2014 was another solid year for Goodman that has seen the Group continue to evolve as an Australian business successfully operating internationally. Having effectively exported its business model and expanded and strengthened its global platform, Goodman has become a recognised brand among key global customers and capital partners, consistently delivering innovative, quality products and services across all of its markets.
Our operating platform now spans 33 cities in 16 key countries around the world, 73% of Goodman staff are now located in markets outside of Australia, and offshore earnings have grown to represent 56% of FY14 operating EBIT.
Financial highlights for the year include:
- operating profit of $601 million, a 10% increase on the same period last year;
- statutory profit of $657 million;
- operating earnings per security (EPS) of 34.8 cents, up 7% on FY13;
- distribution per security of 20.7 cents, up 7% on FY13;
- strong financial position maintained, with balance sheet gearing of 19.5% and interest coverage ratio of 5.9x;
- Group liquidity at $1.5 billion, covering maturities to December 2018; and
- now positioned to deliver FY15 operating EPS of 36.9 cents, up 6% on FY14.
Goodman has continued to deliver solid results with consistently strong operating earnings over the past five years. We continue to see sustainable growth in development, benefiting from ongoing structural changes occurring globally and we remain measured with our entry into new markets.
The Group continues its prudential capital management strategy, with growth driven by leveraging entrepreneurial and operational expertise, not financial leverage. The balance sheet strength is reflected in 19.5% gearing and $1.5 billion of liquidity covering maturities to December 2018.
distribution per security
The ability to innovate and be flexible is a key strategic advantage. Goodman is a contemporary business and has continued to differentiate itself, and benefit from, the quality of its product and the innovative and flexible approach it takes.
Operating earnings per security (₵)
Average growth6.9% pa
Development work in progress ($B)
Average growth19.5% pa
Total assets under management ($B)
Average growth13.4% pa1 Fund investments are subject to Investment Committee approval.
The ability to innovate and be flexible is a key strategic advantage. Goodman is a contemporary business and has continued to differentiate itself, and benefit from, the quality of its product and the innovative and flexible approach it takes. Some good examples of this are as follows:
At Goodman’s 130,000 sqm development at Sakai in the Osaka Bay region, the team collaborated with key customers, Nippon Express, Nissin and Keihin, to create a high specification, modern, multi-customer facility that allowed them to reduce their overall logistics costs through operational cost savings. They also worked closely with the architect and interior designers to create a unique employee friendly workspace that enabled our customers to attract and retain their employees. In addition, the facility contained several key sustainability features that made it the first logistics facility in Western Japan to obtain LEED (Leadership in Energy and Environmental Design) Gold pre-certification. Goodman Sakai was developed in the Goodman Japan Development Partnership with Abu Dhabi Investment Council, 100% pre-leased five months prior to construction completion and pre-sold to the Goodman Japan Core Fund.
Structural changes that have taken place in the logistics industry combined with the Group’s current approach have resulted in the e-retail sector continuing to be one of the fastest growing customer segments for Goodman. In April, Goodman completed the 48,038 sqm second phase of its built-to-suit logistics facility at Wuqing for Vipshop, China’s leading online discount retailer for luxury brands and listed on the New York Stock Exchange (NYSE). Strategically located within the Beijing-Tianjin corridor and serving as a catchment area for a population in excess of 30 million in the region, Wuqing is an ideal location for retailers and e-retailers. Vipshop chose to partner with Goodman again due to our strong reputation for reliability and track record of successfully delivering quality e-retailing facilities globally.
In the UK, Goodman recently completed the development of one of Europe’s largest parcel hubs for French express parcel business, GeoPost, at Hinckley Commercial Park. The 30,669 sqm facility was constructed on a turnkey agreement with Goodman according to very specific, bespoke customer requirements within a set timeframe. When fully operational, the distribution unit will handle up to one million parcels per day and create 1,000 jobs. Goodman has worked very closely with both the customer and the council over the years to ensure successful delivery of a high quality, innovative, world-class facility.
In Brazil, our joint venture, WTGoodman, has made considerable progress in less than two years of operation, with a number of active development opportunities underway in key logistics locations, which underpin our success in securing commitments with global and strategic customers. In line with our strategy of becoming a major player in Brazil’s logistics real estate market, in July, WTGoodman announced the signing of its first built-to-suit agreement to develop a 62,000 sqm distribution centre in Minas Gerais, the third-largest state economy in Brazil, for a large multinational, Forbes 500 company.
The new project highlights WTGoodman’s strategy of delivering new, modern, high quality logistics space as well as its capacity and flexible approach in fulfilling the unique needs of all of its customers. With Brazil´s logistics sector currently going through a process of growth and modernisation, WTGoodman is well placed to selectively build a portfolio of high quality logistics and industrial assets in Brazil’s key logistics markets.
In Australia, since the acquisition of Moorabbin Airport in 2011, Goodman has continued to innovate and add value. The site features a 294 hectare estate with 71 hectares of development land available and good access to Victoria’s Principal Freight Network. It includes over 30 hectares of Goodman Australia Industrial Fund’s award winning Chifley Business Park.
It was recently announced that approval has been given for Victoria’s next Costco warehouse on a 5.8 hectare parcel in the east precinct. It is expected to open mid-2015 and create an additional 400 jobs in the area. Continued improvements to the estate include an 11,000 sqm extension to an existing Coca-Cola Amatil facility, which is nearing completion, and site infrastructure works, such as stormwater drainage and road extensions, to support the release of additional lots in the east precinct.
In May 2014, the Victorian Government recognised the airport in “Plan Melbourne” as a place of state significance for its transport and employment roles. This designation positions the estate to access the future government rollout of key infrastructure and initiatives in the south east.
Developing innovative, customer focused solutions helps drive the growth of Goodman’s business and these initiatives are just some of the examples of the activities undertaken around the world that are designed to ensure the long-term success of the Group.
The strength and diversity of its global operating platform, prudent capital management strategy and quality of its products and services combined with an innovative and contemporary approach have allowed Goodman to build a solid, world-class business that continues to perform and grow profitably.
The Group has remained focused on a strategy of delivering sustainable growth. The team remains committed to building value for our Security holders, customers and capital partners, and I would like to thank them for their commitment and you for your ongoing support.
Mr Ian Ferrier, AM