fed square pty ltd annual report for the year …...fed square pty ltd acn 085 731 479 1 chair’s...

Fed Square Pty Ltd

Annual Report

For the year ended 30 June 2016

TABLE OF CONTENTS

CHAIR’S STATEMENT ....................................................................................................................................... 1

CHIEF EXECUTIVE OFFICER’S REPORT ON OPERATIONS ........................................................................ 3

PERFORMANCE INDICATORS 2015-2016 ....................................................................................................16

STATEMENT OF CORPORATE GOVERNANCE ...........................................................................................17

DIRECTORS’ REPORT ....................................................................................................................................21

AUDITOR-GENERAL’S INDEPENDENCE DECLARATION ...........................................................................23

INDEPENDENT AUDITOR’S REPORT ...........................................................................................................24

COMPREHENSIVE OPERATING STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016 .......26

BALANCE SHEET AS AT 30 JUNE 2016 ........................................................................................................27

CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016 ........................................28

STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016 ..................29

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 ................................30

DIRECTORS’ DECLARATION .........................................................................................................................69

Fed Square Pty Ltd ACN 085 731 479

1

CHAIR’S STATEMENT

On behalf of the Board, it is with great pleasure that I present the 2015-2016 Fed Square Pty Ltd (FSPL)

Annual Report.

Fed Square has had another successful year as Melbourne’s iconic heart. As the city’s premier civic, cultural

and events destination, we have provided a multitude of exceptional and memorable experiences for our

local, interstate and international visitors. With a renewed focus on improving the quality of the visitor

experience, and planning for the longer-term sustainability of the precinct, this past year FSPL has facilitated

over 1,600 memorable initiatives, including cultural festivals, original creative commissions, civic vigils and

popular sport and recreational activations across all sectors.

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

amortisation of $5.167 million. Our visitor satisfaction metrics demonstrate a one hundred percent visitor

customer satisfaction rating for experiences and services, and staff overall. 85% of visitors who encountered

FSPL’s program offerings are likely to revisit. Fed Square retains its number two position in the reputation

category by national and international tourists, with 94% of visitors likely to recommend Fed Square as a

good place to visit. Media coverage of Fed Square has increased overall, with a pronounced jump in overall

social media followers across various platforms – Fed Square remains an extremely prominent and loved

precinct for people to visit and participate.

We are pleased to report that we have achieved these results while meeting our sustainability target of zero

tonnes carbon footprint for a second consecutive year, something we will continue to pursue.

We remain proud of the strong partnerships that align with our Civic and Cultural Charter. In particular, these

include supporting the on-site presence of the National Gallery of Victoria, the Australian Centre for the

Moving Image, Melbourne Festival, the City of Melbourne and, completing its first full year of operations on

site, the Koorie Heritage Trust, which has made an invaluable addition to the overall matrix of the visitor

experience.


2

From this base of sustained success, Fed Square is entering a time of bold transition, with much strategic

thought being given to the longer-term financial model of operations, the food and beverage tenancy base,

and the built form. While we pursue fresh strategies to ensure the longer term financial sustainability of the

business, and the sustainability and refreshment of the physical environment, we remain committed to

exceptional delivery in the day-to-day business of inspiring visitors to Melbourne’s heartbeat through our

core programs and amenity services, in conjunction with the offers of our tenant base.

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

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

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

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

commitment, enthusiasm, advice and support.

I acknowledge the work of our interim Chair, Kathleen Wilson, who remains a committed director, and my

fellow directors, Laura Anderson, James Demetriou, Les Williamson, Pam Mitchell and Audit Committee

member John Lee. I am grateful for their commitment. I also wish to acknowledge the work of Interim CEO

Ron Gauci over the past year, and I extend my welcome to new CEO Jonathan Tribe. Finally, I wish to

acknowledge the efforts of our loyal and dedicated staff for their energetic and enthusiastic work to ensure

that Fed Square remains unequivocally Melbourne’s heartbeat.

............................................................. DEBORAH BEALE

CHAIR


3

CHIEF EXECUTIVE OFFICER’S REPORT ON OPERATIONS

THE YEAR AT A GLANCE


4

FSPL’s vision is to be internationally recognised as Melbourne’s inspirational public place where visitors

come to celebrate, learn, innovate and connect. FSPL implements this through the mission to manage and

develop Fed Square to actively support and reflect Melbourne’s pre-eminent civic and cultural strengths.

FSPL desires Fed Square to be an iconic destination that delivers visitors a memorable experience.

Our vision and mission, together with the Civic and Cultural Charter, sets the strategic direction for the

operations of Fed Square.

In presenting this report as the new Chief Executive of FSPL, I am pleased to detail success and progress

across all areas of operation including:

The extensive, diverse and cutting edge program of events and activities.

Development of a long-term plan to ensure the sustainability of FSPL’s operations, and a refreshed

approach to the strategic management of the physical asset.

Progression of FSPL’s visionary masterplan.

Evolution of a tenancy strategy to ensure relevance of the broader precinct offering.

Further progress of our environmental sustainability program.

Increased understanding of our asset management and a clear plan for the maintenance of the built

environment.

Sustained, exceptional media exposure locally, nationally and internationally generated by our own

program and the excellent outcomes of our key cultural tenants.

Strong financial results.

High visitation and satisfaction levels.

This year’s report assesses our performance as FSPL transitions to a new Corporate Plan spanning 2016-

2019, and a revised set of strategic objectives that encompass a number of bold aspirations for the

organisation as it more vigorously pursues longer-term sustainability and innovation. This strategic roadmap

points to the following 2020 Outcomes:

MUST “GO TO” PLACE

Fed Square will be seen as being an essential place to visit repeatedly, with cultural, civic, commercial and

entertainment experiences that epitomise the heartbeat of Melbourne.

CONNECTING MELBOURNIANS AND THE WORLD

FSPL will pro-actively build initiatives and networks that profile Fed Square to the world and bring the world

to Fed Square physically, online and in popular discourse.

RECOGNISED INNOVATOR

FSPL will achieve and maintain national and international recognition for leading the way in all core business

initiatives including events and programming, cultural tenancies, hospitality and retail tenancies,

environmental sustainability of infrastructure and operations.

THE VIBRANT AND ICONIC HUB OF MELBOURNE

Fed Square aspires to be a destination that takes pride of place in the photo albums and diaries of all visitors

by creating an exciting energy and memorable experiences.

STRATEGIC INTER-MODAL ACCESS (FOOT, TRAM, TRAIN, BIKE, BOAT, BUS …)

FSPL will leverage opportunities from its central and well-serviced location, its waterfront position and the

future development of Melbourne Metro to enhance access to the site, visitor arrival experiences and

position Fed Square as an inter-modal transport hub.

GREAT AND RELEVANT TENANTS, EVENTS AND PROGRAMS

FSPL will ensure that programs, events and tenants are operationally fit for purpose, socially and civically

engaging and in their totality, present an overarching visitor experience, achieving sustained international


5

recognition as a nationally significant destination.

EXCELLENCE IN OPERATIONS, INFRASTRUCTURE AND GOVERNANCE

FSPL will drive a desire for the company to model itself on best practice and quality benchmarks.

In 14 years of continuously successful operation, Fed Square has become a much-loved asset by the people

of Melbourne and a leading example of place making globally.

FSPL’s focus is now firmly on ensuring the built form of the precinct, its tenants, its programs and other

initiatives remain contemporary within a rapidly evolving urban context. Fed Square has been integral to

Melbourne and Victoria’s civic identity for 14 years, but only by pursuing vigorous growth and longer-term

sustainability will Fed Square retain this privileged profile to 2020 and beyond. Therefore, in this time of

strategic evolution, it is pleasing that FSPL has been able to achieve so many positive outcomes within the

current paradigm of this recently concluded year.

MELBOURNE’S HEARTBEAT

Fed Square is not just the heart of Melbourne – it is the heartbeat. It is the place to experience the pulse of

the city.

FSPL continues to frame its significant civic, cultural and operational achievements through the “CLIC” brand

paradigm. Fed Square is where Melbourne Celebrates, Learns, Innovates and Connects. Many of the FSPL

team’s achievements this past year and many points of future focus can be framed through these four

interconnected points of focus.

CELEBRATE

Fed Square continues to consolidate its position as Melbourne’s

inspirational public place and its profile as a significant place leader

nationally and internationally. Through the Program and Events unit,

this year 1,642 diverse events and activities have been delivered

across the public spaces at Fed Square, including the main stage

and Plaza, the River Terrace, the Atrium and Deakin Edge, along

with many smaller ancillary locations. Additional to this is the curation and programming of a 24/7 multimedia

screen program across three screens and various ad hoc demonstrations, protests and vigils.

As the team maintains a focus on ensuring all activity is standardised in terms of quality and safety, it is

pleasing to note that for the first time in the organisation’s history, venue hire revenue exceeded $1m –

especially significant considering the large amount of subsidy and support FSPL offers non-profit and

community organisations. Programming and marketing efforts have continued to exceed respective plan

targets, with numerous high-impact highlights.

Highlight events and innovations for the year include:

Third Party Events Program – In 2015-2016, FSPL serviced 145 separate clients delivering 775

events, including 16 multicultural community festivals, 252 commercial promotions and 59 major

events (defined as with attendance of 2,000 or more). This included actively supporting the majority

of Melbourne’s premier festival seasons – Melbourne Festival, Melbourne Writers Festival, Virgin

Australia Melbourne Fashion Festival, Melbourne Comedy Festival, Melbourne Food and Wine

Festival. It also included numerous Civic, community and Government-supported initiatives including

the Disability Sport and Recreation Festival, the Small Business Festival, Seniors Festival,

Parkinson’s Victoria Walk in the Park and the Victorian Multicultural Commission’s recently

rebranded Victoria’s Multicultural Festival.


6

Christmas season 2015 – As an example of a new, precinct-partner initiative, FSPL collaborated

closely with the City of Melbourne to present an integrated, city-wide Christmas campaign and

attractions, with an extremely successful LEGO activation as its centerpiece. This season was

exceptionally popular and represented a new level of collaboration between the programming teams

at FSPL and the City – something both organisations are keen to increase in the coming years,

especially in light of the imminent closure of City Square for the development of the Melbourne Metro

Rail project.

The Light in Winter – The tenth anniversary of FSPL’s self-produced winter arts and community

program saw seven weeks of inspiring community and arts programming, coalescing around

Leempeyt Weeyn’, the famous urban aboriginal campfire, in the middle of the precinct.

White Night – FSPL again chose to be a major contributor of the fourth iteration of this burgeoning

initiative by co-commissioning an original, projection-based artwork by renowned local aboriginal

artist, Reko Rennie.

FSPL New Year’s Eve celebrations had a distinct focus on prioritising Melbourne’s best multicultural

performance talent in partnership with Multicultural Arts Victoria.

LEARN

FSPL’s focus and highlight initiatives for the year include:

Integrated and collaborative education program initiatives between FSPL and its key cultural tenants:

ACMI, NGV and the Koorie Heritage Trust.

FSPL’s core education program offer, Circle The Square, hosted 2,351 students on site and

undertook numerous collaborations with the Education programs of anchor tenants NGV, ACMI and

KHT.

Representation of senior FSPL personnel at a range of specialist and industry functions, panels and

conferences with speaking/participation opportunities undertaken at:

Presenting at the Local Government and Public Sector Building and Maintenance and Facility

Management Conference.

Presenting at the FSPL Program’s ‘This Changes Everything’ event (focused on climate

change).

Sitting on the Facilities Management Association Victorian committee.

Sitting on the Victorian Events Industry Council, and Victorian Tourism Industry Council

membership.

Attending various networking events (including Committee for Melbourne, Victorian Tourism

Industry, Venue Management Association and Tourism and Transport Forums Women’s

Business Circle events).

Working with City of Melbourne and other business partners on the Renewable Energy

Purchasing Group Project.

Presenting (on carbon neutrality) at the Australian Facilities Management Association national

conference.

Presentation at the Media Architecture Biennale, Vivid Ideas, Sydney.

Membership of the Committee for Melbourne and its Future Focus Group (the Committee for

Melbourne’s business and civic leadership program).


7

INNOVATE

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

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

innovations.

Highlight initiatives for the year include:

“Box Office” Events – Pursuing new and innovative strategies for increasing revenues, FSPL has

this past year supplemented its standard events program with a series of revenue-generating

initiatives, including in Summer, a giant waterslide – “Slide the Square” and the second iteration of

the very successful “River Rink” precinct. Patronage to the River Rink increased from 18,000 in its

inaugural 2015 season to 22,175 in Winter 2016. River Rink 2016 also marked FSPL’s first cross-

ticketing initiative, partnering with Red Rock Leisure to present a combined Fed Square / Eureka

Skydeck promotion. Such collaboration on joint destinational attractions with neighboring precinct

partners has much potential for future growth.

Increased technology event focus – FSPL continues to co-produce the annual Pause Festival –

one of Australia’s highest-profile forums for digital innovation sharing. This year FSPL also hosted

Jack Dorsey, co-founder of Twitter and Square applications.

The Big Pitch - The Big Pitch team returned to Fed Square for the second consecutive year to

distribute over $5m seed funding to cutting edge entrepreneurs.

Multimedia Big Screen – This program continued to deliver 24/7 content, mostly preferencing

creative, community and cultural outcomes with over 50 separate, direct content relationships

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

Melbourne Fashion Festival, Australian Teachers of Media, Victorian College of the Arts and many

others. Of particular note is a refreshed, ongoing series of curatorial collaborations with ACMI,

partnering on content packages derived from the National Film and Sound Archive, as well as ad hoc

special projects.

Sustained live Multimedia Sports Focus via major live site activations (including AFL Grand Final

and Australian Open) and periodic coverage of the majority of major Australian sporting codes.

Industry Partnerships: FSPL remains active in sustaining working relationships with a range of

statutory, industry and private sector entities, as we seek opportunities to enhance and improve our

service delivery effectiveness. FSPL has consolidated a range of core partnerships in the marketing

and programming areas, including Deakin University (naming rights sponsor of Deakin Edge), the

newly constituted Visit Victoria (incorporating the Victorian Major Events Company, Tourism Victoria

and Melbourne Convention Bureau), Victoria Tourism Industry Council, Victoria Events Industry

Council, Melbourne Convention and Exhibition Centre, Melbourne and Olympic Parks Trust,

alongside all levels of Government.

CONNECT

As Melbourne’s heartbeat, FSPL is focused on attracting and retaining visitors and giving them the best

possible set of experiences on-site, in ways that are representative of various community groups and

community issues. FSPL preferences genuine community “buy-in” as much as possible across its various

operations, encouraging a visitor and participant culture of shared ownership, leading to a sense of the

precinct truly being the “people’s square”.


8

Highlights for the year include:

Heightened online engagement: 102,516 social media followers (across multiple platforms),

1,334,005 website visits, 12,708 online placements and 12,125 Fed Mail news subscribers. 4,258

traditional media mentions nationally (print and broadcast).

16 multicultural festivals and 45 National Day flag raising ceremonies.

Regular Events Program – FSPL continues to produce and support numerous free-to-public

community engagement programs. In 2015-2016 FSPL delivered 484 separate activities, including

tai chi, yoga, meditations, dance classes, craft workshops, the popular “Fed Square Live” music

series (partnering with City of Melbourne), numerous markets and other workshops. In a satisfying

legacy, the “5,000 Poppies Project”, which began its life in this part of the regular events program

and was first presented at Fed Square on the centenary of the Gallipoli landings, has since

undertaken a substantial future life, presenting in multiple locations including the 2016 Chelsea

Flower Show and the Australian Memorial Park (Cobbers) in Fromelles as part of the Centenary

Commemoration of the Battle of the Somme. This substantial, globally significant initiative is a good

example of what can be incubated at grassroots level community participation, in which FSPL plays

a vital and ongoing role.

NAIDOC Week March and Concert – Melbourne’s annual NAIDOC Week March was followed by a

free concert at Fed Square for over 3,000 people. This season is now well established on the annual

calendar.

The Long Walk – This was another instance of this recurring, increasingly well attended march,

featuring a major stage program, State Government presence and significant media profile.

Civic Vigils – Fed Square arguably demonstrates its centrality to the life of the diverse local

community no more vividly than when facilitating public responses to tragedy. In the past year, FSPL

has provided resourcing and production management support to a range of community-initiated

activations, including Safe Steps (anti-domestic violence initiative), a vigil in response to the second

Paris terrorist attack in 2016, and a vigil to support of the broader LGBTI community in response to

the shootings in Orlando. FSPL remains acutely aware of its civic responsibility to help facilitate

community connection and healing in the face of tragic circumstances.

Tanderrum – 2015 was the third year of FSPL supporting Melbourne Festival’s historic initiative

bringing together five indigenous communities into the square for a ceremonial launch to the festival

season.

Chinese New Year – FSPL in association with the MCC and Yarra River Business Association

stimulated growth of precinct Chinese New Year activities into a city-wide annual season, increasing

visitation, profile and consolidating major future growth for this season.

Indian National Day and Flag Raising – FSPL facilitated the Indian community, led by the High

Commissioner, in having a ceremonial flag raising activation and subsequent Bollywood dance

competition, with unprecedented international media exposure reaching a television audience of 56

million on the sub-continent and surrounding region.

Ongoing support for other anchor community festivals with international profile, including Buddha’s

Day, Diwali, and the Mexican Festival.


9

Financial Results

Note: The 2016 Total comprehensive result includes asset revaluation increments of $70,538,000 for land and decrements of

$3,857,867 for buildings.

FSPL’s financial results for the year ended 30 June 2016 highlight the continued commitment by the

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

commercial operations on site. In 2015-2016 FSPL recorded a positive net result before depreciation of

$5,166,514 (2014-2015: $5,621,591). Operating revenue is up $1,149,307, or 4.3 per cent to $28,026,800.

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

-

5

10

15

20

25

30

2012-13 2013-14 2014-15 2015-16

$M

illio

ns

Revenue and Expenditure (before depreciation and interest)

Revenue Expenses


10

The company’s Balance Sheet remains strong, with current assets of $22,414,709 relative to current

liabilities of $8,062,952. Net assets total $534,556,369.

Total liabilities were $16,674,486, which represents a decrease of $5,650,454 over the year. Long-term

loans with Treasury Corporation of Victoria (TCV), scheduled to be repaid in 2019, were reduced to

$9,810,826 (2014-2015: $13,345,445).

Staff

FSPL implemented a revised organisational structure during the year following a review in May 2015. The

revised structure is illustrated in the following chart.

Mr Ron Gauci, who was appointed as an Interim CEO in April 2015 completed his contract in June 2016. Mr

Jonathan Tribe was appointed as the Chief Executive Officer and commenced in July 2016.

Ms Jane Sydenham-Clarke departed in September 2015 after 9 years as Manager Marketing and Program.

Mr Matt Jones who had been acting in this role was appointed to the role of General Manager – Program

and Events under the revised structure in October 2015.

A major restructure of the Operations Department was undertaken, which saw changes to most titles and

role descriptions in this department.


11

Business Capability

A core component of FSPL’s strategic plan is to focus on innovation and technology to drive business

improvement and business capability. To this end, a number of technology related projects were

implemented or commenced in 2015 – 2016. These include:

Wireless Infrastructure

Fed Square, with the assistance of its partnering integrator (NetSol), deployed a new Aruba wireless network

across the site in October 2015. Aruba is a world leader in high density wireless networks.

The new platform led to a significant increase in the use of free public Wi-Fi on site and the increased

capacity and precinct coverage provides FSPL staff with access to the corporate network remotely from

across the site. This has enhanced productivity and will facilitate more mobile business solutions for the

organisation into the future. The increased wireless capacity also allows event clients to utilise the network

in innovative ways to engage with visitors.

Further initiatives under development that are made possible from the wireless infrastructure include visitor

data analytics, location based marketing, way finding solutions, visitor engagement and app integration.

VoIP Phone System

In February 2016, Fed Square and NEC rolled out a new cloud based ‘voice over internet protocol’ (‘VoIP’)

telephone system for the organisation. The solution utilises Cisco technology. This is a fully managed

solution with all equipment and infrastructure other than telephone handsets residing in the NEC cloud,

which enabled a faster roll out and reduced capital investment for the project.

Central Multimedia Router

FSPL procured and commissioned a Ross Carbonite Black multimedia router in November 2015. This unit

provides video signal distribution to a number of physical public displays on site, as well as nearby precinct

partners and our own web outlets. The Carbonite router provides seamless mixing and switching between

sources, extensive graphic controls and presentation capabilities and has enabled richer screen based

outcomes and more dynamic management of content to our public screens. This has led to new and

enhanced visitor experiences across site.


12

Public Facing Technologies

FSPL is in the process of procuring a replacement large screen for the plaza and expanding digital media

across the site. During this process, the company has also undertaken extensive work exploring

opportunities through enhanced public facing technologies. Out of Home digital advertising was identified as

a commercial opportunity to improve the company’s financial sustainability and this remains under

consideration.

Service Excellence

Service excellence continues to be a focus across the precinct with a majority of tenants and service delivery

partners.

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

performance against the FSPL Service Excellence Standards. Results of these assessments are used in a

variety of ways across the precinct.

It was pleasing to see a precinct-wide focus on Service Excellence and our hospitality tenants embracing the

mystery shopping survey initiative. These findings were used to drive service and performance that

contributed to high levels of overall satisfaction and assessments of the service experience as measured by

our visitor satisfaction surveys.

Risk Management

The risk management framework adopted by the company continues to ensure analysis, evaluation,

reporting and monitoring systems for risk remain aligned to the international standard AS/NZS ISO

31000:2009 Risk Management – Principles and Guidelines.

Significant work was undertaken during the period to refresh FSPL’s Risk Management Framework to focus

on the changing direction of the company as outlined in the “2020 Vision for Fed Square” masterplan and the

2016-2019 FSPL Corporate Plan. This included an extensive review of the materiality matrix adopted by the

company to assess and rate risk exposures and an associated review of delegations for risk acceptance and

reporting.

Particular attention was given to inter-agency risks, which recognises that a number of key partners (i.e.

Victoria Police, Melbourne City Council, etc.) are critical to FSPL’s capacity to manage risks on a daily basis

and particularly in relation to the regular large public activations at Fed Square.


13

FSPL’s risk management systems and processes were rated “ADVANCED” by the Victorian Managed

Insurance Authority (“VMIA”) when last reviewed as part of the VMIA’s State Government wide Risk

Framework Quality Review program. This is the highest rating possible under the program.

The site risk survey also undertaken by VMIA and conducted in April 2016 also awarded FSPL the highest

rating possible of “VERY GOOD”. The site risk survey is conducted annually. It examines the physical

nature of the site and attempts to identify and mitigate any potential exposures to either property losses or

personal injury arising from the built environment, including construction components. There were no issues

of significance arising from the site inspection or subsequent report by the VMIA that gave rise to concern or

require major or urgent corrective action by the company.

FSPL continues to receive support from the VMIA in relation to risk management and the annual insurance

program, which has seen reduction to insurance premiums for the past year. The VMIA has also provided

valuable advice in relation to the potential impacts from major works, including the first phase of the

Melbourne Metro Rail Tunnel project. The VMIA’s support in this regard is acknowledged and appreciated.

Tenancies FSPL continues to focus its attention on the tenancy strategy for the precinct with the aim of improving the range of offerings that are currently available. The tenancy strategy will also align with FSPL’s Civic and Cultural Charter and intends to have a positive financial outcome for the company. A major area of the tenancy strategy relates to the food and beverage offerings at FSPL. Colliers International is assisting FSPL with building on the recommendations that were provided by Future Foods in 2015 in order to finalise the tenancy strategy. As part of the tenancy strategy, FSPL is assessing a number of opportunities throughout the precinct, which may not have been previously considered as areas of commercial opportunity. This includes the recent Expression of Interest process for the car park rooftop. It is intended that the tenancy strategy will be finalised shortly and commence implementation in late 2016. In addition to the tenancy strategy, a major focus has been to formalise FSPL’s communication with tenants through the implementation of regular meetings and correspondence in various forms including, monthly meetings, weekly newsletters and monthly event listings. These methods keep tenants up to date with events and activities occurring throughout the precinct. Tenancies continue to be routinely supported by way of tourism, marketing, advertising and connections with Melbourne’s major festivals. Sustainability FSPL is proud to have achieved carbon neutrality and this year much focus has been given to sharing with likeminded businesses and organisations, learnings from our nine year journey.

The implementation of the Greener Government Building Program has been completed with the organisation

entering into the measurement and verification stage for the remaining seven years of the contract.

FSPL remains committed to the environment and continues to focus on ways to improve our ‘green’

credentials and be innovative in this space. To this end, we continue to work with the City of Melbourne and

other key businesses on the mass procurement of electricity from a renewable energy source. This project is

called the Melbourne Renewable Energy Project and is the first time in Australia that a group of large scale

energy users have decided to investigate collectively purchasing renewable energy through a group

purchasing model.


14

Occupational Health & Safety

FSPL’s strong safety culture continued to mature and evolve throughout 2015-2016, with increased buy-in

from multiple stakeholder groups. In particular, there continues to be a significant cultural shift amongst

contractors and tenants towards safety compliance and world’s best practice throughout business operations

on site.

Following the implementation of a number of initiatives in previous years, which continued to drive safety

performance, FSPL set an aggressive set of lead and lag safety indicators for the year and are pleased to

confirm 11 out of the 12 safety KPIs for 2015-2016 were met with the remaining target achieving 99%

compliance. Over the same period there was a significant decrease in security incidents, compared the

previous year. The continued KPI performance is a demonstration of commitment by the whole organisation

and its stakeholders to excel in the area of occupational health and safety.

In the year ahead FSPL will be embarking on two key safety projects that seek to yield continued safety and

accessibility improvements. These two projects are:

Handrail Upgrade Project – Upgrades to external stair infrastructure to improve general safety

performance and increased usability from an accessibility perspective.

Occupational Health and Safety Management System accreditation program – Initiation phase of

seeking formal accreditation against Australian and New Zealand Standard (AS/NZS) 4801

Occupational Health and Safety Management Systems.

The projects will enable the organisation to continue to reduce the total number of incidents across the site

as well as improving accessibility and aid in the recognition of the robust Occupational Health and Safety

Management System.

Management of FSPL Assets

FSPL has an obligation to the Victorian Government to apply a comprehensive and structured approach to

the long term management of our assets to allow the ongoing delivery of community benefits. In addition,

FSPL is required to comply with the Whole of Victorian Government requirements in regards to asset

management and asset reporting.

FSPL recently implemented an updated Asset Management Plan. This plan was endorsed by the Board in

February 2016. It provides FSPL management and employees with an improved understanding of how

FSPL’s assets will be maintained to support delivery of services and ensures there is a strategically aligned

plan to manage these assets over the next ten years.

The Asset Management Plan was prepared utilising the Service Oriented Asset Management (SOAM)

Framework and focuses on how the asset portfolio supports delivery of the service. In particular, the SOAM

approach identifies how maintenance or enhancement works will improve the quality of service delivered.

FSPL’s existing policies and procedures, together with the Asset Management Plan, have positioned FSPL

well in relation to achieving compliance of the Victorian Government’s Asset Management Accountability

Framework (AMAF) within the outlined timeframes.

FSPL has completed the third and final year of the State Government funded Capital Asset Replacement

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

remains in good working condition. Some of the works carried out with this funding include:

The upgrading of the building automation system.

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


15

refurbishment of the Security control room.

Replacement of the passenger lift in the Transport building.

Upgrades to other lifts across the site.

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

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

The replacement of fire services pipes in the National Gallery of Victoria – Australia.

The replacement of the emergency and exit lighting across site.

External repainting of the Crossbar building.

The refurbishment of the St Paul’s Court amenities.

Deakin Edge flooring works.

The replacement of the general waste compactor.

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

The upgrade of wireless infrastructure.

Conclusion

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

Moving Image, Melbourne Visitor Centre, the National Gallery of Victoria and the Koori Heritage Trust for

their contribution to the success of the precinct.

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

service are delivered, strengthening the FSPL Brand and Vision. I would also like to thank our many

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

Corporate Vision Australia, Ikon Cleaning Services, Techguard Security and Wilson Parking for their

commitment to FSPL.

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

Eren, Minister for Tourism and Major Events and their staff and departmental officers for their advice and

support.

Thank you to the many stakeholders of FSPL, including City of Melbourne and its many officers and

departments along with all of our collaborators and partners for their work on many projects and events.

Thank you to Deakin University, who have renewed their commitment as naming rights sponsor of the

Deakin Edge in this past term. Thank you to the many program clients, partners and participants, whose

activities bring the square to life and are the reason the precinct has become so valued by such a wide cross

section of the community over its lifespan.

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

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

we move forward into our 15th year, bringing with it substantial change to the precinct and its surrounds, it is

your hard work and dedication which underpins our ongoing success. We are very proud of Fed Square’s

place as Melbourne’s heartbeat.

............................................................. JONATHAN TRIBE

CHIEF EXECUTIVE OFFICER


16

PERFORMANCE INDICATORS 2015-2016

Target Actuals

Community engagement

State wide sentiment – net promoter score(1)

16% 16%

Estimated visitation to Fed Square 10.1m 10m

Online Activity - social media followers(2)

65,000 105,789

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

25% 21%

Attracting international visitors(3)

>25% 39%

Outstanding Experiences

Visitor Experience(3)

56% 45%

Net promoter score(3)

66% 58%

Event Client Satisfaction(4)

>95% 95%

Visitor satisfaction with their overall service experience(3)

100% 100%

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

95% 100%

Number of events and activities 1,500 1,642

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

>95% 94%

International recognition

International awareness(5)

56% 43%

Top 3 Victorian destinations(6)

Top 3 Top 2

Financial efficiency

Operating budget surplus ‘000s $60 $613

Cash reserves $5.0m $16.2m

Liquidity Ratios Current 2.87 2.78

Quick 2.87 2.14

Interest cover - EBITD 4.43 7.94

Profit before depreciation and borrowing costs ‘000s $6,279 $5,911

Profit before depreciation ‘000s $5,303 $5,167

Other

Visitor comfort indicated by their assessment of:

Cleaning 95% 100%

Security 95% 100%

Amenities 95% 97%

OH&S incidents (per 1,000 visits) ≤0.017 0.015

Security incidents (per 1,000 visits) ≤0.045 0.023

Net total carbon emissions(7)

zero zero

Recognised as a culturally diverse public space (1)

>90% 96%

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

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

95% 86%

High level of positive sentiment expressed in print media >90% 98%

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

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

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

(4) Source: Fed Square event client satisfaction survey

(5) Source: Fed Square Melbourne Airport intercept survey

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

(7) Carbon emissions are measured per calendar year


17

STATEMENT OF CORPORATE GOVERNANCE

The Directors of Fed Square Pty Ltd are committed to the highest standard of corporate governance and

acknowledge the need for continued maintenance of governance practice and ethical conduct by all

Directors and employees.

Accordingly, they have ensured that systems and procedures are in place to provide appropriate assurance

that the company undertakes its activities and functions in accordance with:

All legal requirements;

The best interests of shareholders;

An environment that meets relevant standards; and

A manner that is responsible to all stakeholders and the wider community.

Objects and Powers of the Company

The objects of the company are those set out in the Fed Square Pty Ltd Constitution and Federation Square

Civic and Cultural Charter and include without limitation:

(a) to occupy the site known as Federation Square;

(b) to use, refurbish, maintain, improve, develop, lease, licence, manage, operate and modify all or any part

of Federation Square;

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

(i) the businesses of owners, operators, managers, licensors, lessors or occupiers of:

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

(2) car parks,

(3) theatres, cinemas and cinema based entertainment facilities, radio, television and other

multi-media studios, outdoor video screens and video/LED signage,

(4) restaurants, cafes, taverns, hotels, food and drink premises (including, without limitation,

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

convenience shops, and nightclubs,

(5) function centres, conference centres and reception centres,

(6) retail outlets, shops and stores (including, without limitation those required for service

industries and including, without limitation, cash dispensing machines, ticketing machines

and tourist and other information services providing machines),

(7) offices,

(8) amusement parlours and gaming and gambling premises,

(9) indoor recreation facilities,

(10) visitor and tourist information services and other visitor and tourist services,

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

outdoor), festivals, exhibitions and performances;

(iii) places of assembly for religious and cultural activities, entertainment or meetings; and

(iv) markets.

Duties of Directors

The duties of Directors include:

Duty to act honestly in good faith in the best interests of the corporation and for a proper purpose;

Duty to act with care and diligence;

Duty to avoid conflict in the position of a director and/or any interest that a director may have;

Duties which prohibit the misuse of information obtained by directors; and

Duties which prohibit a director from taking for oneself the company’s opportunities.


18

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

FSPL 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. 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.

Risks are identified, assessed and treated in accordance with the principles contained in Australia/New

Zealand Risk Management Standard AS/NZS ISO 31000:2009.

Attestation

I, Deborah Beale, certify that Fed Square Pty Ltd has complied with the Ministerial Standing Direction 4.5.5

– Risk Management Framework and Processes. The Fed Square Pty Ltd Audit Committee verifies this.

............................................................. DEBORAH BEALE

CHAIR


19

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;

State Government’s Financial Management Compliance Framework;

Compliance with Australian equivalents of International Financial Reporting Standards,

Governance;

Risk management; and

OH&S;

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 2016 were Kathleen Wilson (Chair 1 July 2015 to

11 August 2015 and 1 January 2016 to 31 May 2016), Deborah Beale (Chair 12 August 2015 to 31

December 2015), Laura Anderson, James Demetriou, Pamela Mitchell (Chair from 1 June 2016), Les

Williamson 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 FSPL 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 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

FSPL does not tolerate improper conduct by employees, nor the taking of reprisals against those who come

forward to disclose such conduct. FSPL is committed to ensuring transparency and accountability in its

administrative and management practices, and supports the making of disclosures that reveal corrupt

conduct, conduct involving a substantial mismanagement of public resources, or conduct involving a

substantial risk to public health and safety or the environment.

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

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

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

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

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


20

Making Disclosures

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

Such disclosures must be made to:

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

Level 1, North Tower, 459 Collins Street

Melbourne, VIC 3000

Phone: 1300 735 135

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

Internet: www.ibac.vic.gov.au

The IBAC website contains a secure email disclosure process.

Protecting persons who make disclosures

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

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

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

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


21

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 2016.

Minister

The Hon. John Eren, MP Minister for Tourism and Major Events

Directors

The Directors in office during the period and at 30 June 2016 unless otherwise stated were:

Ms Deborah Anne Beale (from 12 August 2015 – Chair from 1 January 2016)

Ms Kathleen Sarah Wilson (1 July 2015 to 30 June 2016 – Chair to 31 December 2015)

Ms Laura Benton Casteel Anderson

Mr James Demetriou (from 21 October 2015)

Ms Pamela Joy Mitchell (from 1 June 2016)

Mr Leslie Maxwell Williamson (from 1 June 2016)

Accountable Officer

The Accountable Officer during the period and at 30 June 2016 unless otherwise stated were:

Mr Ron Gauci, Interim Chief Executive Officer (to 3 June 2016)

Ms Sharon Pollard, Acting Chief Executive Officer (4 June 2016 to 30 June 2016)

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 2016 2015 $ $

Net result before depreciation and amortisation 5,166,514 5,621,591

Depreciation and amortisation (12,456,064) (11,853,371)

Net result (7,289,550) (6,231,780)

Dividends

No dividends have been proposed or paid during the year (2014-2015: Nil).

Changes in State of Affairs

There was no material change in the State of Affairs during the year.

Environmental Regulations

No significant environmental regulations apply that are likely to have an unexpected material effect on the

operations or financial results of Fed Square Pty Ltd.

Subsequent Events

There were no subsequent events after balance date expected to have a material effect on the financial

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


22

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 Deborah Beale (Chair from 1 January 2016) 10 9

Ms Kathleen Wilson (Chair to 31 December 2015) 10 10

Ms Laura Anderson 10 9

Mr James Demetriou 8 8

Ms Pamela Mitchell 1 1

Mr Leslie Williamson 1 1

*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 Kathleen Wilson (Chair 1 July 2015 to 11 August 2015 and 1

January 2016 to 31 May 2016)

5 5

Ms Deborah Beale (Chair 12 August 2015 to 31 December 2015 5 5

Ms Laura Anderson 5 4

Mr James Demetriou 5 3

Ms Pamela Mitchell (Chair from 1 June 2016) 1 1

Mr Leslie Williamson 1 1

Mr John Lee (co-opted member) 5 5

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

Committee during the year.

Directors’ Benefits

Directors’ benefits are set out in notes 20 and 22 to the financial statements.

Insurance of Directors and Officers

During the financial year $19,579 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 (2014-2015: $22,515).

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 6th September 2016.

............................................................. Deborah Beale

(Chair)


23

AUDITOR-GENERAL’S INDEPENDENCE DECLARATION


24

INDEPENDENT AUDITOR’S REPORT


25


26

COMPREHENSIVE OPERATING STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

Notes 2016 2015

$ $

Operating income 2 27,591,472 26,330,976

Interest income 435,328 546,517

Total income from transactions 28,026,800 26,877,493

Borrowing costs (744,414) (966,555)

Employee expenses 3(a) (5,096,278) (4,614,764)

Event expenses (3,517,797) (3,138,276)

Site operating expenses 3(b) (7,861,709) (7,483,601)

Other expenses 3(c) (5,572,797) (5,073,094)

Depreciation and amortisation 6 (12,456,064) (11,853,371)

Total expenses from transactions (35,249,059) (33,129,661)

Net operating result from transactions (7,222,259) (6,252,168)

Other economic flows included in net result

Net gain/(loss) on disposal of non-financial assets (41,628) 22,055

Net loss from revaluation of long service leave liability (25,663) (1,667)

Total other economic flows included in net result (67,291) 20,388

Net result 11 (7,289,550) (6,231,780)

Other economic flows - other comprehensive income

Changes in physical asset revaluation surplus 6 66,680,133 -

Total other economic flows - other comprehensive

income

66,680,133

-

Total comprehensive result for the period 59,390,583 (6,231,780)

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

financial statements.


27

BALANCE SHEET AS AT 30 JUNE 2016

Notes 2016 2015

$ $

Financial Assets

Cash and deposits 18(a) 16,217,472 19,771,879

Receivables 4 1,032,221 1,438,625

Investments and other financial assets 5 5,091,839 -

Total Financial Assets 22,341,532 21,210,504

Non-Financial Assets

Prepayments 37,377 21,164

Property, plant and equipment 6 528,851,946 472,150,058

Total Non-Financial Assets 528,889,323 472,171,222

Total Assets 551,230,855 493,381,726

Liabilities

Payables 7 2,721,999 4,013,310

Borrowings 8 13,152,004 17,563,956

Provisions 9 800,483 747,674

Total Liabilities 16,674,486 22,324,940

Net Assets 534,556,369 471,056,786

Equity

Contributed capital 10 447,675,508 443,566,508

Accumulated deficit 11 (69,164,775) (61,875,225)

Asset revaluation surplus 12 156,045,636 89,365,503

Total Equity 534,556,369 471,056,786

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


28

CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

Notes 2016 2015

$ $

Cash Flows from operating activities

Receipts

Receipts from customers (incl. GST) 31,251,312 30,001,801

Interest received 394,869 570,901

Total receipts 31,646,181 30,572,702

Payments

Payments to employees (5,078,118) (4,842,229)

Payments to suppliers (incl. GST) (19,991,042) (15,351,543)

GST paid to Australian Taxation Office (net) (1,463,532) (987,236)

Interest paid on loans (753,658) (975,256)

Total payments (27,286,350) (22,156,264)

Net cash flows from operating activities 18(b) 4,359,831 8,416,438

Cash Flows from investing activities

Payments for investments (5,091,839) -

Proceeds from sale of non-current assets 13,454 53,773

Payments for property, plant & equipment (2,532,901) (7,955,597)

Net cash flows from investing activities (7,611,286) (7,901,824)

Cash Flows from financing activities

Proceeds from Government appropriation 4,109,000 3,678,000

Proceeds from Government advance - 1,748,691

Repayment of Government advance (851,941) (425,971)

Repayment of borrowings (3,534,619) (3,477,162)

Repayment of finance leases (25,392) (10,901)

Net cash flows from financing activities (302,952) 1,512,657

Net increase/(decrease) in cash and cash

equivalents (3,554,407) 2,027,271

Cash and cash equivalents at the beginning of the

year 19,771,879 17,744,608

Cash and cash equivalents at the end of the year 18(a) 16,217,472 19,771,879

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

statements.


29

STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016

Contributed

capital

Assets

revaluation

surplus

Accumulated

deficit

Total

$ $ $ $

Balance at 1 July 2014 439,888,508 89,365,503 (55,643,445) 473,610,566

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

Revaluation of freehold land - - - -

Revaluation of buildings - - - -

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

Other comprehensive income for the year - - - -

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

Net result for the year - - (7,289,550) (7,289,550)

Revaluation of freehold land - 70,538,000 - 70,538,000

Revaluation of buildings - (3,857,867) - (3,857,867)

Capital appropriation 4,109,000 - - 4,109,000

Other comprehensive income for the year - - - -

Balance at 30 June 2016 447,675,508 156,045,636 (69,164,775) 534,556,369

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

statements.


30

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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

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

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

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

Accounting policies are selected and applied in a manner which ensures that the resulting financial

information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of

the underlying transactions or other events is reported.

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

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

applied.

The financial statements were authorised for issue by the Directors of Fed Square Pty Ltd on 6th

September 2016.

b. Basis of preparation and measurement

The accrual basis of accounting has been applied in the preparation of these financial

statements whereby assets, liabilities, equity, revenue and expenses are recognised in the

reporting period to which they relate, regardless of when cash is received or paid.

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

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

assumptions are based on professional judgements derived from historical experience and

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

may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised and also in

future periods that are affected by the revision. Judgments made by management in the

application of accounting standards that have significant effects on the financial statements and

estimates with a significant risk of material adjustments in the next year are disclosed, where

applicable, in the relevant notes to the financial statements.

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

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

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

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

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

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

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

value measurement as a whole:-


31

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

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

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

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

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

of the fair value hierarchy as explained above.

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

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

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

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

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

relevant data sources to determine whether revaluation is required.

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

for the year ended 30 June 2016 and the comparative information presented in these financial

statements for the year ended 30 June 2015.

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

gains and losses from disposals of non-financial assets;

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

fair value changes of financial instruments.

This classification is consistent with the whole of government reporting format and is allowed under AASB 101 Presentation of Financial Statements. Balance sheet Assets and liabilities are presented in liquidity order with assets aggregated into financial assets and non-financial assets. Current and non-current assets and liabilities (non-current being those assets or liabilities expected to be recovered or settled more than 12 months after the reporting period) are disclosed in the notes, where relevant. Cash flow statement Cash flows are classified according to whether or not they arise from operating, investing or financing activities. This classification is consistent with requirements under AASB 107 Statement of Cash Flows. Statement of changes in equity The Statement of changes in equity presents reconciliations of non-owner and owner changes in equity from opening balances at the beginning of the reporting period to the closing balances at the end of the reporting period.


32

Currency All amounts are presented in Australian dollars, unless otherwise noted. Rounding Amounts in the financial statements have been rounded to the nearest $1 unless otherwise stated.

d. Income recognition

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

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

Car parking income

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

provided.

Event income

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

provided.

Tenancy rents and charges

Income in the form of tenancy rents and outgoings derived from operating leases on premises

at Federation Square is recognised in the period in which the service is provided.

Sponsorship and grants

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

under each specific agreement.

Grants are recognised as income when the company gains control of the underlying assets.

Where grants are reciprocal, income is recognised as performance occurs under the grant.

Non-reciprocal grants are recognised as income when the grant is received or receivable.

Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant.

Interest income

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

financial asset.

Assets and services received free of charge or for nominal consideration

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

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

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

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

purchased if not received as a donation.

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

Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings

and amortisation of ancillary costs incurred in connection with arrangements for borrowings.

Borrowing costs are expensed in the period in which they relate.

Employee expenses

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

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

redundancy payments and WorkCover premiums.


33

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

Superannuation

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

period.

Event, site operating and other expenses

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

reporting period.

Depreciation and amortisation

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

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

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

any estimated residual value, over its estimated useful life.

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

each annual reporting period, and adjustments made where appropriate. Items costing less

than $5,000 are written off in the year of purchase.

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

Category Life

Buildings and improvements 5 - 100 years

Plant and equipment 2 - 40 years

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

term of the relevant lease.

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

result from transactions.

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

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

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

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

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

Impairment of non-financial assets

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

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

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

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

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

asset.

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

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

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

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

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


34

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

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

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

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

held primarily to generate net cash inflows is measured at the higher of the present value of

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

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

Other gains/(losses) from other economic flows

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

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

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

g. Financial instruments

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

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

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

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

definition of financial instruments in AASB 132 Financial Instruments: Presentation.

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

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

AASB 132 and those that do not.

The following refers to financial instruments unless otherwise stated.

Categories of non derivative financial instruments

Loans and receivables

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

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

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

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

impairment.

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

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

statutory receivables.

Financial liabilities at amortised cost

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

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

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

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

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

method.

Financial instrument liabilities measured at amortised cost include contractual payables,

deposits held and advances received, and borrowings.


35

h. Financial assets

Cash and deposits

Cash includes cash on hand, deposits held and cash equivalents, which are highly liquid

investments with short periods to maturity and readily convertible into cash on hand. They are

subject to an insignificant risk of changes in value.

Receivables

Receivables consist of:

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

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

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

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

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

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

contract.

Investments and other financial assets

Investments are classified in the following categories:

financial assets at fair value through profit or loss;

loans and receivables;

held to maturity; and

available for sale financial assets.

The classification depends on the purpose for which the investments were acquired.

Management determines the classification of its investments at initial recognition.

Any dividend or interest earned on the financial asset is recognised in the comprehensive

operating statement as a transaction.

Impairment of financial assets

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

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

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

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

collected, and bad debts are written off when identified.

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

i. Non-financial Assets

Property, plant and equipment

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

value less accumulated depreciation and impairment.

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

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

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

The fair value of land and buildings is determined on the basis of a periodic independent


36

valuation by external valuation experts. The fair values are recognised in the financial

statements and are reviewed at the end of each reporting period to ensure that the carrying

value of land and buildings is not materially different from their fair values, after taking into

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

Revaluation of non-financial assets

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

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

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

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

asset’s carrying value and fair value.

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

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

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

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

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

expense (other economic flows) in the net result.

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

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

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

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

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

accumulated in equity under the asset revaluation surplus.

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

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

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

funds on derecognition of the relevant asset.

Revaluation increments are credited directly to equity in the asset revaluation reserve, except

that, to the extent that an increment reverses a revaluation decrement in respect of that class of

asset previously recognised as an expense in the net result, the increment is recognised as

income in determining the net result.

Prepayments Prepayments represent payments in advance of receipt of goods or services or that part of

expenditure made in one accounting period covering a term extending beyond that period.

j. Liabilities Payables

Payables consist of:

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

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

Contractual payables are classified as financial instruments and categorised as financial

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

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


37

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

from a contract.

Borrowings

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

measurement basis subsequent to initial recognition is amortised cost.

Provisions

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

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

reliably.

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

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

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

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

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

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

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

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

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

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

Wages, salaries and annual leave

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

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

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

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

annual leave and sick leave are measured at:-

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

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

Long service leave

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

Unconditional LSL is disclosed in the notes to the financial statements as a current liability even

where the company does not expect to settle the liability within 12 months because it will not

have the unconditional right to defer the settlement of the entitlement should an employee take

leave within 12 months.

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

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

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

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

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

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


38

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

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

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

economic flow (refer to Note (f)).

On-costs

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

recognised separately from the provision for employee benefits.

k. Leases

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

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

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

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

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

leases are classified as operating leases.

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

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

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

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

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

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

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

the lease term and its useful life.

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

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

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

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

incurred.

Operating leases

Fed Square Pty Ltd as lessee Operating lease payments are recognised as an expense on a straight line basis over the lease

term, except where another systematic basis is more representative of the time pattern in which

economic benefits from the leased asset are consumed.

Fed Square Pty Ltd as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the

relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are

recognised as an expense in the period in which they are incurred.


39

l. Equity

Contributions by owners

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

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

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

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

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

by owners have also been designated as contributions by owners.

m. Commitments

Commitments for future expenditure include operating and capital commitments arising from

contracts. These commitments are disclosed by way of a note (refer to Note 16 Commitments)

at their nominal value and inclusive of the GST payable.

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

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

related liabilities are recognised in the balance sheet.

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

disclosed by way of a note (refer to Note 17 Contingent assets and contingent liabilities) and, if

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

inclusive of GST receivable or payable respectively.

o. Goods and services tax

Income, expenses and physical assets are recognised net of goods and services tax (GST),

except where the amount of GST incurred is not recoverable from the Australian Taxation Office

(ATO). In these circumstances, the GST is recognised as either a part of the cost of the asset

or as part of the expense incurred. Receivables and payables are stated inclusive of GST.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset

or current liability in the Balance sheet.

Cash flows from operating activities are included in the Cash flow statement on a gross basis,

inclusive of GST. The GST components of cash flows from investing activities and financing

activities, that are payable to or recoverable from the ATO, are presented as operating cash

flows.

p. Income tax

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

Assessment Act 1936.

q. Events after the reporting period

Assets, liabilities, income or expenses arise from past transactions or other past events. Where

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

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

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

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

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

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

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

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

interest.


40

r. New accounting standards and interpretations

The following accounting pronouncements effective from the 2015-16 reporting period are

considered to have insignificant impacts on reporting:

AASB 1048 Interpretation of Standards

AASB 2013-9 Amendments to Australian Accounting Standards [Part C Financial Instruments]

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

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

Note: Amending standard AASB 2015-7 Amendments to Australian Accounting Standards – Fair Value Disclosures of Not-for-Profit Public Sector Entities, which is operative from 1 July 2016 provides an exemption for not-for-profit public sector entities from certain fair value disclosures. Please note that the State early adopted AASB 2015-7 in the 2014-15 reporting period and gave not-for-profit entities the option to early adopt this amending standard last year. As a result, all not-for-profit entities must now comply this amending standard for the current financial year.

Australian Accounting Standards issued that are not yet effective

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

mandatory for the 30 June 2016 reporting period. The Department of Treasury and Finance

assesses the impact of these new standards and advises entities of their applicability and early

adoption where applicable.

As at 30 June 2016 the following standards and interpretations had been issued but are not yet

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

Standard/

Interpretation

Summary Applicable

for annual

reporting

periods

beginning

on

Impact on financial statements

AASB 9 Financial

Instruments

The key changes include the

simplified requirements for the

classification and

measurement of financial

assets, a new hedging

accounting model and a

revised impairment loss model

to recognise impairment losses

earlier, as opposed to the

current approach that

recognises impairment only

when incurred.

1 Jan 2018 The financial impact of available

for sale (AFS) assets will now be

reported through other

comprehensive income (OCI)

and no longer recycled to the

profit and loss.

While the preliminary

assessment has not identified

any material impact, it will

continue to be monitored and

assessed.


41

Standard/

Interpretation

Summary Applicable

for annual

reporting

periods

beginning

on


AASB 2010-7

Amendments to

Australian

Accounting

Standards arising

from AASB 9

(December 2010)

The requirements for

classifying and measuring

financial liabilities were added

to AASB 9. The existing

requirements for the

classification of financial

liabilities and the ability to use

the fair value option have been

retained. However, where the

fair value option is used for

financial liabilities the change

in fair value is accounted for as

follows:

The change in fair value

attributable to changes in

credit risk is presented in

other comprehensive

income (OCI); and

Other fair value changes

are presented in profit and

loss. If this approach

creates or enlarges an

accounting mismatch in the

profit or loss, the effect of

the changes in credit risk

are also presented in profit

or loss.

1 Jan 2018 The amendments are likely to

result in earlier recognition of

impairment losses and at more

regular intervals.

Changes in own credit risk in

respect of liabilities designated

at fair value through profit and

loss will now be presented within

other comprehensive income

(OCI).

AASB 15 Revenue

from Contracts

with Customers

The core principle of AASB 15

requires an entity to recognise

revenue when the entity

satisfies a performance

obligation by transferring a

promised good or service to a

customer.

1 Jan 2018 The changes in revenue

recognition requirements in

AASB 15 may result in changes

to the timing and amount of

revenue recorded in the financial

statements. The Standard will

also require additional

disclosures on service revenue

and contract modifications.

A potential impact will be the

upfront recognition of revenue

from licenses that cover multiple

reporting periods. Revenue that

was deferred and amortised over

a period may now need to be

recognised immediately as a

transitional adjustment against

the opening returned earnings if

there are no former performance

obligations outstanding.


42

Standard/

Interpretation

Summary Applicable

for annual

reporting

periods

beginning

on


AASB 2014-5

Amendments to

Australian

Accounting

Standards arising

from AASB 15

Amends the measurement of

trade receivables .

Trade receivables, that do not

have a significant financing

component, are to be

measured at their transaction

price, at initial recognition.

1 Jan 2017,

except

amendment

s to AASB 9

(Dec 2009)

and AASB 9

(Dec 2010)

apply from 1

Jan 2018

There will be no significant

impact.

AASB 2016-3

Amendments to

Australian

Accounting

Standards –

Clarifications to

AASB 15

This Standard amends AASB

15 to clarify the requirements

on identifying performance

obligations, principal versus

agent considerations and the

timing of recognising revenue

from granting a licence. The

amendments require:

A promise to transfer to a

customer a good or service

that is ‘distinct’ to be

recognised as a separate

performance obligation;

For items purchased online,

the entity is a principal if it

obtains control of the good

or service prior to

transferring to the customer;

and

For licences identified as

being distinct from other

goods or services in a

contract, entities need to

determine whether the

licence transfers to the

customer over time (right to

use) or at a point in time

(right to access).

1 Jan 2018 There will be no significant

impact for the public sector,

other than the impact identified

in AASB 15.


43

Standard/

Interpretation

Summary Applicable

for annual

reporting

periods

beginning

on


AASB 16 Leases The key changes introduced by

AASB 16 include the

recognition of most operating

leases (which are currently not

recognised) on balance sheet.

1 Jan 2019 The assessment has indicated

that as most operating leases

will come on balance sheet,

recognition of lease assets and

lease liabilities will cause net

debt to increase.

Depreciation of lease assets and

interest on lease liabilities will be

recognised in the income

statement with marginal impact

on the operating surplus.

The amounts of cash paid for the

principal portion of the lease

liability will be presented within

financing activities and the

amounts paid for the interest

portion will be presented within

operating activities in the cash

flow statement.

No change for lessors.

AASB 2014-4

Amendments to

Australian

Accounting

Standards –

Clarification of

Acceptable

Methods of

Depreciation and

Amortisation

[AASB 116 &

AASB 138]

Amends AASB 116 Property,

Plant and Equipment and

AASB 138 Intangible Assets to:

establish the principle for

the basis of depreciation

and amortisation as being

the expected pattern of

consumption of the future

economic benefits of an

asset;

prohibit the use of

revenue-based methods to

calculate the depreciation or

amortisation of an asset,

tangible or intangible,

because revenue generally

reflects the pattern of

economic benefits that are

generated from operating

the business, rather than

the consumption through

the use of the asset.

1 Jan 2016 There is no expected impact as

the revenue-based method is not

used for depreciation and

amortisation.


44

Standard/

Interpretation

Summary Applicable

for annual

reporting

periods

beginning

on


AASB 2015-6

Amendments to

Australian

Accounting

Standards –

Extending Related

Party Disclosures

to Not-for-Profit

Public Sector

Entities [AASB 10,

AASB 124 &

AASB 1049]

The Amendments extend the

scope of AASB 124 Related

Party Disclosures to not-for-

profit public sector entities.

1 Jan 2016 The amending standard will

result in extended disclosures on

the entity's key management

personnel (KMP), and the

related party transactions.

AASB 2016-4

Amendments to

Australian

Accounting

Standards –

Recoverable

Amount of Non-

Cash-Generating

Specialised Assets

of Not-for-Profit

Entities

The standard amends AASB

136 Impairment of Assets to

remove references to using

depreciated replacement cost

(DRC) as a measure of value

in use for not-for-profit entities.

1 Jan 2017 There is minimal impact. Given

the specialised nature and

restrictions of public sector

assets, the existing use is

presumed to be the highest and

best use (HBU), hence current

replacement cost under AASB

13 Fair Value Measurement is

the same as the depreciated

replacement cost concept under

AASB 136.


45

Notes 2016 2015

$ $

2. OPERATING INCOME

Tenancy rents and charges 17,875,247 16,991,250

Car parking 4,153,344 4,142,567

Events 4,119,078 3,595,247

Sponsorship and grants 1,050,407 1,217,406

Other revenue 393,396 384,506

Total operating income 27,591,472 26,330,976

3. EXPENSES

(a) Employee expenses

Salaries and wages, annual leave, long service leave

and oncosts

4,655,208 4,151,383

Contributions to superannuation funds 14 441,070 463,381

Total employee expenses 5,096,278 4,614,764

(b) Site operating expenses

Building and tenant consultants 234,549 71,639

Car park operations 442,981 439,481

Cleaning 1,801,301 1,805,007

Maintenance 2,042,882 1,960,408

Security 1,804,584 1,680,137

Utilities 1,535,412 1,526,929

Total site operating expenses 7,861,709 7,483,601

(c) Other expenses

Administration and accounting 786,488 700,726

Bad and Doubtful debts 4 - 101,821

Information and communications technology 296,144 305,947

Insurance 574,267 627,990

Legal 118,893 147,009

Motor vehicles 7,153 11,743

Promotional expenses 624,736 706,001

Statutory rates and taxes 2,720,260 1,981,191

Tenancy expenses 444,856 490,666

Total other expenses 5,572,797 5,073,094


46

4. RECEIVABLES Notes 2016 2015

$ $

Current receivables

Contractual

Trade receivables 757,253 666,752

Provision for doubtful debts (100,000) (100,000)

Insurance receivable 20,190 20,244

Accrued investment income 55,354 14,895

Accrued income 299,424 818,503

1,032,221 1,420,394

Statutory

GST receivable - 18,231

Total current receivables 1,032,221 1,438,625

Non-current receivables - -

Total receivables 1,032,221 1,438,625

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 2016 2015

$ $

Balance at beginning of year (100,000) -

Amounts credited during the year - -

Impairment losses recognised on receivables - (101,821)

Amounts written off as uncollectable - 1,821

Balance at end of year (100,000) (100,000)

Ageing of impaired receivables 2016 2015

$ $

Current - -

30 – 60 days - -

60 – 90 days - -

Greater than 90 days (100,000) (100,000)

Total (100,000) (100,000)

In determining the recoverability of a receivable, the company considers any change in the credit

quality of the receivable from the date credit was initially granted up to the reporting date. The

concentration of credit risk is limited due to the customer base being diverse and unrelated.

Accordingly, the Directors believe there is no further credit provision required in excess of the

allowance for doubtful debts.


47

5. INVESTMENTS AND OTHER FINANCIAL ASSETS Notes 2016 2015

$ $

Current investments and other financial asstes

Term deposits

Term deposits > 3 months 5,091,839 -

5,091,839 -

Total investments and other financial assets 5,091,839 -

Note:

Term deposits under 'investments and other financial assets' class include only term deposits with

maturity greater than 90 days.

There were no term deposits with maturity greater than 90 days for 2015.

(a) Ageing analysis of investments and other financial assets

Please refer to Note 19 (b) for the ageing analysis of investments and other financial assets

(b) Nature and extent of risk arising from investments and other financial assets

Please refer to Note 19 for the nature and extent of risks arising from investments and other financial

assets


48

6. PROPERTY, PLANT AND EQUIPMENT

Freehold land

A valuation was undertaken by Urbis Valuations Pty Ltd on behalf of the Valuer-General Victoria (ref:

VGV File: A01217) effective as at 30 June 2016. 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 is considered to be mixed use development site;

- the site is well located, being opposite the river and close to public transport linkages;

- a Community Service Obligation (CSO) discount of 40 percent to the 'unencumbered fair value'

has been applied, in this instance to take into account the civic and cultural uses imposed on

the land;

- the central portion of the land, which is strata above the Rail Yards and essentially an air right,

being ascribed a value equal to 5 percent of the surrounding land values;

- part of the southern portion of the land, specifically the Princess Walk Vaults, is encumbered by

a Heritage Overlay and listed on the Victorian Heritage Register, and an additional 30 percent

discount has been applied to this area; and

- as adjustments of CSO are considered as significant unobservable inputs, the land is classified

as level 3 assets in the fair value measurement hierarchy.

The carrying amount following the revaluation at 30 June 2016 of freehold land is $192,000,000.

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 2016. 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 2016 is $334,944,000. As depreciation adjustments are considered as significant, unobservable

inputs in nature, the buildings are classified as level assets in the fair value measurement hierarchy.

Plant, equipment and tenancy fit-outs

Plant, equipment and tenancy fit-outs is held at fair value. There were no changes to the valuation

techniques throughout the period to 30 June 2016.

For all assets measured at fair value, the current use is considered the highest and best use.

Plant and equipment under finance lease

Plant and equipment under finance lease are vehicles valued using the depreciated replacement cost

method. New vehicles are acquired and at times disposed of before the end of their economic life.

The process of acquisition, use and disposal in the market is managed by VicFleet who set relevant

depreciation rates during use to reflect the utilisation of the vehicles.


49

Notes 2016 2015

$ $

Freehold land – fair value 192,000,000 121,462,000

Buildings and improvements

At fair value 334,944,000 454,002,903

Accumulated depreciation - (113,756,681)

334,944,000 340,246,222

Plant and equipment

At fair value 7,192,985 7,237,261

Accumulated depreciation (5,759,361) (5,516,571)

1,433,624 1,720,690

Tenancy fit-outs

At fair value 861,678 861,678

Accumulated amortisation (612,943) (439,089)

248,735 422,589

Plant and equipment under finance lease 35,789 60,912

Less: Accumulated depreciation (14,138) (14,046)

21,651 46,866

Assets under construction at cost 203,936 8,251,691

Total property, plant and equipment 528,851,946 472,150,058

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

classification.


50

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

Freehold

Land

Buildings and

improvements

Plant and

equipment

Tenancy

fit-outs

Plant and

equipment

under lease

Assets under

construction

Total property,

plant and

equipment

$ $ $ $ $ $

Carrying amount at 1 July 2014

121,462,000

344,630,910

1,346,135

596,444

58,211

7,985,850

476,079,550

Additions - 3,037,380 465,945 - 35,789 4,416,483 7,955,597

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

Reallocations - - - - - - -

Transfer in/out of assets under construction - 3,807,880 342,762 - - (4,150,642) -

Revaluation - - - - - - -

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


121,462,000

340,246,222

1,720,690

422,589

46,866

8,251,691

472,150,058

Additions - 2,190,159 163,559 - 0 179,183 2,532,901

Disposals - - (37,881) - (17,201) - (55,082)

Reallocations - - - - - - -

Transfer in/out of assets under construction - 8,193,636 33,302 - - (8,226,938) -

Revaluation 70,538,000 (3,857,867) - - - - 66,680,133

Depreciation and amortisation - (11,828,150) (446,046) (173,854) (8,014) - (12,456,064)

Carrying amount at 30 June 2016

192,000,000

334,944,000

1,433,624

248,735

21,651

203,936

528,851,946


51

Fair value measurement hierarchy for assets

30 June 2016

Level 1 Level 2 Level 3 Fair value

$ $ $ $

Freehold land - - 192,000,000 192,000,000

Buildings and improvements - - 334,944,000 334,944,000

Plant and equipment - - 1,433,624 1,433,624

Tenancy fit-outs - - 248,735 248,735

Plant and equipment under lease - - 21,651 21,651

30 June 2015

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

Buildings and improvements - - 340,246,222 340,246,222

Plant and equipment - - 1,720,690 1,720,690

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

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


52

Reconciliation of Level 3 fair value

Land Buildings and

improvements

Plant and

equipment

Tenancy

fit-outs

Plant and

equipment

under lease

$ $ $ $ $

Carrying amount at 1 July 2014 - 344,630,910 1,346,135 596,444 58,211

Purchases / (sales) / transfers in (out) of assets in contruction / reallocations - 6,845,260 808,707 - 4,071

Transfers in (out) of level 3 (a) - - - - -

Gains or losses recognised in net result

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

Impairment loss - - - - -

- (11,229,948) (434,152) (173,855) (15,416)

Gains or losses recognised in other economic flows – other comprehensive income

Revaluation - - - - -

- - - - -


-

340,246,222

1,720,690

422,589

46,866

Purchases / (sales) / transfers in (out) of assets in contruction / reallocations - 10,383,795 158,980 - (17,201)

Transfers in (out) of level 3 (a),(b) 121,462,000 - - - -

Gains or losses recognised in net result

Depreciation and amortisation - (11,828,150) (446,046) (173,854) (8,014)

Impairment loss - - - - -

121,462,000 (11,828,150) (446,046) (173,854) (8,014)

Gains or losses recognised in other economic flows – other comprehensive income

Revaluation 70,538,000 (3,857,867) - - -

70,358,000 (3,857,867) - - -

Carrying amount at 30 June 2016 192,000,000 334,944,000 1,433,624 248,735 21,651

Notes: (a) FSPL’s policy is to recognise transfers into and transfers out of Level 3 as of the date of the event or change in circumstances that caused the transfer.

(b) Transferred from Level 2 to Level 3 because of the Community Service Obligation (CSO) adjustment that is considered a significant unobservable input.


53

Description of significant unobservable inputs to Level 3 valuations for 2016 and 2015

Class Valuation technique Significant unobservable inputs

Land (2016 only) Market approach Community service obligations (CSO) adjustment

Buildings Depreciated replacement cost Direct cost per square metre

Useful life

Plant and equipment

Depreciated replacement cost Cost per unit

Useful life

Tenancy fit-outs

Amortised replacement cost Cost per unit

Useful life

Plant and equipment

under lease

Depreciated replacement cost Cost per unit

Useful life

Note: FSPL has early adopted AASB 2015-7 Amendments to Australian Accounting Standards – Fair

Value Disclosures of Not-for-Profit Public Sector Entities which applies from 1 July 2016.

7. PAYABLES Notes 2016 2015

$ $

Current payables

Contractual

Creditors 2,325,239 3,637,400

Advances 200,126 224,128

Accrued interest expense 28,493 37,737

Salaries and associated costs 93,535 102,521

2,647,393 4,001,786

Statutory

GST payable 66,130 -

Fringe benefits tax 8,476 11,524

74,606 11,524

Total current payables 2,721,999 4,013,310

Total non-current payables - -

Total payables 2,721,999 4,013,310

Please refer to the table in Note 19(c) for the maturity analysis of contractual payables.


54

8. BORROWINGS Notes 2016 2015

$ $

Loans 9,810,826 13,345,445

Advances from Government 3,319,199 4,171,140

Lease liability 15 21,979 47,371

13,152,004 17,563,956

Current liability 4,617,552 4,398,993

Non-current liability 8,534,452 13,164,963

13,152,004 17,563,956

Loans of $9,810,826 (2014-2015: $13,345,445) 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 $3,319,199 (2014-2015: $4,171,140) are provided by the Department

of Economic Development, Jobs, Transport and Resources and are repayable by 2023.

Lease liabilities represent motor vehicles leased from Vic Fleet, a unit of the Victorian Department of

Treasury and Finance. The motor vehicles provide security under the terms of the lease.

Please refer to the table in Note 19(c) for the maturity analysis of borrowings.

9. PROVISIONS 2016 2015

$ $

Current

Employee benefits

Annual leave (unconditional)

- Expected to settle within 12 months 163,963 184,948

- Expected to settle after 12 months 48,612 28,165

212,575 213,113

Long service leave (unconditional)

- Expected to settle within 12 months 37,057 102,384

- Expected to settle after 12 months 375,572 222,015

412,629 324,399

625,204 537,512

Provision for on-costs (unconditional) 62,396 81,204

Total current provisions 687,600 618,716

Non-current

Employee benefits

Long service leave (conditional) 98,055 112,033

98,055 112,033

Provision for on-costs (conditional) 14,828 16,925

Total non-current provisions 112,883 128,958

Total benefits 800,483 747,674

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

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

separately.


55

10. CONTRIBUTED CAPITAL

Fed Square Pty Ltd is a company wholly owned by State Trustees Limited as custodian trustee on

behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the

Treasurer of Victoria is the Minister responsible for the State Holding in Fed Square Pty Ltd under the

Deed.

The allocation statement dated 27 June 2003 approved by the Minister for Finance required Fed

Square Pty Ltd to record the value of assets transferred to the company in 2002-2003 as a capital

injection by the State Government as owners. The total amount of the contributed capital of

$435,940,507 comprised $373,440,507 for buildings and improvements, plant and equipment, and

$62,500,000 for land. The transfer was effective from 30 June 2003 and is in accordance with the

Department of Treasury and Finance ‘Accounting and Financial Reporting Bulletin No.39 – Accounting

for Contributed Capital’.

Contributed capital during the year represents a capital appropriation of $4,109,000 (2014-2015:

$3,678,000) by the State Government of Victoria as owners to assist the company with asset

maintenance and capital replacement requirements.

Notes 2016 2015

$ $

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

Capital appropriation 4,109,000 3,678,000

Contributed capital at beginning of financial year 443,566,508 439,888,508

Total contributed capital 447,675,508 443,566,508

11. ACCUMULATED DEFICIT

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

Net result (7,289,550) (6,231,780)

Accumulated deficit at end of financial year (69,164,775) (61,875,225)

12. ASSET REVALUATION SURPLUS

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

Revaluation increments/(decrements) 6 66,680,133 -

Balance at end of financial year 156,045,636 89,365,503

13. DIVIDENDS

There was no provision for dividends or dividends paid for the year (2014-2015: Nil).


56

14. 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 $441,070 (2014-2015: $463,381) was paid or

payable by the company to the various funds.

As at 30 June 2016 there was no amount owing to superannuation funds not brought to account

(2014-2015: Nil). Fed Square Pty Ltd employed 52 full time equivalent employees as at 30 June 2016

(2014-2015: 45). All superannuation payments are paid to defined contribution funds.

15. LEASES Notes 2016 2015

$ $

Finance leases (Fed Square Pty Ltd as lessee)

Finance lease liabilities payable:

- not later than one year 7,397 14,342

- later than one year and not later than five years 15,442 35,893

Minimum lease payments 22,839 50,235

Less: future finance charges (860) (2,864)

Recognised as a lease liability 1(k), 8 21,979 47,371

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 17,241,500 16,251,476

- later than one year and not later than five years 28,211,907 36,412,236

- later than five years 35,431,670 37,450,090

1(k) 80,885,077 90,113,802

16. COMMITMENTS

Plant and Equipment

Payable not longer than one year 1,796,349 4,541,998

Total commitments (exclusive of GST) 1,796,349 4,541,998


57

17. CONTINGENT ASSETS AND LIABILITIES

In the course of conducting its ordinary business, Fed Square Pty Ltd is at risk from claims arising

from incidents occurring at Federation Square. These may take the form of public liability claims from

people who are injured whilst visiting the site or legal claims from disputes with tenants or venue

hirers. In the company’s opinion, the financial risk from such claims is low.

There are no known contingent assets or liabilities at balance date (2014-2015: Nil).

18. CASH FLOW INFORMATION

(a) Reconciliation of cash and cash equivalents

For the purposes of the Cash flow statement, cash includes cash on hand, cash at bank and short

term deposits. Cash as at the end of the financial year as shown in the Cash flow statement is

reconciled to the related items in the Balance sheet as follows:

Notes 2016 2015

$ $

Cash on hand and at bank 425,527 884,930

Term deposits 15,791,945 18,886,949

Cash and cash equivalents as shown on the cash

flow statement

16,217,472

19,771,879

Note:

Term deposits with a maturity of greater than 90 days are disclosed as Investments and other

financial assets (please refer to Note 5).

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

Net deficit

(7,289,550)

(6,231,780)

Adjustments for non-cash items:

- Depreciation and amortisation 12,456,064 11,853,371

- Increase/(Decrease) in Provision for doubtful

debts

- 100,000

- (Gain) / Loss on disposal of assets 41,628

(22,055)

Net cash inflows from operating activities

before changes in assets and liabilities

5,208,142

5,701,203

Changes in assets and liabilities

(Increase) / Decrease in receivables 406,404 477,424

(Increase) / Decrease in prepayments (16,213) 855,212

Increase / (Decrease) in payables (1,291,311) 1,462,522

Increase / (Decrease) in provisions 52,809 (78,256)

Net cash flows from operating activities 4,359,831 8,416,438


58

19. FINANCIAL INSTRUMENTS

(a) Financial risk management objectives and policies

The principal financial instruments comprise:

- cash assets;

- term deposits;

- receivables (excluding statutory receivables);

- payables (excluding statutory payables);

- borrowings; and

- finance lease liabilities payable.

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

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

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

statements.

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

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

Department of Treasury & Finance Treasury Management Guidelines.

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

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

regular reporting to and review by the Board.


59

19. FINANCIAL INSTRUMENTS (continued)

Categorisation of financial instruments

30 June 2016 Note Contractual

financial assets

– loans and

receivables

Contractual

financial

liabilities at

amortised cost

Total

Contractual financial assets $ $ $

Cash and deposits

Cash and deposits 18(a) 16,217,472 - 16,217,472

Receivables

Trade receivables and accrued income 4 956,677 - 956,677

Insurance receivable 4 20,190 - 20,190

Accrued investment income 4 55,534 - 55,354


Term deposits 5 5,091,839 - 5,091,839

Total contractual financial assets 22,341,532 - 22,341,532

Contractual financial liabilities

Payables

Supplies and services 7 - 2,647,393 2,647,393

Other payables - - -

Borrowings

Lease liabilities 8 - 21,979 21,979

Loans 8 - 13,130,025 13,130,025

Total contractual financial liabilities - 15,799,397 15,799,397

30 June 2015 Note Contractual

financial assets

– loans and

receivables

Contractual

financial

liabilities at

amortised cost

Total

Contractual financial assets $ $ $

Cash and deposits

Cash and deposits 18(a) 19,771,879 - 19,771,879

Receivables

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

Insurance receivable 4 20,244 - 20,244

Accrued investment income 4 14,895 - 14,895


Term deposits 5 - - -

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

Contractual financial liabilities

Payables

Supplies and services 7 - 4,001,786 4,001,786

Other payables - - -

Borrowings

Lease liabilities 8 - 47,371 47,371

Loans 8 - 17,516,585 17,516,585

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


60


(b) Credit risk

The credit risk on financial assets that have been recognised on the Balance Sheet, is the carrying amount,

net of any provision for doubtful debts. The carrying amount on the Balance Sheet represents the

company’s maximum exposure to credit risk for receivables.

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial

loss to the company. The company has a policy of only providing material credit to creditworthy

counterparties and obtaining industry standard security over leases in the form of bank guarantees or cash

advances. The company’s exposure and the credit worthiness of counterparties is continually monitored.

Activities that give rise to credit risk are the granting of credit to customers and tenants at Federation Square.

The company does not have any significant exposure to a single counterparty and trade receivables

comprise a large number of diverse customers with differing characteristics.

The credit risk on liquid funds is limited because the counterparties are banks or Government agencies with

high credit ratings.

Included in the company’s receivables balance are receivables with a carrying amount of $377,615 (2014-

15: $329,975) which are past due at the reporting date for which the company has not provided for as there

has not been a significant change in credit quality and the amounts are still considered recoverable. The

company holds security in the form of bank guarantees or deposits amounting to $125,066 (2014-15:

$55,813) against these balances. The average age of these receivables is 201 days (2014-15: 112 days).

Credit quality of contractual financial assets that are neither past due nor impaired

30 June 2016 Note Financial

institutions

Triple A

credit rating

Financial

institutions

Double A-

credit rating

Other

unknown

credit rating

Total

$ $ $

Cash and deposits 18(a) 16,061,058 130,404 26,010 16,217,472

Receivables 4 - - 1,032,221 1,032,221

Investments and other financial assets 5 5,091,839 - - 5,091,839

Total contractual financial assets 21,152,897 130,404 1,058,231 22,341,532

30 June 2015

Note Financial

institutions

Triple A

credit rating

Financial

institutions

Double A-

credit rating

Other

unknown

credit rating

Total

$ $ $

Cash and deposits 18(a) 19,150,960 595,209 25,710 19,771,879

Receivables 4 - - 1,420,394 1,420,394

Investments and other financial assets 5 - - - -

Total contractual financial assets 19,150,960 595,209 1,446,104 21,192,273


61


Aging analysis of contractual financial assets

Past due but not impaired

30 June 2016 Note Carrying

amount

Not past

due and not

impaired

Less than

1 month

1 – 3

months

3 months

– 1 year

Impaired

$ $ $ $ $ $

Receivables

Trade receivables and

accrued income

4 956,677

579,062

67,293

71,803

238,519

100,000

Insurance receivable 4 20,190 20,190 - - - -

Accrued investment income 4 55,354 55,354 - - - -

Investments and other

contractual financial assets

Term deposits (cash and

cash equivalents)

18(a) 15,791,945

15,791,945

-

-

-

-

Term deposits (investments

and other financial assets)

5 5,091,839 5,091,839 - - - -

Total 21,916,005 21,538,390 67,293 71,803 238,519 100,000

Past due but not impaired


amount

Not past

due and not

impaired

Less than

1 month

1 – 3

months

3 months

– 1 year

Impaired

$ $ $ $ $ $

Receivables

Trade receivables and

accrued income

4 1,385,255

1,055,280

81,705

108,785

139,485

100,000

Insurance receivable 4 20,244 20,244 - - - -

Accrued investment income 4 14,895 14,895 - - - -

Investments and other

contractual financial assets

Term deposits (cash and

cash equivalents)

18(a) 18,866,949

18,866,949 -

-

-

-

Term deposits (investments

and other financial assets)

5 - - - - - -

Total 21,916,005 21,538,390 67,293 71,803 238,519 100,000


62


(c) Liquidity risk exposure

The company has no significant exposure to liquidity risk. The table above details the company’s remaining

contractual maturity for its financial liabilities. The tables have been prepared based on the undiscounted

cash flows of financial liabilities based on the earliest date on which the company can be required to pay.

Maturity analysis of contractual financial liabilities


amount

Nominal

amount

Less

than 1

month

1 – 3

months

3 months

– 1 year

1 – 5

years

5 +

years

$ $ $ $ $ $ $

Payables

Supplies and

services

7 2,647,393

2,647,393

2,647,393

- - - -

Other payables - - - - - - -

Borrowings

Lease liabilities 8 21,979 22,839 688 1,376 6,193 14,582 -

Loans 8 13,130,025 13,130,025 - 918,052 3,692,104 8,519,869 -

Total 15,799,397 15,800,257 2,648,081 919,428 3,698,297 8,534,451 -


amount

Nominal

amount

Less

than 1

month

1 – 3

months

3 months

– 1 year

1 – 5

years

5 +

years

$ $ $ $ $ $ $

Payables

Supplies and

services

7 4,001,786

4,001,786

4,001,786

- - - -

Other payables - - - - - - -

Borrowings

Lease liabilities 8 47,371 50,235 1,195 2,390 10,756 35,894 -

Loans 8 17,516,585 17,516,585 - 863,437 3,523,123 13,130,025 -

Total 21,565,742 21,568,606 4,002,981 865,827 3,533,879 13,165,919 -


63


(d) Market Risk

The company has an immaterial exposure to financial risk from market risk (including currency risk and price

risk), credit risk, liquidity risk and interest rate risk. The company does not use derivative financial

instruments to hedge against risk exposures nor for speculative purposes. Financial risks are reported to the

Board at each meeting.

Foreign currency exposure Fed Square Pty Ltd has exposure to foreign currency risk through payables relating to purchases of supplies

and consumables from overseas, which is insignificant due to the limited amount of transactions

denominated in foreign currencies and a relatively short timeframe between commitment and settlement.

The company has no exposure to foreign currency risk as at 30 June 2016.

Interest rate risk

The company’s exposure to interest rate risk and the effective weighted average interest rate for classes of

financial assets and financial liabilities is set out below. There is no interest rate risk associated with loans

as all borrowings are made at either fixed rates of interest from Treasury Corporation Victoria or interest free

from the Department of Economic Development, Jobs, Transport and Resources.


64


Interest rate exposure of financial instruments

30 June 2016 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 18(a) 1.96% 15,791,945 399,517 26,010 16,217,472

Receivables 4 - - - 1,032,221 1,032,221

Term deposits

(investments and

other financial assets)

5 2.09% 5,091,839 - - 5,091,839

20,883,784 399,517 1,058,231 22,341,532

Financial Liabilities

Payables 7 - - - 2,647,393 2,647,393

Lease liabilities 8 4.62% 21,979 - - 21,979

Loans 8 4.68% 9,810,826 - 3,319,199 13,130,025

9,832,805 - 5,966,592 15,799,397

30 June 2015 Weighted Average Interest

Rate

Interest rate exposure Carrying amount

Note Fixed

Interest Rate

Variable Interest

Rate

Non Interest Bearing

percent $ $ $ $

Financial Assets

Cash and deposits 18(a) 2.07% 18,886,949 859,220 25,710 19,771,879

Receivables 4 - - - 1,420,394 1,420,394

Term deposits

(investments and

other financial assets)

5 - - - - -

18,886,949 859,220 1,446,104 21,192,273


Payables 7 - - - 4,001,786 4,001,786

Lease liabilities 8 4.56% 47,371 - - 47,371

Loans 8 4.79% 13,345,445 - 4,171,140 17,516,585

13,392,816 - 8,172,926 21,565,742

Interest rate risk sensitivity

The following sensitivity analysis has been determined on the exposure to variable interest rates at the

reporting date. If variable interest rates had been 50 basis points higher or lower and all other variables

were held constant, the company’s deficit would decrease by $106,417 (2014-2015: $98,731) and increase

by $106,417 (2014-2015: $98,731) respectively. This is mainly attributable to the company’s return on

investments held in the form of cash assets.


65


(e) Fair value The fair values and net fair values of financial instrument assets and liabilities are determined as follows:

Level 1 – the fair value of financial instruments with standard terms and conditions and traded in active

liquid markets are determined with reference to quoted market prices;

Level 2 – the fair value is determined using inputs other than quoted prices that are observable for the

financial asset or liability, either directly or indirectly; and

Level 3 – the fair value is determined in accordance with generally accepted pricing models based on

discounted cash flow analysis using unobservable market inputs.

All financial assets and financial liabilities are level 1.

Fed Square Pty Ltd considers that the carrying amount of financial instrument assets and liabilities recorded

in the financial statements to be a fair approximation of their fair values, because of the short-term nature of

the financial instruments and the expectation that they will be paid in full.

The following table details the financial assets and financial liabilities, of which the fair values are not the

same as their carrying value:

Carrying amount Fair value

2016 2015 2016 2015

$ $ $ $


Loans 13,130,025 17,516,585 13,763,228 18,541,012


66

20. REMUNERATION OF RESPONSIBLE PERSONS

(a) Responsible persons Minister

The Hon. John Eren, MP Minister for Tourism and Major Events

Directors The Directors of Fed Square Pty Ltd during the period and at 30 June 2016 unless otherwise

stated were:

Ms Deborah Anne Beale (from 12 August 2015 – Chair from 1 January 2016)

Ms Kathleen Sarah Wilson (1 July 2015 to 30 June 2016 - Chair to 31 December 2015)

Ms Laura Benton Casteel Anderson

Mr James Demetriou (from 21 October 2015)

Ms Pamela Mitchell (from 1 June 2016)

Mr Leslie Williamson (from 1 June 2016)

Accountable Officer

The Accountable Officer during the period and at 30 June 2016 unless otherwise stated were:

Mr Ron Gauci, Interim Chief Executive Officer (to 3 June 2016)

Ms Sharon Pollard, Acting Chief Executive Officer (3 June 2016 to 30 June 2016)

(b) Remuneration

Income bands Total remuneration Base remuneration

2016 2015 2016 2015

No. No. No. No.

$0 - $9,999 2 1 2 1

$20,000 - $29,999 2 3 2 3

$40,000 - $49,999 2 - 2 -

$50,000 - $59,999 - 1 - 1

$220,000 - $229,999 - 1 - 1

Total number of responsible

persons 6 6 6 6

Total amount $143,552 $365,675 $143,552 $365,675

Amounts relating to Ministers are reported in the financial statements of the Department of Premier

and Cabinet. For information regarding related party transactions of ministers, the register of

members' interests is publicly available from:

www.parliament.vic.gov.au/publications/register-of-interests

Directors’ income includes superannuation but not insurance premiums of $19,579 (2014-2015:

$22,515) paid by the company in respect of Directors’ and Officers’ Liabilities.

http://www.parliament.vic.gov.au/publications/register-of-interests


67

(c) Payments to other personnel The number of contractors charged with significant management responsibilities is disclosed within the

$10,000 expense band. These contractors are responsible for planning, directing or controlling,

directly or indirectly, the entity’s activities.

The change in total expenses from the 2015 to 2016 reporting period was driven by the Interim Chief

Executive Officer employed by an agency being employed for the full 2015-16 year compared to part

of the 2014-15 year.

Expense bands

2016 2015

No. No.

$110,000 - $119,999 - 1

$420,000 - $429,999 1 -

Total amount (exclusive of GST) $426,064 $114,737

21. REMUNERATION OF EXECUTIVES

Disclosure is required for executives whose total remuneration for the twelve month financial

period ending 30 June 2016 exceeded $100,000. The number of executive officers, other than

the Responsible Persons, and their total remuneration during the financial period are shown in

the table below in their relevant income bands. Base remuneration is exclusive of

performance incentive bonus payments, long service leave payments, retirement benefits and

other payments.

Income bands Total remuneration Base remuneration

2016 2015 2016 2015

No. No. No. No.

$70,000 - $79,999 - - - 1

$90,000 - $99,999 - - 1 -

$100,000 - $109,999 1 - - -

$110,000 - $119,999 - 1 - 1

$150,000 - $159,999 - 1 - 1

$160,000 - $169,999 - 1 - -

$170,000 - $179,999 1 - 1 -

$190,000 - $199,999 1 - 1 -

$220,000 - $229,999 - 1 - 1

$230,000 - $239,999 1 - 1 -

Total number of executives 4 4 4 4

Total annualised employee

equivalent

3.6 3 3.6 3

Total amount $711,691 $663,080 $693,293 $567,063

A number of executives resigned or took long service leave in the past year. This has had an impact

on the total remuneration figures due to the inclusion of annual leave and long service leave

payments.


68

22. RELATED PARTY DISCLOSURES

(a) Transactions with Directors and director-related entities

Related party transactions with Board directors and their related parties, which occurred during

the normal course of business, apart from remuneration of Board directors which is disclosed in

Note 20 are listed below:

2016 2015

$ $

Ms Catherine Walter (Director of Victorian Opera

Company Pty Ltd): Revenue for two events held by

Victoria Opera at Fed Square

Mr James Demetriou (Business Development

Director, Research Innovation Commercialisation at

University of Melbourne): Revenue for two events

held by University of Melbourne at Fed Square

-

48,173

5,602

-

As at the 30 June 2016 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 (2014-2015: Nil).

No loans were made to Directors during the year (2014-2015: Nil).

(b) Other related parties

All other transactions with related entities are at arm’s length. Fed Square Pty Ltd deals with a

number of Victorian State Government entities in the course of conducting its operations.

23. EX-GRATIA EXPENSES

There were no ex-gratia expenses greater than or equal to $5,000 during 2015-16 (2014-15: Nil)

24. AUDITORS’ REMUNERATION

2016 2015

$ $

Amounts paid or due and payable to the Victorian Auditor-

General’s Office for audit of the financial statements

29,900

29,200

25. SUBSEQUENT EVENTS

There were no subsequent events after balance date expected to have a material effect on the

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

and notes.


69

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 2016 and of its performance, as represented by the results of its operations and its cash flows, for the year ended 30 June 2016;

(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

6th September 2016

............................................................. Deborah Beale

(Chair)

fed square pty ltd annual report for the year …...fed square pty ltd acn 085 731 479 1 chair’s...

Documents