Fed Square Pty Ltd ACN 085 731 479
1 2
3 Fed Square Pty Ltd
4
5 6
7
8
9 Annual Report
10 For the year ended 30 June 2011
Fed Square Pty Ltd ACN 085 731 479
Table of Contents
Chairman’s Statement ...... 1
Chief Executive Officer’s Report on Operations ...... 2
Key Performance Indicators 2010-11 ...... 14
Statement of Corporate Governance ...... 18
Directors’ Report ...... 23
Auditor-General’s Independence Declaration ...... 25
Comprehensive operating statement for the financial year ended 30 June 2011 ...... 26
Balance sheet as at 30 June 2011 ...... 27
Cash flow statement for the year financial ended 30 June 2011 ...... 28
Statement of changes in equity for the financial year ended 30 June 2011 ...... 29
Notes to the financial statements for the year ended 30 June 2011 ...... 30
Directors’ Declaration ...... 51
Audit Opinion ...... 52
Fed Square Pty Ltd ACN 085 731 479
CHAIRMAN’S STATEMENT
I am pleased to provide the 2010/11 Fed Square Pty Ltd Annual Report.
It has been another busy and successful year and, most importantly, the Board and I have been looking with management to the future. As we approach our 70 millionth visit to the precinct we are also completing its first decade. With this in mind we have seized the opportunity in the last year to undertake a masterplan for the river side of the site which was not embraced in the initial construction. We are thrilled with the draft plan which aims to provide increased public amenity and services, new events spaces and connections to the river and surrounding environment and heritage. We have appreciated the enthusiasm of stakeholders and we look forward to productive discussions with the Government as to possible implementation. In this year we have also partnered with the public and private sectors to further enhance the environmental performance of the site and have laid the groundwork for a major program of investment in sustainability projects.
As always, the Board and I continue to note such achievements and highlights as:
2,080 activities and events which underpin the vitality of the precinct Another year of strong financial performance with a surplus before depreciation of $4.351 million Continued exemplary performance in risk management across a wide range of asset, business and event operations 99% visitor satisfaction with 91% of Victorians saying that there is always something going on Continuing national and international attention to Fed Square as a benchmark for great place management, especially through our involvement in the Melbourne Place Making series
It has also been a year of achievements for our onsite partners. The NGV Australia has opened its new Studio offer as well as celebrating its 150th Anniversary. ACMI celebrated the phenomenally successful Tim Burton exhibition and Dreams Come True: The Art of Classic Disney Fairy Tales. We were pleased to welcome the temporary Art of the Brick exhibition.
Thank you to the staff and Board for their hard work and to all our stakeholders, especially the State Government of Victoria, for their continued enthusiasm and advice.
John Harvey Chairman
- 1 -
Fed Square Pty Ltd ACN 085 731 479
CHIEF EXECUTIVE OFFICER’S REPORT ON OPERATIONS
INTRODUCTION I am pleased to report on continuing success across all areas of operation. FSPL‟s results for 2010-11 include: Full year estimated visitation of 8.99 million - the highest annual visitation since opening The precinct ranked in the top 2 of Victoria‟s leading destinations for domestic and international visitation Commercial, community, charitable, sporting, cultural and media activities numbering 2,080 (excluding tenant activity), resulting in 91% of Victorians saying there always seems to be something going on 88% of activities free and accessible to the public 7,185 media articles generated with more than 1,200 being international
Over time Fed Square is sustaining a good balance between local and tourist visits, with 51% of visitors coming from Melbourne, 6% from Regional Victoria, 19% from interstate and 24% from overseas. The most recent customer satisfaction survey revealed that 99% of visitors were satisfied with their visit and a significant 40% were extremely satisfied. Fed Square is also sustaining high levels of repeat visitation at 73% and with average number of visits per year at 28.
Fed Square Pty Ltd continues to perform strongly in financial terms with a net operating surplus for the year before depreciation of $4.351 million, an excellent outcome given ongoing sensitivities in the consumer market affecting various sources of revenue.
For this year and for future corporate plans, we have reframed our strategic objectives to reflect our aspiration to run a great business even better and deliver great experiences.
GREAT PLACE
“Where it's all happening Fed Square is a great place to start for visitors and Melbournites alike. First, the Square itself is great - a nice spot to hang out with a coffee or for a meal, a nice vibe and always an interesting crowd. The Square is an attraction in itself! Some good food and drink options there. There are always heaps of attractions, displays and events going on. You can check the events page on their website or just turn up and see whats happening - there was an antique car display when I went there! For big events like major sports games, new years and the like, they often set up a special screen and the Square can house thousands of screaming fans - another thing to look out for. A tourist can also easily access a ton of info in Federation Square that will stand you in good stead for your tour around Melbourne. Great spot, highly recommended.” (From - Trip Advisor Aug 2011-sic)
One of our primary focuses is ensuring Fed Square is Melbourne‟s primary meeting place and enhancing our position as a “place leader”.
Estimated visitation for the year reached 8,994,835, proving the most visited year since opening. It was particularly pleasing to see the 15% growth year on year in June (at 777,980), demonstrating both the success of program initiatives as well as Fed Square‟s cross seasonal appeal.
This continued growth in visitation has re-enforced the timely development of the Riverside masterplan. This project, completed as a draft for discussion in the period, responds both to the desire to create a stronger connection between Fed Square, the River and Parklands and to feedback indicating the need for enhanced accessibility, permeability, integration, services and public amenities in that zone.
Outcomes from the masterplan are intended to: Improve pedestrian and visual linkages between Federation Square and the River, including from Russell Street extension Improve access, connectivity and presentation at the junction of River Terrace, Birrarung Marr and Federation Wharf - 2 -
Fed Square Pty Ltd ACN 085 731 479
Develop tourism potential, visitor experience and commercial opportunities at River Terrace, Federation Wharf and in the area Maximise linkages along the North Bank of the River Deliver sustainable long term outcomes consistent with the FSPL business model
The process to create a coherent plan, now delineated in two stages and which results in new, revamped and better connected public spaces-maximising the potential and enjoyment of one of Melbourne‟s most unique enclaves, was aided by extensive and willing consultation with many stakeholders and the hard work of the team at Cox Architects.
We look forward to ongoing discussions with the State Government regarding support for implementation of the project especially in the light of our upcoming 10th Birthday.
At a more operational level, our successful “comfort zones” activity where we provide flexible and enhanced shade, seating and services for visitors and event goers, was reviewed and improvements to infrastructure and delivery methodology will be rolled out in 2011-12 year. Importantly as well, our active participation in onsite and city programs to maintain safety and security at Federation Square saw our ongoing involvement in the Flinders Street / Fed Square Security Precinct group.
GREAT STAFF
“This project has been exciting and ambitious for us and simply could not have happened without your support...... we know you have suffered late nights, countless phone calls and emails and called on a great many favours for the event and for that we are extremely grateful. Thanks to Fed Square and your dedication, this project was a rich and positive experience for everyone.” (Feedback from Regional Arts Victoria re: Illuminated by Fire July 2011)
Delivering the breadth of activities and services at Fed Square is reliant on a hardworking, dedicated team. Supporting staff and being considered an “employer of choice” is critical.
A major initiative in the period has been the development and introduction of a new venue management system (EBMS). This activity brings Fed Square‟s systems in line with many world class venues and focuses on improving efficiencies and streamlining work processes for improved client management, end-to-end booking processes and effective reporting/documentation. An internal project team took on the task of reviewing options, developing a project pathway and training for and implementing the new system. It is expected that this system will assist with the workloads associated with the heavy event bookings schedule that is a core part of the Fed Square business.
In the period multi-media services were brought in house and, as a result, efficiencies and consistency in the management of infrastructure and content have been achieved. Staff have been active in the resolution of issues, establishment of new stakeholder relations and the delivery of an improved level of service both internally and externally.
Annually all policies are reviewed and, as a result, further refinement of the induction process, training program and online compliance were completed. Along with continued provision of health and other staff benefits, it has also been pleasing to support work/life balance by introducing a “Volunteering Policy” which provides staff with the opportunity to serve in the community at large.
Training has been provided for all staff in mandated areas and a new program of activities has been introduced to assist staff new to management in the many dimensions of the management role. Teams have developed bespoke activities to meet needs and expand horizons and, for instance, the Marketing and Program team have visited and shared information with colleagues at the Melbourne Recital Centre, the Aquarium, the Arts Centre and MCEC as well as developing customised sessions around time management and dealing with difficult situations. These and team-building activities such as the “Amazing Race” - a city based challenge activity and our “What Do We Stand For” activities - focus us on teamwork and shared positive culture. Staff have completed performance management work plans and successfully achieved targets and training goals. Effective communication continues to be supported through a regular program of meetings and briefings and over the past year staff have played active roles in the staff briefings.
- 3 -
Fed Square Pty Ltd ACN 085 731 479
It has been gratifying that several internal staff were competitively appointed to roles within the team. This is not always easy in a small organisation and it is a credit to staff involved that they have taken on the challenges of personal and professional growth to achieve these appointments. Changes to staff and structure have also meant ongoing reviews of position descriptions and remuneration tested against an external framework. A new web based Human Resources Management System was also introduced to provide more efficient and effective processes in this area.
Fed Square Pty Ltd also regularly participates in the public sector “People Matters” survey with 2010 results indicating: 100% of staff strive to achieve customer satisfaction 96% of staff believe they make an important contribution to achieving organisational objectives 96% of staff are proud to work at Federation Square 88% of staff view the organisation as an employer of choice 80% of staff are either satisfied or very satisfied in their role at Federation Square
Staff are actively involved in the Corporate Planning process, Disability Action Group, Sustainability Action Group and OH&S Committee.
GREAT DELIVERY “Federation Square, the hub of most public gatherings in Melbourne, from the attempt to break the world record super hero costume gathering to watching the World Cup, was also where thousands were gathering to watch the AFL Grand Final. Walking up the steps, towards the throng, it was shocking, even the steps, where people had to watch on their tip-toes, was covered with people. Making it to the top of the steps, people where spread out over every surface. Security guards kept vigil to make sure no one got out of line and kept lanes open to allow people to pass through the teeming mass of humanity. And it was a strange bunch. Walking through the lane that led far to the back, I passed families, singles, couples, old people, young people, people in wheelchairs, people making out, people in Collingwood and Saint Kilda jerseys, people in suits, people in biker gear, people in bike shorts, teenagers with their parents, tourists (I heard at least five languages).” (Blogger October 14th, 2010)
At Fed Square we aspire to being known as a “can do” organisation because of the quality and timeliness of our service delivery.
In a busy environment where more than 2,000 activities took place in the public realm and there were more than 2,800 planned and reactive maintenance items to respond to, it is a pleasure to see that event client satisfaction is at 98% and tenant satisfaction is at 100%.
There were a number of projects completed which enhance the performance of the site. These include OHS (working at heights projects) and Disability Access improvements (information hub for the Federation Story installation, improvements to doors access, handrails upgrade and amenities signage). One of the more significant projects was the refurbishment of the main stage which has resulted in improved functionality and appearance including a larger stage area with better coverage for events during inclement weather, dedicated canopy coverage for the access lift, water run-off at the rear and a neat solution for removal of the stage extension if required. We have been grateful for Microhire‟s investment in a long term standard lighting fit out for improved reliability, convenience and flexibility including LED technology, computer control of brightness, colour and scheduling and remote access for scene recall, basic configuration, setup and maintenance.
Other equipment upgrades have included installation of permanent power for events on rooftops, replacement of isolating valves on various services (including potable water, chilled water, condenser/heating and hot water lines lines, fire services), upgrades of the greasy waste line in the north services trench, linking of key assets (i.e. sewer pumps / toilets, UPS) to the main generator, enclosing event storage and the creation of a bike parking facility located in the car park.
The previously developed Asset Management plan that provided a high level overview of future asset requirements has been used to finalise the immediate funding requirements for the asset over the next 3-4 years. Maintaining the - 4 -
Fed Square Pty Ltd ACN 085 731 479
physical assets at the highest level of functionality and presentation is critical to Fed Square‟s ongoing visitor appeal and business success. A review of the long term financial requirements underpinning these outcomes has resulted in specific funding applications to government to secure a consistent line of resources to ensure the company is in a position to achieve this. We look forward to the outcome on this.
Focus has remained on delivering dynamic “What‟s On” information in a variety of media and enhancing detailed and accessible public information on Fed Square‟s history, form, institutions and activities. We have seen ongoing growth in uptake across fedsquare.com, Facebook, Twitter and our iPhone App and onsite information has continued to be delivered through tickers and Big/Small Screens. Web search engine results are significantly up from 387,880 to 1,374,000 attributed to social media activation and the updated website and refreshed marketing campaign materials are starting to roll out in the marketplace. We are pleased that this focused effort is paying dividends with 87% of visitors indicating that they are satisfied with the provision of information about what is on at Fed Square.
Given the importance of car parking revenues, it has also been valuable to have instituted the car park customer service working group who are focused on the achieving improvements in service delivery and access.
A range of works have also been completed by tenants which have been overseen by FSPL. Some of the major works include numerous ACMI Exhibition fit outs including Dreams Come True: the Art of Disney‟s Classic Fairy Tales, Kirra Gallery refurbishment, temporary fit out for „Art of the Brick‟, NGV Exhibition fit outs and NGV Studio fit out and the bus operator facility services upgrade.
Service excellence continued to be emphasised as a key driver of success across the precinct and resulted in an increase in tenancies more directly participating in the Fed Square Customer Service Excellence Program, with five making a direct financial investment in the program for the first time.
The customer research based “Loyalty Zone Program” entered its second year with participating food and beverage tenants more fully understanding the link between customer service, loyalty and business outcomes. Participants are more accurately pinpointing and acting on their individual best practice drivers. Aggregating the results identified service as the most important best practice driver followed by food, ambiance, price and location. This intelligence is now helping shape the future direction of the Customer Service Excellence Program.
A concerted effort to improve the circulation of information in support of service excellence has resulted in more interactive Quarterly Tenant Business Forums, FSPL representatives presenting at various ACMI staff forums and record breaking attendance at a Fed Square Staff Get Together event. The long standing Fed Square Customer Service Excellence Awards continued to be well subscribed.
GREAT BUSINESS PRACTICE “The most welcoming square I have been to.....Went to visit Fed Sq for the 5th time and it is the most welcoming place to be in Melbourne, there is a big TV screen showing TV, there is areas to sit and watch and relax, its Across from Flinders Street Railway Station and close to the Trams its difficult to avoid Federation Square. its not lonely there's always people around. When i went there in April the Comedy Festival was nearby. if its your first day in Melbourne or you have a couple of hours to spare before taking the Skybus to Tullamarine airport take a visit to Federation square and visit the Australian Centre for the Moving Image Guarantee to fulfil a couple of hours of your time with interesting exhibits including the free 'Screen Worlds' exhibit. I also enjoyed the Colours and sounds from Fed Square at night there is a wall of moving text. the LED lights coming from the buildings surrounding Fed sq is amazing, it‟s the place to be and is centrally located. I got to congratulate the Victorian Government and Melbourne City for getting something right and creating an amazing place.“ (From -Trip Advisor April 2011-sic)
Our ongoing focus is to advance a sustainable business through attention to „best practice‟ commercial, asset, risk management and governance programs.
Partnerships A range of strong partnerships has underpinned our good performance. We are immensely appreciative of the long term partnership with BMW which has continued to consolidate our successful brand alliance. We were also
- 5 -
Fed Square Pty Ltd ACN 085 731 479
pleased to enter into a new partnership with PRIMUS which has realised the ongoing provision of free public Wi-Fi at Fed Square. We were thrilled at the increased range of partnerships for the delivery of both the Light in Winter and a new program, Fed Square Live. Thank you to The Push, Allans Music + Billy Hyde, Triple J, Australian Independent Record Labels Association, United National Services, Ikon, ACG, Microhire, Harold Mitchell Foundation, VicHealth, Siemens, ESG, Regional Arts Victoria, City of Greater Dandenong, City of Hobson‟s Bay, City of Moreland, MBS Melbourne Bike Share, Eureka Skydeck, Auspicious Arts, Electrolight, Kirra Galleries, Everready, Melbourne International Jazz Festival, Melbourne International Film Festival, Choir of Hope and Inspiration, ArtPlay and ACMI.
SBS continues as an important site partner, providing support at multicultural festivals, advice on programming from different cultures, screen content and some TVC support. This year they were also our major media partner for The Light in Winter. The Melbourne Visitors Centre at Federation Square is also a key supporter and we have been working together to leverage visitation and improve facilities in the foyer area. We are also grateful for the Department of Business and Innovation and the Minister‟s support for our regionally oriented program, the Fed Square Wine Showcase and Awards program.
Thank you to all of our partners for their many forms of support for these programs.
Marketing Plan The Marketing Plan continues to focus on repeat visitation and yield with emphasis on Fed Square‟s brand pillars (eat and drink, culture, events, shopping) and diverse and consistent experiences. The average visitor spend (May 2011) is now more than $14, continuing a positive trend. Both interstate visitors and free-timers are the highest spenders at an average per person of $22.80 and $32.50 respectively. Positive trends in spend are also noted in the City Worker grouping where there has been average uplift to $8.10 from the last survey. Repeat visitation is holding at 73% and 27% of our visitors are new to the site – in fact, of our interstate visitors, almost half (48%) are here for the first time.
Focused effort on the broadest possible on site information provision is paying dividends with 87% of visitors indicating that they are satisfied with the provision of information about what is on at Fed Square, a 5% improvement. Additionally, with respect to the provision of information about upcoming events onsite, again 87% are satisfied.
Financial Results
The year has delivered another strong financial outcome notwithstanding revenue challenges associated with lower interest rates and a volatile financial environment. In 2010-11 the company reported an operating result before depreciation of $ 4.35 million.
Revenue and expenditure (before depreciation) over the years since the opening of Federation Square in 2002 is shown below.
Source: Fed Square Pty Ltd Operating Statement - June 2011 - 6 -
Fed Square Pty Ltd ACN 085 731 479
The company‟s Balance Sheet is very strong with current assets of $22.641 million relative to current liabilities of $6.273 million. Net assets now stand at $490 million.
Total liabilities reduced by $2.271 million to $30.027 million, of which $26.578 million relates to the company‟s long term loans with Treasury Corporation Victoria. The working capital ratio remains steady at 3.61.
In achieving these results, it is important to acknowledge the corporate focus on cost control in a tight budgetary environment and the excellent yield management approach which has resulted in the very positive performance of the carpark.
It has also been gratifying to get feedback via government agencies on the quality of our corporate plan.
Risk Management
In accordance with the Federation Square Pty Ltd Risk Management Strategy, an in-depth annual review of the Policy and Strategy was conducted and covered all activities associated as follows: Risk Management Policy Risk Management Process Risk Management Implementation Schedule and Risk Treatment plans Communication of Risk Management actions and achievements and outstanding issues of significance
A major review of event risk management documentation resulted in risk documents being rationalised in a manner that will deliver efficiencies internally and for event clients, while maintaining risk management rigor.
A successful external audit of the Occupational Health & Safety Management system was conducted and all actions and improvements have been implemented. Security and safety management has been enhanced with installation of cameras in Atrium / BMW Edge and on Russell Street and OHS improvements with the main stage upgrade including installation of mechanical (hand winch) banner bars on side wings and across rear and speaker rigging points along with a motorized lighting truss and a non slip surface on the stage extension.
Reviews and audits were also completed on a range of FSPL systems and processes including Annual Essential Safety Measure sign off and the Emergency Management Manual.
Following a review of IT strategy, disaster recovery has been consolidated with backup and replication software for virtual environments replicating our server environment to a remote location. Other IT initiatives have included migrating all telecommunications to a new provider, Primus, without any significant problems, implementing new multifunction printing devices across the organisation, reducing toner costs, increasing efficiencies in support of the hardware and installing a gas suppression system in the main communications room to replace the water sprinkler system.
As is the case each year we have tendered a range of service delivery contracts to optimise value and efficiency including energy supply via the electricity large market, lift & escalator maintenance, glass cleaning, plumbing services and mechanical services. This process has resulted in improved service levels and financial efficiencies. There have also been a range of other contracts appointed throughout the year all with a focus on improving overall performance.
- 7 -
Fed Square Pty Ltd ACN 085 731 479
Sustainability Working towards our target of carbon neutrality and the achievement of other sustainability goals is a major focus. The table below shows an overview of major utilities/services for the 2010 calendar year compared to 2009 and also the baseline year of 2006 figures.
Years Utility / Service 2006 Change 2009 2010 Baseline (2010 to 2006) General Waste (tonnes) 776 626 627 -149 Recycled Material (tonnes) 384 479 609 225 Electricity (Mega Watts) 8500 8700 8948 448 Water (Mega Litres) 78.6 71 68 -11 Carbon Footprint (tonnes) 15,769* 9,790 9,456 -6313 * Indicates 2007 calendar year
There continues to be good progress in the area of waste / recycling and also water reduction however the overall energy consumption has increased. The challenges here remain to continue to reduce consumption in an environment where usage patterns are driven by other key factors such as visitation numbers.
Taking this into account, the below table shows the change in usage compared with visitor numbers and highlights that there has been a small reduction in electricity consumption per visitor for the last year.
Years Utility / Service 2006 Change 2009 2010 Baseline (2010 to 2006) Visitor numbers 7,834,970 8,006,078 8,572,418 737,448 General Waste (Kg / Visitor) 0.099 0.078 0.073 -0.026 Recycled Material (Kg / Visitor) 0.049 0.060 0.071 0.022 Electricity (Kw / Visitor) 1.085 1.087 1.044 -0.041 Water (Litres / Visitor) 10.0 8.9 7.9 -2.1 Carbon Footprint (Kg / Visitor) 2.0 1.2 1.1 -0.9
Further to the above, FSPL‟s overall carbon footprint has also reduced over the course of the last three years due to efficiencies and the purchase of green energy.
A significant opportunity has also arisen via the State Government‟s Greener Government Buildings program and this has been the major focus over the period with the Request for Proposal (RFP) and Detailed Facility Study (DFS) portions of this program being completed. The DFS is currently being evaluated and it is anticipated that investment and implementation will follow next year on a range of sustainable measures. This program has the potential to deliver significant efficiencies and will be an important step towards our target of being carbon neutral.
Tenancies
The performance and well being of all tenants is essential to the overall success of Federation Square. Visitation to cultural institutions at 2.69 million saw a 22% increase when compared to 2009-10. Commercial tenant turnover was consistent with the previous year, which is particularly positive in light of an increasingly challenging economic climate characterised by softening consumer sentiment. In response to this much emphasis has been placed on driving primary markets visitation (day trippers, city workers and tourists) dwell time and yield.
- 8 -
Fed Square Pty Ltd ACN 085 731 479
As a result, surveys indicate that visitor awareness of key brand pillars is positive with cafes, bars, restaurants registering the most awareness with 84% of visitors aware of this pillar, followed by events with 81%, culture 75%, tourism experiences 65%, and shopping at 58%. Food and Beverage tenancies have continued to be supported through a dedicated and individually focussed publicity campaign.
Tenants continued to be kept abreast of events at Federation Square via the following communications channels: o Fed Square News – bi-weekly update which details the next week‟s events o Monthly event listings – emailed at the end of the month for the next month o Major event updates – emailed quarterly major event details for the next 6 to 8 months o Atrium tenant specific event quarterly calendar updates and weekly screen program updates o Quarterly Tenant Business Briefings with speakers such as Mark Brennan, Director of Liquor Licensing Victoria o Tailored and regular Familiarisation Forums o Quarterly marketing briefings have resulted in some tenant proactive involvement in cooperative initiatives o Fed Square Get Together, social style events that raise the awareness of service excellence by enabling staff and volunteers to experience different elements of the Fed Square offer
FSPL continued its official supplier relationship with Energise Enterprise, Small Business Victoria‟s annual festival for small to medium enterprises. In addition to enabling a number of our tenants to benefit from related events and information, an event was programmed exclusively for Fed Square tenants and another for wine showcase exhibitors. FSPL also continued to support the „Good Access is Good Business‟ program which assists tenants understand key access requirements for visitors with disabilities and their obligations under the Disability Discrimination Act.
VISITOR EXPERIENCE “Federation Square has become the cultural heart of the city, in spite of the huge controversy when first opened. Wander down here virtually any weekend of the year and you will find some kind of live music taking place - ranging from the vast array of multiculturalism present in the city through to major festivals and events such as the Melbourne Jazz Festival, Melbourne International Arts Festival and so much more - and with the big screen, events such as the Australian Open Tennis, World Cup games etc are also broadcast.” (Virtual Tourist - Feb 12, 2011)
Refining and refreshing all aspects of the unique Fed Square experience is both our commitment and a key to success. It has been great to see that visitor satisfaction with the overall Fed Square experience is extremely high at 99% with satisfaction with staff in general across the precinct at a wonderful 100%.
There are numerous contributors to the total experience across tenant activities and the range of public experiences. We were pleased to improve services by installing CBA and Bendigo Bank ATMs, working with tenants on customer experience improvements through such programs as the Loyalty Zone and instigating a PR campaign which increased awareness of Fed Square as a food and beverage destination. We were also grateful to secure the partnership with Primus to continue to provide free public Wi-Fi at Federation Square.
- 9 -
Fed Square Pty Ltd ACN 085 731 479
The NGV has also continued to offer the Kids Corner program and opened the NGV Studio in the Atrium which focuses on flexible contemporary work. While we have not yet secured a long term tenant for the Yarra Building, we have been pleased that the temporary exhibition occupancy of ABBAWORLD and the Art of the Brick have done well. We have been pleased to have active collaborations with ACMI and the NGV on activities such as curation films for significant dates like NAIDOC Week (Bran Nu Day), co-curated December Films, the Disney short film season Dec / Jan, a regional documentary series screened in March, inclusion of NGV web content on the Big Screen and the 150 Year Celebration of the NGV in May.
These activities have been coupled with an extensive activity program with 2,080 activities hosted, collaborated on or produced for the public realm, of which 88% have been free to the public.
The Multimedia Program focused on servicing third party clients, producing a weekly schedule of integrated content, and pro-actively establishing curatorial and commissioning relationships with a range of national and international partners. Highlights have included screen outcomes from a new relationship with Queensland University of Technology – a major curator of innovate multimedia content, especially from Asia, a pilot launch of a series of Xbox gaming sessions to the Big Screen with support from Microsoft, live animation sessions with artists, working with the AFL to schedule regular screenings of classic matches and documentary content prior to MCG games and working with MIFF on short film seasons.
The Regular Events Program comprising initiatives owned and produced by Fed Square has continued to consolidate, meeting particular business/program requirements and including the Fed Square Regional Wine Showcase Series and Awards program, a weekly Book Market, weekly Tai Chi, a twice yearly Microbreweries Showcase, New Year‟s Eve celebrations, and the Fed Square Live concert series showcasing emerging local musicians. As usual, New Year‟s Eve was a spectacular event, with record crowds joining in the family celebrations.
Our Creative Program delivered the hallmark Light in Winter program and a range of high impact interventions. The Light in Winter 2011 saw the broadest and most expansive program to date, including a major work by Bruce Ramus - “Light Hearts”, the Gift of Light (including contributions from more than 20 community organisations) and a substantial industry program. Local and national profile was consolidated effectively through this integrated program with an explicit focus on visitor engagement – with over 100 separate program elements, realising at least one publicly accessible event on each day of the 32 day season. Melburnians voted with their feet and we were delighted to see a dramatic increase in visitation throughout June, with an estimated 777,980 visits, a 15% increase on last year. The Light in Winter also received extensive coverage across national media networks and publications with more than 120 items, an estimated PR value of $5.4 million and an estimated total audience of 15,800,000.
Other creative initiatives included Stopcycle 1, Mobius, a new commission from Eness, which saw a successful 3 week live public art experience onsite, extensive media coverage especially in mainstream and arts media and the subsequent production of a short stop motion film intended for major online distribution in perpetuity. Carbon and Sugar Mountain involved co-curation with two festivals with a focus on urban design and creativity and we initiated the Kings in the Corner – a micro performance project. This year, December festivities were uplifted through “Spirit of the Square”, with creative design from Big Fish and a partnership with the Salvation Army, consolidating Fed Square as a community hub during the festive period.
As always, we saw continued strong third party programming including 120 major events (over 2,000 visits) including Victorian/Melbourne festivals (Fashion, Design, Food and Wine, Comedy) 50 community activism events (Tamil Remembrance Vigil, Whitelion's Bail Out Week and Fatality Free Friday), 22 multicultural festivals (Thai Festival, Buddha‟s Day, Polish Festival, Diwali and Kirat) and 35 flag raisings to celebrate national days. We undertook extensive programming to support those with barriers to access (The Great Australian Sunny Sizzle, End the Cycle photo exhibition, Rawcus Flashmob, The Other Film Festival and a Melbourne Conversation: Universal Access Challenge) and we worked proactively with disadvantaged groups or individuals (Choir in residence – The Choir of Hope and Inspiration, Interfaith Prayer and Chant Ceremony for the Victims of the Japanese Earthquake and Tsunami, World Autism Day – Light it Up Blue, Human Rights Arts and Film Festival, The Song Room Series 2011, Refugee Week Photo Exhibition and The Big Issue - 15th Birthday).
- 10 -
Fed Square Pty Ltd ACN 085 731 479
Programming supported numerous indigenous parties (The Long Walk, NAIDOC Week, presentations of the Koori Cohort Members and re-enacting Indigenous Activist William Cooper‟s Protest March) and there was an extensive program of Ideas Discourse and Debate primarily in the BMW Edge featuring 70 forums including Melbourne Conversations, Monash Series, Conversations with the Archbishop, Zero Carbon Britain, Meet Your Member and the Australia Day Panel.
This year saw the introduction of Fed Square Live presented by The Push - a free fortnightly concert series held on the Main Stage from October to April, focusing on emerging and independent Australian talent from all genres – rock, blues + roots, folk, indie pop, indigenous, soul and hip hop and on creating a safe and accessible offer for Melbourne youth. Artists this year have included Jonathon Boulet, Skipping Girl Vinegar, Eagle and the Worm, Custom Kings, Jess Harlan, The Holidays, Strange Talk, and The Little Stevie. We are grateful for generous support and partnership from The Push, Microhire, Triple J, AIR, and Allen‟s Music/Billy Hyde and look forward to working with this foundation group and new partners next year.
The Atrium, our spectacular glass gallery and gateway to NGV Australia (and its Kids Corner and new Studio space) and the BMW Edge has developed into a salon environment, with a focus on Australian art, design, culture and quality food and beverage experiences. In addition to the Regular Program of Wine, Books and Microbreweries, programming has included Animation Live to the Screen with Clint Cure, Sugar Mountain Festival, Carbon Conference opening, Sneeker Freaker Swap Meet, Decade of Action, MARKit @ Fed Square and Page Palour (Emerging Writers Festival).
Fed Ed, our education program around Civics and Citizenship and Australian History, grew this year with close to 5,000 students through the program and numerous user generated stories created for the Federation Story project on the Atrium Balcony. Live sites continued to evolve with the usual AFL, Tennis and Cricket moments. The Dali Lama‟s visit was carried live into the Square from the Melbourne Convention Exhibition Centre and again we welcomed many special visitors including Oprah Winfrey, Hillary Clinton, and Katy Perry.
GREAT REPUTATION
“So VERY Melbourne....It's the centre of the city, well should be!! Directly opposite the old Flinders Street Station, which is what makes Federation Square so cool, old and new combined. Melbourne itself is unique and Federation Square really puts it up there. I have enjoyed many a good lunch/dinner and drink there!” (From - Trip Advisor Nov 2010)
Working systematically to ensure Fed Square is regarded locally, nationally and internationally as an urban success story benefits Fed Square and Victoria.
Fed Square continues as one of “Top 2” attractions for international and interstate visitors to Victoria it is pleasing to see the high level of positive sentiment expressed in print media at 99%. Media coverage has been extensive with over 6,000 domestic and over 1,000 international articles generated. Fed Square Social media engagement continues to grow with Facebook fans now over 7,000, Twitter followers over 3,000 and iPhone App downloads over 26,000.
International guests are a positive 24% of visits and we continue to position Fed Square as a hallmark image for Melbourne with a view to developing tourism visitation. Examples include Fed Square being used as a hero image for: Melbourne such as in Tourism Australia's 'There's Nothing Like ..." campaign Tourism Victoria Brand Victoria Book The City of Melbourne's 'That's Melbourne' website postcard Victoria‟s contribution to the Shanghai World Expo
This year we have also furthered connections with Chinese communities reflecting practices in China where communities frequently gather in public spaces to dance, sing and exercise. Tai Chi continues weekly onsite and businesses have been blessed as part of Chinese New Year celebrations.
- 11 -
Fed Square Pty Ltd ACN 085 731 479
We have been delighted to host dragon dancing, fitness, origami and mahjong activities – and we plan to extend these further in the term ahead. Similarly, a partnership with the Epoch Times has resulted in stories about Fed Square, Mandarin publications have been developed and relationships have been nurtured with third-parties to build a focus around Chinese culture at the Square. Fed Square‟s screens continue to mark significant Chinese dates, celebrations and festivals.
Numerous events provided landmark photo opportunities and these included the L‟Oreal Melbourne Fashion Festival, Grand Prix Driver Appearance, Earth Hour, Melbourne International Comedy Festival – DotMaze, The Long Walk and MOBIUS.
Representation with key tourism partners continued with the Tourism Alliance Attractions Group, Backpacker Operator Alliance of Victoria, Tourism Victoria, Tourism Australia and the Melbourne Convention & Visitors Bureau. Production of bi-monthly tourism industry-specific, long lead e-newsletters provided a regular flow of information. FSPL also joined the International Society of Customer Service Professionals.
We continued to leverage key hallmark events and ACMI/NGV exhibitions to promote Fed Square to interstate tourist markets via in flight programming/magazine including Getaway – Sydney vs Melbourne, Qantas In-flight Entertainment – The Light in Winter, Where Magazine, Fed Square Wine Showcase and Fed Square Microbreweries Showcase, The Light in Winter, ACMI – Shaun Gladwell, Jetstar February - Bokchoy Tang and Tiger Tales - Il Pomodoro.
As always, the case study experience and expertise developed at Fed Square is sought after by colleagues nationally and internationally. This year it included screen management discussions with Aotea Square, Auckland City Council and in particular Waterfront Auckland; consulting with both the City of Perth and the East Perth Redevelopment Authority; continuing liaison with the Hong Kong Government, including a site visit from the Chief Executive of Hong Kong; and representation via staff involvement in the inaugural Open House Worldwide conference in Tel Aviv. Fed Square was also represented at the Place Leaders‟ Association 2011 Adelaide conference “Placemaking Beyond Design: Maintaining the Momentum” with the focus on “Proactive Programming in Public Spaces”. Six articles were contributed to Place News and the Australasian Leisure Management Magazine and Fed Square featured in and sponsored the free Transforming the Yarra podcast. We continue collaboration with Seoul and have recently been working with London programmers to enable screen links around the coming Olympics.
Other contributions to place making discourse and practice have been significant. Our collaboration on the Melbourne Place Making Series – hosted by VicUrban in partnership with the Department of Planning and Community Development, City of Melbourne, Federation Square and Village Well, encouraged practitioners to consider the role of collaborative place making in creating liveable cities. It included online conversations, industry sector events and a three day conference. The Series aimed to stimulate multidisciplinary debate about how to achieve the Place Making objective of creating cities that are desirable for people today and into the future; places that stand the test of time. This Series was unique in that it drew together representatives from sectors that would not normally be associated with Place Making and urban development such as the financial and investment sector. We were fortunate to attract high profile local and international speakers including Carol Coletta, US moderator of the debate on successful cities; Christopher Leinberger, a developer of sustainable and profitable urbanism; the often quoted James Kunstler; Neil McInroy, CEO of the UK Centre for Local Economic Strategies and Prof Ian Harper. All speakers were very positive on the initiative and the role Fed Square plays in the life of the City and of conference attendee survey respondents, 84% said the conference met their expectations and 79% agreed it would change the way they approach their work.
In December Fed Square also played a role in the successful tourism promotion involving Oprah Winfrey. Accompanied by the Prime Minister and the Premier of Victoria, she made her only public event appearance at Federation Square. Estimated visitation on that day was 44,441 across the entire precinct and was the highest weekday visitation recorded in 2010.
To date 710 media articles have been achieved noting Oprah and Fed Square with a total advertising space rate of $8,479,765 including coverage by all metro TV stations, radio stations and newspapers, as well as substantial
- 12 -
Fed Square Pty Ltd ACN 085 731 479
coverage in all other states and overseas.
The use of social media to tweet and update Facebook throughout the day enabled growth in Facebook fans by over 200 and Twitter followers by 70 – the growth expected in a whole week.
In the year there were numerous formal filming hires and hundreds of media filming moments including Oprah‟s visit, Sunrise Melbourne outdoor broadcasts, Winners and Losers, Grand Designs Australia and Edge and Crook (a Bollywood style film).
Media engagement has continued to be positive throughout the year with highlights including support from Channel 10, Channel 9, ABC TV News, Channel 7 Sunrise, The Age, Herald Sun, ABC 774, Triple J, 3AW, Triple R and Real Time. We are very grateful for our media colleagues in helping us position the Square as the heart of our community.
CONCLUSION
As always, I am grateful to the staff and Boards of the Special Broadcasting Service, Australian Centre for the Moving Image, Melbourne Visitor Centre and the National Gallery of Victoria for their contribution to the success of the precinct and I thank all the tenants and their staff for their participation in many programs and activities. Our many contractors provide valuable services across a broad range of functions and I am particularly grateful to Microhire, Ikon Cleaning Services, AGG Security and Wilson Parking for their commitment to Federation Square.
Thank you to the State Government and City of Melbourne and their many officers and departments with whom we collaborate on a broad range of projects and events.
Thank you to our Board who have provided direction, advice and support and in particular to Kee-Wong who completed his term on the Board.
A big thank you must also go to all the staff. Whether it is coordinating or supervising programs, developing and managing systems or projects, evolving our brand or ensuring compliance, our many successes are underpinned by the ongoing dedication of the team.
Kate Brennan Chief Executive Officer
- 13 -
Fed Square Pty Ltd ACN 085 731 479
Fed Square Pty Ltd
2010-11 KEY PERFORMANCE INDICATORS
(AS AT 30 JUNE 2011)
- 14 -
Fed Square Pty Ltd ACN 085 731 479
KEY PERFORMANCE INDICATORS FOR 2010-11
1. Great Place Enhance our position as a place leader and continue to develop Federation Square as Melbourne‟s primary meeting place within the broader recreational precinct. Target Actual Key Performance Indicators 2010-11 Jun 11 FY Cleaning 95% 100% As at May 11 Visitor comfort indicated by their assessment of: Security 95% 100% As at May 11 Amenities 95% 97% As at May 11 Visitation within 10% of the average of the previous three years. 100% 109% Jun 11 FY Victorians who recommend Fed Square to visiting friends and family 75% 63% As at Jun 11 Sociability – percentage of visitors using Fed Square as a meeting place 20% 20% As at May 11
2. Great Staff Be considered an „employer of choice‟ by developing and supporting a motivated workforce that operates as a cohesive customer focused team.
Target Actual Key Performance Indicators 2010-11 Jun 11 FY Performance of FSPL team in achieving defined role objectives 100% 100% “Overall Job Satisfaction” measured through the People Matter Survey >85% 80% As at Jun 10 Fed Square Pty Ltd an “Employer of Choice” as measured through the annual People >95% 88% As at Jun 10 Matter Survey
- 15 -
Fed Square Pty Ltd ACN 085 731 479
3. Great Delivery Be known as a „can do‟ organisation because of the quality and timeliness of service delivery and processes which address the needs of partners and clients. Target Actual Key Performance Indicators 2010-11 Jun 11 FY Tenant Satisfaction >90% 100% As at Nov 10 Event Client Satisfaction >95% 98% As at Apr 11 Visitor Satisfaction with their overall service experience 100% 99% As at May 11 Visitor Satisfaction with the service provided by staff across Fed Square 95% 100% As at May 11
4. Great Business Practice Continue to advance a sustainable business through attention to „best practice‟ commercial, asset, risk management and governance programs.
Target Actual Key Performance Indicators 2010-11 Jun 11 FY Current 3.41 3.61 Jun 11 FY Liquidity Ratios Quick 3.41 3.44 Jun 11 FY
Interest Cover - EBITD 3.18 3.49 Jun 11 FY Operating profit before interest and depreciation $5,562,112 $6,101,594 Jun 11 FY Operating profit before depreciation $3,810,733 $4,350,915 Jun 11 FY Risk Management – VMIA Risk Management Framework Quality Review >90% 92% VMIA RFQR Jun 11 FY. Visitor and contractor minor injuries Significant OH&S Incidents Zero 6 requiring reporting to Worksafe.. Significant Security and Risk Incidents Zero 1 Jun 11 FY Net total carbon emissions 9,000 9,427 Reported annually - 16 -
Fed Square Pty Ltd ACN 085 731 479
5. Great Visitor Experience Refine and refresh all aspects of the unique Fed Square experience to ensure it continues to be embraced by the community.
Target Actual Key Performance Indicators 2010-11 Jun 11 FY Visitors experience rating >85% 97% As at May 11 Number of events and activities 1,500 2,081 Jun 11 FY Fed Square visitors who recommend it as a good place to visit >95% 94% As at May 11 > 90% Visitation rates to cultural attractions of prior 113% Jun 11 FY YTD year Commercial tenants turnover $38.5m $39.0m Jun 11 YTD
6. Great Reputation Be regarded locally, nationally and internationally as an urban success story.
Target Actual Key Performance Indicators 2010-11 Jun 11 FY Recognised as a culturally diverse public space > 90% 92% As at Jun 11 Percentage of Victorians that agree with the statement that Fed Square is now 95% 78% As at Jun 11 Melbourne‟s major central community focal point Fed Square to be one of the “Top 3” attractions in Victoria in terms of visits by “Top 3” For international and national Top 2 international and interstate visitors to Victoria position visitors Attracting International visitors > 25% 24% As at May 11 High level of positive sentiment expressed in print media >90% 99% Jun 11 FY
- 17 -
Fed Square Pty Ltd ACN 085 731 479
Statement of Corporate Governance
The Directors of Fed Square Pty Ltd are committed to the highest standard of corporate governance and acknowledge the need for continued maintenance of governance practice and ethical conduct by all Directors and employees.
Accordingly, they have ensured that systems and procedures are in place to provide appropriate assurance that the company undertakes its activities and functions in accordance with: . All legal requirements; . The best interests of shareholders; . An environment that meets relevant standards; and . A manner that is responsible to all stakeholders and the wider community.
Objects and Powers of the Company
The objects of the company are those set out in the Federation Square Civic and Cultural Charter and include without limitation:-
(a) to occupy the site known as Federation Square; (b) to use, refurbish, maintain, improve, develop, lease, licence, manage, operate and modify all or any part of Federation Square; (c) in relation to any part of Federation Square, to carry on any or all of: (i) the businesses of owners, operators, mangers, licensors, lessors or occupiers of: (1) galleries, exhibition centres, libraries, art and craft centres and museums; (2) car parks; (3) theaters, cinemas and cinema based entertainment facilities, radio, television and other multi-media studios, outdoor video screens and video/LED signage; (4) restaurants, cafes, taverns, hotels, food and drink premises (including, without limitation, take-away food and drink premises), liquor vendors, shops, convenience restaurants and convenience shops, and nightclubs; (5) function centres, conference centres and reception centres; (6) retail outlets, shops and stores (including, without limitation those required for service industries and including, without limitation, cash dispensing machines, ticketing machines and tourist and other information services providing machines); (7) offices; (8) amusement parlours and gaming and gambling premises; (9) indoor recreation facilities; (10) visitor and tourist information services and other visitor and tourist services; (ii) live performances, entertainment, carnivals, circuses, community or public events, (both indoor and outdoor), festivals, exhibitions and performances; (iii) places of assembly for religious and cultural activities, entertainment or meetings; and (iv) markets; and to do all things incidental or conducive to these objects.
- 18 -
Fed Square Pty Ltd ACN 085 731 479
Duties of Directors
The duties of Directors include:
. Duty to act honestly in good faith in the best interests of the corporation and for a proper purpose; . Duty to act with care and diligence; . Duty to avoid conflict in the position of a director and/or any interest that a director may have; . Duties which prohibit the misuse of information obtained by directors; and . Duties which prohibit a director from taking for oneself the company‟s opportunities.
Responsibilities of the Board
The primary responsibilities of the Board include:-
. Establishing the company‟s vision, mission, values and ethical standards; . Ensuring the company‟s long term viability and enhancing the financial position; . Formulating and overseeing implementation of corporate strategy; . Approving the business plan, budget and corporate policies; . Agreeing key performance indicators (KPIs); . Monitoring/assessing performance of the company, the Board itself, management and major projects; . Overseeing the risk management framework and monitoring business risks; . Appointing and appraising the performance of the Chief Executive Officer; . Requiring and monitoring legal and regulatory compliance; . Approving annual accounts, annual report and other public documents; . Ensuring an effective system of internal controls exists; and . Delegating an appropriate level of authority to management.
Board Committees
The Board has established one permanent Committee, this being the Audit Committee. Committee decisions become recommendations for submission to the Board for resolution.
Risk Management
The company recognises the need for pro-active risk management procedures and during the year reviewed the Risk Management Policy and Strategy and procedures to monitor progress with proposed plans.
Risks are identified, assessed and treated in accordance with the principles contained in Australia/New Zealand Risk Management Standard AS/NZS ISO 31000:2009.
The risk management program is designed to provide a structured approach to business planning, improve operational performance, encourage pro-active management and protect assets, people, finance and property.
- 19 -
Fed Square Pty Ltd ACN 085 731 479
Attestation
In accordance with the Victorian Government‟s Risk Management Framework developed by the Department of Treasury & Finance in July 2007, I, John Frederick Harvey, certify that Fed Square Pty Ltd has risk management processes in place consistent with the Australian/New Zealand Risk Management Standard and an internal control system is in place that enables the executive to understand, manage and satisfactorily control risk exposures. The Board verifies this assurance and that the risk profile of Fed Square Pty Ltd was critically reviewed in the last 12 months.
John Frederick Harvey Chairman 30th August 2011
Audit Committee
The company has established an Audit Committee to advise the Board in relation to matters falling into the following broad areas:-
. Financial reporting and accounting policies; . Internal audit and internal controls; . Governance; . State Government‟s Financial Management Compliance Framework; and . Compliance with Australian equivalents of International Financial Reporting Standards
The Audit Committee meets as required and makes recommendations to the Board on specific issues. The members of the Committee during the year ended 30 June 2010 were Kee Wong (Chairman), John Harvey, Helen Kapalos and Liberty Sanger.
Financial Management Compliance Framework
In June 2003 the Victorian State Government launched the Whole of Government “Financial Management Compliance Framework” to promote responsible financial management in the Victorian public sector and assist public sector agencies meet their obligations and monitor their overall performance in financial management.
A fundamental element of the Financial Management Compliance Framework is the Standing Directions issued from time to time by the Minister for Finance. The standing directions are issued under the provisions of the Financial Management Act 1994 and are designed to supplement the Act by prescribing mandatory procedures for the Victorian public sector.
Whilst Fed Square Pty Ltd is not subject to the provisions of the Financial Management Act 1994, the company is implementing the requirements of the Financial Management Compliance Framework on a voluntary basis.
- 20 -
Fed Square Pty Ltd ACN 085 731 479
Internal Audit
The company engaged Grant Thornton (Vic) Pty Ltd as the Internal Auditor to assist in evaluating the company‟s internal controls.
Grant Thornton P/L developed an annual audit plan, having due regard to the company‟s risk management program, and implementation of proposed audit activities is now underway.
Whistleblowers Protection Act 2001
The Whistleblowers Protection Act 2001 encourages and assists people in making disclosures of improper conduct by public officers and public bodies. The Act provides protection to people who make disclosures in accordance with the Act and establishes a system for the matters disclosed to be investigated and rectifying action to be taken.
Fed Square Pty Ltd does not tolerate improper conduct by employees, nor the taking of reprisals against those who come forward to disclose such conduct. It is committed to ensuring transparency and accountability in its administrative and management practices and supports the making of disclosures that reveal corrupt conduct, conduct involving a substantial mismanagement of public resources, or conduct involving a substantial risk to public health and safety and the environment.
Fed Square Pty Ltd will take all reasonable steps to protect people who make such disclosures from any detrimental action in reprisal for making the disclosure. It will also afford natural justice to the person who is the subject of the disclosure.
Reporting procedures Disclosures of improper conduct or detrimental action by Fed Square Pty Ltd or its employees may be made to the following:
The Protected Disclosure Officer/Coordinator William Blakeney Manager – Corporate Services Fed Square Pty Ltd 9655 1904 [email protected]
Alternatively, disclosures of improper conduct or detrimental action by Fed Square Pty Ltd employees may also be made directly to the Ombudsman.
The Ombudsman Victoria Level 9, 459 Collins Street (North Tower) Melbourne VIC 3000 Telephone: (03) 9613 6222 Internet: www.ombudsman.vic.gov.au E-mail: [email protected]
Further information Written guidelines outlining the system for reporting disclosures of improper conduct or detrimental action by Fed Square Pty Ltd or its employees are available for public perusal.
- 21 -
Fed Square Pty Ltd ACN 085 731 479
Disclosures under the Whistleblowers Protection Act The current procedures established by the public body under Part 6 are available upon request.
The following information is disclosed pursuant to section 104 of the Whistleblowers Protection Act 2001.
2010-11 2009-10 Number Number Public interest disclosures Nil Nil Protected disclosures Nil Nil The number and type of disclosures made to Fed Square Pty Ltd since the Nil Nil commencement of the Act. The number of disclosures referred to the Ombudsman for determination as to Nil Nil whether they are public interest disclosures The number and types of disclosures referred to Fed Square Pty Ltd by the Nil Nil Ombudsman. The number and types of disclosures referred by Fed Square Pty Ltd to the Nil Nil Ombudsman to investigate. The number and types of investigations of disclosures taken over by the Nil Nil Ombudsman from Fed Square Pty Ltd. The number of requests by complainants to have their disclosure investigated by Nil Nil the Ombudsman due to their dissatisfaction with the way Fed Square Pty Ltd is investigating the matter. The number and types of disclosure that Fed Square Pty Ltd has declined to Nil Nil investigate. The number and type of disclosed matters that were substantiated on investigation Nil Nil and the action taken on completion of the investigation. Any recommendations made by the Ombudsman that relate to Fed Square Pty Ltd. Nil Nil
- 22 -
Fed Square Pty Ltd ACN 085 731 479
Directors’ Report
The Directors of Fed Square Pty Ltd present their report on the financial statements of the company for the year ended 30th June 2011.
Directors The Directors in office during the period and at 30 June 2011 unless otherwise stated were:
. Mr John Frederick Harvey (Chairman) . Ms Helen Kapalos . Mr Kee Fatt Wong . Ms Liberty Emma Sanger
Ownership of Fed Square Pty Ltd Fed Square Pty Ltd is a company wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer is the Minister responsible for the State Holding in Fed Square Pty Ltd under the Deed.
Principal Activities The principal activity of Fed Square Pty Ltd continues to be the management of Federation Square.
Results of Operations 2011 2010 $ $ Operating surplus before depreciation 4,350,915 4,821,097 Depreciation expense (11,650,642) (11,619,197)
Operating surplus/(deficit) (7,299,727) (6,798,100)
Dividends No dividends have been proposed or paid during the year (2009-2010 Nil).
Changes in State of Affairs There was no material change in the State of Affairs during the year.
Environmental Regulations No significant environmental regulations apply that are likely to have an unexpected material affect on the operations or financial results of Fed Square Pty Ltd.
Subsequent Events There were no subsequent events after balance date expected to have a material affect on the financial statements of Fed Square Pty Ltd that are not otherwise disclosed in the financial statements and notes.
- 23 -
Fed Square Pty Ltd ACN 085 731 479
Directors’ Meetings The number of Directors‟ meetings and number of meetings attended by each of the Directors of the company during the financial year were:
MEETINGS MEETINGS DIRECTOR HELD* ATTENDED
Mr John Harvey 8 8 Ms Helen Kapalos 8 7 Mr Kee Wong 8 7 Ms Liberty Sanger 8 7
*Reflects the number of meetings held during the time the Director held office during the year.
Audit Committee Meetings The number of Audit Committee meetings and number of meetings attended by each of the Directors of the company during the financial year were:
MEETINGS MEETINGS DIRECTOR HELD* ATTENDED
Mr John Harvey 4 4 Ms Helen Kapalos 4 4 Ms Liberty Sanger 4 4 Mr Kee Wong 4 4
*Reflects the number of meetings held during the time the Director held office during the year.
Directors’ Benefits Directors‟ benefits are set out in notes 19 and 21 to the financial statements.
Insurance of Directors and Officers During the financial year $55,923 was paid by the company to the Victorian Managed Insurance Authority for Directors‟ and Officers‟ Liability insurance premiums and recorded as an expense in the Comprehensive Operating Statement (2009-2010: $51,110).
The insurance provides cover for Directors and Officers of Fed Square Pty Ltd against certain personal liabilities that they may incur by reason of their duties as Directors and Officers.
Signed in accordance with a resolution of the Directors at Melbourne on 30th August 2011.
...... John Harvey (Chairman)
- 24 -
Fed Square Pty Ltd ACN 085 731 479
Auditor-General’s Independence Declaration
- 25 -
Fed Square Pty Ltd ACN 085 731 479
Comprehensive operating statement for the financial year ended 30 June 2011
Notes 2011 2010 $ $
Operating revenue 2 23,220,441 24,146,789
Interest revenue 1,052,605 833,787
Total Revenue 24,273,046 24,980,576
Borrowing costs (1,750,679) (1,913,210)
Employee benefits (3,974,617) (3,415,076)
Event expenses (3,391,745) (3,543,021)
Site operating expenses 3(a) (7,390,397) (7,221,225)
Other expenses 3(b) (3,414,693) (4,066,947)
Total expenses before depreciation (19,922,131) (20,159,479)
Net operating result before depreciation 4,350,915 4,821,097
Depreciation and amortisation 7 (11,650,642) (11,619,197)
Net operating result 12 (7,299,727) (6,798,100)
Other comprehensive income
Revaluation of property, plant and equipment 7 (84,124,795) -
Other comprehensive income for the period (84,124,795) -
Total comprehensive result for the period (91,424,522) (6,798,100)
The comprehensive operating statement should be read in conjunction with the accompanying notes.
- 26 -
Fed Square Pty Ltd ACN 085 731 479
Balance sheet as at 30 June 2011
Notes 2011 2010 $ $ Current Assets Cash and deposits 17(a) 20,520,973 21,119,239 Trade and other receivables 6 1,154,216 1,147,816 Prepayments 966,203 333,958 Total Current Assets 22,641,392 22,601,013
Non-Current Assets Property, plant and equipment 7 497,694,785 591,430,654 Total Non-Current Assets 497,694,785 591,430,654
Total Assets 520,336,177 614,031,667
Current Liabilities Trade and other payables 8 2,972,426 2,568,315 Interest bearing liabilities 10 2,960,385 2,773,518 Provisions 9 339,780 320,168 Total Current Liabilities 6,272,591 5,662,001
Non-Current Liabilities Interest bearing liabilities 10 23,723,040 26,617,320 Provisions 9 31,315 18,593 Total Non-Current Liabilities 23,754,355 26,635,913
Total Liabilities 30,026,946 32,297,914
Net Assets 490,309,231 581,733,753
Equity Contributed capital 11 435,940,508 435,940,508 Accumulated deficit 12 (34,996,780) (27,697,053) Asset revaluation surplus 13 89,365,503 173,490,298 Total Equity 490,309,231 581,733,753
The balance sheet should be read in conjunction with the accompanying notes.
- 27 -
Fed Square Pty Ltd ACN 085 731 479
Cash flow statement for the financial year ended 30 June 2011
Notes 2011 2010 $ $ Cash Flows from operating activities
Receipts from customers (incl. GST) 25,510,086 26,586,722 Interest received 1,119,164 767,169 Payments to employees (3,976,419) (3,347,548) Payments to suppliers (incl. GST) (15,965,354) (16,077,157) GST paid to Australian Taxation Office (781,325) (1,024,105) Interest paid on loans (1,757,436) (1,919,552)
Net cash flows from operating activities 17(b) 4,148,716 4,985,529
Cash Flows from investing activities
Payments for buildings & improvements (1,061,614) (230,438) Payments for plant & equipment (917,172) (766,692) Net cash flows from investing activities (1,978,786) (997,130)
Cash Flows from financing activities
Repayment of borrowings (2,734,821) (2,572,975) Repayment of finance leases (33,375) (22,557) Net cash flows from financing activities (2,768,196) (2,595,532)
Net increase in cash and cash equivalents (598,266) 1,392,867
Cash and cash equivalents at the beginning of the 21,119,239 19,726,371 year
Cash and cash equivalents at the end of the year 17(a) 20,520,973 21,119,239
The cash flow statement should be read in conjunction with the accompanying notes.
- 28 -
Fed Square Pty Ltd ACN 085 731 479
Statement of changes in equity for the financial year ended 30 June 2011
Share Capital Contributed Assets revaluation Accumulated Total capital surplus deficit $ $ $ $ $ Balance at 1 July 2009 1 435,940,507 173,490,298 (20,898,953) 588,531,853
Operating result for the year - - - (6,798,100) (6,798,100)
Other comprehensive income for the year - - - - -
Total comprehensive income for the year - - - (6,798,100) (6,798,100)
Balance at 30 June 2010 1 435,940,507 173,490,298 (27,697,053) 581,733,753
Operating result for the year - - - (7,299,727) (7,299,727)
Revaluation of freehold land - - (35,318,000) - (35,318,000)
Revaluation of buildings - - (48,806,795) - (48,806,795)
Other comprehensive income for the year - - - - -
Total comprehensive income for the year - - (84,124,795) (7,299,727) (91,424,522)
Balance at 30 June 2011 1 435,940,507 89,365,503 (34,996,780) 490,309,231
The statement of changes in equity should be read in conjunction with the accompanying notes.
- 29 -
Fed Square Pty Ltd ACN 085 731 479
Notes to the financial statements for the year ended 30 June 2011
1. STATEMENT OF SIGNIFICANT ACCOUNT POLICIES These financial statements are audited general purpose financial statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Urgent Issues Group Interpretations, and comply with other requirements of the law.
The financial statements were authorised for issue by J. F. Harvey, Chairman, Fed Square Pty Ltd on 30th August 2011.
The significant policies which have been adopted in the preparation of this financial report are:
a. Basis of preparation The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets.
The accrual basis of accounting has been applied in the preparation of these financial statements whereby assets, liabilities, equity, revenue and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.
In the application of accounting standards, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making judgments.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Judgments made by management in the application of accounting standards that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2011 and the comparative information presented in these financial statements for the year ended 30 June 2010.
b. Revenue recognition Revenues are measured at the fair value of the consideration received or receivable, net of any goods and services tax payable to the Australian Taxation Office. Goods or services received without consideration are recognised in the Comprehensive Operating Statement as resources received free of charge. Revenue is recognised for the main business activities as follows:-
- 30 -
Fed Square Pty Ltd ACN 085 731 479
Fees and charges Revenue from events, car parking and other fees and charges are recognised in the period in which the service is provided.
Tenancy rents Revenue in the form of tenancy rents and outgoings derived from operating leases on premises at Federation Square is recognised in the period in which the service is provided.
Grants Grants are recognised as income when the company gains control of the underlying assets. Where grants are reciprocal, income is recognised as performance occurs under the grant. Non-reciprocal grants are recognised as income when the grant is received or receivable. Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant.
Sponsorships Sponsorship revenue is recognised in the period in which the right to receive the revenue exists under each specific agreement.
Interest revenue Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.
Sale of non-current assets The gross proceeds from the sale of non-current assets are included as revenue at the date control of the asset passes to the buyer, which is usually when an unconditional contract of sale is signed. c. Borrowing Costs Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with arrangements for borrowings. Borrowing costs are expensed in the period in which they relate. d. Employee Entitlements
Wages, salaries and annual leave Liabilities for employee entitlements for wages and salaries (including non-monetary benefits) and annual leave represent present obligations resulting from employees‟ services provided up to the reporting date, calculated at undiscounted amounts based on remuneration rates, including on-costs, that the company expects to pay.
Superannuation All superannuation contributions are to defined contribution plans and expensed when incurred.
Long service leave The provision for employee benefits for long service leave represents the present value of the estimated future cash outflows to be made by the company resulting from employees‟ services provided up to the reporting date, including any periods of recognised prior service.
Unconditional long service leave, representing 7 or more years of continuous service, is disclosed as a current liability even where the company does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. This component of the LSL liability is measured at nominal value.
- 31 -
Fed Square Pty Ltd ACN 085 731 479
e. Expenses from transactions
Event expenses Expenses are recognised as they are incurred and reported in the financial year to which they relate.
Site operating expenses Expenses are recognised as they are incurred and reported in the financial year to which they relate.
Other expenses Expenses are recognised as they are incurred and reported in the financial year to which they relate.
f. Goods and Services Tax Revenues, expenses and physical assets are recognised net of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as either a part of the cost of the asset or as part of the expense incurred. Receivables and payables are stated inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or current liability in the balance sheet.
Cash flows from operating activities are included in the Cash Flow Statement on a gross basis, inclusive of GST. The GST components of cash flows from investing activities and financing activities, that are payable to or recoverable from the ATO, are presented as operating cash flows. g. Income Tax The company is exempt from income tax pursuant to Section 24 AM of the Income Tax Assessment Act 1936. h. Leased Assets (Fed Square Pty Ltd as Lessee) Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the entity‟s policy on borrowing costs.
Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset.
Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
- 32 -
Fed Square Pty Ltd ACN 085 731 479
i. Provisions A provision is recognised when there is a legal, equitable or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit will be required to settle the obligation, the timing or amount of which is uncertain.
If the effect is material, a provision is determined by discounting the expected future cash flows (adjusted for expected future risks) required to settle the obligation that reflects the current market assessment of the time value of money and the risks specific to the liability, being risk free rates on government bonds most closely matching the expected future payments.
When some or all of the economic benefit required to settle a provision is expected to be recovered from a third party, the recovery receivable is recognised as an asset when it is probable that the recovery will be received and is measured on a basis consistent with the measurement of the related provision.
In the Balance Sheet, a provision is recognised net of the recovery receivable when the entity: . has a legally recognised right to set-off the recovery receivable and the provision; . intends to settle on a net basis, or to realise the asset and settle the provision simultaneously.
In the Comprehensive Operating Statement, an expense recognised in respect of a provision is presented net of recovery.
j. Property, plant and equipment Plant and equipment and equipment under finance lease are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item.
Land and buildings are measured at fair value. Fair value is determined on the basis of an independent valuation by external valuation experts. The fair values are recognised in the financial statements and are reviewed at the end of each reporting period to ensure that the carrying value of land and buildings is not materially different from their fair values.
Revaluation Revaluation increments are credited directly to equity in the asset revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as an expense in the net result, the increment is recognised as income in determining the net result.
Revaluation decrements are recognised immediately as expenses in the net result, except that, to the extent that a credit balance exists in the revaluation reserve in respect of the same class of assets, they are debited to the asset revaluation reserve.
Revaluation increases and revaluation decreases relating to individual assets within a class of property, plant and equipment are offset against one another within that class but are not offset in respect of assets in different classes.
Depreciation Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method is reviewed at the
- 33 -
Fed Square Pty Ltd ACN 085 731 479
end of each annual reporting period. Items costing less than $5,000 are written off in the year of purchase.
The following estimated useful lives are used in the calculation of depreciation:
Category Life Buildings and improvements 5 - 100 years Plant and equipment 2 - 50 years
The cost of tenancy fit-outs provided under lease arrangements are amortised over the initial term of the relevant lease. k. Impairment of assets At each reporting date, the company reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in use. Value in use is determined by the „depreciated replacement cost‟, which is the current replacement cost of the asset less, where applicable, accumulated depreciation calculated on the basis of such cost to reflect the already consumed or expired future economic benefits of the asset.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. l. Financial assets and liabilities
i. Cash and deposits Cash includes cash on hand, deposits held and cash equivalents, which are highly liquid investments with short periods to maturity and readily convertible into cash on hand. They are subject to an insignificant risk of changes in value.
ii. Interest bearing liabilities Loans are recognised when issued at the amount of the net proceeds received. Interest is recognised in the Comprehensive operating statement on an effective yield basis.
iii. Receivables Debtors are generally settled within 30 days and are carried at amounts due. The ability to collect debts is assessed at year end and specific provision is made for any doubtful amounts.
iv. Payables These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and which remain unpaid. The amounts are unsecured and are paid usually within 30 days of recognition. - 34 -
Fed Square Pty Ltd ACN 085 731 479
v. Net fair value of financial assets and liabilities Monetary financial assets and financial liabilities not readily traded in an organised financial market are determined by valuing them at the present value of contractual future cash flows on amount due from customers (reduced for expected credit losses) or due to suppliers. Cash flows are discounted using standard valuation techniques at the applicable on-market yield having regard to the timing of the cash flows. The carrying amounts of bank term deposits, receivables, payables, loans and employee benefits approximate net fair value. m. Prepayments
Prepayments represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period. n. New Accounting Standards and Interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2011 reporting period. The Department of Treasury & Finance assesses the impact of these new standards and advises Government departments and related entities of their applicability and early adoption where applicable.
As at 30 June 2011 a number of standards and interpretations had been issued but were not mandatory for the financial year ending 30 June 2011. Whilst, these accounting standards and interpretations may have an impact on future reporting periods, the extent of their impact is considered not to warrant further disclosures.
The company has not, and does not intend to, adopt these standards early.
- 35 -
Fed Square Pty Ltd ACN 085 731 479
Notes 2011 2010 $ $ 2. OPERATING REVENUE
Tenancy rents and charges 15,167,595 16,455,347 Car parking 3,773,461 3,419,078 Events 3,104,721 2,938,923 Sponsorship and grants 1,135,983 1,314,523 Other revenue 38,681 18,918 Total operating revenue 23,220,441 24,146,789
3. EXPENSES
(a) Site operating expenses Car park operations 760,819 634,197 Cleaning 1,524,131 1,455,815 Contractors 256,113 261,447 Maintenance 1,693,216 1,908,907 Security 1,385,589 1,338,036 Utilities 1,660,962 1,454,121 Placemaking 109,567 168,702 Total site operating expenses 7,390,397 7,221,225
(b) Other expenses Administration and accounting 780,808 589,820 Bad and Doubtful debts 15,189 120,860 Insurance 693,669 661,823 Legal 129,232 86,149 Motor vehicles 19,697 30,123 Multimedia 63,150 423,456 Promotional expenses 568,581 587,651 Statutory rates and taxes 805,111 732,924 Tenancy expenses 339,256 834,141 Total other expenses 3,414,693 4,066,947
4. AUDITORS’ REMUNERATION
Amounts paid or due and payable to the Victorian Auditor- General‟s Office for audit of the financial statements 25,025 24,699
5. DIVIDENDS
There was no provision for dividends or dividends paid for the year (2009-2010: Nil).
- 36 -
Fed Square Pty Ltd ACN 085 731 479
6. TRADE AND OTHER RECEIVABLES Notes 2011 2010 $ $
Debtors 1,047,041 1,301,485 Provision for doubtful debts (34,773) (370,223) Net debtors 1,012,268 931,262
Accrued income 141,948 216,554
Total trade and other receivables 1,154,216 1,147,816
The average credit period on sales of goods and rendering of services is 30 days. An allowance has been made for estimated irrecoverable receivable amounts arising from past sale of goods or rendering of services. The company has provided for receivables based on the estimated irrecoverable amounts determined by reference to past default experience.
Movement in allowance for doubtful debts 2011 2010 $ $ Balance at beginning of year (370,223) (390,862) Impairment losses recognised on receivables (15,189) (100,000) Amounts written off as uncollectable 205,485 120,639 Amounts credited during the year 145,154 - Balance at end of year (34,773) (370,223)
Ageing of impaired receivables 2011 2010 $ $ Current - 15,842 30 – 60 days - 16,165 60 – 90 days - 15,842 Greater than 90 days 34,773 322,374 Total 34,773 370,223
In determining the recoverability of a receivable, the company considers any change in the credit quality of the receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being diverse and unrelated. Accordingly, the Directors believe there is no further credit provision required in excess of the allowance for doubtful debts.
7. PROPERTY, PLANT AND EQUIPMENT
Valuation Freehold Land An independent valuation of the company‟s freehold land was undertaken on behalf of the Department of Treasury and Finance by Edward Rushton Australia Pty Ltd, immediately before these assets were transferred to the company in June 2003. The market value of land used for the purposes of determining contributed capital by owners was $62,500,000 (Note 11).
- 37 -
Fed Square Pty Ltd ACN 085 731 479
Major assumptions or considerations of the valuer in determining the above value included:-
- the central portion of the land which is a strata and in effect an air right, was ascribed a value equal to 10% of surrounding land values; - recognition was given to the fact that these air rights are considerably larger than usual and more difficult and expensive to develop; - the valuation did not discount the land value on account of restrictions imposed by the planning permit for the site nor for the requirement to construct substantial open and enclosed public spaces.
Rushton Valuers Pty Ltd undertook further valuations of the land using the above assumptions with the latest effective date being 30 June 2008. The revalued carrying amount following the revaluation at 30 June 2008 was $156,780,000.
A subsequent valuation was undertaken by Urbis Valuations Pty Ltd on behalf of the Valuer-General Victoria (ref: 210B-A00797) effective as at 30 June 2011. The Urbis valuation is based on:-
- the property is situated in the „Capital City 1‟ zone, which is a highly sought after property zone;
- the highest and best use based on the zoning and location of Federation Square is for a medium/high density residential development site;
- the site is well located, being opposite the river and close to public transport linkages;
- it is a large site and discount for size should apply;
- the central portion of the land (air rights) being ascribed a value equal to 5% of the surrounding land values
The revalued carrying amount following the revaluation at 30 June 2011 is $121,462,000. This resulted in a decrement to the asset revaluation reserve during 2010-11 of $35,318,000, which leaves a balance relating to land of $58,962,000.
Buildings and Improvements An independent valuation of buildings and improvements was performed by WT Partnership during 2005-06 to determine their fair value as represented by depreciated replacement cost. The valuation was based on the original Principal‟s Instruction Register for works undertaken on the Federation Square project, adjusted to reflect current building market rates prevailing in Melbourne at the effective date of the valuation, this being 30 June 2006.
A subsequent valuation was undertaken by Napier and Blakeley Pty Ltd on behalf of the Valuer General Victoria effective as at 30 June 2011. The value ascribed by Napier and Blakeley Pty Ltd for the carrying amount of buildings and improvements at fair value, as represented by the depreciated replacement cost, at 30 June 2011 is $372,997,000.
The valuation included items previously reported as plant and equipment totalling $50,758,842 which have been reclassified during the current period as buildings and improvements. The valuation resulted in a decrement to the revaluation reserve of $48,806,795 during 2010-11, which leaves a balance relating to buildings and improvements of $30,403,503.
- 38 -
Fed Square Pty Ltd ACN 085 731 479
Notes 2011 2010 $ $
Freehold land – fair value 121,462,000 156,780,000
Buildings and improvements At fair value 444,086,981 411,585,190 Accumulated depreciation (70,361,383) (33,356,021) 373,725,598 378,229,169
Plant and equipment At cost 11,278,262 90,608,062 Accumulated depreciation (8,931,556) (34,354,492) 2,346,706 56,253,570
Tenancy fit-outs At cost 1,800,005 1,800,005 Accumulated amortisation (1,743,967) (1,708,966) 56,038 91,039
Plant and equipment under finance lease 145,509 111,433 Less: Accumulated depreciation (41,066) (34,557) 104,443 76,876
Total property, plant and equipment 497,694,785 591,430,654
Reconciliations Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning of the current financial year are set out below:
Land Buildings and Plant and Tenancy Plant and Total property, improvements equipment fit-outs equipment under plant and lease equipment $ $ $ $ $ $ Carrying amount at 1 July 2009 156,780,000 385,475,162 59,572,062 126,038 86,539 602,039,801 Additions - 230,438 766,692 - 37,544 1,034,674 Disposals - - - - (24,624) (24,624) Revaluation ------Depreciation/Amortisation - (7,476,431) (4,085,184) (34,999) (22,583) (11,619,197)
Carrying amount at 1 July 2010 156,780,000 378,229,169 56,253,570 91,039 76,876 591,430,654 Additions - 1,061,614 917,172 - 71,075 2,049,861 Disposals - - - - (10,293) (10,293) Reallocations 50,758,842 (50,758,842) - Revaluation (35,318,000) (48,806,795) - - - (84,124,795) Depreciation/Amortisation - (7,517,232) (4,065,194) (35,001) (33,215) (11,650,642)
Carrying amount at 30 June 2011 121,462,000 373,725,598 2,346,706 56,038 104,443 497,694,785
- 39 -
Fed Square Pty Ltd ACN 085 731 479
Notes 2011 2010 8. TRADE AND OTHER PAYABLES $ $
Creditors 2,677,659 2,293,755 Advances 145,157 90,814 Salaries and associated costs 149,610 183,746 Total trade and other payables 2,972,426 2,568,315
9. PROVISIONS
Current Employee entitlements 327,357 310,280 Fringe benefits tax 12,423 9,888 339,780 320,168
Non-Current Employee entitlements 31,315 18,593
10. INTEREST BEARING LIABILITIES
Loans 26,578,269 29,313,090 Lease liability 14 105,156 77,748 26,683,425 29,390,838
Current liability 2,960,385 2,773,518 Non-current liability 23,723,040 26,617,320 26,683,425 29,390,838
Loans are provided by the Treasury Corporation of Victoria in the form of fixed interest annuities and are secured by a guarantee from the Treasurer of Victoria. The loans will be fully repaid in 2019.
Lease liabilities represent motor vehicles leased from Vic Fleet, a unit of the Victorian Department of Treasury and Finance. The motor vehicles provide security under the terms of the lease.
11. CONTRIBUTED CAPITAL
Fed Square Pty Ltd is a company wholly owned by State Trustees Limited as custodian trustee on behalf of the State of Victoria. The share is held pursuant to the State Investment Trust Deed and the Treasurer of Victoria is the Minister responsible for the State Holding in Fed Square Pty Ltd under the Deed.
The allocation statement dated 27 June 2003 approved by the Minister for Finance requires Fed Square Pty Ltd to record the value of assets transferred to the company in 2002-2003 as a capital injection by the State Government as owners. The total amount of the contributed capital comprises $373,440,507 for buildings and improvements, plant and equipment, and $62,500,000 for land.
- 40 -
Fed Square Pty Ltd ACN 085 731 479
The transfer was effective from 30 June 2003 and is in accordance with the Department of Treasury and Finance „Accounting and Financial Reporting Bulletin No.39 – Accounting for Contributed Capital‟.
Notes 2011 2010 $ $
Issued and paid-up share capital (1 share @ $1 ea.) 1 1 Contributed capital 435,940,507 435,940,507 Total Contributed Capital 435,940,508 435,940,508
12. ACCUMULATED DEFICIT
Accumulated deficit at beginning of financial year (27,697,053) (20,898,953) Net operating result (7,299,727) (6,798,100) Accumulated deficit at end of financial year (34,996,780) (27,697,053)
13. ASSET REVALUATION SURPLUS
Balance at beginning of financial year 173,490,298 173,490,298 Revaluation increments/(decrements) (84,124,795) - Balance at end of financial year 89,365,503 173,490,298
14. LEASES
Finance Leases (Fed Square Pty Ltd as Lessee)
Finance lease liabilities payable: - not later than one year 57,942 42,612 - later than one year and not later than five years 55,964 39,575 Minimum lease payments 113,906 82,187
Less: future finance charges (8,750) (4,439) Recognised as a lease liability 1(h), 10 105,156 77,748
Operating Leases (Fed Square Pty Ltd as Lessor)
Operating leases relate to premises owned by Fed Square Pty Ltd from which the company derives rental income.
$ Non-cancellable operating lease receivables: - not later than one year 14,837,277 14,036,116 - later than one year and not later than five years 45,738,547 46,526,555 - later than five years 62,712,730 71,751,454 1(h) 123,288,554 132,314,125
- 41 -
Fed Square Pty Ltd ACN 085 731 479
15. EMPLOYEE SUPERANNUATION FUNDS
Fed Square Pty Ltd contributes to superannuation at the minimum rate required by the Superannuation Guarantee (Administration) Act 1992. Each employee (including Directors) is able to nominate a complying fund in accordance with the Act. Additional contributions are optional at the discretion of employees. During the year a total of $362,291 (2009-2010: $331,277) was paid or payable by the company to the various funds.
As at 30 June 2011 there was no amount owing to superannuation funds not brought to account (2009- 2010: Nil). Fed Square Pty Ltd employed 42 full time equivalent employees as at 30 June 2011 (2009- 2010: 40). All superannuation payments are paid to accumulation funds.
16. SUBSEQUENT EVENTS
There were no subsequent events after balance date expected to have a material affect on the financial statements of Fed Square Pty Ltd that are not otherwise disclosed in the financial statements and notes.
17. CASH ASSETS
(a) Reconciliation of Cash For the purposes of the cash flow statement, cash includes cash on hand, cash at bank and short term deposits. Cash as at the end of the financial year as shown in the Cash Flow Statement is reconciled to the related items in the balance sheet as follows:
Notes 2011 2010 $ $
Cash on hand and at bank 462,049 323,495 Term deposits 20,058,924 20,795,744 Cash balance as per cash flow statement 20,520,973 21,119,239
(b) Reconciliation of loss from ordinary activities to net cash provided by operating activities: Net deficit (7,299,727) (6,798,100)
Adjustments for non-cash items: - Depreciation and amortisation 11,650,642 11,619,197 - Provision for doubtful debts 15,189 120,860 Net cash inflows from operating activities before changes in assets and liabilities 4,366,104 4,941,957
Changes in assets and liabilities
(Increase) / Decrease in receivables (21,588) (82,830) (Increase) / Decrease in prepayments (632,245) (83,997) Increase / (Decrease) in payables 438,247 211,114 Increase / (Decrease) in provisions (1,802) (715)
Net cash flows from operating activities 4,148,716 4,985,529
- 42 -
Fed Square Pty Ltd ACN 085 731 479
18. FINANCIAL INSTRUMENTS
Interest rate exposure of financial instruments
30 June 2011 Weighted Average Interest rate exposure Carrying Interest Rate amount Fixed Variable Non Note Interest Interest Interest Rate Rate Bearing % $ $ $ $
Financial Assets Cash and deposits 17(a) 4.81 20,058,924 462,049 - 20,520,973 Receivables 6 - - - 1,154,216 1,154,216 20,058,924 462,049 1,154,216 21,675,189
Financial Liabilities Payables 8 - - - 2,972,428 2,972,428 Lease Liabilities 10 6.78 105,156 - - 105,156 Loans 10 6.19 26,578,269 - - 26,578,269 26,683,425 - 2,972,428 29,655,853
30 June 2010 Weighted Average Interest rate exposure Carrying Interest Rate amount Fixed Variable Non Note Interest Interest Interest Rate Rate Bearing % $ $ $ $
Financial Assets Cash and deposits 17(a) 4.36 20,795,744 323,495 - 21,119,239 Receivables 6 - - - 1,147,816 1,147,816 20,058,924 462,048 1,154,216 21,675,188
Financial Liabilities Payables 8 - - - 2,568,315 2,568,315 Lease Liabilities 10 7.12 77,748 - - 77,748 Loans 10 6.19 29,313,089 - - 29,313,089 26,683,425 - 2,972,428 29,655,853
- 43 -
Fed Square Pty Ltd ACN 085 731 479
18. FINANCIAL INSTRUMENTS (continued)
Aging analysis of contractual financial assets
Past due but not impaired 30 June 2011 Carrying Not past due and Less than 1 1 – 3 3 months – amount not impaired month months 1 year $ $ $ $ $
Receivables Sale of goods and services 1,047,041 273,120 - 489,104 284,817 Accrued investment income 25,635 25,635 - - -
Other contractual financial assets Cash and deposits 20,520,973 20,520,973 - - -
Total 21,593,649 20,819,728 - 489,104 284,817
Past due but not impaired 30 June 2010 Carrying Not past due and Less than 1 1 – 3 3 months – amount not impaired month months 1 year $ $ $ $ $
Receivables Sale of goods and services 1,301,485 775,933 288,901 236,651 Accrued investment income 92,194 92,194 - - -
Other contractual financial assets Cash and deposits 21,119,239 21,119,239 - - -
Total 22,512,918 21,987,366 - 288,901 236,651
- 44 -
Fed Square Pty Ltd ACN 085 731 479
18. FINANCIAL INSTRUMENTS (continued)
Categorisation of financial instruments
30 June 2011 Contractual Contractual Total financial financial assets – liabilities at loans and amortised receivables cost
Contractual financial assets $ $ $ Cash and deposits 20,520,973 - 20,520,973
Receivables Sale of goods and services 1,047,041 - 1,047,041 Accrued investment income 25,635 - 25,635 Prepayments 966,202 - 966,202 Total contractual financial assets 22,559,851 - 22,559,851
Contractual financial liabilities
Payables Supplies and services - 2,697,739 2,697,739
Borrowings Lease liabilities - 105,156 105,156 Loans from TCV - 26,578,269 26,578,269 Total contractual financial liabilities - 29,381,164 29,381,164
30 June 2010 Contractual Contractual Total financial financial assets – liabilities at loans and amortised receivables cost
Contractual financial assets $ $ $ Cash and deposits 21,119,239 - 21,119,239
Receivables Sale of goods and services 1,301,485 - 1,301,485 Accrued investment income 92,194 - 92,194 Prepayments 333,958 - 333,958 Total contractual financial assets 22,846,876 - 22,846,876
Contractual financial liabilities
Payables Supplies and services - 2,294,990 2,294,990
Borrowings Lease liabilities - 77,748 77,748 Loans from TCV - 29,313,090 29,313,090 Total contractual financial liabilities - 31,685,828 31,685,828
- 45 -
Fed Square Pty Ltd ACN 085 731 479
18. FINANCIAL INSTRUMENTS (continued)
Maturity analysis of contractual financial liabilities
30 June 2011 Carrying Nominal Less than 1 – 3 months 3 months 1 – 5 years 5 + years amount amount 1 month – 1 year $ $ $ $ $ $ $
Payables Supplies and services 2,639,731 2,639,731 2,030,088 331,742 277,901 - - Other payables 58,008 58,008 58,008 - - - -
Borrowings Lease liabilities 105,156 105,156 - - 53,490 51,666 - Loans from TCV 26,578,269 26,578,269 - - 2,906,895 17,521,397 6,149,977
Total 29,381,164 29,381,164 2,088,096 331,742 3,238,286 23,723,040 6,149,977
30 June 2010 Carrying Nominal Less than 1 – 3 months 3 months 1 – 5 years 5 + years amount amount 1 month – 1 year $ $ $ $ $ $ $
Payables Supplies and services 2,294,990 2,294,990 1,632,282 451,461 211,247 - - Other payables ------
Borrowings Lease liabilities 77,748 77,748 - - 38,696 39,052 - Loans from TCV 29,313,090 29,313,090 - - 2,734,821 12,772,291 13,805,978
Total 31,685,828 31,685,828 1,632,282 451,461 2,984,764 12,811,343 13,805,978
(a) Credit Risk Exposures
The credit risk on financial assets that have been recognised on the balance sheet, is the carrying amount, net of any provision for doubtful debts. The carrying amount on the balance sheet represents the company‟s maximum exposure to credit risk for receivables.
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the company. The company has a policy of only providing material credit to creditworthy counterparties and obtaining industry standard security over leases in the form of bank guarantees or cash advances. The company‟s exposure and the credit worthiness of counterparties is continually monitored.
Activities that give rise to credit risk are the granting of credit to customers and tenants at Federation Square. The company does not have any significant exposure to a single counterparty and trade receivables comprise a large number of diverse customers with differing characteristics.
The credit risk on liquid funds is limited because the counterparties are banks or Government agencies with high credit ratings. - 46 -
Fed Square Pty Ltd ACN 085 731 479
Included in the company‟s receivables balance are debtors with a carrying amount of $773,921 (2009-10: $475,285) which are past due at the reporting date for which the company has not provided for as there has not been a significant change in credit quality and the amounts are still considered recoverable. The company holds security in the form of bank guarantees amounting to $214,581 (2009-10: $196,586) against these balances. The average age of these receivables is 157 days (2009-10: 105 days).
30 June 2011 Financial Financial Other Total institutions institutions unknown Triple –A credit Triple –B credit rating credit rating rating
$ $ $ Cash and deposits - 462,049 - 462,049 Investments and other financial assets 20,058,924 - 1,154,216 21,213,140
20,058,924 462,049 1,154,216 21,675,189 Total contractual financial assets
30 June 2010 Financial Financial Other Total institutions institutions unknown Triple –A credit Triple –B credit rating credit rating rating
$ $ $ Cash and deposits - 323,495 - 323,495 Investments and other financial assets 20,795,744 - 1,147,816 21,943,560
20,795,744 323,495 1,147,816 22,267,055 Total contractual financial assets
(b) Financial Risk Management
The company has an immaterial exposure to financial risk from market risk (including currency risk and price risk), credit risk, liquidity risk and interest rate risk. The company does not use derivative financial instruments to hedge against risk exposures nor for speculative purposes. Financial risks are reported to the Board at each meeting.
(c) Interest Rate Risk Exposures
The company‟s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out above. There is no interest rate risk associated with loans as all borrowings are made at fixed rates of interest from Treasury Corporation Victoria. The following sensitivity analysis has been determined on the exposure to variable interest rates at the reporting date. If variable interest rates had been 50 basis points higher or lower and all other variables were held constant, the company‟s deficit would decrease by $104,850 (2009-2010: $104,412) and increase by $104,930 (2009-2010: $104,333) respectively. This is mainly attributable to the company‟s return on investments held in the form of cash assets.
- 47 -
Fed Square Pty Ltd ACN 085 731 479
(d) Foreign Currency Exposure
The company has no exposure to foreign currency risk as at 30 June 2011 and has insignificant risk of exposure in the course of conducting its operations.
(e) Liquidity Risk Exposure
The company has no significant exposure to liquidity risk. The table above details the company‟s remaining contractual maturity for its financial liabilities. The tables have been prepared based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay.
(f) Net fair values of financial assets and liabilities
Valuation approach The carrying amounts of financial assets and financial liabilities on the balance sheet approximate fair value.
19. DIRECTORS’ REMUNERATION Director Superannuation Total Fees Payments $ $ $ Mr. J. F. Harvey (Chairman) 51,470 4,632 56,102 Ms. H. Kapalos 24,050 2,165 26,215 Mr. K.F. Wong 24,050 2,165 26,215 Ms. L.E. Sanger 24,050 2,165 26,215
Total income paid or payable to Directors of Fed $123,620 $11,127 $134,747 Square Pty Ltd by the company.
Directors‟ income includes superannuation but not insurance premiums of $55,923 (2009-2010: $51,110) paid by the company in respect of Directors‟ and Officers‟ Liabilities.
20. EXECUTIVE REMUNERATION 2011 2010 The number of Executive Officers of the company whose Number Number remuneration from the company fell within the following bands:-
$130,000 - $139,999 0 1 $160,000 - $169,999 2 1 $170,000 - $179,999 1 1 $270,000 - $279,999 0 1 $330,000 - $339,999 1 0
4 4
Total remuneration paid or payable to Executive Officers of Fed $ 846,965 $ 751,099 Square Pty Ltd by the company, whose income is $100,000 or more.
- 48 -
Fed Square Pty Ltd ACN 085 731 479
21. RELATED PARTY DISCLOSURES
(a) Names of Directors
The Directors of Fed Square during the period and at 30 June 2011 unless otherwise stated were:
Mr. John Frederick Harvey (Chairman) Ms. Helen Kapalos Mr Kee Fatt Wong Ms Liberty Emma Sanger
(b) Transactions with Directors and Director-Related Entities
There were no transactions made with Directors (or Director related entities) except for payments made for performing the functions of Director - refer note 19 (2009-2010: Nil). As at the 30 June 2011 there exists no contingent or actual liabilities of Fed Square Pty Ltd for termination benefits under service agreements to Directors or persons who take part in the management of Fed Square Pty Ltd. No loans were made to Directors during the year (2009- 2010: Nil).
(c) Other Related Parties
All other transactions with related entities are at arms length. Fed Square Pty Ltd deals with a number of State Government departments in the course of conducting its operations.
22. REPAIRS AND MAINTENANCE
The three year financial plan for Federation Square contains reference to repairs and maintenance expenditure forecasts to 2014. These estimates allow for Fed Square Pty Ltd to undertake the necessary planned maintenance that will maintain Federation Square to the standards expected by the Victorian Government and the wider community.
They do not provide for unplanned problems of an extreme cost nature nor for the complete refurbishment of substantial parts of the Square. Whilst unlikely in the formative years, there is an expectation that the State Government will meet such costs if they arise.
Accordingly, Fed Square Pty Ltd has not established a sinking fund for such purposes, however, the company considers this to be appropriate over the long term and is continuing discussions with the Department of Treasury and Finance to determine a funding model for such expenditure.
23. RESTATEMENT OF COMPARATIVE AMOUNTS
Due to the inclusion of prior period transactions, the amounts reported for tenancy rents and charges and tenancy expenses in the Comprehensive Operating Statement and Cash Flow Statement were overstated for the year ended 30 June 2010 by $1,116,840. This error did not affect the net result reported and has been corrected by restating the comparative amounts for the affected financial line items for the prior year.
- 49 -
Fed Square Pty Ltd ACN 085 731 479
24. CAPITAL COMMITMENTS
There were no material capital commitments at 30 June 2011 (2009-2010: Nil).
25. CONTINGENT LIABILITIES AND ASSETS
In the course of conducting its ordinary business, Fed Square Pty Ltd is at risk from claims arising from incidents occurring at Federation Square. These may take the form of public liability claims from people who are injured whilst visiting the site or legal claims from disputes with tenants or venue hirers. In the company‟s opinion, the financial risk from such claims is low.
There are no known contingent assets at balance date.
- 50 -
Fed Square Pty Ltd ACN 085 731 479
Directors’ Declaration
The Directors declare that:
(a) the financial statements and associated notes comply with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
(b) the financial statements and notes give a true and fair view of the company‟s financial position as at 30 June 2011 and of its performance, as represented by the results of its operations and its cash flows, for the year ended 30 June 2011;
(c) in the Directors‟ opinion:
(i) the financial statements and notes are in accordance with the Corporations Act 2001, and
(ii) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(d) at the date of signing these statements the Directors are not aware of any circumstances that would render any particulars included in these statements misleading or inaccurate.
This statement is made in accordance with a resolution of the Directors.
Melbourne 30th August 2011
...... John Harvey (Chairman)
- 51 -
Fed Square Pty Ltd ACN 085 731 479
Independent Auditor’s Report
- 52 -
Fed Square Pty Ltd ACN 085 731 479
- 53 -