Fed Square Pty Ltd Annual Report For the year ended 30 ... · 6/30/2015 · Fed Square Pty Ltd ACN...

Fed Square Pty Ltd ACN 085 731 479

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Fed Square Pty Ltd 13

Annual Report 14

For the year ended 30 June 2015 15

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TABLE OF CONTENTS

CONTENTS

CHAIR’S STATEMENT ....................................................................................................................................... 2

CHIEF EXECUTIVE OFFICER’S REPORT ON OPERATIONS......................................................................... 4

PERFORMANCE INDICATORS 2014-2015..................................................................................................... 19

STATEMENT OF CORPORATE GOVERNANCE............................................................................................ 21

DIRECTORS’ REPORT .................................................................................................................................... 25

AUDITOR-GENERAL’S INDEPENDENCE DECLARATION ............................................................................ 27

INDEPENDENT AUDITOR’S REPORT ............................................................................................................ 28

OPERATING STATEMENT .............................................................................................................................. 30

BALANCE SHEET AS AT 30 JUNE 2015 ........................................................................................................ 31

CASHFLOW STATEMENT .............................................................................................................................. 32

STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015 ................... 33

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015 ................................ 34

DIRECTORS’ DECLARATION ......................................................................................................................... 68


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CHAIR’S STATEMENT

On behalf of the Board, it is with great pleasure that I present the 2014-2015 Fed Square Pty Ltd Annual

Report.

Fed Square has had a very successful year as Melbourne’s premier destination, providing memorable

experiences for our local, interstate and international visitors. Fed Square has evolved as an icon of

Melbourne. This year we hosted over two thousand events across a broad range of activities attracting over

ten million visitors. Our involvement in cultural festivals, celebratory events, recreational activities and

performances has positioned Fed Square as a significant destination in the context of the Victorian State

Government's visitor strategy.

We have experienced another year of strong financial performance with a net surplus before depreciation

and amortisation of $5.6M. Our visitor satisfaction metrics demonstrate a one hundred percent visitor

customer satisfaction rating for experiences and services. Of those, visitors, ninety-seven percent expressed

their likely recommendation of Fed Square as a place to visit. Federation Square is rated number two in the

reputation category by national and international tourists. Fed Square has recently been named the sixth Best

Public Square of the world in a list of top ten international icons. We are particularly pleased to report that we

have achieved these results whilst meeting our sustainability target of zero tonnes carbon footprint this year.

We will continue to explore opportunities to maintain and improve the vibrancy of Melbourne’s Federation

Square whilst meeting our sustainability target.

We are enormously proud of our strong partnerships that align with our Civic and Cultural Charter. These

include the National Gallery of Victoria, Australian Centre for the Moving Image, Melbourne Festival and the

City of Melbourne. This year we were also delighted to welcome the Koori Heritage Trust to Fed Square. Fed

Square is also the home of a plethora of culinary offerings and our food and beverage partners at Fed Square

continue to work collaboratively to provide exceptional dining experiences for our visitors.


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On behalf of the Board, I express my gratitude to the State Government of Victoria and, in particular, the

Treasurer, Mr. Tim Pallas, the Minister for Tourism and Major Events the Hon. John Eren and Minister for

Creative Industries the Hon. Martin Foley, together with their staff, all of whom have provided considerable

support and assistance throughout the year. I thank all our stakeholders and commercial partners for their

commitment, enthusiasm, advice and support.

I acknowledge the work of our former Chair, Catherine Walter AM, and my fellow directors, Louise Staley,

Laura Anderson and Jane Hume for their commitment and support throughout their time on the Board.

Finally, I wish to acknowledge the efforts of our loyal and dedicated staff for their energetic and enthusiastic

work to ensure that Fed Square is a preferred iconic destination and a place that CLIC’s (Celebrates, Learns,

Innovates and Connects).

............................................................. KATHLEEN WILSON

CHAIR


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CHIEF EXECUTIVE OFFICER’S REPORT ON OPERATIONS

The vision of Fed Square is to be internationally recognised as Melbourne’s inspirational public place.

Our vision, together with the Fed Square Charter, sets the strategic direction for the operations of Fed

Square.

In presenting my first report as Chief Executive of Fed Square Pty Ltd (FSPL), I am pleased to detail

continuing outstanding success across all areas of operation including:

High visitation and satisfaction levels

The extensive and diverse program of activities

The progress of our environmental sustainability program

Great media exposure locally, nationally and internationally

Strong financial results

This year’s report assesses our performance against the 2014 - 2017 Corporate Plan, which detailed our

strategic objectives and our priorities for the 2014-2015 financial year.

Our 2014-2017 Corporate Plan contained seven Strategic Pathways, each designed to support progress

towards our vision. These pathways focus on the following major initiatives:

Program: In order to continue to meet and exceed the visitor experiences, we will review and enhance our

programming to identify areas of opportunity and seek to identify joint projects, which leverage the strengths

of FSPL, our assets and technology.

Tenancies: Review, develop and implement a tenancy strategy that supports the future growth of Fed

Square to ensure great visitor experiences and growth in financial returns to FSPL.

Business Capability: In order to identify efficiencies, enhance revenue opportunities and improve our

business operations, FSPL will develop an integrated approach to information communications technology

and management systems, and enhance the capture and use of visitor insights that better informs our

decision-making.

Asset Management: To ensure we are focused and prepared for the long term management of our asset

and safety of our visitors and staff, we will develop a long term asset replacement and funding program,

consolidate our sustainability program and focus on the quality of our occupational health and safety

management.

Next Horizon: To take advantage of new and emerging opportunities, we will develop options for new

sources of revenue, drive precinct growth through the Riverside Development and other opportunities in

proximity to and inside Fed Square.

Marketing and Sponsorship: In capitalising on the value of our brand, we will increase our level of

sponsorship to support our activities. We will develop our visitor engagement experiences and improve

management of stakeholders and customers.

People and Capacity: In ensuring we are well equipped to deliver for the community and our shareholder,

we will review our organisational structure, capability and resources, improve engagement, identify our talent

and implement training and development programs to ensure we have the right people for the future.


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The development of the strategy outlined in the 2014-2017 Corporate Plan has come from linking our brand,

vision, goals and measures, within a framework that will set the direction for FSPL for the next decade and

enable FSPL to develop rolling three year Corporate Plans and one year Business Plans.

Since opening in 2002, Fed Square has become a much-loved asset by the people of Melbourne and a

leading example of place making.

The number of visitations and the volume and diversity of the program have far exceeded original

expectations and as a public space, FSPL is continually conscious of the ever-changing business and social

landscape in which it operates.

Our focus is now on setting a strategic direction for the next decade, which builds on the results of the last

thirteen years. With Melbourne’s population, particularly its inner city population, expected to grow

significantly through to 2025, Federation Square as a public space will face increased expectations from the

community to continue to be the heartbeat of Melbourne and a destination for Melburnians and visitors alike.

MELBOURNE’S HEARTBEAT

Federation Square is not just the heart of Melbourne – it is the heartbeat. It is the place to see and feel the

pulse of the city.

Federation Square engages people to experience Melbourne. It is a place of activity and ideas. It is where

people come to celebrate the achievements of the heroes and cultural festivals. It is a place where we learn

through exhibitions, galleries and educational programs. It is why we have so many school visits and

excursions per year.

It connects communities and cultures from across the city and around the world.

It is a place where creativity, freedom of expression and innovation are encouraged and revealed.

Federation Square not only reflects, but contributes to what makes Melbourne special. Indeed, it is a very

special place.

It is a place of respite in the heart of one of the world’s great cities

where people come to relax and take in the beautiful aspects of

Melbourne.

Federation Square is where Melbourne Celebrates, Learns,

Innovates and Connects. Many of our teams’ achievements this past

financial year, and many points of future focus, can be framed

through these four interconnected points of focus. It is how

Federation Square ‘CLICs’.

CELEBRATE

One of our primary focuses is ensuring Federation Square remains Melbourne’s inspirational public place

enhancing our position as a “place leader” nationally and internationally. This year 2,242 diverse events and

activities have been delivered across the public spaces at Fed Square, including the Atrium and Deakin

Edge. This compares almost exactly to the event count of the previous year – but with venue hire revenues

remaining at significantly increased levels. Programming and marketing efforts have continued to exceed

respective plan targets, with numerous high-impact highlights.


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Highlight events and innovations for the year include:-

Third Party Events program - servicing over 315 separate clients, including 21 multicultural community festival clients, 85 commercial promotions event clients and 16 major event clients.

Momentum Energy River Rink - The Fed Square inaugural outdoor ice skating rink opened for the Winter school holidays and was a hugely successful event almost 19,000 paying visitors over three weeks, of all ages, getting their skates on and having a go. A live feed to the Main Screen showcased the rink and skaters to passers-by in the Square. Fed Square tenants, including Riverland, Mr Burger, Movenpick, Popstick, Mama Gozleme and Timeout provided refreshments.

The Light in Winter – The ninth year of Fed Square’s self-produced winter arts and community program featured the Australian debut of renowned UK light/laser artist Chris Levine, alongside a week-long indigenous campfire program featuring cultural contributions of 25 separate community groups, and a diversity of other small and large scale events.

White Night – A major Fed Square/Deakin University motion capture activation in the square for year three of Melbourne’s new festival.

Fed Square’s New Year’s Eve celebrations achieved a total value by advertising space rates at $2.35 million including 226 TV items, 32 radio, 12 print, 232 online and 590 social media placements, with 100,000 visitors throughout the six-hour program on-site. The Fed Square Lights Up Headline and image, front cover of Where Melbourne (1 December 2014) was a feature here as was the NYE Light and Shine video, which had over 4,700 views on social media.

Roll-out of the annual Christmas ‘Spirit of the Square’ seasonal program involving dozens of community choirs, movie marathons, DJ/VJ sessions, family game sessions, music performances and culminating in the successful launch of a Christmas Day charity initiative, ‘Christmas Breakfast Hop’, providing breakfast to over 2,000 diverse community members.

LEARN

Fed Square’s focus and highlight initiatives for the year include:

Creating stronger communications around indigenous programming with the Urban Indigenous Tour

in partnership with Koorie Heritage Trust. It is pleasing to note a partnership with Tourism Victoria in

place to promote this tour.

Fed Square’s core education program offer, Circle The Square, hosted 2,702 students on site, as

well as building fresh collaborations with Melbourne Writers’ Festival and the education units within

ACMI and NGV.

INNOVATE

An increasing point of focus in Fed Square’s second decade has been to foster initiatives which position the

company and the precinct at the cutting edge of technology, sustainability and efficiency innovations.

Highlight initiatives for the year include:

The Big Pitch - The Big Pitch team landed in Melbourne and chose Federation Square once again to find the next big start-up success story. Five selected finalists were given the opportunity to pitch to a panel of industry experts and compete for a chance to secure $5 million funding from Oxygen Ventures.

Successful production of PauseFest across the Deakin Edge, Atrium, Beer DeLuxe and ACMI,

featuring internationally significant technology sector participation and local attendance of B School

Initiatives, amongst multiple other stakeholders.


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Strong Multimedia Big Screen program with over 50 separate, direct content relationships

established and consolidated, leading to unique screen outcomes, including Virgin Australia

Melbourne Fashion Festival, Australian Teachers of Media, VCA, ACMI and many others.

Heightened live Multimedia Sports Focus: Big Screen coverage preferencing a diverse sport offer:

NFL Superbowl 2015, Cadel Evans Great Ocean Road Race 2015, ICC World Cup Cricket, 2015

Davis Cup, UEFA Champions League, Grand Prix Day 1, some A-league matches along with

multiple sporting live sites: Melbourne Victory A-League Grand Final team appearance, victorious

Australian World Cup Cricket team, Australian Tennis Open and AFL live sites and sustained

commercial bookings.

Interactive screen experiences have included existing conduits (Discussions In Space and Fed

Cam, etc.) with live/direct engagement highlights including a shared broadcast with SBS (“Pop Asia”)

and a live broadcast from Sydney Opera House for Earth Hour.

Partnerships: Our business model continues to evolve as we seek opportunities to enhance and

improve our service delivery effectiveness. We have consolidated a range of core partnerships in the

marketing and programming areas, including Deakin University (naming rights sponsor of Deakin

Edge), Tourism Victoria, Victorian Tourism Industry Council, Victorian Events Industry Council,

Victorian Major Events Corporate, Melbourne Convention Bureau alongside all levels of Government.

An increasing priority for the program, in particular in the coming financial year, will be to consolidate

and grow more commercial partnerships to increase the resource base available for civic and

community activations.

CONNECT

As Melbourne’s heart beat, Fed Square is focused on attracting and retaining visitors and giving them the

best possible set of experiences on-site. For the year, we again achieved high levels of visitation, reaching an

estimated 10.1 million visits. This level of engagement by our visitors indicates strong support for Federation

Square, but to ensure this level is maintained, we need to continue to deliver a program and facilities on site

that support the vision for Federation Square.

Highlights for the year include:-

Heightened online engagement: 76,952 social media followers (across multiple platforms), 1,283,489 website visits, 12,079 online placements and $3 million in advertising at market value.

5,207 traditional media mentions nationally (print and broadcast).

21 multicultural festivals, 42 National Day flag raisings and 145 major events (event with over 2,000 visits) including state wide festivals such as Small Business, Seniors’ Week, Comedy Festival, Melbourne Writers’ Festival and Melbourne Festival.

5,000 Poppies Project – major community activation for the Gallipoli Centenary on ANZAC Day, comprising over 250,000 individually knitted poppies submitted by the community

NAIDOC Week March & Concert - Melbourne’s annual NAIDOC Week March was followed by a free concert at Federation Square for over 3,000 people. This event was attended by the Lord Mayor and Minister for Indigenous Affairs.

Shine Bright Candle Light Vigil – For charity ‘Safe Steps’, this anti-domestic violence launch provided major platform for this major launch, featuring significant State Government representation, attendance by acting Victoria Police Commissioner Tim Cartwright, and Australian of the Year Rosie Batty. There was strong on-site attendance and major media coverage.


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The Long Walk – The return of this major initiative after two-year absence from Fed Square featured a major stage program, State Government presence and significant media profile.

Tanderrum - Year two of supporting Melbourne Festival’s historic initiative bringing together five indigenous communities into the square for a ceremonial launch to the festival season

Viva Victoria: Victorian Multicultural Commission - 45,550 attendance, largest event staged, production wise, with more than 250 artists across six spaces over seven hours.

Ongoing support for anchor community festivals with international profile, including Buddha’s Day, Diwali, and the Mexican Festival.

Continued delivery of a robust regular Community and Wellbeing program, featuring over 500 free-to-public diverse events and workshops, including: Tai Chi, meditation, dancing, craft, and contemporary and classical music.


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THE YEAR AT A GLANCE


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Financial Results

Year Ended 30 June 2015 2014 2013 2012 2011

$ $ $ $ $

Operating results

Revenue 26,877,493 25,915,970 24,627,186 24,468,533 24,273,046

Operating expenses (excluding depreciation and

amortisation)

(20,309,735) (19,635,206) (18,465,867) (18,890,061) (18,171,452)

Borrowing costs (966,555) (1,220,362) (1,395,549) (1,574,906) (1,750,679)

Other economic flows 20,388 285,567 (187,284) (86,389) (84,124,795)

(21,255,902) (20,570,001) (20,048,700) (20,551,356) (104,046,926)

Net result before depreciation and amortisation 5,621,591 5,345,969 4,578,486 3,917,177 (79,773,880)

Depreciation and amortisation (11,853,371) (11,657,614) (11,522,476) (11,308,207) (11,650,642)

Comprehensive result (6,231,780) (6,311,645) (6,943,990) (7,391,030) (91,424,522)

Financial status

Total assets 493,381,726 496,716,583 502,898,284 512,546,438 520,336,177

Total liabilities (22,324,940) (23,106,017) (26,924,073) (29,628,237) (30,026,946)

Total equity 471,056,786 473,610,566 475,974,211 482,918,201 490,309,231

Net cash from operating activities 8,416,438 4,330,587 4,978,884 4,316,437 4,148,716 Note: The 2011 other economic flows includes asset revaluation decrements of $35,318,000 for land and

$48,806,795 for buildings.

FSPL’s financial results for the year ended 30 June 2015 highlight the continued commitment by the company

to adopt sustainable financial practices and operate within the revenues derived from its commercial

operations on site. In 2014-2015 FSPL recorded a positive net result before depreciation of $5,621,591

(2013-2014 $5,345,969). Operating revenue is up $961,523, or 3.71 per cent to $26,877,493. Revenue and

expenditure (before interest and depreciation) over the past five years is shown below.

The company’s Balance Sheet remains strong, with current assets of $21,210,504 relative to current liabilities

of $9,012,789. Net assets total $471,056,786.

Total liabilities were $22,324,940, which represents a decrease of $781,077 over the year. Long-term loans

with Treasury Corporation of Victoria (TCV), scheduled to be repaid in 2019, were reduced to $13,345,445

(2013-2014: $16,822,607).


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Staff

A number of key staff changes occurred during the year with the CEO, Mr. Chris Brooks departing in March

2015, Mr. Mark Bullen, Manager Operations leaving in August 2014 and Ms. Jane Sydenham-Clarke,

Manager Marketing and Program taking long service leave from April 2015 and subsequently departing in

September 2015.

Mr. Ron Gauci was appointed Interim CEO in April 2015 and Ms. Sharon Pollard as Manager Operations in

October 2014. Mr. Matt Jones assumed responsibilities for marketing and program in a higher duties

capacity in April 2015.

Staff turnover for the year was relatively high with a number of people taking up external opportunities that

Fed Square Pty Ltd is unable to provide given the small size of the company. Twelve staff resigned during

the year, which represents approximately 25% of the FSPL’s total workforce of 44.57 FTEs.

A review of the organisation’s structure was commenced in May 2015 in recognition of changing business

needs and the new focus of the company’s strategic plan. This work will be finalised early in 2015-2016.

Training opportunities were afforded to a number of staff with many participating in conferences, workshops

and seminars. There was also a major focus on compliance and awareness training in the areas of Bullying,

Sexual Harassment, Equal Employment Opportunity and the enhancement of Occupational Health and

Safety training through the development of a series of on-line training modules.

The executive would like to express sincere gratitude to outgoing Board Members Louise Staley, Catherine

Walter and Jane Hume for their contribution.

Service Excellence

Service excellence continued to be emphasised as a key driver of success across the precinct with the

majority of tenants and all service delivery partners participating in the Service Excellence Program.

Providing tenants an independent assessment of their service and product offering is central to this program

as is measuring performance against the Fed Square Service Excellence Standards. The resulting ‘evidence

base’ is being used in different ways across the precinct. It was pleasing to see precinct-wide participation in

the Fed Square Service Excellence Program and our hospitality tenants embraced the Service Excellence

Program and the mystery shopping survey initiative.

These findings were used to drive service and performance that contributed to high levels of overall

satisfaction and assessments of the service experience measured by our visitors.


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Business Capability

A core component of FSPL’s strategic plan is to invest in technology to drive business improvement and

business capability. To this end, a number of technology related projects were implemented or commenced

in 2014 – 2015. These include:

EBMS Financials

The financial system was upgraded from Microsoft Great Plains to EBMS from 1st July 2014 to coincide with

the commencement of the new financial year. This fully integrates with the EBMS events management

system and delivers significant efficiencies for both the events and finance teams as well as enhanced

information flows and reporting.

Disaster Recovery in the Cloud

Fed Square’s virtual environment was replicated to the cloud for the purposes of Disaster Recovery using

Amazon Web Services (AWS). AWS was selected, as they are the world leader in cloud services. The

existing backup and replication software platform, Veeam, replicates data to the cloud, which obviated the

need to up-skill IT staff in a new platform, given their existing level of experience with this application. FSPL

now has an industry standard solution for disaster recovery, with data located in three locations. This greatly

reduces the company’s risk of data loss.

Wireless Web Access

Fed Square went to market with an EOI for the upgrade of the wireless infrastructure at Federation Square.

The contract was won by NetSolutions, who will roll out an Aruba wireless platform across the site, which will

provide coverage across all public spaces and Fed Square’s corporate office spaces.

Access points will be increased from 12 to 40 as a part of this project, which will increase coverage across

the site. This project will enable higher density Wi-Fi to service more visitors during peak demand and at

increased download speeds. It will also enable the company to offer enhanced wireless technology to event

clients for the conduct of their events, as well as for the event attendees.

Corporate access via the wireless network will provide our staff with the capability to be more mobile and

work as they transgress the site.

The wireless platform is a substantial building block for future projects such as visitation counting, visitor data

analytics, customer engagement, mobile app integration and location based marketing.

VoIP Phone System

Fed Square went to market with an EOI for a cloud based VoIP solution as the existing digital PABX went

‘end-of-life’ at the end of 2014 and will be unsupported from the end of 2015. NEC won the contract to supply

and support a new VoIP telephony system.

NEC, which has managed the Victorian Office Telephony Services contract since 2004 provides a fully

managed telephony service that hosts over 40,000 seats. The platform will utilise the Cisco Cloud

Collaboration, which is an industry leader in the enterprise voice arena. This is a fully managed service with

tight service level agreements around performance and support.

The VoIP solution itself will have all the rich capabilities of a unified communication platform such as

presence, instant messaging, click to dial, in-call transfer between desk phone and mobile, conference calls,

video calls and more.


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Top of Square Screen

In January 2015 Fed Square installed a new digital screen at the top of the square to attract visitation deeper

into the precinct. Barco won a public tender to supply and install the new screen, which measures 3.6m x

2.0m or 7.2 square metres.

The supporting housing was designed by Madison Architects and built by Kane Constructions and is

designed to complement the award winning top of square canopy, also designed by Maddison Architects and

built by Kane Constructions.

The screen was fully commissioned in time for the 2015 Australian Tennis Open and allowed multiple

matches to be scheduled simultaneously at Federation Square in conjunction with the main plaza screen.

Live Event Streaming

Recent upgrades to our streaming technology have allowed Fed Square to now offer live event streaming

over the web to our event clients. Previously clients requiring this service needed to engage a third party

supplier, which proved to be quite costly, meaning that only larger events could afford to avail of this service.

The capability to offer this service in-house has greatly reduced the cost, thus enabling access to more

clients. Having live event streaming capabilities in-house also provides opportunities for Fed Square in that

the company can now attract more commercial event clients that typically need to use this service (ie: video

game launches, organisations requiring global reach, etc.).

Highlight events to date include ‘The Big Pitch’ and the ‘Deakin University – David Parkin Oration’, which saw

The Hon. Jeff Kennett deliver an address on Sport for Social Change.

The service also provides a new revenue stream for Fed Square.

Deakin Edge Screen

The Deakin Edge screen was upgraded during 2013 – 2014 to new larger display format. Previously 3.5m x

2.0m, the new screen is 4.5m x 2.5m, significantly enhancing the visual output.


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Risk Management

The risk management framework adopted by the company was extensively reviewed during the year,

resulting in a fundamental shift from “bottom up” operational or tactical risk management to a more strategic

focus. Whilst the company continues to maintain a detailed risk register that captures operational risks, the

reporting systems for risk are now also more aligned to the strategic objectives of the company.

The VMIA undertook a Risk Framework Quality Review recently and FSPL continues to achieve the highest

rating of ADVANCED for its risk management systems and processes.

A site risk survey was also undertaken by the VMIA during April 2015, which looked at the physical nature of

the site and the exposures to either property losses or personal injury arising from the built environment,

including construction components. There were no material issues to emerge as a result of this survey that

require significant corrective action.

FSPL continues to work with the VMIA in assessing and implementing the company’s insurance program and

a significant premium saving was made through a review of exposures under the professional indemnity

policy and the resultant decision to reduce the cover in line with changing business needs.

Insurance Attestation

Standing Direction of the Minister for Finance 4.5.5.1 – Insurance (May 2012) states that Public Sector

Agencies are required to insure with VMIA under the Victorian Managed Insurance Authority Act 1996 and

meet specific requirements under the Standing Direction. FSPL meets the requirements of Standing

Direction 4.5.5.1 necessary to make the attestation in this Annual Report.

I, Ron Gauci, Interim Chief Executive Officer, certify that Fed Square Pty Ltd has complied with Ministerial

Direction 4.5.5.1 – Insurance.

............................................................. RON GAUCI

INTERIM CHIEF EXECUTIVE OFFICER


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Tenancies

The performance of tenants continues to be a major focus of the company in terms of both providing a high

quality experience for visitors and as a critical component of the overall financial outcome of the company.

In recognition of the evolving nature of the food offering in Melbourne, FSPL engaged FutureFood to assist

with the development of a strategic plan for the food and beverage tenancies at Federation Square.

The strategy, titled “20-20 Vision”, provides a focus for the company’s food and beverage direction for the

next five years and is currently being finalised by Management for implementation.

The undoubted highlight during the year with respect to tenancies was the addition of the Koorie Heritage

Trust as another public attraction at Federation Square. The Koorie Heritage Trust now occupies two floors

of the Yarra Building formerly occupied by the Australian Racing Museum.

The Koorie Heritage Trust premises incorporates a small exhibition space, a retail shop with a unique focus

showcasing Victorian Indigenous art, craft and design, publicly accessible visible storage/viewing areas, a

workshop area, public meeting and function rooms, a community lounge, and administrative offices.

The Koorie Heritage Trust will run a series of rotating exhibitions and public programs throughout the year.

The involvement of the Koorie Heritage Trust further strengthens Federation Square’s links to the indigenous

community and provides an easily accessible indigenous experience to the many overseas visitors to

Melbourne. Federation Square sees itself as a natural home for this facility given its proximity to the Yarra

River and Birrarung Marr parkland and their importance to indigenous culture.

Tenancies continue to be routinely supported by way of tourism marketing and advertising and connections

with Melbourne’s major festivals. They are kept abreast of events at Federation Square via the following

communication channels:

Fed Square Staff News – twice 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

Tailored and regular Familiarisation Forums

Tenant Business Briefing – bi-annual briefing for senior tenant representatives

A food and beverage ‘Council’ was established recently to better engage with tenants and gain tenant insights

into events and activations that support their businesses and to enhance collaboration for events across the

site.

Sustainability

Consolidation and implementation of our environmental initiatives continued with the Greener Government

Building Program entering its closing stages. The co-generation plant (the final key component of the

program) was brought on line in June.

In a wider context Fed Square has achieved great results in the area of environmental sustainability and is

now a carbon neutral city precinct, following an independent external Green House Emission Audit by Earth

Systems Pty Ltd. This is a remarkable achievement made possible by close collaboration with tenancies,

partners and public stakeholders.

This is not a time to sit back passively; therefore we continue to focus on improved waste management and

renewable energy purchasing. The latter is in conjunction with the City of Melbourne and other key Melbourne

businesses.

The tables below provide an overview of major utilities/services usage for the 2014 calendar year compared


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to 2013, 2012 and 2011 and the baseline year of 2006. They show Fed Square’s consistent commitment to

reducing our environmental impact.

Utility / Service

Years*

2006

Baseline 2011 2012 2013 2014

Benefit Achieved

(2014 to 2006)

General Waste

(tonnes) 776 602 582 572 556 Reduced 220 t

Recycled

Material (tonnes) 384 550 716 620 488 Increased 104 t

Electricity (Mega

Watts) 8,500 8,731 7,656 6,485 7,604

Decreased 896

MW

Central Plant Gas

(Giga Joules) 40,607 41,798 34,123 29,682 29,574

Decreased 11,033

GJ

Water (kilo Litres) 78,646 64,747 58,943 57,191 57,473 Decreased 21,173

kL

Net Carbon

Footprint (tonnes) 15,769 9,095 2,623 804 0 Decreased 15,769 t

Utility / Service

Years*

2006

Baseline 2011 2012 2013 2014

Benefit Achieved

(2014 to 2006)

Visitor numbers 7,834,970 9,783,419 10,027,420 10,415,276 9,962,322 Increased

2,127,352 visitors

General Waste

(Kg / Visitor) 0.099 0.062 0.058 0.055 0.056

Decreased 0.04

Kg/visitor

Recycled

Material (Kg /

Visitor)

0.049 0.056 0.071 0.059 0.049 No change 0.01

Kg/visitor

Electricity (Kw /

Visitor) 1.085 0.89 0.76 0.62 0.76

Decreased 0.3

Kw/visitor

Central Plant Gas

(MJ / Visitor) 5.2 4.3 3.4 2.8 3.0

Decreased 2.2

MJ/visitor

Water (Litres /

Visitor) 10.0 6.6 5.9 5.5 5.8 Decreased 4.3

L/visitor

Net Carbon

Footprint (Kg /

Visitor)

2.0 0.9 0.3 0.1 0.0 Decreased 2.0

Kg/visitor

* All figures are based on calendar year data

Occupational Health & Safety

There was a dedicated focus on the continued development of the OH&S Management System through a full

internal review, two internal audits, an external site inspection and an external audit. The external audit cited

the system as being sufficient, suitably documented and implemented in accordance with the Australian and

New Zealand Standard (AS/NZS) 4801 Occupational Health and Safety Management Systems.

The maturity of the system has continued to see improvements in safety throughout all areas of the business,

reflected in all our KPIs being met for the 2014 - 2015. There was also an ongoing focus on the development


17

of online training modules for staff, contractors and tenants. New training modules implemented this year

included:

• Warden training

• New starter induction

• Safety spotter awareness

• Roof & façade access

• Specialist emergency response team training

There were 127 OH&S incident reports for 2014 - 2015, which was below the target of 175 and 28 less than

the previous year. Over the same period there were 284 security incidents compared to 368 in 2013 – 2014.

Capital Works

Fed Square is in the third and final year of the State Government funded Capital Asset Replacement and

Renewal Program. A number of projects have been completed or are in progress, to ensure the site remains

in good working condition. Some of the works include:-

• The upgrading of the building automation system

• The upgrading of security systems including access control and CCTV systems and the

refurbishment of the Security control room

• Replacement of the passenger lift in the Transport building

• Upgrades to other lifts across the site

• The upgrading of vibration joints on hydraulic, mechanical and fire services systems

• The replacement of fire services pipes in the Alfred Deakin Building

• The replacement of the emergency and exit lighting across site

• External repainting of the Crossbar building

• The refurbishment of the St Paul’s Court amenities

• Deakin Edge flooring works

• The replacement of the general waste compactor

• The replacement of the Deakin Edge lift to be fully DDA compliant.

Maintenance Statistics

Across the site, 1,906 planned maintenance activities were completed and 1,041 reactive maintenance items

were addressed compared to 1,902 and 1,045 respectively last year.

I am grateful to the staff and Boards of the Special Broadcasting Service, the Australian Centre for the

Moving Image, Melbourne Visitor Centre and the National Gallery of Victoria for their contribution to the

success of the precinct.

To all our tenants, thank you for your continued support and for ensuring high levels of customer service are

delivered, strengthening the Fed Square Brand and Vision. I would also like to thank our many contractors

who provide valuable services across a broad range of functions. I am particularly grateful to Corporate

Vision Australia, Ikon Cleaning Services, ACG Security and Wilson Parking for their commitment to Fed

Square.

Thank you to the State Government of Victoria, our Ministers, Mr Tim Pallas, Treasurer, the Hon John Eren,

Minister for Tourism and Major Events, and the Hon. Martin Foley, Minister for Creative Industries and their

staff and departmental officers for their advice and support.


18

Thank you to the City of Melbourne and its many officers and departments along with all of our collaborators

and partners for their work on many projects and events. In the year we were excited to have the support of a

number of project partners whose in kind and financial support enabled The Light In Winter program.

Particularly we thank Corporate Vision Australia, Ikon Cleaning Services, ACG Security, Quality Event Hire,

Horner Recruitment, Logistics Events Australia, City of Melbourne and VicHealth, along with many other

collaborators who enabled a wonderful Light in Winter season in 2015.

Thank you to the Board for its ongoing guidance and support, allowing Fed Square to deliver on its vision.

To the management and staff, thank you for continuing to make Fed Square an inspirational public place. It is

your hard work and dedication which underpins our success.

Since commencing operations in 2002, Fed Square has been successful in delivering diverse programs,

activities and events to many millions of local, national and international visitors. As recognised through many

pieces of research and studies, Fed Square is a special place for all visitors to Victoria, and we understand

our role in ensuring Melbourne continues to be recognised as the world’s most livable city. We are very proud

of Fed Square’s place as Melbourne’s heartbeat.

............................................................. RON GAUCI

INTERIM CHIEF EXECUTIVE OFFICER


19

PERFORMANCE INDICATORS 2014-2015

Target Actuals

Community engagement

State wide sentiment – net promoter score(1)

15% 23%

Estimated visitation to Fed Square 10.4m 10.1m

Online Activity - social media followers(2)

55,000 76,952

Sociability – percentage of visitors using Federation Square as a meeting place(3)

25% 12%

Attracting international visitors(3)

>25% 14%

Outstanding Experiences

Visitor Experience(3)

55% 55%

Net promoter score(3)

65% 65%

Event Client Satisfaction(4)

>95% 95%

Visitor satisfaction with their overall service experience(3)

100% 100%

Visitor satisfaction with the service provided by staff across Federation Square(3)

95% 98%

Number of events and activities 1,500 2,242

Federation Square visitors who recommend it as a good place to visit(3)

>95% 97%

Visitation rates to cultural attractions (compared to the prior year)(3)

>90% 96%

International recognition

International awareness(5)

55% 45%

Top 3 Victorian destinations(6)

Top 3 Top 2

Financially efficiency

Operating budget surplus ‘000s $40 $10

Cash reserves $5.0m $19.8m

Liquidity Ratios Current 2.87 2.35

Quick 2.87 2.35

Interest cover - EBITD 4.43 6.82

Profit before depreciation and borrowing costs ‘000s $6,279 $6,588

Profit before depreciation ‘000s $5,303 $5,622

Other

Visitor comfort indicated by their assessment of:

Cleaning 95% 99%

Security 95% 100%

Amenities 95% 95%

Performance of Fed Square Pty Ltd team in achieving defined role objectives 100% 100%

Tenant satisfaction >90% 90%

Risk management – VMIA Risk Management Framework Quality Review Advanced Advanced

OH&S incidents (per 1,000 visits) ≤0.017 0.013

Security incidents (per 1,000 visits) ≤0.045 0.030

Net total carbon emissions(7)

zero zero

Recognised as a culturally diverse public space (1)

>90% 97%

Percentage of Victorians that agree with the statement that Federation Square is

now Melbourne’s major central community focal point (1)

95% 90%

High level of positive sentiment expressed in print media >90% 99%


20

Notes:

(1) Source: Fed Square annual Victorians’ perceptions survey (computer assisted telephone interviewing)

(2) Source: Number of followers on Facebook, Twitter and LinkedIn

(3) Source: Fed Square bi-annual visitor survey

(4) Source: Fed Square event client satisfaction survey

(5) Source: Fed Square Melbourne Airport intercept survey

(6) Source: International Visitor Survey, Tourism Research Australia

(7) Carbon emissions are measured per calendar year


21

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, managers, licensors, lessors or occupiers of:

(1) galleries, exhibition centres, libraries, art and craft centres and museums

(2) car parks

(3) theatres, 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

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


22

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 and Finance, I, Kathleen Sarah Wilson, 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 twelve months.

............................................................. KATHLEEN WILSON

CHAIR


23

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 2015 were Louise Staley (Chair to 25 September

2014), Kathleen Wilson (Chair from 26 September 2014), Catherine Walter AM, Laura Anderson, Jane Hume

and John Lee as a co-opted member.

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.

Compliance with the Protected Disclosure Act 2012

Fed Square Pty Ltd (FSPL) does not tolerate improper conduct by employees, nor the taking of reprisals

against those who come forward to disclose such conduct. FSPL 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 or the environment.

FSPL is committed to the protection of persons who make disclosures from any detrimental action in reprisal

for making a disclosure or for co-operating in the investigation of a disclosure.

The Protected Disclosure Act 2012 seeks to encourage and assist people to make disclosures of improper

conduct by public officers and public bodies, provides protections for people who make disclosures and

provides for the confidentiality of the content of disclosures and the persons who make them.


24

Making Disclosures

FSPL is not a body to which a protected disclosure can be made under the Protected Disclosure Act 2012.

Such disclosures must be made to:

Independent Broad-based Anti-corruption Commission (IBAC).

Level 1, North Tower, 459 Collins Street

Melbourne, VIC 3001

Phone: 1300 735 135

Mail: IBAC, GPO Box 24234, Melbourne, VIC 3000

Internet: www.ibac.vic.gov.au

The IBAC website contains a secure email disclosure process.

Protecting persons who make disclosures

FSPL has established procedures to protect persons who make, or who co-operate in the investigation of,

protected disclosures, from detrimental action that might be taken against them. Those procedures can be

accessed at www.fedsquare.com/information/ or a copy obtained from the Manager - Corporate Services.

http://www.fedsquare.com/information/


25

DIRECTORS’ REPORT

The Directors of Fed Square Pty Ltd present their report on the financial statements of the company for the

year ended 30 June 2015.

Minister

The Hon. Louise Asher, MP Minister for Tourism and Major Events (to 3 December 2014)

The Hon. John Eren, MP Minister for Tourism and Major Events (from 4 December 2014)

Directors

The Directors in office during the period and at 30 June 2015 unless otherwise stated were:

Ms Kathleen Sarah Wilson (1 July 2014 to 30 June 2015 – Chair from 16 June 2015)

Ms Catherine Mary Walter (Chair 1 July 2014 to 15 June 2015)

Ms Louise Eileen Staley (1 July 2014 to 25 September 2014)

Ms Laura Benton Casteel Anderson

Ms Edwina Jane Hume (26 September 2014 to 15 June 2015)

Accountable Officer

The Accountable Officer during the period and at 30 June 2015 unless otherwise stated were:

Mr Chris Brooks, Chief Executive Officer (to 13 March 2015)

Mr William Blakeney, Acting Chief Executive Officer (14 March 2015 to 6 April 2015)

Mr Ron Gauci, Interim Chief Executive Officer (from 7 April 2015)

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 2015 2014 $ $

Net result before depreciation and amortisation 5,621,591 5,345,969

Depreciation and amortisation (11,853,371) (11,657,614)

Net result (6,231,780) (6,311,645)

Dividends

No dividends have been proposed or paid during the year (2013-2014: 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 effect 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 effect on the financial

statements of Fed Square Pty Ltd that are not otherwise disclosed in the financial statements and notes.


26

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

Ms Catherine Walter (Chair) 6 6

Ms Louise Staley 1 1

Ms Kathleen Wilson 6 6

Ms Laura Anderson 6 5

Ms Jane Hume 5 5

*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 committee

members during the financial year were:

MEETINGS MEETINGS

HELD* ATTENDED

Ms Louise Staley (Chair 1 July 2014 to 25 September 2014) 1 1

Ms Kathleen Wilson (Chair 26 September 2014 to 30 June 2015) 6 6

Ms Catherine Walter 6 6

Ms Laura Anderson 6 5

Ms Jane Hume 5 5

Mr John Lee (co-opted member) 6 6

*Reflects the number of meetings held during the time the committee member was a member of the Audit

Committee 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 $22,515 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 (2013-2014: $23,952).

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 11

th September 2015.

............................................................. Kathleen Wilson

(Chair)


27

AUDITOR-GENERAL’S INDEPENDENCE DECLARATION


28

INDEPENDENT AUDITOR’S REPORT


29


30

OPERATING STATEMENT

Comprehensive operating statement for the financial year ended 30 June 2015

Notes 2015 2014

$ $

Operating income 2 26,330,976 25,347,585

Interest income 546,517 568,385

Total income from transactions 26,877,493 25,915,970

Borrowing costs (966,555) (1,220,362)

Employee expenses 3(a) (4,614,764) (4,495,571)

Event expenses (3,138,276) (3,492,779)

Site operating expenses 3(b) (7,483,601) (7,713,960)

Other expenses 3(c) (5,073,094) (3,932,896)

Depreciation and amortisation 5 (11,853,371) (11,657,614)

Total expenses from transactions (33,129,661) (32,513,182)

Net operating result from transactions (6,252,168) (6,597,212)

Other economic flows included in net result

Net gain/(loss) on disposal of non-financial assets 22,055 340,729

Net loss from revaluation of long service leave liability (1,667) (55,162)

Total other economic flows included in net result 20,388 285,567

Net result 10 (6,231,780) (6,311,645)

Other economic flows - other comprehensive income

Changes in physical asset revaluation surplus 5 - -

Total other economic flows - other comprehensive

income

-

-

Total comprehensive result for the period (6,231,780) (6,311,645)

The Comprehensive operating statement should be read in conjunction with the accompanying notes to the

financial statements.


31

BALANCE SHEET AS AT 30 JUNE 2015

Notes 2015 2014

$ $

Financial Assets

Cash and deposits 17(a) 19,771,879 17,744,608

Receivables 4 1,438,625 2,016,049

Total Financial Assets 21,210,504 19,760,657

Non-Financial Assets

Prepayments 21,164 876,376

Property, plant and equipment 5 472,150,058 476,079,550

Total Non-Financial Assets 472,171,222 476,955,926

Total Assets 493,381,726 496,716,583

Liabilities

Payables 6 4,013,310 2,550,788

Borrowings 7 17,563,956 19,729,299

Provisions 8 747,674 825,930

Total Liabilities 22,324,940 23,106,017

Net Assets 471,056,786 473,610,566

Equity

Contributed capital 9 443,566,508 439,888,508

Accumulated deficit 10 (61,875,225) (55,643,445)

Asset revaluation surplus 11 89,365,503 89,365,503

Total Equity 471,056,786 473,610,566

The Balance sheet should be read in conjunction with the accompanying notes to the financial statements.


32

CASHFLOW STATEMENT

Cash flow statement for the financial year ended 30 June 2015

Notes 2015 2014

$ $

Cash Flows from operating activities

Receipts

Receipts from customers (incl. GST) 30,001,801 28,295,623

Interest received 570,901 573,510

Total receipts 30,572,702 28,869,133

Payments

Payments to employees (4,842,229) (4,476,465)

Payments to suppliers (incl. GST) (15,351,543) (17,607,371)

GST paid to Australian Taxation Office (net) (987,236) (1,165,890)

Interest paid on loans (975,256) (1,288,820)

Total payments (22,156,264) (24,538,546)

Net cash flows from operating activities 17(b) 8,416,438 4,330,587

Cash Flows from investing activities

Proceeds from sale of non-current assets 53,773 39,544

Payments for buildings & improvements (6,331,240) (5,428,658)

Payments for plant & equipment (1,624,357) (1,519,845)

Net cash flows from investing activities (7,901,824) (6,908,959)

Cash Flows from financing activities

Proceeds from Government appropriation 3,678,000 3,948,000

Proceeds from Government advance 1,748,691 -

Repayment of Government advance (425,971) (141,990)

Repayment of borrowings (3,477,162) (3,963,622)

Repayment of finance leases (10,901) (50,770)

Net cash flows from financing activities 1,512,657 (208,382)

Net increase/(decrease) in cash and cash

equivalents 2,027,271 (2,786,754)

Cash and cash equivalents at the beginning of the

year 17,744,608 20,531,362

Cash and cash equivalents at the end of the year 17(a) 19,771,879 17,744,608

The Cash flow statement should be read in conjunction with the accompanying notes to the financial

statements.


33

STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2015

Contributed

capital

Assets revaluation

surplus

Accumulated

deficit Total

$ $ $ $

Balance at 1 July 2013 435,940,508 89,365,503 (49,331,800) 475,974,211

Net result for the year - - (6,311,645) (6,311,645)

Revaluation of freehold land - - - -

Revaluation of buildings - - - -

Capital appropriation 3,948,000 - - 3,948,000

Other comprehensive income for the year - - - -

Balance at 30 June 2014 439,888,508 89,365,503 (55,643,445) 473,610,566

Net result for the year - - (6,231,780) (6,231,780)

Revaluation of freehold land - - - -

Revaluation of buildings - - - -

Capital appropriation 3,678,000 - - 3,678,000

Other comprehensive income for the year - - - -

Balance at 30 June 2015 443,566,508 89,365,503 (61,875,225) 471,056,786

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


34

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

These financial statements are audited general purpose financial statements which have been

prepared in accordance with the Corporations Act 2001 and applicable Australian Accounting

Standards (AAS) which include Interpretations, issued by the Australian Accounting Standards

Board (AASB) and comply with other requirements of the law.

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.

For the purposes of preparing financial statements, Fed Square Pty Ltd is classed as a not for

profit entity. Where appropriate, those AAS paragraphs applicable to not-for-profit entities have

been applied.

The financial statements were authorised for issue by the Directors of Fed Square Pty Ltd on

11th September 2015.

b. Basis of preparation and measurement

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.

Judgments, estimates and assumptions are required about carrying values of assets and

liabilities that are not readily apparent from other sources. The estimates and associated

assumptions are based on professional judgements derived from historical experience and

various other factors that are believed to be reasonable under the circumstance. Actual results

may differ from these estimates.

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 and also in

future periods that are affected by the revision. 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.

The financial report has been prepared on the basis of historical cost, except for non-financial

physical assets and financial instruments, which are measured at fair value. Cost is based on

the fair values of the consideration given in exchange for assets.

Consistent with AASB 13 Fair Value Measurement, the company determines the policies and

procedures for fair value measurements. All assets and liabilities for which fair value is

measured or disclosed in the financial statements are categorised within the fair value hierarchy,

described as follows, based on the lowest level input that is significant to the fair value

measurement as a whole:


35

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For the purpose of fair value disclosures, the company has determined classes of assets and

liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level

of the fair value hierarchy as explained above.

In addition, the company determines whether transfers have occurred between levels in the

hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the

fair value measurement as a whole) at the end of each reporting period.

The Valuer-General Victoria (VGV) is the independent valuation agency. Fed Square Pty Ltd, in

consultation with VGV, monitors changes in the fair value of each asset and liability through

relevant data sources to determine whether revaluation is required.

The accounting policies set out below have been applied in preparing the financial statements

for the year ended 30 June 2015 and the comparative information presented in these financial

statements for the year ended 30 June 2014.

c. Scope and presentation of financial statements

Comprehensive operating statement The Comprehensive operating statement comprises of three components, being ‘net operating result from transactions’, ‘other economic flows included in net result’, as well as ‘other comprehensive income’. The sum of the former two represents the net result. The net result is equivalent to profit or loss derived in accordance with AASs. . ‘Other economic flows’ are changes arising from market remeasurements. They include:

gains and losses from disposals of non-financial assets;

revaluations and impairments of non-financial physical and intangible assets; and

fair value changes of financial instruments.

This classification is consistent with the whole of government reporting format and is allowed under AASB 101 Presentation of Financial Statements.

Balance sheet Assets and liabilities are presented in liquidity order with assets aggregated into financial assets and non-financial assets. Current and non-current assets and liabilities (non-current being those assets or liabilities expected to be recovered or settled more than 12 months after the reporting period) are disclosed in the notes, where relevant.

Cash flow statement Cash flows are classified according to whether or not they arise from operating, investing or financing activities. This classification is consistent with requirements under AASB 107 Statement of Cash Flows.

Statement of changes in equity The Statement of changes in equity presents reconciliations of non-owner and owner changes in equity from opening balances at the beginning of the reporting period to the closing balances at the end of the reporting period.


36

Currency All amounts are presented in Australian dollars, unless otherwise noted.

Rounding Amounts in the financial statements have been rounded to the nearest $1 unless otherwise stated.

d. Income recognition Income is recognised to the extent that is probable that the economic benefits will flow to the

entity and the income can be reliably measured at fair value.

Car parking income

Income from car parking fees and charges is recognised in the period in which the service is

provided.

Event income

Income from event fees and charges is recognised in the period in which the service is provided.

Tenancy rents and charges

Income 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.

Sponsorship and grants

Sponsorship income is recognised in the period in which the right to receive the income exists

under each specific agreement.

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.

Interest income

Interest income is recognised as it accrues, taking into account the effective yield on the

financial asset.

Assets and services received free of charge or for nominal consideration

Contributions of resources received free of charge or for nominal consideration are recognised

at fair value when control is obtained over them, irrespective of whether these contributions are

subject to restrictions or conditions over their use. Contributions in the form of services are only

recognised when a fair value can be reliably determined and the services would have been

purchased if not received as a donation.

e. Expenses from transactions Expenses from transactions are recognised as they are incurred and reported in the financial year to which they relate.

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.

Employee expenses These expenses include all costs related to employment (other than superannuation which is

accounted for separately) including wages and salaries, fringe benefits tax, leave entitlements,

redundancy payments and WorkCover premiums.


37

Refer to the section in Note 1 (j) regarding employee benefits.

Superannuation

All superannuation contributions are recognised when paid or payable during the reporting

period.

Event, site operating and other expenses

All event, site operating and other expenses are recognised when paid or payable during the

reporting period.

Depreciation and amortisation

All infrastructure assets, buildings, plant and equipment and other non-financial physical assets

(excluding items under operating leases and land) that have finite useful lives are depreciated.

Depreciation is calculated on a straight line basis, at rates that allocate the asset’s value, less

any estimated residual value, over its estimated useful life.

The estimated useful lives, residual values and depreciation method is reviewed at the end of

each annual reporting period, and adjustments made where appropriate. 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 - 40 years

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

term of the relevant lease.

f. Other economic flows included in the net result Other economic flows are changes in the volume or value of an asset or liability that does not

result from transactions.

Net gain/(loss) on disposal of non-financial assets

Any gain or loss on the disposal of non-financial assets is recognised at the date of disposal and

is determined after deducting the proceeds from the carrying value of the asset at the time.

Revaluation gains/(losses) of non-financial physical assets

Refer to Note 1 (i) Revaluations of non-financial physical assets.

Impairment of non-financial assets

Non-financial assets are assessed annually for indications of impairment. If there is an

indication of impairment, the assets concerned are tested as to whether their carrying value

exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable

amount, the difference is written off as an other economic flow, except to the extent that the

write down can be debited to an asset revaluation surplus amount applicable to that class of

asset.

If there is an indication that there has been a reversal in the estimate of an asset’s recoverable

amount since the last impairment loss was recognised, the carrying amount shall be increased

to its recoverable amount. The impairment loss is reversed only to the extent that the asset’s

carrying amount does not exceed the carrying amount that would have been determined, net of

depreciation or amortisation, if no impairment loss had been recognised in prior years.


38

It is deemed that, in the event of the loss or destruction of an asset, the future economic benefits

arising from the use of the asset will be replaced unless a specific decision to the contrary has

been made. The recoverable amount for most assets is measured at the higher of depreciated

replacement cost and fair value less costs to sell. Recoverable amount for assets held primarily

to generate net cash inflows is measured at the higher of the present value of future cash flows

expected to be obtained from the asset and fair value less costs to sell.

Refer to Note 1(i) in relation to the recognition and measurement of non-financial assets.

Other gains/(losses) from other economic flows

Other gains/(losses) from other economic flows include the gains or losses from:

the revaluation of the present value of the long service leave liability due to changes in the bond interest rates; and

transfer of amounts from the reserves to accumulated surplus or net result due to disposal or derecognition or reclassification

g. Financial instruments Financial instruments arise out of contractual agreements that give rise to a financial asset of

one entity and a financial liability or equity instrument of another entity. Due to the nature of the

Fed Square Pty Ltd’s activities, certain financial assets and financial liabilities arise under statute

rather than a contract. Such financial assets and financial liabilities do not meet the definition of

financial instruments in AASB 132 Financial Instruments: Presentation.

Where relevant, for note disclosure purposes, a distinction is made between those financial

assets and financial liabilities that meet the definition of financial instruments in accordance with

AASB 132 and those that do not.

The following refers to financial instruments unless otherwise stated.

Categories of non derivative financial instruments

Loans and receivables

Loans and receivables are financial instrument assets with fixed and determinable payments

that are not quoted on an active market. These assets are initially recognised at fair value plus

any directly attributable transaction costs. Subsequent to initial measurement, loans and

receivables are measured at amortised cost using the effective interest method, less any

impairment.

Loans and receivables category includes cash and deposits (refer to Note 1(h)), term deposits

with maturity greater than three months, trade receivables, loans and other receivables, but not

statutory receivables.

Financial liabilities at amortised cost

Financial instrument liabilities are initially recognised on the date they are originated. They are

initially measured at fair value plus any directly attributable transaction costs. Subsequent to

initial recognition, these financial instruments are measured at amortised cost with any

difference between the initial recognised amount and the redemption value being recognised in

profit and loss over the period of the interest bearing liability, using the effective interest rate

method.

Financial instrument liabilities measured at amortised cost include contractual payables,

deposits held and advances received, and borrowings.


39

h. Financial assets

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.

Receivables

Receivables consist of:

contractual receivables, such as debtors in relation to goods and services and accrued investment income; and

statutory receivables, such as Goods and Services Tax (GST) input tax credits recoverable.

Contractual receivables are classified as financial instruments and categorised as loans and

receivables (refer to Note 1(g) Financial Instruments for recognition and measurement).

Statutory receivables, are recognised and measured similarly to contractual receivables (except

for impairment), but are not classified as financial instruments because they do not arise from a

contract.

Impairment of financial assets

At the end of each reporting period, Fed Square Pty Ltd assesses whether there is objective

evidence that a financial asset or group of assets is impaired.

Receivables are assessed for bad and doubtful debts on a regular basis. A provision for

doubtful debts is recognised when there is objective evidence that the debts may not be

collected, and bad debts are written off when identified.

For the measurement principle of receivables, refer to Note 1(g).

i. Non-financial Assets

Property, plant and equipment

All non-financial physical assets are measured initially at cost and subsequently revalued at fair

value less accumulated depreciation and impairment.

The initial cost for non-financial physical assets under a finance lease (refer to Note 1 (k)) is

measured at amounts equal to the fair value of the leased asset or, if lower, the present value of

minimum lease payments, each determined at the inception of the lease.

The fair value of land and buildings is determined on the basis of a periodic 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, after taking into

consideration Valuer-General Victoria (VGV) indices and other relevant indicators.

Revaluation of non-financial assets

Non-financial physical assets are measured at fair value on a cyclical basis. A full revaluation

normally occurs every five years, but may occur more frequently if fair value assessments

indicate material changes in values. Independent valuers are generally used to conduct these

scheduled revaluations. Revaluation increases or decreases arise from differences between an

asset’s carrying value and fair value.


40

Net revaluation increases (where the carrying amount of a class of assets is increased as a

result of a revaluation) are recognised in ‘other economic flows – other comprehensive income’,

and accumulated in equity under the asset revaluation surplus. However, the net revaluation

increase is recognised in the net result to the extent that it reverses a net revaluation decrease

in respect of the same class of property, plant and equipment previously recognised as an

expense (other economic flows) in the net result.

Net revaluation decrease is recognised in ‘other economic flows – other comprehensive income’

to the extent that a credit balance exists in the asset revaluation surplus in respect of the same

class of property, plant and equipment. Otherwise, the net revaluation decreases are

recognised immediately as other economic flows in the net result. The net revaluation decrease

recognised in ‘other economic flows – other comprehensive income’ reduces the amount

accumulated in equity under the asset revaluation surplus.

Revaluation increases and decreases relating to individual assets in a class of property, plant

and equipment, are offset against one another in that class but are not offset in respect of

assets in different classes. The asset revaluation surplus is not transferred to accumulated

funds on derecognition of the relevant asset.

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.

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.

j. Liabilities

Payables

Payables consist of:

contractual payables, including accounts payable, and unearned income. Accounts payable represent liabilities for goods and services provided prior to the end of the financial year that are unpaid, and arise when the Fed Square Pty Ltd becomes obliged to make future payments in respect of the purchase of those goods and services; and

statutory payables, such as goods and services tax and fringe benefits tax payables.

Contractual payables are classified as financial instruments and categorised as financial

liabilities at amortised cost (refer to Note 1(g)). Statutory payables are recognised and

measured similarly to contractual payables, but are not classified as financial instruments and

not included in the category of financial liabilities at amortised cost, because they do not arise

from a contract.

Borrowings

Loans are recognised when issued at the amount of the net proceeds received. The

measurement basis subsequent to initial recognition is amortised cost.


41

Provisions Provisions are recognised when Fed Square Pty Ltd has a present obligation, the future sacrifice

of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle

the present obligation at reporting date, taking into account the risks and uncertainties

surrounding the obligation. Where a provision is measured using the cash flows estimated to

settle the present obligation, its carrying amount is the present value of those cash flows, using

discount rate that reflects the time value of money and risks specific to the provision.

When some or all of the economic benefits required to settle a provision are expected to be

received from a third party, the receivable is recognised as an asset if it is virtually certain that

recovery will be received and the amount of the receivable can be measured reliably.

Employee benefits Provision is made for benefits accruing to employees in respect of wages and salaries, annual

leave and long service leave for services rendered to the reporting date.

Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits, and annual leave, are all

recognised in the provision for employee entitlements as ‘current liabilities’, because the

company does not have an unconditional right to defer settlements of these liabilities

Depending on the expectation of the timing of settlement, liabilities for wages and salaries,

annual leave and sick leave are measured at:

undiscounted value – if the company expects to wholly settle within 12 months; or

present value – if the company does not expect to wholly settle within 12 months.

Long service leave

Liability for long service leave (LSL) is recognised in the provision for employee entitlements.

Unconditional LSL is disclosed in the notes to the financial statements 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.

The components of this current LSL liability are measured at:-

undiscounted value - of the department expects to wholly settle within 12 months; and

present value - if the company does not expect to wholly settle within 12 months.

Conditional LSL is disclosed as a non-current liability. There is an unconditional right to defer

the settlement of the entitlement until the employee has completed the requisite years of service.

This non-current LSL liability is measured at present value.

Any gain or loss following revaluation of the present value of non-current LSL liability is

recognised in the ‘net result from transactions’, except to the extent that a gain or loss arises

due to changes in government bond interest rates for which it is then recognised as an other

economic flow (refer to Note (f)).

On-costs

Provisions for on-costs such as payroll tax, workers compensation and superannuation are

recognised separately from the provision for employee benefits.


42

k. Leases

A lease is a right to use an asset for an agreed period of time in exchange for payment.

Leases are classified at their inception as either operating or finance leases based on the

economic substance of the agreement so as to reflect the risks and rewards incidental to

ownership. Leases are classified as finance leases whenever the terms of the lease transfer

substantially all the risks and rewards of ownership from the lessor to the lessee. All other

leases are classified as operating leases.

Finance leases

Fed Square Pty Ltd as lessee At the commencement of the lease term, finance leases are initially recognised as assets and

liabilities at amounts equal to the fair value of the lease property or, if lower, the present value of

the minimum lease payment, each determined at the inception of the lease. The lease asset is

accounted for as a non-financial physical asset. If there is certainty that FSPL will obtain the

ownership of the lease asset by the end of the lease term, the asset shall be depreciated over

the useful life of the asset. If there is no reasonable certainty that the lessee will obtain

ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of

the lease term and its useful life.

Minimum finance lease payments are apportioned between reduction of the outstanding lease

liability and periodic finance expense which is calculated using the interest rate implicit in the

lease and charged directly to the comprehensive operating statement. Contingent rentals

associated with finance leases are recognised as an expense in the period in which they are

incurred.

Operating leases

Fed Square Pty Ltd as lessee 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.

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.

l. Equity

Contributions by owners

Consistent with the requirements of AASB 1004 Contributions, contributions by owners (that is,

contributed capital and its repayment) are treated as equity transactions and, therefore, do not

form part of the income and expenses of Fed Square Pty Ltd.

Additions to net assets which have been designated as contributions by owners are recognised

as contributed capital. Other transfers that are in the nature of contributions to or distributions by

owners have also been designated as contributions by owners.


43

m. Commitments Commitments for future expenditure include operating and capital commitments arising from

contracts. These commitments are disclosed by way of a note (refer to Note 15 Commitments)

at their nominal value and inclusive of the GST payable.

In addition, where it is considered appropriate, the net present values of significant individual

projects are stated. These future expenditures cease to be disclosed as commitments once the

related liabilities are recognised in the balance sheet.

n. Contingent assets and contingent liabilities Contingent assets and contingent liabilities are not recognised in the balance sheet, but are

disclosed by way of a note (refer to Note 16 Contingent assets and contingent liabilities) and, if

quantifiable, are measured at nominal value. Contingent assets and liabilities are presented

inclusive of GST receivable or payable respectively.

o. Goods and services tax Income, 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.

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

Assessment Act 1936.

q. Events after the reporting period Assets, liabilities, income or expenses arise from past transactions or other past events. Where

the transactions result from an agreement between FSPL and other parties, the transactions are

only recognised when the agreement is irrevocable at or before the end of the reporting period.

Adjustments are made to amounts recognised in the financial statements for events which occur

between the end of the reporting period and the date when the financial statements are

authorised for issue, where those events provide information about conditions which existed at

the reporting date. Note disclosure is made about events between the end of the reporting

period and the date the financial statements are authorised for issue where the events relate to

conditions which arose after the end of the reporting period that are considered to be of material

interest.


44

r. New accounting standards and interpretations

Subsequent to the 2013-14 reporting period, the following new and revised Standards have been adopted for the first time in the current period with their financial impacts disclosed below.

AASB 10 Consolidated Financial Statements

AASB 10 provides a new approach to determine whether an entity has control over an entity, and therefore must present consolidated financial statements. The new approach requires the satisfaction of all three criteria for control to exist over an entity for financial reporting purposes:

a) The investor has power over the investee;

b) The investor has exposure, or rights to variable returns from its involvement with the investee; and

c) The investor has the ability to use its power over the investee to affect the amount of

investor’s returns. Based on the new criteria prescribed in AASB 10, the Fed Square Pty Ltd has reviewed the existing arrangements to determine if there are any additional entities that need to be consolidated into the group. Fed Square Pty Ltd has concluded that no additional entity has met the control criteria. As a result, no adjustments have been required to the financial statements.

AASB 11 Joint Arrangements

In accordance with AASB 11, there are two types of joint arrangements, i.e. joint operations and joint ventures. Joint operations arise where the investors have rights to the assets and obligations for the liabilities of an arrangement. A joint operator accounts for its share of the assets, liabilities, revenue and expenses. Joint ventures arise where the investors have rights to the net assets of the arrangement; joint ventures are accounted for under the equity method. Proportionate consolidation of joint ventures is no longer permitted. Fed Square Pty Ltd does not have any joint operations or joint venture arrangements. As a result, no adjustments have been required to the financial statements.

AASB 12 Disclosure of Interests in Other Entities

AASB 12 prescribes the disclosure requirements for an entity’s interests in subsidiaries, associates, joint arrangements and extends to the entity’s association with unconsolidated structured entities. Fed Square Pty Ltd has no interests in associates and joint ventures. Fed Square Pty Ltd has also reviewed its current contractual arrangements to determine if there are any unconsolidated structured entities that the Fed Square Pty Ltd has involvement with. It has not identified any unconsolidated structured entities during the assessment.

Australian Accounting Standards issued that are not yet effective

Other new accounting standards and interpretations have been published that are not

mandatory for the 30 June 2015 reporting period. The Department of Treasury and 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 2015 the following standards and interpretations had been issued but are not yet

effective. Early adoption of these standards was not required by Fed Square Pty Ltd.


45

Standard/ Interpretation

Summary Applicable for annual reporting periods beginning on

Impact on financial statements

AASB 9 Financial Instruments

The key changes include the simplified requirements for the classification and measurement of financial assets, a new hedging accounting model and a revised impairment loss model to recognise impairment losses earlier, as opposed to the current approach that recognises impairment only when incurred.

1 Jan 2018 While the preliminary assessment has not identified any material impact arising from AASB 9, it will continue to be monitored and assessed.

AASB 15 Revenue from Contracts with Customers

The core principle of AASB 15 requires an entity to recognise revenue when the entity satisfies a performance obligation by transferring a promised good or service to a customer.

1 Jan 2018 The changes in revenue recognition requirements in AASB 15 may result in changes to the timing and amount of revenue recorded in the financial statements. The Standard will also require additional disclosures on service revenue and contract modifications.

AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation

[AASB 116 & AASB 138]

Amends AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets to: establish the principle for

the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset;

prohibit the use of revenue-based methods to calculate the depreciation or amortisation of an asset.

1 Jan 2016 The assessment has indicated that there is no expected impact as the revenue-based method is not used for depreciation and amortisation.

AASB 2015-6 Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-Profit Public Sector Entities [AASB 10, AASB 124 & AASB 1049]

The Amendments extend the scope of AASB 124 Related Party Disclosures to not-for-profit public sector entities.

1 Jan 2016 The amending standard will result in extended disclosures on the entity's key management personnel (KMP), and the related party transactions.


46

In addition to the new standards and amendments above, the AASB has issued a list of other

amending standards that are not effective for the 2014-15 reporting period (as listed below). In

general, these amending standards include editorial and references changes that are expected

to have insignificant impacts on public sector reporting.

AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010).

AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments

AASB 2014-1 Amendments to Australian Accounting Standards [PART D – Consequential Amendments arising from AASB 14 Regulatory Deferral Accounts only]

AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 & AASB 11]

AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15

AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014)

AASB 2014-8 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) – Application of AASB 9 (December 2009) and AASB 9 (December 2010) [AASB 9 (2009 & 2010)]

AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 [AASB 7, AASB 101, AASB 134 & AASB 1049]

AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality


47

Notes 2015 2014

$ $

2. OPERATING INCOME

Tenancy rents and charges 16,991,250 16,355,571

Car parking 4,142,567 4,335,620

Events 3,595,247 3,622,043

Sponsorship and grants 1,217,406 937,562

Other revenue 384,506 96,789

Total operating income 26,330,976 25,347,585

3. EXPENSES

(a) Employee expenses

Salaries and wages, annual leave, long service leave

and oncosts

4,151,383 4,092,478

Contributions to superannuation funds 13 463,381 403,093

Total employee expenses 4,614,764 4,495,571

(b) Site operating expenses

Building and tenant consultants 71,639 217,452

Car park operations 439,481 807,754

Cleaning 1,805,007 1,676,603

Maintenance 1,960,408 2,087,766

Security 1,680,137 1,495,941

Utilities 1,526,929 1,428,444

Total site operating expenses 7,483,601 7,713,960

(c) Other expenses

Administration and accounting 700,726 541,188

Bad and Doubtful debts 4 101,821 4,354

Information and communications technology 305,947 474,471

Insurance 627,990 630,775

Legal 147,009 172,758

Motor vehicles 11,743 25,829

Promotional expenses 706,001 500,399

Statutory rates and taxes 1,981,191 1,108,488

Tenancy expenses 490,666 474,634

Total other expenses 5,073,094 3,932,896


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4. RECEIVABLES Notes 2015 2014

$ $

Current receivables

Contractual

Trade receivables 666,752 393,372

Provision for doubtful debts (100,000) -

Insurance receivable 20,244 1,347,229

Accrued investment income 14,895 39,279

Accrued income 818,503 155,141

1,420,394 1,935,021

Statutory

GST receivable 18,231 81,028

Total current receivables 1,438,625 2,016,049

Non-current receivables - -

Total receivables 1,438,625 2,016,049

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 2015 2014

$ $

Balance at beginning of year - -

Amounts credited during the year - -

Impairment losses recognised on receivables (101,821) (4,354)

Amounts written off as uncollectable 1,821 4,354

Balance at end of year (100,000) -

Ageing of impaired receivables 2015 2014

$ $

Current - -

30 – 60 days - -

60 – 90 days - -

Greater than 90 days (100,000) -

Total (100,000) -

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.


49

5. PROPERTY, PLANT AND EQUIPMENT

Freehold land

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;

- 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 percent of the

surrounding land values

The carrying amount following the revaluation at 30 June 2011 of freehold land is $121,462,000.

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. Additions to buildings and improvements acquired since 1st July 2012 are

recorded at cost, which represents fair value.

Notes 2015 2014

$ $

Freehold land – fair value 121,462,000 121,462,000

Buildings and improvements

At fair value 457,485,161 451,153,921

Accumulated depreciation (113,756,681) (102,526,733)

343,728,480 348,627,188

Plant and equipment

At fair value 12,006,694 12,232,652

Accumulated depreciation (5,516,571) (6,896,945)

6,490,123 5,335,707

Tenancy fit-outs

At fair value 861,678 861,678

Accumulated amortisation (439,089) (265,234)

422,589 596,444

Plant and equipment under finance lease 60,912 103,500

Less: Accumulated depreciation (14,046) (45,289)

46,866 58,211

Total property, plant and equipment 472,150,058 476,079,550

Note: Fed Square Pty Ltd is included in the ‘Public safety & environment’ government purpose group

classification.


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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.

Freehold

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

2013

121,462,000

353,618,484

5,599,124

570,712

107,524

481,357,844

Additions - 5,428,658 1,295,154 199,568 25,123 6,948,503

Disposals - (523,915) - - (45,267) (569,182)

Reallocations 878,700 (878,700) -

Revaluation - - - - - -

Depreciation and amortisation - (10,774,739) (679,871) (173,836) (29,169) (11,657,615)

Carrying amount at 1 July

2014

121,462,000

348,627,188

5,335,707

596,444

58,211

476,079,550

Additions - 6,331,240 1,588,568 - 35,789 7,955,597

Disposals - - - - (31,718) (31,718)

Reallocations - - - - - -

Revaluation - - - - - -

Depreciation and amortisation - (11,229,948) (434,152) (173,855) (15,416) (11,853,371)

Carrying amount at 30 June

2015

121,462,000

343,728,480

6,490,123

422,589

46,866

472,150,058

Fair value measurement hierarchy for assets

The fair value of the freehold land was determined based on the market comparable approach that reflects

transaction prices for vacant land and development sites in Melbourne’s Central Business District and

surrounding areas. The fair value of buildings was determined using the cost approach that reflects the cost to

reconstruct the property to a ‘modern equivalent’ standard. Details of the property, plant and equipment and

information about the fair value hierarchy are as follows:-

30 June 2015

Level 1 Level 2 Level 3 Fair value

$ $ $ $

Freehold land - 121,462,000 - 121,462,000

Buildings and improvements - - 343,728,480 343,728,480

Plant and equipment - - 6,490,123 6,490,123

Tenancy fit-outs - - 422,589 422,589

Plant and equipment under lease - - 46,866 46,866

30 June 2014

Freehold land - 121,462,000 - 121,462,000

Buildings and improvements - - 348,627,188 348,627,188

Plant and equipment - - 5,335,707 5,335,77

Tenancy fit-outs - - 596,444 596,444

Plant and equipment under lease - - 58,211 58,211


51

Description of significant unobservable inputs to Level 3 valuations

Class Valuation

technique

Significant

unobservable

inputs

Range (weighted average) Sensitivity of fair value

measurement to changes in

significant unobservable inputs

2015 2014

Buildings Depreciated

replacement

cost

Direct cost

per square

metre

Useful life

$1,100-

$10,900/m2

($5,300/m2)

5-100 years

(22 years)

$1,100-

$10,900/m2

($5,300/m2)

5-100 years

(22 years)

A significant increase or decrease

in direct cost per square metre

adjustment would result in a

significantly higher or lower fair

value


in the estimated useful life of the

asset would result in a

significantly higher or lower

valuation

Plant and

equipment

Depreciated

replacement

cost

Cost per unit

Useful life

$100 to

$3,380,000

per unit

($3,900 per

unit)

2-40 years

(11 years)

$100 to

$3,380,000

per unit

($3,750 per

unit)

2-40 years

(10 years)


in cost per unit would result in a


value





valuation

Tenancy fit-

outs

Amortised

replacement

cost

Cost per unit

Useful life

$30,000 to

$600,000 per

unit

($215,400

per unit)

4-5 years

(5 years)

$30,000 to

$600,000

per unit

($215,400

per unit)

4-5 years

(5 years)




value





valuation

Plant and

equipment

under lease

Depreciated

replacement

cost

Cost per unit

Useful life

$25,100 to

$35,800

($30,450)

3 years

(3 years)

$28,600 to

$40,300

($34,500)

3 years

(3 years)




value





valuation


52

6. PAYABLES Notes 2015 2014

$ $

Current payables

Contractual

Creditors 3,637,400 2,086,245

Advances 224,128 154,040

Accrued interest expense 37,737 46,438

Salaries and associated costs 102,521 250,063

4,001,786 2,536,786

Statutory - -

GST payable - -

Fringe benefits tax 11,524 14,002

11,524 14,002

Total current payables 4,013,310 2,550,788

Total non-current payables - -

Total payables 4,013,310 2,550,788

Please refer to the table in Note 18(c) for the maturity analysis of contractual payables.

7. BORROWINGS Notes 2015 2014

$ $

Loans 13,345,445 16,822,607

Advances from Government 4,171,140 2,848,420

Lease liability 14 47,371 58,272

17,563,956 19,729,299

Current liability 4,398,993 4,256,887

Non-current liability 13,164,963 15,472,412

17,563,956 19,729,299

Loans of $13,345,445 (2013-2014: $16,822,607) 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.

Interest free advances totalling $4,171,140 (2013-2014: $2,848,420) are provided by the Department of

State Development, Business and Innovation and are repayable by 2023.

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.

Please refer to the table in Note 18(c) for the maturity analysis of borrowings.


53

8. PROVISIONS 2015 2014

$ $

Current

Employee benefits

Annual leave (unconditional)

- Expected to settle within 12 months 184,948 234,611

- Expected to settle after 12 months 28,165 37,481

213,113 272,092

Long service leave (unconditional)

- Expected to settle within 12 months 102,384 118,006

- Expected to settle after 12 months 222,015 188,483

324,399 306,489

537,512 578,581

Provision for on-costs (unconditional) 81,204 60,092

Total current provisions 618,716 638,673

Non-current

Employee benefits

Long service leave (conditional) 112,033 165,718

112,033 165,718

Provision for on-costs (conditional) 16,925 21,539

Total non-current provisions 128,958 187,257

Total benefits 747,674 825,930

Employee benefits consist of annual leave and long service leave accrued by employees. On-costs

such as payroll tax and workers compensation are not employee benefits and are recognised

separately.


54

9. 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 of

$435,940,507 comprised $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’.

Contributed capital during the year represents a capital appropriation of $3,678,000 (2013-2014:

$3,948,000) by the State Government of Victoria as owners to assist the company with asset

maintenance and capital replacement requirements.

Notes 2015 2014

$ $

Issued and paid-up capital (1 share @ $1 ea.) 1 1

Capital appropriation 3,678,000 3,948,000

Contributed capital at beginning of financial year 439,888,508 435,940,508

Total contributed capital 443,566,508 439,888,508

10. ACCUMULATED DEFICIT

Accumulated deficit at beginning of financial year (55,643,445) (49,331,800)

Net result (6,231,780) (6,311,645)

Accumulated deficit at end of financial year (61,875,225) (55,643,445)

11. ASSET REVALUATION SURPLUS

Balance at beginning of financial year 89,365,503 89,365,503

Revaluation increments/(decrements) - -

Balance at end of financial year 89,365,503 89,365,503

12. DIVIDENDS

There was no provision for dividends or dividends paid for the year (2013-2014: Nil).


55

13. 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 $463,381 (2013-2014: $403,093) was paid or payable by the

company to the various funds.

As at 30 June 2015 there was no amount owing to superannuation funds not brought to account (2013-

2014: Nil). Fed Square Pty Ltd employed 45 full time equivalent employees as at 30 June 2015 (2013-

2014: 48). All superannuation payments are paid to defined contribution funds.

14. LEASES Notes 2015 2014

$ $

Finance leases (Fed Square Pty Ltd as lessee)

Finance lease liabilities payable:

- not later than one year 14,342 41,552

- later than one year and not later than five years 35,893 19,071

Minimum lease payments 50,235 60,623

Less: future finance charges (2,864) (2,351)

Recognised as a lease liability 1(k), 7 47,371 58,272

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 16,251,476 15,843,517

- later than one year and not later than five years 36,412,236 43,419,639

- later than five years 37,450,090 42,298,623

1(k) 90,113,802 101,561,779

15. COMMITMENTS

Plant and Equipment

Payable not longer than one year 4,541,998 4,349,249

Other Commitments

Payable not longer than one year - -

Total commitments (exclusive of GST) 4,541,998 $4,349,249


56

16. CONTINGENT ASSETS AND LIABILITIES

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 or liabilities at balance date.

17. CASH FLOW INFORMATION

(a) Reconciliation of cash and cash equivalents

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 2015 2014

$ $

Cash on hand and at bank 884,930 294,490

Term deposits 18,886,949 17,450,118

Cash and cash equivalents as shown on the cash

flow statement

19,771,879

17,744,608

(b) Reconciliation of loss from ordinary activities

to net cash provided by operating activities:

Net deficit

(6,231,780)

(6,311,645)

Adjustments for non-cash items:

- Depreciation and amortisation 11,853,371 11,657,614

- Increase/(Decrease) in Provision for doubtful

debts

100,000 4,354

- (Gain) / Loss on disposal of assets (22,055)

(340,729)

Net cash inflows from operating activities

before changes in assets and liabilities

5,701,203

5,009,594

Changes in assets and liabilities

(Increase) / Decrease in receivables 477,424 (397,400)

(Increase) / Decrease in prepayments 855,212 (619,934)

Increase / (Decrease) in payables 1,462,522 250,277

Increase / (Decrease) in provisions (78,256) 88,050

Net cash flows from operating activities 8,416,438 4,330,587


57

18. FINANCIAL INSTRUMENTS

(a) Financial risk management objectives and policies

The principal financial instruments comprise:

- cash assets;

- term deposits;

- receivables (excluding statutory receivables);

- payables (excluding statutory payables);

- borrowings; and

- finance lease liabilities payable.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the

basis of measurement, and the basis on which income and expenses are recognised, with respect to each

class of financial asset, financial liability and equity instrument above are disclosed in Note 1 to the financial

statements.

Fed Square Pty Ltd’s main financial risks include credit risk, liquidity risk, interest rate risk, foreign currency

risk and equity price risk. Fed Square Pty Ltd manages these financial risks in accordance with the

Department of Treasury & Finance Treasury Management Guidelines.

Fed Square Pty Ltd uses different methods to measure and manage the different risks to which it is exposed.

Primary responsibility for the identification and management of financial risks rests with Management, with

regular reporting to and review by the Board.


58

18. FINANCIAL INSTRUMENTS (continued)

Categorisation of financial instruments

30 June 2015 Note Contractual

financial assets

– loans and

receivables

Contractual

financial

liabilities at

amortised cost

Total

Contractual financial assets $ $ $

Cash and deposits 17(a) 19,771,879 - 19,771,879

Receivables

Trade receivables and accrued income 4 1,385,255 - 1,385,255

Insurance receivable 4 20,244 - 20,244

Accrued investment income 4 14,895 - 14,895

Total contractual financial assets 21,192,273 - 21,192,273

Contractual financial liabilities

Payables

Supplies and services 6 - 4,001,786 4,001,786

Other payables - - -

Borrowings

Lease liabilities 7 - 47,371 47,371

Loans 7 - 17,516,585 17,516,585

Total contractual financial liabilities - 21,565,742 21,565,742

30 June 2014 Note Contractual

financial assets

– loans and

receivables

Contractual

financial

liabilities at

amortised cost

Total

Contractual financial assets $ $ $

Cash and deposits 17(a) 17,744,608 - 17,744,608

Receivables

Trade receivables and accrued income 4 548,513 - 548,513

Insurance receivable 4 1,347,229 - 1,347,229

Accrued investment income 4 39,279 - 39,279

Total contractual financial assets 19,679,629 - 19,679,629

Contractual financial liabilities

Payables

Supplies and services 6 - 2,536,786 2,536,786

Other payables - - -

Borrowings

Lease liabilities 7 - 58,272 58,272

Loans 7 - 19,671,027 19,671,027

Total contractual financial liabilities - 22,266,085 22,266,085


59


(b) Credit risk

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 receivables with a carrying amount of $329,975 (2013-14:

$137,934) which are past due at the reporting date for which the company has not 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 or deposits amounting to $55,813 (2013-14: $88,627)

against these balances. The average age of these receivables is 112 days (2013-14: 127 days).

Credit quality of contractual financial assets that are neither past due nor impaired

30 June 2015 Note Financial

institutions

Triple A

credit rating

Financial

institutions

Double A-

credit rating

Other

unknown

credit

rating

Total

$ $ $

Cash and deposits 17(a) 19,150,960 595,209 25,710 19,771,879

Receivables and other financial assets 4 - - 1,420,394 1,420,394

Total contractual financial assets 19,150,960 595,209 1,446,104 21,192,273

30 June 2014

Note Financial

institutions

Triple A credit

rating

Financial

institutions

Double A-

credit rating

Other

unknown

credit

rating

Total

$ $ $

Cash and deposits 17(a) 17,450,118 294,490 - 17,744,604

Receivables and other financial assets 4 - - 2,016,049 2,016,049

Total contractual financial assets 17,450,118 294,490 2,016,049 19,760,657


60


Aging analysis of contractual financial assets

Past due but not impaired

30 June 2015 Note Carrying

amount

Not past

due and not

impaired

Less than

1 month

1 – 3

months

3 months

– 1 year

Impaired

$ $ $ $ $ $

Receivables

Trade receivables and

accrued income

4 1,385,255 1,055,280 81,705 108,785 139,485 100,000

Insurance receivable 4 20,244 20,244 - - - -

Accrued investment income 4 14,895 14,895 - - - -

Other contractual

financial assets

Term deposits

17(a)

18,886,949

18,886,949

-

-

-

-

Total

20,307,343

19,977,368

81,705

108,785

139,485

100,000

Past due but not impaired


amount

Not past

due and not

impaired

Less than

1 month

1 – 3

months

3 months

– 1 year

Impaired

$ $ $ $ $ $

Receivables

Trade receivables and

accrued income

4 548,513 410,579 47,619 32,295 58,020 -

Insurance receivable 4 1,347,229 - 1,157,735 189,494 - -

Accrued investment income 4 39,279 39,279 - - - -

Other contractual

financial assets

Term deposits

17(a)

17,450,118

17,450,118

-

-

-

-

Total

19,385,139

17,899,976

1,205,354

221,789

58,020

-


61


(c) 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.

Maturity analysis of contractual financial liabilities


amount

Nominal

amount

Less

than 1

month

1 – 3

months

3 months

– 1 year

1 – 5

years

5 +

years

$ $ $ $ $ $ $

Payables

Supplies and

services

6 4,001,786

4,001,786

4,001,786

- - - -

Other payables - - - - - - -

Borrowings

Lease liabilities 7 47,371 50,235 1,195 2,390 10,756 35,894 -

Loans 7 17,516,585 17,516,585 - 863,437 3,523,123 13,130,025 -

Total 21,565,742 21,568,606 4,002,981 865,827 3,533,879 13,165,919 -


amount

Nominal

amount

Less

than 1

month

1 – 3

months

3 months

– 1 year

1 – 5

years

5 +

years

$ $ $ $ $ $ $

Payables

Supplies and

services

6 2,536,786 2,536,786 2,536,786 - - - -

Other payables - - - - - - -

Borrowings

Lease liabilities 7 58,272 60,623 - - 41,484 19,139 -

Loans 7 19,671,027 19,671,027 - - 4,216,944 15,454,083 -

Total 22,266,085 22,268,436 2,536,786 - 4,258,428 15,473,222 -


62


(d) Market Risk

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.

Foreign currency exposure Fed Square Pty Ltd has exposure to foreign currency risk through payables relating to purchases of supplies

and consumables from overseas, which is insignificant due to the limited amount of transactions

denominated in foreign currencies and a relatively short timeframe between commitment and settlement. The

company has no exposure to foreign currency risk as at 30 June 2015.

Interest rate risk

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 below. There is no interest rate risk associated with loans as

all borrowings are made at either fixed rates of interest from Treasury Corporation Victoria or interest free

from the Department of State Development, Business and Innovation.


63


Interest rate exposure of financial instruments

30 June 2015 Weighted

Average Interest

Rate

Interest rate exposure Carrying

amount

Note Fixed

Interest

Rate

Variable

Interest

Rate

Non

Interest

Bearing

percent $ $ $ $

Financial Assets

Cash and deposits 17(a) 2.07% 18,886,949 859,220 25,710 19,771,879

Receivables 4 - - - 1,420,394 1,420,394

18,886,949 859,220 1,446,104 21,192,273

Financial Liabilities

Payables 6 - - - 4,001,786 4,001,786

Lease liabilities 7 4.56% 47,371 - - 47,371

Loans 7 4.79% 13,345,445 - 4,171,140 17,516,585

13,392,816 - 8,172,926 21,565,742

30 June 2014 Weighted

Average Interest

Rate

Interest rate exposure Carrying

amount

Note Fixed

Interest

Rate

Variable

Interest

Rate

Non

Interest

Bearing

percent $ $ $ $

Financial Assets

Cash and deposits 17(a) 2.48% 17,450,118 294,490 - 17,744,608

Receivables 4 - - - 2,016,049 2,016,049

17,450,118 294,490 2,016,049 19,760,657


Payables 6 - - - 2,536,786 2,536,786

Lease liabilities 7 5.83% 58,272 - - 58,272

Loans 7 5.33% 16,822,607 - 2,848,420 19,671,027

16,880,879 - 5,385,206 22,266,085

Interest rate risk sensitivity

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 $98,731 (2013-2014: $107,462) and increase by

$98,731 (2013-2014: $107,547) respectively. This is mainly attributable to the company’s return on

investments held in the form of cash assets.


64


(e) Fair value

The fair values and net fair values of financial instrument assets and liabilities are determined as follows:

Level 1 – the fair value of financial instruments with standard terms and conditions and traded in active

liquid markets are determined with reference to quoted market prices;

Level 2 – the fair value is determined using inputs other than quoted prices that are observable for the

financial asset or liability, either directly or indirectly; and

Level 3 – the fair value is determined in accordance with generally accepted pricing models based on

discounted cash flow analysis using unobservable market inputs.

All financial assets and financial liabilities are level 1.

Fed Square Pty Ltd considers that the carrying amount of financial instrument assets and liabilities recorded

in the financial statements to be a fair approximation of their fair values, because of the short-term nature of

the financial instruments and the expectation that they will be paid in full.

The following table details the financial assets and financial liabilities, of which the fair values are not the

same as their carrying value:

Carrying amount Fair value

2015 2014 2015 2014

$ $ $


Loans 17,516,585 19,671,027 18,541,012 21,001,884


65

19. REMUNERATION OF RESPONSIBLE PERSONS

(a) Responsible persons

Minister

The Hon. Louise Asher, MP Minister for Tourism and Major Events (to 3 December 2014)

The Hon. John Eren, MP Minister for Tourism and Major Events (from 4 December 2014)

Directors The Directors of Fed Square Pty Ltd during the period and at 30 June 2015 unless otherwise

stated were:

Ms Kathleen Sarah Wilson (1 July 2014 to 30 June 2015 - Chair from 16 June 2015)

Ms Catherine Mary Walter (Chair 1 July 2014 to 15 June 2015)

Ms Louise Eileen Staley (term concluded 25 September 2014)

Ms Laura Benton Casteel Anderson

Ms Edwina Jane (Jane) Hume (26 September 2014 to 15 June 2015)

Accountable Officer

The Accountable Officer during the period and at 30 June 2015 unless otherwise stated were:

Mr Chris Brooks, Chief Executive Officer (to 13 March 2015)

Mr William Blakeney, Acting Chief Executive Officer (14 March 2015 to 6 April 2015)

Mr Ron Gauci, Interim Chief Executive Officer (from 7 April 2015)

(b) Remuneration

Income bands Total remuneration Base remuneration

2015 2014 2015 2014

No. No. No. No.

$0 - $19,999 1 - 1 -

$20,000 - $29,999 3 3 3 3

$50,000 - $59,999 1 - 1 -

$60,000 - $69,999 - 1 - 1

$120,000 - $129,999 - - - -

$130,000 - $139,999 - 1 - 1

$170,000 - $179,999 - 1 - 1

$220,000 - $229,999 1 - 1 -

Total number of responsible

persons 6 6 6 6

Total amount $365,675 $444,437 $365,675 $402,775

Amounts relating to Ministers are reported in the financial statements of the Department of Premier

and Cabinet.

Directors’ income includes superannuation but not insurance premiums of $22,515 (2013-2014:

$23,952) paid by the company in respect of Directors’ and Officers’ Liabilities.


66

(c) Payments to other personnel The number of contractors charged with significant management responsibilities is disclosed within the

$10,000 expense band. These contractors are responsible for planning, directing or controlling, directly

or indirectly, the entity’s activities.

The change in total expenses from the 2014 to 2015 reporting period was driven by the appointment of

an Interim Chief Executive Officer employed by an agency.

Expense bands

2015 2014

No. No.

$110,000 - $119,999 1 -

Total amount (exclusive of GST) $114,737 $ -

20. REMUNERATION OF EXECUTIVES

Disclosure is required for executives whose total remuneration for the twelve month financial

period ending 30 June 2015 exceeded $100,000. The number of executive officers, other than

the Responsible Persons, and their total remuneration during the financial period are shown in

the table below in their relevant income bands. Base remuneration is exclusive of

performance incentive bonus payments, long service leave payments, retirement benefits and

other payments.

Income bands Total remuneration Base remuneration

2015 2014 2015 2014

No. No. No. No.

$70,000 - $79,999 - - - -

$110,000 - $119,999 1 - 1 -

$150,000 - $159,999 1 - 1 -

$160,000 - $169,999 1 - 1 -

$180,000 - $189,999 - 2 - 2

$220,000 - $229,999 1 1 1 1

Total number of executives 4 3 4 3

Total annualised employee

equivalent

3 3 3 3

Total amount $663,080 $591,479 $567,063 $591,479

A number of executives resigned or took long service leave in the past year. This has had an impact

on the total remuneration figures due to the inclusion of annual leave and long service leave payments.


67

21. RELATED PARTY DISCLOSURES

(a) Transactions with Directors and director-related entities

Related party transactions with Board directors and their related parties, which occurred during

the normal course of business, apart from remuneration of Board directors which is disclosed in

Note 19 are listed below:

2015 2014

$ $

Ms Catherine Walter (Director of Victorian Opera

Company Pty Ltd): Revenue for two events held by

Victoria Opera at Fed Square

5,602 -

As at the 30 June 2015 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 (2013-2014: Nil).

No loans were made to Directors during the year (2013-2014: Nil).

(b) Other related parties

All other transactions with related entities are at arm’s length. Fed Square Pty Ltd deals with a

number of Victorian State Government entities in the course of conducting its operations.

22. EX-GRATIA EXPENSES 2015 2014

$ $

Payment to university for architectural services - 5,000

and supplies provided by the university and students

Total ex-gratia expenses (exclusive of GST) - $5,000

(i) Includes ex-gratia expenses greater than or equal to $5,000 or those considered material in

nature

(ii) These ex-gratia expenses have been recognised in the Comprehensive operating statement

under Administration expenses

23. AUDITORS’ REMUNERATION 2015 2014

$ $

Amounts paid or due and payable to the Victorian Auditor-

General’s Office for audit of the financial statements

29,200

28,500

24. SUBSEQUENT EVENTS

There were no subsequent events after balance date expected to have a material effect on the

financial statements of Fed Square Pty Ltd that are not otherwise disclosed in the financial statements

and notes.


68

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 2015 and of its performance, as represented by the results of its operations and its cash flows, for the year ended 30 June 2015;

(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

11th September 2015

............................................................. Kathleen Wilson

(Chair)

Fed Square Pty Ltd Annual Report For the year ended 30 ... · 6/30/2015 · Fed Square Pty Ltd ACN...

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Transcript of Fed Square Pty Ltd Annual Report For the year ended 30 ... · 6/30/2015 · Fed Square Pty Ltd ACN...