Goodman Group · ASX:GMG
Goodman — H1 FY2018 Earnings Presentation
46 slides from Goodman's earnings presentation, Feb 14, 2018
Slide 1: Results for the Half Year Ended 31 December 2017
RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2017 For personal use only
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
For personal use only CONTENTS
Slide 4: Section - Highlights
SECTION 1 - HIGHLIGHTS For personal use only COVER PAGE IMAGE
Slide 5: Highlights
HIGHLIGHTS For personal use only + Significant repositioning of the Group over the last five years has set a strong platform for the future + Financial metrics for the 1H FY18 support operational highlights – Operating profit1 of $421.3 million, up 8.5% on 1H FY17 – Operating EPS2 of 23.3 cents, up
Slide 6: Highlights
HIGHLIGHTS For personal use only + Development activity of $3.5 billion now 80% undertaken within the Partnerships – Increased fee for service income provides significantly reduced volatility of development earnings – Reduction in development capital and strong underlying activity has supported cont
Slide 7: Highlights
HIGHLIGHTS For personal use only + High occupancy maintained at 98% and WALE of 4.8 years + Like for like NPI growth at 3% Own + Leased 1.9 million sqm across the global platform equating to $217 million of annual rental property income across the Group and Partnerships + WIP at $3.5 billion across
Slide 8: Section – Results Overview
SECTION 2 – RESULTS OVERVIEW For personal use only COVER PAGE IMAGE
Slide 9: Results Overview
RESULTS OVERVIEW For personal use only + Operating EPS¹ of 23.3 cents per security, up 7.9% on 1H FY17 1H FY18 + DPS of 13.75 cents per security, up 8.3% on 1H FY17 Operating profit ($m)¹ 421.3 + Successful acceleration of asset sale programme has been dilutive to top line growth but accommodated by
Slide 10: Profit and Loss
PROFIT AND LOSS For personal use only + Half year statutory profit of $543 million, includes property Income statement valuations, derivative mark-to-markets and other non-cash or non-recurring items 1H FY17 1H FY18 $M $M – Global property revaluation gains for the 6 months were $1.2 Property invest
Slide 11: Balance Sheet
BALANCE SHEET For personal use only + Strong balance sheet maintained Balance sheet – 3% gearing impact of PLUS Hybrids repurchase and liability 30 June 31 December management programme cost absorbed 2017 2017 $M $M + Stabilised investment properties decreased as a result of 1,834 1,752 Stabilised i
Slide 12: Group Liability Management
GROUP LIABILITY MANAGEMENT For personal use only + Group strategy to rely on bond markets, less reliance on Goodman Group debt maturity profile bank debt + Extended debt maturity profile materially to ensure the Group can continue to operate efficiently and invest through the cycle mitigating volati
Slide 13: Section – Operational Performance
SECTION 3 – OPERAITONAL PERFORMANCE For personal use only COVER PAGE IMAGE
Slide 14: Property Investment
PROPERTY INVESTMENT For personal use only + Property fundamentals remain strong, reflecting the quality of Investment ($m) 1H FY17 1H FY18 the portfolio after the clear and structured asset sale Direct 69.9 60.3 programme – High occupancy at 98% Cornerstones 126.2 132.8 – Like for like NPI growth of
Slide 15: Development
DEVELOPMENT For personal use only + Development activity globally remains strong with WIP of $3.5 Development ($M) 1H FY17 1H FY18 billion Development income 623.7 597.2 – Selective choice of developments increasing development quality and value; speculative development to proven logistics locations
Slide 16: Management
MANAGEMENT For personal use only + Management earnings up 5% on 1H FY17 Management ($M) 1H FY17 1H FY18 – AUM increase due to further revaluation gains and development Management earnings² 156.5 164.7 completions across the platform, offsetting sales – Performance fees from strong cumulative Partner
Slide 17: Management - AUM
MANAGEMENT - AUM For personal use only + Major achievements completed during the half year include Third party AUM by region – GAIP completed a restructuring of bank debt facilities, reducing the banking facility limits and increasing the Partnership debt maturity to 5.9 years – GEP conditionally so
Slide 18: Management - Platform
MANAGEMENT - PLATFORM For personal use only GAIP GEP GHKLP GAP GCLP GMT GJCP GNAP GUKP Total assets $7.1bn $5.0bn $4.7bn $3.7bn $3.2bn $2.4bn3 $2.1bn $1.5bn $0.3bn GMG co-investment 27.9% 20.4% 20.0% 19.9% 20.0% 21.2% 17.3% 55.0% 33.3% GMG co-investment $1.3bn $0.6bn $0.8bn $0.7bn $0.5bn $0.3bn $0.2
Slide 19: Outlook and Summary
OUTLOOK AND SUMMARY For personal use only + Cover page
Slide 20: Outlook and Summary
OUTLOOK AND SUMMARY For personal use only + Macro trends and technology changes remain supportive of logistics real estate – E-commerce and technological solutions driving change in all forms of consumer service fulfillment and will continue to change supply chain and space requirements – Strong cus
Slide 21: Appendix – Results Analysis
APPENDIX 1 – RESULTS ANALYSIS For personal use only COVER PAGE IMAGE
Slide 22: Profit and Loss
PROFIT AND LOSS For personal use only Total income by business segment for the half year ended 31 December 2017 Category Total Property Management Development Operating Non- Investment Expenses operating items $M $M $M $M $M $M Gross property income 78.9 78.5 0.4 Management income 164.7 164.7 Develo
Slide 23: Profit and Loss (Cont)
PROFIT AND LOSS (CONT) For personal use only Category Total Property Management Development Operating Non-operating investment expenses items $M $M $M $M $M $M EBIT / Segment operating earnings 755.7 193.1 164.7 243.4 (128.4) 282.9 Net gain from fair value adjustments on investment properties (60.0)
Slide 24: Reconciliation Non-Operating Items
RECONCILIATION NON-OPERATING ITEMS For personal use only Non-operating items in statutory income statement Half year ended 31 December 2017 $M $M Property valuation related movements Net gain from fair value adjustments attributable to investment properties 60.0 Share of net gain from fair value adj
Slide 25: Financial Position
FINANCIAL POSITION For personal use only As at 31 December 2017 Direct Property Developments Other Total Assets investments $M $M $M $M $M Capital allocation Cash - - - 2,343.8 2,343.8 Receivables - - 359.0 235.2 594.2 Inventories - - 1,064.8 - 1,064.8 Investment properties 1,752.1 - 165.6 - 1,917.7
Slide 26: Net Tangible Asset Movement
NET TANGIBLE ASSET MOVEMENT For personal use only + For half year ended 31 December 2017¹ 1. Calculated on 1,800.8 million securities being closing securities on issue 26
Slide 27: Valuations
VALUATIONS For personal use only + Valuation movement continues to be driven by cap rate compression and rental growth in addition to development completions within the Partnerships + The Group WACR reflected further tightening from 5.9% to 5.7% over the half + Revaluation gains across the entire po
Slide 28: Appendix – Property Investment
For personal use only APPENDIX 2 – PROPERTY INVESTMENT COVER PAGE IMAGE
Slide 29: Leasing
LEASING¹ For personal use only Across the Group and Partnerships: + 1.9 million sqm leased during the period + High Occupancy at 98% + Like for like NPI growth at 3% Region Leasing area (sqm) Net annual rent ($M) Average lease term (years) Australia / New Zealand 576,432 83.5 4.8 Asia 665,978 86.4 3
Slide 30: Customers
CUSTOMERS For personal use only Top 20 global customers (by net income – look through basis) 30
Slide 31: Geographic Exposure
GEOGRAPHIC EXPOSURE For personal use only Top 20 sub-regions (by AUM) 31
Slide 32: Direct Portfolio Detail
DIRECT PORTFOLIO DETAIL For personal use only Portfolio snapshot Key metrics² + 22 properties with a total value of $1.7 billion located Total assets A$1.7 billion primarily in the Sydney market Customers 267 + Leasing deals remain strong across the portfolio Number of properties 22 – 76,426 sqm ($7
Slide 33: Appendix – Development
APPENDIX 3 – DEVELOPMENT For personal use only COVER PAGE IMAGE
Slide 34: Developments
DEVELOPMENTS For personal use only 1H FY18 Developments Completions Commencements Work in progress Value ($M) 1.4 1.4 3.5 Area (m sqm) 1.1 1.0 2.3 Yield (%) 7.4 7.4 7.7 Pre-committed (%) 88 57 63 Weighted average lease term (years) 10.6 8.4 7.9 Development for third parties or Partnerships (%) 78 81
Slide 35: Developments (Cont)
DEVELOPMENTS (CONT) For personal use only Development volume + Maintained development pipeline of $10 billion – Forecast GLA of 7 million sqm – Development pipeline allocated as Asia Pacific 53%, Europe 34% and Americas 13% + The Group’s development future cash commitments Commitments as at 31 Decem
Slide 36: Appendix – Management
APPENDIX 4 – MANAGEMENT For personal use only COVER PAGE IMAGE
Slide 37: Global Platform
For personal use only GLOBAL PLATFORM
Slide 38: Appendix – Capital Management
APPENDIX 5 – CAPITAL MANAGEMENT For personal use only COVER PAGE IMAGE
Slide 39: Group Financial Covenants
GROUP FINANCIAL COVENANTS For personal use only Covenants Test Covenant Result Headroom Net liabilities1 as a percentage of net tangible assets is Gearing ratio 45.0% 13.9% 31.1% not more than 45.0% Interest cover ratio EBITDA to interest expense at least 2.0x 2.0x 14.3x 12.3x Secured debt as a perc
Slide 40: Currency Mix
CURRENCY MIX For personal use only Currency mix – including the impact Currency mix – outstanding debt of Capital Hedging FX Swaps 40
Slide 41: Financial Risk Management
FINANCIAL RISK MANAGEMENT For personal use only + The Group has been implementing a robust capital management framework, which includes a revised Financial Risk Management (FRM) policy. This provides; – Stronger balance sheet which has been reflected in higher credit ratings upgrade from S&P and Moo
Slide 42: Financial Risk Management (Cont)
FINANCIAL RISK MANAGEMENT (CONT) For personal use only Interest rate Interest rate hedge profile + Interest rates are hedged to 88% over next 12 months + Weighted average hedge rate of 2.71%1 - NZD – hedge rate 3.92% - JPY – hedge rate 2.93% - HKD – hedge rate 2.18% - GBP – hedge rate 3.47%² - Euro
Slide 43: Financial Risk Management (Cont)
FINANCIAL RISK MANAGEMENT (CONT) For personal use only Interest rate hedging profile1 Euro payable GBP payable HKD payable NZD payable JPY payable USD payable AUD receivable As at Fixed3 Fixed2 Fixed Fixed Fixed Fixed Fixed Dec rate rate rate rate rate rate Rate €M % £M % HK$M % NZ$M % ¥M % US$M % A
Slide 44: Financial Risk Management (Cont)
FINANCIAL RISK MANAGEMENT (CONT) For personal use only Foreign currency denominated balance sheet hedging maturity profile Currency Maturity Range Weighted average Amount receivable1 Amount payable1 exchange rate NZ$ 2018 - 2023 1.1210 A$260.5m NZ$300.0m HK$ 2018 - 2024 6.5396 A$529.4m HK$3,390.0m €
Slide 45: Exchange Rates
EXCHANGE RATES For personal use only + Statement of Financial Position – exchange rates as at 31 December 2017 – AUDGBP – 0.5773 (31 December 2016: 0.5847) – AUDEUR – 0.6498 (31 December 2016: 0.6846) – AUDHKD – 6.1024 (31 December 2016: 5.5958) – AUDBRL – 2.5873 (31 December 2016: 2.3487) – AUDNZD
Slide 46: Results for the Half Year Ended December 2017
RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2017 For personal use only THANK YOU / IMAGE 46