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CREATING LIFESTYLE DESTINATIONS Annual Report 2017

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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 Report
45 �ire�tor�s �e�ort
49 Remuneration Report
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�

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Chadstone, VIC

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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.

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Performance Highlights

Statutory net profit after tax

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$1,583.6m FY16: $960.9m

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Distribution per security

17.3¢

FY16: 17.7¢

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Total return[1]

15.5%

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%

Calculated as: (Change in net tangible assets per security (NTA) during the period + distributions declared)/opening NTA.

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Vicinity Centres Annual Report 2017

Our Operating Model

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Enriching community experiences

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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�

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�

Deliver the best retail mix and engaging experiences to attract consumers and support our retail partners.

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Enhance our portfolio quality through select developments, divestments and acquisitions.

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02 Vicinity Centres Annual Report 2017

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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

$9,429 per sqm s�e�ialty store �AT (u� 6�� on FY16)

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Highly engaged people

71%

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engagement s�ore (FY16� 66�)

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Better communities

$1.8 million

community investment (FY16� �1�� million)

Intensively managing our centres to drive income growth and operational

8%

redu�tion of �arbon intensity on FY16 (down to 71�g ��2�e�s�m)

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Find out more about our
strategy and how we
create shared value for
our stakeholders in the
following pages.
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Vicinity Centres Annual Report 2017 03

Chairman’s Review

Dear Securityholders

I am pleased to present to you Vicinity Centres’ (Vicinity’s) 2017 Annual Report.

The im�rovement of many of our �ey �ortfolio metri�s during the year re�e�ts this fo�us�

�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�

�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�

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�

�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

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�

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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 Report 2017

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Emporium Melbourne, VIC
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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

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Vicinity Centres Annual Report 2017 05

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.

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�

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�

FY17 earnings and FY18 guidance Pages ��

�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�

�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��

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��

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

�ur re�ently announ�ed initiatives of a��roximately �� million of non��ore assets intended to be divested in FY1�

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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�

�� 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 Report 2017

�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�

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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 Report 2017 07

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.

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Our vision

Our purpose

Reimagining destinations of the future, creating places where people love to connect.

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.

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sha�e better �ommunities� �e measure our su��ess by the shared value we �reate for all of our sta�eholders�

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�

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�

�e believe this strategy enables �i�inity to �reate long�term value and sustainable growth from our �ortfolio of �uality Australian retail assets�

�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�

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

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�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�

FY17 earnings and FY18 guidance

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

�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

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 Report 2017

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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

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Vicinity Centres Annual Report 2017

Our Operating and Financial Review continued

Achievements and focus

	FY17 achievements	FY18 focus
Intensive asset	•�m�roved o��u�an�y to ��	•Continue to improve the retail offer across
management	•A�tive �ortfolio remixing� �om�leting 1��76 leasing deals	the portfolio
	with an average leasing s�read(a)of 1��	•�n�rease an�illary in�ome revenue
	•�stablished �ross�fun�tional wor�ing grou�s fo�used	•�m�lement initiatives to drive further �entre
	on im�roving �onsumer and retailer ex�erien�es	eff�ien�ies
	•Strong growth in an�illary in�ome of 6�� driven by �asual
	mall leasing� retail media and �ar �ar�ing
Development	•�om�leted ma�or redevelo�ment of �hadstone in�luding frst	•�om�lete �andurah Forum develo�ment
	��G��AN�®�is�overy �entre in the southern hemis�here	on time and on budget
	•�ommen�ed ma�or develo�ment of The Glen	•�aterially advan�e The Glen and �F� Perth
	In July 2017	�ro�e�ts
	•�om�leted the frst retail stage of �andurah Forum development fully leased	•�ommen�e �hadstone �otel �ro�e�t •Finalise s�o�e and �ommen�e ma�or
	•�ommen�ed �onstru�tion of �F� Perth	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

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Chadstone, VIC
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10 Vicinity Centres Annual Report 2017

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

(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 Report 2017 11

Our Operating and Financial	Review	continued
Our performance
Key performance metrics
Performance metric	30-Jun-17	30-Jun-16	Change	Page
Financials
Statutory net �roft 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)	$9,429	��6�	�� 6��	1�
��u�an�y �ost(�)	14.6%	1��6�	�	1�
�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(�)	$2.82	��	�� 7�	1�
Net asset valueper security(�)	$2.97	��7�	��	1�
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)	3.84	��67	�m�roved by1��	��
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 CO2-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�

(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 ��17�

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12 Vicinity Centres Annual Report 2017

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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 Report 2017

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-17	30-Jun-16
For the 12 months to:	$m	$m
Property Investment segment
Net property income	916.7	��6
Strategic Partnership segment
Partnershi�s and other in�ome	66.0	66�1
Total income	982.7	1��1��7
�or�orate overheads (net of internal �ro�erty management fees)	(74.9)	(��)
Net interest ex�ense	(166.0)	(1�1��)
Underlyingearnings	741.8	7�7��
�ent lost from underta�ingdevelo�ments	(28.9)	(1��)
Funds from operations	712.9	7��
Pro�erty revaluation in�rements	906.7	7��
�m�airment and amortisation of intangible assets	(3.0)	(��)
�ther items	(33.0)	(�1��)
Netproft after tax	1,583.6	�6��
�PS(�ents)	40.0	��
�nderlying�PS(�ents)	18.7	1��1
�istribution�er se�urity (�PS) (�ents)	17.3	17�7
Payout ratio(�PS as a � of underlying�PS) (�)	92.3	��
Adjusted funds from operations(AFFO)	641.5	667��
�istribution as a�er�entage of AFF�(�)	106.8	1��

1� �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 Report 2017

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�

Asset valuation gains of $906.7 million reflects the strength of investor demand for quality retail assets, as well as income growth.

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�[�]

Note 1 – Segment information Page 7�

Financial position

	30-Jun-17	30-Jun-16
As at	$m	$m
�ash and �ash e�uivalents	42.2	��
�nvestment �ro�erties held for sale	33.5	��1
�nvestment �ro�erties	15,633.5	1��6�6
�ntangible assets	599.4	6��
�ther assets	350.2	��6
Total assets	16,658.8	1��
Borrowings	3,893.7	��
�ther liabilities	1,017.4	1��
Total liabilities	4,911.1	��
Net assets	11,747.7	1��
Net tangible assets�er se�urity (NTA) (�)	2.82	��
Net asset value�er se�urity (NA�) (�)	2.97	��7�
Gearing (a) (�)	24.7	��

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 Report 2017 15

Our Operating and Financial Review continued

�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�

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�

[(a)]

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1,600
1,400
1,200
1,000
800
600
400
200
0
FY18 FY19 [(b)] FY20 FY21 FY22 FY23 FY24 FY25 FY26 Beyond
USPP AMTN EMTN Bank debt drawn Bank debt undrawn
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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 ��

�o�rces of �ebt (�)[(a)]

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16
22
19
30
13
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(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.

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16 Vicinity Centres Annual Report 2017

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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 Report 2017

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 Report 2017

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 Report 2017 19

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

	Our objectives	Material interests of stakeholders	Our response
Consumers	�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� and sha�e better	•Providing �onvenient and safe sho��ing ex�erien�es	•�igital � �age ��
	communities
Retailers	�eliver �om�elling	•�n�reasing �onsumer visitation and dwell time	•A��uisitions � �age ��
	destinations and value	•Su��ortive �entre management and leasing	•�evelo�ment � �age ��
	to support the success of retail operations	services that help retailers to succeed •Su��essful mar�eting initiatives	•�ntensive asset management � �age �7 •�igital � �age ��
Securityholders	�reate long�term value	•�eeting and ex�eeding fnan�ial ex�e�tations	•Finan�ial �erforman�e � �age 1�
	and sustainable growth	•�es�onding to �hanging �onsumer trends	•�a�ital management � �age 16
		•Su��essfully delivering our develo�ment	•Tax trans�aren�y � �age ��
		pipeline	•A��uisitions � �age ��
		•�aintaining a strong re�utation through	•�ivestments � �age ��
		regular and trans�arent dis�losure	•�evelo�ment � �age ��
			•�ntensive asset management � �age �7
			•��17 �or�orate Governan�e Statement �
			vi�inity��om�au
Strategic	�nsure stable and	•�eliver stable and growing returns	•�evelo�ment � �age ��
partners	growing returns	•�es�onding to �hanging �onsumer trends	•�ntensive asset management � �age �7
		•Providing an a��ro�riate level of timely	•�igital � �age ��
		re�orting
		•�elivering on investment ob�e�tives
Our people	Su��ort a highly	•Create a diverse and inclusive culture that	•�ur �eo�le � �age ��
	engaged team that	�romotes e�ual o��ortunities and meaningful
	embra�es our values�	ex�erien�es
	and deliver on	•Flexibility to balan�e �rofessional and
	our strategy	personal needs to ensure health and
		wellbeing
		•�earning and �areer develo�ment
		opportunities
Suppliers	�reate long�term	•Building �ollaborative and mutually	•Sha�ing better �ommunities � �age ��
	relationships, and	benef�ial �artnershi�s	•�ur su��liers � vi�inity��om�au
	ma�e a �ositive im�a�t	•Timely payment for services
	on our communities	•Fair business �ra�ti�es

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20 Vicinity Centres Annual Report 2017

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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 Report 2017

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�

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DFO South Wharf, VIC
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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 ��17�

22 Vicinity Centres Annual Report 2017

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 2016. 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%.

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Development pipeline Key ($m): Vicinity share Partner share Total
Mandurah Forum, WA 175 350
The Glen, VIC 230 460
Current
DFO Perth, WA 75 150
Midland Gate, WA 100
Roselands, NSW [(a)] TBA
Estimated FY18
commencements Chadstone Hotel, VIC 60 120
Galleria, WA 250 500
Estimated FY19
commencements The Myer Centre Brisbane, QLD 75 300
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(a) �aster �lanning �ontinues�

Vicinity Centres Annual Report 2017 23

Our Portfolio continued

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Chadstone, VIC
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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�

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Proposed
hotel
Chadstone, VIC – Artist’s impression
�ontinues� The �onstru�tion of a �ro�osed and underta�e external dining
��room� 1��level hotel ad�a�ent to the ex�ansions and �ross�mall
offi�e tower� is targeted to �ommen�e re�onfigurations� �aster �lanning
in ��1�� e also have �lans to remix of larger future stages also �ontinues�
and further ex�and the luxury �re�in�t�
redevelo� the existing se�ond food �ourt
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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

24 Vicinity Centres Annual Report 2017

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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

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Vicinity Centres Annual Report 2017

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�

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�

1� �x�e�ted to settle in ��1��

26 Vicinity Centres Annual Report 2017

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The Glen, VIC – Artist’s impression
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DFO Perth, WA – Artist’s impression
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�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�

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�

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

�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�

�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

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 Report 2017 27

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�

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.

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Activ Foundation Marist Youth
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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 Report 2017

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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 Report 2017

Our People

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Chadstone National Office, VIC
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�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 Report 2017

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�

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�

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

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.

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sheimagines
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Chadstone National Office, VIC
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Vicinity Centres Annual Report 2017 31

Di ital g

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Emporium Melbourne, VIC
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�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 Report 2017

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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 Report 2017

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 ��

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Peter Hay ��B� FA��

Angus McNaughton B�S (��NS)� FAP� CEO and Managing Director A��ointed ��tober ��1�[1]

Chairman, Independent Non-executive Director A��ointed �une ��1�

Background and Experience

Angus ��Naughton has more than �� years� ex�erien�e in the �ro�erty se�tor�

Peter �ay has a strong Angus ��Naughton has more ba��ground and breadth than �� years� ex�erien�e in of ex�erien�e in business� the �ro�erty se�tor� �or�orate governan�e� finan�e Previously� �r ��Naughton and investment ban�ing was the �anaging �ire�tor advisory wor�� with a �arti�ular and �� of Novion Pro�erty ex�ertise in relation to mergers Grou� (Novion)� Before and a��uisitions� �r �ay was Novion� �r ��Naughton held a �artner of the legal firm a number of roles within Freehills until �� where �olonial First State Global he served as �hief �xe�utive Asset �anagement (�FSGA�) �ffi�er from �� r �ay has in�luding �anaging �ire�tor also had signifi�ant involvement of Pro�erty� �ead of �holesale in advising governments and Pro�erty and �hief �xe�utive government�owned enter�rises� of the �anager of �iwi �n�ome �r �ay is �hairman of the Pro�erty Trust in New �ealand Nominations �ommittee� (now �nown as �iwi Pro�erty Grou� �imited)�

Current Directorships, Executive Positions and Advisory Roles

Chairman: Newcrest �ining �imited�

�ire�tor� Sho��ing �entre Council of Australia and Pro�erty �oun�il of Australia�

�ire�tor� Australian �nstitute of �om�any �ire�tors�

Past Non-executive Directorships (�ast three years) Novion �imited�

�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�

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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 Report 2017

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David Thurin (Dr) �BBS� ��P �A��G� F�A�GP� �S in �anagement 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�

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Debra Stirling BA� GA�� Independent Non-executive Director A��ointed �e�ember ��11

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�

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Karen Penrose B�� (�NS�)� �PA� FA�� Independent Non-executive Director A��ointed �une ��1�

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��

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Peter Kahan

B�� BA�� A� �A�� Non-executive Director A��ointed �une ��1�

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 Report 2017 35

Our Board continued

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Tim Hammon B�om� ��B Independent Non-executive Director A��ointed �e�ember ��11

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�

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Trevor Gerber BA�� A� SA Independent Non-executive Director A��ointed �une ��1�

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�

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Wai Tang BA��S�� BA� GA�� Independent Non-executive Director A��ointed �ay ��1�

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�

Past Non-executive

Directorships (�ast three years) None�

36 Vicinity Centres Annual Report 2017

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
�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

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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�

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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�

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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

�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�

�entre �anagement�
�G� �evelo�ment� G� Sustainability and other senior leaders�

Vicinity Centres Annual Report 2017 37

Our Executive Committee continued

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David Marcun Executive General Manager Business Development

�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 ��

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Justin Mills Executive General Manager Shopping Centre Management

�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�

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Michael O’Brien Chief Investment Officer

�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

�i�hael is a Fellow of the Australian Pro�erty �nstitute and a �ire�tor of the Green Building �oun�il of Australia�

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Richard Jamieson Chief Financial Officer

�i�hard �amieson �oined �i�inity �entres in �une ��1� and has more than �� years� ex�erien�e in ban�ing and

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�

�avid is a member of the �nstitute of �hartered A��ountants in Australia�

38 Vicinity Centres Annual Report 2017

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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�

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Stuart Mac rae Executive G eneral Manager Leasing

Stuart �a�ra e �oined �i�inity �entres in �un e ��1� following the �erger wit h Novion Pro�erty Grou� (Novion )� and has more than �� years� ex�erien�e in �ro�erty ma nagement� develo�ment a nd leasing�

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Prior to his �urr ent appointment, h e was General �anager of �ea sing with Novion (and for merly �FSGA� Pro�erty) sin�e � �� Stuart also held a num ber of senior leasing roles with in Gandel �etail �anageme nt from 1�� to ��

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Vicinity Centres Annual Report 2017 39

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 Report 2017

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

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 Report 2017 41

Tax Transparency continued

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�

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

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

Total taxes borne by Vicinity ($m) $95.4 million

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----- Start of picture text -----

Local rates and levies [2] 50.3
44.3
30.8
Land tax [2] 30.3
18.9
Stamp duty – property acquisitions 9.9
12.0
Payroll tax 9.2
Fringe benefits tax (FBT) 1.01.4
0.6
Workcover contributions 0.7
63.2
Stamp duty – merger 0
0 10 20 30 40 50 60 70
----- End of picture text -----

Total taxes remitted by Vicinity ($m) $129.9 million

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----- Start of picture text -----

Net GST remitted [3] 74.9
75.7
59.7
Pay as you go (PAYG) withholding 53.5
0.8
Taxes withheld from investors [4] 0.7
0 10 20 30 40 50 60 70 80
FY16 FY17
----- End of picture text -----

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

�� 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 Report 2017

Sustainability Assurance Statement

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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 Report and Corporate Governance Statement for the year ended 30 June 2017. 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	Annual Report page
Carbon intensity (scope 1 and 2) (kg CO2- e/sqm)	3, 12
Energy intensity (MJ/sqm)	12
Waste diversion rate (% recovered for recycling)	12
Community investment ($)	3, 4, 12 & 28
TRIFR (Total recordable injury frequency rate)	12
Diversity (% representation of women by level)	12 (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 Reporting Initiative Standards
Vicinity Centres’ own criteria and management methods as set out in its publicly disclosed Sustainability Reporting Criteria, available at:

http://www.vicinity.com.au/sustainability/governance-andperformance.

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 2017.

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.

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Ernst & Young Terence Jeyaretnam Melbourne, Australia Partner

16 August 2017

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 Report 2017 43

Financial Report

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For the year ended 30 June 2017

Inside

45 �ire�tors� �e�ort
49 Remuneration Report
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

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112 Summary of Se�urityholders

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44 Vicinity Centres Annual Report 2017

Directors’ Report

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 ��

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)

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(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�

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��

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�

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�

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��

Vicinity Centres Annual Report 2017 45

Directors’ Report continued

Distributions

Total distributions de�lared by �i�inity during the year were as follows�

	Total	Cents per
	$m	stapled security
�nterim � �1 �e�ember ��16	344.4	��7
Final � �� une ��17	340.4	��6
Total –year end	684.8	17��

Director-related information

Meetings of Directors held during the year

	Board	Special Purpose Board1	Audit Committee	Remuneration Committee	Risk and Compliance Committee
	Eligible Attended	Eligible Attended	Eligible Attended	Eligible Attended	Eligible Attended
Peter �ay Angus ��Naughton �harles �a�e� �avid Thurin �ebra Stirling �aren Penrose Peter �ahan �i�hard �addo�� Tim Hammon Trevor Gerber �ai Tang	7 7 7 7 7 7 7 7 7 7 7 7 7 7 6 6 7 7 7 7 7 7	� � � � � � � � � � � � � � � � � � � � � �	� � � � � � � � � � 7 7 7 7 6 6 � � 7 7 7 7	� � � � 6 6 � � 6 6 � � 6 6 � � 6 6 6 6 � �	� � � � � � � � � � � � � � � � � � � � � �

1� 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�

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 Report 2017

Auditor-related information

�rnst � Young (�Y) is the auditor of the Grou� and is lo�ated at � �xhibition Street� �elbourne� �i�toria ��

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 Reporting (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 6�1�1��1� 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��

Vicinity Centres Annual Report 2017 47

Directors’ Report 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�

�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 ��16�1�1� 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 Report 2017

Remuneration Report

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Charles Macek

Chairman – Remuneration and Human Resources Committee

Letter from Chairman of the Remuneration and Human Resources Committee

�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�

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Charles Macek

�hairman � �emuneration and �uman Resources Committee

Vicinity Centres Annual Report 2017 49

Remuneration Report continued

Report overview

This Remuneration Report outlines:

�i�inity�s reward �rin�i�les and framewor��
�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�

	of Australian A��ounting Standards and have been audited�

	1. Remuneration framework	51
	2. Company performance and executive remuneration outcomes	52
	3. Executive remuneration – further information	58
	4. Non-executive Director remuneration	61
	5. Other remuneration information	63
50	Vicinity CentresAnnual Report 2017

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�

Reward principles

Attract, retain and motivate �emonstrate lin� between �n�ourage exe�utives to high��erforming exe�utives� �erforman�e� strategy exe�ution manage from the �ers�e�tive and value �reation� of se�urityholders�

Remuneration framework

Components Performance measures

Total Fixed Remuneration (TFR)

Ben�hmar�ed to �om�etitive rates�

Base salary, superannuation and any salary sacrifice amounts.

Si�e� s�o�e and �om�lexity of the role�

Further details are contained in se�tion ��1�

The relevant �ob mar�et�
�ndividual ex�erien�e� �a�ability and �erforman�e�

�

Strategic objective

Remuneration set at competitive levels� to attra�t� retain and engage �ey talent�

Short Term Incentive (STI)

�easured against four �erforman�e �ategories�
Finan�ial targets relate to �i�inity�s �a�a�ity to �ay distributions and generate se�urityholder returns�

Annual bonus opportunity, 12-month performance period subject to performance targets.

Financial: targets in�lude underlying earnings �er se�urity� net �ro�erty in�ome (NP�) and management ex�ense ratio�
Strategi� measures fo�us on asset and business �lanning�

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).

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�
Strategic: relates to portfolio enhancement, development pipeline and digital strategy�

Further details are contained in se�tion ��

People and leadership: includes • ��erational ex�ellen�e areas fo�us
se�tion �� ulture� �a�ability� em�loyee on �roviding safe and sustainable � engagement and diversity and environments for employees, in�lusion� consumers and retailers, and a
• Operational excellence: comprises Operational excellence: comprises comprises drive for effi�ien�y and innovation a�ross the business�
Operational excellence: comprises Operational excellence: comprises comprises innovation� ris� management� systems� �ro�esses� sustainability and safety metri�s�

Long Term Incentive (LTI)

Performance rights, three-year performance period, additional one-year holding lock.

Further details are contained in se�tion ��

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�)�
�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��

Vicinity Centres Annual Report 2017 51

Remuneration Report 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

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----- Start of picture text -----

��ief �xec�tive �fficer ��ief �inancial �fficer Chief Investment Officer
TFR 34% TFR 40% TFR 42%
STI 33% STI 29% STI 27%
LTI 33% LTI 31% LTI 31%
----- End of picture text -----

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

Name1	Position	Tenure
Angus ��Naughton	�� and �anaging �ire�tor (��)	Full year
�i�hard �amieson	�hief Finan�ial �ff�er (�F�)	Full year
�i�hael ��Brien	�hief �nvestment �ff�er(��)	Fullyear

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 Report 2017

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��

�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 2.1

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 S�P�AS� �� A��T �ndex	1��1 �7�� ��	1��71 11�� 11�1�	16�� �� ��	17�7 �� ��6�	17�� (17�7�) (6��)
Total return�	6��	1��1�	1��6�	1��	1��

1� 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 ��

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�

Table 2.2: FY17 STI outcomes for Executive KMP

Performance category Weighting at target	Performance level achieved1	Performance level achieved1
	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�

Vicinity Centres Annual Report 2017 53

Remuneration Report 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	�nderlying earnings	�nderlying �PS� NP��		•�elivered underlying �PS of 1��7 �ents� in line with guidan�e
(20%–40%)	�er se�urity (�PS)� net �ro�erty in�ome (NP�) and NP� growth� total	total return and �� are �ey fnan�ial measures of performance, while		•�elivered �om�arable NP� growth of �� •A�hieved a total return of 1��
	return� management	balan�e sheet strength		•�� redu�ed from �� b�s to �1 b�s
	ex�ense ratio (��) and	is a critical foundation		•Standard � Poor�s �redit rating raised to �A�stable�
	�a�ital management	for future success
	ob�e�tives
Strategic	Strategy ob�e�tives	�evelo�ing and		•�erger su��essfully �om�leted with the integration of our
(30%–50%)	focused on portfolio	im�lementing		�eo�le� systems and �ro�esses� and merger synergy targets
	enhancement, delivery	�i�inity�s �ey strategi�		ex�eeded and delivered ahead of �rogram
	of the development	initiatives will underpin		•�m�roved �ortfolio o��u�an�y rate from �� to ��
	�i�eline� merger synergies realisation� digital strategy and sta�eholder	future opportunities and growth		•�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
	management			•Signif�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	Peo�le ob�e�tives	�reating and maintaining		•Signif�ant im�rovement in em�loyee engagement s�ore
Leadership	fo�used on enhan�ing	a team that is high		to 71� from 66� in FY16
(15%)	�ulture� strengthening	�erforming� highly		•�ommen�ed roll out of initiatives under the three �ey fo�us
	�a�ability� im�roving	engaged and diverse		areas of the �iversity and �n�lusion Strategy
	em�loyee engagement and develo�ing our diversity and inclusion agenda	is fundamental to long� term performance		•Talent management �lan and su��ession �lanning for the �xe�utive �ommittee and broader senior leadershi� team in place
Operational	��erational ob�e�tives	Fo�us on business		•Net �or�orate overheads were redu�ed by 7��
Excellence (15%)	centred on a review of corporate overheads,	transformation, o�erational eff�ien�y�		•�m�rovement in Green Star Performan�e �ortfolio average rating from � Stars to � Stars
	ris� management and our sustainability agenda	ris� management and sustainability will under�in sustainable �erforman�e		•�stablished a three�year �artnershi� with Bea�on Foundation fo�used on unem�loyed and disengaged youth
Table 2.4
		Maximum STI	Actual STI % of target STI % of maximum % of maximum
	Target STI	opportunity	awarded opportunity STI opportunity STI opportunity
	as % of TFR	as % of TFR		$ awarded awarded forfeited
Executive KMP
Angus ��Naughton 1��		1��	1�611�� 1�7�� �6�� 1��
�i�hard �amieson 7��		1��	��7� �� �7�� ��
�i�hael ��Brien	6��	1��	�6��7�� 1�� 6�� �7��

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 Report 2017

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 ��

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

			Face value	LTI face value as a percentage	Fair value	LTI fair value as a percentage
	Number of		of rights on	of TFR at	of rights on	of TFR at
	performance		grant date	grant date	grant date2,3	grant date
Executive KMP Angus ��Naughton	rightsgranted1 ��	Grant date � �e�ember ��16	$ 1��	% 1��	$ ��6�6��	% �7�1
�i�hard �amieson	�11��	� �e�ember ��16	6��	��	��67�	��7
�i�hael ��Brien	1��7	� �e�ember ��16	��	7�	��	��
Total	925,435		2,625,000	89	1,499,205	50.8

1� 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�

Vicinity Centres Annual Report 2017 55

Remuneration Report continued

% Perfor- mance related8	% Perfor- mance related8	57%	�6�	50%	��	52%	��	54%	��
Total $		3,743,728	��6�1��	1,520,182	1�6�7��	1,464,696	1��7�7	6,728,606	6��16��71
Post-employment	Termin- ation benefts $	25,000 -	17�6�� �	25,000 -	�� �	19,616 -	1��1 �	69,616 -	�7�1�� �
	Super- annuation contributions $
Share-based payments	STI Deferred7 $	531,706 -	��6�1�� ��1	220,730 267,187	1�6�� ��7��	186,097 284,375	�6�1�� ��67	938,533 551,562	��7�� 1��6��
	Perfor- mance rights6 $
�t�er benefts	Leave entitle- ments5 $	108,333 -	�� �	- 3,469	� �	- 7,178	� �	108,333 10,647	�� �
	Other4 $
��ort�term benefts	Base Salary1 $ STI cash2 $ Non- monetary3 $	1,463,412 1,611,000 4,277	1��1� 1��1�� ��	733,303 267,188 3,305	71�� ��7�� ��1	677,681 284,375 5,374	��7�� ��67 ��6��	2,874,396 2,162,563 12,956	��6 1��7��61 ��67�
	Executive KMP Period	Angus ��Naughton FY17 FY16		�i�hard �amieson FY17 FY16		�i�hael ��Brien FY17 FY16		Total – Executive KMP FY17 FY16

56 Vicinity Centres Annual Report 2017

% Perfor- mance related1 $	% Perfor- mance related1 $	17��	��	��	��
Total $		1��76�7�6	�1��1��	��	��11�
Post-employment	Super- annuation contributions $ Termination benefts $	1�717 1��7�	�� �	�� �	1��616 1��7
Share-based payments	Perfor- mance rights1 $ STI deferred1 $	�67��76 �	�1�617 ��	1�7��6� �	��6�� ��
�t�er benefts	Other $ Leave entitle- ments1 $	7�� �	�� ��7��	� �	�� ��7��
��ort�term benefts	Base salary STI cash1 $ Non- monetary1 $	1�� � 1�7��	��6 �� �	��6�� 6��7�� ��	��1�7 16��7�6 ��76�
	Former Executive KMP Period	Steven Sewell� FY16 Stuart �a�rae� FY16 �onathan Timms� FY16 Total – Former Executive KMP FY16

Vicinity Centres Annual Report 2017 57

Remuneration Report 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	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�
Performance	The a��li�able ST� �erforman�e �eriod is the full fnan�ial year� �here an �xe�utive ��P �ommen�es
period	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�
Grant date,	ST� is �rovided as a �ombination of �ash and deferred e�uity �ayments� Partial �ayment is deferred into e�uity
payment and	for a �eriod of �� months for the �� and 1� months for other �xe�utive ��P� �ividends are �aid on the
deferral1	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 fnan�ial results and the �ash
	�om�onent will be �aid in Se�tember ��17�
Performance	Se�tion �� rovides a detailed summary of the �erforman�e ob�e�tives and measures and the subse�uent
targets and	results for �xe�utive ��P for FY17�
measurement	Performan�e ob�e�tives for FY17 were fnalised 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 fnal 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 Report 2017

3.3 LTI

�efer to se�tion �� for a summary of the �T� and awards during FY17�

LTI arrangements
Type of equity awarded	�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 benef�ial interest in� and no voting rights asso�iated with� the underlying sta�led se�urities�
Performance period	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�
Performance hurdles	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�
Opportunity	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�
Vesting scale	The following vesting s�ales a��ly� TSR Percentile ranking Percentage vesting � �1st �� Between �1st and 7�th Between �1� to 1�� ≥7�th 1�� Following testing� any rights that do not vest� la�se�	TR
		Target total return Percentage vesting
		� �� ��
		Between �� and �� Between �� and 1��
		≥�� 1��

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)�

Vicinity Centres Annual Report 2017 59

Remuneration Report 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	Granted as	Forfeited/
	rights	remuneration	lapsed	Vested	Closing
Angus ��Naughton	��7��	��	�	�	��6��
�i�hard �amieson	1�7��1	�11��	�	�	��6�
�i�hael ��Brien	16��1	1��7	�	�	��11�
Total	815,104	925,435	-	-	1,740,539

3.6 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

			Termination by	Termination
	For cause	Other	Executive KMP	payment1
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 Report 2017

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

Table 4.1: FY17 Board and committee fees
Board/Committee	Role FY17 fees1 $
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�

Vicinity Centres Annual Report 2017 61

Remuneration Report continued

4. Non-executive Director remuneration continued

Table 4.2: Non-executive Directors’ fees for FY17 and FY16

Non-executive Director	Period	��ort�term benefts Fees1 $ Committee fees $	Post-employment benefts2 Superannuation contributions $ Total fees $
Non-executive Directors Peter Hay, Chair (a��ointed 11 �une ��1�)	FY17	430,384 -	19,616 450,000
	FY16	��6�� �	1�� ��
Trevor Gerber3 (a��ointed �� tober ��1�)	FY17	146,118 36,530	17,352 200,000
	FY16	1��16� �6��	1��76 17��77�
Tim Hammon (a��ointed 1� �e�ember ��11)	FY17	146,118 54,795	19,087 220,000
	FY16	1�6�11� ��7��	1��7 ��
Peter Kahan4 (a��ointed 11 �une ��1�)	FY17	160,000 40,000	- 200,000
	FY16	16�� ��	� ��
Charles Macek (a��ointed 1� �e�ember ��11)	FY17	146,118 36,530	17,352 200,000
	FY16	1�6�11� �6��	17�� ��
Karen Penrose (a��ointed 11 �une ��1�)	FY17	146,118 54,795	19,087 220,000
	FY16	1�6�11� ��7��	1��7 ��
Debra Stirling3 (a��ointed �� tober ��1�)	FY17	146,118 36,530	17,352 200,000
	FY16	1��16� �6��	1��76 17��77�
Wai Tang (a��ointed �� ay��1�)	FY17	146,118 36,530	17,352 200,000
	FY16	1�6�11� �6��	17�� ��
David Thurin (a��ointed 11 �une ��1�)	FY17	146,118 18,266	15,616 180,000
	FY16	1�6�11� 1��6�	1��616 1��
Subtotal Non-executive Directors	FY17	1,613,210 313,976	142,814 2,070,000
	FY16	1��6��611 �1��7�	1�7�� ��17��

1� �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�
�� 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 Report 2017

Table 4.2.1: Former Non-executive Directors’ fees

Non-executive Director	Period	��ort�term benefts Fees1 $ Committee fees $	Post-employment benefts2 Superannuation contributions $ Total fees $
Former Non-executive Directors Richard Haddock AM (�eased as �ire�tor on �� A�ril ��17)	FY17	121,765 30,441	14,460 166,666
	FY16	1�6�11� �6��	17�� ��
Subtotal Former Non-executive Directors	FY17	121,765 30,441	14,460 166,666
	FY16	1�6�11� �6��	17�� ��
Total	FY17	1,734,975 344,417	157,274 2,236,666
	FY16	1�711�7�� ��	1��6 ��17��

1� 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�

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�

Vicinity Centres Annual Report 2017 63

Remuneration Report 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 Directors’ 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	Granted as	Additions	Other
	Securities1	remuneration2	during theyear	Movements	Closing
Non-executive Directors
Peter �ay	7��1	�	�7��	�	119,791
Trevor Gerber	��	�	�	�	50,000
�i�hard �addo�� A�	1��	�	��	(1��)�	-
Tim Hammon	��	�	��	�	50,000
Peter �ahan�	�	�	�	�	-
�harles �a�e�	��	�	�	�	50,000
�aren Penrose	��6�	�	1��7	�	40,000
�ebra Stirling	1��	�	�	�	10,000
�ai Tang	��	�	�	�	2,980
�avid Thurin	1��7�	�	�	�	13,895,373
Total	14,251,609	-	116,937	(150,402)	14,218,144
Executive KMP
Angus ��Naughton	1��1�	1�1��6	7��11	�	399,709
�i�hard �amieson	�	1�6��1	�	�	126,931
�i�hael ��Brien	�	7��77�	�	�	73,779
Total	182,512	341,996	75,911	-	600,419

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 Report 2017

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 Report.

Si g ned in �elbourne on 16 August ��17 in a��ordan�e with a resolution of the �ire�tors�

Peter Hay Ch a i rman

Vicinity Centres Annual Report 2017 65

Auditor’s Independence Declaration

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Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001

Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 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.

==> picture [70 x 31] intentionally omitted <==

Ernst & Young

==> picture [89 x 33] intentionally omitted <==

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 Report 2017

Statement of Comprehensive Income

for the year ended 30 June 2017

Revenue Pro�erty ownershi� revenue	Note	30-Jun-17 $m 1,235.8	30-Jun-16 $m 1��
�anagement fee revenue from strategi� �artnershi�s		66.3	66��
�nterest and other in�ome		9.4	1��
Total revenue and income Share of net �roft�(loss) of e�uity a��ounted investments Pro�erty revaluation in�rement for dire�tly owned �ro�erties �ire�t �ro�erty ex�enses Borrowing �osts �m�loyee benefts ex�ense	�(a) �(b) 6(b) 1�	1,311.5 18.2 906.7 (332.2) (154.9) (98.7)	1��1�� (6��) 7�� (��) (17��1) (1�6��)
�ther ex�enses from ordinary a�tivities		(33.0)	(��)
Net foreign ex�hange movement on interest bearing liabilities Net mar��to�mar�et movement on derivatives �m�airment and amortisation of intangible assets	1�(a)	60.7 (55.1) (3.0)	�� (1�7��) (��)
�ntegration �osts		(26.7)	(�1�1)
Stam�dutyand other �osts written off on a��uisition of investment�ro�erties Proft before tax for the year �n�ome tax ex�ense Net proft for the year �ther �om�rehensive in�ome	�(b) �	(9.9) 1,583.6 - 1,583.6 -	(��1) �6�� � �6�� �
Total comprehensive income for theyear		1,583.6	�6��
Total proft/(loss) and total comprehensive income/(loss) for the year
attributable to stapled securityholders as: Se�urityholders of �i�inity �imited Se�urityholders of other sta�led entities of the Grou�	1�(b)	(12.3) 1,595.9	(��6) 1��66��
Netproft and total comprehensive income for theyear		1,583.6	�6��
Earnings per security attributable to securityholders of the Group: Basi� earnings �er se�urity (�ents) �iluted earnings�er se�urity (�ents)	� �	40.00 39.95	��7 ��

The above �onsolidated Statement of �om�rehensive �n�ome should be read in �on�un�tion with the a��om�anying notes�

Vicinity Centres Annual Report 2017 67

Balance Sheet

as at 30 June 2017

	Note	30-Jun-17	30-Jun-16
		$m	$m
Current assets
�ash and �ash e�uivalents		42.2	��
�e�eivables and other assets	�	88.3	1��
�nvestment �ro�erties held for sale	�(a)	33.5	��1
Finan�ial assets �arried at fair value through �roft or loss		4.3	��6
�erivative fnan�ial instruments	6(d)	-	1��6
Total current assets		168.3	��6
Non-current assets
�nvestment �ro�erties	�(a)	15,633.5	1��6�6
�nvestments a��ounted for using the e�uity method	�	88.0	��
�ntangible assets	1�	599.4	6��
Plant and e�ui�ment		14.5	1��
�erivative fnan�ial instruments	6(d)	68.3	11��
�eferred tax assets	�(�)	84.3	��
�e�eivables and other assets	�	2.5	1��1
Total non-current assets		16,490.5	1��
Total assets		16,658.8	1��
Current liabilities
�nterest bearing liabilities	6	-	1��1
�istribution �ayable		340.4	��
Payables and other fnan�ial liabilities	1�	209.6	��7��
Provisions	11	78.5	��
�erivative fnan�ial instruments	6(d)	2.3	�
Total current liabilities		630.8	�6��
Non-current liabilities
�nterest bearing liabilities	6	3,893.7	��7��1
�ther fnan�ial liabilities	1�	202.7	��
Provisions	11	7.8	��
�erivative fnan�ial instruments	6(d)	176.1	17��7
Total non-current liabilities		4,280.3	��1�1��
Total liabilities		4,911.1	��
Net assets		11,747.7	1��
Equity
�ontributed e�uity	�	8,493.2	��
Share based �ayment reserve		4.6	��7
�etained�rofts		3,249.9	��1�1
Total equity		11,747.7	1��

The above �onsolidated Balan�e Sheet should be read in �on�un�tion with the a��om�anying notes�

68 Vicinity Centres Annual Report 2017

Statements of Changes in Equity

for the year ended 30 June 2017

Attributable to securityholders of Vicinity Limited Attributable to securityholders of other stapled entities of the Group Contributed equity $m Reserves $m Retained profts� (losses) $m Total $m Contributed equity $m Reserves $m Retained profts $m Total $m Total equity $m	As at 1 July 2015 481.1 11.5 8.5 501.1 8,012.1 - 2,082.4 10,094.5 10,595.6	Net (loss)��roft for the year � � (��6) (��6) � � 1��66�� 1��66�� �6��	Total comprehensive (loss)/income for the year - - (305.6) (305.6) - - 1,266.5 1,266.5 960.9	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 2016 481.1 4.7 (297.1) 188.7 8,012.1 - 2,648.2 10,660.3 10,849.0	Net (loss)��roft for the year � � (1��) (1��) � � 1�� 1�� 1��6	Total comprehensive (loss)/income for the year - - (12.3) (12.3) - - 1,595.9 1,595.9 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 2017 481.1 4.6 (309.4) 176.3 8,012.1 - 3,559.3 11,571.4 11,747.7	The above Statements of �hanges in ��uity should be read in �on�un�tion with the a��om�anying notes�

Vicinity Centres Annual Report 2017 69

Cash Flow Statement

for the year ended 30 June 2017

		30-Jun-17	30-Jun-16
	Note	$m	$m
Cash fows from operating activities
Receipts in the course of operations		1,469.5	1��7
Payments in the �ourse of o�erations		(591.3)	(61��)
�istributions and dividends re�eived from asso�iates� �oint venture �artnershi�s and		6.8	1��6
managed investments
�nterest and other revenue re�eived		4.6	��
�nterest�aid		(158.4)	(17��7)
Net cash infows from operatingactivities	16	731.2	7�1��
Cash fows 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		436.0	1�1�6�7
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 fnan�ial liability � Bentons S�uare a��uisition		(38.3)	�
Stam�duty �aid		(9.9)	(��)
Net cash(outfows)/infows from investingactivities		(177.4)	��
Cash fows from fnancing activities
Pro�eeds from borrowings		1,972.6	��1��
�e�ayment of borrowings		(1,946.3)	(��7��)
Pro�eeds from re�ayment of loan to Tuggeranong Town �entre Trust		117.4	�
�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 outfows from fnancingactivities		(564.4)	(1��)
Net decrease in cash and cash equivalents held		(10.6)	(��6)
Cash and cash equivalents at the beginningof theyear		52.8	1�7��
Cash and cash equivalents at the end of theyear		42.2	��

The above �ash Flow Statement should be read in �on�un�tion with the a��om�anying notes�

70 Vicinity Centres Annual Report 2017

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�

Operations

1� Segment information
�� arnings �er se�urity
�� Taxes
�� nvestment �ro�erties
�� uity a��ounted investments

6� �nterest bearing liabilities and derivatives
�� ontributed e�uity

Working capital

�� e�eivables and other assets
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�� elated �arties
�� ommitments and �ontingen�ies
�1� �ther Grou� a��ounting matters
�� vents o��urring after the re�orting date

Vicinity Centres Annual Report 2017 71

About This Report

�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 ��16�1�1 (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 �1�1�6�� 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 investmentproperties	Note �
Valuation of derivatives	Note 6
�e�overabilityofgoodwill and intangibles	Note 1�

72 Vicinity Centres Annual Report 2017

Operations

1. Segment information

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

(a) Segment results
	30-Jun-17	30-Jun-16
For the 12 months to:	$m	$m
Property Investment segment Net property income Strategic Partnerships segment Pro�erty management� develo�ment and leasing fees	916.7 56.3	��6 �6��
Funds management fees	9.7	��
Total segment income	982.7	1��1��7
�or�orate overheads (net of internal �ro�erty management fees) Net interest ex�ense Underlyingearnings	(74.9) (166.0) 741.8	(��) (1�1��) 7�7��
Ad�usted for�
�ent lost from underta�ingdevelo�ments	(28.9)	(1��)
Funds From Operations �aintenan�e �a�ital ex�enditure and tenant in�entivesgiven Adjusted Funds From Operations Distribution declared Distribution as apercentage of AFFO	712.9 (71.4) 641.5 684.8 106.8%	7�� (7��1) 667�� 7��7 1��
Distribution as apercentage of underlyingearnings	92.3%	��

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 ��

	30-Jun-17	30-Jun-16
For the 12 months to:	Cents	Cents
�nderlying�PS �istribution�er se�urity	18.74 17.30	1��1� 17�7�

Vicinity Centres Annual Report 2017 73

Operations continued

1. Segment information continued

1. Segment informationcontinued (b) �econciliation of �n�erlyin� earnin�s to net proft after tax
	30-Jun-17	30-Jun-16
For the 12 months to:	$m	$m
Underlying earnings	741.8	7�7��
Pro�erty revaluation in�rement for dire�tly owned �ro�erties1	906.7	7��
Non�distributable gain�(loss) relating to e�uity a��ounted investments1	9.1	(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 �osts6	(26.7)	(�1�1)
�m�airment and amortisation of intangible assets7	(3.0)	(��)
�ther non�distributable items	0.2	(��6)
Netproft after tax	1,583.6	�6��

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�

	30-Jun-17	30-Jun-16
For the 12 months to:	$m	$m
Total segment income (Note 1(a))	982.7	1��1��7
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	379.2	�77��
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	3.5	1��
Total revenue and other incomeper Statement of Comprehensive Income	1,311.5	1��1��

74 Vicinity Centres Annual Report 2017

(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�

		30-Jun-17	30-Jun-16
	Note	$m	$m
�nvestment �ro�erties �nvestment�ro�erties in�luded in e�uitya��ounted investments Total interests in directlyowned investmentproperties Assets under management on behalf of strategi��artners� Total assets under management	�(a)1 �(b)	15,410.5 138.2 15,548.7 9,725.3 25,274.0	1��1��7 �67�1 1��6�� ��6 ��6�6��

�� 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�

Basi� and diluted earnings �er se�urity are as follows�
For the 12 months to:	30-Jun-17	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:	40.00 39.95	��7 ��
Basi� loss �er se�urity (�ents)	(0.31)	(7�7�)
�iluted loss�er se�urity (�ents)	(0.31)	(7�7�)
The following net �roft�(loss) amounts are used in the numerator in �al�ulating earnings �er sta�led se�urity� 30-Jun-17		30-Jun-16
For the 12 months to:	$m	$m
�arnings used in �al�ulating basi� and diluted earnings �er se�urity of the Grou�	1,583.6	�6��
�oss used in �al�ulatingbasi� and diluted earnings�er se�urityof 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:

	30-Jun-17	30-Jun-16
For the 12 months to:	Number(m)	Number(m)
�eighted average number of se�urities used as the denominator in �al�ulating basi� earnings per security Ad�ustment for�otential dilution from�erforman�e rightsgranted �eighted average number of se�urities and �otential se�urities used as the denominator in �al�ulating	3,958.6 5.0 3,963.6	��6 �� ��6��
the diluted earnings�er se�urity

Vicinity Centres Annual Report 2017 75

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�

	30-Jun-17	30-Jun-16
For the 12 months to:	$m	$m
�urrent in�ome tax beneft	5.9	6��
�eferred in�ome tax ex�ense	(3.5)	(��)
Ad�ustment for �urrent year tax of �rior �eriods	2.1	��7
Beneft 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 Report 2017

(b) �econciliation bet�een income tax expense�(beneft) to net proft
For the 12 months to: Proft before tax for the year	30-Jun-17 $m 1,583.6	30-Jun-16 $m �6��
�ess� Proft attributed to the Trust and not sub�e�t to tax	1,595.9	1��66��
Net loss before tax attributable to securityholders of Vicinity Limited	(12.3)	(��6)
Prima fa�ie in�ome beneft at �� Tax effect of amounts not taxable in calculating income tax expense: Non�dedu�tible im�airment and amortisation of intangible assets Net ad�ustment relating to a��uisition of share based �ayments Prior �eriod ad�ustments	3.7 (0.9) (0.2) 2.1	�1�7 (��) �� ��7
�ther non�dedu�tible items	(0.2)	(1�1)
Beneft from tax losses not re�ognised Income tax expense	(4.5) -	(��) �

(c) Movement in temporary differences

A summary of the movements in deferred tax balan�es is as follows�

At 30 June 2015	Provisions $m 19.4	Intangible assets $m (4.3)	Other $m 7.3	Allowable deductions1 $m 23.9	Tax losses $m 38.0	Total $m 84.3
Transfers �harged to�roft At 30 June 2016	� (1��) 17.9	� 1�� (3.3)	� (��) 5.0	(1��) ��6 9.5	1�� �� 55.2	� � 84.3
Transfers	�	�	�	(��)	��	�
�harged to�roft At 30 June 2017	�� 18.2	�� (2.4)	(��7) 0.3	� -	�� 68.2	� 84.3

1� 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)�

Vicinity Centres Annual Report 2017 77

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

(a) Portfolio summary
Shopping centre type	30-Jun-17 Number of properties Value $m Weighted average cap rate %	30-Jun-16
		Number of properties Value $m Weighted average cap rate %
Su�er �egional �a�or �egional City Centre �egional �utlet �entre Sub �egional Neighbourhood Planningand holding�osts1	1 2,675.0 4.25 7 3,358.0 5.45 4 1,726.7 4.97 10 2,240.4 6.17 6 1,391.7 6.29 31 3,308.0 6.37 15 728.4 6.51 - 21.3 -	1 ��1�� ��7� 7 ��1�� ��7� � 1�� ��6 1� ��1�� 6�� � 1�� 6�� �� ��7�� 6�7� 1� 7�7�� 6��6 � �� �
Total	74 15,449.5 5.61	�� 1�� ��
Add: Finance lease assets� �ess� Pro�erties held for sale (�urrent asset)�	217.5 (33.5)	�1�� (��1)
Total investmentproperties	15,633.5	1��6�6

1� 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

(b) Movements for the year
	30-Jun-17	30-Jun-16
	$m	$m
��ening balan�e at 1 �uly	14,444.5	1��1��7
A��uisitions in�luding asso�iated stam� duty and transa�tion �osts1	151.1	�7��1
�a�ital ex�enditure�	397.1	��6��
�a�italised borrowing �osts�	8.0	11��
�is�osals	(436.0)	(1�1�6�7)
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	(9.9)	(��1)
Amortisation of in�entives and leasing �osts	(28.8)	(��6)
Straight�liningof rent ad�ustment	16.8	��
Closingbalance at 30 June	15,449.5	1��

1� �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�
�� 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 Report 2017

(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�

Method	Description
Capitalisation of net income	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 �rofle of the �ro�erty together with �urrent mar�et investment �riteria� as eviden�ed by �urrent sales results�
Discounted	Pro�e�ted �ash �ows for a sele�ted investment �eriod (usually 1� years) are derived from �ontra�ted or
cash fow	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
Residual value (for properties under development)	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 �rofle at develo�ment �om�letion� The estimated �ost to �om�lete the develo�ment� in�luding �onstru�tion �osts and asso�iated ex�enditures� fnan�e �osts� and an allowan�e for develo�er�s ris� and �roft is dedu�ted from the value of the asset on �om�letion to derive
	the �urrent value�

Vicinity Centres Annual Report 2017 79

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�

summarised below�
Unobservable inputs	30-Jun-17 Range of inputs Weighted average inputs	30-Jun-16 Range of inputs Weighted average inputs Sensitivity
Capitalisation rate1 4.25%–7.50% 5.61% �is�ount rate� 6.75%–8.50% 7.55% Terminal yield� 4.50%–7.75% 5.85% �x�e�ted downtime (for tenants va�ating) 2 months to 9 months 5 months		��7�� �� The higher the dis�ount rate� terminal yield, capitalisation rate and ex�e�ted downtime due to tenants va�ating� the lower the fair value� 7�� 7�� ��7�� 6�1�� � months to 1� months � months
�ental growth rate 2.27%–4.44% 3.52%		��7�� ��7�� 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 Report 2017

(d) List of investment properties held

i. Super Regional

i. Super Regional
			Carrying	value
		30-Jun-17
	Ownership interest	Valuation	30-Jun-17	30-Jun-16
	%	type	$m	$m
Chadstone Total Super Regional	��	�nternal	2,675.0 2,675.0	��1�� ��1��

ii. Major Regional

		30-Jun-17	Carrying	value
	Ownership interest	Valuation	30-Jun-17	30-Jun-16
Ban�stown �entral Bayside	% �� 1��	type �xternal �xternal	$m 350.0 622.5	$m �� �7��
�hatswood �hase Sydney	1��	�xternal	1,121.2	1��11��
Galleria	��	�nternal	395.0	��
Northland Roselands The Glen Total Major Regional	�� �� ��	�xternal �xternal �nternal	487.5 179.7 202.1 3,358.0	�� 1�� 17�� ��1��

iii. City Centre

	Ownership interest	30-Jun-17 Valuation	Carrying 30-Jun-17	value 30-Jun-16
	%	type	$m	$m
�m�orium �elbourne1	��	�xternal	605.0	�7��
�yer Bour�e Street1 The �yer �entre Brisbane� �ueensPla�a Total CityCentre	�� �� 1��	�nternal �nternal �xternal	156.2 195.0 770.5 1,726.7	1�1�� �� 7�� 1��

�efer to footnotes at the end of Note �(d)�

iv. Regional

	Ownership interest	30-Jun-17 Valuation	Carrying 30-Jun-17	value 30-Jun-16
	%	type	$m	$m
Broadmeadows �entral	1��	�xternal	330.5	��
Colonnades �ranbourne Par� �astlands �li�abeth �ity �entre	�� �� 1�� 1��	�xternal �nternal �nternal �xternal	155.6 153.0 170.0 384.1	1�� 1�7�� 16�� �7��1
Grand Pla�a	��	�xternal	215.0	��
�andurah Forum	��	�xternal	256.5	17��
�t �mmaney �entre �o��ingham �entre �unawayBay�entre Total Regional	�� �� ��	�nternal �xternal �xternal	105.2 313.0 157.5 2,240.4	1�� �� 16�� ��1��

Vicinity Centres Annual Report 2017 81

Operations continued

4. Investment properties continued

(d) List of investment properties held continued

v. Outlet Centre

			Carrying	value
		30-Jun-17
	Ownership interest	Valuation	30-Jun-17	30-Jun-16
	%	type	$m	$m
�F� Brisbane�	1��	�xternal	59.0	��
�F� �ssendon�	1��	�nternal	170.0	16��
�F� �omebush	1��	�nternal	425.0	��
�F� �oorabbin�	1��	�xternal	122.0	11��
�F� Perth6	��	�nternal	17.7	�
�F� South �harf7	1��	�xternal	598.0	�66��
TotalOutlet Centre			1,391.7	1��

�efer to footnotes at the end of Note �(d)�

vi. Sub Regional

			Carrying	value
		30-Jun-17
	Ownership interest	Valuation	30-Jun-17	30-Jun-16
	%	type	$m	$m
Altona Gate Sho��ing �entre	1��	�nternal	102.5	��
Armidale Central	1��	�xternal	46.0	��
Belmont �illage	1��	�nternal	50.0	�6��
Box �ill �entral (North Pre�in�t)	1��	�xternal	103.0	�6�6
Box �ill �entral (South Pre�in�t)�	1��	�nternal	192.0	161��
Brandon Par�	��	�xternal	65.0	�7��
Buranda �illage	1��	�nternal	42.5	�1��
�arlingford �ourt	��	�nternal	114.0	1��
�astle Pla�a	1��	�nternal	174.0	16��
Corio Central	1��	�nternal	131.0	1�6��
�llenbroo� �entral	1��	�nternal	240.0	��
Gympie Central	1��	�xternal	79.0	7��
Halls Head Central	��	�xternal	54.6	�7��
Karratha City	��	�xternal	52.5	�6�6
Kurralta Central	1��	�nternal	42.0	�7��
�a�e �aven �entre	1��	�nternal	298.0	�7��
�avington S�uare	1��	�nternal	62.3	��
�ivingston �ar�et�la�e	1��	�nternal	86.0	��
�addington �entral	1��	�nternal	122.0	11��
�ornington �entral�	��	�nternal	36.0	6��
Ne�ean �illage	1��	�nternal	181.0	16��
Northgate	1��	�xternal	108.0	1��
�oxburgh �illage	1��	�xternal	122.1	111��
Sunshine �ar�et�la�e	��	�xternal	58.5	�7��
Taigum S�uare	1��	�xternal	100.0	�1��
Toormina Gardens	��	�nternal	40.5	��
�arnbro �entre	1��	�nternal	125.0	1��
�arriewood S�uare	��	�xternal	142.5	1��
�arwi�� Grove	1��	�nternal	200.0	1�7��
�est �nd Pla�a	1��	�xternal	70.0	6��
�hitsunday Pla�a	1��	�nternal	68.0	6��
�aitland �unter �all�	�	�	-	��
Tweed �all�	�	�	-	7��
�odongaPla�a�	�	�	-	�6��
TotalSubRegional			3,308.0	��7��

�efer to footnotes at the end of Note �(d)�

82 Vicinity Centres Annual Report 2017

vii. Neighbourhood

vii. Neighbourhood
	Ownership interest	30-Jun-17 Valuation	Carrying 30-Jun-17	value 30-Jun-16
	%	type	$m	$m
Bentons S�uare	1��	�nternal	82.0	77��
�urrambine �entral �ianella Pla�a Flinders S�uare Goldfelds Pla�a Kalamunda Central �ennox �illage	1�� 1�� 1�� 1�� 1�� ��	�nternal �nternal �nternal �xternal �nternal �nternal	105.0 89.0 32.5 27.2 38.5 36.5	�� �1�� �1�� �7�� �7�� ��
�ilton �illage	1��	�nternal	27.5	��
North Shore �illage �a�leigh �entral �xenford �illage	1�� 1�� 1��	�nternal �xternal �xternal	25.0 71.6 33.1	�� 6�� ��
Stirlings �entral	1��	�nternal	50.0	��
Terrace Central1�	1��	�nternal	33.5	��
The Gateway �i�toria Par� �entral Albany Broo�s Garden� Bowes Street�	1�� 1�� � �	�nternal �xternal � �	46.0 31.0 - -	�� �� �� 7��
�ilton Pla�a�	�	�	-	17��
�onier �illage�	�	�	-	1��
Total Neighbourhood			728.4	747.3

1� 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-17	30-Jun-16
	$m	$m
Not later than one year	861.6	��
�ater than one year and not later than fve years �ater than fveyears Total operatinglease receivables	2,282.2 1,123.9 4,267.7	��77�� 1��1�6 ��1

Vicinity Centres Annual Report 2017 83

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 30-Jun-17 % 30-Jun-16 %	Carrying value
		30-Jun-17 $m 30-Jun-16 $m
�i�toria Gardens �etail Trust �oint venture �ther asso�iates and�oint ventures	50.0 �� - �	86.4 76�� 1.6 ��
Closingbalance		88.0 ��

(a) Movements for the year

(a) Movements for the year
	30-Jun-17	30-Jun-16
	$m	$m
��ening balan�e	80.5	��
Additional investments made during the year	0.4	��
Share of net �roft�(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�uitya��ounted investments	(1.7)	(��)
Closingbalance	88.0	��

[1]

	30-Jun-17	30-Jun-16
	$m	$m
�nvestment �ro�erties � non��urrent	138.2	1�7�1
�nterest bearing liabilities � non��urrent	(46.6)	(�6�6)
�ther net liabilities	(5.2)	(��)
Net assets	86.4	76��
Total income	10.3	��
Aggregate net �rofts after in�ome tax	14.8	1��1
�nterest ex�ense	(1.9)	(1��)
�istributions re�eivable bythe Grou�	5.8	��6

(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 ��16� �66�1�7)� The Grou� also has distributions re�eivable of ��1�7 at balan�e date (�� une ��16� ��667�7��)�

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 �1��6��1� (�� une ��16� �1��1��)� �ividends �aid to the Grou� were ��71��1� (�� une ��16� ��717)� The Grou� has re�eivables from �A� of ��1�1��6 at �� une ��17 (�� une ��16� ��11��7�)�

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 ��16� �1��6��6��)� The loan re�eivable from TT�T of �117��7�� was re�aid u�on dis�osal� �nterest in�ome for the year was ��1�� (�� une ��16� �7�1��1)� There are no outstanding balan�es related to this �oint venture at �� une ��17�

84 Vicinity Centres Annual Report 2017

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�

�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�
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�

The following table outlines the Grou��s interest bearing liabilities at balan�e date�

Current liabilities Unsecured �SPPs	30-Jun-17 $m -	30-Jun-16 $m 1��1
Total current liabilities	-	1��1
Non-current liabilities Secured A�TNs	317.4	��
Unsecured
Ban� debt	1,506.3	1�6�6��
A�TNs GBP �uro�ean �edium Term Notes (��TNs) �SPPs �eferred debt �osts1 Total non-current liabilities Total interest bearingliabilities	645.7 588.1 852.2 (16.0) 3,893.7 3,893.7	�� 61�� �77�6 (17��) ��7��1 ��

1� �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�

Vicinity Centres Annual Report 2017 85

continued Capital Structure and Financial Risk Management

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)� �1�1�6�� million remains undrawn at �� une ��17 (�� une ��16� �1�1�6�� million)�

[1,2]

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----- Start of picture text -----

Bank to capital market
debt ratio
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----- Start of picture text -----

1,600
1,400
1,200
1,000
192.0
800 7.0 48%
52% $2,418.5
600 383.0 727.0 655.2 $2,632.3
200.0 200.0
400 725.3
200 38.0 400.0 200.0150.0 198.0 40.0 200.0 58.9 309.0 367.4
0
FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 Beyond
Capital market debt outstanding
USPP AMTN EMTN Bank debt drawn Bank debt undrawn Bank debt limit
----- End of picture text -----

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 ��16� ��67�7 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 ��16� �17�� 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 ��16� �17�7 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�

	30-Jun-17	30-Jun-16
For the 12 months to:	$m	$m
�nterest �osts on interest bearing liabilities and derivatives	167.4	1��
Amortisation of borrowing �osts	5.2	��
Amortisation of fair value ad�ustments relating to dis�ontinuation of hedge a��ounting1	(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 borrowingcosts	154.9	17��1

1� �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 Report 2017

(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 30-Jun-17 $m 30-Jun-16 $m	Notionalprincipal value
		30-Jun-17 $m 30-Jun-16 $m
�ross �urren�yswa�s(�ayA��oatingre�eive �S�fxed)� Assets	- 1��6	- 177��
Total current assets	- 1��6	n/a n�a
�ross �urren�yswa�s(�ayA��oatingre�eive �S�fxed)� Assets	68.3 11��	340.6 ��
Total non-current assets	68.3 11��	n/a n�a
�nterest rate swa�s(�oatingto fxed)� �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� fxed) � �iabilities �ross �urren�y swa�s (�ay A� �oating re�eive GBP fxed) � �iabilities �nterest rate swa�s(�oatingto fxed)� �iabilities	(36.2) (1��) (67.5) (1��) (72.4) (16��)	357.8 �6�� 655.2 6�� 1,275.0 ��7��1
Total non-current liabilities	(176.1) (17��7)	n/a n�a

Vicinity Centres Annual Report 2017 87

continued Capital Structure and Financial Risk Management

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�
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	Floating rate	�nterest rate ris� re�resents the �otential for �hanges in mar�et interest rates	Note 7(a)
rate risk	borrowings	to im�a�t the total interest ex�ense for the Grou��
		Floating�to�fxed interest rate swa�s1are 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�ifed
		intervals� amounts based on the differen�e between the fxed �ontra�t interest
		rate and the �oating mar�et interest rate �al�ulated by referen�e to an agreed
		notional �rin�i�al amount�
Foreign	Foreign denominated	Foreign ex�hange ris� refers to the ris� that �ash �ows arising from a fnan�ial	Note 7(b)
exchange	interest bearing	�ommitment� asset or liability� denominated in a foreign �urren�y� will �u�tuate due
rate risk	liabilities (�SPPs	to �hanges in a foreign ex�hange rate�
	and ��TNs)	This ris� is managed through the use of �ross �urren�y swa�s1which swap the
		foreign �urren�y interest �ayments into Australian �ollars and fx 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�
Liquidity	�nterest bearing	�i�uidity ris� re�resents the ris� that the Grou� will be unable to meet fnan�ial	Note 7(�)
risk	liabilities	obligations as they fall due�
		To manage this ris�� suff�ient �a�a�ity under the Grou��s fnan�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 suff�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�
Credit	Tenant re�eivables�	�redit ris� is the ris� that a tenant or �ounter�arty to a fnan�ial instrument fails	Note �
risk	derivative	to meet their fnan�ial obligations to the Grou��
	counterparties and ban� de�osits	To mitigate tenant �redit ris�� an assessment is �erformed ta�ing into �onsideration the fnan�ial ba��ground of the tenant and the amount of any guarantee or ban�	Note 6(d)
		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 fnan�ial institution�
		The maximum ex�osure to �redit ris� at the balan�e date is the �arrying amount
		of the Grou��s fnan�ial assets�

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 Report 2017

(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-17	30-Jun-16
	$m	$m
Total interest bearing liabilities (Note 6)	3,893.7	��
Add� �eferred debt �osts Add� Fair value and foreign ex�hange ad�ustments to ��TNs �ess� Fair value and foreign ex�hange ad�ustments to �SPPs �ess� Fair value ad�ustments to A�TNs Total drawn debt �ess� Fixed rate borrowings	16.0 67.1 (38.9) (13.1) 3,924.8 (1,065.0)	17�� �� (7��) (��1) �� (66��)
Variable rate borrowings exposed to cash fow interest rate risk	2,859.8	��7��
�ess� Notional�rin�i�al of outstandinginterest rate swa��ontra�ts Net variable rate borrowings exposed to cash fow interest rate risk Hedge ratio1	(2,462.0) 397.8 90%	(��7��1) ��7�� �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�

denominated borrowings�
US$ borrowings Total interest bearing liabilities in �S�	30-Jun-17 US$ $m 553.0	30-Jun-16 US$ $m 6��
�ess� Notional value of �ross �urren�yswa�s(�ayA�re�eive �S�)	(553.0)	(6��)
Net ex�osure to �S�translation ris�	-	�
�edge ratio for interest bearingliabilityin �S�	100% 30-Jun-17	1�� 30-Jun-16
GBP borrowings	GBP$m	GBP$m
Total interest bearing liabilities in GBP	350.0	��
�ess� Notional value of �ross �urren�yswa�s(�ayA�re�eive GBP) Net ex�osure to GBP translation ris� �edge ratio for interest bearingliabilityin GBP	(350.0) - 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)�

Vicinity Centres Annual Report 2017 89

continued Capital Structure and Financial Risk Management

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�

			Greater
	Less than	1 to 3	than		Carrying
	1 year	years	3 years	Total	amount
30-Jun-17	$m	$m	$m	$m	$m
Ban� debt	�	1�1��	��	1,506.3	1,506.3
A�TNs	�	��	��	950.0	963.1
�SPPs	�	��	��1��	891.3	852.2
��TNs	�	�	6��	694.5	588.1
�stimated interest �ayments on borrowings	1�1��	��	��1��	848.6	n/a
�stimated net interest rate swa� �ash out�ow	�6��	��	1��	79.3	74.7
�stimated gross �ross �urren�y swa� �ash out�ows	��6	1��7	1�761�1	1,967.4	35.4
�stimatedgross �ross �urren�yswa��ash(in�ows)	(��6)	(1��)	(1�761��)	(1,946.3)	n/a
Total contractual outfows	1��	1��1��	��7��	4,991.1	4,019.8
			Greater
	Less than	1 to 3	than 3		Carrying
	1 year	years	years	Total	amount
30-Jun-16	$m	$m	$m	$m	$m
Ban� debt	�	1��	1�7��	1�6�6��	1�6�6��
A�TNs	�	�	��	��	�7��
�SPPs	1��	�1��	��	1�117�1	1��7��7
��TNs	�	�	7��	7��	61��
�stimated interest �ayments on borrowings	1��	��6	��6��	�6��	n�a
�stimated net interest rate swa� �ash out�ow	17�6	6��	1��	1��	16��
�stimated gross �ross �urren�y swa� �ash out�ows	��7	1��	1�7��	��1��	n�a
�stimatedgross �ross �urren�yswa��ash(in�ows)	(��1��)	(1��)	(1��)	(��6�1)	(11��)
Total contractual outfows	��1��	1��	��7��	��7��	��1��

(d) Fair value of borrowings

As at �� une ��17� the Grou��s debt has a fair value of ��7�� million (�� une ��16� ��1�6 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 Report 2017

(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

Bank facilities to capital market debt
Facility type Total ban� debt limit1 Total �a�ital mar�et outstanding Total debt facilities available to the Group Bank facilities as aproportion of total debt facilities	30-Jun-17 $m 2,632.3 2,418.5 5,050.8 52.1%	30-Jun-16 $m ��1�� ��1�6�1 ��1�6�1 �7��
Capital market debt as aproportion 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 ��16� �17�7 million)�

Gearing
	30-Jun-17	30-Jun-16
Total drawn debt($m) �rawn debt net of �ash(�m) Total tangible assets ex�luding�ash�fnan�e lease assets and derivative fnan�ial assets(�m) Gearingratio(target range of 25.0% to 35.0%)	3,924.8 3,882.6 15,731.4 24.7%	�� ��6 1�� ��

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-17	30-Jun-16	30-Jun-17	30-Jun-16
	Number(m)	Number(m)	$m	$m
Total stapled securities on issue duringand at the end of theyear	3,958.6	��6	8,493.2	��

Vicinity Centres Annual Report 2017 91

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-17	30-Jun-16
		$m	$m
Trade debtors		14.8	17��
Accrued income		15.5	��7
�e�eivables from strategi� �artnershi�s		15.6	��
�istribution re�eivable from �oint ventures and asso�iates		5.8	��1
�ess� Provision for doubtful debts		(6.0)	(��6)
Total receivables		45.7	6��
Pre�ayments		12.9	7��
�evies		13.1	1��
Tenant security deposits held		1.2	1��
�ther		15.4	16��
Total current receivables and other assets		88.3	1��
�oan to Tuggeranong Town �entre Trust	�(�)	-	117��
�nvestment in related�arty		2.5	��7
Total non-current receivables and other assets		2.5	1��1

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 ��16� �1��6 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 Report 2017

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-17	30-Jun-16
	$m	$m
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	64.3 34.5 16.8 70.2 0.6	7�� �7�1 16�7 6�� 1��
�ther fnan�ial liability � Bentons S�uare1	-	��6
Finan�e lease liabilities� �ther Totalcurrentliabilities	14.8 8.4 209.6	1�� 7�� ��7��
Non-current
Finan�eleaseliabilities�	202.7	��
Total non-currentliabilities 1� �efer footnote 1 in Note �(b)� �� efer Note �1(b)�	202.7	��

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-17	30-Jun-16
	$m	$m
Current Current employee entitlements �ther �urrent�rovisions	51.6 26.9	�� ��
Total currentprovisions	78.5	��
Non-current
Non��urrent em�loyee entitlements �ther non��urrent�rovisions Total non-currentprovisions	3.6 4.2 7.8	�� � ��

The movements for the year in other provisions are as follows:

The movements for the year in other provisions	are as follows:
		Arising	Paid
Current Stam� duty �evies	30-Jun-16 $m �� 1��	during theyear �� 1��1	during theyear (��) (1��)	Other movements � �	30-Jun-17 $m 9.0 13.1
�ther	7�6	��	�	(��1)	4.8
Totalothercurrent provisions	��	��	(��)	(��1)	26.9
Non-current �ther Totalother non-current provisions	� �	�� ��	� �	� �	4.2 4.2

Vicinity Centres Annual Report 2017 93

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�

of ��P in�luded in the Grou��s fnan�ial statements �om�rises�
	30-Jun-17	30-Jun-16
For the 12 months to:	$’000	$’000
Short�term em�loyee benefts � �xe�utive ��P	5,158	��7
Short�term em�loyee benefts � Non�exe�utive ��P	2,079	��11�
Termination benefts	-	1��
Share based �ayments	1,490	1��
Post�em�loyment benefts	227	��
�ther long�term em�loyee benefts	11	��
Total remuneration of KMP of the Group	8,965	11��

13. Employees

13. Employees �m�loyee benefts ex�ense �onsists of�
	30-Jun-17	30-Jun-16
For the 12 months to:	$m	$m
Salaries and wages	88.1	�7�6
Share based �ayments ex�ense	7.5	��
�ther em�loyee benefts ex�ense	3.1	��
Total employee benefts expense	98.7	1�6��

94 Vicinity Centres Annual Report 2017

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�

Plan	Description
Long Term Incentive (LTI) Short Term Incentive (STI)	�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� fnan�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
$1,000	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
Employee Plan	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��

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�

	30-Jun-17	30-Jun-16
For the 12 months to: �ong Term �n�entive (formerly Performan�e �eward Payment �ong) Short term in�entive (formerly Performan�e �eward Payment Short)1 �1�� m�loyee Plan�	$m 2.9 3.6 1.0	$m ��6 1�7 1��
Total share basedpayments	7.5	��

�� 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�

The movement in the number of �T� �erforman�e rights during the year was	as follows�
	30-Jun-17 Number	30-Jun-16 Number
��ening balan�e at the beginning of the year	4,385,154	��1��
Granted Forfeited and lapsed Vested Outstandingat the end of theyear	3,074,501 (605,374) (732,862) 6,121,419	��1��6� (1�16��) (��) ��1��
�xer�isable at the end of the year �eighted average remaining�ontra�tual life	Nil 2.38years	Nil ��years

Vicinity Centres Annual Report 2017 95

Remuneration continued

(a) Plan details

Long Term Incentive Plan conditions

Features of the �T� �erforman�e rights �urrently on issue are�

Grant years	FY17 and FY16
Performance period	Three years
Holding lock	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)
Performance	to show total return to se�urityholders� relative to that of other �om�anies in the TS� �om�arator Grou��
hurdles1	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�
TSR Comparator Group	S�P�AS� �� A��T �ndex ex�luding �estfeld �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�	$2.92	��7�
Fair value per right – TR		$2.27	��1�
Fair value per right – TSR		$0.97	�1��

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 1�1��1 (�� 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 ��16�

96 Vicinity Centres Annual Report 2017

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�efnite life management	Finite life management
	Goodwill	contracts	contracts	Total
	$m	$m	$m	$m
Carrying value 1 July 2015 �m�airment1and amortisation �harge Arisingfrom a��uisitions Carryingvalue 30 June 2016	712.7 (��) �� 427.0	164.2 � � 164.2	14.5 (��) � 11.2	891.4 (��) �� 602.4
�m�airment and amortisation �harge	�	�	(��)	(��)
Carryingvalue 30 June 2017	427.0	164.2	8.2	599.4

1� 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�

Vicinity Centres Annual Report 2017 97

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-17	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%	7�6��1��

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�

The table below summarises �ey assum�tions used in the �� model�
Key assumption	30-Jun-17	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%	7�6��1��
�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
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 Report 2017

16. �otes to t�e cas� �o� statement

	30-Jun-17	30-Jun-16
	$m	$m
Net proft after tax for the fnancial year	1,583.6	�6��
Exclude non-cash items and cash fows under investing and fnancing activities: Amortisation of in�entives and leasing �osts Straight�lining of rent ad�ustment 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 Share of net (�roft)�loss of e�uity a��ounted investments	28.8 (16.8) (906.7) 9.9 (18.2)	��6 (��) (7��) ��1 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 Net foreign ex�hange movement on interest bearing liabilities	(4.5) (60.7)	(1��) (��)
Net mar��to�mar�et movement on derivatives	55.1	1�7��
Share based �ayment ex�ense	7.5	��
�ntegration �osts �m�airment and amortisation of intangible assets �ther non��ash items Movements in working capital: �e�rease in �ayables� �rovisions and other liabilities	26.7 3.0 3.0 (6.4)	�1�1 �� (��) (��7)
�e�rease in re�eivables and other assets	17.5	��
Net cash infow from operatingactivities	731.2	7�1��

Vicinity Centres Annual Report 2017 99

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�

	30-Jun-17	30-Jun-16
For the 12 months to:	$’000	$’000
Audit services
Statutory audit and review of fnan�ial re�orts	1,287.5	1��
�ther assuran�e servi�es	592.4	�6��
Taxation servi�es	544.0	��1��
Total auditor’s remuneration	2,423.9	��6��

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-17	30-Jun-16
	$m	$m
Balance Sheet
Current assets	3.3	��
Total assets	667.1	1��
�urrent liabilities	(65.3)	(��)
Total liabilities	(584.8)	(��1�1)
Equity
�ontributed e�uity	455.3	��
Share based �ayment reserve	(4.1)	(��1)
Accumulated losses	(368.9)	(�66��)
Total equity	82.3	��7
Net loss for the fnan�ialyear of �i�inity�imited as�arent entity	(2.4)	(��)1
Total comprehensive loss for the fnancialyear of VicinityLimited	(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 Report 2017

�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�

Vicinity Limited and controlled entities ��erating result of the �om�any �ess� �ntegration and transa�tion �osts in�urred by the �om�any �ess� �m�airment and amortisation of intangibles Net loss attributable to securityholders of VicinityLimited(as the Companies)	30-Jun-17 $m 17.4 (26.7) (3.0) (12.3)	30-Jun-16 $m ��6 (��) (��) (��6)
Netproft attributable to securityholders of VicinityCentres Trust(as other stapled entities of the Group)	1,595.9	1��66��
Netproft of the Stapled Group	1,583.6	�6��

19. 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 owned1 30-Jun-17 $’000 30-Jun-16 $’000	Funds management fee receivable 30-Jun-17 $’000 30-Jun-16 $’000	Alignment feepayable
			30-Jun-17 $’000 30-Jun-16 $’000
�holesale funds managed bythe Grou�	528,000 ��	2,140 ��	285 �6�

1� �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�

Vicinity Centres Annual Report 2017 101

Other Disclosures continued

19. Related parties continued

Related party transactions with Wholesale funds

19. Related partiescontinued Related party transactions with Wholesale funds
	30-Jun-17	30-Jun-16
For the 12 months to:	$’000	$’000
Asset and funds management fee in�ome	19,265	17�7�1
�eimbursement of ex�enses to the �ro�erty manager	5,291	��7�
�istribution in�ome	115	11�
Alignment fee ex�ense	(1,137)	(1��)
�ent and outgoings ex�enses	(519)	(66�)

20. Commitments and contingencies

(a) Operating lease commitments

	30-Jun-17	30-Jun-16
	$m	$m
Not later than one year	5.2	��7
�ater than one year and not later than fve years	19.7	1��
�ater than fveyears	7.5	��
Total operatinglease commitments	32.4	��

(b) Capital commitments

�stimated �a�ital ex�enditure �ontra�ted for at re�orting date� but not �rovided for�

	30-Jun-17	30-Jun-16
	$m	$m
Not later than one year	168.9	1��
�ater than oneyear and not later than fveyears	52.5	66��
Total capital commitments	221.4	��

(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 Report 2017

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�

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�

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�

Vicinity Centres Annual Report 2017 103

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

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 Report 2017

(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�

	30-Jun-17 $m Minimum lease payments Future fnance charges Present value of payments	30-Jun-16 $m
		Minimum lease payments Future fnance charges Present value of payments
Not later than one year �ater than one but not more than fve years �ore than fveyears	14.8 - 14.8 64.5 (13.5) 51.0 580.7 (429.0) 151.7	1�� � 1�� 6�� (1��1) �� ��7�7 (��6�6) 1�1�1
Total1	660.0 (442.5) 217.5	67�� (��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 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

Vicinity Centres Annual Report 2017 105

Directors’ 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�

Si g ned in a��ordan�e with a resolution of the �ire�tors of �i�inity �imited�

Peter Hay Ch a i rman

�elbourne

16 August ��17

106 Vicinity Centres Annual Report 2017

Independent Auditor’s Report

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Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001

Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au

INDEPENDENT AUDITOR’S REPORT

To the Members of Vicinity Limited

Report on the Audit of the Financial Report

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 Directors’ Declaration.

In our opinion:

the accompanying financial report of Vicinity Centres is in accordance with the Corporations Act 2001 , including:

(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

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

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 Report 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.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Vicinity Centres Annual Report 2017 107

Independent Auditor’s Report continued

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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 Repor t 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 How the matter was addressed in the audit Vicinity Centres owns a portfolio of retail property assets In performing our audit procedures, with assistance from valued at $15,633.5 million at 30 June 2017, excluding our real estate valuation specialists, on a sample basis, assets held for sale, which represents 93.8% of total we: assets of the Group. ► Assessed the competence of valuers, as well as the The valuation of the property portfolio, which includes independence of external valuers, and properties in a development phase and jointly held appropriateness of the scope and methodology of the investments, is based on a number of assumptions, such valuation commissioned for the purposes of the as capitalisation rates, discount rates and terminal yield, financial report. which require significant estimation and judgement. This ► Assessed the key inputs and assumptions adopted in also includes the estimations for costs to complete and an the valuation methodologies including comparing allowance for developer’s risk and profit for properties in capitalisation rates to those derived from relevant the development phase. Minor adjustments to certain transactions and other external market sources. assumptions can lead to significant changes in the ► Compared the data used in the valuation to the valuation of the retail property assets. actual and budgeted financial performance of the As outlined in Note 4, the Group’s basis for determining underlying properties, tested as part of the audit the portfolio valuation is underpinned by valuations process. sourced from suitably qualified valuation experts and internal valuations. ► For properties under development, we compared the costs incurred to date plus estimated costs to Refer to Note 4 for a description of the accounting policy, complete to the expected value of the completed overview of the valuation methodology, process for project, as advised by external valuers. valuation (including the use of independent expert valuers ► Discussed key developments in progress with and internal valuations), significant assumptions and the Development Management. relative sensitivity of the valuation to changes in these assumptions. ► 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 Report 2017

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2. Carrying Value of Intangible Assets

Why significant How the matter was addressed in the audit As at 30 June 2017 the Group held $599.4 million in In obtaining sufficient audit evidence regarding the goodwill and identifiable intangible assets (relating to recoverable value of goodwill and identifiable intangible indefinite life and finite life external management assets, with assistance from our valuations specialists, contracts). we: As outlined in the disclosures in note 15, under the ► Considered the appropriateness and application of Group’s accounting policy, goodwill and indefinite life valuation methodologies applied. external management contracts are tested for impairment ► Considered the key inputs and assumptions such as annually, or when there is an impairment trigger. forecast cash flows, discount rates and overhead The recoverable amount of the indefinite life external allocations adopted in the valuation. management contracts has been determined based on a ► Compared the data used in the DCFs to the actual and fair value less cost of disposal (“Fair Value”) method using budgeted financial performance of the Group. discounted cash flows (“DCFs”) of the external asset and ► Compared earnings multiples derived from the Group’s funds management business. intangible model to that observable from external The recoverable amount of the Property Investment Cash market data obtained from comparable listed Real Generating Unit (“CGU”), to which Goodwill is allocated, Estate Investment Trust (“REIT”) entities in addition to has been determined using the Fair Value method based comparing the market capitalisation of the business to on DCFs of the CGU’s underlying earnings, adjusted for the net assets on the balance sheet. interest expense and capital expenditure requirements. ► Benchmarked key assumptions used by the Group to The impairment calculation includes judgements and the independent views of EY and external data estimates made by management such as the growth rate obtained. of forecasted cash flows, discount rate and terminal value ► Assessed the disclosures included in Note 15 to the within the model. financial report.

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

Why significant How the matter was addressed in the audit The Group had interest bearing liabilities of $3,893.7 ► We assessed the design and operating effectiveness of million at 30 June 2017. During the year the Group repaid relevant controls over the recording and reporting of US private placement notes which matured in February drawdowns and repayments, the valuation of interest 2017 and issued Australian Medium Term Notes. bearing liabilities, the recording and reporting of The Group maintains a portfolio of facilities with varying derivatives, and the monitoring of compliance. counterparties, currencies and terms. This portfolio ► We assessed the Group’s compliance with material influences the Group’s gearing, liquidity, solvency, facility agreements, including covenants, and the covenant obligations and financing cost profile. Group’s maturity profile, to test the appropriate In relation to this portfolio, the Group incurred $162.9 classification of the interest bearing liabilities as million in borrowing costs during the year, of which, current or non-current. $154.9 million were expensed and $8.0 million were ► We confirmed all interest bearing liabilities and capitalised to assets under development. derivatives directly with counterparties at 30 June Refer to Note 6 of the financial report for a description of 2017. the accounting policy treatment for these liabilities and ► We tested the calculation of interest recognised in the information of the Group’s interest bearing liabilities. consolidated statement of comprehensive income and Interest rate and currency risks are managed by floatingcapitalised to development properties. to-fixed interest rate swaps and cross currency swaps ► On a sample basis, with involvement of our treasury (“derivatives”) which have been set out in Note 7 of the specialists, we tested the calculation of the fair value financial report. of derivatives at the reporting date and disclosures These derivatives involve judgement to assess the fair outlined in Note 6. value (carrying amounts), which are estimated using ► We assessed the disclosures included in Note 6 and valuation techniques and are sensitive to movements in Note 7 to the financial report. financial markets, as outlined in Note 7.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Vicinity Centres Annual Report 2017 109

Independent Auditor’s Report continued

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4. Property Portfolio Transactions

Why significant How the matter was addressed in the audit Vicinity Centres undertook a significant number of For material transactions, we: acquisitions and disposals during the year, which had a ► Reviewed the sale and purchase agreements and other material effect on the financial report. related documents. Refer to Note 4 for the impact of the transactions on ► Assessed these transactions against the recognition, Investment Properties. 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 Report and Auditor’s Report

The Directors are responsible for the other information. The other information comprises the information included in the Vicinity Centres’ Annual Report 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.

Directors’ Responsibilities for the Financial Report

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 Report 2017

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Auditor’s Responsibilities for the Audit of the Financial Report

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: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the Directors' Report for the year ended 30 June 2017.

In our opinion, the Remuneration Report of Vicinity Limited for the year ended 30 June 2017, complies with section 300A of the Corporations Act 2001.

Responsibilities

The Directors are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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Ernst & Young

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David Shewring Partner Melbourne 16 August 2017

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Vicinity Centres Annual Report 2017 111

Summary of Securityholders

as at 14 August 2017

Spread of securityholders

Spread of securityholders
	Number of	Number of	% of issued
Range	securityholders	securities	securities
1��1 and over	��	��761��7	��
1��1 to 1��	6��	1��6��6�	��
��1 to 1��	��11�	�7��6��117	��
1��1 to ��	��66	��	��
1to1��	��7�	��1��	��
Total	24,842	3,958,650,636	100.00

The number of se�urityholders holding less than a mar�etable �ar�el of 1�7 se�urities (��6� on 1� August ��17) is 1�1�7 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

Substantial securityholders
		Number of	% of issued
Company name	Effective date	securities	securities
The Gandel Grou� Pty �td and its asso�iates	11 �une ��1�	6��61��6	17��
BNP Paribas Nominees Pty �imited as �ustodian for �niSu�er �td	� Se�tember ��16	��	��7�
�anguard �nvestments Australia �td	�� e�ember ��16	��6	7��
Bla��o�� Grou� (Bla��o�� n�� and its asso�iates)	� �une ��1�	��	��77
�egg�ason Asset�anagement�imited	�1�anuary��17	1��16��	��

20 largest securityholders

		Number of	% of issued
Rank	Name	securities held	securities
1	�SB� �ustody Nominees (Australia) �imited	1�1��7�17�	��
�	� P �organ Nominees Australia �imited	616�767��	1��
�	�iti�or� Nominees Pty �imited	��1��7�	1��61
�	BNP Paribas Nominees Pty �td	��117��61	1��6
�	National Nominees �imited	1��6��1	��6�
6	�osslynbridge Pty �td	��6��77�	��1�
7	Besgan No� 1 Pty �td	7��6��	��
7	Besgan No� � Pty �td	7��6��	��
7	Besgan No� � Pty �td	7��6��	��
7	Besgan No� � Pty �td	7��6��	��
�	Allowater Pty �td	��7��6	1��1
�	�enarth Pty �td	�1��61	1��
1�	BNP Paribas Noms Pty �td	��	1��
11	Braybridge Pty �td	��61�	��
1�	�SB� �ustody Nominees (Australia) �imited	��7��61�	��
1�	�edburn Pro�rietary �imited	��6�77�	��
1�	Broadgan Pro�rietary �imited	��6�6��	��
1�	�iti�or� Nominees Pty �imited	�1�1�7��7	��7�
16	A�P �ife �imited	17��	��
17	Australian Foundation �nvestment �om�any �imited	1��6�7��	��
1�	A��lebroo� Pty �td	11��6��	��
1�	�ade�liff Pty �td	11��6��	��
1�	�oondale Pty �td	11��6��	��
1�	�ose�ree� Pty �td	11��6��	��
1�	�SB� �ustody Nominees (Australia) �imited � GS�� A	��1�	��
��	�edburn Pro�rietary�imited	��7�6��	��
Total	20largest securityholders	3,617,228,353	91.38
Balan�e of register		��1��	��6�
Total	issued capital	3,958,650,636	100.00

112 Vicinity Centres Annual Report 2017

Corporate Directory

Vicinity Centres

�om�rising�

Vicinity Limited ABN �� 11� 7�7 7��

and

Vicinity Centres RE Ltd ABN �� 1�� 7�1 ��

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

�hadstone Tower �ne �evel �� 1��1 �andenong �oad �hadstone �i�toria �1�� Australia

Telephone: �61 � 7��1 �� Facsimile: �61 � 7��1 ��1 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: �61 1�� 7 �� Facsimile: �61 � ��7 �� Facsimile: �61 � ��7 ��

(for �roxy voting) Email: 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�

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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

Email: 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 ��17 ��17 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
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1� These dates may be sub�e�t to �hange�

Vicinity Centres Annual Report 2017 113

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AI assistant

VICINITY CENTRES TRUST — Annual Report 2017

65995_rns_2017-08-15_21144d27-fa7d-47ed-98eb-3650fa7b15e3.pdf

Inside

About this report

Disclaimer

Performance Highlights

17.3¢

Enriching community experiences

Our resources

Our value add

Capital

People

Real estate

Data and systems

Brand

External in��ences

Financial and property markets

Consumer and retail trends

Local community

Environment

Our outcomes

Solid investor returns

4.6%

15.5%

Successful retailers and

Highly engaged people

71%

Better communities

$1.8 million

8%

Dear Securityholders

Dear Securityholders

FY17 earnings and FY18 guidance Pages ��

Our vision

Our purpose

Our strategy and business prospects

FY17 outcomes and FY18 focus

FY17 earnings and FY18 guidance

Damian Zahra

Achievements and focus

Operations

Key highlights and commentary on our operations include:

Financial performance

Financial position

Capital management

[(a)]

Tax

�o�rces of �ebt (�)[(a)]

Melissa Schulz

Our management of risk

Material risks that could affect achievement of Vicinity’s financial prospects

Development delivery

Retail market conditions

Structural changes in the retail sector

Capital allocation and the achievement of an optimal property portfolio composition

Our portfolio Page ��

Health and safety

Our people Page ��

Funding and liquidity

Cyber security

Climate change

Engaging with our stakeholders

Stakeholder materiality

Simone Dirckze

Acquisitions

Divestments

Vicinity’s investment criteria

Development

Australia’s premier portfolio of DFO Outlet Centres

Development continued

FY17 completed projects

Chadstone

Engaging consumers

Josef Seidler

Development continued

Projects under construction

Mandurah Forum

The Glen

DFO Perth

VICINITY CENTRES TRUST Annual Report 2017

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