Goodman Group · ASX:GMG
Goodman — H1 FY2009 Earnings Presentation
64 slides from Goodman's earnings presentation, Feb 25, 2009
Slide 1: Results for the half year ended 31 December 2008
For personal use only Goodman Group Results for the half year ended 31 December 2008
Slide 2: Disclaimer
2 Disclaimer For personal use only + 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 Number 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839)). This document is a pr
Slide 3: Overview
3 Overview For personal use only + Markets are challenging and will remain that way for some time + We are responding through definitive and material actions + Addressing the key issues + Consolidate market position Goodman Group Results for the half year ended 31 December 2008
Slide 4: Liquidity
4 Liquidity For personal use only + Available liquidity of $842 million + Significantly reduced capital commitments going forward – Development capital expenditure commitment of $95 million – Investment commitments $216 million – Cash settlements on contracted asset sales $168 million + Progressing
Slide 5: Gearing and ICR
5 Gearing and ICR For personal use only + Goodman is comfortably within its covenants – Gearing 41.2%1 – ICR 3.4X2 + Most funds comfortably within covenants – ABPP gearing 59% - investors and banks have shown strong support as was evident in the recent asset for equity swap executed in December 2008
Slide 6: Valuations
6 Valuations For personal use only + Thorough and consistent process – 7% average decline driven by cap rate shift – Primarily UK but all markets affected – Some write downs on land holdings to allow the absorption of future holding costs – IIF taken at market ($15.8 million current book value) – De
Slide 7: Contents
7 Contents For personal use only + Section 1 Operational performance + Section 2 Financial performance + Section 3 Capital management + Section 4 Summary + Section 5 Appendices Goodman Group Results for the half year ended 31 December 2008
Slide 8: Section – Operational performance
8 For personal use only Section 1 – Operational performance Goodman Group Results for the half year ended 31 December 2008
Slide 9: Investments
9 Investments + Property investments (70% of operating EBIT) For personal use only – 60% from directly owned (7.2% yield) – 40% from cornerstone (5.3% yield) + Australian direct property fundamentals remains strong – 98% portfolio occupancy – average WALE1 4.3 years – average rental increase of 3.8%
Slide 10: Fund management
10 Fund management Business space AUM Third party AUM growth drivers 1H09 $ billion + Management services (24% of operating EBIT) For personal use only + Third party assets under management (AUM) grew Open 14.3 by $0.7 billion or 5% on a constant currency basis Acquisitions on market Acquisitions fr
Slide 11: Developments
11 Developments For personal use only + Development (6% of operating EBIT) Work in progress $B Opening 3.1 – Return on capital of 9% (profit and fees) FX impact 0.1 – Implementation of capital management initiatives Completions (1.5) Projects under review (0.6) – Reviewing $0.6 billion of previously
Slide 12: Key events
12 Key events For personal use only + Successfully completed $956 million equity raising + Disposal of 50% of Goodman’s interest in Hong Kong development assets + Restructure and streamline of Asian business – acquisition of Macquarie’s 50% interest in MGA + ABPP – $764 million equity raising + GELF
Slide 13: Earnings outlook
13 Earnings outlook For personal use only + Strong operating performance first half – 1% increase in occupancy, positive reversions and low delinquencies – Third party AUM up 20% (5% excluding FX) to $17.1 billion – Development WIP down to $1.5 billion (89% in Funds) in line with capital management
Slide 14: Section – Financial performance
14 For personal use only Section 2 – Financial performance Goodman Group Results for the half year ended 31 December 2008
Slide 15: Financial performance
15 Financial performance For personal use only + 1H FY09 operating profit of $216.21 million – in line with forecast + Operating EPS of 11.1 cents and DPS of 9.65 cents Half year ended Half year ended Increase/ 31 Dec 2008 31 Dec 2007 (decrease) Operating earnings per security (cents)1 11.08 17.47 (
Slide 16: Reconciliation of operating profit
16 Reconciliation of operating profit For personal use only Equivalent to distribution per security of 9.65 cents3 Equivalent to earnings per security of 11.1 cents 1. Profit (Loss) after tax is statutory profit (loss) after tax attributable to securityholders. 2. Includes $1 million loss on disposa
Slide 17: Net Asset bridge
17 Net Asset bridge + For year half ended 31 December 2008 For personal use only 1. Calculated on 2,738.0 million securities being closing securities on issue of 2,779.7 million less 41.6 million securities related to ESAP. Goodman Group Results for the half year ended 31 December 2008
Slide 18: Gearing bridge
18 Gearing bridge For personal use only + 1.3% movement in gearing from 30 June to 31 December 2008 + Headline gearing of 41.2% + Look through gearing 51% Goodman Group Results for the half year ended 31 December 2008
Slide 19: Liquidity bridge
19 Liquidity bridge For personal use only + $842 million in liquidity as at 31 December 2008 Liquidity bridge $M Contracted Asset Land & Stabilised Cornerstone Total Sales $M WIP Assets Units As at 30 June 2008 1,687 Settled in half 146 64 – 210 Investments (447) Settled next half 121 – 47 168 Devel
Slide 20: Earnings composition
20 Earnings composition Earnings type (Operating EBIT)1 1H09 1H08 restated1 For personal use only $M % $M % Property investment2 246 70 238 53 Management services 86 24 111 25 Development 21 6 97 22 + Operating EBIT composition in line with guidance – Property investment increased due to higher aver
Slide 21: Valuations
21 Valuations + Net property valuation loss of $487.0 million for the period - equates to 7% at the For personal use only property level Investment valuation summary GMG 1H09 GMG book value WACR movement 31 Dec 08 31 Dec 08 $M $M % Australia (80.0) 3,701.9 7.2 New Zealand (10.6) 315.2 8.3 Hong Kong
Slide 22: Section – Capital management
22 For personal use only Section 3 – Capital management Goodman Group Results for the half year ended 31 December 2008
Slide 23: Capital management
23 Capital management For personal use only + Debt – Maintained long-term investment grade ratings of BBB+ (S&P) and Baa1 (Moody’s) – $842 million in available liquidity as at 31 December 2008 – Weighted average debt maturity profile of 3.52 years – Total group borrowings of $4,072.9 million as at 3
Slide 24: Capital management: Fund platform capital
24 Capital management (cont) For personal use only Fund platform capital + Balance of undrawn capital ($1.3 billion) – $0.5 billion of undrawn equity capital within managed funds – $0.8 billion of debt capacity + Weighted average debt maturity profile of 3.3 years Goodman Group Results for the half
Slide 25: Section – Summary
25 For personal use only Section 4 – Summary Goodman Group Results for the half year ended 31 December 2008
Slide 26: Summary
26 Summary For personal use only + Maintain 19.3 cents operating EPS target for FY2009 + Focus on capital management and capital allocation + Maintain capabilities + Focus on opportunities to capitalise on competitive position and operating platform Goodman Group Results for the half year ended 31 D
Slide 27: Section – Appendices
27 For personal use only Section 5 – Appendices Goodman Group Results for the half year ended 31 December 2008
Slide 28: Appendices
28 Appendices For personal use only Contents Page number + Financial performance 29 + Reconciliation of distribution 32 + Financial position 33 + Investments 36 + Developments 39 + Fund management 41 + Capital and debt management 52 Goodman Group Results for the half year ended 31 December 2008
Slide 29: Financial performance
29 Financial performance For personal use only + Operating results in line with forecast – Operating profit1 of $216.2 million – Operating EPS1 11.1 cents – DPS of 9.65 cents – in line with management forecast – Composition in line with expectations + Financial position – Gearing at 41.2%2 and inter
Slide 30: Financial performance (cont)
30 Financial performance (cont) GMG results Half year ended Half year ended Increase / (decrease) 31 Dec 2008 31 Dec 2007 For personal use only (restated) $M $M $M Property investment 176.5 193.3 (16.8) Management services 130.8 161.3 (30.5) Development 21.0 96.7 (75.7) Operating revenue net of prop
Slide 31: Financial performance (cont)
31 Financial performance (cont) + Total income by business segment for year half ended 31 December 2008 Category Total Property Management Realised gains Unallocated Unrealised For personal use only investment / (Losses) profit / (loss) / Non-operating items $M $M $M $M $M $M Property income 131.5 1
Slide 32: Reconciliation of distribution
32 Reconciliation of distribution Category Total Property Management Realised gains Unallocated Unrealised investment / (losses) profit / (loss) / For personal use only Non-operating items $M $M $M $M $M $M EBIT (363.3) 176.5 86.0 21.0 (15.9) (630.9) Unrealised gains/losses on investment property re
Slide 33: Financial position
33 Financial position Movement in assets For personal use only + For year half ended 31 December 2008 Net tangible asset reconciliation $M $M Per security1 Net assets at 1 July 2008 4,669.1 2.79 Less: Minority interests (320.6) (0.19) Net assets attributable to security holders 4,348.5 2.60 Revaluat
Slide 34: Financial position
34 Financial position (cont) For personal use only + Headline gearing of 41.2% As at 31 December 2008 Asia Pacific Europe Total $M $M $M Investment properties 2,574.5 1,359.8 3,934.3 Investments in funds 2,197.2 978.3 3,175.5 Other segment assets1 654.6 1,427.9 2,082.5 Cash 166.7 Other assets 291.9
Slide 35: Financial position: Capital allocation
35 Financial position (cont) For personal use only Capital allocation + Total property investment portfolio up $0.4 billion to $6.0 billion – reduction in directly owned assets $0.1 billion – increase of $0.5 billion cornerstone1, predominately from ABPP asset-for-equity swap + Group owned developme
Slide 36: Investments
36 Investments Australian core property For personal use only + 34 properties with a total value of $2.4 billion1 located across key Australian markets + Leasing deals remain strong across the portfolio – 96,294 sqm ($10.2 million net annual rental) of existing space leased – customer retention 72%
Slide 37: Property rental increase profile
37 Investments (cont) For personal use only Property rental increase profile + Average rental increase of 3.8% for 1H09 + High level of fixed and CPI reviews provide certainty in income growth + Market reviews to occur in 2H09 Goodman Group Results for the half year ended 31 December 2008
Slide 38: Investments (cont)
38 Investments (cont) Cornerstone investment performance For personal use only + $3.2 billion invested, up $0.5 billion since June 2008 + Average total return since inception (annualised) (1.1%)1 – Asia Pacific 10.0% – Europe (14.1%) Largest cornerstone investments Fund Region Performance Relative t
Slide 39: Developments
39 Developments For personal use only Work in progress On balance sheet Third party funds Total end value Third party funds by region end value end value % of total $M $M $M Asia Pacific 62 659 721 91 Europe 106 683 789 87 Total 168 1,342 1,510 89 + Future GMG development cash commitments (WIP) to b
Slide 40: Developments
40 Developments (cont) For personal use only Goodman Group Results for the half year ended 31 December 2008
Slide 41: Fund management: Assets under management
41 Fund management Assets under management For personal use only + Total assets under management of $17.1 billion (excluding direct assets)1 + Diversified across markets in Australia, New Zealand, Hong Kong, Japan, UK and Europe 1. GMG holds a further $4.2 billion of assets under management on balan
Slide 42: Fund management (cont)
42 Fund management (cont) + 39 offices in 19 countries For personal use only Note: Number of people is position as at 31 December 2008 and excludes restructure as announced on 22 January 2009. Goodman Group Results for the half year ended 31 December 2008
Slide 43: Fund management
43 Fund management (cont) For personal use only Fund 31 Dec 2008 30 Jun 2008 Variance Variance $B $B $B % GMG 4.2 4.3 (0.1) (2%) GMT 1.3 1.3 - - GAIF 4.9 4.6 0.3 7% MGLF-HK 1.8 1.2 0.6 50% J-REP 2.0 1.1 0.9 82% GELF 3.1 2.2 0.9 41% ABPP 3.1 3.1 - - GEPBF 0.8 0.7 0.1 14% Other wholesale 0.1 0.1 - - A
Slide 44: Fund management
44 Fund management (cont) For personal use only Europe Asia Pacific Total UK EUR UK EUR AUS AUS NZ HK China Japan Business Parks Logistics 1 Fund Name ABPP GEBPF GMG GELF GMG GAIF GMT MGLF-HK GMG J-REP Third Party AUM ($bn) $3.2 $0.8 $3.1 $4.9 $1.3 $1.8 $2.0 $17.1 GMG on B/S AUM ($bn) $0.0 $0.1 $1.1
Slide 45: Fund management: Drivers of third party AUM growth
45 Fund management (cont) For personal use only Drivers of third party AUM growth Business space AUM growth drivers 1H09 Third party AUM + $17.1 billion of third party assets under management $bn – $2.8 billion net increase for the half Open 14.3 Acquisitions on market 0.6 – 20% growth for the half
Slide 46: Fund management: Fund platform capital
46 Fund management (cont) For personal use only Fund platform capital + Capital partners1 – 56 investors in two or more Goodman funds (+14% from FY08) – new investors in funds post capital raisings – strong investor relationships – confidence in management and long term focus – 45% (by value) of inv
Slide 47: Key fund highlights – Asia Pacific
47 Fund management (cont) For personal use only Key fund highlights – Asia Pacific + Australia – GAIF – Revaluations resulted in a 1.5% reduction in the Fund’s total portfolio value, average capitalisation rate 7.2% – Rent reviews of 456,723 sqm, providing an annualised increase of 3.9% – Portfolio
Slide 48: Key fund highlights – Asia Pacific
48 Fund management (cont) For personal use only Key fund highlights – Asia Pacific + Hong Kong – MGLF-HK – Fund YTD total return of 13.5% (nine months)1 – Total return since inception 45.7% (average 15.2% pa) – Average stabilised portfolio cap rate of 6.9% – Average portfolio occupancy of 98% and WA
Slide 49: Key fund highlights – Europe
49 Fund management (cont) For personal use only Key fund highlights – Europe + Continental European Logistics – GELF – Total portfolio value of $3.1 billion – Portfolio occupancy stable at 97% and WALE of 6.1 years – Over 130,000 sqm leased during the half year with average lease term of five years
Slide 50: Key fund highlights – Europe
50 Fund management (cont) For personal use only Key fund highlights – Europe + UK Business Parks – ABPP – £390 million of equity raised from existing investors – Revised debt covenant from 60% to 65% – 59% gearing (post devaluation and asset-for-equity swap) – Portfolio occupancy remains constant at
Slide 51: Top global customer base
Fund management (cont) 51 Top 20 global customer base (by net rental income)1 For personal use only (Moody’s/S&P) 1. Includes customers of GMG and its managed funds. 2. Parent company rating adopted for Coles, NYK Logistics and T-Mobile. Goodman Group Results for the half year ended 31 December 2008
Slide 52: Debt management of Goodman managed funds
52 Capital management For personal use only Debt management of Goodman managed funds + Goodman successfully arranged the following major debt raisings within its managed funds – successfully refinanced HK$1.1 billion in Macquarie Goodman Hong Kong Logistics Fund (MGLF-HK) in October 2008 and increas
Slide 53: Capital management
53 Capital management (cont) For personal use only + Financial risk management in line with Group board policy – interest risk management is conservative with: – 79% hedged in the first 12 months and to the upper end of policy for eight years – Weighted average hedge maturity of 4.92 years – Weighte
Slide 54: Capital management: Equity
54 Capital management (cont) For personal use only Equity + $956.0 million in new equity capital raisings in October 2008 + Closing number of securities on issue 2,779.7 million1 + Market capitalisation of $2,057.0 million at a $0.74 security price as at 31 December 2008 Securities issued $M Capital
Slide 55: Capital management: Credit metrics
55 Capital management (cont) For personal use only Credit metrics + Group gearing and interest cover ratio are within corporate investment grade credit ratings + Facilities are mainly unsecured (only 1.2% secured) on common terms for all financiers + Goodman is within its covenants under its bank fa
Slide 56: Capital management
56 Capital management (cont) For personal use only Goodman Group Results for the half year ended 31 December 2008
Slide 57: Financial risk management
57 Capital management (cont) For personal use only Financial risk management + Capital hedging – The Group, where practical, funds its international commitments and investments in local foreign currency – Cross currency swaps are used on a case by case basis as required + Foreign sourced income – Fo
Slide 58: Financial risk management
58 Capital management (cont) For personal use only Financial risk management + Interest rate – Interest rates are hedged to 79% over next 12 months – Weighted average hedge rate of 5.31%1 vs spot2 2.84% – NZD – (hedge 6.43%, spot 4.10%) – JPY – (hedge 1.55%, spot 0.85%) – HKD – (hedge 4.27%, spot 2.
Slide 59: Capital management
59 Capital management (cont) For personal use only 1. Includes the 10 year EMTN £250 million at 9.75% fixed rate. Goodman Group Results for the half year ended 31 December 2008
Slide 60: Interest rate hedging profile
60 Capital management (cont) For personal use only Interest rate hedging profile Euro payable GBP payable HKD payable NZD payable JPY payable Fixed Fixed Fixed Fixed Fixed rate rate rate rate rate As at June €M % £M % HK$M % NZ$M % ¥M % 2009 (694.9) 3.88% (781.4) 5.74% (1,600.0) 4.28% (315.2) 6.10%
Slide 61: Currency hedging profile
61 Capital management (cont) For personal use only Currency hedging profile Amount Amount Amount Maturing in Hedge rate payable Hedge rate payable Hedge rate payable year ending June €M HK$M NZ$M 2009 0.5788 (12.0) 5.3831 (15.8) 1.1223 (4.3) 2010 0.5663 (24.0) 5.2922 (68.55) 1.1491 (5.6) 2011 0.5250
Slide 62: Foreign currency denominated balance sheet hedging maturity profile
62 Capital management (cont) For personal use only Foreign currency denominated balance sheet hedging maturity profile Currency Maturity Weighted average Amount receivable1 Amount payable1 exchange rate €M 2009 0.5845 A$513.2M €300M NZ$M 2012 1.1328 A$176.6M NZ$200M HK$M 2012 6.7145 A$148.9M HK$1000
Slide 63: Capital management (cont): Exchange rates
63 Capital management (cont) Exchange rates For personal use only + Statement of financial performance – average exchange rates for the six months to 31 Dec 2008 – AUDGBP – 0.4488 (31 December 2007 : 0.4269) – AUDEUR – 0.5502 (31 December 2007 : 0.6164) – AUDHKD – 6.0725 (31 December 2007 : 6.7640)
Slide 64: For personal use only
For personal use only