ANNUAL REPORT 2023
GOODMAN GROUP ANNUAL REPORT 2023
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GOODMAN GROUP
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Contents
Chairman’s letter
Group CEO letter
Corporate Governance 2023
Goodman Limited and its controlled entities
Appendix A – Goodman Logistics (HK) Limited and its subsidiaries
Securities information
Glossary
Corporate directory
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ANNUAL REPORT 2023
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GOODMAN GROUP
Chairman's letter
Goodman Group has delivered another excellent result in FY23 with
operating earnings per security up 16% on the previous year. The location
and quality of our properties, driven by the Group’s sustainable, long-term
strategy and the quality of our management team, are what continue to
underwrite Goodman’s success.
Within a tough economic environment and a growing digital economy,
the Group remains committed to its business strategy. Over time we
have seen the location of our properties attract a broader range of uses
from the storage and movement of goods to data centres. This demand
provides opportunities for Goodman to create value for Securityholders.
On occasions where land use changes are no longer aligned to our
strategy, we work with rezoning and planning authorities before selling
these assets to the relevant specialists. In many cases these are
residential developers.
The Group remains prudent and disciplined in its capital management
strategy, helping to facilitate long term sustainability of earnings and
financial flexibility. With gearing low at 8.3% and $3.1 billion of liquidity
available to the Group, Goodman has the ability to fund organic growth
through our substantial development program and also take advantage
of opportunities as they arise.
Integrating sustainability
The success of the Group in FY23 also extends to its achievements
across ESG initiatives. Sustainability remains a critical component
of our business strategy and is more than a compliance function.
Remuneration
The attraction and retention of talent are critical for the success of the
Group. We set ambitious and challenging targets for our business which
are aligned to the interests of our Securityholders. We also continue to be
challenged by competitors seeking to recruit our high-performing teams
around the world. The Group’s longstanding and consistent approach
to remuneration has been a key driver of our sustained success as an
international business over an extended period of time.
Despite receiving a second strike at last year’s AGM, we recognise the
significant support for our 2022 Remuneration Report which increased
to over 71% from 58% a year before. While as a Board, we were naturally
disappointed with the result, we were grateful at the overwhelming
support for the Board in relation to the spill resolution. It is important to
note that in the lead up to the AGM in 2022, we engaged directly with a
large number of our investors representing approximately 60% of the
securities on issue. Of this Group only a small proportion voted against
the 2022 Remuneration Report. We received strong positive support for
the plan structure, in particular our innovative ten-year plan for senior
executives, and the changes from 2021.
Despite not receiving sufficient votes to avoid the strike in 2022, the
Board is confident that a substantial majority of our Securityholders
continue to believe firmly in our remuneration structure, and importantly
its alignment with their long-term outcomes.
We have again reflected this sentiment in setting awards and hurdles this
year. For our key management personnel:
In addition to the strong financial performance for FY23, Goodman has
made significant progress against all areas of our sustainability targets.
Details are covered in the Group CEO's letter and in the Directors' report.
To oversee the environmental aspect of the ESG function, in October
2022, the Board established a Sustainability and Innovation Committee
which has been focused on initiatives and investments that support
sustainable developments, energy generation and storage solutions.
It also assesses the impact and opportunities that emerging technologies,
such as artificial intelligence, are expected to have on Goodman, our
customers, and more broadly the way people will live, work and consume.
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The STI component has been reduced by 10% (with the CEO
continuing not to participate in STI awards)
The quantum of the FY24 LTI awards has also been reduced by
10% (to maintain the equivalent face value of the FY23 awards after
taking into account the increase in the Goodman security price over
the course of the year)
Challenging operating EPS hurdles (6% to 11% compound
annual growth over a 4-year testing period and commencing
from a substantially higher base) have again been imposed.
The social and governance areas are overseen by the Remuneration
and Nomination Committee and the Audit, Risk and Compliance
Committee.
Our sustainability-linked remuneration targets in the Group’s Long
Term Incentive Plan promote the integration of sustainability within
the core business.
The remuneration awards are particularly significant in the context
of the Group’s FY23 performance, where operating EPS increased 16%,
well ahead of the broader market and our own initial guidance.
The Board is always mindful of the focus on overall remuneration levels
and spends considerable time each year determining remuneration
outcomes in the context of our complex international operations.
We recognise the need on the one hand, to attract, retain and incentivise
our employees while, on the other hand, to meet the range of expectations
of our Securityholders.
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Board appointments
To meet the changing nature of our strategic drivers and match
our geographic focus, we have continued to evolve and create a
contemporary and diverse Board whose members bring together a
broad global skill set. In line with the Board’s diversity target of 40/40/20
for Non-Executive Directors, Board appointments over the past 18
months have seen four out of five positions be filled by females and three
out of five by directors based outside of Australia, reflecting the global
nature of Goodman’s business.
Following the appointment of Hilary Spann and Vanessa Liu in 2022, both
of whom are based in the USA, we recently appointed three new directors.
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Belinda Robson, based in Australia, was appointed in March and brings
over 30 years’ experience in retail and commercial funds management
George Zoghbi, also based in Australia, was appointed in April.
He is the CEO of Arnott’s Group and brings extensive international
consumer packaged goods and supply chain experience
Kitty Chung, based in Hong Kong, was appointed to the Goodman
Logistics (HK) Limited Board in July and has over 35 years audit and
business advisory experience.
Belinda, George and Kitty will be standing for election to the Board
at this year’s Annual General Meetings. Full details of their experience
are contained in the Notice of Meetings. Mark Johnson and I will stand
for re-election.
I would like to acknowledge our long serving director, Phillip Pryke,
who will be retiring from the Board in the first half of 2024. Phil, who
chaired the Remuneration Committee from 2010 until earlier this year,
has been instrumental in the formulation of the Group’s remuneration
strategies and to Board deliberations more generally. He has helped
steward a successful international business with a strong shared
culture and long-term focus that is a testament to the policies promoted
by the Remuneration Committee. On behalf of the Board, I would like
to thank Phil for his dedication and commitment to the Group over
the last 13 years.
On behalf of the Board, I thank our customers and investors for their
continued support, and all of Goodman’s people for their significant
contribution to the ongoing success of the business, in what has been
a challenging economic environment.
Sincerely
Stephen Johns
Independent Chairman
ANNUAL REPORT 2023
Goodman Board Diversity Metrics
(Non-Executive Directors)
GENDER DIVERSITY
62.5%
60%
71%
29%
2021
37.5%
2022
SQUARE-FULL Female Directors SQUARE-FULL Male Directors
GEOGRAPHIC DIVERSITY
14%
14%
72%
37.5%
12.5%
50%
40%
2023
30%
20%
50%
2021
2022
2023
SQUARE-FULL Australia SQUARE-FULL Hong Kong SQUARE-FULL US
AGE DIVERSITY
14%
43%
29%
14%
2021
25%
25%
12.5%
37.5%
20%
30%
20%
30%
2022
2023
SQUARE-FULL 40-49 SQUARE-FULL 50-59 SQUARE-FULL 60-69 SQUARE-FULL 70-79
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Assets under management have grown 11% to $81 billion, driven primarily
by $6.9 billion in development completions, in addition to acquisitions and
revaluations across the Group and Partnerships. We delivered average
total returns of 7.3% across the Partnerships and expanded the investment
management platform with the establishment of four new Partnerships.
Balance sheet strength
Capital management discipline saw the Group maintain a strong
balance sheet that provides flexibility to take advantage of opportunities.
We raised $1 billion of new equity commitments in Partnerships and
completed $6.4 billion of debt refinancing across the Group and
Partnerships. The Group’s gearing remains low at 8.3%4 while having
$3.1 billion of available liquidity, which provides financial flexibility.
There is also significant liquidity of $17.6 billion in the Partnerships5.
Our strategy is also providing value-add opportunities, as we see increased
competition for industrial sites from other uses such as data centres
and residential rezoning. We’ve been developing data centres since
2010, and over that time they have grown to become a meaningful part
of our business, in line with the rise of the digital economy. It currently
constitutes approximately 30% of our $13 billion development workbook,
and importantly we have a pipeline of over 3GW which has significant value
over time.
Guided by our 2030 Sustainability Strategy, we continue to integrate ESG
into the business. Our focus throughout FY23 remained on incorporating
sustainable design features into our developments and reducing carbon
emissions in line with our targets validated by the Science Based Targets
Initiative. Highlights include reaching around 75% of our 2025 solar
PV target and contributing $10.8 million to community causes via the
Goodman Foundation and our people.
Development work in progress (WIP) of $13.0 billion
Value-add opportunities
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GOODMAN GROUP
Group CEO letter
Goodman Group has continued to perform strongly in FY23, delivering
positive results for our Securityholders. The quality and location of our sites
has underpinned rental growth, property values and development activity.
Key financial highlights include:
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Operating profit1 of $1.78 billion, up 17%
Operating EPS2 of 94.3 cents, up 16%
Statutory profit of $1.56 billion
9% growth in Net Tangible Assets.
Key operational highlights include:
Total assets under management (AUM) of $81.0 billion, up 11% on FY22
High portfolio occupancy of 99%3
On track to achieve key Group sustainability targets including
306MW of solar PV installed or committed in FY23, taking us to
75% of our 400MW 2025 target.
Strong fundamentals delivering $1.7 billion operating profit
Despite the macro uncertainty, the structural forces in our markets
remain intact. They continue to be driven by the need for more efficient
and sustainable assets, the growth of artificial intelligence, and the digital
economy. Against this backdrop, there remains limited supply in our
targeted markets.
Underlying property fundamentals remain strong, with high occupancy
of 99%3 across our stabilised portfolio. While like-for-like net property
income growth has increased to 4.7%3, reversion to market remains
significant. This should support growth in cash flows over the next few
years, as well as valuations.
Development earnings were up 35% on FY22, increasing to $1.3 billion.
Our development workbook stands at $13 billion with an annual production
rate of approximately $7 billion, and 99% of our developments were leased
on completion. Yield on cost remains at 6.6% as our execution has been
consistent, and we have continued to manage the rising cost environment.
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ANNUAL REPORT 2023
FY24 outlook
Goodman is positioned well for FY24. Competition for land from a wide
range of uses is constraining the availability of space in our markets and
creating new opportunities for the Group.
We expect to see further opportunities to add value through site acquisition
and redevelopment and have continued to maintain a strong balance
sheet, which combined with retained income, provides significant liquidity,
stability and financial resources to enable this. Our capital Partners are
both prudent and supportive of investment into the Partnership platform.
We believe Goodman can continue to deliver growth despite the risks
associated with current market volatility and expect FY24 operating
EPS growth to be 9%.
Team effort
These results would not have been possible without our global team
who live our values of integrity, determination, innovation and sustainability.
I’d like to thank them, you, our securityholders, as well as our customers,
and all other stakeholders for your continued support.
Sincerely
Gregory Goodman
Group Chief Executive Officer
Operating profit comprises profit attributable to Securityholders adjusted for property valuations, derivative and foreign currency mark to market and other non-cash or non-recurring items.
1.
2. Operating EPS is calculated using operating profit and weighted average diluted securities of 1,890.7 million which includes 12.1 million LTIP securities which have achieved the required
performance hurdles and will vest in September 2023 and September 2024.
3. Partnership industrial and warehouse assets (excludes office properties which have been earmarked for redevelopment) and represents 95% of Partnership assets.
4. Gearing is calculated as total interest bearing liabilities over total assets, both net of cash and the fair values of certain derivative financial instruments included in other financial assets of $81.7
million (30 June 2022: $133.3 million). Total interest bearing liabilities are grossed up for the fair values of certain derivative financial instruments included in other financial liabilities of $34.2 million
(30 June 2022: $79.6 million).
5. Partnership investments are subject to Investment Committee approval.
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Goodman's Corporate Governance Framework
GOODMAN GROUP BOARDS
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AUDIT, RISK
AND COMPLIANCE
RENUMERATION
AND NOMINATION
SUSTAINABILITY
AND INNOVATION
GROUP CEO
MANAGEMENT
In October 2022 the Board established the Sustainability and Innovation
Committee to focus on sustainability matters and the impact of emerging
technologies. In addition, in March 2023, the Board merged the Audit
Committee and the Risk and Compliance Committee into the Audit, Risk
and Compliance Committee, and the Remuneration Committee and the
Nomination Committee into the Remuneration and Nomination Committee.
Goodman’s Corporate Governance Statement can be viewed on our
website at goodman.com/about-goodman/corporate-governance.
Goodman’s core corporate governance framework
documents including Charters and Policies are available at
goodman.com/about-goodman/corporate-governance. Additional
information for Securityholders is available at the Goodman Investor
Centre at goodman.com/investor-centre.
GOODMAN GROUP
Corporate Governance 2023
Goodman Group (Goodman or Group) is a triple stapled entity comprised
of the Australian company, Goodman Limited (GL), the Australian trust,
Goodman Industrial Trust (GIT) and the Hong Kong company, Goodman
Logistics (HK) Limited (GLHK). The Boards of GL and Goodman Funds
Management Limited as the responsible entity of GIT comprise the same
directors while GLHK has a distinct Board with some overlap. Together
they are referred to as the Boards.
The Goodman Boards and management team are committed to the
highest standards of corporate governance and recognise that an
effective corporate governance culture is critical to the long-term
performance of the business.
Goodman’s corporate governance framework underpins our commitment
to maximise long-term sustainable value for Securityholders through:
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Effective controls, risk management, transparency
and corporate responsibility
Strategic planning and alignment of the interests of our people
with those of Securityholders and other stakeholders
Meeting stakeholder expectations of a global ASX-listed
entity through acting lawfully and responsibly while prudently
managing both financial and non-financial risk.
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Goodman Limited and its controlled entities
Consolidated financial report for the year ended 30 June 2023
ANNUAL REPORT 2023
CONTENTS
Directors’ report
Lead auditor’s independence declaration
Consolidated statements of financial position
Consolidated income statements
Consolidated statements of comprehensive income
Consolidated statements of changes in equity
Consolidated cash flow statements
Notes to the consolidated financial statements
Basis of preparation
Results for the year
1 Profit before income tax
2 Profit per security
3 Segment reporting
4 Taxation
Operating assets and liabilities
5 Property assets
6 Receivables
7 Contract balances
8 Assets held for sale
9 Payables
10 Provisions
11 Property, plant and equipment
12 Leases
13 Goodwill and intangible assets
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100
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120
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Capital management
14 Net finance income/(expense)
15
Interest bearing liabilities
16 Other financial assets and liabilities
17 Financial risk management
18 Dividends and distributions
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Issued capital
Other items
20 Notes to the cash flow statements
21
Equity attributable to Goodman Limited
and non-controlling interests
22 Controlled entities
23 Related parties
24 Commitments
25 Auditors’ remuneration
26 Parent entity disclosures
27 Events subsequent to balance date
Directors’ declaration
Independent auditor’s report
Appendix A – Goodman Logistics (HK) Limited
financial report for the year ended 30 June 2023
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GOODMAN GROUP
Directors’ report
The directors (Directors) of Goodman Limited (ABN 69 000 123 071)
and Goodman Funds Management Limited (GFML), the responsible
entity for Goodman Industrial Trust (ARSN 091 213 839), present their
Directors’ report together with the consolidated financial statements of
Goodman Limited and the entities it controlled (Goodman or Group)
and the consolidated financial statements of Goodman Industrial Trust
and the entities it controlled (GIT) at the end of, or during, the financial
year ended 30 June 2023 (FY23) and the audit report thereon.
Shares in Goodman Limited (Company or GL), units in Goodman
Industrial Trust (Trust) and CHESS Depositary Interests (CDIs) over
shares in Goodman Logistics (HK) Limited (GLHK) are stapled to one
another and are quoted as a single security on the Australian Securities
Exchange (ASX). In respect of stapling arrangements, Australian
Accounting Standards require an acquirer to be identified and an
in-substance acquisition to be recognised and accordingly GL is
identified as having acquired control over the assets of GIT and GLHK.
The consolidated financial statements of GL therefore include the
results of GIT and GLHK.
As permitted by the relief provided in Australian Securities & Investments
Commission (ASIC) Instrument 20-0568, the accompanying consolidated
financial statements present both the financial statements and
accompanying notes of Goodman and GIT. GLHK, which is incorporated
and domiciled in Hong Kong, prepares its financial statements under
Hong Kong Financial Reporting Standards and the applicable
requirements of the Hong Kong Companies Ordinance and accordingly the
financial statements of GLHK have not been included as adjacent columns
in the consolidated financial statements. The financial statements of GLHK
have been included as an appendix to this financial report.
GFML, as responsible entity for the Trust, is solely responsible for the
preparation of the accompanying consolidated financial report of GIT, in
accordance with the Trust’s Constitution and the Corporations Act 2001.
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ANNUAL REPORT 2023
Our integrated business model
Goodman’s Own Develop Manage model focuses our business on our
customers’ current and future needs.
OPERATING AND FINANCIAL REVIEW
About Goodman
Goodman Group is a global industrial property specialist, founded in
Australia by Greg Goodman over 30 years ago. We provide essential
infrastructure for the functioning of a modern economy that is adapting to
digital innovation and ESG developments. We do so by owning, developing
and managing high-quality properties that are close to consumers in key
cities around the world.
We have 432 properties located in key consumer markets in 14 countries
across Asia Pacific, Continental Europe, the United Kingdom and the
Americas. With $81.0 billion of assets under management, we are the largest
property group on the Australian Securities Exchange, a top 20 entity by
market capitalisation, and one of the largest listed specialist investment
managers of industrial property globally. We invest significantly alongside
our capital partners in our investment Partnerships, and work to provide
sustainable long-term returns for our investors.
Our property portfolio includes logistics and distribution centres,
warehouses, light industrial, multistorey industrial, business parks and
data centres. But we're not just about real estate. We're about making a
difference. We're a passionate team who work together to create a better
future for our customers, our people, and the communities we operate in.
We believe in innovation, determination, integrity, and sustainability and
continually looking where we can optimise, increase resilience and make
space for greatness in everything we do.
Environmental, Social and Governance (ESG) is integrated into Goodman’s
long-term business strategy. We make investment decisions based on
strategic long-term thinking and operate with clear sustainability goals.
The Goodman Group annual sustainability report provides additional detail
supporting the strategies discussed within this report.
We own and maintain high-quality properties close to consumers, we
develop properties with specifications that include significant sustainability
features, and we manage our global investment portfolio to the highest
standards. We work alongside our capital partners, which include sovereign
wealth, pension and large multi-manager funds.
In each market, our dedicated local teams take care of all aspects of
property asset and investment management, enabling us to provide a high
level of customer service.
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GOODMAN GROUP
Directors’ report
Operating and financial review (continued)
Our strategy
Providing essential infrastructure for the digital economy
The way we live, work and consume is evolving. Urbanisation and
population growth are changing our cities. There’s a greater expectation
that organisations act sustainably and prioritise health and wellbeing.
Consumers are demanding faster and greener, and the need for data
is growing very rapidly especially with the growing prospects for
artificial intelligence.
Customer demand for our properties is driven by structural drivers
including the growth of e-commerce, supply chain optimisation, and
ongoing growth in data storage requirements. Customers want higher
speed to market along with greater resilience in their supply chain and
more sustainable properties.
Goodman takes a long-term view. Our strategy is to own assets close to
consumers in key global markets where barriers to entry are high, supply
is limited, and demand is strong. We concentrate our portfolio where we
believe we can create the most value for customers and investors.
Productivity, efficiency, sustainability
Within a highly competitive market, Goodman’s long-term strategy is built
on supporting our customers to operate in the most productive, efficient
and sustainable way possible.
Our customers are looking to optimise their supply chain efficiency.
It means the properties we develop for our customers can accommodate
greater automation, are efficient and resilient, and well-located close to
consumers. This can help our customers minimise costs and drive greater
productivity from their properties.
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ANNUAL REPORT 2023
Strategic locations
Our properties are strategically located in major consumer markets
around the world and aim to meet the business, health and wellbeing needs
of our customers. Our long-term horizon means we select sites with existing
or future access to key transport networks and digital infrastructure.
This provides our customers with greater connectivity and speed to
market, helping them optimise distribution to meet rising consumer delivery
and service expectations now and in the future. The close proximity also
provides the opportunity to reduce transport costs and related carbon
emissions – and can make access to labour and commuting to work easier
for our customers’ workforce.
Our focus on urban infill assets or brownfields sites that can be
redeveloped, means we can often regenerate existing sites and revitalise
communities, while minimising land use and our impact on biodiversity.
These sites are often ideal for multi-storey facilities, optimising space and
providing customers with centrally located facilities.
Auckland
Brisbane
Melbourne
Sydney
AUSTRALIA/NZ
$33.9BN
AUM
189
Properties
99%
Occupancy
400+
People
ASIA
$24.7BN
AUM
78
Properties
98%
Occupancy
230+
People
Beiling
Chongqing
Guangzhou
Hong Kong
Osaka
Shanghai
Shenzhen
Tokyo
EUROPE/UK
$11.5BN
AUM
135
Properties
100%
Occupancy
220+
People
Amsterdam
Barcelona
Birmingham
Brussels
Düsseldorf
Hamburg
London
Luxembourg
Madrid
Milan
Munich
Paris
Los Angeles
New Jersey
Pennsylvania
San Francisco
São Paulo
THE AMERICAS
$10.9BN
AUM
30
Properties
99%
Occupancy
100+
People
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GOODMAN GROUP
Directors’ report
Operating and financial review (continued)
Our values
Goodman’s values are integral to the success of the business. They shape
our culture and focus our teams on delivering high-quality service, and
innovative property and investment solutions over the long term. As part
of the annual performance review process, our people are assessed on
their demonstration of the Goodman values of innovation, determination,
integrity and sustainability.
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Innovation – New ideas push our business forward. We focus on
the future, proactively looking for new opportunities and improved
solutions for our stakeholders that will make the world a better
place for all of us.
Determination – Determination gets things done. We are motivated
by excellence and work hard to achieve it, actively pursuing the very
best outcomes for our stakeholders.
Integrity – We have integrity, always. We work inclusively and
transparently, balancing the needs of our business and our people,
with the needs of the community and those we do business with.
+ Sustainability – We are building our business for the long-term.
That is why we consider the planet and the people on it in everything
we do. Our initiatives demonstrate our ongoing commitment to having
a positive economic, environmental and social impact on the world.
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Our purpose
Goodman’s purpose of making space for greatness recognises our
stakeholders’ needs and drives us to help them reach their full potential.
Here’s how we make space for greatness for each of our stakeholders.
Customers
Our customers come from a wide range of industries including
e-commerce, logistics, retail, consumer goods, automotive, food
production, pharmaceutical, life sciences, healthcare and technology.
Regardless of their sector, they all need the right properties in the right
locations. Proximity to their end consumer is key in order to increase
speed to market and reduce transport costs and related emissions.
Our customers are increasingly taking a strategic approach to their
infrastructure decisions. They’re boosting their investment in our
buildings to maximise both supply chain efficiency and overall capacity
as the digital economy grows.
To help our customers achieve their goals, we create spaces with
sustainability in mind and provide them with excellent service, in
high-quality locations. Here, the greatest ambitions of our customers
can flourish as we give them the space and service support, they need
to reach their goals.
Securityholders and investment partners
At Goodman, we invest in and manage the investment portfolio alongside
our investment partners – some of the world’s largest pension and
sovereign wealth funds. We take a patient and long-term approach
to managing capital and focus on growing a sustainable and resilient
business over time.
This long-term approach guides our decision making. By owning,
developing and managing high-quality properties in key locations,
we provide both short-term and long-term benefits for our customers
while simultaneously working to deliver sustainable returns for our
Securityholders and investors.
Our people
Our team of around 1,000 people in 29 offices around the world is key
to our long-term success. Skilled and diverse, team members use their
expertise across the range of locations and cultures we operate in to
deliver strong results. There are many opportunities for our people to
get involved, to learn and to build rewarding careers.
Goodman encourages innovation. We look for people who want to realise
their ambitions, challenge our thinking, drive change and develop new
ideas that deliver a sustainable business – making a tangible difference
today and long into the future. Through Goodman’s Long Term Incentive
Plan (LTIP), our team have a stake in our business, which motivates them
to have a positive impact and take a long-term strategic approach to
decision making.
Supply chains
We acknowledge that providing a high-quality sustainable offering to
our customers is a team effort, requiring relationships built on integrity.
Our network of suppliers extends from our general building contractors
who we work with closely to build facilities for our customers, to the
providers of our office supplies.
In each case, we respect the needs of our suppliers and provide an
environment for them to succeed by setting high quality standards and
practicing good business ethics across our operations and global supply
chains. This ranges from implementing strategies against modern slavery
to treating our suppliers as part of our team, keeping them safe and
paying them fairly and on time. In return, we expect our suppliers to abide
by our high standards and communicate these requirements within their
own supply chains.
Our communities
As a long-term owner of properties, Goodman understands the importance
of contributing to the local community. We build long-term relationships,
engaging and collaborating with landowners, cities and municipalities,
charity partners, and the community at large, to provide developments that
meet our customers’ needs and benefit the wider community.
Our properties add value to local communities and the wider economy
by generating jobs, creating infrastructure, and enabling people to have
the goods they need. They are developed in line with the local planning
authorities’ ambitions to build sustainable and resilient communities.
Our urban infill developments, often on brownfield sites, optimise scarce
land resources and support local regeneration. Our projects can also
add social value – through the provision of cafes, fitness, and recreation
facilities for the whole community to enjoy.
We add social value in other ways too – by working with local charities
and community partners in all our markets to make a positive difference.
Whether it’s working with organisations on emergency response,
prevention of violence against women and children, community
and community health, children and youth, or food rescue and the
environment, the Goodman Foundation provides tangible assistance that
translates to real support where it’s needed most.
As a global business headquartered in Sydney, Goodman considers the
important role First Nations communities and peoples play in Australia.
Our Reconciliation Action Plan (RAP) challenges us to think deeply about
Goodman can contribute to a continent that is with fully reconciled
with it First Nations peoples and this year our RAP received official
endorsement. We have implemented cultural and community initiatives,
and contributed $1.7 million to First Nations peoples-focused community
programs this year.
ANNUAL REPORT 2023
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GOODMAN GROUP
Directors’ report
Operating and financial review (continued)
$1,528.0 million in FY22
Increase of 16.7%
OPERATING PROFIT PER SECURITY1
81.3¢ in FY22
Increase of 16.0%
$3,414.0 million in FY22
Decrease of 54.3%
83.0¢ Statutory profit per security (FY22: 183.2¢)
1,878.6 million weighted average number of securities on issue
DIVIDENDS/DISTRIBUTIONS PER SECURITY
30¢ in FY22
Stable, in line with financial risk management
objective to susbtainably fund future investments
$1,559.9M PROFIT ATTRIBUTABLE TO SECURITYHOLDERS
$1,783.2M OPERATING PROFIT
94.3¢
30¢
$9.12
$81.0B
$13.0B
8.3%
$3.1B
48.3X
NET TANGIBLE ASSETS PER SECURITY
$8.37 in FY22
Increase of 9.0%
1,883.8 million securities on issue
LIQUIDITY
No debt maturities in next 12 months
5.5 years weighted average debt maturity (FY22: 6.2 years)
TOTAL ASSETS UNDER MANAGEMENT
$73.0 billion in FY22
Increase of 11.0%
DEVELOPMENT WORK IN PROGRESS2
Annual production rate maintained at $7.0 billion
GEARING3
8.5% in FY22
Decrease of 20 basis points
INTEREST COVER4
36.7 times in FY22
1. Operating profit per security (operating EPS) is the operating profit divided by the weighted average number of securities on issue during FY23, including securities relating to performance rights
that have not yet vested but where the performance hurdles have been achieved. Operating profit comprises profit attributable to Securityholders adjusted for unrealised net property valuations
gains, non-property impairment losses, net gains/losses from the fair value movements on derivative financial instruments and unrealised fair value and foreign exchange movements on interest
bearing liabilities and other non-cash adjustments or non-recurring items e.g. the share-based payments expense associated with Goodman’s LTIP.
As it is closely aligned with operating cash generation, the Directors consider that Goodman’s operating profit is a key measure by which to examine the underlying performance of the business,
notwithstanding that operating profit is not an income measure under International Financial Reporting Standards.
2. Development work in progress (WIP) is the projected end value of active developments across Goodman and its investments in associates and joint ventures (referred to as Partnerships).
3. Gearing is calculated as total interest bearing liabilities over total assets, both net of cash and the fair values of certain derivative financial instruments included in other financial assets of $81.7 million
(2022: $133.3 million). Total interest bearing liabilities are grossed up for the fair values of certain derivative financial instruments included in other financial liabilities of $34.2 million (2022: $79.6 million).
4. Interest cover is operating profit before net finance expense (operating) and income tax (operating) divided by net finance expense (operating). The calculation is in accordance with the financial
covenants associated with the Group’s unsecured bank loans and includes certain adjustments to the numerator and denominator.
16
Overview
Given the successful execution of the key facets of the business, the
Group has delivered another year of strong operating performance.
Operating profit increased by 16.7% to $1,783.2 million (2022: $1,528.0
million). This equates to an operating EPS of 94.3 cents (2022: 81.3 cents),
up 16.0% on FY22.
The scarcity of space in our locations, and customers’ need for more
productive and sustainable solutions is supporting underlying property
fundamentals. These are driving development demand and rental growth.
Despite the global macro-economic volatility, the fundamental strength
of our specific markets means that our portfolio has almost zero vacancy
and there remains impetus to continue to execute on our development
strategy with the annual production rate of new properties during the year
averaging around $7 billion.
Consequently, both property investment earnings and development
earnings are up on the prior year, with property investment earnings
increasing by 7.4% to $531.4 million and development earnings increasing
by 35.4% to $1,301.2 million.
The Group’s net property uplift, after tax, including our share of the
Partnerships, was $264.1 million (2022: $2,326.3 million). On an
aggregated basis, the adverse valuation impacts from capitalisation rate
expansion were mitigated by the growth in market rents and valuation
uplifts from developments reaching completion. In response to rising
interest rates throughout the year, the weighted average capitalisation
rate for the stabilised assets in the portfolios increased from 4.0% to 4.5%.
At the same time, the expected growth in cash flows from the properties
in the portfolio has increased markedly. While there were fewer real estate
transactions in FY23 compared to prior years, those transactions that did
occur demonstrated that valuations for good quality logistics real estate
in the right locations remain supported.
Our portfolio has continued to grow organically, primarily through
development activity, with external assets under management
increasing from $68.7 billion to $76.3 billion and total AUM increasing
from $73.0 billion to $81.0 billion. As a result of the higher AUM, revenues
from management services, which includes base management fees and
property services income, increased to $438.7 million (2022: $380.4
million). However, performance related income from management
services was lower in FY23 at $41.9 million (2022: $208.0 million),
primarily because during the year there were fewer performance fee
assessment dates within the Partnerships.
Goodman’s statutory profit attributable to Securityholders decreased
by $1,854.1 million to $1,559.9 million (2022: $3,414.0 million), principally
due to the lower net property valuation result during the year.
The statutory profit is reported net of the accounting expense of the
Goodman LTIP of $286.0 million (2022: $257.6 million) and a loss of
$225.8 million (2022: $191.4 million) from derivative fair value movements
(which is offset by a gain of $360.6 million in the foreign currency
translation reserve). These items, as well as the net property valuation
gains, are excluded from the calculation of the Group’s operating profit.
ANNUAL REPORT 2023
The strong financial position of the Group and Partnerships allows
adaption to the volatile economic environment and the pursuit of
opportunities that may emerge. At 30 June 2023, gearing was 8.3%
(2022: 8.5%) and the cash and undrawn bank lines available to the Group
were $3.1 billion (2022: $2.8 billion). Dividends and distributions relating
to FY23 were maintained at 30 cents per security, equivalent to 32% of
operating profit. The cash retained for future investment in the business
enables the maintenance of a balance sheet and capital position that is
consistent with our financial risk management targets given the significant
development activity and the commensurate growth in investments that
are expected in the near term.
Over the year, further progress was made on our ESG objectives,
with FY23 targets met or exceeded. Further details will be provided in
the Goodman Group Sustainability Report, which will be released before
the 2023 Annual General Meeting (AGM).
Key operational highlights for FY23:
Property investment:
+ Property investment earnings of $531.4 million (2022: $494.6 million)
+
+
$81.0 billion (2022: $73.0 billion) of total AUM, of which the Group
owns a whole or a part share
4.7% (2022: 3.9%) like for like growth in net property income (NPI)
from the assets in Partnerships
+ 99% (2022: 98.7%) occupancy across the Partnerships.
Management:
+ Management earnings of $480.6 million (2022: $588.4 million)
+
+
$76.3 billion (2022: $68.7 billion) of external AUM in Partnerships, of
which $68.8 billion (2022: $60.6 billion) relates to stabilised properties
Partnerships reported 7.3% (2022: 21.4%) weighted average total
return on net assets.
Development:
+ Development earnings of $1,301.2 million (2022: $960.7 million)
+
+
$13.0 billion (2022: $13.6 billion) of development WIP
(by estimated end value)
81% (2022: 85%) of WIP is currently conducted within, or pre-sold to,
Partnerships or third parties.
17
GOODMAN GROUP
Directors’ report
Operating and financial review (continued)
Analysis of performance
Goodman’s key operating regions are Australia and New Zealand
(reported on a combined basis), Asia (Greater China, including the Hong
Kong SAR, and Japan), Continental Europe, the United Kingdom and the
Americas (principally North America and including Brazil). The operational
performance can be analysed into property investment earnings,
management earnings and development earnings, and the Directors
consider this presentation of the consolidated results facilitates a better
understanding of the underlying performance of Goodman given the
differing nature of and risks associated with each earnings stream.
Property investment earnings consist of gross property income (excluding
straight lining of rental income), less property expenses, plus Goodman’s
share of the operating results of Partnerships that is allocable to property
investment activities which excludes the Group’s share of property
revaluations and derivative mark to market movements. The key drivers
for maintaining or growing Goodman’s property investment earnings are
increasing the level of AUM (subject also to Goodman’s direct and indirect
interest), maintaining or increasing occupancy and rental levels within the
portfolio, and controlling operating and financing costs within Partnerships.
Management earnings relate to the revenue from managing both the
property portfolios and the capital invested in Partnerships. This includes
performance related revenues but excludes earnings from managing
development activities in Partnerships, which are included in development
earnings. The key drivers for maintaining or growing management earnings
are activity levels, asset performance, and increasing the level of AUM,
which can be impacted by property valuations and asset disposals and
is also dependent on liquidity including the continued availability of third
party capital to fund both development activity and acquisitions across
Goodman’s Partnerships.
Development earnings consist of development income, plus Goodman’s
share of the operating results of Partnerships that is allocable to
development activities, plus net gains or losses from disposals of
investment properties and equity investments that are allocable
to development activities (including the Group’s share of realised
valuation gains booked in prior periods in respect of properties that
had been repositioned – refer to page 23), plus interest income on
loans to development joint ventures (JVs), less development expenses.
Development income includes development management fees and
also performance related revenues associated with managing individual
development projects in Partnerships. The key drivers for Goodman’s
development earnings are the level of development activity, land and
construction prices, property valuations and the continued availability
of third party capital to fund development activity.
18
ANNUAL REPORT 2023
The analysis of Goodman’s performance and the reconciliation of the operating profit to profit for the year attributable to Securityholders for FY23
are set out in the table below:
Analysis of operating profit
Property investment earnings
Management earnings
Development earnings1
Operating earnings
Operating expenses
Net finance expense (operating)2
Income tax expense (operating)3
Operating profit
Adjustments for:
Property valuation related movements
– Net gain from fair value adjustments on investment properties
– Share of fair value adjustments attributable to investment properties in Partnerships after tax
– Deferred tax on fair value adjustments on investment properties
– Realisation of prior years’ property valuation gains, net of deferred tax1
Fair value adjustments related to hedging activities
– Fair value adjustments on derivative financial instruments
– Share of fair value adjustments on derivative financial instruments in Partnerships
Other non-cash adjustments or non-recurring items
– Share based payments expense
– Straight lining of rental income and tax deferred adjustments
Profit for the year attributable to Securityholders
Note
2023
$M
2022
$M
531.4
480.6
1,301.2
494.6
588.4
960.7
2,313.2
2,043.7
(372.5)
(349.3)
1,940.7
1,694.4
(13.5)
(144.0)
(39.3)
(127.1)
1,783.2
1,528.0
5(e)
5(f)
4(d)
14
5(f)
278.9
544.7
(47.7)
(511.8)
260.1
2,272.9
(206.7)
–
264.1
2,326.3
(221.3)
(4.5)
(225.8)
(189.7)
(1.7)
(191.4)
1
(286.0)
(257.6)
24.4
8.7
(261.6)
(248.9)
1,559.9
3,414.0
1. Consistent with the 2021 amendment of the Group’s operating profit policy (refer to page 23), Goodman has categorised $511.8 million of property valuation gains that were realised during the
current financial year in development earnings. These gains, which occurred in prior periods, related to investment properties (both directly and indirectly held) that had been repositioned for
development activities and subsequently sold. The amount of $511.8 million represents the cumulative valuation gains (as required under accounting standards) since the most recent repositioning
activities commenced with $163.0 million relating to the disposal of directly held investment properties and $348.8 million relating to the disposal of investment properties in the Partnerships. In
the reconciliation of the operating profit to profit attributable to Securityholders, these gains have been notionally offset against the current year valuation gains so that they are not double counted.
2. Net finance expense (operating) excludes derivative mark to market movements, and in FY22 interest income from related parties of $6.2 million that was reported as development earnings in the
analysis above.
3. Income tax expense (operating) excludes the deferred tax movements relating to investment property valuations and other non-operating items, such as the Group’s LTIP.
19
GOODMAN GROUP
Directors’ report
Operating and financial review (continued)
Analysis of performance (continued)
Property investment
Property investment earnings in FY23 of $531.4 million (2022: $494.6
million) increased by 7.4% on the prior year and comprised 23% of the
total operating earnings (2022: 24%).
Analysis of property investment earnings
Direct
Partnerships
2023
$M
2022
$M
87.4
103.7
444.0
390.9
531.4
494.6
2023
2022
The more significant component of the Group’s property investment
earnings was from its cornerstone interests in the Partnerships.
The earnings from the Group’s share of these stabilised assets increased
by $53.1 million to $444.0 million (2022: $390.9 million). This was due
to the stabilisation of developments in FY22 and FY23, as the Group
has continued to invest in the Partnerships to fund its share of those
developments and rental income growth from existing stabilised
properties, partly offset by higher interest expense. NPI from the
Partnership portfolios in FY23 was up by 4.7% (2022: 3.9%) on a like for like
basis compared to FY22 and average occupancy was maintained at 99%.
During FY23, the Group’s share of property valuations from the stabilised
portfolios (before deferred tax) was $721.9 million (2022: $2,138.8 million),
which included valuation uplifts of $465.3 million (2022: $204.3 million) on
developments that reached completion during the year.
Key metrics:
Weighted average capitalisation rate (WACR) (%)
Weighted average lease expiry (WALE) (yrs)
Occupancy (%)
4.5
5.5
99
4.0
5.2
99
The valuation gains were predominantly in Australia and North America,
where growth in market rents and the valuation uplifts on development
completions more than offset the impacts of higher capitalisation rates.
At 30 June 2023, the WACR for the Group’s portfolios was 4.5%,
compared to 4.0% at the start of the financial year.
Goodman’s property portfolios are concentrated in large, urban locations
where available space remains restricted, driven by significant customer
demand, combined with relatively high barriers to entry and limited
supply. Consequently, we have seen significant market rental growth
across many locations globally. This is supporting strong underlying
investment fundamentals and cash flows in our portfolio.
The majority of the directly held properties have potential for significant
long-term growth from redevelopment to more intense or higher and
better uses. The net income from the Group’s directly held properties
decreased to $87.4 million (2022: $103.7 million) as a result of disposals
to both Partnerships and external third parties or the deliberate creation
of vacancy to facilitate their redevelopment. However, this was partly
offset by further acquisitions and rental growth.
The operating income return on Goodman’s investment in the stabilised
portfolios held by the Partnerships was 3.5% compared to 4.2% in FY22
due to the higher asset base following the extremely strong valuation
results in the prior year, partly offset by increased earnings. The net
valuation uplifts in the current year resulted in a 7.3% total return for
FY23. Gearing was maintained at the lower end of target ranges, which
continued to be appropriate given the ongoing development activity
and the aim of Goodman and its investment partners to position the
Partnerships for sustainable long-term growth.
20
ANNUAL REPORT 2023
Management
Development
Management earnings in FY23 of $480.6 million (2022: $588.4 million)
decreased by 18% compared to the prior year and comprised 21% of
total operating earnings (2022: 29%). This decrease was due to lower
performance related income partly offset by higher base management
and property service fee income.
Excluding performance related income, management fee income earned
from the overall management of the Group’s Partnerships was $438.7
million (2022: $380.4 million). The higher base management fees were
primarily a result of the increased AUM. During FY23, external AUM
increased to $76.3 billion from $68.7 billion, primarily due to acquisitions
and developments in the Partnerships and the favourable impact of foreign
currency translation.
External AUM
At the beginning of the year
Acquisitions
Disposals
Capital expenditure (developments)
Valuations
Foreign currency translation
At the end of the year
FY2023
$B
68.7
3.7
(0.7)
2.8
0.5
1.3
76.3
Performance fee revenue was $41.9 million (2022: $208.0 million),
lower than the prior year in part because there were fewer performance
fee assessment dates during the year and in part because of the volatility
in financial markets, which makes assessments of future performance fees
more difficult to predict, even when performance to date has exceeded
the relevant performance hurdle. There still remains a significant backlog
of potential fees that may be earned in the future if the relevant conditions
are met.
For FY23, the Partnerships reported a weighted average total return on
net assets of 7.3% (2022: 21.4%).
In FY23, development earnings were $1,301.2 million (2022: $960.7 million),
excluding unrealised valuation gains. This represents an increase of 35% on
the prior year and development earnings comprised 56% of total operating
earnings (2022: 47%).
The quality and location of our sites has underpinned the strength of the
development workbook. The average annualised production rate (based
on expected development end value) has been maintained at $7.0 billion.
The scarcity of available space has driven growth in rents, and combined
with the Group’s strong risk management and cost control, this has
resulted in project margins being maintained, despite the volatility in global
financial markets.
At 30 June 2023, WIP (based on development end value) was $13.0 billion
(2022: $13.6 billion). The WIP is globally diversified across 81 projects
and the majority of development activity was undertaken by or for
the Partnerships and third parties (81% of WIP at 30 June 2023). The
Group continues to selectively consider tightly held, strategic, large
scale sites that display infrastructure-like characteristics, and sites that
can be rezoned to higher and better use or value-add opportunities.
The reduction in the total WIP has not had an adverse effect on the
production rate as the projects that completed in the period included
high rise properties in Hong Kong that have a much greater than average
development period.
The Group remains focused on regeneration of existing land and buildings
and enhancing value through intensification of use such as multi-storey
developments. Goodman is continuing to add opportunities to its
portfolio incrementally to support future development in constrained
markets, while reducing its impact on the environment through brownfield
developments. Brownfield developments and regeneration of sites
continue to be greater than 50% of global WIP.
Data centre demand has risen markedly in recent times and the outlook
for the near term remains strong. The providers of these services are
adding to the demand for the Group’s developments and simultaneously
reducing the supply of space for other uses.
In locations where the supply of available land is restricted, the
Group continues to commence certain projects prior to securing a
pre-lease commitment. Consequently, of the $6.0 billion of project
commencements during the year, 57% had pre-committed leases.
Commencing development without pre-leases in place is not unusual,
and it is common to see leasing occur during the development period.
Of the $6.9 billion of development completions during the year, 99% had
been leased, a reflection of the customer demand and the Group’s ability
to convert that into lease contracts during development.
21
GOODMAN GROUP
Directors’ report
Operating and financial review (continued)
Analysis of performance (continued)
Operating expenses
Capital management
For FY23, operating expenses were $372.5 million, up from $349.3 million
in the prior year, an increase of $23.2 million.
Interest bearing liabilities
Employee expenses were $271.6 million, up from $258.9 million in the
prior year. The Group’s aim is to keep base remuneration costs relatively
steady, and instead use variable remuneration to incentivise staff. Globally,
the Group has 971 employees at 30 June 2023, which is a relatively low
number for a business of Goodman’s size.
At 30 June 2023, the Group’s available debt facilities and fixed rate
long-term bonds totalled $5.0 billion, of which $3.3 billion had been drawn,
and had a weighted average maturity of 5.5 years. The Group’s cash and
undrawn bank facilities totalled $3.1 billion and there are no significant debt
maturities until 2025.
Administrative and other expenses increased to $100.9 million from
$90.4 million primarily due to inflationary pressures in most regions,
recommencement of international travel and higher expenditure on
information technology.
Net finance expense (operating)
Net finance expense (operating), which excludes interest income on
loans to development JVs, derivative mark to market and unrealised
foreign exchange movements, decreased to $13.5 million from $39.3
million. This was due to higher interest earnings. There was also an
increase in capitalised interest, with more development capital allocated
directly by the Group.
Income tax expense (operating)
Income tax expense (operating) for FY23 at $144.0 million (2022: $127.1
million) increased compared to the prior year, primarily due to the nature
and geographic location of the Group’s growing earnings.
However, it should be noted that a significant proportion of Goodman’s
property investment earnings related to GIT and its controlled entities,
which, as trusts, are ‘flow through’ entities under Australian tax legislation,
meaning Securityholders (and not GIT) are taxed on their respective
share of income.
On 9 May 2023, the Australian Government announced it will implement
key aspects of Pillar Two of the OECD/G20 Two-Pillar Solution to address
the tax challenges arising from digitalisation of the economy. The measure
is not yet enacted, but the intention is that large multinational enterprises,
such as Goodman, will be subject to a minimum global tax rate of 15%.
This would apply to Goodman from 1 July 2024.
Management will continue to review the impacts of the proposed changes
when further details are available. There are no impacts arising from the
proposed legislation in the results for the year ended 30 June 2023.
At 30 June 2023, gearing was 8.3% (2022: 8.5%), which continued to be
at the lower end of the Group’s policy range of 0% to 25%. Interest cover
was 48.3 times (2022: 36.7 times) and the Group continued to have
significant headroom relative to its financing covenants. Goodman’s strong
investment grade credit ratings were unchanged over the year.
Including the Partnerships, the Group completed $6.4 billion of debt
financing to refinance and expand its capacity. The Group also secured
$1.0 billion in third party equity commitments, which will provide capacity
for future acquisition and development opportunities. At 30 June 2023,
the Partnerships had $17.6 billion in available cash, undrawn bank
facilities and equity commitments, noting that the majority of the equity
commitments remain subject to the approval by the relevant investment
partners, including Goodman, of proposed property investments for which
the funding is required.
Dividends and distributions
The Group’s distribution for FY23 was maintained at 30 cents per security,
a pay-out ratio of 32%, with 15 cents per security paid on 24 February 2023
and 15 cents per security to be paid on 25 August 2023. This retained
income assisted the Group in obtaining sufficient funds for its ongoing
development activity and in keeping gearing at an appropriate level, within
the desired range. The distribution reinvestment plan was not in operation
during the year.
In respect of the separate components that comprise the 30 cents per
security distribution for FY23:
+
+
+
Goodman Limited did not declare any dividends during the financial
year (2022: $nil)
Goodman Industrial Trust declared and accrued distributions of
25.0 cents per security (2022: 27.5 cents per security), amounting
to $470.4 million (2022: $513.8 million)
GLHK declared and accrued a dividend of 5.0 cents per security
(2022: 2.5 cents per security), amounting to $94.2 million
(2022: $46.7 million).
22
ANNUAL REPORT 2023
Summary of items that reconcile
operating profit to statutory profit
Property valuation related movements
The net gain from fair value adjustments on investment properties
directly held by Goodman was $278.9 million (2022: $260.1 million).
The uplift in value was primarily due to repositioning activities on sites
in Australia and included $55.3 million that related to investment
properties under development.
Goodman’s share of net gains from fair value adjustments before deferred
tax attributable to investment properties in Partnerships was $508.1
million (2022: $2,330.8 million), with increases in market rents and
uplifts on stabilisation of developments partly offset by an expansion
in capitalisation rates. This valuation uplift comprised $498.3 million
(2022: $1,878.7 million) in respect of the stabilised portfolio, including the
uplifts on developments that stabilised during the year, and $9.9 million
(2022: $452.1 million) from investment properties that were still under
development at 30 June 2023.
At 30 June 2023, the WACR for Goodman’s stabilised property portfolios
(both directly held and Partnerships) was 0.5 percentage points higher
than 30 June 2022, increasing from 4.0% to 4.5%.
Fair value movements on properties subject to contracts for disposal
Given the increase in size and scale of the Group’s projects over the past
few years, it has become common for development periods to extend
beyond 12 months. Consequently, these properties have become subject
to more significant fair value adjustments at reporting dates. If the Group
was to apply its historic operating profit policy, then these valuation
movements would not form part of the Group’s operating profit, although
they would still be reflected in the Group’s statutory profit attributable to
Securityholders (as a valuation movement).
In the 2021 financial year, in order to better align performance
measurement with the commercial outcomes that are linked to the cash
generation from these repositioning activities, the Directors amended
the Group’s operating profit policy in respect of a property disposal.
Under the amended policy, any property valuation movements arising
between the date of commencement of the most recent repositioning
activities and the date of disposal should be reported as part of
development earnings, but only in the reporting period when the property
has been sold. The effect of this is that the operating profit will reflect the
cash gain in the period in which the transaction completes.
During FY23, $511.8 million of gains were realised on completion of such
transactions and as a consequence this amount has been reported as
part of the Group’s operating profit for FY23. In the reconciliation of the
operating profit to profit attributable to Securityholders, these gains have
been notionally offset against the current year valuation gains so that they
are not double counted.
At 30 June 2023, the Group’s share of cumulative unrealised valuation
gains on properties that were subject to contracts for disposal but had
not yet been derecognised was $271.3 million (2022: $429.6 million).
These gains have been reported as part of the Group’s statutory profit
attributable to Securityholders in either the current or prior periods
and would form part of future years’ operating profit if and when the
transactions are settled.
There were no impairment losses associated with the Group’s inventories
during the year.
Fair value adjustments relating to hedging activities
The amount reported in the income statement associated with the
Group’s derivative financial instruments was a net loss of $225.8 million
(2022: $191.4 million net loss). This was primarily due to the weakening
of the AUD against most of the Group’s foreign currencies, partly offset
by a strengthening of the AUD against the JPY and the impact of higher
interest rates on the interest rate hedge contracts.
Under the Group’s policy, it continues to hedge between 65% and 90%
of the net investment in its major overseas operations. Where Goodman
invests in foreign assets, it will borrow in that currency or enter into
derivative financial instruments to create a similar liability. In so doing,
Goodman reduces its economic exposures to those currencies. The
unrealised fair value movement of the derivative financial instruments
(up or down) is recorded in the income statement; however, the foreign
currency translation of the net investment that is being hedged is
recorded directly in reserves. In FY23, the movement in reserves
attributable to foreign currency movements was a gain of $360.6 million
(2022: $145.3 million gain).
Other non-cash adjustments or non-recurring items
The principal other non-cash adjustments or non-recurring items for
FY23 related to the share-based payments expense of $286.0 million
(2021: $257.6 million) for Goodman’s LTIP. The increase was primarily
due to the movement in the Goodman security price, from $17.84 to
$20.07 in FY23 compared to a decrease from $21.17 to $17.84 in FY22,
which resulted in a higher expense on remeasurement of the cash settled
performance rights.
23
The directly held development assets (both inventories and investment
properties) increased by $639.3 million to $2,615.7 million (2022: $1,976.4
million), with acquisitions and capital expenditure of $1,023.8 million,
valuation uplifts of $55.3 million and foreign currency translation gains
of $66.1 million. These increases were partly offset by disposals and
transfers to stabilised assets at completion of $506.7 million.
The Group’s share of development assets in the Partnerships decreased
by $529.1 million to $1,949.7 million (2022: $2,478.8 million). This was
due to a significant level of transfers to stabilised assets at completion of
$1,231.8 million, disposals to third parties at completion of $186.8 million
partly offset by acquisitions of $818.0 million, foreign currency translation
gains of $50.0 million and valuation uplifts of $9.9 million ($7.9 million,
net of deferred tax).
The principal goodwill and intangible asset balance is in Continental
Europe. The movement during the year related to changes in foreign
currency exchange rates. There were no impairments or reversals
of impairments.
The movement in the cash balance during the year is explained in the cash
flows section of this report. In respect of the interest bearing liabilities,
Goodman has renegotiated a number of bank facilities to provide
ongoing funds for the business and to repay the foreign private placement
of ¥12.5 billion that matured in April 2023. There are no maturities in the
next 12 months and all drawn debt is disclosed as non-current.
Other assets included receivables, right of use assets from the Group’s
operating leases (primarily office premises) and the fair values of certain
derivative financial instruments, which hedge the Group’s interest rate
and foreign exchange rate risks. There were no material movements
during FY23.
Other liabilities included trade and other payables, lease liabilities,
the provision for distributions to Securityholders, fair values of certain
derivative financial instruments and tax liabilities (including deferred tax).
The increase in other liabilities is primarily due to development related
payables and increased liabilities associated with the Group’s derivative
financial instruments.
GOODMAN GROUP
Directors’ report
Operating and financial review (continued)
Statement of financial position
Stabilised properties
Cornerstone investments
in Partnerships
Development holdings
Intangible assets
Cash and cash equivalents
Other assets
Total assets
Interest bearing liabilities
Other liabilities
Total liabilities
Net assets
2023
$M
2022
$M
2,086.2
2,387.1
14,328.7
11,903.9
4,565.4
4,455.2
850.1
1,360.1
836.7
795.4
1,056.0
834.8
24,027.2 21,432.4
3,292.9
2,832.2
2,709.5
2,175.4
6,002.4
5,007.6
18,024.8
16,424.8
At 30 June 2023, the carrying value of the directly held stabilised
investment properties, which included assets held for sale of $509.6
million (2022: $598.1 million), decreased by $300.9 million to $2,086.2
million at 30 June 2023. This was due to disposals of $918.9 million, partly
offset by acquisitions and development expenditure of $131.9 million,
development completions of $233.0 million, valuation uplifts of $223.6
million and foreign currency translation gains of $27.4 million.
The value of Goodman’s cornerstone investments in Partnerships, which
excludes the Group’s share of their development assets, increased by
$2,424.8 million to $14,328.7 million. The movements during the year
included the Group’s net investments in the Partnerships of $340.0 million,
the valuation uplifts (net of deferred tax) across the portfolios of $536.8
million, transfers from development properties on stabilisation of $1,231.8
million and the impact of foreign currency translation $245.2 million.
Goodman’s development holdings increased by $110.2 million to $4,565.4
million (2022: $4,455.2 million). Overall, activity levels were maintained
across the year, with the Group’s development WIP (as measured by
estimated end value) at 30 June 2023 being slightly lower at $13.0 billion
(2022: $13.6 billion) and the average production rate being consistent with
the prior year at $7.0 billion per annum. However, there has been a change
in the mix of development holdings between directly held assets and the
Group’s share of the Partnerships.
24
ANNUAL REPORT 2023
Cash flows
Operating cash flows
Investing cash flows
Financing cash flows
(excluding dividends and distributions)
Dividends and distributions paid
Net increase in cash held
Cash and cash equivalents
at the beginning of the year
Effect of exchange rate
fluctuations on cash held
Cash and cash equivalents
at the end of the year
Operating cash flows
2023
$M
2022
$M
1,284.2
841.0
(716.0)
(1,001.5)
253.3
856.9
(562.1)
(557.2)
259.4
139.2
1,056.0
920.4
44.7
(3.6)
1,360.1
1,056.0
Operating cash flows of $1,284.2 million (2022: $841.0) million were
higher than the prior year. This was mainly due to higher net cash inflows
associated with development inventories and an increase in cash
received from the Partnership distributions, partly offset by an increase
in other cash payments and lower cash receipts from portfolio
performance fees.
The net development cash inflow was $827.1 million (2022: $367.1
million). This has remained the primary reason for the difference
between operating cash flow and operating profit. The gross receipts
from development activities were lower than the prior year at $1,416.7
million (2022: $1,587.8 million) primarily due to the timing of inventory
completions. The gross payments for development activities were
much lower than the prior year at $589.6 million (2022: $1,220.7 million),
which was due to the nature and structure of the Group’s development
activities – a greater proportion of the Group’s development spend has
been reported in investing cash flows during FY23, either as payments
for investment properties or investments in Partnerships. Nevertheless,
the Group has continued to invest in inventory and expects to recover its
investments and generate a margin from them in future periods.
The increase in other cash payments was due to an increase in operating
costs, driven by inflationary increases in wages and salaries and additional
spend in areas such as travel and information technology. Other cash
payments also include the outflow from the cash settled performance
rights under the LTIP. Similar to the prior year, new securities were issued
(reported in financing cash flows) to fund the cash settled portion of the
LTIP. As a result, the LTIP was cash neutral overall.
The distributions received from Partnerships in FY23 were $583.5 million
(2022: $442.5 million). The Partnerships continued to distribute their net
cash flows from property investment (rental income) and the Goodman
share of these earnings increased due to the improved profitability of
the Partnerships. However, the increase was also partly the result of the
timing of distributions associated with the Group’s share of development
activities in the Partnerships.
Portfolio performance fee revenues are reported under cash receipts
from management and other activities. The timing of receipts of portfolio
performance fees is dependent on the assessment dates for the
Partnerships although revenues may be recognised in advance of the
assessment dates where the returns and the economic conditions mean
that the receipt of revenue is highly probable. During FY23, the cash
flows have been in line with the revenue recognised but were lower than
the prior period because there were fewer performance fee assessment
dates in FY23.
Investing cash flows
Investing net cash outflow was $716.0 million (2022: $1,001.5 million),
a decreased outflow of $285.5 million compared to the prior year.
During FY23, the principal investing cash outflows related to acquisitions
of directly held properties mainly outside Australia of $441.2 million
(2022: $431.7 million) and to investments in the Group’s Partnerships
of $1,243.9 million (2022: $1,332.3 million). The Group received proceeds
of $629.7 million (2022: $671.8 million) from the disposals of investment
properties in Australia and $352.4 million (2022: $4.4 million) from the
partial disposal of its investment in a Partnership joint venture in Australia.
There were no capital returns from the Partnerships during the year
but in the prior year the Group received $91.8 million following capital
management initiatives in two of the Partnerships.
Financing cash flows
Financing net cash outflow (net of dividends and distributions) was
$308.8 million, a movement of $608.5 million compared to a net cash
inflow of $299.7 million in the prior year.
Proceeds from borrowings and derivative financial instruments were
$1,029.3 million (2022: $1,466.5 million). This included cash inflows
in respect of new bank facilities of A$192.9 million and drawdowns
on the Group’s existing revolving bank loans of $836.4 million.
Payments on borrowings and derivative financial instruments were
$772.0 million (2022: $789.3 million). This included repayments on the
Group’s revolving bank loans of $550.0 million (2022: $768.4 million),
the redemption of the $135.3 million (JPY12.5 billion) private placement
in April 2023 and payments on derivative maturities of $84.5 million.
The net cash flow from related party loans was an outflow of $58.0
million (2022: $111.4 million net inflow). These loans are provided by the
Group to fund developments in the Partnerships (including JVs) and
are repaid either at completion or when the Partnership obtains its own
external debt.
The net proceeds from the issue of stapled securities of $67.2 million
(2022: $109.7 million) were directly used to fund obligations under the
LTIP that have been reported as part of the Group’s operating cash flows.
The other principal financing cash outflows were the distributions paid
to Securityholders of $562.1 million (2022: $557.2 million).
25
GOODMAN GROUP
Directors’ report
Operating and financial review (continued)
Outlook
Goodman has developed significant expertise and a deliberate strategy
to target high barrier to entry markets, providing our customers access
to facilities where they are scarce. In particular, the rapid proliferation
of demand for data storage and processing capacity is supplementing
demand and reducing the available supply for warehouses and logistics
centres. This has positioned the Group well for future growth.
In the near term, market conditions are likely to be volatile and the risks
associated with rising inflation, interest rates and slowing economic
growth are elevated. This may impact consumers; however, they
continue to seek faster and more flexible delivery, which requires ongoing
intensification of warehousing in urban locations to optimise delivery
and improve productivity. Our business remains agile, focused on the
changing consumption habits across the physical and digital space and,
as a result, the evolving requirements of customers around the world.
Demand is currently exceeding supply in our markets, supporting
our development-led growth strategy. This is producing well located
assets for the Group and our Partnerships. In addition to strategic site
acquisitions, the opportunities for regeneration of existing assets support
our future development activities by providing value add opportunities.
This can assist in the reduction of the environmental impacts of
our business activities. The development production rate, project
management and depth of customer demand are supporting the outlook
for development earnings into FY24.
In addition, the Group continues to maintain a strong balance sheet,
which combined with retained income, provides significant liquidity,
stability and financial resources.
The outlook for property investment and management earnings remains
positive, as the customer demand and supply constraints in the Group’s
markets provide support for both rental growth and a high level of
occupancy. Investment and management earnings will also benefit from
the completion of ongoing developments. Absent a material adverse
movement in property valuations, development completions and rental
growth are also expected to support growth in AUM.
Goodman has made a strong start to FY24 with a significant development
workbook underway, continued underlying structural demand from
customers and a robust capital position across the Group and
Partnerships. We believe the Group is positioned to continue to deliver
growth despite the risks associated with current market volatility and
expects to achieve operating EPS growth of 9.0% in FY24.
The Group sets financial performance targets annually and reviews them
regularly. Forecasts are subject to there being no material adverse change
in market conditions or the occurrence of other unforeseen events.
26
ANNUAL REPORT 2023
Risks
Goodman identifies strategic and operational risks for each of its regions as part of its strategy process. The key risks, an assessment of their
likelihood of occurrence and consequences and controls that are in place to mitigate the risks are reported to the Board regularly.
Goodman has established formal systems and processes to manage the risks at each stage of its decision making process. This is facilitated by
a Group Investment Committee comprising senior executives, chaired by the Group Chief Executive Officer, which considers all major operational
decisions and transactions. The Group Investment Committee meets on a weekly basis.
The Audit, Risk and Compliance Committee reviews and monitors a range of material risks in Goodman’s risk management systems including, among
other risks, market risks, operational risks, sustainability, regulation and compliance, financial risk management, tax policies and information technology.
The key risks faced by Goodman and the controls that have been established to manage those risks are set out in the following table:
Risk area
Mitigation
Capital
management
(debt, equity
and cash flow)
Goodman could suffer an inability to
deliver its strategy, or an acute liquidity
or solvency crisis, financial loss or financial
distress as a result of a failure in the design
or execution of its capital management
and financing strategy.
Economic and
geopolitical
environment
Governance,
regulation and
compliance
Global economic conditions and
government policies present both
risks and opportunities in the property
and financial markets and the business
of our customers, which can impact the
delivery of Goodman's strategy and its
financial performance.
A continued increase in geopolitical
tension between countries could have
potential consequences on our people,
operations and capital partners.
In the near term, market conditions are
likely to be volatile and the risks associated
with rising inflation, interest rates and
slowing economic activity are elevated.
Non-compliance with legislation,
regulators, or internal policies, or to
understand and respond to changes in
the political and regulatory environment
(including taxation) could result in legal
action, financial consequences and
damage our standing and reputation
with stakeholders.
+ Monthly preparation of a consolidated Capital Management Plan, which is reported to the
Group Investment Committee and the Finance and Treasury management committee
+ Financial reporting to the Goodman Board
+ Weekly cashflow monitoring and reporting
+ Goodman Board approved Financial Risk Management (FRM) policy
+ Capital partnering transfers risks into Partnerships
+ Low gearing, ample liquidity and appropriate hedging and duration to absorb market shocks
+ Diversity and tenure of debt funding sources and cash on deposit
+ Appropriate hedging quantities and duration in accordance with FRM policy
+ Distribution pay-out ratio consistent with contribution of development earnings
+ Long lease terms with prime customers
+ Strong assets that can generate better rental outcomes and growth
+ Key urban market strategy – urban, infill locations support re-usability of property
+ Insurance program (both Goodman’s and key counterparties) including project
specific insurance
+ Global diversification of Goodman’s property portfolios
+ Focus on core property portfolios in key urban market locations and adaptable assets
+ Annual 5-year business strategy
+ Focus on cost management
+ Annual risk assessment and profile
+ Annual budget
+ Regular independent property valuations
+ Asset planning program
+ Prudent capital management with low gearing and significant available liquidity to allow for
potential market shocks
+ Adherence to FRM policy as it relates to hedging of interest rates and currencies
+ Review of customer credit
+ Co-investment with local capital partners
+ Independent governance structures
+ Core values and attitudes, with an embedded compliance culture focused on best practice
+ Dedicated Group Head of Risk and Compliance Officer
+ Review of transactions by the Group Investment Committee
+ Annual compliance plan audits
+ Partnership investment committees independent of the manager
+ Global tax risk management framework
+ Regional and Group Executive declarations and sign-offs
+ Verification process and sign-off of public documents
+ Comprehensive insurance program, covering property, liability, Directors and Officers
and Professional Indemnity
+ Continuous disclosure regime – regular group management meetings
27
GOODMAN GROUP
Directors’ report
Risks (continued)
Risk area
Mitigation
People and
culture
Failure to recruit, develop, support,
and retain staff with the right skills
and experience may result in significant
underperformance or impact the
effectiveness of operations and
decision making, in turn impacting
business performance.
Development
Development risks may arise from
location, site complexity, planning and
permitting, infrastructure, size, duration
along with general contractor capability.
Disruption,
changes in
demand and
obsolescence
The longer-term risk that an inability
to understand and respond effectively
to changes in our competitive landscape
and customer value chain could result
in business model disruption and asset
obsolescence, including the perception
of obsolescence in the short term.
+ Competitive remuneration structures, in particular performance rights under the LTIP,
with ALL staff having ownership
+ Succession planning for senior executives and key roles
+ Performance management and staff review
+ Overall performance review ratings to assess culture and engagement
+ Learning and development program to enhance skills sets
+ Goodman Values program
+ Staff engagement through team strategy days, town halls and the (good) life program.
+ Review and approval of development projects by the Group Investment Committee
and relevant Partnership Investment Committee
+ Targeted returns are higher for the size and complexity of the project
+ Engaging general contractors that are better capitalised
+ Senior oversight and responsibility by Executive Directors
+ Capital partnering transfers risks into partnerships
+ Specialised staff who understand the development process, including development
staff by region
+ Goodman defined design specifications, which cover environmental, technological,
and safety requirements, protecting against short term obsolescence
+ Fixed price, design and construct contracts with appropriately capitalised contractors
+ Redevelopment of older assets to intensify use
+ Insurance program (both Goodman’s and key contractors), including project
specific insurance
+ Spread and diversification of projects
+ Ongoing monitoring and reporting of WIP and levels of speculative development,
with Board oversight including limits with respect to speculative development and
higher development risk provisions
+ Implementation of Goodman policies and procedures (e.g. reporting, Safety framework
and delegation of authority)
+ Leasing prior to reaching development completion.
+ Key urban market strategy – urban, infill locations support re-usability of property
+ Adaptable and reusable building design – ease to reconfigure for another customer
+ Geographic diversification – capital allocation across regions and location of properties
+ Capital partnering transfers risks into partnerships
+ Insurance program (both Goodman’s and key contractors), including project specific
insurance covering design and defects
+ Long lease terms with prime customers
+ Innovation and technology strategy – visibility and insight into technology trends along
with direct investment into technology start-ups
+ Competition analysis and behaviour.
Environmental
sustainability
and
climate change
Failure to deliver on Goodman's
sustainability leadership strategy and
ambitions may lead to a negative impact
on Goodman's reputation, ability to raise
capital and a disruption to operations and
stranded assets.
+ Corporate Responsibility and Sustainability policy
+ 2030 Sustainability Strategy and reporting against those targets
+ Assessment of individual assets to improve resilience and implementation
of sustainability initiatives
+ Sustainability guidelines for development projects including embodied carbon
measurement and offset
+ Review and approval of acquisitions and development projects by the Group Investment
Committee and relevant Partnership Investment Committee, including consideration of
climate risks in the due diligence process and minimum property specifications
+ Adoption of the Task Force on Climate-Related Financial Disclosures recommendations
as a framework for the assessment, management and disclosure of climate risks
+ Investor, customer and regulatory requirements
+ Verification process and sign-off of public sustainability documents
+ Adherence to Group Procurement Policy for selection and purchase of Carbon Credits
+ LTIP performance directly linked to meeting the Group’s sustainability initiatives.
28
ANNUAL REPORT 2023
Risk area
Mitigation
Asset and
portfolio
Inability to execute asset planning and
management strategies, including leasing
risk exposures, can reduce returns from
Goodman's portfolios.
Concentration
of
counterparties
and markets
Over-exposure to specific areas, such
as capital partners, supply chain,
customers and markets, may limit growth
and sustainability opportunities.
+ Key urban market strategy – urban, infill locations where customer demand is strongest
+ In-house property management team
+ Diversification of customer base and lease expiries
+ Review and approval of significant leasing transactions and development projects
by the Group Investment Committee and relevant Partnership Investment Committee
+ Capital expenditure programs keeping pace with property lifecycle
+ Implementation of Goodman policies and procedures (e.g. reporting, Safety framework,
sustainability measures and minimum design specifications)
+ Insurance program including Public Liability, including property risk assessment reports
+ Customer risk assessments
+ Asset plans – in particular categorisation of assets, maintenance program,
customer engagement
+ Portfolio strategy – locations, type of building.
+ Standardised governance structures around Partnerships, which includes:
– Relationship deeds articulating service arrangements
– Pre-emptive rights
+ Independent governance structure
+ Diversification of capital partners and fund expiries, including local investors.
Analysis of alternate capital sources
+ Goodman’s cornerstone investment in each Partnership and the underlying strength
of the Manager
+ Appropriate Management contracts across all Partnerships
+ Contractor pre-selection and tendering
+ Diversification of customer base and lease expiry
+ Investment metrics established for GMG and Partnerships, setting limits including:
– Speculative development
– Geographic and customer exposure
+ FRM policy establishing criteria for financial institution counterparties.
Information and
data security
Maintaining security (including cyber
security) of Information Technology (IT)
environment and data, ensuring continuity
of IT infrastructure and applications to
support sustainability and growth and
prevent operational, regulatory, financial
and reputational impacts.
+ Strategic roadmap for delivery of secured IT systems, benchmarked against the
Australian Signal Directorate’s Essential maturity model and the United States National
Institute of Standards and Technology Cyber Security framework
+ Proactive monitoring, review and testing of infrastructure and system behaviour
+ Incident response, disaster recovery and business continuity planning
+ Penetration testing, vulnerability scanning and network review to identify and remediate
+ IT Dashboard Reporting to the Audit, Risk & Compliance Committee
+ Phishing awareness program implemented to educate and test employees’ awareness
and vigilance in avoiding threats
+ Cyber security awareness/training
+ Decommissioning legacy systems
+ Transition from employee password reliance
+ Speed of threat/vulnerability detection
+ Data system back-up/restore testing
+ Phishing simulation testing/reporting
+ Reporting and compliance with Essential Eight, baseline strategies to mitigate
cyber security incidents, developed by the Australian Cyber Security Centre.
29
GOODMAN GROUP
Directors’ report
QUALIFICATIONS, EXPERIENCE AND
SPECIAL RESPONSIBILITIES OF DIRECTORS
AND COMPANY SECRETARY
Board of Directors
Stephen Johns
Independent Chairman
Stephen is the Independent Chairman and a Non-executive Director
of Goodman Limited, Goodman Funds Management Limited and
Goodman Logistics (HK) Limited.
Appointed: 1 January 2017 (Goodman Limited and Goodman Funds
Management Limited); 19 November 2020 (Goodman Logistics (HK)
Limited).
Board Committees: Chair of the Remuneration and Nomination
Committee and member of the Audit, Risk and Compliance Committee
and Sustainability and Innovation Committee (as at 30 June 2023).
Skills, Experience and Expertise
Stephen is a former executive of Westfield Group where he had a long
executive career during which he held a number of senior positions
including that of Finance Director from 1985 to 2002. He was a
non-executive director of Westfield Group from 2003 to 2013.
Stephen has previously been Chairman of Brambles Limited,
Leighton Holdings Limited and Spark Infrastructure Group.
He has a Bachelor of Economics degree from The University of Sydney
and is a Fellow of Chartered Accountants Australia and New Zealand
and a Fellow of the Australian Institute of Company Directors.
Other Directorships and Offices
+ Director of the Garvan Institute of Medical Research
+ Director of European-Australian Business Council.
Directorships of Other Listed Entities in the Past Three Years
+ Brambles Limited (August 2004 to June 2020).
30
Gregory Goodman
Group Chief Executive Officer
Greg is the Managing Director of Goodman Limited and Goodman Funds
Management Limited and Group Chief Executive Office of Goodman.
He is also an alternate director of Goodman Logistics (HK) Limited.
Appointed: 7 August 1998 (Goodman Limited and 17 January 1995
Goodman Funds Management Limited); 18 January 2012 (Goodman
Logistics (HK) Limited).
Board Committees: Nil.
Skills, Experience and Expertise
Greg is responsible for Goodman’s overall operations and the
implementation of its strategic plan. He has over 30 years of experience
in the property industry with significant expertise in industrial property.
Greg is the founder of Goodman, playing an integral role in establishing
its specialist global position in the property market through various
corporate transactions, including takeovers, mergers and acquisitions.
Other Directorships and Offices
+
+
+
Director of Goodman (NZ) Limited (the manager of the New Zealand
Exchange listed Goodman Property Trust)
Director and/or representative on other subsidiaries and
management companies of Goodman and its Partnerships
Director of Goodman Foundation Pty Limited as trustee of the
Goodman Foundation.
Christopher Green
Independent Director
Chris is an Independent Non-executive Director of Goodman Limited
and Goodman Funds Management Limited.
Appointed: 28 April 2019.
Board Committees: Chairman of the Sustainability and Innovation
Committee and member of the Remuneration and Nomination
Committee (as at 30 June 2023).
Skills, Experience and Expertise
Chris spent 16 years at Macquarie Group and was the Global Head
of Macquarie Capital’s real estate business leading its global expansion
through to 2018.
He has a Bachelor of Laws (Honours) degree and a Bachelor of Commerce
(Computer Science and Accounting) degree from The University of Sydney.
Chris is also the Founder and Chief Executive Officer of GreenPoint
Partners, a New York headquartered firm investing in real estate innovation,
technology and private equity.
Other Directorships and Offices
+ Chief Executive Officer of GreenPoint Partners
+ Director of Wyuna Regenerative Ag Pty Limited
+ Director of Infinium Logistics Solutions UK Limited
+ Director of The Opportunity Network
+ Director of Ility inc.
ANNUAL REPORT 2023
Mark G. Johnson
Independent Director
Mark is an Independent Non-executive Director of Goodman Limited
and Goodman Funds Management Limited.
Appointed: 1 June 2020.
Board Committees: Chairman of the Audit, Risk & Compliance
Committee and member of the Remuneration and Nomination
Committee (as at 30 June 2023).
Skills, Experience and Expertise
Mark is a trained accountant and spent 30 years at
PricewaterhouseCoopers (PwC) where he was CEO from 2008 to 2012
as well as holding positions as Asian Deputy-Chairman and as a member
of PwC’s global strategy council.
Mark also has extensive experience as a Director of charities, educational
bodies and mutual organisations and he is currently a director of the
Smith Family, a Councillor at UNSW Sydney and the Chairman of the
Hospitals Contribution Fund of Australia. He was until recently Chairman
and a director of G8 Education Limited and was formerly an independent
director of Coca-Cola Amatil Limited and Westfield Corporation Limited.
Mark holds a Bachelor of Commerce (UNSW) degree and is a Fellow
of Chartered Accountants Australia and New Zealand, Certified
Practicing Accountant Australia and Fellow of the Australian Institute
of Company Directors.
Other Directorships and Offices
+ Director of Aurecon Limited
+ Director of Boral Limited
+ Director of Metcash Limited
+ Director of Sydney Airport Limited (and its subsidiaries).
Former Directorships of Other Listed Entities in the Past Three Years
+ Coca-Cola Amatil Limited (December 2016 – May 2021)
+ G8 Education Limited (January 2016 – November 2021).
Vanessa Liu
Independent Director
Vanessa is an Independent Non-executive Director of Goodman Limited
and Goodman Funds Management Limited.
Appointed: 1 June 2022.
Board Committees: Member of the Sustainability and Innovation
Committee (as at 30 June 2023).
Skills, Experience and Expertise
Vanessa is an experienced technology business leader and currently
Co-Founder and CEO of SaaS technology company Sugarwork, and an
independent director of ASX-listed artificial intelligence company Appen
Ltd (since March 2020). She has more than twenty years of experience
in the technology sector having started her career at McKinsey in the
Telecom, Media & Technology Practice.
She was most recently Vice President of SAP.iO North America, SAP’s
early-stage venture arm, where she recruited and accelerated 87 enterprise
software startups. Prior to SAP, Vanessa was Chief Operating Officer
at Trigger Media Group, a digital media venture studio, and co-founded
Trigger’s portfolio companies: digital media company InsideHook and SaaS
technology company Fevo (where she remains a Board Observer).
Vanessa graduated magna cum laude highest honours with an AB in
Psychology from Harvard University and cum laude with a JD from
Harvard Law School. She was a Fulbright Scholar at Universiteit Utrecht in
the Netherlands. She serves as a member of Harvard University's Board
of Overseers and is a past President of the Harvard Alumni Association
Other Directorships and Offices
+ Director of Appen Ltd
+ CEO/President/Director of Sugarwork, Inc.
+ Member, Harvard University Board of Overseers.
Rebecca McGrath
Independent Director (now retired)
Rebecca was an Independent Non-executive Director of Goodman
Limited and Goodman Funds Management Limited.
Appointment: 3 April 2012 and retired on 28 February 2023
Board Committees: Chairman of the Risk and Compliance Committee
and member of the Audit Committee until her retirement in February
2023. Rebecca resigned as a Member of the Nomination Committee
on 1 October 2022.
Skills, Experience and Expertise
During her executive career at BP plc, Rebecca held numerous senior
roles in finance, operations, corporate planning, project management
and marketing in Australasia, the UK, and Europe. Her last role as a senior
executive was as Chief Financial Officer of BP Australasia. Rebecca was
formerly a Chairman of OZ Minerals Limited (until April 2023), a director
of CSR Limited and Incitec Pivot Limited.
Rebecca holds a Bachelors degree of Town Planning and a Masters
of Applied Science (Project Management) and is a graduate of the
Cambridge University Business and Environment Programme. She
is Victorian Council President of the Australian Institute of Company
Directors and a member of the National Board and a member of The
Australian British Chamber of Commerce Advisory Council.
Other Directorships and Offices
+
+
Director of Macquarie Group Limited and Macquarie Bank Limited
(since January 2021)
Director of Investa Wholesale Funds Management Limited, Investa Office
Management Pty Limited and Investa Commercial Property Fund
+ Chairman of Scania Australia Pty Limited.
Former Directorships of Other Listed Entities in the Past Three Years
+
Incitec Pivot Limited (September 2011 to December 2020)
+ OZ Minerals Limited (November 2010 to April 2023).
31
GOODMAN GROUP
Directors’ report
Qualifications, experience and special responsibilities of Directors and Company Secretary (continued)
Danny Peeters
Executive Director, Corporate
Danny is an Executive Director of Goodman Limited, Goodman Funds
Management Limited and Goodman Logistics (HK) Limited.
Belinda Robson
Independent Director
Belinda is an Independent Non-executive Director of Goodman Limited
and Goodman Funds Management Limited.
Appointed: 1 January 2013 (Goodman Limited and Goodman Funds
Management Limited); 1 February 2018 (Goodman Logistics (HK) Limited).
Board Committees: Nil.
Appointed: 1 March 2023.
Board Committees: Member of the Audit, Risk and Compliance Committee
(as at 30 June 2023).
Skills, Experience and Expertise
Skills, Experience and Expertise
Danny was formerly CEO of Goodman’s European business and has
oversight and is currently the Acting CEO of Goodman’s Brazilian
operations. Danny has been with Goodman since 2006 and has over
20 years of experience in the property and logistics sectors.
During his career, Danny has built up extensive experience in the design,
implementation and outsourcing of pan- European supply chain and real
estate strategies for various multinationals. Danny was Chief Executive
Officer of Eurinpro, a developer of tailor made logistic property solutions
in Europe acquired by Goodman in May 2006.
Other Directorships and Offices
+
Director and/or representative of Goodman’s subsidiaries and
Partnership entities in Europe and Brazil.
Phillip Pryke
Independent Director
Phillip is an Independent Non-executive Director of Goodman Limited
and Goodman Funds Management Limited.
Appointed: 13 October 2010.
Board Committees: Member of the Audit, Risk and Compliance Committee
and Sustainability and Innovation Committee (as at 30 June 2023).
Skills, Experience and Expertise
Phillip has wide experience in the fishing, energy, financial services, and
health and technology industries and holds a Bachelor of Economics degree.
Phillip is currently a director of Carbine Aginvest Corporation Limited.
He was formerly the Deputy Chairman and Lead Independent Director
of New Zealand Exchange listed Contact Energy Limited, a director of
Tru-Test Corporation Limited and North Ridge Partners Pty Limited,
Vice President of EDS, Chief Executive of Nextgen Networks, Chief
Executive Officer of Lucent Technologies Australia Pty Limited and
New Zealand Health Funding Authority and a member of the Treaty of
Waitangi Fisheries Commission.
Other Directorships and Offices
+
Director of Goodman (NZ) Limited (the manager of the New Zealand
Exchange listed Goodman Property Trust)
+ Director of Carbine Aginvest Corporation Limited
+ Director of Dairy Technology Services Limited.
Belinda has over 30 years’ experience in the property industry, with
specific expertise in retail and commercial property funds management
in the Asia Pacific. Prior to becoming a non-executive director, Belinda
was an executive at Lend Lease Investment Management and the fund
manager for Australian Prime Property Fund Retail where she was
responsible for developing and implementing the fund strategy.
Belinda has a Bachelor of Commerce with Honours (Marketing) from the
University of New South Wales.
Other Directorships and Offices
+
+
+
Director of Region Group
Director of GPT Funds Management Limited
Director of Lendlease’s Asian Retail Investment Funds.
Anthony Rozic
Deputy Chief Executive Officer and
Chief Executive Officer North America
Anthony is an Executive Director of Goodman Limited and Goodman
Funds Management Limited.
Appointed: 1 January 2013.
Board Committees: Nil.
Skills, Experience and Expertise
Anthony is an Executive Director and Deputy Chief Executive Officer
(since August 2010). He was appointed Chief Executive Officer North
America in September 2016, and in that role is responsible for setting and
managing the strategy, business performance and corporate transactions
for the Group’s North American business.
Anthony joined Goodman in 2004 as Group Chief Financial Officer and
was appointed Group Chief Operating Officer in February 2009 before
taking on his current positions.
Anthony is a qualified Chartered Accountant and has over 25 years’
experience in the property industry having previously held a number of
senior roles in the property funds management industry and chartered
accountancy profession.
Other Directorships and Offices
+
Director and/or representative of Goodman’s subsidiaries and
Partnership entities in North America.
32
ANNUAL REPORT 2023
Hilary Spann
Independent Director
Hilary is an Independent Non-executive Director of Goodman Limited
and Goodman Funds Management Limited.
George Zoghbi
Independent Director
George is an Independent Non-executive Director of Goodman Limited
and Goodman Funds Management Limited.
Appointed: 4 April 2022.
Appointed: 11 April 2023
Board Committees: Member of the Sustainability and Innovation
Committee (as at 30 June 2023).
Board Committees: Member of the Sustainability and Innovation
Committee (as at 30 June 203).
Skills, Experience and Expertise
Skills, Experience and Expertise
Hilary has an extensive background in public and private equity markets
and is currently a senior executive at NYSE-listed Boston Properties, Inc.
(NYSE: BXP), based in New York. There, she is responsible for all aspects
of the office developer, owner, and manager’s portfolio in the New York
region. She was previously the Head of Real Estate for the Americas at
CPP Investments and prior to that she held a number of senior real estate
roles at JPMorgan in the United States.
Hilary graduated from the Georgia Institute of Technology with a BS and
a Masters in City Planning, both from the College of Architecture. She also
studied architecture at L’École Nationale Supérieure D'architecture de
Paris – La Villette.
Other Directorships and Offices
Currently the Chief Executive Officer of The Arnott’s Group following its
acquisition by private equity group KKR in 2020, George has extensive
international consumer packaged goods and supply chain experience.
He is also a Director of Brambles Limited and a Strategic Advisor to
Altimetrik – a US-based digital and IT solutions company.
Previously, George was Chief Operating Officer – US Businesses at Kraft
Heinz and prior to that Chief Operating Officer at Kraft Foods Group.
He has also held senior roles with Fonterra Cooperative and Associated
British Foods.
George has a Diploma of Business, Marketing, as well as a Master of
Enterprise from the University of Melbourne. He has also completed an
Accelerated Development Programme at MC London Business School.
+ Executive Vice President, Boston Properties, Inc. (NYSE: BXP)
Other Directorships and Offices
+
+
+
Chief Executive Officer of The Arnott’s Group
Director of Brambles Limited
Director of Altimetrik.
Directorships of other listed entities in the past three years
+
Former Director of Kraft Heinz Company (NASDAQ: KHC) (April 2018
to April 2021).
Carl Bicego
Group Head of Legal and Company Secretary
Appointed: 24 October 2006.
Skills, Experience and Expertise
Carl is the Group Head of Legal and Company Secretary of the Company.
He was admitted as a solicitor in 1996 and joined Goodman from
law firm Allens in 2006. Carl holds a Master of Laws and Bachelor of
Economics/Bachelor of Laws (Hons).
33
GOODMAN GROUP
Directors’ report
Directors’ meetings (GL and GFML)
The number of Directors’ meetings held (including meetings of committees of Directors) and the number of meetings attended by each of the
Directors during the financial year were:
Audit
Committee
meetings
Risk and
Compliance
Committee
meetings
Audit, Risk
and
Compliance
Committee
meetings1
Remuneration
Committee
meetings
Nomination
Committee
meetings
Remuneration
and
Nomination
Committee
meetings2
Sustainability
and Innovation
Committee
meetings3
d
e
d
n
e
t
t
A
l
4
d
e
H
d
e
d
n
e
t
t
A
l
4
d
e
H
d
e
d
n
e
t
t
A
l
4
d
e
H
d
e
d
n
e
t
t
A
l
4
d
e
H
d
e
d
n
e
t
t
A
l
4
d
e
H
d
e
d
n
e
t
t
A
l
4
d
e
H
d
e
d
n
e
t
t
A
l
4
d
e
H
Board
meetings
d
e
d
n
e
t
t
A
l
4
d
e
H
8
8
8
8
8
5
8
8
2
8
8
2
8
8
8
7
8
5
8
7
2
8
7
2
3
–
–
3
–
3
–
3
–
–
–
–
3
–
–
3
–
3
–
3
–
–
–
–
–
–
–
4
–
4
–
4
–
–
–
–
–
–
–
4
–
4
–
4
–
–
–
–
1
–
–
1
–
–
–
1
1
–
–
–
1
–
–
1
–
–
–
1
1
–
–
–
3
–
3
–
–
–
–
3
–
–
–
–
3
–
3
–
–
–
–
3
–
–
–
–
3
–
3
2
–
1
–
–
–
–
–
–
3
–
3
2
–
1
–
–
–
–
–
–
1
–
1
1
–
–
–
–
–
–
–
–
1
–
1
1
–
–
–
–
–
–
–
–
1
–
4
–
4
–
–
4
–
–
4
1
1
–
4
–
4
–
–
4
–
–
3
1
Directors
Stephen Johns
Gregory Goodman
Chris Green
Mark Johnson5
Vanessa Liu
Rebecca McGrath6
Danny Peeters
Phillip Pryke
Belinda Robson7
Anthony Rozic
Hilary Spann
George Zoghbi8
1. On 1 April 2023, the separate Audit Committee and Risk and Compliance Committee were combined as the Audit Risk and Compliance Committee. The committee members since its
establishment are Mark Johnson (Chair), Stephen Johns, Phillip Pryke and Belinda Robson.
2. On 1 April 2023, the separate Remuneration Committee and Nomination Committee were combined as the Remuneration and Nomination Committee. The committee members since
establishment are Stephen Johns (Chair), Chris Green and Mark Johnson.
3. The Sustainability & Innovation Committee commenced its activities from 1 October 2022. On establishment the committee members were Chris Green (Chair), Vanessa Liu, Phillip Pryke
and Hilary Spann. Stephen Johns became a Committee member on 1 April 2023 and George Zoghbi on 11 April 2023.
4. Reflects the number of meetings individuals were entitled to attend.
5. Mark Johnson commenced as a member of the Nomination Committee on 1 October 2022 and as the Chair of the Risk & Compliance Committee on 1 March 2023.
6. Rebecca McGrath ceased being a member of the Nomination Committee on 1 October 2022 and retired as a member of the Board and Chair of the Risk and Compliance Committee
on 28 February 2023.
7. Belinda Robson was appointed to the Board and commenced as member of the Risk & Compliance Committee on 1 March 2023.
8. George Zoghbi was appointed to the Board and commenced as a member of the Sustainability and Innovation Committee on 11 April 2023.
34
ANNUAL REPORT 2023
Directors’ report
Remuneration report – audited
Letter from the Chairman and the Remuneration Committee Chair
4. GROUP PERFORMANCE AND OUTCOMES
4.1. Goodman FY23 highlights
4.2. Financial measures
4.3. Total security price returns comparison
4.4. Remuneration outcomes for FY23
4.4.1.
STI outcomes
4.4.2.
ESG assessment
4.4.3.
LTI outcomes
4.4.3.1. Operating EPS hurdle (75% weighting)
4.4.3.2. Relative TSR hurdle (25% weighting)
4.4.4. Group CEO achievements
4.4.5. Other executive KMP achievements
4.5. LTI grants in relation to FY23 performance
5. NON-EXECUTIVE DIRECTOR REMUNERATION
5.1. Key elements of the Non-Executive Director remuneration policy
5.2. Board and committee annual fees
6. STATUTORY DISCLOSURES
6.1. KMP remuneration (statutory analysis)
6.2. Movements in performance rights held by executive KMP
6.3. Analysis of performance rights held by executive KMP
6.4. Securities issued on exercise of performance rights
6.5. Unissued securities under performance rights
6.6. Non-Executive Directors’ remuneration (statutory analysis)
6.7. Movements in Goodman securities held
6.8. Transactions with Directors, executives and their related entities
1. REMUNERATION GOVERNANCE
1.1.
1.2.
The role of the Board and the Remuneration
and Nomination Committee
Key activities of the Remuneration
and Nomination Committee for FY23
1.3. Key Management Personnel (KMP)
2. REMUNERATION STRATEGY
2.1. Key remuneration principles
2.2. Objectives of the remuneration strategy
2.3. Remuneration mix and alignment across the Group
3. EXECUTIVE REMUNERATION FRAMEWORK
3.1. Feedback and response
3.2. Remuneration for executive KMP
3.3. When is remuneration earned and received?
3.4. Short-term incentive (STI)
3.5. Long-term incentive (LTI)
3.5.1.
FY24 LTI awards (five and ten-year plans)
3.5.2.
FY23 LTI awards (five and ten-year plans)
3.5.3.
FY22 LTI awards
3.5.4.
Setting operating EPS hurdles
3.5.5.
Operating EPS – long-term cash flow
alignment with vesting outcomes
3.6. Non-financial measures
3.6.1.
Types of non-financial measures
3.6.2.
Integration of non-financial measures into STI
3.6.3.
Integration of non-financial measures into LTI
3.7. Considerations for setting of awards
3.7.1.
Considerations for award quantum –
Goodman Group in context
3.7.2. Considerations for award quantum – structure
35
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
Letter from the Chairman and Chair of the Remuneration and Nomination Committee
Dear Securityholders,
On behalf of the Board, I am delighted to present the 2023 Remuneration Report, outlining Goodman’s remuneration strategy and principles which
we firmly believe provide appropriate alignment of the interests of management and Securityholders.
FY23 was another successful year for the Group, where we significantly exceeded financial performance expectations while also making excellent
progress on our ESG initiatives. This was delivered by our management team in a particularly volatile and difficult global economic and market
environment. The ongoing impact of global political instability, rising inflation and higher interest rates continue to present challenges for Goodman’s
business, our people, customers, investors, and the communities in which we operate and live.
The attraction and retention of talent are critical for the success of the Group. This is increasingly challenging as opportunistic competitors in our
business seek to recruit high-performing teams around the world. The Group’s longstanding and consistent approach to remuneration has been
a key driver of our sustained success as an international business over an extended period of time.
This approach is reflected in our strong financial results for FY23 including:
+ Operating profit of $1.8 billion (+17%), growth of 68% for the three years ended 30 June 2023 (which aligns with the Group’s relevant LTIP testing period)
+ Statutory profit of $1.6 billion and $3.0 billion across the combined Group and Partnerships
+ Goodman operating EPS growth of 16%, materially exceeding initial expectations of 11%
+ Significant volume of development work in progress of $13.0 billion at 30 June 2023, across 81 projects and providing a solid base for future profitability
+ Total AUM increasing 11% to $81.0 billion
+ Low leverage of 8.3% and significant liquidity of $3.1 billion providing strong financial capacity both for resilience and growth.
We have continued to reflect the importance placed on providing financial returns and operating within appropriate sustainability and environmental
objectives, incorporating key ESG targets into the operations and long-term business strategies of the Group.
2022 AGM results and subsequent securityholder engagement
Despite receiving a second strike at last year’s AGM, we recognise the significant support for our Remuneration Report which increased to over 71% from
58% a year before. While, as a Board, we were naturally disappointed with the result, we were grateful at the overwhelming support for the board in relation
to the spill resolution. It is important to note that in the lead up to the AGM in 2022, we engaged directly with a large number of our investors representing
approximately 60% of the securities on issue. Of this Group only a small proportion voted against the 2022 Remuneration Report. We received strong
positive support for the plan structure, in particular our innovative ten year plan for senior executives, and the changes from 2021, specifically:
Reducing the proposed quantum of awards significantly (by 46% for the CEO and by 33% for KMP in terms of face value) while retaining the ability
to recognise exceptional outperformance
Adopting significantly more challenging and competitive hurdles for operating EPS, notwithstanding the considerable market uncertainties
existing at the time, which if achieved, at the top end of the range (11% per annum compound growth over the four year testing period; 52% growth
overall) would provide Securityholders with exceptional performance in both relative and absolute terms.
+
+
36
ANNUAL REPORT 2023
We have also met with proxy advisors to explain and discuss our remuneration policies. These meetings have been constructive. An issue raised
by one of the firms is our method of calculating operating profit and that it should include the share-based payment expense. We detail the reasons
for our methodology in determining operating profit in section 3.5.5. In essence, operating profit reflects only cash profits, with non-cash items such
as share-based payments and asset revaluations being excluded. Relevantly:
+ Management runs our business primarily on the basis of cash generation and employee performance is assessed accordingly
+
Based on analyst reports and management’s discussions with investors and analysts, we believe the market uses operating profit as the most
relevant measure to value the Group
+ Cash generation not only supports the payment of distributions but underwrites the robust financial health of the Group.
The Board believes that managing the business, on what is primarily a cash profit basis as represented by diluted operating EPS, is fundamental
to long-term resilience and is the strongest determinant of value creation for Securityholders over time.
Despite not receiving sufficient votes to avoid the strike in 2022, the Board is confident that a substantial majority of our Securityholders continue
to believe firmly in our remuneration structure, and importantly its alignment with their long-term outcomes.
We have again reflected this sentiment in setting awards and LTI hurdles this year. For KMP:
+ The STI component has been reduced by 10% (with the CEO continuing to not participate in STI awards)
+
+
The quantum of the FY24 LTI awards has also been reduced by 10% (so as to maintain the equivalent face value of the FY23 awards after taking
into account the increase in the Goodman security price over the course of the year)
Challenging operating EPS hurdles (6% to 11% compound annual growth over a four year testing period and commencing from a substantially
higher base) for LTI have again been imposed.
This remuneration result is particularly significant in the context of the Group’s FY23 performance, where operating EPS increased 16%, well ahead
of the broader market and our own guidance, but quantum of STI and LTI is similar to FY22. Furthermore, following exceptional results in the past two
years where operating profit is up 46%, management will need to increase profit by over $1 billion by FY27 in order to achieve maximum vesting of the
FY24 awards.
The Board is always mindful of the focus on overall remuneration levels and spends considerable time each year determining remuneration outcomes
in the context of our complex international operations. We recognise the need on the one hand, to attract, retain and incentivise our employees while,
on the other hand, to meet the range of expectations of our Securityholders.
In closing I would like to acknowledge our long serving director, Phillip Pryke, who will be retiring from the Board in the first half of 2024. Phil, who
chaired the Remuneration Committee from 2010 until earlier this year, has made a significant contribution to the formulation of the Group’s
remuneration strategies and to Board deliberations more generally.
We look forward to receiving your views and support at our 2023 AGM.
Yours sincerely,
Stephen Johns
Chairman and Chairs
of the Remuneration and
Nomination Committee
37
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
1. REMUNERATION GOVERNANCE
The role of the Board and the Remuneration
1.1.
and Nomination Committee
The Board and the Remuneration and Nomination Committee are
responsible for approving the structure of the remuneration of the Group’s
employees and for the specific pay of the Group CEO and other KMP.
In setting these, the Board considers remuneration with a five to ten year
horizon. It takes into consideration the impact that decisions made over
the last three to five years have had on current performance and how
it expects the business to perform in the longer term. It is not solely an
exercise in reviewing a single year.
The Board believes the success of Goodman is primarily due to its
people and their ability to execute a global strategy that requires agility,
strong collaboration and an inclusive culture, all of which are key elements
supported by the LTIP.
The Board:
+
+
Encourages management to take a long-term strategic view rather
than an opportunistic approach to property investment
Expects the senior leadership team to accept collective responsibility
for the outcomes
+ Focus on the creation of long-term sustainable returns
+
Focuses on the consistency of cash generation, through the Group’s
operating profit, as the most tangible means of measuring long-term
value creation for Securityholders.
When determining the remuneration levels and outcomes for FY23,
the Remuneration and Nomination Committee has considered:
+ Feedback from Securityholder engagement
+ The significant operational and financial outperformance of the Group
+ The specifics of individual performance
+
The long-term structure of remuneration and the challenging hurdles
employed relative to expectations.
These have been assessed in the context of the current and expected
future volatility as a result of inflationary conditions affecting capital
markets and the global operating environment. This is particularly
evident in the pressures on construction and development operations.
It is our view that the logistics real estate sector continues to be favoured
for investment, so the Remuneration and Nomination Committee
has considered the impact continued competitor activity in our sector
is having on attracting and retaining employees.
Remuneration this year aims to further balance Securityholder and
employee outcomes and to continue to reinforce Goodman’s long-term
decision making. While the Group delivered strong operating EPS growth
(+16.0%) in FY23, well ahead of original market guidance, for KMP the face
value of awards (STI and LTI) has remained the same relative to the prior
year and there are no increases in base pay for FY24 (other than where
base pay is contractually subject to inflation-based indexation).
38
The Board has:
+
+
+
Reduced STI by 10% (increasing the skew to at risk LTI)
Increased the difficulty of the hurdles for the proposed FY24 LTI
awards compared with FY23 by maintaining the challenging operating
EPS hurdles of 6% to 11%, off a substantially higher base year (refer
section 3.5.4)
Reduced the number of performance rights awarded to KMP
by approximately 10%, in order to maintain similar face value of
the combined STI and LTI, as a consequence of the increase in
Goodman’s security price and the reduction in STI.
This approach is consistent with the business and operational strategy
as well as providing competitive remuneration to attract and retain high
quality people.
The Board acknowledges the strike received at our AGM last year in relation
to the 2022 Remuneration Report. However, we remain confident that our
remuneration strategies are best suited to the long-term future of Goodman.
1.2.
Key activities of the Remuneration
and Nomination Committee for FY23
From 1 July 2022 to 31 March 2023, the Board had a separate
Remuneration Committee and Nomination Committee. From 1 April 2023
these committees were combined into the Remuneration and Nomination
Committee. Members of the Remuneration and Nomination Committee
(and the predecessor Remuneration Committee during FY23 were:
Member
Role
Stephen Johns
Chris Green
Mark Johnson
Independent Director and Chairman of
Goodman Group, Member of Remuneration
Committee 1 July 2022 – 31 March 2023,
Chair of the Remuneration and Nomination
Committee 1 April 2023 – 30 June 2023
Independent Director – Member of
Remuneration Committee 1 July 2022 –
31 March 2023, Member of the Remuneration
and Nomination Committee 1 April 2023 –
30 June 2023
Independent Director – Member of
Remuneration Committee 1 October 2022 –
31 March 2023, Member of Remuneration
and Nomination Committee 1 April 2023 –
30 June 2023
Rebecca McGrath
Independent Director, Member of Remuneration
Committee 1 July 2022 – 1 October 2022
Phillip Pryke
Independent Director and Chairman
of the Remuneration Committee 1 July 2023 –
31 March 2023
ANNUAL REPORT 2023
Following significant enhancements to the remuneration policies in FY22
and FY23, the Remuneration and Nomination Committee has made
additional changes for the FY24 awards. Key decisions made and items
considered in the determination of FY24 awards, include the following:
– Based on the Board approved business and financial strategy,
the Target level of performance is 8.5% CAGR growth in operating
EPS over the four year testing period. This is the mid-point of the
6% to 11% operating EPS growth hurdles
– To achieve maximum vesting at the Upper Level hurdles, equates
to operating profit growth in FY27 of over $1,020 million (from the
FY23 base year) and an increase of over $240 million above the
Board’s Target level of performance
– Given the more challenging operating environment globally, analyst
consensus expectations for the broader market (as evident in
the S&P/ASX 100) and Goodman, are materially lower than both
Board Target and the Upper Level. The Upper Level vesting hurdle
reflects an approximately 4% higher growth rate per annum than
market consensus and Visible Alpha forecasts and therefore a
significant stretch component for management.
+
+
+
The Board Considers the 6% to 11% operating EPS CAGR range
to be a truly challenging hurdle range for management in the
current environment
Environmental and sustainability targets, included in the FY24
performance rights testing conditions have been reviewed and
updated as considered appropriate
Fixed remuneration levels for Greg Goodman and Nick Vrondas
were unchanged in FY23. Danny Peeters fixed remuneration is
contractually subject to inflation-based indexation, calculated by
reference to the change in the Luxembourg HICP Index. Accordingly,
in respect of FY23 his base pay increased by 10.2% to €585,450.
In respect of Nick Kurtis and Anthony Rozic, increases were made
to fixed remuneration after benchmarking against similar roles in
relevant locations.
+
+
+
+
+
+
An approximate 10% reduction in STI for KMP that receive STI, further
increasing the at risk long-term nature of remuneration
Agreed with the Group CEO (as in prior years) that he would
not participate in the STI award and all his performance-based
remuneration in relation to his FY23 performance will be in the form
of LTI. In general, LTI remains the significant focus of remuneration
awards across the Group
The quantum of LTI awards has been reviewed and in determining
these, face value and structure relative to peers, the reduction in STI
and the more challenging hurdles have been considered. Accordingly:
– For the Group CEO, the number of rights has declined 10% relative
to the FY23 award, offsetting the security price increase during
FY23 and resulting in the face value of the FY24 LTI awards being
similar to FY23
– For the other executive KMP, the number of rights has declined
by approximately 9% relative to the FY23 awards offsetting the
security price increase during FY23 and lower STI and resulting
in the face value of the FY24 LTI awards being similar to FY23
Continued the issuance of LTI awards under the ten-year plan for
the Group CEO, executive KMP and other senior executives
Continued to make the five-year LTIP available to the balance
of employees
Further increase in the challenge and outperformance required
to achieve hurdles
– For the maximum vesting to occur on the operating EPS linked
portion of the plan, a compound annual growth rate (CAGR) of 11%
per annum (at the Upper Level) must be achieved over four years
(in the case of the 10-year plan); this equates to almost 60% growth
in operating profit in FY27 relative to the very strong FY23 result
– The Board’s operating EPS growth targets for management have
remained consistent despite the deteriorating market and the
effect of compounding growth off the 43% increase in operating
EPS in the past 2 years. This means all the hurdles are materially
higher than in comparable FY22 awards
39
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
1.3 Key Management Personnel (KMP)
Member
Executive KMP
Role
Tenure at Goodman
Gregory Goodman
Group Chief Executive Officer
Danny Peeters
Anthony Rozic
Nick Kurtis
Executive Director Corporate
Deputy CEO and CEO North America
Group Head of Equities
Michael O’Sullivan1
Group Chief Risk Officer
Nick Vrondas
Group Chief Financial Officer
Non-Executive KMP
Stephen Johns
Chris Green
Mark Johnson
Vanessa Liu
Belinda Robson
Phillip Pryke
Hilary Spann
George Zoghbi
David Collins
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
GLHK Non-Executive Director
28 years
17 years 1 month
19 years 1 month
23 years 4 months
20 years 10 months
17 years 2 months
6 years 6 months
4 years 2 months
3 years 1 month
1 year 1 month
2 months
12 years 9 months
1 year 3 months
2 months
5 years 5 months
1. Michael O’Sullivan retired from his role as Group Chief Risk Officer and ceased to be a KMP on 28 March 2023.
Kitty Chung was appointed as a GLHK Non-Executive Director on 1 July 2023 and became a KMP of Goodman from that date.
2. REMUNERATION STRATEGY
Goodman is one of the largest listed industrial real estate fund managers and developers globally. The Group’s people are largely based outside Australia.
The remuneration structure reflects the requirements in the highly competitive labour markets the Group operates in globally, not just in Australia, and the
objective of aligning multiple regional businesses and operational segments with a global strategy and pay for performance outcomes.
A significant proportion of the value of the Group, reflected in the $20.6 billion premium between the security price of $20.07 at 30 June 2023 and
Goodman’s net tangible assets per security of $9.12, is attributable to the value created across the global platform. Given the active nature of the Group’s
operations, the Board believes that this is almost entirely due to Goodman’s people, the decisions they make and their ability to execute consistently
and at all levels that has positioned the Group to sustainably grow the cash generation measure of the business that is encapsulated by operating profit
(as described in the section 3.5.5).
The retention of talent is therefore critical for the long-term success of the Group and is increasingly challenging as opportunistic competitors seek to
recruit high-performing teams around the world. The Group’s remuneration policy is crucial in its ability to have the appropriate human resources to deliver
on the strategy, create the right culture and drive performance for the benefit of all stakeholders.
The Group’s remuneration structure, in particular the focus on equity-based reward, has been a key component of its success as an international
organisation. The Board believes that aligning all employees with Securityholders through the Group’s remuneration policy has added significant value to
the Group. It has been a fundamental differentiator in generating and rewarding long-term performance and retaining quality people in a highly competitive
global environment. It is particularly important considering the challenges created by the volatility in global political and capital markets as it binds all
employees together as owners of the business and is a powerful incentive and driver of operational resilience.
40
2.1
Key remuneration principles
Continuing alignment of remuneration in line with Group strategy,
structural changes and ESG aspirations
Given the cyclical nature of real estate, incentive structures within real
estate businesses are highly outcome driven (particularly by private
equity real estate managers where most institutional assets reside).
The Group’s capital and resource allocations shift over time in response to
variable market circumstances. The effects of these real estate strategies
take time to manifest, requiring rewards to be measured over longer
periods. The Group’s remuneration framework is therefore focused on
influencing long-term decision making and collaboration across business
units and international operations to derive sustainable outcomes.
There are several key principles of remuneration that the Board considers
to be most relevant:
+
Focus on LTI as the predominant source of pay for performance
for senior members and a material factor for all employees of the
Group. All employees are eligible to receive LTI grants as a material
component of remuneration that are tested using challenging hurdles
without encouraging inappropriate risk (see section 3.5.4), enhancing
alignment of rewards across the Group with Securityholders
– Aligning the deliverable outcomes of all employees globally, with
Goodman’s aspirations of long-term cash flow growth, resilience,
and sustainability. This is practically achieved through the focus on
operating profit (which is closely aligned with cash profits) as the
primary testing measure for LTI awards (see section 3.5.5)
– Goodman’s remuneration structure results in a significantly higher
proportion of pay in the form of equity-based performance awards
(93% for the Group CEO versus less than 43% for S&P/ASX 20
CEO’s). Consequently, despite only 25% of LTI testing against
relative total securityholder return (TSR), employees have
significant alignment and exposure to TSR outcomes versus
typical remuneration structures. In addition, operating profit
which determines operating EPS is a cash-based measure which
management globally can have a tangible influence on
– Importantly operating EPS is the underlying value driver for
Goodman securities and is expected to ultimately align with
TSR outcomes over the longer term
Securityholders are the beneficiaries of the Group-wide outcomes.
Collaboration is required to achieve Group-wide targets across
regions and business units. Remuneration should engender a
collective responsibility for the consolidated outcomes which can
facilitate decision making that leads to the optimal allocation of
resources between locations and activity types to pursue the most
appropriate opportunities at different points in time
A culture of ownership, inclusion and alignment, where all employees
experience investment returns aligned with Securityholders creates
stability which reduces staff turnover
Balancing reward and retention with long-term cost to
Securityholders at respective levels of performance.
+
+
+
ANNUAL REPORT 2023
Business strategy requires long-term remuneration timeframes
to align outcomes
Goodman’s increased focus on urban infill markets with their significant
increase in complexity has led to longer development horizons to maximise
outcomes but delivered significant returns to investors. In summary:
+
+
+
Site acquisition and value add to existing stabilised sites, often takes
five to ten years, and sometimes longer, to achieve highest and best
use and urban regeneration outcomes
The Group’s approach to development considers the lifecycle of an
asset even for new developments which allow further intensification
or change of use at a later time. This sometimes comes at the
expense of short-term performance; however, this approach is
consistent with the Group’s strategic objectives and provides future
value realisation potential, over significant time periods
Increased focus on ESG and integration of environmental
sustainability aspirations into the Group’s operational activities
requires significant time periods (often beyond five years) for
implementation. Goodman’s approach to outcomes for the
community, environmental sustainability and wellbeing are long-term
aspirations aligned with the financial sustainability objectives.
In the Board’s view, the long-term nature of the structural trends impacting
the sector, the Group’s approach to real estate investment in relation to
this, and investor feedback, supports continuation of the LTIP structure.
The ten-year plan for the Group CEO, other executive KMP and other
senior executives in the organisation, will continue to influence decision
making and closely align with the time periods required to deliver superior
operational results on a sustainable basis. It also provides sufficient
time to implement key ESG initiatives and achieve the Group’s targets,
particularly in relation to longer-dated environmental and sustainability
objectives, in a manner that creates alignment with the desired outcomes
for Securityholders. The five-year LTIP is longer than most in the S&P/ASX
100 and remains in place for all eligible employees who do not participate
in the ten-year plan and will continue to include hurdles aligned with the
ten-year plan.
41
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
2.2
Objectives of the remuneration strategy
Attract
Reward
Long-term alignment of our people and Securityholders
Remuneration structure
Performance conditions
Alignment with strategy and long-term performance
Fixed remuneration
Low fixed costs, with the
focus on “at risk” equity.
Scope and complexity of the role,
individual absolute and relative
comparison in the relevant market
and comparator group.
Real estate investment management and development are cyclical,
so fixed employee costs are kept relatively low, below median and mean
for comparable companies. Group CEO fixed remuneration has not
changed for 16 years.
Assessment includes
four key components:
+
+
+
+
Achieving operating
EPS target1
Meeting Goodman
behavioural expectations
per the Code of Conduct
Individual financial and
operational assessment
Assessment against
environmental and
sustainability objectives.
1. Achieving the operating EPS target does
not determine the level of STI. It is a “gate”
to the creation of the STI pool for the entire
organisation. The test is therefore different
and distinct from the LTI test where
operating EPS performance determines the
level of LTI vesting.
75% tested based on achieving
the cash-based operating EPS
hurdle range 25% tested based on
relative TSR against the S&P/ASX
100 constituents. The benchmark
index aligns with a significant
portion of investors’ benchmarks
relevant to their holdings and
provides closest alignment with
their performance.
Environmental and sustainability
targets (set by the Board) over the
LTIP testing period with penalty
to vesting outcomes of up to
20% of rights satisfying the
operating EPS hurdle for material
underperformance against targets.
STI is an at risk component, rewarding financial and non-financial
performance against objectives of the individual and the Group. Awards
in FY23 represent 67% of the maximum for executive KMP.
The performance of individuals is assessed through a performance
appraisal process based on contribution to strategic, financial, operational
and ESG objectives, while also reflecting behavioural expectations
(see section 4.4.).
Financial performance is the primary measure in determining the
maximum level of STI for the individual; however, this can be penalised
if behavioural standards or ESG targets are not met or breached (up to
100% of STI for certain measures). These factors together incentivise
the executive KMPs to achieve not only the operating EPS targets , but
also that the method in which they are met matches appropriate risk and
governance settings. Given the complex nature of the Group’s global
operations, individual financial metrics are reflected in the operating EPS.
This structure is simple and transparent and aligns management with the
operating EPS growth expectations of Securityholders. Detailed financial
metrics for the business are additionally disclosed in reporting. In addition
LTI operating EPS targets as LTIP targets are set over four years and
represent the longer-term aspirations of the business with performance
result directly determining financial outcomes through level of vesting.
The high weighting to LTI is believed to be the most effective way of
rewarding sustained performance and retaining talent while maintaining
alignment with Securityholders’ experience.
Hurdles are set to be competitive relative to reference groups and
challenging for management with a significant stretch component, but
without encouraging inordinate risk in execution (see sections 3.5.4 and
3.5.5) relative to external and internal reference points.
TSR provides an effective check against increasing risk or unsustainable
practices within the Group. The price to earnings multiple attributable to
securities will reflect the risk in achieving operating EPS targets, which
impacts the likelihood of vesting and the ultimate value upon vesting.
The relative TSR and operating EPS hurdles interact as TSR impacts
the value of all performance rights. Given the significant skew in
remuneration to performance rights, the effective impact of the TSR
on remuneration is significantly greater than its 25% weighting. The
combination of 25% TSR testing and >80% equity-based remuneration
for executive KMP, provides significant overall exposure to TSR, based
on the Group’s remuneration structure.
The total number of performance rights outstanding under the LTIP
at 30 June 2023 equates to 4.1% of the Group’s issued securities. The
maximum number of performance rights under the LTIP is limited to 5%
of the Group’s issued securities including cash settled performance rights
(“phantoms”). Equity issuance to all employees encourages a collaborative
approach and broader distribution of remuneration across the entire
workforce when the Group is performing well.
STI remuneration is a 100%
at risk performance base
award tied to operational
performance metrics over
the past 12 months.
However, the Group CEO
forgoes STI in favour of LTI.
Other executive KMP
received between 6%
to 10% of total FY23
remuneration in STI, with
payments made in two
instalments, the first in
August or September after
the financial year end and
the second 12 months later.
LTI is “at risk” remuneration
that rewards long-term
sustained performance.
New awards will be
granted in FY24 in relation
to FY23 performance
achievements, an
assessment of potential
future contributions
and relevant alignment
of employees.
Ten-year plan awards to
the Group CEO, executive
KMP and senior executives
are tested over four years
with vesting in equal
tranches, annually, from the
end of year four to the end
of year ten.
Five-year plan awards to
remaining employees are
tested over three years with
vesting in equal tranches,
annually, from the end of
year 3 to the end of year 5.
n
o
i
t
a
r
e
n
u
m
e
r
l
a
t
o
t
O
E
C
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o
%
0
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>
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l
l
i
a
c
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y
t
(
n
o
i
t
a
r
e
n
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m
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r
k
s
i
r
t
A
42
ANNUAL REPORT 2023
2.3 Remuneration mix and alignment across the Group
FY23 vested remuneration outcome
The Board believes that the alignment between pay and long-term
performance is evidenced by the significant proportion of the total
remuneration that is at risk for the Group CEO, the other executive
KMP and employees throughout the organisation. In respect of the
Group CEO, all of his at risk remuneration is in the form of LTI.
This is demonstrated in the charts below that consider the vested
remuneration received during FY23. Vested remuneration represents
the value that is received during FY23. It includes fixed base pay, STI
and the value of performance rights that vested during FY23 (from prior
grants) using the closing Goodman security price on the day of vesting.
The Board believes that this demonstrates the alignment of the
remuneration outcomes for the Group CEO with the outcomes for
Securityholders, who have experienced strong performance over a
significant period alongside the Group CEO. Had the Securityholder
returns been lower, the level of at risk remuneration would have been
lower (due to lower vesting outcomes and lower value of vesting
performance rights) and fixed remuneration would have made up
a greater proportion of the total vested remuneration in FY23 for
all employees, but especially for the Group CEO and the other
executive KMP.
GROUP CEO FY23 REMUNERATION
LTI 94.9%
Fixed remuneration 5.1%
EXECUTIVE KMP (EXCLUDING GROUP CEO)
FY23 REMUNERATION 3 YEAR ROLLING
STI and LTI 91.8%
Fixed remuneration 8.2%
ALL EMPLOYEES (EXCLUDING EXECUTIVE KMP)
FY23 REMUNERATION
STI and LTI 63.8%
Fixed remuneration 36.2%
43
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
3. EXECUTIVE REMUNERATION FRAMEWORK
3.1 Feedback and response
While the Group received a second strike at the AGM in November 2022, the result improved significantly from 58% in 2021 to 71% in 2022.
The Chairman and the Group Head of Stakeholder Relations engaged with as many investors as reasonably possible in the lead up to the AGM.
This led to engagement with 48 investors representing approximately 60% of Goodman’s securities. Of this group only a small percentage voted
against the remuneration. We received strong positive support for the changes from 2021 and specifically for the plan structure and hurdles.
Securityholder and Proxy Feedback
Response
Strongly positive feedback regarding the structure
of the plan, testing and vesting period.
While Securityholders recognise the long-term
nature of LTI awards and many recognize the
economic value approach, the majority use face
value for determining outcomes.
Quantum is high relative to the ISS peer group.
Operating profit/operating EPS has been raised by
one of the proxy advisors as a bespoke calculation
and that it should include non-cash share-based
payment expense.
Hurdles are set to be competitive and challenging
in line with long term performance and the risk
settings appropriate for the Group. Feedback, from
the overwhelming majority of investors was that
hurdles and the ‘stretch’ were appropriate, relative
to targets. One proxy considered the hurdles were
not challenging enough.
Continued the issuance of LTI awards under the ten-year plan for the Group CEO, other
executive KMP and other senior executives. This ten-year plan will apply for the intended
grant of performance rights to be made in September 2023 (therefore in FY24) in respect
of FY23 performance.
The Group has relied on face value comparison with peer groups, noting the structure of
respective plans, for the setting of awards. Awards have been reviewed relative to our global
competitors and local peers. In addition, despite the Group delivering strong operating EPS
growth (+16%) in FY23, well ahead of original market guidance, the Board acknowledges the
strike received at the November 2022 AGM, and consequently for executive KMP has:
– Reduced STI by 10% (which further increases the skew to at risk LTI)
– Maintained the face value of the intended FY24 LTI awards at a level equivalent with FY23
In the Board’s view, the ISS generated peer group is not a comparable group of companies,
as the companies are significantly smaller, less active and operate almost solely in Australia.
The Board has outlined what it considers to be relevant peer groups in section 3.7.1 and has
considered these when assessing the quantum of remuneration awards.
The Board believes that managing the business, on what is primarily a cash profit basis as
represented by diluted operating EPS, is fundamental to long-term resilience and is the
strongest determinant of value creation for Securityholders over time. That is the intent of
the Group’s operating profit definition (and operating EPS), and it is one of the key measures
used to drive the business strategy for employees to execute. It is also why the Board has
used operating EPS (operating profit per share, diluted for tested performance rights) as one
of the principal performance tests in its LTI awards and why it continues to be an appropriate
means by which to assess employee performance. Based on analyst reports and investor
discussions, the market overwhelmingly uses operating profit as the most relevant and
appropriate measure to value the Group. This is covered in further detail in Section 3.5.5.
LTI hurdles have been set for FY24 awards with a further increase to the challenge and
outperformance required to achieve vesting. For the maximum vesting to occur on the operating
EPS linked portion of the plan, a compound annual growth rate (CAGR) of 11% per annum
(at the Upper Level) must be achieved over four years (in the case of the 10-year plan); this
equates to almost 60% growth in operating profit in FY27 relative to the very strong FY23 result.
The Board’s operating EPS growth targets for management have remained consistent
despite the deteriorating market and the effect of compounding growth off the 43% increase
in operating EPS in the past two years. This means all the hurdles are materially higher than in
comparable FY22 awards.
Based on the Board approved business and financial strategy, the Target level of performance
is 8.5% annual growth in operating EPS over the four year testing period. This is the mid-point
of the 6% to 11% operating EPS growth hurdles.
To achieve maximum vesting at the Upper Level hurdle, equates to operating profit growth
in FY27 of over $1,020 million (from the FY23 base year) and FY27 operating profit more
than $240 million above the Board’s Target level of performance. Given the more challenging
operating environment globally, analyst consensus expectations for the broader market
(as evident in the S&P/ASX 100) and Goodman, are materially lower than both the Board’s
Target level and the Upper Level. The Upper Level hurdle reflects a 4% per annum higher
growth rate than market consensus (Visible Alpha forecasts), and a significant stretch
component for management
44
ANNUAL REPORT 2023
Securityholder and Proxy Feedback
Response
Should we increase TSR tested portion
of performance rights to 50%?
Preference for long-term ESG targets.
The Board has again considered the appropriate portion of the performance rights to be
tested using the TSR measure. We continue to believe the current structure providing 75%
operating EPS testing and 25% TSR testing is the appropriate mix for Goodman. The Board
believes that managing the business, on what is primarily a cash profit basis, is fundamental
to long-term value creation and therefore Securityholder performance over time. The Board
gave consideration to:
1. Having engaged with a significant number of investors, there is no clear indication
that TSR testing is a preferred approach for Goodman, and strong support remains for
long-term cash flow measures
2. The LTI plan is a significant component of all eligible employee remuneration, not just for
a small group of senior executives. Importantly, most of these employees are domiciled
outside Australia with limited connection to the ASX or the factors which impact equity
market volatility and TSR. In the Board’s view, it is not appropriate or in the interest of
Securityholders to link the most significant portion of remuneration for all employees to
TSR, which is subject to short-term factors they have no control over
3. Employees across the business contribute to sustainable cash-based earnings growth
in their day to day roles, and therefore the Board believes that in order to effectively
incentivise them, operating EPS represents the most appropriate single measure
4. The relative TSR and operating EPS hurdles interact as TSR i.e. the security price, impacts
the value of all LTI tranches. Given the significant skew in remuneration to LTI, the effective
impact of the TSR on remuneration is significantly greater than its 25% weighting. The
combination of 25% TSR testing and >80% equity-based remuneration for employees,
provides significant overall exposure to TSR, based on the Group’s remuneration structure.
5. The 25% TSR does provides an effective check against increasing risk or unsustainable
practices within the Group. The price to earnings multiple attributable to securities will
reflect the risk in achieving operating EPS targets, which impacts the likelihood of vesting
and the ultimate value upon vesting.
ESG targets will remain as an additional test for operating EPS tranches of performance
rights, allowing for up to 20% reduction in vesting outcomes in the event of material
underperformance against the targets. Targets have been reviewed and additional
environmental and sustainability targets have been included in the testing conditions
for FY24 awards. Progress against targets is reviewed annually.
Preference for long-term at risk remuneration.
Securityholders prefer in principle lower fixed
and STI remuneration and more at risk LTI.
Agreed with the Group CEO (as in prior years) that he would not participate in the STI award
and all his performance-based remuneration in relation to his FY23 performance will be in
the form of LTI.
45
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
3.2 Remuneration for executive KMP
Key testing criteria and minor modifications made to the Long-Term Incentive plan
Ten-year
plan FY23
Change Ten-year
plan FY24
Comment/rationale
EPS
performance
testing
Threshold
Vesting at
Threshold
Target
No
No
Yes
6% (CAGR) in
operating EPS
(25% of performance
rights vest at
the Threshold).
25%
8-9% CAGR in
operating EPS
(55% to 70% of
performance rights
vest at Target)
6% CAGR in
operating EPS
for the 4 years
to FY27 (25%
of performance
rights vest at
the Threshold)
25%
8.5% CAGR in
operating EPS.
For the 4 years
to FY27 (62.5%
of performance
rights vest
at Target)
Vesting at
Target
Upper level
55% to 70%
62.5%
No
11% CAGR in
operating EPS
(100% of performance
rights vest)
11% CAGR in
operating EPS
for the 4 years
to FY27 (100%
of performance
rights vest)
Performance at the Threshold level (compound annual growth in operating
EPS of 6% for the four years to FY27) for performance rights vesting to start
has been set such that it requires performance significantly in excess of that
expected from relevant peer groups. Goodman must deliver >15% EPS growth
compared to the S&P/ASX 100 (2.5% per annum) and S&P/ASX 200 REIT’s
(2.7% per annum) based on broker consensus earnings in order to achieve the
Threshold Level.
Based on the Board approved business and financial strategy, the Target level
of performance is 8.5% compound annual growth in operating EPS over the
four year testing period. This is the mid-point of the 6% to 11% operating EPS
growth hurdles. It is in excess of average broker research estimates for the
Group (of approximately 7% per annum) and materially in excess of peers.
The Board’s operating EPS growth targets for management have remained
consistent despite the deteriorating market and the effect on the hurdles of the
43% increase in operating EPS in the past two years. As a consequence, the
Board considers the hurdles are higher than in comparable FY23 awards.
For the maximum vesting to occur a compound annual growth of 11% per annum,
the Upper Level, must be achieved over four years; this equates to almost 60%
growth in operating profit in FY27 relative to the very strong FY23 result.
Vesting at the Upper Level equates to operating profit growth in FY27 of over
$1,020 million (from the FY23 base year) and the FY27 operating profit would
be more than $240 million above the Board’s Target level
of performance. Given the more challenging operating environment globally,
analyst consensus expectations for the broader market (as evident in the
S&P/ASX 100) and Goodman, are materially lower than both the Board’s Target
level and the Upper Level. The Upper Level vesting hurdle, reflects a 4% per
annum higher growth rate than market consensus (Visible Alpha) forecasts and
a significant stretch component for management
Vesting at
Upper level
100%
No
100%
TSR performance hurdle Ten-year plan FY23
Change
Ten-year plan FY24
Comment/rationale
Testing criteria
TSR against
S&P/ASX 100.
0% at 50th percentile
25% at 51st percentile
Straight line vesting
percentage to 90th
percentile where 100% vests.
No
No
TSR against
S&P/ASX 100.
0% at 50th percentile
25% at 51st percentile
Straight line vesting
percentage to 90th percentile
where 100% vests.
Ten-year plan FY23
Change
Ten-year plan FY24
Targets set by the Board
are tested at the end
of year four. A Penalty
applies to the number of
performance rights that have
satisfied the operating EPS
hurdle, with 20% maximum
reduction in the event of
material underperformance
against targets.
Yes
(refreshed
hurdles)
Targets set by the Board are
tested annually and at the end
of year four.
A Penalty is applied to the
number of performance rights
that have satisfied the operating
EPS hurdle, with 20% maximum
reduction in the event of material
underperformance against targets.
S&P/ASX 100 correlates with most
benchmarks
relevant to Securityholders.
Outperformance of the index average is
required before any portion is vested. This
aligns with Securityholders albeit underlying
operational performance may not be
reflected in TSR if macro environment
changes (as has happened in FY23)
Comment/rationale
Given environmental and sustainability
initiatives are integrated into the operations
of the business, A penalty is applied to
the number of performance rights that
satisfy the operating EPS hurdle.
A 20% maximum reduction would apply
in the event of material underperformance
against targets
Testing thresholds
Environmental and
sustainability hurdles
Environmental
and sustainability
performance
46
ANNUAL REPORT 2023
While STI and LTI both utilise an operating EPS measure the testing criteria are materially different.
For the STI:
+
Achieving the operating EPS guidance for a particular financial year acts as a gate and not a financial test determining level of payment.
The Group’s guidance for the financial year ahead must be achieved in order for any bonus pool to be available for that year
+ STI also includes a “gate” relating to conduct and behaviour
+ STI (excluding the CEO) is then determined based on individual employee performance relative to KPI’s.
For the LTI:
+
+
Operating EPS is tested over four years, so while the first year’s guidance is relevant, it is only one year of the four years growth required
to determine CAGR and therefore the vesting of the operating EPS tranches of the LTI. The level of compound annual growth achieved
(from 6% to 11%) will determine the financial outcome under the LTI as it relates to the number of securities that would vest
The level of certainty relating to operating EPS growth is lower beyond one year, and hence the guidance for the coming financial year is not
indicative of future years.
The chart below illustrates the components of KMP remuneration in relation to FY23 performance using:
+ Current fixed base pay
+ STI award (where applicable)
+ LTI award value using the intended grant to be made in September 2023 based on the face value at 30 June 2023 as detailed in section 4.5.
REMUNERATION
Fixed remuneration (%)
STI (%) LTI (%)
Gregory Goodman
Danny Peeters
Anthony Rozic
Nick Kurtis
Nick Vrondas
7
6
6
8
8
10
10
6
6
93
84
80
88
88
Note: This analysis is different to both the statutory presentation of remuneration and the vested remuneration, which are referred to elsewhere in the remuneration report.
Under the ten-year plan and with the above remuneration structure:
+
+
+
The Group CEO would not receive any performance-based reward in respect of his performance for FY23 if the Group does not meet its minimum
performance hurdles under the LTIP over the next four years (measured at 30 June 2027)
At the Threshold level of performance (6% per annum compound growth in operating EPS), the Group would have significantly outperformed the
S&P/ASX 20 (based on market consensus forecasts) but this would only result in 25% vesting and remuneration outcomes that are materially
below the current median for the entities in the S&P/ASX 20 and our comparators (Section 3.7).
The ultimate value of the award will be subject to Goodman’s security price performance and will only be realised in its entirety in September 2033
(ten years).
47
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
3.3 When is remuneration earned and received?
The chart below illustrates the timing of receipt of the remuneration components for executive KMP. Performance goals under the ten-year plan
must be achieved over a period of four years to qualify for performance-based pay. Vesting then occurs in seven equal tranches from years four to ten.
There is significant risk associated with vesting given the required returns to satisfy vesting and the final cash outcome is dependent on the movement
in the security price over the next ten years.
Fixed
remuneration
100% of fixed pay
awarded in cash
STI
Performance
period (1 year),
50% awarded
in cash
50% of total STI
deferred for 1 year,
awarded in cash
75% of award based on an operating EPS hurdle
and subject to no material underperformance
against environmental and sustainability targets.
Performance measured at the end of year 4.
25% of award based on a relative TSR hurdle.
Performance measured at the end of year 4
14% of LTI award (subject to
service/ performance requirements)
vests shortly after the end of year 4.
14% of LTI award (subject to service/performance
requirements) vests shortly after the end of year 5.
LTI
Performance period
(1 year)
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 6.
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 7.
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 8.
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 9.
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 10.
Current year
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
n
o
i
t
a
r
e
n
u
m
e
r
k
s
i
r
t
A
48
ANNUAL REPORT 2023
3.4 Short-term incentive (STI)
STI is a component of remuneration that is at risk. It is assessed through a series of “gates” based on achievement of financial and non-financial objectives.
This structure is transparent, ensures minimum performance requirements for eligibility and aligns individuals with Securityholders.
Questions
Who is eligible
to participate
in the STI?
What is the form
of the STI award?
What is the
maximum award
participants
may earn?
How is the
STI earned?
How is the
individual STI
award determined?
All full-time and part-time permanent employees.
The Group CEO agreed with the Board not to participate in the STI awards, to emphasise reward for long-term decision making
across the organisation.
Cash. For executive KMP, 50% of the STI award is paid on finalisation of Goodman’s full year result.
50% of the STI award is deferred and paid in cash after a period of 12 months and this deferred STI amount is subject to forfeiture
under malus provisions (see below).
STI awards are capped at 150% of fixed remuneration for executive KMP. Target STI for individuals is also compared to market-
based remuneration data and their manager’s own assessment of what an appropriate level of incentive compensation may be
relative to the long-term value that person brings to the Group.
The Board sets budget targets for the business annually. These targets are set relative to the market conditions, earnings visibility,
financial structure and strategy and are believed to be challenging and appropriate.
STI for all staff is subject to: (1) achieving operating EPS (based on the annual target for the relevant year which is disclosed to the
market at the beginning of the year in the form of “guidance”; (2) meeting behavioural expectations under the Group’s Code of
Conduct; (3) financial and operational assessment; and (4) assessment against environmental and sustainability targets.
It is important to note, achieving the operating EPS Target does not determine the level of STI. It is a “gate” to the creation of the
STI pool for the entire organisation. The test is therefore different and distinct from the LTI test where operating EPS performance
determines the level of LTI vesting.
STI rewards annual performance against objectives of the individual and the Group.
The Group objectives include multiple factors as set from time to time, dependent on the market and strategy of the Group.
Overall Group financial performance relative to targets is the primary assessment, overlaid with required achievement against
environmental and sustainability objectives and adherence to the Group’s core values and conduct.
The performance of individuals is assessed through a detailed and formal performance appraisal process based on contribution
to defined objectives, behavioural expectations, annual contribution to results as well as strategic and other contributions where
these results or benefits may be reflected in future years. Consideration is also given to the total remuneration package with a view
to retaining and appropriately aligning and motivating employees.
Is there
malus/clawback?
Is STI deferred
into equity?
The executive KMP STI awards are subject to 50% deferral for 12 months from the date of publication of Goodman’s financial
statements. This deferral period provides protection from malus. The Board has discretion to forfeit deferred amounts for material
misstatement, fraud or adverse changes that would have affected the award where there is executive responsibility.
No. A much greater portion of remuneration for executive KMP is in the form of LTI (equity) than arguably any other S&P/ASX 100
entity and hence they are already significantly more aligned with Securityholders’ outcomes than executives at other listed entities.
As a result, in the Board’s view, there is little further benefit in deferring STI into equity.
What happens to STI
upon termination or
resignation?
For all executive KMP, the deferred portion of STI award is subject to immediate forfeiture in circumstances where employees
are dismissed for cause without notice (e.g. fraud or serious misconduct) or resign from the organisation, barring special
circumstances.
3.5 Long-term incentive (LTI)
The Goodman LTIP is an equity plan where rewards are at risk and dependent on performance and time. It is open to all permanent employees
to create alignment with the interests of Securityholders over the long term.
+ No value is derived from LTI unless minimum performance hurdles of operating EPS and relative TSR are met or exceeded, and performance
rights have no entitlement to dividends or assets until they vest. The Threshold target with respect to operating EPS (where only 25% of these
performance rights vest) is significantly ahead of estimates for the S&P/ASX 20, S&P/ASX 100 and S&P/ASX 200 REIT sector
+
+
If performance achieves or exceeds long-term targets and performance rights vest, LTI represents the majority of remuneration for executive
KMP and becomes a material component of remuneration for all participating employees
Performance rights represent a small portion of the Group’s equity and a small percentage of the likely value created for Securityholders if they
vest. CAGR for operating EPS is used to test performance and has to absorb dilution created through the vesting of securities under the LTIP,
effectively mitigating the impact of the dilution on Securityholders.
The key terms of the LTIP are set out on the next page.
49
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
3.5.1 FY24 LTI awards
Questions in relation to grants to be made in FY24
Who is eligible
to participate?
All full-time and part-time permanent employees are eligible to participate in either the five-year or the ten-year plans. Executive
KMP and senior executives participate in the ten-year plan.
What is the form
of the award?
The LTIP awards performance rights linked to the underlying ASX listed securities. The performance rights do not receive
distributions or have any right to income, net assets or voting until vesting.
What is the maximum
LTI participants
may earn?
When considering the overall size of LTI awards, the Board also considers the number of securities that could vest and the
associated impact on the operating EPS growth. The total five-year and ten-year performance rights outstanding under the
LTIP are capped at 5% of issued capital with vesting of approximately 0.7% pa, assuming all hurdles are met and all employees
remain employed.
The Board considers the performance of the Group relative to the comparator group, the amount of overall operating profit, the
competitive nature of the global labour markets in which the Group operates and the value of the team in the local and global
marketplace, as appropriate. Ultimately it is a function of the performance of Goodman and the security price, the better the
performance and the higher the price, the greater the reward. This is fully aligned with the outcomes for the Securityholders.
How is the number
of rights determined?
The Board sets the quantum based on a number of factors described in sections 3.7.1 and 3.7.2. The Board considers the face value
per right as well as other factors when determining the LTI award.
What are the
performance
measures?
What is the
weighting?
What is the
performance period?
Behaviour in accordance with Goodman’s core values is an absolute requirement for the granting of performance rights.
The Board believes that the commercial decisions management makes in fulfilment of its overall financial objectives are best
reflected in two key indicators: operating EPS and TSR (relative to the S&P/ASX 100).
Operating EPS is a critical measure of long-term Group-wide performance of the operations (see section 3.5.5).
The hurdles are set to be competitive and challenging relative to external and internal historical and prospective reference points
(see section 3.5.4).
TSR provides an effective check against increasing risk practices within the Group in that the security price to earnings multiple will
reflect the perceived risk in the Group in achieving operating EPS targets.
Focus on LTI is an efficient way of rewarding sustained performance and retaining talent.
The proposed FY24 LTI awards, will incorporate environmental and sustainability targets, in addition to the operating EPS and
relative TSR hurdles. Targets set by the Board will be tested annually and at the end of the LTIP testing period. A penalty can
apply to the number of performance rights that have satisfied the operating EPS hurdle, with 20% maximum reduction if material
underperformance against the environmental and sustainability targets occurs.
75% operating EPS hurdle
25% relative TSR hurdle
Ten-year plan: both operating EPS and relative TSR performance are tested over four financial years starting from 1 July in the
year the grant was made. Operating EPS growth is assessed in the fourth year relative to the year preceding the year of the grant.
Environmental and sustainability targets are reviewed annually and tested at the end of year four.
Five-year plan: both operating EPS and relative TSR performance are tested over three financial years starting from 1 July in the
year the grant was made. Operating EPS growth is assessed in the third year relative to the year preceding the year of the grant.
Environmental and sustainability targets are reviewed annually and tested at the end of year three.
How do the LTIP
awards vest?
Ten-year plan: Subject to meeting performance hurdles, vesting occurs in equal tranches shortly after the end of years 4 – 10,
provided participants remain employed by the Group.
Five-year plan: Subject to meeting performance hurdles, vesting occurs in equal tranches shortly after the end of years 3 – 5,
provided participants remain employed by the Group.
Is there
malus/clawback?
Subject to immediate forfeiture in circumstances where employees are dismissed for cause (e.g. fraud or serious misconduct). LTI
will also be forfeited where employees cease to be employed, unless in Special Circumstances.
What happens to
LTIP awards upon
termination?
Performance rights lapse upon the employee leaving Goodman unless in Special Circumstances (primarily Death, Total and
Permanent Disablement, Redundancy and Retirement in the normal course) in which case they are not subject to the employment
requirement and vest subject to performance hurdles being met and the usual vesting timetable.
Performance rights have no Securityholder rights prior to vesting (e.g. distributions, voting, rights issue participation). They would be
subject to reconstruction in instances of corporate events such as stock splits or stock consolidations.
Executive KMP are required to hold 100% of the value of their fixed remuneration in Goodman securities, determined at time of
purchase. In addition, Goodman’s remuneration structure includes significant emphasis on performance-based remuneration in
equity and the overall exposure of executive KMP to Goodman securities extends significantly beyond this requirement principally
through participation in the LTIP.
What rights are
attached to the
performance rights?
Executive KMP
equity holding
50
ANNUAL REPORT 2023
Relative TSR tested (25% of grant)
Vesting of the TSR awards is subject to achievement of cumulative TSR relative
to the S&P/ASX 100 entities over a four year period:
+ 25% of awards vest for performance at the 51st percentile
+
Awards vest on a sliding scale between 25% and 100% for performance
between the 51st and the 90th percentile
100% of awards vest for performance at the 90th percentile or above.
+
Relative TSR tested (25% of grant)
Vesting of the TSR awards is subject to achievement of cumulative TSR relative
to the S&P/ASX 100 entities over a three year period:
+ 25% of awards vest for performance at the 51st percentile
+
Awards vest on a sliding scale between 25% and 100% for performance
between the 51st and the 90th percentile
100% of awards vest for performance at the 90th percentile or above.
+
Questions in relation to grants to be made in FY24 (continued)
What are the vesting
conditions for FY24
ten-year plan grants?
What are the vesting
conditions for FY24
five-year plan grants?
Operating EPS tested (75% of grant)
The Board has set an operating EPS performance
hurdle of growing operating EPS from the FY23
result of 94.3 cents to between 119.1 cents
(Threshold level) and 143.2 cents (Upper level) in
FY27. Vesting of 25% of the operating EPS portion
occurs upon satisfying testing conditions at the
Threshold level with a sliding scale up to 100% at
the Upper level. The range is equivalent to between
6%pa and 11%pa CAGR in operating EPS or
approximately 26% to 52% cumulatively over the
four-year testing period.
In addition, a penalty may apply to the number
of performance rights that have satisfied the
operating EPS hurdle if environmental and
sustainability targets are not met. These are
reviewed by the Board annually and at the
end of the testing period with 20% maximum
reduction in the number of rights vesting under the
operating EPS tranches, in the event of material
underperformance against targets.
Operating EPS tested (75% of grant)
The Board has set an operating EPS performance
hurdle of growing operating EPS from the FY23
result of 94.3 cents to between 112.3 cents
(Threshold level) and 129.0 cents (Upper level)
in FY26. Vesting of 25% of the operating EPS
portion occurs upon satisfying testing conditions
at the Threshold level with a sliding scale up to
100% at the Upper level. The range is equivalent to
between 6% pa and 11% CAGR in operating EPS or
approximately 19% to 37% cumulatively over the
three-year testing period.
In addition, a penalty may apply to the number
of performance rights that have satisfied the
operating EPS hurdle if environmental and
sustainability targets are not met. These are
reviewed by the Board annually and at the
end of the testing period with 20% maximum
reduction in the number of rights vesting under the
operating EPS tranches, in the event of material
underperformance against targets.
Can the hurdles
be adjusted?
No (subject to ASX Listing Rule adjustments).
No.
51
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
3.5.2 FY23 LTI awards
Questions specific to grants made in FY23
What are the vesting
conditions for FY23
ten-year plan grants?
What are the vesting
conditions for FY23
five-year plan grants?
Operating EPS tested (75% of grant)
The Board set an operating EPS performance hurdle of growing operating EPS
from the FY22 result of 81.3 cents to between 102.7 cents (Threshold level) and
123.4 cents (Upper level) in FY26. Vesting of 25% of the operating EPS portion
occurs upon satisfying testing conditions at the Threshold level with a sliding
scale up to 100% at the Upper level. The range is equivalent to between 6% pa
and 11% pa CAGR in operating EPS or approximately 26% to 52% cumulatively
over the four-year testing period.
In addition, a penalty may apply to the number of performance rights that have
satisfied the operating EPS hurdle if environmental and sustainability targets
are not met. These are reviewed by the Board annually and at the end of the
testing period with 20% maximum reduction in the number of rights vesting
under the operating EPS tranches, in the event of material underperformance
against targets.
Operating EPS tested (75% of grant)
The Board set an operating EPS performance hurdle of growing operating EPS
from the FY22 result of 81.3 cents to between
96.9 cents (Threshold level) and 111.2 cents (Upper level) in FY25. Vesting of
25% of the operating EPS portion occurs upon satisfying testing conditions
at the Threshold level with a sliding scale up to 100% at the Upper level. The
range is equivalent to between 6% pa and 11% CAGR in operating EPS or
approximately 19% to 37% cumulatively over the three-year testing period.
In addition, a penalty may apply to the number of performance rights that have
satisfied the operating EPS hurdle if environmental and sustainability targets
are not met. These are reviewed by the Board annually and at the end of the
testing period with 20% maximum reduction in the number of rights vesting
under the operating EPS tranches, in the event of material underperformance
against targets.
3.5.3 FY22 LTI awards
Questions specific to the grants made in FY22
What are the
vesting conditions
for FY22 ten-year
plan grants?
What are the
vesting conditions
for FY22 five-year
plan grants?
Operating EPS tested (75% of grant)
The Board has set an operating EPS performance hurdle of growing operating
EPS from the FY21 result of 65.6 cents to between 82.8 cents (Threshold
level) and 96.0 cents (Upper level) in FY25. Vesting of 25% of the operating
EPS portion occurs upon satisfying testing conditions at the Threshold level
with a sliding scale up to 100% at the Upper level. The range is equivalent to
between 6% and 10% CAGR in operating EPS or approximately 26% to 46%
cumulatively over the four-year testing period.
In addition, a penalty may apply to the number of performance rights that have
satisfied the operating EPS hurdle if environmental and sustainability targets
are not met. These are reviewed by the Board annually and at the end of the
testing period with 20% maximum reduction in the number of rights vesting
under the operating EPS tranches, in the event of material underperformance
against targets.
Operating EPS tested (75% of grant)
The Board has set an operating EPS performance hurdle of growing operating
EPS from the FY21 result of 65.6 cents to between 78.1 cents (Threshold level)
and 87.3 cents (Upper level) in FY24. Vesting of 25% of the operating EPS
portion occurs upon satisfying testing conditions at the Threshold level with
a sliding scale up to 100% at the Upper level. The range is equivalent to
between 6% and 10% CAGR in operating EPS or approximately 19% to 33%
cumulative growth in operating profit over the three year testing period.
52
Relative TSR tested (25% of grant)
Vesting of the TSR awards is subject to
achievement of cumulative TSR relative to the
S&P/ASX 100 entities over a four year period:
25% of awards vest for performance at
+
the 51st percentile
Awards vest on a sliding scale between
25% and 100% for performance between
the 51st and the 90th percentile
100% of awards vest for performance
at the 90th percentile or above.
+
+
Relative TSR tested (25% of grant)
Vesting of the TSR awards is subject to
achievement of cumulative TSR relative
to the S&P/ASX 100 entities over a three
year period:
+ 25% of awards vest for performance
at the 51st percentile
+ Awards vest on a sliding scale between
25% and 100% for performance between
the 51st and the 90th percentile
+ 100% of awards vest for performance
at the 90th percentile or above.
Relative TSR tested (25% of grant)
Vesting of the TSR awards is subject to
achievement of cumulative. TSR relative
to the S&P/ASX 100 entities over a four
year period:
+ 25% of awards vest for performance
at the 51st percentile
+ Awards vest on a sliding scale between
25% and 100% for performance between
the 51st and the 90th percentile
+ 100% of awards vest for performance
at the 90th percentile or above.
Relative TSR tested (25% of grant)
Vesting of the TSR awards is subject
to achievement of cumulative TSR relative
to the S&P/ASX 100 entities over a three
year period:
+ 25% of awards vest for performance
at the 51st percentile
+ Awards vest on a sliding scale between
25% and 100% for performance between
the 51st and the 90th percentile
+ 100% of awards vest for performance
at the 90th percentile or above.
ANNUAL REPORT 2023
3.5.4 Setting operating EPS hurdles
Profit growth to achieve full vesting for the operating EPS tranches
The operating EPS target range under the ten-year plan is only for the
purpose of testing criteria for vesting of performance rights. The range
does not constitute earnings guidance for the Group.
The hurdles are set in line with the “pay for performance” culture and the
desire for them to be both challenging and competitive while maintaining
the integrity of the business strategy and risk management objectives
in a sustainable manner.
The hurdle range, has been set with particular reference to:
+
+
+
+
The significant proportion of the Group’s revenue over the next four
years, being at risk in the sense that it is not currently contracted
and subject to a wide number of variables, particularly in regard to
development activities and performance fees
The range of potential real estate opportunities for the Group
globally, given the Group’s risk parameters and concentrated
locations of operation
The long-run historical performance of the Group, noting that
previous history is not a reflection of future earnings
+
Increased volatility across the global economic and political
environment which is manifesting in higher cost inflation, slower real
GDP growth rates and higher interest rates.
The Board’s operating EPS growth targets for executive KMP and the
senior executives have remained consistent despite the deteriorating
financial market conditions as reflected in the analyst consensus
expectations for the broader market (as evident in the S&P/ASX 100)
and Goodman being materially lower than both the Target and the Upper
Level hurdles. In addition, the Group has delivered a 43% increase in
operating EPS in the past two years. Combined, this means the difficulty
of the hurdles for the FY24 awards has increased significantly compared
with FY23 by maintaining the challenging growth rates in operating EPS
of 6% to 11%, despite the substantially higher base. To achieve maximum
vesting at the Upper Level hurdle equates to operating profit growth in
FY27 of over $1,020 million (from the FY23 base year) and an increase
in operating profit of more than $240 million compared to the Board’s
Target level of performance.
Since implementation of the ten-year plan in FY21 there has been two
years of significant operating profit growth. As a result, the increase in
operating profit from the base year required for full vesting of FY24 awards
represents a 46% higher outcome than for the awards made in FY22.
Award year
FY22
FY23
FY24
Base year operating profit ($M)
1,219
1,528
1,528
Final year operating profit ($M)
at 11% CAGR in operating EPS
Increase in operating profit ($M)
relative to the base year required
to achieve Upper Level hurdle
Percentage increase in operating
profit growth versus FY22 awards
1,935
2,424
1,929
715
896
2,320
n/a
25%
46%
The Board has set the operating EPS hurdles as follows:
Threshold Level hurdle – CAGR in operating EPS of 6% for the four years
to FY27
Performance at the Threshold Level hurdle is required for
performance rights vesting to start and has been set such that it
requires performance materially in excess of relevant peer groups
(S&P/ASX 20, S&P/ASX 100 S&P/ASX 200 REIT. The Board considers
performance at Threshold level to be very good relative to the market
and with respect to the required operational outcomes. However,
despite significant outperformance required in excess of comparator
Groups, only 25% vesting would occur and remuneration outcomes
are estimated to be well below the median remuneration outcomes
for these comparators.
Target Level hurdle – CAGR in operating EPS of 8.5% for the four years
to FY27
+
Performance at “Target” Level is in line with aspirations determined
by the Board business and financial strategy and is considered by
it to be a very strong outcome. It must be achieved while taking into
account what the Board believes are appropriate risk management
constraints for the business, and given the context of the global
economic and political environment, higher interest rates, inflation,
cost of capital and risk settings. It is contingent upon increased
activity levels and market conditions remaining favourable. As stated
above, the Board’s operating EPS growth targets for management
have remained consistent despite the deteriorating market and the
effect of compounding growth off the 43% increase in operating
EPS in the past 2 years, which means all the hurdles are higher than
in comparable FY22 awards. Target level is in excess of average
broker research estimates1 for the Group (approximately 7% pa) and
materially in excess of peers. Only 62.5% of performance rights vest
at Target.
53
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
Upper-Level hurdle – CAGR in operating EPS of 11% for the four years
to FY27
+
+
+
Performance at the Upper-Level hurdle would require outcomes
significantly ahead of internal targets and analyst expectations
(see below) and is considered by the Board to be an outstanding
outcome incorporating a large stretch component
To achieve maximum vesting at the Upper Level hurdles, equates to
operating profit growth in FY27 of 60% or over $1,020 million (from
the FY23 base year) and an increase in operating profit of more than
$240 million compared to the Board’s Target level of performance
Given the more challenging operating environment globally, analyst
consensus expectations for the broader market (as evident in the
S&PASX 100) and Goodman, are materially lower than the Upper
Level. The Upper Level vesting hurdle reflects a 4% per annum higher
growth rate than market consensus, Visible Alpha forecasts.
The hurdles are set for the entire period of the plan and hence performance
must be achieved regardless of changes to business conditions globally.
Management and other employees carry the risk associated with external
factors negatively impacting operating earnings and in the Board’s view this
risk has increased given the ongoing geo-political tensions and impacts
on supply chains, and global economic activity. The Board considers the
6% to 11% operating EPS CAGR to be a truly challenging hurdle range for
executives in the current environment.
In addition, the hurdles are set with the desire to achieve a sustainable
long-term growth rate that is competitive with the market on a risk
adjusted basis. This is reflected in the relatively low gearing of the Group
(relative to comparators) and its other risk settings. Considering the
difference in gearing, the FY24 hurdles are relatively higher compared
to peers.
Comparator Group
S&P/ASX 203
S&P/ASX 1003
S&P/ASX 200 REITs3
Broker consensus for Goodman4
Threshold level
Target Level
Upper level
Ten-year plan
operating EPS1
hurdles (cents)
Estimated CAGR
in operating EPS1
FY24 – FY27
Growth in
operating EPS1 FY24
to FY27 based on
estimated CAGR
LTI vesting based
on estimated CAGR
in operating EPS
Additional operating
profit2 to achieve
Upper Level
hurdle (A$M)
n/a
n/a
n/a
n/a
119.1
130.3
143.2
2.8%
2.5%
2.7%
7.0%
6.0%
8.5%
11.0%
11.8%
10.2%
11.1%
31.1%
26.2%
38.6%
51.8%
–
–
–
~28%
25.0%
62.5%
100.0%
814
841
824
380
468
242
n/a
1. Operating EPS for Goodman.
2. Relative to the operating profit based on the broker estimates for growth in operating EPS
3. Source: Broker estimates.
4. Source: Visible Alpha. Broker reports
54
ANNUAL REPORT 2023
3.5.5. Operating EPS – long-term cash flow alignment
with vesting outcomes
The Group presents statutory profit in accordance with Australian
Accounting Standards, including all required disclosures. Operating profit
is a Board/Management defined profit measure in addition to Statutory
profit which is common market practice (bespoke to each company and
typically not an IFRS measure, such as underlying profit, operating profit,
management profit, normalised profit, FFO, AFFO etc.) to better reflect
the underlying earnings of the business (or in Goodman’s case,
the underlying cash-based earnings).
The Board believes that managing the business, on what is primarily
a cash profit basis, is fundamental to long-term resilience and is the
strongest determinant of value creation for Securityholders over time.
That is the intent of the Group’s operating profit definition (and operating
EPS), and it is one of the key measures used to drive the business
strategy that is communicated to employees to execute. It is also why
the Board has used operating EPS (operating profit per share diluted for
tested performance rights) as one of the principal performance tests
in its LTI awards. This reflects the actual cash-based operating EPS to
Securityholders when testing outcomes are confirmed.
Importantly, based on analyst reports and investor discussions, the
market overwhelmingly uses operating profit as the most relevant and
appropriate measure to value the Group. This is important as it directly
impacts the targets we set.
Calculation of operating EPS
Operating EPS has been calculated and applied consistently since being
adopted in 2005.
+
+
Operating profit intentionally excludes non-cash measures.
Previously, the Group has excluded significant realised gains (such as
the urban renewal realisation gains) where these were believed to be
cyclical in nature and not reflective of underlying long-term earnings
As required under the accounting standards, the share-based
payments (SBP) expense in the Group’s statutory income statement
reflects the amortisation of the aggregated “fair value” applicable to
the outstanding performance rights. Given the volatility inherent in the
accounting valuation of the performance, it is appropriate for the SBP
expense to be excluded from operating profit, like other non-cash
items (such as revaluations, derivative movements). They have no
impact on Securityholders until they are vested.
+
The Board believes the cost of the plan, which arises from the
future dilution through the issuance of securities under the LTIP,
is most appropriately reflected by including all vested and tested
performance rights in the denominator used for determining
operating EPS. This is not subject to accounting estimation and
is a more reliable measure of the cost to Securityholders and the
actual impact on operating EPS
The operating EPS at each reporting date is calculated using the weighted
average number of securities, which includes:
+
+
+
All securities that have already vested
Rights that have been tested and assessed as having met the hurdles
but have not yet vested
Noting that if we amended the calculation to include in the
denominator all securities potentially issuable under the LTIP
(i.e. including those which have not passed the test and therefore
may not ever vest), it would not have made a material difference to
operating EPS growth or vesting. For the avoidance of doubt, all rights
that have passed the testing hurdles are included in the operating
EPS calculation and therefore operating profit needs to absorb this
dilution to meet future hurdles.
The inclusion of these unvested performance rights in the operating EPS
calculation is a conservative treatment as:
+
+
+
The financial impact of the performance rights occurs only when
securities are issued through the dilution to net assets per security
at the time of issuance and the dilution to future operating EPS
Not all performance rights vest even if they have satisfied
performance hurdles, which does not align with the accounting for
the SBP expense. The accounting for SBP potentially has the effect
of incurring an expense impacting prior year performance, which
is later reversed if vesting conditions are not met. This is not an
appropriate methodology of testing employee performance
Following successful testing at years three or four (for the five-year
plan and ten-year plan respectively), performance rights still have no
entitlement to income (distributions) or net assets nor do they have
any of the other usual Securityholder rights until they vest, which may
be up to six years later (under the ten-year plan).
Therefore, in the Board’s view realised cash profit as represented by
diluted operating EPS is the most reliable measure of value creation for
Securityholders and continues to be the most appropriate means by
which to assess employee performance. It is also consistent with the
valuation of Goodman by the market, which primarily uses operating
profit and operating EPS to assess security value.
55
All of these aspirations are integrated into Goodman’s culture and business
operations and the Group’s financial results are achieved while also
implementing and performing to these standards.
The way employees conduct themselves is crucial to the success of the
Group. Goodman has consistent and transparent practices in place for
managing non-compliance with policies and the approach to risk guides the
way all employees are expected to conduct themselves. Within the Code of
Conduct, there is a set of eight guiding principles that encourage employees
to uphold Goodman’s reputation and behave appropriately in dealing with
our customers and other team members. The guiding principles are:
+ Act in a professional manner
+ Work as a team and respect others
+ Treat stakeholders fairly
+ Value honesty and integrity
+ Follow the law and our policies
+ Respect confidentiality and do not misuse information
+ Manage conflicts of interest
+ Strive to be a great team member.
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
Use of cash settled performance rights
In certain jurisdictions, it is impractical to issue performance rights
which vest into Goodman securities. In these instances, cash settled
performance rights (”phantoms”) are issued, with the same economic
outcome on vesting. From time to time, the Group may issue new
securities into the market to fund the settlement of those rights. This
results in the same outcome to Securityholders as if the phantoms had
been settled in Goodman securities because it results in the situation
where the dilutionary impact to operating EPS is consistent with the
equity settled performance rights. As in recent years, the Board’s current
intention is to issue securities to fund the cash requirements to settle the
phantoms. This results in the effective funding of the LTIP having no cash
impact for the Group and therefore the share-based payments expense
remains effectively a non-cash item in the context of the definition of
operating profit.
3.6 Non-financial measures
3.6.1 Types of non-financial measures
Goodman continues to increase accountability and transparency across
a range of non-financial measures which are important to the Group’s
culture, its stakeholders and the world more broadly. These are integral
components to the operations of the organisation, the health and wellbeing
of the Group’s people and the communities in which Goodman operates.
These values and aspirations encompass a wide range of areas including:
+
Environmental considerations for developments and building operations
+ Energy procurement including renewable targets
+ Group emissions and embodied emissions
+ Health and wellbeing of Goodman’s people and communities
+
Good corporate and social governance including diversity and inclusion
in the workforce
+ Behaviour in line with Goodman’s Code of Conduct.
56
ANNUAL REPORT 2023
Individuals’ behaviour and adherence to the Code of Conduct, governance, implementation of diversity principles and social programs are assessed
as a gate to STI and LTI awards. Breaches can also result in forfeiture of LTI or potentially more severe consequences, depending on severity.
Consequences of breaches of Code of Conduct in FY23
Conduct and or behavioural Issues
Consequences
Termination, forfeiture of STI, forfeiture of LTI
In respect of the FY23 STI awards and the intended LTI awards that will be made in September 2023 (in respect of FY23 performance), key environmental
and sustainability targets will also be assessed based on the individuals’ areas of influence and contributions as part of overall assessment.
3.6.2 Integration of non-financial measures into STI
STI process
1st hurdle
2nd hurdle
Financial, and operational assessments
(including environmental objectives)
3.6.3 Integration of non-financial measures into LTI
Conduct, Governance, Social and Diversity
Operating EPS
Individual assessment
Impact
Gate
Gate
0% to 100%
The Board also believes that ownership through the LTIP assists in creating a common purpose in the organisation and that this has been strongly
reflected in the Group’s performance over many years. Behaviour and adherence to the Group’s Code of Conduct have always been a prerequisite
to entitlement to vested LTI and since 2021, additional hurdles for vesting, related to our environmental and sustainability targets have been
incorporated into intended awards.
+ The Board will review progress on targets annually and set review long term targets each year as they relate to the new testing period
+ Environmental and sustainability objectives and their execution are integrated into the operations of the Group, particularly for development projects.
For this reason, the additional penalty criteria will apply to the operating EPS tested performance rights. This aligns operational targets which are
within the control of senior executives and employees at all levels and therefore have the most logical connection to operational performance
+ Targets set by Board will be tested formally at the end of the testing period (year four for the ten-year plan)
+ The penalty applies to the number of performance rights that have satisfied the operating EPS hurdle with 20% maximum reduction in the event
of material underperformance against targets
+ Targets will be reported each year in the remuneration report.
LTI Process – three- and four-year testing period
1st hurdle
2nd hurdle
Group
assessment
Conduct and behaviour
Gate: 0% to 100%
Operating EPS and relative TSR
0% to 100%
Impact
Environmental
and sustainability
The penalty applies to the number of performance rights that have satisfied
the operating EPS hurdle with 20% maximum reduction in the event of material
underperformance against targets
57
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
3.7 Considerations for setting of awards
The Board is focused on creating a remuneration structure that supports the Group’s strategy and is aligned with outcomes for Securityholders
and then on determining an appropriate quantum of remuneration under that structure. In assessing the Group CEO and other executive KMP
remuneration for FY23, the Board has given consideration to:
+ Feedback from investor engagement following the November 2022 AGM for remuneration related matters
+ Maintaining the structure and principles of the Group’s remuneration strategy
+ The Group’s relative performance against operational targets in FY23
+ The Group’s consistent track record over the past ten years that has also positioned the business for the future
+ Global market conditions for human capital in the sector
+ Balancing employee and Securityholder outcomes
+ Hurdles and testing criteria for performance rights.
The Board has assessed outcomes for Securityholders, based on the testing criteria under the five and ten-year plans and that the pay for performance
alignment is with all Goodman employees (all permanent employees, up to 971 people, are eligible to participate in the LTIP). Based on the proposed
hurdles, the Board believes that significant balance and alignment exists between the cost of the plan and net outcomes achieved for Securityholders.
+
+
+
+
Before any performance awards are realised under the ten-year plan hurdles, significant Securityholder value that equates to $12 billion in
market capitalisation growth, must be created, consistent with >32% TSR over the testing period (all other things being equal and based on the
assumptions set out in the table below)
The maximum employee share of the value created will occur if the awards fully vest through achieving the 11% CAGR in operating EPS over the
four year testing period and the relative TSR performance is at the 90th percentile. This represents only 3.1% of the $22 billion value created for
Securityholders (net of dilution) or 52% potential security price growth (all other things being equal)
Delivered over 10 years, the dilution to Securityholders from the plan at maximum vesting, averages only 0.3% per annum compared to the 52%
total security price growth experienced by Securityholders. In addition, by definition, this 0.3% dilution has been absorbed to achieve the hurdles
If growth were to exceed 11% per annum and the security price grows beyond the assumption above, the employee share diminishes relative to
value created for Securityholders.
Estimated Securityholder value over the four-year testing period under the LTIP
Economic outcomes
Cumulative operating profit growth
Cumulative operating EPS growth
Percentage of performance rights vesting1
Year 4 operating profit
Market capitalisation (MCAP) at end of year 42
Net value created for Securityholders (growth in MCAP)2
Assumed security price3
Effect cost of total plan / MCAP
Employee share of Securityholder value created4
CAGR in operating EPS over the four year testing period
Less than 6.0%
6.0%
11.0% (or more)
<32.1%
<26.2%
0.0%
<$2.4B
<$49.8B
<$11.9B
n/a
0.0%
0.0%
32.1%
26.2%
25.0%
$2.4B
$49.9B
$11.9B
$25.34
0.3%
1.4%
58.5%
51.8%
100.0%
$2.8B
$59.9B
$22.0B
$30.47
1.1%
3.1%
1. Assumes that the proportion of rights that vest under the operating EPS hurdle also applies to the rights that vest under the relative TSR hurdle.
2. Based on 30 June 2023 security price, assuming the market Price/Earnings (P/E) multiple applied to operating EPS remains unchanged over time and is inclusive of an allowance for increases
in the securities on issue because of securities vesting under the LTIP. Excludes distributions and dividend payments that may be made during the period.
3. Assumes constant P/E multiple at the end of year 4 and the relevant CAGR in operating EPS growth.
4. Values the number of vested securities at the assumed security price which is calculated using the 30 June 2023 value and growing it at the same rate as the operating EPS growth. This includes
full dilution including the five-year plan securities assuming the same growth rate for FY27.
58
ANNUAL REPORT 2023
3.7.1 Considerations for award quantum – Goodman Group in context
The Board and Remuneration and Nomination Committee have
considered the Group’s global operations, including its Partnerships,
when assessing the executives’ roles and remuneration awards.
In this context, Goodman:
+
+
+
+
+
+
+
+
+
Is an international real estate fund manager
Reported $1.8 billion operating profit, and a combined statutory profit
across the Group and Partnerships of $3.0 billion in FY23
Reported NTA of $9.12, with gearing of 8.3% and available liquidity
of $3.1 billion
Is the largest listed specialist developer of logistics real estate in the
world, $13.0 billion of WIP and significant growth in scale, value and
complexity of our development projects
Manages and creates value across $81 billion of assets globally which
has almost doubled in the past five years
Manages capital allocation and funding across various activity types,
which is sourced from multiple jurisdictions
Has a market capitalisation of $37.8 billion at 30 June 2023 and
is a member of the S&P/ASX 20 index
Generates 77% of operating earnings from management and
development activities, which require more intensive day to day
activity than a passive investment portfolio
Provides its customers and partners with investment management,
asset management, development, financial, transaction and
capital management services in the listed and private equity capital
markets globally
+
Derives 63% of operating earnings from international markets with
approximately 65% of employees situated offshore.
The Group has limited direct comparable market peers in Australia,
having operating businesses in five continents and 14 countries, each
with market driven remuneration outcomes. The Group has up to 971
employees at 30 June 2023, the majority of whom are offshore, and
consequently Goodman competes for labour in an international market,
which the Board considers when assessing the quantum of remuneration
awards. In FY23, the Board has referenced:
+
+
+
A range of local and global comparators with operations of similar
scale and complexity and certain companies in the S&P/ASX 20
A range of relevant Australian listed comparators with significant
(>50%) global operations
Global real estate companies, REITs and developer/ fund managers
including specifically from the logistics real estate sector. In the
Real Estate Sector the closest comparators are Prologis and Segro,
noting that:
– Prologis is larger by market capitalisation and assets, but Goodman
has a more significant proportion of earnings from development
and management activities. Also Goodman has more globally
diversified activities – whilst Prologis operates in a similar number
of jurisdictions it is more skewed to one location, being the US
– Segro is smaller and predominantly UK focused, with a small
proportion of its assets in Europe, whereas Goodman operates in 14
countries globally. Again, Goodman has a more significant proportion
of earnings from development and management activities.
+
While Goodman is an S&P/ASX REIT under the GICS classification
system, the ASX listed REITs:
– Are significantly smaller (on average <20% of Goodman’s
market capitalisation)
– Typically have less than 20% active earnings compared to 77%
for Goodman
– Typically only operate in Australia, whereas Goodman has
significant global operation.
59
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
Private equity (PE) firms. Noting that PE firms are significant players in the logistics real estate sector with considerable new capital with a desire
to assemble teams and invest in the sector. PE remuneration structures are particularly relevant because:
+
+
the nature of pay for performance remuneration structures is highly equity-based and outcome-driven similar to the Group’s remuneration structure
the period of testing and realisation of remuneration is linked to investor outcomes over significant periods of up to ten years, again a similar
remuneration structure. The majority of the Group’s assets are within PE (unlisted) market entities, which in turn creates significant competition
for high performing people.
Various Reference Groups
Peer group
comparator
Reason for
comparison
Goodman
Group CEO
S&P/ASX 20
Goodman is number 15
in the S&P/ASX 20 index
Selected
ASX listed
companies
with global
operations
63% of Goodman’s earnings
are outside Australia. The
comparator group provides a
reference to local companies
with international operations
S&P/ASX 100
and Global
Property
Companies/
REITs2
Global comparators are included
given the jurisdictions in which
they operate, the complexity
of their operations and the size
and scale of the entities.
1. Based on proposed FY24 award.
Annual CEO remuneration
Range
Average Median
% LTI LTI term
(yrs)
1 year
TSR
3 year
TSR
5 year
TSR
n/a
$19.5m1
$6m – $37m
$11m
n/a
$9m
92%
43%
$6m – $37m
$15m
$11m
49%
10
4
4
14%
16%
41%
49%
128%
59%
14%
44%
80%
$5m – $73m
$15m
$8m
44%
5
-4%
12%
28%
In the Board’s view, the competitive environment for logistics assets and consequently also for teams with skills to develop and manage the products
and services over the long term, remains intense. Goodman is seen as a global leader in this space and the potential loss of key employees and
regional teams poses significant commercial risk. The Board has also assessed the FY24 awards in this context.
3.7.2 Considerations for award quantum – structure
The Board has made its comparison of the awards based on face value, assessed against comparator groups. Given the variability in the components
of remuneration structures in the market, Goodman’s comparator group analysis of value and quantum of awards is assessed in the context of the
degree of risk associated with the structures and the vesting periods:
+
The Board has set the hurdles in respect of the intended LTI award for FY24 to provide additional challenges (and risk of achievement) for all
employees and to achieve a high degree of alignment and balance with Securityholder outcomes demonstrated in the Economic Outcomes table
in section 3.7
+ Performance rights awarded under the LTIP do not have any voting rights or rights to dividends until vested, even after passing testing hurdles
+ Significant financial outperformance in FY23 versus targets and continued outperformance relative to peer group over three and five years
+ The proposed LTI awards have longer testing period, longer vesting period and significantly larger portion at risk than the market generally.
60
ANNUAL REPORT 2023
On this basis of the total remuneration outlined, considering the market capitalisation and performance differentials of the groups above, it is
considered that an appropriate benchmark for the Group CEO’s remuneration remains a potential Face Value of around A$20 million The Board has
set the remuneration accordingly.
The Board’s proposed award for the Group CEO (based on face value of the LTI) is detailed below:
Group CEO:
Number
of rights
FY23 CEO
FY22 CEO
900,000
1,000,000
Variance (%)
(10.0)%
Goodman
security
price1
$
20.07
17.84
12.5%
LTI at
Threshold2
$M
LTI at
Target2
$M
LTI at
Upper level2
$M
Fixed pay
$M
Fixed pay
and LTI
(25.0%
vesting)
$M
Fixed pay
and LTI
(62.5%
vesting)
$M
Fixed pay
and LTI
(100%
vesting)
$M
4.5
4.5
1.3%
11.3
11.2
1.3%
18.1
17.8
1.3%
1.4
1.4
–
5.9
5.9
1.0%
12.7
12.6
1.1%
19.5
19.2
1.2%
1. Face value at the end of the financial year
2. Threshold would result in 25.0% LTI vesting, Target would result in 62.5% LTI vesting and Upper level would result in 100.0% LTI vesting
Group CEO maximum possible outcomes for FY23 versus FY22
Based on the proposed award, the maximum Face Value of remuneration which can be received by the Group CEO, over ten years, if 100% vesting
occurs, is equivalent to (1% higher than) the remuneration awarded last year, noting that in FY23 the Group posted significant outperformance and
followed FY22, the strongest financial performance in the Group’s history. Based on the hurdles set for the FY24 awards, the Group CEO would only
receive 62.5% vesting at the Board’s Target performance level.
CAGR in EPS
Vesting %
Vesting $m
Fixed
remuneration
$m
Total
remuneration
$m
Total return
over four
years
S&P/ASX 20
consensus
Goodman
Threshold
Goodman
Target
Goodman
Upper level
2.8%
6.0%
8.5%
n/a
n/a
25%
63%
4.5
11.1
11.0%
100%
118.1
2.4
1.4
1.4
1.4
10.7
5.9
12.7
19.5
12%
26%
39%
52%
1. Between Group CEO’s potential remuneration vs S&P/ ASX 20 CEO’s potential remuneration
Out-
performance
versus
S&P/ASX 20
Pay
difference1
$m
n/a
n/a
13%
25%
37%
-4.7
2.1
8.9
61
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
4. GROUP PERFORMANCE AND OUTCOMES
The Group has delivered an exceptional result, significantly outperforming the original estimates notwithstanding the challenging operating conditions
and market volatility. Goodman’s security price has continued to demonstrate a significant premium to underlying net assets and medium and longer
term outperformance relative to the peer group indices, attributable to the value creation by employees.
The Group’s remuneration strategy, focused on long-term outcomes, is the key driver of this sustained performance.
4.1
Group FY23 highlights
Financial
Statutory profit of $1.6 billion for Goodman and $3 billion for the combined Group and Partnerships
Operating profit of $1.8 billion (up 17% on FY22)
Operating EPS of 94.3 cents (up 16% on FY22)
Distribution maintained at 30.0 cents per security to sustain financial risk management objectives
Net tangible assets per security increased 9% to $9.12
Operational property investment, management, and development
High occupancy maintained at 99% and like for like net property income growth of 4.7%
Total AUM of $81 billion (up 11% on FY22)
Strong performance by the 20 Partnerships, achieving weighted average returns of over 7%
Development WIP (end value) of $13.0 billion and with 99% commitment levels on completions and 13 year weighted
average lease terms
People, culture and community
Social investment of $10.8 million by the Goodman Foundation, employee fund raising and contributions in kind through
efforts of employees worldwide, contributing almost 3,200 hours to volunteering in our communities
The level of females in senior roles remained at 30% in FY23. Goodman continues to work towards 40% females in senior
roles by 2030 and 50/50 representation overall by 2030
Continued implementation of our Sustainable Sourcing Framework to support human rights and social procurement initiatives.
Strong focus on reinforcing employee behaviours that are consistent with the Group’s values
Feedback from employees in various regions via surveys undertaken in FY23 indicates strong leadership, communication
and high employee engagement
Environmental
Goodman, globally, is expected to maintain certification as a carbon-neutral organisation
Goodman's global renewable energy usage is expected to be more than 80%, with the Australian operations consuming
100% certified GreenPower and other regions using renewable energy certificates
Approximately 306 Megawatts (MW) of solar photovoltaic (PV) is now installed or committed across the global portfolio,
an increase of 103MW in FY23
Continued calculating the embodied emissions for all of Goodman’s logistics developments globally and established
a process for integrating into approval processes
Capital management
Maintained significant available liquidity of $3.1 billion for the Group and capital resources of $17.6 billion in the Partnerships
Significant business growth while maintaining low gearing at 8.3%
Group and Partnerships completed debt refinancing transactions totalling $6.4 billion
62
ANNUAL REPORT 2023
Over the past decade, the focus on the long term as influenced by the LTIP, has enabled the Group to establish a global business with significant
specialist expertise, financial resources, and a strategic real estate portfolio. The business has been deliberately positioned to maximise cash flow
resilience in varying market cycles, primarily through:
+ Concentration of the portfolio on logistics real estate in urban infill markets, where supply is limited, and demand is relatively high due to the
long-term structural trends that have been identified many years ago
+
Proactive pursuit of planning and change of use through site identification, planning and power to intensify site utilisation into multistorey logistics,
data centre and residential uses, and over the long term
+ Deleveraging the Group’s balance sheet and retaining significant liquidity
+ Partnering with long-term capital to share risk and return over a significant globally diversified platform.
This has included specific actions over several years, including:
+ Significant reduction and maintenance of low financial leverage (gearing) with the target gearing range reduced to 0% to 25% and maintaining
a position below the mid-point in the past five years. The Groups significant balance sheet flexibility allows it to be opportunistic in the more
challenging Global environment
+
Increased quality of the property portfolio through more than $30 billion of asset sales since 2013, concentrating the portfolio in predominantly
urban infill markets and providing funding for the development of new buildings
+ Established and maintained an international platform with significant depth of experience required to generate excess returns in competitive high
barrier to entry markets
+ Diversification of the Group’s sources of debt and tenor
+ Reduced operational risk through undertaking a significant proportion of development activity in Partnerships, which has reduced the volatility of
earnings while increasing return on assets for the Group. The impact of increased development within the Partnerships has increased their returns
and the prospects for Goodman to earn performance fees in the medium to longer term
+ Maintained a conservative distribution pay-out ratio to retain funding for growing development activity
+
Investment in innovation and technology to provide knowledge of potential future risks and opportunities for our operations
+ Many of these strategic initiatives rely on foregoing some short-term returns to secure potentially larger long-term sustainable returns, and hence
the value in the LTIP over ten years aligning with, and incentivising, long-term decisions.
The resilience of the Group through this period is largely due to strategic long-term thinking, a highly talented team with specialist skills, and
incentivising those employees through equity, linked to sustained operational performance over a long period.
4.2 Financial measures
Performance measures
Operating profit ($M)
Operating EPS (cents)
Operating EPS growth (%)
Security price as at 30 June ($)
Distributions per security (cents)
3-year TSR (%)1
NTA per security ($)
Growth in NTA ($B)
Gearing (%)
AUM ($B)
Market capitalisation premium to NTA ($B)
FY18
FY19
FY20
FY21
FY22
FY23
942.3
1,060.2
1,219.4
1,528.0
1,783.2
845.9
46.7
8.3
9.62
28.0
69.5
4.64
0.9
5.1
38.3
9.0
51.6
10.5
15.03
30.0
130.8
5.34
1.3
9.7
46.2
17.6
57.5
11.4
14.85
30.0
103.4
5.84
1.0
7.5
51.6
16.5
65.6
14.1
21.17
30.0
133.4
6.68
1.7
6.8
57.9
26.8
81.3
24.0
17.84
30.0
24.7
8.37
3.3
8.5
73.0
17.7
1. TSR is the increase in market capitalisation plus dividends and distributions, attributable to the respective financial year.
94.3
16.0
20.07
30.0
41.3
9.12
1.5
8.3
81.0
20.6
63
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
The key financial metrics which are aligned with the Group’s strategy, long-term performance and LTI programs for all employees, are operating
EPS and to a lesser extent relative TSR. CAGR in operating EPS over the past five years has been exceptional at 15.1%, which has exceeded forecasts.
This has been achieved while at the same time as maintain low gearing, and not utilising the short-term benefits of low interest rates to financially
engineer performance.
EPS “GUIDANCE” AND GROWTH
%
GEARING
%
24.0
5 Y E A R C A G R 1 5 .1 %
14.1
16.0
10.5
11.4
9.0
9.0
10.0
11.0
7.0
25
20
15
10
5
0
10
8
6
4
2
0
9.7
8.5
8.3
7.5
6.8
FY19
FY20
FY21
FY22
FY23
FY19
FY20
FY21
FY22
FY23
SQUARE-FULL EPS Guidance SQUARE-FULL EPS Growth
4.3 Total security price returns comparison
Goodman is the only real estate group currently in the S&P/ASX 20 and the 15th largest ASX listed entity at 30 June 2023 with a market capitalisation
of $37.8 billion. Despite the volatility in the past 12 to 18 months impacting pricing of global interest rate sensitive sectors, the chart below shows the
Group has consistently outperformed the S&P/ASX 20, S&P/ASX 100 and S&P/ASX 200 A-REIT indices over medium to longer term. Importantly,
underlying performance of the operations has been significantly ahead of guidance and the indices.
SECURITY PRICE RETURNS
%
800
800
700
700
600
600
500
500
400
400
300
300
200
200
100
100
0
0 06/2013 06/2014 06/2015 06/2016 06/2017 06/2018 06/2019 06/2020 06/2021
06/2019 06/2020 06/2021
06/2016
06/2014
06/2018
06/2015
06/2013
06/2017
SQUARE-FULL Goodman Group SQUARE-FULL S&P ASX 20 SQUARE-FULL S&P ASX 100 SQUARE-FULL S&P ASX 200 / A-REIT (sector)
64
)
%
(
R
E
T
U
R
N
N
R
U
T
E
R
06/2022 06/2023
06/2022 06/2023
ANNUAL REPORT 2023
4.4 Remuneration outcomes for FY23
4.4.1 STI outcomes
The Board has again agreed with the Group CEO that he will not participate in the STI award. In line with continued focus on sustained long-term
performance, all performance-based remuneration relating to the Group CEO’s FY23 performance will be awarded in the form of performance rights.
Given the global nature of the Group’s operations, the STI recommendations for the other executive KMP are based on the Remuneration and
Nomination Committee’s review of several sources of market information relating to the individual’s role, region and global comparisons and specific
incentive schemes that apply in competitor organisations.
Based on the Group and individual performances in FY23, the executive KMP were eligible for the maximum STI.
Test
Metrics
Gate 1: Behaviour
Code of Conduct: Pass/Fail
Result
Pass
Gate 2: Operating EPS –
FY23 operating EPS versus target
Financial and operational assessments
(including environmental objectives)
Operating EPS growth: Target 11% (90.3 cents)
16.0% operating EPS growth (94.3 cents)
Individual assessment
Various (0% to 100%)
The table below indicates the maximum possible STI and the actual STI awarded for FY23.
Executive
Gregory Goodman
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
Danny Peeters
Anthony Rozic
Year
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
STI
maximum
$M
Actual STI
awarded
$M
2.1
2.1
1.35
1.05
0.75
0.75
1.05
1.05
€M
0.97
0.92
US$M
1.425
1.05
–
–
0.90
1.0
0.45
0.55
0.81
0.90
€M
0.63
0.70
US$M
0.950
1.05
Cash
component
Deferred
component
Actual STI %
of maximum
$M
–
–
0.45
0.5
0.225
0.275
0.405
0.45
€M
0.315
0.35
US$M
0.475
0.525
$M
–
–
0.45
0.5
0.225
0.275
0.405
0.45
€M
0.315
0.35
US$M
0.475
0.525
–
–
67
95
60
73
77
86
65
76
67
100
65
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
4.4.2 ESG assessment
STI and LTI award grant assessments are undertaken with reflection on behaviour, governance, social, environmental and sustainability goals and
targets. The Group has made significant contributions and efforts in a wide range of areas, with key highlights including:
+
+
+
+
+
+
+
+
+
Goodman’s global operations are on track to maintain certification under the Climate Active program for being a Carbon Neutral Organisation
(FY23 certification is underway)
Committed to reducing and tracking carbon emissions in line with our science-based emissions reduction targets, validated by the Science Based
Targets Initiative’s (SBTi) validation team
Approximately 306MW of solar PV installed or committed on Goodman’s properties globally, reaching approx. 75% of our 2025 target of 400MW
Continued transition to renewable energy across Goodman’s operations, with global renewable energy usage for FY23 expected to be more than
80%. Significant work has been done to enable increased renewable energy use in future years
Integrated a consistent process for calculating and including embodied emissions into Goodman’s approval process for new developments,
with approximately 89 embodied carbon assessments completed on new developments during the year
Identified by Sustainalytics as a ‘Sector’ and ‘Region’ Top Rated ESG performer during 2023 with a ‘Negligible’ ESG risk rating
Ten Goodman entities made submissions to the Global Real Estate Sustainability Benchmark (GRESB) in FY23, with results due later this year. In
the FY22 results, Goodman achieved an ‘A’ ESG public disclosure rating, and several Goodman Partnerships were awarded ‘Sector Leader’ status
Goodman’s Task Force on Climate related Financial Disclosures (TCFD) statement has been updated and is available on the Goodman website
Sustainable design initiatives were included in our development specifications including solar PV, battery storage, electric vehicle charging points
and LED lighting
+ Greater than 50% of Goodman’s developments globally were completed on brownfield developments, enhancing circularity opportunities
+
Continued support of biodiversity initiatives relating to urban forests and reforestation, and investigations into collaboration opportunities with
research institutes and industry experts
+ Zero workplace fatalities across Goodman’s global operations including our workforce and contractors
+ Facilitated workshops in most regions to raise awareness on environment and social procurement
+ Contributed $10.8 million to community and philanthropic causes.
The key areas of environmental and sustainability assessment, including new targets for FY24 onwards, are disclosed below. The form of disclosure
below (subject to relevant evolution and changes over time as set by the Board) is used as the basis for future assessment of environmental and
sustainability measures. The measures are formally set over the testing period for performance rights and are reviewed annually for relevant progress.
66
ANNUAL REPORT 2023
Environment and sustainability assessment
Existing LTI targets
Area
Long-term target
Progress
Renewable Energy
100% renewable electricity use
within Goodman’s operations
by 2025 (subject to government
regulation in each jurisdiction)
Goodman's global renewable energy usage for FY23 is expected to be
more than 80%, with continued use of certified GreenPower electricity
in our Australian operations and use of renewable energy certificates in
other regions.
On target
Solar PV Installation
400MW of solar PV installed
or committed by 2025
Carbon Neutral
Carbon neutral
operations by 2025
Approximately 103MW of new solar installations or commitments
taking global total to approximately 306MW, 75% of the way towards
our 400MW target.
On target
Carbon neutral certification in FY23 is on track, with certification
submission to Climate Active due October 2023. This follows our initial
carbon neutral certification in 2021.
Ahead of target
TCFD
Occupancy
Achieve TCFD by FY22
TCFD statement updated and available online.
>95% (ensures utilisation
of sites and therefore
appropriate use of resources)
99%
Additional Targets for FY24 onwards
Area
Long-term target
Progress
Embodied Carbon We are committed to measuring,
reducing and offsetting embodied
carbon emissions from our global
development workbook and
have commenced the process to
reduce and offset this over time
Solar PV
Installation
Science Based
Targets
100MW additional solar PV
installed or committed in total
from 2026 to 2030
In addition to our continued
commitments to renewable
energy and carbon neutrality,
the Group has committed to
Scope 1 and 2 greenhouse gas
emissions reductions of 42%
by 2030 in line with 1.5°C Paris
Agreement pathway and validated
by the SBTi validation team.
Embodied carbon emissions calculated and included in all GIC development
papers. During FY23, 89 embodied carbon assessments were completed.
Reduction initiatives are longer-term and ongoing, demonstrated by our
industry and supplier engagement, collaborations and carbon assessments of
materials. Offset procurement guidance and criteria is continually refined and
shared with the global teams.
Several buildings have been developed on an embodied carbon neutral basis
as offsets have been purchased and retired.
To be commenced from FY26 post initial 400MW target.
Scope 1 and 2 emissions are calculated annually and published within
Goodman’s annual sustainability report in September. FY23 emissions
data will be finalised and included in the Data Metrics section of the FY23
Sustainability Report.
For reference, our FY22 Scope 1 and 2 emissions data were on track
to meet our 2030 targets under the SBTi.
Materially
ahead of target
New target
for FY24
New target
for FY24
New target
for FY24
67
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
In addition, the following non-financial measures are assessed when determining STI and future LTI awards:
Code of conduct, behaviour, social and governance
Area
Diversity
Long-term target
Progress
Gender ratio
in the workforce
50% gender ratio in
the workforce by 2030
Women in
senior roles
More than 40%
in senior roles by 2030
Female representation stable with total employees 44% female, 56% male
overall. Significant progress has been made on career development (job scope
widening, internal promotions etc.) and recruitment of females.
On target
Women represent 30% of senior positions. The progress on female career
development and recruitment of females into new roles should over time
evolve into senior roles.
On target
Governance
Workplace safety Safe working environment with
demonstrable risk controls,
contractor management and
monitoring of key safety metrics
Zero
Significant
reputational
issues arising from
illegal conduct
Social
Social/charitable
donations
$50 million cumulative investment
by Goodman Foundation from
2019 to 2030
There have been zero fatalities in FY23. This includes Goodman employees
or contractors on Goodman controlled areas or contractor controlled
sites. There has been significant focus on ensuring the implementation and
execution of the Group’s comprehensive safety processes and procedures.
No issues have occurred.
On target
On target
$10.8 million was contributed to community and philanthropic causes during
FY23, taking our total investment to $42.4 million since 1 July 2019.
Ahead of target
68
ANNUAL REPORT 2023
4.4.3
LTI outcomes
Testing as at 30 June 2023 was completed for the grants of performance rights made to executive KMP in respect of executive KMP performance in
FY20 (called FY21 awards). The FY21 awards had two hurdles: operating EPS and a relative TSR (the mechanics of the testing are detailed in section 3.5.).
The operating EPS hurdle was measured in the year ended 30 June 2023 against hurdles set in FY21. The relative TSR hurdle was measured over the
three years ended 30 June 2023. Performance rights that achieved the hurdles will vest in three equal tranches in September 2023, September 2024
and September 2025.
4.4.3.1 Operating EPS hurdle (75% weighting)
The operating EPS is calculated by dividing operating profit by the weighted average number of securities on issue, adjusted to include all unissued
securities relating to performance rights which had passed the testing criteria at the start of the financial year. This is to account for the operating
EPS dilution that will arise when those performance rights vest. Operating EPS for the year ended 30 June 2023 was 94.3 cents, compared to a hurdle
of 74.5 cents at the upper level.
FY21 LTIP grant – Operating EPS hurdle1
68.5 cents
74.5 cents
94.3 cents
19.8 cents
100%
Threshold level
Upper level
Actual
Outperformance
Outcome
1. Testing period for grant: operating EPS from 1 July 2022 to 30 June 2023. At the threshold level, 25% satisfy the hurdle with a sliding scale up to 100% satisfying the hurdle at the upper level.
4.4.3.2 Relative TSR hurdle (25% weighting)
TSR provides an effective check against increasing risk practices within the Group, as the price to earnings multiple will reflect the perceived risk in the
Group. Relative TSR is measured against the S&P/ASX 100 peer group. Vesting applies on a sliding scale:
+ Zero vesting up to and including the 50th percentile
+ Vesting of 50% starts at the 51st percentile on a sliding scale with 100% vesting at the 75th percentile.
Goodman posted a three-year TSR of 35.7% to 30 June 2023, under the LTIP TSR calculation methodology. This ranked Goodman in the 52nd percentile
against the S&P/ASX 100 and consequently 52% of these performance rights vested.
FY20 LTIP grant – TSR hurdle1
35.7%
33.0%
52nd
Goodman TSR1
S&P/ASX 100 TSR1
Percentile
Outcome
52%
1.
Testing period for grant was 1 July 2020 to 30 June 2023. In accordance with the LTIP, the TSR is based on the 10 day volume weighted average price (VWAP) at beginning and end of testing period
and is therefore different from the three year TSR sourced from Bloomberg and presented elsewhere in this report.
As a result of satisfying 100% of the operating EPS hurdle and 52% of the relative TSR hurdle, it is expected that up to 10,723,875 equity settled
performance rights will vest in September 2023, September 2024 and September 2025. In addition, up to 2,993,250 cash settled performance rights
are also expected to vest and the Group currently intends to issue an equivalent number of new securities to satisfy this obligation.
69
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
4.4.4 Group CEO achievements
In determining the Group CEO’s remuneration, the Board acknowledged his strong leadership through the challenges of significant economic,
market and operational volatility in the past two years, positioning the business for resilience and significant outperformance in FY23, far exceeding
the Group’s operational targets. It has also considered the following contributing factors and highlights:
Gregory
Goodman
Leadership
Financial and
risk
Group CEO
+ Developed and drove a consistent global business strategy across all markets to sustain the performance of the Group despite the
increases in volatility, costs and risk in the global operating environment. Positioned the business in key locations providing future
opportunities for development and higher cash flow resilience
+ The Group has adapted to the challenging global operating environment and continues to outperform targets, retaining employees
and increasing community support and charitable programs
+ Positioned the business as a leader in its field, managing, motivating and incentivising key personnel across the platform to perform in
highly competitive environment
+ Fostered a culture that focused on delivering quality across all aspects of the business: people, properties and service
+ Led global internal programs to promote a strong culture of inclusion, collaboration and conduct across the organisation,
underpinned by the long-held principles in the Group’s Code of Conduct, treating all stakeholders with integrity, and accountability,
reflected in top decile engagement scores
+ Reinforced Goodman’s purpose aimed at understanding the drivers of change and the needs of customers and all stakeholders to
support their future success
+ Only 6.2% voluntary staff turnover in FY23, a marginal decrease from the level of FY22.
+ Fostered continuity of strategy over successive years leading to continued outperformance over benchmark indices and comparator
companies in FY23, and with strong and sustained TSR of 151.36% over five years
+ Delivered:
– Statutory profit of $1.6 billion despite cap rate expansion in many markets and interest rate increases
– Significant operating profit growth of 17% on FY22, to $1,783 million, significantly ahead of budget
– Revaluation growth across the Group and Partnership of $0.8 billion
– Operating EPS of 94.3 cents, up 16% on FY22
– NTA increased 9% to $9.12 per security
– Occupancy maintained at 99%
+ Exceeded earnings guidance in FY23 after posting significant outperformance in FY22 through the pandemic and volatile
economic conditions
+ Drove a clearly defined capital management strategy with financial leverage of 8.3% and maintained a strong Group balance sheet
with $3.1 billion of liquidity
+ Continued managing relationships with capital partners and secured additional equity and financial facilities to total $17.6 billion of
available funding capacity
+ Integrated strong risk management approaches globally.
Environment + Instrumental in significantly increasing the focus on ESG initiatives and programs throughout the Group and a culture which
continually looks to improve Goodman’s impact on the world. In particular:
– Establishing a carbon neutral emissions target for the Group by 2025, achieving and maintaining since FY21
– Significant progress on the 2025 solar PV installation on the rooftops of Goodman’s global portfolios and installing or committing
to 103 MW in FY23 taking global installation and commitment to over 306MW
– Implemented further Solar installation commitments from 2026-2030 this year
– Maintained compliance with TCFD since FY21
+ Established a process for measuring and assessing embodied carbon to transition to carbon neutral developments, including 89
projects reviewed in FY23. As part of a greater program to reduce embodied carbon, the CEO has encouraged partnerships with
materials suppliers to accelerate production of components which will reduce our carbon footprint
+ Drove the development of science-based emissions reduction targets validated by the Science Based Target initiative as being
ambitious and aligned with a 1.5°C Paris Agreement pathway
+ Supported implementation and progression of EV incentive scheme for staff globally to encourage a shift towards lower
emissions vehicles.
+ Continued to lead the shift for all employees to increase alignment with Securityholders through the LTIP as the preferred form of
remuneration by taking 100% of performance-based remuneration in performance rights and working with the Board to implement
the ten-year plan
+ Commenced new initiatives, including Goodman Foundation commitments. Initiatives during FY23 included:
– Expanding Goodman’s supply chain ethics towards a global supplier Code of Conduct, increasing the focus on human rights and
potential modern slavery, including implementation of Supply Business Code of Conduct
– Contributing $10.8 million to community and philanthropic causes, including $530,000 raised directly by staff. The Goodman
Foundation focuses on community resilience, providing basic human needs e.g. food, housing and employment, psychological
wellbeing, prevention of violence against women and children and responding to natural disasters and humanitarian issues. During
the year, Goodman’s founding food rescue partners have continued to provide meals to feed people in need and the Group has
made a significant commitment to domestic violence prevention. The Group remains well ahead of its cumulative social investment
target of $50 million by 2030
– Enabling the Goodman team globally to contribute 3,172 hours to volunteering and community events.
Social and
cultural
70
ANNUAL REPORT 2023
The charts below demonstrate the performance of the Group and various key metrics relative to the Group CEO’s vested remuneration outcomes in
FY23 and prior years. They illustrate that the significant operating profit growth, security price growth and consequently returns for Securityholders
over the testing and vesting periods, correlate with increased Group CEO remuneration over time. Despite significant market volatility and price
movement in FY23, the market price of securities between the time of the grant and the time of vesting has seen significant growth, and the Group
CEO (and all recipients of the LTIP) has participated in this performance alongside Securityholders.
PROFIT AND VESTED REMUNERATION
B
$
T
I
F
O
R
P
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2.3
1.7
1.5
1.1
1.2
1.2
0.7
0.8 0.8
0.8
1.1
0.9
3.4
50
40
30
1.8
1.6
20
1.5
M
$
I
N
O
T
A
R
E
N
U
M
E
R
D
E
T
S
E
V
10
0
2016
2017
2018
2019
2020
2021
2022
2023
SQUARE-FULL Operating profit ($B) SQUARE-FULL Statutory profit ($B) SQUARE-FULL Vested remuneration ($M)
The table below includes awarded remuneration at grant date and the vested remuneration over the past five years for the Group CEO. The figures
in this table differ from the statutory disclosure in section 6 primarily due to the differences in the measurement and timing of recognition in respect
of performance rights granted under the LTIP and not the final vesting outcome. The below figures show the base salary received by the Group CEO
in the respective year plus the value of performance rights which vested during that year at the closing price on the day the performance rights vested.
The table highlights:
+ No change in fixed remuneration over the period
+ The proportion of remuneration from fixed (cash) salary has declined materially over time
+ Growth in the value of LTI from grant date to the vesting date due to the increase in security price (on average an increase of 82% for grants
vesting in FY23).
Base salary
STI
Value of LTI on grant date1
Value of LTI on vesting date
Total remuneration based on LTI value at grant date1
Total vested remuneration based on LTI value at vesting date
Increase in LTI value due to security price performance of the Group
Percentage growth in value of LTI during vesting period
FY18
$M
FY19
$M
FY20
$M
1.4
–
4.7
8.8
6.1
10.2
4.1
88%
1.4
–
7.3
13.5
8.7
14.9
6.2
86%
1.4
–
11.6
25.4
13.0
26.8
13.8
119%
FY22
FY23
FY21
$M
1.4
–
14.4
35.6
15.8
37.0
21.2
$M
1.4
–
15.9
42.9
17.3
44.3
26.9
147%
169%
$M
1.4
–
14.3
26.0
15.7
27.4
11.7
82%
1.
Value based on the security prices at the grant dates for the performance rights that vested in the financial year. This is so as to allow comparison of the security price outperformance over the
period between grant and vesting dates.
71
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
The chart below illustrates the increase in the value of the Group CEO’s vested LTI in FY23 from the date of the original awards in 2018, 2019 and 2020.
These significant gains have arisen due to consistent earnings growth and security price outperformance of the Group.
Value of LTIP on grant ($M) Value of LTIP on vesting ($M)
Performance rights
14.3
Gain due to increase in security price
26.0
4.4.5
Other executive KMP achievements
In FY23, the Board considered the following highlights when assessing other executive KMP:
Danny Peeters
Executive Director, Corporate
+
Successfully overseeing Brazil, playing a critical role in communicating and reinforcing the Group’s strategy,
both from a real estate and corporate perspective – currently acting as CEO ad interim
+ Played a key role in overseeing the Brazil Investment Partnership with strong financial outcomes
+
+
+
Continued to progress acquisition and permitting of significant infill development sites, positioning the Group and
Partnership in a strong position to capitalise on the growing e-commerce penetration
Construction completion including permits and successful leasing progress of major development sites despite
the complicated regulatory and commercial context in Brazil – strong leasing results. Strong focus on quality of
developments and property management to drive long term value of the assets
Provided guidance and team coaching in a complex acquisition and development environment effecting
above-target performance
+
Embedded key controls and culture with the team working cohesively and capability increasing
+ Further integrated the Brazil operation into the global network
+
Provided advice and support to senior management in Continental Europe and Group regarding sustainability,
modern slavery and innovation initiatives
+ Further improved key controls and culture with the team working cohesively and increasing capability
+
Important direct link for the Board to the operations in Continental Europe and Brazil.
72
ANNUAL REPORT 2023
Anthony Rozic
Chief Executive Officer North America, and Deputy Group Chief Executive Officer
+ FY23 EBIT exceeded budget by 17.5% and valuations for the Partnership ($1.1 billion)
+ Strong investment outperformance of 30.3% during the year
+ Played a critical role in communicating and reinforcing the Group’s strategy in the region
+
+
+
+
+
+
+
Managed a focused and motivated team with an emphasis on succession planning, strong leadership in embedding the
Goodman values in the behaviour of the team and encouraging teamwork and collaboration
With the post COVID-19 disruption, employees have returned to working at the office, enhancing team collaboration and
productivity whilst maintaining focus on key operational priorities
Continued to develop a high-quality portfolio and strongly differentiated brand position and building team capabilities
and skill sets for complex acquisitions and developments ahead of future growth
Commenced 1.5 million square feet (AUD$1.2 billion), completed 2.9 million square feet (A$2.4 billion), stabilised 1.9
million square feet ($1.6 billion) of infill development projects
Continued to grow infill development pipeline with acquisitions of in major US gateway cities providing strong positioning
for future performance
Successfully grew the presence in the two new target markets of New York and San Francisco with the acquisition of
strategic developments and value add opportunities
Extended the bank facility to a total debt maturity profile of 5.8 years whilst maintaining a total unsecured and rated debt
platform of $1.5 billion at a significantly below market average cost of debt. Maintained a conservative gearing level of
13.1% in the Partnership
+
Successfully oversaw strong growth in business operations in North America, achieving a number of key milestones:
– Significant growth in AUM to $10.6 billion
– Stabilised occupancy of 100%
– Maintained a long WALE of 8.2 years
+
+
Introduced new regional and global customer relationships to the portfolio over FY23 with a number of developments
pre-leased and replenishing the land/value-add inventory. Emphasis on developing major infill sites and value-add
development skill sets
Continued to successfully execute on numerous ESG initiatives including renewable energy, solar power and
progressing with our first carbon neutral development in North America at Fullerton.
Nick Kurtis
Group Head of Equities
+ Formulated and implemented the Partnerships’ strategies to successfully deliver significant total returns.
+ Partnership investment portfolio delivered:
–
Annualised average total return on net assets of 7.3% (based on the respective Partnership reporting periods)
in excess of benchmark and target hurdle returns
+ Delivered strong performance metrics including:
–
Management earnings contribution of $481 million to the Group’s operating earnings including Performance
fee revenue of $42 million, with significant future embedded performance fees
– Growth in external AUM up 11% to $76.3billion across 20 Partnerships in 14 countries
+ Facilitated over $10bn in real estate transactions and over $1.2bn in equity arrangements
+ Established new ventures to facilitate the growth of the partnership platform
+
Implemented strategic asset planning and new asset selection focus resulting in superior property level returns
+ Communicated and executed the Group’s strategy and values across Investment Management platform
+
+
Communicated with key Capital Partners as the economic landscape evolved during the year and established
investment and financing strategies to ensure portfolio investment program and execution was consistent with
Capital Partner expectations
Oversight of Partnership capital management plans, including equity, debt and hedging strategies across the whole
portfolio in all jurisdictions
+ Fostered strong relationships with existing and new Capital Partners
+
Provided strategic advice across a range of corporate and structural transactions in the business to position
opportunities for future years.
73
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
Michael O’Sullivan
Group Chief Risk Officer (up to 28 March 2023)
+
+
+
+
+
+
+
Responsible for identifying, assessing, and monitoring risks at Goodman and reporting to the Audit, Risk and
Compliance Committee
Overseen and aligned the Group Investment Committee (GIC) process with strategy execution to ensure final
commercial outcomes remain consistent with Group strategy
A requested member of regional due diligence committee meetings relating to major acquisitions, disposals, and
capital market transactions
Performed a critical role in commercial oversight and assessment of globally complex transactions of the Group
to allow the required level of autonomy at a regional level within delegated authority limits
Maintained risk management frameworks with improved outcomes across the Group and Partnerships in FY23 adapting
to the changing nature of our business including nature, scale, and complexity of development projects globally
Co-ordinated the Group Corporate Service functions, specifically as they relate to the identification and monitoring of
non-financial risks with specific reference to internal audit, safety, sustainability, compliance, insurance and business
continuity planning
Work closely with all Group functions, in particular, Finance, Legal, Compliance, Technical, Investment Management
and IT in respect of risk management practices and processes in those specific functions
+
FY23 saw continued growth in Group activities, in relation to the GIC process including:
– Over 330 GIC submissions with over 40% involving detailed involvement from the Group Risk function
– WIP of $13.0 billion with an annual production rate of circa $7 billion
–
$2.0 billion of asset sales, including both the disposals of directly held developments and disposals to external
parties globally
– $7.8 billion of global acquisitions and development expenditure
–
20 Partnership business plans and strategy proposals across $76.3 billion of external AUM, in which the Group’s
equity investment was $16.3 billion.
Nick Vrondas
Group Chief Financial Officer
+
+
+
+
+
+
Successfully developed and played a key role in the execution of the business strategy including the management and
allocation of capital that has delivered strong returns to investors over several years culminating in the strong FY23
operating profit
Improved oversight of balance sheet and income outcomes for the Group and Partnerships across multiple
jurisdictions. Effective statutory and management financial reporting giving clarity to support strong operational and
transactional decision making
Strengthened monitoring, coordination and consolidation of financial performance and financial position of regional
business units to support them in exceeding their financial plans
Effected Financial Risk Management policies and commensurate capital management plans of Group and
Partnerships that have placed the Group and Partnerships in a strong position to withstand the recent volatility.
In a volatile market environment, successfully oversaw and/or had direct involvement in debt finance transactions in
banking and debt capital markets of over $6.4bn for the Group and its Partnerships, adding liquidity, term to maturity
and diversity of funding sources
Effective hedging and financial risk management through oversight and/or direct involvement in money market and
hedge transactions of over $8.5bn for the Group and Partnerships
+ Built improvements and resilience into systems and controls framework
– Progressed framework for future risk mitigation measures
–
Led operational improvements in relation to business IT systems and processes, particularly considering
the necessary changes that the recent operating climate have given rise to
– Updated and improved various operational policies to enhance compliance and reduce risk
+ Demonstrated an ability to manage through variable market conditions
+ Maintained valuable relationships in the capital markets.
74
ANNUAL REPORT 2023
4.5 LTI grants in relation to FY23 performance
The remuneration proposed by the Board in respect of the executive KMP performance in FY23 comprise fixed remuneration, STI awards and awards
under the LTIP.
As discussed in earlier sections, the Board has decided to reduce the number of performance rights to be issued to the Group CEO and other
executive KMP under the LTIP, by approximately 10%. The Board believes the grants reflect a balance between the interests of Securityholders and
the recipients.
The table below lists the maximum number of performance rights which could vest if the maximum hurdles are met over the four years ending
30 June 2027. The minimum vesting percentage is 0% if the threshold hurdles are not met. The vesting of those performance rights that achieve the
performance hurdles (if any) will occur in seven equal tranches in September each year, starting from September 2027 with the last tranche vesting
ten years from initial grant, in September 2033.
The grants that the Board intends to make in September 2023 and proposes to make for Executive Directors after the AGM (subject to Securityholder
approval) in respect of the executive KMP performance in FY23, are detailed below:
Executive
Gregory Goodman
Danny Peeters
Anthony Rozic
Nick Kurtis
Nick Vrondas
Year of
grant
FY24
FY24
FY24
FY24
FY24
Performance rights
proposed Number
Face value per
performance right $
Face value of grant
$M
900,000
455,000
500,000
585,000
500,000
20.07
20.07
20.07
20.07
20.07
18.1
9.1
10.0
11.7
10.0
75
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
5. NON-EXECUTIVE DIRECTOR REMUNERATION
5.1 Key elements of the Non-Executive Director remuneration policy
+ The policy is structured to ensure independence of judgement in the performance of their duties
+ Non-Executive Directors receive fixed fees for Board membership and additional fees for membership of committees.
+ The fees are set considering the size and scope of Goodman’s activities and the responsibilities and experience of the Directors. Periodically,
these fees are benchmarked against data for comparable entities provided by external advisers
+ As approved by Securityholders at the 2022 AGM, total remuneration (including superannuation) payable by Goodman to all Non-Executive
Directors in aggregate must not exceed $4.0 million per annum. The increase (previously the pool was capped at $2.5 million) was to allow for
recent Board appointments, which have increased the size and depth of operations of the Group, and responsibilities of Directors. For FY23,
total Non-Executive Directors’ remuneration was $2.8 million (2022: $2.4 million).
+ Non-Executive Directors are not entitled to participate in any STI or LTI schemes as they may be perceived to create a bias when overseeing
executive decision making.
+ To align the interests of the Board with Securityholders, the Board updated the Directors’ Security Holding Policy in April 2021. The policy
requires Non-Executive Directors to accumulate and hold Goodman securities with a value equivalent to their pre-tax annual base fee within
three years of appointment, or in the case of the Chairman the pre-tax Chairman’s fee within three years of appointment as Chairman (subject
to a transitional year following adoption of the new policy). For the purpose of this policy, the value of each parcel acquired is the higher of the
purchase price or market value at the end of the financial year.
5.2 Board and committee annual fees
The current Board and Committee fees that applied (on an annualised basis) for the period 1 April 2023 to 30 June 2023 (and remain current)
are set out below: the Remuneration Committee and the Nomination Committee were merged into the Remuneration & Nomination Committee
on 1 April 2023, and the Audit Committee and the Risk and Compliance Committee were merged into the Audit, Risk and Compliance Committee
on 1 April 2023. The Sustainability and Innovation Committee was established on 1 October 2022.
Audit, Risk and
Compliance
Committee
Remuneration
and Nomination
Committee
Sustainability
and Innovation
Committee
$
50,000
30,000
Nomination
Committee
$
n/a
30,000
Chairman
Member
Board
$
625,000
240,000
$
70,000
30,000
$
n/a
30,000
During the period from 1 July 2022 to 30 March 2023 the Board and Committee fees were as set out below:
Board
$
625,000
240,000
Audit
Committee
$
60,000
30,000
Risk and
Compliance
Committee
$
50,000
30,000
Remuneration
Committee
$
50,000
30,000
Chairman
Member
The remuneration of the Non-Executive Director of GLHK was HK$680,000.
76
ANNUAL REPORT 2023
6. STATUTORY DISCLOSURES
6.1 KMP remuneration (statutory analysis)
Details of the nature and amount of each major element of the remuneration of each executive KMP, as calculated under Australian Accounting
Standards, are set out below:
Long-term
Share
based
payments
n
o
i
t
a
u
n
n
a
r
e
p
u
S
s
t
i
f
e
n
e
b
$
l
a
t
o
T
$
2
)
I
T
S
(
s
u
n
o
B
$
3
r
e
h
t
O
$
e
c
n
a
m
r
o
f
r
e
P
5
)
I
T
L
(
s
t
h
g
i
r
$
Performance
related
l
a
t
o
t
f
o
%
s
a
I
T
L
d
n
a
I
T
S
%
l
a
t
o
T
$
l
a
t
o
t
f
o
%
s
a
I
T
L
%
1,417,919
25,292
– (77,351)
12,797,691
14,163,551
90.4
90.4
1,445,570
23,568
–
10,199
14,293,367
15,772,704
90.6
90.6
873,642
25,292
900,000 31,622
5,909,166
7,739,722
88.0
687,955
23,568
1,000,000
8,584
6,253,120
7,973,227
91.0
76.3
78.4
322,691
18,703
450,000
6,952
3,099,847
3,898,193
91.1
79.5
500,095
23,568
550,000
6,403
4,424,720
5,504,786
90.4
80.4
712,123
25,292
810,000 (18,978)
5,221,710
6,750,147
89.4
77.4
713,882
23,568
900,000
8,159
5,706,958
7,352,567
89.9
77.6
€
670,571
610,450
€
–
–
€
630,000
700,000
€
–
–
€
€
3,318,233
4,618,984
85.5
71.8
3,539,015
4,849,465
87.4
73.0
1
s
e
e
f
d
n
a
y
r
a
l
a
S
$
FY23
1,417,919
FY22
1,445,570
FY23
FY22
873,642
687,955
FY23
322,691
FY22
500,095
FY23
712,123
FY22
713,882
€
FY23
670,751
FY22
610,450
2
)
I
T
S
(
s
u
n
o
B
$
–
–
–
–
–
–
–
–
€
–
–
4
,
3
r
e
h
t
O
$
–
–
–
–
–
–
–
–
€
–
–
US$ US$
US$
US$
US$
US$
US$
US$
US$
FY23
1,047,619
FY22
729,880
–
–
30,224 1,077,843
17,024
950,000 29,276
3,757,981
5,832,124
80.7
64.4
20,149
750,029
17,100
1,050,000
14,651
4,305,210
6,136,989
87.3
70.2
Executive
KMP
Gregory
Goodman
Nick Kurtis
Michael
O’Sullivan6
Nick
Vrondas
Danny
Peeters7
Anthony
Rozic8
The footnotes for this table are set out on the following page.
77
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
Executive KMP are engaged under written employment contracts until notice is given by either Goodman or the executive KMP. Notice periods
are for six months except for Gregory Goodman and Danny Peeters for whom the period is 12 months. Danny Peeters provides his services through
a management company, DPCON Bvba.
Footnotes to the executive KMP remuneration table:
1. Salary and fees represent the amounts due under the terms of executives’ service contracts and include movements in annual leave provisions.
2. Executives’ bonus (STI) awards are paid in two instalments: 50% on finalisation of Goodman’s financial statements and 50% 12 months later. Under Australian Accounting Standards, this means
the entire bonus award is considered as a long-term benefit with regard to the disclosure of individual executive’s remuneration. No bonuses were forfeited during the financial year.
3. Other includes changes in long service leave provisions and in the prior year, car parking and reportable fringe benefits.
4. The Board agreed certain tax equalisation payments with Anthony Rozic in connection with his employment arrangements in the United States and Australia to ensure that he was no better
or worse off. As a result, in FY20 Goodman made additional tax related payments of USD 150,005 in respect of the period prior to 1 January 2019. These amounts were on top of Anthony Rozic’s
Australian tax obligations for which he remained exclusively responsible. The Board also advanced under an interest free loan, double-tax amounts for which foreign income tax offsets from the
Australian Taxation Office will be used to repay the advances.
At 1 July 2022, the advances made by Goodman amounted to USD 503,729 and as there have been no further advances or repayments during the year ended 30 June 2023, the balance at 30 June
2023 was also US$503,729. The amount of interest that would have been payable if charged on an arm’s length basis during the year is USD 30,224 (2022: USD 20,149). The notional interest amount
has been included in Anthony Rozic’s statutory remuneration (Other remuneration). No other executive KMP received a loan from the Group during the current or prior financial years.
5. Performance rights are an LTI and in accordance with Australian Accounting Standards: the values of the awards are determined using option pricing models and amortised in the income
statement over the vesting periods.
6. Michael O’Sullivan retired from his role as Group Chief Risk Officer and ceased to be a KMP on 28 March 2023. His remuneration disclosed is for the period he was a KMP.
7. The remuneration of Danny Peeters is disclosed in Euros, the currency in which his base remuneration and STI are determined. The value attributed to his performance rights is translated from
Australian dollars at the weighted average rate for the relevant financial year.
8. The remuneration of Anthony Rozic is disclosed in US dollars, the currency in which his base remuneration and STI are determined. The value attributed to his performance rights is translated from
Australian dollars at the weighted average rate for the relevant financial year.
78
ANNUAL REPORT 2023
6.2 Movements in performance rights held by executive KMP
The movements in the number of performance rights during FY23 are summarised as follows:
Held at the
start of the year
Granted as
compensation
Vested
Forfeited
Held at the
end of the year1
Executive Directors
Gregory Goodman
Danny Peeters
Anthony Rozic
Other executive KMP
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
5,010,001
5,316,667
1,905,001
1,846,667
2,070,000
2,013,333
2,275,000
2,103,333
1,596,667
1,450,000
2,090,000
2,050,000
1,000,000
(1,354,667)
(36,000)
1,560,000
(1,866,666)
–
500,000
625,000
550,000
690,000
645,000
805,000
450,000
560,000
550,000
690,000
(478,668)
(13,998)
(566,666)
–
(521,601)
(15,198)
(633,333)
–
(521,601)
(15,198)
(633,333)
–
(359,333)
(12,000)
(413,333)
–
(521,601)
(15,198)
4,619,334
5,010,001
1,912,335
1,905,001
2,083,201
2,070,000
2,383,201
2,275,000
1,675,334
1,596,667
2,103,201
1. Relates to securities held at the earlier of the end of the financial year or the date of ceasing to be a KMP.
(650,000)
–
2,090,000
79
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
6.3 Analysis of performance rights held by executive KMP
Details of the awards of performance rights under the LTIP granted by Goodman as compensation to the executive KMP are set out in the following tables:
e
c
n
a
m
r
o
f
r
e
p
e
t
a
D
d
e
t
n
a
r
g
s
t
h
g
i
r
r
a
e
Y
1
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
r
e
p
e
u
l
a
v
r
i
a
F
$
s
r
a
e
y
r
o
i
r
p
n
i
r
a
e
y
e
h
t
n
i
d
e
t
s
e
$ V
d
e
t
s
e
% V
f
o
e
u
l
a
v
l
a
t
o
T
e
c
n
a
m
r
o
f
r
e
p
1
d
e
t
n
a
r
g
s
t
h
g
i
r
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
f
o
r
e
b
m
u
N
1,000,000
17 Nov 2022
FY23
13.89
13,890,000
1,560,000
18 Nov 2021
FY22
20.16
31,449,600
950,000
19 Nov 2020
FY21
16.07
15,266,500
Executive
Directors
Gregory
Goodman
900,000
20 Nov 2019
FY20
1,600,000
15 Nov 2018
FY19
1,600,000
16 Nov 2017
FY18
11.48
8.72
6.70
13,952,000
33.3
33.3
10,720,000
66.7
33.3
10,332,000
32.0
4.0
5,520,960
2023–2025
Danny Peeters
500,000
17 Nov 2022
FY23
13.89
6,945,000
625,000
18 Nov 2021
FY22
20.16
12,600,000
380,000
19 Nov 2020
FY21
16.07
6,106,600
–
–
–
–
–
–
–
–
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
3
r
a
e
y
e
h
t
n
i
d
e
t
s
e
v
f
o
e
u
a
V
l
h
c
i
h
w
n
i
s
r
a
e
y
4
s
t
s
e
v
t
n
a
r
g
l
a
i
c
n
a
n
F
i
2027–2033
2026–2032
2024–2026
$
–
–
–
d
e
t
i
e
f
r
o
% F
%
–
–
–
–
–
–
-
-
–
–
–
10,223,994
2022–2024
10,224,013
2021–2023
–
–
–
2027–2033
2026–2032
2024–2026
–
–
–
–
–
3,514,494
2022–2024
3,514,513
2021–2023
–
–
–
2027–2033
2026–2032
2024–2026
–
–
–
–
–
–
4,018,000
32.0
4.0
2,147,059
2023–2025
4,796,000
33.3
33.3
3,685,000
66.7
33.3
7,639,500
13,910,400
6,428,000
4,362,400
–
–
–
–
32.0
4.0
2,331,091
2023–2025
5,232,000
33.3
33.3
4,020,000
66.7
33.3
–
–
3,834,000
2022–2024
3,834,000
2021–2023
350,000
20 Nov 2019
FY20
550,000
15 Nov 2018
FY19
550,000
16 Nov 2017
FY18
Anthony Rozic
550,000
17 Nov 2022
FY23
690,000
18 Nov 2021
FY22
400,000
19 Nov 2020
FY21
380,000
20 Nov 2019
FY20
600,000
15 Nov 2018
FY19
600,000
16 Nov 2017
FY18
11.48
8.72
6.70
13.89
20.16
16.07
11.48
8.72
6.70
The footnotes for this table are set out at the end of this section.
80
ANNUAL REPORT 2023
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
f
o
r
e
b
m
u
N
Other
executive
KMP
e
c
n
a
m
r
o
f
r
e
p
e
t
a
D
d
e
t
n
a
r
g
s
t
h
g
i
r
Nick Kurtis
645,000
30 Sep 2022
805,000
30 Sep 2021
1
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
r
e
p
e
u
l
a
v
r
i
a
F
f
o
e
u
l
a
v
l
a
t
o
$ T
1
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
$
11.69
7,540,050
17.22
13,862,100
r
a
e
Y
FY23
FY22
490,000
30 Sep 2020
FY21
15.77
7,727,300
380,000
30 Sep 2019
FY20
600,000
28 Sep 2018
600,000
30 Sep 2017
FY19
FY18
11.26
8.52
6.41
4,278,800
5,112,000
3,846,000
Michael
O’Sullivan
450,000
30 Sep 2022
FY23
11.69
5,260,500
560,000
30 Sep 2021
FY22
17.22
9,643,200
340,000
30 Sep 2020
FY21
15.77
5,361,800
300,000
30 Sep 2019
FY20
400,000
28 Sep 2018
390,000
30 Sep 2017
FY19
FY18
11.26
8.52
6.41
3,378,000
3,408,000
2,499,900
Nick
Vrondas
550,000
30 Sep 2022
FY23
11.69
6,429,500
690,000
30 Sep 2021
FY22
17.22
11,881,800
420,000
30 Sep 2020
FY21
15.77
6,623,400
380,000
30 Sep 2019
FY20
600,000
28 Sep 2018
600,000
30 Sep 2017
FY19
FY18
11.26
8.52
6.41
4,278,800
5,112,000
3,846,000
Footnotes to the analysis of executive KMP performance rights table:
s
r
a
e
y
r
o
i
r
p
n
i
d
e
t
s
e
V
%
–
–
–
–
33.3
66.7
–
–
–
-
33.3
66.7
–
–
–
–
33.3
66.7
r
a
e
y
e
h
t
n
i
d
e
t
s
e
V
2
%
–
–
–
32.0
33.3
33.3
–
–
–
32.0
33.3
33.3
–
–
–
32.0
33.3
33.3
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
3
r
a
e
y
e
h
t
n
i
d
e
t
s
e
v
d
e
t
i
e
f
r
o
F
f
o
e
u
l
a
% V
–
–
–
h
c
i
h
w
n
i
s
r
a
e
y
4
s
t
s
e
v
t
n
a
r
g
l
a
i
c
n
a
n
F
i
2027–2033
2026–2032
2024–2026
$
–
–
–
4.0
2,331,091
2023–2025
-
-
–
–
–
3,834,000
2022–2024
3,834,000
2021–2023
–
–
–
2027–2033
2026–2032
2024–2026
4.0
1,840,320
2023–2025
–
–
–
–
–
2,555,994
2022–2024
2,492,100
2021–2023
–
–
–
2027–2033
2026–2032
2024–2026
4.0
2,331,091
2023–2025
–
–
3,834,000
2022–2024
3,834,000
2021–2023
1. The fair value was determined at grant date for each of the tranches and calculated using a combination of the standard Black Scholes model with a continuous dividend/distribution yield and a
Monte Carlo model which simulated total returns for each of the S&P/ASX 100 entities and discounted the future value of any potential future vesting performance rights to arrive at a present value.
2. As performance rights had an exercise price of $nil, Goodman securities were automatically issued to employees when the performance rights vested. Accordingly, the percentage of performance
rights that vested during the year equalled the percentage of securities issued during the year.
3. The value of performance rights vested was calculated using the closing price of a Goodman security on the ASX of $19.17 on 1 September 2022, the day the performance rights vested.
4. As Goodman securities were automatically issued to employees when the performance rights vested, and lapsed where they failed to do so, the vesting date was also deemed to be the expiry date.
81
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
6.4 Securities issued on exercise of performance rights
During FY23, Goodman issued 13,479,812 securities as a result of the vesting of performance rights. The amount paid by the employees on exercise
of these securities was $nil.
No performance rights have vested since the end of the financial year.
6.5 Unissued securities under performance rights
At the date of this Directors’ report, unissued securities of Goodman under performance rights, i.e. those performance rights that have not yet vested, were:
Vesting date1
Ten-year plan
Sep 2032
Sep 2031
Sep 2030
Sep 2029
Sep 2028
Sep 2027
Sep 2026
Sep 2025
Five-year plan
Sep 2027
Sep 2026
Sep 2025
Sep 2024
Sep 2023
Exercise price $
Number of performance rights2
–
–
–
–
–
–
–
–
–
–
–
–
–
1,276,432
2,883,576
2,883,572
2,883,571
2,883,569
2,883,569
2,883,569
1,607,142
2,819,471
5,258,340
9,320,912
9,917,043
12,698,023
1. As Goodman securities were automatically issued to employees when the performance rights vested, and lapsed where they failed to do so, the vesting date was also deemed to be the expiry date.
2. The number of performance rights at the date of this Directors’ report is net of any rights forfeited and excludes 16,119,301 performance rights where the intention is to cash settle.
82
ANNUAL REPORT 2023
6.6 Non-Executive Directors’ remuneration (statutory analysis)
Details of the nature and amount of each major element of the remuneration of Non-Executive Directors, as calculated under Australian Accounting
Standards, are set out below:
Salary and fees
Superannuation
benefits
Non-Executive Directors – GL and GFML
Stephen Johns
Christopher Green
Mark Johnson
Vanessa Liu1
Rebecca McGrath2
Phillip Pryke3
Belinda Robson4
Hilary Spann5
Penny Winn6
George Zoghbi7
Non-Executive Director – GLHK
David Collins8
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
$
599,708
601,432
330,000
300,000
323,874
306,432
262,500
20,000
220,833
344,108
418,727
408,701
81,569
–
262,500
59,048
–
107,850
55,059
–
HK$
680,000
680,000
$
25,292
23,568
–
–
25,292
23,568
–
–
–
5,892
25,292
23,568
8,431
–
–
–
–
9,195
5,691
–
HK$
–
-
Total
$
625,000
625,000
330,000
300,000
349,166
330,000
262,500
20,000
220,833
350,000
444,019
432,269
90,000
–
262,500
59,048
–
117,045
60,750
–
HK$
680,000
680,000
1. Vanessa Liu was appointed as a Director on 1 June 2022.
2. Rebecca McGrath retired as a Director on 28 February 2023.
3. Salary and fees for Phillip Pryke included an amount of A$91,516 (NZ$100,000) (2022: A$93,747 (NZ$100,000)) due in respect of his role on the board and audit committee of Goodman (NZ)
Limited, the manager of Goodman Property Trust.
4. Belinda Robson was appointed as a Director on 1 March 2023.
5. Hilary Spann was appointed as a Director on 4 April 2022.
6. Penny Winn retired as a Director on 18 November 2021.
7. George Zoghbi was appointed as a Director on 11 April 2023.
8. David Collins is a Director of GLHK and his Director’s fees are disclosed in Hong Kong dollars.
83
GOODMAN GROUP
Directors’ report
Remuneration report – audited (continued)
6.7 Movements in Goodman securities held
The movements during the year in the number of Goodman securities held, directly, indirectly or beneficially, by each KMP, including their related
parties, are set out below:
Held at
the start of
the year1
Securities issued
on vesting of
performance rights
Acquisitions
Disposals
Held at the end
of the year2
Non-Executive Directors –
GL and GFML
Stephen Johns
Christopher Green
Mark Johnson
Vanessa Liu
Rebecca McGrath
Phillip Pryke
Belinda Robson
Hilary Spann
George Zoghbi
Non-Executive Director – GLHK
David Collins
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
41,143
41,143
78,996
78,996
15,000
5,000
–
–
43,061
43,061
59,880
59,880
–
–
3,500
–
–
–
5,000
5,000
Executive Directors – GL and GFML
Gregory Goodman
FY23
38,604,546
Danny Peeters
Anthony Rozic
Other executive KMP
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
FY23
FY22
38,487,880
2,199,797
1,633,131
951,307
1,209,460
503,619
554,286
1,066,452
843,119
129,909
129,909
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,354,667
1,866,666
478,668
566,666
521,601
633,333
521,601
633,333
359,333
413,333
521,601
650,000
–
–
–
–
–
10,000
1,938
–
–
–
–
–
4,990
–
9,775
3,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
41,143
41,143
78,996
78,996
15,000
15,000
1,938
–
43,061
43,061
59,880
59,880
4,990
–
13,275
3,500
–
–
5,000
5,000
(1,289,726)
(1,750,000)
(1,000,000)
–
–
(891,486)
(525,000)
(684,000)
(509,333)
(190,000)
(521,601)
(650,000)
38,669,487
38,604,546
1,678,465
2,199,797
1,472,908
951,307
500,220
503,619
916,452
1,066,452
129,909
129,909
1. Relates to securities held at the later of the start of the financial year or the date of becoming a KMP.
2. Relates to securities held at the earlier of the end of the financial year or the date of ceasing to be a KMP.
84
6.8
Transactions with Directors, executives and their related entities
GreenPoint Real Estate Innovation and Technology Venture,
LP (GreenPoint)
In order to enhance understanding of and access to technologies that
may influence the property sector and the business, the Group committed
to investing USD15.0 million in GreenPoint, a property technology fund
that is a Delaware limited partnership, managed by GreenPoint Partners.
GreenPoint Partners is beneficially owned and controlled by Christopher
Green, a director of GL.
In FY23, the Group invested a further USD1.9 million and the total
investment in GreenPoint at 30 June 2023 was USD7.2 million
(30 June 2022: USD5.3 million). No distributions were received from
GreenPoint in the current year (2022: $0.8 million).
Wyuna Regenerative Ag Investment Fund (Wyuna)
As part of its ESG strategy, Goodman has committed to investing up to
$30.0 million in an integrated carbon credit and regenerative platform
in Australia – Wyuna. Investing alongside Australia’s Clean Energy
Finance Corporation, this project assists land regeneration, sustainable
food production and land-based solutions to climate change. Wyuna is
managed by Wyuna Regenerative Ag Pty Limited, which is 50% owned
by Christopher Green, a director of GL.
In FY23, GL invested $11.9 million, and the total investment in Wyuna
at 30 June 2023 was $11.9 million (30 June 2022: $nil). No distributions
were received from Wyuna in the current and prior year.
Other than as disclosed elsewhere in the remuneration report, there were
no other transactions with Directors, executives, and their related entities.
ANNUAL REPORT 2023
85
Non-audit services
During the financial year, KPMG, Goodman and GIT’s auditor,
performed certain other services in addition to the audit and review
of the financial statements.
The Board has considered the non-audit services provided during the
financial year by the auditor and, in accordance with written advice
authorised by a resolution of the Audit, Risk and Compliance Committee,
resolved that it is satisfied that the provision of those non-audit services
during the financial year by the auditor is compatible with, and did not
compromise, the auditor independence requirements of the Corporations
Act 2001 for the following reasons:
+
+
All non-audit services were subject to the corporate governance
procedures adopted by Goodman and have been reviewed by the
Audit, Risk and Compliance Committee to determine they do not
impact the integrity and objectivity of the auditor
The non-audit services provided do not undermine the general
principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants, as they did not involve
reviewing or auditing the auditor’s own work, acting in a management
or decision making capacity for Goodman, acting as an advocate for
Goodman or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of Goodman and GIT,
KPMG and its network firms, for the audit and non-audit services
provided during the financial year are set out in note 25 to the
consolidated financial statements.
Lead auditor’s independence declaration under section
307C of the Corporations Act 2001
The lead auditor’s independence declaration is set out on page 88 and
forms part of this Directors’ report for the financial year.
GOODMAN GROUP
Directors’ report
(continued)
Environmental regulations
Goodman has policies and procedures to identify and appropriately
address environmental obligations that might arise in respect of
Goodman’s operations that are subject to significant environmental
laws and regulation. The Directors have determined that Goodman has
complied with those obligations during the financial year and that there
has not been any material breach.
Declaration by the Group Chief Executive Officer
and Group Chief Financial Officer
The Group Chief Executive Officer and Group Chief Financial Officer
declared in writing to the Board that, in their opinion, the financial records
of Goodman for the year ended 30 June 2023 have been properly
maintained and the financial report for the year ended 30 June 2023
complies with accounting standards and presents a true and fair view
of Goodman’s financial condition and operational results. The Group
Chief Executive Officer and Group Chief Financial Officer confirmed
that the above declaration was, to the best of their knowledge and belief,
founded on a sound system of risk management and internal control
and that the system was operating effectively in all material respects
in relation to the financial reporting risks.
Disclosure in respect of any indemnification
and insurance of officers and auditors
Pursuant to the Constitution of Goodman, current and former Directors
and officers of Goodman are entitled to be indemnified. Deeds of
Indemnity have been executed by Goodman, consistent with the
Constitution, in favour of each Director. The Deed indemnifies each
Director to the extent permitted by law for liabilities (other than legal
costs) incurred in their capacity as a director of Goodman Limited
or a controlled entity and, in respect of legal costs, for liabilities incurred
in defending or resisting civil or criminal proceedings.
Goodman has insured to the extent permitted by law, current
and former Directors and officers of Goodman in respect of liability
and legal expenses incurred in their capacity as a director or officer.
As it is prohibited under the terms of the contract of insurance,
the Directors have not included details of the nature of the liabilities
covered or the amount of the premiums paid.
The auditors of Goodman are not indemnified by Goodman or covered
in any way by this insurance in respect of the audit.
86
Rounding
Goodman and GIT are entities of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191. In
accordance with that Instrument, amounts in this Directors’ report and
the consolidated financial statements have been rounded to the nearest
hundred thousand dollars, unless otherwise stated.
Events subsequent to balance date
There has not arisen in the interval between the end of the financial year
and the date of this report any item, transaction or event of a material and
unusual nature likely, in the opinion of the Directors, to affect significantly
the operations of Goodman, the results of those operations, or the state
of affairs of Goodman, in future financial years.
The Directors’ report is made in accordance with a resolution of the Directors.
Stephen Johns
Independent Chairman
Gregory Goodman
Group Chief Executive Officer
Sydney, 17 August 2023
ANNUAL REPORT 2023
87
GOODMAN GROUP
Lead Auditor's Independence Declaration
under Section 307C of the Corporations Act 2001
To the Directors of Goodman Limited and Goodman Funds Management Limited,
as Responsible Entity for Goodman Industrial Trust
I declare that, to the best of my knowledge and belief, in relation to the audits of Goodman Limited (as the deemed parent presenting the stapled
security arrangement of the Goodman Group) and Goodman Industrial Trust for the financial year ended 30 June 2023 there have been:
i no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audits; and
ii no contraventions of any applicable code of professional conduct in relation to the audits.
KPMG
Eileen Hoggett
Partner
Sydney
17 August 2023
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the
independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
88
Consolidated statements of financial position
as at 30 June 2023
ANNUAL REPORT 2023
Current assets
Cash and cash equivalents
Receivables
Contract assets
Inventories
Other financial assets
Assets held for sale
Total current assets
Non-current assets
Receivables
Inventories
Investment properties
Investments accounted for using the equity method
Deferred tax assets
Other financial assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Payables
Current tax payables
Interest bearing liabilities
Provisions
Lease liabilities
Other financial liabilities
Total current liabilities
Non-current liabilities
Payables
Interest bearing liabilities
Deferred tax liabilities
Provisions
Lease liabilities
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to Securityholders
Issued capital
Reserves
Retained earnings
Total equity attributable to Securityholders
Comprising:
Total equity attributable to GL
Total equity attributable to other entities stapled to GL
Total equity attributable to Securityholders
Note
20(a)
6
7
5(b)
16
8
6
5(b)
5(b)
5(b)
4(d)
16
11
13
9
4(c)
15
10
12
16
9
15
4(d)
10
12
16
19(a)
21(a)
21(b)
Goodman
2023
$M
1,360.1
243.1
72.9
464.2
87.8
509.6
2,737.7
231.0
1,781.3
1,644.8
16,285.2
43.9
381.5
71.7
850.1
21,289.5
24,027.2
683.4
170.2
–
301.5
12.3
143.9
1,311.3
390.2
3,292.9
458.2
14.3
55.4
480.1
4,691.1
6,002.4
18,024.8
8,273.3
774.6
8,976.9
18,024.8
2,731.4
15,293.4
18,024.8
2022
$M
1,056.0
217.8
77.6
389.0
1.6
608.2
2,350.2
173.4
1,727.1
1,423.7
14,379.6
25.2
496.4
61.4
795.4
19,082.2
21,432.4
606.5
173.4
133.3
299.2
12.5
71.2
1,296.1
111.0
2,698.9
380.3
15.5
58.1
447.7
3,711.5
5,007.6
16,424.8
8,206.1
352.7
7,866.0
16,424.8
2,292.9
14,131.9
16,424.8
The consolidated statements of financial position are to be read in conjunction with the accompanying notes.
GIT
2023
$M
689.9
242.1
–
–
76.6
509.6
1,518.2
3,122.4
–
234.4
13,012.3
–
251.7
–
–
16,620.8
18,139.0
170.9
–
–
188.4
–
63.9
423.2
778.0
2,982.8
375.0
–
–
383.6
4,519.4
4,942.6
13,196.4
8,355.4
459.1
4,381.9
13,196.4
2022
$M
473.6
131.0
–
–
1.6
608.2
1,214.4
3,137.4
5.9
495.3
11,356.1
–
373.1
–
–
15,367.8
16,582.2
72.7
–
133.3
233.5
–
25.9
465.4
723.8
2,692.1
267.9
–
–
325.3
4,009.1
4,474.5
12,107.7
8,154.5
238.8
3,714.4
12,107.7
89
GOODMAN GROUP
Consolidated income statements
for the year ended 30 June 2023
Note
Goodman
2023
$M
Revenue
Gross property income
Management income
Development income
Distributions from investments
Property and development expenses
Property expenses
Development expenses
Other income
1
1
1
1
Net gain from fair value adjustments on investment properties
5(e)
Net gain on disposal of investment properties
Net gain on disposal of assets held for sale
Net gain on disposal of equity investments
Share of net results of equity accounted investments
Other expenses
Employee expenses
Share based payments expense
Administrative and other expenses
Profit before interest and tax
Net finance (expense)/income
Finance income
Finance expense
Net finance expense
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to GL
Profit attributable to other entities stapled to GL
Profit for the year attributable to Securityholders
Basic profit per security (¢)
Diluted profit per security (¢)
1
5(f)
1
1
14
14
4
21(a)
21(b)
2
2
2022
$M
138.0
511.4
1,441.6
0.8
122.8
438.9
1,407.2
–
1,968.9
2,091.8
(31.7)
(606.7)
(638.4)
278.9
3.6
–
–
1,022.4
1,304.9
(271.6)
(286.0)
(100.9)
(658.5)
1,976.9
22.9
(257.7)
(234.8)
1,742.1
(182.2)
1,559.9
288.2
1,271.7
1,559.9
83.0
81.3
(33.7)
(554.9)
(588.6)
260.1
73.6
12.5
0.2
2,718.2
3,064.6
(258.9)
(257.6)
(90.4)
(606.9)
3,960.9
8.3
(231.1)
(222.8)
3,738.1
(324.1)
3,414.0
552.6
2,861.4
3,414.0
183.2
178.8
The consolidated income statements are to be read in conjunction with the accompanying notes.
90
GIT
2023
$M
27.4
–
22.6
27.7
77.7
(9.8)
(6.7)
(16.5)
229.0
(0.6)
–
–
1,079.1
1,307.5
–
–
(74.5)
(74.5)
2022
$M
51.7
–
–
6.4
58.1
(16.5)
–
(16.5)
208.3
69.8
–
–
2,173.0
2,451.1
–
–
(60.4)
(60.4)
1,294.2
2,432.3
179.2
(236.3)
(57.1)
1,237.1
(99.1)
1,138.0
72.8
(304.4)
(231.6)
2,200.7
(133.1)
2,067.6
Consolidated statements of comprehensive income
for the year ended 30 June 2023
ANNUAL REPORT 2023
Profit for the year
Other comprehensive income/(loss) for the year
Items what will not be classified to profit or loss
Actuarial gains on defined benefit
retirement schemes, net of income tax
Effect of foreign currency translation
Items that are or may be reclassified
subsequently to profit or loss
Note
Goodman
2023
$M
2022
$M
GIT
2023
$M
2022
$M
1,559.9
3,414.0
1,138.0
2,067.6
0.5
(2.6)
(2.1)
5.6
1.6
7.2
–
–
–
–
–
–
(Decrease)/increase due to revaluation of other financial assets
(0.2)
0.3
(15.6)
5.0
Cash flow hedges:
– Change in value of financial instruments
Effect of foreign currency translation
Other comprehensive income for the year,
net of income tax
Total comprehensive income for the year
Total comprehensive income attributable to GL
Total comprehensive income attributable
to other entities stapled to GL
Total comprehensive income for the year
attributable to Securityholders
2.4
363.2
365.4
363.3
1,923.2
294.9
15.9
143.7
159.9
167.1
3,581.1
542.7
1,628.3
3,038.4
1,923.2
3,581.1
21(a)
21(b)
The consolidated statements of comprehensive income are to be read in conjunction with the accompanying notes.
2.4
200.6
187.4
187.4
1,325.4
15.9
221.8
242.7
242.7
2,310.3
91
GOODMAN GROUP
Consolidated statements of changes in equity
for the year ended 30 June 2023
Goodman
Balance at 1 July 2021
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)
Effect of foreign currency translation
Cash flow hedges:
– Change in value of financial instruments
Increase due to revaluation
of other financial assets
Actuarial gains on defined benefit
superannuation funds, net of income tax
Total other comprehensive income
for the year, net of income tax
Total comprehensive income
for the year, net of income tax
Transfers
Contributions by and
distributions to owners
Dividends/distributions
on stapled securities
Issue of stapled securities
Issue costs
Purchase of stapled securities for the LTIP
Equity settled share
based payments expense
Deferred taxes associated with the LTIP
Balance at 30 June 2022
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)
Effect of foreign currency translation
Cash flow hedges:
– Change in value of financial instruments
Decrease due to revaluation
of other financial assets
Actuarial gains on defined benefit
superannuation funds, net of income tax
Total other comprehensive income
for the year, net of income tax
Total comprehensive income
for the year, net of income tax
Transfers
Contributions by and
distributions to owners
Dividends/distributions
on stapled securities
Issue of stapled securities
Issue costs
Equity settled share
based payments expense
Deferred taxes associated with the LTIP
Balance at 30 June 2023
Attributable to Securityholders
Issued
capital
Asset
revaluation
reserve
Cash
flow
hedge
reserve
Foreign
currency
translation
reserve
Employee
compensation
reserve
Note
$M
8,096.4
$M
(6.7)
$M
(4.4)
$M
(90.7)
$M
274.7
Defined
benefit
retirement
schemes
reserve
$M
(38.1)
Total
reserves
Retained
earnings
Total
$M
134.8
$M
4,930.3
$M
13,161.5
–
–
–
–
–
–
–
–
–
109.8
(0.1)
–
–
–
–
–
–
(0.4)
144.1
–
0.3
15.9
–
–
–
–
–
–
0.3
15.5
144.1
0.3
15.5
144.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,206.1
–
(6.4)
–
11.1
–
53.4
–
–
–
–
–
–
–
–
–
67.4
(0.2)
–
–
–
–
(0.5)
0.5
363.2
–
(0.2)
–
2.4
–
–
–
–
–
(0.7)
2.9
363.2
(0.7)
–
–
–
–
–
2.9
–
–
–
–
–
363.2
–
–
–
–
–
–
8,273.3
–
(7.1)
–
14.0
–
416.6
18
19
18
19
–
–
–
–
–
–
–
(81.8)
–
–
–
(28.0)
164.8
(4.2)
325.5
–
–
–
–
–
–
–
–
–
3,414.0
3,414.0
1.6
145.3
–
–
15.9
0.3
5.6
5.6
167.1
–
–
–
–
–
145.3
15.9
0.3
5.6
167.1
7.2
7.2
–
–
–
–
–
–
167.1
3,414.0
3,581.1
(81.8)
81.8
–
–
(560.1)
(560.1)
–
–
(28.0)
164.8
–
–
–
–
109.8
(0.1)
(28.0)
164.8
–
(30.9)
(4.2)
352.7
–
(4.2)
7,866.0 16,424.8
–
–
1,559.9
1,559.9
(2.6)
360.6
–
360.6
–
–
2.4
(0.2)
0.5
0.5
–
–
–
2.4
(0.2)
0.5
(2.1)
363.3
–
363.3
(2.1)
363.3
1,559.9
1,923.2
(115.6)
–
(115.6)
115.6
–
–
–
–
173.6
0.6
384.1
–
–
–
–
–
(564.6)
(564.6)
–
–
173.6
–
–
–
67.4
(0.2)
173.6
–
(33.0)
0.6
774.6
–
0.6
8,976.9 18,024.8
The consolidated statements of changes in equity is to be read in conjunction with the accompanying notes.
For an analysis of equity attributable to non-controlling interests, refer to note 21(b).
92
ANNUAL REPORT 2023
Attributable to Unitholders
Issued
capital
$M
7,849.0
Note
Asset
revaluation
reserve
$M
4.6
Cash flow
hedge
reserve
$M
(4.5)
Foreign
currency
translation
reserve
$M
(220.8)
Employee
compensation
reserve
$M
187.0
Total
reserves
$M
(33.7)
Retained
earnings
$M
2,160.6
Total
$M
9,975.9
GIT
Balance at 1 July 2021
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)
Effect of foreign currency translation
Cash flow hedges:
– Change in value of financial instruments
Increase due to revaluation
of other financial assets
Total other comprehensive income
for the year, net of income tax
Total comprehensive income for the year
Contributions by and distributions to owners
Distributions on ordinary units
Issue of ordinary units
Issue of ordinary units for the LTIP
Issue costs on ordinary units
Equity settled share based
payments transactions
Balance at 30 June 2022
Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)
Effect of foreign currency translation
Cash flow hedges:
– Change in value of financial instruments
Decrease due to revaluation
of other financial assets
Total other comprehensive income
for the year, net of income tax
Total comprehensive income for the year
Contributions by and distributions to owners
Distributions on ordinary units
Issue of ordinary units
Issue of ordinary units for the LTIP
Issue costs on ordinary units
Equity settled share based
payments transactions
Balance at 30 June 2023
–
–
–
–
–
–
18
19(a)
19(a)
–
71.2
234.4
(0.1)
–
–
–
–
–
–
–
18
19(a)
19(a)
–
42.5
158.5
(0.1)
–
–
–
–
(0.2)
(0.3)
222.3
–
5.0
4.8
4.8
–
–
–
–
–
15.9
–
15.6
15.6
–
–
–
–
–
–
–
–
–
222.3
222.3
–
–
–
–
–
1.5
–
0.8
0.4
199.4
–
(15.6)
(14.8)
(14.8)
–
–
–
–
–
2.4
–
2.8
2.8
–
–
–
–
–
–
–
199.4
199.4
–
–
–
–
–
8,154.5
9.4
11.1
The consolidated statements of changes in equity is to be read in conjunction with the accompanying notes.
8,355.4
(5.4)
13.9
200.9
–
–
–
–
–
–
–
–
–
–
–
2,067.6
2,067.6
221.8
15.9
5.0
242.7
–
–
–
–
221.8
15.9
5.0
242.7
242.7
2,067.6
2,310.3
–
–
–
–
(513.8)
–
–
–
(513.8)
71.2
234.4
(0.1)
29.8
29.8
–
29.8
216.8
238.8
3,714.4
12,107.7
–
–
–
–
–
–
–
–
–
–
–
1,138.0
1,138.0
200.6
2.4
(15.6)
187.4
187.4
–
–
–
–
200.6
2.4
(15.6)
187.4
1,138.0
1,325.4
–
–
–
–
(470.5)
–
–
–
(470.5)
42.5
158.5
(0.1)
32.9
249.7
32.9
–
32.9
459.1
4,381.9
13,196.4
93
GOODMAN GROUP
Consolidated cash flow statements
for the year ended 30 June 2023
Goodman
2023
$M
2022
$M
GIT
2023
$M
2022
$M
Note
Cash flows from operating activities
Property income received
Cash receipts from development activities
Cash receipts from management and other activities
Property expenses paid
Payments for development activities
Other cash payments in the course of operations
Distributions received from equity investments,
including Partnerships
Interest received
Finance costs paid
Net income taxes paid
125.2
1,416.7
477.8
(30.1)
(589.6)
(495.5)
583.5
19.5
(59.2)
(164.1)
Net cash provided by operating activities
20(b)
1,284.2
Cash flows from investing activities
Net proceeds from disposal of investment properties
Proceeds from disposal of controlled entities,
net of cash disposed
Net proceeds from disposal of equity investments
Return of capital by Partnerships
Payments for investment properties
Payments for investments in Partnerships
Payments for property, plant and equipment
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Net proceeds from issue of stapled securities
Net cash (outflows)/inflows from loans with related parties
Proceeds from borrowings and derivative financial instruments
Payments on borrowings and derivative
financial instruments
Dividends and distributions paid
Payments of lease liabilities
Purchase of securities to fund LTIP obligations
Net cash (used in)/provided by financing activities
Net increase in cash held
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the year
20(a)
138.4
1,587.8
523.8
(28.6)
(1,220.7)
(456.8)
442.5
9.3
(44.2)
(110.5)
841.0
671.8
0.4
4.4
91.8
(431.7)
(1,332.3)
(5.9)
(1,001.5)
109.7
111.4
629.7
–
352.4
–
(441.2)
(1,243.9)
(13.0)
(716.0)
67.2
(58.0)
1,029.3
1,466.5
(772.0)
(562.1)
(13.2)
–
(308.8)
259.4
1,056.0
44.7
1,360.1
(789.3)
(557.2)
(13.4)
(28.0)
299.7
139.2
920.4
(3.6)
1,056.0
The consolidated cash flow statements are to be read in conjunction with the accompanying notes.
Non-cash transactions are included in note 20(c).
94
29.5
17.5
–
(7.7)
(0.5)
(75.8)
329.0
12.3
(95.1)
(2.1)
207.1
50.8
–
–
(13.9)
(1.1)
(60.4)
245.3
8.9
(32.5)
(1.1)
196.0
629.9
345.6
–
348.8
–
(37.7)
(671.5)
–
269.5
42.5
191.7
712.3
(722.9)
(515.6)
–
–
(292.0)
184.6
473.6
31.7
689.9
–
22.6
20.9
(15.1)
(1,050.0)
–
(676.0)
71.1
279.6
1,456.4
(787.4)
(446.6)
–
–
573.1
93.1
379.8
0.7
473.6
Notes to the consolidated financial statements
ANNUAL REPORT 2023
BASIS OF PREPARATION
This section sets out the general basis upon which Goodman and
GIT have prepared their financial statements and information that
is disclosed to comply with the Australian Accounting Standards,
Corporations Act 2001 or Corporations Regulations.
Specific accounting policies can be found in the sections to which
they relate.
Goodman Limited and Goodman Industrial Trust are for-profit entities
domiciled in Australia.
Statement of compliance
These consolidated financial statements are general purpose financial
statements which have been prepared in accordance with Australian
Accounting Standards adopted by the Australian Accounting Standards
Board (AASB) and the Corporations Act 2001. International Financial
Reporting Standards (IFRS) form the basis of Australian Accounting
Standards adopted by the AASB. The consolidated financial statements
also comply with IFRS.
The consolidated financial statements are presented in Australian dollars
and were authorised for issue by the Directors on 17 August 2023.
The consolidated financial statements are prepared on the historical
cost basis, subject to any impairment of assets, except that the following
assets and liabilities are stated at fair value:
+
Investment properties
+ Derivative financial instruments
+
Investments in unlisted securities
+ Liabilities for cash settled share-based payment arrangements.
In accordance with ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191, amounts in these consolidated financial
statements have been rounded to the nearest hundred thousand dollars,
unless otherwise stated.
Foreign currency translation
Functional and presentation currency
Items included in the consolidated financial statements of each of the
controlled entities are measured using the currency of the primary economic
environment in which the entity operates (functional currency). The
consolidated financial statements are presented in Australian dollars, which is
the Company’s and the Trust’s functional and presentation currency.
Basis of preparation of the consolidated financial reports
Transactions
Shares in the Company, units in the Trust and CDIs over shares in
GLHK are stapled to one another and are quoted as a single security
on the ASX. Australian Accounting Standards require an acquirer to be
identified and an in-substance acquisition to be recognised. In relation
to the stapling of the Company, the Trust and GLHK, the Company is
identified as having acquired control over the assets of the Trust and
GLHK. In the consolidated statement of financial position of the Group,
equity attributable to the Trust and the CDIs over the shares of GLHK are
presented as non-controlling interests.
As permitted by the relief provided in ASIC Instrument 20-0568,
these financial statements present both the financial statements and
accompanying notes of Goodman and GIT. GLHK, which is incorporated
and domiciled in Hong Kong, prepares its financial statements under Hong
Kong Financial Reporting Standards and the applicable requirements
of the Hong Kong Companies Ordinance and accordingly the financial
statements of GLHK have not been combined and included as adjacent
columns in this report. The financial statements of GLHK have been
included as an appendix to this report.
Foreign currency transactions are translated to each entity’s functional
currency at rates approximating to the foreign exchange rates ruling at
the dates of the transactions. Amounts receivable and payable in foreign
currencies at the balance date are translated at the rates of exchange
ruling on that date. Resulting exchange differences are recognised in the
income statement.
Non-monetary assets and liabilities that are measured in terms of
historical cost are translated at rates of exchange applicable at the date
of the initial transaction. Non-monetary items which are measured at fair
value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined.
Translation of controlled foreign operations
The assets and liabilities of controlled foreign operations are translated
into Australian dollars at foreign exchange rates ruling at the balance date.
Revenue and expenses are translated at weighted average rates for
the financial year. Exchange differences arising on translation are taken
directly to the foreign currency translation reserve. On cessation of
operations in a foreign region, the cumulative exchange differences relating
to the operations in that region, that have been included in the foreign
currency translation reserve, are reclassified to the income statement.
Exchange differences arising on monetary items that form part of the net
investment in a controlled foreign operation are recognised in the foreign
currency translation reserve on consolidation.
95
GOODMAN GROUP
Notes to the consolidated financial statements
Basis of preparation (continued)
Exchange rates used
Australian Accounting Standards issued but not yet effective
The following exchange rates are the main exchange rates used in
translating foreign currency transactions, balances and financial
statements to Australian dollars:
Weighted average
As at 30 June
Australian dollar (AUD) to
2023
2022
2023
2022
New Zealand dollar (NZD)
1.0927
1.0667
1.0871
1.1057
Hong Kong dollar (HKD)
5.2751
5.6626
5.2235
5.4241
Chinese yuan (CNY)
Japanese yen (JPY)
Euro (EUR)
4.6804
4.6840
4.8339
4.6154
92.3936 85.1512
96.1530
93.7770
0.6433
0.6442
0.6109
0.6594
British pound sterling (GBP)
0.5592
0.5456
0.5249
0.5676
United States dollar (USD)
0.6731
0.7255
0.6664
0.6912
Brazilian real (BRL)
3.4743
3.8037
3.1911
3.5905
Changes in accounting policies
The Group has adopted Amendments to AASB 112 – International Tax
Reform – Pillar Two Model Rules, which was effective from 29 June
2023. The amendments provide a temporary mandatory exception from
deferred tax accounting for the top-up tax, which is effective immediately
and require new disclosures about the Pillar Two exposure from 30
June 2024. The mandatory exception applies retrospectively. However,
because no new legislation to implement the top-up tax was enacted or
substantively enacted at 30 June 2023 in any jurisdiction in which the
Group operates and no related deferred taxes were recognised at that
date, the retrospective application has no impact on the Group’s financial
statements at 30 June 2023.
The AASB has also issued other amendments to standards that were first
effective from 1 July 2022 but none of these had a material impact on the
Group’s financial statements.
The Group has not applied any new or amended standard that is not
yet effective but available for early application in the current accounting
period. None of the new or amended accounting standards are expected
to have a significant impact on the future results of the Group.
Critical accounting estimates used in the preparation of the
consolidated financial statements
The preparation of consolidated financial statements requires estimates
and assumptions concerning the application of accounting policies and
the future to be made by Goodman. Estimates are continually evaluated
and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under
the circumstances.
The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities
within the next financial year can be found in the following notes:
+ Note 5 – Property assets
+ Note 13 – Goodwill and intangible assets
+ Note 17 – Financial risk management.
The accounting impacts of revisions to estimates are recognised in the
period in which the estimate is revised and in any future periods affected.
Measurement of fair values
A number of Goodman’s accounting policies and disclosures require the
measurement of fair values, for both financial and non-financial assets
and liabilities.
When measuring the fair value of an asset or a liability, Goodman uses
market observable data as far as possible. Fair values are categorised into
different levels in a fair value hierarchy and have been defined as follows:
+
+
+
Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Further information about the assumptions made in measuring fair values
is included in the following notes:
+ Note 5 – Property assets
+ Note 17 – Financial risk management.
96
ANNUAL REPORT 2023
RESULTS FOR THE YEAR
Management income
The notes in this section focus on the significant items in the income
statement, and include the profit per security, analysis of the results
by operating segment and taxation details.
1
Profit before income tax
Gross property income
Gross property income comprises rental income under operating leases
(net of incentives provided) and amounts billed to customers for outgoings
(e.g. rates, levies, cleaning, security, etc). Amounts billed to customers for
outgoings are a cost recovery for Goodman and are recognised once the
expense has been incurred. The expense is included in property expenses.
Rental income under operating leases is recognised on a straight-line basis
over the term of the lease contract. Where operating lease rental income is
recognised relating to fixed increases in rentals in future years, an asset is
recognised. This asset is a component of the relevant investment property
carrying amount. The cost of lease incentives provided to customers is
amortised on a straight-line basis over the life of the lease as a reduction
of gross property income.
Management and development income
The revenue from management and development activities is measured
based on the consideration specified in a contract with a customer.
Goodman recognises revenue when it transfers control over a product
or service to a customer.
Fee income derived from management services relates to investment
management base fees and property services fees and is recognised and
invoiced progressively as the services are provided. Customers make
payments usually either monthly or quarterly in arrears.
Performance related management income generally relates to portfolio
performance fee income, which is recognised progressively as the
services are provided but only when the income can be reliably measured
and is highly probable of not being reversed. These portfolio performance
fees are typically dependent on the overall returns of a Partnership
relative to an agreed benchmark return, assessed over the life of the
Partnership, which can vary from one year to seven years. The returns
are impacted by operational factors such as the quality and location
of the portfolio, active property management, rental income rates and
development activity but can also be significantly affected by changes in
global and local economic conditions. Accordingly, portfolio performance
fee revenue is only recognised towards the end of the relevant
assessment period, as prior to this revenue recognition is not considered
to be sufficiently certain.
In determining the amount of revenue that can be reliably measured,
management prepares a sensitivity analysis to understand the impact
of changes in asset valuations on the potential performance fee at
the assessment date. The assessment of revenue will depend on the
prevailing market conditions at the reporting date relative to long-term
averages and also the length of time until the assessment date e.g. the
longer the time period to assessment date, the greater the impact of the
sensitivity analysis. The potential portfolio performance fee revenue
is then recognised based on the length of time from the start of the
assessment period to the reporting date as a proportion of the total
assessment period. Where the income is attributable to development
activities or it relates to a combination of inextricable management and
development activities that have occurred over the performance fee
period, then it is reported as development income; otherwise, the income
is reported as management income. The Partnerships make payments
in respect of portfolio performances fees at the end of the performance
periods once the attainment of the conditions has been verified and the
amount of the fee has been agreed by all parties.
97
GOODMAN GROUP
Notes to the consolidated financial statements
Results for the year (continued)
1 Profit before income tax (continued)
Development income – disposal of inventories
Net gain on disposal of investment properties
The disposal of inventories is recognised at the point in time when control
over the property asset is transferred to the customer. This will generally
occur on transfer of legal title and payment in full by the customer. The
gain or loss on disposal of inventories is calculated as the difference
between the carrying amount of the asset at the time of disposal and
the proceeds on disposal (less transaction costs) and is included in the
income statement in the period of disposal.
Development income – development management services
Fee income from development management services (including master-
planning, development management and overall project management)
is recognised progressively as the services are provided in proportion
to the stage of completion by reference to costs. Payments are received
in accordance with the achievement of agreed milestones over the
development period. The development period can exceed 24 months for
larger, more complex projects.
Performance related development income includes income associated
with the returns from individual developments under the Group’s
management and performance fee income that relates to development
activity. Income in respect of individual developments is recognised by
Goodman on attainment of the performance related conditions, which
is when the income can be reliably measured and is highly probable of
not being reversed. These amounts are paid by the Partnership when
the amounts have been measured and agreed. Income associated with
development activities as part of a portfolio assessment is recognised on
the same basis as outlined above in the management income section.
Development income – fixed price development contracts
Certain development activities are assessed as being fixed price
development contracts. This occurs when a signed contract exists,
either prior to the commencement of or during the development phase,
to acquire a development asset from Goodman on completion. Revenue
and expenses relating to these development contracts are recognised
in the income statement in proportion to the stage of completion of the
relevant contracts by reference to costs. The payments by the purchaser
usually occur on completion of the development once legal title has been
transferred, but payments may be made during the development period
on achievement of agreed milestones. The development period can
exceed 24 months for larger, more complex projects.
The disposal of an investment property is recognised at the point in time
when control over the property has been transferred to the purchaser.
Employee expenses
Wages, salaries and annual leave
Wages and salaries, including non-monetary benefits, and annual
leave represent present obligations resulting from employees’ services
provided to the balance date. These are calculated at undiscounted
amounts based on rates that are expected to be paid as at balance date
including related on-costs, such as insurances and payroll tax.
Bonuses
A liability is recognised in other payables and accruals for bonuses where
there is a contractual obligation or where there is a past practice that has
created a constructive obligation. Liabilities for bonuses are measured at
the amounts expected to be paid, including related on-costs, when they
are settled.
Superannuation
Defined contribution funds
Obligations for contributions to defined contribution funds are recognised
as an expense as incurred.
Defined benefit retirement schemes
The net obligation in respect of defined benefit retirement schemes
is recognised in the statement of financial position and is calculated
separately for each plan by estimating the amount of future benefit that
employees have earned in the current and prior periods, discounting that
amount and deducting the fair value of any plan assets. The calculation of
defined benefit obligations is performed annually by a qualified actuary
using the projected unit credit method. Remeasurements of the net
defined benefit liability, which comprise actuarial gains and losses and the
return on plan assets (excluding interest), are recognised immediately in
other comprehensive income. Net interest expense and other expenses
related to defined benefit retirement schemes are recognised in the
income statement.
98
Profit before income tax has been arrived at after crediting/(charging) the following items:
Goodman
2023
$M
Note
Gross property income
Rental income
Recovery of property outgoings
Gross property income
Management activities
Management services
Performance related income
Management income
Development activities
Income from disposal of inventories
Income from fixed price development contracts
Other development income, including development management1
Net gain on disposal of assets held for sale
Net gain on disposal of special purpose
development entities, including JVs
Development income
Inventory cost of sales
Other development expenses
Development expenses
Disposal of equity investments
Net consideration from disposal of associates and JVs
Carrying value of associates and JVs disposed
5(f)
Net gain on disposal of equity investments
Employee expenses
Wages, salaries and on–costs
Annual and long service leave
Superannuation costs
Employee expenses
Share based payments expense
Equity settled share based payments expense
Cash settled share based payments expense
Other share based payments related costs
Share based payments expense
Amortisation and depreciation
2022
$M
120.9
17.1
138.0
380.5
130.9
511.4
803.0
206.8
388.3
–
43.5
1,441.6
(381.8)
(173.1)
(554.9)
8.5
(8.3)
0.2
(251.4)
(0.6)
(6.9)
110.4
12.4
122.8
438.7
0.2
438.9
706.9
231.9
440.2
4.3
23.9
1,407.2
(420.7)
(186.0)
(606.7)
–
–
–
(265.7)
2.1
(8.0)
(271.6)
(258.9)
(173.6)
(85.7)
(26.7)
(286.0)
(16.7)
(164.8)
(57.3)
(35.5)
(257.6)
(17.1)
ANNUAL REPORT 2023
GIT
2023
$M
22.1
5.3
27.4
–
–
–
18.3
–
–
4.3
–
22.6
(6.7)
–
(6.7)
–
–
–
–
–
–
–
–
–
–
–
–
2022
$M
41.4
10.3
51.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.
Fee revenues from single contractual arrangements involving a combination of inextricable investment management and development management services and recognised over the life of the
underlying development projects are classified as development income for statutory reporting purposes. During the year, $41.7 million (2022: $77.0 million) of such income was recognised.
99
GOODMAN GROUP
Notes to the consolidated financial statements
Results for the year (continued)
2 Profit per security
Basic profit per security of the Group is calculated by dividing the profit attributable to the Securityholders by the weighted average number of
securities outstanding during the year. Diluted profit per security is determined by adjusting the profit attributable to the Securityholders and weighted
average number of securities outstanding for all dilutive potential securities, which comprise performance rights issued under the LTIP.
Goodman
Profit per security
Basic profit per security
Diluted profit per security
Profit after tax of $1,559.9 million (2022: $3,414.0 million) was used in calculating basic and diluted profit per security.
Weighted average number of securities used in calculating basic and diluted profit per security:
Weighted average number of securities used in calculating basic profit per security
Effect of performance rights on issue
2023
¢
83.0
81.3
2022
¢
183.2
178.8
2023
2022
Number of securities
1,878,611,049
1,863,693,802
40,542,511
45,396,402
Weighted average number of securities used in calculating diluted profit per security
1,919,153,560
1,909,090,204
The calculation of profit per security is not required for GIT.
Goodman Limited
Under Australian Accounting Standards, the issued units of the Trust and the CDIs over the shares of GLHK are presented as non-controlling interests.
As a consequence, the Directors are required to present a profit per share and a diluted profit per share based on Goodman Limited’s consolidated
result after tax but excluding the results attributable to the Trust and GLHK.
Profit per Goodman Limited share
Basic profit per Goodman Limited share
Diluted profit per Goodman Limited share
2023
¢
15.3
15.0
2022
¢
29.7
28.9
Profit after tax of $288.2 million (2022: $552.6 million) was used in calculating basic and diluted profit per Goodman Limited share.
100
3 Segment reporting
An operating segment is a component of Goodman that engages in
business activities from which it may earn revenues and incur expenses.
Goodman reports the results and financial position of its operating
segments based on the internal reports regularly reviewed by the Group
Chief Executive Officer in order to assess each segment’s performance
and to allocate resources to them.
Operating segment information is reported on a geographic basis and
Goodman has determined that its operating segments are Australia
and New Zealand (reported on a combined basis), Asia (Greater China
(including the Hong Kong SAR) and Japan), Continental Europe (with the
majority of assets located in Germany, France, Spain and Netherlands),
the United Kingdom and the Americas (principally North America and
including Brazil).
The activities and services undertaken by the operating segments include:
+
Property investment, through both direct ownership and cornerstone
investments in Partnerships
+ Management activities, both investment and property management
+
Development activities, including development of directly owned
assets (predominantly disclosed as inventories) and management
of development activities for Partnerships.
The segment results that are reported to the Group Chief Executive
Officer are based on profit before net finance expense and income tax
expense, and also exclude non-cash items such as fair value adjustments
and impairments, corporate expenses and share-based remuneration.
The assets allocated to each operating segment are the property assets,
including the investments in Partnerships and trade and other receivables
associated with the operating activities, but exclude inter-entity funding,
income tax receivables and corporate assets. The liabilities allocated
to each operating segment primarily relate to trade and other payables
associated with the operating activities, but exclude interest bearing
liabilities, derivative financial instruments, provisions for distributions and
corporate liabilities.
The accounting policies used to report segment information are the
same as those used to prepare the consolidated financial statements
of Goodman and GIT.
For the purpose of operating segment reporting, there are no material
intersegment revenues and costs.
Information regarding the operations of each reportable segment
is included on the following pages.
ANNUAL REPORT 2023
101
GOODMAN GROUP
Notes to the consolidated financial statements
Results for the year (continued)
3 Segment reporting (continued)
Information about reportable segments
Goodman
Income statement
External revenues
Gross property income
Management income
Development income
Australia and
New Zealand
Asia
Continental
Europe
United Kingdom
Americas
Total
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
66.3
176.1
90.4
256.2
238.0
207.6
29.8
156.8
125.0
15.4
131.3
22.8
57.5
27.5
91.0
0.7
7.5
3.0
5.7
3.2
41.0
192.0
742.2
891.9
93.8
32.8
208.2
1.7
27.2
117.3
122.8
438.9
138.0
511.4
1,407.2
1,441.6
Total external revenues
480.4
554.2
311.6
338.7
822.5
1,010.4
102.0
41.5
252.4
146.2
1,968.9
2,091.0
Analysis of external revenues
Revenue from contracts
with customers
Assets and services
transferred at a point in time
Assets and services
transferred over time
Other revenue
Rental income (excludes
outgoings recoveries)
194.6
71.7
28.0
25.0
534.4
792.0
33.7
12.8
–
–
790.7
901.5
227.6
405.2
256.1
299.5
267.3
193.7
67.6
25.7
249.1
144.5
1,067.8
1,068.6
58.2
77.3
27.5
14.2
20.8
24.7
0.7
3.0
3.2
1.7
110.4
120.9
Total external revenues
480.4
554.2
311.6
338.7
822.5 1,010.4
102.0
41.5
252.3
146.2
1,968.9
2,091.0
Reportable segment
profit before tax
Share of net results of equity
accounted investments
Material non-cash items
not included in reportable
segment profit before tax
Net gain/(loss) from
fair value adjustments
on investment properties
Share of net gain/(loss) from
fair value adjustments in equity
accounted investments
869.5
616.9
310.3
386.4
392.7
582.5
172.1
41.1
343.7
210.8
2,088.3
1,837.7
464.5
1,171.5
28.5
215.4
(100.1)
174.9
(117.6)
213.6
747.9
942.8
1,023.2
2,718.2
279.3
260.4
(0.4)
(0.3)
–
–
–
–
–
–
278.9
260.1
292.5
1,012.0
(52.2)
96.2
(146.2)
119.9
(152.5)
203.8
598.6
839.3
540.2
2,271.2
Australia and
New Zealand
Asia
Continental
Europe
United Kingdom
Americas
Total
Statement of financial position
2023
$M
2022
$M
2023
$M
2022
$M
2023
$MM
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
Reportable segment assets
9,070.8 8,106.2 4,592.0 4,162.0 2,634.4 2,779.7 1,049.5 1,024.9 5,350.3 4,030.8 22,697.0 20,103.6
Included in reportable
segment assets are:
Investment properties
Investments accounted for
using the equity method
882.5 1,086.9
451.7
336.8
–
–
–
–
310.6
–
1,644.8
1,423.7
6,666.0 5,709.6 3,231.5 3,102.8
964.6 1,020.7
586.6
680.6 4,825.4 3,865.9
16,274.1
14,379.6
Non-current assets
7,968.1
7,195.8 4,243.2 3,888.8 2,347.6 2,483.6 926.8
966.6 5,154.6 3,876.3 20,640.3 18,411.1
Additions to non-current
assets include:
– Investment properties
– Investments accounted for
using the equity method
974.6
455.8
213.2
159.7
15.6
63.3
Reportable segment liabilities
432.7
129.9
278.2
268.6
139.8
122.6
102
31.7
22.9
101.4
181.2
–
–
–
243.7
307.5
–
440.6
447.8
138.0
38.3
162.1
167.6
431.3
1,509.0
1,272.2
94.5
434.9
319.5
1,323.9
935.1
ANNUAL REPORT 2023
GIT
Income statement
External revenues
Gross property income
Development income
Distributions from investments
Total external revenues
Analysis of external revenues
Revenue from contracts
with customers
Assets and services
transferred a point in time
Assets and services
transferred over time
Other revenue
Rental income (excludes
outgoings recoveries)
Distributions from investments
Total external revenues
Reportable segment
profit before tax
Share of net results of equity
accounted investments
Material non–cash items
not included in reportable
segment profit before tax
Net gain from fair
value adjustments on
investment properties
Share of net gain/(loss) from
fair value adjustments in equity
accounted investments
Australia and
New Zealand
Asia
Continental Europe
Americas
Total
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
27.4
22.6
–
50.0
51.7
–
–
51.7
22.6
–
5.3
10.3
22.1
–
50.0
41.4
–
51.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
27.7
27.7
–
–
–
27.7
27.7
–
–
5.6
5.6
–
–
–
5.6
5.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2022
$M
51.7
–
5.6
57.3
27.4
22.6
27.7
77.7
22.6
–
5.3
10.3
22.1
27.7
77.7
41.4
5.6
57.3
175.1
239.7
33.7
34.5
63.9
57.3
126.9
91.0
399.6
422.5
488.3
1,053.0
(39.8)
66.4
(90.2)
144.9
720.8
908.7
1,079.1
2,173.0
229.0
208.3
–
–
–
–
–
–
229.0
208.3
345.3
917.7
(76.3)
31.7
(122.1)
97.5
577.0
808.8
723.9
1,855.7
Australia and
New Zealand
Asia
Continental Europe
Americas
Total
Statement of
financial position
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
Reportable segment assets
6,795.3
6,178.8
1,739.4
1,719.4
801.7
878.5
4,693.3
3,736.5
14,030.2
12,513.1
Included in reportable
segment assets are:
Investment properties
Investments accounted for
using the equity method
234.4
495.3
–
–
–
–
–
–
234.4
495.3
5,826.0
5,054.0
1,739.9
1,719.4
795.2
856.4
4,651.2
3,726.3
13,012.3
11,356.1
Non–current assets
6,060.4
5,555.1
1,739.9
1,719.4
801.0
877.8
4,651.2
3,726.3
13,252.5
11,878.6
Additions to non–current
assets include:
– Investment properties
– Investments accounted
for using the equity method
25.7
17.6
756.2
509.9
Reportable segment liabilities
346.2
45.2
–
31.0
–
–
35.5
–
–
–
–
–
–
–
25.7
17.6
61.9
161.6
415.7
948.8
1,023.0
–
376.5
269.5
722.7
314.7
103
GOODMAN GROUP
Notes to the consolidated financial statements
Results for the year (continued)
3 Segment reporting (continued)
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities
Revenues
Total revenues for reportable segments
Total revenues for other segments
Consolidated revenues
Profit or loss
Total profit before tax for reportable segments
Property investment earnings
Management earnings
Development earnings1,2
Operating expenses allocated to reportable segments
Reportable segment profit before tax
Corporate expenses not allocated to reportable segments
Valuation and other items not included
in reportable segment profit before tax:
– Net gain from fair value adjustments
on investment properties
– Share of fair value adjustments attributable
to investment properties in Partnerships
– Share of fair value adjustments on derivative
financial instruments in Partnerships
– Share based payments expense
– Straight lining of rental income
and tax deferred adjustments
– Realisation of prior years' property
valuation gains, net of deferred tax1
Profit before interest and tax
Net finance expense2
Consolidated profit before income tax
Assets
Assets for reportable segments
Cash
Other unallocated amounts3
Consolidated total assets
Liabilities
Liabilities for reportable segments
Interest bearing liabilities
Provisions for dividends/distributions to Securityholders
Other unallocated amounts3
Consolidated total liabilities
Note
Goodman
2023
$M
2022
$M
GIT
2023
$M
1,968.9
–
1,968.9
531.4
480.6
1,301.2
(224.9)
2,088.3
(147.6)
1,940.7
278.9
544.7
(4.5)
(286.0)
14.9
(511.8)
1,976.9
(234.8)
1,742.1
22,697.0
590.0
740.2
24,027.2
1,323.9
3,292.9
282.5
1,103.1
6,002.4
2,091.0
0.8
2,091.8
494.6
588.4
960.7
(206.0)
1,837.7
(143.3)
1,694.4
260.1
2,272.9
(1.7)
(257.6)
(1.0)
–
3,967.1
(229.0)
3,738.1
20,103.6
649.4
679.4
21,432.4
935.1
2,832.2
280.0
960.3
5,007.6
5(e)
5(f)
5(f)
1
14
18
77.7
–
77.7
400.2
–
–
(0.6)
399.6
(73.9)
325.7
229.0
716.5
7.4
–
15.6
–
1,294.2
(57.1)
1,237.1
14,030.2
448.6
3,660.2
18,139.0
722.7
2,982.8
188.4
1,048.7
4,942.6
2022
$M
57.3
0.8
58.1
422.5
–
–
–
422.5
(59.1)
363.4
208.3
1,849.0
6.7
–
4.9
–
2,432.3
(231.6)
2,200.7
12,513.3
450.6
3,618.3
16,582.2
314.7
2,825.4
233.5
1,100.9
4,474.5
1.
Realisation of prior years' property valuation gains, net of deferred tax is a non-IFRS measure and relates to the Group’s share of realised valuation gains on repositioned properties (both directly and
indirectly owned) that have transacted during the year. During FY23, $511.8 million of these realised valuation gains have been included in development earnings and as at 30 June 2023, the Group’s
share of unrealised valuation gains since the repositioning activities commenced was $271.3 million (30 June 2022: $429.6 million). Refer to page 23 of the Directors report for further details.
2. In the prior year, development earnings included $6.2 million of interest income from a loan to a development JV. The interest income is reported under finance income in note 14.
3. Other unallocated amounts in Goodman and GIT included other financial assets and liabilities, deferred tax assets, tax payables and provisions which did not relate to the reportable segments.
Additionally, other unallocated assets and liabilities in GIT included loans due from/to controlled entities of Goodman.
104
ANNUAL REPORT 2023
4 Taxation
Income tax for the period comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax
assets and liabilities are recognised in the income statement except to the extent that they relate to items recognised directly in equity, in which case
the relevant amounts of tax are recognised directly in equity.
Current tax is the expected tax payable on the taxable income for the financial year and any adjustment to tax payable in respect of previous financial years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not accounted for:
+ Goodwill
+ The initial recognition of assets or liabilities that affect neither accounting nor taxable profit
+ Differences relating to investments in controlled entities to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities.
Deferred tax assets or liabilities in respect of investment properties held at fair value are calculated on the presumption that the carrying amount
of the investment property will be recovered through sale. A deferred tax asset is recognised only to the extent that it is probable that future taxable
profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Additional income taxes that arise from dividends/distributions are recognised at the same time as the liability to pay the related dividends/distributions.
(a) Amounts recognised in the income statement
Current tax expense recognised in the income statement
Current year
Changes in estimates related to prior years
Current tax expense
Deferred tax expense recognised in the income statement
Origination and reversal of temporary differences
Deferred tax expense
Total income tax expense recognised in the income statement
Goodman
GIT
2023
$M
(141.8)
7.2
(134.6)
(47.6)
(47.6)
(182.2)
2022
$M
(142.4)
7.3
(135.1)
(189.0)
(189.0)
(324.1)
2023
$M
(2.9)
–
(2.9)
(96.2)
(96.2)
(99.1)
2022
$M
(6.0)
–
(6.0)
(127.1)
(127.1)
(133.1)
105
GOODMAN GROUP
Notes to the consolidated financial statements
Results for the year (continued)
4 Taxation (continued)
(b) Reconciliation of profit before income tax to income tax expense
Profit before income tax
Prima facie income tax expense calculated at 30% (2022: 30%) on the profit before income tax
Decrease/(increase) in income tax due to:
– Profit attributable to GIT Unitholders
– Current year losses for which no deferred tax asset was recognised
– Other (non-deductible)/non-assessable items, net
– Benefit of previously unrecognised temporary differences, including tax losses
– Difference in overseas tax rates
– Changes in estimates related to prior years
– Taxes on Partnership income
– Other items
Income tax expense
GIT
Goodman
2023
$M
1,742.1
(522.6)
333.0
(8.8)
(61.0)
128.3
50.1
7.2
(108.6)
0.2
(182.2)
2022
$M
3,738.1
(1,121.4)
680.4
(36.8)
168.7
95.7
23.6
7.3
(149.7)
8.1
(324.1)
The income tax expense recorded by GIT relates to withholding taxes on actual distributions and deferred taxes on potential future distributions from
Partnerships. Refer to note 4(e).
(c) Current tax receivables/payables
Goodman
2023
$M
2022
$M
(169.5)
(144.0)
164.1
(134.6)
(18.3)
(158.3)
11.9
(170.2)
(158.3)
110.5
(135.1)
(0.9)
(169.5)
3.9
(173.4)
(169.5)
Net income tax payable
Net income tax payable at the beginning of the year
Decrease/(increase) in current tax payable due to:
– Net income taxes paid
– Current tax expense
– Other
Net income tax payable at the end of the year
Current tax receivables (refer to note 6)
Current tax payables
106
ANNUAL REPORT 2023
(d) Deferred tax assets and liabilities
Deferred tax assets/(liabilities) are attributable to the following:
Investment properties1
LTIP
Other items
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Goodman
Deferred tax assets
Deferred tax liabilities
2023
$M
–
68.8
20.4
89.2
(45.3)
43.9
2022
$M
–
39.3
19.9
59.2
(34.0)
25.2
2023
$M
(493.6)
–
(9.9)
(503.5)
45.3
(458.2)
2022
$M
(403.4)
–
(10.9)
(414.3)
34.0
(380.3)
1.
Including withholding tax on potential future distributions from the disposal of investment properties by Partnerships.
Movements in deferred taxes recognised in expenses and equity are attributable to the following:
Deferred tax (expense)/benefit recognised in expenses
Investment properties – fair value adjustments
LTIP
Other items
Total deferred tax expense recognised in expenses
Deferred tax (expense)/benefit recognised in equity
LTIP
Other items
Total deferred tax benefit/(expense) recognised in equity
Goodman
2023
$M
2022
$M
(47.7)
28.9
(28.8)
(47.6)
0.6
–
0.6
(206.7)
16.2
1.5
(189.0)
(4.2)
–
(4.2)
Total deferred tax movements recognised in expenses and equity
(47.0)
(193.2)
Deferred tax assets of $281.8 million (2022: $266.9 million) arising primarily from tax losses (revenue and capital in nature) and deductions associated
with the LTIP have not been recognised by Goodman.
GIT
At 30 June 2023, deferred tax liabilities of $375.0 million (2022: $267.9 million) have been recognised in relation to withholding tax on potential future
distributions from the disposal of investment properties by Partnerships.
(e) Taxation of GIT
Under current Australian income tax legislation, the Trust is not liable for income tax, including capital gains tax, provided that Securityholders
are presently entitled to the distributable income of the Trust as calculated for trust law purposes. The controlled entities of the Trust that operate
in certain foreign jurisdictions are liable to pay tax in those jurisdictions.
107
GOODMAN GROUP
Notes to the consolidated financial statements
Investment property carrying values include the costs of acquiring the
assets and subsequent costs of development, including costs of all labour
and materials used in construction, costs of managing the projects, holding
costs and borrowing costs incurred during the development periods.
Amounts provided to customers as lease incentives and assets relating
to fixed rental income increases in operating lease contracts are included
within investment property values. Lease incentives are amortised over the
term of the lease on a straight-line basis. Direct expenditure associated with
leasing a property is also capitalised within investment property values and
amortised over the term of the lease.
Classification of investment properties
Investment properties are classified as either properties under development
or stabilised properties. Investment properties under development
include land, new investment properties in the course of construction and
investment properties that are being redeveloped. Stabilised investment
properties are all investment properties not classed as being under
development and would be completed properties that are leased or are
available for lease to customers.
For investment properties under development, the carrying values are
reviewed by management at each reporting date to consider whether they
reflect the fair value and at completion external valuations are obtained to
determine the fair values.
For stabilised investment properties, independent valuations are obtained
at least every two years to determine the fair values. At each reporting date
between obtaining independent valuations, the carrying values are reviewed
by management to ensure they reflect the fair values.
Deposits for investment properties
Deposits and other costs associated with acquiring investment properties
that are incurred prior to obtaining legal title are recorded at cost and
disclosed as other receivables in the statement of financial position.
OPERATING ASSETS AND LIABILITIES
The notes in this section focus on Goodman’s property assets,
working capital and goodwill and intangible assets.
5 Property assets
(a) Principles and policies
Investment in property assets includes both inventories and investment
properties (including those under development), which may be held either
directly or through investments in Partnerships (both associates and JVs).
Inventories
Inventories relate to land and property developments that are held for
sale or development and sale in the normal course of the Group’s
business. Inventories are carried at the lower of cost or net realisable value.
The calculation of net realisable value requires estimates and assumptions
which are regularly evaluated and are based on historical experience
and expectations of future events that are believed to be reasonable under
the circumstances.
Inventories are classified as non-current assets unless they are contracted
to be sold within 12 months of the end of the reporting period, in which case
they are classified as current assets.
Investment properties
Investment properties comprise investment interests in land and
buildings held for the purpose of leasing to produce rental income and/or
for capital appreciation. Investment properties are carried at fair value.
The calculation of fair value requires estimates and assumptions which
are continually evaluated and are based on historical experience and
expectations of future events that are believed to be reasonable under
the circumstances. Investment properties are not depreciated as they
are subject to continual maintenance and regularly revalued on the basis
described below. Changes in the fair value of investment properties are
recognised directly in the income statement.
Components of investment properties
Land and buildings (including integral plant and equipment) comprising
investment properties are regarded as composite assets and are
disclosed as such in the consolidated financial report.
108
ANNUAL REPORT 2023
GIT
2023
$M
–
–
–
515.3
25.2
209.2
234.4
7,291.9
5,720.4
13,012.3
13,246.7
2022
$M
–
5.9
5.9
609.3
358.3
137.0
495.3
6,814.4
4,541.7
11,356.1
11,857.3
(b) Summary of investment in property assets
Inventories
Land and development properties – current
Land and development properties – non-current
Assets held for sale
Investment properties
Investment properties
Stabilised investment properties
Investment properties under development
Investments accounted for using the equity method
Associates
JVs
5(e)
5(f)(i)
5(f)(ii)
Total property assets
(c) Estimates and assumptions in determining property carrying values
Inventories
Note
5(d)
5(d)
Goodman
2023
$M
464.2
1,781.3
2,245.5
2022
$M
389.0
1,727.1
2,116.1
8
515.3
609.3
1,125.3
519.5
1,644.8
8,315.4
7,969.8
16,285.2
20,690.8
1,286.6
137.1
1,423.7
7,850.7
6,528.9
14,379.6
18,528.7
For both inventories held directly and inventories held in Partnerships, external valuations are not performed but instead valuations are determined
using the feasibility studies supporting the land and property developments. The end values of the developments in the feasibility studies are based on
assumptions such as capitalisation rates, letting up periods, rental income and incentives that are consistent with those observed in the relevant market.
If the feasibility study calculations indicate that the forecast cost of a completed development will exceed the net realisable value, then the inventories
are impaired.
Investment properties
Stabilised investment properties
The fair value of stabilised investment properties is based on current prices in an active market for similar properties in the same location and
condition and subject to similar lease and other contracts. The current price is the estimated amount for which a property could be exchanged
between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgably,
prudently and without compulsion.
Approach to determination of fair value
The approach to determination of fair value of investment properties is applied to both investment properties held directly and investment properties
held in Partnerships.
Valuations are determined based on assessments and estimates of uncertain future events, including upturns and downturns in property markets
and availability of similar properties, vacancy rates, market rents and capitalisation and discount rates. Recent and relevant sales evidence and other
market data are taken into account. Valuations are either based on an external independent valuation or on an internal valuation.
External valuations are undertaken only where market segments were observed to be active. In making the determination of whether a market
segment is active, the following characteristics are considered:
+ Function of the asset (distribution/warehouse or suburban office)
+ Location of asset (city, suburb or regional area)
+
+
Carrying value of the asset (categorised by likely appeal to private (including syndicates), national and/or institutional investors)
Categorisation as primary or secondary based on a combination of location, weighted average lease expiry, quality of tenant covenant (internal
assessment based on available market evidence) and age of construction.
Each property asset is assessed and grouped with assets in the same or similar market segments. Information on all relevant recent sales is also
analysed using the same criteria to provide a comparative set. The number of sales and the circumstances of each sale are assessed to determine
whether a market segment is active or inactive.
109
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
5 Property assets (continued)
Where a market segment is observed to be active, then external
independent valuations are instructed for stabilised investment
properties where there has been a combination of factors that are likely
to have resulted in a material movement in valuation. The considerations
include a greater than 10% movement in market rents, more than a
25 basis point movement in capitalisation rates, a material change in
tenancy profile (including changes in the creditworthiness of a significant
customer that may have a material impact on the property valuation),
significant capital expenditure, a change in use (or zoning), a development
has reached completion/stabilisation of the asset or it has been two years
since the previous external independent valuation. For all other stabilised
investment properties in an active market segment, an internal valuation
is performed based on observable capitalisation rates and referenced to
independent market data.
Where a market segment is observed to be inactive, then no external
independent valuations are performed and internal valuations are
undertaken based on discounted cash flow (DCF) calculations. The
DCF calculations are prepared over a 10-year period. The key inputs
considered for each individual calculation are:
+ Current contractual lease terms
+ Current market rents
+ Projected growth in market rents
+ Expected and likely capital expenditures
+
+
Projected letting up incentives provided to customers and vacant
time on expiry of leases
Discount rates – computed using the 10 year bond rate or equivalent
in each jurisdiction plus increments to reflect country risk, tenant
credit risk and industry risk. Where possible, the components of the
discount rate are benchmarked to available market data.
Market assessment
With the more volatile economic conditions in FY23 compared to prior
years, there have been fewer transactions of industrial, logistics and
warehousing properties during the year. Nevertheless, at 30 June 2023,
the Board has been able to assess that all markets in which the Group
operated were active and as a consequence no adjustments have
been made to the carrying values of the Group’s stabilised investment
property portfolios on the basis of internally prepared discounted cash
flow valuations.
The overall weighted average capitalisation rates for the divisional
portfolios (including Partnerships) are as set out in the table below:
Total portfolio weighted average capitalisation rate
Division
Australia and
New Zealand
Asia
Continental
Europe
United Kingdom
Americas
Goodman
GIT
2023
%
2022
%
2023
%
2022
%
4.4
4.4
4.5
4.9
4.7
3.9
4.3
3.5
3.7
4.1
4.3
4.1
4.5
–
4.7
3.8
3.8
3.5
–
4.1
In respect of the Group’s and GIT’s directly held stabilised investment
properties at 30 June 2023, 72% (2022: 57%) and 100% (2022: 100%),
respectively, had been valued by an external independent valuer during
the financial year. All independent valuers used by the Group are
required to hold a recognised and relevant professional qualification and
have recent experience in the location and category of the investment
properties being valued.
For the Partnerships, all properties that had been stabilised investment
properties throughout FY23 were valued by an external independent
valuer during the financial year.
Sensitivity analysis
The fair value measurement approach for directly held investment
properties has been categorised as a Level 3 fair value based on the inputs
to the valuation method used. The usual valuation methods are either
based on income capitalisation or market comparison. Where the income
capitalisation method is adopted, then the stabilised investment property
valuations at 30 June 2023 are most sensitive to the following inputs:
+ Capitalisation rates
+ Market rents
+
Incentives provided to customers and/or vacant time on expiry
of leases.
The directly held stabilised investment properties are in Australia and
Asia. The range of market rents and average capitalisation rate and range
of prices are summarised in the table below:
Valuation
technique
Significant
unobservable inputs
Income
capitalisation
Range of net market
rents (per square
metre per annum)
Average
capitalisation rate
Market
comparison
Price per
square metre
2023
2022
$110 to
$450
$90 to
$450
4.5%
$1,851 to
$21,218
4.4%
$1,786 to
$18,019
110
ANNUAL REPORT 2023
The impacts on the Group’s financial position that would arise from the changes in capitalisation rates, market rents and incentives/re-leasing time
are set out in the table below. This illustrates the impacts on Goodman in respect of both the directly held stabilised investment properties and its
share of those stabilised investment properties held by Partnerships.
Goodman
GIT
Valuation impact for the Group
Valuation impact for GIT
Directly held
properties
$M
1,640.6
Partnerships1
$M
18,519.4
Directly held
properties
$M
540.5
Partnerships1
$M
14,651.3
(163.5)
(86.0)
96.2
204.3
(57.2)
(28.6)
28.6
57.2
(3.6)
(7.3)
(1,860.8)
(979.9)
1,096.8
2,332.9
(791.4)
(395.7)
395.7
791.4
(42.4)
(84.8)
(58.0)
(30.6)
34.6
73.9
(19.2)
(9.6)
9.6
19.2
(1.8)
(3.6)
(1,499.6)
(790.3)
886.3
1,887.2
(627.3)
(313.6)
313.6
627.3
(31.7)
(63.4)
Book value at 30 June 2023
Changes in capitalisation rates
Increase in cap rates +50 bps
Increase in cap rates +25 bps
Decrease in cap rates -25 bps
Decrease in cap rates -50 bps
Changes in market rents
Decrease in rents -10%
Decrease in rents -5%
Increase in rents +5%
Increase in rents +10%
Changes in incentives/re-leasing time2
Increase in incentives/ re-leasing time +3 months
Increase in incentives/ re-leasing time +6 months
1. Goodman’s share of stabilised investment properties held by Partnerships.
2. On assumed lease expiries over the next 12 months.
Investment properties under development
For the directly held investment properties under development, external independent valuations are generally not performed, but instead valuations
are determined at each reporting date using the feasibility assessments supporting the developments. The end values of the developments in the
feasibility assessments are based on assumptions such as capitalisation rates, market rents, incentives provided to customers and vacant time that
are consistent with those observed in the relevant market adjusted for a profit and risk factor. This profit and risk factor is dependent on the function,
location, size and current status of the development and are generally in a market range of 10% to 15%; although for larger more complex projects
that are at an early stage of the development, the profit and risk factor could be higher. This adjusted end value is then compared to the forecast cost
of a completed development to determine whether there is an increase or decrease in value.
In respect of the Partnerships, certain Partnerships obtain external independent valuations of investment properties under development at reporting
dates. However, the majority determine the fair values at reporting dates by reference to the feasibility assessments, with external independent
valuations obtained when the properties have been stabilised.
111
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
5 Property assets (continued)
(d) Inventories
Current
Land and development properties
Non-current
Land and development properties
Goodman
Goodman
2023
$M
464.2
464.2
1,781.3
1,781.3
2022
$M
389.0
389.0
1,727.1
1,727.1
GIT
2023
$M
–
–
–
–
2022
$M
–
–
5.9
5.9
During the current and prior financial year, no impairment losses were recognised on land and development properties.
During the financial year, borrowing costs of $5.1 million (2022: $3.1 million) previously capitalised into the carrying value of inventories were expensed
to the income statement on disposal of the inventories.
(e) Investment properties
Reconciliation of carrying amount of directly held investment properties
Carrying amount at the beginning of the year
Acquisitions
Capital expenditure
Carrying value of properties disposed
Transfers to assets held for sale
Transfers from inventories
Net gain from fair value adjustments
Effect of foreign currency translation
Goodman
2023
$M
1,423.7
407.1
33.5
(0.2)
(515.3)
–
278.9
17.1
2022
$M
1,851.2
420.4
27.4
(546.5)
(609.3)
2.5
260.1
17.9
Carrying amount at the end of the year
1,644.8
1,423.7
GIT
2023
$M
495.3
–
25.4
–
(515.3)
–
229.0
–
234.4
2022
$M
1,155.7
–
17.6
(276.9)
(609.3)
–
208.3
(0.1)
495.3
Analysed by segment:
Australia and New Zealand
Asia
Americas
882.5
451.7
310.6
1,086.9
336.8
–
234.4
495.3
–
–
–
–
1,644.8
1,423.7
234.4
495.3
112
ANNUAL REPORT 2023
Non-cancellable operating lease commitments receivable from investment property customers
The analysis in the table below reflects the gross property income, excluding recoverable outgoings, based on existing lease agreements. It assumes that
leases will not extend beyond the next review date, where the customer has an option to end the lease.
Non-cancellable operating lease commitments receivable:
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Goodman
2023
$M
58.3
51.0
42.6
29.6
22.8
137.4
341.7
2022
$M
57.6
47.4
37.9
24.5
15.9
87.0
270.3
GIT
2023
$M
17.3
17.1
14.6
12.5
11.4
54.6
127.5
2022
$M
27.1
20.1
14.8
8.4
5.5
10.9
86.8
(f) Investments accounted for using the equity method
Investments accounted for using the equity method comprise associates and JVs, which are collectively referred to as Partnerships.
Associates
An associate is an entity in which Goodman exercises significant influence but not control over its financial and operating policies.
JVs
A JV is an arrangement in which Goodman is considered to have joint control for accounting purposes, whereby Goodman has rights to the net assets
of the arrangement, rather than rights to its assets and obligations for its liabilities.
In the consolidated financial statements, investments in Partnerships are accounted for using the equity method. Under this method, Goodman’s
investment is initially recognised at cost. Subsequent to initial recognition, the consolidated financial statements include Goodman’s share of the gains
or losses and other comprehensive income of Partnerships until the date on which significant influence or joint control ceases.
113
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
5 Property assets (continued)
(i)
Investments in associates
Investments in Partnerships classified as associates are set out below:
Goodman
GIT
Share of net
results
Ownership
interest
Investment
carrying amount
Share of
net results
Ownership
interest
Investment
carrying amount
Name of associate
Country of
establishment
2023
$M
2022
$M
2023
%
2022
%
2023
$M
2022
$M
2023
$M
2022
$M
2023
%
2022
%
2023
$M
2022
$M
Property
investment
Goodman
Australia Industrial
Partnership
(GAIP)
Goodman Australia
Partnership
(GAP)
Goodman Property
Trust (GMT)1
Goodman Hong
Kong Logistics
Partnership
(GHKLP)
Goodman Japan
Core Partnership
(GJCP)2
Goodman
European
Partnership
(GEP)
Other associates
Australia
300.7
503.4
28.6
28.6 3,453.6 3,008.3
300.7
503.4
28.6
28.6 3,453.6 3,008.3
Australia
106.8
234.1
19.9
19.9
1,133.6
1,060.0
106.8
234.1
19.9
19.9
1,133.6
1,060.0
New Zealand
(29.5)
150.0
25.2
24.9
797.9
825.9
(6.2)
31.6
5.4
5.1
169.6
170.3
Cayman
Islands
(39.8)
66.4
20.4
20.3
1,739.9
1,719.4
(39.8)
66.4
20.4
20.3
1,739.9
1,719.4
Japan
32.7
47.3
14.4
14.4
394.9
380.7
–
–
–
–
–
–
Luxembourg
(90.2)
144.9
19.8
19.8
795.2
856.4
(90.2)
144.9
19.8
19.8
795.2
856.4
(0.6)
–
280.1
1,146.1
0.3
–
8,315.4 7,850.7
271.3 980.4
7,291.9 6,814.4
1. GMT is listed on the New Zealand Stock Exchange (NZX). At 30 June 2023, the market value of Goodman’s investment in GMT using the quoted price on the last day of trading was $721.7 million
(2022: $651.7 million), which compared to the carrying value of $797.9 million. Goodman does not consider its investment impaired as the carrying value is equal to its share of GMT’s net assets
and is supported by independent valuations of the individual investment properties in GMT.
GIT has a 5.4% ownership interest in GMT, which forms part of Goodman’s 25.2% ownership interest in GMT. As a result, the Directors have assessed that GIT has significant influence over GMT
and has applied the equity method of accounting for its 5.4% interest.
2. Goodman’s ownership interest in GJCP reflected the weighted average ownership interest in the various property investment vehicles.
114
ANNUAL REPORT 2023
The reconciliation of the carrying amount of investments in Partnerships classified as associates is set out as follows:
Movement in carrying amount of investments in associates
Carrying amount at the beginning of the year
Share of net results after tax (before fair value adjustments)
Share of fair value adjustments attributable to investment properties after tax
Share of fair value adjustments on derivative financial instruments
Share of net results
Share of movements in reserves
Acquisitions
Disposals
Distributions received and receivable
Effect of foreign currency translation
Carrying amount at the end of the year
Goodman
2023
$M
7,850.7
230.3
47.1
2.7
280.1
2.4
261.6
–
(210.1)
130.7
2022
$M
6,302.6
242.7
914.7
(11.3)
1,146.1
15.0
575.6
(4.9)
(193.2)
9.5
GIT
2023
$M
6,814.4
194.9
71.8
4.6
271.3
2.4
255.6
–
(181.8)
130.0
2022
$M
5,292.9
201.3
790.9
(11.8)
980.4
15.0
605.1
–
(155.1)
76.1
8,315.4
7,850.7
7,291.9
6,814.4
115
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
5 Property assets (continued)
The table below includes further information regarding Partnerships classified as associates, held at the end of the financial year:
GAIP
GAP
GMT
GHKLP
GJCP
GEP
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
Summarised statement
of financial position
Total current assets
923.5
1,081.6
38.4
100.6
13.8
6.1
161.4
187.4
220.3
232.2
107.4
200.2
Total non-current assets
13,872.8 12,266.3
7,012.5
6,513.1 4,508.6 4,435.0
11,529.7
10,679.1 3,929.9 3,825.8 6,793.9 6,818.2
Total current liabilities
454.4
348.9
126.5
142.1
131.3
24.0
457.7
244.9
301.6
231.8
226.5
233.7
Total non-current liabilities
2,349.4 2,545.6
1,290.6
1,212.3
1,223.1
1,105.8
2,711.3 2,236.3
1,105.9
1,189.4 2,655.8 2,456.5
Net assets (100%)
11,992.5 10,453.4 5,633.8 5,259.3 3,168.0
3,311.3 8,522.1 8,385.3 2,742.7 2,636.8 4,019.0 4,328.2
Summarised statement
of comprehensive income
Revenue
Profit after tax
and revaluations
523.9
459.0
320.5
288.6
117.7
112.1
386.7
287.8
196.3
204.6
280.1
239.0
1,050.2
1,739.1
536.4
1,181.0
(117.7)
701.7
(194.5)
326.6
216.6
329.4
(455.9)
656.1
Other comprehensive income
–
–
–
–
–
–
11.8
74.7
–
–
–
–
Total comprehensive
income (100%)
Goodman
Consolidated
ownership interest
Consolidated share
of net assets
Other items, including
capitalised costs
Distributions receivable1
Carrying amount
of investment
Distributions received
and receivable
GIT
Consolidated
ownership interest
Consolidated share
of net assets
Other items, including
capitalised costs
Distributions receivable1
Carrying amount
of investment
Distributions received
and receivable
1,050.2
1,739.1
536.4
1,181.0
(117.7)
701.7
(182.7)
401.3
216.6
329.4
(455.9)
656.1
28.6%
28.6%
19.9%
19.9%
25.2%
24.9%
20.4%
20.3%
14.4%
14.4%
19.8%
19.8%
3,434.7
2,990.7
1,121.7
1,047.2
797.9
825.7
1,738.5
1,706.2
395.1
380.8
795.2
856.4
–
18.9
0.1
17.5
–
11.9
–
12.8
–
–
0.2
–
1.4
–
1.3
11.9
(0.2)
–
(0.1)
–
–
–
–
–
3,453.6 3,008.3
1,133.6
1,060.0
797.9
825.9
1,739.9
1,719.4
394.9
380.7
795.2
856.4
73.3
66.3
33.1
25.1
19.0
17.8
38.8
35.5
13.3
20.3
32.6
28.2
28.6%
28.6%
19.9%
19.9%
5.4%
5.1%
20.4%
20.3%
3,434.7
2,990.7
1,121.7
1,047.2
170.1
169.6
1,738.5
1,706.2
–
18.9
0.1
17.5
–
11.9
–
12.8
(0.5)
–
0.7
–
1.4
–
1.3
11.9
3,453.6 3,008.3
1,133.6
1,060.0
169.6
170.3
1,739.9
1,719.4
73.3
66.3
33.1
25.1
4.0
–
38.8
35.5
–
–
–
–
–
–
–
–
–
–
–
–
19.8%
19.8%
795.2
856.4
–
–
–
–
795.2
856.4
32.6
28.2
1.
Distributions receivable related to distributions provided for but not paid by the Partnerships at 30 June 2023. This was applicable to trusts in Australia where unitholders were presently entitled
to income at the end of the financial year.
116
ANNUAL REPORT 2023
(ii)
Investments in JVs
A summary of the results and ownership interests of principal Partnerships classified as JVs is set out below:
Goodman
GIT
Share of net
results
Ownership
interest
Investment
carrying amount
Share of
net results
Ownership
interest
Investment
carrying amount
Country of
establishment
2023
$M
2022
$M
2023
%
2022
%
2023
$M
2022
$M
2023
$M
2022
$M
2023
%
2022
%
2023
$M
2022
$M
Cayman
Islands
United
Kingdom
United States
of America
26.8
56.8
20.0
20.0
923.3
918.0
(125.4)
213.4
35.0
35.3
573.7
676.3
–
–
–
–
–
–
–
–
–
–
–
–
745.0
938.6
55.0
55.0 4,798.5 3,846.0
717.9
904.4
53.0
53.0 4,624.2 3,706.4
95.9
363.3
742.3
1,572.1
1,674.3
1,088.6
89.9
288.2
7,969.8 6,528.9
807.8
1,192.6
1,096.2
835.3
5,720.4 4,541.7
Name of JV
Property
investment and
development
Goodman
China Logistics
Partnership
(GCLP)
Goodman UK
Partnerships
(GUKP)1
Goodman
North America
Partnership
(GNAP)
Other JVs
1. The consolidated ownership interest in GUKP reflected the weighted average ownership in GUKP, GUKP II and GUKP III.
117
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
5 Property assets (continued)
The reconciliation of the carrying amount of investments in Partnerships classified as JVs is set out as follows:
Goodman
GIT
Movement in carrying amount of investments in JVs
Carrying amount at the beginning of the year
Share of net results after tax (before fair value adjustments)
Share of fair value adjustments attributable to investment properties after tax
Share of fair value adjustments on derivative financial instruments
Share of net results
Share of movements in reserves
Acquisitions
Disposals
Transfer on reclassification as a controlled entity
Capital return
Distributions/dividends received and receivable
Effect of foreign currency translation
Carrying amount at the end of the year
2023
$M
6,528.9
251.9
497.6
(7.2)
742.3
(0.1)
1,259.3
(351.0)
–
–
(373.9)
164.3
7,969.8
2022
$M
4,357.4
204.3
1,358.2
9.6
1,572.1
7.2
696.8
(3.4)
(15.6)
(91.8)
(248.7)
254.9
6,528.9
2023
$M
4,541.7
160.3
644.8
2.7
807.8
–
693.2
(350.9)
–
–
(120.0)
148.6
5,720.4
2022
$M
2,785.5
116.0
1,058.1
18.5
1,192.6
–
417.9
–
–
(20.9)
(83.8)
250.4
4,541.7
118
ANNUAL REPORT 2023
The table below includes further information regarding principal Partnerships classified as JVs, held at the end of the financial year:
Summarised statement of financial position
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Total non-current assets
Current liabilities
Other current liabilities
Total current liabilities
Non-current liabilities
Financial liabilities
Other non-current liabilities
Total non-current liabilities
Net assets (100%)
Summarised statement of comprehensive income
Revenue
Net finance (expense)/income
Income tax expense
Profit after tax and revaluations
Other comprehensive income
Total comprehensive income (100%)
Goodman
Consolidated ownership interest
Consolidated share of net assets
Shareholder loan1
Other items, including capitalised costs
Carrying amount of investment
Distributions/dividends received and receivable
GIT
Consolidated ownership interest
Consolidated share of net assets
Other items, including capitalised costs
Carrying amount of investment in JV
Distributions/dividends received and receivable
GCLP1
2023
$M
2022
$M
GUKP
2023
$M
2022
$M
GNAP
2023
$M
2023
$M
398.2
198.2
596.4
6,660.0
427.4
148.3
575.7
6,303.3
3,067.4
3,067.4
2,940.6
2,940.6
1,354.2
733.4
2,087.6
2,101.4
1,111.8
718.3
1,830.1
2,108.3
210.0
(32.7)
(44.1)
134.2
(0.1)
134.1
20.0%
420.3
499.6
3.4
923.3
8.5
–
–
–
–
–
215.0
(20.3)
(46.3)
283.8
36.2
320.0
20.0%
421.7
492.9
3.4
918.0
7.3
–
–
–
–
–
44.2
15.8
60.0
2,216.0
55.1
55.1
583.1
–
583.1
1,637.8
93.2
(11.3)
(0.2)
(337.0)
–
(337.0)
35.0%
573.2
–
0.5
573.7
160.5
–
–
–
–
–
41.1
12.9
54.0
2,421.8
24.7
24.7
537.8
–
537.8
1,913.3
39.8
(1.0)
(0.2)
575.6
–
575.6
35.3%
676.0
–
0.3
676.3
3.9
–
–
–
–
–
99.0
11.2
110.2
10,290.6
246.7
246.7
1,445.7
(6.8)
1,438.9
8,715.2
392.3
(13.2)
(0.7)
1,354.5
–
1,354.5
75.0
56.8
131.8
8,270.0
273.8
273.8
1,144.3
–
1,144.3
6,983.7
250.0
14.9
(0.4)
1,706.6
–
1,706.6
55.0%
4,793.4
–
5.1
4,798.5
110.1
55.0%
3,841.0
–
5.0
3,846.0
68.9
53.0%
53.0%
4,619.2
5.0
4,624.2
106.1
3,701.4
5.0
3,706.4
66.4
1.
Shareholder loans have been provided by investors of GCLP in proportion to their ownership interest. The shareholder loans are interest free and unsecured and have no fixed terms
of repayment. The shareholder loans are not expected to be repaid within 12 months from the end of the reporting period and the Directors consider the loans to form part of Goodman’s
investment in GCLP.
With respect to Goodman’s other JVs, the total profit after tax and revaluations was $254.9 million (2022: $1,333.2 million) and total other comprehensive
income was $nil (2022: $nil). With respect to GIT’s other JVs, the total profit after tax and revaluations was $317.2 million (2022: $1,024.5 million) and total
other comprehensive income was $nil (2022: $nil).
119
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Receivables
Receivables comprise trade and other receivables and loans to related parties and are recognised on the date that they are originated, initially at fair
value plus any directly attributable transaction costs. Subsequent to initial recognition, receivables are measured at amortised cost using the effective
interest rate method, less any impairment losses.
Receivables are derecognised when the contractual rights to the cash flows from the receivable expire or the Group transfers the rights to receive
the contractual cash flows on the receivable in a transaction in which substantially all the risks and rewards of the receivable are transferred.
Current
Trade receivables
Tax receivables
Other receivables
Amounts due from related parties
Loans to related parties1
Non–current
Other receivables
Loans to related parties1
Goodman
2023
$M
2022
$M
20.9
11.9
110.1
100.2
–
243.1
2.8
228.2
231.0
7.8
3.9
123.1
83.0
–
217.8
5.9
167.5
173.4
2023
$M
–
–
18.2
8.9
215.0
242.1
–
3,122.4
3,122.4
GIT
2022
$M
0.1
–
3.8
–
127.1
131.0
–
3,137.4
3,137.4
1. Refer to note 23 for details of amounts due from and loans to related parties.
Goodman assessed the receivables balances at 30 June 2023 for expected credit losses (risk of non-payment). The level of provisioning was not
significant in the context of the Group’s financial position.
120
ANNUAL REPORT 2023
7 Contract balances
Contract assets primarily comprise amounts recoverable from fixed price development contracts (disclosed net of any payments received on account)
and accrued performance fee income where the Group assesses that the income can be reliably measured.
Contract liabilities primarily comprise consideration received in advance of the completion of development contracts and rental guarantees.
The following table provides an analysis of receivables from contracts with customers (excluding rental income receivables), contract assets and
contract liabilities at the reporting dates:
Current
Receivables, which are included in trade receivables,
other receivables and amounts due from related parties
Contract assets
Contract liabilities
Non-current
Contract liabilities
Significant changes in the contract assets and the contract liabilities balances during the year are set out below:
Goodman
2023
$M
2022
$M
133.6
72.9
21.2
–
111.7
77.6
4.7
–
Balance at the beginning of the year
Increase due to changes in the measure
of progress during the year
Transfers from contract assets to receivables
Revenue recognised that was included in the
contract liability balance at the beginning of the year
Increases due to cash received, excluding
amounts recognised as revenue during the year
Effect of foreign currency translation
Balance at the end of the year
Current contract assets and liabilities
Non–current contract liabilities
Total
Goodman
2023
2022
Contract
assets
$M
77.6
381.9
(388.8)
–
–
2.2
72.9
72.9
–
72.9
Contract
liabilities
$M
4.7
–
–
(14.0)
30.5
–
21.2
21.2
–
21.2
Contract
assets
$M
80.9
476.9
(480.5)
–
–
0.3
77.6
77.6
–
77.6
Contract
liabilities
$M
6.0
–
–
(1.6)
0.1
0.2
4.7
4.7
–
4.7
Details regarding Goodman’s future rental income associated with existing lease agreements is included in note 5.
In addition, Goodman receives investment management, development management and property services fees under various contracts that it has
with its Partnerships. These contracts are for varying lengths of time and are typically transacted on terms that are consistent with market practice.
The revenues under these contracts are linked to the AUM, total development project costs or gross property income of Partnerships and are invoiced
as the services are provided.
121
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
8 Assets held for sale
In June 2023, the Group entered into a conditional contract to dispose
of two controlled entities which own two stabilised investment properties.
As the conditions under the contracts had not been satisfied as at
30 June 2023, the directly held assets and liabilities to be disposed
have been presented as a disposal group held for sale.
Assets and liabilities of disposal group held for sale
At 30 June 2023, the disposal group was held at the lower of carrying
amount and fair value less costs to sell, and comprised the following
assets and liabilities within the Australia and New Zealand segment:
Investment properties
Other assets
Payables
Assets held for sale
$M
515.3
1.7
(7.4)
509.6
No impairment losses have been recognised in FY23 in respect of the
disposal group.
In the prior year, assets held for sale amounting to $608.2 million related
to two investment properties in Australia. The disposal of the investment
properties was completed in FY23.
122
ANNUAL REPORT 2023
9 Payables
Trade and other payables are recognised initially at trade date fair value plus any directly attributable transaction costs. Subsequent to initial recognition,
trade and other payables are measured at amortised cost.
Trade and other payables are derecognised when the contractual obligations are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, there is a legal right
to offset the amounts and an intention to either settle on a net basis or to realise the asset and settle the liability simultaneously.
Current
Trade payables
Other payables and accruals
Contract liabilities
Loans from related parties1
Non–current
Other payables and accruals
Loans from related parties1
Goodman
GIT
2023
$M
90.4
571.8
21.2
–
2022
$M
76.4
525.4
4.7
–
683.4
606.5
390.2
–
390.2
111.0
–
111.0
2023
$M
5.8
113.8
–
51.3
170.9
256.6
521.4
778.0
2022
$M
7.9
61.5
–
3.3
72.7
3.3
720.5
723.8
1. Refer to note 23 for details of loans from related parties.
10 Provisions
A provision is recognised when there is a legal, equitable or constructive obligation as a result of a past event and it is probable that a future sacrifice
of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain.
Current
Dividends/distributions to Securityholders
Other
Non–current
Defined benefit retirement schemes in the United Kingdom
Other
Goodman
2023
$M
282.5
19.0
301.5
12.8
1.5
14.3
2022
$M
280.0
19.2
299.2
13.9
1.6
15.5
GIT
2023
$M
188.4
–
188.4
–
–
–
2022
$M
233.5
–
233.5
–
–
–
123
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
11 Property, plant and equipment
Information about leases for which Goodman is a lessee is detailed below:
2023
$M
2022
$M
561.8
695.6
43.8
453.3
568.0
42.4
1,301.2
1,063.7
12.3
55.4
67.7
12.5
58.1
70.6
2023
$M
245.0
12.4
1.1
14.3
2022
$M
338.4
12.6
1.0
14.4
Property, plant and equipment at cost
Accumulated amortisation
Property, plant and equipment
at net book value1
2023
$M
171.9
(100.2)
2022
$M
147.0
(85.6)
Right of use assets
Inventories
Investment properties
71.7
61.4
Property, plant and equipment
Lease liabilities
Current
Non-current
The following were recognised during the year:
Additions to right of use assets
Depreciation for right of use assets
Interest expense on lease liabilities
Cash outflows on lease liabilities
1. Refer to note 12 for property, plant and equipment held as a lessee.
12 Leases
Goodman leases office buildings, motor vehicles and office equipment.
Certain investment properties and developments classified as inventories
are also built on land held under leasehold interests.
Goodman recognises a right of use asset and a lease liability at the
lease commencement date. The right of use asset is initially measured
at cost plus any direct costs incurred and an estimate of costs to restore
the underlying asset or the site on which it is located, less any lease
incentives received.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using
the lessee’s incremental borrowing rate. After initial recognition, the lease
liability is measured at amortised cost and interest expense is calculated
using the effective interest rate method. The lease liability is remeasured
when there is a change in future lease payments arising from a change
in an index or rate, or there is a change arising from the reassessment
of whether Goodman will be reasonably certain to exercise an extension
or termination option.
The right of use assets in respect of office buildings, motor vehicles and
office equipment are depreciated using the straight-line method over
the period of the lease. Right of use assets that meet the definition of
investment property are carried at fair value in accordance with note 5(a).
Ground leases of development land that are classified as inventories are
not depreciated but are assessed at each reporting date for impairments
to ensure they are recorded at the lower of cost and net realisable value.
124
13 Goodwill and intangible assets
Goodman recognises both goodwill and indefinite life management rights
in its statement of financial position.
Goodwill
Goodwill arising on the acquisition of controlled entities is stated at cost
less any accumulated impairment losses (refer below). No amortisation
is provided.
Management rights
When fund and/or investment management activities are acquired as
part of a business combination, management rights are recorded where
they arise from contractual or other legal rights, and the fair value can be
measured reliably.
Management rights are stated at cost less impairment. Management
rights are not amortised as they are assumed to have an indefinite
life, given they are routinely renewed at minimal cost and on broadly
similar terms.
ANNUAL REPORT 2023
Impairment
The carrying amounts of goodwill and management rights are tested
annually for impairment. For the purpose of impairment testing, goodwill
and management rights are allocated to the related cash-generating units
monitored by management. An impairment loss is recognised whenever
the carrying amount of the cash-generating unit exceeds its recoverable
amount. Recoverable amount is the greater of the fair value (net of disposal
costs) and the value in use but given that goodwill and management
rights are not frequently traded (i.e. fair value is difficult to ascertain), the
recoverable amount will be equal to the value in use of the cash-generating
unit. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the cash-generating unit.
Impairment losses are recognised in the income statement. Impairment
losses recognised in respect of cash-generating units are allocated first
to reduce the goodwill allocated to the cash-generating unit, then to the
carrying amount of the management rights allocated to the cash-generating
unit and then to reduce the carrying amount of the other assets in the
cash-generating unit on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. An impairment
loss for management rights is reversed only to the extent that its carrying
amount does not exceed its original cost.
A summary of Goodman’s goodwill and intangible assets is set out by below:
Goodwill
Management rights
Goodman
2023
$M
738.3
111.8
850.1
2022
$M
685.6
109.8
795.4
125
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
13 Goodwill and intangible assets (continued)
The carrying value of goodwill and intangible assets is analysed by division in the table below:
Analysed:
Goodwill
Continental Europe
Other
Subtotal – goodwill
Management rights
Continental Europe
Other
Subtotal – management rights
Total
2023
$M
2022
$M
622.8
115.5
738.3
35.3
76.5
111.8
850.1
577.0
86.6
685.6
32.7
77.1
109.8
795.4
A reconciliation of the movement in the cost of goodwill and management rights during the year is set out below:
Cost
Goodwill
Continental Europe
Other
Subtotal – goodwill
Management rights
Continental Europe
Other
Subtotal – management rights
Total
Balance at
30 June
2021
$M
Disposals
$M
Effect of
foreign
currency
translation
$M
Balance at
30 June
2022
$M
Effect of
foreign
currency
translation
$M
Balance at
30 June
2023
$M
609.0
161.9
770.9
34.1
84.7
118.8
889.7
–
–
–
–
(10.9)
(10.9)
(10.9)
(24.7)
(7.2)
(31.9)
(1.4)
3.3
1.9
(30.0)
584.3
154.7
739.0
32.7
77.1
109.8
848.8
46.4
10.7
57.1
2.6
(0.6)
2.0
59.1
630.7
165.4
796.1
35.3
76.5
111.8
907.9
A reconciliation of the movement in the impairment losses during the year is set out below:
Balance at
30 June
2021
$M
Disposals
$M
Effect of
foreign
currency
translation
$M
Balance at
30 June
2022
$M
Effect of
foreign
currency
translation
$M
Balance at
30 June
2023
$M
7.6
48.1
55.7
11.4
11.4
67.1
–
–
–
(10.9)
(10.9)
(10.9)
(0.3)
(2.0)
(2.3)
(0.5)
(0.5)
(2.8)
7.3
46.1
53.4
–
–
53.4
0.6
3.8
4.4
–
–
4.4
7.9
49.9
57.8
–
–
57.8
Impairment losses
Goodwill
Continental Europe
Other
Subtotal – goodwill
Management rights
Other
Subtotal – management rights
Total
126
ANNUAL REPORT 2023
Impairments and reversals of impairments
There were no impairment losses or reversals of impairment losses during either the current or prior financial year.
Impairment testing for intangible assets
The carrying values of both goodwill and indefinite life management rights are assessed for impairment annually. For the purpose of impairment
testing, goodwill and indefinite life management rights are allocated to the Goodman divisions that represent the lowest level within Goodman at which
the goodwill and indefinite life management rights are monitored for internal management purposes. Where goodwill and management rights arise
in the same division, impairment testing has been performed on the combined intangible asset.
The impairment tests for all intangible assets are based on each division’s value in use. Value in use is determined by discounting the future projected
cash flows generated from continuing operations. These cash flows are for a five-year period, with a year five terminal value calculated using a terminal
growth rate and an appropriate discount rate for each division.
The key drivers of value in respect of the intangible assets are:
+
+
Development cash flows, which are dependent on development volumes and margins and whether the developments are undertaken directly by
Goodman or directly by Partnerships or in joint venture with Partnerships
Management cash flows, which are dependent on the level of external AUM and net property income in Partnerships and, in the case of portfolio
performance fee income, the long-term performance of the Partnerships.
The estimation of future cash flows requires assumptions to be made regarding uncertain future events. The cash flows do not assume a downturn
in earnings that might arise in the event of a significant adverse change in market conditions for the Group. The cash flows also assume that
Goodman’s management contracts with Partnerships have an indefinite life. This is on the basis that in the past these contracts have been typically
renewed at minimal cost and on broadly similar financial terms.
The post-tax discount rates used in the value in use calculations were determined using the capital asset pricing model, with individual assumptions
referenced to market data, where available, and adjusting for specific factors associated with each division. A risk premium was included in each
division’s discount rate, reflecting the level of forecasting, size, country and financing risks for that division. The value in use was determined using
the after-tax cash flows and the post-tax discount rates, with the discount rates then converted to the equivalent pre-tax rates.
When assessing a potential impairment, the value in use is compared against the sum of the intangible asset balance and the property, plant and
equipment balance for each division.
The principal intangible asset balance relates to the Group’s business activities in Continental Europe. The value in use and the key assumptions used
to calculate the value in use are set out below.
Value in use – Continental Europe
The value in use for Continental Europe is consistent with the prior years. The Group’s strategy remains the same with assets focused on core infill
locations, close to consumers.
Value in use (A$M)
Key assumptions:
Pre-tax discount rate (per annum)
Average annual development expenditure (A$B)
Average annual growth in AUM
2023
2,559.4
12.7%
1.2
6.6%
2022
2,444.3
11.6%
1.3
7.7%
All amounts were calculated in local currency and translated to Australian dollars at the closing exchange rate at the end of the financial period.
Averages related to average amounts over the five-year forecast period.
127
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
13 Goodwill and intangible assets (continued)
Development earnings
During FY23 there has been a decrease in the market values of properties in Continental Europe, however, demand continues to exist for modern,
well-located industrial product. The activities will be focused on the regions core markets in western and southern Europe and will be a mix of
development undertaken directly by Goodman and developments undertaken in joint venture with Partnerships. The average annual development
cash outflow to fund the projected development pipeline across the forecast period is A$1.2 billion per annum (2022: A$1.3 billion per annum). This
is slightly lower than the prior year, with higher inflation and higher interest rates expected to persist in the short term. The development earnings
forecasts include projects which have not yet been contracted.
Management earnings and AUM
External AUM at 30 June 2023 was $A7.8 billion (2022:A$8.1 billion). The average annual increase in external AUM of 6.6% (2022: 7.7%) assumes most
of the projected development over the forecast period is for Partnerships.
For the purpose of the value in use assessments, property values are expected to be stable over the period and no portfolio performance revenue is assumed.
Sources of funding for development activity
Capital inflows required to fund acquisitions and development activity are assumed to arise from the following sources: equity investment directly into
Partnerships (including distribution reinvestment plans) by Goodman and its investment partners (in some cases, the projections assume future equity
investment will be greater than existing commitments); lending facilities advanced to Partnerships; debt capital markets; customer-funded turnkey
developments; and proceeds from disposals of assets. It is not practicable to determine the percentage of the total which will flow from each source.
Funds available to Goodman and its investment partners are assumed to be sourced from available global markets and are not limited to regional
lending markets.
Assumptions impacting the terminal year
The cash flow projections assumes that there will be no significant change in regional or global market conditions. Long-term growth rates have been used
to extrapolate cash flow projections beyond the period covered by the five-year forecast. For Continental Europe, the growth rate of 3.2% (2022: 2.3%)
was based on the average consumer price indices over the past five years. .
128
ANNUAL REPORT 2023
CAPITAL MANAGEMENT
The notes in this section focus on Goodman’s and GIT’s financing activities, capital structure and management of the financial risks involved.
14 Net finance income/(expense)
Interest income and expense are recognised using the effective interest rate method.
Finance costs relating to a qualifying asset are capitalised as part of the cost of that asset using a weighted average cost of debt. Qualifying assets
are assets which take a substantial time to get ready for their intended use or sale. All other finance costs are expensed using the effective interest
rate method.
Finance income
Interest income from:
– Related parties
– Other parties
Foreign exchange gains
Finance expense
Interest expense from third party loans, overdrafts and derivatives
Interest expense from related party loans
Other borrowing costs
Fair value adjustments on derivative financial instruments
Foreign exchange losses
Capitalised borrowing costs1
Net finance expense
Goodman
2023
$M
2022
$M
GIT
2023
$M
2022
$M
2.1
20.0
0.8
22.9
(52.4)
–
(12.8)
(221.3)
–
28.8
(257.7)
(234.8)
6.5
1.8
–
8.3
(42.4)
–
(9.5)
(189.7)
(0.3)
10.8
(231.1)
(222.8)
93.8
12.3
73.1
179.2
(55.4)
(20.1)
(6.9)
(156.6)
–
2.7
(236.3)
(57.1)
72.3
0.5
–
72.8
(38.2)
(9.7)
(5.3)
(181.5)
(69.7)
–
(304.4)
(231.6)
1.
Borrowing costs were capitalised to inventories and investment properties under development during the year at rates between 0.95% and 4.85% per annum (2022: 0.95% and 4.85% per annum)..
129
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
Interest bearing liabilities
15
Interest bearing liabilities comprise bank loans and notes issued in the capital markets. Interest bearing liabilities are recognised initially at fair value
plus any directly attributable transaction costs. Subsequent to initial recognition, interest bearing liabilities are measured at amortised cost using the
effective interest rate method
Carrying amount of drawn debt
Current
Unsecured:
– Foreign private placement
Non–current
Secured:
– Bank loans
Unsecured:
– Bank loans
– USD denominated notes
– EUR denominated notes
Borrowing costs
(a) Bank loans
Secured
Goodman
2023
$M
2022
$M
GIT
2023
$M
2022
$M
Note
15(d)
15(a)
15(b)
15(c)
–
–
133.3
133.3
15(a)
47.9
9.0
–
–
–
133.3
133.3
–
–
421.5
–
156.0
2,025.8
1,953.1
2,025.8
1,953.1
818.5
(20.8)
758.3
(21.5)
818.5
(17.5)
758.3
(19.3)
3,292.9
2,698.9
2,982.8
2,692.1
As at 30 June 2023, Goodman and GIT had the following secured bank facilities:
Goodman
GIT
Facility maturity date
Facility limit
$M
Amounts
drawn
$M
Facility limit
$M
Amounts
drawn
$M
9 January 2028
5 January 2033
18 March 2034
20 April 2038
79.7
51.7
26.9
62.1
220.4
288.2
–
17.9
17.4
12.6
47.9
9.0
–
–
–
–
–
260.0
–
–
–
–
–
–
Total at 30 June 2023
Total at 30 June 2022
130
ANNUAL REPORT 2023
Unsecured
As at 30 June 2023, Goodman and GIT had the following unsecured bank facilities::
Goodman
GIT
Facility maturity date
Facility limit
$M
Amounts
drawn
$M
Facility limit
$M
Amounts
drawn
$M
31 March 2025
31 March 2025
7 December 2025
31 December 2025
1 July 2026
31 July 2026
30 September 2026
30 September 2026
30 September 2026
30 September 2026
30 September 2026
30 September 2026
30 September 2026
21 October 2026
22 October 2026
31 December 2026
30 June 2027
30 June 2027
31 December 2029
Total at 30 June 2023
Total at 30 June 2022
The majority of the unsecured bank loans are multi-currency facilities.
(b) USD denominated notes
70.0
30.0
40.9
100.0
100.0
150.1
280.8
83.2
83.2
156.0
104.0
56.3
37.5
150.0
150.0
122.8
70.0
30.0
156.0
1,970.8
1,455.4
–
–
–
–
–
–
156.9
56.6
–
52.0
–
–
–
–
–
–
–
–
156.0
421.5
–
70.0
30.0
40.9
100.0
100.0
150.1
–
–
–
–
–
56.3
37.5
150.0
150.0
122.8
70.0
30.0
156.0
1,263.6
1,050.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
156.0
156.0
–
As at 30 June 2023, Goodman and GIT had notes on issue in the US144A/Regulation S bond market as follows:
Maturity date
15 March 2028
4 May 2032
15 October 2037
Carrying amount
A$M
787.8
750.3
487.7
2,025.8
1,953.1
US$M
525.0
500.0
325.0
1,350.0
1,350.0
Coupon
(fixed) per
annum
3.70%
4.63%
4.50%
Total at 30 June 2023
Total at 30 June 2022
(c) EUR denominated notes
As at 30 June 2023, Goodman and GIT had A$818.5 million (2022: A$758.3 million) (€500.0 million) Reg S EUR denominated senior notes on issue.
The notes have a fixed coupon of 1.375% per annum and mature on 27 September 2025.
(d) Foreign private placement
At 30 June 2022, Goodman and GIT had A$133.3 million (¥12.5 billion) in a foreign private placement denominated in Japanese yen. The facility had
a fixed coupon of 3.32% per annum payable semi-annually and was repaid on 3 April 2023.
131
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
15 Interest bearing liabilities (continued)
(e) Finance facilities
30 June 2023
Secured:
– Bank loans
Unsecured:
– Bank loans
– USD denominated notes
– EUR denominated notes
– Bank guarantees1
30 June 2022
Secured:
– Bank loans
Unsecured:
– Bank loans
– USD denominated notes
– EUR denominated notes
– Foreign private placement
– Bank guarantees1
Goodman
GIT
Facilities
available
$M
Facilities
utilised
$M
Facilities
available
$M
Facilities
utilised
$M
220.4
47.9
–
–
1,970.8
2,025.8
818.5
–
421.5
2,025.8
818.5
23.6
1,263.6
2,025.8
818.5
–
156.0
2,025.8
818.5
–
5,035.5
3,337.3
4,107.9
3,000.3
288.2
9.0
260.0
1,455.4
1,953.1
758.3
133.3
–
–
1,953.1
758.3
133.3
7.3
1,050.2
1,953.1
758.3
133.3
–
–
–
1,953.1
758.3
133.3
7.3
4,588.3
2,861.0
4,154.9
2,852.0
1. Bank guarantees are drawn from facilities available under unsecured bank loans. The guarantees are not reflected as a liability in the statements of financial position.
132
ANNUAL REPORT 2023
16 Other financial assets and liabilities
Other financial assets and liabilities primarily comprise derivative financial instruments that are recognised initially on the trade date at which
Goodman and GIT become a party to the contractual provisions of the instrument.
Derivative financial instruments and hedging
Goodman and GIT use derivative financial instruments to hedge their economic exposure to foreign exchange and interest rate risks arising from
operating, investing and financing activities. In accordance with the Group’s financial risk management (FRM) policy, Goodman and GIT do not hold
or issue derivative financial instruments for speculative trading purposes.
Goodman and GIT’s derivative financial instruments are not designated as a hedge for accounting purposes, and accordingly movements in the fair
value of derivative financial instruments are recognised in the income statement.
Cash flow hedges
Certain of Goodman and GIT’s associates and JVs continue to designate derivative financial instruments as cash flow hedges for accounting purposes.
Goodman’s and GIT’s share of the effective portion of changes in the fair value of derivative financial instruments in associates and JVs that are
designated and qualify as cash flow hedges is recognised in the cash flow hedge reserve. The gain or loss relating to any ineffective portion is recognised
in the income statement.
Other financial assets
Current
Derivative financial instruments1
Non-current
Derivative financial instruments1
Investment in unlisted securities, at fair value
Goodman
2023
$M
87.8
87.8
363.4
18.1
381.5
2022
$M
1.6
1.6
482.8
13.6
496.4
GIT
2023
$M
76.6
76.6
232.1
19.6
251.7
2022
$M
1.6
1.6
341.3
31.8
373.1
1.
Includes fair values of derivative financial instruments equating to $81.7 million (2022: $133.3 million) that hedge Goodman’s net investments in Continental Europe and the United Kingdom.
Other financial liabilities
Current
Derivative financial instruments1
Non-current
Derivative financial instruments1
Goodman
GIT
2023
$M
143.9
143.9
480.1
480.1
2022
$M
71.2
71.2
447.7
447.7
2023
$M
63.9
63.9
2022
$M
25.9
25.9
383.6
383.6
325.3
325.3
1.
Includes fair values of derivative financial instruments equating to $34.2 million (2022: $79.6 million) that hedge Goodman’s net investments in Continental Europe and the United Kingdom.
133
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
17 Financial risk management
The Board has overall responsibility for approving Goodman’s risk
management framework. The Board has established the Audit, Risk
and Compliance committee, which is responsible for reviewing, approving
and subsequently monitoring the Group’s risk management policies,
including the FRM policy. The FRM policy is established to identify and
analyse the financial risks faced by the Group, to set appropriate risk
limits and controls for managing the financial affairs of the Group, and
to monitor those risks and adherence to limits by Management.
Goodman’s treasury function is responsible for the day to day compliance
with the Group’s FRM policy and prepares reports for consideration by
management committees and the Board including:
Cash flow projections over a period of at least 12 months to assess
the level of cash and undrawn facilities, and headline gearing at each
month end
Capital management
Goodman’s principal capital management objectives are to maintain
a strong capital base and provide funds for operating activities
(including development expenditure), capital expenditure and investment
opportunities as they arise. This is achieved through an appropriate mix
of debt and equity.
Goodman is able to alter the capital mix by issuing new Goodman debt
and equity securities or hybrid securities, by reinstating the distribution
reinvestment plan, by adjusting the timing of development and capital
expenditure and by selling assets to reduce borrowings. Goodman also
manages capital through its distribution policy in which distributions made
to Securityholders are based on the Group’s operating profit, subject to
a minimum distribution equal to the taxable income of the Trust.
Goodman’s key financial risks are market risk (including foreign exchange
and interest rate risk), liquidity risk and credit risk.
Debt maturity profile, to allow the Group to plan well in advance of
maturing facilities
(a) Market risk
Foreign exchange risk
Goodman is exposed to foreign exchange risk through its investments in
New Zealand, Hong Kong, China, Japan, Continental Europe, the United
Kingdom, North America and Brazil. Foreign exchange risk represents the
gain or loss that would be recognised from fluctuations in currency prices
against the Australian dollar as a result of Goodman’s net investment in
foreign operations, future commercial transactions, and other foreign
currency denominated assets and liabilities.
+
+
+
+
Interest rate hedge profile over the next 10 years, to allow the Group to
manage the proportion of fixed and floating rate debt in accordance
with its FRM policy
Capital hedge position (by currency) and profile of expiring currency
derivatives, to allow the Group to manage its net investment hedging
in accordance with its FRM policy.
Any significant investments or material changes to the finance facilities or
FRM policy require approval by the Board.
134
ANNUAL REPORT 2023
In managing foreign exchange risks, Goodman aims to reduce the impact of short-term fluctuations on Goodman’s earnings and net assets. However,
over the long term, permanent changes in foreign exchange rates will have an impact on both earnings and net assets.
Goodman’s capital hedge policy for each overseas region is to hedge between 65% and 90% of foreign currency denominated assets with foreign currency
denominated liabilities. This is achieved by borrowing in the same currency as the overseas investments to form a natural economic hedge against any
foreign currency fluctuations and/or using derivatives such as cross currency interest rate swaps (CCIRS) and foreign exchange contracts (FEC).
The Group’s hedge position is monitored on an ongoing basis and the Group will enter into new derivatives (including forward start contracts) and
close out or enter into contra derivative contracts to manage the capital hedge position.
As at 30 June 2023, the principal that was used to hedge its exposures using derivatives and the weighted average exchange rates, by currency, are
set out below:
Goodman
AUD receivable/NZD payable
2023
2022
Amounts
payable
Amounts
receivable
Weighted
average
exchange
rate
Amounts
payable
Amounts
receivable
Weighted
average
exchange
rate
NZD’M
AUD’M
AUD/NZD
NZD’M
AUD’M
AUD/NZD
(750.0)
HKD'M
696.4
1.0775
AUD'M
AUD/HKD
(750.0)
HKD'M
696.4
1.0775
AUD'M
AUD/HKD
AUD receivable/HKD payable
(8,840.0)
1,598.2
5.5324
(8,340.0)
1,466.9
5.6976
AUD receivable/EUR payable
AUD receivable/GBP payable
AUD receivable/USD payable
EUR'M
(925.0)
GBP'M
(435.0)
USD'M
(1,050.0)
JPY'M
AUD'M
AUD/EUR
1,460.8
0.6341
AUD'M
AUD/GBP
796.4
0.5468
AUD'M
AUD/USD
EUR'M
(825.0)
GBP'M
(380.0)
USD'M
AUD'M
AUD/EUR
1,314.0
0.6283
AUD'M
AUD/GBP
703.4
0.5403
AUD'M
AUD/USD
1,455.5
0.7221
(1,050.0)
1,455.5
0.7221
AUD'M
AUD/JPY
JPY'M
AUD'M
AUD/JPY
AUD receivable/JPY payable
(14,000.0)
177.7
78.1791
(23,000.0)
297.2
77.5413
USD receivable/CNY payable
CNY'M
(4,727.6)
USD'M
USD/CNY
CNY'M
USD'M
USD/CNY
642.2
7.3612
(4,258.6)
539.6
7.8927
135
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
17 Financial risk management (continued)
GIT
AUD receivable/NZD payable
2023
2022
Amounts
payable
Amounts
receivable
Weighted
average
exchange
rate
Amounts
payable
Amounts
receivable
Weighted
average
exchange
rate
NZD’M
AUD’M
AUD/NZD
(450.0)
HKD'M
416.3
1.0814
AUD'M
AUD/HKD
NZD’M
(450.0)
HKD'M
AUD’M
AUD/NZD
416.3
1.0814
A$M
AUD/HKD
AUD receivable/HKD payable
(7,190.0)
1,297.7
5.5371
(7,190.0)
1,264.6
5.6981
AUD receivable/EUR payable
AUD receivable/GBP payable
AUD receivable/USD payable
AUD receivable/JPY payable
EUR'M
(430.0)
GBP'M
(285.0)
USD'M
(600.0)
JPY'M
–
AUD'M
AUD/EUR
657.8
0.6543
AUD'M
AUD/GBP
516.5
0.5524
AUD'M
AUD/USD
820.9
0.7318
A$M
AUD/JPY
EUR'M
(50.0)
GBP'M
(125.0)
USD'M
(600.0)
JPY'M
A$M
AUD/EUR
75.7
0.6605
A$M
AUD/GBP
228.9
0.5460
A$M
AUD/USD
820.9
0.7318
A$M
AUD/JPY
–
–
(17,000.0)
225.3
75.4506
In addition to the derivatives detailed in the table above, GIT also has FECs with a controlled entity of GL to hedge that entity’s USD exposure. On
maturity of the contracts, GIT will receive USD 206.8 million from GL (2022: USD 81.8 million) and pay GBP 167.8 million to GL (2022: GBP 53.8 million).
Sensitivity analysis
Throughout the financial year, if the Australian dollar had been 5% stronger against all other currencies, with all other variables held constant, the
profit attributable to Securityholders, excluding derivative mark to market and unrealised foreign exchange movements, would have decreased
by A$50.0 million (2022: A$107.9 million decrease) for Goodman and A$21.0 million (2022: A$48.1 million) for GIT. If the Australian dollar had been
5% weaker against all other currencies, with all other variables held constant, the profit attributable to Securityholders, excluding derivative mark
to market and unrealised foreign exchange movements, would have increased by A$50.0 million (2022: A$107.9 million increase) for Goodman and
A$21.0 million (2022: A$48.1 million) for GIT.
Interest rate risk
Goodman’s interest rate payments risk arises from variable rate borrowings and the Group’s CCIRS that hedge the overseas investments. Goodman
has a policy of hedging between 60% and 100% of its payments exposure to changes in interest rates for a 3 year period, progressively decreasing
from the fourth year . Goodman enters into interest rate derivatives (IRD) to manage cash flow risks associated with the interest rates on payments
that are floating. The IRD contracts are for 90-day intervals and involve quarterly payments or receipts of the net amount of interest.
136
ANNUAL REPORT 2023
As at 30 June 2023, Goodman and GIT’s fixed and floating interest rate exposure (by principal) based on existing interest bearing liabilities and
derivative financial instruments is set out below:
Goodman
30 June 20231
Fixed rate liabilities
Floating rate liabilities
30 June 20222
Fixed rate liabilities
Floating rate liabilities
GIT
30 June 20231
Fixed rate liabilities
Floating rate liabilities
30 June 20222
Fixed rate liabilities
Floating rate liabilities
Interest bearing
liabilities
A$M
2,896.3
417.4
3,313.7
2,844.7
9.0
2,853.7
Interest bearing
liabilities
A$M
2,844.3
156.0
3,000.3
2,844.7
–
2,844.7
Impact of derivatives
CCIRS
A$M
–
6,407.0
6,407.0
–
5,857.8
5,857.8
Impact of derivatives
CCIRS
A$M
–
3,898.2
3,898.2
–
3,034.9
3,034.9
IRD
A$M
3,886.3
3,886.3
–
2,877.1
(2,877.1)
–
IRD
A$M
2,200.4
(2,200.4)
–
1,590.2
(1,590.2)
–
Net interest
rate exposure
A$M
6,782.6
2,938.1
9,720.7
5,721.8
2,989.7
8,711.5
Net interest
rate exposure
A$M
5,044.7
1,853.8
6,898.5
4,434.9
1,444.7
5,879.6
1. Goodman and GIT are also exposed to variable interest rates on cash at bank and the principal amount of the Australian dollar receiver legs of the CCIRS. To hedge this interest rate
exposure, Goodman and GIT hold IRDs.
At 30 June 2023, Goodman’s cash at bank was $1,360.1 million (FY22: $1,056.0 million) and the principal amount of the Australian dollar receiver legs of the CCIRS was $6,184.9 million
(FY22: $5,933.4 million). The principal amount of the IRDs to hedge this exposure amounted to $3,341.0 million (FY22: $2,630.0 million). Accordingly, at 30 June 2023, Goodman had a net
variable interest rate exposure on its cash and receivables (by principal) of $4,204.0 million (2022: $4,359.4 million).
At 30 June 2023, GIT’s cash at bank was $689.9 million (FY22: $473.6 million) and the principal amount of the Australian dollar receiver legs of the CCIRS was $3,709.3 million (FY22: $3,031.8
million). The principal amount of the IRDs to hedge this exposure amounted to $3,341.0 million (FY22: $2,630.0 million). Accordingly, at 30 June 2023, GIT had a net variable interest rate exposure
on its cash and receivables (by principal) of $1,058.2 million (2022: $875.4 million).
2. For consistency with the current year’s presentation, the comparative figures have been adjusted to exclude the principal amount of the Australian dollar receiver legs of the CCIRS and the
principal amount of the IRDs which hedge the interest rate exposure on these receiver legs. For Goodman, the adjustments amounted to $5,933.4 million to the principal amount of the CCIRS
and $2,130.0 million to the principal amount of the IRDs. For GIT, the adjustments amounted to $3,031.9 million to the principal amount of the CCIRS and $2,130.0 million to the principal
amount of the IRDs.
137
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
17 Financial risk management (continued)
As a result of the fixed rate interest bearing liabilities and derivative financial instruments that existed at 30 June 2023, Goodman and GIT would have
the following fixed payable interest rate exposure (by principal) at the end of each of the next five financial years. This assumes all interest bearing
liabilities and derivative financial instruments mature in accordance with current contractual terms and that no new arrangements are entered into.
Goodman
Number of years post balance date
1 year
2 years
3 years
4 years
5 years
GIT
Number of years post balance date
1 year
2 years
3 years
4 years
5 years
2023
2022
Fixed
interest rate
(by principal)
A$M
6,619.0
5,868.2
4,644.8
3,601.6
2,761.5
Weighted average
interest rate
% per annum
2.15
2.40
2.71
3.10
3.43
Fixed
interest rate
(by principal)1
A$M
Weighted average
interest rate1
% per annum
5,904.2
5,671.0
4,932.3
3,774.7
2,855.3
2.18
2.10
2.38
2.73
3.18
2023
2022
Fixed
interest rate
(by principal)
A$M
5,001.1
4,981.7
3,913.7
3,003.6
2,242.2
Weighted average
interest rate
% per annum
2.56
2.57
2.91
3.37
3.76
Fixed
interest rate
(by principal)1
A$M
4,689.6
4,519.4
4,476.1
3,450.0
2,598.4
Weighted average
interest rate1
% per annum
2.67
2.54
2.56
2.94
3.45
1. For consistency with the current year’s presentation, the comparative figures have been adjusted to exclude the principal amount and associated interest rate impact of the Australian dollar
receiver legs of CCIRS and the principal amount of IRDs which hedge the inflows arising from them.
138
ANNUAL REPORT 2023
Sensitivity analysis
(b) Liquidity risk
Liquidity risk is the risk that Goodman will not be able to meet its
financial obligations as they fall due. Goodman’s objective is to maintain
sufficient liquidity to fund short-term working capital, capital expenditure,
investment opportunities, debt expiries and distributions. This is achieved
through the monthly preparation of a three-year cash flow forecast to
understand the uses of funds and to identify potential shortfalls in funding
or potential breaches of financial covenants in its loan arrangements.
This allows Goodman to plan for renewal of debt facilities, negotiation
of new debt facilities, new issues of securities, including the distribution
reinvestment plan, and other potential sources of funding.
Goodman’s treasury function is responsible for reporting details of all debt
maturities to the Board at its regular meetings.
Goodman seeks to spread its debt maturities such that the total debt
repayable in a single financial year does not exceed Board approved
policy levels.
Throughout the financial year, if interest rates (based on the interest
bearing liabilities and derivative financial instruments in place at the end
of the year) had been 100 basis points per annum higher/lower, with all
other variables held constant, the profit attributable to Securityholders,
excluding derivative mark to market movements, would have
increased/decreased by A$1.4 million (2022: increased/decreased by
A$8.1 million) for Goodman and decreased/increased by A$9.3 million
(2022: decreased/increased by A$5.4 million) for GIT.
Managing interest rate benchmark reform and associated risks
A fundamental reform of major interest rate benchmarks has been
undertaken globally, including the replacement of some interbank offered
rates (IBORs) with alternative nearly risk-free rates (referred to as ‘IBOR
reform’).The Group had exposure to IBORs through certain of its bank
loans (interest bearing liabilities) and its derivative instruments (IRD and
CCIRS). Most of the Group’s external interest bearing liabilities are bonds
with fixed coupons and are not exposed to IBORs. The Group’s derivative
instruments are governed by contracts based on the International Swaps
and Derivatives Association (ISDA) master agreements.
Amendments to the Group’s financial instruments with contractual
terms indexed to sterling LIBOR, Japanese yen LIBOR or US dollar LIBOR,
such that they incorporate the new benchmark rates, were completed by
31 December 2021. The sterling and Japanese yen LIBORs transitioned on
1 January 2023 and the US dollar LIBOR transitioned to SOFR on 1 July 2023.
For Goodman’s other IBOR exposures, the transition to alternative risk-free
rates has been deferred and/or extended and therefore no action has been
or will be taken in that regard until such time as the alternative reference
rates are defined and scheduled. It is expected that these will follow the
conventions established in other markets and the Group will apply the same
principles for those transitions as and when they become relevant.
139
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
17 Financial risk management (continued)
The contractual maturities of financial liabilities are set out below:
Carrying
amount
Contractual
cash flows
Less than
1 year
1-2
year(s)
$M
$M
$M
$M
2-3
years
$M
3-4
years
$M
4-5
years
More than
5 years
$M
$M
Goodman
As at 30 June 2023
Non-derivative financial liabilities
Payables (excluding contract liabilities)
1,052.4
1,052.4
Lease liabilities
Bank loans, secured1
Bank loans, unsecured1
67.7
47.9
421.5
119.7
47.9
421.5
USD denominated notes, unsecured
2,025.8
2,783.6
EUR denominated notes, unsecured
818.5
843.8
662.2
12.3
–
–
85.8
11.3
330.2
11.0
–
–
85.8
11.3
30.0
7.4
–
–
85.8
821.2
20.0
6.4
–
265.5
85.8
–
10.0
6.0
–
–
–
76.6
47.9
156.0
77.3
2,363.1
–
–
Total non-derivative financial liabilities
4,433.8
5,268.9
771.6
438.3
944.4
377.7
93.3
2,643.6
(101.5)
(107.1)
(48.4)
(21.9)
(26.3)
(5.6)
(9.8)
4.9
–
(1,530.2)
274.3
1,605.6
(453.5)
480.9
(314.7)
306.3
(311.7)
320.7
(216.8)
308.8
(142.4)
108.7
(91.1)
80.2
172.8
(31.7)
(21.0)
(30.3)
(17.3)
86.4
(43.5)
(6.0)
Derivative financial
(assets)/liabilities – net
Net settled2
Gross settled:3
(Inflow)
Outflow
Total derivative financial
liabilities/(assets) – net
As at 30 June 2022
Non-derivative financial liabilities
Payables (excluding contract liabilities)
Lease liabilities
Bank loans, secured1
USD denominated notes, unsecured
1,953.1
2,822.9
EUR denominated notes, unsecured
Foreign private placement, unsecured
758.3
133.3
799.9
137.7
712.8
70.6
9.0
712.8
121.6
9.0
601.8
12.5
–
139.2
18.3
137.7
58.2
14.2
–
82.7
10.4
–
26.4
76.5
–
82.7
10.4
–
17.6
4.1
–
82.7
760.8
–
8.8
3.9
–
–
10.4
9.0
82.7
2,352.9
–
–
–
–
Total non-derivative financial liabilities
3,637.1
4,603.9
909.5
165.5
196.0
865.2
95.4
2,372.3
Derivative financial
(assets)/liabilities – net
Net settled2
Gross settled:3
(Inflow)
Outflow
Total derivative financial
liabilities/(assets) – net
33.8
35.3
14.0
5.7
22.2
8.2
3.5
(18.3)
0.7
–
(1,565.0)
(249.5)
1,113.4
218.5
(411.0)
329.5
(257.1)
169.6
(310.8)
189.7
(171.2)
156.4
(165.5)
49.7
34.5
(416.3)
(17.0)
(75.8)
(65.3)
(112.9)
(11.3)
(134.1)
1. Contractual cash flows relating to bank loans exclude any estimate of interest payments that might arise under Goodman’s revolving loan facilities.
2. Net settled includes IRD and FEC.
3. Gross settled includes CCIRS.
140
ANNUAL REPORT 2023
The contractual maturities of financial liabilities are set out below:
Carrying
amount
Contractual
cash flows
Less than
1 year
1-2
year(s)
$M
$M
$M
$M
2-3
years
$M
3-4
years
$M
4-5
years
More than
5 years
$M
$M
GIT
As at 30 June 2023
Non-derivative financial liabilities
Payables
Bank loans, unsecured1
USD denominated notes, unsecured
2,025.8
2,783.6
EUR denominated notes, unsecured
818.5
843.8
948.9
156.0
948.9
156.0
170.9
328.0
126.2
–
85.8
11.3
–
85.8
11.3
–
85.8
821.2
20.5
–
85.8
–
46.6
–
256.7
156.0
77.3
2,363.1
–
–
Total non-derivative financial liabilities
3,949.2
4,732.3
268.0
425.1
1,033.2
106.3
123.9
2,775.8
Derivative financial
(assets)/liabilities – net
Net settled2
Gross settled:3
(Inflow)
Outflow
Total derivative financial
liabilities/(assets) – net
As at 30 June 2022
Non-derivative financial liabilities
(67.2)
(7.6)
10.8
(1.3)
(16.2)
1.1
(6.0)
4.0
–
(494.1)
206.1
1,050.4
(199.1)
322.3
(82.9)
202.1
(79.1)
225.8
(57.7)
180.1
(57.6)
78.5
(17.7)
41.6
138.9
548.7
134.0
117.9
130.5
123.5
14.9
27.9
Payables
796.5
796.5
USD denominated notes, unsecured
1,953.1
2,822.9
EUR denominated notes, unsecured
Foreign private placement, unsecured
758.3
133.3
800.0
137.7
72.7
139.2
18.3
137.7
Total non-derivative financial liabilities
3,641.2
4,557.1
367.9
4.8
82.7
10.4
–
97.9
64.5
82.7
10.4
–
282.7
82.7
760.8
–
139.4
82.7
232.4
2,352.9
–
–
–
–
157.6
1,126.2
222.1
2,585.3
Derivative financial
(assets)/liabilities – net
Net settled2
Gross settled:3
(Inflow)
Outflow
Total derivative financial
liabilities/(assets) – net
(22.0)
141.6
39.4
35.5
33.3
33.5
10.5
(10.5)
30.3
–
(737.3)
753.2
(104.8)
(234.6)
161.1
237.7
(90.9)
100.7
(115.1)
125.6
(51.6)
87.3
(140.1)
40.8
8.3
157.5
95.7
38.6
43.1
44.0
46.2
(109.8)
1. Contractual cash flows relating to bank loans exclude any estimate of interest payments that might arise under Goodman’s revolving loan facilities.
2. Net settled includes IRD and FEC.
3. Gross settled includes CCIRS.
141
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
17 Financial risk management (continued)
(c) Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The maximum exposure to credit risk on financial assets, excluding investments, which have been recognised on the statement of financial position,
is equal to the carrying amount.
Goodman has a policy of assessing the creditworthiness of all potential customers and is not materially exposed to any one customer. Goodman evaluates all
customers’ perceived credit risk and may require the lodgement of rental bonds or bank guarantees, as appropriate, to reduce credit risk. In addition, all rents are
payable monthly in advance. Bank guarantees are accepted from financial institutions which have an investment grade credit rating from a major rating agency.
Concentration of credit risk may exist due to receivables in respect of the disposals of investment properties. The credit risk is minimised as legal
title to the properties is only transferred upon receipt of proceeds and typically Goodman will have either received a cash deposit or be the beneficiary
of a bank guarantee for 10% to 20% of the total proceeds.
In relation to material bank deposits, Goodman minimises credit risk by dealing with major financial institutions. The counterparty must have a long-term
investment grade credit rating from a major rating agency. The amounts and other terms associated with bank deposits are formally reviewed monthly.
The credit risks associated with derivative financial instruments are managed by:
+
+
Transacting with multiple derivatives counterparties that have a long-term investment grade credit rating
Utilising ISDA agreements with derivative counterparties in order to limit exposure to credit risk through netting of amounts receivable and
amounts payable to individual counterparties (refer below)
+
Formally reviewing the mark to market position of derivative financial instruments by counterparty on a monthly basis.
Master netting off or similar agreements
Goodman enters into derivative transactions under ISDA master netting off agreements. Under these agreements, where certain credit events occur
(such as a default), all outstanding transactions under the agreement are terminated and a single net termination value is payable in full and final settlement.
As Goodman does not have any current legally enforceable right to offset, the fair values associated with derivative financial instruments have been
presented gross in the statement of financial position. However, if a credit event occurred, the ISDA master netting off agreement would allow A$278.0
million (2022: A$361.3 million) and A$227.2 million (2022: A$256.1 million) of financial assets and financial liabilities in relation to Goodman’s and GIT’s
respective derivative financial instruments to be offset.
(d) Fair values of financial instruments
The carrying amounts shown in the statement of financial position and fair values of financial assets and liabilities are as follows:
Financial assets
Cash and cash equivalents
Receivables
Other financial assets:
– Interest rate derivatives
– Cross currency interest rate swaps
– Foreign exchange contracts
– Investments in unlisted securities
Financial liabilities
Payables (excluding contract liabilities)
Interest bearing liabilities1
Other financial liabilities:
– IRD
– CCIRS
– FEC
Carrying
amount
2023
$M
Goodman
Fair
value
2023
$M
Carrying
amount
2022
$M
Fair
value
2022
$M
Carrying
amount
2023
$M
GIT
Fair
value
2023
$M
Carrying
amount
2022
$M
Fair
value
2022
$M
1,360.1
474.1
1,360.1
474.1
1,056.0
391.2
1,056.0
391.2
689.9
3,364.5
689.9
3,364.5
473.6
3,268.4
473.6
3,268.4
305.4
136.2
9.6
18.1
2,303.5
305.4
136.2
9.6
18.1
2,303.5
210.5
271.6
2.3
13.6
1,945.2
210.5
271.6
2.3
13.6
1,945.2
211.0
97.5
0.2
19.6
4,382.7
211.0
97.5
0.2
19.6
4,382.7
129.1
194.8
19.0
31.8
4,116.7
129.1
194.8
19.0
31.8
4,116.7
1,052.4
3,292.9
1,052.4
3,034.9
712.8
2,832.2
712.8
2,670.6
948.9
2,982.8
948.9
2,721.5
796.5
2,825.4
796.5
2,528.3
142.4
410.5
71.1
4,969.3
142.4
410.5
71.1
4,711.3
126.2
272.3
120.4
4,063.9
126.2
272.3
120.4
3,902.3
141.2
303.6
2.7
4,379.2
141.2
303.6
2.7
4,117.9
126.2
225.0
–
3,973.1
126.2
225.0
–
3,676.0
1. The fair value of certain fixed rate interest bearing liabilities has been determined by reference to the quoted market prices at 30 June 2023.
142
ANNUAL REPORT 2023
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method
As at 30 June 2023
Derivative financial assets
Investments in unlisted securities
Derivative financial liabilities
As at 30 June 2022
Derivative financial assets
Investments in unlisted securities
Derivative financial liabilities
Goodman
Level 1
Level 2
Level 3
$M
$M
$M
–
–
–
–
–
–
–
–
–
–
451.2
–
451.2
624.0
624.0
484.4
–
484.4
518.9
518.9
–
18.1
18.1
–
–
–
13.6
13.6
–
–
Total
$M
451.2
18.1
469.3
624.0
624.0
484.4
13.6
498.0
518.9
518.9
GIT
Level 1
Level 2
Level 3
$M
$M
$M
–
–
–
–
–
–
–
–
–
–
308.8
–
308.8
447.5
447.5
342.9
–
342.9
351.2
351.2
–
19.6
19.6
–
–
–
31.8
31.8
–
–
Total
$M
308.8
19.6
328.4
447.5
447.5
342.9
31.8
374.7
351.2
351.2
There were no transfers between the levels during the year.
Valuation techniques used to derive Level 2 and Level 3 fair values
The Level 2 derivative financial instruments held by Goodman and GIT consist of IRD, CCIRS and FEC.
The fair values of derivative financial instruments are determined using generally accepted pricing models which discount estimated future cash
flows based on the terms and maturity of each contract and current market interest rates and/or foreign currency rates, adjusted for specific features
of the instruments.
143
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
18 Dividends and distributions
Dividends and distributions are recognised when they are declared and before deduction of any withholding tax. Any non-recoverable withholding tax
is included in income tax.
Goodman
FY23 dividends/distributions
GL
GIT
– 31 December 2022
– 30 June 2023
GLHK
FY22 dividends/distributions
GL
GIT
– 31 December 2021
– 30 June 2022
GLHK
Distributions on treasury securities
GIT
Dividends/distributions
cents per security
Total amount
$M
–
–
15.0
10.0
5.0
30.0
282.1
188.3
94.2
564.6
Dividends/distributions
cents per security
Total amount
$M
–
–
15.0
12.5
2.5
30.0
30.0
280.2
233.6
46.7
560.5
(0.4)
560.1
Date of
payment
n/a
24 Feb 2023
25 Aug 2023
25 Aug 2023
Date of
payment
n/a
25 Feb 2022
26 Aug 2022
26 Aug 2022
In FY23, GIT’s distributions were 25.0 cents per security (2022: 27.5 cents per security) amounting to $470.5 million (2022: $513.8 million).
Movement in provision for dividends/distributions to Securityholders
Goodman
2023
$M
280.0
564.6
(562.1)
2022
$M
277.1
560.1
(557.2)
GIT
2023
$M
233.5
470.5
2022
$M
166.3
513.8
(515.6)
(446.6)
282.5
280.0
188.4
233.5
Balance at the beginning of the year
Provisions for dividends/distributions
Dividends/distributions paid
Balance at the end of the year
144
ANNUAL REPORT 2023
19
Issued capital
(a) Ordinary securities
Ordinary securities are classified as equity. Incremental costs directly attributable to issues of ordinary securities are recognised as a deduction from
equity, net of any tax effects.
2023
2022
Number of securities
Goodman
2023
$M
2022
$M
GIT
2023
$M
2022
$M
Stapled securities:
– Issued and fully paid
– Treasury securities
Less: Accumulated issue costs
Total issued capital
Terms and conditions
1,883,819,883
–
1,883,819,883
1,233,333
1,866,989,276 8,434.5 8,367.1
–
(161.0)
1,868,222,609 8,273.3 8,206.1
–
(161.2)
–
8,504.3 8,303.3
–
(148.8)
8,154.5
(148.9)
8,355.4
Stapled security means one share in the Company stapled to one unit in the Trust and one CDI over a share in GLHK. Holders of stapled securities are
entitled to receive dividends or distributions as declared from time to time and are entitled to one vote per security at Securityholders’ meetings. In the
event of a winding up, Securityholders rank after creditors and are fully entitled to any net proceeds of liquidation.
Movement in ordinary securities
Date
30 June 2021
31 August 2021
31 August 2021
2 September 2021
30 June 2022
1 September 2022
1 September 2022
19 May 2023
30 June 2023
Details
Balance before accumulated issue costs
Securities issued to employees under the LTIP
Issue of treasury securities
Issue of securities
Balance before accumulated issue costs
Securities issued to employees under the LTIP
Treasury securities allocated to employees under the LTIP
Issue of securities
Less: Accumulated issue costs
Closing balance
(b) Share based payments
LTIP
Number of
securities
1,847,429,255
14,716,648
1,233,333
4,843,373
1,868,222,609
13,479,812
(1,233,333)
3,350,795
1,883,819,883
Goodman
$M
8,257.3
–
–
109.8
8,367.1
–
–
67.4
(161.2)
8,273.3
GIT
$M
7,997.7
216.3
18.1
71.2
8,303.3
158.5
–
42.5
(148.9)
8,355.4
The Group’s share-based payments primarily relate to performance rights awarded to employees under the LTIP. These performance rights entitle
an employee to either acquire Goodman securities for $nil consideration (equity settled performance rights) or, in certain jurisdictions, to receive an
amount in cash equal to the value of the securities (cash settled performance rights), subject to the vesting conditions having been satisfied. Further
details regarding the vesting conditions are included in the remuneration report section of the Directors’ report.
During the year, the movement in the number of performance rights under the LTIP was as follows:
Outstanding at the beginning of the year
Granted
Exercised
Forfeited
Outstanding at the end of the year
Exercisable at the end of the year
Number of rights
2023
2022
71,750,644
68,640,720
22,431,397
23,468,860
(16,830,607)
(19,545,855)
(1,033,344)
(813,081)
76,318,090
71,750,644
–
–
145
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
19 Issued capital (continued)
Share-based payments transactions
The fair value of equity settled performance rights at the grant date is expensed with a corresponding increase in the employee compensation reserve
over the period from the grant date to the vesting dates. The expense is adjusted to reflect the actual number of performance rights for which the
related service and non-market vesting conditions are expected to be met. The accumulated share-based payments expense of performance rights
which have vested or lapsed is transferred from the employee compensation reserve to retained earnings.
The fair value of cash settled performance rights is also recognised as an expense but with a corresponding increase in liabilities over the vesting
period. The expense is adjusted to reflect the actual number of performance rights for which the related service and non-market vesting conditions
are expected to be met. The liability is remeasured at each reporting date and at the vesting date based on the fair value of the rights.
The fair value of services received in return for performance rights granted under the LTIP is measured by reference to the fair value of the
performance rights granted. The fair value of the performance rights granted during the year was measured as follows:
+
+
Operating EPS tranches: these rights were valued as a granted call option, using the standard Black Scholes model with a continuous
dividend/distribution yield
Relative TSR tranches: these rights were valued using a Monte Carlo model which simulated total returns for each of the ASX 100 stocks and
discounted the future value of any potential future vesting performance rights to arrive at a present value. The model uses statistical analysis
to forecast total returns, based on expected parameters of variance and co-variance.
The model inputs for performance rights, both equity and cash settled, awarded during the current financial year included the following:
Fair value at measurement date ($)
Security price ($)
Exercise price ($)
Expected volatility (%)
Rights’ expected weighted average life (years)
Dividend/distribution yield per annum (%)
Average risk free rate of interest per annum (%)
10–year
rights
issued on
10–year
rights
issued on
5–year
rights
issued on
17 Nov 2022 30 Sep 2022 30 Sep 2022
13.89
18.18
–
27.61
6.8
1.65
3.43
11.69
15.78
–
27.15
6.9
1.90
3.76
12.32
15.78
–
31.49
3.9
1.90
3.62
The model inputs for the remeasurement of the cash settled performance rights at 30 June 2023 included the following:
10-year
rights issued
in FY23
10-year
rights issued
in FY22
5-year
rights issued
in FY23
5-year
rights issued
in FY22
5-year
rights issued
in FY21
5-year
rights issued
in FY20
5-year
rights issued
in FY19
Fair value at measurement date ($)
Security price ($)
Exercise price ($)
Expected volatility (%)
9.00
20.07
–
12.11
20.07
–
9.18
20.07
–
14.51
20.07
–
19.72
20.07
–
19.87
20.07
–
27.59
27.88
28.50
28.33
26.02
25.28
Rights’ expected weighted average life (years)
Dividend/distribution yield per annum (%)
Average risk free rate of interest per annum (%)
6.2
1.49
3.99
5.7
1.49
4.01
3.2
1.49
4.12
2.2
1.49
4.12
1.2
1.49
4.17
0.7
1.49
4.18
20.02
20.07
–
19.62
0.2
1.49
4.18
The amounts recognised as a share-based payments expense in the consolidated income statement are set out in note 1. At 30 June 2023, a liability
of $146.1 million (2022: $126.6 million) was recognised in relation to cash settled performance rights.
Goodman’s New Zealand Long Term Incentive Plan
Under Goodman’s New Zealand Long Term Incentive Plan, employees receive approximately half of their LTI in the form of performance rights over
GMT units that vest subject to meeting performance hurdles based on the achievement of distributable earnings targets by GMT and the relative
total unitholder return from holding GMT units compared to other NZX property vehicles. On vesting, delivery of units in GMT is made from units held
by Goodman or acquired on-market.
146
ANNUAL REPORT 2023
OTHER ITEMS
The notes in this section set out other information that is required to be disclosed to comply with the Australian Accounting Standards,
Corporations Act 2001 or Corporations Regulations.
20 Notes to the cash flow statements
(a) Reconciliation of cash
For the purpose of the cash flow statements, cash and cash equivalents include cash on hand at the bank and short-term deposits at call. Cash at the
end of the year as shown in the cash flow statements is reconciled to the related items in the statements of financial position as follows:
Bank balances
Call deposits
(b) Reconciliation of profit for the year to net cash provided by operating activities
Profit for the year
Items classified as investing activities
Net gain on disposal of investment properties
Net gain on disposal of assets held for sale
Net gain on disposal of equity investments
Non-cash items
Amortisation and depreciation
Share based payments expense
Net gain from fair value adjustments on investment properties
Share of net results of equity accounted investments
Net finance expense
Income tax expense
Changes in assets and liabilities during the year:
– Decrease in receivables
– (Increase)/decrease in inventories
– Decrease/(increase) in other assets
– (Decrease)/increase in payables
– Decrease in provisions
Distributions/dividends received from Partnerships
Net finance costs paid
Net income taxes paid
Net cash provided by operating activities
(c) Non-cash transactions
Goodman
GIT
2023
$M
1,360.1
–
1,360.1
2022
$M
811.3
244.7
1,056.0
2023
$M
689.9
–
689.9
2022
$M
184.2
289.4
473.6
Goodman
2023
$M
2022
$M
GIT
2023
$M
2022
$M
1,559.9
3,414.0
1,138.0
2,067.6
(3.6)
(4.3)
–
16.7
286.0
(278.9)
(1,022.4)
234.8
182.2
970.4
10.2
(27.5)
1.5
(47.5)
(2.6)
904.5
583.5
(39.7)
(164.1)
1,284.2
(73.6)
–
(0.2)
17.1
257.0
(260.1)
(2,718.2)
222.8
324.1
1,182.9
93.4
(646.1)
(0.1)
(85.5)
(0.1)
544.5
441.9
(34.9)
(110.5)
841.0
0.6
(4.3)
–
–
–
(229.0)
(1,079.1)
57.1
99.1
(17.6)
0.2
5.9
0.3
1.9
–
(9.3)
301.3
(82.8)
(2.1)
207.1
(69.8)
–
–
–
–
(208.3)
(2,173.0)
231.6
133.1
(18.8)
0.7
–
1.4
(1.5)
–
(18.2)
238.9
(23.6)
(1.1)
196.0
During the current and prior financial years, other than disclosed elsewhere in the consolidated financial statements, there were no significant
non-cash transactions.
147
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
20 Notes to the cash flow statements (continued)
(d) Reconciliation of liabilities arising from financing activities
Interest
bearing
liabilities
Derivative
financial
instruments
Provision
for
distributions
$M
2,060.3
$M
(157.6)
$M
277.1
Lease
liabilities
$M
94.0
1,466.5
(779.2)
–
–
687.3
83.2
(2.2)
–
3.6
–
–
–
–
3.6
2,832.2
1,029.3
–
(10.1)
–
–
(10.1)
12.5
189.7
–
–
–
–
–
–
–
34.5
–
(687.5)
(84.5)
–
–
341.8
115.6
–
–
3.3
–
–
–
3.3
3,292.9
–
–
(84.5)
1.5
221.3
–
–
–
–
–
–
172.8
–
–
–
(557.2)
(557.2)
–
–
–
–
–
–
–
560.1
560.1
280.0
–
–
–
(562.1)
(562.1)
–
–
–
–
–
–
564.6
564.6
282.5
–
–
(13.4)
–
(13.4)
(1.6)
–
15.6
–
1.0
(25.0)
–
–
(8.4)
70.6
–
–
(13.2)
–
(13.2)
2.5
–
10.9
–
1.0
(4.1)
–
7.8
67.7
Total
$M
2,273.8
1,466.5
(789.3)
(13.4)
(557.2)
106.6
94.1
187.5
15.6
3.6
1.0
(25.0)
–
560.1
555.3
3,217.3
1,029.3
(772.0)
(13.2)
(562.1)
(318.0)
119.6
221.3
10.9
3.3
1.0
(4.1)
564.6
575.7
3,815.9
Goodman
Balance at 30 June 2021
Changes from financing cash flows
Proceeds from borrowings
and derivative financial instruments
Payments on borrowings and
derivative financial instruments
Payment of lease liabilities
Distributions paid
Total changes from financing cash flows
Effect of changes in foreign exchange rates
Changes in fair value
Other changes
New leases
Other borrowing costs
Interest expense on lease liabilities
Disposal of right of use assets
Debt modification costs
Distributions declared
Total other changes
Balance at 30 June 2022
Proceeds from borrowings and
derivative financial instruments
Payments on borrowings and
derivative financial instruments
Payment of lease liabilities
Distributions paid
Total changes from financing cash flows
Effect of changes in foreign exchange rates
Changes in fair value
Other changes
New leases
Other borrowing costs
Interest expense on lease liabilities
Disposal of right of use assets
Distributions declared
Total other changes
Balance at 30 June 2023
148
ANNUAL REPORT 2023
GIT
Balance at 30 June 2021
Changes from financing cash flows
Net cash flows from loans to related parties
Proceeds from borrowings and derivative financial
instruments
Payments on borrowings and derivative financial instruments
Distributions paid
Total changes from financing cash flows
Effect of changes in foreign exchange rates
Changes in fair value
Other changes
Issue of units under the LTIP
Equity settled share based payments transactions
Interest income
Interest expense
Interest paid
Other borrowing costs
Derivative financial instrument settlement through loans with
related parties
Distributions declared
Total other changes
Balance at 30 June 2022
Changes from financing cash flows
Net cash flows from loans to related parties
Proceeds from borrowings and derivative financial
instruments
Payments on borrowings and derivative financial instruments
Distributions paid
Total changes from financing cash flows
Effect of changes in foreign exchange rates
Changes in fair value
Other changes
Issue of units under the LTIP
Equity settled share based payments transactions
Interest income
Interest expense
Interest paid
Other borrowing costs
Derivative financial instrument settlement
Distributions declared
Total other changes
Balance at 30 June 2023
Interest
bearing
liabilities
$M
2,062.8
Derivatives
used for
hedging
$M
(182.4)
Provision
for
distributions
$M
166.3
Loans with
related
parties, net
$M
(2,559.5)
–
1,456.4
(777.3)
–
679.1
79.8
–
–
–
–
–
–
3.7
–
–
3.7
2,825.4
–
712.3
(687.4)
–
24.9
127.9
–
–
–
–
–
–
4.6
–
–
4.6
2,982.8
17.4
–
(10.1)
–
7.3
1.9
181.5
–
–
–
–
–
–
–
–
–
8.3
11.9
–
(35.5)
–
(23.6)
(2.5)
156.6
–
–
–
–
–
–
–
–
–
138.8
–
–
–
(446.6)
(446.6)
–
–
–
–
–
–
–
–
–
513.8
513.8
233.5
–
–
–
(515.6)
(515.6)
–
–
–
–
–
–
–
–
–
470.5
470.5
188.4
262.2
–
–
–
262.2
60.3
–
(234.4)
(29.8)
(72.3)
9.7
5.7
–
17.4
–
(303.7)
(2,540.7)
179.8
–
–
–
179.8
(163.4)
–
(158.5)
(32.9)
(93.8)
20.1
12.8
–
11.9
–
(240.4)
(2,764.7)
Total
$M
(512.8)
279.6
1,456.4
(787.4)
(446.6)
502.0
142.0
181.5
(234.4)
(29.8)
(72.3)
9.7
5.7
3.7
17.4
513.8
213.8
526.5
191.7
712.3
(722.9)
(515.6)
(334.5)
(38.0)
156.6
(158.5)
(32.9)
(93.8)
20.1
12.8
4.6
11.9
470.5
234.7
545.3
149
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
21 Equity attributable to Goodman Limited and non-controlling interests
Under Australian Accounting Standards, stapled entities are required to separately identify equity attributable to the parent entity from equity
attributable to other entities stapled to the parent. The equity attributable to other entities stapled to the parent is presented as non-controlling
interests in the statement of financial position of the Group. The tables below in notes 22(a) and 22(b) provide an analysis of equity, profit for the
year and total comprehensive income for the year attributable to each of Goodman Limited and the other entities stapled to Goodman Limited
(non-controlling interests).
(a) Equity attributable to Goodman Limited
Attributable to Goodman Limited
Foreign
currency
translation
reserve
$M
Issued
capital
$M
Employee
compensation
reserve
$M
Defined
benefit
retirement
schemes
reserve
$M
Total
reserves
$M
Retained
earnings
$M
Total
$M
Balance at 1 July 2021
494.5
(65.5)
39.4
(23.3)
(49.4)
1,190.5
1,635.6
–
–
–
–
–
19.8
–
–
514.3
–
–
–
–
13.0
(0.1)
–
–
527.2
–
(10.9)
(10.9)
–
–
–
–
–
(76.4)
–
8.9
8.9
–
–
–
–
–
(67.5)
–
–
–
(81.8)
(28.0)
–
127.0
(4.2)
52.4
–
–
–
(115.6)
–
–
129.1
1.6
67.5
–
1.0
1.0
–
–
–
–
–
(22.3)
–
(2.2)
(2.2)
–
–
–
–
552.6
552.6
(9.9)
(9.9)
(81.8)
(28.0)
–
127.0
(4.2)
(46.3)
–
(9.9)
552.6
81.8
542.7
–
–
–
(28.0)
19.8
–
–
1,824.9
127.0
(4.2)
2,292.9
–
288.2
288.2
6.7
6.7
–
6.7
288.2
294.9
(115.6)
115.6
–
–
–
–
–
13.0
(0.1)
–
–
(24.5)
129.1
1.6
(24.5)
–
–
2,228.7
129.1
1.6
2,731.4
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive income
Effect of foreign currency translation
Total comprehensive income
for the year, net of income tax
Transfers
Contributions by and
distributions to owners
Purchase of securities for the LTIP
Issue of securities
Equity settled share based
payments transactions
Deferred tax associated with the LTIP
Balance at 30 June 2022
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive income
Effect of foreign currency translation
Total comprehensive income/(loss)
for the year, net of income tax
Transfers
Contributions by and
distributions to owners
Issue of securities
Issue costs
Equity settled share
based payments transactions
Deferred tax associated with the LTIP
Balance at 30 June 2023
150
ANNUAL REPORT 2023
(b) Equity attributable to other entities stapled to Goodman Limited (non-controlling interests)
Attributable to other entities stapled to Goodman Limited (non-controlling interests)
Issued
capital
$M
7,601.9
Asset
revaluation
reserve
$M
(6.7)
Cash flow
hedge
reserve
$M
(4.4)
Foreign
currency
translation
reserve
$M
(25.2)
Employee
compen-
sation
reserve
$M
235.3
Defined
benefit
retirement
schemes
reserve
$M
(14.8)
Total
reserves
$M
184.2
Retained
earnings
$M
3,739.8
Total
$M
11,525.9
–
–
–
–
–
–
90.1
(0.2)
–
7,691.8
–
–
–
–
–
Balance at 1 July 2021
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive
income/(loss)
Effect of foreign
currency translation
Actuarial gains on defined
benefit superannuation funds
Other changes
Total comprehensive
income/(loss) for the year,
net of income tax
Contributions by and
distributions to owners
Dividends/distributions
on stapled securities
Issue of stapled securities
Issue costs
Equity settled share based
payments transactions
Balance at 30 June 2022
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive
income/(loss)
Effect of foreign
currency translation
Actuarial gains on defined
benefit superannuation funds
Other changes
Total comprehensive
income for the year, net of
income tax
Contributions by and
distributions to owners
Dividends/distributions
on stapled securities
Issue of stapled securities
Issue costs
Equity settled share based
payments transactions
Balance at 30 June 2023
–
–
2,861.4
2,861.4
0.6
5.6
–
155.2
5.6
16.2
–
–
–
155.2
5.6
16.2
6.2
177.0
2,861.4
3,038.4
–
–
–
–
–
–
–
–
–
–
–
0.3
–
–
(0.4)
–
15.9
155.0
–
–
0.3
15.5
155.0
–
–
–
–
(6.4)
–
(0.5)
–
(0.2)
–
–
–
–
11.1
–
0.5
–
2.4
–
–
–
–
354.3
–
–
(0.7)
2.9
354.3
–
–
–
–
–
–
(560.1)
–
–
(560.1)
90.1
(0.2)
37.8
14,131.9
–
129.8
37.8
273.1
–
(8.6)
37.8
399.0
–
6,041.1
–
–
–
–
–
–
–
–
–
–
1,271.7
1,271.7
(0.4)
0.5
–
353.9
0.5
2.2
–
–
–
353.9
0.5
2.2
0.1
356.6
1,271.7
1,628.3
–
–
–
–
–
–
(564.6)
–
–
(564.6)
54.4
(0.1)
–
14.0
–
484.1
43.5
316.6
–
(8.5)
43.5
799.1
–
6,748.2
43.5
15,293.4
151
–
54.4
(0.1)
–
7,746.1
–
–
–
–
(7.1)
–
–
–
–
–
–
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
22 Controlled entities
Controlled entities are entities controlled by the Company. Under Australian Accounting Standards, the Company is identified as having acquired
control over the assets of the Trust and GLHK. The consolidated financial statements incorporate the assets and liabilities of all controlled entities
as at 30 June 2023 and the results of all such entities for the year ended 30 June 2023.
Where an entity either began or ceased to be controlled during the financial year, the results of that entity are included only from or to the date control
commenced or ceased.
Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.
The significant controlled entities of the Company are set out below:
Significant controlled entities of Goodman Limited
Country of establishment/ incorporation
GA Industrial Portfolio Trust1
GIT Investments Holding Trust No.31
Goodman Australia Finance Pty Limited1
Goodman Europe Development Trust1
Goodman Finance Australia Trust1
Goodman Funds Management Australia Limited
Goodman Funds Management Limited
Goodman Industrial Funds Management Limited
Goodman Industrial Trust
Goodman Property Services (Aust) Pty Limited
Goodman Treasury Trust1
Moorabbin Airport Corporation Pty Ltd
Goodman Belgium NV
Goodman Management Services (Belgium) NV
Goodman China Asset Management Limited
Goodman China Developments
Goodman Developments Asia
Goodman Management Consulting (Beijing) Co. Ltd
Goodman Management Consulting (Shanghai) Co. Ltd
Goodman France Sàrl
Goodman Germany GmbH
GCLAM Services (HK) Limited
GFM Hong Kong Limited
Goodman Asia Limited
Goodman China Limited
Goodman Hong Kong Investment Trust1
Goodman Logistics (HK) Limited
Goodman UK Investment (HK) Limited
GPS Hong Kong Limited
Goodman Italy S.R.L.
1.
Significant controlled entities of Goodman Industrial Trust.
152
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Belgium
Belgium
Cayman Islands
Cayman Islands
Cayman Islands
China
China
France
Germany
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Italy
ANNUAL REPORT 2023
Significant controlled entities of Goodman Limited
Country of establishment/ incorporation
Goodman Japan Funds Limited
Goodman Japan Limited
GELF Management (Lux) Sàrl
Goodman Finance (Lux) Sàrl1
Goodman Finance Two (Lux) Sàrl1
Goodman Management Holdings (Lux) Sàrl
Goodman Midnight Logistics (Lux) Sàrl
Goodman Property Opportunities (Lux) Sàrl, SICAR
GPO Advisory (Lux) Sàrl
Goodman Finance NZ Limited1
Goodman Investment Holdings (NZ) Limited
Goodman (NZ) Limited
Goodman Property Services (NZ) Limited
Goodman Galaxy Holding BV
Goodman Netherlands BV
Goodman Real Estate (Spain) S.L.
Goodman Logistics Developments (UK) Limited
Goodman Real Estate (UK) Limited
GIC Vernon LLC
Goodman Development Management LLC
Goodman Management USA Inc
Goodman North America LLC
Goodman North America Management LLC
Goodman US Finance Three, LLC1
Goodman US Finance Four, LLC1
Goodman US Finance Five, LLC1
Tarpon Properties REIT Inc1
1.
Significant controlled entities of Goodman Industrial Trust.
Japan
Japan
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
New Zealand
New Zealand
New Zealand
New Zealand
The Netherlands
The Netherlands
Spain
United Kingdom
United Kingdom
United States
United States
United States
United States
United States
United States
United States
United States
United States
153
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
23 Related parties
The names of KMP of Goodman at any time during the financial year are as follows:
Non-Executive Directors – GL and GFML
Stephen Johns
Christopher Green
Mark Johnson
Vanessa Liu
Rebecca McGrath
Phillip Pryke
Belinda Robson
Hilary Spann
George Zoghbi
Non-Executive Director – GLHK
David Collins
Remuneration of KMP
The KMP remuneration totals are as follows:
Short-term employee benefits
Post-employment benefits
Post-employment benefits
Long-term employee benefits
Executive KMP
Gregory Goodman
Danny Peeters
Anthony Rozic
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
Goodman
Goodman Limited1
2023
$000
2022
$000
2023
$000
2022
$000
8,654.0
7,596.6
209.9
203.6
37,769.7
42,106.0
4,536.4
5,037.4
51,170.0
54,943.6
–
–
–
–
–
–
–
–
–
–
1.
The remuneration is paid by wholly owned controlled entities of Goodman Limited.
GIT does not employ personnel in its own right. However, it is required to have an incorporated responsible entity to manage its activities and GFML
is considered to be the key management personnel of GIT.
Individual Directors’ and executives’ compensation disclosures
Information regarding individual Directors’ and executives’ compensation and some equity instruments disclosures as required by Corporations
Regulations 2M.3.03 is provided in the remuneration report section of the Directors’ report.
GreenPoint Real Estate Innovation and Technology Venture, LP (GreenPoint)
In order to enhance understanding of and access to technologies that may influence the property sector and the business, GIT committed to investing
USD15.0 million in GreenPoint, a property technology fund that is a Delaware limited partnership, managed by GreenPoint Partners. GreenPoint
Partners is beneficially owned and controlled by Christopher Green, a director of GL. Total investment in GreenPoint at 30 June 2023 was USD7.2
million (2022: USD5.3 million). No distributions were received from GreenPoint in the current year (2022: $0.8 million).
Wyuna Regenerative Ag Investment Fund (Wyuna)
As part of its ESG strategy, Goodman has committed to investing up to $30.0 million in an integrated carbon credit and regenerative platform
in Australia – Wyuna. Investing alongside Australia’s Clean Energy Finance Corporation, this project assists land regeneration, sustainable food
production and land-based solutions to climate change. Wyuna is managed by Wyuna Regenerative Ag Pty Limited, which is 50% owned by
Christopher Green, a director of GL.
In FY23, GL invested $11.9 million, and the total investment in Wyuna at 30 June 2023 was $11.9 million (30 June 2022: $nil). No distributions were
received from Wyuna in the current and prior year.
154
ANNUAL REPORT 2023
Transactions with associates and JVs
The transactions with Partnerships during the year were as follows:
Revenue from disposal
of investment properties
Revenue from management
and development activities
Interest charged on loans
to associates and JVs
2023
$000
–
–
–
–
2022
$000
400,825.4
274,018.6
346,825.4
–
2023
$000
683,993.9
495,718.3
2022
$000
1,279,744.9
447,461.7
–
–
–
–
2023
$000
–
2,117.3
(19.1)
1,688.6
2022
$000
–
6,514.7
(36.1)
6,166.6
Goodman
Associates
JVs
GIT
Associates
JVs
In addition to the transactions included in the table above:
+ Goodman disposed of a 40% interest in a JV to GAIP for proceeds of $353.7 million in FY23
+ Goodman incurred $3.6 million (2022: $3.7 million) of costs from Partnerships, primarily for the leasing of office premises.
Amounts due from Partnerships at 30 June 2023 were as follows:
Goodman
GIT
Amounts due from
related parties
2023
$000
2022
$000
Loans provided
by Goodman1
2023
$000
2022
$000
Amounts due from
related parties
Loans provided
by GIT1
2023
$000
2022
$000
2023
$000
2022
$000
Associates
GAIP
GAP
GMT
GHKLP
GJCP
GEP
JVs
GCLP
GUKP
GNAP
Other JVs
16,074.7
5,982.5
3,905.5
16,637.9
5,457.5
10,782.8
58,840.9
6,455.2
2,442.5
10,864.8
21,577.5
41,340.0
14,204.2
5,626.5
3,579.3
9,757.3
4,371.3
13,912.2
51,450.8
6,617.4
1,989.6
16,516.1
6,359.9
31,483.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
228,184.2
167,464.7
228,184.2 167,464.7
8,984.7
8,984.7
4.8
221,188.1
4.8 221,188.1
140,162.8
140,162.8
1. Loans provided by Goodman and GIT to associates and JVs have been provided on an arm’s length basis.
Transactions between GIT and other Goodman entities
The transactions with other Goodman entities during the year were as follows:
Management income
Reimbursement of expenses
GIT
2023
$000
1,045.5
71,192.7
72,238.2
2022
$000
1,850.9
58,381.5
60,232.4
Interest bearing loans exist between GIT and other Goodman entities. At 30 June 2023, interest bearing loans of $3,114.4 million (2022: $3,122.6
million) were receivable by GIT from other Goodman entities and $572.7 million (2022: $723.8 million) was payable by GIT to other Goodman entities.
Loans to related Goodman entities bear interest at rates referenced to GIT’s external funding arrangements.
In the prior year, GIT acquired 65,906,199 units in GMT from a controlled entity of GL for consideration of NZ$139.1 million.
155
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
Furthermore, in respect of certain Partnerships, Goodman and its
investment partners have committed to invest further capital, subject to
the approval by the partners (including Goodman) of the expenditures for
which the funding is required. Goodman’s commitment in respect of these
Partnerships is set out below:
+
+
+
+
+
+
+
$18.1 million (2022: $30.0 million) into Wyuna
$135.0 million (2022: $130.7 million) into KWASA Goodman Germany
$201.3 million (2022: $344.8 million) into Goodman Japan
Development Partnership
$705.3 million (2022: $793.8 million) into GCLP
$501.1 million (2022: $599.3 million) into GUKP
$1,791.1 million (2022: $1,888.9 million) into GNAP
$80.9 million (2022: $73.0 million) into Goodman Brazil Logistics
Partnership (GBLP).
The Commitments in GNAP and GBLP also apply to GIT.
24 Commitments
Development activities
At 30 June 2023, Goodman was committed to expenditure in respect of
$641.5 million (2022: $691.8 million) on inventories and other development
activities. GIT had no such commitments (2022: $nil).
Investment properties
At 30 June 2023, Goodman had capital commitments of $90.1 million
(2022: $6.1 million) in respect of investment properties. GIT had $86.7
million (2022: $4.5 million) of such commitments.
Partnerships
At 30 June 2023, Goodman had remaining equity commitments of $173.8
million (2022: $217.9 million) into GAIP and $145.8 million (2022: $135.0
million) into GEP. In addition, Goodman has undertaken to acquire up
to 82.1 million units in GAIP if their holder elects to sell them. The price
Goodman will pay will be determined by the prevailing unit price at the
time of the sale. As at 30 June 2023, this equates to a total value of $173.8
million (cum distribution value) or $172.8 million (ex-distribution price).
Goodman's commitment to this sale process ends in May 2026. These
commitments also apply to GIT.
In relation to GEP, Goodman offers two liquidity facilities which allow
certain of the partners to sell to the Group some or all of their investments
in GEP, but only when Goodman’s ownership interest in GEP is below
40.0%. At 30 June 2023, Goodman’s ownership interest in GEP was 19.8%
and therefore the facilities are available to the partners. The first facility,
which applies to 1.3% of the issued and committed units, would require
Goodman to purchase up to €39.5 million of units (at a 1% discount to
current unit value), subject to a maximum in each quarter of 2.5% of units.
The second facility, which applies to 32.2% of the issued and committed
units, would require Goodman to purchase up to €150.0 million of units
(at a 5% discount to current unit value), subject to a maximum in each
calendar year of €50.0 million.
156
ANNUAL REPORT 2023
Goodman
2023
$000
2022
$000
GIT
2023
$000
2022
$000
1,302.0
1,469.2
2,771.2
61.5
–
–
5.6
–
304.2
102.8
453.2
927.3
3,698.5
1,279.1
1,218.7
2,497.8
64.9
670.0
15.0
–
–
172.8
–
178.8
1,101.5
3,599.3
808.3
101.1
909.4
46.3
–
–
–
–
–
68.4
–
114.7
1,024.1
737.3
77.3
814.6
41.8
–
–
–
–
–
–
–
41.8
856.4
190.5
151.5
–
–
25 Auditors’ remuneration
Audit services
Auditor of the Company:
– Audit and review of financial reports (KPMG Australia)
– Audit and review of financial reports (overseas KPMG firms)
Other services
– Other regulatory services (KPMG Australia)
– Other assurance services (KPMG Australia)
– Other advisory services (KPMG Australia)
– Other advisory services (overseas KPMG firms)
– Taxation compliance services (KPMG Australia)
– Taxation compliance services (overseas KPMG firms)
– Taxation advice (KPMG Australia)
– Taxation advice (overseas KPMG firms)
Total paid/payable to KPMG
Other auditors
– Audit and review of financial reports (non–KPMG firms)
26 Parent entity disclosures
As at, and throughout the financial year ended, 30 June 2023, the parent entities of Goodman and GIT were Goodman Limited and Goodman Industrial
Trust respectively. The financial information for the parent entities is disclosed as follows:
Result of the parent entity
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Issued capital
Profits reserve
Employee compensation reserve
Accumulated losses
Total equity
Goodman
2023
$M
2022
$M
GIT
2023
$M
224.9
–
224.9
411.9
2,390.5
117.1
1,390.2
996.5
90.7
65.8
(152.7)
1,000.3
176.8
–
176.8
223.9
1,895.5
108.6
1,192.4
937.4
90.7
52.5
(377.5)
703.1
214.2
–
214.2
3,492.8
9,913.6
2,018.9
4,876.9
8,355.4
–
249.8
(3,568.5)
5,036.7
2022
$M
451.7
–
451.7
3,076.5
8,075.9
553.9
3,016.7
8,154.5
–
216.8
(3,312.1)
5,059.2
157
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
The financial information for the parent entities of Goodman and GIT has
been prepared on the same basis as the consolidated financial statements,
except as set out below:
27 Events subsequent to balance date
Goodman and GIT
Other than as disclosed elsewhere in the consolidated financial report,
there has not arisen in the interval between the end of the financial year
and the date of this consolidated financial report any item, transaction or
event of a material and unusual nature likely, in the opinion of the Directors,
to affect significantly the operations of Goodman and GIT, the results of
those operations, or the state of affairs of Goodman and GIT, in future
financial years.
Investments in controlled entities and Partnerships
Investments in controlled entities and Partnerships are accounted for at
cost in the financial statements of GL and GIT. Distributions/dividends
received from Partnerships are recognised in the income statement, rather
than being deducted from the carrying amount of these investments.
Tax consolidation
GL is the head entity in a tax consolidated group comprising all Australian
wholly owned subsidiaries (this excludes GIT). The head entity recognises
all of the current tax assets and liabilities of the tax consolidated group
(after elimination of intra-group transactions).
Financial guarantees
Where the parent entities have provided financial guarantees in relation
to loans and payables of controlled entities for no compensation, the
fair values of these guarantees are accounted for as contributions and
recognised as part of the cost of the investment.
Parent entity capital commitments
At 30 June 2023, the parent entities had no capital commitments (2022: $nil).
Parent entity contingencies
Capitalisation Deed Poll
The Company, GFML, as responsible entity of the Trust, GLHK and
certain of their wholly owned controlled entities are ‘investors’ under a
Capitalisation Deed Poll (CDP) dated 23 May 2007. Under the CDP, each
investor undertakes to pay to the relevant controlled entity borrower
(borrower) any amounts owing under finance documents for the purpose
of the CDP when the borrower fails to make a payment. Any payments
by an investor to a borrower will be by way of loan to, or proceeds for the
subscription of equity in, the borrower by the investor.
US144A/Regulation S senior notes
Under the issue of notes in the US144A/Regulation S bond market (refer to
notes 15(b) and 15(c)), controlled entities of GIT had on issue USD and EUR
notes amounting to US$1,350.0 million and €500.0 million respectively. GL,
GFML, as responsible entity of the Trust, and GLHK have unconditionally
and irrevocably guaranteed on a joint and several basis the payment of
principal and interest in respect of each of the notes.
158
Directors' declaration
In the opinion of the directors of Goodman Limited and the directors
of Goodman Funds Management Limited, the responsible entity for
Goodman Industrial Trust:
a.
the consolidated financial statements and the notes of Goodman
Limited and its controlled entities and Goodman Industrial Trust and
its controlled entities set out on pages 89 to 158 and the remuneration
report that is contained on pages 35 to 85 in the Directors’ report, are
in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of Goodman’s and GIT’s financial
position as at 30 June 2023 and of their performance for the
financial year ended on that date
complying with Australian Accounting Standards (including
Australian Accounting Interpretations) and the Corporations
Regulations 2001
b.
there are reasonable grounds to believe that the Company and the
Trust will be able to pay their debts as and when they become due
and payable.
The Directors have been given the declarations required by section 295A
of the Corporations Act 2001 from the Group Chief Executive Officer and
Chief Financial Officer for the financial year ended 30 June 2023.
The Directors draw attention to note 1 to the consolidated financial
statements, which includes a statement of compliance with International
Financial Reporting Standards.
Signed in accordance with a resolution of the Directors.
Stephen Johns
Independent Chairman
Gregory Goodman
Group Chief Executive Officer
Sydney, 17 August 2023
ANNUAL REPORT 2023
159
GOODMAN GROUP
Independent Auditor’s Report
To the stapled security holders of Goodman Group and the unitholders of Goodman Industrial Trust
Report on the audit of the Financial Reports
Basis for opinion
Opinion
We have audited the Financial Report of Goodman Limited (the Company)
as the deemed parent presenting the stapled security arrangement of the
Goodman Group (the Goodman Group Financial Report).
We have also audited the Financial Statements and Directors’ Declaration
of Goodman Industrial Trust (the Trust Financial Report).
In our opinion, each of the accompanying Goodman Group Financial Report
and Trust Financial Report are in accordance with the Corporations Act
2001, including:
+
+
giving a true and fair view of the Goodman Group’s and of the Trust’s
financial position as at 30 June 2023 and of their financial performance
for the year ended on that date; and
complying with Australian Accounting Standards and the
Corporations Regulations 2001.
The respective Financial Reports of the Goodman Group and Trust
comprises:
+
+
+
Consolidated statement of financial position as at 30 June 2023;
Consolidated income statement, Consolidated statement of
comprehensive income, Consolidated statement of changes in equity
and Consolidated statement of cash flows for the year then ended;
Notes including a summary of significant accounting policies; and
(Collectively referred to as Financial Statements)
+
Directors’ Declaration.
The Goodman Group consists of Goodman Limited and the entities it
controlled at the year-end or from time to time during the financial year,
Goodman Industrial Trust (the Trust) and the entities it controlled at the
year-end or from time to time during the financial year, and Goodman
Logistics (HK) Limited and the entities it controlled at the year-end or from
time to time during the financial year.
We conducted our audit in accordance with Australian Auditing
Standards. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the Financial Report
section of our report.
We are independent of the Goodman Group, Goodman Limited, Goodman
Funds Management Limited (the Responsible Entity of the Trust) and
the Trust in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit
of the Financial Report in Australia. We have fulfilled our other ethical
responsibilities in accordance with these requirements.
Key Audit Matters
The Key Audit Matters we identified for Goodman Group are:
+
Valuation of investment properties, investments accounted for using
the equity method and inventories; and
+ Recognition of development income.
Key Audit Matters are those matters that, in our professional judgement,
were of most significance in our audit of the Financial Report for the
current period.
These matters were addressed in the context of our audit of the
Financial Report as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited
by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme
approved under Professional Standards Legislation.
160
ANNUAL REPORT 2023
Valuation of investment properties ($1,644.8m), investments accounted for using the equity method ($16,285.2m)
and inventories ($2,245.5m)
Refer to Note 5 to the Financial Report
The key audit matter
Goodman Group’s investments in property assets include investment
properties and inventories, which are held either directly or through its
investments accounted for using the equity method.
Goodman Group’s policy is investment properties are held at fair value
and inventories are held at the lower of cost and net realisable value,
determined using internal methodologies or through the use of external
valuation experts.
The valuation of property assets is a key audit matter as they are
significant in value (being 84% of total assets) and contain assumptions
with estimation uncertainty.
This leads to additional audit effort due to differing assumptions
used by Goodman Group based on asset classes, geographies and
characteristics of individual property assets.
We considered significant assumptions in the valuation of property
assets including:
+
+
Investment properties:
– capitalisation rates;
– discount rates;
– market rental income;
– weighted average lease expiry and vacancy levels;
– projections of capital expenditure; and
–
lease incentive costs.
Inventories
– forecast capitalisation rates and market rental income;
–
–
– development costs.
land value per square metre;
letting up periods and lease incentive costs; and
In assessing this Key Audit Matter, we involved real estate valuation
specialists, who understand the Group’s investment profile, business
and the economic environment it operates in.
How the matter was addressed in our audit
Our procedures included:
+
+
+
Obtaining an understanding of Goodman Group’s process regarding
the valuation of property assets.
Assessing the methodologies used in the valuations of property
assets, for consistency with accounting standards, industry practice
and Goodman Group’s policies.
Working with real estate valuation specialists to read published
reports and industry commentary to gain an understanding of
prevailing property market conditions.
For a sample of investment properties, taking into account asset classes,
geographies and characteristics of individual investment properties:
+
+
+
Assessing the scope, competence and objectivity of external
valuation experts and Goodman Group’s internal valuers.
Challenging significant assumptions, with reference to
published industry reports and commentary of prevailing
property market conditions.
With the assistance of real estate valuation specialists, assessing
a sample of significant assumptions including capitalisation rates,
discount rates, customer covenant strength, market rental income,
weighted average lease expiry and vacancy levels, projections
of capital expenditure and lease incentive costs. We did this by
comparing to market analysis published by industry experts, recent
market transactions, inquiries with Goodman Group’s historical
performance of the assets and using our industry experience.
+
Assessing the disclosures in the financial report using our
understanding obtained from our testing, against accounting
standard requirements.
For a sample of inventories:
+
Challenging the key assumptions included in Goodman Group’s
internal recoverability assessments by comparing to commentary
published by industry experts, recent market transactions, and our
knowledge of historical performance of the assets.
161
GOODMAN GROUP
Recognition of development income ($1,407.2m)
Refer to Note 1 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Development income was a key audit matter due to:
Our procedures included:
+
+
+
its significant value (43% of revenue and other income);
the unique nature of contracts; and
the judgements applied by us to assess Goodman Group’s
determination of revenue recognised during the period in relation
to contracts which remain in progress at period end.
+
+
Evaluating Goodman Group’s recognition of development income
against the criteria in the accounting standards.
Selecting specific contracts from development income recognised
based on quantitative and qualitative information (such as the size
and complexity of the arrangement) and performed the following:
Income from development management services is recognised
progressively, requiring judgment by us when considering Goodman
Group’s determination of the amount and extent of the services provided
within the period based on contract deliverables.
Goodman Group’s policy is for income from inventory disposals to be
recognised at a point in time when control is transferred to the customer
and fixed price development contracts to be recognised in proportion
to the stage of completion of the relevant contracts.
We focused on the stage of completion estimation which is based on costs
incurred as a percentage of estimated total costs for each contract.
–
–
–
–
Understanding the underlying contractual arrangements,
in particular their unique terms, for their impact to recognition
of development income.
Where recognition of development income was conditional
upon certain events occurring, checking conditions within the
contract to evidence of achievement of conditions, such as
correspondence with external parties.
Assessing Goodman Group’s determination of revenue
recognised during the period in accordance with the provision
of services stipulated in the underlying contract or the stage of
completion.
For revenue recognised based on the stage of completion, assess
the cost assumptions used by the Group in determining the stage
of completion estimate as follows:
•
•
Costs incurred – assessing a sample of costs incurred to date
to relevant underlying external sources, such as invoices; and
Estimated total costs – assessing a sample of total forecast
costs to secured contracts for construction activities, other
relevant underlying sources, and our understanding of the
industry and economic conditions.
162
ANNUAL REPORT 2023
Other Information
Other Information is financial and non-financial information in Goodman
Group’s annual reporting which is provided in addition to the Financial Report
and the Auditor’s Report. The Directors of the Company and the Directors of
the Responsible Entity are responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s
Report was the Directors’ Report (including the Remuneration Report).
Our opinion on the Financial Report does not cover the Other Information
and, accordingly, we do not express an audit opinion or any form of
assurance conclusion thereon, with the exception of the Remuneration
Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility
is to read the Other Information. In doing so, we consider whether the
Other Information is materially inconsistent with the Financial Report
or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
We are required to report if we conclude that there is a material
misstatement of this Other Information, and based on the work we have
performed on the Other Information that we obtained prior to the date
of this Auditor’s Report, we have nothing to report.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
+
to obtain reasonable assurance about whether the Financial Report
as a whole is free from material misstatement, whether due to fraud
or error; and
+
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing
Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material
if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of the
Financial Report.
A further description of our responsibilities for the audit of the Financial
Report is located at the Auditing and Assurance Standards Board website
at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
Responsibilities of the Directors for the Financial Report
The Directors of the Company and the Responsible Entity are
responsible for:
In our opinion, the Remuneration Report of Goodman Limited for the year
ended 30 June 2023, complies with Section 300A of the Corporations
Act 2001.
+
+
+
preparing the Financial Report that gives a true and fair view
in accordance with Australian Accounting Standards and the
Corporations Act 2001;
implementing necessary internal control to enable the preparation
of a Financial Report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error; and
assessing the Goodman Group and Trust’s ability to continue
as a going concern and whether the use of the going concern basis
of accounting is appropriate. This includes disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless they either intend to liquidate the Goodman
Group or the Trust or to cease operations, or have no realistic
alternative but to do so.
Directors’ responsibilities
The Directors of Goodman Limited are responsible for the preparation
and presentation of the Remuneration Report in accordance with Section
300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages 35 to 85
of the Directors’ report for the year ended 30 June 2023.
Our responsibility is to express an opinion on the Remuneration
Report, based on our audit conducted in accordance with Australian
Auditing Standards.
KPMG
Eileen Hoggett
Partner
Sydney
17 August 2023
163
GOODMAN GROUP
Goodman Logistics (HK) Limited and its subsidiaries
Consolidated financial statements for the year ended 30 June 2023
CONTENTS
Report of the Directors
Independent auditor’s report
Consolidated statement of financial position
Consolidated statement of comprehensive income
Consolidated statement of changes inequity
Consolidated cashflow statement
Notes to the consolidated financial statements
Basis of preparation
Results for the year
1 Profit before interest and income tax
2 Segment reporting
3 Taxation
4 Profit attributable to equity shareholders of the Company
Operating assets and liabilities
5 Property assets
6 Receivables
7 Contract assets and liabilities
8 Payables
9 Leases
Capital management
10 Net finance expense
11
Interest bearing liabilities
12 Other financial assets and liabilities
13 Financial risk management
14 Dividends
15 Share capital
Other items
16 Notes to the consolidated cash flow statement
17 Reserves
18 Retained earnings
19
Investments in subsidiaries
20 Related party transactions
21 Commitments
22 Contingencies
23 Company level statement of financial position
24 Subsequent events
164
165
176
178
179
180
181
182
183
185
188
189
190
197
198
200
200
201
201
202
202
207
208
210
212
212
213
214
216
216
217
217
Report of the Directors
ANNUAL REPORT 2023
The Directors have pleasure in submitting their annual financial report
together with the audited financial statements of Goodman Logistics (HK)
Limited (Company) and its subsidiaries (collectively referred to as the
Consolidated Entity) for the year ended 30 June 2023 (FY23).
Directors of subsidiaries
The names of Directors who have served on the Boards of the
subsidiaries of the Company during the year and up to the date of this
report are set out below:
Andrew McGregor
Izak ten Hove
Palacio Francisco
Aurelien Noel
James Benge
Bart Manteleers
James Cornell
Paul Adams
Paul Heslop
Charles Crossland
Jason Harris
Peter Ralston
Chen Binghua
Chen Zhiming
Jesse Verbist
John Conway
Philip Turpin
Philippe Arfi
Chi Wing Lin
John Dakin
Philippe Van der Beken
Christof Prange
Jorn Bruyninckx
Robert Reed
Chun Kit Fung
Joseph Salvaggio
Shiling Li
Clare Gow
Paul Heslop
Karl Dockx
Kelly Moore
Simone Weyermanns
Song Yun
David Hinchey
Kristoffer Harvey
Stephen Young
Dirk Mölter
Lien Standaert
Sun Chao
Dominique Prince
Luke Caffey
Tang Chenying
Edwin Chong
Gareth Owen
Godfrey Abel
Hans Ongena
Henry Kelly
Hugh Baggie
Ignacio Garcia
Marwan Bustani
Tim Cruypelans
Matthew Macdonald
Timothy Downes
Michael Woodford
Wai Ho Stephen Lee
Michael O'Sullivan
Wang Chen
Nicholas Kurtis
Xiaoyin Zhang
Nick Taunt
Nigel Allsop
Incorporation and principal place of business
Goodman Logistics (HK) Limited was incorporated in Hong Kong on
18 January 2012 and has its principal place of business at Suite 901,
Three Pacific Place, 1 Queen’s Road East, Hong Kong.
On 22 August 2012, the Company became a party to the stapling deed with
Goodman Limited (GL) and Goodman Industrial Trust (GIT), and together
the three entities and their subsidiaries are known as Goodman Group.
Goodman Group is listed on the Australian Securities Exchange (ASX).
Principal activities
The principal activities of the Consolidated Entity are investment in
industrial property (either directly or in partnerships with other investors)
and management services provided to the partnerships (including
investment management, property management and development
management). The principal activities and other particulars of the
subsidiaries are set out in note 19 to the consolidated financial statements.
Financial statements
The financial performance of the Consolidated Entity for the year ended
30 June 2023 and the Consolidated Entity’s financial position at that date
are set out in the consolidated financial report on pages 178 to 217.
During the financial year, the Company declared a final dividend of 5.0
cents per share amounting to $94.2 million. This dividend will be paid on
25 August 2023. In the prior year, the Company declared a final dividend
of 2.5 cents per share amounting to $46.7 million, which was paid on 25
August 2022.
Share capital
Details of the movements in share capital of the Company during FY23
are set out in note 15 to the consolidated financial statements.
Directors
The Directors during the year and up to the date of this report were:
Stephen Paul Johns
David Jeremy Collins
Kit Yi Kitty Chung (appointed on 1 July 2023)
Gregory Leith Goodman (alternate Director to Stephen Paul Johns)
Daniel Cornelius D. Peeters.
165
GOODMAN GROUP
Report of the Directors
(continued)
BUSINESS REVIEW
State of affairs
There were no significant changes in the Consolidated Entity’s state
of affairs during the year.
About Goodman Group
Goodman Group is a global industrial property specialist group whose
strategy is to maximise returns by providing essential infrastructure for
the digital economy by owning, developing and managing high-quality
properties that are close to consumers in key cities around the world.
Goodman Group’s integrated business model
Goodman Group’s Own Develop Manage model focuses the business on
its customers’ current and future needs.
The Consolidated Entity owns and maintains high-quality properties close
to consumers, develops sustainable properties, and manages its global
investment portfolio to a high standard. The Consolidated Entity works
alongside its capital partners, which include sovereign wealth, pension
and large multi-manager funds.
In each market, the Consolidated Entity has dedicated local teams
which take care of property asset and investment management,
delivering a high level of customer service.
166
Performance review
The Consolidated Entity has operations in Asia, Continental Europe
and the United Kingdom, and its earnings are derived from property
investment, development and management activities.
During the year, governments across Continental Europe and in the United
Kingdom have increased interest rates in response to rising inflation. This
has impacted property valuations with weighted average capitalisation
rates expanding from 3.4% to 4.4% in Continental Europe and 3.7% to
4.9% in the United Kingdom. As a consequence, the Consolidated Entity’s
share of the fair value adjustments from its Partnerships was a loss of
$160.1 million compared to gain of $269.8 million in the prior year.
However, the scarcity of space in the Consolidated Entity’s locations,
and customer need for more productive and sustainable solutions has
supported underlying property fundamentals. These have driven and
continue to drive development demand and rental growth. Despite the
global macro-economic volatility, there is almost zero vacancy in the
property portfolios and the Consolidated Entity continues to execute on
its development strategy.
As a consequence of the strong rental income growth and the
Consolidated Entity’s continued investment in its portfolios, property
investment earnings have increased compared to the prior year.
Management earnings have also increased as the investment in the
Partnerships and the stabilisation of properties during both the current
and prior year, notably in Asia, has offset the impacts on external assets
under management (AUM) from the devaluations in FY23. Development
earnings are lower than the prior year, but this is more a reflection of the
strength of the FY22 development result, and current year earnings have
again been a significant contributor to the Consolidated Entity’s overall
results. The quality and location of sites has underpinned development
activity and project returns. In addition, the locations of the sites are often
delivering value add opportunities with intensification and change of use.
In assessing the Consolidated Entity’s underlying performance, the
Directors consider operating profit as well as statutory profit. Operating
profit is a proxy for ‘cash earnings’ and is not an income measure
under Hong Kong Financial Reporting Standards. It is defined as profit
attributable to Shareholders adjusted for property valuations, impairment
losses and other non-cash adjustments or non-recurring items.
ANNUAL REPORT 2023
2023
$M
2022
$M
111.9
187.9
494.0
793.8
(193.4)
600.4
(2.7)
(79.3)
518.4
82.1
170.6
689.1
941.8
(207.9)
733.9
(12.4)
(114.1)
607.4
Analysis of operating profit
Property investment earnings
Management earnings
Development earnings
Operating expenses
Net finance expense (operating)1
Income tax expense (operating)2
Operating profit
1.
2.
Net finance expense (operating) excludes derivative mark to market and unrealised foreign
exchange movements.
Income tax expense (operating) excludes the deferred tax movements relating to
investment property valuations and other non-operating items, such as the Goodman
Group Long Term Incentive Plan (LTIP).
Property investment activities
Property investment earnings in FY23 of $111.9 million were higher than
the prior year and comprised 14% of the total earnings (2022: 9%).
Net property income
Partnerships
Property investment earnings
Key metrics
Weighted average capitalisation rate (%)
Weighted average lease expiry (years)
Occupancy (%)
2023
$M
42.4
69.5
111.9
2023
5.0
4.6
96.6
2022
$M
40.9
41.2
82.1
2022
4.7
4.2
97.6
Property investment earnings comprise gross property income (excluding
straight lining of rental income), less property expenses, plus the Consolidated
Entity’s share of the results of property investment joint ventures (JV)
(referred to as Partnerships). The key drivers for maintaining or growing the
Consolidated Entity’s property investment earnings are increasing the level
of AUM (subject also to the Consolidated Entity’s direct and indirect interest),
maintaining or increasing occupancy and rental levels within the portfolio, and
controlling operating and financing costs within Partnerships.
The Consolidated Entity’s property portfolios are concentrated in large,
urban locations where available space remains restricted due to significant
customer demand, high barriers to entry and limited supply. Consequently,
the Consolidated Entity has experienced significant market rental growth
across its locations and occupancy has remained high. This is supporting
strong underlying investment fundamentals and cash flows in the
Consolidated Entity’s portfolio.
167
GOODMAN GROUP
Report of the Directors
Business review (continued)
The net income from the Consolidated Entity’s directly held properties
increased by 4% to $42.4 million compared to the prior year with
acquisitions in Asia in both the current and prior year offsetting the lower
contribution to rental income in FY23 from completed inventories, prior to
their disposal.
The Consolidated Entity’s share of investment earnings from its
cornerstone holdings in the Partnerships increased by 69% to $69.5
million compared to the prior year. This was due to acquisitions and the
stabilisation of developments in FY22 and FY23, as the Consolidated Entity
and its capital partners have continued to invest in the Partnerships, and
also due to the rental income growth from existing stabilised properties.
During FY23, the Consolidated Entity’s share of property valuations from
the stabilised portfolios was a loss of $160.1 million. Valuation decrements
primarily arose in Continental Europe and the United Kingdom due to the
expansion of capitalisation rates, in response to increased interest rates. At
30 June 2023, the weighted average capitalisation rate for the Consolidated
Entity’s portfolios was 5.0%, compared to 4.7% at the start of FY23.
Management activities
Management earnings in FY23 of $187.9 million increased by 10% compared
to the prior year and comprised 24% of total operating earnings (2022: 18%).
Management earnings
Key metrics
Number of Partnerships
External AUM ($B)
2023
$M
187.9
2023
8
28.7
2022
$M
170.6
2022
8
27.8
Management earnings relate to the revenues from managing both
the property portfolios and the capital invested in the Partnerships.
This includes performance related revenues but excludes earnings
from managing development activities in the Partnerships, which are
included in development earnings. The key drivers for maintaining or
growing management earnings are activity levels, asset performance,
and increasing the level of AUM, which can be impacted by property
valuations and asset disposals and is also dependent on liquidity including
the continued availability of third party capital to fund both development
activity and acquisitions across the Consolidated Entity’s Partnerships.
The main driver of the increased management earnings was the
acquisitions and stabilisations of properties during 2022 and 2023. This
has more than offset the impact on base management fee income from
property devaluations in Asia, Continental Europe and the United Kingdom.
Development activities
Development earnings in FY23 were $494.0 million, a decrease of 28%
on the prior year, but still comprised 62% of total operating earnings
(2022: 73%).
Net development income
Partnerships
Development earnings
Key metrics
Work in progress ($B)
Work in progress
(number of developments)
Developments completed during
the year (number of developments)
2023
$M
485.2
8.8
494.0
2023
5.8
32
14
2022
$M
645.7
43.4
689.1
2022
7.1
36
23
Development earnings consist of development income, plus the
Consolidated Entity’s share of the operating results of Partnerships
that is allocable to development activities, plus net gains or losses from
disposals of investment properties and equity investments that are
allocable to development activities, plus interest income on loans to
development JVs, less development expenses. Development income
includes development management fees and performance related
revenues associated with managing individual development projects in
Partnerships. The key drivers for the Consolidated Entity’s development
earnings are the level of development activity, land and construction
prices, property valuations and the continued availability of capital to fund
development activity.
Most of the inventory disposals and fixed price contract income
arose in Continental Europe, as Goodman Group’s Partnerships in
Continental Europe generally acquire completed developments from
the Consolidated Entity. In the Consolidated Entity’s other operating
segments, development earnings are a mix of development management
income, including performance related income, and transactional activity,
including the Consolidated Entity’s share of development profits reported
by the Partnerships themselves.
Development activity and margins continued to be sound with work
in progress of $5.8 billion across 32 projects at 30 June 2023. The
decrease in the Consolidated Entity’s development earnings was volume
driven, with lower activity in Continental Europe. However, this follows
several years of significant acceleration in the Consolidated Entity’s
development activity.
168
Other items
Cash flows
Operating expenses increased mainly due to lower incentive-based
remuneration partly offset by modest inflation pressure. The net finance
expense has decreased as a result of increased interest income on the
Consolidated Entity’s related party loans. The increase in tax expense is
primarily a function of changes to the origin and nature of revenue arising
from management and development activities.
Statement of financial position
Stabilised investment properties
Cornerstone investments
in Partnerships
Development holdings
Cash
Other assets
Total assets
Loans from related parties
Other liabilities
Total liabilities
Non-controlling interests
Net assets attributable
to Shareholders
2023
$M
451.7
1,850.6
1,532.2
391.9
1,076.9
2022
$M
336.8
1,845.6
1,552.6
357.5
1,190.8
5,303.3
5,283.3
1,676.1
817.8
1,941.0
756.2
2,493.9
2,697.2
42.6
28.2
2,766.8
2,557.9
The stabilised investment properties relate to acquisitions in Asia.
The carrying value of cornerstone investments in Partnerships has
increased by $5.0 million to $1,850.6 million, principally due to the net
investment in the Partnerships and the valuation uplifts. A reconciliation
of the current year movement in cornerstone investments in Partnerships
is detailed in note 6(f) to the consolidated financial statements.
The decrease in development holdings by $20.4 million to $1,532.2 million
was primarily due to to the completion of development projects during
the year..
Other assets included receivables, fair values of derivative financial
instruments that are in an asset position, contract assets, property,
plant and equipment and tax assets (including deferred tax). Other
liabilities included trade and other payables, the provision for dividends
to Shareholders, fair values of derivative financial instruments that are
in a liability position, employee benefits and tax liabilities (including
deferred tax).
ANNUAL REPORT 2023
2023
$M
682.3
(293.0)
(360.7)
28.6
5.8
2022
$M
216.5
(234.8)
12.5
(5.8)
4.9
357.5
358.4
391.9
357.5
Operating cash flows
Investing cash flows
Financing cash flows
Net increase/(decrease)
in cash held
Effect of exchange rate
fluctuations on cash held
Cash and cash equivalents
at the beginning of the year
Cash and cash equivalents
at the end of the year
The increase in the net operating cash flows is primarily due to lower
inventory expenditure.
The net investing cash outflow was due to the net investment in the
Consolidated Entity’s Partnerships, to fund acquisitions and new
developments, plus the acquisitions of investment properties in Asia.
Financing cash flows principally relate to the net repayment of loans with
related parties and payment of the dividend in August 2022.
169
GOODMAN GROUP
Report of the Directors
Business review (continued)
Outlook
Goodman Group has developed significant expertise and a deliberate
strategy to target high barrier to entry markets, providing our customers
access to facilities where they are scarce. In particular, the rapid
proliferation of demand for data storage and processing capacity is
supplementing demand and reducing the available supply for warehouses
and logistics centres. This has positioned the Consolidated Entity well for
future growth.
In the near term, market conditions are likely to be volatile and the risks
associated with rising inflation, interest rates and slowing economic
growth are elevated. This may impact consumers; however, they
continue to seek faster and more flexible delivery, which requires ongoing
intensification of warehousing in urban locations to optimise delivery
and improve productivity. The business remains agile, focused on the
changing consumption habits across the physical and digital space and,
as a result, the evolving requirements of customers around the world.
Risks
Goodman Group identifies strategic and operational risks for each of its
regions as part of its strategy process. The key risks, an assessment of their
likelihood of occurrence and consequences and controls that are in place
to mitigate the risks are reported to the Goodman Group Board regularly.
Goodman Group has established formal systems and processes to manage
the risks at each stage of its decision-making process. This is facilitated
by a Goodman Group Investment Committee comprising senior executives,
chaired by the Group Chief Executive Officer, which considers all major
operational decisions and transactions. The Goodman Group Investment
Committee meets on a weekly basis.
The Goodman Group Audit, Risk and Compliance Committee reviews and
monitors a range of material risks in Goodman Group’s risk management
systems including, among other risks, market risks, operational risks,
financial risk management, sustainability, regulation and compliance, tax
policies and information technology.
Demand is currently exceeding supply in the Consolidated Entity’s
markets, supporting our development-led growth strategy. This is
producing well located assets for the Consolidated Entity and its
Partnerships. In addition to strategic site acquisitions, the opportunities
for regeneration of existing assets support the future development
activities by providing value add opportunities. This can assist in the
reduction of the environmental impacts of the Consolidated Entity’s
business activities. The development activity, project management
and depth of customer demand are supporting the positive outlook for
development earnings into FY24.
The strong customer demand and the supply constraints are resulting
in high levels of occupancy and strong rental growth in the portfolio, which
supports investment earnings. Absent a material adverse change in
market conditions, the rental growth and the development completions
will also support the growth in AUM and therefore management earnings.
In addition, the Consolidated Entity continues to maintain a strong
balance sheet, which combined with retained income, provides significant
liquidity, stability and financial resources.
The Board believes the Consolidated Entity is positioned to deliver growth
in FY24 despite the risks associated with current market volatility.
The Consolidated Entity sets financial performance targets annually
and reviews them regularly. Forecasts are subject to there being no
material adverse change in market conditions or the occurrence of other
unforeseen events.
170
ANNUAL REPORT 2023
The key risks faced by Goodman Group and the controls that have been established to manage those risks are set out in the following table:
Risk area
Mitigation
Capital
management
(debt, equity
and cash flow)
Goodman Group could suffer an inability
to deliver its strategy, or an acute liquidity
or solvency crisis, financial loss or financial
distress as a result of a failure in the design
or execution of its capital management and
financing strategy.
Economic and
geopolitical
environment
Governance,
regulation and
compliance
Global economic conditions and government
policies present both risks and opportunities
in the property and financial markets and the
business of our customers, which can impact
the delivery of Goodman Group's strategy and
its financial performance.
A continued increase in geopolitical tension
between countries could have potential
consequences on our people, operations and
capital partners.
In the near term, market conditions are likely to
be volatile and the risks associated with rising
inflation, interest rates and slowing economic
activity are elevated.
Non-compliance with legislation, regulators,
or internal policies, or to understand and
respond to changes in the political and
regulatory environment (including taxation)
could result in legal action, financial
consequences and damage our standing
and reputation with stakeholders.
People
and culture
Failure to recruit, develop, support, and
retain staff with the right skills and experience
may result in significant underperformance
or impact the effectiveness of operations
and decision making, in turn impacting
business performance.
+ Monthly preparation of a consolidated Capital Management Plan, which is reported
to the Goodman Group Investment Committee and the Finance and Treasury
management committee
+ Financial reporting to the Goodman Group Board
+ Weekly cashflow monitoring and reporting
+ Goodman Group Board approved Financial Risk Management (FRM) policy
+ Capital partnering transfers risks into Partnerships
+ Low gearing, ample liquidity and appropriate hedging and duration to absorb
market shocks
+ Diversity and tenure of debt funding sources and cash on deposit
+ Appropriate hedging quantities and duration in accordance with FRM policy
+ Distribution pay-out ratio consistent with contribution of development earnings
+ Long lease terms with prime customers
+ Strong assets that can generate better rental outcomes and growth
+ Key urban market strategy – urban, infill locations support re-usability of property
+ Insurance program (both Goodman Group’s and key counterparties) including project
specific insurance.
+ Global diversification of Goodman Group’s property portfolios
+ Focus on core property portfolios in key urban market locations and adaptable assets
+ Annual 5-year business strategy
+ Focus on cost management
+ Annual risk assessment and profile
+ Annual budget
+ Regular independent property valuations
+ Asset planning program
+ Prudent capital management with low gearing and significant available liquidity to allow
for potential market shocks
+ Adherence to FRM policy as it relates to hedging of interest rates and currencies
+ Review of customer credit
+ Co-investment with local capital partners.
+ Independent governance structures
+ Core values and attitudes, with an embedded compliance culture focused on best practice
+ Dedicated Goodman Group Head of Risk and Compliance Officer
+ Review of transactions by the Goodman Group Investment Committee
+ Annual compliance plan audits
+ Partnership investment committees independent of the manager
+ Global tax risk management framework
+ Regional and Goodman Group Executive declarations and sign-offs
+ Verification process and sign-off of public documents
+ Comprehensive insurance program, covering property, liability, Directors and Officers
and Professional Indemnity
+ Continuous disclosure regime – regular group management meetings.
+ Competitive remuneration structures, in particular performance rights under the LTIP,
with ALL staff having ownership
+ Succession planning for senior executives and key roles
+ Performance management and staff review
+ Overall performance review ratings to assess culture and engagement
+ Learning and development program to enhance skills sets
+ Goodman Values program
+ Staff engagement through team strategy days, town halls and the (good) life program.
171
GOODMAN GROUP
Report of the Directors
Business review (continued)
Risk area
Mitigation
Development
Development risks may arise from location,
site complexity, planning and permitting,
infrastructure, size, duration along with general
contractor capability.
Disruption,
changes in
demand and
obsolescence
The longer-term risk that an inability to
understand and respond effectively to
changes in our competitive landscape and
customer value chain could result in business
model disruption and asset obsolescence,
including the perception of obsolescence in
the short term.
+ Review and approval of development projects by the Goodman Group Investment
Committee and relevant Partnership Investment Committee
+ Targeted returns are higher for the size and complexity of the project
+ Engaging general contractors that are better capitalised
+ Senior oversight and responsibility by Executive Directors
+ Capital partnering transfers risks into partnerships
+ Specialised staff who understand the development process, including development
staff by region
+ Goodman Group defined design specifications, which cover environmental,
technological, and safety requirements, protecting against short term obsolescence
+ Fixed price, design and construct contracts with appropriately capitalised contractors
+ Redevelopment of older assets to intensify use
+ Insurance program (both Goodman Group’s and key contractors), including project
specific insurance
+ Spread and diversification of projects
+ Ongoing monitoring and reporting of WIP and levels of speculative development, with
Board oversight including limits with respect to speculative development and higher
development risk provisions
+ Implementation of Goodman Group policies and procedures (e.g. reporting, Safety
framework and delegation of authority)
+ Leasing prior to reaching development completion.
+ Key urban market strategy – urban, infill locations support re-usability of property
+ Adaptable and reusable building design – ease to reconfigure for another customer
+ Geographic diversification – capital allocation across regions and location of properties
+ Capital partnering transfers risks into Partnerships
+ Insurance program (both Goodman Group’s and key contractors), including project
specific insurance covering design and defects
+ Long lease terms with prime customers
+ Innovation and technology strategy – visibility and insight into technology trends along
with direct investment into technology start-ups
+ Competition analysis and behaviour.
Environmental
sustainability
and climate
change
Failure to deliver on Goodman Group's
sustainability leadership strategy and
ambitions may lead to a negative impact on
Goodman Group's reputation, ability to raise
capital and a disruption to operations and
stranded assets.
+ Corporate Responsibility and Sustainability policy
+ 2030 Sustainability Strategy and reporting against those targets
+ Assessment of individual assets to improve resilience and implementation of
sustainability initiatives.
+ Sustainability guidelines for development projects including embodied carbon
measurement and offset
+ Review and approval of acquisitions and development projects by the Goodman Group
Investment Committee and relevant Partnership Investment Committee, including
consideration
of climate risks in the due diligence process and minimum property specifications
+ Adoption of the Task Force on Climate-Related Financial Disclosures
recommendations as a framework for the assessment, management and disclosure
of climate risks
+ Investor, customer and regulatory requirements
+ Verification process and sign-off of public sustainability documents
+ Adherence to Goodman Group Procurement Policy for selection and purchase of
Carbon Credits
+ LTIP performance directly linked to meeting Goodman Group’s sustainability initiatives.
172
ANNUAL REPORT 2023
Risk area
Mitigation
Asset and
portfolio
Inability to execute asset planning and
management strategies, including leasing
risk exposures, can reduce returns from
Goodman Group's portfolios.
Concentration
of
counterparties
and markets
Over-exposure to specific areas, such
as capital partners, supply chain,
customers and markets, may limit growth
and sustainability opportunities.
Information
and data
security
Maintaining security (including cyber
security) of Information Technology (IT)
environment and data, ensuring continuity
of IT infrastructure and applications to
support sustainability and growth and
prevent operational, regulatory, financial
and reputational impacts.
+ Key urban market strategy – urban, infill locations where customer demand is strongest
+ In-house property management team
+ Diversification of customer base and lease expiries
+ Review and approval of significant leasing transactions and development
projects by the Goodman Group Investment Committee and relevant Partnership
Investment Committee
+ Capital expenditure programs keeping pace with property lifecycle
+ Implementation of Goodman Group policies and procedures (e.g. reporting, Safety
framework, sustainability measures and minimum design specifications)
+ Insurance program including Public Liability, including property risk assessment reports
+ Customer risk assessments
+ Asset plans – in particular categorisation of assets, maintenance program,
customer engagement
+ Portfolio strategy – locations, type of building.
+ Standardised governance structures around Partnerships, which includes:
– Relationship deeds articulating service arrangements
– Pre-emptive rights
+ Independent governance structure
+ Diversification of capital partners and fund expiries, including local investors.
Analysis of alternate capital sources
+ Goodman Group’s cornerstone investment in each Partnership and the underlying
strength of the Manager
+ Appropriate Management contracts across all Partnerships
+ Contractor pre-selection and tendering
+ Diversification of customer base and lease expiry
+ Investment metrics established for Goodman Group and Partnerships, setting
limits including:
– Speculative development
– Geographic and customer exposure
+ FRM policy establishing criteria for financial institution counterparties.
+ Strategic roadmap for delivery of secured IT systems, benchmarked against the
Australian Signal Directorate’s Essential maturity model and United States National
Institute of Standards and Technology Cyber Security framework
+ Proactive monitoring, review and testing of infrastructure and
system behaviour
+ Incident response, disaster recovery and business continuity planning
+ Penetration testing, vulnerability scanning and network review to identify and remediate
+ IT Dashboard Reporting to the Audit, Risk & Compliance Committee
+ Phishing awareness program implemented to educate and test employees’ awareness
and vigilance in avoiding threats
+ Cyber security awareness/training
+ Decommissioning legacy systems
+ Transition from employee password reliance
+ Speed of threat/vulnerability detection
+ Data system back-up/restore testing
+ Phishing simulation testing/reporting
+ Reporting and compliance with Essential Eight, baseline strategies
to mitigate cyber security incidents, developed by the Australian Cyber Security Centre.
173
GOODMAN GROUP
Report of the Directors
(continued)
Environmental regulations
The Consolidated Entity has policies and procedures to identify and appropriately address environmental obligations that might arise in respect of
the Consolidated Entity’s operations that are subject to significant environmental regulation under the laws of the countries the Consolidated Entity
operates in. The Directors have determined that the Consolidated Entity has complied with those obligations during the financial year and that there
has not been any material breach.
Disclosure in respect of any indemnification of Directors
A permitted indemnity provision (as defined in section 469 of the Hong Kong Companies Ordinance) for the benefit of the Directors of the Company
is currently in force and was in force throughout this year.
Directors’ interests in contracts
No contract of significance in relation to the Consolidated Entity’s business to which the Company, its subsidiaries or any of its fellow subsidiaries was
a party and in which the Directors of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time
during the year.
Directors’ interests in shares
At the end of the year, the Directors (including alternate Directors) held the following interests in the stapled securities of Goodman Group, which are
listed on the ASX:
Directors
Stephen Paul Johns
David Jeremy Collins
Gregory Leith Goodman
Daniel Cornelius Peeters
Directly held
securities
Indirectly held
securities
–
5,000
–
–
41,143
5,000
Total
41,143
10,000
38,667,487
38,667,487
1,678,465
1,678,465
In addition, Gregory Goodman and Daniel Peeters participate in the LTIP under which they hold performance rights. Performance rights entitle
participants to receive Goodman Group stapled securities without the payment of consideration, subject to Goodman Group satisfying performance
criteria and the participants remaining employees of Goodman Group.
Details of the awards of performance rights under the LTIP granted as compensation to the Directors (including alternate Directors) at 30 June 2023
are as follows:
Number of
performance
rights at the
start of the year
Number of
performance
rights granted
during the year
Number of
performance
rights vested
during the year
Number of
performance
rights forfeited
during the year
Number of
performance
rights at the
end of the year
Date
performance
rights granted
Financial
years in which
grant vests
Gregory Leith Goodman
–
1,000,000
1,560,000
950,000
900,000
1,066,667
533,334
–
–
–
–
–
Daniel Cornelius Peeters
–
500,000
625,000
380,000
350,000
366,667
183,334
–
–
–
–
–
–
–
–
(288,000)
(533,333)
(533,334)
–
–
–
(112,001)
(183,333)
(183,334)
–
–
–
1,000,000
17 Nov 2022
2027 – 2033
1,560,000
18 Nov 2021
2026 – 2032
950,000
19 Nov 2020
2024 – 2026
(36,000)
576,000
20 Nov 2019
2023 – 2025
–
–
–
–
–
533,334
15 Nov 2018
2023 – 2024
–
16 Nov 2017
2023
500,000
17 Nov 2022
2027 – 2033
625,000
18 Nov 2021
2026 – 2032
380,000
19 Nov 2020
2024 – 2026
(13,998)
224,001
20 Nov 2019
2023 – 2025
–
–
183,334
15 Nov 2018
2023 – 2024
–
16 Nov 2017
2023
Apart from the above, at no time during the year was the Company, its subsidiaries or any of its fellow subsidiaries a party to any arrangement to
enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other related
body corporate.
174
Auditors
KPMG retire and, being eligible, offer themselves for re-appointment.
A resolution for the re-appointment of KPMG as auditors of the Company
is to be proposed at the forthcoming Annual General Meeting.
Subsequent events
There has not arisen in the interval between the end of the financial year
and the date of this report any item, transaction or event of a material and
unusual nature likely, in the opinion of the Directors, to affect significantly
the operations of the Consolidated Entity, the results of those operations,
or the state of affairs of the Consolidated Entity, in future financial years.
Declaration by the Group Chief Executive Officer
and Chief Financial Officer
The Directors have been given declarations equivalent to those required of
listed Australian companies by section 295A of the Corporations Act 2001
from the Group Chief Executive Officer and Group Chief Financial Officer
for the year ended 30 June 2023.
By order of the Board of Directors
Stephen Paul Johns
Independent Chairman
David Jeremy Collins
Director
Sydney, 17 August 2023
ANNUAL REPORT 2023
175
GOODMAN GROUP
Independent Auditor’s Report
To the members of Goodman Logistics (HK) Limited (Incorporated in Hong Kong with limited liability)
Opinion
We have audited the consolidated financial statements of Goodman
Logistics (HK) Limited (the Company) and its subsidiaries (the Group)
set out on pages 178 to 217, which comprise the consolidated statement
of financial position as at 30 June 2023, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity
and the consolidated cash flow statement for the year then ended and
notes to the consolidated financial statements, including a summary of
significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair
view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with Hong Kong Financial
Reporting Standards (HKFRSs) issued by the Hong Kong Institute of
Certified Public Accountants (HKICPA) and have been properly prepared
in compliance with the Hong Kong Companies Ordinance.
Basis for opinion
We conducted our audit in accordance with Hong Kong Standards on
Auditing (HKSAs) issued by the HKICPA. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the
audit of the consolidated financial statements section of our report. We
are independent of the Group in accordance with the HKICPA’s Code of
Ethics for Professional Accountants (the Code) and we have fulfilled our
other ethical responsibilities in accordance with the Code. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Information other than the consolidated
financial statements and auditor’s report thereon
The Directors are responsible for the other information which comprises
all the information included in the Company’s Report of the Directors.
Our opinion on the consolidated financial statements does not cover
the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements,
our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the Directors
for the consolidated financial statements
The Directors are responsible for the preparation of the consolidated
financial statements that give a true and fair view in accordance with
HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance
and for such internal control as the Directors determine is necessary to
enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are
responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either
intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit
of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. This report is made solely to you, as a body, in
accordance with section 405 of the Hong Kong Companies Ordinance, and
for no other purpose. We do not assume responsibility towards or accept
liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with HKSAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with HKSAs, we exercise professional
judgement and maintain professional scepticism throughout the audit.
We also:
+
+
+
Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by the Directors.
176
ANNUAL REPORT 2023
Independent Auditor’s Report (continued)
To the members of Goodman Logistics (HK) Limited (Incorporated in Hong Kong with limited liability)
+
+
+
Conclude on the appropriateness of the Directors’ use of the going
concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the
related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the
Group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters,
the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify
during our audit.
Certified Public Accountants
8th Floor, Prince’s Building
10 Chater Road
Central, Hong Kong
17 August 2023
177
GOODMAN GROUP
Consolidated statement of financial position
as at 30 June 2023
(expressed in Australian dollars)
Current assets
Cash and cash equivalents
Inventories
Receivables
Contract assets
Current tax receivables
Other assets
Other financial assets
Total current assets
Non-current assets
Inventories
Investment properties
Investments accounted for using the equity method
Receivables
Other financial assets
Deferred tax assets
Property, plant and equipment
Other assets
Total non-current assets
Total assets
Current liabilities
Payables
Loans from related parties
Current tax payables
Employee benefits
Dividend payable
Other financial liabilities
Total current liabilities
Non-current liabilities
Payables
Interest bearing liabilities
Loans from related parties
Deferred tax liabilities
Employee benefits
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to Shareholders
Share capital
Reserves
Retained earnings
Total equity attributable to Shareholders
Non-controlling interests
Total equity
The notes on pages 182 to 217 form part of these consolidated financial statements.
Approved and authorised for issue by the Board of Directors on 17 August 2023.
Stephen Paul Johns
Director
178
David Jeremy Collins
Director
Note
16(a)
5(b)
6
7
3(c)
12
5(b)
5(b)
5(b)
6
12
3(d)
8
20(c)
3(c)
14
12
8
11
20(c)
3(d)
12
15(a)
17
18
2023
$M
391.9
121.6
173.8
70.7
0.3
3.4
11.3
773.0
1,410.6
451.7
1,850.6
612.0
161.1
20.2
23.3
0.8
4,530.3
5,303.3
285.2
86.6
52.1
46.0
94.2
79.9
644.0
93.3
46.7
1,589.5
9.5
12.8
98.1
1,849.9
2,493.9
2,809.4
930.9
(547.3)
2,383.2
2,766.8
42.6
2,809.4
2022
$M
357.5
175.2
115.6
60.5
0.6
3.2
–
712.6
1,377.4
336.8
1,845.6
789.6
174.8
18.8
24.0
3.7
4,570.7
5,283.3
274.6
125.4
32.5
49.0
46.7
45.4
573.6
93.2
9.0
1,815.6
50.5
13.9
141.4
2,123.6
2,697.2
2,586.1
873.0
(605.1)
2,290.0
2,557.9
28.2
2,586.1
Consolidated statement of comprehensive income
for the year ended 30 June 2023
ANNUAL REPORT 2023
(expressed in Australian dollars)
Revenue
Gross property income
Management income
Development income
Dividends from investments
Property and development expenses
Property expenses
Development expenses
Other (loss)/income
Net loss from fair value adjustments on investment properties
Net gain on disposal of investment properties
Share of net results of equity accounted investments
Net gain on disposal of equity accounted investments
Other expenses
Employee expenses
Share based payments expense
Administrative and other expenses
Transaction management fees
Profit before interest and income tax
Net finance expense
Finance income
Finance expense
Net finance expense
Profit before income tax
Income tax expense
Profit for the year
Profit for the year attributable to:
Shareholders
Non-controlling interests
Profit for the year
Other comprehensive income
Items that will not be reclassified to profit or loss
Increase due to revaluation of other financial assets
Actuarial gains on defined benefit retirement schemes (net of tax)
Item that may be reclassified subsequently to profit or loss
Effect of foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Shareholders
Non-controlling interests
Total comprehensive income for the year
The notes on pages 182 to 217 form part of these consolidated financial statements.
Note
2023
$M
2022
$M
1
1
1
5(e)
5(f)
1
15(b)
10
10
3(a)
18
52.8
189.5
934.7
0.8
1,177.8
(10.4)
(454.4)
(464.8)
(0.4)
4.1
(91.8)
–
(88.1)
(152.3)
(111.8)
(41.1)
(1.6)
(306.8)
318.1
38.1
(129.1)
(91.0)
227.1
(26.9)
200.2
187.4
12.8
200.2
10.7
0.5
11.2
37.0
37.0
48.2
248.4
234.6
13.8
248.4
45.9
193.7
1,075.0
0.2
1,314.8
(5.0)
(433.5)
(438.5)
(0.3)
3.8
345.3
0.2
349.0
(170.5)
(94.0)
(37.4)
(23.1)
(325.0)
900.3
48.0
(71.4)
(23.4)
876.9
(114.1)
762.8
751.9
10.9
762.8
9.4
5.6
15.0
0.1
0.1
15.1
777.9
767.8
10.1
777.9
179
GOODMAN GROUP
Consolidated statement of changes in equity
for the year ended 30 June 2023
Year ended 30 June 2022
(expressed in Australian dollars)
Balance at 1 July 2021
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive
income/(loss) for the year
Total comprehensive income
for the year, net of income tax
Contributions by and
distributions to owners
Dividends declared/paid
Issue of shares to employees
of Goodman Group
Issue of treasury shares
Issue of ordinary shares
Equity settled share based
payments transactions
Deferred tax associated with the LTIP
Acquisition of special purpose development
entity with non-controlling interests
Balance at 30 June 2022
Year ended 30 June 2023
(expressed in Australian dollars)
Balance at 1 July 2022
Total comprehensive
income/(loss) for the year
Profit for the year
Other comprehensive
income/(loss) for the year
Total comprehensive income
for the year, net of income tax
Contributions by and
distributions to owners
Dividends declared/paid
Issue of shares to employees
of Goodman Group
Issue of ordinary shares
Issue cossts
Equity settled share based
payments transactions
Deferred tax associated with the LTIP
Acquisition of special purpose development
entity with non-controlling interests
Issue of preference shares
to non-controlling interest
Balance at 30 June 2023
Note
18
14
15(a)
15(a)
15(a)
17(c)
17(c)
Note
18
14
15(a)
15(a)
15(a)
17(c)
17(c)
20(b)
Share
capital
$M
791.9
–
–
–
–
57.4
4.8
18.9
–
–
–
Attributable to Shareholders
Retained
earnings
$M
1,584.8
Total
$M
1,747.7
Reserves
$M
(629.0)
Non–controlling
interests
$M
22.2
Total
equity
$M
1,769.9
–
15.9
15.9
–
–
–
–
12.2
(4.2)
–
751.9
–
751.9
15.9
10.9
(0.8)
762.8
15.1
751.9
767.8
10.1
777.9
(46.7)
(46.7)
(5.5)
(52.2)
–
–
–
–
–
–
57.4
4.8
18.9
12.2
(4.2)
–
–
–
–
–
–
1.4
57.4
4.8
18.9
12.2
(4.2)
1.4
873.0
(605.1)
2,290.0
2,557.9
28.2
2,586.1
Share
capital
$M
873.0
–
–
–
–
46.1
11.9
(0.1)
–
–
–
–
Attributable to Shareholders
Retained
earnings
$M
2,290.0
Total
$M
2,557.9
Reserves
$M
(605.1)
Non–controlling
interests
$M
28.2
Total
equity
$M
2,586.1
–
47.2
47.2
–
–
–
–
11.6
(1.0)
–
–
187.4
–
187.4
47.2
12.8
1.0
200.2
48.2
187.4
234.6
13.8
248.4
(94.2)
–
–
–
–
–
–
–
(94.2)
46.1
11.9
(0.1)
11.6
(1.0)
–
–
(29.3)
(123.5)
–
–
–
–
–
1.3
28.6
42.6
46.1
11.9
(0.1)
11.6
(1.0)
1.3
28.6
2,809.4
930.9
(547.3)
2,383.2
2,766.8
The notes on pages 182 to 217 form part of these consolidated financial statements.
180
Consolidated cash flow statement
for the year ended 30 June 2023
(expressed in Australian dollars)
Cash flows from operating activities
Property income received
Cash receipts from development activities
Cash receipts from management and other activities
Property expenses paid
Payments for development activities
Other cash payments in the course of operations
Dividends/distributions received
Interest received
Finance costs paid
Net income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Net proceeds from disposal of investment properties
Payments for investment properties
Net proceeds from disposal of equity accounted investments
Return of capital from equity accounted investments
Payments for equity investments
Payments for plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from issue of ordinary shares
Transaction costs from issue of ordinary securities
Proceeds from borrowings
Net (repayments of)/proceeds from loans with related parties
Payments on derivative financial instruments
Dividends paid to Shareholders
Dividends paid to non-controlling interests
Payments of lease liabilities
Capital contributed by non-controlling interests
Net cash (used in)/provided by financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the year
The notes on pages 182 to 217 form part of these consolidated financial statements.
ANNUAL REPORT 2023
Note
2023
$M
2022
$M
50.4
896.4
218.0
(8.7)
(329.8)
(242.4)
102.9
65.0
(0.7)
(68.8)
682.3
(0.1)
(100.2)
–
141.7
(330.9)
(3.5)
42.7
1,036.2
300.0
(5.9)
(886.8)
(262.6)
66.1
15.5
(1.0)
(87.7)
216.5
272.5
(413.0)
4.4
166.3
(263.3)
(1.7)
(293.0)
(234.8)
11.9
(0.1)
40.6
(281.8)
(49.0)
(46.7)
(29.3)
(7.6)
1.3
(360.7)
28.6
357.5
5.8
391.9
18.9
–
9.0
107.5
–
(110.8)
(5.5)
(8.0)
1.4
12.5
(5.8)
358.4
4.9
357.5
181
16(b)
16(a)
GOODMAN GROUP
Notes to the consolidated financial statements
(expressed in Australian dollars)
BASIS OF PREPARATION
Statement of compliance
These financial statements have been prepared in accordance with
all applicable Hong Kong Financial Reporting Standards (HKFRSs),
which collective term includes all applicable individual Hong Kong
Financial Reporting Standards, Hong Kong Accounting Standards and
Interpretations issued by the Hong Kong Institute of Certified Public
Accountants (HKICPA) and accounting principles generally accepted in
Hong Kong. These financial statements also comply with the applicable
requirements of the Hong Kong Companies Ordinance.
Translation of controlled foreign operations
The assets and liabilities of controlled foreign operations are translated
into Australian dollars at foreign exchange rates applicable at the
reporting date.
Revenue and expenses are translated at weighted average rates for
the financial year. Exchange differences arising on translation are taken
directly to the foreign currency translation reserve until the disposal or
partial disposal of the operations.
Exchange differences arising on monetary items that form part of the net
investment in a controlled foreign operation are recognised in the foreign
currency translation reserve on consolidation.
Basis of preparation of the consolidated financial statements
Exchange rates used
The measurement basis used in the preparation of the consolidated
financial statements is the historical cost basis except for investment
properties, derivative financial instruments, investment in unlisted
securities and liabilities for cash settled share based payment
arrangements which are stated at fair value.
Accounting for acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions
with equity holders in their capacity as equity holders and therefore no gain
or loss and no goodwill is recognised as a result of such transactions.
Foreign currency translation
Functional and presentation currency
Items included in the consolidated financial statements of each of the
Company’s subsidiaries are measured using the currency of the primary
economic environment in which the entity operates (functional currency).
The consolidated financial statements are presented in Australian dollars,
which is the Company’s functional and presentation currency.
Transactions
Foreign currency transactions are translated to each entity’s functional
currency at rates approximating the foreign exchange rates ruling at the
dates of the transactions. Amounts receivable and payable in foreign
currencies at the reporting date are translated at the rates of exchange
ruling on that date. Resulting exchange differences are recognised in
profit or loss.
Non-monetary assets and liabilities that are measured in terms of
historical cost are translated at rates of exchange applicable at the date
of the initial transaction. Non-monetary items which are measured at fair
value in a foreign currency are translated using the exchange rates at the
date when the fair value was determined.
The following exchange rates are the main exchange rates used in
translating foreign currency transactions, balances and financial
statements to Australian dollars.
Australian dollar
(AUD) to
Weighted average
As at 30 June
2023
2022
2023
2022
Hong Kong dollar (HKD)
5.2751
5.6626
5.2235
5.4241
Chinese yuan (CNY)
4.6804
4.6840
4.8339
4.6154
Japanese yen (JPY)
92.3936 85.1512
96.1530
93.7770
Euros (EUR)
0.6433
0.6442
0.6109
0.6594
British pounds sterling (GBP)
0.5592
0.5456
0.5249
0.5676
United States dollar (USD)
0.6731
0.7255
0.6664
0.6912
Changes in accounting policies
The Consolidated Entity has adopted International Tax Reform – Pillar
Two Model Rules – Amendments to HKAS 12 upon their release in July
2023. The amendments provide a temporary mandatory exception from
deferred tax accounting for the top-up tax, which is effective immediately
and require new disclosures about the Pillar Two exposure from 30
June 2024. The mandatory exception applies retrospectively. However,
because no new legislation to implement the top-up tax was enacted
or substantively enacted at 30 June 2023 in any jurisdiction in which
the Consolidated Entity operates and no related deferred taxes were
recognised at that date, the retrospective application has no impact on
the Consolidated Entity’s financial statements at 30 June 2023.
The HKICPA has also issued other amendments to standards that were
first effective from 1 July 2022 but none of these had a material impact on
the Consolidated Entity’s financial statements.
Accounting standards issued but not yet effective
The Consolidated Entity has not applied any new standard or
interpretation that is not yet effective for the current accounting period.
None of the new accounting standards or interpretations is expected to
have a significant impact on the future results of the Consolidated Entity.
182
ANNUAL REPORT 2023
Critical accounting estimates used in the preparation
of the consolidated financial statements
The preparation of consolidated financial statements requires estimates
and assumptions concerning the application of accounting policies
and the future to be made by the Consolidated Entity. Estimates are
continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year can be found in the following notes:
+ Note 5 – Property assets
+ Note 13 – Financial risk management.
The accounting impacts of revisions to estimates are recognised in the
period in which the estimate is revised and in any future periods affected.
Measurement of fair values
A number of the Consolidated Entity’s accounting policies and
disclosures require the measurement of fair values, for both financial and
non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Consolidated
Entity uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy and have been
defined as follows:
+
+
Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices)
+
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Further information about the assumptions made in measuring fair
values is included in the following notes:
+ Note 5 – Property assets
+ Note 13 – Financial risk management.
RESULTS FOR THE YEAR
1 Profit before interest and income tax
Gross property income
Gross property income comprises rental income under operating
leases (net of incentives provided) and amounts billed to customers for
outgoings (e.g. rates, levies, cleaning, security, etc). Amounts billed to
customers for outgoings are a cost recovery for the Consolidated Entity
and are recognised once the expense has been incurred. The expense
is included in property expenses.
Rental income under operating leases is recognised on a straight-line
basis over the term of the lease contract. Where operating lease rental
income is recognised relating to fixed increases in rentals in future
years, an asset is recognised. This asset is a component of the relevant
investment property carrying amount. The cost of lease incentives
provided to customers is amortised on a straight-line basis over the life
of the lease as a reduction of gross property income.
Management and development income
The revenue from management and development activities is measured
based on the consideration specified in a contract with a customer.
The Consolidated Entity recognises revenue when it transfers control
over a product or service to a customer.
Management income
Fee income derived from management services relates to investment
management base fees and property services fees and is recognised and
invoiced progressively as the services are provided. Customers make
payments usually either monthly or quarterly in arrears.
Performance related management income generally relates to portfolio
performance fee income, which is recognised progressively as the services
are provided but only when the income can be reliably measured and is
highly probable of not being reversed. These portfolio performance fees
are typically dependent on the overall returns of a Partnership relative to
an agreed benchmark return, assessed over the life of the Partnership,
which can vary from one year to seven years. The returns are impacted by
operational factors such as the quality and location of the portfolio, active
property management, rental income rates and development activity but
can also be significantly affected by changes in global and local economic
conditions. Accordingly, portfolio performance fee revenue is only
recognised towards the end of the relevant assessment period, as prior to
this revenue recognition is not considered to be sufficiently certain.
183
GOODMAN GROUP
Notes to the consolidated financial statements
Results for the year (continued)
1 Profit before interest and income tax (continued)
In determining the amount of revenue that can be reliably measured,
management prepares a sensitivity analysis to understand the impact
of changes in asset valuations on the potential performance fee at
the assessment date. The assessment of revenue will depend on the
prevailing market conditions at the reporting date relative to long-term
averages and also the length of time until the assessment date e.g. the
longer the time period to assessment date, the greater the impact of the
sensitivity analysis. The potential portfolio performance fee revenue
is then recognised based on the length of time from the start of the
assessment period to the reporting date as a proportion of the total
assessment period. Where the income is attributable to development
activities or it relates to a combination of inextricable management and
development activities that have occurred over the performance fee
period, then it is reported as development income, otherwise the income
is reported as management income. The Partnerships make payments
in respect of portfolio performances fees at the end of the performance
periods, when the attainment of the conditions has been verified and the
amount of the fee has been agreed by all parties.
Development income – disposal of inventories
The disposal of inventories is recognised at the point in time when control
over the property asset is transferred to the customer. This will generally
occur on transfer of legal title and payment in full by the customer. The
gain or loss on disposal of inventories is calculated as the difference
between the carrying amount of the asset at the time of disposal and the
proceeds on disposal (less transaction costs) and is included in profit or
loss in the period of disposal.
Development income – development management services
Fee income from development management services (including master-
planning, development management and overall project management)
is recognised progressively as the services are provided in proportion
to the stage of completion by reference to costs. Payments are received
in accordance with the achievement of agreed milestones over the
development period. The development period can exceed 24 months for
larger and more complex developments.
Performance related development income includes income associated
with the returns from individual developments under the Consolidated
Entity’s management and performance fee income that relates to
development activity. Income in respect of individual developments is
recognised by the Consolidated Entity on attainment of the performance
related conditions, which is when the income can be reliably measured
and is highly probable of not being reversed. These amounts are paid
by the Partnership when the amounts have been measured and agreed.
Income associated with development activities as part of a portfolio
assessment is recognised on the same basis as outlined above in the
management income section.
Development income – fixed price development contracts
Certain development activities are assessed as being fixed price
development contracts. This occurs when a signed contract exists, either
prior to the commencement of or during the development phase, to
acquire a development asset from the Consolidated Entity on completion.
Revenue and expenses relating to these development contracts are
recognised in profit or loss in proportion to the stage of completion of the
relevant contracts by reference to costs. The payments by the purchaser
usually occur on completion of the development once legal title has been
transferred but payments may be made during the development period on
achievement of agreed milestones. The development period can exceed 24
months for larger and more complex developments.
Net gain on disposal of investment properties
The disposal of an investment property is recognised at the point in time
when control over the property has been transferred to the purchaser.
Employee benefits
Wages, salaries and annual leave
Wages and salaries, including non-monetary benefits, and annual
leave represent present obligations resulting from employees’ services
provided to the reporting date. These are calculated at undiscounted
amounts based on rates that are expected to be paid as at the reporting
date including related on-costs, such as workers’ compensation insurance
and payroll tax.
Bonuses
A liability is recognised in other payables and accruals for bonuses where
there is a contractual obligation or where there is a past practice that
has created a constructive obligation. Liabilities for bonuses that are
expected to be settled within 12 months are measured at the amounts
expected to be paid, including related on-costs, when they are settled.
Superannuation
Defined contribution retirement plans
Obligations for contributions to defined contribution retirement plans
are recognised as an expense as incurred.
Defined benefit retirement schemes
The net obligation in respect of defined benefit retirement schemes
is recognised in the statement of financial position and is calculated
separately for each plan by estimating the amount of future benefit that
employees have earned in the current and prior periods, discounting that
amount and deducting the fair value of any plan assets. The calculation of
defined benefit obligations is performed annually by a qualified actuary
using the projected unit credit method. Remeasurements of the net defined
benefit liability, which comprise actuarial gains and losses and the return
on plan assets (excluding interest), are recognised immediately in other
comprehensive income. Net interest expense and other expenses related
to defined benefit retirement schemes are recognised in profit or loss.
184
Profit before interest and income tax has been arrived at after crediting/(charging) the following items:
Management services
Performance related income
Management income
Income from disposal of inventories
Income from fixed price development contracts
Other development income, including development management1
Net gain on disposal of special purpose development entities, including JVs
Development income
Inventory cost of sales
Other development expenses
Development expenses
Included in employee expenses are the following items:
Salaries, wages and other benefits
Contributions to defined contribution retirement plans
Employee expenses
Depreciation of plant and equipment
Auditor’s remuneration
ANNUAL REPORT 2023
2023
$M
189.2
0.3
189.5
530.7
215.6
164.6
23.8
934.7
(296.0)
(158.4)
2022
$M
162.7
31.0
193.7
747.4
114.6
169.6
43.4
1,075.0
(354.9)
(78.6)
(454.4)
(433.5)
(151.4)
(0.9)
(169.1)
(1.4)
(152.3)
(170.5)
(8.5)
(1.9)
(8.7)
(1.5)
1. Fee revenues from single contractual arrangements involving a combination of inextricable investment management and development management services and recognised over the life of the
underlying developments projects are classified as development income for statutory reporting purposes. During the year, $41.7 million (2022: $77.0 million) of such income was recognised.
2 Segment reporting
An operating segment is a component of the Consolidated Entity that engages in business activities from which it may earn revenues and incur
expenses. The Consolidated Entity reports the results and financial position of its operating segments based on the internal reports regularly reviewed
by the Group Chief Executive Officer in order to assess each segment’s performance and to allocate resources to them.
Operating segment information is reported on a geographic basis and the Consolidated Entity has determined that its operating segments are Asia
(Greater China (including the Hong Kong SAR) and Japan), Continental Europe (with the majority of assets located in Germany, France, Spain and the
Netherlands) and the United Kingdom.
The activities and services undertaken by the operating segments include:
+
Property investment, both through direct ownership and cornerstone investments in Partnerships
+ Management activities, both investment and property management
+
Development activities, including development of directly owned assets (predominantly disclosed as inventories) and management
of development activities for the Consolidated Entity’s Partnerships.
The segment results that are reported to the Group Chief Executive Officer are based on profit before net finance expense and income tax expense,
and also exclude non-cash items such as fair value adjustments and impairments, corporate expenses and share based remuneration. The assets
allocated to each operating segment relate to the properties, which also include the investments in Partnerships, and the trade and other receivables
associated with the operating activities, but exclude receivables from GL, GIT and their controlled entities, income tax receivables and corporate
assets. The liabilities allocated to each operating segment primarily relate to trade and other payables associated with the operating activities, but
exclude payables to GL, GIT and their controlled entities, provision for dividends to Shareholders, income tax payables and corporate liabilities.
The accounting policies used to report segment information are the same as those used to prepare the consolidated financial statements for the
Consolidated Entity.
For the purpose of operating segment reporting, there are no material intersegment revenues and costs.
Information regarding the operations of each reportable segment is included on the following pages.
185
GOODMAN GROUP
Notes to the consolidated financial statements
Results for the year (continued)
2 Segment reporting (continued)
Information about reportable segments
Statement of comprehensive income
External revenues
Gross property income
Management income
Development income
Dividends from investments
Total external revenues
Analysis of external revenues:
Revenues from contracts with customers
Assets and services transferred at a point in time
Assets and services transferred over time
Other revenue
Rental income (excludes outgoings recoveries)
Dividends from investments
Total external revenues
Reportable segment profit before income tax
Other key components of financial
performance included in reportable
segment profit before income tax
Share of net results of equity
accounted investments in Partnerships
(before fair value adjustments)
Share of fair value adjustments attributable
to investment properties in Partnerships
Asia
Continental Europe
United Kingdom
Total
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
2023
$M
2022
$M
29.3
124.4
100.2
0.8
254.7
28.0
198.9
27.0
0.8
254.7
209.1
15.3
96.8
150.2
0.2
262.5
24.8
223.2
14.3
0.2
262.5
252.5
22.8
57.4
740.7
–
820.9
534.4
265.7
20.8
–
820.9
336.7
27.6
90.9
892.1
–
1,010.6
792.2
193.7
24.7
–
1,010.6
505.2
0.7
7.7
93.8
–
102.2
33.8
67.8
0.6
–
102.2
96.2
3.0
6.0
32.7
–
41.7
12.8
25.9
3.0
–
41.7
42.8
52.8
189.5
934.7
0.8
1,177.8
45.9
193.7
1,075.0
0.2
1,314.8
596.2
532.4
829.8
442.8
48.4
0.8
1,177.8
642.0
42.0
0.2
1,314.8
800.5
29.2
16.5
67.2
43.7
14.2
7.6
34.9
9.8
78.3
84.6
(24.1)
22.3
(152.5)
203.8
(160.1)
269.8
Statement of financial position
Reportable segment assets
Included in reportable segment assets are:
Equity accounted investments in Partnerships
Non-current assets
Additions to non-current assets include:
– Investment properties
– Equity accounted
investments in Partnerships
Reportable segment liabilities
Asia
Continental Europe
United Kingdom
Total
2023
$M
2,346.0
2022
$M
1,971.9
2023
$M
1,177.5
2022
$M
1,312.4
1,094.9
2,073.9
1,000.8
1,743.8
169.0
893.7
164.2
1,017.0
101.4
176.9
181.3
99.9
–
15.5
–
1.3
2023
$M
958.6
586.7
835.9
–
138.0
2022
$M
957.2
2023
$M
4,482.1
2022
$M
4,241.5
680.6
899.0
1,850.6
3,803.5
1,845.6
3,659.8
243.6
162.1
101.4
330.4
424.9
263.3
201.2
160.8
147.7
124.1
49.8
113.5
398.7
398.4
186
Reconciliation of reportable segment revenue, profit or loss, assets and liabilities
Revenue
Total revenue for reportable segments
Consolidated revenues
Profit or loss
Total profit before income tax for reportable segments
Corporate expenses not allocated to reportable segments
Valuation and other adjustments not included
in reportable segment profit before income tax:
– Net loss from fair value adjustments on investment properties
– Share of fair value adjustments attributable to investment properties in Partnerships
– Share of fair value adjustments on derivative financial instruments in Partnerships
– Share based payments expense
Net finance expense
Consolidated profit before income tax
Assets
Total assets for reportable segments
Other unallocated amounts1
Consolidated total assets
Liabilities
Total liabilities for reportable segments
Other unallocated amounts1
Consolidated total liabilities
1. Other unallocated amounts comprise principally receivables from and payables to GL, GIT and their controlled entities.
ANNUAL REPORT 2023
Note
2023
$M
2022
$M
5(e)
5(f)(ii)
5(f)(ii)
10
1,177.8
1,177.8
642.0
(41.6)
600.4
(0.4)
(160.1)
(10.0)
(111.8)
(91.0)
227.1
1,314.8
1,314.8
800.5
(66.6)
733.9
(0.3)
269.8
(9.1)
(94.0)
(23.4)
876.9
4,482.1
821.2
4,241.5
1,041.8
5,303.3
5,283.3
398.7
2,095.2
2,493.9
398.4
2,298.8
2,697.2
187
GOODMAN GROUP
Notes to the consolidated financial statements
Results for the year (continued)
3 Taxation
Income tax for the period comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax
assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly
in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity respectively.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the reporting date,
and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying
amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and
unused tax credits. Apart from differences which arise on initial recognition of assets and liabilities, all deferred tax liabilities and all deferred tax
assets, to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised.
The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets
and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.
(a) Taxation in the consolidated statement of comprehensive income
Current tax expense – Hong Kong profits tax
Current year
Changes in estimates related to prior years
Current tax expense – overseas
Current year
Changes in estimates related to prior years
Deferred tax benefit/(expense)
Origination and reversal of temporary differences
Total income tax expense
2023
$M
2022
$M
(13.2)
2.3
(10.9)
(57.0)
(3.1)
(60.1)
44.1
44.1
(26.9)
(14.2)
1.9
(12.3)
(59.8)
0.4
(59.4)
(42.4)
(42.4)
(114.1)
The provision for Hong Kong profits tax for the year ended 30 June 2023 is calculated at 16.5% (2022: 16.5%) of the estimated assessable profits for
the year. Taxation for overseas subsidiaries is charged at the appropriate current rates of taxation ruling in the relevant countries.
(b) Reconciliation between accounting profit and income tax expense at applicable tax rates
Profit before income tax
Notional tax on profit before income tax, calculated at the rates applicable to profits in the countries concerned
(Increase)/decrease in income tax due to:
– Current year losses for which no deferred tax asset was recognised
– Non–assessable income
– Non–deductible expense
– Utilisation of previously unrecognised tax losses
– Changes in estimates related to prior years
Income tax expense
188
2023
$M
227.1
(70.5)
(13.7)
60.9
(27.4)
24.6
(0.8)
(26.9)
2022
$M
876.9
(206.4)
(11.4)
123.5
(45.4)
23.3
2.3
(114.1)
ANNUAL REPORT 2023
(c) Current tax receivables/payables
Net income tax payable at the beginning of the year
Decrease/(increase) in current net tax payable due to:
– Net income taxes paid
– Net income tax expense on current year’s profit
– Changes in estimates related to prior years
– Other
Net income tax payable at the end of the year
Current tax receivables
Current tax payables
(d) Deferred tax assets and liabilities
2023
$M
(31.9)
68.8
(70.2)
(0.8)
(17.7)
(51.8)
0.3
(52.1)
(51.8)
Deferred tax assets of $20.2 million (2022: $18.8 million) arising from performance rights awarded under the LTIP and deferred tax liabilities
of $9.5 million (2022: $50.5 million) arising from investment properties were recognised in the consolidated statement of financial position.
Movements in deferred taxes recognised in expenses and equity are attributable to the following:
Deferred tax benefit/(expense) recognised in expenses
Investment properties – fair value adjustments
LTIP
Other items
Total deferred tax benefit/(expense) recognised in expenses
Deferred tax benefit/(expense) recognised in equity
LTIP
Total deferred tax expense recognised in equity
Total deferred tax movements recognised in expenses and equity
2023
$M
50.9
1.5
(8.3)
44.1
(1.1)
(1.1)
43.0
2022
$M
(44.7)
87.7
(74.0)
2.3
(3.2)
(31.9)
0.6
(32.5)
(31.9)
2022
$M
(54.6)
7.8
4.4
(42.4)
(4.2)
(4.2)
(46.6)
Deferred tax assets of $205.2 million (2022: $190.0 million) arising primarily from tax losses have not been recognised by the Consolidated Entity.
4 Profit attributable to equity shareholders of the Company
The consolidated profit attributable to equity shareholders of the Company includes a profit of $603.8 million (2022: $265.3 million) which has been
dealt with in the financial statements of the Company.
189
GOODMAN GROUP
Notes to the consolidated financial statements
OPERATING ASSETS AND LIABILITIES
Classification of investment properties
Investment properties are classified as either properties under
development or stabilised properties. Investment properties under
development include land, new investment properties in the course of
construction and investment properties that are being redeveloped.
Stabilised investment properties are all investment properties not
classified as being under development and would be completed
properties that are leased or are available for lease to customers.
For investment properties under development, the carrying values are
reviewed by management at each reporting date to consider whether
they reflect their fair values and at completion external valuations are
obtained to determine the fair values.
For stabilised investment properties, independent valuations are obtained
at least every two years to determine the fair values. At each reporting
date between obtaining independent valuations, the carrying values are
reviewed by management to ensure they reflect the fair values.
Deposits for investment properties
Deposits and other costs associated with acquiring investment properties
that are incurred prior to obtaining legal title are recorded at cost and
disclosed as other assets in the consolidated statement of financial position.
5 Property assets
(a) Types of property assets
Investment in property assets includes both inventories and investment
properties (including those under development), which may be held either
directly or through investments in Partnerships.
Inventories
Inventories relate to land and property developments that are held for sale
or development and sale in the normal course of business. Inventories are
carried at the lower of cost or net realisable value. The calculation of net
realisable value requires estimates and assumptions which are regularly
evaluated and are based on historical experience and expectations of
future events that are believed to be reasonable under the circumstances.
Inventories are classified as non-current assets unless they are
contracted to be sold within 12 months of the end of the reporting period,
in which case they are classified as current assets.
Investment properties
Investment properties comprise investment interests in land and
buildings held for the purpose of leasing to produce rental income and/or
for capital appreciation. Investment properties are carried at fair value.
The calculation of fair value requires estimates and assumptions which
are continually evaluated and are based on historical experience and
expectations of future events that are believed to be reasonable under
the circumstances. Investment properties are not depreciated as they
are subject to continual maintenance and regularly revalued on the basis
described below. Changes in the fair value of investment properties are
recognised directly in profit or loss.
Components of investment properties
Land and buildings (including integral plant and equipment) comprising
investment properties are regarded as composite assets and are
disclosed as such in the consolidated financial statements.
Investment property carrying values include the costs of acquiring the
assets and subsequent costs of development, including costs of all labour
and materials used in construction, costs of managing the projects, holding
costs and borrowing costs incurred during the development periods.
Amounts provided to customers as lease incentives and assets relating
to fixed rental income increases in operating lease contracts are included
within investment property values. Lease incentives are amortised
over the term of the lease on a straight-line basis. Direct expenditure
associated with leasing a property is also capitalised within investment
property values and amortised over the term of the lease.
190
ANNUAL REPORT 2023
Note
5(d)
5(d)
5(e)
5(f)
2023
$M
2022
$M
121.6
1,410.6
1,532.2
175.2
1,377.4
1,552.6
451.7
451.8
336.8
336.8
1,850.6
1,850.6
1,845.6
1,845.6
(b) Summary of the Consolidated Entity’s investment in property assets
Inventories
Current
Non-current
Investment properties
Stabilised investment properties
Property held by Partnerships
Investments accounted for using the equity method
(c) Estimates and assumptions in determining property carrying values
Inventories
For both inventories held directly and inventories held in Partnerships, external valuations are not performed but instead valuations are determined using the
feasibility studies supporting the land and property developments. The end values of the developments in the feasibility studies are based on assumptions
such as capitalisation rates, letting up periods, rental income and incentives that are consistent with those observed in the relevant market. If the feasibility
study calculations indicate that the forecast cost of a completed development will exceed the net realisable value, then the inventories are impaired.
Investment properties
Stabilised investment properties
The fair value of stabilised investment properties is based on current prices in an active market for similar properties in the same location and condition
and subject to similar lease and other contracts. The current price is the estimated amount for which a property could be exchanged between a willing buyer
and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgably, prudently and without compulsion.
Approach to determination of fair value
The approach to determination of fair value of investment properties is applied to both investment properties held directly and investment properties
held in Partnerships.
Valuations are determined based on assessments and estimates of uncertain future events, including upturns and downturns in property markets
and availability of similar properties, vacancy rates, market rents and capitalisation and discount rates. Recent and relevant sales evidence and other
market data are taken into account. Valuations are either based on an external, independent valuation or on an internal valuation.
External valuations are undertaken only where market segments were observed to be active. In making the determination of whether a market
segment is active, the following characteristics are considered:
+ Function of the asset (distribution/warehouse or suburban office)
+ Location of the asset (city, suburb or regional area)
+
+
Carrying value of the asset (categorised by likely appeal to private (including syndicates), national and/or institutional investors)
Categorisation as primary or secondary based on a combination of location, weighted average lease expiry, quality of tenant covenant (internal
assessment based on available market evidence) and age of construction.
Each property asset is assessed and grouped with assets in the same or similar market segments. Information on all relevant recent sales is also
analysed using the same criteria to provide a comparative set. The number of sales and the circumstances of each sale are assessed to determine
whether a market segment is active or inactive.
Where a market segment is observed to be active, then external independent valuations are instructed for stabilised investment properties where there has
been a combination of factors that are likely to have resulted in a material movement in valuation. The considerations include a greater than 10% movement in
market rents, more than a 25 basis point movement in capitalisation rates, a material change in tenancy profile (including changes in the creditworthiness of
a significant customer that may have a material impact on the property valuation), significant capital expenditure, a change in use (or zoning), a development
has reached completion/stabilisation of the asset or it has been two years since the previous external independent valuation. For all other stabilised investment
properties in an active market segment, an internal valuation is performed based on observable capitalisation rates and referenced to independent market data.
191
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
5 Property assets (continued)
Sensitivity Ananlysis
The fair value measurement approach for directly held investment
properties has been categorised as a Level 3 fair value based on the
inputs to the valuation method used. The usual valuation methods are
either based on income capitalisation or market comparison. Where
the income comparison method is adopted then the stabilised
investment property valuations at 30 June 2023 are most sensitive
to the following inputs:
+ Capitalisation rates
+ Market rents
+
Incentives provided to customers and/or vacant time on expiry of leases.
The directly held stabilised investment properties are in Asia. The
average net market rents, average capitalisation rate and range of prices
is summarised in the table below:
Valuation
technique
Significant unobservable inputs
Income
capitalisation
Average net market rent
(per square metre per annum)
2023
$302
2022
$258
Average capitalisation rate
4.2%
4.2%
Market
comparison
Price per square metre
$9,885 –
$21,218
$9,201 –
$18,019
Where a market segment is observed to be inactive, then no external
independent valuations are performed and internal valuations are
undertaken based on discounted cash flow (DCF) calculations. The
DCF calculations are prepared over a 10-year period. The key inputs
considered for each individual calculation are:
+ Current contractual lease terms
+ Current market rents
+ Projected growth in market rents
+ Expected and likely capital expenditures
+
+
Projected letting up incentives provided to customers and vacant
time on expiry of leases
Discount rates – computed using the 10-year bond rate or equivalent
in each jurisdiction plus increments to reflect country risk, tenant
credit risk and industry risk. Where possible, the components of the
discount rate are benchmarked to available market data.
Market assessment
With the more volatile economic conditions in FY23 compared to prior
years, there have been fewer transactions of industrial, logistics and
warehousing properties during the year. Nevertheless, at 30 June 2023, the
Board has been able to assess that all markets in which the Consolidated
Entity operates are active and as a consequence, no adjustments have
been made to the carrying values of the Consolidated Entity’s stabilised
investment property portfolios on the basis of internally prepared
discounted cash flow valuations.
The overall weighted average capitalisation rates for the divisional portfolios
(including Partnerships) are set out in the table below:
Segment
Asia
Continental Europe
United Kingdom
Total portfolio weighted
average capitalisation rate
2023
%
2022
%
5.2
4.4
4.9
5.2
3.4
3.7
192
ANNUAL REPORT 2023
The impacts on the Consolidated Entity’s financial position that would arise from the changes in capitalisation rates, market rents and incentives/re-leasing
time are set out in the table below. This illustrates the impacts on the Consolidated Entity in respect of both the directly held stabilised investment properties
and its share of those stabilised investment properties held by Partnerships.
Book value at 30 June 2023
Changes in capitalisation rates:
Increase in capitalisation rates +50 basis points (bps)
Increase in capitalisation rates +25 bps
Decrease in capitalisation rates -25 bps
Decrease in capitalisation rates -50 bps
Changes in market rents:
Decrease in rents -5%
Decrease in rents -2.5%
Increase in rents +2.5%
Increase in rents +5%
Changes in incentives/vacant time2:
Increase in incentives/re-leasing times +3 months
Increase in incentives/re-leasing times +6 months
Reflects the Consolidated Entity’s share in Partnerships.
1.
2. On assumed lease expiries over the next 12 months.
Investment properties under development
Directly held properties
A$M
Partnerships1
$M
451.7
1,991.9
(48.5)
(25.6)
28.9
61.8
(20.0)
(10.0)
10.0
20.0
(1.8)
(3.5)
(180.7)
(94.6)
104.6
220.9
(88.6)
(44.3)
44.3
88.6
(6.3)
(12.5)
For the directly held investment properties under development, external independent valuations are generally not performed, but instead valuations are
determined at each reporting date using the feasibility assessments supporting the developments. The end values of the developments in the feasibility
studies are based on assumptions such as capitalisation rates, market rents, incentives provided to customers and vacant time that are consistent with
those observed in the relevant market, adjusted for a profit and risk factor. The profit and risk factors are dependent on the function, location, size and
current status of the developments and are generally in a market range of 10% to 15%; although for larger more complex projects that are at an early stage
of the development, the profit and risk factor could be higher. This adjusted end value is then compared to the forecast cost of a completed development
to determine whether there is an increase or decrease in value.
In respect of the Partnerships, certain Partnerships obtain external independent valuations of investment properties under development at reporting
dates. However, the majority determine the fair values at reporting dates by reference to the feasibility assessments, with external independent valuations
obtained when the properties have been stabilised.
193
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
5 Property assets (continued)
2023
$M
2022
$M
14.5
12.2
9.9
4.3
0.2
41.1
8.6
8.7
8.2
6.6
3.5
35.6
(d) Inventories
Current
Freehold land and development properties
Leasehold land and development properties
2023
$M
2022
$M
29.3
92.3
175.2
–
121.6
175.2
Non-cancellable operating lease commitments
receivable from investment property customers
The analysis in the table below reflects the gross property income,
excluding recoverable outgoings, based on existing lease agreements.
It assumes that leases will not extend beyond the next review date,
where the customer has an option to end the lease.
Non–current
Freehold land and development properties
969.6
964.1
Non-cancellable operating
lease commitments receivable:
Leasehold land and development properties
441.0
413.3
Less than one year
1,410.6
1,377.4
One to two years
During the current and prior financial year, no impairment losses were
recognised on land and development properties.
As at 30 June 2023, the ownership interests in leasehold land and
development properties, carried at the lower of cost or net realisable
value, are held in China and Continental Europe with remaining lease
terms of between 40 and 97 years.
(e) Investment properties
Two to three years
Three to four years
Four to five years
(f) Investments accounted for using the equity method
Investments accounted for using the equity method comprise associates
and JVs, which are collectively referred to as Partnerships.
Reconciliation of carrying amount of directly held investment properties
Associates
2023
$M
2022
$M
An associate is an entity in which the Consolidated Entity exercises
significant influence but not control over its financial and operating policies.
Leasehold investment properties
JVs
Carrying amount at the beginning of the year
336.8
163.9
Acquisitions
Capital expenditure
Disposals
Net loss from fair value adjustments
Effect of foreign currency translation
100.2
420.4
1.2
–
(0.4)
13.9
4.5
(269.7)
(0.3)
18.0
Carrying amount at the end of the year
451.7
336.8
Analysed by segment:
Asia
451.7
336.8
451.7
336.8
As at 30 June 2023, the ownership interests in leasehold investment
properties, carried at fair value, are held in Hong Kong with remaining
lease terms of 24 years.
A JV is an arrangement in which the Consolidated Entity is considered
to have joint control for accounting purposes, whereby the Consolidated
Entity has rights to the net assets of the arrangement, rather than rights
to its assets and obligations for its liabilities.
In the consolidated financial statements, investments in Partnerships
are accounted for using the equity method. Under this method,
the Consolidated Entity’s investment is initially recognised at cost.
Subsequent to initial recognition, the consolidated financial statements
include the Consolidated Entity’s share of the gains or losses and other
comprehensive income of Partnerships until the date on which significant
influence or joint control ceases.
Transactions eliminated on consolidation
Unrealised gains arising from asset disposals with JVs, including those
relating to contributions of non-monetary assets on establishment, are
eliminated to the extent of the Consolidated Entity’s interest. Unrealised
gains relating to JVs are eliminated against the carrying amount of
the investment. Unrealised losses are eliminated in the same way as
unrealised gains unless they evidence an impairment of an asset.
194
ANNUAL REPORT 2023
Impairment
Non-financial assets
The carrying amounts of the Consolidated Entity’s assets are reviewed at each reporting date to determine whether there is any indication of
impairment. If such indication exists, the asset is written down to the recoverable amount. The impairment is recognised in profit or loss in the reporting
period in which it occurs.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment
losses are recognised in profit or loss, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to
the extent of that previous revaluation, with any excess recognised through profit or loss.
(i)
Investments in associates
The Consolidated Entity owns a 39.9% interest in certain development entities in Continental Europe with a carrying value of $0.2 million.
The consolidated share of the results recognised during the year was a loss of $0.4 million.
(i)
Investments in JVs
The Consolidated Entity’s principal Partnerships are set out below:
Name
Property investment and development
Consolidated
share of net
results recognised
Consolidated
ownership interest
Consolidated
investment
carrying amount
Country of
establishment
2023
$M
2022
$M
2023
%
2022
%
2023
$M
2022
$M
Goodman China Logistics Partnership (GCLP)
Cayman Islands
Goodman UK Partnerships (GUKP)1
United Kingdom
Other JVs
26.8
(125.4)
7.2
56.8
213.4
75.1
(91,4)
345.3
20.0
35.0
20.0
35.3
923.3
573.7
353.4
918.0
676.3
251.3
1,850.4
1,845.6
1. The consolidated ownership interest in GUKP reflected the weighted average ownership in GUKP, GUKP II and GUKP III.
The Consolidated Entity’s property investment Partnerships have a long-term remit to hold investment properties to earn rental income and for capital
appreciation, although they will undertake developments when an appropriate opportunity arises.
The reconciliation of the carrying amount of investments in JVs is set out as follows:
Movements in carrying amount of investments in JVs
Carrying amount at the beginning of the year
Share of net results after tax (before fair value adjustments)
Share of fair value adjustments attributable to investment properties after tax
Share of fair value adjustments on derivative financial instruments
Share of net results
Share of movements in reserves
Acquisitions
Disposals
Capital return
Dividends/distributions received and receivable
Effect of foreign currency translation
Carrying amount at the end of the year
2023
$M
2022
$M
1,845.6
1,470.0
78.7
(160.1)
(10.0)
(91.4)
(0.1)
329.8
(0.1)
(141.7)
(102.1)
10.4
84.6
269.8
(9.1)
345.3
7.2
263.3
(3.4)
(166.3)
(65.8)
(4.7)
1,850.4
1,845.6
195
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
5 Property assets (continued)
Summary financial information of JVs
The following table summarises the financial information of the material Partnerships as included in their own financial statements. The table also
reconciles the summarised financial information to the carrying amount of the Consolidated Entity’s interest in the JVs.
Summarised statement of financial position
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Total non-current assets
Current liabilities
Financial liabilities (excluding trade payables and other provisions)
Other current liabilities
Total current liabilities
Non-current liabilities
Financial liabilities (excluding trade payables and other provisions)
Other non-current liabilities
Total non-current liabilities
Net assets (100%)
Consolidated ownership interest (%)
Consolidated share of net assets
Shareholder loans1
Other items, including acquisition costs
Carrying amount of interest in JV
Summarised statement of comprehensive income
Revenue
Net finance expense
Income tax expense
Profit and total comprehensive income (100%)
Consolidated share of profit and total comprehensive income
Dividends/distributions received and receivable by the Consolidated Entity
GCLP
GUKP
2023
$M
2022
$M
2023
$M
2022
$M
398.2
198.2
596.4
427.4
148.3
575.7
44.2
15.8
60.0
41.1
12.9
54.0
6,660.0
6,303.3
2,216.0
2,421.8
77.2
2,990.0
3,067.2
1,354.2
733.4
2,087.6
2,101.6
20.0
420.4
499.6
3.3
923.3
210.0
(32.7)
(44.1)
134.1
26.8
8.5
70.6
2,870.0
2,940.6
1,111.8
718.3
1,830.1
2,108.3
20.0
421.7
492.9
3.4
918.0
215.0
(20.3)
(46.3)
320.0
64.0
7.3
–
55.1
55.1
583.1
–
583.1
1,637.8
35.0
573.2
–
0.5
–
24.7
24.7
537.8
–
537.8
1,913.3
35.3
676.0
–
0.3
573.7
676.3
93.2
(11.3)
(0.2)
(337.0)
(125.4)
–
39.8
(1.0)
(0.2)
575.6
213.4
3.9
1. Shareholder loans have been provided by investors of GCLP in proportion to their ownership interest. The shareholder loans are interest-free, unsecured and have no fixed terms of
repayment. The shareholder loans are not expected to be repaid within 12 months from the end of the reporting period and the Directors consider the loans to form part of the Consolidated
Entity’s investment in GCLP.
With respect to the Consolidated Entity’s other JVs, the total profit after tax and revaluations was $59.9 million (2022: $308.7 million) and total other
comprehensive income was $nil (2022: $nil).
196
ANNUAL REPORT 2023
6 Receivables
Non-derivative financial assets
The Consolidated Entity initially recognises loans and receivables and
deposits on the date that they are originated. All other financial assets
are recognised initially on the trade date at which the Consolidated Entity
becomes a party to the contractual provisions of the instrument.
The Consolidated Entity derecognises a financial asset when the
contractual rights to the cash flows from the asset expire, or it transfers
the right to receive the contractual cash flows on the financial asset in a
transaction in which substantially all the risks and rewards of ownership
of the financial asset are transferred. Any interest in transferred financial
assets that is created or retained by the Consolidated Entity is recognised
as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented
in the consolidated statement of financial position when, and only
when, the Consolidated Entity has a legal right to offset the amounts
and intends to either settle on a net basis or to realise the asset and
settle the liability simultaneously.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable
payments that are not quoted in an active market. Loans and receivables
comprise trade and other receivables, amounts due from related parties
and loans to related parties. Such assets are recognised initially at fair
value plus any directly attributable transaction costs. Subsequent to
initial recognition, loans and receivables are measured at amortised cost
using the effective interest rate method, less allowance for impairment
of doubtful debts, except where the receivables are interest-free loans
made to related parties without any fixed repayment terms or the effect
of discounting would be immaterial. In such cases, the receivables are
stated at cost less allowance for impairment of doubtful debts.
Amounts recoverable on development contracts
Amounts recoverable on development contracts arise when the
Consolidated Entity contracts to sell a completed development asset
either prior to or during the development phase. The receivables are
stated at cost plus profit recognised to date less an allowance for
foreseeable losses and less amounts already billed.
Impairment
Financial assets and contract assets
The Consolidated Entity recognises an impairment loss allowance for
expected credit losses (ECLs) on financial assets measured at amortised
cost and contract assets. Financial assets measured at amortised cost
include cash and cash equivalents, trade and other receivables, amounts
due from related parties and loans to related parties.
Other financial assets measured at fair value are not subject to the
ECL assessment.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are
measured as the present value of all expected cash shortfalls. In measuring
ECLs, the Consolidated Entity takes into account information about past
events, current conditions and forecasts of future economic conditions.
Impairment loss allowances for trade and other receivables, amounts due
from related parties and contract assets are measured at an amount equal
to a lifetime ECL. Lifetime ECLs are losses that are expected to result from
all possible default events over the expected lives of the items to which the
ECL model applies.
The Consolidated Entity recognises an impairment loss allowance equal
to the expected losses within 12 months after the reporting date on loans
to related parties, unless there has been a significant increase in credit risk
of the loans since initial recognition, in which case the loss allowance
is measured at an amount equal to lifetime ECLs.
Note
2023
$M
2022
$M
Current
Trade receivables
Other receivables
Amounts due from related parties
Loans to related parties
20(c)
Non–current
Loans to related parties
20(c)
19.6
56.6
46.3
51.3
5.0
70.2
37.1
3.3
173.8
115.6
612.0
612.0
789.6
789.6
The maximum exposure to credit risk at the reporting date is the fair value
of each class of receivable mentioned above. All non-current receivables
of the Consolidated Entity are due within five years from the reporting
date. There is no material difference between the carrying values and the
fair values of receivables.
197
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Receivables (continued)
Trade receivables
7 Contract assets and liabilities
No trade receivables were impaired at 30 June 2023 and 2022. There
are no significant overdue trade receivables at 30 June 2023.
Other receivables
At 30 June 2023, none of the other receivables were overdue or impaired
(2022: $nil).
Amounts due from related parties
At 30 June 2023, none of the amounts due from related parties was
overdue or impaired (2022: $nil). Amounts due from related parties are
typically repayable within 30 days. The amounts due from related parties
are unsecured.
Loans to related parties
Loans to related parties principally relate to loans to fellow subsidiaries
of GL and GIT and loans to JVs. Refer to note 20(c) for details of loans
to related parties. During the year, no impairment losses were recognised
on loans to related parties (2022: $nil). The loans to related parties
are unsecured
Contract assets primarily comprise amounts recoverable from fixed
price development contracts (disclosed net of any payments
received on account) and accrued performance fee income where the
Consolidated Entity assesses that the income can be reliably measured.
Contract liabilities primarily comprise deposits and other amounts
received in advance for development contracts and rental guarantees.
The following table provides an analysis of receivables from contracts
with customers (excluding rental income receivables), contract assets
and contract liabilities at the reporting dates:
Current
Receivables from contracts
with customers, which are
included in trade receivables,
other receivables and amounts
due from related parties
Contract assets
Contract liabilities
2023
$M
2022
$M
65.7
70.7
9.8
42.7
60.5
4.6
198
ANNUAL REPORT 2023
Significant changes in the contract assets and the contract liabilities balances during the year are set out below:
Balance at the beginning of the year
Revenue recognised that was included in the contract
liability balance at the beginning of the year
Increases due to cash received, excluding amounts
recognised as revenue during the year
Transfers from contract assets to receivables
Increase due to changes in the measure of progress during the year
Effect of foreign currency translation
Balance at the end of the year
Current contract assets and liabilities
2023
2022
Contract
assets
Contract
liabilities
Contract
assets
Contract
liabilities
$M
60.5
–
–
(371.6)
379.8
2.0
70.7
70.7
70.7
$M
4.6
–
5.2
–
–
–
9.8
9.8
9.8
$M
55.7
–
–
(380.4)
385.0
0.2
60.5
60.5
60.5
$M
5.8
(1.4)
–
–
–
0.2
4.6
4.6
4.6
Transaction price allocated to the remaining contract obligations
The amount of the transaction price allocated to the remaining performance obligations under the Consolidated Entity’s existing contracts is $nil
(2022: $nil).
The Consolidated Entity’s future rental income from existing lease agreements is included in note 5.
In addition, the Consolidated Entity receives investment management, development management and property services fees under various contracts
that it has with its Partnerships. These contracts are for varying lengths of time and are typically transacted on terms that are consistent with market
practice. The revenues under these contracts are linked to the AUM, total development project costs or gross property income of the Partnerships
and are invoiced as the services are provided.
199
GOODMAN GROUP
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
8 Payables
Non-derivative financial liabilities
The Consolidated Entity initially recognises debt securities issued
and subordinated liabilities on the date that they are originated. All other
financial liabilities are recognised initially on the trade date at which
the Consolidated Entity becomes a party to the contractual provisions
of the instrument.
The Consolidated Entity derecognises a financial liability when the
contractual obligations are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount presented
in the consolidated statement of financial position when, and only when,
the Consolidated Entity has a legal right to offset the amounts and
intends to either settle on a net basis or to realise the asset and settle
the liability simultaneously.
Such financial liabilities are recognised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition,
these financial liabilities are measured at amortised cost using the
effective interest rate method.
Other financial liabilities comprise trade payables, other payables and
accruals, contract liabilities and lease liabilities.
9 Leases
The Consolidated Entity leases office buildings, motor vehicles and office
equipment. Certain investment properties and developments classified
as inventories are also built on land held under leasehold interests.
The Consolidated Entity recognises a right of use asset and a lease
liability at the lease commencement date. The right of use asset is initially
measured at cost plus any direct costs incurred and an estimate of costs
to restore the underlying asset or the site on which it is located, less any
lease incentives received.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using
the lessee’s incremental borrowing rate. After initial recognition, the lease
liability is measured at amortised cost and interest expense is calculated
using the effective interest rate method. The lease liability is remeasured
when there is a change in future lease payments arising from a change
in an index or rate, or there is a change arising from the reassessment of
whether the Consolidated Entity will be reasonably certain to exercise an
extension or termination option.
The right of use assets in respect of office buildings, motor vehicles and
office equipment are depreciated using the straight-line method over
the period of the lease. Right of use assets that meet the definition of
investment property are carried at fair value in accordance with note 5(a).
Ground leases of development land that are classified as inventories are
not depreciated but are assessed at each reporting date for impairments
to ensure they are recorded at the lower of cost and net realisable value.
Information about leases for which the Consolidated Entity is a lessee is
detailed below:
2023
$M
47.5
220.2
9.8
7.7
2022
$M
45.7
216.1
4.6
8.2
285.2
274.6
Right of use assets
Inventories
Investment properties
Property, plant and equipment
62.9
30.4
93.3
56.1
37.1
93.2
Lease liabilities
Current
Non–current
The following were recognised during the year:
Additions to right of use assets
Depreciation of right of use assets
Interest expense on lease liabilities
Cash outflows on lease liabilities
2023
$M
533.3
451.7
15.5
1,000.5
7.7
30.4
38.1
2023
$M
229.5
6.9
0.4
7.6
2022
$M
413.3
336.8
18.1
768.2
8.2
37.1
45.3
2022
$M
332.0
6.9
0.4
8.0
Current
Trade payables
Other payables and accruals
Contract liabilities
Lease liabilities
Non–current
Other payables and accruals
Lease liabilities
Note
7
9
9
200
CAPITAL MANAGEMENT
10 Net finance expense
Finance income
Interest is recognised on an accruals basis using the effective interest
rate method, and, if not received at the reporting date, is reflected in the
consolidated statement of financial position as a receivable.
Finance expense
Expenditure incurred in obtaining debt finance is offset against the
principal amount of the interest bearing liability to which it relates and
is recognised as a finance cost on an effective interest rate basis over
the life of the facility or until the facility is significantly modified. Where
a facility is significantly modified, any unamortised expenditure in relation
to that facility and incremental expenditure incurred in modifying the
facility are recognised as a finance cost in the financial year in which the
significant modification occurs.
Finance costs relating to a qualifying asset are capitalised as part of the
cost of that asset using a weighted average cost of debt. Qualifying assets
are assets which take a substantial time to get ready for their intended
use or sale. All other finance costs are expensed using the effective
interest rate method.
Finance income
Interest income on loans to:
– Related parties
– Other parties
Interest income from derivatives
Foreign exchange gain
Finance expense
2023
$M
2022
$M
Note
20 23.1
4.3
10.7
11.6
0.9
8.0
–
27.5
38.1
48.0
Interest expense from related party loans
20 (47.5)
(41.8)
Other borrowing costs
Fair value adjustments
on derivative financial instruments
Foreign exchange losses
Capitalised borrowing costs
Net finance expense
(2.5)
(2.7)
(69.5)
(38.5)
(18.8)
9.2
–
11.6
(129.1)
(71.4)
(91.0)
(23.4)
Total facilities
at 30 June 2023
Total facilities
at 30 June 2022
Borrowing costs were capitalised to inventories and investment
properties under development during the financial year at rates between
1.9% and 8.9% per annum (2022: 1.0% and 10.6% per annum).
ANNUAL REPORT 2023
Interest bearing liabilities
11
Interest bearing liabilities comprise bank loans. Interest bearing liabilities
are recognised initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, interest bearing liabilities are
measured at amortised cost using the effective interest rate method.
Non-current
Bank loans, secured
Borrowing costs
(a) Finance facilities
30 June 2023
Bank loans, secured
30 June 2022
Bank loans, secured
Note
11(b)
2023
$M
47.9
(1.2)
46.7
2022
$M
9.0
–
9.0
Facilities
available
$M
Facilities
utilised
$M
220.4
220.4
28.2
28.2
47.9
47.9
9.0
9.0
(b) Bank loans, secured
As at 30 June 2023, the Consolidated Entity had the following secured
bank facilities.
Facility
maturity
date
Facility
limit
$M
Amounts
drawn
$M
9 January 2028
5 January 2033
18 March 2034
20 April 2038
79.7
51.7
26.9
62.1
–
17.9
17.4
12.6
220.4
47.9
28.2
9.0
201
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
12 Other financial assets and liabilities
Other financial assets and liabilities are recognised initially on the trade
date at which the Consolidated Entity become a party to the contractual
provisions of the instrument.
Derivative financial instruments and hedging
The Consolidated Entity uses derivative financial instruments to hedge its
economic exposure to foreign exchange and interest rate risks arising from
operating, investing and financing activities. In accordance with its treasury
policy, the Consolidated Entity does not hold or issue derivative financial
instruments for speculative trading purposes.
The Consolidated Entity’s derivative financial instruments are not designated
as a hedge for accounting purposes, and accordingly movements in the fair
value of derivative financial instruments are recognised in profit or loss.
Investments in unlisted securities
Subsequent to initial recognition, investments in unlisted securities
are measured at fair value and changes therein are recognised as
other comprehensive income and presented in the asset revaluation
reserve in equity. Dividends are recognised as income in profit or loss
unless the dividend clearly represents a recovery of part of the cost
of the investment. Other net gains and losses are recognised in other
comprehensive income and are never reclassified to profit or loss.
When such an asset is derecognised, the cumulative gain or loss in
equity is transferred to retained earnings.
Other financial assets
Current
Derivative financial instruments
Non-current
2023
$M
11.3
11.3
2022
$M
–
–
Derivative financial instruments
106.6
131.3
Investment in unlisted
securities, at fair value1
54.5
161.1
43.5
174.8
1. Principally relates to the Consolidated Entity’s 10.0% (2022: 10.0%) interest in Goodman
Japan Limited. During the year, a revaluation gain of $10.7 million was recognised in other
comprehensive income (2022: $9.4 million gain). Refer to note 13(d) for assumptions made in
measuring fair value of the unlisted securities.
Other financial liabilities
Current
Derivative financial instruments
Non–current
Derivative financial instruments
202
2023
$M
79.9
79.9
98.1
98.1
2022
$M
45.4
45.4
141.4
141.4
13 Financial risk management
The Goodman Group Board has overall responsibility for approving
Goodman Group’s risk management framework. The Goodman Group
Board has established the Goodman Group Audit, Risk and Compliance
committee, which is responsible for reviewing, approving and subsequently
monitoring Goodman Group’s risk management policies, including the FRM
policy. The FRM policy is established to identify and analyse the financial
risks faced by Goodman Group, to set appropriate risk limits and controls
for managing the financial affairs of Goodman Group, and to monitor those
risks and adherence to limits by Goodman Group Management.
Goodman Group’s treasury function is responsible for the day to day
compliance with Goodman Group’s FRM policy and prepares reports for
consideration by management committees and the Goodman Group
Board including:
+
+
+
+
Cash flow projections over a period of at least 12 months to assess
the level of cash and undrawn facilities, and headline gearing at each
month end
Debt maturity profile, to allow Goodman Group to plan well in advance
of maturing facilities
Interest rate hedge profile over the next 10 years, to allow Goodman
Group to manage the proportion of fixed and floating rate debt in
accordance with its FRM policy
Capital hedge position (by currency) and profile of expiring currency
derivatives, to allow Goodman Group to manage its net investment
hedging in accordance with its FRM policy.
Any significant investments or material changes to the finance facilities or
FRM policy require approval by the Goodman Group Board.
The Consolidated Entity’s key financial risks are market risk (including
foreign exchange and interest rate risk), liquidity risk and credit risk.
(a) Market risk
Foreign exchange risk
The Consolidated Entity is exposed to transactional foreign currency
risk and net investment foreign currency risk through its investments in
Hong Kong, Japan, China, Continental Europe and the United Kingdom
and also loans to related parties in North America. Foreign exchange risk
represents the loss that would be recognised from adverse fluctuations in
currency prices as a result of future commercial transactions, recognised
assets and liabilities and, principally, net investments in foreign operations.
Goodman Group manages foreign currency exposure on a consolidated
basis. In managing foreign currency risks, Goodman Group aims to
reduce the impact of short-term fluctuations on earnings and net assets.
However, over the long term, permanent changes in foreign exchange will
have an impact on both earnings and net assets.
Goodman Group’s capital hedge policy for each overseas region is
to hedge between 65% and 90% of foreign currency denominated
assets with foreign currency denominated liabilities. This is achieved by
borrowing in the same functional currency as the investments to form a
natural economic hedge against any foreign currency fluctuations and/or
using derivatives such as cross currency interest rate swaps (CCIRS) and
forward exchange contracts (FEC).
ANNUAL REPORT 2023
As at 30 June 2023, a summary of the derivative financial instruments used to hedge the Consolidated Entity’s exposures arising from its investments
in foreign operations is set out below:
2023
Amounts
receivable
AUD'M
300.5
AUD'M
803.0
AUD'M
279.8
AUD'M
634.6
AUD'M
177.7
USD'M
642.2
Weighted
average
exchange
rate
AUD/HKD
5.5118
AUD/EUR
0.6165
AUD/GBP
0.5361
AUD/USD
0.7092
AUD/JPY
78.9821
USD/CNY
7.3612
2022
Amounts
receivable
AUD'M
202.3
AUD'M
1,238.3
AUD'M
474.4
AUD'M
634.6
AUD'M
71.9
USD'M
539.6
Weighted
average
exchange
rate
AUD/HKD
5.6948
AUD/EUR
0.6263
AUD/GBP
0.5375
AUD/USD
0.7092
AUD/JPY
83.4650
USD/CNY
7.8927
Amounts
payable
HKD'M
(1,150.0)
EUR'M
(775.0)
GBP'M
(255.0)
USD'M
(450.0)
JPY'M
(6,000.0)
CNY'M
(4,258.6)
Amounts
payable
HKD'M
(1,650.0)
EUR'M
(495.0)
GBP'M
(150.0)
USD'M
(450.0)
JPY'M
(14,000.0)
CNY'M
(4,727.6)
AUD receivable/HKD payable
AUD receivable/EUR payable
AUD receivable/GBP payable
AUD receivable/USD payable
AUD receivable/JPY payable
USD receivable/CNY payable
Sensitivity analysis
Throughout the financial year, if the Australian dollar had been 5% (2022: 5%) stronger against all other currencies, with all other variables held constant,
the Consolidated Entity’s profit attributable to Shareholders, excluding derivative mark to market and unrealised foreign exchange movements, would
have decreased by $21.9 million (2022: $48.8 million). If the Australian dollar had been 5% (2022: 5%) weaker against all other currencies, with all other
variables held constant, the Consolidated Entity’s profit attributable to Shareholders, excluding derivative mark to market and unrealised foreign
exchange movements, would have increased by $21.9 million (2022: $48.8 million).
Interest rate risk
Goodman Group’s interest rate payments risk arises from variable rate borrowings and Goodman Group’s CCIRS that hedge the overseas investments.
Goodman Group has a policy of hedging between 60% and 100% of its payments exposure to changes in interest rates for a 3 year period, progressively
decreasing from the fourth year. The Consolidated Entity enters into interest rate derivatives (IRD) to manage cash flow risks associated with the interest
rates on payments that are floating. The IRD contracts are for 90-day intervals and involve quarterly payments or receipts of the net amount of interest.
As at 30 June 2023, the Consolidated Entity’s fixed and floating rate exposure (by principal) based on existing interest bearing liabilities and derivative
financial instruments is set out below:
30 June 20231
Fixed rate liabilities
Floating rate liabilities
30 June 20222
Fixed rate liabilities
Floating rate liabilities
Interest bearing
liabilities
$M
–
47.9
47.9
–
9.0
9.0
Impact of derivatives
CCIRS
$M
–
2,232.8
2,232.8
–
2,551.6
2,551.6
IRD
$M
1,418.7
(1,418.7)
–
1,106.0
(1,106.0)
–
Net interest
rate exposure
$M
1,418.7
862.0
2,280.7
1,106.0
1,454.6
2,560.6
1. The Consolidated Entity is also exposed to variable interest rates on cash at bank and the principal amount of the Australian dollar receiver legs of the CCIRS. At 30 June 2023, the Consolidated
Entity’s cash at bank was $391.9 million (FY22: $357.5 million) and the principal amount of the Australian dollar receiver legs of the CCIRS was $2,195.5 million (FY22: $2,621.5 million). Accordingly,
at 30 June 2023, the Consolidated Entity had a total variable interest rate exposure on its cash and receivables (by principal) of $2,587.4 million (2022: $2,979.0 million).
2. For consistency with the current year’s presentation, the comparative figures have been adjusted to exclude the principal amount of the Australian dollar receiver legs of CCIRS which hedge the
Australia dollar receiver legs. The adjustments amounted to $2,621.5 million to the principal amount of CCIRS.
203
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
13 Financial risk management (continued)
As a result of the fixed rate interest bearing liabilities and derivative financial instruments that existed at 30 June 2023, the Consolidated Entity would have
the following fixed payable interest rate exposure (by principal) at the end of each of the next five financial years. This assumes all interest bearing liabilities
and derivative financial instruments mature in accordance with current contractual terms and that no new arrangements are entered into.
Number of years
post balance date
1 year
2 years
3 years
4 years
5 years
2023
2022
Fixed
interest rate
(by principal)
$M
Weighted
average
interest rate
% per annum
Fixed
interest rate
(by principal)1
$M
Weighted
average
interest rate1
% per annum
1,350.7
619.3
491.1
491.1
458.4
0.88
1.69
1.98
1.98
2.14
1,033.7
970.7
275.3
151.7
151.7
0.54
0.54
0.44
0.31
0.31
1. For consistency with the current year’s presentation, the comparative figures have been adjusted to exclude the principal amount and associated interest rate impact of the Australian dollar
receiver legs of CCIRS and the principal amount of IRDs which hedge the inflows arising from them.
Sensitivity analysis
Based on the Consolidated Entity’s interest bearing borrowings and derivative financial instruments at 30 June 2023, if interest rates on borrowings
had been 100 bps per annum (2022: 100 bps per annum) higher/lower, with all other variables held constant, the Consolidated Entity’s profit attributable
to Shareholders, excluding derivative mark to market movements, would have been $10.2 million lower/higher (2022: $11.8 million lower/higher).
Managing interest rate benchmark reform and associated risks
In recent years, a fundamental reform of major interest rate benchmarks is being undertaken globally by relevant regulators, including the replacement
of some interbank offered rates (IBORs) with alternative risk-free rates (referred to as IBOR reform). The Consolidated Entity had exposure to IBORs
that have changed or are soon to change through certain of its related party loans and its derivative instruments (IRD and CCIRS). The Consolidated
Entity’s derivative instruments are governed by contracts based on the International Swaps and Derivatives Association (ISDA) master agreements.
Amendments to the Consolidated Entity’s financial instruments with contractual terms indexed to sterling London Interbank Offered Rate (LIBOR),
Japanese yen LIBOR or US dollar LIBOR, such that they incorporate the new benchmark rates, were completed by 31 December 2021. The sterling and
Japanese yen LIBORs transitioned on 1 January 2023 and the US dollar LIBOR transitioned to the Secured Overnight Financing Rate on 1 July 2023.
For the Consolidated Entity’s other IBOR exposures, the transition to alternative risk-free rates has been deferred and/or extended and therefore no
action has been or will be taken in that regard until such time as the alternative reference rates are defined and scheduled. It is expected that these will
follow the conventions established in other markets and the Consolidated Entity will apply the same principles for those transitions as and when they
become relevant.
204
ANNUAL REPORT 2023
(b) Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due. The Consolidated Entity’s objective
is to maintain sufficient liquidity to fund short-term working capital, capital expenditure, investment opportunities and dividends. Management seeks
to achieve these objectives through the preparation of regular forecast cash flows to understand the application and use of funds and through the
identification of future funding, primarily through loans from related parties in Goodman Group.
The contractual maturities of financial liabilities are set out below:
Carrying
amount
Contractual
cash flows
Up to 12
months
$M
$M
$M
1 to 2
year(s)
$M
2 to 3
years
$M
3 to 4
years
$M
4 to 5
years
More than
5 years
$M
$M
Total non-derivative financial liabilities
2,092.7
Derivative financial liabilities
As at 30 June 2023
Non-derivative financial liabilities
Trade and other payables
(excluding contract liabilities)
Lease liabilities
Bank loans, secured1
Loans from related parties
Net settled:2
Gross settled:3
(Inflow)
Outflow
Total derivative financial liabilities
As at 30 June 2022
Non-derivative financial liabilities
Trade and other payables
(excluding contract liabilities)
Lease liabilities
Bank loans, secured1
330.6
330.6
267.7
62.9
38.1
47.9
1,676.1
87.1
47.9
1,683.5
2,149.1
8.0
–
89.1
364.8
5.5
–
538.9
607.3
–
2.8
–
415.9
418.7
–
2.4
–
93.3
95.7
–
2.1
–
474.4
476.5
–
66.3
47.9
71.9
186.1
(10.4)
(10.8)
(11.7)
12.4
(4.5)
(4.5)
(4.0)
1.5
70.5
–
60.1
(512.7)
504.8
(18.7)
(104.3)
142.7
26.7
(88.4)
90.0
14.0
(106.2)
83.3
(27.4)
(85.0)
122.7
33.2
(57.7)
27.5
(34.2)
(71.1)
38.6
(31.0)
–
0.8
9.0
317.9
317.9
261.8
56.1
–
45.3
9.0
94.9
9.0
8.4
–
10.9
–
3.1
73.3
–
26.3
–
0.9
–
–
0.6
–
Loans from related parties
1,941.0
1,949.0
129.3
504.8
708.9
576.6
Total non-derivative
financial liabilities
Derivative financial liabilities
Net settled:2
Gross settled:3
(Inflow)
Outflow
Total derivative financial liabilities
2,313.2
2,370.8
399.5
70.1
99.6
505.7
709.5
586.4
(39.6)
15.5
22.0
5.9
19.6
(20.5)
(5.0)
(6.5)
95.1
–
55.5
(459.5)
308.4
(135.6)
(78.4)
47.1
(9.3)
(95.3)
80.3
(9.1)
(88.8)
57.8
(11.4)
(118.5)
53.2
(85.8)
(72.8)
63.2
(14.6)
(5.7)
6.8
(5.4)
1. Contractual cash flows relating to bank loans exclude any estimate of interest payments that might arise under the Consolidated Entity’s bank facilities.
2. Net settled includes IRD and FEC.
3. Gross settled includes CCIRS.
205
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
13 Financial risk management (continued)
(c) Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The maximum exposure to credit risk on financial assets, excluding investments, of the Consolidated Entity which have been recognised in the
consolidated statement of financial position, is the carrying amount (refer to note 6).
The Consolidated Entity has a policy of assessing the creditworthiness of all potential customers and is not materially exposed to any one customer.
The Consolidated Entity evaluates all customers’ perceived credit risk.
In relation to material bank deposits, the Consolidated Entity minimises credit risk by dealing with major financial institutions. The counterparty must
have a long-term investment grade credit rating from a major rating agency. The amounts and other terms associated with bank deposits are formally
reviewed monthly.
From time to time, the Consolidated Entity also makes loans to JVs, typically to fund development projects. In making its investment decisions, the
Consolidated Entity will undertake a detailed assessment of the development feasibility and credit risks associated with the relevant counterparties.
During the current and prior year, credit risk arising from cash and cash equivalents, trade receivables, amounts and loans due from related parties
and other receivables was not determined to be significant and no impairment losses were recognised.
The credit risks associated with derivative financial instruments are managed by:
+ Transacting with multiple derivatives counterparties that have a long-term investment grade credit rating
+
Utilising ISDA agreements with derivative counterparties in order to limit exposure to credit risk through netting of amounts receivable and amounts
payable to individual counterparties (refer below)
+ Formal review of the mark to market position of derivative financial instruments by counterparty on a monthly basis.
Master netting off or similar agreements
Goodman Group enters into derivative transactions under ISDA master netting off agreements. Under these agreements, where certain credit events occur
(such as a default), all outstanding transactions under the agreement are terminated and a single net termination value is payable in full and final settlement.
(d) Fair values of financial instruments
Except for derivative financial instruments and investments in unlisted securities which are carried at fair value, the Consolidated Entity’s financial
instruments are carried at cost or amortised cost. The carrying amounts of the Consolidated Entity’s financial instruments carried at cost or amortised
cost were not materially different from their fair values as at 30 June 2023 and 2022.
(i) Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method (see Basis of preparation):
As at 30 June 2023
Derivative financial assets
Investment in unlisted securities
Derivative financial liabilities
As at 30 June 2022
Derivative financial assets
Investment in unlisted securities
Derivative financial liabilities
There were no transfers between the levels during the year.
206
Level 1
$M
Level 2
$M
Level 3
$M
Total
$M
–
–
–
–
–
–
–
–
–
–
117.9
–
117.9
178.0
178.0
131.3
–
131.3
186.8
186.8
–
54.5
54.5
–
–
–
43.5
43.5
–
–
117.9
54.5
172.4
178.0
178.0
131.3
43.5
174.8
186.8
186.8
ANNUAL REPORT 2023
(ii) Valuation techniques used to derive Level 2 and Level 3 fair values
The Level 2 derivative financial instruments held by the Consolidated Entity consist of IRD, CCIRS and FEC.
The fair values of derivatives are determined using generally accepted pricing models which discount estimated future cash flows based on the terms
and maturity of each contract and current market interest rates and/or foreign currency rates, adjusted for specific features of the instruments.
The fair value measurement for investment in unlisted securities has been categorised as a Level 3 fair value. The following table shows the valuation
technique used in measuring fair value as well as the significant unobservable inputs used:
Type
Valuation technique
Significant unobservable inputs
Equity securities
Goodman
+
Japan Limited
DCF: The valuation model was
determined by discounting the future
cash flows expected to be generated
from continuing operations. The
future cash flows were based on fund
and development forecasts and then
estimating a year five terminal value
using a terminal growth rate and an
appropriate discount rate.
+
+
+
+
Assets under management
of $7.2 billion in year five
Average annual development
of 124,982 square metres
Five-year terminal value growth
rate of 0.91%
Risk adjusted post tax discount
rate of 7.38% per annum.
(iii) Reconciliation of Level 3 fair values
Carrying amount at the beginning of the year
Acquisitions
Net change in fair value – included in other comprehensive income
Effect of foreign currency translation
Carrying amount at the end of the year
Inter-relationship between
significant unobservable inputs
and fair value measurement
The estimated fair value would
increase/(decrease) if:
+
The level of assets under
management, development
activity and terminal value growth
rate were higher/(lower) or
+ The risk adjusted discount rate
were lower/(higher).
2023
$M
43.5
1.2
10.7
(0.9)
54.5
2022
$M
38.2
–
9.4
(4.1)
43.5
14 Dividends
During the financial year, the Company declared a final dividend of 5.0 cents per share amounting to $94.2 million. This dividend will be paid on 25 August 2023.
In the prior year, the Company declared a final dividend of 2.5 cents per share amounting to $46.7 million. This was paid on 25 August 2022.
207
GOODMAN GROUP
Notes to the consolidated financial statements
Capital management (continued)
15 Share capital
(a) Ordinary shares
Ordinary shares of the Company are classified as equity. Incremental costs directly attributable to issues of ordinary shares are recognised as a deduction
from equity, net of any tax effects.
Share capital
Less: Accumulated issue costs
Total issued capital
Date
Details
Ordinary shares, issued and fully paid
Balance at 30 June 2021
31 Aug 2021
Shares issued to employees of Goodman Group1
31 Aug 2021
Treasury shares issued
2 Sep 2021
Ordinary shares issued
Balance at 30 June 2022
1 Sep 2022
Shares issued to employees of Goodman Group1
19 May 2023
Ordinary shares issued
Balance at 30 June 2023
2023
2022
Number of shares
1,883,819,883
1,868,222,609
2023
$M
931.6
(0.7)
1,883,819,883
1,868,222,609
930.9
2022
$M
873.6
(0.6)
873.0
Number of shares
Share capital
$M
1,847,429,255
14,716,648
1,233,333
4,843,373
1,868,222,609
12,246,479
3,350,795
1,883,819,883
792.5
57.4
4.8
18.9
873.6
46.1
11.9
931.6
1. During the year, the Company issued 12,246,479 (2022: 14,716,648) shares to employees of Goodman Group under the LTIP.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the
Company. All ordinary shares rank equally with regard to the Company’s residual assets.
(b) Equity settled share based payment transactions
LTIP
Goodman Group’s share based payments primarily relate to performance rights awarded to employees under the LTIP. These performance rights
entitle an employee to either acquire Goodman Group securities for $nil consideration (equity settled performance rights) or, in certain jurisdictions, to
receive an amount in cash equal to the value of the securities (cash settled performance rights), subject to the vesting conditions having been satisfied.
During the year, the movement in the number of performance rights under the LTIP was as follows:
Outstanding at the beginning of the year
Issued
Vested
Forfeited
Outstanding at the end of the year
Exercisable at the end of the year
208
Number of rights
2023
2022
24,616,181
22, 734,427
8,149,820
8,220,860
(5,568,204)
(6,208,554)
(439,388)
(130,552)
26,758,409
24,616,181
–
–
ANNUAL REPORT 2023
Share based payments transactions
The fair value of equity settled performance rights at the grant date is expensed with a corresponding increase in the employee compensation reserve
over the period from the grant date to the vesting dates. The expense is adjusted to reflect the actual number of performance rights for which the
related service and non-market vesting conditions are expected to be met. The accumulated share based payments expense of performance rights
which have vested or lapsed is transferred from the employee compensation reserve to retained earnings.
The fair value of cash settled performance rights is also recognised as an expense but with a corresponding increase in liabilities over the vesting
period. The expense is adjusted to reflect the actual number of performance rights for which the related service and non-market vesting conditions
are expected to be met. The liability is remeasured at each reporting date and at the vesting date based on the fair value of the rights.
The fair value of services received in return for performance rights granted under the LTIP is measured by reference to the fair value of the performance
rights granted. The fair value of the performance rights granted during the year was measured as follows:
+ Operating earnings per security tranche: these rights were valued as a granted call option, using the standard Black Scholes model with a continuous
dividend yield
+ Relative total shareholder return tranche: these rights were valued using a Monte Carlo model which simulated total returns for each of the ASX 100
stocks and discounted the future value of any potential future vesting performance rights to arrive at a present value. The model uses statistical
analysis to forecast total returns, based on expected parameters of variance and co-variance.
The model inputs for performance rights, both equity and cash settled, awarded during the current financial year included the following:
Fair value at measurement date ($)
Security price ($)
Exercise price ($)
Expected volatility (%)
Rights’ expected weighted average life (years)
Dividend/distribution yield per annum (%)
Average risk–free rate of interest per annum (%)
10–year rights
issued on
17 Nov 2022
13.89
18.18
–
27.61
6.8
1.65
3.43
10–year rights
issued on
30 Sep 2022
11.69
15.78
–
27.15
6.9
1.90
3.76
5–year rights
issued on
30 Sep 2022
12.32
15.78
–
31.49
3.9
1.90
3.62
The model inputs for the remeasurement of the cash settled performance rights at 30 June 2023 included the following:
Fair value at measurement date ($)
Security price ($)
Exercise price ($)
Expected volatility (%)
Rights’ expected weighted average life (years)
Dividend/distribution yield per annum (%)
Average risk–free rate of interest per annum (%)
10–year
rights
issued in
FY23
9.00
20.07
–
27.59
6.2
1.49
3.99
10–year
rights
issued in
FY22
12.11
20.07
–
27.88
5.7
1.49
4.01
5–year
rights
issued In
FY23
9.18
20.07
–
28.50
3.2
1.49
4.12
5–year
rights
issued In
FY22
14.51
20.07
–
28.33
2.2
1.49
4.12
5–year
rights
issued In
FY21
19.72
20.07
–
26.02
1.2
1.49
4.17
5–year
rights
issued In
FY20
19.87
20.07
–
25.28
0.7
1.49
4.18
Share based payment expense included in profit or loss was as follows:
Share based payment expense:
– Equity settled
– Cash settled
At 30 June 2023, a liability of $103.6 million (2022: $91.7 million) was recognised in relation to cash settled performance rights.
2023
$M
47.6
64.2
111.8
5–year
rights
issued In
FY19
20.02
20.07
–
19.62
0.2
1.49
4.18
2022
$M
41.2
52.8
94.0
209
GOODMAN GROUP
Notes to the consolidated financial statements
OTHER ITEMS
16 Notes to the consolidated cash flow statement
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.
(a) Reconciliation of cash
Cash as at the end of the year as shown in the consolidated cash flow statement is reconciled to the related items in the consolidated statement of
financial position as follows:
Cash assets
(b) Reconciliation of profit for the year to net cash provided by operating activities
Profit for the year
Items classified as investing activities
Net gain on disposal of investment properties
Net gain on disposal of equity accounted investments
Non-cash items
Depreciation of plant and equipment
Share based payments expense
Net loss from fair value adjustments on investment properties
Share of net results of equity accounted investments
Net finance expense
Income tax expense
Changes in assets and liabilities during the year:
– (Increase)/decrease in receivables
– Decrease/(increase) in inventories
– Decrease in other assets
– Decrease in payables
– (Decrease)/increase in provisions (including employee benefits)
Dividends/distributions received from equity accounted investments
Net finance income received
Net income taxes paid
Net cash provided by operating activities
210
2023
$M
391.9
391.9
2023
$M
200.2
(4.1)
–
8.5
111.8
0.4
91.8
91.0
26.9
526.5
(15.9)
95.1
2.5
(21.1)
(2.4)
584.7
102.1
64.3
(68.8)
682.3
2022
$M
357.5
357.5
2022
$M
762.8
(3.8)
(0.2)
8.7
94.0
0.3
(345.3)
23.4
114.1
654.0
52.0
(447.8)
10.9
(45.8)
0.6
223.9
65.8
14.5
(87.7)
216.5
(c) Reconciliation of liabilities arising from financing activities
Balance at 1 July 2021
Changes from financing cash flows
Proceeds from borrowings
Net (repayments of)/proceeds from loans with related parties
Payments of lease liabilities
Dividends paid
Total changes from financing cash flows
Changes arising from disposal of controlled entities
Effect of foreign exchange movements
Changes in fair value
Other changes
Issue of shares under the LTIP
Equity settled share based payments transactions
New leases
Interest income
Interest expense
Disposal of right of use assets
Derivative financial instrument settlement
through loans with related parties
Dividends declared
Total other changes
Balance at 30 June 2022
Balance at 1 July 2022
Changes from financing cash flows
Proceeds from borrowings
Payments on derivative financial instruments
Net repayments of loans with related parties
Payments of lease liabilities
Dividends paid
Total changes from financing cash flows
Effect of foreign exchange movements
Changes in fair value
Other changes
Issue of shares under the LTIP
Equity settled share based payments transactions
New leases
Interest income
Interest expense
Other borrowing costs
Disposal of right of use assets
Derivative financial instrument settlement
through loans with related parties
Dividends declared
Total other changes
Balance at 30 June 2023
ANNUAL REPORT 2023
Interest
bearing
liabilities
$M
–
Derivatives
used for
hedging
$M
24.7
Dividends
payable
$M
110.8
Loans (to)/
from related
parties
$M
1,052.3
Lease
liabilities
$M
66.0
9.0
–
–
–
9.0
–
–
–
–
–
–
–
–
–
–
–
–
9.0
9.0
40.6
–
–
–
–
40.6
(1.7)
–
–
–
–
–
–
(1.2)
–
–
–
(1.2)
46.7
–
(17.4)
–
–
(17.4)
–
9.7
38.5
–
–
–
–
–
–
–
–
–
55.5
55.5
–
(49.0)
(11.9)
–
–
(60.9)
(4.0)
69.5
–
–
–
–
–
–
–
–
–
–
–
(110.8)
(110.8)
–
–
–
–
–
–
–
–
–
–
46.7
46.7
46.7
46.7
–
–
–
–
(46.7)
(46.7)
–
–
–
–
–
–
–
–
–
–
–
–
60.1
94.2
94.2
94.2
–
124.9
–
–
124.9
1.5
11.2
–
(57.4)
(32.0)
–
(11.6)
41.8
–
17.4
–
(41.8)
1,148.1
1,148.1
–
–
(269.9)
–
–
(269.9)
180.4
–
(46.1)
(36.0)
–
(23.1)
47.5
–
–
11.9
–
(45.8)
1,012.8
–
–
(8.0)
–
(8.0)
–
–
–
–
–
13.4
–
0.4
(26.5)
–
–
(12.7)
45.3
45.3
–
–
–
(7.6)
–
(7.6)
2.6
–
–
–
1.6
–
0.4
–
(4.2)
–
–
(2.2)
38.1
211
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
17 Reserves
Asset revaluation reserve
Foreign currency translation reserve
Employee compensation reserve
Defined benefit retirement schemes reserve
Common control reserve1
Total reserves
Consolidated
Company
Note
17(a)
17(b)
17(c)
17(d)
17(e)
2023
$M
47.4
49.6
66.9
(8.3)
(702.9)
(547.3)
2022
$M
36.7
13.6
56.3
(8.8)
(702.9)
(605.1)
2023
$M
47.1
–
64.0
–
–
111.1
2022
$M
36.2
–
52.4
–
–
88.6
1. The common control reserve arises from the acquisition of entities from other members of Goodman Group under the pooling of interest method. The amount in the common control reserve
reflects the difference between the consideration paid and the carrying values of the assets and liabilities of the acquired entity at the date of acquisition.
The movements in reserves of the Consolidated Entity and the Company are analysed below:
Consolidated
Company
(a) Asset revaluation reserve
Balance at the beginning of the year
Increase due to revaluation of other financial assets
Balance at the end of the year
(b) Foreign currency translation reserve
Balance at the beginning of the year
Net exchange differences on conversion of foreign operations
Balance at the end of the year
(c) Employee compensation reserve
Balance at the beginning of the year
Equity settled share based payment transactions
Deferred tax associated with the LTIP
Balance at the end of the year
(d) Defined benefit retirement schemes reserve
Balance at the beginning of the year
Actuarial gains on defined benefit retirement schemes (net of tax)
Balance at the end of the year
(e) Common control reserve
Balance at the beginning of the year
Balance at the end of the year
18 Retained earnings
Balance at the beginning of the year
Profit for the year
Dividends declared
Balance at the end of the year
212
2023
$M
2022
$M
36.7
10.7
47.4
13.6
36.0
49.6
56.3
11.6
(1.0)
66.9
(8.8)
0.5
(8.3)
27.3
9.4
36.7
12.7
0.9
13.6
48.3
12.2
(4.2)
56.3
(14.4)
5.6
(8.8)
(702.9)
(702.9)
(702.9)
(702.9)
2023
$M
36.2
10.9
47.1
–
–
–
52.4
11.6
–
64.0
–
–
–
–
–
2022
$M
27.0
9.2
36.2
4.8
(4.8)
–
40.2
12.2
–
52.4
–
–
–
–
–
Consolidated
Company
Note
14
2023
$M
2,290.0
187.4
(94.2)
2022
$M
1,584.8
751.9
(46.7)
2023
$M
1,013.3
603.8
(94.2)
2022
$M
794.7
265.3
(46.7)
2,383.2
2,290.0
1,522.9
1,013.3
ANNUAL REPORT 2023
19 Investments in subsidiaries
Subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Company has
power, only substantive rights (held by the Company and other parties) are considered.
An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that
control ceases. When an entity ceases to be controlled by the Company, it is accounted for as a disposal of the entire interest in the entity, with a
resulting gain or loss being recognised in profit or loss.
In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses.
The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of the Consolidated Entity.
The class of shares held is ordinary unless otherwise stated.
Significant controlled companies
Principal activities
Interest held
Country of
incorporation
2023
%
2022
%
Goodman Asia Limited
Goodman China Limited
Goodman UK Holdings (HK) Limited
Intermediate holding company
Investment and property management services
Hong Kong
100.0
100.0
Property management and development
Hong Kong
100.0
100.0
Hong Kong
100.0
100.0
Goodman China Asset Management Limited
Investment management
Cayman Islands
100.0
100.0
Goodman Developments Asia
Investment and property development
Cayman Islands
100.0
100.0
GJSP Limited
GELF Management (Lux) Sàrl
Investment management
Investment management
Goodman Management Holdings (Lux) Sàrl
Intermediate holding company
Goodman Midnight Logistics (Lux) Sàrl
Investment holding company
Goodman Property Opportunities (Lux) Sàrl SICAR
Property investment and development
GPO Advisory (Lux) Sàrl
Property management services
Japan
100.0
100.0
Luxembourg
100.0
100.0
Luxembourg
100.0
100.0
Luxembourg
100.0
100.0
Luxembourg
94.0
94.0
Luxembourg
100.0
100.0
Goodman Logistics Developments (UK) Limited
Investment and property management
United Kingdom
100.0
100.0
Goodman Real Estate (UK) Limited
Investment and property development
United Kingdom
100.0
100.0
213
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
Combination of entities or businesses under common control
20 Related party transactions
Where the Consolidated Entity acquires entities or businesses from
other members of Goodman Group such that all of the combining
entities (businesses) are ultimately controlled by Goodman Group
Securityholders both before and after the combination, the Consolidated
Entity applies the pooling of interests method.
At the date of the combination of entities under common control, the
assets and liabilities of the combining entities are reflected at their
carrying amounts. No adjustments are made to reflect fair values or
recognise any new assets or liabilities that would otherwise be done under
the acquisition method. The only goodwill that is recognised is any existing
goodwill relating to either of the combining entities. Any difference
between the consideration transferred and the equity “acquired” by the
Consolidated Entity is reflected within equity (common control reserve).
Similar to the acquisition method, the results of the “acquired” entity are
included only from the date control commenced. Comparatives are not
restated to present the consolidated financial statements as if the entities
had always been combined.
Related parties
(i)
A person, or a close member of that person’s family, is related
to the Company if that person:
(1) Has control or joint control over the Company
(2) Has significant influence over the Company or
(3) Is a member of the key management personnel
of the Company or the Company’s parent.
(ii)
An entity is related to the Company if any of the following
conditions applies:
(1)
The entity and the Company are members of the same group
(which means that each parent, subsidiary and fellow subsidiary
is related to the others)
(2) One entity is an associate or JV of the other entity
(or an associate or JV of a member of a group of which the
other entity is a member)
(3) Both entities are JVs of the same third party
(4) One entity is a JV of a third entity and the other entity is an
associate of the third entity
(5) The entity is a post-employment benefit plan for the benefit
of employees of either the Company or an entity related to
the Company
(6) The entity is controlled or jointly controlled by a person
identified in (i)
(7) A person identified in (i)(1) has significant influence over the
entity or is a member of the key management personnel of the
entity (or of a parent of the entity) or
(8) The entity, or any member of a group of which it is a part,
provides key management personnel services to the Company or
the Company’s parent.
Close members of the family of a person are those family members who
may be expected to influence, or be influenced by, that person in their
dealings with the entity.
(a) Directors’ remuneration
Directors’ remuneration (including alternate Directors) disclosed pursuant
to section 383(1) of the Hong Kong Companies Ordinance and Part 2 of
the Companies (Disclosure of Information about Benefits of Directors)
Regulation is as follows:
Directors’ fees
Salaries, allowances and benefits in kind
Share based payments
2023
$M
0.6
3.5
18.0
22.1
2022
$M
0.6
3.6
19.8
24.0
214
ANNUAL REPORT 2023
Management and
development activities
Amounts due from
related parties1
2023
$M
2022
$M
2023
$M
2022
$M
96.3
67.2
8.4
–
171.9
118.8
348.2
5.1
472.1
104.5
55.8
10.1
–
170.4
139.1
769.2
5.8
914.1
13.6
2.6
–
0.2
16.4
16.6
61.5
–
78.1
6.6
2.1
–
0.7
9.4
9.8
47.7
–
57.5
(b) Transactions and amounts due from related parties
JVs
GCLP
GUKP
KWASA Goodman Germany
Goodman Japan Development Partnership
Related parties of GL and GIT
Goodman Hong Kong Logistics Partnership
Goodman European Partnership
Other related parties
1.
Includes contract assets arising from transactions with related parties.
Transactions with GL
During the year, the Consolidated Entity recognised expenses of $1.5 million (2022: $23.1 million) for services provided by a controlled entity of GL.
In addition, during the year, a subsidiary of the Consolidated Entity issued preference shares amounting to $28.6 million to a controlled entity of GL.
(c) Financing arrangements with related parties
JVs
GL, GIT and their controlled entities
Loans to
related parties1
Loans from
related parties1
2023
$M
7.0
656.3
663.3
2022
$M
27.3
765.6
792.9
2023
$M
–
2022
$M
–
(1,676.1)
(1,676.1)
(1,941.0)
(1,941.0)
Interest
income/(expense)
charged on loans
to/from related parties
2023
$M
0.4
(24.8)
(24.4)
2022
$M
0.4
(30.6)
(30.2)
1. Loans by the Consolidated Entity to/from JVs and other related parties have generally been provided on an arm’s length basis. At 30 June 2023, details in respect of the principal loan balances
are set out below:
+ Loans to GL, GIT and their controlled entities amounting to $656.3 million (2022: $765.6 million) are interest bearing and repayable on demand. The interest bearing loans incur interest at rates
ranging from 0.8% to 6.4% per annum (2022: 0.6% to 5.1% per annum)
+ Loans from GL, GIT and their controlled entities are interest bearing and amount to $1,676.1 million (2022: $1,941.0 million). $86.6 million of the loans is repayable on demand and $1,589.5 million
is repayable greater than one year from the reporting date. The interest bearing loans incur floating interest at rates ranging from 0.8% to 10.5% per annum (2022: 0.2% to 10.6% per annum).
215
GOODMAN GROUP
Notes to the consolidated financial statements
Other items (continued)
21 Commitments
Development activities
At 30 June 2023, the Consolidated Entity was committed to $172.8 million
(2022: $206.4 million) expenditure in respect of inventories and other
development activities.
Investment properties
At 30 June 2023, the Consolidated Entity had capital expenditure
commitments of $0.1 million (2022: $0.1 million) in respect of its stabilised
investment property portfolio.
22 Contingencies
Capitalisation Deed Poll
GLHK, GL, GIT and certain of their wholly owned controlled entities are
“investors” under a Capitalisation Deed Poll (CDP) dated 23 May 2007.
Under the CDP, each investor undertakes to pay to the relevant controlled
entity borrower (borrower) any amounts owing under finance documents
for the purpose of the CDP when the borrower fails to make a payment.
Any payments by an investor to a borrower will be by way of loan to, or
proceeds for the subscription of equity in, the borrower by the investor.
US144A/Regulation S senior notes
Under the issue of notes in the US144A/Regulation S bond market,
controlled entities of GIT had on issue USD and EUR notes amounting
to US$1,350.0 million and €500.0 million respectively. GL, Goodman
Funds Management Limited, as responsible entity of GIT, and GLHK have
unconditionally and irrevocably guaranteed on a joint and several basis
the payment of principal and interest in respect of each of the notes.
216
23 Company level statement of financial position
Current assets
Cash
Receivables
Other financial assets
Total current assets
Non-current assets
Investments in subsidiaries
Receivables
Other financial assets
Total non-current assets
Total assets
Current liabilities
Payables
Dividend payable
Other financial liabilities
Total current liabilities
Non-current liabilities
Payables
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to Shareholders
Share capital
Reserves
Retained earnings
Total equity attributable to Shareholders
ANNUAL REPORT 2023
Note
17
18
2023
$M
74.7
20.8
11.3
106.8
2,631.3
–
340.7
2,972.0
3,078.8
0.5
94.2
79.9
174.6
241.2
98.1
339.3
513.9
2,564.9
930.9
111.1
1,522.9
2,564.9
2022
$M
138.5
7.9
–
146.4
2,550.5
32.9
267.7
2,851.1
2,997.5
0.5
46.7
45.4
92.6
807.7
122.3
930.0
1,022.6
1,974.9
873.0
88.6
1,013.3
1,974.9
The Company level statement of financial position was approved and authorised for issue by the Board of Directors on 17 August 2023.
Stephen Paul Johns
Independent Chairman
David Jeremy Collins
Director
24 Subsequent events
There has not arisen in the interval between the end of the financial year and the date of this financial report any item, transaction or event of a material
and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of the Consolidated Entity, the results of those operations,
or the state of affairs of the Consolidated Entity, in future financial years.
217
GOODMAN GROUP
Securities information
Top 20 Securityholders
as at 25 August 2023
Number of
securities
Percentage of total
issued securities
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
TRISON INVESTMENTS PTY LTD
BEESIDE PTY LTD ATF THE BEESIDE TRUST
1.
2.
3.
4.
5.
6.
7.
8.
9.
10. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
11.
12.
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
13. CUSTODIAL SERVICES LIMITED
14. NETWEALTH INVESTMENTS LIMITED
UBS NOMINEES PTY LTD
15.
BNP PARIBAS NOMS (NZ) LTD
16.
17.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
18. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
19. WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
20. BNP PARIBAS NOMINEES PTY LTD BARCLAYS
Securities held by top 20 Securityholders
Balance of securities held
Total issued securities
655,360,269
569,711,599
210,728,952
73,365,406
59,196,171
35,911,799
35,176,862
16,302,796
13,192,040
11,571,038
10,155,000
4,835,073
4,772,037
4,276,459
4,036,197
3,517,260
3,507,826
3,209,743
3,029,494
2,511,535
1,724,367,556
159,452,327
1,883,819,883
34.79
30.24
11.19
3.89
3.14
1.91
1.87
0.87
0.70
0.61
0.54
0.26
0.25
0.23
0.21
0.19
0.19
0.17
0.16
0.13
91.54
8.46
100.00
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – over
Total
Total holders
Units
% Units
32,692
19,190
3,224
1,848
107
12,017,015
43,761,304
22,745,696
39,301,829
1,765,994,039
0.64
2.32
1.21
2.09
93.74
57,061
1,883,819,883
100.00
There were 804 Securityholders with less than a marketable parcel in relation to 4,978 securities as at 25 August 2023.
Substantial Securityholders1
Vanguard Group Inc.
Leader Investment Corporation; China Investment Corporation
Blackrock Investment Management Limited
State Street Corporation
1. In accordance with latest Substantial Securityholder Notices as at 8 September 2023.
Number of securities
167,546,666
167,247,441
137,503,983
99,948,106
Goodman Logistics (HK) Limited CHESS Depository Interests. ASX reserves the right (but without limiting its absolute discretion) to remove Goodman Logistics (HK) Limited, Goodman Limited and
Goodman Industrial Trust from the official list of the ASX if a CHESS Depository Interest (CDI) referencing an ordinary share in Goodman Logistics (HK) Limited, a share in Goodman Limited or a unit in
Goodman Industrial Trust cease to be stapled, or any new securities are issued by Goodman Logistics (HK) Limited, Goodman Limited or Goodman Industrial Trust and are not (or CDIs in respect of them are
not) stapled to equivalent securities in the Goodman Group.
Voting rights. On a show of hands at a general meeting of Goodman Limited or Goodman Industrial Trust, every person present who is an eligible Securityholder shall have one vote and on a poll, every person
present who is an eligible Securityholder shall have one vote for each Goodman Limited share and one vote for each dollar value of Goodman Industrial Trust units that the eligible Securityholder holds or
represents (as the case may be). At a general meeting of Goodman Logistics (HK) Limited, all resolutions will be determined by poll, and eligible Securityholders will be able to direct Chess Depositary Nominees
Pty Limited to cast one vote for each Chess Depositary Instrument (referencing a Goodman Logistics (HK) Limited share) that the eligible Securityholder holds or represents (as the case may be).
Securityholder approval of securities. During the financial year, 17,475,477 performance rights were issued under the Long Term Incentive Plan, of which 2,050,000 performance rights were issued
to Executive Directors with Securityholder approval under ASX Listing Rule 10.14.
On-market buy-back. There is no current on-market buy-back.
218
Glossary
ANNUAL REPORT 2023
AASB Australian Accounting Standards Board.
ASIC Australian Securities and Investments Commission.
ASX Australian Securities Exchange, or ASX Limited (ABN 98 008 624 691)
or the financial market which it operates as the case requires.
AUM Assets under management: total value of properties directly held
or under management.
CPP Investments Formerly Canada Pension Plan Investment Board.
GNAP Goodman North America Partnership, a logistics and industrial
partnership specialising in the investment of industrial property in
North America.
GLHK Goodman Logistics (HK) Limited (Company No. 1700359;
ARBN 155 911 149) and where the context requires, its controlled entities.
Goodman Group or GMG Goodman Limited, Goodman Industrial
Trust and Goodman Logistics (HK) Limited, trading as Goodman Group
and where the context requires, their controlled entities.
Cps Cents per security.
Cpu Cents per unit.
GUKP Goodman United Kingdom Partnership.
IFRS International Financial Reporting Standards.
DPS Distribution per security. Total distributions to investors divided
by the number of securities outstanding.
EPS Earnings per security.
KGIP KWASA-Goodman Industrial Partnership, an unlisted property
investment vehicle specialising in the investment of industrial property in
Australia.
GADP Goodman Australia Development Partnership, an unlisted
property investment vehicle specialising in the investment of industrial
property in Australia.
GAIP Goodman Australia Industrial Partnership, an unlisted property
investment vehicle specialising in the investment of industrial property
in Australia.
KGG KWASA-Goodman Germany, an unlisted property trust specialising in
the investment of industrial property in Germany.
NAV Net asset value: the value of total assets less liabilities. For this
purpose, liabilities include both current and long-term liabilities. To calculate
the net asset value per ordinary security, divide the net asset value by the
number of securities on issue.
GAP Goodman Australia Partnership, an unlisted property investment
vehicle specialising in the investment of industrial property in Australia.
NZX New Zealand Exchange Limited or New Zealand Exchange being the
equity security market operated by it, as the case requires.
GBLP Goodman Brazil Logistics Partnership.
GCLP Goodman China Logistics Partnership Limited, an unlisted
property investment vehicle specialising in the investment of industrial
property in China.
Responsible Entity Responsible Entity means a public company that holds
an Australian Financial Services Licence (“AFSL”) authorising it to operate
a managed investment scheme. In respect of GIT, the Responsible Entity
is GFML, a wholly-owned subsidiary of GL.
GEP Goodman European Partnership, an unlisted property investment vehicle
specialising in the investment of industrial property in Continental Europe.
S&P Standard & Poor’s: an independent rating agency that provides
evaluation of securities investments and credit risk.
GFML Goodman Funds Management Limited (ABN 48 067 796 641;
AFSL Number 223621).
Securityholder A holder of a Stapled Security.
Shareholder A shareholder of GL and/or GLHK.
GHKLP Goodman Hong Kong Logistics Partnership, an unlisted property
investment vehicle specialising in the investment of industrial property in
Hong Kong.
GIT Goodman Industrial Trust (ARSN 091 213 839) and its controlled
entities or GFML as Responsible Entity for GIT, where the context requires.
GJCP Goodman Japan Core Partnership, an unlisted property investment
vehicle specialising in the investment of industrial property in Japan.
GJDP Goodman Japan Development Partnership, a logistics and industrial
partnership specialising in the development of industrial property in Japan.
GL Goodman Limited (ABN 69 000 123 071) and where the context
requires, its controlled entities.
GMT Goodman Property Trust, a listed property trust on the NZX managed
by GMG.
Sqm Square metres.
Sq ft Square feet.
Stapled The linking together of a GIT unit, a GL share and a CDI in
respect of a GLHK share so that one may not be transferred or otherwise
dealt with without the other and which are quoted on the ASX jointly as
a “stapled security”.
Stapled Security or Security A GIT unit, a GL share and a CDI in respect
of a GLHK share which are stapled so that they can only be traded together.
Substantial Securityholder A person or company that holds at least
5% of Goodman Group’s voting rights.
TSR Total securityholder return.
219
GOODMAN GROUP
Corporate directory
GOODMAN GROUP
Goodman Limited
ABN 69 000 123 071
Company Secretary – Carl Bicego
Goodman Industrial Trust
ASRN 091 213 839
Goodman Funds Management Limited
(Responsible Entity for Goodman Industrial Trust)
ABN 48 067 796 641
AFSL Number 223621
Company Secretary – Carl Bicego
Goodman Logistics (HK) Limited
Company No. 1700359
ARBN 155 911 149
Company Secretary – Goodman Secretarial Asia Limited
REGISTERED OFFICES
The Hayesbery
1-11 Hayes Road
Rosebery NSW 2018
GPO Box 4703
Sydney NSW 2001
Australia
Telephone 1300 791 100 (within Australia)
+61 2 9230 7400 (outside Australia)
Facsimile +61 2 9230 7444
Suite 901
Three Pacific Place
1 Queen’s Road East
Hong Kong
Telephone +852 2249 3100
Facsimile +852 2525 2070
Email
info-au@goodman.com
Website
goodman.com
REGISTERED OFFICES
Amsterdam
Auckland
Barcelona
Beijing
Birmingham
Brisbane
Brussels
Chongqing
Düsseldorf
Guangzhou
Hamburg
Hong Kong
London
Los Angeles
Luxembourg
Madrid
Melbourne
Milan
Munich
New Jersey
220
Osaka
Paris
Pennsylvania
San Francisco
São Paulo
Shanghai
Shenzhen
Sydney
Tokyo
DIRECTORS
Goodman Limited and Goodman Funds Management Limited
Stephen Johns
Independent Chairman
Gregory Goodman
Group Chief Executive Officer
Chris Green
Independent Director
Mark G. Johnson
Independent Director
Vanessa Liu
Independent Director
Danny Peeters
Executive Director
Goodman Logistics (HK) Limited
Stephen Johns
Independent Chairman
Kitty Chung
Independent Director
David Collins
Independent Director
Phillip Pryke
Independent Director
Belinda Robson
Independent Director
Anthony Rozic
Executive Director
Hilary Spann
Independent Director
George Zoghbi
Independent Director
Company Secretary
Carl Bicego
Danny Peeters
Executive Director
Company Secretary
Goodman Secretarial Asia Limited
SECURITY REGISTRAR
Computershare Investor Services Pty Limited
Level 5, 115 Grenfell Street
Adelaide SA 5000 Australia
GPO Box 2975
Melbourne, VIC 3001 Australia
Telephone 1300 723 040 (within Australia)
+61 3 9415 4043 (outside Australia)
Facsimile +61 3 9473 2500
Email
web.queries@computershare.com.au
Website
computershare.com
ASX CODE
GMG
AUDITOR
KPMG
Level 38, Tower Three International Towers Sydney
300 Barangaroo Avenue
Sydney NSW 2000 Australia
GOODMAN’S 2023 REPORTING SUITE
We encourage you to explore our full suite
detailing our Group performance on goodman.com.
ANNUAL REPORT 2023
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) Limited
(Company No. 1700359; ARBN 155 911 149 - a Hong Kong company with limited liability)). It is not intended to be relied upon as advice to investors or potential
investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with
professional advice, when deciding if an investment is appropriate. This document does not constitute an offer, invitation, solicitation, recommendation or advice
with respect to the issue, purchase or sale of any stapled securities or other financial products in the Goodman Group. It does not constitute an offer to sell, or
the solicitation of an offer to buy, any securities in the United States or to any “US person” (as defined in Regulation S under the US Securities Act of 1933, as
amended (Securities Act) (US Person). Securities may not be offered or sold in the United States or to US Persons unless they are registered under the Securities
Act or an exemption from registration is available. The stapled securities of Goodman Group have not been, and will not be, registered under the Securities
Act or the securities laws of any state or jurisdiction of the US. This document contains certain “forward-looking statements”. The words “anticipate”, “believe”,
“expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan” and other similar expressions are intended to identify forward-
looking statements. Indications of, and guidance on, future earnings and financial position and performance as well as expectations, objectives and assumptions
in our climate change and sustainability related statements are also forward-looking statements. Due care and attention have been used in the preparation of
forecast information. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other
factors, many of which are beyond the control of Goodman Group, that may cause actual results to differ materially from those expressed or implied in such
statements. Past performance of any product described in this document is not a reliable indication of future performance. Neither the Goodman Group, nor
any other person, gives any representation, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking
statements in this document will actually occur. Due to the inherent uncertainty and limitations in measuring greenhouse gas (GHG) emissions and operational
energy consumption under the calculation methodologies used in the preparation of such data, GHG emissions and operational energy consumption data
or references to GHG emissions and operational energy consumption volumes (including ratios or percentages) in the sustainability content published in this
document may include estimates. There can be no assurance that actual outcomes will not differ materially from these statements. All values are expressed in
Australian currency unless otherwise stated. September 2023.
221
GOODMAN GROUP
1