Statement of Performance Expectations 2022-2023 by City Rail Link Ltd

City Rail Link Limited Statement of Performance Expectations For Financial Year 2022 – 2023

CityRailLink.co.nz

CityRailLink

Table of Contents Statement of Responsibility

Project overview

4-5

Objectives of the City Rail Link project

Performance targets

Statement of Forecast Comprehensive Revenue and Expenses

Statement of Forecast Financial Position

Statement of Forecast Changes in Equity

Statement of Forecast Cash Flow

Notes to the Forecast Financial Statements

19 - 21

Appendix

This Statement of Performance Expectations acknowledges a significant devlopment involving the four City Rail Link Stations The New Zealand Geographic Board is currently considering a proposal from City Rail Link Ltd and Auckland Transport to provide te reo Māori names for the stations. The proposed names are • Maungawhau Station (Mt Eden) • Karanga a Hape Station (Karangahape) • Te Wai Horotiu Station (Aotea) • Waitematā Station (Britomart) The te reo Māori names were gifted to the project by CRL Ltd’s Mana Whenua Forum. They more accurately reflect the geographic locations of the stations and acknowledge mana whenua’s historic ties to Tāmaki Makaurau / Auckland. The te reo Māori names align with the striking final designs for the Maungawhau Station (Mt Eden), Karanga a Hape Station (Karangahape) and Te Wai Horotiu Station (Aotea) which embed mana whenua’s culture and kaitiaki values.

City Rail Link Limited | Statement of Performance Expectations

Statement of Responsibility 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 internal control systems that provide reasonable assurance as to the integrity of its financial reporting.

Sir Brian Roche - Chair

Anne Urlwin - Director

2 June 2022

This Statement of Performance Expectations (SPE) sets out the performance expected of City Rail Link Limited (CRL Ltd) for the period 1 July 2022 to 30 June 2023.

City Rail Link Limited | Statement of Performance Expectations

Cut and Cover Tunnel Bored Tunnel CRL

Karangahape Rd

Existing Western Line

Symonds St

Sky Tower Pitt St

Connection with Western Line

Central Motorway Junction

Vincent St Aotea Centre

nel d Tun Bore

Chief Post Office Building

Albert St

3.45km

CONNECTS TO EXISTING RAIL NETWORK

3.0km

2.0km el

Cut

CONNECTS TO EXISTING RAIL NETWORK

unn over T and C

1.0km

Redeveloped

Waitematā Station (Britomart)

MINUTES TRAVEL TIME

Platform 11m below ground

New

Te Wai Horotiu Station (Aotea)

Platform 13m below ground

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. CRL is New Zealand’s largest transport infrastructure project and a game-changer for Auckland. The project will deliver a much more efficient rail network with more trains and faster journeys to meet the demands of a growing international city.

MINUTES TRAVEL TIME

New

Karanga a Hape Station (Karangahape)

Platform up to 33m below ground

MINUTES TRAVEL TIME

Redeveloped

Maungawhau Station (Mt Eden)

Platform in an open trench

*Scale is accentuated

0km

City Rail Link’s scope includes: • Building 3.45 kilometre twin track underground tunnels connecting Britomart to Mt Eden, with tunnel depths of up to 42 metres below ground • Building two new stations - Te Wai Horotiu Station (Aotea) under Albert Street with entrances at Wellesley and Victoria Streets, and Karanga a Hape Station (Karangahape) under Karangahape Road with entrances at Beresford Square and Mercury Plaza • Redeveloping the existing Waitematā Station (Britomart) into a twoway through station, and major redevelopment of the Maungawhau Station (Mt Eden) • Streetscape enhancement around stations and along Albert Street • Preparing stations and key urban surrounds to enable work by Kāinga Ora and Eke Panuku Development Auckland for the construction of new homes, community spaces and workplaces • Wider rail network improvements at The Strand, Ōtāhuhu and Newmarket • Capacity for nine-car electric trains providing more seats and up to 48 trains per hour in the peak when CRL is fully operational • 100-year asset life The Crown and Auckland Council (CRL’s Sponsors) have agreed to co-fund and partner to deliver the Project. The Sponsors collaborate on other initiatives 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 people living within 30 minutes travel of Auckland’s city centre and allow for a train at least every 10 minutes during peak when CRL is fully operational.

City Rail Link Limited | Statement of Performance Expectations

The full impact of the Covid-19 pandemic on the project’s construction timetable and costs is still to be measured. Readjusting work programmes to manage lockdowns and constrained working conditions, closed borders, immigration restrictions, specialist overseas expertise not available, labour shortages in New Zealand, materials supply shortages, building cost inflation, supply chain constraints and delays all contribute to CRL’s construction timetable and project cost. Up to 54,000 passengers per hour will be able to travel in and out of the inner-city during rush hour after CRL is constructed and is fully operational. Moving the same number by road would require another 16 motorway lanes or three more Auckland Harbour Bridges. Better travel choices will also help ease pressure on Auckland’s roads and reduce bus congestion in the city centre. Each CRL station and its key urban surrounds will enable future development by other agencies. The greatest opportunity to create new homes, community spaces and workplaces is within the 107,000 sqm available around the redeveloped Maungawhau Station (Mt Eden) at CRL’s Mt Eden site. The Sponsors have indicated their support for a new development Blueprint. The civil, urban realm and infrastructure works necessary to enable Sponsor approved designs will be delivered by CRL Ltd with Kāinga Ora and Eke Panuku Development Auckland leading the overall development.

CRL Ltd’s valued partnership with mana whenua ensures the Project benefits from Māori mātauranga across all relevant stages. World class stations, designed in collaboration with mana whenua, will be unique to New Zealand and will recognise the cultural and historic ties of iwi to Tāmaki Makaurau. CRL will help shape New Zealand’s economic growth, create jobs and help upskill its workforce. The Project will also enable a huge building programme of new homes, shops and workplaces which are either underway or planned along the CRL rail corridor. Station areas will become bustling urban destinations that open up the surrounding streets to more foot traffic and create ideal places to live, work and socialise.

CRL Ltd’s delivery role City Rail Link Ltd (CRL Ltd) is a Crown Entity established to manage the delivery of the City Rail Link – the largest transport infrastructure project ever undertaken in New Zealand. CRL Ltd was established as an operating company on 1 July 2017. Establishment followed an agreement by the New Zealand Government (Crown) and Auckland Council to jointly fund the project. Previously, Auckland Council and Auckland Transport – a Council Controlled Organisation – were responsible for the delivery of CRL. CRL Ltd is not a Council Controlled Organisation.

City Rail Link Limited | Statement of Performance Expectations

Incorporated under the Companies Act 1993, CRL Ltd is a majority-Crown-owned entity and is listed under Schedule 4A of the Public Finance Act 1989 and Part 2 of Schedule 1 of the Ombudsman Act 1975. In addition, the Public Finance Act 1989 applies several provisions of the Crown Entities Act 2004 to CRL Ltd, as if it were a Crown entity under that Act. CRL Ltd’s shareholders are the Crown, acting by and through the Ministers of Finance and Transport, and Auckland Council. The Crown holds 51 per cent of the voting shares, and Auckland Council holds the remaining 49 per cent. Each shareholder contributes 50 per cent of the cost of the CRL project by way of equity contribution. The company’s Board has five non-executive directors appointed by the shareholders, following Cabinet and Auckland Council Governing Body approval. The Board is committed to a high standard of corporate governance and regulatory compliance in guiding and monitoring CRL Ltd’s activities. It carries out its accounting, reporting and risk management responsibilities in accordance with legislation. The directors comply with their obligations under the Companies Act 1993, the Crown Entities Act 2004, the Public Finance Act 1989 and other relevant legislation. To aid the directors, CRL Ltd’s Board has two standing committees. 6

• Audit and Risk Committee, which provides recommendations, counsel and information on accounting, reporting, risk management and responsibilities under legislation. • People and Remuneration Committee, which provides advice and recommendations on remuneration and human resources policies for CRL Ltd. CRL Ltd’s Chief Executive, who is accountable to the Board, has responsibility for the management, operation, and administration of CRL Ltd. The Chief Executive has appointed a leadership team to provide direction and oversight of the project, which is managed through a series of workstreams. A suite of policies that underpin the company’s objectives and mandate also provide a link to dayto-day company operations. CRL Ltd reports regularly to its Sponsors as set out in the Project Delivery Agreement (PDA). CRL Ltd and its contractors collaborate with key stakeholders representing local government, transport, business, and mana whenua to deliver a successful project. The company contributes to wider social, sustainability and economic outcomes in line with the PDA and is also mindful of the impact construction has on immediate neighbours.

City Rail Link Limited | Statement of Performance Expectations

What CRL Ltd intends to achieve in 2022/2023 In conjunction with the Statement of Intent, the SPE describes key focus areas in 2022/2023 to help the Project 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 2022/2023 Annual Report. Contract

Contractor

Scope

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

Tunnels from just south of Wyndham Street to the North Auckland Line (NAL) at Mt Eden, building two new underground stations and the redevelopment of the one at CRL’s Mt Eden site

Link Alliance (awarded as part of expanded C3 contract)

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

Link Alliance (awarded as part of expanded C3 contract)

Rail systems, integration testing and commissioning from Waitematā Station (Britomart) to Maungawhau Station (Mt Eden)

Newmarket Junction (KiwiRail)

New crossover and associated signaling equipment at Newmarket

Britomart East (KiwiRail and Martinus)

Remodelling of Britomart East junction to increase trains per hour capacity including structural alterations to achieve this

CRL Ltd will work with the Ministry of Transport to meet the Governments expectations around national security risks and interests in its procurement framework and processes.

City Rail Link Limited | Statement of Performance Expectations

CRL Ltd’s Reportable Outputs This section describes CRL Ltd’s outputs for the period 1 July 2022 to 30 June 2023 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 2023 financial year that is a non-reportable class of outputs. The expected revenue and expense for each reportable output for the financial year 2023 is as follows: Deliver the City Rail Link Project

Revenue ($’000)

Expenditure ($’000)

Deliver the Auckland City Rail Link project by 2024*

2,434

127,878

Administer the Targeted Hardship Fund (THF) $6,000,000 revenue and expenditure. THF cashflow nets off to nil in the CRL Ltd Financial Statements. *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 2023 relate to Health and Safety, Project Delivery, Funding Envelope, Sustainability and Social Outcomes, Community and Stakeholder Engagement. Oversite Development: whilst there is no specific target for 2022/23, development work continues, led by Kāinga Ora and Eke Panuku Development Auckland (and supported by CRL Ltd) on this important value creation and capture opportunity for Auckland and as a financial contributor to CRL Ltd.

City Rail Link Limited | Statement of Performance Expectations

Statement of Performance Expectations Targets and Measures for 2022-23 The performance targets and measures (targets) for 2022-23 have been established by CRL Ltd management with input from the CRL Ltd Board and Sponsors. These targets are considered relevant in providing to stakeholders and readers of this Statement of Performance Expectations a strong indication of progress of the project across both construction and non-construction activities.

Disclosure of judgements and assumptions In preparing the Statement of Performance Expectations CRL Ltd has made judgements on the application of the reporting standards and has made estimates and assumptions concerning the future. The estimates and assumptions may differ from the subsequent actual results. Covid-19 continues to have a significant impact on the project both in costs and time (past, present and into the future). These impacts include a disrupted supply chain and skilled labour shortages. CRL Ltd is still assessing and determining the impact of Covid-19.

Performance Measures We discuss below some of the changes to the targets from the prior year and in particular new targets. We note which of the targets below are externally verified and any linkages between financial statements and service reporting. Service reporting will be addressed in CRL Ltd’s Annual Report through the comprehensive Project Overview. With Project Delivery, the performance targets and measures (“targets”) reflect the build stage of the project with early works contracts now complete and with most major works being delivered by the Link Alliance (C3/5/7) apart from the C8 Newmarket and C9 Britomart East works. Project delivery performance targets all relate to these Link Alliance works with C8 and C9 completion expected beyond FY23. As the majority of the Link Alliance works only fully complete towards the end of the project, we have selected key milestones within each of the station works that are expected to be completed within FY23. Measuring interim

key milestones helps provide a useful indication of project momentum within the overall construction programme. Health and Safety is fundamental to the project’s activities and this year we have added a further measure to reflect this. The Health and Safety Performance Index (HSPI) provides CRL Ltd and Link Alliance an overall metric that measures a number of leading and lag Health and Safety indicators that are combined to provide an overall indication of performance. The HSPI was developed in the UK and is used on other major international projects. The chosen score of 80 (out of 100) is based off international standards and represents a stretch target for the NZ construction industry. The supporting data for the HSPI score is provided by Link Alliance and reviewed by CRL Ltd. In addition, CRL Ltd are targeting an increased number of areas achieved in the risk management maturity model (RM3). RM3 provides a system to assess and facilitate continuous improvement of CRL and our construction partners health & safety management systems with results externally reviewed. The RM3 model and progress will be detailed in the CRL Ltd Annual Report. The Funding Envelope targets are unchanged. The appropriation of $514m represents the Crown’s 50% share of the total budgeted funding for FY23 of $1,028m. This amount reflects the peak construction year for the project and whilst difficult to be precise with construction spend due to challenges with Covid, supply chain disruption and any unforeseen construction challenges this remains a relevant target for the project and to facilitate budgeting by our Sponsors. The actual project funding is recorded in the CRL Ltd financial statements Statement of Cashflow. It is also important that CRL Ltd continues to maintain a tight discipline over corporate costs. The Sustainability and Social Outcomes are measures consistent with prior years with CRL Ltd continuing to work towards sustainability excellence but now fully focused on the Project Alliance Agreement with Link Alliance for the C3 works. The project’s sustainability performance is externally verified using the Australian based

City Rail Link Limited | Statement of Performance Expectations

Infrastructure Sustainability Council (ISC) rating tool, which has been adapted in partnership with mana whenua to respond to Aotearoa’s unique cultural context. We note a new measure for a reduction in construction and operational energyrelated emissions, a goal central to meeting our commitment to reduce carbon emissions over the life span of the asset. With a reduction of over 20 per cent being recognised by ISC as best practice in the sector, C3 is aiming for a 25 per cent reduction in greenhouse gas emissions. The project has an up-front carbon ‘cost’ to construct, both in energy-related greenhouse gas (GHG) emissions and the embodied carbon of the materials used. To track the project’s success, an estimate called a Base Case is first created for each construction package. This measures the total amount of energy, materials and water that would be used to build and operate CRL if business-asusual occurred without sustainability interventions. A Detailed Design, which includes initiatives to reduce resource consumption, is then developed. The ability to compare the Detailed Design against the Base Case enables the project to quantify improvements in resource use. The base case and final emissions are verified as part of the IS certification process. 12

CRL Ltd is committed to leaving a positive legacy of social outcomes. The focus of the project continues to be on enhancing opportunities for mana whenua, Māori, Pasifika, youth, and social enterprises. The targets for the progressive employment programme and contracts awarded to Māori and/or Pasifika businesses reflect CRL Ltd’s continued commitment to the broader community and to making a real difference when viewed cumulatively over the duration of the project. Together with Link Alliance, CRL Ltd is proud of the achievements in all these areas to-date and they remain key targets until completion of the project. Finally, Community and Stakeholder Engagement contains two new targets reflecting: (i) the establishment and operation of the Targeted Hardship Fund (THF); and (ii) the importance of CRL Ltd’s partnership with mana whenua. A case study focusing on the 10 year partnership between CRL Ltd and the Mana Whenua Forum will be completed this year, highlighting best practise and lessons learnt and providing an industry tool to inform future partnerships. CRL Ltd appreciates there is considerable interest from a wide range of stakeholders to see good progress in these areas.

City Rail Link Limited | Statement of Performance Expectations

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), and Level 4 (Predictable) in six or more areas by 30 June 2023 • Total Recordable Injury Frequency Rate (TRIFR) at or below seven injuries per million hours worked • HSPI score of 80 or more over a 12 month period • Publish an annual safety assurance summary report by 30 June 2023 reporting on safety for operations, maintenance, and users

Project Delivery*

Deliver a safe, operable, quality underground rail link in a timely manner

• Complete* second tunnel boring machine (TBM) drive to Te Wai Horotiu Station (Aotea) by December 2022 • Normanby Road and Porters Avenue bridges completed* by December 2022 • Karanga a Hape Station (Karangahape): Mercury Lane and Beresford Square superstructure works completed* by April 2023 • Te Wai Horotiu Station (Aotea) civil works completed* by June 2023

Funding envelope

Achieve financial efficiency

• Meet delivery targets equal to or no less than 10 per cent of approved Appropriation ($514m)** • Monthly financial and variance reporting of project costs on a cost to complete basis and to budget • Operate CRL Ltd’s corporate functions within the approved budget

Sustainability and Social Outcomes

Achieve sustainability excellence including social outcomes

• C3 to achieve ’Excellent’ Infrastructure Sustainability (IS) design rating • C3 to achieve 15 per cent reduction (versus design base-case) in embodied carbon of materials and 25 per cent reduction (versus design base-case) in construction and operational energy-related emissions • 95 per cent of construction demolition waste (including spoil) diverted from landfill • Deliver the “Progressive Employment Programme” with ≥six rangatahi (young people) graduating and in employment • Six Link Alliance construction contracts awarded to Māori and/or Pasifika small and medium sized enterprises by 30 June 2023

Community and Stakeholder Engagement

Deliver a high level of communication and engagement

• Social media posts (5 per week) and media releases (25 over 12 months) • Increased public participation through events (target 8) and site tours (target 25) • Complete mana whenua partnership case study and make publicly available as an industry tool for lessons learnt and best practice • Targeted Hardship Fund: payments made to applicants within 30 days of CRL Ltd receiving a completed application

The above is explained in detail in the Outcomes, Target Areas, and Measures section of the Statement of Intent. * Completion means the works are completed (subject to the 12-24 month defect liability period) and the asset involved is available for use. ** Appropriation reflects the Crown’s 50% contribution to FY2023 project funding.

City Rail Link Limited | Statement of Performance Expectations

Forecast Financial Statements The forecast financial statements (on pages 15-18) 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 2023 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 primarily 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. Assets are transferred to the shareholders as construction is completed for each asset.

City Rail Link Limited | Statement of Performance Expectations

Statement of Forecast Comprehensive Revenue and Expenses For the year ending 30 June

Forecast 2021/22 $000

Budget 2022/23 $000

Rental revenue

197

111

Interest revenue

708

2,323

Total Revenue

905

2,434

3,401

4,060

Professional services

848

775

IT expenses

491

534

General expenses

2,510

2,725

Insurance expenses

8,396

7,905

2,037

3,339

37,564

54,400

339,843

53,900

302

239

395,394

127,878

(394,489)

(125,444)

Revenue

Expenditure Employment expenses

Bad and doubtful debts Lease payments Third Party Works Vested Asset Expense Depreciation and amortisation expenses Total Expenditure Net Surplus (deficit)

City Rail Link Limited | Statement of Performance Expectations

Statement of Forecast Financial Positions For the year ending 30 June

Forecast 2021/22 $000

Budget 2022/23 $000

22,974

25,916

2,469

6,850

Trade and other receivables

17,569

17,244

Total Current Assets

43,012

50,010

2,155,367

3,050,462

Prepayments

24,566

12,726

Subterranean land

13,397

23,197

117,254

117,176

172

Total Non-Current Assets

2,310,757

3,203,639

Total Assets

2,353,769

3,253,649

84,236

81,561

1,226

1,227

Total Current Liabilities

85,463

82,788

Total Liabilities

85,463

82,788

2,268,306

3,170,861

2,914,282

3,942,280

(645,976)

(771,419)

2,268,306

3,170,861

Assets Current Assets Cash and cash equivalents Prepayments

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

City Rail Link Limited | Statement of Performance Expectations

Notes to the Forecast Financial Statements for the year ending 30 June 2023

Statement of Forecast Changes in Equity For the year ending 30 June

Opening balance as at 1 July 2022

Budget Capital $000

Budget Accumulated Losses $000

Budget Total 2022/23 $000

2,914,282

(645,976)

2,268,306

(125,444)

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

1,027,999

Closing balance as at 30 June 2023

3,942,280

(771,419)

3,170,861

City Rail Link Limited | Statement of Performance Expectations

Notes to the Forecast Financial Statements for the year ending 30 June 2023

Statement of Forecast Cash Flow For the year ending 30 June

Forecast 2021/22 $000

Budget 2022/23 $000

213

(62,565)

(72,652)

708

2,323

(61,644)

(70,244)

(789,239)

(944,947)

Acquisition of property, plant & equipment

(276)

(9,764)

Acquisition of intangibles

(241)

(103)

(789,755)

(954,814)

Proceeds from issue of share capital

856,000

1,028,000

Net Cash Flows from Financing Activities

856,000

1,028,000

4,600

2,942

Cash & cash equivalent at beginning of period

18,374

22,974

Cash & cash equivalent at end of period

22,974

25,916

Cash Flows from 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

Net Cash Flows from Investing Activities Cash Flows from Financing Activities

Net Increase/(Decrease) in cash & cash equivalents

City Rail Link Limited | Statement of Performance Expectations

Notes to the Forecast Financial Statements for the year ending 30 June 2023

Reporting Entity

Basis of Preparation

City Rail Link Limited (‘CRL Ltd’ or the ‘Company’) is a Crown Entity, registered under schedule 4A of the Public Finance Act, and is domiciled in New Zealand. The Company was incorporated on 13 April 2017. CRL Ltd is jointly owned by the Crown, and Auckland Council.

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

The Company’s purpose is to govern and manage the delivery of the Project. CRL Ltd commenced operations with effect from 1 July 2017.

These prospective financial statements have been prepared: • In accordance with the Crown Entities Act 2004, which 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 the Sponsors

Funding from the Sponsors is based on the expenditure programme for the Project, assuming sufficient funding is available for the Project. Funding requirements are 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 2021/22 net deficit of $394.5 million. This impacts on estimated amounts of cash in hand and net assets.

City Rail Link Limited | Statement of Performance Expectations

Notes to the Forecast Financial Statements for the year ending 30 June 2023

Significant Accounting Policies

Goods and Service Tax

The financial statements contained in this document are prospective and, by their nature, contain assumptions which may lead to material differences between the prospective financial statements and the actual financial results prepared 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 are 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.

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.

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 as revenue in the forecast financial statements.

Rental Revenue Other revenue generated by CRL Ltd is from rental income from properties required to enable the build but not yet decommissioned and will be recorded as revenue.

Interest Income Interest revenue is calculated on a proportion basis for the surplus cash balances throughout the forecast.

General Expenses General expenses include costs such as operating leases, rates, directors’ fees, telecommunications, and other office operating costs.

Foreign Currency Transactions Foreign currency transactions are translated into NZ$ (the functional currency) using the spot exchange rates at the date 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.

Income Tax CRL Ltd 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.

Recognition and measurement Property, plant, and equipment is measured initially at cost. Cost includes expenditure that is directly attributable to the acquisition of the items. The cost of an item of property plant and equipment is recognised only when it is probable that future economic benefit or service potential associated with the item will flow to CRL Ltd, and if the item’s cost can be measured reliably. The majority of capital expenditure will remain as ‘Capital Work in Progress’ for the duration of the Project. Work in progress is recognised at cost less impairment 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 straight- line basis over the useful life of the asset. Depreciation is charged at rates calculated to allocate the cost or valuation of the asset less any estimated residual value over its remaining useful life: The estimated useful lives of property, plant and equipment are as follows:

City Rail Link Limited | Statement of Performance Expectations

Notes to the Forecast Financial Statements for the year ending 30 June 2023

Land and buildings Temporary Buildings – other Subterranean land Furniture and fittings Office equipment Computer hardware

Not depreciated 4 years Not depreciated 5 years 5 years 5 years

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

• 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 completed, and the ownership of the assets constructed, means they do not form part of the CRL Ltd assets, in accordance with NZ GAAP.

All B class shares issued are fully paid and have a face value of $1 each. The Shareholder’s investment in CRL Ltd is made up of 2,914,282 shares as of 1 July 2022 and is expected to be 3,942,280 shares as of 30 June 2023.

• 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 will remain as CRL Ltd work in progress until that time. 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 transfer of the asset.

Critical Accounting Estimates and Assumptions

• Covid-19: the cost and time to completion impact of Covid-19 is yet to be fully determined across CRL Ltd’s construction contracts.

Derecognition An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits or service potential are expected from its use or disposal. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in surplus or deficit.

Share Capital and Equity

In preparing these prospective financial statements, CRL Ltd 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:

City Rail Link Limited | Statement of Performance Expectations

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) Patrick Brockie Steve Brunell Elgan Davies Sumi Eratne Gerry Goodwin Jo Reeves Kirsten Mayne 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

City Rail Link Limited | Statement of Performance Expectations

CityRailLink

Printed on recycled paper

CRL0444 Statement of Performance Expectations 2022-23

CityRailLink.co.nz

Statement of Performance Expectations 2022-2023

Articles inside

Notes to the Forecast Financial Statements 19

Performance targets

Statement of Forecast Cash Flow

Objectives of the City Rail Link project