CRL annual report 2019

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.

21

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.

32

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