WORK INTEGRATED LEARNING 2 - ASSESSMENT TASK 2 (BUSINESS REPORT)

ASSESSMENT TASK 2 - WIL 2

PRESENTED BY: HARSHDEEP BHATIA

VICINITY CENTRES CHADSTONE SHOPPING CENTRE,

1341 DANDENONG ROAD, CHADSTONE VIC 3148

S3430652 - HARSHDEEP BHATIA

WORK INTEGRATED LEARNING 2

BP129 – BACHELOR OF BUSINESS (PROFESSIONAL ACCOUNTANCY)

WIL COORDINATOR: WARWICK PONTON

DUE DATE: 26TH OCTOBER AT 11:59PM

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CONTENTS

EXECUTIVE SUMMARY………………………………………………………………………………………………… ……..2

INTRODUCTION…………………………………………………………………………………………………………….......3

SYSTEMS CHANGE……………………………………………………………………………………………………………….4

PRESENTATION CHANGE……………………………………………………………………………………………………..6

TEAM STRUCTURE CHANGE………………………………………………………………………………………………..7

OFFICE RELOCATION……………………………………………………………………………………………………………9

CONCLUSION AND REFERENCE LIST……………………………………………………………………………………12

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EXECUTIVE SUMMARY

This report was commissioned to identify issues/opportunities within Vicinity Centres during my placement year and analyse them to write a comprehensive report on the issues and opportunities identified for investigation and further explanation.

The investigation shows many opportunities and issues that exist within the merge of Federation Centres and Novion Property Group. After being identified as competitors in the Real Estate industry, both these Real Estate Investment Trusts have decided to come together as one entity to create one of Australia’s largest leading REIT’s. This, although, cannot happen without encountering any issues within the merged group. One of the issues investigated and looked into was the comparison of the two systems that both entities were currently using, Yardi (Federation Centres) and JD Edwards (Novion). Furthermore, Vicinity Centres had to come to a conclusion as to what system to use and which was more beneficial and had greater advantages and user friendly interfaces. Further investigation revealed that along with the Systems Change was a change in the way reports and financial statements were set out, hence a Presentation Change. This had to be reviewed and a new monthly reporting template set out after many formal discussions that took place. The change in the Team Structure and contracted roles was also an issue to those who had been working for years, but at the same time an opportunity for a change and a learning curve. This was complemented by the office relocation and re-organisation of seating plans and teams.

Vicinity Centres had decided to choose JD Edwards as their preferred system as it had many benefits over Yardi, which are explained in detail in the body of the report. The report evaluates the advantages, disadvantages and preferences of the two systems in comparison with each other. After the choice of this system, it is evident that there is a presentation change in the way the comments and variances are reported in the end of month/financial year statements. Lastly, the change in team structure to have new Regional Finance Managers and Senior Property Analysts appointed has seen the team grow larger and come together as working under one office at the new location of Chadstone Shopping Centre. All ex-FDC ‘Property Accountants’ had a name change in their role and were now labelled as ‘Property Analysts’.

Furthermore, it would be recommended that moving forward Vicinity Centres hold training/information sessions on how to use the new system and generate the new monthly reporting templates for each of the Property Analyst’s properties. Training or pairing with an ex-Novion employee is a must for ex-Federation Centres employees who are not familiar with JD Edwards in order to become efficient with the system and do their day to day tasks without constant assistance or errors and to the best of their abilities. On top of all this, Vicinity Centres should be looking at adopting a fresh and healthy image of the new trust out to the public to build their brand, value, visions and gain publicity as the largest REIT in the retail industry for consumers.

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INTRODUCTION

Following on from my Business Report Proposal from Work Integrated Learning 1 (WIL1), last semester, at Federation Centres, the merge of FDC and Novion Property Group has taken place as of 11th of June 2015. The combined group is now labelled “Vicinity Centres” although the name will not officially be announced till the shareholders’ approval at the board meeting later this month in October 2015, with the official name change following next month in November. As such, the main head office has now been re-located to Chadstone Shopping Centre in Dandenong and will specialise in the ownership and management of over 100 shopping centres across Australia, with the new additions of Melbourne’s largest shopping centres such as Chadstone, Emporium and Factory Outlets like DFO. The merged trust has been operating for approximately three months with a plan to be one of the top Real Estate Investment Trusts (REIT) across Australia.

Therefore, this business report will expand from the proposed report I had done earlier this year, focusing on the integration of the two trusts along with the issues it brings across and on the other side the multiple benefits. I will be focusing on the systems, presentations/preparations and team structure of the way the work has been conducted – but looking at the whole Real Estate Industry in general as only some of the technical aspects have changed to the new ‘Vicinity Centres’ way rather than the ex-FDC way, that I had previously adhered to throughout the last months of my placement.

I have chosen these main topics to investigate and expand on as they are the critical aspects of change associated within the organisation. They are topics that employees have to adopt too, learn and be trained on/or about. This will also push employees out of their comfort zone due to the many structural changes that will take place because the methods of operation will be different to that of before. Depending on how long an employee has been with the organisation, they may find it difficult to alter and conduct their work style simultaneously, as there is no given time off to adopt or learn the changes. It all has to be done within business hours whilst completing the set day-to-day tasks.

Furthermore, an opportunity like this merge, has been acted upon to increase potential economic growth and assist with becoming one of Australia’s leading REIT’s. Such an opportunity cannot be overlooked and without taking the risk of merge, there will be no opportunity for growth.

Lastly, even though there are many issues with the merge of the companies, the opportunities and plus points outweigh what the issues are. The economy will tend to benefit in many ways through more defined and larger shopping centres (to be developed), allowing them to enjoy the customer service experience of all the shopping centres owned by Vicinity Centres, without having to worry about what is happening behind the scenes, that is within the office or business.

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SYSTEMS CHANGE

VS

One of the most important issues that arose with the merge was the selection of the Enterprise Resource Planning (ERP) platform, as this is a critical step in the integration process. Since the implementation of the merger in June, a project team has been working through an evaluation of the two current platforms, JD Edwards (JDE) and Yardi Voyager (Yardi), including a detailed due diligence process.

“Yardi has two platforms to choose from, ‘Yardi Genesis’, which is designed for smaller real estate firms and the more comprehensive ‘Yardi Voyager’ platform for mid-large sized property owners, managers and investors such as Federation Centres” (Business Report Proposal 2015). It is an all-in-one online platform, with mainly all accounting functions being completed within it. On the other hand, JD Edwards is a suite of comprehensive enterprise resource planning software with more choice of databases, operating systems and hardware so that you can build and tailor the software package to expand your IT solution and meet your own business requirements (Oracle 2015).

David Marcun, from the project team has consulted with various teams and individuals across the business, as well as external consultants. While both platforms have their relative strengths, the findings of this process has identified Novion’s system of ‘JD Edwards’, as the preferred platform for the business of Vicinity Centres moving forward, after the Board has endorsed this decision as of 21 September 2015 (Vicinity Centres Internal Communication 21/9/2015). JDE was ex-Novion’s preferred enterprise solution for the last fifteen years, so the staff of Novion are trained and work efficiently with this system – which is a plus point. Not only did they buy this as a commercial package, but the software has been tailored (or contains some add ons) for the needs of Novion property group. Vicinity Centres hopes to achieve the same thing, where they will edit the basic package bought from Oracle to tailor for the needs of the trust. All these details were communicated via ‘Internal Communications’ by Angus McNaughton through email.

JDE provides strong operational functionality which has been further enhanced over time adding to the effectiveness, efficiency and control of the system and the processes. The next steps for the ERP project include the establishment of a steering committee and project team, with David Marcun as the EC sponsor, and preparation of a detailed migration and risk management plan. The ERP project team has to be appreciated for all their hard work and efforts over the past six months in conducting extensive and detailed evaluations of the two systems (Vicinity Centres Internal Communication 21/9/2015).

Nevertheless, the Yardi platform has a number of advanced features as identified by the ERP team, particularly in the areas of consolidation and tax, due to the on-demand reporting and incentive structures available (Yardi Investment Management 2015). Vicinity Centres will consider options to retain this functionality as the merged group moves forward with JDE in the coming months. There is no expected date as to when the system will be official or successfully integrated as of yet.

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Now, I have not seen how this system works nor have any of the Federation team been given training on how to utilise this system to its full potential. Therefore, this created an issue within the merged group of Vicinity Centres. With Novion benefiting from this decision and not having to undergo further training or help, they would need to work together as a team to assist us ex-FDC employees on how to fully make use of the system, which will be done over the next couple of months. This may slow down the efficiency and process of work till all users are trained on the system, because entering data, pulling up reports and invoices and uploading to the enterprise will have a different process than ‘Yardi Voyager’, which the Federation team has been using since July 2014.

This is a user interface of Yardi Voyager (ex-FDC), the cloud-based platform

This is the user interface of JD Edwards (ex-Novion) platform.

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PRESENTATION CHANGE

Presentation is a key aspect to consider when a company adopts to any type of merge/integration or change within the organisation. The way everything is reported, set out, presented and portrayed to Seniors/RFMs/Managers is differentiated.

As part of the merge, the way reports and data is presented has been changed from both the Novion and Federation Centres way. Both trusts had their own way of showcasing and presenting accounting findings and reports prior to the integration.

As such, Vicinity Centres has decided to scrap both these ways and introduce their own that all ‘Property Analysts’ have to follow. It is the new format for explanations when analysing data at the end of the period/month/year etc. Therefore, when I am expected to analyse, I must follow these new guidelines. Most of my work is presented through Excel findings and reports, so in this instance it will remain the same as previously for most parts of my job.

Some examples include (Vicinity Centres Guideline 2015): Comments are required for variances (either Favourable or Unfavourable) greater than the following:

- “Month > $20k +/-

- YTD > $50k +/-

- Full Year Forecast > $150k +/-

- Where variances are outside these parameters no comment is required and the comments field

should be left blank

- The number format used in Excel is #, ##0; (#,##0); -“

We, as staff members have also been told not to modify excel reporting templates from those provided (including adding/deleting rows/columns), they need to be consistent to enable consolidation at the regional and group level. This means all worksheets/text need to be in “Calibri” font.

Example of Format for Explanation (Vicinity Centres Guideline 2015):

“Favourable base rent $290k (renewals $200k and new kioskis $90k), storage $80k, vacancies $45k and other income $44k, partly offset by total under recovered expenses $421k (Hoyts area dispute)”.

The due dates for month end have also changed with the merged group with ‘month end reporting’ being due within the first week of the following month rather than the first or second day. I have attached the new template for Vicinity Centres August results meetings and also the month end reporting timetable as evidence of the new structure.

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TEAM STRUCTURE CHANGE

Both Federation Centres and Novion Property Group, had a list of different team structures before the implementation of the merge. Each company had a set structure according to their method of operations and systems. Although, with the two teams coming together a final new structure has been appointed. It is similar to that used at both organisations, although altered a little to fit the needs of Vicinity Centres.

The senior level structure of the merged group has now been finalised and is being implemented throughout October. There is a new structure and transition plan for the departments. The relevant Regional Finance Managers and Seniors have communicated property allocations, new reporting lines and transition planning.

All staff within the ‘finance’ team fall under the Property Accounting Manager of Vicinity Centres. That being said all Property Analysts (Accountants) do have a Senior Property Analyst to report too. From here on the Seniors report to the appointed Regional Finance Managers (RFM) that have been set out (as evident in the team structure table below). As such, each RFM has been appointed to look after a specific state/area and for the bigger areas and states there have been two RFM’s assigned. Under each RFM, is the one relevant Senior Property Analyst assigned and under each Senior Property Analyst falls approximately three-four Property Analysts (Accountants) depending on how large the state or shopping centre is. Lastly, if there are any Assistant Property Analysts required, they fall under the Property Analysts and tend to assist all of them with whatever is required, or even sometimes have small properties or tasks to look after on a day-to-day basis.

There are several individuals responsible for making business decisions and running the business, which also shows that individuals at each level in the business may have some autonomy to make business decisions. Hence, this is why there are RFM’s and Seniors within the organisation that are split by states and centres to make it easier to make decisions, appoint tasks and keep the trust well organised. For Example, the different RFM’s involve DFO/SA/TAS/ACT, NSW, QLD, VIC1, VIC 2 etc.

This type of structure results in a more efficient use of resources as the company utilises individuals with a variety of expertise and experiences for running various business operations within the firm. Another advantage of a broad-based team like this is that it ensures the company has knowledgeable directors or managers to handle various types of difficult business scenarios. The dilemma that may occur within a business like Vicinity Centres is that there may be difficulty in trying to get everyone on the same page when making critical decisions between Senior Property Analysts, Property Analysts and Assistants (Vitez (Chron) 2015).

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On the other hand, there is a small team of Majors Analyst within Vicinity Centres which work around the whole finance team mainly preparing summary of billings of Actual and Budgeted outgoings for all major tenants across all centres. Another key aspect of this role is liaising with the finance team to clear outstanding items on their reconciliations and assisting them to obtain further information in relation to payments. In this team, my role is that of an Assistant Majors Analyst, whereby I help my whole team in recovering debt and preparing the required excel spreadsheets to send out to the major tenants across all the shopping centres. My roles and procedures remain the same as ex-FDC as of now until the system is completely merged to JDE, where pulling up reports, reconciliations and grouping of data would be set out differently. The only aspect that would remain the same at that time would be the use of Microsoft Excel, as this is a generic spreadsheet application used by every business in the same way.

Please see below the new overall team structure for Vicinity Centres and a more simplified version from the Regional Finance Manager down. Names have been blanked out due to privacy reasons. These images have been obtained with permission from Vicinity Centres.

My

Ro

le

MY ROLE WITHIN THE NEW STRUCUTE

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OFFICE RELOCATION

Choosing new office spaces and relocating is a process that numerous organisations go through each year. The process is classified as a significant event in the course of a company’s life as decisions concerning locations and office solutions determine the commitment, retainability and satisfaction of employee’s in the future working environment.

Initially, Federation Centres was located out in the Melbourne CBD, with only one main head office which was at Collins Street. All employees of the head office were based out on this one location, although separated on different levels depending on the department and teams. The Finance and Tax team were based on Level 31 inside the building at 35 Collins Street whereas Development Accounting, Payroll, Office Administration and People and Culture were on Level 28, with Level 29 being left for IT and any events or corporate meetings/training being held. This was a well set out structure as the teams were grouped based on the departments and it was easy to locate individuals if you knew what level their departments were based at.

After the merger was implemented on 11 June 2015, as mentioned above, the relocation of the teams took place at the beginning of September (September 8 to be exact), where some teams from Collins Street were moved out to Chadstone Shopping Centre in Dandenong and vice versa.

The following teams were co-located from Collins Street (ex-FDC) to Chadstone (Novion):

- Finance

- IT

- Legal, Governance and Risk

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On the other hand the teams that were moved out from Chadstone (Novion) to Collins Street (ex-FDC) were:

- Development Accounting

- People & Culture

- Leasing – Chadstone Development project team will remain in the Chadstone office

- Marketing

- Shopping Centre Management

As evident, I can say, the findings and process of the relocation showed that organisations in general face many challenges when relocating, especially when they have to manage the process themselves. However, most organisations do acknowledge the complexity of the process and are therefore prepared and/or prepare their employees for all the hurdles that a relocation may bring. Although, the relocation and transfer at Vicinity Centres was a smooth process as both companies were very well organised and informative prior to the move, giving all employee a complimentary leave day off on Monday the 7th of September to get themselves sorted and organised for their new office relocation. A pre-move office tour was given to those teams that are relocating on either side, to clear any unfamiliarity and to get to know the new location (entrances, car parks, office passes) a little better before the move day.

The office relocation also consisted of packing up our desks and moving across all paper and files stored at or on our desks. For employees like myself, I didn’t have many paper files to be taken across to the new office as I had only been on placement for a couple of months, with most of my job being done electronically and documents stored on the share drive or my computer.

However, the Senior Property Accountants and team leaders had many files that needed to be brought over in this instance from the last couple of Financial Years. On behalf of the merge team, those that had many paperwork to be brought over were suggested to scan and electronically store as much of their paper filing as possible and as early as possible to prevent any problems from occurring closer to the move date. This would reduce the hassle and minimise the unnecessary moving of boxes of paper.

This was my first time experiencing a relocation of offices in a corporate environment. The office move was a change that directly affected me, as I had to adjust the way I commute to work and back. I changed from using public transport to driving my own vehicle to work. The commute time is slightly

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longer by approximately thirty minutes back and forth, hence the vast time spent on travelling makes it a longer journey. This is due to traffic and road conditions, and the fact that I am coming from the West Side in towards the city, where I will encounter traffic, and to the South Eastern suburbs of Dandenong. Although, this offsets with the change and experience I am gaining from my placement. With the new office, I am being exposed to a new environment, structure and team of people who are great to network with. This creates the opportunity for me to build long-lasting trustworthy relationships, which I can pursue further on. It also helps me in understanding the different types of work others undertake within the Accounting field, being a great exposure.

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CONCLUSION

Drawing a conclusion to this report, it is evident that the merge of Federation Centres and Novion Property Group, that took place on 11th of June 2015, was a key success that bought along many new opportunities for a Real Estate Investment Trust, as well as key issues that needed to be addressed. The merge created many issues with the change of systems, which was to decide between Yardi Voyager and JD Edwards. Thus, another issue was the change in presentation for reporting and office relocation, which made the travel difficult for some employees.

But, on the other hand it was offset by many opportunities created such as the ability to build more defined and larger shopping centres for consumer satisfaction as well as the increase in the number of jobs available or roles offered. Moving forward, Vicinity Centres aims to focus on its brand, value and marketing ability to gain publicity, with its largest asset being Chadstone Shopping Centre – which is one of Melbourne’s largest shopping centre as well.

Overall, my ability to adopt to change within a business environment for the first time was challenging and demanding, but with the help of my fellow team members it was a great, efficient and rewarding experience. It can be concluded that the way Vicinity Centres will be operated, the way all financial statements are produced and presented will all differ in the coming months, until the organisations sets its hand on one procedure, after multiple internal and external meetings.

REFERENCE LIST:

Bhatia, Harshdeep, ‘WIL 1 – Business Report Proposal 2015’, Page 3, Melbourne

‘JD Edwards Enterprise One, Oracle’, < http://www.oracle.com/us/products/applications/jd-

edwards-enterpriseone/overview/index.html>. N.p., 2015. Web. 8 October 2015.

Osmond Vitez 2015, ‘Centralised VS Decentralised Organisational Structure’,

<http://smallbusiness.chron.com/centralized-vs-decentralized-organizational-structure-

2785.html>. N.p., 2015. Web 10 October 2015

Vicinity Centres Internal Communications, <no email address specified> Team Update. [21

September 2015]

Vicinity Centres Guidelines 2015, NPI Reporting Template. Available from: ‘Andrew Tunnock’ at

Vicinity Centres [25 August 2015]

Ýardi Investment Management’, 2015, < http://www.yardi.com/products/yardi-investment-

management/>. N.p., 2015. Web. 15 October 2015.