GOODMAN GROUP

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26 September 2008

The Manager Company Notices Section ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000

Dear Sir

Goodman Group (Goodman) – Annual Report 2008

We confirm that the Goodman Annual Report 2008 and Goodman Industrial Trust Annual Report 2008 were dispatched today to Securityholders together with the attached covering letter.

Please contact the undersigned should you have any queries.

Yours faithfully

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Carl Bicego Company Secretary

enc

Level 10, 60 Castlereagh Street Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444 | [email protected] | www.goodman.com Goodman International Limited ABN 69 000 123 071 Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621 as responsible entity for Goodman Industrial Trust ARSN 091 213 839

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26 September 2008

Dear Securityholder

Goodman Group (Goodman or Group)

Annual Report 2008

We have pleasure in presenting the Goodman Annual Report 2008 and the Goodman Industrial Trust Annual Report 2008.

We made solid progress this year, particularly given the challenges of the capital markets. We are responding appropriately to these challenges and have taken the necessary steps to ensure we are well capitalised and resourced to continue to deliver consistent results to our customers and investors.

Goodman produced an 11% increase in operating profit to $567.1 million for the year ended 30 June 2008. Operating earnings and distribution per security were 34 cents, an 8% increase on the previous year.

Changes to distribution policy

Following an extensive review by the Board coupled with an external review by McKinsey & Company, the Board determined that the distribution payout ratio should be reduced to 75% of operating profit with effect from the 2009 financial year. This change will result in better capital management capability and higher growth in earnings per security over the medium to long-term, which is expected to be in the interests of long-term total Securityholder returns.

The frequency of distributions has also changed to six monthly bringing the Group into line with the majority of its property industry peers, effective from the 2009 financial year. It also considerably reduces internal resource time and the complexity associated with calculating the taxation components of the distribution on a quarterly basis.

Annual General Meeting

The Annual General Meeting will be held on Monday, 17 November 2008 at Sheraton on the Park, Grand Ballroom, 161 Elizabeth Street, Sydney at 10:00 am. A Notice of Meetings and Proxy Form will be dispatched to all Securityholders during October.

Thank you for your support over the past year.

Yours faithfully

Gregory Goodman Group Chief Executive Officer

Level 10, 60 Castlereagh Street, Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444 | [email protected] | www.goodman.com Goodman International Limited ABN 69 000 123 071 Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621 as responsible entity for Goodman Industrial Trust ARSN 091 213 839

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Keeping focused

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Goodman Group
Annual Report 2008
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Highlights

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$18.6b
assets under
management
$2.4b
of development
completions
39
offi ces worldwide
1. Adjusted for non-cash items such as unrealised
gains and losses on property revaluations,
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straight-lining of rental income and mark to market
of derivatives as well as undistributed capital profi ts.
Chairman’s letter 2
Group Chief Executive
Offi cer’s report 4
Group Chief Financial
Offi cer’s report 9
Regional view 10
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Sustainability
12 Corporate governance
14 Financial report
16 Independent auditor’s report
18 Securities information
20 Other managed funds
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26
27
34
136
137
138
139
140
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Board of Directors and Glossary
Company Secretary 24
Corporate directory
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Chairman’s letter

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“Looking ahead, the Board will remain focused on ensuring that investors and customers continue to benefi t from the Group’s integrated and specialist business.”

David S Clarke, AO

Focused on the future

I am pleased to report that, despite a turbulent year on global capital markets, Goodman Group has again performed strongly and is well positioned for the future.

Goodman is one of the world’s leading providers of industrial property and business space solutions. It employs 1,240 people in 19 countries across Asia Pacifi c and Europe, united under the distinctive Goodman brand.

Our customers are leading national and international companies that rely on Goodman for the logistics and business facilities at the centre of their supply chains and operations. Our investors range from individuals through to global institutional funds.

The Group’s core business offering is focused on owning, developing and managing industrial property and business space. This integrated model enables Goodman to provide superior solutions for customers and attractive, long-term total returns for investors. An essential part of our approach is to retain the best people and to form lasting relationships with our customers.

Over the past year, we have focused on maximising value and effi ciency in our core business. This included divestments of two non-core businesses, capital management initiatives to ensure we maintained a strong balance sheet and a solid overall performance by our funds. This was underpinned by increased development activity and robust property fundamentals.

We disposed of Goodman Property Investors in the United Kingdom after a strategic review found that it was a strong business but peripheral to our core offering. In Singapore, we sold our 40% interest in the joint venture management company as well as the Group’s cornerstone investment in Ascendas Real Estate Investment Trust, realising proceeds of $219 million.

Other major events included signifi cantly expanding the scale of Goodman European Logistics Fund through the merger with Celogix Property Fund. This was a signifi cant transaction and assisted in increasing the size of its portfolio to 76 assets in 11 countries at year end.

We are actively exploring opportunities to launch new funds in the UK, Japan and China. This will see a number of properties move off the Group’s balance

sheet, releasing capital for reinvestment in other parts of the business and will assist in reducing overall gearing levels. These initiatives are subject to market conditions in the respective regions.

Looking ahead, the Board will remain focused on ensuring that investors and customers continue to benefi t from the Group’s integrated and specialised business, while maintaining the highest standards of transparency and corporate governance.

We have considered our long-term cash fl ows and the most effi cient sources of capital to fi nance the needs of our business. We have also undertaken an external review of the Group’s distribution policy with McKinsey & Company. The Board has determined that the distribution payout ratio should be reduced to 75% of operating profi t with effect from the 2009 fi nancial year. This change will result in better capital management capability and higher growth in earnings per security over the medium to long-term, which is expected to be in the interests of long-term total Securityholder returns.

The distribution policy has also been amended to bring the frequency of distributions into line with the majority of Goodman’s property industry peers by adopting six monthly distribution payments from the 2009 fi nancial year. The distributions will be declared for the six months ending 31 December and 30 June and paid in February and August respectively.

Finally, I would like to personally thank David Teplitzky, who retired from the Board in November 2007, for his enormous commitment and contribution to Goodman over 17 years. I also welcome Diane Grady who was appointed to the Board during the year.

Thank you to Securityholders, customers, staff and partners for your support during a challenging year.

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David S Clarke, AO Chairman

Goodman Group Annual Report 2008

Keeping focused

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Group Chief Executive Offi cer’s report

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“We remain focused on the fundamentals of our integrated property business.”

Gregory Goodman

Focused on our core business

This ensured we achieved our business targets in a diffi cult market, delivering growth in operating earnings per security (EPS) of 8% and operating profi t of $567.1 million. We also completed the period with gearing down to 39.9% and $1.7 billion of available liquidity.

During the 2008 fi nancial year, Goodman Group was completely focused on the successful execution of our own+develop+ manage business model.

The past year will be remembered as a challenging one for the listed property sector. It was marked by considerable fi nancial market volatility. With this backdrop, our full year results demonstrate the confi dence that our investors and customers have in the Goodman strategy, the strength of our business and the quality of our people.

We remain focused on the fundamentals of our integrated property business. We continue to invest in, develop and manage industrial property and business space, and work hard to achieve outstanding levels of customer satisfaction. This in turn drives high occupancy and retention rates, which are key to delivering value for our investors.

The Group achieved operating profi t of $567.1 million for the year to 30 June. This represented a distribution of 34 cents per security, which is an 8% increase on the previous year.

Operationally, the Group continues to perform well. Our property investment portfolio now stands at $5.6 billion. This is a 6% increase on last year despite adverse valuation movements predominantly in the United Kingdom where conditions have been particularly tough. At year end, we managed a total of approximately 9.9 million sqm around the world.

Developments to the value of $2.4 billion were completed during the year with customers committing to an additional $2.7 billion of new projects. Total assets under management rose by 9% to $18.6 billion, excluding assets transferred with the sale of Goodman Property Investors (GPI) and our Singaporean interests.

Signifi cantly, we were able to successfully raise debt and equity capital during a period in which many businesses had limited or no access to capital markets.

Our ability to raise capital from a range of sources for the Group and our third party funds, demonstrates the confi dence that leading institutional investors and fi nanciers have in our business.

The successful rebranding that we undertook last year was instrumental in unifying our operations under a single global brand. It laid the foundation for our people to work together as one team with a single shared vision and purpose.

The Goodman brand not only differentiates us from our competitors but defi nes our commitment to delivering a consistent, integrated customer service offering and diverse platform of well managed funds for our investors.

During the year, we continued to focus on the development and engagement of our people, particularly those who have joined the Group in recent years through our acquisitions in Europe. A Group-wide employee engagement survey of our people enabled us to identify our strengths as an employer and where our priorities needed to be focused.

We are fortunate to have a talented and enthusiastic workforce in all areas of our business. The commitment and professionalism of our people is the key to the success of our Customer Service Model.

On behalf of the Board and all our stakeholders, I would like to acknowledge the efforts of our people and thank them for their contribution to the results we achieved together during the year.

Earnings composition

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Property development
23%
Management
services
24%
Property
investment
53%
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Goodman Group Annual Report 2008

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Group Chief
Executive
Offi cer’s report
(cont)
“Our strategy, the
strength of our business
and the quality of our
people have delivered a
solid full year result.”
6 Keeping focused
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Group operations

Following a number of years of strong growth, Goodman has achieved a high level of geographic and earnings diversity consistent with our position as one of the world’s leading players in the industrial property arena.

At year end, 79% of our earnings were sourced from Asia Pacifi c and 21% from Europe. Earnings derived from rental income and management fees accounted for around 77% of total earnings, with the remainder from development profi ts.

We continued to expand our operations internationally with a number of strategic initiatives undertaken, including the merger of Goodman European Logistics Fund with Celogix Property Fund and the recent joint venture in the Middle East with our Abu Dhabi-based partner, Sorouh.

Property investment

The headline value of Goodman’s property investment portfolio increased from $5.3 billion to $5.6 billion. Goodman’s property investment portfolio encompasses direct property investments, assets warehoused for funds and cornerstone investments in Goodman’s managed funds.

Operationally, our direct property investments performed well against all indicators during the year. Highlighting the strength of the real estate sector in the Australian market, the average occupancy rate was a high 98% at year end, the weighted average lease expiry was 4.6 years and 3.3% rental growth was achieved. Our customer retention rate was 75%, demonstrating our focus on building long-term relationships with customers and providing premium property solutions. However, we did experience some valuation declines in the UK, which were in line with the downward movements across that market overall. Similarly, some UK valuation losses were also reported in the Group’s cornerstone investments.

The Group’s cornerstone investments increased by $1.1 billion to $2.6 billion during the year. This increase was mainly attributed to the Group’s participation in the capital raisings undertaken by a number of our managed funds. This participation

supported the growth of these funds, improved our diversity of investments and ensured that our interests are aligned with those of our wholesale investors. The properties contained within our cornerstone investments also performed well achieving a 95% occupancy rate (up from 94% a year ago) and enjoying 4% rental growth.

Property services

Goodman’s property services division is responsible for a range of services to our customers including leasing, fi t-out, maintenance and other day-to-day services. At year end, Goodman had total business space of approximately 9.9 million sqm under management globally, with our specialist property services teams looking after the needs of more than 1,350 customers in 371 properties around the world.

Our local expertise and in-depth understanding of customer requirements are a vital part of our integrated model and a key reason many customers seek out and choose to remain in Goodman properties. This is demonstrated by our strong customer retention rate.

A proactive approach to property services combined with solid demand for quality industrial property and business space achieved an occupancy rate of 95% at year end. We leased 1.7 million sqm globally to the value of $195 million in net annual rent.

Property development

We completed $2.4 billion of new developments in Asia Pacifi c and Europe, delivering 1.4 million sqm of space for over 50 customers. Customers also committed to an additional $2.7 billion of new projects. Commenced developments included a 31,200 sqm warehouse facility for Coca-Cola Amatil in Australia and a 25,200 sqm warehouse facility for Whirlpool in Poland.

The value of development projects underway at year end was $3.1 billion, which will create 1.7 million sqm of new space. Approximately 71% of the developments underway are for Goodman’s funds, with 75% precommitted – greatly reducing risk associated with development activity.

This level of direct participation in development projects by Goodman’s funds has increased, which is expected to enhance their growth profi les by leveraging the Group’s expertise.

Development is an essential part of Goodman’s business model and underpins our property investment, property services and fund management operations. It enables us to create new facilities for customers and supports our position as a leading supplier of industrial property and business space globally. For example, in conjunction with our partner in Hong Kong, Macquarie Group, and the jointly managed Hong Kong unlisted logistics fund, we are currently in the planning stages for two major facilities in the Prime Port precinct. These facilities will provide around 222,000 sqm of new warehouse and logistics space and are among the only new developments of their kind to be undertaken in Hong Kong in over eight years.

Fund management

The Group’s total assets under management increased 9% to $18.6 billion as at June 2008, excluding $19.6 billion in assets disposed of as part of the sale of GPI and our Singaporean interests during the year. Goodman’s funds managed on behalf of third party investors grew by 22% to $14.3 billion. The growth in assets under management was predominantly achieved through a combination of property acquisitions and development activity.

The Group’s fund management business changed signifi cantly during the year as noted due to the sale of GPI for $220 million plus a potential $26 million in performance payments over the next two years. We also took the opportunity to review our Singaporean interests, resulting in a decision to sell our cornerstone investment in Ascendas Real Estate Investment Trust and 40% interest in its management company, realising proceeds of $219 million.

Goodman Group Annual Report 2008

Group Chief Executive Offi cer’s report (cont)

Group Chief Financial Offi cer’s report Anthony Rozic

Focused on capital management

The scale of our European fund management business was enhanced through the merger of Goodman European Logistics Fund with Celogix Property Fund, creating what is now a $2.2 billion fund. Importantly, the merger has provided a signifi cant platform from which to expand our logistics business across Continental Europe.

In Australia, Goodman Australia Industrial Fund (GAIF) continued to perform strongly. The performance was due to a combination of strong property fundamentals in Australia and GAIF’s increased participation in Group development projects. In May, GAIF completed a $1 billion equity raising with the investment by GAIF investors in the Group’s portfolio of 14 prime offi ce and business parks. This transaction has benefi ted GAIF by improving its overall property portfolio, which now totals 112 properties valued at $4.6 billion.

Macquarie Goodman Hong Kong Logistics Fund (MGLF-HK) has emerged as a leading player in the Hong Kong logistics and warehouse market. Its portfolio now consists of 18 properties valued at $1.2 billion, and is proposed to be further enhanced through two major development projects.

Goodman Property Trust (GMT) in New Zealand bought a 50% interest in the world-class, 107 ha Highbrook Business Park, which has an end value in excess of $1.0 billion. To fund this transaction, GMT successfully raised $217 million in equity from retail and institutional investors.

Together with GAIF and MGLF-HK, GMT outperformed its benchmark on a total return basis over the past 12 months.

In 2007, the Group entered the Japanese market with our joint venture partner, Macquarie Group, to form a strategic alliance with J-REP Co., Ltd. Planning is now well underway to establish an unlisted fund in Japan focusing on Japanese logistics properties.

Capital management

Goodman manages capital and risk in a responsible manner to achieve our business strategy. We refi nanced $2.5 billion of debt through asset sales and raising $3.2 billion of new facilities to mitigate risks associated with maturing credit facilities. This refi nancing will ensure we maintain a strong working capital position. We also raised approximately $327 million during the year from the issue of hybrid securities, Goodman PLUS, and a further $126 million in equity for the Group through the operation of its Distribution Reinvestment Plan. As a result, the Group has completed the year in a strong fi nancial position with $1.7 billion in available liquidity.

At year end, the Group had a weighted average debt maturity of 3.9 years.

We announced changes to our distribution policy post-balance date, which will have the effect of reducing the distribution payout ratio in the 2009 fi nancial year to 75% of operating profi t.

There are a number of expected benefi ts associated with the change in distribution policy including:

it generates signifi cant free cash fl ow in the 2009 fi nancial year providing additional capacity to self fund co-investment in Goodman’s funds and property maintenance expenditure;
it enhances key performance indicators, including EPS, cash fl ow from operations and Net Asset Value and in turn total Securityholder returns; and
it places the Group in a strong position relative to its Australian peers and on par with global peers who have access to cash fl ow from retained earnings.

The Group will conduct regular reviews to consider opportunities to provide special distributions and/or capital returns when appropriate.

Outlook

The Group has made solid progress this year, particularly given the challenges of the capital markets. We are responding appropriately to these challenges and have taken the necessary steps to ensure we are well capitalised and resourced to continue to deliver consistent results for our customers and investors.

We believe that we can continue to generate EPS growth and will target 6% for the 2009 fi nancial year. However, we note that the current climate makes it more diffi cult to determine than in previous years.

We expect there to be no material change in the composition of our earnings from the 2008 fi nancial year. Further, we are aiming to continue to reduce gearing.

Our targets are predicated on no material deterioration in market conditions.

We will remain focused on our core business of owning, developing and managing industrial property and business space for our customers and investors around the world.

Gregory Goodman Group Chief Executive Offi cer

In relation to our managed funds, at 30 June 2008 there was $1.4 billion of undrawn capital, of which $0.4 billion was undrawn equity, with $1.0 billion of available debt. All maturing debt during the fi nancial year was refi nanced with a combination of Commercial Mortgage Backed Securities and bank debt.

By recycling capital and actively managing debt and equity, Goodman maximised the effi cient use of capital, retained an appropriate level of gearing at 39.9% and freed funds to reinvest in new developments.

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The Group completed the fi nancial year with $1.7 billion in available liquidity – a signifi cant achievement in a tight market. The Group also retained its Baa1 rating with Moody’s and BBB+ with Standard & Poor’s over the course of the year.

Arlington Business Parks Partnership executed a $1.6 billion (£800 million) facility in July 2007. Goodman Australia Industrial Fund obtained a $1.6 billion new debt facility in January 2008 to replace its existing facilities, increase capacity and extend its maturity profi le. Goodman European Logistics Fund obtained a $1.2 billion (€737 million) facility in June 2008. This completed all material refi nancing for Goodman’s managed funds globally, providing them with a weighted average debt maturity of 3.5 years at year end.

Through active and strategic capital management, Goodman Group ended the year in a fi nancially sound position and is well placed to execute its business strategy.

The major equity initiatives during the year included raising approximately $327 million from the Goodman PLUS hybrid issue and the operation of the Distribution Reinvestment Plan, which while active, raised $126 million.

In line with the Group’s strategy of diversifying its debt platform and increasing the maturity profi le, it undertook a number of major fi nancing initiatives. The Group secured a new $817 million, fi ve year debt facility in December 2007 with an additional $41 million secured in January 2008. This was complemented by an $800 million, four year unsecured banking facility fi nalised in February 2008. We also successfully priced a $514 million (£250 million) 10 year unsecured debt issue under the Group’s Euro Medium Term Note programme in June 2008. These activities resulted in June 2008. These activities resulted in the Group improving its weighted average debt maturity profi le to 3.9 years.

The Group again took a conservative approach to fi nancial risk management. Our hedging profi le reduces earnings volatility and ensures more consistent returns for Securityholders.

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$800 million, four year unsecured
banking facility fi nalised in February
Group debt maturity profile
2008. We also successfully priced
5 years and greater 1 year a $514 million (£250 million) 10 year
39% 13% unsecured debt issue under the Group’s
4 years23% Euro Medium Term Note programme in June 2008. These activities resulted Anthony Rozic
Group Chief Financial Offi cer
in the Group improving its weighted
average debt maturity profi le to 3.9 years.
2 years
15%
3 years10% Interest rate hedge profile
$M % pa
3,500 12
Fund debt maturity profile 3,000 10
5 years and greater 44% 1 year7% 2,500 8
4 years 2,000
24% 6
1,500
2 years 4
4% 1,000
500 2
3 years
21% 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Year
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Goodman Group Annual Report 2008

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HAMBURG
BIRMINGHAM AMSTERDAM WARSAW
LONDON
READING EINDHOVEN DÜSSELDORF KRAKÓW [1]
BRUSSELS FRANKFURT
LUXEMBOURG PRAGUE SENEC [1]
PARIS
MUNICH
BUDAPEST
LYON MILAN
BUCHAREST [1]
MARSEILLE
BARCELONA
ISTANBUL
MADRID
ABU DHABI [2]
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BEIJING [1]
TOKYO [2]
OSAKA [2] NAGOYA [2]
FUKUOKA [2]
SHANGHAI
HONG KONG [2]
BRISBANE
PERTH
ADELAIDE SYDNEY
AUCKLAND
MELBOURNE
CHRISTCHURCH
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Regional view

1,240 people throughout 39 cities around the world

	Asia Pacif c	Europe	Total
Total assets under management ($B)	10.8	7.8	18.6
Number of funds3	5	4	9
Number of business space properties	243	128	371
Business space customers4	1,022	358	1,358
People5	826	414	1,240
Business space managed (M sqm)	6.3	3.6	9.9
Number of off ces	14	25	39

Opened after year end. 2. Joint venture offi ces. 3. Includes J-REP Co., Ltd and Goodman Group. 4. Total number of Goodman Group’s customers globally. Customers with a presence in Europe and Asia Pacifi c are counted in the fi gure of each region. 5. Includes employees of Macquarie Goodman Asia (MGA), a joint venture between Goodman Group and Macquarie Group and employees of J-REP Co., Ltd, in which MGA holds a 53% interest.

Goodman Group Annual Report 2008

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Group
operations
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Property investment
Property
investment
Focused on
performance
Goodman invests Our property investment activities can be divided into the direct property Cornerstone investments grew by $1.1 billion to $2.6 billion over the
in a quality portfolio Group, properties that we have investment portfolio owned by the year, primarily due to the Group’s participation in capital raisings
of assets combined warehoused to provide new undertaken by our managed funds.
opportunities for our managed funds,
with cornerstone and our cornerstone investments in Goodman is continually adding
value to its investment portfolio
Goodman’s existing managed funds.
investments in by providing exceptional property
Along with other transactions and services for customers and capitalising
changes in valuations, the total value of on development opportunities.
our managed
our property investment portfolio With a limited supply of quality
funds, to improve increased by 6% to $5.6 billion. industrial property and business
space in many markets, we are
The quality of assets held across our
diversity and scale also seeing strong demand and
direct property investment portfolio
healthy growth in rental income.
while ensuring combined with the strength of our
interests are 3.3% growth in rental income during business model can be seen in the
aligned with those and weighted average lease expiry the year, occupancy rate of 98%
of fund investors. of 4.6 years.
Capital allocation $M
Direct property assets $2,154.7
$0
$2,154.7
Warehoused property assets $87.7
$710.7
$798.4
Cornerstone investments $2,015.6
$622.6
$2,638.2
Total investments $4,258.0
$1,333.3
$5,591.3
Asia Pacific Europe Total
Goodman Group Annual Report 2008 13
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12 Keeping focused
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		Propertyservices
Group		Property
operations		services
		Focused on
		customer service
		Goodman’s local,	Goodman employs dedicated teams of property services professionals		We drive eff ciencies to reduce property outgoings and actively work with
		expert teams ensure our properties are well maintained	who support customers across the 371 properties held through our direct property investment portfolio and our managed funds. These premium sites provide a total of		customers to structure property solutions that meet their business needs. This may range from f nding new accommodation to support growth to assisting customers to consolidate locations. By cooperating
		and managed to deliver maximum value to customers	approximately 9.9 million sqm in industrial property and business space for customers around the world. The teams are responsible for all the detailed management tasks that		closely with our development teams and f nancial groups worldwide, the teams can deliver complex, integrated and affordable solutions on a local, national or international basis.
		and investors.	ensure Goodman’s properties are well maintained and fully utilised. They ensure		It is all about doing the little things well and the results speak for themselves.
			that we are responsive and diligent in		Goodman’s direct Australian property
			meeting the needs of our customers.		investment portfolio features a high
			This includes procuring new customers,		retention rate of 75% and an occupancy
			lease renewals, property performance		rate of 98%. Property services expertise
			benchmarking, managing rent payments,		is central to our strong, long-term
			leasing agreements, insurance and legal		relationships with customers and our
			issues, refurbishments and environmental		ability to deliver higher returns to investors.
			assessments and initiatives.		Over the year, the teams leased
					1.7 million sqm of space globally, which
					totalled $195 million in net annual rent.
			% Groupand fund top20 customers(bynet rental income)
			Toll		3.4
			Kuehne + Nagel		3.0
			Coles		2.7
			Deutsche Post World Net		2.4
			T-Mobile		2.0
			Verizon		2.0
			Linfox		1.5
			Amazon		1.3
			Unilever		1.3
			Coca-Cola Amatil		1.1
			Regus Group		1.1
			Brambles Australia		1.0
			Constellation		0.9
			Nats En Route		0.9
			Diamond Sparkling		0.8
			ACI Packaging		0.8
			Woolworths		0.7
			GMAC		0.7
			NYK Logistics	0.6
			Metcash	0.6

14	Keeping focused	Goodman Group Annual Report 2008			15

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Group
operations
16 Keeping focused
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In Western Sydney, we have developed
more than 550,000 sqm of new industrial
space in an innovative arrangement
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Property development Property development

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Goodman to
provide premium
our funds.
solutions for
customers and
create fresh, high
quality assets
for investors.
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between Goodman, Goodman Australia
Industrial Fund and Brickworks Limited
– a major landowner. During the year,
we expanded this agreement to add a
further 333 ha of land at Oakdale
Industrial Estate.
Over the past six years, the Group’s
development activities have grown
from completions of 168,000 sqm
in Australasia to 1.4 million sqm
in Asia Pacifi c and Europe.
In all our developments, we focus on the
quality and sustainability of buildings,
the experience they will deliver for the
people who will work in them and their
environmental impact. We were delighted
to be recognised for excellence in design
and sustainability at industry awards held
in Australia and the UK during the year.
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Eastern Europe
8%
Australia
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Completed developments

Development work in progress Completed developments Eastern Europe Western Europe sqm 000 8% 11% 1,230 Asia 12% 512 Australia and United 240 New Zealand Kingdom 168 192 44% 25% 03 04 05 06 07 08 Year

sqm 000 1,352

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Fund management
Group Fund
operations management
Focused on
total returns
Goodman adds Goodman had managed funds with a total of $14.3 billion in assets under We are looking to further grow our funds platform, and continue to assess
value to the assets management as at 30 June 2008. opportunities to launch new funds in
These funds were primarily targeted the United Kingdom, Japan and China.
within its managed at institutional investors and are The timing of these opportunities will
located in Australia, New Zealand, be subject to market conditions in the
Hong Kong, Continental Europe respective regions.
funds through active
and the United Kingdom.
management and Following the merger with Celogix
Our funds own and develop high quality Property Fund in November 2007,
industrial property and business space Goodman European Logistics Fund
by leveraging our
at key locations within their markets. completed a major sale and leaseback
global expertise They leverage Goodman’s proven agreement with Kuehne + Nagel
and customer own+develop+manage customer service in March to secure 21 warehouses
offering to access growth opportunities across fi ve countries. At year end,
relationships. from its extensive development pipeline, investment opportunities, capital it had a total property portfolio of 76 assets in 11 countries.
management expertise and global
In Australia, Goodman Australia Industrial
customer base. Goodman has
substantial cornerstone investments Fund raised $1 billion in equity to expand
its portfolio. In Hong Kong, Macquarie
in each fund ensuring its interests
Goodman Hong Kong Logistics Fund
are aligned with those of investors.
has quickly matured to become one of
The shape of our fund management the largest industrial property owners in
business changed signifi cantly during this market and is delivering above
the year with the sale of our non-core benchmark returns.
business, Goodman Property Investors,
for a potential total of $246 million.
Third party AUM by region ($B) AUM by market segment
China/Hong Kong New Zealand Listed fund Unlisted funds
$1.2 $1.3 16% 84%
Continental
Japan Europe
$1.1 $2.9
United
Australia Kingdom
$4.6 $3.2
18 Keeping focused Goodman Group Annual Report 2008 19
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Executive team

Group executives

==> picture [91 x 92] intentionally omitted <==

Gregory Goodman Michael O’Sullivan Group Chief Chief Executive Executive Offi cer Offi cer, Europe

Nick Kurtis

David van Aanholt

Anthony Rozic Group Chief Financial Offi cer

Group Head of Fund Management

Chief Executive

Offi cer – Asia Pacifi c

Gregory is responsible for Michael has been Anthony’s responsibilities Nick is responsible for David has been with the

Goodman Group’s overall based in London since for the Group include the coordination and Group since 1998 and

operations and the 2006 and is responsible fi nancial control, performance of the worked closely with the

implementation of its for the performance of management reporting Group’s fund management Group Chief Executive

strategic plan. He has 26 the Group’s business in and budgeting, fi nancial platform. He joined Offi cer and the Board on

years of experience in the Europe and the Middle planning, tax management, Goodman in 2000 and the strategic direction of

property industry with East. He joined the capital and fi nancial risk has held a number of the business during the

signifi cant expertise in Group in 2002 and has management and senior positions within year. He has over 20 years

the industrial property managed complex information technology. fund management and of experience in the

arena. Gregory was a fi nancial and corporate He joined Goodman in corporate services. property industry

co-founder of Goodman transactions as well as 2004. Anthony is a Nick has 15 years of including valuation, asset

Group, playing an integral played a leading role in qualifi ed Chartered experience in the property management, development

role in establishing the corporate strategy Accountant and has held fund management management and fund

its specialist global and development of the a number of senior fi nance industry and holds an management. David led

position in the property business. Michael has roles in the property undergraduate degree in the Group’s Asia Pacifi c

market through various had extensive industry and prior to real estate and a Masters operations, including the

corporate transactions, experience in property that in the Chartered in Finance from the Group’s direct investment,

including takeovers, and fi nancial services Accountancy profession. University of fund management and

mergers and acquisitions. and held previous Technology, Sydney. development platforms.

He is a director of fi nancial roles with

Goodman (NZ) Limited, Woolworths and KPMG. J-REP Co., Ltd and the management companies of Goodman Group’s unlisted funds.

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Carolyn Scobie Group General Counsel

Jim Neville

Alison Brink

Nick Vrondas James Inwood Executive – Group Head of European Corporate Finance Fund Management

Group General Manager, People and Services

Group General Manager – Marketing

Carolyn is directly Jim has global Alison is responsible Nick is responsible for James has been with responsible for the legal responsibility for for marketing and the Group’s corporate the Group for two years activities of Goodman Goodman’s human communications fi nance functions, which and is responsible for including corporate, resources function and across the Group include investor relations coordinating equity property and compliance work environment and including branding, and analytical operations. raisings, transactions, matters. Carolyn has joined the Group in 2004. advertising, corporate He also plays a key role investor relations, over 17 years of legal He has over 30 years communications, in the Group’s strategic capital management experience in corporate of commercial and research, promotions planning and capital and analytics across the and commercial property professional experience and public relations. management. Nick has Group’s European fund areas including three gained in the engineering/ Prior to joining Goodman, 15 years of experience management platform. years within the legal manufacturing sector she held various in the property industry He has over 14 years profession and six years and in the fi nancial/ marketing positions at and prior to joining of experience and has as in-house Counsel with professional services DHL in Asia, Europe Goodman was Head of signifi cant expertise Kumagai Australia Group. sector. Prior to joining and the United States, the securities research in property fi nance She holds a Masters Goodman, he held senior including regional team at Goldman and structuring in both of Arts from Sydney executive positions brand director for Asia Sachs JBWere. He has listed and unlisted University, a Bachelor of leading the human Pacifi c and Europe, US also worked in public environments. James Arts/Bachelor of Laws resources function marketing vice-president and private real estate spent 10 years as a real from the Australian at the Kirby Group, and head of global markets in roles at Jones estate investment trust National University and Colonial State Bank and advertising. Alison has Lang LaSalle and BBY. analyst, including eight a Graduate Diploma in KPMG NSW. He holds a 18 years of experience years at JPMorgan, Company Secretarial Bachelor of Economics in international which involved equity Practice. She is a from Sydney University marketing and holds a raisings for listed and member of Chartered where he majored in Bachelor of Business unlisted funds. Secretaries Australia. industrial relations. from the University of Technology, Sydney and a diploma in logistics.

Goodman Group Annual Report 2008

Keeping focused

Executive team

Regional executives

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Matthew Gibb

Jason Little John Dakin General Manager, Chief Executive Australia Offi cer, New Zealand

Daniel McDonald Managing Director, Hong Kong

Philip Pearce Managing Director, China

Managing Director, Japan

Jason joined the John is responsible for the Daniel is responsible for Philip is responsible for Matthew is responsible Group in June 2003 overall management and the overall management the strategic development for Goodman’s and is responsible for operations of Goodman of Macquarie Goodman and continued expansion operations in Japan. the management of in New Zealand. He Asia in Hong Kong. of the Group’s industrial He joined Goodman in Goodman’s Australian joined the Group in 2004 He has more than investment business August 2001 and held operations. Prior to this and has 20 years of 12 years of experience throughout China. various roles in Australia role, he was the Capital experience in the property in the property industry, He joined the Group in including General Transactions Executive industry throughout the including signifi cant 2002 and has over Manager, Victoria and responsible for all United Kingdom, Australia expertise in the industrial 11 years of experience Director of Business property transactions and New Zealand. John is sector in Australia and in real estate investment Development – Asia including both the a former national director across Asia. Daniel trusts in the Asia Pacifi c Pacifi c. Matthew has over sourcing of stabilised of the Property Council joined MGA in 2005 region, including four 15 years of experience investment opportunities of New Zealand and prior from CBRE, where years in Singapore with in commercial property, and the land bank for to joining Goodman he he was the Executive Ascendas Real Estate including over seven with Goodman’s development was with Colonial First Director of Industrial Investment Trust. Prior to international property pipeline. He also State Property. He holds and Logistics Services joining Goodman, he was consultant Jones Lang managed all property a Bachelor of Commerce, Asia and Managing at AMP Henderson Global LaSalle, where he disposals, including a Graduate Diploma in Director Shanghai. Investors in Sydney where held various positions stabilised, strata and Applied Finance and he worked in various across Australia and land subdivisions. Investment (Securities roles within the AMP the United Kingdom. Institute of Australia) Henderson Property and is an Associate of Group including valuation, the Financial Services asset management and Institute of Australasia. fund management.

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Danny Peeters Chief Executive Offi cer, European Logistics

Jim Johnston

Rob Wilkinson

David Keir Jason Dalby Managing Director, Managing Director, UK Logistics UK Logistics

Managing Director, UK Business Parks

Managing Director, European Business Parks

Danny is responsible Jim has overall Rob is responsible for David has overall Jason is Managing for the development of responsibility for UK the management and responsibility for the UK Director of Goodman’s Goodman’s logistics business parks including strategy of the European logistics operations. UK logistics business. property business Arlington Business Parks business parks division, Prior to joining Goodman Prior to joining Goodman in Europe. He joined Partnership. He also leads including responsibility in April 2007, he in April 2007, he was Goodman in 2000 the ongoing expansion of for Goodman European established Rosemound Managing Director (then Eurinpro) as Chief Goodman’s activities into Business Parks Fund. Developments Limited of Rosemound Operating Offi cer. In the business park sector He has been with the where he was Executive Developments Limited this position, Danny and other large scale Group since 2003 and has Chairman for fi ve years. where he had worked was involved in the development projects. 13 years of experience in Prior to establishing for four years. Prior to global expansion and Prior to Goodman, Jim the property and fi nancial Rosemound, David was establishing Rosemound, business development was with Arlington since services sectors in areas Senior Vice President of Jason was joint Managing of the organisation. 1991 in various roles such as general audit ProLogis UK where he Director of ProLogis UK Following Eurinpro’s including Development practice and real estate had worked for four years where he had worked acquisition, he became Director, Sales and investment banking. following the ProLogis for fi ve years following Chief Executive Offi cer, Leasing Director, Regional Prior to joining Goodman, takeover of Kingspark in the ProLogis takeover Logistics for Goodman in Development Director and Rob was a Director of 1998. He was one of the of Kingspark. Prior to 2006. Previously, he was Development Surveyor. real estate investment founding partners of this, he worked as a Business Development banking at UBS. He has Kingspark which was development director at Manager at NYK a degree in law from established in 1993. Countryside Properties in Logistics. Danny holds an Cambridge University Prior to this, David worked its commercial division. engineering degree from and is a qualifi ed with Berry Brothers and the Catholic University Chartered Accountant. Ashfords. of Leuven (Belgium).

Goodman Group Annual Report 2008

Keeping focused

Board of Directors and Company Secretary

The Board

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David S Clarke, AO Gregory Goodman Ian Ferrier, AM Chairman Group Chief Independent App 26 October 2000 Executive Offi cer Director App 7 August 1998 App 1 September 2003

Patrick Goodman Non-Executive Director App 14 April 1998

Diane Grady Independent Director App 30 September 2007

David has been Chairman Gregory is responsible for Ian is a co-founder of Patrick is the Managing Diane was appointed as of Macquarie Group Goodman Group’s overall Ferrier Hodgson. He is a Director of Goodman an Independent Director Limited (the successor operations and the Fellow of The Institute of Holdings Group, which on 30 September 2007. parent entity of Macquarie implementation of its Chartered Accountants in is a major investor in She has been a full-time Bank Limited) since 1 April strategic plan. He has Australia and has 43 years Goodman. The diversifi ed non-executive director on 2007. He was previously 26 years of experience of experience in company interests of Goodman various companies since Executive Chairman in the property industry corporate recovery and Holdings Group initially 1994 and is currently a of Macquarie Bank with signifi cant expertise turnaround practice. focused on direct and director of Woolworths from its formation in 1985 in the industrial property Ian is also a director of indirect property Limited and BlueScope until 31 March 2007 arena. Gregory was a a number of private and development and have Steel Limited. She is also and prior to that Joint co-founder of Goodman public companies. He is expanded to include the a senior adviser to or Managing Director Group, playing an integral currently Chairman of management of a diverse McKinsey & Company of its predecessor, Hill role in establishing its InvoCare Limited, portfolio across sectors and a member of the Samuel Australia Limited, specialist global position Australian Oil Limited and covering aviation, food, ASIC Business from 1971. He is also in the property market EnergyOne Limited and a rural, private and listed Consultative Panel. Prior Chairman of Australian through various corporate director of Australian equity, infrastructure and to becoming an Vintage Ltd, Poole’s Rock transactions, including Vintage Ltd (formerly fi nancial services globally. independent director, Wines Pty Limited, the takeovers, mergers and McGuigan Simeon Wines He is also a director of Diane was a partner with Wine Committee of the acquisitions. He is a Limited) and Reckon companies involved in McKinsey & Company Royal Agricultural Society director of Goodman (NZ) Limited. Ian’s experience information technology, where she spent 15 years of NSW, the Opera Limited, J-REP Co., Ltd is essentially concerned property investment and consulting to clients in a Australia Capital Fund, and the management with understanding the management both in broad range of industries the Sydney University companies of Goodman fi nancial and other issues Australasia and the on strategic and Football Club Foundation Group’s unlisted funds. confronting companies United States. During his organisational issues. and the George Gregan which require turnaround 28 year career, Patrick Foundation. David is a management, analysing has gained considerable member of the Investment those issues and public and private Advisory Committee of implementing policies company experience the Australian Olympic and strategies which both domestically and Foundation, Harvard lead to a successful internationally. Business School Asia rehabilitation. He has Advisory Board, Seoul signifi cant experience International Business in the property and Advisory Council and development, tourism, Bloomberg Asia Pacifi c manufacturing, retail, Advisory Committee. hospitality and hotels, David was previously infrastructure and aviation Chairman of the Sydney and service industries. and Territorial Advisory Board of The Salvation Army and the Australian Rugby Union and a member of the International Rugby Board.

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Mr Jim Sloman, OAM Carl Bicego Independent Company Director Secretary App 1 February 2006 App 24 October 2006

John Harkness Independent Director App 23 February 2005

James Hodgkinson Non-Executive Director App 21 February 2003

Anne Keating Independent Director App 23 February 2005

John is a Fellow of The James is an executive Anne is a non-executive Jim has over 30 years of Carl is the Company Institute of Chartered director (non-voting) of director with board experience in the building Secretary of Goodman Accountants in Australia Macquarie Group Limited positions in a range of and construction and its Australian and the Australian and Co-Head of industries. She is on the industries in Australia and subsidiaries as well as Institute of Company Macquarie Group’s Real boards of Macquarie overseas, including Legal Counsel – Head of Directors. He was a Estate Capital (REC) Leisure Management experience with Sir Corporate in Australia. partner of KPMG for Division. His Limited and Macquarie Robert McAlpine & Sons He has over 10 years of 24 years and National responsibilities include Leisure Operations in London and Lend experience in corporate Executive Offi cer for fi ve Macquarie Group’s Limited, being the Lease Corporation in law and joined Goodman years. Since retiring from interest in the MGA Joint management companies Australia and as Deputy from law fi rm Allens KPMG in June 2000, John Venture. James was also of Macquarie Leisure Chief Executive and Chief Arthur Robinson in 2006. has held a number of Chief Executive Offi cer of Trust Group, and STW Operating Offi cer of the Carl holds a Masters of non-executive director Macquarie Industrial Trust Communications Group Sydney Organising Laws and Bachelor of roles. He is currently for six years prior to that Limited. Anne was Committee for the Economics/Bachelor of Chairman of ICA Property trust’s merger with previously on the board of Olympic Games (SOCOG) Laws (Hons). He is an Development Funds and Goodman Industrial Trust. Spencer Street Station from 1997 to 2001. He is affi liate of Chartered Sydney Foundation for He is a director of J-REP Redevelopment Holdings currently the Chief Secretaries Australia. Medical Research. Co., Ltd, Goodman (NZ) Limited and prior to that Executive Offi cer and a John is a director of Limited and Macquarie was a director of director of MI Associates Macquarie CountryWide Goodman Hong Kong Insurance Australia Group Pty Limited, a company Management Limited, Logistics Fund. With over Limited for seven years. established by him and the management 20 years of experience in She is also a member of comprising some of the company of Macquarie property fund the Advisory Council of leading members of the CountryWide Trust, and management, investment ABN AMRO Australia and former SOCOG senior Crane Group Limited. banking and chartered New Zealand, a Governor management team. He is President of accounting, James of the Cerebral Palsy MI Associates is working Northern Suburbs Rugby oversees REC’s Foundation and a trustee as an adviser to the Football Club Limited and businesses and real for the Centennial Park organisers of the London a member of the Territorial estate investment trust and Moore Park Trust. Olympic Games following Headquarters and development in Asia and Her last executive its work on London’s Sydney Advisory Board core real estate position was as General winning bid for the 2012 of The Salvation Army. investments for Manager, Australia for Olympic Games. With his Macquarie Group. He has United Airlines for nine range of experience, Jim a Bachelor of Economics, years until 2001. brings signifi cant is a Certifi ed Practising expertise to Goodman. Accountant and is a Fellow of the Australian Property Institute.

Goodman Group Annual Report 2008

Keeping focused

Corporate governance

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Sustainability
Focused on
a sustainable future
We have recently adopted an integrated For the 2008 fi nancial year, we recorded a
At Goodman, approach to sustainability. In light of this, number of achievements across the four
we take our our strategy is simply to be a sustainability leader in industrial property and business factors that make up our sustainability framework. Highlights included:
space in all our markets.
commitment to + In the workplace, we completed our
To achieve this strategy, we are inaugural employee engagement
sustainability developing and implementing survey and have committed
seriously and a sustainability framework that incorporates workplace, marketplace, to conducting these annually; introduced a staff careers expo to
acknowledge environmental and community components across the Goodman raise awareness and promote internal career development opportunities;
business. This will be delivered through an and are in the process of setting
that integrating
approach that focuses on creating long- company-wide KPIs to measure
term value and recognising the different and benchmark performance.
sustainability
requirements of all our stakeholders. + In the marketplace, we conducted
into the way we Our approach encompasses: a detailed customer engagement
survey, which produced a number
do business is a + ensuring that our business and of recommendations for us to
property portfolios are positioned
improve the way we currently
long-term journey for a sustainable future; interact with our customers.
+ improving business effi ciencies and + Our environmental achievements
of continuous
effectiveness;
included platinum sponsorship
+ taking advantage of our market-
of the Green Building Council of
improvement. leading position and our proven Australia’s Green Star Industrial
own+develop+manage model for
Tool; commencement of NABERS
long-term competitive advantage; and
Energy assessment of our existing
+ embedding sustainability so that it
commercial offi ce portfolio;
becomes a business-as-usual
introduction and assessment of
operational component within the our Australian and New Zealand
Goodman business.
greenhouse gas inventories to
The implementation of our sustainability quantify our carbon emissions profi le;
strategy will be driven by increasing completion of our second Carbon
dedicated resources within Goodman Disclosure Project questionnaire;
to focus on and coordinate sustainability and completion or commencement
across the entire business. Our of a number of projects that meet a
effectiveness will be measured through: range of sustainability benchmarks.
+ We continued our community
+ setting key performance indicators
involvement through the work of
(KPIs) for sustainability to benchmark the Goodman Foundation, which
development and management of our donated funds to help charities such
property and corporate performance; as Oz Harvest, Multiple Sclerosis
+ introducing and monitoring targeted Australia and De Dauw VZW.
programmes that facilitate and
The introduction of the good+deeds
coordinate sustainability; and programme has enabled staff to
+ implementing the feasibility of specifi c nominate a number of charities to be
initiatives at an individual property
supported throughout the year.
level that deliver specifi ed levels of These charities included The Burdekin
sustainability performance. Association, Beyond Blue, Challenge,
We look forward to reporting on the Education Development Association,
progress we are making on the The Salvation Army, The Smith Family
implementation of our sustainability and the Ovarian Cancer Research
framework going forward. Foundation. In addition, staff raised
money for the China Relief Fund
following the earthquake in
Sichuan Province.
26 Keeping focused
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Focused on good governance

Goodman recognises that an effective corporate governance culture is critical to success. We have designed and implemented a substantial range of governance initiatives, described in detail below, and we believe that our corporate governance systems are robust and effective. We recognise corporate governance is not static and systems will need to evolve over time to meet the demands of a changing market and corporate circumstances. At all times, we strive to achieve governance outcomes which balance the needs of Goodman, its stakeholders, regulators and the market.

Corporate governance is the framework of rules, systems and processes by which authority is exercised within an organisation and accountability placed. It infl uences how the objectives of Goodman Group (Goodman) are set and achieved, how risk is monitored and assessed and how performance is optimised.

The Corporate Governance Statement below outlines the ways in which Goodman has met the Australian Securities Exchange (ASX) Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations. We have also had regard to the Council’s Second Edition to apply from future reporting periods. Any departures to implementation of the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations are described in the Corporate Governance Statement below.

The Board

In February 2005, Goodman International Limited (GIL) and Goodman Industrial Trust (Trust) were stapled together to form Goodman, which is listed on the ASX under the ticker GMG. Goodman is governed by its constituent documents, applicable laws (including the Corporations Act), the ASX Listing Rules and, in respect of the Trust, the compliance plan lodged with the Australian Securities & Investments Commission (ASIC).

As a result of stapling, the boards of GIL and Goodman Funds Management Limited (GFM), as the responsible entity for the Trust, meet jointly as the Board of Goodman and comprise the same Directors. The term “Board” hereafter should be read as a reference to the boards of GIL and GFM as responsible entity for the Trust.

The Board is comprised of nine Directors, the majority of whom are independent, and is chaired by Mr David Clarke. The Board believes its existing size and

composition provides the broad base of skills and experience necessary to set the strategic direction of Goodman, oversee management’s implementation of strategy and enhance corporate performance.

The Directors bring a wide range of skills and experience to their respective roles and are committed to achieving a high standard of corporate governance. The diversity of each Director’s background strengthens the Board and enables it to bring critical judgement and independent assessment to the oversight of Goodman’s business. The Board is responsible for all aspects of the management of Goodman and has ultimate responsibility for its corporate governance practices.

The Board has adopted a charter that sets out the functions of the Board. The charter clearly establishes the role of the Board in setting Goodman’s objectives and its responsibilities in the implementation of such objectives. A copy of the charter is published on Goodman’s website at www.goodman.com.

To assist the Directors in exercising their responsibilities with critical judgement and independent thinking, comprehensive Board papers are issued in advance of meetings to enable full and informed participation.

The Board’s functions include:

(a) appointing the Group Chief Executive Offi cer;

(b) setting strategic direction; (c) reviewing progress on strategy; (d) developing key policies which impact on Goodman;

(e)

(e) approving strategic alliances; (f) monitoring organisational performance against set targets; (g) ensuring compliance with statutory, fi nancial and social responsibilities; and

(h) ensuring business risks are appropriately identifi ed and managed.

The Board has developed a statement of delegated authority to management. This delegated authority stipulates those matters to be dealt with by the Board and those matters which are delegated to management. The general statement of delegated authority governs areas such as fi nance, corporate matters and property transactions.

Goodman Group Annual Report 2008

Corporate governance (cont)

The composition of the Board as at 30 June 2008 is shown below. Please refer to page 36 in the Directors’ report for details of each Director’s attendance at Board and committee meetings during the year.

Directors’ obligations and rights

Goodman uses formal letters of appointment for Directors in order to ensure that the Directors clearly understand the expectations of them. Each letter outlines the terms of the Director’s appointment and includes matters such as their powers and duties, attendance at meetings, remuneration, appointment on committees, induction and continuing education, disclosure of interests and circumstances when their offi ce becomes vacant. Please refer to pages 54 and 55 in the Directors’ report for the skills and experience of each Director.

In respect of tenure, Non-Executive Directors are subject to re-election by rotation at least every three years and new Directors appointed to the Board are required to seek election at the fi rst Annual General Meeting (AGM) of Securityholders following their appointment. Together with letters of appointment, all new Directors are provided with an information pack regarding the operations of Goodman, including key company policies and guidelines, constitutions for GIL, GFM and the principal trusts and the relevant compliance plans.

Goodman stipulates the standards of ethical behaviour expected of Directors, key executives and employees in its Code of Conduct and requires the observance of those standards. The Code of Conduct is available on its website.

Goodman requires Directors to hold securities with a value equivalent to twice their base annual fees and applies 25% of Directors’ remuneration to the acquisition of Goodman securities until that value of securities is held. For the purposes of this policy, the value of each parcel acquired is the higher of the purchase price or market value at the end of the fi nancial year.

Goodman has a formal policy allowing Directors to take independent legal advice at Goodman’s expense should they believe it necessary for the performance of their duties.

Independent decision-making

The Board recognises the importance of independent decision-making by Directors and has established policies which require the independence of Directors to be assessed annually and that Directors inform the Chairman prior to accepting any other board appointments offered to them. Each Director provides confi rmations on their ability to adequately perform their role on an annual basis. The Directors bring independent thinking, high standards of corporate governance and good judgement to the Board.

The Company Secretary and senior executives are always available to the Directors to provide them with information or clarifi cation as required. These senior executives also present information at Board meetings in order to provide the Directors with unfettered access to all relevant information and the ability to candidly question senior management in relation to any matter they deem necessary.

The Independent Directors may elect to consider matters without the presence of executives or the Non-Independent Directors where they believe this would bring additional transparency to the conduct of Goodman’s affairs.

Directors are provided with tours of Goodman’s properties, both within Australia and overseas. Tours are also conducted prior to the completion of key acquisitions.

Directors and senior executives are also encouraged to participate in further education relevant to their roles. Goodman reimburses the costs of further education which is relevant to a Director’s or executive’s role.

==> picture [328 x 23] intentionally omitted <==

----- Start of picture text -----

Name Description Independent
----- End of picture text -----

			Yes	No
Mr	David Clarke	Chairman		+
Mr	Gregory Goodman	Group Chief Executive Off cer		+
Mr	Ian Ferrier	Independent Director	+
Mr	Patrick Goodman	Non-Executive Director		+
Ms	Diane Grady	Independent Director	+
Mr	John Harkness	Independent Director	+
Mr	James Hodgkinson	Non-Executive Director		+
Ms	Anne Keating	Independent Director	+
Mr	Jim Sloman	Independent Director	+

Criteria for assessing independence

The Board has assessed individual Directors for independence using the defi nition of independence provided in the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations.

The Board considers that a material professional advisor or material consultant is one that derives more than 5% of their revenue from Goodman. The Board also considers that a substantial Securityholder, for the purpose of assessing independence, holds more than 10% of Goodman’s securities but also has regard to other relationships that the Securityholder may have with Goodman. The table on page 28 sets out the Directors and their status.

Mr David Clarke and Mr James Hodgkinson

are not considered independent due to the ongoing joint venture between Goodman and Macquarie Group Limited known as Macquarie Goodman Asia. Macquarie Goodman Asia has investments in Hong Kong and Japan. Mr David Clarke is the Chairman of Macquarie Group Limited and Mr James Hodgkinson is an Executive Director and Co-head of Macquarie Group Limited’s Real Estate Capital Division.

Mr Patrick Goodman is not considered to be independent due to his role as Managing Director of Goodman Holdings Group. Goodman Holdings Group has a signifi cant holding in Goodman.

Mr Gregory Goodman is an Executive Director of Goodman.

The Directors consider the other Board members to be independent.

Chairman

Mr David Clarke was appointed as a Non-Executive Director and the Chairman of the Board in October 2000.

David brings extensive experience and in-depth knowledge to the role of Chairman as well as skills and experience in the fi elds of fi nance, corporate advisory and accounting.

Company Secretary

The Board considers that while not an Independent Director, David’s experience and skills provide a valuable contribution to his role as Chairman.

Independent Director, David’s experience The Company Secretary is Mr Carl Bicego. and skills provide a valuable contribution Carl is responsible for advising Directors to his role as Chairman. on corporate governance matters, liaising with regulators, supervising market Goodman has adopted a number of disclosures and investor interactions, practices to further strengthen corporate maintenance of Goodman’s register governance in recognition of David’s and appraising the Board on legal and non-independent status. Such measures governance issues. His biographical include the separation of the roles of details appear on page 55 in the Chairman and Group Chief Executive Directors’ report. Offi cer, the delegation of some Board functions to committees in which the Remuneration and Chairman does not participate, and having a majority of Independent Nomination Committee Directors on the Board.

The Board has established a Remuneration and Nomination Committee to consider remuneration and nomination issues more effectively and fully and to provide recommendations to the Board for approval. The purpose of the Committee is to:

In his role as Chairman, David is Committee to consider remuneration responsible for ensuring that the Board functions as an effective and cohesive and nomination issues more effectively and fully and to provide recommendations group, working with the Group Chief to the Board for approval. The purpose Executive Offi cer to determine the of the Committee is to: strategic direction for Goodman, establishing high standards of corporate (a) identify and recommend individuals governance and oversight of strategic to the Board for nomination as development and leadership. The role members of the Board and its also includes formulation of Board committees; meeting agendas and papers and (b) ensure performance of members management of Board meetings to ensure of the Board is reviewed; the best performance of each participant.

The Chairman acts as a representative of, and spokesperson for, the Board.

(d) ensure an appropriate Board and committee structure is in place so that the Board can perform a proper review function;

Group Chief Executive Offi cer

The Group Chief Executive Offi cer is Mr Gregory Goodman. The terms, conditions and responsibilities of his role are established in an agreement between Gregory and Goodman. His role as Group Chief Executive Offi cer is to support and encourage his management team to deliver the strategy developed by the Board and management. His role involves an intimate knowledge of all aspects of the business and communication of the strategy and operational results to the Board, management team and other stakeholders.

(e) review and make recommendations to the Board in respect of the administration of Goodman’s remuneration programmes;

(f) review and make recommendations to the Board in respect of the approval and remuneration of senior executives and Non-Executive Directors;

(g)

(g) prepare for approval by the Board any report on executive remuneration that may be required by any ASX Listing Rule, legislation, regulatory body or other regulatory requirements or proposed for inclusion in any annual report; and (h) report regularly to the Board on each of the above matters.

Goodman Group Annual Report 2008

Keeping focused

Corporate governance (cont)

The Remuneration and Nomination Committee operates under a formal charter, a copy of which is published on Goodman’s website. The Committee is required to assess the necessary and desirable competencies of Board members, develop and review the Board succession plan and recommend the appointment and removal of Directors.

The Committee is chaired by Mr David Clarke and is comprised of a majority of Independent Directors. Although not an Independent Director, David brings signifi cant expertise and understanding of the market to the deliberations of the Committee, and Goodman believes that his contribution is invaluable. Further information regarding the attendance of Committee members can be found on page 36 of the Directors’ report.

Remuneration

Goodman follows the principles of remuneration that are set out in the ASX Corporate Governance Council’s Recommendations. These include a policy of rewarding employees with a mixture of fi xed, performance linked and equity based remuneration. Further information in relation to the remuneration policies is set out in the remuneration report on pages 41 to 52 in the Directors’ report.

The salary and/or fees of each Director, key management personnel and fi ve highest paid company and Group executives are disclosed on pages 46 and 47 in the Directors’ report.

Performance review

The Board reviews its performance and that of its committees approximately every two years. The Board considers this is an appropriate timeframe having regard to the time taken in the review process, the frequency of Board meetings and the level of change in the Board over time. An assessment of the performance of the Board and individual Directors is being conducted this year. The process for conducting this review consists of each Director completing a self-assessment questionnaire, which also elicits comments and key issues the Director wishes to raise at that time. Following the collation of the questionnaire results, the Chairman meets with each Director individually to discuss their

Board participation. The questionnaires completed by the Directors cover the following matters:

(a) Board contribution to developing strategy and policy;

(b) interaction between the Board and management;

(d) Board composition and structure; and

(e) operation of the Board including the conduct of Board and committee meetings.

The Board also undertakes ongoing assessment of Goodman’s various committees.

Senior executives are reviewed through a structured process of self-assessment and Group Chief Executive Offi cer review implemented by Goodman’s human resources department.

Policies and codes

Responsible and ethical decision-

making

In addition to the responsibilities which apply specifi cally to Directors, the Board has endorsed a Code of Conduct which applies to Directors and employees of Goodman.

The Code of Conduct outlines the ethical standards and personal conduct expected of all Directors, committee members and employees and makes compliance with these standards a condition of appointment and/or ongoing employment. The aim of the Code of Conduct is to establish a high standard of conduct and to communicate this to the Directors and employees. Expectations regarding fairness, honesty and the treatment of confi dential information are made explicit. The Code of Conduct also charges all employees with responsibility for reporting unethical or corrupt conduct.

The Code of Conduct is provided to Directors upon appointment and all employees upon commencement. The Code of Conduct is supported by a framework of policies that set out Goodman’s approach to meeting its legal

obligations and the expectations of stakeholders for ethical and responsible decision-making. Key policies forming part of the framework are set out below.

Sustainability

Goodman has adopted a Sustainability Policy which has regard to its Customer Service Model of “own+develop+manage”. The Policy includes a commitment to a sustainable approach to our environment as well as proper consideration for our social and economic responsibilities to the wider community. This commitment is refl ected in our approach to both the workplace and the marketplace. Further information is available on page 26.

Securities trading

The Securities Trading Policy prohibits Directors and employees from trading in Goodman securities when in possession of inside information. It also prohibits the communication of that inside information to any other person who is likely to purchase or sell Goodman’s securities or who is likely to procure a third party to purchase or sell those securities. The Policy is available to Directors on their appointment and employees on their commencement.

Reminder emails on the Policy are forwarded to all employees whenever Goodman commences and concludes a trading blackout.

Confl icts of interest

Goodman has put in place arrangements to identify, assess, manage and report on the types of confl icts of interest which it anticipates will affect or arise from its business. These arrangements include mechanisms to:

(a) identify confl icts of interest; (b) manage confl icts of interest by assessing and evaluating actual or potential confl icts, and decide upon and implement an appropriate response to those matters; and (c) maintain written records that demonstrate how Goodman manages confl icts which occur.

Directors, consultants and employees are required to comply with the Confl icts of Interest Policy.

Group Employee Handbook

Related parties

Goodman has implemented a Related Party Policy for the disclosure and resolution of any matter that may give rise to actual, potential or perceived confl icts of interest between the interests of a Director and Goodman. The Policy ensures that all transactions involving related parties of Goodman conform to the requirements of the Corporations Act 2001 and ASX Listing Rules.

Goodman has implemented a Related The Handbook is a guide for employees Party Policy for the disclosure and about their obligations and entitlements resolution of any matter that may give as employees of Goodman. The rules rise to actual, potential or perceived and policies in the Handbook apply to confl icts of interest between the interests all employees globally. The Handbook of a Director and Goodman. The Policy covers matters such as diversity, ensures that all transactions involving remuneration, insurance, presentation, related parties of Goodman conform to leave, performance management, the requirements of the Corporations grievance handling, substance abuse, Act 2001 and ASX Listing Rules. internet/email usage and disciplinary proceedings. The Handbook is regularly Gifts reviewed and updated by the General All Directors and employees are Manager, People and Services. prohibited from accepting payment or any other benefi ts in money or in kind Occupational Health and Safety from third parties as an inducement (OH&S) Manual or reward for any act or in connection Goodman recognises its obligations with any matter or business transaction under the OH&S legislation and is undertaken by or on behalf of Goodman. committed to the implementation and All Directors and employees must proper management of appropriate risk exercise extreme care when giving management procedures to protect the or receiving business related gifts safety of its employees, contractors, and are requested to disclose any customers and visitors. Goodman’s such gifts. Whether a gift may be commitment to OH&S extends to all accepted or given will depend upon facets of its business with the overall a number of factors including: responsibility for OH&S resting at the

Goodman recognises its obligations under the OH&S legislation and is committed to the implementation and proper management of appropriate risk management procedures to protect the safety of its employees, contractors, customers and visitors. Goodman’s commitment to OH&S extends to all facets of its business with the overall responsibility for OH&S resting at the highest level of management and the Board. However, every employee is also required to comply with the OH&S Manual and to perform all duties in a safe and responsible manner. Goodman has developed and implemented an OH&S management programme and conducts induction training for contractors at its properties.

(a) the monetary value of the gift;
(b) the circumstances surrounding the giving or receiving of the gift; and
(c) whether the gift could be perceived as being unreasonable, excessive or imposing a right on the giver or an obligation on the recipient.

Dealing with public offi cials

Goodman is committed to conducting all of its business in accordance with all applicable laws and regulations and in a way that will maintain and enhance its reputation in the market. One aspect of this commitment is that Goodman behaves in a professional, honest and responsible manner and avoids any conduct which may be considered to be corrupt or contrary to good corporate ethics. It prohibits any activity that seeks to bribe, corrupt or otherwise improperly infl uence a public offi cial in any country to act (or omit to act) in a way that differs from that offi cial’s proper duties, obligations and standards of conduct.

Each of the documents above, other than

the Employee Handbook and OH&S Manual, is available to Securityholders on Goodman’s website. The Employee Handbook and OH&S Manual are available to all employees through Goodman’s intranet.

Copies of these policies are available on Goodman’s website.

Committees and oversight

Effective risk management is a fundamental part of Goodman’s business strategy and is central to protecting the interests of Securityholders. The Board has the ultimate responsibility for risk management and compliance. Goodman operates within overall guidelines and specifi c parameters set by the Board. The Board has established a number of committees to assist in the exercise of its functions and the discharge of its duties, such as ensuring that fi nancial reports are true and fair and comply with applicable accounting standards. A summary of the roles of the various committees (in addition to the Remuneration and Nomination Committee described above) is set out below.

Audit Committee

The Board has established an Audit Committee, which meets at least four times a year, to assist in fulfi lling the Board’s legal and regulatory requirements in relation to Goodman’s fi nancial statements. The Audit Committee operates under a formal charter and its responsibilities include:

(a) oversight of fi nancial reporting principles and policies, controls and procedures;

(b) ensuring the integrity of Goodman’s fi nancial statements, independent external audit and its compliance with legal and regulatory requirements relating to fi nancial statements;
(c) audit functions and committees of any entity within Goodman;
(d) due diligence and prudential supervision procedures required by regulatory bodies; and
(e) appointment of Goodman’s external auditor, including undertaking any required due diligence.

Goodman Group Annual Report 2008

Keeping focused

Corporate governance (cont)

The Committee may consider any matter which falls within the roles and responsibilities delegated to it by the Board, notwithstanding that the particular matter(s) may have been previously referred to and considered by another Board committee. For example, the Audit Committee also has, as part of its charter, a formal role in the oversight of risk management practices within Goodman, with an emphasis on fi nancial risk management. Subject to any resolution of the Board, the Committee has the power delegated by the Board to undertake all things necessary to perform its duties and fulfi l its purpose including:

(a) approving principles, policies, strategies, processes and control frameworks for the management of audit matters; and
(b) sub-delegating its powers and discretions to senior executives with or without the power to delegate further.

The Audit Committee has unlimited access to the senior executives, external auditor and internal auditor. In particular:

(a) senior members of management are invited to attend Committee meetings and to present to the Committee on key issues; and
(b) Committee members regularly meet with management, independently of Committee meetings, to further discuss issues relevant to the work of the Committee.

The Committee reports to the Board on the outcome of its reviews, discussions with the external auditor and its fi ndings on matters which have or are likely to have a material impact on the operating results or fi nancial position of Goodman.

Goodman has engaged KPMG to act as its external auditor. As part of the terms of engagement, KPMG is required to attend the AGM and be available to answer questions from Securityholders about the conduct of the audit and the preparation and content of the independent audit report.

The internal audit function involves a rolling programme of reviews and control testing of Goodman’s business processes. The internal audit programme is closely aligned to the risk management framework. The internal audit function is wholly independent of the external audit function. The fi ndings of internal audit are reported to both the Audit and Risk and Compliance Committees and management responds to the recommendations.

The Audit Committee reviews the scope of the engagement arrangements for the internal auditor and recommends the programme to be adopted to the Board.

As at 30 June 2008, the Audit Committee is chaired by Mr Ian Ferrier. Ian is a Chartered Accountant with signifi cant fi nancial expertise. The other members of the Committee are Mr John Harkness and Mr James Hodgkinson. John is also a Chartered Accountant and was a former partner of KPMG, before resigning in June 2000. He was a partner of KPMG while it was engaged to conduct the audit of Goodman’s entities, however, he was not involved in those audits. James is a senior executive at Macquarie Group Limited and has signifi cant experience in the listed property sector. All three members of the Committee are non-executive and the majority of the members are Independent Directors. Please refer to page 36 in the Directors’ report for details of the Committee members’ attendance at meetings during the year.

Executive confi rmations

In addition to the work of the Audit Committee, the Group Chief Executive Offi cer and the Group Chief Financial Offi cer are required to confi rm to the Board in writing that Goodman’s fi nancial reports present a true and fair view, in all material respects, of its fi nancial condition and operational results and are in accordance with relevant accounting standards.

The Group Chief Executive Offi cer and the Group Chief Financial Offi cer also provide written confi rmation that, to the best of their knowledge and belief:

(a) the statement given to the Board on the integrity of Goodman’s fi nancial statements is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and (b) Goodman’s risk management and internal compliance and control system are operating effi ciently and effectively in all material aspects.

These statements are based on a group-wide and broad ranging series of full and half year confi rmations from senior executives and department heads in relation to the fi nancial integrity, risk management and internal compliance and control system within each department.

Risk and Compliance Committee

The Board has established a Risk and Compliance Committee to provide oversight and direction to Goodman’s system of risk oversight, management and internal controls. The Committee, which meets at least four times a year, is chaired by Mr John Harkness, and is comprised of a majority of Independent Directors. The Committee reports to the Board, generally, in respect of licensing and compliance issues, signifi cant projects and transactions, and on an “exceptions” basis.

The Committee operates under a formal charter (available on Goodman’s website) that assists the Board to fulfi l its corporate governance and oversight responsibilities in relation to:

(a) internal risk management systems; (b) incident management;

(c) business continuity planning and support processes;
(d) external compliance audit functions;
(e) internal compliance systems; and (f) insurance requirements.

The Board has adopted a Risk Management Policy on the oversight and management of risk for Goodman. The Policy outlines the risk management framework elements, which include roles and responsibilities, governance, risk and control assessment, incident management, change management, business continuity planning, internal audit, compliance and insurance.

The Committee also oversees the work of several internal management committees which have risk responsibilities. These committees facilitate the sharing of information and seek to ensure that a consistent approach to risk management is applied across Goodman.

Consistent with Goodman’s approach of transparent reporting to the Board, members of the Committee have unfettered access to management to discuss risk matters. Senior members of management are invited to attend Committee meetings and present on key issues. External experts and third party service providers are also invited to attend the Committee meetings to provide the Committee with further information and understanding of the way in which Goodman manages its risk and compliance obligations.

The Group Risk Manager is responsible for the implementation of the Risk Management Policy globally. He reviews critical business units and profi les their key risks on an annual basis. Action plans for mitigating key risks are reported to the Committee at each meeting.

The Risk and Compliance Manager is responsible for reviewing and monitoring the effi ciency of the compliance systems on an ongoing basis and for reporting on the results of these activities to the Risk and Compliance Committee.

A list of attendees at the meetings of the Board, Audit Committee, Remuneration and Nomination Committee, Risk and Compliance Committee and Investment Committee can be found on page 36 of the Directors’ report.

Investment Committee

The Investment Committee has authority to:

(a) review, consider and, if appropriate, approve any transactions falling within its mandate; (b) make recommendations to the Board regarding transactions; (c) perform other functions as may be delegated from the Board from time to time; and (d) sub-delegate its powers and discretions to executives of Goodman, with or without the power to delegate further.

The Investment Committee consists of at least three Directors and is chaired by Mr Jim Sloman.

Timely and balanced disclosure

Goodman is committed to providing timely, balanced and readily available disclosure of material information to Securityholders, the investment community generally, other stakeholders and regulators. It believes that ethical and responsible decision-making is critical to the success of its business. Goodman also believes that the transparency of these processes promotes market and Securityholder confi dence in its integrity and sustainability.

Goodman’s Continuous Disclosure Policy outlines the procedures followed internally to ensure timely and full disclosure of material through the ASX. Information on continuous disclosure is made available to all employees on commencement of employment.

Any enquiries regarding the continuous disclosure requirements are directed to the Group Chief Executive Offi cer and Company Secretary in the fi rst instance. ASX announcements are co-ordinated by the Legal and Investor Relations departments. Goodman also relies on the input and sign-off of key employees in each department to which the ASX announcement relates. Goodman’s website contains ASX and media releases, newsletters, annual reports and frequently asked questions.

Securityholders

Goodman has implemented a number of processes in order to facilitate the effective and effi cient exercise of the rights of all Securityholders. It communicates information to Securityholders through a range of media, including annual reports, half year results, quarterly updates, general communications and ASX announcements. Results presentations are webcast and available for downloading on the website. Key fi nancial information and stock performance are also available on Goodman’s website. Securityholders can raise questions by contacting Goodman by telephone, facsimile, email or post. Contact details are provided on the website and at the back of this Annual Report.

Securityholders are invited to attend the AGM either in person or by proxy. The Board regards the meeting as an excellent forum in which to discuss issues relevant to Goodman. The Board encourages full participation of Securityholders at these meetings to ensure a high level of accountability and identifi cation with Goodman’s strategy and objectives. Securityholders are invited to submit questions to the external auditor for discussion at the AGM.

The meeting is webcast to further inform Securityholders who are unable to attend and the address of the Chairman is immediately announced to the ASX. Voting results (including a summary of proxy voting) on matters considered at the meeting are released to the ASX as soon as they are determined.

Complaints handling

Goodman has both internal and external complaints handling procedures. The Investor Relations department responds to Securityholder enquiries and complaints and provides a thorough and transparent communications service to Securityholders. GFM is also a member of the Financial Ombudsman Service, an external industry complaints handling service.

Goodman Group Annual Report 2008

Keeping focused

Financial Report

Contents
Directors’ report	35	17. Other f nancial assets	97
Lead auditor’s independence declaration	57	18. Plant and equipment	97
Income statements	58	19. Intangible assets	98
Balance sheets	59	20. Payables	100
Statements of recognised income and expense	60	21. Interest bearing liabilities	100
Cash f ow statements	61	22. Provisions	103
Notes to the f nancial statements		23. Issued capital 24. Reserves	104 106
1. Statement of signif cant accounting policies	62	25. (Accumulated losses)/retained earnings	108
2. Earnings per Company share	72	26. Minority interests	108
3. Acquisitions of controlled entities	73	27. Commitments	109
4. Discontinued operation	75	28. Cash f ow statements	110
5. Disposals of interests in controlled entities	76	29. Controlled entities	111
6. Segment reporting	77	30. Interest in joint venture operations	114
7. Critical accounting estimates used in the preparation of the f nancial statements	80	31. Related parties	115
8. Prof t/(loss) before income tax	81	32. Other related party disclosures	119
9. Income tax expense	82	33. Employee benef ts	121
10. Dividends and distributions	84	34. Financial risk management	126
11. Assets classif ed as held for sale	85	35. Auditor’s remuneration	134
12. Receivables	86	36. Events subsequent to balance date	134
13. Inventories 14. Other assets	88 88	Directors’ declaration Independent auditor’s report	135 136
15. Investment properties	88
16. Investments accounted for using the equity method	93

Directors’ report

Goodman International Limited and its controlled entities

The directors (Directors) of Goodman International Limited (Company) present their Directors’ report on the consolidated entity consisting of the Company and the entities it controlled (Goodman or Consolidated Entity) at the end of, or during, the year ended 30 June 2008 (year) and the audit report thereon.

Directors

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

Director	Appointment date
Mr David S Clarke, AO (Chairman)	26 Oct 2000
Mr Gregory Goodman (Group Chief Executive Off cer)	7 Aug 1998
Mr Ian Ferrier, AM (Independent Director)	1 Sep 2003
Mr Patrick Goodman (Non-Executive Director)	14 Apr 1998
Ms Diane Grady (Independent Director)	30 Sep 2007
Mr John Harkness (Independent Director)	23 Feb 2005
Mr James Hodgkinson (Non-Executive Director)	21 Feb 2003
Ms Anne Keating (Independent Director)	23 Feb 2005
Mr Jim Sloman, OAM (Independent Director)	1 Feb 2006
Dr David Teplitzky (Independent Deputy Chairman)	21 Nov 1990
	(retired 22 Nov 2007)
Mr Stephen Girdis (Alternate Director for Messrs David S Clarke, AO and James Hodgkinson)	21 Feb 2003
	(resigned 14 Nov 2007)
Details of the Directors’ qualif cations and experience are set out on pages 54 to 55 in this Directors’ report.
Company Secretary
The Company Secretary at any time during, or since the end of, the year is:
Company Secretary	Appointment date
Mr Carl Bicego	24 Oct 2006

Details of the Company Secretary’s qualifi cations and experience are set out on page 55 in this Directors’ report.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Directors’ meetings

The number of Directors’ meetings held (including meetings of committees of Directors) and the number of meetings attended by each of the Directors during the year were:

					Remuneration	Remuneration	Risk and
				Audit	and Nomination		Compliance		Investment
	Board meetings		Committee meetings		Committee meetings		Committee meetings		Committee meetings
Director	Held	1 Attended	Held	1 Attended	Held1 Attended		Held1 Attended		Held1 Attended
Mr David S Clarke, AO	13	13			5	5			1	1
Mr Gregory Goodman	13	13			5	5			2	2
Mr Ian Ferrier	13	12	5	5	5	5			2	2
Mr Patrick Goodman	13	13					4	4
Ms Diane Grady2	10	7			3	3
Mr John Harkness	13	12	3	3			4	4
Mr James Hodgkinson	13	12	5	5
Ms Anne Keating	13	13			5	5
Mr Jim Sloman	13	12					4	4	2	2
Dr David Teplitzky3	6	6	3	3	3	3
Mr Stephen Girdis (Alternate)4

Refl ects the number of meetings individuals were entitled to attend.
Appointed 30 September 2007.

Directors’ report

Review and results of operations

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

	Consolidated
	2008 2007
Revenue and other income ($M) Prof t attributable to Securityholders – continuing operations ($M) Prof t attributable to Securityholders ($M) Basic earnings/(loss) per Company share (¢) Basic earnings/(loss) per Company share – continuing operations (¢)1 Basic earnings per security (¢) Basic earnings per security – continuing operations (¢) Dividends and distributions provided for or paid by Goodman ($M) Weighted average number of securities on issue (M)	1,082.8 1,123.3 258.5 600.0 250.7 622.5 1.7 (0.2) 2.1 (1.6) 14.7 38.3 15.1 36.9 568.2 514.0 1,709.6 1,624.3
Net assets ($M) Number of securities on issue (M)2 Net tangible assets per security ($)3	4,669.1 4,578.2 1,715.8 1,692.7 1.91 1.93

The prior year comparatives have been restated to refl ect the classifi cation of continuing and discontinued operations following the Consolidated Entity’s disposal of an equity interest in Goodman Property Investors.
Represents amounts as per Australian Securities Exchange (ASX) and includes 40.6 million treasury securities (2007: 42.6 million).
Net tangible assets per security is stated after deducting amounts due to minority interests.
Retired 22 November 2007.
Resigned 14 November 2007.

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

Principal activities

The principal activities of the Consolidated Entity during the course of the year were fund management, property services, property development and property investment in directly and indirectly held industrial property. The Consolidated Entity operates in Australia, New Zealand, Asia and Europe.

Dividends and distributions

The Company did not declare any dividends during the year ended 30 June 2008 or up to the date of this report (2007: $nil).

Distributions declared/announced by a controlled entity, Goodman Industrial Trust (GIT), payable directly to Securityholders during the year are as follows:

Distributions from GIT – 2008	Distribution cpu	Total amount $M	Date of payment
Distributions for the quarters ended:
– 30 Sep 2007	8.5	141.2	8 Nov 2007
– 31 Dec 2007	8.5	142.3	14 Feb 2008
– 31 Mar 2008	8.5	142.3	8 May 2008
– 30 Jun 2008	8.5	142.4	26 Aug 2008
Total distributions for the year ended 30 June 2008	34.0	568.2
Distributions from GIT – 2007
Distributions for the quarters ended: – 30 Sep 2006 – 31 Dec 2006 – 31 Mar 2007 – 30 Jun 2007	7.875 7.875 7.875 7.875	126.5 128.4 129.2 129.9	9 Nov 2006 15 Feb 2007 3 May 2007 23 Aug 2007
Total distributions for the year ended 30 June 2007	31.500	514.0

Distributions declared by a controlled entity, Goodman PLUS Trust, to holders of its hybrid securities during the year were $15.6 million (2007: $nil).

Goodman Group Annual Report 2008

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Directors’ report

Reconciliation of profi t attributable to Securityholders to operating profi t available for distribution The reconciliation of profi t attributable to Securityholders to operating profi t available for distribution is as follows:

	2008 $M	2007 $M
Prof t attributable to Securityholders	250.7	622.5
Unrealised losses/(gains) on investment property revaluations, net of deferred tax	145.5	(64.0)
Share of unrealised losses/(gains) on investment property revaluations
from results of associates and joint venture entities, net of related deferred tax	125.0	(41.1)
Impairment of equity investment	108.2	–
	629.4	517.4
Other adjustments
– Straightlining of rent and amortisation of lease incentives	(1.1)	(13.0)
– Fair value of derivatives and deferred tax on derivative valuations	(11.4)	(9.0)
– Share based payments expense	34.6	16.2
– Capital prof ts not distributed	(84.4)	–
	567.1	511.6
Pari passu adjustment	–	2.4
Operating prof t available for distribution	567.1	514.0

State of affairs

Key changes in Goodman’s state of affairs during the year were as follows:

(a) Partial disposal of equity interest in Highbrook Developments Limited (HDL)

On 17 December 2007, Goodman sold a 50% equity interest in HDL (through the sale of 100% of the shares in Goodman (Highbrook) Limited) to Goodman Property Trust for a consideration of approximately A$90 million. Goodman retains a 25% equity interest in HDL through its wholly-owned subtrust, Highbrook Trust.

(b) New debt facilities

The principal new debt facilities during the year are as follows:

On 10 December 2007, Goodman secured a new A$815 million (€500 million) unsecured debt facility in Europe for a term of fi ve years. In January 2008, this facility was increased by A$43 million (€25 million).

On 31 December 2007, Goodman secured a new A$96 million (S$125 million) unsecured debt facility in Singapore for a term of two years.

On 8 February 2008, Goodman entered into a commitment for a four year A$800 million unsecured banking facility, which matures in February 2012. This facility replaced the A$603 million Commercial Mortgage Backed Securities (CMBS) loan note facility which matured in May 2008 and provides additional funding for working capital purposes.

On 12 February 2008, Goodman entered into a A$453 million (£220 million) unsecured banking facility available for up to fi ve years. On 2 April 2008, this facility was increased by A$205 million (£100 million). This facility replaced the European facility which expired in April 2008. Subsequent to the end of the fi nancial year, Goodman has paid down A$329 million (£160 million) of this facility.

On 30 April 2008, Goodman entered into a new A$100 million unsecured facility maturing in April 2009.

On 28 May 2008, Goodman entered into a A$47 million (NZ$60 million) unsecured facility maturing in May 2010.

On 30 June 2008, Goodman issued A$514 million (£250 million) under its Euro Medium Term Note programme. The 10 year senior unsecured notes were priced at a fi xed coupon of 9.75% per annum and mature on 16 July 2018.

(c) Goodman PLUS Trust hybrid securities (Hybrid Securities)

Directors’ report

State of affairs (cont)

(d) Transactions with Goodman Australia Industrial Fund (GAIF)

In July 2007, Goodman disposed of $480 million of industrial assets to GAIF. The transaction was funded by a $500 million equity raising by GAIF.

On 1 May 2008, the unitholders in GAIF invested in a $900 million portfolio of 14 prime offi ce and business park assets via the stapling of a controlled entity Mascot Trust, that became known as Goodman Australia Industrial Trust No 3. The transaction was funded by a $1 billion equity raising by GAIF together with debt capital. The equity offer was structured so that Goodman held $600 million, increasing its unitholding in GAIF to 44.1%.

(e) Japan Fund Platform

In April 2008, J-REP Co., Ltd (J-REP), an entity controlled in joint venture with Macquarie Group Limited, announced that it had established an initial portfolio comprising 15 assets with a total acquisition value of A$700 million. The portfolio was part funded by non-recourse four year term debt fi nancing totalling A$500 million from a syndicate of leading Japanese fi nancial institutions arranged by the Development Bank of Japan.

J-REP is planning to use this portfolio to establish a new Japanese private fund platform aimed at institutional investors. The assets of the fund will be managed by J-REP Funds Management Co Ltd, a controlled entity of J-REP.

(f) Disposal of equity interest in Ascendas Real Estate Investment Trust (A-REIT) and Ascendas-MGM Funds Management

Limited (AMFM)

On 27 March 2008, Goodman completed the disposal of its 40% interest in AMFM for A$97 million and also sold its 6.8% stake in the Singapore-listed A-REIT for A$125 million.

(g) Disposal of equity interest in Goodman Property Investors (GPI)

On 31 May 2008, Goodman completed the disposal of GPI to Aberdeen Property Investors for approximately A$220 million plus a further A$26 million in performance based payments over the next two years, contingent on the level of new investor commitments to the combined GPI and Aberdeen Property Investors business.

The results of GPI have been disclosed as a discontinued operation in both the current and prior year.

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

Strategy and outlook

Looking forward, Goodman will continue to strengthen its presence in Asia Pacifi c and Europe. The focus for these regions is to grow Goodman’s third party fund management businesses and pursue yield-accretive properties that are well located and provide stability through the diversifi cation of its customer base, asset and geographic mix.

Likely developments in the near future include establishing logistics funds in China, Japan and the United Kingdom, which will increase Goodman’s third party fund management operations.

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.

Options granted during the year

The following options over unissued securities were issued by the Company under the Executive Option Plan (EOP) to Executive Offi cers and other employees during the year:

Date granted	Expiry date	Exercise price $ Options issued	Exercise price $ Options issued
Options over unissued securities
19 Oct 2007	30 Jun 2013	6.36	38,088,000
26 Nov 2007	30 Jun 2013	6.36	2,700,000
Cash settled options
19 Oct 2007	30 Jun 2013	6.36	522,500
Total			41,310,500

On 21 December 2007, a controlled entity of GIT, Goodman PLUS Trust, raised approximately A$327 million from its issue of Hybrid Securities. Hybrid Securities are preferred, perpetual securities in Goodman PLUS Trust, which are listed on the ASX. The Hybrid Securities are classifi ed as minority interests in equity and may be exchanged or repurchased in certain circumstances.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Unissued securities under option

At the date of the Financial Report, unissued securities under option and the applicable earnings per security (EPS) or return on equity (ROE) performance hurdles are:

			Number of unissued
		Exercise price	options at
Date granted	Expiry date	$	30 June 2008	Performance hurdle
28 Oct 2003 23 Jul 2004	28 Oct 2008 23 Jul 2009	2.59 3.17	33,334 100,000	10% EPS 10% EPS
3 Nov 2005 9 Dec 2005 14 Jun 2006	30 Jun 2011 31 Dec 2011 31 Dec 2011	4.09 4.29 5.24	3,703,448 14,000,000 3,266,000	11% ROE 11% ROE 12% ROE
13 Oct 2006	30 Sep 2012	6.35	8,040,000	12% ROE
10 Apr 2007	31 Dec 2012	7.23	25,942,500	12% ROE
22 Jun 2007 19 Oct 2007	31 Dec 2012 30 Jun 2013	7.13 6.36	7,060,000 37,967,000	12% ROE 12% ROE
26 Nov 2007	30 Jun 2013	6.36	2,700,000	12% ROE

All options expire on the earlier of their expiry date or one month following the termination of the employee’s employment (other than in the event of special circumstances). 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 EOP requires the Consolidated Entity achieving compound annual growth in EPS or ROE as set out above. These hurdles are calculated since the end of the previously reported 12 month period immediately preceding the date of grant (as reported in the Annual Report or Half Year Review of the Consolidated Entity).

Securities issued on exercise of options

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

	Amount paid
Number of securities issued	per security $
200,000	2.59
333,334	2.83
100,000	3.17
1,010,000	4.09
5,000	5.24

Directors’ report

Directors’ interests

The relevant interest of each Director in the issued capital of Goodman as notifi ed by the Directors to the ASX in accordance with section 205G(1) of the Corporations Act 2001 at the date of the Financial Report is as follows:

	Securities	Securities
	held directly	held indirectly	Total
Non-Executive
Mr David S Clarke, AO	117,857	89,044	206,901
Mr Ian Ferrier	10,188	–	10,188
Mr Patrick Goodman	–	74,398,414	74,398,414
Ms Diane Grady	–	30,000	30,000
Mr John Harkness	21,931	–	21,931
Mr James Hodgkinson	113,513	313,119	426,632
Ms Anne Keating	29,505	24,078	53,583
Mr Jim Sloman	7,736	–	7,736
Executive
Mr Gregory Goodman	5,955,992	68,442,422	74,398,414

None of the Non-Executive Directors held any options over unissued securities at 30 June 2008. Mr Gregory Goodman held 2,700,000 options over unissued securities at 30 June 2008. Mr Patrick Goodman has an indirect interest in respect of those options.

None of the Directors holds any interests in the Hybrid Securities which are listed on the ASX.

Remuneration report – audited

The remuneration report of Goodman sets out the Board’s policies for determining the remuneration of its Key Management Personnel and the relationship between that policy and the performance of Goodman.

In particular, this report sets out prescribed remuneration details for the Non-Executive Directors, the Executive Director (Mr Gregory Goodman), Key Management Personnel and other highly remunerated senior executives.

The Board, based on advice from the Remuneration and Nomination Committee, has developed policies dealing with fi xed pay and short and long-term incentive remuneration of Goodman’s employees. The role of the Remuneration and Nomination Committee in setting these policies is set out below.

Remuneration and Nomination Committee

The Remuneration and Nomination Committee develops and makes recommendations to the Board regarding overall remuneration policy and specifi c remuneration arrangements applying to the Group Chief Executive Offi cer, senior executives and Directors. The Committee is also responsible for oversight of specifi c remuneration elements including the short-term incentive bonus scheme, the long-term incentive scheme, Executive Option Plan (EOP) and Employee Securities Acquisition Plan (ESAP), superannuation entitlements, termination payments, gifts and fringe benefi ts policy.

The members of the Remuneration and Nomination Committee during the year were:

Mr David S Clarke, AO (Non-Executive Chairman); + Mr Gregory Goodman (Executive Member); + Mr Ian Ferrier (Independent Member);
Ms Diane Grady (Independent Member) (since 30 September 2007); + Ms Anne Keating (Independent Member); and + Dr David Teplitzky (Independent Member) (retired 22 November 2007).

On 16 July 2008, Mr Gregory Goodman resigned as a member of the Remuneration and Nomination Committee.

The Remuneration and Nomination Committee meets as required to consider and recommend to the Board approaches to remuneration policy and specifi c remuneration arrangements for senior employees and Directors and general outcomes for the wider employee population. Decisions are made by the Committee during the year either at meetings or via circular resolutions. The Committee has the resources and authority to appropriately discharge its duties and responsibilities. It is able to engage external professionals to advise on any relevant matters. The Committee members’ attendance record is disclosed on page 36 in this Directors’ report. Further information relating to the activities of the Committee is available on Goodman’s website.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Remuneration report – audited (cont)

Overview of remuneration policies

The Board recognises that Goodman’s performance is dependent upon the quality of its people and the way they are organised, managed and motivated.

Remuneration levels are competitively set to attract and retain appropriately qualifi ed and experienced directors and senior executives. The Remuneration and Nomination Committee obtains independent advice on the appropriateness of remuneration, taking into account remuneration trends in comparable companies and markets. Remuneration packages include a mix of fi xed remuneration, short-term performance based remuneration and equity based remuneration. The remuneration structures explained below are designed to attract and retain suitably qualifi ed candidates and to align executive performance with the objective of increasing Goodman’s ROE in the short and longer term.

To date, Goodman has adopted the practice of maintaining relatively low fi xed remuneration components while providing proportionately higher short-term and long-term incentive components when compared to the overall market. This has refl ected the rapid growth and transaction based nature of the business over recent years.

The global nature of Goodman’s business requires adoption of approaches to remuneration and benefi ts policies that refl ect local regulatory requirements. For example, differing approaches to retirement income policy necessitate tailored solutions in terms of superannuation/pension arrangements. Goodman takes account of these differences but does not necessarily attempt to match benefi ts with those applying in different local or regional environments.

During the year, Goodman continued to develop its expatriate remuneration policies to ensure mobility of talented employees who are being deployed among countries where Goodman has operations.

The Committee seeks input and advice to ensure that it determines an approach to remuneration which is sustainable, competitive and attractive in the market.

Remuneration policies Fixed remuneration

Fixed remuneration consists of a base remuneration package which includes cash, non-cash benefi ts (eg. motor vehicles and allowances) including the full cost of any related Fringe Benefi ts Tax charges, plus employer contributions to superannuation and pension funds.

Remuneration rates are reviewed annually by the Remuneration and Nomination Committee through a process that considers individual, segment and overall performance of the Consolidated Entity and overall remuneration movements in competitor companies and the wider market. The Committee seeks external remuneration market analysis and advice to ensure the Directors’ and senior executives’ remuneration is competitive. Senior executives’ remuneration may also be reviewed by the Committee on individual appointment or promotion.

Performance-linked remuneration

Performance-linked remuneration is reviewed annually and includes both short-term and long-term incentives. The intention is to reward the Group Chief Executive Offi cer and senior executives for meeting or exceeding performance goals at a business and Consolidated Entity level.

(a) Short-term incentive (STI)

The STI provides cash bonuses for individual performance compared to objectives set for the year. Total STI amounts are calculated in accordance with the Bonus Policy established by the Remuneration and Nomination Committee and approved by the Board. The Bonus Policy determines a potential bonus pool which may be allocated across all employees as determined by the Board on the recommendation of the Remuneration and Nomination Committee. Individual allocations are made based on an assessment by senior managers and the Group Chief Executive Offi cer of each individual’s performance and contribution to the Consolidated Entity’s performance. The bonus pool is calculated having regard to ROE achieved for this period and other considerations.

The current Bonus Policy provides that the fi rst $100,000 (2007: $100,000) of any bonus granted is paid in cash in August or September of the year following the year in which the bonus was earned. This initial instalment limit varies from country to country having regard for local market practice. The remainder is paid with regular salary payments over three years subject to the conditions attaching to senior executives’ service agreements described later in this remuneration report. Employees forfeit any entitlement to accrued but unpaid bonuses if they cease employment by resigning from the Consolidated Entity. The Committee may from time to time elect to bring forward the timing of payment of all or part of any individual’s accrued but unpaid bonus (STI) entitlement.

Directors’ report

Remuneration report – audited (cont)

(b) Long-term incentive (LTI)

The LTI provides equity based remuneration through the issue of options over securities under the EOP. In prior fi nancial years, Goodman offered Australian based employees participation in the ESAP but this policy was changed following the implementation by the Australian Government of regulatory changes that facilitated Australian employees of stapled groups being offered options. Only the Group Chief Executive Offi cer has been granted securities under the ESAP during the year and this was a consequence of the grant being subject to Securityholder approval obtained at the 2007 Annual General Meeting.

The purpose of the EOP is to achieve enhanced alignment of the interests of employees and Securityholders by matching rewards under the LTI with the long-term growth and prosperity of Goodman. In addition to providing LTIs to senior executives, Goodman also ensures that the majority of other employees have the opportunity to participate in the EOP.

Details of equity based remuneration are as follows:

Executive Option Plan

The EOP was re-approved at the Annual General Meeting on 16 November 2006.

Each option issued under the EOP entitles an employee to acquire a stapled security in Goodman on payment of the exercise price for the option subject to the vesting conditions having been satisfi ed.

Non-Executive Directors are not entitled to participate in the EOP and no options over stapled securities have been issued to Non-Executive Directors during or since the end of the year.

Under the terms of the EOP and decisions made by the Board in accordance with the plan, issues of options to employees are subject to the following broad terms:

- the ability to exercise options will be conditional on the Consolidated Entity achieving ROE hurdles of at least 12% per annum aggregated over the vesting period and continued employment (subject to special circumstances, e.g. death, total and permanent disability, redundancy or retirement);
options lapse on the earlier of approximately six years from the offer or the termination of the employee’s employment (unless such termination is due to special circumstances);
options vest in three equal tranches from the third, fourth and fi fth anniversaries of the offer; and
the exercise price of options will be based on the volume weighted average market price of securities traded on the ASX during the 10 trading days immediately prior to the date options are offered to nominated employees.

In relation to future offers under the EOP, the vesting profi le of the options will alter to two, three and four years, with the lapse date of the options being on their fi fth anniversary.

The Board’s policy set out in the Securities Trading Policy is that no Director or employee may enter into any arrangement to limit their exposure to risk in relation to unvested options or ESAP securities. In accordance with their terms of engagement, Directors and employees are required to comply with the Consolidated Entity’s policies.

Employee Securities Acquisition Plan

During the year, a grant of securities under the ESAP was made to the Group Chief Executive Offi cer. No other employees were granted securities under the ESAP during or since the end of the year.

The broad terms of the grant under the ESAP were as follows:

- the market price will be the 10 day volume weighted average price at which securities are traded on the ASX prior to the effective date of the offer;
securities are restricted for three years, with one third of the securities becoming unrestricted each year at the end of years three, four and fi ve, subject to conditions;
the ability to exercise the rights over the securities will be conditional on the Consolidated Entity achieving ROE hurdles of at least 12% per annum over the restriction period and continued employment (subject to special circumstances);
loans to purchase securities will be limited recourse and interest bearing at 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.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Remuneration report – audited (cont)

Remuneration and past fi nancial performance

The level of fi xed remuneration and performance-linked remuneration has been a function of the growth achieved by the Consolidated Entity and its ability to attract and retain qualifi ed and experienced management. The key fi nancial drivers used to determine the level of STI are EPS and ROE.

Goodman uses ROE as the key criteria for determining performance based remuneration for the following reasons:

- it is a strong indicator of management performance in delivering returns to Securityholders; + it is generally strongly correlated with EPS; and
- unlike other metrics, such as total securityholder return, it is less infl uenced by external factors such as broader market movements.

Earnings are relevant to determining the level of performance based remuneration, having regard to the level of returns provided to Securityholders and the Consolidated Entity’s capacity to pay such additional remuneration.

The Board has determined that an appropriate performance hurdle for EOP and ESAP grants is a 12% per annum ROE. This is on the basis that it is a challenging target having regard to the size of the Consolidated Entity’s balance sheet and this hurdle would generally be correlated with strong EPS and consistent distributions to Securityholders. The ROE is determined by the Board and the Remuneration and Nomination Committee in accordance with approved policies and the fi nancial statements.

The individual performance based remuneration disclosed in this fi nancial year’s remuneration report was based on the prior year’s fi nancial performance and hence should be assessed against the ROE and earnings achieved during the 2007 fi nancial year.

Historical performance for these fi nancial drivers as well as total Securityholder returns over the past fi ve years for Goodman are as follows:

==> picture [497 x 239] intentionally omitted <==

----- Start of picture text -----

Earnings per security Return on equity Total Securityholder return [1]
¢ % %
34.0 24.0 55.0
31.5
26.7
23.7
20.0
15.0 17.0
12.0
13.6
11.0 12.0 (49.1)
9.4
041,2 053,4 065 075 085 041,2 053 06 07 08 04 05 06 07 08
Year Year Year
1. Not adjusted for AIFRS. 1. Not adjusted for AIFRS. 1. Based on distributions and the security
2. Before performance fee. 2. Before performance fee. price movement during each financial year.
3. Before performance fee and merger cost. 3. Before performance fee and merger cost.
4. Restated under AIFRS.
5. Adjusted to exclude unrealised gains on
investment properties.
----- End of picture text -----

Directors’ report

Remuneration report – audited (cont)

Service agreements

Senior executives

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 specifi c policies of the Consolidated Entity such as its Code of Conduct and Human Resource Policies.

Goodman has agreed specifi c notice of termination periods in the employment contracts of senior executives ranging from one month to 12 months. Statutory entitlements such as accrued leave are payable in the usual course on termination.

As at the date of signature of the Directors’ report, the notice periods of the Group Chief Executive Offi cer and the fi ve named executives are as follows:

	Notice period
	Company Employee
Executive Director Mr Gregory Goodman	12 months 12 months
Executives Mr David van Aanholt Mr Anthony Rozic Mr Nick Kurtis Mr Michael O’Sullivan	12 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months

Effective 1 July 2008, Mr Jeff Pulsford ceased employment with Goodman. His employment contract provided for a 12 month notice period that has been satisfactorily addressed under the agreed terms of his severance from Goodman.

The above executives are not entitled to additional contractual termination payments

Non-Executive Directors

Total remuneration payable by Goodman to all Non-Executive Directors in aggregate, must not exceed $2.5 million per annum being the amount approved by Shareholders at the Annual General Meeting of the Company on 16 November 2006. Remuneration is determined on the basis of advice from external advisers about fees paid to other non-executive directors of comparable companies. Directors’ fees for 2008 total approximately $2.0 million which takes into account amounts paid for committee membership, chairing of committees and compulsory contributions to superannuation. All Non-Executive Directors must act as a member of at least one Board Committee.

While Non-Executive Directors are not entitled to participate in any short-term or long-term incentive schemes, the Consolidated Entity does have a Directors’ Securities Acquisition Plan under which Directors are required to accumulate a signifi cant long-term holding of stapled securities equal in value to twice their annual base fees. The value of securities for this purpose equals the higher of purchase cost or market value at the end of each fi nancial year. This holding may be acquired at any time but where not held at the beginning of a year, 25% of base fees during the year must be applied to the on-market purchase of securities.

As demonstrated by the above historical performance, total performance remuneration is directly linked to predetermined benchmarks based on the Consolidated Entity’s fi nancial performance, which have been achieved.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Remuneration report – audited (cont)

Directors’ remuneration

Details of the nature and amount of each major element of the remuneration of each Director of the Company in relation to the management of Goodman’s affairs are set out below:

		Salary and fees	Short-term Bonus1 Other2	Short-term Bonus1 Other2	Total	Post-employment superannuation benef ts	Long-term Bonus1 Other2	Long-term Bonus1 Other2	Long-term Bonus1 Other2	Share based payments Securities (ESAP) Options and rights	Share based payments Securities (ESAP) Options and rights	Total	performance related	remuneration 3
Directors		$	$	$	$	$	$		$	$	$	$	%	%
Non-Executive
Mr David S Clarke	2008	572,871	–	–	572,871	13,129	–		–	–	–	586,000	–	–
	2007	537,314	–	–	537,314	12,686	–		–	–	–	550,000	–	–
Mr Ian Ferrier	2008	194,371	–	–	194,371	13,129	–		–	–	–	207,500	–	–
	2007	180,214	–	–	180,214	12,686	–		–	–	–	192,900	–	–
Mr Patrick Goodman	2008	174,371	–	–	174,371	13,129	–		–	–	–	187,500	–	–
	2007	164,814	–	–	164,814	12,686	–		–	–	–	177,500	–	–
Ms Diane Grady	2008	130,778	–	–	130,778	9,847	–		–	–	–	140,625	–	–
(appointed
30 September 2007)	2007	–	–	–	–	–	–		–	–	–	–	–	–
Mr John Harkness	2008	185,944	–	–	185,944	13,129	–		–	–	–	199,073	–	–
	2007	169,814	–	–	169,814	12,686	–		–	–	–	182,500	–	–
Mr James Hodgkinson	2008	176,871	–	–	176,871	13,129	–		–	–	–	190,000	–	–
	2007	167,314	–	–	167,314	12,686	–		–	–	–	180,000	–	–
Ms Anne Keating	2008	174,371	–	–	174,371	13,129	–		–	–	–	187,500	–	–
	2007	164,814	–	–	164,814	12,686	–		–	–	–	177,500	–	–
Mr Jim Sloman	2008	184,371	–	–	184,371	13,129	–		–	–	–	197,500	–	–
	2007	165,614	–	–	165,614	12,686	–		–	–	–	178,300	–	–
Dr David Teplitzky	2008	84,608	–	–	84,608	–	–		–	–	–	84,608	–	–
(retired
22 November 2007)	2007	207,500	–	–	207,500	–	–		–	–	–	207,500	–	–
Mr Stephen Girdis4	2008	–	–	–	–	–	–		–	–	–	–	–	–
(resigned
14 November 2007)	2007	–	–	–	–	–	–		–	–	–	–	–	–
Executive
Mr Gregory Goodman	2008	1,386,871	3,033,333	87,096	4,507,300	13,129	1,466,667	24,342		1,015,067	556,478	7,582,983	80	21
	2007	1,387,398	2,433,333	162,895 3,983,626		13,174	1,166,667	177,351		847,858	–	6,188,676	72	14

Directors’ report

Remuneration report – audited (cont)

Executive offi cers’ remuneration

Details of the nature and amount of each major element of the remuneration of each of the Key Management Personnel and the named senior executives who receive the highest remuneration are set out below:

		Salary and fees	Short-term Bonus2 Other3	Short-term Bonus2 Other3	Total	Post-employment superannuation benef ts	Long-term Bonus2 Other	Long-term Bonus2 Other	Share based payments Securities (ESAP) Options and rights	Share based payments Securities (ESAP) Options and rights	Total	performance related	proportion of remuneration 4
Executives1		$	$	$	$	$	$	$	$	$	$	%	%
Mr David van Aanholt	2008	686,871	1,033,333	66,978	1,787,182	13,129	466,667	22,780	595,906	309,154	3,194,818	75	28
Chief Executive Off cer,
Asia Pacif c	2007	687,335	866,667	23,612	1,577,614	13,174	383,333	41,729	601,285	–	2,617,135	71	23
Mr Anthony Rozic	2008	686,871	1,033,333	72,480	1,792,684	13,129	466,667	9,828	549,127	309,154	3,140,589	75	27
Group Chief Financial Off cer
	2007	687,398	700,000	98,090	1,485,488	13,174	300,000	10,610	405,516	–	2,214,788	63	18
Mr Nick Kurtis	2008	861,512	990,689	138,766	1,990,967	3,535	405,959	15,639	595,183	309,154	3,320,437	69	27
Group Head of Fund
Management	2007	537,398	700,000	22,663	1,260,061	13,174	300,000	21,418	660,696	–	2,255,349	74	29
Mr Michael O'Sullivan	2008	893,855	1,400,372	276,681	2,570,908	–	610,801	15,899	523,668	309,154	4,030,430	71	21
Chief Executive Off cer,
Europe	2007	988,890	866,667	(42,850)	1,812,707	976	383,333	23,404	401,586	–	2,622,006	63	15
Mr Jeff Pulsford	2008	759,776	558,659	–	1,318,435	274,431	–	–	–	431,118	2,023,984	49	21
Chief Executive Off cer,
European Business Parks	2007	836,408	196,801	45,027	1,078,236	231,430	–	–	–	330,673	1,640,339	32	20
and Funds5

Mr David van Aanholt, Mr Anthony Rozic, Mr Nick Kurtis and Mr Michael O’Sullivan are considered to be Key Management Personnel of the Consolidated Entity. 2. Bonuses paid to executives are in accordance with the Bonus Policy and based on individual performance of executives among their peers. Bonuses comprise both short-term benefi ts and long-term benefi ts. Amounts due to employees in Australia above $100,000 (2007: $100,000) are generally withheld and paid fortnightly over a period of three years. This limit varies from country to country. The total bonus amount included represents the amount approved during the fi nancial year with respect to the previous fi nancial year’s performance. Subsequent to the end of the fi nancial year, the Remuneration and Nomination Committee has agreed that 70% of the unpaid bonus entitlement at 30 June 2008 relating to Mr Nick Kurtis and Mr Michael O’Sullivan will be paid in July 2008.
Other includes reportable fringe benefi ts, car parking and per diem allowances and changes in annual leave balances.
The value of options as a proportion of remuneration includes both options and securities issued under the ESAP.
Effective 1 July 2008, Mr Jeff Pulsford ceased employment with Goodman and as part of his severance agreement he is to receive any unpaid bonus amounts relating to the current and prior years, and forfeits his entitlements under the Executive Option Plan.
Bonus payments to the Executive Director are paid in accordance with the policy determined by the Remuneration and Nomination Committee. Bonuses comprise both short-term and long-term benefi ts as generally amounts above $100,000 (2007: $100,000) are withheld and paid fortnightly over a period of three years. The total bonus amount included represents the amount approved during the fi nancial year with respect to the previous fi nancial year’s performance.
Other includes reportable fringe benefi ts, car parking and per diem allowances and changes in annual leave balances. 3. The value of options as a proportion of remuneration includes both options and securities issued under the ESAP. 4. Mr Stephen Girdis did not receive any remuneration from Goodman for his role as an Alternate Director.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Remuneration report – audited (cont)

Executive offi cers’ remuneration (cont)

Notes in relation to the table of Directors’ and executives’ remuneration

The Consolidated Entity’s share based payment remuneration includes both securities issued under the ESAP and options issued under the EOP.

In respect of securities granted under the terms of the ESAP where limited recourse loans are provided to employees, the fair value of the limited recourse feature of the loan is treated as an option and is based on the following assumptions:

		Fair value per limited
		recourse		Market price	Expected	Risk free	Distribution
Grant date	Expiry date	security $	Issue price $	of security $	volatility %	interest rate % pa	yield % pa
10 Apr 2007	31 Dec 2012	1.10	7.23	7.17	18.60	6.64	5.30
26 Nov 2007	31 Dec 2012	0.54	7.23	6.25	23.97	6.93	5.77

The following assumptions were used in determining the fair value of options on grant date:

		Fair value		Market price	Expected	Risk free	Distribution
	Expiry	per option	Exercise price	of security	volatility	interest rate	yield
Grant date	date	$	$	$	%	% pa	% pa
10 Apr 2007	31 Dec 2012	0.75	7.23	7.17	18.60	6.32	5.30
19 Oct 2007	30 Jun 2013	0.77	6.36	6.36	23.97	6.93	5.77
26 Nov 2007	30 Jun 2013	0.77	6.36	6.36	23.97	6.93	5.77

Analysis of bonuses included in the remuneration

Details of the vesting periods of the bonuses awarded as remuneration to the Executive Director and each of the fi ve named executives are set out below:

Included in remuneration $ Paid in 2008 %	To be paid in future years
	2009 % 2010 %
Executive Director Mr Gregory Goodman 4,500,000 34.8	32.6 32.6
Executives Mr David van Aanholt 1,500,000 37.8 Mr Anthony Rozic 1,500,000 37.8 Mr Nick Kurtis 1,396,648 39.4 Mr Michael O’Sullivan 2,011,173 39.3 Mr Jeff Pulsford 558,659 54.7	31.1 31.1 31.1 31.1 53.9 6.7 51.6 9.1 45.3 –

The total bonus amount included in remuneration represents the amount approved during the fi nancial year in relation to the previous year’s fi nancial performance. Details of the Consolidated Entity’s policy in relation to the proportion of remuneration that is performance related is discussed on pages 46 and 47. No bonuses were forfeited during the fi nancial year.

The percentage of bonuses to be paid in future years represents the actual percentages as determined by the Remuneration and Nomination Committee. Subsequent to the end of the fi nancial year, the Remuneration and Nomination Committee has agreed to pay 70% of the unpaid bonus entitlement relating to Mr Nick Kurtis and Mr Michael O’Sullivan in July 2008. This is refl ected in the table above.

Effective 1 July 2008, Mr Jeff Pulsford ceased employment with Goodman, and as part of his severance agreement he received any unpaid bonus amounts relating to the 2008 year in July 2008.

Bonuses may not be paid in the event that an individual ceases employment through resignation.

Directors’ report

Remuneration report – audited (cont)

Equity instruments

Equity instruments refer to options over stapled securities issued under the EOP and stapled securities issued under the ESAP. As the interest bearing loans granted to employees under the ESAP are limited recourse, the value of this feature of the loan is accounted for as an option. Details of the Consolidated Entity’s policy in relation to the proportion of remuneration that is performance related is discussed on pages 46 and 47.

Options over equity instruments granted as compensation

Details of options under the EOP that were granted by the Company as compensation to the Executive Director and each of the fi ve named executives and details of options that vested during the reporting period are as follows:

		Number of		Fair value per option	Exercise price		Number of
		options		at grant date	per option		options
	Year	granted	Grant date	$	$	Expiry date	vested
Executive Director
Mr Gregory Goodman	2008	2,700,000	26 Nov 2007	0.77	6.36	30 Jun 2013	–
	2007	–	–	–	–	–	–
Executives
Mr David van Aanholt	2008	1,500,000	19 Oct 2007	0.77	6.36	30 Jun 2013	–
	2007	–	–	–	–	–	–
Mr Anthony Rozic	2008	1,500,000	19 Oct 2007	0.77	6.36	30 Jun 2013	–
	2007	–	–	–	–	–	–
Mr Nick Kurtis	2008	1,500,000	19 Oct 2007	0.77	6.36	30 Jun 2013	–
	2007	–	–	–	–	–	–
Mr Michael O’Sullivan	2008	1,500,000	19 Oct 2007	0.77	6.36	30 Jun 2013	–
	2007	–	–	–	–	–	–
Mr Jeff Pulsford	2008	–	–	–	–	–	–
	2007	1,000,000	10 Apr 2007	0.75	7.23	31 Dec 2012	–

No options have been granted since the end of the fi nancial year. The options were provided at no cost to the recipients.

All options expire on the earlier of their expiry date or termination of the individual’s employment (subject to special circumstances). The options are exercisable in three equal tranches from the end of each of the years three, four and fi ve after the grant date. In addition to a continuing employment service condition, the ability to exercise options is conditional on Goodman achieving certain performance hurdles. For options granted during the current fi nancial year, the earliest exercise date is 1 July 2010.

Effective 1 July 2008, Mr Jeff Pulsford ceased employment with Goodman and forfeited any outstanding options under the EOP previously granted to him as compensation.

Securities granted as compensation under the ESAP

Details of securities that were granted by the Company under the ESAP as compensation to the Executive Director and each of the fi ve named executives and details of securities that vested during the reporting period are as follows:

		Number of		Fair value per	Exercise price		Number of
		securities		security at grant date	per security		securities
	Year	granted	Grant date	$	$	Expiry date	vested
Executive Director
Mr Gregory Goodman	2008	2,000,000	26 Nov 2007	0.54	7.23	31 Dec 2012	651,996
	2007	2,000,000	22 Nov 2006	0.53	5.24	31 Dec 2011	–
Executives
Mr David van Aanholt	2008	–	–	–	–	–	659,331
Mr Anthony Rozic	2007 2008	900,000 –	10 Apr 2007 –	1.10 –	7.23 –	31 Dec 2012 –	333,333 244,498
	2007	1,000,000	10 Apr 2007	1.10	7.23	31 Dec 2012	–
Mr Nick Kurtis	2008	–	–	–	–	–	744,498
	2007	950,000	10 Apr 2007	1.10	7.23	31 Dec 2012	500,000
Mr Michael O’Sullivan	2008	–	–	–	–	–	285,248
	2007	850,000	10 Apr 2007	1.10	7.23	31 Dec 2012	–

No ESAP securities were granted as compensation to Mr Jeff Pulsford.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Remuneration report – audited (cont)

Securities granted as compensation under the ESAP (cont)

No securities provided under the ESAP have been granted since the end of the fi nancial year.

The exercise of the offers under the ESAP expires on the earlier of their expiry date or termination of the individual’s employment. The securities are exercisable in three equal tranches from the end of each of years three, four and fi ve after the grant date. In addition to a continuing employment service condition, the ability to exercise options or securities under the ESAP is conditional on Goodman achieving certain performance hurdles. For ESAP securities granted in the current year, the earliest exercise date is 1 January 2010.

Modifi cation of terms of equity settled share based payment transactions

No terms of equity settled share based payment transactions (including options under the EOP or securities under the ESAP) have been altered or modifi ed by Goodman during the current or prior years.

Exercise of options issued under the EOP and rights over securities issued under the ESAP granted as compensation No options under the EOP previously granted as compensation were exercised in the fi nancial year.

During the fi nancial year, the following securities previously granted as compensation under the ESAP were exercised:

		Amount paid
	Number of	per security
	securities	$
Executive Director
Mr Gregory Goodman	–	–
Executives
Mr David van Aanholt	333,334	2.59
Mr Anthony Rozic	–	–
Mr Nick Kurtis	500,000	2.59
Mr Michael O’Sullivan	–	–
Mr Jeff Pulsford	–	–

Analysis of options issued under the EOP and rights over securities issued under the ESAP granted as compensation

Details of vesting profi les of the options granted under the EOP as remuneration to the Executive Director and each of the fi ve named senior executives are below:

			Number of
	Number of	Date options	options vested	% vested	% forfeited	Financial years in
	options granted	granted	in year	in year	in year1	which grant vests
Executive Director
Mr Gregory Goodman	2,700,000	26 Nov 2007	–	–	–	FY2011 – FY2013
Executives
Mr David van Aanholt	1,500,000	19 Oct 2007	–	–	–	FY2011 – FY2013
Mr Anthony Rozic	1,500,000	19 Oct 2007	–	–	–	FY2011 – FY2013
Mr Nick Kurtis	1,500,000	19 Oct 2007	–	–	–	FY2011 – FY2013
Mr Michael O’Sullivan	1,500,000	19 Oct 2007	–	–	–	FY2011 – FY2013
Mr Jeff Pulsford2	1,000,000	10 Apr 2007	–	–	–	FY2010 – FY2012
	1,325,000	9 Dec 2005	–	–	–	FY2009 – FY2011

Directors’ report

Remuneration report – audited (cont)

Analysis of options issued under the EOP and rights over securities issued under the ESAP granted as compensation (cont) Details of vesting profi les of the securities granted under the ESAP as remuneration to the Executive Director and each of the fi ve named senior executives are below:

Number of securities granted Date securities granted Number of securities vested in year	% vested in year % forfeited in year	1 Financial years in which grant vests
Executive Director Mr Gregory Goodman 2,000,000 26 Nov 2007 – 2,000,000 22 Nov 2006 – 1,955,990 3 Nov 2005 651,996	– – – – 33.3 –	FY 2010 – FY 2012 FY 2009 – FY 2011 FY 2008 – FY 2010
Executives Mr David van Aanholt 900,000 10 Apr 2007 – 1,000,000 14 Jun 2006 – 977,995 3 Nov 2005 325,998 1,000,000 28 Oct 2003 333,333 Mr Anthony Rozic 1,000,000 10 Apr 2007 – 1,000,000 14 Jun 2006 – 733,496 3 Nov 2005 244,498 Mr Nick Kurtis 950,000 10 Apr 2007 – 1,000,000 14 Jun 2006 – 733,496 3 Nov 2005 244,498 1,500,000 28 Oct 2003 500,000 Mr Michael O’Sullivan 850,000 10 Apr 2007 – 1,000,000 14 Jun 2006 – 855,746 3 Nov 2005 285,248 Mr Jeff Pulsford – – –	– – – – 33.3 – 33.3 – – – – – 33.3 – – – – – 33.3 – 33.3 – – – – – 33.3 – – –	FY 2010 – FY 2012 FY 2009 – FY 2011 FY 2008 – FY 2010 FY 2006 – FY2008 FY 2010 – FY 2012 FY 2009 – FY 2011 FY 2008 – FY 2010 FY 2010 – FY 2012 FY 2009 – FY 2011 FY 2008 – FY 2010 FY 2006 – FY2008 FY 2010 – FY 2012 FY 2009 – FY 2011 FY 2008 – FY 2010 –

The percentage forfeited in the year represents the reduction from the maximum number of securities available to vest due to the highest level performance criteria not being achieved.

The minimum value of securities yet to vest is $nil as the performance or service criteria may not be met, consequently the security may not vest.

The maximum value of securities yet to vest is not determinable as it depends on the market price of securities on the ASX at the date the security is exercised.

The percentage forfeited in the year represents the reduction from the maximum number of options available to vest due to the highest level performance criteria not being achieved.
Effective 1 July 2008, Mr Jeff Pulsford ceased employment with Goodman and forfeited any outstanding options under the EOP previously granted to him as compensation.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Remuneration report – audited (cont)

Analysis of movements in options issued under the EOP and securities issued under ESAP

The movement during the fi nancial year, by value, of securities granted under the ESAP and options granted under the EOP to the Executive Director and each of the fi ve named senior executives is detailed below:

		Options under the EOP			ESAP securities
	Value of	Value of	Value of	Value of	Value of	Value of
	options	options	options	securities	securities	securities
	granted	exercised	lapsed	granted	exercised	lapsed
	in year1	in year2	in year3	in year1	in year2	in year
	$	$	$	$	$	$
Executive Director
Mr Gregory Goodman Executives	2,079,000	–	–	1,080,000	–	–
Mr David van Aanholt	1,155,000	–	–	–	603,333	–
Mr Anthony Rozic	1,155,000	–	–	–	–	–
Mr Nick Kurtis	1,155,000	–	–	–	2,155,000	–
Mr Michael O’Sullivan	1,155,000	–	–	–	–	–
Mr Jeff Pulsford	–	–	–	–	–	–

The value of options under the EOP and securities under the ESAP granted in the year is the fair value of the options and securities calculated at grant date using a combination of Monte Carlo simulations and numerical option valuation in a lattice based framework. The total value of the options and securities granted under these arrangements is included in the table above. This amount is allocated to remuneration over the vesting period of the options and securities.
The value of the options under the EOP and securities under the ESAP exercised during the year is calculated as the market price of securities on the ASX at close of trading on the date the options and securities were exercised after deducting the price paid or payable to exercise the options and securities.
Effective 1 July 2008, Mr Jeff Pulsford ceased employment with Goodman and forfeited any outstanding options under the EOP previously granted to him as compensation.

Environmental regulations

The Consolidated Entity has policies and procedures in place that are designed to ensure that, where operations are subject to any particular and signifi cant environmental regulation under a law of Australia, those obligations are identifi ed and appropriately addressed.

The Directors have determined that there has not been any material breach of those obligations during the fi nancial year.

Declaration by the Group Chief Executive Offi cer and Group Chief Financial Offi cer

The Group Chief Executive Offi cer and Group Chief Financial Offi cer declared in writing to the Board that, in their opinion, the fi nancial records of the Company for the fi nancial year ended 30 June 2008 have been properly maintained and the Company’s fi nancial reports for the fi nancial year ended 30 June 2008 comply with accounting standards and present a true and fair view of the Company’s fi nancial condition and operational results. This statement is required annually.

Directors’ report

Indemnifi cation and insurance of offi cers and auditors

Goodman has insured current and former Directors and offi cers of the Consolidated Entity in respect of Directors’ and offi cers’ 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 offi cers’ 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 indemnifi ed in any way by this insurance cover.

Non-audit services

During the year, KPMG, the Company’s auditor, performed certain other services in addition to its statutory duties. The Board has considered the non-audit services provided during the year to the Company and its controlled entities by the auditor and, in accordance with written advice authorised by a resolution of the Audit Committee, resolved that it is satisfi ed 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 APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

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

	Consolidated
	2008 $000 2007 $000
Audit services Auditor of the Company: – Audit and review of f nancial reports (KPMG Australia) – Audit and review of f nancial reports (overseas KPMG f rms)	944.1 805.1 1,338.4 764.4
	2,282.5 1,569.5
Other regulatory services – Other regulatory services (KPMG Australia) – Other regulatory services (overseas KPMG f rms)	59.2 50.1 141.8 12.9
Other assurance services – Investigative accounting services (KPMG Australia) – Investigative accounting services (overseas KPMG f rms)	1,051.7 48.1 125.9 176.6
Taxation services – Taxation compliance services (KPMG Australia) – Taxation compliance services (overseas KPMG f rms) – Other taxation advice (KPMG Australia) – Other taxation advice (overseas KPMG f rms)	173.4 234.7 511.0 145.6 139.9 124.4 260.0 1,463.4
	2,462.9 2,255.8
Total paid/payable to KPMG	4,745.4 3,825.3
Other auditors – Audit and review of f nancial reports (non-KPMG f rms)	134.5 66.3

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Qualifi cations, experience and special responsibilities of Directors and Company Secretary

Board of Directors

Mr David S Clarke, AO – Chairman Appointed 26 October 2000

David has been Chairman of Macquarie Group Limited (the successor parent entity of Macquarie Bank Limited) since 1 April 2007. He was previously Executive Chairman of Macquarie Bank from its formation in 1985 until 31 March 2007. From 1971 to 1977, he was Joint Managing Director of Hill Samuel Australia Limited (predecessor to Macquarie Bank), from 1977 to 1984 Managing Director and from 1984 Executive Chairman. David is also Chairman of Australian Vintage Ltd (formerly McGuigan Simeon Wines Limited, since 27 November 1991), Poole’s Rock Wines Pty Limited (since 1 May 1970), the Wine Committee of the Royal Agricultural Society of NSW, the Opera Australia Capital Fund, the Sydney University Football Club Foundation and the George Gregan Foundation. He is a member of the Investment Advisory Committee of the Australian Olympic Foundation, a member of the Harvard Business School Asia Advisory Board, a member of the Seoul International Business Advisory Council and a member of the Bloomberg Asia Pacifi c Advisory Committee. David is also a member of Council of the Royal Agricultural Society of NSW and an honorary life member of the Financial Markets Foundation for Children. He is a member of the Corporate Governance Committee of the Australian Institute of Company Directors and Vice President of the Sydney University Cricket Club. David was previously Chairman of Macquarie ProLogis Management Limited (from 26 June 2002 until 31 March 2007), Macquarie Offi ce Management Limited (from 30 June 1987 until 31 March 2007) and Macquarie CountryWide Management Limited (from 22 June 1995 until 31 March 2007), the management companies of Macquarie ProLogis Trust, Macquarie Offi ce Trust and Macquarie CountryWide Trust respectively. Additionally, he was Chairman of the Sydney and Territorial Advisory Board of the Salvation Army (from 1999 until 2006) and the Australian Rugby Union (from 1998 until 2001) and a member of the International Rugby Board (from 1998 until 2001).

Mr Gregory Goodman – Group Chief Executive offi cer

Appointed 7 August 1998

Gregory is responsible for Goodman Group’s overall operations and the implementation of its strategic plan. He has 26 years of experience in the property industry with signifi cant expertise in the industrial property arena. Gregory was a co-founder of Goodman Group, playing an integral role in establishing its specialist global position in the property market through various corporate transactions, including takeovers, mergers and acquisitions. He is a director of Goodman (NZ) Limited, J-REP Co., Ltd and the management companies of Goodman Group’s unlisted funds.

Mr Ian Ferrier, AM – Independent Director

Appointed 1 September 2003

Ian is a co-founder of Ferrier Hodgson. He is a Fellow of The Institute of Chartered Accountants in Australia and has 43 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 (since 8 March 2001), Australian Oil Limited (since 2 May 2005) and EnergyOne Limited (since 15 January 2007) and a director of Australian Vintage Ltd (formerly McGuigan Simeon Wines Limited, since 20 November 1991) and Reckon Limited (since 17 August 2004). His experience is essentially concerned with understanding the fi nancial 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 signifi cant experience in property and development, tourism, manufacturing, retail, hospitality and hotels, infrastructure and aviation and service industries.

Mr Patrick Goodman – Non-Executive Director

Appointed 14 April 1998

Patrick is the Managing Director of Goodman Holdings Group, which is a major investor in Goodman. The diversifi ed interests of Goodman Holdings Group initially focused on direct and indirect property development and have expanded to include the management of a diverse portfolio across sectors covering aviation, food, rural, private and listed equity, infrastructure and fi nancial services globally. Patrick is also a director of companies involved in information technology, property investment and management both in Australasia and the United States. During his 28 year career, he has had considerable public and private company experience both domestically and internationally.

Ms Diane Grady – Independent Director

Appointed 30 September 2007

Directors’ report

Qualifi cations, experience and special responsibilities of Directors and Company Secretary (cont)

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. He was a partner of KPMG for 24 years and National Executive Offi cer for fi ve years. Since retiring from KPMG in June 2000, John has held a number of non-executive director roles. He is currently Chairman of ICA Property Development Funds and Sydney Foundation for Medical Research. John is a director of Macquarie CountryWide Management Limited (since 18 August 2003), the management company of Macquarie CountryWide Trust, and Crane Group Limited (since 1 September 2000). He was formerly the Chairman of Lipa Pharmaceuticals Limited (from 17 June 2004 to 6 November 2007). John is President of Northern Suburbs Rugby Football Club Limited and a member of the Territorial Headquarters and Sydney Advisory Board of the Salvation Army.

Mr James Hodgkinson – Non-Executive Director

Appointed 21 February 2003

James is an executive director (non-voting) of Macquarie Group Limited and Co-Head of Macquarie Group’s Real Estate Capital (REC) Division. His responsibilities include Macquarie Group’s interest in the MGA Joint Venture. James was also Chief Executive Offi cer of Macquarie Industrial Trust for six years prior to that trust’s merger with GIT. He is a director of J-REP Co., Ltd, Goodman (NZ) Limited, the manager of the NZX-listed Goodman Property Trust, and the manager of Macquarie Goodman Hong Kong Logistics Fund. James has previously been an alternate director of Macquarie ProLogis Management Limited (from 24 May 2002 to 9 June 2006), the management company of Macquarie ProLogis Trust. With over 20 years of experience in property funds management, investment banking and chartered accounting, he oversees REC’s businesses and real estate investment trust development in Asia and core real estate investments for Macquarie Group. Since taking a senior position across REC’s businesses in 2000, James has jointly led growth in assets under management from $3 billion to over $32 billion as at 31 March 2008. During this time, he has played an instrumental role in the establishment of a number of REC’s fund management platforms around the world. James has a Bachelor of Economics, is a Certifi ed Practising Accountant and is a Fellow of the Australian Property Institute.

Ms Anne Keating – Independent Director

Appointed 23 February 2005

Anne is a non-executive director with board positions in a range of industries. She is on the boards of Macquarie Leisure Management Limited (since 30 March 1998) and Macquarie Leisure Operations Limited (since 28 April 2003), being the management companies of Macquarie Leisure Trust Group, and STW Communications Group Limited (since 17 May 1995). Anne was previously on the board of Spencer Street Station Redevelopment Holdings Limited (from 31 December 2003 to 14 May 2008) and prior to that was a director of Insurance Australia Group Limited for seven years. She is also a member of the Advisory Council of ABN AMRO Australia and New Zealand, a Governor of the Cerebral Palsy Foundation and a trustee for the Centennial Park and Moore Park Trust. Her last executive position was as General Manager, Australia for United Airlines for nine years until 2001.

Mr Jim Sloman, OAM – Independent Director

Appointed 1 February 2006

Jim has over 30 years of experience in the building and construction industries in Australia and overseas, including experience with Sir Robert McAlpine & Sons in London and Lend Lease Corporation in Australia and as Deputy Chief Executive and Chief Operating Offi cer of the Sydney Organising Committee for the Olympic Games (SOCOG) from 1997 to 2001. He is currently the Chief Executive Offi cer and a director of MI Associates Pty Limited, a company established by him and comprising some of the leading members of the former SOCOG senior management team. MI Associates is working as an adviser to the organisers of the London Olympic Games following its work on London’s winning bid for the 2012 Olympic Games. With his range of experience, Jim brings signifi cant expertise to Goodman.

Company Secretary

Mr Carl Bicego – Company Secretary

Carl is the Company Secretary of Goodman and its Australian subsidiaries as well as Legal Counsel – Head of Corporate in Australia. He has over 10 years of legal experience in corporate law and joined Goodman from law fi rm Allens Arthur Robinson in 2006. Carl holds a Masters of Laws and Bachelor of Economics/Bachelor of Laws (Hons). He is an affi liate of Chartered Secretaries Australia.

Diane was appointed as an Independent Director on 30 September 2007. She has been a full-time non-executive director on various companies since 1994 and is currently a director of Woolworths Limited and BlueScope Steel Limited. Diane is also a senior adviser to McKinsey & Company and a member of the ASIC Business Consultative Panel. Prior to becoming an independent director, she was a partner with McKinsey & Company where she spent 15 years consulting to clients in a broad range of industries on strategic and organisational issues.

Goodman Group Annual Report 2008

Keeping focused

Directors’ report

Events subsequent to balance date

In the opinion of the Directors, there were no events subsequent to balance date, and up to the date of signature of the Financial Report, which would require adjustment or disclosure in the Financial Report.

Lead auditor’s independence declaration under section 307C of the Corporations Act 2001 The lead auditor’s independence declaration is set out on page 57 and forms part of this Directors’ report for the year.

Rounding

Goodman is an entity of a kind referred to in Australian Securities & Investments Commission Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in this Directors’ report and the Financial Report and have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

The Directors’ report is made in accordance with a resolution of the Directors.

==> picture [131 x 46] intentionally omitted <==

Gregory Goodman Director

Ian Ferrier, AM Director Sydney, 21 August 2008

Lead auditor’s independence declaration

Lead auditor’s independence declaration under section 307C of the Corporations Act 2001 To: the Directors of Goodman International Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the year ended 30 June 2008 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

==> picture [109 x 48] intentionally omitted <==

KPMG

==> picture [140 x 77] intentionally omitted <==

John Teer Partner Sydney, 21 August 2008

Goodman Group Annual Report 2008

Keeping focused

as at 30 June 2008

Income statements

Balance sheets

for the year ended 30 June 2008

Note	Consolidated	Parent Entity
	2008 $M 2007 Restated $M	1 2008 $M 2007 $M
Revenue Gross property income Fund management Property services Development management Distributions from investments	310.5 419.8 86.9 71.8 75.1 65.0 351.1 190.1 28.9 18.0	– – – – – – – – 12.9 –
	852.5 764.7	12.9 –
Property and Development Expenses Property expenses Development expenses	(64.4) (94.4) – – (296.5) (134.4) – –
	(360.9) (228.8) – –
Other Income Net (loss)/gain from fair value adjustments on investment properties 15 Net gain on disposal of investment properties 8 Net gain on disposal of controlled entities 8 Share of net results of equity accounted investments 16 Net gain on disposal of equity investments 8	(144.3) 64.0 – – 97.4 54.3 – – 183.0 114.2 32.1 – (25.0) 121.2 – – 119.2 4.9 – –
	230.3 358.6 32.1 –
Other Expenses Employee expenses Administrative and other expenses Impairment losses 8	(144.7) (81.0) – – (77.1) (93.2) (1.5) (1.0) (108.2) – (111.5) –
	(330.0) (174.2) (113.0) (1.0)
Earnings before interest and tax and discontinued operation	391.9 720.3 (68.0) (1.0)
Financing Costs Financial income 8 Financial expenses 8	67.4 16.5 22.7 24.1 (177.9) (112.8) (63.0) (53.9)
Net f nancing costs	(110.5) (96.3) (40.3) (29.8)
Prof t/(loss) before income tax 8	281.4 624.0 (108.3) (30.8)
Income tax expense 9	(5.2) (23.8) (13.2) (0.1)
Prof t/(loss) after income tax – continuing operations	276.2 600.2 (121.5) (30.9)
Discontinued operation (Loss)/prof t from discontinued operation (net of income tax) 4	(7.8) 22.5 – –
Prof t/(loss) for the year	268.4 622.7 (121.5) (30.9)
Prof t/(loss) attributable to Shareholders Prof t attributable to Unitholders	28.9 (3.6) 221.8 626.1
Prof t attributable to Securityholders	250.7 622.5
Amount attributable to other minority interests	17.7 0.2
Prof t for the year	268.4 622.7
Basic earnings/(loss) per Company share (¢) 2 Diluted earnings per Company share (¢) 2	1.7 (0.2) 1.7 (0.2)
Continuing operations Basic earnings/(loss) per Company share (¢) 2 Diluted earnings/(loss) per Company share (¢) 2	2.1 (1.6) 2.1 (1.6)

Refer to note 4 Discontinued Operation.

The income statements are to be read in conjunction with the accompanying notes.

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Consolidated Parent Entity
2008 2007 2008 2007
Note $M $M $M $M
Current Assets
Cash 639.2 81.8 0.6 0.1
Receivables 12 532.9 815.5 679.1 5.3
Inventories 13 8.7 20.6 – –
Current tax receivables 9(c) 0.3 6.0 – 4.0
Assets classifi ed as held for sale 11 33.3 – – –
Other assets 14 98.1 61.5 11.6 –
Total current assets 1,312.5 985.4 691.3 9.4
Non-current Assets
Receivables 12 252.2 7.1 107.0 834.8
Investment properties 15 4,263.8 5,360.0 – –
Inventories 13 34.2 8.1 – –
Investments accounted for using the equity method 16 2,399.5 1,092.1 – –
Deferred tax assets 9(e) 34.6 6.5 1.1 2.5
Other fi nancial assets 17 238.7 407.0 399.1 476.6
Plant and equipment 18 24.9 21.3 – –
Intangible assets 19 1,073.2 1,281.8 – –
Total non-current assets 8,321.1 8,183.9 507.2 1,313.9
Total assets 9,633.6 9,169.3 1,198.5 1,323.3
Current Liabilities
Payables 20 424.0 324.6 159.1 25.0
Current tax payables 9(d) 50.8 37.5 13.0 –
Interest bearing liabilities 21 512.1 2,276.6 1,016.0 –
Provisions 22 193.2 143.0 – –
Total current liabilities 1,180.1 2,781.7 1,188.1 25.0
Non-current Liabilities
Payables 20 4.7 105.3 0.8 568.9
Interest bearing liabilities 21 3,717.0 1,585.0 – 655.2
Deferred tax liabilities 9(e) 53.8 96.2 – 0.4
Provisions 22 8.9 22.9 – –
Total non-current liabilities 3,784.4 1,809.4 0.8 1,224.5
Total liabilities 4,964.5 4,591.1 1,188.9 1,249.5
Net assets 4,669.1 4,578.2 9.6 73.8
Equity Attributable to Shareholders
Issued capital 23 193.9 178.9 193.9 178.9
Reserves 24 65.1 126.9 87.2 44.9
Accumulated losses 25 (23.3) (57.4) (271.5) (150.0)
Total equity attributable to Shareholders 235.7 248.4 9.6 73.8
Minority Interests
Equity Attributable to Unitholders
Issued capital 23 4,123.3 3,993.2 – –
Reserves 24 – 254.9 – –
(Accumulated losses)/retained earnings 25 (10.5) 58.0 – –
– –
Total equity attributable to Unitholders 4,112.8 4,306.1
Other minority interests 26 320.6 23.7 – –
Total equity 4,669.1 4,578.2 9.6 73.8
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The balance sheets are to be read in conjunction with the accompanying notes.

Goodman Group Annual Report 2008

Keeping focused

Cash fl ow statements for the year ended 30 June 2008

Statements of recognised income and expense for the year ended 30 June 2008

Consolidated Parent Entity Note 2008 $M 2007 $M 2008 $M 2007 $M Amounts recognised directly in equity (net of tax) Effect of foreign currency translation 24, 25 6.4 (5.8) – – Cash f ow hedges: – – – – – Movements in fair value taken directly to equity 24 23.9 45.0 – – – (Gain)/loss transferred to income statement 24 (6.2) 1.0 – – Change in fair value of available for sale equity securities 24 4.1 54.0 – – Fair value of available for sale equity securities transferred to income statement on disposal 24 (89.0) – – – Actuarial def cit on def ned benef t superannuation funds 24 (2.0) (4.0) – – Net (expense)/income recognised directly in equity (62.8) 90.2 – – Prof t/(loss) for the year 268.4 622.7 (121.5) (30.9) Total recognised income and expense 205.6 712.9 (121.5) (30.9) Attributable to: – Securityholders 187.9 712.7 (121.5) (30.9) – Minority interests 17.7 0.2 – – Total recognised income and expense 205.6 712.9 (121.5) (30.9) The statements of recognised income and expense are to be read in conjunction with the accompanying notes.	Consolidated Parent Entity Note 2008 $M 2007 $M 2008 $M 2007 $M
	Cash Flows from Operating Activities Property income received 396.6 416.3 – – Other cash receipts from services provided 233.5 151.3 3.6 8.3 Property expenses paid (84.8) (99.4) – – Other cash payments in the course of operations (158.2) (146.8) (11.5) (0.1) Dividends/distributions received 108.8 62.1 12.9 – Interest received 15.5 5.6 – 3.6 Finance costs paid (138.4) (47.6) (1.1) – Net income tax (paid, net of refunds)/received (27.8) (7.5) (5.5) 4.6
	Net cash provided by/(used in) operating activities 28(b) 345.2 334.0 (1.6) 16.4
	Cash Flows from Investing Activities Proceeds from deferred settlement and sale of investment properties 1,607.7 600.9 – – Acquisition of controlled entities (net of cash acquired) 3 (257.1) (639.4) – (34.6) Proceeds from sale of controlled entities (net of cash disposed) 1,045.5 – 32.1 – Proceeds from sale of equity investments (net of cash disposed) 444.3 357.6 – – Proceeds from the disposal of discontinued operation (net of cash disposed) 4 212.9 – – – Payments for equity investments (1,734.1) (833.5) – (0.2) Payments for investment properties and developments (1,630.2) (1,135.5) – – Payments for plant and equipment (17.1) (8.9) – –
	Net cash (used in)/provided by investing activities (328.1) (1,658.8) 32.1 (34.8)
	Cash Flows from Financing Activities Proceeds from issue of ordinary securities 17.7 89.2 8.8 13.6 Proceeds from issue of Hybrid Securities 327.0 – – – Transaction costs from issue of securities (6.4) (0.2) – – Loans (to)/from controlled entities – – (39.2) 4.5 Loans (to)/from related entities (70.7) 4.8 0.4 (0.5) Proceeds from borrowings 7,183.9 5,839.8 – – Repayment of borrowings (6,465.6) (4,320.7) – – Dividends and distributions paid (445.6) (229.6) – –
	Net cash provided by/(used in) f nancing activities 540.3 1,383.3 (30.0) 17.6
	Net increase/(decrease) in cash held 557.4 58.5 0.5 (0.8) Cash at beginning of the year 81.8 23.3 0.1 0.9
	Cash at end of the year 28(a) 639.2 81.8 0.6 0.1

The cash fl ow statements are to be read in conjunction with the accompanying notes.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies

Goodman International Limited (Company or Parent Entity) is a company domiciled in Australia. The consolidated Financial Report of the Company as at, and for, the year ended 30 June 2008 comprises the Company and its controlled entities (together Goodman or Consolidated Entity) and the Consolidated Entity’s interest in associates and joint venture entities.

Statement of compliance

This consolidated Financial Report is a general purpose fi nancial report which has been prepared in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. International Financial Reporting Standards (IFRS) form the basis of Accounting Standards adopted by the AASB, being Australian equivalents to IFRS. The Financial Report also complies with IFRS.

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(b) Principles of consolidation (cont) Associates

Associates are those entities over which the Consolidated Entity exercises signifi cant infl uence but not control over their fi nancial and operating policies. In the consolidated fi nancial 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 profi ts or losses of associates is recognised in the consolidated income statement and its share of post-acquisition movements in reserves is recognised in consolidated reserves. Cumulative post-acquisition movements in both profi t or loss and reserves are adjusted against the cost of the investment.

Joint ventures

The Financial Report is presented in Australian dollars and was authorised for issue by the Directors on 21 August 2008.

The signifi cant accounting policies which have been adopted in the preparation of the consolidated Financial Report are set out below:

(a) Basis of preparation of the consolidated Financial Report

The Financial Report is prepared on the historical cost basis except that the following assets and liabilities are stated at fair value:

- investment properties;
- derivative fi nancial instruments;
- fi nancial instruments classifi ed as available for sale; and + liabilities for cash settled share based payment arrangements.

(b) Principles of consolidation

Accounting for the acquisition of control of Goodman Industrial Trust (GIT)

The stapling of the Company and GIT was approved at separate meetings of the respective Shareholders and Unitholders on 25 January 2005. Following approval of the stapling, shares in the Company and units in GIT were stapled to one another and are quoted as a single security on the Australian Securities Exchange (ASX). Both the responsible entity of GIT and the Company must at all times act in the best interest of the Consolidated Entity.

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

- no goodwill is recognised on acquisition of GIT because no direct ownership interest was acquired by the Company in GIT;
- the equity issued by the Company to Unitholders to give effect to the transaction is recognised at the dollar value of the consideration payable by the Unitholders. This is because the issue of shares by the Company was administrative in nature rather than for the purposes of the Company acquiring an ownership interest in GIT; and
- the issued units of GIT are not owned by the Company and are presented as minority interests in the Consolidated Entity notwithstanding that the Unitholders are also the Shareholders by virtue of the stapling arrangement. Accordingly, the equity in the net assets of GIT and the profi t arising from those net assets have been separately identifi ed in the income statement and balance sheet.

Accounting for Goodman PLUS Trust

On 21 December 2007, a controlled entity of GIT, Goodman PLUS Trust, issued Goodman PLUS hybrid securities (Hybrid Securities) which meet the defi nition of equity for the purposes of the Consolidated Entity. Accordingly, the Hybrid Securities have been classifi ed as equity and presented as minority interests. Incremental costs directly attributable to the issue of Hybrid Securities are recognised as a deduction from equity, net of any tax effects.

Controlled entities

Controlled entities are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the fi nancial and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The consolidated fi nancial statements incorporate the assets and liabilities of all entities controlled by the Company at 30 June 2008 and the results of all such entities for the year ended 30 June 2008.

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

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

Joint venture entities

In the consolidated fi nancial statements, investments in joint venture entities are accounted for using the equity method. 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 profi t or loss is recognised in the consolidated profi t and loss from the date joint control commences to the date joint control ceases. Other movements in reserves are recognised directly in the consolidated reserves.

Joint venture operations and assets

The Consolidated Entity’s interests in unincorporated joint ventures and jointly controlled assets are brought to account by including its proportionate share of assets and liabilities and the Consolidated Entity’s revenue and expenses from the sale of its goods or services 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 venture entities, including those relating to contributions of non-monetary assets on establishment, are eliminated to the extent of the Consolidated Entity’s proportionate share 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) Issued capital

Ordinary shares

Ordinary shares of the Company are classifi ed as equity. Incremental costs directly attributable to the issues of ordinary shares and options are recognised as a deduction from equity, net of any tax effects.

(d) Revenue recognition

Rental income

Rental income entitlements under operating leases are recognised on a straight-line basis over the term of the lease contract. Where operating lease rental income is recognised relating to fi xed increases in rentals in future years, an asset is recognised. This asset is a component of the relevant investment property carrying amount. The cost of lease incentives provided to customers is recognised on a straight-line basis over the life of the lease as a reduction of gross operating lease rental income.

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 fund management, property services and development management is recognised progressively as the services are provided. Any performance related fund management income is recognised on attainment of the performance related conditions.

Construction contracts

Certain development management arrangements are assessed as being fi xed price construction contracts rather than a rendering of services.

Investments in controlled entities are carried at their cost of acquisition, less any impairment, in the Company’s fi nancial statements.

Revenue and expenses relating to construction contracts are recognised in profi t or loss in proportion to the stage of completion of the relevant contracts. The stage of completion is assessed by reference to costs incurred to date as a percentage of estimated total costs for each contract. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profi t and loss.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(d) Revenue recognition (cont) Financial income

Interest

Interest is recognised on an accruals basis using the effective interest method, and, if not received at balance date, is refl ected in the balance sheet as a receivable.

Dividends and distributions

Dividend income is recognised when a dividend has been declared and, if not received at balance date, is refl ected in the balance sheet as a receivable. Dividends are recognised net of any franking credits.

Distributions are recognised when they are declared by the distributing entities and before deduction of any withholding tax. Any non-recoverable withholding tax is included in income tax.

(e) Foreign currency translation Functional and presentation currency

Items included in the fi nancial statements of each of the Company’s controlled entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The consolidated fi nancial statements are presented in Australian dollars, which is the Company’s functional and presentation currency.

Transactions

Foreign currency transactions are translated to Australian currency at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at the reporting date are translated at the rates of exchange ruling on that date. Resulting exchange differences are recognised in profi t or loss.

Non-monetary assets and liabilities that are measured in terms of historical cost are translated at rates of exchange applicable at the date of the initial transaction. Non-monetary items which are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Translation of controlled foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated into Australian dollars at foreign exchange rates applicable at the reporting date.

Exchange differences arising on monetary items that form part of the net investment in a foreign operation are recognised in the profi t or loss of the Company and recognised in the foreign currency translation reserve on consolidation.

Exchange rates used

The following exchange rates are the main exchange rates used in translating foreign currency transactions, balances and fi nancial statements:

	Weighted	average	As at 30 June	As at 30 June
New Zealand dollar	2008 1.1668	2007 1.1475	2008 1.2678	2007 1.1045
Singapore dollar	1.2855	1.2165	1.3093	1.2879
Hong Kong dollar	6.9822	6.1262	7.4812	6.5438
United States dollar	0.8961	0.7857	0.9592	0.8474
European euro	0.6100	0.6016	0.6117	0.6293
British pounds sterling	0.4475	0.4065	0.4860	0.4241
Japanese yen	98.6479	93.0993	103.5800	104.5500

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(f) Investment properties

Investment properties comprise investment interests in land and buildings held for the purpose of leasing to produce rental income and/or for capital appreciation. Investment properties are carried at their fair value.

Components of investment properties

Land and buildings (including integral plant and equipment) comprising investment properties are regarded as composite assets and are disclosed as such in the Financial Report. Investment properties are not depreciated as they are subject to continual maintenance and regularly revalued on the basis described below. Taxation allowances for building, plant and equipment depreciation are claimed by trusts within the Consolidated Entity and are declared as tax deferred components of distributions.

Investment property carrying values include the costs of acquiring the properties. Where a contract of purchase includes a deferred payment arrangement, the acquisition value is determined as the cash consideration payable in the future, discounted to present value at the date of acquisition.

Amounts provided to customers as lease incentives and assets relating to fi xed rental income increases in operating lease contracts are included within investment property values. Lease incentives are amortised over the term of the lease on a straightline basis. The amortisation is applied to reduce gross property income.

Expenditure on direct leasing and tenancy costs is deferred and included within investment property values. Direct leasing and tenancy costs are amortised over the term of the lease in proportion to the rental income recognised in each fi nancial year.

Revaluations 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 valuers determine the market value based on market evidence and assuming a willing, but not anxious, buyer and seller, a reasonable period to sell the property, and the property being reasonably exposed to the market.

At each reporting date occurring between obtaining independent valuations, the Directors review the carrying value of the Consolidated Entity’s investment properties to be satisfi ed that, in their opinion, the carrying value of the investment properties refl ects the fair value of the investment properties at that date.

Changes in fair value are recognised directly in the profi t or loss. The net of unrealised revaluations from investment properties is transferred to the asset revaluation reserve.

Disposal of investment properties

The disposal of an investment property is recognised when the signifi cant risks and rewards of ownership have been transferred. The gain or loss on disposal of investment properties is calculated as the difference between the carrying amount of the property at the time of the disposal and the proceeds on disposal (less transaction costs and any provision for future rental guarantees) and is included in the income statement in the period of disposal. The balance of previously unrealised gains for the individual properties included in the asset revaluation reserve is transferred to the capital profi ts reserve.

Redevelopment projects

Where a property is undergoing redevelopment works, the cost of the redevelopment works is added to its previously stated fair value. The carrying amounts of redevelopment projects are reviewed to determine whether they are in excess of their recoverable amount at each reporting date. If the carrying amount of a redevelopment project exceeds its recoverable amount, the project is written down to the recoverable amount. The write-down is recognised in the income statement in the period in which it occurs. The Consolidated Entity’s policy is to revalue redevelopment properties to their fair value at the date of their practical completion.

Investment properties under development

Investment properties under development include new investment properties in the course of construction and land. They are recorded at acquisition cost plus the subsequent costs of development.

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

The carrying amounts of investment properties under development are reviewed to determine whether they are in excess of their recoverable amount at each reporting date. If the carrying amount of an investment property under development exceeds its recoverable amount, the asset is written down to the lower amount. The write-down is recognised in the income statement in the period in which it occurs. The Consolidated Entity’s policy is to revalue development properties to their fair value at the date of their practical completion.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(g) Receivables

Trade receivables (including rental debtors) due within 30 days are not discounted (refer to note 1(m) for details of impairment). The collectibility of trade receivables is assessed at the reporting date. Debts which are known to be uncollectible are written off.

Construction contract receivables are stated at cost plus profi t recognised to date less an allowance for foreseeable losses and less progress billings. Cost includes all expenditure related directly to specifi c projects and an allocation of fi xed and variable overheads incurred, relating to the Consolidated Entity’s construction contract activities based on normal operating activity.

(h) Inventories

Work in progress in relation to on balance sheet construction projects, land subdivision and development projects 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) Plant and equipment

Leasehold improvements and items of 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 estimated useful lives used for each class of asset are as follows:

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

Refer also to note 1(l) in respect of leased plant and equipment.

(j) Finance costs

Expenditure incurred in obtaining debt fi nance is offset against the principal amount of the interest bearing liability to which it relates, and is recognised as an interest expense on an effective yield basis over the life of the facility. Finance costs relating to a qualifying asset are capitalised as part of the cost of that asset using a weighted average cost of debt. Qualifying assets are assets which takes a substantial time to get ready for their intended use or sale. All other fi nance costs are expensed as incurred.

(k) Investments

Investments in equity securities

Investments held for trading are classifi ed as current assets and are stated at fair value with any resultant gain or loss recognised in profi t or loss.

Other investments held by the Consolidated Entity (apart from investments in associates and joint venture entities) are classifi ed as being available for sale and are stated at fair value, with any resultant gain or loss being recognised directly in equity except for impairment losses. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profi t or loss. Where these investments are interest bearing, interest calculated using the effective interest method is recognised in profi t or loss.

Investments in listed entities which are designated as available for sale (other than investments in listed associates and joint venture entities) are measured at fair value which is determined with reference to the quoted bid price at reporting date. Changes in the fair value of such investments are recognised in equity, except for impairment losses (refer to note 1(m)). When investments classifi ed as available for sale are sold, the accumulated fair value adjustments are included in the profi t or loss as gains or losses from disposal of investment securities.

(l) Leased assets

Leases under which the Consolidated Entity assumes substantially all the risks and benefi ts of ownership are classifi ed as fi nance leases. Other leases are classifi ed 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.

Finance lease payments

Minimum lease payments are apportioned between the fi nance charge and the reduction of the outstanding liability. The fi nance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(m) Impairment

Non-fi nancial assets

The carrying amounts of the Consolidated Entity’s assets (except deferred tax assets, inventories and investment properties) are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the asset is written down to the recoverable amount. The impairment is recognised in profi t or loss in the reporting period in which it occurs.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profi t or loss, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through profi t or loss.

Impairment losses recognised in respect of cash-generating units are allocated fi rst to reduce the goodwill allocated to cashgenerating units (group of units), then to the carrying amount of any identifi ed intangible asset and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

Financial assets

A fi nancial asset is assessed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the fi nancial asset is written down to the present value of the estimated future cash fl ows discounted at the original effective interest rate, or in the case of an available for sale fi nancial asset, to its fair value. The impairment is recognised in profi t or loss in the reporting period in which it occurs.

When a decline in the fair value of an available for sale fi nancial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profi t or loss. The amount of the cumulative loss that is recognised in profi t or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that fi nancial asset previously recognised in profi t or loss.

Calculation of recoverable amount

The recoverable amount of the Consolidated Entity’s receivables carried at amortised cost is calculated as the present value of estimated future cash fl ows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these fi nancial assets). Receivables with a short duration are not discounted.

Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Signifi cant receivables are individually assessed for impairment. Impairment testing of signifi cant receivables that are not assessed as impaired individually is performed by placing them into portfolios of signifi cant receivables with similar risk profi les and undertaking a collective assessment of impairment. Non-signifi cant receivables are not individually assessed. Instead, impairment testing is performed by placing non-signifi cant receivables in portfolios of similar risk profi les, based on objective evidence from historical experience adjusted for any effects of conditions existing at each balance date.

The recoverable amount of other assets is the greater of their fair value less costs to sell, and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. For an asset that does not generate largely independent cash infl ows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

Impairment losses, other than those in respect of goodwill, are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimate used to determine the recoverable amount.

An impairment loss in respect of goodwill is not reversed.

An impairment loss in respect of an investment in an equity instrument classifi ed as available for sale is not reversed through profi t or loss. If the fair value of a debt instrument classifi ed as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profi t or loss, the impairment loss is reversed, with the amount of the reversal recognised in profi t or loss.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

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

In assessing recoverable amounts of non-current assets, the relevant cash fl ows are discounted to their present value.

Operating lease payments

Payments made under operating leases are recognised as an expense on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense and are spread over the term of the lease.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(n) Interest bearing liabilities

Interest bearing liabilities are recognised on inception at their fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing liabilities are stated at amortised cost with any difference being recognised in the profi t or loss over the period of the borrowings on an effective interest method, subject to set-off arrangements. Unpaid interest is accrued at the contracted rate and included in the balance sheet under current payables.

(o) 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. Payables are recognised at amortised cost using the effective interest method. Payables that are due in less than 12 months are not discounted.

(p) Provisions

Dividends/distributions payable

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

Other 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 sacrifi ce of economic benefi ts will be required to settle the obligation, the timing or amount of which is uncertain.

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

(q) Derivative fi nancial instruments and hedging

The Consolidated Entity uses derivative fi nancial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, fi nancing and investing activities. In accordance with its treasury policy, the Consolidated Entity does not hold or issue derivative fi nancial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are treated as trading instruments.

Transactions are designated as a hedge of the anticipated specifi c purchase or sale of goods or services, purchase of qualifying assets, or an anticipated interest transaction, only when they are expected to reduce exposure to the risks being hedged, are designated prospectively so that it is clear when an anticipated transaction has or has not occurred and it is probable the anticipated transaction will occur as designated.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is recognised in profi t or loss.

Cash fl ow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash fl ow hedges are recognised directly in equity. The gain or loss relating to any ineffective portion is recognised in the income statement.

Hedges of net investment in foreign operation

The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation that is determined to be an effective hedge is recognised directly in equity. The ineffective portion is recognised immediately in profi t or loss.

(r) Intangible assets

All business combinations on or after 1 July 2004 are accounted for by applying the purchase method. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifi able assets acquired.

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(s) Income tax

Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for fi nancial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not accounted for:

+ goodwill;

the initial recognition of assets or liabilities that affect neither accounting nor taxable profi t; and

differences relating to investments in controlled entities to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefi t will be realised.

Additional income taxes that arise from dividends/distributions are recognised at the same time as the liability to pay the related dividends/distributions.

Tax consolidation

The Company is the head entity in a tax consolidated group comprising all Australian wholly-owned subsidiaries (this excludes GIT and its controlled entities). The head entity recognises all of the current 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 arising from external transactions during the year. Under the tax funding arrangements, the contributions are calculated on a stand-alone basis so that the contributions are equivalent to the tax balances generated by external transactions entered into by wholly-owned subsidiaries within the tax consolidated group. The timing of contributions refl ects 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.

GIT and its controlled entities

Under current Australian income tax legislation, GIT 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 GIT 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.

(t) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash fl ows are presented on a gross basis. The GST components of cash fl ows arising from investing or fi nancing activities which are recoverable from, or payable to, the taxation authority, are presented as operating cash fl ows.

Management rights

An intangible asset acquired as part of a business combination is recognised as distinct from goodwill if the asset is separable or arises from contractual or other legal rights, and its fair value can be measured reliably. Management rights, including indefi nite-life contracts to manage assets, are carried at cost less accumulated amortisation and impairment losses. Where management rights are for an indefi nite term and/or where renewal of rights is routinely renewed at minimal cost, no amortisation is provided but the rights are subject to an annual impairment test. Where management rights are for a fi nite period, they are amortised on a straightline basis over that term.

Goodwill

Goodwill is stated at cost less any accumulated impairment losses. No amortisation is provided. Goodwill is tested annually for impairment. For the purpose of impairment testing, goodwill is allocated to the related cash-generating units monitored by management. Valuation methods based on multiples of pre-tax earnings are used to estimate the recoverable value of the reporting unit. Where the recoverable amount of the reporting unit is less than its carrying amount, including goodwill, an impairment loss is recognised in profi t or loss.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(u) Employee benefi ts

Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefi ts, and annual leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees’ services provided to the reporting date. These 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-term service benefi ts

The Consolidated Entity’s net obligation in respect of long-term service benefi ts, other than defi ned benefi t superannuation funds, is the amount of future benefi t that employees have earned in return for their service in the current and prior years. The obligation is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates, and is discounted to refl ect the estimated timing of benefi t payments.

Defi ned contribution superannuation funds

Obligations for contributions to defi ned contribution superannuation funds are recognised as an expense as incurred.

Defi ned benefi t superannuation funds

A liability or asset in respect of a defi ned benefi t superannuation fund is recognised in the balance sheet, and is measured as the present value of the defi ned benefi t obligation at the reporting date less the fair value of the superannuation fund’s assets at that date. The present value of the defi ned benefi t obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using market yields at the reporting date on government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outfl ows.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited directly to equity.

Share based payment transactions (including Employee Securities Acquisition Plan (ESAP))

Because of the limited recourse nature of certain loans provided to employees in respect of securities granted to them under the terms of the ESAP, the value of the limited recourse feature of those loans is required to be accounted for as an option.

The fair value of options at the grant date is expensed with a corresponding increase in the employee compensation reserve. The options expense is calculated on a straight-line basis over the years to the vesting date and assumes that all conditions of the grant and employee service will be met. The fair value of options is measured at grant date using a combination of Monte Carlo simulations and models using a lattice based framework.

Where the Company has issued or purchased securities in advance of ESAP vesting conditions being met by employees, the Company recognises the amount payable to GIT as a payable and the related asset as an increase in its investment in GIT. On exercise of the securities, the Company reduces its investment in GIT and transfers the related option expense from employee compensation reserve to retained earnings. On consolidation, the cost of the ESAP securities is recognised as treasury securities. These securities are treated as ordinary issued securities only when these securities under the ESAP have been exercised.

Notes to the fi nancial statements

for the year ended 30 June 2008

1. Statement of signifi cant accounting policies (cont)

(v) Earnings per Company share

The Consolidated Entity presents basic and diluted earnings per Company share on the face of the income statement. Basic earnings per Company share is calculated by dividing the profi t or loss attributable to the Shareholders by the weighted average number of Company shares outstanding during the period. Diluted earnings per Company share is determined by adjusting the profi t or loss attributable to the Shareholders and weighted average number of Company shares outstanding for all dilutive potential Company shares, which comprise treasury securities and options.

As stated in note 1(b), the issued units of GIT are presented as a minority interest, and therefore the profi t attributable to GIT is excluded from the calculation of basic and diluted earnings per Company share presented on the face of the income statement. Therefore, the Directors also disclose basic and diluted earnings per stapled security in the notes to the consolidated Financial Report.

(w) 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 and liabilities include all assets and liabilities used by a segment which can be directly attributed to segment activity, excluding interest bearing receivables and payables, derivative fi nancial instruments, provision for distributions to Securityholders and tax assets and liabilities. Segment revenue and expenses exclude the income statement effect of these non-segment assets and liabilities.

(x) Australian Accounting Standards issued but not yet effective

As at the date of this Financial Report, the following new and revised accounting standards and interpretations on issue with mandatory application dates after the end of the current reporting period are available for early adoption at 30 June 2008:

revised AASB 3 Business Combinations;
- AASB 8 Operating Segments;
- revised AASB 101 Presentation of Financial Statements;
- AASB 127 Consolidated and Separate Financial Statements;
- AI 12 Service Concession Arrangements;
- AI 14 IAS 19 The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction; + IFRIC 15 Agreements for the Construction of Real Estate; and
IFRIC 16 Hedges of a Net Investment in a Foreign Operation.

The Consolidated Entity has not early adopted any accounting standards and interpretations. The Consolidated Entity has not yet determined the potential effect of the new and revised standards and interpretations on the consolidated Financial Report, although AASB 8 and revised AASB 101 will only impact disclosures in relation to the Consolidated Entity’s fi nancial statements.

(y) Rounding

In accordance with Australian Securities & Investments Commission Class Order 98/100 dated 10 July 1998, the amounts shown in the consolidated Financial Report and Directors’ report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

When the Company grants options over its shares to employees of controlled entities, the fair value at grant date is recognised as an increase in the investment in controlled entities with a corresponding increase in equity over the vesting period of the grant. The above accounting policy has not been applied to options that were issued prior to 7 November 2002 but vested before 1 January 2005.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

2. Earnings per Company share

3. Acquisitions of controlled entities

Year ended 30 June 2008


		Consolidated		Year ended 30 June 2008
				The Consolidated Entity acquired 95% of the issued share capital of SMH Sparkasse Mannesmann Hoffmeister Projektentwicklung
		2008	2007	GmbH & Co. KG (SMH) on 11 September 2007.
	Note	¢	¢	The effect of this acquisition and other acquisitions during the year on the Consolidated Entity’s assets		and liabilities was as follows:
Earnings per Company share						Other
Basic earnings/(loss) per Company share	2(a)	1.7	(0.2)		SMH	acquisitions	Total
					$M	$M	$M
Basic earnings/(loss) per Company share – continuing operations	2(a)	2.1	(1.6)
				Cash	6.2	–	6.2
Diluted earnings/(loss) per Company share	2(a)	1.7	(0.2)
				Receivables	1.5	0.1	1.6
Diluted earnings/(loss) per Company share – continuing operations	2(a)	2.1	(1.6)
				Investment properties	105.6	10.5	116.1
Earnings per security
				Other assets	–	0.4	0.4
Basic earnings per security	2(a)	14.7	38.3
				Payables	(17.3)	(0.3)	(17.6)
Basic earnings per security – continuing operations	2(a)	15.1	36.9
				Interest bearing liabilities	(52.3)	–	(52.3)
Diluted earnings per security Diluted earnings per security – continuing operations Distribution per security	2(a) 2(a) 2(b)	14.6 15.1 34.0	38.0 36.7 31.5	Net identif able assets and liabilities Add: Intangible assets on acquisition Total consideration payable	43.7 – 43.7	10.7 8.3 19.0	54.4 8.3 62.7
Weighted average number of securities used in calculating basic earnings per security and distribution per security		Number of securities 2008 2007 1,709,602,4571,624,294,734		Less: Transaction costs yet to be paid Gross cash outf ow Cash held by controlled entities on acquisition Net cash outf ow (excluding prior year acquisitions)	– 43.7 (6.2) 37.5	0.2 19.2 – 19.2	0.2 62.9 (6.2) 56.7
Effect of securities issued under the ESAP accounted for as treasury securities		2,678,171	33,018,447	Deferred settlements on prior year acquisitions1	–	200.4	200.4
Effect of executive options on issue		3,219,356	38,604,104	Net cash outf ow	37.5	219.6	257.1


	Number of securities
	2008 2007
Weighted average number of securities used in calculating basic earnings per security and distribution per security Effect of securities issued under the ESAP accounted for as treasury securities Effect of executive options on issue	1,709,602,4571,624,294,734 2,678,171 33,018,447 3,219,356 38,604,104
Weighted average number of securities used in calculating diluted earnings per security	1,715,499,984 1,695,917,285

The Consolidated Entity paid $200.4 million during the year in relation to the deferred settlements on entities that were acquired prior to 30 June 2007. Costs relating to Arlington Securities Limited ($78.8 million) and Eurinpro ($29.5 million) were provided for at 30 June 2007. Costs relating to Rosemound Developments Limited ($92.1 million) were not provided for and capitalised at 30 June 2007 as the conditions for their payment did not exist at that time.

(a) Profi t/(loss) after tax used in calculating earnings per security/Company share

There were no fair value adjustments in respect of above acquisitions.

		2008			2007
	Continuing	Discontinued		Continuing	Discontinued
Earnings per security	operations $M	operation $M	Total $M	operations $M	operation $M	Total $M
Prof t/(loss) after tax used in calculating basic earnings per security	258.5	(7.8)	250.7	600.0	22.5	622.5
Effect of treasury securities and options	–	–	–	22.0	–	22.0
Prof t/(loss) after tax used in calculating diluted earnings per security	258.5	(7.8)	250.7	622.0	22.5	644.5
Earnings per Company share
Prof t/(loss) after tax used in calculating basic and diluted earnings per Company share	36.7	(7.8)	28.9	(26.1)	22.5	(3.6)

Further details of the SMH acquisition are set out below:

			Actual contribution since	Contribution if acquisition took
			acquisition	place on 1 July 2007
		Date of	Revenue Prof t before tax	Revenue Prof t before tax
Entity acquired	Principal activity	acquisition	$M $M	$M $M
SMH	Property investment	11 Sep 2007	3.9 3.0	4.7 3.6

(b) Dividends and distributions per security/Company share

Total distributions for the year made by GIT equal 34.0 cents per security (2007: 31.5 cents per security). Details of the dates of payment are set out in note 10. No dividends were declared or paid by the Company during the year (2007: $nil).

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

3. Acquisitions of controlled entities (cont)

Year ended 30 June 2007

The Consolidated Entity acquired all of the issued share capital of a group of entities which owned a portfolio of eight completed properties in the United Kingdom (collectively Lighthouse), a fund manager which also held three properties located in Europe called Akeler Holdings Limited (Akeler) and a property investment and development business in the United Kingdom, comprising Rosemound Developments Limited and Rosehill TopCo Limited (Rosemound) on 20 September 2006, 14 November 2006 and 13 April 2007 respectively.

The effects of the acquisitions on the Consolidated Entity’s assets and liabilities were as follows:

	Lighthouse $M	Akeler $M	Rosemound $M	Total $M
Cash	14.6	–	11.7	26.3
Receivables	–	–	76.2	76.2
Investments accounted for using the equity method	–	–	11.0	11.0
Investment properties	445.9	79.2	553.0	1,078.1
Plant and equipment	–	–	0.2	0.2
Payables	(6.7)	(6.9)	(47.4)	(61.0)
Interest bearing liabilities	(242.9)	(26.3)	(416.6)	(685.8)
Deferred tax liabilities Net identif able assets and liabilities	– 210.9	– 46.0	(44.9) 143.2	(44.9) 400.1
Add: Intangible assets on acquisition	–	60.6	124.8	185.4
Total consideration payable	210.9	106.6	268.0	585.5
Less: Amounts unpaid at 30 June 2007	(4.5)	(13.6)	(12.9)	(31.0)
Gross cash outf ow	206.4	93.0	255.1	554.5
Cash held by controlled entities on acquisition	(14.6)	–	(11.7)	(26.3)
Net cash outf ow (excluding prior year acquisitions)	191.8	93.0	243.4	528.2
Deferred settlements on prior year acquisitions1				111.2
Net cash outf ow				639.4

Amounts paid relate to the deferred settlements on entities acquired prior to 30 June 2006 are as follows: Highbrook Development Limited (HDL) ($19.5 million); Arlington Securities Limited ($4.0 million); and Eurinpro ($87.7 million). These amounts were provided for at 30 June 2006.

The fair value adjustments on acquisition of Rosemound resulted in an increase in investment property values of $152.5 million, and net deferred tax liabilities of $45.8 million. All other net identifi able assets and liabilities relating to the acquisitions of Lighthouse and Akeler shown above have been stated at their carrying value prior to acquisition as there were no fair value adjustments. Amounts of $60.6 million and $124.8 million were recognised as management rights and goodwill as a result of the Akeler and Rosemound acquisitions respectively.

Details of the entities acquired are set out below:

			Actual contribution since	Actual contribution since	Contribution	if acquisition
			acquisition		took place on 1 July 2006
		Date of	Revenue	Prof t/(loss) before tax	Revenue	Prof t/(loss) before tax
Entity acquired	Principal activity	acquisition	$M	$M	$M	$M
Lighthouse	Property investment	20 Sep 06	15.9	3.7	21.3	4.9
Akeler	Property investment	14 Nov 06	1.4	(3.7)	2.4	(6.4)
	and management
Rosemound	Property investment	13 Apr 07	0.8	(1.4)	35.0	27.7
	and management

Notes to the fi nancial statements for the year ended 30 June 2008

4. Discontinued operation

On 31 May 2008, the Consolidated Entity sold its investment in Goodman Property Investors (GPI), a signifi cant component of the fund management business in Europe. The segment was not a discontinued operation or classifi ed as held for sale as at 30 June 2007 and the comparative income statement has been re-presented to show the discontinued operation separately from continuing operations. Management committed to a plan to sell GPI following the strategic decision to place greater focus on the Consolidated Entity’s other businesses in the United Kingdom and Europe.

Entity’s other businesses in the United Kingdom and Europe.
Results of discontinued operation	Consolidated
	2008 $M 2007 $M
Revenue Other expenses Net f nancing costs	54.2 68.8 (43.1) (35.9) (0.8) (0.7)
Prof t before tax from operating activities	10.3 32.2
Income tax expense	(0.5) (9.7)
Results from operating activities (net of income tax)	9.8 22.5
Loss on sale of discontinued operation Income tax on loss on sale of discontinued operation	(17.6) – – –
(Loss)/prof t for the year	(7.8) 22.5
	2008 ¢ 2007 ¢
Basic (loss)/earnings per security	(0.5) 1.4
Diluted (loss)/earnings per security	(0.5) 1.4
Cash f ows from discontinued operation	2008 $M 2007 $M
Net cash (used in)/provided by operating activities Net cash provided by investing activities Net cash provided by f nancing activities	(7.6) 15.3 212.9 – – –
Net cash provided by discontinued operation	205.3 15.3
Effect of disposal on the f nancial position of the Consolidated Entity	2008 $M
Intangible assets Trade and other receivables Cash Trade and other payables	184.4 19.9 4.7 (5.9)
	203.1
Consideration received, satisf ed in cash Cash disposed of	217.6 (4.7)
Net cash f ow	212.9

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

5. Disposals of interests in controlled entities

Year ended 30 June 2008

In addition to the disposal of GPI referred to in note 4, Goodman also disposed of other controlled entities as set out below:

				Total $M
Proceeds	received	on	partial disposal of equity interest in HDL – refer (a)	89.3
Proceeds	received	on	the Mascot Trust transaction – refer (b)	872.6
Proceeds	received	on	sale of other controlled entities – refer (c)	51.3 1,013.2

(a) Partial disposal of equity interest in HDL

On 17 December 2007, Goodman sold 50% of its equity interest in HDL (through the sale of 100% of shares in Goodman (Highbrook) Limited) to Goodman Property Trust for a net consideration of $89.3 million.

The effect of the transaction is to reduce Goodman’s direct equity interest in HDL from 75% to 25%. Subsequent to the above transaction, the Consolidated Entity has accounted for its investment in HDL as a joint venture entity. Investment properties were reduced by $181.0 million, debt was reduced by $58.4 million and the carrying value of equity accounted joint venture entities was increased by $30.0 million.

Up to the date of the disposal of the equity, HDL had contributed $1.5 million to the Consolidated Entity’s result for the year.

(b) Mascot Trust

On 1 May 2008, the unitholders in GAIF invested in a portfolio of 14 prime offi ce and business park assets via the stapling of a controlled entity, Mascot Trust, for a net consideration of $872.6 million. The effect of the transaction was to reduce the Consolidated Entity’s investment properties by $885.0 million, receivables by $2.3 million and payables by $106.0 million.

(c) Disposals of other controlled entities

During the year, a controlled entity disposed of several special purpose development property entities located in Europe for a net consideration of $30.3 million. The disposals did not have a signifi cant effect on the Consolidated Entity’s balance sheet.

In addition, the Consolidated Entity disposed of four controlled entities in Australia which held completed investment properties for consideration of $21.0 million. The principal effect of the disposals was a decrease in investment properties of $140.0 million and payables of $105.5 million.

Year ended 30 June 2007

	Year ended 30 June 2007
		Total
		$M
	Proceeds received on launch of the Goodman European Logistics Fund (GELF) – refer (a)	121.0
	Proceeds received on second tranche of SPVs into GELF (GELF second tranche) – refer (b)	40.1
	Proceeds received on sale of Lighthouse Off ce SPVs (Lighthouse) – refer (c)	78.6
	Proceeds received on sale of MGA Direct Property Trust (DPT) – refer (d)	39.5
	Proceeds received on the sale of other controlled entities – refer (e)	24.6
		303.8

(a) Launch of GELF

On 20 December 2006, the Consolidated Entity sold 100% of the issued capital of Arlington Investments (Luxembourg) SARL to GELF. The principal effect of the disposal was a decrease in the investment properties of the Consolidated Entity of $274.6 million and a decrease in interest bearing liabilities of $255.6 million.

Up to the date of the disposal of the equity, Arlington Investments (Luxembourg) SARL had contributed $3.3 million to the Consolidated Entity’s revenue and profi t after tax for the year.

(b) GELF second tranche

In May and June 2007, a controlled entity disposed of the entire issued capital of seven entities which held development properties located in Europe. The principal effect of the disposals was a decrease in investment properties of $33.9 million.

(c) Disposal of Lighthouse

On 20 March 2007, a controlled entity disposed of the entire issued capital of three entities which held completed properties located in the United Kingdom. The principal effect of the disposals was a decrease in investment properties of $199.4 million and a decrease in interest bearing liabilities of $133.7 million.

Notes to the fi nancial statements for the year ended 30 June 2008

5. Disposals of interests in controlled entities (cont)

(d) Disposal of DPT

On 3 April 2007, a controlled entity disposed of the entire issued capital of an entity which held two completed properties located in Australia. The principal effect of the disposal was a decrease in investment properties of $42.3 million and a decrease in payables of $11.0 million.

(e) Disposal of other controlled entities

During the prior year, a controlled entity disposed of the entire issued share capital of two entities which held completed properties located in Europe. The principal effect of the disposals was a decrease in construction contract receivables of $71.3 million and a decrease in interest bearing liabilities of $49.1 million.

6. Segment reporting

The Consolidated Entity is based in Australia and has operations in Asia Pacifi c (primarily Australia, New Zealand, Hong Kong, China and Japan) and Europe. Products and services undertaken by the Consolidated Entity in each region are as follows:

direct and indirect ownership of investment properties;
- fund management;
- property services;
- due diligence works; and
development management.

Geographical segment revenue and expenses are presented based on the geographical location of customers serviced. Segment assets and liabilities are classifi ed based on the location of the assets.

During the year, the Consolidated Entity sold its investment of GPI, a signifi cant component of the fund management business segment in Europe. The GPI business has been classifi ed as a discontinued operation (refer to note 4) and accordingly, the comparatives below for 2007 have been restated.

Primary segment reporting – geographical segments

	Asia Pacif c	Asia Pacif c	Europe	Europe	Consolidated	Consolidated
	2008	2007	2008	2007 Restated1	2008	2007 Restated
Year ended 30 June	$M	$M	$M	$M	$M	$M
Total revenue and other income
Revenue (excluding distributions from
investments)	598.6	573.0	225.0	173.7	823.6	746.7
Net gains/(loss) from fair value adjustments on
investment properties	49.4	64.0	(193.7)	–	(144.3)	64.0
Net gain on disposal of investment properties	71.9	54.7	25.5	(0.4)	97.4	54.3
Net gain on disposal of controlled entities	132.7	8.0	50.3	106.2	183.0	114.2
Share of net results of equity accounted
investments	157.2	95.2	(182.2)	26.0	(25.0)	121.2
Net gain on disposal of equity investments	117.4	–	1.8	4.9	119.2	4.9
Distributions from investments	26.9	8.8	2.0	9.2	28.9	18.0
Revenue and other income	1,154.1	803.7	(71.3)	319.6	1,082.8	1,123.3
Segment result Prof t/(loss) before depreciation, amortisation, impairment, interest expense and income tax Depreciation, amortisation and impairment Net f nancing costs Income tax expense Prof t from continuing operations	734.7	507.6	(227.0)	215.4	507.7 (115.8) (110.5) (5.2) 276.2	723.0 (2.7) (96.3) (23.8) 600.2
(Loss)/prof t from discontinued operation (net of income tax)					(7.8)	22.5
Prof t for the year					268.4	622.7

Refer to note 4 Discontinued operation.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

6. Segment reporting (cont)

Primary segment reporting – geographical segments (cont)

	Asia Pacif c	Asia Pacif c	Europe	Europe	Consolidated	Consolidated
	2008	2007	2008	2007	2008	2007
	$M	$M	$M	$M	$M	$M
Segment assets
Investment properties	2,581.1	4,144.7	1,682.7	1,215.3	4,263.8	5,360.0
Investments accounted for using the equity method	1,825.5	930.1	574.0	162.0	2,399.5	1,092.1
Other f nancial assets	190.1	202.1	48.6	204.9	238.7	407.0
Intangible assets	5.3	6.0	1,067.9	1,275.8	1,073.2	1,281.8
Inventories	42.9	28.7	–	–	42.9	28.7
Other assets	309.7	226.0	255.9	601.0	565.6	827.0
Total segment assets	4,954.6	5,537.6	3,629.1	3,459.0	8,583.7	8,996.6
Segment liabilities
Payables	(175.5)	(111.7)	(240.6)	(318.2)	(416.1)	(429.9)
Provisions	(17.5)	(18.1)	(42.2)	(17.9)	(59.7)	(36.0)
Total segment liabilities	(193.0)	(129.8)	(282.8)	(336.1)	(475.8)	465.9
Total segment assets less segment liabilities	4,761.6	5,407.8	3,346.3	3,122.9	8,107.9	8,530.7
Non-segment assets and liabilities Cash Derivative f nancial instruments Interest bearing assets Interest bearing liabilities Provisions for distribution Deferred tax liabilities (net) Income tax payable					639.2 111.3 252.2 (4,229.1) (142.4) (19.2) (50.8)	81.8 69.0 15.9 (3,861.6) (129.9) (96.2) (31.5)
Total non-segment assets less total non-segment liabilities					(3,438.8)	(3,952.5)
Net assets Capital expenditure	(579.6)	(512.8)	(1,138.2)	(699.8)	4,669.1 (1,717.8)	4,578.2 (1,212.6)

Notes to the fi nancial statements for the year ended 30 June 2008

6. Segment reporting (cont) Secondary segment reporting – business segments

	Property	Property
	investment		Management			Other	Consolidated
				2007				2007
	2008	2007	2008	Restated1	2008	2007	2008	Restated
Year ended 30 June	$M	$M	$M	$M	$M	$M	$M	$M
External segment revenue and other
income2	195.0	500.8	602.7	328.0	310.1	173.4	1,107.8	1,002.2
Share of net results of equity accounted
investments	(45.9)	104.4	20.9	16.8	–	–	(25.0)	121.2
Unallocated revenue	–	–	–	–	–	–	–	–
Total revenue and other income	149.1	605.2	623.6	344.8	310.1	173.4	1,082.8	1,123.4
Segment result Net f nancing costs Unallocated revenue and expenses Prof t before income tax	(23.4)	511.8	116.8	92.1	298.5	116.4	391.9 (110.5) – 281.4	720.3 (96.3) – 624.0
Income tax expense Prof t after income tax – continuing operations							(5.2) 276.2	(23.8) 600.2
Prof t from discontinued operation (net of income tax) (refer to note 4)							(7.8)	22.5
Prof t for the year							268.4	622.7
Assets Segment assets3 Equity accounted investments Unallocated assets	4,764.1 2,225.5	6,061.4 917.9	1,635.0 174.0	1,496.4 174.2	– –	202.0 –	6,399.1 2,399.5 835.0	7,759.9 1,092.1 317.3
Consolidated total assets							9,633.6	9,169.3
Liabilities Segment liabilities Interest bearing liabilities Unallocated liabilities Consolidated total liabilities	(233.0)	(146.5)	(73.1)	(94.3)	–	–	(306.1) (4,229.1) (429.3) (4,964.5)	(240.8) (3,861.6) (488.7) (4,591.1)
Capital expenditure	(1,700.7)	(1,215.5)	–	–	(17.1) (17.3)		(1,311.3)	(1,717.8)

Refer to note 4 Discontinued operation.
Net gains before tax on disposal of interests in AMFM and A-REIT of $116.3 million are included in other segment revenue and segment result.
Intangible assets have been reclassifi ed from the property investment segment to the management segment. The net effect in the comparative year is to increase management segment assets by $1,275.7 million and reduce property investment segment assets by the same amount.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

7. Critical accounting estimates used in the preparation of the fi nancial statements

The preparation of fi nancial statements requires estimates and assumptions concerning the application of accounting policies and the future to be made by the Consolidated Entity. Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

(a) Investment property values

Investment properties are carried at their fair value. Valuations are either based on an independent valuation or on a Directors’ review of the carrying value. Valuations are determined based on assessments and estimates of uncertain future events, including upturns and downturns in property markets and availability of similar properties, vacancy rates, market rents and capitalisation and discount rates.

At 30 June 2008, the carrying value of completed investment properties held by the Consolidated Entity is $2,953.1 million (2007: $3,815.2 million).

(b) Intangible assets

The Consolidated Entity recognises both management rights and goodwill in its balance sheet at 30 June 2008.

Management rights

Management rights represent the cost less impairment of direct and indirect asset management arrangements. The carrying values of these assets are assessed annually taking into account uncertain future events, including the period over which the future fee income streams continue to be received, the likelihood of renewal of contractual agreements to manage funds at minimal cost, and the future fi nancial performance of the entities which generate those future fee income streams.

At 30 June 2008, the carrying value of management rights held by the Consolidated Entity is $282.3 million (2007: $515.5 million).

Goodwill

Goodwill carried by the Consolidated Entity represents the excess of the purchase price paid to acquire control over entities or groups of entities over the fair value of the net assets acquired. The carrying value of these assets is reviewed annually. The value is dependent on the assessment of uncertain future events, including the future profi tability of the businesses acquired.

At 30 June 2008, the carrying value of goodwill for the Consolidated Entity is $790.9 million (2007: $766.3 million).

8. Profi t/(loss) before income tax

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Consolidated Parent Entity
2007
2008 Restated [1] 2008 2007
$M $M $M $M
Profi t/(loss) before income tax has been arrived at after
crediting/(charging) the following items:
Net proceeds from sale of investment properties 1,463.2 677.5 – –
Carrying value of investment properties sold (1,365.8) (623.2) – –
Net gain on disposal of investment properties 97.4 54.3 – –
Proceeds from the sale of controlled entities 1,013.1 215.1 32.1 –
Net assets disposed (830.1) (100.9) – –
Net gain on disposal of controlled entities 183.0 114.2 32.1 –
Proceeds from the sale of equity investments 290.8 143.7 – –
Carrying value of equity investments sold (171.6) (138.8) – –
Net gain on disposal of equity investments 119.2 4.9 – –
Financial income
Interest income from:
– Related parties 6.4 – – –
– Controlled entities – – 16.8 23.4
– Other parties 9.1 7.3 0.2 0.2
Fair value gains on ineffective portion of derivatives 45.7 9.2 2.2 0.5
Fair value gains on derivatives transferred from equity 6.2 – – –
Foreign exchange gain – – 3.5 –
67.4 16.5 22.7 24.1
Financial expenses
Bank loans and overdraft interest (221.5) (165.0) (63.0) –
Interest on loans from controlled entities – – – (51.5)
Reset Preference Units (RePS) interest – (0.8) – –
Other borrowing costs (19.1) – – –
Foreign exchange loss (30.6) – – (2.4)
Capitalised borrowing costs [ 2] 93.3 53.0 – –
(177.9) (112.8) (63.0) (53.9)
Net fi nancing costs (110.5) (96.3) (40.3) (29.8)
Depreciation of plant and equipment (5.3) (3.5) – –
Amortisation of leasehold improvements (2.2) (0.4) – –
Depreciation of plant and equipment (7.5) (3.9) – –
Impairment of investment in controlled entities – – 104.7 –
Impairment of equity investment 108.2 – – –
Impairment of receivables from the ESAP [ 3] – – 6.8 –
Total impairment losses 108.2 – 111.5 –
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Refer to note 4 Discontinued operation.
Borrowing costs were capitalised during the year at rates between 3.7% and 8.6% per annum (2007: 5.44% and 9.15% per annum).
Impairment of receivables from ESAP is included within employee expenses of the Consolidated Entity.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

Income tax expense (cont)

9. Income tax expense

Consolidated Parent Entity 2008 $M 2007 $M 2008 $M 2007 $M Current tax (expense)/benef t recognised in the income statement Current year (47.4) (24.4) (15.0) (0.5) Adjustment for prior years 2.7 9.0 2.9 2.6 (44.7) (15.4) (12.1) 2.1 Deferred tax benef t/(expense) recognised in the income statement Movements in deferred tax 32.1 (7.7) (0.9) (1.5) Adjustment for prior years 6.9 (10.4) (0.2) (0.7) 39.0 (18.1) (1.1) (2.2) Total income tax expense (5.7) (33.5) (13.2) (0.1) Income tax expense from continuing operations (5.2) (23.8) (13.2) (0.1) Income tax expense from discontinued operation (refer to note 4) (0.5) (9.7) – – Total income tax expense (5.7) (33.5) (13.2) (0.1) (a) Income tax (expense)/benef t Prof t/(loss) before income tax from continuing operations 281.4 624.0 (108.3) (30.8) Prof t/(loss) before income tax from discontinued operation (7.3) 32.2 – – Prof t/(loss) before income tax 274.1 656.2 (108.3) (30.8) Primary facie income tax (expense)/benef t calculated at 30% (2007: 30%) on the prof t/(loss) before income tax (82.2) (196.8) 32.5 9.3 Decrease/(increase) in income tax due to: – Prof t attributable to Unitholders 71.4 187.8 – – – Current year losses for which no deferred tax asset was recognised (14.3) – – – – Non-deductible impairment losses – – (33.4) – – Other non-deductible items (8.4) (1.8) – – – Non-assessable interest income – 2.3 2.6 – – Non-assessable foreign income 26.7 (1.1) – – – Non-assessable income 5.7 – 2.0 – – Non-deductible interest expense (13.7) (6.2) (7.9) – – Non-deductible security/option expense (8.2) (3.3) – – – Other items 5.5 (13.7) (11.6) (11.3) – Difference in overseas tax rates 2.2 0.7 – – – Over/(under) provision in prior year 9.6 (1.4) 2.6 1.9 Income tax expense attributable to prof t (5.7) (33.5) (13.2) (0.1) (b) Deferred tax recognised directly in equity Relating to revaluation of investments 25.7 (26.0) – – Other 1.5 1.0 0.2 – 27.2 (25.0) 0.2 –	Consolidated Parent Entity 2008 $M 2007 $M 2008 $M 2007 $M
	(c) Current tax receivables Balance at the beginning of the year 6.0 1.1 4.0 6.6 Movements during the year: – Income taxes paid (net of refunds) (6.0) (0.3) – (4.7) – Income tax expense on current year’s prof t 0.3 (3.8) – (0.5) – Adjustment for prior years – 9.0 (4.0) 2.6
	Balance at the end of the year 0.3 6.0 – 4.0
	(d) Current tax payables Balance at the beginning of the year (37.5) (12.6) – – Movements during the year: – Income taxes paid (net of refunds) 33.8 14.0 5.5 – – Income tax expense on current year’s prof t (47.7) (20.6) (15.0) – – Amount relating to tax on pre-acquisition prof ts (2.1) (18.3) – – – Recognition of tax assets/liabilities of the wholly-owned subsidiaries in the tax consolidated group – – (10.4) – – Adjustment for prior years 2.7 – 6.9 –
	Balance at the end of the year (50.8) (37.5) (13.0) –
	(e) Deferred tax assets and liabilities Deferred tax (assets)/liabilities are attributable to the following: Deferred tax assets Deferred tax liabilities Net Consolidated 2008 $M 2007 $M 2008 $M 2007 $M 2008 $M 2007 $M
	Receivables – – 13.2 11.1 13.2 11.1 Investments accounted for using the equity method – – – – – – Investment properties – – 40.3 36.1 40.3 36.1 Other f nancial assets – – – 55.8 – 55.8 Tax losses (15.0) – – – (15.0) – Payables – (4.0) – – – (4.0) Provisions (17.6) (6.8) – – (17.6) (6.8) Other items (1.7) (2.5) – – (1.7) (2.5)
	Tax (assets)/liabilities (34.3) (13.3) 53.5 103.0 19.2 89.7
	Set off (0.3) 6.8 0.3 (6.8) – –
	Net tax (assets)/liabilities (34.6) (6.5) 53.8 96.2 19.2 89.7
(b) Deferred tax recognised directly in equity Relating to revaluation of investments 25.7 (26.0) – Other 1.5 1.0 0.2
	Parent Entity
	Other f nancial assets (1.1) (2.5) – 0.4 (1.1) (2.1) Set off – – – – – –
27.2 (25.0) 0.2

	Deferred tax assets	Deferred tax assets	Deferred tax liabilities	Deferred tax liabilities		Net
	2008	2007	2008	2007	2008	2007
Consolidated	$M	$M	$M	$M	$M	$M
Receivables Investments accounted for using the equity method	– –	– –	13.2 –	11.1 –	13.2 –	11.1 –
Investment properties	–	–	40.3	36.1	40.3	36.1
Other f nancial assets	–	–	–	55.8	–	55.8
Tax losses	(15.0)	–	–	–	(15.0)	–
Payables	–	(4.0)	–	–	–	(4.0)
Provisions	(17.6)	(6.8)	–	–	(17.6)	(6.8)
Other items	(1.7)	(2.5)	–	–	(1.7)	(2.5)
Tax (assets)/liabilities	(34.3)	(13.3)	53.5	103.0	19.2	89.7
Set off	(0.3)	6.8	0.3	(6.8)	–	–
Net tax (assets)/liabilities	(34.6)	(6.5)	53.8	96.2	19.2	89.7
Parent Entity Other f nancial assets Set off	(1.1) –	(2.5) –	– –	0.4 –	(1.1) –	(2.1) –
Net tax (assets)/liabilities	(1.1)	(2.5)	–	0.4	(1.1)	(2.1)

There are no deferred tax assets in relation to tax losses that have not been recognised at 30 June 2008.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

10. Dividends and distributions

(a) Dividends declared by the Company

No dividends were declared or paid by the Company during the year ended 30 June 2008 or up to the date of this report (2007: $nil).

(b) Distributions declared by GIT

(b) Distributions declared by GIT	(b) Distributions declared by GIT
Distribution cpu Total amount $M Date of payment
Distributions for the quarters ended: – 30 Sep 2007 8.5 – 31 Dec 2007 8.5 – 31 Mar 2008 8.5 – 30 Jun 2008 8.5	141.2 8 Nov 2007 142.3 14 Feb 2008 142.3 8 May 2008 142.4 26 Aug 2008
34.0	568.2
Distributions for the comparative quarters ended: – 30 Sep 2006 7.875 – 31 Dec 2006 7.875 – 31 Mar 2007 7.875 – 30 Jun 2007 7.875	126.5 9 Nov 2006 128.4 15 Feb 2007 129.2 3 May 2007 129.9 23 Aug 2007
31.500	514.0
Movement in provision for distributions to securityholders	Consolidated
	2008 $M 2007 $M
Balance at the beginning of the year Provisions for distributions Payment of distributions	129.9 108.5 568.2 514.0 (555.7) (492.6)
Balance at the end of the year	142.4 129.9
Dividend franking account	Parent Entity
	2008 $M 2007 $M
30% franking credits available to Shareholders for subsequent f nancial years	12.1 5.6

10. Dividends and distributions (cont)

(c) Hybrid Securities

(c) Hybrid Securities
		Total
	Distribution cpu	amount $M	Date of payment
Distributions for the quarters ended: – 21 Mar 2008	240.044	7.8	25 Mar 2008
– 21 Jun 2008	238.191	7.8	23 Jun 2008
Total distributions for the year ended 30 June 2008	478.235	15.6

The Hybrid Securities were issued on 21 December 2007 and accordingly, there were no distributions in the prior year.

11. Assets classifi ed as held for sale

11. Assets classif ed as held for sale
	Consolidated		Parent Entity
	2008	2007	2008	2007
	$M	$M	$M	$M
Investments in associates	24.8	–	–	–
Other f nancial assets	8.5	–	–	–
	33.3	–	–	–

As part of the completion of the sale of GPI, it was agreed that one of the Consolidated Entity’s investments in associates and certain other fi nancial assets would be sold by 28 February 2009. Accordingly, these investments have been presented as held for sale, and are held at the lower of their carrying amount and fair value less costs to sell. There are no impairment losses in respect of these assets.

The investment in associate relates to the Consolidated Entity’s investment in the listed securities of Goodman UK Active Property Fund plc. The market value of Goodman’s investment at 30 June 2008 using the quoted price on the last day of trading was $25.6 million (2007: $44.9 million).

There were no franked dividends paid during the current or prior year.

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

- franking credits that will arise from the payment of the current tax liability;
- franking debits that will arise from the payment of dividends recognised as a liability at year end;
- franking credits that will arise from the receipt of dividends recognised as a receivable at year end; and
- 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 suffi cient available profi ts to declare dividends.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

12. Receivables

12. Receivables
	Consolidated		Parent Entity
	2008	2007	2008	2007
	$M	$M	$M	$M
Current
Trade receivables	127.8	75.2	–	–
Other receivables	135.5	503.6	–	–
Construction contract receivables	48.7	81.1	–	–
Receivables from the ESAP	–	2.4	–	2.4
Loans to controlled entities	–	–	675.5	–
Amounts due from related parties	97.0	68.4	2.2	2.5
Other	123.9	84.8	1.4	0.4

	532.9	815.5	679.1	5.3
Non-current Other receivables Receivables from the ESAP Loans to controlled entities Loans to related parties	– 4.7 – 247.5	1.4 5.3 – 0.4	– 4.7 102.3 –	– 5.3 829.5 –
	252.2	7.1	107.0	834.8

Trade receivables

Trade receivables that are past due are not considered impaired. As of 30 June 2008, no signifi cant overdue trade receivables (2007: $nil) were impaired. The overdue receivables principally relate to management fees from funds for which there is no recent history of default. The ageing analysis of these trade receivables is as follows:

(2007: $nil) were impaired. The overdue receivables principally relate to management fees from funds for history of default. The ageing analysis of these trade receivables is as follows:	which there is no recent
	Consolidated
	2008 $M 2007 $M
Overdue by: Up to 1 month 1 to 4 months Greater than 4 months	20.9 18.9 5.6 9.6 5.6 4.0
	32.1 32.5

Notes to the fi nancial statements for the year ended 30 June 2008

12. Receivables (cont) Construction contract receivables	Consolidated
	2008 $M 2007 $M
Net contract debtors excluding retentions Retentions	355.9 323.0 – –
Net contract debtors	355.9 323.0
Cash received to date Effect of foreign currency translation	(309.5) (241.9) 2.3 –
Total progressive value	48.7 81.1
Amounts due from customers – contract debtors Amounts due from customers – trade debtors	48.7 81.1 – –
Net construction contract receivables	48.7 81.1

Receivables from the ESAP

Amounts receivable from employees bear interest at the Consolidated Entity’s weighted average interest rate of 8.2% per annum (2007: 7.1% per annum) and are for periods of up to fi ve years. Loans shown are full recourse in respect of those securities vested under the ESAP. A provision against the full amounts receivable from employees under the ESAP has been made as the security exercise prices were above the market price of the stapled security at 30 June 2008 as quoted on the ASX.

Loans to controlled entities

Current loans to controlled entities include an amount of $37.7 million (2007: non-current loans of $157.3 million) that is interest bearing.

The fair values of non-current loans to controlled entities are based on cash fl ows discounted using a rate of 9.0% per annum (2007: 9.0% per annum).

Further details of loans to controlled entities are set out in note 32.

Loans to related parties

Details of loans to related parties are set out in note 32.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. All noncurrent receivables of the Consolidated Entity are due within fi ve years from the balance sheet date. There is no material difference between the carrying values and the fair values of trade and other receivables.

Receivables denominated in currencies other than Australian dollars are as follows:

	Amounts in A$M	NZD	HKD	USD	SGD	GBP	EUR	JPY
	2008	13.6	99.5	6.1	0.1	174.0	158.3	7.1
	2007	21.2	4.3	–	0.6	381.7	147.2	0.6

As of 30 June 2007 and 2008, there were no signifi cant receivables that were impaired and accordingly, there was no signifi cant provision for the impairment of trade receivables.

The Consolidated Entity holds bank guarantees as security for $8.0 million (2007: $6.0 million) of its trade receivables from investment property customers.

Other receivables

Other receivables at 30 June 2007 included $138.6 million receivable from the sale of investment properties.

There are no overdue other receivables and no provision for impairment of other receivables. In the event of default by a purchaser of investment property, legal title to the property would revert to the Consolidated Entity.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

15. Investment properties (cont)

13. Inventories

Properties in the following lists are classifi ed between Investment (I), Redevelopment (R), and Development (D):

Consolidated Parent Entity 2008 $M 2007 $M 2008 $M 2007 $M Current Work in progress 8.7 20.6 – – Non-current Work in progress 34.2 8.1 – – 14. Other assets Consolidated Parent Entity 2008 $M 2007 $M 2008 $M 2007 $M Refundable deposits for the purchase of investment properties 14.7 14.1 – – Prepayments 9.7 15.5 – – Other 73.7 31.9 11.6 – 98.1 61.5 11.6 – 15. Investment properties Completed investment properties Redevelopment projects Investment properties under development Total investment properties 2008 $M 2007 $M 2008 $M 2007 $M 2008 $M 2007 $M 2008 $M 2007 $M Carrying amount at the beginning of the year 3,815.2 3,794.6 67.7 63.7 1,477.1 331.7 5,360.0 4,190.0 Cost of acquisition: – On acquisition of controlled entities 6.8 442.8 – – 109.8 631.6 116.6 1,074.4 – Other acquisitions 29.0 78.2 – – 136.0 525.8 165.0 604.0 Costs capitalised 297.5 110.4 36.4 23.9 1,201.8 477.2 1,535.7 611.5 Transfers in/(out) 733.9 113.6 66.2 (22.6) (800.1) (91.0) – – Disposals: – Carrying value of properties sold (991.9) (514.1) (50.5) – (323.4) (115.4) (1,365.8) (629.5) – On disposal of interests in controlled entities (785.7) (262.0) – – (407.0) (278.5) (1,192.7) (540.5) Changes in fair values (65.3) 64.0 (6.3) – (72.7) – (144.3) 64.0 Effect of foreign currency translation (86.4) (12.3) – 2.7 (124.3) (4.3) (210.7) (13.9) Carrying amount at the end of the year 2,953.1 3,815.2 113.5 67.7 1,197.2 1,477.1 4,263.8 5,360.0 Redevelopment projects represent properties previously included within completed investment properties but now undergoing redevelopment works with the intention of continued use as investment properties. As at 30 June 2008, investment properties with a carrying value of $157.0 million (2007: $380.1 million) were subject to charges to secure bank loans. The Parent Entity did not hold any investment properties during the current year or the comparative year.	roperes n e oowng ss are cass e eween nvesmen (), eeveopmen (), an eveopmen (): Properties I, D, R Acquisition date Original purchase price $M Cost since acquisition $M Cost including capital expenditure $M Last independent valuation date Last independent valuation $M Disposal during the year $M Revaluation increment/ (decrement) during the year $M Book value 30 June 2008 $M
	Australia
	Warehouse/distribution centres GreystanesPark, Prospect, NSW I 1 Feb 05 115.6 83.1 198.7 30 Jun 08 211.7 – 3.6 211.7 MFive Industry Park, Moorebank, NSW I 1 Feb 05 108.7 43.2 151.9 30 Jun 08 152.5 – (2.5) 152.6 Roberts Distribution Centre, Chullora, NSW – Building A I,D 1 Feb 05 61.6 17.7 80.7 31 Dec 07 78.0 – (8.1) 81.9 Southend Distribution Centre, Mascot, NSW I 1 Feb 05 35.2 4.5 39.7 31 Dec 07 49.0 – 2.8 50.7 Kingston Distribution Centre, Braeside, Vic I 1 Feb 05 30.2 0.8 31.0 30 Jun 08 32.9 – (2.1) 32.9 Sheff eld Distribution Centre, Welshpool, WA I 1 Feb 05 16.9 0.6 17.5 31 Dec 07 33.0 – 14.6 33.4 Prestons Distribution Centre, Prestons, NSW D 4 Mar 05 24.8 8.8 33.6 30 Jun 08 17.0 – (4.2) 17.0 Bradfords Distribution Centre, Cavan, SA R 1 Feb 05 3.8 0.1 3.9 31 Dec 06 4.5 – – 4.7 Forrester Distribution Centre, St Marys, NSW D 1 Feb 05 6.7 1.5 8.2 1 May 05 6.7 – – 8.9 Perth Airport, Perth, WA I 5 Apr 07 2.4 32.4 34.8 30 Jun 08 36.0 – 4.2 36.0 Perth Airport ITT Flygt development, Perth, WA I Leasehold – 2.5 2.5 31 Dec 07 4.9 – (0.1) 4.8 Taylor Distribution Centre, Edinburgh, SA I,D 31 Aug 05 6.4 3.7 10.1 31 Dec 07 8.6 – 0.1 11.1 Glasscocks Road, Lyndhurst, NSW D 30 Jun 08 27.6 – – 30 Jun 08 27.6 – – 27.6
	Business parks Homebush Corporate Park, Homebush, NSW I,R 1 Feb 05 & 30 Jun 05 199.2 84.8 284.0 30 Jun 07 & 30 Jun 08 207.2 – (4.0) 283.7 Campus Business Park, Homebush, NSW I 1 Feb 05 125.2 41.9 167.1 31 Dec 07 177.5 – 4.0 177.7 Lidcombe Business Park, Lidcombe, NSW I 1 Feb 05 142.9 4.0 146.9 31 Dec 07 171.0 – 11.5 171.9 Clayton Business Park, Clayton, Vic I 1 Feb 05 87.7 38.8 126.5 30 Jun 08 116.5 – – 116.7 Slough Business Park, Silverwater, NSW I 1 Feb 05 101.1 9.2 110.3 31 Dec 07 117.0 – 5.1 117.7 Botany Grove Business Park, Botany, NSW I 1 Feb 05 61.1 4.7 65.8 31 Dec 07 77.0 – 1.0 77.8 Airgate Business Park, Mascot, NSW I 1 Feb 05 61.8 25.9 87.7 31 Dec 07 92.5 – 3.2 93.2 Euston Business Park, Alexandria, NSW I 1 Feb 05 49.7 1.5 51.2 31 Dec 07 56.5 – 3.4 56.6 Toyotagreen Business Park, Port Melbourne, Vic I,D 14 Apr 05 & 24 Mar 05 27.4 30.1 57.5 17 Mar 05 26.1 – (0.1) 59.5 Forestridge Business Park, Frenchs Forest, NSW I 1 Feb 05 34.7 10.6 45.3 30 Jun 08 48.9 – 4.7 48.9 Orion Business Park, Lane Cove, NSW I 1 Feb 05 12.8 0.9 13.7 30 Jun 08 14.5 – (0.1) 14.5 Chase Business Park, Chatswood, NSW I 1 Feb 05 10.1 0.3 10.4 31 Dec 07 7.5 (4.3) (0.1) 3.6 Regal Business Park, Rowville, Vic D 1 Feb 05 37.6 25.2 62.8 1 Feb 05 37.6 (41.5) – 3.9 Chif ey Business Park, Mentone, Vic D 1 Feb 05 56.6 47.4 104.0 30 Jun 06 101.0 (106.4) (0.4) 0.6

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

15. Investment properties (cont)

									Revaluation
					Cost				increment/	Book
			Original		including	Last	Last	Disposal	(decrement)	value
			purchase	Cost since	capital	independent	independent	during the	during the	30 June
		Acquisition	price	acquisition	expenditure	valuation	valuation	year	year	2008
Properties	I, D, R	date	$M	$M	$M	date	$M	$M	$M	$M
Australia (cont)
Industrial estates
Discovery Cove Industrial Estate,
Banksmeadow, NSW	I	1 Feb 05	72.2	6.6	78.8	31 Dec 07	102.0	–	3.0	101.9
Alexandria Industrial Estate, Alexandria, NSW	I	1 Feb 05	60.1	11.8	71.9	31 Dec 07	80.0	–	6.2	80.7
Mitchell Industrial Estate, Alexandria, NSW	I	1 Feb 05	67.9	6.0	73.9	31 Dec 07	78.3	–	5.7	78.7
Kingsford Smith Industrial Estate, Alexandria, NSW	I	1 Feb 05	41.3	0.1	41.4	30 Jun 08	45.0	–	4.0	45.0
Burrows Industrial Estate, Alexandria, NSW	I	1 Feb 05	32.0	3.5	35.5	31 Dec 07	41.5	–	1.5	42.1
Interchange Industrial Estate, Laverton North, Vic D		3 Apr 06 & 29 May 07	13.2	51.8	65.7	3 Apr 06	33.8	–	–	96.4
Westcove Industrial Estate, Lane Cove, NSW	I	1 Feb 05	12.9	0.2	13.1	30 Jun 07	12.9	–	(2.1)	10.9
Homebush Bay Industrial Estate, Homebush,
NSW	I	1 Feb 05	11.3	0.9	12.2	30 Jun 07	12.8	–	0.2	12.9
Greensquare Industrial Estate, Alexandria, NSW	I	1 Feb 05	11.6	0.2	11.8	31 Dec 07	12.5	–	(0.4)	12.5
Portside Industrial Estate, Port Melbourne, Vic Goldsborough Industrial Estate, Pooraka, SA Keylink Industrial Estate, Edinburgh Parks, SA Gateway Business Park, Craigieburn, NSW Other Australian development land	I D D D D	1 Feb 05 Leasehold 11 Aug 06 27 Oct 06 Various	32.4 – 7.6 21.1 46.2	1.0 20.6 1.3 3.5 2.3	33.4 20.6 8.9 24.6 48.5	31 Dec 07 18 Nov 05 11 Aug 06 27 Oct 06 –	36.1 – 7.0 19.5 –	– (12.6) – – (30.2)	2.7 – – – (6.4)	36.1 8.0 8.9 24.6 14.7 2,473.0

Notes to the fi nancial statements for the year ended 30 June 2008

15. Investment properties (cont)

										Revaluation
						Cost				increment/	Book
				Original		including	Last	Last	Disposal	(decrement)	value
				purchase	Cost since	capital	independent	independent	during the	during the	30 June
			Acquisition	price	acquisition	expenditure	valuation	valuation	year	year	2008
Properties	I, D, R date			$M	$M	$M	date	$M	$M	$M	$M
New Zealand
Industrial estates
New Zealand development land		D	Various	43.6	(23.2)	20.4	31 Mar 08	20.4	–	(3.9)	20.4
											20.4
China Warehouse/distribution centres Kangqiao Industrial Zone, Shanghai Fengxian Distribution Centre, Stage 1, Shanghai Taopu Industrial Estate, Shanghai Europe		I I I	1 Dec 05 14 Feb 07 1 Aug 07	29.7 18.2 31.2	2.1 1.6 3.1	31.8 19.8 34.3	31 Dec 07 31 Dec 07 1 Aug 07	30.5 19.2 31.2	– – –	0.8 0.9 –	32.7 20.7 34.3 87.7
Warehouse/distribution centres
Beaumont Leys, Leicester, United Kingdom		I	29 Jun 07	65.8	8.9	74.7	30 Jun 08	65.7	–	(14.2)	60.6
Tunnel Industrial Estate, Thurrock,
United Kingdom		I	20 Sep 06	64.6	(0.5)	64.1	30 Jun 08	44.9	–	(19.1)	44.9
Panasonic Unit, Brackmills, United Kingdom		I	26 Mar 07	62.2	0.4	62.6	30 Jun 08	53.2	–	(9.5)	53.2
Gloucester Business Park, United Kingdom		I	20 Sep 06	50.0	(0.4)	49.6	30 Jun 08	39.1	–	(10.5)	39.1
Brackmills, United Kingdom		I	20 Sep 06	38.1	(0.5)	37.6	30 Jun 08	30.2	–	(7.4)	30.2
South Normanton, United Kingdom		I	20 Sep 06	31.1	(0.2)	30.9	30 Jun 08	26.5	–	(4.3)	26.5
Centrum 100, Burton, United Kingdom		I	21 Dec 06	30.6	–	30.6	30 Jun 08	29.7	–	(0.8)	29.7
Maltby, United Kingdom		I	20 Sep 06	19.3	(0.1)	19.2	30 Jun 08	16.3	–	(2.9)	16.3
Magnetic Park, Desborough, United Kingdom		I	15 Feb 07	34.4	39.3	73.8	30 Jun 08	66.2	–	(7.6)	66.2
Pioneer Business Park, Ellesmere Port,
United Kingdom		D	24 Apr 07	4.9	18.7	23.5	30 Jun 08	23.5	–	–	23.5
Harthills, United Kingdom		D	24 Apr 07	5.9	–	5.9	30 Jun 08	5.1	–	(0.8)	5.1

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

15. Investment properties (cont)

										Revaluation
						Cost				increment/	Book
				Original purchase	Cost since	including capital	Last independent	Last independent	Disposal during the	(decrement) during the	value 30 June
Properties	I,	D, R	Acquisition date	price $M	acquisition $M	expenditure $M	valuation date	valuation $M	year $M	year $M	2008 $M
Europe (cont)
Warehouse/distribution centres (cont)
Other development land – UK Logistics		D	Various	391.1	393.6	784.7	30 Jun 08	726.6	–	(48.8)	726.6
Other development land – Continental
Europe		D	Various	184.7	27.2	211.9	30 Jun 08	237.6	–	–	237.6
Royal Oak, Daventry, United Kingdom		I	1 Jul 07	140.7	–	140.7	30 Jun 08	129.6	–	(11.1)	129.6
Jersey Marine, Swansea, United Kingdom		I	1 Jan 07	2.4	63.6	66.0	30 Jun 08	49.3	(0.8)	(15.9)	49.3
Gemini Business Park, Beckton, United Kingdom		D	13 Apr 07	6.0	43.3	49.3	30 Jun 08	5.0	(44.3)	–	5.0
Brookf eld Road, Hinckley, United Kingdom		I,D	13 Apr 07 & 3 Aug 07	31.3	1.2	32.6	30 Jun 08	29.5	–	(3.1)	29.5
Unit C RD Park, Hoddesdon, United Kingdom Gretton Brook Road, Corby, United Kingdom		D D	13 Apr 07 2 Apr 08	18.4 –	(2.8) 6.1	15.5 6.1	30 Jun 08 30 Jun 08	8.0 6.1	(7.5) –	– –	8.0 6.1
Business parks
e3, Edinburgh, United Kingdom		D	8 Aug 06	35.3	1.4	36.7	8 Aug 06	25.0	–	(11.7)	25.0
SMH, Germany		I	1 Jan 08	8.3	0.8	9.1	1 Jan 08	9.1	(21.1)	–	9.1
Paris Airpark, France		I	14 Nov 06	65.5	–	65.5	31 Mar 08	61.6	–	(11.8)	61.6
Portfolio total											1,682.7 4,263.8

Notes to the fi nancial statements

for the year ended 30 June 2008

16. Investments accounted for using the equity method

16. Investments accounted for using the equity method
	Consolidated
	2008 $M 2007 $M
Share of net assets accounted for using the equity method Associates (a) Joint venture entities (b)	2,142.1 902.1 257.4 190.0
Total	2,399.5 1,092.1

(a) Investments in associates

(a) Investments in associates
Name Principal activities	Country of establishment/ incorporation Share of associate’s result recognised Consolidated ownership interest Consolidated investment carrying amount 2008 $M 2007 $M 2008 % 2007 % 2008 $M 2007 $M
Arlington Business Parks Partnership (ABPP)1 Property investment Ascendas-MGM Funds Management Limited (AMFM)2 Fund management Goodman Australia Industrial Fund (GAIF) Property investment Goodman European Logistics Fund (GELF) Property investment Goodman Property Trust (GMT)3 Property investment Goodman UK Active Property Fund plc (UK Active Fund)4 Property investment Macquarie Goodman Hong Kong Logistics Fund (MGLF-HK) Property investment Regent Residential Trust (Regent) Property investment	United Kingdom (173.9) – 22.0 – 250.2 – Singapore 3.9 6.2 – 40.0 – 16.1 Australia 76.9 36.5 44.1 30.01,206.5 407.4 Luxembourg 9.1 5.1 21.8 27.2 286.0 84.4 New Zealand 25.4 25.5 28.4 27.5 251.7 205.7 Republic of Ireland (15.4) 0.7 – 24.4 – 45.7 Cayman Islands 24.8 16.3 20.0 20.0 147.7 142.8 United Kingdom – 17.5 – – – –
	(49.2) 107.8 2,142.1 902.1

In July 2007, the Consolidated Entity increased its effective interest in ABPP and since that date has accounted for its investment as an associate. Prior to this transaction, the Consolidated Entity accounted for its investment within other fi nancial assets (refer to note 17).
On 27 March 2008, the Consolidated Entity disposed of its investment in AMFM.
GMT is a listed entity. The market value of the Consolidated Entity’s investment in GMT at 30 June 2008 using the quoted price on the last day of trading was $226.6 million (2007: $242.0 million).
Formerly Arlington UK Balanced Property Fund Plc. The Consolidated Entity increased its interest in the UK Active Fund from 18.0% to 24.4% on 8 January 2007 and began accounting for this investment using the equity method from this date until 31 May 2008, when the investment was classifi ed as held for sale (refer to notes 4 and 11).

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

16. Investments accounted for using the equity method (cont)

(a) Investments in associates (cont)

	Year ended	Revenue (100%)	Tax (100%)	(Loss)/prof t after tax (100%)	Total assets (100%)	Total liabilities (100%)	Net assets as reported by associate (100%)
Name ABPP	30 June 2008	$M 180.6	$M –	$M (791.9)	$M 3,124.1	$M 1,992.2	$M 1,131.9
	2007	–	–	–	–	–	–
AMFM	2008 2007	25.0 20.8	– 3.1	9.8 13.6	– 40.2	– 5.2	– 35.0
GAIF	2008	373.4	–	232.2	4,977.1	1,996.4	2,980.7
	2007	190.2	–	136.4	2,082.1	741.3	1,340.8
GELF	2008	52.5	–	43.6	2,571.5	1,274.2	1,297.3
GMT	2007 2008	22.8 108.2	0.6 –	17.0 85.1	575.4 1,262.2	294.1 405.8	281.3 856.4
	2007	140.6	23.9	114.3	1,094.9	398.1	696.8
UK Active Fund	2008	20.8	–	(61.6)	240.7	141.9	98.8
MGLF-HK	2007 2008	6.3 79.2	– –	2.2 124.0	347.3 1,240.8	159.9 503.3	187.4 737.5
	2007	71.0	2.0	34.7	1,258.1	544.0	714.1
Regent	2008	–	–	–	–	–	–
	2007	41.4	–	40.8	–	–	–

Amounts presented above for revenue, tax and (loss)/profi t after tax are measured from the later of the beginning of the year or the date that equity accounting commenced to the end of the year or date equity accounting ceased, if earlier.

Movements in carrying amount of investments in associates	Consolidated
	2008 $M 2007 $M
Carrying amount at the beginning of the year Share of net results after tax of associates Share of increment on revaluation of investments Transfers in from other f nancial assets Transfer to assets classif ed as held for sale Investments in associates during the year Distributions received and receivable Disposals of investments in associates Effect of foreign currency translation	902.1 454.7 (49.2) 107.8 3.2 2.6 181.7 31.8 (24.8) – 1,355.7 528.6 (67.5) (42.7) (82.6) (170.8) (76.5) (9.9)
Carrying amount at the end of the year	2,142.1 902.1

Notes to the fi nancial statements

for the year ended 30 June 2008

16. Investments accounted for using the equity method (cont)

(b) Interests in joint venture entities (JVEs)

(b) Interests in joint venture entities (JVEs)
								Consolidated
				Share of		Consolidated		investment
				JVE’s result		ownership		carrying
			Country of	recognised		interest		amount
			incorporation/	2008	2007	2008	2007	2008	2007
Name		Principal activities	establishment	$M	$M	%	%	$M	$M
Macquarie Goodman Asia Limited (MGA)		Fund management	Hong Kong	4.6	1.7	50.0	50.0	1.4	1.4
Macquarie Goodman Japan Pte Limited (MGJ)	Property management		Singapore
	and investment			0.3	–	50.0	50.0	157.8	147.6
Colworth Business Park Partnership (Colworth)		Property investment	United Kingdom	(1.1)	2.7	50.0	50.0	17.2	20.8
Toll Goodman Property Services Pty Ltd (TGPS)		Property investment	Australia	0.5	1.8	50.0	50.0	0.8	2.0
BGA1 Pty Ltd		Property investment	Australia	13.2	7.2	50.0	50.0	14.0	7.2
MGJ Cayman 1		Property investment	Cayman Islands	3.4	–	50.0	–	12.6	–
Highbrook Development Limited (HDL)1		Property development	New Zealand	4.1	–	25.0	–	30.7	–
Sino Cayman No. 1 Ltd	Property development		Hong Kong	–	–	50.0	–	2.1	–
Sino Cayman No. 2 Ltd	Property development		Hong Kong	–	–	50.0	–	–	–
BL Goodman LLP		Land development	United Kingdom	1.2	–	50.0	–	12.1	–
Pochin Rosemound (Deeside) Ltd		Land development	United Kingdom	(2.0)	–	50.0	–	1.2	–
Desborough Developments Ltd		Land development	United Kingdom	–	–	50.0	–	4.1	–
Other				– 24.2	– 13.4	–	–	3.4 257.4	11.0 190.0

As set out in note 5, Goodman reduced its interest in HDL from 75% to 25% on 17 December 2007. Subsequent to that transaction, the Consolidated Entity accounts for its investment as a JVE.

accounts for its investment as a JVE.
Movements in carrying amount of investments in JVEs	Consolidated
	2008 $M 2007 $M
Carrying amount at the beginning of the year Share of net results after tax of JVEs Investments in JVEs during the year Transfer on part disposal of controlled entity Increase on acquisition of controlled entities during the year Distributions received and receivable Return of investment capital Effect of foreign currency translation	190.0 20.5 24.2 13.4 43.1 149.6 29.3 – – 11.5 (12.4) (1.4) (9.0) – (7.8) (3.6)
Carrying amount at the end of the year	257.4 190.0

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

16. Investments accounted for using the equity method (cont)

(b) Interests in joint venture entities (cont)

	Year ended	Revenue (100%)	Tax (100%)	Prof t/(loss) after tax (100%)	Total assets (100%)	Total liabilities (100%)	Net assets reported by JVE (100%)
Name	30 June	$M	$M	$M	$M	$M	$M
MGA MGJ	2008 2007 2008	21.9 14.6 52.7	– 3.8 –	7.5 3.1 2.6	12.2 11.2 1,068.1	10.9 8.5 580.4	1.3 2.7 487.7
	2007	–	–	–	290.6	–	290.6
Colworth	2008	14.2	–	4.5	86.7	52.3	34.4
	2007	9.3	7.8	5.5	98.8	57.2	41.6
TGPS	2008	–	–	–	2.7	0.9	1.8
	2007	8.5	2.3	3.7	6.3	2.7	3.6
BGA1 Pty Ltd	2008	–	–	–	39.2	10.2	29.0
	2007	18.9	–	14.4	20.1	5.7	14.4
MGJ Cayman 1	2008	3.0	–	7.4	45.0	18.2	26.8
	2007	–	–	–	–	–	–
HDL	2008	17.9	–	18.4	154.3	96.2	58.1
	2007	–	–	–	–	–	–
Sino Cayman	2008	0.2	–	–	94.3	94.5	(0.2)
No. 1 Ltd	2007	–	–	–	–	–	–
Sino Cayman	2008	–	–	–	103.6	103.9	(0.3)
No. 2 Ltd	2007	–	–	–	–	–	–
BL Goodman LLP	2008	1.7	–	2.8	56.5	35.1	21.4
	2007	–	–	–	–	–	–
Pochin	2008	–	–	(4.0)	12.4	12.4	–
Rosemound (Deeside) Ltd	2007	–	–	–	–	–	–
Desborough	2008	–	–	–	–	–	–
Developments Ltd	2007	–	–	–	–	–	–

Amounts presented above for revenue, tax and profi t/(loss) after tax are measured from the later of the beginning of the year or the date that equity accounting commenced to the end of the year or date equity accounting ceased, if earlier.

Included in the balance sheets of the JVEs disclosed above are total non-current assets of $1,484.4 million (2007: $446.9 million) and total non-current liabilities of $465.0 million (2007: $94.6 million).

Notes to the fi nancial statements for the year ended 30 June 2008

17. Other fi nancial assets

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2008	2007	2008	2007
	$M	$M	$M	$M
Investments in controlled entities:
– Unlisted securities, at cost1,2	–	–	399.1	476.6
Investments in listed securities, at fair value3	177.2	202.1	–	–
Investments in unlisted securities, at fair value4	61.5 238.7	204.9 407.0	– 399.1	– 476.6

Refer to note 29 for details of investments in controlled entities.
As set out in note 1(u), where the Company has issued or purchased securities in advance of the employee exercising the right over the ESAP security, the Company recognises the amount payable to GIT as a payable and the related asset as an increase in its investment in GIT.
Investments in listed securities were valued using the quoted price on the last day of trading in the year and included units in ING Industrial Fund with a carrying value of $177.2 million (2007: $12.1 million) and units in A-REIT with a carrying value of $nil (2007: $190.0 million).
The fair values of investments in unlisted securities are determined by reference to the net asset value per security advised to investors.

18. Plant and equipment

18. Plant and equipment
	Consolidated		Parent Entity
	2008	2007	2008	2007
	$M	$M	$M	$M
Leasehold improvements, at cost	12.9	9.0	–	–
Accumulated amortisation	(2.9)	(0.7)	–	–
	10.0	8.3	–	–
Plant and equipment, at cost	23.9	19.1	–	–
Accumulated depreciation	(9.0)	(6.1)	–	–
	14.9	13.0	–	–
Total plant and equipment, at net book value	24.9	21.3	–	–
Reconciliation Leasehold improvements Carrying amount at the beginning of the year Additions Disposals Amortisation Effect of foreign currency translation	8.3 9.1 (4.7) (2.2) (0.5)	2.2 9.1 (2.3) (0.4) (0.3)	– – – – –	– – – – –
Carrying amount at the end of the year	10.0	8.3	–	–
Plant and equipment Carrying amount at the beginning of the year Additions on acquisition of controlled entities Other additions Disposals Depreciation Effect of foreign currency translation	13.0 – 8.0 (0.5) (5.3) (0.3)	10.0 0.2 8.1 (1.7) (3.4) (0.2)	– – – – – –	– – – – – –
Carrying amount at the end of the year	14.9	13.0	–	–

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

19. Intangible assets

19. Intangible assets
	Consolidated		Parent	Entity
	2008	2007	2008	2007
	$M	$M	$M	$M
Management rights relating to European operations, at cost	277.0	509.5	–	–
Management rights relating to New Zealand operations, at cost	5.3	6.0	–	–
Goodwill relating to European operations, at cost	790.9	766.3	–	–
	1,073.2	1,281.8	–	–

A reconciliation of the movement in intangible assets for the year is set out below:

Reconciliation	Note Carrying amount at the beginning of the year $M	Acquisitions 1 $M	Disposals 2 $M	Adjustments 3 $M	Effect of foreign currency translation $M	Carrying amount at the end of the year $M
Europe
Business parks	19(a) 247.1	8.3	–	31.3	(34.0)	252.7
Logistics – UK	19(b) 124.7	52.5	–	(10.3)	(21.0)	145.9
Logistics – Continental Europe	19(c) 665.1	11.9	–	(25.9)	18.2	669.3
Fund management	19(d) 238.9	–	(184.4)	(42.7)	(11.8)	–
Subtotal – Europe	1,275.8	72.7	(184.4)	(47.6)	(48.6)	1,067.9
New Zealand
Fund management	19(e) 6.0	–	–	–	(0.7)	5.3
Total	1,281.8	72.7	(184.4)	(47.6)	(49.3)	1,073.2

Acquisitions include amounts paid relating to the acquisition of Rosemound Developments Limited (A$52.5 million), an amount paid for management rights pursuant to the acquisition of Celogix Property Fund by GELF (A$11.9 million) and an amount paid for management rights relating to the acquisition of Calliston Gesellschaft für Projektwicklung mbH (A$8.3 million).
Disposals relate to the sale of GPI on 31 May 2008 (refer to note 4).
Adjustments include reclassifi cation from Fund management to Business parks ($42.4 million) and Logistics – Continental Europe ($23.5 million). Other adjustments relate to the release of surplus provisions including deferred settlements in relation to the acquisition of Eurinpro that will no longer be paid.

The management rights relating to the European and New Zealand operations have been assessed to have an indefi nite life as these rights are routinely renewed at minimal cost.

Notes to the fi nancial statements for the year ended 30 June 2008

19. Intangible assets (cont)

Impairment testing for intangible assets

The impairment tests for all intangible assets were based on the business unit’s fair value. Fair value is estimated based on each business unit’s contribution to earnings before interest, tax, depreciation and amortisation (EBITDA). A multiple of EBITDA was used to determine fair value.

Primarily as a result of the postponement of the launch of the proposed UK Logistics Fund, the EBITDA achieved in the year ended 30 June 2008 was below the EBITDA target at acquisition date. The intangible assets impairment test for this business unit has therefore been performed based on the forecast EBITDA result for the year ending 30 June 2009 (refer to note 19(b)).

In respect of all other business units, the current year EBITDA for each business unit was equal to or greater than the EBITDA target used to determine the acquisition price, and forecast EBITDA for each business unit for the next 12 months is equal to or greater than the EBITDA target at acquisition date.

A review of the published EBITDA multiples for comparable transactions in Europe since 1 July 2007 was performed at 30 June 2008. A sensitivity analysis was also performed to assess whether potential decreases in the multiples of EBITDA adopted on acquisition for any business units using both EBITDA results for the year ended 30 June 2008 and the forecast for the year ending 30 June 2009. Assumptions made regarding future growth in the EBITDA levels refl ected continued growth in fund management, property services and development management activity in line with the Consolidated Entity’s strategy. Growth assumptions used did not include any signifi cant expansion of geographical or market operations. As the results of this sensitivity analysis did not indicate any impairment, the multiples arising on acquisition continue to be adopted for the purposes of establishing recoverable amount.

(a) Business parks – Europe

The business parks intangible assets relate to the acquisition of Arlington Securities Limited (Arlington), Akeler, Calliston and SMH businesses. The overall weighted average multiple of EBITDA adopted for the impairment assessment as at 30 June 2008 was 9.2 times.

(b) Logistics – United Kingdom

Intangible assets relating to United Kingdom logistics relate to amounts arising on the acquisition of Rosemound. The weighted average multiple of EBITDA adopted for the impairment assessment was 5.0 times. Forecast growth in the year ending 30 June 2009 includes assumptions relating to development gains on investment properties as well as contributions from the management of the UK Logistics Fund, once launched.

(c) Logistics – Continental Europe

Intangible assets relating to Continental Europe logistics relate to amounts arising on the acquisition of Eurinpro, an attribution of amounts arising on acquisition of Arlington based on the historical EBITDA contribution from this segment, and amounts contributed for management rights on the acquisition of the Celogix Property Fund by GELF. The weighted average multiple of EBITDA adopted for the impairment assessment was 7.7 times.

(d) Fund management – Europe

Management rights relating to fund management arise as a result of the acquisition of Arlington. The management rights were sold during the year.

(e) Fund management – New Zealand

Management rights relating to the New Zealand fund management business have been reviewed based on the business unit’s annual earnings. No impairment is required as future earnings from these rights are expected to continue at similar or greater levels.

Goodman Group Annual Report 2008

Keeping focused

Notes to the fi nancial statements for the year ended 30 June 2008

20. Payables Consolidated Parent Entity 2008 $M 2007 $M 2008 $M 2007 $M Current Trade payables 75.0 50.5 – – Other payables and accruals1 346.3 253.1 0.7 25.0 Deferred settlements2 2.7 21.0 9.9 – Loans from controlled entities3 – – 148.5 – 424.0 324.6 159.1 25.0 Non-current Other payables and accruals1 4.7 – 0.8 – Deferred settlements2 – 105.3 – – Loans from controlled entities3 – – – 568.9 4.7 105.3 0.8 568.9 1. Other payables and accruals include unpaid interest and capital accruals. 2. Deferred settlements at 30 June 2008 relate to the acquisition of Eurinpro. At 30 June 2007, amounts disclosed as non-current were discounted at the Consolidated Entity’s weighted average cost of debt. 3. Loans from controlled entities are non-interest bearing. Details of loans from controlled entities are set out in note 32. Payables denominated in currencies other than Australian dollars are as follows: Amounts in A$M NZD HKD USD SGD GBP EUR JPY 2008 5.1 4.1 13.8 2.1 117.3 123.3 2.9 2007 22.1 3.2 – 3.6 205.1 113.0 0.2 21. Interest bearing liabilities Note Consolidated Parent Entity 2008 $M 2007 $M 2008 $M 2007 $M Current	21. Interest bearing liabilities (cont) (a) Bank loans – unsecured as at 30 June 2008 Amounts drawn down in A$M equivalents Facility AUD SGD NZD HKD USD GBP EUR JPY Total
	Syndicated Multi-currency Facility (SMCF)1 2008 117.0 – – 100.6 143.8 784.2 289.7 54.8 1,490.1 2007 409.5 68.7 380.2 142.3 49.8 170.6 36.8 146.2 1,404.1 Bank loan2 2008 – – – – – – – – – 2007 – – – – – 912.3 192.3 – 1,104.6 Bank loan3 2008 – – – – – 561.4 – – 561.4 2007 – – – – – – – – – Bank loan4 2008 – – 96.9 – – 287.5 349.9 – 734.3 2007 – – – – – – – – – Bank loan5 2008 – – – – – – – – – 2007 – – – – – 27.6 – – 27.6 Bank loan6 2008 – – – – – – – 84.6 84.6 2007 – – – – – – – – – Bank loan7 2008 – – 47.3 – – – – – 47.3 2007 – – – – – – – – – Bank loan8 2008 – – – – – 524.8 136.3 – 661.1 2007 – – – – – 468.7 3.2 – 471.9
	Total bank loans 2008 117.0 – 144.2 100.6 143.8 2,157.9 775.9 139.4 3,578.8
	2007 409.5 68.7 380.2 142.3 49.8 1,579.2 232.3 146.2 3,008.2
	Less: Unamortised borrowing costs 2008 (14.4) 2007 (5.7)
Note Consolidated Parent Entity 2008 $M 2007 $M 2008 $M 2007 $M
	Total unsecured bank loans 2008 3,564.4
Current	2007 – – – – – – – – 3,002.5
Bank loans – unsecured 21(a) 491.3 1,595.1 – – Bank loans – secured 21(b) 20.8 81.2 – – Other loans – unsecured 21(c) – 600.3 – – Other loans – controlled entities – – 1,016.0 –
512.1 2,276.6 1,016.0 –
Non-current Bank loans – unsecured 21(a) 3,073.1 1,407.4 – – Bank loans – secured 21(b) 129.5 177.6 – – Euro Medium Term Notes – unsecured 21(d) 514.4 – – – Other loans – controlled entities – – – 655.2
3,717.0 1,585.0 – 655.2

21. Interest bearing liabilities
		Consolidated		Parent Entity
		2008	2007	2008	2007
	Note	$M	$M	$M	$M
Current
Bank loans – unsecured	21(a)	491.3	1,595.1	–	–
Bank loans – secured	21(b)	20.8	81.2	–	–
Other loans – unsecured	21(c)	–	600.3	–	–
Other loans – controlled entities		–	–	1,016.0	–
Non-current Bank loans – unsecured Bank loans – secured Euro Medium Term Notes – unsecured Other loans – controlled entities	21(a) 21(b) 21(d)	512.1 3,073.1 129.5 514.4 –	2,276.6 1,407.4 177.6 – –	1,016.0 – – – –	– – – – 655.2
		3,717.0	1,585.0	–	655.2

The SMCF comprises fi ve revolving tranches, a A$100 million tranche maturing on 31 December 2008, a A$460 million tranche maturing on 24 May 2009, a A$520 million tranche maturing on 24 May 2010, a A$520 million tranche maturing on 24 May 2011 and a A$400 million tranche maturing on 24 May 2012.
As at 30 June 2007, controlled entities had bank loans of A$1,104.6 million which were denominated in British pounds sterling (A$912.3 million) and euros (A$192.3 million). The facility expired on 9 April 2008.
A controlled entity has a bank loan of A$561.4 million denominated in British pounds sterling. The facility expires on 7 April 2013. This facility was drawn to refi nance the 9 April 2008 bank loan maturity referred to above.
Controlled entities have bank loans of A$734.3 million denominated in British pounds sterling (A$287.5 million), euros (A$349.9 million) and New Zealand dollars (A$96.9 million). The facility expires on 8 February 2012.
As at 30 June 2008, a controlled entity had a bank loan of A$27.6 million denominated in British pounds sterling which is now classifi ed under secured loans. 6. A controlled entity has a bank loan of A$84.6 million denominated in Japanese yen. The facility expires on 31 December 2009. The facility was previously a classifi ed as secured but the terms of the facility were amended in December 2007 and the facility is now classifi ed as unsecured.
A controlled entity has a bank loan of A$47.3 million denominated in New Zealand dollars. The facility expires on 29 May 2010.
Controlled entities have bank loans of A$661.1 million denominated in British pounds sterling (A$524.8 million) and euros (A$136.3 million). The facility expires on 5 December 2012.

Goodman Group Annual Report 2008

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101

Notes to the fi nancial statements for the year ended 30 June 2008

21. Interest bearing liabilities (cont)

(b) Bank loans – secured as at 30 June 2008

(b) Bank loans – secured as at 30 June 2008
			Amounts drawn down in A$M equivalents
Facility		AUD	SGD	NZD	HKD	USD	GBP	EUR	Total
Bank loan1	2008	–	–	–	–	–	–	–	–
	2007	–	89.6	–	–	–	–	–	89.6
Bank loan2	2008	–	–	–	–	–	–	–	–
	2007	–	–	13.7	–	–	–	–	13.7
Bank loan3	2008	–	–	–	–	–	129.5	–	129.5
	2007	–	–	–	–	–	155.5	–	155.5
Bank loan4	2008	–	–	–	–	–	–	8.3	8.3
	2007	–	–	–	–	–	–	–	–
Bank loan5	2008	–	–	–	–	–	11.9	0.6	12.5
	2007	–	–	–	–	–	–	–	–
Total secured bank loans	2008 2007	– –	– 89.6	– 13.7	– –	– –	141.4 155.5	8.9 –	150.3 258.8

The terms of the facility were amended in December 2007 and the facility is now classifi ed as unsecured.
This facility related to an entity that was disposed by the Consolidated Entity during the year.
A controlled entity has a bank loan of A$129.5 million denominated in British pounds sterling. The facility expires on 20 September 2009.
A controlled entity has a bank loan of A$8.3 million denominated in euros. The facility expires on 20 July 2008.
Controlled entities have bank loans of A$12.5 million denominated in British pounds sterling (A$11.9 million) and euros (A$0.6 million). The facility expires on 24 May 2009.

Security for all loans referred to above is by way of fi rst and second ranking charges over various assets of the Consolidated Entity (refer also to note 15).

(c) Other loans – unsecured

In February 2008, the Consolidated Entity entered into a four year A$800 million unsecured banking facility that matures on 8 February 2012. This facility replaced the unrated CMBS loan notes on 7 May 2008. As at 30 June 2007, the CMBS notes were denominated in British pounds sterling (A$329.6 million), euros (A$171.6 million) and Australian dollars (A$99.1 million).

(d) Euro Medium Term Notes – unsecured

On 30 June 2008, the Consolidated Entity issued A$514.4 million Euro Medium Term Notes. All notes were issued at a fi xed coupon of 9.75%, payable annually. The notes mature on 16 July 2018.

Notes to the fi nancial statements for the year ended 30 June 2008

21. Interest bearing liabilities (cont)

(e) Finance facilities

(e) Finance facilities
	Consolidated		Parent Entity
	Facilities	Facilities	Facilities	Facilities
	available	utilised	available	utilised
	$M	$M	$M	$M
At 30 June 2008
Bank loans – unsecured	4,559.5	3,564.4	–	–
Bank loans – secured	158.3	150.3	–	–
Euro Medium Term Notes – unsecured	514.4	514.4	–	–
Foreign private placement – unsecured	44.1	–	–	–
Bank guarantees1	–	84.8	–	–
	5,276.3	4,313.9	–	–
At 30 June 2007 Bank loans – unsecured Bank loans – secured Other loans – unsecured Bank guarantees1	3,700.3 316.2 600.3 –	3,002.5 258.8 600.3 124.1	– – – –	– – – –
	4,616.8	3,985.7	–	–

Bank guarantees relate to the Consolidated Entity’s unsecured facilities.

22. Provisions

22. Provisions
		Consolidated		Parent Entity
	Note	2008 $M	2007 $M	2008 $M	2007 $M
Current
Distributions to Securityholders	10	142.4	129.9	–	–
Employee benef ts	33	50.8	13.1	–	–
		193.2	143.0	–	–
Non-current Employee benef ts	33	8.9	22.9	–	–
		8.9	22.9	–	–

Goodman Group Annual Report 2008

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103

Notes to the fi nancial statements for the year ended 30 June 2008

23. Issued capital

23. Issued capital
	Consolidated
	2008 2007
Securities on issue Number of securities on issue on the ASX Less: Treasury securities issued under the ESAP	1,715,805,005 1,692,736,692 (40,582,641) (42,613,035)
Balance included in issued capital	1,675,222,364 1,650,123,657
	Consolidated
	$M $M
Parent Entity Issued capital, fully paid Treasury securities Issue costs	200.8 186.0 (1.5) (1.5) (5.4) (5.6)
Equity attributable to Shareholders	193.9 178.9
Goodman Industrial Trust Issued capital, fully paid Issue costs	4,415.8 4,277.6 (66.6) (66.6)
	4,349.2 4,211.0
Less: Amounts attributable to Shareholders1	(225.9) (217.8)
Equity attributable to Unitholders	4,123.3 3,993.2
Total issued capital	4,317.2 4,172.1

The equity attributable to Unitholders is reduced on consolidation by the Company’s interest in GIT units issued under the ESAP which are not vested. The Company retains an economic interest in these units until they vest under the ESAP.

Terms and conditions

A stapled security means one share in the Company stapled to one unit in GIT. Holders of stapled securities are entitled to receive dividends and distributions as declared from time to time and are entitled to one vote per security at Shareholders’ and Unitholders’ meetings. In the event of a winding up of the Company and GIT, Securityholders rank after creditors and are fully entitled to any proceeds of liquidation.

Effective 1 July 1998, the Company Law Review Act 1998 abolished the concept of par value shares and the concept of authorised capital. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

Notes to the fi nancial statements for the year ended 30 June 2008

23. Issued capital (cont)

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Securities Treasury Treasury Consolidation Parent
per ASX securities Consolidated Equity securities eliminations GIT Entity
M M M M M M $M $M $M $M $M $M $M $M $M $M
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
Balance at the
beginning of the year
Securities on issue at 1 July 1,692.7 1,608.8 – – 1,692.7 1,608.8 4,311.6 3,923.2 – – (152.0) (41.3) 4,277.6 3,795.4 186.0 169.1
– – – – – –
Treasury securities at 1 July (42.6) (30.9) (42.6) (30.9) (67.3) (68.9) (65.8) (67.4) (1.5) (1.5)
Less: Issue costs – – – – – – (72.2) (72.7) – – – – (66.5) (66.5) (5.6) (6.2)
1,692.7 1,608.8 (42.6) (30.9) 1,650.1 1,577.9 4,239.4 3,850.5 (67.3) (68.9) (217.8) (108.7) 4,211.1 3,728.9 178.9 161.4
Movements during the year
– 19,419,978 securities
issued under the
Distribution Reinvestment
Plan (DRP)
(2007: 40,004,845) 19.4 40.0 – – 19.4 40.0 125.7 263.0 – – – – 118.9 259.1 6.8 3.9
– 2,000,000 treasury
securities issued under the
ESAP (2007: 16,435,500) 2.0 16.4 (2.0) (16.4) – – – – – – (13.7) (111.4) 13.7 111.4 – –
– 1,648,335 securities
issued on exercise of
options (2007: 593,333) 1.7 0.6 – – 1.7 0.6 5.9 2.0 – – – – 5.6 2.0 0.3 –
– Nil securities issued under
Securities Purchase Plan
(2007: 9,725,620) – 9.7 – – – 9.7 – 48.9 – – – – – 48.3 – 0.6
– Nil institutional placement
of securities (2007:
5,548,357) – 5.6 – – – 5.6 – 28.3 – – – – – 28.0 – 0.3
– Nil securities issued on
conversion of RePS
(2007: 11,606,556) – 11.6 – – – 11.6 – 33.8 – – – – – 33.4 – 0.4
– 2,116,670 treasury
securities (with nil value)
converted to securities on
vesting under the ESAP
(2007: 3,416,664) – – 2.1 3.4 2.1 3.4 5.5 9.3 – – – – – – 5.5 9.3
– 1,247,054 treasury
securities converted to
securities on vesting under
the ESAP (2007: 542,011) – – 1.2 0.5 1.2 0.5 1.9 0.7 3.7 1.6 5.6 2.3 – – – –
– 666,670 treasury
securities vested but not
exercised (2007: 766,665) – – 0.7 0.8 0.7 0.8 2.2 2.4 – – – – – – 2.2 2.4
Issue costs – – – – – – (72.0) (72.2) – – – – (66.6) (66.6) (5.4) (5.6)
Balance at 30 June 2008 1,715.8 1,692.7 (40.6) (42.6) 1,675.2 1,650.1 4,380.8 4,239.4 (63.6) (67.3) (225.9) (217.8) 4,349.2 4,211.0 193.9 178.9
Comprises:
Securities on issue at
30 June 1,715.8 1,692.7 – – 1,715.8 1,692.7 4,452.8 4,311.6 – – (163.8) (152.0) 4,415.8 4,277.6 200.8 186.0
Treasury securities on
issue at 30 June – – (40.6) (42.6) (40.6) (42.6) – – (63.6) (67.3) (62.1) (65.8) – – (1.5) (1.5)
Less: Issue costs – – – – – – (72.0) (72.2) – – – – (66.6) (66.6) (5.4) (5.6)
1,715.8 1,692.7 (40.6) (42.6) 1,675.2 1,650.1 4,380.8 4,239.4 (63.6) (67.3) (225.9) (217.8) 4,349.2 4,211.0 193.9 178.9
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Goodman Group Annual Report 2008

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105

Notes to the fi nancial statements for the year ended 30 June 2008

24. Reserves

24. Reserves
		Consolidated		Parent Entity
		2008	2007	2008	2007
	Note	$M	$M	$M	$M
Asset revaluation reserve	24(a)	(356.9)	252.6	–	–
Cash f ow hedge reserve	24(b)	72.4	60.6	–	–
Foreign currency translation reserve	24(c)	6.8	(1.8)	–	–
Capital prof ts reserve	24(d)	309.1	52.0	–	–
Employee compensation reserve	24(e)	36.6	19.6	87.2	44.9
Def ned benef t plan actuarial gains/(losses) reserve	24(f)	(2.9)	(1.2)	–	–
Total reserves		65.1	381.8	87.2	44.9

The reserves of the Consolidated Entity are apportioned below between the amounts Securityholders are entitled to by virtue of their shareholding in the Company and their unitholding in GIT.

	Shareholders	Shareholders	Unitholders	Unitholders	Securityholders	Securityholders
	2008	2007	2008	2007	2008	2007
	$M	$M	$M	$M	$M	$M
(a) Asset revaluation reserve
Balance at the beginning of the year	95.6	39.7	157.0	95.6	252.6	135.3
Increase/(decrease) due to revaluation of listed/
unlisted investments	0.1	87.2	4.3	(7.2)	4.4	80.0
Deferred tax	(0.3)	(26.0)	–	–	(0.3)	(26.0)
Transfers to capital prof ts reserve	–	–	(175.6)	(33.8)	(175.6)	(33.8)
Transfers from (accumulated losses)/retained earnings	(64.2)	1.0	(313.6)	102.1	(377.8)	103.1
Transfers to income statement due to disposal of
listed/unlisted investments1	(89.0)	–	–	–	(89.0)	–
Effect of foreign currency translation	8.2	(6.3)	20.6	0.3	28.8	(6.0)
Balance at the end of the year	(49.6)	95.6	(307.3)	157.0	(356.9)	252.6
Refer to notes 1(f) and 1(k) for the accounting policies relating to this reserve. (b) Cash f ow hedge reserve Balance at the beginning of the year – (1.7) Change in value of f nancial instruments (0.2) 1.5 Transfers to income statement – – Transfers from (accumulated losses)/retained earnings – – Effect of foreign currency translation – 0.2 Balance at the end of the year (0.2) – Refer to note 1(q) for the accounting policy relating to this reserve. (c) Foreign currency translation reserve Balance at the beginning of the year (2.2) (2.2) Net exchange differences on conversion of foreign operations (14.9) –			60.6 24.1 (6.2) – (5.9) 72.6 0.4 23.5	7.4 43.5 1.0 10.2 (1.5) 60.6 (1.6) 2.0	60.6 23.9 (6.2) – (5.9) 72.4 (1.8) 8.6	5.7 45.0 1.0 10.2 (1.3) 60.6 (3.8) 2.0
Balance at the end of the year	(17.1)	(2.2)	23.9	0.4	6.8	(1.8)

Notes to the fi nancial statements for the year ended 30 June 2008

24. Reserves (cont)

24. Reserves (cont)
	Shareholders		Unitholders		Securityholders
	2008	2007	2008	2007	2008	2007
	$M	$M	$M	$M	$M	$M
(d) Capital prof ts reserve
Balance at the beginning of the year	15.1	3.0	36.9	8.4	52.0	11.4
Transfers from asset revaluation reserve	–	–	175.6	33.8	175.6	33.8
Transfers from (accumulated losses)/retained
earnings	84.4	12.3	(1.0)	(5.3)	83.4	7.0
Effect of foreign currency translation	(1.2)	(0.2)	(0.7)	–	(1.9)	(0.2)
Balance at the end of the year	98.3	15.1	210.8	36.9	309.1	52.0
Refer to note 1(f) for the accounting policy relating to this reserve. (e) Employee compensation reserve Balance at the beginning of the year 19.6 17.2 Expense recognised in the income statement during the year 26.7 16.2 Amount transferred to issued capital on vesting of options/securities (1.7) (1.7) Difference between the ESAP interest and distribution 3.8 0.7 Other 0.4 – Transfers to (accumulated losses)/retained earnings (11.2) (12.4) Effect of foreign currency translation (1.0) (0.4) Balance at the end of the year 36.6 19.6 Refer to note 1(u) for the accounting policy relating to this reserve. (f) Def ned benef t fund actuarial gains/(losses) reserve Balance at the beginning of the year (1.2) 2.7 Actuarial losses (2.0) (4.0) Effect of foreign currency translation 0.3 0.1			– – – – – – – – – – –	– – – – – – – – – – –	19.6 26.7 (1.7) 3.8 0.4 (11.2) (1.0) 36.6 (1.2) (2.0) 0.3	17.2 16.2 (1.7) 0.7 – (12.4) (0.4) 19.6 2.7 (4.0) 0.1
Balance at the end of the year	(2.9)	(1.2)	–	–	(2.9)	(1.2)

The amount recognised in the income statement represents accumulated revaluation gains relating to units in A-REIT less related deferred tax.

The foreign currency translation reserve records the foreign currency difference arising from the translation of foreign operations in New Zealand, Singapore, Hong Kong, China, Japan, United Kingdom and Europe.

Goodman Group Annual Report 2008

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106

107

Notes to the fi nancial statements for the year ended 30 June 2008

25. (Accumulated losses)/retained earnings

The (accumulated losses)/retained earnings of the Consolidated Entity are apportioned below between the amounts Securityholders are entitled to by virtue of their shareholding in the Company and their unitholding in GIT:

	Shareholders	Shareholders	Unitholders	Unitholders	Securityholders	Securityholders
	2008 $M	2007 $M	2008 $M	2007 $M	2008 $M	2007 $M
(Accumulated losses)/retained earnings at the
beginning of the year	(57.4)	(63.3)	58.0	63.3	0.6	–
Prof t/(loss) for the year	28.9	(3.6)	221.8	626.1	250.7	622.5
Transfers to asset revaluation reserve	64.2	(1.0)	313.6	(102.1)	377.8	(103.1)
Transfers to cash f ow hedge reserve	–	–	–	(10.2)	–	(10.2)
Transfers to capital prof ts reserve	(84.4)	(12.3)	1.0	5.3	(83.4)	(7.0)
Transfers from employee compensation reserve	11.2	12.4	–	–	11.2	12.4
Distributions declared1	14.1	10.4	(582.3)	(524.4)	(568.2)	(514.0)
Impact of foreign exchange (Accumulated losses)/retained earnings at the end of the year	0.1 (23.3)	– (57.4)	(22.6) (10.5)	– 58.0	(22.5) (33.8)	– 0.6

Distributions declared by GIT relating to ESAP securities are deducted from Unitholders’ share of retained earnings and added to Shareholders’ share of retained earnings.

	Parent Entity
	2008 $M 2007 $M
Accumulated losses at the beginning of the year Loss for the year	(150.0) (119.1) (121.5) (30.9)
Accumulated losses at the end of the year	(271.5) (150.0)

Notes to the fi nancial statements for the year ended 30 June 2008

27. Commitments

27. Commitments
	Consolidated		Parent Entity
	2008	2007	2008	2007
	$M	$M	$M	$M
Capital expenditure commitments
Contracted but not provided for and payable:
– Within one year	125.2	252.4	–	–
– One year or later and no later than f ve years	2.5	29.2	–	–
– Later than f ve years	–	–	–	–
	127.7	281.6	–	–
Non-cancellable operating lease commitments Future operating lease commitments not provided for in the f nancial statements and payable: – Within one year – One year or later and no later than f ve years – Later than f ve years	14.1 33.3 43.6	5.7 20.6 1.1	– – –	– – –
	91.0	27.4	–	–

Commitment to investment in managed funds

At 30 June 2008, the Consolidated Entity was committed to invest A$42.8 million (HK$ 320.0 million) into MGLF-HK (2007: A$7.9 million), A$102.9 million into ABPP (2007: $nil) and A$393.8 million into GAIF (2007: $nil).

During June 2008, Goodman agreed to subscribe for up to A$327 million (€200.0 million) in respect of an anticipated offer of units by GELF. The existing unitholders have a pro rata right to subscribe for the units, and Goodman has committed to subscribe for its pro rata share, with the fi nal underwrite amount to be based on a calculation of the projected gearing of GELF at 31 December 2008.

Acquisition of investment properties

Amounts contracted for the acquisition of investment properties not provided for at 30 June 2008 are $77.2 million (2007: $129.0 million).

Guaranteed land payments – M7 Business Hub development

26. Minority interests

Minority interests in controlled entities comprise:

26. Minority interests Minority interests in controlled entities comprise:
	Consolidated
	2008 $M 2007 $M
Hybrid Securities1 Other shareholders in Ascendas Global Gateway Pte Limited Other shareholders in Highbrook Development Limited2	320.6 – – 2.8 – 20.9
	320.6 23.7

On 21 December 2007, Goodman issued 3,269,665 Hybrid Securities at a face value of $100 each. The Hybrid Securities are preferred, perpetual non-call securities in Goodman PLUS Trust which are listed on the ASX. The Hybrid Securities may be exchanged or repurchased in certain circumstances. The minority interest balance is net of issue costs.
As set out in note 5, Goodman reduced its interest in HDL from 75% to 25% on 17 December 2007. Subsequent to this transaction, the Consolidated Entity accounted for its investment in HDL as a joint venture entity.

A commitment exists at 30 June 2008 in respect of a Heads of Agreement signed between the Parent Entity, GIT, Goodman Vineyard Pty Limited (Vineyard), Brickworks Limited and The Austral Brick Company Pty Ltd (Austral). Austral has a put option which gives it the right to require Vineyard to take a transfer of unsold saleable lots of land. The amount payable over the duration of the development will be the greater of:

- the guaranteed land payments of unsold saleable lots; or
the revised retail price of the unsold saleable lots less a 2.5% discount if the revised retail price is less than $10 million or a 5% discount if it is greater than $10 million.

GIT has provided Austral with a guarantee for all amounts payable to Austral by Vineyard under the Heads of Agreement.

Non-cancellable operating lease receivables from investment property customers

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2008	2007	2008	2007
Non-cancellable operating lease commitments receivable:	$M	$M	$M	$M
– Within one year	202.8	199.1	–	–
– One year or later and no later than f ve years	637.4	591.6	–	–
– Later than f ve years	405.9	328.3	–	–
	1,246.1	1,119.0	–	–

Goodman Group Annual Report 2008

Keeping focused

108

109

Notes to the fi nancial statements for the year ended 30 June 2008

28. Cash fl ow statements

(a) Reconciliation of cash

For the purpose of the cash fl ow statement, cash includes cash on hand at the bank and short-term deposits at all. Cash as at the end of the year as shown in the cash fl ow statement is reconciled to the related items in the balance sheet as follows:

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Consolidated Parent Entity
2008 2007 2008 2007
$M $M $M $M
Cash assets 639.2 81.8 0.6 0.1
(b) Reconciliation of profi t/(loss) after income tax to net cash
provided by/(used in) operating activities
Profi t/(loss) for the year 268.4 622.7 (121.5) (30.9)
Items classifi ed as investing/fi nancing activities
– –
Net gain on disposal of investment properties (97.4) (54.3)
–
Net gain on disposal of equity investments (284.6) (124.6) (32.1)
– – –
Interest paid capitalised (53.0)
Non-cash items
Depreciation and amortisation 7.5 3.9 – –
Share based payments expense 26.7 16.2 – –
Impairment of investments 108.2 – 111.5 –
Loss/(gains) on fair value adjustments on investment properties 144.3 (64.0) – –
Share of net results of equity accounted investments 25.0 (121.2) – –
Unrealised foreign exchange gain – – (5.7) 2.4
Unrealised loss/(gain) on revaluation of fi nancial instruments 45.7 (9.2) – (0.5)
– – –
Non-cash adjustments included in net fi nancing costs (2.5)
Decrease in income taxes payable – 18.8 – –
Increase in income taxes receivable – – – (4.0)
Net cash provided by/(used by) operating activities before
change in assets and liabilities 241.3 235.3 (47.8) (33.0)
Change in assets and liabilities during the year:
– Decrease/(increase) in receivables 33.0 (4.3) (14.1) 542.7
– (Increase)/decrease in inventories (14.2) 10.9 – –
– Increase in current tax payables (net) 19.0 6.0 6.3 –
– Decrease/(increase) in other assets 2.9 (14.4) (11.6) –
– Increase/(decrease) in payables 119.7 91.2 64.6 (493.6)
– (Decrease)/increase in deferred tax liabilities (net) (70.5) 1.2 1.0 0.3
– Increase in provisions 14.0 8.1 – –
Net cash provided by/(used in) operating activities 345.2 334.0 (1.6) 16.4
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(c) Non-cash fi nancing and investing activities

During the year, the following non-cash transactions were undertaken:

+ Settlement of distribution liabilities

During the year, 19,419,978 securities were allocated under the DRP for total consideration of $125.7 million (2007: 40,004,845 securities for $263.0 million);

Issue of securities under the ESAP

During the year, 2,000,000 securities were issued to employees under the ESAP (2007: 16,435,500). Securities issued under the ESAP are accounted for as options. The securities are held in trust as security for the loans; and

Conversion of RePS

29. Controlled entities

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Parent Entity
2008 2007
$M $M
Particulars in relation to controlled entities
Investments in controlled entities, at cost 399.1 476.6
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Investments in controlled entities, at cost	399.1 476.6
Country of incorporation Signif cant controlled companies	Interest held
	2008 % 2007 %
Goodman Funds Management Limited Australia Goodman Industrial Finance (Aust) Pty Limited Australia Goodman Singapore Industrial Management (Aust) Pty Limited Australia Goodman Property Services (Aust) Pty Limited Australia Goodman Vineyard Pty Limited Australia Goodman Funds Management Australia Limited Australia Goodman Singapore Holdings (Aust) Pty Limited Australia Goodman Australia Finance Pty Limited Australia Goodman (NZ) Limited New Zealand Goodman Property Services (NZ) Limited New Zealand Goodman Finance NZ Limited New Zealand Goodman Singapore Pte Limited Singapore Ascendas Global Gateway Pte Limited Singapore Goodman Japan Holdings (Singapore) Pte Limited Singapore Goodman Funding Singapore Pte Limited Singapore MGI HK Finance Cayman Islands Goodman Developments Asia Cayman Islands Goodman China Investments Cayman Islands Macquarie Goodman China Limited Hong Kong Goodman Management Consulting (Shanghai) Co. Ltd. China Goodman Property Holdings (Jersey) Limited Jersey Goodman Northampton (Jersey) Limited Jersey GUKBPF Investment Management (Jersey) Limited Jersey Goodman Leicester (Jersey) Limited Jersey Goodman Daventry (Jersey) Limited Jersey Goodman Brackmills (Jersey) Limited Jersey Goodman Gloucester (Jersey) Limited Jersey Goodman Maltby (Jersey) Limited Jersey Goodman South Normanton (Jersey) Limited Jersey Goodman West Thurrock (Jersey) Limited Jersey Goodman Burton (Jersey) Limited Jersey Goodman Citadel (Jersey) Limited Jersey ABPP Investment Jersey Limited Jersey Goodman Corby (Jersey) Limited Jersey Goodman Coventry (Jersey) Limited Jersey Goodman Desborough (Jersey) Limited Jersey Goodman Ellesmere Port (Jersey) Limited Jersey Goodman Finance (Jersey) Limited Jersey	100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 – 100 100 60 60 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100 100 100

During the year, nil securities were issued as a result of RePS Holders’ conversion elections (2007: 11,606,556). The value of the securities issued was $nil (2007: $33.8 million). No cash was received as a result of these transactions.

Goodman Group Annual Report 2008

Keeping focused

110

111

Notes to the fi nancial statements for the year ended 30 June 2008

29. Controlled entities (cont)

29. Controlled entities (cont)
Signif cant controlled companies (cont) Country of incorporation	Interest held
	2008 % 2007 %
Goodman Logistics (Jersey) Limited Jersey Goodman Oceanview Logistics (Jersey) Limited Jersey Goodman Regent Residential (Jersey) Limited Jersey Goodman Management (Jersey) Limited Jersey Goodman Thurrock (Jersey) Limited Jersey Goodman Harthills (Jersey) Limited Jersey Goodman Edinburgh (Jersey) Limited Jersey Goodman Europe (Lux) SA Luxembourg GELF Management (Lux) Sàrl Luxembourg Goodman APP 4,5, & CdV (Lux) Sàrl Luxembourg Goodman Finance (Lux) Sàrl Luxembourg Goodman Property Opportunities (Lux) Sàrl, SICAR Luxembourg Dollhurst Limited United Kingdom Dollmist Limited United Kingdom Dollplace Limited United Kingdom Goodman Business Services (UK) Limited United Kingdom Goodman Development Management (UK) Limited United Kingdom Goodman LP (UK) Limited United Kingdom Goodman Net Services (UK) Limited United Kingdom Goodman Science Park LP (UK) Limited United Kingdom Goodman UK Limited United Kingdom Centrum West Limited United Kingdom Colworth Park (GP2) Limited United Kingdom Coventry Business Park Limited United Kingdom Coventry Business Park Management Limited United Kingdom Desborough Developments Limited United Kingdom Goodman Fund Management (UK) Limited United Kingdom Goodman Operations (UK) Limited United Kingdom Goodman Real Estate Adviser (UK) Limited United Kingdom Goodman Real Estate Developments (2003) United Kingdom Goodman Real Estate Investors UK Operations Limited United Kingdom Goodman BidCo 1 (UK) Limited United Kingdom Goodman BidCo 3 (UK) Limited United Kingdom Goodman Logistics Developments (UK) Limited United Kingdom Goodman Top Co (UK) Limited United Kingdom Goodman Hinckley (UK) Limited United Kingdom Goodman Real Estate (UK) Limited United Kingdom Goodman Operator (UK) Limited United Kingdom Goodman Real Estate (Spain) SL Spain Coral Logistics Sp. zoo Poland Industrial Development sro Slovakia Goodman Properties (Germany) GmbH Germany Ludwigstraße-West Projektentwicklungs GmbH & Co KG Germany SMH Sparkasse Mannesmann Hoffmeister Projektentwicklung GmbH & Co KG Germany	100 100 100 100 100 100 100 100 100 100 100 – 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 50 100 100 100 100 100 50 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 – 100 100 100 – 100 100 95 –

Notes to the fi nancial statements

for the year ended 30 June 2008

29. Controlled entities (cont)

29. Controlled entities (cont)
Country of establishment Signif cant controlled unit trusts	Interest held
	2008 % 2007 %
Goodman Match Trust Australia Binary No. 2 Trust Australia Carter Street Trust Australia Goodman JV Holding Trust Australia Clayton 3 Trust Australia Euston Road Subtrust Australia Highbrook Trust Australia Hill Road Trust Australia Homebush Subtrust Australia IBC Trust Australia Goodman Industrial Trust Australia MIP Trust Australia Goodman Arlington Warehousing Trust Australia Goodman Europe Development Trust Australia Goodman Hong Kong Investment Trust Australia MGA Industrial Portfolio Trust Australia Orion Road Trust Australia Penrose Trust Australia Perth Leasing Trust Australia Port Melbourne 3 Trust Australia Regal Business Park Trust Australia St. Leonards Trust Australia Thomas Trust Australia West Melbourne Trust Australia Saunders Street Trust Australia Waterloo Road Off ce Trust Australia Goodman Capital Trust Australia Cambridge Off ce Park Trust Australia BDE Unit Trust Australia Biloela Street Unit Trust Australia Goodman Jersey Holdings Trust Australia Goodman Palmers Trust Australia Goodman Perth Airport No. 1 Trust Australia Goodman Perth Airport No. 2 Trust Australia Goodman Treasury Trust Australia ABPP Investment Trust Australia CC Trust Australia Edinburgh Trust Australia Goodman Finance Australia Trust Australia Goodman PLUS Trust Australia Goodman Japan Investment Trust Australia Perth Airport Trust No. 3 Trust Australia Perth Airport Trust No. 4 Trust Australia	100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 – 100 – 100 –

Goodman Group Annual Report 2008

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112

113

Notes to the fi nancial statements for the year ended 30 June 2008

30. Interest in joint venture operations

31. Related parties

The Consolidated Entity participates equally in a joint venture operation with Austral relating to development of the Brickworks site in Sydney.

The names of Key Management Personnel of the Consolidated Entity at any time during the year are as follows:

Non-Executive Directors Executives Mr David S Clarke, AO Mr David van Aanholt Mr Ian Ferrier, AM Mr Nick Kurtis Mr Patrick Goodman Mr Michael O’Sullivan Ms Diane Grady Mr Anthony Rozic Mr John Harkness

Under the terms of the Joint Venture Agreement, the Consolidated Entity pays for infrastructure works. In addition, Austral holds a put option whereby it has the right to require the Consolidated Entity to purchase unsold lots of land. The Consolidated Entity also has the right to acquire unsold lots of land after specifi ed dates subject to the conditions as outlined in note 27.

Included in the revenue, expenses, assets and liabilities of the Consolidated Entity are the following items which represent the
Consolidated Entity’s interest in the revenue and expenses recorded by the joint venture operation, and the assets and liabilities
employed in the joint venture operation. These amounts are recorded in accordance with the accounting policies described in note 1.
Consolidated
Parent Entity
2008
$M
2007
$M
2008
$M
2007
$M
Total assets
Inventories
34.6
28.7
–
–
Other assets
15.4
30.5
–
–
Total liabilities
Trade payables
(14.1)
(29.2)
–
–
Net assets
35.9
30.0
–
–
Contribution to prof t
Sale of inventories
12.3
31.7
–
–
Cost of sales
(11.7)
(25.6)
–
–
Capitalised interest
1.8
2.3
–
–
Income tax benef t
3.4
3.0
–
–
Prof t after tax
5.8
11.4
–
–

r arc ooman
r cae uvan
Ms Diane Grady
Mr Anthony Rozic
Mr John Harkness
Mr James Hodgkinson
Ms Anne Keating
Mr Jim Sloman, OAM
Dr David Teplitzky (retired 22 November 2007)
Mr Stephen Girdis (Alternate Director for Messrs David S Clarke, AO and James Hodgkinson) (resigned 14 November 2007)
Executive Director
Mr Gregory Goodman
Mr Jeff Pulsford was a Key Management Person in 2007 until Mr Michael O’Sullivan became Chief Executive Off cer, Europe.
Key Management Personnel compensation
The Key Management Personnel compensation totals are as follows:
Consolidated
Parent Entity 1
2008
$M
2007
$M
2008
$M
2007
$M

Short-term employee benef ts
14.5
11.2
–
–
Post-employment benef ts
0.1
0.3
–
–
Equity compensation benef ts
5.1
3.2
–
–
Long-term employee benef ts
3.5
2.8
–
–

23.2
17.5
–
–

The Directors’ compensation is paid by Goodman Property Services (Aust) Pty Limited, a 100% controlled entity of the Company.

Individual Directors’ and executives’ compensation disclosures

Information regarding individual Directors’ and executives’ compensation and some equity instruments disclosures as permitted by Corporations Regulations 2M.3.03 is provided in the remuneration report section of the Directors’ report on pages 41 to 52.

Loans to Key Management Personnel and their related parties

Loans provided in respect of employee security plan arrangements where the loans are full recourse in nature or where securities have vested or were issued prior to 7 November 2002 are recorded as loans on the balance sheet of the Consolidated Entity. Details of these amounts are as follows:

of these amounts are as follows:
		Balance at	Balance at	Interest paid	Highest
		the start of	the end of	and payable	balance in
		the year	the year	in the year	the year
	Year	$	$	$	$
Executive Director
Mr Gregory Goodman	2008	1,562,351	–	41,339	1,571,576
	2007	3,238,215	1,562,351	138,320	3,310,531
Executive
Mr Michael O'Sullivan	2008	–	–	–	–
	2007	466,668	–	13,098	476,711

Goodman Group Annual Report 2008

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114

115

Notes to the fi nancial statements for the year ended 30 June 2008

31. Related parties (cont)

Loans to Key Management Personnel and their related parties (cont)

Interest on loans to employees is charged at 8.2% per annum (2007: 7.1% 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 periods of up to fi ve 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.

During the year, a loan of $219,852 was made to Mr Michael O’Sullivan. No amounts were repaid during the year and the balance of the loan outstanding at 30 June 2008 was $219,852. The loan was interest free. The interest that would have been charged on an arm’s length basis amounts to $14,215 for the period of grant to 30 June 2008. The loan has been paid in full since the end of the fi nancial year.

Options and rights over equity instruments

The movement during the reporting period in the number of securities of Goodman held under the ESAP by each Director and other Key Management Personnel under the ESAP is detailed below. No securities were forfeited during the year.

					Held at the	Vested but not
		Held at	Granted as		end of	exercised at
	Year	1 July	compensation	Exercised	the year	30 June
Executive Director
Mr Gregory Goodman	2008	3,955,990	2,000,000	–	5,955,990	651,996
	2007	1,955,990	2,000,000	–	3,955,990	–
Executives
Mr David van Aanholt	2008	3,211,329	–	(333,334)	2,877,995	325,998
	2007	2,977,995	900,000	(666,666)	3,211,329	–
Mr Anthony Rozic	2008	2,733,496	–	–	2,733,496	244,498
	2007	1,733,496	1,000,000	–	2,733,496	–
Mr Nick Kurtis	2008	3,183,496	–	(500,000)	2,683,496	244,498
	2007	2,733,496	950,000	(500,000)	3,183,496	–
Mr Michael O'Sullivan	2008	2,705,746	–	–	2,705,746	285,248
	2007	1,855,746	850,000	–	2,705,746	–

The movement during the reporting period in the number of options over ordinary securities in Goodman held, directly or benefi cially, by each Key Management Person, including their related parties, is as follows:

							Vested and
	Year	Held at 1 July	Granted as compensation	Exercised	Held at 30 June	Vested during the year	exercisable at 30 June
Executive Director
Mr Gregory Goodman	2008	–	2,700,000	–	2,700,000	–	–
	2007	–	–	–	–	–	–
Executives
Mr David van Aanholt	2008	–	1,500,000	–	1,500,000	–	–
	2007	–	–	–	–	–	–
Mr Anthony Rozic	2008	–	1,500,000	–	1,500,000	–	–
	2007	–	–	–	–	–	–
Mr Nick Kurtis	2008	–	1,500,000	–	1,500,000	–	–
	2007	–	–	–	–	–	–
Mr Michael O'Sullivan	2008	–	1,500,000	–	1,500,000	–	–
	2007	–	–	–	–	–	–
Mr Jeff Pulsford	2008	2,325,000	–	–	2,325,000	–	–
	2007	1,325,500	1,000,000	–	2,325,000	–	–

Notes to the fi nancial statements for the year ended 30 June 2008

31. Related parties (cont)

Options and rights over equity instruments (cont) Movement in ordinary securities

The movement during the reporting period in the number of ordinary securities in Goodman held, directly or benefi cially, by each Key Management Person, including their related parties, is as follows:

Year
Held at
1 July
Acquisitions

Issued under
the ESAP
Disposals
Held at
30 June

Non-Executive Directors
Mr David S Clarke, AO
2008
206,901
–
2007
206,901
–
Mr Ian Ferrier
2008
4,765
5,423
2007
1,696
3,069
Mr Patrick Goodman
2008
148,725,839
1,672,575
2007
127,198,228
19,527,611
Ms Diane Grady
2008
–
30,000
2007
–
–
Mr John Harkness
2008
5,426
16,505
2007
1,656
3,770
Mr James Hodgkinson
2008
308,817
117,815
2007
158,817
150,000
Ms Anne Keating
2008
45,180
8,403
2007
29,180
16,000
Mr Jim Sloman
2008
2,785
4,951
2007
215
2,570

–
–
206,901
–
–
206,901

–
–
10,188

–
–
4,765

2,000,000
(78,000,000)
74,398,414

2,000,000
–
148,725,839

–
–
30,000
–
–
–

–
–
21,931

–
–
5,426

–
–
426,632

–
–
308,817

–
–
53,583

–
–
45,180

–
–
7,736

–
–
2,785

Executive Director
Mr Gregory Goodman
2008
148,725,839
1,672,575
2007
127,198,228
19,527,611

2,000,000
(78,000,000)
74,398,414

2,000,000
–
148,725,839

Mr David Teplitzky, who retired on 22 November 2007, held 5,636 ordinary securities in Goodman at the start of the year.

		Held at		Issued under		Held at
	Year	1 July	Acquisitions	the ESAP	Disposals	30 June
Executives
Mr David van Aanholt	2008	7,669,835	645,748	–	(5,412,338)	2,903,245
	2007	6,643,834	134,315	900,000	(8,314)	7,669,835
Mr Anthony Rozic	2008	2,819,031	12,164	–	–	2,831,195
	2007	1,776,631	42,400	1,000,000	–	2,819,031
Mr Nick Kurtis	2008	4,813,505	–	–	(750,000)	4,063,505
	2007	3,971,105	42,400	950,000	(150,000)	4,813,505
Mr Michael O'Sullivan	2008	4,278,070	–	–	–	4,278,070
	2007	3,343,070	85,000	850,000	–	4,278,070

None of the Key Management Personnel had any interests in the Hybrid Securities (refer to note 26).

Goodman Group Annual Report 2008

Keeping focused

116

117

Notes to the fi nancial statements for the year ended 30 June 2008

31. Related parties (cont)

Transactions with Key Management Personnel and their related entities

(a) Macquarie Group Limited (MQG)

MQG was considered to be a related party of GMG until September 2007. During the year ended 30 June 2007, a total of $5,434,808 was paid to MQG in relation to various services provided.

(b) Goodman Holdings Group

Mr Gregory Goodman and Mr Patrick Goodman are directors of and shareholders in Goodman Holdings Group. During the year, the Company was reimbursed by Goodman Holdings Group for a portion of offi ce rental costs to the value of $ 317,998 (2007: $305,505).

During the year, the Consolidated Entity reimbursed travel costs totalling $271,208 (2007: $242,965) to a wholly-owned subsidiary of 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 Chifl ey Business Park, Mentone, Vic. The Consolidated Entity has agreed with MAC to pay all infrastructure costs incurred in developing Chifl ey Business Park. Unpaid costs, which totalled $4.0 million at 30 June 2008 (2007: $6.7 million), are to be reimbursed by MAC progressively as the site is developed and leased and rental income is being derived by MAC.

(c) Poole’s Rock Wines Pty Limited

On 15 January 2003, Poole’s Rock Wines Pty Limited (a director related entity of Mr David Clarke) entered into a six year lease at CityWest Offi ce Park, Pyrmont, NSW with GIT. Rent and outgoings for the year amounted to $ 81,360 (2007: $95,743).

Notes to the fi nancial statements for the year ended 30 June 2008

32. Other related party disclosures

The Consolidated Entity has a related party relationship with its controlled entities (refer to note 29), associates and joint venture entities (refer to note 16) and its Directors and executives (refer to note 31).

(a) Transactions with controlled entities

Transactions between the Company and its controlled entities during the years ended 30 June 2008 and 2007 included the following:

+ payment of dividends to the Company;

- loans advanced by/to the Company (including amounts arising under the tax funding agreement);
- recharge of expenses by the Company to its controlled entities;
- interest charged by/to the Company; and
purchase of units from GIT pursuant to the operation of the ESAP.

The above transactions were made on the terms and conditions set out below.

Amounts receivable from and payable to entities in the wholly-owned group at balance date are as follows:

	Note	2008 $M	2007 $M
Receivables
Loans to controlled entities – current1	12	675.5	–
Loans to controlled entities – non-current2	12	102.3	829.5
Payables
Loans from controlled entities – current3	20	148.5	–
Loans from controlled entities – non-current	20	–	568.9
Interest bearing liabilities
Loans from controlled entities – current4	21	1,016.0	–
Loans from controlled entities – non-current	21	–	655.2

Loans are unsecured and repayable on demand. Included in the loan is an amount of $37.7 million that bears interest at Goodman’s weighted average cost of debt. 2. Loans are unsecured, non-interest bearing and repayable after 12 months. The fair values of loans are based on cash fl ows discounted using a rate based on the borrowing rate of 9.0% per annum (2007: 9.0% per annum).
Loans are unsecured, non-interest bearing and repayable on demand.
Loans are unsecured and bear interest at Goodman’s weighted average cost of debt and are repayable on demand.

The Company is the head entity in the tax consolidated group comprising all Australian wholly-owned subsidiaries of the Company. The head entity recognises all of the current 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 receivable and payable from entities in the wholly-owned group at balance date are disclosed in notes 12 and 20.

Goodman Group Annual Report 2008

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118

119

Notes to the fi nancial statements for the year ended 30 June 2008

32. Other related party disclosures (cont)

(b) Transactions with associates and JVEs

		Sales of		Sales of
	investment		controlled		Management
	properties			entities	services	income
	2008	2007	2008	2007	2008	2007
	$M	$M	$M	$M	$M	$M
GMT	10.6	32.4	89.5	–	21.0	19.4
GAIF	433.8	333.8	638.9	39.5	76.8	160.8
ABPP	–	–	–	–	68.0	–
GELF	160.1	–	65.1	161.1	53.3	42.4
UK Active Fund	–	–	–	–	2.7	3.0
MGA	–	–	–	–	–	0.2
Colworth	–	–	–	–	0.5	0.2
BL Goodman LLP	–	–	–	–	0.5	–
Fisher Highbrook	–	–	–	–	–	0.9

Amounts due from associates and JVEs at 30 June 2008 are as follows:

	Trade and other	Trade and other
	receivables		Loans	provided
	2008	2007	2008	2007
	$M	$M	$M	$M
GMT	1.0	0.3	–	–
GAIF	15.3	–	–	(0.5)
ABPP	33.3	–	–	–
GELF	89.3	–	–	–
MGA	–	0.1	–	2.3
BL Goodman LLP	–	–	18.6	–
Pochin Rosemound (Deeside) Ltd	–	–	7.0	–
Gateway LLP	–	–	0.2	–
BGA1 Pty Ltd	–	–	–	32.9
Sino Cayman No. 1 Ltd	–	–	45.0	–
Sino Cayman No. 2 Ltd	–	–	51.8	–

Notes to the fi nancial statements

for the year ended 30 June 2008

33. Employee benefi ts

33. Employee benef ts
	Consolidated		Parent Entity
	2008	2007	2008	2007
Aggregate liability for employee benef ts including on-costs	$M	$M	$M	$M
Current
– Annual leave	4.0	2.5	–	–
– Long service leave	0.3	–	–	–
– Other employee benef ts provision	46.5	10.6	–	–
	50.8	13.1	–	–
Non-current – Other employee benef ts provision – Def ned benef t pension obligations (a) – Long service leave	4.4 3.3 1.2	7.3 14.4 1.2	– – –	– – –
	8.9	22.9	–	–

(a) Liability for defi ned benefi t obligation

During the current and prior year, the Consolidated Entity operated two United Kingdom defi ned benefi t funds of the “fi nal salary” type, both of which are closed to new entrants. Employer contributions payable over the annual period after the balance date are expected to remain at the same annual rates payable in the current period.

During the current year, the scheme rules were amended to remove the link between future salary increases and the fi nal pension at retirement. This has resulted in a negative past service cost. In addition, the pensionable benefi ts have been further amended to restrict pension increases after retirement to a maximum 2.5% per annum.

The above amendments have reduced the expected cost of the benefi ts building up over the period. The estimated cost is set at the start of the year and the reduction in the expense cost is shown as a curtailment.

Loans provided to associates and JVEs are provided at arm’s length interest rates and are repayable on demand. All other amounts due are receivable within 30 days. Interest income of $2.0 million (2007: $nil) on a loan to Sino Cayman No. 1 Ltd and Sino Cayman No. 2 Ltd was recognised in the current year.

Goodman Group Annual Report 2008

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120

121

Notes to the fi nancial statements for the year ended 30 June 2008

33. Employee benefi ts (cont)

(a) Liability for defi ned benefi t obligation (cont)

The pension expense charged to the income statement does not include actuarial gains or losses, which are recognised in the period in which they occur directly in equity.

period in which they occur directly in equity.
	2008	2007
	$M	$M
Change in benef t obligation
Benef t obligation at the beginning of the year	69.5	67.5
Current service cost	2.7	2.7
Interest cost	3.7	3.4
Past service cost	(10.6)	–
Member contributions	0.3	0.2
Actuarial (gains)/losses	(0.7)	0.5
Curtailments	(0.8)	–
Settlements	(3.3)	–
Benef ts paid	(0.4)	(1.0)
Effect of foreign currency translation	(8.0)	(3.8)
Benef t obligation at the end of the year	52.4	69.5
Analysis of def ned benef t obligation Funds that are wholly or partly funded Change in fund assets Fair value of fund assets at the beginning of the year Expected return on fund assets Actuarial losses Employer contributions Member contributions Benef ts paid Settlements Effect of foreign currency translation	52.4 55.1 3.2 (2.7) 3.8 0.3 (0.4) (3.3) (6.9)	69.5 56.3 2.5 (2.0) 2.2 0.2 (1.0) – (3.1)
Fair value of fund assets at the end of the year	49.1	55.1
Funding def cit at the end of the year	3.3	14.4
Net liability recognised at the end of the year	3.3	14.4
Components of pension cost Current service cost Interest cost Expected return on fund assets Past service cost Effects of curtailments	2.6 3.7 (3.2) (10.6) (0.8)	2.7 3.4 (3.4) – –
Total (benef t)/cost recognised in income statement	(8.3)	2.7
Actuarial losses recognised immediately in equity Less: deferred tax expense	(2.0) –	(4.0) –
Net actuarial losses recognised immediately in equity	(2.0)	(4.0)

33. Employee benefi ts (cont)

(a) Liability for defi ned benefi t obligation (cont)

Fund assets

The actual return on fund assets during the year was $0.5 million (2007: $0.6 million). The asset allocation at the end of the year was as follows:

	2008	2007
	%	%
Equities	57.0	65.0
Bonds	32.0	35.0
Property	10.0	–
Cash	1.0	–
	100.0	100.0

To develop the expected long-term rate of return on assets assumption, Goodman considered the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

		2008	2007
		% pa	% pa
Weighted average assumptions used to determine benef t obligations
Discount rate		6.50	5.5
Rate of compensation increase		–	4.75
Weighted average assumptions used to determine net pension cost
Discount rate		6.50	5.25
Expected long-term return on fund assets		6.55	6.13
Rate of benef t increase		3.75	2.75
Rate of compensation increase		–	4.75
Historical information	2008	2007	2006
Benef t obligation at end of year ($M)	(52.4)	(69.5)	(67.5)
Fair value of fund assets at end of year ($M)	49.1	55.1	56.3
Funding def cit ($M)	(3.3)	(14.4)	(11.2)
Difference between expected and actual return on fund assets
– Amount ($M)	(2.5)	(2.8)	(1.0)
– Percentage of fund assets (%)	(5)	(5)	(2)
Experience losses and (gains) on fund liabilities
– Amount ($M)	(0.6)	0.4	–
– Percentage of fund liabilities (%)	1	1	–

Goodman Group Annual Report 2008

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122

123

Notes to the fi nancial statements for the year ended 30 June 2008

33. Employee benefi ts (cont)

(b) Share based payments

The Company provides equity based remuneration through the issue of options over securities under the Executive Option Plan (EOP). In prior fi nancial years, Goodman offered Australian based employees participation in the ESAP, but this policy was changed following the implementation by the Australian Government of regulatory charges that facilitated Australian employees of stapled groups being offered options. Details of equity based remuneration are as follows:

(i) Executive option plan

The EOP was re-approved at the Annual General Meeting on 16 November 2006.

Non-Executive Directors are not entitled to participate in the EOP and no options over stapled securities have been issued to NonExecutive Directors during or since the end of the year.

Under the terms of the EOP and decisions made by the Board in accordance with the plan, issues of options to employees are subject to the following broad terms:

- the ability to exercise options will be conditional on the Consolidated Entity achieving return on equity hurdles of at least 12% per annum aggregated over the vesting period and continued employment (subject to special circumstances);
- options lapse on the earlier of approximately six years from the offer or the earlier termination of the employee’s employment (unless such termination is due to special circumstances, e.g. illness and redundancy);
- options vest in three equal tranches from the third, fourth and fi fth anniversaries of the offer; and
- the exercise price of options will be based on the volume weighted average market price of securities traded on the ASX during the 10 trading days immediately prior to the date options are offered to nominated employees.

In relation to future offers under the EOP, the vesting profi le of the options will alter to two, three and four years, with the lapse date of the options being on their fi fth anniversary.

(ii) Employee Securities Acquisition Plan

During the year a grant of securities under the ESAP was made to the Group Chief Executive Offi cer. No other employees were granted securities under the ESAP during or since the end of the year.

The broad terms of the grant under the ESAP were as follows:

the market price will be the 10 day volume weighted average price at which securities are traded on the ASX prior to the date of the offer;
securities are restricted for three years, with one third of the securities becoming unrestricted each year at the end of years three, four and fi ve, subject to restrictions;
- the ability to exercise the rights over the securities will be conditional on the Consolidated Entity achieving return on equity hurdles of at least 12% per annum over the restriction period and continued employment (subject to special circumstances);
- loans to purchase securities will be limited recourse and interest bearing at 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.

The weighted average exercise prices and number of securities issued under the ESAP are as follows:

	Weighted average	Weighted average	Number of	Number of
	exercise price		securities
	2008 $	2007 $	2008	2007
Outstanding at the beginning of the year	5.37	4.17	43,379,700	31,469,546
Exercised during the year	3.36	2.73	(3,730,391)	(4,525,346)
Granted during the year	7.23	6.93	2,000,000	16,435,500
Outstanding at the end of the year	5.63	5.37	41,649,309	43,379,700
Exercisable at the end of the year	3.83	3.10	4,692,271	766,665

Notes to the fi nancial statements

for the year ended 30 June 2008

33. Employee benefi ts (cont)

(b) Share based payments (cont)

The weighted average exercise prices and number of options are as follows:

			Weighted average exercise price	Weighted average exercise price	Number of options
			2008 $	2007 $	2008 2007
Outstanding at the beginning of the year			6.07	4.32	65,917,114 25,753,947
Granted during the year			6.36	7.01	40,788,000 46,282,500
Exercised during the year			3.60	3.34	(1,648,334) (593,333)
Forfeited during the year			5.95	6.02	(2,244,501) (5,526,000)
Outstanding at the end of the year			6.23	6.07	102,812,279 65,917,114
Exercisable at the end of the year			3.99	2.84	1,367,816 166,667
The options outstanding at 30 June 2008 have an exercise price in the range of $2.59 to $7.23 (2007: $2.59 to $7.23).
The fair value of services received in return for options and securities granted under the EOP and ESAP respectively are measured by reference to the fair value of options and securities granted. The estimate of the fair value of the services received is measured based on a combination of Monte Carlo simulations and numerical option valuation in a lattice based framework. The methodology
takes into account the exercise price, the term of the option, the security price at grant date, expected volatility of the security, the
expected dividend yield and the risk free rate of interest for	the term of the option.
The model inputs for options granted during the year ended 30 June 2008 include the following:
	Cash settled options issued on			Options issued on 19 Oct 07 and Securities issued under the ESAP
		19	Oct 07	26 Nov 07 on 26 Nov 07
Fair value at measurement date ($)			0.77		0.77 0.54
Security price ($)			6.36		6.36 6.25
Exercise price ($)			6.36		6.36 7.23
Expected volatility (%)			23.97		23.97 23.97
Option life (years)			5		5 5
Distribution/dividend yield per annum (%)			5.77		5.77 5.77
Risk free rate of interest per annum (%)			6.93		6.93 6.93
Share based payments included under employee expenses are as follows:
			Consolidated		Parent Entity
			2008	2007	2008 2007
			$M	$M	$M $M
Share based payments – equity settled			26.7	16.2	– –

The outstanding securities under the ESAP at 30 June 2008 have an exercise price in the range of $2.59 to $7.23 (2007: $2.59 to $7.23).

Goodman Group Annual Report 2008

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125

Notes to the fi nancial statements for the year ended 30 June 2008

34. Financial risk management

Overview

The Directors have ultimate responsibility for the Consolidated Entity’s capital management and fi nancial risk management processes and have established policies, documented in the Consolidated Entity’s fi nancial risk management (FRM) policy document, to ensure both the effi cient use of capital and the appropriate management of the exposure to fi nancial risk.

Management has established a Finance, Treasury, IT and Tax Committee, which is the primary forum where strategic capital and fi nancial management requirements are discussed and decisions made in accordance with FRM policy. The Committee meets at least once a month.

Group Treasury is responsible for preparing the following reports for consideration at each committee meeting:

- analysis of capital allocation and funding requirements against the Consolidated Entity’s gearing constraint;
- analysis of the Consolidated Entity’s liquidity and funding position;
- analysis of the Consolidated Entity’s debt maturity profi le;
- a review of all the hedge exposures and the completed hedges;
compliance of the core and discretionary FRM strategies with Goodman’s policy recommendations for future hedging strategies; and
- full mark to market of all derivative positions.

Capital management

The Consolidated Entity’s main capital management objectives are to maintain a strong capital base and provide funds for capital expenditure and investment opportunities as they arise. This is achieved through an appropriate mix of debt, equity and hybrid instruments.

The Consolidated Entity is able to alter the capital mix, subject to Board approval, by issuing new stapled securities or hybrid securities, turning on the DRP and/or electing to have the DRP underwritten and recycling assets to its managed funds or third parties to reduce borrowings. Equity should be fully invested to ensure that a maximum return on the capital is achieved.

Goodman monitors capital on the basis of both the gearing ratio and the weighted average cost of debt. Gearing is reviewed at both a Consolidated Entity basis and on a look-through basis i.e. assuming proportional consolidation for certain of the Consolidated Entity’s associates, joint venture entities and available for sale fi nancial assets. The gearing ratio for the Consolidated Entity is calculated as the total interest bearing liabilities less cash as a percentage of the total assets less cash.

During 2008, Goodman’s strategy has been to maintain its gearing levels and interest cover in line with its desired investment grade ratings (BBB+/Baa1 Standard & Poor’s/Moody’s) and Board approved policy bands.

Financial risk management

Goodman’s key fi nancial risks are market risk (including foreign currency risk, interest rate risk and price risk), liquidity risk and credit risk.

Notes to the fi nancial statements

for the year ended 30 June 2008

34. Financial risk management (cont)

(a) Market risk Interest rate risk

Goodman’s interest rate risk primarily arises from long-term borrowings.

The Consolidated Entity’s policy is to ensure that the risk associated with its exposure to changes in interest rates on borrowings is fi xed, in accordance with its FRM policy.

The Consolidated Entity enters into interest rate swaps to manage cash fl ow risks associated with the interest rates on borrowings that are fl oating. The interest rate swap contracts are for 90 day intervals and involve quarterly payments or receipts of the net amount of interest. Details of the outstanding interest rate swap contracts and fi xed rate debt are as follows:

		At at 30 June 2008	At at 30 June 2008				As at 30 June 2007	As at 30 June 2007
	Interest rate swaps		Fixed rate debt			Interest rate swaps		Fixed	rate debt
Interest rate swaps and f xed rate debt contracted as at reporting date and outstanding at:	Notional principal currency 1 M	Average rate pa 2 %	Principal currency M	Average rate pa 2 %		Notional principal currency 1 M	Average rate pa 2 %	Principal currency M	Average rate pa 2 %
Euros receivable/payable
30 Jun 2007	–	–	–		–	(390.0)	3.76	–	–
30 Jun 2008	(517.3)	3.89	–		–	(390.0)	3.76	–	–
30 Jun 2009	(653.2)	3.96	–		–	(382.9)	3.78	–	–
30 Jun 2010	(590.0)	4.11	–		–	(320.0)	4.02	–	–
30 Jun 2011	(487.2)	4.09	–		–	(315.9)	4.03	–	–
30 Jun 2012	(353.2)	4.07	–		–	(270.0)	4.06	–	–
30 Jun 2013	(291.8)	4.05	–		–	(258.5)	4.06	–	–
British pounds sterling receivable/payable
30 Jun 2007	–	–	–		–	(283.4)	4.72	–	–
30 Jun 2008	(459.0)	4.95	(250.0)	9.75		(283.4)	4.72	–	–
30 Jun 2009	(463.2)	4.97	(250.0)	9.75		(233.2)	4.76	–	–
30 Jun 2010	(460.0)	4.98	(250.0)	9.75		(230.0)	4.76	–	–
30 Jun 2011	(433.0)	5.00	(250.0)	9.75		(203.0)	4.78	–	–
30 Jun 2012	(345.0)	5.07	(250.0)	9.75		(115.0)	4.82	–	–
30 Jun 2013	(328.7)	5.09	(250.0)	9.75		(98.7)	4.86	–	–
Hong Kong dollars receivable/payable
30 Jun 2007	–	–	–		–	(800.0)	4.61	–	–
30 Jun 2008	(1,294.0)	4.35	–		–	(800.0)	4.61	–	–
30 Jun 2009	(1,600.0)	4.28	–		–	(800.0)	4.65	–	–
30 Jun 2010	(1,530.4)	4.28	–		–	(730.4)	4.58	–	–
30 Jun 2011	(871.2)	4.25	–		–	(386.8)	4.51	–	–
30 Jun 2012	(345.5)	4.30	–		–	(145.5)	4.55	–	–
30 Jun 2013	(124.7)	4.25	–		–	(30.4)	4.55	–	–
New Zealand dollars receivable/payable
30 Jun 2007	–	–	–		–	(200.0)	6.85	–	–
30 Jun 2008	(188.1)	7.08	–		–	(200.0)	6.85	–	–
30 Jun 2009	(253.3)	7.10	–		–	(193.3)	6.73	–	–
30 Jun 2010	(250.0)	7.06	–		–	(190.0)	6.67	–	–
30 Jun 2011	(250.0)	7.06	–		–	(135.9)	6.61	–	–
30 Jun 2012	(250.0)	7.06	–		–	(110.0)	6.56	–	–
30 Jun 2013	(250.0)	7.06	–		–	(110.0)	6.56	–	–

Goodman Group Annual Report 2008

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127

Notes to the fi nancial statements for the year ended 30 June 2008

34. Financial risk management (cont)

(a) Market risk (cont) Interest rate risk (cont)

(a) Market risk (cont) Interest rate risk (cont)
		At at 30 June 2008				As at 30 June 2007
	Interest rate swaps		Fixed	rate debt	Interest rate swaps		Fixed	rate debt
Interest rate swaps and	Notional				Notional
f xed rate debt contracted	principal	Average	Principal	Average	principal	Average	Principal	Average
as at reporting date	currency 1	rate pa 2	currency	rate pa 2	currency 1	rate pa 2	currency	rate pa 2
and outstanding at:	M	%	M	%	M	%	M	%
Singapore dollars receivable/payable
30 Jun 2007	–	–	–	–	(135.0)	3.58	–	–
30 Jun 2008	–	–	–	–	(135.0)	3.58	–	–
30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012	– – – –	– – – –	– – – –	– – – –	(135.0) (135.0) (125.1) (79.1)	3.58 3.58 3.57 3.54	– – – –	– – – –
30 Jun 2013	–	–	–	–	(40.0)	3.90	–	–
Japanese yen receivable/payable
30 Jun 2007 30 Jun 2008	– (15,785.5)	– 1.51	– –	– –	(9,533.3) (13,000.0)	1.57 1.57	– –	– –
30 Jun 2009 30 Jun 2010	(17,000.0) (17,000.0)	1.49 1.49	– –	– –	(13,000.0) (13,000.0)	1.57 1.57	– –	– –
30 Jun 2011	(16,161.6)	1.51	–	–	(13,000.0)	1.57	–	–
30 Jun 2012	(14,808.7)	1.53	–	–	(12,459.0)	1.58	–	–
30 Jun 2013	(4,000.0)	1.69	–	–	(4,000.0)	1.69	–	–
Australian dollars receivable/payable 30 Jun 2007 –		–	–	–	–	–	–	–
30 Jun 2008	–	–	–	–	–	–	–	–
30 Jun 2009	–	–	–	–	–	–	–	–
30 Jun 2010	–	–	–	–	–	–	–	–
30 Jun 2011	–	–	–	–	–	–	–	–
30 Jun 2012	–	–	–	–	–	–	–	–
30 Jun 2013	–	–	–	–	–	–	–	–

Notional principal amount as at 30 June 2008 and 30 June 2007 represents the actual amounts included in open swaps at those dates. For each succeeding year, the amount is the weighted average of principal balances included in hedge instruments over the course of the year.
Average rate represents the weighted average hedge rate by region weighted by quantum of the principal.

At 30 June 2008, if interest rates on borrowings had been 5% (2007: 5%) higher/lower, with all other variables held constant, the Consolidated Entity profi t attributable to Securityholders for the year would have been A$0.1 million lower/higher (2007: A$6.0 million).

At 30 June 2008, if interest rates on borrowings had been 1% (2007: 1%) higher/lower, with all other variables held constant, the Parent Entity profi t for the year would have been A$9.8 million lower/higher (2007: A$5.0 million).

Foreign exchange risk

Goodman is exposed to foreign exchange risk through its investments in Europe, the United Kingdom, Hong Kong, New Zealand, China and Japan. Foreign exchange risk represents the loss that would be recognised from fl uctuations in currency prices against the Australian dollar as a result of future commercial transactions, recognised assets and liabilities and principally, net investments in foreign operations.

Goodman’s investment in foreign denominated investments is achieved by borrowing in the same functional currency as the investments to form a natural economic hedge against any foreign currency fl uctuations. Further drawdowns or repayments of debt are made to maintain this hedge. Derivatives such as cross currency swaps are used on a case-by-case basis to hedge funds borrowed in different currencies. Additionally, the Consolidated Entity enters into forward foreign exchange contracts to hedge a proportion of the income received/receivable from its investments denominated in overseas currencies.

The Consolidated Entity’s policy is to ensure the net exposure to overseas currency is hedged, in accordance with the FRM policy. In managing foreign currency risk, the Consolidated Entity aims to reduce the impact of short-term fl uctuations on Goodman’s earnings. Over the long term, however, permanent changes in foreign exchange will have an impact on profi t.

Notes to the fi nancial statements for the year ended 30 June 2008

34. Financial risk management (cont)

(a) Market risk (cont)

Details of the Consolidated Entity’s forward exchange contracts at 30 June 2008 are as follows:

	Weighted	average	Amounts	Amounts	Amounts	Amounts
	exchange rate		receivable		payable
					2008	2007
Foreign exchange derivatives contracted	2008	2007	2008	2007	Currency	Currency
as at reporting date and outstanding at:			A$M	A$M	M	M
Euros
Contracts to buy Australian dollars and sell euros
30 Jun 2007	–	–	–	–	–	–
30 Jun 2008	0.6065	–	46.3	–	(28.1)	–
30 Jun 2009	0.5832	–	41.3	–	(24.0)	–
30 Jun 2010	0.5667	–	42.5	–	(24.0)	–
30 Jun 2011	0.5551	–	17.2	–	(9.5)	–
30 Jun 2012	0.5421	–	17.6	–	(9.5)	–
British pounds sterling
Contracts to buy Australian dollars and sell British pounds sterling
30 Jun 2007	–	0.4150	–	24.1	–	(10.0)
30 Jun 2008	0.4158	0.4150	47.4	24.1	(19.7)	(10.0)
30 Jun 2009	0.4150	0.4150	24.1	24.1	(10.0)	(10.0)
30 Jun 2010	0.4150	0.4150	24.1	24.1	(10.0)	(10.0)
30 Jun 2011	0.4150	0.4150	12.0	12.0	(5.0)	(5.0)
Hong Kong dollars
Contracts to buy Australian dollars and sell Hong Kong dollars
30 Jun 2007	–	5.6200	–	1.1	–	(6.0)
30 Jun 2008	6.3831	5.6200	3.2	1.1	(20.1)	(6.0)
30 Jun 2009	6.1394	5.6200	2.5	1.1	(15.1)	(6.0)
30 Jun 2010	6.3403	5.6200	1.6	1.1	(10.0)	(6.0)
Singapore dollars
Contracts to buy Australian dollars and sell Singapore dollars
30 Jun 2007	–	1.1554	–	3.2	–	(3.8)
30 Jun 2008	1.2231	1.1542	5.9	3.3	(7.2)	(3.8)
30 Jun 2009	–	1.1130	–	1.9	–	(2.1)
30 Jun 2010	–	1.1130	–	1.9	–	(2.1)
30 Jun 2011	–	1.1130	–	1.0	–	(1.1)
30 Jun 2012	–	1.1130	–	1.0	–	(1.1)
30 Jun 2013	–	1.1130	–	1.0	–	(1.1)
New Zealand dollars
Contracts to buy Australian dollars and sell New Zealand dollars
30 Jun 2007	–	1.1322	–	1.4	–	(1.6)
30 Jun 2008	1.1248	1.1322	25.3	11.0	(28.5)	(12.3)
30 Jun 2009	1.1519	1.1321	7.7	0.8	(8.9)	(0.9)
30 Jun 2010	1.1633	1.1321	7.7	0.8	(8.9)	(0.9)
30 Jun 2011	1.1720	1.1321	3.8	0.4	(4.5)	(0.4)
30 Jun 2012	1.1809	1.1321	3.8	0.4	(4.5)	(0.4)

Goodman Group Annual Report 2008

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129

Notes to the fi nancial statements for the year ended 30 June 2008

34. Financial risk management (cont)

(a) Market risk (cont) Capital hedges

Additionally, the Consolidated Entity uses cross currency swaps as follows:

	Weighted average exchange rate	Weighted average exchange rate	Weighted average exchange rate	Amounts receivable	Amounts receivable	Amounts payable	Amounts payable
Cross currency derivatives contracted as	2008	2007		2008	2007	2008 Currency	2007 Currency
at reporting date and outstanding at:				A$M	A$M	M	M
Australian dollars receivable/euros payable
30 Jun 2007	–	0.6090		–	492.6	–	(300.0)
30 Jun 2008	0.6090	0.6090		492.6	492.6	(300.0)	(300.0)
30 Jun 2009	0.6090	0.6090		492.6	492.6	(300.0)	(300.0)
30 Jun 2010	–		–	–	–	–	–
30 Jun 2011	–		–	–	–	–	–
30 Jun 2012	–		–	–	–	–	–
30 Jun 2013	–		–	–	–	–	–
Australian dollars receivable/Hong Kong dollars payable
30 Jun 2007	–		–	–	–	–	–
30 Jun 2008	6.7145		–	148.9	–	(1,000.0)	–
30 Jun 2009	6.7145		–	148.9	–	(1,000.0)	–
30 Jun 2010	6.7145		–	148.9	–	(1,000.0)	–
30 Jun 2011	6.7145		–	148.9	–	(1,000.0)	–
30 Jun 2012	6.7145		–	148.9	–	(1,000.0)	–
30 Jun 2013 6.7145 Australian dollars receivable/Japanese yen payable			–	148.9	–	(1,000.0)	–
30 Jun 2007	–		–	–	–	–	–
30 Jun 2008	97.4500		–	44.5	–	(4,340.0)	–
30 Jun 2009	97.4500		–	44.5	–	(4,340.0)	–
30 Jun 2010	97.4500		–	44.5	–	(4,340.0)	–
30 Jun 2011	97.4500		–	44.5	–	(4,340.0)	–
30 Jun 2012	97.4500		–	44.5	–	(4,340.0)	–
30 Jun 2013	97.4500		–	44.5	–	(4,340.0)	–
Australian dollars receivable/New Zealand dollars payable
30 Jun 2007	–		–	–	–	–	–
30 Jun 2008	1.1328		–	176.6	–	(200.0)	–
30 Jun 2009	1.1328		–	176.6	–	(200.0)	–
30 Jun 2010	1.1328		–	176.6	–	(200.0)	–
30 Jun 2011	1.1328		–	176.6	–	(200.0)	–
30 Jun 2012	1.1328		–	176.6	–	(200.0)	–
30 Jun 2013	1.1328		–	176.6	–	(200.0)	–

Notes to the fi nancial statements for the year ended 30 June 2008

34. Financial risk management (cont)

(a) Market risk (cont)

At 30 June 2008, if the Australian dollar has weakened/strengthened by 5% (2007: 5%), with all other variables held constant, the Consolidated Entity profi t attributable to Securityholders would have been A$14.8 million lower/higher (2007: A$7.9 million). This relatively low impact on profi t in both the current and prior year is a result of the Consolidated Entity’s policy of ensuring that investments in foreign controlled entities are hedged in accordance with the FRM policy.

At 30 June 2008, if the Australian dollar has weakened/strengthened by 5% (2007: 5%), with all other variables held constant, the Parent Entity profi t for the year would have been A$0.2 million higher/lower (2007: A$1.0 million lower/higher).

Price risk

Goodman is exposed to equity securities price risk because of investments held by the Consolidated Entity classifi ed on the balance sheet as available for sale. The Consolidated Entity is not exposed to commodity price risk.

Goodman’s investments in equity of other entities that are publicly traded and classifi ed as available for sale are listed on the ASX.

A 5% (2007: 5%) movement in the listed security price as at 30 June 2008, would impact equity attributable to Securityholders by A$8.9 million (2007: $0.6 million). Any decrease in the listed security price would also impact the profi t attributable to Securityholders, if the decrease was considered to be an impairment of the asset. The analysis is based on the assumption that all other variables are held constant. There would be no impact on the results of the Parent Entity.

(b) Liquidity risk

Liquidity risk is the risk that the Consolidated Entity will not be able to meet its fi nancial obligations as they fall due. The Consolidated Entity’s objective is to maintain suffi cient liquidity resources to maintain operations, meet its fi nancial obligations and liabilities, pay distributions and provide funds for capital expenditure and investment opportunities. Management seeks to achieve these objectives through:

preparation of regular forecast cash fl ows to understand the application and use of funds; and + identifi cation of future funding, including new debt facilities, new issues of securities or the DRP.

Group Treasury is responsible for reporting details of all debt maturities for all loans across the regions to the Finance, Treasury, IT and Tax Committee and the Board at its regular meetings. Group Treasury is also responsible for reporting to the Finance, Treasury, IT and Tax Committee and the Board all the information and term sheets relating to any fi nancing arrangements being contemplated or negotiated by the Consolidated Entity for their review and approval.

The Consolidated Entity seeks to spread its debt maturities such that the total debt maturing in a single fi nancial year does not exceed Board approved policy levels. The contractual maturities of fi nancial liabilities are set out below:

Contractual maturities of fi nancial liabilities

				Consolidated	Consolidated
	Carrying	Up to 12					More than 5
	amount	months	1-2 years	2-3 years	3-4 years	4-5 years	years
30 June 2008	A$M	A$M	A$M	A$M	A$M	A$M	A$M
Non-derivative f nancial liabilities
Payables	428.7	424.0	4.7	–	–	–	–
Bank loans – unsecured	3,564.4	491.3	379.0	504.1	967.5	1,222.5	–
Bank loans – secured	150.3	20.8	129.5	–	–	–	–
Euro Medium Term Notes – unsecured 514.4		–	–	–	–	–	514.4
Total non-derivative f nancial liabilities 4,657.8		936.1	513.2	504.1	967.5	1,222.5	514.4
Derivative f nancial liabilities Net settled (interest rate swaps) Gross settled: Inf ow Outf ow	(87.6) (95.9) 82.5	(25.3) (25.8) 20.0	(21.5) (22.6) 18.8	(17.6) (18.7) 16.6	(11.8) (20.1) 18.5	(7.8) (8.7) 8.6	(3.6) – –
Total derivative f nancial liabilities	(101.0)	(31.1)	(25.3)	(19.7)	(13.4)	(7.9)	(3.6)

Goodman Group Annual Report 2008

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130

131

Notes to the fi nancial statements for the year ended 30 June 2008

34. Financial risk management (cont)

(b) Liquidity risk (cont) Contractual maturities of fi nancial liabilities

				Consolidated	Consolidated
	Carrying	Up to 12					More than 5
	amount	months	1-2 years	2-3 years	3-4 years	4-5 years	years
30 June 2007	A$M	A$M	A$M	A$M	A$M	A$M	A$M
Non-derivative f nancial liabilities
Payables	429.9	324.6	105.3	–	–	–	–
Bank loans – unsecured	3,002.5	1,595.1	451.7	384.0	192.4	379.3	–
Bank loans – secured	258.8	81.2	22.1	155.5	–	–	–
Other loans – CMBS Total non-derivative f nancial liabilities	600.3 4,291.5	600.3 2,601.2	– 579.1	– 539.5	– 192.4	– 379.3	– –
Derivative f nancial liabilities Net settled (interest rate swaps) Gross settled: Inf ow Outf ow	(74.4) (42.3) 25.8	(14.0) (35.9) 22.0	(14.5) (6.4) 3.8	(16.5) – –	(12.9) – –	(6.5) – –	(10.0) – –
Total derivative f nancial liabilities	(90.9)	(27.9)	(17.1)	(16.5)	(12.9)	(6.5)	(10.0)

The Parent Entity’s fi nancial liabilities all mature in less than 12 months except for other payables of $0.8 million (2007: $nil).

(c) Credit risk

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

The maximum exposure to credit risk on fi nancial assets, excluding investments, of the Consolidated Entity which have been recognised on the balance sheet, is the carrying amount (refer to note 12).

The Consolidated Entity has a policy of assessing the creditworthiness of all potential customers and is not materially exposed to any one customer. The Consolidated Entity evaluates all customers’ perceived credit risk 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 fi nancial institutions in relation to cash and short-term borrowings. Concentration of credit risk exists from time to time on receivables for the proceeds of disposals of investment properties. The credit risk is minimised as legal title is transferred only upon receipt of proceeds for the sale of those assets.

The credit risks associated with fi nancial instruments are managed by:

transacting with multiple derivatives counterparties that have a long-term credit rating of at least AA- (or its equivalent); and + utilising ISDA agreements with derivative counterparties in order to limit exposure to credit risk through netting of amounts receivable and amounts payable to individual counterparties.

Notes to the fi nancial statements for the year ended 30 June 2008

34. Financial risk management (cont)

(d) Fair values of fi nancial instruments

The fair values of fi nancial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:

		Carrying		Carrying
		amount	Fair value	amount	Fair value
		2008	2008	2007	2007
Consolidated	Note	$M	$M	$M	$M
Financial assets
Cash	28(a)	639.2	639.2	81.8	81.8
Receivables	12	78.4	78.4
– Interest rate derivatives		33.4	33.4	65.6	65.6
– Cross currency swaps		10.8	10.8	15.9	15.9
– Foreign exchange contracts		–	–	3.4	3.4
– Receivables from the ESAP		4.7	4.7	7.7	7.7
– Amounts due from/loans to related parties		344.5	344.5	68.7	68.7
Other f nancial assets	17
– Investments in listed securities		177.2	177.2	202.1	202.1
– Investments in other unlisted securities		61.5	61.5	204.9	204.9
		1,349.7	1,349.7	650.1	650.1
Financial liabilities Payables – Trade, other payables and deferred settlements Interest bearing liabilities Provisions – Distribution payable – Employee benef ts	20 21 22	428.7 4,229.1 142.4 59.7	428.7 4,229.1 142.4 59.7	429.9 3,861.6 129.9 32.3	429.9 3,861.6 129.9 32.3
		4,859.9	4,859.9	4,453.7	4,453.7
Company Financial assets Cash Receivables – Loans to controlled entities – Receivables from the ESAP – Amounts due from/loans to related parties Other f nancial assets – Investments in other unlisted securities	27 11 16	0.6 777.8 4.7 2.2 398.2	0.6 777.8 4.7 2.2 398.2	0.1 829.5 7.7 2.5 476.6	0.1 829.5 7.7 2.5 476.6
		1,183.5	1,183.5	1,316.4	1,316.4
Financial liabilities Payables – Trade, other payables and deferred settlements – Loans from controlled entities Interest bearing liabilities	19 20	11.4 148.5 1,016.0	11.4 148.5 1,016.0	25 568.9 655.2	25 568.9 655.2
		1,175.9	1,175.9	1,249.1	1,249.1

The methods used for determining fair values are discussed in notes 1, 7, 12 and 17. Refer also to note 11 and 16 for details of differences between carrying values and investments in associates which are listed.

Goodman Group Annual Report 2008

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133

Notes to the fi nancial statements for the year ended 30 June 2008

35. Auditor’s remuneration

35. Auditor’s remuneration
	Consolidated		Parent Entity
	2008 $000	2007 $000	2008 $000	2007 $000
Audit services
Auditor of the Company:
– Audit and review of f nancial reports (KPMG Australia)	944.1	805.1	–	–
– Audit and review of f nancial reports (overseas KPMG f rms)	1,338.4	764.4	–	–
	2,282.5	1,569.5	–	–
Other regulatory services
– Other regulatory services (KPMG Australia)	59.2	50.1	–	–
– Other regulatory services (overseas KPMG f rms)	141.8	12.9	–	–
Other assurance services
– Investigative accounting services (KPMG Australia)	1,051.7	48.1	–	–
– Investigative accounting services (overseas KPMG f rms)	125.9	176.6	–	–
Taxation services
– Taxation compliance services (KPMG Australia)	173.4	234.7	–	–
– Taxation compliance services (overseas KPMG f rms)	511.0	145.6	–	–
– Other taxation advice (KPMG Australia)	139.9	124.4	–	–
– Other taxation advice (overseas KPMG f rms)	260.0	1,463.4	–	–
	2,462.9	2,255.8	–	–
Total paid/payable to KPMG	4,745.4	3,825.3	–	–
Other auditors
– Audit and review of f nancial reports (non-KPMG f rms)	134.5	66.3	–	–

Directors’ declaration

In the opinion of the Directors of Goodman International Limited:

(a) the fi nancial statements and the accompanying notes set out on pages 58 to 134 and the remuneration disclosures that are contained on pages 41 to 52 of the remuneration report in the Directors’ report are in accordance with the Corporations Act 2001, including:
- giving a true and fair view of the fi nancial position of the Company and the Consolidated Entity as at 30 June 2008 and of their performance for the year ended on that date; and
- complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
(b) the Financial Report also complies with International Financial Reporting Standards as disclosed in note 1; and
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The Directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Group Chief Executive Offi cer and Group Chief Financial Offi cer for the year ended 30 June 2008.

Signed in accordance with a resolution of the Directors.

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Gregory Goodman Director

Ian Ferrier, AM Director

Sydney, 21 August 2008

36. Events subsequent to balance date

In the opinion of the Directors, there were no events subsequent to balance date and up to the date of signature of this Financial Report which would require adjustment or disclosure in this Financial Report.

Goodman Group Annual Report 2008

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135

Independent auditor’s report

Securities information

to the members of Goodman International Limited

We have audited the accompanying fi nancial report of Goodman International Limited, which comprises the balance sheets as at 30 June 2008, and the income statements, statements of recognised income and expense and cash fl ow statements for the year ended on that date, a description of signifi cant accounting policies and other explanatory notes 1 to 36 and the Directors’ declaration of the Consolidated Entity comprising the Company and the entities it controlled at the year’s end or from time to time during the fi nancial year.

Directors’ responsibility for the Financial Report

The directors of the Company are responsible for the preparation and fair presentation of the Financial Report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the Financial Report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In note 1, the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the Financial Report, comprising the fi nancial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the Financial Report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the Financial Report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the Financial Report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Financial Report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the Financial Report.

We performed the procedures to assess whether in all material respects the Financial Report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Company’s and the Consolidated Entity’s fi nancial position and of their performance.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

(a) the Financial Report of Goodman International Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s and the Consolidated Entity’s fi nancial position as at 30 June 2008 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the Financial Report also complies with International Financial Reporting Standards as disclosed in note 1.

Report on the remuneration report

We have audited the remuneration report included on pages 41 to 52 of the Directors’ report for the year ended 30 June 2008. The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with auditing standards.

Auditor’s opinion

In our opinion, the remuneration report of Goodman International Limited for the year ended 30 June 2008, complies with Section 300A of the Corporations Act 2001.

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KPMG

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John Teer Partner Sydney, 21 August 2008

Top 20 Securityholders as at 29 August 2008		Number of securities	Percentage of total issued securities
1. HSBC Custody Nominees (Australia) Limited		382,243,301	22.28
2. National Nominees Limited		276,847,748	16.14
3. Citicorp Nominees Pty Limited 4. JP Morgan Nominees Australia Limited		229,231,111 208,300,005	13.36 12.14
5. Goodman Holdings Group		74,391,616	4.34
6. Cogent Nominees Pty Limited		55,225,512	3.22
7. ANZ Nominees Limited		48,967,031	2.85
8. Bond Street Custodians Limited		45,318,576	2.64
9. RBC Dexia Investor Services Australia Pty Limited		44,957,114	2.62
10. AMP Life Limited		22,123,521	1.29
11. Queensland Investment Corporation		19,826,056	1.16
12. Questor Financial Services Limited		15,558,028	0.91
13. Waterview Custodian Limited		11,860,719	0.69
14. UBS Private Clients Australia Nominees Pty Ltd		9,149,406	0.53
15. Mormarl Pty Ltd		8,822,528	0.51
16. Invia Custodian Pty Limited		7,534,745	0.44
17. Suncorp Custodian Services Pty Limited		7,126,604	0.42
18. Nick Kurtis		4,063,505	0.24
19. Avantos Investments Limited 20. Michael O’Sullivan		4,002,652 3,415,295	0.23 0.20
Securities held by top 20 Securityholders		1,478,965,073	86.20
Balance of securities held		236,839,932	13.80
Total issued securities		1,715,805,005	100.00
Range of securities	Number of Securityholders	Number of securities	Percentage of total issued securities
1 – 1,000	2,527	1,167,156	0.07
1,001 – 5,000	8,819	26,742,801	1.56
5,001 – 10,000 10,001 – 100,000	6,040 5,200	44,151,555 106,723,206	2.57 6.22
100,001 – over	259	1,537,020,287	89.58
Total	22,845	1,715,805,005	100.00

There were 711 Securityholders with less than a marketable parcel in relation to 39,207 securities as at 29 August 2008. There are 1,605,684 securities held in escrow until 31 December 2010.

There are 1,605,684 securities held in escrow until 31 December 2010.
Substantial Securityholders1	Number of securities
Commonwealth Bank of Australia	141,143,458
AMP Limited	104,248,385
The Vanguard Group Inc	86,290,343
Barclays Global Investors Australia Limited	86,277,196

In accordance with the latest Substantial Securityholder Notices as at 29 August 2008.

Voting rights

On a show of hands, every person present who is an eligible Securityholder shall have one vote and on a poll, every person present who is an eligible Securityholder shall have one vote for each Goodman International Limited share and one vote for each dollar value of Goodman Industrial Trust units that the eligible Securityholder holds or represents (as the case may be).

On-market buy-back

There is no current on-market buy-back.

Goodman Group Annual Report 2008

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137

Other managed funds

Listed property fund

Goodman Property Trust1 Region	New Zealand
Sector	Business/Industrial/Logistics
Number of properties Total assets Unit price	27 $1.3 billion $1.16
NZX code	GMT
Unlisted property funds
Goodman Australia Industrial Fund
Region	Australia
Sector Number of properties	Business/Industrial/Logistics 1122
Total assets	$4.6 billion
Macquarie Goodman Hong Kong Logistics Fund
Region	Hong Kong
Sector	Logistics
Number of properties	18
Total assets	$1.2 billion
Goodman European Logistics Fund
Region	Europe
Sector	Logistics
Number of properties	76
Total assets	$2.2 billion
Goodman European Business Parks Fund
Region	Europe
Sector	Business
Number of properties	7
Total assets Arlington Business Parks Partnership3	$0.7 billion
Region	United Kingdom
Sector	Business
Number of properties	20
Total assets	$3.2 billion
1. Listed on the New Zealand Exchange and based on results for the year ended 31 March 2008. 2. Including development properties. 3. Includes Colworth.

Glossary

A-REIT Ascendas Real Estate Investment Trust.

AASB Australian Accounting Standards Board.

AIFRS Australian equivalents to International Financial Reporting Standards.

Arlington Arlington Securities Limited.

ASIC Australian Securities & Investments Commission.

ASX Australian Securities Exchange or ASX Limited (ABN 98 008 624 691) or the fi nancial market which it operates as the case requires.

AUM Assets under management: total value of properties directly held or under management.

Board The boards of directors of the Responsible Entity and GIL.

China People’s Republic of China.

CPU Cents per unit.

Customer Service Model Goodman Group’s own+develop+ manage operating and cultural philosophy, which is based on providing complete global property solutions to its customers and quality returns for investors. This is achieved through the delivery of a diverse range of industrial property and business space products; managed funds; and in-house property services.

Distribution yield The annual distribution expressed as a percentage of the security price.

EBITDA Earnings before interest, tax, depreciation and amortisation.

EPS Earnings per security.

ESAP Employee Securities Acquisition Plan.

Eurinpro Eurinpro International SA.

Executive Option Plan or EOP The Executive Option Plan was approved by Securityholders on 16 November 2006.

GAIF Goodman Australia Industrial Trust No. 1 (ARSN 088 750 627), Goodman Australia Industrial Trust No. 2 (ARSN 116 208 612) and Goodman Australia Industrial Trust No. 3 (ARSN 130 854 938) stapled to form Goodman Australia Industrial Fund.

GCT Goodman Capital Trust (ARSN 100 155 986).

GELF Goodman European Logistics Fund.

GFM Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621).

GIL , Company or Parent Entity Goodman International Limited (ABN 69 000 123 071) and its controlled entities, where the context requires.

GIT Goodman Industrial Trust (ARSN 091 213 839) and its controlled entities or GFM as responsible entity for GIT, where the context requires.

GMT Goodman Property Trust.

Goodman Group , Group , Goodman or GMG GIL and GIT, trading as Goodman Group and where the context requires, their controlled entities.

J-REP J-REP Co., Ltd.

Macquarie Group Limited, Macquarie Group or MQG Macquarie Group Limited and its controlled entities, where the context requires.

MGA Macquarie Goodman Asia.

MGLF-HK Macquarie Goodman Hong Kong Logistics Fund.

NAV Net asset value: the value of the total assets less total liabilities. To calculate the net asset value per ordinary security, divide the net asset value by the number of securities on issue (including ESAP securities).

NZX New Zealand Exchange Limited or New Zealand Exchange being the equity security market operated by it, as the case requires.

OH&S Occupational health and safety.

RePS Reset Preference Units in GCT.

RePS Holder A holder of RePS.

Responsible entity GFM as responsible entity for GIT.

ROE Return on equity.

Securityholder A holder of a Stapled Security.

Shareholder A shareholder of GIL.

SPV Special purpose vehicle.

Sqm Square metres.

Stapled Security A GIL share and a GIT unit which are stapled so that they can only be traded together.

Substantial Securityholder A person or company holding at least 5% of Goodman Group’s voting rights.

Unitholder A unitholder of GIT.

Goodman Holdings Group Goodman Holdings Pty Limited and its controlled entities.

GPI Goodman Property Investors.

Hybrid Securities Goodman PLUS hybrid securities.

IFRS International Financial Reporting Standards.

Goodman Group Annual Report 2008

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139

Corporate directory

Goodman International Limited ABN 69 000 123 071

Goodman Industrial Trust

ARSN 091 213 839

Responsible Entity

Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Offi ces

Registered offi ce

Level 10 60 Castlereagh Street Sydney NSW 2000 Australia

GPO Box 4703 Sydney NSW 2001

Telephone: 1300 791 100 (within Australia) +61 2 9230 7400 (outside Australia) Facsimile: +61 2 9230 7444 Email: [email protected] Website: www.goodman.com

Other offi ces

Abu Dhabi Eindhoven Milan Adelaide Frankfurt Munich Amsterdam Fukuoka Nagoya Auckland Hamburg Osaka Barcelona Hong Kong Paris Beijing Istanbul Perth Birmingham Kraków Prague Brisbane London Reading Brussels Luxembourg Senec Bucharest Lyon Shanghai Budapest Madrid Tokyo Christchurch Marseille Warsaw Düsseldorf Melbourne

Security registrar Computershare Investor Services Pty Limited

Level 5 115 Grenfell Street Adelaide SA 5000

GPO Box 1903 Adelaide SA 5001

Telephone: 1300 723 040 (within Australia) +61 3 9415 4000 (outside Australia) Facsimile: +61 8 8236 2305 Email: [email protected] Website: www.computershare.com

Custodians

Trust Company Limited 35 Clarence Street Sydney NSW 2000

Perpetual Trustee Company Limited 123 Pitt Street Sydney NSW 2000

Auditor

KPMG

10 Shelley Street Sydney NSW 2000

ASX code GMG

Directors

Mr David S Clarke, AO (Chairman) Mr Gregory Goodman (Group Chief Executive Offi cer) Mr Ian Ferrier, AM (Independent Director) Mr Patrick Goodman (Non-Executive Director) Ms Diane Grady (Independent Director) Mr John Harkness (Independent Director) Mr James Hodgkinson (Non-Executive Director) Ms Anne Keating (Independent Director) Mr Jim Sloman, OAM (Independent Director)

Company Secretary

Mr Carl Bicego

This Annual Report has been prepared by Goodman Group (Goodman International Limited (ABN 69 000 123 071) and Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839)). It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, fi nancial situation or needs of any particular investor. These should be considered, with professional advice, when deciding if an investment is appropriate. This Annual Report is not an offer or invitation for subscription or purchase of securities or other fi nancial products. It does not constitute an offer of securities in the United States. Securities may not be offered or sold in the United States unless they are registered under the US Securities Act of 1933 or an exemption from registration is available. This Annual Report contains certain “forward-looking statements”. The words “anticipate”, “believe”, “expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and fi nancial position and performance are also forward-looking statements. Due care and attention have been used in the preparation of forecast information. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Goodman Group, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. All values are expressed in Australian currency unless otherwise stated. September 2008.

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Goodman Group Annual Report 2008

Keeping focused

Goodman Industrial Trust Annual Report 2008

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Goodman Industrial Trust Annual Report 2008

Contents
Directors’ report	2
Lead auditor’s independence declaration	9
Income statements	10
Balance sheets	11
Statements of changes in equity	12
Cash fow statements	13
Notes to the fnancial statements
1. Statement of signifcant accounting policies	14
2. Critical accounting estimates used in the preparation of the fnancial statements	19
3. Proft before income tax	20
4. Distributions	21
5. Receivables	22
6. Assets classifed as held for sale	23
7. Other assets	23
8. Investment properties	23
9. Investments accounted for using the equity method	24
10. Other fnancial assets	27
11. Payables	29
12. Interest bearing liabilities	29
13. Issued capital	31
14. Reserves	33
15. (Accumulated losses)/retained earnings	34
16. Minority interests	34
17. Segment reporting	34
18. Auditor’s remuneration	36
19. Notes to the cash fow statements	37
20. Acquisition of controlled entities	39
21. Related party disclosures	39
22. Financial risk management	41
23. Commitments	49
24. Events subsequent to balance date	49
Directors’ declaration	50
Independent auditor’s report	51
Corporate directory	52

Goodman Industrial Trust Annual Report 2008

Directors’ report

The directors (Directors) of Goodman Funds Management Limited (Responsible Entity), the responsible entity for Goodman Industrial Trust (GIT, Trust or Parent Entity), present their Directors’ report together with the consolidated Financial Report of GIT and the entities it controlled (Consolidated Entity) at the end of, or during, the year ended 30 June 2008 and the audit report thereon.

GIT is deemed to be a controlled entity of Goodman International Limited. GIT’s units are stapled to shares in Goodman International Limited and trade on the Australian Securities Exchange (ASX) as Goodman Group stapled securities.

Directors

The Directors at any time during, or since the end of, the year were:

Director	Appointment date
Mr David S Clarke, AO (Chairman)	26 Oct 2000
Mr Gregory Goodman (Group Chief Executive Offcer)	17 Jan 1995
Mr Ian Ferrier, AM (Independent Director)	23 Feb 2005
Mr Patrick Goodman (Non‑Executive Director)	23 Feb 2005
Ms Diane Grady (Independent Director)	30 Sep 2007
Mr John Harkness (Independent Director)	1 Sep 2004
Mr James Hodgkinson (Non‑Executive Director)	21 Feb 2003
Ms Anne Keating (Independent Director)	6 Feb 2004
Mr Jim Sloman, OAM (Independent Director)	1 Feb 2006
Dr David Teplitzky (Independent Deputy Chairman)	23 Feb 2005
	(Retired 22 Nov 2007)
Mr Stephen Girdis (Alternate Director for Messrs David S Clarke, AO	14 Jun 2005
and James Hodgkinson)	(Resigned 14 Nov 2007)

Details of the Directors’ qualifications, experience and special responsibilities are set out on pages 6 and 7 of this Directors’ report.

Company Secretary

The Company Secretary at any time during, or since the end of, the year was:

Company Secretary The Company Secretary at any time during, or since the end of, the	year was:
Company Secretary	Appointment date
Mr Carl Bicego	24 Oct 2006

Details of the Company Secretary’s qualifications and experience are set out on page 7 of this Directors’ report.

Keeping Focused

Directors’ report (cont)

Directors’ meetings

The number of Directors’ meetings held (including meetings of committees of Directors) and the number of meetings attended by each of the Directors during the year were:

Director	Board meetings Audit Committee meetings Remuneration and Nomination Committee meetings Risk and Compliance Committee meetings Investment Committee meetings
	Held1 Attended Held1 Attended Held1 Attended Held1 Attended Held1 Attended
Mr David Clarke, AO Mr Gregory Goodman Mr Ian Ferrier Mr Patrick Goodman Ms Diane Grady2 Mr John Harkness Mr James Hodgkinson Ms Anne Keating Mr Jim Sloman Dr David Teplitzky3 Mr Stephen Girdis (Alternate)4	13 13 5 5 1 1 13 13 5 5 2 2 13 12 5 5 5 5 2 2 13 13 4 4 10 7 3 3 13 12 3 3 4 4 13 12 5 5 13 13 5 5 13 12 4 4 2 2 6 6 3 3 3 3

Reflects the number of meetings individuals were entitled to attend.
Appointed 30 September 2007.
Retired 22 November 2007.
Resigned 14 November 2007.

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

Principal activities

The principal activity of the Consolidated Entity during the year was property investment. There were no significant changes to the nature of the Consolidated Entity’s activities during the year.

Distributions

The total distribution declared to ordinary Unitholders of GIT (Unitholders) during the year was 34.0 cents per unit (2007: 31.5 cents per unit). The total distribution declared to Goodman PLUS Trust Hybrid Securityholders was $15.6 million (2007: $nil). Further details of distributions paid or declared during the year are set out in note 4 to the financial statements.

Review of operations

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

	Consolidated
	2008 $M 2007 $M
Gross property income Proft attributable to Unitholders	293.0 374.4 221.8 626.1
Value of assets	Consolidated
	2008 $M 2007 $M
Carrying value of assets	9,200.1 8,521.2

The basis for valuation of assets is disclosed in note 1 to the financial statements.

Goodman Industrial Trust Annual Report 2008

Directors’ report (cont)

Issued capital

The movement in units on issue in GIT during the year is set out below:

	Consolidated
	2008 M 2007 M
Units on issue at the beginning of the year Units issued during the year	1,692.7 1,608.9 23.1 83.8
Units on issue at the end of the year	1,715.8 1,692.7

State of affairs

Key changes in the Consolidated Entity’s state of affairs during the year were as follows:

(a) Partial disposal of equity interest in Highbrook Development Limited (HDL)

Effective 17 December 2007, GIT sold a 12.5% equity interest in HDL to Goodman Property Trust. GIT retains a 25% equity interest in HDL.

(b) New debt facilities

The principal new debt facilities during the year are as follows:

On 10 December 2007, the Consolidated Entity secured a new A$815 million (€500 million) unsecured debt facility in Europe for a term of five years. In January 2008, this facility was increased by A$43 million (€25 million).

On 31 December 2007, the Consolidated Entity secured a new A$96 million (S$125 million) unsecured debt facility in Singapore for a term of two years.

On 8 February 2008, the Consolidated Entity entered into a A$800 million unsecured banking facility for a term of fours years, which matures in February 2012. This facility replaced the A$603 million Commercial Mortgage Backed Securities (CMBS) loan note facility that matured in May 2008 and provides additional funding for working capital purposes.

On 12 February 2008, the Consolidated Entity entered into a A$453 million (£220 million) unsecured banking facility available for up to five years. On 2 April 2008, this facility was increased by A$205 million (£100 million). This facility replaced the European facility, which expired in April 2008. Subsequent to the end of the financial year, the Consolidated Entity has paid down A$329 million (£160 million) of this facility.

On 30 April 2008, the Consolidated Entity entered into a new A$100 million unsecured facility maturing in April 2009.

On 28 May 2008, the Consolidated Entity entered into a A$47 million (NZ$60 million) unsecured facility maturing in May 2010.

On 30 June 2008, the Consolidated Entity issued A$514 million (£250 million) under its Euro Medium Term Note programme. The 10 year senior unsecured notes were priced at a fixed coupon of 9.75% per annum and mature on 16 July 2018.

(c) Goodman PLUS Trust Hybrid Securities (Hybrid Securities)

On 21 December 2007, a controlled entity of GIT, Goodman PLUS Trust, raised approximately A$327 million from its issue of Hybrid Securities. Hybrid Securities are preferred, perpetual securities in the Goodman PLUS Trust, which are listed on the ASX. The Hybrid Securities are classified as minority interests in equity and may be exchanged or repurchased in certain circumstances.

(d) Transactions with Goodman Australia Industrial Fund (GAIF)

In July 2007, the Consolidated Entity disposed of A$480 million of industrial assets to GAIF. The transaction was funded by a A$500 million equity raising by GAIF.

On 1 May 2008, the unitholders in GAIF invested in a A$900 million portfolio of 14 prime office and business park assets via the stapling of a controlled entity, Mascot Trust, that became known as Goodman Australia Industrial Trust No 3. The transaction was funded by a $1 billion equity raising by GAIF together with debt capital. The equity offer was structured so that the Consolidated Entity held A$600 million, increasing its unitholding in GAIF to 44.1%.

(e) Goodman Group disposal of Goodman Property Investors (GPI)

On 31 May 2008, Goodman Group announced the disposal of GPI to Aberdeen Property Investors. As part of this transaction the Consolidated Entity agreed to sell certain of its equity investments to Aberdeen Property Investors by 28 February 2009. The sales price for these assets will be based on the fair value at the date the transaction is completed (refer to note 6 to the Financial Report).

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

Keeping Focused

Directors’ report (cont)

Strategy and outlook

Looking forward, the Consolidated Entity will seek to strengthen its presence in Asia Pacific and Europe. The focus for these regions is to pursue yield‑accretive properties that are well located and provide stability through the diversification of the Consolidated Entity’s customer base and asset and geographic mix.

Likely developments in the near future include establishing logistics funds in the People’s Republic of China, Japan and the United Kingdom.

Further information as to other likely developments in the operations of the Consolidated Entity and the expected results of those operations in future years have 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 has policies and procedures in place that are designed to ensure that, where operations are subject to any significant environmental regulation under a law of Australia, those obligations are identified and appropriately addressed.

The Directors have determined that there has not been any material breach of those obligations during the financial year.

Interests of the Responsible Entity

The Responsible Entity did not hold any units either directly or indirectly in the Consolidated Entity at any time during the year and up to the date of signature of the Financial Report.

Indemnification and insurance of officers and auditors

The Responsible Entity has insured current and former Directors and officers 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.

Fees paid to and interests held by related entities and Directors

Fees were paid or are payable to Goodman Group and its associated entities for services provided during the year. Details of these fees and the interests of the Responsible Entity and other related party information are set out in note 21 to the financial statements.

The relevant interest of each Director in the stapled securities of Goodman Group as notified by the Directors to the ASX in accordance with section 205G(1) of the Corporations Act 2001 at the date of the Financial Report is as follows:

	Securities	Securities
	held	held
	directly	indirectly	Total
Non‑Executive
Mr David S Clarke, AO	117,857	89,044	206,901
Mr Ian Ferrier	10,188	–	10,188
Mr Patrick Goodman	–	74,398,414	74,398,414
Ms Diane Grady	–	30,000	30,000
Mr John Harkness	21,931	–	21,931
Mr James Hodgkinson	113,513	313,119	426,632
Ms Anne Keating	29,505	24,078	53,583
Mr Jim Sloman	7,736	–	7,736
Executive
Mr Gregory Goodman	5,955,992	68,442,422	74,398,414

None of the Non‑Executive Directors held any options over unissued securities at 30 June 2008. Mr Gregory Goodman held 2,700,000 options over securities of Goodman Group (including units in GIT) at 30 June 2008. Mr Patrick Goodman has an indirect interest in respect of those options.

None of the Directors hold any interests in the Hybrid Securities which are listed on the ASX.

Goodman Industrial Trust Annual Report 2008

Directors’ report (cont)

Qualifications, experience and special responsibilities of Directors and Company Secretary

Board of Directors

Mr David S Clarke, AO – Chairman Appointed 26 October 2000

David has been Chairman of Macquarie Group Limited (the successor parent entity of Macquarie Bank Limited) since 1 April 2007. He was previously Executive Chairman of Macquarie Bank from its formation in 1985 until 31 March 2007. From 1971 to 1977, he was Joint Managing Director of Hill Samuel Australia Limited (predecessor to Macquarie Bank), from 1977 to 1984 Managing Director and from 1984 Executive Chairman. David is also Chairman of Australian Vintage Ltd (formerly McGuigan Simeon Wines Limited, since 27 November 1991), Poole’s Rock Wines Pty Limited (since 1 May 1970), the Wine Committee of the Royal Agricultural Society of NSW, the Opera Australia Capital Fund, the Sydney University Football Club Foundation and the George Gregan Foundation. He is a member of the Investment Advisory Committee of the Australian Olympic Foundation, a member of the Harvard Business School Asia Advisory Board, a member of the Seoul International Business Advisory Council and a member of the Bloomberg Asia Pacific Advisory Committee. David is also a member of Council of the Royal Agricultural Society of NSW and an honorary life member of the Financial Markets Foundation for Children. He is a member of the Corporate Governance Committee of the Australian Institute of Company Directors and Vice President of the Sydney University Cricket Club. David was previously Chairman of Macquarie ProLogis Management Limited (from 26 June 2002 until 31 March 2007), Macquarie Office Management Limited (from 30 June 1987 until 31 March 2007) and Macquarie CountryWide Management Limited (from 22 June 1995 until 31 March 2007), the management companies of Macquarie ProLogis Trust, Macquarie Office Trust and Macquarie CountryWide Trust respectively. Additionally, he was Chairman of the Sydney and Territorial Advisory Board of the Salvation Army (from 1999 until 2006) and the Australian Rugby Union (from 1998 until 2001) and a member of the International Rugby Board (from 1998 until 2001).

Mr Gregory Goodman – Group Chief Executive Officer Appointed 17 January 1995

Gregory is responsible for Goodman Group’s overall operations and the implementation of its strategic plan. He has 26 years of experience in the property industry with significant expertise in the industrial property arena. Gregory was a co‑founder of Goodman Group, playing an integral role in establishing its specialist global position in the property market through various corporate transactions, including takeovers, mergers and acquisitions. He is a director of Goodman (NZ) Limited, J‑REP Co., Ltd and the management companies of Goodman Group’s unlisted funds.

Mr Ian Ferrier, AM – Independent Director Appointed 23 February 2005

Ian is a co‑founder of Ferrier Hodgson. He is a Fellow of The Institute of Chartered Accountants in Australia and has 43 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 (since 8 March 2001), Australian Oil Limited (since 2 May 2005) and EnergyOne Limited (since 15 January 2007) and a director of Australian Vintage Ltd (formerly McGuigan Simeon Wines Limited, since 20 November 1991) and Reckon Limited (since 17 August 2004). His experience 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, infrastructure and aviation and service industries.

Mr Patrick Goodman – Non‑Executive Director Appointed 23 February 2005

Patrick is the Managing Director of Goodman Holdings Group, which is a major investor in Goodman. The diversified interests of Goodman Holdings Group initially focused on direct and indirect property development and have expanded to include the management of a diverse portfolio across sectors covering aviation, food, rural, private and listed equity, infrastructure and financial services globally. Patrick is also a director of companies involved in information technology, property investment and management both in Australasia and the United States. During his 28 year career, he has had considerable public and private company experience both domestically and internationally.

Ms Diane Grady – Independent Director Appointed 30 September 2007

Diane was appointed as an Independent Director on 30 September 2007. She has been a full‑time non‑executive director on various companies since 1994 and is currently a director of Woolworths Limited and BlueScope Steel Limited. Diane is also a senior adviser to McKinsey & Company and a member of the ASIC Business Consultative Panel. Prior to becoming an independent director, she was a partner with McKinsey & Company where she spent 15 years consulting to clients in a broad range of industries on strategic and organisational issues.

Mr John Harkness – Independent Director Appointed 1 September 2004

John is a Fellow of the Institute of Chartered Accountants in Australia and the Australian Institute of Company Directors. He was a partner of KPMG for 24 years and National Executive Officer for five years. Since retiring from KPMG in June 2000, John has held a number of non‑executive director roles. He is currently Chairman of ICA Property Development Funds and Sydney Foundation for Medical Research. John is a director of Macquarie CountryWide Management Limited (since 18 August 2003), the management company of Macquarie CountryWide Trust, and Crane Group Limited (since 1 September 2000). He was formerly the Chairman of Lipa Pharmaceuticals Limited (from 17 June 2004 to 6 November 2007). John is President of Northern Suburbs Rugby Football Club Limited and a member of the Territorial Headquarters and Sydney Advisory Board of the Salvation Army.

Keeping Focused

Directors’ report (cont)

Mr James Hodgkinson – Non‑Executive Director Appointed 21 February 2003

James is an executive director (non‑voting) of Macquarie Group Limited and Co‑Head of Macquarie Group’s Real Estate Capital (REC) Division. His responsibilities include Macquarie Group’s interest in the MGA Joint Venture. James was also Chief Executive Officer of Macquarie Industrial Trust for six years prior to that trust’s merger with GIT. He is a director of J‑REP Co., Limited, Goodman (NZ) Limited, the manager of the New Zealand Exchange listed Goodman Property Trust, and the manager of Macquarie Goodman Hong Kong Logistics Fund. James has previously been an alternate director of Macquarie ProLogis Management Limited (from 24 May 2002 to 9 June 2006), the management company of Macquarie ProLogis Trust. With over 20 years of experience in property funds management, investment banking and chartered accounting, he oversees REC’s businesses and real estate investment trust development in Asia and core real estate investments for Macquarie Group. Since taking a senior position across REC’s businesses in 2000, James has jointly led growth in assets under management from $3 billion to over $32 billion as at 31 March 2008. During this time, he has played an instrumental role in the establishment of a number of REC’s funds management platforms around the world. James has a Bachelor of Economics, is a Certified Practising Accountant and is a Fellow of the Australian Property Institute.

Ms Anne Keating – Independent Director Appointed 6 February 2004

Anne is a non‑executive director with board positions in a range of industries. She is on the boards of Macquarie Leisure Management Limited (since 30 March 1998) and Macquarie Leisure Operations Limited (since 28 April 2003), being the management companies of Macquarie Leisure Trust Group, and STW Communications Group Limited (since 17 May 1995). Anne was previously on the board of Spencer Street Station Redevelopment Holdings Limited (from 31 December 2003 to 14 May 2008) and prior to that was a director of Insurance Australia Group Limited for seven years. She is also a member of the Advisory Council of ABN AMRO Australia and New Zealand, a Governor of the Cerebral Palsy Foundation and a trustee for the Centennial Park and Moore Park Trust. Her last executive position was as General Manager, Australia for United Airlines for nine years until 2001.

Mr Jim Sloman, OAM – Independent Director Appointed 1 February 2006

Jim has over 30 years of experience in the building and construction industries in Australia and overseas, including experience with Sir Robert McAlpine & Sons in London and Lend Lease Corporation in Australia and as Deputy Chief Executive and Chief Operating Officer of the Sydney Organising Committee for the Olympic Games (SOCOG) from 1997 to 2001. He is currently the Chief Executive Officer and a director of MI Associates Pty Limited, a company established by him and comprising some of the leading members of the former SOCOG senior management team. MI Associates is working as an adviser to the organisers of the London Olympic Games following its work on London’s winning bid for the 2012 Olympic Games. With his range of experience, Jim brings significant expertise to Goodman.

Company Secretary

Mr Carl Bicego – Company Secretary

Carl is the Company Secretary of Goodman Group and its Australian subsidiaries as well as Legal Counsel – Head of Corporate in Australia. He has over 10 years of legal experience in corporate law and joined Goodman Group from law firm Allens Arthur Robinson in 2006. Carl holds a Masters of Laws and Bachelor of Economics/Bachelor of Laws (Hons). He is an affiliate of Chartered Secretaries Australia.

Options over stapled securities of Goodman Group

Details of the options over stapled securities of Goodman Group held by Mr Gregory Goodman are set out below. None of the other Directors held any options over stapled securities.

		Number of		Fair value	Exercise		Number
		options	Grant	per option at	price per	Expiry	of options
	Year	granted	date	grant date	option	date	vested
				$	$
Executive Director
Mr Gregory Goodman	2008	2,700,000	26 Nov 2007	0.77	6.36	30 Jun 2013	–
	2007	–	–	–	–	–	–

No options have been granted since the end of the financial year.

Goodman Industrial Trust Annual Report 2008

Directors’ report (cont)

Options over stapled securities of Goodman Group (cont)

The total number of options over stapled securities of Goodman Group outstanding at the beginning and end of the year was as follows:

	Number of options
	2008 2007
Outstanding at the beginning of the year Granted during the year Exercised during the year Forfeited during the year Outstanding at the end of the year	65,917,114 25,753,947 40,788,000 46,282,500 (1,648,334) (593,333) (2,244,501) (5,526,000) 102,812,279 65,917,114
Exercisable at the end of the year	1,367,816 166,667

Corporate governance statement

As a result of the stapling of GIT and Goodman International Limited, the corporate governance regime implemented for GIL applies equally to GIT. For information regarding the corporate governance systems and procedures that apply to GIT, please refer to pages 27 to 33 of the Goodman Group Annual Report 2008, which is available on Goodman Group’s website.

ASX additional information

The ASX additional information regarding Goodman Group securities appears on page 137 of the Goodman Group Annual Report 2008, which is available on Goodman Group’s website.

Events subsequent to balance date

In the opinion of the Directors, there were no events subsequent to balance date and up to the date of signature of this report which would require adjustment or disclosure in the Financial Report.

Lead auditor’s independence declaration under section 307C of the Corporations Act 2001

The lead auditor’s independence declaration under section 307C of the Corporations Act 2001 is attached to this Directors’ report.

Rounding

The Consolidated Entity is an entity of a kind referred to in the Australian Securities & Investments Commission Class Order 98/100 dated 10 July 1998, and in accordance with that Class Order, amounts in this Directors’ report and the Financial Report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

The Directors’ report is made in accordance with a resolution of the Directors.

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Ian Ferrier, AM Director

Gregory Goodman Director

Sydney, 26 August 2008

Keeping Focused

Lead auditor’s independence declaration

Lead auditor’s independence declaration under section 307C of the Corporations Act 2001

To: the Directors of Goodman Funds Management Limited, as responsible entity for Goodman Industrial Trust

I declare that, to the best of my knowledge and belief, in relation to the audit for the year ended 30 June 2008, there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit.

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KPMG
J Teer
Partner
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Sydney, 26 August 2008

Goodman Industrial Trust Annual Report 2008

Income statements

for the year ended 30 June 2008

Note	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Revenue and other income Gross property income Net (loss)/gain from fair value adjustments on investment properties Net gain on disposal of investment properties 3 Net gain on disposal of controlled entities 3 Net gain on disposal of equity investments 3 Share of net results of equity accounted investments 9 Distributions from investments Distributions from controlled entities	293.0 374.4 – – (117.1) 66.3 – – 58.4 52.3 – – 152.5 114.0 62.4 – 12.1 4.9 0.3 7.3 (1.2) 97.3 – – 20.8 4.6 5.0 21.7 – – 752.7 511.6
Total revenue and other income	418.5 713.8 820.4 540.6
Property and other expenses Property expenses Trust expenses Management fee Impairment loss 3 Other expenses	(72.6) (77.3) – – (2.9) (0.6) (0.5) (3.2) (0.6) (1.4) (0.6) (1.3) (108.2) – (608.6) – (7.1) (4.6) (10.3) –
Total property and other expenses	(191.4) (83.9) (620.0) (4.5)
Financing income/costs Financial income 3 Financial expenses 3	192.6 107.9 63.5 136.6 (181.7) (111.7) (21.0) (98.3)
Net fnancing income/(costs)	10.9 (3.8) 42.5 38.3
Proft for the year	238.0 626.1 242.9 574.4
Proft attributable to Unitholders Proft attributable to minority interests	221.8 626.1 242.9 574.4 16.2 – – –
Proft for the year	238.0 626.1 242.9 574.4

The income statements are to be read in conjunction with the accompanying notes.

Keeping Focused

Balance sheets

as at 30 June 2008

Note	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Current assets Cash Receivables 5 Assets classifed as held for sale 6 Other assets 7	628.7 41.5 613.0 8.3 2,586.6 470.7 3,034.2 35.6 31.3 – 22.8 – 72.6 32.9 – 2.1
Total current assets	3,319.2 545.1 3,670.0 46.0
Non‑current assets Receivables 5 Investment properties 8 Investments accounted for using the equity method 9 Other fnancial assets 10	187.3 2,470.7 67.5 3,913.6 3,446.0 4,531.6 – – 2,057.2 864.3 – – 190.4 109.5 2,975.2 2,634.3
Total non‑current assets	5,880.9 7,976.1 3,042.7 6,547.9
Total assets	9,200.1 8,521.2 6,712.7 6,593.9
Current liabilities Deferred income Payables 11 Provisions for distributions 4 Interest bearing liabilities 12	2.4 2.4 2.4 2.4 172.1 107.5 2,240.7 6.7 145.9 133.3 145.9 133.3 491.2 2,194.8 – 599.3
Total current liabilities	811.6 2,438.0 2,389.0 741.7
Non‑current liabilities Deferred income Payables 11 Interest bearing liabilities 12	3.0 4.2 3.0 4.2 1.8 12.2 – 1,290.5 3,716.9 1,535.4 – –
Total non‑current liabilities	3,721.7 1,551.8 3.0 1,294.7
Total liabilities	4,533.3 3,989.8 2,392.0 2,036.4
Net assets	4,666.8 4,531.4 4,320.7 4,557.5
Equity Issued capital 13 Reserves 14 (Accumulated losses)/retained earnings 15	4,349.2 4,211.0 4,349.2 4,211.0 (2.4) 252.5 (284.8) 256.9 (0.6) 67.9 256.3 89.6
Total equity attributable to Unitholders	4,346.2 4,531.4 4,320.7 4,557.5
Minority interests 16	320.6 – – –
Total equity	4,666.8 4,531.4 4,320.7 4,557.5

The balance sheets are to be read in conjunction with the accompanying notes.

Goodman Industrial Trust Annual Report 2008

Statements of changes in equity

for the year ended 30 June 2008

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Consolidated Parent Entity
2008 2007 2008 2007
Note $M $M $M $M
Total equity at the beginning of the year 4,531.4 3,909.6 4,557.5 3,909.6
Movements in reserves 14
Cash flow hedges:
– Movements in fair value taken directly to equity 24.1 43.5 – (7.4)
– (Gain)/loss transferred to income statement (6.2) 1.0 – –
Revaluation of controlled entities – – – 123.3
Revaluation of other financial assets 4.3 (7.2) (35.6) –
Foreign currency translation differences for
foreign operations 14.9 0.8 – –
Net gain recognised directly in equity 37.1 38.1 (35.6) 115.9
Profit for the year
Profit attributable to Unitholders 221.8 626.1 242.9 574.4
Profit attributable to minority interests 16.2 – – –
Total recognised income and expense 275.1 664.2 207.3 690.3
Issued capital
Increase due to Distribution Reinvestment Plan 13 118.9 259.1 118.9 259.1
Increase due to ordinary units issued to Unitholders 13 19.3 223.1 19.3 223.1
Issue costs due to ordinary units 13 – (0.2) – (0.2)
Increase due to Hybrid Securities issued 16 327.0 – – –
Issue costs due to Hybrid Securities 16 (6.4) – – –
Total issued capital 458.8 482.0 138.2 482.0
Distributions provided for or paid to ordinary
Unitholders 4 (582.3) (524.4) (582.3) (524.4)
Distributions provided for or paid to holders of
– – –
Hybrid Securities (16.2)
Total equity at the end of the year 4,666.8 4,531.4 4,320.7 4,557.5
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The statements of changes in equity are to be read in conjunction with the accompanying notes.

Keeping Focused

Cash flow statements

for the year ended 30 June 2008

Note	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Cash fows from operating activities Property income received Property expenses paid Trust expenses paid (including GST paid) Management fee paid Distributions received from associates and other equity investments Interest and other fnance costs paid Interest received Distributions received from controlled entities	322.1 410.6 – – (40.4) (66.1) – – (4.6) (46.9) (4.1) (9.3) (0.6) (1.4) – (1.3) 87.7 42.2 – 14.5 (157.8) (71.7) (35.5) (52.7) 183.3 108.0 7.8 55.1 – – 752.7 511.6
Net cash provided by operating activities 19(b)	389.7 374.7 720.9 517.9
Cash fows from investing activities Payments for investment properties Payments for investments in controlled entities (net of cash acquired) Payments for equity investments Proceeds from sale of investments in controlled entities (net of cash held) Proceeds from sale of equity investments Proceeds from sale of investment properties Loans to related parties Loans from/(to) controlled entities	(1,042.1) (1,031.0) – – – (247.6) (516.7) – (1,609.4) (677.9) (879.1) (199.7) 926.4 279.1 510.0 39.5 226.6 54.3 60.0 – 846.3 516.5 – – (44.0) (1,619.6) 803.2 (561.4) – – 937.1 (208.3)
Net cash (used in)/provided by investing activities	(696.2) (2,726.2) 914.5 (929.9)
Cash fows from fnancing activities Proceeds from issue of units to ordinary Unitholders Issue costs paid on ordinary units Proceeds from issue of Hybrid Securities Issue costs paid on Hybrid Securities Proceeds from borrowings Repayment of borrowings Distributions paid to ordinary Unitholders Distributions paid to holders of Hybrid Securities	19.3 189.7 19.3 189.7 – (0.2) – (0.2) 327.0 – – – (6.4) – – – 7,064.0 5,815.7 39.3 2,301.4 (6,043.8) (3,383.7) (638.5) (1,837.6) (450.8) (242.6) (450.8) (242.6) (15.6) – – –
Net cash provided by/(used in) fnancing activities	893.7 2,378.9 (1,030.7) 410.7
Net increase/(decrease) in cash held Cash at the beginning of the year	587.2 27.4 604.7 (1.3) 41.5 14.1 8.3 9.6
Cash at the end of the year 19(a)	628.7 41.5 613.0 8.3

Non‑cash financing and investing activities are included in note 19(c).

The cash flow statements are to be read in conjunction with the accompanying notes.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements

for the year ended 30 June 2008

1. Statement of significant accounting policies

Goodman Industrial Trust (GIT, Trust or Parent Entity) is established in Australia. The Financial Report of GIT for the year ended 30 June 2008 comprises GIT and its controlled entities (Consolidated Entity) and the Consolidated Entity’s interest in associates and joint venture entities.

The stapling of GIT and Goodman International Limited (GIL) was approved at separate meetings of the respective Unitholders and Shareholders on 25 January 2005. Following approval of the stapling, units in GIT and shares in GIL were stapled to one another and are quoted as a single security on the Australian Securities Exchange (ASX). Both the responsible entity of GIT and GIL must at all times act in the best interest of the stapled entity.

Statement of compliance

This Financial Report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. International Financial Reporting Standards (IFRS) form the basis of Accounting Standards adopted by the AASB, being Australian equivalents to IFRS. The Financial Report also complies with IFRS.

The Financial Report is presented in Australian dollars and was authorised for issue by the directors of Goodman Funds Management Limited (Directors) on 26 August 2008.

The significant accounting policies which have been adopted in the preparation of the Financial Report are set out below and have been applied consistently to all periods presented in the Financial Report.

(a) Basis of preparation of the Financial Report

The Financial Report is prepared on the historical cost basis except that the following assets and liabilities are stated at fair value:

- investment properties;
- derivative financial instruments; and
- financial instruments classified as available for sale.

(b) Principles of consolidation

Controlled entities

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Parent Entity as at 30 June 2008 and the results of all such entities for the year ended 30 June 2008. Control exists when the Parent Entity has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.

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.

Accounting for Goodman PLUS Trust

On 21 December 2007, a controlled entity of GIT, Goodman PLUS Trust, issued Goodman PLUS hybrid securities (Hybrid Securities) which meet the definition of equity for the purposes of the Consolidated Entity. Accordingly, the Hybrid Securities have been classified as equity and presented as minority interests. Incremental costs directly attributable to the issue of Hybrid Securities are recognised as a deduction from equity, net of any tax effects.

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 consolidated income statement, 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. Associates are accounted for at cost in the Parent Entity.

Joint venture entities

A joint venture entity is an entity that is jointly controlled by the Consolidated Entity. 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 income statement from the date joint control commences until the date joint control ceases. Movements in reserves are recognised directly in consolidated reserves. Joint venture entities are accounted for at cost in the Parent Entity.

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 venture entities, 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.

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

(c) Revenue recognition

Rental income

Rental income entitlements under operating leases are recognised on a straight‑line basis over the term of the lease contract. Where operating lease rental income is recognised relating to fixed increases in rentals in future years, an asset is recognised. This asset is a component of the relevant investment property carrying amount. The cost of lease incentives provided to customers is recognised on a straight‑line basis as a reduction of gross operating lease rental income.

Recoverable outgoings

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

Loan facilities

Income from the provision of loan facilities including establishment fees, line fees and interest income is recognised over the relevant service period on an effective yield basis.

Interest income

Interest is brought to account on an accruals basis using the effective interest rate method, and, if not received at balance date, is reflected in the balance sheet as a receivable.

Income from dividends and distributions

Dividend and distribution income is recognised net of any franking credits and before deduction of any withholding tax.

Dividend and distribution income is recognised when a dividend/distribution is declared and, if not received at balance date, is reflected in the balance sheet as a receivable.

(d) Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Trust’s controlled entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The Financial Report of GIT is presented in Australian dollars, which is the Trust’s functional and presentation currency.

Transactions

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

Non‑monetary assets and liabilities that are measured in terms of historical cost are translated at rates of exchange ruling at the date of the initial transaction. Non‑monetary items which are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Translation of controlled foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars at foreign exchange rates ruling at the balance sheet date.

Revenue and expenses 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. Fair value adjustments arising on the acquisition of foreign entities are treated as assets of the foreign entities and translated at the closing rate.

Exchange differences arising on monetary items that form part of the net investment in a foreign operation are recognised in the income statement of the Parent Entity and in the foreign currency translation reserve on consolidation.

Exchange rates used

The main exchange rates used in translating foreign currency transactions, balances and financial statements are as follows:

	Weighted average As at 30 June
	2008 2007 2008 2007
Singapore dollar New Zealand dollar Hong Kong dollar United States dollar British pounds sterling European euro Japanese yen	1.2855 1.2165 1.3093 1.2879 1.1668 1.1475 1.2678 1.1045 6.9822 6.1262 7.4812 6.5438 0.8961 0.7857 0.9592 0.8474 0.4475 0.4065 0.4860 0.4241 0.6100 0.6016 0.6117 0.6293 98.6479 93.0993 103.5800 104.5500

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

1. Statement of significant accounting policies (cont)

(e) Investment properties

Investment properties comprise investment interests in land and buildings held for the purpose of letting to produce rental income. Investment properties are carried at their fair value.

Components of investment properties

Land and buildings (including integral plant and equipment), comprising investment properties, are regarded as composite assets and are disclosed as such in the Financial Report.

Investment property carrying values include the cost of acquiring the property. Where a contract of purchase includes a deferred payment arrangement, the acquisition value is determined as the cash consideration payable in the future, discounted to present value at the date of acquisition.

Amounts provided to customers as lease incentives and assets relating to fixed increases in operating lease contracts are included within investment property values. Lease incentives are amortised over the lease term on a straight‑line basis. The amortisation is recognised as a reduction of gross operating lease rental income.

Expenditure on direct leasing and tenancy costs is deferred and included within investment property values. Direct leasing and tenancy costs are amortised over the lease term in proportion to the rental income recognised in each financial year.

Revaluations 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.

An independent registered valuer determines the market value based on market evidence and assuming 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.

At reporting dates occurring between obtaining independent valuations, the Directors assess the carrying value of the Consolidated Entity’s investment properties to be satisfied that, in their opinion, the carrying value of the investment properties reflects the fair value of the investment properties at that date.

Changes in fair value are recognised directly in the income statement. The net of unrealised revaluations from investment properties is transferred to the asset revaluation reserve.

Disposal of investment properties

The disposal of an investment property is recognised when the significant risks and rewards of ownership have been transferred. The gain or loss on disposal of investment properties is calculated as the difference between the carrying amount of the property at the time of the disposal and the proceeds on disposal (less transaction costs and any provision for future rental guarantees) and is included in the income statement in the period of disposal. The balance of previously unrealised gains for the individual properties, included in the asset valuation reserve at the time of their disposal, is transferred to the capital profits reserve.

Redevelopment projects

Where a property is undergoing redevelopment works, the cost of redevelopment works is added to its previously stated fair value. The carrying amounts of redevelopment projects are reviewed to determine whether they are in excess of their recoverable amount at each reporting date. If the carrying amount of a redevelopment project exceeds its recoverable amount, the project is written down to the recoverable amount. The write‑down is recognised in the income statement in the period in which it occurs. The Consolidated Entity’s policy is to revalue redevelopment properties to their fair value at the date of their practical completion.

Investment properties under development

Investment properties under development include new investment properties in the course of construction and land. They are recorded at acquisition cost plus the subsequent costs of development.

Costs of development include the costs of all materials used in construction, costs of managing the project, holding costs and finance costs incurred during the development period.

The carrying amounts of investment properties under development are reviewed to determine whether they are in excess of their recoverable amount at each reporting date. If the carrying amount of an investment property under development exceeds its recoverable amount, the asset is written down to the recoverable amount. The write‑down is recognised in the Income Statement in the period in which it occurs. The Consolidated Entity’s policy is to revalue development properties to their fair value at the date of their practical completion.

(f) Goods and services tax (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 relevant tax authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item 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 relevant tax authority is included as a current asset or liability in the balance sheet.

Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the relevant tax authority are classified as operating cash flows.

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

(g) Taxation

Under current Australian income tax legislation, GIT is not liable for income tax provided that each year the taxable income and any taxable capital gain derived from the sale of an asset are fully distributed to Unitholders.

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

(h) Receivables

Trade receivables (including rental debtors) due within 30 days are not discounted. The collectibility of trade receivables is assessed at balance date. Debts which are known to be uncollectible are written off.

(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.

(j) Finance costs

Expenditure incurred in obtaining debt finance is offset against the principal amount of the interest‑bearing liability to which it relates, and recognised as an interest expense on an effective yield basis over the life of the facility. Finance costs relating to a qualifying asset are capitalised as part of the cost of that asset using a weighted average cost of debt. Qualifying assets are assets which take a substantial time to get ready for their intended use or sale. All other finance costs are expensed as incurred.

(k) Interest‑bearing liabilities

Bank loans are recognised on inception at their fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing liabilities are stated at amortised cost with any difference being recognised in the income statement over the years of the borrowings on an effective yield basis, subject to set‑off arrangements. Interest expense is accrued at the contracted rate and included in the balance sheet under current payables.

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.

(l) Payables

(m) 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.

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.

Distributions payable

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

(n) Hedging

Transactions are designated as a hedge of the anticipated specific purchase or sale of goods or services, purchase of qualifying assets, or an anticipated interest transaction, only when they are expected to reduce exposure to the risks being hedged, are designated prospectively so that it is clear when an anticipated transaction has or has not occurred and it is probable the anticipated transaction will occur as designated.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised directly in equity. The gain or loss relating to any ineffective portion is recognised in the income statement.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

1. Statement of significant accounting policies (cont)

(o) Investments

Investments in controlled entities

Investments in controlled entities are carried at fair value which is determined with reference to the net assets of the controlled entities. Revaluation increments are credited directly to an asset revaluation reserve. Revaluation decrements are taken directly to the asset revaluation 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 recognised as impairment losses and charged to the income statement. Subsequent revaluation increments are credited to an asset revaluation reserve.

Investments in equity securities

Investments held for trading are classified as current assets and are stated at fair value with any resultant gain or loss recognised in profit or loss.

Other investments held by the Consolidated Entity (apart from investments in associates and joint venture entities) are classified as being available for sale and are stated at fair value, with any resultant gain or loss being recognised directly in equity except for impairment losses. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss. Where these investments are interest bearing, interest calculated using the effective interest method is recognised in profit or loss.

Investments in listed entities which are designated as available for sale (other than investments in listed associates and joint venture entities) are measured at fair value which is determined with reference to the quoted bid price at reporting date. Changes in the fair value of such investments are recognised in equity, except for impairment losses (refer to note 1(p)). When investments classified as available‑for‑sale are sold, the accumulated fair value adjustments are included in the profit or loss as gains or losses from disposal of investment securities.

(p) Impairment

The carrying amounts of the Consolidated Entity’s assets (except investment properties) are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the asset is written down to the recoverable amount. The write‑down is expensed in the reporting period in which it occurs.

An impairment loss is recognised whenever the carrying amount of an asset or its cash‑generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the income statement.

When a decline in the fair value of an available for sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the income statement even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the income statement.

Calculation of recoverable amount

The recoverable amount of the Consolidated Entity’s investments receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (ie. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.

Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Significant receivables are individually assessed for impairment. Impairment testing of significant receivables that are not assessed as impaired individually is performed by placing them into portfolios of significant receivables with similar risk profiles and undertaking a collective assessment of impairment. Non‑significant receivables are not individually assessed; instead, impairment testing is performed by placing non‑significant receivables in portfolios of similar risk profiles, based on objective evidence from historical experience, adjusted for any effects of conditions existing at each balance date.

The recoverable amount of other assets is the greater of their fair value less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre‑tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash‑generating unit to which the asset belongs.

Reversals of impairment

Impairment losses are reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimate used to determine the recoverable amount.

An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

An impairment loss in respect of an investment in an equity instrument classified as available for sale is not reversed through profit or loss. If the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the income statement, the impairment loss is reversed, with the amount of the reversal recognised in the income statement.

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

(p) Impairment (cont)

Reversals of impairment (cont)

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

In assessing recoverable amounts of non‑current assets, the relevant cash flows are discounted to their present value.

(q) 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 and liabilities include all assets and liabilities used by a segment which can be directly attributed to segment activity, excluding interest‑bearing receivables and payables, derivative financial instruments, provision for distributions to unitholders and tax assets and liabilities. Segment revenue and expenses exclude the income statement effect of these non‑segment assets and liabilities.

(r) Australian Accounting Standards issued but not yet effective

As at the date of this Financial Report, the following relevant new and revised accounting standards and interpretations on issue with mandatory application dates after the end of the current reporting period are available for early adoption at 30 June 2008:

- revised AASB 3 Business Combinations;
- AASB 8 Operating Segments;
- revised AASB 101 Presentation of Financial Statements;
- AASB 127 Consolidated and Separate Financial Statements;
- AI 12 Service Concession Arrangements;
- IFRIC 15 Agreements for the Construction of Real Estate; and
- IFRIC 16 Hedges of a Net Investment in a Foreign Operation.

The Consolidated Entity has not early adopted any of the above new and revised accounting standards and interpretations. The Consolidated Entity has not yet determined the potential effect of the new and revised standards and interpretations on the Financial Report, although AASB 8 and revised AASB 101 will only impact disclosures in relation to the Consolidated Entity’s financial statements.

(s) Rounding

In accordance with Australian Securities & Investments Commission Class Order 98/100, the amounts shown in this Financial Report and the Directors’ report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

2. Critical accounting estimates used in the preparation of the financial statements

Estimates and assumptions concerning the future are made by the Consolidated Entity. These estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Investment property values

- upturns and downturns in property markets and availability of similar properties;
- vacancy rates; and
- capital expenditure.

As at 30 June 2008, the carrying value of completed investment properties held by the Consolidated Entity is $2,790.6 million (2007: $3,728.7 million).

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

3. Profit before income tax

==> picture [498 x 469] intentionally omitted <==

----- Start of picture text -----

Consolidated Parent Entity
2008 2007 2008 2007
$M $M $M $M
Profit before income tax has been arrived at after
crediting/(charging) the following items:
Net proceeds from the sale of investment properties 867.4 619.7 – –
– –
Carrying value of investment properties sold (809.0) (567.4)
Net gain on disposal of investment properties 58.4 52.3 – –
Net proceeds from the sale of controlled entities 960.5 290.9 510.0 –
–
Net assets disposed (808.0) (176.9) (447.6)
Net gain on disposal of controlled entities 152.5 114.0 62.4 –
Proceeds from the sale of equity investments 98.4 143.7 60.0 39.5
Carrying value of equity investments sold (86.3) (138.8) (59.7) (32.2)
Net gain on disposal of equity investments 12.1 4.9 0.3 7.3
Financial income
Interest income from:
– Related parties 176.7 89.3 3.7 76.4
– Controlled entities – – 51.6 41.5
– Other parties 6.7 2.9 4.1 2.3
Fair value gains on ineffective portion of derivatives 35.9 9.9 – 2.7
Foreign exchange (loss)/gain (26.7) 5.8 4.1 13.7
192.6 107.9 63.5 136.6
Financial expenses
Bank loans and overdraft interest (228.8) (140.0) (21.0) (90.9)
Interest expense from:
– –
– Related parties (5.5) (7.3)
– Controlled entities – – – (0.1)
Capitalised borrowing costs [1] 47.1 33.8 – –
(181.7) (111.7) (21.0) (98.3)
Net financing costs 10.9 (3.8) 42.5 38.3
Loss on loans to controlled entities forgiven – – 102.5 –
Impairment of equity investment 108.2 – 506.1 –
Total impairment losses 108.2 – 608.6 –
----- End of picture text -----

Borrowing costs were capitalised to investment properties under development at weighted average rates between 3.20% and 8.62% per annum (2007: 6.95% and 8.11% per annum).

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

4. Distributions

(a) Ordinary units

	Distribution	Total amount	Date of
	cpu	$M	payment
Distributions for the quarters ended:
– 30 Sep 2007	8.5	144.8	8 Nov 2007
– 31 Dec 2007	8.5	145.8	14 Feb 2008
– 31 Mar 2008	8.5	145.8	8 May 2008
– 30 Jun 2008	8.5	145.9	26 Aug 2008
Total distributions for the year ended 30 June 2008	34.0	582.3
Distributions for the quarters ended: – 30 Sep 2006 – 31 Dec 2006 – 31 Mar 2007 – 30 Jun 2007	7.875 7.875 7.875 7.875	128.9 130.7 131.5 133.3	9 Nov 2006 15 Feb 2007 3 May 2007 23 Aug 2007
Total distributions for the year ended 30 June 2007	31.500	524.4

Movement in provision for distributions to Unitholders

	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Balance at the beginning of the year Provisions for distributions Payment of distributions	133.3 110.6 133.3 110.6 582.3 524.4 582.3 524.4 (569.7) (501.7) (569.7) (501.7)
Balance at the end of the year	145.9 133.3 145.9 133.3

(b) Hybrid Securities

	Distribution	Total amount	Date of
	cpu	$M	payment
Distributions for the quarters ended:
– 21 Mar 2008	240.044	7.8	25 Mar 2008
– 21 Jun 2008	238.191	7.8	23 Jun 2008
Total distributions for the year ended 30 June 2008	478.235	15.6

The Hybrid Securities were issued on 21 December 2007. Accordingly, there were no distributions in the prior year.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

5. Receivables

5. Receivables
	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Current Trade receivables Other receivables Loans to related parties Loans to controlled entities Derivatives – at fair value	13.3 9.4 – 0.1 91.3 346.2 31.4 2.6 2,360.3 32.9 1,192.0 32.9 – – 1,810.8 – 121.7 82.2 – –
	2,586.6 470.7 3,034.2 35.6
Non‑current Loans to controlled entities Loans to related parties	– – – 2,472.9 187.3 2,470.7 67.5 1,440.7
	187.3 2,470.7 67.5 3,913.6

Trade receivables

Trade receivables that are past due are not considered impaired. At 30 June 2008, no significant overdue trade receivables (2007: $nil) were impaired. The ageing analysis of these trade receivables is as follows:

	Consolidated
	2008 $M 2007 $M
Overdue by: Up to one month One to four months Greater than four months	1.8 2.2 4.7 1.0 3.6 –
	10.1 3.2

As of 30 June 2008 and 2007, there were no significant receivables that were impaired and accordingly, there was no significant provision for the impairment of trade receivables.

The Consolidated Entity holds bank guarantees as security for $8.0 million (2007: $6.0 million) of its trade receivables from investment property customers.

Other receivables

As at 30 June 2007, other receivables included $121.8 million from the sale of the Regent Residential Fund portfolio and $138.6 million receivable from the sale of investment properties.

Loans to related parties

The Consolidated Entity’s loans to related parties principally relate to amounts owed by fellow controlled entities of Goodman International Limited and advances to associates and joint venture entities. The effective interest rates on loans to related parties are 3.1% to 11.6% per annum (2007: 2.1% to 11.2% per annum). Further details of loans to related parties are set out in note 21.

Loans to controlled entities

The effective interest rates on loans to controlled entities at 30 June 2008 are 3.1% to 8.6% per annum (2007: 7.0% to 8.1% per annum). Further details of loans to controlled entities are set out in note 21.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.

All non‑current receivables of the Consolidated Entity are due within five years from the balance sheet date. There is no material difference between the carrying values and the fair values of receivables.

Receivables denominated in currencies other than Australian dollars are as follows:

Amounts in A$M	NZD	HKD	USD	SGD	GBP	EUR	JPY
2008	103.2	116.7	5.3	–	833.8	1,368.8	174.7
2007	196.7	18.8	–	209.8	892.8	1,390.5	–

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

6. Assets classified as held for sale

	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Investment in associate Other fnancial assets	22.8 – 22.8 – 8.5 – – –
	31.3 – 22.8 –

On 31 May 2008, as part of Goodman Group’s disposal of Goodman Property Investors, the Consolidated Entity agreed to sell an investment in an associate and certain investments in other financial assets by 28 February 2009. Accordingly, these investments have been presented as held for sale, and are held at the lower of their carrying amount and fair value less costs to sell. There are no impairment losses in respect of these assets.

The investment in an associate relates to a listed investment, Goodman UK Active Property Fund plc. The market value of the Consolidated Entity’s investment at 30 June 2008 using the quoted price on the last day of trading was $23.7 million (2007: $41.6 million).

7. Other assets

the Consolidated Entity’s investment at 30 June 2008 using the quoted (2007: $41.6 million). 7. Other assets	price on the last day of trading was $23.7 million
	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007
Prepayments Other	5.8 9.2 – – 66.8 23.7 – 2.1
	72.6 32.9 – 2.1

8. Investment properties

	Completed investment properties Redevelopment projects Investment properties under development Total investment properties
	2008 $M 2007 $M 2008 $M 2007 $M 2008 $M 2007 $M 2008 $M 2007 $M
Carrying amount at the beginning of the year 3,728.7 3,779.8 67.8 – 735.1 229.3 4,531.6 4,009.1 Acquisitions: – On acquisition of controlled entities – 442.8 – – – 78.6 – 521.4 – Other acquisitions 29.0 58.0 – – 61.8 512.2 90.8 570.2 Costs capitalised 302.8 101.6 36.4 24.0 547.6 378.0 886.8 503.6 Transfers 567.2 49.8 66.2 43.8 (633.4) (93.6) – – Disposals: – Carrying value of properties sold (766.2) (514.7) (31.4) – (11.4) (60.5) (809.0) (575.2) – On disposal of interests in controlled entities (934.2) (241.9) – – (93.6) (297.4) (1,027.8) (539.3) Changes in fair value1 (62.4) 66.3 (6.4) – (48.3) – (117.1) 66.3 Effect of foreign currency translation (74.3) (13.0) – – (35.0) (11.5) (109.3) (24.5)
Carrying amount at the end of the year 2,790.6 3,728.7 132.6 67.8 522.8 735.1 3,446.0 4,531.6

Changes in fair value include $111.9 million decrement (2007: $65.9 million increment) determined in accordance with independent valuations.
(a) Investment properties with carrying value of $157.0 million (2007: $233.3 million) were subject to charges to secure bank loans.
(b) Refer to note 23 for disclosure of contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance or enhancements.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

9. Investments accounted for using the equity method

9. Investments accounted for using the equity method
		2008	2007
	Note	$M	$M
Share of net assets of entities accounted for using the equity method:
– Associates	9(a)	2,018.0	864.3
– Joint venture entities (JVEs)	9(b)	39.2	–
		2,057.2	864.3

(a) Interests in associates

(a) Interests in associates
	Principal activities Country of incorporation/ establishment Share of associates’ (loss)/proft recognised Consolidated ownership interest Consolidated carrying amount
	2008 $M 2007 $M 2008 % 2007 % 2008 $M 2007 $M
Arlington Business Parks Partnership (ABPP)1 Goodman Australia Industrial Fund (GAIF) Goodman European Logistics Fund (GELF) Goodman Property Trust (GMT)2 Goodman UK Active Property Fund plc (UK Active Fund)3 Highbrook Development Limited (HDL)4 Macquarie Goodman Hong Kong Logistics Fund (MGLF‑HK) Regent Residential Trust (Regent)	Property investment United Kingdom (126.8) – 16.0 – 180.8 – Property investment Australia 76.9 36.5 44.1 30.3 1,206.5 407.4 Property investment Luxembourg 9.6 5.1 22.0 27.2 283.8 83.4 Property investment New Zealand 19.5 18.9 22.2 20.9 199.2 154.6 Property investment Republic of Ireland (14.1) 0.7 – 24.4 – 42.1 Property investment New Zealand 0.6 2.3 – 37.5 – 34.0 Property investment Cayman Islands 24.8 16.3 20.0 20.0 147.7 142.8 Property investment United Kingdom – 17.5 – – – –
	(9.5) 97.3 2,018.0 864.3

In July 2007, GIT increased its effective interest in ABPP and commenced accounting for this investment using the equity method from this date. Prior to this transaction, the Consolidated Entity accounted for its investment within other financial assets (refer to note 10).
GMT is a listed entity. The market value of the Consolidated Entity’s investment in GMT at 30 June 2008 using the quoted price on the last day of trading was $177.0 million (2007: $179.5 million).
Formerly Arlington UK Balanced Property Fund plc. The Consolidated Entity increased its interest in the UK Active Fund from 18.0% to 24.4% on 8 January 2007 and began accounting for this investment using the equity method from this date until 31 May 2008, when the investment was classified as held for sale (refer to note 6).
Effective 17 December 2007, GIT reduced its interest in HDL from 37.5% to 25%, which resulted in a profit on disposal of $10.8 million. Subsequent to that transaction, the Consolidated Entity has accounted for its investment as a JVE rather than an associate.

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

9. Investments accounted for using the equity method (cont)

(a) Interests in associates (cont)

							Net
							assets as
				(Loss)/proft	Total	Total	reported by
	Year	Revenue1	Tax1	after tax1	assets	liabilities	associate
	ended	(100%)	(100%)	(100%)	(100%)	(100%)	(100%)
Name	30 June	$M	$M	$M	$M	$M	$M
ABPP	2008	180.6	–	(791.9)	3,124.1	1,992.2	1,131.9
	2007	–	–	–	–	–	–
GAIF	2008	373.4	–	232.2	4,977.1	1,996.4	2,980.7
	2007	190.2	–	136.4	2,082.1	741.3	1,340.8
GELF	2008	52.5	–	43.6	2,571.5	1,274.2	1,297.3
	2007	13.9	–	17.0	575.4	294.1	281.3
GMT	2008	108.2	–	85.1	1,262.2	405.8	856.4
	2007	140.6	(23.9)	90.4	1,094.9	398.1	696.8
UK Active Fund	2008	20.8	–	(56.3)	240.7	141.9	98.8
	2007	6.3	–	2.2	347.3	160.7	186.6
HDL	2008	0.3	–	1.6	–	–	–
	2007	7.8	(1.7)	6.1	112.3	20.9	91.4
MGLF‑HK	2008	79.2	–	124.0	1,240.8	503.3	737.5
	2007	71.0	–	32.7	1,258.1	544.0	714.1
Regent	2008	–	–	–	–	–	–
	2007	3.3	–	40.8	–	–	–

Amounts presented above for revenue, tax and (loss)/profit after tax are measured from the beginning of the year, or the date that equity accounting commenced, if later, or to the end of the year or date equity accounting ceased, if earlier.

Movements in carrying amount of investment in associates

	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Carrying amount at the beginning of the year Investments made during the year Share of (loss)/proft after tax Share of increment/(decrement) on revaluation of investments Distributions received/receivable Transfer in from other fnancial assets Transfer to joint venture entities Transfer to assets classifed as held for sale Disposals of investments during the year Effect of foreign currency translation	864.3 434.8 – – 1,319.8 551.4 – – (9.5) 97.3 – – 3.3 (0.8) – – (60.3) (37.6) – – 86.3 – – – (21.6) – – – (22.8) – – – (76.7) (171.2) – – (64.8) (9.6) – –
Carrying amount at the end of the year	2,018.0 864.3 – –

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

9. Investments accounted for using the equity method (cont)

(b) Interests in JVEs

			Share of JVE’s	Share of JVE’s
	Principal	Country of		proft	Ownership		Investment
Name	activities	incorporation	recognised		interest		carrying amount
			2008	2007	2008	2007	2008	2007
			$M	$M	%	%	$M	$M
HDL1	Property	New Zealand	5.0	–	25.0	–	24.4	–
	investment
MGJ Cayman 1	Property	Cayman Islands	3.3	–	50.0	–	12.7	–
	investment
Sino Cayman No. 1 Ltd	Property	Hong Kong	–	–	50.0	50.0	2.1	–
	development
Sino Cayman No. 2 Ltd	Property	Hong Kong	–	–	50.0	50.0	–	–
	development
			8.3	–			39.2	–

Effective 17 December 2007, GIT reduced its interest in HDL from 37.5% to 25%, which resulted in a profit on disposal of $10.8 million. Subsequent to that transaction, the Consolidated Entity accounts for its investment as a JVE rather than an associate.

							Net assets as
				Proft	Total	Total	reported by
		Revenue1	Tax1	after tax1	assets	liabilities	associate
	Year ended	(100%)	(100%)	(100%)	(100%)	(100%)	(100%)
Name	30 June	$M	$M	$M	$M	$M	$M
HDL1	2008	17.6	–	16.8	154.3	96.2	58.1
	2007	–	–	–	–	–	–
MGJ Cayman 1	2008	3.0	–	7.4	45.0	18.2	26.8
	2007	–	–	–	–	–	–
Sino Cayman No. 1 Ltd	2008	0.2	–	–	94.3	94.5	(0.2)
	2007	–	–	–	–	–	–
Sino Cayman No. 2 Ltd	2008	–	–	–	103.6	103.9	(0.3)
	2007	–	–	–	–	–	–

Amounts presented above for revenue, tax and profit after tax are measured from the later of the beginning of the year or the date that equity accounting commenced to the end of the year.

Movements in carrying amount of investment in JVEs

	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007
Carrying amount at the beginning of the year Transfers in from associates Investments made during the year Share of proft after tax Return of investment capital Effect of foreign currency translation	– – – – 21.6 – – – 21.1 – – – 8.3 – – – (9.0) – – – (2.8) – – –
Carrying amount at the end of the year	39.2 – – –

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

10. Other financial assets

10. Other fnancial assets
	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Investments in controlled entities – at fair value Investments in listed securities, at fair value1 Investments in unlisted securities2	– – 1,690.9 2,229.1 177.2 12.0 177.2 – 13.2 97.5 1,107.1 405.2
	190.4 109.5 2,975.2 2,634.3

Investments in listed securities represent units in ING Industrial Fund, which are accounted for as available for sale assets.
Investments in associates are accounted for at cost by the Parent Entity. All other investments are accounted for at fair value.

Country of incorporation

Interest held

2008
%
2007
%

Signifcant controlled companies
Goodman Funding Singapore Pte Limited
Singapore
MGI HK Finance
Cayman Islands
Goodman Development Asia
Cayman Islands
Goodman China Investments
Cayman Islands
Macquarie Goodman (Shanghai) Warehouse Co. Ltd
People’s Republic of China
Jia Meng (Shanghai) Warehouse Co. Ltd
People’s Republic of China
Goodman Property Holdings (Jersey) Limited
Jersey
Goodman Northampton (Jersey) Limited
Jersey
GUKBPF Investment Management (Jersey) Limited
Jersey
Goodman Leicester (Jersey) Limited
Jersey
Goodman Daventry (Jersey) Limited
Jersey
Goodman Brackmills (Jersey) Limited
Jersey
Goodman Gloucester (Jersey) Limited
Jersey
Goodman Maltby (Jersey) Limited
Jersey
Goodman South Normanton (Jersey) Limited
Jersey
Goodman West Thurrock (Jersey) Limited
Jersey
Goodman Burton (Jersey) Limited
Jersey
Goodman Citadel (Jersey) Limited
Jersey
Goodman Corby (Jersey) Limited
Jersey
Goodman Coventry (Jersey) Limited
Jersey
Goodman Desborough (Jersey) Limited
Jersey
Goodman Ellesmere Port (Jersey) Limited
Jersey
Goodman Finance (Jersey) Limited
Jersey
Goodman Logistics (Jersey) Limited
Jersey
Goodman Oceanview Logistics (Jersey) Limited
Jersey
Goodman Regent Residential (Jersey) Limited
Jersey
Goodman Thurrock (Jersey) Limited
Jersey
Goodman Harthills (Jersey) Limited
Jersey
Goodman Edinburgh (Jersey) Limited
Jersey
ABPP Investment Jersey Limited
Jersey
Goodman APP 4,5, & CdV (Lux) Sàrl
Luxembourg
Goodman Finance (Lux) Sàrl
Luxembourg
Goodman Property Opportunities (Lux) Sàrl, SICAR
Luxembourg
Goodman Australia Finance Pty Limited
Australia
Goodman Finance NZ Limited
New Zealand

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
–
100
–
100
100
100
100
100
100
100
–
100
–

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

10. Other financial assets (cont)

10. Other fnancial assets (cont)
Country of incorporation	Interest held
	2008 % 2007 %
Coral Logistics Sp. Z o.o. Poland Goodman Properties (Germany) GmbH Germany Ludwigstraße‑West Projekt‑entwicklungs GmbH & Co KG Germany Signifcant controlled unit trusts Goodman Match Trust Australia Binary No. 2 Trust Australia Carter Street Trust Australia Goodman JV Holding Trust Australia Clayton 3 Trust Australia Euston Road Subtrust Australia Highbrook Trust Australia Hill Road Trust Australia Homebush Subtrust Australia IBC Trust Australia MIP Trust Australia Goodman Europe Development Trust Australia Goodman Hong Kong Investment Trust Australia MGA Industrial Portfolio Trust Australia Orion Road Trust Australia Penrose Trust Australia Perth Leasing Trust Australia Port Melbourne 3 Trust Australia Regal Business Park Trust Australia St. Leonards Trust Australia Thomas Trust Australia West Melbourne Trust Australia Saunders Street Trust Australia Waterloo Road Offce Trust Australia Goodman Capital Trust Australia Cambridge Offce Park Trust Australia BDE Unit Trust Australia Biloela Street Unit Trust Australia Goodman Jersey Holdings Trust Australia Goodman Palmers Trust Australia Goodman Perth Airport No. 1 Trust Australia Goodman Perth Airport No. 2 Trust Australia Goodman Treasury Trust Australia ABPP Investment Trust Australia CC Trust Australia Edinburgh Trust Australia Goodman Finance Australia Trust Australia Goodman PLUS Trust Australia Goodman Japan Investment Trust Australia Perth Airport Trust No. 3 Trust Australia Perth Airport Trust No. 4 Trust Australia	100 – 100 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 – 100 – 100 –

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

11. Payables

11. Payables
	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Current Trade payables Rental income received in advance Loans from controlled entities1 Loans from related parties1 Other payables and accruals	3.2 2.7 – 0.1 3.9 4.4 – – – – 2,219.7 – 9.3 – – – 155.7 100.4 21.0 6.6
	172.1 107.5 2,240.7 6.7
Non‑current Loans from controlled entities1 Loans from related parties1 Other payables	– – – 1,278.5 – 12.2 – 12.0 1.8 – – –
	1.8 12.2 – 1,290.5
1. Details of loans from controlled entities and loans from related parties are set out in Payables denominated in currencies other than Australian dollars are a Amounts in A$M NZD HKD USD	note 21. s follows: SGD GBP EUR JPY
2008 3.9 4.1 14.2 2007 6.6 2.6 –	– 33.2 42.9 2.9 0.5 25.6 39.0 –

12. Interest‑bearing liabilities

Note	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Current Bank loans – unsecured 12(a) Other loans – unsecured 12(b)	491.2 1,595.0 – – – 599.8 – 599.3
	491.2 2,194.8 – 599.3
Non‑current Bank loans – unsecured 12(a) Bank loans – secured 12(c) Euro Medium Term Notes – unsecured 12(d)	3,073.0 1,379.9 – – 129.5 155.5 – – 514.4 – – –
	3,716.9 1,535.4 – –

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

12. Interest‑bearing liabilities (cont)

(a) Bank loans – unsecured

As at 30 June 2008

As at 30 June 2008
Facility	Amounts drawn down in A$M equivalents AUD SGD NZD HKD USD GBP EUR JPY Total
Syndicated 2008 multi‑currency facility1 2007 Bank loan2 2008 2007 Bank loan3 2008 2007 Bank loan4 2008 2007 Bank loan5 2008 2007 Bank loan6 2008 2007 Bank loan7 2008 2007	117.0 – – 100.6 143.8 784.1 289.6 54.8 1,489.9 409.5 68.8 380.3 142.3 49.8 170.6 36.8 146.2 1,404.3 – – – – – – – – – – – – – – 912.3 192.3 – 1,104.6 – – – – – 561.4 – – 561.4 – – – – – – – – – – – 96.9 – – 287.5 349.9 – 734.3 – – – – – – – – – – – – – – – – 84.6 84.6 – – – – – – – – – – – 47.3 – – – – – 47.3 – – – – – – – – – – – – – – 524.8 136.3 – 661.1 – – – – – 468.7 3.2 – 471.9
Total bank loans 2008	117.0 – 144.2 100.6 143.8 2,157.8 775.8 139.4 3,578.6
2007	409.5 68.8 380.3 142.3 49.8 1,551.6 232.3 146.2 2,980.8
Less: Unamortised 2008	(14.4)
borrowing costs 2007	(5.9)
Total unsecured 2008	3,564.2
bank loans 2007	2,974.9

The syndicated multi‑currency facility comprises five revolving tranches, a $100 million tranche maturing on 31 December 2008, a $460 million tranche maturing on 24 May 2009, a $520 million tranche maturing on 24 May 2010, a $520 million tranche maturing on 24 May 2011 and a $400 million tranche maturing on 24 May 2012.
As at 30 June 2007, controlled entities had bank loans of $1,104.6 million which were denominated in British pounds sterling ($912.3 million) and euros ($192.3 million). The facility expired on 9 April 2008.
A controlled entity has a bank loan of $561.4 million denominated in British pounds sterling. The facility expires on 7 April 2013. This facility was drawn to refinance the 9 April 2008 bank loan maturity referred to above.
Controlled entities have bank loans of $734.3 million denominated in British pounds sterling ($287.5 million), euros ($349.9 million) and New Zealand dollars ($96.9 million). The facility expires on 8 February 2012.
A controlled entity has a bank loan of $84.6 million denominated in Japanese yen. The facility expires on 31 December 2009. The facility was previously classified as secured but the terms of the facility were amended in December 2007 and the facility is now classified as unsecured.
A controlled entity has a bank loan of $47.3 million denominated in New Zealand dollars. The facility expires on 29 May 2010.
Controlled entities have bank loans of $661.1 million denominated in British pounds sterling ($524.8 million) and euros ($136.3 million). The facility expires on 5 December 2012.

(b) Bank loans – secured

The controlled entity has a secured bank loan of A$129.5 million (2007: A$155.5 million) denominated in British pounds sterling. The facility expires in 20 September 2009.

Security for all loans referred to above is by way of first and second ranking charges over various assets of the Consolidated Entity (refer also to note 8).

(c) Other loans

In February 2008, the Consolidated Entity entered into a four year A$800 million unsecured banking facility that matures on 8 February 2012. This facility replaced the unrated Commercial Mortgage Backed Securities (CMBS) loan notes on 7 May 2008. As at June 2007, the CMBS notes were denominated in British pounds sterling (A$329.4 million), in euros (A$171.6 million) and Australian dollars (A$99.1 million).

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

12. Interest‑bearing liabilities (cont)

(d) Euro Medium Term Notes – unsecured

On 30 June 2008, the Consolidated Entity issued A$514.4 million Euro Medium Term Notes. All notes were issued at a fixed coupon of 9.75%, payable annually. The notes mature on 16 July 2018.

Finance Facilities

	Consolidated Parent Entity
	Facilities available $M Facilities utilised $M Facilities available $M Facilities utilised $M
At 30 June 2008 Bank loans – unsecured Bank loans – secured Euro Medium Term Notes – unsecured Foreign Private Placement – unsecured Bank guarantees1	4,559.5 3,564.2 – – 129.5 129.5 – – 514.4 514.4 – – 44.1 – – – – 82.2 – –
	5,247.5 4,290.3 – –
At 30 June 2007 Bank loans – unsecured Bank loans – secured Other loans – unsecured Bank guarantees1	3,676.7 2,974.9 – – 155.5 155.5 – – 600.2 600.2 600.2 600.2 – 124.1 – –
	4,432.4 3,854.7 600.2 600.2

Bank guarantees relate to the unsecured facilities.

13. Issued capital

13. Issued capital
	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
1,715,805,005 (2007: 1,692,736,692) fully paid units on issue Issue costs1	4,415.8 4,277.6 4,415.8 4,277.6 (66.6) (66.6) (66.6) (66.6)
	4,349.2 4,211.0 4,349.2 4,211.0

Issue costs associated with the issue of units have been directly paid from the proceeds of the issues. These costs have been deducted from the issued capital in the balance sheet, rather than charged as an expense of GIT, as they are considered to form part of the net equity raised.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

13. Issued capital (cont)

Terms and conditions

Stapled security means one unit in GIT stapled to one share in Goodman International Limited. Holders of Goodman stapled securities are entitled to receive distributions and dividends as declared from time to time and are entitled to one vote per stapled security at Unitholders’ and Shareholders’ meetings. In the event of a winding‑up of Goodman, Unitholders and Shareholders rank after creditors and are fully entitled to any proceeds of liquidation.

	2008	2007	2008	2007
	Units	Units	$M	$M
Units on issue at 1 July 2006:	–	1,608,822,481	–	3,795.4
– Issued under the DRP1	–	40,004,845	–	259.1
– Issued for Treasury securities issued under the ESAP2	–	16,435,500	–	111.4
– Issued on conversion of RePS during the year3	–	11,606,556	–	33.4
– Issued to employees of GIL under the ESAP2	–	9,725,620	–	48.3
– Issued due to placement of securities	–	5,548,357	–	28.0
– Issued due to exercise of executive options	–	593,333	–	2.0
Units on issue at 30 June 2007	–	1,692,736,692	–	4,277.6
Units on issue at 1 July 2007: – Issued under the DRP1 – Issued to employees of GIL under the ESAP2 – Issued due to exercise of executive options	1,692,736,692 19,419,978 2,000,000 1,648,335	– – – –	4,277.6 118.9 13.7 5.6	– – – –
Units on issue at 30 June 2008	1,715,805,005	–	4,415.8	–

Under the Distribution Reinvestment Plan (DRP), holders of ordinary units may elect to have all or part of their distribution entitlement satisfied by the issue of new ordinary units rather than being paid in cash. Units are issued under the DRP at a discount to the issue price, at the discretion of the Board of Goodman Funds Management Limited.
Employee Securities Acquisition Plan.
Reset Preference Units.

Effective from 1 July 1998, the Company Law Review Act 1998 abolished the concept of par value units and the concept of authorised capital. Accordingly, the Trust does not have authorised capital or par value in respect of its issued units.

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

14. Reserves

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Consolidated Parent Entity
2008 2007 2008 2007
Note $M $M $M $M
Cash flow hedge reserve 14(a) 72.6 60.6 – –
Asset revaluation reserve 14(b) (330.3) 134.0 (284.8) 256.9
Capital profits reserve 14(c) 231.4 57.5 – –
Foreign currency translation reserve 14(d) 23.9 0.4 – –
Total reserves (2.4) 252.5 (284.8) 256.9
Refer to note 1 for the purpose and accounting policy for each of these reserves.
(a) Cash flow hedge reserve
Balance at the beginning of the year 60.6 7.4 – 7.4
Change in value of financial instruments 24.1 43.5 – (7.4)
Transfer to income statement (6.2) 1.0 – –
Transfer from retained earnings [1] – 10.2 – –
– –
Effect of foreign currency translation (5.9) (1.5)
Balance at the end of the year 72.6 60.6 – –
1. Fair value movements of certain cash flow hedges previously treated as ineffective were transferred from retained earnings to the cash flow hedge reserve.
(b) Asset revaluation reserve
Balance at the beginning of the year 134.0 72.6 256.9 127.2
Revaluation of investment in controlled entities – – (35.6) 123.3
Revaluation of investments 4.3 (7.2) – –
– –
Transfer to capital profits reserve (175.6) (33.8)
Transfer from retained earnings (313.6) 102.1 (506.1) 6.4
Effect of foreign currency translation 20.6 0.3 – –
Balance at the end of the year (330.3) 134.0 (284.8) 256.9
(c) Capital profits reserve
Balance at the beginning of the year 57.5 29.0 – –
Transfer from asset revaluation reserve 175.6 33.8 – –
– –
Transfer from/to retained earnings (1.0) (5.3)
– – –
Effect of foreign currency translation (0.7)
Balance at the end of the year 231.4 57.5 – –
(d) Foreign currency translation reserve
Balance at the beginning of the year 0.4 (1.6) – –
Net exchange differences 23.5 2.0 – –
Balance at the end of the year 23.9 0.4 – –
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Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

15. (Accumulated losses)/retained earnings

	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Balance at the beginning of the year Proft attributable to Unitholders Distributions declared Transfer to asset revaluation reserve Transfer to/from capital profts reserve Transfer to cash fow hedge reserve Effect of foreign currency translation	67.9 73.2 89.6 46.0 221.8 626.1 242.9 574.4 (582.3) (524.4) (582.3) (524.4) 313.6 (102.1) 506.1 (6.4) 1.0 5.3 – – – (10.2) – – (22.6) – – –
Balance at the end of the year	(0.6) 67.9 256.3 89.6
16. Minority interests	2008 $M 2007 $M
Hybrid Securities	320.6 –

On 21 December 2007, a controlled entity of GIT, Goodman PLUS Trust issued 3,269,665 Hybrid Securities at a face value of $100 each. The Hybrid Securities are preferred, perpetual securities in Goodman PLUS Trust, which are listed on the ASX. The Hybrid Securities may be exchanged or repurchased in certain circumstances. The minority interest balance is net of issue costs.

17. Segment reporting

The Consolidated Entity’s business is investing, directly or indirectly, in industrial and commercial properties in Asia Pacific and Europe.

Primary segment reporting – geographical segments

	Asia Pacifc Europe Consolidated
	2008 $M 2007 $M 2008 $M 2007 $M 2008 $M 2007 $M
Revenue and other income Gross property income 256.0 354.6 37.0 19.8 293.0 374.4 Net gain/(loss) from fair value adjustments on investment properties 50.9 66.3 (168.0) – (117.1) 66.3 Net gain/(loss) on disposal of investment properties 58.4 52.9 – (0.6) 58.4 52.3 Net gain on disposal of controlled entities 86.0 7.8 66.5 106.2 152.5 114.0 Net gain on disposal of equity investments 10.3 – 1.8 4.9 12.1 4.9 Share of net results of equity accounted investments 129.4 74.0 (130.6) 23.3 (1.2) 97.3 Distributions from investments 20.1 – 0.7 4.6 20.8 4.6
Total revenue and other income 611.1 555.6 (192.6) 158.2 418.5 713.8
Segment result Proft before fnancing costs 427.3 473.6 (200.2) 156.3 227.1 629.9 Net fnancing income/(costs) 10.9 (3.8)
Proft for the year 238.0 626.1

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

17. Segment reporting (cont)

Primary segment reporting – geographical segments (cont)

	Asia Pacifc Europe Consolidated
	2008 $M 2007 $M 2008 $M 2007 $M 2008 $M 2007 $M
Segment assets Investment properties Investments accounted for using the equity method Other fnancial assets Assets classifed as held for sale Other assets1	2,572.5 3,916.2 873.5 615.4 3,446.0 4,531.6 1,569.8 738.8 487.4 125.5 2,057.2 864.3 181.6 12.0 8.8 97.5 190.4 109.5 – – 31.3 – 31.3 – 39.7 215.1 137.5 206.4 177.2 421.5
Total segment assets	4,363.6 4,882.1 1,538.5 1,044.8 5,902.1 5,926.9
Segment liabilities Deferred income Payables	(5.4) (6.6) – – (5.4) (6.6) (97.8) (55.1) (76.1) (64.6) (173.9) (119.7)
Total segment liabilities	(103.2) (61.7) (76.1) (64.6) (179.3) (126.3)
Total segment assets less segment liabilities	4,260.4 4,820.4 1,462.4 980.2 5,722.8 5,800.6
Non‑segment assets and liabilities Cash Derivative fnancial instruments Interest‑bearing assets1 Interest‑bearing liabilities Provision for distributions	628.7 41.5 121.7 66.3 2,547.6 2,486.5 (4,208.1) (3,730.2) (145.9) (133.3)
Total non‑segment assets less total non‑segment liabilities	(1,056.0) (1,269.2)
Net assets	4,666.8 4,531.4

Other assets amounting to $443.8 million in the Asia Pacific segment and $2,026.8 million in the Europe segment have been reclassified to interest bearing assets in the comparative figures.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

18. Auditor’s remuneration

18. Auditor’s remuneration
	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Audit services Auditors of GIT: – Audit and review of fnancial reports (KPMG Australia) – Audit and review of fnancial reports (overseas KPMG frms)	444.2 414.0 444.2 414.0 323.1 52.7 – –
	767.3 466.7 444.2 414.0
Other assurance services – Investigative accounting services (KPMG Australia) – Investigative accounting services (overseas KPMG frms) Other services – Other regulatory services (KPMG Australia) – Taxation compliance services (KPMG Australia) – Taxation compliance services (overseas KPMG frms) – Other taxation advice (KPMG Australia) – Other taxation advice (overseas KPMG frms)	533.5 – 533.5 – 18.6 57.1 – – 32.1 50.1 32.1 50.1 167.1 165.7 167.1 165.7 72.6 – – – 48.2 – 48.2 – 106.6 7.9 – –
	978.7 280.8 780.9 215.8
	1,746.0 747.5 1,225.1 629.8
Other auditors – Audit and review of fnancial reports	21.5 2.4 – –
	21.5 2.4 – –

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

19. Notes to the cash flow statements

(a) Reconciliation of cash

For the purpose of the cash flow statement, 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 Cash Flow Statement is reconciled to the related items in the balance sheet as follows:

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Consolidated Parent Entity
2008 2007 2008 2007
$M $M $M $M
Cash 628.7 41.5 613.0 8.3
(b) Reconciliation of profit for the year to net cash provided by operating activities
Consolidated Parent Entity
2008 2007 2008 2007
$M $M $M $M
Profit for the year 238.0 626.1 242.9 574.4
Items classified as investing and financing activities:
– –
– Net gain on disposal of investment properties (58.4) (52.3)
– –
– Net gain on disposal of controlled entities (152.5) (62.4)
– Net gain on disposal of equity investments (12.1) (4.9) (0.3) (7.3)
– Distributions received from associates and joint venture entities 87.7 42.2 – –
Non‑cash items:
– Net loss/(gain) from fair value adjustments on investment properties 117.1 (66.3) – –
– Impairment losses 108.2 – 608.6 –
– Share of net results of equity accounted investments 1.2 (97.3) – –
– –
– Movement in deferred leasing and tenancy costs (4.9) (17.2)
– – –
– Capitalised finance costs (33.8)
Net cash provided by operating activities before change
in assets and liabilities 324.3 396.5 788.8 567.1
Change in assets and liabilities during the year:
– Decrease/(increase) in receivables 50.9 (20.4) 1,206.1 15.0
– (Increase)/decrease in other assets (39.7) (4.3) 2.1 1.5
– Increase/(decrease) in payables 54.2 2.9 (1,276.1) (65.7)
Net cash provided by operating activities 389.7 374.7 720.9 517.9
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(c) Non‑cash financing and investing activities

During the year, 19.4 million units (2007: 40.0 million units) were allocated under the DRP for $118.9 million (2007: $259.1 million).

(d) Disposals of interests in controlled entities

Year ended 30 June 2008

		Total
		$M
	Proceeds received on the Mascot Trust transaction	872.6
	Proceeds received on the sale of other controlled entities	51.3
	Net cash infow	923.9

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

19. Notes to the cash flow statements (cont)

Mascot Trust

On 1 May 2008, the unitholders in GAIF invested in a portfolio of 14 prime office and business park assets via the stapling of a controlled entity, Mascot Trust, for a net consideration of $872.6 million. The principal effect of the transaction is to reduce the Consolidated Entity’s investment properties by $861.1 million and liabilities by $99.6 million.

Disposal of other controlled entities

During the year, a controlled entity disposed of several special purpose development property entities (SPVs) located in Europe for a net consideration of $30.3 million. The disposals had no significant effect on the Consolidated Entity’s balance sheet.

In addition, the Consolidated Entity disposed of two controlled entities in Australia which held completed investment properties for consideration of $21.0 million. The principal effect of the disposals was a decrease in investment properties of $127.0 million and liabilities of $105.4 million.

Year ended 30 June 2007

		Total
		$M
	Proceeds received on launch of GELF	121.1
	Proceeds received on sale of second tranche of SPVs into GELF (GELF second tranche)	40.1
	Proceeds received on sale of the Lighthouse Offce SPVs (Lighthouse)	78.6
	Proceeds received on sale of the MGA Direct Property Trust (DPT)	39.3
	Net cash infow	279.1

Launch of GELF

On 20 December 2006, the Consolidated Entity sold 100% of the issued capital of Arlington Investments (Luxembourg) SARL (formerly Macquarie Goodman Investments (Luxembourg) SARL) to GELF. The principal effect of the disposal was a decrease in the investment properties and interest‑bearing liabilities of $274.6 million and $255.6 million respectively.

Up to the date of the disposal of the equity, Arlington Investments (Luxembourg) SARL had contributed $3.3 million to the Consolidated Entity’s revenue and profit after tax for the year.

GELF second tranche

Disposal of Lighthouse

On 20 March 2007, a controlled entity disposed of the entire issued capital of three entities which held completed properties located in the United Kingdom. The principal effect of the disposals was a decrease in investment properties and interest‑bearing liabilities of $199.4 million and $133.7 million respectively.

Disposal of DPT

On 3 April 2007, a controlled entity disposed of the entire issued capital of an entity which held two completed properties located in Australia. The principal effect of the disposals was a decrease in investment properties and payables of $42.3 million and $11.0 million respectively.

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

20. Acquisition of controlled entities

Year ended 30 June 2008

The Consolidated Entity made no acquisitions during the year.

Year ended 30 June 2007

The Consolidated Entity acquired a group of entities (collectively Lighthouse) which owned a portfolio of eight fully leased properties located in the United Kingdom and Akeler Holdings (Akeler) on 20 September 2006 and 14 November 2006 respectively.

The effect of the acquisitions on the Consolidated Entity’s assets and liabilities was as follows:

	Lighthouse	Akeler	Total
	$M	$M	$M
Cash	14.6	–	14.6
Investment properties	445.9	79.2	525.1
Payables	(6.7)	(6.9)	(13.6)
Interest‑bearing liabilities	(242.9)	(26.3)	(269.2)
Net identifable assets and liabilities	210.9	46.0	256.9
Add: Intangible assets on acquisition	–	–	–
Total consideration payable	210.9	46.0	256.9
Less: Transaction costs yet to be paid	(4.5)	–	(4.5)
Gross cash outfow	206.4	46.0	252.4
Cash held by controlled entities on acquisition	(14.6)	–	(14.6)
Net cash outfow (excluding prior year acquisitions)	191.8	46.0	237.8
Deferred settlements on prior year acquisitions1			9.8
Net cash outfow			247.6

Deferred settlements on prior year acquisitions relate to HDL, which was acquired prior to 30 June 2006. The net identifiable assets and liabilities shown above have been stated at book value prior to fair value adjustments. There were no fair value adjustments on acquisition.

Details of the entities acquired are set out below:

Entities acquired Principal activity Date of acquisition	Actual contribution since acquisition Contribution if acquisition took place on 1 July 2006
	Revenue $M Proft/loss before tax $M Revenue $M Proft/loss before tax $M
Akeler Property investment and management 14 Nov 2006 Lighthouse Property investment 20 Sep 2006	– (0.9) – (1.6) 15.9 3.7 21.3 4.9

21 Related party disclosures

Key management personnel disclosures

GIT does not employ personnel in its own right. However, it is required to have an incorporated responsible entity to manage its activities and the Responsible Entity is considered to be the key management personnel of the Consolidated Entity.

Responsible Entity’s remuneration

In accordance with GIT’s constitution, the Responsible Entity is entitled to receive a management fee and expense reimbursements where expenses have been incurred on behalf of GIT:

	Consolidated Parent Entity
	2008 $ 2007 $ 2008 $ 2007 $
Management fees	574,479 1,361,596 574,479 1,335,631

As at 30 June 2008, the amounts owed to the Responsible Entity were $0.5 million (2007: $nil).

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

20. Acquisition of controlled entities (cont)

Goodman Group

Goodman Group performs a number of services for the Consolidated Entity and has billed the following amounts during the year:

	Consolidated Parent Entity
	2008 $ 2007 $ 2008 $ 2007 $
Property services fees (including property management and leasing) Development management and project fees Building supervisor costs reimbursed Due diligence	13,039,358 14,075,756 – – 10,819,730 19,030,311 – – 2,442,236 2,657,451 – – 5,281,803 9,013,000 – –
	31,583,127 44,776,518 – –

In addition to the above there have been the following transactions between Goodman Group and the Consolidated Entity:

- Goodman Vineyard Pty Limited (Vineyard) is a fellow controlled entity of Goodman Group. The balance of the loan provided by GIT to Vineyard at 30 June 2008 is $49.6 million (2007: $50.2 million). The purpose of the loan to Vineyard is to fund the development of M7 Business Hub, Eastern Creek, NSW. The loan is limited recourse, interest bearing at a rate of 15% per annum and with a maturity date of December 2011. Interest and other amounts charged to Vineyard during the year totalled $10.7 million (2007: $6.4 million).
- Other loans to Goodman Group exist at 30 June 2008, totalling $2,177.0 million (2007: $2,260.0 million). The loans are interest bearing at rates determined based on the tranche under which the funds are borrowed.
- Other loans from Goodman Group exist at 30 June 2008 totalling $9.3 million (2007: $11.7 million). The loans are interest bearing at rates determined based on the tranche under which the funds are borrowed.
- Dollhurst Limited, a fellow controlled entity of Goodman Group has issued $133.7 million (£65.0 million), (2007: $169.5 million, £65.0 million) of Fixed Rate Notes (Notes) to GIT. The Notes are unsecured with limited recourse and mature in December 2011. Interest at 8.5% per annum is payable on the Notes semi‑annually in arrears on 30 June and 31 December.

Transactions with associates and JVEs

Transactions between the Consolidated Entity and its associates and JVEs during the year are as follows:

	Sales of controlled entities and investment properties Other
	2008 $M 2007 $M 2008 $M 2007 $M
GAIF GELF GMT	1,074.1 333.8 – 39.5 65.8 – – – 18.8 10.0 – –

Amounts due (to)/from associates and JVEs at 30 June 2008 are as follows:

	Due from sales of controlled entities and investment properties Loans provided
	2008 $M 2007 $M 2008 $M 2007 $M
GAIF GELF GMT	15.4 7.8 – (0.5) 54.4 – – 27.8 – (0.1) – –

Loans provided to associates are provided at arm’s length interest rates and are repayable on demand. All other amounts due are receivable within 30 days.

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

21. Related party disclosures (cont)

Other related party disclosures

Goodman Holdings Group

The Consolidated Entity has entered into a sublease to April 2048 with Moorabbin Airport Corporation Pty Limited (a director‑ related entity of Messrs Gregory Goodman and Patrick Goodman) for the lease of land at Chifley Business Park, Mentone, Vic. During the year ended 30 June 2008, an amount of $701,835 (2007: $1,075,884) was paid in connection with the sublease.

Poole’s Rock Wines Pty Ltd

Poole’s Rock Wines Pty Ltd (a director‑related entity of Mr David Clarke) has entered into a lease to January 2009 with the Consolidated Entity at CityWest Office Park, Pyrmont, NSW. Rent and outgoings charges amounted to $81,360 for the year ended 30 June 2008 (2007: $95,743).

Transactions between the Parent Entity and its controlled entities

The significant wholly owned controlled entities are set out in note 10.

Transactions between GIT and its wholly owned controlled entities during the years ended 30 June 2008 and 2007 consisted of:

- payment of distributions to GIT;
- loans advanced by GIT;
- loans repaid to GIT; and
- interest on loans advanced/provided.

All of the above transactions were made on normal commercial terms and conditions.

Aggregate amounts included in the determination of profit before tax that resulted from transactions with wholly owned controlled entities are disclosed in note 3. Aggregate amounts receivable from, and payable to, wholly owned controlled entities at balance date are disclosed in notes 5, 11 and 13 respectively.

22. Financial risk management

Overview

The Directors have ultimate responsibility for the Consolidated Entity’s capital management and financial risk management processes and have established policies, documented in Goodman Group’s financial risk management (FRM) policy document, to ensure both the efficient use of capital and the appropriate management of the exposure to financial risk.

Management has established a Finance, Treasury, IT and Tax Committee, which is the primary forum where strategic capital and financial management requirements are discussed and decisions made in accordance with FRM policy. The Committee meets at least once a month.

Goodman Group Treasury is responsible for preparing the following reports for consideration at each committee meeting:

- analysis of capital allocation and funding requirements against the Consolidated Entity’s gearing constraint;
- analysis of the Consolidated Entity’s liquidity and funding position;
- analysis of the Consolidated Entity’s debt maturity profile;
- a review of all the hedge exposures and the completed hedges;
- compliance of the core and discretionary FRM strategies with Goodman Group’s policy recommendations for future hedging strategies; and
- full mark to market of all derivative positions.

Capital management

The Consolidated Entity monitors capital on the basis of both the gearing ratio and the weighted average cost of debt. Gearing is reviewed at both a Consolidated Entity basis and on a look through basis, ie. assuming proportional consolidation for certain of the Consolidated Entity’s associates, joint venture entities and available for sale financial assets. The gearing ratio for the Consolidated Entity is calculated as the total interest‑bearing liabilities less cash over the total assets less cash.

During 2008, the Consolidated Entity’s strategy has been to maintain its gearing levels and interest cover in line with its desired investment grade ratings (BBB+/Baa1 Standard & Poor’s/Moody’s) and Board approved policy bands.

Financial risk management

The Consolidated Entity’s key financial risks are market risk (including currency risk, interest rate risk and price risk), liquidity risk and credit risk.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

22. Financial risk management (cont)

(a) Market risk

Interest rate risk

The Consolidated Entity’s interest rate risk primarily arises from long‑term borrowings.

The Consolidated Entity’s policy is to ensure that the risk associated with its exposure to changes in interest rates on borrowings is fixed, in accordance with its FRM policy.

The Consolidated Entity enters into interest rate swaps to manage cash flow risks associated with the interest rates on borrowings that are floating. The interest rate swap contracts are for 90 day intervals and involve quarterly payments or receipts of the net amount of interest. Details of the outstanding interest rate swap contracts and fixed rate debt are as follows:

Interest rate swaps and fxed rate debt contracted as at reporting date and outstanding at	As at 30 June 2008 As at 30 June 2007
	Interest rate swaps Fixed rate debt Interest rate swaps Fixed rate debt
	Notional principal1 currency M Average rate pa2 % Principal currency M Average rate pa2 % Notional principal1 currency M Average rate pa2 % Principal currency M Average rate pa2 %
Euro receivable/payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	(517.3) 3.89 – – (390.0) 3.76 – – (653.2) 3.96 – – (382.9) 3.78 – – (590.0) 4.11 – – (320.0) 4.02 – – (487.2) 4.09 – – (315.9) 4.03 – – (353.2) 4.07 – – (270.0) 4.06 – – (291.8) 4.05 – – (258.5) 4.06 – –
British pounds sterling receivable/payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	(459.0) 4.95 (250.0) 9.75 (283.4) 4.72 – – (463.2) 4.97 (250.0) 9.75 (233.2) 4.76 – – (460.0) 4.98 (250.0) 9.75 (230.0) 4.76 – – (433.0) 5.00 (250.0) 9.75 (203.0) 4.78 – – (345.0) 5.07 (250.0) 9.75 (115.0) 4.82 – – (328.7) 5.09 (250.0) 9.75 (98.7) 4.86 – –
Hong Kong dollars receivable/payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	(1,294.0) 4.35 – – (800.0) 4.61 – – (1,600.0) 4.28 – – (800.0) 4.65 – – (1,530.4) 4.28 – – (730.4) 4.58 – – (871.2) 4.25 – – (386.8) 4.51 – – (345.5) 4.30 – – (145.5) 4.55 – – (124.7) 4.25 – – (30.4) 4.55 – –
New Zealand dollars receivable/payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	(188.1) 7.08 – – (200.0) 6.85 – – (253.3) 7.10 – – (193.3) 6.73 – – (250.0) 7.06 – – (190.0) 6.67 – – (250.0) 7.06 – – (135.9) 6.61 – – (250.0) 7.06 – – (110.0) 6.56 – – (250.0) 7.06 – – (110.0) 6.56 – –

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

22. Financial risk management (cont)

(a) Market risk (cont)

Interest rate risk (cont)

Interest rate risk (cont)
Interest rate swaps and fxed rate debt contracted as at reporting date and outstanding at	As at 30 June 2008 As at 30 June 2007
	Interest rate swaps Fixed rate debt Interest rate swaps Fixed rate debt
	Notional principal1 currency M Average rate pa2 % Principal currency M Average rate pa2 % Notional principal1 currency M Average rate pa2 % Principal currency M Average rate pa2 %
Singapore dollars receivable/payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	– – – – (135.0) 3.58 – – – – – – (135.0) 3.58 – – – – – – (135.0) 3.58 – – – – – – (125.1) 3.57 – – – – – – (79.1) 3.54 – – – – – – (40.0) 3.90 – –
Japanese yen receivable/payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	(15,785.5) 1.51 – – (13,000.0) 1.57 – – (17,000.0) 1.49 – – (13,000.0) 1.57 – – (17,000.0) 1.49 – – (13,000.0) 1.57 – – (16,161.6) 1.51 – – (13,000.0) 1.57 – – (14,808.7) 1.53 – – (12,459.0) 1.58 – – (4,000.0) 1.69 – – (4,000.0) 1.69 – –

Notional principal amount as at 30 June 2008 and 30 June 2007 represents the actual amounts included in open swaps at those dates. For each succeeding year, the amount is the weighted average of principal balances included in hedge instruments over the course of the year.
Average rate represents the weighted average hedge rate by region weighted by quantum of the principal.

At 30 June 2008, if interest rates on borrowings had been 5% (2007: 5%) higher/lower, with all other variables held constant, the Consolidated Entity profit attributable to Unitholders for the year would have been A$0.1 million lower/higher (2007: A$5.7 million).

At 30 June 2008, if interest rates on borrowings had been 1% (2007: 1%) higher/lower, with all other variables held constant, the Parent Entity profit for the year would have been A$8.5 million lower/higher (2007: A$26.4 million).

Foreign exchange risk

The Consolidated Entity is exposed to foreign exchange risk through its investments in Europe, the United Kingdom, Hong Kong, New Zealand, the People’s Republic of China and Japan. Foreign exchange risk represents the loss that would be recognised from fluctuations in currency prices against the Australian dollar as a result of future commercial transactions, recognised assets and liabilities and, principally, net investments in foreign operations.

The Consolidated Entity’s investment in foreign denominated investments is achieved by borrowing in the same functional currency as the investments to form a natural economic hedge against any foreign currency fluctuations. Further draw downs or repayments of debt are made to maintain this hedge. Derivatives such as cross currency swaps are used on a case‑by‑case basis to hedge funds borrowed in different currencies. Additionally, the Consolidated Entity enters into forward foreign exchange contracts to hedge a proportion of the income received/receivable from its investments denominated in overseas currencies.

The Consolidated Entity’s policy is to ensure the net exposure to overseas currency is hedged, in accordance with the FRM policy. In managing foreign currency risks, the Consolidated Entity aims to reduce the impact of short‑term fluctuations on the Consolidated Entity’s earnings. Over the long term, however, permanent changes in foreign exchange will have an impact on profit.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

22. Financial risk management (cont)

(a) Market risk (cont)

Foreign exchange risk (cont)

Details of the Consolidated Entity’s forward exchange contracts at 30 June 2008 are as follows:

Foreign exchange derivatives contracted as at reporting date and outstanding at	Weighted average exchange rate Amounts receivable Amounts payable
	2008 2007 2008 A$M 2007 A$M 2008 Currency M 2007 Currency M
Euros Contracts to buy Australian dollars and sell euros 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012	0.6065 – 46.3 – (28.1) – 0.5832 – 41.3 – (24.0) – 0.5667 – 42.5 – (24.0) – 0.5551 – 17.2 – (9.5) – 0.5421 – 17.6 – (9.5) –
British pounds sterling Contracts to buy Australian dollars and sell British pounds sterling 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011	0.4158 0.4150 47.4 24.1 (19.7) (10.0) 0.4150 0.4150 24.1 24.1 (10.0) (10.0) 0.4150 0.4150 24.1 24.1 (10.0) (10.0) 0.4150 0.4150 12.0 12.0 (5.0) (5.0)
Hong Kong dollars Contracts to buy Australian dollars and sell Hong Kong dollars 30 Jun 2008 30 Jun 2009 30 Jun 2010	6.3831 5.6200 3.2 1.1 (20.1) (6.0) 6.1394 5.6200 2.5 1.1 (15.1) (6.0) 6.3403 5.6200 1.6 1.1 (10.0) (6.0)
New Zealand dollars Contracts to buy Australian dollars and sell New Zealand dollars 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012	1.0915 1.0915 1.0 1.0 (1.1) (1.1) 1.1571 1.1571 0.5 0.5 (0.6) (0.6) 1.1571 1.1571 0.5 0.5 (0.6) (0.6) 1.1571 1.1571 0.3 0.3 (0.3) (0.3) 1.1571 1.1571 0.3 0.3 (0.3) (0.3)

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

22. Financial risk management (cont)

(a) Market risk (cont)

Capital hedges

Additionally, the Consolidated Entity uses cross currency swaps as follows:

Cross currency derivatives contracted as at reporting date and outstanding at	Weighted average exchange rate Amounts receivable Amounts payable
	2008 2007 2008 A$M 2007 A$M 2008 Currency M 2007 Currency M
Australian dollars receivable/ euro payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	0.6090 0.6090 492.6 492.6 (300.0) (300.0) 0.6090 0.6090 492.6 492.6 (300.0) (300.0) – – – – – – – – – – – – – – – – – – – – – – – –
Australian dollars receivable/ Hong Kong dollars payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	6.7145 – 148.9 – (1,000.0) – 6.7145 – 148.9 – (1,000.0) – 6.7145 – 148.9 – (1,000.0) – 6.7145 – 148.9 – (1,000.0) – 6.7145 – 148.9 – (1,000.0) – 6.7145 – 148.9 – (1,000.0) –
Australian dollars receivable/ Japanese yen payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	97.4500 – 44.5 – (4,340.0) – 97.4500 – 44.5 – (4,340.0) – 97.4500 – 44.5 – (4,340.0) – 97.4500 – 44.5 – (4,340.0) – 97.4500 – 44.5 – (4,340.0) – 97.4500 – 44.5 – (4,340.0) –
Australian dollars receivable/ New Zealand dollars payable 30 Jun 2008 30 Jun 2009 30 Jun 2010 30 Jun 2011 30 Jun 2012 30 Jun 2013	1.1328 – 176.6 – (200.0) – 1.1328 – 176.6 – (200.0) – 1.1328 – 176.6 – (200.0) – 1.1328 – 176.6 – (200.0) – 1.1328 – 176.6 – (200.0) – 1.1328 – 176.6 – (200.0) –

At 30 June 2008, if the Australian dollar has weakened/strengthened by 5% (2007: 5%), with all other variables held constant, the Consolidated Entity profit attributable to Unitholders would have been A$17.0 million lower/higher (2007: A$7.9 million). This relatively low impact on profit and loss in both the current and prior year is a result of the Consolidated Entity’s policy of ensuring that investments in foreign controlled entities are hedged in accordance with the Financial Risk Management policy.

At 30 June 2008, if the Australian dollar has weakened/strengthened by 5% (2007: 5%), with all other variables held constant, the Parent Entity profit for the year would have been A$8.0 million lower/higher (2007: A$3.1 million).

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

22. Financial risk management (cont)

(a) Market risk (cont)

Price risk

The Consolidated Entity is exposed to equity securities price risk because of investments held by the Consolidated Entity classified on the balance sheet as available for sale financial assets. The Consolidated Entity is not exposed to commodity price risk.

The Consolidated Entity’s investments in equity of other entities that are publicly traded and classified as available‑for‑sale are listed on the ASX.

A 5% (2007: 5%) movement in the listed security price as at 30 June 2008, would impact equity by A$8.9 million (2007: A$0.6 million increase/decrease). Any decrease in the listed security price would also impact the profit attributable to Unitholders, if the decrease was considered to be an impairment of the asset. The analysis is based on the assumption that all other variables are held constant. There would be no impact on the results of the Parent Entity.

(b) Liquidity risk

Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due. The Consolidated Entity’s objective is to maintain sufficient liquidity resources to maintain operations, meet its financial obligations and liabilities, pay distributions and provide funds for capital expenditure and investment opportunities. Management seeks to achieve these objectives through:

preparation of regular forecast cash flows to understand the application and use of funds; and + identification of future funding, including new debt facilities, new issues of securities or the DRP.

Group Treasury is responsible for reporting details of all debt maturities for all loans across the regions to the Finance, Treasury, IT and Tax Committee and Board of Directors at its regular meetings. Group Treasury is also responsible for reporting to the Finance, Treasury, IT and Tax Committee and the Board of Directors all the information and term sheets relating to any financing arrangements being contemplated or negotiated by the Consolidated Entity for their review and approval.

The Consolidated Entity seeks to spread its debt maturities to ensure that total debt maturing in a single financial year does not exceed Board approved policy levels. The contractual maturities of financial liabilities are set out below:

30 June 2008				Consolidated	Consolidated
	Carrying	Up to						More than
	amount	12 months	1–2 years	2–3 years	3–4	years	4–5 years	5 years
	A$M	A$M	A$M	A$M		A$M	A$M	A$M
Non‑derivative fnancial liabilities
Bank loans – unsecured	3,564.2	491.2	379.0	504.0		967.5	1,222.5	–
Bank loans – secured	129.5	–	129.5	–		–	–	–
Other loans – CMBS	–	–	–	–		–	–	–
Euro Medium Term Notes – unsecured	514.4	–	–	–		–	–	514.4
Total non‑derivative fnancial liabilities	4,208.1	491.2	508.5	504.0		967.5	1,222.5	514.4
Derivative fnancial liabilities Net settled (interest rate swaps) Gross settled: – Infow – Outfow	(87.6) (95.9) 82.5	(25.3) (25.8) 20.0	(21.5) (22.6) 18.8	(17.6) (18.7) 16.6		(11.8) (20.1) 18.5	(7.8) (8.7) 8.6	(3.6) – –
Total derivative fnancial liabilities	(101.0)	(31.1)	(25.3)	(19.7)		(13.4)	(7.9)	(3.6)

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

22. Financial risk management (cont)

(b) Liquidity risk (cont)

30 June 2007				Consolidated	Consolidated
	Carrying	Up to						More than
	amount	12 months	1‑2 years	2‑3 years	3‑4	years	4‑5 years	5 years
	A$M	A$M	A$M	A$M		A$M	A$M	A$M
Non‑derivative fnancial liabilities
Bank loans – unsecured	2,974.9	1,595.0	424.2	384.0		192.4	379.3	–
Bank loans – secured	155.5	–	–	155.5		–	–	–
Other loans – CMBS	599.8	599.8	–	–		–	–	–
Total non‑derivative fnancial liabilities	3,730.2	2,194.8	424.2	539.5		192.4	379.3	–
Derivative fnancial liabilities Net settled (interest rate swaps) Gross settled: – Infow – Outfow	(74.4) (42.1) 25.8	(14.0) (35.8) 22.0	(14.5) (6.3) 3.8	(16.5) – –		(12.9) – –	(6.5) – –	(10.0) – –
Total derivative fnancial liabilities	(90.7)	(27.8)	(17.0)	(16.5)		(12.9)	(6.5)	(10.0)

The Parent Entity’s financial liabilities all mature in less than 12 months except for other payables of $0.8 million (2007: $nil).

(c) Credit risk

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

The credit risk on financial assets, excluding investments, of the Consolidated Entity which have been recognised on the balance sheet is the carrying amount (refer to note 5).

The credit risks associated with financial instruments are managed by:

- transacting with multiple derivatives counterparties that have a long‑term credit rating of at least AA– (or its equivalent); and + utilising ISDA agreements with derivative counterparties in order to limit exposure to credit risk through netting of the amounts receivable and the amounts payable to individual counterparties.

Goodman Industrial Trust Annual Report 2008

Notes to the financial statements (cont)

for the year ended 30 June 2008

22. Financial risk management (cont)

Fair values of financial instruments

The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:

		Carrying		Carrying
		amount	Fair value	amount	Fair value
		2008	2008	2007	2007
Consolidated	Note	$M	$M	$M	$M
Financial assets
Cash		628.7	628.7	41.5	41.5
Receivables	5
– Derivative fnancial instruments		121.7	121.7	82.2	82.2
– Loans to other related parties		2,547.6	2,547.6	2,503.6	2,503.6
– Other receivables		104.6	104.6	355.6	355.6
Other fnancial assets	10
– Investments in listed securities		177.2	177.2	12.0	12.0
– Investments in other unlisted securities		13.2	13.2	97.5	97.5
		3,593.0	3,593.0	3,092.4	3,092.4
Financial liabilities Payables – Trade and other payables Interest‑bearing liabilities Provision for distributions	11 12	173.9 4,208.1 145.9	173.9 4,208.1 145.9	119.7 3,730.2 133.3	119.7 3,730.2 133.3
		4,527.9	4,527.9	3,983.2	3,983.2
Company Financial assets Cash Receivables – Loans to controlled entities – Loans to other related parties – Other receivables Other fnancial assets – Investments in listed securities – Investments in other unlisted securities	5 10	613.0 1,810.8 1,259.5 31.4 177.2 2,798.0	613.0 1,810.8 1,259.5 31.4 177.2 2,798.0	8.3 2,472.9 1,473.6 2.7 – 2,634.3	8.3 2,472.9 1,473.6 2.7 – 2,634.3
		6,689.9	6,689.9	6,591.8	6,591.8
Financial liabilities Payables – Trade and other payables – Loans from controlled entities Interest‑bearing liabilities Provision for distributions	11 12	21.0 2,219.7 – 145.9	21.0 2,219.7 – 145.9	18.7 1,278.5 599.3 133.3	18.7 1,278.5 599.3 133.3
		2,386.6	2,386.6	2,029.8	2,029.8

Keeping Focused

Notes to the financial statements (cont)

for the year ended 30 June 2008

23. Commitments

23. Commitments
	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Capital expenditure commitments Contracted but not provided for and payable: – Within one year – One year or later and no later than fve years	69.1 175.9 – – – 25.8 – –

Acquisition of investment properties

The amount contracted for the acquisition of investment properties not provided for is $77.2 million (2007: $180.2 million).

Commitment to investment in managed funds

At 30 June 2008, the Consolidated Entity was committed to invest A$42.8 million (HK$320.0 million) into MGLF‑HK (2007: A$7.9 million), A$102.9 million into ABPP (2007: $nil) and A$393.8 million into GAIF (2007: $nil).

During June 2008, the Consolidated Entity agreed to subscribe for up to A$327 million (€200.0 million) in respect of an anticipated offer of units by GELF. The existing unitholders have a pro rata right to subscribe for the units, and the Consolidated Entity has committed to subscribe for its pro rata share, with the final underwritten amount to be based on a calculation of the projected gearing of GELF at 31 December 2008.

Guaranteed land payments – development of M7 Business Hub, Eastern Creek, NSW

A commitment exists at 30 June 2008 in respect of a Heads of Agreement signed between GIT, Goodman Group, Vineyard, Brickworks Limited and The Austral Brick Company Limited (Austral). Austral has a put option which gives it the right to require Vineyard to take a transfer of unsold saleable lots of land. The consideration payable over the duration of the development will be the greater of:

- the guaranteed land payments of unsold saleable lots; or
- the revised retail price of the unsold saleable lots less a 2.5% discount if the revised retail price is less than $10 million or a 5% discount if it is greater than $10 million.

GIT has provided Austral with a guarantee for all amounts payable to Austral by Vineyard under the Heads of Agreement.

Non‑cancellable operating lease receivable from investment property customers

	Consolidated Parent Entity
	2008 $M 2007 $M 2008 $M 2007 $M
Non‑cancellable operating lease commitments receivable: – Within one year – Later than one year but no later than fve years – Later than fve years	185.5 199.1 – – 585.5 591.6 – – 249.0 328.3 – –
	1,020.0 1,119.0 – –

24. Events subsequent to balance date

In the opinion of the Directors, there were no events subsequent to balance date and up to the date of this report which would require adjustment or disclosure in the Financial Report.

Goodman Industrial Trust Annual Report 2008

Directors’ declaration

In the opinion of the Directors of Goodman Funds Management Limited, the responsible entity for Goodman Industrial Trust:

(a) the financial statements and the accompanying notes set out on pages 10 to 49, are in accordance with the Corporations Act 2001, including:
- giving a true and fair view of the financial position of the Parent Entity and the Consolidated Entity as at 30 June 2008 and of their performance for the year ended on that date; and
- complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
(b) the Financial Report also complies with International Financial Reporting Standards as disclosed in note 1; and
(c) there are reasonable grounds to believe that the Parent Entity will be able to pay its debts as and when they become due and payable.

The Directors of the Responsible Entity have been given the declarations required by section 295A of the Corporations Act 2001 from the Group Chief Executive Officer and Group Chief Financial Officer for the year ended 30 June 2008.

Signed in accordance with a resolution of the Directors of the Responsible Entity.

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Ian Ferrier, AM Director Sydney, 26 August 2008

Gregory Goodman Director

Keeping Focused

Independent auditor’s report

to the Unitholders of Goodman Industrial Trust

Report on the Financial Report

We have audited the accompanying financial report of Goodman Industrial Trust, which comprises the balance sheets as at 30 June 2008, and the income statements, statements of changes in equity and cash flow statements for the year ended on that date, a description of significant accounting policies and other explanatory notes 1 to 24 and the Directors’ declaration of the Consolidated Entity comprising the Trust and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the Financial Report

The Directors of the Responsible Entity, Goodman Funds Management Limited, are responsible for the preparation and fair presentation of the Financial Report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the Financial Report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In note 1, the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the Financial Report of the Consolidated Entity, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

We performed the procedures to assess whether in all material respects the Financial Report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Trust’s and the Consolidated Entity’s financial position and of their performance.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

(a) the Financial Report of Goodman Industrial Trust is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Parent Entity’s and the Consolidated Entity’s financial position as at 30 June 2008 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) the Financial Report of the Consolidated Entity also complies with International Financial Reporting Standards as disclosed in note 1.

==> picture [109 x 49] intentionally omitted <==

KPMG

John Teer Partner

Sydney, 26 August 2008

Goodman Industrial Trust Annual Report 2008

Corporate directory

Goodman Industrial Trust

ARSN 091 213 839

Responsible Entity

Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Registered office

Level 10 60 Castlereagh Street Sydney NSW 2000 Australia

GPO Box 4703 Sydney NSW 2001

Telephone: 1300 791 100 (within Australia) +61 2 9230 7400 (outside Australia) Facsimile: +61 2 9230 7444 Email: info‑[email protected] Website: www.goodman.com

Directors

Mr David S Clarke, AO (Chairman) Mr Gregory Goodman (Group Chief Executive Officer) Mr Ian Ferrier, AM (Independent Director) Mr Patrick Goodman (Non‑Executive Director) Ms Diane Grady (Independent Director) Mr John Harkness (Independent Director) Mr James Hodgkinson (Non‑Executive Director) Ms Anne Keating (Independent Director) Mr Jim Sloman, OAM (Independent Director)

Company Secretary

Mr Carl Bicego

Security registrar

Computershare Investor Services Pty Limited

Level 5 115 Grenfell Street Adelaide SA 5000

GPO Box 1903 Adelaide SA 5001

Telephone: 1300 723 040 (within Australia) +61 3 9415 4000 (outside Australia) Facsimile: +61 8 8236 2305 Email: [email protected] Website: www.computershare.com

Custodians

Trust Company Limited

35 Clarence Street Sydney NSW 2000

Perpetual Trustee Company Limited

123 Pitt Street Sydney NSW 2000

Auditor

KPMG

10 Shelley Street Sydney NSW 2000

Keeping Focused

This Annual Report has been prepared by Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) as the responsible entity for Goodman Industrial Trust (ARSN 091 213 839). It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with professional advice, when deciding if an investment is appropriate. This Annual Report is not an offer or invitation for subscription or purchase of securities or other financial products. It does not constitute an offer of securities in the United States. Securities may not be offered or sold in the United States unless they are registered under the US Securities Act of 1933 or an exemption from registration is available. This Annual Report contains certain “forward-looking statements”. The words “anticipate”, “believe”, “expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Due care and attention have been used in the preparation of forecast information. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Goodman Funds Management Limited, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. All values are expressed in Australian currency unless otherwise stated. September 2008.

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Goodman Industrial Trust Annual Report 2008

AI assistant

GOODMAN GROUP — Annual Report 2008

64998_rns_2008-09-25_062fe90e-fb14-4639-af4c-61e7ac8ad637.pdf

Goodman Group (Goodman) – Annual Report 2008

26 September 2008

Goodman Group (Goodman or Group)

Annual Report 2008

Changes to distribution policy

Annual General Meeting

David S Clarke, AO

Focused on the future

Gregory Goodman

Focused on our core business

Earnings composition

Group operations

Property investment

Property services

Property development

Fund management

Group Chief Executive Offi cer’s report (cont)

Group Chief Financial Offi cer’s report Anthony Rozic

Focused on capital management

Capital management

Outlook

Regional view

1,240 people throughout 39 cities around the world

Group executives

Regional executives

Board of Directors and Company Secretary

The Board

Focused on good governance

The Board

Directors’ obligations and rights

Independent decision-making

Criteria for assessing independence

Chairman

Company Secretary

Group Chief Executive Offi cer

Remuneration

Performance review

Policies and codes

Responsible and ethical decision-

making

Sustainability

Securities trading

Confl icts of interest

Group Employee Handbook

Related parties

Dealing with public offi cials

Committees and oversight

Audit Committee

Executive confi rmations

Risk and Compliance Committee

Investment Committee

Securityholders

Complaints handling

Financial Report

Contents

Directors’ report

Goodman International Limited and its controlled entities

Directors

Directors’ report

Directors’ meetings

Directors’ report

Review and results of operations

Principal activities

Dividends and distributions

Directors’ report

State of affairs

(a) Partial disposal of equity interest in Highbrook Developments Limited (HDL)

(b) New debt facilities

(c) Goodman PLUS Trust hybrid securities (Hybrid Securities)

Directors’ report

State of affairs (cont)

(d) Transactions with Goodman Australia Industrial Fund (GAIF)

(e) Japan Fund Platform

(f) Disposal of equity interest in Ascendas Real Estate Investment Trust (A-REIT) and Ascendas-MGM Funds Management

Limited (AMFM)

(g) Disposal of equity interest in Goodman Property Investors (GPI)

Strategy and outlook

GOODMAN GROUP Annual Report 2008