ANNUAL REPORT 2006/2007
Over the next 25 years, Victoria’s population will increase by over one million people. VicUrban creates places, communities, and centres for business that value the environment, making choices that are affordable today and necessary for tomorrow. VicUrban is the Victorian Government’s sustainable land development agency. VicUrban works in partnership with the public and private sector to lead Victoria in the delivery of exemplary sustainable communities and the creation of opportunities for the development industry.
CONTENTS
This report outlines VicUrban’s Highlights 1 business operations and performance Chairperson’s Report 2 for the financial year Chief Executive Officer’s Report 4 VicUrban 6 1 July 2006 to 30 June 2007. VicUrban Board 8 VicUrban Executive 9 It highlights our commitment to VicUrban Projects 10 Corporate Governance 31 providing sustainable developments, Disclosure Index 35 in which people can Financial Statements 37 live, work, learn and play. Auditor General’s Report 70 1
Highlights
Commercial Success
Revenue of $212.8 million, the highest recorded since the creation of VicUrban. Docklands development revenue: $58.4 million Residential lots settled: 997 Net profit from ordinary activities after income tax equivalent expense of $16.9 million.
Urban Design Excellence
Kangan Batman TAFE collected the 2007 Premier’s Sustainability Award for Public Sector Excellence for its new Docklands campus.
Metro Village 3175 display suite won the Housing Industry Association award for its innovative design.
Environmental Leadership
VicUrban launched the Sustainability Charter, a major initiative that aims to drive improved sustainability outcomes in the built environment. The benchmark for sustainable living has been set by Aurora - the most sustainable development of its size in Australia.
Community Well-being
VicUrban established community intranets, community associations and community services within the Melbourne Docklands and Aurora communities.
Housing Affordability
Over 40% of land delivered by VicUrban in Melbourne’s growth regions was within the lowest price quartile of local markets. The Ownhome pilot was launched in February, trialling the use of a second mortgage to reduce the cost of home purchase.
Housing Affordability Walking paths at The Boardwalk, Point Cook connect people and places.
A year of significant achievement for VicUrban, combining sustainability with profitability. 3
I have pleasure in submitting this Annual Report for the year ended 30 June 2007, prepared in accordance with Section 46 (1) of the Financial Management Act 1994.
The report outlines a year of significant achievement for VicUrban, combining sustainability with profitability. Our net profit from ordinary CHAIRPERSON’S REPORT activities after income tax equivalent expense, before significant items, was $16.9 million. This is a decrease from last year’s net profit of $19.6 million; the result of the increased impact of start up projects to the portfolio, and the concurrent finalisation of projects. Melbourne Docklands had a particularly strong year, both in its financial performance and works on the ground.
At $212.8 million, revenue has grown from the $203.8 million achieved last year and is the highest since VicUrban’s formation. We generated strong operational net cash inflows of $47 million, a substantial increase on last year’s figure of $10.9 million. Some of this excess cash has been used to repay debt.
We completed the municipal transfer of Melbourne Docklands to the Melbourne City Council (MCC). The transfer has resulted in a final asset write down in the current financial year of $19.7 million. As part of the transfer, the MCC has agreed to pay $8.4 million as a reimbursement for the accumulated operating deficit incurrred by VicUrban up until the transfer. Both the charge and the reimbursement have been recorded as extraordinary items in the financial report.
With the completion of the municipal transfer, over $200 million worth of assets developed by VicUrban have been transferred from our balance sheet.
During the reporting period the Board met on twelve occasions, and committees of the Board met eight times. I wish to take this opportunity to thank our out-going board member Helen Hewett. Helen has served the Board with professionalism for the past four years as Deputy Chair and, from the commencement of VicUrban, as Chair of The Finance Audit and Risk Committee. We particularly valued her contribution in the area of risk management and financial management compliance.
I would also like to thank our CEO, employees and our contractors who have all contributed, once again, to ensuring that the year ending 30 June 2007 was a highly successful year for VicUrban and its partners.
TONY DARVALL, AM Chairperson VicUrban We are raising the standard of urban living in Victoria.
Having completed my first full financial year as Chief Executive Officer, I am proud to present to you this account of VicUrban’s achievements over the past 12 months. I wish to begin by thanking the Board of VicUrban, and all our employees, contractors and partners for your hard work and support. Without you, we could not have achieved our present successes. CHIEF EXECUTIVE OFFICER’S REPORT This year we have responded to the various challenges established in our legislation, and have embraced issues that arose from a subdued residential market during the first three quarters of the year. The diversity of the VicUrban portfolio has allowed management to deliver an above budget profit result despite below budget revenues. The year’s performance was a balance between lower than anticipated settlements of residential lots in the General Fund and very strong performance of the Docklands project. We maintained the overall profitability by reducing operating expenditures; it is also pleasing to note that residential lot sales (as distinct from settlements) finished slightly ahead of budget. This is a positive indicator for the forthcoming year, providing continuity of land supply can be achieved. Victoria Harbour at Melbourne Docklands. This year VicUrban successfully launched the VicUrban Sustainability Charter. The Charter is a major initiative, seeking both to lead and support the development industry in the achievement of sustainability. The Charter has introduced a new language to describe excellence in the City of Greater Dandenong, as well as with Regional Development urban development. We shall finalise a second version of the Charter, Victoria and a number of provincial councils. incorporating industry-wide feedback later this year. As we begin a new year of continuing successful partnerships and VicUrban has well exceeded expectations against the housing building fresh ones, our organisational purpose remains focussed. affordability targets set for 2006/2007, with over half of lots sold priced We will continue to deliver sustainable developments and to raise the in the bottom quartile of their local markets. standard of urban living in Victoria. Other achievements this year include: the commencement of the Ownhome pilot in February 2007, with 29 market priced house and land packages sold so far; the transfer of the Docklands’ municipal function to the MCC on 30 June 2007, and the acquisition of key land holdings in central Dandenong as the first step in its revitalisation. VicUrban has also worked with Government to secure new land holdings. This remains an important challenge for the forthcoming year. A number of awards recognised VicUrban’s position as an innovator in the development industry, including the Housing Industry Association PRU SANDERSON (HIA) award to the Metro Village 3175 display suite for its innovative CEO design. VicUrban Our partnerships with both the public and private sectors continued to grow. Current partnerships include those with Melbourne Water, VICURBAN
VicUrban’s task is to deliver a diversity of projects with a focus on sustainability.
VicUrban is the Victorian Government’s sustainable development agency. Established to encourage the development of prosperous and successful communities across Victoria, we work in partnership with both the public and private sectors. Our role is to lead the development industry by demonstrating how sustainable communities can be achieved, while still making a profit. We are one of Victoria’s largest land developers with a diverse portfolio of projects, including the showcase development, Melbourne Docklands. We seek partnerships with private developers, builders and landowners, as well as local government. This ensures we operate across a broad range of activities, and that our approach to development achieves maximum impact in the industry. Together with our partners, we develop communities that are integrated into their surroundings, maintain consistent standards of design, are well connected to transport, and are enjoyable places in which to live and work. Over the next 25 years, the population of Melbourne is expected to increase by up to one million people, which will require the establishment of another 620,000 households. VicUrban’s task is to deliver a diversity of residential projects to help meet this need, while promoting sustainable development. Consequently, we build communities across Victoria, on the metropolitan fringe, and in established metropolitan areas. 7
The Victorian Urban Development Authority Act (2003) u Develop land in Victoria for residential and other urban The Victorian Government established the broad functions and purposes to provide a competitive market, and responsibilities of VicUrban through the Victorian Urban Development u Contribute to improvements in housing affordability. Authority Act 2003. The Act requires VicUrban to carry out its functions on a The Act states VicUrban was established to: commercial basis. During the 2006/2007 year, VicUrban reported to the Minister for Major Projects. u Carry out urban development alone or in partnership; u Develop the Docklands area in accordance with the Docklands Government Policy and Objectives Act 1991; A range of Government policies and objectives drive VicUrban’s u Undertake declared projects, and strategic goals. u Assist in the implementation of Government urban development The key published Government policies that influence VicUrban’s policies and strategies, including Melbourne 2030. strategic directions are: u Melbourne 2030: Planning for Sustainable Growth Key functions set out in the Act include to: u Our Environment, Our Future: Victoria’s Environmental u Purchase, consolidate, take on, transfer or otherwise acquire land Sustainability Framework in metropolitan and provincial areas for development for urban u Growing Victoria Together purposes; u Moving Forward: Making Provincial Victoria the Best Place to Live, u Promote best practice in urban and community design and Work and Invest sustainable development, having regard to links to transport services and innovations in sustainable development;
6-Star energy efficient homes helping reduce the cost of living at Aurora. VICURBAN BOARD
Tony Darvall, AM - Chairperson Helen Hewett - Deputy Chairperson A lawyer, Tony Darvall is Deputy Chairperson of the Helen Hewett trained as an accountant before taking Southern and Eastern Integrated Transport Authority, up senior management positions in finance, property, Chairperson of the Melbourne University Law School health and welfare. She also serves as Chairperson of Foundation and a commissioner of the Essential both the Audit Committee of the Victorian Building Services Commission. Commission and the Queen Victoria Women’s Centre.
Marcus Spiller Carolyn Lloyd Marcus Spiller is a Director of SGS Carolyn Lloyd specialises in the application of Economics & Planning Pty Ltd. He has consulted to sustainability and environment issues to the building the planning industry on land economics, regional and development industries. Carolyn has held a development, housing policy, infrastructure funding, number of senior positions, including CEO of the policy co-ordination systems, and business Housing Industry Association (HIA), and planning for cultural institutions. Chairperson of the Building Practitioners’ Board.
Michael Roux Garry Weaven Michael Roux is Chairperson of Roux International Pty Ltd, Australian Davos Connection (ADC), Garry Weaven is Chairperson of Industry Funds Victorian Opera and Asian Markets-KPMG. Management, and a director of Members Equity Bank He is also a Director of Asialink. and of Pacific Hydro Pty Ltd.
Gabrielle Trainor Warwick Heine Gabrielle Trainor is a lawyer and consults in Warwick Heine works as a policy analyst, governance government affairs and issues management. She is advisor and strategist to the private, public and not- Chairperson of Best Western Australia and Shirlaws for-profit sectors. He is Chairperson of the Emergency Limited, and director of the Sydney Harbour Services Telecommunications Authority (ESTA) and Foreshore Authority, World Swimming Championships the Victorian Packaged Liquor Industry Development Corporation and Breast Cancer Network Australia. Trust Fund.
Sharon Michael - Secretary to the Board 9 EXECUTIVE
PRU SANDERSON CEO
MATT FAUBEL Government
MARK ALLAN ROB VINES MICHAEL HYNES DOMINIC ARCARO GARY SZOKA KIRSTEN RAPPOLT Project Planning Urban & Provincial Docklands & Urban Corporate Business Planning & Design Communities Major Projects Revitalisation Services & Marketing
Design Services Urban Commmunities Development Dandenong Finance Business Planning Project Delivery Community Development Place Management Transit Cities ICT Property Marketing Provincial Projects Projects Planning Infrastructure Urban Renewal Human Resources Sales Construction Industrial Legal and Governance Brand Management New Business Bid Management Communications Market Research
Total area: 175 hectares Total area: 185 hectares Number of dwellings: 1,712 Number of dwellings: 1,516 Population projection: 5,000 Total area: 28 hectares Population projection: 5,200 Community infrastructure: Carranballac College, Number of dwellings: 300 Community infrastructure: two lakes/wetlands, one community centre, main street-style town centre, smaller Population projection: 1,000 primary school, oval, playground, BBQ recreation commercial premises (milk bar), 2 childcare centres, Community infrastructure: lake foreshore included in master area, retail area, community centre Catholic School scheduled to open in 2008 plan - all abilities playground to be constructed Sustainability initiatives: WSUD throughout, roads Sustainability initiatives: solar orientation, green Sustainability initiatives: solar orientation, compulsory water designed to accommodate existing red gums, powered street lighting, Skeleton Creek revitalisation, tanks, Homes for Life principles included in all design, WSUD protection of the Barnbam Swamp, protection of 13 hectares of wetland with boardwalks stormwater management, stormwater reuse significant Aboriginal sites Expected Completion: 2007 Expected Completion: 2023 Expected Completion: 2008
THE BOARDWALK HAMILTON LYNBROOK
VALLEY LAKE ROXBURGH PARK LANCASTER GATE
Total area: 47 hectares Total area: 650 hectares Total area: 26 hectares Number of dwellings: 550 Number of dwellings: 5,600 Number of dwellings: 535 Population projection: 1,800 Population projection: 14,500 Population projection: 2,500 Community infrastructure: 14ha of open space Community infrastructure: three shopping centres, four Community infrastructure: council operated community Sustainability initiatives: solar orientation, water tanks, primary schools, one secondary school, youth and recreation centre, integrated with neighbourhood village solar hot water, Steele Creek rejuvenation, recycled water centre, nursing home and aged care facility, community Sustainability initiatives: solar orientation, protection of for landscaping, lake purification to wetlands centre, sports complex, 80ha of open space over 50% of the mature trees, establishment of Laurundel Expected Completion: 2010 Sustainability initiatives: WSUD, 14 lake open drainage Grassland reserve, including the protection of the system, tree protection endangered ‘Matted Flax-lily’ Expected Completion: 2007 Expected Completion: 2008 residential. 2014 mixed use precinct
concept render only
Abbreviations WSUD Water Sensitive Urban Design ESD Environmentally Sustainable Development CALM Capped And Lined Mound
These maps, plans, photos, master plan and renders are for illustrative purposes only, are not to scale and are subject to change. Total area: 207 hectares renewal (land and water) Number of dwellings: 8,300, (850,000m2 commercial) Estimated residents: 20,000 Total area: 3 hectares Estimated workers: 40,000 Number of dwellings: 51 Estimated visitors: 20 million per year Total area: 24 hectares Population projection: 150 Community infrastructure: parks, community intranet Number of dwellings: 145 Community infrastructure: n/a Sustainability initiatives: Melbourne Docklands ESD guide, Population projection: 400 Sustainability initiatives: sustainable design WSUD, two proposed 6-Star green star buildings under Community infrastructure: 50% open space principles incorporated into townhouse construction, four 5-Star green star buildings proposed/achieved, Sustainability initiatives: wetlands and waterways designed to development, protection of significant native recycled water to Docklands Park, water storage and irrigation for improve water quality and supplement council’s irrigation for the and exotic trees, WSUD principles throughout, Docklands Park, other ESD initiatives including black water sporting precinct, 5-6-Star energy efficient homes, rainwater used protection of cultural heritage treatment, river cooling system for hot water, toilet, laundry and gardens Completed: 2006 Expected Completion: 2020 Expected Completion: 2010
CHELTENHAM MELBOURNE DOCKLANDS PARKSIDE GARDENS
NARRE WARREN NORTH DANDENONG LOGIS BONBEACH
Total area: 11 hectares Total area: 154 hectares Total area: 6 hectares Number of dwellings: 61 Number of lots: 206 Number of dwellings: 97 Population projection: 183 Estimated number of workers: 3,000 Population projection: 262 Community infrastructure: new shared pedestrian paths, Community infrastructure: adult learning centre, retail Community infrastructure: retention and upgrade of school inclusion of small park centre, provision of public transport hall and car parking, 7,500m2 of open space Sustainability initiatives: rainwater harvesting for hot Sustainability initiatives: class A recycled water, WSUD Sustainability initiatives: water tanks for toilet and garden water, solar orientation, recycled water for toilets and garden stormwater management, rehabilitation of adjoining use and WSUD stormwater treatment use, WSUD and reconstruction of existing wetlands, WSUD Dandenong Creek, eco selector for industrial buildings, Expected Completion: 2008 using bio-retention cells and a rain garden, retention of 200 construction waste reduction program, fibre to the premises, year old swamp gum, indigenous landscaping low energy street lighting and green power supply Expected Completion: 2008 Expected Completion: 2014 Total area: 630 hectares Number of dwellings: 8,000 Population projection: 25,000 Total area: 7 hectares developable land Community infrastructure: one retail/community hub, two mixed Number of dwellings: 92 use town centres, five schools, three community activity centres, Total area: 108 hectares Population projection: 300 various sporting facilities, 135 ha of open space Number of dwellings: 1,000 Community infrastructure: North Shepparton Sustainability initiatives: 6-Star energy efficient homes, third pipe Population projection: 3,000 Community Hub water recycling, WSUD stormwater management, rehabilitation of Community infrastructure: public school, 34ha of Sustainability initiatives: WSUD including swales natural environment including Edgar’s Creek, eco selector, open space, sports precinct, playground in central parkland, solar orientation (where construction waste management, fibre to the home, green powered Sustainability initiatives: rejuvenation of Kororoit available) street lighting, living and learning centre at Creeds Farm Creek Expected Completion: 2010 Expected Completion: 2027 Expected Completion: 2008
PARKSIDE AURORA TENTERFIELD
OFFICER DANDENONG CREEK RESIDENTIAL RIVERWALK
Total area: 360 hectares Total area: 18 hectares Total area: 197 hectares Number of dwellings: 3,100 Number of dwellings: 250 Number of dwellings: 2,200 Population projection: 9,000 Population projection: 750 Population projection: 5,000 Community infrastructure: activity centre/main street, three smaller Community infrastructure: proposed community gardens, Community infrastructure: retail centre, two primary schools, activity centres, three schools, integrated health care facility, connections to the local bicycle paths Melbourne Water Discovery Centre, Housing of the B24 Liberator equestrian centre, sporting facilities, 40ha of open space Sustainability initiatives: maximise construction waste diverted from aircraft, 25ha of open space, Independent public and private Sustainability initiatives: 6-Star energy efficient homes, third pipe landfill, third pipe recycled water connected from the LOGIS project, school, bicycle trails, pedestrian bridge over Werribee River water recycling, WSUD stormwater management, rehabilitation solar hot water, water tanks to each home Sustainability initiatives: 6-Star energy efficient homes, WSUD of natural environment including Gum Scrub Creek, eco selector, Expected Completion: 2014 water recycling, rehabilitation of natural environment including contruction waste management, fibre to the home, low and green upgrades to the Werribee River, incorporation of cultural heritage powered street lighting Expected Completion: 2020 Expected Completion: 2018 concept render only
Total area: 150 hectares Total area: 28 hectares Number of dwellings: 1,100 Number of dwellings: 1,000 Population projection: 2,500 Population projection: 3,000 Community infrastructure: TAFE site, cafe site, aged Community infrastructure: proposed community centre, care facility/retirement village 2ha of open space, realignment of Cheltenham Road Total area: 2 hectares Sustainability initiatives: design controls, WSUD Sustainability initiatives: WSUD stormwater onsite Number of dwellings: 32 stormwater management, stormwater reuse treatment, rain gardens to the northern properties Population projection: 87 Expected Completion: 2020 Expected Completion: 2015 Expected Completion: 2008
TOWER HILL METRO VILLAGE 3175 KEMPSTON ST
CAIRNLEA JACKSONS HILL
Total area: 197 hectares Total area: 460 hectares Total area: 193 hectares Number of dwellings: 2,200 Number of dwellings: 3,000 Number of dwellings: 1,100 Population projection: 5,000 Population projection: 10,000 Population projection: 3,300 Community infrastructure: retail centre, two primary schools, Community infrastructure: town hub with retail centre, local Community infrastructure: primary school, special school, Melbourne Water Discovery Centre, Housing of the B24 Liberator government service hub, residents’ association, primary school, university, local commercial precinct, 42ha of open space, bicycle/ aircraft, 25ha of open space, Independent public and private secondary school, 80ha of open space, four parks, 37ha walking paths school, bicycle trails, pedestrian bridge over Werribee River conservation reserve, 35ha business precinct Sustainability initiatives: WSUD for wetlands and public open Sustainability initiatives: 6-Star energy efficient homes, WSUD Sustainability initiatives: land remediation (CALM), space, 22 home solar precinct, surplus energy back to grid, low energy water recycling, rehabilitation of natural environment including stormwater harvesting, protection endangered fauna and flora street lighting, recycled onsite materials and water used in upgrades to the Werribee River, incorporation of cultural heritage program, Aboriginal artefact protection program construction and civil works, ‘economical house’ project Expected Completion: 2020 Expected Completion: 2009 demonstration, protection and reuse of historical buildings Expected Completion: 2010 SUSTAINABILITY CHARTER VicUrban’s Sustainability Charter measures excellence in urban development. VicUrban is working towards the adoption of the Sustainability Charter by the Victorian development industry in 2008 to improve the way it assesses sustainability.
We launched the first edition of the VicUrban Sustainability Charter to external stakeholders in February 2007. Building on the groundbreaking Melbourne Docklands Ecologically Sustainable Development (ESD) guide, developed in 2003, the Charter establishes guidelines that define VicUrban’s vision for sustainability, and provides a framework for the design, implementation and delivery of every project the agency undertakes.
The Charter measures and reports against a comprehensive set of key sustainability objectives. VicUrban uses this information to improve our sustainability performance in developments. The Charter is intended to provide the development industry with a
Aurora, North Epping integrating common language for measuring the elements of sustainability. urban design with the environment. 13
SUSTAINABLE DEVELOPMENT IS DEFINED BY THE BRUNDTLAND COMMISSION AS The Sustainability Charter is based on the following interdependent ‘DEVELOPMENT THAT MEETS THE NEEDS OF objectives: THE PRESENT WITHOUT COMPROMISING THE ABILITY OF FUTURE GENERATIONS TO MEET Commercial Success THEIR OWN NEEDS’. Our projects achieve commercial success when they meet or exceed the hurdle rate of return set by VicUrban, while maximising Community Well-being environmental, social and economic benefits, in accordance with Government policy. VicUrban strives to create safe and healthy communities with ready access to jobs, services and education. Our communities foster active local citizenship, and are pleasant places to live, work Housing Affordability and visit. Providing access to affordable and appropriate housing is a critical We have identified five areas that influence sustained community element in building sustainable and diverse communities. well-being: responding to community needs; building a strong The Charter identifies areas in which VicUrban can influence sense of belonging in a community; ensuring access to local and housing affordability by: seeking to reduce the purchase price of regional employment opportunities; creating safe environments for housing; delivering ongoing savings in household expenditure; physical activity; recreation and social interaction, and providing the cost-effective purchase and release of land, and delivering opportunities for lifelong learning. affordable rental housing. SUSTAINABILITY CHARTER
Environmental Leadership Urban Design Excellence
We are committed to the protection and management of natural The successful delivery of this objective requires every aspect of systems, habitat and biodiversity, and seek to use precious the design process to be focussed on the creation of a sense of resources such as materials, water and energy in an efficient and place within an urban landscape. innovative manner. Essential elements include: the recognition of the individual The Charter identifies a number of areas in which VicUrban distinctions of place; providing a safe, walkable and well-designed can demonstrate environmental leadership: the efficient and public realm; paying particular attention to subdivision design; an responsible use of energy; conservation of water resources; innovative and imaginative use of space and form; well-connected attention to transport and pedestrian needs; ensuring indoor and easy to understand spaces; ease of movement; safety and environmental quality; using renewable, low-energy materials; security; varying densities, and mixed use. minimising waste; respecting the local ecosystem, and the minimisation of atmospheric pollution. Cairnlea, leading integrated water sensitive urban design. 15
Performance Report COMMERCIAL
Tenterfield, 91 sales ahead of budget this year.
VicUrban achieves commercial success by meeting or exceeding the hurdle rate of return on all projects, while maximising environmental, social and economic benefits in accordance with government policy.
VicUrban focuses on commercial success in all are strongly contributing to the growth of the second land release of 21 lots is scheduled for projects. By commercial success, we refer not Tenterfield community. September 2007, again by ballot. only to the return to our shareholder: we also Cairnlea features a mixed-use town centre, The good profit margins VicUrban has consider the profitability of the project to providing significant community services and achieved at The Boardwalk development are private partners, as well as the continuing local employment opportunities. The the result of buying keenly and the substantial contribution to the local economy. incorporation of a business park into the growth of land prices, since we made the Docklands has been VicUrban’s most successful Cairnlea development will help to supplement purchase. The quality of our development at development to date. Projects such as this employment. Cairnlea is emerging as a The Boardwalk has driven its commercial Tenterfield, Cairnlea, Bonbeach, and The preferred choice for people from neighbouring success. VicUrban was one of the first Boardwalk are also important to the continued suburbs such as Deer Park and Sunshine. developers in the Point Cook area and played a delivery of VicUrban’s positive financial Extended families are purchasing homes within significant role in the design of the area’s performance. a couple of blocks of each other, choosing structure plan. This plan provided the Cairnlea as a suitable neighbourhood for the framework for the provision of community The development at Tenterfield has been whole family, from grandparents through to the facilities such as schools, child-care centres and extremely successful, achieving 91 sales ahead children. retail facilities. The market has demonstrated a of budget this year. VicUrban sold land to the strong appreciation of these community Department of Education and Training (DET) Two other VicUrban commercial successes this facilities, as well as The Boardwalk’s for the construction of education facilities year have been the developments in the bayside landscaping, urban design, and excellent access planned to begin in 2009. suburb of Bonbeach and at The Boardwalk, to Melbourne’s CBD. Point Cook. VicUrban prefers to use local builders when possible as this provides employment and Earlier this year, the first new land release in increases spending in the area. Building on the years at Bonbeach sold out within an hour, successful associations formed at Cairnlea, we during a ballot draw for 19 lots. Prices at have established excellent relationships with the Bonbeach ranged from $215,000 to builders around the Tenterfield area. Sales $290,000. The sell-out demonstrated the success at Tenterfield, increased local business benefits of offering a well-priced, competitive relationships and its future education facilities land opportunity in a sought-after area. The
17
MELBOURNE DOCKLANDS Docklands is Victoria’s largest urban renewal project. In 1997 the area consisted of 207 hectares of disused wharves and railyards. Now, in Melbourne’s new city destination 2007, it is a vibrant new CBD precinct in which Melburnians can live, work and play, offering some of the best water views in the city.
VicUrban partners with the private sector in the rejuvenation of the precinct, aiming to deliver a total of $10 billion of private investment. At present, more than one third of the project is complete or in construction and we expect that Docklands will eventually become home to 20,000 residents, provide diverse employment opportunities for 30,000 workers, and be a daily destination for 55,000 visitors.
VicUrban has facilitated much of the key infrastructure in Docklands, including the roads, Telstra Dome and the Webb Bridge. We also designated the parcels of land for development and presided over both the design guidelines and the bidding by developers. Our involvement in these processes has created certainty for the development industry, making investment in Docklands an attractive proposition. Leading firms such as Mirvac, MAB and Lend Lease have created distinctive precincts at Docklands, and this interest from the private development industry is expected to continue through to our projected completion date of 2020.
The year 2006/2007 has been significant for VicUrban’s involvement at Docklands. We achieved a record $58.4 million revenue from the Docklands development. Revenue received a substantial boost following the announcement in September of the ANZ bank’s intention to establish a campus style headquarters at Victoria Harbour. On completion in late 2009, this will be one of the largest commercial developments in Australian history: 83,000m2 of commercial office space at a cost of $478 million with approximately 5,500 employees coming and going every day.
During the year, VicUrban moved to accelerate the redevelopment of a major traffic and pedestrian spine: Harbour Esplanade. With work Melbourne Docklands featuring a view of the city expected to start in 2008, VicUrban initiated consultation with the local from The Blue Park. and broader community to establish the most suitable options for this centrally located precinct. MELBOURNE DOCKLANDS
VicUrban also continued to work to secure key worker housing at Docklands. Lend Lease announced the development of a high quality 12-storey residential building in Victoria Harbour, including apartments designated for key workers such as hospitality workers and administrative staff.
Docklands’ multi-million dollar urban art program grew substantially, with the addition of landmark pieces: Field Of Play, by Troy Innocent at Digital Harbour; On The Beach, by Janet Burchill at SiteOne, and It’s Hard To See What It All Means, by Rose Nolan, also at SiteOne.
During June 2007, VicUrban finalised preparations for the transfer of the municipal and workplace functions of Docklands Public transport is to the MCC. From 1 July 2007, responsibility for collection integrated into Melbourne Docklands. of rates, local law enforcement for street and water, garbage collection, and security and maintenance now resides with the MCC.
The MCC and VicUrban worked together to create a new logo (below) for Docklands that each organisation could use: the MCC to promote Docklands as a destination and VicUrban to promote further development opportunities.
A marketing strategy developed by VicUrban will promote the continued delivery of private investment into Docklands by strengthening the brand and increasing its attractiveness to investors.
Through the enforcement of the design guidelines, VicUrban has created a market for more environmentally sustainable office spaces and an aesthetically exciting destination for visitors. Together, these benefits make Docklands a highly desirable investment proposition, and ensure the continuing commercial success of the precinct. 19
KEY HIGHLIGHTS 2006/2007 July 2006 Docklands becomes a winter playground for thousands of Melbourne families with the Winter Wonderland event at Waterfront City. September 2006 ANZ announces it will relocate 5,500 staff to Victoria Harbour. October 2006 The State Government and VicUrban announce each will contribute $10 million to accelerate the development of Grand Plaza on Harbour Esplanade. The City of Melbourne commits to invest up to $6.75 million, subsequently increased to $6.95 million, in a new childcare facility in Victoria Harbour. December 2006 Work starts on National Foods new headquarters in the Batman’s Hill Precinct. Docklands summer events program includes a series of Christmas events and is part of Melbourne’s largest free New Year’s Eve celebration. Port 1010 at Comtechport was completed, achieving a 5-Star green star environmental rating. January 2007 Scheduled for completion in May 2008, the construction of the further extension of Collins Street begins. Work starts on 370 Docklands Drive - a 7-storey environmentally sustainable office building with ground floor retail in the NewQuay precinct. May 2007 The NewQuay precinct opens its latest addition: the Aquavista tower for small businesses. Stage One of the interim use for Dockland’s Central Pier, opens. Designed to showcase the site’s potential for a longer-term solution, the interim use features function rooms and cocktail bar, Alumbra, and an emerging artists’ gallery and studio. June 2007 A community consultation process begins on the Harbour Esplanade project. Work is finalised in preparation for 1 July 2007 handover of the municipal and place management functions from VicUrban to the City of Melbourne.
Summer events at Docklands draw large crowds. This map is for illustrative purposes only, is not to scale and is subject to change. 21
The Revitalising Central Dandenong project (RCD) is a partnership between the Victorian Government and the City of Greater Dandenong. REVITALISING With a Victorian Government commitment of $290 million, it is CENTRAL Victoria’s second largest urban renewal project after Docklands. Central Dandenong is located 40km South East of Melbourne’s CBD. DANDENONG During the past two decades, this once vibrant centre experienced significant decline in population, employment opportunities and investment.
The RCD project envisages a rejuvenated Dandenong, with the city taking its place as the capital of South-East Victoria. The project is designed to improve the city’s economy and street life, with Dandenong’s multicultural community taking pride in their historically great city and ownership of its public spaces.
The project aims to attract over $1 billion of private sector investment over the next 15-20 years. It expects to generate approximately 7,000 new jobs, accommodate up to 12,000 new residents, and draw 30,000 visitors to Central Dandenong each day.
The RCD project is the lead project of the Victorian Government’s Transit City Program, through which VicUrban will encourage urban consolidation, with mixed use and higher residential density developments around key public transport sites.
A draft urban master plan has been developed with the key elements including:
u Making Lonsdale Street more people friendly;
u Creation of a City Walk, which connects the rail and bus station to the heart of the city;
u Development of the rail/bus station precinct, and
u George Street bridge.
Other opportunities identified by the master plan include improvements in tree planting, amenities, education, health and civic uses, and new development sites for private sector investment. Draft urban master plan for Revitalising Central Dandenong. A framework for the next 20 years. DANDENONG
Other projects in the Dandenong area include: 18 hectare site is expected to provide approximately 250 dwellings and associated public open space. In partnership with Melbourne Water, we are undertaking residential development of this site. Metro Village 3175 At present, Dandenong Creek is a concrete channel with grass on This joint venture between VicUrban and the City of Greater either side. The master plan proposes the aesthetic improvement Dandenong is converting the site of the former Dandenong saleyards of the area by upgrading the channel through the introduction of into a vibrant, cosmopolitan community. tree-lined banks, and recreational facilities such as barbecues and Metro Village 3175 is the first new housing development of its type shared bike/pedestrian paths. in Dandenong for more than 20 years. The development focuses on environmental sustainability, each home delivering 5-Star energy ratings, maximum exposure to natural light, solar hot water systems Dandenong LOGIS and the treatment of stormwater. In partnership with Melbourne Water, VicUrban is making a major Delivering around 1,000 new homes, Metro Village 3175 is expected to contribution to the economic sustainability of Dandenong by become home for up to 3,000 new residents. The relandscaped banks transforming this land into Victoria’s newest industrial precinct. of Dandenong Creek are a central feature of the development, offering Located on the former Dandenong treatment plant, LOGIS will be scenic views of a relaxed, beautiful and natural environment. a large-scale industrial development designed on sustainability principles and is expected to generate around 3,000 jobs for the Dandenong Creek Residential Dandenong area. Located just south of the Metro Village 3175 development and adjacent to both the Dandenong Creek and the Eastlink Freeway, this
Metro Village 3175 will offer a range of housing options to suit every need.
This is an artist’s impression, is for illustrative purposes only and is subject to change. 23
Performance Report AFFORDABILITY
The Boardwalk at Point Cook features several Ownhome sites.
Access to affordable and appropriate housing is a critical element in building sustainable and diverse communities.
Access to affordable and appropriate housing close to their places of work. It is the result of or deals in the property. The first release of 40 is critical to building inclusive communities. a successful collaboration between Lend Lease, house and land packages (four shared equity) VicUrban is committed to improving housing Melbourne Affordable Housing (MAH), the took place in February 2007 in four VicUrban affordability for all Victorians by ensuring it is Office of Housing and VicUrban. Another communities. Further releases are scheduled in delivered in its projects. late 2007 and 2008. Over half of VicUrban’s Through their work with current land supply is located VicUrban is driving projects designed to deliver VicUrban, Porter Davis, one of in Melbourne’s growth regions. housing affordability for Victorians Melbourne’s premier builders, Since July 2006, VicUrban has built the first of the new delivered over 50% of this supply Access range of homes at The within the lowest price quartile Boardwalk and at Tenterfield. example of VicUrban’s commitment to housing of local markets. Our provincial projects Priced to suit low to moderate income affordability is the Ownhome pilot, being consistently deliver 45% of total stock within households, these affordable homes feature high undertaken in partnership with Burbank the local market’s lowest quartile. quality fittings and fixtures and are offered as Homes. This entails delivery of 100 affordable complete packages. VicUrban is participating in a number homes, including ten being offered on a shared of projects designed to increase housing equity basis, with eligible purchasers paying VicUrban continues to implement strategies affordability for Victorians. The Victoria 75% of the home’s price. like these, that will further improve housing Harbour key worker project will increase affordability for moderate income families Ownhome pilots the use of a second mortgage, living opportunities for low to moderate- across Victoria. held by VicUrban, to reduce the cost of home income households in Melbourne Docklands. purchase. The second mortgage does not incur The project is designed to ensure that workers interest and will realise funds for reinvestment such as administrative staff, nurses and in affordable housing when the purchaser sells hospitality workers are able to afford to live
25
VicUrban’s Aurora development sets a new standard for sustainable living in Australia. Located in Epping North, north of Melbourne, AURORA on gently undulating land, Aurora has been designed to deliver an environmentally sustainable, healthy, and vibrant community. Our benchmark for sustainable living A diverse mix of homes will stand on wide, tree-lined streets, based around two vibrant town centres. Facilities are expected to include schools, kindergartens, sporting facilities, a gym, and a retail district. Comprising some 8,000 dwellings when complete, over the next 20 years Aurora is expected to become home to around 25,000 residents.
This innovative development has been designed to encourage a strong sense of place linked to local communities. At Creed’s Farm Village, for example, a heritage walk reminds Aurora residents of the history of the location as a working dairy farm. A further example is the recent installation of three major artworks, as part of a public art program.
Crucial to its sense of place is the creation of a cohesive community: Aurora is home to people from all age groups and from diverse ethnic backgrounds. The wide age range means that VicUrban had to consider the requirements of every stage of the life cycle in the planning of Aurora. The community provides for learning, physical and social activities for children, local employment opportunities for adults, and social activities for retirees. The development is designed to encourage lifelong learning with opportunities for each age group to pursue further learning.
A significant development will be the construction of the Living and Learning Centre. The Centre will feature a lending library that provides information on all aspects of living in an environmentally sustainable way, including reducing energy and water consumption around the home. It will also offer programs such as car-pooling, support for environmental action groups and share equipment.
Aurora is designed to encourage a real sense of community, and the introduction of the community intranet has been a significant and well- used development in this regard. At the same time, innovative home and public realm design delivers privacy when required. Important too is the provision of the latest technology in the form of fast broadband Aurora, our flagship for sustainable connection over a fibre-to-the-home network: Aurora is designed to be housing development. a traditional community with a contemporary focus. AURORA
The development is also showing Victorians how to pursue an active and healthy lifestyle in a time when our lives are becoming increasingly sedentary. Facilities lie within walking distance to most homes, along safe pathways and across large open green spaces, encouraging residents to leave their cars at home.
Each home at Aurora delivers a 6-Star energy rating with solar hot water systems as standard. Homes are positioned to minimise overshadowing: to make best use of the warm winter sun for heating and to reduce exposure to the summer sun. Aurora homes use almost 50% less energy than conventional homes, and by also using energy efficient appliances residents could reduce greenhouse gas emissions by as much as 5 tonnes a year.
The development also boasts one of Australia’s first recycled waste water systems. Once operational, high quality recycled water will be piped directly into every home for toilet flushing and the watering of gardens. It is estimated that the Aurora community could save the equivalent of 400 Olympic swimming pools of drinking water every year.
Finally, Aurora is home to a diverse range of indigenous plants and animals, including the Matted Flax-lily, the Golden Sun Moth, the Growling Grass Frog, and River Red Gums. VicUrban places the highest priority on the maintenance of this biodiversity. We have taken a practical approach to the management of the natural environment at Aurora, creating conservation reserves, controlling weeds and vermin, and re-planting native species. Residents can participate in Aurora Planting Days, encouraging community ownership of the enhancement and maintenance of their environment. 27
Performance Report ENVIRONMENT
Environmental leadership is essential to the protection and management of natural systems, habitat and biodiversity, as well as the innovative and efficient use and management of precious resources such as natural materials, water and energy.
VicUrban’s LOGIS development at Dandenong exemplifies our commitment to environmental leadership. Developed in partnership with Melbourne Water, the first lots are scheduled for sale in 2008. LOGIS will be Victoria’s most environmentally sustainable industrial precinct. Besides delivering financial success for its This master plan is for illustrative purposes only, is not to scale and subject change. business partners, we envisage that LOGIS will set a new national standard for industrial parks, based on social and environmental principles that encourage business, employees and the community to work and prosper together. Economically sustainable initiatives are at
Draft master plan for the heart of the LOGIS project, including VicUrban’s industrial development third pipe recycled water; on site stormwater Dandenong LOGIS treatment; the recycling of industrial waste; the provision of green power, and the application of environmentally sustainable principles in all built forms.
N Performance Report DESIGN
Parkside Gardens, Shepparton - early days of construction.
Urban design excellence can only be achieved when all design thinking concentrates on creating a sense of place within an urban landscape. With the Parkside and Parkside Gardens development will have new parklands that House and wetlands. Combined with the developments in Shepparton, VicUrban is will be complemented by the ready access to the newly developed Wanganui Park, the area demonstrating how excellent urban design can substantial parklands planned for the nearby provides an attractive natural environment change the way a community feels about the Parkside Gardens development. for residents. The project will also feature spaces in which it lives. new access points for pedestrians, cyclists and Following public consultation, it was decided vehicles to areas of interest, the enhancement Creating a sense of place has been at the heart to keep more than half of the Parkside Gardens of the onsite radio station (98.5FM) and of VicUrban’s redevelopment of the Parkside site for public open space. The design of this significant landscape improvements to the site, north of Shepparton in Central Victoria. public space will incorporate the existing Bangerang Culture Centre. Residents of the new affordable Parkside Bangerang Culture Centre, the Philippine
Parkside Gardens render of final design.
This is an artist’s impression, is for illustrative purposes only and is subject to change. 29
Performance Report COMMUNITY
Cairnlea - the Royal Children’s Hospital Good Friday Appeal auction attracted a large crowd.
Communities that are safe and healthy, have access to services, jobs and learning, foster active local citizenship and are pleasant places to live, work and visit.
VicUrban creates sustainable communities. the renewal and redevelopment of Parkside on the street allows residents to pick up last- We conduct research into sustainability, build and Parkside Gardens. The Hub is expected minute necessities without having to walk developments that demonstrate sustainable to provide a range of services to the local long distances. A child care centre is located practices, and share those practices with the community, including maternal and child conveniently just off the main street. private development industry. health care, adult education programs, youth Our commitment to the community programs and neighbourhood house services. Our goal is to promote community continues to extend beyond our well-being through a range of developments. During the year, innovations, including community Our goal is to promote community well-being. VicUrban continued its long intranets and associations, and the running association with the creation of local community hubs. Royal Children’s Hospital Good Friday Appeal. Together with We have planned a number of community The Lynbrook Village Retail Centre opened Henley Properties Group and a large group of hubs at developments across Victoria. in mid-March 2007. Based on a main street suppliers and subcontractors, VicUrban once The Docklands Children’s Hub provides theme, the design references the convenience again auctioned two house and land packages integrated long day care, occasional care, a of Melbourne’s traditional local shopping at VicUrban developments, raising over kindergarten, maternal and child health care, centres. Most of Lynbrook’s residents live just $800,000 for the 2007 Good Friday Appeal. training spaces, and a place for the community a short walk from the Village, where they can to come together. enjoy a leisurely stroll along the tree-lined The proposed North Shepparton Community main street. Behind the shops there is ample Hub is a major initiative, arising out of parking for longer stays; short-term parking OUR PEOPLE
With over 190 employees working across 14 Our Capabilities VicUrban ‘university’ locations, VicUrban has a multi-disciplined Once we have attracted the right people, This weeklong event brings local and and diverse workforce. We strive to create a we work hard to retain them. Our multi- international experts and employees together working environment that provides clarity, disciplined workforce requires a broad to share industry knowledge and brainstorm opportunity, responsibility, recognition and program of learning and development solutions for our projects. Last year’s program respect for employees. Over the past twelve opportunities to align our capabilities to our considered our Docklands’ urban renewal months, we have worked hard to ensure our corporate goals. project from a community and design people policies and practices are aligned. perspective, and reviewed two Transit City Our corporate goal to encourage the projects: Geelong and Dandenong. development of prosperous and successful Our Culture communities across Victoria means we need We believe in providing an environment our people to perform above and beyond Our Health and Well-being and resources that support employee and other developers. To promote innovation The health and well-being of our people is organisational values so employees can give and to push the boundaries of best practice, paramount. Our excellent workplace safety of their best. we continue to run a series of development record is, again, evidence of the success of programs such as: Employee engagement is an important occupational health and safety awareness. way of gauging organisational health - just One incident of lost time injury occurred as important as measuring our financial The John Tabart scholarship during this year against a targeted zero. performance. Named after VicUrban’s former CEO, John To complement our OHS procedures, we Key employee engagement initiatives Tabart, the scholarship encourages and have a full program of health and well-being are around career opportunities; brand promotes an individual’s contribution to activities, including an employee assistance alignment; collaboration, and leadership sustainable urban development, through a program; ergonomic consultations; spinal development. In the coming year, we will research program. checks; flu vaccinations; fruit at work; Global focus our efforts on these areas. Corporate Challenge (encouraging daily We selected two people in the scheme’s walking), and nutrition presentations. VicUrban is committed to applying merit inaugural year, who will finalise their research and equity principles, when appointing and findings in late 2007. employees. The selection process ensures applicants are assessed and evaluated fairly and equitably on the basis of the key selection criteria, without discrimination. Given the competitive labour market, we are working hard to attract and retain the right people. To help with this, we implemented an employee referral and reward program to provide a wider pool of candidates, to ensure the best person for the job, and to reduce the cost of recruitment. We have revisited our orientation and induction processes. Our business is complex and challenging. We understand the first few months of employment set the foundations for new employees and can influence their long-term success in the business. Our new processes assist employees to be productive in a shorter time frame. 31 CORPORATE GOVERNANCE
The Board COMMITTEE MEMBERSHIP
The Board is responsible for policy Board Member Finance, Audit & Docklands Place People & Remuneration development, strategic direction, and Risk Committee Management & Committee monitoring the performance of VicUrban. Municipal Committee A framework for effective management Tony Darvall 3 Ex-officio Ex-officio has been established through delegated authorities, control mechanisms, and Warwick Heine 3 3 comprehensive risk management strategies. Helen Hewett 3 Chair 3
The Governor in Council appoints members Carolyn Lloyd 3 3 Chair for periods not exceeding five years. The Michael Roux 3 Board consists of a Chairperson, a Deputy Chairperson, and no more than seven other Marcus Spiller 3 3 members. As at 30 June 2007, there were Gabrielle Trainor 3 Chair 3 eight members of the Board. The Board 3 3 reviews its own performance regularly. Garry Weaven Pru Sanderson (CEO) Ex-officio Ex-officio Ex-officio The Board ensures that the government is informed of all major issues affecting VicUrban. Board meetings are held monthly, or more frequently, if required. The Chief Executive BOARD AND COMMITTEE MEETINGS ATTENDED Officer and the General Counsel, who is Secretary to the Board, attend each Board Board Committees meeting. VicUrban staff attend as required, Board Member Eligible to Attended Eligible to Attended or by invitation. attend attend Attendance by members at Board and Committee meetings during the year is Tony Darvall 12 11 8 6 detailed in this report. Helen Hewett 12 7 4 2 Directors’ fees, and related party transactions Carolyn Lloyd 12 9 5 4 with directors and their related entities, are Michael Roux 12 8 3 2 fully disclosed in Note 21 and Note 25 to the Marcus Spiller 12 12 5 3 Financial Statements. Gabrielle Trainor 12 12 5 4 Committees to the Board Garry Weaven 12 9 7 7 To enable detailed consideration to be given to specific governance issues, the Board has Warwick Heine 12 10 5 2 established three committees which operated throughout the year ended 30 June 2007. COMPLIANCE
Audit Summary of significant changes in financial assets of $10.5m in 2005/06 and $5.6m in Under the Financial Management Act 1994, position during the year ended 2004/2005. It recorded an opening balance the Auditor General has audited the annual 30 June 2007 sheet adjustment of $129.3m under the financial statements. VicUrban also has an Australian equivalent to International For the year ended 30 June 2007, VicUrban internal auditor who regularly conducts Financial Reporting Standards, as at recorded a net profit from ordinary activities internal audit engagements and makes 1 July 2004. after tax (before significant items) of $16.9m recommendations to the Finance, Audit and ($19.6m in 2006). Risk Committee. Building Act VicUrban has created significant public realm Risk Management All new buildings, and works to existing assets at Melbourne Docklands, which are of VicUrban has developed a corporate culture buildings, carried out for or on behalf of lasting benefit to all Victorians. These include of delivering business objectives, while VicUrban, must conform with the Building roads, bridges, promenades and parks such ensuring appropriate management of risk. Act 1993. VicUrban did not exempt any as Wurundjeri Way, the Charles Grimes work from the application of the ten-year Bridge, the Latrobe and Collins Street The VicUrban Board acknowledges the liability cap. extensions, the Bourke Street pedestrian importance of managing the spectrum of bridge and Docklands Park. The developers risks, for both specific projects and Victorian Industry Participation Policy of Melbourne Docklands have contributed enterprise-wide activities. VicUrban’s ‘Risk (V.I.P.P.) many of these assets as part of their Management Policy’ sets out guiding development obligations with VicUrban. principles, processes, and reporting During this financial year, VicUrban com- requirements for risk management. The Over $200m of Melbourne Docklands assets menced five contracts to which the V.I.P.P. Board regularly reviews risk issues. have now been transferred to the City of applies. Two of these are in the metropolitan Melbourne, and the final impact on area, totalling $6,648,237; three, are During the year, KPMG provided risk VicUrban’s balance sheet and operating regional, totalling $5,165,351. management advisory services to VicUrban. statement is reflected in the 2006/2007 VicUrban is committed to instilling a risk financial year. In each case, 100% of the value of the management focus at all levels of the The impairment of the Docklands Municipal contract is committed to local content. These organisation. and Place Management assets totalled contracts ensure the commitment of 86 full- $19.7m in 2006/2007, and is partially offset time jobs, with the following benefits to the Subsequent Events by the reimbursement of the Docklands Victorian economy in terms of skills’ increase Since 30 June 2007 there have been no Municipal and Place Management operating and technology transfer: events that had a significant effect on the deficit of $8.4m. Both of these sums have u Modification and recycling of quarry operations of VicUrban. been accounted for as significant items. The materials for use in fill, in preparation of Department of Treasury and Finance will residential subdivision. reimburse the Docklands Municipal and u Introduction of higher construction Place Management operating deficit to standards in respect to water and sewer VicUrban over the next five years. The reticulation in regional areas. non-current assets in the financial statements include $8.4m for this receivable. During this period, VicUrban completed six contracts totalling $16,837,757. Three of After tax and these significant items, the these were metropolitan projects and three 2006/2007 net profit is $5.6m (2005/2006 were regional projects (Shepparton). $9.1m). In all cases, 100% of the works value was VicUrban has previously recorded committed to local content and 138 full-time impairments of these Melbourne Docklands equivalent jobs were achieved, as a result of the projects. 33 COMPLIANCE
National Competition Policy Freedom of Information Access to Documents
VicUrban carries out its functions on a The Freedom of Information Act 1982 allows People wishing to access VicUrban commercial basis. National Competition the public a right of access to documents documents under the Freedom of Information Policy requires VicUrban to act within a held by VicUrban. For the year ended 30 Act 1982 should write to: competitively neutral framework. This means June 2007, VicUrban received ten requests that, except in respect of the Melbourne for information under the Act. Seven Freedom of Information Officer Docklands and Revitalisation of Central requests were from Members of Parliament, VicUrban Dandenong projects, VicUrban: two were from private sector bodies, and GPO Box 2428V one from a member of the public. Of the ten Melbourne Vic 3001 u Operated in a competitive environment in requests, two went to internal review. an open market; The designated principal officer for the Each application must clearly identify the u Enjoyed no preferential access to purpose of the Act is the Chief Executive documents sought and be accompanied by a government land purchase or services; Officer. $22 application fee. u Operated under the provisions of the Financial Management Act 1994, rather than Other authorised employees to consider FOI the Corporations Act; requests are General Counsel, Legal Counsel Financial Reporting Direction 22 u Was subject to Victorian State and Federal and General Manager, Government. regulations applying to private sector VicUrban retains information listed in organisations; Appendix 1 of Financial Reporting Direction u Was subject to Victorian State and Federal 22, and, to the extent applicable and taxes, including compliance with the National subject to the operation of the Freedom of Tax Equivalents Regime, and Information Act 1982, this is available on u Was subject to all equivalent local request. government rates and charges.
Where the government decides that a fully commercial approach is not appropriate for a specific project, special provisions exist. The VicUrban Urban Development Authority Act 2003 provides for the Governor in Council, on the recommendation of the Minister, to declare an urban development, or proposed urban development, to be a ‘declared project’. Once established as such, VicUrban can then exercise particular powers to facilitate the development of the ‘declared project’. On 26 September 2005, the government gazetted the Revitalisation of Central Dandenong project as a ‘declared project’.
COMPLIANCE AND PROBITY
Whistleblower Protection Act 2001 - adverse treatment in relation to a person’s Probity and Ethical Standards Disclosures employment, career, profession, trade or VicUrban seeks to maintain the highest business, including the taking of disciplinary No disclosures were made for the year ended standard of corporate governance practices action. 30 June 2007. and ethical conduct by all members, VicUrban recognises that it is crucial to executives and staff. It has developed Whistleblower Protection Act 2001 maintain confidentiality to ensure reprisals detailed governance policies and probity – Procedures are not made against a whistleblower, and processes, covering, in particular, the bidding will take all reasonable steps to protect his processes, confidentiality and conflict of VicUrban is committed to the aims and or her identity. VicUrban ensures that all interest principles. objectives of the Whistleblowers Protection files and materials related to a disclosure are Board members are required to act in the Act 2001 (the Act). It does not tolerate kept securely, and access is strictly limited interests of VicUrban. They cannot place improper conduct by its employees, officers to persons involved in responding to the themselves in a position of conflict, where a or members, or the taking of reprisals against disclosure. those who come forward to disclose such personal interest or duty conflicts with their conduct. The Act requires that any person who duty to VicUrban. Any pecuniary interest or receives information due to the handling or interest that could conflict with a Director’s VicUrban recognises the value of investigation of a Protected Disclosure (as performance must be reported to the Board. transparency and accountability in its defined by the Act) is not to disclose that administrative and management practices, information, except in limited circumstances. and supports the making of disclosures that Disclosure of such information will constitute reveal corrupt conduct; conduct involving a breach of section 22 of the Act and is an a substantial mismanagement of public offence that is punishable by a maximum resources; or conduct involving a substantial fine of 60 penalty units or six months risk to public health and safety or the imprisonment, or both. environment. VicUrban has procedures for reporting Consultancies disclosures of ‘Improper Conduct’ or ‘Detrimental Action’ by VicUrban or its The aggregate cost of consultancies during the twelve months ended 30 June 2007 was as employees. Disclosures of such conduct follows: should be made to the Chairperson, Consultancies costing Number Cost CEO, General Counsel of VicUrban or the Ombudsman. a) more than $100,000 2 608,810 b) less than $100,000 50 541,103 ‘Improper Conduct’ means conduct that is corrupt; a substantial mismanagement Consultancies costing more than $100,000 of public resources; or conduct involving Set out below are details of those consultancies for non development works costing more than $100,000 for the twelve month period ending 30 June, 2007. substantial risk to public health or safety, or to the environment. Consultant Details Cost ‘Detrimental Action’ is action taken against a Tracey Brunstom & Hammond Pty Ltd Research and support dispute settlement 452,868 person in reprisal for a disclosure being made The Hornery Institute Business planning and research studies 155,942 under the Act. Detrimental Action includes: The definition of consultancy, as set out in FRD22 - Standard Disclosures in the Report of u Action causing injury, loss or damage; Operations, is an arrangement where an individual or organisation is engaged to provide expert analysis to facilitate design-making and perform a specific one-off task that involves skills or u Intimidation or harassment; and perspectives, which would not normally be expected to reside within the agency. u Discrimination, disadvantage or 35 DISCLOSURE INDEX
Legislation Requirement Page Reference
Financial Management Act 1994
FRD 22B Occupational Health & Safety 30 FRD 22B Establishment 6-7 FRD 22B Ministers 64 FRD 22B Objectives, functions, powers and duties 6-7 FRD 22B Nature and range of services provided 6-7 FRD 22B Summary of achievements 12-29 FRD 22B Organisational structure 8-9 FRD 22B Financial statements 37-71 FRD 22B Subsequent events 32 FRD 22B Summary of significant changes in financial position 32 FRD 22B Report of operations 3-5 FRD 22B Consultancies 34 FRD 22B Application and operation of Freedom of Information Act 1982 33 FRD 22B Compliance with building and maintenance provisions of Building Act 1993 32 FRD 22B Application and operation of Whistleblowers Protection Act 2001 34 FRD 22B Statement on National Competition Policy 33 FRD 22B Summary of environmental performance 12-14
FRD 10 Disclosure index 35 FRD 11 Ex gratia payments N/A FRD 21A Responsible Person and Executive Officer disclosures 64-65 FRD 25 Victorian Industry Participation Policy disclosures 32 FRD 29 Workforce data disclosures 30
Other legislation Freedom of Information Act 1982 33 Building Act 1993 32 Whistleblowers Protection Act 2001 34 Victorian Industry Participation Act 2003 32 Financial Management Act 1994 32, 37-71 Audit Act 1994 32, 70-71
Financial Statements for the year ended 30 June, 2007 OPERATING 30 June 2007 30 June 2006 STATEMENT Notes $’000 $’000 FOR THE Land sales 4 175,347 179,258 FINANCIAL YEAR Cost of land sales (113,220) (106,020) ENDED 30 JUNE 2007 Gross profit from land sales 62,127 73,238
Other revenue from ordinary activities
Municipal & place management Rates 4 8,061 6,533 Statutory fees, charges & other revenue 4 1,148 2,223
9,209 8,756 Project management fees & profit share 4 6,309 1,610 Other revenue 4 21,934 14,165
Total other revenue from ordinary activities 37,452 24,531
Expenses from ordinary activities Project expenses (31,410) (24,495) Corporate expenses (14,407) (12,034) Marketing & selling expenses (10,212) (10,156) Municipal & place management expenses (9,639) (9,242) Borrowing cost expenses 5 (15,153) (14,062)
Total expenses from ordinary activities (80,821) (69,989)
Profit from ordinary activities before income tax equivalent expense 18,758 27,780 Income tax equivalent expense 6 (1,858) (8,157)
Profit from ordinary activities after income tax equivalent expense 16,900 19,623
Impairment of assets 7 (19,662) (10,499) Reimbursement of docklands municipal and place management operating deficit 7 8,374 -
Profit after income tax equivalent expense and significant items 5,612 9,124
The above Operating Statement should be read in conjunction with the accompanying notes.
39 30 June 2007 30 June 2006 BALANCE Notes $’000 $’000 SHEET AS AT Current assets 30 JUNE 2007 Cash assets and cash equivalents 8 28,049 5,281 Receivables 9 19,710 20,647 Prepayments 10 329 259 Inventories 11 479,734 482,792 Total current assets 527,822 508,979
Non-current assets Receivables 9 9,868 3,306 Infrastructure, property, plant & equipment 12 13,114 32,664 Deferred tax assets 6 1,547 1,931 Total non-current assets 24,529 37,901 Total assets 552,351 546,880
Current liabilities Payables 13 37,588 18,997 Amounts owing to land vendors 14 7,811 5,820 Land sale deposits 15 6,014 7,645 Interest bearing liabilities 16 12,762 33,970 Provisions 17 44,865 36,749 Current tax liabilities 6 671 1,266 Total current liabilities 109,711 104,447
Non-current liabilities Amounts owing to land vendors 14 3,521 5,283 Land sale deposits 15 33,541 37,453 Interest bearing liabilities 16 145,035 153,471 Provisions 17 769 1,538 Deferred tax liabilities 6 3,246 5,003 Total non-current liabilities 186,112 202,748 Total liabilities 295,823 307,195 Net assets 256,528 239,685
Equity Contributed equity 18 392,115 380,884 Accumulated losses 18 (135,587) (141,199) Total equity 256,528 239,685
Contingent assets and liabilities 23 Commitments for expenditure 24
The above Balance Sheet should be read in conjunction with the accompanying notes.
STATEMENT 30 June 2007 30 June 2006 OF CHANGES Notes $’000 $’000 IN EQUITY AS AT 30 JUNE 2007 Total equity at the beginning of the financial year 18 239,685 230,561 Profit from ordinary activities after income tax equivalent expense 16,900 19,623 Impairment of assets 7 (19,662) (10,499) Reimbursement of docklands municipal and place management operating deficit 7 8,374 - Contributed capital received from the State Government of Victoria 18 11,231 -
Total equity at the end of the financial year 256,528 239,685
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
CASH 30 June 2007 30 June 2006 FLOW Notes $’000 $’000 STATEMENT FOR Cash flows from operating activities: THE Receipts from customers 209,848 208,498 FINANCIAL Operating grants received from the State Government of Victoria 28,012 9,000 YEAR ENDED Goods and Services Tax recovered from the ATO 12,544 14,842 30 JUNE 2007 Interest received 3,693 2,635 Payments to contractors, consultants, suppliers and employees (139,646) (145,830) Land purchases (31,106) (33,550) Goods and Services Tax paid to the ATO (16,661) (18,688) Borrowing costs (15,853) (14,061) Income tax equivalent paid (3,826) (11,905) Net cash inflow/(outflow) from operating activities 26 47,005 10,941
Cash flows from investing activities: Payments for infrastructure, property, plant & equipment (5,770) (12,484) Proceeds from sale of infrastructure, property, plant & equipment 72 25 Net cash inflow/(outflow) from investing activities (5,698) (12,459)
Cash flows from financing activities: Contributed capital received from the State Government of Victoria 11,231 - Proceeds from borrowings 20,400 37,620 Repayment of borrowings (50,170) (37,350) Net cash inflow/(outflow) from financing activities (18,539) 270
Net increase/(decrease) in cash and cash equivalents 22,768 (1,248) Cash and equivalents at the beginning of the financial year 5,281 6,529 Cash and cash equivalents at the end of the financial year 8 28,049 5,281
Financing arrangements 19
The above Cash Flow Statement should be read in conjunction with the accompanying notes.
41 1. Statement of significant accounting policies NOTES TO (a) Basis of accounting THE The financial report is a general purpose financial report which has been prepared on an accruals basis in accordance with the Financial FINANCIAL Management Act 1994, Australian Accounting Standards, other authorative pronouncements of the Australian Accounting Standards Board, STATEMENTS and Urgent Issues Group Interpretations. Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). The financial report is authorised for issue by Mr Gary Szoka (General Manager - Corporate Services) on 15 August 2007.
(b) Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments.
(c) Revenue recognition Amounts disclosed as revenue are net of returns, allowances, duties and taxes. Revenue is recognised for the major business activities as follows: (i) Land sales revenue Land sales revenue is recognised when the risks and rewards of ownership no longer lie with VicUrban. This most often occurs on settlement of the land sales contract. Amounts received under the terms of the development agreements, prior to the risks and rewards of ownership transferring from VicUrban, are recorded as land sale deposits in the Balance Sheet. (ii) Project management fees and profit share Project management fees and profit share from development agreements are brought to account when the land is settled. (iii) Rental revenue Rental income is recognised on an accruals basis. (iv) Government grants, appropriations, rates, fees, charges and fines State Government grants are recognised as revenue in the same year in which VicUrban incurs the associated expense. Rates, fees, charges and fines are recognised as revenue in the year in which VicUrban gains control of the funds. (v) Interest income Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
(d) Income tax VicUrban is exempt from income tax in accordance with section 50-25 of the Income Tax Assessment Act 1997. VicUrban is subject to the National Tax Equivalent Regime pursuant to section 88 of the State Owned Enterprises Act 1992. Any activity relating to the Docklands Area is exempt from the National Tax Equivalent Regime in accordance with section 67 of the Victorian Urban Development Authority Act 2003.
Income tax equivalent expense in the operating statement is matched with the accounting profit after allowing for permanent differences. The future tax benefit relating to tax losses is not carried forward as an asset unless the benefit is virtually certain of realisation. Income tax equivalent on cumulative timing differences is set aside to the deferred income tax or future income tax benefit accounts at the rates which are expected to apply when those timing differences reverse.
(e) Goods and services tax Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Balance Sheet. Cash flows are included in the Cash Flow Statement on a gross basis.
(f) Cash & cash equivalents Cash and cash equivalents comprise cash on hand and cash held at call with financial institutions. Deposits at call are carried at the principal amount.
NOTES 1. Statement of significant accounting policies - continued TO THE (g) Receivables FINANCIAL (i) Accounts receivable under contract of sale STATEMENTS These amounts represent deposits received from private land purchasers which are held in trust until settlement. (ii) Provision for doubtful debts Collectability of amounts outstanding are reviewed on an ongoing basis. A provision is raised when there is objective evidence that VicUrban will not be able to collect all amounts due. (iii) Amounts owing under development agreements Amounts receivable under development agreements are carried at nominal amounts due. (h) Inventories Inventories of undeveloped land, work in progress and developed land and buildings held for resale are valued at the lower of cost or net realisable value. Cost includes: (i) the cost of acquiring the land and buildings; (ii) land improvement costs; and (iii) applicable borrowing costs. Net realisable value is determined from valuations provided by a panel of independent valuers. In determining the net realisable value for undeveloped land, the expected net cash flows from the development and sale of land on a staged and single lot basis are discounted to their present values using a market-determined, risk adjusted rate. Valuations are regularly undertaken to determine the net realisable value of undeveloped land.
(i) Acquisition of assets The purchase method of accounting is used for all acquisitions of assets. Cost is measured as the fair value of the assets given up or liabilities undertaken at the date of the acquisition. Where settlement of any part of the cash consideration is deferred, the amounts payable in the future are discounted to their present value at the date of acquisition. The discount rate used is the incremental borrowing rate, being the rate at which similar borrowings could be obtained from an independent financier under comparable terms and conditions.
(j) Infrastructure, property, plant and equipment (i) Cost and valuation Subsequent to initial recognition as assets, non-current physical assets, other than plant, equipment and motor vehicles are measured at fair value. Plant, equipment and motor vehicles are measured at cost. Where assets are stated at their fair value, assessments are made with sufficient regularity to ensure that the carrying amount does not differ materially from its fair value at the reporting date. Annual assessments are made, supplemented by independent assessments at least every three years. (ii) Recoverable amount of non-current assets The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and outflows arising from the assets continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. Where net cash flows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is recognised as an expense in the reporting period in which the write-down occurs. (iii) Depreciation and amortisation Each item excluding land and public art, is depreciated or amortised on a straight line basis over their useful economic lives.
Asset class 2007 2006 Infrastructure (roads, promenades, footpaths, drains, street furniture and fixtures) 3 to 100 years 3 to 100 years Buildings 4 to 40 years 4 to 40 years Plant, equipment and motor vehicles Plant and equipment 2 to 10 years 2 to 10 years Motor vehicles 2 to 3 years 2 to 3 years Leasehold improvements 8 years 8 years Public art assets are not depreciated as they are assumed to have an unlimited useful life.
43 (k) Intangible assets NOTES Intangible assets represent identifiable non-monetary assets without physical substance. Intangible assets are recognised at cost. TO Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to THE VicUrban. FINANCIAL (i) Capitalised software development costs STATEMENTS Capitalised software development costs have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of software development costs over their estimated useful lives of 5 years.
(l) Impairment of assets VicUrban has recognised an impairment loss to the carrying value of the Docklands Municipal & Place Management assets to write these down to their recoverable amount. As a ‘For Profit’ entity, the appropriate measure of recoverable amount in accordance with AASB 136 Impairment of Assets is the net present value of future cash flows from the business unit. Other assets are reviewed annually for impairment or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.
(m) Fair value estimation The fair values and net fair values of financial assets and financial liabilities are determined as follows: - the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; and - the fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis. Transaction costs are included in the determination of net fair value.
(n) Payables (i) Trade creditors and accruals These amounts represent liabilities for goods and services provided to VicUrban prior to the end of the financial year which remain unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (ii) Payables under development agreements These amounts relate to amounts payable to developers and others under development agreements on the achievement of agreed milestones.
(o) Amounts owing to land vendors Amounts owing to land vendors are carried at their net present value.
(p) Land sale deposits For precinct land sales, these amounts represent non-interest bearing deposits received for land sales and associated trunk infrastructure from developers in accordance with their relevant precinct development agreements. Upon the associated stage release of part or all of a precinct these amounts are subsequently recognised as revenue. For residential land sales, these amounts represent interest bearing deposits and are recognised as revenue once the land is settled.
(q) Interest bearing liabilities Amounts owing to the Treasury Corporation of Victoria are carried at their principal amounts.
(r) Borrowing costs Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include interest on bank overdrafts, short-term and long-term borrowings and finance lease charges. Interest is charged as an expense as it accrues, except when it relates to the financing of land improvement construction projects that had a duration of more than one year, in which case interest is capitalised up to the date of practical completion.
(s) Provision for development costs A provision for development costs has been set aside where VicUrban has a present obligation to carry out development works under relevant planning permits or development agreements. These development costs may relate to stage allotments sold or to the overall costs of the project. NOTES 1. Statement of significant accounting policies - continued TO THE (t) Employee benefits FINANCIAL (i) Annual leave STATEMENTS A provision for annual leave, measured at the amounts expected to be paid when the liabilities are settled, is included within the provision for employee benefits. (ii) Long service leave The liability for long service leave expected to be settled more than twelve months from the reporting date is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on federal government guaranteed securities for the relevant periods. (iii) Superannuation VicUrban contributes towards various private and public sector complying superannuation schemes on behalf of its employees in accordance with the contracts of employment and the superannuation guarantee legislation. (iv) Employee performance incentives Provision has also been made for performance incentive bonuses. Amounts included as current provisions are expected to be paid within the next twelve months. (v) Employee benefit on-costs All on-costs, including payroll tax, workers compensation premiums and insurance premiums, are included in the determination of the provision for employee benefits.
(u) Leases A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of the assets and operating leases under which the lessor effectively retains substantially all such risks and benefits (i) Operating leases VicUrban has operating leases relating to the premises it occupies, motor vehicles and some computer equipment. Operating lease payments are charged to the Operating Statement in the period in which they are incurred so as to match the pattern of benefits derived from the leased assets. (ii) Finance leases VicUrban has finance leases relating to some motor vehicles. A lease asset and liability are established at the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the interest expense.
(v) Leasehold improvements The cost of improvements to or on leasehold property is amortised over the unexpired period of the lease or the estimated useful life of the improvements, whichever is shorter.
(w) Lease Incentives Lease incentives received on entering into operating leases are recognised as a liability. VicUrban recognises the aggregate benefit of incentives as a reduction of rental expense over the lease term, on a straight-line basis.
(x) Dividends An obligation to pay a dividend only arises after a formal determination is made by the Treasurer of the State of Victoria following consultation between VicUrban’s Board, the Minister and the Treasurer. No dividend has been provided for this year ($0 previous year).
(y) Rounding Amounts in the financial report have been rounded to the nearest thousand dollars.
45 2. Financial risk management NOTES TO The principal risks associated with VicUrban’s treasury function are interest rate, liquidity (including refinancing), credit and operational. THE VicUrban seeks to minimise its exposure to the financial markets in its treasury activities. FINANCIAL VicUrban’s debt and treasury management policies set the treasury policy framework and outline the approach to be taken in respect of STATEMENTS treasury risk management in relation to interest rate risks, liquidity risks, credit risks and treasury operational risks.
(a) Credit risk VicUrban’s maximum credit risk exposure is indicated by the carrying amounts of its financial assets. This does not take into account the value of security held in the event other parties fail to perform their obligations under contracts of sale. VicUrban does not have any significant concentrations of credit risks as it undertakes transactions with a large number of customers in the residential property industry.
(b) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the nature of the underlying business, the treasury function aims to maintain flexibility in funding by keeping committed credit lines available from the Treasury Corporation of Victoria (TCV).
(c) Cash flow and fair value interest rate risk The businesses income and operating cash inflows are not materially exposed to changes in market interest rates. The businesses interest rate risk arises from borrowings facilities with the TCV. Borrowings issued at variable rates expose the business to cash flow interest-rate risk. Borrowings issued at fixed rates expose the business to fair value interest-rate risk. VicUrban policy is to fix interest rates for approximately 60% of its borrowings. This policy has been complied with at the year end. VicUrban manages its cash flow interest-rate risk by using floating interest rates.
3. Segment information
(a) Accounting policies Segment information is prepared in conformity with VicUrban’s accounting policies as disclosed in Note 1 and accounting standard AASB 114 Segment Reporting. Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of receivables, inventories, and infrastructure assets, net of related provisions. Segment liabilities consist primarily of amounts owing under development agreements, certain trade accruals and payables.
(b) Description of segments Business segments VicUrban’s primary business segments are Urban Communities and Provincial Development, Docklands Development, Docklands Municipal & Place Management and Urban Revitalisation and Transit Cities: (i) Urban Communities and Provincial Development Urban Communities and Provincial Development encompasses land development focused on the creation of sustainable, high quality living environments and diverse, cohesive communities. Urban Communities and Provincial Development have major projects in all major growth corridors of Melbourne and in Victorian regional centres. (ii) Docklands Development Docklands Development encompasses the management of the Melbourne Docklands project including; attracting investment and executing development agreements; managing development agreements; and delivery and facilitation of planning and infrastructure. (iii) Docklands Municipal & Place Management Docklands Municipal & Place Management encompasses the provision of municipal services, place creation and management for the Melbourne Docklands precinct. The Docklands Municipal & Place Management responsibilities transferred from VicUrban to the City of Melbourne effective 1 July 2007 along with many significant public realm assets created by VicUrban which are of lasting benefit to all Victorians. (iv) Urban Revitalisation Urban Revitalisation focuses on the development of vibrant community centres which expand the opportunities for education, employment, housing and improved access to public transport. Urban Revitalisation collaborates with government agencies and local councils to attract private sector investment and create well planned and sustainable developments. VicUrban is the lead agency for the Revitalisation of Central Dandenong project.
VicUrban operates in one geographical segment - Victoria, Australia
NOTES 3. Segment information - continued TO THE (c) Primary reporting - business segments FINANCIAL STATEMENTS Urban Communities Docklands Docklands Urban Consolidated and Provincial Development Municipal & Place Revitalisation Development Management 2007 2007 2007 2007 2007 $’000 $’000 $’000 $’000 $’000
Revenue Revenue from external sales 124,834 56,474 9,302 18,521 209,131 Interest income 1,330 1,899 36 403 3,668 Total revenue from external parties 126,164 58,373 9,338 18,924 212,799
Results Profit from ordinary activities before income tax equivalent expense 5,722 13,909 (1,444) 571 18,758 Income tax equivalent expense (1,687) - - (171) (1,858) Profit from ordinary activities after related income tax equivalent expense 4,035 13,909 (1,444) 400 16,900
Assets Development and other assets 363,353 140,466 - 38,208 542,027 Infrastructure, property, plant and equipment 4,178 1,998 - 471 6,647 Segment assets 367,531 142,464 - 38,679 548,674 Unallocated assets 7,268 Elimination of inter-segment transactions (3,591) Total assets 552,351
Liabilities Segment liabilities 118,161 166,050 - 7,935 292,146 Unallocated liabilities 7,268 Elimination of inter-segment transactions (3,591) Total liabilities 295,823
Acquisitions of infrastructure, property, plant and equipment Segment acquisitions 1,105 405 2,882 14 4,406 Unallocated acquisitions 1,364 Total acquisitions 5,770
Depreciation/amortisation expense Segment depreciation 1,775 271 620 488 3,154 Total depreciation/amortisation expense 3,154
Cashflow Receipts from customers 133,751 61,404 10,027 4,666 209,848 Operating grants received from the State Government of Victoria 675 - 94 27,243 28,012 Contributed capital received from the State Government of Victoria - - - 11,231 11,231 Land purchases 13,728 220 - 17,158 31,106 Borrowing costs 3,072 11,682 766 333 15,853
47 NOTES Urban Communities Docklands Docklands Urban Consolidated TO and Provincial Development Municipal & Place Revitalisation THE Development Management FINANCIAL 2006 2006 2006 2006 2006 STATEMENTS $’000 $’000 $’000 $’000 $’000
Revenue Revenue from external sales 147,108 39,835 8,756 5,450 201,149 Interest income 2,469 86 20 65 2,640 Total revenue from external parties 149,577 39,921 8,776 5,515 203,789
Results Profit from ordinary activities before income tax equivalent expense 26,696 2,015 (1,350) 419 27,780 Income tax equivalent expense (8,031) - - (126) (8,157) Profit from ordinary activities after income tax equivalent expense 18,665 2,015 (1,350) 293 19,623
Assets Development and other assets 355,005 167,071 1,993 6,511 530,580 Infrastructure, property, plant and equipment 5,429 2,835 18,433 - 26,697 Segment assets 360,434 169,906 20,426 6,511 557,277 Unallocated assets 7,446 Elimination of inter-segment transactions (17,843) Total assets 546,880
Liabilities Segment liabilities 101,751 205,998 9,096 3,851 320,696 Unallocated liabilities 4,342 Elimination of inter-segment transactions (17,843) Total liabilities 307,195
Acquisitions of infrastructure, property, plant and equipment Segment acquisitions 2,672 886 5,309 - 8,867 Unallocated acquisitions 3,617 Total acquisitions 12,484
Depreciation/amortisation expense Segment depreciation 975 500 423 - 1,898 Total depreciation/amortisation expense 1,898
Cashflow Receipts from customers 161,648 37,442 9,408 - 208,498 Operating grants received from the State Government of Victoria - 3,550 - 5,450 9,000 Contributed capital received from the State Government of Victoria - - - - - Land purchases 33,550 - - - 33,550 Borrowing costs 2,519 11,542 - - 14,061 NOTES 4. Revenue from ordinary activities TO THE 30 June 2007 30 June 2006 FINANCIAL $’000 $’000 STATEMENTS Revenue
Development Land sales 175,347 179,258 Project management fees and profit share 6,309 1,610 Property rental and other revenue 2,947 1,507 Public art contributions from developers 2,194 1,018 Operating grants from the State Government of Victoria 13,125 9,000 199,922 192,393
Municipal & Place Management
Rates 8,061 6,533 Statutory fees and charges 278 797 Fines and infringements 746 810 Other revenue 124 322 Operating grants from the State Government of Victoria - 294 9,209 8,756
Interest income revenue 3,668 2,640
Total revenue from ordinary activities 212,799 203,789 49 5. Expenses from ordinary activities NOTES TO 30 June 2007 30 June 2006 THE $’000 $’000 FINANCIAL STATEMENTS Profit from ordinary activities before related income tax equivalent expense is arrived at after charging the following specific items:
Depreciation Infrastructure 507 420 Plant, equipment, motor vehicles and leasehold improvements 1,978 1,175 Buildings 669 303 Total depreciation 3,154 1,898
Other charges against assets Bad and doubtful debts - trade debtors (97) 431 Total other charges against assets (97) 431
Borrowing costs Interest and finance charges paid/payable 12,370 11,268 Financial accommodation levy 2,783 2,794 Borrowing costs expensed 15,153 14,062
Contributions to superannuation funds on behalf of employees 1,582 1,628 Net loss/(gain) on disposal of infrastructure, property, plant and equipment (72) 766 Rental expense relating to operating leases 1,385 1,052 NOTES 6. Income Tax TO THE 30 June 2007 30 June 2006 FINANCIAL $’000 $’000 STATEMENTS Income tax equivalent expense
The income tax expense differs from the prima facie tax payable. The differences are reconciled as follows:
Profit from continuing activities before income tax equivalent expense 18,758 27,780 Profit from ordinary activities subject to income tax equivalent expense 6,292 27,115 Prima facie income tax calculated at 30% 1,888 8,134
Tax effect of permanent differences: Sundry items (21) 23 Adjustments with respect to prior year (9) - Income tax equivalent expense attributable to profit from ordinary activities 1,858 8,157
Opening Balance Income Closing Balance 1 July 2006 tax paid Movement 30 June 2007 30 June 2007 $’000 $’000 $’000 $’000
Aggregate income tax expense and related balances comprise:
Current tax liabilities (1,266) 3,826 (3,231) (671) Deferred tax liabilities (5,003) - 1,757 (3,246) Deferred tax assets 1,931 - (384) 1,547 Income tax equivalent expense (1,858)
Opening Balance Income Closing Balance 1 July 2005 tax paid Movement 30 June 2006 30 June 2006 $’000 $’000 $’000 $’000
Aggregate income tax expense and related balances comprise :
Current tax liabilities (2,545) 11,905 (10,626) (1,266) Deferred tax liabilities (7,512) - 2,509 (5,003) Deferred tax assets 1,971 - (40) 1,931 Income tax equivalent expense (8,157) 51 7. Asset Impairment and Reimbursement of Docklands Municipal & Place Management Operating Deficit NOTES TO The municipal responsibilities for the Melbourne Docklands transferred from VicUrban to the City of Melbourne effective 1 July 2007 along with THE the many significant public realm assets created by VicUrban which are of lasting benefit to all Victorians. FINANCIAL These assets, include roads, bridges, promenades and parks such as Wurundjeri Way, the Charles Grimes bridge, the Latrobe and Collins Street STATEMENTS extensions and the Bourke Street pedestrian bridge; many of which have been contributed by the developers of the Melbourne Docklands as part of their development obligations with VicUrban. In accordance with the requirements of AASB 136 Impairment of Assets, VicUrban had to write-down the value of these municipal and place management assets each year end to reflect the recoverable amount of the assets to be transferred. The write-down in the current financial year is $19.7 million ($10.5 million in the prior year), which is in addition to the write-down of $129.3 million recorded as an opening balance sheet adjustment under the Australian equivalent to International Financial reporting Standards (A-IFRS) as at 1 July 2004. As part of the transfer the City of Melbourne has agreed to pay $8.4 million as a reimbursement for the accumulated operating deficit incurred by VicUrban up until the transfer of the Docklands Municipal and Place Management business segment.
8. Cash and cash equivalents
30 June 2007 30 June 2006 $’000 $’000
Cash assets
Cash at bank and on hand 6,523 1,835 Deposits at call 21,526 3,446 Total Cash Assets 28,049 5,281 NOTES 9. Receivables TO THE 30 June 2007 30 June 2006 FINANCIAL $’000 $’000 STATEMENTS Current Amounts receivable under contracts of sale 2,017 1,693 Trade receivables - other 6,738 7,931 8,755 9,624 Provision for doubtful debts (315) (575) 8,440 9,049
Amounts receivable under development agreements 9,566 10,334 Other receivables 1,703 1,224 Accrued interest 1 40 19,710 20,647
Non-current Amounts receivable under development agreements 1,494 3,306 Receivable for reimbursement of docklands municipal and place management operating deficit 8,374 - 9,868 3,306
(a) Bad and doubtful trade receivables
VicUrban has recognised a net write-back of $97,000 (loss of $430,939 in the prior year) in respect of bad and doubtful trade receivables during the year ended 30 June 2007.
10. Prepayments
30 June 2007 30 June 2006 $’000 $’000
Current
Prepayments 329 259 329 259
11. Inventories
Current Developed land at cost or at deemed cost 199,233 222,112 Undeveloped land at cost or at deemed cost 153,035 156,069 Work in progress at cost 127,466 104,611 479,734 482,792
53 12. Infrastructure, property, plant and equipment NOTES TO 30 June 2007 30 June 2006 THE $’000 $’000 FINANCIAL
STATEMENTS Bridges At fair value - 6,077 Less: accumulated depreciation - (221) Total bridges - 5,856
Roads At fair value - 2,258 Less: accumulated depreciation - (190) Roads in the course of construction at cost - 2,661 Total roads - 4,729
Footpaths At fair value - 201 Less: accumulated depreciation - (23) Total footpaths - 178
Kerbs and Channels At fair value - 162 Less: accumulated depreciation - (14) Total kerbs and channels - 148
Drains At fair value - 739 Less: accumulated depreciation - (30) Total drains - 709
Land At fair value 72 72
Promenades At fair value - 2,135 Less: accumulated depreciation - (166) Promenades in the course of construction at cost - 8 Total promenades - 1,977
Other Infrastructure At fair value - 1,671 Less: accumulated depreciation - (183) Other infrastructure in the course of construction at cost - 2,404 Total other infrastructure - 3,892
Buildings At fair value 6,786 7,284 Less: accumulated depreciation (1,152) (611) Buildings in the course of construction at cost - 229 Total buildings 5,634 6,902
Public art At fair value 545 408 Public art in the course of construction at cost - 533 Total public art 545 941
Plant, equipment and vehicles At cost 10,152 7,433 Less: accumulated depreciation (5,357) (5,562) Plant, equipment and vehicles in the course of construction at cost - 3,216 Total plant, equipment and vehicles 4,795 5,087
Leasehold improvements At cost 2,907 2,675 Less: accumulated depreciation (839) (502) Total leasehold improvements 2,068 2,173 Total infrastructure, property, plant & equipment 13,114 32,664 NOTES 12. Infrastructure, property, plant and equipment - continued TO THE Kerbs and Other Plant, equipment Leasehold FINANCIAL 30 June 2007 Bridges Roads Footpaths channels Drains Land Promenades Infrastructure Buildings Public art and vehicles improvements Total STATEMENTS $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Carrying amount at the start of the financial year 5,856 4,729 178 148 709 72 1,977 3,892 6,902 941 5,087 2,173 32,664 Additions - 1,281 - - - - - 1,853 780 254 1,369 233 5,770 Disposals ------(2,492) - - (12) - (2,504) Reclassified as inventory ------Depreciation/amortisation expense (70) (68) (7) (3) (6) - (41) (312) (669) - (1,640) (338) (3,154) Asset impairment (5,786) (5,942) (171) (145) (703) - (1,936) (2,941) (1,379) (650) (9) - (19,662) Carrying amount at the end of the financial year - - - - - 72 - - 5,634 545 4,795 2,068 13,114
Kerbs and Other Plant, equipment Leasehold 30 June 2006 Bridges Roads Footpaths channels Drains Land Promenades Infrastructure Buildings Public art and vehicles improvements Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Carrying amount at the start of the financial year 7,645 7,979 237 197 927 72 2,894 4,329 4,035 1,374 2,465 2,481 34,635 Additions - 2,757 155 - - - 8 2,113 3,550 283 3,571 47 12,484 Disposals ------(285) - (380) - (126) - (791) Reclassified as inventory - (1,267) ------(1,267) Depreciation/amortisation expense (98) (131) (10) (6) (13) - (72) (90) (303) - (820) (355) (1,898) Asset impairment (1,691) (4,609) (204) (43) (205) - (568) (2,460) - (716) (3) - (10,499) Carrying amount at the end of the financial year 5,856 4,729 178 148 709 72 1,977 3,892 6,902 941 5,087 2,173 32,664
55 12. Infrastructure, property, plant and equipment - continued NOTES TO Kerbs and Other Plant, equipment Leasehold THE 30 June 2007 Bridges Roads Footpaths channels Drains Land Promenades Infrastructure Buildings Public art and vehicles improvements Total FINANCIAL $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 STATEMENTS
Carrying amount at the start of the financial year 5,856 4,729 178 148 709 72 1,977 3,892 6,902 941 5,087 2,173 32,664 Additions - 1,281 - - - - - 1,853 780 254 1,369 233 5,770 Disposals ------(2,492) - - (12) - (2,504) Reclassified as inventory ------Depreciation/amortisation expense (70) (68) (7) (3) (6) - (41) (312) (669) - (1,640) (338) (3,154) Asset impairment (5,786) (5,942) (171) (145) (703) - (1,936) (2,941) (1,379) (650) (9) - (19,662) Carrying amount at the end of the financial year - - - - - 72 - - 5,634 545 4,795 2,068 13,114
Kerbs and Other Plant, equipment Leasehold 30 June 2006 Bridges Roads Footpaths channels Drains Land Promenades Infrastructure Buildings Public art and vehicles improvements Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Carrying amount at the start of the financial year 7,645 7,979 237 197 927 72 2,894 4,329 4,035 1,374 2,465 2,481 34,635 Additions - 2,757 155 - - - 8 2,113 3,550 283 3,571 47 12,484 Disposals ------(285) - (380) - (126) - (791) Reclassified as inventory - (1,267) ------(1,267) Depreciation/amortisation expense (98) (131) (10) (6) (13) - (72) (90) (303) - (820) (355) (1,898) Asset impairment (1,691) (4,609) (204) (43) (205) - (568) (2,460) - (716) (3) - (10,499) Carrying amount at the end of the financial year 5,856 4,729 178 148 709 72 1,977 3,892 6,902 941 5,087 2,173 32,664
NOTES 13. Payables TO THE 30 June 2007 30 June 2006 FINANCIAL $’000 $’000 STATEMENTS Current
Trade and other creditors 10,747 5,078 Payables under development agreements - 2,408 Accrued expenses 11,954 11,511 Deferred Income 14,887 - 37,588 18,997
14. Amounts owing to land vendors
Current (Secured) Land vendors 7,811 5,820 7,811 5,820
Non-current (Secured) Land vendors 3,521 5,283 3,521 5,283
15. Land sale deposits
Current Land sale deposits 6,014 7,645 6,014 7,645
Non-current Land sale deposits 33,541 37,453 33,541 37,453
57 16. Interest bearing liabilities NOTES TO 30 June 2007 30 June 2006 THE $’000 $’000 FINANCIAL STATEMENTS Current Unsecured Loans from Treasury Corporation of Victoria - Docklands 7,200 32,020 - Urban Communities and Provincial Development 5,500 1,900 Secured Lease liabilities 62 50 12,762 33,970
Non-current Unsecured Loans from Treasury Corporation of Victoria - Docklands 102,780 119,730 - Urban Communities and Provincial Development 42,000 33,600 Secured Lease liabilities 255 141 145,035 153,471
Aggregate carrying amount of interest bearing liabilities Current 12,762 33,970 Non-current 145,035 153,471 157,797 187,441
(a) Fair value disclosures
Details of the fair value of interest bearing liabilities for VicUrban are set out in Note 20. NOTES 17. Provisions TO THE 30 June 2007 30 June 2006 FINANCIAL $’000 $’000 STATEMENTS Current Property and development related costs 42,680 35,548 Employee benefits 2,185 1,201 44,865 36,749
Non-current Property and development related costs 435 405 Employee benefits 334 1,133 769 1,538
(i) Property and development related costs Movements in the property and development related cost provisions during the financial year are set out below:
Current Carrying amount at the start of the year 35,548 31,176 Additional provisions recognised 7,132 4,372 Carrying amount at the end of the year 42,680 35,548
Non-current Carrying amount at the start of the year 405 377 Additional provisions recognised 30 28 Carrying amount at the end of the year 435 405
(ii) Employee benefits
Current All annual leave and long service leave benefits for employees with greater than 7 years of service - Are expected to be utilised within 12 months after the end of the reporting period 1,402 1,053 - Are expected to be utilised more than 12 months after the end of the reporting period 783 148 2,185 1,201
Non-current Long service leave benefits for employees with less than 7 years of service are measured at their present value. 334 1,133 334 1,133 59 18. Equity NOTES TO THE 30 June 2007 30 June 2006 FINANCIAL $’000 $’000 STATEMENTS
(a) Contributed capital
Capital contribution balance at the start of the year (i) 380,884 380,884 Capital contributions during the financial year (ii) 11,231 - 392,115 380,884
(i) The Victorian Urban Development Authority Act 2003 was proclaimed on 1 August 2003, creating the Victorian Urban Development Authority, trading as VicUrban. VicUrban represents the merger of the Urban and Regional Land Corporation and the Docklands Authority.
In accordance with sections 81 and 85 of the Victorian Urban Development Authority Act 2003, the Urban and Regional Land Corporation and the Docklands Authority were abolished and all rights, assets, liabilities and obligations of the Urban and Regional Land Corporation and the Docklands Authority immediately before their abolition were vested in VicUrban on 1 August 2003.
In accordance with section 65 of the Victorian Urban Development Authority Act 2003, the contributed capital of VicUrban on 1 August 2003 ($378.3 million) was equal to the sum of the assets and liabilities vested in VicUrban under sections 81 and 85 of the Victorian Urban Development Authority Act 2003.
UIG Abstract 40 required the vested assets and liabilities that determine the contributed equity of VicUrban to be recorded at their fair value.
(ii) The State Government of Victoria contributed $11.2 million (nil in the previous year) of capital relating to the Revitalisation of Central Dandenong project.
(b) Accumulated losses
Movements in accumulated losses were as follows:
Opening Balance (141,199) (150,323) Net profit for the financial year from ordinary activities after income tax equivalent expense 16,900 19,623 Impairment of assets (19,662) (10,499) Reimbursement of docklands municipal and place management operating deficit 8,374 - Closing balance (135,587) (141,199)
NOTES 19. Financing arrangements TO THE VicUrban has access to the following finance facilities: FINANCIAL STATEMENTS Facility limit Drawn down Undrawn facility $’000 $’000 $’000
Loan facility - 30 June 2007 Treasury Corporation of Victoria - Docklands 170,000 109,980 60,020 - Urban Communities and Provincial Development 70,500 47,500 23,000 240,500 157,480 83,020
Loan facility - 30 June 2006 Treasury Corporation of Victoria - Docklands 180,000 151,750 28,250 - Urban Communities and Provincial Development 82,200 35,500 46,700 262,200 187,250 74,950
Loan facility - 30 June 2006 Commonwealth Bank of Australia 1,000 - 1,000
30 June 2007 30 June 2006 $’000 $’000
Finance leases
Commitments in relation to motor vehicle finance leases are payable as follows:
Within one year 81 60 Later than one year but no later than five years 270 154 Minimum lease payments 351 214 Future finance charges (34) (23) Recognised as a liability 317 191
Representing lease liabilities:
Current (Note 16) 62 50 Non-current (Note 16) 255 141 Recognised as a liability 317 191 61 20. Financial Instruments NOTES TO (a) Terms, conditions and accounting policies THE VicUrban’s accounting policies, including terms and conditions of each class of financial asset and financial liability are as follows: FINANCIAL STATEMENTS
Recognised Balance financial sheet Accounting Terms and instruments notes policies conditions
(i) Financial Assets Cash and cash equivalents 8 Cash and cash equivalents are carried at the Deposits are at call. principal amount. Interest is recognised as income on an accruals basis.
Receivables - trade 9 Trade receivables under contract of sale are Sales contracts are on settlement terms, carried at nominal amounts. generally anging from 30 days to twelve months.
Receivables - amounts 9 Amounts receivable under development Terms and conditions are set out in the owing under agreements are carried at nominal amounts in the development agreements, development agreements Interest (when charged) is taken up as however normal commercial terms and income on an accrual basis. conditions generally apply.
(ii) Financial Liabilities Payables 13 Liabilities are recognised for amounts to be Trade liabilities are normally settled on terms paid in the future for goods and services ranging from 15 to 30 days. received. Other payables include liabilities to the developer of the Comtechport precinct in Melbourne Docklands, payable on the achievement of agreed contractual milestones.
Amounts owing to land 14 Amounts owing to land vendors are carried Terms and conditions are set out in exchanged vendors at their principal amount. Interest (when agreements with various vendors, however charged) is capitalised to inventory. normal commercial terms and conditions apply.
Land sale deposits 15 These amounts represent non-interest For private sales, revenue is recognised on bearing deposits received for land sales and settlement. For builder sales, revenue is associated trunk infrastructure from recognised once the stage is registered and developers in accordance with their relevant land access is granted. precinct development agreements, and upon the stage release of part or all of a precinct these amounts are subsequently recognised as revenue.
Interest bearing liabilities 16 Amounts owing to the Treasury Corporation Terms and conditions are set out in an of Victoria are carried at their principal exchanged agreement, however commercial amount. terms and conditions apply.
NOTES 20. Financial Instruments - continued TO THE (b) Interest rate risk exposure FINANCIAL STATEMENTS VicUrban is exposed to interest rate risk through financial assets and liabilities. The table below summarises interest rate risk, together with the effective interest rates at balance date.
Fixed interest maturing in: 30 June 2007 Floating Interest 1 year or Between 1 to 5 Over 5 Non-interest Total Rate less years years bearing $’000 $’000 $’000 $’000 $’000 $’000 Financial Assets Cash assets and cash equivalents 28,040 - - - 9 28,049 Amounts receivable under contracts ` of sale - - - - 2,017 2,017 Trade receivables - - - - 6,423 6,423 Amounts receivable under development agreements - - - - 11,060 11,060 Other receivables - - - - 10,078 10,078 28,040 - - - 29,587 57,627 Weighted average interest rate 6.20%
Financial Liabilities Payables - - - - 37,588 37,588 Amounts owing to land vendors - - - - 11,332 11,332 Land sale deposits - - - - 39,555 39,555 Interest bearing liabilities - 12,762 78,935 66,100 - 157,797 - 12,762 78,935 66,100 88,475 246,272 Weighted average interest rate 6.12% 5.92% 5.90%
Fixed interest maturing in: 30 June 2006 Floating Interest 1 year or Between 1 to 5 Over 5 Non-interest Total Rate less years years bearing $’000 $’000 $’000 $’000 $’000 $’000 Financial Assets Cash assets and cash equivalents 5,272 - - - 9 5,281 Amounts receivable under contracts of sale - - - - 1,693 1,693 Trade Receivables - - - - 7,356 7,356 Amounts receivable under development agreements - - - - 13,640 13,640 Other receivables - - - - 1,264 1,264 5,272 - - - 23,962 29,234 Weighted average interest rate 5.60%
Financial Liabilities Payables - - - - 18,997 18,997 Amounts owing to land vendors - - - - 11,103 11,103 Land sale deposits - - - - 45,098 45,098 Interest bearing liabilities - 33,970 99,371 54,100 - 187,441 - 33,970 99,371 54,100 75,198 262,639 Weighted average interest rate 6.06% 5.98% 5.72%
Floating interest rates represent the most recently determined rate applicable to the instrument at balance date.
63 The net fair value of financial assets and financial liabilities approximate their carrying value. The following methods and assumptions have been NOTES used to determine that the aggregate net fair values of the financial assets and liabilities equal their respective carrying amounts as recorded in the TO Balance Sheet as at 30 June 2007: THE FINANCIAL Cash and cash equivalents: The carrying amount equals fair value. STATEMENTS
Receivables and payables: The carrying amounts approximate fair value due to their short collection and payment terms.
Interest bearing liabilities: The carrying amount based on the draw down value equates approximately to fair value based on the market value of the portfolio at balance date.
Amounts owing to land vendors: The carrying amount equates approximately to fair value.
(c) Credit risk exposure
VicUrban’s maximum credit risk exposure is indicated by the carrying amounts of its financial assets. This does not take into account the value of security held in the event other parties fail to perform their obligations under contracts of sale.
VicUrban does not have any significant concentrations of credit risk as it undertakes transactions with a large number of customers in the residential property market. NOTES 21. Authority members and executives disclosure TO THE (a) Responsible persons FINANCIAL STATEMENTS In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding Responsible Persons for the reporting period:
Minister The Hon. Theo Theophanous, MP Major Projects (from 29 November 2006) The Hon. John Lenders, MP Minister for Major Projects (1 July 2006 - 28 November 2006)
Governing Board Mr Tony Darvall (Chair) Mr Warwick Heine Ms Helen Hewett Ms Carolyn Lloyd Mr Michael Roux Mr Marcus Spiller Ms Gabrielle Trainor Mr Garry Weaven
Accountable Officer Ms Pru Sanderson, Chief Executive Officer
(b) Remuneration of Responsible Persons
The Responsible Persons received remuneration for the twelve month financial period ending 30 June 2007. The number of Responsible Persons, excluding Ministers, whose total remuneration in connection with the affairs of VicUrban, as shown in the following bands, were:
30 June 2007 30 June 2006 No. No.
$20,000 - $29,999 - 1 $30,000 - $39,999 7 7 $40,000 - $49,999 - 1 $50,000 - $59,999 1 1 $400,000 - $409,999 1 - $510,000 - $519,999 - 1*
9 11
* Including performance incentive bonus payments and leave entitlements on resignation.
30 June 2007 30 June 2006 $’000 $’000
Total remuneration received, or due and receivable by Responsible Persons from VicUrban for the financial period : 687 871
VicUrban pays premiums in respect of insurance for the benefit of all Responsible Persons including directors and officers indemnity insurance. The State Government of Victoria also provides an environmental indemnity to the VicUrban Board members.
65 (c) Remuneration of executives NOTES TO The executives received remuneration for the twelve month financial period ending 30 June 2007. The number of executive officers, THE other than the Accountable Officers, and their total remuneration during the financial period are shown in the table below in their FINANCIAL relevant income bands. Base remuneration is exclusive of performance incentive bonus payments, long service leave payments and STATEMENTS retirement benefits.
Total Base Total Base Remuneration Remuneration Remuneration Remuneration 30 June 2007 30 June 2007 30 June 2006 30 June 2006 No. No. No. No.
$130,000 - $139,999 - 1 - - $140,000 - $149,999 - 1 - - $150,000 - $159,999 1 - - 1 $160,000 - $169,999 1 - - $170,000 - $179,999 1 1 2 2 $190,000 - $199,999 - - - 1 $200,000 - $209,999 - - 1 - $210,000 - $219,999 - - 1 - $220,000 - $229,999 - 2 - 3 $230,000 - $239,999 - 1 - - $250,000 - $259,999 - 1 2 - $260,000 - $269,999 2 - 1 - $270,000 - $279,999 1 - - - $290,000 - $299,999 1 - - - 7 7 7 7
Total Base Total Base Remuneration Remuneration Remuneration Remuneration 30 June 2007 30 June 2007 30 June 2006 30 June 2006 $’000 $’000 $’000 $’000
The total remuneration received, or due and receivable, by executive officers, other than Responsible Persons, whose total remuneration exceeded $100,000 from VicUrban for the financial year was: 1,583 1,380 1,547 1,367
22. Remuneration of auditors
During the year the following fees were paid or payable for services provided by VicUrban’s auditors:
30 June 2007 30 June 2006 $’000 $’000
Audit services Auditor-General’s office - audit and review of financial reports and other audit work under the Financial Management Act 1994 80 87 Ernst & Young - internal audit assessment 29 65 KPMG - internal audit assessment 73 - Total remuneration for audit services 182 152
NOTES 23. Contingent Assets and Liabilities TO THE FINANCIAL 30 June 2007 30 June 2006 STATEMENTS $’000 $’000
Contingent assets Bank guarantees (i) 57,006 29,328
Contingent liabilities Bank guarantees (ii) 8,573 11,017 Valley Lake BMD claim (iii) - - Docklands municipal and place management transfer to the City of Melbourne (iv) - 20,000
(i) Bank guarantees provided to VicUrban relate to Docklands stage development and performance securities.
(ii) Bank guarantees have been issued by VicUrban’s bankers to municipalities and other Government bodies for satisfactory performance of works undertaken by VicUrban. If a body is not satisfied with VicUrban’s performance it may claim against the relevant guarantee.
(iii) A claim for damages was lodged in the 2003/04 financial year against VicUrban with respect to contract earthworks at Valley Lake. The matter is currently subject to trial in the Supreme Court of Victoria. VicUrban has denied liability, is defending the action and has lodged a counter claim. VicUrban believes that any disclosure of financial impacts could potentially prejudice the outcome of the court proceedings.
(iv) With the on-going development of the Melbourne Docklands, VicUrban has created many significant public realm assets which are of lasting benefit to all Victorians. These assets include roads, bridges, promenades and parks such as Wurundjeri Way, the Charles Grimes bridge, the Latrobe and Collins Street extensions, the Bourke Street pedestrian bridge and Docklands Park; many of which have been contributed by the developers of the Melbourne Docklands as part of their development obligations with VicUrban.
In accordance with the requirements of AASB 136 Impairment of Assets, the Authority is required to assess the impairment of assets. As VicUrban is a ‘for-profit’ entity, this process involves writing down the value of the assets at each year end to reflect the recoverable amount of the assets which is equal to the estimated net present value of the future cash flows to be derived from these assets. This process has been undertaken to 30 June 2007 as outlined in Note 7.
The municipal responsibilities for the Melbourne Docklands transferred from VicUrban to the City of Melbourne effective 1 July 2007 along with the many significant public realm assets. No further impairment of assets is anticipated.
24. Commitments for expenditure
30 June 2007 30 June 2006 $’000 $’000
Capital commitments Commitments for the acquisition of infrastructure, property, plant and equipment contracted for at the reporting date but not recognised as liabilities or payables are as follows: Within one year 310 2,167 Total capital commitments 310 2,167
Operating leases Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year 1,425 1,405 Later than one year but no later than five years 4,650 4,367 More than five years 4,927 5,901 Total operating lease commitments 11,002 11,673
67 25. Related party transactions NOTES TO The names of the Responsible Persons who were Responsible Persons of VicUrban during the year ended 30 June 2007 are disclosed in Note 21. THE FINANCIAL Related party transactions with Board directors and their related parties, which occurred during the normal course of business, apart from STATEMENTS remuneration of Board directors which is disclosed in Note 21 are listed below:
30 June 2007 30 June 2006 $’000 $’000
Mr Marcus Spiller Consulting services by SGS Economics & Planning 23 -
During the financial period, the following aggregate transactions were undertaken and balances held with other Victorian Government controlled entities. These transactions were undertaken on commercial terms and conditions in the ordinary course of operations.
30 June 2007 30 June 2006 $’000 $’000
Revenue 9,936 505 Other receipts including operating grants 28,012 17,209 Operating expense payments 7,296 2,292 Capital appropriations 11,231 - Payments for land purchases 6,415 7,947 Payments for development works 6,443 13,174
Interest payments 11,332 11,250 Financial accommodation levy payments 2,783 2,794 Income tax equivalent payments 3,826 11,905
Assets 10,797 827
Other liabilities 317 129
Loans from Treasury Corporation of Victoria (TCV) 157,480 187,250 Loans received from TCV 20,400 37,620 Loans repaid to TCV 50,170 37,350
Deposits with Treasury Corporation of Victoria (TCV) 21,526 2,909 Deposit paid to TCV 70,845 2,909 Deposits repaid by TCV 52,228 -
The ultimate controlling entity of VicUrban is the State Government of Victoria. NOTES 26. Notes to the cash flow statement TO THE FINANCIAL 30 June 2007 30 June 2006 STATEMENTS $’000 $’000
Reconciliation of profit after income tax equivalent expense and impairment of assets to net cash inflow/(outflow) from operating activities
Profit after income tax equivalent expense and significant items 5,612 9,124 Add/(deduct):
Depreciation 3,154 1,898 Asset impairment 19,662 10,499 Provision for doubtful debts (260) 176 Loss on disposal of fixed assets (72) (25) Change in operating assets and liabilities: Decrease/(increase) in receivables (before accrued interest and provisions) (5,365) (2,175) Decrease/(increase) in inventories 3,058 23,185 Decrease/(increase) in prepayments (70) (139) Decrease/(increase) in deferred tax asset 384 39 Increase/(decrease) in payables 21,221 (12,117) Increase/(decrease) in amounts owing to land vendors 229 (20,207) Increase/(decrease) in land sale deposits (5,543) (369) Increase/(decrease) in provisions 7,347 4,841 Increase/(decrease) in current tax liabilities (595) (1,279) Increase/(decrease) in deferred tax liabilities (1,757) (2,510)
Net cash inflow/(outflow) from operating activities 47,005 10,941
27. Deed of Support
In fulfilling its objectives, VicUrban executes development agreements from time to time and requires funding in order to carry out its rights and obligations under those development agreements.
VicUrban also requires funding from time to time to meet other costs incurred in carrying out the functions under the Victorian Urban Development Authority Act 2003.
The Treasurer of the State of Victoria has provided a Deed of Support in favour of VicUrban in respect of the loans for the Docklands project from the Treasury Corporation of Victoria (TCV). In the event of delayed receipts from developers or other prescribed events of support, the Treasurer will provide appropriate financial support to VicUrban to avoid VicUrban’s default of its TCV borrowing obligations.
69 Certification of financial statements for the year ended 30 June 2007 NOTES TO We certify that the attached financial statements for VicUrban have been prepared in accordance with Standing Direction 4.2 of the Financial THE Management Act 1994, applicable Financial Reporting Directions, Australian accounting standards and other mandatory professional reporting FINANCIAL requirements. STATEMENTS
We further state that, in our opinion, the information set out in the Operating Statement, Balance Sheet, Cashflow Statement, Statement of Changes in Equity and Notes to and Forming Part of the Financial Statements, presents fairly the financial transactions for the year ended 30 June 2007 and financial position of VicUrban as at 30 June 2007.
We are not aware of any circumstance which would render any particulars included in the Financial Statements to be misleading or inaccurate.
Mr A Darvall Ms P Sanderson Mr G Szoka Chair Chief Executive Officer General Manager - Corporate Services Accountable Officer
Melbourne 15 August 2007 AUDITOR GENERAL’S REPORT 71 AUDITOR GENERAL’S REPORT Statement of Corporate Intent VicUrban, as a participant in the market, acts to raise the standard of sustainable urban living.
VicUrban’s Purpose VicUrban is the Victorian Government’s sustainable urban land development agency committed to delivering sustainable, prosperous and successful communities in metropolitan and regional Victoria.
VicUrban’s two key interrelated roles are to: Deliver and demonstrate innovation to the industry as a commercial developer; and Implement Government urban policy, applying commercial skills and discipline.
VicUrban executes these roles by: Delivering projects at the forefront of sustainable living; Developing innovations that industry can replicate; Educating the buying public to the possibilities; and Realising Government vision through commercial developments.
VicUrban’s business approach is founded on a commitment to sustainability, which embraces: Community well-being; Environment; Commercial success; Urban design excellence; and Housing affordability.
Business Objectives To meet Government objectives and achieve our vision within a competitive commercial environment, we have set ourselves five key objectives for the corporate planning period 2007-12:
Commerciality with Sustainability Leadership A commercial entity that invests in innovation to deliver sustainable communities;
Partnerships Create opportunities for private and public entities to share in the delivery of sustainable communities;
Urban Growth and Urban Renewal Balanced portfolio comprising both urban growth and urban renewal projects;
Affordability Deliver affordable housing for households on the margins of home ownership; and
Organisational Capability Employees who are engaged and capable of delivering VicUrban’s strategic directions. The business targets for these objectives are commercially sensitive. Overview of Operations (nature and scope) VicUrban operates in both metropolitan and provincial Victoria to develop land on a varying scale, from small scale residential projects, such as Cheltenham Green and Bonbeach, to large scale mixed use and industrial developments such as the Melbourne Docklands and Dandenong LOGIS.
VicUrban’s primary functions are to: Establish broad acre developments in the growth corridors VicUrban operates in the growth corridors to enable it to exercise a price-moderating influence on the market as well as demonstrate innovations in sustainable development;
Develop the Melbourne Docklands VicUrban has been entrusted with delivering the Melbourne Docklands, transforming 200ha of disused industrial land into a world class entertainment, residential and office precinct;
Shape medium density infill and urban renewal developments VicUrban has a specific mandate to undertake major urban renewal projects, particularly where there has been market failure or site or bureaucratic impediments. Medium density infill and renewal projects are also consistent with the Melbourne 2030 policy;
Contribute to developments in provincial Victoria VicUrban undertakes projects, often in partnership with local Government and the private sector, to broaden the range of available residential opportunities and contribute to the implementation of Governments Provincial Statement ‘Moving Forward’; and
Assist with the implementation of the Transit Cities program VicUrban is the lead agency for Revitalising Central Dandenong supporting the implementation of Government’s ‘Melbourne 2030’ policy.
Regulatory Environment - Provisions Under the Act The Victorian Government established the broad function and responsibilities of VicUrban through the Victorian Urban Development Authority Act 2003.
The Act states VicUrban was established to: Carry out urban development alone or in partnership; Develop the Docklands area in accordance with the Docklands Act 1991; Undertake declared projects; and Assist in the implementation of Government urban development policies and strategies including Melbourne 2030.
Key functions set out in the Act include: To purchase, consolidate, take on, transfer or otherwise acquire land in metropolitan and provincial areas for development for urban purposes; To promote best practice in urban and community design and sustainable development having regard to links to transport services and innovations in sustainable development; To develop land in Victoria for residential and other urban purposes to provide a competitive market; and To contribute to improvements in housing affordability.
The Act requires VicUrban to carry out its functions on a commercial basis. Corporate and Social Responsibility VicUrban is committed to the principles of corporate social responsibility. This is reflected in its core philosophy and approach which includes: Being a good corporate citizen; Integrating social and environmental objectives into business operations; Having a longer time horizon in decision-making, taking into account the future as well as the present; Taking responsibility for action, mitigating adverse environmental or social impacts at every stage, both within and outside the Authority; Upholding the spirit as well as the letter of the law; Continuous improvement in all aspects of operations, including employee relations, training, working environment, quality of outputs and performance reporting; and Relating positively to, and often working in partnership with, other developers, suppliers, customers, the community and other Government agencies.
Accounting Policy The Financial Report is a general purpose financial report which is prepared on an accruals basis in accordance with the Financial Management Act 1994.
Income Tax VicUrban is exempt from income tax in accordance with section 50-25 of the Income Tax Assessment Act 1997. Vicurban is subject to the National Tax Equivalent regime pursuant to section 88 of the State Owned Enterprises Act 1992. Any activity relating to the Docklands area is exempt from the National Tax Equivalent Regime in accordance with section 67 of the Victorian Urban Development Authority Act 2003. Income tax equivalent expense in the Operating Statement is matched with the accounting profit after allowing for permanent differences. The future tax benefit relating to tax losses is not carried forward as an asset unless the benefit is virtually certain of realisation. Income tax equivalent on cumulative timing differences is set aside to the deferred tax liability or deferred tax asset accounts at the rates which are expected to apply when those timing differences reverse.
Capital Structure and Dividends VicUrban has a strong balance sheet with net assets in excess of $250 million. The balance sheet has significant accumulated losses as a result of the gifting of the Docklands municipal and place management assets to the City of Melbourne on 30 June 2007. The payment of dividends occurs only after a formal determination is made by the Treasurer of the State of Victoria following consultation between VicUrban’s Board, the Minister and the Treasurer.
Corporate Status The ultimate controlling entity of VicUrban is the State Government of Victoria. Statutory Authority Victorian Urban Development Authority - trading as ‘VicUrban’ Incorporation Act Victorian Urban Development Authority Act 2003 Incorporated 01 August 2003 Registered Address Level 12, 700 Collins Street, DOCKLANDS 3008 ABN 61 868 774 623 TFN 796 929 111