DIRECTORY
BOARD
Sir Brian Roche
Chair
Russell Black Brian Harrison Karen Jordan Anne Urlwin SENIOR MANAGEMENT
BANKERS
Sean Sweeney
Chief Executive
Caroline Beaumont
General Counsel
Steve Brunell
Programme Performance & Controls Director
Patrick Brockie
Chief Financial Officer
Sumi Eratne
Programme Delivery Director
Victoria Jessop
GM Corporate Relations & Communications
Rob Mair
GM Health, Safety & Environment
Moira Manning
GM People & Capability
Russell McMullan
GM Assurance & Integration
Sandip Ranchhod
GM Programme Procurement
Bank of New Zealand Queen Street Auckland ANZ Albert Street Auckland
AUDITOR
Audit New Zealand on behalf of the Auditor-General
REGISTERED OFFICE
Level 17, AMP Building 29 Customs Street West Auckland Central Auckland 1010
SOLICITORS
Bell Gully Chapman Tripp Anderson Lloyd SBM Legal
36
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
STATEMENT OF RESPONSIBILITY
We are responsible for the preparation of City Rail Link Limited (the Company’s) financial statements and statement of performance, and for the judgements made in them. We are responsible for any end of year performance information provided by the Company under section 19A of the Public Finance Act 1989. We have the responsibility for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting. In our opinion, these financial statements and statement of performance fairly reflect the financial position and operations of the Company for the year ended 30 June 2019.
Signed on behalf of the Board
Sir Brian Roche KNZM Chair Dated: 27 August 2019
Anne Urlwin Director Dated: 27 August 2019
FINANCIAL REPORT 37
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Statement of Financial Performance for the year ended 30 June 2019 in New Zealand ‘000 Dollars
Note
2019
2018
$(000)
$(000)
2,321
2,623
207
302
1,287
543
Other revenue
4
117
Total revenue
3,819
3,585
4,645
4,407
1,176
3,853
640
968
2,219
2,230
45
117
451
284
3, 4
7,255
320
Impairment expenses
5
2,407
24,689
Third party works
14
10,277
-
29,115
36,868
(25,296)
(33,280)
-
-
(25,296)
(33,280)
Revenue Rental revenue – commercial Rental revenue – residential Interest revenue
Expenses Employment expenses
2
Professional services IT expenses General expenses Credit losses and allowances Lease payments Depreciation and amortisation expenses
Total expenditure
Deficit for the year Other comprehensive revenue and expense Total comprehensive revenue and expense for the year
This statement is to be read in conjunction with the notes to the financial statements. Refer to note 17 on page 53 for comparatives to budget.
38
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Statement of Financial Position as at 30 June 2019 in New Zealand ‘000 Dollars
Note
2019
2018
$(000)
$(000)
Assets Cash and cash equivalents
6
5,236
54,776
Trade and other receivables
7
8,333
4,470
13,569
59,246
Total current assets
Capital work in progress
5
553,495
398,436
Property, plant and equipment
3
153,106
142,551
Intangibles
4
821
1,068
Total non-current assets
707,422
542,055
Total assets
720,991
601,301
Liabilities 8
26,146
10,780
Current employee entitlements
9
888
1,328
8 12
253
193
Total current liabilities
27,287
12,301
Total liabilities
27,287
12,301
693,704
589,000
752,280
622,280
Retained earnings
(58,576)
(33,280)
Total equity
693,704
589,000
Related party payables
Net assets
Equity Contributed capital
18
FINANCIAL REPORT
Accounts payable and accruals
This statement is to be read in conjunction with the notes to the financial statements. Refer to note 17 on page 54 for comparatives to budget.
39
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Statement of Changes in Equity for the year ended 30 June 2019 in New Zealand ‘000 Dollars
Retained
Contributed
Total
earnings
capital
$(000)
$(000)
$(000) Note 18
Balance at 30 June 2018
(33,280)
622,280
589,000
Total comprehensive revenue and expense for the year
(25,296)
-
(25,296)
Contributions on settlement transfer
-
-
-
Funding received for B class share issues
-
130,000
130,000
Balance at 30 June 2019
(58,579)
752,280
693,704
Balance at 30 June 2017
-
-
-
(33,280)
-
(33,280)
Contributions on settlement transfer
-
435,730
435,730
Funding received for B class share issues
-
186,550
186,550
(33,280)
622,280
589,000
Owner transactions:
Total comprehensive revenue and expense for the year Owner transactions:
Balance at 30 June 2018
This statement is to be read in conjunction with the notes to the financial statements. Refer to note 17 on page 55 for comparatives to budget.
40
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Statement of Cash Flows for the year ended 30 June 2019 in New Zealand ‘000 Dollars
Note
Actual
Actual
2019
2018
$(000)
$(000)
2,379
2,613
(22,004)
(11,217)
1,287
543
(18,338)
(8,061)
(157,212)
(120,233)
(3,990)
(3,055)
-
(428)
(161,202)
(123,716)
Proceeds from issue of share capital
130,000
186,553
Net cash from financing activities
130,000
186,553
Net (decrease)/increase
(49,540)
54,776
54,776
-
5,236
54,776
5,236
54,776
5,236
54,776
Cash flows from operating activities Cash received from customers Cash paid to suppliers & employees Interest received Net cash from operating activities Cash flows from investing activities Acquisition of capital work in progress Acquisition of property, plant and equipment Acquisition of intangibles Net cash from investing activities Cash flows from financing activities
Opening cash and cash equivalents
Made up of Bank balances Total cash
6
FINANCIAL REPORT
Closing cash
This statement is to be read in conjunction with the notes to the financial statements.
41
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS 1. Statement of accounting policies 1.1 Reporting entity City Rail Link Limited (the ‘Company’) is a Crown Entity, registered under schedule 4A of the Public Finance Act and is domiciled in New Zealand. The Company was incorporated on 13th April 2017. The Company is jointly owned by the Crown and Auckland Council. The Company’s purpose is to govern and manage the delivery of the City Rail Link project. City Rail Link Limited commenced operations with effect from 1 July 2017. The financial statements of the Company are for the year ended 30 June 2019. These financial statements were authorised by the City Rail Link Limited Board on the date specified on page 37. 1.2 Basis of preparation The financial statements have been prepared on a going concern basis and the accounting policies have been applied consistently throughout the year. The financial statements of the Company have been prepared in accordance with the requirements of the Crown Entities Act 2004, which includes the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP) and the Companies Act 1993. The Company is a Public Benefit Entity (PBE) for financial reporting purposes and reports under Tier 1 PBE standards. The financial statements are presented in New Zealand ‘000 Dollars ($), which is the Company’s functional currency and have been prepared on an accrual and historical cost basis. 1.3 New and amended standards and interpretations In line with the Financial Statement of the Government, CRLL has elected to early adopt PBE IFRS 9 Financial Instruments. PBE IFRS9 replaces PBE IPSAS 29 Financial Instruments: Recognition and Measurement. Information about the adoption of PBE IFRS 9 is provided in Note 20. 1.4 Cash and cash equivalents Cash comprises cash at bank and short-term deposits with a maturity of three months or less. 1.5 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets Financial assets were initially recognised at fair value. After initial measurement, such financial assets are subsequently measured at amount due less an allowance for credit losses. Financial liabilities Financial liabilities are classified as payables. The Company’s financial liabilities include trade and other payables. Trade and other payables are unsecured and are usually paid within 30 days of recognition. Due to their short-term nature they are not discounted. A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. 1.6 Capital Work in Progress CRLL capitalises those costs directly attribute to the construction of the project. These are captured under Capital Works in Progress in Note 5 below. CRLL also capitalises a portion of the overhead costs that is deemed to be required to support the construction of the actual physical works. This allocation of cost is reviewed regularly to ensure the method adopted remains appropriate for the stage of the project. When discrete assets within the project are completed there is an agreed handover procedure to the new recipient of the asset. The asset is then removed from CRLL’s WIP. 1.7 Property, plant and equipment Property, plant and equipment consist of land, building, subterranean land, furniture and fittings, computer hardware, computer software and office equipment.
42
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS Recognition and measurement Property, plant and equipment is measured initially at cost. Cost includes expenditure that is directly attributable to the acquisition of the items. The cost of an item of property plant and equipment is recognised only when it is probable that future economic benefit or service potential associated with the item will flow to the Company, and if the item’s cost can be measured reliably. The majority of capital expenditure will remain as ‘Work in Progress’ for the duration of the project. Subsequent expenditure Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the entity. Repairs and maintenance costs are recognised as expenditure as incurred. Depreciation Land, Buildings and Subterranean Land are held for the development of rail tunnels and stations and are not depreciated. All other assets (including temporary buildings constructed) are depreciated on a straight-line basis over the useful life of the asset. Depreciation is charged at rates calculated to allocate the cost or valuation of the asset less any estimated residual value over its remaining useful life. The estimated useful lives of buildings, property, plant and equipment are as follows: Land and buildings
Not depreciated
Buildings - other
4 years
Subterranean land
Not depreciated
Furniture and fittings
5 years
Office equipment
5 years
Computer hardware
5 years
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. Derecognition An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits or service potential are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in surplus or deficit. Impairment of non-cash generating assets For non-financial non-cash-generating assets, CRLL assesses at each reporting date whether there is an indication that a non-cash-generating asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, CRLL estimates the asset’s recoverable service amount. An asset’s recoverable service amount is the higher of the non-cash-generating asset’s fair value less costs to sell and its value in use. Where the carrying amount of an asset exceeds its recoverable service amount, the asset is considered impaired and is written down to its recoverable service amount. In assessing value in use, CRLL has adopted the depreciation replacement cost approach. Under this approach, the present value of the remaining service replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service potential of the asset. In determining fair value less costs to sell, the price of the asset in a binding agreement in an arm’s length transaction, adjusted for incremental costs that would be directly attributed to the disposal of the asset, is used. If there is no binding agreement, but the asset is traded on an active market, fair value less cost to sell is the asset’s market price less cost of disposal. If there is no binding sale agreement or active market for an asset, CRLL determines fair value less cost to sell based on the best available information. Impairment losses are recognised immediately in surplus or deficit.
FINANCIAL REPORT
potential of an asset is determined as the depreciated replacement cost of the asset. The depreciated replacement cost is measured as the reproduction or
For each asset, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, CRLL estimates the asset’s recoverable service amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable service amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such a reversal is recognised in surplus or deficit. 1.8 Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
43
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS The Company has no internally generated intangible assets. The useful lives of intangible assets are assessed as finite. Intangible assets with finite lives are amortised over their useful economic lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits or service potential embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in surplus or deficit as the expense category that is consistent with the function of the intangible assets. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in surplus or deficit when the asset is derecognised. Software The Company holds several computer software packages for internal use, including purchased software. Purchased software is recognised and measured at the cost incurred to acquire the software. A summary of the policies applied to the Company’s intangible assets is as follows: Intangible asset
Useful life
Amortisation method
Software
5 years
Straight-line basis
1.9 Leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement at inception date. The substance of the arrangement depends on whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. Company as a lessee Operating leases are leases that do not transfer substantially all the risks and benefits incidental to ownership of the leased items to the Company. Operating lease payments are recognised as an operating expense in surplus or deficit on a straight-line basis over the lease term. Company as a lessor Rent received from an operating lease is recognised as income on a straight-line basis over the lease term. Contingent rents are recognised as revenue in the periods in which they are earned. 1.10 Employee benefits Liabilities for wages and salaries (including non-monetary benefits) and annual leave are recognised in surplus or deficit during the periods in which the employees rendered the related services, and are generally expected to be settled within 12 months of the reporting date. The liabilities for these shortterm benefits are measured at the amounts expected to be paid when the liabilities are settled. Expenses for sick leave are recognised when the leave is taken and are measured at the rates paid. 1.11 Equity Equity is made up of accumulated comprehensive revenue and expense and contributed capital. Accumulated comprehensive revenue and expense is the Company’s accumulated surplus or deficit since the formation of the Company. Contributed capital represents the transfer of project costs based on a settlement agreement between the Crown and Auckland Council as well as shares issued to the shareholders, the Crown and the Auckland Council for funding of the project. 1,000 Ordinary shares were issued for the contributed capital with B class shares being issued for funding. Each funding share represents one New Zealand dollar.
44
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS 1.12 Revenue Revenue is recognised to the extent that it is probable that the economic benefit will flow to the Company and revenue can be reliably measured. Revenue is measured at the fair value of the consideration received. The following specific recognition criteria must be met before revenue is recognised. Rental revenue Rental revenue arising from operating leases on investment properties is accounted for on a straight-line basis over the lease term and is included in revenue in the statement of financial performance due to its operating nature. Outstanding customer receivables are monitored monthly and balances >30 days are followed up for recovery. As at 30 June 2019, there were 24 (2018:27) property debtors with outstanding balances. The balance of each debtor was assessed individually as to collectability and a provision for credit losses and allowances have been accounted for as a result. Interest revenue Interest is received on the cash held at bank and short-term deposits maturing within less than three months. Interest income is included in finance income in the statement of financial performance. 1.13 Tax City Rail Link Limited is a Public Entity in accordance with the Income Tax Act 2007 and consequently is exempt from the payment of income tax. Accordingly, no provision has been made for income tax. All amounts are shown exclusive of GST, except for receivables and payables that are stated inclusive of GST. Items in the financial statements are presented exclusive of GST, except for receivables and payables which are presented on a GST inclusive basis. Where GST is not recoverable as input tax, it is recognised as part of the related asset or expense. The net amount of GST recoverable from the IRD is included as part of receivables in the statement of financial position. The net GST paid to, or received from, the IRD, including the GST relating to investing and financing activities, is classified as a net operating cash flow in the statement of cash flows. Commitments and contingencies are disclosed exclusive of GST. 1.14 Significant accounting judgments, estimates and assumptions The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amounts of assets or liabilities affected in future periods. Judgements In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:
The Company has entered into commercial and rental property leases on its property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as a lease term not constituting a substantial portion of the economic life of a property, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases. The bulk of these properties (both residential and commercial) will, at some stage during the project, need to be demolished, with new stations constructed on these sites. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, which have a significant risk
FINANCIAL REPORT
Operating lease commitments – Company as lessor
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur. Useful lives and residual values The useful lives and residual values of assets are assessed using the following indicators to inform potential future use and value from disposal: • T he condition of the asset based on the assessment of experts employed by the Company • T he nature of the asset and its susceptibility and adaptability to changes in technology and processes • Changes in the market in relation to the asset. The estimated useful lives of the asset classes held by the Company are listed in notes 1.7 and 1.8.
45
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS 2. Employment expenses Breakdown of personnel costs and further information
30 June 2019
30 June 2018
$(000) $(000)
Salaries and wages
1,849 1,990
Defined contribution plan employer contributions (KiwiSaver) Increase/(Decrease) in employee entitlements Other employment-related costs
238
226
1,754
992
804
1,199
4,645 4,407
2.1 Employee remuneration bands The number of employees, contractors or former employees and contractors who received remuneration and other benefits exceeding $100,000 during the year to 30 June 2019 are specified in the following table. Remuneration includes salary, any performance incentive payments, redundancy payments, employer contributions to superannuation, health and insurance plans, motor vehicle and other sundry benefits received in their capacity as employees or former employees of the Company or payments to Contractors at their agreed rates in their capacity of filling roles that would otherwise have been filled by an employee. 30 June 2019 Number of employees
30 June 2018 Number of employees
$100,000 - $109,999
4
4
$110,000 - $119,999
3
2
$120,000 - $129,999
5
4
$130,000 - $139,999
6
3
$140,000 - $149,999
1
3
$150,000 - $159,999
3
3
$160,000 - $169,999
2
4
$170,000 - $179,999
4
4
$180,000 - $189,999
2
2
$190,000 - $199,999
2
2
$200,000 - $209,999
2
3
$210,000 - $219,999
2
1
$220,000 - $229,999
2
2
$230,000 - $239,999
4
3
$240,000 - $249,999
1
1
$250,000 - $259,999
1
-
$260,000 - $269,999
-
1
$270,000 - $279,999
-
1
$280,000 - $289,999
-
2
$290,000 - $299,999
1
-
$300,000 - $309,999
1
-
$330,000 - $339,999
1
-
$360,000 - $369,999
1
-
$380,000 - $389,999
1
-
$530,000 - $539,999
-
1
$550,000 - $559,999
1
-
50
46
Severance payments Termination benefits relate to severance amounts paid to five employees (2018:3) as a result of the reorganisation of the Company. The total termination amounts paid by the Company to these employees was $523k (2018: $108k). Redundancy payments No termination benefits relating to redundancy amounts were paid in 2019 (2018: 8) as a result of the reorganisation of the Company. The total redundancy amounts paid by CRLL to employees was $0 (2018: $286k).
46
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS Directors Remuneration (included in General Expenses in the Statement of Financial Performance)
30 June 2019
30 June 2018
$(000)
$(000)
Sir Brian Roche (Chair)
98
147
Russell Black
49
74
Brian Harrison
49
74
Karen Jordan
49
74
Anne Urlwin
49
74
294
441
3. Property, plant and equipment 30 June 2019 Cost Balance at 1 July 2018
Subterranean
Land and
land
buildings
$(000)
$(000)
Buildings
Furniture
Office
and fittings
equipment
Total
$(000)
$(000)
$(000)
$(000)
754
140,913
-
565
470
142,702
(177)
177
13,580
-
-
13,581
Additions
3,888
14
-
36
51
3,989
Disposals
-
(2)
-
-
(4)
(6)
4,465
141,102
13,580
601
517
160,265
Balance at 1 July 2018
-
-
-
110
41
151
Depreciation for the year
-
-
6,790
118
100
7,008
Balance at 30 June 2019
-
-
6,790
228
141
7,159
4,465
141,102
6,790
373
376
153,106
Subterranean
Land and
Buildings
Total
land
buildings
$(000)
$(000)
-
-
754 -
Transferred/reclassified assets
Balance at 30 June 2019
Depreciation
Net book value at 30 June 2019
30 June 2018
Office equipment
$(000)
$(000)
$(000)
$(000)
-
-
-
-
138,184
-
547
162
139,647
2,729
-
18
308
3,055
754
140,913
-
565
470
142,702
Balance at 1 July 2017
-
-
-
-
-
-
Depreciation for the year
-
-
-
110
41
151
Balance at 30 June 2018
-
-
-
110
41
151
754
140,913
-
455
429
142,551
Cost Balance at 1 July 2017 Transferred assets Additions Balance at 30 June 2018
Depreciation
Net book value at 30 June 2018
FINANCIAL REPORT
Furniture and fittings
There are no items of PPE where title has been restricted or that have been used for security against liabilities.
47
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS 4. Intangibles Software Cost Balance at 1 July Transferred assets Additions Balance at 30 June
30 June 2019
30 June 2018
$(000)
$(000)
1,237
-
-
809
-
428
1,237
1,237
Depreciation Balance at 1 July
169
-
Depreciation for the year
247
169
Balance at 30 June
416
169
Net book value at 30 June
821
1,068
30 June 2019
30 June 2018
$(000)
$(000)
There are no intangible assets where title is restricted or pledged as security for liabilities.
5. Capital work in progress Capital work in progress is measured at the lower of cost or net realisable value. 30 June Cost Balance at 1 July Transferred assets Transfers to PPE
423,125
-
-
296,083
(13,594)
-
Additions
171,060
127,042
Balance at 30 June
580,591
423,125
Impairment Balance at 1 July Impairment for the year Balance at 30 June Net book value at 30 June
24,689
-
2,407
24,689
27,096
24,689
553,495
398,436
Capital Work in Progress costs include payments to contractors for the actual construction works, resource consents and compliance requirements and costs incurred in the design, procurement and supervision of the works. CRLL also capitalises a portion of the overhead costs that it deems is required to support the construction of the actual physical works. Examples of these overhead costs include CRLL staff costs and operating costs such as rent and utilities. For 2019 the total value of overhead costs capitalised is $10.9m (2018: $11.3m). CRLL reviews its work in progress bi annually to identify any impairment of the carrying value of its assets.
6. Cash and cash equivalents Cash comprises cash at bank and short-term deposits with a maturity of three months or less. 30 June 2019 $(000) Cash at bank Short-term deposits Total
30 June 2018 $(000)
5,236
939
-
53,837
5,236
54,776
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates. While cash and cash equivalents at 30 June 2019 are subject to the expected credit loss requirements of PBE IFRS 9, no loss allowance has been recognised because the estimated loss allowance for credit losses is trivial.
48
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS Reconciliation of operating surplus with net cash from operating activities
Surplus/(Deficit) for the year
30 June 2019
30 June 2018
$(000)
$(000)
(25,296)
(33,283)
7,255
320
45
117
2,407
24,689
(2,350)
(2,751)
Adjustments for: Depreciation and amortisation Increase in provisions Impairment of work in progress Working capital movements: (Increase) In accounts receivable, prepayments and other assets (Decrease) In accounts payable, accruals and other liabilities Cash generated from operating activities
(399)
2,847
(18,338)
(8,061)
7. Trade and other receivables Short-term receivables are recorded at the amount due, less an allowance for credit losses. CRLL applies the simplified expected credit loss model of recognising lifetime expected credit losses for receivables. In measuring expected credit losses, short term receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due. Short term receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include the debtor being in liquidation. Previous accounting policy for impairment of receivables Short term receivables were carried at the original invoice amounts less any allowance for doubtful debt. 30 June 2019 $(000)
30 June 2018 $(000)
Trade receivables
2,976
2,302
GST receivable
5,404
2,141
5
144
Sundry receivables Prepayments Expected credit loss
86
-
(138)
(117)
8,333
4,470
As at 30 June, the aging analysis of trade receivables was: $(000)
$(000)
$(000)
30 - 60 days
60 - 90 days
>90 days
Trade receivables 30 June 2019
2,031
17
785
143
Trade receivables 30 June 2018
1,924
97
111
170
There have been no changes in the estimation techniques or significant assumptions used in measuring the loss allowance during the reporting period.
8. Trade and other payables Accounts payable and accruals represent liabilities of goods and services provided to the entity that have not been paid at the end of the financial year. Accounts payable and accruals are classified as other liabilities, and are measured at amortised cost. Note Trade payables Related parties payables
12
Sundry payables and accruals
30 June 2019 $(000)
30 June 2018 $(000)
3,321
980
253
193
22,825
9,800
26,399
10,973
FINANCIAL REPORT
$(000) 0 - 30 days
Terms and conditions of the above financial liabilities: • Trade payables are non-interest bearing and are normally settled on 20th of the month • Related party payables mainly relate to accruals for NoR applications not yet invoiced by Auckland Council • Sundry payables and accruals are non-interest bearing and have an average term of three months. 49
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS 9. Employee entitlements 30 June 2019
30 June 2018
$(000)
$(000)
438
422
Annual leave Accrued salaries and wages
450
906
888
1,328
10. Commitments and contingencies Operating lease commitments – Company as a lessee The Company has entered into commercial leases. These leases have an average life of between three and five years, with renewal options included in the contracts. There are no restrictions placed upon the Company by entering into these leases. Future minimum rentals payable under non-cancellable operating leases as at 30 June are, as follows: 30 June 2019
30 June 2018
$(000)
$(000)
Less than one year
1,383
1,691
One to five years
3,283
2,820
-
1,387
4,666
5,898
More than five years
Operating lease commitments – Company as a lessor The Company has entered into commercial and rental property leases on its property portfolio consisting of the Company’s buildings. These noncancellable leases have remaining terms of between one and three years. Each lease includes a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows: 30 June 2019
30 June 2018
$(000)
$(000)
Less than one year
264
1,597
One to five years
897
626
-
-
1,161
2,223
More than five years
Commitments At 30 June 2019, the Company had commitments of $147.391m (2018: $211.714m) relating to the project (in relation to capital work in progress). Contingencies As at 30 June 2019 CRLL is a party to various claims and sundry disputes. Where it has been assessed that the likelihood of having to make a payment meets the recognition criteria for a provision, this has been included in the financial statements (2018:$Nil).
11. Financial assets and liabilities and financial risk management The table below summarises the maturity profile of the Company’s financial liabilities which show the timing of the cash outflows and the maturity profiles of financial assets held by the Company which are readily salable or expected to generate cash inflows to meet the cash outflows of the financial liabilities. The amounts disclosed are undiscounted contractual cashflow. 30 June 2019 Financial assets
30 June 2018
$(000)
$(000)
Cash
5,236
54,776
Receivables
2,929
2,329
8,165
57,105
Financial liabilities Financial liabilities at amortised cost
50
26,399
10,973
26,399
10,973
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS 30 June 2019
Carrying Amount $(000)
On demand $(000)
Less than six months $(000)
Total Contractual Cashflows $(000)
Cash
5,236
5,236
-
5,236
Receivables
2,929
-
2,929
2,929
Total non derivative financial assets
8,165
5,236
2,929
8,165
Financial liabilities at amortised cost
26,399
-
26,399
26,399
Total non derivative financial liabilities
26,399
-
26,399
26,399
(18,234)
5,236
(23,470)
(18,234)
Carrying Amount $(000)
On demand $(000)
Less than six months $(000)
Total Contractual Cashflows $(000)
54,776
54,776
-
54,776
2,329
-
2,329
2,329
57,105
54,776
2,329
57,105
Non derivative financial assets
Non derivative financial liabilities
Net contractual cashflows
30 June 2018
Non derivative financial assets Cash Receivables Total non derivative financial assets Non derivative financial liabilities Financial liabilities at amortised cost
10,973
-
10,973
10,973
Total non derivative financial liabilities
10,973
-
10,973
10,973
Net contractual cashflows
46,132
54,776
(8,644)
46,132
The Company’s risk management policies identify and analyse the risks faced by the Company and set appropriate risk levels and controls to monitor those risks. (i) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. The Company has significant exposure to fluctuations in currency risk. (ii) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party, by failing to discharge an obligation. The entity is mainly exposed to credit risk from its financial assets, and the maximum exposure to credit risk at balance date is represented by the total amount of financial assets in the statement of financial position: • Trade receivables The Company manages credit risk by analysing the credit worthiness of its customers, including with external ratings if available. Deposits are placed with Bank of New Zealand and/or ANZ Bank New Zealand Limited both rated AA- by Standard & Poor’s and Fitch ratings agencies. (iii) Liquidity risk Liquidity risk is the risk that the Company will have difficulty with meeting the obligations associated with its financial liabilities. The entity’s approach to managing liquidity is to ensure that it has sufficient liquidity to meet its liabilities when they are due. Funding will be made available upon request in a prescribed format from the shareholders of the Company and therefore the Company has no significant exposure to liquidity risk.
FINANCIAL REPORT
• Cash and cash equivalents
12. Related parties a) Key management personnel Key management personnel include the senior management and the Board of Directors. 30 June 2019 Remuneration and benefits: Senior management Directors
30 June 2018
Number of personnel
$(000)
Number of personnel
$(000)
13
3,756
17
2,950
294
5
5
4,050
441 3,391
51
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS Key management personnel did not receive any remuneration or compensation other than in their capacity as key management personnel. If the number of personnel were reported as FTE the number of Senior Managers would have been 11 FTE (2018: 8.68). The Company did not provide any compensation at non-arm’s-length terms to close family members of key management personnel during the year. The Company did not provide any loans to key management personnel or their close family members. During the first year of operations, the Directors’ fees included a 50% loading to recognise the additional responsibilities required by the Directors in the company’s first year of operations. No Directors received compensation or other benefits in relation to cessation (2018:$Nil). Indemnities and insurance In accordance with section 162 of the Companies Act 1993 and City Rail Link Limited’s Constitution CRLL has provided a deed of indemnity to Directors for certain activities undertaken in the performance of CRLL’s functions. CRLL has taken out Directors’ and Officers’ Liability and Professional Indemnity insurance cover during the financial year in respect of the liability or cost of Directors and employees. Information used by directors There were no notices from directors requesting to disclose or use Company information received in their capacity as directors that would not otherwise have been available to them. b) Related party transactions and balances Related party transactions other than remuneration of key management personnel All related party transactions that the Company entered into during the year occurred within normal client/supplier relationships and under terms equivalent to those that prevail in arm’s-length transactions in similar circumstances. KiwiRail Holdings and Auckland Transport are participants in the Project Alliance Agreement (PAA). City Rail Link Limited entered into a ‘transitional business agreement’ during its establishment phase with Auckland Transport. Per note 14 CRLL also funded work by KiwiRail Holdings in relation to the C8 Strand asset. The terms of these agreements were on an arm’s-length commercial basis. Balances at year end
30 June 2019 Crown Auckland Council
Due from
Owed to
$(000)
$(000)
-
-
1,260
253
1,260
253
Crown
-
-
Auckland Council
-
193
-
193
30 June 2019
30 June 2018
$(000)
$(000)
30 June 2018
13. External auditors’ remuneration
Audit New Zealand fees paid for the assurance audit of projects C3 and C7 Audit New Zealand fees paid for the audit of the financial statements KPMG audit fees paid for the audit of the 1 July opening balance transfer
97
76
245
121
3
37
345
234
14. Third Party Works - The Strand - C8 In the 2019 financial year CRLL funded work undertaken by KiwiRail Holdings Limited, on the KiwiRail Holding Limited network, at The Strand in Parnell. As part of the overall project, CRLL will undertake or fund construction work, such as that done at The Strand, across the wider Auckland rail network. This will enable the network to manage the larger volumes of rail passengers arising from the completion of the project. The nature of the work done, and the ownership of the assets constructed, means that they do not form part of the CRLL assets, in accordance with NZ GAAP.
52
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS 15. Capital Management City Rail Link Ltd’s capital is its equity, which comprises capital and accumulated surplus/(deficit). Equity is represented by net assets. City Rail Link Ltd is subject to the financial management and accountability provisions of the Crown Entities Act 2004, which impose restrictions in relation to borrowings, acquisition of securities, issuing guarantees and indemnities, and the use of derivatives. City Rail Link Ltd manages its equity by prudently managing revenues, expenses, assets, liabilities, investments and general financial dealings to ensure the company effectively achieves its objectives and purpose.
16. Subsequent events On 19th July 2019 CRLL signed an agreement (Project Alliance Agreement) with the Link Alliance (Vinci Construction Grands Projets S.A.S, Downer NZ Ltd, Soletanche Bachy International NZ Limited, WSP Opus (NZ) Limited, AECOM New Zealand Limited and Tonkin+Taylor Limited) as C3 contractor for the construction of Tunnels from just south of Wyndham St to North Auckland Line at Mt Eden and stations (Aotea, Karangahape and Mt Eden). The Link Alliance are also the preferred contractor for the C5 and C7 contracts and it is expected finalisation of these contracts will occur over the next few months. The C5 contract is for the connection of tunnels into the existing North Auckland Line live rail corridor environment and C7 contract for rail systems, integration, testing and commissioning from Britomart to Mt Eden Station. These three contracts are all considered major transactions for the purposes of the financial statements.
17. Explanation of major variances against budget Major variations from the Company’s budget figures are explained below:
Statement of financial performance and statement of other comprehensive revenue and expense Budget 2019 $(000)
Actual 2019 $(000)
Variance 2019 $(000)
1,440
2,528
1,088
Revenue Rental income Other revenue Total revenue
738
1,291
553
2,178
3,819
1,641
Expenditure 6,328
4,645
1,683
2,772
1,176
1,596
Rental expenses
1,096
451
645
Other expenses
5,187
2,904
2,283
Depreciation
-
7,255
(7,255)
Impairment expenses
-
2,407
(2,407)
Third Party Works
-
10,277
(10,277)
Total Expenditure
15,383
29,115
(13,732)
Surplus/(Deficit)
(13,205)
(25,296)
(12,091)
Total comprehensive revenue and expense
(13,205)
(25,296)
(12,091)
The Company’s net deficit was $12m higher than budgeted (2018: $6m). The net effect of the following items contributed to this variation: Expenses were higher than budgeted by $13.7m (2018: $33.3m). This is partly due to the transfer of an asset from WIP to Buildings and the
FINANCIAL REPORT
Personnel costs Professional fees
associated depreciation expensed but not budgeted for. Other costs contributing to expenses being higher than budgeted are an impairment expense and contracted third party works which did not meet the required definition for capitilisation.
53
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS Statement of financial position Budget
Actual
Variance
2019
2019
2019
$(000)
$(000)
$(000)
17,794
5,236
(12,558)
Assets Current Assets Cash & cash equivalents Receivables and prepayments Total Current Assets
2,468
8,333
5,865
20,262
13,569
(6,693)
Non-Current Assets Capital work in progress
609,155
553,495
(55,660)
Property, Plant and Equipment
150,744
153,106
2,362
-
821
821
Total Non - Current Assets
Intangible Assets
759,899
707,422
(52,477)
Total Assets
780,161
720,991
(59,170)
13,086
26,146
(13,060)
393
888
(495)
Liabilities Current Liabilities Payables and deferred revenue Employee Entitlements Related party payables
-
253
(253)
Total Current Liabilities
13,479
27,287
(13,808)
Total liabilities
13,479
27,287
(13,808)
766,682
693,704
(72,978)
Contributed capital
784,282
752,283
(31,399)
Accumulated Surplus/(Deficit)
(17,600)
(58,579)
(40,979)
Total Equity
766,682
693,704
(72,978)
Net Assets
Equity
CRLL’s net assets were $73m lower than budgeted (2018: $15.2m). This was due to lower opening asset levels, slower progress on C1 and C2 and delays caused by the alternative procurement approach required on C5 and C7.
54
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
Statement of cash flow Budget
Actual
Variance
2019
2019
2019
$(000)
$(000)
$(000)
3,526
2,379
(1,147)
(13,918)
(22,004)
(436)
738
1,287
549
Cash flows from operating activities Cash received from customers Cash paid to suppliers & employees Interest received Cash received from other operating activities
-
-
-
(9,654)
(18,338)
(1,034)
(173,514)
(157,212)
8,652
Acquisition of property, plant and equipment
-
(3,990)
(3,990)
Acquisition of intangibles
-
-
-
(173,514)
(161,202)
4,662
Proceeds from issue of share capital
162,000
130,000
(32,000)
Net cash from financing activities
162,000
130,000
(32,000)
Net (decrease)/increase
(21,168)
(49,540)
(28,372)
Opening cash and cash equivalents
38,962
54,776
15,814
Closing cash
17,794
5,236
(12,558)
Net cash from operating activities
Cash flows from investing activities Acquisition of capital work in progress
Net cash from investing activities
Cash flows from financing activities
Made up of: Bank balances
17,794
5,236
(12,558)
Total cash
17,794
5,236
(12,558)
The Company’s net cash was $12.6m lower than budgeted (2018: $53.8m higher than budgeted) and proceeds from issuance of share capital was $32m lower than planned. This was largely due to improved cashflow forecasting and seeking to maintain only necessary cash on hand. The budget for acquisition of capital works in progress also included acquisition of property, plant and equipment.
FINANCIAL REPORT 55
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
NOTES TO THE FINANCIAL STATEMENTS 18. Equity Equity is measured as the difference between total assets and total liabilities. Equity is classified into the following components. • Contributed capital • Surplus/(Deficit) • Funding received for B class shares Shares Ordinary Shares: The initial shareholding for the creation of CRLL comprised 1,000 ordinary shares. Ordinary shares relate to the initial set up of the company and have no par value or voting rights attached. There have been no movements in ordinary shares. The shareholding was split as per the table below. B Class Shares: Shareholders receive 1 share for every dollar of funding received. Funding is applied for on a quarterly basis supported by future forecast cash requirements. All B class shares are authorised, issued and fully paid. They have no par value.
Minister of Finance
Minister of Transport
Auckland Council
Total number
Total value
of shares
of shares $000
Ordinary Shares 2019 Number of shares
1,000
255
255
490
108,932
108,933
217,865
Shares issued 1 July
32,345,784
32,345,784
64,691,568
129,383,136
129,383
Shares issued relating to prior year
14,291,777
14,291,777
28,583,554
57,167,108
57,167
Shares issued during the year
32,500,000
32,500,000
65,000,000
130,000,000
130,000
-
-
-
-
-
79,137,561
79,137,561
158,275,122
316,550,244
316,550
Total value of shares
435,730
B Class Shares 2019
Shares paid not yet issued Total B Class Shares 30 June
Total Contributed Capital 2019
752,280
Ordinary Shares 2018 Number of shares
1,000
255
255
490
108,932
108,933
217,865
Shares issued during the year
32,345,784
32,345,784
64,691,568
129,383,136
129,383
Shares paid not yet issued
14,291,777
14,291,777
28,583,554
57,167,108
57,167
Total B Class Shares 30 June
46,637,561
46,637,561
93,275,122
186,550,244
186,550
Total value of shares
435,730
B Class Shares 2018
Total Contributed Capital 2018
56
622,280
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
19. Accounting Standards and Interpretations issued but not yet effective The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are unlikely to have an impact on the Company’s financial position, performance, and/or disclosures. PBE IPSAS 34-38 replaces the existing standards for interests in other entities (PBE IPSAS 6-8). These new standards are effective for annual periods beginning on or after 1 January 2019. CRLL will apply these new standards in preparing the 30 June 2020 financial statements. No effect is expected as a result of this change. PBE IPSAS 37 - CRLL has entered into a Project Alliance Agreement (PAA) with Other Alliance Participants (OAPs) to collaborate and share the risks and responsibilities in delivering the CRL. The CRL assets become the property of CRLL on payment for those assets. Management considered the guidance in PBE IPSAS 37 and determined that the arrangement between CRLL and the OAPs is not a joint arrangement from an accounting perspective. The PAA is not a joint venture as it is not structured through a separate vehicle. Further, the arrangement does not meet the definition of a joint operation as CRLL and the 6 OAPs do not share the rights to the assets and obligations for the liabilities arising from the arrangement. CRLL and the OAPs only share the benefits of cost underruns and the risks of cost overruns in certain agreed circumstances. OAPs refers to the Link Alliance participants Vinci Construction Grands Projets S.A.S., Soletanche Bachy International NZ Ltd, Downer NZ Ltd, WSP Opus (NZ) Ltd, AECOM New Zealand Ltd and Tonkin+Taylor Ltd. PBE IPSAS 41 Financial Instruments was issued in March 2019. This standard supersedes PBE IFRS 9 Financial Instruments, which was issued as an interim standard. It is effective for reporting periods beginning on or after 1 January 2022. Although CRLL has not assessed the effect of the new standard, it does not expect any significant changes as the requirements are similar to PBE IFRS 9. PBE FRS 48 replaces the service performance reporting requirements of PBE IPSAS 1 and is effective for reporting periods beginning on or after 1 January 2021. CRLL has not yet determined how application of PBE FRS 48 will affect its statement of performance.
20. Adoption of PBE IFRS 9 Financial Instruments The adoption of PBE IFRS 9 has not had any financial reporting effect on CRLL. Accounting policies have been updated to comply with PBE IFRS 9. The main updates are: Note 6 Cash and Cash Equivalents: The policy has been updated to reflect that no loss allowance has been recognised because the estimated loss allowance for credit losses is trivial. Note 7 Trade and other receivables: This policy has been updated to reflect that the impairment of short-term receivables is now determined by applying an expected credit loss model. Measurement Category
Carrying amount
Original PBE
New PBE IFRS 9
Closing balance
Adoption of PBE
IPSAS 29 category
category
30 June 2018
IFRS 9 adjustment
Opening balance 1 July 2018 (PBE IFRS 9)
(PBE IPSAS 29) Receivables
Amortised cost
54,776
-
54,776
Trade and other receivables
Receivables
Amortised cost
4,470
-
4,470
59,246
-
59,246
Total Financial Instruments
FINANCIAL REPORT
Cash and cash equivalents
57
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
DIRECTORS’ INTERESTS Directors made the following entries in the Directors’ Interest Register pursuant to section 140 of the Companies Act 1993 during the year end of 30 June 2019.
DIRECTOR
BOARD/COMMITTEE MEMBERSHIPS
Sir Brian Roche
Ceased as Chair of Wellington Gateway General Partner No 1 Ltd
(Chair)
Ceased as Chair of Wellington Gateway General Partner No 2 Ltd Became Director of Pouakai New Zealand Limited Became Panel Member of Review of the NZ Health & Disability System Became Chair of New Zealand Transport Agency
Karen Jordan
Ceased as Lay Canon of Christ Church Cathedral, Nelson, Anglican Diocese of Nelson Ceased as Lay Member of Lawyers Standards Committee, Nelson Became Committee Member of New Zealand Defence Force Risk and Assurance Committee Became Chair of Waimea Water Limited
Anne Urlwin
Ceased as board member of Hockey New Zealand Became Director of Tararua Wind Power Ltd Became Director of Waverley Wind Farm Ltd
58
Russell Black
Ceased as a member of Sydney Metro Assurance Board
Brian Harrison
No changes
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
AUDIT REPORT
AUDIT REPORT 59
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
60
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
AUDIT REPORT 61
CITY RAIL LINK LIMITED ANNUAL REPORT 2018 - 2019
62
CRLL0195 Annual Report 2018-19
Printed on recycled paper
CRLL0195 Annual Report 2018-19
Printed on recycled paper