perth market authority

PERTH MARKET AUTHORITY

Annual Report

2002/2003

PERTH MARKET AUTHORITY MP 1, MARKET CITY 280 BANNISTER ROAD CANNING VALE 6155 TEL: (08) 9455 2900 FAX: (08) 9455 2902 EMAIL: [email protected] WEB: www.perthmarket.com.au ABN: 74 807 298 316 ANNUAL REPORT 2002 - 2003

PRESENTATION TO THE HON KIM CHANCE, MLA MINISTER FOR AGRICULTURE, FORESTRY AND FISHERIES; THE MIDWEST, WHEATBELT AND GREAT SOUTHERN The Board of the Perth Market Authority is pleased to present its Annual Report to you for your information and for presentation to Parliament. The report was adopted by resolution of the Board on 15 August 2003. This presentation is made in accordance and in compliance with the provisions contained in both the Financial Administration & Audit Act and the Perth Market Act.

15 August 2003

The Perth Market Authority (formerly the Metropolitan Market Trust) was established under the provisions of the Perth Market Act 1926 and is responsible to the Minister for Agriculture, Forestry and Fisheries; the Midwest, Wheatbelt and Great Southern.

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http://www.perthmarket.com.au/

CONTENTS

PAGE NUMBER

Mission and Vision Statements

5

Chairman’s Overview

6

Review of Year 7

Corporate Governance

20

Performance Indicators 23

Financial Statements

34

Legislation and Compliance Reporting 59

4

MISSION AND VISION STATEMENTS

MISSION STATEMENT The mission of the Perth Market Authority is to continue to develop and manage a commercially viable, world class facility for the marketing, distribution and value adding of fresh food in Western Australia.

VISION STATEMENT The vision of the Perth Market Authority is to play an integral role in the growth of an efficient and internationally competitive fresh food industry in Western Australia.

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CHAIRMAN’S OVERVIEW

CHAIRMAN’S OVERVIEW The Authority achieved a sound financial and leasing performance during the financial year ended 30 June 2003 whilst holding rental increases within the consumer price index range. Increased insurance premiums, following recent events affecting the world wide insurance market, have again affected the cost of site variable outgoings. During the year the Authority constructed a car park at the southern end of the site for patrons of the Sunday Markets so that the general public could be separated from the operational side of the fruit and vegetable market. The Authority is currently evaluating several requests for purpose built facilities and, should they prove financially viable, these developments would further enhance the value of the Market City site. Professor Murray McGregor and his Industry Working Group have been reviewing the Minister’s Terms of Reference and the Authority is awaiting the Minister’s decision on:

the future ownership and management of the commercial Central Trading Area, warehouse complex and vacant land

the future role of the Perth Market Authority the potential of having a mandatory code of practice to replace the current act any other matters that may need addressing.

GOVERNANCE Monthly meetings of the Authority were held during the financial year along with regular meetings of the Finance and Market Operations Committees. A number of changes in the membership of the Authority occurred during the year. In October 2002 the Minister appointed two new members, Ms Ermie Robinson and Ms Diane Fry and I took office as Chairman in March, 2003. I extend my thanks to all Members of the Authority and the CEO and staff for their work during the year. I would also like to acknowledge the outgoing Chairman, Mr. Leigh Warnick, for his contribution to the work of the Authority. David Taylor CHAIRMAN

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REVIEW OF YEAR

REVIEW OF YEAR 2002/2003 The Minister under the Chairmanship of Professor Murray McGregor established the Perth Market Review Working Group. This group of industry representatives met three times during the year to consider the Minister’s terms of reference and the groups recommendations are currently being considered by the Minister. INDUSTRY LIAISON The Authority has continued to publish a quarterly newsletter, which is widely distributed to growers, buyers and tenants. Australian markets have continued to maintain a close co-operative approach to business sharing information to bench mark and improve services. The markets formed an association called Central Markets Association of Australia (CMAA) to provide a national vehicle and voice of the central markets. One of the main aims is to make coordinated submissions and recommendations, to State and Commonwealth Governments on issues relevant to Central Markets. The Authority has been working with the Chamber of Fruit and Vegetable Industries to improve safety aspects at Market City. This is an ongoing process and managed on a daily basis by the contract Property Manager and his staff. SUPPORT FOR INDUSTRY BODIES The Board continues to support industry bodies that locate their administration at Market City. Offices in the Commercial Centre are provided at concessional rental rates for the Western Australian Fruit Grower’s Association and the Vegetable Industry Development Officer. The Chamber of Fruit & Vegetable Industries are located within the Central Trading Area also at concessional rental rates on a fixed term lease. WEB SITE – www.perthmarket.com.au During the year the Authority continued to improve on the information available through the Web Site. Of growing importance to industry is the ability to obtain same day market price reports over the Internet. Statistical data is also available for download and use by industry. PROPERTY PROPERTY ENVIRONMENT The Market City site was purchased in 1988 as virgin bush. It was on the western boundary of the proposed Canning Vale Industrial Estate and at the time was mostly inaccessible. Prior to this purchase land had been set aside at the eastern end of the estate and in Kewdale. Key issues in selecting the site included population growth projections; access to rail in case this option was needed in the future; good road access and compatibility with the surrounding area. The population growth for the Perth metropolitan area has grown as projected with significant growth in southern areas. It is however disappointing that the residential area on the southern side of the market although separated by the railway is seeking to limit developments on the northern side of the railway. The Perth Market Authority objected to the housing subdivision when it was in the planning stages and it was disappointing that the objection was dismissed and the housing development was permitted to proceed close to the Canning Vale Industrial Estate without an adequate buffer. The Authority is in the process of establishing a landscaped bund to cushion any impact from the site as development progress towards the residential area to the south.

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REVIEW OF YEAR

The original 51 hectares (510,000m²) of land at Market City was purchased at a cost of $14psm including clearing and levelling costs. Similar serviced land in Canning Vale is now achieving $55 - $65 psm. The site was valued by Jones Lang LaSalle at $64,775,000 as at 30 June 2002. Demand for industrial land has been slowly improving over the last 12 months as has the leasing market for warehouses and factories in the Canning Vale area. PROPERTY LEASING AND DEVELOPMENT During the year the Authority constructed a car park on the southern end of the Central Trading Area to cater for the Sunday Market public patrons. The construction was necessary to comply with Worksafe requirements to ensure adequate separation between the general public and a working wholesale market with an increasing truck and forklift activity on Sundays. The Authority views safety on site as being of paramount importance and continues to monitor and modify procedures and practices to ensure a safe working environment for all stakeholders. The Central Trading Area continues to be fully leased with few vacancies in the commercial area and warehouses. The site occupancy rate of 98.36% on a total net lettable area of 100,977.82m2 is considered very good by leasing standards. The Authority has received several requests for purpose built facilities. These are currently being evaluated and costed along with Council approval to provide access to Randford Road from the commercial centre. PROPERTY MANAGEMENT The property and market management of Market City is under contract to Knight Frank (WA) Pty Ltd for a term of 5 years from 1 July 1999 with 2 options each of 2 years. ASSET MAINTENANCE The Property Manager ensures that all building plant and equipment is maintained to contemporary standards and that plant and equipment is operated in the most efficient manner. Funds are budgeted to ensure that routine maintenance may be carried out and so that periodic maintenance may be programmed. Regular maintenance inspections are carried out.

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REVIEW OF YEAR

RETURN ON INVESTMENT As a measurement of effectiveness on behalf of the community and the Government of Western Australia as owner the following measures of return on investment have been calculated.

2002/2003 2001/02 2000/01 1999/00 Operating profit before interest

3,708,427 4,002,000 4,068,000 3,503,000

Fixed assets (net of Depreciation)

64,553,000

66,748,000

65,975,000

41,677,000

Return 5.75% 6.00% 6.17% 8.4% Note: As at 30 June 2003 buildings and site services have been valued at fair market value. The carrying value has reduced from $33,932,000 to $32,772,000. Land at fair value is $31,000,000 and construction in progress ( Car Park ) amounts to $577,000. Accordingly this has reduced the operating profit before interest by $1,746,000 and reduced the return on investment. Land revaluation from $4.97M to $29.6M dramatically increased value of fixed assets and therefore decreased return on investment as at 30 June 2001. The Board has an agreed margin on the cost of money for new developments but due to commercial confidentiality is not prepared to release this margin. The figures provide a comparative guide to indicate that the public asset is being appropriately utilised.

RENTAL INCOME PER NET LETTABLE AREA The ratio below assesses the Authority’s performance in providing a world class facility for distribution of produce whilst controlling rental charges for the use of the facilities. It also demonstrates the Authority’s performance in expanding its facilities whilst generating a consistent rate of rent which in turn provides an incentive for new tenants to enter the market and increase the overall rental income. Any increase in rental income is re-invested in developing new facilities and maintaining existing facilities.

2002/2003 2001/2002 2000/2001 1999/2000 Rental Income ($) 5,526,619 5,394,000 5,077,000 4,974,000 NLA (M²) 100,977.82 100,185.82 97,925.58 100,065.58 Rental rate per M² ($/M²)

54.73 53.84 51.85 49.71

Note: Due to warehouse W2 fire on 30 October 2000 the rental NLA was reduced in 2000/2001 and increased when rebuilt in 2001/2002.

VARIABLE OUTGOINGS PER METRE SQUARE NET LETTABLE AREA In order for the Authority to provide a viable commercial marketing and distribution centre for produce, variable outgoings are required to be minimised without compromising services and maintenance of the facilities. The ratio calculates the variable outgoings before recoveries per net lettable area, as a demonstration of the Authority’s effective management of overall site costs.

2002/2003 2001/2002 2000/2001 1999/2000 Total Site Variable Outgoings ($)

3,550,000 3,422,000 3,451,000 3,114,000

Total NLA 100,977.82 100,185.82 97,925.58 100,065.58 Total Site Variable Outgoings expense per M² NLA ($/M²)

35.16

34.16

35.24

31.12

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REVIEW OF YEAR

SATURDAY CLEARANCE MARKET – VEHICLE ENTRY

The ratio below represents the yearly paid vehicle entry to the Saturday clearance market. The performance indicators demonstrates patronage at the market reflecting the potential for growers to clear balance of their unsold produce, produce that may glut the following week’s market or will not carry over due to short remaining shelf life. This is consistent with the Authority’s purposes of providing facilities for the sale of growers’ produce. The Saturday market remains a viable commercial operation although it has been decreasing over a number of years. The ratio does not reflect the total number of people but the number of paid vehicles entering the clearance market site. Total patronage is considerably higher due to the ability of patrons to park outside the area and walk in. Although the ratio does not calculate the number of patrons visiting the market it does measure and monitor demand for the market.

2002/2003 2001/2002 2000/2001 1999/2000 Average paid vehicle entry per calendar month

2466

2748

2,814

3,261

Annual Total Vehicle Entry

29,589 32,976 33,321 39,132

% Variation -10.27% - 1.04% -14.85 % -8.18% LEASING SUMMARY 2002/2003 2001/02

m² 2000/01

m² 1999/00

m² CENTRAL TRADING AREA – FRUIT AND VEGETABLES

Trading Floor (21,140.00) Mezzanine Offices (3,063.74) SUB TOTAL 24,203.74 24,203.74 (7) 24,093.50 24,093.50 WAREHOUSE BUILDINGS Standard Warehouses (27,572.00) Crate Exchange (5,010.00) Fish Market (210.00) Meat Market (560.96) Mercer Retail Services (10,158.00) Loscam Pallet Facility (12,551.00) SUB TOTAL 56,061.96 56,061.96 (8) 53,921.96 (6) 56,061.96 COMMERCIAL CENTRE Ground Floor (2,126.01) First Floor (2,055.11) Wholesale Retail (1,960.00) Café (330.00) Service Station (8,858.00) Tavern (5,383.00) SUB TOTAL 20,712.12 19,920.12 19,920.12 19,920.12 TOTAL NET LETTABLE AREA M² 100,977.82 100,185.82 97,935.58 100,075.58 Leased at June 30 Occupancy Rate 98.36 99.62% 98.29% 96.76% Notes: (6) Warehouse W2 destroyed by fire and 2,140 m² not included at 30 June 2001 (7) Increased mezzanine area Central Fruit Sales (67 m²) and Market City Fruit & Vegetables (43.24 m²) (8) Warehouse W2 rebuilt following fire (2,140 m²)

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REVIEW OF YEAR

FINANCE FINANCE OVERVIEW BORROWINGS Market City was established in 1989 at no cost to the taxpayer and without an injection of capital by the owner, the WA Government. The capital cost was met by proceeds from the sale of the market site in West Perth plus borrowings (referred to as the principal loan) that remain at $45.088M. No repayments are being made and the loan consists of 46 lines as follows: • 6 $2.254M lines rolled over monthly • 40 $0.789M lines rolled over quarterly for 10 years The Board has five loans for developments as at 30 June 2003. $586,387.69 maturing 15/4/2007 @ 7.98% including guarantee fee $586,387.69 $277,627.71 maturing 15/1/2008 @ 6.71% including guarantee fee $277.627.71 $559,775.25 maturing 15/10/2008 @ 6.16% including guarantee fee $559,775.25 $480,338.30 maturing 15/4/2012 @ 8.22% including guarantee fee $480,338.30 $471,885.81 maturing 15/4/2012 @ 6.10% including guarantee fee $471,885.81

CASH MANAGEMENT The Authority’s main source of revenue is derived from rents, fees and charges for facilities and use of the site. At 30 June the Authority maintained five accounts at Bank of Western Australia totalling $10,380,183. • $80,000 Fixed Term Deposit • $4,048,089 Fixed Term Deposit • $3,059,570 Fixed Term Deposit • $80,842 Operating Account to 30 June 2003 bank statement • $3,111,682 Cash Management Account to 30 June 2003 bank statement

Interest earned on fixed term deposits is transferred to the Operating Account for general operating expenses whilst funds in the Cash Management are required to meet interest payments and capital works projects. The Authority maintains $7,107.659 on fixed term deposit in readiness for capital expenditure that will be required to fund further expansion on the facility. The cost of operating the site is met by tenants’ contribution to variable outgoings plus a contribution by the Perth Market Authority. This is managed, separately from owner’s costs, by the Property Manager. FINANCIAL RESULT Accounting Standard A.A.S.B. 1010 and Australian Accounting Standard A.A.S. 10 “recoverable amount of non-current assets” require a non-current asset measured on the cost basis to be written down to its recoverable amount. Accordingly the Authority has adopted the fair value figures for buildings and site services in accordance with the independent valuation undertaken by Jones Lang La Salle. This has affected the Authority’s net profit of $256,446 which is below budget expectations of $555,341. Forecast net profit for 2003/2004 is $1,153,083 and is itemised separately in this report. CAPITAL EXPENDITURE Major capital expenditure during 2002/2003 was as follows. Sunday Market Car Park $577,044 (ex GST)

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REVIEW OF YEAR

This amount represents the major expenditure during this financial year and not the full project cost. Figure excluding GST. RISK MANAGEMENT The Board continues to manage risks in accordance with the risk management practices and procedures. Insurance premiums paid to indemnify members of the Board. An insurance policy has been taken out to indemnify members of the Board against any liability incurred under sections 13 or 14 of the Statutory Corporations (liability of Directors) Act 1996. The amount of the insurance premium paid for 2002/2003 was $15,933. PRICING POLICY The Property Manager operates the market under Board policy on a user pays basis. All leases at Market City provide that rent will at various times through the term of the lease be reviewed to market and/or C.P.I. An arbitration mechanism is provided in the leases in the event of a disagreement.

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REVIEW OF YEAR

FORECAST PROFIT AND LOSS STATEMENT FOR THE YEAR ENDING 30 JUNE 2004

Note INCOME Rent 5,659,865 Profit on services 446,032 Car parking 227,670 Interest 282,300 Sundry income 70,987 Lease premiums 10,000 Total Income 6,696.854 EXPENDITURE Bad Debts 75,000 Board Member Fees 100,000 Commercial Centre 50,000 Consultancies owner – general 10,000 Contributions to statutory and variable outgoings 160,478 Corporate Planning 125,000 Deferred Maintenance 150,000 Grower complaint procedure 30,000 Interest and guarantee fee - WATC 3,460,921 Internet Services 25,000 Leasing fees 30,000 Museum 19,342 Random Audits 1,000 Review of PMA 100,000 Rotary Parking 9,000 Sponsorship 10,000 Strategic planning 40,000 Sunday market tickets 3,000 Superannuation 1,800 Travel costs 60,170 Unfunded pensions 54,000 Vacancy Advertising 3,000 Wages & Salaries 22,500 Total Expenditure 4,540.211 Operating Profit 2,156,643 Depreciation 1,003,560 Net Profit 1,153,083

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REVIEW OF YEAR

GENERAL SITE SAFETY The Property Manager reports all known accidents on site to the Board. The accidents reported during the year were: Vehicle struck waste bin (1) Pedestrian walked into waste bin (1) Pedestrian slipped on paving / wet surface (3) Crates fell on vehicle (1) Vehicle reversed into another vehicle (2) Vehicle hit light pole (1) Forklift struck steel column / kerb (2) Truck ran into stationary semi-trailer (1) Truck struck pedestrian (1) FORKLIFTS Forklift driver assessment and the issue of driver permits is the responsibility of the Property Manager who conducts the service in co-operation with the Chamber of Fruit & Vegetable Industries. Forklifts registered during the year – 2 Total forklifts on site - 140 Number of drivers trained during the year - 57 EMERGENCY AND EVACUATION PROCEDURES The Property Manager has contracted WSC Risk Consultants t/as When Seconds Count to undertake building fire and evacuation procedures and training for Market City. INDUSTRIAL RELATIONS There were no industrial relation matters reported during the year. WEEKEND MARKETS FOR THE PUBLIC The market is open to the public on Saturday mornings primarily as a clearance market for Central Trading Area intermediaries. A charge of $2 (plus GST) per vehicle is made for vehicles entering the clearance market area. The average monthly number of vehicles paying an entry fee was 2466 during 2002/2003. The Sunday stall type market is operated under licence by a private company (Shadmar Pty Ltd t/as Canning Vale Sunday Market). The number of monthly stallholders on a Sunday varies but is approximately 555 with an estimated public attendance of 22,785 per month. PRODUCE INSPECTION SERVICES The contract with KWD Family Trust for market price reporting services includes authorisation for the operation of a produce inspection service on a commercial basis. This means inspections, condemnations, monitoring and other services will be offered by the contractor on a fee for service basis.

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REVIEW OF YEAR

INFORMATION SERVICES FRUIT AND VEGETABLE PRICE AND TREND REPORTS KWD Family Trust carries out the contract for the fruit and vegetable report. This service provides an independent report that reflects the prices paid in the market together with supply and demand trends. Reports are accessible by the following means: Internet www.perthmarket.com.au Telephone report available after 11.00 am on the main market days Countryman Newspaper – weekly reports and a comprehensive report in the monthly Horticulture Supplement ABC Radio Fruit and Vegetable Demand Report – Every Friday Reports to the West Australian Newspaper - Best Buyers for the Week – Every Monday. CHARITY CHERRY AUCTION The Chamber of Fruit & Vegetable Industries assisted by the Perth Market Authority conducted the annual cherry auction in December to raise funds for Princess Margaret Hospital. The results are set out below:

YEAR NUMBER OF LOTS TOP PRICE PAID TOTAL $ RAISED 2002 8 $7,000.00 $18,100 2001 8 $12,000 $23,600 2000 8 $4,000 $15,150 1999 8 $3,500 $18,350 1998 8 $7,000 $23,900 1997 10 $2,150 $10,775 1996 9 $7,700 $14,300 1995 10 $5,400 $13,250 1994 9 $4,500 $10,250

PUBLICATIONS Publications available from the Perth Market Authority: Annual Reports Report of the Review Committee (2000) Deloitte Touche Tohmatsu Report (1993) Information Statement under the Freedom of Information Act 1992 Market Equity Report – Performance Indicator Survey Right Marketing Report – Market Hours Survey PMA Horticulture Industry Association Listing Customer Service Charter Fresh Produce Manuals $22.00 per set if collected from office (inc GST)

$30.00 per set if postage required (inc GST) Information sheets issued by the Property Manager Servicing Mail Delivery Electricity Supply Buying Produce at Market City Rubbish Removal Saturdays at Market City Equipment Available for Use Visitor's Help Sheet 15


REVIEW OF YEAR

Information Services re: Fruit & Vegetables Schedule of Parking Fees Market City PABX Conference Room Parking at Market City Subleasing Warehouses Incoming Tenants Selling in the market Posters A selection of posters are available at a range of prices. The posters have been produced by various bodies and are available for sale at cost as a service to promote fresh produce. A list with description and prices is available on request.

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REVIEW OF YEAR

ORGANISATIONAL STRUCTURE STAFFING Perth Market Authority: Chief Executive Officer Robert Halliday Administrative Officer Lorena Lindo The Property Manager, Knight Frank, employs the following staff on site: Property Manager Steve Thomas Assistant Property Manager Bob Hillson Maintenance Supervisor Michael Walsh Administrative Assistants Nicole Chellin Blanka Jaksic Inspectors Trevor Towie Cliff Noble John Rickard SUMMARY OF CONTRACTED SERVICES Contracts with the Perth Market Authority at 30 June 2003 SERVICE PROVIDED

CONTRACTOR

TERM OF CONTRA

CT

START DATE

FINISH DATE

Accounting Services RSM Bird Cameron 3 years 1/8/2001 31/7/2004 Fruit & vegetable price reporting

KWD Family Trust 1 years 1/7/1999 30/6/2004

Property Management Knight Frank (WA) Pty Ltd 5 years 1/7/1999 30/6/2004 Tour Operator Agreement Kartos Pty Ltd 3 years 1/9/1999 31/8/2002 Contracts and engagements with the Perth Market Authority and supervised by the Property Manager Knight Frank (WA) Pty Ltd at 30 June 2003 SERVICE PROVIDED

CONTRACTOR

TERM OF CONTRA

CT

START DATE

FINISH DATE

Airconditioning C/C Direct Engineering Services 5 years 1/12/1997 30/11/2003 Cleaning Southern Cross Cleaning 1 years 1/1/2003 31/12/2003 Emergency & Exit Lighting Fire Fighting Enterprise 1 year 10/6/2002 9/6/2004 Fire services Chubb Fire 5 years 1/7/1999 30/6/2004 Gardening/Landscape Landscape Development 1 years 15/3/1999 30/06/2004 Lift Otis Lifts Australia 5 years 1/7/2000 30/6/2005 PABX NEC Australia 1 year 1/7/2001 30/6/2004 Pest Control Rentokil Pest Control 1 years 1/7/2001 30/6/2004 Roadsweeping Austra-Sweep 1 years 1/2/2000 31/1/2004 Rubbish collection SITA 1 years 1/2/2001 31/1/2004 Sanitary bins Sanitaire 1 year 1/8/2002 31/7/2003 Security Services Baxendale Securities 3 years 1/8/2001 31/7/2004 Scissorlift WA Access 2 years 1/2/2002 31/1/2004 Professional and other Services Used During the Year

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REVIEW OF YEAR

Service Provider Architectural Woodhead International Audit Office of Auditor General (Hall Chadwick) Banking BankWest Computing Services RDA Group Emergency and Evacuation Procedures When Seconds Count Insurance Riskcover Internal Audit Stanton Partners Leasing Knight Frank (WA) Pty Ltd Legal Jackson McDonald Market Newsletter Fresh Finesse/Martin Bates

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REVIEW OF YEAR

Property Management Asset Management

Leasing

Property Management B

Market Operations - Management - Enforcement

Balanccoll

Knight Frank (WA) Pty Ltd Management Team

On-Site Property Manager Mr Steve Thomas Asset Management

Asst. Property Manager Mr Bob Hillson Leasing

Secretary/Receptionist Mrs Nicole Chellin Valuation & Consulta Mrs Blanka Jaksic

Maint Supervisor Mr Michael Walsh Inspectors Mr Trevor Towie Mr John Rickard Mr Cliff Noble

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Perth Market Authority Board Mr David Taylor - Chairman

Mr Dennis Cerinich Mrs Dianne Fry

Mr Graham Morgan Mr Bruce Munro

Mrs Ermie Robinson Mr David Thomas

usiness Management Regulatory Information

ing the diverse needs and serving ective interests of stakeholders

Control of Trading Enforced by PMA

Market Operations Enforced by Property Manager

Price Reporting Outturn Reporting

Chief Executive Officer Mr Robert Halliday

Administrative Officer

Lorena Lindo

Head Office Mr Craig Dawson

Mr Ian Edwards ncy Mr Marc Crowe

Owner West Australian Government

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE STATEMENT The Perth Market Authority consists of 7 members, appointed by the Minister for Agriculture, Forestry and Fisheries; the Midwest, Wheatbelt and Great Southern. Four of the members are appointed because of their knowledge of the affairs and interests of one of the following stakeholder groups: • buyers • market intermediaries • growers • consumers A key criterion for the selection of the members is that they must possess and be able to apply the knowledge, skills and commercial expertise required to successfully carry on the business in a commercial manner in the context of a government trading enterprise. The Authority adopts governance principles comparable to those established in the corporate sphere and the members meet regularly as a Board. The overriding duty of members of the Authority is to advance the public purposes set out in section 11 of the Perth Market Act: establishing and maintaining a market, primarily for fruit and vegetables, and making available land for market-related purposes. The mission and vision statements adopted by the Authority, and set out at the beginning of this Report, reflect these public purposes. The Board determines strategies intended to achieve these purposes, and monitors the performance of the Authority in achieving its strategic and financial targets and in complying with its obligations. Responsibility for management of the Authority’s operations has been delegated to the Chief Executive Officer. ACCOUNTABILITY Under section 3(3) of the Perth Market Act the Authority is directed to carry on and conduct its business for and on behalf of the State of Western Australia. The Authority is accountable to the Minister for Agriculture, Forestry and Fisheries; the Midwest, Wheatbelt and Great Southern as representative of the State. The Minister is kept informed through the annual report, copies of Board minutes/ Board papers and meetings with the Chairman and Chief Executive Officer. CODE OF CONDUCT The Board has adopted a code of conduct that sets out standards of behaviour which are expected of employees. A code of conduct for Board and Committee members was also adopted during the year. CONFLICT OF INTEREST The Board has in place a policy that ensures conflict of interest is declared and recorded in Board minutes and non participation in discussions or exclusion from a meeting for a member when such matters are discussed is determined by the Board.

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BOARD MEETINGS During 2002/2003 the Board of the Perth Market Authority met on 10 occasions. There were 67 member attendances for the year out of a possible 69.

BOARD MEETING ATTENDANCE NAME ATTENDED POSSIBLE ATTENDED Leigh Warnick 5 5 David Taylor 4 4 Dennis Cerinich 10 10 Diane Fry 7 8 Ermie Robinson 8 8 Lindsay Innes 2 2 Mike McMillan 2 2 Graham Morgan 10 10 Bruce Munro 10 10 David Thomas 9 10 TOTALS 67 69

BOARD OF THE PERTH MARKET AUTHORITY Chairman - Mr D (David) Taylor BA FAICD FAIBF David Taylor was appointed Chairman on 4 March 2003. He has extensive commercial experience with a marketing and banking background. David operates his own business development consultancy and is an experienced public company director. Member - Mr D (Dennis) Cerinich Member of the Board knowledgeable about the affairs and interests of buyers; first appointed November 5, 1996. Dennis is half share owner with his brother Alan of Herdsman Fresh Essentials, a modern retail outlet for fruit and vegetables and other fresh and processed products. Member – Mr B (Bruce) Munro Member of the Board knowledgeable about the affairs and interest of growers; first appointed 6 September, 1999. From Munro’s Plantation, Carnarvon. Member – Mr D (David) Thomas Government appointment. David is the State Manager, Business Banking, Rabobank Group. He previously served as a member of the Authority between 6/9/93 –20/11/98. Member – Mr G (Graham) Morgan Member of the Board knowledgeable about the affairs and interests of wholesalers. Graham is the Managing Director of Morgan Corporation Pty Ltd T/as Bullfrog International at the Canning Vale Markets. Member – Ms D (Diane) Fry Member of the Board appointed by the Government on 8 October 2002. Diane is a fruit grower from Manjimup.

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Member – Ms E (Ermie) Robinson Member of the Board knowledgeable about the affairs and interests of consumers of general produce appointed 8 October 2002. RETIRED BOARD MEMBERS During the year three Board members retired. Leigh Warnick appointed 9 August 2000 was replaced by David Taylor 4 March 2003. Lindsay Innes appointed 5 December 2000 was replaced by Diane Fry 8 October 2002. Mike McMillan appointed 5 December 2000 was replaced by Ermie Robinson 8 October 2002.

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PERFORMANCE INDICATORS


For The Year Ended 30 June 2003

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CERTIFICATION OF PERFORMANCE INDICATORS We hereby certify that the performance indicators are based on proper records, are relevant and appropriate for assisting users to assess the Perth Market Authority and fairly represent the performance of the Authority for the financial year ended 30 June 2003.

15 August 2003 By resolution of the Board 15 August 2003

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BASIS FOR PERFORMANCE MEASUREMENT The Perth Market Authority is empowered by the Perth Market Act 1926 to establish and maintain a market. OUTCOME To play an integral support role in the growth of a competitive fresh food industry in Western Australia through fostering the development of a highly effective distribution channel which generates significant advantages for all parties involved. EFFECTIVENESS PERFORMANCE INDICATORS The Perth Market Authority is required to report effectiveness indicators in a quantified way to show the extent to which stakeholders’ needs have been satisfied. The Perth Market Authority manages Market City in a manner that balances the diverse needs of stakeholders serving the collective interests of stakeholders’ in relation to their use and interaction with Market City. Stakeholders’ needs are detailed below: • State Government: Industry satisfaction, sound financial management, minimal use of government resources • Local Government: Compliance with regulatory measures • Financiers: Financial security • Industry Bodies (Grower/Wholesaler/Buyer): Trading integrity SURVEY The Authority undertakes a customer survey every five years and in 2001 commissioned Market Equity to undertake a tracking survey to assess any movement in the various performance indicators to determine key stakeholders’ level of satisfaction with Market City. These were compared with their 1997 survey. SURVEY VALIDITY At the time of the survey there were approximately 1500 growers, 350 buyers and 23 intermediaries. 2001 Review A survey of 201 growers and 100 buyers from across the state was conducted based on sample lists provided by the Authority. The sample of 201 growers provided results with a forecasting accuracy of + 7.1% with the sample of 100 buyers providing results of + 10.0%. A further telephone survey of 36 grower associations, 18 intermediaries and an indepth interview with the Minister were undertaken. Completed questionnaires were checked, validated, coded and data entered according to the 10% validation standards recommended by the Market Research Society of Australia. 1996/97 Review A series of 41 interviews using a highly structured questionnaire was used to interview wholesalers, grower’s associations and government representatives. A further survey of 200 growers and 100 buyers from across the state was conducted based on sample lists provided by industry associations and organisations. The sample of 200 growers provided results with a forecasting accuracy of ± 7%, with the sample of 100 buyers providing results of ± 10%.

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Completed questionnaires were checked, validated, coded and data entered according to the 10% validation standards recommended by the Market Research Society of Australia. GROWERS STAKEHOLDERS NEEDS Cost effective market access Efficient mechanism for price setting Review 2001 ♦ Growers rated Market City's performance highest on the elements of unloading produce (mean score of 5.3

out of 7) and delivery turnaround times (mean score of 4.0 out of 7). Market City was viewed least positively in terms of meeting the needs of Growers (mean score of 3.85 out of 7).

♦ Growers' results were generally consistent with the 1997 results, with the only exception a marginal decline in the performance of unloading produce (mean score of 5.3 in 2001 compared to 5.7 in 1997).

3.9

4.1

5.0

5.3

4.4

4.8

4.9

Unloading of produce(n=165, n=140)

Delivery turnaround time (n=190, n=170)Experience & knowledge of intermediary(n=199, n=197)Amount of contact with intermediary(n=199, n=198)Feedback on produce quality(n=200, n=200)Information on supply & demand(n=199, n=197)Meeting your needs(n=198, n=197)

mean score Excellent

3 4 5 62

2001

(1997, 2001)

Performance of Market City

1997

Growers

4.1

4.3

4.5

4.9

5.0

5.7

5.0

Poor

27


BUYERS STAKEHOLDERS NEEDS Consistent access to a range of produce Consistent supplies of quality produce Review 2001 Buyers ♦ Buyers indicated that Market City's performance was best in the areas of contact with intermediary (mean

score of 5.2 out of 7), experience and knowledge of intermediary and sales staff (mean score of 5.2 out of 7) and the loading of produce (mean score of 5.0). Market City was rated poorest in terms of providing information on supply and demand (mean score of 4.3 out of 7).

♦ Notable improvements in the performance of Market City as rated by Buyers were evident in the case of experienced and knowledgable staff (mean score of 5.2 in 2001 compared to 4.4 in 1997) and meeting Buyers needs (mean score of 4.9 in 2001 compared to 4.1 in 1997).

♦ Buyers gave Market City significantly better ratings than Growers on the performance criteria of contact with Intermediaries (Buyers mean score of 5.2 compared to Growers mean score of 4.8) and meeting their needs (Buyers mean score of 4.9 compared to Growers mean score of 3.9).

♦ The views of supermarket Buyers regarding the performance of Market City on all criteria remains average with mean ratings given consistently between 4 and 5 out of 7.

3.1

3.8

4.2

4.3

3.9

Running a disciplined & effective operation(n=81, n=73)

Upholding Market integrity(n=81, n=70)

Degree of communication(n=83, n=72)

Understanding users’ needs(n=83, n=71)

Market reports on prices(n=84, n=67)


3 4 5 62(1997, 2001)

2001

Performance of the Perth Market Authority

19972.8

3.7

4.1

4.0

4.0

Buyers - Non-Supermarket

Poor

28


4.2

4.6

4.7

4.7

5.1

5.2

Supermarkets

Amount of contact with intermediary(n=15, n=22)

Loading of produce(n=15, n=25)

Pickup turnaround times(n=15, n=25)

Experience & knowledge of intermediary(n=15, n=23)

Meeting your needs(n=15, n=25)

Information on supply & demand(n=15, n=21)


3 4 5 62

Caution: Small Sample Sizes(1997, 2001)

2001

Performance of Market City

1997

Perceptions of Market City

1997

3.6

4.3

4.3

4.7

5.6

5.5

3.8

3.7

4.0

3.9

Poor

Poor

INTERMEDIARIES STAKEHOLDER NEEDS An efficient and cost effective base for business operations. A central enivronment for business transaction. Review 2001 ♦ Intermediaries' perceptions of Market City were generally better than was the case in 1997, with performance

highest in terms of meeting Intermediaries needs (mean score of 4.8 compared to 3.9 in 1997). Level of security provided continues to receive the poorest rating (mean score of 4.1 in 2001).

4.1

4.3

4.5

4.8

6 22 17 1739

0 25 50 75 100

Significantly worse Somewhat worse Neutral Somewhat better Significantly better

Meets intermediaries’needs

Efficiency

Effectiveness

Level of security

Overall Operation of Market City Compared to Two Years Ago is...

mean score of intermediaries Excellent

3 4 5 62

Intermediaries

Caution: Small Sample Sizes

2001

29


STATE GOVERNMENT STAKEHOLDER NEEDS Industry efficiency. Industry satisfaction. Effective resource utilisation. Review 2001 The Minister for Agriculture rated the overall performance of the Perth Market Authority very highly. A similarly high rating was given to four of the performance criteria rated as listed below. Running an efficient market operation; Satisfying the wider community needs; Effective utilisation of resources; Communication with Ministerial office.

Summary of Findings Usage of Market City Growers ♦ On average, Growers using Market City sell 78% of their produce through the markets with 40% using Market

City exclusively. ♦ Similar to 1997, one-half of Growers indicated that the proportion that they sell through Market City has

remained the same. Growers suggest that there has been a slight net decrease in the proportion sold through Market City (2%). This result is consistent with the 1997 net decrease of 3%.

♦ In terms of future usage, overall, Growers anticipate a net increase of 11% in usage of the central wholesaling facility at Market City, whilst 57% expect their future usage to remain at their present level.

Buyers ♦ Buyers (non-supermarket) indicated that on average 89% of the produce they buy is through Market City.

Nearly one-half of Buyers interviewed (48%) use Market City exclusively for the produce requirements. ♦ Results show a positive net increase of 17% in the proportion of produce purchased through Market City in

the past year, with 32% of Buyers saying that they purchase more stock than previously and less than half that amount (15%) purchasing less stock than 12 months ago.

♦ Buyers’ future usage of Market City for produce requirements shows significant improvement since the planned 1997 study. A net increase of 13% in the use of the central wholesaling facility at Market City is anticipated, up from a net decrease of 14% seen in 1997. This suggests that more Buyers are expecting their usage of Market City to increase compared to the number who believe their usage will decline.

♦ The twenty-five supermarket Buyers interviewed suggested that on average they purchase 82% of their produce through Market City, which is an increase on the 1997 result of 75%.

♦ As was the case in 1997 a net increase in the proportion purchased through Market City over the past 12 months was exhibited, standing at 4%. It should be noted that most Buyers (16 out of the 25) indicated that their use of Market City over the past 12 months had stayed the same.

30


♦ Estimated future use of Market City by supermarket Buyers suggests a healthy increase in their use of Market City with a 12% likely net increase in usage, this compares with a net decrease of 21% evident in 1997.

Performance of the Perth Market Authority Growers ♦ The Perth Market Authority's performance was viewed most positively by Growers in terms of running a

disciplined and effective operation (mean score of 4.1 out of 7) and understanding of market users' needs (mean score of 3.8 out of 7). Performance of the Perth Market Authority in terms of dealing with issues such as transparency and terms of trade (mean score of 3.6 out of 7) and market reports on prices (mean score of 3.5 out of 7) were viewed least favourably. Positively, since the 1997 survey there has been a significant improvement in the degree of communication provided by the Perth Market Authority (mean score of 3.7 out of 7 compared to a mean score of 3.1 out or 7 in 1997).

Buyers ♦ Similar to Growers, Buyers rated the Perth Market Authority's performance highest in terms of running a

disciplined and effective operation (mean score of 4.3 out of 7) and poorest in terms of market reports on prices (mean score of 3.1 out of 7). Perceptions of the Perth Market Authority’s performance remain consistent with the 1997 results.

♦ Supermarket Buyers' perceptions of the Perth Market Authority's performance have generally improved since 1997 with the exception of communication which remains consistent. The performance criteria of running a disciplined and effective operation (mean score of 3.3 out of 7) and upholding market integrity (mean score of 3.3 out of 7) received the highest ratings whilst performance in terms of market reports on prices rated the most poorly (mean score of 3.3 out of 7).

Growers’ Associations ♦ Growers’ Associations also rated the Perth Market Authority's performance highest in terms of running a

disciplined and effective operation (mean score 4.1 out of 7) and understanding market users' needs (mean score of 4.0 out of 7). Performance was viewed least positively in terms of market reports on prices (mean score of 3.4 out of 7) and meeting the needs of Growers (mean score of 3.3 out of 7).

Intermediaries ♦ Perceptions of the Perth Market Authority's performance amongst Intermediaries were less than average

across all four criteria. Communication was viewed most positively (mean score of 3.7 out of 7) whilst the Authority's ability to make decisions was considered mediocre with the mean rating given 2.6 out of 7.

31


GROWTH IN LEASED PREMISES AND OCCUPANCY RATE

NET LETTABLE AREA 1989 - 2003

0

20000

40000

60000

80000

100000

120000

1989 1995 1996 1997 1998 1999 2000 2001 2002 2003

M²

YEARS

OCCUPANCY RATES OF PREMISES AS AT 30 JUNE 2003

LETTABLE AREA AND PERCENTAGE OCCUPIED The occupancy rate reflects the demand for the use of the facility and is a measure of the Authority’s ability to attract tenants by providing a world class facility.

2003 m²

2003 Occupied

2002 Occupied %

2001 Occupied %

TOTAL 100,977.82 98.36% 99.62 98.29 GROWTH IN PARKING OCCUPANCY

STAFF PARKING ALLOCATION OF PARKING

2003 2002 2001 2000 Occupancy Rate 81.72%

(3) 79.17% (2) 81.07% (1) 71.36%

(1) 12 parking bays were sacrificed following the construction of an access road around the western end of warehouse W2. (2) 35 parking bays created with rebuilding of W2. (3) 16 bays created for Meatworks staff. Total staff parking bays: 629

32


KEY PERFORMANCE INDICATOR EFFICIENCY INDICATOR The Perth Market Authority is primarily a commercial operation, appointed to manage the facilities to ensure general operating expenses are kept to a minimum without sacrificing quality of service and maintenance of the facilities. This output is measured as a dollar cost per square metre of net lettable area, obtained by the formula of total accrued operating costs less statutory outgoings divided by the net lettable area of the site. Total operating costs is the sum of the total expenses and depreciation as per the statement of financial performance. The efficiency performance indicator measuring “dollars per square metre of lettable area” is a key indicator for the Authority’s aim of minimising overall cost increases. Not all costs are controllable by the Authority and the warehouse fire abnormally affected ratios in 2000/2001 and the accounting standards change to building and site services fair value increased the 2002/2003 operating cost from $80.86 to $99.81 per m2. 2002/2003 2001/2002 2000/2001 1999/2000 1998/99 Total Operating Costs Less Statutory Outgoings ($)

10,079,000

8,788,000

9,497,000

8,659,000

8,110,000

Net Lettable Area (M²) 100,977.82 100,185.82 97,926 100,066 100,066 Operating cost / M² ($/M²)

99.81 87.72 96.98 86.53 81.05

PERFORMANCE INDICATORS - PERTH MARKET AUTHORITY

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003

RATE /M²

YEARS

COST = $/M² - TOTAL ACCRUED OPERATING COST – STATUTORY OUTGOINGS SITE NET LETTABLE AREA DOWNWARD TREND IN COST OF DOING BUSINESS INTERRUPTED IN 1995/96 DUE TO PENALTY INTEREST FOR RENEGOTIATION OF EXISTING TREASURY LOANS TO MORE FAVOURABLE INTEREST RATES AND IN 2000/01 DUE TO LOSS OF WAREHOUSE W2 FIRE

33

FINANCIAL STATEMENTS


For the Year Ending 30 June 2003

34


FINANCE

Certification of Financial Statements The accompanying financial statements of the Perth Market Authority have been prepared in compliance with the provisions of the Financial Administration and Audit Act 1985 from proper accounts and records to present fairly the financial transactions for the financial year ended 30 June 2003 and the financial position as at 30 June 2003. At the date of signing we are not aware of any circumstances which would render any particulars included in the financial statements misleading or inaccurate.

15 August 2003

35


36


PERTH MARKET AUTHORITYSTATEMENT OF FINANCIAL PERFORMANCEFOR THE YEAR ENDED 30 JUNE 2003

2003 2002Note $'000 $'000

REVENUE

Revenues from ordinary activitiesRevenue from operating activitiesRent 2 6,028 5,716Service income and outgoings 3 3,441 3,025Services 4 423 372Revenues from non-operating activitiesInterest revenue 5 409 291Other revenues from ordinary activities 6 35 54

Total revenues from ordinary activities 10,336 9,458

EXPENSES

Expenses from ordinary activitiesBorrowing costs expense 7 3,451 3,332Variable outgoings 8 3,550 3,422Depreciation expense 9 1,045 1,620Authority's costs 10 2,033 414

Total expenses from ordinary activities 10,079 8,788

Profit from ordinary activities 257 670

NET PROFIT 257 670

Increase in asset revaluation reserve - 1,379

- 1,379

257 2,049

The Statement of Financial Performance should be read in conjunction with the accompanying notes.

Total revenues, expenses and valuationadjustments recognised directly in equity

TOTAL CHANGES IN EQUITY OTHER THAN THOSERESULTING FROM TRANSACTIONS WITH WASTATE GOVERNMENT AS OWNERS

37


PERTH MARKET AUTHORITYSTATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2003

2003 2002Note $'000 $'000

Current AssetsCash assets 11 10,402 7,901Receivables 12 465 573Inventories 13 50 43Other assets 14 8 7

Total Current Assets 10,925 8,524

Non-Current AssetsProperty, plant and equipment 15 64,553 66,748

Total Non-Current Assets 64,553 66,748

Total Assets 75,478 75,272

Current LiabilitiesPayables 16 1,331 1,048Interest-bearing liabilities 17 349 326Provisions 18 60 73Other liabilities 19 83 71

Total Current Liabilities 1,823 1,518

Non-Current LiabilitiesInterest-bearing liabilities 17 47,115 47,464Provisions 18 320 317Other liabilities 19 41 51

Total Non-Current Liabilities 47,476 47,832

Total Liabilities 49,299 49,350

NET ASSETS 26,179 25,922

EquityReserves 20 44,780 44,780Retained profits/(accumulated losses) 20

TOTAL EQUITY 26,179 25,922

The Statement of Financial Position should be read in conjunction with the accompanying notes.

(18,601) (18,858)

38


PERTH MARKET AUTHORITYSTATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2003

2003 2002Note $'000 $'000

CASH FLOWS FROM OPERATING ACTIVITIES

ReceiptsReceipts from services 10,030 10,230Interest received 413 258GST receipts on sales 961 71

PaymentsPayments to suppliers and employees (3,876) (4,645)Borrowing costs (3,341) (3,498)GST payments on purchases (380) - GST payments to ATO (631) -

Net cash provided by/(used in) operating activities 11(b) 3,176 2,416

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (349) (1,257)

Net cash provided by/(used in) investing activities (349) (1,257)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of borrowings (326) (305)

Net cash provided by/(used in) financing activities (326) (305)

Net increase/(decrease) in cash held 2,501 854

Cash assets at the beginning of the financial year 7,901 7,047

Cash assets at the end of the financial year 11(a) 10,402 7,901

39


PERTH MARKET AUTHORITYNOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2003

1 Significant Accounting Policies

General Statement

Basis of Accounting

(a) Revenue recognition

(b) Acquisitions of assets

The following accounting policies have been adopted in the preparation of the financialstatements. Unless otherwise stated these policies are consistent with those adopted in thepreceding year.

The financial statements constitute a general purpose financial report which has beenprepared in accordance with Australian Accounting Standards, Statements of AccountingConcepts and other authoritative pronouncements of the Australian Accounting StandardsBoard (AASB), and Urgent Issues Group (UIG) Consensus Views as applied by theTreasurer’s Instructions. Several of these are modified by the Treasurer’s Instructions to varyapplication, disclosure, format and wording. The Financial Administration and Audit Act andthe Treasurer’s Instructions are legislative provisions governing the preparation of financialstatements and take precedence over Australian Accounting Standards, Statements ofAccounting Concepts and other authoritative pronouncements of the AASB, and UIGConsensus Views. The modifications are intended to fulfil the requirements of generalapplication to the public sector, together with the need for greater disclosure and also tosatisfy accountability requirements.

If any such modification has a material or significant financial effect upon the reported results,details of that modification and where practicable, the resulting financial effect, are disclosedin individual notes to these financial statements.

The financial statements have been prepared on the accrual basis of accounting using thehistorical cost convention, except for certain assets and liabilities which, as noted, aremeasured at fair value.

The cost method of accounting is used for all acquisitions of assets. Cost is measured as thefair value of the assets given up or liabilities undertaken at the date of acquisition plusincidental costs directly attributable to the acquisition.

Revenue from the rendering of services and disposal of assets is recognised when theAuthority has passed control of the assets or delivery of the service to the customer. Interestrevenues are recognised as they are accrued.

40




(c) Depreciation of non-current assets

Buildings and site services 3% paPlant and equipment 10% paOffice equipment 10% paOffice furniture and fittings 10% paOperations computer 20% pa

(d) Revaluation of land and buildings

(e) Cash

(f) Inventories

(g) Receivables

For the purpose of the Statement of Cash Flows, cash includes cash assets andrestricted cash assets net of outstanding bank overdrafts. These include short-termdeposits that are readily convertible to cash on hand and are subject to insignificant risk ofchanges in value.

Inventories are valued at the lower of cost and net realisable value. Costs are assigned by the method most appropriate to each particular class of inventory, with the majority being valued on a first-in first-out basis.

Depreciation is calculated on the straight line basis, using rates which are reviewedannually. The relevant rates are:

Accounts receivable are recognised at the amounts receivable as they are due forsettlement no more than 30 days from the date of recognition.

All non-current assets having a limited useful life are systematically depreciated over theiruseful lives in a manner which reflects the consumption of their future economic benefits.

The Authority has a policy of valuing land and buildings at fair value. The independentvaluations have been undertaken by Jones Lang LaSalle, valuers, and are recognised inthe financial statements.

Collectability of receivables is reviewed on an ongoing basis. Debts which are known to beuncollectable are written off. A provision for doubtful debts is raised where some doubt asto collection exists.

41



1 Significant Accounting Policies (h) Payables

(i) Interest-bearing liabilities

(j) Employee benefits

Annual leave

Long service leave

Superannuation

The liability for long service leave expected to be settled within 12 months of the reportingdate is recognised in the provisions for employee benefits, and is measured at the nominalamounts expected to be paid when the liability is settled. The liability for long service leaveexpected to be settled more than 12 months from the reporting date is recognised in theprovisions for employee benefits and is measured at the present value of expected futurepayments to be made in respect of services provided by employees up to the reporting date.Consideration is given, when assessing expected future payments, to expected future wageand salary levels including relevant on costs, experience of employee departures and periodsof service. Expected future payments are discounted using market yields at the reporting dateon national government bonds with terms to maturity and currency that match, as closely aspossible, the estimated future cash outflows. This method of measurement of the liability isconsistent with the requirements of AASB 1028 "Employee Benefits".

Staff may contribute to the Pension Scheme, a defined benefits pension scheme now closedto new members, or to the Gold State Superannuation Scheme, a defined benefit lump sumscheme now also closed to new members. All staff who do not contribute to either of theseschemes become non-contributory members of the West State Superannuation Scheme, anaccumulation fund complying with the Commonwealth Government's SuperannuationGuarantee (Administration) Act 1992. All of these schemes are administered by theGovernment Employees Superannuation Board (GESB).

Payables, including accruals not yet billed, are recognised when the Authority becomesobliged to make future payments as a result of a purchase of assets or services. Accountspayable are generally settled within 30 days.

Borrowings from WA Treasury Corporation are recorded at an amount equal to the netproceeds received. Borrowing costs expense is recognised on an accrual basis.

This benefit is recognised at the reporting date in respect of employees' services up to thatdate and is measured at the nominal amounts expected to be paid when the liabilities aresettled.

42




(j) Employee benefits

(k)

(l) Taxation

Tax effect accounting has not been applied as the Authority is not subject to income tax.

(m) Comparative figures

(n) Rounding

Employee benefit on-costs, including payroll tax, are recognised and included in employeebenefit liabilities and costs when the employee benefits to which they relate are recognised asliabilities and expenses. Refer to Note18.

Employee benefit on-costs

The Chief Executive Officer may apply to have all superannuation contributions paid to aprivate superannuation fund subject to the approval of the Board and The Office of thePremier.

Comparative figures are, where appropriate, reclassified so as to be comparable with thefigures presented in the current financial year.

Amounts in the financial statements have been rounded to the nearest thousand dollars, or incertain cases, to the nearest dollar.

The liabilities for superannuation charges under the Gold State Superannuation Scheme andWest State Superannuation Scheme are extinguished by payment of employer contributionsto the GESB.

The note disclosure required by paragraph 6.10 of AASB 1028 (being the employer's share ofthe difference between employees' accrued superannuation benefits and the attributable netmarket value of plan assets) has not been provided. State scheme deficiencies arerecognised by the State in its whole of government reporting. The GESB's records are notstructured to provide the information for the Authority. Accordingly, deriving the information forthe Authority is impractical under current arrangements, and thus any benefits thereof wouldbe exceeded by the cost of obtaining the information.

The Pension Scheme and the pre-transfer benefit for employees who transferred to the GoldState Superannuation Scheme are unfunded and the liability for future payments are providedfor at reporting date.

43



2003 2002$'000 $'000

2 Rent

Office and warehouse rent 5,676 5,393Car parking 342 313Lease premiums 10 10

Total rent 6,028 5,716

3 Service income and outgoings

Tenant works - 5Electricity 1,243 1,157Garbage removal 114 122Locks/keys, card keys - 12PABX extensions 54 53Outgoings - general 2,012 1,511Outgoings statutory - water 18 122Outgoings statutory - council - 43

Total service income and outgoings 3,441 3,025

4 Services

Garbage removal 23 16Electricity 385 340PABX calls 15 16

Total services 423 372

5 Interest

Bankwest operating account 156 4Bankwest cash management account 101 76Bankwest term deposit 134 176Overdue debtors 18 35

Total interest 409 291

6 Other revenues from ordinary activities

Compensation - 14Sundry income 35 40

Total other revenues from ordinary activities 35 54

44



2003 2002$'000 $'000

7 Borrowing costs expense

Interest paid 3,361 3,235Guarantee fees 90 97

Total borrowing costs expense 3,451 3,332

8 Variable Outgoings

Statutory outgoings 170 239Insurance premiums 232 179Air conditioning/ventilation 39 21Cleaning 159 199Car parking 98 75Electricity 1,281 1,256Fire protection 43 44Lifts & escalators 3 3Pest control 17 10Repairs & maintenance 215 124Security 339 293Telephones 58 56Salaries and board fees 244 267Miscellaneous 118 132Sundry expenses 5 37Gardening 77 74Administration 452 413

Total variable outgoings 3,550 3,422

9 Depreciation expense

Plant and equipment 25 23Buildings and site services 1,014 1,589Office equipment 3 5Office furniture and fittings - - Carpets - - Computer equipment 3 3

Total depreciation expense 1,045 1,620

45



2003 2002$'000 $'000

10 Authority's Costs

Bad & doubtful debts 4 49Commercial centre 4 26Internet services 27 - Leasing fees 1 5Minor capital works 55 11 6-036Other 1 - Owner consultancy 56 51 6-024Payment of deferred maintenance 44 - 6-025Review of PMA - 18 6-026Rotary parking 4 10Saturday/sunday market 10 7Sponsorship 3 5Staff costs - 13 6-034Travelling expenses 21 31Unfunded pensions 42 49Minor plant and equipment 15 - Loss on revaluation of buildings 1,746 - Write-off of warehouse MRS3 - 139

Total authority's costs 2,033 414

11 Notes to the statement of cash flows

(a) Reconciliation of cash

Petty cash 1 - Operating 85 302Cash management 3,128 3,471Term deposits 7,188 4,128

Total cash assets 10,402 7,901

Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

46



2003 2002$'000 $'000

11 Notes to the statement of cash flows (cont) (b)

Profit from ordinary activities 257 670

Non-cash items:Depreciation 1,045 1,620Doubtful debts / bad debts 4 - Write-downs to recoverable amount 1,746 139

(Increase)/decrease in assets:Current receivables 104 100Other current assets (1) (2)Current inventories (7) (30)Increase/(decrease) in liabilities:Payables and other liabilities 88 (141)GST payable (50) 71Provisions (10) (11)

Net cash provided by / (used in) operating activities 3,176 2,416

12 Receivables

Tenants 402 500Buyers parking - 5Electricity recoverable 88 116Interest receivable 12 16Rubbish removal costs recoverable 11 11Provision for doubtful debts (48) (75)

Total receivables 465 573

13 Inventories

Stock on hand - at cost 50 43

Total inventories 50 43

Reconciliation of profit from ordinary activities after income tax equivalents to net cash flows provided by / (used in) operating activities

47



2003 2002$'000 $'000

14 Other assets

Prepaid expenses 8 7

Total other assets 8 7

15 Property, plant and equipment

Land - developed at fair value (i) 26,100 26,100Land - undeveloped at fair value (i) 4,900 4,900

31,000 31,000

Buildings and site services at cost (i) - 53,330Buildings and site services at fair value (i) 33,786 - Less: accumulated depreciation (1,014) (17,809)

32,772 35,521

Buildings under construction 577 - 577 -

Plant and equipment at cost 291 283Less: accumulated depreciation (116) (91)

175 192

Office equipment at cost 76 76Less: accumulated depreciation (54) (51)

22 25

Office furniture and fittings at cost 69 69Less: accumulated depreciation (67) (67)

2 2

Operations computers at cost 884 884Less: accumulated depreciation (880) (877)

4 7

Carpets at cost 115 115Less: accumulated depreciation (114) (114)

1 1

Total property, plant and equipment 64,553 66,748

48



15 Property, plant & equipment (cont'd)

Reconciliations

Buildings Office& site Buildings Plant & Office furniture Operations

Land at services at under equipment equipment & fittings computers Carpetsfair value fair value construction at cost at cost at cost at cost at cost Total

2003 $ '000 $ '000 $'000 $ '000 $'000 $ '000 $ '000 $'000 $ '000

31,000 35,521 - 192 25 2 7 1 66,748Additions - 11 577 8 - - - - 596Disposals - - - - - - - - - Revaluation increments - - - - - - - - - Revaluation decrements (1,746) - - - - - - (1,746)Depreciation expense - (1,014) - (25) (3) (0) (3) (0) (1,045)Write o ff of obsolete assets - - - - - - - - - Transfers - - - - - - - - -

31,000 32,772 577 175 22 2 4 1 64,553

Reconciliations of the carrying amounts of property, plant and equipment at the beginning and theend of the current financial year are set out below.

Carrying amount at the end ofthe year

Balance at the beginning o f the year

(i) The revaluation of land and buildings was performed in July 2002 in accordance with anindependent valuation by Jones Lang LaSalle, valuers. Fair value has been determined on thebasis of current market buying values. Buildings and site services were recorded at cost in the 30June 2002 financial year.

49



2003 2002$'000 $'000

16 Payables

Interest payable - WATC 799 689Accounts payable 484 178Accrued expenses 27 110GST payable 21 71

Total payables 1,331 1,048

17 Interest-bearing liabilities

Interest Only Loan - $45,087,612

Interest only loan - WATC 45,088 45,088Debentures - WATC (10 years @ 6.71%) 278 2-1310 326Debentures - WATC (10 years @ 7.98%) 586 2-1320 706Debentures - WATC (15 years @ 8.22%) 480 2-1330 515Debentures - WATC (10 years @ 6.16%) 560 2-1340 644Debentures - WATC (11 years @ 6.10%) 472 2-1350 511

Total WATC debt 47,464 47,790

Amounts repayable are as follows:Within 1 year 349 2-1310 326Later than 1 year and not later than 5 years 1,472 2-1320 1,555Later than 5 years 45,643 2-1330 45,909

2-1340Total borrowings from WATC 47,464 2-1350 47,790

Current 349 326Non current 47,115 47,464

Total interest-bearing liabilities 47,464 47,790

The Authority has negotiated the timing of principalrepayments with the WATC. Support has been obtainedfrom the Corporation in the form of no reduction of principalbe made for the present.

50



2003 2002$'000 $'000

18 Provisions

Current

Annual leave 12 12Long service leave - 9Superannuation (i) 48 52

60 73

Non current

Long service leave 18 10Superannuation (i) 302 307

320 317

Total provisions 380 390

Employee Benefit Liabilities

Provision for employee benefits:Current 60 73Non current 320 317

380 39

(i) The superannuation liability has been established from data supplied by the Government Employees Superannuation Board.

The Authority considers the carrying amount of employee benefits approximates the net fair value.

The aggregate employee benefit liability recognised and included in the financial statement is as follows:

0

51



2003 2002$'000 $'000

19 Other liabilities

Current

Deposits - magnetic cards 6 6Income received in advance 48 54Lease premiums received in advance 10 10Prepaid buyers parking 19 1

83 71

Non current

Lease premiums received in advance 41 51

41 51

Total other liabilities 124 122

20 Equity

ReservesAsset revaluation reserve:Opening balance 26,009 24,630Net revaluation increments:Land - 1,379

Closing balance 26,009 26,009

Other reserves

Revenue reserve 1,200 1,200Debenture revenue reserve 960 960Market relocation reserve 16,611 16,611

18,771 18,771

Total reserves 44,780 44,780

Retained profits/(accumulated losses)

Opening balance (18,858) (19,528)Net profit 257 670

Closing balance (18,601) (18,858)

21 Remuneration of auditor

Remuneration to the Auditor General for the financial year is as follows:

12 11Auditing the accounts, financial statements and performance indicators

52



2003 2002$'000 $'000

22 Commitments for expenditure

Capital Expenditure Commitments

Within 1 year 436 -

436 -

The capital commitments are amounts for buildings under construction

23 Remuneration of members of the Accountable Authority

91 81

$0 - $10,000 5 7$10,001 - $20,000 5 - $30,001 - $40,000 - 1

24 Remuneration of senior officers of the Authority

Total remuneration of senior officers is: 125 110

$110,001 - $120,000 - 1 $120,001 - $130,000 1 -

The superannuation included here represents the superannuation expense incurred by the Authority in respect of the Accountable Authority. No members of the Accountable Authority are members of the Pension Scheme

The superannuation included here represents the superannuation expense incurred by the Authority in respect of senior officers other than senior officers reported as members of the Accountable Authority. No senior officers are members of the Pension Scheme

Capital expenditure commitments, being contracted capital expenditure additional to the amounts reported in the financial statements, are payable as follows:

Total remuneration of the members of the Accountable Authority is:

The number of members of the Accountable Authority whose fees, salaries, superannuation and other benefits for the financial year, fall within the following bands are:

The number of senior officers other than senior officersreported as members of the Accountable Authority, whosetotal fees, salaries, superannuation and other benefits forthe financial year, fall within the following bands are:

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2003 2002$'000 $'000

25 Contingent liabilities and contingent assets

Contingent liabilities

(i) Traffic signals

26 Events occurring after reporting date

27 Segment (Output) Information

In addition to the liabilities incorporated in the financial statements, the Authority has the following contingent liability:

The Authority operates within one geographical segment(the Western Australian public sector) and one industrysegment (managing a facility for the marketing, distributionand value adding of fresh food).

There is a potential commitment of $80,000 for theprovision of traffic signals at the Tavern entrance.

There were no significant events occurring after reportingdate.

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2003 2002 Variance$'000 $'000 $'000

28

Revenue

(i) Interest 409 291 118

(ii) Service income and outgoings 3,441 3,025 416

(iii) Services 423 372 51

(iv) Other revenues from ordinary activities 35 54 (19)

Expenditure

(i) Depreciation expense 1,045 1,620 (575)

(ii) Authority's cost 2,033 414 1,619

Significant variations between actual revenues and expenditures for the financial year and revenues and expenditures for the immediately preceding financial year

The increase was largely due to a loss on revaluation ofbuildings being recognised this financial year

Significant variations are considered to be those greaterthan 10% and $15,000.

Interest revenue increased from the prior year as a resultof an increase in cash held, term deposits

The Authority received an easement payment in the 2002financial year from Western Power

The increase is due to increased consumption of powerand respective profitability

The decrease was largely due to the decrease in value ofbuildings and site services as a result of a revaluation

The increase was largely due to an increase in insurancepremiums, maintenance expenditure and powerconsumption

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Actual Budget Variance$'000 $'000 $'000

29 Significant variations between estimates and actual results for the financial year

Revenue

(i) Interest 409 282 127

(ii) Other revenues from ordinary activities 35 74 (39)

Expenditure

109 82 2

(ii) Depreciation 1,045 1,632 (587)

(iii) Authority's costs 2,033 740 1,293

The variance is due to a loss on revaluation of buildings being recognised this financial year, being offset against expenditure which was budgeted for, however not incurred

The variance is largely due to the decrease in value ofbuildings and site services as a result of a revaluation

Significant variations are considered to be those greaterthan 10% and $15,000.

The variance is a result of additional term deposits heldduring the current financial year

The variable outgoings component of the commercialcentre gross rents was not separated within the rentalbudget

(i) Authority's contribution to statutory and variableoutgoings

The variance is a result of a large portion of the budgetedrevenue being classified against Rent for the financial year.This difference in classification does not render asignificant variation between actual Rent and budgetedRent

7

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30 Financial instruments

Interest rate risk exposure

Weightedaverageeffective Floating Fixed interest rate maturities Non interest interest 1 year 1 to 5 Over 5 interest

rate rate or less years years bearing Total2003 % $'000 $'000 $'000 $'000 $'000 $'000

Financial AssetsCash assets 4.40% 10,402 - - - - 10,402Receivables - - - - 465 465

Total financial assets 10,402 - - - 465 10,867

Financial LiabilitiesPayables - - - - 1,331 1,331WATC debenture 6.71% - 51 226 - - 277WATC debenture 7.98% - 130 456 - - 586WATC debenture 8.22% - 38 187 256 - 481WATC debenture 6.16% - 89 413 59 - 561WATC debenture 6.10% - 41 190 240 - 471WATC loan 6.86% 45,088 - - - - 45,088

Total financial liabilities 45,088 349 1,472 555 1,331 48,795

The following table details the Authority's exposure to interest rate risk as at the reporting date.

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30 Financial instruments

Weightedaverageeffective Floating Fixed interest rate maturities Non interest interest 1 year 1 to 5 Over 5 interest

rate rate or less years years bearing Total2002 % $'000 $'000 $'000 $'000 $'000 $'000

Financial AssetsCash assets 4.70% 7,901 - - - - 7,901Receivables - - - - 573 573

Total financial assets 7,901 - - - 573 8,474

Financial LiabilitiesPayables - - - - 1,048 1,048WATC debenture 6.71% - 48 228 50 - 326WATC debenture 7.98% - 120 586 - - 706WATC debenture 8.22% - 35 172 308 - 515WATC debenture 6.16% - 84 389 171 - 644WATC debenture 6.10% - 39 179 293 - 511WATC loan 6.86% 45,088 - - - - 45,088

Total financial liabilities 45,088 326 1,554 822 1,048 48,838

Net fair values

The carrying amount of financial assets and financial liabilities recorded in the financial statements are not materially different from their net fair values, determined in accordance with the accounting policies disclosed in Note 1 to the financial statements.

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LEGISLATION AND COMPLIANCE REPORTING

LEGISLATION AND COMPLIANCE REPORTING The Authority, to the best of its knowledge, complies with all legislation that impacts upon the administrative, financial and operational areas of its business. In addition to the legislation specifically referred to elsewhere in this Report, the following legislation has a material effect on the Authority:

• Anti-Corruption Commission Act 1988

Requiring notification of possible corrupt conduct.

• Disability Services Act 1993

Requiring the preparation and implementation of a disability services plan.

The Authority has prepared a Disability Services Plan that addresses the needs of customers with disabilities.

• Electoral Act 1907 (Section 175ZE)

The Electoral Act 1907 requires a statement on specified expenditure (advertising agencies, market research organisations, polling organisations, direct mail organisations and media advertising organisations).

• No payments were made to polling or direct mail organisations

• No payments were made to research organisations.

• No payments were made to advertising agencies.

• No payments were made to media advertising organisations.

• Environmental Protection Act 1986

Requiring referral of proposals significantly affecting the environment, and control of environmental pollution.

• Equal Opportunity Act 1984

Requiring the preparation and implementation of an equal opportunity plan.

The Perth Market Authority complies with the Equal Opportunity Act (1984).

• Financial Administration and Audit Act 1985

Requiring financial management and accountability and compliance with financial administration requirements set by State Treasury.

During 2002/2003 no ministerial directions were given to the Perth Market Authority.

• Freedom of Information Act 1992

The Authority received no applications for information under the Freedom of Information Act during the year. The Authority, in accordance with the Act, charges fees associated with FOI applications.

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• Government Employees Superannuation Act 1987

Requiring the provision of superannuation benefits.

• Industrial Relations Act 1979

The Perth Market Authority employs two staff. There were no matters of industrial relations reported.

• Library Board of Western Australia Act 1951

Requiring the maintenance of a records management system.

• Occupational Health, Safety and Welfare Act 1984

Requiring the provision and maintenance of a working environment in which employees are not exposed to hazards.

• Public Sector Management Act 1994 Requiring compliance with a number of General Principles in such areas as public administration

and management, human resources management and official conduct.

• State Supply Commission Act 1991

Requiring compliance with Supply Policies relating to the acquisition, storage, distribution and disposal of goods and services.

An exemption has been obtained to enable the Authority to make purchases up to $50,000.

• Statutory Corporations (Liability of Directors) Act 1996

This legislation sets out the duties of directors; provides for the recovery of compensation for breaches; and covers the situation with respect to ministerial directions.

• Workers’ Compensation and Rehabilitation Act 1981

Requiring compensation for and rehabilitation of workers suffering disability by accident or disease in the course of employment.

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61

OTHER REQUIRED REPORTING CUSTOMER FOCUS BY STAFF Customers are entitled to expect that the staff will give careful attention to their needs and will be given personal attention. A folder detailing the Customer Focus Policy is available from the Perth Market Authority office. WORKERS COMPENSATION 2002/2003 2001/2002 2000/2001 1999/2000 Number of Claims 0 0 0 1 Premium Rates 0.65% 0.63% 0.53% 0.74% Cost/$100 payroll 0 0 0 0 Time Lost 0 0 0 0 CODE OF CONDUCT The Board of the Perth Market Authority adopted a Code of Conduct in June 2000 for Board and Committee members. COMPLIANCE STATEMENT In the administration of the Perth Market Authority the Board has complied in all material aspects with the requirements of the Perth Market Act and other relevant legislation. The Board has exercised controls that provide reasonable assurance that the receipt and expenditure of monies, the acquisition and disposal of public property and incurring of liabilities have been in accordance with legislative provisions. The Board has complied with the Public Sector Standards in Human Resource Management, the Perth Market Authority Code of Conduct and the Western Australian Public Sector Code of Ethics. It has put in place procedures and conducted appropriate internal assessments designed to ensure such compliance. During 2002/2003 there were no applications lodged for breach of Public Sector Standards.

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