Goodman Group · ASX:GMG
Goodman — FY2012 Earnings Presentation
57 slides from Goodman's earnings presentation, Aug 10, 2012
Slide 1: ASX cover letter: Goodman full year results presentation
10 August 2012 The Manager Company Notices Section ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir GMP: GOODMAN GROUP (GMG) ANNOUNCEMENT – GOODMAN FULL YEAR RESULTS PRESENTATION We attach an announcement made by Goodman Group in relation to its Full Year Results. Please contact
Slide 2: Goodman Group Results for the year ended 30 June 2012
Goodman Group Results for the year ended 30 June 2012 10 August 2012 building the future+
Slide 3: Important notice and disclaimer
Important notice and disclaimer 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 present
Slide 4: Contents
Contents + Section 1 Highlights + Section 2 Results overview + Section 3 Operational performance + Section 4 Outlook and summary + Appendices – Results analysis – Investment – Development – Management – Capital management – Corporate structure 3
Slide 5: Section 1 Highlights
Section 1+ Highlights Goodman Interlink, Hong Kong 4
Slide 6: Highlights
Highlights + Focused strategy delivering: – Operating profit1 of $463 million, up 21% on FY2011 – Operating EPS1 of 30.52 cents, up 8% on FY2011 – Distribution per security of 18.0 cents, up 3% on FY2011 – Total assets under management of $20 billion, up 11% on FY2011 + Global operating platform: –
Slide 7: Highlights
Highlights + Strength and focus of Group’s strategy delivering results: – The ‘active’ developments and management businesses contributed 38% of operating EBIT, trending to 50% over medium term – Increasing market share across Goodman regions of operation – Focus on quality of service and consistenc
Slide 8: Highlights
Highlights + High occupancy maintained at 96% + Retention rate of 80% and WALE of 5.2 years Own + Like for like rental growth at 2.8% + Leased 1.9 million sqm across the platform equating to $195 million of property income + WIP at $1.9 billion across 68 projects in 13 countries with a forecast yiel
Slide 9: Section 2 Results overview
Section 2+ Results overview Stockyards Industrial Estate, Australia 8
Slide 10: Results overview
Results overview + Operating results above initial targets: FY2012 – Stronger than expected performance in European operations Operating profit ($M) 463.4 Statutory accounting profit ($M) 408.3 – Maintained liquidity and low gearing Operating EPS (cents)1 30.7 – Fund capital raisings and development
Slide 11: Profit and loss
Profit and loss + Full year operating profit of $463.4 million: Income statement FY2011 FY2012 – Foreign EBIT reduced by weighted average AUD $m $m appreciation of 5% compared to FY2011 Investment (look through) 443.2 477.6 – Offset by currency hedges included in interest expense Management 62.6 79.
Slide 12: Balance sheet
Balance sheet + Strong balance sheet maintained: Balance sheet – Selective approach to pre-committed and pre-sold FY2011 FY2012 developments $m $m Stabilised investment properties 2,409 2,259 – Managed fund equity raisings and asset recycling Fund cornerstones1 2,632 2,937 + Stabilised asset and fun
Slide 13: Group liquidity position
Group liquidity position + Goodman Group has cash and available lines of credit of Goodman Group debt maturity profile $1.3 billion at 30 June 2012: – $310.8 million cash – $965.6 million available lines + Significant covenant headroom maintained + Average Debt Maturity profile of 5.9 years + ICR at
Slide 14: Section 3 Operational performance
Section 3+ Operational performance Saint-Mard Logistics Centre, France 13
Slide 15: Investment
Investment + Property fundamentals remain stable reflecting quality of Investment ($m) FY11 FY12 the portfolio and customers: Direct 166.6 171.3 – Maintained occupancy at 96% Cornerstones 276.6 306.3 Look through EBITDA 443.2 477.6 – Retention remains high at 80% Key metrics1 FY11 FY12 – WALE of 5.2
Slide 16: Development
Development + Development demand driven by structural changes: Development ($m) FY11 FY12 – E-commerce, supply chain efficiencies, building Revenue 157.6 183.6 obsolescence, 3PL consolidation EBITDA 121.6 139.8 + Development WIP maintained at $1.9 billion – Active developments across all markets Key
Slide 17: Management
Management + External Assets Under Management (AUM) of $16.1 billion Management ($m) FY2011 FY2012 increased 12% Fund management fees 64.1 76.4 + Development completions organically grown AUM Property service fees2 56.9 62.7 + Size and scale has resulted in improved margins across the Revenue 121.0
Slide 18: Management - AUM
Management - AUM + Major new initiatives completed during the year include: – Secured US$890 million for GNAP alongside CPPIB – US$3501 million of external investor commitments in the Japan Core Fund and Japan Development Fund – A$500 million equity commitment for Australia alongside Employees Provi
Slide 19: Management platform
Management platform Goodman’s six largest managed vehicles GAIF GTA GELF GHKLF ABPP GMT1 Total assets $4.7bn $2.8bn $2.2bn $1.7bn $1.6bn $1.3bn GMG co-investment 43.3% 19.9% 26.6% 20.0% 43.1% 17.2%2 GMG co-investment $1.1bn $0.3bn $0.3bn $0.2bn $0.3bn $0.1bn2 Number of properties 104 57 86 14 26 22
Slide 20: Section 4 Outlook and summary
Section 4+ Outlook and summary Matsuda Centre, Japan 19
Slide 21: Outlook and summary
Outlook and summary + Maintain position as a leading global industrial property operator and fund manager Strategy + Focus on largest and / or growing consumer economies, North America, Europe, Japan and China + Despite uncertain macro environment, logistics markets remain stable driving rental retu
Slide 22: Appendix 1 Results analysis
Appendix 1+ Results analysis Westney Industry Park, New Zealand Kobe, Japan 21
Slide 23: Profit and loss
Profit and loss podma Operating earnings FY2011 to FY2012 $ million 188 463.4 48.2 (1.6) 65 I) = 16.7 =z 18.3 <i. = 383.9 =z FY2011 Cormerstones Direct Management Development Unallocated Borrowing Tax Minorities FY2012 operating property expenses costs ‘operating income income NPAT FY2011 to FY2012
Slide 24: Profit and loss (cont)
Profit and loss (cont) GMG results Year ended Year ended Increase / 30 June 2011 30 June 2012 (decrease) $M $M $M Property investment1 329.5 352.5 23.0 Management services 104.6 122.0 17.4 Development 157.6 183.6 26.0 Operating earnings net of property expenses 591.7 658.1 66.4 Unrealised gains/(los
Slide 25: Profit and loss (cont)
Profit and loss (cont) Total income by business segment for the year ended 30 June 2012 Category Total Investment Management Development Unallocated Non- operating items $M $M $M $M $M $M Gross property income 235.7 233.0 - - - 2.7 Fund management income 76.5 - 76.0 0.5 - - Property services income
Slide 26: Profit and loss (cont)
Profit and loss (cont) Category Total Investment Management Development Unallocated Non-operating items $M $M $M $M $M $M EBIT – per statutory accounts 401.6 352.5 79.3 139.8 (44.7) (125.3) Net gain from fair value adjustments on investment properties (6.5) - - - - (6.5) Share of net loss from fair
Slide 27: Reconciliation non-operating items
Reconciliation non-operating items Non-operating Items in statutory profit & loss Notes Year ended 30 June 2012 $M $M Property valuations Net gain from fair value adjustments on investment properties 1 6.5 Share of net gain from fair value adjustments on investment properties in associates and joint
Slide 28: Financial position
Financial position As at 30 June 2012 Direct Investments Developments Other Total Assets $M $M $M $M $M Cash - - - 310.8 310.8 Receivables - 40.0 133.2 355.5 528.7 Inventories - - 795.3 - 795.3 Investment properties 2,259.0 - 415.5 - 2,674.5 Investments accounted for using equity - 2,883.0 10.4 - 2,
Slide 29: Property valuations
Property valuations + Overall property valuations stable with liquidity in all markets + Marginal tightening in WACR to 7.8% + Strong investor demand continues for prime investment assets + Devaluations primarily in UK and Spain 30 June 2012 property valuations (look through) Book value Movement sin
Slide 30: Appendix 2 Investment
Appendix 2+ Investment Graben Logistics Centre, Germany 29
Slide 31: Leasing
Leasing Across the Group and Funds platform: + ~1.9 million sqm leased during the year + Reversions flat on new leasing deals, with like for like NPI growing at 2.8% + Occupancy maintained at 96% Division Leasing area (sqm) Net annual rent (A$M) Average lease term Occupancy at 30 June 2012 (years) (
Slide 32: Customers
Customers joodma Top 20 global customers (by net income - look through basis) & Toll ba i) Wesfarmers 2 fo Deutsche Post (DHL) id Amazon 24 Metcash Ds > Kuehne & Nagel fF 1.6 Brambles Po 1.5 Coca-Cola Amatil & Everything Everywhere Ceva Logistics oo Wincanton Holdings 0.9 Tesco iz 0.8 Unilever | 0.8
Slide 33: Direct portfolio detail - Australia
Direct portfolio detail - Australia Portfolio snapshot Key metrics Total assets A$2.0 billion + 30 properties with a total value of $2.0 billion located across key Australian markets Customers 235 + Leasing deals remain strong across the portfolio: Number of properties 30 – 233,624 sqm ($27.7 millio
Slide 34: Direct portfolio detail – UK and CE
Direct portfolio detail – UK and CE Portfolio snapshot Key metrics Total assets A$0.3 billion + Occupancy at 81% Customers 25 + Strong WALE of 5.5 years + Active enquiry on vacant properties Number of properties 12 + Cap rates stable with current WACR of 8.0% Occupancy 81% Weighted average cap rate
Slide 35: Appendix 3 Development
Appendix 3+ Development Bungarribee Industrial Estate, Australia 34
Slide 36: Developments
Developments FY12 Developments Completions Commitments Work in progress Value ($M) 1,720 1,751 1,865 Area (m sqm) 1.3 1.6 1.5 Yield (%) 9.1 8.3 8.5 Pre-committed (%) 100 74 75 Weighted Average Lease Term (years) 8.3 7.0 7.6 Development for Third Parties or Funds (%) 98 87 87 Australia / New Zealand
Slide 37: Developments (cont)
Developments (cont) + Maintained development pipeline in excess of $10 billion – Development pipeline restocked (North America, China and Japan landbanks) – Forecast GLA over 7 million sqm – Development pipeline allocated as Asia Pacific 49%, Europe 50% and North America 1% + The Group’s development
Slide 38: Appendix 4 Management
Appendix 4+ Management Senec Logistics Centre, Slovakia 37
Slide 39: Global platform
Global platform + China/Hong Kong d f GMG Managed Funds Europe/UK A$O.1bn in assets A$2.2bn in assets 4 310 people 22 properties 4 AS1.1bn in assets 3! 12 properties 308 people ; Japan' Lenin china A$4.3bn in assets 141 properties ‘A$0.6bn in assets A$0.1bn in assets i 9 properties 24 people? a) Noe
Slide 40: Goodman Australia Industrial Fund
Goodman Australia Industrial Fund Key events Key metrics Total assets A$4.7 billion + Portfolio occupancy increased to 98% Interest bearing liabilities A$1.8 billion + Total leasing of 426,196 sqm for the year, equating Gearing1 37.6% to $47.8 million of property income Customers 390 + Completed ina
Slide 41: Goodman Trust Australia
Goodman Trust Australia Key metrics Key events Total assets A$2.8 billion + Portfolio occupancy is stable at 98% Interest bearing liabilities A$1.1 billion Gearing1 39.2% + Successfully renegotiated margins down for the $1.1 billion Australian debt facility Customers 217 Number of properties 57 + Se
Slide 42: Goodman European Logistics Fund
Goodman European Logistics Fund Key events Key metrics Total assets1 A$2.2 billion + Completed a €351 million equity raise. Underwritten by: Interest bearing liabilities A$0.8 billion – Dutch asset managers, APG (€150 million) and Gearing2 37.8% PGGM (€50 million) Customers 88 – Goodman for €145 mil
Slide 43: Arlington Business Parks Partnership
Arlington Business Parks Partnership Key events Key metrics + Completed fund 5 year extension together with a Total assets A$1.6 billion new £350 million 5 year facility with a syndicate of Interest bearing liabilities A$0.8 billion 3 banks Gearing1 47.8% + Leasing activity of 24,553 sqm (£5.2 milli
Slide 44: Goodman Hong Kong Logistics Fund
Goodman Hong Kong Logistics Fund Key events Key metrics Total assets A$1.7 billion + GHKLF continues to be the dominant provider of high quality warehouse and logistics space in Hong Interest bearing liabilities A$0.4 billion Kong, offering customers 0.9 million sqm of space Gearing1 25.0% across 14
Slide 45: Goodman Property Trust
Goodman Property Trust Key events Key metrics1 + Active portfolio management: Total assets A$1.3 billion Interest bearing liabilities A$0.5 billion - Over 155,000 sqm of space leased to new or existing customers during the 12 months ended 31 March 2012, Gearing2 35.7% equating to NZ$18.3 million of
Slide 46: Appendix 5 Capital management
Appendix 5+ Capital management Greater Manchester Police Headquarters, UK 45
Slide 47: Group financial covenants
Group financial covenants Covenants Test Covenant Result Headroom Net liabilities1 as a percentage of net tangible assets is Gearing ratio 55.0% 32.1% 22.9% not more than 55.0% Interest cover ratio EBITDA to interest expense at least 2.0x 2.0x 5.5x 3.5x Secured debt as a percentage of total tangible
Slide 48: Currency mix
Currency mix joodmai Currency mix — outstanding debt EUR NZD 1% 1% =» Currency mix — Including the impact of Capital Hedging FX Swaps EUR HKD 32% 6% NZD 6% 47
Slide 49: Financial risk management
Financial risk management Financial risk management in line with Group Board policy +Interest risk management: – 92% hedged over next 12 months – Weighted average hedge maturity of 4.5 years – Weighted average hedge rate of 4.58%1 vs spot 1.42%2 – Current “all in” net WACD 4.41%3 +Foreign currency r
Slide 50: Financial risk management (cont)
Financial risk management (cont) Interest rate + Interest rates are hedged to 92% over next 12 months + Weighted average hedge rate of 4.58%1 vs spot 1.42%2 - NZD – (hedge 4.64%, spot 3.28%) - JPY – (hedge 1.09%, spot 0.35%) - HKD – (hedge 1.92%, spot 0.79%) - GBP – (hedge 8.43%3, spot 1.11%) - Euro
Slide 51: Financial risk management (cont)
Financial risk management (cont) Interest rate hedging profile Euro payable GBP payable HKD payable NZD payable JPY payable USD payable Fixed Fixed1 Fixed Fixed Fixed Fixed rate rate rate rate rate rate As at €M % £M % HK$M % NZ$M % ¥M % US$M % June 2013 (620.0) 2.14 (425.0) 8.20 (1,200.0) 2.18 (200
Slide 52: Financial risk management (cont)
Financial risk management (cont) Currency hedging profile Amount Amount Maturing in Hedge rate payable Hedge rate payable year ending June HK$M NZ$M 2013 4.9077 (62.6) 1.1932 (5.0) Foreign currency denominated balance sheet hedging maturity profile Currency Maturity Weighted average Amount receivabl
Slide 53: Exchange rates
Exchange rates + Statement of Financial Position – exchange rates as at 30 June 2012 – AUDGBP – 0.6529 (30 June 2011 : 0.6667) – AUDEUR – 0.8092 (30 June 2011 : 0.7405) – AUDHKD – 7.8899 (30 June 2011 : 8.3336) – AUDSGD – 1.2925 (30 June 2011 : 1.3156) – AUDNZD – 1.2771 (30 June 2011 : 1.2953) – AUD
Slide 54: Appendix 6 Corporate structure
Appendix 6+ Corporate structure M7 Business Hub, Australia 53
Slide 55: Corporate restructure
Corporate restructure + Goodman Group confirms that all of the conditions for the Restructure of the Group, through the addition of the Hong Kong incorporated company, Goodman Logistics (HK) Limited (HKCo), to the existing Goodman stapled structure (Restructure), have now been satisfied or waived. +
Slide 56: Q&A
Q&A Interlink Industrial Estate, Australia 55
Slide 57: Thank you
thank+you Important Notice This document has been prepared by Goodman Group (Goodman International Limited (ABN 69 000 123 071) and Goodman Funds Management Limited (ABN 48 067 796 641) (AFSL223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839)). The details in this prese