Fed Square Pty Ltd ANNUAL REPORT 2018-2019 Contents

04 About Fed Square Fed Square’s Purpose Vision Mission TRADITIONAL OWNER Values ACKNOWLEDGEMENT Service Goal Message from the Chair and CEO Fed Square proudly acknowledges that Federation Square is About Fed Square situated on the traditional lands of the lands of the Boon Wurrung Corporate Governance and Woiwurrung peoples of the Kulin nation and pays respect to their Elders past and present. Fed Square Pty Ltd Functional Structure Fed Square’s Board 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 14 The Year’s Activity of Aboriginal people and communities to Victorian life and how this enriches us. We embrace the spirit of reconciliation, working Strategic Imperatives towards the equality of outcomes and ensuring an equal voice. 1. Enhancing Fed Square’s reputation as a globally recognised place for meaningful, visitor-centred experiences. 2. Growing the Fed Square family exponentially, by connecting people to the enduring power of community. 3. Ensuring a sustainable future for Fed Square. 4. Building a social enterprise culture that is engaged, aligned and committed to delivering the Strategic Plan 2018-21. 5. Prepare Fed Square to open up to the Yarra River and accommodate new and innovative offerings to enrich the precinct in an integrated way with its cultural tenants.

38 The Year Ahead

42 Five Year Financial Summary

44 Key Performance Indicators

46 Statement of Corporate Governance

54 Directors’ Report

57 Financial Report

110 Contact Information

2 | FED SQUARE 2018-19 ANNUAL REPORT | 3 About Fed Square

To manage and develop Fed Square to Mission actively support and reflect Melbourne’s ABOUT pre-eminent civic and cultural strengths. Fed Square desires to be an iconic destination that delivers a memorable FED visitor experience. Community Commitment Innovation Values • Aspiring to help foster a stronger • Creativity in bringing new ideas to life and healthier society • Boldness in applying innovation to the • Support for our diverse community business SQUARE • Inclusivity through accessibility and the • Flexibility to embrace change and adapt promotion of harmony and engagement to new challenges

Integrity Teamwork • Honesty and transparency in all our • Pride in our work and shared results, practices including with contractors and • Trustworthiness in the sincerity of our stakeholders actions and dealings • Respect for each other and our differing • Accountability in delivering on personalities and styles expectations and outcomes • Support for each other and sensitivity to individual interests and priorities Leadership • Resilience in working to achieve our goals • Inspiration through passion and • Balance combining hard work with a animated influence fulfilling personal life The Civic and Cultural Charter outlines • to communicate the City’s leadership in • Commitment to quality service, systems, Fed Fed Square’s purpose as achieving the contemporary ideas and expression; experiences, safety and sustainability following objectives for Victoria: • to provide a focal point for arts and • Efficacy as a goal for each individual Square’s • to provide a stimulating, educational, cultural festivals and activities and • High performance which is respected in comfortable and entertaining destination important civic commemorations; business and the community Purpose venue to Victorians, and to interstate and • to reflect Melbourne’s cultural diversity international visitors; in its overall operations and programming; • to represent Melbourne as a leading and To be recognised for providing exceptional • Establish a reputation for excellence city for the arts and for innovation • to attract local, national and Service customer service that will inspire visitors, • Be a positive ambassador for Victoria and creativity in all forms of cultural international visitors to Fed Square. customers and clients to return time and In delivering this service, Fed Square will be: expression; Goal again. • Welcoming • Helpful Fed Square’s core service commitments • Respectful are: • Accountable

To be internationally recognised as • Providing consistent, reliable customer Vision Melbourne’s inspirational public place service and value where visitors come to celebrate, learn, • Ensuring that what we do, we do with innovate and connect. pride

4 | FED SQUARE 2018-19 ANNUAL REPORT | 5 About Fed Square | 7 promote and celebrate Fed Square and its treasured its and treasured Square Fed celebrate and promote Fed particular, hearts In the place in Melburnians. of responsible our acknowledge to like would Square for Minister Martin Hon MP, the Pakula Minister predecessor his and Sport Events Major and Tourism, cultural key Melbourne, City of the Eren, John Hon the Australia NGV Centre: Potter Ian The partners – ACMI, partners. commercial and KHT, (NGVA), the of commitment ongoing also the to you Thank direction strategic providing in Board Square Fed Fed Square at staff the and governance strong and to passion with dedication and worked have who and safe a vibrant, remains Square Fed that ensure as as well those Melburnians, all space for welcoming city. the visit who Mr Jonathan Tribe Jonathan Mr CEO *This data is based on ticketed events and estimated daily footfall. of n o hile icipati ruction st . opportunity to thank n a Ms Deborah Beale AM AM Beale Ms Deborah Chair . (MREP) elbourne Renewable Energy Project re M a Yarra Building ritage Victoria determined that the u in ant econfigured Alfred Deakin Building th several other organisations i q on ed Square has undertaken major c r he all the Fed Square partners that continue to support, redevelopment may not occur as proposed, the redevelopment may not occur as improvements to the Alfred Deakin Building will enable Fed Square to accommodate additional tenants capable of strengthening vibrancy of the S The next 12 months for Fed Square promise to be transformative. In addition to the government review works will be taking several key mentioned earlier, These include place over the course of the next year. the refurbishment of ACMI and ongoing construction of a new underground station entrance at Fed Square by Rail Projects Victoria. The Annual Report provides Sustainability has remained a key focus for Sustainability has remained a key most notable example with the Fed Square this year, electricity through being the supply of Fed Square’s t Fed Square now from January 2019. This means that farm in the purchases Green Power from a wind entered into state’s South West under an agreement w F projects within the precinct to improve potential tenants in accommodation for existing and a Building site. W the redevelopment of the Yarra He

nd nts ve ecinct e quare pr ast uilding. p he enants a ed S lbourn he n t overnment rust (KHT) rust (KHT) porting e T g r t rganisations tio f Me o ve nd o o osi gining a square that ransport b t xisting nables F a e p ity ecinct. with nd he T ith s national reim ips he C f t enants t he pr nter th i or t o ide a takeholders nnovation e wi nd a sitation t ltural . The $5.4 million, five-storey digital five-storey million, $5.4 . The cu 7 w elationships ith astern s a tional e f spirations d artnership s mmunity, na ncrease vi n p o e-of-the-art i c o i ive n tat he ctivities. the installation and unveiling of the digital façade, façade, digital the of unveiling and installation the s , regularly meeting with the National Gallery of National the with meeting , regularly r find ways for mutual collaboration. In addition to addition In collaboration. mutual for ways find th reflects and serves the community. t th o orthern a osted i hat share a commitment to This showcase artto bespoke content, and programs stream l Square. Fed to people of thousands attracting working closer form has to sought Square Fed w relationships yea Moving the for Centre Australian the (NGV), Victoria Heritage Koorie the and Image (ACMI) t b announced in 201 in announced the wrapping 2018, August in wasscreen revealed LED n to strengthening r Within this context, the Victorian Government Government Victorian context, the this Within April in announced Square, Federation of Review engage an opportunity a conversation is to in 2019, wi best the Square. forward consider and Fed path for of terms the that noting review, the welcome We strategic the with well align review the for reference Fed and organisation, the for priorities and direction project Review the with closely be working will Square supports the conversation the that ensure to team meets that Square Fed for a vision of development Victorians’ a reputation Square’s Fed enhancing to initiative A key was events cultural Melbourne iconic broadcastand other and a a two-year also developed Square Fed 2018, In the ensure strategy to program framework and Fed at high-quality delivery of events continued t Square has framework This heart city. the of as cultural the events successful, highlight proven with already Prix 1 Grand Formula the of launch assuch global the event Village Christmas season, the and Winter the h partners, Fed Square has also begun seeking new partnerships and sponsorsh

6 | FED SQUARE 2018-19 ANNUAL REPORT While Victorians, Australians and international visitors Victorians, and international Australians While the appreciate fully not may they Square, Fed know is Square Fed precinct. the of challenges unique answerable an independent, company, commercial Sport Events Major and Tourism, for Minister the to financed is role its public that an expectation with leases the and of revenue commercial through and organisations not-for-profit the institutions, With home. Square businesses call Federation that significant revenue, for generating avenues limited expectations accesscommunity for protection, costsincreasing and associated affordability and innovative Square’s Fed of maintenance with model requires operating Square’s Fed infrastructure, a successful these of important, balancing at but times objectives. uncommercial, Fed Square remains a critical part of the cultural part a critical cultural the remains of Square Fed year this captured insights Visitor Melbourne. of fabric and well-known remains Square Fed that revealed people 90% of with public, amongst the well-loved 86% and Square Fed of knowing nationally surveyed space to the visiting recommend would they stating Square Fed Furthermore, tourists. and friends family, with attraction, most visited be Victoria’s to continues hosting year the during million* 9.7 of visitation annual of one 2018-19 making days, 2,560 than more event history the of busiest in most years and the varied Fed Square. It is a pleasure to present the Annual Annual a the It pleasure present is to Fed which in a year 2018-19, Report for of the Square captured the imagination ascommunity both quintessentially ongoing of need in and Victorian city the great transformation-like the of course the In serves. it which Board the and Management year progress significant on achieved – Square Fed at projects key several both

THE CHAIR AND CEO AND THE CHAIR MESSAGE FROM FROM MESSAGE ABOUT FED SQUARE SQUARE FED ABOUT About Fed Square | 9 Operations Purpose provide To services for the management and maintenance of the asset and facilities. Provides oversight for the implementation of the live events venue and program supervision. Functions include: • Building Services Essential• Services • Environmental Services Security• • Cleaning • OH&S Maintenance • • Project Management • Tenancy Management • Program Operations Supervision Event • Back of House Back of Treasurer Board Nominations and Board Nominations Department of Treasury and Finance Executive Remuneration Committee Remuneration Executive Functions Functions include: • Engagement and Retention • Leadership Capability Performance• and Talent Management Remuneration • Benefitsand Recruitment • • HR Policy and Procedure • Return to Work • Employee Relations Human Human Resources Purpose embed andTo continually people enhance capabilities and organisational performance across all areas of organisationthe with a strong focus. commercial Board Administration Minister for Tourism, Tourism, for Minister Sport and Major Events Sport Major and Corporate Services Purpose Functions Functions include: • Corporate Planning • Finance • Business Improvement Reception • Administration • • IT and Multimedia support • Legal Service Customer • • Payroll To provide internalTo services and support to the management and administration of organisation.the

Finance, Audit Finance, Commercial Commercial and Public Engagement Purpose Functions Functions include: Commercial • Partnerships • Marketing Communications • and Stakeholder Engagement • Venue Hire • Event Coordination • Public Programming • Community To conceptualiseTo and deliver visitor exceptional and experiences innovative digital programming that engages the public according to the civic and cultural expectations of Fed Square. and Risk Committee Risk and Department of Jobs, Department Jobs, of Precincts and Regions Front of House of Front FED SQUARE PTY LTD PTY LTD SQUARE FED STRUCTURE FUNCTIONAL The Minister for Tourism, Sport and Major Events has State Sport Events Major and Tourism, for Minister The portfolioGovernment responsibility Square. for Fed also and has its Constitution, by governed is Square Fed was jointly Charter that Cultural and Civic the to regard and agreed Government and Victorian the developed by project. Square Fed the of inception the at Melbourne City of Charter recognises Melbourne’s and Cultural Civic The pre-eminence its as for creativity a centre and innovation, successful and diverse festivals, arts its cultural cultural and the popularity and beautydiversity, its of and gardens river, contemporary for focal a new for point desirability the and and activities. civic cultural Charter the Square, Fed of purpose the asAs well detailing and requirements outcomes, implementation details key Square. Fed of expected principles operating its and broad-reaching role diverse Square’s Because Fed of interactsgovernment with Fedsignificance, Square Department particularly the andentities, Jobs, Precincts of portfolio on Department matters, the and (DJPR) Regions State the to relation in (DTF) Finance and Treasury of DJPR, Within company. the in shareholding Government’s Sport Visitor and Creative, the with liaises Square Fed assisting with the to view Division implementing in Economy Government. of behalf on policies strategic the supported is by that Directors has of a Board company The “smallof a framework Within staff. professional of a team has assembled Square a team Fed execution”, big footprint, FTE staff. 49.7 of contracts services Square Fed as such security, cleaning, car parkingaudiovisual, and property management. commitmentThese service Square’s Fed share providers visitor great delivery the and of serviceto excellence experiences.

8 | FED SQUARE 2018-19 ANNUAL REPORT Corporate Governance State by owned wholly is Square) Pty (Fed Square Fed Ltd State of the of behalf on trustee as custodian Limited Trustees State Investment the to pursuant held is share The Victoria. for responsible Minister the is Deed Treasurer the and Trust Deed. the under Square Fed in State Holding the Despite the challenges of Fed Square’s operating conditions, operating Despite Square’s Fed of the challenges more has welcomed Square 2002 Fed in opening since part become and an integral visitors of million 100 than as and recognised is and internationally Victoria Melbourne spaces. public great world’s the of one not-for-profit organisations and organisations businesses that call not-for-profit car fees, home, parking third-party Square Federation It usesevents. these revenues office to box and hire venue range a broad accessible and to available Square Fed make enrichthat organisations and community not-for-profit of and experience. civic cultural Victoria’s When compared to other major public squares around the around squares public major other to compared When model funding the of terms in unique is Square Fed world, globally squares comparable While operates. it which under from funding dedicated and regular of some level receive public and its operations funds Square Fed government, leases through delivery with the institutions, primarily Fed Square is a 5.2 hectare precinct comprising the main the a 5.2 comprising is hectare precinct Square Fed plaza, performance external spaces, and internal and event cafés, of range a diverse including 30 tenancies over and SBS ACMI, bars, experiences, restaurants, NGVA, tourism Heritage Special and Koorie the Broadcasting Service) (the and coordination the for responsible is Square Fed Trust. tenancies, self-governing management Square’s Fed of all and space, public all of marketing and programming aspects asset of management development. and Over the past 17 years, Fed Square has welcomed more has welcomed Square past years, the Fed Over 17 and visitors establishedthan 100 million itself as significant civic and as cultural a place Victoria and of Melbourne to as and globally beingexpression. recognised is It nationally the in squares public loved and mostamongst the visited world.

FED SQUARE FED SQUARE ABOUT ABOUT and commercial activities around the City’s major public square. square. public major the around City’s and activities commercial an inspirational precinct which concentrates community, cultural cultural community, concentrates precinct which aninspirational Federation Square (known as Fed Square) is Melbourne’s heartbeat, Melbourne’s is as Square) Fed (known Square Federation About Fed Square | 11 Mr Ari Suss Ari Mr 2018) 1 August (Appointed Ari Suss is CEO of Fox Special Projects, part of the part the of Projects, Special Fox of CEO is Suss Ari Group, Linfox the of arm investment family private also a Board is Ari 2004. in company the joining Australia. Airport Avalon of Member adviser a senior was Ari 2004, and 1999 Between this During Bracks. Steve Premier former to the in advice and policy in specialised he time, areas of infrastructure transport, development, and affairs multicultural projects, ports, major parliamentary strategy. as role his in also commenced Ari 2011, In General Australian Manager the of Linfox-owned a 1000-hectare Centre, Research Automotive Victoria. Anglesea, in facility test vehicle and Director a appointed was Ari 2015, October In Water. Board Murray Member Goulburn of and Policy Public in degree has a Master’s Ari isManagement a from Monash University, of Institute Australian the of member graduate executive has completed and Directors Company School. Business Harvard at studies Ms Pamela Mitchell Mitchell Ms Pamela Pam Mitchell is a Chartered Accountant with with Accountant a Chartered is Mitchell Pam the experienceextensive establishment, in management financial documentation, and funds investment property and of reporting management businesses and superannuation size medium and small of a range in funds and not- enterprises the government corporate, in sectors. for-profit of a Director non-executive Pam iscurrently the of a member and Limited Trustees State Committee the of Victorian Government’s Audit Regions. and Precincts Jobs, of Department the for Committee Audit the chairs also She Agency. Safety Nuclear and Radiation Australian She was Services thea of Emergency Director and as roles many has held and Board Super State in Secretary Company and Officer Financial Chief property sectors. and investment the Patrick Conlon is a former South Australian Australian South a former is Conlon Patrick of district electoral the represented who politician Assembly of House Australian South the in Elder Party Labor from Australian the of as a member Transport, for Minister was He 2014. to 1997 Minister for Infrastructure, and Minister for Government of Leader as the as well Energy, 2005, early Until House. Lower the in Business wasPatrick also Services Emergency Minister. 2002 between portfolios many served in Patrick including member, cabinet as a senior 2013 and Police, Emergency Enterprises, Government State/Local Relations, Services, Industrial and Relations, Urban Housing Government Infrastructure. and Transport and Development, practised Patrick Parliament, from retiring Since own his opening before Ellison Minter at law consultancy. Mr Patrick Conlon Mr Patrick

10 | FED SQUARE 2018-19 ANNUAL REPORT On 26 January 2019, Chair of the FSPL Board Board FSPL the of Chair 2019, January 26 On (AM) as a Member awarded was Beale Deborah the Generalin the of Australia Order Division of public and business the to service significant for Victoria. of community the to and sectors, Deb Beale AM has a Bachelor of Commerce Commerce of has a Bachelor AM Beale Deb a Graduate Melbourne, of University the from from Australia of the SecuritiesDiploma Institute from Administration Business of a Master and Melbourne Business School. Deb began her careerworking industry the finance in shewhere a decade. over for Lynch Merrill by employed was she where & Young Ernst to moved then She specialised and risk management. governance in a serve on to continues has also served and Deb and not- private public, government, of number includes experience broad Her boards. for-profit public governance, corporate finance, of areas the andrelations risk management.

Ms Deborah Beale AM AM Beale Ms Deborah Chair FED SQUARE’S BOARD BOARD FED SQUARE’S ABOUT FED SQUARE SQUARE FED ABOUT About Fed Square | 13 Committee Membership Committee and Risk Audit Finance, Committee Chair Mitchell, Ms Pamela AM Beale Ms Deborah Wilson Ms Kathy Mr John Lee Board and Nominations Remuneration Executive Committee Chair Wilson, Ms Kathy AM Beale Ms Deborah Mr Leslie Williamson 2019) May 31 (To Mr John Lee Mr John Lee, Co-Opted Lee, John Mr Of Finance, Member Committee, Risk and Audit and Nominations Board and Remuneration Executive John Lee is a Chartered Accountant and and Accountant a Chartered is Lee John Diploma has a Graduate John consultant. Institute Australian the from Directors) (Company Associate an is and (AICD) Directors Company of Associate also an is John AICD. of Member and ANZ Accountants, Chartered of Member Studies Business of Diploma has a Fellowship University. from RMIT (Accountancy) Kathy Wilson is the Principal of Kathy Wilson Wilson Kathy of Principal the is Wilson Kathy property law, in has a background Kathy Legal. has and law, succession and litigation commercial and 25 litigation years’over in experience advising and wills asset structuring, resolution, dispute matters. andsuccession guardianship planning and boards of a number has servedon Kathy and not-for-profit private, the in committees sectors. government the of director a non-executive presently is Kathy Institute the and Limited Victoria of Institute Law of a member is She Limited. Executives Legal of Directors, Company of Institute Australian the in specialist accredited mediator, accredited an and estate trust a qualified and estates and wills practitioner. Ms Kathleen Wilson Ms Kathleen

12 | FED SQUARE 2018-19 ANNUAL REPORT Les was made a fellow of Engineers Australia Australia Engineers of a fellow made was Les technology using in has expertise and 2010 in delivering and change cultural support to operational success. Les had held various roles over his 13-year career career 13-year his over roles various held had Les in spent years three including Ericsson, with and 1998 in Systems Cisco joined He Europe. as roles leadership various in years 14 spent the throughout and Australia in President Vice change country-wide leading region, Pacific Asia agendas relevance market term long ensure to promise the upon delivering success, and and led Les recently Most Economy. Internet the of Citrix, for operations Zealand New Australia the drive software to of provision the in a leader workplace productivity andinnovation. Les Williamson has been a leader in the the in a leader has been Williamson Les technology and communications information roles various with 25 years, over for industry (ICT) He Australia. and Pacific Asia Sweden, based in with University Monash Chisholm from graduated Engineering. Electronic in a degree

Mr Leslie Williamson 2019) May 31 (To FED SQUARE’S BOARD BOARD FED SQUARE’S ABOUT FED SQUARE SQUARE FED ABOUT emerging operating environment. The process identified four primary objectives to be included STRATEGIC in the Plan: 1. Reimagining Fed Square so that it provides a IMPERATIVES relevant and vital part of an iconic Melbourne City destination and experience. Since opening in 2002, the operating conditions facing 2. Positioning Fed Square amongst key Fed Square have fundamentally stakeholders as a critical asset and infrastructure that is essential to Melbourne and Victoria’s changed, necessitating continued future. THE assessment of the strategic direction of the organisation. 3. Pursuing innovations that will increase exposure, use and revenue flows for Fed Square. In 2018, the Fed Square Board commissioned YEAR’S a corporate planning process to provide an 4. Ensuring the financial sustainability of Fed overarching blueprint for the next four years. The Square into the future. 2018-2021 Corporate Plan was created through a detailed review of Fed Square’s current and

ACTIVITY The public enjoys the Australian Open on the Digital Façade at Fed Square

14 | FED SQUARE 2018-19 ANNUAL REPORT | 15 AboutThe Fed Year’s Square Activity THE YEAR’S ACTIVITY The resulting 2018-2021 Corporate Plan focused on five key strategic imperatives that encapsulate the essence of the organisation, the challenges it faces, and the developments required over the coming years to achieve the set objectives.

1. 2. 3. 4. 5. Enhancing Growing Ensuring a Building Prepare Fed Square Fed Square’s the sustainable a social to open up to the reputation Fed Square future enterprise Yarra River and as a globally recognised place family for Fed Square. culture accommodate new for meaningful, visitor-centred Ensure the sustainability of the experiences. exponentially, by connecting that is engaged, aligned people to the enduring power of organisation and physical site by and committed to and innovative Promote and attract visitation community. gaining financial viability over the delivering the Strategic offerings through Melbourne’s national long term. In doing so, FSPL will Plan 2018-21. identity as Australia’s cultural and Through Fed Square, connect utilise contemporary practices that to enrich the precinct in sporting capital, and Fed Square’s people through a sense of belonging ensure it minimises the impact of Deliver a social enterprise culture an integrated way with critical role in Melbourne’s civic and worth that encourages them to its operations on the environment, and, in turn, a highly engaged, its cultural tenants. visit both in person and virtually, to productive and cohesive team, and cultural life, as a destination for whilst maintaining visitor safety In 2018-19 the principal actions in engage with and be part of the Fed committed to ongoing organisational surprising and inspiring art, sport, and security. this strategic imperative were to Square family. transformation and implementation entertainment and cultural prepare to execute the integration of shared objectives. experiences that will excite and of the Apple Global Flagship delight visitors throughout the year. Store within the precinct.This was designed to allow access to the Yarra River and drive greater visitation and global recognition. As outlined below, this strategic imperative will not progress following a decision by Heritage Victoria. A number of accommodation configurations have been completed and will enable improvements to the precinct’s accommodation for both new and existing tenants into the future.

Rafael Nadal addresses media and the public at Fed Square ahead of the Australian Open

16 | FED SQUARE 2018-19 ANNUAL REPORT | 17 The Year’s Activity THE YEAR’S ACTIVITY 1 – ENHANCING FED SQUARE’S REPUTATION AS A GLOBALLY RECOGNISED PLACE FOR MEANINGFUL, VISITOR-CENTRED EXPERIENCES.

Fed Square is known space for artistic expression, as demonstrated by Sally Gabori’s All The Fish being brought to for having hosted life as a progressive digital artwork, and some incredible visitor initiatives to give Deakin University, RMIT and Monash University to showcase student works to experiences over the years, visitors to the square. and this year Fed Square • Giving sports-lovers plenty to cheer about with a Summer of Sport program from January Mirdidingkingathi Juwarnda Sally Gabori’s undertook significant All The Fish on the Digital Façade initiatives to ensure this to February 2019, with sports including the Australian Open 2019, the AFLW, AFLX, the New Program Strategy The programming approach will see Fed Square reputation continues to NBA All-Star Weekend, SuperBowl LIII and the establish anchor platform themes including grow. English Premier League. The Digital Façade Fed Square has successfully produced high- curated blocks of time with set themes that also showcased the 2018 AFL Grand Final, with quality cultural events over the years to attract will enable the team to create and promote a Digital Façade Launch 3,500 people heading to Fed Square to enjoy the visitation and position Fed Square as the heart of kaleidoscope of events and partnerships to match. Fed Square also collaborated with Racing Melbourne, and this year the organisation wanted provide a coordinated experience across the Victoria to develop a content piece about the precinct. An impressive five-storey digital LED screen was to determine how to raise the bar even further. history of horse racing, and worked with the AFL In 2018, Fed Square commissioned a study to launched at Fed Square in August 2018, marking to curate a three-hour photo exhibition of AFLW The programming will be divided into content the start of a reimagined, future-focused precinct. understand the relationship visitors have with and AFL players, history and Behind-the-scenes the precinct and support a new direction for pillars. Fed Square identified several key insight. organisation categories to target for program Uniquely wrapping around the northern and programming, aiming to enhance Fed Square’s • Curating a 2019 International Women’s Day partnerships over the next two years: Local eastern side of the Transport building, the reputation as a globally recognised place for program that celebrated the occasion by giving meaningful visitor-centred experiences. and State Government, cultural tenants, interactive Digital Facade is the first of its kind in visitors to the precinct and followers on social Universities, Foundations, community artists Australia and shows works from digital artists and media a chance to be seen and heard on the Fed Square engaged professional advice at the and other cultural organisations. The content cultural groups, screens major sporting events Digital Façade. pillars prioritised for the next two years are: and public announcements, acts as an exciting end of December 2018 to assist Fed Square in • In collaboration with Ramus and the Arts & Community, Health & Wellness, Sport communications asset for commercial partners, creating a program framework that balances Department of Premier and Cabinet, presenting commercial and cultural objectives and reflects (including e-sport and games) and Knowledge and engages with visitors to Fed Square. The $5.4 an Armistice Day Digital Artwork displayed on (eg. hackathons, seminars and events aimed at million Digital Facade is made up of over 850 LED what is important to Victorians in their square. the Digital Façade to commemorate the 100-year They conducted a workshop with cultural tenants enabling community learning). panels and 4 million pixels, creating a state-of- anniversary. the-art public screen for Fed Square. and internal and external stakeholders to • Giving kids a chance to play video games on the understand expectations, and explore and design massive digital screen during the school holidays. Since its launch, the Digital Façade has been used new opportunities for partnerships to be built into for a wide variety of purposes, including: Fed Square programming. • Providing a vibrant, exciting, and everchanging

18 | FED SQUARE 2018-19 ANNUAL REPORT | 19 The Year’s Activity

others reached via targeted advertisements. Website More than 1300 responses recorded, providing RESPONDENTS TOLD US: Development Fed Square with a more comprehensive understanding of a wide audience of Melburnians. Fed Square has been developing an updated Consider Favourite events destination tourism website. The website will be As well as tracking audience demographics and 29% 35% inspired by the websites of other culturally iconic psychographics, the survey asked respondents Fed Square an are “Food and Aged 35-44 Earn a household Drink Festivals” Australian destinations such as the Sydney Opera about their perceptions of and preferences for income of $100k - House, National Gallery of Victoria (NGV) and “Iconic and “Live Music”, Fed Square. The visitor trends snapshot provides $150k Arts Centre Melbourne. more detail of the findings but some key findings Building/ followed by Features for the new website will include: about perceptions of Fed Square were: “Performances”, Venue” “Art” and • Responsive design for full functionality to • A vast majority of respondents Mostly and “Tourist mobile devices, tablets and desktop computers, (86%) expressed a positive sentiment about visit Destination” “Family in recognition of the increasing amount of mobile Fed Square. 42% online traffic. on Weekends Activities” between Work full-time • A state-of-the-art automated, self-learning • An overwhelming number of respondents customer service Chatbot, operating 24 hours a (86%) would recommend visiting Fed Square 1:00pm – 6:00pm. day. The service will be able to assist with general to family, friends and tourists. Visit primarily consumer enquires, including wayfinding, retail, “because of a restaurants and bar information and more. • Melburnians largely recognise Fed Square specific event” 33% • Sophisticated, interactive way-finding maps. as a meeting place that is the iconic heart of followed by Spend $20-$50 on The Mapbox technology being implemented Melbourne. 28% average each visit. will enable to creation of sophisticated map Visit Fed Square “to enjoy interactivity and wayfinding to enhance visitor Common responses to the survey identified 10+ times per year usability. Fed Square as: a loved part of Melburnians’ the space”. • Multiple Language Translation support, to lives, a common fixture and a landmark, a place reflect the diversity of Victorian communities where old meets new, and an open public space and in recognition of increasing annual visitation where everyone meets and which represents to Fed Square by international visitors. The new multiculturalism. website will integrate advanced, sophisticated language translations, with a key focus on The research was undertaken to help inform Chinese, Malaysian, Japanese and Hindi language marketing strategy and support business content. development, with compelling insight for venue • A tenant portal that will allow for tenants hire and sponsorship propositions. to upload and edit their own digital content - including event details, promotions and multimedia, simply by submitting information via a secure form. • Social media linking tools to allow seamless social sharing of events, restaurants, bars and shops with friends through social media platforms including Facebook, LinkedIn, Twitter and email.

Visitor Insights

In April 2019, the Fed Square marketing team spearheaded the largest visitor insights survey conducted by the organisation to date. A 30-question online visitor insight surveys was developed and distributed to multiple Melbourne- based audiences, including those currently subscribed to Fed Square’s mailing lists and The Winter Village on Skyline Terrace at Fed Square

20 | FED SQUARE 2018-19 ANNUAL REPORT | 21 The Year’s Activity

2019 Formula 1 Season Launch Third-Party Events

Throughout the year, Fed Square continued to be With winter of 2019 approaching, the delightful Prospective Jedi also flocked to Fed Square for home to a brilliant and diverse array of events. winter-themed pop-up The Winter Village May the Fourth Be With You: Star Wars Day, In March, the 2019 Formula 1 Season Launch took residence at Fed Square’s Skyline Terrace, a multi-generational celebration of the attracted over 10,000 fans wanting to see live comprising an ice-skating rink, bars and food venerable science-fiction fantasy universe that interviews with the drivers, get autographs and trucks, private ‘igloos’ and a dining area with included cosplay competitions for adults and revel in the atmosphere of a high-powered, artificial snowfall. children alike, live bands playing the iconic adrenalin-fuelled day. music of the series, a guided Jedi skills Children of all ages experienced life as a showcase and photo opportunities with perfect Families flocked to seePixar Putt, an 18-hole superhero at Avengers S.T.A.T.I.O.N, trying their replicas of Darth Vader, R2D2 and a life-size X- mini-golf course beautifully designed and themed hands at lifting Thor’s Hammer and marvelling Wing Starfighter. by Disney and featuring the stars of Toy Story, at life-size replicas of the famous costumes worn Finding Nemo, The Incredibles, Wall-E and more. by Captain America and Iron Man, including the Fed Square turned navy, crimson and jade for famous (and massive) Hulkbuster. the Melbourne Vixens’ Fan Day, with plenty of activities, including meet and greets with the players, as well as the presentation of the Melbourne Vixens’ 2019 team kits.

22 | FED SQUARE 2018-19 ANNUAL REPORT | 23 The Year’s Activity art, food and more available in the precinct before Community the traditional walk itself to watch Dreamtime at Festivals the ‘G.

This year’s Victoria’s Multicultural Festival + Pause Fest, the world’s leading creativity-infused Culture Waves 2019 was a massive celebration business event for future founders, explorers of Melbourne’s cultural vibrancy, with an array and leaders returned to Fed Square for its 9th of food and drink on offer as well as music and year in a row. The festival’s theme, ‘The Future dance, including performances by Australian is Intimate’, explored human interaction with home-grown talents such as Kaiit and Bakerboy. technology, how it challenges our lifestyles, and the exciting new opportunities for the future. The Japanese Summer Festival combined Atlassian, Google, Amazon, CERN, R/GA, B Lab aspects of traditional dress with lovers of ANZ, YouTube, IBM, Facebook, Tiffany & Co. Japanese cosplay culture renowned around the NASA, Adobe, Microsoft, Movember, Wired UK world, nestled among exquisite food favourites and Airbnb alongside 200 future builders and like stir-fried gyoza and salmon tataki, to the tune innovators all participated in Melbourne’s biggest of Taiko drumming, Bon Dance and Okinawan folk tech and futurism summit, a dazzling display of music performances. talent and a valuable outreach between those who design the future’s technologies and those 40,000 people flowed into Fed Square over the who utilise them. course of a day to celebrate Diwali, the Festival of Lights, with traditional and contemporary Fed Square was proud to mark NAIDOC cultural dancing and music, Bollywood Week with a flag-raising ceremony and live Pause Fest 2019 performances and screenings, Henna painting performances. NAIDOC in the City was hosted and an authentic Indian street food bazaar. by Grant Hanson (Marngrook Footy Show) and Fed Square In consultation with the family and estate of featured performances by Soju Gang, Bart Mirdidingkingathi Juwarnda Sally Gabori, Fed Square commissioned an interpretive digital The two-day Willoughby and Tjimba, Stray Blacks and more. Programming Buddha’s Day and Multicultural artwork evoking the artistic practice and visual , an annual highlight for the precinct, In addition, every national day worldwide has Festival Fed Square was a key event host for Melbourne storytelling techniques displayed in leading celebrated Buddha’s birthday and the diversity been celebrated with a flag raising at Fed , hosting several events across leading Aboriginal artist Sally Gabori’s ‘All The of Melbourne through traditional Buddhist Square, in recognition of both the diversity Knowledge Week the week including Hack Fed Square, a creative ceremonies, arts, music, cultural performances, and multiculturalism of Melbourne’s people Fish’. This digital reinterpretation was proudly design sprint competition. Participants were social and spiritual wellbeing lectures, world and the importance of global respect and presented to the Gabori family, who were flown posed with the question ‘How can we ensure Fed peace prayers, blessing ceremonies, thrilling interconnectedness. to Melbourne to honour the event with their Square remains one of Melbourne’s key cultural Dragon Boat racing on the Yarra and far presence, and displayed for all of Melbourne to landmarks and iconic meeting places–a space more. Fed Square is proud to host this free, see nightly for an entire month on the new Digital where creativity, curiosity and inspiration collide?’ not-for-profit festival each year in the name Façade. The digital reinterpretation was a great and in only eight hours required to produce of inclusiveness, cultural awareness and example of the potential of the Digital Façade, and pitch creative solutions. The event was a understanding and community spirit. and also a show of Fed Square’s support for tremendous success both in terms of community the contribution of Aboriginal and Torres Strait involvement and in the creative potential for the Islander peoples to Australia’s ever-developing The Melbourne International Comedy Festival future at Fed Square. artistic landscape. dominated the city during April and Fed Square was no exception. For a period of weeks, clowns, Also, as part of Melbourne Knowledge Week, In the lead up to the 2019 Federal Election, comedians and children’s entertainers took to the Fed Square activated the Michelle Grattan, one of Australia’s most Main Stage at Fed Square as part of Fed Square’s Indigenous Design respected political reporters, was invited by Fed ‘The (Very) Big Laugh Out’ to delight and amuse Thinking Charter and Conversations, a Square to Deakin Edge for The Conversation, an families with daily shows. double-bill event. The International Indigenous Design Charter, exhibited in The Atrium, forecast in-depth interview about her views on the state a design future led by the world’s oldest living of Australian politics. Our annual hosting of The Long Walk to the ‘G cultures and asked the question of how we can and Indigenous culture festival was an endearingly unpack the question of what is appropriate or wholesome, positive celebration of the 15th appropriation, and how to differentiate between anniversary of Michael Long’s famous Long Walk these two terms. The Conversations, emceed and the subsequent founding of the charity by Shalley Ware (Yankunytjatjara, Wirangu) led bearing that name. Aboriginal and Torres Strait a stellar line-up of Aboriginal and Torres Strait Islander artists and performers took to the stage, Islander designers and aligned speakers at a with face painting stalls, traditional local Aboriginal panel event exploring how Indigenous knowledge Buddha’s Day and is shaping design practice. Multicultural Festival 24 | FED SQUARE 2018-19 ANNUAL REPORT | 25 The Year’s Activity F1 GRAND PRIX MELBOURNE LAUNCH INTERNATIONAL COMEDY FESTIVAL

PIXAR PUTT THE LONG WALK TO THE ‘G THE WINTER VILLAGE PAUSE FEST AVENGERS NAIDOC WEEK S.T.A.T.I.O.N FLAG RAISING MAY THE FOURTH BE AT FED SQUARE WITH YOU: STAR WARS DAY MELBOURNE KNOWLEDGE WEEK MELBOURNE VIXENS’ FAN DAY INDIGENOUS DESIGN THINKING CHARTER To mark International Women’s Day 2019 For New Year’s Eve, an estimated 100,000 Fed Square came alive with exciting live visitors packed into Fed Square over the course VICTORIA’S AND CONVERSATIONS demonstrations, interactive displays and of the evening for the single biggest gathering MULTICULTURAL emergency service vehicles kindly presented of people in all of Melbourne that night. People by Emergency Management Victoria. In a day flocked to Fed Square to experience live music FESTIVAL + CULTURE SALLY GABORI’S designed to encourage participation by families, celebrations and thrilling view of the city’s particularly women and girls, representatives fireworks, with an even bigger turn out expected WAVES 2019 ‘ALL THE FISH’ from fire and rescue services, Victoria Police, next year. Ambulance Victoria, Victoria State Emergency Service, Life Saving Victoria, Australian Red Cross and Emergency Management Victoria talked JAPANESE SUMMER INTERNATIONAL about their day and night jobs and the many opportunities for people of all genders to be a FESTIVAL WOMEN’S DAY 2019 part of these critical services. Fed Square partnered with the City of DIWALI, CHRISTMAS Melbourne to host this year’s beautiful, family- friendly Christmas. An estimated 500,000 THE FESTIVAL visitors came to marvel at Fed Square’s digital interactive Christmas tree and digital projections, OF LIGHTS NEW YEAR’S EVE gingerbread village and nativity scene.

Picture above Christmas at Fed Square 26 | FED SQUARE 2018-19 ANNUAL REPORT | 27 The Year’s Activity | 29 Christmas at Fed Square Industry Leadership Fed Square has demonstrated industry ongoing and staff Square Fed with year, this leadership management engaged with a industries of range Boards, of a number on represented and which of some panels, advisory and committees of Association Management Facility the include Association, Business River Yarra the Australia, Australian the and Australia, & Events Meetings Human Resources Institute. Commercial Commercial PartnershipsSponsorship seeking process of the began Square Fed expressions of interest fromcorporations Partnership a Principal into entering in interested The 2019. April in Square Fed with arrangement corporations from interest seeking is organisation a diverse to value their articulate clearly that positioning, brand their through community identity. brand Square’s Fed with aligning while seeking is Square process, Fed partAs this of Principal Partnerships in fourdistinct areas; and Health and Entertainment Banking, Media, Wellbeing. be their of works on conducting the remainder Chocolate months. 12 next the over tenancy refurbishment a full of middle the in are Buddha and reopen will with 2019 their September in new operated offering,Pop-Up having Buddha for 2019 May in closed ACMI refit. the throughout $40 a million undertake to order in months 12 and reimagined space see the will that update visitors with new exhibition provide to renewed spaces, experiences immersive and interactive moments. action is the Winter Village activation, developed developed activation, Village Winter the is action Venue Australian tenant Square Fed by run and to May from Terrace Skyline Square’s Fed at Co. 2019. September and ACMI NGVA, tenants cultural Square’s Fed play to continued have Trust Heritage Koorie the as position Square’s Fed maintaining in role a key attracting in and heart Melbourne of cultural the year, This precinct. the to people of millions Modern included Australian exhibitions NGVA Generations Hans and Two Nora Heysen: Women, Sylvester: Darren and Art, Polyverse, Australian of Become Everything, Devour Carve a Future, and Mania Series presented ACMI Something. Koorie The year. this Wonderland incredible the including showcased exhibitions Heritage Trust and Koorroyarr. Re/Connecting, Undercurrent, that tenants cultural have to proud is Square Fed are putting and on such impressive exhibitions experience the for Fed Square visitors. enhancing meaningful more and deeper forge to order In Fed tenants, cultural the with relationships discuss to meetings quarterly has held Square and collectively and programming marketing Theidentify opportunities work to together. as initiative ongoing be an will meetings quarterly in tenancies cultural support to looks Square Fed addition In basis. ongoing an on way a meaningful with communication improve to order in this, to a monthly introduced Square Fed tenants all about updates regular provide to newsletter activities the precinct. and works within a number with closely working also is Square Fed provide to of tenancies renovations undergoing future. the in offering exciting and a refreshed a refurbishment has completed DeLuxe Beer will and tenancy their of section upper the of

28 | FED SQUARE 2018-19 ANNUAL REPORT This year has seen an increased focus on greater greater on focus increased an has seen year This Square, Fed and tenants between collaboration Square. Fed and partnersthese of benefit the to in relationship working closer this of example One Tenant Partnerships To further strengthen reputation To Fed Square’s Square Fed destination as iconic a world-class, a new develop to work undertaking has been has approach marketing The strategy. marketing remains Square Fed ensure to developed been is and marketplace, a competitive in relevant and employees tenants, visitors, for appealing using by this do will partners. It commercial unique, promoting and voice intriguing an experiences Fed Square by immersive delivered events, partner across and programming segments, audience aspirational targeting Square Fed for affinity long-term building and will strategy marketing The public. the amongst financial next the of course the over be activated year. Fed Square Square Fed Marketing Strategy This year, Fed Square has Square Fed year, This of a number undertaken expand help to projects key and family Square Fed the of a place be to continue to for visitors all community the precinct. ENDURING POWER OF COMMUNITY. POWER ENDURING BY CONNECTING PEOPLE TO THE TO PEOPLE CONNECTING BY FAMILY EXPONENTIALLY, EXPONENTIALLY, FAMILY 2 – GROWING THE FED SQUARE SQUARE FED THE GROWING 2 – THE YEAR’S ACTIVITY The Year’s Activity | 31 Disney Princess Exhibition Exhibition Princess Disney 0 Number of serious serious of Number OH&S or injuries issues associated constructionwith Digital the of Façade: 0 Number Number workers of compensation the for claims year: -on-year Number of injuries injuries of Number associated with and trips slips, falls decreased by 12% Preventative hazard identification reporting and increased by 46% Incident and Incident reportsinjury decreased by year-on-year 24% year across the precinct, while Fed Square hosted hosted Square Fed while precinct, the across security-focused of part a number in took or a counterterrorism- activities, including key involving Square Fed of tour focused external stakeholders,CCTV an offender counter of a series and exercise, tracking involving discussion exercises terrorism tenants staff, Square Fed Police, Victoria presented also Square Fed contractors. and and Safety Places Crowded 2019 the at Security Melbourne and in Conference had representatives attend other of a number security-focused and forums conferences. Fed Square has continued its focus on safety and safety on focus its has continued Square Fed as engaging as well year, the throughout security and external internal stakeholders with key directly operations. of component critical this on align to tenants and Square Fed for plans Emergency businesses all to delivered and updated were Keeping Fed Square Square Fed Keeping Secure and Safe Fed Square also continued to work on achieving achieving on work to also continued Square Fed sustainable outcomes for Fed Square through the Energy Performance Contract. initiative, This Greener the Stateenabled through Government’s Square Fed saw Fund, Buildings Government Measures, Improvement Facility several install Co- the was which of significant most the eight- the of year third The System. Generation payback year Measurement and Verification November of 31st the on concluded which period, – equivalent 2330MWh of savings showed 2018, 450 than more usage of electricity annual the to households. Australian Group Action Sustainability Square Fed The together bringing year, this reinvigorated was cross-departmental in a staff of members various focus sustainable on achieving outcomes for identify to continue will group The Square. Fed revised part the of a key can form that actions ManagementPlan. Environmental has also Square Fed past year, the In strengthened the accountability for asset of upgrade a major completing by management aligns that Plan Asset Management FSPL the Asset Managementwith the Government’s also Square Fed Framework. Accountability Square Fed with closely work to continues are necessary refurbishments ensure to tenants Fit Tenancy updated the with line in completed Out Guidelines.

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30 | FED SQUARE 2018-19 ANNUAL REPORT There hasThere been notable progress terms in made Square. Fed at sustainability environmental of Square Fed for electricity 2019, 1 January From Renewable Melbourne the through supplied was between a partnership (MREP), Project Energy organisations other several and Square Fed ain tripartite agreement for the procurement Square Fed MREP, the Under Power. Green of situated farm a wind from Power Green purchases a 10- for Ararat near West South state’s the in consumption year’s first the with period, year representing 4000MWh hours). (Megawatt Environmental Sustainability All of these initiatives are within the framework framework the within are initiatives these of All Charter. Cultural and Civic Square’s Federation of - been has already reference which to strategy, made. - the usage of the through particularly revenue, new Digital Façade. Th A number of initiatives have been undertaken undertaken been have initiatives of A number to th Throughout Financial Sustainability enable that term, immediate the in organisation and not-for- Fed Square to support community and use the square. profit organisations to access h Square in place initiatives to ensure ensure to initiatives place in Square Fed i FOR FED SQUARE. FED FOR A SUSTAINABLE FUTURE FUTURE A SUSTAINABLE 3 – ENSURING ENSURING 3 – THE YEAR’S ACTIVITY The Year’s Activity | 33

Christmas Christmas at Fed Square April 2019, in readiness for staff training and the the and training staff for readiness in 2019, April June in live going to prior content new of upload 2019. was tool communications internal new This staff of with the involvement implemented to order in organisation the of areas all from enhanceof staff and provision communications manner. a in timely information Provide clear signposting and a single entry a single and signposting clear Provide Offer support devicesfor mobile Potentially automate simple business processes business simple automate Potentially Improve ease of content creation, publishing and publishing creation, content ease of Improve Enhance collaboration of staff cross-functionally staff of collaboration Enhance on staffimprove communication Significantly 32 | FED SQUARE 2018-19 ANNUAL REPORT • • • • • • Submissions were sought in October 2018 from from 2018 October in sought were Submissions Fed for Intranet a new develop to organisations are intranet the of objectives primary The Square. to: Intranet Two initiatives were targeted for implementation implementation for targeted were initiatives Two Fed of redevelopment the being these 2018-19, in and the Intranet commencement the of Square’s project. (ERP) Planning Resource Enterprise Now in the third year of Fed Square’s Information Information Square’s Fed of year third the in Now progress Strategy, has continued Technology and infrastructure its upgrade to be made to capability. software organisational enhance to Information Information Technology New online learning modules for induction and and induction for modules learning online New tenants employees, Square Fed for training accessible publicly using contractors and been have Firefox and as Google such platforms for a benefit In year. this out rolled and developed meanscontractors this particularly, inductions also reducing easily, more can be completed the time commitment and space requirements on- facilitate to Security by required previously and uptake greater promoting thus induction, site changing and large Square’s Fed by compliance workforce.tenant point to commonly used business systems business used commonly to point A series undertaken workshops of were with staff and identify to 2019 February and January in address potential improvements. This process focussed on the user experience, content, co-design architecture. and information Consultants undertook subsequently detailed in completed work with development, and design through the ability to include simple electronic simple include to ability the through forms and workflows administration both business updates and key messages key and updates business both THE YEAR’S ACTIVITY The Year’s Activity | 35 Fed Square carpark Square Fed PNAU plays a pop up concert on the rooftop of the Running leadership development for key leaders for key development leadership Running performance a of new online Development ensure process to induction the of Expansion engagement employee monthly of Execution Employee an of development the Commencing several across staff for training of Delivery • program This business. the across executives and has strengthened leaders ensuring by Fed Square skills and tools the have business the across needed teamwork and promote to collaboration. • July in out be rolled will which system, planning and KPIs individuals’ with strategy link to 2019, development. • with successfully engaged are employees new the business and connected with all stakeholders success. for up them set to needed • activities cross-functional promote to community. of a sense and collaboration • engage will which program, Proposition Value the establish to organisation entire the with Square. Fed at working of values • project including organisation, the of areas key capability, upliftmanagement to planning efficiencies, improve to software training and aid email to management work training prioritisation.

Completion of training for staff on the “Strategy the on staff for training of Completion 34 | FED SQUARE 2018-19 ANNUAL REPORT in Action” strategic framework, enabling effective enabling framework, strategic Action” in of annual strategic businessdevelopment plans strategic for tool useful a Square Fed offering and Square. Fed across decision-making Throughout this year a focus has been on the the on has been a focus year this Throughout delivery the for required talent of engagement ongoing the and strategy Square’s Fed of organisation’s the of growth and development professional people Fed Square’s capability. by supported been have staff passionate and to initiatives people in investment continued team existing and new grow and strengthen the on placed being priority With members. the culture, enterprise a social of embedding and the teamenhancement of capability, within skills leadership high-level of development led team Resources Human the organisation, the this year:the initiatives following • Fed Square has been a transforming organisation organisation a transforming has been Square Fed and as has adjusted it years past three the over strategic organisation’s the with alignment found priorities. Fed Square has continued to to has continued Square Fed year this progress initiatives a enterprise social deliver to a highly and culture and productive engaged, committed team, cohesive organisational ongoing to and transformation shared of implementation objectives.

THE STRATEGIC PLAN 2018-21. THE STRATEGIC COMMITTED TO DELIVERING DELIVERING TO COMMITTED IS ENGAGED, ALIGNED AND ALIGNED AND IS ENGAGED, ENTERPRISE CULTURE THAT THAT CULTURE ENTERPRISE 4 – BUILDING A SOCIAL A SOCIAL BUILDING 4 – THE YEAR’S ACTIVITY The Year’s Activity THE YEAR’S ACTIVITY 5 – PREPARE FED SQUARE TO OPEN UP TO THE YARRA RIVER AND ACCOMMODATE NEW AND INNOVATIVE OFFERINGS TO ENRICH THE PRECINCT IN AN INTEGRATED WAY WITH ITS CULTURAL TENANTS.

In 2018-19 the principal actions in this strategic As a result of the Interim Protection Order, Fed imperative were to prepare to execute the Square was required to lodge a permit application integration of the Apple Global Flagship Store for the demolition of the Yarra Building. This within the precinct. This was designed to allow application was lodged in December 2018 and access to the Yarra River and drive greater was followed by a period of public advertisement, visitation and global recognition. As outlined and receipt of numerous submissions to Heritage below, this strategic imperative will not progress Victoria. Heritage Victoria in April 2019 refused following a decision by Heritage Victoria. A a permit for the demolition of the Yarra Building. number of accommodation configurations were Based on this decision it was determined that the completed, and they will enable improvements Apple project could no longer proceed. to the tenant accommodation both with new and existing tenants into the future.

As part of this strategic imperative, several key initiatives were undertaken in Fed Square. These activities included: • Consolidation of SBS from two levels of the Alfred Deakin Building into a single refurbished level. • Construction of a new staircase to Level 2 of the Alfred Deakin Building to provide greater external connectivity, access and utilisation. • Refurbishment of Chocolate Buddha in the Alfred Deakin Building, and development of the Pop-Up Buddha restaurant in the Yarra Building.

Concurrently with these works, on 21 August 2018 the CEO of Heritage Victoria announced a recommendation that Fed Square be included on the Victorian Heritage Register, recognising its historical, architectural, aesthetic, cultural and technical significance, and included an interim protection order.

Fed Square top view 36 | FED SQUARE 2018-19 ANNUAL REPORT | 37 Fed Square is preparing for a transformational year ahead, and is putting in place plans to lift the organisation’s capabilities and pursue opportunities for the precinct. Fed Square has developed a three-year Corporate Government Review of Federation Square and Plan 2019-2022 that is designed to help Fed providing all support and advice necessary to the Square thrive in this period of transformational Federation Square Review Panel. Through the change. The Corporate Plan 2019-2022 focuses review process, and ongoing collaboration with on four Strategic Imperatives to be progressed to key government stakeholders at the conclusion of ensure the continued success and growth of Fed the review, Fed Square will mobilise to implement Square. a business model that will ensure a sustainable and accessible future for Fed Square. THE A significant focus for Fed Square in the year ahead will be participating in the Victorian YEAR NYE at Fed Square AHEAD

38 | FED SQUARE 2018-19 ANNUAL REPORT | 39 AboutThe Year Fed Ahead Square | 41 Living Cities Forum Cities Living While the year ahead promises to be one of significant significant be of one to promises ahead year the While approaching is Board the Square, Fed for change and optimism sense of an overwhelming with it and events With exciting a of range opportunity. forward to looking is Square Fed planned, activities next the 12 over visitors delighting and surprising be community a place to of continuing and months to years for destination Melbourne an iconic and come. Employee Employee Proposition Value tools, has required the organisation the ensure To support place to in skills an agile and systems, culture, a social enterprise promote to workplace and Value an Employee be creating will Square Fed talent key attract retain and seeks to that Proposition organisation. the of culture the enhance and In July 2019 Fed Square’s updated website will will website updated Square’s Fed 2019 July In a with organisation the be providing released, a range presence Incorporating online. rejuvenated Annual the in earlier mentioned features exciting of Square Fed the enhance Report, set to is website the and the to website visitors to visitors experience of the precinct. PerformanceOnline Planning System will system performance online planning A new 2019, July in organisation across the out be rolled between Square’s Fed link direct and a clear providing objectives and strategy development the and a ensure toolwill online The staff. individual of process performance by efficient planning more tools processes and the centralising needed drive to performance organisation. across level the high significant be of one to promises ahead year the While is Board Square Fed the Square, Fed for change sense of an overwhelming with it approaching With exciting a of range and opportunity. optimism looking is Square Fed planned, activities and events the over visitors delighting and forward surprising to be a place to of continuing and months next twelve for destination Melbourne an iconic and community come. to years Anchor Anchor Programming its new of rollout the continue will Square Fed specific of strategy development program the and anchor This year. the anchor platforms throughout and cohesive a coordinated ensure will programming the within events and programming to approach informed year, the during points different at precinct theme. a specific by Updated Website 40 | FED SQUARE 2018-19 ANNUAL REPORT Building on the work undertaken this year to enhance enhance to year this undertaken work the on Building and capabilities ambitions the commercial fund that organisations’use andcommunity not-for-profit identify to continue will Square Fed square. the of principal and regarding organisations approach Media, areasof distinct the partnerships within Wellbeing. and Health and Banking, Entertainment Commercial Commercial Partnerships A significant reputation-enhancing Aexpected significant project last the coming in the be quarter launched of to for refresh brand of a the yearis launch financial the incorporating and upon building Square, Fed strategies digital and programming marketing, brand The months. past the in twelve developed based feedback on strategy developed being is a from past the months 18 throughout gathered the and visitors tenants, including sources of variety also be will and strongly broadly, more community of recommendations and findings the by influenced which Square, Fed of Review Government current the year. the in belater finalised to due is Refreshed Fed Square Square Fed Refreshed Brand In the meantime, and as foreshadowed through this this through as and foreshadowed meantime, the In reshape its to future continue report, will Square Fed several of implementation the through direction being: the major highlights and initiatives, innovations THE YEAR AHEAD 2019 2018 2017 2016 2015 YEAR ENDED 30 JUNE $ $ $ $ $

Operating results $

Revenue 32,454,421 32,220,166 28,071,853 28,026,800 26,877,493

Operating expenses (28,118,253) (25,003,309) (21,633,478) (22,048,581) (20,309,735) (excluding depreciation and amortisation) Interest expense (867) (328,746) (520,118) (744,414) (966,555) Other economic flows (201,087) 6,906 11,659 (67,291) 20,388 FIVE YEAR (28,320,207) (25,325,149) (22,141,937) (22,860,286) (21,255,902)

Net result before depreciation and amortisation 4,134,214 6,895,017 5,929,916 5,166,514 5,621,591

Depreciation and amortisation (12,119,169) (11,747,662) (11,776,172) (12,456,064) (11,853,371) FINANCIAL Net result (7,984,955) (4,852,645) (5,846,256) (7,289,550) (6,231,780) Changes in physical asset revaluation surplus (9,000,000) 24,000,000 66,680,133

Total comprehensive result for the period (16,984,955) (4,852,645) 18,153,744 59,390,583 (6,231,780)

SUMMARY Financial status Total assets 536,398,978 555,661,437 566,616,611 551,230,855 493,381,726 Total liabilities (5,526,465) (7,803,969) (13,906,498) (16,674,486) (22,324,940) Total equity 530,872,513 547,857,468 552,710,113 534,556,369 471,056,786

Net cash from operating activities 4,448,150 3,974,186 7,453,145 4,359,831 4,330,587

35 Revenue and Expenditure 30 (before Depreciation Five Year Financial Summary 25 and Interest) The financial results for 2018-19 are a positive net The company’s balance sheet remains strong, 20 result before depreciation of $4,134,214 (2017-18: with financial assets of $20,511,622 relative Revenue and expenditure (before $6,895,017). Operating revenue was up $234,255 to liabilities of $5,526,465. Net assets total interest and depreciation) over the or 0.73% to $32,454,421 and expenditure from $530,872,513 which is $16,984,955 lower than past five years is shown in this graph: 15 transactions was up $2,995,058 or 11.83% to 2017-18. $28,320,207. 10

5

2014-15 2015-16 2016-17 2017-18 2018-19 Revenue Expenses

42 | FED SQUARE 2018-19 ANNUAL REPORT | 43 Category KPI Target Actuals

Operations Total Revenue $30.451m $32.454m Total Expenditure (excl. dep) $25.206m $28.320m Net Result Before Depreciation $5.245m $4.134m Sponsorship $0.548m $0.293m Car Park $4.308m $4.500m Public Space Hire $2.200m $2.474m KEY Ticketed Activations $1.050m $0.192m Screen Advertising $1.070m $0.137m Tenant Presentation Audit 95% 78% OH&S Incidents Per 100,000 1.6 0.9 PERFORMANCE Visits 9,500,000 9,700,000 Planned Maintenance 100% 100% People Staff Turnover 25% 38% INDICATORS DJPR Governance Framework Liquidity Buffer (weeks) 18.62 19.34 Working Capital 1.86 3.31 Capex Replacement 0.48 0.20 Revenue Growth 5.41% 0.73% Labour Growth 1.45% 0.91% Profitability 13.63% 12.74% Self-financing 2.84 5.95 Return On Assets 0.75% 0.77% Gearing 0.40% 0.41% Reliance On Government Funding 0.00% 0.13%

44 | FED SQUARE 2018-19 ANNUAL REPORT | 45 The Directors of Fed Square Pty Ltd (FSPL) 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 • The best interests of shareholders; procedures are in place to provide appropriate • An environment that meets relevant standards; and assurance that the company undertakes its • A manner that is responsible to all stakeholders activities and functions in accordance with: and the wider community. • All legal requirements; The public enjoys the Australian Open on the STATEMENT Digital Façade at Fed Square OF CORPORATE GOVERNANCE

46 | FED SQUARE 2018-19 ANNUAL REPORT | 47 Governance Corporate of Statement

STATEMENT OF CORPORATE GOVERNANCE

(ii) live performances, entertainment, Chief Executive Officer; Objects and Powers carnivals, circuses, community or public events, Responsibilities Of the Company (both indoor and outdoor), festivals, exhibitions Of the Board • Requiring and monitoring legal and regulatory and performances; compliance; The objects of the company are those set out in the (iii) places of assembly for religious and cultural The primary responsibilities of the Board include: Fed Square Constitution and Federation Square Civic activities, entertainment or meetings; and • Approving annual accounts, annual report and other and Cultural Charter and include without limitation: (iv) markets. • Establishing the company’s vision, mission, values public documents; and ethical standards; (a) to occupy the site known as Federation Square; • Ensuring an effective system of internal controls (b) to use, refurbish, maintain, improve, develop, Duties • Ensuring the company’s long term viability and exists; and lease, licence, manage, operate and modify all or any Of Directors enhancing the financial position; part of Federation Square; • Delegating an appropriate level of authority to (c) in relation to any part of Federation Square, to The duties of Directors include: • Formulating and overseeing implementation of management. carry on any or all of: • The duty to act honestly in good faith in the best corporate strategy; (i) the businesses of owners, operators, interests of the corporation and for a proper purpose; managers, licensors, lessors or occupiers of: • Approving the business plan, budget and corporate Board (1) galleries, exhibition centres, libraries, art • The duty to act with care and diligence; policies; Committees and craft centres and museums, (2) car parks, • The duty to avoid conflict in the position of a • Agreeing key performance indicators (KPIs); The Board has established two permanent (3) theatres, cinemas and cinema based director and/or any interest that a director may have; Committees: the Finance, Audit & Risk Committee entertainment facilities, radio, television and • Monitoring/assessing performance of the company, and the Board Nominations & Executive other multi-media studios, outdoor • Duties which prohibit the misuse of information the Board itself, management and major projects; Remuneration Committee. Committee decisions video screens and video/LED signage, obtained by directors; and become recommendations for submission to the (4) restaurants, cafes, taverns, hotels, food • Overseeing the risk management framework and Board for resolution. and drink premises (including, without • Duties which prohibit a director from taking for monitoring business risks; limitation, take-away food and drink oneself the company’s opportunities. premises), liquor vendors, shops, • Appointing and appraising the performance of the 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,

2019 Formula 1 Season Launch

48 | FED SQUARE 2018-19 ANNUAL REPORT | 49 Governance Corporate of Statement

STATEMENT OF CORPORATE GOVERNANCE

public-sector entities manage asset portfolios • Maintain effective communication with external Risk appropriately. Whilst Fed Square is not subject to the auditors; Internal Management provisions of the Financial Management Act 1994 • Consider recommendations made by internal and Audit (FMA), the company is implementing the external auditors and review the implementation of Fed Square recognises the need for active risk requirements of Ministerial Standing Direction 4.2.3 – actions to resolve issues raised; The company engaged Protiviti Pty Limited as the management procedures and during the year Asset Management Accountability on a voluntary • Oversee the effective operation of the risk Internal Auditor to assist in evaluating the reviewed the Risk Management Policy and Strategy basis. management framework; company’s internal controls. Protiviti developed an and procedures to monitor progress with proposed • Oversee the effective operation of treasury annual audit plan, having due regard to the plans. The risk management program is designed to management; and Asset Management company’s risk management program, and provide a structured approach to business planning, • Oversee insurance and legal proceedings. improve operational performance, encourage pro- Accountability Framework implementation of proposed audit activities is now underway. active management and protect assets, people, Attestation The members of the Committee during the year finance and property. ended 30 June 2019 were Pamela Mitchell (Chair), I, Deborah Beale, certify that Fed Square Pty Ltd has Deborah Beale AM, Kathleen Wilson and John Lee as Risks are identified, assessed and treated in partially adopted the Ministerial Standing Direction a c o-opted member. Compliance with the accordance with the principles contained in 4.2.3 – Asset Management Accountability. There are Protected Disclosure Australian Risk Management Standard AS ISO no material deficiencies. The Fed Square Pty Ltd 31000:2018 Finance, Audit & Risk Committee verifies this. Compliance Attestation Act 2012 Framework Fed Square does not tolerate improper conduct by Risk employees, nor the taking of reprisals against those The Standing Directions under the Financial who come forward to disclose such conduct. Fed Management DEBORAH BEALE AM Management Act 1994 (2018 Directions) set the Square is committed to ensuring transparency and CHAIR Attestation standard for financial management in the Victorian accountability in its administrative and management public sector. In April 2016 the Victorian State practices, and supports the making of disclosures I, Deborah Beale, certify that Fed Square Pty Ltd Government launched the Whole of Government that reveal corrupt conduct, conduct involving a has adopted the Ministerial Standing Direction 3.7.1 – “Compliance Attestation Framework” to assist with substantial mismanagement of public resources, or Risk Management Framework and Processes. The Finance, Audit monitoring, reporting on and attesting to compliance conduct involving a substantial risk to public health Fed Square Pty Ltd Finance, Audit & Risk Committee & Risk Committee with the Directions. and safety or the environment. verifies this. The main responsibilities of the Finance, Audit & Risk The Directions require agencies to annually attest Committee are to: Fed Square is committed to the protection of persons compliance with applicable requirements in the FMA, • Review and report independently to the Board on who make disclosures from any detrimental action in the Directions and the supporting Instructions. Whilst the annual report; reprisal for making a disclosure or for co-operating in DEBORAH BEALE AM Fed Square is not subject to the provisions of the • Assist the Board in reviewing the effectiveness of the investigation of a disclosure. CHAIR FMA, the company is implementing the requirements the internal control environment covering: of the Compliance Attestation Framework on a - effectiveness and efficiency of operations; The Protected Disclosure Act 2012 seeks to voluntary basis where appropriate. Asset Management - reliability of financial reporting; and encourage and assist people to make disclosures Accountability - compliance with applicable laws and of improper conduct by public officers and public regulations; bodies, provides protections for people who make Framework • Determine the scope of the internal audit function disclosures and provides for the confidentiality of the and ensure its resources are adequate and used content of disclosures and the persons who make The Asset Management Accountability Framework effectively, including coordination with the external them. (AMAF) establishes a flexible and non-prescriptive auditors; set of requirements which aim to ensure Victorian

50 | FED SQUARE 2018-19 ANNUAL REPORT | 51 Governance Corporate of Statement

STATEMENT OF CORPORATE GOVERNANCE

Making Disclosures Fed Square is not a body to which a protected disclosure can be made under the Protected Disclosure Act 2012. Such disclosures must be made to:

Independent Broad-based Anti-corruption Commission (IBAC). Level 1, North Tower, 459 Collins Street Melbourne, VIC 3000 Phone: 1300 735 135 Mail: IBAC, GPO Box 24234, Melbourne, VIC 3000 Internet: www.ibac.vic.gov.au

The IBAC website contains a secure email disclosure process. Protecting Persons Who Make Disclosures Fed Square has established procedures to protect persons who make, or who co-operate in the investigation of, protected disclosures, from detrimental action that might be taken against them. Those procedures can be accessed at www. fedsquare.com/information/ or a copy obtained from the General Manager - Corporate Services.

Pixar Putt

52 | FED SQUARE 2018-19 ANNUAL REPORT | 53 The Directors of Fed Square RESULTS OF OPERATIONS 2019 2018 present their report on the $ $ financial statements of the Net result before depreciation and amortisation 4,134,214 6,895,017 company for the year ended 30 Depreciation and amortisation (12,119,169) (11,747,662) June 2019. Net result (7,984,955) (4,852,645)

Minister Dividends

The Hon. John Eren MP, Minister for Tourism and No dividends have been proposed or paid during Major Events (to December 2018) the year (2017-18: Nil). The Hon. Martin Pakula MP, Minister for DIRECTORS’ Tourism, Sport and Major Events (from December Changes in 2018). State of Affairs Directors There was no material change in the State of REPORT The Directors in office during the period and at 30 Affairs during the year. June 2019, unless otherwise stated, were: Environmental Ms Deborah Beale AM (Chair) Regulations Ms Kathleen Wilson Ms Pamela Mitchell No significant environmental regulations apply Mr Les Williamson (to 31 May 2019) that are likely to have an unexpected material Mr Patrick Conlon effect on the operations or financial results of Mr Ari Suss (from 1 August 2018) FSPL. Accountable Officer Subsequent The Accountable Officer during the period and at Events 30 June 2019 unless otherwise stated was: There were no subsequent events after balance date expected to have a material effect on Mr Jonathan Tribe, the financial statements of FSPL that are not Chief Executive Officer otherwise disclosed in the financial statements and notes. Ownership of Fed Square Pty Ltd

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 is the Minister responsible for the state holding in FSPL under the Deed.

The public enjoys the Australian Open on the Digital Façade at Fed Square

54 | FED SQUARE 2018-19 ANNUAL REPORT | 55 Directors’ Meetings Board Nominations & Executive Remuneration Committee Meetings The number of Directors’ meetings and number of meetings attended by each of the Directors of the The number of Board Nominations & Executive company during the financial year were: Remuneration Committee meetings and number of meetings attended by each of the committee

DIRECTOR MEETINGS MEETINGS HELD* ATTENDED DIRECTOR MEETINGS MEETINGS Ms Deborah Beale AM (Chair) 10 10 HELD* ATTENDED Ms Kathleen Wilson (Chair) 2 2 Ms Kathleen Wilson 10 10 Ms Deborah Beale AM 2 2 Ms Pamela Mitchell 10 8 Mr Leslie Williamson 2 2 Mr Leslie Williamson 9 8 Mr John Lee 2 2 Mr Patrick Conlon 10 9 (invitee - co-opted member of Finance, Audit & Risk Committee) FINANCIAL Mr Ari Suss 9 8 *Reflects the number of meetings held during the time the committee member was a member of the Mr John Lee 10 10 Board Nominations & Executive Remuneration Committee during the year. (invitee - co-opted member of Finance, Audit & Risk Committee) REPORT *Reflects the number of meetings held during the time the Director held office during the year. Directors’ Benefits

Directors’ benefits are set out in note 8.6.2 to the financial statements. Finance, Audit & Risk Committee Meetings Insurance of Directors and Officers The number of Finance, Audit & Risk Committee meetings and number of meetings attended During the financial year $20,923 was paid by the by each of the committee members during the company to the Victorian Managed Insurance financial year were: Authority for Directors’ and Officers’ Liability insurance premiums and recorded as an expense DIRECTOR MEETINGS MEETINGS in the Comprehensive operating statement (2017- HELD* ATTENDED 18: $20,923). Ms Pamela Mitchell (Chair) 5 5 The insurance provides cover for Directors and Ms Deborah Beale AM 5 5 Officers of Fed Square against certain personal Ms Kathleen Wilson 5 5 liabilities that they may incur by reason of their duties as Directors and Officers. Mr John Lee (co-opted member) 5 5

*Reflects the number of meetings held during the time the committee member was a member of the Responsible Finance, Audit & Risk Committee during the year. Body’s Declaration

I am pleased to present Fed Square Pty Ltd’s Annual Report for the year ending 30 June 2019.

Signed in accordance with a resolution of the Directors at Melbourne on 13th September 2019.

DEBORAH BEALE AM CHAIR

A family celebrates after taking part in Big Screen Gaming 56 | FED SQUARE 2018-19 ANNUAL REPORT on the Digital Façade | 57 OFFICIAL

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.

ndndnc ction As auditor for Fed Square Pty Ltd for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been: • no contraventions of auditor independence requirements of the Cootions Act 1 in relation to the audit. • no contraventions of any applicable code of professional conduct in relation to the audit.

MELBOURNE Simone Bohan 16 September 2019 s dt o t Auditon o ictoi

OFFICIAL

58 | FED SQUARE 2018-19 ANNUAL REPORT | 59 Auditor’s As required by the Audit Act 1994, my responsibility is to express an opinion on the financial responsibilities report based on the audit. My objectives for the audit are to obtain reasonable assurance for the audit of about whether the financial report as a whole is free from material misstatement, whether due Independent Auditor’s Report the financial to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable report assurance is a high level of assurance but is not a guarantee that an audit conducted in To the Directors of Fed Square Pty Ltd accordance with the Australian Auditing Standards will always detect a material misstatement

Opinion I have audited the financial report of Fed Square Pty Ltd (the company) which comprises the: 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  balance sheet as at 30 June 2019 decisions of users taken on the basis of this financial report.  comprehensive operating statement for the year then ended  statement of changes in equity for the year then ended As part of an audit in accordance with the Australian Auditing Standards, I exercise professional  cash flow statement for the year then ended judgement and maintain professional scepticism throughout the audit. I also:  notes to the financial statements, including significant accounting policies  directors' declaration.  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, In my opinion the financial report is in accordance with the Corporations Act 2001 including: and obtain audit evidence that is sufficient and appropriate to provide a basis for my  giving a true and fair view of the financial position of the company as at 30 June 2019 opinion. The risk of not detecting a material misstatement resulting from fraud is higher and its financial performance and cash flows for the year then ended than for one resulting from error, as fraud may involve collusion, forgery, intentional  complying with Australian Accounting Standards and the Corporations Regulations 2001. omissions, misrepresentations, or the override of internal control. Basis for I have conducted my audit in accordance with the Audit Act 1994 which incorporates the  obtain an understanding of internal control relevant to the audit in order to design audit Opinion Australian Auditing Standards. I further describe my responsibilities under that Act and those procedures that are appropriate in the circumstances, but not for the purpose of standards in the Auditor’s Responsibilities for the Audit of the Financial Report section of my expressing an opinion on the effectiveness of the company’s internal control report.  evaluate the appropriateness of accounting policies used and the reasonableness of My independence is established by the Constitution Act 1975. My staff and I are independent accounting estimates and related disclosures made by the Directors 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  conclude on the appropriateness of the Directors' use of the going concern basis of Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are accounting and, based on the audit evidence obtained, whether a material uncertainty relevant to my audit of the financial report in Victoria. My staff and I have also fulfilled our exists related to events or conditions that may cast significant doubt on the company’s other ethical responsibilities in accordance with the Code. ability to continue as a going concern. If I conclude that a material uncertainty exists, I I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis am required to draw attention in my auditor’s report to the related disclosures in the for my opinion. financial report or, if such disclosures are inadequate, to modify my opinion. My

Directors' The Directors of the company are responsible for the preparation of a financial report that conclusions are based on the audit evidence obtained up to the date of my auditor’s responsibilities gives a true and fair view in accordance with Australian Accounting Standards and the report. However, future events or conditions may cause the company to cease to for the Corporations Act 2001, and for such internal control as the Directors determine is necessary to continue as a going concern. financial report enable the preparation of a financial report that gives a true and fair view and is free from  evaluate the overall presentation, structure and content of the financial report, material misstatement, whether due to fraud or error. including the disclosures, and whether the financial report represents the underlying In preparing the financial report, the Directors are responsible for assessing the company’s transactions and events in a manner that achieves fair presentation. 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. 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 16 September 2019 as delegate for the Auditor-General of Victoria 60 | FED SQUARE 2018-19 ANNUAL REPORT | 61

2 Comprehensive operating statement Balance sheet as at 30 June 2019 for the financial year ended 30 June 2019

Notes 2019 2018 Notes 2019 2018 $ $ $ $ Financial assets Operating income 2.1 31,034,671 31,915,366 Cash and deposits 6.4 11,280,477 9,788,783 Receivables 5.1 9,231,145 3,921,085 Interest income 2.1 1,419,750 304,800 Total financial assets 20,511,622 13,709,868

Total income from transactions 32,454,421 32,220,166 Non-financial assets Prepayments 97,898 96,672 Employee expenses 3.1.1(a) (6,311,393) (5,972,530) Property, plant and equipment 4.1 515,789,458 541,854,897 Total non-financial assets 515,887,356 541,951,569 Event expenses (2,642,869) (3,312,690) Total assets 536,398,978 555,661,437 Site operating expenses 3.1.2 (9,024,488) (8,165,753) Liabilities Other operating expenses 3.1.3 (10,139,503) (7,552,336) Payables 5.2 2,682,514 4,461,834 Borrowings 6.1 2,173,436 2,735,596 Interest expense 6.1.2 (867) (328,746) Employee related provisions 3.1.1(b) 670,515 606,539 Total liabilities 5,526,465 7,803,969 Depreciation and amortisation 4.1.1 (12,119,169) (11,747,662) Net assets 530,872,513 547,857,468 Total expenses from transactions (40,238,289) (37,079,717) Equity Net operating result from transactions (7,783,868) (4,859,551) Contributed capital 8.3 447,675,508 447,675,508 Accumulated deficit (86,411,631) (79,863,676) Other economic flows included in net result 8.2 Physical asset revaluation surplus 169,608,636 180,045,636 Net gain/(loss) on disposal of non-financial assets (207,000) 7,272 Net worth 530,872,513 547,857,468 The accompanying notes form part of these financial statements. Net gain/(loss) on financial instruments 8.2.1 23,209 -

Net gain/(loss) arising from revaluation of long service liability (17,296) (366)

Total other economic flows included in net result (201,087) 6,906

Net result (7,984,955) (4,852,645)

Other economic flows - other comprehensive income Changes in physical asset revaluation surplus (9,000,000) -

Total other economic flows - other comprehensive income (9,000,000) -

Comprehensive result (16,984,955) (4,852,645) The accompanying notes form part of these financial statements.

62 | FED SQUARE 2018-19 ANNUAL REPORT | 63 Cash flow statement Statement of changes in equity for the financial year ended 30 June 2019 for the financial year ended 30 June 2019

Notes 2019 2018 Physical $ $ Contributed assets Accumulated capital revaluation deficit Total Cash flows from operating activities $ $ $ $ Balance at 1 July 2017 447,675,508 180,045,636 (75,011,031) 552,710,113 Receipts Net result for the year - - (4,852,645) (4,852,645) Receipts from customers (incl. GST) 36,470,477 31,283,147 Revaluation of freehold land - - - - Interest received 1,425,184 324,533 Balance at 30 June 2018 447,675,508 180,045,636 (79,863,676) 547,857,468 Total receipts 37,895,661 31,607,680

Net result for the year - - (7,984,955) (7,984,955) Payments Other comprehensive income for the year: Payments to employees (6,249,456) (6,080,440) - Changes in physical asset revaluation surplus - - (9,000,000) - (9,000,000) Payments to suppliers (incl. GST) (26,143,475) (20,695,057) revaluation of freehold land GST paid to Australian Taxation Office (net) (1,053,713) (510,606)

Interest paid on loans (867) (347,391) Transfer to accumulated deficit - realised asset Total payments (33,447,511) (27,633,494) revaluation surplus on derecogition of physical assets:

- Land - (1,100,000) 1,100,000 - Net cash flows from operating activities 6.4.1 4,448,150 3,974,186 - Buildings - (337,000) 337,000 - Balance at 30 June 2019 447,675,508 169,608,636 (86,411,631) 530,872,513 Cash flows from investing activities Proceeds from sale of investments - 67,045 The accompanying notes form part of these financial statements. Proceeds from sale of non-current assets - 20,636 Payments for property, plant & equipment (2,394,296) (8,759,415) Net cash flows from investing activities (2,394,296) (8,671,734)

Cash flows from financing activities Repayment of Government advance (555,429) (555,429) Repayment of borrowings - (6,052,611) Repayment of finance leases (6,731) (20,562) Net cash flows from financing activities (562,160) (6,628,602)

Net increase/(decrease) in cash and cash equivalents 1,491,694 (11,326,150)

Cash and cash equivalents at the beginning of the year 9,788,783 21,114,933

Cash and cash equivalents at the end of the year 6.4 11,280,477 9,788,783 Non-cash transactions 6.4.1

The accompanying notes form part of these financial statements.

64 | FED SQUARE 2018-19 ANNUAL REPORT | 65 Accounting policies selected and applied in these These annual financial statements were financial statements ensure that the resulting authorised for issue by the Directors of FSPL 1. ABOUT THIS REPORT financial information satisfies the concepts of on 13th September 2019. relevance and reliability, thereby ensuring that Fed Square Pty Ltd (“FSPL”) is a company wholly owned by State Trustees Limited as custodian the substance of the underlying transactions or trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust other events is reported. 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 2. INCOME TO DELIVER OUR SERVICES operations” which does not form part of these financial statements. Introduction Structure FSPL’s overall objective is to manage and develop 2.1 Summary of income that funds the delivery of a. Basis of preparation Federation Square to actively support and our services reflect Melbourne’s preeminent civic and cultural 2.2 Operating leases relating to premises owned These financial statements are in Australian Judgements, estimates and assumptions are strengths, and be an iconic destination that by FSPL dollars and the historical cost convention is required to be made about financial information delivers visitors a memorable experience. used unless a different measurement basis is being presented. The significant judgements specifically disclosed in the note associated with made in the preparation of these financial To enable the entity to fulfil its objectives, the item measured on a different basis. statements are disclosed in the notes where it receives income (predominantly rental amounts affected by those judgements are income, fees and charges for services and The accrual basis of accounting has been applied disclosed. Estimates and associated assumptions sponsorship). in preparing these financial statements, whereby are based on professional judgements derived assets, liabilities, equity, income and expenses from historical experience and various other are recognised in the reporting period to which factors that are believed to be reasonable under they relate, regardless of when cash is received the circumstances. Actual results may differ from 2.1 Summary of income that funds the delivery of our services or paid. these estimates. 2019 2018 Consistent with the requirements of AASB 1004 Revisions to accounting estimates are recognised $ $ Contributions, contributions by owners (that in the period in which the estimate is revised Tenancy rents and charges 17,758,576 17,376,444 is, contributed capital and its repayment) are and also in future periods that are affected by Car parking 4,500,376 4,064,392 treated as equity transactions and, therefore, do the revision. Judgements and assumptions not form part of income and expenses. made by management in applying AAS that have Events 4,414,454 5,089,225 significant effects on the financial statements and Sponsorship and grants 1,071,741 3,469,965 Capital appropriations received which have estimates are disclosed in the notes under the Other revenue 3,289,524 1,915,340 been designated as contributions by owners are heading ‘Significant judgement or estimates’. Total operating income 31,034,671 31,915,366 recognised as contributed capital. All amounts in the financial statements have been rounded to the nearest $1 unless otherwise Interest income from cash and deposits 232,891 304,800 stated. Finance lease interest income 1,186,859 - 1,419,750 304,800 b. Compliance information Total interest income

These general purpose financial statements For the purposes of preparing financial Total income from transactions 32,454,421 32,220,166 have been prepared in accordance with the statements, FSPL is classed as a not-for-profit Corporations Act 2001 and applicable Australian entity. Where appropriate, those AASs paragraphs Accounting Standards (AASs) which include applicable to not-for-profit entities Interpretations, issued by the Australian have been applied. Accounting Standards Board (AASB).

66 | FED SQUARE 2018-19 ANNUAL REPORT | 67 Income is recognised to the extent it is probable Grant income arises from transactions in which a the economic benefits will flow to the enity and party provides goods or assets (or extinguishes a the income can be reliably measured. liability) to FSPL without receiving approximately 3. THE COST OF DELIVERING SERVICES equal value in return. While grants may result in Where applicable, amounts disclosed as income the provision of some goods or services to the are net of returns, allowances, duties and taxes. transferring party, they do not provide a claim Introduction Structure to receive benefits directly of approximately This section provides an account of the expenses 3.1 Expenses incurred in delivery of services Income in the form of tenancy rents and equal value (and are termed ‘non-reciprocal’ incurred by the entity in delivering services. 3.1.1 Employee benefit expenses outgoings derived from operating leases on transfers). Receipt and sacrifice of approximately In Section 2, the funds that enable the provision 3.1.2 Site operating expenses premises at Federation Square is recognised on equal value may occur, but only by coincidence. of services were disclosed and in this note the 3.1.3 Other expenses a straight-line basis over the term of the relevant Where grants are reciprocal, income is recognised cost associated with provision of services are lease. Initial direct costs incurred in negotiating as performance occurs under the grant. Non- recorded. and arranging an operating lease are recognised reciprocal grants are recognised as income when as an expense in the period in which they are the grant is received or receivable. Conditional incurred. grants may be reciprocal or non-reciprocal depending on the terms of the grant. Income from car parking and event fees and 3.1 Expenses incurred in delivery of services charges is recognised in the period in which the Interest income is recognised using the effective service is provided. interest method, which allocates interest over the Notes 2019 2018 relevant period. $ $ Sponsorship income is recognised in the period in Employee expenses 3.1.1(a) 6,311,393 5,972,530 which the right to receive the income exists under Event expenses 2,642,870 3,312,690 each specific agreement. Site operating expenses 3.1.2 9,024,488 8,165,753 Other operating expenses 3.1.3 10,139,503 7,552,336 2.2 Operating leases relating to premises owned by FSPL Total expenses incurred in delivery of services 28,118,254 25,003,309 (FSPL as lessor) The company derives income in the form of tenancy rents and outgoings from operating leases relating to premises owned by FSPL. 3.1.1(a) Employee expenses in the comprehensive operating statement 2019 2018 Nominal amounts $ $ Notes 2019 2018 $ $ Non-cancellable operating lease receivables: Salaries and wages, annual leave, long service leave and oncosts 5,730,081 5,495,259 - not later than one year 17,200,773 15,995,879 Defined contribution superannuation expense 3.1.1 (c) 528,812 477,271 - later than one year and not later than five years 47,240,061 52,593,525 Termination benefits 52,500 - - later than five years 18,282,006 23,802,415 Total employee expenses 6,311,393 5,972,530 Total operating lease receivables 82,722,840 92,391,819

Employee expenses include all costs related to superannuation plans that are paid or payable employment including wages and salaries, fringe during the reporting period. benefits tax, leave entitlements, redundancy payments and WorkCover premiums. Termination benefits are payable when employment is terminated before normal The amount recognised in the comprehensive retirement date, or when an employee accepts an operating statement in relation to superannuation offer of benefits in exchange for termination is employer contributions for defined contribution of employment.

68 | FED SQUARE 2018-19 ANNUAL REPORT | 69 3.1.1(b) Employee benefits in the balance sheet Liabilities for wages and salaries, including The components of this current LSL liability are non-monetary benefits, and annual leave, are measured at: Provision is made for benefits accruing to recorded as an expense during the period the all recognised in the provision for employee • undiscounted value - if the company expects to employees in respect of wages and salaries, services are delivered. entitlements as ‘current liabilities’, because the wholly settle within 12 months; and annual leave and long service leave (LSL) for company does not have an unconditional right to • present value - if the company does not expect services rendered to the reporting date and defer settlements of these liabilities. to wholly settle within 12 months.

The liability for salaries and wages are recognised Conditional LSL is disclosed as a non-current 2019 2018 $ $ in the balance sheet at remuneration rates which liability. There is an unconditional right to defer Current provisions are current at the reporting date. As the company the settlement of the entitlement until the expects the liabilities to be wholly settled within employee has completed the requisite years of Annual leave (unconditional) 12 months of reporting date, they are measured at service. This non-current LSL liability is measured - expected to settle within 12 months 226,392 188,201 undiscounted amounts. at present value. - expected to settle after 12 months 24,738 37,078 The annual leave liability is classified as a current Any gain or loss following revaluation of the liability and measured at the undiscounted present value of non-current LSL liability is Long service leave (unconditional) amount expected to be paid, as the company recognised in the ‘net result from transactions’, - expected to settle within 12 months 72,159 57,818 does not have an unconditional right to defer except to the extent that a gain or loss arises due - expected to settle after 12 months 252,124 235,912 settlement of the liability for at least 12 months to changes in government bond interest rates for after the end of the reporting period. which it is then recognised as an other economic flow. Provision for on-costs (unconditional) Unconditional long service leave (LSL) is - expected to settle within 12 months 25,895 8,770 disclosed as a current liability even where the Provisions for on-costs such as payroll tax, - expected to settle after 12 months 36,265 35,786 company does not expect to settle the liability workers compensation and superannuation are within 12 months because it will not have the recognised separately from the provision for Total current provisions for employee benefits 637,573 563,565 unconditional right to defer the settlement of the employee benefits. entitlement should an employee take leave within Non-current provisions 12 months. Long service leave (conditional) 28,606 37,314 Provision for on-costs (conditional) 4,336 5,660 3.1.1(c) Superannuation contributions Total non-current provisions for employee benefits 32,942 42,974 Employees of the company are entitled to receive nominate a complying fund in accordance with superannuation benefits and the company the Act. Additional contributions are optional at Total provisions for employee benefits 670,515 606,539 contributes to defined contribution plans. The the discretion of employees. company contributes to superannuation at the minimum rate required by the Superannuation As at 30 June 2019 there was no amount owing Reconciliation of movement in on-costs provision Guarantee (Administration) Act 1992. Each to superannuation funds not brought to account employee (including Directors) is able to (2017-18: Nil). 2019 $ Opening balance 50,216 3.1.2 Site operating expenses Additional provision recognised 14,067 2019 2018 Unwind of discount and effect of changes in the discount rate 2,213 $ $ Closing balance 66,496 Building and tenant consultants 551,680 112,865 Current 62,160 Car park operations 486,404 475,855 Non-current 4,336 Cleaning 1,840,893 1,819,573 Maintenance 2,174,627 2,089,357 Security 2,081,686 1,961,727 Utilities 1,889,198 1,706,376 Total site operating expenses 9,024,488 8,165,753

70 | FED SQUARE 2018-19 ANNUAL REPORT | 71 3.1.3 Other operating expenses 2019 2018 4. KEY ASSETS AVAILABLE TO SUPPORT SERVICE DELIVERY $ $ Administration and accounting 856,987 925,115 disclosed in Note 7.3 in connection with how Bad debts from transactions 5,000 59,335 Introduction those fair values were determined. The company controls infrastructure and other Information and communications technology 646,567 704,730 investments that are utilised in fulfilling its 544,884 544,884 Structure Insurance objectives and conducting its activities. They 4.1 Total property, plant and equipment Legal 715,317 162,393 represent the key resources that have been 4.1.1 Depreciation and impairment entrusted to the company to be utilised for Motor vehicles 5,637 1,884 4.1.2 Reconciliation of movements delivery of those activities. Promotional expenses 801,960 710,846 in carrying amount of property, plant and equipment. Statutory rates and taxes 1,941,204 1,630,381 Fair value measurement Tenancy expenses 4,621,947 2,812,768 Where the assets included in this section are carried at fair value, additional information is Total other operating expenses 10,139,503 7,552,336

Site and other operating expenses generally projects that are not proceeding) of $4,524,599 4.1 Total property, plant and equipment represent the day-to-day running costs incurred (2017-18: $2,390,309). Costs recovered under Gross carrying amount Accumulated Net Carrying in normal operations. It also includes bad debts commercial arrangements and included in other depreciation Amount expense from transactions that are mutually revenue in Note 2.1 are $3,248,385 (2017-18: 2019 2018 2019 2018 2019 2018 agreed. $1,466,286). $ $ $ $ $ $ Freehold land at fair value 203,600,000 216,000,000 - - 203,600,000 216,000,000 Tenancy expenses include the cost of Supplies and services are recognised as an Buildings and improvements at fair value 338,203,127 341,500,181 (31,106,451) (22,708,566) 307,096,676 318,791,615 compensation, relocation of tenants and expense in the reporting period in which they are 9,362,290 7,065,097 (5,567,734) (5,316,640) 3,794,556 1,748,457 associated costs (including previously capitalised incurred. Plant and equipment at fair value costs written back to expense for tenancy Tenancy fit-outs at fair value ------Plant and equipment under finance lease 35,714 35,714 (12,940) (6,189) 22,774 29,525

Assets under construction at cost 1,275,452 5,285,300 - - 1,275,452 5,285,300

Total property, plant and equipment 552,476,583 569,886,292 (36,687,125) (28,031,395) 515,789,458 541,854,897

Note: FSPL is included in the ‘Public safety & environment’ government purpose classification group.

Initial recognition Items of property, plant and equipment are The initial cost for non-financial physical assets measured initially at cost and subsequently under a finance lease is measured at amounts revalued at fair value less accumulated equal to the fair value of the leased asset or, depreciation and impairment. if lower, the present value of minimum lease payments, each determined at the inception of the lease.

72 | FED SQUARE 2018-19 ANNUAL REPORT | 73 Subsequent measurement Buildings are valued using the current of the asset will be replaced (unless a specific potential has not, in any material sense, been replacement cost method, adjusting for the decision to the contrary has been made). consumed during the reporting period. Property, plant and equipment are subsequently associated depreciation. measured at fair value less accumulated Land is considered to have an indefinite life and is Assets under construction are not depreciated depreciation and impairment. Fair value is Plant, equipment and tenancy fit-outs are held at not depreciated. Depreciation is not recognised until brought into use. determined with regard to the asset’s highest and fair value. in respect of these assets because their service best use (considering legal or physical restrictions imposed on the asset, public announcements or Plant and equipment under finance lease are Impairment vehicles valued using the current replacement commitments made in relation to the intended Non-financial assets are assessed annually for recognised, the carrying amount shall be increased cost method. New vehicles are acquired and use of the asset) and is summarised below by indications of impairment. If there is an indication to its recoverable amount. However this reversal at times disposed of before the end of their asset category. of impairment, the assets concerned are tested should not increase the asset’s carrying amount economic life. The process of acquisition, use and as to whether their carrying value exceeds their above what would have been determined, net of disposal in the market is managed by VicFleet, Freehold land is valued using the market recoverable amount. Where an asset’s carrying depreciation or amortisation, if no impairment loss who set relevant depreciation rates during use to approach, whereby assets are compared to value exceeds its recoverable amount, the had been recognised in prior years. reflect the utilisation of the vehicles. recent comparable sales or sales of comparable difference is written off as an 'other economic assets that are considered to have nominal value. flow', except to the extent that the write down The recoverable amount for most assets is Note 7.3 includes additional information in The value is adjusted for the community service can be debited to an asset revaluation surplus measured at the higher of current replacement cost connection with fair value determination of obligation (CSO) to reflect the specialised nature amount applicable to that class of asset. and fair value less costs to sell. Recoverable amount property, plant and equipment. of the land. In addition an adjustment is made for assets held primarily to generate net cash to the portion of land on the Victorian Heritage If there is an indication that there has been a inflows is measured at the higher of the present Register. The adjustments are a reflection of the reversal in the estimate of an asset’s recoverable value of future cash flows expected to be obtained valuer’s assessment of the impact of restrictions amount since the last impairment loss was from the asset and fair value less costs to sell. associated with an asset to the extent that is also equally applicable to market participants. 4.1.2 Reconciliation of movements in carrying amount of property, plant and equipment

4.1.1 Depreciation and impairment Total Plant and Assets under property, 2019 2018 Freehold Buildings and Plant and Tenancy equipment construction plant and $ $ Notes Land improvements equipment fitouts under lease at cost equipment $ $ $ $ $ $ $ Charge for the period: Carrying amount at 1 216,000,000 325,839,726 1,130,016 74,901 14,582 1,761,570 544,820,795 Buildings and improvements at fair value 11,536,318 11,435,082 July 2017 Plant and equipment at fair value 576,100 230,273 Additions - 3,363,678 848,714 - 35,713 4,547,023 8,795,128 Tenancy fit-outs at fair value - 74,901 Disposals - - - - (13,364) - (13,364) Plant and equipment under finance lease 6,751 7,406 Transfer in/out - 1,023,293 - - - (1,023,293) - of assets under Total depreciation 12,119,169 11,747,662 construction Revaluation 7.3.2 ------(11,435,082) (230,273) (74,901) (7,406) - (11,747,662) The estimated useful lives, residual values and Category Useful life Depreciation and depreciation method is reviewed at the end of amortisation each annual reporting period, and adjustments Buildings and improvements 5 - 100 years made where appropriate. Items costing less than Carrying amount at 1 216,000,000 318,791,615 1,748,457 - 29,525 5,285,300 541,854,897 2 - 40 years $5,000 are written off in the year of purchase. Plant and equipment (including leased July 2018 assets) Additions - 1,064,405 636,458 - - 693,434 2,394,297

Disposals (3,400,000) (3,940,567) - - - - (7,340,567) Depreciation The cost of tenancy fit-outs provided under lease Transfer in/out - 2,717,541 1,985,741 - - (4,703,282) - arrangements are amortised over the shorter of assets under Depreciation is calculated on a straight line basis, of the initial term of the relevant lease and their construction at rates that allocate the asset’s value, less any useful lives. Revaluation 7.3.2 (9,000,000) - - - - - (9,000,000) estimated residual value, over its estimated Depreciation and - (11,536,318) (576,100) - (6,751) - (12,119,169) useful life. The following estimated useful lives In the event of the loss or destruction of an asset, amortisation are used in the calculation of depreciation: the future economic benefits arising from the use Carrying amount at 203,600,000 307,096,676 3,794,556 - 22,774 1,275,452 515,789,458 30 June 2019

74 | FED SQUARE 2018-19 ANNUAL REPORT | 75 Minimum lease receivables (a) Present value of minimum lease receivables

5. OTHER ASSETS AND LIABILITIES 2019 2018 2019 2018 $ $ $ $ Introduction Structure Finance lease receivables This section sets out those assets and liabilities 5.1 Receivables Not longer than one year 307,964 - 297,072 - that arose from the company’s operations. 5.2 Payables 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) - - - 5.1 Receivables Present value of minimum lease receivables 8,073,660 - 8,073,660 - Included in the financial statements as: 2019 2018 - Current finance lease receivables 297,072 - $ $ - Non‑current finance lease receivables 7,776,588 -

Current receivables Total 8,073,660 - Contractual

Trade receivables 999,818 2,500,461 Note: (a) Minimum future lease payments receivable includes the aggregate of all lease payments receivable and any guaranteed residual. Insurance receivable 5,848 6,848 Accrued investment income - 5,434 5.2 Payables Accrued income 169,746 1,461,323 Finance lease receivable 8,073,660 - 2019 2018 Allowances for impairment losses of contractual receivables (17,927) (52,981) $ $ Total current receivables 9,231,145 3,921,085 Current payables Contractual 1,533,185 3,556,621 Total receivables 9,231,145 3,921,085 Creditors Advances 1,054,645 668,437 Salaries and associated costs 78,931 63,674 Contractual receivables are classified as financial costs. Subsequently to initial measurement they instruments and categorised as loans and are measured at amortised cost using effective 2,666,761 4,288,732 receivables. They are initially recognised at fair interest method, less any impairment. Statutory value plus any directly attributable transaction GST payable 8,538 169,905 Fringe benefits tax 7,215 3,197 5.1.1 Finance leases (FSPL as lessor) 15,753 173,102 Amounts due from lessees under finance leases Finance lease receivables relate to land being are recorded as receivables. Finance lease developed by Melbourne Metro Project as an Total current payables 2,682,514 4,461,834 receivables are initially recorded at amounts entrance to the new Town Hall train station with equal to the present value of the minimum lease a lease term of four years. At the end of the lease, 2,682,514 4,461,834 payments receivable plus the present value of there is an unguaranteed residual value, which Total payables any unguaranteed residual value expected to is in the form of the land being compulsorily accrue at the end of the lease term. Finance acquired under the Land Acquisition and lease receipts are apportioned between periodic Compensation Act 1986 (Vic). The finance lease Payables consist of: Statutory payables, that are recognised and interest revenue and reduction of the lease receivable amount is dependent on the estimated Contractual payables, classified as financial measured similarly to contractual payables, but receivable over the term of the lease in order to amount to be received on compulsory acquisition, instruments and measured at amortised cost. are not classified as financial instruments and not reflect a constant periodic rate of return on the which will be reviewed on a periodic basis. Contractual payables represent liabilities for included in the category of financial liabilities at net investment outstanding in respect of the goods and services provided to the company amortised cost, because they do not arise from lease. prior to the end of the financial year that are contracts. unpaid; and

76 | FED SQUARE 2018-19 ANNUAL REPORT | 77 5.2.1 Maturity analysis of contractual payables

Carrying Nominal Less than 1 – 3 3 months 1 – 5 2019 amount amount 1 month months – 1 year years 5 + years 6. HOW WE FINANCED OUR OPERATIONS $ $ $ $ $ $ $ Payables Introduction Structure This section provides information on the sources 6.1 Borrowings Supplies and services 2,666,761 2,666,761 2,666,761 - - - - of finance utilised by the company during its 6.1.1 Maturity analysis of borrowings Total 2,666,761 2,666,761 2,666,761 - - - - operations, along with interest expenses (the cost 6.1.2 Interest expense of borrowings) and other information related to 6.2 Leases financing activities of the company. 6.2.1 Finance lease liabilities Carrying Nominal Less than 1 – 3 3 months 2018 amount amount 1 month months – 1 year 1 – 5 years 5 + years 6.3 Commitments for expenditure This section includes disclosures of balances that 6.4 Cash flow information $ $ $ $ $ $ $ are financial instruments (such as borrowings 6.4.1 Reconciliation of net result to Payables and cash balances). Notes 7.1 and 7.3 provide cash flow from operating activities Supplies and services 4,288,732 4,288,732 4,288,732 - - - - additional, specific financial instrument Total 4,288,732 4,288,732 4,288,732 - - - - disclosures.

6.1 Borrowings

2019 2018 $ $ Current borrowings Loans - - Advances from Government 555,429 555,429 Finance lease liability 6,952 6,731 Total current borrowings 562,381 562,160

Non-current borrowings Loans - - Advances from Government 1,595,005 2,150,434 Finance lease liability 16,050 23,002 Total non-current borrowings 1,611,055 2,173,436

Total borrowings 2,173,436 2,735,596 ‘Borrowings’ refer to interest bearing liabilities costs. The measurement basis subsequent mainly raised from public borrowings raised to initial recognition depends on whether through the Treasury Corporation of Victoria, the company has categorised its interest finance leases and other interest bearing bearing liabilities as either ‘financial liabilities arrangements. designated at fair value through ‘profit or loss’, or financial liabilities at ‘amortised cost’. The Borrowings are classified as financial instruments. classification depends on the nature and purpose All interest bearing borrowings are initially of the interest bearing liabilities. The company recognised at the fair value of the consideration determines the classification of its interest received less directly attributable transaction bearing liabilities at initial recognition.

78 | FED SQUARE 2018-19 ANNUAL REPORT | 79 Loans are provided by the Treasury Corporation Finance lease liabilities represent motor vehicles 6.2 Leases of Victoria in the form of fixed interest annuities leased from Vic Fleet, a unit of the Victorian and are secured by a guarantee from the company of Treasury and Finance. The motor Treasurer of Victoria. vehicles provide security under the terms of the Minimum future lease Present value of minimum future lease. payments (a) lease payments Advances from Government are interest free Notes 2019 2018 2019 2018 advances are provided by the Department of During the current and prior year, there were no $ $ $ $ Jobs, Precincts and Regions and are repayable by defaults and breaches of any of the loans. Finance lease liabilities payable: 2023. - not later than one year 7,597 7,597 6,953 6,953 - later than one year and not later than 16,093 23,691 16,049 22,780 6.1.1 Maturity analysis of borrowings five years Minimum lease payments 23,690 31,288 23,002 29,733 Carrying Nominal Less than 1 – 3 3 months 1 – 5 Less: future finance charges (688) (1,555) - - 2019 Note amount amount 1 month months – 1 year years 5 + years Present value of minimum lease payments 23,002 29,733 23,002 29,733 $ $ $ $ $ $ $ Included in the financial statements as: Loans 6.1 ------Current borrowings lease liabilities 6.1 6,952 6,731 Advances from 6.1 2,150,434 2,150,434 - - 555,429 1,595,005 - 6.1 16,050 23,002 Government - Non-current borrowings lease liabilities Lease liability 6.1 23,002 23,690 633 1,266 5,698 16,093 - Total lease liability 23,002 29,733 Total 2,173,436 2,174,124 633 1,266 561,127 1,611,098 - Note: (a) Minimum future lease payments receivable includes the aggregate of all base payments and any guaranteed residual.

Carrying Nominal Less than 1 – 3 3 months 2018 Note amount amount 1 month months – 1 year 1 – 5 years 5 + years At the commencement of the lease term, finance Minimum finance lease payments are apportioned leases are initially recognised as assets and between the reduction of the outstanding lease $ $ $ $ $ $ $ liabilities at amounts equal to the fair value of the liability and the periodic finance expense which Loans 6.1 ------leased property or, if lower, the present value of is calculated using the interest rate implicit in the Advances from 6.1 2,705,863 2,705,863 - - 555,429 2,150,434 - the minimum lease payment, each determined lease and charged directly to the comprehensive Government at the inception of the lease. The leased asset is operating statement. Lease liability 6.1 29,733 31,288 633 1,266 5,698 23,691 - accounted for as a non-financial physical asset and depreciated over the shorter of the estimated Total 2,735,596 2,737,151 633 1,266 561,127 2,174,125 - useful life of the asset or the term of the lease. 6.1.2 Interest expense

2019 2018 $ $ Interest on loans - 329,368 Interest on finance leases 867 (622) Total interest expense 867 328,746

‘Interest expense’ includes costs incurred in Interest expense is recognised in the period in connection with the borrowing of funds and which it is incurred. includes short term and long term borrowings and the interest component of finance leases repayments.

80 | FED SQUARE 2018-19 ANNUAL REPORT | 81 6.3 Commitments for expenditure 6.4.1 Reconciliation of net result for the period to net Commitments for future expenditure include present values of significant individual projects cash flows from operating activities operating and capital commitments arising from are stated. These future expenditures cease to contracts. These commitments are recorded be disclosed as commitments once the related Notes 2019 2018 $ $ below at their nominal value and inclusive of the liabilities are recognised in the balance sheet. GST. Where it is considered appropriate, the net Net result for the period (7,984,955) (4,852,645)

Non-cash items: 2019 2018 Nominal amounts $ $ - Depreciation and amortisation 4.1.1 12,119,169 11,747,662 - Increase / (Decrease) in allowance for impairment losses of 8.2.1 (35,054) - contractual receivables Payable less than one year - Forgiveness of liabilities 8.2.1 11,846 - Capital expenditure commitments payable 117,413 613,449 - Bad debts from transactions 3.1.3 5,000 59,335 - (Gain) / Loss on disposal of assets 207,000 (7,272) Total commitments (inclusive of GST) 117,413 613,449 Net cash inflows from operating activities before changes 4,323,006 6,947,080 in assets and liabilities Less GST recoverable from the Australian Tax Office (10,674) (55,768) Changes in assets and liabilities Total commitments (exclusive of GST) 106,739 557,681 (Increase) / Decrease in receivables (excluding assets transferred 1,841,714 (3,501,658) to finance lease receivable) (Increase) / Decrease in prepayments (1,226) 38,404 6.4 Cash flow information and balances Increase / (Decrease) in payables (1,779,320) 563,263 Cash and deposits, including cash equivalents, The company, at the request of the Treasurer, has Increase / (Decrease) in provisions 63,976 (72,903) comprise cash on hand and cash at bank, deposited surplus balances into the Centralised deposits at call and those highly liquid Banking System (CBS). Funds held in the CBS 4,448,150 3,974,186 investments with an original maturity of three account are at call. Net cash flows from operating activities months or less, which are held for the purpose of meeting short-term cash commitments rather Cash as at the end of the financial year as shown than for investment purposes, and which are in the cash flow statement is reconciled to the readily convertible to known amounts of cash and related items in the balance sheet as follows: are subject to an insignificant risk of changes in value.

2019 2018 $ $ Cash on hand and at bank 11,280,477 222,104 Term deposits - 9,566,679 Cash and cash equivalents as shown on the cash flow statement 11,280,477 9,788,783

82 | FED SQUARE 2018-19 ANNUAL REPORT | 83 Categories of financial liabilities under AASB Derecognition of financial liabilities: 7. RISKS, CONTINGENCIES AND VALUATION JUDGEMENTS 9 and previously under AASB 139 A financial liability is derecognised when the Financial liabilities at amortised cost obligation under the liability is discharged, items that are contingent in nature or require a Introduction are initially recognised on the date they are cancelled or expires. higher level of judgement to be applied, which FSPL (the Company) is exposed to risk from originated. They are initially measured at fair for the company related mainly to fair value its activities and outside factors. In addition, value plus any directly attributable transaction When an existing financial liability is replaced by determination. it is often necessary to make judgements costs. Subsequent to initial recognition, these another from the same lender on substantially and estimates associated with recognition financial instruments are measured at amortised different terms, or the terms of an existing and measurement of items in the financial Structure 7.1 Financial instruments specific disclosures cost with any difference between the initial liability are substantially modified, such an statements. This section sets out financial recognised amount and the redemption value exchange or modification is treated as a instrument specific information, (including 7.2 Contingent assets and contingent liabilities 7.3 Fair value determination being recognised in profit and loss over the period derecognition of the original liability and the exposures to financial risks) as well as those of the interest bearing liability, using the effective recognition of a new liability. The difference in interest rate method. The company recognises the respective carrying amounts is recognised as the following liabilities in this category: an ‘other economic flow’ in the comprehensive - payables (excluding statutory payables); operating statement. 7.1 Financial instruments specific disclosures - borrowings; and - finance lease liabilities payable. Reclassification of financial instruments: Introduction The company recognises the following assets in Subsequent to initial recognition reclassification Financial instruments arise out of contractual this category: Derecognition of financial assets: agreements that give rise to a financial asset - cash and deposits; of financial liabilities is not permitted. Financial of one entity and a financial liability or equity - receivables (excluding statutory receivables); and A financial asset (or, where applicable, a part assets are required to reclassified between fair instrument of another entity. Due to the nature - term deposits of a financial asset or part of a group of similar value through net result, fair value through of FSPL’s activities, certain financial assets and financial assets) is derecognised when: other comprehensive income and amortised cost financial liabilities arise under statute rather than Categories of financial instruments previously - the rights to receive cash flows from the asset when and only when the company business a contract. Such financial assets and financial under AASB 139 have expired ; or model for managing its financial assets has liabilities do not meet the definition of financial - the company retains the right to receive cash changes such that its previous model would no instruments in AASB 132 Financial Instruments: Loans and receivables and cash are financial flows from the asset, but has assumed an longer apply. Presentation. instrument assets with fixed and determinable obligation to pay them in full without material payments that are not quoted on an active delay to a third party under a ‘pass through’ If under rare circumstances an asset is From 1 July 2018, the company applies AASB 9 market. These assets and liabilities are initially arrangement; or reclassified, the reclassification is applied and classifies all of its financial assets based on recognised at fair value plus any directly - the company has transferred its rights to prospectively from the reclassification date and the business model for managing the assets and attributable transaction costs. Subsequent to receive cash flows from the asset and either: previously recognised gains, losses or interest the asset’s contractual terms. initial measurement, loans and receivables are - has transferred substantially all the risks should not be restated. If the asset is measured at amortised cost using the effective and rewards of the asset; or reclassified to fair value, the fair value should be Categories of financial assets under AASB 9 interest method (and for assets, less any - has neither transferred nor retained determined at the reclassification date and any Financial assets at amortised cost impairment). The company recognises the substantially all the risks and rewards gain or loss arising from a difference between following assets in this category: of the asset, but has transferred control the previous carrying amount and fair value is Financial assets are measured at amortised costs - cash assets; of the asset. recognised in ne t re sult. if both of the following criteria are met and the - term deposits; and assets are not designated as fair value through - receivables (excluding statutory receivables). Where the company has neither transferred nor net result: retained substantially all the risks and rewards or - the assets are held by the company to collect transferred control, the asset is recognised to the the contractual cash flows, and extent of the company’s continuing involvement - the assets’ contractual terms give rise to cash in the asset. 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.

84 | FED SQUARE 2018-19 ANNUAL REPORT | 85 Financial instruments: Categorisation Financial risk management objectives Financial assets Financial 2019 Cash and at amortised liabilities at Note deposits cost amortised cost Total $ $ $ $ Contractual financial assets Financial Cash and deposits 6.4 11,280,477 - - 11,280,477 risks

Receivables (a)

Sale of goods and services 5.1 - 1,151,637 - 1,151,637 Accrued investment income 5.1 - - - - Credit risk Liquidity risk Market risk 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 Interest rate risk

Payables (a)

Supplies and services 5.2 - - 2,666,761 2,666,761

Borrowings Foreign currency risk Finance lease liabilities 6.1 - - 23,002 23,002

Advances from government 6.1 - - 2,150,434 2,150,434

Total contractual financial liabilities - - 4,840,197 4,840,197 Equity price risk

Contractual Contractual financial assets financial Cash and – loans and liabilities at 2018 Note deposits receivables amortised cost Total $ $ $

Contractual financial assets As a whole, the company’s financial risk The company’s main financial risks include Cash and deposits 6.4 9,788,783 - - 9,788,783 management program seeks to manage these credit risk, liquidity risk, interest rate risk, foreign risks and the associated volatility of its financial currency risk and equity price risk. The company

Receivables (a) performance. manages these financial risks in accordance with its financial risk management policy. Sale of goods and services 5.1 - 3,908,803 - 3,908,803 Details of the significant accounting policies Accrued investment income 5.1 - 5,434 - 5,434 and methods adopted, including the criteria The company uses different methods to Finance lease receivable 5.1 - - - - for recognition, the basis of measurement, and measure and manage the different risks to which Other receivables 5.1 - 6,848 - 6,848 the basis on which income and expenses are it is exposed. Primary responsibility for the Total contractual financial assets 9,788,783 3,921,085 - 13,709,868 recognised, with respect to each class of financial identification and management of financial risks asset, financial liability and equity instrument rests with management, with regular reporting to

Contractual financial liabilities above are disclosed in Note 7.3 to the financial and review by the Board. statements. Payables (a) Supplies and services 5.2 - - 4,288,732 4,288,732 The main purpose in holding financial instruments is to prudentially manage the Borrowings company’s financial risks within the government Finance lease liabilities 6.1 - - 29,733 29,733 policy parameters.

Advances from government 6.1 - - 2,705,863 2,705,863

Total contractual financial liabilities - - 7,024,328 7,024,328

Notes: (a) The totals amounts disclosed here exclude statutory amounts (e.g. amounts payable to or recoverable from the Australian Taxation Office).

86 | FED SQUARE 2018-19 ANNUAL REPORT | 87 Financial instruments: Credit risk In addition, the company does not engage in Impairment of financial assets under AASB 9 Contractual receivables at amortised cost Credit risk refers to the possibility that a borrower hedging for its contractual financial assets and – applicable from 1 July 2018 The company applies AASB 9 simplified approach will default on its financial obligations as and mainly obtains contractual financial assets From 1 July 2018, the company has been for all contractual receivables to measure when they fall due. The company’s exposure to that are on fixed interest, except for cash and recording the allowance for expected credit loss expected credit losses using a lifetime expected credit risk arises from the potential default of a deposits, which are mainly cash at bank. The for the relevant financial instruments, replacing loss allowance based on the assumptions about counter party on their contractual obligations company’s policy is to only deal with banks with AASB 139’s incurred loss approach with AASB risk of default and expected loss rates. The resulting in financial loss to the company. Credit high credit ratings. 9’s Expected Credit Loss approach. Subject to company has grouped contractual receivables risk is measured at fair value and is monitored on AASB 9 impairment assessment include the on shared credit risk characteristics and days a regular basis. Provision of impairment for contractual financial company’s contractual receivables, cash and past due and select the expected credit loss rate assets is recognised when there is objective cash equivalents. based on the company’s past history, existing Credit risk associated with the company’s evidence that the company will not be able to market conditions, as well as forward‑looking contractual financial assets is minimal because collect a receivable. Objective evidence includes estimates at the end of the financial year. the company has a policy of only providing financial difficulties of the debtor, default material credit to creditworthy counterparties payments, debts that are more than 90 days On this basis, the company determines the and obtaining industry standard security over overdue, and changes in debtor credit ratings. opening loss allowance on initial application date leases in the form of bank guarantees or cash of AASB 9 and the closing loss allowance at end advances. The company’s exposure and the Except as otherwise detailed in the following of the financial year as follows: credit worthiness of counterparties is continually table, the carrying amount of contractual monitored. financial assets recorded in the financial statements, net of any allowances for losses, Less than 1 – 3 3 months Activities that give rise to credit risk are the represents the company’s maximum exposure to 2019 Current 1 month months – 1 year 1 - 5 years Total granting of credit to customers and tenants at credit risk without taking account of the value of $ $ $ $ $ $ Federation Square. The company does not have any collateral obtained. Expected loss rate % 0% 0% 0% 0% 0.2% any significant exposure to a single counterparty 552,868 213,693 613,553 81,726 7,787,232 9,249,072 and trade receivables comprise a large number of There has been no material change to the Gross carrying amount of contractual diverse customers with differing characteristics. company’s credit risk profile in 2018-19. Loss allowance - - - - 17,927 17,927

Credit quality of contractual financial assets that are neither Less than 1 – 3 3 months past due nor impaired 2018 1 month months – 1 year 1 - 5 years Total $ $ $ $ $ $ Expected loss rate % 0% 0% 0% 0% 100.0% Financial Financial institutions institutions Other Gross carrying amount of contractual 1,889,519 1,921,927 32,720 76,919 52,981 3,921,085 Triple A Double A- unknown 2019 Note credit rating credit rating credit rating Total Loss allowance - - - - 52,981 52,981 $ $ $ $

Cash and deposits 6.4 - 11,254,767 25,710 11,280,477 Contractual receivables 5.1 - - 9,231,145 9,231,145 Reconciliation of the movement in the loss allowance for contractual receivables is shown as follows: Total contractual financial assets - 11,254,767 9,256,855 20,511,622 2019 2018 $ $ Financial Financial Balance at beginning of year (52,981) - institutions institutions Other (17,927) - Triple A credit Double A- unknown Increase in provision recognised in the net result 2018 Note rating credit rating credit rating Total Reversal of provision of receivables written off during the year as uncollectible 11,846 (52,981) $ $ $ $ Reversal of unused provision recognised in the net result 41,135 - Cash and deposits 6.4 9,566,679 196,394 25,710 9,788,783 Balance at end of year (17,927) (52,981) Contractual receivables 5.1 - - 3,921,085 3,921,085 Total contractual financial assets 9,566,679 196,394 3,946,795 13,709,868

Notes: (a) The total amounts disclosed here exclude statutory amounts (e.g. GST input tax credit recoverable).

88 | FED SQUARE 2018-19 ANNUAL REPORT | 89 Credit loss allowance is classified as other The company’s exposure to liquidity risk is Interest rate risk The company manages this risk by mainly economic flows in the net result. Contractual deemed insignificant based on prior periods’ data Fair value interest rate risk is the risk that the undertaking fixed rate or non-interest bearing receivables are written off when there is and current assessment of risk. fair value of a financial instrument will fluctuate financial instruments with relatively even no reasonable expectation of recovery and because of changes in market interest rates. maturity profiles, with only insignificant amounts impairment losses are classified as a transaction The carrying amount detailed in the following The company does not hold any interest bearing of financial instruments at floating rate. expense. Subsequent recoveries of amounts table of contractual financial liabilities recorded financial instruments that are measured at fair Management has concluded for cash at bank, as previously written off are credited against the in the financial statements represents the value, and therefore has no exposure to fair value financial assets that can be left at floating rate same line item. company’s maximum exposure to liquidity risk. interest rate risk. without necessarily exposing the company to significant bad risk, management monitors In prior years, a provision for doubtful debts is Financial instruments: Market risk There is no interest rate risk associated with movement in interest rates on a regular basis. recognised when there is objective evidence that The company’s exposures to market risk are loans as all borrowings are made at either fixed the debts may not be collected and bad debts are primarily through interest rate risk, foreign rates of interest from Treasury Corporation The carrying amounts of financial assets and written off when identified. A provision is made currency risk and equity price risk. Objectives, Victoria or interest free from the Department of financial liabilities that are exposed to interest for estimated irrecoverable amounts from the policies and processes used to manage each of Jobs, Precincts and Regions. rates and the company’s sensitivity to interest sale of goods when there is objective evidence that these risks are disclosed below. rate risk are set out in the table that follows. an individual receivable is impaired. Bad debts Cash flow interest rate risk is the risk that the considered as written off by mutual consent. The company has an immaterial exposure to future cash flows of afinancial instrument will interest rate risk, foreign currency risk, credit fluctuate because of changes in market interest The company holds bank guarantees and security risk and liquidity risk. The company does not use rates. The company has minimal exposure to deposits from a limited number of customers. derivative financial instruments to hedge against cash flow interest rate risks through cash and risk exposures nor for speculative purposes. deposits, and term deposits that are at floating Financial instruments: Liquidity risk Financial risks are reported to the Board at each Liquidity risk arises from being unable to meet meeting. rate. financial obligations as they fall due. The company operates under a policy of settling Sensitivity disclosure analysis and assumptions financial obligations within 30 days and in the The company’s sensitivity to market risk is event of a dispute, making payments within 30 determined based on the observed range days from the date of resolution. of actual historical data for the preceding five year period, with all variables other than the The company is exposed to liquidity risk mainly primary risk variable held constant. The through the financial liabilities as disclosed in company’s fund managers cannot be expected the face of the balance sheet and the amounts to predict movements in market rates and related to financial guarantees. The company prices. Sensitivity analyses shown are for manages its liquidity risk by: illustrative purposes only. - close monitoring of its short-term and long-term borrowings by senior management, including The following movements are ‘reasonably monthly reviews on current and future borrowing possible’ over the next 12 months: levels and requirements; - a movement of 50 basis points up and down - maintaining an adequate level of uncommitted (50 basis points up and down) in market interest funds that can be drawn at short notice to meet rates (AUD); its short-term obligations; - proportional exchange rate movement of 15 per - holding investments and other contractual cent down and 15 per cent up against the USD; and financial assets that are readily tradeable in the - a movement of 15 per cent up and down for the financial markets; top ASX 200 index. - careful maturity planning of its financial obligations based on forecasts of future cash Where relevant, tables that follow show the flows; and impact on the company’s net result and equity for - a high credit rating for the State of Victoria each category of financial instrument held by the (Moody’s Investor Services and Standard & Poor’s company at the end of the reporting period, if the triple-A, which assists in accessing debt market above movements were to occur. at a lower interest rate).

90 | FED SQUARE 2018-19 ANNUAL REPORT | 91 Interest rate exposure of financial instruments Interest rate risk sensitivity

Weighted Average Amount exposed to - 50 basis points + 50 basis points Interest 2019 rate movement Net result Net result 2019 Note Rate Interest rate exposure Financial Assets Fixed Interest Variable Non Interest Carrying Rate Interest Rate Bearing amount 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 Financial assets Cash and deposits 6.4 1.40% - 11,254,767 25,710 11,280,477 Receivables (a) 5.1 Amount exposed to - 50 basis points + 50 basis points 2018 rate movement Net result Net result - Finance lease receivable 22.41% - 8,073,660 - 8,073,660 Financial Assets - All other receivables - - - 1,157,485 1,157,485 Cash and deposits 11,254,767 (56,274) 56,274 Total financial assets - 19,328,427 1,183,195 20,511,622 Receivables 8,073,660 (40,368) 40,368

Total impact 9,763,073 (48,815) 48,815 Financial liabilities Payables (a) 5.2 - - - 2,666,761 2,666,761 Lease liabilities 6.1 3.25% 23,002 - - 23,002 Loans and advances 6.1 - - - 2,150,434 2,150,434 Foreign currency exposure The company has no exposure to foreign currency Total financial liabilities 23,002 - 4,817,195 4,840,197 The company has exposure to foreign currency risk as at 30 June 2019. risk through a limited number of transactions denominated in foreign currencies and there is a Equity price risk Weighted relatively short timeframe between commitment The company is not exposed to equity price risk. Average Interest and settlement, therefore risk is minimal. The company does not have investments in listed 2018 Note Rate Interest rate exposure and unlisted shares or managed investment

Fixed Interest Variable Non Interest Carrying All foreign currency transactions during the schemes. Rate Interest Rate Bearing amount financial year are brought to account using % $ $ $ $ the exchange rate in effect at the date of the transaction.

Financial assets Cash and deposits 6.4 2.04% 9,566,679 196,394 25,710 9,788,783 7.2 Contingent assets and contingent liabilities Receivables (a) 5.1 - Finance lease receivable - - - - - Contingent assets and contingent liabilities are - present obligations that arise from past events not recognised in the balance sheet but are but are not recognised because: - All other receivables - - - 3,921,085 3,921,085 disclosed and, if quantifiable, are measured at - it is not probable that an outflow of Total financial assets 9,566,679 196,394 3,946,795 13,709,868 nominal value. Contingent assets and liabilities resources embodying economic benefits are presented inclusive of GST receivable or will be required to settle the obligations; or Financial liabilities payable respectively. - the amount of the obligations cannot be Payables (a) 5.2 - - - 4,288,732 4,288,732 measured with sufficient reliability. Contingent liabilities Lease liabilities 6.1 3.25% 29,733 - - 29,733 Contingent liabilities are: Contingent liabilities are also classified as either Loans and advances 6.1 - - - 2,705,863 2,705,863 - possible obligations that arise from past events, quantifiable or non-quantifiable. Total financial liabilities 29,733 - 6,994,595 7,024,328 whose existence will be confirmed only by the occurrence or non-occurrence of one or more Notes: (a) The total amounts disclosed here exclude statutory amounts (e.g. GST input tax credit recoverable). uncertain future events

92 | FED SQUARE 2018-19 ANNUAL REPORT | 93 Non quantifiable contingent liabilities Quantifiable contingent liabilities be the same for those assets measured at fair the end; and There are potential non-quantifiable obligations at There are no known quantifiable obligations as at value); - details of significant unobservable inputs this time arising from: balance sheet date. - which level of the fair value hierarchy was used used in the fair value determination. - net costs relating to compensation, relocation of to determine the fair value; and This section is divided between disclosures in tenants and associated costs, and Contingent assets - in respect of those assets and liabilities subject connection with fair value determination for - claims arising from incidents occurring at Fed Contingent assets are possible assets that to fair value determination using Level 3 inputs: financial instruments (refer to Note 7.3.1) and non Square. These may take the form of public liability arise from past events, whose existence will - a reconciliation of the movements in fair -financial physical assets (refer to Note 7.3.2). claims from people who are injured whilst visiting be confirmed only by the occurrence or non- values from the beginning of the year to the site or legal claims from disputes with tenants or occurrence of one or more uncertain future venue hirers. In the company’s opinion, the financial events not wholly within the control of the entity. 7.3.1 Fair value determination of financial assets and liabilities risk from such claims is low. There are no known contingent assets at balance date. The fair values and net fair values of financial These financial instruments include: Should FPSL incur costs in relation to compensation, assets and liabilities are determined as follows: Financial assets Financial liabilities relocation of tenants and associated costs FPSL may • Level 1 – the fair value of financial instruments be able to recover a proportion of these costs. with standard terms and conditions and traded Cash and deposits Payables in active liquid markets are determined with Receivables -For supplies and services reference to quoted market prices; -Sale of goods and services -Advances • Level 2 – the fair value is determined using -Accrued investment income Borrowings 7.3 Fair value determination inputs other than quoted prices that are -Other receivables -Finance lease observable for the financial asset or liability, Significant judgement: Fair value measurements in the financial statements, these inputs are either directly or indirectly; and Where the fair value of the financial instruments of assets and liabilities. categorised into three levels, also known as the • Level 3 – the fair value is determined in is different from the c arrying amounts, the Fair value determination requires judgement and fair value hierarchy. The levels are as follows: accordance with generally accepted pricing following information has been included to the use of assumptions. This section discloses the • Level 1 – quoted (unadjusted) market prices in models based on discounted cash flow analysis disclose the difference. most significant assumptions used in determining active markets for identical assets or liabilities; using unobservable market inputs. fair values. Changes to assumptions could have a • Level 2 – valuation techniques for which the Fair value of financial instruments measured material impact on the results and financial lowest level input that is significant to the fair at amortised cost The company currently holds a range of financial position of the company. value measurement is directly or indirectly instruments that are recorded in the financial Carrying amount Fair value observable; and statements where the carrying amounts 2019 2018 2019 2018 This section sets out information on how the • Level 3 – valuation techniques for which the $ $ $ $ approximate to fair value, due to their short-term company determined fair value for financial lowest level input that is significant to the fair nature or with the expectation that they will be Financial reporting purposes. Fair value is the price that value measurement is unobservable. assets paid in full by the end of the 2018-19 reporting would be received to sell an asset or paid to Finance lease 8,073,660 - 14,139,506 - period. transfer a liability in an orderly transaction The company determines whether transfers receivables between market participants at the measurement have occurred between levels in the hierarchy by There are no financial assets and financial date. reassessing categorisation (based on the lowest liabilities measured at fair value. level input that is significant to the fair value Land, buildings, plant and equipment are are measurement as a whole) at the end of each 7.3.2 Fair value determination of non-financial physical assets carried at fair value. reporting period. Fair value measurement hierarchy for assets

In addition, the fair values of other assets and The Valuer‑General Victoria (VGV) is the 2019 Level 1 Level 2 Level 3 Fair value liabilities that are carried at amortised cost, also company’s independent valuation agency. The $ $ $ $ need to be determined for disclosure purposes. company, in conjunction with VGV, monitors Freehold land - - 203,600,000 203,600,000 changes in the fair value of each asset and The company determines the policies and liability through relevant data sources to Buildings and improvements - - 307,096,676 307,096,676 procedures for determining fair values for both determine whether revaluation is required. Plant and equipment - - 3,794,556 3,794,556 financial and non-financial assets and liabilities as Tenancy fit-outs - - - -

required. How this section is structured 2018 For those assets and liabilities for which fair Freehold land - - 216,000,000 216,000,000 Fair value hierarchy values are determined, the following disclosures - - 318,791,615 318,791,615 In determining fair values a number of inputs are are provided: Buildings and improvements used. To increase consistency and comparability - carrying amount and the fair value (which would Plant and equipment - - 1,748,457 1,748,457 Tenancy fit-outs - - - -

94 | FED SQUARE 2018-19 ANNUAL REPORT There have been no transfers between levels during the period. | 95 The fair value of land and buildings is determined and close to public transport linkages; Buildings and improvements Plant, equipment and tenancy fit-outs on the basis of a periodic independent valuation - a Community Service Obligation (CSO) discount Valuation Plant, equipment and tenancy fit-outs are held at fair value. by external valuation experts. The fair values of 40 percent to the 'unencumbered fair value' A valuation was undertaken by Napier and are recognised in the financial statements and has been applied, in this instance to take into Blakeley Pty Ltd on behalf of the Valuer- Plant and equipment under finance lease are are reviewed at the end of each reporting period account the civic and cultural uses imposed on General Victoria effective as at 30 June 2016. vehicles valued using the current replacement to ensure that the carrying value of land and the land; The fair value ascribed by Napier and Blakeley cost method. New vehicles are acquired and buildings is not materially different from their - the central portion of the land, which is strata Pty Ltd for the carrying amount of buildings at times disposed of before the end of their fair values, after taking into consideration Valuer- above the Rail Yards and essentially an air right, and improvements, as represented by the economic life. The process of acquisition, use and General Victoria (VGV) indices and other relevant being ascribed a value equal to 5 percent current replacement cost, at 30 June 2016 disposal in the market is managed by VicFleet indicators. of the surrounding land values; and is $334,944,000. Additions to buildings and who set relevant depreciation rates during use to - part of the land, specifically the land that improvements since 1 July 2016 are recorded at reflect the utilisation of the vehicles. Freehold land has been nominated for listing in the Victorian cost, which represents fair value. Valuation Heritage Register, and an additional 30 percent There were no changes in valuation techniques On 20 July 2018 an external party nominated discount has been applied to this area. This Derecognition throughout the period to 30 June 2019. Federation Square for inclusion in the Victorian includes part of the southern portion of the land, The Melbourne Metro Rail Project construction Heritage Register. The Victorian Heritage Register specifically the Princess Walk Vaults, that was works, as discussed in freehold land above, For all assets measured at fair value, the current is established under the Heritage Act 2017, and already listed on the Victorian Heritage Register. included demolishing the Melbourne Visitor use is considered the highest and best use. is a statutory list of places and objects which are Centre building. At the end of the lease FSPL considered to have State level cultural heritage On 26 August 2019 it was announced that will be receive compensation for the loss of Reconciliation of Level 3 fair value significance. Federation Square was listed in the Victorian the building under the Land Acquisition and Non-financial physical assets were all classified Heritage Register. Compensation Act 1986 (Vic). The as Level 3 assets in the fair value hierarchy for On 21 August 2018 an Interim Protection Order compensation amount to be received by FSPL the duration of the 2018 and 2019 financial year was issued in relation to Federation Square by the The carrying amount following the revaluation at have yet to be finalised. FSPL has derecognised periods. Refer to Note 4.1.2 for the reconciliation Executive Director of Heritage Victoria. 30 June 2019 of freehold land was $207,000,000. the carrying amount of that building (refer to of movements in the carrying amount of property, note 4.1.2). plant and equipment. On 11 October 2018 the Executive Director of Derecognition Heritage Victoria made a recommendation that On 3rd September 2018 the Melbourne Metro Federation Square be included as a Registered Rail Project took possession of a parcel of land Description of significant unobservable input to Level 3 Place in the Victorian Heritage Register. on the north west corner of Federation Square, valuations for 2019 and 2018 including the Melbourne Visitor Centre building, On 15 April 2019 to 17 April 2019 a registration to construct a 'Town Hall - Federation Square’ hearing (H8586) was held before the railway station entrance. The land will be leased Class Valuation Technique Significant unobservable inputs Registrations and Reviews Committee of Heritage by the State Government for the duration of the Land Market approach Community service obligations (CSO) Council of Victoria. Following the hearing FSPL entrance construction. At the end of the lease a and Victorian Heritage Register was of the opinion that it was probable that portion of the land will be compulsorily acquired adjustment Federation Square would be included in the under the Land Acquisition and Compensation Buildings Current replacement cost Direct cost per square metre Victorian Heritage Register. Act 1986 (Vic). The compensation amount to be received by FSPL have yet to be finalised. Useful life FSPL requested that the Valuer-General Victoria to undertake a valuation, in accordance with While the lease does not transfer the land to Plant and equipment Current replacement cost Cost per unit the heritage restrictions referenced in the the lessor, the combination of the lease and the Useful life recommendation of the Executive Director dated subsequent compulsory acquisition of the land 11 October 2018. A valuation was undertaken by are such that the relevant land will never be Tenancy fit-outs Amortised Replacement Cost Cost per unit Urbis Valuations Pty Ltd on behalf of the Valuer- returned to FSPL, and in substance FSPL has lost General Victoria (ref: VGV File: A01217/1) effective control of that land on commencement of the Useful life as at 30 June 2019. The Urbis valuation is based on: lease. Therefore at the commencement the lease - the property is situated in the ‘Capital City 1’ FSPL derecognised the carrying amount of that Signifcant unobservable inputs remained unchanged from the 2018 financial year. zone, which is a highly sought after property zone; land (refer to note 4.1.2). - the highest and best use is considered to be mixed use development site; - the site is well located, being opposite the river

96 | FED SQUARE 2018-19 ANNUAL REPORT | 97 8.3 Contributed capital FSPL is a company wholly owned by State Consistent with the requirements of AASB 1004 8. OTHER DISCLOSURES Trustees Limited as custodian trustee on Contributions, contributions by owners (that behalf of the State of Victoria. The share is held is, contributed capital and its repayment) are Introduction Structure pursuant to the State Investment Trust Deed treated as equity transactions and, therefore, do This section includes additional material 8.1 Ex-gratia expenses and the Treasurer of Victoria is the Minister not form part of the income and expenses. disclosures required by accounting standards 8.2 Other economic flows included in net result responsible for the State Holding in FSPL under or otherwise, for the understanding of this 8.3 Contributed capital the Deed. Additions to net assets that have been designated financial report. 8.4 Dividends as contributions by owners are recognised as 8.5 Remuneration of auditors The allocation statement dated 27 June 2003 contributed capital. Other transfers that are in 8.6 Responsible persons approved by the Minister for Finance required the nature of contributions to or distributions 8.7 Remuneration of executives FSPL to record the value of assets transferred by owners have also been designated as 8.8 Related parties to the company in 2002-2003 as a capital contributions by owners. 8.9 Changes in accounting policies injection by the State Government as owners. 8.10 Subsequent events The total amount of the contributed capital The issued and paid-up capital is 1 share @ $1 8.11 Australian Accounting Standards issued of $435,940,507 comprised $373,440,507 each (2017-18: 1 share @ $1 each). 8.12 Glossary of technical terms for buildings and improvements, plant and equipment, and $62,500,000 for land. The The contributed capital during the year is nil transfer was effective from 30 June 2003 and (2017-18: Nil). The contributed capital since 1 July 8.1 Ex-gratia expenses is in accordance with the company of Treasury 2003 is $11,735,000. There were no ex-gratia expenses greater than or and Finance ‘Accounting and Financial Reporting equal to $5,000 during 2018-19 (2017-18: Nil). Bulletin No.39 – Accounting for Contributed Capital’. 8.2 Other economic flows included 8.4 Dividends Other economic flows are changes in the volume interest rates; and or value of an asset or liability that do not result - transfer of amounts from the reserves to There was no provision for dividends or dividends from transactions. accumulated surplus or net result due to disposal paid for the year (2017-18: Nil). or derecognition or reclassification. Other gains/(losses) from other economic flows 8.5 Remuneration of auditors include the gains or losses from: - the revaluation of the present value of the long 2019 2018 $ $ service leave liability due to changes in the bond Amounts paid or due and payable to the Victorian Auditor-General’s Office for audit of 38,000 42,000 8.2.1 Net gain/(loss) on financial instruments the financial statements

2019 2018 $ $ 8.6 Responsible persons Revaluation of impairment of financial assets at amortised cost 35,054 - Bad debts written off unilaterally (11,846) - 8.6.1 Names Minister Directors Total net gain/(loss) on financial instruments 23,208 - The Hon. John Eren MP, Minister for Tourism The Directors of FSPL during the year ended 30 and Major Events (to December 2018) June 2019 and as at the date of signing unless The Hon. Martin Pakula MP, Minister for Tourism, otherwise stated are: Sport and Major Events (from December 2018) Ms Deborah Beale AM (Chair) Ms Kathleen Wilson Accountable Officer Ms Pamela Mitchell The Accountable Officer during the year ended Mr Les Williamson (to 31 May 2019) 30 June 2019 and as at the date of signing are: Mr Patrick Conlon Mr Jonathan Tribe, Chief Executive Officer Mr Ari Suss (from 1 August 2018)

98 | FED SQUARE 2018-19 ANNUAL REPORT | 99 8.6.1 Remuneration 2019 2018 Remuneration of executive officers $ $ Income bands Total remuneration Base remuneration Short-term employee benefits 752,834 804,321

2019 2018 2019 2018 Post-employment benefits 68,505 76,589 No. No. No. No. Other long-term benefits 5,155 6,916 $20,000 - $29,999 3 4 3 4 Termination benefits 52,500 - $30,000 - $39,999 2 - 2 - Total remuneration (a) 878,994 887,826 $60,000 - $69,999 1 1 1 1 Total number of executives 5 7 $340,000 - $349,999 - - - 1 Total annualised employee equivalents (b) 3.8 4.2

$350,000 - $359,999 - - 1 - 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). $360,000 - $369,999 - 1 - - (b) Annualised employee equivalent is based on the time fraction worked over the reporting period. $370,000 - $379,999 1 - - - Total number of responsible persons 7 6 7 6

Total amount $592,479 $543,308 $570,007 $524,141

The remuneration detailed above excludes Directors’ income includes superannuation but the salaries and benefits the Portfolio Minister not insurance premiums of $20,923 (2017-18: receives. The Minister’s remuneration and $20,923) paid by the company in respect of allowances is set by the Parliamentary Salaries Directors’ and Officers’ Liabilities. and Superannuation Act 1968 and is reported within the company of Parliamentary Services’ Payments to other personnel Financial Report. There were no payments to other personnel during the reporting period (2017-18: Nil)

8.7 Remuneration of executives The number of executive officers, other than basis, as well as non-monetary benefits such ministers and accountable officers, and their as allowances and free or subsidised goods or total remuneration during the reporting period services. are shown in the table below. Total annualised Post-employment benefits include pensions and employee equivalents provides a measure of other retirement benefits paid or payable on a full time equivalent executive officers over the discrete basis when employment has ceased. reporting period. Other long-term benefits include long service Remuneration comprises employee benefits in all leave, other long service benefits or deferred forms of consideration paid, payable or provided compensation. by the entity, or on behalf of the entity, in exchange for services rendered, and is disclosed Termination benefits include termination of in the following categories. employment payments, such as severance packages. Short-term employee benefits include amounts such as wages, salaries, annual leave or sick leave that are usually paid or payable on a regular

100 | FED SQUARE 2018-19 ANNUAL REPORT | 101 8.8 Related parties Key management personnel FSPL is a company wholly owned by State Government entities in the course of conducting Key management personnel of the company (as disclosed in Note 8.6.1) and the following Trustees Limited as custodian trustee on its operations. All transactions with related executive officers: behalf of the State of Victoria. entities, unless specified, are at arm’s length. includes the Responsible Persons

Transactions with government-related Significant transactions with government-related Name Position Title entities enties are: William Blakeney General Manager - Corporate Services FSPL deals with a number of Victorian State Sharon Pollard General Manager - Operations Cherilynne Kemp General Manager - Human Resources Rachel Cooper (to 19 September 2018) General Manager - Commercial & Public Engagement Details Disclosure Suzana Bishop (from 19 November 2018) General Manager - Commercial & Public Engagement Tenancy rents and charges from National Gallery of Victoria Note 2.1 Summary of income (Tenancy rents and charges (rent of cultural area is not at market rates) $5,875,197) (2017-18: $5,784,810) Compensation of KMPs 2019 2018 Tenancy rents and charges from Australian Centre for the Note 2.1 Summary of income (Tenancy rents and charges Moving Image (rent of cultural area is not at market rates) $4,624,053) (2017-18: $4,539,854) $ $ Lease with Department of Transport Note 2.1 Summary of income (Tenancy rents and charges Short-term employee benefits 1,293,911 1,300,955 for Melbourne Metro Project $776,234) Post-employment benefits 119,907 123,263 Note 2.1.1 Finance lease interest income Other long-term benefits 5,155 6,916 Note 5.1.1 Finance lease receivable Termination benefits 52,500 - Grant of $500,000 from the Department of Jobs, Precincts and Note 2.1 Summary of income (Grant $42,720) (2017-18: $93,000) Regions (DJPR) for the preparation of a business case for FSPL. Total remuneration (a) 1,471,473 1,431,134 Note 5.2 Payables (Advances $201,711) (2017-18: $244,431) This was received in 2016-17 and partly used in 2016-17, 2017-18 and 2018-19 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. Grant of $333,446 from the Department of Jobs, Precincts and Note 2.1 Summary of income (Grant $0) (2017-18: $333,446) (b) KMPs are also reported in the disclosure of remuneration of executive officers (Note 8.7). Regions (DJPR) for a number of minor capital works in 2017-18 Grant of $1,800,000 from the Department of Jobs, Precincts Note 2.1 Summary of income (Grant $0) (2017-18: $1,800,000) and Regions (DJPR) to contribute to the Federation Square Note 5.1 Receivables (Trade Receivables $0) (2017-18: Transactions with key management Outside of normal citizen type transactions with Digital Screen in 2017-18 $1,800,000) personnel and other related parties the company, the related party transactions that Advance from the Department of Jobs, Precincts and Regions Note 6.1 Borrowings and the Cash flow statement (Cash Flows Given the breadth and depth of State government involved key management personnel, their close (DJPR) as part of the Greener Government Building Program. from financing activities) activities, related parties transact with the family members and their personal business The advance is interest free and repayable by 2023 Victorian public sector in a manner consistent interests are below. These transactions occurred Deposits with Treasury Corporation of Victoria (TCV) Note 6.4 Cash balances (Term deposits) with other members of the public e.g. stamp during the normal course of business. duty and other government fees and charges. Interest income from Treasury Corporation of Victoria (TCV) Note 2.1 Summary of income (Interest income $147,648 (2017-18: No provision has been required, nor any expense $290,428) Further employment of processes within recognised, for impairment of receivables from Loans from Treasury Corporation of Victoria (TCV) Note 6.1 Borrowings and the Cash flow statement (Cash Flows the Victorian public sector occur on terms from financing activities) and conditions consistent with the Public related parties. Interest paid to Treasury Corporation of Victoria (TCV) Note 6.1.2 Interest expense Administration Act 2004 and Codes of Conduct No loans were made to key management and Standards issued by the Victorian Public, personnel (2017-18: Nil). Sector Commission. Procurement processes occur on terms and conditions consistent with the Victorian Government Procurement Board requirements.

102 | FED SQUARE 2018-19 ANNUAL REPORT | 103 8.9 Change in accounting policies 8.11 Australian Accounting Standards issued The company has elected to apply the limited The accounting for financial liabilities remains that are not yet effective exemption in AASB 9 paragraph 7.2.15 relating largely the same as it was under AASB 139, to transition for classification and measurement except for the treatment of gains or losses arising Current Reporting Period Accounting Standards – Effective Date of AASB 15 and impairment, and accordingly has not from the company’s own credit risk relating to The following accounting standards are effective • AASB 2016-3 Amendments to Australian restated comparative periods in the year of initial liabilities designated at fair value through net from the 2018-19 reporting period and are Accounting Standards – Clarifications to AASB 15 application. As a result: result. Such movements are presented in other considered to have an impact on the company’s comprehensive income with no subsequent reporting: • AASB 2016-7 Amendments to Australian (a) Any adjustments to carrying amounts recycle through profit or loss. Accounting Standards – Deferral of AASB 15 for of financial assets or liabilities are recognised • AASB 9 Financial Instruments: AASB 9 simplifies Not-for-Profit Entities at beginning of the current reporting period The company’s accounting policies for financial the classification and subsequent measurement with difference recognised in opening retained assets and liabilities are set out in note 7.1. The of financial assets from four categories (fair value Future Reporting Periods earnings; and following table summarises the required and through profit or loss, loans and receivables and The following AASs become effective for elected reclassification upon adoption of AASB 9. held to maturity to three categories (fair value reporting periods commencing after the operative (b) Financial assets and provision for through profit or loss, fair value through other dates stated. impairment have not been reclassified and/or Changes to the impairment of financial assets comprehensive income and amortised cost). restated in the comparative period. Under AASB 9, all loans and receivables as well Certain new Australian Accounting Standards The following accounting pronouncements (AAS) have been published which are not AASB 9 introduces a major change to hedge as other debt instruments not carried at fair effective from the 2018-19 reporting period are mandatory for the 30 June 2019 reporting period. accounting. However, it is the company’s policy value through net result are subject to AASB considered to have insignificant impacts on the The Department of Treasury & Finance (DTF) not to apply hedge accounting. 9’s new expected credit loss (ECL) impairment model, which replaces AASB 139’s incurred loss company’s reporting: assesses the impact of all these new standards and advises the company of their applicability This note explains the impact of the adoption of approach. • AASB 2014-1 Amendments to Australian and early adoption where applicable. AASB 9 Financial Instruments on the company’s Accounting Standards [Part E Financial For other loans and receivables, the company financial statements. Instruments] applies the AASB 9 simplified approach to The table below outlines the accounting pronouncements that have been issued but not measure expected credit losses based on the • AASB 2014-7 Amendments to Australian Changes to classification and measurement effective for 2018-19, which may result in potential On initial application of AASB 9 on 1 July 2018, change in the ECLs over the life of the asset. Accounting Standards arising from AASB 9 impacts on public sector reporting for future the company’s management has assessed for all Refer to note 7.1 for details about the calculation • AASB 2014-5 Amendments to Australian reporting periods. financial assets based on the company’s business of the allowance. Accounting Standards arising from AASB 15 models for managing the assets. The following • AASB 2015-8 Amendments to Australian are the changes in the classification of the Transition impact company’s financial assets: There is no transition impact of first-time adoption of AASB 9 on Comprehensive Operating (a) Contractual receivables previously classified Statement and Balance Sheet. as other loans and receivables under AASB 139 are now reclassified as financial assets at amortised cost under AASB 9. There was no adjustment in loss allowance for these assets recognised in opening retained earnings for the 8.10 Subsequent events period. There were no subsequent events after balance date expected to have a material effect on the financial statements of Fed Square Pty Ltd that are not otherwise disclosed in the financial statements and notes.

104 | FED SQUARE 2018-19 ANNUAL REPORT | 105 Applicable for 8.12 Glossary of Technical Terms Standard / annual reporting Impact on FSPL financial Summary Interpretation periods statements The following is a summary of the major technical - to receive cash or another financial asset from beginning on terms used in this report. another entity; or AASB 16 Leases The key changes introduced by AASB 16 include 1 January 2019 The assessment has indicated - to exchange financial assets or financial liabilities the recognition of most operating leases (which are that there will be no significant Amortisation is the expense that results from the currently not recognised) on balance sheet, which has impact for the company. consumption, extraction or use over time of a non- with another entity under conditions that are an impact on net debt. produced physical or intangible asset. This expense is potentially favourable to the entity; or classified as an ‘other economic flow’. (d) a contract that will or may be settled in the AASB 15 Revenue The core principle of AASB 15 requires an entity 1 January 2019 The changes in revenue entity’s own equity instruments and is: from Contracts to recognise revenue when the entity satisfies a recognition requirements in Borrowings refers to interest bearing liabilities - a non-derivative for which the entity is or may be with Customers performance obligation by transferring a promised AASB 15 may result in changes mainly raised from public borrowings raised through obliged to receive a variable number of the entity’s good or service to a customer. Note that amending to the timing and amount the Treasury Corporation of Victoria, finance leases standard AASB 2015‑8 Amendments to Australian of revenue recorded in the own equity instruments; or Accounting Standards – Effective Date of AASB 15 financial statements. The and other interest bearing arrangements. Borrowings - a derivative that will or may be settled other than has deferred the effective date of AASB 15 to annual Standard will also require also include non-interest bearing advances from by the exchange of a fixed amount of cash or another reporting periods beginning on or after 1 January 2018, additional disclosures on government. financial asset for a fixed number of the entity’s own instead of 1 January 2017. service revenue and contract equity instrument modifications. Commitments include those operating, capital and The assessment has indicated that there will be no significant other outsourcing commitments arising from non- Financial instrument is any contract that gives impact for the company. cancellable contractual or statutory sources. rise to a financial asset of one entity and a financial liability or equity instrument of another entity. AASB 2016-8 This standard amends AASB 9 and AASB 15 to include 1 January 2019 This amending standard will Comprehensive result is the amount included in the Amendments requirements and implementation guidance to assist defer the application period operating statement representing total change in net Financial liability is any liability that is: to Australian not-for-profit entities in applying the respective of AASB 15 for not-for-profit worth other than transactions with owners as owners. Accounting standards to particular transactions and events. entities to the 2019-20 (a) a contractual obligation: Standards The amendments: reporting period. Depreciation is an expense that arises from the - to deliver cash or another financial asset to another - require non-contractual receivable arising from The assessment has indicated – Australian entity; or Implementation statutory requirements (i.e. taxes, rates and fines) to that there will be no significant consumption through wear or time of a produced Guidance for Not- be initially measured and recognised in accordance impact for the company. physical or intangible asset. This expense is classified - to exchange financial assets or financial liabilities for-Profit Entities with AASB 9 as if those receivables are financial as a ‘transaction’ and so reduces the ‘net result from with another entity under conditions that are instruments; and clarifies circumstances when a potentially unfavourable to the entity; or contract with a customer is within the scope transaction’. of AASB 15. (b) a contract that will or may be settled in the Effective interest method is the method used to entity’s own equity instruments and is: calculate the amortised cost of a financial asset and AASB 1058 Income This standard will replace AASB 1004 Contributions 1 January 2019 The assessment has indicated - a non-derivative for which the entity is or may be of Not-for-Profit and establishes principles for transactions that that there will be no significant of allocating interest income over the relevant period. obliged to deliver a variable number of the entity’s Entities are not within the scope of AASB 15, where the impact for the company. The effective interest rate is the rate that exactly own equity instruments; or consideration to acquire an asset is significantly discounts estimated future cash receipts through less than fair value to enable not-for-profit entities - a derivative that will or may be settled other than to further their objectives. The restructure of the expected life of the financial asset or, where by the exchange of a fixed amount of cash or another administrative arrangement will remain under AASB appropriate, a shorter period. financial asset for a fixed number of the entity’s own 1004. Employee benefits expenses include all costs equity instruments. For this purpose, the entity’s own related to employment including wages and salaries, equity instruments do not include instruments that AASB 2018-7 This standard amends AASB 101 Presentation of 1 January 2020 The assessment has indicated fringe benefits tax, leave entitlements, redundancy are themselves contracts for the future receipt or Amendments Financial Statements and AASB 108 Accounting that there will be no significant payments and defined contribution superannuation delivery of the entity’s own equity instruments. to Australian Policies, Changes in Accounting Estimates and Errors. impact for the company. Accounting The amendments refine the definition of material in plans. Financial statements comprises: Standards – AASB 10 Events after the Reporting Period, include (a) a balance sheet as at the end of the period; Definition of some supporting requirements in AASB 101 in the Ex-gratia expenses mean the voluntary payment of Material definition to give it more prominence and clarify the money or other non-monetary benefit (e.g. a write- (b) a comprehensive operating statement for the explanation accompanying the definition of material. off) that is not made either to acquire goods, services period; The amendments also clarify the definition of material and its application by improving the wording and or other benefits for the entity or to meet a legal (c) a statement of changes in equity for the period; aligning the definition across AASB standards and liability, or to settle or resolve a possible legal liability (d) a cash flow statement for the period; other publications. or claim against the entity. (e) notes, comprising a summary of significant Financial asset is any asset that is: accounting policies and other explanatory The following accounting pronouncements are also issued but not effective for the 2018-19 reporting period. At this stage, the preliminary assessment suggests they may have insignificant impacts on public sector reporting. (a) cash; information; - AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015 – 2017 Cycle - AASB 2018-3 Amendments to Australian Accounting Standards – Reduced Disclosure Requirements (b) an equity instrument of another entity; (f) comparative information in respect of the preceding period as specified in paragraph 38 of Notes : (a) For the current year, given the number of consequential amendments to AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers, the standards/interpretations have been (c) a contractual right: grouped together to provide a more relevant view of the upcoming changes.

106 | FED SQUARE 2018-19 ANNUAL REPORT | 107 AASB 101 Presentation of Financial Statements; and Operating result is a measure of financial (g) a statement of financial position as at the performance of the operations for the period. It is the beginning of the preceding period when an entity net result of items of revenue, gains and expenses applies an accounting policy retrospectively or makes (including losses) recognised for the period, excluding DIRECTORS’ DECLARATION a retrospective restatement of items in its financial those that are classified as ‘other non-owner statements, or when it reclassifies items in its movements in equity’. Refer also ‘net result’. financial statements in accordance with paragraphs Other economic flows included in net result are 41 of AASB 101. changes in the volume or value of an asset or liability that do not result from transactions. In simple terms, Interest expense represents costs incurred in The Directors declare that: connection with borrowings. It includes interest on other economic flows are changes arising from market remeasurements. They include gains and losses from advances, loans, overdrafts, bonds and bills, deposits, (a) the financial statements and associated notes comply with the Accounting Standards, the disposals, revaluations and impairments of non- interest components of finance lease repayments, Corporations Regulations 2001 and other mandatory professional reporting requirements; and amortisation of discounts or premiums in relation current physical and intangible assets; and fair value changes of financial instruments. to borrowings. (b) the financial statements and notes give a true and fair view of the company’s financial position Interest income includes unwinding over time of Other economic flows – other comprehensive as at 30 June 2019 and of its performance, as represented by the results of its operations and its discounts on financial assets and interest received on income comprises items (including reclassification cash flows, for the year ended 30 June 2019; bank term deposits and other investments. adjustments) that are not recognised in net result as required or permitted by other Australian Accounting (c) in the Directors’ opinion: Leases are rights to use an asset for an agreed period Standards. They include changes in physical asset (i) the financial statements and notes are in accordance with the Corporations Act 2001, and of time in exchange for payment. Leases are classified revaluation surplus. at their inception as either operating or finance leases (ii) there are reasonable grounds to believe that the company will be able to pay its debts based on the economic substance of the agreement Payables includes short and long-term trade debt as and when they become due and payable. so as to reflect the risks and rewards incidental to and accounts payable, grants, taxes and interest ownership. Leases of infrastructure, property, plant 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. and equipment are classified as finance leases Receivables include short and long-term trade credit whenever the terms of the lease transfer substantially and accounts receivable, accrued investment income, all the risks and rewards of ownership from the grants and interest receivable. This statement is made in accordance with a resolution of the Directors. lessor to the lessee. All other leases are classified as operating leases. Sales of goods and services refers to income Melbourne from the direct provision of goods and services and 13th September 2019 Net operating balance or net result from includes fees and charges for services rendered and transactions is a key fiscal aggregate and is revenue sales of goods and services. It also includes rental from transactions minus expenses from transactions. income under operating leases. It is a summary measure of the ongoing sustainability of operations. It excludes gains and losses resulting Supplies and services generally represent cost of from changes in price levels and other changes in the goods sold and the day to day running costs, including volume of assets. It is the component of the change maintenance costs, incurred in the normal operations in net worth that is due to transactions and can be of the company. attributed directly to government policies. Transactions are those economic flows that are DEBORAH BEALE AM CHAIR Net result is a measure of financial performance considered to arise as a result of policy decisions, of the operations for the period. It is the net result usually an interaction between two entities by mutual of items of revenue, gains and expenses (including agreement. They also include flows into an entity such losses) recognised for the period, excluding those as depreciation, where the owner is simultaneously classified as ‘other non-owner movements in equity’. acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Net worth is calculated as assets less liabilities, Taxation is regarded as mutually agreed interactions which is an economic measure of wealth. between the government and taxpayers. Transactions Non-financial assets are all assets that are not can be in kind (e.g. assets provided/given free of financial assets. It includes inventories, land, charge or for nominal consideration) or where the buildings, infrastructure, plant and equipment and final consideration is cash. intangibles.

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Fed Square Pty Ltd ABN: 99 085 731 479 ACN: 085 731 479

Published by Fed Square Pty Ltd Melbourne Victoria Australia October 2019 Also published on fedsquare.com

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