CREATING LIFESTYLE DESTINATIONS

Transcription

1 CREATING LIFESTYLE DESTINATIONS Annual 2017

2 Inside 02 ur erating odel 04 Chairman s Review 06 and anaging ire tor s eview 08 ur erating and Finan ial eview 22 ur Portfolio 30 ur Peo le 32 igital 34 ur Board 37 ur xe utive ommittee 40 Tax Trans aren y 43 Sustainability Assuran e Statement 44 Financial 45 ire tor s e ort 49 Remuneration 67 Finan ial Statements 107 nde endent Auditor s e ort 113 or orate ire tory About this report This annual report is a summary of Vicinity Centres operations, a tivities and finan ial osition as at une 17 n this report references to Vicinity, Group, we, us and our refer to i inity entres unless otherwise stated eferen es in this re ort to a year and FY17 refer to the finan ial year ended une 17 unless otherwise stated All dollar figures are ex ressed in Australian dollars (A ) unless otherwise stated This annual re ort dis loses i inity s finan ial and non finan ial erforman e for FY17 and has been re ared using elements of the ntegrated e orting framewor ore information particularly latest company announcements and detailed sustainability re orting an be found on i inity s website i inity is ommitted to redu ing the environmental foot rint associated with the production of the annual report and printed copies are only posted to securityholders who have ele ted to re eive a rinted o y This re ort is rinted on environmentally res onsible a er manufa tured under S 1 1 environmental standards The following symbols are used in this re ort to ross refer to more information on a topic: References additional materials within this report References additional materials on Vicinity s website Disclaimer This re ort ontains forward loo ing statements in luding statements indi ations and guidan e regarding future earnings distributions and erforman e The forward loo ing statements are based on information available to i inity entres as at the date of this re ort (16 August 17) These forward loo ing statements are not guarantees or redi tions of future results or erforman e ex ressed or im lied by the forward loo ing statements and involve nown and un nown ris s un ertainties assum tions and other fa tors many of whi h are beyond the ontrol of i inity entres The a tual results of Vicinity Centres may differ materially from those ex ressed or im lied by these forward loo ing statements and you should not la e undue relian e on su h forward loo ing statements x e t as re uired by law or regulation (in luding the AS isting ules) we underta e no obligation to u date these forward loo ing statements Chadstone, VIC

3 From local shopping centres to premium retail destinations that compete on an international stage, we aim to enrich our communities by providing unique centres with the shops, services and amenities that they need. Performance Highlights Statutory net profit after tax $1,583.6m FY16: $960.9m Distribution per security 17.3 FY16: 17.7 Total return % FY16: 12.8% Employee engagement score 71% FY16: 66% Green Star Performance portfolio rating 3 Stars FY16: 2 Stars Occupancy rate 99.5% June 2016: 99.4% 1. Calculated as: (Change in net tangible assets per security (NTA) during the period + distributions declared)/opening NTA. Vicinity Centres Annual

4 Our Operating Model Enriching community experiences Our resources Our value add We evolve and optimise our resources to complement and enhan e our o erating model Our strategy is to create unique and relevant consumer experiences, deliver compelling value for our retail partners and strive for excellence in everything we do. Capital a ital from our e uity and debt investors and strategi artners People A highly engaged and a able wor for e Real estate A resilient and sustainable ro erty ortfolio Data and systems Networ a ability data ro esses and our insights and intelle tual ro erty Brand Brand and re utation under inned by strong sta eholder relationshi s Deliver the best retail mix and engaging experiences to attract consumers and support our retail partners. External in ences e embra e o ortunities and manage material ris s resented by our external in uen es Financial and property markets Fa tors that im a t the a essibility ri ing and li uidity of our a ital and real estate assets Consumer and retail trends hanging lifestyles needs and behaviours of onsumers and mar et for es that affe t our retailers Local community emogra hi ultural so ial and economic characteristics where we o erate Environment A essibility and ost of resour es and the im a ts of limate variability 02 Vicinity Centres Annual 2017 Enhance our portfolio quality through select developments, divestments and acquisitions.

5 Our outcomes e reate shared value by enri hing ommunity ex erien es Solid investor returns 4.6% om arable underlying PS growth 15.5% total return (FY16 1 ) Successful retailers and satisfie c stomers $9,429 per sqm s e ialty store AT (u 6 on FY16) Highly engaged people 71% engagement s ore (FY16 66 ) Better communities $1.8 million Intensively managing our centres to drive income growth and operational efficiencies. community investment (FY16 1 million) 8% redu tion of arbon intensity on FY16 (down to 71 g 2 e s m) Find out more about our strategy and how we create shared value for our stakeholders in the following pages. Vicinity Centres Annual

6 Chairman s Review Dear Securityholders I am pleased to present to you Vicinity Centres (Vicinity s) 2017 Annual. uring the 17 finan ial year we have fo used on reinfor ing i inity s strong latform for future growth Portfolio uality has been im roved our a ital osition has been strengthened we have invested in networ s systems and a ability to o erate more effe tively and gain dee er insights into our onsumers behaviours and all outstanding ey merger and integration a tivities have now been om leted e have also ontinued to sharpen our emphasis on our consumers and our retailers, as we position Vicinity for further su ess in the evolving retail lands a e Statutory net rofit after tax for the 1 months to une 17 was 1 6 million under inned by strong net ro erty valuation gains Net tangible assets er se urity (NTA) was u to su orting a total return 1 of 1 for the eriod nderlying earnings of 7 1 million or 1 7 ents er se urity were delivered This result was in line with guidan e and down 1 om ared to the rior year largely as a result of non ore assets divested to im rove the uality and growth of the ortfolio Ad usting for a uisitions and divestments om arable underlying earnings were u 6 on the rior year a strong a hievement in a soft retail environment This solid result re e ts the benefit of ongoing ortfolio enhancement, the realisation of further merger synergies and effi ien ies and the sound underlying erforman e of our assets The full year distribution er se urity was 17 ents om ared to 17 7 ents in the rior year mainly due to the divestment of non ore assets To deliver on our strategy to reate uni ue and relevant onsumer ex erien es deliver om elling value for our retail artners and strive for ex ellen e in everything we do we fo used on im roving our offer both in terms of the assets within our portfolio and the retail ex erien e for our onsumers e have done this through sele tive a uisitions divestments and redevelopment, and by ontinuing to refine our tenan y mix The im rovement of many of our ey ortfolio metri s during the year re e ts this fo us e have also integrated broader sustainability ob e tives into our strategy to reate a low arbon highly effi ient portfolio, enhance our climate resilience and sha e better ommunities where we o erate As one of the largest owners and managers of sho ing entres in Australia we tou h a great number of lives our people, our retailers and service providers, together with our onsumers and lo al ommunities As an em loyer we have fo used on a number of internal initiatives this year in luding a fo us on ulture and engagement This year am leased to report that our people initiatives have hel ed to in rease our overall engagement s ore to 71 u er entage oints on the rior year s grou wide engagement survey out ome e have also been strategi ally investing in our ommunities ontributing 1 million this year through both or orate and entre level ommunity initiatives e entered a three year artnershi with Bea on Foundation to deliver our community investment rogram fo using on assisting unem loyed and disengaged youth in our ommunities e have also artnered with a number of so ial enter rises su orting the em loyment of a roximately disadvantaged individuals from our lo al ommunities e believe these initiatives reate shared value by strengthening our communities and the connection they have with our entres A number of unfortunate events o urred during the year n February 17 a light air raft rashed into the omema er entre at F ssendon Sadly those on board the lane did not survive n behalf of the entire i inity team extend my condolences to the families of the de eased The entre was losed at the time and fortunately there were no other asualties y lone ebbie in ar h 17 and the asso iated ash ooding resulted in entre losures and emergen y lans Peter Hay Chairman being initiated at some of our entres a ross the ueensland oast am leased to re ort that there were no serious in uries to our eo le and no ma or damage to our assets would li e to a nowledge the dedication and professionalism of our team in how they dealt with these unforeseen events At the 16 Annual General eeting (AG ) announ ed our intention to redu e the total number of Board members and also to introdu e new s ills to our Board arti ularly in the areas of digital and te hnology am delighted to be wel oming s anette endall to the Board as an nde endent Non exe utive ire tor effe tive from 1 e ember 17 uring the year r i hard addo A retired from the Board and at i inity s 17 AG later this year r harles a e and s ebra Stirling will also be retiring from the Board n behalf of the Board than i hard harles and ebra for their commitment to Vicinity s se urityholders and their signifi ant ontribution to the Board ur and anaging ire tor r Angus Naughton announ ed his retirement as of 1 e ember 17 having been involved with the business for nearly 1 years in luding his time with Novion Pro erty Grou (Novion) and its rede essor FS etail Pro erty Trust Grou Angus ste ed in to lead i inity through the integration of the merger between Novion and Federation entres in August 1 having reviously been the and anaging ire tor of Novion n behalf of the Board than Angus for his ivotal ontribution in om leting the su essful integration of these 1 al ulated as ( hange in NTA during the eriod distributions de lared) o ening NTA n ludes a ombination of ash and in ind ontributions a ounting for asso iated management time and art of the o erational s end on so ial enter rises in a ordan e with the ondon Ben hmar ing Grou ( BG) framewor 04 Vicinity Centres Annual 2017

7 Emporium Melbourne, VIC Our strategy is to create unique and relevant consumer experiences, deliver compelling value for our retail partners and strive for excellence in everything we do. two grou s delivering the anti i ated synergies from the merger and reating a strong latform for the future After a global sear h am leased to have announced the appointment of r Grant elley as the in oming and anaging ire tor ith global ex erien e in real estate investment, corporate strategy funds management and rivate e uity Grant will bring a strong strategi and analyti al ers e tive to bear on the evolving Australian retail lands a e The Board together with Angus will wor to ensure a smooth transition from Angus through to Grant s lanned ommen ement on 1 anuary 1 n the year ahead our fo us will ontinue to be on building uality and strength a ross the business This in ludes the implementation of recently announced initiatives to further strengthen i inity s a ital osition ffe tive from FY1 i inity s rimary earnings measure will hange to funds from o erations (FF ) and our distribution ayout ratio will be to 1 of ad usted funds from o erations (AFF ) This hange in distribution oli y will result in a lower distribution for FY1 than under the revious oli y but is more sustainable over the long term and will su ort the future growth of i inity Additionally we intend to divest a further million of non ore assets over the oming year to im rove ortfolio uality e have also announ ed an on mar et buy ba of u to of i inity s se urities whi h is to be underta en o ortunisti ally at a ri e that is a retive to both FF er se urity and NTA To meet evolving onsumer referen es we will ontinue to rogress our extensive development pipeline and reposition our tenan y mix ur a tive a roa h to asset enhancement which continues to strengthen our ortfolio resilien e year on year ou led with these re ently announced capital initiatives, positions us well to reate long term value and sustainable growth des ite ex e tations that the retail sales environment will remain hallenging over the oming year n behalf of the Board would li e to than the i inity team who ontinue to wor with assion loo ing for ways to im rove our business while delivering solid underlying erforman e would also li e to than our se urityholders for your ontinued su ort throughout this transformational year and loo forward to having the han e to meet with many of you at our 17 AG that will be held in elbourne on 16 November 17 Peter Hay Chairman Vicinity Centres Annual

8 CEO and Managing Director s Review Dear Securityholders I am pleased to present to you an update on Vicinity Centres, for what has been an extremely active 12 month period. The outcomes of this activity are re e ted in the solid results re orted for the 17 finan ial year whi h were driven by benefits from ongoing ortfolio enhan ement through a uisitions divestments, developments and tenant remixing the om letion of all ey merger integration a tivities realising additional effi ien ies within our business along with the sound underlying erforman e of our assets Another highlight in the eriod was rolling out our ommunity investment rogram to strengthen the ommunities in whi h we o erate i inity delivered statutory net rofit after tax for FY17 of 1 6 million whi h was under inned by strong net ro erty valuation gains of million 1 nderlying earnings for the eriod were 7 1 million or 1 7 ents on a er se urity basis Ad usting for a uisitions and divestments om arable underlying earnings were u 6 on the rior year su orted by om arable net ro erty in ome growth of and lower net or orate overheads a strong a hievement in a soft retail environment Prudent a ital allo ation de isions and the divestment of interests in 1 7 billion of assets over the ast months have ut us in a strong a ital osition At une 17 our gearing was 7 our weighted average debt duration was years and all debt ex iring in FY1 had been re aid ur su ess on ortfolio enhan ement initiatives and strengthening our balan e sheet was a nowledged in anuary 17 with Standard Poor s raising i inity s redit rating to A with a stable outloo ur re ently announ ed initiatives of a roximately million of non ore assets intended to be divested in FY1 to further im rove our ortfolio uality together with our ado tion of FF and AFF as rin i al oli y measures effe tive from FY1 will further strengthen our a ital osition and su ort future growth These initiatives build on last month s announ ement of an on mar et buy ba of u to of i inity s se urities to be underta en at a ri e that is a retive to both FF er se urity and NTA while also reserving am le a a ity to fund i inity s other a ital re uirements FY17 earnings and FY18 guidance Pages ur a tive ortfolio re ositioning during the year is also being re e ted in our solid ortfolio metri s The ortfolio o u an y rate has im roved to om ared to a year earlier and leasing s reads are also stronger om arable s e ialty sales er s m were u strongly by 6 to and om arable specialty occupancy costs remained un hanged at 1 6 A hieving these ortfolio metri s has been a great out ome arti ularly given the softer retail trading environment whi h featured a number of retailer administrations in the eriod oving annual turnover ( AT) growth at une 17 was om ared to 1 for the rior eriod S e ialty store AT growth was down from a year earlier x luding the im a t of the i Smith ortfolio that went into administration in FY16 s e ialty store AT was u 1 We have continued to reposition our tenan y mix and im rove our retail offer in res onse to hanging onsumer referen es This in ludes re weighting Angus McNaughton CEO and Managing Director our retail mix from mid level women s a arel into ategories ex erien ing higher demand su h as food atering and retail servi es e are also fo used on a wide range of initiatives to enhan e the retail ex erien e in a ontinuously evolving retail lands a e Ama on has made a well ubli ised ommitment to enter the Australian mar et over the next year or two hile we feel Ama on will have a greater im a t on the existing online retail mar et in om arison to in store sales its entry will raise the servi e delivery ex e tations of Australian onsumers There is also heightened im ortan e on delivering a om elling omni hannel ex erien e integrating the hysi al and digital sho ing ourneys for both retailers and onsumers and this is a ey area of fo us for our business This year, we completed the connection of our retail assets and or orate offi es to a single high s eed digital networ with ifi onne tivity throughout ur onsumers now have a ess to free high speed WiFi at our centres and the rich data we are gathering from this networ is enabling us to gain insight into onsumer behaviour in luding dwell times foot traffi and the way onsumers move around our entres ur fo us for FY1 is to leverage this data to enhan e the onsumer ex erien e rovide insights to retailers, and improve the way we manage our assets 1 al ulated as the aggregate net valuation gain for the two six month eriods The net valuation gain ex ludes statutory a ounting ad ustments and assets divested during ea h eriod For a re on iliation of underlying earnings to statutory net rofit refer to Note 1(b) of the Finan ial e ort Sales are re orted on a om arable basis whi h ex ludes divestments and develo ment im a ted entres in a ordan e with Sho ing entre oun il of Australia (S A) guidelines 06 Vicinity Centres Annual 2017

9 ngoing ortfolio enhan ement through divesting non ore assets ma ing sele t a uisitions and re ositioning our entres through tenant remixes and redevelo ment remains a ey fo us for our business to reate long term value and to drive sustainable earnings growth Ta ing advantage of the ongoing demand for retail property, we divested interests in 1 retail assets for 6 million during FY17 a remium to revailing boo values Sale ro eeds were used in art to a uire the remaining interests in two assets that we artly owned in luding the strongly erforming F South harf and also to rogress our signifi ant develo ment i eline A ma or highlight of our develo ment activities this year, was the completion of the 666 million ( i inity share million) ma or redevelo ment of hadstone in une 17 whi h in luded wel oming the first G AN is overy Centre in the southern hemisphere into the entre hadstone has ontinued to strengthen sin e the o ening of the ey retail stage in tober 16 attra ting large rowds arti ularly on the wee ends with annual traffi u 1 to over 1 million visitors and AT u to 1 7 billion at une 17 This develo ment has reaffirmed hadstone s status as one of the leading retail assets globally and has under inned a strong valuation gain over the year of 1 to billion ( i inity share 6 billion) This year we loo ed more dee ly into the longer term sustainability of our assets e om leted a ortfolio wide ris assessment to better understand the im a ts of limate hange on our business and integrated limate resilien e onsiderations into ey business ro esses We continued to reduce the resource usage of our entres and ommen ed further wor to identify energy effi ien y and onsite solar generation o ortunities a ross our ortfolio ur third solar installation went live at llenbroo entral roviding a strong business ase for our low arbon strategy being develo ed in the year ahead These initiatives along with our res onsible management ra ti es ontinue to be favourably re ognised by three ey sustainability surveys n late 16 we were included in three leaders indices in the ow ones Sustainability ndex ( S ) ran ed above our retail eers by Global eal state Sustainability Ben hmar (G SB) and rated A for limate hange erforman e by P oo ing ahead we do ex e t the retail environment to remain hallenging over the next 1 months ur fo us remains on building a stronger and more resilient business e intend to divest a roximately million of non ore assets over FY1 and to ontinue to rogress our develo ment i eline Furthermore in res onse to strong leasing demand we will ommen e ma or remixes at hadstone and ueenspla a These ro e ts will signifi antly im rove the tenan y mix and growth otential of both assets notwithstanding a short term im a t on FF while wor s are om leted e will be rogressing our develo ment i eline in luding om leting andurah Forum o ening the first stage of retail at The Glen and advan ing the F Perth ro e t A ross our ortfolio we will ontinue to fo us on reating the best tenant mix to enhan e the retail ex erien e generating additional in ome streams and driving further o erational effi ien ies n a ital management we will see to buy ba i inity se urities at a ri e that is a retive to both FF er se urity and NTA while also reserving ample capacity to fund other capital re uirements e will also loo to extend our FY1 debt ex iries ur FY1 FF guidan e is 1 to 1 ents er se urity and our FY1 distribution ayout ratio is ex e ted to be 1 of AFF with maintenan e a ital ex enditure and in entives in total to be a roximately 7 million to million FY17 earnings and FY18 guidance Pages A major highlight of our development activities this year, was the completion of the $666 million (Vicinity share: $333 million) major redevelopment of Chadstone in June 2017, which included welcoming the first LEGOLAND Discovery Centre in the southern hemisphere into the centre. t has been a rivilege to be art of i inity s transformation and together with the Board and exe utive team to establish i inity s strategi dire tion i inity is in a strong osition and am very onfident in the highly om etent exe utive team that we have built and their ability to drive the future growth of our business loo forward to ontinuing to wor with the team through to the end of 17 and am ommitted to overseeing a smooth transition to in oming and anaging ire tor Grant elley Than you for your ongoing su ort Angus McNaughton and anaging ire tor x ludes transa tions osts and in ludes ontra ts ex hanged for the sale of Terra e entral NS whi h is ex e ted to settle in November 17 Assuming no material deterioration to existing e onomi onditions Vicinity Centres Annual

10 Our Operating and Financial Review We are pleased to present Vicinity Centres operating and financial review for the 2017 financial year. This operating and financial review sets out Vicinity s strategy, operating model, achievements, objectives and outlook. It also provides a review of financial and operational performance over the 2017 financial year, along with key risks and opportunities. Our vision Reimagining destinations of the future, creating places where people love to connect. Our purpose To enrich community experiences. We do this by creating a better, easier and more enjoyable experience for our stakeholders our consumers, retailers, securityholders, strategic partners and our people. Our strategy and business prospects ur vision is to reimagine destinations of the future reating la es where eo le love to onne t To a hieve this our strategy is to reate uni ue and relevant onsumer ex erien es deliver om elling value for our retail artners and strive for ex ellen e in everything we do This means being onsumer entri and understanding and res onding to hanging onsumer trends e fo us on reating destinations that engage and ex ite while ma ing the retail ourney easier so that our consumers visit more often and stay longer ur strategy also involves artnering with our retailers to understand how we can service and su ort them for su ess A ross our business we embra e a ulture of agility and innovation onstantly striving to im rove the way we o erate e use data and te hnology to hel us servi e our consumers and retailers, and to o erate more effi iently With a portfolio across Australia of our s ale we have a signifi ant o ortunity to deliver on our purpose, to enrich ommunity ex erien es now and into the future The integration of broader sustainability ob e tives into our strategy guides how we invest in our ommunities and build a low arbon and limate resilient ortfolio This a roa h hel s us reate sustainable destinations and sha e better ommunities e measure our su ess by the shared value we reate for all of our sta eholders e believe this strategy enables i inity to reate long term value and sustainable growth from our ortfolio of uality Australian retail assets Our operating model Pages FY17 outcomes and FY18 focus Vicinity s performance and achievements in FY17 and fo us for FY1 an be found on the ages following Key performance metrics Page 1 Achievements and focus Pages 1 11 FY17 earnings and FY18 guidance ver the 1 months to une 17 i inity generated a net rofit of 1 6 million under inned by solid underlying erforman e and strong ro erty valuation gains i inity s underlying earnings 1 er se urity ( PS) was 1 7 ents for the year whi h re e ts om arable underlying PS growth of 6 ad usting for a uisitions and divestments The distribution er se urity de lared totalled 17 ents (1 7 ents 6 ents) whi h e uates to a ayout ratio of of underlying earnings i inity has revised its earnings and distribution ayout oli ies to harmonise them with broadly a e ted mar et ra ti e ffe tive from FY1 i inity s rimary earnings measure will hange from underlying earnings whi h in ludes rent lost from underta ing develo ments to funds from o erations (FF ) on urrently our distribution oli y has been revised to ay out to 1 of ad usted funds from o erations (AFF ) whi h will drive more sustainable earnings growth going forward AFF re resents FF ad usted for annual maintenan e a ital ex enditure and stati lease in entives i inity s FF guidan e for FY1 is 1 to 1 ents er se urity and assumes a roximately million of non ore asset divestments in the period and rent lost from ma or remixes at hadstone and ueenspla a After ad usting for the im a t of ortfolio hanges, this guidan e re e ts om arable FF er se urity growth of to i inity s distribution ayout ratio for FY1 is ex e ted to be 1 of AFF aintenan e a ital ex enditure and in entives in total for FY1 are fore ast to be 7 million to million 1 nderlying earnings is net rofit ad usted for fair value movements ertain unrealised and non ash items and other items that are not in the ordinary ourse of the business or are a ital in nature Assuming no material deterioration to existing e onomi onditions A uisitions divestments and ma or remixes at hadstone and ueenspla a 08 Vicinity Centres Annual 2017

11 Living our values We bring our values to life through the actions we take and the experiences we create we embrace difference, we always collaborate, and we imagine a better way and we believe in the power of the collective to achieve our purpose of enriching community experiences. Damian Zahra General Manager People and Culture Vicinity Centres Annual

12 Our Operating and Financial Review continued Achievements and focus Intensive asset management FY17 achievements m roved o u an y to A tive ortfolio remixing om leting 1 76 leasing deals with an average leasing s read (a) of 1 stablished ross fun tional wor ing grou s fo used on im roving onsumer and retailer ex erien es Strong growth in an illary in ome of 6 driven by asual mall leasing retail media and ar ar ing FY18 focus Continue to improve the retail offer across the portfolio n rease an illary in ome revenue m lement initiatives to drive further entre effi ien ies Development om leted ma or redevelo ment of hadstone in luding first G AN is overy entre in the southern hemis here ommen ed ma or develo ment of The Glen In July 2017 om leted the first retail stage of andurah Forum development fully leased ommen ed onstru tion of F Perth om lete andurah Forum develo ment on time and on budget aterially advan e The Glen and F Perth ro e ts ommen e hadstone otel ro e t Finalise s o e and ommen e ma or redevelo ment of Galleria and refurbishment and remixing ro e t at oselands ommen e ma or remixes at hadstone and ueenspla a Advan e sele t ro e ts in the shadow i eline Chadstone, VIC 10 Vicinity Centres Annual 2017

13 Acquisition/ divestment FY17 achievements FY18 focus ivested interests in 1 retail assets for 6 million ontinue to review a uisition o ortunities re e ting a remium to boo values (b) ivest million of non ore assets A uired remaining interest in strongly erforming F South harf Capital People Real estate Data and Systems Brand and relationships ssued million of Australian medium term notes and re aid FY1 debt ex iries Standard Poor s raised i inity s redit rating to A stable from A ositive elivered on wholesale fund ob e tives in luding om leting Gateway Pla a redevelo ment and ommen ing idland Gate redevelo ment Strong erforman e a ross investor sustainability surveys ( ) m roved our em loyee engagement s ore in ey fo us areas aun hed sheimagines am aign as art of our ommitment to gender diversity Transitioned elbourne team into new offi e with a tivity based and agile wor ing stablished wor la e giving and volunteering rograms A hieved Green Star Performan e ortfolio rating of Stars Su essfully trialled 1 w solar installation at llenbroo entral edu ed arbon intensity (d) by om leted limate ris assessment a ross whole ortfolio and a ross ey business ro esses om leted onne tion of entres and or orate offi es to single high s eed digital networ ommen ed olle tion of information on onsumer behaviour stablished a data la e to ool a range of data (a ounting ro erty metri s and real time onsumer and o erational data) stablished se urity governan e framewor and develo ed an information se urity management system to strengthen yber se urity stablished i inity entre brand framewor stablished three year artnershi with Bea on Foundation fo used on unem loyed and disengaged youth ndertoo internal ommunity grants rogram where 1 was distributed at a entre level to form lo al artnershi s that address youth related needs in ea h catchment S ent over on so ial enter rises su orting the em loyment of eo le timise the ost of debt while a ro riately managing debt diversity ex iry rofile and mar et ris eliver wholesale fund ob e tives tilise sustainability survey out omes to strengthen business and sustainability ra ti es aintain high engagement s ore of over 7 m lement diversity rograms relating to mental health and age evelo a low arbon target for i inity edu e de enden e on ele tri ity grid through energy effi ien y measures and ursuing solar roll out ontinue to embed limate ris onsiderations into ey business ro esses Continue to collect and analyse consumer data Standardise re orting of data stablish digital solutions for onsumers and retailers nvestigate other digital initiatives se i inity data and insights to tailor entre brands to our onsumers m rove retailer satisfa tion s ores ontinue roll out of ommunity investment rogram at or orate and entre level with Bea on Foundation (a) The varian e between the rent at the end of a lease and the rent re eived over the same s a e for a new lease (b) x ludes transa tion osts and in ludes ontra ts ex hanged for the sale of Terra e entral NS whi h is ex e ted to settle in November 17 ( ) ow ones Sustainability ndi es P and Global eal state Sustainability Ben hmar Recent sustainability survey results vi inity om au (d) FY17 om ared to FY16 on a er s m basis Vicinity Centres Annual

14 Our Operating and Financial Review continued Our performance Key performance metrics Performance metric 30-Jun-16 Change Page Financials Statutory net rofit after tax (a) $1,583.6m 6 m 6 7m 1 nderlying earnings er se urity (a) 18.7 cents 1 1 ents own 1 1 istribution er se urity (a) 17.3 cents 17 7 ents own 1 om arable net ro erty in ome growth (a) (b) 2.5% n a 1 Total return (a) 15.5% 1 n a Total securityholder return (a) (17.7%) n a Portfolio Number of retail assets ( ) 74 1 own 7 (l) u an y rate ( ) 99.5% 1 b s 1 Total moving annual turnover ( AT) ( ) $16.2b 16 7b n a 1 S e ialty store AT ( ) (d) ( er s m) $9, u an y ost ( ) 14.6% eighted average a italisation rate ( ) 5.61% Tightened b s Balance Sheet Total assets ( ) $16.7b 1 b 1 1 Net tangible assets er se urity ( ) $ Net asset value per security ( ) $ Debt Gearing ( ) (e) 24.7% edu ed 1 b s 1 eighted average ost of debt (a) (f) 4.2% b s ebt duration ( ) (g) 5.3 years years 16 Pro ortion of debt hedged ( ) 90% 1 own 1 People m loyee engagement s ore ( ) 71% 66 Women in leadership ( ) (h) 36% 1 1 T F (a) (i) ( er million hours wor ed) m roved by 1 Sustainability Community investment (a) ( ) $1.8m 1 m m Green Star Performan e ortfolio rating ( ) 3 Stars Stars 1 Star 7 NAB S nergy rating ( ) ( ) 3.7 Stars Stars Stars 7 NAB S ater rating ( ) ( ) 3.2 Stars Stars Stars 7 nergy intensity ( er s m) (a) 303MJ m roved 6 7 arbon intensity s o e 1 and ( er s m) (a) 71kg CO 2 -e 77 g e m roved 7 Waste diversion rate (a) 36% m roved 1 7 (a) For the 1 months to une (b) x ludes a uisitions divestments and develo ment im a ted entres and is al ulated on a li e for li e basis versus the rior orres onding eriod ( ) As at une (d) om arable x ludes divestments and develo ment im a ted entres in a ordan e with S A guidelines (e) al ulated as drawn debt at Note 7(a) of the Finan ial e ort net of ash divided by total tangible assets ex luding ash finan e lease assets and derivative finan ial assets (f) Average for rior 1 months and in lusive of margins drawn line fees and establishment fees (g) Based on fa ility limits (h) xe utive ommittee senior leaders and senior managers (i) Total re ordable in ury fre uen y rate the number of lost time in uries and medi al treatment in uries for ea h million hours wor ed ( ) n ludes a ombination of ash and in ind ontributions a ounting for asso iated management time and art of the o erational s end on so ial enter rises in a ordan e with the BG framewor ( ) Portfolio average al ulated in a ordan e with NAB S guidelines and in ludes entres with urrent a redited ratings at une 17 efer to the Portfolio NAB S nergy and ater ating 17 at vi inity om au sustainability for the list of entres in luded in the average (l) i inity retained artial interests in two of the nine retail assets divested during FY17 Note ontra ts were ex hanged for the sale of Terra e entral NS whi h is ex e ted to settle in November Vicinity Centres Annual 2017

15 Enriching communities We are out in the centre every day, alongside our retail partners, creating the best retail experience we can for our consumers. We engage with our communities through informal and formal interactions, through activities that resonate and by providing attractive destinations where they can connect. Most importantly, we greet them with a smile. Gabe North-Haney Centre Manager, Bayside Centre Vicinity Centres Annual

16 Our Operating and Financial Review continued Operations i inity has signifi ant s ale and resen e a ross Australia At une 17 we had retail assets under management with a ombined value of billion whi h generated 17 billion in annual sales from leases a ross million s m of gross lettable area (G A) i inity has an ownershi interest in 7 of these assets 1 bringing the value of its dire t ortfolio to 1 billion This se tion focuses on the performance of the direct ortfolio whi h generates the ma ority of i inity s total in ome e ontinued to rogress our ortfolio enhan ement strategy during FY17 divesting interests in 1 retail assets, a uiring the remaining interests in two assets we artly owned and om leting two develo ment ro e ts in luding the ex ansion of hadstone Key highlights and commentary on our operations include: Portfolio occupancy remains high at 99.5% om ared to re orted at une 16 Average leasing spread 3 of 1.9% from in FY16 A strong result given the wea er sales growth environment f the 1 76 leasing deals om leted were renewals with an average leasing s read of 7 Total MAT of $16.2 billion over the ast 1 months but down from 1 re orted over FY16 with only the su ermar et store ategory showing an im rovement in the growth rate over the year Specialty store MAT productivity 4 of $9,429/sqm 6 from 6 at une 16 re e ting both im rovements in the rodu tivity of s e ialty stores and ortfolio om osition Specialty store MAT growth 4 of 0.5% own from re orted over FY16 re e ting the wea er Australian retail sales environment Specialty store occupancy costs 4 of 14.6% n hanged over the year Our portfolio Page Financial performance The following summarised segment in ome statement is extra ted from Note 1 of the Finan ial e ort 30-Jun-16 For the 12 months to: Property Investment segment Net property income Strategic Partnership segment Partnershi s and other in ome Total income or orate overheads (net of internal ro erty management fees) (74.9) ( ) Net interest ex ense (166.0) (1 1 ) Underlying earnings ent lost from underta ing develo ments (28.9) (1 ) Funds from operations Pro erty revaluation in rements m airment and amortisation of intangible assets (3.0) ( ) ther items (33.0) ( 1 ) Net profit after tax 1, PS ( ents) 40.0 nderlying PS ( ents) istribution er se urity ( PS) ( ents) Payout ratio ( PS as a of underlying PS) ( ) 92.3 Adjusted funds from operations (AFFO) istribution as a er entage of AFF ( ) n ludes F Brisbane business and ex ludes F Perth (under onstru tion) n ludes ontra ts ex hanged for the sale of Terra e entral NS whi h is ex e ted to settle in November 17 The varian e between the rent at the end of a lease and the rent re eived over the same s a e for a new lease om arable x ludes divestments and develo ment im a ted entres in a ordan e with S A guidelines 14 Vicinity Centres Annual 2017

17 ey commentary on financial performance Net property income (NPI) down $36.9 million or 3.9% A solid result onsidering the im a t of selling 1 7 billion of assets sin e 1 uly 1 om arable 1 portfolio NP was u re e ting fixed rental in reases growth in an illary in ome and a fo us on ex ense ontrol offset by in reased va an ies during the year as a result of administrations Corporate overheads down $5.9 million or 7.3% Strong fo us on merger synergies and driving o erational effi ien ies Net interest expense down $15.4 million or 8.5% Primarily driven by the timing of asset sales and average debt levels over FY17 being lower than the rior year Asset valuation gains of $906.7 million e e ts the strength of investor demand for uality retail assets as well as in ome growth ver the eriod i inity s weighted average a italisation rate tightened to 61 ( une 16 ) Net valuation gain for the eriod was million Asset valuation gains of $906.7 million reflects the strength of investor demand for quality retail assets, as well as income growth. Note 1 Segment information Page 7 Financial position The following summarised balan e sheet is based on the full finan ial statements As at 30-Jun-16 ash and ash e uivalents 42.2 nvestment ro erties held for sale nvestment ro erties 15, ntangible assets ther assets Total assets 16, Borrowings 3,893.7 ther liabilities 1, Total liabilities 4,911.1 Net assets 11, Net tangible assets er se urity (NTA) ( ) 2.82 Net asset value er se urity (NA ) ( ) Gearing (a) ( ) 24.7 (a) al ulated as drawn debt at Note 7(a) of the Finan ial e ort net of ash divided by total tangible assets ex luding ash finan e lease assets and derivative finan ial assets ey commentary on financial position Investment properties up $1,008.3 million argely driven by valuation gains develo ment ex enditure and the a uisition of interests in two assets artly offset by the dis osal of interests in nine assets efer to Note (b) of the Finan ial e ort for further information Borrowings down $48.5 million Asset sale ro eeds of 6 million offset by a uisitions and develo ment ex enditure over the eriod Gearing down to 24.7% e rease re e ts the strengthened balan e sheet Balance Sheet Page 6 1 om arable ortfolio ex ludes a uisitions divestments and develo ment im a ted entres and is al ulated on a li e for li e basis versus the rior orres onding eriod al ulated as the aggregate net valuation gain for the two six month eriods The net valuation gain ex ludes statutory a ounting ad ustments and assets divested during ea h eriod x ludes the divestment of Terra e entral NS whi h is ex e ted to settle in November 17 Vicinity Centres Annual

18 Our Operating and Financial Review continued Capital management i inity s balan e sheet ontinued to strengthen over the eriod The Grou diversified its debt a ital sour es redu ed gearing and further smoothed the ex iry rofile Together with o erational milestones achieved, this supported a de ision by Standard Poor s to u grade its redit rating of i inity to A with a stable outloo oody s also reaffirmed its A redit rating with a stable outloo in the eriod ver the year we issued million of 1 year and million of 7 year Australian dollar medium term notes, re aid our FY1 debt ex iries and extended the tenor of 1 billion of future ban debt ex iries ith gearing of 7 and a weighted average debt duration of years i inity is well positioned to capitalise on opportunities to support future portfolio enhancement and other initiatives to reate long term value and sustainable earnings growth for se urityholders Tax i inity is a tive in managing the im a t that hanges to tax law an have on our capital structure and future returns to our se urityholders i inity ontinues to engage with Federal Treasury in its review of the taxation regime a lying to sta led stru tures and their se urityholders Tax transparency Page ebt mat rity profile () (a) o rces of ebt ( ) (a) 1,600 1,400 1, , FY18 FY19 (b) FY20 FY21 FY22 FY23 FY24 FY25 FY26 Beyond USPP AMTN EMTN Bank debt drawn Bank debt undrawn (a) Based on fa ility limits (b) FY1 in ludes undrawn ban debt of 7 million With gearing of 24.7% and a weighted average debt duration of 5.3 years, Vicinity is well positioned to capitalise on opportunities to support future portfolio enhancement. 16 Vicinity Centres Annual 2017

19 Shaping better communities Our goal is to help shape better communities, whether it is providing a safe and attractive place for locals to connect, creating low-carbon and resilient destinations, or generating economic and social benefits by investing in our communities. Melissa Schulz General Manager, Sustainability Vicinity Centres Annual

20 Our Operating and Financial Review continued Our management of risk ur Board and management re ognise that effe tive ris management and internal ontrols are an integral art of sound management ra ti e and good or orate governan e and are essential to exe uting on our strategi fo us of delivering long term value and sustainable growth to our se urityholders i inity has dedi ated ris om lian e and sustainability teams that are res onsible for the ongoing review and monitoring of the effe tiveness of grou wide om lian e and ris management systems and ensuring that a ro riate om lian e and ris mitigation measures are in la e to manage ris within agreed ris a etite Throughout the re orting eriod i inity had in la e an enter rise ris management framewor and system of internal controls to ensure that assets are protected and that material ris s are roa tively identified managed and re orted i inity has also underta en a formal materiality assessment to identify our long term e onomi environmental and so ial sustainability ris s This ro ess engaged both internal and external sta eholders to ensure that we res ond to issues that matter most to Vicinity and our sta eholders esults of this assessment have been integrated into i inity s enter rise ris rofile Material risks that could affect achievement of Vicinity s financial prospects Development delivery Vicinity s development pipeline contains a number of urrent and ros e tive develo ment ro e ts There is a ris that develo ment ro e ts are not delivered in a ordan e with Board a roved targets due to delays, increased costs and failure to realise targeted rents or valuation i inity s mitigation strategy for this ris involves rigorous ro e t lanning and management in luding an extensive iterative resear h and lanning ro ess review and ris assessment by a third arty with oversight and a rovals re uired rogressively by an internal nvestment ommittee and the Board sub e t to ro e t ost evelo ment ro e ts are also regularly monitored against s hedule budget and s o e by a ro e t ontrol grou Development Page Retail market conditions The ma ority of i inity s earnings are derived from rental in ome f retail mar et onditions are subdued for an extended eriod this has the otential to im a t tenant viability va an y rates rental growth and our rofitability i inity s a roa h to mitigating this ris involves im roving the uality of our portfolio to ensure that our assets remain relevant to consumers and retailers This may involve tenant remixes develo ments divestments and a uisitions At an asset level i inity s intensive asset management a roa h fo uses on reating om elling onsumer ex erien es im roving amenities and tailoring a entre s retail offer to the wants and needs of the lo al ommunity These initiatives are designed to drive greater onsumer visitation whi h should translate into higher sales and rental growth Our portfolio Page Structural changes in the retail sector The retail se tor is onstantly evolving onsumer behaviour and sho ing referen es are hanging in luding when, where, why and how consumers sho hanges su h as the in ux of international retailers into Australia, the role of digital te hnology and the growth in online retailing ontinue to in uen e how i inity o erates its business Amazon s announcement that it will move into the Australian mar et is also redi ted to have an in uen e on the domesti retail lands a e but the extent of its in uen e will de end on the rodu t and distribution model hosen and how onsumers and existing retailers res ond i inity s mitigation strategy is to ontinue to research, monitor, anticipate and adapt to these trends ur entre management leasing and develo ment teams wor together to reate a develo ment master lan a five year strategi leasing lan and a strategi asset lan for ea h asset These lans fa tor in onsumer preferences, development and product opportunities, tenant renewal and re la ement strategies and rent or a ital re uirements The billion i eline ( i inity share billion) of develo ment ro e ts is fo used on ensuring our entres ada t to stru tural hanges and remain relevant to our onsumers retailers and ommunities i inity has also been a tively remixing the tenant composition of its centres to in rease the weighting towards food and servi es and away from mid tier a arel retailers in line with hanging onsumer referen es This overall strategy is su lemented by ongoing and more agile efforts to develo better onsumer ex erien es whi h leverage our hysi al assets and sta eholder relationshi s i inity s digital strategy is fo used on building a seamlessly integrated hysi al and digital retail ro erty latform to assist in reating uni ue and relevant onsumer ex erien es and in delivering om elling value for our retailers This year, Vicinity completed its connectivity ro e t to onne t all of its entres and offi es to the one high s eed digital networ with ifi a abilities This will rovide benefits for i inity and our onsumers retailers and ommunities Development Page Intensive asset management Page 7 Digital Page 18 Vicinity Centres Annual 2017

21 Capital allocation and the achievement of an optimal property portfolio composition n order to meet i inity s return ex e tations it is riti al that our ro erty portfolio composition is optimised and that a ital is allo ated rudently i inity s ortfolio om osition along with any developments, divestments and a uisitions underta en an signifi antly im a t i inity s total return Vicinity has clear investment criteria for evaluating assets with ualitative and uantitative fa tors used to assess asset uality and ros e tive erforman e i inity ensures strong governan e and oversight of a ital allo ation de isions through its internal nvestment ommittee Our portfolio Page Health and safety i inity s o erations ex ose our team contractors, retailers and consumers to the ris of in ury or illness n addition a health and safety incident could affect i inity s re utation sub e t it to laims for finan ial om ensation or have regulatory onse uen es e are ommitted to roviding an in ury free environment for all of our sta eholders in line with our belief that everyone has the right to go home safe and healthy i inity has a dedi ated health and safety team that maintains our health and safety management system to support the provision of a safe and healthy environment This in ludes roviding indu tion and edu ation the use of om etent ontra tors regular reviews of our ro edures and stringent health and safety assessments rior to a ointing principal contractors for development and asset refurbishment wor s i inity maintains a risis and emergen y management system whi h rovides the framewor for i inity to res ond to a ma or in ident or risis o urring at one of its centres, development sites or offi es This system is su orted by a training and edu ation rogram a ross our entres in luding the use of des to and simulated emergen y management exer ises ebriefs and ost in ident reviews are ondu ted after any signifi ant incident or event, in order to assess the effectiveness of the system and to identify and implement any opportunities for im rovement Our people Page Funding and liquidity i inity uses debt as an im ortant sour e of funding for ongoing o erations develo ments and a uisitions There is a ris that a ess to debt funding is not available at the a ro riate ri e or annot be a essed in the re uired timeframes to su ort the ongoing management and develo ment of our business Funding and li uidity ris is managed through a rudent a ital management hiloso hy ey attributes of this philosophy are the maintenance of a strong balan e sheet with moderate gearing ( une 17 7 ) reservation of an investment grade redit rating diversifi ation of debt sour es and forward lanning to address u oming debt maturities i inity also has oli ies in la e to regulate the level of ex osure to interest rate ris and fully hedges its ex osure to foreign urren y denominated debt Capital management Page 16 Cyber security ver re ent years there has been signifi ant growth globally in the number so histi ation and severity of yber atta s Brea h or failure of i inity s information te hnology systems ould ex ose it to finan ial loss disru tion or damage to o erations and re utational damage i inity has a strong fo us on maintaining and im roving its organisational resilien e and has developed an information se urity management system whi h in ludes strategies for managing yber ris i inity has an information se urity manager leading a rogram of wor to im rove its se urity maturity ommen ing with development of a security governan e framewor de loyment of se urity tools training and awareness for users, and assessments of third party and networ se urity Climate change limate hange resents both dire t and indire t ris s for i inity now and in reasingly over the longer term xtreme weather events such as heatwaves, y lones and ooding in rease the hysi al vulnerability of our entres and their communities, which may impact our operational costs, asset values, consumer visitation and retail sales i inity also a nowledges the role we need to lay in transitioning to a low arbon ortfolio to limit our im a t on the limate e res ond to limate hange by fo using on building a resilient and low arbon ortfolio that an withstand long term hysi al and non hysi al ris s while su orting our onsumers and retailers and in reasing our energy self suffi ien y n FY17 we om leted a ortfolio wide limate ris assessment and embedded onsideration of limate ris into ey business ro esses su h as ris management develo ment asset lanning a ital allo ation and transa tion de isions ma ing our business more resilient over the longer term e are also in the ro ess of setting a long term low arbon target for i inity and develo ing a athway to a hieve this target through a ombination of energy effi ien y and onsite renewable energy generation Better business Page 7 CDP submissions vi inity om au Vicinity Centres Annual

22 Our Operating and Financial Review continued Engaging with our stakeholders At i inity we rely on strong relationshi s with our sta eholders to o erate our business su essfully and deliver our strategy Proa tive and ongoing engagement enables us to understand our sta eholders wants and needs gain better insights into material business ris s and also identify o ortunities to reate shared value out omes that are benefi ial to both i inity and our sta eholders e engage with our sta eholders in many ways throughout the year to understand their ex e tations of i inity The following table outlines i inity s ey sta eholders our ob e tives for those sta eholders and their material interests in their interactions with Vicinity; all of which helps to shape our business a tivities Proactive and ongoing engagement enables us to understand our stakeholders wants and needs, gain better insights into material business risks, and also identify opportunities to create shared value. Stakeholder materiality Consumers Our objectives Material interests of stakeholders Our response reate uni ue and A ro riate tenant mix to servi e onsumers evelo ment age relevant ex erien es wants and needs ntensive asset management age 7 through our destinations Providing onvenient and safe igital age and sha e better sho ing ex erien es communities Retailers eliver om elling destinations and value to support the success of retail operations n reasing onsumer visitation and dwell time Su ortive entre management and leasing services that help retailers to succeed Su essful mar eting initiatives A uisitions age evelo ment age ntensive asset management age 7 igital age Securityholders reate long term value and sustainable growth eeting and ex eeding finan ial ex e tations es onding to hanging onsumer trends Su essfully delivering our develo ment pipeline aintaining a strong re utation through regular and trans arent dis losure Finan ial erforman e age 1 a ital management age 16 Tax trans aren y age A uisitions age ivestments age evelo ment age ntensive asset management age 7 17 or orate Governan e Statement vi inity om au Strategic partners nsure stable and growing returns eliver stable and growing returns es onding to hanging onsumer trends Providing an a ro riate level of timely re orting elivering on investment ob e tives evelo ment age ntensive asset management age 7 igital age Our people Su ort a highly engaged team that embra es our values and deliver on our strategy Create a diverse and inclusive culture that romotes e ual o ortunities and meaningful ex erien es Flexibility to balan e rofessional and personal needs to ensure health and wellbeing earning and areer develo ment opportunities ur eo le age Suppliers reate long term relationships, and ma e a ositive im a t on our communities Building ollaborative and mutually benefi ial artnershi s Timely payment for services Fair business ra ti es Sha ing better ommunities age ur su liers vi inity om au 20 Vicinity Centres Annual 2017

23 Partnering with retailers We partner with our retailers to better understand how we can deliver them compelling value, while helping them to achieve success by creating mutually beneficial outcomes, ultimately, to enhance the consumer experience. Simone Dirckze National Retailer Experience Manager, Marketing Vicinity Centres Annual

24 Our Portfolio As one of the largest owners and managers of retail assets in Australia, our portfolio rovides signifi ant o ortunity to reate shared value for our sta eholders To do this we have an ongoing fo us on enhan ing our ortfolio uality and om osition through targeted a uisitions divesting assets that no longer meet our investment riteria and develo ing refurbishing and intensively managing our assets strategi ally investing in initiatives that enhan e the sustainability and resilien e of our entres and strengthen their local communities, and delivering our strategy to reate uni ue and relevant ex erien es for our onsumers deliver om elling value for our retailers and strive for ex ellen e in everything we do Acquisitions n A ril 17 we too full ontrol of F South harf in elbourne by a uiring the remaining interest for 1 1 million 1 following om letion of onstru tion of a multi de ar ar The asset has delivered strong returns and has the potential to continue to strengthen over time with the ex ansion of conference facilities currently underway at the ad a ent elbourne onvention and xhibition entre n August 16 we settled the a uisition of the remaining interest in Bentons S uare for million 1 The Neighbourhood entre is lo ated on i toria s ornington Peninsula with a strongly erforming su ermar et Divestments e ontinued to refine our ortfolio om osition during the year with the divestment of interests in 1 retail assets for a ombined value of 6 million 1, at a remium to revailing boo values Given the differen e between ro erty yields and borrowing osts divesting these assets has been dilutive to earnings rior to the reinvestment of any sale ro eeds owever we believe the short term earnings dilution from the asset sales is outweighed by the long term benefits of an enhan ed ortfolio generating more robust and higher uality earnings growth and a strengthened balan e sheet whi h rovides signifi ant headroom for investing in our development pipeline and other investment o ortunities ur ortfolio is reviewed every six months against our investment riteria ver the ourse of FY1 we intend to divest a roximately million of non ore assets Vicinity s investment criteria Vicinity considers a range of criteria to evaluate an asset s investment potential. This provides a framework with which to benchmark the composition of the portfolio every six months and also for reference when reviewing potential acquisition opportunities. Key criteria include: forecast future total returns catchment fundamentals competition longer term resilien e (in luding limate hange and e ommer e) development potential, and sales rodu tivity and growth DFO South Wharf, VIC 1 x luding transa tion osts n luding ontra ts ex hanged for the sale of Terra e entral NS whi h is due to settle in November Vicinity Centres Annual 2017

25 Development ur billion develo ment i eline ( i inity share billion) remains an im ortant driver of ortfolio enhan ement evelo ments enable i inity to build sustainable and in lusive lifestyle destinations, introduce the latest retail on e ts and revitalise our offer enhan ing the overall retail ex erien e This in turn hel s to im rove the uality of our in ome streams through in reased mar et share and sales growth Strong rogress has been made a ross a number of ro e ts over the ast year The om letion of the ma or redevelo ment of hadstone together with the entre s ontinued strong trading erforman e showcases Vicinity s development and asset management ex ertise Australia s premier portfolio of DFO Outlet Centres Vicinity is the proud owner and manager of Australia s premier portfolio of DFO Outlet Centres with interests in six DFOs at a total value of $1.4 billion, representing 9% of our direct portfolio. The DFO concept focuses on offering consumers a wide range of quality branded products at discounted prices. Our DFOs continue to perform strongly, operating at full occupancy the majority of the time, driving strong leasing spreads and income growth. Over the seven years of Vicinity s ownership, the DFO portfolio has provided a total return of approximately 15.3% per annum. During the year, we acquired the remaining 25% interest of DFO South Wharf. In July 2017, we commenced construction of Perth s first DFO, in partnership with Perth Airport Pty Ltd, which we anticipate will experience the same success as our East Coast centres. At DFO Brisbane we have achieved significant improvements since commencing management of the asset in June We quickly introduced Vicinity s intensive asset management approach including lifting basic operational compliance and standards, improving centre marketing and the tenancy mix generating positive leasing spreads, and driving additional ancillary income. This has delivered strong results, with annual consumer traffic up 21% and MAT up 12%. Development pipeline Key (): Vicinity share Partner share Total Mandurah Forum, WA Current The Glen, VIC DFO Perth, WA Midland Gate, WA 100 Roselands, NSW (a) TBA Estimated FY18 commencements Chadstone Hotel, VIC Galleria, WA Estimated FY19 commencements The Myer Centre Brisbane, QLD Note Timing and osts of identified ro e ts are indi ative only and may hange as ro e ts advan e (a) aster lanning ontinues Vicinity Centres Annual

26 Our Portfolio continued Development continued FY17 completed projects Chadstone etail in Australia has been ta en to the next level with the om letion of the 666 million ( i inity share million) ma or redevelo ment of hadstone in FY17 reating Australia s remier retail entertainment and dining destination and reinfor ing the entre as one of the to retail assets globally The northern end of the centre has been transformed with the reation of an entertainment leisure and dining precinct around a central atrium, spanned by an i oni glass olumn free gridshell roof the first of its ind in Australia The develo ment offers an ex anded luxury mall and new large format international agshi stores in luding Se hora ni lo and ara hadstone now also features a new state of the art YTS digital inema om lex a seven restaurant ining Terra e a 1 seat 1 tenan y Food Gallery a Tesla otors dealershi and Australia s first G AN is overy entre The ma or ro e t also involved the reation of a 1 bay bus inter hange one of elbourne s busiest to servi e the entre and the surrounding suburbs as well as the introdu tion of a new 1 level 16 s m offi e tower whi h is fully leased Both were om leted in FY16 and bring a range of new users to the asset The entre is now also servi ed by over 1 ar s a es Both the retail and offi e develo ments were ertified Star Green Star 1, re resenting Australian x ellen e in environmentally sustainable building design and roviding a range of ositive out omes for our tenants onsumers and our eo le The ro e t will deliver a year one yield of 6 and a fore ast internal rate of return ( ) of over 11 while substantially enhan ing the onsumer and retailer ex erien e This ro e t builds u on a history of su essful develo ments at this world class asset and the evolution of this asset ontinues The onstru tion of a ro osed room 1 level hotel ad a ent to the offi e tower is targeted to ommen e in 1 e also have lans to remix and further ex and the luxury re in t redevelo the existing se ond food ourt Chadstone, VIC Proposed hotel Chadstone, VIC Artist s impression and underta e external dining ex ansions and ross mall re onfigurations aster lanning of larger future stages also ontinues 1 etail om onent was ertified Star Green Star etail esign v1 and the offi e tower was ertified Star Green Star ffi e ating 24 Vicinity Centres Annual 2017

27 Engaging consumers We understand that our consumers deserve a great experience with us including excellent service and convenience, while being offered a tailored range of products and services. We strive to create sustainable destinations of the future where people love to visit and connect. Josef Seidler Regional General Manager, Development Vicinity Centres Annual

28 Our Portfolio continued Development continued Projects under construction Mandurah Forum onstru tion and leasing are rogressing well on the million ( i inity share 17 million) ma or redevelo ment of andurah Forum The s a e multi de ar ar was o ened rior to hristmas 16 ahead of rogram The first stage of retail in luding the new format Target and around 6 s e ialty stores om leted on rogram in uly 17 and is fully leased n om letion ex e ted in mid 1 the asset will be signifi antly ex anded and revitalised t will om rise over retailers in luding a new format avid ones store along with a dramati ally im roved dining and fresh food offer reinfor ing it as the dominant retail destination in one of Australia s fastest growing regions The ro e t is ex e ted to deliver a forecast initial yield on cost of over 6 and of over 1 The Glen onstru tion ommen ed in ar h 17 for the 6 million ( i inity share million) ex ansion of The Glen The first stage is fully leased and will o en in late 17 t will in or orate a fresh food mar et hall an hored by Coles, a new Aldi and the latest format oolworths and in ludes over 6 s e ialty stores on the lower ground oor The ro e t will be om leted over a number of stages to minimise retail downtime through to and is ex e ted to deliver an initial yield greater than 6 and an of more than 1 n om letion The Glen will in lude the latest format avid ones a new ontem orary food gallery an outdoor dining re in t and a om lete refurbishment of the existing entre uring the year we divested 1 air rights to a residential develo er Golden Age to deliver more than a artments over three towers on the southern end of the site esidential onstru tion is ex e ted to ommen e in 1 and om lete within months 1 x e ted to settle in 1 DFO Perth Construction has commenced on the 1 million ( i inity share 7 million) develo ment of Perth s first F This latest addition to i inity s F ortfolio will in lude a roximately 1 outlet retailers over s m servi ed by more than 1 ar s a es easing discussions are well advanced, with strong retailer demand Pro e t om letion is ex e ted in 1 and is forecast to deliver an initial yield in ex ess of 1 and an of greater than 1 Mandurah Forum, WA Asset refurbishment projects The Asset efurbishment Team (A T) wor s on minor ro e ts to enhan e uality and onsumer ex erien e in assets that are not agged for develo ment in the short to medium term A T ro e ts involve the investment of small amounts of capital in improvements in areas such as mall space, entrances and amenities to drive consumer visitation, increase sales enhan e leasing demand and reate other in ome o ortunities n FY17 we om leted eight A T ro e ts at a total investment of 1 million ( i inity s share) generating an average initial return of around 7 etailer and onsumer feedba on these om leted ro e ts has been very ositive Additional ro e ts have been s heduled for delivery during FY1 in line with our investment strategy and ongoing fo us on im roving the ex erien e and offer for our consumers, retailers and lo al ommunities 26 Vicinity Centres Annual 2017

29 om a ting bins in entres a ross our ortfolio with more ex e ted to be introdu ed in FY1 By monitoring and om a ting waste these bins re uire em tying far less fre uently and where they are located outdoors, they are solar owered Intensive asset management e have retail assets under management 1 7 of whi h i inity has dire t ownershi in ma ing us one of the leading retail landlords a ross Australia ow we manage our assets tou hes all three fo al oints of our strategy the onsumer the retailer and better business For the onsumer it is about delivering an engaging and a ro riate retail mix and reating a great ex erien e through uality servi es and amenities with easy a ess By getting this right we attra t more eo le to our destinations a ey deliverable for our retailers e are also fo used on roviding a high level of servi e for our retailers and hel ing them to su eed Better business involves using data to gain a better understanding of onsumers and our o erations managing our assets more effi iently through the use of te hnology and identifying o erational effi ien ies at our entres and our or orate offi es The Glen, VIC Artist s impression DFO Perth, WA Artist s impression uring the year we established a number of ross fun tional wor ing grou s alled s uads five of whi h are focused on aspects of the consumers ex erien e in our entres and four of whi h are fo used on the ex erien e that our retailers have with us These s uads have a rimary goal of identifing solutions to im rove the ex erien es of our onsumers and retailers Better business We continue to improve our net income osition by a hieving o erational effi ien ies and minimising in reases in ontrollable outgoings ur ortfolio s ale and breadth allows us to trial a number of initiatives a ross a range of entre ty es then as a ro riate these initiatives an be rolled out a ross the ortfolio and to new assets we a uire After successful trials, we have installed n the eriod we have ontinued to wor with our leaning artners for them to introdu e new roboti te hnology to assist with overnight leans of our entres These ma hines generate effi ien ies by roviding a better lean with less hemi al and water usage ith a ortfolio of our si e energy onsum tion forms a large ro ortion of our outgoings and we are fo used on reating low arbon highly effi ient smart assets and redu ing our relian e on the grid e have su essfully trialled solar generation at a number of our assets and during FY1 we will be develo ing a rogram to roll out solar a ross a number of entres in our ortfolio Along with ontinued fo us on energy effi ien y this year we will be establishing a low arbon target for i inity e ben hmar the sustainable erforman e of our assets using the Green Star and NAB S rating tools This year we were pleased to have our entire portfolio Green Star Performan e rated with an average ortfolio rating of Stars u from Stars in FY16 e are the largest property portfolio in Australia to achieve su h a rating These ratings allow us to ben hmar our urrent erforman e and identify areas where we can improve the sustainability of our assets ur environmental im rovement rogram drives ontinuous rogress in resour e effi ien y a ross our ortfolio This year we ontinued to redu e our energy and arbon emissions intensity er s uare metre, as well as the proportion of waste we send to landfill Key performance metrics Page 1 Sustainability performance vi inity om au 1 At une 17 Salamander Bay entre whi h was managed for a strategi artner was sold in uly 17 Vicinity Centres Annual

30 Our Portfolio continued Intensive asset management continued Shaping better communities As signifi ant lo al hubs our entres have an im ortant role to lay in sha ing better ommunities both e onomi ally and so ially n FY17 we invested 1 million 1 into ommunities through artnershi s with our retailers, suppliers and national and lo al ommunity grou s This year i inity entered into a three year artnershi with Bea on Foundation with an annual ontribution of 1 to help deliver our community investment rogram whi h fo uses on unem loyed and disengaged youth an area that we believe i inity is well ositioned to hel address through our day to day business a tivities and extensive networ of entres n FY17 i inity also undertoo an internal ommunity grants rogram where 1 was distributed at a entre level for the formation of local partnerships to i start this rogram and address s e ifi needs within their at hments ocial proc rement benefits everyone Partnering with social enterprises is an important facet of Vicinity s sustainability strategy and presents us with the opportunity to make a positive impact in our local communities through our day-to-day activities. We believe that our inclusive approach strengthens our communities and increases the success of our business. Our sustainability and social procurement programs aim to engage our broader communities and enhance the connection they have with our centres by creating opportunities for employment focusing on disadvantaged youth and other marginalised groups. During the year, Vicinity has procured over $300,000 in services from social enterprises and supported the employment of approximately 30 disadvantaged individuals from our communities. We currently have landscaping and maintenance services being undertaken at our centres in partnership with: Y A ebuild in i toria whi h em loys youth out of ustody and su orts their re integration into the ommunity and A tiv Foundation in estern Australia and ouse ith No Ste s in New South ales whi h em loy eo le with disabilities We also encourage our suppliers to create opportunities for social enterprises in their operations and supply chains through our Sustainable Procurement Policy. During the year, we partnered one of our cleaning suppliers with Marist Youth to employ at-risk youth for cleaning services at one of our centres. Activ Foundation Marist Youth 1 n ludes a ombination of ash and in ind ontributions a ounting for asso iated management time and art of the o erational s end on so ial enter rises in a ordan e with the BG framewor 28 Vicinity Centres Annual 2017

31 Celebrating difference We celebrate difference and encourage our people to bring their whole selves to work. By taking this approach it enables us to have a greater understanding of our diverse communities and deliver better outcomes. Veronica Millen Diversity and Engagement Manager Vicinity Centres Annual

32 Our People Chadstone National Office, VIC ur a roa h to eo le and ulture is designed to su ort a talented and highly engaged team to deliver with energy and assion a better easier and more en oyable ex erien e a ross i inity and for our sta eholders ith our desire to reate a great wor la e we have fo used on understanding the needs of our eo le Together with the lear arti ulation of our grou strategi dire tion in the year this fo us allows us to learly define and build our desired i inity ulture Peo le and ulture at i inity is fo used on four pillars: develo ing talent and a ability defining and nurturing our ulture and values energising and engaging our eo le and sha ing our organisation These strategi illars have enabled the people and culture team to live out their ur ose of reating an awesome la e to wor Sin e formation two years ago we have seen a shift in the culture at i inity with the team embra ing new ways of wor ing whether it is art of our newly reated exible wor ing oli y real time wor ing onditions or agile stand u s This has been embra ed at i inity s new national offi e at hadstone with the team be oming a ustomed to the new ways of real time wor ing This ositive shift has been re e ted in our engagement survey results this year with a high arti i ation rate of and our overall engagement in reasing by er entage oints to a s ore of 71 e are ex e tionally roud of the dire tion we are heading and we ex e t our engagement to ontinue to in rease year on year Health and Safety At Vicinity, we believe everyone has the right to go home safe and healthy. This belief underpins the way we do business. Essential to our health and safety goals is having effective leadership at all levels throughout the organisation. We expect our people leaders to champion good health and safety practices in the workplace and actively engage with their team members. We are pleased with the good practices embraced within Vicinity, with high scores for health and safety in both the current and prior years engagement surveys. Since forming two years ago, we have seen a shift in the culture at Vicinity, with the team embracing new ways of working; whether it is part of our newly created flexible working policy, real-time working conditions or agile stand-ups. 30 Vicinity Centres Annual 2017

33 As art of our fo us on im roving ex erien es for our eo le and attra ting the very best talent to the business a number of ey initiatives were underta en during the year Diversity and inclusion sing both external resear h and feedba from our eo le about what matters most to them we established three ey areas of focus for our diversity and inclusion rogram this year gender age and mental health isability and ethni ity were also identified as im ortant onsiderations for our rogram To hel romote a more diverse and in lusive wor la e we romote a ulture of exibility and in lusive leadershi uring the year we undertoo un ons ious bias and mental health training for all senior leaders established formal and informal exible wor ing arrangements for our eo le to a hieve a better wor life balan e and introdu ed or orate rograms that su ort health and wellbeing Leadership eadershi has been a ey fo us for i inity e have introdu ed monthly meetings of senior leaders a ross the business in order to rovide regular u dates on ey a tivities Twi e a year we hold senior leader forums a two day conference where senior leaders ollaborate and strategise for the future of the business n addition arti i ants in our first veryday eader rogram graduated earlier in the year The rogram involved 6 senior leaders mentoring 1 managers a ross our business which has developed and improved the oa hing s ills of our leaders while roviding some great insights into behaviours and leadershi for our managers Helping our people contribute to communities Vicinity introduced new employee volunteering and wor la e giving rograms this year to enable our eo le to dire tly ontribute to our ommunities ur s illed volunteering rogram delivered through our or orate artner Bea on Foundation is lin ed to individual learning and develo ment ob e tives #sheimagines This enables our eo le to rovide valuable assistan e to those in need while also using volunteering as a latform to develo s ills and ex erien e to su eed in the wor la e e also have a wor la e giving rogram that provides our employees the opportunity to su ort a wide range of so ial auses that are important to them, with access to over 1 harities a ross Australia A new initiative #sheimagines was launched on International Women s Day. The #sheimagines campaign is aimed to be a conversation starter and call to action to stop assuming and start listening to what women think, and is part of an ongoing initiative designed to demonstrate our commitment to gender diversity. #sheimagines Chadstone National Office, VIC Vicinity Centres Annual

34 Digital Emporium Melbourne, VIC igital te hnology is hanging the way consumers shop, how retailers sell and how we manage our assets These te hnologies are roviding i inity with the opportunity to enhance the consumer and retailer ex erien e in addition to driving o erational effi ien ies n line with our digital strategy in FY17 i inity has been building greater a ability in digital and data analyti s while also rogressing wor on our digital illars of onne tivity online and omni Connectivity uring the year we om leted the connection of our retail assets and or orate offi es to the one high s eed digital networ with ifi onne tivity throughout ur onsumers now have a ess to free high s eed ifi at our entres and the ri h data we are gathering from this networ is enabling us to gain insight into onsumer behaviour in luding dwell times foot traffi and traffi ows The fo us for FY1 is to leverage this data to enhan e the onsumer ex erien e rovide insights to retailers and im rove the way we manage our assets Online The online ex erien e is a riti al component of our consumers overall ex erien e with us This year we have invested signifi antly in reating leading websites that om lement our hysi al assets n FY1 i inity will ontinue to develo its online latform by ma ing our entres more dis overable online im roving digital wayfinding and in reasing our a ability to ersonalise our mar eting ommuni ations in order to engage with new and existing onsumers i inity is also develo ing a new online retailer portal to deliver insights and im rove engagement with our retail artners Omni e now our onsumers blend digital and hysi al ex erien es in their everyday lives etail ex erien es should be no different with the future to be hara terised by the seamless integration of the hysi al and digital environments igital te hnology when ombined with the hysi al environment has the o ortunity to rovide a uni ue and enhan ed retail ex erien e for our onsumers and will also assist in redu ing oints of fri tion For FY1 i inity has established three broad areas of fo us within omni wayfinding ar ing and last mile delivery ithin these fo us areas i inity is using an agile a roa h to develo digitally enabled rodu ts and solutions that will enhance the physical retail ex erien e for our onsumers 32 Vicinity Centres Annual 2017

35 Knowing our consumers To create unique and relevant experiences we take time to understand our consumers wants, needs and behaviours. Using a combination of qualitative and quantitative data insights, we are able to evolve and tailor our destinations to enhance the retailer and consumer experience. Ranil Illesinghe Consumer Intelligence Manager Vicinity Centres Annual

36 Our Board ur Board is ommitted to high standards of or orate governan e ur or orate governan e latform is integral to su orting our strategi value drivers rote ting the rights of all of our investors and reating long term value and sustainable growth Corporate governance Throughout FY17 i inity entres governan e arrangements were consistent with the Corporate Governan e Prin i les and e ommendations ( rd edition) (Prin i les) ublished by the AS or orate Governan e oun il ur or orate Governan e Statement outlines our a roa h to governan e in luding the stru ture and res onsibilities of our Board and our exe utive 2017 Corporate Governance Statement vi inity om au Further information You an find more dis losure on the following to i s Our strategy Page Our management of risk Page 1 Sustainability vi inity om au Tax transparency Page Contact us Page 11 Peter Hay B FA Chairman, Independent Non-executive Director A ointed une 1 Background and Experience Peter ay has a strong ba ground and breadth of ex erien e in business or orate governan e finan e and investment ban ing advisory wor with a arti ular ex ertise in relation to mergers and a uisitions r ay was a artner of the legal firm Freehills until where he served as hief xe utive ffi er from r ay has also had signifi ant involvement in advising governments and government owned enter rises r ay is hairman of the Nominations ommittee Current Directorships, Executive Positions and Advisory Roles Chairman: Newcrest ining imited ire tor Australian nstitute of om any ire tors ember Australian Government Ta eovers Panel and A or orate Governan e ommittee Past Non-executive Directorships ( ast three years) G oldings imited Novion imited Alumina imited Australia and New ealand Ban ing Grou imited NBN o imited and yer oldings imited Angus McNaughton B S ( NS) FAP CEO and Managing Director A ointed tober 1 1 Background and Experience Angus Naughton has more than years ex erien e in the ro erty se tor Previously r Naughton was the anaging ire tor and of Novion Pro erty Grou (Novion) Before Novion r Naughton held a number of roles within olonial First State Global Asset anagement ( FSGA ) in luding anaging ire tor of Pro erty ead of holesale Pro erty and hief xe utive of the anager of iwi n ome Pro erty Trust in New ealand (now nown as iwi Pro erty Grou imited) Current Directorships, Executive Positions and Advisory Roles ire tor Sho ing entre Council of Australia and Pro erty oun il of Australia Past Non-executive Directorships ( ast three years) Novion imited Charles Macek B Admin FA F A F PA SF Fin Independent Non-executive Director A ointed e ember 11 Background and Experience harles a e has extensive exe utive ex erien e in the finan e industry in Australia New ealand the nited ingdom and a an r a e has held numerous senior positions and directorships in a range of ubli om anies in luding Telstra and is a former ire tor and hairman of F former hairman of the Finan ial e orting oun il and former Vice Chairman of the nternational Finan ial e orting Standards Advisory ommittee r a e is hairman of the Remuneration and Human Resources Committee and a member of the Nominations ommittee Current Directorships, Executive Positions and Advisory Roles hairman arthwat h nstitute Australia and ivid Te hnology td ire tor Sinefa Pty td and indlab imited ember AS ire tor Advisory Panel and nvestment ommittee of nisu er td Past Non-executive Directorships ( ast three years) esfarmers td 1 A ointed as in August 1 and anaging ire tor following the 1 Annual General eeting in tober 1 34 Vicinity Centres Annual 2017

37 David Thurin (Dr) BBS P A G F A GP S in anagement Non-executive Director A ointed une 1 Debra Stirling BA GA Independent Non-executive Director A ointed e ember 11 Karen Penrose B ( NS ) PA FA Independent Non-executive Director A ointed une 1 Peter Kahan B BA A A Non-executive Director A ointed une 1 Background and Experience r avid Thurin has had extensive ex erien e in the property industry that includes senior roles within The Gandel Group and associated om anies in luding being the oint anaging ire tor r Thurin was a ire tor of The Gandel Group at the time of the merger between Gandel Retail Trust and Colonial First State etail Pro erty Trust in r Thurin is the anaging ire tor and founder of Tig or Pty td whi h has property interests in retirement villages and land subdivision e has a ba ground in medi ine having been in private practice for over a decade, and was a prior President of the nternational iabetes nstitute r Thurin is a member of the is and om lian e ommittee Current Directorships, Executive Positions and Advisory Roles anaging ire tor Tig or Pty td ire tor elbourne Football lub and Ba er eart and iabetes nstitute Past Non-executive Directorships ( ast three years) Novion imited Background and Experience ebra Stirling has more than years ex erien e as a senior exe utive in retailing building and onstru tion materials manufa turing mining and agri ulture s Stirling was xe utive General anager of Peo le and Communications for New rest ining imited from anuary to uly 1 She has reviously held exe utive roles with in er Grou S and oles yer s Stirling is a member of the Remuneration and Human Resources Committee and the is and om lian e ommittee Current Directorships, Executive Positions and Advisory Roles hairman onash niversity ining esour es Advisory Board ire tor ission Australia ember PNG Government s ae Te hni al Training entre of x ellen e Tas for e and Victorian Resources oundtable Past Non-executive Directorships ( ast three years) None Background and Experience aren Penrose has a strong ba ground and ex erien e in business finan e and investment ban ing in both the ban ing and or orate se tors s Penrose is a full time non exe utive dire tor er rior exe utive areer in ludes years with ommonwealth Ban and SB and eight years as a hief Finan ial ffi er and hief erating ffi er with two AS listed om anies s Penrose served hief xe utive omen ( ) for six years as a member of s Council and continues as a member of the advisory anel for s eaders Program s Penrose is hairman of the Audit Committee and a member of the is and om lian e ommittee Current Directorships, Executive Positions and Advisory Roles ire tor A imited S ar nfrastru ture Grou Future Generation Global nvestment om any imited ( ro bono role) Ban of ueensland imited and arshall nvestments Pty imited Past Non-executive Directorships ( ast three years) Novion imited Silver hef imited and rbangrowth NS Background and Experience Peter ahan has a long areer in ro erty funds management with rior roles in luding hief xe utive ffi er and Finan e ire tor of The Gandel Grou r ahan was the Finan e ire tor of The Gandel Grou at the time of the merger between Gandel etail Trust and olonial First State etail Pro erty Trust in Prior to oining The Gandel Grou in 1 r ahan wor ed as a Chartered Accountant and held several senior finan ial roles across a variety of industry se tors r ahan is a member of the Audit Committee, the Remuneration and Human Resources Committee and the Nominations ommittee Current Directorships, Executive Positions and Advisory Roles xe utive e uty hairman The Gandel Grou Pty imited Past Non-executive Directorships ( ast three years) Novion imited and harter all Grou Vicinity Centres Annual

38 Our Board continued Tim Hammon B om B Independent Non-executive Director A ointed e ember 11 Trevor Gerber BA A SA Independent Non-executive Director A ointed une 1 Wai Tang BA S BA GA Independent Non-executive Director A ointed ay 1 Background and Experience Tim ammon has extensive wealth management ro erty servi es and legal ex erien e e is urrently hairman of The Pa ifi Group of Companies Advisory Board and a onsultant to utual Trust Pty imited r ammon reviously was hief xe utive ffi er of utual Trust Pty imited and wor ed for oles yer td in a range of roles in luding hief ffi er or orate and Pro erty Servi es with res onsibility for property development and leasing and or orate strategy e was also anaging Partner of various offi es of allesons Ste hen a ues r ammon is the hairman of the is and om lian e ommittee and a member of the Remuneration and Human Resources Committee and the Nominations ommittee Current Directorships, Executive Positions and Advisory Roles hairman The Pa ifi Grou of om anies Advisory Board onsultant utual Trust Pty imited Past Non-executive Directorships ( ast three years) None Background and Experience Trevor Gerber wor ed for 1 years at estfield initially as Group Treasurer and subse uently as ire tor of Funds anagement res onsible for estfield Trust and estfield Ameri a Trust e has been a rofessional dire tor sin e and has ex erien e in ro erty funds management hotels and tourism, infrastructure and a ua ulture r Gerber is a member of the Audit Committee and the Remuneration and Human esour es ommittee Current Directorships, Executive Positions and Advisory Roles hairman Sydney Air ort oldings ire tor Grou imited Tassal Grou imited and egis ealth are imited Past Non-executive Directorships ( ast three years) Novion imited Background and Experience ai Tang has extensive retail industry ex erien e and nowledge gained through senior exe utive and board roles er former senior exe utive roles in luded erations ire tor for ust Grou and hief xe utive ffi er of the ust Grou slee wear business Peter Alexander Prior to oining the ust Grou she was General anager of Business evelo ment for Pa ifi Brands She was also the o founder of the a y ab retail onfe tionery on e t s Tang is a member of the Audit ommittee and the is and om lian e ommittee Current Directorships, Executive Positions and Advisory Roles ire tor i i B i Fi imited isit i toria and the elbourne Festival Past Non-executive Directorships ( ast three years) S e ialty Fashion Grou and r al elbourne Fashion Festival 36 Vicinity Centres Annual 2017

39 Our Executive Committee The and anaging ire tor ( ) together with the members of the xe utive ommittee and senior leaders is res onsible for im lementing our strategy a hieving i inity s business erforman e and finan ial ob e tives and arrying out the day to day management of i inity s affairs anagement is also res onsible for su lying the Board with a urate timely and clear information to enable the Board to erform its res onsibilities Management committees The has established a number of ommittees to fa ilitate de ision ma ing by management anagement committees include: Executive Committee om rised of nine members outlined on the urrent age and overleaf Investment Committee in ludes the hief nvestment ffi er ( ) ( hair) hief Finan ial ffi er ( F ) and the xe utive General anagers of Sho ing entres evelo ment and easing Capital Management Committee F ( hair) General anager (G ) Treasury and an external member Diversity Forum in ludes ( hair) and a range of senior leaders Sustainability Committee in ludes ( hair) G Sho ing entre anagement G evelo ment G Sustainability and other senior leaders Angus McNaughton CEO and Managing Director Angus Naughton oined i inity entres in August 1 and has more than years ex erien e in the ro erty se tor Previously Angus was the anaging ire tor and of Novion Pro erty Grou (Novion) Before Novion Angus held a number of roles within olonial First State Global Asset anagement ( FSGA ) in luding anaging ire tor of Pro erty ead of holesale Pro erty and hief xe utive of the anager of iwi n ome Pro erty Trust in New ealand (now nown as iwi Pro erty Grou imited) Angus is a Fellow of the Australian Pro erty nstitute ire tor of the Sho ing Centre Council of Australia and the Pro erty oun il of Australia and a Pro erty ale ham ion of hange Carolyn Reynolds General Counsel arolyn eynolds oined i inity entres in ay 1 and has more than years ex erien e as a ommer ial litigation and or orate lawyer n her urrent role arolyn has oversight of the safety ris om lian e company secretarial, lease administration and legal functions for Vicinity, and is a ire tor of the i inity subsidiary Boards Prior to her urrent appointment, Carolyn was a artner at law firm inter llison from uly arolyn gained extensive ex erien e over this time which featured wor on as egas Sands or orate s bid for the rights to develop and operate the arina Bay Sands ntegrated esort in Singa ore arolyn has also gained diverse ex erien e relating to boards from her legal wor and involvement with not for rofit organisations su h as varian Cancer Australia, Glenorchy Art and S ul ture Par and the oreland ommunity egal entre arolyn is a member of the Australian nstitute of om any ire tors and A Australia Carolyn Viney Executive General Manager Development arolyn iney oined i inity entres in tober 16 and has more than years ex erien e in onstru tion property development and real estate investment Prior to her urrent appointment, Carolyn was with Grocon where she held a number of senior roles over a 1 year eriod in luding e uty ead of evelo ment and n house ounsel Before this arolyn was a Senior Asso iate at law firm inter llison arolyn is a ivision oun illor of the Pro erty oun il of Australia s i toria ivision an Advisory Board ember to the Victorian Government s ffi e of Pro e ts i toria and an Advisory Board ember of omen s Pro erty nitiatives a not for rofit housing rovider to women and hildren at ris of homelessness and oined the Board of the alter li a all nstitute of edi al esear h in e ember 16 Vicinity Centres Annual

40 Our Executive Committee continued David Marcun Executive General Manager Business Development Justin Mills Executive General Manager Shopping Centre Management Michael O Brien Chief Investment Officer Richard Jamieson Chief Financial Officer avid ar un oined i inity entres in une 1 following the erger with Novion Pro erty Grou (Novion) and has more than years ex erien e in the retail property sector, redominantly in finan e and o erations roles Prior to his urrent a ointment avid was hief erating ffi er and ead of Asset anagement at Novion (and formerly FSGA Pro erty) sin e uring his areer avid has been em loyed by Novion and its rior entities ba to the oat of Gandel etail Trust in 1 ver this time avid layed a signifi ant role in the erger of Novion and Federation Centres and the internalisation of FSGA Pro erty from ommonwealth Ban of Australia in 1 1 avid was also involved in the a uisition of Gandel etail anagement by FSGA Pro erty in avid is a member of the nstitute of hartered A ountants in Australia ustin ills oined i inity entres in une 1 following the erger with Novion Pro erty Grou (Novion) and has more than 17 years ex erien e in the retail property sector, entre management asset management investment management and strategy Prior to his urrent a ointment ustin was General anager etail anagement and Strategy at Novion (and formerly FSGA Pro erty) sin e ustin oined FSGA Pro erty in where his roles also included Assistant Fund anager of FS etail Pro erty Trust entre anager of hadstone Sho ing entre and regional res onsibilities a ross several i torian assets i hael Brien oined i inity entres in tober 1 and has years ex erien e in real estate in luding sho ing entre management and development, real estate funds management and finan e Prior to his urrent a ointment i hael held a number of senior roles at The GPT Grou in luding Grou xe utive or orate evelo ment hief erating ffi er and hief Finan ial ffi er as well as A ting hief xe utive for a eriod through Previous to this i hael was at end ease or oration where he held a variety of funds management and sho ing entre management ositions in luding hief xe utive ffi er of end ease etail i hael is a Fellow of the Australian Pro erty nstitute and a ire tor of the Green Building oun il of Australia i hard amieson oined i inity entres in une 1 and has more than years ex erien e in ban ing and finan e roles Richard was formerly Chief Finan ial ffi er at Novion Pro erty Grou Prior to this i hard was A ting General anager for Su erannuation ar eting ire t at BT Finan ial Grou after three years as Chief Financial ffi er Previously i hard was hief Finan ial ffi er for est a New ealand imited and nfrastru ture Fund anager and hief Finan ial ffi er at olonial First State Global Asset anagement ( FSGA ) i hard is a member of the nstitute of hartered A ountants in Australia 38 Vicinity Centres Annual 2017

41 Simone Carroll Executive General Manager Digital, Marketing, People and Culture Simone arroll oined i inity entres in November 1 and has lose to years ex erien e in business transformation with a strong ommer ial ba ground that spans human resources, mar eting sales and ommer ial strategy as well as digital rodu t develo ment and data analyti s Prior to her role with i inity Simone held exe utive leadership positions and advisor roles for numerous online digitally led domesti and international businesses ost re ently Simone was xe utive General anager Peo le and Brand ire tor at digital advertising om any A Grou n 1 Simone was re ognised as Australian ire tor of the Year Stuart Macrae Executive General Manager Leasing Stuart a rae oined i inity entres in une 1 following the erger with Novion Pro erty Grou (Novion) and has more than years ex erien e en e in ro erty management ent develo ment and leasing Prior to his urrent appointment, he was General anager of easing with Novion (and formerly FSGA Pro erty) sin e Stuart also held a number of senior leasing roles within in Gandel etail anagement ent from 1 to Vicinity Centres Annual

42 Tax Transparency Our approach to tax Vicinity operates under a comprehensive tax ris management framewor whi h is designed to ensure that i inity always conducts itself in a lawful manner with res e t to all of its tax obligations n arrying on its a tivities i inity has robust tax governan e with ongoing oversight from i inity s ey exe utives Audit ommittee and Board of ire tors has a low ris a etite and does not engage in aggressive tax lanning and strategies is onservatively geared with a ubli ally dis losed target gearing range of to is wholly domestic, does not have any offshore subsidiaries and therefore has no related arty ross border transactions underta es to om ly with all of its statutory obligations in a timely and transparent manner, and engages dire tly with the Australian Taxation ffi e (AT ) to rovide greater trans aren y and understanding of i inity s tax affairs verall i inity s tax ulture and business ra ti es are driven by our ision and Values, and are consistent with our Pur ose of enri hing the ommunities that we serve Our strategy and business prospects Page Australian tax transparency To im rove the trans aren y of business tax affairs in Australia the Board of Taxation designed the Tax Trans aren y ode (TT ) in 16 to outline a set of principles and minimum standards for the ur ose of guiding the dis losure of tax information n ado ting the TT s guidelines for the se ond year i inity aims to continue to provide informative dis losure on its tax affairs Furthermore i inity imited as a or orate tax ayer with total in ome in ex ess of 1 million is sub e t to the AT s Publi is losure of ntity nformation e ort that is released annually This re ort dis loses i inity imited s total in ome taxable in ome and in ome tax ayable for the relevant finan ial year Further information Page i inity values having a good relationshi with all external regulatory bodies in luding the AT As a ey Tax ayer i inity is wor ing with the AT in its Pre odgement om lian e eview (P ) rogram nder the P rogram i inity engages with the AT on a real time basis so that where ossible learan e of any tax issues and transa tions o urs rior to the lodgement of i inity s annual in ome tax returns Vicinity has a history of compliance, which is re e tive of its a roa h and attitude towards the AT Tax governance i inity s Tax is anagement Framewor (the Framewor ) enables om lian e with tax laws and the management of tax ris through the im lementation of a set of tax oli ies ro edures and systems a ross the i inity business The Framewor outlines the role of management teams defines their res onsibility and also rovides es alation roto ols within management the Audit ommittee and the Board to effe tively manage tax ris The Framewor guides management on how to a ro riately analyse mitigate and re ort tax ris s Further a robust set of internal ontrols has been ut in la e in luding eriodi re on iliations information te hnology systems and rovision for external advisor review along with audit ro edures to ensure the Framewor effe tively addresses tax ris Finally the Framewor also gives authority to management to engage and onsult with regulatory bodies (in luding the AT ) regarding tax oli y tax reform and tax law design on matters that affe t i inity s business and its se urityholders Group structure Vicinity has a stapled structure, with each sta led se urity om rising one share in a om any ( i inity imited) and one unit in a trust ( i inity entres Trust) i inity imited and its wholly owned grou of entities underta es the business of managing i inity s sho ing entre ortfolio in luding ro erty management develo ment management and res onsible entity and trustee services for Vicinity entres Trust its sub trusts and external wholesale funds i inity imited also provides property and development management servi es for oint owners of i inity s assets and other third arties i inity entres Trust is a managed investment s heme o erating in accordance with the Corporations Act 2001 and is regulated by the Australian Se urities and nvestments ommission (AS ) i inity entres Trust and its controlled trusts hold the real estate investments for i inity The sta ling of om anies to trusts to reate Australian eal state nvestment Trusts (A Ts) as in the ase of i inity and its rede essor organisations has been ommon la e in the Australian ro erty industry sin e the 1 s A sta led ro erty grou generally holds its real estate investments within a trust, while its management and other trading a tivities are held by the om any The structure provides securityholders the o ortunity to invest in ro erty through a regulated and managed s heme while at the same time allowing se urityholders to re eive the benefits and effi ien ies that result from property investment as if they held their investment dire tly These benefits extend to ow through of the taxable in ome (in luding a ital gains) of the trust so that this in ome is taxed dire tly in the hands of the se urityholder 40 Vicinity Centres Annual 2017

43 Stapled structures review n ar h 17 Federal Treasury announced a review of stapled structures in Australia and released its Consultation Pa er on Sta led Stru tures The review is being underta en at the dire tion of the Federal Treasurer with a view to rote ting the integrity of Australia s or orate tax system Federal Treasury is see ing to ensure that stapled structures are not being ina ro riately used as a means of re hara terising trading in ome into more favourably taxed assive in ome Federal Treasury has consistently indi ated throughout onsultation that its integrity on ern regarding the use of sta led stru tures does not extend to traditional ro erty sta les li e i inity As a leader in the Australian property industry and a sta led A T i inity has been a tively engaged in the consultation process with Treasury and also made written submissions n its submissions i inity has outlined its views and suggestions on ensuring that Australia s regime for taxing ro erty is a ro riately balan ed and fosters an environment that promotes investment, growth and effi ien y Vicinity will continue to monitor and engage with Federal Treasury to ensure that they understand the impact of any potential reforms on Vicinity s structure and its se urityholder s tax osition as well as to ensure that it is in a position to appropriately adapt to the implementation of any announ ed reforms Taxation of Vicinity i inity is a tax resident of Australia and operates entirely within the Australian mar et i inity does not own any foreign assets nor does it have any foreign subsidiaries As des ribed above i inity is a sta led grou that onsists of om anies and trusts nder Australian tax law om anies are sub e t to in ome tax at the a li able or orate tax rate ( for FY17) on their taxable in ome Trusts in om arison are generally taxed on a ow through basis meaning that a trust s taxable in ome is taxed in the hands of the benefi iaries (or in the ase of i inity its se urityholders) at their a li able tax rates i inity imited and its wholly owned grou of entities are consolidated for income tax ur oses resulting in all members of the onsolidated grou being treated as a single or orate tax ayer As a result i inity imited is res onsible for the in ome tax liability of the onsolidated tax grou and intra grou transa tions are eliminated in order to determine the onsolidated tax grou s taxable in ome Vicinity Centres Trust and its controlled trusts are not liable to ay in ome tax (in luding a ital gains tax) as the taxable income from their property investments ows through the trust and is taxed in the hands of se urityholders annually i inity s se urityholders ay tax at their marginal tax rates in the ase of Australian resident se urityholders or through the anaged nvestment Trust ( T) withholding tax rules for non resident se urityholders Reconciliation of accounting profit to income tax pai A full re on iliation of i inity s a ounting net rofit to in ome tax aid is in luded in the deferred and urrent tax note in Note of the Finan ial e ort n inter reting the dis losure in the deferred and urrent tax note it should be noted that the a ounting net rofit is determined in accordance with the Australian A ounting Standards Taxable in ome in ontrast is a on e t defined under in ome tax law whi h is al ulated by subtra ting allowable dedu tions from assessable in ome A tax ayer s in ome tax liability is al ulated by multi lying its taxable in ome by its a li able tax rate The a ounting net rofit that was attributable to se urityholders of Vicinity Centres Trust and its controlled entities was 1 million for FY17 This a ounting net rofit was derived through its trust stru ture so the taxable in ome that is referrable to this net rofit is therefore taxed in the hands of se urityholders as des ribed above The i inity imited onsolidated grou generated an a ounting loss of 1 million ith res e t to its tax osition for FY17 the i inity imited in ome tax onsolidated grou generated a tax loss of a roximately 7 million The tax loss was rimarily driven by the a ounting loss ad usted for allowable dedu tions (of million 1 ) that arose from the internalisation of management in 1 A ordingly i inity imited is not re uired to ay in ome tax for FY17 i inity imited s losses that are arried forward to later income years are partly re ognised through its deferred tax asset balan e and des ribed in detail in the deferred and urrent tax dis losures at Note ( ) of the Finan ial e ort i inity imited will ay tax when it fully utilises its tax losses and other deferred tax assets t is noted that i inity imited s nil taxable in ome and nil in ome tax ayable will be re orted in the AT s Publi is losure of ntity nformation e ort for FY17 whi h is ex e ted to be released in late 1 Effective tax rate nder the TT i inity has hosen to al ulate its effe tive tax rate ( T ) as in ome tax ex ense ( urrent and deferred) divided by a ounting rofit t is noted that this is a sim lified method of al ulating the T and should not be om ared to the or orate tax rate without a re iating the differen es between a ounting rofit and taxable in ome (as ex lained above) Further information is available on the AT s tax trans aren y web age Further information Page Given that Vicinity Centres Trust does not ay in ome tax (rather tax is aid by i inity s se urityholders) it has nil in ome tax ex ense and therefore nil T i inity imited will not ay in ome tax in res e t of FY17 due to its tax losses hen e it has nil tax ex ense and therefore nil T 1 Although the onsideration for the internalisation of the funds management business was aid in FY1 the allowable dedu tions are re uired to be amortised for tax ur oses over five years (refer to Note of the Finan ial e ort for further information) Vicinity Centres Annual

44 Tax Transparency continued Contributions to the Australian tax system i inity entres Trust s ow through trust status means that Vicinity se urityholders ay in ome tax dire tly on i inity s ro erty investments in ome For FY17 i inity s se urityholders will ay in ome tax on the taxable om onents of the 6 million distribution aid to them The taxable om onents of the distribution will be communicated to securityholders and u loaded onto the i inity website along with the Fund Payment noti e for T withholding ur oses in late August 17 As the ma ority of our Total taxes borne by Vicinity () $95.4 million Local rates and levies 2 Land tax 2 Stamp duty property acquisitions Payroll tax Fringe benefits tax (FBT) Workcover contributions Stamp duty merger Total taxes remitted by Vicinity () $129.9 million Net GST remitted 3 Pay as you go (PAYG) withholding Taxes withheld from investors 4 non resident se urityholders hold their interests indire tly (for exam le through ustodians) the Fund Payment noti e informs these third parties of the amount of tax to withhold from our distribution Additionally as a business that o erates in the Australian property industry, Vicinity is sub e t to various other taxes at the federal state and lo al government levels n FY17 these taxes amounted to a roximately million and are either borne by i inity as a ost of our business or are remitted by i inity as art of our ontribution to the administration of the tax system 1 As an be seen below the taxes remitted in lude ay as you go (PAYG) withholding taxes aid by our em loyees and Goods and Servi es Tax (GST) we olle t from our retailers who rent s a e in our entres net of GST laimed by i inity on its own ur hases The information rovided below summarises i inity s Australian tax ontribution for FY17 The most material hanges between the taxes aid in FY16 and FY17 arise in the areas of stam duty and lo al rates and levies FY16 in luded stam duty aid on the merger to reate Vicinity, while local rates and levies have fallen during FY17 due to asset sales through the year Payroll taxes and PAYG withholding were also higher in the rior year due to signifi ant eo le ost asso iated with the merger Further information i inity imited taxes aid information is ublished by the AT in its e ort of ntity nformation ublished on data gov au dataset or orate transparency A brea down of the taxable om onents that securityholders receive via their annual taxation statements will be available in late August on i inity s website vi inity om au AT s web age on tax trans aren y for or orate tax entities in luding ba ground information and ex lanations ato gov au Business arge business n detail Tax trans aren y Tax trans aren y re orting of entity tax information The Treasury s onsultation Pa er on Sta led Stru tures ( ar h 17) is ublished on treasury gov au onsultationsand eviews onsultations 17 Sta led Stru tures FY16 FY17 1 n this regard i inity in ludes entities whi h have been e uity a ounted in these finan ial statements and tax and lo al rates and levies data has been extra ted from the grou finan ial statements and therefore may vary from the a tual taxes aid in FY16 and FY17 due to timing differen es Net GST remitted for FY17 is om rised of 1 million of GST olle ted (FY16 1 million) and 1 million of GST laimed (FY16 11 million) This re resents taxes withheld from i inity s se urityholders As the ma ority of our se urityholders either su ly their tax file number or in the ase of non residents hold their interests indire tly this figure is not re resentative of the taxes a tually aid by our se urityholders 42 Vicinity Centres Annual 2017

45 Sustainability Assurance Statement Independent Limited Assurance Statement to the Management and Directors of Vicinity Centres Our Conclusion We were engaged by Vicinity Centres to undertake limited assurance as defined by Australian Auditing Standards and below, and hereafter referred to as a review, over Vicinity Centres disclosures of selected sustainability performance data included in Vicinity Centres 2017 Annual and Corporate Governance Statement for the year ended 30 June Based on the work we performed, nothing came to our attention that caused us to believe that the selected sustainability performance data had not been prepared and presented fairly, in all material respects, in accordance with the reporting criteria. What our review covered We reviewed a selection of Vicinity Centres sustainability performance data for the year ended 30 June 2017, as shown in the table below: Selected sustainability performance data Carbon intensity (scope 1 and 2) (kg CO2- e/sqm) Annual page 3, 12 Energy intensity (MJ/sqm) 12 Waste diversion rate (% recovered for recycling) Community investment ($) 3, 4, 12 & 28 TRIFR (Total recordable injury frequency rate) Diversity (% representation of women by level) (13 & 14 of Corporate Governance Statement) Gross lettable area (GLA) (sqm) 14 Criteria applied by Vicinity Centres The following criteria have been applied: specific criteria from the Global ing Initiative Standards Vicinity Centres own criteria and management methods as set out in its publicly disclosed Sustainability ing Criteria, available at: Key responsibilities EY s responsibility and independence Our responsibility was to express a limited assurance conclusion on the disclosures of selected sustainability metrics. We were also responsible for maintaining our independence and confirm that we have met the independence requirements of the APES 110 Code of Ethics for Professional Accountants and have the required competencies and experience to conduct this assurance engagement. Vicinity Centres responsibility Vicinity Centres management was responsible for selecting the Criteria, and preparing and fairly presenting the selected sustainability performance data in accordance with that Criteria. This responsibility includes establishing and maintaining internal controls, adequate records and making estimates that are reasonable in the circumstances. Our approach to conducting the review We conducted this review in accordance with the Standard for Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (ASAE 3000), Assurance Engagements on Greenhouse Gas Statements (ASAE 3410) and the terms of reference for this engagement as agreed with Vicinity Centres 21 June Summary of review procedures performed Our procedures included, but were not limited to: Gaining an understanding of the processes supporting the development of data for Vicinity Centres sustainability disclosures Conducting interviews with key personnel to understand Vicinity Centres process for collecting, collating and reporting the selected sustainability performance data during the reporting period Checking that the Criteria has been correctly applied in the calculation of the selected sustainability performance data Undertaking analytical review procedures to support the reasonableness of the data Identifying and testing assumptions supporting calculations Testing the calculations performed by Vicinity Centres Testing, on a sample basis, underlying source information to check the accuracy of the data Reviewing the appropriateness of the presentation of information. We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusions. Ernst & Young Melbourne, Australia 16 August 2017 Terence Jeyaretnam Partner Limited Assurance Procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. While we considered the effectiveness of management s internal controls when determining the nature and extent of our procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems. Use of our Assurance Statement We disclaim any assumption of responsibility for any reliance on this assurance report to any persons other than management and the Directors of Vicinity Centres, or for any purpose other than that for which it was prepared. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Vicinity Centres Annual

46 Financial For the year ended 30 June 2017 Inside 45 ire tors e ort 49 Remuneration 66 Auditor s nde enden e e laration 67 Statement of om rehensive n ome 68 Balan e Sheet 69 Statements of hanges in uity 70 ash Flow Statement 71 Notes to the Finan ial Statements 72 About This e ort 73 erations 85 a ital Stru ture and Finan ial is anagement 92 or ing a ital 94 Remuneration 97 ther is losures 106 ire tors e laration 107 nde endent Auditor s e ort 112 Summary of Se urityholders 44 Vicinity Centres Annual 2017

47 Summary of Securityholders The ire tors of i inity imited resent the Finan ial e ort of i inity entres ( i inity or the Grou ) for the year ended une 17 i inity entres is a sta led grou om rising i inity imited (the om any) and i inity entres Trust (the Trust) Although se arate entities the Sta ling eed entered into by the om any and the Trust ensures that shares in the om any and units in the Trust are sta led together and are traded olle tively on the Australian Se urities x hange under the ode Remuneration Directors The Boards of ire tors of the om any and i inity entres td as es onsible ntity ( ) of the Trust (together the i inity Board) onsist of the same ire tors The following ersons were members of the i inity Board from 1 uly 16 and u to the date of this report unless otherwise stated: (i) Chairman Peter ay ( nde endent) (ii) Non-executive Directors harles a e ( nde endent) 1 avid Thurin ebra Stirling ( nde endent) 1 aren Penrose ( nde endent) Peter ahan i hard addo A ( nde endent) (retired A ril 17) Tim ammon ( nde endent) Trevor Gerber ( nde endent) ai Tang ( nde endent) Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity (iii) Executive Director Angus Naughton ( and anaging ire tor) Further information on the ba ground and ex erien e of the ire tors is ontained on ages to 6 of this re ort Cash Flow Statement Company Secretaries Carolyn Reynolds i helle Brady Principal activities The Grou has its rin i al la e of business at evel hadstone Tower ne 1 1 andenong oad hadstone i toria 1 Notes to the Financial Statements The rin i al a tivities of the Grou during the year were ro erty investment ro erty management ro erty develo ment leasing and funds management Review of results and operations The erating and Finan ial eview is ontained on ages to of this re ort i nificant matters The ire tors are not aware of any matter or ir umstan e not otherwise dealt with in the ire tors e ort or the finan ial statements that has signifi antly affe ted or may signifi antly affe t the o erations of the Grou the results of those o erations or the state of the Grou s affairs in future finan ial years Declaration Independent Auditor s 1 r harles a e and s ebra Stirling have announ ed their intention to retire as Non exe utive ire tors at the Annual General eeting to be held on 16 November 17 As announ ed on une 17 and anaging ire tor r Angus Naughton has advised of his intention to retire during the 1 finan ial year n 11 August 17 the Grou announ ed r Grant elley would su eed r Angus Naughton and anaging ire tor with a lanned ommen ement date of 1 anuary 1 Corporate Directory Vicinity Centres Annual

48 continued Distributions Total distributions de lared by i inity during the year were as follows Total Cents per stapled security nterim 1 e ember Final une Total year end The final distribution of 6 ents er sta led se urity will be aid on August 17 Director-related information Meetings of Directors held during the year Board Special Purpose Board 1 Audit Committee Remuneration Committee Risk and Compliance Committee Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended Peter ay 7 7 Angus Naughton 7 7 harles a e avid Thurin 7 7 ebra Stirling aren Penrose Peter ahan i hard addo Tim Hammon Trevor Gerber ai Tang S e ial ur ose Board meetings were s heduled and onvened at short noti e to onsider s e ial ur ose a rovals i inity also has a Nominations ommittee onsisting of r ay r ammon r a e and r ahan All members attended the three Nominations ommittee meetings held during the year Director security holdings ire tor se urity holdings as at une 17 are detailed within the emuneration e ort There have been no movements in se urity holdings between une 17 and the date of this re ort n emnification an ins rance of irectors an fficers The om any must indemnify the ire tors on a full indemnity basis and to the full extent ermitted by law against all losses or liabilities in urred by the ire tors as offi ers of the om any or of a related body or orate rovided that the loss or liability does not arise out of mis ondu t in luding la of good faith uring the finan ial year the om any insured its ire tors Se retaries and ffi ers against liability to third arties and for osts in urred in defending any ivil or riminal ro eedings that may be brought against them in their a a ity as ire tors or ffi ers of i inity This ex ludes a liability that arises out of wilful brea h of duty or im ro er use of inside information The remium also insures the om any for any indemnity ayments it may ma e to its ffi ers in res e t of osts and liabilities in urred is losure of the remium ayable is rohibited under the onditions of the oli y 46 Vicinity Centres Annual 2017

49 Remuneration Statement of Comprehensive Income Corporate Directory Summary of Securityholders Auditor-related information rnst Young ( Y) is the auditor of the Grou and is lo ated at xhibition Street elbourne i toria n emnification of a itor To the extent ermitted by law the om any has agreed to indemnify Y as art of the terms of its audit engagement agreement against laims by third arties arising from the audit (for an uns e ified amount) The indemnity does not a ly to any loss arising out of any brea h of the audit engagement agreement or from Y s negligent wrongful or wilful a ts or omissions No ayment has been made under this indemnity to Y during or sin e the end of the finan ial year Non-audit services The Grou may de ide to em loy the auditor on assignments additional to statutory audit duties where the auditor s ex ertise and ex erien e with the Grou are essential and will not om romise auditor inde enden e etails of the amounts aid or ayable to Y for audit and non audit servi es rovided during the year are set out in Note 17 to the Finan ial e ort The Board has onsidered the non audit servi es rovided during the year and is satisfied these servi es are om atible with the general standard of inde enden e for auditors im osed by the Corporations Act 2001 ( th) for the following reasons All non audit servi es have been reviewed by the Audit ommittee to ensure they do not im a t the im artiality and ob e tivity of the auditor; and None of the servi es undermine the general rin i les relating to auditor inde enden e as set out in AP S 11 Code of Ethics for Professional Accountants A o y of the Auditor s nde enden e e laration as re uired under se tion 7 of the Corporations Act 2001 ( th) is in luded immediately following the ire tors e ort Environmental regulation The Grou is sub e t to the re orting obligations under the National Greenhouse and Energy ing (NGER) Act 2007 ( th) This re uires the Grou to re ort annual greenhouse gas emissions energy use and rodu tion for all assets under management for years ending une The Grou met this obligation by submitting its NG re ort to the e artment of the nvironment and nergy for the year ended une 16 by 1 tober 16 The 17 NG re ort will be submitted by the 1 tober 17 deadline The Grou monitors its other environmental legal obligations and is om liant for the re orting eriod Corporate governance n re ognition of the need for high standards of or orate behaviour and a ountability the ire tors of the om any have ado ted and re ort against the third edition of the AS or orate Governan e oun il s or orate Governan e Prin i les and e ommendations The full or orate Governan e Statement is available on the or orate Governan e se tion of i inity s website at vi inity om au Options over unissued securities As at une 17 and at the date of this re ort there were unissued ordinary se urities under o tion in the form of erforman e rights efer to the emuneration e ort for further details of the o tions outstanding for ey anagement Personnel tion holders do not have any rights by virtue of the o tion to arti i ate in any se urity issue of the Grou Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Vicinity Centres Annual

50 continued Events occurring after the end of the reporting period On-market securities buy-back n uly 17 the Grou announ ed an on mar et buy ba rogram of u to of ordinary se urities on issue The Grou will only ur hase se urities where doing so is a retive to earnings er se urity and NTA while also reserving am le a a ity to fund other a ital re uirements Appointment of ne ief xec tive fficer ( ) an ana in irector n 11 August 17 the Grou announ ed r Grant elley would su eed r Angus Naughton as and anaging ire tor with a lanned ommen ement date of 1 anuary 1 Vicinity Board changes n 1 uly 17 the Grou announ ed the a ointment of s anette endall as an nde endent Non exe utive ire tor to the Boards of i inity imited and i inity entres td effe tive from 1 e ember 17 r harles a e and s ebra Stirling will retire as nde endent Non exe utive ire tors at the Annual General eeting to be held on 16 November 17 No matters other than those identified above have arisen sin e the end of the year whi h have signifi antly affe ted or may signifi antly affe t the o erations of the Grou the results of those o erations or the state of affairs of the Grou in future finan ial eriods Rounding of amounts The om any is an entity of a ind referred to in egislative nstrument issued by the Australian Se urities and nvestments ommission relating to the rounding off of amounts in the ire tors e ort A ordingly amounts in the ire tors e ort have been rounded off to the nearest tenth of a million dollars ( m) in a ordan e with that egislative nstrument unless stated otherwise 48 Vicinity Centres Annual 2017

51 Remuneration Corporate Directory Summary of Securityholders Remuneration Charles Macek Chairman Remuneration and Human Resources Committee Letter from Chairman of the Remuneration and Human Resources Committee Statement of Comprehensive Income ear Se urityholders n behalf of the Board am leased to resent our FY17 emuneration e ort for whi h we will see your a roval at our Annual General eeting in November 17 The emuneration e ort is designed to rovide you with the necessary information to demonstrate the lin between i inity s strategy performance, and the remuneration out omes for our xe utive ey anagement Personnel ( P) n FY17 i inity delivered solid finan ial erforman e and made strong rogress towards our strategi ob e tives ntegration a tivities were su essfully on luded well ahead of rogram and merger synergy targets were ex eeded u an y of whi h is ahead of target des ite a hallenging retail environment together with a strong leasing s read out ome enabled net ro erty in ome to ex eed budget This ontributed to underlying earnings er se urity of 1 7 ents whi h when ombined with strong valuation gains resulted in a total return of 1 being re orded for the year ended une 17 Statutory net rofit for the year was 1 6 million n our se ond year sin e formation in une 1 the i inity ulture ontinues to evolve mbedding a digital mindset in the NA of our ulture is an im erative entral to this is agility with a fo us on ustomers both onsumers and retailers Pleasingly mu h rogress in this transformation has occurred over the ast 1 months There has been a signifi ant im rovement in our em loyee engagement s ore from 66 to 71 and our eo le have embra ed our refined om any values e Always ollaborate e mbra e iversity and e magine a Better ay This year we la ed signifi ant em hasis on develo ing senior leadershi a ability im lementing our diversity and in lusion rogram whi h is fo used on gender age and mental health and strengthening the connection we have with our communities through investment volunteering and wor la e giving rograms ith underlying earnings er se urity in line with target and strong total returns a hieved an average of 6 of the maximum Short Term n entive (ST ) Plan o ortunity available was awarded to xe utive P n e again to re ognise the im ortan e of the ontribution by all em loyees we maintain an xem t m loyee Se urity Plan ( SP) This enables i inity to gift u to 1 worth of se urities to ea h eligible em loyee This year we ex e t ust over 1 em loyees to benefit from the SP The retirement of Angus Naughton and anaging ire tor effe tive 1 e ember 17 will signify a new era for i inity but with our strong exe utive team and o erating latform and a strong alignment between our strategy erforman e and remuneration framewor am onfident that i inity is well ositioned for the future Charles Macek hairman emuneration and uman Resources Committee Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Vicinity Centres Annual

52 Remuneration continued overview This Remuneration outlines: i inity s reward rin i les and framewor i inity s erforman e for the 17 finan ial year and the remuneration out omes for xe utive P and emuneration re eived by ire tors and xe utive P The ontents of the emuneration e ort (as set out below) are governed by s A of the Corporations Act 2001 and the Corporations egislation nless otherwise noted figures ontained within this re ort are re ared on a basis onsistent with the re uirements of Australian A ounting Standards and have been audited 1. Remuneration framework Company performance and executive remuneration outcomes Executive remuneration further information Non-executive Director remuneration Other remuneration information Vicinity Centres Annual 2017

53 1. Remuneration framework 1.1 Reward principles and framework The ob e tive of i inity s remuneration framewor is to build a ability by attra ting retaining and engaging a talented exe utive team while aligning their a tions with se urityholder interests This is a hieved through lin ing exe utive remuneration to both short and long term om any erforman e ur framewor en ourages exe utives to fo us on reating long term growth and om lements our ur ose of enri hing ommunity ex erien es by ensuring that short term a tions do not have a detrimental effe t in the longer term The diagram below rovides a sna shot lin ing our reward rin i les to the om onents of our remuneration framewor and how these om onents are measured to ensure that exe utive and se urityholder interests are aligned Attract, retain and motivate high erforming exe utives Reward principles emonstrate lin between erforman e strategy exe ution and value reation n ourage exe utives to manage from the ers e tive of se urityholders Remuneration Statement of Comprehensive Income Balance Sheet Remuneration framework Components Performance measures Strategic objective Total Fixed Remuneration (TFR) Base salary, superannuation and any salary sacrifice amounts. Further details are contained in se tion 1 Ben hmar ed to om etitive rates Si e s o e and om lexity of the role The relevant ob mar et ndividual ex erien e a ability and erforman e Remuneration set at competitive levels to attra t retain and engage ey talent Statements of Changes in Equity Cash Flow Statement Short Term Incentive (STI) Annual bonus opportunity, 12-month performance period subject to performance targets. Partially paid in cash and partially deferred into equity (24-month deferral for the CEO and Managing Director and 18 months for other Executive KMP). Further details are contained in se tion Long Term Incentive (LTI) Performance rights, three-year performance period, additional one-year holding lock. Further details are contained in se tion easured against four erforman e ategories Financial: targets in lude underlying earnings er se urity net ro erty in ome (NP ) and management ex ense ratio Strategic: relates to portfolio enhancement, development pipeline and digital strategy People and leadership: includes ulture a ability em loyee engagement and diversity and in lusion Operational excellence: comprises innovation ris management systems ro esses sustainability and safety metri s The erforman e rights vest sub e t to achievement of an: nternal hurdle based on total return (T ) and xternal hurdle based on total se urityholder return (TS ) relative to the S P AS A T (Australian eal state nvestment Trust) ndex ex luding estfield or oration (AS F ) Finan ial targets relate to i inity s a a ity to ay distributions and generate se urityholder returns Strategi measures fo us on asset and business lanning Peo le and leadershi ob e tives aim to romote a ulture and behaviours that drive company performance and re e t our long term ob e tives erational ex ellen e areas fo us on roviding safe and sustainable environments for employees, consumers and retailers, and a drive for effi ien y and innovation a ross the business n ourages sustainable high erforman e over the medium to long term and se urityholder value reation Provides retention element T measures the extent to whi h i inity effi iently manages and extra ts value from i inity s assets elative TS hurdle aligns remuneration with i inity s long term return relative to its nominated eer grou Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders Corporate Directory Vicinity Centres Annual

54 Remuneration continued 1. Remuneration framework continued 1.2 Pay mix A signifi ant om onent of exe utive remuneration is lin ed to short and long term om any erforman e to assist in aligning exe utive interests with those of se urityholders The relative weightings of the fixed and at ris om onents of total target remuneration for xe utive P are detailed in Figure 1 1 below A higher ro ortion of the s total remuneration is at ris as he has the greatest s o e to in uen e i inity s long term erforman e Figure 1.1 ief xec tive fficer ief inancial fficer Chief Investment Officer TFR 34% STI 33% LTI 33% TFR 40% STI 29% LTI 31% TFR 42% STI 27% LTI 31% 1.3 Key Management Personnel (KMP) The P of i inity in ludes all Non exe utive ire tors and those exe utives who are deemed to have authority and res onsibility for lanning dire ting and ontrolling the a tivities of i inity ( xe utive P) A summary of xe utive P during the year and their tenure as P is shown in Table 1 below Table 1.2 Name 1 Position Tenure Angus Naughton and anaging ire tor ( ) Full year i hard amieson hief Finan ial ffi er ( F ) Full year i hael Brien hief nvestment ffi er ( ) Full year 1 Former xe utive P who held P ositions during the year ended une 16 are in luded in the statutory remuneration tables in se tion The list of Non exe utive ire tors during the urrent and rior years an be found in se tion 2. Company performance and executive remuneration outcomes 2.1 Overview of company performance ver the 1 months to une 17 i inity s net rofit was 1 6 million under inned by solid underlying ortfolio erforman e and strong ro erty valuation gains Net tangible assets er se urity in reased ents or to ontributing to a total return of 1 for the eriod i inity s underlying earnings for the year was 7 1 million or 1 7 ents on a er se urity basis in line with guidan e This re resented a de rease of 1 7 million or 1 from the rior year due to the im a t of the non ore asset divestment rogram whi h saw interests in 1 retail assets dis osed sin e 1 uly 1 The im a t of the dis osals was artially offset by om arable NP growth as a result of base rental and an illary in ome growth rudent ro erty ex ense management and additional NP from develo ments and a uisitions Additionally a 7 redu tion in net or orate overheads was a hieved re e ting the strong fo us on o erational effi ien ies and the realisation of merger synergies 52 Vicinity Centres Annual 2017

55 Corporate Directory A ontinued fo us on a ital management was re ognised by Standard Poor s raising i inity s redit rating to A with stable outloo in anuary 17 Prudent a ital allo ation de isions and the divestment of interests in 1 7 billion of assets over the ast months have ut i inity in a strong a ital osition Gearing is 7 at une 17 and the weighted average debt duration is years with no debt ex iries in FY1 Remuneration i inity s TS relative under erforman e in the eriod together with other retail Ts is rimarily due to a ontinuation of the er e tion of stronger onditions in offi e mar ets ( arti ularly Sydney and elbourne) softer retail trading onditions and the announ ement by Ama on onfirming its ex ansion into Australia Table 1 below summarises details of i inity s erforman e for ey finan ial metri s for the urrent and ast four finan ial years Table 2.1 Performance metric FY13 FY14 FY15 FY16 FY17 Se urity ri e as at une ( ) 7 7 istributions de lared er se urity ( ents) TS for the year ended une 7 11 (17 7 ) S P AS A T ndex (6 ) Total return FY1 in ludes a ent distribution de lared ost une 1 relating to FY1 al ulated as ( hange in NTA during the eriod distributions de lared) o ening NTA 2.2 FY17 Short Term Incentive (STI) outcomes Summary i inity s ST rovides em loyees with the o ortunity to be rewarded for a hieving a ombination of grou finan ial strategi and individual erforman e ob e tives through an annual erforman e based reward any of these ob e tives ontribute towards medium to longer term erforman e out omes aligned to i inity s strategy The ST out ome is weighted against four erforman e ategories that are outlined in Table S e ifi measures for individuals are set within these erforman e ategories and a roved by the Board Further details of the ST are set out in se tion Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Performan e for ea h measure is assessed on a range from threshold to maximum aximum is set at a level that ensures that the maximum amount of ST is ayable only when erforman e has signifi antly ex eeded target measures Further detail on the assessment of ea h erforman e measure is ontained in Table below and details of ST awarded are ontained in Table Outcomes The al ulation of finan ial erforman e for FY17 was underta en in uly 17 by om aring a tual erforman e against the agreed erforman e ob e tives Tables and below outline the FY17 ST out omes Table below shows the range of out omes a hieved by the xe utive P against ea h erforman e ategory relating to the 17 finan ial year Notes to the Financial Statements Declaration Table 2.2: FY17 STI outcomes for Executive KMP Performance level achieved 1 Performance category Weighting at target Threshold Target Maximum Financial Strategic People and Leadership 1 Operational Excellence 1 1 The line re resents that range of out omes a hieved by the xe utive P The ir les indi ate the average out ome Please refer to Table for more detail on business erforman e against FY17 measures Independent Auditor s Summary of Securityholders Vicinity Centres Annual

56 Remuneration continued 2. Company performance and executive remuneration outcomes continued Table 2.3: Business performance against FY17 measures Performance category and weighting Performance measure Reason chosen Performance outcome Financial (20% 40%) nderlying earnings er se urity ( PS) net ro erty in ome (NP ) and NP growth total return management ex ense ratio ( ) and a ital management ob e tives nderlying PS NP total return and are ey finan ial measures of performance, while balan e sheet strength is a critical foundation for future success elivered underlying PS of 1 7 ents in line with guidan e elivered om arable NP growth of A hieved a total return of 1 redu ed from b s to 1 b s Standard Poor s redit rating raised to A stable Strategic (30% 50%) Strategy ob e tives focused on portfolio enhancement, delivery of the development i eline merger synergies realisation digital strategy and sta eholder management evelo ing and im lementing i inity s ey strategi initiatives will underpin future opportunities and growth erger su essfully om leted with the integration of our eo le systems and ro esses and merger synergy targets ex eeded and delivered ahead of rogram m roved ortfolio o u an y rate from to ivested 6m of non ore assets at a remium to boo value and a uired the remaining of F South harf and the remaining of Bentons S uare Signifi ant rogress a ross live ro e ts and the shadow i eline in luding hadstone ma or redevelo ment su essfully om leted First retail stage at andurah Forum o ened in uly 17 fully leased Approvals received and construction commenced at F Perth and The Glen om leted rollout of high s eed digital networ within rogram and budget Strong engagement and wor ing relationshi s with o owners People and Leadership (15%) Peo le ob e tives fo used on enhan ing ulture strengthening a ability im roving em loyee engagement and develo ing our diversity and inclusion agenda reating and maintaining a team that is high erforming highly engaged and diverse is fundamental to long term performance Signifi ant im rovement in em loyee engagement s ore to 71 from 66 in FY16 ommen ed roll out of initiatives under the three ey fo us areas of the iversity and n lusion Strategy Talent management lan and su ession lanning for the xe utive ommittee and broader senior leadershi team in place Operational Excellence (15%) erational ob e tives centred on a review of corporate overheads, ris management and our sustainability agenda Fo us on business transformation, o erational effi ien y ris management and sustainability will under in sustainable erforman e Net or orate overheads were redu ed by 7 m rovement in Green Star Performan e ortfolio average rating from Stars to Stars stablished a three year artnershi with Bea on Foundation fo used on unem loyed and disengaged youth Table 2.4 Target STI as % of TFR Maximum STI opportunity as % of TFR Actual STI awarded $ % of target STI opportunity awarded % of maximum STI opportunity awarded % of maximum STI opportunity forfeited Executive KMP Angus Naughton i hard amieson i hael Brien Note the maximum ST o ortunity as of TF is the theoreti al maximum the xe utive P an re eive 54 Vicinity Centres Annual 2017

57 Corporate Directory 2.3 FY17 Long Term Incentive (LTI) outcomes Summary The T rovides an annual o ortunity for the the dire t re orts to the ( xe utive ommittee) and other Senior xe utives (Senior eaders) for an e uity award (through erforman e rights) sub e t to the a hievement of erforman e hurdles over three years and a further 1 month holding lo The T aligns a signifi ant ortion of overall remuneration to se urityholder value over the longer term Please refer to se tion for further details of the T Plan Outcomes The FY1 T grant was tested at une 17 and nil overall vesting level was a hieved The relative TS hurdle was not a hieved and as the underlying PS target did not meet threshold nil vesting was a hieved against the eturn on uity ( ) and underlying PS tran he No urrent xe utive P were em loyees of i inity at the time these erforman e rights were granted in FY1 The first eriod in whi h the xe utive P will be eligible for erforman e rights to vest will be the year ending une 1 (three years after the FY16 erforman e rights were granted) etails of all urrent T holdings for xe utive P are ontained in se tion Remuneration Statement of Comprehensive Income Balance Sheet FY17 grants The FY17 T grant was made to the xe utive ommittee and Senior eaders with effe t from 1 uly 16 with a three year erforman e eriod Table shows the number of erforman e rights granted to the xe utive P under the FY17 T The number of erforman e rights granted was allo ated using the fa e value methodology The fair value of the erforman e rights at grant date are also in luded in Table and are al ulated in a ordan e with AASB Share Based Payment As outlined these erforman e rights may vest in three years time rovided TS and T hurdles are met f the erforman e rights vest there is an additional 1 month holding lo during whi h they annot be traded Further details on the hurdle re uirements are ontained in se tion below Table 2.5: FY17 LTI grants Number of performance rights granted 1 Face value of rights on grant date $ LTI face value as a percentage of TFR at grant date % Fair value of rights on grant date 2,3 $ LTI fair value as a percentage of TFR at grant date % Grant date Executive KMP Angus Naughton e ember i hard amieson 11 e ember i hael Brien 1 7 e ember 16 7 Total 925,435 2,625, ,499, The grants made to xe utive P re resented their full T entitlement for the relevant finan ial year The se urity ri e used in the al ulation is the volume weighted average ri e of i inity s se urities 1 trading days immediately following the 16 Annual General eeting al ulated based on a fair value er erforman e right of Grant date: e ember 16 TR hurdle: 7 TSR hurdle: 7 The fair value er erforman e right was al ulated by inde endent onsultants as at the grant date identified above The valuation of the TS erforman e rights in or orates the robability of a hieving mar et onditions whereas the valuation of T erforman e rights does not This results in a lower fair value for TS erforman e rights than for T erforman e rights Further details on assum tions used to determine the fair value of the erforman e rights are in luded in Note 1 (a) to the Finan ial e ort The fair value is re ognised as an ex ense in the Statement of om rehensive n ome over the three year vesting eriod The value of the grant has been determined based on the fair value er instrument as at the date of grant The minimum total value of the grant to the xe utive P is nil should none of the a li able erforman e onditions be met Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders Vicinity Centres Annual

58 Remuneration continued 2. Company performance and executive remuneration outcomes continued 2.4 Statutory remuneration tables Table 6 below details the remuneration re eived by ea h xe utive P during the urrent and rior years for the eriod whi h they were a P Table 7 rovides the same information for former xe utive P This table has been re ared in a ordan e with the re uirements of the or orations A t and the relevant A ounting Standards The figures rovided under the erforman e rights olumns are a ounting values and do not re e t a tual ayments re eived As noted above in se tion no erforman e rights vested to any xe utive P during FY17 Table 2.6: Total Executive KMP remuneration for FY17 and FY16 Executive KMP Period Angus Naughton i hard amieson i hael Brien Base Salary 1 $ ort term benefits t er benefits Share-based payments Post-employment STI cash 2 $ Nonmonetary 3 $ Other 4 $ Leave entitlements 5 $ Performance rights 6 $ STI Deferred 7 $ Superannuation contributions $ Termination benefits $ FY17 1,463,412 1,611,000 4, , ,706-25,000-3,743,728 57% FY FY17 733, ,188 3,305-3, , ,187 25,000-1,520,182 50% FY FY17 677, ,375 5,374-7, , ,375 19,616-1,464,696 52% FY FY17 2,874,396 2,162,563 12, ,333 10, , ,562 69,616-6,728,606 54% Total Executive KMP FY Base salary in ludes the net movement of annual leave entitlement balan e The ash om onent is of the FY17 ST for xe utive P (ex luding the ) and is s heduled to be aid in Se tember 17 (following Board a roval of the audited FY17 finan ial statements) ue to the resignation of r Angus Naughton effe tive 1 e ember 17 his FY17 ST will not be sub e t to deferral into share based ayments 7 of his total FY17 ST is s heduled to be aid in Se tember with the remaining sub e t to ash deferral and ayable u on termination Non monetary benefits in lude motor vehi les and other non ash fringe benefits (in luding the value of death and total ermanent disability insuran e remiums aid by i inity on behalf of the xe utive P) ther benefits for r Angus Naughton in lude relo ation allowan es or reimbursements ( une 16 1 relo ation allowan e 7 reimbursements) and ( une 17 1 relo ation allowan e) eave entitlements re e t long servi e leave a rued for the eriod r Angus Naughton will not be entitled to long servi e leave u on retirement given he has not met the seven year servi e re uirement 6 n a ordan e with the re uirements of Australian A ounting Standards remuneration in ludes a ro ortion of the fair value of the e uity om ensation granted or outstanding during the year (that is a ortion of erforman e rights awarded under the T that remained unvested as at une 17) The fair value of the e uity instruments is determined as at the grant date and is rogressively ex ensed over the vesting eriod This amount in luded as remuneration is not related to or indi ative of the benefit (if any) that xe utive P may ultimately realise should the erforman e rights vest The fair value of the erforman e rights at the date of their grant has been determined in a ordan e with AASB a lying a onte arlo simulation valuation method 7 The amount resented re resents the value of ST deferred that has been re ognised as an ex ense in the urrent eriod as re uired by a ounting standards e resents the sum of ST ash and share based ayments divided by the total remuneration re e ting the a tual er entage of remuneration at ris for the year Total $ % Performance related 8 56 Vicinity Centres Annual 2017

59 Table 2.7: Total former Executive KMP remuneration for FY17 and FY16 Former Executive KMP Period ort term benefits t er benefits Base salary STI cash 1 $ Nonmonetary 1 $ Other $ Leave entitlements 1 $ Share-based payments Post-employment Performance rights 1 $ STI deferred 1 $ Superannuation contributions $ Termination benefits $ Steven Sewell FY Stuart a rae FY onathan Timms FY Total Former Executive KMP FY efer to orres onding footnotes on Table 6 r Steven Sewell eased to be P on August 1 following the a ointment of r Angus Naughton as r Sewell s em loyment eased on e ember 1 r Stuart a rae and r onathan Timms eased as P on 1 tober 1 r Timms subse uently eased em loyment on A ril 16 om rises balan e of noti e eriod and relo ation and a rued annual leave entitlement aid out on termination s e ial ayment sub e t to erforman e and retention Total $ % Performance related 1 $ Corporate Directory Summary of Securityholders Independent Auditor s Declaration Notes to the Financial Statements Cash Flow Statement Statements of Changes in Equity Balance Sheet Statement of Comprehensive Income Remuneration Vicinity Centres Annual

60 Remuneration continued 3. Executive remuneration further information This se tion ontains further details of the three om onents of xe utive P remuneration being Fixed remuneration ST and T 3.1 Fixed remuneration Fixed remuneration om rises base salary su erannuation ontributions and any salary sa rifi e amounts (for exam le motor vehi le leases) i inity aims to rovide a om etitive level of fixed remuneration that re ognises the si e s o e and om lexity of the role the relevant ob mar et and the ex erien e a ability and erforman e of the in umbent 3.2 STI efer to se tion for a summary of the ST and out omes for FY17 STI arrangements Opportunity Performance period Grant date, payment and deferral 1 Performance targets and measurement For the the FY17 ST o ortunity at a target level of erforman e is 1 of TF For other xe utive P the ST o ortunity at a target level of erforman e is between 6 and 7 of TF a h xe utive P (other than the ) has a theoreti al maximum of two times target for ex e tional individual and i inity erforman e For the the maximum is limited to 1 times target o ortunity The a li able ST erforman e eriod is the full finan ial year here an xe utive P ommen es em loyment during the year their ST is evaluated and aid on a ro rata basis here an xe utive P eases em loyment during the year if the ST is not forfeited it is evaluated and aid on a ro rata basis at the same time as all others ST is rovided as a ombination of ash and deferred e uity ayments Partial ayment is deferred into e uity for a eriod of months for the and 1 months for other xe utive P ividends are aid on the deferred e uity om onent during the holding lo eriod ut omes are al ulated following the Board s review of i inity s FY17 audited finan ial results and the ash om onent will be aid in Se tember 17 Se tion rovides a detailed summary of the erforman e ob e tives and measures and the subse uent results for xe utive P for FY17 Performan e ob e tives for FY17 were finalised by the Board in the ase of the and by the and emuneration and uman esour es ommittee (the ommittee) in the ase of other xe utive P The ommittee with in ut from the hairman of the Board assesses the s erforman e against his ob e tives and ma es the re ommendation to the Board for final determination The assesses the erforman e of all other xe utive P relative to their individual ob e tives and ma es re ommendations to the ommittee for determination 1 ue to the resignation of the effe tive 1 e ember 17 the s FY17 ST will not be sub e t to deferral into e uity 7 of the s FY17 ST is s heduled to be aid in Se tember with the remaining sub e t to ash deferral and ayable u on termination For FY1 our remuneration framewor relating to the ST Plan has been ada ted slightly to further align ST ayments to shareholder interests The erforman e ob e tives and measures for FY1 reinfor e that ST ayments are awarded for delivery of erforman e strategy exe ution and value reation and a hievement of o erational or Business As sual ob e tives are rewarded through fixed remuneration 58 Vicinity Centres Annual 2017

61 Corporate Directory 3.3 LTI efer to se tion for a summary of the T and awards during FY17 LTI arrangements Type of equity awarded Performance period i inity sta led se urities at a future time for nil onsideration sub e t to the a hievement of agreed erforman e hurdles at the end of the erforman e eriod (as set out below) ntil the erforman e rights vest an xe utive P has no entitlement to re eive dividends or distributions from no legal or benefi ial interest in and no voting rights asso iated with the underlying sta led se urities Three years There is an additional holding lo eriod of 1 months after the three year erforman e eriod ends uring this eriod the vested erforman e rights annot be traded but the holder is entitled to re eive dividends distributions and vote Remuneration Statement of Comprehensive Income Performance hurdles Opportunity Allo ations of erforman e rights are tested against two erforman e hurdles are sub e t to the a hievement of a relative TS 1 ; and are tied to the a hievement of T a h hurdle will be measured inde endently at the end of the erforman e eriod For the the FY17 T o ortunity at a target level of erforman e is 1 of TF For other xe utive P the T o ortunity at a target level of erforman e is between 7 and of TF The number of rights allo ated was determined based on the 1 day olume eighted Average Pri e ( AP) of i inity se urities immediately following the 16 Annual General eeting Balance Sheet Statements of Changes in Equity Vesting scale The following vesting s ales a ly TSR TR Percentile ranking Percentage vesting Target total return Percentage vesting 1st Between 1st and 7 th Between 1 to 1 Between and Between and 1 7 th 1 1 Following testing any rights that do not vest la se 1 elative TS ombines the se urity ri e movement and dividends (whi h are assumed to be re invested) to show total return to se urityholders relative to that of other om anies in the TS om arator Grou The Board de ided that an a ro riate om arator grou for the relative TS erforman e hurdle was the S P AS A T ndex ex luding estfield or oration here a ro riate the Board has dis retion to ad ust the om arator grou to ta e into a ount events in luding but not limited to ta eovers mergers or de mergers that might o ur with res e t to the entities in the om arator grou T is al ulated as the hange in i inity s Net Tangible Assets er se urity (NTA) during the erforman e eriod lus total distributions made divided by the NTA at the beginning of the erforman e eriod 3.4 STI and LTI Cessation of employment, clawback or change of control The Board retains dis retion to determine the treatment of the ST and T awards on the essation of em loyment however generally f terminated for ause any existing ST and T entitlements will be forfeited n the event of essation of em loyment for su h reasons as redundan y death total and ermanent disablement or retirement a ro rata amount of unvested erforman e rights will remain on foot with the balan e forfeited Performan e rights may then vest at the end of the erforman e eriod sub e t to meeting the erforman e measures under the asso iated lan and will be sub e t to the holding lo and ST for the year will be ro rated over the em loyment eriod and aid fully in ash at the same time as all others (no amounts are deferred into e uity) Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders Vicinity Centres Annual

62 Remuneration continued 3. Executive remuneration further information continued 3.4 STI and LTI Cessation of employment, clawback or change of control continued The Board also has the right to redu e future award ayments or ad usted unvested amounts to lawba from arti i ants if there has been serious mis ondu t or a material misstatement in i inity s finan ial results n the event of a hange in ontrol the Board has absolute dis retion to determine the treatment for ST and T entitlements ith res e t to the resignation of the effe tive from 1 e ember 17 the following treatment of the s in entives will a ly eferred se urities granted under the FY16 ST offer will be released in Se tember 1 in the ordinary ourse FY17 ST will not be sub e t to deferral into e uity 7 of the s FY17 ST is s heduled to be aid in Se tember 17 with the remaining sub e t to ash deferral and ayable u on termination Any FY1 ST will be ro rated u to the termination date and aid fully in ash (deferral will not a ly) in the ordinary ourse in Se tember 1 Performan e rights granted under the FY16 and FY17 T offers will be ro rated and will vest at the end of the res e tive erforman e eriods sub e t to a hievement of the erforman e hurdles and the additional holding lo No grant to the will be made under the FY1 T offer and No other termination ayments will be made 3.5 Total LTI holdings Total erforman e rights held by xe utive P in luding the FY17 T grants detailed above are as follows Opening performance rights Granted as remuneration Forfeited/ lapsed Vested Closing Angus Naughton 7 6 i hard amieson i hael Brien Total 815, , ,740, Service agreements emuneration and other terms of em loyment for xe utive P are formalised in xe utive Servi es Agreements ( SAs) The terms and onditions of em loyment of the xe utive P re e t mar et onditions at the time of entering into their ontra t ey features of the xe utive P SAs in lude the following eligibility to arti i ate in short and long term in entive lans ongoing em loyment until terminated by either the xe utive P or i inity and i inity may ma e ayments in lieu of all or art of the a li able noti e eriod Noti e eriod rovisions are detailed below Termination by Vicinity For cause Other Termination by Executive KMP Termination payment 1 Angus Naughton mmediately 1 months 6 months 1 months x TF i hard amieson mmediately 6 months 6 months 6 months x TF i hael Brien mmediately 6 months 6 months 6 months x TF 1 Paid sub e t to law if i inity terminated the xe utive P s em loyment agreement on noti e and without ause and ma es ayment in lieu of noti e Termination ayments are generally not aid on resignation or termination with ause although the Board may determine ex e tions to this No termination ayment will ex eed the limit under the Corporations Act 60 Vicinity Centres Annual 2017

63 Corporate Directory Summary of Securityholders Independent Auditor s Declaration Notes to the Financial Statements 4. Non-executive Director remuneration 4.1 Remuneration philosophy Non exe utive ire tor fee levels are set with regard to time ommitment and wor load the ris and res onsibility atta hed to the role and external mar et ben hmar ing To romote inde enden e and im artiality no element of Non exe utive ire tor remuneration is at ris that is no element is based on the erforman e of i inity The urrent maximum fee ool of million was a roved by i inity se urityholders in November 11 Board and committee fees FY17 Board and ommittee fees are outlined in the table below Table 4.1: FY17 Board and committee fees Board/Committee Role FY17 fees 1 $ Board Chairman Non exe utive ire tor 16 Audit Committee Chairman ember is and om lian e ommittee Chairman ember Nominations Committee Chairman No additional fee ember No additional fee Remuneration and Human Resources Committee Chairman ember 1 Fees are in lusive of su erannuation The hairman of the Board re eives no further remuneration for ommittee membershi although he may attend ommittee meetings Non exe utive ire tors are entitled to be reimbursed for all reasonable business related ex enses in luding travel on om any business that may be in urred in the dis harge of their duties Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Vicinity Centres Annual

64 Remuneration continued 4. Non-executive Director remuneration continued 4.2 ees an benefits pai Table 4.2: Non-executive fees for FY17 and FY16 Non-executive Director Non-executive Directors Peter Hay, Chair (a ointed 11 une 1 ) Trevor Gerber 3 (a ointed tober 1 ) Tim Hammon (a ointed 1 e ember 11) Peter Kahan 4 (a ointed 11 une 1 ) Charles Macek (a ointed 1 e ember 11) Karen Penrose (a ointed 11 une 1 ) Debra Stirling 3 (a ointed tober 1 ) Wai Tang (a ointed ay 1 ) David Thurin (a ointed 11 une 1 ) Subtotal Non-executive Directors Period ort term benefits Fees 1 $ Committee fees $ Post-employment benefits 2 Superannuation contributions $ Total fees $ FY17 430,384-19, ,000 FY FY17 146,118 36,530 17, ,000 FY FY17 146,118 54,795 19, ,000 FY FY17 160,000 40, ,000 FY16 16 FY17 146,118 36,530 17, ,000 FY FY17 146,118 54,795 19, ,000 FY FY17 146,118 36,530 17, ,000 FY FY17 146,118 36,530 17, ,000 FY FY17 146,118 18,266 15, ,000 FY FY17 1,613, , ,814 2,070,000 FY nless otherwise stated fees re resent fees aid to Non exe utive ire tors in their a a ity as ire tors of i inity imited (the om any) and i inity entre td as es onsible ntity for i inity entres Trust (the ) whi h meet on urrently Non exe utive ire tors re eive no ost em loyment benefits other than statutory su erannuation r Gerber and s Stirling were a ointed as ire tors of the om any on tober 1 The remuneration dis losed in Table for FY16 for r Gerber and s Stirling is onse uently for the eriod from tober 1 to une 16 From 1 uly 1 to tober 1 r Gerber and s Stirling were engaged as onsultants and a ointed as alternate dire tors of the om any for whi h they ea h earned fees of 6 r ahan s ire tor fees are aid to the Gandel Grou Pty imited and therefore no su erannuation ontributions are made by i inity on his behalf 62 Vicinity Centres Annual 2017

65 Corporate Directory Summary of Securityholders Independent Auditor s Table 4.2.1: Former Non-executive fees ort term benefits Fees 1 $ Committee fees $ Post-employment benefits 2 Superannuation contributions $ Total fees $ Non-executive Director Period Former Non-executive Directors Richard Haddock AM FY17 121,765 30,441 14, ,666 ( eased as ire tor on A ril 17) FY Subtotal Former FY17 121,765 30,441 14, ,666 Non-executive Directors FY Total FY17 1,734, , ,274 2,236,666 FY Fees re resent fees aid to Non exe utive ire tors in their a a ity as ire tors of the om any and the whi h meet on urrently Non exe utive ire tors re eive no ost em loyment benefits other than statutory su erannuation Remuneration Statement of Comprehensive Income Balance Sheet 5. Other remuneration information 5.1 Remuneration governance The Board of ire tors has res onsibility to ensure that a ro riate governan e is in la e in relation to all human resour e matters in luding remuneration To ensure that the Board a ts inde endently of management and is fully informed when ma ing remuneration de isions the Board has established the following roto ols The Board has established the ommittee om rised of Non exe utive ire tors whi h is res onsible for reviewing and ma ing re ommendations on remuneration oli ies for i inity in luding oli ies governing the remuneration of xe utive P and other senior exe utives Further information regarding the res e tive roles and res onsibilities of the Board and the ommittee are ontained in their res e tive harters available at vi inity om au and in i inity s or orate Governan e Statement hen onsidering the re ommendations of the ommittee the Board a lies a oli y of ex luding any exe utives from being resent and arti i ating in dis ussions im a ting their own remuneration The ommittee an see advi e from both management and external advisors in develo ing its remuneration re ommendations for the Board 5.2 External advisors and consultants To assist in erforming its duties and ma ing re ommendations to the Board the ommittee dire tly engages external advisors to rovide in ut to the ro ess of reviewing xe utive P and Non exe utive ire tor remuneration and to rovide advi e on various as e ts of the remuneration framewor uring FY17 P G was engaged by the ommittee and management to rovide a number of servi es The wor underta en by P G in FY17 did not onstitute a remuneration re ommendation for the ur oses of the or orations A t Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Vicinity Centres Annual

66 Remuneration continued 5. Other remuneration information continued 5.3 Security trading restrictions i inity s Se urities Trading Poli y rohibits senior exe utives from hedging or otherwise limiting their ex osure to ris in relation to unvested i inity se urities issued or a uired under any a li able e uity arrangements 5.4 Minimum executive securityholdings A mandatory se urity ownershi oli y is in la e for exe utives This re uires xe utive P and other senior exe utives to a uire and retain a minimum holding of se urities e ual to 6 of TF (1 of TF for ) within five years eferred ST and T ount towards the holding level 5.5 Minimum NED securityholdings A minimum se urity holding oli y for nde endent Non exe utive ire tors is urrently in la e This oli y en ourages ire tors to a uire a holding of se urities e ual in value to one year of base Board fees (on an after tax basis) within five years from the introdu tion of the oli y in 16 or from the ire tor s ommen ement date whi hever is the latter 5.6 Executive KMP and Non-executive securityholdings The table below shows the se urities held (dire tly or indire tly) by Non exe utive ire tors and xe utive P as at une 17 There were no hanges in holdings between une 17 and the date of this re ort Opening Securities 1 Granted as remuneration 2 Additions during the year Other Movements Closing Non-executive Directors Peter ay ,791 Trevor Gerber 50,000 i hard addo A 1 (1 ) - Tim Hammon 50,000 Peter ahan - harles a e 50,000 aren Penrose ,000 ebra Stirling 1 10,000 ai Tang 2,980 avid Thurin ,895,373 Total 14,251, ,937 (150,402) 14,218,144 Executive KMP Angus Naughton ,709 i hard amieson ,931 i hael Brien ,779 Total 182, ,996 75, ,419 1 e e ts se urities balan e as at 1 uly 16 e e ts deferred se urities allo ated under the FY16 ST Plan e e ts se urities held at the date i hard addo A eased to be a ire tor As r ahan and r Thurin re resent The Gandel Grou Pty imited a substantial se urityholder of i inity they are not nde endent Non exe utive ire tors and therefore are not re uired to meet the minimum N se urityholding oli y 64 Vicinity Centres Annual 2017

67 Corporate Directory Summary of Securityholders Independent Auditor s Declaration Notes to the Financial Statements Cash Flow Statement Statements of Changes in Equity There were no other related arty transa tions or balan es with ire tors and xe utive P or their ontrolled entities in relation to se urities held End of the Remuneration. Remuneration Signed in elbourne on 16 August 17 in a ordan e with a resolution of the ire tors Peter Hay Chairman Statement of Comprehensive Income Balance Sheet Vicinity Centres Annual

68 Auditor s Independence Declaration Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: Fax: ey.com/au Auditor s Independence Declaration to the Directors of Vicinity Limited As lead auditor for the audit of Vicinity Centres for the financial year ended 30 June 2017, I declare to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Vicinity Limited and the entities it controlled during the financial year. Ernst & Young David Shewring Partner 16 August 2017 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 66 Vicinity Centres Annual 2017

69 Statement of Comprehensive Income for the year ended 30 June Jun-16 Corporate Directory Summary of Securityholders Independent Auditor s Declaration Note Revenue Pro erty ownershi revenue 1, anagement fee revenue from strategi artnershi s nterest and other in ome Total revenue and income 1, Share of net rofit (loss) of e uity a ounted investments (a) 18.2 (6 ) Pro erty revaluation in rement for dire tly owned ro erties (b) ire t ro erty ex enses (332.2) ( ) Borrowing osts 6(b) (154.9) (17 1) m loyee benefits ex ense 1 (98.7) (1 6 ) ther ex enses from ordinary a tivities (33.0) ( ) Net foreign ex hange movement on interest bearing liabilities 60.7 Net mar to mar et movement on derivatives (55.1) (1 7 ) m airment and amortisation of intangible assets 1 (a) (3.0) ( ) ntegration osts (26.7) ( 1 1) Stam duty and other osts written off on a uisition of investment ro erties (b) (9.9) ( 1) Profit before tax for the year 1, n ome tax ex ense - Net profit for the year 1, ther om rehensive in ome - Total comprehensive income for the year 1, Total profit/(loss) and total comprehensive income/(loss) for the year attributable to stapled securityholders as: Se urityholders of i inity imited 1 (b) (12.3) ( 6) Se urityholders of other sta led entities of the Grou 1, Net profit and total comprehensive income for the year 1, Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Earnings per security attributable to securityholders of the Group: Basi earnings er se urity ( ents) iluted earnings er se urity ( ents) The above onsolidated Statement of om rehensive n ome should be read in on un tion with the a om anying notes Notes to the Financial Statements Vicinity Centres Annual

70 Balance Sheet as at 30 June 2017 Note 30-Jun-16 Current assets ash and ash e uivalents 42.2 e eivables and other assets nvestment ro erties held for sale (a) Finan ial assets arried at fair value through rofit or loss erivative finan ial instruments 6(d) Total current assets Non-current assets nvestment ro erties (a) 15, nvestments a ounted for using the e uity method 88.0 ntangible assets Plant and e ui ment erivative finan ial instruments 6(d) eferred tax assets ( ) 84.3 e eivables and other assets Total non-current assets 16, Total assets 16, Current liabilities nterest bearing liabilities istribution ayable Payables and other finan ial liabilities Provisions erivative finan ial instruments 6(d) 2.3 Total current liabilities Non-current liabilities nterest bearing liabilities 6 3, ther finan ial liabilities Provisions erivative finan ial instruments 6(d) Total non-current liabilities 4, Total liabilities 4,911.1 Net assets 11, Equity ontributed e uity 8,493.2 Share based ayment reserve etained rofits 3, Total equity 11, The above onsolidated Balan e Sheet should be read in on un tion with the a om anying notes 68 Vicinity Centres Annual 2017

71 Statements of Changes in Equity for the year ended 30 June 2017 Attributable to securityholders of Vicinity Limited Corporate Directory Summary of Securityholders Independent Auditor s Declaration Notes to the Financial Statements Cash Flow Statement Statement of Comprehensive Income Remuneration Contributed equity Reserves Retained profits (losses) Total Contributed equity Attributable to securityholders of other stapled entities of the Group Reserves Retained profits As at 1 July , , , ,595.6 Net (loss) rofit for the year ( 6) ( 6) Total comprehensive (loss)/income for the year - - (305.6) (305.6) - - 1, , Transactions with securityholders in their capacity as securityholders: Net movements in share based ayment reserve (6 ) (6 ) (6 ) istributions de lared (7 7) (7 7) (7 7) Total equity as at 30 June (297.1) , , , ,849.0 Net (loss) rofit for the year (1 ) (1 ) Total comprehensive (loss)/income for the year - - (12.3) (12.3) - - 1, , ,583.6 Transactions with securityholders in their capacity as securityholders: Net movements in share based ayment reserve ( 1) ( 1) ( 1) istributions de lared (6 ) (6 ) (6 ) Total equity as at 30 June (309.4) , , , ,747.7 Total Total equity The above Statements of hanges in uity should be read in on un tion with the a om anying notes Statements of Changes in Equity Balance Sheet Vicinity Centres Annual

72 Cash Flow Statement for the year ended 30 June Jun-16 Note Cash flows from operating activities Receipts in the course of operations 1, Payments in the ourse of o erations (591.3) (61 ) istributions and dividends re eived from asso iates oint venture artnershi s and managed investments nterest and other revenue re eived 4.6 nterest aid (158.4) (17 7) Net cash inflows from operating activities Cash flows from investing activities Payments for a ital ex enditure on investment ro erties (398.9) ( ) Payments for a uisition of investment ro erties (141.3) ( ) Pro eeds from dis osal of investment ro erties Payments for lant and e ui ment and other investments (6.6) ( ) Pro eeds from other investments - Payment for intangibles - ( ) ntegration osts (18.4) ( ) Payment to settle other finan ial liability Bentons S uare a uisition (38.3) Stam duty aid (9.9) ( ) Net cash (outflows)/inflows from investing activities (177.4) Cash flows from financing activities Pro eeds from borrowings 1, e ayment of borrowings (1,946.3) ( 7 ) Pro eeds from re ayment of loan to Tuggeranong Town entre Trust istributions aid to external se urityholders (696.7) (6 ) ebt establishment osts aid (3.8) (1 6) A uisition of shares on mar et for settlement of share based ayments (7.6) (1 ) Net cash outflows from financing activities (564.4) (1 ) Net decrease in cash and cash equivalents held (10.6) ( 6) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 42.2 The above ash Flow Statement should be read in on un tion with the a om anying notes 70 Vicinity Centres Annual 2017

73 Notes to the Financial Statements The index of notes to the finan ial statements is shown below Similar notes have been grou ed into se tions with relevant a ounting oli ies and udgement and estimate dis losures in or orated within the notes to whi h they relate Corporate Directory Summary of Securityholders Independent Auditor s Declaration Operations 1 Segment information arnings er se urity Taxes nvestment ro erties uity a ounted investments apital str ct re an financial risk mana ement 6 nterest bearing liabilities and derivatives 7 a ital and finan ial ris management ontributed e uity Working capital e eivables and other assets 1 Payables and other finan ial liabilities 11 Provisions Remuneration 1 ey management ersonnel 1 m loyees 1 Share based ayments Other disclosures 1 ntangible assets 16 Notes to the ash Flow Statement 17 Auditor s remuneration 1 Parent entity finan ial information 1 elated arties ommitments and ontingen ies 1 ther Grou a ounting matters vents o urring after the re orting date Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Vicinity Centres Annual

74 About This i inity entres (the Grou ) is listed on the Australian Se urities x hange (AS ) under the ode t om rises i inity imited (the om any) and i inity entres Trust (the Trust) The Sta ling eed entered into by the om any and the Trust ensures that shares in the om any and units in the Trust are sta led together and are traded olle tively The om any and the Trust are for rofit entities that are domi iled and o erate wholly in Australia Basis of preparation This general ur ose Finan ial e ort has been re ared in a ordan e with the Corporations Act 2001 ( th) and Australian A ounting Standards (AASBs) issued by the Australian A ounting Standards Board om lian e with AASBs ensures om lian e with nternational Finan ial e orting Standards ( F S) as issued by the nternational A ounting Standards Board ( ASB) is resented in Australian dollars ( ) and rounded to the nearest tenth of a million dollars ( m) in a ordan e with AS egislative nstrument (unless otherwise stated) has been re ared in a ordan e with the histori al ost onvention ex e t for ertain finan ial assets and liabilities and investment ro erties whi h have been re ognised at fair value and was authorised for issue by the Board of ire tors on 16 August 17 The ire tors have the ower to amend and reissue the Finan ial e ort Although the Grou has a net urrent defi ien y of 6 million ( urrent liabilities ex eed urrent assets) at re orting date the Grou has suffi ient urrent undrawn borrowing fa ilities (of million refer to Note 6(a)) and generates suffi ient o erating ash ows to meet its urrent obligations as they fall due A ordingly this Finan ial e ort has been re ared on a going on ern basis The resentation of ertain items has also been ad usted as ne essary to rovide more meaningful information in the ontext of the Grou here the resentation or lassifi ation of items in the Finan ial e ort is amended om arative amounts are also re lassified unless it is im ra ti al The ad ustments made to the resentation of items had no im a t on the net assets or net rofit of the Grou Accounting policies The Grou s a ounting oli ies are ontained within the relevant notes to these finan ial statements ther a ounting oli ies that relate to the finan ial statements as a whole detail of any hanges in a ounting oli ies and the im a t of new or amended a ounting standards are ontained in Note 1 Critical accounting judgements and estimates The re aration of finan ial statements re uires the Grou to ma e udgements estimates and assum tions These are based on histori al ex erien e and other fa tors onsidered to be reasonable under the ir umstan es but whi h are inherently un ertain the results of whi h form the basis of the arrying value of those assets and liabilities onse uently future a tual results ould differ from these estimates udgements and estimates onsidered material to this Finan ial e ort are Judgement or estimate Reference e ognition of deferred tax assets Note Valuation of investment properties Note Valuation of derivatives Note 6 e overability of goodwill and intangibles Note 1 72 Vicinity Centres Annual 2017

75 Operations 1. Segment information The Grou s o erating segments identified for internal re orting ur oses are Pro erty nvestment and Strategi Partnershi s Property Investment: comprises net property income derived from investment in retail property; and Strategic Partnerships: re resents fee in ome from ro erty management develo ment leasing and management of wholesale ro erty funds The internal re orting on these segments is rovided to the hief erating e ision a ers to ma e strategi de isions uring the year the hief erating e ision a ers were the and anaging ire tor ( ) and the hief Finan ial ffi er ( F ) Segment erforman e is assessed based on nderlying arnings whi h is al ulated as statutory net rofit ad usted for fair value movements ertain unrealised and non ash items and other items that are not in the ordinary ourse of business or a ital in nature n addition to nderlying arnings the and F also review Ad usted Funds From erations (AFF ) in assessing the erforman e of the Grou AFF is determined by ad usting nderlying arnings for ertain items in a ordan e with the guidelines ublished by the Pro erty oun il of Australia (a) Segment results 30-Jun-16 For the 12 months to: Property Investment segment Net property income Strategic Partnerships segment Pro erty management develo ment and leasing fees Funds management fees 9.7 Total segment income or orate overheads (net of internal ro erty management fees) (74.9) ( ) Net interest ex ense (166.0) (1 1 ) Underlying earnings Ad usted for ent lost from underta ing develo ments (28.9) (1 ) Funds From Operations aintenan e a ital ex enditure and tenant in entives given (71.4) (7 1) Adjusted Funds From Operations Distribution declared Distribution as a percentage of AFFO 106.8% 1 Distribution as a percentage of underlying earnings 92.3% Corporate Directory Summary of Securityholders Grou erforman e is also monitored on nderlying arnings er se urity (underlying PS) The al ulation of underlying PS for ea h year uses the basi weighted average number of shares on issue as al ulated in Note For the 12 months to: Cents 30-Jun-16 Cents nderlying PS istribution er se urity Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Vicinity Centres Annual

76 Operations continued 1. Segment information continued (b) econciliation of n erlyin earnin s to net profit after tax For the 12 months to: 30-Jun-16 Underlying earnings Pro erty revaluation in rement for dire tly owned ro erties Non distributable gain (loss) relating to e uity a ounted investments (1 6) Amortisation of static lease incentives (11.3) (1 ) Amortisation of other ro e t items (16.8) ( ) Straight lining of rent ad ustment 16.8 ent lost from underta ing develo ments (28.9) (1 ) Stam duty and transa tion osts written off on a uisition of investment ro erties (9.9) ( 1) Net mar to mar et movement on derivatives (55.1) (1 7 ) Net foreign ex hange movement on interest bearing liabilities 60.7 ntegration osts 6 (26.7) ( 1 1) m airment and amortisation of intangible assets 7 (3.0) ( ) ther non distributable items 0.2 ( 6) Net profit after tax 1, The material ad ustments to net rofit to arrive at underlying earnings and reasons for their ex lusion are des ribed below 1 nderlying earnings ex ludes non distributable fair value movements relating to dire tly owned investment ro erties and e uity a ounted investments ertain ayments su h as lease in entives relating to investment ro erties are a italised to investment ro erties Amortisation of these items is then re ognised as an ex ense in a ordan e with Australian A ounting Standards Tenant in entives aid during the year are re e ted in the AFF al ulation at Note 1(a) A ordingly amortisation of these amounts is ex luded from underlying earnings Straight lining of rental revenue whi h is re uired by Australian A ounting Standards is an unrealised non ash amount and ex luded from underlying earnings The Grou re ognises rent lost from underta ing develo ments in underlying earnings This in ome does not meet the definition of revenue under Australian A ounting Standards and is therefore not re ognised in statutory net rofit Fair value movements in derivatives om rise mar to mar et movements re uired by Australian A ounting Standards for valuation ur oses in luding realised and unrealised amounts and are ex luded from underlying earnings 6 The Grou has in urred osts in the urrent year in relation to integration a tivities following the merger of Federation entres and Novion Pro erty Grou on 11 une 1 Further information on the merger an be found in the une 1 and une 16 finan ial statements 7 nderlying earnings ex ludes non ash harges relating to intangible assets (c) Reconciliation of segment income to total revenue The following is a re on iliation of total segment in ome to total revenue and other in ome in the Statement of om rehensive n ome For the 12 months to: 30-Jun-16 Total segment income (Note 1(a)) Ad usted for Net ro erty in ome from e uity a ounted investments in luded in segment in ome (13.7) ( ) Straight lining revenue 16.8 Pro erty related ex enses in luded in segment in ome Amortisation of stati lease in entives and other ro e t items (28.1) ( 6) ent lost from underta ing develo ments (28.9) (1 ) nterest and other revenue not in luded in segment in ome Total revenue and other income per Statement of Comprehensive Income 1, Vicinity Centres Annual 2017

77 Corporate Directory (d) Segment assets and liabilities The ro erty investment segment re orted to the and F in ludes investment ro erties held dire tly and those that are in luded in e uity a ounted investments The ro erty investment values are measured in a manner onsistent with the Balan e Sheet A brea down of the total investment ro erties in the ro erty investment segment is shown below Note 30-Jun-16 nvestment ro erties (a) 1 15, nvestment ro erties in luded in e uity a ounted investments (b) Total interests in directly owned investment properties 15, Assets under management on behalf of strategi artners 9, Total assets under management 25, x ludes lanning and holding osts finan e lease assets relating to investment ro erties and F Perth whi h is under onstru tion as dis losed in Note (a) e resents the value of ro erty interests managed but not owned onsolidated or otherwise a ounted for by the Grou All other assets and liabilities are not allo ated by segment for re orting to the and F 2. Earnings per security The basi and diluted earnings er se urity for the Grou are al ulated below in a ordan e with the re uirements of AASB 1 Earnings per Share Basi earnings er se urity is determined by dividing the net rofit or loss after in ome tax by the weighted average number of se urities outstanding during the year iluted earnings er se urity ad usts the figures used in the determination of basi earnings er se urity by ta ing into a ount the interest and other finan ing osts asso iated with dilutive otential ordinary se urities and the weighted average number of se urities assumed to have been issued for no onsideration in relation to dilutive otential ordinary se urities Basi and diluted earnings er se urity are as follows For the 12 months to: 30-Jun-16 Earnings per security attributable to securityholders of the Group: Basi earnings er se urity ( ents) iluted earnings er se urity ( ents) Loss per security attributable to securityholders of the Parent: Basi loss er se urity ( ents) (0.31) (7 7 ) iluted loss er se urity ( ents) (0.31) (7 7 ) The following net rofit (loss) amounts are used in the numerator in al ulating earnings er sta led se urity For the 12 months to: 30-Jun-16 arnings used in al ulating basi and diluted earnings er se urity of the Grou 1, oss used in al ulating basi and diluted earnings er se urity of the Parent (12.3) ( 6) The following weighted average number of se urities are used in the denominator in al ulating earnings er se urity for the Parent and the Group: For the 12 months to: Number (m) 30-Jun-16 Number (m) eighted average number of se urities used as the denominator in al ulating basi earnings 3, per security Ad ustment for otential dilution from erforman e rights granted 5.0 eighted average number of se urities and otential se urities used as the denominator in al ulating the diluted earnings er se urity 3, Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders Vicinity Centres Annual

78 Operations continued 3. Taxes (a) Group taxation Income tax Vicinity Centres Trust (flow through trust structure) i inity entres Trust (the Trust) and its ontrolled trusts are not liable to ay in ome tax (in luding a ital gains tax) on the basis that their benefi iaries are resently entitled to the net in ome of the trusts This means that the taxable in ome from the Trust s ro erty investments is taxed on a ow through basis in the hands of the Trust s se urityholders The Trust s se urityholders ay tax at their marginal tax rates in the ase of Australian resident se urityholders or through the anaged nvestment Trust withholding rules for non resident se urityholders As a result the Grou has ero in ome tax ex ense re ognised in res e t of the Trust s rofit Vicinity Limited (corporate tax group) i inity imited (the om any) and its subsidiaries have formed a tax onsolidated grou (T G) nder this arrangement the om any the head entity a ounts for its own urrent and deferred tax amounts and assumes those from subsidiaries in the T G embers of the T G have entered into a tax funding arrangement whi h sets out the funding obligations of members of the T G in res e t of tax amounts The tax funding arrangement re uires ayments to from the head entity to be re ognised via an inter entity re eivable ayable whi h is at all n ome tax ex ense for the year is al ulated at the or orate tax rate of and om rises urrent and deferred tax ex ense These amounts are re ognised in rofit or loss ex e t to the extent they relate to items re ognised dire tly in other om rehensive in ome or e uity urrent tax ex ense re resents the ex ense relating to the ex e ted taxable in ome at the a li able rate for the finan ial year eferred tax assets and liabilities are measured based on the ex e ted manner of re overy of the arrying value of an asset or liability eferred tax ex ense re resents the tax ex enses in res e t of future tax onse uen es of re overing or settling the arrying amount of an asset or liability These future tax onse uen es are re orded as deferred tax assets to the extent it is robable that future taxable rofits or deferred tax liabilities will be available to utilise them here a ro riate deferred tax assets and liabilities are offset as ermitted by Australian A ounting Standards A summary of i inity imited s urrent and deferred tax ex ense and re ognised deferred tax assets is shown below For the 12 months to: 30-Jun-16 urrent in ome tax benefit eferred in ome tax ex ense (3.5) ( ) Ad ustment for urrent year tax of rior eriods Benefit from tax losses not re ognised (4.5) ( ) Income tax expense - Statutory taxes and levies The Grou also in urs federal state based or lo al authority taxes in luding land tax oun il rates and levies These are in luded within dire t ro erty ex enses in the Statement of om rehensive n ome Also in luded in em loyee benefits ex enses are em loyment related taxes su h as fringe benefits tax ayroll tax and wor over ontributions Further details of these taxes an be found in the Tax Trans aren y se tion of this Annual e ort Goods and services tax evenues ex enses and assets are re ognised net of the amount of Goods and Servi es Tax (GST) ex e t where the GST in urred on a ur hase of goods and servi es is not re overable from the taxation authority in whi h ase the GST is re ognised as art of the ost of a uisition of the asset or as art of the ex ense item as a li able and re eivables and ayables whi h are stated with the amount of GST in luded The net amount of GST re overable from or ayable to the taxation authority is in luded as art of re eivables and ayables in the Balan e Sheet ash ows are in luded in the ash Flow Statement on a gross basis and the GST om onent of ash ows arising from investing and finan ing a tivities that is re overable from or ayable to the taxation authority is lassified as art of o erating ash ows ommitments and ontingen ies are dis losed net of the amount of GST re overable from or ayable to the taxation authority Further details of these taxes an be found in the Tax Trans aren y se tion of this Annual e ort 76 Vicinity Centres Annual 2017

79 Corporate Directory Summary of Securityholders Independent Auditor s (b) econciliation bet een income tax expense (benefit) to net profit For the 12 months to: 30-Jun-16 Profit before tax for the year 1, ess Profit attributed to the Trust and not sub e t to tax 1, Net loss before tax attributable to securityholders of Vicinity Limited (12.3) ( 6) Prima fa ie in ome benefit at Tax effect of amounts not taxable in calculating income tax expense: Non dedu tible im airment and amortisation of intangible assets (0.9) ( ) Net ad ustment relating to a uisition of share based ayments (0.2) Prior eriod ad ustments ther non dedu tible items (0.2) (1 1) Benefit from tax losses not re ognised (4.5) ( ) Income tax expense - (c) Movement in temporary differences A summary of the movements in deferred tax balan es is as follows Provisions Intangible assets Other Allowable deductions 1 Tax losses Total At 30 June (4.3) Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Transfers (1 ) 1 harged to rofit (1 ) 1 ( ) 6 At 30 June (3.3) Cash Flow Statement Transfers ( ) harged to rofit ( 7) At 30 June (2.4) The Grou is entitled to tax dedu tions under s of the Income Tax Assessment Act 1997 rimarily resulting from the termination of funds management ontra ts in ar h 1 The deferred tax assets are re ognised as it is robable that the Grou will earn suffi ient taxable in ome in future eriods for them to be utilised nre ognised deferred tax assets will be reviewed on an annual basis and may be re ognised at a later date if onsidered li ely to be re overed These totalled million at une 17 ( une 16 million) om rising allowable dedu tions of 16 6 million ( une 16 1 million) and tax losses of 1 million ( une 16 million) Notes to the Financial Statements Declaration Vicinity Centres Annual

80 Operations continued 4. Investment properties The Grou s investment ro erties re resent freehold and leasehold interests in land and buildings held to derive rental in ome They are initially measured at ost in luding related transa tion osts Subse uently at ea h re orting eriod they are arried at their fair values based on the mar et value determined by inde endent (external) valuers or internal valuations These valuations in lude the ost of a ital wor s in rogress on develo ment ro e ts Further detail on the Grou s valuation ro ess and valuation methods is des ribed in Note ( ) (a) Portfolio summary Weighted average cap rate % 30-Jun-16 Weighted average cap rate % Shopping centre type Number of properties Value Number of properties Value Su er egional 1 2, a or egional 7 3, City Centre 4 1, egional 10 2, utlet entre 6 1, Sub egional 31 3, Neighbourhood Planning and holding osts Total 74 15, Add: Finance lease assets ess Pro erties held for sale (33.5) ( 1) ( urrent asset) Total investment properties 15, Planning and holding osts relating to otential ma or develo ment ro e ts are a italised and arried within the overall investment ro erty balan e These osts are reviewed ea h eriod and the status of the ro e t assessed to determine if ontinued a italisation of these osts remains a ro riate efer to Note 1(b) for further detail e resents the arrying amount of ro erties whi h the Grou had an agreement to sell At une 17 the value re resented a 1 freehold interest in Terra e entral whi h is due to settle in 17 The une 16 balan e in luded a freehold interest in The yer entre Brisbane a freehold interest in ornington entral and a 1 freehold interest in Bowes Street The rior year ro erties held for sale all settled during the year (b) Movements for the year 30-Jun-16 ening balan e at 1 uly 14, A uisitions in luding asso iated stam duty and transa tion osts a ital ex enditure a italised borrowing osts is osals (436.0) ( ) Pro erty revaluation in rement for dire tly owned ro erties Stam duty and other osts written off on a uisition of investment ro erties (9.9) ( 1) Amortisation of in entives and leasing osts (28.8) ( 6) Straight lining of rent ad ustment 16.8 Closing balance at 30 June 15, x ludes million deferred onsideration aid for the a uisition of the remaining of Bentons S uare in uly 16 as this asset was reviously a ounted for in investment ro erties on a 1 ownershi basis based on the terms of the a uisition agreement n ludes develo ment osts maintenan e a ital ex enditure lease in entives and fit out osts Borrowing osts in urred in the onstru tion of ualifying assets have been a italised at a weighted average rate of ( une 16 1 ) 78 Vicinity Centres Annual 2017

81 Corporate Directory Summary of Securityholders (c) Portfolio valuation Process a h investment ro erty is valued either inde endently (externally) or internally in e ember and une ea h year as art of the biannual valuation ro ess This ro ess re uires ea h ro erty to be inde endently valued at least on e er year inde endent valuers (who are sele ted from a re a roved anel) that are a ro riately ualified This is onsidered to be when they are authorised by law to arry out su h valuations and have at least five years valuation ex erien e (in luding at least two years in Australia) internal valuations to be underta en if a ro erty is not due for an inde endent valuation where an internal valuation shows a varian e greater than 1 from the last inde endent valuation a new inde endent valuation to be underta en (even if this results in a ro erty being inde endently valued twi e in one year) and internal valuations to be reviewed by a dire tor of an inde endent valuation firm to assess the assum tions ado ted and the reasonableness of the out omes The valuation ro ess is governed by the Board and the internal management nvestment ommittee with in ut from ey exe utives as re uired The ro ess is reviewed eriodi ally to ta e into a ount any regulatory hanges hanges in mar et onditions and any other re uirements that would need to be ado ted Methodology To determine fair value: nde endent valuations ommonly ado t the mid oint of the a italisation of net in ome and dis ounted ash ow ( F) methods nternal valuations utilise the latest available ro erty finan ial information in the a italisation of net in ome method with a ross he using the F method Both inde endent and internal valuations em loy the residual value method when valuing develo ment ro erties Pro erties that have sale agreements in la e by the end of the finan ial year are valued at the agreed sale amount Method Capitalisation of net income Discounted cash flow Residual value (for properties under development) Description The fully leased annual net in ome of the ro erty is a italised in er etuity from the valuation date arious ad ustments are then made to the al ulated result in luding estimated future in entives a ital ex enditure va an y allowan es and reversions to mar et rent The a italisation rate re e ts the nature lo ation and tenan y rofile of the ro erty together with urrent mar et investment riteria as eviden ed by urrent sales results Pro e ted ash ows for a sele ted investment eriod (usually 1 years) are derived from ontra ted or mar et rents o erating osts lease in entives a ital ex enditure and future in ome on va ant s a e The ash ows assume the ro erty is sold at the end of the investment eriod for a terminal value This terminal value is al ulated by a italising in er etuity assumed rents at the end of the investment eriod by an a ro riate terminal yield Fair value is determined to be the resent value of these ro e ted ash ows whi h is al ulated by a lying a mar et derived dis ount rate to the ash ows The value of the asset on om letion is al ulated using the a italisation of net in ome and F methods as des ribed above based on the fore ast in ome rofile at develo ment om letion The estimated ost to om lete the develo ment in luding onstru tion osts and asso iated ex enditures finan e osts and an allowan e for develo er s ris and rofit is dedu ted from the value of the asset on om letion to derive the urrent value Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Vicinity Centres Annual

82 Operations continued 4. Investment properties continued (c) Portfolio valuation continued Key inputs and sensitivities The Grou has lassified fair value measurements (su h as those erformed on investment ro erties) into the following hierar hy as re uired by AASB 1 Fair Value Measurement: evel 1 uoted ri es (unad usted) in a tive mar ets for identi al assets or liabilities evel in uts other than uoted ri es in luded within evel 1 that are observable for the asset or liability either dire tly or indire tly evel in uts for the asset or liability that are not based on observable mar et data (unobservable in uts) n uts to investment ro erty valuations are onsidered evel of the fair value hierar hy as the a italisation of in ome and F methods re uire assum tions to be made to determine ertain in uts that are not based on observable mar et data At re orting date the ey unobservable in uts used by the Grou in determining fair value of its investment ro erties are summarised below 30-Jun-16 Unobservable inputs Range of inputs Weighted average inputs Range of inputs Weighted average inputs Sensitivity Capitalisation rate % 7.50% 5.61% 7 The higher the dis ount rate is ount rate 6.75% 8.50% 7.55% 7 7 Terminal yield 4.50% 7.75% 5.85% months x e ted downtime (for tenants va ating) 2 months to 9 months 5 months months to 1 months ental growth rate 2.27% 4.44% 3.52% 7 7 terminal yield, capitalisation rate and ex e ted downtime due to tenants va ating the lower the fair value The higher the rental growth rate the higher the fair value 1 The a italisation rate is the re uired annual yield of net mar et in ome used to determine the value of the ro erty The rate is determined with regard to om arable mar et transa tions The dis ount rate is a re uired annual total rate of return used to onvert a fore ast ash ow of an asset into a resent value t should re e t the re uired rate of return of the ro erty given its ris rofile relative to om eting uses of a ital The rate is determined with regard to om arable mar et transa tions The terminal yield is the a italisation rate used to onvert fore ast annual in ome into a fore ast asset value at the end of the holding eriod when arrying out a dis ounted ash ow al ulation The rate is determined with regard to om arable mar et transa tions and the ex e ted ris of the asset at the end of the ash ow eriod All of the above ey assum tions have been ta en from the latest external valuation re orts and internal valuation assessments F Perth is ex luded from the une 17 in uts as it is urrently under onstru tion For all investment ro erties the urrent use e uates to the highest and best use 80 Vicinity Centres Annual 2017

83 Corporate Directory (d) List of investment properties held i. Super Regional Carrying value Ownership interest % Valuation type 30-Jun-16 Chadstone nternal 2, Total Super Regional 2, ii. Major Regional Carrying value Ownership interest % Valuation type 30-Jun-16 Ban stown entral xternal Bayside 1 xternal hatswood hase Sydney 1 xternal 1, Galleria nternal Northland xternal Roselands xternal The Glen nternal Total Major Regional 3, iii. City Centre Carrying value Ownership interest % Valuation type 30-Jun-16 m orium elbourne 1 xternal yer Bour e Street 1 nternal The yer entre Brisbane nternal ueenspla a 1 xternal Total City Centre 1, efer to footnotes at the end of Note (d) iv. Regional Carrying value Ownership interest % Valuation type 30-Jun-16 Broadmeadows entral 1 xternal Colonnades xternal ranbourne Par nternal astlands 1 nternal li abeth ity entre 1 xternal Grand Pla a xternal andurah Forum xternal t mmaney entre nternal o ingham entre xternal unaway Bay entre xternal Total Regional 2, Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders Vicinity Centres Annual

84 Operations continued 4. Investment properties continued (d) List of investment properties held continued v. Outlet Centre Carrying value Ownership interest % Valuation type 30-Jun-16 F Brisbane 1 xternal 59.0 F ssendon 1 nternal F omebush 1 nternal F oorabbin 1 xternal F Perth 6 nternal 17.7 F South harf 7 1 xternal Total Outlet Centre 1, efer to footnotes at the end of Note (d) vi. Sub Regional Carrying value Ownership interest % Valuation type 30-Jun-16 Altona Gate Sho ing entre 1 nternal Armidale Central 1 xternal 46.0 Belmont illage 1 nternal Box ill entral (North Pre in t) 1 xternal Box ill entral (South Pre in t) 1 nternal Brandon Par xternal Buranda illage 1 nternal arlingford ourt nternal astle Pla a 1 nternal Corio Central 1 nternal llenbroo entral 1 nternal Gympie Central 1 xternal Halls Head Central xternal Karratha City xternal Kurralta Central 1 nternal a e aven entre 1 nternal avington S uare 1 nternal 62.3 ivingston ar et la e 1 nternal 86.0 addington entral 1 nternal ornington entral nternal Ne ean illage 1 nternal Northgate 1 xternal oxburgh illage 1 xternal Sunshine ar et la e xternal Taigum S uare 1 xternal Toormina Gardens nternal 40.5 arnbro entre 1 nternal arriewood S uare xternal arwi Grove 1 nternal est nd Pla a 1 xternal hitsunday Pla a 1 nternal aitland unter all - Tweed all - 7 odonga Pla a - 6 Total Sub Regional 3, efer to footnotes at the end of Note (d) 82 Vicinity Centres Annual 2017

85 Corporate Directory Summary of Securityholders vii. Neighbourhood Carrying value Ownership interest % Valuation type 30-Jun-16 Bentons S uare 1 nternal urrambine entral 1 nternal ianella Pla a 1 nternal Flinders S uare 1 nternal Goldfields Pla a 1 xternal Kalamunda Central 1 nternal ennox illage nternal 36.5 ilton illage 1 nternal 27.5 North Shore illage 1 nternal 25.0 a leigh entral 1 xternal xenford illage 1 xternal 33.1 Stirlings entral 1 nternal 50.0 Terrace Central 1 1 nternal 33.5 The Gateway 1 nternal 46.0 i toria Par entral 1 xternal 31.0 Albany Broo s Garden - Bowes Street - 7 ilton Pla a - 17 onier illage - 1 Total Neighbourhood The titles to these ro erties are leasehold and ex ire in 6 A interest in The yer entre Brisbane and a interest in ornington entral were dis osed during the year The right to o erate the F Brisbane business ex ires in 6 The title to this ro erty is leasehold and ex ires in The title to this ro erty is leasehold with an o tion to extend the ground lease to at the Grou s dis retion 6 This ro erty is urrently under onstru tion The arrying value at une 17 re resents osts in urred to date The title is leasehold and ex ires in 7 7 An additional interest in F South harf was a uired during the year The title to this ro erty is leasehold and ex ires in 1 The title to this ro erty is leasehold with o tions to extend the ground lease to 1 at the Grou s dis retion is osed during the year 1 Pro erty is urrently ontra ted for sale with settlement ex e ted in 17 (e) Operating lease receivables The investment ro erties are leased to tenants under o erating leases with rentals ayable monthly Future minimum rental revenue re eivables under non an ellable o erating leases of investment ro erties are as follows 30-Jun-16 Not later than one year ater than one year and not later than five years 2, ater than five years 1, Total operating lease receivables 4, Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Vicinity Centres Annual

86 Operations continued 5. Equity accounted investments uity a ounted investments are redominantly investment ro erty oint ventures with strategi artners where the ro erty ownershi interest is held through a ointly owned trust rather than dire t ownershi into the ro erty title The Grou has ontra tual arrangements that establish oint ontrol over the e onomi a tivities of these trusts based on standard mar et terms These are a ounted for in the Grou s finan ial statements using the e uity method Ownership Carrying value % 30-Jun-16 % 30-Jun-16 i toria Gardens etail Trust oint venture ther asso iates and oint ventures Closing balance 88.0 (a) Movements for the year 30-Jun-16 ening balan e 80.5 Additional investments made during the year 0.4 Share of net rofit (loss) of e uity a ounted investments 18.2 (6 ) istributions of net in ome from e uity a ounted investments (9.4) ( ) is osal of ownershi in e uity a ounted investments (1.7) ( ) Closing balance 88.0 (b) mmarise financial information for ictoria ar ens etail r st 1 30-Jun-16 nvestment ro erties non urrent nterest bearing liabilities non urrent (46.6) ( 6 6) ther net liabilities (5.2) ( ) Net assets Total income 10.3 Aggregate net rofits after in ome tax nterest ex ense (1.9) (1 ) istributions re eivable by the Grou Summarised finan ial information re resents of the underlying finan ial statement information of the oint venture with no ad ustments made (c) Related party transactions with equity accounted investments during the year Victoria Gardens Retail Trust (joint venture, 50% ownership interest) Asset management fees earned by the Grou for management servi es rovided to i toria Gardens etail Trust totalled 1 ( une 16 7 ) At une 17 1 remains ayable to the Grou ( une ) The Grou also has distributions re eivable of 1 7 at balan e date ( une ) Vicinity Asset Operations Pty Ltd (VAO) (associate, 33% ownership interest) ent and outgoings earned from A as a tenant of the Grou s entres was ( une ) ividends aid to the Grou were 71 1 ( une ) The Grou has re eivables from A of at une 17 ( une ) Tuggeranong Town Centre Trust (joint venture, 50% ownership interest disposed on 30 November 2016) Asset management fees earned by the Grou for management servi es rovided to Tuggeranong Town entre Trust (TT T) rior to dis osal totalled 1 ( une ) The loan re eivable from TT T of was re aid u on dis osal nterest in ome for the year was 1 ( une ) There are no outstanding balan es related to this oint venture at une Vicinity Centres Annual 2017

87 Capital Structure and Financial Risk Management 6. Interest bearing liabilities and derivatives nterest bearing liabilities are initially re ognised at fair value net of transa tion osts in urred and subse uently measured at amortised ost using the effe tive interest rate method Foreign urren y denominated notes are translated to Australian ollars (A ) at the a li able ex hange rate at year end with the gain or loss attributable to ex hange rate movements re ognised in rofit or loss in the Statement of om rehensive n ome uring the year the following finan ing a tivities have o urred S 1 million of S Private Pla ement Notes ( SPPs) ex ired on 7 February 17 and were re aid through existing available ban debt fa ilities million of 7 year and million of 1 year A edium Term Notes (A TNs) were issued on 6 A ril 17 The ro eeds of the issue were used to re ay existing ban fa ilities and for general or orate ur oses 6 million of existing ban debt fa ilities were an elled following this issue A 1 month extension of ertain ban debt fa ilities to im rove the debt ex iry rofiles Net re ayments of existing fa ilities have been made throughout the year from asset sales artially offset by funds drawn for a ital ex enditure Remuneration Corporate Directory Summary of Securityholders Independent Auditor s Statement of Comprehensive Income Balance Sheet The following table outlines the Grou s interest bearing liabilities at balan e date 30-Jun-16 Current liabilities Unsecured SPPs Total current liabilities Non-current liabilities Secured A TNs Unsecured Ban debt 1, A TNs GBP uro ean edium Term Notes ( TNs) SPPs eferred debt osts 1 (16.0) (17 ) Total non-current liabilities 3, Total interest bearing liabilities 3, eferred debt osts om rise the unamortised value of borrowing osts on establishment or refinan e of debt fa ilities These osts are deferred on the Balan e Sheet and amortised to borrowing osts in the Statement of om rehensive n ome Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Vicinity Centres Annual

88 Capital Structure and Financial Risk Management continued 6. Interest bearing liabilities and derivatives continued (a) Financing facilities The harts below outline the maturity of the Grou s total available fa ilities at une 17 by ty e and the ban to a ital mar ets debt ratio f the million total available fa ilities ( une 16 million) million remains undrawn at une 17 ( une million) Available facilities expiry profile () 1,2 1,600 Bank to capital market debt ratio 1,400 1,200 1, FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 USPP AMTN EMTN Bank debt drawn Beyond Bank debt undrawn 48% 52% $2,418.5 $2,632.3 Capital market debt outstanding Bank debt limit 1 The arrying amount of the SPPs TNs and A TNs in the Balan e Sheet is net of ad ustments for fair value items and foreign ex hange translation of 1 1 million ( une million) These ad ustments are ex luded from the al ulation of total fa ilities available and amounts drawn as shown in the harts Additionally deferred debt osts of 16 million ( une million) are not re e ted in the amount drawn Total ban debt fa ilities are redu ed by ban guarantees of 17 7 million drawn against ban debt fa ilities ( une million) (b) Borrowing costs Borrowing osts onsist of interest and other osts that an entity in urs in onne tion with borrowing funds su h as establishment fees legal and other fees Borrowing osts are ex ensed to the Statement of om rehensive n ome using the effe tive interest rate method ex e t for borrowing osts in urred for the develo ment of investment ro erties whi h are a italised to the ost of an investment ro erty during the eriod of develo ment For the 12 months to: 30-Jun-16 nterest osts on interest bearing liabilities and derivatives Amortisation of borrowing osts 5.2 Amortisation of fair value ad ustments relating to dis ontinuation of hedge a ounting 1 (7.9) (1 ) Amortisation of A TN and TN fair value ad ustments (5.1) ( ) Finance lease interest 3.3 ess a italised borrowing osts (8.0) (11 ) Total borrowing costs n 1 ay 16 the Grou ele ted to dis ontinue hedge a ounting that it reviously a lied for its existing SPPs and ross urren y Swa derivatives AASB 1 Financial Instruments Recognition and Measurement re uired that u on dis ontinuation the histori al hedge a ounting ad ustment a lied to the arrying value of the SPPs relating to movements in interest rates sin e the SPPs were entered into be re ognised as art of the arrying value of the SPP This ad ustment is then amortised to ero over the remaining life of the SPPs using the effe tive interest rate method This amortisation is in luded in borrowing osts in the Statement of om rehensive n ome 86 Vicinity Centres Annual 2017

89 Corporate Directory Summary of Securityholders Independent Auditor s Declaration (c) Defaults and covenants At une 17 the Grou had no defaults on debt obligations or brea hes of lending ovenants ( une 16 None) (d) Derivatives As detailed further in Note 7 derivative instruments are held to hedge against the interest rate ris and foreign urren y ris of the Grou s borrowings The fair value of these derivatives are estimated using valuation te hni ues in luding referen ing to the urrent fair value of other instruments that are substantially the same or al ulation of dis ounted ash ows These valuation te hni ues use observable evel in uts mainly interest rates and interest rate urves as well as foreign urren y rates and foreign urren y urves The arrying value and notional rin i al amounts of these instruments are shown in the table below Carrying amount Notional principal value 30-Jun Jun-16 ross urren y swa s ( ay A oating re eive S fixed) Assets Total current assets n/a n a ross urren y swa s ( ay A oating re eive S fixed) Assets Total non-current assets n/a n a nterest rate swa s ( oating to fixed) iabilities (2.3) 1,187.0 Total current liabilities (2.3) n/a n a ross urren y swa s ( ay A oating re eive S fixed) iabilities (36.2) (1 ) ross urren y swa s ( ay A oating re eive GBP fixed) iabilities (67.5) (1 ) nterest rate swa s ( oating to fixed) iabilities (72.4) (16 ) 1, Total non-current liabilities (176.1) (17 7) n/a n a Remuneration Notes to the Financial Statements Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Vicinity Centres Annual

90 Capital Structure and Financial Risk Management continued 7. apital an financial risk mana ement The Grou s treasury team is res onsible for the day to day management of the Grou s a ital re uirements and finan ial ris management These a tivities are overseen by the internal management a ital anagement ommittee ( ) o erating under harter and treasury oli ies These oli ies are endorsed by the Audit ommittee and a roved by the Board of ire tors The overall ob e tives of the are to ensure that the Grou has funds available to meet all finan ial obligations wor ing a ital and ommitted a ital ex enditure re uirements monitor and ensure om lian e with all relevant finan ial ovenants under the Grou s debt fa ilities redu e the im a t of adverse interest rate or foreign ex hange movements on the Grou using a roved finan ial ris management instruments and diversify ban ing ounter arties to mitigate ounter arty redit ris The ey finan ial ris s monitored by the and strategies ado ted by the Grou to assist in a hieving these ob e tives are set out below Risk Primary source(s) Explanation and risk management strategy Details Interest rate risk Floating rate borrowings nterest rate ris re resents the otential for hanges in mar et interest rates to im a t the total interest ex ense for the Grou Floating to fixed interest rate swa s 1 are used to manage this ris None of the Grou s derivatives are urrently in designated hedge relationshi s nder the terms of these swa s the Grou agrees to ex hange at s e ified intervals amounts based on the differen e between the fixed ontra t interest rate and the oating mar et interest rate al ulated by referen e to an agreed notional rin i al amount Note 7(a) Foreign exchange rate risk Foreign denominated interest bearing liabilities ( SPPs and TNs) Foreign ex hange ris refers to the ris that ash ows arising from a finan ial ommitment asset or liability denominated in a foreign urren y will u tuate due to hanges in a foreign ex hange rate This ris is managed through the use of ross urren y swa s 1 which swap the foreign urren y interest ayments into Australian ollars and fix the ex hange rate for the onversion of the rin i al re ayment None of these derivatives are urrently in designated hedge relationshi s Note 7(b) Liquidity risk nterest bearing liabilities i uidity ris re resents the ris that the Grou will be unable to meet finan ial obligations as they fall due To manage this ris suffi ient a a ity under the Grou s finan ing fa ilities is maintained to meet the needs arising from the Board a roved short term and medium term business strategy This is a hieved through se uring and maintaining funding from a range of sour es (e g Ban s and Australian and foreign debt a ital mar ets) maintaining suffi ient undrawn debt a a ity and ash balan es and managing the amount of borrowings that mature or fa ilities that ex ire in any one year Note 7( ) Credit risk Tenant re eivables derivative counterparties and ban de osits redit ris is the ris that a tenant or ounter arty to a finan ial instrument fails to meet their finan ial obligations to the Grou To mitigate tenant redit ris an assessment is erformed ta ing into onsideration the finan ial ba ground of the tenant and the amount of any guarantee or ban guarantee rovided as ollateral under the lease To mitigate redit ris in relation to derivative ounter arties and ban de osits the Grou has oli ies to limit ex osure to any one finan ial institution The maximum ex osure to redit ris at the balan e date is the arrying amount of the Grou s finan ial assets Note Note 6(d) 1 erivative finan ial instruments su h as interest rate swa s and ross urren y swa s are not ermitted to be entered into for s e ulative ur oses under the Grou s hedging oli y imits are in la e in res e t of their use to hedge ash ows sub e t to interest rate and foreign ex hange ris None of these derivatives are urrently in hedge relationshi s 88 Vicinity Centres Annual 2017

91 Corporate Directory (a) Interest rate risk As at the balan e date the Grou had the following ex osure to ash ow interest rate ris 30-Jun-16 Total interest bearing liabilities (Note 6) 3,893.7 Add eferred debt osts Add Fair value and foreign ex hange ad ustments to TNs 67.1 ess Fair value and foreign ex hange ad ustments to SPPs (38.9) (7 ) ess Fair value ad ustments to A TNs (13.1) ( 1) Total drawn debt 3,924.8 ess Fixed rate borrowings (1,065.0) (66 ) Variable rate borrowings exposed to cash flow interest rate risk 2, ess Notional rin i al of outstanding interest rate swa ontra ts (2,462.0) ( 7 1) Net variable rate borrowings exposed to cash flow interest rate risk Hedge ratio 1 90% 1 1 al ulated as total drawn debt less re resentative net variable rate borrowings ex osed to ash ow interest rate ris divided by total drawn debt Sensitivity to interest rates A shift in the forward interest rate urve of b s assuming the net ex osure to ash ow interest rate ris as at une 17 remains un hanged for the next 1 months would im a t the Grou s ash interest ost for the next 1 months by 1 million ( une 16 b s million) The fair values of derivatives used by the Grou are also sensitive to interest rates A shift in the forward interest rate urve of b s assuming the net ex osure to fair value interest rate ris as at une 17 remains un hanged for the next 1 months would im a t net rofit and e uity for the next 1 months by 6 million ( une 16 b s 1 million) This sensitivity analysis should not be onsidered a ro e tion (b) Foreign exchange rate risk At une 17 the Grou has the following net ex osure to foreign urren y translation ris arising from S and GBP denominated borrowings US$ borrowings US$ 30-Jun-16 US$ Total interest bearing liabilities in S ess Notional value of ross urren y swa s ( ay A re eive S ) (553.0) (6 ) Net ex osure to S translation ris - edge ratio for interest bearing liability in S 100% 1 GBP borrowings GBP 30-Jun-16 GBP Total interest bearing liabilities in GBP ess Notional value of ross urren y swa s ( ay A re eive GBP) (350.0) ( ) Net ex osure to GBP translation ris - edge ratio for interest bearing liability in GBP 100% 1 The arrying values of debt and derivatives held by the Grou are also sensitive to foreign ex hange rates A shift in the forward S and GBP ex hange rate urves of ents assuming the net ex osure to fair value ex hange rate ris as at une 17 remains un hanged for the next 1 months would im a t net rofit and e uity for the next 1 months by 16 million ( une 16 ents 7 million) Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders Vicinity Centres Annual

92 Capital Structure and Financial Risk Management continued 7. apital an financial risk mana ement continued (c) Liquidity risk The ontra tual maturity of interest bearing liabilities and the interest ayment rofile is shown below stimated interest and rin i al ayments are al ulated based on the forward interest and foreign ex hange rates revailing at year end and are undis ounted Timing of ayments is based on urrent ontra tual obligations whi h may not align to the lassifi ations of urrent and non urrent liabilities efer to Note 1 for details on trade and other liabilities that are not in luded in the table below Less than 1 year 1 to 3 years Greater than 3 years Carrying amount Total Ban debt 1 1 1, ,506.3 A TNs SPPs TNs stimated interest ayments on borrowings n/a stimated net interest rate swa ash out ow stimated gross ross urren y swa ash out ows , stimated gross ross urren y swa ash (in ows) ( 6) (1 ) (1 761 ) (1,946.3) n/a Total contractual outflows , ,019.8 Less than 1 year 1 to 3 years Greater than 3 years Carrying amount Total 30-Jun-16 Ban debt A TNs 7 SPPs TNs stimated interest ayments on borrowings n a stimated net interest rate swa ash out ow stimated gross ross urren y swa ash out ows n a stimated gross ross urren y swa ash (in ows) ( 1 ) (1 ) (1 ) ( 6 1) (11 ) Total contractual outflows (d) Fair value of borrowings As at une 17 the Grou s debt has a fair value of 7 million ( une million) The differen e between the arrying amount and fair value is due to fixed rate borrowings held The fair value of fixed rate borrowings is al ulated by dis ounting the ontra tual ash ows using the yield to maturity or revailing mar et dis ount rates for mar et fixed interest debt instruments with similar terms maturity and redit uality ad the fixed debt been re ognised at fair value these in uts would have been lassified as evel under the fair value hierar hy as the mar et dis ount rates used are indire tly observable 90 Vicinity Centres Annual 2017

93 Corporate Directory Summary of Securityholders Independent Auditor s (e) Capital risk management The Grou maintains a strong and onservative a ital stru ture with a ro riate li uidity a strong Balan e Sheet and a diversified debt rofile (by sour e and tenor) The Grou has long term redit ratings of A from oody s nvestors Servi e and A from Standard Poor s The two ey metri s monitored by the Grou are the ban fa ilities to a ital mar ets debt ratio and gearing ratio These metri s are shown in the tables below Bank facilities to capital market debt Facility type 30-Jun-16 Total ban debt limit 1 2, Total a ital mar et outstanding 2, Total debt facilities available to the Group 5, Bank facilities as a proportion of total debt facilities 52.1% 7 Capital market debt as a proportion of total debt facilities 47.9% 1 Total ban debt fa ilities are redu ed by ban guarantees of 17 7 million drawn against ban debt fa ilities ( une million) Gearing 30-Jun-16 Total drawn debt () 3,924.8 rawn debt net of ash ( m) 3, Total tangible assets ex luding ash finan e lease assets and derivative finan ial assets ( m) 15, Gearing ratio (target range of 25.0% to 35.0%) 24.7% 8. Contributed equity An ordinary sta led se urity om rises one share in the om any and one unit in the Trust rdinary sta led se urities entitle the holder to arti i ate in distributions and the ro eeds on winding u of the Grou (if ena ted) in ro ortion to the number of se urities held rdinary sta led se urities are lassified as e uity n remental osts dire tly attributable to the issue of new sta led se urities are shown in e uity as a dedu tion net of tax from the ro eeds n remental osts dire tly attributable to the issue of new sta led se urities for the a uisition of a business are not in luded in the ost of the a uisition as art of the ur hase onsideration The number of ordinary se urities of the Grou is shown in the table below All ordinary se urities are fully aid There were no movements in the number of ordinary se urities on issue during the urrent or rior finan ial year 30-Jun Jun-16 Number (m) Number (m) Total stapled securities on issue during and at the end of the year 3, ,493.2 Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Vicinity Centres Annual

94 Working Capital 9. Receivables and other assets Trade and other re eivables are re ognised initially at fair value and subse uently measured at amortised ost using the effe tive interest method less any rovision for im airment ebts that are individually nown to be un olle table are written off when identified An allowan e a ount ( rovision for doubtful debts) is used when there is ob e tive eviden e that the Grou may not be able to olle t all amounts due a ording to the original terms of the re eivables Note 30-Jun-16 Trade debtors Accrued income e eivables from strategi artnershi s 15.6 istribution re eivable from oint ventures and asso iates ess Provision for doubtful debts (6.0) ( 6) Total receivables Pre ayments evies Tenant security deposits held ther Total current receivables and other assets oan to Tuggeranong Town entre Trust ( ) nvestment in related arty Total non-current receivables and other assets Risk of tenant default Tenant debtor balan es are ontinually monitored with the Grou onsidering re eivables that have not been aid for days after the invoi e date as ast due Prom t re overy of these balan es is sought here there are indi ators that full re overy will not o ur rovision is made for these amounts f the 1 7 million trade and related arty re eivables outstanding ( une 16 7 million) 1 1 million whi h re resents a roximately of total ombined revenue is onsidered ast due but not im aired at une 17 ( une million) The Grou has re ognised a loss of 6 million ( une 16 6 million) in res e t of im aired trade re eivables during the year The loss has been in luded in dire t ro erty ex enses from ordinary a tivities in the Statement of om rehensive n ome The Grou does not hold any ollateral in relation to trade or other re eivables other than se urity de osits or ban guarantees as is usual in leasing agreements The maximum ex osure to redit ris at the balan e date is the arrying amount of ea h lass of re eivables outlined above 92 Vicinity Centres Annual 2017

95 Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity 10. ayables an ot er financial liabilities Payables and other finan ial liabilities re resent liabilities for goods and servi es rovided to the Grou rior to the end of the finan ial year and that are un aid The amounts are unse ured and are usually aid within days of re ognition Trade and other ayables are arried at amortised ost and are not dis ounted due to their short term nature 30-Jun-16 Current Trade ayables and a rued ex enses Rents received in advance A rued interest ex ense A rued a ital ex enditure Se urity de osits ther finan ial liability Bentons S uare 1-6 Finan e lease liabilities ther Total current liabilities Non-current Finan e lease liabilities Total non-current liabilities efer footnote 1 in Note (b) efer Note 1(b) At une 17 the arrying value of ayables and other finan ial liabilities a roximated their fair value All urrent ayables ex luding finan e lease liabilities are ex e ted to be due and ayable within the next three months 11. Provisions Provisions om rise liabilities arising from em loyee benefits su h as annual leave and long servi e leave as well as rovisions for stam duty and other items for whi h the amount or timing of the settlement is un ertain as it is outside the ontrol of the Grou here the rovisions are not ex e ted to be settled wholly within 1 months after the end of the annual re orting eriod in whi h the obligation arises the liability is dis ounted to resent value based on management s best estimate of the timing of settlement and the ex enditure re uired to settle the liability at the re orting date The dis ount rates used to determine the resent value are determined by referen e to mar et yields at the end of the re orting eriod atta hing to high uality or orate bonds with terms to maturity and urren ies that mat h as losely as ossible the estimated future ash out ows of the related liability 30-Jun-16 Current Current employee entitlements 51.6 ther urrent rovisions 26.9 Total current provisions 78.5 Non-current Non urrent em loyee entitlements 3.6 ther non urrent rovisions 4.2 Total non-current provisions 7.8 The movements for the year in other provisions are as follows: 30-Jun-16 Arising during the year Paid during the year Other movements Current Stam duty ( ) 9.0 evies (1 ) 13.1 ther 7 6 ( 1) 4.8 Total other current provisions ( ) ( 1) 26.9 Non-current ther 4.2 Total other non-current provisions 4.2 Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders Corporate Directory Vicinity Centres Annual

96 Remuneration 12. Key management personnel The remuneration of the ey anagement Personnel ( P) of the Grou is dis losed in the emuneration e ort The om ensation of P in luded in the Grou s finan ial statements om rises For the 12 months to: $ Jun-16 $ 000 Short term em loyee benefits xe utive P 5,158 7 Short term em loyee benefits Non exe utive P 2, Termination benefits - 1 Share based ayments 1,490 1 Post em loyment benefits 227 ther long term em loyee benefits 11 Total remuneration of KMP of the Group 8, Employees m loyee benefits ex ense onsists of For the 12 months to: 30-Jun-16 Salaries and wages Share based ayments ex ense 7.5 ther em loyee benefits ex ense 3.1 Total employee benefits expense Vicinity Centres Annual 2017

97 Corporate Directory Summary of Securityholders 14. Share based payments The Grou remunerates eligible em loyees through three se urity based om ensation lans These lans are designed to align exe utives and em loyees interests with those of se urityholders by in entivising arti i ants to deliver long term shareholder returns A summary of ea h lan is des ribed below Remuneration Plan Long Term Incentive (LTI) Short Term Incentive (STI) $1,000 Employee Plan Description xe utives and senior management are granted erforman e rights to a uire i inity se urities for nil onsideration These rights vest when ertain hurdle re uirements whi h are set when the rights are granted are met A hievement of the hurdle re uirements are assessed three years after the rights are granted (the vesting eriod) The detailed hurdle re uirements are set out in Note 1 (a) ST rovides the o ortunity to re eive an annual erforman e based in entive ayment when a ombination of short term Grou finan ial and individual erforman e ob e tives is a hieved ertain exe utives and senior management are then re uired to defer a ortion of their annual ST ayment into e uity for a eriod of 1 to months The amounts deferred will be ome available to the em loyee at the end of the deferral eriod rovided they remain em loyed by the Grou 1 worth of i inity se urities are granted annually to eligible em loyees for nil onsideration Se urities granted under the lan are sub e t to a three year trading restri tion unless the em loyee eases to be em loyed by the Grou Statement of Comprehensive Income Balance Sheet Further details relating to the T and ST lans are in luded in Note 1 (a) The following ex enses were re ognised in relation to the share based ayment om ensation lans For the 12 months to: 30-Jun-16 ong Term n entive (formerly Performan e eward Payment ong) Short term in entive (formerly Performan e eward Payment Short) m loyee Plan Total share based payments As des ribed in Note 1 (a) this amount re resents the value of ST deferred into e uity relating to the rior finan ial year A total of se urities were granted under the 1 m loyee Plan during the year ( une 16 6 ) The movement in the number of T erforman e rights during the year was as follows Number 30-Jun-16 Number ening balan e at the beginning of the year 4,385,154 1 Granted 3,074, Forfeited and lapsed (605,374) (1 16 ) Vested (732,862) ( ) Outstanding at the end of the year 6,121,419 1 Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration xer isable at the end of the year Nil Nil eighted average remaining ontra tual life 2.38 years years Independent Auditor s Vicinity Centres Annual

98 Remuneration continued (a) Plan details Long Term Incentive Plan conditions Features of the T erforman e rights urrently on issue are Grant years Performance period Holding lock Performance hurdles 1 TSR Comparator Group FY17 and FY16 Three years 1 months after the end of the erforman e eriod 50% relative total securityholder return (TSR) elative TS ombines the se urity ri e movement and dividends (whi h are assumed to be reinvested) to show total return to se urityholders relative to that of other om anies in the TS om arator Grou 50% total return (TR) T is al ulated as hange in i inity s Net Tangible Assets (NTA) value during the erforman e eriod lus total distributions made divided by the NTA value at the beginning of the erforman e eriod S P AS A T ndex ex luding estfield or oration 1 For the ur oses of T lan assessment ea h erforman e hurdle o erates inde endently of the other Long Term Incentive Plan performance rights valuation The fair value of erforman e rights granted under the T is estimated at the date of grant using a onte arlo Simulation odel ta ing into a ount the terms and onditions u on whi h the erforman e rights were granted The total grant date fair value is ex ensed over the vesting eriod (three years) and is ad usted to re e t the a tual number of rights for whi h the related servi e and non mar et vesting onditions are ex e ted to be met A number of assum tions were used in valuing the erforman e rights as shown in the table below Assumption Basis FY17 FY16 istribution yield x e ted annual distribution rate over the next three years 5.9% 6 is free interest rate Three year government bond yields as at grant date 1.9% 1 olatility orrelation between i inity and other comparator companies Analysis of histori al total se urity return volatility (i e standard deviation) and the im lied volatilities of ex hange traded o tions 50.0% Volatility of Vicinity securities As above 21.0% TS of i inity se urities Performan e between the start date of the testing eriod and the valuation date (9.1%) ( 1 ) olding lo ad ustment Ad ustment for 1 month holding lo eriod 7.5% 7 Se urity ri e at measurement date losing i inity se urities ri e at grant date $ Fair value per right TR $ Fair value per right TSR $ Short Term Incentive Plan The number of se urities granted and deferred under the ST lan during the year ended une 17 relating to in entive ayments earned in the year ended une 16 was ( une 16 6 ) and the fair value of these se urities was er se urity ( une 16 7 ) determined based on the se urity ri e of i inity at the grant date of Se tember Vicinity Centres Annual 2017

99 Other Disclosures 15. Intangible assets (a) Background ntangible asset balan es relate to the value of external management ontra ts and goodwill External management contracts xternal management ontra ts re e t the right to rovide asset and funds management servi es to external arties in a ordan e with management agreements They were re ognised at their fair value at both the date of Novion Pro erty Grou s internalisation of management from the ommonwealth Ban of Australia (on ar h 1 ) and the merger of Novion Pro erty Grou and Federation entres ( erger on 11 une 1 ) The value of these ontra ts is allo ated to the Strategi Partnershi s ash generating unit ( G ) whi h is also an o erating and re ortable segment Finite life xternal management ontra ts that are onsidered to have a finite life are amortised on a straight line basis de ending on the timing of the ro e ted ash ows under the management agreements The amortisation eriod is based on termination dates re e ted in the management agreements (with onsideration given to renewals) The Grou amortises intangible assets with a finite life using the straight line method over eriods ranging from one to seven years Indefinite life xternal management ontra ts rimarily those asso iated with strategi artners who o own assets with the Grou and that have management agreements without termination dates are onsidered to have indefinite useful lives and are therefore not amortised No deferred tax liability has been re ognised in res e t of these ontra ts as their arrying value is not ex e ted to be re overed through use Goodwill Goodwill relates to the internalised management of the owned ro erties and the ortfolio remium asso iated with being a large listed eal state nvestment Trust ( T) This balan e is allo ated to the Pro erty nvestment G whi h is also an o erating and re ortable segment Portfolio premium The ortfolio remium that was re ognised u on erger relates to value elements not a tured in the underlying fair value of the individual ro erties This ortfolio remium re resents amongst other items develo ment otential li uidity diversified ortfolio benefits and the Grou s ability to obtain and attra t debt funding Internal management contracts nternal management ontra ts relate to the in remental value reated in relation to the Grou s investment ro erties by re la ing ro erty management fees with an internalised ost stru ture (asset management business) i e the value of management ontra ts relating to internally owned assets A re on iliation of the movements in the value of intangible assets for the urrent and rior year is shown below n efinite life management contracts Finite life management contracts Goodwill Total Carrying value 1 July m airment 1 and amortisation harge ( ) ( ) ( ) Arising from a uisitions Carrying value 30 June m airment and amortisation harge ( ) ( ) Carrying value 30 June The im airment harge of million to goodwill was re orded at 1 e ember 1 based on the assessment of the re overable amount erformed at that time Remuneration Corporate Directory Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders Vicinity Centres Annual

100 Other Disclosures continued 15. Intangible assets continued (b) Impairment testing The Grou erforms im airment testing for goodwill and indefinite life intangible assets on an annual basis (at une ea h year) or when there are other indi ators of im airment Summarised below are the results of the Grou s annual im airment testing ro ess erformed at une 17 External management contracts As des ribed in Note 1 (a) external management ontra ts are allo ated to the strategi artnershi s G for the ur oses of im airment testing The re overable amount of the Strategi Partnershi s G is determined using a fair value less ost of dis osal (fair value) a roa h This is erformed using a dis ounted ash ow ( F) valuation of the external asset and funds management business whi h is based on the following ey assum tions Key assumption 30-Jun-16 ash ows for fore ast arnings Before nterest and Tax on management fees 5 years years Terminal growth rates 2.20% 2.70% Post tax dis ount rate range 7.36% 7.86% Sensitivities to these assum tions have been tested and the Grou has determined that no reasonably ossible hanges would give rise to im airment at une 17 The future dis osal of interests in dire tly owned or e uity a ounted investment ro erty assets where the Grou also gives u any future rights under existing finite life or indefinite life ontra ts may lead to the dere ognition of the asso iated arrying values of these management ontra ts as the Grou may no longer be entitled to the management fees under dis osal arrangements Goodwill As des ribed in Note 1 (a) Goodwill is allo ated to the Pro erty nvestment G for the ur oses of im airment testing The re overable amount of the Pro erty nvestment G is determined using a fair value a roa h n order to determine the fair value of the Pro erty nvestment G as a whole an nter rise alue ( ) a roa h has been ado ted This a roa h estimates fair value based on a F analysis using underlying earnings ad usted for interest ex ense ash ows from the Strategi Partnershi s G and a ital ex enditure re uirements The re overable amount whi h is e ual to the arrying value has been determined as the Grou s net asset value less the value of the finite and indefinite life management ontra ts The table below summarises ey assum tions used in the model Key assumption 30-Jun-16 ash ows for fore ast underlying earnings and o erational a ital ex enditure 3 years years Terminal growth rate 2.20% Post tax dis ount rate range 7.11% 7.61% ost of e uity 7.69% 8.19% 6 6 The arrying amount of the Pro erty nvestment G in ludes the value of the Grou s investment ro erties whi h are held at fair value These fair values are determined based on a number of assum tions as outlined in Note ( ) As the arrying amount of the Pro erty nvestment G is e ual to its re overable amount any reasonably ossible hange in the assum tions that im a t the ro erty valuations and model may have a orres onding im a t on the arrying amount of the Pro erty nvestment G in luding goodwill Process for determination of key assumptions The ey assum tions used in the fair value assessment of both goodwill and the external management ontra ts have been determined as follows: elevant dis ount rates are al ulated based on the a ital Asset Pri ing odel with referen e to the Grou s ost of debt ost of e uity and target gearing ratios Terminal growth rates are estimated with referen e to ma ro e onomi onditions and the Grou s ex e ted earnings growth through fixed rental in reases Fore ast underlying earnings o erational a ital ex enditure and asset and funds management ash ows are based on the values determined by the Grou s budgeting and lanning ro ess The Grou onsiders the in uts and the valuation a roa h to be onsistent with the a roa h ta en by mar et arti i ants As fore ast underlying earnings dis ount rates and growth rates are unobservable in uts into the valuation ro ess the ey assum tions are onsidered to be evel in the fair value hierar hy 98 Vicinity Centres Annual 2017

101 Remuneration Corporate Directory Summary of Securityholders Independent Auditor s Declaration 16. otes to t e cas o statement The re on iliation of net rofit after tax for the finan ial year to net ash rovided by o erating a tivities is rovided below 30-Jun-16 Net profit after tax for the financial year 1, Exclude non-cash items and cash flows under investing and financing activities: Amortisation of in entives and leasing osts Straight lining of rent ad ustment (16.8) ( ) Pro erty revaluation in rement for dire tly owned ro erties (906.7) (7 ) Stam duty and other osts written off on a uisition of investment ro erties Share of net ( rofit) loss of e uity a ounted investments (18.2) 6 istributions of net in ome from e uity a ounted investments 9.4 Amortisation of non ash items in luded in interest ex ense (4.5) (1 ) Net foreign ex hange movement on interest bearing liabilities (60.7) ( ) Net mar to mar et movement on derivatives Share based ayment ex ense 7.5 ntegration osts m airment and amortisation of intangible assets 3.0 ther non ash items 3.0 ( ) Movements in working capital: e rease in ayables rovisions and other liabilities (6.4) ( 7) e rease in re eivables and other assets 17.5 Net cash inflow from operating activities Notes to the Financial Statements Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Vicinity Centres Annual

102 Other Disclosures continued 17. Auditor s remuneration uring the year the following fees were aid or ayable for servi es rovided by the auditor of the Grou Y or its related ra ti es $ Jun-16 $ 000 For the 12 months to: Audit services Statutory audit and review of finan ial re orts 1, ther assuran e servi es Taxation servi es Total auditor s remuneration 2, arent entity financial information (a) mmary financials The finan ial information resented below re resents that of the legal arent entity and deemed arent entity of the sta led Grou i inity imited nvestments in subsidiary entities are a ounted for at ost less any im airment re ognised sin e a uisition ther a ounting oli ies are onsistent with those used for the re aration of the onsolidated Finan ial e ort 30-Jun-16 Balance Sheet Current assets 3.3 Total assets urrent liabilities (65.3) ( ) Total liabilities (584.8) ( 1 1) Equity ontributed e uity Share based ayment reserve (4.1) ( 1) Accumulated losses (368.9) ( 66 ) Total equity Net loss for the finan ial year of i inity imited as arent entity (2.4) ( ) 1 Total comprehensive loss for the financial year of Vicinity Limited (2.4) ( ) 1 1 The loss of i inity imited for the year ended une 16 in luded an im airment of the goodwill value of million No im airment has been re ognised in the urrent year i inity imited has a ess to the Grou s ash ow from o erations and undrawn ban fa ilities in order to ay its urrent obligations as and when they fall due The arent entity has no a ital ex enditure ommitments whi h have been ontra ted but not rovided for or o erating lease ommitments and ontingen ies as at re orting date Guarantees rovided to subsidiary entities are dis losed at Note ( ) and redominantly relate to fulfilling a ital re uirements under Australian Finan ial Servi es i en es held by these subsidiaries 100 Vicinity Centres Annual 2017

103 Corporate Directory Summary of Securityholders (b) taple entity allocation of net profit n a ordan e with AASB Business Combinations the om any is the deemed arent of the i inity entres sta led grou As the om any has no legal ownershi over i inity entres Trust and its ontrolled entities the allo ation of net rofit and net assets is shown se arately for the om any and the Trust in the Statement of om rehensive n ome and Statements of hanges in uity Remuneration The following illustrates the ontribution of the om any to the sta led Grou s net rofit after tax Vicinity Limited and controlled entities 30-Jun-16 erating result of the om any ess ntegration and transa tion osts in urred by the om any (26.7) ( ) ess m airment and amortisation of intangibles (3.0) ( ) Net loss attributable to securityholders of Vicinity Limited (as the Companies) (12.3) ( 6) Net profit attributable to securityholders of Vicinity Centres Trust (as other stapled entities of the Group) 1, Net profit of the Stapled Group 1, Related parties (a) Background The deemed arent entity of the Grou is i inity imited whi h is domi iled and in or orated in Australia All subsidiaries and sub trusts of the Grou are wholly owned subsidiaries of i inity imited or sub trusts of i inity entres Trust as at une 17 (b) Information on related party transactions and balances i inity Funds td a wholly owned subsidiary of the Grou is the es onsible ntity Trustee of the following funds ( olle tively nown as the holesale funds managed by the Grou ) ire t Pro erty nvestment Fund A ( P F A) ire t Pro erty nvestment Fund B ( P F B) i inity nhan ed etail Fund ( F) nternational Private uity eal state Fund ( P ) and Australian nvestments Trust (A T) The transa tions with the holesale funds on normal ommer ial terms and the balan es outstanding at une 17 are outlined in the tables below Related party balances with Wholesale funds Property jointly owned 1 30-Jun-16 $ 000 $ 000 Funds management fee receivable 30-Jun-16 $ 000 $ 000 Alignment fee payable 30-Jun-16 $ 000 $ 000 holesale funds managed by the Grou 528,000 2, e resents the value of the Grou s interest in Grand Pla a and interest in o ingham whi h are ointly owned with holesale funds An im airment assessment is underta en ea h finan ial year by examining the finan ial osition of the related arty to determine whether there is ob e tive eviden e that a related arty re eivable is im aired hen su h ob e tive eviden e exists the Grou re ognises an allowan e for the im airment loss utstanding related arty trade re eivables balan es at year end are unse ured and settlement o urs in ash nterest is harged on an arm s length basis on amounts greater than days outstanding The Grou does not hold any ollateral in relation to related arty re eivables Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Vicinity Centres Annual

104 Other Disclosures continued 19. Related parties continued Related party transactions with Wholesale funds For the 12 months to: $ Jun-16 $ 000 Asset and funds management fee in ome 19, eimbursement of ex enses to the ro erty manager 5,291 7 istribution in ome Alignment fee ex ense (1,137) (1 ) ent and outgoings ex enses (519) (66 ) 20. Commitments and contingencies (a) Operating lease commitments stimated o erating lease ex enditure ontra ted for at re orting date but not rovided for in the finan ial statements 30-Jun-16 Not later than one year ater than one year and not later than five years ater than five years 7.5 Total operating lease commitments 32.4 (b) Capital commitments stimated a ital ex enditure ontra ted for at re orting date but not rovided for 30-Jun-16 Not later than one year ater than one year and not later than five years Total capital commitments (c) Contingent assets and liabilities Ban guarantees totalling 1 million have been arranged by the Grou rimarily to guarantee obligations for three of the Grou s es onsible ntities to meet their finan ial obligations under their Australian Finan ial Servi es i en es As at re orting date there were no other material ontingent assets or liabilities 102 Vicinity Centres Annual 2017

105 Remuneration Statement of Comprehensive Income Corporate Directory Summary of Securityholders 21. Other Group accounting matters (a) Other accounting policies This se tion ontains other a ounting oli ies that relate to the finan ial statements as a whole detail of any hanges in a ounting oli ies and the im a t of new or amended a ounting standards Principles of consolidation These onsolidated finan ial statements om rise the assets and liabilities of all ontrolled entities at une 17 and the results of all ontrolled entities for the finan ial year unless otherwise stated ontrolled entities are all entities over whi h the Grou is ex osed to or has rights to variable returns from its involvement with the entity and has the ability to affe t those returns through its ower to dire t the relevant a tivities of the entity and fully onsolidated from the date on whi h ontrol is transferred to the Grou and where a li able de onsolidated from the date on whi h ontrol eases The a uisition method of a ounting is used to a ount for the a uisition of ontrolled entities and the balan es and effe ts of transa tions between all ontrolled entities are eliminated in full n a ordan e with AASB Business Combinations i inity imited is the deemed arent of the sta led Grou The results and e uity attributable to i inity entres Trust (that is the amounts shown as attributable to se urityholders of other sta led entities of the Grou ) are shown rior to the elimination of transa tions between i inity imited and i inity entres Trust Revenue recognition evenue is measured at the fair value of the onsideration re eived or re eivable evenue is re ognised for the following a tivities Property ownership revenue and lease income As the owner of a number of sho ing entres the Grou derives rental revenue as lessor from the leasing of the retail s a e in these ro erties ease in ome is re ognised on a straight line basis over the lease term tems in luded in the straight lining al ulation as re uired by a ounting standards are lease in entives given to tenants and fixed rental in reases that form art of rental ontra ts Balance Sheet Statements of Changes in Equity Cash Flow Statement Management fee revenue Pro erty management and leasing fees are generated from existing ro erties and develo ment fees are derived in res e t of new develo ments and redevelo ments Funds management revenue relates to in ome re eived for the management of externally owned ro erties wholesale ro erty funds and ro erty mandates Fees are in a ordan e with generally a e ted ommer ial terms and onditions Fee revenue is re ognised on an a ruals basis as earned and when it an be reliably measured Notes to the Financial Statements Interest revenue nterest revenue is re ognised using the effe tive interest method Investments in joint operations n luded in investment ro erties are sho ing entres that are a ounted for as oint o erations in the form of dire t ownershi of a artial freehold or leasehold interest in a sho ing entre with a strategi artner based on standard mar et oint o eration agreements The Grou a ounts for oint o erations by re ognising its share of the sho ing entre lassified as investment ro erty and its share of other assets liabilities in ome and ex enses from the use and out ut of the oint o eration Declaration Independent Auditor s Vicinity Centres Annual

106 Other Disclosures continued 21. Other Group accounting matters continued Impact of new and amended standards There are no new and amended standards that be ame effe tive for the Grou on 1 uly 16 that have a material im a t on the finan ial statements Future impact of Accounting Standards and Interpretations issued but not yet effective AASB 9 Financial Instruments (effective for the Group from 1 July 2018) This standard re la es AASB 1 Financial Instruments: Recognition and Measurement. t introdu es a new a roa h for lassifi ation and measurement im airment and hedge a ounting of finan ial instruments and introdu es a forward loo ing ex e ted loss im airment model for re ording ex e ted redit losses The ado tion of this standard is not ex e ted to have a material im a t for the Grou AASB 15 Revenue from Contracts with Customers (effective for the Group from 1 July 2018) This standard re la es AASB 11 Revenue and other revenue related standards and inter retations The ore rin i le of AASB 1 is that an entity re ognises revenue related to the transfer of romised goods or servi es when ontrol of those goods or servi es asses to ustomers The amount of revenue re ognised should re e t the onsideration to whi h the entity ex e ts to be entitled in ex hange for those goods or servi es The standard has introdu ed a five ste model as the framewor for a lying that ore rin i le n addition the standard re uires dis losure of the nature amount timing and un ertainty of revenue and ash ows arising from ontra ts with ustomers This standard is not ex e ted to have a signifi ant im a t on the Grou s finan ial statements as the ma ority of the Grou s revenue and in ome is base rental in ome derived from lease agreements with tenants The re ognition of other revenue items derived by the Grou in luding variable ayments lin ed to lease agreements ost re overies from tenants and fee in ome from strategi artners is not ex e ted to be materially im a ted by the ado tion of this standard AASB 16 Leases (effective for the Group from 1 July 2019) This standard re la es AASB 117 Leases t rovides a new lessee a ounting model whi h re uires a lessee to re ognise assets and liabilities for all leases with a term of more than 1 months unless the underlying asset is of low value AASB 16 substantially arries forward the lessor a ounting re uirements in AASB 117 A ordingly a lessor ontinues to lassify its leases as o erating leases or finan e leases and to a ount for those two ty es of leases differently The Grou is urrently assessing the otential im a t of this standard and the transition method to be ado ted however does not ex e t a material im a t on the finan ial statements 104 Vicinity Centres Annual 2017

107 Corporate Directory Summary of Securityholders Independent Auditor s (b) Finance lease liabilities As dis losed in the footnotes to Note (d) a number of the Grou s investment ro erties are held under long term leasehold arrangements As er mar et ra ti e external and internal valuations erformed to determine the fair values of these ro erties at re orting date (as dis losed in Note ) have dedu ted the estimated lease ayments from the valuation ash ows As re uired by AASB 1 Investment Properties, where the fair value model is used to value investment property, the present value of these minimum ayments under the leasehold arrangements must then be resented se arately as a finan e lease asset that is added to the overall investment ro erty balan e (refer Note (a)) and orres onding finan e lease liability (refer Note 1 ) The minimum lease ayments under finan e leases fall due as follows Future finance charges 30-Jun-16 Future finance charges Minimum lease payments Present value of payments Minimum lease payments Present value of payments Not later than one year ater than one but not more than 64.5 (13.5) (1 1) five years ore than five years (429.0) ( 6 6) Total (442.5) ( 7) 1 1 For details of ro erties sub e t to leasehold arrangements refer to the footnotes in Note (d) 22. Events occurring after the reporting date On-market securities buy-back n uly 17 the Grou announ ed an on mar et buy ba rogram of u to of ordinary se urities on issue The Grou will only ur hase se urities where doing so is a retive to earnings er se urity and NTA while also reserving am le a a ity to fund other a ital re uirements Appointment of ne ief xec tive fficer ( ) an ana in irector n 11 August 17 the Grou announ ed r Grant elly would su eed r Angus Naughton as and anaging ire tor with a lanned ommen ement date of 1 anuary 1 Vicinity Board changes n 1 uly 17 the Grou announ ed the a ointment of s anette endall as an nde endent Non exe utive ire tor to the Boards of i inity imited and i inity entres td effe tive from 1 e ember 17 r harles a e and s ebra Stirling will retire as nde endent Non exe utive ire tors at the Annual General eeting to be held on 16 November 17 No matters other than those identified above have arisen sin e the end of the year whi h have signifi antly affe ted or may signifi antly affe t the o erations of the Grou the results of those o erations or the state of affairs of the Grou in future finan ial eriods Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Vicinity Centres Annual

108 Declaration n a ordan e with a resolution of the ire tors of i inity imited we de lare that (a) in the o inion of the ire tors the finan ial statements and notes set out on ages 67 to 1 are in a ordan e with the Corporations Act 2001 ( th) in luding i giving a true and fair view of the Grou and its ontrolled entities finan ial osition as at une 17 and of the erforman e for the finan ial year ended on that date and ii om lying with Australian A ounting Standards and the Corporations Regulations 2001 ( th) and iii om lying with nternational Finan ial e orting Standards as issued by the nternational A ounting Standards Board as dis losed in the notes to the finan ial statements on age 7 of the 17 Annual e ort and (b) in the o inion of the ire tors there are reasonable grounds to believe that the Grou and its ontrolled entities will be able to ay their debts as and when they be ome due and ayable and ( ) the ire tors have been given the e larations re uired to be made to the ire tors in a ordan e with se tion A of the Corporations Act 2001 ( th) for the finan ial year ended une 17 Signed in a ordan e with a resolution of the ire tors of i inity imited Peter Hay Chairman elbourne 16 August Vicinity Centres Annual 2017

109 Independent Auditor s Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: Fax: ey.com/au Remuneration INDEPENDENT AUDITOR S REPORT To the Members of Vicinity Limited Statement of Comprehensive Income on the Audit of the Financial Opinion We have audited the financial report of Vicinity Centres, comprising the stapled entities Vicinity Limited (the Company ), Vicinity Centres Trust (the Trust ) and the entities they controlled (collectively the Group ), which comprises the balance sheet as at 30 June 2017, the statement of comprehensive income, the statements of changes in equity and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information and the Declaration. In our opinion: the accompanying financial report of Vicinity Centres is in accordance with the Corporations Act 2001, including: Balance Sheet Statements of Changes in Equity (i) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017 and of its financial performance for the year ended on that date; and Cash Flow Statement Corporate Directory Summary of Securityholders (ii) complying with Australian Accounting Standards and the Corporations Regulations Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board s APES 110 Code of Ethics for Professional Accountants (the Code ) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Notes to the Financial Statements Declaration Independent Auditor s A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Vicinity Centres Annual

110 Independent Auditor s continued Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor s Responsibilities for the Audit of the Financial section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. 1. Shopping Centre Investment Property Portfolio Carrying Values and Revaluations Why significant Vicinity Centres owns a portfolio of retail property assets valued at $15,633.5 million at 30 June 2017, excluding assets held for sale, which represents 93.8% of total assets of the Group. The valuation of the property portfolio, which includes properties in a development phase and jointly held investments, is based on a number of assumptions, such as capitalisation rates, discount rates and terminal yield, which require significant estimation and judgement. This also includes the estimations for costs to complete and an allowance for developer s risk and profit for properties in the development phase. Minor adjustments to certain assumptions can lead to significant changes in the valuation of the retail property assets. As outlined in Note 4, the Group s basis for determining the portfolio valuation is underpinned by valuations sourced from suitably qualified valuation experts and internal valuations. Refer to Note 4 for a description of the accounting policy, overview of the valuation methodology, process for valuation (including the use of independent expert valuers and internal valuations), significant assumptions and the relative sensitivity of the valuation to changes in these assumptions. How the matter was addressed in the audit In performing our audit procedures, with assistance from our real estate valuation specialists, on a sample basis, we: Assessed the competence of valuers, as well as the independence of external valuers, and appropriateness of the scope and methodology of the valuation commissioned for the purposes of the financial report. Assessed the key inputs and assumptions adopted in the valuation methodologies including comparing capitalisation rates to those derived from relevant transactions and other external market sources. Compared the data used in the valuation to the actual and budgeted financial performance of the underlying properties, tested as part of the audit process. For properties under development, we compared the costs incurred to date plus estimated costs to complete to the expected value of the completed project, as advised by external valuers. Discussed key developments in progress with Development Management. Assessed the design and operating effectiveness of key controls surrounding the development process and tested a sample of significant development spend on major projects to progress billing reports. Performed an analytical review of the portfolio assets with reference to external market data and portfolio performance in order to identify and investigate items that were outside of our audit expectations. Assessed the disclosures included in Note 4 to the financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 108 Vicinity Centres Annual 2017

111 Corporate Directory Remuneration 2. Carrying Value of Intangible Assets Why significant As at 30 June 2017 the Group held $599.4 million in goodwill and identifiable intangible assets (relating to indefinite life and finite life external management contracts). As outlined in the disclosures in note 15, under the Group s accounting policy, goodwill and indefinite life external management contracts are tested for impairment annually, or when there is an impairment trigger. The recoverable amount of the indefinite life external management contracts has been determined based on a fair value less cost of disposal ( Fair Value ) method using discounted cash flows ( DCFs ) of the external asset and funds management business. The recoverable amount of the Property Investment Cash Generating Unit ( CGU ), to which Goodwill is allocated, has been determined using the Fair Value method based on DCFs of the CGU s underlying earnings, adjusted for interest expense and capital expenditure requirements. The impairment calculation includes judgements and estimates made by management such as the growth rate of forecasted cash flows, discount rate and terminal value within the model. As a result of the assessment performed at 30 June 2017, no impairment of goodwill or identifiable intangible assets was recorded during the year. 3. Interest Bearing Liabilities and Derivatives The Group maintains a portfolio of facilities with varying counterparties, currencies and terms. This portfolio influences the Group s gearing, liquidity, solvency, covenant obligations and financing cost profile. In relation to this portfolio, the Group incurred $162.9 million in borrowing costs during the year, of which, $154.9 million were expensed and $8.0 million were capitalised to assets under development. Refer to Note 6 of the financial report for a description of the accounting policy treatment for these liabilities and information of the Group s interest bearing liabilities. Interest rate and currency risks are managed by floatingto-fixed interest rate swaps and cross currency swaps ( derivatives ) which have been set out in Note 7 of the financial report. These derivatives involve judgement to assess the fair value (carrying amounts), which are estimated using valuation techniques and are sensitive to movements in financial markets, as outlined in Note 7. How the matter was addressed in the audit In obtaining sufficient audit evidence regarding the recoverable value of goodwill and identifiable intangible assets, with assistance from our valuations specialists, we: Considered the appropriateness and application of valuation methodologies applied. Considered the key inputs and assumptions such as forecast cash flows, discount rates and overhead allocations adopted in the valuation. Compared the data used in the DCFs to the actual and budgeted financial performance of the Group. Compared earnings multiples derived from the Group s intangible model to that observable from external market data obtained from comparable listed Real Estate Investment Trust ( REIT ) entities in addition to comparing the market capitalisation of the business to the net assets on the balance sheet. Benchmarked key assumptions used by the Group to the independent views of EY and external data obtained. Assessed the disclosures included in Note 15 to the financial report. Why significant How the matter was addressed in the audit The Group had interest bearing liabilities of $3,893.7 million at 30 June During the year the Group repaid US private placement notes which matured in February 2017 and issued Australian Medium Term Notes. We assessed the design and operating effectiveness of relevant controls over the recording and reporting of drawdowns and repayments, the valuation of interest bearing liabilities, the recording and reporting of derivatives, and the monitoring of compliance. Statement of Comprehensive Income Balance Sheet We assessed the Group s compliance with material facility agreements, including covenants, and the Group s maturity profile, to test the appropriate classification of the interest bearing liabilities as current or non-current. We confirmed all interest bearing liabilities and derivatives directly with counterparties at 30 June We tested the calculation of interest recognised in the consolidated statement of comprehensive income and capitalised to development properties. On a sample basis, with involvement of our treasury specialists, we tested the calculation of the fair value of derivatives at the reporting date and disclosures outlined in Note 6. We assessed the disclosures included in Note 6 and Note 7 to the financial report. Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Summary of Securityholders A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Vicinity Centres Annual

112 Independent Auditor s continued 4. Property Portfolio Transactions Why significant Vicinity Centres undertook a significant number of acquisitions and disposals during the year, which had a material effect on the financial report. Refer to Note 4 for the impact of the transactions on Investment Properties. How the matter was addressed in the audit For material transactions, we: Reviewed the sale and purchase agreements and other related documents. Assessed these transactions against the recognition, derecognition, measurement and classification criteria of the Group s accounting policies set out in Note 4 of the financial report and applicable Australian Accounting Standards. We assessed the adequacy of the disclosures in the financial report. Information Other than the Financial and Auditor s The Directors are responsible for the other information. The other information comprises the information included in the Vicinity Centres Annual for the year ended 30 June 2017, but does not include the financial report and the auditor s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based upon the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities for the Financial The Directors are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Group s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or cease operations, or have no realistic alternative but to do so. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation 110 Vicinity Centres Annual 2017

113 Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Corporate Directory Summary of Securityholders Remuneration Auditor s Responsibilities for the Audit of the Financial Our objectives 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 our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: This description forms part of our auditor s report. on the Remuneration Opinion on the Remuneration We have audited the Remuneration included in the Directors' for the year ended 30 June In our opinion, the Remuneration of Vicinity Limited for the year ended 30 June 2017, complies with section 300A of the Corporations Act Cash Flow Statement Responsibilities The Directors are responsible for the preparation and presentation of the Remuneration in accordance with section 300A of the Corporations Act Our responsibility is to express an opinion on the Remuneration, based on our audit conducted in accordance with Australian Auditing Standards. Notes to the Financial Statements Ernst & Young Declaration David Shewring Partner Melbourne 16 August 2017 Independent Auditor s A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Vicinity Centres Annual

114 Summary of Securityholders as at 14 August 2017 Spread of securityholders Range Number of securityholders Number of securities % of issued securities 1 1 and over to to to 66 1 to Total 24,842 3,958,650, The number of se urityholders holding less than a mar etable ar el of 1 7 se urities ( 6 on 1 August 17) is and they hold 61 se urities On market purchase of securities uring FY17 i inity se urities were ur hased on mar et at an average ri e er se urity of 6 by the trustee for the SP ST and T to satisfy entitlements under these lans Substantial securityholders Company name Effective date Number of securities % of issued securities The Gandel Grou Pty td and its asso iates 11 une BNP Paribas Nominees Pty imited as ustodian for nisu er td Se tember 16 7 anguard nvestments Australia td e ember Bla o Grou (Bla o n and its asso iates) une 1 77 egg ason Asset anagement imited 1 anuary largest securityholders Rank Name Number of securities held % of issued securities 1 SB ustody Nominees (Australia) imited P organ Nominees Australia imited iti or Nominees Pty imited BNP Paribas Nominees Pty td National Nominees imited osslynbridge Pty td Besgan No 1 Pty td Besgan No Pty td Besgan No Pty td Besgan No Pty td 7 6 Allowater Pty td enarth Pty td BNP Paribas Noms Pty td 1 11 Braybridge Pty td 61 1 SB ustody Nominees (Australia) imited edburn Pro rietary imited Broadgan Pro rietary imited iti or Nominees Pty imited A P ife imited Australian Foundation nvestment om any imited A lebroo Pty td ade liff Pty td oondale Pty td ose ree Pty td SB ustody Nominees (Australia) imited GS A 1 edburn Pro rietary imited 7 6 Total 20 largest securityholders 3,617,228, Balan e of register 1 6 Total issued capital 3,958,650, Vicinity Centres Annual 2017

115 Corporate Directory Vicinity Centres om rising Vicinity Limited ABN and Vicinity Centres RE Ltd ABN as es onsible ntity for Vicinity Centres Trust A SN 1 1 ASX listing i inity entres is listed on the AS under the listing ode Board of Directors Peter ay ( hairman) Angus Naughton harles a e avid Thurin ( r) ebra Stirling aren Penrose Peter ahan Tim Hammon Trevor Gerber ai Tang Company Secretaries Carolyn Reynolds i helle Brady e istere office hadstone Tower ne evel 1 1 andenong oad hadstone i toria 1 Australia Telephone: Facsimile: Website: vi inity om au Auditors rnst Young xhibition Street elbourne i toria Australia Security registrar f you have ueries relating to your se urityholding or wish to u date your personal or payment details, please onta t the Se urity egistrar Link Market Services Limited evel 1 ollins Street elbourne i toria Australia General se urityholder en uiries Toll Free: Facsimile: 61 7 Facsimile: 61 7 (for roxy voting) vi inity lin mar etservi es om au Post: o ed Bag A1 Sydney South NS 1 Australia Access your securityholding online You can update your personal details and a ess information about your se urityholding online by li ing Se urityholder login on our home age at vi inity om au or via the nvestor Servi es se tion of the se urity registrar s website at lin mar etservi es om au or s an the ode (below) to ta e you to the investor entre Se urityholders an use the online system to: view your holding balan es distribution payments and transaction history choose your preferred annual report and communications options onfirm whether you have lodged your Tax File Number (TFN) or Australian Business Number (ABN) update your contact details u date your ban a ount details he i inity entres se urity price, and download various securityholder instru tion forms Contact Vicinity Centres e are ommitted to delivering a high level of servi e to all se urityholders Should there be some way you feel that we can improve our service, we would li e to now hether you are ma ing a suggestion or a om laint your feedba is always a re iated Investor Relations investor relations vi inity om au The es onsible ntity is a member (member no 1 ) of the Finan ial mbudsmen Servi e (F S) an external om laints resolution s heme F S offers onsumers a single national sour e of a essible information and ex ertise for ban ing insuran e and investment dis utes f you are not satisfied with the resolution of your om laint by the es onsible ntity you may refer your om laint to F S Key dates 1 August 17 une 17 distribution payment 16 November Annual General eeting e ember 17 x distribution date for e ember 17 distribution e ember 17 Record date for e ember 17 distribution 1 February 1 FY1 interim results ar h 1 e ember 17 distribution payment une 1 x distribution date for une 1 distribution une 1 Record date for une 1 distribution 1 August 1 FY1 annual results August 1 une 1 distribution payment Remuneration Statement of Comprehensive Income Balance Sheet Statements of Changes in Equity Cash Flow Statement Notes to the Financial Statements Declaration Independent Auditor s Corporate Directory Summary of Securityholders 1 These dates may be sub e t to hange Vicinity Centres Annual

116 vicinity.com.au