CRL Statement of Performance Expectations (SPE) 2019

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

D

do

ou

t eS

th

St

St

Rd rth

Bosto

Flower St

E

St ie inn

Eas

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Haro

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Rd

ld Rd

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Rd

Kelly

Do St

Rd

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Min

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Edwin Rd

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rm

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Clive Rd

St

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Continues to Western Line

St

St

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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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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

na

Sy m

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Flee

16

on Rd Newt

16

un

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Ex

Fra

y St t rS ste he inc W New ton Rd

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

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Gore Rd

St

16

Gundr

Rd

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Carlton

Carlto

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kw oo

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St

St B

Rd

Par k

1

St

ns Alex Eva

en

ape

Gra

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1

ngah

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

5

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.

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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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