Performance targets

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

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. 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.

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

Community and Stakeholder Engagement Deliver a high level of communication and engagement • 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

• 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.

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.