Head of Group Corporate Communications
Goodman Group (Goodman or Group) today announced its results for the full year ended 30 June 2021. The Group delivered operating profit1 of $1,219.4 million, up 15.0% on FY20, and operating earnings per security (EPS) of 65.6 cents2, up 14.1% on FY20. Statutory profit was $2,311.9 million.
The Group’s FY22 forecast operating EPS is 72.2 cents per security, up 10% on FY21. Forecast full year distribution for the coming year is 30 cents per security.
Key highlights for the year are:
Group Chief Executive Officer, Greg Goodman said: “Goodman’s adaptable and flexible approach has enabled our people to continue to perform at a high standard and deliver a very strong result in the current environment, with health and well-being remaining a critical priority.
During the year, we have made significant progress on our ESG initiatives including the Group achieving carbon neutrality across our global operations, four years ahead of our target. Our disciplined focus on location, the continued demand in online shopping, and the rise of the digital economy, has seen the Group deliver continued strong performance in FY21. In addition, robust underlying property fundamentals and investor demand has supported significant growth in revaluations of $5.8 billion across the Group and Partnerships, contributing to the 14% growth in Goodman’s net tangible assets driving statutory profit to $2.3 billion.
Long-term structural trends are well established and are resulting in higher utilisation of space and customer demand. This is providing greater visibility around future requirements for space, and accordingly we have increased WIP further to $10.6 billion at June 2021. The development and valuation growth is flowing through to our Partnership platform, where total AUM has increased 12% to $57.9 billion in FY21. With strong income and capital growth, our Partnerships have delivered average returns of 17.7%5.
Goodman remains well-capitalised with available liquidity of $1.9 billion, including $0.9 billion in cash and gearing at 6.8%.
Property investment – focus on infill locations is enhancing sustainability of earnings
Customer demand for space in our locations continues to increase across a range of industry segments. The prolonged impacts of the global pandemic continue to accelerate consumers’ propensity to shift to online shopping. Logistics and warehousing has provided critical infrastructure to enable distribution of essential goods to time-sensitive consumers through this period.
Development – demand and scarcity of space driving activity
Strong demand from our customers and the ongoing transition to infill locations has allowed the Group to increase WIP to $10.6 billion. Metrics across the workbook remain robust as we maintain our focus on infill target markets, resulting in high levels of pre-commitment at 70% with a 14 year WALE. Projects completed in FY21 are 96% leased.
Our projects continue to increase in scale and value with the average development period for projects in WIP now 19 months. The longer development periods are providing greater visibility into
Repositioning and redevelopment of stabilised assets is increasingly contributing to the future activity with 50% of our development sites now brownfields. The Group has progressed sites through planning and undertaken infrastructure work over a number of years to make sites available for expected customer demand. Around the world, the Group continues to undertake long-term value-enhancing opportunities by targeting higher and better use through re-zoning or increased floor space ratios with multi-level warehousing facilities.
Management – development completions and higher valuations driving performance
Strong revaluations of $5.8 billion across the group has supported growth in total AUM to $57.9 billion (up 12%). The development WIP will organically grow AUM which is expected to exceed $65 billion in FY22.
Strong development performance in addition to continued cash flow growth has seen the Partnerships achieve 17.7% average total returns for FY21 whilst maintaining strong credit metrics.
Environmental Social Governance – increasing our commitments
We continue to increase our commitments and accelerate our progress on our 2030 Sustainability Strategy. We’re investing more into renewable energy and carbon neutrality, while also improving the resilience of our workforce, business, properties and communities.
Some of our highlights for the year are:
A more comprehensive review of our progress will be published as part of our ESG Report later in the year.
Outlook – a sustainable business for the long-term
Commenting on the outlook, Greg Goodman said “After a robust year in FY21, we expect the current levels of development activity to be sustained over the coming year. The Group is well positioned to maintain WIP of around $10 billion throughout FY22, with multi-storey developments remaining a meaningful contributor.
Customer demand in our markets is also translating into high occupancy, rental growth and strong investment returns which should see AUM grow to in excess $65 billion and support the performance of our management business.
As a result, the Group expects to deliver FY22 operating EPS of 72.2 cents (up 10% on FY21). Forecast distribution for FY22 will remain at 30.0 cents per security.”
Goodman sets its 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.
1 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. A reconciliation to statutory profit is provided in summary on page 10 of the Results Presentation announced on the ASX and available from the Investor Centre at www.goodman.com.
2 Operating EPS is calculated using operating profit and weighted average diluted securities of 1,859.7 million which includes 15.5 million LTIP securities which have achieved the required performance hurdles and will vest in September 2021 and September 2022.
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 $134.1 million (30 June 2020: $292.5 million). Total interest bearing liabilities are grossed up for the fair values of certain derivative financial instruments included in other financial liabilities of $62.3 million (30 June 2020: $194.0 million).
4 For assets in Partnerships.
5 Weighted average total return on net assets.