City Rail Link Limited Statement of Performance Expectations For Financial Year 2019 – 2020
R D CityRailLink.co.nz
CityRailLink
T F A
TABLE OF CONTENTS Table of contents
2
Introduction 3 Objectives of the City Rail Link project
4
Performance targets
6
Statement of Forecast Comprehensive Revenue and Expenses
9
Statement of Forecast Financial Position
10
Statement of Forecast Changes in Equity
11
Statement of Forecast Cash Flows
12
Notes to the Forecast Financial Statements
13 - 16
Appendix 17
2
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
This Statement
STATEMENT OF RESPONSIBILITY
of Performance Expectations (SPE)
CRLL is responsible for the statements contained in this
sets out the performance
assumptions underlying them. CRLL is also responsible for
expected of City Rail Link Limited (CRLL)
document, including the appropriateness of the business internal control systems that provide reasonable assurance as to the integrity of its financial reporting.
for the period 1 July 2019 to 30 June 2020. Sir Brian Roche
Anne Urlwin
Chair
Director
30 June 2019
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
3
Rangitoto Island
Takarunga/ Mt Victoria
North Head
Redeveloped Britomart Station
Kelly Tarlton’s Sea Life Aquarium
Waitematā Harbour
Hobson Bay
Waitematā
Downtown Ferry Terminal
sS t
University of Auckland
Auckland Art Gallery
Sy m
St
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th
St
St
Rd rth
Bosto
Flower St
E
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Eas
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Haro
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Rd
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Kelly
Do St
Rd
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Min
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Edwin Rd
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Clive Rd
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Continues to Western Line
St
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Ave
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Kohe
St
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to
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M
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Sylv
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Ave
tain Rd
by Rd
Enfield
Ruru St
Virginia Ave East
M
Norman
Sh
ad
Korari St
ra Aki
Por ters
Moun
n Rd
Rd
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No
Powerstation
St
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Charlotte St
The City Rail Link (CRL or the Project) will contribute to a vibrant Auckland by transforming how people travel, and live in, work in and enjoy their city.
St
hS t
en Ed
St
Ne
Redeveloped Mt Eden Station
Auckland Grammar
Rd
nt
n
ge
sto
ig
ck
ich St
Ruru St
New Karangahape Station
Nu rle
Continues to Southern and Onehunga Lines
tain Rd
Mt Eden Rd
Nik au
d
Norw
Basque Road Reserve
16
ds
Moun
1
Mt
on
St ulay
ld
s Rd Bu
on
Grafton Station
Pass Rd
ss Rd er Pa Khyb Gillie s Ave
Rd ber Pass
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Maca
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Sy m
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Flee
16
on Rd Newt
16
un
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Ex
Fra
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on Rd Newt
Newmarket Station
re Rd
Rd
Bo
r Pas Khybe
St
Pa rk
Khy
St
ic ts
on Go Carlt
Rd
1
Khyber
Nikau St
ed
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Gore Rd
St
16
Gundr
Rd
en
Carlton
Carlto
Ave
kw oo
n fto
St
St B
Rd
Par k
1
St
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Gra
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1
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on
Symonds St Cemetery
rQ
Ln
Park Rd
Auckland City Hospital
Grafton Bridge
ape Rd
m Sy
pe Rd
pe
gaha
Up
Karan
Mer cury
Auckland War Memorial Museum
Rd
St Karangah
Myers Park
St
fton
rge
en
e Av
Pitt
New Aotea Station
ue
ys Gre
Gra
Geo
Q
Town Hall
Aotea Centre
Auckland Domain
on
The Civic
Shore Road Reserve
Parnell Station
Ro c
Albert Park Sky City
ce
St
Pr in
Aotea Square
Continues to Eastern Line
Spark Arena
ds
Auckland Waterfront
Kara
Bastion Point
Devonport Wharf
Ed e
Mt Eden Rd
St
nv a
le
CRL/Underground Track
Es
Cre
s
yson Gra
pla
na
Tahaki Reserve
Mt de
s Ln
Existing Track
Eden
Rd a uk
Rd
St
P New/Redeveloped CRL Stations
Existing Stations
The City Rail Link (CRL or the Project) will contribute to a vibrant Auckland by transforming how people travel, and live in, work in and enjoy their city. The project comprises a 3.45km twin tunnel underground rail link from the existing Britomart Transport Centre in lower Queen Street connecting to the Auckland rail network at a redeveloped Mt Eden Station with two new underground stations at Aotea and Karangahape to be built in the central city. The Minister of Finance, Minister of Transport and Auckland Council (Shareholders) have agreed to co-fund and partner on the delivery of the CRL, and collaborate on other initiatives, with the following overarching objectives: • When completed in 2024, the CRL will double the number of people living within 30 minutes travel of New Zealand’s largest employment hub, Auckland’s CBD. • Up to 54,000 rail passengers will be able to travel in and out of the Auckland CBD during rush hours – to move the same number by bus or car would require another 16 motorway lanes or three more Auckland Harbour Bridges. • The CRL will give people a whole new rail service by making more efficient use of the network already in place and delivering significant travel time savings. • Better travel choices will help ease pressure on Auckland’s roads, bus congestion in the city centre will be reduced, and a health dividend includes cleaner air with more people travelling on electric trains. • The CRL will help shape economic growth with a huge building programme of new homes, shops and offices either underway or planned along the new rail corridor. • CRLL engages proactively with Mana Whenua to ensure the project recognises cultural values, particularly in the design of the underground stations.
4
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
The
CRLL announced, in April, a revised cost envelope for the CRL
CRL’s
of $4.419 billion – a $1 billion increase on the previous estimate.
extra capacity is the
16
equivalent of
EXTRA LANES of traffic
The revised figure reflected significant changes impacting on the Project in the past five years that included a rigorous examination by CRLL of costs, changes to the project’s scope, and a competitive construction environment. The CRLL’s two sponsors, the Crown and Auckland Council, endorsed the additional funding requested by CRLL. CRLL selected as preferred contractor the Link Alliance, a group of New Zealand and international companies with proven records in delivering large-scale infrastructure projects, to deliver its main programme of works – the C3 contract to complete the tunnels and construct the underground stations. The Link
OR the
equivalent
of
3
Auckland Harbour
Alliance is delivering an Early Works Contract ahead of the main works starting in C3 in early 2020. The CRL is planned to be completed in 2024.
Functions and Operations The CRLL Board provides governance and assurance that
BRIDGES
management is delivering to the objectives. The Chief Executive has appointed a leadership team to provide direction and oversight to the activities of CRLL. The CRL is managed via a series of workstreams and team structure is adapted progressively in keeping with the evolving requirements of the project through its lifecycle.
CRL DOUBLE When completed
will
the number of people within
30 MINUTES
of the city
Establishment and Ownership CRLL commenced its first year as an operating company on 1 July 2017. CRLL reports regularly to the sponsors (the Crown and Auckland Council), as set out in the PDA, and to the Shareholders (the Crown as 51% shareholder through the Minister of Transport and Minister of Finance, and 49% shareholder Auckland Council) as required by the Companies Act, Crown Entities Act and the Crown Companies Owners’ Expectations Manual.
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
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WHAT CRLL INTENDS TO ACHIEVE IN 2019/2020 In conjunction with the Statement of Intent, this Statement of Performance Expectations describes key focus areas in 2019/2020 to help us achieve the key performance targets. These targets support the objectives of the CRL project and CRLL. CRLL will report on its performance in implementing these activities in its 2019/2020 Annual Report. CONTRACTOR
SCOPE
Fletcher Construction
Construction of City Rail Link tunnels below Precint's retail and tower development site
C1
Awarded in July 2016 to Downer Soletanche Bachy Joint Venture
Creation of temporary Britomart station passenger facility and construction of tunnels from below Britomart to former Downtown Shopping Centre (DSC) site
C2
A cut and cover contract awarded in June 2016 to Connectus (McConnell Dowell /Downer) Joint Venture
From DSC to the Wyndham St intersection on Albert St and the pipejack contract (separable portion) awarded in December 2015 for the relocation of a stormwater line on Albert St and strengthening of the Orakei Main sewer that cuts across Albert St
C3
Link Alliance preferred contractor (Vinci, Downer, Soletanche Bachy, WSP Opus, Aecom and Tonkin Taylor)
Tunnels from just south of Wyndham St to North Auckland Line at Mt Eden and stations (Aotea, Karangahape, Mt Eden)
C5
Under negotiation
Connection of tunnels into existing North Auckland Line live rail corridor environment
C6
Awarded in December 2017 to March Bessac JV
Stormwater replacement in Mt Eden prior to start of C3 and C5 works
C7
Under negotiation
Rail systems, integration, testing and commissioning from Britomart to Mt Eden Station
C8
KiwiRail - Otahuhu (partial) Henderson, Newmarket - TBC
Additional platforms and turnback facilities at The Strand (completed), ĹŒtÄ huhu, Newmarket and Henderson
C9
TBC
Additional connections and stairs, platform widening and track modifications at the eastern end of Britomart once CRL is operational
CONTRACT
DSC
6
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
STRATEGIC AREA
OUTCOME
PERFORMANCE TARGETS AND MEASURES
Health and Safety
Build an underground rail link that is safe for constructors, operators, maintainers and users
• An externally validated maturity assessment of the CRL HSE Management System using the Risk Management Maturity Model (RM3) will achieve Level 3 (standardised) by June 2020 • Total Recordable Injury Frequency Rate (TRIFR) at or below 6 injuries per million hours worked • Zero WorkSafe New Zealand notified events • 95% of incidents investigated and assigned actions closed out within agreed timescales • Publish annual safety assurance summary report by June 2020 to assure safety for operations, maintenance, and users
Oversite Development
Realisation of development potential in and around the CRL project site
• Monthly report on progress of development opportunities • Delivery of development options to the shareholders by June 2020 • Develop master plans for CRL station precincts by June 2020 • Commence community and stakeholder engagement by June 2020 • Develop a CRL value creation and capture strategy by June 2020
Project Delivery
Deliver a safe, operable, quality underground rail link in a timely manner
• Agree C5 and C7 for inclusion as variation to C3 Alliance and commence work on same by December 2019 • Commencement of C3 Alliance on site January 2020 (Early Works Contract underway) • Complete C8 Otahuhu Station by September 2020 • Continued progress of C2 towards completion by December 2020 including Public Realm works • Continued progress of C1 towards completion by July 2021 including Public Realm works
Funding envelope
Achieve fiscal efficiency
• Meet delivery targets within approved Appropriation • Provide 12 month forward cashflow forecasts to manage funding calls • Timely financial reporting of project costs on a cost to complete basis • Develop organisational efficiency measures • Meet statutory and other agreed financial reporting requirements
Sustainability and social outcomes
Achieve sustainability excellence including social outcomes
• Continued progress of C1 and C2“Excellent” Infrastructure Sustainability (IS) “as built” rating • 95% of construction and demolition waste diverted from landfill • 25% reduction in construction & operational energy related carbon • C1 and C2 10% reduction in embodied carbon of construction materials • Deliver social outcomes pilot ‘progressive employment programme’ with six rangatahi (young people) • Issue Sustainability Annual Review
Community and Stakeholder Engagement
Deliver a high level of communications and engagement.
• Improved results from November 2018 public survey • Increased public participation through events (target 8), community liaison group meetings (target 12), stakeholder presentations (target 25) and site tours (target 25) • Build positive profile of the project with videos (target 10), social media (target: at least 5 posts a week), proactive media releases (target 25) and community newsletter (target 12) • Positive partnership with iwi through Mana Whenua hui (target 10) • Responsiveness (target 2 working days response to public enquiries)
The above is explained in detail in the Outcomes, Target Areas and Measures section of the Statement of Intent.
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
7
FORECAST FINANCIAL STATEMENTS The forecast financial statements below include a Statement of Forecast Comprehensive Revenue and Expenses, Statement of Forecast Financial Position, Statement of Forecast Changes in Equity and Statement of Forecast Cash Flows for the 2020 financial year. CRLL is funded to deliver the project. Under the terms set out in the PDA dated 30 June 2017, funding is recognised as share capital. Other funding received by CRLL is by way of rental income from properties required to be purchased to enable the build but not yet decommissioned, and interest on surplus cash balances. These items will be recorded as revenue in the Income Statement. CRLL incurs expenditure as part of its various activities. Operating expenditure (i.e. the day to day running of CRLL) and project expenditure (i.e. unable to be capitalised) is recorded in the Statement of Forecast Comprehensive Revenue and Expenses. This expenditure is funded by the Shareholders. Project expenditure that is capital in nature is recorded on the balance sheet as Work in Progress.
8
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
STATEMENT OF FORECAST COMPREHENSIVE REVENUE AND EXPENSES FOR THE YEAR ENDING 30 JUNE 2020
FORECAST 2018/19
BUDGET 2019/20
$000
$000
2,253
234
197
21
Interest revenue
1,269
1,206
Total Revenue
3,719
1,461
Employment expenses
4,886
5,516
Professional services
2,240
1,445
IT expenses
1,457
1,016
General expenses
2,677
2,103
41
0
978
654
7,320
0
467
477
20,066
11,211
(16,347)
(9,750)
Revenue Rental revenue - commercial Rental revenue - residential
Expenditure
Bad and doubtful debts Lease payments Third party works Depreciation and amortisation expenses Total Expenditure NET SURPLUS (DEFICIT)
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
9
STATEMENT OF FORECAST FINANCIAL POSITION FOR THE YEAR ENDING 30 JUNE 2020
FORECAST 2018/19
BUDGET 2019/20
$000
$000
21,153
41,385
3,127
7,145
24,280
48,530
551,498
897,586
4,479
4,479
142,995
161,799
821
573
Total Non-Current Assets
699,793
1,064,438
Total Assets
724,073
1,112,968
20,494
34,138
Current employee entitlements
728
729
Related party payables
193
193
Total Current Liabilities
21,415
35,060
Total Liabilities
21,415
35,060
702,658
1,077,907
Contributed Capital
752,280
1,137,280
Retained earnings
(49,623)
(59,373)
Total Equity
702,658
1,077,907
Assets Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets
Non-Current Assets Capital work in progress Subterranean land Property, plant and equipment Intangibles
Liabilities Current Liabilities Accounts payable and accruals
Net Assets
Equity
10
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
STATEMENT OF FORECAST CHANGES IN EQUITY
LOSSES
BUDGET TOTAL 2019/20
$000
$000
$000
752,280
(49,623)
702,658
(9,750)
(9,750)
-
-
(9,750)
(9,750)
385,000
-
385,000
1,137,280
(59,373)
1,077,907
BUDGET
BUDGET
CAPITAL
ACCUMULATED
FOR THE YEAR ENDING 30 JUNE 2020 Opening balance as at 1 July 2019
Total Comprehensive Revenue and Expenses for the year Deficit for the year Other comprehensive income and expenses
-
Total Comprehensive income and expenses
Owner Transactions Share capital issues Total Assets
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
11
STATEMENT OF FORECAST CASH FLOW FOR THE YEAR ENDING 30 JUNE 2020
FORECAST 2018/19
BUDGET 2019/20
$000
$000
3,491
210
(26,314)
(23,188)
1,270
1,206
(21,553)
(21,772)
(136,928)
(323,963)
(5,052)
(18,934)
(91)
(99)
(142,070)
(342,996)
Proceeds from issue of share capital
130,000
385,000
Net Cash Flows from Financing Activities
130,000
385,000
Net Increase/(Decrease) in cash and cash equivalents
(33,624)
20,232
Cash and cash equivalent at beginning of period
54,777
21,153
Cash and cash equivalent at end of period
21,153
41,385
Cash Flows for Operating Activities Cash received from customers Cash paid to suppliers & employees Interest Received Net Cash Flow from Operating Activities
Cash Flows from Investing Activities Acquisition of capital work in progress Acquisition of property, plant & equipment Acquisition of intangibles Net Cash Flow from Investing Activities
Cash Flows from Financing Activities
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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2020
Reporting Entity
Basis of Preparation
City Rail Link Limited (‘CRLL’ or the ‘Company’) is a Crown
These prospective financial statements have been
Entity, registered under schedule 4A of the Public Finance
prepared for the purpose of providing information on
Act, and is domiciled in New Zealand. The Company was
CRLL’s future operating intentions and financial position,
incorporated on 13th April 2017. CRLL is jointly owned by
against which it must report and be formally audited at
the Crown, and Auckland Council.
the end of the financial year.
The Company’s purpose is to govern and manage the
These prospective financial statements have been
delivery of the City Rail Link project.
prepared:
City Rail Link Limited commenced operations with effect
• In accordance with the Crown Entities Act 2004, which
from 1 July 2017.
include the requirement to comply with New Zealand generally accepted accounting practice (NZGAAP) and the Companies Act 1993 • In accordance with PBE FRS42 and NZGAAP as it relates to prospective financial statements • The Company reports under Tier 1 Public Benefit Entity (PBE) standards and as such the prospective financial statements have been prepared on that basis • In New Zealand ‘000 Dollars ($), which is the Company’s functional currency, unless separately identified • The information in these financial statements may not be suitable for another purpose.
Statement of Significant Underlying Assumptions Funding from
Funding from the Sponsors is based on the expenditure programme for the project, assuming
the Sponsors
sufficient funding is available for the project. Funding requirement is assessed monthly and the funding application to the Sponsors and approval by the Sponsors is completed before the beginning of every quarter. For successful funding applications, the funds are received at the beginning of the new quarter.
Personnel costs
Forecast costs assume the current organisational structure will be in place throughout the period. A proportion of personnel cost which is directly attributable to the project is capitalised and recognised as Work in Progress in the Statement of Forecast Financial Position.
Capital
CRLL is undertaking a programme of capital spending aimed at delivering the CRL project. Projected costs and timing of expenditure are based on plans and quotations that were current when these forecasts were prepared.
Opening equity
Estimated opening equity assumes 2018/19 net deficit of $16.3 million. This impacts on estimated amounts of cash in hand and net assets.
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
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NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2020
Significant Accounting Policies
Goods and Service Tax
The financial statements contained in this document are
Items in the financial statements are presented exclusive
prospective and, by their nature, contain assumptions
of GST, except for receivables and payables, which are
which may lead to material differences between the
presented on a GST inclusive basis. Where GST is not
prospective financial statements and the actual financial
recoverable as input tax, it is recognised as part of the
results prepared in future reporting periods. CRLL has
related asset or expense.
undertaken a review of its financial models, and believes they remain fit for purpose in assisting CRLL in preparing prospective financial statements. The prospective statements for CRLL is subject to significant management judgement relating to the timing and quantum of the investments, and the prospective information reflects the best information available to management.
Revenue Project Funding Project costs, which are capital in nature, create an asset
Income Tax CRLL is a Public Authority 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.
Property, Plant & Equipment Property, plant and equipment consists of land, building, subterranean land, furniture and fittings, computer hardware, software and office equipment.
for CRLL as well as operating costs for its day to day running and management and are funded by a share issue to the Crown and Auckland Council. This funding is not recognised as revenue in the forecast financial statements.
Rental Revenue
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
Other revenue generated by CRLL is from rental income
or service potential associated with the item will flow to
from properties required to be purchased to enable the
CRLL, and if the item’s cost can be measured reliably.
build but not yet decommissioned and will be recorded
The majority of capital expenditure will remain as
as revenue.
‘Work in Progress’ for the duration of the project.
Interest Income
Work in progress is recognised at cost less impairment
Interest revenue is calculated on a proportion basis for the surplus cash balances throughout the forecast.
Foreign Currency Transactions Foreign currency transactions are translated into NZ$ (the functional currency) using the spot exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of
and is not depreciated.
Depreciation Land, Buildings and Subterranean Land are held for the development of rail tunnels and stations and are not depreciated. All other assets are depreciated on a straightline 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:
monetary assets and liabilities denominated in foreign currency are recognised in the surplus or deficit.
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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2020
Critical Accounting Estimates and Assumptions
The estimated useful lives of property, plant and equipment are as follows: Land & Buildings
Not depreciated
Subterranean Land
Not depreciated
Furniture & fittings
5 years
Office equipment
5 years
Computer Hardware
5 years
In preparing these prospective financial statements, CRLL has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results.
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at
Estimates and assumptions are continually evaluated and are based on expectations of future events that
each financial year end.
are believed to be reasonable under the circumstances.
Derecognition
of causing material adjustment to the carrying amount
An item of property, plant and equipment is derecognised
statements are as follows:
The estimates and assumptions that have significant risk of the assets and liabilities within the forecast financial
upon disposal or when no further future economic benefits or service potential are expected from its use or disposal.
• Revenue and expenditure forecast uncertainty, with regards to timing and amount of future transactions related to the C3 Alliance as was in tender process at
Gains and losses on disposals are determined by
time of preparing the document and C5&C7 packages
comparing proceeds with the carrying amount.
were still being finalised.
These are included in surplus or deficit.
Share Capital and Equity All shares issued are fully paid and have a face value of $1 each. The Shareholder’s investment in CRLL is made up of 752,280,476 shares as at 1 July 2019 and is expected to be 1,137,280,476 shares as at 30 June 2020.
CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
15
APPENDIX: DIRECTORY
SHAREHOLDERS The Minister of Finance The Minister of Transport Auckland Council
BOARD Sir Brian Roche (Chairman) Russell Black Brian Harrison Karen Jordan Anne Urlwin
SENIOR MANAGEMENT Sean Sweeney (Chief Executive) Caroline Beaumont Steve Brunell Patrick Brockie Sumi Eratne Victoria Jessop Rob Mair Moira Manning Russell McMullan John Williamson
BANKERS Bank of New Zealand ANZ Bank New Zealand Limited
AUDITOR Audit New Zealand on behalf of the Auditor-General
REGISTERED OFFICE Level 17, AMP Building 29 Customs Street West Auckland Central Auckland 1010 Email: info@cityraillink.govt.nz Web: www.cityraillink.co.nz Phone: 0800 275 8255
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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2019/2020
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CRLL0202 Statement Of Performance Expectations 2019
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