Statement of Performance Expectations 2020-2021

City Rail Link Limited Statement of Performance Expectations For Financial Year 2020 - 2021

CityRailLink.co.nz

CityRailLink

Table of Contents Statement of Responsibility Project Overview

3 4-5

Objectives of the City Rail Link project

6

Performance targets

7

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 Flow

12

Notes to the Forecast Financial Statements Appendix - Directory

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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

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Statement of Responsibility This Statement of Performance

CRL Ltd is responsible for the statements contained in this document, including the appropriateness of the business assumptions underlying them. CRL Ltd is also responsible for

Expectations (SPE)

internal control systems that provide reasonable assurance

sets out the performance

as to the integrity of its financial reporting.

expected of City Rail Link Limited (CRL Ltd) for the period 1 July 2020 to 30 June 2021.

Sir Brian Roche

Anne Urlwin

Chair

Director

30 June 2020

CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

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City Rail Link (CRL or the Project) will contribute to a vibrant Auckland by transforming how people travel, live in, work in and enjoy their city.

It is New Zealand’s largest transport infrastructure project ever and a game-changer for Auckland, doubling the capacity of the current rail network.

The Project’s scope of works includes: • Building 3.45km twin track underground tunnels connecting Britomart to Mt Eden, with tunnel depths of up to 42 metres

Maha ake ngā tereina Tere ake ngā haerenga Pai ake ngā hononga

underground • Building two new stations; one

opportunity to build new homes, community spaces and work places • Wider network improvements at The Strand, Ōtāhuhu and Newmarket • Capacity for nine-car electric trains on the CRL line and operation of 48

at Wellesley and Victoria Streets

trains per hour in the peak

provisionally named Aotea, and the other under Karangahape Road with

Faster journeys

Mercury Plaza provisionally named

entrances at Beresford Square and Karangahape • Major redevelopment of Britomart Station transforming it into a twoway through station, and major redevelopment of Mt Eden Station • Streetscape enhancement around

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around new stations creating

under Albert Street with entrances

More trains Better connections

• Provision of oversite development

• 100-year asset life.

The Crown and Auckland Council (CRL’s Sponsors) have agreed to co-fund and partner on the delivery of CRL, and collaborate on other initiatives, looking to achieve a number of overarching objectives. These include creating significant travel time savings and better connections for Auckland. Once it is built, CRL will double the number of

stations and along the entirety of

people living within 30 minutes travel

Albert Street

of Auckland’s city centre and allow for

CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

a train at least every 10 minutes during

New Zealand for years to come. The

peak.

Project also enables a huge building

Up to 54,000 rail passengers per hour will be able to travel in and out of the inner city during rush hour after CRL is constructed. To move the same number by bus or car would require another 16 motorway lanes or three more Auckland Harbour Bridges. Better travel choices will also help ease pressure on Auckland’s roads, bus congestion in the

programme of new homes, shops and workplaces which are either underway

CRL Ltd commenced its first year as an

or planned along the new rail corridor.

operating company on 1 July 2017. CRL

The station areas will become bustling

Ltd reports regularly to its Sponsors (the

urban destinations, opening up the

Crown and Auckland Council), as set

surrounding streets to more foot traffic,

out in the Project Delivery Agreement

creating ideal places to live, work and

(PDA), and to the Sponsors (the Crown

socialise.

as 51 per cent shareholder through the Minister of Transport and Minister of

city centre will be reduced, and a health

Functions and Operations

dividend includes cleaner air with more

The CRL Ltd Board provides governance

people travelling on electric trains.

and assurance that management

CRL Ltd’s partnership with Mana

is delivering to the objectives. The

Whenua ensures the Project is embedded with cultural and kaitiaki values, and that it benefits from Māori mātauranga across all relevant project stages. World class stations, designed together with Mana Whenua, will be unique to New Zealand; recognising the

Establishment and Ownership

Chief Executive has appointed a

Finance, and 49 per cent shareholder Auckland Council) as required by the Companies Act, Crown Entities Act and the Crown Companies Owners’ Expectations Manual.

leadership team to provide direction and oversight to the activities of CRL Ltd. CRL is managed via a series of workstreams and team structure is adapted progressively in keeping with the evolving requirements of the Project

cultural and historic ties of Iwi to Tāmaki through its lifecycle.

Makaurau.

CRL will help shape New Zealand’s economic growth. Job creation and the upskilling of its workforce will benefit

CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

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What CRL Ltd intends to achieve in 2020/2021 In conjunction with the Statement of Intent, this Statement of Performance Expectations describes key focus areas in 2020/2021 to help us achieve key performance targets.

These targets support the objectives of the Project and CRL Ltd. CRL Ltd will report on its performance in implementing these activities in its 2020/2021 Annual Report.

CONTRACT CONTRACTOR

SCOPE

C1

Downer Soletanche Bachy Joint Venture (awarded July 2016)

Creation of temporary Britomart Station passenger facility, construction of tunnels from below Britomart to former Downtown Shopping Centre (DSC) site and streetscape enhancement on Lower Queen Street and around Britomart Station

C2

Connectus, a McConnell Dowell Downer Joint Venture (awarded June 2016)

Construction of tunnels under Albert Street from DSC to the Wyndham Street intersection, the pipejack contract for the relocation of a stormwater line on Albert Street, strengthening of the Ōrākei Main sewer that cuts across Albert Street and streetscape upgrade along Albert Street between Wyndham and Customs Streets

C3

Link Alliance (Vinci, Downer, Soletanche Bachy, WSP Opus, Aecom Tonkin+Taylor, CRL Ltd)

Tunnels from just south of Wyndham Street to the North Auckland Line at Mt Eden, building two new stations at Aotea and Karangahape and redeveloping Mt Eden Station

C5

Under negotiation

Connection of tunnels into existing North Auckland Line live rail corridor environment

C7

Under negotiation

Rail systems, integration, testing and commissioning from Britomart to Mt Eden Station

C8

Ōtāhuhu: KiwiRail (track works) and Libbet Ltd (station works) Newmarket (TBC)

Additional platforms and turnback facilities at Ōtāhuhu and Newmarket

C9

KiwiRail (early works)

Additional connections and stairs, platform widening and track modification at the eastern end of Britomart Station

CRL Ltd’s Reportable Outputs This section describes CRL Ltd’s outputs for the period 1 July 2020 to 30 June 2021 which are reportable under section 149E(1)(a) of the Crown Entities Act 2004. Per the appropriation CRL Ltd’s reportable output is to “Deliver the Auckland City Rail Link project by 2024”. Per section 149E(1)(c) of the Crown Entities Act 2004, CRL Ltd does not propose to supply any class of outputs in the 2021 financial year that is a non-reportable class of outputs.

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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

The expected revenue and expense for each reportable output for the financial year 2021 is as follows: DELIVER THE AUCKLAND CITY RAIL LINK PROJECT

REVENUE ($’000)

EXPENDITURE ($’000)

Deliver the Auckland City Rail Link project by 2024*

653

55,305

*Subject to determination of COVID-19 impact

The performance of the output will be measured through the Output Measures noted below.

CRL Ltd’s Output Classes for the fiscal year 2021 relate to Health and Safety, Oversite Development, Project Delivery, Funding Envelope, Sustainability and Social Outcomes, Community and Stakeholder Engagement.

STRATEGIC AREA

OUTCOME

PERFORMANCE TARGETS AND MEASURES

Health and Safety

Build an underground

• 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 2021

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

• Total Recordable Injury Frequency Rate (TRIFR) at or below seven injuries per million hours worked • Staff wellbeing survey completed and action plan in place • Publish annual safety assurance summary report by June 2021 to assure safety for operations, maintenance and users

Oversite

Realisation of

Development

development potential in

entity to implement the agreed value creation and capture strategy –

and around CRL sites

timeframe to be decided by the Sponsors

Project Delivery

• CRLL to contribute to the planning and successful transition to a new

Deliver a safe, operable,

• Complete C8 Ōtāhuhu by October 2020

quality underground rail

• Project Alliance Variation Agreement approved for inclusion of C5/C7 contracts by December 2020

link in a timely manner

• Complete C2 by February 2021 • Complete C5 Western Line Early Works by October 2020 • TBM drive commences at Mt Eden by June 2021 Funding Envelope

Achieve fiscal efficiency

• Meet delivery targets within approved Appropriation • Timely financial reporting of project costs on a cost to complete basis • Operate CRL Ltd’s corporate functions within the approved budget

Sustainability and

Achieve sustainability

Social Outcomes

excellence including social outcomes

• Achieve C1 and C2 “Excellent” Infrastructure Sustainability (IS) “as built” rating • 95 per cent of construction demolition waste (including spoil) diverted from landfill • C1 and C2 10 per cent reduction in embodied carbon of construction material • C3 15 per cent reduction in embodied carbon of concrete • Deliver the Link Alliance progressive employment programme • Six Link Alliance construction contracts to be awarded to Māori and/or Pasifika small and medium sized enterprises

Community and

Deliver a high level of

Stakeholder

communications and

Engagement

engagement

• Efficiently respond to and process applications for access to the Albert Street Business Hardship Programme • Increased public participation through events (target 8) 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) • 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 2020-2021

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Forecast Financial Statements The forecast financial statements (on pages 9-12) 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 2021 financial year.

CRL Ltd is funded to deliver the Project. Under the terms set out in the PDA, funding is recognised as share capital.

Other funding received by CRL Ltd is by way of rental income from properties purchased to enable the build but not yet decommissioned, and interest on surplus cash balances. These items will be recorded as revenue in the Statement of Forecast Comprehensive Revenue and Expenses.

CRL Ltd incurs expenditure as part of its activities. Operating expenditure (i.e. the day-to-day running of CRL Ltd) 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 Sponsors. Project expenditure that is capital in nature is recorded on the Statement of Forecast Financial Position as Capital Work in Progress.

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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

Statement of Forecast Comprehensive Revenue and Expenses

FORECAST 2019/20

BUDGET 2020/21

$000

$000

278

163

1,539

490

Other revenue

112

0

Total Revenue

1,930

653

3,871

4,123

Professional services

809

640

IT expenses

653

586

General expenses

3,131

4,299

Insurance expenses

4,360

7,514

Bad and doubtful debts

(80)

0

Lease payments

900

196

Third party works

33,403

23,536

Capital expenditure writeoffs

24,458

0

Vested asset expense

39,434

11,004

3,764

3,408

114,704

55,305

(112,774)

(54,652)

For the year ending 30 June Revenue Rental revenue Interest revenue

Expenditure Employment expenses

Depreciation and amortisation expenses Total Expenditure Net Surplus (deficit)

CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

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Statement of Forecast Financial Position

FORECAST 2019/20

BUDGET 2020/21

$000

$000

45,271

7,619

Prepayments

7,116

6,614

Trade and other receivables

9,706

13,321

62,093

27,553

926,420

1,759,443

Prepayments

31,707

25,113

Subterranean land

13,296

16,296

120,825

117,613

339

176

Total Non-Current Assets

1,092,588

1,918,640

Total Assets

1,154,681

1,946,194

56,928

81,117

823

798

-

-

Total Current Liabilities

57,750

81,915

Total Liabilities

57,750

81,915

1,096,931

1,864,279

1,268,280

2,090,280

(171,350)

(226,002)

1,096,931

1,864,279

For the year ending 30 June Assets Current Assets Cash and cash equivalents

Total Current Assets

Non-Current Assets Capital work in progress

Property, plant and equipment Intangibles

Liabilities Current Liabilities Accounts payable and accruals Current employee entitlements Related party payables

Net Assets

Equity Contributed capital Retained earnings Total Equity

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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

Statement of Forecast Changes in Equity

BUDGET

BUDGET

CAPITAL

ACCUMULATED

BUDGET TOTAL

LOSSES

For the year ending 30 June Opening balance as at 1 July 2020

$000

$000

$000

1,268,280

(171,350)

1,096,931

(54,652)

(54,652)

-

-

(54,652)

(54,652)

822,000

-

822,000

2,090,280

(226,002)

1,864,279

Total Comprehensive Revenue and Expenses for the year Deficit for the year Other comprehensive revenue and expenses

-

Total Comprehensive Revenue and Expenses

Owner Transactions Share capital issues Closing balance as at 30 June 2021

CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

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Statement of Forecast Cash Flow

FORECAST 2019/20

BUDGET 2020/21

$000

$000

399

170

(67,098)

(21,253)

1,539

490

(65,160)

(20,593)

(426,510)

(836,028)

15,513

(2,941)

193

(91)

(410,805)

(839,060)

Proceeds from issue of share capital

516,000

822,000

Net Cash Flows from Financing Activities

516,000

822,000

40,035

(37,652)

5,236

45,271

45,271

7,619

For the year ending 30 June 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

Net Increase/(Decrease) in cash and cash equivalents Cash and cash equivalent at beginning of period Cash and cash equivalent at end of period

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CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

Notes to the Forecast Financial Statements For the year ending 30 June 2021

Reporting Entity

Basis of Preparation

City Rail Link Limited (‘CRL Ltd’ or the ‘Company’) is a Crown

These prospective financial statements have been prepared

Entity, registered under schedule 4A of the Public Finance

for the purpose of providing information on CRL Ltd’s future

Act, and is domiciled in New Zealand. The Company was

operating intentions and financial position, against which

incorporated on 13th April 2017. CRL Ltd is jointly owned by

it must report and be formally audited at the end of the

the Crown and Auckland Council.

financial year.

The Company’s purpose is to govern and manage the

These prospective financial statements have been prepared:

delivery of the Project.

• In accordance with the Crown Entities Act 2004, which

City Rail Link Limited commenced operations with effect

include the requirement to comply with New Zealand

from 1 July 2017.

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 the

Funding from the Sponsors is based on the expenditure programme for the Project, assuming

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 majority of 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 Capital Work in Progress in the Statement of Forecast Financial Position.

Capital

CRL Ltd 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 2019/20 net deficit of $112.8 million. This impacts on estimated amounts of cash in hand and net assets.

CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

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Notes to the Forecast Financial Statements For the year ending 30 June 2021

Significant Accounting Policies

Income Tax

The financial statements contained in this document are

CRL Ltd is a Public Authority in accordance with the Income

prospective and, by their nature, contain assumptions which

Tax Act 2007 and consequently is exempt from the payment

may lead to material differences between the prospective

of income tax. Accordingly, no provision has been made for

financial statements and the actual financial results prepared

income tax.

in future reporting periods. CRL Ltd has undertaken a review of its financial models, and believes they remain fit for purpose in assisting CRL Ltd in preparing prospective financial statements. The prospective statements for CRL Ltd is subject to significant management judgement relating to the timing and quantum of the investments, and

Property, Plant & Equipment Property, plant and equipment consists of land, building, subterranean land, furniture and fittings, computer hardware, software and office equipment.

the prospective information reflects the best information

Recognition and measurement

available to management.

Property, plant and equipment is measured initially at cost.

Revenue Project Funding Project costs, which are capital in nature, create an asset for CRL Ltd 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

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 CRL Ltd, and if the item’s cost can be measured reliably.

The majority of capital expenditure will remain as ‘Capital

as revenue in the forecast financial statements.

Work in Progress’ for the duration of the Project.

Rental Revenue

Work in progress is recognised at cost less impairment and is

Other revenue generated by CRL Ltd is from rental income

not depreciated.

from properties required to enable the build but not yet

Depreciation

decommissioned and will be recorded as revenue.

Land, Buildings and Subterranean Land are held for the

Interest Income

development of rail tunnels and stations and are not

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

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: The estimated useful lives of property, plant and equipment are as follows:

resulting from the settlement of such transactions and from

Land and buildings

Not depreciated

the translation at year-end exchange rates of monetary

Temporary Buildings - other

4 years

Subterranean land

Not depreciated

Furniture and fittings

5 years

Goods and Service Tax

Office equipment

5 years

Items in the financial statements are presented exclusive

Computer hardware

5 years

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

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.

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The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

Notes to the Forecast Financial Statements For the year ending 30 June 2021

Derecognition

will remain as CRL Ltd work in progress until that time.

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.

Per PBE IPSAS 37 Joint Arrangements, CRL Ltd continues to be classified as a joint venture (as opposed to joint operation) by the Sponsors as the ultimate ownership of the CRL assets is yet to be determined. Any separable assets transferred prior to project completion will transfer without compensation and hence will be treated as a vested asset in the period in which the asset transfer occurs. CRL Ltd will recognise a vested asset expense on

Share Capital and Equity

transfer of the asset.

All shares issued are fully paid and have a face value of $1

• COVID-19: the cost impact of COVID-19 is yet to be

each. The Shareholder’s investment in CRL Ltd is made up of

determined across CRL Ltd’s construction contracts

1,268,280,476 shares as at 1 July 2020 and is expected to

but the expectation is that such costs will be able to be

be 2,090,280,476 shares as at 30 June 2021.

accommodated within the existing project budget.

The impact (if any) to the target project completion date

Critical Accounting Estimates and Assumptions

is yet to be fully quantified.

• The Business Hardship Programme was launched in

In preparing these prospective financial statements, CRL Ltd has made estimates and assumptions concerning the future. These estimates and assumptions may differ from

December 2019. The programme was set up to provide assistance in the form of rental payment contributions to small retail businesses that have been directly impacted by

the subsequent actual results.

the delay to completion of the C2 contract works within

Estimates and assumptions are continually evaluated and are

Customs Street intersections.

based on expectations of future events that are believed to

the Albert Street Impact zone between Victoria and

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: • Expenditure forecast uncertainty, with regards to timing and amount of future transactions related to the C5 and C7 contracts which were still being finalised at time of preparing this document.

• Third Party Works: CRL Ltd fund work undertaken

by KiwiRail Holdings Ltd on the KiwiRail Holdings Ltd network. As part of the overall project CRL Ltd undertakes or funds construction work across the wider Auckland rail network. The nature of the work done and the ownership of the assets constructed, means they do not form part of the CRL Ltd assets, in accordance with NZ GAAP. • Asset Transfers: as CRL Ltd completes certain contracts it may transfer separable assets relating to enabling works (including assets related to a number of utility services) for the CRL to the Sponsors or their subsidiaries as those assets are commissioned for use. However, the ownership of the majority of CRL Ltd’s key assets will stay with CRL Ltd until the completion of the Project. Therefore, they

CITY RAIL LINK LIMITED | Statement of Performance Expectations 2020-2021

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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 Patrick Brockie Steve Brunell Sumi Eratne Victoria Jessop Rob Mair Russell McMullan Sandip Ranchhod

Bankers Bank of New Zealand ANZ Bank New Zealand Limited

Auditor Audit New Zealand on behalf of the Auditor-General

Registered Office Level 2, 25 Teed Street Newmarket Auckland 1149

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 2020-2021

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