Goodman Group · ASX:GMG
Goodman — H1 FY2014 Earnings Presentation
54 slides from Goodman's earnings presentation, Feb 13, 2014
Slide 1: Results for the half year ended 31 December 2013
Goodman Group Results for the half year ended 31 December 2012 For personal use only 21 February 2013 Global partner + Global platform 1
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only + 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 Good
Slide 3: Contents
Contents For personal use only + Section 1 Highlights + Section 2 Results overview + Section 3 Operational performance + Section 4 Outlook and summary + Appendices - Results analysis - Investment - Development - Management - Capital management 3
Slide 4: Section 1 Highlights
For personal use only Section1+1+ Section Highlights Highlights Goodman Interlink, Hong Kong Erfurt, Zalando, Germany 4
Slide 5: Highlights
Highlights For personal use only + Focused strategy delivering sustainable growth: – Operating profit1 of $296 million, up 11% on 1H FY13 – Operating EPS1 of 17.16 cents2, up 6% on 1H FY13 – Distribution per security of 10.35 cents, up 7% on 1H FY13 – Delivering on commitment to stability, consisten
Slide 6: Highlights
Highlights For personal use only + Goodman’s global operating platform is a key point of differentiation: – Capital partners attracted to sector specialists with $2.0 billion of third party equity commitments raised in the 1HFY14 – Enables the Group to respond to significant opportunities for exampl
Slide 7: Highlights
Highlights For personal use only + High occupancy maintained at 96% + Retention rate of 77% and WALE of 4.9 years Own + Like for like rental growth at 2.2% + Leased 1.4 million sqm across the platform equating to $168 million of property income across the Group and managed funds + WIP at $2.6 billio
Slide 8: Section 2 Results overview
For personal use only Section Section2+2+ Results Results Overview overview Stockyards Industrial Estate, Australia M7 Business Hub, Australia 8
Slide 9: Results overview
Results overview For personal use only + Operating results in line with full year forecast: 1H FY14 – Property fundamentals remain sound Operating profit ($M) 296.0 – Maintained liquidity and low gearing Statutory accounting profit ($M) 160.4 – Development commitments and enquiry levels a positive l
Slide 10: Profit and loss
Profit and loss For personal use only + Half year operating profit of $296 million: Income statement 1H FY13 1H FY14 – Investments reducing in line with balance sheet $m $m initiatives with ROA > 7% Investment (look through) 254.9 244.4 – Development volumes continue to increase, driving Management
Slide 11: Balance sheet
Balance sheet For personal use only + Strong balance sheet maintained: Balance sheet – 60% payout ratio of operating profit and DRP ensure the 30 June 2013 31 Dec 2013 Group is sustainably funded for the long term $m $m Stabilised investment properties 2,090 2,169 – Managed fund equity raisings and
Slide 12: Group liquidity position
Group liquidity position For personal use only + Goodman Group has cash and available lines of Goodman Group debt maturity profile credit of $1,881 million at 31 December 2013: – $566 million cash – $1,315 million available lines + Significant covenant headroom maintained + Average debt maturity pro
Slide 13: Section 3 Operational Performance
For personal use only Section 3+ Operational Performance Interlink, Berlin Goodman Fiege Brieseleang, Hong Kong Osaka Nanko, Japan
Slide 14: Investment
Investment For personal use only + Property fundamentals remain stable reflecting Investment ($m) 1H FY13 1H FY14 quality of the portfolio and customers: Direct 81.1 77.2 – Maintained occupancy at 96% Cornerstones 173.8 167.2 Look through EBITDA 254.9 244.4 – Retention remains high at 77% – WALE of
Slide 15: Development
Development For personal use only + Development demand continues to be driven by Development ($m) 1H FY13 1H FY14 structural changes: Revenue 102.1 132.8 – E-commerce, supply chain efficiencies, building obsolescence, 3PL consolidation EBITDA 83.1 102.3 + Development WIP at $2.6 billion Key metrics
Slide 16: Management
Management For personal use only + External assets under management of $21.6 billion Management ($m) 1H FY13 1H FY14 increased 11% on FY13 Management income² 86.8 97.6 + Development completions organically growing assets EBITDA 56.0 57.5 under management + Active asset management through both acquis
Slide 17: Management – AUM
Management – AUM For personal use only + Major new initiatives completed during the half year include: – Raised €550 million for GELF with Goodman selling a further €110 million of its cornerstone investment to meet excess demand – Commitment of a further US$500 million for GCLH taking total equity
Slide 18: Management platform
Management platform For personal use only Goodman’s Largest¹ managed vehicles GAIF GTA GELF GHKLF GMT2 ABPP EPF GCLH Total assets $5.6bn $3.3bn $3.3bn $2.7bn $1.9bn $1.6bn $1.1bn $1.0bn GMG co-investment 26.7% 19.9% 20.4% 20.0% 17.4%³ 43.1% 37.3% 20.0% GMG co-investment $0.9bn $0.4bn $0.4bn $0.4bn $
Slide 19: Section 4 Outlook and Summary
For personal use only Section 3+ Section 4+ Capital Management Outlook and Initiatives Summary Pudong International Airport Logistics Park, China Pudong International Airport Logistics Park, China
Slide 20: Strategy and outlook
Strategy and outlook For personal use only + Leading global industrial property operator and fund manager + Focus on execution of a consistent and clearly enunciated strategy + Customer service focus and asset management capabilities are key to business model + Capabilities in major markets with foc
Slide 21: Appendix 1 Results analysis
For personal use only Appendix 1+ Results analysis Westney Pinnacle Industry Corporate Park, Park, New Zealand Australia Banfield Distribution Centre, Australia Kobe, Japan
Slide 22: Profit and loss
Profit and loss Total income by business segment for the half year ended 31 December 2013 For personal use only Category Total Investment Management Development Unallocated Non- operating items $m $m $m $m $m $m Gross property income 105.6 106.9 - - - (1.3) Management income 97.4 - 97.4 - - - Develo
Slide 23: Profit and loss (cont)
Profit and loss (cont) For personal use only Category Total Investment Management Development Unallocated Non-operating items $m $m $m $m $m $m EBIT – per statutory accounts 399.2 186.6 57.5 102.3 (28.0) 80.8 Net gain from fair value adjustments on investment properties (46.8) - - - - (46.8) Share o
Slide 24: Reconciliation non-operating items
Reconciliation non-operating items For personal use only Non-operating items in statutory profit & loss Half Year ended 31 Dec 2013 $m $m Property valuations Net gain from fair value adjustments on investment properties 46.8 Share of net gain from fair value adjustments on investment properties in a
Slide 25: Financial position
Financial position For personal use only As at 31 December 2013 Direct Assets Investments Developments Other Total $M $M $M $M $M Cash - - - 565.7 565.7 Receivables - 30.5 154.9 215.9 401.3 Inventories - - 1,216.3 - 1,216.3 Investment properties 2,169.3 - 333.1 - 2,502.4 Investments accounted for us
Slide 26: Net tangible asset bridge
Net tangible asset bridge For personal use only + For period ended 31 December 2013¹ 1. Calculated on 1,718.7 million securities being closing securities on issue and excludes minority interest 26
Slide 27: Property valuations
Property valuations For personal use only + Cap rate compression starting to be realised + WACR at 7.8% + Strong investor demand continues for prime investment assets 31 December 2013 property valuations (look through) Book value Movement since WACR WACR movement (GMG exposure) June 2013 since June
Slide 28: Appendix 2 Investment
For personal use only Appendix 2+ Investment Goodman Interlink, Hong Kong
Slide 29: Leasing
Leasing For personal use only Across the Group and Funds platform: + ~1.4 million sqm leased during the half year + Positive lease reversions of 5.4% on new leasing deals, with like for like NPI growing at 2.2% + Occupancy maintained at 96% Region Leasing area (sqm) Net annual rent (A$M) Average lea
Slide 30: Customers
For personal use only Customers 30
Slide 31: Geographic exposure
Geographic exposure For personal use only 31
Slide 32: Direct portfolio detail
Direct portfolio detail For personal use only Portfolio snapshot Key metrics Total assets A$2.2 billion + 38 properties with a total value of $2.2 billion located across key Australian and UK markets Customers 263 + Leasing deals remain strong across the portfolio: Number of properties 38 – 151,022
Slide 33: Appendix 3 Development
Rheinberg Logistics Centre , Germany For personal use only Appendix 3+ Development Bungarribee Industrial Estate, Australia
Slide 34: Developments
Developments For personal use only 1HFY13 Developments Completions Commitments Work in progress Value ($M) 978 1,167 2,592 Area (m sqm) 0.9 1.0 1.9 Yield (%) 8.2 8.5 8.4 Pre-committed (%) 89 69 71 Weighted Average Lease Term (years) 7.4 6.6 7.9 Development for Third Parties or Funds (%) 92 76 88 Aus
Slide 35: Developments (cont)
Developments (cont) For personal use only + Development pipeline from controlled land sites maintained at $10 billion + Development holdings increasing on the back of increased activity in Japan, China, North America and Brazil + The Group’s development future cash commitments Cash commitments as at
Slide 36: Appendix 4 Management
For personal use only Appendix 4+ Management Senec Logistics Centre, BirminghamBusiness Slovakia Park, U.K Interlink Industrial Estate, Australia
Slide 37: Global platform
For personal use only Global platform 37
Slide 38: Goodman Australia Industrial Fund
Goodman Australia Industrial Fund For personal use only Key events Key metrics¹ Total assets A$5.6 billion + New equity raised totaling $115 million through the Interest bearing liabilities A$2.2 billion Fund’s distribution reinvestment plan Gearing² 39.6% + Acquired four investment properties total
Slide 39: Goodman Trust Australia
Goodman Trust Australia For personal use only Key events Key metrics¹ Total assets A$3.3 billion + Completed the second urban renewal development sale Interest bearing liabilities A$1.2 billion in North Ryde for $73 million Gearing² 36.3% + Leased 127,445 sqm in the year, representing $14 Customers
Slide 40: Goodman European Logistics Fund
Goodman European Logistics Fund For personal use only Key events Key metrics¹ Total assets A$3.3 billion + GELF successfully closed the 2013 equity raise of €550 million, 95% by existing investors and 5% by new Interest bearing liabilities A$1.4 billion investors Gearing² 34.5% Customers 98 + Second
Slide 41: Goodman Hong Kong Logistics Fund
Goodman Hong Kong Logistics Fund For personal use only Key events Key metrics¹ + Sale of one floor of Mita Centre for HK$67 million Total assets A$2.7 billion Interest bearing liabilities A$0.7 billion + Leased 148,968 sqm in the six months, representing Gearing2 22.6% HK$178 million of net property
Slide 42: Goodman Property Trust
Goodman Property Trust For personal use only Key events Key metrics1 Total assets A$1.9 billion + Capital management program: Interest bearing liabilities A$0.7billion – NZ$37 million disposal of Gateside Industry Park Gearing2 35.6% – NZ$100 million, 7 year corporate bond issue Customers 265 Number
Slide 43: Arlington Business Parks Partnership
Arlington Business Parks Partnership For personal use only Key Events Key metrics¹ Total assets A$1.6 billion + Arlington Business Parks Partnership (ABPP) is a core plus unlisted fund which invests, develops and manages Interest bearing liabilities A$0.7 billion business parks located in key UK reg
Slide 44: EPF Mandate
EPF Mandate For personal use only Key Events Key metrics1 Total assets A$1.1 billion + KWASA-Goodman Industrial Trust (KGIT) was Interest bearing liabilities A$0.4 billion established in June 2012 in partnership with the Gearing² 40.7% Employees Provident Fund (EPF) Customers 31 + KGIT invested in a
Slide 45: Goodman China Logistics Holding
Goodman China Logistics Holding For personal use only Key events Key metrics¹ + Strong support from capital partners to capitalise on the Total assets A$1.0 billion ongoing demand for prime logistics space in China: Interest bearing liabilities A$0.1 billion – US$500 million equity upsizing from Can
Slide 46: Appendix 5 Capital management
For personal use only Appendix 5+ Capital management Torun Logistics Centre, Poland
Slide 47: Group financial covenants
Group financial covenants For personal use only Covenants Test Covenant Result Headroom Net liabilities1 as a percentage of net tangible assets is Gearing ratio 55.0% 27.5% 27.5% not more than 55.0% Interest cover ratio EBITDA to interest expense at least 2.0x 2.0x 5.9x 3.9x Secured debt as a percen
Slide 48: Currency mix
For personal use only Currency mix 48
Slide 49: Financial risk management
Financial risk management For personal use only Financial risk management in line with Group Board policy +Interest risk management: – 78% hedged over next 12 months – Weighted average hedge maturity of 4.3 years – Weighted average hedge rate of 4.70%1 vs spot 1.63%2 +Foreign currency risk managemen
Slide 50: Financial risk management (cont)
Financial risk management (cont) For personal use only Interest rate + Interest rates are hedged to 78% over next 12 months + Weighted average hedge rate of 4.70%1 vs spot 1.63%2 - NZD – (hedge 4.67%, spot 4.54%) - JPY – (hedge 1.47%, spot 0.33%) - HKD – (hedge 1.22%, spot 1.76%) - GBP – (hedge 6.81
Slide 51: Financial risk management (cont)
Financial risk management (cont) For personal use only Interest rate hedging profile Euro payable GBP payable HKD payable NZD payable JPY payable USD payable AUD receivable Fixed Fixed1 Fixed Fixed Fixed Fixed A$M Fixed rate rate rate rate rate rate Rate As at €M % £M % HK$M % NZ$M % ¥M % US$M % % D
Slide 52: Financial risk management (cont)
Financial risk management (cont) For personal use only Foreign currency denominated balance sheet hedging maturity profile Currency Maturity Weighted average Amount receivable1 Amount payable1 exchange rate NZ$ 2017 / 2018 1.3767 A$93.0m NZ$130.0m HK$ 2016 / 2018 7.8154 A$332.5m HK$2,590.0m ¥ 2016 /
Slide 53: Exchange rates
Exchange rates For personal use only + Statement of Financial Position – exchange rates as at 31 December 2013 – AUDGBP – 0.5388 (31 December 2012 : 0.6428) – AUDEUR – 0.6475 (31 December 2012 : 0.7868) – AUDHKD – 6.9219 (31 December 2012 : 8.0474) – AUDBRL – 2.1090 (31 December 2012 : 2.1270) – AUD
Slide 54: Thank you
For personal use only thank+you 54