CRL Ltd Statement of Performance Expectations 2018 2019

City Rail Link Limited Statement of Performance Expectations For Financial Year 2018 – 2019

CityRailLink.co.nz

CityRailLink

INTRODUCTION

This Statement of Performance Expectations (SPE) sets

out the performance expected of City Rail Link Limited

(CRLL) for the period 1 July 2018 to 30 June 2019.

Sir Brian Roche Chair

28 June 2018

2

CRLL Statement of Performance Expectations

Anne Urlwin Director

City Rail Link Limited Statement of Performance Expectations For the year ending 30 June 2019

TABLE OF CONTENTS Introduction 2 Table of contents

3

Objectives of the City Rail Link project

4

Performance targets

5

Statement of Forecast Comprehensive Revenue and Expenses

6

Statement of Forecast Financial Position

7

Statement of Forecast Changes in Equity

8

Statement of Forecast Cash Flows

9

Notes to the Forecast Financial Statements

10 - 12

CRLL Statement of Performance Expectations

3

OBJECTIVES OF THE CITY RAIL LINK PROJECT The City Rail Link (CRL) is a significant infrastructure project to enhance the capacity and performance of Auckland rail services and improve public transport outcomes in Auckland.

The project comprises a 3.45km twin tunnel underground rail link from the existing Britomart Transport Centre connecting to the Auckland rail network at a redeveloped Mt Eden Station with two new stations at Aotea and Karangahape.

The Minister of Finance, Minister of Transport and Auckland Council (Shareholders) have agreed to co-fund and partner on the delivery of the project, and collaborate on other initiatives, with the following overarching objectives: • • • • • •

Improve transport access into and around the Auckland City Centre for a rapidly growing Auckland Improve the efficiency and resilience of the transport network of urban Auckland Significantly contribute to lifting and shaping Auckland’s economic growth Provide a sustainable transport solution that minimises environmental impacts Contribute positively to a liveable, vibrant and safe city Deliver the CRL project with a ‘best for Auckland’ approach.

OBJECTIVE OF CITY RAIL LINK LIMITED (CRLL) CRLL was established with a finite life span. It has one key objective, which is to manage the delivery and completion of the CRL.

FUNCTIONS AND OPERATIONS The CRLL Board provides governance and assurance that management is delivering to the objectives.

The Chief Executive has appointed a leadership team to provide direction and oversight to the activities of the company. The project 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.

ESTABLISHMENT CRLL commenced its first year as an operating company on 1 July 2017.

It has an established baseline of cost developed under the governance and management of Auckland Transport and set out in the Project Delivery Agreement (PDA). Reporting against the baseline assists management and the board in implementing the project and keeping Sponsors informed of progress.

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.

CRLL was established with infrastructure, an organisational structure and processes, as adopted by Auckland Transport.

CRLL is a single output class reporting entity.

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CRLL Statement of Performance Expectations

WHAT CRLL INTENDS TO ACHIEVE IN 2018/2019 In conjunction with the Statement of Intent, this Statement of Performance Expectations describes key 2018/2019 activities to 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 2018/2019 Annual Report.

STRATEGIC AREA

OUTCOME

TARGETS

• 90% minimum compliance in all construction health Health and Safety

Build an underground rail link that is safe for constructors, operators, maintainers and users

Sustainability and social outcomes

Achieve sustainability excellence including social outcomes

Project Delivery

Deliver a quality underground rail link in a timely manner

& safety audits in line with current contracts, to be reviewed for future contracts • 95% of incidents investigated and reported, with actions assigned and closed out within two weeks • Total Recordable Injury Frequency Rate (TRIFR) between 6 – 8 • 75% of completed CRLL staff annual wellbeing surveys

• An “Excellent” Infrastructure Sustainability (IS) rating • Aspiring to zero waste to landfill • Developing a carbon footprint • Monthly reporting to track progress • Complete the construction of C6 • Complete C7 procurement • Complete C3 procurement • Resolve all open NCRs • Submit a proposal to Sponsors on development master planning and value capture opportunities within the project

Funding envelope

Achieve fiscal efficiency

Community and stakeholder engagement

Communities and stakeholders are informed about the project, understand the likely effects on them and have opportunities to engage with the project

• Track monthly, quarterly and yearly budgets in relation to the level of activities agreed

• Meet statutory and other agreed financial reporting requirements • Track monthly, quarterly and annual information provision • Track social media engagement • Compliance with consent conditions • One working day response to public inquiries

The above is explained in detail in the Outcomes, Target Areas and Measures section of the Statement of Intent.

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 2019 financial year.

CRLL is funded to deliver the CRL 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.

CRLL Statement of Performance Expectations

5

City Rail Link Limited Statement of Forecast Comprehensive Revenue and Expenses For the year ending 30 June 2019

Forecast 2019 $000 Revenue Rental income

1,440

Other revenue

738

Total Revenue

2,178

Expenditure Personnel costs

(6,328)

Professional fees

(2,772)

Premises costs

(1,096)

IT expenses

(4,212)

Other expenses

6

(975)

Total Expenditure

(15,383)

Surplus/(Deficit)

(13,205)

CRLL Statement of Performance Expectations

City Rail Link Limited Statement of Forecast Financial Position As at 30 June 2019

Forecast 2019 $000 Assets Current Assets Cash and cash equivalents Receivables Prepayments

17,794 2,157 311

Non-current assets held for sale Total Current Assets

20,262

Non-Current Assets Work in progress

609,155

Land and buildings

150,674

Other fixed assets

70

Intangible assets

-

Total Non-Current Assets

759,899

Total Assets

780,161

Liabilities Current Liabilities Trade and other payables Employee entitlements

13,086 393

Provisions

-

Total Current Liabilities

13,479

Total Liabilities

13,479

Net Assets

766,682

Equity Contributed capital

784,282

Accumulated surplus/(deficit)

(17,600)

Property revaluation reserve

-

Total Equity

766,682

CRLL Statement of Performance Expectations

7

City Rail Link Limited Statement of Forecast Changes in Equity For the year ending 30 June 2019

Forecast

Forecast

Forecast

Capital

Accumulated losses

Total

$000

$000

$000

622,282

(4,395)

617,887

Deficit for the year

-

(13,205)

(13,205)

Other comprehensive income and expenses

-

-

-

Total comprehensive income and expenses

-

(13,205)

(13,205)

Share capital issues

162,000

-

162,000

Closing balance as at 30 June 2019

784,282

(17,600)

766,682

Opening balance as at 1 July 2018 Total Comprehensive Revenue and Expenses for the year

Owner Transactions

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CRLL Statement of Performance Expectations

City Rail Link Limited Statement of Forecast Cash Flows For the year ending 30 June 2019 Forecast 2019 $000 Cash Flows from Operating Activities Receipts from rental income Receipts from interest income

3,526 738

Payments to suppliers

(8,526)

Payments to employees

(5,392)

Net cash flow from operating activities

(9,654)

Cash Flows from Investing Activities Receipts from sale of property, plant and equipment

-

Purchase of property, plant and equipment

(173,514)

Net cash flow from Investing Activities

(173,514)

Cash Flows from Financing Activities Proceeds on issue of shares

162,000

Net cash flow from Financing Activities

162,000

Net Increase/(Decrease) in Cash and Cash Equivalents

(21,168)

Cash and cash equivalents at the beginning of the year

38,962

Cash and cash equivalents at the end of the year

17,794

CRLL Statement of Performance Expectations

9

City Rail Link Limited Notes to the Forecast Financial Statements For the year ending 30 June 2019

Reporting Entity CRLL is a limited liability company incorporated under the Companies Act 1993. CRLL is a majority Crown-owned entity, listed under Schedule 4A of the Public Finance Act 1989 and subject to the Crown Entities Act 2004, the Official Information Act 1982 and the Ombudsmen Act 1975.

Its shareholders are the Minister of Finance, the Minister of Transport and Auckland Council.

The purpose of CRLL is to manage the delivery and completion of the CRL project in accordance with the PDA.

Basis of Preparation These prospective financial statements have been prepared for the purpose of providing information on CRLL’s future operating intentions and financial position, against which it must report and be formally audited at the end of the financial year.

These prospective financial statements have been prepared: • in accordance with the Public Finance Act 1989 and the Crown Entities Act 2004, which include the requirement to comply with New Zealand generally accepted accounting practice (NZGAAP) • in accordance with PBE FRS42 and NZGAAP as it relates to prospective financial statements • on a historical cost basis modified by the revaluation of certain assets and liabilities • in New Zealand dollars rounded to the nearest one thousand, unless separately identified.

Statement of Significant Underlying Assumptions Funding from the Sponsors

Funding from the Sponsors is based on the expenditure programme for the project, assuming 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 done before the beginning of every quarter. For successful funding applications, the funds are received at the beginning of the new quarter.

Personnel costs The 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 2017/18 total comprehensive revenue and expense of $4.4 million. This impacts on estimated amounts of cash in hand and net assets.

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CRLL Statement of Performance Expectations

City Rail Link Limited Notes to the Forecast Financial Statements For the year ending 30 June 2019

Significant Accounting Policies The following accounting policies significantly affect the measurement of financial performance and position.

Revenue Project Funding Project costs, which are capital in nature, create an asset 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 Other revenue generated by CRLL is from rental income from properties required to be purchased to enable the build but not yet decommissioned and will be recorded as revenue.

Interest Income Interest revenue is recognised by accruing on a time proportion basis the interest due for the surplus cash balances.

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 monetary assets and liabilities denominated in foreign currency are recognised in the surplus or deficit.

Goods and Service Tax 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, or payable to, the IRD is included as part of receivables or payables 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.

Income Tax CRLL is exempt from the payment of income tax. Accordingly, no provision has been made for income tax.

CRLL Statement of Performance Expectations

11

City Rail Link Limited Notes to the Forecast Financial Statements For the year ending 30 June 2019

Property, Plant & Equipment Property, plant and equipment consists of four asset classes which are measured as follows: • Land and buildings, at cost • Leasehold improvements, at cost less accumulated depreciation and impairment losses • Furniture and office equipment, at cost less accumulated depreciation and impairment losses.

Additions The cost of an item of property, plant and equipment will be recognised as an asset only once the contracted works are completed and costs have been fully recognised. This includes items such as property purchases and other assets which are not part of the construction works.

Work in progress is recognised at cost less impairment and is not depreciated.

Depreciation Depreciation is provided on a straight-line basis on all property, plant and equipment other than land, at rates that will write off the cost (or valuation) of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of property, plant and equipment are estimated as follows: Leasehold improvements Furniture and equipment

10 years 5 years

10% 20%

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is the shorter.

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 622,281,608 shares as at 1 July 2018 and is expected to be 784,281,605 shares as at 30 June 2019.

Critical Accounting Estimates and Assumptions 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.

Estimates and assumptions are continually evaluated and are based on expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have significant risk of causing material adjustment to the carrying amount of the assets and liabilities within the forecast financial statements are as follows:

• Revenue and expenditure forecast uncertainty, with regards to timing and amount of future transactions related to properties held for future project works.

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CRLL Statement of Performance Expectations

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