Fed Square Pty Ltd - Parliament of · PDF fileFed Square Pty Ltd ACN 085 731 479 ... Infinite Horizon show at the NGV Ian Potter Centre and the Star Voyager, ... I am undertaking the

Fed Square Pty Ltd ACN 085 731 479

Fed Square Pty Ltd

Annual Report

For the year ended 30 June 2012


1

Table of Contents Chair’s Statement .................................................................................................................. 2

Chief Executive Officer’s Report on Operations ................................................................. 3

Key Performance Indicators 2011-12 ................................................................................. 17

Statement of Corporate Governance ................................................................................. 18

Directors’ Report ................................................................................................................. 22

Auditor-General’s Independence Declaration .................................................................... 24

Comprehensive operating statement for the financial year ended 30 June 2012 ........... 25

Balance sheet as at 30 June 2012 ...................................................................................... 26

Cash flow statement for the year financial ended 30 June 2012 ..................................... 27

Statement of changes in equity for the financial year ended 30 June 2012 .................... 28

Notes to the financial statements for the year ended 30 June 2012 ................................ 29

Directors’ Declaration ......................................................................................................... 49

Audit Opinion ....................................................................................................................... 50


2

CHAIR’S STATEMENT

On behalf of the Board and as newly appointed Chair, I am pleased to provide the Chair's Report as part of the 2011 -2012 Fed Square Pty Ltd Annual Report. As we approach Fed Square's 10th birthday, it is gratifying to recognise the important role that Fed Square occupies in the civic, community and cultural life of Victoria. We remain one of the 'Top 2' attractions for international and interstate visitors to Victoria. This year’s estimated visitation is nearly 10 million, with more than 79% of Victorians saying they have visited us during the year. Total visits, from the time when Fed Square opened until June 30 2012, is now more than 79 million. During the year our busy program of activities across the spectrum of civic, community and cultural interests has included the highlight of The Queen’s visit and has continued to embrace community sentiment through exhibitions, festivals, gatherings, concerts, sporting events and heartfelt moments such as Jim Stynes’ funeral broadcast. Fed Square has been able to host 2,144 events and activities in its public spaces with 89% of these being free to the public. It has been pleasing to achieve extremely high levels of visitor satisfaction. There have been more than 8000 media placements, of which more than one fifth have been in the international market, and it has been satisfying to note that the vast majority of these have been positive. Financial results for the period include a net surplus before depreciation of $3.917m. It has also been a year of achievement for our onsite partners with food and beverage tenants working with us on refurbishments and our Think Food Plan, a number of businesses participating in the inaugural Fed Square Service Excellence Certificate 3, awards for Zinc and an ongoing program of wonderful exhibitions such as the Fred Williams, Infinite Horizon show at the NGV Ian Potter Centre and the Star Voyager, Exploring Space on Screen program at ACMI. Thank you to all our stakeholders and supporters, especially the State Government of Victoria, for their continued enthusiasm, advice and support. I would like to acknowledge John Harvey who retired on June 30 having been Chairman from 2007. During John’s time as Chairman he saw the emergence of the key role that Federation Square plays in the civic and community life of Victoria. He oversaw a period when the precinct sustained the success of many businesses within it and during which FSPL has been able to honour both its community charter and commercial imperative, delivering strong results in these areas. I know John is grateful to: fellow Board members for their insights and diligence; to the dedicated staff of FSPL, who work so hard to realise the shared vision; and for the opportunity to serve Victoria through his work at Federation Square.

Catherine Walter AM Chair


3

CHIEF EXECUTIVE OFFICER’S REPORT ON OPERATIONS

INTRODUCTION As we look to Federation Square’s 10th year of operation, I am pleased again to report on continuing success across all areas of operation. FSPL’s results for 2011-12 include having welcomed the largest number of visitors since opening, a robust program of activities, great media exposure and extremely high visitor satisfaction ratings. In an increasingly challenging consumer market it is also good to report a net operating surplus for the year before depreciation consistent will all previous years of operation. GREAT PLACE “Dear Fed Square, I am undertaking the Month of Letters Challenge (lettermo.com) and I decided I would use today’s missive to write to you and let you know that I’m a really big fan. As a Melbournian who (unfortunately) lives in Sydney, I make sure I visit you whenever I am in town and you’ve come to represent the best parts of Melbourne’s character: bold, stylish, forward thinking and cutting edge. Keep up the fabulousness!” Letter – February 2012

“We put Fed Square into virtually every itinerary for visitors to Melbourne” Tourism Victoria UK representative One of our primary focuses is ensuring Federation Square is Melbourne’s primary meeting place and enhancing our position as a “place leader”. Estimated visitation for the year reached 9,999,239 and is a record result. This demand has kept us live to implementing many activities designed to create a sense of place and community engagement, from the physical to the ephemeral. This has included such projects as:

• Enhanced free WIFI service for visitors with increased coverage throughout the public areas • Installation of new LED lighting in the Atrium cantilever • Re-construction of the Eastern Access road to improve access and safety • Redesign and upgrade of our successful “comfort zones” where we provide flexible and enhanced

shade, seating and services for visitors and event goers • Accessibility across the site improved through the installation of automatic doors to the public

accessible toilets, improved contrast of fixed furniture to enhance visibility, upgrades to tactile indicators throughout the car park and engagement with tenants and staff through the “Realistic Race” awareness and training program.

• Finalisation of the Riverside Master Plan with definable stages and outcomes. This project responds both to the desire to create a stronger connection between Federation Square, the Yarra River and parklands, and to feedback indicating the need for enhanced accessibility, permeability, integration, services and public amenities in that zone. We will continue to liaise with the State Government regarding opportunities for funding

Safety and presentation standards continue to be critical to public enjoyment of the precinct and it is pleasing to note 100 % satisfaction with the cleanliness of the site (67% extremely satisfied), 100% satisfaction with safety and security (69% extremely satisfied) and satisfaction with amenities 97% (38% extremely satisfied). During the year, the Emergency Management Plan was updated to reflect the new standard and we continue our active participation in onsite and city programs to maintain safety and security including co-operation with Police and Emergency Services and ongoing involvement in the Flinders Street / Fed Square Security Precinct group.


4

Less visible but essential projects which maintain the effective functioning of the place included:

• Improvements to plant and maintenance access for staff and contractors • Completion of stage 1 of the hail guard program (NGV, Atrium, BMW Edge and SBS) to minimise

risk of property/people damage in the event of a major hail storm, as was experienced in 2010 • Finalisation of further works associated with the hail storm damage including replacement of the

Transport Hotel roof • Installation of a range of isolation valves to effect repairs and improve maintenance and service

efficiency of central plant services • Upgrades to mechanical plant in the East Shard building to better manage environmental conditions • Upgrades to external electrical boxes to improve access and security • Refurbishment of level 2 of the Yarra Building to accommodate new tenants

Covered elsewhere in the report is the depth of activity taking place in the precinct which generates so much of our visitation and the now embedded sense that “there is always something going on at Fed Square” and that it is the City’s “meeting place”. In the last year our ‘perceptions’ survey indicates that 79% of Victorians say they have visited Federation Square. 84% of Victorians also say that Federation Square is Melbourne’s major focal point with 94% agreeing there is always something going on. As always we have been pleased to work with colleagues in Australia and around the world to share expertise and experiences around placemaking. This has included screen management discussions with Aotea Square, Auckland City Council and in particular Waterfront Auckland, consulting with both the City of Perth and the East Perth Redevelopment Authority, continuing liaison with the Hong Kong Government and involvement in the inaugural Open House Worldwide conference in Tel Aviv. Fed Square was also represented at the Place Leaders’ Association 2011 Adelaide conference “Placemaking Beyond Design: Maintaining the Momentum” with the focus on “Proactive Programming in Public Spaces”. Four articles were contributed to Place News and significant outcomes achieved in communicating accessibility with articles placed with Carers Victoria, ADEC, Able Australia, Autism Victoria, Disability Sport and Recreation Festival, Yooralla, Scope and Seniors Information Victoria. We continue collaboration with Seoul and have recently been working with Perth to host interactive gaming session and with London programmers to enable screen links around the Olympics. We have also enjoyed the process of working with Monash University to produce an academic reflection on the role of Fed Square in Melbourne’s development, the resultant book being prepared for publication for our 10th birthday. GREAT STAFF “You should be very proud of your staff at Federation Square. They are a great team to work with. They also demonstrate a deep compassion for the people of Melbourne who find themselves in significant need”. Brendan Nottle, Commanding Officer, The Salvation Army Delivering the breadth of activities and services at Fed Square is reliant on a hardworking, dedicated team. Supporting staff and being considered an “employer of choice” is critical. In the past year, staff have completed performance management work plans and successfully achieved targets. A regular program of meetings and briefings underlies communication in such a busy team. The staff are actively involved in the Corporate Planning process, Disability Action Group, Sustainability Action Group and OH&S Committee and new managers have participated in Broad Management Group activities. Staff have also contributed to the community beyond their roles by supporting the Red Cross Blood Bank, taking advantage of the Volunteering Leave Policy and supporting the Heart Foundation and Salvation Army.


5

Training has been provided for all staff in mandated areas with specific role or career development activities being undertaken as relevant. The training register has been integrated into the HR Subscribe software and teams have developed bespoke activities to meet needs and expand horizons. This has included team-building and learning activities like the “Amazing Race”, and “Ops-lympics”. Project management training was provided in the Venue Supervisor team and the multi-media team received dedicated Scala training (the main scheduling software for the public screens). The events co-ordination group was involved in industry-wide networking and business advocacy including attendance at the national MEA Conference and participation in tourism industry events, and the Operations team participated in facilities management industry seminars & events. It is a pleasure to see staff acknowledged by both their peers and industries through awards. Quarterly FSPL awards were made to Tula Harris, Peter Middenway, Rory Murphy and Renee Dudfield for their alignment with objectives and values. Victor Anastasiadis and Amy Brear received Fed Square Customer Service Excellence awards, David Clifton won the “My Customer Rules” events category in the national International Customer Services Professionals annual awards and Peter Brace was a national finalist. More recently Holly Bennett achieved the Event Manager of the Year Award at the Meetings and Events Association national awards. Work volume challenges continue to be addressed via systems and technology and with the new venue management system (EBMS) now embedded, benefits include increased efficiencies of data entry (particularly useful in recurrent, complex bookings), better tracking of customer data and information and vastly improved productivity around internal planning and communications processes. Along with continued provision of health and other staff benefits, it has also been pleasing to support work/life balance by introducing the Healthy Choices Food program and Health and Wellbeing workshops. Our participation in the public sector “People Matters” survey continues to provide useful information around the opportunities and challenges of supporting a strong team, particularly around workload and culture. It is pleasing to note that this year results indicate:91% overall job satisfaction and 93% of staff viewing FSPL as an “Employer of choice” GREAT DELIVERY “Make yourself at home: that’s the message to the public in Melbourne’s Federation Square, with deckchairs provided so you can chase the sun, or cushions to make sitting on the stairs more comfortable. Is there a lesson here for Alice?” Kieran Finnane, Alice Springs News 24/05/12 At Fed Square we aspire to being known as a “can do” organisation because of the quality and timeliness of our service delivery. In such a complex environment with more than 2,948 planned and reactive maintenance items to respond to, 2,144 activities in the public realm and nearly 10 million visits, it is particularly pleasing to see the 100% Visitor Satisfaction rating (April 2012), an uplift in Event Client Satisfaction to 95% (March 2012) and tenant satisfaction at 100%. Service excellence continued to be emphasised as a key driver of success across the precinct and resulted in an increase in tenancies directly participating in the Fed Square Customer Service Excellence Program. The program attracted National Workforce Development Funding for the development of the nationally accredited ‘Fed Square Service Excellence Certificate 3’. Five tenants participated in the inaugural program which saw them document their service standards and undergo management coaching and staff training, all with an emphasis on service excellence and increasing yield. The Fed Square Service Excellence Standards were also collaboratively updated and re-launched with the view to growing a united culture of excellence across the precinct in a way that is measurable and sustainable. The long standing Fed Square Customer Service Excellence Awards continued to be well subscribed.


6

In the last year the average number of times visitors have been to Fed Square is 17 and onsite visitor satisfaction highlights included

• 100% visitor satisfaction with their overall service experience • 95% of visitors would recommend Fed Square as a good place to visit • 96% of visitors are likely to return to Fed Square • 98% of visitors say there is a good variety of things to do at Fed Square • 86% repeat visitation

Our focus has also remained on delivering dynamic “What’s On” information in a variety of media and enhancing detailed and accessible public information on Fed Square’s history, form, institutions and activities. Projects this year included four new multicultural screen welcomes – each representing 13 different languages, a new ‘what’s on’ animation for screen, customised collateral for the Melbourne Visitor Centre, focusing on weekly events and dedicated use of the Melbourne Visitor Centre’s external screen to promote visitor information services including fedsquare.com/WiFi/MVC. There was a refresh of directional signage across the site – including i-site pillars, lift panels, internal panels, tour bus signage and Get Fed signage, a new consolidated suite of e-newsletters (Fedmail/Get Fed/Creative/Fed Ed/City to Cellar) and a significant rework of the core Melbourne’s Meeting Place collateral. Social media has been a key focus in the last year with the intent to build community engagement and conversation. We have seen ongoing growth in uptake across fedsquare.com, Facebook, Twitter and new platforms – Trip Advisor, LinkedIn, Tumblr (Squared Produce – creative blog) and MeetUp and onsite information has continued to be delivered through tickers and our big and small screens. Monitoring of social media has also been enhanced via a new platform Buzz Numbers which also provides tenancies with a summary of online mentions each month at no additional cost. Fed Square’s new mobile- friendly website has been particularly successful with 30% of visitation to fedsquare.com now via a mobile device. We are pleased that this focused effort is paying dividends with 89% of visitors indicating that they are satisfied with the provision of information about Fed Square – a 2% increase on last year and 86% satisfied with “What’s On” information. Work was also undertaken to extend information about The Light in Winter program with a digital signage solution and an additional 12,000 programs and 20,000 postcards distributed offsite. It was pleasing these efforts reflected in survey results, with 69% of respondents agreeing that information on The Light in Winter program is readily accessible. In August 2011 we rolled out Fed Square’s free guided tour program, with an immediate uptake in visitors taking part (on average over 150 people per month). Fed Square also conducted sell out tours above ground and back-of-house during the Melbourne Open House weekend with the opportunity to further engage with local visitors on its history and our sustainable practices at Fed Square.


7

The information technology (IT) and multimedia environments are critical to Fed Square’s public outreach and internal operations. In the period the implementation of the ‘Nagios’ monitoring system has resulted in improved IT systems with fewer outages and better planning along with a much better alert system and more granular information on the overall health of the IT environment. The organisation was upgraded to the latest Microsoft productivity suite, Office 2010, and the development of the taxonomy for the document and records information management and intranet project marked the successful completion of the first phase of this project. The multimedia operating systems were transferred to a “virtualised environment” and a refocused multimedia production effort has enabled the life of creative projects to be extended on the screen and online with high quality productions created for Tape Melbourne, Strandbeest, Fed Square Live and The Light in Winter. A number of other enhancements were made to improve daily operations and these included completion of a standard for recurring program risk assessments, ongoing EBMS operational consolidation, migration of Venue Supervisor operations to iPads (enabling more assured event compliance and regulation on event days), installation of power for activities in the Square itself, reducing the need for temporary cabling and a real innovation with the introduction of the Comfort Zone trailers reducing labour requirements and OHS risks. Installation of video intercoms across the site to improve security access to secure areas, improved access control to public amenities, installation of isolation valves on a range of services to improve maintenance efficiency and upgrades to heating and cooling systems also enhanced the efficiency of operations of the site. Maintaining the physical assets at the highest level of functionality and presentation is critical to Fed Square’s ongoing visitor appeal and business success and we are working with Government to secure a consistent line of resources to ensure the company is in a position to achieve this. GREAT BUSINESS PRACTICE “After two nights of watching the men's Australian Open semis inside the arena, we were content to sit out the women's finals. Besides, we can watch it for free at Federation Square. Since our trips to Melbourne have always been about the Australian Open, Fed Square now feels like our home away from home. It really is quite a nice spot to catch some sun and enjoy the match with fellow tennis fans without having the need to spend big bucks. Grab a spot, lay down some blanket, open a bottle of…. sprite in this case and you're game, set and match”. Lonely Planet Blog 30/01/12 Our ongoing focus is to advance a sustainable business through attention to best practice commercial, asset, risk management and governance programs. Partnerships A range of strong partnerships has underpinned our good performance. We are immensely appreciative of the long term partnership with BMW which draws to a close in December 2012. BMW ‘s long commitment has been a significant contribution to the success of Fed Square over the 10 years of the partnership and many community and business benefits have been generated as a result. SBS continues as an important site partner, with a focus on celebrating the stories of our diverse communities via initiatives such as a collaborative Australia Day call out for Federation Story, screen activation for ‘Go Back to Where You Came From’ and ‘Bollywood Star’ and a regular news presence on the Big Screen. This year SBS was also a major media partner of The Light in Winter program. We are also grateful for the ongoing partnerships that helped us produce Fed Square Live, including with The Push, Allans Music + Billy Hyde, Triple J, and Everguide. We have also been pleased to enter into a new partnership with Tourism Victoria commencing in July 2012, which promotes Victorian regions via screen advertising and onsite events throughout the year.


8

We were particularly thrilled at the increased range of partnerships for the Light in Winter, which included: Microhire, Ikon, Siemens, SBS, UNS, ARAB, City of Melbourne, Electrolight, Wheeler Centre, IFLIT, Melbourne Conversations, National Year of Reading and the Deaf Arts Network. Pro-active support from the NGV, ACMI, Kirra Galleries, No Vacancy and Arintji complemented a burgeoning relationship with the Salvation Army, who partnered on both the Light in Winter and our December program, Spirit of the Square. The Melbourne Visitor Centre at Federation Square is a key supporter and we have been working together to leverage visitation, screen advertising opportunities and improve information provision and facilities in the foyer area. This year Fed Square also hosted one of the quarterly City of Melbourne Ambassador briefings, with 100 ambassadors attending the event in BMW Edge and taking a tour of the site with Fed Square staff members. We also continued our partnership with the Small Business Festival (formerly Energise Enterprise), Small Business Victoria’s annual festival for small to medium enterprises. In addition to enabling a number of our tenants to benefit from related events and information, an event was programmed exclusively for Fed Square tenants and another for wine showcase exhibitors. We have also enjoyed strong partnerships with the Melbourne Symphony Orchestra, Circus OZ, the AFL, the Australian Open and the Melbourne International Comedy Festival. Thank you to all of our partners for their many forms of support. Marketing Plan The Marketing Plan continues to focus on repeat visitation and yield with emphasis on Fed Square’s brand pillars (eat and drink, culture, events, shop and experience). The average visitor spend (April 2012) is now $13, slightly down on April 2011 in line with general consumer behaviour, but consistent with 2009 - 2010. It was pleasing to see an uplift in spend by Day Trippers – who constitute our major domestic market. Positive trends in time spent onsite are also notable for the City Worker segment (76 mins up from 51mins) and Day Tripper segment (90mins up from 57 mins). Repeat visitation remains high at 86% and the annual Melbourne Airport Survey revealed an increase in awareness for international arrivals from New Zealand and Singapore. Risk Management It is pleasing to report that FSPL received the highest ranking ‘Advanced’ for its Risk Management Framework following the Victorian Managed Insurance Authority’s Risk Framework Quality Review undertaken in May. In accordance with the Federation Square Pty Ltd Risk Management Strategy, an in-depth annual review of the policy and strategy was conducted and covered all associated activities as follows: • Risk Management Policy • Risk Management Process • Risk Management Implementation Schedule and Risk Treatment plans • Communication of Risk Management actions and achievements and outstanding issues of significance Reviews and audits were also completed on a range of FSPL systems and processes including annual Essential Safety Measure sign off and the Emergency Management Manual. A review of the Business Continuity Plan was completed with major enhancements and associated training was conducted with key staff.

Continuous improvement of our OHS management system is a feature of our activities given the nature of the physical site and the extent of public and tenant activity. We completed a full internal review of our OHS management system and OHS training was completed for relevant staff including updated training for the


9

Emergency Planning Committee. There were a total of 198 OH&S Incident Reports for the 2011-12 financial year, which was slightly below our target of 200. While there were 595 security incidents, none were significant. Refinement of event risk management documentation has resulted in efficiencies both internally and for clients while maintaining risk management rigor. The integration of the Event Management Business System (EBMS) into the risk monitoring and assessment process has led to greater efficiencies in the event co-ordination workflow, and has more directly linked event planning to on-the-ground delivery. This brings an improved assurance around event compliance on the day. New processes were developed to better manage structure (wind, weight and design) and an upgrade of access control across the site was concluded. Tenancies The performance and wellbeing of all tenants is essential to the overall success of Federation Square. We were pleased to work with tenants to plan or commence a number of tenancy fit outs and refurbishments. These included Arintji, Chocolate Buddha, Il Pomodoro, Time Out, ACMI Café and Café Chinotto. The period also saw lease extensions negotiated with Transport, Feddish, Bokchoy Tang, Café Chinotto, NGV Kids Corner, NGV Studio, Il Pomodoro, Time Out Kirra Galleries, Melbourne Visitor Centre, No Vacancy, Williamstown Bay & River Cruises, Melbourne River Cruises and Melbourne Day Tours, all of which reflect the precinct approaching its tenth anniversary.

A number of tenancies have been secured, including Melbourne International Festival of Arts as tenants of the Yarra Building, In-a-Rush as the new tenant of the Atrium Café and Street Bites and Movenpick as new cart operators on site in 2012-2013. With the successful sale of the business, the lease for Beer DeLuxe was assigned to new owners, BD Fed Square Pty Ltd.

Tenancies are routinely supported via tourism marketing and advertising with the new tourism branding focusing on individual brand pillars and they were also profiled via partnership marketing including: Classic AFL Clashes, Australian Open, Circus Oz, Melbourne International Comedy Festival, Ballarat Photo Biennale and the City Circle Tram. Tenants continued to be kept abreast of events at Federation Square via the following communications channels:

• Fed Square News – bi-weekly update which details the next week’s events • Monthly event listings – emailed at the end of the month for the next month • Major event updates – emailed quarterly major event details for the next 6 to 8 months • Atrium specific event quarterly calendar updates and weekly screen program updates • Tailored and regular Familiarisation Forums • Quarterly tenant marketing briefings resulting in tenant involvement in cooperative initiatives

The Fed Square Get Togethers, which raise the awareness of service excellence by enabling staff and volunteers to experience different elements of the Fed Square offer, were exemplified by the particularly successful gathering around the creative project “Strandbeest”. This event was attended by 100+ Fed Square tenant personnel, directly linking program results to tenant engagement. This year, an enhanced focus on food and beverage, the “Think Food Plan”, has been supported by a targeted publicity campaign supporting Fed Square food activations, tenant events and developments.

A new brand was developed – Get Fed - with early roll out in Melbourne International Comedy Festival program and Melbourne City Living Guide. This was followed by followed by several applications such as new outdoor signage, 20,000 postcards, building decals, custom foodie enewsletter and subscriber drive via sign up forms in tenancies, competitions, car park duratrans, City Circle tram advertising and screen content. These applications will continue to be rolled out and refreshed across the site in the year ahead.


10

A major redevelopment at ACMI progressed, including a new food & beverage offer and a new visitor experience on entry. It has also been pleasing to see the partnerships around the NGV’s new Studio offer evolve. Financial Results Financial Results for the year ending 30 June 2012 again demonstrate Fed Square Pty Ltd’s commitment to prudent financial management, whilst facilitating great community outcomes. In 2011-2012, FSPL reported a net operating result before depreciation of $3.917 million. Revenue and expenditure (before depreciation) over the ten years since the opening of Federation Square in 2002 is shown below.

Source: Fed Square Pty Ltd Operating Statement - June 2012

The company’s Balance Sheet remains very strong, with current assets of $23.024 million relative to current liabilities of $7.292 million. Net assets now total $483 million. Total liabilities decreased by $398,709 to $29.628 million and include $25.581 million of long term loans with Treasury Corporation Victoria, which is down from $26.578 million the previous year. The loans are scheduled to be fully repaid by 2019. Operating revenue is up $231,827 or 1.00%, which is indicative of the difficult economic circumstances and low inflationary environment in which we are currently operating. Expenditure is up $286,790 or 0.91%, again demonstrating management’s commitment to tight fiscal control. Numerous projects enhancing our business capacity in this area included the completion of the stock take for physical assets and establishment of a more refined asset register, installation of PALO Business Intelligence software and identification of a solution for integration of EBMS (Venue Management System) with Great Plains (Accounting System) for debtor invoicing and receipting. We also undertook an upgrade to systems to improve processing of financial transactions, including credit card receipting and subscription to ANZ eGate for payroll processing, EFT’s and international payments. A Strategic Assessment for the proposed car park extension to City Link was prepared for discussion with DBI and DTF. The records management systems and physical storage facilities were reviewed and further steps required in this area were identified. A range of services were successfully tendered including filter maintenance, mechanical services and cleaning services. Sustainability Working towards our target of carbon neutrality and the achievement of other sustainability goals is a major focus. It is pleasing to report that in the period we


11

o Reduced water consumption by 9% compared to 2010-2011 year o Reduced electricity consumption by 6% compared to 2010-2011 year o Reduced central plant gas consumption by 25% compared to 2010-2011 year

As reported last year the Energy Performance Contract under the Greener Government Building Program will allow us to add to our performance in this area. Works to date include:

o Lighting upgrades throughout the site o Commencement of installation of variable speed drives for mechanical plant o Installation of solar panels o Commencement of works on central plant optimisation o Upgrades to water fixtures throughout public spaces o Installation of a cooling system for the main square o Installation of intelligent water management system to monitor water usage across site users o Commencement of works associated with new co-generation system

The tables below provide an overview of major utilities/services for the 2011 calendar year compared to 2010 and the baseline year of 2006.

Utility / Service Years 2006 Baseline 2010 2011 Change

(2011 to 2006)

General Waste (tonnes) 776 627 602 -174 Recycled Material (tonnes) 384 609 550 166 Electricity (Mega Watts) 8,500 8,948 8,731 231 Central Plant Gas (Giga Joules) 40,607 45,892 41,798 1,191 Water (Mega Litres) 79 68 65 -14 Carbon Footprint (tonnes) 15,769* 9,456 9,095 -6,674 * Indicates 2007 calendar year

Utility / Service Years 2006 Baseline 2010 2011 Change

(2011 to 2006)

Visitor numbers 7,834,970 8,572,418 9,783,419 1,948,449 General Waste (Kg / Visitor) 0.099 0.073 0.062 -0.038 Recycled Material (Kg / Visitor) 0.049 0.071 0.056 0.007 Electricity (Kw / Visitor) 1.085 1.044 0.89 -0.192 Central Plant Gas (MJ / Visitor) 5.2 5.3 4.3 -0.900 Water (Litres / Visitor) 10.0 7.9 6.6 -3.4 Carbon Footprint (Kg / Visitor) 2.0 1.1 0.9 -1.1


12

GREAT VISITOR EXPERIENCE “@Fed_Square as someone who is currently sitting here, I am so grateful to have this place in our city. It has become #Melbourne's heart”. From @ZoeeAngelaa November 2011 “The crowds gathered at Federation Square to watch on the big screen, the incredible restaurants buzzing with Jim Courier sightings (he’s the John McEnroe of tennis commentary in this country, if you can believe it), and the European backpackers drinking mediocre Australian beer while wondering what happened to Steffi Graf – the city was on fire.” On the Australian Open 2012 - Sydney Finkelstein – Forbes Refining and refreshing all aspects of the unique Fed Square experience is both our commitment and a key to success. It has been great to see that visitor satisfaction with the overall Fed Square experience is extremely high at 100% with satisfaction with staff in general across the precinct at a wonderful 100%. There have been active collaborations with ACMI and the NGV on activities such as films for significant dates like NAIDOC Week (Bran Nu Day), co-curated December Films, the Independent Gaming Festival in January, live cross play outs of significant ACMI programming including the Star Voyager exhibition, Thermos, a creative project inspired by ACMI’s William Kentridge exhibition and inclusion of NGV creative content on the Big Screen - particularly from Studio projects throughout the year. The Multimedia Program focused on developing its unique programming identity, based on a combination of servicing third party clients, producing a weekly schedule of integrated, unique local and international content, and pro-actively establishing curatorial and commissioning relationships with a range of national and international partners. Highlights have included increased public engagement with the Discussions in Space interactive platform (in partnership with QUT), monthly instances of our X-Box enabled Big Screen Gaming program (which continues to grow in popularity), live and interactive animation sessions with artists and ongoing partnership with the AFL to schedule regular screenings of classic matches and documentary content prior to MCG games. We have also guaranteed unique development opportunities and arts program outcomes with local independent content curators and producers (including Austhetic, Loop, Pause Digital Festival, QUT), international screening partnerships (particularly with the UK, New Zealand, China, US and Singapore), remote, screen-based shared live events (with Perth and Korea), premieres and seasons of high-profile creative projects (with Paul Carter, creator of Nearamnew, Aphids, Experimenta and Michael O’Dwyer), and custom film season screenings (with ATOM, Movember, Winter and Christmas film seasons, and a Grace Kelly Movie Marathon in association with Bendigo Art Gallery). The Regular Events Program comprising initiatives owned and produced by Fed Square has continued to consolidate and includes the Fed Square Regional Wine Showcase Series and Awards program, a weekly Book Market, a twice yearly Microbreweries Showcase, New Year’s Eve celebrations, and the Fed Square Live concert series showcasing emerging local musicians. As usual, New Year’s Eve was a spectacular event, with record crowds joining in the family celebrations. An increasing number of community activated regular events are also being accommodated within the program, including Tai Chi, further Chinese programming, busking, urban hip hop dance sessions, open access mediation and Salsa sessions, and our monthly car club. Our Creative Program delivered the hallmark Light in Winter program and a range of high impact interventions. The Light in Winter 2012 saw an even broader and more integrated program than in previous years. Inspired by the National Year of Reading, this theme resulted in major commissions from Spanish company Luzinterruptus, Sydney artist Jordana Maisie, Rob Caslick, Eness (whose previous Fed Square collaboration Mobius continues to be a worldwide Vimeo hit), Electrolight with whom we presented a major new initiative “Shed Light”, featuring the work of 7 professional Melbourne design teams, and a substantial Gift of Light program featuring inspiring work from over 20 multicultural community groups, including major levels of indigenous representation.


13

We were pleased to see strong visitation in June – despite the unusually wet weather, with an estimated 657,694 visits. The Light in Winter also received extensive coverage across national media networks and publications with more than 80 items, an estimated PR value of $5.6 million and an estimated total audience of 8,900,000. Other initiatives with the Creative Program included major commissions with national premieres of internationally-renowned artists, with For Use / Numen creating a spectacular web-like interactive structure, “Tape Melbourne”, and Dutch artist Theo Jansen presenting Strandbeest, kinetically-powered “monsters” which were resident for a month in February. Both these major projects achieved extremely substantial on-site engagement and local and international media coverage. In addition, the Creative Program produced a unique annual Christmas program, Spirit of the Square, the highlight of which was “In The Pines”, a major, month-long interactive installation of recycled Christmas Trees and regular free-to-public events, which also achieved major on-site impact and broader publicity. Further creative program highlights included significant new commissions and co-productions with Polyglot Theatre, Snuff Puppets, The Social Studio, and Jolt Arts, and collaborative partner outcomes with Aphids, RMIT, Arts Access Victoria, Carbon, We Australians/MoNOW, and the Next Wave Festival. As always, we saw continued strong third party programming including 250 major events (over 2,000 visits) including Victorian/Melbourne festivals (Design, Food and Wine, Comedy, Writers, Sustainability and Fair Trade) and one-off, nationally significant occasions (including visits from HM Queen Elizabeth, Cadel Evans, a State Funeral broadcast for Jim Stynes and a Today Show Outside Broadcast featuring Lenny Kravitz). Live sites continued to evolve with the usual substantial AFL andj Australian Open presence – the latter enjoying unprecedented popularity, with finals matches achieving visitation in excess of 5,000 patrons across several evenings. Within the third party program, there were 240 instances of community activism events (eg. National Disability Insurance Scheme Rally, Fatality Free Friday), multicultural festivals (including Buddha’s Day, Melbourne Indigenous Arts Festival, Thai Food and Cultures Festival, Viva Victoria, Diwali Indian Festival of Light) and 30 flag raisings to celebrate national days. We undertook extensive programming to support those with barriers to access (including ADEC Artability Exhibition, Disability Sport & Recreation Festival, Nebula from Arts Access Victoria, End Polio Illumination, Home to Home: Digital Story Exhibition and ableart and ablephoto exhibition); and we worked proactively with disadvantaged groups or individuals (such as The Choir of Hope and Inspiration who continue their strong and ongoing residency, World Autism Day – Light it Up Blue, Human Rights Arts and Film Festival and multiple outcomes through The Song Room Series 2012). We supported numerous indigenous initiatives in addition to supporting the inaugural Melbourne Indigenous Arts Festival, ongoing support for The Long Walk, NAIDOC Week. There was an extensive program of Ideas Discourse and Debate primarily in the BMW Edge featuring 446 separate forums and events, including Melbourne Conversations, the annual Peggy Glanville-Hicks Address, Monash University Alumni Series, Conversations with the Archbishop Series, a new, ongoing social enterprise series with RMIT and a forum about Wikileaks, supported by the Wheeler Centre as part of our growing relationship with Wheeler. We also continued our partnership with The Push, producing and presenting a further season of Fed Square Live concerts, nine in total, culminating in an exciting three-day celebration aligned with Australia Day. The Atrium, our spectacular glass gallery and gateway to NGV Australia (and its Kids Corner and new Studio space) and the BMW Edge has developed into a bustling salon and market environment, with a focus on


14

Australian art, community expression, design, culture and quality food and beverage experiences. In addition to the Regular Program of Wine, Books and Microbreweries, other programming has included, film seasons, screen content highlighting cultural partners, the urban Sneeker Freaker Swap Meet, winter school holiday events, live animation, MARKit @ Fed Square and Page Palour (Emerging Writers Festival). Fed Ed, our education program around Civics and Citizenship and Australian History, consolidated its program this year with over 5,000 students through the core program and partner initiatives and numerous user generated stories created for the Federation Story project on the Atrium Balcony. GREAT REPUTATION “Being able to film free of charge and with little hassle was great for us and made things very easy... As a student production we couldn't have done it any other way. In fact, being able to film at Fed Square in general was so perfect. It was our first and only choice and I don't know what we would have done otherwise... We had a whole lot of fun shooting there for the past 8 months and although I'm glad we finally got through it I'll miss our trips to Fed Square - I really love the place!” Silic & Lee Show, Channel 31 Email 30/01/12 Working systematically to ensure Fed Square is regarded locally, nationally and internationally as an urban success story benefits both Melbourne and Victoria. Fed Square continues as one of the “Top 2” attractions for international and interstate visitors to Victoria. Media coverage has been extensive with 6,636 domestic and over 1,745 international articles generated and it is pleasing to see the high level of positive sentiment expressed in print media at 99%. Fed Square Social media engagement continues to grow with Facebook fans now over 12,000, Twitter followers over 6,000 and while the share of international visitors dropped slightly this year at 21% (down 3%) Tourism Victoria’s November 2011 survey indicated a growth from 50% to 60% in in respondents reporting having visited Fed Square. It was also the first and second most visited attraction in the key market segments of China, NZ, UK, Germany and Singapore. Interestingly, The Light in Winter Survey also showed an enhanced international share at 26% of survey respondents, with the largest markets identified as China and New Zealand (each representing 31% of international respondents) followed by USA, Germany and Japan. Tourism media and industry familiarisations were strong with 19 major visits including: hosting the AOT US + Europe Mega Familiarisation with 50 agents, Chinese Online Drama - Discover Your Australia which has more than 10 million viewers, German program This is My Australia, Korean TV’s major hit – I am a Singer, CNN IBN India and two visits by MediaCorp 8 – the biggest Mandarin channel in Singapore. This has been assisted by new bi-monthly event updates for Tourism Victoria’s Melbourne familiarisations team and biannual presentations to staff across Tourism Victoria. Fed Square also participated in Victoria Tourism Week and numerous presentations, conferences, forums and workshops with key industry partners – MCVB, MCEC, MEA, City of Melbourne, Destination Melbourne, VTIC, Tourism Australia & Tourism Victoria. Stakeholder communication was also enhanced via mailing initiatives to key cultural/events/tourism and government personnel. Last year we hosted two successful concierge familiarisations, with the opportunity for key personnel at Melbourne hotels to experience The Art of The Brick, the Fed Square Wine Showcase, ACMI’s William Kentridge exhibition and the Fed Square Microbreweries Showcase.


15

We continue to position Fed Square as a hallmark image for Melbourne with a view to developing tourism visitation and this focus has been extended to digital media with a customised 30 second production created for tourism industry representatives. Examples include Fed Square being used as a hero image for:

• VTIC Quarterly publication – front page

• AIME – MCVB Stand backdrop

• Tourism Victoria Trade Mission to India backdrop

• International arrivals – Official Visitor Guide pick up station (before customs)

• Tourism Victoria microsites, print and e-campaigns with major outcomes in Japan, Korea, Singapore, Europe + NZ and inclusion in the Aussie Specialist video

• Cruise Ship Arrivals brochure – front page

• VIE Collateral and backdrop

• Tourism Victoria Accessible Tourism Workshop backdrop

• Numerous high profile spots on Australia.com

• MCVB communications

• Destination Melbourne communications We also hosted Tourism Victoria photo shoots for Chinese and backpacker markets. Building our connections with Chinese communities has been achieved through reflecting practices in China where communities frequently gather in public spaces to dance, sing and exercise. Tai Chi continues weekly onsite and businesses have been blessed as part of Chinese New Year celebrations which were covered by Channel 7 News and we have also seen the addition of Feel Young – a seniors exercise program based on Chinese traditions. We have been delighted to host dragon dancing, fitness, origami and mahjong activities – and we plan to extend these further in the term ahead. Similarly, a partnership with the Epoch Times has resulted in stories about Fed Square, Mandarin publications have been developed and relationships have been nurtured with organisations to build a focus around Chinese culture at the Square. Fed Square’s screens continue to mark significant Chinese dates, celebrations and festivals, with the added multicultural welcomes also featuring Mandarin. In October Fed Square played a key role in Melbourne’s Royal Visit, with The Queen making her only public appearance at Federation Square. Coverage of this event went around the world, with particularly strong results as expected in the UK. Numerous events provided landmark photo opportunities and these included the Spirit of the Square, One Day on Earth, St Valentine’s Day, Strandbeest, Tape Melbourne, The Light in Winter and Screen Gaming. The Welcome Home for Cadel Evans in August, Memorial for Jim Stynes in March and Live Site for Black Caviar’s race at Royal Ascot were also events of world significance – attracting large local media contingents and being broadcast around the world – including live crosses on the BBC for Black Caviar’s cameo at Royal Ascot. We continued to leverage key hallmark events and ACMI/NGV exhibitions to promote Fed Square to interstate tourist markets via in flight programming/magazines Qantas In-flight Entertainment, Air New Zealand inflight entertainment and Skybus TV. A 12 month partnership has been secured with Yarra Trams, providing the opportunity for permanent advertising display and brochures in City Circle trams. During the year there were numerous formal filming hires and hundreds of media filming moments including live broadcasts by Channel 9’s Today Show and Channel 7’s Sunrise, Channel 7 coverage of New Year’s Eve, The Good Life – brought to you by Getaway, the Discovery Channel and extensive coverage by Channel 10 Weather and The Project. Media engagement has continued to be positive throughout the year with highlights including support from Channel 10, Channel 9, ABC TV News, Channel 7, SBS, The Age, Herald


16

Sun, ABC 774, Triple J, 3AW, Triple R. We are very grateful for our media colleagues in helping us position the Square as the heart of our community. The cumulative impact of these activities has seen in the period: • 81% of Victorians saying they have visited Fed Square • 84% of Victorians saying that Fed Square is Melbourne’s major focal point • 87% of Victorians agreeing that Fed Square has been embraced since opening • 83% of Victorians agreeing that Fed Square helps attract interstate and overseas visitors • 94% of Victorians agreeing there is always something going on at Fed Square • 90% of Victorians agreeing that Fed Square is great for Melbourne • 88% of Victorians agreeing that Fed Square is a public space where culturally diverse activities occur CONCLUSION As always, I am grateful to the staff and Boards of the Special Broadcasting Service, Australian Centre for the Moving Image, Melbourne Visitor Centre and the National Gallery of Victoria for their contribution to the success of the precinct and I thank all the tenants and their staff for their participation in many programs and activities. Our many contractors provide valuable services across a broad range of functions and I am particularly grateful to Microhire, Ikon Cleaning Services, AGG Security and Wilson Parking for their commitment to Federation Square. Thank you to the State Government and City of Melbourne and their many officers and departments along with all our collaborators and partners for their work on many projects and events. It is also timely to thank BMW whose partnership with us concludes shortly, for their enormous contribution to Fed Square’s success and in particular for underpinning the operations of one of the world’s most beautiful venues, BMW Edge. Thank you to our Board who have provided direction, advice and support. We are pleased to welcome Catherine Walter AM as Chair of FSPL commencing in July 2012 and to thank John Harvey, who has retired as Chairman after 7 years. John has provided consistent guidance and encouragement on many fronts and it has been a pleasure working with him. A big thank you must also go to all the staff. Their dedication is enormous and they are proud to be the custodians of Federation Square

Kate Brennan Chief Executive Officer


17

KEY PERFORMANCE INDICATORS 2011-12

Key Performance Indicators 2011-12 Target Actuals

Great Place

Visitor comfort indicated by their assessment of:

Cleaning 95% 100%

Security 95% 100%

Amenities 95% 97%

Visitation within 10% of the average of the previous three years. 100% 111%

Victorians who recommend Fed Square to visiting friends and family 75% 68%

Sociability – percentage of visitors using Fed Square as a meeting place 20% 19%

Great Staff

Performance of FSPL team in achieving defined role objectives 100% 100%

“Overall Job Satisfaction” measured through the People Matter Survey >85% 91%

FSPL an “Employer of Choice” as measured through the annual People Matter Survey >95% 93%

Great Delivery

Tenant Satisfaction >90% 100%

Event Client Satisfaction >95% 95%

Visitor Satisfaction with their overall service experience 100% 100%

Visitor Satisfaction with the service provided by staff across Fed Square 95% 100%

Great Business Practice

Liquidity Ratios Current 3.21 3.16

Quick 3.23 3.13

Interest Cover - EBITD 3.35 3.49

Operating profit before interest and depreciation ‘000s $5,283 $5,492

Operating profit before depreciation ‘000s $3,704 $3,917

Risk Management – VMIA Risk Management Framework Quality Review >90% Advanced (1)

Significant OH&S Incidents Zero 11 (2)

Significant Security and Risk Incidents Zero Zero

Net total carbon emissions 9,000 9,095 (3)

Great Visitor Experience

Number of events and activities 1,500 2,144

Fed Square visitors who recommend it as a good place to visit >95% 95%

Visitation rates to cultural attractions (compared to the prior year) > 90% 84%

Great Reputation

Recognised as a culturally diverse public space > 90% 88%

Percentage of Victorians that agree with the statement that Fed Square is now Melbourne’s major central community focal point

95% 84%

Fed Square in “Top 3” attractions in Victoria in terms of international and interstate visitors to

Top 3 Top 2

Attracting International visitors > 25% 21%

High level of positive sentiment expressed in print media >90% 99% Note: (1) Advanced is the highest score given by VMIA (2) Includes minor incidents that are deemed significant as they are reported to Worksafe

(3) Carbon emissions are measured per calendar year


18

Statement of Corporate Governance The Directors of Fed Square Pty Ltd are committed to the highest standard of corporate governance and acknowledge the need for continued maintenance of governance practice and ethical conduct by all Directors and employees. Accordingly, they have ensured that systems and procedures are in place to provide appropriate assurance that the company undertakes its activities and functions in accordance with: All legal requirements; The best interests of shareholders; An environment that meets relevant standards; and A manner that is responsible to all stakeholders and the wider community. Objects and Powers of the Company The objects of the company are those set out in the Fed Square Pty Ltd Constitution and Federation Square Civic and Cultural Charter and include without limitation:- (a) to occupy the site known as Federation Square; (b) to use, refurbish, maintain, improve, develop, lease, licence, manage, operate and modify all or any part

of Federation Square; (c) in relation to any part of Federation Square, to carry on any or all of:

(i) the businesses of owners, operators, mangers, licensors, lessors or occupiers of: (1) galleries, exhibition centres, libraries, art and craft centres and museums; (2) car parks; (3) theaters, cinemas and cinema based entertainment facilities, radio, television and other

multi-media studios, outdoor video screens and video/LED signage; (4) restaurants, cafes, taverns, hotels, food and drink premises (including, without limitation,

take-away food and drink premises), liquor vendors, shops, convenience restaurants and convenience shops, and nightclubs;

(5) function centres, conference centres and reception centres; (6) retail outlets, shops and stores (including, without limitation those required for service

industries and including, without limitation, cash dispensing machines, ticketing machines and tourist and other information services providing machines);

(7) offices; (8) amusement parlours and gaming and gambling premises; (9) indoor recreation facilities; (10) visitor and tourist information services and other visitor and tourist services;

(ii) live performances, entertainment, carnivals, circuses, community or public events, (both indoor and outdoor), festivals, exhibitions and performances;

(iii) places of assembly for religious and cultural activities, entertainment or meetings; and (iv) markets; and to do all things incidental or conducive to these objects.

Duties of Directors The duties of Directors include: Duty to act honestly in good faith in the best interests of the corporation and for a proper purpose; Duty to act with care and diligence; Duty to avoid conflict in the position of a director and/or any interest that a director may have; Duties which prohibit the misuse of information obtained by directors; and Duties which prohibit a director from taking for oneself the company’s opportunities.


19

Responsibilities of the Board The primary responsibilities of the Board include:- Establishing the company’s vision, mission, values and ethical standards; Ensuring the company’s long term viability and enhancing the financial position; Formulating and overseeing implementation of corporate strategy; Approving the business plan, budget and corporate policies; Agreeing key performance indicators (KPIs); Monitoring/assessing performance of the company, the Board itself, management and major projects; Overseeing the risk management framework and monitoring business risks; Appointing and appraising the performance of the Chief Executive Officer; Requiring and monitoring legal and regulatory compliance; Approving annual accounts, annual report and other public documents; Ensuring an effective system of internal controls exists; and Delegating an appropriate level of authority to management. Board Committees The Board has established one permanent Committee, this being the Audit Committee. Committee decisions become recommendations for submission to the Board for resolution. Risk Management The company recognises the need for pro-active risk management procedures and during the year reviewed the Risk Management Policy and Strategy and procedures to monitor progress with proposed plans. Risks are identified, assessed and treated in accordance with the principles contained in Australia/New Zealand Risk Management Standard AS/NZS ISO 31000:2009. The risk management program is designed to provide a structured approach to business planning, improve operational performance, encourage pro-active management and protect assets, people, finance and property. Attestation In accordance with the Victorian Government’s Risk Management Framework developed by the Department of Treasury & Finance, I, Catherine Mary Walter, certify that Fed Square Pty Ltd has risk management processes in place consistent with the Australian/New Zealand Risk Management Standard and an internal control system is in place that enables the executive to understand, manage and satisfactorily control risk exposures. The Board verifies this assurance and that the risk profile of Fed Square Pty Ltd was critically reviewed in the last 12 months.

Catherine Walter AM Chair 28th August 2012


20

Audit Committee The company has established an Audit Committee to advise the Board in relation to matters falling into the following broad areas:- Financial reporting and accounting policies; Internal audit and internal controls; Governance; State Government’s Financial Management Compliance Framework; and Compliance with Australian equivalents of International Financial Reporting Standards The Audit Committee meets as required and makes recommendations to the Board on specific issues. The members of the Committee during the year ended 30 June 2012 were Louise Staley (Chair), John Harvey, Helen Kapalos and Liberty Sanger. Financial Management Compliance Framework In June 2003 the Victorian State Government launched the Whole of Government “Financial Management Compliance Framework” to promote responsible financial management in the Victorian public sector and assist public sector agencies meet their obligations and monitor their overall performance in financial management. A fundamental element of the Financial Management Compliance Framework is the Standing Directions issued from time to time by the Minister for Finance. The standing directions are issued under the provisions of the Financial Management Act 1994 and are designed to supplement the Act by prescribing mandatory procedures for the Victorian public sector. Whilst Fed Square Pty Ltd is not subject to the provisions of the Financial Management Act 1994, the company is implementing the requirements of the Financial Management Compliance Framework on a voluntary basis. Internal Audit The company engaged Grant Thornton (Vic) Pty Ltd as the Internal Auditor to assist in evaluating the company’s internal controls. Grant Thornton P/L developed an annual audit plan, having due regard to the company’s risk management program, and implementation of proposed audit activities is now underway. Whistleblowers Protection Act 2001 The Whistleblowers Protection Act 2001 encourages and assists people in making disclosures of improper conduct by public officers and public bodies. The Act provides protection to people who make disclosures in accordance with the Act and establishes a system for the matters disclosed to be investigated and rectifying action to be taken. Fed Square Pty Ltd does not tolerate improper conduct by employees, nor the taking of reprisals against those who come forward to disclose such conduct. It is committed to ensuring transparency and accountability in its administrative and management practices and supports the making of disclosures that reveal corrupt conduct, conduct involving a substantial mismanagement of public resources, or conduct involving a substantial risk to public health and safety and the environment. Fed Square Pty Ltd will take all reasonable steps to protect people who make such disclosures from any detrimental action in reprisal for making the disclosure. It will also afford natural justice to the person who is the subject of the disclosure.


21

Reporting procedures Disclosures of improper conduct or detrimental action by Fed Square Pty Ltd or its employees may be made to the following:

• The Protected Disclosure Officer/Coordinator William Blakeney Manager – Corporate Services Fed Square Pty Ltd 9655 1904 [email protected]

Alternatively, disclosures of improper conduct or detrimental action by Fed Square Pty Ltd employees may also be made directly to the Ombudsman. The Ombudsman Victoria Level 9, 459 Collins Street (North Tower) Melbourne VIC 3000 Telephone: (03) 9613 6222 Internet: www.ombudsman.vic.gov.au E-mail: [email protected] Further information Written guidelines outlining the system for reporting disclosures of improper conduct or detrimental action by Fed Square Pty Ltd or its employees are available for public perusal. Disclosures under the Whistleblowers Protection Act The current procedures established by the public body under Part 6 are available upon request. The following information is disclosed pursuant to section 104 of the Whistleblowers Protection Act 2001. 2011-12

Number 2010-11 Number

Public interest disclosures Nil Nil Protected disclosures Nil Nil The number and type of disclosures made to Fed Square Pty Ltd since the commencement of the Act.

Nil Nil

The number of disclosures referred to the Ombudsman for determination as to whether they are public interest disclosures

Nil Nil

The number and types of disclosures referred to Fed Square Pty Ltd by the Ombudsman.

Nil Nil

The number and types of disclosures referred by Fed Square Pty Ltd to the Ombudsman to investigate.

Nil Nil

The number and types of investigations of disclosures taken over by the Ombudsman from Fed Square Pty Ltd.

Nil Nil

The number of requests by complainants to have their disclosure investigated by the Ombudsman due to their dissatisfaction with the way Fed Square Pty Ltd is investigating the matter.

Nil Nil

The number and types of disclosure that Fed Square Pty Ltd has declined to investigate.

Nil Nil

The number and type of disclosed matters that were substantiated on investigation and the action taken on completion of the investigation.

Nil Nil

Any recommendations made by the Ombudsman that relate to Fed Square Pty Ltd. Nil Nil

mailto:[email protected]

http://www.ombudsman.vic.gov.au/

mailto:[email protected]


22

Directors’ Report The Directors of Fed Square Pty Ltd present their report on the financial statements of the company for the year ended 30th June 2012. Directors The Directors in office during the period and at 30 June 2012 unless otherwise stated were: Mr John Frederick Harvey (retired 30 June 2012)

Ms Helen Kapalos

Ms Liberty Emma Sanger

Ms Louise Eileen Staley (appointed 26 September 2011)

Ms Catherine Mary Walter (appointed 16 July 2012)

Ownership of Fed Square Pty Ltd Fed Square Pty Ltd is a company wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer is the Minister responsible for the State Holding in Fed Square Pty Ltd under the Deed. Principal Activities The principal activity of Fed Square Pty Ltd continues to be the management of Federation Square. Results of Operations 2012 2011

$ $ Operating surplus before depreciation 3,917,177 4,350,915

Depreciation expense (11,308,207) (11,650,642)

Operating surplus/(deficit)

(7,391,030)

(7,299,727) Dividends No dividends have been proposed or paid during the year (2010-2011 Nil). Changes in State of Affairs There was no material change in the State of Affairs during the year. Environmental Regulations No significant environmental regulations apply that are likely to have an unexpected material affect on the operations or financial results of Fed Square Pty Ltd. Subsequent Events There were no subsequent events after balance date expected to have a material affect on the financial statements of Fed Square Pty Ltd that are not otherwise disclosed in the financial statements and notes.


23

Directors’ Meetings The number of Directors’ meetings and number of meetings attended by each of the Directors of the company during the financial year were: MEETINGS MEETINGS DIRECTOR HELD* ATTENDED Mr John Harvey 6 6 Ms Helen Kapalos 6 6 Ms Louise Staley 5 5 Ms Liberty Sanger

6 4

*Reflects the number of meetings held during the time the Director held office during the year. Audit Committee Meetings The number of Audit Committee meetings and number of meetings attended by each of the Directors of the company during the financial year were: MEETINGS MEETINGS DIRECTOR HELD* ATTENDED Mr John Harvey 3 3 Ms Helen Kapalos 3 3 Ms Liberty Sanger 3 3 Ms Louise Staley 3 3 *Reflects the number of meetings held during the time the Director held office during the year. Directors’ Benefits Directors’ benefits are set out in notes 19 and 21 to the financial statements. Insurance of Directors and Officers During the financial year $38,577 was paid by the company to the Victorian Managed Insurance Authority for Directors’ and Officers’ Liability insurance premiums and recorded as an expense in the Comprehensive Operating Statement (2010-2011: $55,923). The insurance provides cover for Directors and Officers of Fed Square Pty Ltd against certain personal liabilities that they may incur by reason of their duties as Directors and Officers. Signed in accordance with a resolution of the Directors at Melbourne on 28th August 2012.

............................................................. Catherine Walter (Chair)


24

Auditor-General’s Independence Declaration


25

Comprehensive operating statement for the financial year ended 30 June 2012 Notes 2012 2011 $ $ Operating revenue 2 23,452,268 23,220,441 Interest revenue 1,016,265 1,052,605 Total Revenue 24,468,533 24,273,046 Borrowing costs (1,574,906) (1,750,679) Employee benefits (4,308,214) (3,974,617) Event expenses (3,097,501) (3,391,745) Site operating expenses 3(a) (8,382,273) (7,390,397) Other expenses 3(b) (3,188,462) (3,414,693) Total expenses before depreciation (20,551,356) (19,922,131) Net operating result before depreciation 3,917,177 4,350,915 Depreciation and amortisation 7 (11,308,207) (11,650,642) Net operating result

12 (7,391,030)

(7,299,727)

Other comprehensive income

Revaluation of property, plant and equipment 7 - (84,124,795) Other comprehensive income for the period - (84,124,795) Total comprehensive result for the period (7,391,030) (91,424,522) The comprehensive operating statement should be read in conjunction with the accompanying notes.


26

Balance sheet as at 30 June 2012 Notes 2012 2011 $ $ Current Assets Cash and deposits 17(a) 20,724,788 20,520,973 Trade and other receivables 6 2,247,535 1,154,216 Prepayments 51,510 966,203

Total Current Assets 23,023,833 22,641,392 Non-Current Assets Property, plant and equipment 7 489,522,605 497,694,785

Total Non-Current Assets 489,522,605 497,694,785

Total Assets 512,546,438 520,336,177 Current Liabilities Trade and other payables 8 3,377,350 2,972,426 Interest bearing liabilities 10 3,479,241 2,960,385 Provisions 9 435,587 339,780

Total Current Liabilities 7,292,178 6,272,591 Non-Current Liabilities Interest bearing liabilities 10 22,227,589 23,723,040 Provisions 9 108,470 31,315

Total Non-Current Liabilities 22,336,059 23,754,355

Total Liabilities 29,628,237 30,026,946

Net Assets 482,918,201 490,309,231 Equity Contributed capital 11 435,940,508 435,940,508 Accumulated deficit 12 (42,387,810) (34,996,780) Asset revaluation surplus 13 89,365,503 89,365,503

Total Equity 482,918,201 490,309,231 The balance sheet should be read in conjunction with the accompanying notes.


27

Cash flow statement for the financial year ended 30 June 2012 Notes 2012 2011 $ $ Cash Flows from operating activities Receipts from customers (incl. GST) 25,099,193 25,510,086 Interest received 847,875 1,119,164 Payments to employees (4,055,105) (3,976,419) Payments to suppliers (incl. GST) (15,126,071) (15,965,354) GST paid to Australian Taxation Office (867,351) (781,325) Interest paid on loans (1,582,104) (1,757,436) Net cash flows from operating activities 17(b) 4,316,437 4,148,716 Cash Flows from investing activities Payments for buildings & improvements (515,934) (1,061,614) Payments for plant & equipment (2,565,276) (917,172) Net cash flows from investing activities (3,081,210) (1,978,786) Cash Flows from financing activities Proceeds from Government advance Repayment of borrowings

1,716,180 (2,713,011)

- (2,734,821)

Repayment of finance leases (34,581) (33,375) Net cash flows from financing activities (1,031,412) (2,768,196) Net increase in cash and cash equivalents 203,815 (598,266) Cash and cash equivalents at the beginning of the year

20,520,973 21,119,239

Cash and cash equivalents at the end of the year 17(a) 20,724,788 20,520,973 The cash flow statement should be read in conjunction with the accompanying notes.


28

Statement of changes in equity for the financial year ended 30 June 2012 Contributed

capital Assets revaluation

surplus Accumulated

deficit Total

$ $ $ $

Balance at 1 July 2010 435,940,508 173,490,298 (27,697,053) 581,733,753

Operating result for the year - - (7,299,727) (7,299,727)

Revaluation of freehold land - (35,318,000) - (35,318,000)

Revaluation of buildings - (48,806,795) - (48,806,795)

Other comprehensive income for the year - - - -

Total comprehensive income for the year - (84,124,795) (7,299,727) (91,424,522)

Balance at 30 June 2011 435,940,508 89,365,503 (34,996,780) 490,309,231

Operating result for the year - - (7,391,030) (7,391,030)

Revaluation of freehold land - - - -

Revaluation of buildings - - - -

Other comprehensive income for the year - - - -

Total comprehensive income for the year - - (7,391,030) -

Balance at 30 June 2012 435,940,508 89,365,503 (42,387,810) 482,918,201

The statement of changes in equity should be read in conjunction with the accompanying notes.


29

Notes to the financial statements for the year ended 30 June 2012 1. STATEMENT OF SIGNIFICANT ACCOUNT POLICIES These financial statements are audited general purpose financial statements which have been

prepared in accordance with the Corporations Act 2001, Accounting Standards and Urgent Issues Group Interpretations, and comply with other requirements of the law.

The financial statements were authorised for issue by C. M. Walter, Chair, Fed Square Pty Ltd on

28th August 2012. The significant policies which have been adopted in the preparation of this financial report are:

a. Basis of preparation

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. The accrual basis of accounting has been applied in the preparation of these financial statements whereby assets, liabilities, equity, revenue and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid. In the application of accounting standards, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making judgments. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by management in the application of accounting standards that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2012 and the comparative information presented in these financial statements for the year ended 30 June 2011.

b. Revenue recognition

Revenues are measured at the fair value of the consideration received or receivable, net of any goods and services tax payable to the Australian Taxation Office. Goods or services received without consideration are recognised in the Comprehensive Operating Statement as resources received free of charge. Revenue is recognised for the main business activities as follows:-

Fees and charges Revenue from events, car parking and other fees and charges are recognised in the period in which the service is provided.


30

Tenancy rents Revenue in the form of tenancy rents and outgoings derived from operating leases on premises at Federation Square is recognised in the period in which the service is provided. Grants Grants are recognised as income when the company gains control of the underlying assets. Where grants are reciprocal, income is recognised as performance occurs under the grant. Non-reciprocal grants are recognised as income when the grant is received or receivable. Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant. Sponsorships Sponsorship revenue is recognised in the period in which the right to receive the revenue exists under each specific agreement. Interest revenue Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. Sale of non-current assets The gross proceeds from the sale of non-current assets are included as revenue at the date control of the asset passes to the buyer, which is usually when an unconditional contract of sale is signed.

c. Borrowing Costs

Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with arrangements for borrowings. Borrowing costs are expensed in the period in which they relate.

d. Employee Entitlements Wages, salaries and annual leave Liabilities for employee entitlements for wages and salaries (including non-monetary benefits) and annual leave represent present obligations resulting from employees’ services provided up to the reporting date, calculated at undiscounted amounts based on remuneration rates, including on-costs, that the company expects to pay.

Superannuation All superannuation contributions are to defined contribution plans and expensed when incurred. Long service leave The provision for employee benefits for long service leave represents the present value of the estimated future cash outflows to be made by the company resulting from employees’ services provided up to the reporting date, including any periods of recognised prior service. Unconditional long service leave, representing 7 or more years of continuous service, is disclosed as a current liability even where the company does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. This component of the LSL liability is measured at nominal value.


31

e. Expenses from transactions Event expenses Expenses are recognised as they are incurred and reported in the financial year to which they relate. Site operating expenses Expenses are recognised as they are incurred and reported in the financial year to which they relate. Other expenses Expenses are recognised as they are incurred and reported in the financial year to which they relate.

f. Goods and Services Tax Revenues, expenses and physical assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as either a part of the cost of the asset or as part of the expense incurred. Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or current liability in the balance sheet. Cash flows from operating activities are included in the Cash Flow Statement on a gross basis, inclusive of GST. The GST components of cash flows from investing activities and financing activities, that are payable to or recoverable from the ATO, are presented as operating cash flows.

g. Income Tax

The company is exempt from income tax pursuant to Section 24 AM of the Income Tax Assessment Act 1936.

h. Leased Assets

Fed Square Pty Ltd as Lessee Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the entity’s policy on borrowing costs. Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset. Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.


32

Fed Square Pty Ltd as Lessor Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense in the period in which they are incurred.

i. Provisions A provision is recognised when there is a legal, equitable or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit will be required to settle the obligation, the timing or amount of which is uncertain. If the effect is material, a provision is determined by discounting the expected future cash flows (adjusted for expected future risks) required to settle the obligation that reflects the current market assessment of the time value of money and the risks specific to the liability, being risk free rates on government bonds most closely matching the expected future payments. When some or all of the economic benefit required to settle a provision is expected to be recovered from a third party, the recovery receivable is recognised as an asset when it is probable that the recovery will be received and is measured on a basis consistent with the measurement of the related provision. In the Balance Sheet, a provision is recognised net of the recovery receivable when the entity: has a legally recognised right to set-off the recovery receivable and the provision;

intends to settle on a net basis, or to realise the asset and settle the provision simultaneously.

In the Comprehensive Operating Statement, an expense recognised in respect of a provision is presented net of recovery.

j. Property, plant and equipment

Plant and equipment and equipment under finance lease are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. Land and buildings are measured at fair value. Fair value is determined on the basis of an independent valuation by external valuation experts. The fair values are recognised in the financial statements and are reviewed at the end of each reporting period to ensure that the carrying value of land and buildings is not materially different from their fair values. Revaluation Revaluation increments are credited directly to equity in the asset revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as an expense in the net result, the increment is recognised as income in determining the net result. Revaluation decrements are recognised immediately as expenses in the net result, except that, to the extent that a credit balance exists in the revaluation reserve in respect of the same class of assets, they are debited to the asset revaluation reserve. Revaluation increases and revaluation decreases relating to individual assets within a class of property, plant and equipment are offset against one another within that class but are not offset in respect of assets in different classes.


33

Depreciation Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period. Items costing less than $5,000 are written off in the year of purchase.

The following estimated useful lives are used in the calculation of depreciation:

Category Life Buildings and improvements 5 - 100 years Plant and equipment 2 - 50 years

The cost of tenancy fit-outs provided under lease arrangements are amortised over the initial term of the relevant lease.

k. Impairment of assets At each reporting date, the company reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is determined by the ‘depreciated replacement cost’, which is the current replacement cost of the asset less, where applicable, accumulated depreciation calculated on the basis of such cost to reflect the already consumed or expired future economic benefits of the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

l. Financial assets and liabilities

i. Cash and deposits

Cash includes cash on hand, deposits held and cash equivalents, which are highly liquid investments with short periods to maturity and readily convertible into cash on hand. They are subject to an insignificant risk of changes in value.

ii. Interest bearing liabilities

Loans are recognised when issued at the amount of the net proceeds received. Interest is recognised in the Comprehensive operating statement on an effective yield basis.

iii. Receivables

Debtors are generally settled within 30 days and are carried at amounts due. The ability to collect debts is assessed at year end and specific provision is made for any doubtful amounts.


34

iv. Payables These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and which remain unpaid. The amounts are unsecured and are paid usually within 30 days of recognition.

v. Net fair value of financial assets and liabilities Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them at the present value of contractual future cash flows on amount due from customers (reduced for expected credit losses) or due to suppliers. Cash flows are discounted using standard valuation techniques at the applicable on-market yield having regard to the timing of the cash flows. The carrying amounts of bank term deposits, receivables, payables, loans and employee benefits approximate net fair value.

m. Prepayments

Prepayments represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period.

n. New Accounting Standards and Interpretations Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2012 reporting period. The Department of Treasury & Finance assesses the impact of these new standards and advises Government departments and related entities of their applicability and early adoption where applicable. As at 30 June 2012 a number of standards and interpretations had been issued but were not mandatory for the financial year ending 30 June 2012. Whilst, these accounting standards and interpretations may have an impact on future reporting periods, the extent of their impact is considered not to warrant further disclosures. The company has not, and does not intend to, adopt these standards early.


35

Notes 2012 2011 $ $ 2. OPERATING REVENUE

Tenancy rents and charges 15,520,418 15,167,595 Car parking 3,790,011 3,773,461 Events 3,036,075 3,104,721 Sponsorship and grants 1,078,878 1,135,983 Other revenue 26,886 38,681 Total operating revenue 23,452,268 23,220,441

3. EXPENSES (a) Site operating expenses Building consultants 531,505 256,113 Car park operations 660,479 760,819 Cleaning 1,576,409 1,524,131 Maintenance 2,683,138 1,693,216 Placemaking 14,952 109,567 Security 1,391,029 1,385,589 Utilities 1,524,761 1,660,962 Total site operating expenses 8,382,273 7,390,397 (b) Other expenses Administration and accounting 657,234 780,808 Bad and Doubtful debts 108,737 15,189 Insurance 592,933 693,669 Legal 83,493 129,232 Motor vehicles 9,733 19,697 Multimedia 69,204 63,150 Promotional expenses 492,049 568,581 Statutory rates and taxes 803,619 805,111 Tenancy expenses 371,460 339,256 Total other expenses 3,188,462 3,414,693

4. AUDITORS’ REMUNERATION Amounts paid or due and payable to the Victorian Auditor-General’s Office for audit of the financial statements

25,300

25,025

5. DIVIDENDS

There was no provision for dividends or dividends paid for the year (2010-2011: Nil).


36

6. TRADE AND OTHER RECEIVABLES Notes 2012 2011 $ $

Debtors 2,080,138 1,047,041 Provision for doubtful debts (96,116) (34,773) Net debtors 1,984,022 1,012,268 Accrued income 263,513 141,948 Total trade and other receivables 2,247,535 1,154,216 The average credit period on sales of goods and rendering of services is 30 days. An allowance has been made for estimated irrecoverable receivable amounts arising from past sale of goods or rendering of services. The company has provided for receivables based on the estimated irrecoverable amounts determined by reference to past default experience.

Movement in allowance for doubtful debts 2012 2011 $ $

Balance at beginning of year (34,773) (370,223) Impairment losses recognised on receivables (61,343) (15,189) Amounts written off as uncollectable - 205,485 Amounts credited during the year - 145,154 Balance at end of year (96,116) (34,773)

Ageing of impaired receivables 2012 2011 $ $

Current - - 30 – 60 days - - 60 – 90 days 15,286 - Greater than 90 days 80,830 34,773 Total 96,116 34,773 In determining the recoverability of a receivable, the company considers any change in the credit quality of the receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being diverse and unrelated. Accordingly, the Directors believe there is no further credit provision required in excess of the allowance for doubtful debts.

7. PROPERTY, PLANT AND EQUIPMENT

Valuation

A valuation was undertaken by Urbis Valuations Pty Ltd on behalf of the Valuer-General Victoria (ref: 210B-A00797) effective as at 30 June 2011. The Urbis valuation is based on:- - the property is situated in the ‘Capital City 1’ zone, which is a highly sought after property zone; - the highest and best use based on the zoning and location of Federation Square is for a

medium/high density residential development site;


37

- the site is well located, being opposite the river and close to public transport linkages; - it is a large site and discount for size should apply; - the central portion of the land (air rights) being ascribed a value equal to 5% of the surrounding

land values The revalued carrying amount following the revaluation at 30 June 2011 is $121,462,000. This resulted in a decrement to the asset revaluation reserve during 2010-11 of $35,318,000, which leaves a balance relating to land of $58,962,000.

Buildings and Improvements A valuation was undertaken by Napier and Blakeley Pty Ltd on behalf of the Valuer-General Victoria effective as at 30 June 2011. The fair value ascribed by Napier and Blakeley Pty Ltd for the carrying amount of buildings and improvements, as represented by the depreciated replacement cost, at 30 June 2011 is $372,997,000. The valuation resulted in a decrement to the revaluation reserve of $48,806,795 during 2010-11, which leaves a balance relating to buildings and improvements of $30,403,503.

Notes 2012 2011 $ $ Freehold land – fair value 121,462,000 121,462,000 Buildings and improvements At fair value 444,602,915 444,086,981 Accumulated depreciation (81,089,475) (70,361,383) 363,513,440 373,725,598

Plant and equipment At cost 13,843,538 11,278,262 Accumulated depreciation (9,441,225) (8,931,556) 4,402,313 2,346,706 Tenancy fit-outs At cost 1,800,005 1,800,005 Accumulated amortisation (1,778,968) (1,743,967) 21,037 56,038 Plant and equipment under finance lease 157,241 145,509 Less: Accumulated depreciation (33,426) (41,066) 123,815 104,443

Total property, plant and equipment 489,522,605 497,694,785


38

Reconciliations Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning of the current financial year are set out below:

Land Buildings and improvements

Plant and equipment

Tenancy fit-outs

Plant and equipment under

lease

Total property, plant and

equipment $ $ $ $ $ $

Carrying amount at 1 July 2010

156,780,000

378,229,169

56,253,570

91,039

76,876

591,430,654

Additions - 1,061,614 917,172 - 71,075 2,049,861 Disposals - - - - (10,293) (10,293) Reallocations - 50,758,842 (50,758,842) - - - Revaluation (35,318,000) (48,806,795) - - - (84,124,795) Depreciation/Amortisation - (7,517,232) (4,065,194) (35,001) (33,215) (11,650,642) Carrying amount at 1 July 2011

121,462,000

373,725,598

2,346,706

56,038

104,443

497,694,785

Additions - 515,934 2,565,276 - 86,165 3,167,375 Disposals - - - - (31,348) (31,348) Reallocations - - - Revaluation - - - - - - Depreciation/Amortisation - (10,728,092) (509,669) (35,001) (35,445) (11,308,207) Carrying amount at 30 June 2012

121,462,000

363,513,440

4,402,313

21,037

123,815

489,522,605

Notes 2012 2011 8. TRADE AND OTHER PAYABLES $ $

Creditors 3,032,347 2,677,659 Advances 115,246 145,157 Salaries and associated costs 229,757 149,610 Total trade and other payables 3,377,350 2,972,426

9. PROVISIONS

Current Employee entitlements 422,494 327,357 Fringe benefits tax 13,093 12,423 435,587 339,780 Non-Current

Employee entitlements 108,470 31,315


39

10. INTEREST BEARING LIABILITIES Loans 25,581,438 26,578,269 Lease liability 14 125,392 105,156 25,706,830 26,683,425

Current liability 3,479,241 2,960,385 Non-current liability 22,227,589 23,723,040 25,706,830 26,683,425

Loans are provided by the Treasury Corporation of Victoria in the form of fixed interest annuities and are secured by a guarantee from the Treasurer of Victoria. The loans will be fully repaid in 2019. Lease liabilities represent motor vehicles leased from Vic Fleet, a unit of the Victorian Department of Treasury and Finance. The motor vehicles provide security under the terms of the lease.

11. CONTRIBUTED CAPITAL

Fed Square Pty Ltd is a company wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer of Victoria is the Minister responsible for the State Holding in Fed Square Pty Ltd under the Deed. The allocation statement dated 27 June 2003 approved by the Minister for Finance required Fed Square Pty Ltd to record the value of assets transferred to the company in 2002-2003 as a capital injection by the State Government as owners. The total amount of the contributed capital comprises $373,440,507 for buildings and improvements, plant and equipment, and $62,500,000 for land. The transfer was effective from 30 June 2003 and is in accordance with the Department of Treasury and Finance ‘Accounting and Financial Reporting Bulletin No.39 – Accounting for Contributed Capital’.

Notes 2012 2011 $ $ Issued and paid-up share capital (1 share @ $1 ea.) 1 1 Contributed capital 435,940,507 435,940,507 Total Contributed Capital 435,940,508 435,940,508

12. ACCUMULATED DEFICIT

Accumulated deficit at beginning of financial year (34,996,780) (27,697,053) Net operating result (7,391,030) (7,299,727) Accumulated deficit at end of financial year (42,387,810) (34,996,780)


40

13. ASSET REVALUATION SURPLUS Notes 2012 2011 $

$

Balance at beginning of financial year 89,365,503 173,490,298 Revaluation increments/(decrements) - (84,124,795) Balance at end of financial year 89,365,503 89,365,503

14. LEASES

Finance Leases (Fed Square Pty Ltd as Lessee) Finance lease liabilities payable: - not later than one year 58,506 57,942 - later than one year and not later than five years 78,184 55,964 Minimum lease payments 136,690 113,906 Less: future finance charges (11,298) (8,750) Recognised as a lease liability 1(h), 10 125,392 105,156

Operating Leases (Fed Square Pty Ltd as Lessor) Operating leases relate to premises owned by Fed Square Pty Ltd from which the company derives rental income. Non-cancellable operating lease receivables: - not later than one year 12,546,131 14,837,277 - later than one year and not later than five years 43,749,013 45,738,547 - later than five years 52,463,450 62,712,730 1(h) 108,758,594 123,288,554

15. EMPLOYEE SUPERANNUATION FUNDS

Fed Square Pty Ltd contributes to superannuation at the minimum rate required by the Superannuation Guarantee (Administration) Act 1992. Each employee (including Directors) is able to nominate a complying fund in accordance with the Act. Additional contributions are optional at the discretion of employees. During the year a total of $344,373 (2010-2011: $362,291) was paid or payable by the company to the various funds. As at 30 June 2012 there was no amount owing to superannuation funds not brought to account (2010-2011: Nil). Fed Square Pty Ltd employed 45 full time equivalent employees as at 30 June 2012 (2010-2011: 42). All superannuation payments are paid to accumulation funds.

16. SUBSEQUENT EVENTS

There were no subsequent events after balance date expected to have a material affect on the financial statements of Fed Square Pty Ltd that are not otherwise disclosed in the financial statements and notes.


41

17. CASH ASSETS

(a) Reconciliation of Cash For the purposes of the cash flow statement, cash includes cash on hand, cash at bank and short term deposits. Cash as at the end of the financial year as shown in the Cash Flow Statement is reconciled to the related items in the balance sheet as follows:

Notes 2012 2011 $ $

Cash on hand and at bank 1,651,758 462,049 Term deposits 19,073,030 20,058,924 Cash balance as per cash flow statement 20,724,788 20,520,973

(b) Reconciliation of loss from ordinary activities to net cash provided by operating activities:

Net deficit (7,391,030) (7,299,727)

Adjustments for non-cash items:

- Depreciation and amortisation 11,308,207 11,650,642 - Provision for doubtful debts 61,343 15,189 Net cash inflows from operating activities before changes in assets and liabilities

3,978,520

4,366,104

Changes in assets and liabilities (Increase) / Decrease in receivables (1,154,662) (21,588) (Increase) / Decrease in prepayments 914,693 (632,245) Increase / (Decrease) in payables 324,777 438,247 Increase / (Decrease) in provisions 253,109 (1,802) Net cash flows from operating activities 4,316,437 4,148,716


42

18. FINANCIAL INSTRUMENTS Interest rate exposure of financial instruments 30 June 2012 Weighted Average

Interest Rate Interest rate exposure Carrying

amount

Note Fixed Interest

Rate

Variable Interest

Rate

Non Interest Bearing

% $ $ $ $

Financial Assets Cash and deposits 17(a) 3.56 19,073,030 1,651,758 - 20,724,788 Receivables 6 - - - 2,247,535 2,247,535 19,073,030 1,651,758 2,247,535 22,972,323 Financial Liabilities Payables 8 - - - 3,377,350 3,377,350 Lease Liabilities 10 6.53 125,392 - - 125,392 Loans 10 5.78 25,581,438 - - 25,581,438 25,706,830 - 3,377,350 29,084,180 30 June 2011 Weighted Average

Interest Rate Interest rate exposure Carrying

amount

Note Fixed Interest

Rate

Variable Interest

Rate

Non Interest Bearing

% $ $ $ $

Financial Assets Cash and deposits 17(a) 4.81 20,058,924 462,049 - 20,520,973 Receivables 6 - - - 1,154,216 1,154,216 20,058,924 462,049 1,154,216 21,675,189 Financial Liabilities Payables 8 - - - 2,972,428 2,972,428 Lease Liabilities 10 6.78 105,156 - - 105,156 Loans 10 6.19 26,578,269 - - 26,578,269 26,683,425 - 2,972,428 29,655,853


43

18. FINANCIAL INSTRUMENTS (continued) Aging analysis of contractual financial assets Past due but not impaired

30 June 2012 Carrying amount

Not past due and not impaired

Less than 1 month

1 – 3 months

3 months – 1 year

$ $ $ $ $ Receivables

Sale of goods and services 2,278,425 1,610,491 115,521 217,192 40,818 Accrued investment income 30,890 30,890 - - - Other contractual financial assets Cash and deposits

20,724,788

20,724,788

-

-

- Total

23,034,103

22,366,169

115,521

217,192

40,818

Past due but not impaired


Not past due and not impaired

Less than 1 month

1 – 3 months

3 months – 1 year

$ $ $ $ $ Receivables

Sale of goods and services 1,047,041 273,120 - 489,104 284,817 Accrued investment income Other contractual financial assets

25,635 25,635 - - -

Cash and deposits 20,520,973 20,520,973 - - - Total

21,593,649

20,819,728

-

489,104

284,817


44

18. FINANCIAL INSTRUMENTS (continued) Categorisation of financial instruments

30 June 2012 Contractual financial assets –

loans and receivables

Contractual financial

liabilities at amortised

cost

Total

Contractual financial assets $ $ $ Cash and deposits 20,724,788 - 20,724,788 Receivables Sale of goods and services 1,984,022 - 1,984,022 Accrued investment income 30,890 - 30,890 Prepayments 51,510 - 51,510 Total contractual financial assets 22,791,210 - 22,791,210 Contractual financial liabilities Payables Supplies and services - 2,964,929 2,964,929 Borrowings Lease liabilities - 125,392 125,392 Loans from TCV - 25,581,438 25,581,438 Total contractual financial liabilities - 28,671,759 28,671,759

30 June 2011 Contractual

financial assets –

loans and receivables

Contractual financial

liabilities at amortised

cost

Total

Contractual financial assets $ $ $ Cash and deposits 20,520,973 - 20,520,973 Receivables Sale of goods and services 1,047,041 - 1,047,041 Accrued investment income 25,635 - 25,635 Prepayments 966,202 - 966,202 Total contractual financial assets 22,559,851 - 22,559,851 Contractual financial liabilities Payables Supplies and services - 2,697,739 2,697,739 Borrowings Lease liabilities - 105,156 105,156 Loans from TCV - 26,578,269 26,578,269 Total contractual financial liabilities - 29,381,164 29,381,164


45

18. FINANCIAL INSTRUMENTS (continued) Maturity analysis of contractual financial liabilities


Nominal amount

Less than 1 month

1 – 3 months 3 months – 1 year

1 – 5 years 5 + years

$ $ $ $ $ $ $ Payables

Supplies and services 2,835,082 2,835,082 2,350,918 28,743 455,421 - - Other payables 129,847 129,847 129,847 - - - - Borrowings Lease liabilities 125,392 125,392 - - 53,520 71,872 - Loans from TCV 25,387,553 25,387,553 - - 3,089,846 16,147,731 6,149,976 Total

28,477,874

28,477,874

2,480,765

28,743

3,598,787

16,219,603

6,149,976


Nominal amount

Less than 1 month

1 – 3 months 3 months – 1 year

1 – 5 years 5 + years

$ $ $ $ $ $ $ Payables

Supplies and services 2,639,731 2,639,731 2,030,088 331,742 277,901 - - Other payables 58,008 58,008 58,008 - - - - Borrowings Lease liabilities 105,156 105,156 - - 53,490 51,666 - Loans from TCV 26,578,269 26,578,269 - - 2,906,895 17,521,397 6,149,977 Total

29,381,164

29,381,164

2,088,096

331,742

3,238,286

17,573,063

6,149,977

(a) Credit Risk Exposures The credit risk on financial assets that have been recognised on the balance sheet, is the carrying amount, net of any provision for doubtful debts. The carrying amount on the balance sheet represents the company’s maximum exposure to credit risk for receivables. Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the company. The company has a policy of only providing material credit to creditworthy counterparties and obtaining industry standard security over leases in the form of bank guarantees or cash advances. The company’s exposure and the credit worthiness of counterparties is continually monitored. Activities that give rise to credit risk are the granting of credit to customers and tenants at Federation Square. The company does not have any significant exposure to a single counterparty and trade receivables comprise a large number of diverse customers with differing characteristics. The credit risk on liquid funds is limited because the counterparties are banks or Government agencies with high credit ratings. Included in the company’s receivables balance are debtors with a carrying amount of $380,785 (2010-11: $773,921) which are past due at the reporting date for which the company has not


46

provided for as there has not been a significant change in credit quality and the amounts are still considered recoverable. The company holds security in the form of bank guarantees amounting to $102,544 (2010-11: $214,581) against these balances. The average age of these receivables is 131 days (2010-11: 157 days).

30 June 2012 Financial

institutions Triple A credit

rating

Financial institutions

Double A- credit rating

Other unknown

credit rating

Total

$ $ $ Cash and deposits - 1,651,757 - 1,651,757 Investments and other financial assets 19,073,030 - 2,247,535 21,320,565 Total contractual financial assets 19,073,030 1,651,757 2,247,535 22,972,322

30 June 2011 Financial

institutions Triple A credit

rating

Financial institutions

Triple B credit rating

Other unknown

credit rating

Total

$ $ $ Cash and deposits - 462,049 - 462,049 Investments and other financial assets 20,058,924 - 1,154,216 21,213,140 Total contractual financial assets 20,058,924 462,049 1,154,216 21,675,189

(b) Financial Risk Management

The company has an immaterial exposure to financial risk from market risk (including currency risk and price risk), credit risk, liquidity risk and interest rate risk. The company does not use derivative financial instruments to hedge against risk exposures nor for speculative purposes. Financial risks are reported to the Board at each meeting.

(c) Interest Rate Risk Exposures

The company’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out above. There is no interest rate risk associated with loans as all borrowings are made at fixed rates of interest from Treasury Corporation Victoria. The following sensitivity analysis has been determined on the exposure to variable interest rates at the reporting date. If variable interest rates had been 50 basis points higher or lower and all other variables were held constant, the company’s deficit would decrease by $107,070 (2010-2011: $104,850) and increase by $107,152 (2010-2011: $104,930) respectively. This is mainly attributable to the company’s return on investments held in the form of cash assets.

(d) Foreign Currency Exposure

The company has no exposure to foreign currency risk as at 30 June 2012 and has insignificant risk of exposure in the course of conducting its operations.


47

(e) Liquidity Risk Exposure The company has no significant exposure to liquidity risk. The table above details the company’s remaining contractual maturity for its financial liabilities. The tables have been prepared based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay.

(f) Net fair values of financial assets and liabilities

Valuation approach The carrying amounts of financial assets and financial liabilities on the balance sheet approximate fair value.

19. REMUNERATION OF DIRECTORS

Income Bands Total Remuneration Base Remuneration 2012 2011 2012 2011 No. No. No. No. $20,000 - $29,999 3 3 3 3 $50,000 - $59,999 1 1 1 1 Total number of directors 4 4 4 4 Total amount $131,764 $134,747 $131,764 $134,747

Directors’ income includes superannuation but not insurance premiums of $38,577 (2010-2011: $55,923) paid by the company in respect of Directors’ and Officers’ Liabilities.

20. EXECUTIVE REMUNERATION

Income Bands Total Remuneration Base Remuneration 2012 2011 2012 2011 No. No. No. No. $160,000 - $169,999 - 2 - 2 $170,000 - $179,999 2 1 2 1 $180,000 - $189,999 1 - 1 - $280,000 - $289,999 - - - 1 $290,000 - $299,999 - - 1 - $330,000 - $339,999 - 1 - - $340,000 - $349,999 1 - - - Total number of executives 4 4 4 4 Total annualised employee equivalent

4 4 4 4

Total amount $874,935 $846,966 $822,963 $796,507


48

21. RELATED PARTY DISCLOSURES (a) Names of Directors

The Directors of Fed Square during the period and at 30 June 2012 unless otherwise stated were:

Mr. John Frederick Harvey (retired 30 June 2012) Ms. Helen Kapalos Ms Liberty Emma Sanger Ms Louise Eileen Staley (appointed 26 September 2011) Ms Catherine Mary Walter (appointed 16 July 2012)

(b) Transactions with Directors and Director-Related Entities There were no transactions made with Directors (or Director related entities) except for payments made for performing the functions of Director - refer note 19 (2010-2011: Nil). As at the 30 June 2012 there exists no contingent or actual liabilities of Fed Square Pty Ltd for termination benefits under service agreements to Directors or persons who take part in the management of Fed Square Pty Ltd. No loans were made to Directors during the year (2010-2011: Nil).

(c) Other Related Parties All other transactions with related entities are at arms length. Fed Square Pty Ltd deals with a number of State Government departments in the course of conducting its operations.

22. CAPITAL COMMITMENTS

2012 2011 $ $ Plant and Equipment Payable not longer than one year 5,099,348 - Other Commitments Payable not longer than one year 300,000 - Total commitments for expenditure (exclusive of GST) $5,399,348 -

23. CONTINGENT LIABILITIES AND ASSETS In the course of conducting its ordinary business, Fed Square Pty Ltd is at risk from claims arising from incidents occurring at Federation Square. These may take the form of public liability claims from people who are injured whilst visiting the site or legal claims from disputes with tenants or venue hirers. In the company’s opinion, the financial risk from such claims is low. There are no known contingent assets at balance date.


49

Directors’ Declaration The Directors declare that: (a) the financial statements and associated notes comply with the Accounting Standards, the Corporations

Regulations 2001 and other mandatory professional reporting requirements; (b) the financial statements and notes give a true and fair view of the company’s financial position as at 30

June 2012 and of its performance, as represented by the results of its operations and its cash flows, for the year ended 30 June 2012;

(c) in the Directors’ opinion:

(i) the financial statements and notes are in accordance with the Corporations Act 2001, and (ii) there are reasonable grounds to believe that the company will be able to pay its debts as and

when they become due and payable. (d) at the date of signing these statements the Directors are not aware of any circumstances that would

render any particulars included in these statements misleading or inaccurate. This statement is made in accordance with a resolution of the Directors. Melbourne 28th August 2012

............................................................. Catherine Walter (Chair)


50

Independent Auditor’s Report


51

Documents

Fed Square Pty Ltd - Parliament of · PDF fileFed Square Pty Ltd ACN 085 731 479 ... Infinite Horizon show at the NGV Ian Potter Centre and the Star Voyager, ... I am undertaking the