Victorian Ports Corporation (Melbourne)...The Hon. Tim Pallas MP Treasurer 1 Treasury Place East Melbourne Victoria 3002 Dear Ministers, Victorian Ports Corporation (Melbourne) 2018-19

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Department of Transport

Victorian Ports Corporation (Melbourne)

Street addressLevel 5, 530 Collins StreetMelbourne Victoria 3000

Australia

Postal addressGPO Box 261

Melbourne VIC 3001Australia

Tel: +61 3 8347 8300 Fax: +61 3 8347 8301

www.vicports.vic.gov.au Victorian Ports C

orporation (Melbourne) 2018-19 A

nnual Report

ANNUAL REPORT2018-19

1Victorian Ports Corporation (Melbourne) 2018-19 Annual Report

The Hon. Melissa Horne MPMinister for Ports and Freight1 Spring StreetMelbourne Victoria 3000

The Hon. Tim Pallas MP Treasurer1 Treasury PlaceEast Melbourne Victoria 3002

Dear Ministers,

Victorian Ports Corporation (Melbourne) 2018-19 Annual Report

I have much pleasure in submitting to you the Annual Report of Victorian Ports Corporation (Melbourne) for the period 1 July 2018 to 30 June 2019, in accordance with the provisions of the Transport Integration Act 2010 (Vic) and the Financial Management Act 1994 (Vic).

Yours sincerely,

James CainChairman

28 August 2019

Responsible Body’s declaration

2 Victorian Ports Corporation (Melbourne) 2018-19 Annual Report


Responsible Body’s declaration 1Section 1: Year in review 5 From the Chairman 6 FromtheChiefExecutiveOfficer 7 Mission, vision and values 8 An overview of VPCM 9 Manner of establishment 9 Purpose and responsibilities 9 Functions, objects and powers 10 Significantlegislativechanges 11 Ministerial Direction 11 Operations review 12 Financialinformationsummary 17Section 2: Governance and organisational structure 21 Corporate governance 22 Directors 23 Board and Committee meetings 25 Organisational structure 26 ExecutiveManagementTeam 27 OH&S and employment principles 28Section 3: Workforce data 31 Our people 32 Public sector values and employment principles 32 Comparative workforce data 32Section 4: Other disclosures 35 Local Jobs First 36 Disclosure of government advertising expenditure 36 Consultancyexpenditure 37 InformationandCommunicationTechnologyexpenditure 37 Disclosure of major contracts 38 Freedom of Information 38 Compliance with building and maintenance provisions of the Building Act 1993 (Vic) 39 Competitive Neutrality Policy 39 Compliance with the Protected Disclosure Act 2012 (Vic) 39 Statement of availability of other information 40 AttestationforfinancialmanagementcompliancewithMinisterialStandingDirection5.1.4 41Section 5: Financial statements 43Section 6: Appendices 105 A - Disclosure index 106 B - Statement of Corporate Intent 108

Contents



Section 1:

Year in review


From the Chairman

The international and coastal trade through the port is vital to the Victorian economy. Victorian Ports Corporation Melbourne (VPCM) is responsible forprovidingsafe,efficientaccesstotheportsof Melbourne and Geelong, and ensuring these gateways for cargo and passengers are open for business every day. We are also responsible for the operation of Victoria’s premier passenger terminal at Station Pier.

Consistentwithpreviousyearswefindourselvesoperating in a changing and increasingly demandingenvironment.Theglobalshippingfleetis continuing to change with larger vessels calling at Australian ports. At the same time the demand from the cruise industry and in particular the appeal of Melbourne as a cruise destination has also grown. The strength of the Victorian economy and growth in population throughout Melbourne reinforces the need for the port to understand and respond to community expectations.

Our focus is to ensure that the management of vital port infrastructure continues to meet the needs of customers, stakeholders and the Victorian community into the future and I am pleased to report that over the 2018-19 year there have again beensignificantachievements.

VPCM is introducing newer, improved technology to enhance the safety of vessel navigation and management. Last year, the leading edge version of the dynamic under keel clearance system was commissioned to assist safe access to Port Phillip Bay and the port of Melbourne while the project toinstallanewVesselTrafficServicessystemforimproved vessel management and safety in port waters continued.

The successful trials for accommodating larger container vessels at Webb Dock and Swanson Dock are continuing. They involve using innovative operating procedures which are made possible through close cooperation between VPCM, Port of Melbourne, the marine pilots, towage companies and the shipping lines.

In terms of infrastructure needs, we have continued our planning for capital works at Station Pier to accommodate the growing cruise industry as well as the daily ferry service to Tasmania. As part of

that planning, extensive community consultation was undertaken to ensure the local community’s needs and expectations are clearly understood.

I would like to thank my fellow Board members for their contribution over the year. On behalf of the Board,IthanktheChiefExecutiveOfficer,RachelJohnson, and the management and staff of VPCM for their hard work and dedication through another very busy year.

The challenges and opportunities for VPCM exist in a complex environment. Looking ahead we are committed to continuing to plan for sustainable growth and work cooperatively with our customers, partners and the community to support the important contribution the port makes to Victoria.

James CainChairman


From the Chief Executive Officer

The year 2018-19 saw both consolidation and preparation for a coming growth phase for the organisation.

The growing international cruise ship and domestic ferry industries are central to our planning for Station Pier. It is vital that we can meet the future needs of these customers by delivering sustainable growth at the same time as meeting the expectations of the local community.

As part of our continued planning for improved infrastructure and operational solutions at the pier we consulted widely with industry and the local community to determine their needs and views. To complement our consultation with the cruise lines we undertook a survey of cruise passengers to help us understand their experience at Station Pier and the surrounding area.

Input from all these groups helped inform our business case for development; this was submitted to the Victorian Government for consideration as the development phase approaches.

Asset management is key to our provision of facilities and services, now and in the future, and we have strengthened our management processes in this area. As part of our asset management, between cruise seasons we continued our maintenance program on the Station Pier structure and both of its terminal buildings.

OurprojecttoinstallanupgradedVesselTrafficServices system will ensure we can meet the future marine and navigation needs of shipping lines and the port of Melbourne while delivering enhanced safety,productivityandefficiency.

As part of our commitment to provide a safe workplace for our staff, contractors and visitors we have revised our drug and alcohol policy to require everyonetobedrugandalcoholfreeinourofficesand at our work sites. I want to give credit to all our staff for the way they have embraced the new zero tolerance level and participated in the random testing.

We continued our support for the wellbeing of the marine environment in Port Phillip Bay by once again donating to The Nature Conservancy, assisting with its program of re-establishing shellfishreefsinthebay.

I thank the Chairman and Board of Directors for their work in providing direction and support during the year and setting the path for VPCM. I also want to thank the Executive Management Team and the staff for their commitment and work during another busy year and express my appreciation for everything we achieved together in 2018-19.

Rachel JohnsonChief Executive Officer


Mission, vision and values

Our missionWe contribute to the enhancement of the economic and social prosperity for the people of Victoria by providing vital infrastructure and services for trade and tourism. We do this by: •ensuringsafeandefficientnavigationofvessels • providing essential connectivity to Tasmania • realising Victorian trade and tourism opportunities for seaborne passengers and freight.

Our visionWe will be recognised for providing Victoria’s premier gateways for trade and tourism.

Our values• Safety - we lead the way in the provision of safe navigation and services.• Innovation - we deliver excellence in sustainable and practical solutions.• People - we support, respect, and challenge each other – we value diversity.• Customers and communities - we put our customers and communities at the centre of everything we do. • Integrity - always.


An overview of VPCM

As a result of a Machinery-of-Government change effective on 1 January 2019, the Department of Economic Development, Jobs, Transport and Resources (DEDJTR) became the Department of Transport (DoT). DoT assumed the transport portfolios of DEDJTR, and the non-transport portfolios were transferred to the newly established Department of Jobs, Precincts and Regions.

On 1 July 2019, VicRoads and Public Transport Victoria came together with DoT to create a properly integrated transport department – in step with other global cities.

VPCM is part of Victoria’s integrated transport portfolio led by DoT.

Manner of establishmentVictorian Ports Corporation (Melbourne) (VPCM) is a Victorian Government statutory authority. Established on 1 November 2016, VPCM’s statutory objectives, powers and functions are carried out under the Transport Integration Act 2010 (Vic).

Purpose and responsibilities VPCM is responsible for: • channel management and safe navigation in

Melbourne’s port waters • waterside emergency and marine pollution

response • the management of Station Pier as Victoria’s

premier cruise shipping and interstate passenger ferry facility.

Shipping and navigation VPCM engages a licensed Harbour Master for the port waters of the port of Melbourne in accordance with Chapter 6 of the Marine Safety Act 2010 (Vic). It is also empowered to authorise persons to act as Assistant Harbour Masters, in accordance with section 229 of the Marine Safety Act.

VPCMoperatesmodernvesseltrafficservices(VTS) at the Port Operations Control Centre in Port Melbourne (Melbourne VTS) and at the Point Lonsdale Lighthouse (Lonsdale VTS). The VTS operates 24-hours a day, seven days a week to support safe navigation services in the port waters of the port of Melbourne.

Tourism gateway VPCM manages Station Pier as Victoria’s premier cruise shipping gateway. The pier also accommodates TT-Line’s Spirit of Tasmania passenger ferries and other visiting ships including Australian and international navy vessels.

Infrastructure VPCM is responsible for maintaining the heritage-listed Station Pier and the historic Point Lonsdale Lighthouse building at the Heads.

Trade Station Pier provides a vital trade link with Tasmania with the Spirit of Tasmania ferries carrying cargo between Devonport and Melbourne.


Functions, objects and powers Transport Integration Act 2010 (Vic) The Transport Integration Act 2010 (Vic) (TIA) commenced on 1 July 2010. Its purpose was to create a new framework for the provision of an integrated and sustainable transport system in Victoria consistent with the vision statement contained in section 6 which reads:

‘The Parliament recognises the aspirations of Victorians for an integrated and sustainable transport system that contributes to an inclusive, prosperous and environmentally responsible State.’

VPCMisdefinedasa‘transportbody’undertheTIA.

Under section 24 of the TIA, VPCM is required to haveregardtothe‘transportsystemobjectives’,‘decisionmakingprinciples’andanyapplicable‘specifiedpolicyprinciples’whenperformingits functions or exercising its powers under any‘transportlegislation’.Transportlegislationapplicable to VPCM includes the Port Management Act 1995 (Vic) and the Marine Safety Act 2010 (Vic).

The transport system objectives provide for: • Social and economic inclusion • Economic prosperity • Environmental sustainability • Integration of transport and land use •Efficiency,coordinationandreliability • Safety, health and wellbeing

The decision making principles provide for: • Integrated decision making • Triple bottom line assessment • Equity • Transport system user perspective • The precautionary principle • Stakeholder engagement and community

participation • Transparency

Section 141D: ObjectThe main objects of VPCM are: a. to ensure that port of Melbourne waters and

channels in port of Melbourne waters are managed for use on a fair and reasonable basis consistent with the vision statement and the transport system objectives; and

b. to manage and develop Station Pier and West Finger Pier consistent with the vision statement and the transport system objectives.

c. if VPCM is a designated State port entity (asdefinedinsection74AAofthePortManagement Act 1995), to manage a site in the port of Melbourne at which stevedoring operations are carried out consistent with the vision statement and the transport system objectives.

Section 141E: FunctionsThe functions of VPCM are: a. to promote and market the port of Melbourne; b. to establish and manage and to dredge

and maintain channels in port of Melbourne waters;

c. to provide and maintain navigation aids in connection with navigation in port of Melbourne waters;

d. to publish information about the depths and configurationsofchannelsandberthsinportof Melbourne waters;

e. to provide or maintain systems related to navigation in port of Melbourne waters includingsystemsformanagingvesseltrafficand vessel communications and scheduling and allocating vessels to berths in those waters;

f. to generally direct and control, in accordance with the Marine Safety Act 2010, the movement of vessels in port of Melbourne waters;

g. to regulate towage services in accordance with the Port Management Act 1995;

h. in relation to Station Pier and West Finger Pier:

• to plan for the development and operation of the piers;

• to provide land, waters and infrastructure necessary for the development and operation of the piers;

• to develop, or enable and control the development by others of, the whole or any part of the piers;

• to manage, or enable and control the management by others of, the whole or any part of the piers;

• to provide, or enable and control the provision by others of, services for the operation of the piers;


• to facilitate the integration of infrastructure and logistics systems in the piers with the transport system and other relevant systems outside the piers;

i. to perform functions in accordance with a direction given by the Minister under section 141H of the Act;

j. to perform any other functions or duties conferred on VPCM under a Transport Restructuring Order or by or under the TIA any other Act or any regulations under the TIA or any other Act.

In performing its functions, VPCM must: a. carry out its functions consistently with State

policies and strategies for the development of the Victorian port and freight networks; and

b. to the extent that it is possible to do so consistently with paragraph (a) above, operate in a commercially sound manner having regard to:

i. thebenefitsofincreasedcompetitionbetween persons and bodies that provide services related to the operation of the port of Melbourne;

ii. the persons living or working in the immediate neighbourhood of the port of Melbourne;

iii. the need to conduct research and collect information relating to the performance of the functions and the operation of the port of Melbourne so as to enable VPCM to meet its primary object;

iv. theneedtodealefficientlywithanycomplaints relating to the performance of its functions.

Section 152: PowersAsa‘transportcorporation’undertheTIA,VPCMhas power to do all things that are necessary or convenient to be done for or in connection with, or as incidental to, the achievement of its object and the performance of its functions.

Significant legislative changesDuring2018-19therewerenosignificantlegislativechanges relevant to VPCM.

Ministerial DirectionThe following Ministerial Direction was received during the reporting period:

Ministerial Directions No. 2 Contracting provisions for public construction – Effective date: 1 July 2018On 1 July 2018, new principles and procedures were introduced under Ministerial Directions No. 2 Contracting provisions for public construction (Directions No.2). Directions No. 2 replaced Ministerial Directions No.1 Tendering Provisions for Public Construction. Directions No. 2 provides a principles-based approach to public construction procurement in Victoria and are part of a broader public governance and accountability framework to capture fundamental expectations about how public procurement should be conducted.


Operations review

Key achievementsDuring the reporting period 2018-19: •Facilitated3676shipvisitstoPortPhillipBay. • Ensured Victoria’s premier gateway for trade

and tourism remained open for business every day of the year.

• Successfully managed ongoing trials of larger container ships berthing in Melbourne.

Marine and navigationVessel traffic services system upgradeTheprogramstartedin2017-18toreplaceandupgradethevesseltrafficservices(VTS)systemcontinued during 2018-19. The VTS provides navigational safety services to vessels calling at Melbourne.

The innovative new system will provide enhanced safety for navigation through features such as provision for expansion, the ability to interface with future innovations as they become available and by taking advantage of features of the advanced radar system already in place.

Larger container shipsTo accommodate the increasingly larger container vessels deployed worldwide by shipping lines, VPCM continued to work with Port of Melbourne to assess opportunities to accommodate these ships in Melbourne.

Incremental staged trials for berthing at Swanson and Webb docks were conducted throughout the year.

Thefirstofthetrialswasthesuccessfulberthingof OOCL Seoul at Webb Dock on 28 August 2018. At 325 m length overall (LOA) and with capacity for 8063 TEU (Twenty-foot Equivalent Unit), this was the largest container ship to visit Melbourne to that date.

The maximum sized vessels to be trialled are as follows: • Swanson Dock – 315 m LOA, beam 42.8 m. • Webb Dock – 336 m LOA, beam 42.8 m.

Larger ships will give Victorian exporters and primaryproducersaccesstoimprovedefficiencyforoverseas markets through economy of scale.

Harbour Master’s DirectionsA new edition of Harbour Master’s Directions was published in March 2019, taking effect from 2 May 2019. The 11th edition of the publication is available for download from the VPCM website, www.vicports.vic.gov.au.

DUKC upgradeThe Dynamic Under Keel Clearance (DUKC) system has been used to aid safe vessel navigation in port of Melbourne port waters since 2009. In June 2019, a new, upgraded version (Series 5) was introduced for use by ships entering Port Phillip Bay and the port of Melbourne.

The new, web-based user interface affords easier access to the system for masters and pilots while on board vessels and enables improved system management by VPCM.

SafetySafety is a key organisational value and health and safety is a priority in everything we do.

We maintain a high level of maritime and workplace health and safety through continuously reviewing risks and risk mitigation strategies. This process is enhanced through good communication and liaison with our stakeholders.

Anychangestotheriskprofileareaddressedbyrevising operational procedures and providing appropriate additional treatments to mitigate the identifiedrisks.

Theongoing‘SteerClear’boatingsafetyprogramaddresses the risk of a vessel interaction between commercial shipping and small recreational vessels. Details of this program are given on page 15.


Naval visits Station Pier hosted three visits by Royal Australian Navy (RAN) ships during the year.

HMAS Choules, an amphibious Landing Ship Dock, made two visits, berthing on 28 September 2018 for a four day visit and again on 1 February 2019 for a three day visit.

HMAS Warramunga, an Anzac class frigate, arrived on 19 October for a three day visit.

During the two visits in spring the RAN conducted free public open days on their ships, attracting large crowds.

Cruise shippingStationPierwelcomed107cruisevesselsduringthe2018-19cruiseseasonwithatotalof320,927passengers and crew using the pier.

A record equalling 50 of these visits were turnarounds in which all, or some, of the passengers disembarked and a new complement embarked.

Other season highlights included four vessels homeporting for the season – Queen Elizabeth, Pacific Jewel, Golden Princess and Carnival Legend–16overnightstaysandfiveshipsmadetheirfirstvisittoMelbourne.

The Melbourne Cup weekend in November once again saw a full house at Station Pier with all three cruise ship berths in use. A fourth ship berthed at Victoria Dock for the Cup, adding 4952 passengers and crew.

To help improve the overall customer experience for cruise passengers, VPCM began work after the end of the 2018-19 season to enhance the appearance of the two terminal buildings on the pier. For details about these works, see Infrastructure maintenance on the following page.

Passenger ferriesThe TT-Line ferry service between Station Pier and Devonport in Tasmania provided a daily service throughout the year with double sailings during school holiday periods and the summer months.

TheTasmanianGovernmentannouncedin2017that the current Spirit of Tasmania ferries will be replaced by new vessels in 2021.

VPCM has been working closely with TT-Line to design the infrastructure and services necessary to accommodate the new vessels.

Planning for passenger growthThe Victorian Government allocated $5.8 million in the 2018-19 Budget for VPCM to undertake both planning and cruise-related capital works to grow the domestic ferry and cruise ship operations in Victoria.

As part of the funding agreement, $3.15 million of the $5.8 million has been allocated for capital works to upgrade existing infrastructure at Station Pier. Some works were delivered over the reporting period and more will be delivered over the 2019-20 financialyear.

Employee relationsPolicy Review CommitteeVPCM is working closely with employees through its Policy Review Committee to strengthen governance and employment arrangements. The committee,aninitiativeofthe2017enterpriseagreement, has a membership of employee and management representatives.

Drug and Alcohol PolicyVPCM is committed to providing and maintaining a safe and healthy work environment for all employees, contractors, visitors and the general public. For this reason the revised Drug and Alcohol Policy now requires all staff and those working for, or on, VPCM sites to abide by a zero tolerance drug and alcohol policy.

To monitor compliance, random drug and alcohol testing of all employees is conducted and will be extended to include contractors and visitors during the latter part of 2019.


Family violence leave provisionIn line with our organisational values, VPCM is committed to building and maintaining a culture that supports respectful relationships and ensuring employees who may be experiencing family violence can feel safe and supported in continuing employment. Family violence leave is available to support employees who may be experiencing personaldifficulties.

Learning and developmentEmployees and management participated in learning and development training throughout the year which included freedom of information, privacy, mental health awareness, diversity and inclusion, and drug and alcohol awareness.

Corporate valuesEmployees participated in a series of workshops to identifyanddefineexpectedbehaviourstoensureVPCM upholds each of its corporate values.

InfrastructureMaintenanceThe Station Pier infrastructure maintenance carried outbetweenthe2017-18and2018-19cruiseseasons was completed on time. Activities included the ongoing pile rehabilitation project and routine maintenance and repairs to the pier structure.

In April 2019, a program of works was started on the two terminal buildings on the pier. Works include painting the exterior of each of the buildings and balcony rehabilitation which will both enhance the appearance and preserve the structure for ongoing use.

The next phase of the pile rehabilitation project for Station Pier and West Finger Pier started in May2019.Witharound7000pilessupportingtheStation Pier structure, maintenance is an ongoing project.

All maintenance works on the heritage-listed Station Pier structures are carried out in close consultation with Heritage Victoria and, where necessary, with approval under the Marine and Coastal Act 2018 (Vic).

RestorationThe heritage-listed East Finger Pier Kiosk is to be restoredtoitsoriginalconfiguration.

Builtin1927,thekioskhashadavarietyofusesover the years and a number of extensions have been added to the building. In June 2019, works began to demolish those non-heritage extensions to leave just the original structure.

After assessment, restoration works will be carried out to preserve it for the future.

Asset managementVPCM is responsible for a diverse set of assets in many different and challenging locations on land and water.

The assets range from the heritage-listed Station Pier to the advanced systems used to ensure safe navigation in Port Phillip Bay. They are located in and around the bay, along the southern Victorian coast and in the waters of Bass Strait.

In2017-18,VPCMstartedafour-yearassetmanagement improvement plan. In the second year of the plan (2018-19) with a solid foundation established and the formal training of relevant employees, VPCM is aiming to achieve full compliance with the Victorian Government’s Asset Management Accountability Framework as well as with the Asset Management ISO 55000 standard.


PricingAs a designated State Port Entity under section 74ABofthePort Management Act 1995 (Vic), VPCM may set fees and charges for its services. These are set out in the Reference Tariff Schedule (RTS) and reviewed annually.

Reference Tariff Schedule 2019A new RTS detailing fees and charges effective from 1 July 2019 was issued in June 2019 to give industry time to prepare for the changes.

Fee changes have been kept to a minimum with an increaseof1.8%acrosstheboard,reflectingtheAustralian Consumer Price Index All Groups CPI weighted average of eight capital cities increase for the year ending the December Quarter 2018.

The increase was approved by the Governor-in-Council and gazetted on 14 May 2019.

The Reference Tariff Schedule 2019 is available on the VPCM website, www.vicports.vic.gov.au.

CommunityMelbourne is a port city with urban communities bordering VPCM’s operations areas and landside links. Recognising the amenity expectations of neighbouring communities, we liaise and regularly meet with residents, businesses and local government in the Port Melbourne area.

Community consultationIn late 2018, VPCM conducted wide ranging community consultation about future development of the Station Pier precinct in order to understand what matters most to the local community.

More than 400 community members provided input onplanning,access,trafficmanagement,retailandtourism activities.

Community input was captured via an online survey, community pop-up stands and consultation workshops.Areportofthefindingsfromthisworkisavailable on the VPCM website, www.vicports.vic.gov.au.

Community Advisory GroupAn outcome of the consultation was the establishment of an ongoing Community Advisory Group. The group meets monthly and consists of members representing a wide range of local interests including residents, traders, schools, special interest groups and representatives from the City of Port Phillip.

‘Steer Clear’ boating safety campaignWecontinuedour‘SteerClear’boatingsafetycampaign during the reporting period which aims to reduce the risk of vessel interactions between commercial shipping and small recreational vessels in the port waters of the port of Melbourne.

The Steer Clear operations saw our Transport SafetyOfficersconductingon-waterpatrolstodirectly advise and educate boat operators, who were out on the water, about the campaign messages.

In addition, senior VPCM staff attended meetings of fishing,boatingandyachtclubsaroundPortPhillipBay to present safety and Steer Clear information to educate club members.

Queenscliffe Maritime MuseumVPCM supports the Queenscliffe Maritime Museum by enabling it to conduct paid public tours of the Point Lonsdale Lighthouse, hosted by knowledgeable Museum volunteers. These tours are available from 9.30 am to 1 pm every Sunday and by appointment, for groups, on other days.

Waterfront WelcomersCity of Port Phillip community volunteers continued their meet and greet service for cruise ship passengers, giving a warm welcome to visitors at Station Pier during the cruise season.

City of Melbourne volunteersThe long-running cruise passenger information service on Station Pier is provided by City of Melbourne volunteers who help with advice about tourism events and locations in the greater Melbourne area. It is the longest running such serviceinAustralasiahavingstartedin1997.


EnvironmentVPCM is again demonstrating its commitment to the wellbeing of the natural environment by continuing its support of The Nature Conservancy Australiainitsworktore-establishshellfishreefsinPort Phillip Bay.

This year’s donation of $25,000 will be used to establish a bay-wide assessment for oyster reef restoration, gathering information on water quality, marine habitats, oyster lifecycles, recreational use, culturalsites,shipping,boatingandfishing.Thedata will be critical in helping determine the most suitable locations for future oyster reef restoration.

The reefs are replacing those that have been lost as a result of human activities in the bay. The reintroductionofoystersandothershellfishwhichpurify water enhances the overall health of the bay.

Emergency responseVPCM provides operational capability for marine pollution and casualty management for the area from Cape Schanck to Cape Otway and for Port Phillip Bay.

Staff continue to participate in state and national emergency response exercises and workshops in the areas of marine pollution and casualty response. During the reporting period, VPCM staff who are members of the state response team attended the State Maritime Emergencies Workshop and the Australian Maritime Safety Authority Complex Maritime Emergencies Workshop.

Safety and Environment Management PlanVPCM operated under its Safety and Environment Management Plan (SEMP) which was independently audited in 2015-16 and valid for three years. The plan is prepared in accordance with Ministerial Guidelines Port Safety and Environment Management Plans (November 2012), as required by section 91G of the Port Management Act 1995 (Vic).

This plan is subject to internal audit on an annual basisandareportofthefindingsandsafetymetricsis presented to the Minister for Ports and Freight.

This year the SEMP was externally audited by accredited safety and environment auditors as required triennially under the Port Management Act. This audit report found that the VPCM SEMP was in full conformance with all of the requirements of the Port Management Act and Ministerial Guidelines.


Financial information summary

OverviewThefinancialstatementspresentedinthisreportare prepared in accordance with the Financial Management Act 1994 (Vic) and applicable Australian accounting standards.

VPCM’s scope of business activities was consistent with the year immediately prior. It was reduced from two years prior as a result of the Port of Melbourne LeaseTransaction(PLT).Thefinancialstatementsfortheyearended30June2017representthefourmonths of the consolidated entity known as the Port of Melbourne Corporation Group and eight months operations of the stand-alone entity, VPCM.

The2017-18AnnualReportincludesVPCM’sfirstfullyearfinancialstatementsasanindividualreporting entity.

VPCMdeliveredaprofitaftertaxof$0.6millionforthe year ended 30 June 2019.

Financial performance – operating statementVPCM’soperatingprofitaftertaxfor2018-19 was $0.6 million, a $1.1 million or 65% decrease againstthepreviousyeartotalof$1.7million.

The net result for the period is -$4.8 million compared to $4.1 million in the prior year. This is duetoanegativemovementinemployeebenefitreservesof$6.7millionbasedonthe re-measurementofthenetdefinedbenefitliabilityfor the Port of Melbourne Superannuation Fund.

VPCM’s income tax expense decreased to $0.1 million from $0.8 million due primarily to alowerprofitbeforeincometaxgenerated in 2018-19.

Five-year financial summaryThetablebelowshowsVPCM’sfive-yearfinancialsummary.

(i) In accordance with directions given by the Premier to the Port Corporation pursuant to section 20(2) of the Delivering Victorian Infrastructure (Port of Melbourne Lease Transaction) Act 2016(Vic),thefinancialsummaryrepresentsconsolidatedfinancialinformationfor: Port of Melbourne Operations Pty Ltd (Port Manager) for the period 1 July 2016 - 31 October 2016, Melbourne Port Lessor Pty Ltd (Port Lessor) for the period 1 July 2016 - 31 October 2016, Port of Melbourne Corporation (renamed Victorian Ports Corporation (Melbourne)on1November2016)fortheperiod1July2016-30June2017. (ii)ThefinancialsummaryrepresentsconsolidatedfinancialinformationforPortofMelbourneCorporation.(iii)Aminorchangetothe2018totalassetsandtotalliabilitiesrelatestothereclassificationoftheGoodsandServicesTax(GST).GSTwas previously disclosed as a statutory receivable and a statutory payable. GST has been netted off in 2019 with a restatement of the balance sheet in 2018. (iv)The2018financialsummaryhasbeenrestatedtocorrecttheunderstatementoftheprovisionforincometaxandoverstatementofemployeebenefitreserve.

2019 $m

2018 (iv)

$m 2017 (i)

$m 2016 (ii)

$m 2015 (ii)

$m

Income from transactions 36.9 34.1 146.9 394.2 381.7

Expenses from transactions 36.2 31.6 101.0 266.8 330.4

Operatingprofitaftertax 0.6 1.7 30.4 95.8 45.9

Net result for the period - 4.8 4.1 106.8 4,225.5 1,046.2

Netcashflowfromoperatingactivities 7.2 16.5 21.8 258.6 105.6

Total assets 159.0 150.9 145.7 10,225.0 4,245.9

Total liabilities 51.0 39.5 42.6 110.9 880.5

(iii)

(iii)


Operating revenue for 2018-19 totalled $36.9 million compared to $34.1 million in the previous year. The increase of $2.8 million is due primarily from the government funding for the Station Pier redevelopment project and an increase in the Site Occupation Charge.

Operating expenses for 2018-19 totalled $36.2 million compared to $31.6 million in the previous year. The increase of $4.6 million is due mainly to higher contractors and consultant expenses of $2.0 million, a once-off cost for surrender of a lease of $0.8 million, increase in employeebenefitexpensesof$0.8millionandincrease in depreciation and amortisation expenses of $0.6 million.

Finance costsCash reserves increased by $4.1 million to $24.0 million compared to $19.9 million in the previous year. There were no borrowings during the year.

Capital expenditureVPCM’s capital expenditure was $6.2 million and included the Station Pier Piles Rehabilitation project,VesselTrafficServicesEquipmentUpgradeand Station Pier Balcony Deck Refurbishment.

Cash flowNetcashinflowsfromoperatingactivitieswere $7.2millioncomparedwith$16.5millionin 2017-18.Thisdecreaseof$9.3millionwasdueprimarily to the income tax refund received in 2017-18of$13.9millionoffsetwithanincreasein receipts from customers of $2.5 million and a decrease in payments to suppliers of $2.9 million compared to the prior year.

Cashoutflowsfrominvestingactivitieswere $4.6millioncomparedto$7.5millionin2017-18.

Cashinflowsfromfinancingactivitieswere $1.3 million compared to $5.0 million in 2017-18asaresultofacapitalcontribution from the Department of Transport.

Balance sheetThe balance sheet of VPCM as at 30 June 2019 reports net assets of $108.0 million (2018: $111.4 million).

• Total assets increased by $8.0 million over the year to $159.0 million. This is due to the following:

– Cash and cash equivalents have increased by $4.1 million due primarily to the funding received for the Station Pier Transition Project and introduction of the Site Occupation Charge.

– Deferred tax assets have increased by $3.2 million due to the reduction in the Commonwealth Government Bond Discount Rate (“discount rate”) from 3% in 2017-18to1.8%in2018-19.Thisdiscountrate is used to value the Port of Melbourne SuperannuationFundnetdefinedbenefitliability.

• Total liabilities increased by $11.5 million over the year to $51.0 million. This is due to the Port ofMelbourneSuperannuationFundnetdefinedliability increasing $10 million and the amount payable by VPCM to creditors at year-end increasing $2.5 million over the prior year.

Statements of Changes in EquityThe statement of changes in equity records a decrease of $3.4 million to $108.0 million. The movementinthisstatementreflectsthe re-measurementofthenetdefinedbenefitliabilityfor the Port of Melbourne Superannuation Fund ($6.7million),increaseinreservesduetothecapital contribution from Department of Transport for the Station Pier Project $1.3 million, revaluation ofbuildings$1.3millionandprofitfortheyear $0.6 million.


Significant changes in financial positionTherewerenosignificantmatterswhichchangedVPCM’sfinancialpositionduringthereportingperiod.

Significant changes or factors affecting performanceTherewerenosignificantchangesorfactorswhichaffected VPCM’s performance during the reporting period.

Capital projectsIn 2018–19 VPCM did not have any capital projects with a total estimated investment of $10 million ormore.

Subsequent eventsThere have been no events subsequent to the balance date at 30 June 2019 which may significantlyaffectoperationsinsubsequentreporting periods.



Section 2:

Governance and organisational structure


Corporate governance

Board of ManagementThe VPCM Board of Management is established under the Transport Integration Act 2010 (Vic). The Board consists of not less than three and not more than nine members, each of whom is appointed by the Governor in Council. It is the duty of the Board to act consistently with the functions and objectives of VPCM, act as a sounding base for good corporate governance and to act honestly, fairly and diligently in accordance with the applicable legislation. Management of the operations and administration is delegated by the Board to the ChiefExecutiveOfficer.

VPCM reported to the following Ministers during the reporting period: • The Hon. Melissa Horne MP, Minister for Ports and Freight • The Hon. Tim Pallas MP, Treasurer

The primary responsibility of the VPCM Board is to ensure that the port of Melbourne waters and channels in port of Melbourne waters are managed for use on a fair and reasonable basis and to manage and develop Station Pier and West Finger Pier consistent with the vision statement and transport system objectives as set out in the Transport Integration Act 2010 (Vic) (TIA).

With the aim of achieving best practice, the Board has developed and endorsed a set of governance principles which are in line with its responsibilities under the TIA. As a result, the primary focus of the Board is on: • setting the strategic direction of VPCM including the approval and oversight of the corporate plan,

annual operating and capital budgets, risk management framework and policy and strategy, corporate policiesandalldelegationsofauthority(includingfinancialdelegations)madepursuanttosection170ofthe TIA

• having regard to the transport system objectives, the decision-making principles and any relevant statement of policy principles in carrying out its functions and exercising its powers

• ensuring accountabilities to the Minister for Ports and Freight and the Treasurer of Victoria under the legislation are understood by VPCM

• approving capital projects where the total project value exceeds $1 million (or any other capital projects ofstrategicsignificance)

• monitoring compliance with legislative and regulatory requirements, ethical standards and external commitments

• monitoring VPCM’s operational performance •overseeingtheadequacyofVPCM’sfinancialcontrols • approving and overseeing VPCM’s operating and capital budgets •appointingandreviewingtheperformanceoftheChiefExecutiveOfficer • promoting safety as a matter of priority having regard to the safety and security of the port of Melbourne.

Conflict of interestTheDirectorsaregovernedinrespectofconflictsofinterestbytherelevantprovisionsofthePublic Administration Act 2004 (Vic) and binding codes issued by the Victorian Public Sector Commission. They are required to declare any pecuniary interest in any matter being considered by the Board or in any other matter in which VPCM is concerned. The Board is provided at each of its meetings a consolidated list of registered interests disclosed by Directors.


Directors

James Cain, Chairman James Cain was appointed Chairman of Victorian Ports Corporation (Melbourne) on 2 November 2016 and reappointed on 1 February 2018.

James was Deputy Chair of Port of Melbourne Corporation from July 2010 until the medium-term lease of the port of Melbourne became effective in November 2016.

He has an extensive background in project development management in property and infrastructure, in both the public and private sectors.

James’ professional experience includes 12 years with property and construction company Lend Lease in various roles including General Manager forVictoria,TasmaniaandSouthAustralia,andfiveyears with the Victorian Government as Executive Director of Major Projects Victoria, the Victorian Government’s major capital works agency.

Since 2006, James has developed his interests in commercial, infrastructure and property areas through his own consulting business.

James was Chair of the Industry Superannuation Property Trust (ISPT) between 2009 and April 2018. He was also Chair of Port of Hastings Corporation until September 2010 and was a Director of Victorian Rail Track (VicTrack) between April 2008 and July 2010.

Board Committee membership:• Chair, Remuneration and People Committee• Risk Committee• Audit and Finance Committee

Janice van Reyk, Deputy Chair Janice van Reyk was appointed Deputy Chair of Victorian Ports Corporation (Melbourne) on 2 November 2016 and reappointed on 1 February 2018.

Janice was a Director of Port of Melbourne Corporation from 2011 until the medium-term lease of the port of Melbourne became effective in November 2016.

She is an experienced non-executive Director with broad based business skills gained as a senior executive in listed industrial companies.

She is a non-executive Director of Lochard Energy Group, Chair of its Audit Committee; a non-executive Director of Australian Naval Infrastructure, Chair of its Audit & Risk Committee; a non-executive Director of Citywide, Chair of its Safety Risk and Environment Committee and a member of its Audit and Finance Committee; a non-executive Director of Tennis Australia, Chair of its Audit & Risk Committee; a trustee of Melbourne & Olympic Parks Trust; a member of the Northern Territory Environment Protection Authority; and a member of the VicRoads Risk Audit & Governance Committee.

Janice has an extensive professional background inmajorcapitalprojects,infrastructure,financeand capital markets, mergers and acquisitions, commercial negotiations, risk management, environmental management and stakeholder engagement.

Janice also holds a Master of Commerce, a Master of Environment (Hons), Bachelor of Laws (Hons) and a Bachelor of Arts (Economics). Janice is a Fellow of the Australian Institute of Company Directors, a CPA and a Leadership Victoria Fellow.

Board Committee membership:• Chair, Audit and Finance Committee• Risk Committee


Deb Beale Deb Beale was appointed a Director of Victorian Ports Corporation (Melbourne) on 2 November 2016 and reappointed on 1 February 2018.

Deb’s broad experience includes the areas of finance,corporategovernance,publicrelationsandrisk management. She has served, and continues to serve, on a number of government, public, privateandnot-for-profitboards.

Shebeganherworkingcareerinthefinanceindustry where she was employed by Merrill Lynch for over a decade. She then moved to Ernst & Young where she specialised in risk management, government relations and governance.

Deb has a Bachelor of Commerce from the University of Melbourne, a Graduate Diploma from the Securities Institute of Australia and a Masters of Business Administration from Melbourne Business School.

Board Committee membership:• Chair, Risk Committee• Remuneration and People Committee

Peter Tuohey Peter Tuohey was appointed a Director of Victorian Ports Corporation (Melbourne) on 2 November 2016 and reappointed on 1 February 2018.

Peterisafifthgenerationgrain,woolandprimelamb producer whose experience in freight and logistics has seen him appointed to a number of advisory roles.

Peter is Chair of the Victorian Government’s Grains Logistics Taskforce, Chairman of Melbourne Market Authority, Chairman of V/Line Rail Freight Advisory Council, a member of the Ministerial Freight Advisory Council and a member of the Victorian Water Board Selection Panel.

At the Victorian Farmers Federation (VFF) he served as President from 2012 to 2016 and Vice President from 2009 to 2012. He was also Chair of the VFF’s Farm Business and Regional Development Committee from 2010 to 2013. At the national level, Peter was a Board Director of the National Farmers Federation from 2012 to 2016 and served on its Economics Committee.

Peter was also a member of the Victorian Freight and Logistics Council from 2009 to 2012.

Board Committee membership:• Audit and Finance Committee• Remuneration and People Committee


Board and Committee meetings

Audit and Finance Committee membership and roles The Audit and Finance Committee consisted of the following members in 2018-19: Ms Janice van Reyk, Chairperson (independent) Mr Peter Tuohey (independent) MrJamesCain(exofficiomember)

The responsibilities of the Audit and Finance Committee are set out in Standing Direction 3.2.1.1. The key responsibilities of the committee are to: •reviewandreportindependentlytotheboardontheannualreportandallotherfinancialinformation

published by VPCM • assist the board in reviewing the effectiveness of VPCM’s internal control environment covering: –effectivenessandefficiencyofoperations –reliabilityoffinancialreporting – compliance with applicable laws and regulations • determine the scope of the internal audit function and ensure its resources are adequate and used

effectively, including coordination with the external auditors • maintain effective communication with external auditors • consider recommendations made by internal and external auditors and review the implementation of

actions to resolve issues raised.

Remuneration and People CommitteeTheRemunerationandPeopleCommitteeassiststheBoardtofulfilitsgovernanceresponsibilitiesbyensuring that VPCM has executive remuneration policies guidelines and practices that are consistent with government policy and by reviewing policies and processes relating to the development of VPCM’s people and its culture.

Risk Committee The primary role of the Risk Committee is to oversee the effective operation of the risk management frameworktoassisttheBoardinfulfillingitsgovernanceresponsibilities.Thecommitteealsoevaluatestheeffectivenessofriskidentificationandmanagementandensurescompliancewithinternalguidelinesandexternal requirements.

Attendance at Board and Board Committee meetings Number attended/eligible to attend

Chairman / Director Board CommitteeAudit and Finance Remuneration and

PeopleRisk

J Cain (Chairman) 10/10 4/4 2/2 4/4

J van Reyk (Deputy Chair) 9/10 4/4 - 4/4

D Beale 10/10 - 2/2 4/4

P Tuohey 10/10 4/4 2/2 -


Organisational structure

Assets and Infrastructure

Major Projects

Strategy and Risk

Contract Management

Infrastructure

Finance

Legal

Board Secretariat

People and CultureSecurity

Corporate Affairs

Business Support

Finance and Corporate Support

Station Pier /Cruise Shipping

Information Technology

Property Management

Business, Information and Strategy

Marine and Navigation

Business Resilience

Health and Safety

Marine and Navigation

Chief Executive Officer

Remuneration and People Committee Risk CommitteeAudit and Finance

Committee

Board


Executive Management Team

Rachel Johnson, Chief Executive OfficerRachelJohnsontookuptheroleofinauguralChiefExecutiveOfficerofVPCMinNovember2016.

Rachel has wide ranging experience of Australian freight and logistics businesses and the development and operation of transport infrastructure in both the public and private sectors. She has held senior positions in NewSouthWalesgovernmentbodiesaswellasinanumberofhighprofileprivatesectorcompanies.

Captain Roy Stanbrook, Harbour Master/ Executive General Manager – Marine and NavigationRoy is the Harbour Master of the port of Melbourne and leads the Marine and Navigation division. His divisionisresponsibleforsafenavigationintheportwatersoftheportofMelbournethroughVesselTrafficServices as well as emergency management, health and safety, and security.

Jeff Bazelmans, Executive General Manager – Business, Information and StrategyJeff leads a diverse division that includes the management of Victoria’s premier cruise shipping facility at Station Pier, cruise tourism, tenant management, environment, information technology services, business strategy and risk.

Yin Chen, Acting Executive General Manager – Finance and Corporate SupportYinleadsthedivisionresponsibleforfinanceandthecorporatesupportareasofBoardsecretariat,legalcounsel, corporate affairs, human resources and business support.

Executive General Manager – InfrastructureThe Assets and Infrastructure department and the Major Projects department reported directly to the Chief ExecutiveOfficerduringthereportingperiod.


OH&S and employment principles

Occupational health and safetyVPCM is committed to a safety culture that ensures the health, welfare and safety of its workers. This commitment extends to ensuring that VPCM operations do not place the wider port community at unnecessary risk of injury or illness.

As an integral part of advancing the safety culture, VPCM takes a proactive approach to managing its occupational health and safety responsibilities and delivers initiatives and programs designed to prevent safety incidents and injuries.

Some of the key health and safety initiatives delivered during the period include:

• continuing support of the Port of Melbourne Health Safety Environment Consultative Forum which brings together the safety teams from all organisations working in the port

• surveying all users of the port’s dangerous goods system, DG Hub. This survey was completed by more than 15% of all registered users with generally positive feedback

•PortAuthorisedOfficersfromthePortSafetyTeamconducting362auditstomonitorhazardousportactivities across the port as well as reviewing work practices on VPCM-operated sites

• implementing a revised drug and alcohol policy which includes random staff drug and alcohol testing• conducting educational training sessions for staff on renewed employee assistance program services,

diversity and mental health awareness.

VPCM is working to enhance its positive safety culture. To help achieve this, it has a key strategic objective to increase the reporting of hazards, near misses and incidents. During 2018-19 employees and contractors were encouraged to be vigilant and report every hazard or incident no matter how small. As a result, there was a marked increase in the number of reports compared with previous years with a total of two injuries and 30 hazards.

TherewerenonotifiableinjuriesnorlosttimeinjuriestoVPCMstaffduring2018-19.

Workplace Health and Safety Representatives give staff a voice through the organisation’s OHS Committee which meets throughout the year.

Performance against OHS management measures

FTE = Full-time equivalent staff

* Due to the Victorian Government’s lease of the commercial operations of the port of Melbourne, VPCM beganoperationson1November2016.Therefore,the2016-17reportingperiodincludedfourmonthsofPort of Melbourne Corporation operations.

Measure KPI 2018-19 2017-18 2016-17

IncidentsNumber of hazards/incidents 32 0 2.0

Rate per 100 FTE 0 0 3.6

Claims

Number of lost time standard claims 0 0 0.0

Rate per 100 FTE 0 0 0.0

Average cost per standard claim 0 0 0.0

Fatalities Fatality claims 0 0 0.0

*


Employment and conduct principlesVPCM is committed to applying merit and equity principles when appointing staff. The selection processes ensure that applicants are assessed and evaluated fairly and equitably on the basis of the key selection criteriaandotheraccountabilitieswithoutdiscrimination.Employeeshavebeencorrectlyclassifiedinworkforce data collections.



Section 3:

Workforce data


Public sector values and employment principlesWe aspire to be an effective, sustainable, diverse and fair organisation, with a culture that creates high levels of employee engagement and performance.

Our strategic intent is to: •developandmaintainacontemporaryorganisationdesignandfit-for-purposepeoplepolicies,

procedures and enabling systems • drive engaged leadership that motivates and inspires employees • develop a strong employee value proposition that attracts and retains people with the right capabilities • create and sustain market-leading capabilities in the workforce through workforce planning, professional

development and succession planning • build a culture of innovation, growth, engagement, high performance, inclusivity and wellbeing.

These objectives align with our corporate plan objectives which are to provide an effective workplace and portcommunityorganisationandtodelivervaluetocustomersandstakeholdersthroughefficientinternalsystems, processes and innovation.

Comparative workforce dataAnnualised total salary, by $20,000 bands, for executives

Our people

Income band (salary) Executives< $160,000 0$160,000-$179,999 3$180,000 - $199,999 0$200,000 - $219,999 6$220,000 - $239,999 1$240,000 - $259,999 1$260,000-$279,999 0$280,000 - $299,999 1$300,000 - $319,999 0$320,000 - $339,999 1Total 13


Details of employment levels in 2018 and 2019The following table discloses the headcount and full-time staff equivalent (FTE) of all VPCM employees, employed in the last full pay period in June of the current reporting period, and in the last full pay period in the previous reporting period.

Dem

ogra

phic

data

Cla

ssifi

catio

nda

ta

June 2019All employees Ongoing Fixed term and

casualNumber

(headcount)FTE Full-time

(headcount)Part-time

(headcount)FTE Number

(headcount)FTE

GenderMale 48 47.2 28 0 28.0 20 19.2Female 18 16.6 3 1 3.8 14 12.8Age15-24 0 0.0 0 0 0.0 0 0.025-34 3 2.0 0 0 0.0 3 2.035-44 21 20.2 8 1 8.8 12 11.445-54 12 12.0 8 0 8.0 4 4.055-64 28 27.6 14 0 14.0 14 13.665+ 2 2.0 1 0 1.0 1 1.0

EBA employees 53 51.4 31 1 31.8 21 19.6Senior employeesExecutives 13 12.4 0 0 0.0 13 12.4Total employees 66 63.8 31 1 31.8 34 32.0

Dem

ogra

phic

data

Cla

ssifi

catio

nda

ta

June 2018All employees Ongoing Fixed term and

casualNumber

(headcount)FTE Full-time

(headcount)Part-time

(headcount)FTE Number

(headcount)FTE

GenderMale 45 42.8 28 0 28 17 14.8Female 14 13.8 4 0 4 10 9.8Age15-24 0 0.0 0 0 0 0 0.025-34 3 3.0 0 0 0 3 3.035-44 18 17.8 10 0 10 8 7.845-54 13 12.1 8 0 8 5 4.155-64 24 22.7 13 0 13 11 9.765+ 1 1.0 1 0 1 0 0.0

EBA employees 47 45.2 32 0 32 15 13.2Senior employeesExecutives 12 11.4 0 0 0 12 11.4Total employees 59 56.6 32 0 32 27 24.6



Section 4:

Other disclosures


Local jobs firstThe Local Jobs First Act 2003 (Vic) introduced in August 2018 brings together the Victorian Industry Participation Policy (VIPP) and Major Project Skills Guarantee (MPSG) policy which were previously administered separately.

Public sector bodies are required to apply the Local Jobs First policy in all projects valued at $3 million or more in metropolitan Melbourne or for statewide projects, or $1 million or more for projects in regional Victoria.

MPSG applies to all construction projects valued at $20 million or more. The MPSG guidelines and VIPP guidelines will continue to apply to MPSG applicable and VIPP applicable projects respectively where contracts have been entered before 15 August 2018.

Project commenced – Local Jobs First StandardDuring2018-19,VPCMcommencedthreeLocalJobsFirstStandardprojectstotalling$15.47million: • The projects were located in metropolitan Melbourne. • A Local Industry Development Plan (LIDP) was required for each project. • MPSG did not apply to these projects.

The outcomes expected from the implementation of the Local Jobs First policy to these projects where information was provided, are as follows: • A commitment to 89.56 per cent local content was made • Twenty-eight jobs (annualised employee equivalent (AEE)) were committed, including the creation of

six new jobs and the retention of 22 existing jobs (AEE) • Eighteen positions for new apprentices, trainees and cadets were committed, including the creation of

seven new apprenticeships/traineeships/cadets and the retention of 11 apprenticeships/traineeships/cadets.

Disclosure of government advertising expenditureIn 2018-19 VPCM did not undertake any advertising campaigns with a total media spend of $100,000 or greater (exclusive of GST).


All operational ICT expenditure

ICT expenditure related to projects to create or enhance ICT capabilities

Business As Usual (BAU) ICT expenditure

Non-Business as Usual (non-BAU) ICT expenditure Total = OPEX + CAPEX

Operational expenditure (OPEX)

Capital expenditure (CAPEX)

$3.1 million $0.2 million Nil $0.2 million

Consultancy expenditureDetails of consultancies under $10,000During the period 1 July 2018 to 30 June 2019, eight consultants were engaged where the value of the consultancy was less than $10,000. The total expenditure on these eight consultancies was $56,000 excluding GST.

Details of consultancies over $10,000 During the period 1 July 2018 to 30 June 2019, 19 consultants were engaged where the value of the consultancy was greater than $10,000.

The total value of consultancies for the 12 months ended 30 June 2019 was $2.6 million excluding GST.

Details of individual consultancies can be found on VPCM’s website at www.vicports.vic.gov.au.

Information and Communication Technology (ICT) expenditureFor the 2018-19 reporting period, VPCM had a total ICT expenditure of $3.3 million, with the details shown below.

Note: • ICT expenditure refers to VPCM’s costs in providing business enabling ICT services within the current

reporting period. It comprises Business As Usual (BAU) ICT expenditure and Non-Business As Usual (Non-BAU) ICT expenditure.

• Non-BAU ICT expenditure relates to extending or enhancing VPCM’s current ICT capabilities. • BAU ICT expenditure is all remaining ICT expenditure which primarily relates to ongoing activities to

operate and maintain the current ICT capability.


Disclosure of major contractsVPCM did not award any major contracts (valued at $10 million or more) during 2018-19.

Freedom of informationThe Freedom of Information Act 1982 (Vic) (FOI Act) enables members of the public to obtain information held by VPCM.

Making a request FOI requests to VPCM should be addressed to:

FreedomofInformationOfficerVictorian Ports Corporation (Melbourne) GPO Box 261Melbourne VIC 3001

FOI requests can also be lodged electronically to [email protected].

An application fee of $28.90 applies. Access charges may also be payable if the document pool is large and the search for material is time consuming.

When making an FOI request, applicants should ensure requests are in writing and clearly identify what types of material/documents are being sought.

FOI statistics/timelines During 2018-19, VPCM received four FOI requests. Three requests came directly from the public and one request was received from a commercial entity.

VPCM made two FOI decisions during the 12 months ending 30 June 2019. One FOI decision was made within the statutory 30-day time period and the other decision was made after an extension of time to allow thirdpartyconsultation.Theaveragetimetakentofinaliseadecisionwas19.5days.OneofthesedecisionsiscurrentlyunderreviewwiththeOfficeoftheVictorianInformationCommissioner(OVIC).

In addition, one request was withdrawn, and one request remains outstanding and awaiting the applicant to consult with VPCM in respect of their request.

Thereisalsoonedecisionthatwasmadeintheperiod2017-18,thatremainsunderreviewwithOVIC.

Further information Further information regarding the operation and scope of FOI can be found in the FOI Act, the regulations madeundertheFOIActandfromtheOfficeoftheVictorianInformationCommissioner(OVIC): www.ovic.vic.gov.au.

Further information regarding the process for making an FOI request to VPCM can be found on VPCM’s website: www.vicports.vic.gov.au.


Compliance with building and maintenance provisions of the Building Act 1993 (Vic)Buildings were maintained in accordance with relevant building and maintenance provisions in the Building Act 1993 (Vic) and Building Regulations 2018.

To ensure buildings conform with building standards, VPCM retains experienced building maintenance contractors who are required to be up to date with all relevant standards.

VPCM uses an asset management system for recording maintenance requests, essential service inspections,reporting,scheduling,andrectificationandmaintenanceworksonexistingbuildings.

During the reporting period the following applied to buildings owned by VPCM: • One major works project (greater than $50,000) was completed. This project was started in the previous

year,2017-18. • One major works project (greater than $50,000), was started. •Twobuildingpermitsandonecertificateoffinalinspectionwereissued. • No emergency orders or building orders were issued. • No buildings were brought into conformity with building standards.

Competitive Neutrality PolicyCompetitive neutrality requires government businesses to ensure where services compete, or potentially compete with the private sector, any advantage arising solely from their government ownership be removed if it is not in the public interest. Government businesses are required to cost and price these services as if they were privately owned. Competitive neutrality policy supports fair competition between public and private businesses and provides government businesses with a tool to enhance decisions on resource allocation. Thispolicydoesnotoverrideotherpolicyobjectivesofgovernmentandfocusesonefficiencyintheprovisionof service.

VPCM continues to comply with the requirement of the Competitive Neutrality Policy and conformance with the instructions for public construction procurement.

Compliance with the Protected Disclosure Act 2012 (Vic)The purpose of the Protected Disclosure Act 2012 (Vic) (PDA) is to encourage and facilitate disclosure of improperconductbypublicofficersandpublicbodiesandtoprovideprotectionforpersonswhomakethosedisclosures.

VPCM is a public body and disclosures under the PDA can therefore be made about VPCM or VPCM’s members,officersoremployees.

Reporting proceduresDisclosuresofimproperconductordetrimentalactionbyVPCMoranyofitsmembers,officersoremployeesmust be made directly to the Independent Broad-based Anti-corruption Commission (IBAC) at:

Independent Broad-based Anti-corruption CommissionLevel 1, North Tower, 459 Collins StreetMelbourne VIC 3000

Tel:1300735135Internet: www.ibac.vic.gov.auEmail: See the IBAC website for the secure email disclosure process which also provides for anonymous disclosures.


Further informationVPCM’s Protected Disclosure Procedures which outline the system for reporting disclosures of improper conductordetrimentalactionbyVPCMoranyofitsmembers,employeesorofficersareavailableonVPCM’s website: www.vicports.vic.gov.au.

Statement of availability of other informationAdditional information available on requestThe following information relating to VPCM, relevant to the period 1 July 2018 to 30 June 2019, has been prepared and is available to the Ministers, Members of Parliament and the public on request: •Astatementthatdeclarationsofpecuniaryinterestshavebeendulycompletedbyallrelevantofficers. • Details of publications produced by VPCM about VPCM and how these can be obtained. • Details of changes in prices, fees, charges, rates and levies charged by VPCM. • Details of any major external reviews carried out on VPCM. • Details of major research and development activities undertaken by VPCM. • Details of overseas visits undertaken including a summary of the objectives and outcomes of each visit. • Details of major promotional, public relations and marketing activities undertaken by VPCM to develop

community awareness of the organisation and its services. • A general statement on industrial relations within VPCM and details of time lost through industrial

accidents and disputes. • A list of major committees sponsored by VPCM, the purposes of each committee and the extent to which

the purposes have been achieved. • Details of all consultancies and contractors including consultants/contractors engaged, services

provided; and expenditure committed to for each engagement.

Additional information included in the reportThe following details are included in the Annual Report on the pages indicated: • Details of assessments and measures undertaken to improve the occupational health and safety of

employees. See page 28.

Information that is not applicable to VPCM •Detailsofsharesheldbyaseniorofficerasnomineeorheldbeneficiallyinastatutoryauthorityor

subsidiary.


Attestation for financial management compliance with Ministerial Standing Direction 5.1.4Victorian Ports Corporation (Melbourne) Financial Management Compliance Attestation StatementI James Cain, on behalf of the Responsible Body, certify that Victorian Ports Corporation (Melbourne) has complied with the applicable Standing Directions 2018 under the Financial Management Act 1994 (Vic) and Instructions.

James CainChairman



Section 5:

Financial Statements


Victorian Ports Corporation (Melbourne)Table of contentsFor the year ended 30 June 2019

How this report is structured

Comprehensive operating statement 49Balance sheet 50Statement of changes in equity 51Cash flow statement 53

1. About this report 54

2. Funding delivery of our services

2.1 Revenue 582.2 Finance income 592.3 Other income 59

3. The cost of delivering services

3.1 Summary of expenses incurred in delivery of services 603.2 Employee benefits 603.3 Other operating expenses 69

4. Key assets available to support output delivery

4.1 Property, plant and equipment 70

5. Other assets and liabilities

5.1 Receivables 755.2 Payables 765.3 Other non-financial assets 775.4 Other liabilities 77

6. How we financed our operations

6.1 Leases 786.2 Cash flow information and balances 796.3 Commitments for expenditure 80

Operating expenses of the entity

Victorian Ports Corporation (Melbourne) (VPCM) has presented its audited general purpose financial statements for the financial year ended 30 June 2019 in the following structure to provide users with the information about VPCM's stewardship of resources entrusted to it.

Financial statements

The basis on which the financial statements have been prepared andcompliance with reporting regulations

Notes to the financial statements

Revenue recognised from taxes, grants, sales of goods and services and othersources

Land, property, infrastructure, plant and equipment, intangible assetsand joint operations

Working capital balances and other key assets and liabilities

Borrowings, cash flow information, leases, trusts and commitments

2


Victorian Ports Corporation (Melbourne)Table of contentsFor the year ended 30 June 2019

7. Taxation and transactions with the State

7.1 Income tax 817.2 Deferred tax 837.3 Dividends 847.4 Correction of prior period error 85

8. Risks, contingencies and valuation judgements

8.1 Financial instruments specific disclosures 868.2 Contingent assets and contingent liabilities 918.3 Fair value determination 92

9. Other disclosures9.1 Ex-gratia expenses 949.2 Equity disclosure 959.3 Responsible persons 979.4 Remuneration of executives 989.5 Related parties 999.6 Remuneration of auditors 1019.7 Subsequent events 1019.8 Australian Accounting Standards issued that are not yet effective 102

Notes to the financial statements (continued)

Items subject to taxation and transactions with the State

Financial risk management, contingent assets and liabilitiesas well as fair value determination

3


Victorian Ports Corporation (Melbourne)Certification of Financial Statements30 June 2019

Mr J Cain Ms R Johnson Ms Y ChenChairman Chief Executive Officer Chief Financial Officer28 August 2019 28 August 2019 28 August 2019

We certify that the attached financial statements for Victorian Ports Corporation (Melbourne) have been prepared in accordance with the Direction 5.2 of the Standing Directions of the Assistant Treasurer under the Financial Management Act 1994 , applicable Financial Reporting Directions, Australian Accounting Standards, including Interpretations and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the Comprehensive Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and notes to and forming part of the financial statements, presents fairly the financial transactions during the year ended 30 June 2019 and financial position of Victorian Ports Corporation (Melbourne) as at 30 June 2019.

At the time of signing, we are not aware of any circumstances which would render any particulars included in the financial statements to be misleading or inaccurate.

We authorise the attached financial statements for issue on 28 August 2019.


Independent Auditor’s Report To the Board of the Victorian Ports Corporation (Melbourne)

Opinion I have audited the financial report of the Victorian Ports Corporation (Melbourne) (the corporation) which comprises the:

• balance sheet as at 30 June 2019 • comprehensive operating statement for the year then ended • statement of changes in equity for the year then ended • cash flow statement for the year then ended • notes to the financial statements, including significant accounting policies • certification of financial statements.

In my opinion the financial report presents fairly, in all material respects, the financial position of the corporation as at 30 June 2019 and their financial performance and cash flows for the year then ended in accordance with the financial reporting requirements of Part 7 of the Financial Management Act 1994 and applicable Australian Accounting Standards.

Basis for Opinion

I have conducted my audit in accordance with the Audit Act 1994 which incorporates the Australian Auditing Standards. I further describe my responsibilities under that Act and those standards in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report.

My independence is established by the Constitution Act 1975. My staff and I are independent of the corporation in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the financial report in Victoria. My staff and I have also fulfilled our other ethical responsibilities in accordance with the Code.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Board’s responsibilities for the financial report

The Board of the corporation are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards and the Financial Management Act 1994, and for such internal control as the Board determine is necessary to enable the preparation and fair presentation of a financial report that is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the Board are responsible for assessing the corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is inappropriate to do so.


2

Auditor’s responsibilities for the audit of the financial report

As required by the Audit Act 1994, my responsibility is to express an opinion on the financial report based on the audit. My objectives for the audit are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the corporation’s internal control

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board

• conclude on the appropriateness of the Board’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the corporation’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the corporation to cease to continue as a going concern.

• evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

MELBOURNE 30 August 2019

Simone Bohan as delegate for the Auditor-General of Victoria


Victorian Ports Corporation (Melbourne)Comprehensive Operating StatementFor the year ended 30 June 2019

2019 2018Notes $'000 $'000

Revenue 2.1 33,041 31,680 Finance Income 2.2 307 174 Other Income 2.3 3,588 2,258 Total 36,936 34,112

Expenses 3.1 (36,198) (31,558) Finance costs 8.1.2 (5) (9) Total expenses (36,203) (31,567)

Profit/(Loss) before income tax 733 2,545 Income tax benefit /(expense) 7.1 (147) (799)

Profit/(Loss) after income tax 586 1,745

Other comprehensive incomeItems that will not be reclassified to profit after income taxAsset revaluation reserve movement 9.2.2 1,319 2,132 Employee benefits reserve movement 9.2.2 (6,673) 266 Other comprehensive income/(loss) for the year, net of tax (5,354) 2,398

Total comprehensive income/(loss) for the year (4,768) 4,143

The above Comprehensive Operating Statement should be read in conjunction with the accompanying notes.

VPCM has adopted AASB15 Revenue from Contracts with Customers from 1 July 2018 using the modified retrospective approaach and has not restated comparatives.The comparatives have been prepared using AASB118 and related interpretations. VPCM has not restated comparatives when initially applying AASB9 Financial Instruments.

5


Victorian Ports Corporation (Melbourne)Balance SheetAs at 30 June 2019

2019 2018Notes $'000 $'000

Financial assetsCash and cash equivalents 6.2 23,928 19,914 Receivables 5.1 6,580 5,214

30,508 25,128

Non-financial assetsProperty, plant and equipment 4.1 118,345 118,719 Intangible assets 214 309 Other non-financial assets 5.3 783 843 Deferred tax assets 7.2 9,101 5,914

128,443 125,784

Total assets 158,951 150,912

LiabilitiesPayables 5.2 4,465 2,127 Provisions - employee benefits 3.2.2 29,682 19,346 Other provisions 79 75 Other liabilities 5.4 385 430 Current tax liabilities 7.1 1,097 1,372 Deferred tax liabilities 7.2 15,270 16,155 Total liabilities 50,978 39,507

NET ASSETS 107,973 111,406

EquityContributed capital 9.2.1 7,335 6,000 Reserves 9.2.2 37,483 42,837 Retained profits 63,155 62,568

TOTAL EQUITY 107,973 111,406

The above Balance Sheet should be read in conjunction with the accompanying notes.

VPCM has adopted AASB15 Revenue from Contracts with Customers from 1 July 2018 using the modified retrospective approach and has not restated comparatives.The comparatives have been prepared using AASB118 and related interpretations. VPCM has not restated comparatives when initially applying AASB9 Financial Instruments.

6


Victorian Ports Corporation (Melbourne)Balance SheetAs at 30 June 2019

2019 2018Notes $'000 $'000

Financial assetsCash and cash equivalents 6.2 23,928 19,914 Receivables 5.1 6,580 5,214

30,508 25,128

Non-financial assetsProperty, plant and equipment 4.1 118,345 118,719 Intangible assets 214 309 Other non-financial assets 5.3 783 843 Deferred tax assets 7.2 9,101 5,914

128,443 125,784

Total assets 158,951 150,912

LiabilitiesPayables 5.2 4,465 2,127 Provisions - employee benefits 3.2.2 29,682 19,346 Other provisions 79 75 Other liabilities 5.4 385 430 Current tax liabilities 7.1 1,097 1,372 Deferred tax liabilities 7.2 15,270 16,155 Total liabilities 50,978 39,507

NET ASSETS 107,973 111,406

EquityContributed capital 9.2.1 7,335 6,000 Reserves 9.2.2 37,483 42,837 Retained profits 63,155 62,568

TOTAL EQUITY 107,973 111,406

The above Balance Sheet should be read in conjunction with the accompanying notes.


6

Victorian Ports Corporation (Melbourne)Statement of Changes in EquityFor the year ended 30 June 2019

Contributedcapital

$'000

Asset revaluation

reserve$'000

Employee benefits reserve

$'000

Retained profits

$'000

Total equity

$'000

Balance at 1 July 2018 6,000 40,458 2,379 62,568 111,406

Profit for the year - - - 586 586

Other comprehensive income - 1,319 (6,673) - (5,354)

Total comprehensive incomefor the year

- 1,319 (6,673) 586 (4,768)

Transactions with owners in their capacity as owners:Contributions/(distributions) of equity, net of transaction costs

1,335 - - - 1,335

1,335 - - - 1,335 Balance at 30 June 2019 7,335 41,777 (4,294) 63,155 107,973

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.


7



Contributedcapital

$'000

Asset revaluation

reserve$'000


$'000

Retained profits

$'000

Total equity

$'000

Balance at 1 July 2017 1,000 38,327 2,113 60,824 102,263 Profit for the year - - - 1,745 1,745 Other comprehensive income - 2,132 266 - 2,398 Total comprehensive income for the year

- 2,132 266 1,745 4,142


5,000 - - - 5,000

5,000 - - - 5,000 Balance at 30 June 2018 6,000 40,458 2,379 62,568 111,406



8



Contributedcapital

$'000

Asset revaluation

reserve$'000


$'000

Retained profits

$'000

Total equity

$'000

Balance at 1 July 2017 1,000 38,327 2,113 60,824 102,263 Profit for the year - - - 1,745 1,745 Other comprehensive income - 2,132 266 - 2,398 Total comprehensive income for the year

- 2,132 266 1,745 4,142


5,000 - - - 5,000

5,000 - - - 5,000 Balance at 30 June 2018 6,000 40,458 2,379 62,568 111,406



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Victorian Ports Corporation (Melbourne)Cash flow StatementFor the year ended 30 June 2019

2019 2018Notes $'000 $'000

Cash flows from operating activitiesReceipts from customers 37,938 37,085 Payments to suppliers and employees (26,900) (29,399) Interest received 307 174 Interest paid (6) (9) Income tax instalments (paid)/refund (2,200) 9,830 Goods and Services Tax (paid)/refund (1,906) (1,136) Net cash inflow/(outflow) from operating activities 6.2.1 7,233 16,544

Cash flows from investing activitiesPayments for property, plant and equipment (4,717) (7,474) Proceeds from sale of property, plant and equipment 163 - Net cash (outflow) from investing activities (4,554) (7,474)

Cash flows from financing activitiesRepayment of borrowings - (4,000) Proceeds from borrowings - 4,000 Capital contribution from Owner 9.2.1 1,335 5,000 Net cash inflow/(outflow) from financing activities 1,335 5,000

Net increase/(decrease) in cash and cash equivalents 4,014 14,070

Cash and cash equivalents at the beginning of the financial year

6.2 19,914 5,845

Cash and cash equivalents at end of the financial year 6.2 23,928 19,914

The above Cash flow Statement should be read in conjunction with the accompanying notes.


9


Victorian Ports Corporation (Melbourne)Notes to the Financial StatementsFor the year ended 30 June 2019

1 ABOUT THIS REPORT

Corporate informationVictorian Ports Corporation (Melbourne) (VPCM) is a Government Business Enterprise established by the Victorian Government under the Transport Integration Act 2010 (Vic) (TIA). The Board of VPCM is directly accountable to the Victorian Government through the Minister for Ports and the Treasurer.

VPCM is responsible for navigation of commercial shipping in Port Phillip Channels, waterside emergency and marine pollution response and the management of Station Pier and West Finger Pier as Victoria's premier cruise shipping and Tasmanian passenger ferry facility. VPCM has responsibility for Harbour Master, Station Pier and West Finger Pier, relevant safety and environmental regulation, waterside emergency management and marine pollution response.

These financial statements incorporate all activities of VPCM.

Basis of preparationThe financial statements have been prepared on an accruals and a historical cost basis, except for property, plant and equipment which, subsequent to acquisition, are measured at a revalued amount being their fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent impairment losses. Cost is based on the fair values of the consideration given in exchange for assets. 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.

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.

Judgements, estimates and assumptions are required to be made about financial information being presented. The significant judgements made in the preparation of these financial statements are disclosed in the notes where amounts affected by those judgements are disclosed. Estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Critical judgements that management has made in the process of applying VPCM’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements are:

(i) Recovery of deferred tax assetsDeferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise these temporary differences.

(ii) Fair value of property, plant and equipmentAll non-current physical assets are measured initially at cost and subsequently revalued at fair value in accordance with FRD 103H.

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1 ABOUT THIS REPORT

Corporate informationVictorian Ports Corporation (Melbourne) (VPCM) is a Government Business Enterprise established by the Victorian Government under the Transport Integration Act 2010 (Vic) (TIA). The Board of VPCM is directly accountable to the Victorian Government through the Minister for Ports and the Treasurer.

VPCM is responsible for navigation of commercial shipping in Port Phillip Channels, waterside emergency and marine pollution response and the management of Station Pier and West Finger Pier as Victoria's premier cruise shipping and Tasmanian passenger ferry facility. VPCM has responsibility for Harbour Master, Station Pier and West Finger Pier, relevant safety and environmental regulation, waterside emergency management and marine pollution response.

These financial statements incorporate all activities of VPCM.

Basis of preparationThe financial statements have been prepared on an accruals and a historical cost basis, except for property, plant and equipment which, subsequent to acquisition, are measured at a revalued amount being their fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent impairment losses. Cost is based on the fair values of the consideration given in exchange for assets. 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.

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.

Judgements, estimates and assumptions are required to be made about financial information being presented. The significant judgements made in the preparation of these financial statements are disclosed in the notes where amounts affected by those judgements are disclosed. Estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Critical judgements that management has made in the process of applying VPCM’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements are:

(i) Recovery of deferred tax assetsDeferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise these temporary differences.

(ii) Fair value of property, plant and equipmentAll non-current physical assets are measured initially at cost and subsequently revalued at fair value in accordance with FRD 103H.

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(iii) Defined benefit superannuation planThe value of the defined benefit superannuation plan has been calculated using the Projected Unit Credit method, as required by AASB 119. The objective under this method is to expense each member's benefits in the Fund as they would accrue, taking into consideration future salary increases and the benefit allocation formula. Thus the total benefit to which each member is expected to become entitled is broken down into units, each associated with a year of past or future credited service.

The financial statements have been prepared on a going concern basis.

(iv) Adoption of new and revised Accounting Standard In the current year VPCM have adopted the following new Australian Accounting Standards, Interpretations and Amendments issued by the AASB which were mandatorily effective for accounting periods on or after 1 January 2019.

(v) Impact of initial application of AASB 9 Financial InstrumentsAASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement forreporting periods beginning on or after 1 January 2018 bringing together all three aspects of accountingfor financial instruments: classification and measurement, impairment and hedge accounting. Hedgeaccounting is not relevant to VPCM. Additionally, VPCM adopted consequential amendments to AASB 7“Financial Instruments: Disclosures” that were approved to the disclosures this year to the comparativeperiod.

(vi) Classification and measurement of financial assetsThe date of initial application is 1 July 2018. Accordingly, VPCM has applied the requirements of AASB 9 toinstruments that continue to be recognised as at 1 July 2018 and has not applied the requirements toinstruments that have already been derecognised as at 1 July 2018.

All recognised financial assets that are within the scope of AASB 9 are required to be subsequentlymeasured at amortised cost or fair value on the basis of VPCM’s business model for managing the financialassets and the contractual cash flow characteristics of the financial assets.

Specifically: · Debt investments that are held within a business model whose objective is both to collect thecontractual cash flows and to sell the debt instruments, and that have contractual cash flows that aresolely payments of principal and interest on the principal amount outstanding, are subsequentlymeasured at fair value through other comprehensive income (FVOCI).

· Debt investments that are held within a business model whose objective is to collect the contractualcash flows, and that have contractual cash flows that are solely payments of principal and interest on theprincipal amount outstanding, are subsequently measured at amortised cost.

· Equity investments are subsequently measured at fair value through profit or loss (FVTPL).

· Debt instruments that are measured at amortised cost are subject to impairment assessment.

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Management of VPCM have reviewed and assessed VPCM’s existing financial assets as at 1 July 2018based on facts and circumstances that existed at that date and concluded that the initial application ofAASB 9 has had the following impact on VPCM’s financial assets regardless of their classification andmeasurement.· Financial assets classified as held to maturity and loans and receivables under AASB 139 that weremeasured at amortised cost continue to be measured at amortised cost under AASB 9 as they are heldwithin a business model to collect contractual cash flows and these cash flows consist solely of paymentsof principal and interest on the principal amount outstanding.None of the other reclassifications of financial assets under AASB 9 have had impact on the VPCM’sfinancial position, profit or loss, other comprehensive income or total comprehensive income in eitheryear.

(vii) Impairment of financial assetsIn relation to the impairment of financial assets, AASB 9 requires an expected credit loss model asopposed to an incurred credit loss model under AASB 139. The expected credit loss model requires VPCMto account for expected credit losses and changes in those expected credit losses at each reporting date toreflect changes in credit risk since initial recognition of the financial assets. Specifically, AASB 9 requiresVPCM to recognise a loss allowance for expected credit losses on:· Debt instruments measured subsequently at amortised cost, and · Trade receivables.

In particular, AASB 9 requires VPCM to measure the loss allowance for a financial instrument at an amountequal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument hasincreased significantly since initial recognition, or if the financial instrument is a purchased or originatedcredit-impaired financial asset. However, if the credit risk on a financial instrument has not increasedsignificantly since initial recognition (except for a purchased or originated credit-impaired financial asset),VPCM is required to measure the loss allowance for that financial instrument at an amount equal to 12-months ECL. AASB 9 also requires a simplified approach for measuring the loss allowance at an amountequal to lifetime ECL for trade receivables, contract assets and lease receivables in certain circumstances.

Based on our assessment, there is no material impact to VPCM as impairment was previously performedon debt instruments and trade receivables have been previously assessed for impairment based onexpected credit losses model. There is no change to our expected credit losses assumptions under AASB 9.

The consequential amendments to AASB 7 have also resulted in more extensive disclosures about VPCM’sexposure to credit risk in the financial statements (see Note 8.1.3.).

(viii) Classification and measurement of financial liabilitiesAASB 9 has introduced in the classification and measurement of financial liabilities relates to theaccounting for changes in the fair value of a financial liability designated as at FVTPL attributable tochanges in the credit risk of the issuer. The application of AASB 9 has had no impact on the classificationand measurement of VPCM’s financial liabilities.

For further details, refer to Note 8.1.3.

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Management of VPCM have reviewed and assessed VPCM’s existing financial assets as at 1 July 2018based on facts and circumstances that existed at that date and concluded that the initial application ofAASB 9 has had the following impact on VPCM’s financial assets regardless of their classification andmeasurement.· Financial assets classified as held to maturity and loans and receivables under AASB 139 that weremeasured at amortised cost continue to be measured at amortised cost under AASB 9 as they are heldwithin a business model to collect contractual cash flows and these cash flows consist solely of paymentsof principal and interest on the principal amount outstanding.None of the other reclassifications of financial assets under AASB 9 have had impact on the VPCM’sfinancial position, profit or loss, other comprehensive income or total comprehensive income in eitheryear.

(vii) Impairment of financial assetsIn relation to the impairment of financial assets, AASB 9 requires an expected credit loss model asopposed to an incurred credit loss model under AASB 139. The expected credit loss model requires VPCMto account for expected credit losses and changes in those expected credit losses at each reporting date toreflect changes in credit risk since initial recognition of the financial assets. Specifically, AASB 9 requiresVPCM to recognise a loss allowance for expected credit losses on:· Debt instruments measured subsequently at amortised cost, and · Trade receivables.

In particular, AASB 9 requires VPCM to measure the loss allowance for a financial instrument at an amountequal to the lifetime expected credit losses (ECL) if the credit risk on that financial instrument hasincreased significantly since initial recognition, or if the financial instrument is a purchased or originatedcredit-impaired financial asset. However, if the credit risk on a financial instrument has not increasedsignificantly since initial recognition (except for a purchased or originated credit-impaired financial asset),VPCM is required to measure the loss allowance for that financial instrument at an amount equal to 12-months ECL. AASB 9 also requires a simplified approach for measuring the loss allowance at an amountequal to lifetime ECL for trade receivables, contract assets and lease receivables in certain circumstances.

Based on our assessment, there is no material impact to VPCM as impairment was previously performedon debt instruments and trade receivables have been previously assessed for impairment based onexpected credit losses model. There is no change to our expected credit losses assumptions under AASB 9.

The consequential amendments to AASB 7 have also resulted in more extensive disclosures about VPCM’sexposure to credit risk in the financial statements (see Note 8.1.3.).

(viii) Classification and measurement of financial liabilitiesAASB 9 has introduced in the classification and measurement of financial liabilities relates to theaccounting for changes in the fair value of a financial liability designated as at FVTPL attributable tochanges in the credit risk of the issuer. The application of AASB 9 has had no impact on the classificationand measurement of VPCM’s financial liabilities.

For further details, refer to Note 8.1.3.

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(ix) Impact of application of AASB 15 Revenue from Contracts with CustomersIn current year, VPCM has applied AASB 15 Revenue from Contracts with Customers which is effective foran annual period that begin on or after 1 January 2018. AASB 15 introduced a 5-step approach to revenuerecognition. Far more prescriptive guidance has been added in AASB 15 to deal with specific scenarios.Details of the new requirements as well as their impact on VPCM’s financial statements are describedbelow.

VPCM’s accounting policies for its revenue stream are disclosed in detail in Note 2 below. Apart fromproviding more extensive disclosure for VPCM’s revenue transactions, the application of AASB 15 has nothad a significant impact on the profit or loss or balance sheet of VPCM. The amount of adjustment foreach financial statement line item affected by the application of AASB 15 is illustrated below.

VPCM has adopted modified retrospective. Therefore, there is no restatement made to comparatives.

AASB 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what might more commonly beknown as ‘accrued revenue’ and ‘deferred revenue’, however the Standard does not prohibit an entityfrom using alternative descriptions in the statement of financial position. VPCM has adopted theterminology used in AASB 15 to describe such balances.

(x) Statement of complianceThe financial statements of VPCM are general purpose financial statements in accordance with the Financial Management Act 1994 (Vic) and applicable Australian Accounting Standards and Interpretations (AAS). VPCM has been designated a "for profit" entity.

The annual financial statements were authorised for issue by the Board of VPCM on xx August 2019.

(xi) Compliance with International Financial Reporting Standards (IFRS)The Board of VPCM is of the view that the 2018-19 financial statements of VPCM also comply with IFRS as issued by the International Accounting Standards Board (IASB).

(xii) Rounding of amountsAmounts in the financial statements have been rounded to the nearest $1,000, unless otherwise stated. Discrepancies in tables between totals and sums of components reflect rounding. Percentage variations in all tables are based on the underlying unrounded amounts.

13



2 FUNDING DELIVERY OF OUR SERVICES

Introduction

Structure2.1 Revenue from contracts with customers2.2 Finance income2.3 Other income

2.1 Revenue from contracts with customers 2019 2018$'000 $'000

Wharfage fees 10,981 10,564 Anchorage fees 709 794 Berth hire and Site Occupation charge 2,783 1,784 Port Manager contribution 15,608 15,290 Other charges for services 2,960 3,248 Total revenues 33,041 31,680

(i) Wharfage fees

(ii) Anchorage

(iii) Berth hire and Site Occupation Charge

This section provides additional information about how VPCM is funded and the accounting policies that are relevant for an understanding of the items recognised in the financial statements.

For comparative yearRevenue is recognised and measured at fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to VPCM and the income can be reliably measured. Where applicable, amounts disclosed as income are net of concessions, allowances, duties and taxes.

Revenue is recognised for the major business activities as follows:

Wharfage fees are charged per unit of quantity, volume or weight of cargo for all cargoes loaded on or discharged from vessels or between vessels in the Port of Melbourne. Revenue is recognised after the vessel’s departure from its designated berth, at a point in time.

Berth hire is a time-based fee charged for the provision of berths for the purpose of loading or discharging specialised cargo and lay-up or other purpose approved by VPCM. Berth hire is not applicable to passenger vessels to which a Site Occupation Charge (SOC) will be levied. The SOC is a charge levied in reference to both the number of incoming passengers arriving on the cruise vessel and the amount of time for which the site was reserved or occupied by such cruise vessel. Revenue is recognised over time.

For current yearUnder AASB 15, VPCM recognises revenue when or as performance obligation is satisfied i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer. Revenue is recognised at a point of time or over time depending upon the satisfaction of performance obligations. Please refer below for further details.

Anchorage fees are charged for the provision of an area for use by vessels seeking safe anchorage in lieu of mooring at a Port of Melbourne berth or mooring in the Port of Geelong. Fees are charged based on time spent in Port waters with a minimum charge of 24 hours. Revenue is recognised over time.



2 FUNDING DELIVERY OF OUR SERVICES

Introduction

Structure2.1 Revenue from contracts with customers2.2 Finance income2.3 Other income

2.1 Revenue from contracts with customers 2019 2018$'000 $'000

Wharfage fees 10,981 10,564 Anchorage fees 709 794 Berth hire and Site Occupation charge 2,783 1,784 Port Manager contribution 15,608 15,290 Other charges for services 2,960 3,248 Total revenues 33,041 31,680

(i) Wharfage fees

(ii) Anchorage

(iii) Berth hire and Site Occupation Charge

This section provides additional information about how VPCM is funded and the accounting policies that are relevant for an understanding of the items recognised in the financial statements.

For comparative yearRevenue is recognised and measured at fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to VPCM and the income can be reliably measured. Where applicable, amounts disclosed as income are net of concessions, allowances, duties and taxes.

Revenue is recognised for the major business activities as follows:

Wharfage fees are charged per unit of quantity, volume or weight of cargo for all cargoes loaded on or discharged from vessels or between vessels in the Port of Melbourne. Revenue is recognised after the vessel’s departure from its designated berth, at a point in time.

Berth hire is a time-based fee charged for the provision of berths for the purpose of loading or discharging specialised cargo and lay-up or other purpose approved by VPCM. Berth hire is not applicable to passenger vessels to which a Site Occupation Charge (SOC) will be levied. The SOC is a charge levied in reference to both the number of incoming passengers arriving on the cruise vessel and the amount of time for which the site was reserved or occupied by such cruise vessel. Revenue is recognised over time.

For current yearUnder AASB 15, VPCM recognises revenue when or as performance obligation is satisfied i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer. Revenue is recognised at a point of time or over time depending upon the satisfaction of performance obligations. Please refer below for further details.

Anchorage fees are charged for the provision of an area for use by vessels seeking safe anchorage in lieu of mooring at a Port of Melbourne berth or mooring in the Port of Geelong. Fees are charged based on time spent in Port waters with a minimum charge of 24 hours. Revenue is recognised over time.


2.1 Revenue from contracts with customers (continued)

(iv) Port Manager contribution

(v) Other charges for services

(vi) Disaggregation of revenue from contracts with customers 2019 2018$'000 $'000

Timing of revenue recognitionAt a point in time 10,981 - Over time 22,060 - Total revenues 33,041 -

2.2 Finance Income2019 2018

$'000 $'000Interest revenue 307 174 Total Finance Income 307 174

(i) Interest revenue

2.3 Other income2019 2018

$'000 $'000Rent and licence fees 893 879 Government project funding 2,190 1,213 Other revenue 504 167 Total other incomes 3,588 2,258

Total revenues 36,936 34,112

(i) Rent and licence fees

(ii) Government project funding

(iii) Other revenue

Other charges for services is recognised at the time the service to which the revenue relates is provided or work is undertaken and the revenue is receivable.

All other revenue from major business activities is recognised at the time the service to which the revenue relates is provided or work is undertaken and the revenue is receivable.

Interest revenue is recognised as the interest accrues to the net carrying amount of the financial asset using the effective interest rate method.

Revenue from operating leases is recognised when earned and accrued in accordance with the terms and conditions implicit in the leasing contract.

Revenue from Government project funding is recognised when expenses have been incurred in accordance with the terms and conditions implicit in the contract with the relevant Government department. When the amounts relate to the purchase of property, plant and equipment, they are deferred and are recognised on a straight line basis over the expected useful lives of the related assets.

Contribution by the Port Manager under the Port Concession Deed and Port Operations Service Deed. Revenue is recognised on an annual basis over the term of the Deed.

15



3 THE COST OF DELIVERING SERVICES

Introduction

Structure3.1 Summary of expenses incurred in delivery of services3.2 Employee benefits3.3 Other operating expenses

3.1 Summary of expenses incurred in delivery of services2019 2018

Notes $'000 $'000Employee benefits expense 3.2.1 12,751 11,924 Depreciation and amortisation 4.1.1 8,444 7,829 Other operating expenses 3.3 15,003 11,805 Total expense incurred in delivery of services 36,198 31,558

3.2 Employee benefits

3.2.1 Employee benefits in the comprehensive operating statement 2019 2018

$'000 $'000Defined contribution superannuation expense 1,188 1,103 Defined benefit superannuation expense 824 948 Salaries and employee benefits expenses 10,739 9,873 Total employee expenses 12,751 11,924

3.2.2 Employee benefits in the balance sheetProvision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave (LSL) for services rendered to the reporting date inclusive of on-costs and recorded as an expense during the period the services are delivered.

The amount recognised in the comprehensive operating statement in relation to superannuation is the employer contributions for members of both defined benefit and defined contribution superannuation plans that are paid or payable during the reporting period.

Employee benefits expenses include all costs related to employment including wages and salaries, fringe benefits tax, leave entitlements, redundancy payments, WorkCover premiums, defined benefits superannuation plans, and defined contribution superannuation plans. VPCM does not recognise any defined benefit liability in respect of the State Superannuation Scheme. Department of Treasury and Finance (DTF) recognises and discloses the defined benefit liabilities for the State Superannuation Scheme in its financial report.

This section provides additional information about how VPCM's funding is applied and the accounting policies that are relevant for an understanding of the items recognised in the financial statements.

Defined Benefits under the Port of Melbourne Superannuation Fund is disclosed under Note 3.2.3

16




Introduction

Structure3.1 Summary of expenses incurred in delivery of services3.2 Employee benefits3.3 Other operating expenses

3.1 Summary of expenses incurred in delivery of services2019 2018

Notes $'000 $'000Employee benefits expense 3.2.1 12,751 11,924 Depreciation and amortisation 4.1.1 8,444 7,829 Other operating expenses 3.3 15,003 11,805 Total expense incurred in delivery of services 36,198 31,558

3.2 Employee benefits

3.2.1 Employee benefits in the comprehensive operating statement 2019 2018

$'000 $'000Defined contribution superannuation expense 1,188 1,103 Defined benefit superannuation expense 824 948 Salaries and employee benefits expenses 10,739 9,873 Total employee expenses 12,751 11,924

3.2.2 Employee benefits in the balance sheetProvision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave (LSL) for services rendered to the reporting date inclusive of on-costs and recorded as an expense during the period the services are delivered.

The amount recognised in the comprehensive operating statement in relation to superannuation is the employer contributions for members of both defined benefit and defined contribution superannuation plans that are paid or payable during the reporting period.

Employee benefits expenses include all costs related to employment including wages and salaries, fringe benefits tax, leave entitlements, redundancy payments, WorkCover premiums, defined benefits superannuation plans, and defined contribution superannuation plans. VPCM does not recognise any defined benefit liability in respect of the State Superannuation Scheme. Department of Treasury and Finance (DTF) recognises and discloses the defined benefit liabilities for the State Superannuation Scheme in its financial report.

This section provides additional information about how VPCM's funding is applied and the accounting policies that are relevant for an understanding of the items recognised in the financial statements.

Defined Benefits under the Port of Melbourne Superannuation Fund is disclosed under Note 3.2.3

16



3.2.2 Employee benefits in the balance sheet (continued) 2019 2018$'000 $'000

Current employee benefits:Annual leave entitlementsUnconditional and expected to wholly settle within 12 months 663 482 Long service leave entitlementsUnconditional and expected to wholly settle within 12 months 398 357 Unconditional and expected to wholly settle after 12 months 1,171 1,091 Defined benefits superannuation fund liability 26,867 16,878

Provision for on-costsUnconditional and expected to wholly settle within 12 months 136 112 Unconditional and expected to wholly settle after 12 months 179 167 Total current employee benefits and on-costs 29,413 19,086

Non-current employee benefitsLong service leave entitlements 233 226 On-costs 36 35 Total non-current employee benefits and on-costs 269 260 Total employee benefits and related on-costs 29,682 19,346

Reconciliation of movement in on-cost provision

Opening balance 313 308 Additional provision recognised 137 259 Reductions arising from payments (101) (254) Closing balance 350 313

Current 314 279 Non-current 36 35

17




3.2.2 Employee benefits in the balance sheet (continued)

Wages, salaries and sick leave

Annual leave

Long service leave

Unconditional long service leave is disclosed as a current liability even when the liability is not expected to settle within 12 months as VPCM does not have an unconditional right to defer the settlement. Those liabilities which are expected to be wholly settled within 12 months of the reporting period, are measured at their undiscounted (nominal) values. Those liabilities that are not expected to be wholly settled beyond 12 months are measured at present value.

Conditional long service leave is disclosed as a non-current liability as there is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. Conditional long service leave is disclosed as a non-current liability measured at present value.

Liabilities for wages and salaries, expected to be settled within 12 months of the reporting date, are measured at their nominal amounts (including on-costs) using the remuneration rates expected to apply at the time of the settlement and are recognised as current liabilities. VPCM does not have an unconditional right to defer settlement of these liabilities. No liability is recognised for non-vesting sick leave as the anticipated pattern of future sick leave taken indicates that accumulated non-vesting leave will not be used.

Long service leave entitlements are assessed at balance date having regard to expected employees’ remuneration rates on settlement, employment related on-costs and other factors including expected accumulated years of employment on settlement and past experience. Commonwealth bond rates are used for discounting future cash flows.

Annual leave entitlements are accrued on a pro-rata basis in respect of services provided by employees up to the reporting date, having regard to rates expected to apply when the liabilities are settled. The entire obligation has been recognised as a current liability as VPCM does not have an unconditional right to defer settlement. Those liabilities which are expected to be wholly settled within 12 months of the reporting period, are measured at their undiscounted (nominal) values. Those liabilities that are not expected to be wholly settled within 12 months are also recognised in the provision for employee benefits as current liabilities, but are measured at present value of the amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

18




3.2.2 Employee benefits in the balance sheet (continued)

Wages, salaries and sick leave

Annual leave

Long service leave

Unconditional long service leave is disclosed as a current liability even when the liability is not expected to settle within 12 months as VPCM does not have an unconditional right to defer the settlement. Those liabilities which are expected to be wholly settled within 12 months of the reporting period, are measured at their undiscounted (nominal) values. Those liabilities that are not expected to be wholly settled beyond 12 months are measured at present value.

Conditional long service leave is disclosed as a non-current liability as there is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. Conditional long service leave is disclosed as a non-current liability measured at present value.

Liabilities for wages and salaries, expected to be settled within 12 months of the reporting date, are measured at their nominal amounts (including on-costs) using the remuneration rates expected to apply at the time of the settlement and are recognised as current liabilities. VPCM does not have an unconditional right to defer settlement of these liabilities. No liability is recognised for non-vesting sick leave as the anticipated pattern of future sick leave taken indicates that accumulated non-vesting leave will not be used.

Long service leave entitlements are assessed at balance date having regard to expected employees’ remuneration rates on settlement, employment related on-costs and other factors including expected accumulated years of employment on settlement and past experience. Commonwealth bond rates are used for discounting future cash flows.

Annual leave entitlements are accrued on a pro-rata basis in respect of services provided by employees up to the reporting date, having regard to rates expected to apply when the liabilities are settled. The entire obligation has been recognised as a current liability as VPCM does not have an unconditional right to defer settlement. Those liabilities which are expected to be wholly settled within 12 months of the reporting period, are measured at their undiscounted (nominal) values. Those liabilities that are not expected to be wholly settled within 12 months are also recognised in the provision for employee benefits as current liabilities, but are measured at present value of the amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

18


THE COST OF DELIVERING SERVICES

3.2.3 Defined benefit superannuation

Defined benefit superannuation plan

Contribution recommendations

A liability in respect of the Port of Melbourne Superannuation Fund (Fund) is recognised in the Statement of Financial Position, and is measured as the present value of the Defined Benefit Obligation at year end less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost. The value of the defined benefit superannuation plan has been calculated using the Projected Unit Credit method, as required by AASB 119. The objective under this method is to expense each member's benefits in the Fund as they would accrue, taking into consideration future salary increases and the benefit allocation formula. Thus the total benefit to which each member is expected to become entitled is broken down into units, each associated with a year of past or future credited service.

Future taxes, such as taxes on investment income and employer contributions, are taken into account in the actuarial assumptions used to determine the relevant components of VPCM’s defined benefit liability.

The Fund only has defined benefit members and is closed to new members. Members receive pension benefits on retirement, death and disablement. On withdrawal, members have a choice of receiving a lump sum benefit and/or a deferred pension benefit.

As at 30 June 2019, the Fund has 1 active member (2018: 3), 1 deferred pension member (2018: 1) and 30 members drawing a pension (2018: 28).

The Superannuation Industry Supervision (SIS) legislation governs the superannuation industry and provides the framework within which superannuation plans operate. The SIS Regulations require an actuarial valuation to be performed for each defined benefit superannuation plan every three years, or every year if the plan pays defined benefit pensions.

The Fund’s Trustee is responsible for the governance of the Fund. The Trustee has a legal obligation to act solely in the best interests of Fund beneficiaries. The Trustee has the following roles: - Administration of the Fund and payment to the beneficiaries from Fund assets when required in accordance with the Fund rules;- Management and investment of the Fund assets; and- Compliance with superannuation law and other applicable regulations.

The Fund is regulated by the Australian Prudential Regulation Authority (APRA). The prudential regulator, APRA, licenses and supervises regulated superannuation plans.

Employer contributions to the defined benefit superannuation plan are based on recommendations by the plan’s actuary. Actuarial assessments are made annually and the last such assessment was made at 30 June 2019. The objective of funding is to ensure that the benefit entitlements of members and other beneficiaries are fully funded by the time they become payable. VPCM has no legal obligation to settle this liability with an immediate contribution or additional one-off contributions.

19




3.2.3 Defined benefit superannuation (continued)

Funding method

Nature of asset/liability

Investment risk - the risk that investment returns will be lower than assumed and VPCM will need to increase contributions to offset the shortfall.

Salary growth risk - the risk that salaries or wages (on which future benefit amounts will be based) will rise more rapidly than assumed, increasing defined benefit amounts and thereby requiring additional employer contributions.

There were no plan amendments affecting the defined benefits payable, curtailments or settlements during the year.

The defined benefit assets are invested in the BT Institutional Retirement PST and the Schroder Balanced Fund Professional Class. The assets are diversified within these investment options and therefore the Fund has no significant concentration of investment risk.

VPCM may, at any time by notice to the Trustee, terminate its contributions. VPCM has a liability to pay the contributions due before the effective date of the notice, but there is no requirement for it to pay further contributions, irrespective of the financial condition of the fund. However, VPCM does have a constructive obligation for the fund and therefore has recognised a current liability in the Statement of Financial Position in respect of its defined benefit superannuation arrangements. Refer to Note 3.2.2.

The method used to determine the employer contribution recommendations at the last actuarial review was the aggregate funding method. The method adopted affects the timing of the cost to VPCM.

The Port of Melbourne Superannuation Fund does not impose a legal liability on VPCM to cover any deficit that exists in the fund. If the fund were wound up, there would be no legal obligation on VPCM to make good any shortfall. The Trust Deed of the fund states that if the fund winds up, the remaining assets are to be distributed by the Trustee of the fund in an equitable manner as it sees fit.

The Fund typically exposes VPCM to actuarial risks such as legislative risk, pension risk, inflation risk, investment risk, salary growth risk and inflation risk as outlined in more detail below:

Pension risk - the risk that, firstly pensioner mortality will be lower than expected, resulting in pensions being paid for a longer period. Secondly, that a greater proportion of eligible members will elect to take a pension benefit, which is generally more valuable than the corresponding lump sum benefit.

Inflation risk - the risk that inflation is higher than anticipated, increasing pension payments, and thereby requiring additional employer contributions.

Legislative risk - the risk that legislative changes could be made which increase the cost of providing the defined benefits.

Timing of members leaving service - as the fund is a small fund (i.e. has a small number of members), if members with high benefits leave, this may impact on the financial position of the fund at the time they leave. The impact may be positive or negative depending on the circumstances and timing of withdrawal.

20





Funding method

Nature of asset/liability

Investment risk - the risk that investment returns will be lower than assumed and VPCM will need to increase contributions to offset the shortfall.

Salary growth risk - the risk that salaries or wages (on which future benefit amounts will be based) will rise more rapidly than assumed, increasing defined benefit amounts and thereby requiring additional employer contributions.

There were no plan amendments affecting the defined benefits payable, curtailments or settlements during the year.

The defined benefit assets are invested in the BT Institutional Retirement PST and the Schroder Balanced Fund Professional Class. The assets are diversified within these investment options and therefore the Fund has no significant concentration of investment risk.

VPCM may, at any time by notice to the Trustee, terminate its contributions. VPCM has a liability to pay the contributions due before the effective date of the notice, but there is no requirement for it to pay further contributions, irrespective of the financial condition of the fund. However, VPCM does have a constructive obligation for the fund and therefore has recognised a current liability in the Statement of Financial Position in respect of its defined benefit superannuation arrangements. Refer to Note 3.2.2.

The method used to determine the employer contribution recommendations at the last actuarial review was the aggregate funding method. The method adopted affects the timing of the cost to VPCM.

The Port of Melbourne Superannuation Fund does not impose a legal liability on VPCM to cover any deficit that exists in the fund. If the fund were wound up, there would be no legal obligation on VPCM to make good any shortfall. The Trust Deed of the fund states that if the fund winds up, the remaining assets are to be distributed by the Trustee of the fund in an equitable manner as it sees fit.

The Fund typically exposes VPCM to actuarial risks such as legislative risk, pension risk, inflation risk, investment risk, salary growth risk and inflation risk as outlined in more detail below:

Pension risk - the risk that, firstly pensioner mortality will be lower than expected, resulting in pensions being paid for a longer period. Secondly, that a greater proportion of eligible members will elect to take a pension benefit, which is generally more valuable than the corresponding lump sum benefit.

Inflation risk - the risk that inflation is higher than anticipated, increasing pension payments, and thereby requiring additional employer contributions.

Legislative risk - the risk that legislative changes could be made which increase the cost of providing the defined benefits.

Timing of members leaving service - as the fund is a small fund (i.e. has a small number of members), if members with high benefits leave, this may impact on the financial position of the fund at the time they leave. The impact may be positive or negative depending on the circumstances and timing of withdrawal.

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(a)

2019 2018Notes $'000 $'000

Net defined benefit liability/(asset) at start of the year 16,878 16,900 Current services cost 393 471 Net interest 430 469 Actual return on Fund assets less interest income (991) (1,639) Actuarial losses/(gain) arising from changes in financial assumptions 10,897 2,408 Actuarial gain arising from changes in liability experience (374) (1,149)

(366) (582) 3.2.2 26,867 16,878

(b) Reconciliation of Fair Value of Fund Assets

Movements in the fair value of the Defined Benefit Fund assets were as follows:2,019 2,018 $'000 $'000

Fair value of Fund assets at beginning of the year 31,727 30,513 Interest income 929 992 Actual return on Fund assets less interest income 991 1,639 Employer contributions 366 582 Contributions by Fund participants 13 36 Benefits paid (1,655) (1,641) Taxes, premiums and expenses paid (414) (394) Fair value of Fund assets at end of the year 3.2.3 (d) 31,957 31,727

(c)

2019 2018$'000 $'000

48,605 47,413 Current service cost 393 471 Interest cost 1,359 1,461 Contributions by Fund participants 13 36 Actuarial losses /(gain) arising from changes in financial assumptions 10,897 2,408 Actuarial gain arising from changes in liability experience (374) (1,149) Benefits paid (1,655) (1,641) Taxes, premiums and expenses paid (414) (394) Present value of Defined Benefit Obligation at end of the year 3.2.3 (g) 58,824 48,605

Reconciliation of the Net Defined Benefit Liability/(Asset)

Movements in the net defined benefit liability/(asset) were as follows:

Reconciliation of Defined Benefit Obligation

Movements in the defined benefit obligation were as follows:

Employer contributionsNet defined benefit liability/(asset) at end of the year

Present value of Defined Benefit Obligation at beginning of the year

21





(d)

As at 30 June Level 1 Level 2 Level 3

Asset category $'000 $'000 $'000 $'000Investment funds 31,957 - 31,957 - Total 31,957 - 31,957 -

(e) The percentage invested in each asset class at reporting date 2019 2018% %

Australian equity 30 33 International equity 24 24 Fixed income 17 15 Property 2 3 Alternatives/Other 15 14 Cash 12 11

100 100

(f) Significant actuarial assumptions at the reporting date 2019 2018Assumptions to determine Defined Benefit Cost % %Discount rate 3.0 3.3 Expected salary increase rate 3.0 3.0 Expected pension increase rate 2.5 2.5

Pension mortality Mercer

Standard Mercer

Standard

Assumptions to determine Defined Benefit Obligation 2019 2018% %

Discount rate 1.8 3.0 Expected salary increase rate 3.0 3.0 Expected pension increase rate 2.5 2.5


Standard Mercer

Standard

Fair value measurement at reporting period Carrying amount

The fair value of the Fund assets does not include amounts relating to VPCM's own financial instruments or any property occupied, or other assets used.

Fair value of Defined Benefit Fund assets

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(d)

As at 30 June Level 1 Level 2 Level 3

Asset category $'000 $'000 $'000 $'000Investment funds 31,957 - 31,957 - Total 31,957 - 31,957 -

(e) The percentage invested in each asset class at reporting date 2019 2018% %

Australian equity 30 33 International equity 24 24 Fixed income 17 15 Property 2 3 Alternatives/Other 15 14 Cash 12 11

100 100

(f) Significant actuarial assumptions at the reporting date 2019 2018Assumptions to determine Defined Benefit Cost % %Discount rate 3.0 3.3 Expected salary increase rate 3.0 3.0 Expected pension increase rate 2.5 2.5


Standard Mercer

Standard

Assumptions to determine Defined Benefit Obligation 2019 2018% %

Discount rate 1.8 3.0 Expected salary increase rate 3.0 3.0 Expected pension increase rate 2.5 2.5


Standard Mercer

Standard

Fair value measurement at reporting period Carrying amount

The fair value of the Fund assets does not include amounts relating to VPCM's own financial instruments or any property occupied, or other assets used.

Fair value of Defined Benefit Fund assets

22




(g) Sensitivity AnalysisThe Defined Benefit Obligation as at 30 June 2019 under several scenarios is presented below.Scenario A: 0.5% per annum lower discount rate sensitivityScenario B: 0.5% per annum higher discount rate sensitivityScenario C: 0.5% per annum lower salary increase rate sensitivityScenario D: 0.5% per annum higher salary increase rate sensitivityScenario E: 90% per annum of the Mercer Standard pensioner mortality sensitivityScenario F: 110% per annum of the Mercer Standard pensioner mortality sensitivityScenario G: 0.5% per annum lower pension increase rate sensitivityScenario H: 0.5% per annum higher pension increase rate sensitivity

Base Case

ScenarioA

ScenarioB

ScenarioC

ScenarioD

Discount rate 1.8% pa -0.5% pa +0.5% paSalary increase rate 3.0% pa -0.5% pa +0.5% paPension increase rate 2.5% pa

MercerStandard

58,824 64,351 53,915 58,751 58,899

Base Case

ScenarioE

ScenarioF

ScenarioG

ScenarioH

Discount rate 1.8% paSalary increase rate 3.0% paPension increase rate 2.5% pa -0.5% pa +0.5% pa

MercerStandard

-10% pa +10% pa

58,824 60,872 57,029 54,129 64,039

Pensioner mortality assumption

Pensioner mortality assumption

Defined Benefit Obligation ($'000)

Defined Benefit Obligation ($'000)

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(h) Funding arrangements

(i) Expected contributions 2020$'000

Expected employer contributions 503

(j) Maturity profile of Defined Benefit Obligations

$'00030 June 2020 1,754 30 June 2021 1,788 30 June 2022 1,825 30 June 2023 1,862 30 June 2024 1,898 Following 5 years 10,394

(k) Asset-Liability matching strategies

The weighted average duration of the defined benefit obligation as at 30 June 2019 is 16 years (2018: 16 years).

There are no asset and liability matching strategies adopted by the Fund.

For the year ended 30 June 2019, based on the actuary's recommendation, VPCM contributed the following to the Fund: - 20% (2018: 20%) of superannuation salaries; and - additional lump sum contributions of $25,000 per month (2018: $25,000) to finance expected administration and insurance costs. - additional contribution of $nil per month (2018: $20,000) to address a projected funding gap from FY 2019-20 onwards.

The financing objective adopted for the year ended 30 June 2019 was for the Fund to maintain the value of its assets at least equal to: - 110% (2018: 110%) of Vested Benefits over a five year period - to ensure full funding of the Actuarial Value of Accrued Benefits over a three year period; and - to achieve, as far as possible, a stable level of future Employer contributions.

24





(h) Funding arrangements

(i) Expected contributions 2020$'000

Expected employer contributions 503

(j) Maturity profile of Defined Benefit Obligations

$'00030 June 2020 1,754 30 June 2021 1,788 30 June 2022 1,825 30 June 2023 1,862 30 June 2024 1,898 Following 5 years 10,394

(k) Asset-Liability matching strategies

The weighted average duration of the defined benefit obligation as at 30 June 2019 is 16 years (2018: 16 years).

There are no asset and liability matching strategies adopted by the Fund.

For the year ended 30 June 2019, based on the actuary's recommendation, VPCM contributed the following to the Fund: - 20% (2018: 20%) of superannuation salaries; and - additional lump sum contributions of $25,000 per month (2018: $25,000) to finance expected administration and insurance costs. - additional contribution of $nil per month (2018: $20,000) to address a projected funding gap from FY 2019-20 onwards.

The financing objective adopted for the year ended 30 June 2019 was for the Fund to maintain the value of its assets at least equal to: - 110% (2018: 110%) of Vested Benefits over a five year period - to ensure full funding of the Actuarial Value of Accrued Benefits over a three year period; and - to achieve, as far as possible, a stable level of future Employer contributions.

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3.3 Other operating expenses2019 2018

$'000 $'000Contractors and consultant expenses 10,513 8,562 Operating lease expenses - minimum lease payments 1,314 520 Other expenses 3,175 2,722 Total operating expenses 15,003 11,805

Other operating expenses from transactions are recognised as they are incurred and reported in the financial year to which they relate. Operating expenses generally represent day-to-day running costs incurred in normal operations.

25



4. KEY ASSETS AVAILABLE TO SUPPORT OUTPUT DELIVERY

Introduction

Structure4.1 Property, plant and equipment4.1.1 Depreciation and impairment4.1.2 Reconciliation of movements in carrying amount

4.1.0 Property, plant and equipment

2019 2018 2019 2018 2019 2018Total$'000

Total$'000

Total$'000

Total$'000

Total$'000

Total$'000

Land 16,951 16,951 - - 16,951 16,951 Infrastructure 106,299 102,801 (23,538) (17,094) 82,761 85,707 Plant and equipment & motor vehicles

21,654 21,184 (7,524) (5,772) 14,131 15,412

Capital works in progress 4,502 649 - - 4,502 649 Net carrying amount 149,407 141,585 (31,062) (22,866) 118,345 118,719

Initial recognition

VPCM controls land, infrastructure and other plant and equipment that are utilised in fulfilling its objectives and conducting its activities. They represent the resources that have been entrusted to VPCM for delivery of those outputs.

Property, plant and equipment represent non-current assets comprising land, buildings and improvements, and plant and equipment used by VPCM in its operations. All non-current physical assets are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment.

Gross carrying amount Accumulated depreciation Net carrying amount

26




Introduction

Structure4.1 Property, plant and equipment4.1.1 Depreciation and impairment4.1.2 Reconciliation of movements in carrying amount

4.1.0 Property, plant and equipment

2019 2018 2019 2018 2019 2018Total$'000

Total$'000

Total$'000

Total$'000

Total$'000

Total$'000

Land 16,951 16,951 - - 16,951 16,951 Infrastructure 106,299 102,801 (23,538) (17,094) 82,761 85,707 Plant and equipment & motor vehicles

21,654 21,184 (7,524) (5,772) 14,131 15,412

Capital works in progress 4,502 649 - - 4,502 649 Net carrying amount 149,407 141,585 (31,062) (22,866) 118,345 118,719

Initial recognition

VPCM controls land, infrastructure and other plant and equipment that are utilised in fulfilling its objectives and conducting its activities. They represent the resources that have been entrusted to VPCM for delivery of those outputs.

Property, plant and equipment represent non-current assets comprising land, buildings and improvements, and plant and equipment used by VPCM in its operations. All non-current physical assets are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment.

Gross carrying amount Accumulated depreciation Net carrying amount

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4.1 Property, plant and equipment (continued)

Initial recognition (continued)

4.1.1 Depreciation and amortisation2019 2018

DepreciationTotal$'000

Total$'000

Infrastructure (6,445) (5,838) Plant and equipment & vehicles (1,905) (1,911) Total depreciation (8,349) (7,749)

AmortisationIntangible Assets (95) (80) Total amortisation (95) (80) Total depreciation and amortisation (8,444) (7,829)

Non-current physical assets measured at fair value are revalued in accordance with Financial Reporting Direction (FRD) 103H Non-Financial Physical Assets . This revaluation process occurs every five years, based upon the asset’s classification under the Government Purpose Classification, but may occur more frequently if fair value assessments indicate material changes in values. Revaluation increments or decrements arise from differences between an asset’s carrying value and fair value.

If an asset's carrying amount is increased as a result of a revaluation, the increase is credited directly to equity under the heading of asset revaluation reserve net of applicable tax. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease previously recognised in profit or loss in respect of that asset.

If an asset's carrying amount is decreased as a result of a revaluation, the decrease is recognised in profit or loss. However, the decrease is debited directly to equity under the heading of asset revaluation reserve to the extent of any credit balance existing in the revaluation reserve in respect of that asset.

Gains and losses on disposals of assets are determined by comparing proceeds from sale with the carrying amount and selling costs. These are included in profit or loss. Upon disposal or derecognition, any revaluation reserve relating to the particular asset being sold or written off is transferred to retained profits.

27




4.1.1 Depreciation and amortisation (continued)

Depreciation expense

2019 2018Infrastructure 2 - 85 years 2 - 85 yearsPlant and equipment 1 - 25 years 1 - 25 yearsIntangible assets 4 years 4 years

Change in accounting estimates

Acquisition

Land held by VPCM is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives (or, in the case of leasehold improvements and certain leased plant and equipment, the lease term if shorter) as follows:

The estimated useful lives, residual values and depreciation method are reviewed at the end of each financial reporting period and, where revised, are accounted for as a change in an accounting estimate. Where depreciation rates or methods are changed, the net written down value of the asset is depreciated from the date of the change in accordance with the new depreciation rate or method.

The purchase method of accounting is used for all acquisitions of assets, being the fair value of the assets provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition. Where assets are constructed by VPCM, the costs at which they are initially recorded include an appropriate share of labour costs incurred directly in the construction of the asset.All items with a cost or value in excess of $1,000 (2018: $1000) and with a useful life greater than one year are recognised as assets. All items within the threshold of $91 to $1,000 (2018: $91 to $1000) and with a useful life greater than one year are grouped and recognised as assets within the Low Value Asset Pool. All other items are expensed as acquired.

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Depreciation expense

2019 2018Infrastructure 2 - 85 years 2 - 85 yearsPlant and equipment 1 - 25 years 1 - 25 yearsIntangible assets 4 years 4 years

Change in accounting estimates

Acquisition

Land held by VPCM is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives (or, in the case of leasehold improvements and certain leased plant and equipment, the lease term if shorter) as follows:

The estimated useful lives, residual values and depreciation method are reviewed at the end of each financial reporting period and, where revised, are accounted for as a change in an accounting estimate. Where depreciation rates or methods are changed, the net written down value of the asset is depreciated from the date of the change in accordance with the new depreciation rate or method.

The purchase method of accounting is used for all acquisitions of assets, being the fair value of the assets provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition. Where assets are constructed by VPCM, the costs at which they are initially recorded include an appropriate share of labour costs incurred directly in the construction of the asset.All items with a cost or value in excess of $1,000 (2018: $1000) and with a useful life greater than one year are recognised as assets. All items within the threshold of $91 to $1,000 (2018: $91 to $1000) and with a useful life greater than one year are grouped and recognised as assets within the Low Value Asset Pool. All other items are expensed as acquired.

28




4.1.2 Reconciliation of movements in carrying amount

Year ended 30 June 2019 Notes

Land

$'000

Infrastructure

$'000

Plant and equipment

$'000

Capital works

in progress$'000

Total

$'000

Carrying amount 1 July 2018 16,951 85,707 15,412 649 118,719 Transfer of capital works in progress - 1,511 787 (2,298) - Additions - 6,151 6,151 Disposals (163) (163) Revaluation adjustments - 1,987 - - 1,987 Depreciation charge - (6,445) (1,905) - (8,349) Carrying amount 30 June 2019 16,951 82,761 14,131 4,502 118,345

At 30 June 2019Fair value 2018 16,951 106,299 21,654 - 144,905 Cost - 4,502 4,502 Accumulated depreciation - (23,538) (7,524) - (31,062) Net book amount 8.3.1(a) 16,951 82,761 14,131 4,502 118,345

Recoverable amount: An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (impairment of assets). Where an asset’s carrying value exceeds its recoverable amount, the difference is written off by a charge to profit or loss except to the extent that the write-down can be debited to an asset revaluation reserve amount applicable to that specific asset. The recoverable amount for an asset is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell.

Repairs and maintenance: Routine maintenance, repair costs and minor renewal costs are expensed as incurred. Where the repair relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold, the cost is capitalised and depreciated.

29




4.1.2 Reconciliation of movements in carrying amount (continued)


Land

$'000

Infrastructure

$'000

Plant and equipment

$'000

Capital works

in progress$'000

Total

$'000

Carrying amount 1 July 2017 13,905 77,499 16,765 8,030 116,199 Transfer from capital works in progress - 13,971 558 (14,855) (326) Additions - 75 - 7,474 7,549 Disposals - - - - - Revaluations adjustments 3,046 3,046 Depreciation charge - (5,838) (1,911) - (7,749) Carrying amount 30 June 2018 16,951 85,707 15,412 649 118,719

At 30 June 2018Fair value 2018 16,951 102,801 21,184 - 140,936 Cost - - - 649 649 Accumulated depreciation - (17,094) (5,772) - (22,866) Net book amount 8.3.1(b) 16,951 85,707 15,412 649 118,719

30




4.1.2 Reconciliation of movements in carrying amount (continued)


Land

$'000

Infrastructure

$'000

Plant and equipment

$'000

Capital works

in progress$'000

Total

$'000

Carrying amount 1 July 2017 13,905 77,499 16,765 8,030 116,199 Transfer from capital works in progress - 13,971 558 (14,855) (326) Additions - 75 - 7,474 7,549 Disposals - - - - - Revaluations adjustments 3,046 3,046 Depreciation charge - (5,838) (1,911) - (7,749) Carrying amount 30 June 2018 16,951 85,707 15,412 649 118,719

At 30 June 2018Fair value 2018 16,951 102,801 21,184 - 140,936 Cost - - - 649 649 Accumulated depreciation - (17,094) (5,772) - (22,866) Net book amount 8.3.1(b) 16,951 85,707 15,412 649 118,719

30


5 OTHER ASSETS AND LIABILITIES

IntroductionThis section sets out any other assets and liabilities that arose from VPCM's operations.

Structure5.1 Receivables5.2 Payables5.3 Other non-financial assets5.4 Other liabilities

5.1 Receivables2019 2018

Notes $'000 $'000CurrentContractualTrade receivables (i) 8.1.1 6,580 5,214

6,580 5,214

(i) Ageing analysis of contractual receivables0 - 30 days 2,215 5,162 31 - 60 days 4,365 7 61 - 90 days - 38 91 - 120 days - 7

6,580 5,214

Receivables consist of contractual receivables. Contractual receivables mainly include trade receivables in relation to goods and services and are classified as financial instruments in Note 8. Trade receivables are amounts due for services rendered to customers of VPCM in the ordinary course of business and generally due for settlement within 30 days and therefore are all classified as current. Trade receivables are held with the objective to collect contractual cashflows and therefore measured at amortised cost using the effective interest method, less provision for impairment. VPCM applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for trade receivables. Details of VPCM's Impairment Policy are set out in Note 8.1 (iii). No provision for expected credit loss has been recognised given the low level of historical impairment loss and current year collection statistics.

In the prior year Goods and Services Tax (GST) input tax credits recoverable were disclosed as a statutory receivable. GST receivable has been netted-off with GST payable in 2018 and 2019 with a restatement of the balance sheet in 2018.

31




5.2 Payables2019 2018

Notes $'000 $'000Current

ContractualTrade payables (i) 1,439 1,186 Accrued expenses (i) 2,927 672

8.1.1 4,366 1,858 Statutory

FBT (receivable)/payable 22 28 GST payable 77 242

99 270

4,465 2,127

(i) Maturity analysis of contractual payablesLess than 1 month 4,364 1,752 1 - 3 months 2 106 3 months - 1 year - - 1 - 5 years - - 5+ years - -

4,366 1,858

Payables consist of contractual payables and statutory payables. Contractual payables include mainly trade payables' creditors in relation to goods and services. Statutory payables include GST payable, fringe benefits tax and other tax payable. Contractual payables are classified as financial instruments in Note 8. Statutory payables are not classified as financial instruments as they do not arise from a contract.

Trade payables are carried at amortised cost. Due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to VPCM prior to the end of the financial year that are unpaid as at year end. The amounts are unsecured and are usually paid within 30 days of recognition.

32




5.2 Payables2019 2018

Notes $'000 $'000Current

ContractualTrade payables (i) 1,439 1,186 Accrued expenses (i) 2,927 672

8.1.1 4,366 1,858 Statutory

FBT (receivable)/payable 22 28 GST payable 77 242

99 270

4,465 2,127

(i) Maturity analysis of contractual payablesLess than 1 month 4,364 1,752 1 - 3 months 2 106 3 months - 1 year - - 1 - 5 years - - 5+ years - -

4,366 1,858

Payables consist of contractual payables and statutory payables. Contractual payables include mainly trade payables' creditors in relation to goods and services. Statutory payables include GST payable, fringe benefits tax and other tax payable. Contractual payables are classified as financial instruments in Note 8. Statutory payables are not classified as financial instruments as they do not arise from a contract.

Trade payables are carried at amortised cost. Due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to VPCM prior to the end of the financial year that are unpaid as at year end. The amounts are unsecured and are usually paid within 30 days of recognition.

32



5.3 Other non-financial assets2019 2018

$'000 $'000CurrentPrepayments 755 814 Other assets 28 29

783 843

5.4 Other liabilities2019 2018

$'000 $'000CurrentRent received in advance 183 176 Lease incentive 53 53

236 229

Non-currentLease incentive 149 201

149 201

385 430

Rent received in advance is recognised as a reduction of rental incomeLease incentives are recognised as a reduction of rental expense over the lease term, on a straight-line basis.

Other non-financial assets include prepayments which 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.

33



6 HOW WE FINANCED OUR OPERATIONS

Introduction

Structure6.1 Leases6.2 Cash flow information and balances6.3 Commitments for expenditure

6.1 Leases2019 2018

$'000 $'000Operating leasesNon-cancellable operating lease receivable- within one year 682 826 - later than one year but not later than five years 1,648 2,554 - later than five years - -

2,330 3,380

2019 2018$'000 $'000

Non-cancellable operating lease payable- within one year 433 397 - later than one year but not later than five years 1,338 1,604 - later than five years 408 367

2,179 2,367

As lessor

As lessee

This section provides information on the sources of finance utilised by VPCM during its operations, along with interest expenses (the cost of borrowings) and other information related to financing activities of VPCM.

VPCM has entered into a number of short-term leases and preferential berthing licences for land, buildings and infrastructure. The leases and licences terms range from one year to five years.

Generally, rental income under leases was reviewed to market at two or three-yearly intervals. Some leases provide for annual or biennial CPI reviews or an agreed fixed increase.

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense in the year in which they are incurred. This reflects the pattern of benefits derived by VPCM.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease agreement.

Operating lease payments are recognised as an expense on a straight-line basis over the term of the lease, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

34




Introduction

Structure6.1 Leases6.2 Cash flow information and balances6.3 Commitments for expenditure

6.1 Leases2019 2018

$'000 $'000Operating leasesNon-cancellable operating lease receivable- within one year 682 826 - later than one year but not later than five years 1,648 2,554 - later than five years - -

2,330 3,380

2019 2018$'000 $'000

Non-cancellable operating lease payable- within one year 433 397 - later than one year but not later than five years 1,338 1,604 - later than five years 408 367

2,179 2,367

As lessor

As lessee

This section provides information on the sources of finance utilised by VPCM during its operations, along with interest expenses (the cost of borrowings) and other information related to financing activities of VPCM.

VPCM has entered into a number of short-term leases and preferential berthing licences for land, buildings and infrastructure. The leases and licences terms range from one year to five years.

Generally, rental income under leases was reviewed to market at two or three-yearly intervals. Some leases provide for annual or biennial CPI reviews or an agreed fixed increase.

The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased item, are recognised as an expense in the year in which they are incurred. This reflects the pattern of benefits derived by VPCM.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease agreement.

Operating lease payments are recognised as an expense on a straight-line basis over the term of the lease, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

34



6.2 Cash flow information and balances

2019 2018Notes $'000 $'000

Cash and cash equivalentsCash at bank and in hand (i) 1,428 1,414 Deposits (ii) 22,500 18,500

8.1.3 23,928 19,914

(i) Cash at bank earns a weighted average interest rate of 0.98% at 30 June 2019 (2018: 1.00%).(ii) Deposits earn a weighted average interest rate of 1.43% at 30 June 2019 (2018: 1.45%).

6.2.12019 2018

$'000 $'000Net result for the period 586 1,745

Non-cash movements in income and expenseDepreciation and amortisation 8,444 7,829 Defined Benefit Superannuation Scheme adjustment 457 358 Revaluation of non financial assets (103) -

Change in operating assets and liabilitiesIncrease in receivables (2,800) (258) (Increase)/decrease in deferred tax assets (327) 144 Decrease/(increase) in other operating assets 60 (67) Increase/(decrease) in payables 2,261 (3,873) (Decrease)/increase in provision for income taxes payable (275) 11,640 Decrease in deferred tax liabilities (1,450) (1,508) Increase in current provisions 607 375 (Decrease)/increase in non current provisions (45) 234 Decrease in other liabilities (182) (75)

Net cash from operating activities 7,233 16,544

Cash and deposits, including cash equivalents, comprise cash on hand and cash at bank, deposits at call and those highly liquid investments with an original maturity of three months or less, which are held for the purpose of meeting short-term cash commitments rather than for investment purposes, and are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Reconciliation of profit after income tax to net cash inflow from operating activities

35




6.3 Commitments for expenditure

(a) Commitments for expenditure2019 2018

$'000 $'000Capital expenditure commitmentsCommitments for the construction and acquisition of property, plant and equipment, contracted for at balance date but not incurred or recognised as liabilities

10,254 288 Total capital expenditure commitments (net of GST) 10,254 288

Operating expenditure commitmentsCommitments for the payments of operating expenditure excluding lease commitments contracted for at balance date but not incurred or recognised as liabilities

13,518 9,746 Total operating expenditure commitments (net of GST) 13,518 9,746

Total commitments for expenditure (net of GST) 23,772 10,034

(b) Commitments for expenditure payable

Capital expenditure commitments payable- within one year 10,254 288 - later than one year but not later than five years - - - later than five years - - Total capital expenditure commitments (net of GST) 10,254 288

Operating expenditure commitments payable (excluding lease commitments)- within one year 5,302 6,975 - later than one year but not later than five years 8,216 2,771 - later than five years - -

13,518 9,746

Total commitments for expenditure payable (net of GST) 23,772 10,034

Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are recorded below at their nominal value and inclusive of GST. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the balance sheet.

Total operating expenditure commitments(excluding lease commitments)

36




6.3 Commitments for expenditure

(a) Commitments for expenditure2019 2018

$'000 $'000Capital expenditure commitmentsCommitments for the construction and acquisition of property, plant and equipment, contracted for at balance date but not incurred or recognised as liabilities

10,254 288 Total capital expenditure commitments (net of GST) 10,254 288

Operating expenditure commitmentsCommitments for the payments of operating expenditure excluding lease commitments contracted for at balance date but not incurred or recognised as liabilities

13,518 9,746 Total operating expenditure commitments (net of GST) 13,518 9,746

Total commitments for expenditure (net of GST) 23,772 10,034

(b) Commitments for expenditure payable

Capital expenditure commitments payable- within one year 10,254 288 - later than one year but not later than five years - - - later than five years - - Total capital expenditure commitments (net of GST) 10,254 288

Operating expenditure commitments payable (excluding lease commitments)- within one year 5,302 6,975 - later than one year but not later than five years 8,216 2,771 - later than five years - -

13,518 9,746

Total commitments for expenditure payable (net of GST) 23,772 10,034

Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are recorded below at their nominal value and inclusive of GST. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the balance sheet.

Total operating expenditure commitments(excluding lease commitments)

36


7 Taxation and transactions with the State

Structure7.1 Income tax7.2 Deferred tax7.3 Dividends

7.1 Income tax2019 2018

Restated$'000 $'000

(a) Income tax expenseCurrent tax/(benefit) 7.1(c) 1,956 2,196 Movement in deferred tax (1,734) (1,356) Under/(over) (75) (41) Income tax expense/(benefit) recognised in the statement of comprehensive income

147 799

Deferred income tax (benefit)/expense included in income tax expense comprises:(Increase)/decrease in deferred tax assets 7.2(a) (251) 145 (Decrease) in deferred tax liabilities 7.2 (b) (1,483) (1,501)

(1,734) (1,356)

VPCM is subject to the National Tax Equivalent Regime (NTER). In accordance with this legislation, VPCM is required to pay to the State Government Consolidated Fund, amounts determined to be equivalent to the amounts that would be payable by VPCM if it was subject to the Income Tax Assessment Act 1936 (Cwlth) and Income Tax Assessment Act 1997 (Cwlth).

The tax expenses or income represents the tax payable on the current year's taxable income or tax loss based on the prevailing income tax rate, adjusted for changes in deferred tax assets and liabilities.

37



7.1 Income tax expense (continued)2019 2018

$'000 $'000(b) Numerical reconciliation of income tax expense

to prima facie tax payableProfit/(loss) before income tax expense 733 2,545 Tax at the Australian tax rate of 30% (2018 - 30%) 220 763 Under/(over) (75) (41) Tax effect of sundry amounts which are not deductible/(taxable) 2 77 Income tax (benefit)/expense 147 799

(c)Asset revaluation reserve 565 914 Employee benefits reserve (2,860) 114

(2,295) 1,028

Current tax asset - - Income tax liabilities 1,097 1,372

1,097 1,372

Movement in current tax (assets)/liabilities:Carrying amount 1 July 1,372 (10,735) Charged to income tax expense 7.1(a) 1,956 2,196 Under/(over) provision in prior year (32) (33) Employee benefits reserve - correction of error - 114 Income tax instalment (paid)/refund (2,200) 9,830 Carrying amount 30 June 1,097 1,372

Tax expense/(income) relating to items of other comprehensive income

38



7.1 Income tax expense (continued)2019 2018

$'000 $'000(b) Numerical reconciliation of income tax expense

to prima facie tax payableProfit/(loss) before income tax expense 733 2,545 Tax at the Australian tax rate of 30% (2018 - 30%) 220 763 Under/(over) (75) (41) Tax effect of sundry amounts which are not deductible/(taxable) 2 77 Income tax (benefit)/expense 147 799

(c)Asset revaluation reserve 565 914 Employee benefits reserve (2,860) 114

(2,295) 1,028

Current tax asset - - Income tax liabilities 1,097 1,372

1,097 1,372

Movement in current tax (assets)/liabilities:Carrying amount 1 July 1,372 (10,735) Charged to income tax expense 7.1(a) 1,956 2,196 Under/(over) provision in prior year (32) (33) Employee benefits reserve - correction of error - 114 Income tax instalment (paid)/refund (2,200) 9,830 Carrying amount 30 June 1,097 1,372

Tax expense/(income) relating to items of other comprehensive income

38


2019 2018$'000 $'000

7.2 Deferred tax

(a) The balance comprises temporary differences attributable to:Employee benefits 8,905 5,803 Provision (13) (35) Income received in advance 55 53 Lease Incentive Liability 60 - Accrued expenses 94 92

9,101 5,914

Movement in deferred tax assets:Carrying amount 1 July 5,914 6,058 Credited/(charged) to Comprehensive Operating Statement 7.1(a) 251 (145) Under/(over) 76 - (Credited)/charged to Statement of Equity 2,860 - Carrying amount 30 June 9,101 5,914

(b) Deferred tax liabilities

The balance comprises temporary differences attributable to:Depreciation 13,792 15,241 Revalued land 914 914 Revalued buildings 565 -

15,271 16,155

Movement in deferred tax liabilities:Carrying amount 1 July 16,155 16,750 (Credited)/charged to Comprehensive Operating Statement 7.1 (a) (1,483) (1,501) Under/(over) 33 (8) (Credited)/charged to Statement of Equity 565 914 Carrying amount 30 June 15,270 16,155

39



7.2 Deferred tax (continued)

7.3 Dividends

Deferred income tax liabilities are recognised for all taxable temporary differences.

VPCM pays dividends in accordance with a determination of the Treasurer of Victoria under the Transport Integration Act 2010 (Vic). The obligation to pay a dividend arises after consultation between VPCM’s Board, the Minister for Ports and the Treasurer of Victoria. Following this consultation process, the Treasurer makes a formal determination. Only dividends declared on or before reporting date are recognised as a liability.

For the current reporting period, the dividends declared was nil (2018: Nil).

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and VPCM intends to settle its current tax assets and liabilities on a net basis.

No deferred tax assets and liabilities will be recognised from the initial recognition of an asset or liability, excluding a business combination where there is no effect on accounting or taxable profit or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date.

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise these temporary differences.

40


7.4 Correction of prior period error

Note 7.1(c) Movement in current tax (assets)/liabilities 2018 Restated

2018 Previously

reportedCarrying amount 1 July (10,735) (11,640) Charged to income tax expense 2,196 2,196 Under/(over) provision in prior year (33) (33) Employee benefits reserve - correction of error 114 - Income tax instalment (paid)/refund 9,830 9,830 Carrying amount 30 June 1,372 353

Note 9.2.2(a) Movement in employee benefits reserve 2018 Restated

2018 Previously

reportedCarrying amount 1 July 2,113 3,018 Movements in actuarial gains/losses 266 380 Carrying amount 30 June 2,379 3,398

During the 2018 and prior financial years, the Corporation did not properly account for the movement in Provision for PMA Super booked against the Employee Benefits Reserve in calculating its NTER tax liability. This error had the effect of understating the Provision for Income Tax and overstating the Employee Benefits Reserve balance by $1,019,400 as at 30 June 2018 (1 July 2017: $905,000). The Employee benefits reserve movement in Other Comprehensive Income for the year ended 30 June 2018 was also overstated by $114,000. The prior period error did not affect the deferred tax balance attributable to the Provision for PMA Super.

The error has been corrected by restating each of the affected financial statement line items for the years in which the error occurred, as follows:

41



7.2 Deferred tax (continued)

7.3 Dividends

Deferred income tax liabilities are recognised for all taxable temporary differences.

VPCM pays dividends in accordance with a determination of the Treasurer of Victoria under the Transport Integration Act 2010 (Vic). The obligation to pay a dividend arises after consultation between VPCM’s Board, the Minister for Ports and the Treasurer of Victoria. Following this consultation process, the Treasurer makes a formal determination. Only dividends declared on or before reporting date are recognised as a liability.

For the current reporting period, the dividends declared was nil (2018: Nil).

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and VPCM intends to settle its current tax assets and liabilities on a net basis.

No deferred tax assets and liabilities will be recognised from the initial recognition of an asset or liability, excluding a business combination where there is no effect on accounting or taxable profit or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the reporting date.

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise these temporary differences.

40


7.4 Correction of prior period error

Note 7.1(c) Movement in current tax (assets)/liabilities 2018 Restated

2018 Previously

reportedCarrying amount 1 July (10,735) (11,640) Charged to income tax expense 2,196 2,196 Under/(over) provision in prior year (33) (33) Employee benefits reserve - correction of error 114 - Income tax instalment (paid)/refund 9,830 9,830 Carrying amount 30 June 1,372 353

Note 9.2.2(a) Movement in employee benefits reserve 2018 Restated

2018 Previously

reportedCarrying amount 1 July 2,113 3,018 Movements in actuarial gains/losses 266 380 Carrying amount 30 June 2,379 3,398

During the 2018 and prior financial years, the Corporation did not properly account for the movement in Provision for PMA Super booked against the Employee Benefits Reserve in calculating its NTER tax liability. This error had the effect of understating the Provision for Income Tax and overstating the Employee Benefits Reserve balance by $1,019,400 as at 30 June 2018 (1 July 2017: $905,000). The Employee benefits reserve movement in Other Comprehensive Income for the year ended 30 June 2018 was also overstated by $114,000. The prior period error did not affect the deferred tax balance attributable to the Provision for PMA Super.

The error has been corrected by restating each of the affected financial statement line items for the years in which the error occurred, as follows:

41



8 RISKS, CONTINGENCIES AND VALUATION JUDGEMENTS

Introduction

Structure8.1 Financial instruments specific disclosures8.2 Contingent assets and contingent liabilities8.3 Fair value determination

8.1 Financial instruments specific disclosures

Introduction

Categories of financial instruments

(i) Financial assets at amortised cost

VPCM is exposed to risk from its activities and outside factors. In addition, it is often necessary to make judgements and estimates associated with recognition and measurement of items in the financial statements. This section sets out financial instrument specific information, (including exposures to financial risks) as well as those items that are contingent in nature or require a higher level of judgement to be applied, which for VPCM related mainly to fair value determination.

Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of the VPCM’s activities, certain financial assets and financial liabilities arise under statute rather than a contract (for example taxes, fines and penalties). Such assets and liabilities do not meet the definition of financial instruments in AASB 132 Financial Instruments: Presentation.

Financial assets measured at amortised cost are financial instruments which meet both of the following criteria and are not designated at fair value through profit or loss: - it is held within a business model whose objective is to hold assets to collect contractual cashflows; and- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

VPCM recognises the following financial assets in this category:- cash and deposits- receivables (excluding statutory receivables); and- term deposits.

42




Introduction

Structure8.1 Financial instruments specific disclosures8.2 Contingent assets and contingent liabilities8.3 Fair value determination

8.1 Financial instruments specific disclosures

Introduction

Categories of financial instruments

(i) Financial assets at amortised cost

VPCM is exposed to risk from its activities and outside factors. In addition, it is often necessary to make judgements and estimates associated with recognition and measurement of items in the financial statements. This section sets out financial instrument specific information, (including exposures to financial risks) as well as those items that are contingent in nature or require a higher level of judgement to be applied, which for VPCM related mainly to fair value determination.

Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of the VPCM’s activities, certain financial assets and financial liabilities arise under statute rather than a contract (for example taxes, fines and penalties). Such assets and liabilities do not meet the definition of financial instruments in AASB 132 Financial Instruments: Presentation.

Financial assets measured at amortised cost are financial instruments which meet both of the following criteria and are not designated at fair value through profit or loss: - it is held within a business model whose objective is to hold assets to collect contractual cashflows; and- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

VPCM recognises the following financial assets in this category:- cash and deposits- receivables (excluding statutory receivables); and- term deposits.

42



8.1 Financial instruments specific disclosures (continued)

(ii) Financial liabilities at amortised costFinancial instrument liabilities are initially recognised on the date they are originated. They are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial instruments are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest-bearing liability, using the weighted average interest rate method.

Financial instrument liabilities measured at amortised cost include VPCM's leased motor vehicles, contractual payables, deposits held and advances received, and interest-bearing arrangements other than those designated at fair value through profit or loss.

(iii) Impairment of financial assetsAASB 9 replaces the 'incurred loss' model in AASB 139 with an 'expected credit loss' (ECL) model. The new impairment model applies to financial assets measured at amortised cost. Under AASB 9, credit losses are recognised earlier than under AASB 139. The financial assets at amortised cost consist of trade receivables, cash and cash equivalents, revenue receivable and term deposits.

Under AASB 9, loss allowances are measured on either of the following bases: • 12-month ECLs: these are ECLs that result from possible default events within the 12 months after the • lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument.

VPCM measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured as 12-month ECLs:

• debt securities that are determined to have low credit risk at the reporting date; and • other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

No provision for Expected Credit Loss has been recognised given the low level of historical impairment loss and current year collection experience.



8 RISKS, CONTINGENCIES AND VALUATION JUDGEMENTS2019 2018

$'000 $'0008.1.1 Financial instruments: Categorisation

Contractual financial assetsCurrent assetsCash and cash equivalents 23,928 19,914 Receivables - Trade receivables 6,580 5,214 Total contractual financial assets 30,508 25,129

Contractual financial liabilitiesLiabilities at amortised costCurrent liabilitiesPayables 4,366 1,858 Total contractual financial liabilities 4,366 1,858

8.1.2 Financial instruments: Net holding gain/(loss)on financial instruments by category

307 174 (5) (9)

Total 302 164

8.1.3 Financial risk management objectives and policies

The main purpose in holding financial instruments is to prudentially manage VPCM's financial risks within the State Government's policy parameters. VPCM's main financial risks include liquidity risk and interest rate risk. VPCM manages these financial risks in accordance with its Treasury Management Policy.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect to each class of financial asset, financial liability and equity instrument above are disclosed in the relevant notes.

Interest income on contractual financial assets (i)Interest expense on contractual financial liabilities (ii)

(i) The net holding gain/(loss) on contractual financial assets equates to the interest income on cash and cash equivalents.

(ii) The net holding gain/(loss) on contractual financial liabilities equates to the interest expense on interest bearing liabilities.

As a whole, VPCM’s financial risk management program seeks to manage these risks and the associated volatility of its financial performance.

44



8.1.3 Financial risk management objectives and policies (continued)

Financial risk management

Financial instruments: Liquidity risk

Financial instruments: Credit riskCredit risk refers to the risk that the counterparty will default on its contractual obligations resulting in a financial loss to VPCM. The carrying amount of VPCM's financial assets recognised in the Statement of Financial Position, net of any provisions for doubtful debts, represents VPCM's maximum exposure to credit risk from financial assets.VPCM actively manages its credit risk using a range of proocesses and procedures. These include performing credit checks for new and existing customers as required, obtaining bank guarantees where considered appropriate and monitoring the performance of significant trading partners on an ongoing basis.VPCM does not engage in hedging for its contractual assets and only deals with banks with high credit ratings.No provision for impairment of financial assets has been recognised based on past experience and current and expected changes in client's credit ratings. VPCM's exposure to credit risk is low as detailed in the ageing anaysis provided in Note 5.1.

VPCM's maximum exposure to liquidity risk is the carrying amount of financial liabilities as disclosed in Note 5.2.

Liquidity risk is the risk that VPCM will be unable to meet its financial obligations as and when they fall due. VPCM, cognisant of the seasonal nature of the cruise industry, manages its liquidity risk to ensure that adequate cash funds are available at all times to meet its commitments as they arise. This objective is met through:- sound cash management practices;- regular identification and monitoring of the maturity profile of liquid assets and liabilities together with regular cash flow forecasting;- having sufficient temporary purpose financial accommodation from Treasury Corporation of Victoria; and- investments that are limited to highly liquid and secure assets.

VPCM maintains a comprehensive Risk Management System which is integrated with its business planning processes. There is a formally documented Risk Management Policy, Risk Management Procedures and a framework which are consistently applied across all levels of the business. A Financial Risk Management Assessment is presented to the Audit and Finance Committee of the Board on an annual basis in line with the requirements of the Standing Directions of the Minister for Finance, under the Financial Management Act 1994 (Vic). In addition, a quarterly risk status report is presented to the Risk Committee and the Board outlining VPCM's significant material risks including financial risks. Each risk is reviewed regularly against the risk matrix to ensure the level of risk is appropriate and the treatment and controls are adequate.

45



8 RISKS, CONTINGENCIES AND VALUATION JUDGEMENTS2019 2018

$'000 $'0008.1.1 Financial instruments: Categorisation

Contractual financial assetsCurrent assetsCash and cash equivalents 23,928 19,914 Receivables - Trade receivables 6,580 5,214 Total contractual financial assets 30,508 25,129

Contractual financial liabilitiesLiabilities at amortised costCurrent liabilitiesPayables 4,366 1,858 Total contractual financial liabilities 4,366 1,858

8.1.2 Financial instruments: Net holding gain/(loss)on financial instruments by category

307 174 (5) (9)

Total 302 164

8.1.3 Financial risk management objectives and policies

The main purpose in holding financial instruments is to prudentially manage VPCM's financial risks within the State Government's policy parameters. VPCM's main financial risks include liquidity risk and interest rate risk. VPCM manages these financial risks in accordance with its Treasury Management Policy.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect to each class of financial asset, financial liability and equity instrument above are disclosed in the relevant notes.

Interest income on contractual financial assets (i)Interest expense on contractual financial liabilities (ii)

(i) The net holding gain/(loss) on contractual financial assets equates to the interest income on cash and cash equivalents.

(ii) The net holding gain/(loss) on contractual financial liabilities equates to the interest expense on interest bearing liabilities.

As a whole, VPCM’s financial risk management program seeks to manage these risks and the associated volatility of its financial performance.

44




Financial risk management

Financial instruments: Liquidity risk

Financial instruments: Credit riskCredit risk refers to the risk that the counterparty will default on its contractual obligations resulting in a financial loss to VPCM. The carrying amount of VPCM's financial assets recognised in the Statement of Financial Position, net of any provisions for doubtful debts, represents VPCM's maximum exposure to credit risk from financial assets.VPCM actively manages its credit risk using a range of proocesses and procedures. These include performing credit checks for new and existing customers as required, obtaining bank guarantees where considered appropriate and monitoring the performance of significant trading partners on an ongoing basis.VPCM does not engage in hedging for its contractual assets and only deals with banks with high credit ratings.No provision for impairment of financial assets has been recognised based on past experience and current and expected changes in client's credit ratings. VPCM's exposure to credit risk is low as detailed in the ageing anaysis provided in Note 5.1.

VPCM's maximum exposure to liquidity risk is the carrying amount of financial liabilities as disclosed in Note 5.2.

Liquidity risk is the risk that VPCM will be unable to meet its financial obligations as and when they fall due. VPCM, cognisant of the seasonal nature of the cruise industry, manages its liquidity risk to ensure that adequate cash funds are available at all times to meet its commitments as they arise. This objective is met through:- sound cash management practices;- regular identification and monitoring of the maturity profile of liquid assets and liabilities together with regular cash flow forecasting;- having sufficient temporary purpose financial accommodation from Treasury Corporation of Victoria; and- investments that are limited to highly liquid and secure assets.

VPCM maintains a comprehensive Risk Management System which is integrated with its business planning processes. There is a formally documented Risk Management Policy, Risk Management Procedures and a framework which are consistently applied across all levels of the business. A Financial Risk Management Assessment is presented to the Audit and Finance Committee of the Board on an annual basis in line with the requirements of the Standing Directions of the Minister for Finance, under the Financial Management Act 1994 (Vic). In addition, a quarterly risk status report is presented to the Risk Committee and the Board outlining VPCM's significant material risks including financial risks. Each risk is reviewed regularly against the risk matrix to ensure the level of risk is appropriate and the treatment and controls are adequate.

45





Interest rate risk and financial liability and financial asset maturity analysis

2019 Floating interest

Non-interest bearing

1 year or less

Total

$'000 $'000 $'000Financial assetsCash and cash equivalents 23,928 - 23,928 Receivables - Trade receivables - 6,580 6,580

23,928 6,580 30,508 Weighted average interest rate 1.21% -% -%

Financial liabilitiesPayables - 4,366 4,366

- 4,366 4,366 Weighted average interest rate 1.42% -% -%

Net financial assets/(liabilities) 23,928 2,214 26,142



1 year or less

Total






The exposure to interest rate risks, the effective weighted average interest rates for financial assets and financial liabilities and their maturity profiles at the reporting date are as follows:

46





Interest rate risk and financial liability and financial asset maturity analysis



1 year or less

Total








1 year or less

Total






The exposure to interest rate risks, the effective weighted average interest rates for financial assets and financial liabilities and their maturity profiles at the reporting date are as follows:

46



8.2 Contingent assets and contingent liabilitiesContingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.

Contingent assetsContingent assets are possible assets that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.These are classified as either quantifiable, where the potential economic benefit is known, or non-quantifiable.

VPCM has no contingent assets as at the reporting date (2018: $Nil).

Contingent liabilitiesContingent liabilities are:- possible obligations that arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or- present obligations that arise from past events but are not recognised because:

- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligations; or- the amount of the obligations cannot be measured with sufficient reliability.

An internal governance review conducted this year has identified potential issues in the way Enterprise Agreement business rules have been interpreted for the purposes of payroll. VPCM considers it has an exposure in this regard but cannot reliably quantify the potential dollar value involved. An analysis of VPCM’s historical payroll data is continuing as part of a formal independent assurance review to finalise the quantum relating to these historical payroll inaccuracies. The review will also advise the steps required for remediation and the process is expected to be completed within six months from the date of this report (2018: $Nil).

47




8.3 Fair value determination

8.3.1 Net fair value of non-financial physical assetsLand, infrastructure assets and plant and equipment

Level 1 Level 2 Level 3Asset class $'000 $'000 $'000 $'000Land 16,951 - 16,951 - Infrastructure 82,761 - - 82,761 Plant and equipment 14,131 - - 14,131 Total 113,843 - 16,951 96,892

VPCM's property, plant and equipment assets are measured and disclosed at fair value for financial reporting purposes as per Note 4.1. None of VPCM's financial assets and liabilities are disclosed at fair value for financial reporting purposes after initial recognition. In order to determine fair value of an asset or a liability, VPCM uses market-observable data to the extent it is available. The carrying value of all of VPCM's financial assets and liabilities approximate their fair value.

VPCM engages external, independent and qualified valuers to determine the fair value of its fixed assets every five years. The last full independent valuation was performed as at 30 June 2015.

In accordance with FRD103H: Non-Financial Physical Assets requirements , as at each balance date, management assesses the compounded impact of movement in the fair value inputs since the last full revaluation date. To the extent that the compounded movement in the fair value inputs is greater than 10 % but not in excess of 40%, a managerial revaluation will be performed. To the extent that the compounded movement in the fair value inputs equals or exceeds 40%, a full revaluation by external, independent and qualified valuers will be performed. No adjustment to carrying amount is required if the compounded movement in the fair value inputs is less than or equal to 10%.

As at 30 June 2019, a managerial revaluation was completed for Buildings as the compounded movement in the fair value inputs since the last full revaluation date was between 10 % and 40 %.

(a) Fair value measurement hierarchy for assets as at 30 June 2019

Fair value measurement at reporting period using

Carrying amount

A managerial revaluation was completed for land in the prior financial year 2018.

As the compounded movement in the fair value inputs for Infrastructure and Plant and equipment was less than 10 %, management assessed that no adjustment to carrying amount is required. Values calculated during the 30 June 2015 full independent valuation were escalated to 30 June 2019 with relevant consumer price indices and depreciation rates to estimate the magnitude of the compound movement in the fair value inputs.

It should be noted that since the fair value of the Land has been determined on the basis of market-based evidence its classification with respect to the fair value hierarchy has been determined as being Level 2 in nature. This is consistent with the prior year.




8.3 Fair value determination

8.3.1 Net fair value of non-financial physical assetsLand, infrastructure assets and plant and equipment


VPCM's property, plant and equipment assets are measured and disclosed at fair value for financial reporting purposes as per Note 4.1. None of VPCM's financial assets and liabilities are disclosed at fair value for financial reporting purposes after initial recognition. In order to determine fair value of an asset or a liability, VPCM uses market-observable data to the extent it is available. The carrying value of all of VPCM's financial assets and liabilities approximate their fair value.

VPCM engages external, independent and qualified valuers to determine the fair value of its fixed assets every five years. The last full independent valuation was performed as at 30 June 2015.

In accordance with FRD103H: Non-Financial Physical Assets requirements , as at each balance date, management assesses the compounded impact of movement in the fair value inputs since the last full revaluation date. To the extent that the compounded movement in the fair value inputs is greater than 10 % but not in excess of 40%, a managerial revaluation will be performed. To the extent that the compounded movement in the fair value inputs equals or exceeds 40%, a full revaluation by external, independent and qualified valuers will be performed. No adjustment to carrying amount is required if the compounded movement in the fair value inputs is less than or equal to 10%.

As at 30 June 2019, a managerial revaluation was completed for Buildings as the compounded movement in the fair value inputs since the last full revaluation date was between 10 % and 40 %.

(a) Fair value measurement hierarchy for assets as at 30 June 2019


Carrying amount

A managerial revaluation was completed for land in the prior financial year 2018.

As the compounded movement in the fair value inputs for Infrastructure and Plant and equipment was less than 10 %, management assessed that no adjustment to carrying amount is required. Values calculated during the 30 June 2015 full independent valuation were escalated to 30 June 2019 with relevant consumer price indices and depreciation rates to estimate the magnitude of the compound movement in the fair value inputs.

It should be noted that since the fair value of the Land has been determined on the basis of market-based evidence its classification with respect to the fair value hierarchy has been determined as being Level 2 in nature. This is consistent with the prior year.



8.3.1 Net fair value of non-financial physical assets (continued)

Infrastructure

$'000

Plant and equipment

$'000Opening balance - 1 July 2018 85,707 15,412 Transfer from Capital Work-In-Progress (CWIP) 1,511 787 Disposals - (163) Revaluation 1,987 - Depreciation (6,445) (1,905) Closing balance - 30 June 2019 82,761 14,131

Carrying amount


Infrastructure

$'000

Plant andequipment

$'000Opening balance - 1 July 2017 77,498 16,765 Transfer from Capital Work-In-Progress (CWIP) 14,046 558 Depreciation (5,838) (1,911) Closing balance - 30 June 2018 85,707 15,412

Reconciliation of Level 3 fair value as at 30 June 2018:

(b) Fair value measurement hierarchy for assets as at 30 June 2018


Reconciliation of Level 3 fair value as at 30 June 2019:

2



9 OTHER DISCLOSURES

Introduction

Structure9.1 Ex-gratia expenses9.2 Equity disclosure9.3 Responsible persons9.4 Remuneration of executives9.5 Related parties9.6 Remuneration of auditors9.7 Subsequent events9.8 Australian Accounting Standards issued that are not yet effective

9.1 Ex-gratia expenses

This section includes additional material disclosures required by accounting standards or otherwise, for the understanding of this financial report.

In accordance with FRD 11A Disclosure of Ex-Gratia Expenses VPCM must disclose in aggregate the total amount of material (greater than $5,000) expenses.

For 2018-19, VPCM incurred no ex-gratia expenses (2018: $0).

50


9 OTHER DISCLOSURES

9.2 Equity disclosure

9.2.1 Contributed capital

2019 2018$'000 $'000

Carrying amount 1 July 6,000 1,000

Capital contribution from the Department of Transport 1,335 5,000

Carrying amount 30 June 7,335 6,000

Capital management

Consistent with applicable Australian reporting requirements and the Financial Management Act 1994 (Vic) , transfers and appropriation for additions of net assets between VPCM and State Government Departments designated as contributed capital, are recognised as capital transactions.Transfers of net assets arising from administrative restructures and/or from all other arrangements which are deemed to be contributions by owners, where there is insufficient contributed capital for distribution, are recognised as an expense by the transferor and income by the transferee in accordance with FRD 119A - Transfers through Contributed Capital. Alternatively, if the transferor has approval to reclassify sufficient accumulated funds to contributed capital prior to, or at, the time of the asset transfer date then a distribution from contributed capital can occur.

VPCM manages capital risk through the monitoring and reporting of key ratios to the Board on a monthly basis.The key ratios monitored are based on DTF's Treasury Management Guidelines and that future decisions regarding capital investment and funding requirements ensure that VPCM does not breach these key ratios. Target maximum gearing is between 0% - 35%.There have been no changes to the general processes and procedures that are applied by VPCM in managing capital risk since 2018.VPCM does not have any externally imposed debt-related covenants, financial ratios or any other capital requirements.



9 OTHER DISCLOSURES

Introduction

Structure9.1 Ex-gratia expenses9.2 Equity disclosure9.3 Responsible persons9.4 Remuneration of executives9.5 Related parties9.6 Remuneration of auditors9.7 Subsequent events9.8 Australian Accounting Standards issued that are not yet effective

9.1 Ex-gratia expenses

This section includes additional material disclosures required by accounting standards or otherwise, for the understanding of this financial report.

In accordance with FRD 11A Disclosure of Ex-Gratia Expenses VPCM must disclose in aggregate the total amount of material (greater than $5,000) expenses.

For 2018-19, VPCM incurred no ex-gratia expenses (2018: $0).

50


9 OTHER DISCLOSURES

9.2 Equity disclosure

9.2.1 Contributed capital

2019 2018$'000 $'000

Carrying amount 1 July 6,000 1,000

Capital contribution from the Department of Transport 1,335 5,000

Carrying amount 30 June 7,335 6,000

Capital management

Consistent with applicable Australian reporting requirements and the Financial Management Act 1994 (Vic) , transfers and appropriation for additions of net assets between VPCM and State Government Departments designated as contributed capital, are recognised as capital transactions.Transfers of net assets arising from administrative restructures and/or from all other arrangements which are deemed to be contributions by owners, where there is insufficient contributed capital for distribution, are recognised as an expense by the transferor and income by the transferee in accordance with FRD 119A - Transfers through Contributed Capital. Alternatively, if the transferor has approval to reclassify sufficient accumulated funds to contributed capital prior to, or at, the time of the asset transfer date then a distribution from contributed capital can occur.

VPCM manages capital risk through the monitoring and reporting of key ratios to the Board on a monthly basis.The key ratios monitored are based on DTF's Treasury Management Guidelines and that future decisions regarding capital investment and funding requirements ensure that VPCM does not breach these key ratios. Target maximum gearing is between 0% - 35%.There have been no changes to the general processes and procedures that are applied by VPCM in managing capital risk since 2018.VPCM does not have any externally imposed debt-related covenants, financial ratios or any other capital requirements.



9 OTHER DISCLOSURES

9.2.1 Contributed capital (continued)

9.2.2 Reserves2019 2018

$'000 $'000ReservesAsset revaluation reserve 41,777 40,458 Employee benefits reserve (4,294) 2,379

37,483 42,837

Movement in asset revaluation reserve:Carrying amount 1 July 40,458 38,326

Gain from asset revaluation 1,884 3,046 Tax effect from asset revaluation (565) (914) Total movement in asset revaluation reserve 1,319 2,132 Carrying amount 30 June 41,777 40,458

Movement in employee benefits reserve:Carrying amount 1 July 2,379 2,113

Movements in actuarial gains/(losses) (9,533) 380 Tax effect from movements in actuarial gains/(losses) 2,860 (114) Total movement in employee benefits reserve (6,673) 266 Carrying amount 30 June (4,294) 2,379

VPCM’s Treasury Management Policy and procedures are in compliance with the Borrowing and Investment Powers Act 1987 (Vic), the DTF's Treasury Management Guidelines and Standing Direction 4.5.6 Treasury Risk Management.

In accordance with the Borrowings and Investment Powers Act 1987 (Vic), the Treasurer granted a temporary purpose financial accommodation of $20 million to VPCM for the reporting period 1 July 2018 to 30 June 2019 (2018: $20 million), which has also been extended for the year ending 30 June 2020.

This reserve has been set up in accordance with the revised AASB 119 Employee Benefits to capture the movements in the actuarial gains and losses in respect of the Port of Melbourne Superannuation Fund. Refer to Note 3.2.3 for further details.

VPCM has a separate asset revaluation reserve for Land, Infrastructure and Plant and equipment. The reserves record the increments and decrements in the fair value of the assets net of the tax effect.

2


OTHER DISCLOSURES

9.3 Responsible persons

(a) Names

Responsible Ministers:The Hon. Luke Donnellan MP Minister for Ports(Jul 18 to Dec 18)The Hon. Melissa Horne MP Minister for Ports and Freight (Dec 18 to Jun 19 )The Hon. Tim Pallas MP Treasurer of Victoria

Directors Mr J CainMs J van Reyk Ms D BealeMr P Tuohey

Accountable Officer: Ms R Johnson Chief Executive Officer

(b) Remuneration

2019 2018Income band $'000 $'000$20,000 to $29,999 - 1 $50,000 to $59,999 3 3 $80,000 to $89,999 1 1 $320,000 to $329,999 - 1 $400,000 to $409,999 1 - Total number of responsible persons 5 6 Total remuneration ($ 000s) $ 656 $ 513

In accordance with the Ministerial Directions issued by the Assistant Treasurer under the Financial Management Act 1994 , the following disclosures are made regarding responsible persons for the reporting period.

The names of persons who held the positions of Ministers and Accountable Officers in VPCM at any time during the financial year were:

Chairman Deputy Chair

Remuneration received or receivable by responsible persons in connection with the management of VPCM during the reporting period was:



9 OTHER DISCLOSURES

9.2.1 Contributed capital (continued)

9.2.2 Reserves2019 2018

$'000 $'000ReservesAsset revaluation reserve 41,777 40,458 Employee benefits reserve (4,294) 2,379

37,483 42,837

Movement in asset revaluation reserve:Carrying amount 1 July 40,458 38,326

Gain from asset revaluation 1,884 3,046 Tax effect from asset revaluation (565) (914) Total movement in asset revaluation reserve 1,319 2,132 Carrying amount 30 June 41,777 40,458

Movement in employee benefits reserve:Carrying amount 1 July 2,379 2,113

Movements in actuarial gains/(losses) (9,533) 380 Tax effect from movements in actuarial gains/(losses) 2,860 (114) Total movement in employee benefits reserve (6,673) 266 Carrying amount 30 June (4,294) 2,379

VPCM’s Treasury Management Policy and procedures are in compliance with the Borrowing and Investment Powers Act 1987 (Vic), the DTF's Treasury Management Guidelines and Standing Direction 4.5.6 Treasury Risk Management.

In accordance with the Borrowings and Investment Powers Act 1987 (Vic), the Treasurer granted a temporary purpose financial accommodation of $20 million to VPCM for the reporting period 1 July 2018 to 30 June 2019 (2018: $20 million), which has also been extended for the year ending 30 June 2020.

This reserve has been set up in accordance with the revised AASB 119 Employee Benefits to capture the movements in the actuarial gains and losses in respect of the Port of Melbourne Superannuation Fund. Refer to Note 3.2.3 for further details.

VPCM has a separate asset revaluation reserve for Land, Infrastructure and Plant and equipment. The reserves record the increments and decrements in the fair value of the assets net of the tax effect.

2


OTHER DISCLOSURES

9.3 Responsible persons

(a) Names

Responsible Ministers:The Hon. Luke Donnellan MP Minister for Ports(Jul 18 to Dec 18)The Hon. Melissa Horne MP Minister for Ports and Freight (Dec 18 to Jun 19 )The Hon. Tim Pallas MP Treasurer of Victoria

Directors Mr J CainMs J van Reyk Ms D BealeMr P Tuohey

Accountable Officer: Ms R Johnson Chief Executive Officer

(b) Remuneration

2019 2018Income band $'000 $'000$20,000 to $29,999 - 1 $50,000 to $59,999 3 3 $80,000 to $89,999 1 1 $320,000 to $329,999 - 1 $400,000 to $409,999 1 - Total number of responsible persons 5 6 Total remuneration ($ 000s) $ 656 $ 513

In accordance with the Ministerial Directions issued by the Assistant Treasurer under the Financial Management Act 1994 , the following disclosures are made regarding responsible persons for the reporting period.

The names of persons who held the positions of Ministers and Accountable Officers in VPCM at any time during the financial year were:

Chairman Deputy Chair

Remuneration received or receivable by responsible persons in connection with the management of VPCM during the reporting period was:



9 OTHER DISCLOSURES

9.4 Remuneration of executives

2019$'000

2018$'000

Short-term employee benefits 2,354 2,348 Post-employment benefits 206 173 Other long-term benefits 67 49 Total remuneration 2,627 2,570 Total number of executives (i) 14 13Total annualised employee equivalents (ii) 11.1 10.2

(i) The total number of executive officers includes persons who meet the definition of Key Management Personnel (KMP) of the entity under AASB 124 Related Party Disclosures and are also reported within the related parties note disclosure.

(ii) Annualised employee equivalent is based on paid working hours of 38 ordinary hours per week over the 52 weeks for a reporting period.

The number of executive officers, other than ministers and accountable officers, and their total remuneration during the reporting period are shown in the table below. Total annualised employee equivalents provides a measure of full-time equivalent executive officers over the reporting period. Remuneration comprises employee benefits in all forms of consideration paid, payable or provided by the entity, or on behalf of the entity, in exchange for services rendered, and is disclosed in the following categories.

Other long-term benefits include long service leave, other long service benefits or deferred compensation.

Termination benefits include termination of employment payments, such as severance packages.

Remuneration of executive officers(Including Key Management Personnel - see related parties note)

Post-employment benefits include pensions and other retirement benefits paid or payable on a discrete basis when employment has ceased.

Short-term employee benefits include amounts such as wages, salaries, annual leave or sick leave that are usually paid or payable on a regular basis, as well as non-monetary benefits such as allowances and free or subsidised goods or services.

54


9 OTHER DISCLOSURES

9.5 Related parties

2019 2018$'000 $'000

Operating revenue and expenses CGU Workers' Compensation (58) (57)

- 1,089 (61) -

Department of Transport 2,190 - State Revenue Office (522) (482) South East Water (63) (123) Victorian Auditor General's Office (54) (86) Vic Roads - (182) Visit Victoria - (22) Other revenue and expenses (95) (76) Finance charges Treasury Corporation of Victoria - (9) Income tax instalments Department of Treasury and Finance (2,200) 9,830 Capital contribution

1,335 - Department of Treasury and Finance - 5,000

The Victorian State Government prepares consolidated financial statements relating to its controlled entities. For the purpose of preparing the State Government's Annual Financial Report (AFR), transactions which VPCM has undertaken with other State Government controlled entities will be eliminated in the State Government's AFR.The aggregate amounts of VPCM's transactions conducted during the year and its assets and liabilities at the end of the year which relate to State Government controlled entities are as follows:

Department Of Transport

Department of Economic Development, Jobs & Precinct Department of Health and Human Services

VPCM is a wholly owned and controlled entity of the State of Victoria.Related parties of VPCM include:- all key management personnel and their close family members and personal business interests (controlled entities, joint ventures and entities they have significant influence over);- all Cabinet Ministers and their close family members; and- all departments and public sector entities that are controlled and consolidated into the whole of state consolidated financial statements.

All related party transactions have been entered into on an arm’s length basis.

Significant transactions with government-related entities



9 OTHER DISCLOSURES

9.5 Related parties

2019 2018$'000 $'000

Operating revenue and expenses CGU Workers' Compensation (58) (57)

- 1,089 (61) -

Department of Transport 2,190 - State Revenue Office (522) (482) South East Water (63) (123) Victorian Auditor General's Office (54) (86) Vic Roads - (182) Visit Victoria - (22) Other revenue and expenses (95) (76) Finance charges Treasury Corporation of Victoria - (9) Income tax instalments Department of Treasury and Finance (2,200) 9,830 Capital contribution

1,335 - Department of Treasury and Finance - 5,000

The Victorian State Government prepares consolidated financial statements relating to its controlled entities. For the purpose of preparing the State Government's Annual Financial Report (AFR), transactions which VPCM has undertaken with other State Government controlled entities will be eliminated in the State Government's AFR.The aggregate amounts of VPCM's transactions conducted during the year and its assets and liabilities at the end of the year which relate to State Government controlled entities are as follows:

Department Of Transport

Department of Economic Development, Jobs & Precinct Department of Health and Human Services

VPCM is a wholly owned and controlled entity of the State of Victoria.Related parties of VPCM include:- all key management personnel and their close family members and personal business interests (controlled entities, joint ventures and entities they have significant influence over);- all Cabinet Ministers and their close family members; and- all departments and public sector entities that are controlled and consolidated into the whole of state consolidated financial statements.

All related party transactions have been entered into on an arm’s length basis.

Significant transactions with government-related entities



9 OTHER DISCLOSURES

9.5 Related parties (continued)

Mr J Cain - Chairman Ms J van Reyk - Deputy Chair Ms D Beale - Director Mr P Tuohey - Director

Ms R Johnson - Chief Executive Officer Mr J Bazelmans - EGM Business Information and Strategy Captain R Stanbrook - EGM Marine and Navigation Mr M Beattie - EGM Finance and Corporate Support (until 6 February 2019)

2019 2018$'000 $'000

Short-term employee benefits 1,344 1,426 Post-employment benefits 75 77 Other long-term benefits 30 32 Total 1,449 1,535

No transactions have occurred with KMP and their related parties. There are no outstanding balances, including commitments, with such parties.

(i) Note that KMPs are also reported in the disclosure of remuneration of responsible persons (Note 9.3) and executive officers (Note 9.4).

Given the breadth and depth of State government activities, related parties transact with the Victorian public sector in a manner consistent with other members of the public e.g. stamp duty and other government fees and charges. Further employment of processes within the Victorian public sector occur on terms and conditions consistent with the Public Administration Act 2004 (Vic) and Codes of Conduct and Standards issued by the Victorian Public Sector Commission. Procurement processes occur on terms and conditions consistent with the Victorian Government Procurement Board requirements.The terms and conditions of transactions entered into with responsible persons’ related entities occurred within a normal customer and supplier relationship on terms and conditions no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to other entities on an arm’s length basis.

Transactions and balances with key management personnel and other related parties

Key management personnel (KMP) are those who, directly or indirectly, have authority and responsibility for planning, directing and controlling the activities of VPCM. This includes responsible Ministers, Directors, Chief Executive Officer and Executive General Managers. KMP for 2019 are detailed as follows:

The compensation detailed below excludes the salaries and benefits the Portfolio and Shareholder Ministers receive. The Ministers' remuneration and allowances are set by the Parliamentary Salaries and Superannuation Act 1968 (Vic) and are reported within the Department of Parliamentary Services' Financial Report.

Compensation of KMP (i)

2


9 OTHER DISCLOSURES

9.6 Remuneration of auditors

Victorian Auditor-General's Office 2019 2018$'000 $'000

Audit of financial reports 58 56

9.7 Subsequent events

During the year the following fees were paid or payable for services provided by the auditors of VPCM:

Since 30 June 2019 to the date of this report, no matter or circumstance has arisen that, in the opinion of the Directors, has significantly affected or may significantly affect the operations of VPCM, the results of those operations, or the state of affairs of VPCM in future financial years.

57



9 OTHER DISCLOSURES

9.6 Remuneration of auditors

Victorian Auditor-General's Office 2019 2018$'000 $'000

Audit of financial reports 58 56

9.7 Subsequent events

During the year the following fees were paid or payable for services provided by the auditors of VPCM:

Since 30 June 2019 to the date of this report, no matter or circumstance has arisen that, in the opinion of the Directors, has significantly affected or may significantly affect the operations of VPCM, the results of those operations, or the state of affairs of VPCM in future financial years.

57



9 OTHER DISCLOSURES

9.8 Australian Accounting Standards issued that are not yet effective

Reference SummaryApplication

date Impact on VPCM’s financial

statementsAASB 16 Leases

AASB 16 was issued in January 2016 and it replaces AASB 117 Lease. AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117. The standard includes two recognition exemptions for lessees – leases of 'low-value’ assets (e.g. printing and photocopying machines) and short-term leases (i.e. leases with a lease term of 12 months or less). The key changes introduced by AASB 16 include the recognition of most operating leases (which are currently not recognised) on balance sheet.

1 Jan 2019 The assessment has indicated that most operating leases, with the exception of short term and low value leases will come on to the balance sheet and will be recognised as right of use assets with a corresponding lease liability. In the operating statement, the operating lease expense will be replaced by depreciation expense of the asset and an interest charge.There will be no change for lessors as the classification of operating and finance leases remains unchanged.On initial recognition as at 1 July 2019 right of use assets and lease liabilities will increase by approximately $2.1M.

Assessment of the impact of those new standards and interpretations which affect VPCM is set out below:

Certain new accounting standards and interpretations that are deemed relevant to VPCM have been published, but are not mandatory for the 30 June 2019 reporting period. VPCM has not adopted these standards early in accordance with DTF stating that entities must not early adopt

58

9.8 Australian Accounting Standards issued that are not yet effective (continued)



statementsAASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material

This Standard principally amends AASB 101 Presentation of Financial Statements and AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors . The amendments refine and clarify the definition of material in AASB 101 and its application by improving the wording and aligning the definition across AASB Standards and other publications. The amendments also include some supporting requirements in AASB 101 in the definition to give it more prominence and clarify the explanation accompanying the definition of material.

1 Jan 2020 The standard is not expected to have a significant impact on the public sector.

· AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business

· AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative Compensation· AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015 – 2017 Cycle· AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendments, Curtailment or Settlement

In addition to the new standards and amendments above, the AASB has issued a list of other amending standards that are not effective for the 2018-19 reporting period (as listed below). In general, these amending standards include editorial and references changes that are expected to have insignificant impacts on public sector reporting. · AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty over Income Tax Treatments

59



9 OTHER DISCLOSURES

9.8 Australian Accounting Standards issued that are not yet effective



statementsAASB 16 Leases

AASB 16 was issued in January 2016 and it replaces AASB 117 Lease. AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117. The standard includes two recognition exemptions for lessees – leases of 'low-value’ assets (e.g. printing and photocopying machines) and short-term leases (i.e. leases with a lease term of 12 months or less). The key changes introduced by AASB 16 include the recognition of most operating leases (which are currently not recognised) on balance sheet.

1 Jan 2019 The assessment has indicated that most operating leases, with the exception of short term and low value leases will come on to the balance sheet and will be recognised as right of use assets with a corresponding lease liability. In the operating statement, the operating lease expense will be replaced by depreciation expense of the asset and an interest charge.There will be no change for lessors as the classification of operating and finance leases remains unchanged.On initial recognition as at 1 July 2019 right of use assets and lease liabilities will increase by approximately $2.1M.

Assessment of the impact of those new standards and interpretations which affect VPCM is set out below:

Certain new accounting standards and interpretations that are deemed relevant to VPCM have been published, but are not mandatory for the 30 June 2019 reporting period. VPCM has not adopted these standards early in accordance with DTF stating that entities must not early adopt

58

9.8 Australian Accounting Standards issued that are not yet effective (continued)



statementsAASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material

This Standard principally amends AASB 101 Presentation of Financial Statements and AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors . The amendments refine and clarify the definition of material in AASB 101 and its application by improving the wording and aligning the definition across AASB Standards and other publications. The amendments also include some supporting requirements in AASB 101 in the definition to give it more prominence and clarify the explanation accompanying the definition of material.

1 Jan 2020 The standard is not expected to have a significant impact on the public sector.

· AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business

· AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative Compensation· AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015 – 2017 Cycle· AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendments, Curtailment or Settlement

In addition to the new standards and amendments above, the AASB has issued a list of other amending standards that are not effective for the 2018-19 reporting period (as listed below). In general, these amending standards include editorial and references changes that are expected to have insignificant impacts on public sector reporting. · AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty over Income Tax Treatments

59



Section 6:

Appendices


A: Disclosure index

Legislation Requirement Page

Standing Directions and Financial Reporting Directions (FRD)

Report of operations

Charter and purposeFRD 22H Manner of establishment and the relevant Ministers 1, 9, 22FRD 22H Purpose, functions, powers and duties 9-11FRD 22H Nature and range of services provided 9

Management and structureFRD 22H Organisational structure 26

Financial and other informationFRD 10A Disclosure index 104FRD 10A StatementofCorporateIntentpursuanttosection79QoftheTransport Integration Act

2010 (Vic)106

FRD 12B Disclosure of major contracts 19, 38FRD 15E Executiveofficerdisclosures 98FRD 22H Occupational health and safety policy 28FRD 22H Employment and conduct principles 29FRD 22H Summaryofthefinancialresultsfortheyear 17

FRD 22H Significantchangesinfinancialpositionduringtheyear 19FRD 22H Major changes or factors affecting performance 19FRD 22H Subsequent events 19FRD 22H Application and operation of Freedom of Information Act 1982 (Vic) 38FRD 22H Compliance with building and maintenance provisions of Building Act 1993 (Vic) 39FRD 22H Statement on Competitive Neutrality Policy 39FRD 22H Application and operation of the Protected Disclosure Act 2012 (Vic) 39-40FRD 22H Details of consultancies over $10,000 37FRD 22H Details of consultancies under $10,000 37FRD 22H Disclosure of government advertising expenditure 36FRD 22H Disclosure of ICT expenditure 37FRD 22H Statement of availability of other information 40FRD 25D Local Jobs First 36FRD 29C Workforce data disclosures 32FRD 30D Standard Requirements for the design and print of annual reports 1-117

Compliance attestation and declarationSD 5.1.4 Attestation for compliance with Ministerial Standing Direction 41SD 5.2.3 Declaration in report of operations 1

Financial statementsSD 5.2.2 Declarationinfinancialstatements 46

The annual report of VPCM is prepared in accordance with all relevant Victorian legislations and pronouncements.ThisindexhasbeenpreparedtofacilitateidentificationofVPCM’scompliancewithstatutory disclosure requirements.


Legislation Requirement Page

Standing Directions and Financial Reporting Directions (FRD)

Other requirements under Standing Direction 5.2SD 5.2.1 (a) Compliance with Ministerial Directions 57SD 5.2.1 (a) Compliance with Australian accounting standards and other authoritative pronouncements 57

Other disclosures as required by FRDs in the notes to the financial statementsFRD 03A Accounting for Dividends 84FRD17B LongServiceLeave,WageInflationandDiscountRates 62FRD 21C ResponsiblepersonsandExecutiveofficersintheFinancialReport 97-98FRD 103G Non-Financial Physical Assets 70-74FRD 100A Financial Reporting Directions - Framework 78FRD 105B Borrowing Costs 78FRD 106B Impairment of Assets 56FRD 108C ClassificationofEntitiesasFor-Profit 57FRD 109A Intangible Assets 50FRD 110A Statement of Cash Flows 53,79FRD 112D DefinedBenefitSuperannuationObligations 63-69FRD 114B Financial Instruments 86-88FRD 119A Contributions by Owners 95-96FRD 120L Accounting and Reporting Pronouncements applicable to the 2018-19 Reporting Period 102-103

LegislationBorrowing and Investment Powers Act 1987 (Vic) 52Building Act 1993 (Vic) 39Financial Management Act 1994 (Vic) VariousFreedom of Information Act 1982 (Vic) 38Marine Safety Act 2010 (Vic) 9, 10Parliamentary Salaries and Superannuation Act 1968 (Vic) 56Port Management Act 1995 (Vic) 10, 15, 16Protected Disclosure Act 2012 (Vic) 39Public Administration Act 2004 (Vic) 22, 56Transport Integration Act 2010 (Vic) VariousVictorian Industry Participation Policy Act 2003 (Vic) 36Income Tax Assessment Act 1936 (Cwlth) 81Income Tax Assessment Act 1997 (Cwlth) 81


B: Statement of Corporate Intent

1 Statement of Corporate IntentVPCM is required to prepare the following Statement of Corporate Intent under the Transport Integration Act 2010 (Vic) Clause 166.

VPCM overview and assetsVPCM is a statutory authority created by the Victorian Government following the successful completion of the lease of the Port of Melbourne Corporation commercial operations. This transaction is commonly referred to as the Port Lease Transaction (PLT). VPCM commenced operations on 1 November 2016.

VPCM has responsibility for those functions and activities which remain with the State, including Vessel TrafficServicesforsafenavigation,watersideemergencymanagement,towageregulationandmanagementof the Station Pier terminal and West Finger Pier. Station Pier is Victoria’s primary cruise vessel and Tasmania passenger ferry terminal.

2 VPCM operating environmentWe’re part of Victoria’s integrated transport portfolio, led by the Department of Transport.The Department of Transport brings Victoria’s transport sector agencies together under one umbrella. This coordinated approach fosters collaboration and integrated decision-making and positions the government to meet the transport challenges facing Victoria.

VPCM legislative framework overviewThe legislative framework that guides VPCM’s roles, responsibilities and activities is primarily outlined in the Transport Integration Act 2010 (TIA), the Port Management Act 1995 (PMA) and the Marine Safety Act 2010 (MSA).

Transport Integration Act 2010 (TIA)The TIA sets out VPCM’s objects, functions and powers and roles as a transport corporation, a transport body and a sector transport agency.

The main objects of VPCM include: • to ensure that port of Melbourne waters and channels in port of Melbourne waters are managed for use on

a fair and reasonable basis consistent with the vision statement and the transport system objectives; • to manage and develop Station Pier and West Finger Pier consistent with the vision statement and the

transport system objectives; • to ensure, in collaboration with relevant responsible bodies, that the port of Melbourne waters, Station

Pier and West Finger Pier are effectively integrated with the transport system and other systems of infrastructure in the State.

The functions and powers of VPCM address key areas, including: • direction and control of vessel movements in port of Melbourne waters, including scheduling and allocation

of vessels to berths in the port of Melbourne; • channels, navigation aids and systems in connection with navigation in port of Melbourne waters; • development, management and operation of Station Pier and West Finger Pier; and • promotion and marketing of the port of Melbourne.


Port Management Act 1995 (PMA)ThePMAestablishestheoperatingframeworkforStationPierandallocatesspecificoperationalandregulatoryresponsibilities to VPCM. The purposes of the Act are: • to provide for the establishment, management and operation of commercial trading ports and local

ports in Victoria; • to provide for the economic regulation of certain port services; • to provide for the imposition of certain port charges or fees; • to require the engagement of licensed harbour masters in certain circumstances and set out their

functions; • to provide for the transfer of property, rights and liabilities and the management of Crown land and

to make provision with respect to the rights of staff.

ForVPCM,thePMAspecifiesoperationalandregulatoryresponsibilitiesinrelationtothefollowing: • as a Committee of Management under the Crown Land (Reserves) Act 1978 (Vic) for Crown Land

reserved for the purposes of the port of Melbourne, including Station Pier and the West Finger Pier • towage services within the port of Melbourne • wharfage and channel fees • powers to restrict access to areas • hazards and polluting activities or things on port of Melbourne land, that is not leased port of Melbourne

land, or into port of Melbourne waters • abandoned or unclaimed goods or things in port of Melbourne waters or on port of Melbourne land that is

not leased port of Melbourne land.

Marine Safety Act 2010 (MSA)The MSA provides the framework for safe marine operations within Victoria by, among other things: • imposing a range of safety duties on owners, managers, designers, manufacturers, suppliers of vessels,

marine safety infrastructure and marine safety equipment; marine safety workers; masters and users of recreational vessels; and passengers on vessels;

• providing for the registration of recreational vessels and for the licensing of masters of recreational vessels and regulated hire and drive vessels;

• providing for the regulation and management of the use of, and navigation of vessels on, State waters; • requiring port management bodies to engage harbour masters and providing for the licensing of persons to

act as harbour masters and the authorisation of persons to act as assistant harbour masters; • providing for the registration of pilotage service providers and the licensing of pilots; and • requiring the use of pilots in declared parts of State waters.

The objects of the MSA are to promote: • the safety of marine operations; • the effective management of safety risks in marine operations and in the marine operating environment; • continuous improvement in marine safety management; •publicconfidenceinthesafetyofmarineoperations; • involvement of relevant stakeholders in marine safety; and • a culture of safety among all participants in the marine operating environment.

The purpose and objects are underpinned by principles of marine safety: shared responsibility; accountability for managing safety risks; integrated risk management; enforcement; transparency; participation, consultation and involvement of all affected persons; and equity of use of Victorian waterways.


Ministerial directions and expectationsOurStatementofExpectations(SOE),issuedbytheMinisterforPortsandFreight,providesaconfirmationoftheroleanddirectionofVPCM.Inaddition,theSOEidentifiedtwocomplianceandadministrativeprocesses undertaken by VPCM which could be reviewed and streamlined to enhance the customer experience. The processes are: •applicationandnotificationproceduresincludingareviewofthedangerousgoodsnotificationprocess;

and • review of Harbour Master’s Directions to ensure regulatory clarity and engagement with commercial

operators.

3 VPCM objectivesOur objectives respond to the challenges, opportunities and risks while supporting delivery of the portfolio strategic focus areas.

Table 1 – VPCM Strategic objective 1 – Safety, Security & Sustainability

What When Who Year 12019-20

Year 22020-21

Year 32021-22

Year 42022-23

Strategic objective 1 – Safety, Security & Sustainability focusDeliverable: provide a safe VPCM working environment for VPCM people and network users and protect the port environment from environmental and security threats and hazards.

Prepare VPCM infrastructure and stakeholders for revised air emission and fuel type standards in port areas

FY19/20 Marine & Navigation •

Enhance port safety and security Ongoing Marine &

Navigation • • • •

Develop and implement a VPCM Sustainability programme

Beginning in FY20/21

Business, Information & Strategy

• • •

Measuring performance • All injury frequency rate. The all injury frequency rate (AIFR) is a measure of all reportable injuries:

lost time injuries, restricted work injuries and medical treatment cases per 120,000 hours worked. The target for VPCM is zero, to be reported quarterly.

• Reportable environmental regulation breaches. Number of VPCM reportable environmental regulation breaches during the period. The target for VPCM is zero in the period, to be reported quarterly.

• Reportable security regulation breaches. Number of VPCM reportable security regulation breaches during the period. The target for VPCM is zero in the period, to be reported quarterly.

•VesselTrafficServices:98percentavailability(100percentachievedinFY2017-18).



Year 22020-21

Year 32021-22

Year 42022-23

Strategic objective 2 – Commercial Performance FocusDeliverable: tocreatealong-termfinancialplanthatensuresVPCM’sfinancialsustainabilityby: •maintaininganadequateoperatingsurplusinoutwardyearstoensureVPCMisabletomeetitsongoingfinancial

commitments •maintainingsoundfinancialgovernancetopromotecommercialdecision-making •operatingefficientlyandmanagingfinancialriskeffectively •ensuringoperatingandcapitalbudgetsaremanagedefficiently.

Bring a commercial focus to our decisions by articulating costsandbenefitsfor all decisions

Ongoing All divisions • • • •

Review VPCM Procurement Policy and procedures

OngoingFinance & Corporate Support

• • • •

Secure grant funding for capacity expansion projects

Ongoing Infrastructure • • • •

Measuring performance •Achieveanoperatingprofitwhileoperatingwithinapprovedbudgets. • Ensure cash balance will remain in excess of $5 million to meet standing obligations. • Compliance of VPCM policies.

Table 2 – Strategic objective 2 – Commercial Performance Focus


Table 3 – Strategic objective 3 – Customer Focus


Year 22020-21

Year 32021-22

Year 42022-23

Strategic objective 3 – Customer FocusDeliverable: respond to changes in the marine operating environment with safe navigation support systems and infrastructure capacity and tourism at Station Pier.

Ensure navigation safety support systems for the channels in port of Melbourne waters meet customer needs

Ongoing Marine & Navigation • • • •

Enhance marine and navigation services to Port Phillip Bay users


Collaborate with stakeholders to ensure port of Melbourne waters and Station Pier are effectively integrated with the transport network

Ongoing

Business, Information & Strategy

Infrastructure

• • • •

Promote and market the port of Melbourne (VPCM functions)

OngoingBusiness, Information & Strategy

• • • •

Measuring performance • Customer reputation. The reputation of VPCM with customers will be calculated from customer survey

data to be collected annually. The areas of satisfaction to be measured are: responsiveness, cost effectiveness,collaborationandcommunication.Thetargetistoberatedbycustomersover75percent.

•Paymentoffinancialpenalties.ThePortOperationsServiceDeedbetweenVPCMandPortofMelbourne includes provision for payment of penalties for non-compliance in delivery of services to the Port of Melbourne. The target is zero penalty payments.


Table 4 – Strategic objective 4 – Productivity Focus


Year 22020-21

Year 32021-22

Year 42022-23

Strategic objective 4 – Productivity FocusDeliverable: manage port of Melbourne waters and channels in port of Melbourne waters on a fair and reasonable basisandefficientlymanageStationPierandtheWestFingerPier.

Deliver capital development and capital maintenance projects on time and on budget to meet market demand


Investigate navigation safety options to maximise the capacity of the port of Melbourne channels and facilities to cater for projected increase in vessel size


Engage with road network managers and public transport operators to provide landside network capacity for expanded and ongoing Station Pier operations

Ongoing

Business Information & Strategy

Infrastructure

• • • •

Measuring performance • Assets management accountability framework in support of development and maintenance projects.

VPCM has developed a four-year improvement plan to promote a good asset management culture, in line with the Minister of Finance Standing Directions (2016) and closely aligned to the ISO 55000 Asset Management Standard Series. The plan includes ten major tasks to ensure compliance, including the development of:

- a strategic asset management plan in FY19/20, taking into consideration stakeholder requirements, levels of service and future assets required by VPCM

- good asset management, governance, training and culture procedures.


- Systems availability. Key operational systems needed for management of port of Melbourne waters and channels within the port of Melbourne are required to achieve availability levels for customer use as follows:

Dynamic Under Keel Clearance (DUKC). Percentage availability of the DUKC during the period – the target is no less than 98 per cent availability and no critical failures measured quarterly.

•VesselTrafficService(VTS).Supportingnavigationsafety.PercentageavailabilityoftheVTSduringthe period – the target is no less than 98 per cent availability and no critical failures measured quarterly.

• Trade volume. The volume of cargo transhipped through the port of Melbourne is a derived demand based on factors such as the level of economic activity in the hinterland of the port, population, international events and national productivity. The function of VPCM is to facilitate trade through delivery of services and facilities. By measuring cargo volume throughput at the VPCM managed facilities relative to those managed by the Port of Melbourne ensures that the VPCM services and facilitiesarefitforpurposeandpricedappropriately.Thismeasureistheoverallcargovolumemeasured in revenue tonnes through sites managed by VPCM where stevedoring operations are carried out (currently only Station Pier). The comparison volume is an estimate of the volume of trade through port of Melbourne facilities catering for the Bass Strait RoRo trade (currently Webb Dock East).Thisgrossmeasureofperformanceseekstomeasuretherelativeefficiencyandattractivenessof VPCM managed facilities compared to substitute facilities within the port. The target is relative parity with port of Melbourne Bass Strait volume, to be measured annually.

• Cruise vessel visits and passenger throughput. Like cargo volume, the number of cruise vessel calls and passenger throughput are a derived demand. Measuring the number of vessel calls and passengerthroughputensuresthattheservicesandfacilitiesprovidedbyVPCMarefitforpurposeand priced appropriately. The overall number of cruise vessel calls and passenger throughput at Station Pier should increase in line with the number of cruise vessels operating in Australian waters.

• The growth in the number of vessels calling to Station Pier and passenger throughput should increase in line with vessel calls to Port Jackson (Sydney) given the similar sizes of the port catchment areafordomesticpassengers.Thisindicatorofperformancemeasurestherelativeefficiencyandattractiveness of VPCM managed facilities compared to similar facilities in the main cruise port in Australia. The VPCM target is relative parity with Port Jackson cruise vessel calls and passenger throughput to be measured annually.


Table 5 - Strategic objective 5 – People, Culture & Community Relations Focus


Year 22020-21

Year 32021-22

Year 42022-23

Strategic objective 5 – People, Culture & Community Relations FocusDeliverable: Maintain an effective, sustainable, diverse and fair organisation, with a culture that creates high levels of employee engagement and performance by: • ensuring well documented governance policies and processes are in place (incorporating clear processes for

ongoing review and updates) and effectively communicated to all VPCM personnel to achieve the following: - Decision-making is transparent, compliant with VPCM policies and aligns with the Victorian Government

standards. - Acting in accordance with all applicable legislative requirements. - Having staff represent our values and act with integrity, honesty and in the best interests of the business when

making decisions. - Ensuring our internal processes are clear, consistent, understood and used by staff.

Continual focus on the VPCM People & Culture Strategy


Continual focus on VPCM Community Relations


Measuring performance • Employee engagement metrics will continuously improve. • No instances of non-compliance with VPCM policies. • Community reputation. The reputation of VPCM with the local community will be calculated from

community stakeholder survey data to be collected annually. The areas of satisfaction to be measured are: responsiveness, collaboration and communication. The target is to be rated by community stakeholdersatover75percent.


4 Service delivery performance measures and targetsTo monitor and measure performance, VPCM utilises a range of lead and lag indicators.

VPCM will report KPI quarterly to our shareholding Ministers in the quarterly business performance report. A summary of the KPI are shown in Table 6.

Table 6 - VPCM Key Performance Indicators (KPI)

Strategic objective KPI and remarks Target Strategic objective 1Safety, Security & Sustainability

All Injury Frequency Rate (AIFR) Zero

Reportable environmental regulation breaches

Zero

Reportable security regulation breaches

Zero

VesselTrafficServices 98 per cent availability

Strategic objective 2Commercial Focus

Operatingprofit As per budget

Return on Capital Employed (ROCE)

As per budget

Debtor management No outstanding debts receivable greater than 60 days

Cash at bank Ensure >$5 million cash on hand

Policy compliance No instances of policy non-compliance

Strategic objective 3Customer Focus

Customer reputation Ratedover75percent

Paymentoffinancialpenalties Zero penalty payments

Strategic objective 4Productivity Focus

Systems availability DUKC and VTS to achieve no less than 98 per cent availability and no critical failures

Trade volume Station Pier cargo throughput to maintain relative parity with port of Melbourne Bass Strait volumes and cruise passenger numbers to maintain relative parity with Port Jackson

Strategic objective 5People, Culture & Community Relations Focus

Employee engagement and alignment

Ratedover75percent

Community reputation Ratedover75percent


5 Accounting policies

Preparation of financial budget and forecastPricing – Tariffs. VPCM’s Reference Tariff Schedule fees for 2019-20 will increase by 1.8 per cent based on the most recent Consumer Price Index (CPI) released by the Australian Bureau of Statistics (December quarter2017toDecemberquarter2018-weightedaverageofeightcapitalcities).Thisincreaseisastandard price increase to maintain VPCM’s operational activities.

Application of the Revised Reference Tariff Schedule. The revised VPCM Reference Tariff Schedule applies from 1 July 2019. Annual review of the RTS will occur with CPI used as the primary adjustment factor.

Salary increases. The assumed rate of increase is 3 per cent for all years in the forecast period for Enterprise Agreement staff and 2 per cent for Executives.

Pricing – Rent.Revenuefromlandrentalsin2019-20willcontinueinaccordancewithspecifictermsoftheleases.

Capital expenditure. Total capital expenditure to 30 June 2019 is $8.4 million spent in 2018-19 mainly on Station Pier redevelopment project, Station Pier facility activities and the works associated with the replacement of the VTS and radar.

Summary of significant accounting policiesBasis of accounting.Thefinancialforecastshavebeenpreparedasageneralpurposefinancialreportinaccordance with all applicable standards, frameworks and regulation from Government.

Income tax. Pursuant to the State Owned Enterprise Act 1992 (Vic), VPCM is subject to the National Income Tax Equivalent Regime. In accordance with this legislation, VPCM is required to pay to the Victorian Government’s Consolidated Fund an amount determined as equivalent to the amount that would be payable by VPCM if it was subject to the Commonwealth Income Tax Assessment Act 1936(Cwlth).Thefinancialresults have been prepared using tax effect accounting.

Valuation of fixed assets.Accountingstandardsrequirethefairvaluationoffixedassetsbeappliedandtheimpactreflectedintheprofitandlossstatementandbalancesheet.

Capital works expenditure In accordance with VPCM’s capital investment procedures, each proposed project more than $1.0 million will besubjecttothecompletionofasatisfactoryfinancialevaluationpriortomanagementapprovaltoproceedwith the project.

BorrowingsThe TIA confers borrowings and investment powers to VPCM under the Borrowing and Investment Powers Act 1987 (Vic).

Authorised by the Victorian Government.This publication is produced by Victorian Ports Corporation (Melbourne).

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Department of Transport

Victorian Ports Corporation (Melbourne)

Street addressLevel 5, 530 Collins StreetMelbourne Victoria 3000

Australia

Postal addressGPO Box 261

Melbourne VIC 3001Australia

Tel: +61 3 8347 8300 Fax: +61 3 8347 8301

www.vicports.vic.gov.au Victorian Ports C

orporation (Melbourne) 2018-19 A

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ANNUAL REPORT2018-19

Documents

Victorian Ports Corporation (Melbourne)...The Hon. Tim Pallas MP Treasurer 1 Treasury Place East Melbourne Victoria 3002 Dear Ministers, Victorian Ports Corporation (Melbourne) 2018-19