FED SQUARE PTY LTD ANNUAL REPORT 2 0 1 9 - 2 0 2 0 TRADITIONAL OWNER ACKNOWLEDGEMENT
Fed Square proudly acknowledges that Federation Square is situated on the
traditional lands of the Boon Wurrung and Woiwurrung peoples of the Kulin
nation and pays respect to their Elders past and present.
We acknowledge Aboriginal people as Australia’s first people and as the
Traditional Owners and custodians of the land and water on which we rely.
We recognise and value the ongoing contribution of Aboriginal people and
communities to Victorian life and how this enriches us. We embrace the spirit
of reconciliation, working towards the equality of outcomes and ensuring
an equal voice. CONTENTS FED SQUARE ANNUAL REPORT 2019 - 2020
About Fed Square 3
Fed Square’s Purpose 4
Vision 4
Mission 4
Values 4
Service Goal 5
Message from Chair and CEO 6
About Fed Square 10
Corporate Governance 10
Fed Square Ptd Ltd Functional Structure 11
Fed Square’s Board 12
The Year’s Activity 16
Strategic Imperatives 17
Enhance Fed Square’s reputation as a globally recognised place for 1. 18 meaningful, visitor centred experiences
Grow the Fed Square Family exponentially, by connecting people to the 2. 28 enduring power of community
3. Ensure a sustainable future for Fed Square 32
Build a social enterprise culture that is engaged, aligned and committed to 4. 36 delivering the Corporate Plan 2019-2022
The Year Ahead 38
5 Year Financial Summary 42
Key Performance Indicators 44
Statement of Corporate Governance 46
CONTENTS Directors’ Report 52
Financial Report 56
Contact Information 122
PAGE 1 Enjoying the Australian Open on the Digital Facade.
PAGE 2 FED SQUARE ANNUAL REPORT 2019 - 2020
ABOUT FED SQUARE
PAGE 3 ABOUT FED SQUARE Please note that throughout the Annual Report, ‘Federation Square’ will refer to the place and ‘Fed Square’ will refer to the management entity (Fed Square Pty Ltd).
FED SQUARE’S PURPOSE The Civic and Cultural Charter outlines Fed Square’s purpose as achieving the following objectives for Victoria: • to provide a stimulating, educational, comfortable and entertaining destination venue to Victorians, and to interstate and international visitors; • to represent Melbourne as a leading city for the arts and for innovation and creativity in all forms of cultural expression; • to communicate the City’s leadership in contemporary ideas and expression; • to provide a focal point for arts and cultural festivals and activities and important civic commemorations; • to reflect Melbourne’s cultural diversity in its overall operations and programming; and • to attract local, national and international visitors to Federation Square.
VISION To be internationally recognised as Melbourne’s inspirational public place where visitors come to celebrate, learn, innovate and connect.
MISSION To manage and develop Federation Square to actively support and reflect Melbourne’s pre-eminent civic and cultural strengths. Federation Square desires to be an iconic destination that delivers a memorable visitor experience.
VALUES
Community commitment
• Aspiring to help foster a stronger and healthier society • Support for our diverse community • Inclusivity through accessibility and the promotion of harmony and engagement
Integrity
• Honesty and transparency in all our practices • Trustworthiness in the sincerity of our actions and dealings
• Accountability in delivering on expectations and outcomes ABOUT FED SQUARE ABOUT
PAGE 4 FED SQUARE ANNUAL REPORT 2019 - 2020
Leadership • Inspiration through passion and animated influence • Commitment to quality service, systems, experiences, safety and sustainability • Efficacy as a goal for each individual • High performance which is respected in business and the community
Innovation • Creativity in bringing new ideas to life • Boldness in applying innovation to the business • Flexibility to embrace change and adapt to new challenges
Teamwork • Pride in our work and shared results including with contractors and stakeholders • Respect for each other and our differing personalities and styles • Support for each other and sensitivity to individual interests and responsibilities • Resilience in working to achieve our goals • Balance combining hard work with a fulfilling personal life
SERVICE GOAL To be recognised for providing exceptional customer service that will inspire visitors, customers and clients to return time and again.
Our core service commitments are:
• Providing consistent, reliable customer service and value • Ensuring that what we do, we do with pride • Establish a reputation for excellence • Be a positive ambassador for Victoria
In delivering this service, we will be: • Welcoming • Helpful • Respectful • Accountable ABOUT FED SQUARE ABOUT
PAGE 5 MESSAGE FROM THE CHAIR AND CEO We are pleased to present the 2019-2020 Annual Report, a year of continued transformation at Federation Square in which foundations have been built upon for an exciting new chapter for Melbourne’s gathering place. Over the course of the year Fed Square’s Board and Management have continued to drive the organisation forward with the delivery of several key initiatives, which we are proud to detail in this Annual Report.
MS DEBORAH BEALE AM CHAIR
DR XAVIER CSAR CEO
PAGE 6 FED SQUARE ANNUAL REPORT 2019 - 2020
Throughout 2019-2020 Fed Square was actively involved in the Victorian Government Review of Federation Square, which was announced in April 2019. Fed Square’s Board and Management provided the Federation Square Review Panel with the information, insights and access required to conduct a thorough review and determine meaningful outcomes for Federation Square and the organisation. Fed Square was also involved in facilitating community and stakeholder consultation as part of the review process and, upon the release of the community consultation report in December 2019, sought to immediately address the key feedback received. The recommendations of the Review, publicly released in August 2020, have further established Federation Square’s position as the premier gathering place for all Victorians.
In September 2019, Jonathan Tribe stepped down as CEO of Fed Square after a three-year tenure in the position. During his time in the role, Jonathan delivered a number of key initiatives for the organisation including the installation and unveiling of the Digital Façade, the development of a rolling program and event strategy to ensure continued delivery of high quality public events, activations and experiences, and the development of a more sustainable business framework.
Following Jonathan’s retirement, Xavier Csar was appointed to the position of CEO. Xavier brought extensive executive experience leading Victoria’s TAFE system, state and regional development and economic policy in the Victorian and Commonwealth Governments. In the relatively short time he has been in the position, Xavier has made a significant impact upon the organisation and the future direction of Federation Square, as demonstrated in the various initiatives highlighted throughout this Annual Report.
Fed Square undertook an organisational restructure in December 2019, consolidating the number of internal departments from four to two: Business Operations and Support Services and Customer Experience. This simplification allows Fed Square to benefit from synergies between different areas of the business and improved communication and collaboration amongst staff.
A significant moment in the history of Federation Square came about when it received heritage listing from the Heritage Council of Victoria in August 2019. Following the announcement, Fed Square worked with heritage experts to develop Design Integrity Guidelines and a Conservation Management Plan. This will help guide the management of the site into the future and protect the architecture and design that make the precinct unique.
Fed Square has continued to foster relationships with its tenants, and in particular the cultural institutions that call Federation Square home. The result has been greater collaboration with tenants across events and activities, a greater sharing of information and learnings between organisations, and most importantly a more holistic experience for
ABOUT FED SQUARE ABOUT visitors to the Square.
PAGE 7 Over the course of the year Federation Square was home to a kaleidoscope of events and activations that reflected the vibrancy and diversity of Melbourne. The public flocked to the Main Square for cultural festivals including Diwali, the African Music and Cultural Festival, and the NAIDOC Week concert, as well as community celebrations for the likes of Christmas and New Year’s Eve. A wide range of third party activations, such as the full site takeover of the Australian Open, the display of Terrance Plowright’s statue of Tayla Harris ‘The Kick’ on Swanston Street Forecourt, and the captivating Cartier: Into the Wild exhibition were all hosted. Fed Square also produced some of its own wonderful events during the year including the sold out Sensory Underground dining experience, the Little Food Festival, and the Fed Beach activation, all of which added to the excitement of the precinct for visitors.
Prior to March 2020, Fed Square oversaw strong financial performance for the organisation, with a substantial end of year operating surplus anticipated based on forecasts for the remainder of the 2019-2020 year. The onset of the coronavirus (COVID-19) pandemic has had a significant impact upon the financial position of Fed Square, with revenue sources dramatically impacted and unforeseen costs incurred. Decrease revenue was realised across tenancy rents, car park income, sponsorship and advertising, event delivery, and venue hire. Despite these unprecedented challenges the organisation managed to deliver an operating surplus in 2019-2020. Throughout this difficult period Fed Square has continued to invest in its people and act as an exemplar public sector employer through these challenging times.
From 30 March until 1 June, Federation Square was closed as a venue, with restrictions on events, operation of tenants and institutions. Throughout this period the Digital Façade served as a display for coronavirus public service announcements.
While the pandemic forced a halt to normal operations for Fed Square, it also challenged the organisation to think laterally about how to continue meeting its role as a civic and cultural hub for Melbourne. The result of this was the innovative Virtual Square, created within weeks of Federation Square’s closure. This allows visitors from anywhere in the world to experience a wide range of content associated with the Square without leaving their homes. As well as driving great interest from the community, the establishment of the Virtual Square has rapidly increased Fed Square’s capabilities around creating, curating, and publishing great interactive experiences. This enables events to take place seamlessly across both physical and virtual spaces.
Our ambition is undiminished by the current situation, not least of all due to the forward focused and transformative vision that the Board and Executive have set out over the past several years.
The coming year promises to be amongst the most significant in Fed Square’s history. These include the organisation’s response to the recommendations of the Victorian Government Review and the phased return to re-opening and public programming as the impact of the pandemic recedes.
The Annual Report provides an opportunity to thank all Fed Square’s partners that provided support over the past year and ensured that Federation Square maintained its status as
ABOUT FED SQUARE ABOUT the civic and cultural heart of Melbourne. Fed Square would like to acknowledge our
PAGE 8 FED SQUARE ANNUAL REPORT 2019 - 2020
responsible Ministers throughout the reporting period, The Hon Martin Pakula MP, Minister for Tourism, Sport and Major Events (to 1 September 2020); The Hon Martin Foley MP, Minister for the Creative Industries (2 September 2020 to 28 September 2020); The Hon Danny Pearson MP, Minister for Creative Industries (from 29 September 2020); Treasurer Mr Tim Pallas MP; the City of Melbourne; key cultural partners – the Australian Centre for the Moving Image (ACMI), The Ian Potter Centre: NGV Australia (NGVA), the Koorie Heritage Trust (KHT); and our retail and commercial partners. Fed Square would also like to thank the Department of Jobs, Precincts and Regions, the Department of Treasury and Finance, Visit Victoria and our other government partners for their assistance and collaboration throughout the year.
Fed Square looks forward to working with The Hon Danny Pearson MP, Assistant Treasurer and Minister for Government Services, Regulatory Reform and Creative Industries, as the responsible Minister.
Thanks are extended to the Fed Square Board for their commitment in providing governance and strategic direction to the organisation. Fed Square staff are also to be congratulated for their enthusiasm in delivering on the vision for Federation Square. By working together the Board and management ensure that Federation Square remains a welcoming and inclusive place for Victorians and visitors alike to enjoy a kaleidoscope of experiences.
Taking a break at Federation Square ABOUT FED SQUARE ABOUT
PAGE 9 ABOUT FED SQUARE Federation Square is one of Melbourne’s premier public spaces, filling a gap that had previously existed in the city’s civic and cultural landscape and striving to be a welcoming and accessible place to gather in celebration and healing, and engage in civic and political discourse. Each year Federation Square hosts community, cultural and other activities that equate to around 2,300 event and activation days. It also supports a diverse mix of businesses that service residents, CBD workers and local and international visitors alike. It is home to four nationally significant resident cultural institutions and is also responsible for funding routine maintenance and upkeep such as lift replacement, disability access and built form preservation.
CORPORATE GOVERNANCE Fed Square Pty Ltd (Fed Square) is wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer is the Minister responsible for the State Holding in Fed Square under the Deed. The Minister for Tourism, Sport and Major Events had State Government portfolio responsibility for Fed Square until 1 September 2020. From 2 September this responsibility was transferred to the Minister for the Creative Industries. Fed Square is governed by its Constitution and has regard to the Civic and Cultural Charter that was jointly developed and agreed by the Victorian Government and City of Melbourne at the inception of the Federation Square project. The Civic and Cultural Charter recognises Melbourne’s pre-eminence as a centre for creativity and innovation, its diverse and successful arts and cultural festivals, its cultural diversity, the popularity and beauty of its gardens and river, and the desirability for a focal point for contemporary cultural and civic activities. As well as detailing the purpose of Federation Square, the Charter details key outcomes, implementation requirements and operating principles expected of Fed Square. Because of it’s diverse role and broad-reaching significance, Fed Square interacts with government entities, particularly the Department of Jobs, Precincts and Regions (DJPR) on portfolio matters, and the Department of Treasury and Finance (DTF) in relation to the State Government’s shareholding in the company. Within DJPR, Fed Square liaises with the Creative, Sport and Visitor Economy Group with the view to assisting in implementing the strategic policies on behalf of Government. The company has a board of directors and a Chief Executive Officer with a team of professional staff. A dedicated team of 44 staff (43 full time plus 1 part time (43.9 FTE) as at 30 June 2020) work across a range of areas of expertise to ensure that Federation Square remains one of the nation’s premier civic precincts. Fed Square also contracts services such as cleaning, security, audio visual and car park management. These service providers share Fed Square’s commitment to service
ABOUT FED SQUARE ABOUT excellence and the delivery of great visitor experiences.
PAGE 10 FED SQUARE ANNUAL REPORT 2019 - 2020
FED SQUARE PTY LTD FUNCTIONAL STRUCTURE OPERATING ENVIRONMENT
PORTFOLIO MINISTER* TREASURER
DEPARTMENT OF JOBS, PRECINCTS AND REGIONS DEPARTMENT OF TREASURY AND FINANCE
FED SQUARE PTY LTD BOARD
FINANCE, AUDIT AND RISK COMMITTEE BOARD NOMINATIONS & EXECUTIVE REMUNERATION COMMITTEE
CEO
COMPANY SECRETARY
CXO COO
CUSTOMER EXPERIENCE BUSINESS OPERATIONS AND SUPPORT SERVICES PURPOSE To conceptualise and deliver exceptional visitor PURPOSE experiences and innovative digital programming that To support the Board with strategic planning and engages the public according to the civic and cultural corporate governance. Provide business support expectations of Fed Square. services for the management and administration of Functions include: Federation Square, plus the maintenance and upgrade of its assets and facilities. • Venue hire Functions include: • Event coordination • Corporate planning • Public programming • Finance • Marketing • Business improvement • Community participation • Administration and business support • Digital program curation • IT and Multimedia support • Commercial partnerships • People and performance • Program operations • Policies and procedures • Event supervision • Environmental services • Communications and stakeholder engagement • Security • Cleaning • OH&S • Asset maintenance and facilities management • Project Management • Tenancy Management
FRONT OF HOUSE BACK OF HOUSE AND ADMINISTRATION
* Portfolio Ministers – The Hon Martin Pakula MP, Minister for Tourism, Sport & Major Events (to 1 September 2020) The Hon Martin Foley MP, Minister for Creative Industries (from 2 September 2020 to 28 September 2020) The Hon Danny Pearson MP, Minister for Creative Industries (from 29 September 2020) PAGE 11 OUR BOARD
MS DEBORAH BEALE AM, CHAIR
Deb Beale has a Bachelor of Commerce from the University of Melbourne, a Graduate Diploma from the Securities Institute of Australia and a Master of Business Administration from Melbourne Business School. Deb began her working career in the finance industry where she was employed by Merrill Lynch for over a decade. She then moved to Ernst & Young where she specialised in governance and risk management.
Deb has also served and continues to serve on a number of government, public, private and not-for-profit boards. Her broad experience includes the areas of finance, corporate governance, public relations and risk management.
MR PATRICK CONLON
Patrick Conlon is a former member of the South Australian Parliament. He served in the House of Assembly as a member of the Australian Labor Party from 1997 to 2014 and was Minister for Transport, Minister for Infrastructure, and Minister for Energy, as well as the Leader of Government Business in the Lower House. During his 11 years as a Minister, Patrick held a number of other portfolios, including Police, Emergency Services, and Housing and Urban Development.
While Transport and Infrastructure Minister, Patrick oversaw the greatest infrastructure build in South Australia’s history, including a $2.6 billion rail revitalisation programme and the redevelopment of Adelaide Oval. He negotiated the first ever major contribution from the Federal Government to public transport and oversaw two tram extensions as well as a number of large, private joint venture mixed residential developments.
Patrick has a Bachelor of Laws (Hons) and a Bachelor of Arts (Jurisprudence) from the University of Adelaide and has practised in energy law at Minter Ellison. He currently runs his own government relations consultancy. ABOUT FED SQUARE ABOUT
PAGE 12 FED SQUARE ANNUAL REPORT 2019 - 2020
MS PAMELA MITCHELL
Pam Mitchell is a Chartered Accountant with extensive experience in the establishment, documentation, financial management and reporting of property and investment funds management businesses and superannuation funds in a range of small and medium-sized enterprises in the corporate, government and not-for-profit sectors.
Pam is currently a Director of Heyfield ASH Holding Pty Ltd, a member of the Audit Committees of the Victorian Government’s Department of Transport and Department of Jobs, Precincts and Regions. She also chairs the Audit Committee for the Australian Radiation and Nuclear Safety Agency.
She was a non-executive Director of State Trustees Limited, a Director of the Emergency Services and State Super Board and has held many roles as Chief Financial Officer and Company Secretary in the investment and property sectors.
MS KATHLEEN WILSON
Kathy Wilson is the Principal of Kathy Wilson Legal. Kathy has a background in property law, commercial litigation and succession law, and has over 25 years’ experience advising in litigation and dispute resolution, asset structuring, wills and succession planning and guardianship matters. Kathy has served on a number of boards and committees in the private, not-for-profit and government sectors.
Kathy is presently a non-executive director of the Law Institute of Victoria Limited and the Institute of Legal Executives Limited. She is a member of the Australian Institute of Company Directors, accredited mediator, accredited specialist in wills and estates and a qualified trust and estate practitioner. ABOUT FED SQUARE ABOUT
PAGE 13 MR ARI SUSS
Ari Suss is CEO of Fox Special Projects, part of the private family investment arm of the Linfox Group, joining the company in 2004. Ari is also a Board Member of Avalon Airport Australia.
Between 1999 and 2004, Ari was a senior adviser to former Premier Steve Bracks. During this time, he specialised in policy and advice in the areas of infrastructure development, transport, ports, major projects, multicultural affairs and parliamentary strategy.
In 2011, Ari also commenced in his role as General Manager of the Linfox-owned Australian Automotive Research Centre, a 1000-hectare vehicle test facility in Anglesea, Victoria.
In October 2015, Ari was appointed a Director and Board Member of Goulburn Murray Water.
Ari has a Master’s degree in Public Policy and Management from Monash University, is a graduate member of the Australian Institute of Company Directors and has completed executive studies at Harvard Business School.
MR JOHN LEE, CO-OPTED MEMBER OF BOARD, FINANCE, AUDIT AND RISK COMMITTEE, AND BOARD NOMINATIONS AND EXECUTIVE REMUNERATION COMMITTEE
John Lee is a Chartered Accountant and consultant. John has a Graduate Diploma (Company Directors) from the Australian Institute of Company Directors (AICD) and is an Associate Member of AICD. John is also an Associate Member of Chartered Accountants, ANZ and has a Fellowship Diploma of Business Studies (accountancy) from RMIT University. ABOUT FED SQUARE ABOUT
PAGE 14 FED SQUARE ANNUAL REPORT 2019 - 2020
COMMITTEE MEMBERSHIP The annual Tanderrum Indigenous celebration allows safe passage, temporary access and use of Finance, Audit and Risk Committee land and resources by visitors. Ms Pamela Mitchell, Chair Ms Deborah Beale Ms Kathleen Wilson Mr John Lee
Board Nominations and Executive Remuneration Committee Ms Kathleen Wilson, Chair Ms Deborah Beale Mr John Lee
PAGE 15 THE YEAR’S ACTIVITY
PAGE 16 FED SQUARE ANNUAL REPORT 2019 - 2020
STRATEGIC IMPERATIVES
With constantly evolving operating conditions facing Fed Square and challenges and opportunities being presented due to these changes, continued assessment of the strategic direction of the organisation is critical to ensuring its long-term success.
In 2019 the Fed Square Board oversaw a review of the 2018-2021 Strategic Plan to assess whether the strategic direction previously detailed appropriately accounted for recent changes in the external and internal operating environments. The result of this review was the 2019-2022 Strategic Plan and the establishment of four primary strategic imperatives for the organisation:
1. Enhance Federation Square’s reputation as a globally recognised place for meaningful, visitor centred experiences.
Promote and attract visitation to Federation Square as Melbourne’s destination for surprising and inspiring experiences for visitors, through leveraging Melbourne’s national identity as Australia’s cultural and sporting capital.
2. Grow the Fed Square Family exponentially, by connecting people to the enduring power of community.
The enduring power of community aims to connect people by creating a sense of belonging and worth to each other and to the broader Victorian community, which encourages them to visit both in person and virtually, to engage with and be part of the Fed Square family. Federation Square’s range of inspirational arts, education and entertainment experiences, particularly provided by ACMI, KHT and NGVA, reflect the diverse culture that is Melbourne and enhances people’s wellbeing and sense of belonging.
3. Ensure a sustainable future for Fed Square.
Ensure the sustainability of the organisation and physical site by gaining financial viability over the long term. In doing so, Fed Square will utilise contemporary practices that ensure it minimises the impact of its operations on the environment, whilst maintaining visitor safety and security.
4. Build a social enterprise culture that is engaged, aligned and committed to delivering the Corporate Plan 2019-2022.
To deliver social, cultural and environmental benefits to the community, Fed Square will continue to build a highly engaged, productive and cohesive team, committed to ongoing organisational transformation.
PAGE 17 1. Enhance Federation Square’s reputation as a globally recognised place for meaningful, visitor-centred experiences.
Federation Square built upon its reputation as the home to iconic events and activations this year, putting in place some critical initiatives to enhance the experience of visitors to the precinct now and into the future.
PAGE 18 FED SQUARE ANNUAL REPORT 2019 - 2020
PROGRAMMING STRATEGY
Federation Square was brought to life with a wide variety of compelling events, activations and experiences in 2019-2020, prior to the coronavirus pandemic, with a new anchor programme strategy and a more holistic and collaborative programming approach being implemented for the first time this year.
The new program strategy saw Fed Square curate a kaleidoscope of experiences across the calendar, in collaboration with a range of cultural, event and activation partners, with a renewed focus on Fed Square produced events. Experiences were structured around anchor themes for certain periods of the year, enabling the team to both create, partner, and promote a clear and cohesive visitor experience. The 24-month nature of the program strategy also provided a clear roadmap of activity for the precinct over the medium term and ability to approach community-minded organisations to partner with Fed Square on these anchor periods. Partnerships as part of the programming strategy for 2019-2020 were secured with KHT, NGVA, ACMI, Monash University, the Sandro de Maio Foundation, the City of Melbourne, Melbourne International Arts Festival, Visit Victoria, Food and Wine Victoria, the Committee for Melbourne, and Joost. Fed Square also partnered to support major events throughout the year including the Australian Open, Melbourne Fashion Week, the ICC T20 Women’s World Cup, and the Australian F1 Grand Prix.
DIGITAL FACADE
A critical element of the programming strategy was the utilisation of the Digital Façade, Federation Square’s state-of-the-art public screen, to both elevate events in the Main Square and to be used as a means of activating the precinct in its own right. Fed Square maximised the potential of the Digital Façade by working closely with event organisers to create compelling experiences for visitors, aligning with creative partners to host content, and taking an innovative approach to interactive uses for the screen. Some of the broadcasts screened on the Digital Façade included content provided by students at Swinburne University and Melbourne Girls Grammar, a virtual reality experience in collaboration with RMIT, the AFL Grand Final, a premiere simulcast of MTV Unplugged, the launch of ABC’s vertical format series ‘Content’, and opportunities for visitors to play video games on the big screen. With the onset of the coronavirus pandemic and government restrictions, the Digital Façade become a potent tool to convey public service announcements and social distancing advice on behalf of the Victorian Government.
Underpinned by the anchor program strategy, Fed Square also attracted a variety of partner experiences to Federation Square over the course of the year, adding to the vibrancy brought to Federation Square by the wealth of annual civic and cultural events that take place here.
2020 Australian Open THE YEAR’S ACTIVITY THE YEAR’S
PAGE 19 African Music and Cultural Festival, December 2019 Photo credit: AMCF
PAGE 20 FED SQUARE ANNUAL REPORT 2019 - 2020
A small selection of the events that took place at Federation Square over the past year are described in the following sections.
COMMUNITY FESTIVALS
As part of NAIDOC Week 2019, Federation Square’s main stage was put to great use as the location for a special concert held at the end of the NAIDOC Week march that made its way from Fitzroy. The concert attracted not only marchers but plenty of passers-by drawn in by the fantastic music and atmosphere.
Diwali, the Festival of Lights, returned to Federation Square for the 14th straight year in October, with tens of thousands of visitors flocking to the precinct over the course of the day to be a part of this incredible Indian celebration. The event featured traditional and contemporary Indian music, art, performance, and food and culminated in a spectacular fireworks display.
Another annual favourite, the Melbourne Prize, took place at Federation Square in November for the Melbourne Prize for Music 2019. In addition to an awards night held in Deakin Edge where some incredible Victorian musicians were recognised, members of the public were able to listen to pieces from all finalists in an innovative exhibit with the Atrium.
Korean culture was celebrated at several points during the year at Federation Square. The K-Pop World Festival was in July, with a performance extravaganza in Deakin Edge and the opportunity for members of the public to put their own skills to the test for the chance to perform at the event. Then in November the Main Square hosted the 2019 Korea Festival featuring Korean food, music, art and culture. During the event Fed Square also hosted a meeting between representatives from major South Korean airline Asiana and the Victorian Government to establish a seasonal flight service between Melbourne and Seoul.
December’s African Music and Cultural Festival, the largest annual African festival in Australia was a vibrant celebration of African culture that attracted large numbers of visitors to Federation Square. The family friendly event showcased incredible music, arts, dancing and food from the African continent.
The Melbourne Japanese Summer Festival in February highlighted the very best of Japanese culture across a range of areas including food, music, art, and dance. As well as live performances on the Main Stage, the festival also featured Japanese food and drink stalls, opportunities for visitors to learn traditional dance for themselves, and even some great examples of cosplay.
In addition to these amazing events, Fed Square was proud to celebrate the national day of 117 countries over the course of the year through flag raising ceremonies.
Federation Square is proud to host festivals from around the world including Diwali, PAGE 21 The Korea Festival, The Polish Festival and the African Musica and Cultural Festival. PARTNER EVENTS
In July, the Bastille Day French Festival took over the Atrium and Deakin Edge for a day in celebration of French culture and cuisine. The event featured market stalls, art exhibits, live music and dance, kids activities, and insightful talks about French history and its connection with Melbourne, making it an ideal experience for Francophiles.
As part of Melbourne Fashion Week in August, Deakin Edge was repurposed as a catwalk for the first of its kind Modest Fashion Runway. The event recognised diverse cultures and backgrounds and their fashions, providing exposure to the modest fashion industry and strengthening the connection between fashion lovers everywhere.
‘The Kick’ Tayla Harris statue In September, Federation Square’s Swanston Street Forecourt was chosen as the location for one of the most talked about statues in years, a sculpture commissioned by National Australia Bank depicting AFLW star Tayla Harris from the iconic image ‘The Kick’. Designed as a statement not just about Tayla, but about the need to raise the profile of sports- women in general, the statue garnered plenty of interest from the public as well as sports lovers around the country.
In celebration of 80 years since the creation of superhero Batman, Federation Square’s East Shard was the location for a projection of the famous bat signal, lighting up the night for Melbourne’s comic book fans. The Batman symbol lights up the East Shard
Excited fans waiting for autographs at PAGE 22 Rafael Nadal’s media call THIS YEAR’S ACTIVITY FED SQUARE ANNUAL REPORT 2019 - 2020
The Paddock was transformed into a wonderland throughout September and October with the arrival of the Wonderland Spiegeltent, a beautiful 19th-century Belgian travelling circus tent. Coinciding with the Melbourne Fringe Festival, the Wonderland Spiegeltent featured world-class circus performers and over 120 performances of shows for children and adults.
In one of the highlights of the year, the Australian Open took over Federation Square for three weeks in January, with the precinct becoming a hub for tennis lovers flocking to the city. As well as pop-up bars, deck chairs to watch the tennis action on the Digital Façade, and plenty of photo-worthy installations, the Australian Open also converted Deakin Nadal’s media call Edge into the AO Kids Club – an incredible tennis themed childcare program for those heading along to the tennis. In the lead up to the tournament, the Main Square also hosted a meet and greet opportunity for fans with tennis superstar Rafael Nadal.
Following the success of the Winter Village activation, which ran until September 2019, Fed Square partner the Australian Venue Co. returned to Federation Square’s Skyline Terrace in January 2020 with Summertime Social, featuring games such as bocce and shuffleboard, a communal lawn, deluxe caravans to relax in, live music, and food and drink treats.
In March, the Atrium was the location for the stunning Cartier: Into the The Cartier exhibition Wild exhibition. The exhibit, which snaked through the length of the Atrium space, took visitors on a journey of discovery to discover the art, inspiration and the untold story behind the iconic Panthere de Cartier.
Federation Square has often been the site of celebrations following Australian sporting triumphs, and this was the case again when masses of fans descended on the Main Square to cheer on the Australian women’s cricket team following their historic victory in the ICC T20 World Cup Final, hosted at the Melbourne Cricket Ground in March.
FED SQUARE PRODUCED EVENTS
Anything But Square In July, Fed Square launched a brand-new festival, the Anything But Square Festival Festival, which set the tone for Fed Square produced events for the year. The festival was a fusion of world-class activations, public events, and intriguing exhibitions throughout the precinct, with Sensory Underground as the hero event. Sensory Underground was an event unique to Melbourne and completely new to Federation Square. Patrons entered the event space, a revitalised former storage area beneath Federation Square purpose-fitted for the event, through Flinders St Station’s Platform 13, before dining on a futuristic menu designed by the team from Tokyo Tina amid a world of kaleidoscopic lights, originally-created audio and exciting smells, tastes and haptic experiences. The ticketed event sold out all 34 sessions, with 2,720 diners enjoying the experience. Additional events as part of the BlakHEART promotion festival included Open House Melbourne, a Red Nose Day activation, the Winter Garden art installation in the Atrium, and the Martha Cooper x Rone Street Art Talk in Deakin Edge. PAGE 23 PAGE 24 THE YEAR’S ACTIVITY Minecraft. the DigitalFaçade, kidscouldeven explore andgreenify created aminiMelbourne in taste andexplore health,theenvironment upon offood thepower andcommunity. On workshops,andplentyofopportunities forkids tolisten,question, stalls, hands-on where weeat, itcomesfromfood andwhatthismeansforourhealth,featured food to create theLittleFood Festival. The whichexplored children-focused festival, the Over twodays inSeptember, Fed Square partnered withtheSandro deMaioFoundation Indigenous artisticexpression. throughflowed theprecinct over thecourse oftheevent togetatasteofcontemporary dance, musicand visualartonofferforvisitors.people of Thousands with storytelling, BlakHEART event putFirst This nine-hour inAugust. Nationscreatives inthespotlight In partnership withtheCityofMelbourne, Fed Square produced theincredible event THIS YEAR’S ACTIVITY Federation Square style Square Federation Christmas 2019, Christmas
FED SQUARE ANNUAL REPORT 2019 - 2020
A kaleidoscope of Christmas fun took over Federation Square in December with the Fed Square Christmas Festival, with a wide range of events, activations and activities to deliver festive cheer on offer for visitors to the square. The centrepiece of the festival was the Christmas Square, a magical activation created in partnership with the City of Melbourne featuring a 16-metre LED Christmas tree, giant light up bauble, larger than life candy canes, a nativity scene and Santa’s House. Throughout December the Main Square played host to some incredible free Christmas performances, while the Digital Façade offered interactive fun with its Dancing Santa overlay, allowing people to see themselves transformed into Santa or one of his elves up on the big screen.
Complementing the activity in the Main Square, a Christmas Styling Masterclass hosted by Chyka Keebaugh was held in Deakin Edge, with plenty of people coming along to learn how to take their festive celebrations at home to a new level.
Federation Square is always a popular spot for revellers to enjoy New Year’s Eve, and this was no different in 2019, with a record crowd of over 100,000 visiting the precinct over the course of the night to celebrate. Musical entertainment on the main stage and fun videos on the Digital Façade kept the crowd buzzing through the night before eyes turned to the fireworks show at midnight.
In February, visitors to the Main Square were transported to a beach paradise with Fed Beach. This vibrant summer zone featured deckchairs and cabanas, sliders and ice creams, live music, a real sandy “beach” and even two larger-than-life seagulls, and was the perfect location to enjoy the sunshine during the day or enjoy some cult summer and surf films on the Digital Façade in the evening.
Also in February, Fed Square was proud to partner with Foxtel to broadcast Fire Fight Australia, one of the biggest relief concerts in recent history in support of communities affected by the 2019-2020 bushfires. As well as broadcasting the main concert in full on the Digital Façade, Federation Square was a live site for the event hosted by Eddie McGuire and Shaynna Blaze, with world famous crooner Michael Bublé making an appearance.
VISITOR INSIGHTS Christmas 2019, Federation Square style In 2019 Fed Square developed a Visitor Feedback Framework, designed to capture relevant insights for the business and enable better recognition of trends and changes amongst audiences.
Utilising this framework, an onsite visitor survey was conducted at Federation Square in January 2020, with visitor behaviours, perceptions and preferences were established through the survey, alongside demographic information.
Results from the onsite visitor survey have been used to inform strategic planning for the coming year, and particularly that of the Customer Experience department. This survey data, as well as other data collected via the Visitor Feedback Framework, will better enable Fed Square identify trends or shifts in behaviour and perceptions and provide useful visitor insights to stakeholders. THE YEAR’S ACTIVITY THE YEAR’S
PAGE 25 Enjoying Fed Beach - January 2020
PAGE 26 FED SQUARE ANNUAL REPORT 2019 - 2020
VIRTUAL SQUARE
In the wake of the coronavirus pandemic and subsequent restrictions that forced the closure of Federation Square as a venue from late March 2020, Fed Square needed to quickly identify options for the community to connect remotely, and safely access Federation Square’s kaleidoscope of experiences, even if the community could not visit the physical site. The solution was Virtual Square, a new online offering designed to capture the kaleidoscope of experiences available at Federation Square and make them available in people’s homes.
Experiences on Virtual Square have been divided across themes including Federation Square’s design and history, arts and culture, its significance as an Indigenous place of meeting, health and wellbeing, Fed Square’s sustainability and accessibility and Fed People. Content has included virtual tours from our cultural institutions, Fed Fitness videos to help people do yoga, meditation or Tai Chi from home, masterclasses from our food and beverage tenants showing off some of their favourite dishes, Fed Funny stand-up comedy performances, and even fun activities for kids to do at home.
As part of Virtual Square, Fed Square also launched a new podcast series, Anything But Square, featuring interviews, conversations and profiles of Fed Square’s people, places and events. Episodes have been released weekly and have utilised a combination of new interviews and audio from events hosted in Deakin Edge.
Following a significant drop in website traffic in the immediate wake of coronavirus restrictions coming into effect, Virtual Square drove an 80% increase in web traffic and saw Fed Square’s subscriber database increase by 5,000 people over the course of six weeks. The content produced for Virtual Square was also very well received, with the Fed Fitness videos winning Time Out’s Time In award for Movers and Shakers Award for Favourite Way to Get Moving From Home.
Examples of Fed Square’s virtual offering - Fed Funny comedy series, Fed Fitness and Tom Mosby (CEO, KHT) from our podcast series.
PAGE 27 2. Grow the Fed Square family exponentially, by connecting people to the enduring power of community.
Fed Square has continued to grow its network over the course of the year through a range of initiatives designed to increase the spirit of community for the precinct.
PAGE 28 FED SQUARE ANNUAL REPORT 2019 - 2020
STAKEHOLDER ENGAGEMENT
Fed Square has dedicated significant energy into fostering stronger relationships with stakeholders during the year, with a robust Stakeholder Management Plan having been developed and implemented.
Implementation of the Stakeholder Management Plan took place across all areas of the business, with a systematic and specific approach instituted to increase collaboration and engagement between Fed Square and stakeholders including the precinct’s cultural partners, government bodies, and community event organisers.
PARTNERSHIP & SPONSORSHIP STRATEGY
Following the development of a Partnership & Sponsorship Plan in 2018-19, Fed Square implemented this strategy this year, actively pursuing partnership opportunities with community focused organisations.
A critical element of this strategy was close alignment with the new programming strategy for Fed Square, and this approach led to the successful forging of partnerships with organisations including Deakin University, Monash University, the Sandro de Maio Foundation, the City of Melbourne, Melbourne International Arts Festival, Visit Victoria, Food and Wine Victoria, the Committee for Melbourne, and Joost.
To increase higher value partnerships for Fed Square, the partnerships team developed and executed several initiatives throughout the year to connect with and attract prospective partners. While significant progress was made with the strategy the onset of the pandemic has dramatically impacted performance.
THE YEAR’S ACTIVITY THE YEAR’S The Little Food Festival
PAGE 29 TENANT UPDATES
Fed Square has continued to support all our tenancies in the precinct over the course of the year. Close collaboration with resident cultural partners at the executive level and greater integration of these partners into Fed Square’s programming strategy has led to the identification of opportunities to work together on events, activations and experiences throughout the year.
In September 2019, Fed Square welcomed a new tenant to the precinct with the opening of Niska Ice Cream Bar. The novel concept of the store sees customers served locally made and delicious ice cream by three robot shop attendants, a first of its kind retail experience in Australia. The new ice creamery was an instant hit with visitors to Federation Square, with families lining up for a tasty treat as well as a unique customer service experience. Niska was also recognised by the industry, winning the Customer Experience – Small Business award at the 2020 Retailer Awards and being nominated as a finalist for the Outstanding Start-Up award for the 2020 Endeavour Awards.
Fed Square has also worked with other tenants to refresh the fit-out of their tenancies over the past year. Key amongst these is the multi-million dollar renewal of ACMI, which has continued throughout the year and is anticipated to reopen in 2021. The works reimagine the space within the Alfred Deakin Building and will offer visitors to ACMI an immersive and interactive experience. Beer DeLuxe completed refurbishment of various areas of their tenancy, having commenced these works in early 2019. Chocolate Buddha also completed a significant renovation in 2019, with the beautiful new look of the restaurant being unveiled when it reopened in October and being recognised for its aesthetic appeal as a finalist in the Hospitality Design category of the Australian Interior Design Awards 2020.
In the face of the coronavirus pandemic, Fed Square worked closely with all tenants to support them through an incredibly difficult time. Chief amongst this support was offering all commercial tenants rent relief for the entirety of 2020, aligning Fed Square to the State Government’s Economic Survival Package to Support Businesses and Jobs rent relief scheme. Fed Square provided regular and timely information to tenants throughout the development of this crisis and has worked with tenants to develop coordinated plans for the resumption of operations as restrictions have been eased.
INDUSTRY LEADERSHIP AND RECOGNITION
THE YEAR’S ACTIVITY THE YEAR’S Niska Ice Cream Bar’s robots show us the future
PAGE 30 FED SQUARE ANNUAL REPORT 2019 - 2020
Fed Square continued to demonstrate industry leadership in 2019, with staff and management actively involved within a number of industries, including participation in committees and advisory panels as well as Board representation, with industry bodies including Meetings & Events Australia, the Facility Management Association of Australia, the Yarra River Business Association, the Australian Human Resources Institute, RMIT University, the Victorian Tourism Industry Council, and the Committee for Melbourne. Fed Square was also recognised within the industry in 2019, with the organisation winning three awards at the 2019 Meetings & Events Australia Awards – the Victorian award for Operations Person of the Year, awarded to Event Production and Delivery Manager Pedro Gallo, and both the state and national awards for Event of the Year, for the widely celebrated Anything But Square Festival.
Suzana Bishop opens Fed Square’s ‘Anything But Square’ Festival.
Highlights from the ABS Festival’s ‘Sensory Underground - An Immersive Dining Experience’ THE YEAR’S ACTIVITY THE YEAR’S
PAGE 31 3. Ensure a sustainable future for Fed Square.
Fed Square has put in place initiatives throughout the year to ensure a sustainable future for Fed Square across several key areas.
PAGE 32 FED SQUARE ANNUAL REPORT 2019 - 2020
FEDERATION SQUARE REVIEW
The Victorian Government’s Review of Federation Square was conducted over the course of the year, gathering feedback and insights from the community and stakeholders to identify actions to benefit Federation Square into the future. Fed Square was committed to supporting the Federation Square Review Project Control Board with the information, insights and access required to conduct a thorough review and determine meaningful outcomes for the precinct and organisation.
As well as direct and regular engagement with key members of the Federation Square Review Project Control Board, Fed Square was heavily involved in facilitating the community and stakeholder consultations as part of the review process, including hosting surveys and focus groups on-site; and provided detailed financial modelling for the running of the precinct and asset management.
In December 2019, the Federation Square Review Project Control Board released the Federation Square Review Community Consultation Report, which captured the key findings from the community and stakeholder consultation.
Over the course of the year Fed Square has taken action to address several of these findings, including:
• Federation Square’s architecture and heritage is unique and requires careful stewardship
As explained in further detail below, Fed Square worked with Heritage experts to develop Design Integrity Guidelines and a Conservation Management Plan for Federation Square in order to ensure the protection of the architecture and design of the site into the future
• Greater coordination of programming, activities and events in Federation Square is essential
The development and roll-out of Fed Square’s 24-month programming strategy, and collaboration with all partners within the Federation Square precinct on the delivery of the strategy, has already led to a more coordinated approach to events and activations and a more holistic experience for visitors. This level of coordination across the Square will continue to grow in 2020-2021.
• A future service delivery approach requires care and attention to deliver better public value
Fed Square’s renewed dedication to the visitor experience is most clearly demonstrated in the formation of the Customer Experience department, whose members are focused on delivering the best possible experience for visitors to the Square. Insights from the onsite visitor survey have helped guide Fed Square in programming, marketing, and event delivery, and a more coordinated approach with partners across the precinct has led to a more holistic experience for visitors.
• Cultural institutions at Federation Square are key to its success
THE YEAR’S ACTIVITY THE YEAR’S Fed Square is very proud to have four of Australia’s finest cultural institutions call Federation Square home: KHT, the NGVA, ACMI and SBS, and this year the organisation has dedicated PAGE 33 itself to fostering ever stronger relationships with these critical partners, driven by greater communication and collaboration across all levels of these organisations. Fed Square has worked with the cultural partners on events within Federation Square, provided marketing and promotional support for cultural tenant events, and consulted with these partners on the future plans for the precinct.
HERITAGE LISTING In August 2019, Federation Square received heritage listing from the Heritage Council of Victoria, cementing the precinct’s status as Melbourne’s civic and cultural hub, with the Council recognising its “historical, aesthetic, technological and social significance”. Following the heritage listing announcement, Fed Square has undertaken significant work to understand the implications of this status on the maintenance of the site and on future works. Working with heritage experts and in consultation with the Office of the Victorian Government Architect and Heritage Victoria, Fed Square developed Design Integrity Guidelines and a Conservation Management Plan. These documents will guide Fed Square’s management of the Federation Square site and will provide clarity and transparency on these processes for all relevant stakeholders.
INCREASING COMMERCIAL ACUMEN In recognition of the need for improved capability across the organisation in terms of identifying partnership and revenue opportunities to enable and support social enterprise outcomes, Fed Square developed and rolled out a commercial acumen training program for identified staff across the business. The program equipped staff with the tools to anticipate the commercial needs of partners and realise shared benefits for all users of Federation Square.
ENTERPRISE RESOURCE PLANNING SYSTEM As Fed Square has sought to continue streamlining processes, improving data capture and analysis, and enhancing productivity across the organisation, a critical technology project throughout 2019-20 has been the sourcing, development and roll-out of an enterprise wide integrated applications system (ERP). The ERP incorporates application solutions for Finance, Tenancy Management, Asset Management, Customer Relationship Management and Records and Document Management, THE YEAR’S ACTIVITY THE YEAR’S with the project anticipated to bring about process changes in most Fed Square
PAGE 34 FED SQUARE ANNUAL REPORT 2019 - 2020
departments. The ERP will reduce operational and maintenance costs, provide real time insights and increased data security, and enable a consolidation of departmental data.
SAFETY AND SECURITY The safety and wellbeing of visitors to Federation Square is the highest priority for Fed Square and as such safety and security continues to be an area of strong focus for the organisation at all times. As well as hosting or taking part in a number of security-focused activities, including desktop and practical on-site training exercises, Fed Square has continued liaison with the Department of Justice, Victoria Police and City of Melbourne on security issues and in particular the facilitation of replacing concrete blocks and barriers across the precinct with long-term protection measures, as part of a city-wide security upgrade project. Fed Square has also updated its Post Emergency Response Plan based on research and review of industry best practice, and consultation with other organisations that will support Fed Square in emergency situations, including Victoria Police and the City of Melbourne. This ensures the recovery process is streamlined. Fed Square presented at the Crowded Places Forum in New Zealand in September 2019, with the presentation based on the desktop and practical exercises Fed Square held in 2019 and focused on the training Fed Square provides staff and tenants in responding to terrorist-related incidents.
OH&S INSIGHTS (YEAR ON YEAR)
INCIDENT & INJURIES 24% INJURY 12% SLIPS, TRIPS + & FALLS 1 PREVENTATIVE WORKERS 46% HAZARD 1 COMPENSATION IDENTIFICATION CLAIMS THE YEAR’S ACTIVITY THE YEAR’S & REPORTING
PAGE 35
4. Build a social enterprise
culture that is engaged, aligned and committed to
delivering the Strategic Plan 2019-22.
This year, Fed Square has undertaken some significant initiatives in relation to enhancing the social enterprise culture of the organisation and ensuring the Fed Square team is engaged, enthusiastic, and equipped to address the strategic opportunities and challenges identified by the Board.
PAGE 36 FED SQUARE ANNUAL REPORT 2019 - 2020
ORGANISATIONAL RESTRUCTURE In December 2019, Fed Square underwent an internal restructure, with the number of departments consolidated from four to two: Business Operations and Support Services and Customer Experience. The restructure also saw the creation of an executive leadership team comprised of Chief Executive Officer, Chief Operations Officer and Chief Experience Officer. The restructure enabled Fed Square to simplify the organisation structure and positioned the organisation to capitalise upon recognised synergies between different areas of the business, which is beneficial to the organisation itself as well as a wide range of stakeholders. These changes have also improved communication and collaboration across the team and helped to place the customer experience at the heart of the organisation.
EMPLOYEE VALUE PROPOSITION Following a six-month process of consultation and development that involved all staff within the organisation, Fed Square launched its Employee Value Proposition (EVP) in December 2019. The EVP serves as a clear statement about how important our people are to the success of the organisation and is a rallying cry to current and future staff to make their mark on the organisation, Federation Square and the city beyond. Under the banner of “Making Anything Happen”, the EVP aims to unify Fed Square’s staff in building internal culture, embracing change and challenge, celebrating unique perspectives and passions, and constantly thinking of new ways to engage and inspire all who use or work with Fed Square.
The launch of Fed Square’s EVP. THE YEAR’S ACTIVITY THE YEAR’S
PAGE 37 THE YEAR AHEAD Despite the uncertainty brought about by the coronavirus (COVID-19) pandemic, Fed Square is putting in place plans to ensure a bright future for the organisation and precinct in 2020-2021.
PAGE 38 FED SQUARE ANNUAL REPORT 2019 - 2020
Fed Square’s three-year Corporate Plan 2020-2023 has been formulated to help the organisation capitalise upon the successes of the past year, rise to the opportunities of the next 12 months, and navigate the uncertainty and challenges brought about by the coronavirus pandemic. The Corporate Plan also recognises that Fed Square has a leadership role to play in the rebuilding of both the events and tourism industries in Victoria. The Corporate Plan 2020-2023 focuses on four Strategic Imperatives to guide the continued evolution of Fed Square:
1. Enhance Federation Square’s reputation as a globally recognised place for meaningful, visitor-centred experiences.
2. Grow Federation Square’s role in reflecting and building our communities and amplify the culture of diversity that defines the best of Melbourne and Victoria.
3. Ensure a sustainable future for Federation Square and Fed Square.
4. Build a social enterprise culture that is engaged, aligned and committed to delivering the Corporate Plan 2020-2023.
The plans for the coming year have in part been informed by the publicly-released outputs of the Victorian Government’s Review of Federation Square, and in particular the findings from the community and stakeholder consultation of this process. Fed Square has sought to address this feedback in the development of plans for 2020-2021, and is augmenting these plans following the release of the Review’s recommendations in August 2020 to ensure that Government and community expectations for Federation Square are fully met. Another major consideration in the plans for 2020-2021 is the impact of coronavirus in the short, medium, and long term upon Federation Square. While the path to recovery and the full impacts of the pandemic remain uncertain, Fed Square has put in place plans to help the organisation respond to these challenges. It is acknowledged that Fed Square’s plans for the year may need to change as the extent of the impact of the coronavirus pandemic and plans for recovery are better understood.
A view of Federation Square showing it’s proximity to the Yarra River
PAGE 39 The following section details some of the key areas of focus planned for the year ahead.
ASSET MANAGEMENT AND IMPROVEMENT In the coming year Fed Square will invest significantly in capital and non-capital works across Federation Square. These include essential maintenance, asset management plan works, improvements to customer experience and modernising cultural partners’ facilities. This will position Fed Square to more readily bounce back from the impacts of coronavirus and help support the wider economy at a critical time. The scale and timing of these capital works are made possible by the Victorian Government’s $20 million investment to support upgrades to Federation Square, announced alongside the Review recommendations and representing the biggest investment in the precinct since its creation. The planned upgrades to the Square’s physical fabric, developed with the aid of the Conservation Management Plan, include several projects that will lead to real improvements to visitor amenity and customer experience, three of which bear special mention. Working with a range of partners, Fed Square is planning the creation of a new immersive Regional Experience Centre in the Yarra Building. This will reimagine the concept of a visitor centre, showcasing Victoria’s regional offering and bringing together food, cultural experiences and special programs and events. Fed Square will implement an innovative wayfinding and signage strategy that improves the customer experience, improves accessibility to all parts of Federation Square, and is supportive of the design integrity of the precinct. Fed Square will also deliver a lighting masterplan strategy to enhance the lighting capabilities throughout Federation Square. The lighting masterplan, once complete, will complement the design and architecture of the site, improve visitor experience and safety, and provide enhanced events and activations at Federation Square.
REIMAGINING FEDERATION SQUARE AS A PLACE OF DEEP INDIGENOUS SIGNIFICANCE The place on which Federation Square now stands has for tens of thousands of years been an important gathering place for different groups from the Kulin nation. Because of this, it is steeped in the spirit of Tanderrum - the Indigenous ceremony of welcome; involving dance, music and the sharing of food. Fed Square is committed to honouring this deep history by reimagining the Square as a place of Indigenous story and history in partnership with Victorian First Nations groups. Fed Square will co-design and implement a meaningful engagement and collaboration program with First Nations representatives as part of a broader effort to increase community ownership and partnership across the community. Fed Square will harness this new engagement framework to facilitate the development of a year-round Indigenous program for the Square, with the strong involvement of key Fed Square cultural institution the Koorie Heritage Trust.
PROTECTING ARCHITECTURAL SIGNIFICANCE Federation Square’s heritage listing provides the impetus for Federation Square to embrace its status as a unique Australian architectural treasure, to be safeguarded for future generations. Fed Square is working on bringing an architectural advisory structure to the organisation, ensuring Federation Square’s built form is front and centre in decision making. THE YEAR AHEAD
PAGE 40 FED SQUARE ANNUAL REPORT 2019 - 2020
Fed Square will operationalise the Conservation Management Plan developed in 2019-2020 and all current and planned capital projects on site will be developed in close consultation with the Office of the Victorian Government’s Architect to ensure maintenance and protection of Heritage. Fed Square is also committed to the Federation Square Design Principles, which outline the overarching philosophies relating to the built form. Design considerations will also be made to strategies including creating a stronger connection with the Yarra River, linking with adjacent city precincts, and unfinished design ambitions for Federation Square.
CUSTOMER EXPERIENCE PLAN To reinforce the organisation’s renewed focus on the Federation Square visitor experience, Fed Square is developing and rolling out a holistic Customer Experience Plan. This Plan will consider all touch points a customer has with the precinct including tenancies, marketing and the programming that take place at Federation Square.
NEW VISUAL IDENTITY Building upon the marketing, programming and digital strategies developed in the past two years, the organisation is rolling out a new visual identity under the theme ‘Anything But Square’. In part inspired by Federation Square’s original design, which was a deliberate departure from other premier public squares around the world, the Anything But Square visual identity is a celebration of the fact that Federation Square has always been ‘regularly irregular’. A place where people can have their own interaction with the space in their own way. The new look and feel will be rolled out on site in signage and across Federation Square’s communications channels and activities.
GIVING COMMUNITY A VOICE A key feature of Fed Square’s approach in the coming year will be to create even more ways to ‘plug in’ to the views of the community and specific stakeholder groups. Fed Square recognises that it needs to continue to listen to the community and provide opportunities to be actively involved in shaping its future direction. To ensure stakeholders continue to communicate directly with Fed Square, a Community and Stakeholder Engagement Plan will be developed to guide future decision making.
New Year’s Eve revellers NAIDOC flag raising ceremony THE YEAR AHEAD
PAGE 41 5 YEAR FINANCIAL SUMMARY The financial results for 2019-20 are a positive net result before depreciation of $4,682,324 (2018-19: $4,134,214). Operating revenue was down $4,040,644 or 12.45% to $28,413,777 and expediture from transactions was down $4,588,754 or 16.20% to $23,731,453. The company’s balance sheet remains strong, with financial assets of $21,543,401 relative to liabilities of $9,525,911. Net assets total $561,483,055 which is $30,610,542 higher than 2018-19.
PAGE 42 FED SQUARE ANNUAL REPORT 2019 - 2020
2020 2019 2018 2017 2016 Year ended 30 June $ $ $ $ $
Operating results
Revenue 28,413,777 32,454,421 32,220,166 28,071,853 28,026,800
Operating expenses (23,637,599) (28,118,253) (25,003,309) (21,633,478) (22,048,581) (excluding depreciation and amortisation)
Interest expense (263) (867) (328,746) (520,118) (744,414)
Other economic flows (93,591) (201,087) 6,906 11,659 (67,291)
(23,731,453) (28,320,207) (25,325,149) (22,141,937) (22,860,286)
Net result before depreciation and 4,682,324 4,134,214 6,895,017 5,929,916 5,166,514 amortisation
Depreciation and amortisation (12,176,146) (12,119,169) (11,747,662) (11,776,172) (12,456,064)
Net result (7,493,822) (7,984,955) (4,852,645) (5,846,256) (7,289,550)
Changes in physical asset revaluation surplus 38,104,364 (9,000,000) - (24,000,000) 66,680,133
Total comprehensive result for the period 30,610,542 (16,984,955) (4,852,645) 18,153,744 59,390,583
Financial status
Total assets 571,008,966 536,398,978 555,661,437 566,616,611 551,230,855
Total liabilities (9,525,911) (5,526,465) (7,803,969) (13,906,498) (16,674,486)
Total equity 561,483,055 530,872,513 547,857,468 552,710,113 534,556,369
Net cash from operating activities 3,054,853 4,448,150 3,974,186 7,453,145 4,359,831
35
30
REVENUE AND EXPENDITURE 25 (BEFORE DEPRECIATION AND
INTEREST) 20
Revenue and expenditure 15
(before interest and depreciation) MILLIONS over the past five years is shown in 10 this graph:
5
2014-15 2015-16 2016-17 2017-18 2018-19 Revenue Expenses
PAGE 43 KEY PERFORMANCE INDICATORS
PAGE 44 FED SQUARE ANNUAL REPORT 2019 - 2020
Category KPI Target Actuals
Operations Total Revenue $30.280m $28.414m
Total Expenditure (excl. dep) $25.091m $23.732m
Not Result Before Depreciation $5.189m $4.682m
Sponsorship $0.800m $0.487m
Car Park $4.430m $3.270m
Public Space Hire $2.185m $1.815m
Advertising $0.300m $0.184m
Tenant Presentation Audit 80% 80%
OH&S Incidents Per 100,000 1.6 0.6
Visits 9,500,000 7,700,000
Planned Maintenance 100% 93%
People Staff Turnover 25% 23%
DJPR Governance Framework Liquidity Buffer (weeks) 19.06 23.48
Working Capital 1.70 1.48
Capex Replacement 1.06 0.63
Revenue Growth (4.87%) (12.45%)
Labour Growth 3.72% 3.95%
Profitability 17.37% 16.48%
Self-financing 0.71 1.88
Return On Assets 0.98% 0.86%
Gearing 1.55% 1.00%
Reliance On Government Funding 0.00% 0.08%
PAGE 45 STATEMENT OF CORPORATE GOVERNANCE
PAGE 46 FED SQUARE ANNUAL REPORT 2019 - 2020
The Directors of Fed Square Pty Ltd are committed to the highest standard of corporate governance and acknowledge the need for continued maintenance of governance practice and ethical conduct by all Directors and employees. Accordingly, they have ensured that systems and procedures are in place to provide appropriate assurance that the company undertakes its activities and functions in accordance with:
• All legal requirements;
• The best interests of shareholders;
• An environment that meets relevant standards; and
• A manner that is responsible to all stakeholders and the wider community.
OBJECTS AND POWERS OF THE COMPANY The objects of the company are those set out in the Fed Square Pty Ltd Constitution and Federation Square Civic and Cultural Charter and include without limitation: (a) to occupy the site known as Federation Square; (b) to use, refurbish, maintain, improve, develop, lease, licence, manage, operate and modify all or any part of Federation Square; (c) in relation to any part of Federation Square, to carry on any or all of: (i) the businesses of owners, operators, managers, licensors, lessors or occupiers of: (1) galleries, exhibition centres, libraries, art and craft centres and museums, (2) car parks, (3) theatres, cinemas and cinema based entertainment facilities, radio, television and other multi-media studios, outdoor video screens and video/LED signage, (4) restaurants, cafes, taverns, hotels, food and drink premises (including, without limitation, take-away food and drink premises), liquor vendors, shops, convenience restaurants and convenience shops, and nightclubs, (5) function centres, conference centres and reception centres, (6) retail outlets, shops and stores (including, without limitation those required for service industries and including, without limitation, cash dispensing machines, ticketing machines and tourist and other information services providing machines), (7) offices, (8) amusement parlours and gaming and gambling premises, (9) indoor recreation facilities, (10) visitor and tourist information services and other visitor and tourist services, (ii) live performances, entertainment, carnivals, circuses, community or public events, (both indoor and outdoor), festivals, exhibitions and performances; (iii) places of assembly for religious and cultural activities, entertainment or meetings; and (iv) markets. PAGE 47 DUTIES OF DIRECTORS The duties of Directors include:
• Duty to act honestly in good faith in the best interests of the corporation and for a proper purpose;
• Duty to act with care and diligence;
• Duty to avoid conflict in the position of a director and/or any interest that a director may have;
• Duties which prohibit the misuse of information obtained by directors; and
• Duties which prohibit a director from taking for oneself the company’s opportunities.
RESPONSIBILITIES OF THE BOARD The primary responsibilities of the Board include:
• Establishing the company’s vision, mission, values and ethical standards;
• Ensuring the company’s long term viability and enhancing the financial position;
• Formulating and overseeing implementation of corporate strategy;
• Approving the business plan, budget and corporate policies;
• Agreeing key performance indicators (KPIs);
• Monitoring/assessing performance of the company, the Board itself, management and major projects;
• Overseeing the risk management framework and monitoring business risks;
• Appointing and appraising the performance of the Chief Executive Officer;
• Requiring and monitoring legal and regulatory compliance;
• Approving annual accounts, annual report and other public documents;
• Ensuring an effective system of internal controls exists; and
• Delegating an appropriate level of authority to management.
BOARD COMMITTEES
The Board has established two permanent Committees: the Finance, Audit & Risk Committee and the Board Nominations & Executive Remuneration Committee. Committee decisions become recommendations for submission to the Board for resolution. STATEMENT OF CORPORATE GOVERNANCE OF CORPORATE STATEMENT PAGE 48 FED SQUARE ANNUAL REPORT 2019 - 2020
RISK MANAGEMENT
Federation Square recognises the need for active risk management procedures and during the year reviewed the Risk Management Policy and Strategy and procedures to monitor progress with proposed plans. The risk management program is designed to provide a structured approach to business planning, improve operational performance, encourage active management and protect assets, people, finance and property.
Risks are identified, assessed and treated in accordance with the principles contained in Australian Risk Management Standard AS ISO 31000:2018
RISK MANAGEMENT ATTESTATION
I, Deborah Beale, certify that Fed Square Pty Ltd has adopted the Ministerial Standing Direction 3.7.1 – Risk Management Framework and Processes. The Fed Square Pty Ltd Finance, Audit & Risk Committee verifies this.
DEBORAH BEALE AM, CHAIR
ASSET MANAGEMENT ACCOUNTABILITY FRAMEWORK
The Asset Management Accountability Framework (AMAF) establishes a flexible and non-prescriptive set of requirements which aim to ensure Victorian public-sector entities manage asset portfolios appropriately. Whilst Federation Square is not subject to the provisions of the Financial Management Act 1994, the company is implementing the requirements of Ministerial Standing Direction 4.2.3 - Asset Management Accountability on a voluntary basis.
ASSET MANAGEMENT ACCOUNTABILITY FRAMEWORK ATTESTATION
I, Deborah Beale, certify that Fed Square Pty Ltd has partially adopted the Ministerial Standing Direction 4.2.3 – Asset Management Accountability. There are no material deficiencies. The Fed Square Pty Ltd Finance, Audit & Risk Committee verifies this.
DEBORAH BEALE AM, CHAIR STATEMENT OF CORPORATE GOVERNANCE OF CORPORATE STATEMENT PAGE 49 FINANCE, AUDIT & RISK COMMITTEE
The main responsibilities of the Finance, Audit & Risk Committee are to:
• Review and report independently to the Board on the annual report;
• Assist the Board in reviewing the effectiveness of the internal control environment covering:
– effectiveness and efficiency of operations; – reliability of financial reporting; and – compliance with applicable laws and regulations;
• Determine the scope of the internal audit function and ensure its resources are adequate and used effectively, including coordination with the external auditors;
• Maintain effective communication with external auditors;
• Consider recommendations made by internal and external auditors and review the implementation of actions to resolve issues raised;
• Oversee the effective operation of the risk management framework;
• Oversee the effective operation of treasury management; and
• Oversee insurance and legal proceedings.
The members of the Committee during the year ended 30 June 2020 were Pamela Mitchell (Chair), Deborah Beale AM, Kathleen Wilson and John Lee as a co-opted member.
COMPLIANCE ATTESTATION FRAMEWORK
The Standing Directions under the Financial Management Act 1994 (2018 Directions) set the standard for financial management in the Victorian public sector. In April 2016 the Victorian State Government launched the Whole of Government “Compliance Attestation Framework” to assist with monitoring, reporting on and attesting to compliance with the Directions.
The Directions require agencies to annually attest compliance with applicable requirements in the Financial Management Act, the Directions and the supporting Instructions. Whilst Federation Square is not subject to the provisions of the Financial Management Act, the company implements the requirements of the Compliance Attestation Framework on a voluntary basis where appropriate.
INTERNAL AUDIT
The company engaged Protiviti Pty Limited as Internal Auditor to assist in evaluating the company’s internal controls.
Protiviti developed an annual audit plan, having due regard to the company’s risk management program, and implementation of proposed audit activities is now underway. STATEMENT OF CORPORATE GOVERNANCE OF CORPORATE STATEMENT PAGE 50 FED SQUARE ANNUAL REPORT 2019 - 2020
COMPLIANCE WITH THE PUBLIC INTEREST DISCLOSURE ACT 2012
Federation Square does not tolerate improper conduct by employees, nor the taking of reprisals against those who come forward to disclose such conduct. Federation Square is committed to ensuring transparency and accountability in its administrative and management practices, and supports the making of disclosures that reveal corrupt conduct, conduct involving a substantial mismanagement of public resources, or conduct involving a substantial risk to public health and safety or the environment.
Federation Square is committed to the protection of persons who make disclosures from any detrimental action in reprisal for making a disclosure or for co-operating in the investigation of a disclosure.
The Public Interest Disclosure Act 2012 seeks to encourage and assist people to make disclosures of improper conduct by public officers and public bodies, provides protections for people who make disclosures and provides for the confidentiality of the content of disclosures and the persons who make them.
MAKING DISCLOSURES
Federation Square is not a body to which a public interest disclosure can be made under the Protected Disclosure Act 2012. Such disclosures must be made to:
Independent Broad-based Anti-corruption Commission (IBAC).
Level 1, North Tower, 459 Collins Street Melbourne, VIC 3000
Phone: 1300 735 135
Mail: GPO Box 24234, Melbourne, VIC 3001
Internet: www.ibac.vic.gov.au
The IBAC website contains a secure email disclosure process.
PROTECTING PERSONS WHO MAKE DISCLOSURES
Federation Square has established procedures to protect persons who make, or who co-operate in the investigation of, public interest disclosures, from detrimental action that might be taken against them. Those procedures can be accessed at https://fedsquare.com/ privacy-policy or a copy obtained from the Head of People & Performance. STATEMENT OF CORPORATE GOVERNANCE OF CORPORATE STATEMENT PAGE 51 DIRECTORS’ REPORT
PAGE 52 FED SQUARE ANNUAL REPORT 2019 - 2020
The Directors of Fed Square Pty Ltd present their report on the financial statements of the company for the year ended 30 June 2020.
MINISTER
The Hon Martin Pakula MP, Minister for Tourism, Sport & Major Events (to 1 September 2020) The Hon Martin Foley MP, Minister for Creative Industries (from 2 September 2020 to 28 September 2020) The Hon Danny Pearson MP, Minister for Creative Industries (from 29 September 2020)
DIRECTORS
The Directors in office during the period and at 30 June 2020 unless otherwise stated were:
Ms Deborah Beale AM (Chair) Ms Kathleen Wilson Ms Pamela Mitchell Mr Patrick Conlon Mr Ari Suss
ACCOUNTABLE OFFICER
The Accountable Officers during the period and at 30 June 2020 unless otherwise stated were:
Mr Jonathan Tribe, Chief Executive Officer (1 July 2019 - 3rd September 2019) Dr Xavier Csar, Chief Executive Officer (from 4th September 2019)
OWNERSHIP OF FED SQUARE PTY LTD
Fed Square Pty Ltd is wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer is the Minister responsible for the state holding in Federation Square under the Deed.
PRINCIPAL ACTIVITIES
The principal activity of Fed Square Pty Ltd continues to be the management of Federation Square.
PAGE 53 PAGE 54 DIRECTORS’ REPORT Directors ofthecompanyduringfinancial year were: The ofDirectors’ by number attended eachofthe ofmeetings andnumber meetings DIRECTORS’ MEETINGS the companyare outin set thatmayperiod have totheendoffinancial Matters on subsequent amaterialeffect EVENTSSUBSEQUENT ontheoperations orfinancialmaterial effect resultsofFederation Square. environmentalNo significant regulations apply thatare likely tohave anunexpected ENVIRONMENTAL REGULATIONS of thecoronavirus pandemicare outinthenotestofinancialstatements. set Federation ofboth position Square anditstenants.Further detailsinrelation totheimpacts movement have operations andfinancial impactonthebusiness ofpeople hadasignificant andrestrictions businesses onthe Closure venues ofhospitality andothernon-essential to eliminateorreduce risktopublichealth. aserious of Emergency, theChiefHealthOfficerisgiven powersbroad todowhatevernecessary is declared across Victoriatocombatthespread ofthecoronavirus pandemic.DuringaState On 16March 2020, theVictorianPremier aStateofEmergency announced hadbeen CHANGES INSTATE OFAFFAIRS No dividendshave proposed orpaidduringtheyear been (2018-19: Nil). DIVIDENDS Net result Depreciation andamortisation Net result before depreciation andamortisation Results ofOperations Ms Kathleen Wilson Ms Kathleen Ms Deborah BealeAM(Chair) Director *Reflects the number of meetings held during the time the Director held office during the year. the during office held Director the time the during held meetings of number the *Reflects Audit &Risk Committee) ofFinance, member Mr JohnLee -co-opted (invitee Mr AriSuss Mr Patrick Conlon Ms Pamela Mitchell Note 8.10 Note tothefinancialstatements. Meetings held* (7,493,822) (12,176,146) 4,682,324 2020 ($) 9 9 9 9 9 9 Meetings attended (7,984,955) (12,119,169) 4,134,214 2019 ($) 9 9 9 9 9 9
FED SQUARE ANNUAL REPORT 2019 - 2020
FINANCE, AUDIT & RISK COMMITTEE MEETINGS The number of Finance, Audit & Risk Committee meetings and number of meetings attended by each of the committee members during the financial year were:
Meetings held* Meetings attended Ms Pamela Mitchell (Chair) 6 6
Ms Deborah Beale AM 6 6
Ms Kathleen Wilson 6 6
Mr John Lee (co-opted member) 6 6
*Reflects the number of meetings held during the time the committee member was a member of the Finance, Audit & Risk Committee during the year.
BOARD NOMINATIONS & EXECUTIVE REMUNERATION COMMITTEE MEETINGS The number of Board Nominations & Executive Remuneration Committee meetings and number of meetings attended by each of the committee members during the financial year were:
Meetings held* Meetings attended Ms Kathleen Wilson (Chair) 3 3
Ms Deborah Beale AM 3 3 Mr John Lee (invitee - co-opted member of Finance, 3 3 Audit & Risk Committee)
*Reflects the number of meetings held during the time the committee member was a member of the Board Nominations & Executive Remuneration Committee during the year.
DIRECTORS’ BENEFITS Directors’ benefits are set out inNote 8.6.2 to the financial statements.
INSURANCE OF DIRECTORS AND OFFICERS During the financial year $27,885 was paid by the company to the Victorian Managed Insurance Authority for Directors’ and Officers’ liability insurance premiums and recorded as an expense in the Comprehensive operating statement (2018-19: $20,923). The insurance provides cover for Directors and Officers of Federation Square against certain personal liabilities that they may incur by reason of their duties as Directors and Officers.
RESPONSIBLE BODY’S DECLARATION I am pleased to present Fed Square Pty Ltd’s Annual Report for the year ending 30 June 2020. Signed in accordance with a resolution of the Directors at Melbourne on 8th September 2020.
DEBORAH BEALE AM, CHAIR DIRECTORS’ REPORT DIRECTORS’
PAGE 55 FINANCIAL REPORT
PAGE 56 FED SQUARE ANNUAL REPORT 2019 - 2020
Auditor-General’s Independence Declaration
To the Directors, Fed Square Pty Ltd
The Auditor-General’s independence is established by the Constitution Act 1975. The Auditor-General, an independent officer of parliament, is not subject to direction by any person about the way in which his powers and responsibilities are to be exercised. Under the Audit Act 1994, the Auditor-General is the auditor of each public body and for the purposes of conducting an audit has access to all documents and property, and may report to parliament matters which the Auditor-General considers appropriate.
nd nd nc c tion As auditor for Fed Square Pty Ltd for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: • no contraventions of auditor independence requirements of the Co o tions Act 1 in relation to the audit. • no contraventions of any applicable code of professional conduct in relation to the audit.
MELBOURNE Simone Bohan 15 September 2020 s d t o t Audito n o icto i
PAGE 57
Independent Auditor’s Report To the Directors of Fed Square Pty Ltd
Opinion I have audited the financial report of Fed Square Pty Ltd (the company) which comprises the: balance sheet as at 30 June 2020 comprehensive operating statement for the year then ended statement of changes in equity for the year then ended cash flow statement for the year then ended notes to the financial statements, including significant accounting policies directors' declaration. In my opinion the financial report is in accordance with of the Corporations Act 2001 including:
giving a true and fair view of the financial position of the company as at 30 June 2020 and its financial performance and cash flows for the year then ended complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for I have conducted my audit in accordance with the Audit Act 1994 which incorporates the Australian Opinion Auditing Standards. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report. My independence is established by the Constitution Act 1975. My staff and I are independent of the company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the financial report in Victoria. My staff and I have also fulfilled our other ethical responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Directors' The Directors of the company are responsible for the preparation of a financial report that gives a responsibilities true and fair view in accordance with Australian Accounting Standards and the Corporations Act for the 2001, and for such internal control as the Directors determine is necessary to enable the financial report preparation of a financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is inappropriate to do so.
PAGE 58 FED SQUARE ANNUAL REPORT 2019 - 2020
Auditor’s As required by the Audit Act 1994, my responsibility is to express an opinion on the financial report responsibilities based on the audit. My objectives for the audit are to obtain reasonable assurance about whether for the audit of the financial report as a whole is free from material misstatement, whether due to fraud or error, the financial and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of report assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:
identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. I communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide the Directors with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.
MELBOURNE Simone Bohan 15 September 2020 as delegate for the Auditor-General of Victoria
2
PAGE 59 COMPREHENSIVE OPERATING STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Notes 2020 2019 $ $
Operating income 2.1 26,521,390 31,034,671
Interest income 2.1 1,892,387 1,419,750
Total revenue and income from transactions 28,413,777 32,454,421
Employee benefit expenses 3.1.1(a) (6,648,968) (6,311,393)
Event expenses (2,391,873) (2,642,869)
Site operating expenses 3.1.2 (8,560,322) (9,024,488)
Other operating expenses 3.1.3 (6,036,436) (10,139,503)
Interest expense 6.1.2 (263) (867)
Depreciation and amortisation 4.1.1 (12,176,146) (12,119,169)
Total expenses from transactions (35,814,008) (40,238,289)
Net result from transactions (net operating balance) (7,400,231) (7,783,868)
Other economic flows included in net result 8.2
Net gain/(loss) on disposal of non-financial assets 2,740 (207,000)
Net gain/(loss) on financial instruments 8.2.1 (93,648) 23,209
Net gain/(loss) arising from revaluation of long service liability (2,683) (17,296)
Total other economic flows included in net result (93,591) (201,087)
Net result (7,493,822) (7,984,955)
Other economic flows - other comprehensive income
Changes in physical asset revaluation surplus 4.1.2 38,104,364 (9,000,000)
Total other economic flows - other comprehensive income 38,104,364 (9,000,000)
Comprehensive result 30,610,542 (16,984,955)
The accompanying notes form part of these financial statements.
PAGE 60 FED SQUARE ANNUAL REPORT 2019 - 2020
BALANCE SHEET AS OF 30 JUNE 2020
Notes 2020 2019 $ $
Financial assets
Cash and deposits 6.4 10,154,424 11,280,477
Receivables 5.1 11,388,977 9,231,145
Total financial assets 21,543,401 20,511,622
Non-financial assets
Prepayments 96,209 97,898
Property, plant and equipment 4.1 547,302,049 515,662,885
Intangible assets 4.2 2,067,307 126,573
Total non-financial assets 549,465,565 515,887,356
Total assets 571,008,966 536,398,978
Liabilities
Payables 5.2 3,370,162 2,682,514
Borrowings 6.1 5,641,470 2,173,436
Employee related provisions 3.1.1(b) 514,279 670,515
Total liabilities 9,525,911 5,526,465
Net assets 561,483,055 530,872,513
Equity
Contributed capital 8.3 447,675,508 447,675,508
Accumulated deficit (93,905,453) (86,411,631)
Physical asset revaluation surplus 207,713,000 169,608,636
Net worth 561,483,055 530,872,513
The accompanying notes form part of these financial statements.
PAGE 61 CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Notes 2020 2019 $ $ Cash flows from operating activities
Receipts
Receipts from customers (incl. GST) 29,092,942 37,416,004
Interest received 441,503 479,657
Total receipts 29,534,445 37,895,661
Payments
Payments to employees (6,769,365) (6,249,456)
Payments to suppliers (incl. GST) (19,034,229) (26,143,475)
GST paid to Australian Taxation Office (net) (675,735) (1,053,713)
Interest and other costs of finance paid (263) (867)
Total payments (26,479,592) (33,447,511)
Net cash flows from operating activities 6.4.1 3,054,853 4,448,150
Cash flows from investing activities
Proceeds from sale of non-current assets 49,470 -
Payments for property, plant & equipment (7,619,952) (2,394,296)
Net cash flows from investing activities (7,570,482) (2,394,296)
Cash flows from financing activities
Repayment of Government advance (555,429) (555,429)
Proceeds from borrowings 4,000,000 -
Repayment of principal portion of leases liabilities (2019: finance leases) (54,995) (6,731)
Net cash flows from financing activities 3,389,576 (562,160)
Net increase/(decrease) in cash and cash equivalents (1,126,053) 1,491,694
Cash and cash equivalents at the beginning of the year 11,280,477 9,788,783
Cash and cash equivalents at the end of the year 6.4 10,154,424 11,280,477
Non-cash transactions 6.4.1
The accompanying notes form part of these financial statements.
PAGE 62 FED SQUARE ANNUAL REPORT 2019 - 2020
STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
Physical Contributed assets Accumulated Total capital revaluation deficit $ $ surplus $ $
Balance at 1 July 2018 447,675,508 180,045,636 (79,863,676) 547,857,468
Net result for the year - - (7,984,955) (7,984,955)
Other comprehensive income for the year:
- Changes in physical asset revaluation surplus - - (9,000,000) (9,000,000) revaluation of freehold land Transfer to accumulated deficit - realised asset revaluation surplus on derecogition of physical assets:
- Land - (1,100,000) 1,100,000 -
- Buildings - (337,000) 337,000 -
Balance at 30 June 2019 447,675,508 169,608,636 (86,411,631) 530,872,513
Net result for the year - - (7,493,822) (7,493,822)
Other comprehensive income for the year:
- Changes in physical asset revaluation surplus - - 38,104,364 - 38,104,364 revaluation of buildings and improvements
Balance at 30 June 2020 447,675,508 207,713,000 (93,905,453) 561,483,055
The accompanying notes form part of these financial statements.
PAGE 63 1. ABOUT THIS REPORT Fed Square Pty Ltd (“FSPL”, “the Company”) is a company wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer is the Minister responsible for the state holding in FSPL under the deed.
Its principal address is:
Fed Square Pty Ltd Cnr of Swanston St and Flinders St Melbourne VIC 3000
A description of the nature of its operations and its principal activities is included in the “Report of operations” which does not form part of these financial statements.
A. BASIS OF PREPARATION
These financial statements are in Australian dollars and the historical cost convention is used unless a different measurement basis is specifically disclosed in the note associated with the item measured on a different basis.
The accrual basis of accounting has been applied in preparing these financial statements, whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.
Consistent with the requirements of AASB 1004 Contributions, contributions by owners (that is, contributed capital and its repayment) are treated as equity transactions and, therefore, do not form part of income and expenses.
Additions to net assets which have been designated as contributions by owners are recognised as contributed capital.
Judgements, estimates and assumptions are required to be made about financial information being presented. The significant judgements made in the preparation of these financial statements are disclosed in the notes where amounts affected by those judgements are disclosed. Estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods that are affected by the revision. Judgements and assumptions made by management in applying AAS that have significant effects on the financial statements and estimates are disclosed in the notes under the heading: ‘Significant judgement or estimates’.
All amounts in the financial statements have been rounded to the nearest $1 unless otherwise stated.
PAGE 64 FED SQUARE ANNUAL REPORT 2019 - 2020
B. COMPLIANCE INFORMATION
These general purpose financial statements have been prepared in accordance with theCorporations Act 2001 and applicable Australian Accounting Standards (AASs) which include Interpretations, issued by the Australian Accounting Standards Board (AASB).
For the purposes of preparing financial statements, FSPL is classed as a not-for-profit entity. Where appropriate, those AASs paragraphs applicable to not-for-profit entities have been applied.
Accounting policies selected and applied in these financial statements ensure that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
These annual financial statements were authorised for issue by the Directors of FSPL on 8th September 2020.
PAGE 65 2. INCOME TO DELIVER OUR SERVICES INTRODUCTION
FSPL’s overall objective is to manage and develop Federation Square to actively support and reflect Melbourne’s preeminent civic and cultural strengths, and be an iconic destination that delivers visitors a memorable experience.
To enable the entity to fulfil its objectives, it receives income (predominantly rental income, fees and charges for services and sponsorship).
STRUCTURE
2.1 Summary of income that funds the delivery of our services
2.2 Operating leases relating to premises owned by FSPL
2.1 Summary of income that funds the delivery of our services
2020 2019 $ $
Tenancy rents and charges 17,598,967 17,758,576
Car parking 3,270,473 4,500,376
Events 4,293,382 4,414,454
Grants 767,718 778,914
Sponsorship 487,230 292,827
Other revenue 103,620 3,289,524
Total operating income 26,521,390 31,034,671
Interest income from cash and deposits 135,612 232,891
Finance lease interest income 1,756,775 1,186,859
Total interest income 1,892,387 1,419,750
Total income from transactions 28,413,777 32,454,421
PAGE 66 FED SQUARE ANNUAL REPORT 2019 - 2020
Performance obligations and revenue recognition policies
FSPL enters into property leases with tenants of Federation Square. FSPL has determined that it retains all significant risks and rewards of ownership of these properties and has therefore classified the leases as operating leases. Rental income from those leases, including fixed rental increases, is recognised on a straight-line basis over the term of the lease in accordance with AASB 16 Leases. The majority of operating lease contracts, but not all, contain market review clauses in the event that the lessee exercises its option to renew. FSPL reduces its risk by holding tenant security deposits (Note 5.2) and bank guarantees for some tenants. Lessees do not have the option to purchase the property at the expiry of the lease period. For the definition of a lease refer to note 6.2.
Tenancy charges includes the recovery of outgoings, rates and taxes. These relate to a provision of services and are recognised over the period of which the obligations are satisfied in accordance with AASB 15 Revenue from Contracts with Customers.
FSPL provided lease concessions to tenants due to COVID-19. Non-government tenants are not being charged rent, storage or other licence costs from 1 January 2020 to 31 December 2020. Outgoings contributions and rates and taxes recoverable continue to be payable. The lease concessions were a change in the consideration for a lease that was not part of the original terms and conditions of the lease and was therefore a lease modification. The lease concessions totalling $4,094,451 are an initial direct costs incurred in negotiating and arranging an operating lease that form a lease incentive and is recognised on a straight-line over the term of the relevant lease as per AASB 16 Leases. The concessions to tenants for the period of 1 January 2020 to 30 June 2020 reduced revenue by $1,459,008.
Income from car parking is recognised at the point in time in which the car parking service is provided in accordance with AASB 15 Revenue from Contracts with Customers. There has been no change in the recognition of revenue as a result of the adoption of AASB 15.
Income from event fees and charges are recognised in the period in which the service is provided, being the date or period of the event, in accordance with AASB 15 Revenue from Contracts with Customers. This includes events that are satisfied at a point in time (such as a single day event) or over a period (such as a multi day or multi week event). FSPL reduces its risk by requiring event customers to pay consideration in advance of the event being held. Consideration received in advance of recognising the associated revenue from the customer is recorded as an advance contract liability (Note 5.2). Where the performance obligations is satisfied but not yet billed, a contract asset is recorded (Note 5.1). There has been no change in the recognition of revenue as a result of the adoption of AASB 15.
Grant income received by FSPL is for grants that are enforceable and have specific performance obligations. Revenue is recognised when FSPL satisfies the performance obligations in accordance with AASB 15 Revenue from Contracts with Customers. Deferred grant revenue is recognised in contract liabilities (note 5.2). There has been no change in the recognition of revenue as a result of the adoption of AASB 15.
Sponsorship income is recognised over the period of time in which the performance obligations under each specific agreement, which often include marketing and promotion, are satisfied. There has been no change in the recognition of revenue as a result of the adoption of AASB 15.
Interest income from cash and deposits is recognised using the effective interest method, which allocates the interest over the relevant period.
Finance lease interest income includes interest received on the net investment in the lease in respect to the Melbourne Metro Project as detailed in Note 5.1.2, and the unwinding over time of the discount on the financial
PAGE 67 assets, in accordance with AASB 16 Leases. The lease payments receivable are disclosed in Note 5.1.2. There has been no change in the recognition of revenue as a result of the adoption of AASB 16.
Previous accounting policy for 30 June 2019
Income is recognised to the extent it is probable the economic benefits will flow to the entity and the income can be reliably measured.
Where applicable, amounts disclosed as income are net of returns, allowances, duties and taxes.
Income in the form of tenancy rents and outgoings derived from operating leases on premises at Federation Square is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease that form a lease incentive are recognised on a straight-line over the term of the relevant lease.
Income from car parking and event fees and charges is recognised in the period in which the service is provided.
Sponsorship income is recognised in the period in which the right to receive the income exists under each specific agreement.
Grant income arises from transactions in which a party provides goods or assets (or extinguishes a liability) to FSPL without receiving approximately equal value in return. While grants may result in the provision of some goods or services to the transferring party, they do not provide a claim to receive benefits directly of approximately equal value (and are termed ‘non-reciprocal’ transfers). Receipt and sacrifice of approximately equal value may occur, but only by coincidence. Where grants are reciprocal, income is recognised as performance occurs under the grant. Non-reciprocal grants are recognised as income when the grant is received or receivable. Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant.
Interest income is recognised using the effective interest method, which allocates interest over the relevant period. 2.2 Operating leases relating to premises owned by FSPL (FSPL as lessor)
FSPL derives income in the form of tenancy rents and outgoings from operating leases relating to premises owned by FSPL.
2020 2019 Nominal amounts $ $
Non-cancellable operating lease receivables:
- not longer than one year 15,851,039 17,200,773
- longer than one year and not longer than two years 15,504,001 16,353,428
- longer than two years and not longer than three years 8,903,063 15,911,650
- longer than three years and not longer than four years 6,477,707 8,745,962
- longer than four years and not longer than five years 5,535,094 6,229,021
- longer than five years 12,796,730 18,282,006
Total operating lease receivables 65,067,634 82,722,840
PAGE 68 FED SQUARE ANNUAL REPORT 2019 - 2020
THE COST OF DELIVERING SERVICES
3. INTRODUCTION
This section provides an account of the expenses incurred by the entity in delivering services. In Section 2, the funds that enable the provision of services were disclosed and in this note the cost associated with provision of services are recorded.
STRUCTURE
3.1 Expenses incurred in delivery of services
3.1.1 Employee benefit expenses
3.1.2 Site operating expenses
3.1.3 Other expenses
3.1 Expenses incurred in delivery of service
Notes 2020 2019 $ $
Employee benefit expenses 3.1.1(a) 6,648,968 6,311,393
Event expenses 2,391,873 2,642,870
Site operating expenses 3.1.2 8,560,322 9,024,488
Other operating expenses 3.1.3 6,036,436 10,139,503
Total expenses incurred in delivery of services 23,637,599 28,118,254
3.1.1(A) EMPLOYEE BENEFITS IN THE COMPREHENSIVE OPERATING STATEMENT
Notes 2020 2019 $ $
Salaries and wages, annual leave, long service leave and oncosts 6,062,538 5,730,081
Defined contribution superannuation expense 3.1.1(c) 535,728 528,812
Termination benefits 50,702 52,500
Total employee expenses 6,648,968 6,311,393
PAGE 69 Employee expenses include all costs related to employment including wages and salaries, fringe benefits tax, leave entitlements, redundancy payments and WorkCover premiums.
The amount recognised in the comprehensive operating statement in relation to superannuation is employer contributions for defined contribution superannuation plans that are paid or payable during the reporting period.
Termination benefits are payable when employment is terminated before normal retirement date, or when an employee accepts an offer of benefits in exchange for termination of employment.
3.1.1(B) EMPLOYEE BENEFITS IN THE COMPREHENSIVE OPERATING STATEMENT
Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave (LSL) for services rendered to the reporting date and recorded as an expense during the period the services are delivered.
2020 2019 $ $
Current provisions
Annual leave (unconditional)
- expected to settle within 12 months 177,691 226,392
- expected to settle after 12 months 111,534 24,738
Long service leave (unconditional)
- expected to settle within 12 months 24,638 72,159
- expected to settle after 12 months 140,688 252,124
Provision for on-costs (unconditional)
- expected to settle within 12 months 19,384 25,895
- expected to settle after 12 months 20,660 36,265
Total current provisions for employee benefits 494,595 637,573
Non-current provisions
Long service leave (conditional) 17,093 28,606
Provision for on-costs (conditional) 2,591 4,336
Total non-current provisions for employee benefits 19,684 32,942
Total provisions for employee benefits 514,279 670,515
PAGE 70 FED SQUARE ANNUAL REPORT 2019 - 2020
2020 Reconciliation of movement in on-costs provision $
Opening balance 66,496
Additional provision recognised 153,090
Reductions arising from payments/other sacrifices offuture economic benefits (177,294)
Unwind of discount and effect of changes in the discount rate 343
Closing balance 42,635
Current 40,044
Non-current 2,591
Liabilities for wages and salaries, including non-monetary benefits, and annual leave, are recognised as part of the employee benefit provision as current liabilities, because FSPL does not have an unconditional right to defer settlements of these liabilities.
The liability for salaries and wages are recognised in the balance sheet at remuneration rates which are current at the reporting date. As FSPL expects the liabilities to be wholly settled within 12 months of reporting date, they are measured at undiscounted amounts.
The annual leave liability is classified as a current liability and measured at the undiscounted amount expected to be paid, as FSPL does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
Unconditional long service leave (LSL) is disclosed as a current liability even where FSPL does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.
The components of this current LSL liability are measured at:
• undiscounted value - if FSPL expects to wholly settle within 12 months; and
• present value - if FSPL does not expect to wholly settle within 12 months.
Conditional LSL is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value.
Any gain or loss following revaluation of the present value of non-current LSL liability is recognised in the ‘net result from transactions’, except to the extent that a gain or loss arises due to changes in government bond interest rates for which it is then recognised as an other economic flow.
Provisions for on-costs such as payroll tax, workers compensation and superannuation are disclosed separately as a component of the provision for employee benefits.
PAGE 71 3.1.1(C) SUPERANNUATION CONTRIBUTIONS
Employees of FSPL are entitled to receive superannuation benefits and FSPL contributes to defined contribution plans. FSPL contributes to superannuation at the minimum rate required by the Superannuation Guarantee (Administration) Act 1992. Each employee (including Directors) is able to nominate a complying fund in accordance with the Act. Additional contributions are optional at the discretion of employees.
As at 30 June 2020 there was no amount owing to superannuation funds not brought to account (2019: Nil).
3.1.2 SITE OPERATING EXPENSES
2020 2019 $ $
Building and tenant consultants 271,306 551,680
Car park operations 394,833 486,404
Cleaning 1,860,477 1,840,893
Maintenance 2,227,384 2,174,627
Security 2,145,345 2,081,686
Utilities 1,660,977 1,889,198
Total site operating expenses 8,560,322 9,024,488
3.1.3 OTHER OPERATING EXPENSES
2020 2019 $ $
Administration and accounting 752,472 856,987
Bad debts from transactions 5,753 5,000
Information and communications technology 962,941 646,567
Insurance 580,531 544,884
Legal 293,320 715,317
Motor vehicles 8,368 5,637
Promotional expenses 695,530 801,960
Statutory rates and taxes 2,355,227 1,941,204
Tenancy expenses 382,294 4,621,947
Total other operating expenses 6,036,436 10,139,503
PAGE 72 FED SQUARE ANNUAL REPORT 2019 - 2020
Site and other operating expenses generally represent the day-to-day running costs incurred in normal operations. It also includes bad debts expense from transactions that are mutually agreed.
Tenancy expenses include the cost of compensation, relocation of tenants and associated costs (including previously capitalised costs written back to expense for tenancy projects that are not proceeding) of $313,290 (2019: $4,524,599). Costs recovered under commercial arrangements and included in other revenue in Note 2.1 are $7,972 (2019: $3,248,385).
Supplies and services are recognised as an expense in the reporting period in which they are incurred.
PAGE 73 KEY ASSETS AVAILABLE TO SUPPORT 4. SERVICE DELIVERY
INTRODUCTION
FSPL controls infrastructure and other investments that are utilised in fulfilling its objectives and conducting its activities. They represent the key resources that have been entrusted to FSPL to be utilised for delivery of those activities.
FAIR VALUE MEASUREMENT
Where the assets included in this section are carried at fair value, additional information is disclosed in Note 7.3 in connection with how those fair values were determined.
STRUCTURE
4.1 Total property, plant and equipment
4.1.1 Depreciation and amortisation
4.1.2 Reconciliation of movements in carrying amount of property, plant and equipment
4.2 Intangible assets
4.1 Total property, plant and equipment
Gross carrying amount Accumulated depreciation Net carrying amount
2020 2019 2020 2019 2020 2019 $ $ $ $ $ $ Freehold land at fair 203,600,000 203,600,000 - - 203,600,000 203,600,000 value Buildings and improvements at fair 336,435,367 338,203,127 - (31,106,451) 336,435,367 307,096,676 value Plant, equipment and vehicles at fair value 9,413,151 9,323,724 (5,929,716) (5,580,674) 3,483,435 3,743,050 (inc. leased assets) Assets under 3,783,247 1,223,159 - - 3,783,247 1,223,159 construction at cost
Total property, plant and equipment 553,231,765 552,350,010 (5,929,716) (36,687,125) 547,302,049 515,662,885 Notes: The table incorporates depreciation of right-of-use assets as AASB16 Leases has been applied for the first time from 1 July 2019. FSPL is included in the ‘Public safety & environment’ government purpose classification group. PAGE 74 FED SQUARE ANNUAL REPORT 2019 - 2020
Initial recognition
Items of property, plant and equipment are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment.
The cost of constructed non-financial physical assets includes the cost of all materials used in construction, direct labour on the project and an appropriate proportion of variable and fixed overheads.
The initial cost for non-financial physical assets under a finance lease (under AASB 117 until 30 June 2019) is measured at amounts equal to the fair value of the leased asset or, if lower, the present value of minimum lease payments, each determined at the inception of the lease.
Right-of-use asset acquired by lessees (Under AASB 16 Leases from 1 July 2019) – Initial measurement
FSPL recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost which comprises the initial amount of the lease liability adjusted for:
• any lease payments made at or before the commencement date less any lease incentive received; plus
• any initial direct costs incurred; and
• an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located
Subsequent measurement
Property, plant and equipment as well as right-of-use assets under leases are subsequently measured at fair value less accumulated depreciation and impairment. Fair value is determined with regard to the asset’s highest and best use (considering legal or physical restrictions imposed on the asset, public announcements or commitments made in relation to the intended use of the asset) and is summarised below by asset category.
Right-of-use asset – Subsequent measurement
FSPL depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use assets are also subject to revaluation.
In addition, the right-of-use asset is periodically reduced by impairment losses, if any and adjusted for certain remeasurements of the lease liability.
Freehold land is valued using the market approach, whereby assets are compared to recent comparable sales or sales of comparable assets that are considered to have nominal value. The value is adjusted for the community service obligation (CSO) to reflect the specialised nature of the land. In addition an adjustment is made to the portion of land on the Victorian Heritage Register. The adjustments are a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extent that is also equally applicable to market participants.
Buildings are valued using the current replacement cost method, adjusting for the associated depreciation.
Plant and equipment are held at fair value.
Refer to Note 7.3 for additional information on fair value determination of property, plant and equipment.
PAGE 75 Impairment
Non-financial assets are assessed annually for indications of impairment. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written off as an ‘other economic flow’, except to the extent that the write down can be debited to an asset revaluation surplus amount applicable to that class of asset.
If there is an indication that there has been a reversal in the estimate of an asset’s recoverable amount since the last impairment loss was recognised, the carrying amount shall be increased to its recoverable amount. However this reversal should not increase the asset’s carrying amount above what would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in prior years.
The recoverable amount for most assets is measured at the higher of current replacement cost and fair value less costs to sell.
4.1.1 DEPRECIATION AND AMORTISATION
2020 2019 $ $
Charge for the period:
Buildings and improvements 11,450,445 11,536,318
Plant, equipment and vehicles (including leased assets) 694,143 582,851
Intangible produced assets (amortisation) 31,558 -
Total depreciation and amortisation 12,176,146 12,119,169
The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period, and adjustments made where appropriate. Items costing less than $5,000 are written off in the year of purchase.
Depreciation
Depreciation is calculated on a straight line basis, at rates that allocate the asset’s value, less any estimated residual value, over its estimated useful life. The following estimated useful lives are used in the calculation of depreciation:
Category Useful life
Buildings and improvements 5 - 100 years
Plant, equipment and vehicles (including leased assets) 2 - 40 years
Intangible produced assets (amortisation) 3 - 5 years
PAGE 76 FED SQUARE ANNUAL REPORT 2019 - 2020
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term.
In the event of the loss or destruction of an asset, the future economic benefits arising from the use of the asset will be replaced (unless a specific decision to the contrary has been made).
Land is considered to have an indefinite life and is not depreciated. Depreciation is not recognised in respect of these assets because their service potential has not, in any material sense, been consumed during the reporting period.
Assets under construction are not depreciated until brought into use.
4.1.2 RECONCILIATION OF MOVEMENTS IN CARRYING AMOUNT OF PROPERTY, PLANT AND EQUIPMENT
Buildings Total Plant, Assets under Freehold and property, Notes equipment construction Land improve- plant and and vehicles at cost ments equipment
$ $ $ $ $
Carrying amount at 1 July 2018 216,000,000 318,791,615 1,777,982 5,285,300 541,854,897
Additions - 1,064,405 562,178 641,141 2,267,724
Disposals (3,400,000) (3,940,567) - - (7,340,567)
Transfer in/out of assets - 2,717,541 1,985,741 (4,703,282) - under construction
Revaluation 7.3.2 (9,000,000) - - - (9,000,000)
Depreciation and - (11,536,318) (582,851) - (12,119,169) amortisation
Carrying amount at 1 July 2019 203,600,000 307,096,676 3,743,050 1,223,159 515,662,885
Additions - 1,675,731 481,258 3,569,129 5,726,118
Disposals - - (46,730) - (46,730)
Transfer in/out of assets - 1,009,041 - (1,009,041) - under construction
Revaluation 7.3.2 - 38,104,364 - - 38,104,364
Depreciation and - (11,450,445) (694,143) - (12,144,588) amortisation
Carrying amount at 30 June 2020 203,600,000 336,435,367 3,483,435 3,783,247 547,302,049
Included in plant, equipment and vehicles is right-of-use assets with a carrying value of $46,325 (2019: Plant and equipment under finance lease $22,774). During the year there was additions of $93,200 (2019: Nil), disposals of $59,983 (2019: Nil) and a depreciation charge of $9,666 (2019: $6,751). PAGE 77 4.2 Intangible assets
Computer software Total
2020 2019 2020 2019 $ $ $ $
Gross carrying amount
Opening balance 126,573 - 126,573 -
Additions 1,972,292 126,573 1,972,292 126,573
Closing balance 2,098,865 126,573 2,098,865 126,573
Accumulated depreciation, amortisation and impairment
Opening balance - - - -
Depreciation and amortisation (31,558) - (31,558) -
Closing balance (31,558) - (31,558) -
Net book value at end of financial year 2,067,307 126,573 2,067,307 126,573
Initial recognition
Purchased intangible assets are initially recognised at cost. When the recognition criteria in AASB 138 Intangible Assets is met, internally generated intangible Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Depreciation and available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following are demonstrated:
(a) the technical feasibility of completing the intangible asset so that it will be available for use;
(b) an intention to complete the intangible asset and use;
(c) the ability to use the intangible asset;
(d) the intangible asset will generate probable future economic benefits;
(e) the availability of adequate technical, financial and other resources to complete the development and to use the intangible asset; and
(f) the ability to measure reliably the expenditure attributable to the intangible asset during its development.
PAGE 78 FED SQUARE ANNUAL REPORT 2019 - 2020
Subsequent measurement
Intangible produced assets with finite useful lives, are amortised as an ‘expense from transactions’ on a straight-line basis over their useful lives. Produced intangible assets have useful lives of between three and five years.
Impairment of intangible assets
Intangible assets with indefinite useful lives (and intangible assets not yet available for use) are tested annually for impairment and whenever there is an indication that the asset may be impaired. Intangible assets with finite useful lives are tested for impairment whenever an indication of impairment is identified.
The policy in connection with testing for impairment is outlined in section 4.1.1.
PAGE 79 5. OTHER ASSETS AND LIABILITIES INTRODUCTION
This section sets out those assets and liabilities that arose from FSPL’s operations.
STRUCTURE
5.1 Receivables 5.2 Payables
5.1 Receivables
2020 2019 $ $ Current receivables Contractual
Trade receivables 1,082,326 999,818
Insurance receivable 31,661 5,848
Accrued income 699,336 169,746
Finance lease receivable 9,524,544 8,073,660
Allowances for impairment losses of contractual receivables (94,500) (17,927)
11,243,367 9,231,145
Statutory
GST receivable 145,610 -
Total current receivables 11,388,977 9,231,145
Total receivables 11,388,977 9,231,145
Contractual receivables are classified as financial instruments and categorised as ‘financial assets at amortised costs’. They are initially recognised at fair value plus any directly attributable transaction costs. FSPL holds the contractual receivables with the objective to collect the contractual cash flows and therefore subsequently measured at amortised cost using the effective interest method, less any impairment.
Details about FSPL’s impairment policies, FSPL’s exposure to credit risk and the calculation of the loss allowance are set out in Note 7.1.
PAGE 80 FED SQUARE ANNUAL REPORT 2019 - 2020
5.1.1 FINANCE LEASES RECEIVABLES (FSPL AS LESSOR)
Amounts due from lessees under finance leases are recorded as receivables. Finance lease receivables are initially recorded at amounts equal to the present value of the minimum lease payments receivable plus the present value of any unguaranteed residual value expected to accrue at the end of the lease term. Finance lease receipts are apportioned between periodic interest revenue and reduction of the lease receivable over the term of the lease in order to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Finance lease receivables relate to land being developed by Melbourne Metro Project as an entrance to the new Town Hall train station with a lease term of four years. At the end of the lease, there is an unguaranteed residual value, which is in the form of the land being compulsorily acquired under the Land Acquisition and Compensation Act 1986 (Vic). The finance lease receivable amount is dependent on the estimated amount to be received on compulsory acquisition, which will be reviewed on a periodic basis.
The following table sets out the maturity analysis of lease receivables, showing the undiscounted lease payments to be received after the reporting date.
2020 $
Less than one year 318,230
One to two years 330,958
Two to three years 55,516
Total undiscounted lease payments receivable 704,704
Unguaranteed residual amounts - undiscounted 14,000,000
Less unearned finance income (5,180,160)
Net investment in the lease 9,524,544
PAGE 81 Gross investment in leases and the present value of minimum lease payment receivables under non-cancellable finance leases as at 30 June 2019 are as:
Present value Minimum lease of minimum receivables (a) lease receivables 2019 2019 $ $
Finance lease receivables
Not longer than one year 307,964 297,072
Longer than one year but not longer than five years 14,653,377 7,776,588
Minimum future lease receivables 14,961,341 8,073,660
Less unearned finance income (6,887,681) -
Present value of minimum lease receivables 8,073,660 8,073,660
Included in the financial statements as:
- Current finance lease receivables 297,072
- Non‑current finance lease receivables 7,776,588
Total 8,073,660
Note: (a) Minimum future lease payments receivable includes the aggregate of all lease payments receivable and any guaranteed residual.
During 2019-20, FSPL recognised finance income on the finance lease receivable of $1,756,775 (2019: $1,186,859).
Leases as a Lessor
FSPL’s accounting policy under AASB 16 has not changed from the comparative period. As a lessor, FSPL classifies its leases as either operating or finance leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset and classified as an operating lease if it does not.
PAGE 82 FED SQUARE ANNUAL REPORT 2019 - 2020
5.2 Payables
2020 2019 $ $ Current payables Contractual
Creditors 2,416,448 1,335,759
Advances 611,712 1,005,295
Tenant security deposits 59,579 49,350
Salaries and associated costs 117,453 78,931
3,205,192 2,469,335
Statutory
GST payable - 8,538
Fringe benefits tax 7,076 7,215
Other taxes payable 157,894 197,426
164,970 213,179
Total current payables 3,370,162 2,682,514
Total payables 3,370,162 2,682,514
Payables consist of:
Contractual payables, classified as financial instruments and measured at amortised cost. Contractual payables represent liabilities for goods and services provided to FSPL prior to the end of the financial year that are unpaid; and
Statutory payables, that are recognised and measured similarly to contractual payables, but are not classified as financial instruments and not included in the category of financial liabilities at amortised cost, because they do not arise from contracts.
Payables for supplies and services have an average credit period of 30 days.
PAGE 83 Contract liabilities
2020 $
Opening balance brought forward from 30 June 2019 1,005,295
Less: Revenue recognised in the reporting period that was included in the contract liability balance at (825,404) the beginning of the period
Add: Payments received for performance obligations yet to be completed during the period 431,821
Total contract liabilities 611,712
Represented by
Current contract liabilities 611,712
Contract liabilities include consideration received in advance from customers in respect of event delivery services and tenancy rents. Revenue is recognised once the services obligations are delivered to the customer. The balance of contract liabilities was lower at 30 June 2020 as a number of events have been cancelled due to COVID-19.
In addition, grant consideration was also received from the State Government for the preparation of a business case for FSPL. Grant income is recognised when the relevant grant obligations are satisfied. The remaining grant revenue will be recognised when the obligations are satisfied at a later time.
5.2.1 MATURITY ANALYSIS OF CONTRACTUAL PAYABLES
Carrying Nominal Less than 1 - 3 3 months 2020 1 - 5 years 5+ years amount amount 1 month months - 1 year
$ $ $ $ $ $ $
Payables
Supplies and services 2,533,901 2,533,901 2,533,901 - - - -
Total 2,533,901 2,533,901 2,533,901 - - - -
Carrying Nominal Less than 1 - 3 3 months 2019 1 - 5 years 5+ years amount amount 1 month months - 1 year
$ $ $ $ $ $ $
Payables
Supplies and services 1,414,690 1,414,690 1,414,690 - - - -
Total 1,414,690 1,414,690 1,414,690 - - - -
PAGE 84 FED SQUARE ANNUAL REPORT 2019 - 2020 6. HOW WE FINANCED OUR OPERATIONS INTRODUCTION
This section provides information on the sources of finance utilised by FSPL during its operations, along with interest expenses (the cost of borrowings) and other information related to financing activities of FSPL.
This section includes disclosures of balances that are financial instruments (such as borrowings and cash balances). Notes 7.1 and 7.3 provide additional, specific financial instrument disclosures.
STRUCTURE
6.1 Borrowings
6.1.1 Maturity analysis of borrowings 6.1.2 Interest expense
6.2 Leases
6.2.1 Finance lease liabilities
6.3 Commitments for expenditure
6.4 Cash flow information
6.4.1 Reconciliation of net result to cash flow from operating activities
6.1 Borrowings
2020 2019 $ $
Current borrowings
Loans 4,000,000 -
Advances from Government 555,429 555,429
Lease liability 7,971 6,952
Total current borrowings 4,563,400 562,381
Non-current borrowings
Advances from Government 1,039,576 1,595,005
Lease liability 38,494 16,050
Total non-current borrowings 1,078,070 1,611,055
Total borrowings 5,641,470 2,173,436
PAGE 85 ‘Borrowings’ refer to interest bearing liabilities mainly raised from public borrowings raised through the Treasury Corporation of Victoria, finance leases and other interest bearing arrangements.
Borrowings are classified as financial instruments. All interest bearing borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. The measurement basis subsequent to initial recognition depends on whether FSPL has categorised its interest bearing liabilities as either ‘financial liabilities designated at fair value through ‘profit or loss’, or financial liabilities at ‘amortised cost’. The classification depends on the nature and purpose of the interest bearing liabilities. FSPL determines the classification of its interest bearing liabilities at initial recognition. All of FSPL’s borrowings are subsequently measured at amortised cost using the effective interest method.
Loans are provided by the Treasury Corporation of Victoria in the form of fixed interest annuities and are secured by a guarantee from the Treasurer of Victoria.
Advances from Government are interest free advances are provided by the Department of Jobs, Precincts and Regions and are repayable by 2023.
Lease liabilities represent motor vehicles leased from Vic Fleet, a unit of the Victorian Department of Treasury and Finance. The motor vehicles provide security under the terms of the lease.
During the current and prior year, there were no defaults and breaches of any of the loans.
6.1.1 MATURITY ANALYSIS OF BORROWINGS
Carrying Nominal Less than 1 - 3 3 months 2020 Notes 1 - 5 years 5+ years amount amount 1 month months - 1 year
$ $ $ $ $ $ $
Loans 6.1 4,000,000 4,000,000 4,000,000 - - - -
Advances from 6.1 1,595,005 1,595,005 - - 555,429 1,039,576 - Government
Lease liability 6.1 46,465 49,520 780 1,560 7,022 40,158 -
Total 5,641,470 5,644,525 4,000,780 1,560 562,451 1,079,734 -
Carrying Nominal Less than 1 - 3 3 months 2019 Notes 1 - 5 years 5+ years amount amount 1 month months - 1 year
$ $ $ $ $ $ $
Loans 6.1 ------
Advances from 6.1 2,150,434 2,150,434 - - 555,429 1,595,005 - Government
Finance lease 6.1 23,002 23,690 633 1,266 5,698 16,093 - liability
Total 2,173,436 2,174,124 633 1,266 561,127 1,611,098 -
PAGE 86 FED SQUARE ANNUAL REPORT 2019 - 2020
6.1.2 INTEREST EXPENSES
2020 2019 $ $
Interest on leases liabilities 263 867
Total interest expense 263 867
‘Interest expense’ includes the interest component of lease liability repayments.
Interest expense is recognised in the period in which it is incurred.
6.2 Leases
Information about leases for which FSPL is a lessee is presented below.
FSPL leases motor vehicles. The lease contracts generally have contract terms of 3-5 years.
6.2.1 RIGHT-OF-USE ASSETS
Right-of-use assets are presented in note 4.1.
6.2.2 AMOUNTS RECOGNISED IN THE COMPREHENSIVE OPERATING STATEMENT
The following amounts are recognised in the comprehensive operating statement relating to leases:
2020 $
Interest expense on lease liabilities 263
Total amount recognised in the comprehensive operating statement 263
6.2.2 AMOUNTS RECOGNISED IN THE CASHFLOW STATEMENT
The following amounts are recognised in the cashflow statement for the year ending 30 June 2020 relating to leases.
2020 $
Total cash outflow for leases 54,995
For any new contracts entered into on or after 1 July 2019, FSPL considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this definition FSPL assesses whether the contract meets three key evaluations:
• Whether the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to FSPL and for which the supplier does not have substantive substitution rights;
PAGE 87 • Whether FSPL has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract and FSPL has the right to direct the use of the identified asset throughout the period of use;
• Whether FSPL has the right to take decisions in respect of ‘how and for what purpose’ the asset is used throughout the period of use.
This policy is applied to contracts entered into, or changed, on or after 1 July 2019.
Separation of lease and non-lease components
At inception or on reassessment of a contract that contains a lease component, the lessee is required to separate out and account separately for non-lease components within a lease contract and exclude these amounts when determining the lease liability and right-of-use asset amount.
Recognition and measurement of leases as a lessee (under AASB 16 from 1 July 2019)
Lease Liability - initial measurement
The lease liability is initially measured at the present value of the lease payments unpaid at the commencement date, discounted using the interest rate implicit in the lease if that rate is readily determinable or FSPL’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments (including in-substance fixed payments) less any lease incentive receivable;
• variable payments based on an index or rate, initially measured using the index or rate as at the commencement date; - amounts expected to be payable under a residual value guarantee; and
• payments arising from purchase and termination options reasonably certain to be exercised.
Lease Liability - subsequent measurement
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in-substance fixed payments
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
Presentation of right-of-use assets and lease liabilities
FSPL presents right-of-use assets as ‘property plant equipment’ unless they meet the definition of investment property, in which case they are disclosed as ‘investment property’ in the balance sheet. Lease liabilities are presented as ‘borrowings’ in the balance sheet.
Recognition and measurement of leases (under AASB 117 until 30 June 2019)
In the comparative period, leases of property, plant and equipment were classified as either finance lease or operating leases.
FSPL determined whether an arrangement was or contained a lease based on the substance of the arrangement and required an assessment of whether fulfilment of the arrangement is dependent on the use of the specific asset(s); and the arrangement conveyed a right to use the asset(s).
PAGE 88 FED SQUARE ANNUAL REPORT 2019 - 2020
Leases of property, plant and equipment where the FSPL as a lessee had substantially all of the risks and rewards of ownership were classified as finance leases. Finance leases were initially recognised as assets and liabilities at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payment, each determined at the inception of the lease. The leased asset is accounted for as a non-financial physical asset and depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Minimum finance lease payments were apportioned between the reduction of the outstanding lease liability and the periodic finance expense, which is calculated using the interest rate implicit in the lease and charged directly to the comprehensive operating statement. 6.3 Commitments for expenditure
Commitments for future expenditure include capital commitments arising from contracts. These commitments are recorded below at their nominal value and inclusive of the GST. Where it is considered appropriate, the net present values of significant individual projects are stated. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the balance sheet.
2020 2019 Nominal amounts $ $
Payable less than one year
Capital expenditure commitments payable 225,243 106,739
Total commitments (exclusive of GST) 225,243 106,739
6.4 Cash flow information and balances
Cash and deposits, including cash equivalents, comprise cash on hand and cash at bank, deposits at call and those highly liquid investments with an original maturity of three months or less, which are held for the purpose of meeting short-term cash commitments rather than for investment purposes, and which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
FSPL, at the request of the Treasurer, has deposited surplus balances into the Centralised Banking System (CBS). Funds held in the CBS account are at call.
Cash as at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:
2020 2019 $ $
Cash on hand and at bank 10,154,424 11,280,477
Cash and cash equivalents as shown on the cash flow statement 10,154,424 11,280,477
PAGE 89 6.4.1 RECONCILIATION OF NET RESULT FOR THE PERIOD TO NET CASH FLOWS FROM OPERATING ACTIVITIES
Notes 2020 2019 $ $
Net result for the period (7,493,822) (7,984,955)
Non-cash items:
- Depreciation and amortisation 4.1.1 12,176,146 12,119,169
- Increase / (Decrease) in allowance for impairment 8.2.1 76,572 (35,054) losses of contractual receivables
- Forgiveness of liabilities 8.2.1 17,076 11,846
- Bad debts from transactions 3.1.3 5,753 5,000
- (Gain) / Loss on disposal of assets (2,740) 207,000
Net cash inflows from operating activities before changes in assets 4,778,985 4,323,006 and liabilities
Changes in assets and liabilities
(Increase) / Decrease in receivables (excluding assets transferred to finance (2,257,233) 1,841,714 lease receivable in prior year)
(Increase) / Decrease in prepayments 1,689 (1,226)
Increase / (Decrease) in payables 687,648 (1,779,320)
Increase / (Decrease) in provisions (156,236) 63,976
Net cash flows from operating activities 3,054,853 4,448,150
PAGE 90 FED SQUARE ANNUAL REPORT 2019 - 2020
RISKS, CONTINGENCIES AND 7. VALUATION JUDGEMENTS
INTRODUCTION
FSPL is exposed to risk from its activities and outside factors. In addition, it is often necessary to make judgements and estimates associated with recognition and measurement of items in the financial statements. This section sets out financial instrument specific information, (including exposures to financial risks) as well as those items that are contingent in nature or require a higher level of judgement to be applied, which FSPL related mainly to fair value determination.
STRUCTURE
7.1 Financial instruments specific disclosures
7.2 Contingent assets and contingent liabilities
7.3 Fair value determination
7.1 Financial instruments specific disclosures
Introduction
Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of the FSPL’s activities, certain financial assets and financial liabilities arise under statute rather than a contract. Such financial assets and financial liabilities do not meet the definition of financial instruments in AASB 132Financial Instruments: Presentation.
Categories of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised costs if both of the following criteria are met and the assets are not designated as fair value through net result:
• the assets are held by FSPL to collect the contractual cash flows, and
• the assets’ contractual terms give rise to cash flows that are solely payments of principal and interests.
These assets are initially recognised at fair value plus any directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method less any impairment.
PAGE 91 FSPL recognises the following assets in this category:
• cash and deposits;
• receivables (excluding statutory receivables); and
• term deposits
Categories of financial liabilities
Financial liabilities at amortised cost are initially recognised on the date they are originated. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest bearing liability, using the effective interest rate method.
FSPL recognises the following liabilities in this category:
• payables (excluding statutory payables); and
• borrowings (including lease liabilities)
Offsetting financial instruments
Financial instrument assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, FSPL has a legal right to offset the amounts and intend either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Some master netting arrangements do not result in an offset of balance sheet assets and liabilities. Where FSPL does not have a legally enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events such as default, insolvency or bankruptcy, they are reported on a gross basis.
Derecognition of financial assets:A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:
• the rights to receive cash flows from the asset have expired.
• FSPL retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ arrangement; or - FSPL has transferred its rights to receive cash flows from the asset and either:
- has transferred substantially all the risks and rewards of the asset; or
- has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Where FSPL has neither transferred nor retained substantially all the risks and rewards or transferred control, the asset is recognised to the extent of FSPL’s continuing involvement in the asset.
Derecognition of financial liabilities: A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
PAGE 92 FED SQUARE ANNUAL REPORT 2019 - 2020
treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised as an ‘other economic flow’ in the comprehensive operating statement.
Reclassification of financial instruments: Subsequent to initial recognition reclassification of financial liabilities is not permitted. Financial assets are required to reclassified between fair value through net result, fair value through other comprehensive income and amortised cost when and only when FSPL’s business model for managing its financial assets has changes such that its previous model would no longer apply.
If under rare circumstances an asset is reclassified, the reclassification is applied prospectively from the reclassification date and previously recognised gains, losses or interest should not be restated. If the asset is reclassified to fair value, the fair value should be determined at the reclassification date and any gain or loss arising from a difference between the previous carrying amount and fair value is recognised in net result.
Financial instruments: Categorisation
Financial Financial Cash and assets at liabilities at 2020 Notes Total deposits amortised amortised cost cost
$ $ $ $
Contractual financial assets
Cash and deposits 6.4 10,154,424 - - 10,154,424
Receivables (a)
Sale of goods and services 5.1 - 1,687,162 - 1,687,162
Finance lease receivable 5.1 - 9,524,544 9,524,544
Other receivables 5.1 - 31,661 - 31,661
Total contractual financial assets 10,154,424 11,243,367 - 21,397,791
Contractual financial liabilities
Payables (a)
Supplies and services 5.2 - - 2,533,901 2,533,901
Borrowings
Lease liabilities 6.1 - - 46,465 46,465
Advances from government 6.1 - - 5,595,005 5,595,005
Loans from TCV 6.1 - 4,000,000 4,000,000
Total contractual financial liabilities - - 12,175,371 12,175,371
PAGE 93 Contractual Contractual financial financial Cash and 2019 Notes assets - liabilities at Total deposits loans and amortised receivables cost
$ $ $ $
Contractual financial assets
Cash and deposits 6.4 11,280,477 - - 11,280,477
Receivables (a)
Sale of goods and services 5.1 1,151,637 - 1,151,637
Finance lease receivable 5.1 - 8,073,660 8,073,660
Other receivables 5.1 - 5,848 - 5,848
Total contractual financial assets 11,280,477 9,231,145 - 20,511,622
Contractual financial liabilities
Payables (a)
Supplies and services 5.2 - - 1,414,690 1,414,690
Borrowings
Lease liabilities 6.1 - - 23,002 23,002
Advances from government 6.1 - - 2,150,434 2,150,434
Loans from TCV 6.1 - - -
Total contractual financial liabilities - - 3,588,126 3,588,126
Notes: (a) The totals amounts disclosed here exclude statutory amounts (e.g. amounts payable to or recoverable from the Australian Taxation Office).
PAGE 94 FED SQUARE ANNUAL REPORT 2019 - 2020
Financial risk management objectives and policies
FINANCIAL RISKS
CREDIT RISK LIQUIDITY RISK MARKET RISK
INTEREST RATE RISK
FOREIGN CURRENCY RISK
EQUITY PRICE RISK
As a whole, FSPL’s financial risk management program seeks to manage these risks and the associated volatility of its financial performance.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses each class of financial asset, financial liability and equity instrument above are disclosed in Note 7.1 to the financial statements.
The main purpose in holding financial instruments is to prudentially manage FSPL’s financial risks within the government policy parameters.
FSPL’s main financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and equity price risk. FSPL manages these financial risks in accordance with its financial risk management policy.
FSPL uses different methods to measure and manage the different risks to which it is exposed. Primary responsibility for the identification and management of financial risks rests with management, with regular reporting to and review by the Board.
PAGE 95 Financial instruments: Credit risk
Credit risk refers to the possibility that a borrower will default on its financial obligations as and when they fall due. FSPL’s exposure to credit risk arises from the potential default of a counter party on their contractual obligations resulting in financial loss to FSPL. Credit risk is measured at fair value and is monitored on a regular basis.
Credit risk associated with the FSPL’s contractual financial assets is minimal because FSPL has a policy of only providing material credit to creditworthy counterparties and obtaining industry standard security over leases in the form of bank guarantees or cash advances. FSPL’s exposure and the credit worthiness of counterparties is continually monitored.
Activities that give rise to credit risk are the granting of credit to customers and tenants at Federation Square. FSPL does not have any significant exposure to a single counterparty and trade receivables comprise a large number of diverse customers with differing characteristics.
In addition, FSPL does not engage in hedging for its contractual financial assets and mainly obtains contractual financial assets that are on fixed interest, except for cash and deposits, which are mainly cash at bank. FSPL’s policy is to only deal with banks with high credit ratings.
Provision of impairment for contractual financial assets is recognised when there is objective evidence that FSPL will not be able to collect a receivable. Objective evidence includes financial difficulties of the debtor, default payments, debts that are more than 90 days overdue, and changes in debtor credit ratings.
Except as otherwise detailed in the following table, the carrying amount of contractual financial assets recorded in the financial statements, net of any allowances for losses, represents FSPL’s maximum exposure to credit risk without taking account of the value of any collateral obtained.
There has been no material change to FSPL’s credit risk profile in 2020.
Credit quality of financial assets
Financial Financial Other institutions institutions (unknown 2020 Notes Total (double-A (A+ credit credit credit rating) rating) rating)
$ $ $ $
Financial assets with loss allowance measured at 12-month expected credit loss
Cash and deposits (not assessed for impairment due to 6.4 - 10,128,714 25,710 10,154,424 materiality)
Financial assets with loss allowance measured at lifetime expected credit loss
Contractual receivables applying the simplified 5.1 - - 11,243,367 11,243,367 approach for impairment
Total financial assets - 10,128,714 11,269,077 21,397,791
PAGE 96 FED SQUARE ANNUAL REPORT 2019 - 2020
Financial Financial Other institutions institutions (unknown 2019 Notes Total (double-A (A+ credit credit credit rating) rating) rating)
$ $ $ $
Financial assets with loss allowance measured at 12-month expected credit loss
Cash and deposits (not assessed for impairment due to 6.4 11,254,767 - 25,710 11,280,477 materiality)
Financial assets with loss allowance measured at lifetime expected credit loss
Contractual receivables applying the simplified 5.1 - - 9,231,145 9,231,145 approach for impairment
Total financial assets 11,254,767 - 9,256,855 20,511,622
Notes: (a) The total amounts disclosed here exclude statutory amounts (e.g. GST input tax credit recoverable).
Impairment of financial assets
FSPL records the allowance for expected credit loss for the relevant financial instruments applying AASB 9’s Expected Credit Loss approach. Subject to AASB 9 impairment assessment are FSPL’s contractual receivables.
While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified impairment loss was immaterial.
Contractual receivables at amortised cost
FSPL applies AASB 9 simplified approach for all contractual receivables to measure expected credit losses using a lifetime expected loss allowance based on the assumptions about risk of default and expected loss rates. FSPL has grouped contractual receivables on shared credit risk characteristics and days past due and select the expected credit loss rate based on FSPL’s past history, existing market conditions, as well as forward‑looking estimates at the end of the financial year.
On this basis, FSPL determines the opening loss allowance on initial application date of AASB 9 and the closing loss allowance at end of the financial year as follows:
Less than 1 1 - 3 3 months 2020 Current 1 - 5 years Total month months - 1 year
$ $ $ $ $ $
Expected loss rate % 2.8% 0.0% 13.0% 8.7% 0.0%
Gross carrying amount of 1,494,779 330,946 318,230 133,208 9,206,314 11,483,477 contractual receivables
Loss allowance 41,397 - 41,516 11,587 - 94,500
PAGE 97 Less than 1 - 3 3 months 2019 Current 1 - 5 years Total 1 month months - 1 year
$ $ $ $ $ $
Expected loss rate % 0.0% 0.0% 0.0% 0.0% 0.2%
Gross carrying amount of 552,868 213,693 613,553 81,726 7,787,232 9,249,072 contractual receivables
Loss allowance - - - - 17,927 17,927
Reconciliation of the movement in the loss allowance for contractual receivables is shown as follows:
2020 2019 $ $
Balance at beginning of year (17,927) (52,981)
Increase in provision recognised in the net result (94,500) (17,927)
Reversal of provision of receivables written off during the year as uncollectible - 11,846
Reversal of unused provision recognised in the net result 17,927 41,135
Balance at end of year (94,500) (17,927)
Credit loss allowance is classified as other economic flows in the net result. Contractual receivables are written off when there is no reasonable expectation of recovery and impairment losses are classified as a|transaction expense. Subsequent recoveries of amounts previously written off are credited against the same line item. FSPL holds bank guarantees and security deposits from a limited number of customers.
Financial instruments: Liquidity risk
Liquidity risk arises from being unable to meet financial obligations as they fall due. FSPL operates under a policy of settling financial obligations within 30 days and in the event of a dispute, making payments within 30 days from the date of resolution.
FSPL is exposed to liquidity risk mainly through the financial liabilities as disclosed in the face of the balance sheet and the amounts related to financial guarantees. FSPL manages its liquidity risk by:
• close monitoring of its short-term and long-term borrowings by senior management, including monthly reviews on current and future borrowing levels and requirements; - maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its short-term obligations;
• holding investments and other contractual financial assets that are readily tradeable in the financial markets;
• careful maturity planning of its financial obligations based on forecasts of future cash flows; and
• a high credit rating for the State of Victoria (Moody’s Investor Services and Standard & Poor’s triple- A, which assists in accessing debt market at a lower interest rate). FSPL’s exposure to liquidity risk is deemed insignificant based on prior periods’ data and current assessment of risk.
PAGE 98 FED SQUARE ANNUAL REPORT 2019 - 2020
The carrying amount detailed in the following table of contractual financial liabilities recorded in the financial statements represents FSPL’s maximum exposure to liquidity risk.
Financial instruments: Market risk
FSPL’s exposures to market risk are primarily through interest rate risk, foreign currency risk and equity price risk. Objectives, policies and processes used to manage each of these risks are disclosed below.
FSPL has an immaterial exposure to interest rate risk, foreign currency risk, credit risk and liquidity risk. FSPL does not use derivative financial instruments to hedge against risk exposures nor for speculative purposes. Financial risks are reported to the Board at each meeting.
Sensitivity disclosure analysis and assumptions
FSPL’s sensitivity to market risk is determined based on the observed range of actual historical data for the preceding five year period, with all variables other than the primary risk variable held constant. FSPL’s fund managers cannot be expected to predict movements in market rates and prices. Sensitivity analyses shown are for illustrative purposes only. The following movements are ‘reasonably possible’ over the next 12 months:
• a movement of 50 basis points up and down (50 basis points up and down) in market interest rates (AUD).
Where relevant, tables that follow show the impact on FSPL’s net result and equity for each category of financial instrument held by FSPL at the end of the reporting period, if the above movements were to occur.
Interest rate risk
Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. FSPL does not hold any interest bearing financial instruments that are measured at fair value, and therefore has no exposure to fair value interest rate risk.
There is no interest rate risk associated with loans as all borrowings are made at either fixed rates of interest from Treasury Corporation Victoria or interest free from the Department of Jobs, Precincts and Regions.
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. FSPL has minimal exposure to cash flow interest rate risks through cash and deposits, and term deposits that are at floating rate.
FSPL manages this risk by mainly undertaking fixed rate or non-interest bearing financial instruments with relatively even maturity profiles, with only insignificant amounts of financial instruments at floating rate. Management has concluded for cash at bank, as financial assets that can be left at floating rate without necessarily exposing FSPL to significant bad risk, management monitors movement in interest rates on a regular basis.
The carrying amounts of financial assets and financial liabilities that are exposed to interest rates and FSPL’s sensitivity to interest rate risk are set out in the table that follows.
PAGE 99 Interest rate exposure of financial instruments
Interest rate exposure Weighted Average Carrying 2020 Notes Fixed Variable Interest Rate Non Interest amount Interest Interest percent Bearing Rate Rate
$ $ $ $
Financial assets
Cash and deposits 6.4 0.65% - 10,128,714 25,710 10,154,424
Receivables (a) 5.1
- Finance lease receivable 22.41% - 9,524,544 - 9,524,544
- All other receivables - - - 1,718,823 1,718,823
Total financial assets - 19,653,258 1,744,533 21,397,791
Interest rate exposure Weighted Average Carrying 2019 Notes Fixed Variable Interest Rate Non Interest amount Interest Interest percent Bearing Rate Rate
$ $ $ $
Financial liabilities
Payables (a) 5.2 - - - 1,414,690 1,414,690
Lease liabilities 6.1 3.25% 23,002 - - 23,002
Loans and advances 6.1 - - - 2,150,434 2,150,434
Total financial liabilities 23,002 - 3,565,124 3,588,126
Notes: (a) The total amounts disclosed here exclude statutory amounts (e.g. GST input tax credit recoverable).
PAGE 100 FED SQUARE ANNUAL REPORT 2019 - 2020
Interest rate risk sensitivity
Amount -50 basis +50 basis exposed to 2020 points points rate Net result Net result movement
$ $ $
Financial Assets
Cash and deposits 10,128,714 (50,644) 50,644
Receivables 9,524,544 (47,623) 47,623
Total impact 19,653,258 (98,266) 98,266
Amount -50 basis +50 basis exposed to 2019 points points rate Net result Net result movement
$ $ $
Financial Assets
Cash and deposits 11,254,767 (56,274) 56,274
Receivables 8,073,660 (40,368) 40,368
Total impact 19,328,427 (96,642) 96,642
Foreign currency exposure
FSPL has exposure to foreign currency risk through a limited number of transactions denominated in foreign currencies and there is a relatively short timeframe between commitment and settlement, therefore risk is minimal.
All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of the transaction.
FSPL has no exposure to foreign currency risk as at 30 June 2020.
Equity price risk
FSPL is not exposed to equity price risk. FSPL does not have investments in listed and unlisted shares or managed investment schemes.
PAGE 101 7.2 Contingent assets and contingent liabilities
Contingent assets and contingent liabilities are not recognised in the balance sheet but are disclosed and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.
Contingent liabilities
Contingent liabilities are:
• Possible obligations that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
• Present obligations that arise from past events but are not recognised because:
– it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligations; or
– the amount of the obligations cannot be measured with sufficient reliability.
Contingent liabilities are also classified as either quantifiable or non-quantifiable.
Non quantifiable contingent liabilities
There are potential non-quantifiable obligations at this time arising from:
• net costs relating to claims for compensation and associated costs from tenants.
Quantifiable contingent liabilities
There are no known quantifiable obligations as at balance sheet date (2019: Nil).
Contingent assets
Contingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. There are no known contingent assets at balance date (2019: Nil). 7.3 Fair value determination
Significant judgement: Fair value measurements of assets and liabilities
Fair value determination requires judgement and the use of assumptions. This section discloses the most significant assumptions used in determining fair values. Changes to assumptions could have a material impact on the results and financial position of FSPL.
This section sets out information on how FSPL determined fair value for financial reporting purposes. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Land, buildings, plant and equipment are are carried at fair value.
PAGE 102 FED SQUARE ANNUAL REPORT 2019 - 2020
In addition, the fair values of other assets and liabilities that are carried at amortised cost, also need to be determined for disclosure purposes.
FSPL determines the policies and procedures for determining fair values for both financial and non-financial assets and liabilities as required.
Fair value hierarchy
In determining fair values a number of inputs are used. To increase consistency and comparability in the financial statements, these inputs are categorised into three levels, also known as the fair value hierarchy. The levels are as follows:
• Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities;
• Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and
• Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
FSPL determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Valuer-General Victoria (VGV) is FSPL’s independent valuation agency. FSPL, in conjunction with VGV, monitors changes in the fair value of each asset and liability through relevant data sources to determine whether revaluation is required.
How this section is structured
For those assets and liabilities for which fair values are determined, the following disclosures are provided:
• carrying amount and the fair value (which would be the same for those assets measured at fair value);
• which level of the fair value hierarchy was used to determine the fair value; and
• in respect of those assets and liabilities subject to fair value determination using Level 3 inputs: – a reconciliation of the movements in fair values from the beginning of the year to the end; – details of significant unobservable inputs used in the fair value determination.
This section is divided between disclosures in connection with fair value determination for financial instruments (refer to Note 7.3.1) and non-financial physical assets (refer to Note 7.3.2).
7.3.1 FAIR VALUE DETERMINATION OF FINANCIAL ASSETS AND LIABILITIES
The fair values and net fair values of financial assets and liabilities are determined as follows:
• Level 1 - the fair value of financial instruments with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market prices;
• Level 2 - the fair value is determined using inputs other than quoted prices that are observable for the financial asset or liability, either directly or indirectly; and
• Level 3 - the fair value is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using unobservable market inputs.
PAGE 103 FSPL currently holds a range of financial instruments that are recorded in the financial statements where the carrying amounts approximate to fair value, due to their short-term nature or with the expectation that they will be paid in full by the end of the 2020 reporting period. These financial instruments include:
Financial assets Financial liabilities
Cash and deposits Payables
Receivables - For supplies and services
- Sale of goods and services - Tenant security deposits
- Accrued investment income Borrowings
- Other receivables - Lease liabilities
Where the fair value of the financial instruments is different from the carrying amounts, the following information has been included to disclose the difference.
Fair value of financial instruments measured at amortised cost
Carrying amount Fair value
2020 2019 2020 2019 $ $ $ $
Financial assets
Finance lease receivables 9,524,544 8,073,660 14,089,155 14,139,506
Financial liabilities
Loans from TCV 4,000,000 - 4,000,045 -
There are no financial assets and financial liabilities measured at fair value.
7.3.2 FAIR VALUE DETERMINATION OF NON-FINANCIAL PHYSICAL ASSETS
Fair value measurement hierarchy for assets
Level 1 Level 2 Level 3 Fair value 2020 $ $ $ $
Freehold land - - 203,600,000 203,600,000
Buildings and improvements - - 336,435,367 336,435,367
Plant and equipment - - 3,483,435 3,483,435
Intangible assets - - 2,067,307 2,067,307
PAGE 104 FED SQUARE ANNUAL REPORT 2019 - 2020
Level 1 Level 2 Level 3 Fair value 2019 $ $ $ $
Freehold land - - 203,600,000 203,600,000
Buildings and improvements - - 307,096,676 307,096,676
Plant and equipment - - 3,667,983 3,794,556
Intangible assets - - 126,573 -
There have been no transfers between levels during the period.
The fair value of land and buildings is determined on the basis of a periodic independent valuation by external valuation experts. The fair values are recognised in the financial statements and are reviewed at the end of each reporting period to ensure that the carrying value of land and buildings is not materially different from their fair values, after taking into consideration Valuer-General Victoria (VGV) indices and other relevant indicators.
FREEHOLD LAND
Valuation
On 26 August 2019 it was announced that Federation Square was listed in the Victorian Heritage Register.
FSPL requested that the Valuer-General Victoria to undertake a valuation, in accordance with the heritage restrictions. A valuation was undertaken by Urbis Valuations Pty Ltd on behalf of the Valuer-General Victoria (ref: VGV File: A01217/1) effective as at 30 June 2019.
The Urbis valuation is based on:-
• the property is situated in the ‘Capital City 1’ zone, which is a highly sought after property zone;
• the highest and best use is considered to be mixed use development site;
• the site is well located, being opposite the river and close to public transport linkages;
• a Community Service Obligation (CSO) discount of 40 percent to the ‘unencumbered fair value’ has been applied, in this instance to take into account the civic and cultural uses imposed on the land;
• the central portion of the land, which is strata above the Rail Yards and essentially an air right, being ascribed a value equal to 5 percent of the surrounding land values; and
• part of the land, specifically the land that has been nominated for listing in the Victorian Heritage Register, and an additional 30 percent discount has been applied to this area. This includes part of the southern portion of the land, specifically the Princess Walk Vaults, that was already listed on the Victorian Heritage Register.
The carrying amount following the revaluation at 30 June 2019 of freehold land was $207,000,000.
Derecognition
On 3 September 2018 the Melbourne Metro Rail Project took possession of a parcel of land on the north west corner of Federation Square, including the Melbourne Visitor Centre building, to construct a ‘Town Hall -
PAGE 105 Federation Square’ railway station entrance. The land will be leased by the State Government for the duration of the entrance construction. At the end of the lease a portion of the land will be compulsorily acquired under the Land Acquisition and Compensation Act 1986 (Vic). The compensation amount to be received by FSPL have yet to be finalised.
While the lease does not transfer the land to the lessor, the combination of the lease and the subsequent compulsory acquisition of the land are such that the relevant land will never be returned to FSPL, and in substance FSPL has lost control of that land on commencement of the lease. Therefore at the commencement the lease FSPL derecognised the carrying amount of that land (refer to note 4.1.2).
BUILDINGS AND IMPROVEMENTS
Valuation
A valuation was undertaken by Napier and Blakeley Pty Ltd on behalf of the Valuer-General Victoria effective as at 30 June 2016. The fair value ascribed by Napier and Blakeley Pty Ltd for the carrying amount of buildings and improvements, as represented by the current replacement cost, at 30 June 2016 is $334,944,000. Additions to buildings and improvements since 1 July 2016 are recorded at cost, which represents fair value.
A fair value assessment was conducted as at 30 June 2020, taking into consideration the Valuer-General Victoria (VGV) building indices that showed a cumulative 13.1% increase from 30 June 2016 to 30 June 2020. Financial Reporting Direction 103H Non-financial physical assets mandates that if the cumulative movement in the relevant fair value indicators since the last revaluation is greater than 10% a managerial revaluation shall be performed. FSPL had concerns in regard to increasing the valuation in the current economic environment, however elected to comply with the FRD and a management revaluation was made to increase the value of buildings by $38,104,364.
There is market uncertainty caused by the COVID-19 outbreak. The market affect of COVID-19 is unknown and therefore there is valuation uncertainty which may cause a material impact on the value of the land and buildings. The valuation uncertainty will likely affect inputs, assumptions and processes used in determining the asset values. The valuations may change materially over a short period of time.
Derecognition
The Melbourne Metro Rail Project construction works, as discussed in freehold land above, included demolishing the Melbourne Visitor Centre building. At the end of the lease FSPL will be receive compensation for the loss of the building under the Land Acquisition and Compensation Act 1986 (Vic). The compensation amount to be received by FSPL have yet to be finalised. FSPL derecognised the carrying amount of that building in 2019 (refer to note 4.1.2).
Plant, equipment and vehicles
Plant and equipment is are held at fair value.
Plant and equipment under lease are vehicles valued using the current replacement cost method. New vehicles are acquired and at times disposed of before the end of their economic life. The process of acquisition, use and disposal in the market is managed by VicFleet who set relevant depreciation rates during use to reflect the utilisation of the vehicles.
There were no changes in valuation techniques throughout the period to 30 June 2020.
For all assets measured at fair value, the current use is considered the highest and best use.
PAGE 106 FED SQUARE ANNUAL REPORT 2019 - 2020
Reconciliation of Level 3 fair value
Non-financial physical assets were all classified as Level 3 assets in the fair value hierarchy for the duration of the 2019 and 2020 financial year periods. Refer to Note 4.1.2 for the reconciliation of movements in the carrying amount of property, plant and equipment.
Sensitivity of fair value Valuation Valuation Range measurement to changes in Class Technique Technique (weighted average) significant unobservable inputs
A significant increase or decrease in the CSO adjustment and Victorian Land Market approach Market approach 40% and 30% Heritage Register adjustment would result in a significantly lower or higher fair value.
A significant increase or decrease in direct cost per Current Current replacement $1,174-$11,213/m2 Buildings square metre adjustment replacement cost cost ($3,941/m2) would result in a significantly higher or lower fair value.
A significant increase or decrease in the estimated 22-75 years Useful life useful life of the asset would (58 years) result in a significantly higher or lower valuation.
Plant, Cost per unit Current equipment and - - replacement cost motor vehicles Usefil life
Signifcant unobservable inputs remained unchanged from the 2019 financial year.
PAGE 107 8. OTHER DISCLOSURES INTRODUCTION
This section includes additional material disclosures required by accounting standards or otherwise, for the understanding of this financial report.
STRUCTURE
8.1 Ex-gratia expenses
8.2 Other economic flows included in net result
8.3 Contributed capital
8.4 Dividends
8.5 Remuneration of auditors
8.6 Responsible persons
8.7 Remuneration of executives
8.8 Related parties
8.9 Changes in accounting policies
8.10 Subsequent events
8.11 Australian Accounting Standards issued
8.12 Glossary of technical terms
8.1 Ex-gratia expenses There were no ex-gratia expenses greater than or equal to $5,000 during 2019-20 (2019: Nil) 8.2 Other economic flows included in net result Other economic flows are changes in the volume or value of an asset or liability that do not result from transactions. Other gains/(losses) from other economic flows include the gains or losses from:
• the revaluation of the present value of the long service leave liability due to changes in the bond interest rates; and
• transfer of amounts from the reserves to accumulated surplus or net result due to disposal or derecognition or reclassification.
PAGE 108 FED SQUARE ANNUAL REPORT 2019 - 2020
8.2.1 NET GAIN/(LOSS) ON FINANCIAL INSTRUMENTS
2020 2019 $ $
Revaluation of impairment of financial assets at amortised cost (76,572) 35,055
Bad debts written off unilaterally (17,076) (11,846)
Total net gain/(loss) on financial instruments (93,648) 23,209 8.3 Contributed capital
FSPL is a company wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer of Victoria is the Minister responsible for the State Holding in FSPL under the Deed.
The allocation statement dated 27 June 2003 approved by the Minister for Finance required FSPL to record the value of assets transferred to FSPL in 2002-2003 as a capital injection by the State Government as owners. The total amount of the contributed capital of $435,940,507 comprised $373,440,507 for buildings and improvements, plant and equipment, and $62,500,000 for land. The transfer was effective from 30 June 2003 and is in accordance with the Department of Treasury and Finance ‘Accounting and Financial Reporting Bulletin No.39 - Accounting for Contributed Capital’.
Consistent with the requirements of AASB 1004 Contributions, contributions by owners (that is, contributed capital and its repayment) are treated as equity transactions and, therefore, do not form part of the income and expenses.
Additions to net assets that have been designated as contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions to or distributions by owners have also been designated as contributions by owners.
The issued and paid-up capital is 1 share @ $1 (2019: 1 share @ $1).
The contributed capital during the year is nil (2019: Nil). The contributed capital since 1 July 2003 is $11,735,000. 8.4 Dividends
There was no provision for dividends or dividends paid for the year (2019: Nil). 8.5 Remuneration of auditors
2020 2019 $ $
Amounts paid or due and payable to the Victorian Auditor-General’s Office foraudit 39,000 38,000 of the financial statements
PAGE 109 8.6 Responsible persons
8.6.1 NAMES Minister The Hon. Martin Pakula MP, Minister for Tourism, Sport and Major Events Directors The Directors of FSPL during the year ended 30 June 2020 and as at the date of signing unless otherwise stated are: Ms Deborah Beale (Chair) Ms Kathleen Wilson Ms Pamela Mitchell Mr Patrick Conlon Mr Ari Suss Accountable Officer The Accountable Officer during the year ended 30 June 2020 and as at the date of signing are: Mr Jonathan Tribe, Chief Executive Officer (to 3 September 2019) Mr Xavier Csar, Chief Executive Officer (from 4 September 2019)
8.6.2 REMUNERATION
Income bands Total remuneration Base remuneration
2020 2019 2020 2019 No. No. No. No. $20,000 - $29,999 - 3 - 3
$30,000 - $39,999 4 2 4 2
$60,000 - $69,999 1 1 1 1
$80,000 - $89,999 - - 1 -
$110,000 - $119,999 1 - - -
$290,000 - $299,999 1 - 1 -
$350,000 - $359,999 - - - 1
$370,000 - $379,999 - 1 - -
Total number of responsible persons 7 7 7 7
Total amount $600,222 $592,479 $571,299 $570,007
The remuneration detailed above excludes the salaries and benefits the Portfolio Minister receives. The Minister’s remuneration and allowances is set by the Parliamentary Salaries and Superannuation Act 1968 and is reported within the Department of Parliamentary Services’ Financial Report. Directors’ income includes superannuation but not insurance premiums of $30,397 (2019: $20,923) paid by FSPL in respect of Directors’ and Officers’ Liabilities.
PAGE 110 FED SQUARE ANNUAL REPORT 2019 - 2020
Payments to other personnel
There were no payments to other personnel during the reporting period (2019: Nil) 8.7 Remuneration of executives
The number of executive officers, other than ministers and accountable officers, and their total remuneration during the reporting period are shown in the table below. Total annualised employee equivalents provides a measure of full time equivalent executive officers over the reporting period.
Remuneration comprises employee benefits in all forms of consideration paid, payable or provided by the entity, or on behalf of the entity, in exchange for services rendered, and is disclosed in the following categories.
Short-term employee benefits include amounts such as wages, salaries, annual leave or sick leave that are usually paid or payable on a regular basis, as well as non-monetary benefits such as allowances and free or subsidised goods or services.
Post-employment benefits include pensions and other retirement benefits paid or payable on a discrete basis when employment has ceased. Other long-term benefits include long service leave, other long service benefits or deferred compensation.
Termination benefits include termination of employment payments, such as severance packages.
2020 2019 Remuneration of executive officers $ $
Short-term employee benefits 666,282 752,834
Post-employment benefits 63,534 68,505
Other long-term benefits 3,126 5,155
Termination benefits 50,702 52,500
Total remuneration (a) 783,644 878,994
Total number of executives 5 5
Total annualised employee equivalents (b) 3.1 3.8
Notes: (a) All executive officers meet the definition of Key Management Personnel (KMP) of the entity under AASB 124 Related Party Disclosures and are also reported within the related parties note disclosure (Note 8.8). (b) Annualised employee equivalent is based on the time fraction worked over the reporting period.
PAGE 111 8.8 Related parties
FSPL is a company wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria.
Transactions with government-related entities
FSPL deals with a number of Victorian State Government entities in the course of conducting its operations. All transactions with related entities, unless specified, are at arm’s length.
Significant transactions with government-related enties are:
Details Disclosure
Tenancy rents and charges from National Gallery of Note 2.1 Summary of income Victoria (rent of cultural area is not at market rates) (Tenancy rents and charges $5,952,635) (2019: $5,875,197)
Tenancy rents and charges from Australian Centre for the Note 2.1 Summary of income Moving Image (rent of cultural area is not at market rates) (Tenancy rents and charges $4,820,691) (2019: $4,624,053)
Note 2.1 Summary of income Lease with Department of Transport for Melbourne Metro (Tenancy rents and charges $975,029) (2019: $776,234) Project Note 2.1.1 Finance lease interest income Note 5.1.1 Finance lease receivable
Grant of $500,000 from the Department of Jobs, Precincts Note 2.1 Summary of income (Grant $21,820) (2019: and Regions (DJPR) for the preparation of a business case $42,720) for FSPL. This was received in 2017 and partly used in 2017, Note 5.2 Payables (Advances $179,891) (2019: $201,711) 2018, 2019 and 2020
Advance from the Department of Jobs, Precincts and Regions (DJPR) as part of the Greener Government Note 6.1 Borrowings and the Cash flow statement Building Program. The advance is interest free and (Cash Flows from financing activities) repayable by 2023
Deposits with Treasury Corporation of Victoria (TCV) Note 6.4 Cash balances (Term deposits)
Interest income from Treasury Corporation of Victoria Note 2.1 Summary of income (TCV) (Interest income $0) (2019: $147,648)
Note 6.1 Borrowings and the Cash flow statement Loans from Treasury Corporation of Victoria (TCV) (Cash Flows from financing activities)
Interest paid to Treasury Corporation of Victoria (TCV) Note 6.1.2 Interest expense
PAGE 112 FED SQUARE ANNUAL REPORT 2019 - 2020
Key management personnel Key management personnel of FSPL includes the Responsible Persons (as disclosed in Note 8.6.1) and the following executive officers:
Name Position title
Sharon Pollard General Manager - Operations (to 8 December 2019)
Chief Operating Officer (from 9 December 2019 to 26 June 2020)
Matthew Howe Chief Operating Officer (from 1 June 2020)
General Manager - Commercial & Public Engagement Suzana Bishop (to 8 December 2019)
Chief Experience Officer (from 9 December 2019)
General Manager - Corporate Services (to 13 January William Blakeney 2020)
General Manager - Human Resources (to 8 December Cherilynne Kemp 2019)
2020 2019 Compensation of KMPs $ $
Short-term employee benefits 1,223,575 1,293,911
Post-employment benefits 106,463 119,907
Other long-term benefits 3,126 5,155
Termination benefits 50,702 52,500
Total remuneration (a) 1,383,866 1,471,473
Notes: (a) Total remuneration paid to KMPs employed as a contractor during the reporting period through an external provider has been reported under short-term benefits. (b) KMPs are also reported in the disclosure of remuneration of executive officers (Note 8.7).
Transactions with key management personnel and other related parties
Given the breadth and depth of State government activities, related parties transact with the Victorian public sector in a manner consistent with other members of the public e.g. stamp duty and other government fees and charges. Further employment of processes within the Victorian public sector occur on terms and conditions consistent with the Public Administration Act 2004 and Codes of Conduct and Standards issued by the Victorian Public Sector Commission. Procurement processes occur on terms and conditions consistent with the Victorian Government Procurement Board requirements.
PAGE 113 Outside of normal citizen type transactions with FSPL, the related party transactions that involved key management personnel, their close family members and their personal business interests are below. These transactions occurred during the normal course of business.
No provision has been required, nor any expense recognised, for impairment of receivables from related parties. No loans were made to key management personnel (2019: Nil). 8.9 Change in accounting policies
8.9.1 LEASES
This note explains the impact of the adoption of AASB 16 Leases on FSPL’s financial statements.
FSPL has applied AASB 16 with a date of initial application of 1 July 2019.
FSPL has elected to apply AASB 16 using the modified retrospective approach, as per the transitional provisions of AASB 16 for all leases for which it is a lessee. The cumulative effect of initial application is recognised in retained earnings as at 1 July 2019. Accordingly, the comparative information presented is not restated and is reported under AASB 117 and related interpretations.
Previously, FSPL determined at contract inception whether an arrangement is or contains a lease under AASB 117 and Interpretation 4 Determining whether an arrangement contains a lease. Under AASB 16, FSPL assesses whether a contract is or contains a lease based on the definition of a lease as explained in note 6.2.2.
On transition to AASB 16, FSPL has elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied AASB 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under AASB 117 and Interpretation 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under AASB 16 was applied to contracts entered into or changed on or after 1 July 2019.
Leases classified under AASB 117
As a lessee, FSPL previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to FSPL. Under AASB 16, FSPL recognises right-of-use assets and lease liabilities for all leases except where exemption is availed in respect of short-term and low-value leases.
On adoption of AASB 16, FSPL did not have any leases which had previously been classified as operating leases under the principles of AASB 117.
For leases that were classified as finance leases under AASB 117, the carrying amount of the right-of-use asset and lease liability at 1 July 2019 are determined as the carrying amount of the lease asset and lease liability under AASB 117 immediately before that date.
Leases as a Lessor
FSPL is not required to make any adjustments on transition to AASB 16 for leases in which it acts as a lessor. FSPL accounted for its leases in accordance with AASB 16 from the date of initial application.
PAGE 114 FED SQUARE ANNUAL REPORT 2019 - 2020
Impacts on financial statements
On transition to AASB 16, the only lease liabilities recognised related to liabilities previously classified as finance leases which totalled $23,002.
The adoption of AASB 16 did not have an impact on other comprehensive income and the statement of cash flows for the financial year.
8.9.2 REVENUE FROM CONTRACTS WITH CUSTOMERS
In accordance with FRD 121 requirements, FSPL has applied the transitional provisions of AASB 15 Revenue from Contracts with Customers, under modified retrospective method with the cumulative effect of initially applying this standard against the opening retained earnings at 1 July 2019. Under this transition method, FSPL applied this standard retrospectively only to contracts that are not ‘completed contracts’ at the date of initial application.
Comparative information has not been restated.
Note 2.1 includes details about the transitional application of AASB 15 and how the standard has been applied to revenue transactions.
The adoption of AASB 15 did not have an impact on other comprehensive income and the statement of cash flows for the financial year.
8.9.3 INCOME OF NOT-FOR-PROFIT ENTITIES
In accordance with FRD 122 requirements, FSPL has applied the transitional provision of AASB 1058 Income of Not-for-Profit Entities, under modified retrospective method with the cumulative effect of initially applying this standard against the opening retained earnings at 1 July 2019. Under this transition method, FSPL applied this standard retrospectively only to contracts and transactions that are not completed contracts at the date of initial application.
Comparative information has not been restated.
Note 2.1 includes details about the transitional application of AASB 1058 and how the standard has been applied to revenue transactions.
The adoption of AASB 1058 did not have an impact on other comprehensive income and the statement of cash flows for the financial year.
8.9.4 TRANSITIONAL IMPACT ON FINANCIAL STATEMENTS
There is no transition impact of first-time adoption of AASB 15, AASB 1058, AASB 16 and AASB 1059 on the comprehensive operating statement and balance sheet.
PAGE 115 8.10 Subsequent events
On 22nd August 2020 the Victorian Government released the ‘Federation Square Review 2020’ report. As part of the report the following items were announced:
• the Victorian Government will provide $20 million for asset maintenance and renewal works at Federation Square.
• Fed Square Pty Ltd has moved into the Creative Industries portfolio and the Minister is The Hon. Martin Foley MP, Minister for Creative Industries. 8.11 Australian Accounting Standards issued that are not yet effective
Current Reporting Period
Certain new and revised accounting standards have been issued but are not effective for the 2019-20 reporting period. These accounting standards have not been applied to the Financial Statements. FSPL is assessing the potential implications of these accounting standards which include:
• AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
• AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current
Future Reporting Periods
Several other amending standards and AASB interpretations have been issued that apply to future reporting periods, but are considered to have limited impact on FSPL’s reporting.
• AASB 17 Insurance Contracts
• AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities (Appendix C)
• AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
• AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework
• AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform
• AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia
• AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities
PAGE 116 FED SQUARE ANNUAL REPORT 2019 - 2020
8.12 Glossary of technical terms
The following is a summary of the major technical terms used in this report.
Amortisation is the expense that results from the consumption, extraction or use over time of a non-produced physical or intangible asset. This expense is classified as an ‘other economic flow’.
Borrowings refers to interest bearing liabilities mainly raised from public borrowings raised through the Treasury Corporation of Victoria, finance leases and other interest bearing arrangements. Borrowings also include non-interest bearing advances from government.
Commitments include those operating, capital and other outsourcing commitments arising from non-cancellable contractual or statutory sources.
Comprehensive result is the amount included in the operating statement representing total change in net worth other than transactions with owners as owners.
Depreciation is an expense that arises from the consumption through wear or time of a produced physical or intangible asset. This expense is classified as a ‘transaction’ and so reduces the ‘net result from transaction’.
Effective interest method is the method used to calculate the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset or, where appropriate, a shorter period.
Employee benefits expenses include all costs related to employment including wages and salaries, fringe benefits tax, leave entitlements, redundancy payments and defined contribution superannuation plans.
Ex-gratia expenses mean the voluntary payment of money or other non-monetary benefit (e.g. a write-off) that is not made either to acquire goods, services or other benefits for the entity or to meet a legal liability, or to settle or resolve a possible legal liability or claim against the entity.
Financial asset is any asset that is:
(a) cash;
(b) an equity instrument of another entity;
(c) a contractual right:
– to receive cash or another financial asset from another entity; or
– to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or
(d) a contract that will or may be settled in the entity’s own equity instruments and is:
– a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments; or
– a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments.
PAGE 117 Financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial liability is any liability that is:
(a) a contractual obligation:
– to deliver cash or another financial asset to another entity; or
– to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity; or
(b) a contract that will or may be settled in the entity’s own equity instruments and is:
– a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments; or
– a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments. For this purpose, the entity’s own equity instruments do not include instruments that are themselves contracts for the future receipt or delivery of the entity’s own equity instruments.
Financial statements comprises:
(a) a balance sheet as at the end of the period;
(b) a comprehensive operating statement for the period;
(c) a statement of changes in equity for the period;
(d) a cash flow statement for the period;
(e) notes, comprising a summary of significant accounting policies and other explanatory information;
(f) comparative information in respect of the preceding period as specified in paragraph 38 of AASB 101 Presentation of Financial Statements; and
(g) a statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements in accordance with paragraphs 41 of AASB 101.
Interest expense represents costs incurred in connection with borrowings. It includes interest on advances, loans, overdrafts, bonds and bills, deposits, interest components of finance lease repayments, and amortisation of discounts or premiums in relation to borrowings.
Interest income includes unwinding over time of discounts on financial assets and interest received on bank term deposits and other investments.
Leases are rights conveyed in a contract, or part of a contract, the right to use an asset (the underlying asset) for a period of time in exchange for consideration.
PAGE 118 FED SQUARE ANNUAL REPORT 2019 - 2020
Lease modification refers to where there is a change in the scope of a lease, or the consideration for a lease, that was not part of the original terms and conditions of the lease. For lessors where the lease is an operating lease such lease modifications are treated as new leases from the effective date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.
Net operating balance or net result from transactions is a key fiscal aggregate and is revenue from transactions minus expenses from transactions. It is a summary measure of the ongoing sustainability of operations. It excludes gains and losses resulting from changes in price levels and other changes in the volume of assets. It is the component of the change in net worth that is due to transactions and can be attributed directly to government policies.
Net result is a measure of financial performance of the operations for the period. It is the net result of items of revenue, gains and expenses (including losses) recognised for the period, excluding those classified as ‘other non-owner movements in equity’.
Net worth is calculated as assets less liabilities, which is an economic measure of wealth.
Non-financial assetsare all assets that are not financial assets. It includes inventories, land, buildings, infrastructure, plant and equipment and intangibles.
Operating result is a measure of financial performance of the operations for the period. It is the net result of items of revenue, gains and expenses (including losses) recognised for the period, excluding those that are classified as ‘other non-owner movements in equity’. Refer also ‘net result’.
Other economic flows included in net result are changes in the volume or value of an asset or liability that do not result from transactions. In simple terms, other economic flows are changes arising from market remeasurements. They include gains and losses from disposals, revaluations and impairments of non-current physical and intangible assets; and fair value changes of financial instruments.
Other economic flows – other comprehensive income comprises items (including reclassification adjustments) that are not recognised in net result as required or permitted by other Australian Accounting Standards. They include changes in physical asset revaluation surplus.
Payables includes short and long-term trade debt and accounts payable, grants, taxes and interest payable.
Receivables include short and long-term trade credit and accounts receivable, accrued investment income, grants and interest receivable.
Sales of goods and services refers to income from the direct provision of goods and services and includes fees and charges for services rendered and sales of goods and services. It also includes rental income under operating leases.
Supplies and services generally represent cost of goods sold and the day to day running costs, including maintenance costs, incurred in the normal operations of FSPL.
Transactions are those economic flows that are considered to arise as a result of policy decisions, usually an interaction between two entities by mutual agreement. They also include flows into an entity such as depreciation, where the owner is simultaneously acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Taxation is regarded as mutually agreed interactions between the government and taxpayers. Transactions can be in kind (e.g. assets provided/given free of charge or for nominal consideration) or where the final consideration is cash.
PAGE 119 DIRECTORS’ DECLARATION
The Directors declare that:
(a) the financial statements and associated notes comply with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
(b) the financial statements and notes give a true and fair view of the company’s financial position as at 30 June 2020 and of its performance, as represented by the results of its operations and its cash flows, for the year ended 30 June 2020;
(c) in the Directors’ opinion:
(i) the financial statements and notes are in accordance with theCorporations Act 2001, and
(ii) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(d) at the date of signing these statements the Directors are not aware of any circumstances that would render any particulars included in these statements misleading or inaccurate.
This statement is made in accordance with a resolution of the Directors.
Melbourne
8th September 2020
DEBORAH BEALE AM, CHAIR
PAGE 120 FED SQUARE ANNUAL REPORT 2019 - 2020
PAGE 121 CONTACT INFORMATION
FED SQUARE PTY LTD ABN: 99 085 731 479 ACN: 085 731 479
Published by Fed Square Pty Ltd Melbourne, Victoria Australia October 2020 Also published on fedsquare.com
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