Goodman Group (Goodman or Group) has announced its results for the full year ended 30 June 2013, delivering an operating profit of A$544 million (€386 million), which is forecast to grow to A$594 million (€421 million) inFY14. Key financial and operational highlights for the period are:
- Operating profit of A$544 million1 (€386 million), a 17% increase on same period last year
- Operating earnings per security (EPS)1 of 32.4 cents2, up 6% on FY12
- Total distribution and dividend of 19.4 cents per stapled security3, up 8% on FY12, and forecasting 20.7 cents for FY14, up 7%
- Strong financial position maintained – balance sheet gearing reduced to 18.5%4 and interest coverage ratio (ICR) of 5.0x
- Group’s liquidity at A$1.8 billion (€1.3billion), with weighted average debt maturity of 5.4 years
- Positioned to deliver FY14 operating profit of A$594 million (€421 million,) equating to operating EPS of 34.3 cents (up 6% on FY13)
- Total assets under management of A$23 billion (€16.3 billion,) up 15% on FY12, reflecting investor demand for quality, high yielding industrial assets
- Strong performance across core investment portfolio, with high occupancy maintained at 96%, and weighted average lease expiry of 4.7 years
- Development work in progress at A$2.3 billion (€1.6 billion)across 69 projects, 72% pre-committed and 92% matched to third party capital
- A$2.8 billion (€2 billion) of new committed third party equity raised, endorsing Goodman’s contemporary fund management and independent governance structures
- A$3.8 billion (€2.7 billion)of uncalled equity and debt available for Funds to participate in development opportunities from the Group and broader market
- Entered Brazilian market, establishing WTGoodman joint venture, and consolidated Japan management platform
Goodman’s Group Chief Executive Officer, Mr Greg Goodman said, “Goodman has delivered a strong FY13 operating profit of A$544 million (€386 million,) slightly ahead of the initial targets set for the year and representing a year on year increase of 17%, equating to 6% growth in operating earnings per security.”
“The strong underlying performance from Goodman’s operations can be attributed to the delivery of our strategy and day to day operational activities across all parts of our business. The consistency and quality of our product offering and proven capability have also ensured that we are well positioned to benefit from the accelerating business activity in our key markets globally. This is being driven by significant customer and investor demand for prime industrial assets and a number of structural changes that are shaping our sector, including the rapid growth in e- commerce.” Mr Goodman said.
Goodman’s leading global operating platform, access to third party capital, extensive customer relationships and experienced team, have provided significant scope to pursue a range of high quality opportunities during the year. Key transactions undertaken by Goodman during the period include entry into the South American market through the establishment of the WTGoodman joint venture in Brazil, consolidation of the Goodman Japan management platform and the acquisition of an interest in the A$1.8 billion (€1.3 million) ATL Logistics Centre in Hong Kong.
“The global reach provided by Goodman’s operating platform is a key advantage for us and provides a high degree of earnings diversity and stability, with our international businesses contributing 48% of earnings in FY13. We are now fully operational in key logistics markets globally, including the Americas where we have development projects underway, and are well positioned to meet the diverse business needs of our customers, while selectively securing quality investment opportunities for our capital partners. This is highlighted by solid fundamentals across our portfolio and the growth in our development workbook to A$2.3 billion (€1.6 billion). Underlying momentum is strong in allof our markets, particularly in Australia, where we have secured a number of large pre-commitments; China and Japan, where demand continues to run ahead of available supply, and; Europe, which continues to experience high demand led by the e-commerce and automotive sectors.” Mr Goodman commented.
Goodman will use its proven expertise and capability, global operating platform, and quality customer and capital partner relationships, to pursue opportunities and realise initiatives to drive the long-term growth of its business in a measured and sustainable manner.
The customer focused approach at the core of Goodman’s operating business ensures that its properties are managed and maintained to a high standard, and combined with its active asset management capabilities, reflect the high occupancy and retention rates across the portfolio. Goodman also seeks to generate additional value by identifying higher and better use opportunities for its assets, including the trend to urbanisation and property renewal in its key markets.
Philippe Van der Beken, Goodman’s Managing Director Continental Europe said: “We completed a number of key corporate and capital management initiatives during the year and our team around the world focused on the quality execution of our day to day operational activities. This has ensured that Goodman is very well positioned to secure growth opportunities that capitalise on the customer and investor demand for prime industrial space in our key operating markets and the structural changes taking place within the industrial property sector.”
Operational highlights include the following:
Property performance measurements have been strong during the year, with overall occupancy maintained at 96%, consistent with the same period last year. The weighted average lease expiry across the investment portfolio was 4.7 years. Approximately 2.9 million sqm of industrial and business space was leased during the year.
The Group’s work in progress as at 30 June 2013 was A$2.3 billion (€1.6 billion), equating to 1.9 million sqm of new space.
During the year, the Group secured A$2.2 billion (€1.56 billion) of new development commitments across 69 projects in 11 countries, making it one of the largest industrial real estate developers globally. Development demand remains strong, particularly in Continental Europe and Australia.
“We have continued to build on the significant activity in our development business and capitalise on the opportunities being generated by the strong customer and investor demand for Goodman’s development product in all of our markets. The undersupply of prime quality industrial space and a number of structural changes taking place globally, including the rapid growth in e-commerce and greater supply chain efficiencies are key growth drivers of our development business. In turn, we expect the contribution from our development led approach in markets such as Japan, North America and Brazil to help grow our development portfolio to A$2.5 billion (€1.8 billion) in the short-term.” Mr Goodman said.
Importantly, Goodman’s ability to finance and attract capital for development activities is a key point of differentiation for customers.
Third party assets under management increased to A$19.5 billion (€13.8 billion) over the full year, which is a 21% increase compared with 30 June 2012.
Goodman completed a number of major initiatives across its managed fund platform during the year, raising A$2.8 billion (€2 billion) of new third party equity capital. As a result, Goodman has $3.8 billion (€2.7 billion) of undrawn debt and equity available for its Funds to participate in investment and development opportunities from the Group and broader market.
Goodman has continued to deliver on its stated strategy of diversifying its debt funding sources and demonstrated its ongoing access to global debt capital markets. During the full year, A$4.5 billion (€3.2 billion) of debt facilities with an average term of 3.3 years were procured across the Group and managed funds. In addition to this, debt capital markets included GELF’s inaugural
€500 million, five year Eurobond issue.
Goodman has maintained its strong competitive position in the current operating environment, given its quality global brand and reputation, proven development and management capability and significant capital partner and customer relationships.
The growing contribution from the active components of Goodman’s business, being its development and management activities, coupled with the strength and diversity of its global operating platform are key advantages for the Group and ensure it is well positioned to achieve solid earnings growth in FY14. The momentum across Goodman’s business, particularly in its Asian and European operations and from its entry into new markets, is expected to drive earnings in the year ahead.
Accordingly, Goodman is forecasting a full year operating profit of A$594 million (€421 million), equating to an operating earnings per security of 34.3 cents, up 6% on FY13 and a forecast distribution of 20.7 cents, up 7% on FY13.
For further information, please contact Goodman:
+32 2 263 40 00
For more information please visit www.goodman.com
1 Operating profit and operating EPS comprise profit attributable to Securityholders, adjusted for property valuations, derivative and foreign currency mark to market and other non-cash or non-recurring items. Operating profit is used to present a clear view of the underlying profit from operations. It is used consistently and without bias year on year for comparability. A reconciliation to statutory profit is provided in summary on page 10 of the ASX Results Presentation and in detail on page 5 of the Directors’ Report as announced on ASX and available from the Investor Centre at www.goodman.com.
2 Calculated based on weighted average diluted securities of 1,677.4 million, including 5.6 million LTIP securities which have achieved the required performance hurdles and will vest equally in September 2013 and September 2014.
3 Goodman Limited has declared a dividend of 5.2 cents per security while Goodman Industrial Trust has determined that the final distribution for the second half is 4.5 cents per security or 14.2 cents per security for the full year. Refer to confirmation of distribution announcement dated 15 August 2013.
4 Calculated as total interest bearing liabilities over total assets, both net of cash and fair values of cross currency swaps used to hedge liabilities denominated in currencies other than those to which the proceeds are applied equating to A$94 million – refer to Note 8 of the Financial Statements.