GOODMAN GROUP — Annual Report 2005

Aug 17, 2005

ASX Release - Macquarie Goodman Group ("Macquarie Goodman")

Macquarie Goodman Group Results Announcement and Appendix 4E for the year ended 30 June 2005

18 August 2005 Date: Release: Immediate
-----------------------------------------------	--

Macquarie Goodman is pleased to announce its inaugural results for the year ended 30 June 2005. The results are in line with the forecasts provided in the Explanatory Memorandum issued in December 2004.

Macquarie Goodman was created in February this year via the Merger of Macquarie Goodman Management Limited ("MGM") and Macquarie Goodman Industrial Trust ("MGI"). The Merger secured the relationship between MGM and MGI by the successful pairing of MGM's proven management skills and MGI's high quality industrial and business space portfolio to form an integrated property group.

Gregory Goodman, Chief Executive Officer of Macquarie Goodman, said, "Throughout a period of important structural change, we continued to deliver our objective of generating solid returns to Securityholders, providing total returns of 48.5% for MGI Unitholders and 20.3% for MGM Shareholders for the year ended 30 June 2005."

Macquarie Goodman delivered a net operating profit of \$50 million for the year ending 30 June 2005. This result includes a 12 month profit contribution from MGM, a five month profit contribution from MGI and the effect of the Merger and other related transaction costs. Importantly, following the Merger, Macquarie Goodman provided Securityholders with a distribution of 12.95 cents per security ("cps") (equivalent to 25.90 cps on an annualised basis) and normalised earnings of 11.98 cps (equivalent to 23.96 cps on an annualised basis) which was in line with the forecasts contained within the Explanatory Memorandum for the Merger.

On a stand alone basis, both MGM and MGI outperformed the forecasts outlined in the Explanatory Memorandum. Contract

Additional key highlights for the period include:

• capital transactions and acquisitions totalling \$973 million; $\rightarrow$
• → \$1.2 billion growth in external funds under management to \$2.3 billion;
• an increase in market capitalisation to \$5.7 billion; →
• $\rightarrow$ gearing level of 36%, within the target range of 35% to 40%;
• $\rightarrow$ establishing a Hong Kong operation and the acquisition of \$400 million in assets;
• → leasing 311,000 sqm of existing space providing \$35.0 million in net annual rental income:

$\sim 10^{-1}$

• → completing 240,000 sqm of new development projects valued at \$290 million; and
• $\rightarrow$ securing 316,000 sqm of new development space with an estimated completion value of \$532 million.

asx release

Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69 000 123 071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

As at 30 June 2005, Macquarie Goodman had a core portfolio of 125 properties in Australia, New Zealand and Hong Kong, with a direct portfolio investment of \$4.7 billion. In addition, management capabilities are provided throughout Australia, New Zealand, Singapore and Hong Kong with assets under management now totalling \$7.0 billion.

"The strong operational performance of our core portfolio highlights its high quality nature. This performance is further improved by the dedication of our property management team," Mr Goodman said.

"Our Customer Service Model continues to be fundamental to our success in assisting to enhance property partnerships with both existing and new customers," he said.

The attached Appendix 4E contains financial information which has been audited by KPMG. We also attach Macquarie Goodman's "Results for announcement to the market" for the year ended 30 June 2005 (also refer to Annexure 1 for Results at a Glance).

Property Investment

David van Aanholt. Chief Operating Officer of Macquarie Goodman, said. "Intensive management of the portfolio throughout the year has assisted in maintaining an occupancy rate of 98%, a weighted average lease term of 5.1 years and customer retention rate of 81%."

The portfolio has had an extremely active year with capital transactions totalling \$973 million. Major acquisitions for the year are detailed in Annexure 2.

Key achievements during the year included:

• → \$497 million in Australian acquisitions;
• → \$248 million in Hong Kong acquisitions (\$400 million post balance date);
• → \$391 million in divestments (including \$289 million in New Zealand assets); and
• -> \$64.3 million in property revaluations.

In addition, the investment portfolio benefited from the completion of \$290 million of new development product providing an average return on cost of 8.6%.

Mr van Aanholt said, "Valuable property partnerships with existing and new customers helped us secure pre-commitments for 88% of the development projects we commenced this year. This provides security of income for the portfolio and importantly we continue to achieve the quality of the portfolio through the roll out of the development pipeline."

Macquarie Goodman also holds strategic cornerstone investments in our third party managed listed property trusts, Macquarie Goodman Property Trust ("MGP") and Ascendas Real Estate Investment Trust ("A-REIT") with interests of 30% and 7% respectively.

Macquarie Goodman Management Limited ABN 69 000 123 071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Telephone (02) 9230 7400 Facsimile (02) 9230 7444 info@macquarlegoodman.com.au www.macquariegoodman.com.au

Funds Management*

We continued to successfully develop our funds management business during the year, recording a \$1.2 billion increase in funds under management.

In Singapore, A-REIT doubled its total assets to A\$1.6 billion with the acquisition of 20 properties for A\$0.8 billion. It consistently outperformed market expectations to deliver strong distribution and capital growth for Unitholders, A-REIT's total net investment income available for distribution reached A\$65 million, equating to a 17% increase in distributions to A7.39 cents per unit. Total returns to Unitholders reached 56% with the unit price increasing 48% to A\$1.45.

The New Zealand listed, MGP also enjoyed strong growth during the year with an increase in total assets from A\$206 million to A\$495 million, growth in net profit after tax of 118.5% to A\$15.6 million and entry into the New Zealand Stock Exchange's top 50 entity index, the NZSX50.

MGP Unitholders were rewarded with a total return of 27% for the year resulting from a 19% increase in gross distributions and a 10% increase in unit price to A\$1.01. It finished the year with a market capitalisation of A\$346 million at 31 March 2005.

During the year, we continued our expansion into Asia, facilitated by the signing of a Joint Venture Agreement ("JV Agreement") with Macquarie Bank. Under the JV Agreement, Macquarie Goodman established an office in Hong Kong, headed by Stephen Hawkins. Our Hong Kong office now has a staff of 15 who are concentrating on the growth of the business.

Macquarie Goodman has to date secured \$400 million worth of high quality property in Hong Kong which is in line with our strategy to seed a REIT in Hong Kong during the first half of 2006.

(*Reflects all 2005 financial year results for the respective vehicles).
Property Development

The development division performed strongly throughout the year with over 242,000 sqm of $\mathbb{R}^{1\times 1}$ completed space and 316,000 sqm of new development space commenced.

"The combination of our proven development management expertise and extensive development pipeline allows us to accommodate the future space requirements of our existing and prospective customers in key growth markets whilst also adding new investment grade property to the portfolio," Mr van Aanholt said.

Key development highlights for the year included the:

• -> securing the right to develop a major distribution facility for Coles in Adelaide with the subsequent appointment in July 2005 to develop a national distribution facility in Sydney:
• → planning approval for the Brickworks/M7 Business Hub site; and
• → successful acquisition of the Highbrook Development site in New Zealand.

Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69 000 123 071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Telephone (02) 9230 7400 Facsimile (02) 9230 7444 info@macquarlegoodman.com.au www.macquariegoodman.com.au

$\frac{1}{2}$ is the space of $\frac{1}{2}$

In August 2005, Macquarie Goodman partnered with Toll Holdings Limited ("Toll") to acquire, develop and jointly manage in excess of \$120 million of Toll's properties. This strategic partnership provides Macquarie Goodman with a secure, stable income stream over the long term.

The developments completed and commenced during the year and the development pipeline are detailed in Annexure 3.

Property Services

We manage 150 properties throughout Australia, New Zealand and Hong Kong. The experience and skills of our property services team and the structure of our operating platform has allowed us to replicate our proven Customer Service Model to our third party listed property trust, MGP.

In 2005, the property services team secured more than 377,000 sqm in new leasing transactions, with intensive asset management delivering strong underlying property performance to both the Macquarie Goodman and MGP portfolios.

Both portfolios enjoyed solid customer retention, higher occupancy rates and strong lease expiry profiles.

The major leases secured during the year are detailed in Annexure 4.

Capital Management

To manage Macquarie Goodman's capital requirements we raised \$565.1 million in equity during the period bringing our market capitalisation to \$5.7 billion as at 30 June 2005.

Equity was raised via a one for 10 non-renounceable Priority Entitlement Offer and Public Offer. The Offer was strongly supported by institutions and retail Securityholders, raising \$458.4 million at an issue price of \$3.64 per security.

In July 2005, we established a \$1.4 billion Syndicated Multi-Currency Facility (the "Facility") which will be used to re-finance the existing MGI \$1.1 billion Multi-Option Facility, MGM Westpac Bank Facility and for ongoing general purposes of Macquarie Goodman.

The Facility, which was originally launched at \$1.2 billion, received overwhelming support from banks resulting in significant oversubscription and upscaling. The Facility diversifies Macquarie Goodman's funding to include highly rated local and international banks to complement the domestic business and expansion into Asia.

Anthony Rozic, Chief Financial Officer of Macquarie Goodman said, "We constantly focused on capital management throughout the year. With total borrowing of \$1.87 billion and gearing at the lower end of our stated target range at 36%, we are well positioned to continue to fund the development pipeline and property acquisitions."

asx release

Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69 000 123 071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Telephone (02) 9230 7400 Facsimile (02) 9230 7444 info@macquarlegoodman.com.au www.macquariegoodman.com.au

As at 30 June 2005, 74% of Macquarie Goodman's borrowings were hedged against movements in interest rates at an average cost of 6.0%. Testament to our active capital management, we have continued to maintain our current and forecast gearing and hedging profiles at targeted levels.

Outlook for 2006

"Looking forward, we will continue to strengthen our presence in Australia, New Zealand and Asia. We will maintain our pursuit of expansion opportunities with well located industrial and business properties which provide stability through the diversification of our customer base." Mr Goodman said.

Our team will continue to apply the fundamentals of our Customer Service Model. The Model underpins our long-term commitment to our customers. It utilises the talents of over 230 Macquarie Goodman team members to deliver our objective to be the leading industrial and business space provider in Australia, New Zealand and Asia.

"In 2006 we intend to focus on a number of initiatives including organically growing our Australian investment portfolio, capitalising on our growing position in the Asian market by launching a Hong Kong REIT in the first half of 2006, and growing our third party funds management business in both Australia and abroad," said Mr Goodman.

"We will continue to nurture our development pipeline with a total of 2.96 million sqm of vacant land available for development in Australia and New Zealand," he said.

Macquarie Goodman re-affirms its forecast distribution of 27.5 cents per security for the year ending 30 June 2006, representing an increase of 6% over the annualised distribution of 25.9 cents paid this year.

Mr Goodman concluded, "By focusing on our core portfolio of industrial and business space and maintaining strong customer relationships we are well positioned to deliver positive results to Securityholders in 2006."

For further information, please contact Macquarie Goodman:

Mr Gregory Goodman Chief Executive Officer Tel: (61 2) 9230 7400

Mr David van Aanholt Chief Operating Officer Tel: (61 2) 9230 7400

Anthony Rozic Chief Financial Officer Tel: (61 2) 9230 7400.

Macquarie Goodman Group Macquarie Goodman Management Limited ABN 69 000 123 071 Macquarie Goodman Funds Management Limited ABN 48 067 796 641

Level 10, 60 Castlereagh Street Sydney NSW 2000 GPO Box 4703 Sydney NSW 2001

Telephone (02) 9230 7400 Facsimile (02) 9230 7444 info@macquarlegoodman.com.au www.macquariegoodman.com.au

Results at a Glance

	yang mga mga Anggota E KAMANGA K germang	E SAN TELEBROOM ti Tillaangananan teenanga ETA EL EL EL EL EL EL ETA
Normalised full year distribution per security	25.90	25.90
Normalised full year earnings per security	23.96	23.65
MGQ net profit attributable to Securityholders	50.0	14.2
Total assets	5.171	4.213
Net tangible assets per security (\$)	2.15	1.97
Gearing (%)	36	38
Security price (\$)	4.08	3.60
Market capitalisation (\$m)	5,732	4.511

Major Acquisitions

, ,	E SAMARA ANANGAN SA LESSA 83.
Remaining 25% interest in former Colonial First State Industrial Property Trust	130.3
Upper Global Gateway, Hong Kong	125.7
Lower Global Gateway, Hong Kong	$122.0*$
IBC Business Park, Homebush NSW	88.0
St Leonards Corporate Centre, St Leonards, NSW	77.0
Highbrook Business Park, East Tamaki, Auckland	59.6
Eden Commercial Corporate Centre, Auckland	$57.4*$
Millenium Centre, Stage 2, Auckland, New Zealand	51.5
Air New Zealand House, Auckland, New Zealand	49.0
Regal Business Park, Rowville, VIC	35.3

* Exchanged but not settled as at 30 June 2005

Completed Developments

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Sydney West	36,155	8.1	77.9	27	7.0
Sydney Outer West	88,250	8.5	103.7	36	7.0
Victoria	51,300	9.1	36.4	13	5.8
Queensland	48,040	8.3	46.9	16	12.6
Auckland	16,290	10.1	25.0	8	11.1
Total	240,035	8.6	289.9	100	8.1

Commenced Developments

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Sydney West	19,230	8.0	27.7	5	4.0
Sydney Outer West	69,423	8.4	92.4	17	15.0
Sydney North	17,250	8.0	71.8	14	5.1
Victoria	36,134	8.4	28.5	5	12.8
Queensland	19,050	8.4	30.5	6	10.7
South Australia	76,525	7.6	138.6	26	18.9
Auckland	78,277	9.0	142.1	27	7.2
Total	315,889	8.3	531.6	100	11.5

Annexure 3 cont...

Development Pipeline

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Sydney South	115,278	49,500	43%	65,778	2%
Sydney West	280.906	103.300	37%	177.606	6%
Sydney Outer West	1,818,818	1,096,198	60%	722,620	24%
Sydney North	69,965	45,790	65%	24,175	1%
Victoria	897,621	583.621	65%	314,000	11%
Queensland	308,055	204,219	66%	103,836	4%
South Australia	321,550	308,300	96%	13,250	1%
Auckland	1,728,134	191,559	11%	1,536,575	51%
Total	5,540,327	2,582,487	47%	2,957,840	100%

Major Lease Transactions

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Campus Business Park	Samsung	12,127	1.4	5
Tranzport Distribution Centre	Air International	11,820	1.3	10
Macquarie Corporate Park	CCH	5,308	1.2 1	6
Federation Distribution Centre	Fastline International	15,342	0.9	6
Slough Business Park	Summit Technologies	7,693	0.9	5
Campus Business Park	Exel	6,898	0.8	з
Ferntree Industrial Estate	Onga Pty Ltd	11,171	0.7	3
Ferntree Business Park	CSC Australia	4,286	0.6	10
Forestridge Business Park	Pearsons	2,478	0.5	10

APPENDIX 4E MACQUARIE GOODMAN MANAGEMENT LIMITED RESULTS FOR ANNOUNCEMENT TO THE MARKET

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The Appendix 4E contains financial information which has been audited by KPMG.

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Highlights of results
	30 June 05	30 June 04	Change %
Revenue from ordinary activities (\$M)	494.5	78.8	527.5
Net profit attributable to Securityholders/Shareholders (\$M)	50.0	37.0	35.1
Basic earnings per security/share (cents)	7.4	13.9	(46.8)
Diluted earnings per security/share (cents)	7.2	13.1	(45.0)
Adjusted basic earnings per security/share (cents)	22.0	13.9	58.3
Dividends paid or proposed per share (cents)	4.5	7.0	(35.7)
Distributions paid or proposed per security (cents)	12.95
Franked amount per security/share (cents)	1.4	5.0	(72.0)
Record date for determining entitlements to the distributions/dividends	30 Jun 05	10 Sep 04
Date distribution/dividend is payable	19 Aug 05	22 Sep 04
Total assets (\$M)
Total liabilities (\$M)	5,171.1	241.9	2,037.7
Net assets (\$M)	2,078.0 3,093.1	107.8 134.1	1,827.6
Net tangible assets per security/share (cents)	214.8		2,206.6
Total borrowings to equity ratio (%)	60.2	12,8	1,578.1
Contributed equity (\$M)	2,978.0	59.0 126.6	2.0
			2,252.3
Security/share price (\$)	4.08	3.59	13.6
Number of securities/shares on issue (M)	1,405.0	273.2	414.3
Market capitalisation (\$M)	5,732.4	980.8	484.5
Number of Securityholders/Shareholders	23,417	2,884	712.0

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MACQUARIE GOODMAN MANAGEMENT LIMITED AND ITS CONTROLLED ENTITIES ABN 69 000 123 071 FINANCIAL REPORT 30 JUNE 2005

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CONTENTS

Directors' Report

Lead Auditor's Independence Declaration

L.

Statements of Financial Performance

Statements of Financial Position

Statements of Cash Flows

Notes to the Financial Statements

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Directors' Declaration

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Independent Audit Report

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The Directors of Macquarie Goodman Management Limited ("the Company" or "Parent Entity") present their Directors' Report on the Consolidated Entity consisting of the Company and the entities it controlled ("Macquarie Goodman") at the end of, or during, the year ended 30 June 2005 ("year") and the audit report thereon.

Directors

The Directors of the Company at any time during or since the end of the year are:

Mr David Clarke, AO (Chairman)	Appointed 26 October 2000
Dr David Teplitzky (Independent Deputy Chairman)	Appointed 21 November 1990
Mr Gregory Goodman (Chief Executive Officer)	Appointed 7 August 1998
Mr Patrick Allaway (Non-Executive Director)	Appointed 23 February 2005
Mr Ian Ferrier, AO (Independent Director)	Appointed 1 September 2003
Mr Patrick Goodman (Non-Executive Director)	Appointed 14 April 1998
Mr John Harkness (Independent Director)	Appointed 23 February 2005
Mr James Hodgkinson (Non-Executive Director)	Appointed 21 February 2003 (1)
Ms Anne Keating (Independent Director)	Appointed 23 February 2005
Ms Lynn Wood (Independent Director)	Appointed 23 February 2005
Mr Stephen Girdis (Alternate for David Clarke and James Hodgkinson)	Appointed 21 February 2003
Mr William Moss (Non-Executive Director)	Appointed 26 October 2000, Resigned 13 June 2005

⁽¹⁾ Mr James Hodgkinson was appointed as an alternate director to Mr David Clarke on 21 February 2003. He was appointed a director on 14 June 2005.

Details of the Directors' qualifications and independence status are set out in the Directors and Company Secretaries Profile Report set out on pages 15 to 17 of the Directors' Report.

Company Secretary

The Company Secretaries at any time during or since the end of the year are:

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Ms Carolyn Scobie

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Mr Mark Alley

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Details of the Company Secretaries' qualifications and experience are set out in the attached Directors and Company Secretaries Profile Report set out on pages 15 t o 17 of the Directors' Report.

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Directors' Meetings

The number of Directors' meetings (including meetings of committees of Directors) and the number of meetings attended by each of the Directors of Macquarie Goodman during the year are:

	Board Meetings		Audit Committee Meetings		Remuneration and Nomination Committee Meetings
Director	Held $(1)$	Attended	- 11 Held	Attended	Held $(1)$	Attended
Mr David Clarke
	17	17			3	3
Dr David Teplitzky	17	17	4	4	3	3
Mr Gregory Goodman	17	17			3	3
Mr Patrick Allaway	8	7
Mr Ian Ferrier	17	16	4	4
Mr Patrick Goodman	17	16	3	3
Mr John Harkness	8	8
Mr James Hodgkinson	1	1	1
Ms Anne Keating	8	7				1
Ms Lynn Wood	8	7
Mr Stephen Girdis (Alternate)	5	5
Mr William Moss	17	12

(1) Reflects the number of meetings individuals were entitled to attend.

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Directors absented themselves from meetings where they had a personal interest in matters being discussed.

The Nomination Committee and Remuneration Committee were combined during the year.

Principal Activities

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The principal activities of the Consolidated Entity during the course of the year were funds management, property services, development management and investment.

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As a consequence of the successful merger with Macquarie Goodman Industrial Trust ("MGI") effective 1 February 2005, the Consolidated Entity's principal activities now include property investment.

Review and Results of Operations

Effective 1 February 2005, the Macquarie Goodman Group was formed following the merger of Macquarie Goodman Management Limited and Macquarie Goodman Industrial Trust.

The performance of the Consolidated Entity, as represented by the results of its operations for the year, was as follows:

	Consolidated
	2005	2004
Total net assets (\$M)	3.093.1	134.1
Revenue from ordinary activities (\$M)	494.5	78.8
Net profit attributable to Securityholders of Macquarie Goodman (\$M)	50.0	37.0
Basic earnings per security (cents)	7.4	13.9
Adjusted basic earnings per security (cents) (refer Note 7 to the financial
statements)	22.0	13.9
Dividends and distributions paid by Macquarie Goodman (\$M)	194.6	17.1
Number of securities on issue (M)	1.405.0	273.2
Net tangible assets per security (\$)	2.15	0.13

Dividends and Distributions

Dividends and distributions declared by Macquarie Goodman since the end of the previous year are as follows:

	SM
- Dividends from Macquarie Goodman Management Limited	-22.1
- Distributions from Macquarie Goodman Industrial Trust
since 1 February 2005	172.5
	194.6

Dividends from Macquarie Goodman Management Limited	Dividend CDS	Total amount SM	Franked/ unfranked	Franked %	Date of payment
Final 2004 dividend	3.5	9.6	Partiv franked	57	22 Sep 04
Interim 2005 dividend	4.5	12.5 22.1	Partiv franked	30	2 Feb 05

Distributions from Macquarie Goodman	Distribution	Total	Date of
Industrial Trust	cpu	amount	payment
		SM
March 2005 quarter distribution from the Trust	6.475	81.5	3 May 05
Final 2005 distribution from the Trust	6.475	91.0	19 Aug 05

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State of Affairs

Key changes in Macquarie Goodman Group's state of affairs during the year were as follows:

(a) Merger with Macquarie Goodman Industrial Trust

Effective 1 February 2005, the Company merged with Macquarie Goodman Industrial Trust. This is reflected in the financial statements as an acquisition of Macquarie Goodman Industrial Trust by Macquarie Goodman.

(b) Restructuring of interests in New Zealand

On 29 March 2005, Macquarie Goodman sold its interest in certain New Zealand properties to Macquarie Goodman Property Trust in return for cash and equity in Macquarie Goodman Property Trust.

(c) Interest in Hong Kong

As at 30 June 2005, Macquarie Goodman has acquired a property in Hong Kong and is committed to the purchase of additional properties. Subsequent to 30 June 2005, Macquarie Goodman has entered into further commitments for the purchase of investment properties in Asia. These transactions have been undertaken pursuant to the Group's strategy for further expansion in Asia. Hong Kong acquisitions have been fully debt funded using Hong Kong dollars.

(d) Entitlement Offer

On 24 May 2005, Macquarie Goodman successfully completed an Entitlement Offer which allowed all Securityholders to acquire one new security for every ten securities held, at the price of \$3.64 per security. This Offer raised \$458 million with the issue of 126 million securities.

In the opinion of the Directors, there were no other significant changes in the state of affairs of Macquarie Goodman that occurred during the year.

Strategy and Outlook

Looking forward we will continue to strengthen our presence in Australia, New Zealand and Asia with a focus on pursuing expansion opportunities and yield-accretive properties that are well located and provide stability through the diversification of our customer base, asset and geographic mix.

Likely developments in the near future include seeding a property fund in Hong Kong in the first half of 2006 with a view to expanding Macquarie Goodman's third party funds management operations. Expansion of the third party funds management opportunities will be actively pursued in Australia.

Further information as to other likely developments in the operations of the Consolidated Entity and the expected results of those operations in future years has not been included in the Financial Report because disclosure of the information would be likely to result in unreasonable prejudice to the Consolidated Entity.

Environmental Regulations

The Consolidated Entity's operations are not subject to any significant environmental regulations under either Commonwealth or State legislation in relation to its property activities. An Environmental Committee monitors compliance with environmental regulations prior to the acquisition of properties and during the development or redevelopment of the properties. The Directors are not aware of any breaches during the period covered by the Directors' Report.

Where necessary, an independent expert's advice is sought to review environmental issues affecting Macquarie Goodman. The Directors believe that Macquarie Goodman has adequate systems in place for the management of its environmental requirements under the various Acts and guidelines currently in place, as they relate to industrial and commercial property.

Events Subsequent to Reporting Date

Other than the matters discussed below, there has not arisen in the interval between the end of the financial vear and the date of the Directors' 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.

(a) Refinancing of loan facilities

Subsequent to year end, Macquarie Goodman agreed terms with its bankers for the refinancing of certain of its bank debts. Existing facilities totalling \$1.1 billion were replaced with new facilities totalling \$1.4 billion.

(b) Introduction of Australian equivalents to International Financial Reporting Standards ("AlFRS")

For reporting periods beginning on or affer 1 July 2005, the Consolidated Entity must comply with AIFRS as issued by the Australian Accounting Standards Board. The implementation plan and potential impact of adopting AIFRS are detailed in Note 36 to the financial statements.

(c) Acquisition and sale of properties

Macquarie Goodman has exchanged and/or settled contracts for the purchase of properties in Australia, New Zealand, Singapore and Hong Kong for \$380.4 million. Subsequent to 30 June 2005, Macquarie Goodman has exchanged and settled contracts for the sale of properties in Australia for \$32.9 million.

Options Granted During the Year

During or since the end of the year, Macquarie Goodman has not issued any options over unissued securities of Macquarie Goodman to its Directors or Executive Officers. The following options over unissued securities were issued by the Company under the Executive Option Scheme to other employees during the year.

Date granted	Expiry date	Exercise price	Options
		.	issued
23 Jul 04	23 Jul 09	3.1859	300,000
23 Jul 04	23 Jul 09	3.4448	100,000
--------------------------------------			400.000

Unissued Stapled Securities under Option

At the date of the Financial Report, unissued stapled securities of Macquarie Goodman under option are:

Date granted	Expiry date	Exercise price	Number of
			securities
10 Oct 01	10 Oct 06	0.7810	133,334
13 Dec 01	13 Dec 06	1.1423	500,000
28 Oct 03	28 Oct 08	2.5761	700.000
23 Jan 04	$23$ Jan $09$	2.8255	500.000
23 Jul 04	23 Jul 09	3.1714	300.000
			33.334

All options expire on the earlier of their expiry date or termination of the employee's employment. In addition, the ability to exercise the options is conditional on the Consolidated Entity achieving certain performance hurdles. The performance hurdle applicable to the above options issued under the Executive Option Scheme requires compound annual growth in earnings per security for Macquarie Goodman of 10% or more since the end of the previously reported twelve month period immediately preceding the date of grant (as reported in the Annual Report or Half Yearly Report of the Consolidated Entity).

Securities Issued on Exercise of Options

During or since the end of the year, Macquarie Goodman issued securities as a result of the exercise of options as follows:

Number of securities	Amount paid per
issued	security
	S.
750,000	0.2291
100.000	0.5033
4,599,999	0.5178
66,667	0.7810
1.833.335	0.7955
500,000	1.1568
1.250.000	1.2778
166.667	1.3478
7,550,000	2.5906
100,000	3.4448
1.000.000	3.7564

Directors' Interests

The relevant interest of each Director in the contributed equity of Macquarie Goodman as notified by the Directors to the Australian Stock Exchange Limited ("ASX") in accordance with section 205G(1) of the Corporations Act 2001, at the date of the Financial Report is as follows:

	Totai Securities	Securities held through
Directors	Held	associated interests
Non-Executive
Mr David Clarke	206.901	89.044
Dr David Teplitzky
Mr Patrick Allaway	65,400	65,400
Mr Ian Ferrier
Mr Patrick Goodman	100.500.347	100,500,347
Mr John Harkness
Mr James Hodgkinson	158,817	48,106
Ms Anne Keating	15,675	15,675
Ms Lynn Wood	18.984	18.984
Mr Stephen Girdis	1,105	1.105
Mr William Moss	97,997	97,997
Executive
Mr Gregory Goodman	108.381.164	100.500.347

None of the Directors held any options over unissued securities at 30 June 2005.

l,

$\mathcal{P}_{\rm{max}} \sim \mathcal{P}$

$\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$

Remuneration Report

The Board, based on advice from the Remuneration Committee, has developed policies dealing with the short, medium and long term remuneration of Macquarie Goodman's staff. The role of the Remuneration Committee and these policies are set out below.

Remuneration Committee

The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the Chief Executive Officer, senior executives and Directors themselves. It is also responsible for various incentive performance packages, including the bonus policy, Executive Option Plan, Employee Security Acquisition Plan ("ESAP"), superannuation entitlements, termination entitlements, gifts and the fringe benefits policy.

The members of the Remuneration Committee during the year were:

• (a) Mr David Clarke (Non-Executive Chairman);
• (b) Dr David Teplitzky (independent Member);
• (c) Mr Gregory Goodman (Executive Member);
• (d) Mr Ian Ferrier (Independent Member, appointed 14 June 2005); and
• (e) Ms Anne Keating (Independent Member, appointed 14 June 2005).

The Remuneration Committee meets as required to review and recommend to the Board annual bonuses and salary reviews. Decisions are made by the Committee during the year either in meeting or via circular resolutions in relation to new appointments and promotions. The Committee has the resources and authority appropriate to discharge its duties and responsibilities. It is able to engage external professionals to advise on any relevant matters. The Committee engaged external consultants during the year in order to benchmark the appropriate fees for the new board of Macquarie Goodman as a stapled entity. The Committee members' attendance record is disclosed in the table of Directors' meetings on page 3 of the Director's Report.

On 14 June 2005, the Committee was combined with the Nomination Committee and expanded its functions to include those previously performed by the Nomination Committee.

Further information relating to the activities of the Committee is available on the Company's website.

Remuneration Policies

Overview of Remuneration Policies

The board recognises that Macquarie Goodman's performance is dependent on the quality of its people.

Remuneration levels are competitively set to attract and retain appropriately qualified and experienced Directors and senior executives. The Remuneration Committee obtains independent advice on the appropriateness of remuneration packages, given trends in comparative companies. Remuneration packages include a mix of fixed remuneration, short term performance-based remuneration, and equity-based remuneration. The remuneration structures explained below are designed to attract suitably qualified candidates, and are aligned to effect the broader outcome of increasing Macquarie Goodman's return on equity.

Fixed Remuneration

Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any Fringe Benefits Tax charges related to employee benefits including motor vehicles), as well as employer contributions to superannuation funds.

Remuneration levels are reviewed annually by the Remuneration Committee through a process that considers individual, segment and overall performance of the Consolidated Entity. In addition, external consultants provide analysis and advice to ensure the Directors' and senior executives' remuneration is competitive in the market place. A senior executive's remuneration may also be reviewed on promotion.

Performance-Linked Remuneration

Performance linked remuneration is reviewed on an annual basis and includes both short-term and long-term incentives and is designed to reward executive directors and senior executives for meeting or exceeding their financial and personal objectives.

(a) Short-Term Incentives ("STI")

The STI provides cash bonuses for individual performance against peers and objectives set for the year, Total STI's are calculated in accordance with a Bonus Policy approved by the Remuneration Committee and the Board. The Bonus Policy determines a bonus pool which is allocated across all staff with the Chief Executive Officer entitled to between 15% and 20% of the total bonus pool. Individual allocations are made based on a assessment by senior managers and the Chief Executive Officer of each individual's performance. The Bonus Pool is calculated based on the Consolidated Entity achieving return on equity targets on average greater than 11% for that year.

The Bonus Policy provides that the first \$50,000 of any bonus granted is paid in cash in August of the year following the year in which the bonus was earned. The remainder is paid fortnightly over three years subject to the conditions attaching to Senior Executives' service agreements described later in this report. Executives will only receive unpaid bonuses if they remain as employees of the Consolidated Entity.

(b) Long-Term Incentives ("LTI")

The LTI provides equity-based remuneration through the issue of options or participation in the Employee Security Acquisition Plan ("ESAP"). The purpose of these plans is to provide alignment of the interests of employees and securityholders by matching rewards under the LTI with the long term growth and prosperity of Macquarie Goodman. Details of equity based remuneration are as follows:

(i) Options

Macquarie Goodman has an Executive Option Plan which was approved at the Annual General Meeting on 14 September 1999. Due to anomalies in the Australian tax rules that apply to options over stapled securities, the future issue of options will be limited to non-resident employees. During or since the end of the financial year, no options over unissued securities were granted to Directors or to Executive Officers. Future issues of options will be subject to the following broad terms:

• options will expire on the earlier of five years or termination of the employee's employment:
• the ability to exercise options will be conditional on the Consolidated Entity achieving return on equity $\overline{a}$ hurdles on average greater than 11% over the period of the option;
• options will vest equally over the end of years three, four and five;
• exercise price of options will be based on the weighted average market price of securities traded on ASX during five trading days immediately prior to the date options are offered to the employee.

(ii) Employee Security Acquisition Plan

Macquarie Goodman's ESAP was approved at the shareholders meeting on the 23 January 2005. Initially participants of the ESAP were Australian option holders who rolled-over into the ESAP. Generally option holders who rolled into ESAP had similar restrictions and benefits applying to their securities as would have applied if they continued to hold their options.

$\mathcal{A}_{\mathcal{A}}$

The broad terms of future grants under ESAP are as follows:

• subject to offers made from time to time by the Company eligible employees will be able to acquire securities at the market price prevailing at the time of issue using funds borrowed from Macquarie Goodman. Securities may only be acquired during the periods permitted under the Company's policies for employees dealing in the Company's securities;
• the market price will be the five day volume weighted average price at which securities are traded on the ASX;
• securities will be restricted for three years with one third of the securities becoming unrestricted each year at the end of years three, four and five, subject to return on equity hurdles;
• restrictions will be based on the participant remaining an employee and the Consolidated Entity achieving return on equity targets on average greater than 11% over the period of the offer:
• loans to purchase securities will be non-recourse and interest bearing at Macquarie Goodman's weighted average cost of debt; and
• the after tax amount of any dividends or distributions paid on restricted securities acquired with the loan must be applied towards payment of interest and the principal of the loan. Tax is deducted at the highest marginal rate for individuals.

Service Agreements

Senior Executives

The service agreements for nominated senior executives including Mr G Goodman, Mr D van Aanholt, Mr M O'Sullivan, Mr N Kurtis and Ms C Scobie were amended in January 2005 to provide that:

• Each Executive agreed not to resign from Macquarie Goodman for a period of at least two years from January 2005:
• The Company agreed that in the event that Macquarie Goodman terminated the Executive's employment during the two year term to December 2006 (for reasons other than serious or willful misconduct) that it would pay an amount equivalent to one year of remuneration plus any unpaid amounts of short term incentive pay that had been awarded but not yet received by the Executive. This provision was inclusive of any notice periods in existing employment contracts;
• Each Executive has agreed to "non compete" and "non-poach" conditions that will apply for a period of twelve months following termination of employment;
• Each Executive agreed to the effective conversion of outstanding executive options to restricted securities in Macquarie Goodman under the ESAP with restrictions lapsing on the same timetable that operated under the Executive Option Plan applying to the Executive.

Other aspects of executive service agreements including compliance with the Company's Code of Conduct and Human Resource Policies remain unaltered.

Other Employees

All employees are engaged under written employment agreements that provide for usual conditions of employment applying in the industry including the need for compliance with specific policies of the Company in relation to its Code of Conduct and Human Resource Policies. Notice provisions vary from periods of one month to six months depending upon the role of the employee.

Non-Executive Directors

Total remuneration payable by the Company for all Non-Executive Directors, last voted upon by shareholders at its meeting on 23 January 2005, is not to exceed \$950,000 per annum. Remuneration is set based on advice from external advisors with reference to fees paid to other non-executive directors of comparable companies. Directors' base fees are presently up to \$75,000 per annum with additional amounts paid for committee membership, chairing of committees and the Board along with per diem allowances for due diligence or special projects.

The following also applies to Non-Executives Directors' remuneration:

• Non-Executive Directors do not receive any long-term or short-term incentives;
• Macquarie Goodman does not operate an incentive or retirement scheme for Non-Executive Directors;
• 25% of the after tax remuneration must be applied to the on-market purchase of securities until the value of securities held by the Director equals two years of fees for that Director. Securities may only be acquired during the periods permitted for purchases of Macquarie Goodman securities. These securities will be held in escrow until the Director's retirement; and
• all Non-Executive Directors must act as a member of at least one Board Committee.

$\ddot{\phantom{a}}$

$\frac{1}{2} \frac{d}{dt} \mathcal{E}^{(1)}$

$\mathcal{L}^{\mathcal{L}}$

Directors' Remuneration

Details of the nature and amount of each major element of the remuneration of each Director of Macquarie Goodman in relation to the management of Macquarie Goodman's affairs are set out below. This excludes amounts paid prior to the merger to individuals who were directors of the Responsible Entity of Macquarie Goodman Industrial Trust and its subsidiary trusts in relation to the management of the affairs of those trusts. All information provided within this Remuneration Report has been subject to audit except where otherwise indicated.

For the year ended 30 June 2005

	Salary
	including
	superannuation	Other (3)	Bonus {4}	Options	Total	Paid by
	Ŝ	\$	Ś	\$	s
Directors
Non-Executive
Mr David Clarke (1)	75,660				75,660	Consolidated Entity/MBL
Dr David Teplitzky	$83.418 -$	11,000		٠	94,418	Consolidated Entity
Mr Patrick Allaway	34,063	÷			34,063	Consolidated Entity
Mr Ian Ferrier	67,303	6,000			73,303	Consolidated Entity
Mr Patrick Goodman	68,761				68,761	Consolidated Entity
Mr John Harkness	40.875	$\blacksquare$		÷	40.875	Consolidated Entity
Mr James Hodgkinson 12)	42.500	270,792		12,360	325,652	MBL
Ms Anne Keating	36,333				36,333	Consolidated Entity
Ms Lynn Wood	36,333		$\blacksquare$	٠	36,333	Consolidated Entity
Mr Stephen Girdis 12)	12.320	98.634		5,316	116,270	MBL
Mr William Moss (1)						MBL
Executive
Mr Gregory Goodman	484,615	9,916	450,000	460,000	1,404,531	Consolidated Entity
For the year ended 30 June 2004
Directors
Non-Executive
Mr David Clarke (1)	٠					MBL
Dr David Teplitzky	68.003	6.120			74.123	Consolidated Entity
Mr Ian Ferrier	46.326				46,326	Consolidated Entity
Mr Patrick Goodman	55,591			$\mathbf{v}$	55,591	Consolidated Entity
Mr William Moss (1)						MBL
Executive
Mr Gregory Goodman	399,998	10,864	400,000	542,917	1,353,779	Consolidated Entity

⁽¹⁾ There is no meaningful basis on which to allocate the remuneration of Mr David Clarke and Mr William Moss to the entities of which they are Directors. Mr David Clarke is Executive Chairman and Mr William Moss is a Director of Macquarie Bank Limited ("MBL") and their total remuneration is disclosed below. The basis for calculating the MBL profit share and option amounts are disclosed in MBL's Annual Report for the years ended 31 March 2005 and 31 March 2004. In addition, Mr Clarke received remuneration from Macquarie Goodman commencing 1 February 2005.

		Salary including superannuation (primary)	MBL. profit share (primary)	MBL options (equity)	11 M Total
Mr David Clarke	2005	329,662	8,727,805	237.778	9,295,245
	2004	329,666	5,741,523	168.726	6,239,915
Mr William Moss	2005	470.945	14,205,956	467,357	15,144,258
	2004	470,952	4,217,339	322,151	5,010,442	37 cm

⁽²⁾ Mr Stephen Girdis and Mr James Hodgkinson are employed by MBL. The remuneration shown above is an apportionment of their total remuneration paid by MBL. The basis for calculating the MBL profit share and option amounts are disclosed in the MBL Annual Report for the year ended 31 March 2005. Messrs Girdis and Hodgkinson did not receive any remuneration from Macquarie Goodman in their capacity as Directors or Alternate Directors.

(3) For all the Directors except James Hodgkinson and Stephen Girdis, Other includes reportable fringe benefits, car parking and per diem allowances. Refer above for details of amounts paid by MBL to Messrs Hodgkinson and Girdis.

⁽⁴⁾ Bonus payments are paid in accordance with the policy determined by the Remuneration Committee. The first \$50,000 of any bonus payment is paid as cash with the balance being paid in equal fortnightly cash instalments for three years following the year in which it was earned. Any unpaid amount is forfeited on termination of employment in the mean time. The portion of Mr Goodman's bonus for the year unpaid at 30 June 2005 was 59% (2004: 67%).

Executive Officers' Remuneration

Details of the nature and amount of each major element of the remuneration of each of the named Executive Officers who receive the highest remuneration and those specified Executives identified in accordance with Accounting Standard AASB 1046 Director and Executive Disclosures by Disclosing Entities are set out in the tables below.

For the year ended 30, lune 2005

		Salary including	$Other^{(3)}$	Bonus (2)	Options	Total
		superannuation s	s s		5
Consolidated Entity
Executive Officers (Excluding Directors)
Mr David van Aanholt	A,B	399,039	9.916	350,000	230,000	988,955
Mr Nick Kurtis	A,B	322,116	10.315	300,000	349,979	982,410
Mr Michael O'Sullivan	A,B	304,374	10,315	300,000	154,063	768,752
Mr Stephen Hawkins (3)	₿	346,729		300,000	91,438	738,167
Mr John Marsh	А	300,000	9,756	100,000	292,500	702,256
Mr John Dakin	A,B	272,795	4,869	46,236	120,000	443,900
For the year ended 30 June 2004
Consolidated Entity
Executive Officers (Excluding Directors)
Mr David van Aanholt	A,B	325,000	10.817	324,999	224,208	885,024
Mr Nick Kurtis	A,B	260,000	10,201	175,000	261,225	706,426
Mr Stephen Hawkins (3)	A,B	236.683		226,575	199,500	662,758
Mr Michael O'Sullivan	A,B	260.000	13,430	150,000	154.063	577,493
Mr Craig Goodman	А	233,365	17.824	125,000	59,646	435,835
Ms Carolyn Scobie	А	250,576	7,391	100,000	75,604	433,571
Mr John Dakin	в	104,171			60,000	164,171

^(A) Executive is included as one of the five named Company Executives who receive the highest remuneration in the current financial year in accordance with section 300A of the Corporations Act 2001.

⁽⁸⁾ Executive is included as a Specified Executive in accordance with Accounting Standard AASB 1046 Directors and Executive Disclosures for Disclosing Entities for the Consolidated Entity.

(1) Other includes reportable fringe benefits and car parking.

⁽²⁾ Bonuses paid by the Consolidated Entity are paid in accordance with the bonus policy. The Specified Executives bonuses are based on individual performance amongst their peers. This policy includes the requirement for any amount above \$50,000 to be withheld and paid to employees fortnightly over a period of three years. Subject to the conditions of their service contracts, Specified Executives will only receive their unpaid bonuses if they remain as employees of the Consolidated Entity.

The proportion of bonuses included as remuneration for the year remaining unpaid at the end of the year is as follows:

	30 June 2005 %	30 June 2004 ٠,
Mr David van Aanholt	57	66
Mr Nick Kurtis	56	66
Mr Michael O'Sullivan	56 66	67 68
Mr Stephen Hawkins Mr John Dakin		$\overline{\phantom{a}}$
Mr John Marsh	33	$\sim$
Mr Craig Goodman		55
Ms Carolyn Scobie		51

⁽³⁾ Mr Stephen Hawkins is now employed directly by a Joint Venture in which Macquarie Goodman has a 50% interest. He is included in this table by virtue of his role as Fund Manager. Singapore which he held up to 30 November 2004 and his direct employment by Macquarie Goodman from November 2004 to January 2005. Mr Hawkins' remuneration details for the year are summarised as follows:

Employers		Period covered Salary including superannuation	Other	Bonus	Options	Total
Funds Manager, Singapore	1 Jul - 30 Nov	127.278			л.	127.278
The Company	i Dec - 31Jan	52.784		300.000	91.438	444,222
Hong Kong Joint Venture	l Feb - 30 Juni	166.667			$\overline{\phantom{a}}$	166.667
Total		346.729		300.000	91.438	738.167

Remuneration and past financial performance

The level of fixed remuneration and performance linked remuneration has been a function of the growth undertaken by Macquarie Goodman Management Limited and the Company's ability to attract and retain qualified and experienced management. Key financial drivers used to determined the level of remuneration in the past and moving forward include: net profit after tax, earnings per share/security, total shareholder returns and return on equity. Return on equity will be the most significant factor moving forward of which executives will be remunerated by exceeding a benchmark performance of return on equity. Historical performance for these financial drivers over the past four years for Macquarie Goodman Management Limited is as follows:

25.0 $20.0$ š 15.0 Ì $9.4$ CONT 10.0 $\overline{B}$ Ë, $4.2$ 6.0 0.0 2002 2003 2004 (1) 2005

Earnings Par Shara/Sacurity

23.7

(1) Before performance fee (2) Before performance fee and merger cost

(2) Before performance fee and merger cost

Total Sharaholdar Returns

As demonstrated by the above historical performance, total performance remuneration is directly linked to pre-determined benchmarks which have historically been achieved based on the Consolidated Entity's financial performance.

Analysis of movements in options

None of the Non-Executive Company Directors were granted, exercised, or forfeited any options over shares or securities during the year.

The value of options over Macquarie Goodman securities exercised by the Chief Executive Officer and by each of the five named Executive Officers during the reporting period, are detailed below. This information is not subject to audit. No options were granted to or forfeited by these individuals during the year.

		Value of Options exercised during the year
	Exercised prior to merger	Restricted under ESAP	Unrestricted
Executive Director
Mr Gregory Goodman	4,853,668	9,319,131	881,442
Consolidated Entity
Executive Officers
Mr David van Aanholt	1,631,100	3.435.500	261,805
Mr Nick Kurtis	174,968	2,992,621	52,555
Mr Michael O'Sullivan		3,640,250	536.588
Mr John Dakin
Mr. John Marsh		433.600

The value of options exercised during the year is calculated as the market price of shares/securities of the Company on the Australian Stock Exchange at close of trading on the date the options were exercised after deducting the price paid or payable to exercise the option.

Indemnification and Insurance of Officers and Auditors

Macquarie Goodman has insured current and former Directors and officers of Macquarie Goodman and its Controlled Entities in respect of Directors and officers' liability and legal expenses. The Directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the Directors and officers' liability and legal expenses insurance contracts, as such disclosure is prohibited under the terms of those contracts. The auditors of the Consolidated Entity are not indemnified in any way by this insurance cover.

Non-audit Services

During the year KPMG, the Company's auditor, has performed certain other services in addition to their statutory duties.

The board has considered the non-audit services provided during the year by the auditor and in accordance with written advice provided by resolution of the Audit Committee, is satisfied that the provision of those non-audit services during the 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 the Company and have been reviewed by the Audit Committee to ensure they do not impact the integrity and objectivity of the auditor; and

. the non-audit services provided do not undermine the general principles relating to auditor independence as set out in Professional Statement F1 Professional Independence, as they did not involve reviewing or auditing the auditor's own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

Details of the amounts paid to the auditors of the Company, KPMG and its related practices for the audit and non-audit services, provided during the year are set out below. In addition, amounts paid to other auditors for the statutory audit have been disclosed.

		Consolidated
	2005	2004
	s	s
Statutory audit
Auditors of the Company
audit and review of financial reports (KPMG Australia)	376,766	68,000
audit and review of financial reports (overseas KPMG firms)	28,088	13,520
	404,854	81,520
Other auditors
audit and review of financial reports (non-KPMG firms)	18,495	1,387
	423,349	82,907
Services other than statutory audit
Other regulatory services (KPMG Australia)	68,500	13,000
Other assurance services
investigative accounting services (KPMG Australia)	1.412.828
Other services
taxation compliance services (KPMG Australia)	264,293	141,592
taxation compliance services (overseas KPMG firms)	15,584	24,202
	1,761,205	178.794
	2,184,554	261,701

The Lead auditor's independence declaration under Section 307C of the Corporations Act 2001 is attached to this Directors' Report.

Rounding

Macquarie Goodman is an entity of a kind referred to in Australian Securities & Investments Commission ("ASIC") Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the Financial Report and Directors' Report have been rounded to the nearest million dollars, unless otherwise stated.

Qualifications, experience and special responsibilities of Directors and Company Secretaries

Board of Directors

Mr David Clarke, AO - Chairman Appointed 26 October 2000

David is the Executive Chairman of Macquarie Bank Limited. He was previously Managing Director and then Chairman of Macquarie Bank's predecessor organisation, Hill Samuel Australia Limited. David was educated at Sydney University (BEcon (Hons)) and Harvard University (MBA) and holds an honorary degree of Doctor of Science in Economics from Sydney University (Hon DScEcon).

David has extensive experience as a chairman and is currently Chairman of Macquarie CountryWide Management Limited, Macquarie Office Management Limited and Macquarie ProLogis Management Limited, the management companies of Macquarie CountryWide Trust, Macquarie Office Trust and Macquarie ProLogis Trust. He is also Chairman of McGuigan Simeon Wines Limited, the Wine Committee of the Royal Agricultural Society of New South Wales, Sydney Advisory Board of the Salvation Army, Opera Australia Capital Fund and Sydney University Football Club Foundation.

Dr David Teplitzky - Independent Deputy Chairman

Appointed 21 November 1990

David has a PhD and honours degree in Engineering and a Bachelor of Science. He is a retired Regional Director of American Cyanamid Company and the former Managing Director of Cyanamid Australia, Formica Australia Limited and Lederle Pharmaceuticals Limited. He is a member of both the Audit Committee, and the Remuneration Committee of Macquarie Goodman Group. He is Executive Chairman of a venture capital company that is developing electric power generation from Wave Energy and a director of the public company, HiTec Energy Limited.

David has been active for many years in venture capital and high-technology companies in Australia and South East Asia as a consultant and director.

Mr Gregory Goodman - Chief Executive Officer

Appointed 7 August 1998

Greg is the Chief Executive Officer of Macquarie Goodman and is responsible for its overall operations and the implementation of the strategic plan. He has 23 years of experience in the property industry with significant expertise in the industrial property arena. Greg was a co-founder of Macquarie Goodman Industrial Trust and has played an integral role in establishing its specialist position in the marketplace through various corporate transactions, including takeovers, mergers and acquisitions. Recently, he was involved in the merger of Macquarie Goodman Industrial Trust and Macquarie Goodman Management Limited and the repositioning of Macquarie Goodman Property Trust in New Zealand.

Mr Patrick Allaway - Non Executive Director

Appointed 23 February 2005

Patrick was educated in South Africa before coming to Australia to attend Sydney University where he attained a Bachelor of Arts and Bachelor of Laws. He is the Non-Executive Chairman of Reino International Limited, an Australian parking systems technology and service provider. Patrick is also Joint Managing Director of Saltbush Funds Management, a boutique funds management group focussed on the alternative asset class, and a director and trustee of Giant Steps Endowment Fund, which was established to raise funds for children with autism. Patrick has extensive experience in senior management roles in international companies, including Citibank and Swiss Bank Corporation, in Australia and abroad. He was previously Managing Director and an executive board member of SBC Warburg Global Investment Bank, based in London (now UBS).

$\mathcal{L}_{\mathrm{in}}$

$\chi_{\rm{max}}$ and

$\ddot{\phantom{a}}$

Qualifications, experience and special responsibilities of Directors and Company Secretaries (continued)

Mr Ian Ferrier, AO - Independent Director Appointed 1 September 2003

lan is the founder of Ferrier Hodgson. He is a Fellow of The Institute of Chartered Accountants in Australia. He has 41 years of experience in company corporate recovery and turnaround practice. Ian is also a director of a number of private and public companies. He is currently Chairman of InvoCare Limited and Port Douglas Reef Resorts Limited and a director of McGuigan Simeon Wines Limited and Reckon Limited.

His role is essentially concerned with understanding the financial and other issues confronting companies which require turnaround management, analysing those issues and implementing policies and strategies which lead to a successful rehabilitation. Ian has significant experience in property and development, tourism, manufacturing, retail, hospitality and hotels, manufacturing, infrastructure and aviation and service industries.

Mr Patrick Goodman - Non-Executive Director

Appointed 14 April 1998

Patrick is the Managing Director of the Goodman Holdings Group, which is a major investor in Macquarie Goodman Group. The diversified interests of the Goodman Holdings Group include aviation, food and financial services throughout Australasia. Patrick is also a director of a number of property investment and management companies both in Australia and New Zealand.

Mr John Harkness - Independent Director Appointed 23 February 2005

John is a Fellow of The Institute of Chartered Accountants in Australia and the Australian Institute of Company Directors. John was a partner of KPMG for 24 years, National Executive Chairman for five years and retired from KPMG in June 2000. Since retiring from KPMG he has held a number of non-executive director roles. John is currently Chairman of Lipa Pharmaceuticals Limited, ICA Property Development Funds, Helmsman Capital Fund and Sydney Foundation for Medical Research. He is a Director of Macquarie CountryWide Management Limited and Crane Group Limited. John is the President of Northern Suburbs Rugby Football Club Limited and a member of the Sydney Advisory Board of the Salvation Army.

Mr James Hodgkinson - Non-Executive Director Appointed 21 February 2005

James is an Executive Director of Macquarie Bank Limited and Joint Head of Macquarie Bank Group's Property Investment Management Division ("PIM"). James' responsibilities include Macquarie Bank Limited's ongoing investment in the Macquarie Goodman Group and he also has overall responsibility for PIM's activities in Asia. James was Chief Executive Officer of Macquarie Industrial Trust for six years prior to that Trust's merger with Macquarie Goodman Industrial Trust. James is also a Director of Ascendas - MGM Funds Management Limited and Macquarie Goodman Management Limited New Zealand James has over 18 years experience in property funds management, investment banking and chartered accounting. $\sim$ $\sim$

Ms Anne Keating - Independent Director Appointed 23 February 2005

Anne was the General Manager, Australia of United Airlines from 1993 to 2001. She is now a professional director with board positions in a range of industries including advertising, property, construction, banking and medical research. She is on the boards of Macquarie Leisure Management Limited, STW Communications Group Limited and Spencer Street Station Redevelopment Holdings Limited. Anne is also a member of the Advisory Council of ABN AMRO Australia and New Zealand and an inaugural director of the Victor Chang Cardiac Research Institute.

Ms Lynn Wood - Independent Director Appointed 23 February 2005

Lynn obtained a MA (Psychology) from Sydney University and an MBA from the Australian Graduate School of Management. She is a member of the Foreign Investment Review Board, a compliance committee member of several major fund managers, a director and vice president of the MS Society of NSW and an executive coach.

Lynn's previous board memberships include Schroders Australia Limited, Schroders Australia Property Management Limited, Sedgwick (Holdings) Pty Limited, NSW Lotteries Corporation and the Investment Funds Association of Australia (now IFSA). Her career in financial services began at American Express, including a posting in Hong Kong. Lynn was awarded the Centenary Medal for service to Australian society through business and finance in 2003.

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Qualifications, experience and special responsibilities of Directors and Company Secretaries (continued)

Mr Stephen Girdis - Alternate Director for Messrs David Clarke and James Hodgkinson Appointed 21 February 2003

Stephen is an Executive Director and the Head of Macquarie Property. He is or has been a Director or alternate Director on many of Macquarie Property listed and unlisted real estate funds. Stephen has over 23 years of experience in chartered accounting, property finance, funds management and investment banking and is an Associate of both The Institute of Chartered Accountants in Australia and the Securities Institute of Australia, He is also a director of Macquarie Capital Partners LLC, Macquarie's global real estate investment banking joint venture.

Company Secretaries

Ms Carolyn Scobie, Group General Counsel and Joint Company Secretary

Carolyn is the Group General Counsel and Joint Company Secretary of Macquarie Goodman Group. She is directly responsible for the company secretarial and corporate legal activities of the Group. She also oversees all legal matters relating to property and compliance. Carolyn has over 15 years of legal experience in corporate and commercial property areas including three years within the legal profession and six years as in-house Counsel with Kumagai Australia Group. She holds a Masters of Arts from Sydney University, a Bachelor of Arts/Bachelor of Laws from the Australian National University and a Graduate Diploma in Company Secretarial Practice. She is a member of Chartered Secretaries Australia,

Mr Mark Alley, Chief Financial Officer - Asia and Joint Company Secretary

Mark is Chief Financial Officer for Asia and Joint Company Secretary of the Macquarie Goodman Group. He is responsible for the overall financial management of the Group outside of Australia and New Zealand. Mark has over 21 years of experience in finance, property investment and development in Australia, New Zealand and Europe, Previously, he was the Group Financial Controller of Ipoh Limited and before that the Finance Director of a private group of property companies. Mark is a Fellow Certified Practising Accountant and holds a Bachelor of Commerce and Administration.

The Directors' Report is made with a resolution of the Directors.

$\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ , $\frac{1}{2}$ ,

$\sim$ $\sim$

David Clarke, AO Chairman

Sydney, 18 August 2005

egory Goodman Dirextor

$\omega_{\rm eff}$ for $\omega_{\rm eff}$

17

Lead auditor's independence declaration under Section 307C of the Corporations Act 2001.

To: the Directors of Macquarie Goodman Management Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2005 there have been:

No contraventions of the auditor independence requirements as set out in the Corporations $\ddot{\phantom{1}}$ Act 2001 in relation to the audit; and

a green.

No contraventions of any applicable code of professional conduct in relation to the audit. $\ddot{\phantom{0}}$

KPMG

P. M. Reid Partner

Sydney, 18 August 2005

MACQUARIE GOODMAN MANAGEMENT LIMITED AND ITS CONTROLLED ENTITIES STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2005

	Note	Consolidated		Parent Entity
		2005	2004	2005	2004
		SM.	\$M	\$M	\$M
Revenue from ordinary activities
Gross property income		154.5
Funds management		13.6	39.5
Proceeds from sale of investment properties		278.0	÷
Property services		10.5	13.9
Development management		22.8	20.4
Other revenue from operating activities	3	15.1	5.0	18.2	25.0
Total revenue		494.5	78.8	18.2	25.0
Expenses from ordinary activities
Carrying value of investment properties sold		(261.0)
Property expenses		(27.4)
Employee expenses		(17.4)	(14.4)
Borrowing costs		(25.9)	(2.7)	(2.9)	(1.8)
Merger transaction expenses		(22.5)		(39.6)
Diminution in value of management rights		(95.4)		(67.8)
Other expenses from ordinary activities		(17.6)	(9.6)	(0.6)	(0.4)
	4	(467.2)	(26.7)	(110.9)	(2.2)
Share of net results of associates and joint ventures	28	6.3	1.3
Profit/(loss) from ordinary activities before
income tax	4	33.6	53.4	(92.7)	22.8
Income tax benefit/(expense) relating to ordinary
activities	6(a)	18.1	(16.4)	27.7	(0.8)
Net profit/(loss) after income tax		51.7	37.0	(65.0)	22.0
Amount attributable to outside equity interests Net profit/(loss) attributable to Securityholders		(1.7)
of Macquarie Goodman		50.0	37.0	(65.0)	22.0
Non-owner transaction changes in equity
Net increase in revaluation reserves	22	70.6
Net exchange difference relating to self-sustaining foreign operations	22	0.6	0.1
Total changes in equity from non-owner related
transactions attributable to Securityholders of
Macquarie Goodman		121.2	37.1	(65.0)	22.0
Basic earnings per security (¢)	7	7,4	13.9
Diluted earnings per security $(\phi)$	$\overline{7}$	7.2	13.1
Adjusted basic earnings per security (¢)	7	22.0	13.9
Distribution/dividend per security (¢)	7	27.2	7.2

$\sim$ 1880 $\pm$

$\overline{a}$

$\bar{z}$

The Statements of Financial Performance are to be read in conjunction with the accompanying notes.

MACQUARIE GOODMAN MANAGEMENT LIMITED AND ITS CONTROLLED ENTITIES STATEMENTS OF FINANCIAL POSITION

AS AT 30 JUNE 2005

	Note		Consolidated		Parent Entity
		2005	2004	2005	2004
		\$M	\$M	SM.	\$М
Current assets
Cash assets	9	7.2	10.3	0.1
Receivables Inventories	10 11	80.7 13.5	42.4 2.7	22.4 ٠	25.9
Current tax receivables	6(b)	6.3	0.1	2.6	0.4
Other assets	12	48.0	3.1	1.0	0.3
Total current assets		155.7	58.6	26.1	26.6
Non-current assets
Receivables	10	15.5		64.8	6.0
investment properties	13	4,739.9
Inventories	11	17.2	6.1
Investments accounted for using the equity method	14	120.0	1.8
Deferred tax assets		7.0	1.6	4.6	1.6
Other financial assets	15	101.0	72.0	31.5	57.8
Other assets	12	5.5	¥,
Plant and equipment	16	3.3	2.8
Intangible assets	17	6.0	99.0	۰	64.9
Total non-current assets		5,015.4	183.3	100.9	130.3
Total assets		5,171.1	241.9	127.0	156.9
Current liabilities
Payables	18	91.7	9.6	1.6	0.3
Interest bearing liabilities	19	207.0	$\overline{\phantom{a}}$	٠	-
Provisions	20	93.5	0.7	۰	$\blacksquare$
Total current liabilities		392.2	10.3	1.6	0.3
Non-current liabilities
Payables	18	28.5	$\blacksquare$	38.1
Interest bearing liabilities	19	1,656.2	79.1	33.7	33.4
Deferred tax liabilities		0.7	18.2	۰	18.2
Provisions	20	0.4	0.2	٠	$\blacksquare$
Total non-current liabilities		1,685.8	97.5	71.8	51.6
Total liabilities		2,078.0	107.8	73.4	51.9
Net assets		3,093.1	134.1	53.6	105.0
Equity attributable to Shareholders of Macquarie Goodman Management Limited
Contributed equity	21	162.3	126.6	162.3	126.6
Reserves	22	37.5	0.1	٠
(Accumulated losses)/retained profits	23	(98.9)	7.4	(108.7)	(21.6)
Total equity attributable to Shareholders of
Macquarie Goodman Management Limited		100.9	134.1	53.6	105.0
Equity attributable to Unitholders of Macquarie Goodman Industrial Trust
Contributed equity	21	2,815.7
Reserves	22	8.1
Retained profits	23	99.2
Total equity attributable to Unitholders of
Macquarie Goodman Industrial Trust		2,923.0	٠
Outside equity interests	24	69.2
Total equity		3,093.1	134.1	53.6	105.0

The Statements of Financial Position are to be read in conjunction with the accompanying notes.

$\hat{\textbf{r}}$

$\bar{z}$

MACQUARIE GOODMAN MANAGEMENT LIMITED AND ITS CONTROLLED ENTITIES STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2005

	Note	Consolidated		Parent Entity
		2005	2004	2005	2004
		\$M	\$M	\$M	\$M
Cash flows from operating activities
Property income received		163.5
Other cash receipts from services provided		93.2	50.0
GST collected		23.5	$\ddot{\phantom{0}}$
Property expenses paid		(45.2)
GST paid		(29.9)
Other cash payments in the course of operations		(51.2)	(26.2)		(0.3)
Dividends/distributions received		7.1	3.8	15.9	22.2
Interest received		2.1	0.5	1.9	2.8
Borrowing costs paid		(53.8)	(2.6)	(2.5)	(1.8)
Income taxes paid (net of refunds)		(10.4)	(3.6)	(2.4)	(0.2)
Net cash provided by operating activities	25(b)	98.9	21.9	12.9	22.7
Cash flows from investing activities
Proceeds from deferred settlement and sale of investment properties		185.5	5.2
Proceeds from sale of investments			۰	26.3
Payments for shares issued by controlled entities		٠	L.		(1.6)
Payments for investments		(30.3)	(38.8)	å.	(26.3)
Payments for investment properties and developments		(635.9)	J.
Payments for plant and equipment		(1.2)	(1.5)
Payments for management rights		(3.5)	(42.4)	(3.5)
Cash on acquisition of Macquarie Goodman Industrial Trust		20.6	÷		$\ddot{\phantom{0}}$
Merger transaction costs		(23.1)		(23.0)
Net cash used in investing activities		(487.9)	(77.5)	(0.2)	(27.9)
Cash flows from financing activities
Proceeds from issue of securities		462.6	38.7	26.6	38.7
Transaction costs from issue of securities		(11.3)	(0.7)	(0.5)	(0.7)
Net loans from/(to) controlled entities			u,	11.2	(45.6)
Proceeds from borrowings		815.2	75.1	6.7	62.8
Repayment of borrowings		(719.6)	(40.9)	(34.5)	(40.9)
Dividends and distributions paid		(91.1)	(17.3)	(22.1)	(17.1)
Amounts paid to outside equity interests	26(c)	(69.9)	$\tilde{\phantom{a}}$ 55.1	۰	$\blacksquare$
Net cash provided by/(used in) financing activities		385.9		(12.6)	(2.8)
Net (decrease)/increase in cash held		(3.1)	(0.5)	0.1	(8.0)
Cash at beginning of year		10.3	10.9	u,	8.0
Effects of exchange rate fluctuations on the balances of cash
held in foreign currencies			(0.1)
Cash at end of year	25(a)	7.2	10.3	0.1	$\bullet$

$\sim 10^7$

The Statements of Cash Flows are to be read in conjunction with the accompanying notes.

$\sim 1200$ km

$\epsilon$

$\alpha$

Note 1. Statement of Significant Accounting Policies

The significant accounting policies which have been adopted in the preparation of the Financial Report are: *

(a) Basis of Preparation

The Financial Report is a general purpose financial report which has been prepared in accordance with Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

It has been prepared on the basis of historical costs and, except where stated, does not take into account changing money values or fair values of non-current assets.

These accounting policies have been consistently applied by each entity in the Consolidated Entity and, except for the changes in accounting policy as set out in Note 2, are consistent with those of the previous year.

(b) Principles of Consolidation

Accounting for the acquisition of Macquarie Goodman Industrial Trust

The merger of Macquarie Goodman Management Limited and Macquarie Goodman Industrial Trust was approved at separate meetings of the respective shareholders and Unitholders on 25 January 2005. Following approval of the merger, shares in Macquarie Goodman Management Limited and units in Macquarie Goodman Industrial Trust were stapled to one another and are quoted as a single security on the Australian Stock Exchange.

Australian Accounting Standards require an acquirer to be identified and an in-substance acquisition to be recognised. In relation to the merger of Macquarie Goodman and Macquarie Goodman Industrial Trust, the Company is identified as having acquired control over the assets of Macquarie Goodman Industrial Trust. To recognise the in-substance acquisition, the following accounting principles have been applied:

• $(i)$ No goodwill is recognised in acquisition of Macquarie Goodman Industrial Trust because there is no direct ownership interest by Macquarie Goodman in Macquarie Goodman Industrial Trust; and
• ${ii}$ The equity issued by Macquarie Goodman to Macquarie Goodman Industrial Trust Unitholders to give effect to the transaction is recognised at the dollar value of the consideration payable by the Macquarie Goodman Industrial Trust Unitholders. This is because the issue of shares by Macquarie Goodman was administrative in nature rather than for the purposes of the Company acquiring an ownership interest in Macquarie Goodman Industrial Trust.

Controlled Entities

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Company as at 30 June 2005 and the results of all such entities for the year ended 30 June 2005. Macquarie Goodman and its controlled entities together are referred to in the Financial Report as the Consolidated Entity,

Where an entity either began or ceased to be controlled during the year, the results for that entity are included only from/to the date control commenced or ceased.

Associates

Associates are those entities over which the Consolidated Entity exercises significant influence, but not control and which are not intended for sale in the near future.

In the consolidated financial statements investments in associates are accounted for using the equity method. Investments in associates are carried at the lower of the equity accounted amount and recoverable amount. Under this method, the Consolidated Entity's share of post-acquisition profits or losses of associates is recognised in the Statement of Financial Performance, and its share of post-acquisition movements in reserves is recognised in consolidated reserves. Cumulative post-acquisition movements in both profit or loss and reserves are adjusted against the cost of the investment.

Note 1. Statement of Significant Accounting Policies (continued)

Joint Ventures

A joint venture is either an entity or operation that is jointly controlled by the Consolidated Entity.

Joint venture entities

In the consolidated financial statements, investments in joint venture entities are accounted for using equity accounting principles. Investments in joint venture entities are carried at the lower of the equity accounted amount and recoverable amount.

The Consolidated Entity's share of the joint venture entity's net profit or loss is recognised in the consolidated statement of financial performance from the date joint control commences. Other movements in reserves are recognised directly in consolidated reserves.

Joint venture operations

The Consolidated Entity's interests in unincorporated joint ventures are brought to account by including its proportionate share of joint venture operations assets, liabilities and expenses and the Consolidated Entity's revenue from the sale of its share of output on a line-by line basis from the date joint control commences to the date joint control ceases.

Transactions Eliminated on Consolidation

Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.

Unrealised gains resulting from transactions with associates and joint ventures, 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 associates and joint venture entities are eliminated against the carrying amount of the investment. Unrealised losses are eliminated in the same way as unrealised gains, unless they evidence a recoverable amount impairment.

(c) Revenue Recognition

Rental Income

Rental income is brought to account on an accruals basis and, if not received at balance date, is reflected in the Statement of Financial Position as a receivable or if paid in advance, as rental in advance. Lease incentives are reflected in the Statement of Financial Position as other assets and amortised over the period of the lease.

Recoverable Outgoings

Recovery of certain outgoings is accrued on an estimated basis and adjusted when the actual amounts are invoiced to respective customers.

Rendering of Services

Fee income derived from funds management, property services, development management and property advisory services is recognised progressively as the services are provided, net of the amount of Goods and Services Tax ("GST").

Interest Revenue

Interest is brought to account on an accruals basis and, if not received at balance date, is reflected in the Statement of Financial Position as a receivable.

Asset Sales

The gross proceeds of asset sales are included as revenue of the Consolidated Entity when contracts for the sale have been unconditionally exchanged. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

$\lambda$ , $\lambda$ , $\lambda$ , $\lambda$

Note 1. Statement of Significant Accounting Policies (continued)

Income from Dividends and Distributions

Dividend revenue is recognised net of any franking credits.

Revenue from distributions from controlled entities is recognised by the Parent Entity when they are declared by the controlled entities.

Dividend income is recognised when a dividend has been declared and, if not received at balance date is reflected in the Statement of Financial Position as a receivable.

$(d)$ GST

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office ("ATO"). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statements of Financial Position.

Cash flows are included in the Statements of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(e) Foreign Currency Translation

Transactions

Foreign currency transactions are translated to Australian currency at the rates of exchange ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at reporting date are translated at the rates of exchange ruling on that date. Resulting exchange differences are recognised in the Statements of Financial Performance.

Translation of Controlled Foreign Operations

The assets and liabilities of foreign operations, including controlled entities and associates, that are selfsustaining are translated at rates of exchange ruling at reporting date. Equity items are translated at historical rates. The Statements of Financial Performance are translated at weighted average rates for the year. Exchange differences arising on translation are taken directly to the foreign currency translation reserve until the disposal or partial disposal of the operations.

$\omega_{\rm{max}}$

Exchange Rates Used

The following exchange rates are the main exchange rates used in translating foreign currency transactions, balances and financial statements (expressed in Australian dollars):

	Average 2005	Average 2004	As at 30 June 2005 As at 30 June 2004
New Zealand dollar	1.0814	1.1356	1.0949	.0970
Singapore dollar	1.2503	1.2257	1.2928	1.1833
-Hong Kong dollar	5.8608	N/A	5.9978	N/A

(f) Derivatives

The Consolidated Entity is exposed to changes in interest rates and foreign exchange rates from its activities. The Consolidated Entity uses interest rate swaps, cross-currency swaps and forward foreign exchange contracts to hedge these risks. Derivative financial instruments are not held for speculative purposes.

Note 1. Statement of Significant Accounting Policies (continued)

Hedges

Transactions are designated as hedges of specific purchases or sales of goods or services, purchases of qualifying assets, or an anticipated interest transaction, only when they are expected to reduce exposure to the risks being hedged. Derivative financial instruments are designated prospectively so that it is clear when an anticipated transaction has or has not occurred. Derivative financial instruments are designated as hedges only when it is probable that the anticipated transaction will occur as designated. Gains or losses on the hedge arising up to the date of the anticipated transaction, together with any costs or gains arising at the time of entering into the hedge, are deferred and included in the measurement of the anticipated transaction when the transaction has occurred as designated. Any gains or losses on the hedge transaction after that date are included in the Statement of Financial Performance.

The net amounts receivable or payable under cross-currency swaps and forward foreign exchange contracts and the associated deferred gains or losses are recorded on the Statement of Financial Position from the date of inception of the hedge transaction. When recognised, the net receivables or payables are revalued using the foreign currency rate current at the reporting date.

The Consolidated Entity has entered into interest rate swap agreements to hedge against the risk of increases in interest rates on the Consolidated Entity's debt. The net amounts receivable and payable under the swap agreements are accounted for on an accruals basis and are included in interest expense.

When the anticipated transaction is no longer expected to occur as designated, the deferred gains and losses relating to the hedged transaction are recognised immediately in the Statement of Financial Performance.

Where a hedge transaction is terminated early and the anticipated transaction is still expected to occur as designated, the deferred gains and losses that arose on the hedge prior to its termination continue to be deferred and are included in the measurement of the purchase or sale or interest transaction when it occurs. Where a hedge transaction is terminated early because the anticipated transaction is no longer expected to occur as designated, deferred gains and losses that arose on the hedge prior to its termination are included in the Statement of Financial Performance for the year.

(g) Taxation

The Consolidated Entity adopts the income statement liability method of tax effect accounting.

Income tax expense is calculated on profit from ordinary activities adjusted for permanent differences between taxable and accounting income. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is carried forward as a future income tax benefit or a provision for deferred income tax.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt, or if relating to tax losses when realisation is virtually certain.

To the extent that dividends are proposed by controlled entities incorporated overseas, the Consolidated Entity has provided for withholding tax where applicable. A provision is also made for the withholding tax on the balance of unremitted profits that eventually will be remitted to Macquarie Goodman.

Tax Consolidation

Macquarie Goodman Management Limited is the head entity in a tax consolidated group comprising all Australian wholly-owned subsidiaries (this excludes Macquarie Goodman Industrial Trust and its wholly owned subsidiaries). The head entity recognises all of the current and deferred tax assets and liabilities of the tax consolidated group (after elimination of intra-group transactions).

The tax consolidated group has entered into a tax funding arrangement that requires wholly-owned subsidiaries to make contributions to the head entity for current tax assets and liabilities and movements in deferred tax balances arising from external transactions during the year.

Note 1. Statement of Significant Accounting Policies (continued)

Under the tax funding arrangements, the contributions are calculated on a "standalone basis" so that the contributions are equivalent to the tax balances generated by external transactions entered into by whollyowned subsidiaries within the tax consolidated group. The timing of contributions reflects the timing of the head entity's obligations to make payments for tax liabilities to the relevant tax authorities. The assets and liabilities arising under the tax funding arrangement are recognised as inter-company assets and liabilities with a consequential adjustment to income tax expense/revenue.

Macquarie Goodman Industrial Trust and its Controlled Entities

Under current Australian income tax legislation, Macquarie Goodman Industrial Trust and its controlled entities are 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.

Tax allowances for building and plant and equipment depreciation are distributed to Securityholders in the form of tax deferred components of distributions. Any taxable capital gains are distributed.

(h) Receivables

Trade debtors and rental debtors are carried at amounts due as they are due for settlement no more than thirty days from the date of recognition. The collectibility of trade debtors is assessed at balance date. Debts which are known to be uncollectible are written off. A provision for doubtful debts is made when some doubt as to collection exists.

(i) Investment Properties

Investment properties comprise investment interests in land and buildings (including integral plant and equipment) held for the purpose of producing rental income. Land and buildings (including integral plant and equipment) comprising investment properties, are regarded as composite assets and are disclosed as such in the financial statements.

Where a contract of purchase includes a deferred settlement arrangement, the acquisition value is determined as the cash consideration payable in the future, discounted to present value at the date of acquisition.

The fair value basis is used to measure the carrying amount of investment properties. An independent valuation of investment properties is obtained at least every three years to use as a basis for measuring the fair value of the properties.

The independent registered valuer determines the market value based on a willing, but not anxious, buyer and seller, a reasonable period to sell the property, and that the property is reasonably exposed to the market. Where an investment property is acquired, the property is carried at cost which includes the costs of acquisition.

At reporting dates occurring between obtaining independent valuations, the Directors review the carrying value of the Consolidated Entity's investment properties to be satisfied that, in their opinion, the carrying value of the investment properties is not materially different to the fair value of the investment properties at that date. Where the carrying amount value materially differs from fair value, an adjustment is made as appropriate.

Revaluation increments are credited directly to an asset revaluation reserve. Revaluation decrements are taken directly to the Asset Revaluations Reserve to the extent that such decrements are reversing amounts previously credited to that reserve that are still available in that reserve. Revaluation decrements in excess of amounts available in the reserve are charged to the Statement of Financial Performance. Subsequent revaluation increments that recover amounts previously charged to the Statement of Financial Performance are, to that extent, credited to the Statement of Financial Performance.

Disposal of Revalued Assets

The gain or loss on disposal of previously revalued properties is calculated as the difference between the carrying amount of the property at the time of the disposal and the proceeds on disposal and is included in the Statement of Financial Performance in the year of disposal. Any related revaluation increment in the Asset Revaluation Reserve at the time of disposal is transferred to the Capital Profits Reserve.

Note 1. Statement of Significant Accounting Policies (continued)

(j) Development Costs of Investment Properties

From time to time, the Consolidated Entity will undertake development of investment properties in order to enhance marketability for customers. The cost of any development is reflected as part of the cost of the investment property. The carrying amounts of non-current assets valued on the cost basis are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds its recoverable amount, the asset is written down to the lower amount. The writedown is recognised as an expense in the net profit or loss in the reporting period in which it occurs.

Costs of development includes the costs of all materials used in construction, costs of managing the project, holding costs and borrowing costs incurred during construction.

The Consolidated Entity's policy is to obtain an independent valuation at practical completion of each development in order to assess fair value. The carrying amount of the completed development is subject to the policies in Note 1(i).

(k) Inventories

Work in progress in respect of land sub-division and development costs includes the costs of acquisition, planning, management, development and holding costs such as rates and taxes. Work in progress is carried at the lower of cost and net realisable value.

(I) Depreciation

Investment properties are not depreciated. Buildings and plant integral to the property are classified as investment properties and accordingly are not depreciated. The properties are subject to continual maintenance and regularly revalued on the basis described above. Taxation allowances for building, plant and equipment depreciation are claimed by the Consolidated Entity and are declared as tax deferred components of distributions.

Items of property, plant and equipment are initially recorded at cost and depreciated using the straight line method over their estimated useful lives to the Consolidated Entity. The depreciation and amortisation rates or useful lives used for each class of asset are as follows:

Property, plant and equipment	Useful lives
Leasehold improvements	4 to 10 years
Plant and equipment	2 to 15 years

(m) Deferred Leasing and Tenancy Costs

Expenditure on direct leasing and tenancy costs is deferred and amortised over the lease term in proportion to the rental income recognised in each financial year.

$\sim 10^{-1}$

(n) Borrowing Costs

Expenditure incurred in obtaining debt finance is deferred and written off over the period of the finance facility. Borrowing 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 more than twelve months to get ready for their intended use or sale. All other borrowing costs are expensed as incurred.

(o) Investments

Controlled Entities

Investments in controlled entities are carried in Macquarie Goodman's financial statements at the lower of cost and recoverable amount. The carrying amounts of investments in controlled entities are reviewed to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount exceeds its recoverable amount, the asset is written down to the lower amount. The write down is recognised as an expense in the net profit or loss in the reporting period in which it occurs. Distributions/dividends are brought to account in the Statement of Financial Performance when they are declared by the controlled entities.

Note 1. Statement of Significant Accounting Policies (continued)

Associates

Investments in listed shares of associates are carried at fair value which is measured with reference to quoted market values. Investments in unlisted shares of associates are carried at the lower of cost and recoverable amount.

Other

Investments in other listed entities are measured at fair value which is determined with reference to quoted market values at reporting date. Refer Note 1(x).

(p) Leased Assets

Leases under which the Consolidated Entity assumes substantially all the risks and benefits of ownership are classified as finance leases. Other leases are classified as operating leases.

Finance Leases

A lease asset and a lease liability equal to the present value of the minimum lease payments are recorded at the inception of the lease.

Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed. Contingent rentals are expensed as incurred.

Operating Leases

Payments made under operating leases are expensed on a straight line basis over the term of the lease, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased property.

Lease incentives are recognised as liabilities. Lease rental payments are allocated between rental expense and reduction of the liability, on a straight line basis over the period of the incentive.

(q) Intangible Assets - Management Rights

Management rights are carried at the lower of cost or recoverable amount. Management rights are amortised on a straight line basis over their useful lives. The recoverable amount of management rights is reviewed by the Directors on a regular basis. Any diminution in value of management rights is recognised in the Statement of Financial Performance in the period in which it occurs.

(r) Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received by the Consolidated Entity prior to the end of the year.

(s) Interest Bearing Liabilities

Bank loans are recognised at their principal amount. Interest expense is accrued at the contracted rate and included in the Statement of Financial Position as Other creditors and accruals.

Debentures and notes payable are recognised when issued at the net proceeds received with the premium or discount on issue amortised over the period to maturity. Interest expense is recognised on an effective yield basis.

(t) 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.

Note 1. Statement of Significant Accounting Policies (continued)

If the effect is material, a provision is determined by discounting the expected future cash flows (adjusted for expected future risks) required to settle the obligation at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability most closely matching the expected future payments, except where noted below. The unwinding of the discount is treated as part of the expense related to the particular provision.

Dividends/Distributions

Provisions for dividends and distributions payable are recognised in the reporting period in which the dividends and distributions are declared, for the entire undistributed amount, regardless of the extent to which they will be paid in cash.

(u) Issue Costs

Transaction costs arising on the issue of equity are offset directly against the proceeds from the issue.

(v) Employee Benefits

Wages, Salaries, Annual Leave and Sick Leave

Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting from employees' services provided to reporting date, They are calculated at undiscounted amounts based on remuneration wage and salary rates that the Consolidated Entity expects to pay as at reporting date including related on-costs, such as, workers compensation insurance and payroll tax.

Long Service Leave

The provision for employee benefits to long service leave represents the present value of the estimated future cash outflows to be made resulting-from employees' services provided to reporting date.

The provision is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates based on turnover history and is discounted using the rates attaching to national government bonds at reporting date which most closely match the terms of maturity of the related liabilities. The unwinding of the discount is treated as long service leave expense.

Executive Option Plan

Macquarie Goodman has granted options to certain executives under the Executive Option Plan. Costs incurred in administering the Plan are expensed as incurred.

No accounting entries are made in relation to the Executive Option Plan until options are exercised, at which time amounts received are recognised in the Statement of Financial Position as contributed equity.

The amounts disclosed for remuneration of Directors and Executives in the Directors' Report and Note 32 include the assessed fair values of options at the date they were granted and have been allocated between the grant and vesting dates of the options.

Employee Security Acquisition Plan ("ESAP")

Funds advanced to employees under the ESAP are recognised as receivables and at the amounts due to be repaid to Macquarie Goodman. Loans are initially recognised upon approval of the loans to individual employees. Conversions of Executive Options to ESAP loans were recognised on the date the merger with Macquarie Goodman Industrial Trust was approved.

Superannuation Plan

The Consolidated Entity contributes to employees and Directors' defined contribution superannuation funds by making the required contributions to independent superannuation funds as required by legislation. These contributions are expensed in the Statement of Financial Performance.

Note 1. Statement of Significant Accounting Policies (continued)

Bonus Plan

A liability is recognised for employee bonuses payable as the benefit calculations are formally documented in accordance with the bonus policy.

(w) Earnings per Security ("EPS")

Basic EPS is calculated by dividing the net profit attributable to Securityholders for the reporting period, after excluding any costs of servicing equity (other than ordinary securities), by the weighted average number of ordinary securities of Macquarie Goodman, adjusted for any bonus issue.

Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after-tax effect of financing costs associated with dilutive potential ordinary securities and the effect on revenues and expenses of conversion to ordinary securities associated with dilutive potential ordinary securities, by the weighted average number of ordinary securities and dilutive potential ordinary securities adjusted for any bonus issue.

(x) Revaluation of non-current assets

Classes of non-current assets measured at fair value are revalued with sufficient regularity to ensure the carrying amount of each asset in the class does not differ materially from fair value at reporting date. Revaluation increments, on a class of assets basis, are recognised in the Asset Revaluation Reserve except that amounts reversing a decrement previously recognised as an expense are recognised as revenues. Revaluation decrements are only offset against revaluation increments relating to the same class of asset and any excess is recognised as an expense.

Potential capital gains tax is only taken into account if the asset is held for sale and forms part of the assessable income of the Consolidated Entity.

(y) Acquisition of Assets

The cost of the purchase of an ownership interest in assets acquired is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value at the date of acquisition.

(z) Recoverable Amount of Non-current Assets Valued on Cost Basis

The carrying amounts of non-current assets valued on the cost basis are reviewed to determine whether they are in excess of their recoverable amount at reporting date. If the carrying amount of a non-current asset exceeds its recoverable amount, the asset is written down to the lower amount. The write-down is expensed in the reporting period in which it occurs.

Where a group of assets working together supports the generation of cash inflows, recoverable amount is assessed in relation to that group of assets.

In assessing recoverable amounts of non-current assets, the relevant cash flows have been discounted to their present value.

(aa) Rounding

In accordance with ASIC Class Order 98/100, the amounts shown in the Financial Report and Director's Report have been rounded to the nearest million dollars, unless otherwise stated.

(ab) Comparative figures

Where applicable, certain comparative figures have been restated to conform with the presentation in the current year's Financial Report.

Note 2. Changes in accounting policy

Investments in listed trusts

In order to more accurately reflect the assets of the Consolidated Entity, the accounting policy for investments in listed trusts, except where they are equity accounted in accordance with the policy set out in Note 1(b), has been changed from cost to fair value. Fair value is measured with reference to quoted market prices.

The increase in the carrying amount of the listed units in a Singapore listed property trust ("A-REIT") by the Consolidated Entity at 30 June 2005 is \$36.9 million. The corresponding increase in value has been recognised in the Asset Revaluation Reserve.

If the change in accounting policy had been applied at 30 June 2004, the increase in the carrying value of the units would have been \$10.1 million and the corresponding increase in value would have been recognised in the Asset Revaluation Reserve.

Note 3. Other Revenue from Operating Activities

$\mathcal{A}^{\prime}$ , $\mathcal{A}^{\prime}$

$\sim$ $\sim$

IAAFA WI WEISI IJAAASINA ILAISI ARALMISI LIANILISAA
	Note	Consolidated		Parent Entity
		2005	2004	2005	2004
		\$M	\$M	\$M	\$M
Revenue from Ordinary Activities includes the following:
Interest income from:
Related parties	34	$\overline{\phantom{a}}$	0.7
Controlled entities				1.5	2.6
Other parties		2.5	0.5	0.8	0.2
Dividends from controlled entities				14.8	21.1
Dividends/distributions from listed property trusts		7.7	3.8	1.1	1.1
Proceeds from sale of investments in associate		4.9
		15.1	5.0	18.2	25.0

$\Delta_{\rm{max}}$

$\omega_{\rm eff}$ and $\omega_{\rm eff}$

	Consolidated		Parent Entity
	2005	2004	2005	2004
Note 4. Profit from Ordinary Activities	\$M	\$M	\$M	\$M
Profit from Ordinary Activities before Income Tax Expense has been Arrived at after (Charging)/Crediting the Following Items:
Transaction costs (1) Performance fee waived	(22.5)		(22.4) (17.2)
Merger transaction expenses	(22.5)		(39.6)
Diminution in value of management rights (2)	(95.4)		(67.8)
Bank loans and overdraft interest	(48.8)	(2.7)	(1.8)	(1.8)
Interest bearing loans/advances from controlled entities	(48.8)	٠ (2.7)	(1.1) (2.9)	(1.8)
Capitalised borrowing costs (3)	22.9	-	w
Borrowing costs	(25.9)	(2.7)	(2.9)	(1.8)
Proceeds from sale of investment properties Carrying value of investment properties sold Net profit on sale of investment properties	278.0 (261.0) 17.0		u,
Proceeds from sale of investment in associate Carrying value of investment sold	4.9 (4.7)
Net profit on sale of investment in associate	0.2	$\overline{a}$
Depreciation of plant and equipment Amortisation of leasehold improvements	${0.6}$ (0.1)	(0.2)
Amortisation of management rights Amortisation of deferred leasing and tenancy costs	(1.1) (0.3)	(1.5)	(1.0)	(0.4)
Total depreciation and amortisation	(2.1)	(1.7)	(1.0)	(0.4)
Net expense in provision for employee benefits Operating lease rental expenses	(1.0) (2.7)	(0.4) (1,6)

(1) Transaction costs incurred relates mainly to fees paid to financial advisors, lawyers and investigating accountants in connection with the stapling of Macquarie Goodman Management Limited shares and Macquarie Goodman Industrial Trust units.

$\mathcal{O}(\mathcal{E}_\mathrm{d})$ , $\mathcal{O}(\mathcal{E})$

(2) For details of the diminution in value of management rights, refer to Note 17.

$\sim 10$

$\frac{1}{2}$ , where

(3) Borrowing costs were capitalised to investment properties under development at a weighted average rate of 6.35% per annum.

Note 5. Auditors' Remuneration

$\sim$

$\sim 10^{-10}$

$\hat{\mathcal{A}}$

$\frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \right) - \frac{1}{2} \left( \frac{1}{2} \right) \right) + \frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \right) - \frac{1}{2} \left( \frac{1}{2} \right) \right) \right)$

		Consolidated		Parent Entity
	2005	2004	2005	2004
	s	Ş	s	\$
Statutory audit
Auditors of the Company
- audit and review of financial reports (KPMG Australia)	376,766	68,000
- audit and review of financial reports (overseas KPMG firms)	28,088	13,520
	404,854	81,520
Other auditors
- audit and review of financial reports (non-KPMG firms)	18,495	1,387
	423,349	82,907
Services other than statutory audit
Other regulatory services (KPMG Australia)	68,500	13,000
Other assurance services
- investigative accounting services (KPMG Australia)	1,412,828		1,160,875
Other services
- taxation compliance services (KPMG Australia)	264,293	141,592
- taxation compliance services (overseas KPMG firms)	15,584	24,202
	1,761,205	178,794	1,160,875
	2.184.554	261.701	1.160.875

$\mathcal{A}$ and $\mathcal{A}$ are $\mathcal{A}$ and $\mathcal{A}$ are $\mathcal{A}$ and $\mathcal{A}$ are $\mathcal{A}$

$\mathcal{L}{\text{max}}$ and $\mathcal{L}{\text{max}}$ and $\mathcal{L}_{\text{max}}$

$\sim 10^{12}$ km $^{-1}$

$\label{eq:1} \frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\int_{-\infty}^{\infty}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\$

$\bar{z}$

$\bar{z}$

$\hat{\mathbf{r}}$

$\sim$

$\label{eq:2.1} \frac{1}{\sqrt{2\pi}}\left(\frac{1}{\sqrt{2\pi}}\left(\frac{1}{\sqrt{2\pi}}\right)^2\right)^{1/2} \left(\frac{1}{\sqrt{2\pi}}\right)^{1/2} \left(\frac{1}{\sqrt{2\pi}}\right)^{1/2}$

Note 6. Taxation

$\sim 10^{-10}$

(a) Income Tax Benefit/(Expense)	2005 お話	2004 \$M	2005	2004
			\$M	\$M
Prima facie income tax (expense)/benefit calculated at 30% (2004: 30%) on			÷,
the profit from ordinary activities	(10.1)	(16.0)	27.8	(6.8)
(increase)/decrease in income tax due to:
- Net profit attibutable to Unitholders of Macquarie Goodman
Industrial Trust	40.3		$\blacksquare$
- Diminution in value of management rights	(10.8)	×.	(3.9)
- Other non-deductible items	(0.4)	${0.1}$	(0.2)	(0.3)
- Non-assessable income - intragroup dividend	$\blacksquare$		4.4	6.3
- Net assessable foreign income	(1.4)	(0.3)	(0.4)
- Net foreign tax credits received/(paid)	0.7	${0.1}$
- Income tax expense related to current and deferred tax transactions of
the wholly-owned subsidiaries in the tax consolidated group				(14.3)
- Recovery of income tax expense under a tax funding arrangement at
transition				14.3
	18.3	(16.5)	27.7	(0.8)
(Under)/over provision in prior year	${0.2}$	0.1
Income tax benefit/(expense) attributable to profit from ordinary	18.1	(16.4)	27.7	(0.8)
activities
(b) Current Tax Receivables
Balance at beginning of year	0.1	(5.4)	0.4	(0.3)
Movements during the year:
- Income taxes paid (net of refunds)	10.4	3.6	2.4	0.2
- Current year's income tax expense on profit from ordinary activities - Income tax refundable related to current and deferred tax transactions of	(4.0)	(6.5)	${0.2}$	0.5
the wholly-owned subsidiaries in the tax-consolidated group	۰	8.3
(Under)/over provision in prior year	(0.2)	0.1
Balance at end of year	6.3	0.1	2.6	0.4

$\mathcal{L}_{\text{max}}$

$\mathcal{A}$ and $\mathcal{A}$ are $\mathcal{A}$ and $\mathcal{A}$ are $\mathcal{A}$ and $\mathcal{A}$

$\mathcal{L}{\text{max}}$ and $\mathcal{L}{\text{max}}$

$\label{eq:2.1} \frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^3}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^3}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^3}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^3}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^3}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^3}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^3}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^3}\frac{$

$\sim$

$\bar{z}$

$\star$

$\sim$

Note 7. Earnings per security ("EPS")

		Consolidated
	2005	2004
	Cents	Cents
Attributable to Securityholders of Macquarie Goodman
- Basic earnings per security	7.4	13.9
- Diluted earnings per security.	7.2	13.1
- Adjusted basic earnings per security - refer (i) -	22.0	13.9
- Distribution/dividend per security - refer (ii).	27.2	7.2

2004
266.552.469
15.874.729
282,427,198

(i) Net profit after tax used in calculating earnings per security

$\bar{z}$

$\mathcal{L}^{\text{max}}$

$\frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \right) - \frac{1}{2} \left( \frac{1}{2} \right) \right) \right)$

	2005	2004.
	\$M	SM.
Net profit after tax used in calculating basic and diluted earnings per
security	50.0	37.0
Add back: Merger transaction expenses	22.5
Diminution in value of management rights (net of tax)	77 3
Net profit after tax used in calculating adjusted basic earnings
ber security	149.8	37.O

(ii) Distributions and dividends for the vear used in calculating distribution/dividend per security

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
31 December 2004 dividend of 4.5 cents (2003: 3.5 cents).	12.5	9.5
31 March 2005 distribution of 6.475 cents (2003: nil)	81.5
30 June 2005 distribution of 6.475 cents (2003: 3.5 cents)	91.0	9.6.
	185.0

$\label{eq:2.1} \frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^{2}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^{2}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^{2}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^{2}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^{2}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^{2}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^{2}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{R}^{2}}\frac{1}{\sqrt{2\pi}}\int_{\mathbb{$

$\sim 10^{-1}$

$\mathcal{L}{\text{M}}$ and $\mathcal{L}{\text{M}}$ and $\mathcal{L}_{\text{M}}$

$\label{eq:2.1} \mathcal{L}{\mathcal{A}}(\mathcal{A}) = \mathcal{L}{\mathcal{A}}(\mathcal{A}) = \mathcal{L}{\mathcal{A}}(\mathcal{A}) \mathcal{L}{\mathcal{A}}(\mathcal{A})$

$\ddot{\phantom{a}}$

$\omega$ is a $\omega$

المناسبات

$\bar{\mathcal{A}}$

Note 8. Dividends and distributions

(a) Dividends recognised in the current year by Macquarie Goodman

	Dividend cps	Total amount \$M	Franked / unfranked	% Franked	Date of payments
2005
Final 2004 ordinary	3.5	9.6	Partly franked	57	22 Sep 04
Interim 2005 ordinary	4.5	12.5	Partly franked	30	2 Feb 05
		22.1
2004	was :
Final 2003 ordinary	3.0	7.6	Partly franked	66	14 Nov 03
Interim 2004 ordinary	3.5	9.5	Partly franked	85	3 Mar 04
		17.1
Dividand fronting account					Dornert Entity

DIVIDEND TRAIKING ACCOUNT		Гагопі Епіну
	2005	2004
	ŝM	\$M
30% franking credits available to shareholders of Macquarie Goodman
Management Limited for subsequent financial vears	(0.6)

The partly franked dividends paid during the year were franked at the tax rate of 30%.

The above amounts are based on the balance of the dividend franking account at year end adjusted for:

(a) franking credits that will arise from the payment of the current tax liability;

(b) franking debits that will arise from the payment of dividends recognised as a liability at year end;

(c) franking credits that will arise from the receipt of dividends recognised as a receivable at year end; and

(d) franking credits that the entity may be prevented from distributing in subsequent years.

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends.

(b) Distributions declared by Macquarie Goodman industrial Trust since the date of acquisition

	Distribution cpu	Total amount	Date of payment
2005 distributions for the quarter ended		SM
March 2005 quarter distribution from the Trust	6.475	81.5	3 May 05
Final 2005 distribution from the Trust	6.475 as:	91.0	19 Aug 05

$\mathbb{R}^{n \times n}$ .

$\hat{\mathcal{A}}$

		Consolidated		Parent Entity
	2005	2004	2005	2004
Note 9. Cash Assets	\$M	\$M	\$M	SM.
Cash at bank and on hand	7.2	10.3	0.1
Note 10. Receivables
Current
Trade debtors	20.2	12.5	1.2
Other debtors (1)	48.8	0.6	3.5	0.2
Receivables from ESAP (2)	11.1		11.1	u.
Loans to controlled entities	٠		6.6	8.5
Performance Fee receivable	$\bullet$	17.2	٠	17.2
Deferred settlement on sale of inventories		12.1
Loans to related parties	0.6			×
	80.7	42.4	22.4	25.9
Non-current
Receivables from ESAP (2)	15.5		15.5
Loans to controlled entities (3)	$\mathbf{z}$		49.3	6.0
	15.5		64.8	6.0

⁽¹⁾ Other debtors at 30 June 2005 includes \$24.7 million receivable from the sale of investment properties (30 June 2004: \$ nil).

$^{(2)}$ Amounts receivable from employees are at the consolidated entity's weighted average interest rate of 6.5% per annum and are for periods of up to five years. Loans are limited recourse to the value of the securities restricted under the ESAP.

⁽³⁾ Non-current loans to controlled entities are interest bearing, with the exception of \$21.5 million (2004: \$1.2 million) which is non-interest bearing, with no fixed term of repayment. Interest is charged per the loan agreement at 9.55% per annum (2004: 7.99% per annum).

Note 11. Inventories

Current Work in progress	13.5	-200 $\sim$	*	$\overline{\phantom{a}}$
Non-current Work in progress	17.2	6.	.	$\mathbf{r}$

Details of transactions with related parties involving work in progress are set out in Note 34 to the financial statements. The transactions relate to the Brickworks Joint Venture and the Moorabin Airport Corporation projects.

Note 12. Other Assets
Current
Prepayments	11.2	0.5	$\blacksquare$
Deferred borrowing costs	2.0		w
Deferred leasing and tenancy costs	1.4	$\overline{ }$	٠
Other (1)	33.4	$-2.6$	1.0	0.3
	48.0	3.1	1.0	0.3
Non-current
Deferred leasing and tenancy costs	4.7	×	٠
Other	0.8	$\mathbf{r}$	×	٠
	5.5	٠	٠	٠

$^{(1)}$ Includes refundable deposits of \$33.3 million for the purchase of investment properties.

Note 13. Investment Properties

$\frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \right) - \frac{1}{2} \left( \frac{1}{2} \right) \right) \right)$ , $\frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \right) - \frac{1}{2} \left( \frac{1}{2} \right) \right)$

$\bar{a}$

		Consolidated Parent Entity
	2005	2004	2005	2004
	sM	SM.	\$M	\$M
Carrying amount at beginning of year	$\bullet$	٠	$\ddot{\phantom{a}}$
Acquisitions - on acquisition of Macquarie Goodman Industrial
Trust and its controlled entities	4.250.2	٠	٠
- other acquisitions	498.6	$\bullet$
Capital expenditure	218.9	$\blacksquare$	$\blacksquare$	$\overline{\phantom{a}}$
Disposals	(261.0)	$\sim$	٠
Valuation increment	33.2
Carrying amount at end of year	4,739.9

$\mathcal{L}^{\text{max}}$

$\mathcal{L}_{\mathcal{L}}$

$\mathcal{L}_{\mathcal{L}}$

$\sim 10$

1. investment Properties (continued)

k.

$\bar{z}$

Propartius	Acquistion deta	Purchase price Including acquisition costs	Total cost including capital expanditure	Valuation date	Valuation	Casta sinca acquisition during the	Disposale	Revaluation increment/	Book value 30 June 2005
					\$M		уенг	{decrement}
Australia		\$11	SM			耕作	\$M	导桥	李邦
Warnhouse/Distribution Centres									ė.
GreystanesPark, Prospect, NSW - East Stage 1	1 Feb 05			1 Fob 05	61.7	22.4
- West Stage 2	1 Feb 06	61.7 63.9	84.1 63.9	1 Peb 05	53.9	10.0			84.1 63.9
		115.6	148.0		115.6	32.4			148.0
MFive Industry Park, Moorebank, NSW Forrester Distribution Centre, St Marys, NSW	1 Feb 05	108.7	116.5	1 Feb 05	108.7	7.8			116.5
- Stage 1	$1$ Feb $05$	55.3	55.3	⊺ Feb 05	55.3				55.3
- Stage 2	1 Feb 05	6.7	7.0	î Feb 05	6.7	0.3			7.0
Roberts Distribution Centre, Chullora, NSW		62.0	62.3		62.0	0.3			62.3
- Suikling A	1 Feb 05	25.2	25.2	t Feb 06	25.2				25.2
- Building S	1 Feb 05	36.4	36.4	1 Feb 06	36.4				36.4
Northgate Distribution Centre, Somerton, Vic		61.6	81.6		61.6				61.6
- Stages 1 & 2	1 Feb 05	46.1	45.6	30 Jun 05	45.1	9.5		B.G	53.6
- Stage 3	1 Feb 05	2.4	2,4	1 Feb 05	2.4		(0.6)		1.8
Reservoir Distribution Centre, Wether III Park, NSW	1 Feb 05	47.5 49.7	48.0 49.9	1 Feb 05	47.5 49.7	0.5 0.2	(0.8)	8.0	55.4 49.9
Portside Distribution Centre, Banksmeadow, NSW	1 Feb 05	43.5	43.5	1 Feb 05	48.5				46.5
Centenary Distribution Centre, Moorebank, NSW	1 Eeb 05	48.4	46.4	1 Feb 06	46.4				46.4
Wyndham Distribution Centre, Leverton, Vic Smithfield Distribution Centre, Smithfield, NSW	1 Feb 05 ∃ Fab 06	38.5 38.2	38.5 38.2	1 Feb 05 1 Fab 05	38.5 3B.2				36.5 38.2
Great West Distribution Centre, Arndell Park, NSW	1 Feb 05	37.6	37.6	1 Feb 05	37.6				37.6
Chullora Distribution Centre, Chullora, NSW - Staga 1	1 Feb 06	25.3	25.3	1 Feb 05	25.3				26.3
- Stage 2	1 Feb 05	11.9	11.9	1 Feb 06	11.9				11.9
		37.2	37.2		37.2				37.2
Anglies Distribution Centre, Laveston North, Vic Southend Distribution Centre, Mascet, NSW	1 Feb 05 1 Feb 05	10.2 36.1	32.9 36.1	30 Jun 05 1 Feb 05	19.2 35.1	13.6	$\overline{\phantom{a}}$	3.6	39.4 35.1
Westall Distribution Centre, Clayton, Vic	1 Feb 05	33.2	33.2	$15$ ab 05	33.2				33.2
Laverton Distribution Centre, Laverton North, Vic	1 Feb 05	30.9	30.8	1 Feb 05	30.8				30.8
Crestmead Distribution Centre, Crestmead, Qld	1 Feb 06 1 Feb 05	30.0 30.2	30.3 30.2	1 Feb 05 1 Feb 05	30.0 90.2	0.3			30.3
Kingston Distribution Centre, Braeside, Vic Dandenong Distribution Centre, Dandenong, Vic	30 Jun 05	29.9	29.9	30 Jun 05	29.3				30.2 29.9
Davis Elatributlon Centre, Wetherill Park, NSW
- Building A - Building B	1 Feb 05 1 Feb 05	18.6 7.9	18.8 8.0	1 Feb 05 t Feb 05	18.5 7.9	0.3 0,1			18.3 8.0
		26.4	26.8		25.4	0.4			25.8
Fitzgerald Distribution Centre, Laverton North, Vic	1 Feb 05 4 Mar 05	25.4 24.8	25.4	1 Feb 05 23 Nov 04	25.4				25.4
Prestone Distribution Centre, Preston, NSW Hampton Park Distribution Centre, Hampton Park, Vic	1 Feb 05	23.8	25.4 23.8	1 Feb 05	22.6 23.8	0.6			26.4 23.8
Serkeley Distribution Centre, Berkeley Vals, NSW	1 Fab 06	22.3	22.3	1 Fab 05	22.3				22.3
Miller Distribution Centre, Villawood, NSW Centenssy Distribution Centre, Moorabank, NSW	1 Fab 05 1 Fab 06	21.3 19.8	21.4 20.1	1 Feb 05 1 Feb 05	21.3 19.8	0.1 0.3			21.4 20.1
Post Wakefield Distribution Centra, Geope Cross, SA	1 Feb 06	17.8	17.8	1 Fab 05	17.8				17.8
Boundary Distribution Centre, Laverton, Vic	1 Feb 06	17.6	17.6	1 Feb 05	17.6				17.6
Holroyd Distribution Cantre, Smithfield, NSW Sheffiald Distribution Centre, Weishpool, WA	1 Feb 05	17.3	17.3	1 Feb 05	17.3				17.3
- Stage 1	1 Feb 05	12.7	12.7	105	12.7				12.7
- Stage 2	1 Feb 05	4.2 16.9	4.2 16.9	1 Feb 05	4.2 16.9				42 16.9
Villawood Distribution Cantre, Villawood, NSW	1 Fob 06	16.3	16.3	1 Feb 06	16.3				16.3
Tranzport Distribution Centre, Port Melbourne, Vic	1 Feb 06	14.1	14.1	1 Feb 05	14.1				14,1
Britton Distribution Contra, Smithfield, NSW Sunshine Distribution Centre, Somerville, Old	1 Fob 05 1 Feb 05	13.8 13.4	13.8 13.4	i Fub 05 1 Feb 05	13.5 13.4				13.8 13.4
Federation Distribution Centre, Laverton North, Vic	1 Feb 05	12.3	12.3	1 Feb 05	12.3				12.3
Woodlands Distribution Centre, Braeside, Vic Westlink Distribution, Laveston North, Vic	1 Feb 06 1 Feb 05	10.8 6.7	10.8 10.6	1 Feb 05 1 Feb 05	10.8 6.7	3,8			10.8 10.6
Kaysborough Distribution Centre, Kaysborough, Vic
- Stage 1	1 Feb 05	6.7	6,8	1 Feb 05	6,7	0,1	٠		6.8
- Stage 2	1 Feb 05	2.8 95	2.8 9.6	1 Feb 06	2,8 9,5	$\bullet$ : 0.1	÷	٠	2.8 9.8
Wingfield Distribution Centre, Wingfield, SA	30 Jun 05	9.2	9.2	30 Jun 06	8.7			÷,	9.2
Lytton Distribution Centre, Lytton, Old Holbecha Distribution Cantre, Arndail Park, NSW	1 Feb 05 1 Feb 05	7.6 B.B	7.6 8.8	30 Jun 05 1 Fab 06	7,6 8.8			1.2	8.8
Montague Distribution Centre, West End, Old	1 Feb 05	8.3	8.3	1 Feb 05	8.3				8.8 8.3
Gippstand Distribution Centre, Dandenong, Vic	1 Feb 05	7.0	7.0	1 Feb 05	7.0				7.0
Beverley Distribution Centre, Beverley, SA Edinburgh Distribution Centre, Edinburgh Park, NSW	28 Jun 05 28 Apr 05	5.7 1.6	5.9 4.8	11 Mar 05	$\cdot$ 1.6	0.2 3.2			5,9 4.B
Bradford Distribution Centra, Cavan, SA	1 Feb 05	3,8	3.8	30 Jun 05	3.8		٠	0.6	4.3
Wodonga Distribution Centre, Chullora, Vic	1 Feb 05	$3.\overline{3}$	3.3	1 Feb 06	3.3				3.3
Industrial Estates
Erskine Park Industrial Estate, Erskine Park, NBW	1 Feb 05	48.2	85.1	1 Feb 05	48.2	36.9			85.1
Discovery Cove Industrial Estate, Banksmeadow, NSW Chifley Industry Park, Mentone, Vic	1 Feb 05 1 Feb 05	72.2 56.6	73.6 64.4	30 Jun 06 1 Feb 05	72.2 56.6	1.4 7,8		6,4	80.0 64.4
Afexandria Industrial Estate , Alexandria, NSW	t Feb 05	60.1	83.1	30 Jun 05	60.1	3.0		(1.6)	61.5
Mitchell Industrial Estate, Alexandria, NSW Kingsford Smith Industrial Estate, Alexandria, NSW	I Feb 05 1 Feb 05	47.2	47.5	30 Jun 05 1 Feb 06	47.2	0.3	P,	2.7	50.2
Cumberland Industrial Estate, Smithfield, NSW	1 Feb 05	41.3 37.8	41.3 40.6	1 Feb 36	41.3 37.B	2.8			41.3 40.6
Botany Bay Industrial Estate, Banksmeadow, NSW	1 Feb 05	34.7	34.7	1 Feb 05	34.1	0.8			34.7 à,
Gateway Industrial Estate, Arndell Park, NSW Smithfield Industrial Estate, Smithfield, NSW	1 Feb 05	34.1	34.1	1 Feb 05	34.1				34.1 ¥
- Stage 1	1 Feb 05	16.8	15.8	1 Feb 06	15.8				15.8 $\hat{\textbf{z}}$
- Stage 2 - Stage 3	1 Feb 06 1 Feb 05	14.4	14.4	1 Feb 05 1 Feb 05	14.4				$\bullet$ 14.4
		3.8 34.0	3.9 34.1		3.8 34.0	-9.1 0,1		$\bullet$	3,9 $\overline{a}$ 34.1
Burrows Industrial Estate, Alexandria, NSW	1 Feb 05	32.0	32.3	30 Jun 05	32.0	0.3		1.2	33.5
Portside Industrial Estate, Port Melbourne, Vic McLaren industrial Estate, North Rocks, NSW	1 Feb 05 1 Feb 05	32.4 31.1	32.4 32.0	1 Feb 05 1 Feb 05	32.4 31.1	0.9			32.4 32.0
Brishane Gate Industrial Park, Hendra, Old	1 Feb 05	30.7	30.8	1 Feb 05	30.7	0.1			30.8 ٠
Acacia Link Industrial Estate, Acacia Ridge, QLD Arcadia Industrial Estate, Coopers Plains, Old	1 Feb 09 1 Feb 06	20.3 23.0	28.4 23.2	1 Feb 05 30 Jun 05	20.3 23.0	8.1 0.1			28.4
Brodie Industrial Estate, RydsImere, NSW	1 Feb 06	23.5	23.6	1 Fab 05	23.5			1.9	25.0 23,5
Riverside Centre, Parramatta, NSW Mitcheff Industrial Estate, Alexandria, NSW	1 Feb 06 1 Feb 05	22.8 20.7	22.9 22.3	1 Feb 08 $1$ Feb 05	22.8 20.7	0.1 1.6		ç, ٠	22.5 à, 22.3

$\bar{z}$

1. Investment Properties (continued)

l,

Proportion	Acquistion	Purchase price		Total cost Valuation		Valuation Costs since	Dispossis		Revažuation – Book vašue 30
	date	including acquisition costs	including capital expenditure	4638		ocquieition	during the your	increment/ (doorement)	June 2006
Australia (continued)		\$M	\$M		机械	参析	¢М	事制	\$M
Industrial Estates (continued)
Sitoota Industrial Estate, Villewood, NSW	1 Feb 05	19.9	20.1	1 Feb 05	19,9	0.2			20.1
Reserva Industrial Estate, Ermington, NSW Tingstps Industrial Estate, Tingalpa, Old	1 Feb 05 1 Feb 05	19.9 13.8	\$9,8 13.8	1 Feb 05 30 Jun 05	19.9 13.8			1.8	19.9 16.6
Ferntres Industrial Estats, Notting Hill, Vic	1 Feb 05	14.1	14.1	1 Feb 05	14.3				14.1
Westcove industrial Estate, Lane Cove, NSW	1 Feb 05	12.9	12.9	1 Feb 05	12.9				12.9
Citiport Industrial Estate, Eagle Farm, Old Abbott Industrial Estate, Chester Hill, NSW	1 Feb 05 1 Feb 06	12.2 12.1	12.2 12.1	1 Feil 05 1 Feb 05	12.2 12.1				12.2 12.1
Greensquare Industrial Estate, Alexandria, NSW	1 Feb 05	11.8	11.6	1 Feb 05	11.6				11.6
Honsebush Bay Industrial Estate, Homebush, NSW Pavesi Industriai Estate, Smithfield, NSW	1 Feb 06 1 Feb 06	11.3 9.5	11.3 9.5	1 Feb 05 1 Feb 05	11.3 9.5			ž	11.3 9.5
Woodpark Industrial Estate, Smithfield, NSW	1 Feb 05	72	7.3	30 Jun 05	7.2	0.1		0.6	7.9
Healey Industrial Estate, Dandenong, Vic	1 Feb 05	7.0	7.0	1 Feb 05	7.0				7.0
Business Parks
Lidcombe Business Park, Lidcombe, NSW	1 Feb 05	142.8 125.2	143.3 129.9	30 Jun 05 1 Fub 05	142.9 125.2	0.4 4.7		6.7	150.0
Campus Business Park, Homebush, NSW Slough Business Park, Silverwater, NSW	1 Feb 05 1 Feb 05	101.1	103.1	1 Fab 08	101.1	2.0			129.9 103.1
ISC Business Estate, Homebush, NSW	30 Jun 06	92.9	92.9	1 May 05	88.0				92.9
Ciayton Business Park, Clayton, Vic Acadia Ridge Business Park, Acadia Ridge, Old	t Feb 05	87.7	91.5	t feb 05	87.7	3.8			91.5
- Stage 1	1 Feb 05	44,1	44.2	i Feb 06	44.1	0.1		×,	44.2
- Stage 2	1 Feb 05	20.3 84.4	21.9 66. I	1 Feb 06	20.3 64.4	1.5 1.7	×,		21.9
Chullora Business Park, Chullors, NSW	1 Feb 05	84.4	64.8	1 Feb 05	64,4	0.2			66.1 64.6
Airgate Sueiness Park, Mascot, NSW - Stege 1	1 Feb 09	23.4	25,2	1 Feb 05	23.4	1.8			25.2
- Stage 2	1 Feb 05	30.0	30.6	1 Feb 05	30.0	0.6			30.6
- Stage 3	1 Feb 05	8.4 8.15	8.4 64.2	1 Fob 05	0,4 61.8	2.4	÷	$\overline{a}$	8.4 64.2
Botany Grove Business Park, Botany, NSW
- Stage T	1 Feb 05	17.5	17.6	1 Feb 05	17.5	0.1			17.6
- Stage 2 - Stage 3	1 Feb 05 1 Feb 05	20.8 17.5	20.9 17.6	1 Feb 05 1 Feb 06	20.8 17.5	0,1 0.1			20.9 17.8
- Stage 4	1 Feb 05	5,2	5.7	1 Feb 05	5.2	0.5			57
Euston Business Park, Alexandria, NSW	1 Feb 05	61.0 49.7	81.8 49.7	1 Feb 05	61.0 49.7	0.8	٠	٠	61.8 49.7
TrensTech Business Park, Lane Cove, NSW	1 Feb 05	41.0	41.9	1 Feb 05	41.0	0,9			41.9
St Peters Business Park, St Paters, NSW Talavera Bueiness Park, North Byde, NSW	1 Feb 05	39.2	39.2	1 Feb 05	39.2				39.2
- Building A	1 Feb 05	17.6	17.5	1 Fab 05	17.5			٠	17.5
- Building B	1 Feb 05	21.4	21.4	1 Feb 05	21.4				21.4
Regal Business Park, Kellets Road, Rowevilla, VIC	1 Feb 05	38.9 37.8	38.9 38.8	1 Feb 05	38.9 37.6	1.0		×	38.9 36.6
Forestridge Businese Park, Frenche Poreet, NSW	1 Feb 05	34,7	39.7	1 Feb 05	34.7	1.0			35.7
Link Business Park, North Ryde, NSW - Building A	1 Feb 05	14.3	14.3	1 Feb 05	14.3				14.3
- Building B	1 Feb 05	21.0	21.4	1 Feb 06	21.0	0.4			21.4
Enterprise Business Park, Gladesville, NSW	1 Feb 05	35.3 31.7	36.7 31.7	1 Feb 05	35.3 31.7	0.4		٠	35.7 31.7
Toyota Business Park, ,Vic
- Parcol A - Parcel B	14 Apr 05	16.7 10.7	16.7 10.7	17 Mar 05 17 Mar 05	16.0 10.1	$\sim$			18.7
	24 Mar 05	27.4	27.4		26.1				10.7 27.4
Waterloo Susiness Park, North Ryde, NSW	1 Feb 08	24.2	24.8	1 Feb 06	24.2	0.4			24.8
Ferntree Business Park, Notting Hill, Vic Queensport Quays Business Park, Muramie, Qidi	1 Feb 05 1 Feb 03	23.8 17.3	24.2 27.3	1 Feb 05 1 Feb 05	23.8 77.3	0,4 10.0	(8.4)		24.2 20.9
Seville Business Park, Villawood, NSW	1 Feb 05	17.9	18.0	1 Feb 05	17.9	0.1			18.0
Pacific View Business Park, Frenchs Forest, NSW Orion Business Park, Lane Cove, NSW	1 Feb 05 1 Feb 05	15.9 12.8	16.2 12.9	30 Jun 06 30 Jun 06	15.9 12.8	0.3 0.1		0.1 0.1	10.3 13.0
Citylink Business Park, Port Malbourne, Vic-	1 Feb 06	9.6	10.3	1 Feb 05	9,6	٥.٦			10.3
Chase Business Park, Chatswood, NSW	1 Feb 05	10.1	10.2	1 Feb 05	10.1	0,1	(2.7)		7.5
Peninsula Business Park, Brookvale, NSW Wadgewood Business Park, Hallam, Vic	1 Feb 05 1 Feb 05	37.7 2.1	18.5 2.3	1 Feb 05 1 Feb 05	17.7 2.1	0.8 0.2	(38.5) (2.3)
Office Parks Talavers Corporate Centre, North Ryde, NSW	1 Feb 05	110.9	129.1	1 Fab 05	110.8	18.3			129.1
Homebush Corporate Park, Homebush, NSW	1 Feb 06	106.3	110.9	1 Feb 05	100.3	4.6			110.9
CityWent Office Park, Pyrmont, NSW Macquerie Corporate Park, North Ryde, NSW	1 Feb 05	104.5	104.9	1 Fab 05	104.6	0.3			164.9
- Building A	1 Fab 05	33.4	33.4	1 Feb 05	33.4				33.4
- Building B	1 Feb 05	52.4	52.5	1 Feb 05	62.A	0.1			52.5
- Buriding C	1 Feb 05	5.4 91.2	5.6 91.5	1 Feb 05	5.4 91.2	0.2 0.3		$\cdot$	5.6 91.6
Binary Centre, North Ryde, NSW	1 Feb 05	81.1	81.2	1 Feb 05	81.1	9.1			81.2
St Leonards Corporate Centre, St Leonards, NSW Warringsh Corporate Centre, Frenche Forest, NSW	31 May 05	77.9	77.9	1 May 05	77.5				77.9
Stage 1	t Feb 05	43.7	43.7	1 Feb 05	43.7	٠		ä,	43.7
-Stage 2	1 Feb 05	3.6 47.3	3.7 47.4	1 Feb 05	3.6 47.3	0.1 aı	$\cdot$	$\boldsymbol{\mathsf{s}}$	3.7 47.4
Cambridge Office Park, Epping, NSW	1 Feb 05	46.1	46.1	1 Feb 05	45.1	٠			46.1
Pinnacle Office Park, North Ryde, NSW + Stage 1	1 Fob 06	26.8	27.4	1 Feb 05	26.8	0.6		i.	27.4
- Stage 2	$1$ Feb $05$	5.4	6.3	1 Feb 05	5.4	0.9			6,3
		32.2	33.7		32.2	,1.5		×	33.7
Showground Business Park, Castle Hill, NSW Hurstville Office Park, Hurstville, NSW	1 Fab 05 1 Feb 05	32,0 29.8	32.5 30.2	1 Feb DS 1 Feb 05	32.0 29.9	0.5 0.3		×,	32.5 30.2
The Precinct Corporate Centre, North Ryde, NSW
- Stage 1 - Stage 2	1 Fab 05 1 Feb 05	16.4 9.3	17.7 9.3	3 Feb 05 1 Feb 05	16.4 9.3	1.3		٠	17.7 9.3
		26.7	27,0		25.7	1.3		ú	27.0
Subarban Cammercial
Ashfield Corporate Centre, Ashfield, NSW
- Stage 1 - Stege 2	1 Feb 05 1 Pab 05	28.2 12.7	28.2 13.2	1 Fab 06 1 Feb 05	20.2 12.7	$\hat{\mathbf{z}}$ 0.5			23.2 13.2
		40.9	41.4		40.9	0,5			41.4
Gordan Corporate Centre, Gordan, NSW Total Australia	1 Feb 05	26.9 4,280.3	27.3 4,469,4	1 Feb 05	26.9 4,263.7	0.4 188.8	(30.3)	33.2	27.3 4.471.9

$\mathcal{F}_{\mathcal{G}}$

÷.

MACQUARIE GOODMAN MANAGEMENT LIMITED AND ITS CONTROLLED ENTITIES NAULUONNE GOODINAR MANAGEMENT

$\mathcal{O}(\mathcal{A}^{\mathcal{A}})$ . The set of $\mathcal{O}(\mathcal{A}^{\mathcal{A}})$

$\mathcal{A}^{\text{max}}_{\text{max}}$

$\label{eq:2} \frac{1}{\sqrt{2}}\left(\frac{1}{2}\left(\frac{1}{2}\right)^2\right)^{1/2}\left(\frac{1}{2}\left(\frac{1}{2}\right)^2\right)^{1/2}\left(\frac{1}{2}\right)^{1/2}\right).$

1. Investment Properties (continued)

Properties	Acquistion date	Purchase price including acquisition costs	Total cost including capital expenditure	date		acquieition	during	Increment/ the year (decrement)	Valuation Valuation Coats since Disposals Revaluation Book value 30 June 2005
		\$180	野洲		\$34	\$M	\$M	\$M	\$W.
New Zealand
Industrial Estatas
Savill Link, Otahuhu, Auckland	1 Feb 05	17.7	22.3	1 Feb 06	17.7	4.8	(6, 6)		15.9
The Gate Industry Park, Penrose, Auckland	1 Feb 05	39.0	39.7	1 Feb 05	39.6	0.7	${36.2}$		3.5
Penrose industrial Estate, Penrose, Auckland	1 Feb 05	15.8	15.8	1 Feb 05	15.B	J.	(15.6)
Bueiness Parks								÷.
Highbrook Business Park, East tamaki, Auckland	1 Feb 06	81.1	94.4	1 Feb 05	81.1	13.3			94.4
Office Parks
Air New Zealand House, Auckland	4 May 05	20.1	22.9	1 Feb 05	54.6	2.8			22.9
Central Park Corporate Centre, Greenlane, Auckland	1 Fab 05	46.6	53.3	1 Feb 05	46.6	6.7	(50.0)		3.3
Neilson Street, Persosa, Auckland	30 Jun 05	1,1	1, 1	12 May 06	2.0				1.1
Millenium Centre, Phase 3, Greenlane, Auckland	B Apr 05	0.6	0.6	4 Mar 05	1,1				0.8
Fletcher Head Office, Penrose, Auckland	1 Feb 05	33.B	33.8	1 Feb 05	33.8		(33.8)		٠
Millennium Centre, Greenlane, Auckland	1 Feb 05	20.4	20.4	1 Feb 05	20.4		(20.4)
18M Centre, Auckland	1 Feb 06	10.1	10.3	1 Feb 05	10,1		${10.3}$
BTI House, Newmarket, Auckland	$1$ Feb $05 -$	7,9	7.9	1 Feb 05	7.9		(7, 9)
Vector House, Newmarket, Auckland	1 Feb 05	7.6	7,6	1 Feb 05	7.6		(7.6)
Nastlé Building, Wiri, Manukau, Auckland	1 Fab 05	3,8	3.8	1 Feb 06	3.B		(3.8)
Ricoh Building, Parnall, Auckland	1 Feb 06	3.8	3.6	1 Feb 05	3.6		(3.6)
Kodak Budding, Parnell, Auckland	1 Fab 06	4.0	4.0	1 Feb 06	4.0	$\ddot{\phantom{0}}$	(4.0)
Windsor Court, Parnell, Auckland	1 Feb 05	3.1	3.1	1 Feb 05	3.1		(3, 1)
EDS House, Mt Wellington, Auckland	1 Fab 05	2.7	2.7	1 Feb 06	2.7		(2.7)
HSBC Centre, Auckland	1 Feb 06	10.3	10.3	1 Feb 05	10.3		(10.3)
HP House, Auckland	1 Fab 06	12.1	12.1	1 Fab 06	12.3		(12.1)
Westney Road Linfox NZ	1 Feb 05	0.8	2.6	1 Feb 05	0.8	1.7 30.0	(2.5)
Total New Zealand		342.2	372.0		378.1		(230.5)	۰	141.7
Hong Kong
Office Parks
Upper Global Gateway	20 Jun 06	126.3	125.3	1 Apr 05	123.4				126.3
Total Hong Kong		126.3	126.3		123.4	٠	٠	$\cdot$	126.3
Total Invastment Properties		4,748.8	4,967.7		4,765.2	218.9	(261.0)	33.2	4,739.9

$\sim$

Valuations dated 1 February 2005 represent Directors' fair valuation of Investment properties at the date of scoulsition of Macquaria Goodman Industrial Trust. All other valuations are independent valuations.

$\mathcal{L}(\mathcal{L}^{\mathcal{L}})$ and $\mathcal{L}^{\mathcal{L}}$ are $\mathcal{L}^{\mathcal{L}}$ . In the contribution of $\mathcal{L}^{\mathcal{L}}$

$\label{eq:2.1} \frac{1}{\sqrt{2\pi}}\int_{0}^{\infty} \frac{1}{\sqrt{2\pi}}\left(\frac{1}{\sqrt{2\pi}}\right)^{2\pi} \frac{1}{\sqrt{2\pi}}\int_{0}^{\infty} \frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\frac{1}{\sqrt{2\pi}}\$

$\label{eq:2.1} \frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\left(\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{$

$\sim$

$\bar{z}$

Note 14. Investments Accounted for Using the Equity Method

	Note	Consolidated		Parent Entity
		2005	2004	2005	2004
		SM	\$M	SM.	\$Μ
Associates	28	120.0	1.8
Joint venture entity	28
		120.0	1.8
Note 15, Other Financial Assets
Investments in controlled entities - Unlisted shares at cost	26			31.5	31.4
Investments in other entities - Listed units at fair value (1)		101.0
- Listed units at cost			72.0		26.4
		101.0	72.0	31.5	57.8

^(f) As set out in Note 2, the accounting polloy for investments in listed trusts, except where they are equity accounted in accordance with the policy set out in Note 1(b), was changed during the year from cost to fair value. Fair value is determined with reference to quoted market prices at reporting date.

Note 16. Plant and Equipment

1.5	1.4
(0.1)
1.4	1.4	٠
2.7	1.6
(0.8)	(0.2)
1.9	1,4
3.3	2.8
1.4	1.4
1.4	0.5
1.1	1.1
(0.6)	(0.2)
1.9	1,4
	1.4 0.1 (0.1)	1,4

$\sim 15\sigma$ .

$\ddot{\phantom{1}}$

Note 17. Intangible Assets

	Consolidated		Parent Entity
۰	2005	2004	2005	2004
	合制	\$M	SM	\$M
Management rights at cost	106.6	103.1	68.8	65.3
Provision for diminution in value	(95.4)	$\sim$	(67.8)	$\sim$
Accumulated amortisation	(5.2)	(4, 1)	(1.0)	(0.4)
	6.0	99.0		64.9

As a result of the acquisition of Macquarie Goodman industrial Trust, a provision for diminution in the value of Management Rights relating to Macquarie Goodman Industrial Trust and its Controlled Entities is recognised at the Company and Consolidated Entity levels as revenue and profits are no longer recognised in the consolidated results in respect of these assets.

Note 18. Payables

Current
Trade creditors	0.9	2.2	٠	0.1
Other creditors and accruals	38.2	7.4	1.6	0.2
Deferred settlements (1)	52.6	$\overline{\phantom{a}}$
	91.7	9.6	1.6	0.3
Non-current
Deferred settlements (1)	19.2	$\mathbf{H}$	$\blacksquare$
Loans to controlled entities (2)		$\ddot{\phantom{1}}$	38.1
Other creditors and accruals	9.3		$\mathbf{u}$
	28.5		38.1

⁽¹⁾ Deferred settlements include amounts for acquisition of ordinary shares in Highbrook Development Limited payable within twelve months (\$20.4 million) and after twelve months (\$19.2 million). The amounts payable after twelve months have been discounted at the Consolidated Entity's weighted average cost of debt (6.49% per annum) at the date of acquisition.

$\bar{z}$

$\mathcal{L}^{\text{max}}$

$\mathcal{L}^{\mathcal{L}}$

(2) Non-current loans to controlled entities are non-interest bearing, with no fixed term of repayment.

$\frac{1}{2}$ , where $\frac{1}{2}$ is the $\frac{1}{2}$ -respectively.

$\mathbb{R}^{n \times n}$

Note 19. Interest Bearing Liabilities	Consolidated	Parent Entity
	2005	2004	2005	2004
	SM	\$M	SM	\$M
Current
Other loans -- deferred payment (1)	207.0
Non-current
Bank loans – secured $(2)$	935.3	79.0	5.7	33.4
Other Ioans - CMBS (3)	720.9	v.
Other loans - controlled entity			28.0
Lease liabilities		0.1
	1.656.2	79.1	33.7	33.4

⁽¹⁾ Interest bearing deferred payments of \$207 million (2004: nil) relate to the fair value of the deferred payment owed to Commonwealth Managed Investments Limited on the acquisition of Colonial First State Industrial Property Trust in April 2003. The vendor can call for repayment at any time up to 1 April 2006. The liability attracts a coupon rate of 8.4% per annum. The effective interest rate after fair valuation is 6.9% per annum (2004: nil).

⁽²⁾ Macquarie Goodman has a \$575 million Syndicated Multi-Option Facility, a \$225 million Syndicated Standby Facility and a \$300 million (2004: nil) bridging facility with National Australia Bank Limited and Westpac Banking Corporation. Security is by way of first or second ranking mortgages and charges over various assets. The multi option and standby facilities are available to 30 April 2006 and the bridging facility is available to 31 July 2005. Amounts denominated in foreign currencies are as follows: New Zealand dollars \$144.8 million (2004: nil), Singapore dollars \$34.9 million (2004: nil) and Hong Kong dollars \$85.2 million (2004: nil). Any resulting foreign currency exposure is hedged by property and other assets purchased in the corresponding currency with the proceeds. These facilities were refinanced subsequent to 30 June 2005. Refer to Note 37 for details.

Macquarie Goodman has a further \$37 million Multi-Option Facility with Westpac Banking Corporation of which \$32 million (2004: \$33.5) is denominated in New Zealand dollars. Any resulting foreign currency exposure is hedged by corresponding New Zealand investments purchased with the proceeds. Security is by way of charges over various assets of the Consolidated Entity. The facility expires on 31 December 2005. This facility was refinanced subsequent to 30 June 2005. Refer to Note 37 for details.

A controlled entity has bank loan of \$87.4 million (2004: \$45.6 million) which is denominated in Singapore dollars. Any resulting foreign currency exposure is hedged by corresponding Singapore investments purchased with the proceeds. Security is by way of charges over various assets of the Consolidated Entity. The facility expires on 24 November 2007.

Controlled entities have bank loans of \$65.8 million (2004: nil) which are denominated in New Zealand dollars. Any resulting foreign currency exposure is hedged by investments in New Zealand assets purchased with the proceeds. Security is by way of charges over the assets of the Consolidated Entity to which the borrowings relate. The sum of \$45.6 million of the facility expires on 28 February 2007 and \$20.2 million on 31 October 2005.

A controlled entity has a bank loan of \$130 million (2004: nil) which is denominated in Hong Kong dollars. Any resulting foreign currency exposure is hedged by corresponding Hong Kong property investments purchased with the proceeds. Security is by way of charges over the property. The facility expires in June 2007.

⁽³⁾ Macquarie Goodman Industrial Trust has Commercial Mortgage Backed Securities ("CMBS") of \$720.9 million (2004: nil). Standard & Poor's has rated \$510.9 million at AAA \$109 million at AA and \$101 million at A, Security is by way of first registered mortgages and charges over various assets. The sum of \$233 million of CMBS matures on 7 September 2006 and \$487.9 million on 7 November 2006.

Financing Arrangements

The Consolidated Entity has access to the following lines of credit:

1,414.7	85.6	5.7	39.9
5.5	5.1	5.1	5.1
1,420.2	90.7	10.8	45.0
935.3	79.1	5.7	33.4
5.5	5.1	5.1	5.1
940.8	84.2	10.8	38.5	$\mathcal{E}$ . $\kappa$
479.4	6.5	-	6.5
479.4	6.5		6.5

$\mathbb{R}^2$

$\Delta \sim 10^{11}$ m $^{-1}$ m $^{-1}$

$\mathcal{L}_{\rm{eff}}$

$\mathcal{L}_{\rm{max}}$

$\mathcal{L}(\mathcal{A})$ and $\mathcal{L}(\mathcal{A})$

$\mathcal{L}^{\text{max}}{\text{max}}$ , where $\mathcal{L}^{\text{max}}{\text{max}}$

$\sim 20\,$ km s $^{-1}$

$\Delta \sim 10^{11}$

Note 20. Provisions

$\bar{z}$

$\sim 10^{-10}$

$\frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \right) - \frac{1}{2} \left( \frac{1}{2} \right) \right) \right)$ , $\frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \right) - \frac{1}{2} \left( \frac{1}{2} \right) \right)$

	Consolidated		Parent Entity
	2005	2004	2005	2004
	sM	\$M	\$M	\$M
Current
Provisions for distributions to Security holders	91.0
Provisions for distributions to RePS Holders	1.0 1
Employee benefits	1.5	0.7
	93.5	0.7
Non-current
Employee benefits	0.4	0.2 0
Provision for Dividends and Distributions to Securityholders
Provisions for dividends and distributions	194.6
Payment of dividends and distributions	(103.6)
Closing balance	91.0
Provision for Distributions to RePS Holders
Initial provision at the date of stapling	3.4
Provisions for distributions	1.7
Payment of distributions	(4.1)
Closing balance	1.0

$\star$

$\mathcal{L}$

Note 21. Contributed Equity

Consolidated		Parent Entity
2005	2004	2005	2004
\$M	\$M	\$M.	\$M
166.0	129.6	166.0	129.6
(3.7)	(3,0)	(3.7)	(3.0)
162.3	126.6	162.3	126.6
2.876.7
(61.0)
2.815.7
2.978.0	126.6	162.3	126.6

Terms and Conditions

Stapled security means one share in the Company stapled to one unit in Macquarie Goodman Industrial Trust.

Holders of Macquarie Goodman stapled securities are entitled to receive dividends and distributions as declared from time to time and are entitled to one vote per stapled security at Shareholders' and Unitholders' meetings. In the event of winding up of Macquarie Goodman, Securityholders' rank after creditors and are fully entitled to any proceeds of liquidation.

Note 33 provides details of shares/securities issued on exercise of options.

(1) Reconciliation of securities of Macquarie Goodman

		Macquarie
	Consolidated Entity	Goodman Industrial Trust	Macquarie Goodman Management Limited Parent Entity
	2005	2005	2005	2004
	sм	忘れた	SM.	\$M
Balance at 1 July 2004 273.215.776 shares	129.6		129.6	90.9
(1 July 2003: 250,854,945)
Contributed value of units in Macquarie Goodman Industrial
Trust immediately prior to stapling	2.347.9	2.347.9
Securities issued
$-4,149,997$ (2004: 4,433,331) from the exercise of options under the
Executive Options Plan	2,4		2.4	2.8
- 13,766,671 issued under the Employee Security Acquisition Plan on 27
January 2005	27.7		27.7
- 967,794,042 shares issued to Unitholders of Macquarie Goodman
Industrial Trust at one cent per share (2)	$9.6 -$	$\sim 10^{-4}$	9.6
- Return of capital to shareholders in the Company for investment in
Macquarie Goodman Industrial Trust pursuant to the merger transaction		29.1	(29.1)
- 10.209.433 issued under the Distribution Reinvestment Plan	38.1	36.2	1.9
$-125,924,433$ (2004; 17,927,500) issued under the Entitlement Offer on
19 May 2005	458.4	435.9	22.5	35.9
-9,907,181 issued on conversion of RePS during the year	29.0	27.6	1.4
Balance at 30 June 2005 1,404,967,533 securities	3,042.7	2,876.7	166.0	129.6
(30 June 2004: 273,215,776)
Less issue costs	(64, 7)	(61.0)	(3.7)	(3.0)
	2,978.0	2,815.7	162.3	126.6

⁽²⁾ In order to implement the merger, 967,794,042 shares of Macquarie Goodman Management Limited were issued to Unitholders of Macquarie Goodman Industrial Trust. The number and value of the shares were calculated using the ratio approved at a meeting Shareholders of Macquarie Goodman Management Limited held on 25 January 2005.

Note 22. Reserves

	Consolidated		Parent Entity
	2005	2004	2005	2004
$\bullet$	\$M	SM.	SIM	\$M
Asset revaluation reserve 111	61.5
Foreign currency translation reserve (2)	0.7	0.1
Capital profits reserve 131	4.2	$\overline{\phantom{a}}$
RePS repurchase reserve 441	(20.8)			×
Total reserves	45.6	٥.

The reserves of Macquarie Goodman are apportioned below between the amounts Securityholders of Macquarie Goodman are entitled by virtue of their shareholding in Macquarie Goodman Management Limited and their Unitholding in Macquarie Goodman Industrial Trust.

Shareholders of Unitholders of
				Securityholders of
				Macquarie Goodman
2005	2004	2005		2005	2004
sni	\$M	SN		\$M	\$M
	$\hat{\phantom{a}}$	112.6		112.6
37.4				37.4
	٠	33.2		33.2
37.4	٠	33.2	ă.	70.6	$\bullet$
	۰	(121.7)		(121.7)
37.4		24.1		61.5
0.1				0.1
		(0.9)		(0.9)
		0.9		0.9
	0.1	0.6		0.6	0.1
0.1	0.1	0,6		0.7	0.1
		Macquarie Goodman Management Limited		Macquarie Goodman Industrial Trust \$M	2004

The foreign currency translation reserve records the foreign currency differences arising from the translation of self-sustaining foreign operations in Singapore, New Zealand and Hong Kong.

(3) Capital Profits Reserve
Balance at beginning as at 1 July
Balance at acquisition of Macquarie Goodman Industrial Trust	$\mathbf{w}$	5.7	٠.	5.1
Transfers from Foreign Currency Translation Reserve		(0.9)		(0.9)
Balance as at 30 June		42		4.2
(4) RePS Repurchase Reserve
Balance at beginning as at 1 July
Premium paid on repurchase of RePS from Outside Equity Interest		(20.8)		(20.8)
Balance as at 30 June		(20.8)		(20.8)

The RePS Repurchase Reserve arises on acquisition of RePS by Macquarie Goodman. The balance will reverse on conversion of the RePS instruments to Macquarie Goodman securities. Refer Note 24 for details.

$37.5$

$0.1$

$8,1$

÷.

45.6

Total Consolidated reserves

The Parent Entity did not hold any Asset Revaluation Reserve, Foreign Currency Translation Reserve, Capital Profits Reserve or RePS Repurchase Reserve at any time during the financial year or the comparative year.

$0.1$

Note 23. (Accumulated Losses)/Retained Profits

The (accumulated losses)/retained earnings of Macquarle Goodman are apportioned below between the amounts Securityholders of Macquarie Goodman are entitied to by virtue of their shareholding in Macquarie Goodman Management Limited and their Unitholding in . Macquarie Goodman Industrial Trust.

2005	2004	2005	2004	2005	2004
SM	SM	SM.	SM.	SM.	\$M
7.4	(12.5)			7.4	(12.5)
${84.2}$	37.0	134.2	$\overline{a}$	50.0	37.0
	$\mathbf{r}_i$	137.5	$\mathbf{r}$	137.5
(22.1)	(17.1)	(172.5)		(194.6)	(17.1)
(98.9)	7.4	99.2		0.3	7.4
${21.6}$	(26.5)
(65.0)	22.0
(22.1)	(17.1)
(108.7)	(21.6)
		Shareholders of Macquarie Goodman Management Limited		Unitholders of Macquarie Goodman Industrial Trust	Securityholders of Macquarie Goodman

Note 24. Outside Equity Interests

Outside equity interests in controlled entities comprise:

Consolidated
2005	2004
SM	SM.
51.0	MAI
18.2
69.2	×

$^{(i)}$ Reset Preference Shares ("RePS") are a class of securities that provide preferred distributions fixed for an initial period, the first reset date on the RePS is scheduled to occur at the discretion of Macquarie Goodman Capital Trust during the twelve months ending 30 June 2007. The fixed return provides for a distribution rate of 7.5% per annum. Upon expiry of the initial period, known as a reset date, the issuer may convert RePS holdings into Macquarie Goodman securities at a 3% discount at the directors' discretion which will rank equally in all respects with existing Macquarie Goodman's securities. Prior to the reset date the RePS Holders can convert their securities into predetermined numbers of Macquarie Goodman securities.

Prior to the merger with the Company, Macquarie Goodman industrial Trust acquired 492,302 RePS from RePS Holders for consideration of \$68.4 million. This amount was paid in cash subsequent to the acquisition. The Company has not exercised conversion rights at 30 June 2005. The costs of repurchasing the RePS is offset against Outside Equity Interests to the extent of the nominal value on issue of the instruments. The remaining balance of \$20.8 million is recognised in the RePS Repurchase Reserve.

48

$\mathcal{A}=\mathcal{J}(\sigma_{\text{max}})$

$\mathcal{L}_{\mathcal{A}}$

$\ddot{\phantom{a}}$

Note 25. Notes to the Statement of Cash Flows

(a) Reconcillation of Cash

For the purpose of the Statement of Cash Flows, cash includes cash on hand and at bank and short-term deposits at call. Cash as at the end of the year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

	Note	Consolidated		Parent Entity
		2005	2004	2005	2004
		SM	\$M	\$M	SM.
Cash assets	9	7.2	10.3	0.1	۰
(b) Reconciliation of Profit/(Loss) from Ordinary Activities after Income Tax Expense to Net Cash Provided by Operating Activities
Profit/(loss) from ordinary activities after income tax		51.7	37.0	(65.0)	22.0
Items classified as investing/financing activities
Profit on sale of investment properties		(17.0)
Profit on sale of investment in shares		(0.2)
Interest paid capitalised		(22.9)
Merger transaction costs		22.5		22.4
Non-cash items
Depreciation and amortisation		2.1	1.7	1.0	0.4
Diminution in value of management rights		95.4		67.8
Share of net profit of associates		(6.3)	(1.3)	ä
Inter-company recharges					(1.1)
Decrease in income taxes payable			(5.4)		(0.3)
(Increase) in income taxes receivable		(6.2)	(0.1)	(2.2)	(0.4)
Net cash provided by operating activities before
change in assets and liabilities		119.1	31.9	24.0	20.6
Change in assets and liabilities during the year:
Decrease/(increase) in receivables		66.0	(24.9)	8.9	(14.6)
(Increase) in inventories		(24.9)	(1.6)
(Increase) decrease in tax assets		(5.4)	0,1	(3.0)	(1.5)
Decrease/(increase) in other assets		12.8	(2.2)		÷
(Decrease)/increase in payables		(52.2)	٠	1.2	0.1
(Decrease)/increase in deferred taxes payable		(17.5)	18.2	(18.2)	18.2
Increase/(decrease) in provisions		1.0	0.4		(0.1)
Net cash inflow from operating activities		98.9	21.9	12.9	22.7

in yet g

$\mathcal{L}^{(1)}$

$\ddot{\phantom{1}}$

Note 25. Notes to the Statement of Cash Flows (continued)

(c) Non-cash financing and investing activities

• During the year, the following non-cash transactions were undertaken:
• (i) acquisition of Macquarie Goodman Industrial Trust
• (ii) acquisition of units in Macquarie Goodman Property Trust
• (iii) settlement of Trust distribution liabilities
• (iv) issue of securities under ESAP
• (v) return of capital to Shareholders
• (vi) conversion of RePS

(i) Acquisition of Macquarie Goodman Industrial Trust

As a result of the stapling, Macquarie Goodman acquired control of Macquarie Goodman Industrial Trust, effective 1 February 2005. No consideration was paid for the acquisition. The net assets of Macquarie Goodman Industrial Trust at the date of acquisition were as follows:

	-2115
∙ Cash	20.6
- Receivables	98.4
- Investment properties	4,250.2
- Other assets	65.4
	4,434.6
- Payables	178.7
- Interest bearing liabilities	1,691.0
- Provisions	28.9
	1,898.6
Net assets acquired	2,536.0

(ii) Acquisition of units in Macquarie Goodman Property Trust

As a result of a restructuring of the Group's interests in New Zealand, Macquarie Goodman sold certain of its properties and investments in New Zealand to Macquarie Goodman Property Trust. The key components of the transaction are summarised as follows:

Properties and investments sold Consideration received:	249.2
Cash	176.8
Units in Macquarie Goodman Property Trust	73.4 -----------------------------
	249.2

(iii) Settlement of Macquarie Goodman Industrial Trust distribution liabilities.

Since the date of acquisition of Macquarie Goodman Industrial Trust, 10,209,433 stapled securities were allocated under the Distribution Reinvestment Plan for total consideration of \$36.2 million.

(iv) issue of securities under ESAP.

During the year, 17,916,668 securities were issued as a result of the exercise of options. Of this amount 13,766,671 securities were issued to the Chief Executive Officer and the other employees under the ESAP. No cash was received on the exercise of these options and \$27.7 million was recognised as a receivable on that date. $\sim$ $\mathcal{L}_{\text{max}}$

(v) Return of capital to shareholders.

Pursuant to the merger transaction, Macquarie Goodman Management Limited returned capital to its shareholders at a rate of one cent per share held. The proceeds of this transaction (\$29.1 million) were used as a consideration for units in Macquarie Goodman Industrial Trust acquired by Shareholders of Macquarie Goodman Management Limited.

(vi) Conversion of RePS.

During the year 9,007,181 securities were issued as a result of RePs Holders conversion elections. The value of the securities issued was \$29 million. No cash was received as a result of these transactions.

$\omega_{\rm eff}$ from $\omega_{\rm g}$

Note 26. Controlled Entities			Parent Entity
		2005	2004
(a) Particulars in Relation to Controlled Entities		\$M	SM.
Investments in controlled entities at cost		31.5	31.4
	Country of	Interest Held 2005	2004
	incorporation	%	%
Controlled Companies
Macquarie Goodman Funds Management Limited	Australia	100.0	100.0
Macquarie Goodman Property Services Pty Limited	Australia	100.0	100.0
Macquarie Goodman Development Management Pty Limited	Australia	100.0	100.0
Macquarie Goodman Property Development Pty Limited	Australia	100.0	100.0
Macquarie Goodman Corporate Services Pty Limited	Australia Australia	100.0 100.0	100.0 100.0
Macquarie Goodman Building Services Pty-Limited Macquarie Goodman Industrial Finance Pty Limited	Australia	100.0	100.0
Macquarie Goodman Industrial Management Pty Limited	Australia	100.0	100.0
Macquarie Goodman Vineyard Pty Limited (1)	Australia	100.0	50.0
Macquarie Goodman Wholesale Limited (2)	Australia	100.0
Macquarie Goodman Acquisitions Pty Limted (2)	Australia	100.0
Macquarie Goodman Foundation Pty Limted (2)	Australia	100.0
Macquarie Goodman Holdings Pty Limited	Australia	100.0
Tallina Pty Limited (3)	Australia	100.0
Tidecard Pty Limited (3)	Australia	100.0
Mintbail Pty Limited (3)	Australia	100.0
01 Pty Limited (3)	Australia	100.0
02 Pty Limited (3)	Australia	100.0
Binary Centre Pty Limited (3)	Australia	100.0
Riverside 1 Pty Limited (3)	Australia	100.0
Riverside 2 Pty Limited (3)	Australia	100.0
Riverside 3 Pty Limited (3)	Australia	100.0
Tranway Pty Limited (3)	Australia	100.0
Tranway No. 1 Pty Limited (3)	Australia	100.0
Oxcap Pty Limited (3)	Australia	100.0
Ashcap Pty Limited (3)	Australia	100.0
CityCap Pty Limited (3)	Australia	100.0
Suncap Pty Limited (3)	Australia	100.0
Clayton Business Park Pty Limited (3)	Australia	100.0
Graham Street F Pty Limited (3)	Australia	100.0
Clyvina Pty Limited (3)	Australia	100.0
Keeto Pty Limited (3)	Australia	100.0
MGI HK Pty Limited (2)	Australia	100.0
MGM Acquisitions Pty Limited (2)	Australia	100.0 1
Macquarie Goodman (NZ) Limited	New Zealand	100.0	100.0
Macquarie Goodman Highbrook Limited	New Zealand	100.0	100.0
Highbrook Developments Limited	New Zealand	75.0	$\ddot{}$
Macquarie Goodman Property Services (NZ) Limited	New Zealand	100.0	100.0
Yeung UK A Limited	Cayman Islands	100.0
MGD Asia Limited (2)	Cayman Islands	100.0
MGI HK Investment Limited (2)	Cayman Islands	100.0
MGPS Hong Kong Limited (2)	Hong Kong	100.0
Comfort Developments Limited Elite Bright Properties Limited	Hong Kong Hong Kong	100.0 100.0
MGM Singapore Pte Limited	Singapore	100.0	100.0

$^{41}$ Classified as an associate at 30 June 2004

$^{(2)}$ Companies incorporated during the year ended 30 June 2005

(3) Controlled entities of Macquarie Goodman Industrial Trust acquired on 1 February 2005.

$\bar{z}$

$\ldots$ .

$\ddot{\phantom{a}}$

$\lambda$

$\mathcal{A}$

Note 26. Controlled Entities (continued)

		Interest Held
٠	Country of	2005	2004
	incorporation	%	$\%$
Controlled Unit Trusts
Industrial Property Management Trust	Australia	100.0	100.0
Trusts acquired on acquisition of Macquarie Goodman Industrial Trust		Ŷ.
Macquarie Goodman Industrial Trust	Australia	100.0
Macquarie Industrial Trust	Australia	100.0
O'Riordan Street Unit Trust	Australia	100.0
Homebush Subtrust	Australia	100.0
Carter Street Trust	Australia	100.0
Penrose Trust	Australia	100.0
Macquarie Goodman Capital Trust	Australia	99.8
- Biloela Street Unit Trust	Australia	99.8
- BDE Unit Trust	Australia Australia	99.8 99.8
- Macquarie Goodman Commercial Property Trust - Waterloo Road Office Trust	Australia	99.8
- Cambridge Office Park Trust	Australia	99.8
- Liverpool Road Trust	Australia	99.8
- Saunders Street Trust	Australia	99.8	×,
- 828 Pacific Highway Trust	Australia	99.8
Binary No. 1 Trust	Australia	100.0
- Binary No. 2 Trust	Australia	100.0
Riverside No. 4 Unit Trust (2)	Australia	100.0
- Riverside No. 3 Unit Trust (2)	Australia	100.0
- Riverside No. 2 Unit Trust (2)	Australia	100.0
- Riverside Unit Trust (2)	Australia	100.0
Orion Road Trust	Australia	100.0
Hill Road Trust	Australia	100.0
Clayton 1 Trust	Australia	100.0
- Clayton 2 Trust	Australia	100.0
- Clayton 3 Trust	Australia	100.0
Port Melbourne 1 Trust	Australia	100.0
- Port Melbourne 2 Trust	Australia	100.0
- Port Melbourne 3 Trust	Australia	100.0
Smithfield Property Trust	Australia	100.0
- Smithfield Property Trust No. 2	Australia	100.0
MGA Industrial Portfolio Trust	Australia	100.0
- MGA Industrial Subsidiary Trust No. 1	Australia	100.0
- MGA Industrial Subsidiary Trust No. 2	Australia	100.0
- MGA Industrial Subsidiary Trust No. 3	Australia	100.0
MGA Direct Property Trust ("MGA DPT")	Australia	100.0
Thomas Trust	Australia	100.0
Macquarie Goodman Thomas Trust	Australia	100.0	÷.
Euston Road Trust	Australia	100.0
- Euston Road Subtrust	Australia	100.0
Highbrook Trust	Australia -	100.0
MG Holding Trust No. 1 (formerly Liverpool Showgrounds Trust)	Australia	100.0
- Regal Business Park Trust (formerly Liverpool Showgrounds Subtrust)	Australia	100.0
Trusts acquired subsequent to the acquisition of Macquarie Goodman Industrial Trust
TMG Property Fund (1)	Australia
MGM Holding Trust 11)	Australia	100.0
Macquarie Goodman Wholesale Trust (1)	Australia	100.0
- MG Wholesale Subtrust (1)	Australia	100.0
St Leonards Trust (1)	Australia	100.0 100.0
Wacol Trust (1)	Australia	100.0
IBC Trust 113	Australia	100.0
Q Stores Trust (1)	Australia
	Australia	100.0
Woolsheds Trust (1)		100.0

$(1)$ Trusts established during the financial year ended 30 June 2005.

$\bar{z}$

$(2)$ Trusts wound up during the financial year ended 30 June 2005.

j.

$\bar{z}$

Note 26. Controlled Entities

(b) Acquisition of Controlled Entities

Name	Date acquired	Entity's Interest %	Consolidated Consideration SM.
Macquarie Goodman Industrial Trust and its controlled entities Highbrook Development Limited (1)	$1$ Feb $05$ 1 Feb 05	100 75	30.3
Comfort Development Limited $\mathbf{r}$ Elite Bright Properties Limited	20 Jun 05 20 Jun 05	100 100	81.6 44.4

⁽¹⁾ The Company acquired a 37.5% interest in Highbrook on 19 November 2004. As a result of the acquisition of Macquarie Goodman Industrial Trust, Macquarie Goodman's interest in Highbrook Development Limited has been increased to 75%. Macquarie Goodman Industrial Trust acquired its 37.5% interest in Highbrook Development Limited for \$30.3 million.

(c) Amounts paid to Outside Equity Interest

Prior to the merger, Macquarie Goodman Industrial Trust acquired 492,302 RePS from RePS Holders for consideration of \$68.4 million. This is included in the amount paid to Outside Equity Interest as the liability was settled by the Consolidated Entity subsequent to the merger.

Note 27. Segment Reporting

Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, inventories, investment properties (including properties under development) and other intangible assets, net of related provisions. Segment liabilities consist primarily of trade and other creditors and employee benefits. Segment assets and liabilities do not include income taxes.

Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an arm's length basis and are eliminated on consolidation.

As a result of the acquisition of Macquarie Goodman Industrial Trust during the year, property investment has been recognised as an additional industry segment. This segment represents investment in industrial and commercial properties in Australia, New Zealand, Hong Kong and Singapore.

The major products/services from which the below segments (based on the Consolidated Entity's management reporting system) derive revenue are:

Industry Segments	Products and Services
Property investment	Ownership of properties for investment potential and
Funds management	Management of trusts
Property services	Property management, leasing services and due
	diligence works
Development management	Design, development and project management
Other Investments	investments in third party funds managed by Macquarie
	Goodman or related entities

Note 27. Segment Reporting (continued)
Primary Reporting - Business Segments

$\hat{\mathcal{L}}$

	Property	Funds investment management	Property services	Development management	Other Investment	Eliminations	Consolidated
	SM	\$M	\$M	\$14	参照	SM	\$M
2005 External segment revenue	432.5	13.6	10.5	22.8	7.7	×,	487.1
Internal segment revenue	3.5	0.2	5.4	9.6		(18.7)
Unallocated revenue Total revenue	u.	$\mathbf{w}$ .	×.	$\omega$	$\blacksquare$	$\blacksquare$	7.4 494.5
Seament result	117.8	12.7	(0.1)	16.7	3.2	(4.1)	146.2
Share of net profit of
equity accounted investments	2.1	4.2					6.3
Diminution of in value of management rights							(95.4)
Merger transaction expenses							(22.5)
Other unallocated revenues and							(1.0)
expenses Profit from ordinary activities
before income tax expense							33.6
Income tax benefit Net profit after tax							18.1 51.7
Assets Segment assets	4,854.0	6.9	7.7	36.0	101.0		5,005.6
Equity accounted investments		120.0	÷	٠			120.0
Unallocated assets		٠	$\blacksquare$	à.			45.6 5.171.1
Consolidated total assets
Liabilities
Segment liabilities Unallocated liabilities	1,893.5 ä,	101.4 ÷	8.4 ÷.	2.9 $\blacksquare$	64.6 $\overline{\phantom{a}}$		2,070.8 7.2
Consolidated total liabilities							2,078.0
Acquisitions of non-current assets	573.5	3.5	1.2				578.2
		Funds	Property	Development		Other Eliminations	Consolidated
	Property	investment management	services	management	investment
2004	SM	\$M	SM.	\$M	sM	sM	\$M
External segment revenue		39.5 $\bar{a}$	13.9	20.4 ÷	3.8 $\overline{r}$		77.6
Unallocated revenue Total revenue			$\bullet$				1.2 78.8
				11.6	0.9		51.7
Segment result Share of net profit of equity		31.1	8.1
accounted investments		1.3					1.3
Unaflocated revenues and expenses							0.4
Profit from ordinary activities
before income tax expense Income tax expense							53.4 (16.4)
Net profit after tax							37.0
Assets
Seament assets		113.9	10.7	29.7	72.0		226.3
Equity accounted investments Unallocated assets		1.8 $\bullet$	$\omega$	÷ $\cdot$	$\star$ $\mathbf{r}$		1.8 13.8
Consolidated total assets							241.9
Liabilities
Segment liabilities		1.0	6.0	2.2	72.2		81.4
Unallocated liabilities Consolidated total liabilities		$\mathbf{H}$	$\overline{\phantom{a}}$	$\bar{a}$	$\cdot$		26.4 107.8
Acquisitions of non-current assets		37.4	7.6				45.0

$\hat{\mathcal{A}}$

$\bar{z}$

$\bar{z}$

Note 27. Segment Reporting (continued) Geographical Segments

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

	Australia SM	New Zealand \$M	Asia \$M	Consolidated \$M
2005
Revenue (property investment funds management,
property services and development management)	184.3	16.9	0.2	201.4
Proceeds from sales of assets (investment properties
and other investments)	33.7	249.2		282.9
Distributions received from listed property trusts		2.6	5.1	7.7
Interest income	2.5		٠	$2.5^{\circ}$
Total revenue	220.5	268.7	5.3	494.5
Share of net profit of equity accounted investments		27	3.6	6.3
Total	220.5	271.4	8.9	500.8
Assets
Investment properties	4,471.8	141.8	126.3	4,739.9
Investments in listed property trusts			101.0	101.0
Investments accounted for using the equity method		113.7	6,3	120.0
Inventories	30.7			30.7
Intangible assets		6.0		6.0
Other assets	114.9	27.9	30.7	173.5
Total assets	4,617.4	289.4	264.3	5,171.1
Acquisition of non-current assets	273.8	178.1	126.3	578.2

	Australia \$M	New Zealand \$M	Asia \$M	Consolidated SM.
2004
Revenue (funds management, property services and
development management)	70.3	3.5		73.8
Distributions received from listed property trusts		1.1	2.7	$3.8^{\circ}$
Interest income	$1.2^{\circ}$		۰.	1.2
Total revenue	71.5	4.6	2.7	78.8
Share of net profit of equity accounted investments			1.3	1.3
Total	71.5	4.6	4.0	80.1
Assets			-1970)
Investments in listed property trusts		26.4	45.6	72.0
Other assets	158.6	9.3	2.0	169.9
Total assets	158.6	35.7	47.6	241.9
Acquisition of non-current assets	38.5	6.5		45.0

Note 28. Investments Accounted for Using the Equity Method

	Consolidated		Parent Entity
	2005	2004	2005	2004
	sM	\$M	\$M	\$M
Share of net results accounted for using the equity method
- Associates (a)	6.3	13		۰.
- Joint ventures (b).			$\overline{\phantom{a}}$

Carl Corporation

$\mathcal{L}$

$\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\$

医学校

(a) Investments in Associates

Name	Principal	Country of Reporting activities incorporation	date	Consolidated Ordinary share ownership interest		Consolidated Investment carrying amount
				2005 %	2004 %	2005 \$M	2004 \$М
Ascendas-MGM Funds Management Limited (1)	Funds management Property	Singapore	31 March	40	40	6.3	1.8
Macquarie Goodman Property Trust (2)	investment	New Zealand	31 March	30	17.4	113.7
Macquarie Goodman Vineyard Pty Limited (3)	Development management Property	Australia	30 June		50
Auckland Business Park Pty Limited (4)	investment	New Zealand	30 June
						120.0	1.8

$^{(1)}$ Ascendas-MGM Funds Management Limited is the manager of A-REIT, a Singapore-based listed property trust.

⁽²⁾ As a result of the Consolidated Entity restructuring its interests in New Zealand during the year, its equity interest in Macquarie Goodman Property Trust was increased from 17.4% to 30% and reclassified from Other Financial Assets to Investments in Associates.

(3) As a result of the acquisition of Macquarie Goodman Industrial Trust, Macquarie Goodman now controls Macquarie Goodman Vineyard Pty Limited and this entity is consolidated at 30 June 2005.

¹⁴⁾ As a result of the acquisition of Macquarie Goodman Industrial Trust, Macquarie Goodman acquired a 50% interest in Auckland Business Park Pty Limited. This interest was subsequently sold as part of the Group's restructure of its interest in New Zealand.

	Consolidated
	2005	2004
	sM	\$M
Movements in Carrying Amount of Investments
Carrying amount at beginning of year	1.8	0.5
Reclassification of MGP shares, at cost, from Other Financial Assets	26.4
investments in associates during the year	90.2
Disposal of investment in Auckland Business Park	(4.7)	٠
Share of net profit after tax of associates	6.3	1.3
Carrying amount at the end of year	120.0	1.8
Summary of Financial Position of Associates
The aggregate assets and liabilities of associates is as follows:
Assats	172.1	2.7
Liabilities	(52.1)	(0.9)
Net asset equity adjusted	120.0	1.8

Note 28. Investments Accounted for Using the Equity Method (continued)

(b) Interests in joint venture entities

Name	Principal Activities	Joint Venture reporting date	Consolidated ordinary share ownership interest		Consolidated Investment carrying amount
			2005	2004	2005	2004
			₩	%	SM	\$M.
Macquarie Goodman (Hong Kong) Limited	Funds management	31 March	50.0	$\overline{\phantom{a}}$

Results of joint venture entities

The joint venture did not contribute any amount to the Company's or Consolidated Entity's result for the year.

Note 29. Interest in Joint Venture Operation

Macquarie Goodman is in a joint venture with The Austral Brick Company Pty Ltd ("Austral") relating to development of the Brickworks site in Sydney.

Under the terms of the Joint Venture Agreement, Macquarie Goodman pays for infrastructure works and has provided Austral with a put and call option which gives Austral the right to require Macquarie Goodman to purchase unsold lots of land and Macquarie Goodman the right to acquire unsold lots of land after specified dates subject to the conditions as outlined in Note 31.

For the year ended 30 June 2005, the joint venture did not contribute any amount to the operating profit of the Company or the Consolidated Entity.

Included in the assets and liabilities of the Company and the Consolidated Entity are the following items which represent the Company's and the Consolidated Entity's interest in the assets and liabilities employed in the joint venture, recorded in accordance with the accounting policies described in Note 1.

	Consolidated			Parent Entity
	2005	2004	2005	2004
	念誦	\$M	\$M	\$M
Total assets
- Trade debtors	1.2			٠
- Other assets	6.8		÷	$\ddot{\phantom{1}}$
- Inventories (1)	26.7			$\overline{\phantom{a}}$
Total liabilities
- Trade creditors	(5.3)			$\mathbf{H}$
Net assets	29.4

$^{\text{41}}$ Amounts expected to be recovered after twelve months are \$15.3 million.

Refer to Note 31 for details of contingent liabilities.

$\omega = \frac{2\pi}{3} \sigma_{\rm max}$

$\Delta \phi$

Note 30. Commitments

$\ddot{\phantom{1}}$	Consolidated		Parent Entity
	2005	2004	2005	2004
	SM	\$M	SM	\$M
Capital Expenditure Commitments			÷ ≯
Contracted but not provided for and payable:
Within one year
- capital expenditure on investment properties	160.6
Non-cancellable Operating Lease Commitments
Future operating lease commitments not provided for in
the financial statements and payable:
Within one year	2.1	1.7
One year or later and no later than five years (1)	5.0	5.5
	7.1	7.2

(1) Includes lease for Levels 9 and 10, 60 Castlereagh Street, Sydney, NSW under a five year agreement expiring 16 November 2008

Acquisition of Investment Properties

Amounts contracted for the acquisition of investment properties not provided for is \$211.8 million (2004; nil).

Operating Lease Commitments not Provided for in the Financial Statements

(a) Gordon Corporate Centre, Gordon, NSW is subject to a 99 year ground lease that commenced in August 1991. Rent under this lease is 17.5% of net property income, payable monthly in advance.

(b) Chifley Business Park, Mentone, VIC is subject to a subjease to April 2048, with a 49 year option to review, Under the terms of the sublease, rent is 10% of the freehold value of the land, calculated on each fifth anniversary of the sublease. Between these market reviews, rent is reviewed annually subject to consumer price index changes. Rent is subject to abatements of between 50% and 100% until 30 June 2006.

Funding Commitments

A guarantee exists between Macquarie Goodman and the Security Trustee for RePS Holders, such that in the event that Macquarie Goodman Capital Trust has either insufficient amounts to pay the distribution or insufficient funds to pay the face value in the event of a winding up of Macquarie Goodman Capital Trust, Macquarie Goodman will, subject to some limitations, be required to pay the RePS Holders an amount equal to the shortfall. The Consolidated Entity's obligation to deliver securities on conversion is also guaranteed. The amount that Macquarie Goodman is required to pay under the guarantee in respect of distributions will not be greater than the income that Macquarie Goodman Industrial Trust has available to distribute to its Securityholders. The obligations of Macquarie Goodman under the guarantee are subordinated to the claims of Macquarie Goodman's secured creditors.

Contractual Commitments

Under the terms of the agreement for the acquisition of the Upper Global Gateway property, the vendor has an option to repurchase up to 50% of their Hong Kong property interests sold to Macquarie Goodman in the event that a Hong Kong Real Estate Investment Trust is not formed within 30 months of the date Macquarie Goodman acquired the property. This consideration payable is calculated as 50% of the contract acquisition price plus any capital expenditure incurred since the date of acquisition.

$\overline{1}$

Note 31. Contingent Liabilities

Contingent Consideration

Under the terms of the Heads of Agreement signed between Macquarie Goodman and Brickworks Limited, Austral has a right to require Macquarie Goodman to take a transfer of certain lots of land if they remain unsold after a specified time. The consideration payable over the duration of the development will be the market price of the unsold saleable lots less a 2.5% discount if the market price is in aggregate less than \$10 million or a 5% discount if it is in aggregate greater than \$10 million.

Bank Guarantees

The Consolidated Entity had contingent liabilities at 30 June 2005 of \$5.5 million (30 June 2004: \$5.1 million) in respect of bank guarantees provided in support of the fulfillment of financial obligations under license conditions.

Other Guarantees

The Consolidated Entity also has provided a guarantee in support of distribution payments to RePS Holders.

Entities within the Consolidated Entity are, in the normal course of business, called upon to provide guarantees and indemnities in respect of the performance by controlled entities of their contractual and financial obligations. The value of these guarantees and indemnities is indeterminable in amount.

Note 32. Director and Executive Disclosures for Disclosing Entities

Executive Option Plan

Up to the date of the acquisition of Macquarie Goodman Industrial Trust, Macquarie Goodman issued options under the Executive Option Plan, providing for staff to receive options over ordinary shares for no consideration. The ability to exercise the options was conditional on the Consolidated Entity achieving the performance hurdles of a compound annual growth in EPS in Macquarie Goodman of 10% or more since the end of the previously reported twelve month period immediately preceding the date of grant (as reported in the Annual Report or Half Yearly Report of the Consolidated Entity).

From the date of announcement up to the date of approval of the merger, Option Holders had the opportunity to exercise their options regardless of the status of their exercise of conditions. A requirement of the early exercise was that Option Holders use a loan under the ESAP. The loans advanced are on the same conditions as described above. In addition, the security may be forfeited if the performance and vesting conditions attaching to the original Executive Options are not met.

ESAP and Executive Option Plan

Subsequent to the acquisition of Macquarie Goodman Industrial Trust, current tax arrangements make it unfeasible to issue options to employees who are resident in Australia for tax purposes. In order that Macquarie Goodman can continue to facilitate these employees' investment in the Consolidated Entity, an ESAP has been launched, the significant features of which are as follows:

• Subject to offers to subscribe made from time to time by the Company, eligible employees can acquire securities at the market price prevailing at the time of issue, using funds borrowed from Macquarie Goodman. The terms of the loans are at the discretion of the Directors. Securities may only be acquired during the periods permitted under the Company's policies for employees dealing in the Company's securities. The after tax amount of any dividends or distributions paid on the securities acquired with the loan must be applied towards payment of interest, if any, and the principal of the loan.
• Loans are for periods of up to five years and are repayable at the earliest of the timetable agreed in the loan agreement with the employee, the date the employee ceases to be an employee of the Macquarie Goodman or at the time of disposal of the securities by the employee.
• With the exception of Mr Gregory Goodman, Ioans to eligible employees are limited recourse to the value of the Macquarie Goodman securities held under the plan.

Note 32. Director and Executive Disclosures for Disclosing Entities (continued)

Total remuneration for all Non-Executive Directors, last voted upon by Shareholders at the Annual General Meeting in 2004, is not to exceed \$950,000 per annum. The amount paid by Macquarie Goodman to Non-Executive Directors for the year was \$459,746. Non-Executive Directors do not receive bonuses nor are they issued options over Macquarie Goodman securities. Directors' remuneration covers all Board activities and membership of required committees throughout the year.

Options over Equity instruments

Up to the date of the acquisition of Macquarie Goodman Industrial Trust, the options were exercisable on a one-for-one basis under the Executive Option Plan. Since the date of acquisition of Macquarie Goodman Industrial Trust, as described more fully below, all options held by employees who were at that time Australian residents for tax purposes were converted to loans from Macquarie Goodman to the individuals to purchase Macquarle Goodman securities.

Option Holdings During the Year

The movement during the year in the number of options over Macquarie Goodman securities held, directly, indirectly or beneficially, by each Specified Director and Specified Executive, including their personally-related entities, is as follows:

		Number of options vested	Number of securities issued on	Amount paid / payable per
	Held at	during the	exercise of	security	Held at
	1 July 2004	vear	options	s	30 June 2005
Specified Director
Mr Gregory Goodman	3.333.333	3,333,333	3.333.333	0.5178
	2.000.000	2.000.000	2.000.000	2.5906
Specified Executives
Mr David van Aanholt	1,000,000	1.000.000	1,000.000	0.5178
	1,000,000	1.000.000	1,000.000	2.5906
Mr Nick Kurtis	133,334	133.334	133.334	0.7956
	100,000	100,000	100.000	0.5178
	1.500.000	1,500,000	1,500,000	2.5906
Mr Michael O'Sullivan	1.250.000	1.250.000	1.250.000	1.2778
Mr Stephen Hawkins	1.000.000	500.000	500,000	1.1568	500,000
Mr John Dakin	500,000				500.000

Equity Holdings and Transactions

The movement during the reporting period in the number of Macquarie Goodman securities held, directly, indirectly or beneficially, by each Specified Director and Specified Executive, including their personally-related entities is as follows:

	Shares in Macquarie Goodman Management Limited at 1 July 2004	Securities acquired	Securities disposed	Securities at 30 June 2005
Specified Directors
Non-Executive
Mr David Clarke	107,143	99,758		206,901
Dr David Teplitzky
Mr Patrick Allaway		125,400	60,000	65,400
Mr lan Ferrier
Mr Patrick Goodman (1)	51,688,385	48,811,962		100,500,347
Mr John Harkness
Mr James Hodgkinson	25,715	133,102		158,817
Ms Anne Keating		15,675		15,675
Ms Lynn Wood	10,822	8,162		18,984
Mr Stephen Girdis		1.105		1,105
Mr William Moss		97,997		97,997
Executive
Mr Gregory Goodman (1)	53,474,099	54,907,065		108,381,164
Specified Executives
Mr David van Aanholt	1,959,293	1,729,507		3,688,800
Mr Nick Kurtis	275,598	2,033,972	170,000	2,139,570
Mr Michael O'Sullivan	11,152	1,365,358		1,376,510
Mr Stephen Hawkins	524,153	638,661		1,162,814
Mr John Dakin

⁽¹⁾ Mr Gregory Goodman and Mr Patrick Goodman together hold 100,500,347 securities through interests associated with them.

Note 32. Director and Executive Disclosures for Disclosing Entities (continued)

Analysis of share-based payments granted as remuneration

None of the Non-Executive Directors held any options over securities at any time during the year.

Details of the vesting profile of the securities awarded as remuneration to the Executive Director and each of the five named Executives are detailed below:

		Options Granted				Value yet to yest
	Number	Date	Percentage vested in vear	Financial years in which grant vests	Min $^{11}$ \$	$Max^{(2)}S$
Director
Mr Gregory Goodman	3,333,333	30 Mar 01	100%	٠
	2,000,000	28 Oct 03	100%	$\blacksquare$
Consolidated Entity
Executives
Mr David van Aanholt	1,000,000	30 Mar 01	100%	$\mathbf{H}$
	1.000.000	28 Oct 03	100%	$\hat{\phantom{a}}$
Mr Nick Kurtis	133,334	10 Oct 01	100%
	100.000	30 Mar 01	100%	$\overline{a}$
	1,500,000	28 Oct 03	100%	÷		$\mathbf{r}$
Mr Michael O'Sullivan	1,250,000	28 Oct 02	100%		÷.
Mr John Dakin	166,666	23 Jan 04	-%	30 Jun 06	×.	218,330
	166.667	23 Jan 04	-%	30 Jun 07	٠.	218,334
	166,667	23 Jan 04	-%	30 Jun 08	$\blacksquare$	218,334
Mr John Marsh	1,000,000	23 Apr 04	100%

$^{\text{\tiny{(t)}}}$ The minimum value of options yet to vest is \$nil as the performance criteria may not be met and consequently the option may not vest.

(2) The maximum value of options yet to vest is not determinable as it depends on the market price of Macquarie Goodman securities at the date the option is exercised. The maximum values presented above are based on the assumption that the stapled security price on the date the option is exercised does not exceed \$4.15 for the above grants.

Loans with Specified Director and Specified Executives

	Balance 1 July 2004 30 June 2005	Balance	Interest paid and payable in the vear	Highest balance in the vear
Specified Director
Mr Gregory Goodman		5,325,172	162.512	6.174.051
Specified Executives
Mr David van Aanholt		2.662.586	74.891	2,880,962
Mr Nick Kurtis		4.048.386	110,227	4.050.572
Mr Michael O'Sullivan		1.094.423	33.761	1.609.481
Mr Stephen Hawkins
Mr John Dakin
		7.805.395	218,879	8.541.015

Interest on loans to directors and executives is charged at 6.5% per annum. The after tax amount of any dividends or distributions paid on the securities acquired with the loans must be applied towards payment of interest, if any, and the principal of the loan.

Loans are for the periods of up to five years and are repayable earlier on termination of the employee or disposal of the securities. No amounts have been written down or recorded as allowances as the balances are considered fully collectible.

Note 33. Employee Benefits

		Consolidated	Parent Entity
	2005	2004	2005	2004
	\$M	sм	\$M	_______
Aggregate liability for employee benefits including on-				۰۰.
costs:
Current:
- Employee benefits provision	1.5	0.7
Non-current:
- Employee benefits provision	0.4	0.2
Number of Employees
Number of employees at year end	231	181

Note 33. Employee Benefits (continued)

Options over Unissued Ordinary Securities (Shares

Details of options issued over unissued ordinary shares as at the beginning of the year and movements up to the date of conversion to the ESAP are set out below.

			Options outstanding at beginning of year	Options issued	Total options exercised and securities issued	Options outstanding at end of year	Options exercised and shares issued
Date granted	Expiry date	Exercise price	2005	2005	2005	2005	2004
13 Dec 99	17 Sep 04	\$0.2291	750,000	$\overline{a}$	750.000		500,000
30 Mar 01	10 Mar 06	\$0.5033 (1)	100,000		100,000	۰
30 Mar 01	10 Mar 06	\$0.5178 (1)	4,599,999	٠	4,599.999		2,533,334
10 Oct 01	10 Oct 06	$$0.7810^{127}$	$\mathbf{r}$ 66.667	×.	66,667
10 Oct 01	10 Oct 06	$$0.7955^{(2)}$$	1,966,669	٠	1,833,335	133,334	816,664
13 Dec 01	13 Dec 06	\$1,1568	1,000,000		500,000	500,000	500,000
13 Mar 02	13 Mar 07	\$1,3478	166,667		166,667	v.	83,333
28 Oct 02	28 Oct 07	\$1.2778	1,250,000	$\bullet$	1.250.000		$\bullet$
28 Oct 03	28 Oct 08	\$2,5906	8,250,000	$\mathbf{r}$	7.550.000	700.000
23 Jan 04	23 Jan 09	\$2.8400	500,000	$\blacksquare$		500,000
23 Apr 04	23 Apr 09	\$3.7564	1,000,000		1,000,000
23 Jul 04	23 Jul 09	\$3,1859		300,000		300,000
23 Jul 04	23 Jul 09	\$3.4448		100.000	100,000
			19,650,002	400,000	17,916,668	2,133,334	4,433,331

⁽¹⁾ Of 4,699,999 options on issue at 1 July 2004 4,599,999 were exercised prior to the merger, the remaining 100,000 options were exercised at the revised exercise price of \$0,5033

$^{(2)}$ Of 2,033,336 options on issue at 1 July 2004 1,966,669 were exercised prior to the merger, the remaining 66,667 options were exercised at the revised exercise price of \$0.7810

During the year the vesting conditions relating to options held by non-Australian residents were changed and the resulting securities issued are dealt with under the terms of the ESAP. Refer to information set out in the Directors' Report for further details of the ESAP.

The amounts recognised in the financial statements in relation to options exercised during the year were:

	Note	Consolidated		Parent Entity
		2005	2004	2005	2004
			.
Contributed equity	21	30,174,713	2,814,000	30.077.341	2,814,000

Employee Share Plans

In addition to ESAP, Macquarie Goodman maintains two other share plans, the Exempt Employee Share Plan and the Deferred Employee Share Plan, which are available to all eligible employees to acquire ordinary shares in Macquarie Goodman. Macquarie Goodman contributes up to \$500 per employee, with the balance of the cost of shares being paid by the employee. Upon successful approval of the acquisition of Macquarie Goodman Industrial Trust, the provisions of the Share Plans were amended so that they relate to stapled securities. Macquarie Goodman does not intend to grant any further securities under either Employee Share Plan.

$\hat{r}$ .

Note 34. Related Party Disclosures

Directors of Macquarie Goodman

The names of the persons holding the position of Director of Macquarie Goodman during the year were:

Mr David Clarke, AO Dr David Teplitzky Mr Gregory Goodman Mr Patrick Allaway (appointed 23 February 2005) Mr Ian Ferrier, AO Mr Patrick Goodman Mr John Harkness (appointed 23 February 2005) Mr James Hodgkinson Ms Anne Keating (appointed 23 February 2005) Ms Lynn Wood (appointed 23 February 2005) Mr Stephen Girdis (Alternate Director for Mr David Clarke and Mr James Hodgkinson) Mr William Moss (resigned 13 June 2005).

Transactions with Director-related Entities

The terms and conditions of the transactions with Directors and their Director related entities were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-Director related entities on an arm's length basis.

Macquarie Bank Group

Mr David Clarke, Mr William Moss, Mr James Hodgkinson are directors of Macquarie Bank Limited ("MBL"). During the year ended 30 June 2005, a total of \$17,166,098 (2004: \$2,283,304) was paid to MBL in relation to various services provided.

Goodman Holdings Group

Mr Gregory Goodman and Mr Patrick Goodman are directors and shareholders in Moorabbin Airport Corporation Pty Limited ("MAC"), the lessor of the Chifley Business Park, Mentone, Victoria. The Consolidated Entity has agreed with MAC to pay all infrastructure costs incurred in developing the Chifley Business Park site. These costs, which totalled \$6,498,732 at 30 June 2005 (2004: \$5,843,679), are to be reimbursed by MAC progressively as the site is developed, leased and rental income is being derived by MAC. To the extent that these costs are not reimbursed progressively, the balance of such costs will be repayable by MAC by 2005 and are secured by a floating charge of certain of the assets of MAC limited to \$2.5 million. Costs totalling \$2 million (2004: \$0.4 million) have been recharged to MAC during the year.

Mr Gregory Goodman and Mr Patrick Goodman are directors of and shareholders in the Goodman Holdings Group. During the year, Macquarie Goodman was also reimbursed by the Goodman Holdings Group for a portion of office rental costs to the value of \$67,466 (2004: \$61,638).

During the year the Consolidated Entity also reimbursed travel costs totalling \$23,997 to a wholly owned subsidiary of Goodman Holdings Group.

Pooles Rock Wines Pty Limited

On 15 January 2003, Pooles Rock Wines Pty Ltd (a Director related entity of Mr David Clarke) entered into a six year lease at CityWest Office Park, Pyrmont, NSW with Macquarie Goodman Industrial Trust. Rent and outgoings from the date Macquarie Goodman acquired Macquarie Goodman Industrial Trust to 30 June 2005 amounted to \$85,095.

Note 34. Related Party Disclosures (continued)

Non-Director Related Parties

The classes of non-Director related parties are:

(a) controlling entity of Macquarie Goodman

• (b) wholly-owned controlled entities
• (c) partly-owned controlled entities
• (d) commonly controlled entities
• (e) associates
• (f) joint venture entities and operations

(g) Directors of related parties and their personally-related entities.

Transactions with Entities in the Wholly-owned Group

Transactions between Macquarie Goodman and other entities in the wholly-owned group during the years ended 30 June 2005 and 2004 included the following:

• (a) payment of dividends to Macquarie Goodman;
• (b) Ioans advanced by/to Macquarie Goodman;
• (c) sale of management rights;
• (d) fees for services charged by Macquarie Goodman; and

$\frac{1}{2} \left( \frac{1}{2} \left( \frac{1}{2} \right) \right) \frac{1}{2} \left( \frac{1}{2} \right)$

$\sim 10$

(e) interest charged by/to Macquarie Goodman.

All of the above transactions were made on normal commercial terms and conditions with the exception of certain loans which are interest free and have no specified time period for repayment.

Macquarie Goodman is the head entity in the tax consolidated group comprising all Australian wholly-owned subsidiaries of Macquarie Goodman Management Limited. The head entity recognises all of the current and deferred tax assets and liabilities of the tax consolidated group (after elimination of intra-group transactions). The assets and liabilities arising under the tax funding arrangement are recognised as inter-company assets and liabilities.

Aggregate amounts included in the determination of net profit after income tax that resulted from transactions with entities in the wholly-owned group are disclosed in the Statement of Financial Performance and Notes 3 and 4.

Aggregate amounts receivable and payable from entities in the wholly-owned group at balance date are disclosed in Notes 10 and 18.

$\sim 10^{-1}$

$\mathcal{O}(\mathcal{E}_\mathrm{c})$ , $\mathcal{O}(\mathcal{E})$

$\sim 10^{-12}$

$\sim 10^{-10}$

$\Delta \phi$

Note 34. Related Party Disclosures (continued)

Macquarie Goodman Industrial Trust and its Controlled Entities

A subsidiary of Macquarie Goodman is the Responsible Entity for Macquarie Goodman Industrial Trust. Up to the date of its acquisition by Macquarie Goodman of Macquarie Goodman Industrial Trust, the Consolidated Entity earned a majority of its revenues from Macquarie Goodman Industrial Trust. During the year and up to the date of its acquisition, the following transactions took place with Macquarie Goodman Industrial Trust:

	Consolidated
	2005	2004
Revenue Earned from Macquarie Goodman Industrial Trust
Performance Fee (1)		17, 151, 752
Management fees (in relation to acting as Responsible Entity)	10.184.023	16.430.795
Trustee fees (in relation to acting as Responsible Entity)	687.846	1,122.870
Property services fees (including property management, leasing and due diligence work)	8.722.721	12.793.879
Development and project fees (including development management)	16.277.445	19,395,085
	35,872,035	66.894.381
Expenses Reimbursed by Macquarie Goodman Industrial Trust
Building supervisor costs	1,136,694	1,534,323
Responsible Entity costs	100,625	235.539
	1.237.319	1.769.862

⁽¹⁾ Subsequent to the merger transaction, the Performance Fee receivable from Macquarie Goodman Industrial Trust in respect of the half-year ended 31 December 2003 was waived by the Company.

An amount of \$2,621,514 representing a portion of the selling price (including interest) in relation to a property sold to Macquarie Goodman Industrial Trust during 2001, has been deferred for up to five years. The amount is repayable with interest at commercial rates as tenanted developments are completed. Total interest receivable during the year up to the date of acquisition was \$510,825 (2004: \$706,000).

Macquarie Goodman Property Trust and its Controlled Entities

A company in the wholly-owned group is the Manager of Macquarie Goodman Property Trust ("MGP"). During the year ended 30 June 2005, the following transactions took place with MGP :

	Consolidated
2005	2004
250.651.362
1.726.569	711.960
1.049.499	794.668
1,727,780	19,850
255.155.211	1.526.478

Dealings between the Consolidated Entity and other related parties are on normal commercial terms and conditions. All material dealings are, where appropriate, appraised by qualified external parties to ensure they are at commercial market rates.

Brickworks Joint Venture

During the year, the Consolidated Entity paid \$20.5 million to its fellow venturer in respect of costs incurred in the development of the M7 Business Hub. The Consolidated Entity also charged fees to the Joint Venture totaling \$2.4 million at 30 June 2005 (2004: nil).

Ascendas-MGM Funds Management

During the year, the Consolidated Entity and AMFM each charged expenses to the other party for costs incurred in relation to their operations. The net amount reimbursed to Macquarie Goodman by AMFM was \$5,504 (2004: \$563,134). As at 30 June 2005 the outstanding balance to AMFM is \$644 (2004: \$109,143).

Joint Venture with MBL

During the year, the Consolidated Entity has recharged fees to the joint venture with MBL totaling \$567,767. As at 30 June 2005, the outstanding balance due to Macquarie Goodman is \$567,767 (2004: nil).

Note 35. Additional Financial Instruments Disclosure

(a) Interest Rate Risk

The Consolidated Entity enters into interest rate swaps to manage cash flow risks associated with the interest rates on borrowings that are floating. The maturity dates of the interest rate swap contracts are principally between December 2005 and April 2013. The interest rate swap contracts are for 90 and 180 day intervals and involve quarterly and semi-annual payments or receipts of the net amount of interest. At 30 June 2005, the fixed rates varied from 1.8% per annum to 6.7% per annum and the floating rates were at bank bill rates plus a credit margin.

The Consolidated Entity's exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and financial liabilities is set out below:

				Fixed interest maturing in
	Note	Weighted average interest rate pa H)	Floating interest rate	1 year or less	1 to 5 vears	Non- interest bearing	Total
			\$M	SM	\$M	\$M.	SM.
2005
Financial Assets
Cash assets	9	3.53%	7.2				7.2
Receivables	10	6.32%	31.4			64.8	96.2
Other financial assets	15, 6(b).			٠	٠	107.3	107.3
			38.6	$\blacksquare$		172.1	210.7
Financial Liabilities
Payables	18	6.49%		20.4	19.2	80.6	120.2
Provisions	20		۰	$\rightarrow$		92.0	92.0
Employee Benefits	33				$\blacksquare$	1.9	1.9
Bank and other loans	19	6.23%	1,435.3	207.0	220.9	$\overline{\phantom{a}}$	1,863.2
			1,435.3	227.4	240.1	174.5	2,077.3
Interest rate swaps (2)			(853.7)	w	853.7	٠

⁽¹⁾ After incorporating the effect of interest rate swaps.

$\mathcal{A}^{\mathcal{A}}$ and $\mathcal{A}^{\mathcal{A}}$

$\sim$ $\sim$

⁽²⁾ Notional principal amounts.

$\mathcal{L}^{\text{max}}_{\text{max}}$

				Fixed interest maturing in
$\ddotsc$		Weighted interest rate	average interest rate	Floating 1 year or less 1 to 5 years Non-interest		bearing	Total
	Note	$\mathbf{pa}^{(1)}$	\$M	\$M	\$M	\$M	SM.
2004
Financial Assets
Cash assets	9	4.4%	10.3				10.3
Receivables	10	6.3%	12.1		$\overline{a}$	30.3	42.4
Other financial assets	15					72.0	72.0
			22.4		$\bullet$	102.3	124.7
Financial Liabilities
Payables	18				٠	9.6	9.6
Provisions	20					0.9	0.9
Lease liabilities	19	10.4%			0.1		0.1
Bank loans	19	5.3%	79.0	$\omega$	$\blacksquare$		79.0
			79.0		0.1	10.5	89.6
Interest rate swaps (2)			(60.2)		60.2		$\bullet$

Note 35. Additional Financial Instruments Disclosure (continued)

⁽¹⁾ After incorporating the effect of interest rate swaps.

⁽²⁾ Notional principal amounts.

(b) Credit Risk

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

Recognised Financial Instruments

The credit risk on financial assets, excluding investments, of the Consolidated Entity which have been recognised on the Statement of Financial Position, is the carrying amount, net of any provision for doubtful debts.

The Consolidated Entity has a policy of assessing the creditworthiness of all potential tenants and is not materially exposed to any one tenant or industry group. The Consolidated Entity evaluates all tenants' 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.

The Consolidated Entity minimises credit risk by dealing with major financial institutions in relation to cash and short-term borrowings.

Concentration of credit risk exists from time to time on trade debtors for the proceeds of disposals of investment properties. The credit risk is minimised as legal title is paid only upon receipt of proceeds for the sale of those assets.

Unrecognised Financial Instruments

The credit risk in relation to derivative contracts which have not been recognised in the Statement of Financial Position is minimal, as counterparties are generally large banks.

Credit risk on swap contracts is limited to the net amount to be received from or paid to counterparties on contracts that are favourable or unfavourable to the Consolidated Entity. The accrued amount payable by the Consolidated Entity at 30 June 2005 was \$0.1 million (2004: nil).

Note 35. Additional Financial Instruments Disclosure (continued)

(c) Foreign Exchange Risk

The Consolidated Entity is exposed to foreign exchange risk through its investments in New Zealand, Singapore and Hong Kong. Foreign exchange risk represents the loss that would be recognised from fluctuations in foreign currency prices against the Australian dollar.

Macquarie Goodman has entered into forward foreign exchange contracts to hedge a proportion of the income received from its New Zealand and Singapore investments. The Consolidated Entity has contracts to sell 15.4 million New Zealand dollars, and sell 11.4 million Singapore dollars. The contracts settle at quarterly intervals from August 2005 to June 2008. The net fair value gain on forward foreign exchange contracts at 30 June 2005 was \$0.3 million.

(d) Net Fair Value of Financial Assets and Liabilities

Recognised Financial Instruments

The Consolidated Entity's financial assets and liabilities included in the Statement of Financial Position are carried at amounts that approximate net fair value. The valuation approach equates to the historical costs of the underlying transactions. Net fair values of assets and liabilities are reviewed by the Directors on a regular basis.

Unrecognised Financial Instruments

The loss on net fair value of interest rate swaps not recognised on the Statement of Financial Position as at the reporting date is \$13.9 million (2004: gain of \$0.1 million).

Note 36. Impact of adopting Australian equivalents to International Financial Reporting Standards

For reporting periods beginning on or after 1 January 2005, the Consolidated Entity must comply with Australian equivalents to International Financial Reporting Standards ("AIFRS") as issued by the Australian Accounting Standards Board.

This financial report has been prepared in accordance with Australian accounting standards and other financial reporting requirements (Australian Generally Accepted Accounting Principles ("Australian GAAP" or "AGAAP")) applicable for reporting periods ended 30 June 2005.

Transition Management

A formal implementation project has been established to assess the impact of transition to AIFRS and to achieve compliance with AIFRS reporting for the financial year commencing 1 July 2005.

Assessment and Planning Phase

The assessment and planning phase generated a high level overview of the impacts of conversion to AIFRS on existing accounting and reporting policies and procedures, systems and processes, business structures and staff.

The assessment and planning phase is complete as at 30 June 2005.

Design Phase

The design phase for the transition to AIFRS included:

• formulation of revised accounting policies for compliance with AIFRS requirements
• identification of potential financial impacts as at the transition date and for subsequent reporting periods prior to adoption of AIFRS.
• development of revised AIFRS disclosures.

The design phase is substantially complete as at 30 June 2005.

Note 36. Impact of adopting Australian equivalents to International Financial Reporting Standards (continued)

Implementation Phase

The implementation phase includes implementation of identified changes to accounting and business procedures, to enable the consolidated entity to generate the required reconciliations and disclosures of AASB 1 First Time Adoption of Australian Equivalents to International Financial Reporting Standards.

This phase is substantially complete as at 30 June 2005.

Impact of Transition to AIFRS

The impact of transition to AIFRS, including the transitional adjustments disclosed in the reconciliations from current Australian GAAP to AIFRS, and the selection and application of AIFRS accounting policies, are based on AIFRS standards that management expect to be in place, or where applicable, early adopted, when preparing the first complete AIFRS financial report (being the half-year ending 31 December 2005). Only a complete set of financial statements and notes together with comparative balances can provide a true and fair presentation of the Company's and consolidated entity's financial position, results of operations and cash flows in accordance with AIFRS. This note provides only a summary, therefore, further disclosure and explanations will be required in the first complete AIFRS financial report for a true and fair view to be presented under AIFRS.

There is a significant amount of judgement involved in the preparation of the reconciliations from current Australian GAAP to AIFRS, consequently the final reconciliations presented in the first financial report prepared in accordance with AIFRS may vary materially from the reconciliations provided in this Note.

Revisions to the selection and application of the AIFRS accounting policies may be required as a result of:

• changes in financial reporting requirements that are relevant to the Company's and Consolidated Entity's first complete AIFRS financial report arising from new or revised accounting standards or interpretations issued by the Australian Accounting Standards Board subsequent to the preparation of the 30 June 2005 financial report.
• additional guidance on the application of AIFRS in a particular industry or to a particular transaction.

The significant changes in accounting policies expected to be adopted in preparing the AIFRS reconciliations and under AASB 1 are set out below:

$(a)$ Investment Property Revaluations

Under AIFRS, revaluation increments and decrements relating to investment properties are recognised in the operating results in the Statement of Financial Performance whereas under Australian GAAP they are recognised through the asset revaluation reserve. The increase in the fair value of the investment properties recognised by the Consolidated Entity since the date of acquisition of Macquarie Goodman Industrial Trust is \$33.0 million. The net profit after tax for the year ended 30 June 2005 determined under AIFRS is increased by \$33.0 million due to the inclusion of net revaluation increments.

$(b)$ Fixed increases in lease rentals under AIFRS

The Consolidated Entity has entered into lease arrangements with customers which allow for fixed annual increases in rental income. Under AIFRS, the Consolidated Entity be required to recognise the total lease rental income evenly over the life of the lease. As a result, lease rental income for the year ended 30 June 2005 is increased by \$4.4 million. No adjustments are expected for the Company.

Note 36. Impact of adopting Australian equivalents to International Financial Reporting Standards (continued)

$(c)$ Loan facilities refinanced

Under current Australian GAAP, loan facilities totalling \$756 million which are due to expire within twelve months of the balance sheet date have been treated as non-current liabilities. Under AIFRS, the Consolidated Entity will be required to reclassify these amounts as current liabilities. No adjustment is required for the Company.

$(d)$ Management Rights

Management rights acquired will be stated at cost less accumulated amortisation and impairment losses. Under AIFRS intangible assets relating to management rights over fixed life trusts are amortised and annually tested for impairment. No impairment losses are expected for either the Consolidated Entity or Parent Entity for the year ended 30 June 2005.

Taxation $\Theta$

On transition to AIFRS the balance sheet method of tax effect accounting will be adopted, rather than the income statement method applied currently under Australian GAAP.

Under the balance sheet approach, income tax on the profit and loss for the year comprises current and deferred taxes. Income tax will be recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it will be recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at reporting date, and any adjustments to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences will not be provided in respect of either the initial recognition of assets and liabilities that affect neither accounting or taxable profit, or differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided will be based on the expected manner of realisation of the asset or settlement of the liability, using tax rates enacted or substantively enacted at reporting date.

A deferred tax asset will be 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 will be reduced to the extent it is no longer probable that the related tax benefit will be realised.

The expected impact of the change in basis on the tax expense for the financial year ended 30 June 2005 is an increase in tax expense by \$4.3 million for the Consolidated Entity and \$nil for the Company. Deferred tax assets and deferred tax liabilities of the Consolidated Entity are expected to increase by \$0.3 million and \$14.8 million respectively as at 30 June 2005. For the Company the expected impact at 30 June 2005 is an increase in deferred tax assets of \$nil and an increase in deferred tax liabilities of \$nil.

$(f)$ Share based payments

Under current Australian GAAP no expense is recognised for options issued to employees.

Under AIFRS, the fair value of options granted must be recognised as an employee benefit expense with a corresponding increase in equity. The fair value will be measured at grant date taking into account market performance conditions only, and spread over the vesting period during which the employees become unconditionally entitled to the options. The amount recognised as an expense will be adjusted to reflect the actual number of options that vest except where forfeiture is due to market related conditions.

No employee benefits expense has been recognised for the year ended 30 June 2005 by either the Consolidated Entity or the Company as the value of the options exercised is recoverable from the employees under the ESAP.

Note 36. Impact of adopting Australian equivalents to International Financial Reporting Standards (continued)

$(g)$ Business Combinations

No change in accounting policy for the merger has been recognised in the reconciliations between AGAAP and AIFRS set out below. Whilst discussions are ongoing between the Australian Accounting Standards Board and its associated bodies in relation to the treatment of stapling transactions under AIFRS, the Directors believe that the presentation of the merger under AIFRS is appropriate under both AGAAP and AIFRS. However, should the Australian Accounting Standards Board or its associated bodies issue definitive guidance on this matter, changes may be required to Macquarie Goodman's current accounting policy.

$(h)$ Financial instruments

Macquarie Goodman has taken advantage of the election in AASB1 to not restate comparatives for AASB132 Financial Investments: Disclosure and Presentation or AASB139 Financial Instruments: Recognition and Measurement. There are no expected adjustments in relation to these standards for 1 July 2004 or the financial year ended 30 June 2005 as current Australian GAAP is expected to continue to apply.

The Consolidated Entity has followed Australian GAAP in accounting for financial instruments within the scope of AASB 132 and AASB 139 as described in Note 1 Statement of significant accounting policies.

As at 1 July 2005 the expected adjustments are:

• Under current Australian GAAP not all derivatives were recognised on the balance sheet. On adoption of AASB 139 all derivatives will be recognised at fair value on the balance sheet. The effect on the Consolidated Entity is to decrease fair value derivatives and the hedging reserve by \$13.9 million arising principally from the fair value of interest rate swaps at 30 June 2005. No adjustment is expected for the Company.

• Currently under Australian GAAP, the RePS are classified as equity and distributions to RePS Holders are treated as a payment to an outside equity interest. Under AIFRS, RePS are regarded as a compounded financial instrument. A portion of the instrument will be recognised as debt and classified as interest bearing liabilities. Distributions to RePS Holders will include an amount which will be treated as interest expense. The net profit after tax for the year ended 30 June 2005 determined under AIFRS will be reduced by the after tax amount attributed to interest for the period. The amount of this adjustment has not been quantified at this time.

$\omega = \omega$ .

Note 36. Impact of adopting Australian equivalents to International Financial Reporting Standards (continued)

	30 June 2005 Consolidated			30 June 2005 Parent Entity
	AGAAP	Transition Impact	AIFRS	AGAAP	Transition impact	AIFRS
	\$14	sM.	\$M	\$M	sM	\$M
Total current assets	155.7		155.7	26.1		26.1
Total non-current assets	5.015.4	0.8	5,016.2	100.9		100.9
Total assets	5,171.1	0.8	5,171.9	127.0		127.0
Total current liabilities	${392.2}$	(756.0)	(1.148.2)	(1.6)		(1.6)
Total non-current liabilities	(1,685.8)	743.3	(942.5)	(71.8)		(71.8)
Total liabilities	(2,078.0)	(12.7)	(2,090.7)	(73.4)		(73.4)
Net Assets	3.093.1	(11.9)	3,081.2	53.6		53.6
	÷
Equity
Contributed equity	2.978.0	0.1	2,978.1	162.3		162.3
Reserves	45.6	(39.3)	6.3
Retained profits	0.3	27.3	27.6	(108.7)		(108.7)
Outside equity interests	69.2		69.2
Total Equity	3,093.1	(11.9)	3.081.2	53.6		53.6

Reconciliation of Retained Earnings and other reserves under AIFRS for the year ended 30 June 2005

	Consolidated		Parent Entity
	Retained earnings	Reserves	Retained earnings	Reserves
	\$M	\$M	\$M	事務
Balance as at 30 June 2005 under AGAAP		45.6	27.3	6.3
AIFRS reconciliation as at 1 July 2004
- deferred tax adjustment	2.0
Adjustments in respect of current year's performance
- Revaluation of investment properties	33.0	(33.0)
- Deferred tax adiustments	(4.3)	(10.5)
- Straight line treatment for fixed increase leases	4.5
· Other adjustments	(3,7)
- Transfer of other net reserves to retained profits	(4.2)	4.2
Balance as at 30 June 2005 under AIFRS	27.3	63	27.3	6.3

Note 37. Events Subsequent to Reporting Date

Subsequent to the financial year end, Macquarie Goodman agreed terms with its bankers for the refinancing of certain of its bank debts. Existing facilities totalling \$1.1 billion were replaced with new facilities totaling \$1.4 billion. $\sim$

Since the balance sheet date, the Consolidated Entity has exchanged and/or settled contracts for the purchase of properties in Australia, New Zealand, Singapore and Hong Kong for \$380.4 million.

The Directors are not aware of any matters or circumstances not otherwise dealt with in this Financial Report or the Directors Report that have significantly affected or may significantly affect the operations of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in the financial year subsequent to the year ended 30 June 2005.

$\omega \rightarrow \infty$ .

$\sim 10^{-1}$

In the opinion of the Directors of Macquarie Goodman Management Limited ("Macquarie Goodman"):

• the financial statements and the accompanying notes, are in accordance with the Corporations Act 2001, $(a)$ including:
• giving a true and fair view of the financial position of Macquarie Goodman and the Consolidated Entity ${i}$ as at 30 June 2005 and of their performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and
• $(ii)$ complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
• (b) here are reasonable grounds to believe that Macquarie Goodman will be able to pay its debts as and when they become due and payable.
• The Directors of Macquarie Goodman have received a declaration from the Chief Executive Officer and $(c)$ Chief Financial Officer stating that the financial statements of Macquarie Goodman Management and its controlled entities present a true and fair view, in all material respects, of Macquarie Goodman Management Limited's financial condition and operational results and are in accordance with the relevant accounting standards.

Signed in accordance with a resolution of the Directors:

David Clarke, AO Chairman

Sydney, 18 August 2005

Gr⁄egòry/Goodman Chief Executive Officer

بمنصصص ومدادمات والمتحاجين

Independent audit report to the members of Macquarie Goodman Management Limited

Scope

We have audited the financial report of Macquarie Goodman Management Limited for the financial year ended 30 June 2005, consisting of the statements of financial performance, statements of financial position, statements of cash flows, accompanying notes 1 to 36, the disclosures made in accordance with the Corporations Regulations 2001, including the disclosures as required by AASB 1046 Director and Executive Disclosures by Disclosing Entities, in the "Remuneration report" in pages 8 to 12 of the Directors' report ("remuneration disclosures") and the directors³ declaration, set out on page 73. The financial report includes the consolidated financial statements of the consolidated entity, comprising the Company and the entities it controlled at the end of the year or from time to time during the financial year. The Company's directors are responsible for the financial report, including the remuneration disclosures. We have conducted an independent audit of the financial report, including the remuneration disclosures, in order to express an opinion on it to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement and the remuneration disclosures comply with Accounting Standard AASB 1046 and the Corporations Regulations 2001. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, including the remuneration disclosures, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements in Australia and statutory requirements so as to present a view which is consistent with our understanding of the Company's and the consolidated entity's financial position, and performance as represented by the results of their operations and their cash flows and whether the remuneration disclosures comply with Accounting Standard AASB 1046 and the Corporations Regulations 2001.

The audit opinion expressed in this report has been formed on the above basis.

Audit opinion

In our opinion, the financial report including the remuneration disclosures of Macquarie Goodman Management Limited are in accordance with:

• a) the Corporations Act 2001, including:
• i. giving a true and fair view of the Company's financial position as at 30 June 2005 and of its performance for the financial year ended on that date; and

ii. complying with Accounting Standards in Australia, including AASB 1046 Director and Executive Disclosures by Disclosing Entities, and the Corporations Regulations $2001$ ; and

J.

$\mathcal{E}^{\pm}$ .

b) other mandatory financial reporting requirements in Australia.

Ť,

$\epsilon = \pm$

KPMG

P M Reid Partner Sydney, 18 August 2005