Goodman Group · ASX:GMG
Goodman — H1 FY2020 Earnings Presentation
45 slides from Goodman's earnings presentation, Feb 13, 2020
Slide 1: Results for the half year ended 31 December 2019
Results for the half year ended 31 December 2019 13 February 2020 Rochedale Motorway Estate, QLD, Australia
Slide 2: Important Notice and Disclaimer
Important Notice and Disclaimer + This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071), Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839), and Goodman Logistics (HK) Li
Slide 3: Contents
Contents SECTION 1 APPENDICES Highlights — Results analysis SECTION 2 — Property investment — Development — Management Results overview SECTION 3 — Capital management Operational:performance_-Envireqméntal, Social = SECTION 4 and Governance" = Outlook —~ a. x, . = =
Slide 4: Section 1 - Highlights
Section 1 - Highlights
Slide 5: Highlights
Highlights + Development, management and investment divisions all delivered strong performance in 1H20. Key financial metrics include: – Operating profit1 of $530.4 million, up 14.1% on 1H19 – Operating earnings per security (EPS)2 of 28.8 cents, up 12.9% on 1H19 – Gearing 10.0%³ (9.7% at FY19) – Di
Slide 6: Highlights
Highlights + Assets under management (AUM) up 15% on 1H19 to $49.2bn with strong underlying returns – External AUM up 15.4% on 1H19 to $45.7 billion – $1.6 billion of revaluation gains across the Group and Partnerships – Acquisitions and development completions of $2.1 billion in the half – 77% of d
Slide 7: Highlights
Highlights + Occupancy maintained at 98% and WALE of 4.7 years + Like-for-like NPI growth of 3.3% supported by tight supply in infill markets Own + Leased 1.6 million sqm across the global platform equating to $224 million of annual rental property income across the Group and Partnerships in 1H20 +
Slide 8: Section 2 - Results overview
Section 2 - Results overview
Slide 9: Results overview
Results overview + Operating EPS of 28.8 cents per security, up 13% on 1H19 1H FY20 + DPS of 15.0 cents per security Operating profit ($m) 530.4 + Statutory accounting profit $810.6 million Statutory accounting profit ($m) 810.6 – Includes property valuations, derivative and foreign currency mark-to
Slide 10: Profit and loss
Profit and loss + Half year statutory accounting profit of $810.6 million, includes property Income statement valuations, derivative mark-to-markets and other non-cash or non-recurring 1H19 1H20 items $m $m – Global property revaluation gains for 1H20 were $1.6 billion driven by Property investment
Slide 11: Balance sheet
Balance sheet + Strong balance sheet maintained Balance sheet – Gearing increased marginally on FY19 to 10%1 (up from 9.7% FY19) 30 June 31 December and 21.1%2 on a look through basis, primarily due to cornerstone 2019 2019 $m $m investment and property investments funding strong development activit
Slide 12: Group liquidity position
Group liquidity position + Cash and available lines of credit (excluding Partnership debt and Goodman Group drawn debt expiry profile equity) of $2.4 billion as at 31 December 2019 - $1.4 billion in cash - $1.0 billion of available lines + Weighted average debt maturity profile of 6.3 years + Gearin
Slide 13: Section 3 - Operational performance
Section 3 - Operational performance
Slide 14: Property investment
Property investment + Property fundamentals remain strong, reflecting the quality of the portfolio Property investment ($m) 1H19 1H20 after the clear and structured asset sale program Direct 37.8 44.6 – High occupancy at 98% Partnership investments 144.0 168.7 – Like-for-like NPI growth of 3.3% Prop
Slide 15: Development
Development + WIP at $4.3 billion and expected to grow Development ($m) 1H19 1H20 – High demand from our customers is giving the Group confidence to increase Development income 793.9 577.9 development activity and volumes with WIP expected to exceed $5 billion Development expenses (520.6) (277.8) –
Slide 16: Management
Management + External asset AUM of $45.7 billion up 15% since December 2018 driving base Management ($m) 1H19 1H20 fee income Management earnings 189.4 219.0 – Management earnings up 16% following strong revaluation gains, development completions and acquisitions across the platform Key metrics 1H19
Slide 17: Management platform – largest Partnerships
Management platform – largest Partnerships GAIP GHKLP GEP GCLP GAP GNAP GJCP GMT3 GUKP Total assets $8.5bn $7.9bn $6.2bn $4.9bn $4.4bn $4.0bn $3.4bn $2.9bn $0.7bn GMG co-investment 28.5% 20.2% 20.4% 20.0% 19.9% 55.0% 15.9% 21.6% 33.3% GMG co-investment $1.7bn $1.2bn $0.7bn $0.7bn $0.8bn $2.0bn $0.3b
Slide 18: Section 4 - Outlook
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Slide 19: Outlook
Outlook + Significant structural changes continue to shape our industry and provide opportunities – The deliberate concentration of our assets in urban logistics locations is delivering long-term solutions for our customers and strong returns from our Partnerships + Choice of location is critical –
Slide 20: Appendix 1 – Results analysis
Appendix 1 – Results analysis
Slide 21: Profit and loss
Profit and loss Total income by business segment for the half year ended 31 December 2019 Category Total Property Management Development Operating Non- investment expenses operating items $m $m $m $m $m $m Gross property income 63.4 62.9 - - - 0.5 Management income 219.0 - 219.0 - - - Development in
Slide 22: Profit and loss (cont’d)
Profit and loss (cont’d) Category Total Property Management Development Operating Non-operating investment expenses items $m $m $m $m $m $m EBIT / Segment operating earnings 868.1 213.3 219.0 300.1 (139.7) 275.4 Net gain from fair value adjustments on investment properties (26.2) (26.2) Share of fai
Slide 23: Reconciliation non-operating items
Reconciliation non-operating items Non-operating items in statutory income statement Half year ended 31 December 2019 $m $m Property valuation related movements Net gain from fair value adjustments attributable to investment properties 26.2 Share of net gain from fair value adjustments attributable
Slide 24: Financial position
Financial position As at 31 December 2019 Direct Assets Property Developments Other Total $m investments $m $m $m $m Capital allocation Cash - - - 1,360.9 1,360.9 Receivables - - 162.5 430.9 593.4 Inventories - - 1,147.2 - 1,147.2 Investment properties 1,830.5 - 163.6 - 1,994.1 Investments accounted
Slide 25: Net tangible asset movement
Net tangible asset movement + For year half ended 31 December 2019¹ 1. Calculated based on 1,828.4 million securities being closing securities on issue 25
Slide 26: Property valuations
Property valuations + The Group’s results for 1H20 reflect the current strong industrial market fundamentals driven by expectations of a sustained low growth environment and limited availability of investment product + Market rental growth, cap rate compression and development completions within the
Slide 27: Appendix 2 – Property investment
Appendix 2 – Property investment
Slide 28: Leasing
Leasing Across the Group and Partnerships: + 1.6 million sqm leased during the year equating to $224 million of annual rental property income + High occupancy at 98%. Region Leasing area (sqm) Net annual rent ($m) Average lease term (years) Australia / New Zealand 549,324 78.5 4.0 Asia 554,813 100.1
Slide 29: Customers
Customers Top 20 global customers (by net income - look through basis) 29
Slide 30: Geographic exposure
Geographic exposure Top 20 sub-regions (by AUM) 30
Slide 31: Direct portfolio detail
Direct portfolio detail Portfolio snapshot Key metrics¹ Total assets ($b) 1.8 + 27 properties with a total value of $1.8 billion located primarily in the Sydney market Customers 303 Number of properties 27 – Represents a significant part of the urban renewal portfolio Occupancy (%) 92 Weighted avera
Slide 32: Appendix 3 – Development
Appendix 3 – Development
Slide 33: Developments
Developments 1H20 Developments Completions Commencements Work in progress Value ($bn) 1.5 1.7 4.3 Area (m sqm) 0.9 1.0 1.9 Yield (%) 6.8 6.9 6.5 Committed (%) 80 60 61 Weighted average lease term (years) 10.1 13.1 11.7 Development for third parties or Partnerships (%) 90 69 77 Australia / New Zealan
Slide 34: Appendix 4 - Management
Appendix 4 - Management _ .. Goodman, Longquan Logistics Centre, China. a = =
Slide 35: Global platform
Global platform S¢ $9.0bn 2 142 PROPERTIES, $17.0bn AUM 63 mmm PROPERTIES = UI OUR GLOBAL NETWORK $49.2bn TOTAL ASSETS UNDER MANAGEMENT (AUM) 394 PROPERTIES 17 COUNTRIES 947 PEOPLE )PERTIES Ri THE AMERI CONTINENTA\ + DENOTES GOODMAN OFFICE {© Current Goodman global presence. As at 31 December 2019 (
Slide 36: Management - AUM
Management - AUM + $16.9 billion of equity commitments and liquidity now available across the Third party AUM by region Partnership platform, up 25% since June 2019 + Equity commitments of $4.6 billion across a number of regions were executed in 1H20 + $3.8 billion in undrawn debt facilities and cas
Slide 37: Appendix 5 – Capital management
Appendix 5 – Capital management
Slide 38: Currency mix
Currency mix Currency mix – including the impact Currency mix – outstanding debt of capital hedging FX swaps 38
Slide 39: Financial risk management
Financial risk management + The Group has implemented a robust capital management framework, under its Financial Risk Management (FRM) policy. This provides: ‒ Stronger balance sheet which has been reflected in our credit ratings from S&P and Moody’s BBB+ / Baa1 respectively ‒ Covenants that are app
Slide 40: Financial risk management (cont’d)
Financial risk management (cont’d) Interest rate hedge profile + Interest rates are hedged to 74% over next 12 months + Weighted average hedge rate of 2.70%1 - NZD – hedge rate 2.29% - JPY – hedge rate 2.10% - HKD – hedge rate 2.13% - GBP – hedge rate 1.75% - Euro – hedge rate 0.74%2 - USD – hedge r
Slide 41: Financial risk management (cont’d)
Financial risk management (cont’d) Foreign currency denominated balance sheet hedging maturity profile Currency Weighted average Weighted average Amount receivable1 Amount payable1 maturity exchange rate NZ$ 3.4 years 1.0864 A$368.3m NZ$400.0m HK$ 3.4 years 5.7382 A$817.7m HK$4,690.0m US$ 4.2 years
Slide 42: Exchange rates
Exchange rates + Statement of Financial Position – exchange rates as at 31 December 2019 – AUDGBP – 0.5297 (30 June 2019: 0.5523) – AUDEUR – 0.6256 (30 June 2019: 0.6173) – AUDHKD – 5.4719 (30 June 2019: 5.4761) – AUDBRL – 2.8235 (30 June 2019: 2.6880) – AUDNZD – 1.0417 (30 June 2019: 1.0449) – AUDU
Slide 43: Appendix 6 – Environmental, Social and Governance
Appendix 6 – Environmental, Social and Governance Marl Logistics Centre, Germany
Slide 44: Environmental, Social and Governance
Environmental, Social and Governance Our 2030 Sustainability Strategy sets a clear path that is based on the three pillars of property, people and culture and corporate performance. We have set clear and specific targets under these pillars that represent the key environmental, social and governance
Slide 45: Thank you
Thank you Important Notice This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071) and Goodman Funds Management Limited (ABN 48 067 796 641) (AFSL 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839)). The details in this presentation provi