fed square pty ltd annual report for the year ended 30 june 2013

Fed Square Pty Ltd ACN 085 731 479

Fed Square Pty Ltd

Annual Report

For the year ended 30 June 2013


Table of Contents Chair’s Statement .................................................................................................................................... 1

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

Key Performance Indicators 2012-13 ................................................................................................... 17

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

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

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

Comprehensive operating statement for the financial year ended 30 June 2013 ........................... 25

Balance sheet as at 30 June 2013 ........................................................................................................ 26

Cash flow statement for the year financial ended 30 June 2013 ....................................................... 27

Statement of changes in equity for the financial year ended 30 June 2013 .................................... 28

Notes to the financial statements for the year ended 30 June 2013 ................................................. 29

Directors’ Declaration ............................................................................................................................ 50

Audit Opinion ......................................................................................................................................... 51


1

CHAIR’S STATEMENT

“Delight is in the detail at the square that won Melbourne's heart.” John Elder, The Age, Oct 2012 on Federation Square’s 10th Birthday. On behalf of the Board, I am pleased to provide the Chair's Report as part of the 2012 -2013 Fed Square Pty Ltd Annual Report. During the year we celebrated Federation Square's 10th birthday with the Victorian community. Extensive media coverage and huge public participation over the birthday weekend underscored the way Federation Square has been embraced as Melbourne’s civic hub. Estimated visitation in this year was 10.4 million and in the most recent national and international visitor surveys, Federation Square was rated ‘Number 1’ for national and international visitation to Melbourne with more than 77 per cent of Victorians saying they have visited us during the year. Total visitation from the time when Federation Square opened until June 30 2013, is now more than 89 million. During the year we have hosted, supported or produced 2,167 events and activities in Federation Square’s public spaces with 91 per cent of these being free to the public. This busy program of activities across the spectrum of civic, community and cultural interests has included exhibitions, festivals, gatherings, concerts, sporting events and highlights such as the whimsical Stickwork installation, our participation in the very successful first Melbourne White Night, the world record setting FutuRide with Siemens, the spectacular Light In Winter, Helix Tree and more than 30 different multi-cultural events and festivals. It was a particular pleasure to see the fusion of art and science when the singing up of our Helix Tree by community choirs occurred against the backdrop of DNA animation on the big screen. It has been pleasing to achieve extremely high levels of visitor, tenant and client satisfaction. With the ever expanding reality of social media, our exposure has grown with over 15,000 media mentions made up of


2

4,902 national and 791 international traditional placements and 10,075 online. It is also gratifying that these mentions were overwhelmingly positive. Financial results for the period include a net result before depreciation of $4.6 million, with the surplus being applied primarily to the repayment of the company’s loans with Treasury Corporation Victoria. Lively programming from our onsite cultural partners has led to higher levels of visitation at these institutions and included the wonderful Hollywood Costumes Exhibition at ACMI and the exquisite Australian Impressionists in France Exhibition at the NGV Ian Potter Centre. Kirra Galleries, the first commercial premises at Federation Square, celebrated its 100th exhibition. Many of our food and beverage tenants have completed or are part way through refurbishments and restyling of menus and operations and they have continued to work with us on our ‘Get Fed’ program. It has been a pleasure to welcome the Melbourne Festival to its permanent home in the precinct and we have seen many successful exhibitions from community partners in the Yarra Gallery. Thank you to all our stakeholders and supporters. We thank especially the State Government of Victoria and Minister Asher in particular, for the funding provided to commence our three year Asset Replacement and Renewal program. This recognition of the critical work needed to maintain our icon at responsible operating standards is most welcome. We thank all of those who helped us with our 10th birthday celebrations including Brookfield Multiplex which was such an integral part of the original construction project. It has also been a delight to welcome Deakin University as the naming rights partner of the Deakin Edge. We look forward to continuing our productive association with all our stakeholders and supporters. I would like to acknowledge my fellow Board members: Liberty Sanger whose term was completed during the year, and Helen Kapalos who recently retired from the Board. I thank them for their role in advising and supporting the organisation over many years. I also thank fellow Board members, Louise Staley and Kathleen Wilson (who joined us this year) for their insights, enthusiasm and diligence and special thanks to the dedicated staff of Fed Square Pty Ltd, who work so hard to create and maintain this very dynamic place. I would especially like to acknowledge and thank Kate Brennan who has been Fed Square Pty Ltd’s Chief Executive Officer for eight years and who leaves us in September. Kate’s vision and dedication has delivered an international benchmark for the public realm and a place of great value for Victorians.

Catherine Walter AM Chair


3

CHIEF EXECUTIVE OFFICER’S REPORT ON OPERATIONS

THE YEAR AT A GLANCE

In this report, I am pleased to once again detail continuing success across all areas of operation. Exceptional and ongoing 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 as well as better than budget financial results, are all reflected in the narrative. Our Visitors: continuing growth

Our Program: 2,167 activities

Customer Satisfaction: experience and services

Visitor Satisfaction: staff

Our financial results: surplus before dep. and int.

Sustainability: reduction in consumption

Our reputation: at home and abroad

Media Coverage: 15,000 items incl. social media exponential growth


4

GREAT PLACE One of our main focuses is ensuring Federation Square is Melbourne’s primary meeting place, enhancing our position as a “place leader”. Estimated visitation for the year reached 10,440,110 and is a record result. This demand makes ongoing effort to create a sense of place and community engagement critical. 2012-13 projects included:

• Continued development of our comfort zones throughout the main square; • Updated way-finding signage; • Introducing the Yarra Gallery as a new exhibition place; • Commissioning Patrick Dougherty to deliver Stickwork in the Urban Garden Amphitheatre; • Creating a stream of regular community well-being initiatives in various locations across the precinct

e.g. chess, meditation, exercise, crochet. Safety and presentation standards continue to be critical to public enjoyment of the precinct and it is pleasing to note 99 per cent satisfaction with the cleanliness of the site (77 per cent extremely satisfied), 99 per cent satisfaction with safety and security (73 per cent extremely satisfied) and satisfaction with amenities 97 per cent (52 per cent extremely satisfied). Less visible but essential projects which maintain the effective functioning of the place included:

• Improvements to plant and maintenance access for staff and contractors; • Commencement of a stair nosing upgrade program across the site; • Upgrades to external electrical boxes to improve access and security; • Access improvements to the Yarra Building through the installation of automatic doors to the lift foyer; • A new meet and greet desk for the Deakin Edge; • Early Warning Intercom System rationalisation program; • Installation of a range of isolation valves to effect repairs and improve maintenance and service

efficiency of central plant services; • A new keying system; and • Finalisation of the Yarra Gallery base building services.

During the year, the Emergency Management Plan was updated to meet the current standard and we continue our active participation in onsite and city programs to maintain safety and security. This includes co-operation with Police and Emergency Services and ongoing involvement in the Flinders Street/Federation Square Security Precinct which facilitated our hosting of a specialist counter terrorism exercise. In the last year, our ‘perceptions’ survey indicates that 77 per cent of Victorians say they have visited Federation Square. During the year, 86 per cent of Victorians also said that Federation Square is Melbourne’s major focal point with 90 per cent agreeing there is always something going on and 97 per cent agreeing it is a public space where culturally diverse activities occur. As always we have been pleased to work with colleagues in Australia and around the world to share expertise and experiences around placemaking. This has included working with colleagues from India and South America as well as participating in academic initiatives with Melbourne and Monash Universities, regularly contributing to the Australian Place Leaders Association and supporting such activities as National Architecture Week and the Mainstreet Conference. Federation Square was also represented at:

• Australian Event Awards Symposium; • Deakin University Arts Incubator Conference; • 19th International Symposium of Electronic Art; • National Tourism and Events Excellence Conference; • Green Cities Conference; and • International Customer Service Professionals meetings.


5

It was also wonderful to acknowledge how far Federation Square has come as we celebrated our 10th birthday in October 2012. These celebrations were designed to acknowledge contributions to the creation and ongoing success of Federation Square, reinforce the ‘value’ of the development and to engage the public in marking the anniversary. The four day celebration saw a 26 per cent uplift in visitation on the same period in 2011, an estimated $500,000 value in media coverage (100 items), 500 new Facebook fans, 300 new Twitter followers and there were 250 social media mentions. We were also pleased to work in partnership with Monash University who published an independent book reviewing Federation Square’s impact in its 10 years and the benchmark it provides for cities. It was also great to see the positive response to the publication Federation Square - A Place for Melbourne. GREAT STAFF Delivering the breadth of activities and services at Federation Square is reliant on a hardworking, dedicated team and a range of activities are undertaken to support and develop team members. In the past year Fed Square Pty Ltd:

• Introduced a Flexible Work Practices Policy and accommodated 4 staff under new flexible arrangements;

• Reviewed and re-introduced the Study Leave Policy; • Continued the employee benefits and assistance program with a particular focus on health and well-

being including achieving a $5,000 Workcover employee wellbeing grant; • Continued the availability of Converge on a confidential paid basis for all staff; • Introduced a trainee position into the Program team (2012-13) and allocated 2013-14 budget for an

dedicated information officer in Marketing (in lieu of campaign funds); • Continued the implementation and integration of the EBMS venue management system with a view

to improving efficiency of internal processes e.g. by improving the integration of finance and booking systems;

• Ran activities designed to assist staff integration and team building; and • Undertook specific Customer Service Excellence training.

Policies dealing with Equal Employment Opportunity and Sexual Harassment and Workplace Bullying were reviewed to reflect changing legislative requirements, whilst Privacy and Protected Disclosure policies and procedures are currently under review. Staff have completed performance management work plans and successfully achieved targets and are actively involved in the Corporate Planning process, Disability Action Group, Sustainability Action Group and OH&S Committee. Staff have also contributed to the community beyond their roles by supporting the Red Cross Blood Bank, taking advantage of the Volunteering Leave Policy and supporting the Salvation Army. Participating staff are to be congratulated for their efforts. It is a pleasure to see staff acknowledged by both their peers and industry through awards. Fed Square Pty Ltd awards for outstanding work and contribution were made to Peter Taylor, Erik Holslag and Mark Bullen for their alignment with objectives and values. Kate Buchanan and Andrea Riley received our Customer Service Excellence Awards and it was a pleasure to see our Manager Security and Services, Peter Middenway, acknowledged with the National Operations Person of the Year Award from Meetings and Events Australia.


6

Training has been provided for all staff in mandated areas with specific role or career development activities being undertaken as relevant. Specific training included: Marketing and Program Operations Corporate Services • Maximising business

networking • Management/leadership

development • Finance/budgeting and

business planning and time management

• Presentation, communication and writing skills

• Vectorworks • EBMS Ungerboeck training • Digital SLR photography • Grant writing and fundraising • Search engine marketing

• Management skills improvement

• Emergency management • EWIS/FIP operations • Lighting management • Elevated work platform

licensing • Breathing apparatus • Facilities management • Certificate IV in Workplace

Assessment • Resource efficiency

• Risk management professional development

• Financial obligations and statutory compliance

• Property management • Business continuity planning • Information systems and

multimedia infrastructure developments

• Junos for security platforms/firewall

• Sharepoint platform • Digistore live content delivery

GREAT DELIVERY At Fed Square Pty Ltd, we aspire to be known as a “can do” organisation because of the quality and timeliness of our service delivery. In such a complex environment with 2,774 planned and reactive maintenance items to respond to, 2,167 activities in the public realm and over 10.4 million visits, it is particularly pleasing to see the 100 per cent Visitor Satisfaction rating (April 2013), an uplift in Event Client Satisfaction to 97 per cent (March 2013) and tenant satisfaction at 100 per cent. Service excellence continued to be emphasised as a key driver of success across the precinct. All tenants and service delivery partners are exposed to the Federation Square Customer Service Excellence Program which is gaining real momentum with the majority of food and beverage tenancies making a financial contribution toward the new measurement regime associated with the Federation Square Service Excellence Standards. Participating tenancies receive an independent assessment of their service delivery that is resulting in a heightened awareness of this aspect of their operations and in some cases, managers’ key performance indicators are being tied to these standards. The long standing Federation Square Customer Service Excellence Awards also continued to be well subscribed.

In the last year, the average number of times visitors have been to Federation Square is 27 and onsite visitor satisfaction highlights included:

• 100 per cent visitor satisfaction with their overall service experience; • 97 per cent of visitors would recommend Federation Square as a good place to visit; • 88 per cent of visitors are likely to return to Federation Square; • 98 per cent of visitors say there is a good variety of things to do at Federation Square; and • 79 per cent repeat visitation.


7

Continuing to deliver dynamic multiplatform ‘What’s On’ information has remained a priority as has the provision of detailed and accessible public information on Federation Square’s history, form, institutions and activities. This year has seen visitor satisfaction with the provision of information about Federation Square and events in the precinct at 89 per cent and 91 per cent respectively. A strong presence has been retained in key tourism publications such as Welcome to Victoria, Welcome to Australia, Cruise Ship Arrivals Guide, Official Visitors Map, MCEC Map, OVG – Mandarin, Safari Pete Backpacker’s Guide, Epoch Times and Insiders’ Guide. Printed materials have been distributed widely through Skybus, hotels, Visitor Information Centres and City Circle Trams and multimedia assets have been leveraged with multiple commercials produced. Signage has been extended to provide information about onsite activities, products and services. Free Guided Tours have remained popular with a mix of domestic and international visitors, particularly from Germany, UK, NSW and regional Victoria and partnerships have been strengthened with MCB and MCEC to attract business meetings/conference visitors with pilot initiatives rolled out for both the Nurses’ Congress and PAX Gaming Conference. Information and Multimedia systems remain fundamental to our capacity to achieve objectives, both from an internal delivery perspective and also for visitor engagement. During 2012-2013, new desktop computers were rolled out to all staff operating the latest version of Windows software. The IT servers and storage environments were upgraded to latest generation technology and virtualised on VMware V Sphere 5.1. The core firewall infrastructure was also upgraded from a single firewall to a dual Juniper SRX 2405 to provide redundancy in the event of failure and increase data throughout. In addition, the focus on making multimedia systems more robust continued, with the key projects being:

• Upgrade of the screen scheduling system to Scala for improved reliability and external support; and • Transferring LED ticker scheduling from complex bespoke environments to Scala.

The multimedia production effort has extended the life and narrative of creative projects and memorable moments onsite. Short films have been produced for The Light in Winter, Stickwork, Global Focus, Federation Story and “Think Fed Square, Think Food”. A number of other enhancements were made to improve daily operations and these included the introduction of notice only activations for low risk initiatives, ongoing EBMS operational streamlining, efficiencies in risk assessment processes, improved access to maintenance equipment across the site, installation of isolation valves on a range of services to improve maintenance efficiency and upgrades to heating and cooling systems. We are pleased to have been allocated funding from the 2013-14 State Budget for a three year Capital Asset


8

Replacement and Renewal Works program that will assist in maintaining the physical assets at the highest level of functionality and presentation. Works, primarily to base building services infrastructure located throughout the back of house areas, include:

• Renewal of pipework and joints which are part of the fire sprinkler and hydrant systems; • Replacement of components in over 20 lifts across the site; • Replacement of parts and upgrades to the access controls and security systems to ensure the public,

and assets are secure; and • Replacement of parts and an upgrade of the computer control system which manages heating and

cooling in public areas and critical areas such as gallery spaces. GREAT BUSINESS PRACTICE The team strives to advance a sustainable business through attention to ‘best practice’ commercial, asset, risk management and governance programs. Partnerships As always, a range of strong partnerships has underpinned our good performance. We are thrilled to have entered into a new partnership with Deakin University for naming rights of the Edge and are looking forward with them to developing a program that extends the ideas, debate and discourse theme in the Deakin Edge and to welcoming their community through lectures, special events and marketing. We were particularly thrilled at the increased range of partnerships for Light in Winter, which included Corporate Vision Australia, Change Media, City of Greater Dandenong, City of Greater Bendigo, City of Hobson's Bay, City of Melbourne, Electrolight, Footscray Community Arts Centre, Ikon Cleaning Services, Kirra Australia Pty Ltd, Melbourne International Film Festival, No Vacancy, Platform Youth Theatre, RMIT, SBS, The Walter and Eliza Hall Institute of Medical Research, United National Services and Vic Health. It was also wonderful to have the support of Brookfield Multiplex in delivering our 10th birthday activities and the ongoing provision of free WiFi supported by i-Primus. SBS continues as an important site partner, with a focus on celebrating the stories of our diverse communities via initiatives such as Light in Winter, for which they were a major media partner also. Presenting Eurovision on the Big Screen with SBS was a great new initiative this year. Tourism Victoria remains a critical partner and we have been delighted to broadcast regional Victorian tourism advertising on the Big Screen throughout the year. Melbourne Convention Bureau continues as a key partner enabling attraction of business and conference travellers. A pilot program targeting delegates to the international Nurses Congress, attended by approximately 4,000 participants, included a Federation Square discount card and exclusive late night activities at ACMI and NGV Australia. These activities were also promoted via a conference specific wrap for the Official Visitors’ Guide distributed via City of Melbourne. The Melbourne Visitor Centre at Federation Square is a key supporter and we have been working together to leverage visitation, create screen advertising opportunities and improve information provision and facilities in the foyer area. This year we also conducted research on international visitors exiting the Centre providing valuable data for future planning. Thank you to all of our partners for their many forms of support.


9

Marketing The Marketing Plan continues to focus on yield i.e spend, time and repeat visitation across the key target markets of City Workers, City Residents, Day Trippers, Free-Timers and Tourists. It has been gratifying to see visitation continuing to grow with repeat visitation at 79 per cent. Average visitor spend is at $9 and it is pleasing to see City Workers spending more than previously at $13.60. Similarly, it is pleasing to see City Workers, Day Trippers, Free-Timers and Tourists on average visiting more often. Work continues to uplift spend and duration of visits across all these markets. Risk Management Fed Square Pty Ltd received the highest ranking ‘Advanced’ for its Risk Management Framework following the Victorian Managed Insurance Authority’s Risk Framework Quality Review undertaken in May 2012. In accordance with the Fed Square Pty Ltd Risk Management Framework, in-depth bi-annual reviews of the policy and framework were conducted and covered all associated activities as follows: • Risk Management Policy; • Risk Management Process; • Risk Management Implementation Schedule and Risk Treatment plans; • Communication of Risk Management actions and achievements and outstanding issues of significance;

and • Development of a Risk Appetite Statement. Continuous improvement of our OHS management system is a feature of our activities given the nature of the physical site and the extent of public and tenant activity. An external audit of our OHS Management System was completed, along with a full internal review of our OHS Management System and specific OHS training for relevant staff. There were 171 OHS Incident Reports for the 2012-13 financial year, which was below the target of 199 and 566 security and general incidents which was below the previous year of 595. Reviews and audits were also completed on a range of Fed Square Pty Ltd systems and processes including annual Essential Safety Measure sign off and the Emergency Management Manual. Training on business continuity was undertaken in a facilitated workshop funded by the Victorian Managed Insurance Authority and a review of the Business Continuity Plan was completed. Further refinement of event risk management documentation has resulted in efficiencies both internally and for clients while maintaining risk management rigor. The integration of the Event Management Software (EBMS) into the risk monitoring and assessment process has led to greater efficiencies in the event co-ordination workflow, and has more directly linked event planning to on-the-ground delivery. This brings an improved assurance around event compliance on the day. New processes were developed to better manage structures (wind, weight and design) and an upgrade of access control across the site was concluded. 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, Kate Brennan, Chief Executive Officer, certify that Fed Square Pty Ltd has complied with Ministerial Direction 4.5.5.1 – Insurance. Tenancies The performance of tenants continues to be a major focus both in terms of providing a high quality offer to visitors and as a critical component of financial outcomes for the company. Whilst the economic environment remained challenging, particularly for the food and beverage offerings, a number of tenants undertook significant reinvestment in the business through refurbishment projects. These


10

included Arintji, Chocolate Buddha and Café Chinotto which have all completed works, whilst Il Pomodoro, Time Out and Beer Deluxe are finalising plans. The Melbourne International Arts Festival relocated to Federation Square during the year and we look forward to stronger relationships and activation on site during the festival period. In a Rush opened in the Atrium with a focus on quality and affordable fast food and Optic Kitchen and Bar provides a new vibrant offer within the Australian Centre for the Moving Image. The NGV has recently integrated the NGV Kids and NGV Studio premises to provide more publicly engaging experiences for visitors to the Atrium and it has also flagged extended public programming with major new projects across Melbourne. The ‘Think Food’ strategy continued with the objective of raising the awareness of Federation Square as a food and beverage precinct. The major focus for 2012-13 was to work with tenants to develop a calendar of interesting food related events and activities. Behind the scenes, work continued with tenancy presentation audits and customer service initiatives aimed at ensuring the solid foundations to build the program. Several new initiatives have underscored Federation Square as a place for interesting food related activities. The Pop Up Patch commenced business on the car park roof top to showcase sustainable food production and provide city residents and food businesses with opportunities to grow their own produce. The Melbourne Bee Company also established hives on the roof of ACMI and generated significant public and media attention. Tenancies are routinely supported via tourism marketing and advertising and are also profiled via partnership marketing including: Australian Open, Circus Oz, Melbourne International Comedy Festival and the City Circle Tram. Tenants continued to be kept abreast of events at Federation Square via the following communication channels:

• Fed Square News – bi-weekly update which details the next week’s events;

• Monthly event listings – emailed at the end of the month for the next month;

• Major event updates – emailed quarterly major event details for the next 6 to 8 months;

• Tailored and regular Familiarisation Forums;

• Marketing and Program briefings resulting in tenant involvement in cooperative initiatives; and

• Tenant Business Briefing – bi-annual briefing for senior tenant representatives. Three ‘Fed Square Get Togethers’, which raise the awareness of service excellence by enabling staff and volunteers to experience different elements of the Federation Square offer, were hosted. This format proved to be a great way for over 100 staff and volunteers to celebrate Federation Square’s 10th birthday. A blustery day failed to deter over 60 staff and volunteers participating in the Pop Up Patch get together. A progressive get together for Day Tour staff saw them experience Arintji and ACMI. This event was successful in further assimilating these staff into the Federation Square service culture. Financial Results Financial results for the year ending 30 June 2013 again demonstrate Fed Square Pty Ltd’s commitment to prudent financial management, whilst facilitating great community outcomes. In 2012-2013, Fed Square Pty Ltd reported a net result before depreciation of $4,578,486. Revenue and expenditure (before depreciation) over the ten years since the opening of Federation Square in 2002, is shown below.


11

Source: Fed Square Pty Ltd Operating Statement - June 2013

The company’s Balance Sheet remains very strong, with current assets of $21.540 million relative to current liabilities of $6.397 million. Net assets now total $476 million. Total liabilities decreased by $2.704 million to $26.924 million and include $20.786 million of long term loans with Treasury Corporation Victoria, which is down from $23.865 million the previous year. The TCV loans are scheduled to be fully repaid by 2019. Additional advances of $2.990 million to implement the Greener Government Buildings Program take total borrowings to $23.777 million. These borrowings are repayable over the next eight years. Operating revenue is up $514,501 or 2.19 per cent, which is indicative of the difficult economic circumstances and low inflationary environment in which we are currently operating. Operating expenses (excluding depreciation and amortisation) are down $603,551 or 2.95 per cent, again demonstrating management’s commitment to tight fiscal control.

Sustainability Working towards our target of carbon neutrality in gas and electricity consumption and the achievement of other sustainability goals is a major focus. It is pleasing to report that in the period we reduced:

o Water consumption by 5.4 per cent compared to 2011-12 year; o Electricity consumption by 18.6 per cent compared to 2011-12 year; and o Central plant gas consumption by 12.8 per cent compared to 2011-12 year.

As reported last year the Energy Performance Contract under the Greener Government Building Program has progressed with the majority of the works being implemented throughout the year. These works include:

o Energy harvesting pavers; o Power load reconfiguration; o Installation of solar panels; o Central plant optimisation; o Cooling tower upgrades; o Installation of variable speed drives throughout mechanical plant; o Strategic control improvements; o Improvements to the “Labyrinth” heating and cooling system; o River Terrace storm water mining; o Installation of an intelligent water management system; o Extension of our current rainwater harvesting system; and o Installation of a cooling system for the main square.


12

In addition to the above, planning and design works have been progressing on the installation of a cogeneration plant and Biogas plant. These works are expected to be completed in the 2013-14 year and will complete the Energy Performance Program. The tables below provide an overview of major utilities/services usage for the 2012 calendar year compared to 2011, 2010 and the baseline year of 2006.

Utility / Service Years

2006 Baseline

2010 2011 2012 Change

(2012 to 2006)

General Waste (tonnes) 776 627 602 582 -194

Recycled Material (tonnes) 384 609 550 716 332

Electricity (Mega Watts) 8,500 8,948 8,731 7,656 -844

Central Plant Gas (Giga Joules) 40,607 45,829 41,798 34,123 -6,484

Water (kilo Litres) 78,646 67,974 64,747 58,943 -19,703

Net Carbon Footprint (tonnes) 15,769* 9,456 9,095 2,623 -13,146 * Indicates 2007 calendar year

Utility / Service Years

2006 Baseline

2010 2011 2012 Change

(2012 to 2006)

Visitor numbers 7,834,970 8,572,418 9,783,419 10,027,420 2,192,450

General Waste (Kg / Visitor) 0.099 0.073 0.062 0.058 -0.041

Recycled Material (Kg / Visitor) 0.049 0.071 0.056 0.071 0.022

Electricity (Kw / Visitor) 1.085 1.044 0.89 0.76 -0.321

Central Plant Gas (MJ / Visitor) 5.2 5.3 4.3 3.4 -1.780

Water (Litres / Visitor) 10.0 7.9 6.6 5.9 -4.2

Net Carbon Footprint (Kg / Visitor) 2.0 1.1 0.9 0.3 -1.8 GREAT VISITOR EXPERIENCE Refining and refreshing all aspects of the unique Federation Square experience is both our commitment and a key to success. There have been active collaborations with ACMI and the NGV with both institutions active in our 10th birthday celebrations and ACMI celebrating its own 10th milestone. Big Screen outcomes have included Game Masters collaborative programming, Christmas and Australia Day curated packages, Human Rights Arts and Film Festival, Czech and Slovak Film Festival and a great new initiative with the L’Oreal Melbourne Fashion Festival delivering an engaging fashion film series for the public domain set to become an ongoing initiative. This year, the Multimedia Program has continued to evolve based on the combination of servicing third party clients, producing a weekly schedule of integrated, unique local and international content, and pro-actively establishing curatorial and commissioning relationships with a range of national and international partners. Successful screen partnerships this term have included those with Jesuit Social Services’ Artful Dodgers, Human Rights Film Festival, Australian Atlantic Division, QUT, AFL, Street Smart Australia, Loop de Loop, Gus Berger, dLux Media, RMIT, Pause Festival, 11Eleven Project, Christopher Kezelos, Propaganda Window, Flinders St Project, Leonardo Moro, Seniors Week, NZ show me shorts, Swinburne University, VCA, 100 Story Building, Streaming Museum, Shift.MOV, Luna Park 100th Birthday Celebration, ATOM,


13

Lumens Festival, Strip Billboard, NITV, Sideshow Alley, Artbox, Georgie Pinn, Glen Henderson, RMIT Skypetrait program, International Women’s Day program, VicRoads, Czech and Slovak Film Festival, ArtBox, Goethe Institute and Kirsten Perry. Ambient program solutions have been enhanced to ensure the screens are vibrant and dynamic every day. Examples of these include Ted Talks, Fed Camera, Piazza TV Perth, ABC News and SBS World News, National Indigenous TV, International Current Affairs – Presidential Election, Sporting events; e.g., Tour de France, American Football, Rugby, Paralympics, Boxing Day Test, One Day Test Matches and AFL 2013 broadcasts. International relationships have been fostered to also realise screen outcomes for example with Asialink, the London Organising Committee for the Olympics Games, Asia Pacific Contemporary Art, Lumens Festival and New Zealand Short Film Festival. Big Screen film seasons have been delivered with Not Yet it’s Difficult - David Pledger, Movember, Gus Berger Films, Diwali Film Festival and Phantasmata Animation with Kirsten Perry. The Regular Events Program comprises initiatives owned and produced by Federation Square to meet particular business/program requirements and includes a variety of programming across two streams: Boutique Industry Development and Community/Wellbeing as well as major activities such as New Year’s Eve (attended by over 100,000 people across the night) and the December/Christmas program. In the boutique industry program the Regional Wine Showcase has continued with bimonthly showcases and annual awards as has the Microbreweries Showcase with two successful seasons delivered. Plans are well advanced in transitioning to an external provider for these two initiatives to enable their growth and development. A Books and Literature focus including a Weekly Book Market has continued with Poetry, Live Illustrations and the Book Club attracting good patronage. In the Community and Wellbeing portfolio fortnightly ‘Feel Young’ Chinese seniors dance continues as does a monthly Classics Concert Series which has featured various performers such as Melbourne Youth Music Orchestra and the Victorian College of the Arts Secondary School. Busking has been refreshed creating streamlined procedures and widening the capacity for participants and the monthly Federation Square Car Club Showcase continues to roll on popularly. Tai Chi, Health Quigong and Refresh Your Mind Meditation all occur weekly and the Laughter Club continues fortnightly. Pop Up Chess is regularly available across the Square as are Crochet, Exercise and Dance (Salsa and Zumba) sessions. The Creative Program has again delivered the Light in Winter along with a range of other high impact interventions. This year’s Light in Winter program again featured the Campfire burning throughout June animated by a diverse group of indigenous artists. The major commission was The Helix Tree by Bruce Ramus. Community participation was strengthened with over 24 groups actively engaged across Dusk, Solstice and the VicHealth funded Square of Light project. Each night at dusk community choirs activated The Helix Tree and the specifically commissioned anthem by Lou Bennet was just one of the many highlights at the very popular Solstice Celebration event. A forum program was delivered in The Deakin Edge in partnership with Centenary of Canberra, Walter and Eliza Hall Institute, RMIT Seeds and Melbourne Conversations (City of Melbourne) and lighting industry engagement through Electrolight animated St Paul’s Court. We are pleased to see both strong visitation to the site in June with 693,366 visits, 5 per cent greater than 2012, and strong media valued at an estimated $966,200 for Light in Winter alone. Television highlights included Channel 10 News, Channel 9 Today Show, ABC News and Qantas Inflight Entertainment in international and domestic arrivals. Other highlight creative initiatives during the year have included Patrick Dougherty’s wonderful willow installation “Ballroom” as part of his internationally sought after “Stickworks”, David Burrows Mirage Project,


14

Jolt Arts and In The Pines while other creative partnerships have enabled Spring Fashion Show by The Social Studio, Free Play, The Sound of the Wind in The Trees – Simon Wilkinson, The Performing Frame by Deakin University, Spies by Night - Freeplay Independent Games Festival, Fresh Air Festival by Pop Up Playground, FutuRide, Nomad, The Other Film Festival Program and Visible Studio. As always, strong third party programming has continued with the equivalent of $1.98m in sponsor support provided to community groups to enable their activations. There have been 34 multicultural festivals, 35 national day flag raisings and hundreds of other events including state wide festivals such as those for Small Business, Seniors, Design, Comedy, Writers, Sustainability and Fair Trade. Live sites have continued to evolve with the usual substantial AFL and Australian Open presence. We have been delighted to support numerous indigenous initiatives including The Long Walk, NAIDOC Week, Journey to Recognition – Recognise Launch and the Reconciliation Week Launch. We undertook extensive programming with a focus on inclusion and were pleased to work with ADEC Artability Exhibition, Disability Sport and Recreation Festival and Keep Moving! World Parkinson’s Day. We worked proactively with disadvantaged groups such as The Choir of Hope and Inspiration who continue their strong and ongoing residency, World Autism Day – Light it Up Blue and The Song Room for multiple activations. The program of Ideas, Discourse and Debate, primarily in the newly named Deakin Edge, featured 180 separate forums and events, including Melbourne Conversations, the annual Peggy Glanville-Hicks Address, Monash University Alumni Series and the Conversations with the Archbishop Series. The Atrium, our spectacular glass gallery and gateway to NGV Australia and The Deakin Edge, has consolidated as a bustling salon and market environment, with a focus on Australian art, community expression, design, culture and quality food and beverage experiences. In addition to the Regular Program of Wine, Books and Microbreweries, other programming has included film seasons, screen content highlighting cultural partners, winter school holiday events, live animation and MARKit @ Fed Square. Fed Ed, our education program around Civics and Citizenship and Australian History, has continued with close to 5,000 students through the core program and partner initiatives and numerous user generated stories created for the Federation Story project on the Atrium balcony. GREAT REPUTATION We work systematically to ensure Federation Square is regarded locally, nationally and internationally as an urban success story benefiting both Melbourne and Victoria. Federation Square is presently the ‘Top 1’ attraction for both international and interstate visitors to Victoria. Media coverage has been extensive with over 4,902 traditional and 10,075 online placements – representing a significant uplift in our online presence. Internationally 791 placements have been realised. It is most pleasing to have a 99 per cent positive media sentiment and this has been particularly supported with great coverage around highlights such as Big Screen Gaming, Chinese New Year, In The Pines, Stickwork, Light in Winter, Get Fed and 10th birthday celebrations. This year deeper engagement across local media has been a priority and two Leader News front pages have been achieved along with close to 600 suburban placements. Highlights in local media have included Fed Square Live, Regional Wine and Microbreweries series, Pop Up Patch and Community Choirs. Social media engagement continues to grow with Facebook fans now over 22,500 and Twitter followers over 10,700. We now have over 680 followers on LinkedIn and 402 followers of Federation Square’s creative blog,


15

Squared Produce. Social media was used to deepen connections with community with examples this term including Anzac Day and Sorry Day. Wider specialist media has also been a feature this year with articles published about our commitment to accessibility and best practice in place making. Achievements have also been presented in facility management, architecture and academic publications and various state wide and national awards have been received including:

• Australian Event Awards – Community Event of the Year (National); • Meetings and Events Australia (MEA Vic) Special Event of the Year – The Light in Winter; • Meetings and Events Australia (MEA Vic) Operations Person of the Year – Peter Middenway; and • Meetings and Events Australia (MEA National) Operations Person of the Year – Peter Middenway.

It is pleasing to see the share of international visitors uplifting by 4 per cent return to the target of 25 per cent. tourism, media and industry familiarisations have been strong with many major visits including from US, Indian and Chinese delegations. Federation Square has been featured in Tourism Victoria’s ATE presentation and in both the Chinese and Indian Super Trade Missions. We have also hosted Tourism Victoria photo shoots for Chinese, Indian and backpacker markets. Positioning as a hallmark for Melbourne and Victoria has been consolidated through ongoing collaboration with key industry partners – MCB, MCEC, MEA, City of Melbourne, Destination Melbourne, VTIC, Tourism Australia and Tourism Victoria and examples include:

• Victorian Tourism Week conference presentation; • Feature in Architect Victoria – excerpt from Monash publication; • VTIC Quarterly magazine – 10th birthday double page feature; • UTS Diploma of Business Management guest lecture; and • ABC 774 all day birthday broadcast.

Building our connections with Chinese communities has been achieved through Chinese New Year celebrations in which onsite businesses were blessed, Tai Chi, Qigong, dragon dancing, “Feel Young” seniors dance and various third party initiatives. There have been many formal filming hires and hundreds of media filming moments including live broadcasts by Channel 7’s Sunrise and a full day broadcast with ABC 774 for our birthday. Extensive coverage has continued through Channel 10 Weather, ABC News TV and The Project. Media engagement has been positive throughout the year with highlights including support from SBS, Channel 10, Channel 9, ABC TV, Channel 7, The Age, Herald Sun, ABC 774, Nova, Smooth, Triple J, 3AW, Triple R. We are very grateful for our media colleagues in helping us position the Square as the heart of our community. CONCLUSION The cumulative impact of all of these activities has resulted in: • 77 per cent of Victorians saying they have visited Federation Square; • 86 per cent of Victorians saying that Federation Square is Melbourne’s major focal point; • 85 per cent of Victorians agreeing that Federation Square has been embraced since opening; • 84 per cent of Victorians agreeing that Federation Square helps attract interstate and overseas visitors; • 90 per cent of Victorians agreeing there is always something going on at Federation Square; • 92 per cent of Victorians agreeing that Federation Square is great for Melbourne; • 97 per cent of Victorians agreeing that Federation Square is a public space where culturally diverse

activities occur; and • 86 per cent of Victorians agreeing that Federation Square is a place for leading edge exciting ideas and

inspiring contemporary experiences.


16

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 and I thank all the tenants and their staff for their participation in many programs and activities. Our many contractors provide valuable services across a broad range of functions and I am particularly grateful to Corporate Vision Australia, Microhire, Ikon Cleaning Services, AGG Security and Wilson Parking for their commitment to Federation Square. Thank you to the State Government of Victoria, our Minister the Hon Louise Asher and departmental officers for their advice and support. We are particularly grateful this year for the 3 year funding commitment of $11.7m towards the costs of physical asset replacement and renewal. Thanks to the City of Melbourne and its officers and departments along with all our collaborators and partners for their work on many projects and events. In the year we were thrilled to have the support of a number of project partners whose in kind and financial support enabled our Light In Winter program and our 10th birthday celebrations. A big thanks to Brookfield Multiplex again for their support of our birthday program. As reported it has been a great pleasure to enter into the naming rights partnership with Deakin University for the Deakin Edge. The relationship is apt from both an historical perspective and in the context that Deakin and its programs are both worldly and committed to Victoria, as is Fed Square Pty Ltd. We thank all our Deakin colleagues and look forward to a great partnership. Thank you to the Board for its ongoing guidance and support, acknowledging both Liberty Sanger and Helen Kapalos whose terms were completed in this year. They have been wonderful advisors and advocates for all of our efforts. And a big thank you again to all the staff at Federation Square for the hard work and dedication which underpins our success. Over the last 8 years, I have been privileged to serve the community of Victoria through Federation Square and I am enormously proud to have led the organisation in creating what has now become an integral part of our civic and cultural life. There are countless stories of teamwork, creativity, industry, collaboration and partnership that have populated this cherished part of my career. I will continue to be grateful for the privilege of this custodianship, the hard work and dedication of all my staff, the guidance of Chairs and Board members, and the wealth of contributions and responses that so many parts of our community have shared. I trust this dynamic platform for the expression of our collective identity will continue to be useful to the people of Victoria into the future.

Kate Brennan CHIEF EXECUTIVE OFFICER


17

PERFORMANCE INDICATORS 2012-13

Performance Indicators 2012-13 Target Actuals

Great Place

Visitor comfort indicated by their assessment of:

Cleaning 95% 99%

Security 95% 99%

Amenities 95% 97%

Visitation within 10 per cent of the average of the previous three years. 100% 105%

Sociability – percentage of visitors using Federation Square as a meeting place 20% 24%

Great Staff

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

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

Fed Square Pty Ltd is an “Employer of Choice” as measured through the annual People Matter Survey

>95% 93%

Great Delivery

Tenant Satisfaction >90% 100%

Event Client Satisfaction >95$ 97%

Visitor Satisfaction with their overall service experience 100% 100%

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

Great Business Practice

Liquidity Ratios Current 2.95 3.37

Quick 2.95 3.28

Interest Cover - EBITD 3.94 4.28

Profit before depreciation and borrowing costs ‘000s 5,497 5,974

Profit before depreciation ‘000s 4,101 4,578

Risk Management – VMIA Risk Management Framework Quality Review Advanced Advanced (1)

Significant OH&S Incidents ≤0.022 0.016

Significant Security and Risk Incidents ≤0.045 0.0424

Net total carbon emissions ≤2,500 2,622(2)

Great Visitor Experience

Number of events and activities 1,500 2,167

Federation Square visitors who recommend it as a good place to visit >95% 97%

Visitation rates to cultural attractions (compared to the prior year) >90% 88%

Great Reputation

Recognised as a culturally diverse public space >90% 97%

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

95% 86%t

Federation Square in “Top 3” attractions in Victoria in terms of international and

Top 3 Top 1

Attracting International visitors >25% 25%

High level of positive sentiment expressed in print media >90% 99% Note: (1) Advanced is the highest score given by VMIA in its most recent review at May 2012.

(2) Carbon emissions are measured per calendar year


18

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

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

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

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

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

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

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

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

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

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

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


19

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

Catherine Walter AM Chair 3rd September 2013


20

Audit Committee The company has established an Audit Committee to advise the Board in relation to matters falling into the following broad areas:- Financial reporting and accounting policies; Internal audit and internal controls; Governance; State Government’s Financial Management Compliance Framework; and Compliance with Australian equivalents of International Financial Reporting Standards The Audit Committee meets as required and makes recommendations to the Board on specific issues. The members of the Committee during the year ended 30 June 2013 were Louise Staley (Chair), Catherine Walter AM, Helen Kapalos, Liberty Sanger, Kathleen Wilson 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 and Whistleblowers Protection Act 2001 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 cooperating 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. The Protected Disclosure Act 2012 applies to disclosures made on or after its commencement on 10 February 2013. The Whistleblowers Protection Act 2001, which previously provided for protected disclosures, was repealed from that date, although transitional provisions provide for matters arising under


21

the former legislation to continue to be managed in accordance with that legislation. As the change of legislation occurred during the financial year 2012-13, this report complies with the requirements of both Acts for the relevant time periods. Making disclosures Under the Whistleblowers Protection Act 2001, the key FSPL contact for making disclosures of improper conduct or detrimental action was the Manager - Corporate Services. 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. The archived procedures for making disclosures and protecting welfare established under the Whistleblowers Protection Act 2001 can be made available upon request Disclosures made during 2012-2013 FSPL being a body to which protected disclosures cannot be made, is required to report in its annual report only disclosures made on or before 9 February 2013. In the period 1 July 2012 to 9 February 2013, no disclosures under or subject to the Whistleblowers Protection Act 2001 were:

• made to FSPL; • referred to the Ombudsman by FSPL; • referred by FSPL to the Ombudsman; • the subject of an investigation by the Ombudsman or FSPL; • matters which FSPL declined to investigate; or • substantiated upon investigation. Further FSPL was not made the subject of any recommendations by the Ombudsman in connection with the the Whistleblowers Protection Act 2001.

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


22

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 2013. Directors The Directors in office during the period and at 30 June 2013 unless otherwise stated were:

Ms Catherine Mary Walter (Chair)

Ms Helen Kapalos (retired 30 May 2013)

Ms Liberty Emma Sanger (retired 30 September 2012)

Ms Louise Eileen Staley

Ms Kathleen Sarah Wilson (appointed 1 October 2012)

Ownership of Fed Square Pty Ltd Fed Square Pty Ltd is a company wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer is the Minister responsible for the State Holding in Fed Square Pty Ltd under the Deed. Principal Activities The principal activity of Fed Square Pty Ltd continues to be the management of Federation Square. Results of Operations 2013 2012

$ $ Net result before depreciation and amortisation 4,578,486 3,917,177

Depreciation and amortisation (11,522,476) (11,308,207)

Net result

(6,943,990)

(7,391,030)

Dividends No dividends have been proposed or paid during the year (2011-2012: Nil). Changes in State of Affairs There was no material change in the State of Affairs during the year. Environmental Regulations No significant environmental regulations apply that are likely to have an unexpected material affect on the operations or financial results of Fed Square Pty Ltd. Subsequent Events There were no subsequent events after balance date expected to have a material affect on the financial statements of Fed Square Pty Ltd that are not otherwise disclosed in the financial statements and notes.


23

Directors’ Meetings The number of Directors’ meetings and number of meetings attended by each of the Directors of the company during the financial year were: MEETINGS MEETINGS DIRECTOR HELD* ATTENDED Ms Catherine Walter (Chair) 7 7 Ms Helen Kapalos 6 5 Ms Liberty Sanger 1 1 Ms Louise Staley 7 7 Ms Kathleen Wilson 6 6 *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 Catherine Walter 4 4 Ms Helen Kapalos 3 3 Ms Liberty Sanger 1 1 Ms Louise Staley Ms Kathleen Wilson

4 3

4 3

Mr John Lee (co-opted member appointed 30 April 2013) 2 1 *Reflects the number of meetings held during the time the committee member held 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 $34,218 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 (2011-2012: $38,577). 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 5th September 2013.

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


24

Auditor-General’s Independence Declaration


25

Comprehensive operating statement for the financial year ended 30 June 2013 Notes 2013 2012 $ $ Operating revenue 2 23,966,769 23,452,268 Interest revenue 660,417 1,016,265 Total revenue from transactions 24,627,186 24,468,533 Borrowing costs (1,395,549) (1,574,906) Employee entitlements (4,375,229) (4,221,825) Event expenses (3,044,177) (3,097,501) Site operating expenses 3(a) (7,758,655) (8,382,273) Other expenses 3(b) (3,287,806) (3,188,462) Depreciation and amortisation 7 (11,522,476) (11,308,207) Total expenses from transactions (31,383,892) (31,773,174) Net operating result from transactions (6,756,706) (7,304,641)

Other economic flows included in net result

Gain on sale of non-financial assets 6,550 - Net loss from revaluation of long service liability (193,834) (86,389) Total other economic flows included in net result (187,284) (86,389) Net result 12 (6,943,990) (7,391,030)

Other comprehensive income

Revaluation of property, plant and equipment 7 - - Other comprehensive income for the period - -

Total comprehensive result for the period (6,943,990) (7,391,030)

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


26

Balance sheet as at 30 June 2013 Notes 2013 2012 $ $ Current Assets Cash and deposits 17(a) 20,531,362 20,724,788 Receivables 6 752,636 2,247,535 Prepayments 256,442 51,510

Total Current Assets 21,540,440 23,023,833 Non-Current Assets Property, plant and equipment 7 481,357,844 489,522,605

Total Non-Current Assets 481,357,844 489,522,605

Total Assets 502,898,284 512,546,438

Current Liabilities

Payables 8 2,286,509 3,377,350 Borrowings 10 3,484,021 3,479,241 Provisions 9 626,347 435,587

Total Current Liabilities 6,396,877 7,292,178 Non-Current Liabilities Borrowings 10 20,401,661 22,227,589 Provisions 9 125,535 108,470

Total Non-Current Liabilities 20,527,196 22,336,059

Total Liabilities 26,924,073 29,628,237

Net Assets 475,974,211 482,918,201

Equity Contributed capital 11 435,940,508 435,940,508 Accumulated deficit 12 (49,331,800) (42,387,810) Asset revaluation surplus 13 89,365,503 89,365,503

Total Equity 475,974,211 482,918,201

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


27

Cash flow statement for the financial year ended 30 June 2013 Notes 2013 2012 $ $ Cash Flows from operating activities Receipts from customers (incl. GST) 27,779,176 25,099,193 Interest received 842,843 847,875 Payments to employees (4,327,150) (4,055,105) Payments to suppliers (incl. GST) (17,174,689) (15,126,071) GST paid to Australian Taxation Office (727,263) (867,351) Interest paid on loans (1,414,033) (1,582,104)

Net cash flows from operating activities 17(b) 4,978,884 4,316,437 Cash Flows from investing activities Proceeds from sale of non-current assets 25,683 - Payments for buildings & improvements (848,181) (515,934) Payments for plant & equipment (2,488,430) (2,565,276) Net cash flows from investing activities (3,310,928) (3,081,210) Cash Flows from financing activities Proceeds from Government advance Repayment of borrowings

1,274,230 (3,079,029)

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

Repayment of finance leases (56,583) (34,581) Net cash flows from financing activities (1,861,382) (1,031,412) Net increase in cash and cash equivalents (193,426) 203,815 Cash and cash equivalents at the beginning of the year

20,724,788 20,520,973

Cash and cash equivalents at the end of the year 17(a)

20,531,362

20,724,788

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


28

Statement of changes in equity for the financial year ended 30 June 2013 Contributed

capital Assets revaluation

surplus Accumulated

deficit Total

$ $ $ $

Balance at 1 July 2011 435,940,508 89,365,503 (34,996,780) 490,309,231

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

Revaluation of freehold land - - - -

Revaluation of buildings - - - -

Other comprehensive income for the year - - - -

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

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

Operating result for the year - - (6,943,990) (6,943,990)

Revaluation of freehold land - - - -

Revaluation of buildings - - - -

Other comprehensive income for the year - - - -

Total comprehensive income for the year - - (6,943,990) (6,943,990)

Balance at 30 June 2013 435,940,508 89,365,503 (49,331,800) 475,974,211

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


29

Notes to the financial statements for the year ended 30 June 2013 1. STATEMENT OF SIGNIFICANT ACCOUNT POLICIES These financial statements are audited general purpose financial statements which have been

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

The financial statements were authorised for issue by C. M. Walter, Chair, Fed Square Pty Ltd on 5th

September 2013. The significant policies which have been adopted in the preparation of this financial report are:

a. Basis of preparation

The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. The accrual basis of accounting has been applied in the preparation of these financial statements whereby assets, liabilities, equity, revenue and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid. In the application of accounting standards, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making judgments. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by management in the application of accounting standards that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2013 and the comparative information presented in these financial statements for the year ended 30 June 2012.

b. Revenue recognition

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

Car parking revenue Revenue from car parking fees and charges is recognised in the period in which the service is provided.


30

Event revenue Revenue from event fees and charges is recognised in the period in which the service is provided. Tenancy rents and charges Revenue in the form of tenancy rents and outgoings derived from operating leases on premises at Federation Square is recognised in the period in which the service is provided. Sponsorship and grants Sponsorship revenue is recognised in the period in which the right to receive the revenue 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 revenue Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset. Sale of non-current assets The gross proceeds from the sale of non-current assets are included as revenue at the date control of the asset passes to the buyer, which is usually when an unconditional contract of sale is signed.

c. Borrowing costs

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

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

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


31

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

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

g. Income tax

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

h. Leased assets

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


32

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

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

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

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

j. Property, plant and equipment

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


33

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

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

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

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

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

l. Financial assets and liabilities

i. Cash and deposits

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

ii. Borrowings

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

iii. Receivables

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


34

iv. Payables

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

v. Net fair value of financial assets and liabilities

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

m. Prepayments

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

n. New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2013 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 2013 a number of standards and interpretations had been issued but were not mandatory for the financial year ended 30 June 2013. Whilst, these accounting standards and interpretations may have an impact on future reporting periods, the extent of their impact is considered not to warrant further disclosures. The company has not, and does not intend to, adopt these standards early.


35

Notes 2013 2012 $ $ 2. OPERATING REVENUE

Tenancy rents and charges 15,850,281 15,520,418 Car parking 3,994,878 3,790,011 Events 3,202,762 3,036,075 Sponsorship and grants 864,177 1,078,878 Other revenue 54,671 26,886 Total operating revenue 23,966,769 23,452,268

3. EXPENSES (a) Site operating expenses Building and tenant consultants 390,768 531,505 Car park operations 689,516 660,479 Cleaning 1,696,265 1,576,409 Maintenance 2,059,359 2,683,138 Placemaking 2,653 14,952 Security 1,464,705 1,391,029 Utilities 1,455,389 1,524,761 Total site operating expenses 7,758,655 8,382,273

(b) Other expenses Administration and accounting 717,802 657,234 Bad and Doubtful debts 6 (83,662) 108,737 Insurance 637,462 592,933 Legal 117,637 83,493 Motor vehicles 38,915 9,733 Multimedia 74,693 69,204 Promotional expenses 631,110 492,049 Statutory rates and taxes 836,048 803,619 Tenancy expenses 317,801 371,460 Total other expenses 3,287,806 3,188,462

4. AUDITORS’ REMUNERATION

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

26,795

25,300

5. DIVIDENDS

There was no provision for dividends or dividends paid for the year (2011-2012: Nil).


36

6. RECEIVABLES Notes 2013 2012 $ $

Trade receivables 481,112 2,080,138 Provision for doubtful debts - (96,116) Net trade receivables 481,112 1,984,022 Accrued income 271,524 263,513 Total receivables 752,636 2,247,535

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 2013 2012 $ $

Balance at beginning of year (96,116) (34,773) Amounts credited during the year 91,543 - Impairment losses recognised on receivables - (61,343) Amounts written off as uncollectable 4,573 - Balance at end of year - (96,116)

The amount of $91,543 provided in prior periods was credited to bad and doubtful debts because the relevant receivables were collected during the current period. An additional $7,881 was written off directly to bad and doubtful debts (2011-12: $47,394). The total net positive impact on the Comprehensive operating statement is $83,662.

Ageing of impaired receivables 2013 2012

$ $ Current - - 30 – 60 days - - 60 – 90 days - 15,286 Greater than 90 days - 80,830 Total - 96,116

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.


37

7. PROPERTY, PLANT AND EQUIPMENT

Valuation

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

medium/high density residential development site; - 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 5percent of the

surrounding land values The revalued carrying amount following the revaluation at 30 June 2011 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 2013 2012 $ $ Freehold land – fair value 121,462,000 121,462,000 Buildings and improvements At fair value 445,451,096 444,602,915 Accumulated depreciation (91,832,612) (81,089,475) 353,618,484 363,513,440

Plant and equipment At cost 15,669,154 13,843,538 Accumulated depreciation (10,070,030) (9,441,225) 5,599,124 4,402,313 Tenancy fit-outs At cost 2,462,115 1,800,005 Accumulated amortisation (1,891,403) (1,778,968) 570,712 21,037 Plant and equipment under finance lease 157,649 157,241 Less: Accumulated depreciation (50,125) (33,426) 107,524 123,815

Total property, plant and equipment 481,357,844 489,522,605


38

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

Land Buildings and

improvements Plant and

equipment Tenancy

fit-outs Plant and

equipment under lease

Total property, plant and

equipment $ $ $ $ $ $

Carrying amount at 1 July 2011

121,462,000

373,725,598

2,346,706

56,038

104,443

497,694,785

Additions - 515,934 2,565,276 - 86,165 3,167,375 Disposals - - - - (31,348) (31,348) Reallocations - - - - - - Revaluation - - - - - - Depreciation and amortisation - (10,728,092) (509,669) (35,001) (35,445) (11,308,207) Carrying amount at 1 July 2012

121,462,000

363,513,440

4,402,313

21,037

123,815

489,522,605

Additions - 848,181 1,826,320 662,110 40,234 3,376,845 Disposals - - - - (19,130) (19,130) Reallocations - - - Revaluation - - - - - - Depreciation and amortisation - (10,743,137) (629,509) (112,435) (37,395) (11,522,476) Carrying amount at 30 June 2013

121,462,000

353,618,484

5,599,124

570,712

107,524

481,357,844

Notes 2013 2012 8. PAYABLES $ $

Creditors 1,814,668 2,964,929 GST payable 39,103 67,418 Advances 168,893 115,246 Salaries and associated costs 263,845 229,757 Total payables 2,286,509 3,377,350

9. PROVISIONS

Current Employee entitlements 609,105 422,494 Fringe benefits tax 17,242 13,093 626,347 435,587

Non-Current

Employee entitlements 125,535 108,470


39

10. BORROWINGS Notes 2013 $

2012 $

Loans 23,776,639 25,581,438 Lease liability 14 109,043 125,392 23,885,682 25,706,830

Current liability 3,484,021 3,479,241 Non-current liability 20,401,661 22,227,589 23,885,682 25,706,830

Loans of $20,786,229 (2011-2012: $23,865,258) 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 $2,990,410 (2011-2012: $1,716,180) are provided by the Department of State Development, Business and Innovation and are repayable by 2022. Lease liabilities represent motor vehicles leased from Vic Fleet, a unit of the Victorian Department of Treasury and Finance. The motor vehicles provide security under the terms of the lease.

11. CONTRIBUTED CAPITAL

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

Notes 2013 2012 $ $ Issued and paid-up share capital (1 share @ $1 ea.) 1 1 Contributed capital 435,940,507 435,940,507

Total contributed capital 435,940,508 435,940,508


40

12. ACCUMULATED DEFICIT Notes 2013 2012 $ $ Accumulated deficit at beginning of financial year (42,387,810) (34,996,780) Net operating result (6,943,990) (7,391,030) Accumulated deficit at end of financial year (49,331,800) (42,387,810)

13. 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

14. LEASES

Finance leases (Fed Square Pty Ltd as lessee) Finance lease liabilities payable: - not later than one year 61,515 58,506 - later than one year and not later than five years 54,613 78,184 Minimum lease payments 116,128 136,690 Less: future finance charges (7,085) (11,298) Recognised as a lease liability 1(h), 10 109,043 125,392

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 15,426,112 12,546,131 - later than one year and not later than five years 51,608,847 43,749,013 - later than five years 46,552,830 52,463,450 1(h) 113,587,789 108,758,594


41

15. EMPLOYEE SUPERANNUATION FUNDS Fed Square Pty Ltd contributes to superannuation at the minimum rate required by the Superannuation Guarantee (Administration) Act 1992. Each employee (including Directors) is able to nominate a complying fund in accordance with the Act. Additional contributions are optional at the discretion of employees. During the year a total of $345,606 (2011-2012: $344,373) was paid or payable by the company to the various funds.

As at 30 June 2013 there was no amount owing to superannuation funds not brought to account (2011-2012: Nil). Fed Square Pty Ltd employed 47 full time equivalent employees as at 30 June 2013 (2011-2012: 45). All superannuation payments are paid to accumulation funds.

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

17. CASH ASSETS

(a) Reconciliation of cash

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

Notes 2013 2012 $ $

Cash on hand and at bank 643,786 1,651,758 Term deposits 19,887,576 19,073,030 Cash balance as per Cash flow statement 20,531,362 20,724,788

(b) Reconciliation of loss from ordinary activities

to net cash provided by operating activities:

Net deficit

(6,943,990) (7,391,030)

Adjustments for non-cash items:

- Depreciation and amortisation 11,522,476 11,308,207 - Provision for doubtful debts (83,662) 61,343 - Profit on sale of assets (6,550) - Net cash inflows from operating activities before changes in assets and liabilities

4,488,274

3,978,520

Changes in assets and liabilities

(Increase) / Decrease in receivables 1,578,560 (1,154,662) (Increase) / Decrease in prepayments (204,933) 914,693 Increase / (Decrease) in payables (1,090,842) 324,777 Increase / (Decrease) in provisions 207,825 253,109

Net cash flows from operating activities 4,978,884 4,316,437


42

18. FINANCIAL INSTRUMENTS Interest rate exposure of financial instruments 30 June 2013 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) 2.78 19,887,576 643,786 - 20,531,362 Receivables 6 - - - 752,636 752,636 19,887,576 643,786 752,636 21,283,998 Financial Liabilities Payables 8 - - - 2,286,509 2,286,509 Lease liabilities 10 6.56 109,043 - - 109,043 Loans 10 5.42 20,786,229 - 2,990,410 23,776,639 20,895,272 - 5,276,919 26,172,191 30 June 2012 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) 3.56 19,073,030 1,651,758 - 20,724,788 Receivables 6 - - - 2,247,535 2,247,535 19,073,030 1,651,758 2,247,535 22,972,323 Financial Liabilities Payables 8 - - - 3,377,350 3,377,350 Lease liabilities 10 6.53 125,392 - - 125,392 Loans 10 5.78 23,865,258 - 1,716,180 25,581,438 23,990,650 - 5,093,530 29,084,180


43

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

30 June 2013 Carrying amount

Not past due and not impaired

Less than 1 month

1 – 3 months

3 months – 1 year

$ $ $ $ $ Receivables

Sale of goods and services 481,112 314,616 41,176 113,372 11,948 Accrued investment income 11,191 11,191 - - - Other contractual financial assets Cash and deposits

20,531,362

20,531,362

-

-

-

Total

21,023,665

20,857,169

41,176

113,372

11,948

Past due but not impaired


Not past due and not impaired

Less than 1 month

1 – 3 months

3 months – 1 year

$ $ $ $ $ Receivables

Sale of goods and services 1,984,022 1,610,491 115,521 217,192 40,818 Accrued investment income Other contractual financial assets

30,890 30,890 - - -

Cash and deposits 20,724,788 20,724,788 - - - Total

22,739,700

22,366,169

115,521

217,192

40,818


44

18. FINANCIAL INSTRUMENTS (continued) Categorisation of financial instruments

30 June 2013 Contractual financial assets

– loans and receivables

Contractual financial

liabilities at amortised cost

Total

Contractual financial assets $ $ $ Cash and deposits 20,531,362 - 20,531,362 Receivables Sale of goods and services 481,112 - 481,112 Accrued investment income 11,191 - 11,191 Prepayments 256,442 - 256,442 Total contractual financial assets 21,280,107 - 21,280,107 Contractual financial liabilities Payables Supplies and services - 1,768,075 1,768,075 Other payables - 46,593 46,593 Borrowings Lease liabilities - 109,043 109,043 Loans - 23,776,639 23,776,639 Total contractual financial liabilities - 25,700,350 25,700,350

30 June 2012 Contractual financial assets

– loans and receivables

Contractual financial

liabilities at amortised cost

Total

Contractual financial assets $ $ $ Cash and deposits 20,724,788 - 20,724,788 Receivables Sale of goods and services 1,984,022 - 1,984,022 Accrued investment income 30,890 - 30,890 Prepayments 51,510 - 51,510 Total contractual financial assets 22,791,210 - 22,791,210 Contractual financial liabilities Payables Supplies and services - 2,835,082 2,835,082 Other payables - 129,847 129,847 Borrowings Lease liabilities - 125,392 125,392 Loans - 25,581,438 25,581,438 Total contractual financial liabilities - 28,671,759 28,671,759


45

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


Nominal amount

Less than 1 month

1 – 3 months

3 months – 1 year

1 – 5 years

5 + years

$ $ $ $ $ $ $ Payables

Supplies and services

1,768,075 1,768,075 1,666,516 38,654 62,905 - -

Other payables 46,593 46,593 46,593 - - - - Borrowings Lease liabilities 109,043 116,128 - - 63,089 53,039 - Loans 23,776,639 23,776,639 204,701 - 3,426,355 17,655,681 2,489,902 Total

25,700,350

25,707,435

1,917,810

38,654

3,552,349

17,708,720

2,489,902


Nominal amount

Less than 1 month

1 – 3 months

3 months – 1 year

1 – 5 years

5 + years

$ $ $ $ $ $ $ Payables

Supplies and services

2,835,082 2,835,082 2,350,918 28,743 455,421 - -

Other payables 129,847 129,847 129,847 - - - - Borrowings Lease liabilities 125,392 125,392 - - 53,520 71,872 - Loans 25,387,553 25,387,553 - - 3,089,846 16,147,731 6,149,976 Total

28,477,874

28,477,874

2,480,765

28,743

3,598,787

16,219,603

6,149,976

(a) Credit risk exposures The credit risk on financial assets that have been recognised on the Balance sheet, is the carrying amount, net of any provision for doubtful debts. The carrying amount on the Balance sheet represents the company’s maximum exposure to credit risk for receivables. Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the company. The company has a policy of only providing material credit to creditworthy counterparties and obtaining industry standard security over leases in the form of bank guarantees or cash advances. The company’s exposure and the credit worthiness of counterparties is continually monitored.


46

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 $166,495 (2011-12: $380,785) 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 amounting to $149,203 (2011-12: $102,544) against these balances. The average age of these receivables is 86 days (2011-12: 131 days).

30 June 2013 Financial

institutions Triple A credit

rating

Financial institutions

Double A- credit rating

Other unknown

credit rating

Total

$ $ $ Cash and deposits - 643,786 - 643,786 Investments and other financial assets 19,887,576 - 752,636 20,640,212 Total contractual financial assets

19,887,576 643,786 752,636 21,283,998

30 June 2012 Financial

institutions Triple A credit

rating

Financial institutions

Triple B credit rating

Other unknown

credit rating

Total

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

19,073,030 1,651,757 2,247,535 22,972,322

(b) Financial risk management

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

(c) Interest rate risk exposures

The company’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out above. There is no interest rate risk associated with loans as all borrowings are made at fixed rates of interest from Treasury


47

Corporation Victoria. The following sensitivity analysis has been determined on the exposure to variable interest rates at the reporting date. If variable interest rates had been 50 basis points higher or lower and all other variables were held constant, the company’s deficit would decrease by $101,378 (2011-2012: $107,070) and increase by $101,456 (2011-2012: $107,152) respectively. This is mainly attributable to the company’s return on investments held in the form of cash assets.

(d) Foreign currency exposure The company has no exposure to foreign currency risk as at 30 June 2013 and has insignificant risk of exposure in the course of conducting its operations.

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

(f) Net fair values of financial assets and liabilities 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.

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. Valuation approach The carrying amounts of financial assets and financial liabilities on the Balance sheet approximate fair value. All financial assets and financial liabilities are level 1.


48

19. REMUNERATION OF DIRECTORS

Income bands Total remuneration Base remuneration 2013 2012 2013 2012 No. No. No. No. $0 - $19,999 1 - 1 - $20,000 - $29,999 3 3 3 3 $50,000 - $59,999 1 1 1 1 Total number of directors 5 4 5 4 Total amount $139,148 $131,764 $139,148 $131,764

Directors’ income includes superannuation but not insurance premiums of $34,218 (2011-2012: $38,577) paid by the company in respect of Directors’ and Officers’ Liabilities.

20. EXECUTIVE REMUNERATION

Income bands Total remuneration Base remuneration 2013 2012 2013 2012 No. No. No. No. $170,000 - $179,999 2 2 2 2 $180,000 - $189,999 - 1 - 1 $200,000 - $219,999 1 - 1 - $290,000 - $299,999 - - 1 1 $340,000 - $349,999 1 1 - - Total number of executives 4 4 4 4 Total annualised employee equivalent

4 4 4 4

Total amount $910,178 $874,935 $864,676 $822,963

21. RELATED PARTY DISCLOSURES

(a) Names of Directors

The Directors of Fed Square Pty Ltd during the period and at 30 June 2013 unless otherwise stated were:

Ms Catherine Mary Walter (Chair) Ms. Helen Kapalos (retired 30 May 2013) Ms Liberty Emma Sanger (retired 30 September 2012) Ms Louise Eileen Staley Ms Kathleen Sarah Wilson (appointed 1 October 2012)


49

(b) Transactions with Directors and director-related entities There were no transactions made with Directors (or Director related entities) except for payments made for performing the functions of Director - refer note 19 (2011-2012: Nil). As at the 30 June 2013 there exists no contingent or actual liabilities of Fed Square Pty Ltd for termination benefits under service agreements to Directors or persons who take part in the management of Fed Square Pty Ltd. No loans were made to Directors during the year (2011-2012: Nil).

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

22. CAPITAL COMMITMENTS

2013 2012 $ $ Plant and Equipment Payable not longer than one year 3,825,118 5,099,348 Other Commitments Payable not longer than one year 1,830,254 300,000 Total commitments for expenditure (exclusive of GST) $5,655,372 $5,399,348

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


50

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 2013 and of its performance, as represented by the results of its operations and its cash flows, for the year ended 30 June 2013;

(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 5th September 2013

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


51

Independent Auditor’s Report


52

fed square pty ltd annual report for the year ended 30 june 2013

Documents