Goodman Group · ASX:GMG
Goodman — FY2015 Earnings Presentation
56 slides from Goodman's earnings presentation, Aug 13, 2015
Slide 1: Investor Update
Investor Update 11 June 2015 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
Contents For personal use only + Section 1 Highlights + Section 2 Results overview + Section 3 Operational performance + Section 4 Strategy and outlook + 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 driving consistent and sustainable growth – Operating profit¹ of $653 million, up 9% on FY2014 – Operating EPS¹ of 37.2 cents², up 7.1% on FY2014 – Distribution per security of 22.2 cents, up 7% on FY2014 – FY2016 forecast operating EPS of 39.4 cen
Slide 6: Highlights
Highlights For personal use only + Development led strategy providing the best risk adjusted returns – Creating our own future deal flow – Opportunity to access the best assets in the best markets for our managed partnerships – Customer service model and relocations contributing to development work
Slide 7: Highlights
Highlights For personal use only + Asset sales of $1.9 billion across the Group and managed partnerships have reduced capital needs + High occupancy maintained at 96% + Retention rate of 74% and WALE of 4.8 years Own + Like for like rental growth at 2.5% and positive lease reversions of 4.7% on new
Slide 8: Section 2 Results overview
For personal use only Section Section2+2+ Results Results Overview overview Stockyards Industrial Estate, Australia M7 Business Hub, Australia 8
Slide 9: Results overview
Results overview For personal use only + Delivering sustainable operating results FY2015 – Development contributions and sound property fundamentals driving overall performance Operating profit ($m) 653.5 – Benefiting from global platform with offshore earnings Statutory accounting profit ($m) 1,208
Slide 10: Profit and loss
Profit and loss For personal use only + Statutory profit of $1.2 billion, includes property Income statement valuations, derivative mark-to-markets and other non- FY2014 FY2015 $m $m cash or non-recurring items Investment (look through) 491.8 500.6 – Cap rate compression and revaluations from higher
Slide 11: Balance sheet
Balance sheet For personal use only Balance sheet + Strong balance sheet maintained FY2014 FY2015 – Financial leverage reduced given earnings mix $m $m – 60% pay out ratio of operating EPS Stabilised investment properties 2,191 2,710 – Self financing business over the long term Partnership cornersto
Slide 12: Group liquidity position
Group liquidity position For personal use only + Capital structure and hedge strategies have enabled the Goodman Group debt maturity profile Group to withstand foreign currency volatility + Goodman Group has cash and available lines of credit of $1,793 million as at 30 June 2015 – $747 million cash
Slide 13: Section 3 Operational Performance
For personal use only Section 3+ Operational Performance Interlink, Berlin Goodman Fiege Brieseleang, Hong Kong Osaka Nanko, Japan
Slide 14: Investment
Investment For personal use only + Property fundamentals remain sound reflecting the quality of Investment ($m) FY2014 FY2015 the portfolio and customers Direct 152.1 145.9 – Maintained occupancy at 96% Cornerstones 339.7 354.7 Look through EBITDA 491.8 500.6 – Retention remains high at 74% Key metr
Slide 15: Development
Development For personal use only + Development WIP at $3.1 billion Development ($M) FY2014 FY2015 – Active contributions from all markets Revenue 276.5 327.8 EBITDA 214.5 256.6 + Increased development volumes driving 20% increase in development EBITDA Key metrics FY2014 FY2015 – Development revenue
Slide 16: Management
Management For personal use only + Average managed partnership total returns exceeding Management ($M) FY2014 FY2015 16% Management income² 205.9 215.7 + Increasing asset values growing management earnings EBITDA 117.1 125.2 – Transactional activity levels consistent with FY2014 Key metrics FY2014 F
Slide 17: Management - AUM
Management - AUM For personal use only + Major achievements completed during the year include – CPPIB increased equity commitment to GNAP by US$500 million Third party AUM by region – Commitment of a further US$500 million for GCLH taking total equity for the partnership to US$2.0 billion – ¥23 bill
Slide 18: Management platform
Management platform For personal use only GAIF GHKLF GTA GELF GCLH GMT1 GJCF2 EPF ABPP Total assets $6.2bn $3.9bn $3.6bn $3.6bn $2.1bn $1.9bn $1.4bn $1.2bn $1.2bn GMG co-investment 27.5% 20.0% 19.9% 20.4% 20.0% 18.0%3 22.4%3 37.5% 43.1% GMG co-investment $1.0bn $0.6bn $0.5bn $0.4bn $0.3bn $0.2bn3 $0
Slide 19: Section 4 Outlook and Initiatives 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 + Australian listed, leading global industrial property operator and fund manager + Delivering significant benefit from opportunities in the global platform + Globally diversified operating platform across key logistics markets managed by a skilled team of
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: Sustainable growth
Sustainable growth For personal use only Operating EPS Development WIP Total AUM Gearing + Consistent and sustainable operating earnings growth over five years + Growth in development remains sustainable with entry into new markets and ongoing structural changes within those markets + AUM organicall
Slide 23: Profit and loss
Profit and loss For personal use only Total income by business segment for the year ended 30 June 2015 Category Total Investment Management Development Unallocated Non- operating items $M $M $M $M $M $M Gross property income 206.1 205.3 - - - 0.8 Management income 215.3 - 215.3 - - - Development inc
Slide 24: 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 1,378.0 394.6 125.2 256.6 (59.3) 660.9 Net gain from fair value adjustments on investment properties (515.9) - - - - (515.9) S
Slide 25: Reconciliation non-operating items
Reconciliation non-operating items For personal use only Non-operating Items in statutory profit & loss Year ended 30 June 2015 $M $M Property valuations Net gain from fair value adjustments on investment properties 515.9 Share of net gain from fair value adjustments on investment properties in asso
Slide 26: Financial position
Financial position For personal use only As at 30 June 2015 Direct Investments Developments Other Total Assets $M $M $M $M $M Cash - - - 746.5 746.5 Receivables - 32.5 248.1 123.5 404.1 Inventories - - 1,431.7 - 1,431.7 Investment properties 2,709.6 - 196.4 - 2,906.0 Investments accounted for using
Slide 27: Net tangible asset bridge
Net tangible asset bridge For personal use only + For year ended 30 June 2015¹ 1. Calculated on 1,753.0 million securities being closing securities on issue 27
Slide 28: Cash flow
Cash flow For personal use only + Cash flow from operating activities growing in excess of underlying operating profit + Reinvestment into development activities consistent with overall development led investment strategy + Current year cash distributions from equity accounted investments includes p
Slide 29: Property valuations
Property valuations For personal use only + FY2015 has seen the industrial market strengthen, with the WACR firming to 7.0% + The predominant driver of the $710 million of property valuations has been the revaluation of the Group’s Urban Renewal sites, which represents approximately 70% + Strong dem
Slide 30: Appendix 2 Investment
For personal use only Appendix 2+ Investment Goodman Interlink, Hong Kong
Slide 31: Leasing
Leasing1 For personal use only Across the Group and partnerships: + 3.4 million sqm leased during the year + Reversions of 4.7% on new leasing deals, with like for like NPI growing at 2.5% + Occupancy maintained at 96% Region Leasing area (sqm) Net annual rent ($M) Average lease term (years) Austral
Slide 32: Customers
Customers For personal use only Top 20 global customers (by net income – look through basis) 32
Slide 33: Geographic exposure
Geographic exposure For personal use only Top 20 sub-regions (by AUM) 33
Slide 34: Direct portfolio detail
Direct portfolio detail For personal use only Portfolio snapshot Key metrics + 31 properties with a total value of $2.7 billion located primarily Total assets A$2.7 billion across key Australian and UK markets Customers 262 – Bulk of UK portfolio sold in FY2015 Number of properties 31 – Significant
Slide 35: Appendix 3 Development
Rheinberg Logistics Centre , Germany For personal use only Appendix 3+ Development Bungarribee Industrial Estate, Australia
Slide 36: Developments
Developments For personal use only FY15 Developments Completions Commencements Work in progress Value ($M) 2,516 2,729 3,074 Area (m sqm) 2.1 2.0 2.2 Yield (%) 8.6 8.6 8.8 Pre-committed (%) 91 73 65 Weighted average lease term (years) 8.7 10.5 10.7 Development for third parties or partnerships (%) 8
Slide 37: Developments (cont)
Developments (cont) For personal use only + Maintained development pipeline in excess of $10 billion Development volume – Forecast GLA over 7 million sqm – Development pipeline allocated as Asia Pacific 54%, Europe 27% and The Americas 19% + The Group’s development future cash commitments Commitment
Slide 38: Appendix 4 Management
For personal use only Appendix 4+ Management Senec Logistics Centre, BirminghamBusiness Slovakia Park, U.K Interlink Industrial Estate, Australia
Slide 39: Global platform
For personal use only Global platform 39
Slide 40: Goodman Australia Industrial Fund
Goodman Australia Industrial Fund For personal use only Key events Key metrics¹ Total assets A$6.2 billion + Execution of asset rotation strategy disposing $300 million of investment properties in the financial year Interest bearing liabilities A$2.4 billion Gearing² 36.4% + Completed 102,687 sqm of
Slide 41: Goodman Hong Kong Logistics Fund
Goodman Hong Kong Logistics Fund For personal use only Key events Key metrics¹ Total assets A$3.9bn + Leased 210,146 sqm in the 12 months, representing HK$203.2 million of annualised rental income Interest bearing liabilities A$0.8bn Gearing2 21.5% + 99% occupancy with a weighted average lease expir
Slide 42: Goodman Trust Australia
Goodman Trust Australia For personal use only Key events Key metrics¹ Total assets $3.6bn + Execution of asset sales strategy disposing $273 million of investment properties in the financial year Interest bearing liabilities $1.1bn Gearing2 30.8% + Leased 499,311 sqm in the year, representing $48 mi
Slide 43: Goodman European Logistics Fund
Goodman European Logistics Fund For personal use only Key metrics¹ Key events Total assets $3.6bn + Secured 693,284 sqm of new and renewed leases (excluding developments). These leases equate €29.1 million of net Interest bearing liabilities $1.3bn property income Gearing2 32.6% + Over the 12 months
Slide 44: Goodman China Logistics Holding
Goodman China Logistics Holding For personal use only Key events Key metrics¹ + GCLH portfolio continues to expand with 23 stabilised Total assets A$2.1bn properties and 13 development projects, total assets are Interest bearing liabilities A$0.3bn A$2.1bn Gearing² 1.0% + Completed six strategic acq
Slide 45: Goodman Property Trust
Goodman Property Trust For personal use only Key events1 Key metrics1 Total assets A$1.9 billion + New Viaduct joint venture created with GIC, providing additional capital for future development Interest bearing liabilities A$0.6billion + Capital management program Gearing 34.2%3 – NZ$148.8 million
Slide 46: Goodman Japan Core Fund
Goodman Japan Core Fund For personal use only Key Events Key metrics1 Total assets A$1.4 billion + Acquired two new industrial assets, Goodman Obu and Goodman Mizue, from the Goodman Japan Interest bearing liabilities A$0.6 billion Development Partnership Gearing² 44.8% Customers 25 + 100% occupancy
Slide 47: Arlington Business Parks Partnership
Arlington Business Parks Partnership For personal use only Key Events Key metrics¹ + Arlington Business Parks Partnership (ABPP) is a core Total assets A$1.2bn plus unlisted fund which opportunistically invests, Interest bearing liabilities A$0.4bn develops and manages business parks located in key
Slide 48: Appendix 5 Capital management
For personal use only Appendix 5+ Capital management Torun Logistics Centre, Poland
Slide 49: Group financial covenants
Group financial covenants For personal use only Covenants Test Covenant Result Headroom Net liabilities1 as a percentage of net tangible assets is not Gearing ratio 55.0% 26.1% 28.9% more than 55.0% Interest cover ratio EBITDA to interest expense at least 2.0x 2.0x 6.0x 4.0x Secured debt as a percen
Slide 50: Currency mix
Currency mix For personal use only Currency mix – outstanding debt Currency mix – including the impact of Capital Hedging FX Swaps 50
Slide 51: Financial risk management
Financial risk management For personal use only Financial risk management in line with Group Board policy + Interest risk management: - Policy to ensure between 60% and 100% of current year interest rates are fixed - 94% hedged over next 12 months - Weighted average hedge maturity of 5.4 years - Wei
Slide 52: Financial risk management (cont)
Financial risk management (cont) For personal use only Interest rate Interest rate hedge profile + Interest rates are hedged to 94% over next 12 months + Weighted average hedge rate of 5.40%1 - NZD – hedge rate 4.62% - JPY – hedge rate 1.47% - HKD – hedge rate 1.99% - GBP – hedge rate 6.62%2 - Euro
Slide 53: Financial risk management (cont)
Financial risk management (cont) For personal use only Interest rate hedging profile Euro payable GBP payable HKD payable NZD payable JPY payable USD payable AUD receivable As at Fixed Fixed1 Fixed Fixed Fixed Fixed A$M Fixed June rate rate rate rate rate rate Rate €M % £M % HK$M % NZ$M % ¥M % US$M
Slide 54: Financial risk management (cont)
Financial risk management (cont) For personal use only Foreign currency denominated balance sheet hedging maturity profile Currency Maturity Weighted average Amount receivable1 Amount payable1 exchange rate NZ$ 2017 / 2018 1.2252 A$65.4m NZ$100.0m HK$ 2016 / 2018 7.8154 A$332.5m HK$2,590.0m ¥ 2017 /
Slide 55: Exchange rates
Exchange rates For personal use only + Statement of Financial Position – exchange rates as at 30 June 2015 – AUDGBP – 0.4903 (30 June 2014 : 0.5511) – AUDEUR – 0.6910 (30 June 2014 : 0.6883) – AUDHKD – 5.9739 (30 June 2014 : 7.3034) – AUDBRL – 2.3930 (30 June 2014 : 2.0820) – AUDNZD – 1.1381 (30 Jun
Slide 56: Thank you
For personal use only thank+you 56