Fed Square Pty Ltd Annual Report For the year …...Fed Square Pty Ltd ACN 085 731 479 1 CHAIR’S...
Transcript of 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
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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.
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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
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CHIEF EXECUTIVE OFFICER’S REPORT ON OPERATIONS
THE YEAR AT A GLANCE
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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
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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.
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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).
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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”.
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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.
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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
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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.
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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.
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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.
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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.
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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
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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
Fed Square Pty Ltd ACN 085 731 479
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
Fed Square Pty Ltd ACN 085 731 479
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.
Fed Square Pty Ltd ACN 085 731 479
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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
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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)
Fed Square Pty Ltd ACN 085 731 479
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AUDITOR-GENERAL’S INDEPENDENCE DECLARATION
Fed Square Pty Ltd ACN 085 731 479
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INDEPENDENT AUDITOR’S REPORT
Fed Square Pty Ltd ACN 085 731 479
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Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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:-
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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
Fed Square Pty Ltd ACN 085 731 479
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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
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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Standard/
Interpretation
Summary Applicable
for annual
reporting
periods
beginning
on
Impact on financial statements
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.
Fed Square Pty Ltd ACN 085 731 479
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Standard/
Interpretation
Summary Applicable
for annual
reporting
periods
beginning
on
Impact on financial statements
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.
Fed Square Pty Ltd ACN 085 731 479
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Standard/
Interpretation
Summary Applicable
for annual
reporting
periods
beginning
on
Impact on financial statements
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.
Fed Square Pty Ltd ACN 085 731 479
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Standard/
Interpretation
Summary Applicable
for annual
reporting
periods
beginning
on
Impact on financial statements
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.
Fed Square Pty Ltd ACN 085 731 479
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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
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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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
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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.
Fed Square Pty Ltd ACN 085 731 479
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)
Carrying amount at 1 July 2015
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
Fed Square Pty Ltd ACN 085 731 479
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
Fed Square Pty Ltd ACN 085 731 479
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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 - - - - -
- - - - -
Carrying amount at 1 July 2015
-
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.
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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.
Fed Square Pty Ltd ACN 085 731 479
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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).
Fed Square Pty Ltd ACN 085 731 479
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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
Fed Square Pty Ltd ACN 085 731 479
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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
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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
Investments and other financial assets
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
Investments and other financial assets
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
Fed Square Pty Ltd ACN 085 731 479
60
19. FINANCIAL INSTRUMENTS (continued)
(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
Fed Square Pty Ltd ACN 085 731 479
61
19. FINANCIAL INSTRUMENTS (continued)
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
30 June 2015 Note Carrying
amount
Not past
due and not
impaired
Less than
1 month
1 – 3
months
3 months
– 1 year
Impaired
$ $ $ $ $ $
Receivables
Trade receivables and
accrued income
4 1,385,255
1,055,280
81,705
108,785
139,485
100,000
Insurance receivable 4 20,244 20,244 - - - -
Accrued investment income 4 14,895 14,895 - - - -
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
Fed Square Pty Ltd ACN 085 731 479
62
19. FINANCIAL INSTRUMENTS (continued)
(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
30 June 2016 Note Carrying
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 -
30 June 2015 Note Carrying
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 -
Fed Square Pty Ltd ACN 085 731 479
63
19. FINANCIAL INSTRUMENTS (continued)
(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.
Fed Square Pty Ltd ACN 085 731 479
64
19. FINANCIAL INSTRUMENTS (continued)
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
Financial Liabilities
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.
Fed Square Pty Ltd ACN 085 731 479
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19. FINANCIAL INSTRUMENTS (continued)
(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
$ $ $ $
Financial Liabilities
Loans 13,130,025 17,516,585 13,763,228 18,541,012
Fed Square Pty Ltd ACN 085 731 479
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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.
Fed Square Pty Ltd ACN 085 731 479
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(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.
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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.
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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)