TSW.601.057.2355

BOSTON

CONSULTING

GROUP

Anne HayesActing CEOTAHE

20-44 Ennis RoadMilsons Point

NSW 2061

21" July 2020

Commercial in confidence

Proposal: TAHE organisation, asset plan and commercial strategy

Dear Anne,

Thank you for inviting BCG to put forward how we can help you to establish TAHE as an enduringorganisation, with a clear asset plan and commercial strategy.

This letter of proposal outlines how BCG could support you, your Executive team, and the newly incorporatedTAHE Board. The proposed work would be focused on establishing your internal plan. It would complementTfNSW's broader operating model work. It will also consider the potential financial benefits for the NSWGovernment. This letter is structured in six parts:

• Our understanding of the context• Proposed delivery plan• BCG credentials

• Your BCG team

• Fees and BCG investment

• Potential next steps

Our understanding of the context

TAHE has now been established, effective 1 July 2020. As an initial priority, your Board and your ExecutiveTeam need to develop your priorities and business plan. This needs to build on work done over the last fewyears by NSW Treasury and TfNSW, including the original TAHE business definition (developed with BCG in2017), the evolved Transport operating model, recent TAHE operating model work done as part of'EvolvingTransport', as well as recent assessments of the accounting treatment of the entity.

We understand there remain open questions regarding TAHE's corporate strategy, commercial intent, andasset plan that will need to be resolved as input into the Statement of Corporate Intent, Strategic Business Plan,(required under the SOC Act) and is expected to be endorsed by the Voting Shareholders in October 2020 andtabled to Parliament in November 2020. We understand both you and your Chair believe there is a need forTAHE to have its own perspective on these questions.

We see a series of questions to resolve against these three categories:

1. Commercial strategy

• What is the appropriate commercial role of TAHE in the operational vs non-operational assets? Howdoes it deliver on its determination to be a "for-profit" entity within the constraints of the operatinglicense and relevant legislation?

• How much unrealised value potential exists in the TAHE asset base, how could this be unlocked?• What partnerships or deals might unlock this potential?• How does this relate to broader government priorities for fiscal repair and asset commercialisation?

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TSW.601.057.2356

• Can and should TAHE be a vehicle for development of infrastructure assets outside the GeneralGovernment sector to provide access to alternative financial structures and/or accounting benefits?

• What commercial opportunities should be a priority for TAHE, balancing the potential to be ambitiouswith the need to build momentum and internal capability over time?

• How might the commercial strategy evolve over time so that TAHE maximises value delivery forshareholders, in the near and longer term?

• What commercial strategy provides a pathway to profitability?• What capabilities will TAHE need to execute its commercial priorities?• How should TAHE be funded? What framework needs to be applied to leverage the TAHE balance

sheet?

3. Asset plan

• What is the full scope of TAHE's assets, including not just land, property and fleet but also intellectualproperty?

• How should the TAHE asset base be categorised in a way that informs its commercialisation strategy,considering legal constraints, operational and safety requirements/constraints, and other prioritiesacross government?

• How does TAHE fit into Treasury's longer-term asset portfolio strategy, and how is this impacted bybroader macro-trends?

• Which assets need to remain in TAHE's portfolio, be carved out?

Proposed delivery plan

To help develop TAHE's commercial strategy and asset commercialization plan, we would like to propose a 6-week BCG engagement, working directly with the TAHE Executive team. We would also be available beyondthis six week period for briefings or Board presentations as required.

We propose to deliver the project through three workstreams, with deliverables as described below.

Commercial strategy deliverables• Agreed high-level commercial ambition and value proposition• Initial list of opportunities and prioritisation criteria• Pathway to profitability• Articulation of commercial strategy ('intent'), for inclusion in a High Level "Shareholders Prospectus"

that could be used to engage stakeholder across TfNSW, Treasury and Government.

Asset plan deliverables• Framework and guiding principles for management of the asset portfolio, consistent with the WoG

strategy

• Initial allocation of existing assets against the framework• Assessment of options for how to carve out or re-allocate assets or liabilities ft-om/within the portfolio• Asset Plan including high level roadmap for the existing assets

We will be flexible to focus on other priorities as they emerge through the course of the work.

This work will be incorporated into a final report in PowerPoint form. A draft of the final report will beprepared at the end of week 4, with the final version being handed over at the end of week 6. The report will beprepared so that its contents can be easily fed into TAHE's Corporate Plan.

Details of our proposed activities are shown in Exhibit 1.

TSW.601.057.2359

Your BCG team

We have assembled a working team and expert panel with experience across Transport, the infrastructureindustry (in Australia and globally), government transactions, and a deep understanding of the NSWGovernment. The core working team will be led by Simon Miller, Andrew Newsome and Christy Frasheri.

• The lead partner will be Simon Miller, a Managing Director and Partner in our Sydney office. He hasmore than 20 years' experience working with the NSW Government. He leads BCG s relationship withTfNSW and has worked closely with most of the senior leaders in the cluster. He has also ledconfidential asset transactions reviews with NSW Treasury and strategic reviews for Sydney Water.Prior to joining BCG, Simon was Deputy Director-General of the Dept. of Water & Energy in NSWand held senior roles in State and Federal Governments in Australia.

• The executing partner will be Andrew Newsome, a Managing Director and Partner in our Sydneyoffice and the leader of BCG's Asia-Pacific infrastructure business. He has extensive experience inoperating model design, transactions and government asset commercialisation. He led the designwork for TAHE and Sydney Metro, the operating model work across the Transport Cluster, as well asoperating model reviews for two of Australia s Tier 1 contractors, NBN, BHP and multiple energycompanies. In addition, he has led asset commercialisation, carve-out preparation and commercialdue diligence projects for TfNSW, Victoria Department of Transport, the UK Department ofTransport and multiple private sector engineering, real estate and construction firms.

• The project lead will be Christy Frasheri, a Principal in our Sydney office. She has extensiveexperience in delivering operating model transformations — including developing strategic intent,designing operating models, and defining governance, organisation, end-to-end processes and waysof working. She brings wide-ranging experience in Industrial Goods and Infrastructure, in Australia,USA and Europe, including working for BHP, Department of Transport Victoria, and PMI forinfrastructure companies.

The project will also be supported by two dedicated and suitably qualified BCG consultants. We will confirmthis team member with you based on availability at start-date.

Our expert panel includes the following:

• Jason LaBresh is a Managing Director and Senior Partner in our Sydney office. He has advised theNSW Government for more than a decade on major strategic issues and supported NSW Treasury onthe Land and Property Information transaction working alongside a wide range of advisers. Jason is

relationship partner for the NSVf Government and leads BCG s Public Sector Practice across AsiaPacific. He has extensive transactional experience (including as former lawyer specialising in complexcommercial contracting in Washington DC).

• Ant Roediger, Senior Partner and Managing Partner of BCG in Australia. He has more than 12 yearsserving Transport for NSW (and its predecessor). His experience spans the NSW Government across allClusters, with key pieces of work with Transport, Treasury, DFSI, Health, Planning, Family andCommunity Services, Justice, Industry, and Education. This includes leading BCG's strategic advisoryengagements with NSW Treasury on the LPl and delivering an operating model for a toll road authorityin Victoria.

If you approve this proposal, we can start preparations this week on logistics, data requests and pre-read, withthe full team ready to start on 27 June.

Fees and investment

For the engagement led by two Managing Directors and Partners, and delivered by Principal and twoConsultants, our total professional fees and expenses at our agreed 2019/2020 NSW Government Rates fornormally be $800,982 (including expenses, ex-GST). We are pleased to invest $300,982 of capacity in thisproject given our commitment to you as a long-term relationship client. This means the total fees for TAHEwould be $500,000 (including expenses, ex-GST).

The price quoted above is all inclusive, there are no other additional costs. BCG does not work on a day-rate orhourly-rate model, but on an agreed fixed-cost engagement model that will drive genuine value-for-money forTAHE. We do this at our risk; if we need to invest further resources at our cost to make sure we deliver on time.