Goodman Group · ASX:GMG
Goodman — FY2019 Earnings Presentation
49 slides from Goodman's earnings presentation, Aug 23, 2019
Slide 1: Results for the year end 30 June 2019
Results for the year end 30 June 2019 23 August 2019
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) Lim
Slide 3: Contents
Contents SECTION 1 APPENDICES Highlights — Results analysis SECTION 2 — Property investment — Development — Management Results overview SECTION 3 ~ Capital management Operational:performance—__ Environmental, Social © —s< SECTION 4 and Governance Outlook — Remuneration
Slide 4: Section 1 - Highlights
Section1 - Highlights Goodman ChifleyBusiness BusinessPark Park, East, VIC,Chiba, Australia Japan
Slide 5: Highlights
Highlights + The Group has delivered a strong operating performance in FY19. Key financial metrics for the year include: ‒ Operating profit1 of $942 million, up 11.4% on FY18 ‒ Operating earnings per share (EPS)2 of 51.6 cents, up 10.5% on FY18 (compared to initial guidance of 7%) ‒ Gearing at 9.7%³
Slide 6: Highlights
Highlights + Significant liquidity and balance sheet capacity maintained – Gearing at 9.7%¹ and at the lower end of the target range of 0 – 25% – $2.7 billion of available liquidity, $1.6 billion in cash (excludes available liquidity of $13.6 billion in Partnerships) + Forecast to deliver FY20 opera
Slide 7: Highlights
Highlights + High occupancy maintained at 98% and WALE of 4.7 years + Like for like NPI growth at 3.3%¹ Own + Leased 3.4 million sqm across the global platform equating to $478 million of annual rental property income across the Group and Partnerships + Properties under control support >35,000 apart
Slide 8: Section 2 - Results overview
Section 2 - Results overview Goodman Longquan Logistics Centre, Chengdu, China
Slide 9: Results overview
Results overview + Statutory accounting profit up 48% to $1,627.9 million FY18 FY19 – Includes property valuations, share based payments, derivative and mark-to-market movements Operating profit ($m) 845.9 942.3 + Operating profit of $942.3 million up 11.4% on FY18 Statutory accounting profit ($m) 1
Slide 10: Profit and loss
Profit and loss + Statutory profit of $1,627.9 million, includes property valuations, share Income statement based payments expense and mark to market movements FY18 FY19 $M $M – Continued strong revaluation gains of $3.8 billion across the platform (Group’s share $871.7 million) driven by rent grow
Slide 11: Balance sheet
Balance sheet Balance sheet + Strong balance sheet maintained FY18 FY19 $m $m – Gearing increased to 9.7% (from 5.1% in FY18) and 20.0% on a look through basis driven by growth in development activity and FX Stabilised investment properties 1,624 1,757 + Stabilised investment properties increased pr
Slide 12: Group liquidity position
Group liquidity position + Cash and available lines of credit (excluding Partnership debt Goodman Group drawn debt expiry profile and equity) of $2.7 billion as at 30 June 2019 - $1.6 billion in cash - $1.1 billion of available lines + Weighted average debt maturity profile of 6.6 years + Gearing at
Slide 13: Section 3 - Operational performance
Section 3 - Operational performance
Slide 14: Property investment
Property investment + The portfolio concentration in infill markets is delivering strong underlying Property investment ($m) FY18 FY19 returns Direct 113.2 74.0 – Occupancy remained at 98% Cornerstones 271.6 298.1 – WALE of 4.7 years Property investment earnings 384.8 372.1 – Like-for-like net prope
Slide 15: Development
Development + WIP strong at $4.1 billion and growing Development ($M) FY18 FY19 – Increased demand from our customers, driven by structural changes, is Development income 1,299.5 1,236.5 resulting in an escalation of development activity. Volumes are expected to Development expenses (808.9) (727.3)
Slide 16: Management
Management + Management earnings up 48% on FY18 Management ($M) FY18 FY19 + Continued strong performance of the Partnerships and AUM growth increasing Management earnings 316.5 469.7 management earnings – Partnership average total return of 15.9% for FY19 Key metrics FY18 FY19 – Performance fees inc
Slide 17: Management platform
Management platform GAIP GHKLP GEP GCLP GAP GNAP GJCP GMT3 GUKP Total assets $8.2bn $7.5bn $6.0bn $4.7bn $4.1bn $3.6bn $3.0bn $2.6bn $0.6bn GMG co-investment 28.4% 20.1% 20.4% 20.0% 19.9% 55.0% 16.5% 21.4% 33.3% GMG co-investment $1.5bn $1.1bn $0.7bn $0.7bn $0.8bn $1.9bn $0.3bn $0.4bn $0.2bn Number
Slide 18: Section 4 - Outlook
Section 4 - Outlook Goodman Lahr II Logistics Centre, Germany
Slide 19: Outlook
Outlook + Macro trends globally continue to drive structural changes in our industry and significant opportunity – Technology is changing consumer behaviour and enabling our customers’ ability to provide supply chain solutions to service them + Deliberate urban logistics concentration is delivering
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 year ended 30 June 2019 Category Total Property Management Development Operating Non- investment expenses operating items $M $M $M $M $M $M Gross property income 114.6 114.2 - - - 0.4 Management income 469.7 - 469.7 - - - Development income 1,
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 1,794.0 372.1 469.7 509.2 (267.7) 710.7 Net gain from fair value adjustments on investment properties (146.8) - - - - (146.8)
Slide 23: Reconciliation non-operating items
Reconciliation non-operating items Non-operating items in statutory income statement Year ended 30 June 2019 $M $M Property valuation related movements Net gain from fair value adjustments attributable to investment properties 146.8 Share of net gain from fair value adjustments attributable to inves
Slide 24: Financial position
Financial position As at 30 June 2019 Direct Assets Property Developments Other Total $M investments $M $M $M $M Capital allocation Cash - - - 1,607.1 1,607.1 Receivables - - 247.4 417.1 664.5 Inventories - - 1,069.0 - 1,069.0 Investment properties 1,756.4 - 140.7 - 1,897.1 Investments accounted for
Slide 25: Business performance analysis
Business performance analysis + Operating margins have steadily increased + ROA has increased – Focused strategy; transition business has diluted earnings short – Positive performance from investment property on a like- term with longer term benefits of structure now emerging in fee for-like basis r
Slide 26: Net tangible asset movement
Net tangible asset movement + For year ended 30 June 2019¹ 1. Calculated on 1,813.9 million securities being closing securities on issue 26
Slide 27: Property valuations
Property valuations + The Group’s results for FY19 have benefitted from the restricted supply of quality assets in prime locations, reducing bond yields, increasing land values and increasing investment allocations to industrial + The global portfolio cap rate has compressed by 36bps over FY19 to 5.
Slide 28: Appendix 2 - Property investment
Appendix 2 – Property investment Marl Logistics Centre, Germany
Slide 29: Leasing
Leasing Across the Group and Partnerships: + 3.4 million sqm leased during the year equating to $478 million of annual rental property income + High occupancy at 98% Region Leasing area (sqm) Net annual rent ($M) Average lease term (years) Australia / New Zealand 1,186,260 170.5 5.0 Asia 1,395,368 2
Slide 30: Customers
Customers Top 20 global customers (by net income - look through basis) 30
Slide 31: Geographic exposure
Geographic exposure Top 20 sub-regions (by AUM) 31
Slide 32: Direct portfolio detail
Direct portfolio detail Portfolio snapshot Key metrics¹ + 26 properties with a total value of $1.8¹ billion located Total assets A$1.8 billion primarily in the Sydney market Customers 297 Number of properties 26 – Represents a significant part of the urban renewal portfolio Occupancy 88% Weighted av
Slide 33: Appendix 3 - Development
Appendix 3 – Development
Slide 34: Developments
Developments FY19 Developments Completions Commencements Work in progress Value ($bn) 3.9 4.2 4.1 Area (m sqm) 2.2 1.9 1.8 Yield (%) 7.3 6.6 6.6 Committed (%) 81 59 58 Weighted average lease term (years) 7.2 8.7 7.9 Development for third parties or Partnerships (%) 88 81 80 Australia / New Zealand (
Slide 35: Developments (cont'd)
Developments (cont’d) + Maintained development pipeline in excess of $10 billion Development volume – Forecast GLA of 6.2 million sqm – Development pipeline allocated as Australia/New Zealand 11%, Asia 41%, UK/Europe 28% and Americas 20% + The Group’s development future cash commitments Commitments
Slide 36: Section 4 - Management
Section 4 - Management Goodman Lahr II Logistics Centre, Germany
Slide 37: Global platform
Global platform $3: 6 PROPERTIES THE AMERI © Current Goodman global presence Ast 30 June 2019 (Australian currency) CONTINENTA ae $16.1bn AUM 62 mms PROPERTIES OUR GLOBAL NETWORK $46.2bn TOTAL ASSETS UNDER MANAGEMENT (AUM) 383 PROPERTIES 17 COUNTRIES, 959 PEOPLE + DENOTES GOODMAN OFFICE 37
Slide 38: Management - AUM
Management - AUM + Major achievements completed during the year include Third party AUM by region – GHKLP successful equity raise of US$0.5bn to finance development of Westlink and Goodman Tsuen Wan West (GTWW) Stage 1. GTWW building 1 now fully pre-leased – GNAP acquired two of the largest infill i
Slide 39: Appendix 5 - Capital management
Appendix 5 – Capital management
Slide 40: Currency mix
Currency mix Currency mix – including the impact Currency mix – outstanding debt of capital hedging FX swaps 40
Slide 41: Financial risk management
Financial risk management + The Group has implemented a robust capital management framework, under its Financial Risk Management (FRM) policy. This provides: ‒ Stronger balance sheet which has been reflected in our credit ratings from S&P and Moody’s BBB+ / Baa1 respectively ‒ Covenants that are fle
Slide 42: Financial risk management (cont'd)
Financial risk management (cont’d) Interest rate hedge profile + Interest rates are hedged to 98% over next 12 months + Weighted average hedge rate of 3.12%1 - NZD – hedge rate 2.70% - JPY – hedge rate 2.17% - HKD – hedge rate 2.48% - GBP – hedge rate 2.36% - Euro – hedge rate 1.25%2 - USD – hedge r
Slide 43: Financial risk management (cont'd)
Financial risk management (cont’d) Foreign currency denominated balance sheet hedging maturity profile Currency Weighted average Weighted average Amount receivable1 Amount payable1 maturity exchange rate NZ$ 3.9 years 1.0864 A$368.3m NZ$400.0m HK$ 3.9 years 5.7382 A$817.7m HK$4,690.0m US$ 4.7 years
Slide 44: Exchange rates
Exchange rates + Statement of Financial Position – exchange rates as at 30 June 2019 – AUDGBP – 0.5523 (30 June 2018: 0.5604) – AUDEUR – 0.6173 (30 June 2018: 0.6332) – AUDHKD – 5.4761 (30 June 2018: 5.8015) – AUDBRL – 2.6880 (30 June 2018: 2.8565) – AUDNZD – 1.0449 (30 June 2018: 1.0922) – AUDUSD –
Slide 45: Appendix 6 - Environmental, Social and Governance
Appendix 6 – Environmental, Social and Governance Marl Logistics Centre, Germany
Slide 46: Environmental, Social and Governance
Environmental, Social and Governance The Group completed a comprehensive review of its sustainability approach and performance during the year and refined its target focus to three strategic pillars. These represent key ESG priorities most relevant to Goodman, its stakeholders and customers. In orde
Slide 47: Appendix 7 - Remuneration
Appendix 7 – Remuneration Marl Logistics Centre, Germany
Slide 48: Remuneration
Remuneration + Goodman’s remuneration structure has a strong emphasis on pay for performance over the long term through equity ‒ 100% of employees globally having a material proportion of remuneration in at risk LTIP Performance Rights, this is unique amongst Australian companies ‒ Through its testi
Slide 49: 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) and Goodman Logistics (HK) Limited (Comp