GOODMAN GROUP

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30 September 2009

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

Dear Sir

Goodman Group (Goodman) – Annual Report 2009

We confirm that the Goodman Annual Report 2009 (incorporating the Goodman Industrial Trust Annual Report 2009) was dispatched today to Securityholders. The Report and covering letter are attached.

Please contact the undersigned should you have any queries.

Yours faithfully

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Carl Bicego

Company Secretary

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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 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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30 September 2009

Dear Securityholder

Goodman Group (Goodman or Group) - Annual Report 2009

We are pleased to advise that the Goodman Annual Report 2009 (incorporating the Goodman Industrial Trust Annual Report 2009) is now available at www.goodman.com.

Goodman has faced a challenging financial year, punctuated by the rapid deterioration in financial markets and subsequent weakening of the economic environment globally.

The Group has however made significant progress by strengthening our capital position, reducing debt and refining our integrated own+develop+manage business model to reflect the market conditions. A range of capital and strategic initiatives were undertaken during the course of the financial year and since 30 June 2009, and as a result we believe we are in a sound position to achieve our long-term business objectives.

We achieved an operating profit of $408.1 million for the year ended 30 June 2009, equivalent to operating earnings per security of 17.4 cents, and paid a distribution of 9.65 cents.

Thank you for your support over the past year.

Yours faithfully

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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 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

Positioned for the future+

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Regional
View
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Goodman Group Annual Report 2009

Goodman Group is one of the world’s leading listed industrial property groups. We are focused on our proven business model of owning, developing and managing industrial property and business space in our chosen markets around the world. This approach, together with our dedicated team and global reach, means we are well positioned to meet the needs of our customers, investors and strategic partners.

Contents
Chairman’s letter	3	Corporate governance	17	Glossary	214
Group Chief Executive		Financial report for		Corporate directory	215
Off cer’s report	7	Goodman Limited	29
Group Chief Financial		Financial report for
Off cer’s report	13	Goodman Industrial Trust	150
Sustainability report	15	Securities information	213

Highlights

9.7cc Distribution p er security

17.4c 9.7cc Earnings per Distribution p er security security 4.1 $18.5b years 32 Weighted average Assets under Off i ces lease expiry management worldwide (direct portfolio) 96% 1.6 m sqm m $408.1 Occupancy Space leased Operating profi t (direct portfolio) globally

Goodman Group Annual Report 2009

Chairman’s letter Ian Ferrier, AM

Positioned to create value+

The resilience of the Group’s own+ develop+manage business model has been tested and proven and we remain fully committed to our stakeholders across these areas.

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The past 12 months have been most challenging for Goodman Group along with many other businesses. As Securityholders, we have had to endure the loss of considerable value over this period. I would like to explain the sequence of events that occurred and how we reacted to the challenges so as to reposition and stabilise Goodman for the future.

Since the stapling of the Group in February 2005 up until mid 2007, Goodman and the Australian Real Estate Investment Trust sector generally experienced strong growth. This period was characterised by a buoyant investment climate and a robust property sector. The cost of capital was low, credit conditions relaxed, and there was strong investor appetite for growth and active investment strategies. Over this time, the sector grew by over 20% per annum and the security price rose from around $4.00 to well over $7.00 in 2007. During this time, Goodman experienced strong growth around the world, both organically and via a series of strategic acquisitions.

In July 2007, the fi nancial world as we knew it changed considerably. Widespread instability swept through fi nancial markets and what was originally a US based problem quickly became a worldwide one from which few industries could escape. The Group was then presented with market conditions characterised by limited credit availability, a high cost of capital, dramatically reduced tolerance for risk and previous levels of debt, falling property prices and weakened investor confi dence.

The severity and speed of the market decline were unprecedented, and required us to focus on reducing our gearing levels in line with the deteriorating market conditions. In late October 2008, we announced a $956 million equity raising at $0.90 per security which was used to repay debt and expand our cornerstone investment in Asia.

Then, in the four months between January and April 2009, at a time when banking conditions tightened further and the security price fell to below $0.30, Goodman was faced with signifi cant challenges that needed to be addressed quickly and decisively to strengthen the balance sheet, reduce our level of debt and reposition the Group for long-term stability.

With the scarce availability and high cost of debt, the Group considered a broad range of capital management options to address its short and longer-term debt obligations. As fi nanciers became more cautious, $620 million of debt which had been the subject of discussion for rollover for sometime became the centre of a challenging debate shortly thereafter, making the prospect of refi nancing very diffi cult.

The fi rst stages of our capital management plan were announced with the objective of positioning the Group well for the long-term. On 19 May 2009, a $300 million Finance Facility was established with Macquarie which included the issue of options over Goodman securities. This was a necessary and signifi cant step as it provided the Group with the time and fl exibility to explore the full range of capital management initiatives.

On 16 June 2009, the Facility was increased with China Investment Corporation (CIC), a new stakeholder, committing $200 million to the Macquarie Finance Facility[1] . The combined size of the Facility was a total of $485 million with the options shared by the lenders on a pro rata basis.

1 Macquarie’s initial commitment of $300 million was subsequently reduced to $285 million to enable China Investment Corporation’s participation of $200 million in the Finance Facility, taking the fi nal Facility size to $485 million.

Goodman Group Annual Report 2009

Whilst industry peers were undertaking equity raisings of their own, the timing was not optimal for Goodman as it would not have delivered the benefi ts that stemmed from the long-term plan. The Group also wanted to ensure full disclosure and supply Securityholders with the full year results to enable informed decisions to be made.

On 6 August 2009, Goodman announced a comprehensive capital management plan that involved a $1.3 billion equity raising, refi nancing of bank debt and the issue of $500 million of hybrid securities to CIC. The Group was seeking to secure a partner that could contribute to the longer-term growth of the business. After extensive due diligence, CIC was attracted to Goodman’s leading global logistics platform and their new investment of $500 million is an initial step towards engaging in a broader long-term relationship with Goodman. It is the combination of CIC’s capital with Goodman’s management expertise that will provide opportunities to explore and participate in the global logistics market.

An additional equity partner was also secured in Canada Pension Plan Investment Board (CPPIB). The joint venture (JV) with CPPIB has been formed to undertake logistics ownership and development in mainland China and will provide Goodman with fund management, property services and development management fees. The JV will also explore opportunities to develop facilities on land owned by Goodman in Shanghai.

These steps were taken with a view to preserving the Group’s focus on its core business model. Despite capital markets being under great pressure, operationally the Group was performing well and Goodman remained committed to its own+develop+manage business model, with the focus on:

Property development – despite the reduced level of development activity, this area continues to generate income with a lower level of risk than in the past as a result of our more conservative and revised approach; and

Fund management – our Funds continue to provide a source of long-term income. They are now in a sound liquidity position with more headroom to

We remain committed to the markets we operate in, with an increased focus on Asia. The European market continues to be a facilitator of trade with Asia. Our international platform gives us a number of opportunities we can explore providing us with greater fl exibility.

The fi nancial impacts of the above are:

The Group achieved an operating profi t of $408 million for the year to 30 June 2009 but reported a statutory loss of $1,120 million mainly due to the impact of non-cash items, including $1,158 million in decreased property values;
As a consequence of our capital management initiatives and FY10 budget, our operating profi t is forecast to reduce to $310 million and undiluted operating earnings per security (EPS) to decrease to 5.7 cents per security in FY10 from 17.4 cents per security in FY09. The main drivers of this decrease in EPS include the dilutionary impact of the increased number of securities on issue, reduced income from development activities and interest coupon on the $500 million hybrid issued to CIC; and
The Board has contemporaneously determined that the Group’s distribution policy should be amended to distribute the higher of 60% of operating earnings and taxable income so as to preserve ongoing working capital to support the funding of future development activity.

Property investment – the direct property portfolio and cornerstone investments continue to deliver good returns, with disposals of some non-core assets taking place;

Property services – our in house management team has assisted us in maintaining stable rental income coupled with high occupancy and retention rates;

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The resilience of the Group’s own+develop+manage business model has been tested and proven and we remain fully committed to our stakeholders across these areas. We will refi ne our development model through the involvement of third parties and joint ventures for fi nancing, and undertake projects on a pre committed basis only. We will also continue to maintain our lower gearing level and proactively manage our debt expiries well ahead of due dates. We remain committed to our key markets and will work with our partners to prudently grow the business into the future. We will also continue to take a prudent approach to cost management to keep our operating costs low.

Finally, on behalf of the Board and management, thank you to Securityholders and customers for your ongoing support during what has been Goodman’s most challenging year. We remain fully committed to continuing to drive the business and ensuring we are well positioned for the future.

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Ian Ferrier, AM Independent Chairman

I would like to thank David Clarke, who has recently retired as Chairman, for his signifi cant contribution to the Group since he took up the position in October 2000. We wish him all the best for his health and the future.

Goodman Group Annual Report 2009

Gregory Goodman

Positioned + for the long-term

The combination of capital management and strategic initiatives undertaken has provided us with a signifi cantly strengthened business and places Goodman in a sound position to achieve our long-term objectives.

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The 2009 fi nancial year has been a challenging one for Goodman Group as we worked hard to strengthen our capital position, reduce debt and refi ne our own+develop+manage business model and operations to refl ect the market conditions.

Due to the rapid deterioration in fi nancial markets in the fi rst half of the year and subsequent weakening of the economic environment, the Group posted operating earnings per security (EPS) of 17.4 cents and an operating profi t of $408 million. The lower operating result compared with the 2008 fi nancial year was mainly due to lower development earnings.

An amount of 9.65 cents per security was distributed for the full year. This distribution was declared for the half year ended 31 December 2008, and paid to Securityholders in February 2009. No distribution was declared for the half year ended 30 June 2009.

The operating environment over the last year has been marked by continuing diffi cult credit conditions and limited access to debt capital, coupled with greater investor focus on balance sheet strength and a lower tolerance for risk. It has been imperative for the Group to preserve capital and reduce gearing. Following the severe decline in fi nancial markets during September and October 2008, we undertook a $956 million equity raising in late October to increase the Group’s available liquidity and to lower gearing.

We also completed an operational review in the fi rst half of the year to maximise effi ciencies and reduce costs across all aspects of our business. This has achieved savings through the consolidation and outsourcing of some of the Group’s functions, and reduced offi ce space requirements across a number of our markets. These initiatives are expected to deliver annualised cost savings of approximately 20%.

In the second half of the year, we had to deal with our upcoming debt refi nancing and the need to strengthen our balance sheet by developing a comprehensive capital management plan. We worked closely with debt and equity providers over a number of months to achieve this outcome. In May 2009, we announced a $300 million investment by Macquarie Bank Limited (Macquarie) into a new Finance Facility, which included a grant of options. This gave Goodman suffi cient liquidity to repay all of our 2009 debt expiries. In June 2009, a $200 million investment into the Finance Facility[1] was made by China Investment Corporation (CIC), on the same terms as Macquarie. Beyond the additional capital this provided to the Group, the announcement was signifi cant as it signalled CIC’s intention to form a strategic relationship with Goodman to explore a range of opportunities to grow our business.

Our capital management plan was announced post-balance date in early August 2009. It encapsulated a number of initiatives to achieve an optimal long-term capital structure for our business and addressed the equity and debt components of our balance sheet. Goodman has undertaken a $1.8 billion equity raising, of which $1.3 billion has been contributed by existing Securityholders, and $500 million through a separate hybrid securities issue to CIC. The Group also negotiated the extension of $1.2 billion of existing debt facilities. A further $2.9 billion of debt was extended in our fund management business. Signifi cantly, these initiatives have lowered our levels of debt; reduced pro forma gearing to 26.7% compared with 47.9% as at 30 June 2009; lengthened the weighted average term to expiry for our debt facilities to 4.2 years; and ensured we have no unfunded debt expiries until May 2012.

Goodman Group Annual Report 2009

continued

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New strategic relationships with CIC and Canada Pension Plan Investment Board (CPPIB) were also announced post-balance date. We are excited to be partnering with such leading global investors, who recognise the strength of our business platform. They will provide ongoing sources of capital to realise attractive opportunities and facilitate the growth of our business. These new partners demonstrate the confi dence that leading institutional investor groups have in our business, and our ability to continue to raise capital from a range of sources for the Group and our managed funds.

In response to the challenging operating environment, the Group also reviewed its business model during the year which led to changes in the way we approach our development activities. Since December 2008, we have withdrawn from a number of previously committed developments, and in addition, no new unfunded projects have been undertaken. The effect of these decisions has been to reduce development earnings from $299 million to $90 million. At the same time however, these changes enabled the Group to retain capital of $211 million and mitigate risk in this part of the business model.

We remain committed to the fundamentals of our integrated property business and continue to focus on owning, developing and managing industrial property and business space in our chosen markets around the world. Our people have worked hard this year to deliver quality service to customers, and ensuring we achieve high levels of customer satisfaction. Pleasingly, this has been refl ected in the resilience of the property fundamentals across our direct and indirect portfolios, with Goodman able to maintain high overall customer retention and occupancy rates.

At year end, the Group’s property investment portfolio stood at $5.6 billion, which is unchanged from last year. This is largely due to an additional $1.3 billion committed to the Group’s cornerstone investments and $362 million of completed developments. This was offset by a $1.2 billion downward revaluation of our property portfolio, predominantly in the United Kingdom (UK) and Australian markets, and $542 million of completed asset sales. Similarly, the Group’s total assets under management (AUM) stands at $18.5 billion, which compares with $18.6 billion for the same time last year. We managed a total of approximately 10.5 million sqm across the markets in which we operate.

We acknowledge the challenges faced by our business due to the unprecedented market conditions and weak operating environment over the last year. In turn, we understand the impact of this on all of our stakeholders. We are confi dent in the resilience of our integrated business model and leading industrial property and business space platform. The combination of the capital management and strategic initiatives undertaken during the year and since 30 June 2009 has provided us with a signifi cantly strengthened business and places Goodman in a sound position to achieve our long term business objectives.

On behalf of the Board and management team, I would like to recognise the effort and contribution of our people through the extraordinary events that have taken place over the last year. It is the skill, commitment and professionalism of our people that have been the key in achieving the success of our business in the past and will continue to drive our success in the future.

Group operations

Goodman remained focused on our core operations over the last year. We refi ned our robust own+develop+manage business model to ensure we were running as effi ciently as possible and that risk was being prudently managed in light of the diffi cult market conditions.

The adjustments we made to our business model have, in turn, changed the composition of our earnings. This is refl ected in the contribution to full year earnings from our property investment, property services, property development and fund management divisions, with the main impact occurring within our property development activities.

Property investment

Goodman’s property investment portfolio remained unchanged at $5.6 billion compared with last year. This portfolio encompasses the Group’s direct property investments, assets warehoused for funds and cornerstone investments in Goodman’s managed funds.

Property fundamentals remained resilient across the Group’s direct property investments. In Australia, we retained a high average occupancy rate of 96% at year end, with a weighted average lease expiry of 4.1 years and average rental growth of 3.7% across the portfolio. Our customer retention rate has remained steady at 75%, demonstrating the value of the Group’s customer service offering.

Our direct investment portfolio was impacted by downward asset revaluations during the year, which occurred across all markets but most prominently in the UK and Australia. We were also affected by property valuation declines in the Group’s cornerstone investments. The valuation movements that Goodman has experienced across its property portfolio during the last year are consistent with the fall in property values that has taken place around the world.

The Group retains signifi cant strategic cornerstone investments in our managed funds. The value of our cornerstone investments increased to $2.7 billion from $2.6 billion. The increase was predominantly due to the Group’s participation in the asset for equity swap undertaken by our UK business park fund, Arlington Business Parks Partnership (ABPP) in December 2008. The Group’s investment in our managed funds provides a diversifi ed source of earnings and achieves greater alignment of interests with our wholesale investors. We are committed to holding long-term investment positions in all of our funds and intend to continue with our strategy of targeting a 15% to 20% investment in the Group’s funds over time.

The properties contained within our cornerstone investments continued to perform well, with the occupancy rate retained at 94% (compared with 95% last year) and achieving rental growth of 1.1%.

Property services

The specialist property teams that make up Goodman’s Property Services division provide a range of services to over 1,300 customers worldwide. These services range from the procurement of new customers and lease renewals, through to refurbishments and undertaking environmental assessments.

Our teams are also responsible for ensuring that the 363 properties that comprise the 10.5 million sqm of industrial property and business space that Goodman manages around the world, are maintained to an exceptional standard. We work closely with customers to ensure their business needs are understood and in turn, that we are able to deliver integrated property solutions that meet their changing business needs.

The professionalism and proactive approach of our property teams is demonstrated through the consistently high customer retention and occupancy rates that are achieved across the Goodman property portfolio. In the 2009 year, we leased 1.6 million sqm globally to the value of $149 million in annual rent.

Goodman Group Annual Report 2009

continued

Earnings composition

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Property development
13%
Management
services
9%
Property
investment
78%
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Property development

Goodman’s development activities are an essential part of our integrated business model. Our approach to developments was reviewed during the year to conserve capital and minimise risk. We achieved this by withdrawing from $864 million of previously committed projects, while only undertaking select new development projects that were pre-committed, pre-sold, and predominantly funded by third parties. Developments in progress at 30 June 2009 were valued at $596 million, which is a substantial reduction from the $3.1 billion of developments underway at the end of the 2008 fi nancial year.

An example of how Goodman’s new approach has been implemented across our platform is the 12,475 sqm facility being developed at one of our sites in South Sydney for the Australian Red Cross Blood Service. We secured an agreement for lease in June 2009 and concurrently entered into a sale agreement with a private investor to purchase the land upfront and fund the capital expenditure to completion of the project. Goodman will achieve a total return of 12.1% on sale proceeds of more than $62 million.

The Group completed 84 new developments in Asia Pacifi c and Europe valued at $2.1 billion, delivering 1.3 million sqm of space for 58 customers. Importantly, 88% of these completed developments had customer pre-commitments.

The level of participation in development projects by Goodman’s funds has continued to grow, with 79% of developments completed during the year undertaken on behalf of our funds.

Capital allocation

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$M
$2,242
Direct property assets
$577
$2,819
$1,853
Cornerstone investments
$881
$2,734
Total investments $4,095
$1,458
$5,553
Asia Pacific Europe Total
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Fund management

Goodman’s third party AUM remained unchanged for the year at $14.3 billion. This result largely refl ects the $1.8 billion aggregate downward movement in fund property values and $1 billion of completed asset sales for the year ended 30 June 2009.

Our fund management business consists of eight distinct geographic funds that invest in high quality industrial property or business space. They are primarily ‘core’ income producing funds that are denominated in a single currency. Importantly, the Group’s fund management business continues to enjoy the strong support of major institutional investors, many of whom invest in a number of our funds.

The Goodman Australia Industrial Fund (GAIF), which is Australia’s largest unlisted industrial fund, completed leases of approximately 400,000 sqm of space during the year. This supported GAIF’s strong property fundamentals, enabling it to achieve a 97% occupancy rate and weighted average lease expiry of 6.3 years. In December 2008, GAIF completed the refi nancing of $450 million of maturing debt. In August 2009, GAIF also extended a $1,350 million syndicated facility for three years to August 2012, and a $100 million syndicated facility for two years to August 2011.

ABPP is the largest business park provider in the UK. It has undertaken a number of capital management initiatives during the year, including the completion of a $764 million asset for equity swap with existing investors. A targeted asset sales programme has achieved $450 million of properties sold or contracted for sale over the last 12 months.

In Hong Kong, the Goodman Hong Kong Logistics Fund (GHKLF) has grown to become the largest owner of industrial space in that market. It manages over 800,000 sqm from 18 properties across Hong Kong’s industrial regions. GHKLF also has access to a circa 300,000 sqm development pipeline through the acquisition of a 50% share in the Interlink and Seaview development projects from the Group and Macquarie.

As a result of these initiatives, our liquidity position has been signifi cantly strengthened, with the Group now having no unfunded debt expiries until May 2012. Pro forma gearing as at 30 June 2009 reduced to 26.7% following the initiatives and our weighted average debt maturity has been lengthened to 4.2 years.

Separately, we made changes to our distribution policy as part of the post-balance date announcement to provide ongoing working capital for the Group. This means the Group will distribute the higher of 60% of operating earnings and taxable income, with effect from the 2010 fi nancial year.

The Group’s interests in Japan were strengthened in November 2008 with the announcement that Goodman and our joint venture partners, Macquarie and J-REP Co., Ltd had established two wholesale funds to invest in Japanese logistics properties. The funds have an initial investment in a portfolio of 15 logistics facilities valued at more than $900 million.

Outlook

Goodman has made good progress toward resolving the uncertainty of the last year and ensuring we are well placed to manage through the current environment. Our fi nancial position has been strengthened and our business model enables us to take advantage of the signifi cant opportunities in the existing Asia Pacifi c and European markets in which we operate.

Capital management

Goodman has focused on the effective

management of its capital and risk to ensure we are appropriately positioned to meet the challenges of the current economic climate and to achieve our business strategy.

We raised $956 million of new equity in October 2008 and completed $491 million of property asset sales to improve the Group’s liquidity position and lower gearing. The Group established a $300 million Finance Facility with Macquarie in May 2009 to help repay $460 million of maturing debt in that month, being the fi rst tranche of a $2 billion multi-currency syndicated facility. In June 2009, CIC committed $200 million into the Finance Facility, investing alongside Macquarie, providing the Group with additional capital. The Group fi nished the year with $308 million in available liquidity, gearing of 47.9% and a weighted average debt maturity of 3.1 years.

The Group expects to achieve an EPS target of 5.7 cents on an undiluted basis for the 2010 fi nancial year. This target is predicated on no material changes to market conditions.

We are committed to our core business of owning, developing and managing industrial property and business space for our customers and investors in our key markets around the world.

This will be undertaken in a prudent way that refl ects the changes we have made to our business segments, particularly our development activities. Goodman will continue to undertake a prudent fi nancial approach to maintain debt at conservative levels and proactively manage all debt expiries. We will also closely manage operating costs and strive

We announced a comprehensive capital management plan post-balance date, including a fully underwritten $1.3 billion equity raising, which received strong support from eligible Securityholders; a $500 million hybrid securities issue to CIC; and a $163 million China joint venture with CPPIB. The Group also worked collaboratively with its lenders to extend the maturity of $4.1 billion of debt facilities across the Group and its managed fund platform, with $1.2 billion of these maturity extensions relating to the Group’s debt facilities.

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Gregory Goodman Group Chief Executive Offi cer

Goodman Group Annual Report 2009

Nick Vrondas

Positioned + for fi nancial stability

Goodman has completed a year of intensive capital management to achieve a fi nancially secure position for the Group and our managed funds.

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The initiatives we have undertaken throughout the year have sought to deal with the uncertainty generated by the tight credit conditions and fi nancial market volatility, such that Goodman is now well positioned to execute our long-term business strategy.

The Group raised $485 million of new debt capital from investors outside the Group’s banking syndicate. Macquarie Bank Limited and an associated fund invested $285 million and a further $200 million was invested by China Investment Corporation (CIC), providing us with suffi cient liquidity to repay all debt maturing in 2009 and giving the Group suffi cient time to fi nalise a more comprehensive capital management plan.

Our capital management plan was fi nalised postbalance date and addressed both the debt and equity components of our balance sheet. The debt initiatives undertaken will extend $1.2 billion of the Group’s debt across four facilities, and lengthen the weighted average debt maturity profi le to 4.2 years from 3.1 years as at 30 June 2009. We also agreed some amendments to our key banking covenants.

The equity initiatives undertaken post-balance date consisted of a $1.8 billion equity raising, of which a fully underwritten $1.3 billion was raised from existing institutional and retail Securityholders. Additionally, a $500 million hybrid securities issue was made to CIC with 45% of the hybrid securities able to be redeemed by Goodman within 15 months, subject to the Group’s security price trading at or above $0.54. Following completion of these initiatives, our pro forma gearing as at 30 June 2009 is reduced to 26.7%.

The Group completed the year with $308 million of available liquidity. Following the post-balance date initiatives, our liquidity position increased to $2.2 billion which is suffi cient to cover all of the Group’s maturing debt facilities until May 2012.

Other major equity initiatives completed during the year included a $956 million fully underwritten capital raising in October 2008, which was well supported by existing Securityholders.

The Group completed property asset sales to the value of $491 million, with the proceeds used to retire debt.

A full year non-cash valuation loss of $280 million has been recorded against Goodman’s currency and interest rate derivative positions due to adverse movements in these instruments.

Our managed funds platform was signifi cantly strengthened through the post-balance date initiatives. The term to maturity has been extended for $2.9 billion of our fund debt facilities, with improved banking covenants obtained on $2.7 billion of these facility extensions. In addition, improved banking covenant positions were also achieved on a further $2 billion of existing fund debt facilities where no term extension was sought. The liquidity profi le of our managed funds has improved through an increase in the weighted average term to maturity to 3.2 years from 2.7 years as at 30 June 2009. The increased cost of the debt restructuring has been fully factored into our estimates.

Asset sales of $1 billion were completed in our managed funds during the 2009 fi nancial year, with proceeds used to retire debt and increase liquidity.

The Goodman Hong Kong Logistics Fund (GHKLF) completed a HK$2.7 billion ($520 million) capital raising in October 2008, consisting of HK$1.6 billion ($310 million) of equity raised from existing and new investors to acquire a 50% interest in the Interlink and Seaview development projects. A further HK$1.1 billion ($210 million) of senior debt was raised through a new fi ve year facility from existing and new lenders to reduce gearing. Separately, GHKLF refi nanced a HK$1.1 billion senior debt facility until September 2011.

Goodman Group Annual Report 2009

continued

Group debt maturity profi le

Goodman Property Trust refi nanced NZ$902 million ($753 million) of existing debt facilities for three years, which was completed one year ahead of expiry. Goodman Australia Industrial Fund successfully refi nanced $450 million of existing debt in December 2008, and in the same month, Arlington Business Parks Partnership completed a $764 million asset for equity swap with existing investors.

In order to mitigate ongoing risks from currency movements to our gearing and liquidity positions, management and the Board moved to a revised currency hedging policy in April 2009. This will allow balance sheet hedging in a range from 70% to 95%, compared with 100% previously.

Fund debt maturity profi le

This change enables the Group to retain liquidity and better manage volatility of our gearing, to assist in maintaining a stable fi nancial position. Whilst this will result in some variability in our net tangible assets, it is considered a more balanced fi nancial risk management strategy.

Nick Vrondas Group Chief Financial Offi cer

Sustainability report

Positioned for a sustainable future+

Our commitment to sustainability continues to be driven by long-term value creation for all stakeholders.

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To deliver on this commitment, we continue working toward a fully integrated, whole of business approach to sustainability. Last fi nancial year, the Group introduced a sustainability framework that focused on the four key elements of workplace, marketplace, environment and community.

Sustainability is a key consideration in our funding, development and property management decisions. Goodman is aware of the changing regulatory landscape and we are committed to ensuring that Goodman’s direct property portfolio and those of its managed funds are well positioned to meet these regulatory requirements into the future.

Goodman is also working with our customers to deliver sustainable property outcomes that meet their expectations and requirements. From an investor perspective Goodman is mindful of protecting the long-term value of our assets by ensuring that they refl ect future market requirements.

Goodman is exploring strategic relationships with both suppliers and customers to leverage sustainable opportunities that are unique to Goodman’s structure and platform.

For the 2009 fi nancial year, Goodman has recorded a number of achievements across the key elements of our sustainability framework. Highlights include:

- completion of the Coca-Cola Amatil facility at Eastern Creek on the M7 motorway in Sydney sets a new benchmark in sustainable industrial development. Goodman’s platinum sponsorship of the Green Star Industrial tool has enabled us to undertake this development as a Green Star Pilot Project, ensuring the facility will be one of the fi rst Green Star Industrial facilities in Australia. It includes a number of sustainability initiatives that demonstrate Goodman’s commitment to sustainable development in the industrial space. Key sustainability initiatives incorporated into the Coca-Cola Amatil facility include:
one of Australia’s largest commercial solar panel systems (110 kW);
a rain water harvesting system to take water from the facility’s 31,000 sqm roof;
zoned and effi cient lighting throughout the warehouse and offi ce; and
indoor/outdoor breakout space for staff.
- Goodman has also completed a number of Green Star and BRE Environmental Assessment Method (BREEAM) projects in New Zealand and the UK and continues to be an active member of the New Zealand Green Building Council and the UK Green Building Council respectively. Our UK Business Parks team has made a commitment for all new developments it undertakes to achieve a minimum BREEAM standard of “Very Good”. This is approximately equivalent to a “4 Green Star” rating in Australia. An example of one of Goodman’s UK projects is Closed Loop Recycling (CLR) in Dagenham. This is the UK’s fi rst food grade plastics recycling business, which recycles around 35,000 tonnes of mixed plastics each year. In keeping with CLR’s business, the sustainable initiatives incorporated into its facility include: a number of energy production and usage features to convert sunlight and wind into electricity; natural and effi cient artifi cial lighting to reduce energy consumption; and the use of construction methods and materials such as a 100% recyclable building frame;

Goodman Group Annual Report 2009

Sustainability report continued

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Coca-Cola Amatil facility, Sydney
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- in Waldlaubersheim, Germany, Goodman has completed a facility for Corporate Express that incorporates a number of energy effi ciency and sustainability initiatives. For example, the solar roof generates electrical energy equivalent to 450 households of four persons, with the centre piece of the facility being a 1.6 mW solar (PV) installation;
- Goodman has also successfully partnered with BP Solar to secure funding from the Department of Environment, Water, Heritage and the Arts (DEWHA) for a 50 kW solar (PV) installation at our MTU Detroit Diesel Australia facility at Keylink in South Australia under DEWHA’s Solar Cities programme;
- Goodman is continuing to undertake National Australian Built Environment Rating System (NABERS) Energy ratings of all its commercial offi ce portfolio;
- as Goodman employees we recognise our roles as members of the wider community and again had the opportunity throughout the year to make contributions to employee nominated charities. This is done via payroll deductions which are matched by contributions from the Goodman Foundation under a scheme known as Good + Deeds. The focus of this effort was to assist disadvantaged people in the communities we serve including those affected by natural disasters; and
- Goodman has also launched its Good + Heart scheme whereby its staff can participate in active voluntary work in support of nominated charities, with staff given a day of paid leave each year for this purpose.
- Goodman Australia has become a Sustainability Advantage member. The Sustainability Advantage programme is run by the NSW Department of Environment and Climate Change. The programme is a partnership between Government and business and is aimed at facilitating and assisting businesses embed sustainability into business as usual operations. Goodman has encouraged a number of its supply chain partners to also commit to the programme;

Corporate governance+

Corporate governance is the framework of rules, systems and processes by which authority is exercised within Goodman and accountability placed.

Corporate governance infl uences how the objectives of Goodman Group (Goodman) are set and achieved, how risk is monitored and assessed and how performance is optimised. 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 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.

The corporate governance statement below outlines the ways in which Goodman has met the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations. Any departures to implementation of the Principles and Recommendations are described in the corporate governance statement below.

The Board

In February 2005, Goodman Limited (GL) 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 2001), the ASX Listing Rules and, in respect of the Trust, the compliance plan lodged with the Australian Securities and Investments Commission (ASIC). The Trust holds the majority of Goodman’s real property investments in Australia.

As a result of stapling, the Boards of GL 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 GL and GFM as Responsible Entity of the Trust.

GFM as Responsible Entity of the Trust (a registered managed investment scheme) must perform its duties in accordance with the constitution of the Trust and the laws applicable to responsible entities of managed investment schemes, as prescribed by the Corporations Act 2001. These duties require GFM to:

(a) act honestly;

(b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the Responsible Entity’s position; (c) act in the best interests of members; and (d) treat members of the same class equally.

The Board is comprised of eight Directors, the majority of whom are independent, and is currently chaired by Mr Ian Ferrier. Ian succeeded Mr David Clarke as Chairman on 28 July 2009, having been appointed as Acting Chairman on 28 November 2008. 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.

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Corporate governance continued

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) 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.

Please refer to page 31 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 and their rights and benefi ts. 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 50 and 51 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 undertake an induction process which includes meeting key executives and the provision of an information pack regarding the operations of Goodman, including key company policies and guidelines, constitutions for GL, GFM and the principal trusts and the relevant compliance plans.

The composition of the Board as at 30 June 2009 is shown below.

		Independent	Independent
Name	Description	Yes	No
Mr Ian Ferrier	Independent Chairman	+
Mr Gregory Goodman	Group Chief Executive Off cer		+
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	+

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 to apply 25% of Directors’ remuneration to the acquisition of Goodman Securities until that value of securities is held. For the purpose 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 professional advice at Goodman’s expense should they believe it necessary for the performance of their duties.

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.

Directors are provided with tours of Goodman’s properties, both within Australia and overseas. Tours may be 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.

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 rmation of 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 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.

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 Corporate Governance Principles and Recommendations. Independence is assessed annually and was last confi rmed in June 2009, having regard to the upcoming fi nancial year.

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 18 sets out the Directors and their status.

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Corporate governance continued

Mr David Clarke was, and Mr James Hodgkinson is, not considered independent due to Goodman’s business relationships with Macquarie Group Limited, which include Macquarie Goodman Asia’s investment in Japan. Mr David Clarke is the Chairman of Macquarie Group Limited and Mr James Hodgkinson is an Executive Director (non-voting) of Macquarie Group Limited within Real Estate, Macquarie Capital Advisers.

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 and he retired from that position on 2 July 2009.

David brought 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.

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

Following the announcement that David was receiving medical treatment, Ian Ferrier was appointed as Acting Chairman on 28 November 2008. He was appointed as Chairman on 28 July 2009.

Mr Ferrier is an Independent Director with over 44 years of experience in corporate recovery and turnaround practice.

Goodman adopted a number of practices to further strengthen corporate governance in recognition of David’s non-independent status. Such measures included the separation of the roles of Chairman and Group Chief Executive Offi cer, the delegation of some Board functions to committees in which the Chairman does not participate, and having a majority of Independent Directors on the Board. These measures have remained in place notwithstanding that Ian Ferrier is an Independent Director.

In his role as Chairman, Ian is responsible for ensuring that the Board functions as an effective and cohesive group, working with the Group Chief Executive Offi cer to determine the strategic direction for Goodman, establishing high standards of corporate governance and oversight of strategic development and leadership. The role also includes formulation of Board meeting agendas and papers and management of Board meetings to ensure the best performance of each participant. The Chairman acts as a representative of, and spokesperson for, the Board.

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.

Company Secretary

The Company Secretary is Mr Carl Bicego. Carl is responsible for advising Directors on corporate governance matters, liaising with regulators, supervising market disclosures and investor interactions, maintenance of Goodman’s register and apprising the Board of governance issues. His biographical details appear on page 51 in the Directors’ report.

Remuneration and Nomination Committee

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:

(a) identify and recommend individuals to the Board for nomination as members of the Board and its Committees;
(b) ensure performance of members of the Board is reviewed;
(c) develop and recommend to the Board relevant corporate governance principles;
(d) ensure an appropriate Board and Committee structure is in place so that the Board can perform a proper review function;
(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) 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.

The Remuneration and Nomination Committee operates under a formal charter, a copy of which is published on Goodman’s website.

The Committee was chaired by Mr David Clarke until 28 November 2008, when Ian Ferrier was appointed Acting Chairman (now Chairman). The Committee is now comprised of Independent Directors. Formerly, while not an Independent Director, David brought signifi cant expertise and understanding of the market to the deliberations of the Committee, and Goodman believes that his contribution was invaluable. Further information regarding the attendance of Committee members can be found on page 31 in 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 37 to 48 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 42 and 43 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 was conducted during the course of the fi nancial year. The process for conducting this review consists of each Director completing a self-assessment questionnaire, which also elicits comments and key issues a 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. In relation to the 2009 performance review, the questionnaires completed by the Directors covered the following matters:

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Corporate governance continued

(a) Board contribution to developing strategy and policy;
(b) interaction between the Board and management;
(c) Board processes to monitor business performance and compliance, control risk and evaluate 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. This process is conducted along with the assessment of the Board and individual Directors through the questionnaire process.

The performance of senior executives is reviewed annually through a structured process of self-assessment and review against previously established goals and objectives by the Group Chief Executive Offi cer. The formal review process is co-ordinated by Goodman’s Human Resources department and applied globally throughout the Group. In relation to the 2009 reporting period, performance reviews are currently being completed in accordance with these procedures.

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 requires Directors and employees to, among other things:

(a) keep abreast of the Group’s policies and procedures, and where necessary sign acknowledgements that they have read these policies;
(b) co-operate fully with any investigations relating to Goodman’s policies;
(c) notify the Group General Counsel in writing if they are required by any regulatory body to provide information, answer charges or face proceedings in respect of any matter arising during their tenure with the Group;
(d) keep any and all Group information confi dential except as necessary for marketing Group products and services;
(e) notify the Group General Counsel and/or the General Manager, Human Resources if they have reason to suspect fraud, corrupt, criminal or unethical conduct by any Director or employee of the Group; and
(f) are prohibited from accepting payment or any other benefi t in money or kind as an inducement or reward for any act or in connection with any matter or business transaction undertaken by or on behalf of the Group.

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 own+develop+manage business model. 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 15.

Securities trading

The Securities Trading Policy, which is made available to Directors on their appointment and employees on their commencement, 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.

Under the Securities Trading Policy, the only appropriate time for a Director or employee to acquire or sell Goodman securities is when he or she is not in possession of price sensitive information that is not generally available to the market. To avoid any adverse inference being drawn of unfair dealing, Directors and employees are not to deal in Goodman securities during the period from 2 two weeks before the end of a fi nancial period (ie. from after 16 June and 17 December) through to the release of Goodman’s half yearly or yearly results (unless a public offer is being conducted in accordance with the Corporations Act 2001). A trading blackout is notifi ed to Directors and employees during those times and may also be notifi ed by the Company Secretary or Group Chief Executive Offi cer at other times when considered appropriate.

Approval is not given during a trading blackout unless the Group Chief Executive Offi cer (CEO) or Chairman is satisfi ed of circumstances amounting to hardship and that the person is not in possession of price sensitive information which is not generally available to the market.

Directors and employees are not allowed to engage in short-term trading of Goodman securities under the Securities Trading Policy nor are Directors or senior executives allowed to enter into derivative contracts that hedge their exposure to movements in the price of Goodman securities that have not vested.

The Securities Trading Policy applies to decisions to sell Goodman securities by a mortgagee or margin lender under a margin loan or other fi nancing arrangements.

Any trade in breach of the Securities Trading Policy must be immediately disclosed to the Company Secretary for reporting to, and consideration by, the Board.

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.

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.

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Corporate governance continued

Gifts

All Directors and employees are prohibited from accepting payment or any other benefi ts in money or in kind from third parties as an inducement or reward for any act or in connection with any matter or business transaction undertaken by or on behalf of Goodman. All Directors and employees must exercise extreme care when giving or receiving business related gifts and are requested to disclose any such gifts. Whether a gift may be accepted or given will depend upon a number of factors including:

(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.

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

Group Employee Handbook

The Handbook is a guide for employees about their obligations and entitlements as employees of Goodman. The rules and policies in the Handbook apply to all employees globally. The Handbook covers matters such as diversity, remuneration, insurance, presentation, leave, performance management, grievance handling, substance abuse, internet/email usage and disciplinary proceedings. The Handbook is regularly reviewed and updated by the General Manager, Human Resources.

Occupational Health and Safety (OH&S) Manual

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.

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.

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 on pages 25 to 27.

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) establishing procedures for selecting, appointing, and if necessary, removing Goodman’s external auditor, including undertaking any required due diligence.

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 review the half yearly and annual fi nancial report prior to approval by the Board, discuss their fi ndings with the Committee including the adequacy of fi nancial and accounting controls, and 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.

Each reporting period, the external auditor provides an independence declaration in relation to the audit or review. The Committee is also responsible for assessing whether non-audit services provided by the external auditor are consistent with the external auditor’s independence and compatible with the general standard of independence of auditors imposed by the Corporations Act 2001.

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. Internal audit fi ndings are reported to both the Audit and Risk and Compliance Committees and management responds to the recommendations.

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Corporate governance continued

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 2009, the Audit Committee is chaired by Mr John Harkness. John is a Chartered Accountant and was a former partner of KPMG, before retiring 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. The other members of the Committee are Mr Ian Ferrier and Mr James Hodgkinson. Ian is also a Chartered Accountant with signifi cant fi nancial expertise and was previously the Chairman of the Audit Committee (until he became Acting Chairman of the Board). 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 31 in the Directors’ report for details of the Committee members’ attendance at meetings during the year. Goodman’s Audit Committee Charter is available on its website.

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, 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 control and that the system is operating in all material respects in relation to the fi nancial reporting risks.

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 required that management design and implement a risk management and internal control system to manage Goodman’s material business risks. 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 operates under a formal charter (available on Goodman’s website) and reports to the Board regarding the effectiveness of its risk management framework 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;
(f) sustainability framework; and
(g) insurance requirements.

Both management and the Board have formed the view that the Committee manages Goodman’s risks effectively.

Goodman’s risk management system has been developed in accordance with international and Australian/New Zealand standards on Risk Management and has been underpinned by a Risk Management Policy that sets out the oversight and management of risk for Goodman. Goodman’s Risk Management Policy is available on its website.

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 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.

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 Mr Jim Sloman (Chairman), Mr Ian Ferrier and Mr Gregory Goodman.

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 31 in the Directors’ report.

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. Under this policy, Investor Relations is responsible for the co-ordination of all ASX announcements, however it relies on the input and signoff of key staff in each division to which the ASX announcement relates. The Group Chief Executive Offi cer and Company Secretary (the “Communications Offi cer”) review all fi lings prior to lodgement with ASIC or the ASX and are responsible for ensuring timely lodgement of all documentation.

Where possible, the Board’s policy is to review announcements (or near fi nal drafts) on key transactions, disclosure documents and other periodic or other mandatory disclosures.

All announcements are reported to the Board and a record is made as part of Board papers, whether the announcement has been reviewed by the Board or otherwise. The Communications Offi cer has responsibility for all communications with the ASX. The Communications Offi cer authorises all market communications and should be kept informed of issues discussed during meetings with investors/analysts. The Communications Offi cer reviews other market communications such as press releases and other corporate publications, to ensure a consistent approach is adopted in relation to disclosure. Following receipt of confi rmation of lodgement and the release of announcements, relevant information is then published on the Group’s website.

Goodman Group Annual Report 2009

Corporate governance continued

The Group’s senior executives, including the Communications Offi cer, regularly meet to consider operational matters and regulatory compliance including the consideration of identifi ed potential transactions that may require disclosure. In particular, this includes signifi cant corporate or property transactions, and refi nancing at the Group level or within the Group’s managed funds.

The Continuous Disclosure Policy also sets out when trading halts are to be used, how to respond to market speculation and guidelines regarding how communications are to be made through differing forms of media.

Information on continuous disclosure is made available to all employees on commencement of employment. Goodman’s Continuous Disclosure Policy is available on its website.

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. Goodman’s policy and procedures in relation to investor communications are incorporated into its Continuous Disclosure Policy.

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 the 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 practicable after they are determined.

Complaints handling

Goodman has both internal and external complaints handling procedures. Investor Relations 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.

Financial report for Goodman Limited

and its controlled entities for the year ended 30 June 2009

Contents
Directors’ report	30
Lead auditor’s independence declaration	53
Income statements	54
Balance sheets	55
Statements of recognised income and expense	56
Cash f ow statements	57
Notes to the f nancial statements
1 Statement of signif cant accounting policies	58
2 Earnings per Company share/per security	69
3 Acquisitions of controlled entities	70
4 Discontinued operation	71
5 Disposals of interests in controlled entities	72
6 Segment reporting	72
7 Critical accounting estimates used in the
preparation of the f nancial statements	76
8 (Loss)/prof t before income tax	79
9 Income tax benef t/(expense)	82
10 Dividends and distributions	84
11 Receivables	86
12 Inventories	88
13 Assets/liabilities classif ed as held for sale	89
14 Other assets	89
15 Investment properties	90
16 Investments accounted for using the
equity method	94

17 Other f nancial assets	99
18 Plant and equipment	100
19 Intangible assets	101
20 Payables	105
21 Interest bearing liabilities	105
22 Provisions	108
23 Issued capital	109
24 Reserves	111
25 (Accumulated losses)/retained earnings	113
26 Minority interests	113
27 Commitments	114
28 Contingencies	115
29 Notes to the cash f ow statements	116
30 Controlled entities	118
31 Interest in joint venture operation	124
32 Related parties	125
33 Other related party disclosures	130
34 Employee benef ts	132
35 Financial risk management	137
36 Auditors’ remuneration	146
37 Events subsequent to balance date	147
Directors’ declaration	148
Independent auditor’s report	149

Goodman Group Annual Report 2009

Directors’ report

Goodman Limited (formerly Goodman International Limited) and its Controlled Entities

The directors (Directors) of Goodman Limited (Company) (formerly Goodman International Limited) 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 2009 (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 Ian Ferrier, AM (Independent Chairman)1	1 September 2003
Mr Gregory Goodman (Group Chief Executive Off cer)	7 August 1998
Mr David S Clarke, AO (Non-Executive Director)	26 October 2000
	(retired 2 July 2009)
Mr Patrick Goodman (Non-Executive Director)	14 April 1998
Ms Diane Grady, AM (Independent Director)	30 September 2007
Mr John Harkness (Independent Director)	23 February 2005
Mr James Hodgkinson (Non-Executive Director)	21 February 2003
Ms Anne Keating (Independent Director)	23 February 2005
Mr Jim Sloman, OAM (Independent Director)	1 February 2006

Mr Ian Ferrier assumed the role of Acting Chairman on 28 November 2008, when Mr David Clarke took leave of absence due to ill health. Mr Ian Ferrier was confi rmed as Independent Chairman on 28 July 2009.

Details of the Directors’ qualifi cations and experience are set out on pages 50 and 51 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 October 2006

Details of the Company Secretary’s qualifi cations and experience are set out on page 51 in this 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
			Committee		Committee		Committee		Committee
	Board	meetings	meetings		meetings		meetings		meetings
Director	Held1	Attended	Held1	Attended	Held1 Attended		Held1 Attended		Held1 Attended
Mr Ian Ferrier	27	27	6	6	5	5	–	–	2	2
Mr Gregory Goodman	27	26	–	–	–	–	–	–	2	2
Mr David Clarke2	5	5	–	–	3	3	–	–	–	–
Mr Patrick Goodman	27	25	–	–	–	–	4	4	–	–
Ms Diane Grady	27	22	–	–	5	4	–	–	–	–
Mr John Harkness	27	27	6	6	–	–	4	4	–	–
Mr James Hodgkinson	27	25	6	6	–	–	–	–	–	–
Ms Anne Keating	27	27	–	–	5	5	–	–	–	–
Mr Jim Sloman	27	27	–	–	–	–	4	4	2	2

Refl ects the number of meetings individuals were entitled to attend. The Directors make themselves available as required but a number of the above meetings were unscheduled with the result that Directors may not have been able to attend the meeting.
Mr David Clarke was on leave of absence from 28 November 2008 due to ill health and retired as a Director on 2 July 2009.

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 investment in directly and indirectly held industrial property, fund management, property services and development management. The Consolidated Entity operates in Australia, New Zealand, Asia and Europe. There were no signifi cant changes to the nature of the Consolidated Entity’s activities during the year.

Goodman Group Annual Report 2009

Directors’ report (cont)

Review and results of operations

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

	Consolidated
	2009 2008
Revenue and other income before fair value adjustments on investment properties ($M) Fair value adjustments on investment properties ($M)	915.5 1,367.3 (1,157.7) (284.5)
Revenue and other income ($M)	(242.2) 1,082.8
(Loss)/prof t attributable to Securityholders ($M) (Loss)/prof t attributable to Securityholders from continuing operations ($M) Basic (loss)/earnings per Company share (¢) Basic (loss)/earnings per Company share from continuing operations (¢) Basic (loss)/earnings per security (¢) Basic (loss)/earnings per security from continuing operations (¢) Dividends and distributions provided for or paid by Goodman ($M) Weighted average number of securities on issue (M)	(1,120.0) 250.7 (1,120.0) 258.5 (10.5) 1.3 (10.5) 1.7 (37.0) 11.2 (37.0) 11.6 264.1 568.2 2,406.3 1,733.2
Net assets ($M) Number of securities on issue (M)1 Net tangible assets per security ($)2	3,777.6 4,669.1 2,738.0 1,675.2 0.85 1.96

Represents amounts as per Australian Securities Exchange (ASX) excluding 41.7 million treasury securities (2008: 40.6 million).
Net tangible assets per security is stated after deducting amounts due to minority interests.

Dividends and distributions

The Company did not declare any dividends during the year ended 30 June 2009 or up to the date of this report (2008: $nil).

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

	Distribution	Total amount	Date of
Distributions from GIT – 2009	cpu	$M	payment
Distributions for the half years ended:
– 31 December 2008	9.65	264.1	26 Feb 09
– 30 June 2009	–	–	–
Total distributions for the year ended 30 June 2009 Distributions from GIT – 2008 Distributions for the quarters ended: – 30 September 2007 – 31 December 2007 – 31 March 2008 – 30 June 2008 Total distributions for the year ended 30 June 2008	9.65 8.5 8.5 8.5 8.5 34.0	264.1 141.2 142.3 142.3 142.4 568.2	8 Nov 07 14 Feb 08 8 May 08 26 Aug 08

Distributions declared by a controlled entity, Goodman PLUS Trust, to holders of its hybrid securities (Hybrid Securities) during the year were $24.5 million (2008: $15.6 million).

Reconciliation of (loss)/profi t attributable to Securityholders to operating profi t available for distribution

The reconciliation of (loss)/profi t attributable to Securityholders to operating profi t available for distribution is as follows:

		2009	2008
	Note	$M	$M
(Loss)/prof t attributable to Securityholders		(1,120.0)	250.7
Net loss from fair value adjustments on investment properties, net of deferred tax	15	527.0	145.5
Share of net loss from fair value adjustments on investment properties in associates,
net of deferred tax	16a	578.6	125.0
Share of net loss from fair value adjustments on investment properties in joint venture
entities, net of deferred tax	16b	52.1	–
Share of unrealised losses from fair value adjustments on derivative f nancial instruments
in associates and joint venture entities, net of deferred tax		8.0	–
Impairment losses	8	229.7	108.2
Other adjustments:
– Straight lining of rent and amortisation of lease incentives		(3.3)	(1.1)
– Fair value adjustments on derivative f nancial instruments, net of deferred tax	8	62.3	(11.4)
– Share based payments (credit)/expense (including impairment of ESAP receivables)	8	(38.1)	34.6
– Restructuring costs	8	85.7	–
– Restructuring costs incurred within associates	16a	2.2	–
– Restructuring costs incurred within joint ventures entities	16b	2.8	–
– Losses on disposals of investment properties by associates	16a	17.1	–
– Losses on disposals of investment properties by joint ventures entities	16b	1.8	–
– Capital losses/(prof ts) not distributed		2.2	(84.4)
Operating prof t available for distribution		408.1	567.1

Goodman Group Annual Report 2009

Directors’ report (cont)

State of affairs

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

(a) Change of name

On 1 December 2008, the Company changed its name from Goodman International Limited to Goodman Limited.

(b) Equity raising and acquisition of equity interest in Goodman Asia Limited (GAL) (formerly Macquarie Goodman Asia Limited)

On 28 November 2008, Goodman completed a capital raising of approximately A$956 million, comprising an A$229.5 million institutional placement and an A$726.5 million, 0.47 for one accelerated non-renounceable entitlement offer of Goodman stapled securities at an issue price of A$0.90 per security.

The proceeds of the capital raising were used to strengthen Goodman’s balance sheet by reducing debt and consolidating the operating platform. Part of these proceeds (A$194 million) were used to acquire Macquarie Group Limited’s (Macquarie Group) 50% interest in GAL, a 25% share in two development joint ventures in Hong Kong and an additional investment in Goodman Hong Kong Logistics Fund increasing the Consolidated Entity’s ownership interest to 24.2%.

(c) New Finance Facility

On 19 May 2009, Goodman signed an A$300 million secured Finance Facility with Macquarie Group. The key terms of the Facility are as follows:

- nine month term expiring on 20 February 2010, extendable for a further 15 months; and
- covenants comparable to those in Goodman’s existing common terms deed poll.

In conjunction with the Facility, Macquarie Group was granted options over 414 million Goodman stapled securities at an exercise price of A$0.30 per security with a two year term. The issue of 294 million of these options is subject to Securityholder approval.

The proceeds from the Facility and surplus liquidity were used by the Consolidated Entity to repay Tranche A of the Syndicated Multi-Currency Facility (SMCF).

On 16 June 2009, China Investment Corporation (CIC) became a party to the Finance Facility resulting in an increase in the Facility limit by A$185 million to A$485 million. In conjunction, the Consolidated Entity entered into an agreement to issue 255.3 million options with an exercise price of A$0.40 per security with the lenders to the Facility to share the A$0.30 and A$0.40 exercise price per security options on a pro rata basis having regard to their commitments under the Facility. The issue of the A$0.40 exercise price options is subject to Securityholder approval.

(d) Other fi nance facilities

During the year, the Consolidated Entity repaid and retired the following facilities:

- A$460 million in Tranche A of the SMCF;
- A$100 million Australian dollar facility;
- A$200 million of the Australian dollar revolving credit facility;
- A$328.4 million of the UK pounds sterling revolving credit facility;
- A$47.3 million of the New Zealand dollar revolving credit facility; and
- A$8.3 million of a euro term facility.

During the year, the Consolidated Entity extended its £10 million revolving line from May 2009 to September 2009.

(e) Goodman Australia Industrial Fund (GAIF)

On 24 December 2008, GAIF refi nanced $450 million of debt, the fi rst tranche of GAIF’s $1.6 billion bank syndication facility, with maturities in December 2011 and December 2012.

(f) Arlington Business Parks Partnership (ABPP)

On 23 December 2008, ABPP completed an equity raising of A$764 million in the form of the injection of property assets from existing investors of A$685 million and cash and cash equivalents of A$79 million.

(g) Goodman European Logistics Fund (GELF)

Goodman participated in the fi rst and second closings of an equity offer by GELF during the year and committed to subscribe for the lower of A$451.3 million or such amount as represents 40% of the GELF units on issue. The commitment will be drawn down as and when required by the capital management plan of GELF and to date A$198.2 million has been drawn.

(h) Japan fund

On 21 November 2008, J-REP Co., Ltd, Goodman and Macquarie Group announced that A$106 million of equity had been raised in respect of the two wholesale funds established in April 2008.

Details of changes in the state of affairs of the Consolidated Entity subsequent to the year end are set out on page 52 in this Directors’ report.

Strategy and outlook

Goodman is committed to the execution of its long-term strategy of owning, developing and managing industrial property and business space.

In light of the current environment, Goodman is focused on its core business and maintaining core earnings. This has been supported by initiatives to maintain a strong fi nancial position and lower gearing through the disposal of assets and repayment of debt. A review of Goodman’s operations has also achieved signifi cant cost savings across its business.

Goodman continues to actively manage its direct and third-party property portfolios and is committed to building long-term value for customers and investors. Its fund management activities are progressing to plan and include the launch of a logistics joint venture in China with the Canada Pension Plan Investment Board (CPPIB). Goodman’s development activities have been scaled back to reduce risk and conserve capital.

Information regarding developments subsequent to the year end has been included on page 52 in this Directors’ report.

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 fi nancial report because disclosure of the information would be likely to result in unreasonable prejudice to the Consolidated Entity.

Options granted during the year

(a) Granted to employees

The following options were issued by the Company under the Executive Option Plan (EOP) to executives and other employees during the year:

during the year:
		Exercise
		price1
Date granted	Expiry date	$	Options issued
Options over unissued securities
5 September 2008	30 June 2013	3.07	48,175,000
17 November 2008	30 June 2013	3.07	7,000,000
Cash settled options
5 September 2008	30 June 2013	3.07	1,375,000
Total			56,550,000

As a consequence of the entitlement offer on 28 November 2008, the exercise prices of certain options issued on 5 September 2008 were reduced to $3.04 per option in accordance with the Listing Rules. This reduction does not apply to options that were offered to the Group Chief Executive Offi cer and employees in certain European jurisdictions which were subject to conditions at the time of the offer. On successful completion of the one for one non-renounceable entitlement offer announced on 6 August 2009 the exercise prices of all options will be reduced in accordance with the Listing Rules by $0.0536.

(b) Granted to fi nance facility providers

The following options over unissued securities were issued by the Company under the option deed associated with the new fi nancing arrangement with Macquarie Group and CIC during the year:

		Exercise
		price
Date granted	Expiry date	$	Options issued
Options over unissued securities
19 May 20091	22 May 2011	0.303	414,000,000
15 Jun 20092	22 May 2011	0.404	255,300,000

The grant of 294,000,000 options is conditional on Securityholder approval.
The grant of all the options is conditional on Securityholder approval.
On successful completion of the one for one accelerated non-renounceable entitlement offer announced on 6 August 2009 the exercise price will be adjusted in accordance with the Listing Rules to $0.2464.
On successful completion of the one for one accelerated non-renounceable entitlement offer announced on 6 August 2009 the exercise price will be adjusted in accordance with the Listing Rules to $0.3464.

Goodman Group Annual Report 2009

Directors’ report (cont)

Unissued securities under option

At the date of the fi nancial report, unissued securities under option issued to employees and the applicable earnings per security (EPS) or return on equity (ROE) performance hurdles are:

		Exercise	Number of
		price1	unissued options	Performance
Date granted	Expiry date	$	at 30 June 2009	hurdle
3 November 2005	30 June 2011	4.06	3,153,445	11% ROE
9 December 2005	31 December 2011	4.26	11,250,000	11% ROE
14 June 2006	31 December 2011	5.21	2,120,000	12% ROE
13 October 2006	30 September 2012	6.32	7,522,500	12% ROE
10 April 2007	31 December 2012	7.20	19,850,000	12% ROE
22 June 2007	31 December 2012	7.10	6,310,000	12% ROE
19 October 2007	30 June 2013	6.33	32,167,500	12% ROE
26 November 2007	30 June 2013	6.33	2,700,000	12% ROE
5 September 2008	30 June 2013	3.04	43,325,000	12% ROE
5 September 2008	30 June 2013	3.07	39,000,000	12% ROE
17 November 2008	30 June 2013	3.07	7,000,000	12% ROE

As a consequence of the entitlement offer on 28 November 2008, the exercise prices of certain options on issue have been reduced. The amounts disclosed in the table above refl ect this reduced exercise price, where relevant. On successful completion of the one for one accelerated non-renounceable entitlement offer announced on 6 August 2009 the exercise prices will be further reduced in accordance with the Listing Rules by $0.0536.

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 Yearly Review of the Consolidated Entity).

At the date of the fi nancial report, unissued securities under option issued to Macquarie Group and CIC are:

		Exercise	Number of
		price	unissued options
Date granted	Expiry date	$	at 30 June 2009
19 May 20091	22 May 2011	0.303	414,000,000
15 June 20092	22 May 2011	0.404	255,300,000

The grant of 294,000,000 options is conditional on Securityholder approval.
The grant of all the options is conditional on Securityholder approval.
On successful completion of the one for one accelerated non-renounceable entitlement offer announced on 6 August 2009 the exercise price will be adjusted in accordance with the Listing Rules to $0.2464.
On successful completion of the one for one accelerated non-renounceable entitlement offer announced on 6 August 2009 the exercise price will be adjusted in accordance with the Listing Rules to $0.3464.

Securities issued on exercise of options

During or since the end of the year, Goodman issued 33,334 securities to employees as a result of the exercise of options with an exercise price of $2.59 per security.

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 this Director’s report is as follows:

	Direct	Indirect
	securities	securities	Total
Non-Executive
Mr Ian Ferrier	215,436	–	215,436
Mr David Clarke	173,250	130,895	304,145
Mr Patrick Goodman	–	76,794,926	76,794,926
Ms Diane Grady	–	104,100	104,100
Mr John Harkness	117,460	–	117,460
Mr James Hodgkinson	166,865	460,286	627,151
Ms Anne Keating	43,373	109,060	152,433
Mr Jim Sloman	198,206	–	198,206
Executive
Mr Gregory Goodman	5,955,992	70,838,934	76,794,926

None of the Non-Executive Directors held any options over unissued securities at 30 June 2009. Mr Gregory Goodman held 9,700,000 options over unissued securities at 30 June 2009 (2008: 2,700,000). 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.

Remuneration report – audited

The Remuneration report of Goodman sets out the Board’s policies for determining the remuneration of its key management personnel and other senior executives 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), other 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 (STI), the long-term incentive (LTI) (EOP and Employee Securities Acquisition Plan (ESAP)), superannuation entitlements, termination payments and gifts and fringe benefi ts policy.

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

- Mr Ian Ferrier (Independent Member);
- Ms Diane Grady (Independent Member);
- Ms Anne Keating (Independent Member);
- Mr David Clarke (Member) (on leave of absence from 28 November 2008 due to ill health and retired as a Member on 2 July 2009); and
- Mr Gregory Goodman (Member) (resigned as a Member on 16 July 2008).

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 31 in this Directors’ report.

Further information relating to the activities of the Committee is available on Goodman’s website.

Goodman Group Annual Report 2009

Directors’ report (cont)

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 return on equity in the short and longer-term.

The global nature of Goodman’s business requires 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.

The Committee seeks input and advice to ensure that it determines an approach to remuneration which is sustainable, competitive and attractive in the market. In this regard, it is clear that remuneration market rates have declined and remuneration of senior Goodman executives refl ects this trend. For example, no bonuses were awarded to senior executives in respect of the 2008 fi nancial year and the Board has confi rmed that no bonuses will be paid in respect of the 2009 fi nancial year.

The Board keeps itself abreast of public discussion and policy initiatives in the area of remuneration – particularly in relation to the remuneration of senior executives. Among the challenges faced by all boards is fi nding the balance between offering competitive remuneration which includes effective retention mechanisms and delivering appropriate performance based rewards. For example, it is important that any short-term incentives are disbursed over a timeframe that seeks to ensure that no short-term windfalls arise from decisions or performance that subsequently are proven to be inconsistent with such rewards. Goodman has placed a heavy reliance upon options over stapled securities as part of its remuneration strategy for senior executives and while signifi cant allocations of options were made to individuals in the context of the performance in past years, the potential value of those rewards has been eliminated as the price of Goodman stapled securities has declined.

The Committee is reviewing policy in relation to the timing and form of STI and LTI disbursements, including the appropriate form of performance hurdle to apply under the EOP, which is intended to become a mix of relative total Securityholder return and EPS growth.

Remuneration policies

Fixed remuneration

Fixed remuneration consists of a base remuneration package which includes cash, non-cash benefi ts (e.g. motor vehicles and allowances) including the full cost of any related Fringe Benefi ts Tax charges, plus any salary sacrifi ced 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. For senior executives, apart from one off adjustments to remuneration of particular individuals due to signifi cant changes in role/responsibilities the fi xed base pay element of remuneration has remained unaltered since July 2006.

Remuneration report – audited (cont)

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

The STI provides cash bonuses for individual performance compared to objectives set for the year. Total STI amounts are calculated in accordance with the policy established by the Remuneration and Nomination Committee and approved by the Board. The 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 executives 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 the period and other performance considerations.

The current Bonus Policy provides that the fi rst $100,000 (2008: $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 STI payments 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. As reported above, no bonuses were awarded to senior executives in respect of the 2008 fi nancial year.

The Board has confi rmed that no bonuses will be paid in respect of the 2009 fi nancial year.

(b) Long-term incentive

The LTI provides equity based remuneration through the issue of options over securities under the EOP.

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 as measured by the price of Goodman stapled securities.

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 Goodman stapled security 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.

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 fi ve 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 second, third and fourth anniversaries of the offer; and
- the exercise price of options will be based on the volume weighted average market price of Goodman stapled securities traded on the ASX during the 10 trading days immediately prior to the date options are offered to nominated employees. The most recent offer of options to executives was made in September 2008 and in accordance with this formula the exercise price was $3.07, although this was reduced to $3.04 as a consequence of the entitlement offer on 28 November 2008.

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.

Goodman Group Annual Report 2009

Directors’ report (cont)

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 return on equity 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 2008 fi nancial year.

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

Earnings per security[1]

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

Return on equity [1]
----- End of picture text -----

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

Total Securityholder return [1]
----- End of picture text -----

==> picture [489 x 197] intentionally omitted <==

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

¢ % %
55.0
20.0
34.0 17.0
31.5
-49.1 -84.5
26.7
23.7
15.0
13.6
17.4 12.0
11.0
1.5
05 06 [2,3] 07 [4] 08 [4] 09 [4] 05 [2] 06 07 08 09 05 06 07 08 09
Year Year Year
----- End of picture text -----

Earnings per security is the operating profit available for distribution divided by the weighted average number of securities on issue during the year.
Before performance fee and merger cost.
Restated under AIFRS.
Return on equity is calculated as operating 1. Based on distributions and the security earnings for the year plus a four year rolling price movement during each financial year. average of unrealised gains and losses, divided by the average total equity for the year.
Before performance fee and merger cost.
Adjusted to exclude unrealised gains on investment properties.

As demonstrated by the above historical performance, total performance remuneration is directly linked to pre-determined benchmarks based on the Consolidated Entity’s fi nancial performance.

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 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 named executives are as follows:

	Notice period
	Company Employee
Executive Director Mr Gregory Goodman	12 months 12 months
Executives Mr Anthony Rozic Mr Nick Kurtis Mr Michael O’Sullivan Mr Nick Vrondas Mr James Inwood Mr Danny Peeters	6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 1 month 1 month 12 months 12 months

Consistent with local practice in Belgium, Mr Danny Peeters provides his services by means of a management company, DPCON Bvba.

Effective 11 February 2009, Mr David van Aanholt ceased employment with Goodman. He did not receive any additional benefi ts on termination beyond what was provided in his employment contract.

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 2009 total approximately $2.1 million (2008: $2.0 million) which take into account amounts paid for committee membership, chairing of committees and compulsory contributions to superannuation. The fees payable to Non-Executive Directors have not increased since 1 July 2007. 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 incentives 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.

The Chairman, Mr David Clarke, took leave for the period from 28 November 2008 to 30 June 2009 due to ill health, and retired on 2 July 2009. Mr Ian Ferrier assumed the role of Acting Chairman in the absence of Mr Clarke, and was confi rmed as Independent Chairman on 28 July 2009.

Goodman Group Annual Report 2009

Directors’ report (cont)

Remuneration report – audited (cont)

Directors’ remuneration

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

oomans aars Directors	are se ou eow: Short-term Salary and fees1 $ Bonus2 $ Other3 $ Total $ $ Post employment superannuation benef ts	Long-term	Share based payments Securities (ESAP)4 $ Options4 $ Total $ % % Proportion of remuneration performance related Value of options as proportion of remuneration5
		Bonus2 $ Other3 $
Non-Executive Mr Ian Ferrier Mr David Clarke (retired 2 July 2009) Mr Patrick Goodman Ms Diane Grady (appointed 30 September 2007) M John Harkness Mr James Hodgkinson6 Ms Anne Keating Mr Jim Sloman Dr David Teplitzky (retired 22 November 2007)	2009 414,547 – – 414,547 13,745 2008 194,371 – – 194,371 13,129 2009 437,755 – – 437,755 13,745 2008 572,871 – – 572,871 13,129 2009 173,755 – – 173,755 13,745 2008 174,371 – – 174,371 13,129 2009 173,755 – – 173,755 13,745 2008 130,778 – – 130,778 9,847 2009 190,630 – – 190,630 13,745 2008 185,944 – – 185,944 13,129 2009 237,285 – – 237,285 13,745 2008 241,149 – – 241,149 13,129 2009 173,755 – – 173,755 13,745 2008 174,371 – – 174,371 13,129 2009 183,755 – – 183,755 13,745 2008 184,371 – – 184,371 13,129 2009 – – – – – 2008 84,608 – – 84,608 –	– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –	– – 428,292 – – – – 207,500 – – – – 451,500 – – – – 586,000 – – – – 187,500 – – – – 187,500 – – – – 187,500 – – – – 140,625 – – – – 204,375 – – – – 199,073 – – – – 251,030 – – – – 254,278 – – – – 187,500 – – – – 187,500 – – – – 197,500 – – – – 197,500 – – – – – – – – – 84,608 – –
Executive Mr Gregory Goodman2009 1,386,255 – 39,821 1,426,076 13,745 2008 1,386,871 3,033,333 87,096 4,507,300 13,129		– 24,342 1,466,667 24,342	(1,869,516) (556,500) (961,853) – – 1,015,067 556,478 7,582,983 80.0 21.0

Salary and fees represents the amounts due to the Directors under the terms of their service contracts and does not refl ect any salary sacrifi ce elections by the Directors.
The total bonus amount included for Mr Gregory Goodman 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.
During the year, the Directors have assessed that the non-market related performance hurdles attached to certain of the securities issued under the ESAP and options issued under the EOP are unlikely to be achieved. Accordingly, the share based payment expense recognised in prior years’ remuneration for Mr Gregory Goodman has been reversed. This has resulted in a net credit in reporting the current year’s remuneration.
The value of options as a proportion of remuneration includes both options and securities issued under the ESAP.
Salary and fees reported in the current year for Mr James Hodgkinson includes an amount of A$61,030 (NZD 75,000) for his role on the board of Goodman (NZ) Limited, the responsible entity of Goodman Property Trust. Salary and fees for the prior year have been restated to include the comparative amount of A$64,278 (NZD 75,000). As at 30 June 2009, neither the current year nor prior year amount had been paid.

Remuneration report – audited (cont)

Executives’ remuneration

Details of the nature and amount of each major element of the remuneration of each of the key management personnel (excluding the Directors) and the other named executives who receive the highest remuneration are set out below.

the Directors) and Executives1	he other named executives who receive the highest r Short-term Salary and fees1 $ Bonus2 $ Other3 $ Total $ $ Post employment superannuation benef ts	emuneration are s Long-term	et out below. Share based payments Securities (ESAP)4 $ Options4 $ Total $ % % Proportion of remuneration performance related Value of options as proportion of remuneration5
		Bonus2 $ Other3 $
Mr Anthony Rozic Group Chief Operating Off cer Mr Nick Kurtis Group Head of Funds Management Mr Michael O’Sullivan Chief Executive Off cer, Europe Mr Nick Vrondas Chief Financial Off cer6 Mr David van Aanholt former Chief Executive Off cer, Asia Pacif c7 Mr James Inwood Head of European Funds Management8 Mr Danny Peeters Chief Executive Off cer Continental Europe8	2009 686,255 – 25,413 711,668 13,745 2008 686,871 1,033,333 72,480 1,792,684 13,129 2009 686,255 – 36,432 722,687 13,745 2008 861,512 990,689 138,766 1,990,967 3,535 2009 864,865 – 187,711 1,052,576 – 2008 893,855 1,400,372 276,681 2,570,908 – 2009 159,401 – 18,370 177,771 5,022 2008 – – – – – 2009 433,319 – 30,924 464,243 1,037 2008 686,871 1,033,333 66,978 1,787,182 13,129 2009 627,027 108,108 181,155 916,290 – 2008 – – – – – 2009 913,872 – – 913,872 – 2008 – – – – –	– 12,248 466,667 9,828 – 41,883 405,959 15,639 – 18,815 610,801 15,899 – 3,361 – – – 7,166 466,667 22,780 – 3,858 – – – – – –	(914,148) (309,167) (485,654) – – 549,127 309,154 3,140,589 75.0 27.0 (892,606) (309,167) (423,458) – – 595,183 309,154 3,320,437 69.0 27.0 (875,828) (309,167) (113,604) – – 523,668 309,154 4,030,430 71.0 21.0 – – 186,154 – – – – – – – (923,673) (309,167) (760,394) – – 595,906 309,154 3,194,818 75.0 28.0 (352,361) (154,583) 413,204 – – – – – – – – (708,160) 205,712 – – – – – – –

During the current fi nancial year, Mr Anthony Rozic, Mr Nick Kurtis, Mr Michael O’Sullivan, Mr Nick Vrondas and Mr David van Aanholt are considered to be key management personnel of the Consolidated Entity. Mr Nick Vrondas became a key management person on his appointment as Chief Financial Offi cer on 24 February 2009. Mr David van Aanholt ceased duties on commencement of sabbatical leave prior to his resignation effective 11 February 2009.
Bonuses paid to executives are in accordance with the Bonus Policy and based on individual performance of executives. The total bonus amount included for each fi nancial year in the table above 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 and long service leave balances.
During the year, the Directors have assessed that the non-market related performance hurdles attached to certain of the securities issued under the ESAP and options issued under the EOP are unlikely to be achieved. Accordingly, the share based payment expense recognised in prior years’ remuneration has been reversed. This has resulted in a net credit in reporting the current year’s remuneration.
The value of options as a proportion of remuneration includes both options and securities issued under the ESAP.
Mr Nick Vrondas became a key management person on 24 February 2009, and details of his remuneration have been disclosed from that date. Accordingly no comparative information has been disclosed.
Effective 11 February 2009, Mr David van Aanholt ceased employment with Goodman. He did not receive any additional benefi ts on termination beyond what was provided in his employment contract.
Mr James Inwood and Mr Danny Peeters are included in the fi ve named senior executives who receive the highest remuneration. No comparatives have been provided as neither individual was one of the fi ve most highly remunerated senior executives in the prior year.

Goodman Group Annual Report 2009

Directors’ report (cont)

Remuneration report – audited (cont)

Executives’ 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
	Expiry	security	Issue price	of security	volatility	interest rate	yield
Grant date	date	$	$	$	%	% pa	% pa
2008:
26 Nov 07	31 Dec 12	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	Exercise	Market price	Expected	Risk free	Distribution
	Expiry	per option	price1	of security	volatility	interest rate	yield
Grant date	date	$	$	$	%	% pa	% pa
2008:
19 Oct 07	30 Jun 13	0.77	6.36	6.36	23.97	6.93	5.77
26 Nov 07	30 Jun 13	0.77	6.36	6.36	23.97	6.93	5.77
2009:
05 Sep 08	30 Jun 13	0.37	3.07	3.07	20.00	6.61	10.60
17 Nov 08	30 Jun 13	0.04	3.07	1.14	20.00	5.19	10.66

As a consequence of the entitlement offer on 28 November 2008, the exercise prices of certain options under the EOP have been reduced. The amounts disclosed in the table above refl ect the original exercise price at the grant date.

Analysis of bonuses included in the remuneration

During the current year, Mr James Inwood was awarded a bonus of $108,108, all of which has been paid in the year ended 30 June 2009. Neither the Executive Director nor any of the other named executives were awarded bonuses as part of their remuneration.

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 39 and 40. No bonuses were forfeited during the fi nancial year.

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

Remuneration report – audited (cont)

Equity instruments

Equity instruments refer to options over Goodman stapled securities issued under the EOP and Goodman 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 39 and 40.

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 named executives and details of options that vested during the reporting period are as follows:

			Fair value
			per option	Exercise
	Number of		at grant	price per		Number of
	options	Grant	date	option1	Expiry	options
	granted	date	$	$	date	vested
Executive Director
Mr Gregory Goodman	7,000,000	17 Nov 08	0.04	3.07	30 Jun 13	–
Executives
Mr Anthony Rozic	3,500,000	5 Sep 08	0.37	3.04	30 Jun 13	–
Mr Nick Kurtis	3,500,000	5 Sep 08	0.37	3.04	30 Jun 13	–
Mr Michael O’Sullivan	3,500,000	5 Sep 08	0.37	3.04	30 Jun 13	–
Mr Nick Vrondas2	–	–	–	–	–	–
Mr David van Aanholt3	–	–	–	–	–	–
Mr James Inwood	3,000,000	5 Sep 08	0.37	3.04	30 Jun 13	–
Mr Danny Peeters	1,500,000	5 Sep 08	0.37	3.07	30 Jun 13	–

As a consequence of the entitlement offer on 28 November 2008, the excercise prices of certain options issued on 5 September 2008 were reduced to $3.04 per option in accordance with the Listing Rules. This reduction does not apply to options that were offered to the Group Chief Executive Offi cer and employees in certain European jurisdictions which were subject to conditions at the time of the offer.
Mr Nick Vrondas became a key management person on 24 February 2009. Details of options under the EOP that were granted by the Company as compensation have been disclosed from that date. During the year, but prior to Mr Nick Vrondas becoming a key management person, he was granted 3,000,000 options under the EOP at an exercise price of $3.04 per option.
Effective 11 February 2009, Mr David van Aanholt ceased employment with Goodman.

The options were provided at no cost to the recipients.

No options have been granted since the end of the fi nancial year.

All options expire on the earlier of their expiry date or termination of the individual’s employment (subject to special circumstances). For options granted during the current fi nancial year, the earliest exercise date is 1 July 2010.

Securities granted as compensation under the ESAP

No securities were granted to any employee under the ESAP during the current fi nancial year. No securities granted by the Company as compensation to the Executive Director and each of the named executives vested during the current fi nancial year.

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 (subject to special circumstances). 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 securities under the ESAP is conditional on Goodman achieving the performance hurdle.

Modifi cation of terms of equity settled share based payment transactions

In the event of the termination of an employee’s employment due to special circumstances, previously the employee was given six months from the date of termination to exercise ahead of schedule any offers under the ESAP and/or the options under the EOP. During the year, the Board approved a change to this condition such that if the termination of an employee’s employment was due to special circumstances, any offers under the ESAP and/or the options under the EOP would not expire early, but instead the service conditions of the original offer would be waived.

No other terms of equity settled share based payment transactions (including securities under the ESAP or options under the EOP) have been altered or modifi ed by Goodman during the current or prior years. However, as a consequence of the entitlement offer on 28 November 2008, the exercise prices of certain options on issue have been reduced.

Goodman Group Annual Report 2009

Directors’ report (cont)

Remuneration report – audited (cont)

Exercise of rights over securities issued under the ESAP granted as compensation and options issued under the EOP No rights over securities under the ESAP or options under the EOP previously granted as compensation were exercised in the fi nancial year by the key management personnel and each of the named executives.

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

			Number of			Financial
	Number of	Date	securities			years in
	securities	securities	vested	% vested	% forfeited	which grant
	granted	granted	in year	in year	in year1	vests
Executive Director
Mr Gregory Goodman	2,000,000	26 Nov 07	–	–	–	2010 – 2012
	2,000,000	22 Nov 06	–	–	–	2009 – 2011
	1,955,990	3 Nov 05	–	–	–	2008 – 2010
Executives
Mr Anthony Rozic	1,000,000	10 Apr 07	–	–	–	2010 – 2012
	1,000,000	14 Jun 06	–	–	–	2009 – 2011
	733,496	3 Nov 05	–	–	–	2008 – 2010
Mr Nick Kurtis	950,000	10 Apr 07	–	–	–	2010 – 2012
	1,000,000	14 Jun 06	–	–	–	2009 – 2011
	733,496	3 Nov 05	–	–	–	2008 – 2010
	1,500,000	28 Oct 03	–	–	–	2006 – 2008
Mr Michael O’Sullivan	850,000	10 Apr 07	–	–	–	2010 – 2012
	1,000,000	14 Jun 06	–	–	–	2009 – 2011
	855,746	3 Nov 05	–	–	–	2008 – 2010
Mr Nick Vrondas2	200,000	10 Apr 07	–	–	–	2010 – 2012
	1,000,000	13 Apr 06	–	–	–	2009 – 2011
Mr David van Aanholt	900,000	10 Apr 07	–	–	100	2010 – 2012
	1,000,000	14 Jun 06	–	–	100	2009 – 2011
	977,995	3 Nov 05	–	–	100	2008 – 2010
Mr James Inwood3	200,000	10 Apr 07	–	–	–	2010 – 2012
	1,000,000	29 Sep 06	–	–	–	2009 – 2011
Mr Danny Peeters	–	–	–	–	–	–

The percentage forfeited in the year represents the reduction from the maximum number of securities available to vest due to vesting criteria not being achieved. Mr David van Aanholt ceased employment with Goodman effective 11 February 2009 and forfeited any outstanding securities under the ESAP previously granted to him as compensation. The disposal of ESAP holdings of all employees who have resigned is managed by the ESAP trustee and the ESAP securities held by Mr David van Aanholt are being processed accordingly.
Details include securities that were granted to Mr Nick Vrondas prior to him becoming a key management person on 24 February 2009.
Details include securities that were granted to Mr James Inwood prior to him becoming a named executive.

Remuneration report – audited (cont)

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

			Number of			Financial
	Number of	Date	options			years in
	options	options	vested	% vested	% forfeited	which grant
	granted	granted	in year	in year	in year1	vests
Executive Director
Mr Gregory Goodman	7,000,000	17 Nov 2008	–	–	–	2011 – 2013
	2,700,000	26 Nov 2007	–	–	–	2011 – 2013
Executives
Mr Anthony Rozic	3,500,000	5 Sep 2008	–	–	–	2011 – 2013
	1,500,000	19 Oct 2007	–	–	–	2011 – 2013
Mr Nick Kurtis	3,500,000	5 Sep 2008	–	–	–	2011 – 2013
	1,500,000	19 Oct 2007	–	–	–	2011 – 2013
Mr Michael O’Sullivan	3,500,000	5 Sep 2008	–	–	–	2011 – 2013
	1,500,000	19 Oct 2007	–	–	–	2011 – 2013
Mr Nick Vrondas2	3,000,000	5 Sep 2008	–	–	–	2011 – 2013
	1,250,000	19 Oct 2007	–	–	–	2011 – 2013
Mr David van Aanholt	1,500,000	19 Oct 2007	–	–	100	2011 – 2013
Mr James Inwood3	3,000,000	5 Sep 2008	–	–	–	2011 – 2013
	750,000	19 Oct 2007	–	–	–	2011 – 2013
Mr Danny Peeters3	1,500,000	5 Sep 2008	–	–	–	2011 – 2013
	200,000	19 Oct 2007	–	–	–	2011 – 2013
	1,000,000	10 Apr 2007	–	–	–	2010 – 2012
	1,500,000	13 Oct 2006	–	–	–	2010 – 2012

The percentage forfeited in the year represents the reduction from the maximum number of options available to vest due to the vesting criteria not being achieved. Mr David van Aanholt ceased employment with Goodman effective 11 February 2009 and forfeited any outstanding options under the EOP previously granted to him as compensation.
Details include options that were granted prior to Mr Nick Vrondas becoming a key management person on 24 February 2009.
Details include options that were granted prior to Mr James Inwood and Mr Danny Peeters becoming named executives.

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

Goodman Group Annual Report 2009

Directors’ report (cont)

Remuneration report – audited (cont)

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

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

	ESAP securities Options under the EOP
	Value of securities issued in year1 $ Value of securities exercised in year2 $ Value of securities lapsed in year3 $ Value of options granted in year1 $ Value of options exercised in year2 $ Value of options lapsed in year3 $
Executive Director Mr Gregory Goodman	– – – 245,000 – –
Executives Mr Anthony Rozic Mr Nick Kurtis Mr Michael O’Sullivan Mr Nick Vrondas4 Mr David van Aanholt Mr James Inwood Mr Danny Peeters	– – – 1,309,000 – – – – – 1,309,000 – – – – – 1,309,000 – – – – – – – – – – 923,673 – – 309,167 – – – 1,122,000 – – – – – 561,000 – –

The value of securities under the ESAP issued in the year and value of options under the EOP granted in the year is the fair value of the securities and options 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 securities issued and options granted under these arrangements is included in the table above. This amount is allocated to remuneration over the vesting period of the securities and options.
The value of the securities under the ESAP and options under the EOP exercised during the year is calculated as the market price of securities on the ASX at close of trading on the date the securities and options were exercised after deducting the price paid or payable to exercise the securities and options.
The value of both the securities under the ESAP and options that lapsed during the year represents the benefi t forgone and is calculated at the date the security under the ESAP and/or the option lapsed using a combination of Monte Carlo simulations and numerical option valuation in a lattice based framework assuming the performance criteria had been achieved. Mr David van Aanholt ceased employment with Goodman effective 11 February 2009 and forfeited the rights to any outstanding securities under the ESAP and options under the EOP previously granted to him as compensation.
Mr Nick Vrondas became a key management person on 24 February 2009. Details of movements in securities issued under the ESAP and options issued under the EOP have been disclosed from that date.

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 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 2009 have been properly maintained and the Company’s fi nancial reports for the year ended 30 June 2009 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.

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
	2009 $000 2008 $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)	1,099.6 944.1 1,122.7 1,338.4
	2,222.3 2,282.5
Other regulatory services – other regulatory services (KPMG Australia) – other regulatory services (overseas KPMG f rms)	100.2 59.2 124.4 141.8
Other assurance services – investigative accounting services (KPMG Australia) – investigative accounting services (overseas KPMG f rms)	893.9 1,051.7 639.5 125.9
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)	358.0 173.4 668.7 511.0 19.3 139.9 63.3 260.0
	2,867.3 2,462.9
Total paid/payable to KPMG	5,089.6 4,745.4
Other auditors – audit and review of f nancial reports (non–KPMG f rms)	244.4 134.5

Goodman Group Annual Report 2009

Directors’ report (cont)

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

Board of Directors

Mr Ian Ferrier, AM – Independent Chairman Appointed 1 September 2003

Following David Clarke’s leave of absence commencing on 28 November 2008, Ian was Acting Chairman of the Company. Ian is a Fellow of The Institute of Chartered Accountants in Australia and has 44 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), Acting Chairman of Australian Vintage Ltd (and a director since 20 November 1991) and a director of EnergyOne Limited (since 15 January 2007) and Reckon Limited (since 17 August 2004). He was formerly a director of Australian Oil Limited (2 May 2005 to 7 January 2009). 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 Gregory Goodman – Group Chief Executive Offi cer

Appointed 7 August 1998

Gregory is responsible for Goodman’s overall operations and the implementation of its strategic plan. He has 27 years of experience in the property industry with signifi cant expertise in the industrial property arena. Gregory was a co-founder of Goodman, 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, the manager of the New Zealand Exchange listed Goodman Property Trust, J-REP Co., Ltd and the management companies of Goodman’s unlisted funds and its subsidiaries.

Mr David S Clarke, AO – Non-Executive Director

Appointed 26 October 2000 Retired 2 July 2009

David commenced a leave of absence (due to illness) from the Company on 28 November 2008 prior to resigning as a Director on 2 July 2009.

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 Poole’s Rock Wines Pty Limited (since 1 May 1970), The Macquarie Group Foundation, the Wine Committee of the Royal Agricultural Society of NSW, the Opera Australia Capital Fund, the Sydney University Football Club Foundation and the National Leadership Council of Social Ventures Australia.

He is a member of the Investment Advisory Committee of the Australian Olympic Foundation, and of the Bloomberg Asia Pacifi c Advisory Committee. He is also a member of the Council of the Royal Agricultural Society of NSW and an honorary life member of the Financial Markets Foundation for Children and Vice President of the Sydney University Cricket Club. David was previously Chairman of Australian Vintage Ltd (from 27 November 1991 to 2 July 2009), 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.

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 29 year career, he has had considerable public and private company experience both domestically and internationally.

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

Ms Diane Grady, AM – Independent Director

Appointed 30 September 2007

Diane 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. Previously, she was a director of Lend Lease, Wattyl Ltd and a Trustee of the Sydney Opera House. Prior to becoming an independent director, Diane 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 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 Chairman 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 within Real Estate, Macquarie Capital Advisors. 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 and Goodman (NZ) Limited, the manager of the New Zealand Exchange listed Goodman Property Trust. With over 20 years of experience in property funds management, investment banking and chartered accounting, James has specialist real estate and funds management expertise inclusive of new product development and management. 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), STW Communications Group Limited (since 17 May 1995) and the Garvan Institute of Medical Research (since 16 January 2009). Anne is also a member of the Advisory Council of RBS Group (Australia) Pty Ltd (formerly ABN AMRO), a Governor of the Cerebral Palsy Foundation and a trustee for the Centennial Park and Moore Park Trust. 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. 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 Chairman 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 the Company 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).

Goodman Group Annual Report 2009

Directors’ report (cont)

Events subsequent to balance date

Prior to the issue of this report and during August 2009, Goodman undertook a fully underwritten equity raising to raise a total of $1.279 billion from the issue of approximately 3.2 billion stapled securities at $0.40 per security via an institutional placement and a one for one non-renounceable entitlement offering. As at the date of issuing the Directors’ report $959 million has been raised from the institutional entitlement offer, institutional placement and that portion of the retail entitlement offer that participated in the early settlement. A further $320 million is expected to be raised from the retail entitlement offer on 16 September 2009.

In addition to the ordinary equity raising, Goodman has agreed terms (subject to Securityholder approval, receipt of Foreign Investment Review Board approval, completion of the equity raising and fi nal documentation of the Consolidated Entity’s bank debt facility amendments) for a further $500 million from the issue of three tranches of preferred equity to CIC. Each tranche will receive a coupon of 10% and can be converted to ordinary stapled securities as follows: tranche one of $225 million can be converted at a price of $0.43 per security from 31 October 2009; tranche two of $150 million can be converted at a price of $0.44 per security from 30 June 2010; and tranche three of $125 million can be converted at a price of $0.45 per security from 31 December 2010. Goodman may also elect to redeem the preferred equity if the closing price of Goodman’s stapled securities for 20 out of 30 consecutive trading days is in excess of 125% of the conversion price as follows: tranche one from 31 December 2010, tranche two from 31 December 2011 and tranche three from 30 June 2012. Along with the issue, CIC has announced its long-term strategic intentions for its investment in Goodman which include fund and property joint ventures.

The proceeds from the equity raising will be used to retire the A$300 million drawn under the A$485 million secured loan provided by Macquarie Group and CIC and any amounts drawn under the $520 million Tranche B of the SMCF.

In conjunction with the equity raising, the Consolidated Entity has received credit approval (subject to documentation and Goodman raising $1.2 billion of equity) to an extension and renegotiation of a signifi cant portion of both Goodman’s bank debt facilities and the bank debt facilities of funds managed by Goodman. These include:

- extension from 2011 to 2012 of A$438 million of the $520 million Tranche C of the SMCF and extension from 2012 to 2013 of 80% of the €525 million European revolving credit facility, along with amended covenants to the common terms deed poll, to which they are a party;
- extension of facilities and renegotiation of covenants for GAIF;
- renegotiation of the covenants for GELF; and
- renegotiation of covenants for ABPP.

During August 2009, Goodman also announced the creation of a new joint venture with CPPIB in China. The joint venture (of which Goodman holds 20% and CPPIB holds 80%) acquired four stabilised assets with a book value at 30 June 2009 of A$157.3 million. The joint venture has established a platform for future funding of further opportunities in China. Goodman will receive fees for the services it provides to the joint venture.

Following the successful completion of the recent capital initiatives, Goodman will be substantially better placed to cope with the deterioration in the market as its pro-forma gearing is reduced to approximately 30% and it has suffi cient liquidity to meet its fi nancial obligations to June 2012.

On 19 August 2009, the Consolidated Entity announced the sale of 93 million units in Goodman Property Trust to a number of institutional investors at a price of NZ$0.95 per unit. The proceeds of approximately A$72 million will further strengthen the Consolidated Entity’s balance sheet and subsequent to the disposal Goodman will own 17% of Goodman Property Trust. The disposal is in line with Goodman’s strategy of targeting a long-term holding of 15% to 20% for investments in funds managed by Goodman. The non-recurring loss on disposal of this investment of approximately A$13 million will be refl ected in the income statement in the year ending 30 June 2010.

Lead auditor’s independence declaration under section 307C of the Corporations Act 2001

The lead auditor’s independence declaration is set out on page 53 and forms part of this Directors’ report for the year.

Rounding

Goodman is an entity of a kind referred to in Australian Securities and Investments Commission Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in this Directors’ report and the fi nancial 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 47] intentionally omitted <==

Ian Ferrier, AM Independent Chairman Sydney, 28 August 2009

Gregory Goodman Group Chief Executive Offi cer

Lead auditor’s independence declaration

Lead auditor’s independence declaration under section 307C of the Corporations Act 2001

To: the Directors of Goodman Limited

I declare that, to the best of my knowledge and belief, in relation to the audit for the fi nancial year ended 30 June 2009 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

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John Teer Partner

Sydney, 28 August 2009

Goodman Group Annual Report 2009

Income statements

for the year ended 30 June 2009

		Consolidated	Consolidated	Parent Entity	Parent Entity
		2009	2008	2009	2008
	Note	$M	$M	$M	$M
Revenue
Gross property income		264.3	310.5	–	–
Fund management income		84.4	86.9	–	–
Property services income		65.5	75.1	–	–
Development management income		305.4	351.1	–	–
Distributions from investments Property and development expenses Property expenses Development expenses Other income Net loss from fair value adjustments on investment properties Net gain on disposal of investment properties Net gain on disposal of controlled entities Share of net results of equity accounted investments Net gain on disposal of equity investments Other expenses Employee expenses Share based payments credit/(expense) Administrative and other expenses Impairment losses Restructuring costs (Loss)/earnings before interest and tax and discontinued Financing costs Financial income Financial expenses Net f nancing costs (Loss)/prof t before income tax Income tax benef t/(expense) (Loss)/prof t after income tax from continuing operations Discontinued operation Loss from discontinued operation (net of income tax) (Loss)/prof t for the year (Loss)/prof t attributable to Shareholders (Loss)/prof t attributable to Unitholders (Loss)/prof t attributable to Securityholders Prof t attributable to other minority interests (Loss)/prof t for the year Basic (loss)/earnings per Company share (¢)	15 8 8 8 8 8 8 8 operation 8 8 9 4 2	19.6 739.2 (53.2) (243.4) (296.6) (527.0) 1.8 40.6 (508.7) 11.9 (981.4) (68.4) 38.1 (81.2) (229.7) (85.7) (426.9) (965.7) 18.9 (172.5) (153.6) (1,119.3) 23.3 (1,096.0) – (1,096.0) (317.4) (802.6) (1,120.0) 24.0 (1,096.0) (12.9)	28.9 852.5 (64.4) (296.5) (360.9) (144.3) 97.4 183.0 (25.0) 119.2 230.3 (118.0) (26.7) (77.1) (108.2) – (330.0) 391.9 67.4 (177.9) (110.5) 281.4 (5.2) 276.2 (7.8) 268.4 28.9 221.8 250.7 17.7 268.4 1.6	12.9 12.9 – – – – – 2.1 – – 2.1 – – (1.2) (102.8) – (104.0) (89.0) 10.5 (52.9) (42.4) (131.4) 27.2 (104.2) – (104.2) (104.2) (104.2) (104.2)	12.9 12.9 – – – – – 32.1 – – 32.1 – – (1.5) (111.5) – (113.0) (68.0) 22.7 (63.0) (40.3) (108.3) (13.2) (121.5) – (121.5) (121.5) (121.5) (121.5)
Diluted (loss)/earnings per Company share (¢)	2	(12.9)	1.6
Continuing operations
Basic (loss)/earnings per Company share (¢)	2	(12.9)	2.0
Diluted (loss)/earnings per Company share (¢)	2	(12.9)	2.0

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

Balance sheets

for the year ended 30 June 2009

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Consolidated Parent Entity
2009 2008 2009 2008
Note $M $M $M $M
Current assets
Cash 242.5 639.2 0.1 0.6
Receivables 11 315.6 532.9 694.8 679.1
Inventories 12 10.0 8.7 – –
Current tax receivables 9(c) 5.4 0.3 3.9 –
Assets classifi ed as held for sale 13 182.9 33.3 – –
Other assets 14 42.9 98.1 11.1 11.6
Total current assets 799.3 1,312.5 709.9 691.3
Non-current assets
Receivables 11 303.6 252.2 115.3 107.0
Inventories 12 35.5 34.2 – –
Investment properties 15 3,534.0 4,263.8 – –
Investments accounted for using the equity method 16 2,662.3 2,399.5 – –
Deferred tax assets 9(e) 28.2 34.6 0.6 1.1
Other fi nancial assets 17 71.1 238.7 278.5 399.1
Plant and equipment 18 23.6 24.9 – –
Intangible assets 19 1,125.4 1,073.2 – –
Total non-current assets 7,783.7 8,321.1 394.4 507.2
Total assets 8,583.0 9,633.6 1,104.3 1,198.5
Current liabilities
Payables 20 245.1 424.0 212.9 159.1
Current tax payables 9(d) 13.2 50.8 – 13.0
Interest bearing liabilities 21 986.7 512.1 984.2 1,016.0
Provisions 22 36.0 193.2 – –
Liabilities classifi ed as held for sale 13 10.1 – – –
Total current liabilities 1,291.1 1,180.1 1,197.1 1,188.1
Non-current liabilities
Payables 20 188.0 4.7 – 0.8
Interest bearing liabilities 21 3,253.1 3,717.0 – –
Deferred tax liabilities 9(e) 42.4 53.8 – –
Provisions 22 30.8 8.9 – –
Total non-current liabilities 3,514.3 3,784.4 – 0.8
Total liabilities 4,805.4 4,964.5 1,197.1 1,188.9
Net assets/(liabilities) 3,777.6 4,669.1 (92.8) 9.6
Equity attributable to Shareholders
Issued capital 23 241.6 193.9 241.6 193.9
Reserves 24 (235.3) 65.1 41.3 87.2
Accumulated losses 25 (93.7) (23.3) (375.7) (271.5)
Total equity attributable to Shareholders (87.4) 235.7 (92.8) 9.6
Minority interests
Equity attributable to Unitholders
Issued capital 23 5,003.2 4,123.3 – –
Reserves 24 (1,436.9) – – –
Accumulated losses 25 (20.1) (10.5) – –
Total equity attributable to Unitholders 3,546.2 4,112.8 – –
Other minority interests 26 318.8 320.6 – –
Total equity 3,777.6 4,669.1 (92.8) 9.6
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The balance sheets are to be read in conjunction with the accompanying notes.

Goodman Group Annual Report 2009

Statements of recognised income and expenses

for the year ended 30 June 2009

	Consolidated Parent Entity
	Note 2009 $M 2008 $M 2009 $M 2008 $M
Amounts recognised directly in equity, net of tax: Effect of foreign currency translation Cash f ow hedges: – Change in value of f nancial instruments – Transfers to income statement (Decrease)/increase due to revaluation of listed/unlisted investments Fair value of available for sale equity securities transferred to income statement on disposal Share based payments credits booked directly to reserves Actuarial losses on def ned benef t superannuation funds	24 (48.4) 6.4 – – 24 (294.7) 23.9 – – 24 (16.4) (6.2) – – 24 (13.8) 4.1 – – 24 4.1 (89.0) – – 24 (16.6) – (10.2) – 24 (9.3) (2.0) – –
Net expense recognised directly in equity	(395.1) (62.8) (10.2) –
(Loss)/prof t for the year	(1,096.0) 268.4 (104.2) (121.5)
Total recognised income and expense	(1,491.1) 205.6 (114.4) (121.5)
Attributable to: – Securityholders – Minority interests	(1,515.1) 187.9 (114.4) (121.5) 24.0 17.7 – –
Total recognised income and expense	(1,491.1) 205.6 (114.4) (121.5)

The statements of recognised income and expense are to be read in conjunction with the accompanying notes.

Cash fl ow statements

for the year ended 30 June 2009

		Consolidated	Consolidated	Parent Entity	Parent Entity
		2009	2008	2009	2008
	Note	$M	$M	$M	$M
Cash f ows from operating activities
Property income received		271.8	396.6	–	–
Other cash receipts from services provided		373.7	233.5	0.8	3.6
Property expenses paid		(42.8)	(84.8)	–	–
Other cash payments in the course of operations		(280.0)	(158.2)	(9.0)	(11.5)
Dividends/distributions received		153.9	108.8	12.9	12.9
Interest received		18.9	15.5	1.2	–
Finance costs paid		(143.2)	(138.4)	(0.2)	(1.1)
Income taxes paid (net of refunds)	9	(31.5)	(27.8)	–	(5.5)
Net cash provided by/(used in) operating activities Cash f ows from investing activities Proceeds from deferred settlement and sale of investment properties Proceeds from sale of controlled entities (net of cash disposed) Cash included in assets held for sale Proceeds from sale of equity investments Proceeds from the disposal of discontinued operation (net of cash disposed) Payments to acquire controlled entities (net of cash acquired) Payments for equity investments Payments for investment properties and developments Payments for plant and equipment Net cash (used in)/provided by investing activities Cash f ows from f nancing activities Proceeds from issue of ordinary securities Proceeds from issue of Goodman PLUS Trust hybrid securities Transaction costs from issue of securities Loans to controlled entities Loans (to)/from related entities Proceeds from borrowings Repayments of borrowings Dividends and distributions paid Net cash provided by (used in) f nancing activities Net (decrease)/increase in cash held Cash at the beginning of the year Cash at the end of the year	29(b) 5 4 3 23 23 10 29(a)	320.8 204.9 15.2 (21.3) 301.9 0.9 (61.8) (899.7) (580.1) (9.6) (1,049.6) 956.0 – (32.1) – (49.8) 5,293.0 (5,404.0) (431.0) 332.1 (396.7) 639.2 242.5	345.2 1,607.7 1,045.5 – 444.3 212.9 (257.1) (1,734.1) (1,630.2) (17.1) (328.1) 17.7 327.0 (6.4) – (70.7) 7,183.9 (6,465.6) (445.6) 540.3 557.4 81.8 639.2	5.7 – 2.1 – – – – – – – 2.1 – – – (8.3) – – – – (8.3) (0.5) 0.6 0.1	(1.6) – 32.1 – – – – – – – 32.1 8.8 – – (39.2) 0.4 – – – (30.0) 0.5 0.1 0.6

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

Goodman Group Annual Report 2009

Notes to the fi nancial statements for the year ended 30 June 2009

1. Statement of signifi cant accounting policies

Goodman Limited (Company or Parent Entity) is a company domiciled in Australia. The consolidated fi nancial report of the Company as at and for the year ended 30 June 2009 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 fi nancial 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 fi nancial report also complies with IFRS.

The fi nancial report is presented in Australian dollars and was authorised for issue by the Directors on 28 August 2009.

The signifi cant accounting policies which have been adopted in the preparation of the consolidated fi nancial report are set out below.

(a) Basis of preparation of the consolidated fi nancial report

The fi nancial report is prepared on the historical cost basis, subject to any impairment of assets, 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.

As at 30 June 2009, the Parent entity had net liabilities of $92.8m. Under the Stapling Deed (refer note 1(b)) between Goodman Funds Management Limited (GFML), as Responsible Entity for GIT and the Parent Entity, the Parent Entity and GIT are obliged to provide fi nancial support to each other. On this basis, the Parent Entity will be able to pay its debts as and when they become due and payable.

(b) Principles of consolidation

Accounting for the acquisition of control of Goodman Industrial Trust

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 purpose 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 has been separately identifi ed in the balance sheet and the profi t or loss arising from those net assets has been separately identifi ed in the income statement.

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 purpose 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 2009 and the results of all such entities for the year ended 30 June 2009.

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.

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

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

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 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 an impairment of an asset.

(c) Issued capital

Ordinary shares

Ordinary shares of the Company are classifi ed as equity. Incremental costs directly attributable to 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.

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.

Financial income

Interest

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

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

1. Statement of signifi cant accounting policies (cont)

(d) Revenue recognition (cont)

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
	2009	2008	2009	2008
New Zealand dollar	1.2289	1.1668	1.2428	1.2678
Singapore dollar	1.0916	1.2855	1.1699	1.3093
Hong Kong dollar	5.8048	6.9822	6.2586	7.4812
United States dollar	0.7473	0.8961	0.8114	0.9592
Japanese yen	74.2058	98.6479	77.7600	103.5800
European euro	0.5416	0.6100	0.5751	0.6117
British pounds sterling	0.4625	0.4475	0.4872	0.4860

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 fi nancial 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 straight-line 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 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

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 collectability of trade receivables is assessed at the reporting date. Debts which are known to be uncollectible are written off.

Construction contract receivables 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.

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.

1. Statement of signifi cant accounting policies (cont)

(m) Impairment

Non-fi nancial assets

The carrying amounts of the Consolidated Entity’s assets (except investment properties, refer to note 1(f), inventories, refer to note 1(h), and deferred tax assets, refer to note 1(t)) 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.

(n) Non-current assets held for sale

Non-current assets that are expected to be recovered through sale rather than through continuing use are classifi ed as held for sale. Immediately before classifi cation as held for sale, the assets are re-measured in accordance with the Consolidated Entity’s accounting policies. Thereafter, the assets are measured at the lower of their carrying amount, and fair value less costs to sell. Impairment losses on initial classifi cation as held for sale and subsequent gains or losses on re-measurement are recognised in profi t or loss. Gains are not recognised in excess of any cumulative impairment loss.

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

1. Statement of signifi cant accounting policies (cont)

(o) 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 basis, subject to set-off arrangements. Unpaid interest is accrued at the contracted rate and included in the balance sheet under current payables.

(p) 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.

(q) 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.

Restructuring provisions

A provision for restructuring is recognised when the Consolidated Entity has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating costs are not provided for. Restructuring provisions include provisions for onerous contracts.

Onerous contracts

A provision for onerous contracts is recognised when the expected benefi ts to be derived by the Consolidated Entity from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Consolidated Entity recognises any impairment loss on the assets associated with that contract.

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.

(r) 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.

1. Statement of signifi cant accounting policies (cont)

(s) 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.

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 straight-line 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.

(t) 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.

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

1. Statement of signifi cant accounting policies (cont)

(u) 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.

(v) 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 over the period to the vesting date and is adjusted to refl ect the actual number of options for which the related service and non-market vesting conditions are 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 (accumulated losses)/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.

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.

1. Statement of signifi cant accounting policies (cont)

(w) Earnings per Company share/security

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 of the Company 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 of the Company 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 value of the income statement. Therefore, the Directors also disclose a basic and diluted earnings per stapled security in the notes to the consolidated fi nancial report.

(x) Segment reporting

A segment is a distinguishable component of the Consolidated Entity that is engaged in either providing related services (business segment), or in providing services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments. Segment information is presented in respect of the Consolidated Entity’s business and geographical segments. The Consolidated Entity’s primary format for segment reporting is based on geographic segments. The geographic segments are based on the Consolidated Entity’s management and internal reporting structure.

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.

Segment capital expenditure is the total cost incurred during the year to acquire investment property, plant and equipment and intangible assets, other than goodwill.

(y) Australian accounting standards issued but not yet effective

As at the date of this fi nancial report, revised accounting standards on issue with mandatory application for the Consolidated Entity’s 30 June 2010 fi nancial statements are available for early adoption at 30 June 2009:

- revised AASB 3 Business Combinations (2008) incorporates the following changes that are likely to be relevant to the Consolidated Entity’s operations;
the defi nition of a business has been broadened, which is likely to result in more acquisitions being treated as business combinations;
contingent consideration will be measured at fair value, with subsequent changes therein recognised in profi t or loss;
– transaction costs, other than share and debt issue costs, will be expensed as incurred;
any pre-existing interest in the acquiree will be measured at fair value with the gain of loss recognised in profi t or loss; and
any non-controlling (minority) interest will be measured at either fair value, or at its proportionate interest in the identifi able assets and liabilities of the acquiree, on a transaction-by-transaction basis.
revised AASB 3 will be applied prospectively and therefore there will be no impact on prior periods;
- amended AASB 127 Consolidated and Separate Financial Statements (2008) requires accounting for changes ownership interests by the Consolidated Entity in a controlled entity, while maintaining control, to be recognised as an equity transaction. When the Consolidated Entity loses control of a controlled entity, any interest retained in the former controlled entity will be measured at fair value with the gain or loss recognised in profi t or loss. The amendments to AASB 127 are not expected to have a signifi cant impact on the consolidated fi nancial statements;
- AASB 8 Operating Segments introduces the “management approach” to segment reporting. AASB 8 will require a change in the presentation of and disclosure of segment information based on the internal reports regularly reviewed by the Group’s Chief Executive Offi cer in order to assess each segment’s performance and to allocate resources to them. Currently the Consolidated Entity presents segment information in respect of its business and geographical segments (refer to note 6.) The Consolidated Entity has not yet determined how the new requirement will be presented;
- revised AASB 101 Presentation of Financial Statements (2007) introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement) or, in an income statement and a separate statement of comprehensive income. Revised AASB 101 is expected to have a signifi cant impact on the presentation of the consolidated fi nancial statements. The Consolidated Entity has not yet determined how the new requirement will be presented;
- AASB 2008-1 Amendments to Australian Accounting Standard – Share Based Payment: Vesting Conditions and Cancellations clarifi es the defi nition of vesting conditions, introduces the concept of non-vesting conditions, requires non-vesting conditions to be refl ected in grant-date fair value and provides the accounting treatment for non-vesting conditions and cancellations. The amendments to AASB 2 require retrospective application. The Consolidated Entity has not yet determined the potential effect of the amendment;

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

1. Statement of signifi cant accounting policies (cont)

(y) Australian accounting standards issued but not yet effective (cont)

- AASB 2008-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Process and 2008-6 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Process affect various AASBs resulting in minor changes for presentation, disclosure and recognition, which will become mandatory for the Consolidated Entity’s fi nancial statements for the year ending 30 June 2010. However, the principal impact for the Consolidated Entity relates to the amendments to AASB 140 Investment Properties which brings into scope property under construction or development for future use as an investment property. As Goodman adopts the fair value approach under AASB 140 this will require property under construction or development for future use as an investment property to be measured at fair value. The Consolidated Entity has not yet determined the potential effect of the amendment;
- AI 15 Agreements for the Construction of Real Estate provides guidance on the accounting for agreements for the construction of real estate by the seller under AASB 111 Construction Contracts or AASB 18 Revenue and the timing of revenue recognition. AI 15 requires retrospective application. The Consolidated Entity has not yet determined the potential effect of the interpretation; and
- AI 16 Hedges of a Net Investment in a Foreign Operation clarifi es that net investment hedging can only be applied when the net assets of the foreign operation are recognised in the consolidated fi nancial statements. The Consolidated Entity has not yet determined the potential effect of the interpretation.

(z) Rounding

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

2. Earnings per Company share/per security

2. Earnings per Company share/per security
		Consolidated
		2009	20081
	Note	¢	¢
(Loss)/earnings per Company share
Basic (loss)/earnings per Company share	2(a)	(12.9)	1.6
Basic (loss)/earnings per Company share from continuing operations	2(a)	(12.9)	2.0
Diluted (loss)/earnings per Company share	2(a)	(12.9)	1.6
Diluted (loss)/earnings per Company share from continuing operations	2(a)	(12.9)	2.0
(Loss)/earnings per security
Basic (loss)/earnings per security	2(a)	(45.4)	14.0
Basic (loss)/earnings per security from continuing operations	2(a)	(45.4)	14.4
Diluted (loss)/earnings per security	2(a)	(45.4)	14.0
Diluted (loss)/earnings per security from continuing operations	2(a)	(45.4)	14.4
Distribution per security	2(b)	9.65	34.0

Prior year weighted average number of securities and earnings per Company share and earnings per security have been adjusted for the equity raising in November 2008, in accordance with AASB 133 Earnings per Share. The weighted average number of Company shares and securities on issue for the current year, prior to the equity raising in November 2008 have also been adjusted, as required by AASB 133.

(a) Basic and diluted earnings per Company share/per security

	2009	2008
	Continuing operations $M Discontinued operation $M	Total $M Continuing operations $M Discontinued operation $M	Total $M
(Loss)/earnings per Company share (Loss)/prof t after tax used in calculating basic (loss)/earnings per Company share (317.4) – Effect of treasury securities and options – –		(317.4) 36.7 (7.8) – – –	28.9 –
(Loss)/prof t after tax used in calculating diluted (loss)/ earnings per Company share (317.4) –		(317.4) 36.7 (7.8)	28.9
(Loss)/earnings per security (Loss)/prof t after tax used in calculating basic (loss)/earnings per security (1,120.0) – Effect of treasury securities and options – –		(1,120.0) 258.5 (7.8) – – –	250.7 –
(Loss)/prof t after tax used in calculating diluted (loss)/ earnings per security (1,120.0) –		(1,120.0) 258.5 (7.8)	250.7

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

2. Earnings per Company share/per security (cont)

(a) Basic and diluted earnings per Company share/per security (cont)

	Number of securities
	2009 20081
Weighted average number of securities used in calculating basic (loss)/earnings per Company share/per security and distribution per security Effect of securities issued under the Employee Securities Acquisition Plan accounted for as treasury securities Effect of options on issue	2,468,366,954 1,793,915,590 – 2,880,012 – 3,461,983
Weighted average number of securities used in calculating diluted (loss)/earnings per Company share/per security	2,468,366,954 1,800,257,585

Prior year weighted average number of securities and earnings per Company share and earnings per security have been adjusted for the equity raising in November 2008.

As at 30 June 2009, 41,649,309 securities granted under the ESAP and 139,398,445 options issued under the Executive Option Plan (EOP) were anti-dilutive and therefore excluded from the above calculation. As at 30 June 2009, 669,300,000 options issued to Macquarie Group Limited (Macquarie Group) and China Investment Corporation (CIC) (including 549,300,000 options that are conditional on Securityholder approval) are potentially dilutive in future periods.

(b) Dividends per Company share and distributions per security

No dividends were declared or paid by the Company during the year (2008: $nil). Total distributions for the year made by GIT equal 9.65 cents per security (2008: 34.0 cents per security). Details of the dates of payment are set out in note 10.

3. Acquisitions of controlled entities

Goodman and Macquarie Group had a joint venture, Goodman Asia Limited (GAL) (formerly Macquarie Goodman Asia Limited), to pursue industrial property investment and management opportunities in Asia. On 3 December 2008, Goodman acquired Macquarie Group’s 50% interest in GAL (excluding Japan) for a net consideration of $51.3 million. Goodman and Macquarie Group’s joint venture in Japan remains in place.

On 15 October 2008, Goodman acquired 100% of the benefi cial interests in Uptime Enterprises Limited for a net consideration of $10.5 million. Uptime Enterprises Limited owns a development property in China.

The effect of these acquisitions on the Consolidated Entity’s assets and liabilities was as follows:

		Uptime
	Goodman	Enterprises
	Asia Limited	Limited	Total
	$M	$M	$M
Cash	9.6	4.2	13.8
Receivables	1.8	0.1	1.9
Investment properties	–	23.9	23.9
Other assets	6.7	14.2	20.9
Payables	(13.6)	(13.4)	(27.0)
Net identif able assets and liabilities Less: Interests in the entity already owned Add: Intangible assets on acquisition Total consideration payable Add: Transaction costs Gross cash outf ow Cash held by controlled entities on acquisition Net cash outf ow	4.5 (1.2) 57.6 60.9 – 60.9 (9.6) 51.3	29.0 (14.3) – 14.7 – 14.7 (4.2) 10.5	33.5 (15.5) 57.6 75.6 – 75.6 (13.8) 61.8

3. Acquisitions of controlled entities (cont)

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||||||||
|---|---|---|---|---|---|---|
|Actual contribution|Contribution if acquisition|
|since acquisition|took place on 1 July 2008|
|Profi t|Profi t|
|Principal|Date of|Revenue|before tax|Revenue|before tax|
|Entity acquired|activity|acquisition|$M|$M|$M|$M|
|Goodman Asia Limited|Fund management|3 Dec 2008|17.9|14.2|29.3|19.2|
|Uptime Enterprises Limited|Property investment|15 Oct 2008|2.1|1.0|2.1|1.0|

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4. Discontinued operation

On 31 May 2008, the Consolidated Entity sold its investment in Goodman Property Investors Limited (GPI), a signifi cant component of the fund management business in Europe. Consistent with the prior year fi nancial statements, the income statement shows the results of the discontinued operation separately from those of the continuing operations.

==> picture [497 x 197] intentionally omitted <==

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

Consolidated
2009 2008
Results of discontinued operation $M $M
Revenue – 54.2
–
Other expenses (43.1)
–
Net fi nancing costs (0.8)
Profi t before tax from operating activities – 10.3
–
Income tax expense (0.5)
Results from operating activities (net of income tax) – 9.8
–
Loss on sale of discontinued operation (17.6)
– –
Income tax on loss on sale of discontinued operation
–
Loss for the year (7.8)
----- End of picture text -----

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||||
|---|---|---|
|2009|2008|
|¢|¢|
|–|
|Basic earnings per security|(0.5)|
|–|
|Diluted earnings per security|(0.5)|
|2009|2008|
|Cash fl ows from discontinued operation|$M|$M|
|–|
|Net cash used in operating activities|(7.6)|
|Net cash provided by investing activities|0.9|212.9|
|–|–|
|Net cash provided by fi nancing activities|
|Net cash fl ow from discontinued operation|0.9|205.3|

----- End of picture text -----

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

5. Disposals of interests in controlled entities

In the current year, Goodman disposed of controlled entities as set out below:

	Total
	$M
Cash consideration received on disposals to Arlington Business Parks Partnership (ABPP)1	–
Cash consideration received on sale of special purpose entities in Europe2	12.4
Consideration received on disposal of other entities	0.2
Cash consideration received from disposals recognised in prior years3, 4	2.6
Net cash inf ow	15.2

On 23 December 2008, Goodman contributed the entire issued share capital of three entities holding four investment properties in the United Kingdom to ABPP. Consideration of $144.1 million was provided to the Consolidated Entity in equity by ABPP. The equity provided by ABPP has a preferred return of between 7% and 10% per annum. The principal impact on the Consolidated Entity’s balance sheet of the disposals of these controlled entities was a decrease in the carrying value of investment properties of $142.6 million, offset by an increase in investments in associates of $144.1 million.
Two further property assets were contributed directly to ABPP during the year under the same conditions.
No cash payments or receipts were recorded as a result of any of the above transactions with ABPP which in aggregate resulted in an increase of $321.8 million in investments in associates and a decrease in investment properties of $320.4 million after revaluation adjustments of $62.8 million (refer to note 15).
1. During the year, controlled entities disposed of several special purpose development property entities located in Europe for a net consideration of $12.4 million (2008: $30.3 million). The principal impact on the Consolidated Entity’s balance sheet was a decrease of investment properties by $68.5 million and a decrease of payables by $77.8 million.
On 17 December 2007, Goodman sold 50% of its equity interest in Highbrook Development Limited (HDL) (through the sale of 100% of shares in Goodman (Highbrook) Limited) to Goodman Property Trust (GPT) for a net consideration of $91.4 million, which includes $2.1 million received in the current year.
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 $873.1 million, which includes $0.5 million received in the current year. The principal effect of the transaction in the prior year was to reduce the Consolidated Entity’s investment properties by $885.0 million and payables by $106.0 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 (United Kingdom and Continental 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.

6. Segment reporting (cont)

Primary segment reporting – geographical segments

	Asia Pacif c	Asia Pacif c	Europe	Europe	Consolidated	Consolidated
	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M
Revenue and other income
Revenue (excluding distributions from
investments)	425.0	598.6	294.6	225.0	719.6	823.6
Net (loss)/gain from fair value adjustments
on investment properties	(248.0)	49.4	(279.0)	(193.7)	(527.0)	(144.3)
Net gain/(loss) on disposal of
investment properties	17.9	71.9	(16.1)	25.5	1.8	97.4
Net gain on disposal of controlled entities	3.4	132.7	37.2	50.3	40.6	183.0
Share of net results of equity
accounted investments	(195.3)	157.2	(313.4)	(182.2)	(508.7)	(25.0)
Net gain on disposal of equity investments	15.2	117.4	(3.3)	1.8	11.9	119.2
Distributions from investments	6.0	26.9	13.6	2.0	19.6	28.9
Total revenue and other income (Loss)/prof t before impairment losses, restructuring costs, amortisation, depreciation, net f nancing costs and income tax Impairment losses1 Restructuring costs1 Depreciation and amortisation Segment result Net f nancing costs Income tax credit/(expense) (Loss)/prof t from continuing operations Prof t from discontinued operation, net of income tax2 (Loss)/prof t for the year	24.2 (152.0) (187.0) (25.8) (6.0) (370.8)	1,154.1 734.7 (108.2) – (4.8) 621.7	(266.4) (489.3) (42.7) (59.9) (3.0) (594.9)	(71.3) (227.0) – – (2.8) (229.8)	(242.2) (641.3) (229.7) (85.7) (9.0) (965.7) (153.6) 23.3 (1,096.0) – (1,096.0)	1,082.8 507.7 (108.2) – (7.6) 391.9 (110.5) (5.2) 276.2 (7.8) 268.4

Refer to note 8 for details of impairment losses and restructuring costs.
Refer to note 4 Discontinued operation.

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

6. Segment reporting (cont)

Primary segment reporting – geographical segments

	Asia Pacif c	Asia Pacif c		Europe	Consolidated	Consolidated
	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M
Segment assets
Investment properties	2,314.4	2,581.1	1,219.6	1,682.7	3,534.0	4,263.8
Investments accounted for using
the equity method	1,824.9	1,825.5	837.4	574.0	2,662.3	2,399.5
Other f nancial assets	27.7	190.1	43.4	48.6	71.1	238.7
Intangible assets	51.4	5.3	1,074.0	1,067.9	1,125.4	1,073.2
Inventories	45.5	42.9	–	–	45.5	42.9
Assets classif ed as held for sale	182.9	–	–	33.3	182.9	33.3
Other assets	11.6	309.7	400.2	222.6	411.8	532.3
Total segment assets Segment liabilities Payables Liabilities classif ed as held for sale Provisions Total segment liabilities Total segment assets less segment liabilities Non-segment assets and liabilities Cash Derivative f nancial instruments (net) Interest bearing assets Interest bearing liabilities Provision for distributions Deferred tax liabilities (net) Current tax payables (net) Total non-segment assets less total non-segment liabilities Net assets Capital expenditure	4,458.4 (94.7) (10.1) (8.9) (113.7) 4,344.7 (182.0)	4,954.6 (175.5) – (17.5) (193.0) 4,761.6 (579.6)	3,574.6 3,629.1 (138.2) (240.6) – – (57.9) (42.2) (196.1) (282.8) 3,378.5 3,346.3 (266.8) (1,138.2)		8,033.0 (232.9) (10.1) (66.8) (309.8) 7,723.2 242.5 (169.3) 243.0 (4,239.8) – (14.2) (7.8) (3,945.6) 3,777.6 (448.8)	8,583.7 (416.1) – (59.7) (475.8) 8,107.9 639.2 111.3 252.2 (4,229.1) (142.4) (19.2) (50.8) (3,438.8) 4,669.1 (1,717.8)

6. Segment reporting (cont)

Secondary segment reporting – business segments

	Property	Property
	investment		Management		Other		Consolidated
	2009	2008	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M	$M	$M
External segment revenue and other income1	(243.1)	195.0	455.2	602.7	54.4	310.1	266.5	1,107.8
Share of net results of equity
accounted investments	(512.2)	(45.9)	3.5	20.9	–	–	(508.7)	(25.0)
Total revenue and other income Segment result1, 2 Net f nancing costs Prof t before income tax Income tax benef t/(expense) (Loss)/prof t for the year – continuing operations Loss from discontinued operation net of income tax (refer to note 4) (Loss)/prof t for the year Assets Segment assets Equity accounted investments Unallocated assets Consolidated total assets Liabilities Segment liabilities Interest bearing liabilities Unallocated liabilities Consolidated total liabilities Capital expenditure	(755.3) (981.5) 3,866.2 2,642.4 (101.7) (439.5)	149.1 (23.4) 4,764.1 2,225.5 (233.0) (1,700.7)	458.7 (38.6) 1,684.1 19.9 (92.8) (9.3)	623.6 116.8 1,635.0 174.0 (73.1) –	54.4 54.4 16.0 – – –	310.1 298.5 – – – (17.1)	(242.2) (965.7) (153.6) (1,119.3) 23.3 (1,096.0) – (1,096.0) 5,566.3 2,662.3 354.4 8,583.0 (194.5) (4,239.8) (371.1) (4,805.4) (448.8)	1,082.8 391.9 (110.5) 281.4 (5.2) 276.2 (7.8) 268.4 6,399.1 2,399.5 835.0 9,633.6 (306.1) (4,229.1) (429.3) (4,964.5) (1,717.8)

In 2008, net gains before tax on disposal of interests in Ascendas-MGM Funds Management Limited (AMFM) and Ascendas Real Estate Investment Trust of $116.3 million are included in other segment revenue and segment result.
Segment result includes restructuring costs of $85.7 million (2008: $nil) under the management segment and impairment losses of $172.9 million (2008: $108.2) and $56.8 million (2008: $nil) under property investment and management segments respectively.

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

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. Fair value is based on current prices in an active market for similar properties in the same location and condition and subject to similar lease and other contracts. The current price is the estimated amount for which a property could be exchanged between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

Valuations are either based on an external, independent valuation or on an internal valuation. 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. Recent and relevant sales evidence and other market data are taken into account.

Availability of comparable sales information at 30 June 2009

Investment property markets in most regions have been signifi cantly and adversely impacted by the changes in economic conditions during the course of the fi nancial year. The scarcity of fi nance resulted in a reduced number of transactions involving properties comparable to those owned or managed by Goodman which signifi cantly increased the level of uncertainty inherent in determining the fair value of individual properties. The diffi culties in determining fair value are exacerbated by an absence of consensus on how to distinguish sales where sellers are forced as opposed to willing. Whilst providing general information on markets, broad index-based valuation approaches may also be insuffi ciently specifi c to apply directly to calculations of fair value.

Approach to determination of fair value at 30 June 2009

As a consequence of lack of available comparable sales across all markets at 30 June 2009, external valuations were only undertaken where market segments were observed to be active. This determination was made based on the criteria set out below:

- function of the asset (distribution/warehouse or suburban offi ce);
- location of asset (city, suburb or regional area);
- carrying value of asset (categorised by likely appeal to private investors (including syndicates), national and institutional investors); and
- categorisation as primary or secondary based on a combination of location, weighted average lease expiry, quality of tenant covenant (internal assessment based on available market evidence) and age of construction.

Each property asset was assessed and grouped with assets in the same or similar market segments. Information on all relevant recent sales was also analysed using the same criteria to provide a comparative set. Unless three or more sales were observed in an individual market segment (taken together with any comparable market segments as necessary), that market segment was considered inactive with the consequence that no external valuations were undertaken for those property assets at 30 June 2009. Internal valuations were completed for all assets for which an external valuation was not undertaken. This approach was also consistently applied to investment properties within funds managed by Goodman.

Key assumptions for discounted cash fl ow (DCF) calculations

Internal valuations were prepared using a DCF methodology and referenced to cap rate information where reliable cap rate information was available. The DCF calculations were prepared over a 10 year period. The key inputs considered for each individual calculation (for wholly-owned investment properties as well as investment properties within funds managed by Goodman) were rental growth rates, discount rates, market rental rates and letting up incentives. Discount rates were computed using the 10 year bond rate or equivalent in each jurisdiction plus increments to refl ect country risk, tenant credit risk and industry risk. Where possible, the components of the discount rate were benchmarked to available market data. The ranges utilised for each division are set out on the next page.

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

(a) Investment property values (cont)

	Forecast average	Annual			Derived
	annual rental	discount			weighted
	growth (10 years)	rate	Letting up	Incentives	average cap rate
Division	%	%	period	%	%
Australia	2.8 to 3.2	9.0 to 9.75	3 to 6 months	8.0 to 10.0	8.0
New Zealand	1.3 to 2.5	9.5 to 10.8	4 to 12 months	8.0 to 12.0	8.7
Hong Kong	2.2 to 3.0	8.8 to 9.5	Nil to 3 months	Nil to 5.6	7.1
China	5.2	12.5	3 months	5.6	9.2
Japan	Nil	5.2	6 to 12 months	6.0 to 12.0	5.5
UK Business Parks	(1.9) to 0.7	6.9 to 9.8	1 to 33 months	5.0 to 25.0	7.9
UK Logistics	0.5 to 1.05	7.0 to 9.3	12 months	10.0 to 25.0	8.2
Continental Europe	1.5 to 2.2	6.7 to 14.3	Nil to 6 months	Nil to 13.0	7.7
(Logistics)

By comparison, the weighted average cap rates for those properties valued at 30 June 2009 by external independent valuers (including both those held directly by Goodman and those held by funds managed by Goodman) were as follows: Australia 8.5%; Hong Kong 7.4%; UK Logistics 8.0%; and Continental Europe (Logistics) 7.4%. No external property valuations were undertaken at 30 June 2009 for New Zealand, China, Japan or UK Business Parks.

The table below shows the sensitivity of those investment properties which have been internally valued at 30 June 2009 to a 25 basis point increase in the annual discount rate. All other assumptions are property specifi c and it is impractical to show sensitivities.

	Decrease in investment	Goodman share of decrease in
	property values	investment property values
	(Goodman properties)	(properties held by managed funds)
Division	$M	$M
Australia	(40.7)	(25.3)
UK Business Parks	–	(15.5)
UK Logistics	(8.2)	–
Continental Europe (Logistics)	(0.9)	(9.7)

At 30 June 2009, the carrying value of completed investment properties held by the Consolidated Entity is $2,547.2 million (2008: $2,953.1 million). Consistent assumptions were also utilised in feasibility models supporting development properties.

(b) Intangible assets

The Consolidated Entity recognises both indefi nite life management rights and goodwill in its balance sheet at 30 June 2009. Details of key assumptions are set out in note 19.

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 at minimal cost of contractual agreements to manage funds, and the future fi nancial performance of the entities which generate those future fee income streams.

At 30 June 2009, the carrying value of management rights held by the Consolidated Entity is $326.0 million (2008: $282.3 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 2009, the carrying value of goodwill for the Consolidated Entity is $799.4 million (2008: $790.9 million).

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

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

(c) Equity accounted investments

The Consolidated Entity has a 50% investment in a joint venture entity, Macquarie Goodman Japan Pte Limited (MGJ), which in turn has a 52% investment in J-REP Co., Ltd (J-REP). J-REP established a fund platform in April 2008 with initial equity invested of ¥27.3 billion (A$351.0 million), but has subsequently undertaken a restructuring of its business. Given the restructuring and the current fi nancial environment, the carrying value of the Consolidated Entity’s investment in MGJ has been assessed for impairment based on a value in use calculation using a discount rate of 9.15% per annum. The key assumption used in that calculation is that equity of ¥150 billion (A$1,929.0 million) is raised in the fund over the period to March 2014, although the forecasts do not assume any equity is raised in the next fi nancial year.

At 30 June 2009, the carrying value of the investment in MGJ is $165.4 million, which is net of an impairment loss of $8.3 million. The table below sets out the sensitivity of the fair value to the amount of equity raised in the next fi ve years:

	Impact on fair value of
	investment in MGJ
Sensitivity	$M
10% reduction in equity raised in each of the next f ve years	(11.5)
10% reduction in equity raised in the next 12 months	–
50 basis point increase in the discount rate per annum	(3.4)

8. (Loss)/profi t before income tax

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Consolidated Parent Entity
2009 2008 2009 2008
$M $M $M $M
(Loss)/profi t before income tax has been arrived
at after crediting/(charging) the following items:
Net consideration from the sale of investment properties 382.7 1,463.2 – –
– –
Carrying value of investment properties sold (380.9) (1,365.8)
Net gain on disposal of investment properties 1.8 97.4 – –
Net consideration received and receivable from the sale of controlled entities 179.4 1,013.1 2.1 32.1
– –
Net assets disposed (138.8) (830.1)
Net gain on disposal of controlled entities 40.6 183.0 2.1 32.1
– –
Share of net results of investments in associates (refer to note 16a) (463.5) (49.2)
Share of net results of investments in JVEs (refer to note 16b) (45.2) 24.2 – –
– –
Share of net results of equity accounted investments (508.7) (25.0)
Net consideration from the sale of equity investments 286.0 290.8 – –
– –
Carrying value of equity investments sold (274.1) (171.6)
Net gain on disposal of equity investments 11.9 119.2 – –
– –
Amortisation of leasehold improvements (1.3) (2.2)
– –
Depreciation of plant and equipment (7.7) (5.3)
– –
Total amortisation and depreciation (9.0) (7.5)
Impairment of receivables from the ESAP – – 3.7 (6.8)
– – –
Impairment of assets classifi ed as held for sale (9.6)
– – –
Impairment of inventories (15.3)
– –
Impairment of investment in controlled entities (106.5) (104.7)
– – –
Impairment of equity accounted investments (10.2)
– –
Impairment of other fi nancial asset (161.4) (108.2)
– – –
Impairment of intangible assets (33.2)
Total impairment losses (229.7) (108.2) (102.8) (111.5)
Restructuring costs
– – –
Employee expenses (23.7)
– – –
Development expenses (16.2)
– – –
Administrative and other expenses (45.8)
– – –
Total restructuring costs (85.7)
----- End of picture text -----

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

8. (Loss)/profi t before income tax (cont)

8. (Loss)/prof t before income tax (cont)
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Financial income
Interest income from:
Related parties	9.8	6.4	7.9	–
Controlled entities	–	–	–	16.8
Other parties	9.1	9.1	1.2	0.2
Fair value adjustments on derivative instruments1	–	51.9	–	2.2
Foreign exchange gain	–	–	1.4	3.5
	18.9	67.4	10.5	22.7
Financial expenses
Interest expense from:
Third party loans, overdrafts and derivatives	(167.0)	(221.5)	–	–
Controlled entities	–	–	(51.3)	(63.0)
Other borrowing costs	(14.9)	(19.1)	(0.2)	–
Fair value adjustments on derivative instruments1	(62.3)	–	(1.4)	–
Foreign exchange loss	–	(30.6)	–	–
Capitalised borrowing costs2	71.7	93.3	–	–
	(172.5)	(177.9)	(52.9)	(63.0)
Net f nancing costs	(153.6)	(110.5)	(42.4)	(40.3)

Includes fair value losses on the ineffective portion of derivatives and gains on terminated derivative contracts included in the cash fl ow hedge reserve. The gains on terminated derivative contracts included in the cash fl ow hedge reserve are recognised in the income statement when the underlying hedged transaction is recognised.
Borrowing costs were capitalised during the year at rates between 1.4% and 10.8% per annum (2008: 3.7% and 8.6% per annum).

Share based payments credit/(expense)

During the year, the Directors have assessed that the non-market related performance hurdles attached to certain of the options issued under the EOP and the securities issued under the ESAP are unlikely to be achieved. Accordingly, the expense recognised in the income statement in previous years has been reversed. This has resulted in a net credit to the income statement of $38.1 million (2008: $26.7 million expense).

8. (Loss)/profi t before income tax (cont)

Impairment losses

Impairment losses recognised during the year by the Consolidated Entity relate to the following items:

(i) Assets classifi ed as held for sale

Losses relate to the Consolidated Entity’s share of decrements in the carrying value of the Goodman UK Active Property Fund plc (UK Active Fund) since the investment was classifi ed as an asset held for sale.

(ii) Inventories

Losses relate to the Brickworks project in Australia where the net realisable value of the project is lower than cost.

(iii) Equity accounted investments

The impairment loss arises following an assessment of the value in use of the Consolidated Entity’s investment in MGJ (refer to note 16 for details).

(iv) Other fi nancial asset

Losses arise on the mark to market of the Consolidated Entity’s investment in ING Industrial Fund.

(v) Intangible assets

Losses relate to management rights associated with Colworth Park Ltd. Partnership (Colworth) and intangible assets associated with the UK Logistics Division where the value in use of intangible assets is lower than cost (refer to note 19 for details).

Restructuring costs

During the year, the Consolidated Entity undertook a review of its strategy relative to business lines and geographical presence. A review of operations was also undertaken encompassing activity levels, underlying cost base, personnel and accommodation.

(i) Employee expenses

As a result of the strategic and operational reviews, the number of employees was signifi cantly reduced. The cost for the year of employee terminations due to restructuring changes totalled $23.7 million.

(ii) Development expenses

Costs incurred in postponing or withdrawing from development projects during the year have been included in restructuring costs. These costs were incurred in Australia ($2.1 million), New Zealand ($1.4 million), China ($1.9 million), the UK ($3.0 million) and Continental Europe ($7.8 million).

(iii) Administrative and other expenses

Business development projects

A full review of business development opportunities and related timelines was undertaken during the year. Key changes as a result of this review relate to the Middle East and UK. Goodman’s plans to expand its joint venture operations in the Middle East were put on hold and the cost of investment was expensed to restructuring costs ($6.2 million). Also, costs relating to the proposed launch of the UK Logistics fund were expensed to restructuring costs ($7.9 million) as the business is expected to develop through a series of joint ventures rather than a fund (refer to note 19). The cost of other commenced business development initiatives included in restructuring costs totalled $2.0 million.

Offi ce accommodation

Each offi ce occupied by the Consolidated Entity was reviewed and a decision was taken to vacate certain premises and identify opportunities for subleasing where practical. Unamortised fi t-out costs were also expensed. The restructuring cost recognised in the current year in relation to offi ce space totalled $21.1 million. The amount included in the provision for onerous leases as a result of the restructuring totals $19.6 million at 30 June 2009 (refer to note 22).

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

9. Income tax expense

9. Income tax expense
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Current tax benef t/(expense) recognised in the income statement
Current year	3.7	(47.4)	9.2	(15.0)
Adjustment for prior periods	20.7	2.7	19.2	2.9
	24.4	(44.7)	28.4	(12.1)
Deferred tax (expense)/benef t recognised in the income statement
Movements in deferred tax	2.9	32.1	(1.5)	(0.9)
Adjustment for prior periods	(4.0)	6.9	0.3	(0.2)
	(1.1)	39.0	(1.2)	(1.1)
Total income tax benef t/(expense)	23.3	(5.7)	27.2	(13.2)
Income tax benef t/(expense) from continuing operations	23.3	(5.2)	27.2	(13.2)
Income tax expense from discontinued operation (refer to note 4)	–	(0.5)	–	–
Total income tax benef t/(expense)	23.3	(5.7)	27.2	(13.2)
(a) Income tax benef t/(expense)
(Loss)/prof t before income tax from continuing operations	(1,119.3)	281.4	(131.4)	(108.3)
Loss before income tax from discontinued operations	–	(7.3)	–	–
(Loss)/prof t before income tax	(1,119.3)	274.1	(131.4)	(108.3)
Prima facie income tax benef t/(expense) calculated at 30%
(2008: 30%) on the (loss)/prof t before income tax	335.8	(82.2)	39.4	32.5
(Increase)/decrease in income tax due to:
– (Loss)/prof t attributable to Unitholders	(244.2)	71.4	–	–
– Current year losses for which no deferred tax asset was recognised	(18.8)	(14.3)	–	–
– Non-deductible impairment losses	(9.5)	–	(30.8)	(33.4)
– Non-deductible losses from share of results of equity accounted
investments	(29.9)	(7.1)	–	–
– Non-deductible fair value adjustments on investment properties	(33.5)	–	–	–
– Non-deductible interest expense	(7.0)	(13.7)	(5.9)	(7.9)
– Other non-deductible items	(6.4)	(1.3)	–	–
– Non-assessable interest income	2.9	–	2.9	2.6
– Net assessable foreign income	3.7	26.7	–	–
– Non-assessable/deductible option benef t/(expense)	10.8	(8.2)	–	–
– Other non-assessable income	16.8	5.7	3.8	2.0
– Other items	(0.1)	5.5	(1.7)	(11.6)
– Difference in overseas tax rates	(14.0)	2.2	–	–
– Over provision in prior year	16.7	9.6	19.5	2.6
Income tax benef t/(expense) attributable to (loss)/prof t	23.3	(5.7)	27.2	(13.2)

9. Income tax expense (cont)

9. Income tax expense (cont)
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
(b) Deferred tax recognised directly in equity
Relating to revaluation of investments	–	25.7	–	–
Other	3.3	1.5	0.7	0.2
(c) Current tax receivables Balance at the beginning of the year Increase/(decrease) in current tax receivables due to: – Income taxes paid (net of refunds) – Income tax benef t on current year’s (loss)/prof t – Adjustment for prior periods Balance at the end of the year (d) Current tax payables Balance at the beginning of the year Decrease/(increase) in current tax payables due to: – Income taxes paid (net of refunds) – Income tax benef t/(expense) on current year’s (loss)/prof t – Amount relating to tax on pre-acquisition prof ts – income tax refundable related to current tax transactions of the wholly-owned subsidiaries in the tax consolidated group – Income tax on ESAP interest income recognised in reserves – Adjustment for prior periods Balance at the end of the year	3.3 0.3 4.6 0.5 – 5.4 (50.8) 26.9 3.2 – – (13.2) 20.7 (13.2)	27.2 6.0 (6.0) 0.3 – 0.3 (37.5) 33.8 (47.7) (2.1) – – 2.7 (50.8)	0.7 – 3.9 – – 3.9 (13.0) 23.8 9.2 – (26.0) (13.2) 19.2 –	0.2 4.0 – – (4.0) – – 5.5 (15.0) – (10.4) – 6.9 (13.0)

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

9. Income tax expense (cont)

(e) Deferred tax assets and liabilities

Deferred tax assets/(liabilities) are attributable to the following:

	Deferred tax assets	Deferred tax assets	Deferred tax liabilities	Deferred tax liabilities		Net
	2009	2008	2009	2008	2009	2008
Consolidated	$M	$M	$M	$M	$M	$M
Receivables	–	–	(3.3)	(13.2)	(3.3)	(13.2)
Investment properties	–	–	(39.1)	(40.3)	(39.1)	(40.3)
Tax losses	19.1	15.0	–	–	19.1	15.0
Payables	1.8	–	–	–	1.8	–
Provisions	6.5	17.6	–	–	6.5	17.6
Other items	0.8	1.7	–	–	0.8	1.7
Tax assets/(liabilities)	28.2	34.3	(42.4)	(53.5)	(14.2)	(19.2)
Set off	–	0.3	–	(0.3)	–	–
Net tax assets/(liabilities) Parent Entity Other f nancial assets Tax assets/(liabilities)	28.2 0.6 0.6	34.6 1.1 1.1	(42.4) – –	(53.8) – –	(14.2) 0.6 0.6	(19.2) 1.1 1.1

Deferred tax assets of $20.5 million in relation to tax losses have not been recognised by the Consolidated Entity at 30 June 2009 (2008: $nil).

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 2009 or up to the date of this report (2008: $nil).

(b) Distributions declared by GIT

		Total
	Distribution	amount	Date of
	cpu	$M	payment
Distributions for the half years ended:
– 31 Dec 08	9.65	264.1	26 Feb 09
– 30 Jun 09	–	–	–
Distributions for the comparative quarters ended: – 30 Sep 07 – 31 Dec 07 – 31 Mar 08 – 30 Jun 08	9.65 8.5 8.5 8.5 8.5 34.0	264.1 141.2 142.3 142.3 142.4 568.2	8 Nov 07 14 Feb 08 8 May 08 26 Aug 08

The distribution for the quarter ended 30 June 2007 of $129.9 million was paid on 23 August 2007.

10. Dividends and distributions (cont)

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Consolidated
2009 2008
Movement in provision for distributions to Securityholders $M $M
Balance at the beginning of the year 142.4 129.9
Provisions for distributions 264.1 568.2
Payment of distributions (406.5) (555.7)
Balance at the end of the year – 142.4
----- End of picture text -----

Dividend franking account	Parent Entity
	2009 $M 2008 $M
30% franking credits available to Shareholders for subsequent f nancial years	39.8 12.1

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.

(c) Hybrid Securities

		Total
	Distribution	amount	Date of
	cpu	$M	payment
Distributions for the quarters ended:
– 21 Sep 08	242.5	7.9	22 Sep 08
– 21 Dec 08	233.7	7.6	22 Dec 08
– 21 Mar 09	150.6	4.9	23 Mar 09
– 21 Jun 09	124.6	4.1	22 Jun 09
Distributions for the comparative quarters ended: – 21 Mar 08 – 21 Jun 08	751.4 240.0 238.2 478.2	24.5 7.8 7.8 15.6	25 Mar 08 23 Jun 08

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

11. Receivables

11. Receivables
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Current
Trade receivables	38.2	127.8	–	–
Other receivables	106.8	135.5	–	–
Construction contract receivables	88.1	48.7	–	–
Amounts due from related parties	79.8	97.0	–	2.2
Derivative f nancial instruments	2.7	122.6	–	–
Loans to controlled entities	–	–	694.8	675.5
Other	–	1.3	–	1.4
Non-current Loans to related parties1 Other amounts due from related parties Other receivables1 Receivables from the ESAP Loans to controlled entities Derivative f nancial instruments	315.6 243.0 15.5 16.9 – – 28.2 303.6	532.9 193.2 – 54.3 4.7 – – 252.2	694.8 – – – – 115.3 – 115.3	679.1 – – – 4.7 102.3 107.0

$54.3 million has been reclassifi ed in the comparative period from non-current loans to related parties to non-current other receivables as the counterparties were not related parties.

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 fi ve years from the balance sheet date. There is no material difference between the carrying values and the fair values of all current and non-current receivables.

Receivables (current and non-current) denominated in currencies other than Australian dollars are as follows:

Amounts in A$M	NZD	HKD	USD	SGD	GBP	EUR	JPY
2009	2.6	137.1	9.0	–	90.3	184.0	–
2008	13.6	99.5	6.1	0.1	174.0	158.3	7.1

11. Receivables (cont)

Trade receivables

As at 30 June 2009, trade receivables of $0.9 million were impaired (2008: $nil). The ageing analysis of these trade receivables is as follows:

	Consolidated
	2009 $M 2008 $M
Overdue by: Up to 1 month 1 month to 4 months Greater than 4 months	6.1 20.9 11.4 5.6 4.1 5.6
	21.6 32.1

As of 30 June 2009, there were no signifi cant receivables that were impaired (2008: $nil) and accordingly, there was no signifi cant provision for the impairment of trade receivables (2008: $nil).

The Consolidated Entity holds bank guarantees as security for $3.4 million (2008: $8.0 million) of its trade receivables from investment property customers.

Other receivables

Other receivables that are past due are not considered impaired. At 30 June 2009, there is no provision for impairment of overdue other receivables (2008: $nil). The ageing analysis of these other receivables is as follows:

	Consolidated
	2009 $M 2008 $M
Overdue by: Up to 1 month 1 month to 4 months Greater than 4 months	5.1 – 17.0 – 3.6 –
	25.7 –

Construction contract receivables

	Consolidated
	2009 $M 2008 $M
Net contract debtors excluding retentions Retentions	216.8 355.9 – –
Net contract debtors	216.8 355.9
Cash received to date Effect of foreign currency translation	(130.4) (309.5) 1.7 2.3
Total progressive value	88.1 48.7
Amounts due from customers – contract debtors Amounts due from customers – trade debtors	88.1 48.7 – –
Net construction contract receivables	88.1 48.7

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

11. Receivables (cont)

Amounts due from related parties

Amounts due from related parties that are past due are not considered impaired. At 30 June 2009, there is no provision for impairment of overdue other receivables (2008: $nil). The ageing analysis of these amounts due from related parties is as follows:

	Consolidated
	2009 $M 2008 $M
Overdue by: Up to 1 month 1 month to 4 months Greater than 4 months	21.0 – 12.4 – 6.0 –
	39.4 –

Loans to controlled entities

Current loans to controlled entities include an amount of $nil (2008: $37.7 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 (2008: 9.0% per annum). Further details of loans to controlled entities are set out in note 33.

Loans to related parties

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

Receivables from the ESAP

Amounts receivable from employees bear interest at the Consolidated Entity’s weighted average interest rate of 5.5% per annum (2008: 8.2% 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. At 30 June 2009, there was a provision of $17.2 million (2008: $6.7 million) against the full amounts receivable from employees under the ESAP as the security exercise prices were above the market price of the stapled security as quoted on the ASX.

12. Inventories

	Consolidated	Consolidated	Parent	Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Current
Work in progress	10.0	8.7	–	–
Non-current
Work in progress	35.5	34.2	–	–

13. Assets/liabilities classifi ed as held for sale

13. Assets/liabilities classif ed as held for sale
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Assets classif ed as held for sale
Cash	21.3	–	–	–
Investment properties	157.3	–	–	–
Investment in associate	–	24.8	–	–
Other f nancial assets	–	8.5	–	–
Other assets	4.3	–	–	–
Liabilities classif ed as held for sale Other liabilities	182.9 (10.1) (10.1)	33.3 – –	– – –	– – –

At 30 June 2009, the Consolidated Entity was at an advanced stage of negotiations to sell an entity incorporated in the Cayman Islands that holds four investment properties. This transaction was completed subsequent to the year end (refer to note 37). Accordingly, at 30 June 2009, the assets and liabilities of the entity have been presented as held for sale and recorded at the lower of cost or net realisable value. There have been no impairment losses on these assets.

As part of the completion of the sale of GPI in May 2008, it was agreed that certain of the Consolidated Entity’s other investments would be sold by 28 February 2009. Accordingly, these investments were presented as held for sale at 30 June 2008, and were recorded at the lower of their carrying amount and fair value less costs to sell. During the period prior to disposal, impairment losses of $9.6 million were recorded.

At 30 June 2008, the investment in associate related to the Consolidated Entity’s investment in the listed securities of UK Active Fund. The market value of this investment at 30 June 2008 using the quoted price on the last day of trading was $25.6 million.

14. Other assets

14. Other assets
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Refundable deposits for the purchase of investment properties	4.4	14.7	–	–
Prepayments	11.6	9.7	–	–
Other	26.9	73.7	11.1	11.6
	42.9	98.1	11.1	11.6

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

15. Investment properties

15. Investment properties
	Completed				Investment
	investment		Redevelopment		properties under		Total investment
	properties		projects1		development		properties
	2009	2008	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M	$M	$M
Carrying amount at the beginning 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
Cost of acquisition:
– On acquisition of controlled entities	23.9	6.8	–	–	–	109.8	23.9	116.6
– Other acquisitions	36.9	29.0	–	–	107.9	136.0	144.8	165.0
Transfers in from other assets	–	–	–	–	37.7	–	37.7	–
Capital expenditure	39.3	297.5	11.9	36.4	243.5	1,201.8	294.7	1,535.7
Transfers in/(out)	254.8	733.9	(24.7)	66.2	(230.1)	(800.1)	–	–
Disposals:
– Carrying value of properties sold	(148.1)	(991.9)	–	(50.5)	(232.8)	(323.4)	(380.9)	(1,365.8)
– On disposal of interests in controlled entities	(121.0)	(785.7)	–	–	(90.1)	(407.0)	(211.1)	(1,192.7)
– Transfers to assets held for sale	(157.3)	–	–	–	–	–	(157.3)	–
Net loss from fair value adjustments	(355.0)	(65.3)	(3.0)	(6.3)	(169.0)	(72.7)	(527.0)	(144.3)
Effect of foreign currency translation	20.6	(86.4)	–	–	24.8	(124.3)	45.4	(210.7)
Carrying amount at the end of the year2	2,547.2	2,953.1	97.7	113.5	889.1	1,197.2	3,534.0	4,263.8

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 2009, investment properties with a carrying value of $1,289.6 million (2008: $157.0 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.

15. Investment properties (cont)

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

					Cost				Revalu-	Effect of
				Cost	including	Last	Last		ation	foreign	Book
			Original	since	capital	indepe-	indepe-	Disposal	decrement	currency	value
			purchase	acqui-	expend-	ndent	ndent	during	during the	trans-	30 June
		Acquisition	price	ition	iture	valuation	valuation	the year	year	slation	2009
Properties	I, D, R	date	$M	$M	$M	date	$M	$M	$M	$M	$M
Australia
Warehouse/distribution centres
Greystanes Park, Prospect, NSW	I	1 Feb 05	115.6	86.4	202.0	30 Jun 08	211.7	–	(23.7)	–	189.8
MFive Industry Park, Moorebank, NSW	I	1 Feb 05	108.7	44.6	153.3	30 Jun 08	152.5	–	(17.1)	–	136.6
Roberts Distribution Centre, Chullora, NSW	I	1 Feb 05	61.6	21.4	83.0	31 Dec 08	74.2	–	(12.5)	–	71.4
Southend Distribution Centre, Mascot, NSW	I	1 Feb 05	35.2	5.3	40.5	31 Dec 07	49.0	–	(7.8)	–	44.2
Kingston Distribution Centre, Braeside, Vic	I	1 Feb 05	30.2	0.9	31.1	30 Jun 08	32.9	–	(6.4)	–	26.6
Sheff eld Distribution Centre, Welshpool, WA	I	1 Feb 05	16.9	1.4	18.3	31 Dec 07	33.0	–	(1.2)	–	33.1
Prestons Distribution Centre, Preston, NSW	D	4 Mar 05	21.9	–	21.9	30 Jun 08	17.0	–	(3.3)	–	16.0
Bradford Distribution Centre, Cavan, SA	R	1 Feb 05	3.8	1.4	5.2	31 Dec 06	4.5	–	–	–	6.0
Perth Airport, Perth, WA	I	5 Apr 07	2.4	32.6	35.0	30 Jun 08	36.0	–	(4.1)	–	32.1
Perth Airport ITT Flygt development, Perth, WA	I	Leasehold	–	2.5	2.5	31 Dec 07	4.9	–	(1.2)	–	3.6
Taylor Distribution Centre, Edinburgh, SA	I,R	31 Aug 05	6.4	5.1	11.5	31 Dec 07	8.6	(1.3)	(0.1)	–	11.1
Glasscocks Industrial Estate, Lyndhurst, Vic	D	1 Feb 05	27.6	2.7	30.3	30 Jun 08	27.6	–	(3.9)	–	26.4
Business parks
Homebush Corporate Park, Homebush, NSW1	I,R	1 Feb 05 &	199.2	97.3	296.5	31 Dec 08	212.2	–	(15.0)	–	282.9
		30 Jun 05
Campus Business Park, Homebush, NSW	I	1 Feb 05	125.2	42.5	167.7	31 Dec 07	177.5	–	(20.5)	–	157.4
Lidcombe Business Park, Lidcombe, NSW	I	1 Feb 05	142.9	5.7	148.6	31 Dec 08	155.8	–	(19.6)	–	155.8
Clayton Business Park, Clayton, Vic	I	1 Feb 05	87.7	43.5	131.2	30 Jun 08	116.5	–	(12.1)	–	110.7
Slough Business Park, Silverwater, NSW	I	1 Feb 05	101.1	10.5	111.6	31 Dec 08	106.3	–	(13.3)	–	106.3
Botany Grove Business Park, Botany,	I	1 Feb 05	55.9	3.2	59.1	31 Dec 08	71.5	–	(4.5)	–	67.5
NSW – Stage 1,2 and 3
Botany Grove Business Park, Botany,	I	1 Feb 05	5.2	1.7	6.9	30 Jun 09	4.8	–	(0.6)	–	4.8
NSW – Stage 4
Airgate Business Park, Mascot, NSW	I	1 Feb 05	61.8	28.0	89.8	31 Dec 08	89.8	–	(11.0)	–	83.2
Euston Business Park, Alexandria, NSW	I	1 Feb 05	49.7	2.2	51.9	31 Dec 08	52.2	–	(5.2)	–	52.2
Toyotagreen Business Park, Port Melbourne,	I,D	14 Apr 05	16.7	2.2	18.9	17 Mar 05	26.1	–	–	–	19.2
Vic – Parcel A
Toyotagreen Business Park, Port Melbourne,	I,D	24 Mar 05	10.7	28.0	38.7	–	–	–	(6.5)	–	32.9
Vic – Parcel B
Forestridge Business Park, Frenchs Forest, NSW	I	1 Feb 05	34.7	10.8	45.5	30 Jun 08	48.9	–	(4.8)	–	43.7
Orion Business Park, Lane Cove, NSW	I	1 Feb 05	12.8	1.1	13.9	30 Jun 09	13.3	–	(1.4)	–	13.3

Last independent valuation relates to the investment component and not the redevelopment component of Homebush Corporate Park.

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

15. Investment properties (cont)

					Cost				Revalu-	Effect of
				Cost	including	Last	Last		ation	foreign	Book
			Original	since	capital	indepe-	indepe-	Disposal	decrement	currency	value
			purchase	acqui-	expend-	ndent	ndent	during	during the	trans-	30 June
		Acquisition	price	ition	iture	valuation	valuation	the year	year	slation	2009
Properties	I, D, R	date	$M	$M	$M	date	$M	$M	$M	$M	$M
Australia (cont)
Industrial estates
Discovery Cove Industrial Estate,
Banksmeadow, NSW	I	1 Feb 05	72.2	6.9	79.1	31 Dec 08	88.6	–	(13.8)	–	88.6
Alexandria Industrial Estate , Alexandria, NSW	I	1 Feb 05	60.1	12.3	72.4	31 Dec 07	80.0	–	(8.7)	–	72.1
Mitchell Industrial Estate, Alexandria, NSW	I	1 Feb 05	47.2	1.4	48.6	31 Dec 07	60.0	–	–	–	61.5
Mitchell Industrial Estate, Alexandria, NSW	I	1 Feb 05	20.7	5.3	26.0	30 Jun 09	16.8	–	(1.3)	–	16.8
Kingsford Smith Industrial Estate,	I	1 Feb 05	41.3	0.1	41.4	30 Jun 08	45.0	–	(3.1)	–	42.0
Alexandria, NSW
Burrows Industrial Estate, Alexandria, NSW	I	1 Feb 05	32.0	3.4	35.4	31 Dec 07	41.5	–	(6.7)	–	35.0
Interchange Industrial Estate, Laverton		3 Apr 06 &
North, Vic	D	29 May 07	32.2	59.8	92.0	3 Apr 06	33.8	(70.8)	–	–	33.6
Westcove Industrial Estate, Lane Cove, NSW	I	1 Feb 05	12.9	0.2	13.1	30 Jun 09	8.1	–	(2.8)	–	8.1
Homebush Bay Industrial Estate,
Homebush, NSW	I	1 Feb 05	11.3	1.2	12.5	30 Jun 09	10.3	–	(2.9)	–	10.3
Toyotagreen Business Park, Precinct A,
Port Melbourne, Vic	I	1 Feb 05	32.4	10.6	43.0	31 Dec 07	36.1	–	(3.8)	–	42.3
Goldsborough Industrial Estate, Pooraka, SA	D	Leasehold	–	8.2	8.2	18 Nov 05	–	–	–	–	8.3
Keylink Industrial Estate, Edinburgh Parks, SA	D	11 Aug 06	7.6	12.3	19.9	11 Aug 06	7.0	–	–	–	19.9
Gateway Business Park, Craigieburn, NSW	D	27 Oct 06	21.1	6.2	27.3	27 Oct 06	19.5	(7.5)	–	–	20.6
Other development land	D	Various	61.6	10.0	71.6			(21.4)	(5.6)	–	20.3
New Zealand Industrial estates Development land China Warehouse/distribution centres Pudong International Airport Logistics Park Land Other development land	D D D	Various 31 Dec 07 Various	15.5 52.6 10.0	4.9 34.5 3.1	20.4 87.1 13.1	31 Mar 09 – –	15.9 – –	(2.9) – –	(3.6) – –	0.5 (6.9) (1.0)	2,206.2 15.9 15.9 80.2 12.1 92.3

15. Investment properties (cont)

					Cost				Revalu-	Effect of
				Cost	including	Last	Last		ation	foreign	Book
			Original	since	capital	indepe-	indepe-	Disposal	decrement	currency	value
			purchase	acqui-	expend-	ndent	ndent	during	during the	trans-	30 June
		Acquisition	price	ition	iture	valuation	valuation	the year	year	slation	2009
Properties	I, D, R	date	$M	$M	$M	date	$M	$M	$M	$M	$M
United Kingdom
Warehouse/distribution centres
Tunnel Industrial Estate, West Thurrock,
South East England	I	20 Sep 06	64.6	–	64.6	30 Jun 08	44.9	–	(7.1)	0.2	38.1
Gloucester Business Park, Gloucester,
South West England	I	20 Sep 06	50.0	0.1	50.1	30 Jun 08	39.1	–	(6.1)	0.2	33.2
Brackmills Industrial Estate, Northampton,
East Midlands, England	I	20 Sep 06	38.1	0.1	38.2	30 Jun 08	30.2	–	(6.7)	0.3	23.8
Amber Park, South Normanton,
East Midlands, England	I	20 Sep 06	31.1	–	31.1	30 Jun 09	19.6	–	(7.2)	0.3	19.6
Centrum 100 Business Park, Burton-on-Trent,
East Midlands, England	I	21 Dec 06	30.6	–	30.6	30 Jun 09	20.7	–	(9.4)	0.4	20.7
Maltby, Rotherham, North East England	I	20 Sep 06	19.3	0.1	19.4	30 Jun 08	16.3	–	(3.8)	0.2	12.7
Pioneer Business Park, Ellesmere Port,
North West England	D	24 Apr 07	4.9	19.0	23.9	30 Jun 08	23.5	–	(4.2)	0.1	20.9
Harthills, Glasgow, Scotland	D	24 Apr 07	5.9	–	5.9	30 Jun 08	5.1	–	(1.3)	0.1	3.9
Royal Oak Ind Estate, Daventry,
East Midlands, England	I	1 Jul 07	140.7	0.4	141.1	30 Jun 08	129.6	–	(26.2)	1.0	104.8
Jersey Marine, Swansea, Wales	I	1 Jan 07	2.4	63.3	65.7	30 Jun 08	49.3	0.3	(3.9)	0.1	45.0
Gemini Business Park, Beckton,
South East England	D	13 Apr 07	4.9	–	4.9	30 Jun 08	5.0	–	(1.5)	0.1	2.0
RD Park, Hinckley, East Midlands, England		13 Apr 07
	I,D	& 3 Aug 07	31.3	1.3	32.6	30 Jun 08	29.5	–	(4.9)	0.2	24.8
RD Park, Hoddesdon, South East England	D	13 Apr 07	18.4	(2.8)	15.6	30 Jun 08	8.0	–	(0.5)	–	7.5
Earlstrees Industrial Estate, Corby,
East Midlands, England	D	2 Apr 08	–	6.1	6.1	30 Jun 08	6.1	–	(0.7)	–	5.4
Other development land	D	Various	588.8	596.0	1,184.8	30 Jun 08	936.6	(404.3)	(156.8)	13.6	607.5
Europe Warehouse/distribution centres Düren Logistics Centre, Duren, Germany Schönberg Logistics Centre, Schonberg, Germany Other development land Business parks Other development land, Germany Paris Airpark, France Portfolio total	I I D D I	6 Jun 08 13 Oct 08 Various Various 14 Nov 06	2.7 3.3 184.7 8.3 65.5	20.8 23.9 37.3 2.0 1.1	23.5 27.2 222.0 10.3 66.6	– – 30 Jun 08 – 31 Mar 08	– – 237.6 9.1 61.6	– – (79.4) (7.4) –	– – – (2.7) (11.2)	(0.9) (1.6) 21.4 1.1 4.5	969.9 24.4 25.6 142.2 1.4 56.1 249.7 3,534.0

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

16. Investments accounted for using the equity method

16. Investments accounted for using the equity method
Note	Consolidated
	2009 $M 2008 $M
Share of net assets accounted for using the equity method Associates 16(a) Joint venture entities (JVEs) 16(b)	2,373.6 2,142.1 288.7 257.4
Total	2,662.3 2,399.5
(a) Investments in associates Movements in carrying amount of investments in associates	Consolidated
	2009 $M 2008 $M
Carrying amount at the beginning of the year	2,142.1 902.1
Share of net results after tax (before revaluations) of associates1 Share of net loss from fair value adjustments on investment properties	115.1 91.0 (578.6) (140.2)
Share of net results of investments in associates	(463.5) (49.2)
Share of movements in reserves Transfers in from other f nancial assets Transfer to assets classif ed as held for sale Acquisitions of investments in associates Disposals of investments in associates Distributions received and receivable Effect of foreign currency translation	(132.2) 3.2 – 181.7 – (24.8) 1,100.8 1,355.7 (182.9) (82.6) (126.3) (67.5) 35.6 (76.5)
Carrying amount at the end of the year	2,373.6 2,142.1

S hare of net results after tax (before revaluations) of associates includes $17.1 million (2008: $nil) of losses on disposals of investment properties and restructure charges of $2.2 million (2008: $nil).

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

(a) Investments in associates (cont)

(a) Investments in associates (cont)
						Consolidated
		Share of		Consolidated		investment
		associate’s		ownership		carrying
		result recognised		interest		amount
	Country of
	incorporation/	2009	2008	2009	2008	2009	2008
Name	establishment	$M	$M	%	%	$M	$M
Fund management associates
AMFM1	Singapore	–	3.9	–	–	–	–
Property investment associates
Goodman Australia Industrial Fund (GAIF)	Australia	(156.8)	76.9	45.4	44.1	1,122.9	1,206.5
Goodman Property Trust (GMT)2	New Zealand	(17.4)	25.4	28.1	28.4	215.0	251.7
Goodman Hong Kong Logistics Fund (GHKLF)	Cayman Islands	15.7	24.8	24.2	20.0	244.2	147.7
Goodman European Logistics Fund (GELF)	Luxembourg	(72.2)	9.1	32.9	21.8	411.7	286.0
ABPP	United Kingdom	(232.8)	(173.9)	35.8	22.0	379.8	250.2
UK Active Fund3	Republic of	–	(15.4)	–	–	–	–
	Ireland
		(463.5)	(49.2)			2,373.6	2,142.1

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 2009 using the quoted price on the last day of trading was $173.7 million (2008: $226.6 million).
The investment in UK Active Fund was reclassifi ed as held for sale on 31 May 2008 (refer to note 13).

						Net assets as
			Result	Total	Total	reported by
		Revenue1	after tax1	assets	liabilities	associate
	Year ended	(100%)	(100%)	(100%)	(100%)	(100%)
Name	30 June	$M	$M	$M	$M	$M
AMFM	2009	–	–	–	–	–
	2008	25.0	9.8	–	–	–
GAIF	2009	404.6	(336.4)	4,637.8	2,165.1	2,472.7
	2008	373.4	232.2	4,977.1	1,996.4	2,980.7
GMT	2009	106.8	(63.2)	1,256.9	530.7	726.2
	2008	108.2	85.1	1,262.2	405.8	856.4
GHKLF	2009	121.4	71.2	1,703.4	729.3	974.1
	2008	79.2	124.0	1,240.8	503.3	737.5
GELF	2009	183.9	(229.5)	2,633.3	1,471.6	1,161.7
	2008	52.5	43.6	2,571.5	1,274.2	1,297.3
ABPP	2009	200.9	(517.2)	3,147.6	2,004.0	1,143.6
	2008	180.6	(791.9)	3,124.1	1,992.2	1,131.9
UK Active Fund	2009	–	–	–	–	–
	2008	20.8	(61.6)	240.7	141.9	98.8

Amounts presented above for revenue and result 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.

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

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

(b) Investments in Joint Venture Entities (JVEs)

Movements in carrying amount of investments in JVEs	Consolidated
	2009 $M 2008 $M
Carrying amount at the beginning of the year	257.4 190.0
Share of net results after tax (before revaluations) of JVEs1 Share of net loss from fair value adjustments on investment properties	6.9 24.2 (52.1) –
Share of net results of investments in JVEs	(45.2) 24.2
Share of movements in reserves Impairment2 Acquisitions of investments in JVEs Transfer on part disposal of controlled entity Transfer on reclassif cation as a controlled entity3 Disposals of investments in JVEs Transfer from other f nancial assets4 Distributions received and receivable Return of investment capital Effect of foreign currency translation	(1.1) – (10.2) – 120.4 43.1 – 29.3 (1.2) – (73.5) – 2.5 – (19.6) (12.4) – (9.0) 59.2 (7.8)
Carrying amount at the end of the year	288.7 257.4

Share of net results after tax (before revaluations) of JVEs for the current year includes $1.8 million (2008: $nil) of losses on disposals of investment properties by JVEs and restructure charges of $2.8 million (2008: $nil).
Relates to the investments in MGJ and 413 King William Street Trust.
Relates to the acquisition of remaining 50% share of GAL on 3 December 2008.
Relates to the investment in 413 King William Street Trust.

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

(b) Investments in JVEs (cont)

		Share of	Share of	Consolidated	Consolidated	Consolidated	Consolidated
		JVEs result		ownership		investment
		recognised		interest		carrying	amount
	Country of
	establishment/	2009	2008	2009	2008	2009	2008
Name	incorporation	$M	$M	%	%	$M	$M
Fund management JVEs
GAL1	Hong Kong	2.1	4.6	100.0	50.0	–	1.4
MGJ	Singapore	(40.8)	0.3	50.0	50.0	165.4	157.8
MGJL Management Lux Sàrl	Luxembourg	–	–	50.0	50.0	0.2	0.2
Property investment JVEs
413 King William Street Trust	Australia	–	–	50.0	50.0	0.5	–
MGJ Cayman 1	Cayman Islands	(0.8)	3.4	50.0	50.0	14.1	12.6
Colworth	United Kingdom	1.8	(1.1)	50.0	50.0	18.9	17.2
The Harwell Science and Innovation
Campus Limited Partnership (Harwell)	United Kingdom	(0.2)	–	50.0	50.0	6.6	0.5
Abu Dhabi Business Parks	United
Company LLC (Abu Dhabi)	Arab Emirates	(0.8)	–	49.0	49.0	–	2.7
Property development JVEs
BGA1 Pty Ltd	Australia	1.1	13.2	50.0	50.0	–	14.0
Toll Goodman Property Services Pty Ltd (TGPS)	Australia	0.4	0.5	50.0	50.0	1.2	0.8
GGGAIF Huntingwood East	Australia	–	–	50.0	–	–	–
GGGAIF Huntingwood West	Australia	–	–	50.0	–	–	–
HDL2	New Zealand	2.1	4.1	25.0	25.0	43.3	30.7
Goodman Seaview Ltd (formerly Sino
Cayman No. 1 Ltd) (Seaview)	Cayman Islands	–	–	50.0	50.0	5.5	2.1
Goodman Interlink Ltd (formerly Sino
Cayman No. 2 Ltd) (Interlink)	Cayman Islands	–	–	50.0	50.0	12.7	–
Goodman Herten Logistics (Lux) Sàrl (Herten)	Luxembourg	1.5	–	50.0	100.0	1.4	–
Goodman Lazulite Logistics (Lux) Sàrl
(Lazulite)	Luxembourg	0.4	–	50.0	100.0	0.4	–
Ullo One 2008 Kft (Ullo)	Hungary	(0.4)	–	50.0	–	4.5	–
Agate Ingatlanforgalmazo Kft (Agate)	Hungary	–	–	50.0	–	–	–
WMP nv	Belgium	–	–	50.0	–	0.5	–
BL Goodman LLP	United Kingdom	(7.9)	1.2	50.0	50.0	6.2	12.1
Desborough Developments Ltd (Desborough)	United Kingdom	(2.4)	–	50.0	50.0	2.7	4.1
Gateway LLP	United Kingdom	–	–	50.0	50.0	3.2	–
Pochin Rosemound (Deeside) Ltd (Pochin)	United Kingdom	(1.3)	(2.0)	50.0	50.0	1.4	1.2
		(45.2)	24.2			288.7	257.4

On 3 December 2008, Goodman acquired the remaining 50% of GAL (refer to note 3).
On 17 December 2007, Goodman reduced its interest in HDL from 75% to 25% and subsequently accounted for its investment as a JVE.

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

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

(b) Investments in JVEs (cont)

			Result	Total	Total	Net assets as
		Revenue1	after tax1	assets2	liabilities2	reported by
	Year ended	(100%)	(100%)	(100%)	(100%)	JVE (100%)
Name	30 June	$M	$M	$M	$M	$M
GAL	2009	11.7	4.2	–	–	–
	2008	21.9	7.5	12.2	10.9	1.3
MGJ	2009	36.8	(173.0)	1,139.3	547.8	591.5
	2008	52.7	2.6	1,068.1	580.4	487.7
MGJL Management Lux Sàrl	2009	–	–	0.3	–	0.3
	2008	–	–	0.3	–	0.3
413 King William Street Trust	2009	–	–	5.0	–	5.0
	2008	–	–	–	–	–
MGJ Cayman 1	2009	12.7	(1.8)	43.9	12.8	31.1
	2008	3.0	7.4	45.0	18.2	26.8
Colworth	2009	11.5	4.1	88.8	51.0	37.8
	2008	14.2	4.5	86.7	52.3	34.4
Harwell	2009	2.0	(0.3)	11.1	0.6	10.5
	2008	–	–	–	–	–
Abu Dhabi	2009	–	(1.7)	–	–	–
	2008	–	–	–	–	–
BGA1 Pty Ltd	2009	2.1	2.1	2.0	2.6	(0.6)
	2008	–	–	39.2	10.2	29.0
TGPS	2009	0.7	0.7	2.5	–	2.5
	2008	–	–	2.7	0.9	1.8
GGGAIF Huntingwood East	2009	–	–	15.9	15.9	–
	2008	–	–	–	–	–
GGGAIF Huntingwood West	2009	–	–	21.4	21.4	–
	2008	–	–	–	–	–
HDL	2009	11.4	7.9	259.4	150.8	108.6
	2008	17.9	18.4	154.3	96.2	58.1
Seaview	2009	–	–	121.4	121.4	–
	2008	0.2	–	94.3	94.5	(0.2)
Interlink	2009	–	–	141.8	141.8	–
	2008	–	–	103.6	103.9	(0.3)
Herten	2009	–	3.0	12.0	9.1	2.9
	2008	–	–	–	–	–

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

(b) Investments in JVEs (cont)

			Result	Total	Total	Net assets as
		Revenue1	after tax1	assets2	liabilities2	reported by
	Year ended	(100%)	(100%)	(100%)	(100%)	JVE (100%)
Name	30 June	$M	$M	$M	$M	$M
Lazulite	2009	–	0.8	7.1	6.3	0.8
	2008	–	–	–	–	–
Ullo	2009	–	(0.8)	14.5	5.4	9.1
	2008	–	–	–	–	–
Agate	2009	–	–	7.9	7.9	–
	2008	–	–	–	–	–
WMP nv	2009	–	–	17.3	16.3	1.0
	2008	–	–	–	–	–
BL Goodman LLP	2009	2.5	(15.9)	32.5	31.4	1.1
	2008	1.7	2.8	56.5	35.1	21.4
Desborough	2009	–	(4.7)	–	–	–
	2008	–	–	–	–	–
Gateway LLP	2009	–	–	1.3	1.3	–
	2008	–	–	–	–	–
Pochin	2009	–	(2.6)	13.1	13.1	–
	2008	–	(4.0)	12.4	12.4	–

Amounts presented above for revenue and result 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 $1,666.3 million (2008: $1,484.4 million) and total non-current liabilities of $1,059.9 million (2008: $465.0 million).

17. Other fi nancial assets

17. Other f nancial assets
	Consolidated		Parent	Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Investments in controlled entities:
– Unlisted securities, at cost1,2	–	–	278.5	399.1
Investment in listed securities, at fair value3	27.7	177.2	–	–
Investments in unlisted securities, at fair value4	43.4	61.5	–	–
	71.1	238.7	278.5	399.1

Refer to note 30 for details of investments in controlled entities.
As set out in note 1(v), 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.
Investment in listed securities relates to ING Industrial Fund, which is valued using the quoted price on the last day of trading in the year.
The fair values of investments in unlisted securities are determined by reference to the net asset value per security advised to investors.

Goodman Group Annual Report 2009

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

18. Plant and equipment

18. Plant and equipment
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Leasehold improvements, at cost1	12.9	16.2	–	–
Accumulated amortisation1	(4.6)	(6.2)	–	–
	8.3	10.0	–	–
Plant and equipment at cost2	47.3	45.2	–	–
Accumulated depreciation2	(32.0)	(30.3)	–	–
	15.3	14.9	–	–
Total plant and equipment, at net book value Reconciliation Leasehold improvements Carrying amount at the beginning of the year Additions Disposals Amortisation Effect of foreign currency translation Carrying amount at the end of the year 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 Carrying amount at the end of the year	23.6 10.0 1.1 (1.4) (1.3) (0.1) 8.3 14.9 1.4 8.2 (1.7) (7.7) 0.2 15.3	24.9 8.3 9.1 (4.7) (2.2) (0.5) 10.0 13.0 – 8.0 (0.5) (5.3) (0.3) 14.9	– – – – – – – – – – – – – –	– – – – – – – – – – – – – –

The cost and accumulated amortisation for the comparative period have both been increased by $3.3 million to refl ect the correct gross position. These amounts were netted off in the prior year fi nancial statements. There is no impact on the net carrying amount of leasehold improvements as reported in the prior year fi nancial statements.
The cost and accumulated depreciation for the comparative period have both been increased by $21.3 million to refl ect the correct gross position. These amounts were netted off in the prior year fi nancial statements. There is no impact on the net carrying amount of plant and equipment as reported in the prior year fi nancial statements.

100

19. Intangible assets

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Goodwill relating to European operations, at cost	799.4	790.9	–	–
Management rights relating to European operations, at cost	274.6	277.0	–	–
Management rights relating to Asia Pacif c operations, at cost	51.4	5.3	–	–
	1,125.4	1,073.2	–	–

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

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

		Carrying
		amount				Effect of	Carrying
		at the				foreign	amount at
		beginning				currency	the end of
		of the year	Acquisitions1	Adjustments2	Impairments3	translation	the year
Reconciliation	Note	$M	$M	$M	$M	$M	$M
Goodwill
Logistics – United Kingdom	19(a)	145.9	–	(0.4)	(24.5)	0.7	121.7
Logistics – Continental Europe	19(b)	636.8	–	(7.9)	–	40.6	669.5
Business Parks – Continental Europe	19(e)	8.2	–	(0.5)	–	0.5	8.2
Subtotal – goodwill		790.9	–	(8.8)	(24.5)	41.8	799.4
European management rights
Logistics – Continental Europe	19(b)	32.5	–	0.4	–	4.7	37.6
Business Parks – United Kingdom	19(c)	214.1	–	–	–	0.5	214.6
Business Parks – Colworth	19(d)	18.5	–	–	(8.7)	0.1	9.9
Business Parks – Continental Europe	19(e)	11.9	–	–	–	0.6	12.5
Subtotal – European management rights		277.0	–	0.4	(8.7)	5.9	274.6
Asia Pacif c management rights
Fund management – Hong Kong	19(f)	–	30.4	–	–	(5.3)	25.1
Fund management – China	19(g)	–	26.2	–	–	(5.4)	20.8
Fund management – New Zealand		5.3	–	–	–	0.2	5.5
Subtotal – Asia Pacif c management rights		5.3	56.6	–	–	(10.5)	51.4
Subtotal – management rights Total		282.3 1,073.2	56.6 56.6	0.4 (8.4)	(8.7) (33.2)	(4.6) 37.2	326.0 1,125.4

Acquisitions of management rights relate to amounts paid pursuant to the acquisition of GAL (refer to note 3).
Adjustments to goodwill and management rights relate to the release of surplus provisions relating to the acquisition of Eurinpro that will no longer be paid.
Impairments of goodwill and management rights relate to UK Logistics Division and Colworth respectively (refer to notes 19(a) and 19(d)).

Goodman Group Annual Report 2009

101

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

19. Intangible assets (cont)

Impairment testing for intangible assets

For the purpose of impairment testing, goodwill and indefi nite life management rights are allocated to Goodman’s divisions or sub-divisions (business units) representing the lowest level within Goodman at which the goodwill and indefi nite life management rights are monitored for internal management purposes.

As a consequence of the restructuring of the Consolidated Entity during the year, management has subdivided the Business Parks Division into United Kingdom Business Parks Division (UKBP) and Continental Europe Business Parks Division. The UKBP is further subdivided into two cash generating units for the purpose of impairment testing for intangible assets, with cash fl ows relating to ABPP and Colworth being separately assessed.

In the prior year, the impairment tests for each intangible asset were based on fair value less costs to sell. In the current year there has been limited information available on fair values as few comparable transactions have occurred. Consequently, the impairment tests for all intangible assets in the current fi nancial year were based on each of the division’s or business unit’s value in use. Value in use was determined by discounting the future cash fl ows generated from continuing operations. The future cash fl ows for all intangible assets were based on the most recent fund and development forecasts and then estimating a year fi ve terminal value using a terminal growth rate and the business unit’s discount rate. Where goodwill and management rights arise in the same division or business unit, impairment testing was performed on the combined intangible asset.

The impairment testing for the business units with material intangible assets was based on the assumptions set out below:

(a) Logistics – United Kingdom

Key assumptions

The key assumptions on which management prepared its fi ve year forecasts for this business unit are as follows:

- one stabilised investment property and a number of development properties are used to create an initial joint venture structure in the year ending 30 June 2010, with a further joint venture created in the year ending 30 June 2011. The Consolidated Entity would earn development and fund management revenue from these joint ventures at levels consistent with those on other funds managed by Goodman;
- the joint venture is not expected to be signifi cant in its fi rst year of operation but increases year on year to a peak in the fourth year of operation;
- the remaining on balance sheet development properties are assumed to be developed on behalf of third parties, from which the Consolidated Entity earns further development management fees. The level of development is considered to be modest; and
- the Division’s annual operating expenses are reduced, refl ecting the effect of the restructuring implemented during the current fi nancial year. Synergies in operating costs are assumed such that they increase at a lower rate than projected earnings.

The growth rate used to extrapolate cash fl ow projections beyond the period covered by the fi ve year business unit forecasts is 2.5%. The discount rate used in assessing the value in use is 15.3% per annum. This rate is higher than that applied to the other United Kingdom business units refl ecting the additional risk given there is no established joint venture or fund within the business unit.

(b) Logistics – Continental Europe

Key assumptions

The key assumptions on which management prepared its fi ve year forecasts for this business unit are as follows:

- earnings forecasts include projects which have not yet been contracted. These developments are assumed to be funded by GELF and/or third parties. The forecasts assume a decline in development starts (by area) until the year commencing 1 July 2011 beyond which growth is assumed;
- capital continues to be available to GELF through external investment and/or lending, as well as through an orderly asset sale programme. This capital is assumed to be made available to fund development expenditure which in turn generates development and transactional profi ts for the Consolidated Entity. This level of profi ts is reduced in the short-term refl ecting the current market environment and a decrease in property values but begins to increase during the fi ve year forecast period, albeit at levels well within the capacity of the business unit;
- the growth in the assets under management within GELF generates a modest increase in base management fees over the period. No performance fees were included in the forecasts as any “underperformance” in previous years must be recouped before a performance fee is earned;
- no movements in investment property values have been assumed in the forecast;
- the Division’s annual operating expenses are reduced, refl ecting the effect of the restructuring implemented during the current fi nancial year. Synergies in operating costs are assumed such that they increase at a lower rate than projected earnings; and
- the business model and underlying earnings are assumed to continue for the foreseeable future and a terminal value was calculated refl ecting the ongoing value in use beyond the fi ve year forecast. No amortisation of management rights is recognised on the basis that the management rights will be routinely renewed at minimal cost.

The growth rate used to extrapolate cash fl ow projections beyond the period covered by the fi ve year forecasts is 2.5%. The discount rate used in assessing the value in use is 11.5% per annum.

102

19. Intangible assets (cont)

Impairment testing for intangible assets (cont)

(c) Business parks – United Kingdom

Key assumptions

The key assumptions on which management has prepared its fi ve year forecasts for this business unit are as follows:

- the UK property market will remain a diffi cult operating environment in the short-term but will begin to recover from late 2010. This is refl ected in the level of future developments for ABPP, which drives the growth in assets under management, and therefore impacts both base fees and development fees for the Consolidated Entity;
- no signifi cant performance fees will be earned in the short term, but performance fees will be earned in years four and fi ve. For the purpose of the year fi ve terminal value, management has included an average performance fee over the forecast period;
- investment property values are forecast to stabilise in year ending 30 June 2010 underpinning base management fees. Investment property values are forecast to recover at a steady rate from 1 July 2010 onwards;
- development expenditure is to be funded primarily through an orderly asset sales programme; and
- the Division’s annual operating expenses are reduced refl ecting the effect of the restructuring implemented during the current fi nancial year. Synergies in operating costs are assumed such that they increase at a lower rate than projected earnings.

The growth rate used to extrapolate cash fl ow projections beyond the period covered by the fi ve year forecasts is 2.5%. The discount rate used in assessing the value in use is 11.4% per annum.

(d) Business parks – Colworth Key assumptions

The key assumptions on which management has prepared its fi ve year forecasts for this business unit are as follows:

- all income for this cash generating unit increases at a rate of 3% per annum over the fi ve year forecast period; and
- synergies in operating costs are assumed such that they increase at a lower rate than projected income.

The growth rate used to extrapolate cash fl ow projections beyond the period covered by the fi ve year forecasts is 2.5%. The discount rate used in assessing the value in use is 11.8% per annum.

(e) Business parks – Continental Europe

Key assumptions

The key assumptions on which management has prepared its fi ve year forecasts for this business unit are as follows:

- the fund will not commence any signifi cant development projects until the year commencing 1 July 2011. This results in a prudent growth in assets under management, which impacts both base fees and development fees;
- no movement in investment property values are assumed in the forecast period; and
- a reduction in operating expenses refl ecting the restructuring that has taken place during the current fi nancial year.

The growth rate used to extrapolate cash fl ow projections beyond the period covered by the fi ve year forecasts is 2.5%. The discount rate used in assessing the value in use is 14.2% per annum.

(f) Fund management – Hong Kong

Key assumptions

The key assumptions on which management has prepared its fi ve year forecasts for this business unit are as follows:

- development management income is earned on identifi ed projects until completion in the year ending 30 June 2012. Thereafter development completions contribute to growth in asset management and property services fees;
- asset values are stable in the year commencing 1 July 2010 underpinning base management fees;
- the performance fee is recouped from previous years’ outperformance and additional moderate performance fees are earned in each year commencing on or after 1 July 2011; and
- there is 5% growth in operating expenses in each year.

The growth rate used to extrapolate cash fl ow projections beyond the period covered by the fi ve year forecasts is 2.0%. The discount rate used in assessing the value in use is 9.2% per annum.

(g) Fund management – China

Key assumptions

The key assumptions on which management has prepared its fi ve year forecasts for this business unit are as follows:

- the on balance sheet stabilised investment properties are used to create a joint venture structure in the year ending 30 June 2010. Development activity in the joint venture commences in fi nancial year ending 30 June 2010 and increases in subsequent years;
- the Consolidated Entity earns fund management revenue from these joint ventures at levels consistent with those on other funds managed by Goodman;
- the on balance sheet development properties would drive further growth in the assets under management of the joint venture; and
- the Division’s annual operating expenses are assumed to increase at a moderate level year on year.

The growth rate used to extrapolate cash fl ow projections beyond the period covered by the fi ve year forecasts is 5.0%. The discount rate used in assessing the value in use is 16.0% per annum.

Goodman Group Annual Report 2009

103

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

19. Intangible assets (cont)

Impairment testing for intangible assets (cont)

Sensitivity analysis

The key sensitivity for all divisions discussed above is the pre-tax discount rate applied to the cash fl ow projections. The table below shows the impact on the impairment charge of an increase of 100 basis points per annum in the discount rate:

			Current	Annual		Incremental
			annual	discount	Decrease in	impairment
	Value in use	Carrying value	discount	rate adjusted	value in use	loss
Division	$M	$M	rate	for sensitivity	$M	$M
UK Logistics	121.7	121.7	15.3%	16.3%	(4.3)	(4.3)
European Logistics	756.9	707.1	11.5%	12.5%	(30.0)	–
UK Business Parks	297.1	214.6	11.4%	12.4%	(10.8)	–
Colworth	9.9	9.9	11.8%	12.8%	(0.3)	(0.3)
European Business Parks	23.3	20.7	14.2%	15.2%	(0.7)	–
Hong Kong	115.0	25.1	9.2%	10.2%	(4.5)	–
China	113.3	20.8	16.0%	17.0%	(4.6)	–

Other sensitivities for selected intangible assets are summarised as follows:

		Incremental
		impairment loss
Division	Adjustment	A$M
UK Logistics	1 year delay in formation of the f rst joint venture	(10.3)
	1 year delay in development starts	(16.1)
	5% increase in forecast operating costs each year	(2.9)
European Logistics	10% reduction in development starts in each year	(111.8)
	5% decrease in investment property values in 2010	(2.6)
	5% increase in forecast operating costs each year	(28.0)
UK Business Parks	25% reduction of performance fees in each of years 4 and 5	(9.0)
	5% decrease in investment property values in 2010	8.61
	5% increase in forecast operating costs each year	(7.6)
European Business Parks	10% reduction in development management fees in each year	(2.2)
	5% decrease in investment property values in 2010	(2.3)
	5% increase in forecast operating costs each year	(2.7)

The adjustment assumes that the investment property values decrease in 2010 but increase over the remaining forecast period which results in additional performance fee income subsequent to 2010.

Impairment charge

As a result of current conditions in the UK property market and the consequent delay in establishing a UK Logistics fund platform, an impairment charge of $24.5 million has been recognised against the goodwill in the UK Logistics division. Also, as a result of the revised prospective cash fl ows from the Colworth business unit, an impairment charge of $8.7 million has been recognised against management rights in the Colworth business unit. These charges have been refl ected as impairment losses in the income statement (refer to note 8). There were no impairments of intangible assets in 2008.

There have been no reversals of impairment losses during the year (2008: $nil).

104

20. Payab les

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Current
Trade payables	82.9	75.0	–	–
Other payables and accruals1	147.6	323.0	–	0.7
Deferred settlements2	0.9	2.7	2.2	9.9
Loans from controlled entities3	–	–	210.7	148.5
Derivative f nancial instruments	13.7	23.3	–	–
Non-current Other payables and accruals1 Derivative f nancial instruments	245.1 1.5 186.5 188.0	424.0 4.7 – 4.7	212.9 – – –	159.1 0.8 – 0.8

Other payables and accruals include unpaid interest and deferred income.
Deferred settlements at 30 June 2009 and 30 June 2008 relate to the acquisition of Eurinpro.
Loans from controlled entities are non-interest bearing. Details of loans from controlled entities are set out in note 33.

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

Amounts in A$M	NZD	HKD	USD	SGD	GBP	EUR	JPY
2009	21.0	26.7	12.5	0.1	208.1	131.6	18.5
2008	5.1	4.1	13.8	2.1	117.3	123.3	2.9

21. Interest bearing liabilities

21. Interest bearing liabilities
	Consolidated Parent Entity
	Note 2009 $M 2008 $M 2009 $M 2008 $M
Current Bank loans, unsecured Bank loans, secured Other loans – controlled entities1	21(a) 584.4 491.3 – – 21(b) 402.3 20.8 – – – – 984.2 1,016.0
	986.7 512.1 984.2 1,016.0
Non-current Bank loans, unsecured Bank loans, secured Euro medium term notes, unsecured Foreign private placement, unsecured	21(a) 2,693.1 3,073.1 – – 21(b) – 129.5 – – 21(c) 513.1 514.4 – – 21(d) 46.9 – – –
	3,253.1 3,717.0 – –

Details of loans from controlled entities are set out in note 33.

Goodman Group Annual Report 2009

105

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

21. Interest bearing liabilities (cont)

(a) Bank loans, unsecured, as at 30 June 2009

			Amounts drawn down in A$M	Amounts drawn down in A$M	Amounts drawn down in A$M	Amounts drawn down in A$M	equivalents	equivalents
Facility		AUD	SGD	NZD	HKD	USD	GBP	EUR	JPY	Total
Syndicated multi-currency facility	2009	1,017.2	–	–	–	270.2	3.3	40.9	44.8	1,376.4
(SMCF)1	2008	117.0	–	–	100.6	143.8	784.2	289.7	54.8	1,490.1
Bank loan2	2009	–	–	–	–	–	328.4	–	–	328.4
	2008	–	–	–	–	–	561.4	–	–	561.4
Bank loan3	2009	448.2	–	–	–	–	–	109.3	–	557.5
	2008	–	–	96.9	–	–	287.5	349.9	–	734.3
Bank loan4	2009	–	–	–	–	–	–	–	101.1	101.1
	2008	–	–	–	–	–	–	–	84.6	84.6
Bank loan5	2009	–	–	–	–	–	–	–	–	–
	2008	–	–	47.3	–	–	–	–	–	47.3
Bank loan6	2009	–	–	–	–	–	306.1	623.6	–	929.7
	2008	–	–	–	–	–	524.8	136.3	–	661.1
Total bank loans 2009 2008 Less: Unamortised borrowing costs 2009 2008 Total unsecured bank loans 2009 2008		1,465.4 117.0	– –	– 144.2	– 100.6	270.2 143.8	637.8 2,157.9	773.8 775.9	145.9 139.4	3,293.1 3,578.8 (15.6) (14.4) 3,277.5 3,564.4

The SMCF comprises three revolving tranches: a A$520 million tranche maturing on 24 May 2010 (drawn to A$483.4 million at 30 June 2009), a A$520 million tranche maturing on 24 May 2011 (drawn to A$500.6 million at 30 June 2009) and a A$400 million tranche maturing on 24 May 2012 (drawn to A$392.4 million at 30 June 2009).
A controlled entity has a bank loan of A$328.4 million denominated in British pounds sterling. The facility expires on 7 April 2013.
Controlled entities have bank loans of A$557.5 million denominated in Australian dollars (A$448.2 million) and euros (A$109.3 million). The facility expires on 8 February 2012.
A controlled entity has a bank loan of A$101.1 million denominated in Japanese yen. The facility expires on 31 December 2009.
The facility, denominated in New Zealand dollars, was repaid in full during December 2008.
Controlled entities have bank loans of A$929.7 million denominated in British pounds sterling (A$306.1 million) and euros (A$623.6 million). The facility expires on 5 December 2012.

106

21. Interest bearing liabilities (cont)

(b) Bank loans, secured, as at 30 June 2009

			Amounts drawn down in A$M equivalents	Amounts drawn down in A$M equivalents	Amounts drawn down in A$M equivalents	Amounts drawn down in A$M equivalents	Amounts drawn down in A$M equivalents
Facility		AUD	SGD	NZD	HKD	USD	GBP	EUR	Total
Bank loan1	2009	–	–	–	–	–	106.2	–	106.2
	2008	–	–	–	–	–	129.5	–	129.5
Bank loan2	2009	–	–	–	–	–	–	–	–
	2008	–	–	–	–	–	–	8.3	8.3
Bank loan3	2009	–	–	–	–	–	5.1	6.2	11.3
	2008	–	–	–	–	–	11.9	0.6	12.5
Bank loan4	2009	300.0	–	–	–	–	–	–	300.0
	2008	–	–	–	–	–	–	–	–
Total bank loans 2009 2008 Less: Unamortised borrowing costs2009 2008 Total secured bank loans 2009 2008		300.0 –	– –	– –	– –	– –	111.3 141.4	6.2 8.9	417.5 150.3 (15.2) – 402.3 150.3

A controlled entity has a bank loan of A$106.2 million denominated in British pounds sterling. The facility expires on 20 September 2009.
The facility, denominated in euros, was repaid on 20 July 2008.
Controlled entities have bank loans of A$11.3 million denominated in British pounds sterling (A$5.1 million) and euros (A$6.2 million). The facility expires on 30 September 2009.
A controlled entity has a bank loan of A$300 million denominated in Australian dollars. The facility expires on 20 February 2010.

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) Euro medium term notes, unsecured

As at 30 June 2009, there are A$513.1 million euro medium term notes on issue. All notes were issued at a fi xed coupon of 9.75%, payable annually. The notes mature on 16 July 2018. The notes are listed on the Singapore Stock Exchange and the market value of the notes using the quoted price at 30 June 2009 was A$343.0 million.

(d) Foreign private placement, unsecured

As at 30 June 2009, the Consolidated Entity has an A$46.9 million unsecured foreign private placement denominated in euros. The facility was drawn in July 2008 and expires on 30 June 2023.

Goodman Group Annual Report 2009

107

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

21. Interest bearing liabilities (cont)

(e) Finance facilities

	Consolidated	Consolidated	Parent Entity	Parent Entity
	Facilities	Facilities	Facilities	Facilities
	available	utilised	available	utilised
	$M	$M	$M	$M
At 30 June 2009
Bank loans, unsecured	3,388.1	3,277.5	–	–
Bank loans, secured	611.7	402.3	–	–
Euro medium term notes, unsecured	513.1	513.1	–	–
Foreign private placement, unsecured	46.9	46.9	–	–
Bank guarantees1	–	50.0	–	–
At 30 June 2008 Bank loans, unsecured Bank loans, secured Euro medium term notes, unsecured Foreign private placement, unsecured Bank guarantees1	4,559.8 4,559.5 158.3 514.4 44.1 – 5,276.3	4,289.8 3,564.4 150.3 514.4 – 84.8 4,313.9	– – – – – – –	– – – – – – –

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

22. Provisions

22. Provisions
		Consolidated		Parent Entity
		2009	2008	2009	2008
	Note	$M	$M	$M	$M
Current
Distributions to Securityholders	10	–	142.4	–	–
Employee benef ts	34	11.4	50.8	–	–
Onerous leases1		11.6	–	–	–
Rental guarantee2		11.8	–	–	–
Other		1.2	–	–	–
Non-current Employee benef ts Onerous leases1	34	36.0 18.4 12.4 30.8	193.2 8.9 – 8.9	– – – –	– – – –

At 30 June 2009, onerous lease provisions relate to future lease costs of offi ce accommodation vacated by Goodman. The leases expire at various dates between July 2009 and November 2013. Subleasing of certain surplus space has been agreed or assumed in future periods. A provision has been recognised for the obligation for all discounted future payments, net of expected rental income. An amount of $6.3 million relating to future lease costs of surplus offi ce space was included in other payables and accruals at 30 June 2008. An additional $21.1 million was provided on restructuring during the year and $3.4 million was released during the year.
At 30 June 2009, rental guarantee provisions relate to estimates of future amounts payable by the Consolidated Entity to meet rental income targets for certain properties guaranteed to GELF under the terms of asset sales contracts. An amount of $6.2 million was included in the other payables and accruals at 30 June 2008 in respect of these guarantees. An additional $6.9 million was provided during the year and $1.3 million was reversed during the year.

108

23. Issued capital

23. Issued capital
	Consolidated
	2009 2008
Securities on issue Number of securities on issue on the ASX Less: Treasury securities issued under the ESAP	2,779,651,716 1,715,805,005 (41,649,311) (40,582,641)
Balance included in issued capital	2,738,002,405 1,675,222,364
	$M $M
Parent Entity Issued capital, fully paid Treasury securities Issue costs	249.8 200.8 (1.5) (1.5) (6.7) (5.4)
Equity attributable to Shareholders	241.6 193.9
Goodman Industrial Trust Issued capital, fully paid Issue costs	5,324.7 4,415.8 (95.6) (66.6)
	5,229.1 4,349.2
Less: Amounts attributable to Shareholders1	(225.9) (225.9)
Equity attributable to Unitholders	5,003.2 4,123.3
Total issued capital	5,244.8 4,317.2

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

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.

Equity raising

On 28 November 2008, Goodman completed an equity raising of $956.0 million, comprising a $229.5 million institutional placement and a $726.5 million, 0.47 for one accelerated non-renounceable entitlement offer of Goodman stapled securities at an issue price of $0.90 per security.

For details of the further equity raising announced subsequent to the year refer to note 37.

Goodman Group Annual Report 2009

109

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

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
2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Balance at the
beginning of the year
Securities on issue
at 1 July 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
– – – – – –
at 1 July (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) (66.5) (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 4,211.1 193.9 178.9
Movements during
the year:
– 1,062,207,693
securities issued under
the Institutional
Placement and
Entitlement Offer
(2008: nil) 1,062.2 – – – 1,062.2 – 956.0 – – – – – 904.1 – 51.9 –
– nil securities issued
under the Distribution
Reinvestment Plan
(DRP) (2008:
19,419,978) – 19.4 – – – 19.4 – 125.7 – – – – – 118.9 – 6.8
– nil treasury securities
issued under the ESAP
(2008: 2,000,000) – 2.0 – (2.0) – – – – – – – (13.7) – 13.7 – –
– 33,334 securities
issued on exercise
of options
(2008: 1,648,335) 0.1 1.7 – – 0.1 1.7 0.1 5.9 – – – – 0.1 5.6 – 0.3
– 1,605,684 securities
issued under the earn
out provisions of the
Eurinpro acquisition 1.6 – – – 1.6 – 5.0 – – – – – 4.7 – 0.3 –
– nil treasury securities
(with $nil value)
converted to securities
on vesting under
the ESAP
(2008: 2,116,670) – – – 2.1 – 2.1 – 5.5 – – – – – – – 5.5
– nil treasury securities
converted to securities
on vesting under the
ESAP (2008: 1,247,054) – – – 1.2 – 1.2 – 1.9 – 3.7 – 5.6 – – – –
– 1,066,669 treasury
securities vested but
not converted to
securities under
the ESAP – – (1.1) – (1.1) – (3.2) – – – – – – (3.2)
– nil treasury securities
vested but
not exercised
(2008: 666,670) – – – 0.7 – 0.7 – 2.2 – – – – – – – 2.2
2,779.7 1,715.8 (41.7) (40.6) 2,738.0 1,675.2 5,410.7 4,452.8 (63.6) (63.6) (225.9) (225.9) 5,324.7 4,415.8 248.3 199.3
Less: Issue costs – – – – – – (102.3) (72.0) – – – – (95.6) (66.6) (6.7) (5.4)
Balance at 30
June 2009 2,779.7 1,715.8 (41.7) (40.6) 2,738.0 1,675.2 5,308.4 4,380.8 (63.6) (63.6) (225.9) (225.9) 5,229.1 4,349.2 241.6 193.9
Comprises:
Securities on issue
at 30 June 2,779.7 1,715.8 – – 2,779.7 1,715.8 5,410.7 4,452.8 – – (163.8) (163.8) 5,324.7 4,415.8 249.8 200.8
Treasury securities
on issue at 30 June – – (41.7) (40.6) (41.7) (40.6) – – (63.6) (63.6) (62.1) (62.1) – – (1.5) (1.5)
Less: Issue costs – – – – – – (102.3) (72.0) – – – – (95.6) (66.6) (6.7) (5.4)
2,779.7 1,715.8 (41.7) (40.6) 2,738.0 1,675.2 5,308.4 4,380.8 (63.6) (63.6) (225.9) (225.9) 5,229.1 4,349.2 241.6 193.9
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110

24. Reserves

24. Reserves
		Consolidated		Parent Entity
		2009	2008	2009	2008
	Note	$M	$M	$M	$M
Asset revaluation reserve	24(a)	(1,521.0)	(356.9)	–	–
Cash f ow hedge reserve	24(b)	(235.9)	72.4	–	–
Foreign currency translation reserve	24(c)	(62.8)	6.8	–	–
Capital prof ts reserve	24(d)	175.8	309.1	–	–
Employee compensation reserve	24(e)	(16.0)	36.6	41.3	87.2
Def ned benef t funds actuarial losses reserve	24(f)	(12.3)	(2.9)	–	–
Total reserves		(1,672.2)	65.1	41.3	87.2

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 Unitholders Securityholders
	2009 $M 2008 $M 2009 $M 2008 $M 2009 $M 2008 $M
(a) Asset revaluation reserve Balance at the beginning of the year Revaluation of investments, net of tax Transfers to capital prof ts reserve Transfers from (accumulated losses) /retained earnings Transfer to income statement on disposal of investments Effect of foreign currency translation	(49.6) 95.6 (307.3) 157.0 (356.9) 252.6 (21.9) (0.2) 8.1 4.3 (13.8) 4.1 52.7 – 90.4 (175.6) 143.1 (175.6) (243.8) (64.2) (1,058.5) (313.6) (1,302.3) (377.8) 1.3 (89.0) 2.8 – 4.1 (89.0) 1.0 8.2 3.8 20.6 4.8 28.8
Balance at the end of the year	(260.3) (49.6) (1,260.7) (307.3) (1,521.0) (356.9)
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 (0.2) – 72.6 60.6 72.4 60.6 Change in value of f nancial instruments (12.5) (0.2) (282.2) 24.1 (294.7) 23.9 Transfers to income statement – – (16.4) (6.2) (16.4) (6.2) Effect of foreign currency translation – – 2.8 (5.9) 2.8 (5.9)
Balance at the end of the year (12.7) (0.2) (223.2) 72.6 (235.9) 72.4
Refer to note 1(r) for the accounting policy relating to this reserve.
(c) Foreign currency translation reserve Balance at the beginning of the year (17.1) (2.2) 23.9 0.4 6.8 (1.8) Net exchange differences on conversion of foreign operations 25.0 (14.9) (94.6) 23.5 (69.6) 8.6
Balance at the end of the year 7.9 (17.1) (70.7) 23.9 (62.8) 6.8

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, Continental Europe and the United Kingdom.

Goodman Group Annual Report 2009

111

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

24. Reserves (cont)
	Shareholders		Unitholders		Securityholders
	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M
(d) Capital prof ts reserve
Balance at the beginning of the year	98.3	15.1	210.8	36.9	309.1	52.0
Transfers from asset revaluation reserve	(52.7)	–	(90.4)	175.6	(143.1)	175.6
Transfers from (accumulated losses)/
retained earnings	0.9	84.4	(2.7)	(1.0)	(1.8)	83.4
Effect of foreign currency translation	11.6	(1.2)	–	(0.7)	11.6	(1.9)
Balance at the end of the year 58.1 98.3 Refer to note 1(f) for the accounting policy relating to this reserve. (e) Employee compensation reserve Balance at the beginning of the year 36.6 19.6 (Credit)/expense recognised in prof t or loss (38.1) 26.7 Transfers to issued capital on vesting of options/securities – (1.7) Difference between the ESAP interest income and distribution 8.6 3.8 Other (25.2) 0.4 Transfers to (accumulated losses)/retained earnings – (11.2) Effect of foreign currency translation 2.1 (1.0) Balance at the end of the year (16.0) 36.6 Refer to note 1(v) for the accounting policy relating to this reserve. (f) Def ned benef t funds actuarial losses reserve Balance at the beginning of the year (2.9) (1.2) Actuarial losses, net of tax (9.3) (2.0) Effect of foreign currency translation (0.1) 0.3 Balance at the end of the year (12.3) (2.9)			117.7 – – – – – – – – – – –	210.8 – – – – – – – – – – – –	175.8 36.6 (38.1) – 8.6 (25.2) – 2.1 (16.0) (2.9) (9.3) (0.1) (12.3)	309.1 19.6 26.7 (1.7) 3.8 0.4 (11.2) (1.0) 36.6 (1.2) (2.0) 0.3 (2.9)

Refer to note 1(v) for the accounting policy relating to this reserve.

112

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
	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M
(Accumulated losses)/retained earnings
at the beginning of the year	(23.3)	(57.4)	(10.5)	58.0	(33.8)	0.6
(Loss)/prof t for the year	(317.4)	28.9	(802.6)	221.8	(1,120.0)	250.7
Transfers to asset revaluation reserve	243.8	64.2	1,058.5	313.6	1,302.3	377.8
Transfers to capital prof ts reserve	(0.9)	(84.4)	2.7	1.0	1.8	(83.4)
Transfers from employee
compensation reserve	–	11.2	–	–	–	11.2
Distributions declared1	4.1	14.1	(268.2)	(582.3)	(264.1)	(568.2)
Effect of foreign currency translation	–	0.1	–	(22.6)	–	(22.5)
Accumulated losses at the end of the year	(93.7)	(23.3)	(20.1)	(10.5)	(113.8)	(33.8)

Distributions declared by GIT relating to ESAP securities are deducted in calculating Unitholders’ allocation of (accumulated losses)/retained earnings and added to Shareholders’ allocation of (accumulated losses)/retained earnings. This amount is eliminated on consolidation.

	Parent Entity
	2009 $M 2008 $M
Accumulated losses at the beginning of the year Loss for the year	(271.5) (150.0) (104.2) (121.5)
Accumulated losses at the end of the year	(375.7) (271.5)

26. Minority interests

Minority interests in controlled entities comprise:

	Consolidated
	2009 $M 2008 $M
Goodman PLUS Trust hybrid securities1	318.8 320.6

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.

Goodman Group Annual Report 2009

113

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

27. Commitments

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Capital expenditure commitments
Contracted but not provided for and payable:
– Within one year	21.8	125.2	–	–
– One year or later and no later than f ve years	9.1	2.5	–	–
– Later than f ve years	–	–	–	–
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	30.9 3.9 12.4 39.0 55.3	127.7 14.1 33.3 43.6 91.0	– – – – –	– – – – –

Commitment to investment in funds managed by Goodman

At 30 June 2009, the Consolidated Entity was committed to invest A$102.2 million into GHKLF (2008: A$42.8 million). At 30 June 2008, the Consolidated Entity had committed to invest A$102.9 million into ABPP and A$393.8 million into GAIF.

During the year, Goodman participated in the fi rst and second closings of an equity offer undertaken by GELF and committed to subscribe for the lower of A$386.0 million or such amount as represents 40% of the GELF units on issue. That commitment will be drawn down as and when required by the capital management plan of GELF. At 30 June 2009, that commitment had been drawn to A$198.2 million.

Goodman has a commitment to provide additional shareholder funding of up to A$2.0 million (2008: A$nil) into HDL, A$9.5 million into Seaview and A$16.7 million into Interlink. This is to fund development projects committed to by these JVEs.

Acquisition of investment properties

Amounts contracted for the acquisition of investment properties not provided for at 30 June 2009 is $54.4 million (2008: $77.2 million).

Guaranteed land payments – M7 Business Hub development

A commitment exists at 30 June 2009 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. GIT has provided Austral with a guarantee for all amounts payable by Vineyard and as at 30 June 2009, the maximum amount payable, in the event that there are no further sales of the lots of land between now and 31 December 2011, is $16.8 million.

Non-cancellable operating lease receivables from investment property customers

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Non-cancellable operating lease commitments receivable:
– Within one year	155.3	202.8	–	–
– One year or later and no later than f ve years	415.2	637.4	–	–
– Later than f ve years	143.9	405.9	–	–
	714.4	1,246.1	–	–

114

28. Contingencies

Issue of conditional options

On 19 May 2009, Goodman signed a $300 million secured Finance Facility with Macquarie Group. In conjunction with the Facility, Macquarie Group were granted options over 414 million Goodman stapled securities at an exercise price of $0.30 per security. The issue of 294 million of these options is subject to Securityholder approval.

On 16 June 2009, CIC became a party to the above Finance Facility resulting in an increase in the Facility limit by $185 million to $485 million. In conjunction with the amendment to the Facility, CIC were granted options over 255.3 million options with an exercise price of $0.40 per security. The issue of all these options is subject to Securityholder approval.

Macquarie Group and CIC reached an agreement to share the $0.30 and $0.40 exercise price per security options on a pro rata basis having regard to their commitments under the Facility.

If the Securityholders do not approve the issue of the conditional options at a specifi cally convened Extraordinary General Meeting, then in the period to 22 May 2011, Macquarie Group and CIC can require Goodman to pay to them an amount equal the number of conditional options multiplied by the amount by which the weighted average stapled security price over the 10 days prior to the written election exceeds the option exercise price. If the option exercise price is greater than the weighted average stapled security price over the 10 days prior to the written election then the amount will be $nil.

Goodman Group Annual Report 2009

115

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

29. Notes to the 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 call. 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
2009 2008 2009 2008
$M $M $M $M
Cash assets 242.5 639.2 0.1 0.6
(b) Reconciliation of (loss)/profi t after income tax to net cash
provided by/(used in) operating activities
(Loss)/profi t for the year (1,096.0) 268.4 (104.2) (121.5)
Items classifi ed as investing/fi nancing activities
– –
Net gain on disposal of investment properties (1.8) (97.4)
Loss on disposal of discontinued operation – 17.6 – –
Net gain on disposal of other equity investments (52.5) (302.2) (2.1) (32.1)
Non-cash items
Amortisation and depreciation 9.0 7.5 – –
Share based payments (credit)/expense (38.1) 26.7 – –
Net loss on fair value adjustments on investment properties 527.0 144.3 – –
Impairment losses 229.7 108.2 – 111.5
Share of net results of equity accounted investments 508.7 25.0 – –
Net fi nance expense (including discontinued operation) 153.6 110.5 42.4 40.3
Income tax (benefi t)/expense (including discontinued operation) (23.3) 5.7 (27.2) 13.2
Operating profi t/(loss) before changes in
working capital and provisions 216.3 314.3 (91.1) 11.4
Changes in assets and liabilities during the year:
– Decrease/(increase) in receivables 94.8 33.0 (159.6) (14.1)
– Increase in inventories (17.9) (14.2) – –
– Decrease/(increase) in other assets 30.4 2.9 – (11.6)
– Increase in payables 27.8 66.0 255.4 19.3
– (Decrease)/increase in provisions (9.1) 14.0 – –
342.3 416.0 4.7 5.0
Distributions received from equity accounted investments 134.3 79.9 – –
Net fi nance costs paid (124.3) (122.9) 1.0 (1.1)
–
Net income taxes paid (31.5) (27.8) (5.5)
Net cash provided by/(used in) operating activities 320.8 345.2 5.7 (1.6)
----- End of picture text -----

116

29. Notes to the cash fl ow statements (cont)

(c) Non-cash fi nancing and investing activities

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

Consolidated Entity

- the Consolidated Entity transferred three special purpose entities and two investment properties to ABPP in return for equity. The combined consideration for these assets was $321.8 million;
- settlement of distribution liabilities – no securities were allocated under the DRP. In the prior year, 19,419,978 securities were allocated for total consideration of $125.7 million; and
- issue of securities under the ESAP – no securities were issued to employees under the ESAP (2008: 2,000,000). Securities issued under the ESAP are accounted for as options. The securities are held in trust as security for the loans.

Parent Entity

- the Parent Entity’s allocation of $51.9 million from the equity raising in November 2008 was received by GIT and refl ected in the Parent Entity as a reduction in the inter-company liability.

Goodman Group Annual Report 2009

117

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

30. Controlled entities

==> picture [497 x 77] intentionally omitted <==

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

Parent Entity
2009 2008
$M $M
Particulars in relation to controlled entities
Investments in controlled entities, at cost 278.5 399.1
----- End of picture text -----

Investments in controlled entities, at cost	278.5 399.1
Signif cant controlled companies Country of incorporation	Interest held
	2009 % 2008 %
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 Blackberry Logistics nv Belgium Goodman Belgium nv Belgium Goodman Management Services (Belgium) nv Belgium Red Pine Logistics nv Belgium Willebroek Platform Project nv Belgium MGI HK Finance Cayman Islands Goodman Developments Asia Cayman Islands Goodman China Investments Cayman Islands Goodman Management Consulting (Shanghai) Co. Ltd. China Goodman MKR (Shanghai) Warehouse Co. Ltd. China Jia Meng (Shanghai) Warehouse Co. Ltd. China Goodman Czech Republic sro Czech Republic LPR Czech sro Czech Republic MNB Czech sro Czech Republic Goodman Developments (France) Sàrl France Goodman France S.A.S. France Goodman Logistics Developments (France) Sàrl France Goodman Nantes Logistics (France) Sàrl France Goodman Oracle Logistics (France) Sàrl France Goodman Property Developments France S.A.S. France Goodman Property Services France S.A.S. France	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

118

30. Controlled entities (cont)

Signif cant controlled companies
Country of incorporation

Interest held

2009
%
2008
%

Goodman Germany GmbH
Germany
Goodman Properties (Germany) GmbH
Germany
Ludwigstrasse Beteiligungsgesellschaft mbH
Germany
Ludwigstrasse-Ost Projektentwicklungs GmbH and Co KG
Germany
Ludwigstrasse-West Projektentwicklungs GmbH and Co KG
Germany
Rebstockpark Beteiligungsgesellschaft mbH
Germany
Rebstockpark Eins GmbH and Co KG
Germany
SMH Sparkasse Mannesmann Hoffmeister
Projektentwicklung GmbH and Co. KG
Germany
SMH Sparkasse Mannesmann Hoffmeister
Projektentwicklung Verwaltungsgesellschaft mbh
Germany
Lighthouse (Gloucester) Ltd
Guernsey
Goodman China Limited
Hong Kong
Goodman Hungary Ingatlankezelo Kft
Hungary
Goodman Italy srl
Italy
ABPP Investment Jersey Limited
Jersey
Goodman Brackmills (Jersey) Limited
Jersey
Goodman Burton (Jersey) Limited
Jersey
Goodman Citadel (Jersey) Limited
Jersey
Goodman Colnbrook (Jersey) Limited
Jersey
Goodman Coventry (Jersey) Limited
Jersey
Goodman Daventry (Jersey) Limited
Jersey
Goodman Ellesmere Port (Jersey) Limited
Jersey
Goodman Finance (Jersey) Limited
Jersey
Goodman Funding (Jersey) Limited
Jersey
Goodman Gloucester (Jersey) Limited
Jersey
Goodman Harthills (Jersey) Limited
Jersey
Goodman Holdings (Jersey) Limited
Jersey
Goodman Leicester (Jersey) Limited
Jersey
Goodman Logistics (Jersey) Limited
Jersey
Goodman Maltby (Jersey) Limited
Jersey
Goodman Management (Jersey) Limited
Jersey
Goodman Oceanview Logistics (Jersey) Limited
Jersey
Goodman Property Holdings (Jersey) Limited
Jersey
Goodman Regent Residential (Jersey) Limited
Jersey

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
95
95
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 2009

119

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

30. Controlled entities (cont)

30. Controlled entities (cont)
Signif cant controlled companies Country of incorporation	Interest held
	2009 % 2008 %
Goodman South Normanton (Jersey) Limited Jersey Goodman Thurrock (Jersey) Limited Jersey Goodman UAE (Jersey) Limited Jersey Goodman West Thurrock (Jersey) Limited Jersey GELF Management (Lux) Sàrl Luxembourg Goodman APP 1 and 2 (Lux) Sàrl Luxembourg Goodman APP 3 (Lux) Sàrl Luxembourg Goodman APP 4,5, and CdV (Lux) Sàrl Luxembourg Goodman APP Holdings (Lux) Sàrl Luxembourg Goodman Aventurine Logistics (Lux) Sàrl Luxembourg Goodman Bad Hersfeld Logistics (Lux) Sàrl Luxembourg Goodman Business Parks (Lux) Sàrl Luxembourg Goodman Europe (Lux) SA Luxembourg Goodman Feldspar Logistics (Lux) Sàrl Luxembourg Goodman Finance (Lux) Sàrl Luxembourg Goodman Heliotrope Logistics (Lux) Sàrl Luxembourg Goodman Hematite Logistics (Lux) Sàrl Luxembourg Goodman Jasper Logistics (Lux) Sàrl Luxembourg Goodman Leucite Logistics (Lux) Sàrl Luxembourg Goodman Magnetite Logistics (Lux) Sàrl Luxembourg Goodman Malachite Logistics (Lux) Sàrl Luxembourg Goodman Management Holdings (Lux) Sàrl Luxembourg Goodman Marcasite Logistics (Lux) Sàrl Luxembourg Goodman Option (Lux) Sàrl Luxembourg Goodman Property Opportunities (Lux) Sàrl, SICAR Luxembourg Goodman Serpentine Logistics (Lux) Sàrl Luxembourg Goodman Turquoise Logistics (Lux) Sàrl Luxembourg GPO Advisory (Lux) Sàrl Luxembourg Oak Logistics Sàrl Luxembourg Rowan Logistics Sàrl Luxembourg Goodman Finance NZ Limited New Zealand Goodman (NZ) Limited New Zealand Goodman Property Services (NZ) Limited New Zealand Goodman Poland Sp zoo Poland Goodman Europe Romania Srl Romania	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

120

30. Controlled entities (cont)

30. Controlled entities (cont)
Signif cant controlled companies Country of incorporation	Interest held
	2009 % 2008 %
Goodman Singapore Pte Limited Singapore Ascendas Global Gateway Pte Limited Singapore Goodman Japan Holdings (Singapore) Pte Limited Singapore Goodman Funding Singapore Pte Limited Singapore Goodman Senec 1 Logistics (Slovakia) sro Slovakia Goodman Slovakia sro Slovakia Girona Global Logistics SL Spain Goodman Spain S.L. Spain Goodman Real Estate (Spain) SL Spain Demeter Logistics B.V. The Netherlands Goodman Logistics Developments (Netherlands) B.V. The Netherlands Goodman Westpoort Logistics (Netherlands) B.V. The Netherlands Aquamarine Gayrimenkul Ticareti Anonim Sirketi Turkey Goodman Gayrimenkul Ticareti Anonim Sirketi Turkey Ancosec Limited United Kingdom Arlington Business Parks GP Limited United Kingdom Beckton Waterfront Management Company Limited United Kingdom Centrum West Management Company Limited United Kingdom Dollhurst Limited United Kingdom Dollmist Limited United Kingdom Dollplace Limited United Kingdom Frenbury Properties Limited United Kingdom Golden Gate Management Company Limited United Kingdom Goodman Advisory (UK) Limited United Kingdom Goodman Andover (UK) Limited United Kingdom Goodman BidCo 1 (UK) Limited United Kingdom Goodman BidCo 3 (UK) Limited United Kingdom Goodman Bristol (UK) Limited United Kingdom Goodman Business Parks (UK) Limited United Kingdom Goodman Business Services (UK) Limited United Kingdom Goodman Coventry Management Company Limited United Kingdom Goodman Derby (UK) Limited United Kingdom Goodman Development Management (UK) Limited United Kingdom Goodman Group Holdings (UK) Limited United Kingdom Goodman Hinckley (UK) Limited United Kingdom	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 – 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 100 100 100 100 100 100

Goodman Group Annual Report 2009

121

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

30. Controlled entities (cont)

30. Controlled entities (cont)
Signif cant controlled companies Country of incorporation	Interest held
	2009 % 2008 %
Goodman Invest (UK) Limited United Kingdom Goodman Logistics Developments (UK) Limited United Kingdom Goodman LP (UK) Limited United Kingdom Goodman NCP (UK) Limited United Kingdom Goodman Net Services (UK) Limited United Kingdom Goodman Operator (UK) Limited United Kingdom Goodman Real Estate Adviser (UK) Limited United Kingdom Goodman Real Estate Developments (2003) Limited United Kingdom Goodman Real Estate Management (UK) Limited United Kingdom Goodman Real Estate Services Limited United Kingdom Goodman Real Estate Services (UK) Limited United Kingdom Goodman Real Estate (UK) Limited United Kingdom Goodman Science Park GP (UK) Limited United Kingdom Goodman Science Park LP (UK) Limited United Kingdom Goodman Securities Operations (UK) Limited United Kingdom Goodman Thurrock (UK) Limited United Kingdom Goodman Top Co (UK) Limited United Kingdom Goodman UK Pension Plan Trustees Limited United Kingdom Goodman UK Limited United Kingdom Harbour Properties Limited United Kingdom Hatf eld Business Park Limited United Kingdom Ingleby (1648) Limited United Kingdom Junegrange Ltd United Kingdom Junehurst Limited United Kingdom Logix Park (Hinckley) Management Company Limited United Kingdom Mill Legacy Holdings Limited United Kingdom Preston Business Park Limited United Kingdom Property Management Employment Services Ltd United Kingdom RD Park (Andover) Management Company Limited United Kingdom RD Park (Hoddesdon Phase 1) Management Company Limited United Kingdom RD Park (Hoddesdon Phase 2 – K Units) Management Company Limited United Kingdom Rothley Lodge Management Company Limited United Kingdom Goodman USA Inc United States	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

122

30. Controlled entities (cont)

30. Controlled entities (cont)
Signif cant controlled unit trusts Country of establishment	Interest held
	2009 % 2008 %
BDE Unit Trust Australia Biloela Street Unit Trust Australia Binary No. 2 Trust Australia Cambridge Off ce Park Trust Australia Carter Street Trust Australia CC Trust Australia Clayton 3 Trust Australia Edinburgh Trust Australia Euston Road Subtrust Australia Goodman Capital Trust Australia Goodman Dandenong Trust Australia Goodman Europe Development Trust Australia Goodman Finance Australia Trust Australia Goodman Hong Kong Investment Trust Australia Goodman Industrial Trust Australia Goodman Japan Investment Trust Australia Goodman JV Holding Trust Australia Goodman Palmers Trust Australia Goodman Perth Airport No. 1 Trust Australia Goodman Perth Airport No. 2 Trust Australia Goodman Perth Airport No. 3 Trust Australia Goodman Perth Airport No. 4 Trust Australia Goodman Stockyards Trust Australia Goodman Treasury Trust Australia Highbrook Trust Australia Hill Road Trust Australia Homebush Subtrust Australia IBC Trust Australia MGA Industrial Portfolio Trust Australia MIP 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 Saunders Street Trust Australia West Melbourne Trust Australia Waterloo Road Off ce Trust Australia Harwell Unit Trust United Kingdom	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 2009

123

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

31. Interest in joint venture operation

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

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 certain conditions (refer to note 27).

Included in the revenue and expenses and 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 Consolidated Entity’s accounting policies (refer to note 1).

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Balance sheet
Trade receivables	13.5	–	–	–
Inventories	33.1	34.6	–	–
Other assets	–	15.4	–	–
Payables	(21.5)	(14.1)	–	–
Net assets Contribution to prof t Sale of inventories Cost of sales Capitalised interest Income tax benef t Prof t after tax	25.1 6.1 (3.7) – 8.2 10.6	35.9 12.3 (11.7) 1.8 3.4 5.8	– – – – – –	– – – – – –

32. Related parties

The names of key management personnel of the Consolidated Entity at any time during the year are as follows:

Non-Executive Directors	Executives
Mr Ian Ferrier, AM	Mr Anthony Rozic
Mr Patrick Goodman	Mr Nick Kurtis
Mr David S Clarke, AO	Mr Michael O’Sullivan
Ms Diane Grady, AM	Mr Nick Vrondas
Mr John Harkness	Mr David van Aanholt
Mr James Hodgkinson
Ms Anne Keating
Mr Jim Sloman, OAM

Executive Director

Mr Gregory Goodman

Mr David van Aanholt was a key management person in 2008 until his resignation effective 11 February 2009. Mr Nick Vrondas became a key management person on his appointment as Chief Financial Offi cer on 24 February 2009.

Mr David Clarke retired as a Director on 2 July 2009.

124

32. Related parties (cont)

Key management personnel compensation

The key management personnel compensation totals are as follows:

	Consolidated	Consolidated	Parent Entity1	Parent Entity1
	2009	2008	2009	2008
	$M	$M	$M	$M
Short-term employee benef ts	6.5	14.5	–	–
Post-employment benef ts	0.2	0.1	–	–
Equity compensation benef ts	(7.3)	5.1	–	–
Long-term employee benef ts	0.1	3.5	–	–
	(0.5)	23.2	–	–

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 37 to 48.

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:

		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	2009	–	–	–	–
	2008	1,562,351	–	41,339	1,571,576

Interest on loans to employees is charged at 5.5% per annum (2008: 8.2% 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 prior year, an interest free loan of $219,852 was made to Mr Michael O’Sullivan. The loan was repaid on 6 August 2008. The interest that would have been charged on an arm’s length basis from 1 July 2008 until the date of repayment amounts to $1,825 (from date of grant to 30 June 2008: $14,215).

Goodman Group Annual Report 2009

125

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

32. Related parties (cont)

Options and rights over equity instruments

The movement during the year in the number of securities of Goodman held under the ESAP, by each key management person is detailed below:

								Vested
								but not
		Held at				Held at	Vested	exercised
		the start	Granted as			the end	during	at the end
	Year	of the year1	compensation	Exercised	Forfeited2	of the year	the year	of the year
Executive Director
Mr Gregory Goodman	2009	5,955,990	–	–	–	5,955,990	–	651,996
	2008	3,955,990	2,000,000	–	–	5,955,990	–	651,996
Executives
Mr Anthony Rozic	2009	2,733,496	–	–	–	2,733,496	–	244,498
	2008	2,733,496	–	–	–	2,733,496	–	244,498
Mr Nick Kurtis	2009	2,683,496	–	–	–	2,683,496	–	244,498
	2008	3,183,496	–	(500,000)	–	2,683,496	–	244,498
Mr Michael O’Sullivan	2009	2,705,746	–	–	–	2,705,746	–	285,248
	2008	2,705,746	–	–	–	2,705,746	–	285,248
Mr Nick Vrondas	2009	1,200,000	–	–	–	1,200,000	–	–
	2008	–	–	–	–	–	–	–
Mr David van Aanholt	2009	2,877,995	–	–	(2,877,995)	–	–	–
	2008	3,211,329	–	(333,334)	–	2,877,995	–	352,998

These fi gures represent the securities held at the later of either the start of the year or the date of becoming a key management person.
Mr David van Aanholt ceased employment with Goodman effective 11 February 2009 and forfeited the right to any outstanding securities under the ESAP previously granted to him as compensation.

126

32. Related parties (cont)

Options and rights over equity instruments (cont)

The movement during the year in the number of options over securities in Goodman held, directly or benefi cially, by each key management person, including their related parties, is as follows:

								Vested
								but not
		Held at				Held at	Vested	exercised
		the start	Granted as			the end	during	at the end
	Year	of the year1	compensation	Exercised	Forfeited2	of the year	the year	of the year
Executive Director
Mr Gregory Goodman	2009	2,700,000	7,000,000	–	–	9,700,000	–	–
	2008	–	2,700,000	–	–	2,700,000	–	–
Executives
Mr Anthony Rozic	2009	1,500,000	3,500,000	–	–	5,000,000	–	–
	2008	–	1,500,000	–	–	1,500,000	–	–
Mr Nick Kurtis	2009	1,500,000	3,500,000	–	–	5,000,000	–	–
	2008	–	1,500,000	–	–	1,500,000	–	–
Mr Michael O’Sullivan	2009	1,500,000	3,500,000	–	–	5,000,000	–	–
	2008	–	1,500,000	–	–	1,500,000	–	–
Mr Nick Vrondas	2009	4,250,000	–	–	–	4,250,000	–	–
	2008	–	–	–	–	–	–	–
Mr David van Aanholt	2009	1,500,000	–	–	(1,500,000)	–	–	–
	2008	–	1,500,000	–	–	1,500,000	–	–

These fi gures represent the securities held at the later of either the start of the year or the date of becoming a key management person.
Mr David van Aanholt ceased employment with Goodman effective 11 February 2009 and forfeited any outstanding options under the EOP previously granted to him as compensation.

Goodman Group Annual Report 2009

127

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

32. Related parties (cont)

Options and rights over equity instruments (cont)

Movement in ordinary securities

The movement during the year in the number of stapled securities in Goodman held, directly or benefi cially, by each key management person, including their related parties, is as follows:

		Held at					Held at
		the start		Issued under			the end
	Year	of the year1	Acquisitions	the ESAP	Disposals	Forfeiture2	of the year
Non-Executive Directors
Mr Ian Ferrier	2009	10,188	97,530	–	–	–	107,718
	2008	4,765	5,423	–	–	–	10,188
Mr David Clarke	2009	206,901	97,244	–	–	–	304,145
	2008	206,901	–	–	–	–	206,901
Mr Patrick Goodman	2009	74,398,414	36,625,386	–	(34,728,874)	–	76,294,926
	2008	148,725,839	1,672,575	2,000,000	(78,000,000)	–	74,398,414
Ms Diane Grady	2009	30,000	74,100	–	–	–	104,100
	2008	–	30,000	–	–	–	30,000
Mr John Harkness	2009	21,931	95,529	–	–	–	117,460
	2008	5,426	16,505	–	–	–	21,931
Mr James Hodgkinson	2009	426,632	200,519	–	–	–	627,151
	2008	308,817	117,815	–	–	–	426,632
Ms Anne Keating	2009	53,583	98,850	–	–	–	152,433
	2008	45,180	8,403	–	–	–	53,583
Mr Jim Sloman	2009	7,736	91,367	–	–	–	99,103
	2008	2,785	4,951	–	–	–	7,736
Executive Director							–
Mr Gregory Goodman	2009	74,398,414	36,625,386	–	(34,728,874)	–	76,294,926
	2008	148,725,839	1,672,575	2,000,000	(78,000,000)	–	74,398,414
Executives
Mr Anthony Rozic	2009	2,831,195	965,556	–	–	–	3,786,751
	2008	2,819,031	12,164	–	–	–	2,831,195
Mr Nick Kurtis	2009	4,063,505	540,000	–	(1,370,000)	–	3,233,505
	2008	4,813,505	–	–	(750,000)	–	4,063,505
Mr Michael O’Sullivan	2009	4,278,070	923,202	–	(928,064)	–	4,273,208
	2008	4,278,070	–	–	–	–	4,278,070
Mr Nick Vrondas	2009	1,324,950	–	–	–	–	1,324,950
	2008	–	–	–	–	–	–
Mr David van Aanholt	2009	2,902,995	74,008	–	(99,008)	(2,877,995)	–
	2008	7,669,835	645,238	–	(5,412,078)	–	2,902,995

These fi gures represent the securities held at the later of either the start of the year or the date of becoming a key management person.
Mr David van Aanholt ceased employment with Goodman effective 11 February 2009 and forfeited any outstanding securities under the ESAP previously granted to him as compensation.

128

32. Related parties (cont)

Options and rights over equity instruments (cont)

Movement in Hybrid Securities

The movement during the reporting period in the number of Hybrid Securities (refer to note 26) held, directly or benefi cially, by each key management person, including their related parties, is as follows:

		Held at				Held at
		the start		Issued under		the end
	Year	of the year1	Acquisitions	the ESAP	Disposals	of the year
Executives
Mr Anthony Rozic	2009	1,000	–	–	–	1,000
	2008	–	1,000	–	–	1,000
Mr Nick Kurtis	2009	–	–	–	–	–
	2008	–	–	–	–	–
Mr Michael O’Sullivan	2009	–	–	–	–	–
	2008	–	–	–	–	–
Mr Nick Vrondas	2009	120	–	–	–	120
	2008	–	–	–	–	–
Mr David van Aanholt2	2009	250	–	–	(250)	–
	2008	–	510	–	(260)	250

These fi gures represent the securities held at the later of either the start of the year or the date of becoming a key management person.
Mr David van Aanholt ceased employment with Goodman effective 11 February 2009.

None of the Directors had any interests in the Hybrid Securities.

Transactions with key management personnel and their related entities

(a) Goodman Holdings Group

Mr Gregory Goodman and Mr Patrick Goodman are directors of and shareholders in Goodman Holdings Group. During the year, Goodman Holdings Group reimbursed the Consolidated Entity for offi ce rental costs of $315,120 (2008: $317,998) and for IT licence costs of $45,312 (2008: $nil).

In the prior year, the Consolidated Entity reimbursed a wholly-owned subsidiary of Goodman Holdings Group for travel costs of $271,208. No amounts were paid in the current year.

(b) Moorabbin Airport Corporation Pty Limited

Mr Gregory Goodman and Mr Patrick Goodman are directors of and shareholders in Moorabbin Airport Corporation Pty Limited (MAC). During the year ended 30 June 2008, MAC leased land at Chifl ey Business Park, Mentone, Victoria to the Consolidated Entity and received an amount of $701,835. The Consolidated Entity sold its lease at the Chifl ey Business Park site to GAIF in June 2008.

The Consolidated Entity has also agreed with MAC that it will pay all infrastructure costs incurred by the Consolidated Entity in developing Chifl ey Business Park. At 30 June 2009, the Consolidated Entity is owed an amount of $3.6 million (2008: $4.0 million), which MAC will reimburse progressively as Chifl ey Business Park is developed and rental income is earned by MAC.

(b) 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 prior year amounted to $81,360. The CityWest Offi ce Park property was sold to GAIF in May 2008.

Goodman Group Annual Report 2009

129

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

33. Other related party disclosures

The Consolidated Entity has a related party relationship with its controlled entities (refer to note 30), associates and joint venture entities (refer to note 16) and with its Directors and executives (refer to note 32).

(a) Transactions with controlled entities

Transactions between the Company and its controlled entities during the current year included the following:

- payment of dividends of A$12.9 million (2008: $12.9 million) by GAL to the Company;
- loans advanced by/to the Company (including amounts arising under the tax funding agreement);
- interest charged by/to the Company; and
- purchase of units from GIT pursuant to the operation of Goodman’s share based payment schemes (refer to note 23).

Further details of the terms and conditions of the loan amounts receivable from and payable to controlled entities at 30 June 2009, are set out below:

		2009	2008
	Note	$M	$M
Receivables
Loans to controlled entities – current1	11	694.8	675.5
Loans to controlled entities – non-current2	11	115.3	102.3
Payables
Loans from controlled entities – current3	20	210.7	148.5
Interest bearing liabilities
Loans from controlled entities – current4	21	984.2	1,016.0

Loans are unsecured and repayable on demand. Included in the loan is an amount of $nil (2008: $37.7 million) that bears interest at Goodman’s weighted average cost of debt.
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% (2008: 9.0%).
Loans are unsecured, non-interest bearing and repayable on demand.
Loans are unsecured, bear interest at Goodman’s weighted average cost of debt and 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.

(b) Transactions with associates and joint venture entities

		Sales of	Sales of controlled	Sales of controlled	Management	Management
	investment		entities and equity		services and
	properties		investments		other income
	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M
GAIF	75.2	433.8	–	638.9	106.9	76.8
GMT	2.7	10.6	2.1	89.5	12.1	21.0
HDL	–	–	–	–	1.7		–
GHKLF	–	–	80.2	–	11.5		–
Seaview	–	–	–	–	1.1		–
Interlink	–	–	–	–	2.1		–
GELF	–	160.1	68.4	65.1	41.9	53.3
ABPP	–	–	21.8	–	22.6	68.0
UK Active Fund	–	–	–	–	–		2.7
Harwell	–	–	–	–	0.9		–
Colworth	–	–	–	–	6.8		0.5
BL Goodman LLP	–	–	–	–	0.4		0.5

130

33. Other related party disclosures (cont)

(b) Transactions with associates and joint venture entities (cont)

Amounts due from associates and JVEs at 30 June 2009 are as follows:

	Trade and other	Trade and other	Shareholder	Shareholder
	receivables1		loans provided2
	2009	2008	2009	2008
	$M	$M	$M	$M
GAIF	21.3	15.3	–	–
GMT	0.3	1.0	–	–
GELF	31.9	89.3	25.8	–
ABPP	36.8	33.3	–	–
Colworth	0.4	–	–	–
Abu Dhabi	1.0	–	–	–
BGA1 Pty Ltd	–	–	1.2	–
TGPS	–	–	0.3	–
GGGAIF Huntingwood East	–	–	15.9	–
GGGAIF Huntingwood West	–	–	21.4	–
413 King William Street Trust	–	–	2.1	–
Seaview	–	–	60.4	45.0
Interlink	–	–	70.4	51.8
Herten	–	–	4.8	–
Lazulite	–	–	3.4	–
Ullo	–	–	3.1	–
Agate	–	–	3.6	–
WMP nv	–	–	8.3	–
BL Goodman LLP	–	–	15.0	18.6
Gateway LLP	–	–	0.2	0.2
Pochin	–	–	6.5	7.0
Scottish Widows partnership	–	–	0.6	–
	91.7	138.9	243.0	122.6

Trade and other amounts due are receivable within 30 days.
Shareholder loans to associates and JVEs have generally been provided on an arms length basis. Details In respect of the principle loan balances are set out below:
- a shareholder loan of $22.4 million has been provided to Goodman Pyrite Logistics (Lux) Sàrl, a controlled entity of GELF. The loan bears interest at 6.9% per annum, but no amounts were recognised in the year (2008: $nil);
- interest income of $1.7 million (2008 $nil) was recognised on loans to GGGAIF Huntingwood East and GGGAIF Huntingwood West. The loans bear interest at 4.5% per annum;
interest income of $5.6 million (2008: $2.0 million) was recognised on loans to Seaview and Interlink. The loans bear interest at the three month Hong Kong Interbank Offer Rate plus 1.5% per annum; and
- as agreed with the other shareholders of the JVE, no interest income was recognised on the loan to BL Goodman LLP.

Goodman Group Annual Report 2009

131

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

34. Employee benefi ts

34. Employee benef ts
		Consolidated		Parent Entity
Aggregate liability for employee benef ts		2009	2008	2009	2008
including on-costs	Note	$M	$M	$M	$M
Current
Annual leave		4.3	4.0	–	–
Long service leave		0.8	0.3	–	–
Other employee benef ts provision		6.3	46.5	–	–
Non-current Long service leave Def ned benef t pension obligations Other employee benef ts provision	34(a)	11.4 0.8 17.4 0.2 18.4	50.8 1.2 3.3 4.4 8.9	– – – – –	– – – – –

(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.

There have been no changes to the scheme rules in the current year. During the prior year, the scheme rules were amended to remove the link between future salary increases and the fi nal pension at retirement. In addition, the pensionable benefi ts were further amended to restrict pension increases after retirement to a maximum 2.5% per annum.

132

34. 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.

	2009	2008
	$M	$M
Change in benef t obligation
Benef t obligation at the beginning of the year	52.4	69.5
Current service cost	1.0	2.7
Interest cost	3.6	3.7
Past service cost	1.1	(10.6)
Actuarial losses/(gains)	2.2	(0.7)
Members’ contributions	0.3	0.3
Curtailments	–	(0.8)
Settlements	(0.1)	(3.3)
Benef ts paid	(0.5)	(0.4)
Effect of foreign currency translation	(0.6)	(8.0)
Benef t obligation at the end of the year 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 Members’ contributions Settlements Benef ts paid Effect of foreign currency translation Fair value of fund assets at the end of the year Funding def cit at the end of the year Net liability recognised at the end of the year Components of pension cost Current service cost Interest cost Expected return on fund assets Past service cost Effects of curtailments or settlements Employer contributions Total cost/(benef t) recognised in income statement Actuarial losses recognised immediately in equity Less: Deferred tax expense Net actuarial losses recognised immediately in equity	59.4 59.4 49.1 3.4 (11.5) 1.1 0.3 (0.1) (0.5) 0.2 42.0 17.4 17.4 1.0 3.6 (3.4) 1.1 – (1.1) 1.2 (13.1) 3.8 (9.3)	52.4 52.4 55.1 3.2 (2.7) 3.8 0.3 (3.3) (0.4) (6.9) 49.1 3.3 3.3 2.6 3.7 (3.2) (10.6) (0.8) – (8.3) (2.0) – (2.0)

Goodman Group Annual Report 2009

133

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

34. 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 an $8.0 million loss (2008: $0.5 million gain). The weighted average asset allocation at the end of the year was as follows:

	2009	2008
	%	%
Equities	62.0	57.0
Bonds	33.0	32.0
Property	5.0	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.

			2009	2008
			% per	% per
			annum	annum
Weighted average assumptions used to determine benef t obligations
Discount rate			6.00	6.50
Rate of compensation increase			–	–
Weighted average assumptions used to determine net pension cost
Discount rate			6.00	6.50
Expected long-term return on fund assets			5.90	6.55
Rate of benef t increase			2.3	3.75
Rate of compensation increase			–	–
Historical Information	2009	2008	2007	2006
Benef t obligation at the end of the year ($M)	(59.4)	(52.4)	(69.5)	(67.5)
Fair value of fund assets at the end of the year ($M)	42.0	49.1	55.1	56.3
Funding def cit ($M)	(17.4)	(3.3)	(14.4)	(11.2)
Difference between expected and actual return on fund assets
Amount ($M)	(11.5)	(2.5)	(2.8)	(1.0)
Percentage of fund assets (%)	(25.9)	(5.0)	(5.0)	(2.0)
Experience gains/(losses) on fund liabilities
Amount ($M)	0.3	(0.6)	0.4	–
Percentage of fund liabilities (%)	0.6	1.0	1.0	–

The Consolidated Entity’s defi ned benefi t funds were acquired as part of the acquisition of Arlington in December 2005. Accordingly, the historical information has only been reported since the date of acquisition.

134

34. Employee benefi ts (cont)

(b) Share based payments

The Company 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. Details of equity based remuneration are set out below:

Share based payments credit/expense included in the income statement is as follows:

	Consolidated	Consolidated	Parent	Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Share based payments (credit)/expense	(38.1)	26.7	–	–

(i) Employee Securities Acquisition Plan

No employees were granted securities under the ESAP during or since the end of the year.

The weighted average exercise prices and number of securities issued under the ESAP are as follows:

	Weighted average	Weighted average
	exercise price		Number	of securities
	2009	2008
	$	$	2009	2008
Outstanding at the beginning of the year	5.63	5.37	41,649,309	43,379,700
Granted	–	7.23	–	2,000,000
Exercised	–	3.36	–	(3,730,391)
Outstanding at the end of the year	5.63	5.63	41,649,309	41,649,309
Exercisable at the end of the year	3.83	3.83	4,723,605	4,692,271

The outstanding securities under the ESAP at 30 June 2009 have an exercise price in the range of $2.59 to $7.23 (2008: $2.59 to $7.23).

Goodman Group Annual Report 2009

135

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

34. Employee benefi ts (cont)

(b) Share based payments (cont)

(ii) 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 Directors 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);
- for offers made prior to 30 June 2008, 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);
- for offers made after 30 June 2008, options lapse on the earlier of approximately fi ve 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);
- for offers made prior to 30 June 2008, options vest in three equal tranches from the third, fourth and fi fth anniversaries of the offer;
- for offers made after 30 June 2008, options vest in three equal tranches from the second, third and fourth 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.

The weighted average exercise prices and number of options are as follows:

	Weighted average	Weighted average
	exercise price		Number	of options
	2009	2008
	$	$	2009	2008
Outstanding at the beginning of the year	6.23	6.07	102,812,279	65,917,114
Granted	3.07	3.60	55,175,000	(1,648,334)
Exercised	2.59	6.36	(33,334)	40,788,000
Forfeited	6.03	5.95	(18,555,500)	(2,244,501)
Outstanding at the end of the year	4.97	6.23	139,398,445	102,812,279
Exercisable at the end of the year	3.80	3.99	1,151,148	1,367,816

As at 30 June 2009, the options outstanding have an exercise price in the range of $3.04 to $7.23 (2008: 2.59 to $7.23).

The fair value of services received in return for options granted under the EOP is measured by reference to the fair value of the options 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, the 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 2009 include the following:

	Options issued on 5 Sep 2008	Options issued on 17 Nov 2008
Fair value at measurement date ($)	0.37	0.04
Security price ($)	3.07	1.14
Exercise price ($)	3.07	3.07
Expected volatility (%)	20.00	20.00
Option life (years)	4.00	4.00
Distribution/dividend yield per annum (%)	10.60	10.66
Risk free rate of interest per annum (%)	6.61	5.19

136

35. 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 fi nance, treasury 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 six times during the year.

Goodman’s treasury function 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 with Goodman’s hedging policy and 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, electing to have the DRP underwritten and recycling assets to funds managed by Goodman or to 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 a Consolidated Entity basis and 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.

Financial risk management

Goodman’s key fi nancial risks are market risk (including interest rate risk, foreign exchange risk and price risk), liquidity risk and credit risk.

(a) Market risk

Interest rate risk

Goodman’s interest rate risk primarily arises from variable rate borrowings. The Consolidated Entity adopts a policy of ensuring that between 60% and 100% of its exposure to changes in interest rates on borrowings is on a fi xed rate basis. 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.

Goodman Group Annual Report 2009

137

for the year ended 30 June 2009

Notes to the fi nancial statements (cont)

35. Financial risk management (cont)

(a) Market risk (cont)

Interest rate risk (cont)

Based on the Consolidated Entity’s existing interest rate swap contracts as at 30 June 2009, the principal balances as at future year ends and the weighted average interest rates during future years, by region, are set out below:

			2009				2008
	Interest	rate swaps	Fixed	rate debt	Interest	rate swaps	Fixed	rate debt
	Notional				Notional
	principal	Average	Principal	Average	principal	Average	Principal	Average
	currency1	rate pa2	currency	rate pa2	currency1	rate pa2	currency	rate pa2
	M	%	M	%	M	%	M	%
New Zealand dollars receivable/payable
30 June 2009	–	–	–	–	(253.3)	7.10	–	–
30 June 2010	(173.0)	7.70	–	–	(250.0)	7.06	–	–
30 June 2011	(135.2)	8.10	–	–	(250.0)	7.06	–	–
30 June 2012	(110.0)	8.79	–	–	(250.0)	7.06	–	–
30 June 2013	(110.0)	8.79	–	–	(250.0)	7.06	–	–
30 June 2014	(110.0)	8.79	–	–	–	–	–	–
30 June 2015	(68.8)	7.33	–	–	–	–	–	–
Hong Kong dollars receivable/payable
30 June 2009	–	–	–	–	(1,600.0)	4.28	–	–
30 June 2010	(1,530.4)	4.28	–	–	(1,530.4)	4.28	–	–
30 June 2011	(871.2)	4.25	–	–	(871.2)	4.25	–	–
30 June 2012	(345.5)	4.30	–	–	(345.5)	4.30	–	–
30 June 2013	(124.7)	4.25	–	–	(124.7)	4.25	–	–
Japanese yen receivable/payable
30 June 2009	–	–	–	–	(17,000.0)	1.49	–	–
30 June 2010	(15,750.0)	1.51	–	–	(17,000.0)	1.49	–	–
30 June 2011	(14,911.6)	1.53	–	–	(16,161.6)	1.51	–	–
30 June 2012	(13,633.9)	1.55	–	–	(14,808.7)	1.53	–	–
30 June 2013	(4,000.0)	1.69	–	–	(4,000.0)	1.69	–	–
30 June 2014	(3,758.9)	1.69	–	–	–	–	–	–
Euro receivable/payable
30 June 2009	–	–	–	–	(653.2)	3.96	–	–
30 June 2010	(660.0)	3.82	–	–	(590.0)	4.11	–	–
30 June 2011	(386.1)	4.17	–	–	(487.2)	4.09	–	–
30 June 2012	(173.2)	4.98	–	–	(353.2)	4.07	–	–
30 June 2013	(140.0)	5.12	–	–	(291.8)	4.05	–	–
30 June 2014	(132.4)	5.16	–	–	–	–	–	–
30 June 2015	(50.0)	5.91	–	–	–	–	–	–

138

35. Financial risk management (cont)

(a) Market risk (cont) Interest rate risk (cont)

			2009				2008
	Interest	rate swaps	Fixed	rate debt	Interest	rate swaps	Fixed	rate debt
	Notional				Notional
	principal	Average	Principal	Average	principal	Average	Principal	Average
	currency1	rate pa2	currency	rate pa2	currency1	rate pa2	currency	rate pa2
	M	%	M	%	M	%	M	%
British pounds	sterling receivable/payable
30 June 2009	–	–	–	–	(463.2)	4.97	(250.0)	9.75
30 June 2010	(535.0)	3.56	(250.0)	9.75	(460.0)	4.98	(250.0)	9.75
30 June 2011	(494.8)	4.69	(250.0)	9.75	(433.0)	5.00	(250.0)	9.75
30 June 2012	(435.0)	5.38	(250.0)	9.75	(345.0)	5.07	(250.0)	9.75
30 June 2013	(435.0)	5.38	(250.0)	9.75	(328.7)	5.09	(250.0)	9.75
30 June 2014	(435.0)	5.38	(250.0)	9.75	–	–	–	–
30 June 2015	(398.8)	5.40	(250.0)	9.75	–	–	–	–

The amount is the principal balance at each year end that is hedged as a result of the existing interest rate swap contracts as at 30 June 2009.
Average rate per annum represents the weighted average interest rate payable, by region, as a result of the existing interest rate swap contracts as at 30 June 2009.

At 30 June 2009, if interest rates on borrowings had been 100 basis points per annum (2008: 500 basis points per annum) higher/lower, with all other variables held constant, the Consolidated Entity result attributable to Securityholders for the year would have been A$0.1 million lower/higher (2008: A$0.1 million).

At 30 June 2009, if interest rates on borrowings had been 100 basis points per annum (2008: 100 basis points per annum) higher/lower, with all other variables held constant, the Parent Entity result for the year would have been A$9.8 million lower/higher (2008: A$9.8 million).

Goodman Group Annual Report 2009

139

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

35. Financial risk management (cont)

(a) Market risk (cont)

Foreign exchange risk

Goodman is exposed to foreign exchange risk through its investments in New Zealand, Hong Kong, China, Japan, Continental Europe and the United Kingdom. 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.

In managing foreign currency risks, the Consolidated Entity aims to reduce the impact of short-term fl uctuations on the Consolidated Entity’s earnings and net assets. Over the long-term, however, permanent changes in foreign exchange will have an impact on both earnings and net assets.

The Consolidated Entity’s capital hedge policy for each overseas region is to hedge between 70% and 95% of foreign currency denominated assets with foreign currency denominated liabilities. Goodman’s investment in foreign denominated investments is generally achieved by borrowing in the same functional currency as the investments to form a natural economic hedge against any foreign currency fl uctuations. Further draw downs or repayments of debt are made to maintain this hedge. Derivatives such as cross currency swaps are also used to achieve the hedge position required under the FRM policy.

Based on the Consolidated Entity’s existing cross currency swap contracts as at 30 June 2009, the weighted average foreign exchange rates during future years and the principle hedged amount at each future year end, by region, are set out below:

	Weighted average	Weighted average
	exchange rate		Amounts	receivable	Amounts	payable
					2009	2008
			2009	2008	Currency	Currency
	2009	2008	A$M	A$M	M	M
Australian dollars receivable/New Zealand dollars payable
30 June 2009	–	1.1328	–	176.6	–	(200.0)
30 June 2010	1.2590	1.1328	81.0	176.6	(102.0)	(200.0)
30 June 2011	1.2590	1.1328	81.0	176.6	(102.0)	(200.0)
30 June 2012	1.2590	1.1328	81.0	176.6	(102.0)	(200.0)
30 June 2013	1.2590	1.1328	81.0	176.6	(102.0)	(200.0)
Australian dollars receivable/Hong Kong dollars payable
30 June 2009	–	6.7145	–	148.9	–	(1,000.0)
30 June 2010	6.4213	6.7145	234.6	148.9	(1,500.0)	(1,000.0)
30 June 2011	6.4213	6.7145	148.9	148.9	(1,500.0)	(1,000.0)
30 June 2012	6.7145	6.7145	148.9	148.9	(1,000.0)	(1,000.0)
30 June 2013	6.7145	6.7145	148.9	148.9	(1,000.0)	(1,000.0)
Australian dollars receivable/Japanese yen payable
30 June 2009	–	97.4500	–	44.5	–	(4,340.0)
30 June 2010	97.4500	97.4500	44.5	44.5	(4,340.0)	(4,340.0)
30 June 2011	97.4500	97.4500	44.5	44.5	(4,340.0)	(4,340.0)
30 June 2012	97.4500	97.4500	44.5	44.5	(4,340.0)	(4,340.0)
30 June 2013	97.4500	97.4500	44.5	44.5	(4,340.0)	(4,340.0)

140

35. Financial risk management (cont)

(a) Market risk (cont) Foreign exchange risk (cont)

	Weighted average	Weighted average
	exchange rate		Amounts	receivable	Amounts	payable
					2009	2008
			2009	2008	Currency	Currency
	2009	2008	A$M	A$M	M	M
Australian dollars receivable/euros payable
30 June 2009	–	0.6090	–	492.6	–	(300.0)
30 June 2010	0.5665	–	369.3	–	(209.0)	–
30 June 2011	0.5665	–	369.3	–	(209.0)	–
30 June 2012	0.5665	–	369.3	–	(209.0)	–
30 June 2013	0.5500	–	198.2	–	(109.0)	–
30 June 2014	0.5500	–	198.2	–	(109.0)	–
Australian dollars receivable/British pounds sterling payable
30 June 2009	–	–	–	–	–	–
30 June 2010	0.4700	–	272.3	–	(128.0)	–
30 June 2011	0.4700	–	272.3	–	(128.0)	–
30 June 2012	0.4700	–	183.0	–	(86.0)	–
30 June 2013	0.4700	–	183.0	–	(86.0)	–

Goodman Group Annual Report 2009

141

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

35. Financial risk management (cont)

(a) Market risk (cont)

Foreign exchange risk (cont)

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.

Based on the Consolidated Entity’s existing forward foreign exchange contracts as at 30 June 2009, the weighted average exchange rates and the principal amounts expiring in future years, by region, is set out below:

	Weighted average	Weighted average
	exchange rate		Amounts	receivable	Amounts	payable
					2009	2008
			2009	2008	Currency	Currency
Year ending	2009	2008	A$M	A$M	M	M
Contracts to buy Australian dollars and sell New Zealand dollars
30 June 2009	–	1.1519	–	7.7	–	(8.9)
30 June 2010	1.1491	1.1633	4.9	7.7	(5.6)	(8.9)
30 June 2011	1.1630	1.1720	4.6	3.8	(5.3)	(4.5)
30 June 2012	1.1768	1.1809	4.5	3.8	(5.3)	(4.5)
30 June 2013	1.1932	–	4.2	–	(5.0)	–
Contracts to buy Australian dollars and sell Hong Kong dollars
30 June 2009	–	6.1394	–	2.5	–	(15.1)
30 June 2010	5.3333	6.3403	13.0	1.6	(68.5)	(10.0)
30 June 2011	5.0701	–	12.4	–	(62.6)	–
30 June 2012	4.9885	–	12.6	–	(62.6)	–
30 June 2013	4.9077	–	12.8	–	(62.6)	–
Contracts to buy Australian dollars and sell euros
30 June 2009	–	0.5832	–	41.3	–	(24.0)
30 June 2010	0.5667	0.5667	42.5	42.5	(24.0)	(24.0)
30 June 2011	0.5273	0.5551	32.4	17.2	(17.0)	(9.5)
30 June 2012	0.5229	0.5421	27.9	17.6	(14.5)	(9.5)
30 June 2013	0.4837	–	18.6	–	(9.0)	–
Contracts to buy Australian dollars and sell British pounds sterling
30 June 2009	–	0.4150	–	24.1	–	(10.0)
30 June 2010	–	0.4150	–	24.1	–	(10.0)
30 June 2011	–	0.4150	–	12.0	–	(5.0)

At 30 June 2009, if the Australian dollar had strengthened by 5% (2008: 5%), with all other variables held constant, the Consolidated Entity’s result attributable to Securityholders would have decreased by A$33.2 million (2008: A$14.8 million decrease). If the Australian dollar had weakened by 5% (2008: 5%), with all other variables, in particular interest rates, held constant, the Consolidated Entity’s result attributable to Securityholders would have increased by A$36.7 million (2008: A$14.8 million increase).

At 30 June 2009, if the Australian dollar has weakened/strengthened by 5% (2008: 5%), with all other variables held constant, the Parent Entity’s result for the year would have been A$0.5 million lower/higher (2008: A$0.2 million lower/higher).

142

35. Financial risk management (cont)

(a) Market risk (cont)

Price risk

Goodman is exposed to equity securities price risk because of its investment in ING Industrial Fund, which is listed on the ASX and classifi ed on the balance sheet as an other fi nancial asset (refer to note 17).

As at 30 June 2009, a 5% (2008: 5%) movement in the security price of ING Industrial Fund would have impacted equity by A$1.4 million (2008: A$8.9 million). There would be no impact on the Consolidated Entity’s result attributable to Securityholders. The analysis is based on the assumption that all other variables are held constant.

The Parent Entity is not exposed to equity securities price risk.

The Consolidated Entity is not exposed to commodity price risk.

(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.

Goodman’s treasury function is responsible for reporting details of all debt maturities for all loans across the regions to the fi nance, treasury and tax committee and the Board at their regular meetings. Goodman’s treasury function is also responsible for reporting to the fi nance, treasury 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

		Contractual	Up to					More
	Carrying	cash	12	1-2	2-3	3-4	4-5	than
	amount	f ows	months	year(s)	years	years	years	5 years
As at 30 June 2009	$M	$M	$M	$M	$M	$M	$M	$M
Non-derivative f nancial liabilities1
Payables	232.9	232.9	231.4	1.5	–	–	–	–
Bank loans, unsecured	3,277.5	3,277.5	584.4	485.1	949.9	1,258.1	–	–
Bank loans, secured	402.3	402.3	402.3	–	–	–	–	–
Euro medium term notes, unsecured	513.1	513.1	–	–	–	–	–	513.1
Foreign private placement, unsecured	46.9	46.9	–	–	–	–	–	46.9
Total non-derivative f nancial liabilities Derivative f nancial liabilities Net settled2 Gross settled3: Inf ow Outf ow Total derivative f nancial liabilities	4,472.7 152.3 17.0 – 169.3	4,472.7 156.6 (176.3) 182.5 162.8	1,218.1 60.5 (45.9) 15.9 30.5	486.6 39.5 (52.2) 34.3 21.6	949.9 17.6 (47.3) 44.9 15.2	1,258.1 9.7 (27.2) 69.8 52.3	– 11.7 (3.7) 17.6 25.6	560.0 17.6 – – 17.6

Cash fl ows relating to non-derivative fi nancial liabilities exclude any estimated interest payments.
Net settled includes interest rate swaps and forward foreign currency contracts.
Gross settled includes cross currency interest rate swaps.

Goodman Group Annual Report 2009

143

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

35. Financial risk management (cont)

(b) Liquidity risk (cont)

Contractual maturities of fi nancial liabilities (cont)

		Contractual	Up to					More
	Carrying	cash	12	1-2	2-3	3-4	4-5	than
	amount	f ows	months	year(s)	years	years	years	5 years
As at 30 June 2008	$M	$M	$M	$M	$M	$M	$M	$M
Non-derivative f nancial liabilities1
Payables	405.4	405.4	400.7	4.7	–	–	–	–
Bank loans, unsecured	3,564.4	3,564.4	491.3	379.0	504.1	967.5	1,222.5	–
Bank loans, secured	150.3	150.3	20.8	129.5	–	–	–	–
Euro medium term notes, unsecured	514.4	514.4	–	–	–	–	–	514.4
Total non-derivative f nancial liabilities Derivative f nancial liabilities Net settled2 Gross settled3: Inf ow Outf ow Total derivative f nancial liabilities	4,634.5 (65.9) (33.4) – (99.3)	4,634.5 (87.6) (95.9) 82.5 (101.0)	912.8 (25.3) (25.8) 20.0 (31.1)	513.2 (21.5) (22.6) 18.8 (25.3)	504.1 (17.6) (18.7) 16.6 (19.7)	967.5 (11.8) (20.1) 18.5 (13.4)	1,222.5 (7.8) (8.7) 8.6 (7.9)	514.4 (3.6) – – (3.6)

Cash fl ows relating to non-derivative fi nancial liabilities exclude any estimated interest payments.
Net settled includes interest rate swaps and forward foreign currency contracts.
Gross settled includes cross currency interest rate swaps.

As at 30 June 2009, the Parent Entity’s fi nancial liabilities all mature in less than 12 months. As at 30 June 2008, $0.8 million of the Parent Entity’s fi nancial liabilities matured in more than 12 months.

(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 11).

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.

144

35. Financial risk management (cont)

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 value1	amount	Fair value1
		2009	2009	2008	2008
Consolidated	Note	$M	$M	$M	$M
Financial assets
Cash	29(a)	242.5	242.5	639.2	639.2
Receivables	11
– Loans and receivables		588.3	588.3	661.2	661.2
– Interest rate derivatives		1.3	1.3	78.4	78.4
– Cross currency swaps		18.5	18.5	33.4	33.4
– Foreign exchange contracts		11.1	11.1	10.8	10.8
Other f nancial assets	17
– Investments in listed securities		27.7	27.7	177.2	177.2
– Investments in other unlisted securities Financial liabilities Payables – Trade, other payables and accruals and deferred settlements – Interest rate derivatives – Cross currency swaps – Foreign exchange contracts Interest bearing liabilities Parent Entity Financial assets Cash Receivables – Loans and receivables Other f nancial assets – Investments in controlled entities Financial liabilities Payables – Other payables and accruals and deferred settlements – Loans from controlled entities Interest bearing liabilities	20 21 29(a) 11 17 20 21	43.4 932.8 232.9 163.4 35.6 1.2 4,239.8 4,672.9 0.1 810.1 278.5 1,088.7 2.2 210.7 984.2 1,197.1	43.4 932.8 232.9 163.4 35.6 1.2 4,069.7 4,502.8 0.1 810.1 278.5 1,088.7 2.2 210.7 984.2 1,197.1	61.5 1,661.7 405.4 22.4 – 0.9 4,229.1 4,657.8 0.6 784.7 399.1 1,184.4 11.4 148.5 1,016.0 1,175.9	61.5 1,661.7 405.4 22.4 – 0.9 4,229.1 4,657.8 0.6 784.7 399.1 1,184.4 11.4 148.5 1,016.0 1,175.9

The methods used for determining fair values of fi nancial instruments are discussed in notes 1, 7, 11 and 17. The fair value of the euro medium term notes included in interest bearing liabilities have been determined by reference to their quoted price on the Singapore Stock Exchange at 30 June 2009.

Goodman Group Annual Report 2009

145

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

36. Auditors’ remuneration

36. Auditors’ remuneration
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$000	$000	$000	$000
Audit services
Auditor of the Company:
– audit and review of f nancial reports (KPMG Australia)	1,099.6	944.1	–	–
– audit and review of f nancial reports (overseas KPMG f rms)	1,122.7	1,338.4	–	–
Other regulatory services – other regulatory services (KPMG Australia) – other regulatory services (overseas KPMG f rms) Other assurance services – investigative accounting services (KPMG Australia) – investigative accounting services (overseas KPMG f rms) 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) Total paid/payable to KPMG	2,222.3 100.2 124.4 893.9 639.5 358.0 668.7 19.3 63.3 2,867.3 5,089.6	2,282.5 59.2 141.8 1,051.7 125.9 173.4 511.0 139.9 260.0 2,462.9 4,745.4	– – – – – – – – – – –	– – – – – – – – – – –
Other auditors
– audit and review of f nancial reports (non-KPMG f rms)	244.4	134.5	–	–

146

37. Events subsequent to balance date

The proceeds from the equity raising will be used to retire the $300 million drawn under the $485 million secured loan provided by Macquarie Group and CIC and any amounts drawn under the $520 million Tranche B of the SMCF.

- extension from 2011 to 2012 of A$438.0 million of the $520 million Tranche C of the SMCF and extension from 2012 to 2013 of 80% of the €525 million European revolving credit facility, along with amended covenants to the common terms deed poll, to which they are a party;
- extension of facilities and renegotiation of covenants for GAIF;
- renegotiation of the covenants for GELF; and
- renegotiation of covenants for ABPP.

During August 2009, Goodman also announced the creation of a new joint venture with Canada Pension Plan Investment Board (CPPIB) in China. The joint venture (of which Goodman holds 20% and CPPIB holds 80%) acquired four stabilised assets with a book value at 30 June 2009 of A$157.3 million. The joint venture has established a platform for future funding of further opportunities in China. Goodman will receive fees for the services it provides to the joint venture.

On 19 August 2009, the Consolidated Entity announced the sale of 93 million units in Goodman Property Trust to a number of institutional investors at a price of NZ$0.95 per unit. The proceeds of approximately A$72 million will further strengthen the Consolidated Entity’s balance sheet and subsequent to the disposal Goodman will own 17% of Goodman Property Trust. The disposal is in line with Goodman’s strategy of targeting a long-term holding of 15% to 20% for investments in funds managed by Goodman. The non recurring loss on disposal of this investment of approximately A$13 million will be refl ected in the income statement in the year ending 30 June 2010.

Goodman Group Annual Report 2009

147

Directors’ declaration

In the opinion of the Directors of Goodman Limited:

(a) the fi nancial statements and the accompanying notes set out on pages 54 to 147 and the remuneration disclosures that are contained on pages 37 to 48 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 2009 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 fi nancial 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 2009.

Signed in accordance with a resolution of the Directors.

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

Ian Ferrier, AM Independent Chairman Sydney, 28 August 2009

==> picture [177 x 73] intentionally omitted <==

Gregory Goodman Group Chief Executive Offi cer

148

Independent auditor’s report to the members of

Goodman Limited (formerly Goodman International Limited)

Report on the fi nancial report

We have audited the accompanying fi nancial report of Goodman Limited (formerly Goodman International Limited) (the Company), which comprises the balance sheets as at 30 June 2009, 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 37 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 fi nancial report

The Directors of the Company are responsible for the preparation and fair presentation of the fi nancial 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 fi nancial 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 fi nancial 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 fi nancial 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 fi nancial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial 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 fi nancial 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 fi nancial report.

We performed the procedures to assess whether in all material respects the fi nancial 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 fi nancial report of Goodman Limited (formerly 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 2009 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.
(b) the fi nancial 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 37 to 48 in the Directors’ report for the year ended 30 June 2009. 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 Limited (formerly Goodman International Limited) for the year ended 30 June 2009, complies with Section 300A of the Corporations Act 2001.

KPMG

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

John Teer Partner

Sydney, 28 August 2009

Goodman Group Annual Report 2009

149

Financial report for Goodman Industrial Trust

and its controlled entities for the year ended 30 June 2009

Contents
Directors’ report	151
Lead auditor’s independence declaration	161
Income statements	162
Balance sheets	163
Statements of changes in equity	164
Cash f ow statements	165
Notes to the f nancial statements
1 Statement of signif cant accounting policies	166
2 Critical accounting estimates used in the
preparation of the f nancial statements	173
3 (Loss)/prof t before income tax	175
4 Distributions	176
5 Receivables	177
6 Assets/liabilities classif ed as held for sale	178
7 Other assets	178
8 Investment properties	179
9 Investments accounted for using
the equity method	179
10 Other f nancial assets	183
11 Payables	187
12 Interest bearing liabilities	187
13 Issued capital	191
14 Reserves	192
15 (Accumulated losses)/retained earnings	193
16 Minority interests	193
17 Segment reporting	194
18 Acquisition of controlled entity	196
19 Disposal of interests in controlled entities	197
20 Auditors’ remuneration	197
21 Notes to the cash f ow statements	198
22 Related party disclosures	199
23 Financial risk management	201
24 Commitments	209
25 Contingencies	210
26 Events subsequent to balance date	210
Directors’ declaration	211
Independent auditor’s report	212

150

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 fi nancial report of GIT and the entities it controlled (Consolidated Entity) at the end of, or during, the year ended 30 June 2009 and the audit report thereon.

GIT is deemed to be a controlled entity of Goodman Limited (formerly Goodman International Limited). GIT’s units are stapled to shares in Goodman 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 Ian Ferrier, AM (Independent Chairman)1	23 February 2005
Mr Gregory Goodman (Group Chief Executive Off cer)	17 January 1995
Mr David S Clarke, AO (Non-Executive Director)	26 October 2000
	(retired 2 July 2009)
Mr Patrick Goodman (Non-Executive Director)	23 February 2005
Ms Diane Grady, AM (Independent Director)	30 September 2007
Mr John Harkness (Independent Director)	1 September 2004
Mr James Hodgkinson (Non-Executive Director)	21 February 2003
Ms Anne Keating (Independent Director)	6 February 2004
Mr Jim Sloman, OAM (Independent Director)	1 February 2006
1. Mr Ian Ferrier assumed the role of Acting Chairman on 28 November 2008, when Mr David Clarke took leave of absence due to ill health. Mr Ian Ferrier was
conf rmed as Independent Chairman on 28 July 2009.
Details of the Directors’ qualif cations, experience and special responsibilities are set out on pages 156 and 157 in this Directors’ report
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 October 2006

Details of the Directors’ qualifi cations, experience and special responsibilities are set out on pages 156 and 157 in this Directors’ report.

Details of the Company Secretary’s qualifi cations and experience are set out on page 157 in this Directors’ report.

Goodman Group Annual Report 2009

151

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:

					Remuneration	Remuneration	Risk and
				Audit	and Nomination		Compliance		Investment
	Board		Committee		Committee		Committee		Committee
	meetings		meetings		meetings		meetings		meetings
Director	Held1 Attended		Held1 Attended		Held1 Attended		Held1 Attended		Held1 Attended
Mr Ian Ferrier	27	27	6	6	5	5	–	–	2	2
Mr Gregory Goodman	27	26	–	–	–	–	–	–	2	2
Mr David Clarke2	5	5	–	–	3	3	–	–	–	–
Mr Patrick Goodman	27	25	–	–	–	–	4	4	–	–
Ms Diane Grady	27	22	–	–	5	4	–	–	–	–
Mr John Harkness	27	27	6	6	–	–	4	4	–	–
Mr James Hodgkinson	27	25	6	6	–	–	–	–	–	–
Ms Anne Keating	27	27	–	–	5	5	–	–	–	–
Mr Jim Sloman	27	27	–	–	–	–	4	4	2	2

Refl ects the number of meetings individuals were entitled to attend. The Directors make themselves available as required but a number of the above meetings were unscheduled with the result that Directors may not have been able to attend the meeting.
Mr David Clarke was on leave of absence from 28 November 2008 due to ill health and retired as a Director on 2 July 2009.

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 signifi cant 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 9.65 cents per unit (2008: 34.0 cents per unit). The total distribution declared by a controlled entity, Goodman PLUS Trust, to holders of its hybrid securities was $24.5 million (2008: $15.6 million). Further details of distributions paid or declared during the year are set out in note 4 to the fi nancial statements.

152

Review of operations

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

	Consolidated
	2009 $M 2008 $M
Gross property income (Loss)/prof t attributable to Unitholders	238.6 293.0 (1,005.0) 221.8

Value of assets

Value of assets
	Consolidated
	2009 $M 2008 $M
Carrying value of assets	8,548.7 9,200.1

The basis for valuation of assets is disclosed in note 1 and note 2 to the fi nancial statements.

Issued capital

The movement in units on issue in GIT during the year is set out below:

	Consolidated
	2009 M 2008 M
Units on issue at the beginning of the year Units issued during the year	1,715.8 1,692.7 1,063.9 23.1
Units on issue at the end of the year	2,779.7 1,715.8

Goodman Group Annual Report 2009

153

Directors’ report (cont)

State of affairs

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

(a) Equity raising

On 28 November 2008, Goodman Limited and the entities it controlled (Goodman Group) completed a capital raising of approximately $956 million, comprising a $229.5 million institutional placement and a $726.5 million, 0.47 for one accelerated non-renounceable entitlement offer of Goodman Group stapled securities at an issue price of $0.90 per security. GIT’s share of the capital raised amounted to $904.1 million.

The proceeds of the capital raising have been used to strengthen the Consolidated Entity’s balance sheet by reducing debt and consolidating the operating platform.

(b) New fi nance facility

On 19 May 2009, Goodman Group signed an A$300 million secured fi nance facility with Macquarie Group Limited (Macquarie Group). The key terms of the facility are as follows:

- nine month term expiring on 20 February 2010, extendable for a further 15 months; and
- covenants comparable to those in Goodman Group’s existing common terms deed poll.

In conjunction with the facility, Macquarie Group were granted options over 414 million Goodman Group stapled securities at an exercise price of A$0.30 per security with a two year term. The issue of 294 million of these options is subject to Securityholder approval.

The proceeds from the facility and surplus liquidity were used by the Consolidated Entity to repay Tranche A of the Syndicated Multi-Currency Facility (SMCF).

On 16 June 2009, China Investment Corporation (CIC) became a party to the fi nance facility resulting in an increase in the facility limit by A$185 million to A$485 million. In conjunction, Goodman Group entered into an agreement to issue 255.3 million options with an exercise price of A$0.40 per security with the lenders to the facility to share the A$0.30 and A$0.40 exercise price per security options on a pro rata basis having regard to their commitments under the facility. The issue of the A$0.40 exercise price option is also subject to Securityholder approval.

(c) Other fi nance facilities

During the year, the Consolidated Entity repaid and retired the following facilities:

- A$460 million in Tranche A of the SMCF;
- A$100 million Australian dollar facility;
- A$200 million of the Australian dollar revolving credit facility;
- A$328.4 million of the UK pounds sterling revolving credit facility;
- A$47.3 million of the New Zealand dollar revolving credit facility; and
- A$8.3 million of a euro term facility.

(d) Goodman Australia Industrial Fund (GAIF)

On 24 December 2008, GAIF refi nanced $450 million of debt, the fi rst tranche of GAIF’s $1.6 billion bank syndication facility, with maturities in December 2011 and December 2012.

(e) Arlington Business Parks Partnership (ABPP)

(f) Goodman European Logistics Fund (GELF)

The Consolidated Entity participated in the fi rst and second closings of an equity offer by GELF during the year and committed to subscribe for the lower of A$451.3 million or such amount as represents 40% of the GELF units on issue. The commitment will be drawn down as and when required by the capital management plan of GELF and to date A$198.2 million has been drawn.

154

Strategy and outlook

The Consolidated Entity is committed to the execution of its long-term strategy of owning, developing and managing industrial property and business space.

In light of the current environment, the Consolidated Entity is focused on its core business and maintaining core earnings. This has been supported by initiatives to maintain a strong fi nancial position and lower gearing through the disposal of assets and repayment of debt.

Environmental regulations

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 fi nancial report.

Indemnifi cation and insurance of offi cers and auditors

The Responsible Entity has insured current and former Directors and offi cers 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.

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 22 to the fi nancial statements.

The relevant interest of each Director in Goodman Group stapled securities 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 fi nancial report is as follows:

	Direct	Indirect
	securities	securities	Total
Non-Executive
Mr Ian Ferrier	215,436	–	215,436
Mr David Clarke	173,250	130,895	304,145
Mr Patrick Goodman	–	76,794,926	76,794,926
Ms Diane Grady	–	104,100	104,100
Mr John Harkness	117,460	–	117,460
Mr James Hodgkinson	166,865	460,286	627,151
Ms Anne Keating	43,373	109,060	152,433
Mr Jim Sloman	198,206	–	198,206
Executive
Mr Gregory Goodman	5,955,992	70,838,934	76,794,926

None of the Non-Executive Directors held any options over unissued securities at 30 June 2009. Mr Gregory Goodman held 9,700,000 options over securities of Goodman Group (including units in GIT) at 30 June 2009 (2008: 2,700,000). Mr Patrick Goodman has an indirect interest in respect of those options.

None of the Directors holds any interests in the Goodman PLUS Trust hybrid securities which are listed on the ASX.

Goodman Group Annual Report 2009

155

Directors’ report

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

Board of Directors

Mr Ian Ferrier, AM – Independent Chairman Appointed 23 February 2005

Following David Clarke’s leave of absence commencing on 28 November 2008, Ian was Acting Chairman of Goodman Group. Ian is a Fellow of The Institute of Chartered Accountants in Australia and has 44 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), Acting Chairman of Australian Vintage Ltd (and a director since 20 November 1991) and a director of EnergyOne Limited (since 15 January 2007) and Reckon Limited (since 17 August 2004). He was formerly a director of Australian Oil Limited (2 May 2005 to 7 January 2009). 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 Gregory Goodman – Group Chief Executive Offi cer

Appointed 17 January 1995

Gregory is responsible for Goodman Group’s overall operations and the implementation of its strategic plan. He has 27 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, the manager of the New Zealand Exchange listed Goodman Property Trust, J-REP Co., Ltd and the management companies of Goodman Group’s unlisted funds and its subsidiaries.

Mr David S Clarke, AO – Non-Executive Director

Appointed 26 October 2000 Retired 2 July 2009

David commenced a leave of absence (due to illness) from Goodman Group on 28 November 2008 prior to resigning as a Director on 2 July 2009.

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 Group. 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 29 year career, he has had considerable public and private company experience both domestically and internationally.

Ms Diane Grady, AM – Independent Director

Appointed 30 September 2007

156

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

Mr John Harkness – Independent Director

Appointed 1 September 2004

Mr James Hodgkinson – Non-Executive Director

Appointed 21 February 2003

James is an executive director (non-voting) of Macquarie Group Limited within Real Estate, Macquarie Capital Advisors. 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 and Goodman (NZ) Limited, the manager of the NZX-listed Goodman Property Trust. With over 20 years of experience in property funds management, investment banking and chartered accounting, James has specialist real estate and funds management expertise inclusive of new product development and management. 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 6 February 2004

Mr Jim Sloman, OAM – Independent Director

Appointed 1 February 2006

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 fi rm Allens Arthur Robinson in 2006. Carl holds a Masters of Laws and Bachelor of Economics/Bachelor of Laws (Hons).

Goodman Group Annual Report 2009

157

Directors’ report

Options over Goodman Group stapled securities

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.

				Fair value
				per option	Exercise
		Number of		at grant	price per	Number of
		options	Grant	date	option1 Expiry	options
	Year	granted	date	$	$ date	vested
Executive Director
Mr Gregory Goodman	2009	7,000,000	17 Nov 08	0.04	3.07 30 Jun 13	–
	2008	2,700,000	26 Nov 07	0.77	6.33 30 Jun 13	–
1. As a consequence of the entitlement offer completed on 28 November 2008, the exercise prices of certain options issued to Mr Greg Goodman on
26 November 2007 has been reduced. The amounts disclosed in the table above ref ect the reduced exercise price.
No options have been granted since		the end of the f nancial year.
At the date of the f nancial report, unissued securities under option and the applicable earnings per security (EPS) or return on
quity (ROE) performance hurdles applicable to options issued to employees are:
				Exercise
				price1	Number of	Performance
Date granted		Expiry date		$	unissued options	hurdle2
3 November 2005		30 June 2011		4.06	3,153,445	11% ROE
9 December 2005	31 December 2011			4.26	11,250,000	11% ROE
14 June 2006	31 December 2011			5.21	2,120,000	12% ROE
13 October 2006	30 September 2012			6.32	7,522,500	12% ROE
10 April 2007	31 December 2012			7.20	19,850,000	12% ROE
22 June 2007	31 December 2012			7.10	6,310,000	12% ROE
19 October 2007		30 June 2013		6.33	32,167,500	12% ROE
26 November 2007		30 June 2013		6.33	2,700,000	12% ROE
5 September 2008		30 June 2013		3.04	43,325,000	12% ROE
5 September 2008		30 June 2013		3.07	3,900,000	12% ROE
17 November 2008		30 June 2013		3.07	7,000,000	12% ROE
19 May 20093		22 May 2011		0.30	414,000,000	–
15 June 20094		22 May 2011		0.40	255,300,000	–

No options have been granted since the end of the fi nancial year.

At the date of the fi nancial report, unissued securities under option and the applicable earnings per security (EPS) or return on equity (ROE) performance hurdles applicable to options issued to employees are:

As a consequence of the entitlement offer on 28 November 2008, the exercise prices of certain options on issue have been reduced. The amounts disclosed in the table above refl ect the reduced exercise price, where relevant. On successful completion of the one for one accelerated non-renounceable entitlement offer announced on 6 August 2009 the exercise prices will be further reduced in accordance with the Listing Rules by $0.0536.
Performance hurdles are based on the results of Goodman Group.
The grant of 294,000,000 options is conditional on approval by securityholders of Goodman Group.
The grant of all the options is conditional on approval by securityholders of Goodman Group.

158

Events subsequent to balance date

Prior to the issue of this report and during August 2009, Goodman Group undertook a fully underwritten equity raising to raise a total of $1.279 billion from the issue of approximately 3.2 billion stapled securities at $0.40 per security via an institutional placement and a one for one non-renounceable entitlement offering. As at the date of issuing the Directors’ report $959 million has been raised from the institutional entitlement offer, institutional placement and that portion of the retail entitlement offer that participated in the early settlement. A further $320 million is expected to be raised from the retail entitlement offer on 16 September 2009.

In addition to the ordinary equity raising, Goodman Group has agreed terms (subject to Securityholder approval, receipt of Foreign Investment Review Board approval, completion of the equity raising and fi nal documentation of Goodman Group’s bank debt facility amendments) for a further $500 million from the issue of three tranches of preferred equity to CIC. Each tranche will receive a coupon of 10% and can be converted to ordinary stapled securities as follows: tranche one of $225 million can be converted at a price of $0.43 per security from 31 October 2009; tranche two of $150 million can be converted at a price of $0.44 per security from 30 June 2010; and tranche three of $125 million can be converted at a price of $0.45 per security from 31 December 2010. Goodman Group may also elect to redeem the preferred equity if the closing price of Goodman Group’s stapled securities for 20 out of 30 consecutive trading days is in excess of 125% of the conversion price as follows: tranche one from 31 December 2010, tranche two from 31 December 2011 and tranche three from 30 June 2012. Along with the issue, CIC has announced its long-term strategic intentions for its investment in Goodman Group which include fund and property joint ventures.

In conjunction with the equity raising, the Consolidated Entity has received credit approval (subject to documentation and Goodman raising $1.2 billion of equity) to an extension and renegotiation of a signifi cant portion of the Consolidated Entity’s bank debt facilities and the bank debt facilities of investments in which the Consolidated Entity has signifi cant infl uence. These include:

- extension from 2011 to 2012 of A$438 million of the $520 million Tranche C of the SMCF and extension from 2012 to 2013 of 80% of the €525 million European revolving credit facility, along with amended covenants to the common terms deed poll, to which they are a party;
- extension of facilities and renegotiation of covenants for GAIF;
- renegotiation of the covenants for GELF; and
- renegotiation of covenants for ABPP.

During August 2009, Goodman Group also announced the creation of a new joint venture with Canada Pension Plan Investment Board (CPPIB) in China. The joint venture (of which Goodman Group holds 20% and CPPIB holds 80%) acquired in four stabilised assets with a book value at 30 June 2009 of A$157.3 million. The joint venture has established a platform for future funding of further opportunities in China. Goodman Group will receive fees for the services it provides to the joint venture.

On 19 August 2009, the Goodman Group announced the sale of 93 million units in Goodman Property Trust to a number of institutional investors at a price of NZ$0.95 per unit. The Consolidated Entity’s share of the sale amounted to 41.3 million units. The proceeds of approximately A$31.9 million will further strengthen the Consolidated Entity’s balance sheet and subsequent to the disposal the Consolidated Entity will own 17% of Goodman Property Trust. The disposal is in line with Goodman’s strategy of targeting a long-term holding of 15% to 20% for investments in funds managed by Goodman. The non recurring loss on disposal of this investment of approximately A$6.1 million will be refl ected in the income statement in the year ending 30 June 2010.

Goodman Group Annual Report 2009

159

Directors’ 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 161 and forms part of this Directors’ report for the year.

Rounding

The Consolidated Entity is an entity of a kind referred to in Australian Securities and Investments Commission Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in this Directors’ report and the fi nancial 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 Independent Chairman Sydney, 28 August 2009

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Gregory Goodman Group Chief Executive Offi cer

160

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 fi nancial year ended 30 June 2009, 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

John Teer Partner

Sydney, 28 August 2009

Goodman Group Annual Report 2009

161

Income statements

for the year ended 30 June 2009

		Consolidated	Consolidated	Parent Entity	Parent Entity
		2009	2008	2009	2008
	Note	$M	$M	$M	$M
Revenue and other income
Gross property income		238.6	293.0	–	–
Net loss from fair value adjustments on investment properties	8	(374.7)	(117.1)	–	–
Net gain on disposal of investment properties	3	9.1	58.4	–	–
Net gain on disposal of controlled entities	3	33.8	152.5	0.5	62.4
Net gain/(loss) on disposal of equity investments	3	10.9	12.1	(10.3)	0.3
Share of net results of equity accounted investments	3	(412.3)	(1.2)	–	–
Distributions from equity investments		16.0	20.8	72.4	5.0
Distributions from controlled entities		–	–	319.5	752.7
Other income		4.0	–	0.6	–
Total revenue and other income Property and other expenses Property expenses Trust expenses Management fee Impairment losses Other expenses Total property and other expenses Financing income/costs Financial income Financial expenses Net f nancing (costs)/income (Loss)/prof t before income tax Income tax expense (Loss)/prof t for the year (Loss)/prof t attributable to Unitholders Prof t attributable to minority interests (Loss)/prof t for the year	3 3 3	(474.6) (63.1) (3.7) (12.4) (389.7) (6.8) (475.7) 193.0 (218.2) (25.2) (975.5) (5.5) (981.0) (1,005.0) 24.0 (981.0)	418.5 (72.6) (2.9) (0.6) (108.2) (7.1) (191.4) 219.3 (208.4) 10.9 238.0 – 238.0 221.8 16.2 238.0	382.7 – – (12.4) (1,374.4) (3.8) (1,390.6) 120.5 (77.9) 42.6 (965.3) – (965.3) (965.3) – (965.3)	820.4 – (0.5) (0.6) (608.6) (10.3) (620.0) 63.5 (21.0) 42.5 242.9 – 242.9 242.9 – 242.9

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

162

Balance sheets

as at 30 June 2009

		Consolidated	Consolidated	Parent Entity	Parent Entity
		2009	2008	2009	2008
	Note	$M	$M	$M	$M
Current assets
Cash		216.7	628.7	56.6	613.0
Receivables	5	2,461.4	2,586.6	1,906.9	3,034.2
Assets classif ed as held for sale	6	182.9	31.3	–	22.8
Other assets	7	31.5	72.6	–	–
Total current assets Non-current assets Receivables Investment properties Investments accounted for using the equity method Other f nancial assets Total non-current assets Total assets Current liabilities Deferred income Payables Interest bearing liabilities Provision for distributions Liabilities classif ed as held for sale Total current liabilities Non-current liabilities Deferred income Payables Interest bearing liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Reserves (Accumulated losses)/retained earnings Total equity attributable to Unitholders Minority interests Total equity	5 8 9 10 11 12 4 6 11 12 13 14 15 16	2,892.5 430.1 2,870.7 2,327.4 28.0 5,656.2 8,548.7 8.1 216.5 975.4 – 10.1 1,210.1 1.8 186.6 3,254.2 3,442.6 4,652.7 3,896.0 5,229.1 (1,439.3) (212.6) 3,577.2 318.8 3,896.0	3,319.2 187.3 3,446.0 2,057.2 190.4 5,880.9 9,200.1 2.4 172.1 491.2 145.9 – 811.6 3.0 1.8 3,716.9 3,721.7 4,533.3 4,666.8 4,349.2 (2.4) (0.6) 4,346.2 320.6 4,666.8	1,963.5 268.1 – – 2,716.7 2,984.8 4,948.3 2.4 1,028.9 – – – 1,031.3 1.8 – – 1.8 1,033.1 3,915.2 5,229.1 (726.1) (587.8) 3,915.2 – 3,915.2	3,670.0 67.5 – – 2,975.2 3,042.7 6,712.7 2.4 2,240.7 – 145.9 – 2,389.0 3.0 – – 3.0 2,392.0 4,320.7 4,349.2 (284.8) 256.3 4,320.7 – 4,320.7

The balance sheets are to be read in conjunction with the accompanying notes.

Goodman Group Annual Report 2009

163

Statements of changes in equity

for the year ended 30 June 2009

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

Consolidated Parent entity
2009 2008 2009 2008
Note $M $M $M $M
Total equity at the beginning of the year 4,666.8 4,531.4 4,320.7 4,557.5
Movements in reserves 14
Cash fl ow hedges:
– Change in value of fi nancial instruments (282.2) 24.1 – –
– Transfers to income statement (16.4) (6.2) – –
Revaluation of investments 8.1 4.3 (51.9) (35.6)
Transfer to income statement on disposal of investments 2.8 – – –
Effect of foreign currency translation (88.0) 14.9 – –
Net (loss)/gain recognised directly in equity (375.7) 37.1 (51.9) (35.6)
(Loss)/profi t for the year
(Loss)/profi t attributable to Unitholders (1,005.0) 221.8 (965.3) 242.9
Profi t attributable to minority interests 24.0 16.2 – –
Total recognised income and expense (1,356.7) 275.1 (1,017.2) 207.3
Issued capital
Increase due to ordinary units issued to Unitholders 13 908.9 19.3 908.9 19.3
Increase due to Distribution Reinvestment Plan 13 – 118.9 – 118.9
Issue costs due to ordinary units 13 (29.0) – (29.0) –
Increase due to Goodman PLUS Trust hybrid securities issued 16 – 327.0 – –
Issue costs due to Goodman PLUS Trust hybrid securities 16 (1.8) (6.4) – –
Total issued capital 878.1 458.8 879.9 138.2
Distributions provided for or paid to Unitholders 4 (268.2) (582.3) (268.2) (582.3)
Distributions provided for or paid to holders
– –
of Goodman PLUS Trust hybrid securities (24.0) (16.2)
Total equity at the end of the year 3,896.0 4,666.8 3,915.2 4,320.7
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The statements of changes in equity are to be read in conjunction with the accompanying notes.

164

Cash fl ow statements for the yea r ended 30 June 2009

		Consolidated	Consolidated	Parent Entity	Parent Entity
		2009	2008	2009	2008
	Note	$M	$M	$M	$M
Cash f ows from operating activities
Property income received		261.5	322.1	–	–
Other income received		4.4	–	0.6	–
Property expenses paid		(70.3)	(40.4)	–	–
Other cash payments in the course of operations		(26.2)	(5.2)	(8.7)	(4.1)
Distributions received from controlled entities		–	–	–	752.7
Dividends/distributions received from other equity investments		135.4	87.7	72.4	–
Interest received		14.8	183.3	7.7	7.8
Interest and other f nance costs paid		(142.9)	(157.8)	–	(35.5)
Income taxes paid Net cash provided by operating activities 21(b) Cash f ows from investing activities Proceeds from deferred settlement and sale of investment properties Proceeds from sale of investment in controlled entities (net of cash disposed) 19 Cash included in assets held for sale 6 Proceeds from sale of equity investments Payments to acquire controlled entities (net of cash acquired) 18 Payments for equity investments Payments for investment properties and developments Loans (to)/from related parties Loans (to)/from controlled entities Net cash (used in)/provided by investing activities Cash f ows from f nancing activities Proceeds from issue of units to Unitholders Proceeds from issue of Goodman PLUS Trust hybrid securities Issue costs paid on issue of securities Proceeds from borrowings Repayment of borrowings Distributions paid to Unitholders Distributions paid to holders of Goodman Plus Trust hybrid securities		(3.3) 173.4 203.5 12.4 (21.3) 282.1 (10.5) (880.5) (318.9) (185.8) – (919.0) 904.1 – (30.8) 5,271.1 (5,372.2) (414.1) (24.5)	– 389.7 846.3 926.4 – 226.6 – (1,609.4) (1,042.1) (44.0) – (696.2) 19.3 327.0 (6.4) 7,064.0 (6,043.8) (450.8) (15.6)	– 72.0 – – – 15.3 – (190.2) – 124.7 (1,039.2) (1,089.4) 904.1 – (29.0) – – (414.1) –	– 720.9 – 510.0 – 60.0 (516.7) (879.1) – 803.2 937.1 914.5 19.3 – – 39.3 (638.5) (450.8) –
Net cash provided by/(used in) f nancing activities Net (decrease)/increase in cash held Cash at the beginning of the year Cash at the end of the year	21(a)	333.6 (412.0) 628.7 216.7	893.7 587.2 41.5 628.7	461.0 (556.4) 613.0 56.6	(1,030.7) 604.7 8.3 613.0

Non-cash fi nancing and investing activities are included in note 21(c).

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

Goodman Group Annual Report 2009

165

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

1. Statement of signifi cant accounting policies

Goodman Industrial Trust (GIT, Trust or Parent Entity) is established in Australia. The fi nancial report of GIT for the year ended 30 June 2009 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 Limited (GL) 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 GL were stapled to one another and are quoted as a single security on the Australian Securities Exchange (ASX). Both Goodman Funds Management Limited (Responsible Entity), the responsible entity for GIT, and GL must at all times act in the best interest of the stapled entity.

Statement of compliance

This fi nancial 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 fi nancial report also complies with IFRS.

The fi nancial report is presented in Australian dollars and was authorised for issue by the directors of Goodman Funds Management Limited (Directors) on 28 August 2009.

The signifi cant accounting policies which have been adopted in the preparation of the fi nancial report are set out below and have been applied consistently to all periods presented in the fi nancial report.

(a) Basis of preparation of the fi nancial report

The fi nancial 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; and
- fi nancial instruments classifi ed as available for sale.

(b) Principles of consolidation

Controlled entities

The consolidated fi nancial statements incorporate the assets and liabilities of all entities controlled by the Parent Entity as at 30 June 2009 and the results of all such entities for the year ended 30 June 2009. Control exists when the Parent Entity 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.

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 Trust 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.

Associates

Associates are those entities over which the Consolidated Entity exercises signifi cant infl uence but not control and which are not intended for sale in the near future. 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. Associates are accounted for at cost in the Parent Entity.

Joint venture entities (JVEs)

A JVE is an entity that is jointly controlled by the Consolidated Entity. In the consolidated fi nancial statements, investments in JVEs are accounted for using equity accounting principles. Investments in JVEs are carried at the lower of the equity accounted amount and recoverable amount.

The Consolidated Entity’s share of the JVE’s net profi t 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. JVEs are accounted for at cost in the Parent Entity.

166

1. Statement of signifi cant accounting policies (cont)

(b) Principles of consolidation (cont)

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 JVEs, 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 JVEs are eliminated against the carrying amount of the investment. Unrealised losses are eliminated in the same way as unrealised gains, unless they evidence a recoverable amount impairment.

(c) Revenue recognition

Rental income

Rental income 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 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 refl ected 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 refl ected in the balance sheet as a receivable.

(d) Foreign currency translation

Functional and presentation currency

Items included in the fi nancial 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 fi nancial 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.

Goodman Group Annual Report 2009

167

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

1. Statement of signifi cant accounting policies (cont)

(d) Foreign currency translation (cont)

Exchange rates used

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

	Weighted	average	As at 30 June	As at 30 June
	2009	2008	2009	2008
New Zealand dollar	1.2289	1.1668	1.2428	1.2678
Singapore dollar	1.0916	1.2855	1.1699	1.3093
Hong Kong dollar	5.8048	6.9822	6.2586	7.4812
United States dollar	0.7473	0.8961	0.8114	0.9592
Japanese yen	74.2058	98.6479	77.76	103.5800
European euro	0.5416	0.6100	0.5751	0.6117
British pounds sterling	0.4625	0.4475	0.4872	0.4860

(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 fi nancial 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 fi xed 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 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.

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 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 income statement. The net of unrealised revaluations from investment properties is transferred to the asset revaluation reserve.

168

1. Statement of signifi cant accounting policies (cont)

(e) Investment properties (cont)

Disposal of investment properties

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 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 fi nance 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 taxation 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 taxation authority is included as a current asset or liability in the balance sheet.

Cash fl ows are included in the cash fl ow statement on a gross basis. The GST components of cash fl ows arising from investing and fi nancing activities which are recoverable from, or payable to, the relevant taxation authority are classifi ed as operating cash fl ows.

(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 collectability 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 classifi ed 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 fi nance 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 fi nance costs are expensed as incurred.

Goodman Group Annual Report 2009

169

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

1. Statement of signifi cant accounting policies (cont)

(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

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, 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

(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 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 JVEs) 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 JVEs) 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 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.

170

1. Statement of signifi cant accounting policies (cont)

(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 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 the income statement even though the fi nancial asset has not been derecognised. 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 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 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.

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 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 the income statement, the impairment loss is reversed, with the amount of the reversal recognised in the income statement.

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.

(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 fi nancial 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.

Goodman Group Annual Report 2009

171

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

1. Statement of signifi cant accounting policies (cont)

(r) Australian accounting standards issued but not yet effective

- revised AASB 3 Business Combinations (2008) incorporates the following changes that are likely to be relevant to the Consolidated Entity’s operations;
the defi nition of a business has been broadened, which is likely to result in more acquisitions being treated as business combinations;
contingent consideration will be measured at fair value, with subsequent changes therein recognised in profi t or loss;
transaction costs, other than share and debt issue costs, will be expensed as incurred;
any pre-existing interest in the acquiree will be measured at fair value with the gain of loss recognised in profi t or loss; and
any non-controlling (minority) interest will be measured at either fair value, or at its proportionate interest in the identifi able assets and liabilities of the acquiree, on a transaction-by-transaction basis.
- revised AASB 3 will be applied prospectively and therefore there will be no impact on prior periods;
- amended AASB 127 Consolidated and Separate Financial Statements (2008) requires accounting for changes ownership interests by the Consolidated Entity in a controlled entity, while maintaining control, to be recognised as an equity transaction. When the Consolidated Entity loses control of a controlled entity, any interest retained in the former controlled entity will be measured at fair value with the gain or loss recognised in profi t or loss. The amendments to AASB 127 are not expected to have a signifi cant impact on the consolidated fi nancial statements;
- AASB 8 Operating Segments introduces the “management approach” to segment reporting. AASB 8 will require a change in the presentation on and disclosure of segment information based on the internal reports regularly reviewed by the Group’s Chief Executive Offi cer in order to assess each segment’s performance and to allocate resources to them. Currently the Consolidated Entity presents segment information in respect of its business and geographical segments (refer note 6.) The Consolidated Entity has not yet determined how the new requirement will be presented;
- revised AASB 101 Presentation of Financial Statements (2007) introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of comprehensive income (effectively combining both the income statement and all non-owner changes in equity in a single statement) or, in an income statement and a separate statement of comprehensive income. Revised AASB 101 is expected to have a signifi cant impact on the presentation of the consolidated fi nancial statements. The Consolidated Entity has not yet determined how the new requirement will be presented;
- AASB 2008-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Process and 2008-6 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Process affect various AASBs resulting in minor changes for presentation, disclosure and recognition, which will become mandatory for the Consolidated Entity’s fi nancial statements for the year ending 30 June 2010. However, the principal impact for the Consolidated Entity relates to the amendments to AASB 140 Investment Properties which brings into scope property under construction or development for future use as an investment property. As the Consolidated Entity adopts the fair value approach under AASB 140 this will require property under construction or development for future use as an investment property to be measured at fair value. The Consolidated Entity has not yet determined the potential impact of the amendment; and
- AI 16 Hedges of a Net Investment in a Foreign Operation clarifi es that net investment hedging can only be applied when the net assets of the foreign operation are recognised in the consolidated fi nancial statements. AI 16 will become mandatory for the Consolidated Entity’s 30 June 2010 fi nancial statements. The Consolidated Entity has not yet determined the potential effect of the interpretation.

(s) Rounding

In accordance with Australian Securities and Investments Commission Class Order 98/100, the amounts shown in this fi nancial report and the Directors’ report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

172

2. Critical accounting estimates used in the preparation of the fi nancial 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 defi nition, seldom equal the related actual results. 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:

Investment property values

Availability of comparable sales information at 30 June 2009

Investment property markets in most regions have been signifi cantly and adversely impacted by the changes in economic conditions during the course of the fi nancial year. The scarcity of fi nance resulted in a reduced number of transactions involving properties comparable to those owned or managed by GIT which very signifi cantly increased the level of uncertainty inherent in determining the fair value of individual properties. The diffi culties in determining fair value are exacerbated by an absence of consensus on how to distinguish sales where sellers are forced as opposed to willing. Whilst providing general information on markets, broad index-based valuation approaches may also be insuffi ciently specifi c to apply directly to calculations of fair value.

Approach to determination of fair value at 30 June 2009

- function of the asset (distribution/warehouse or suburban offi ce);
- location of asset (city, suburb or regional area);
- carrying value of asset (categorised by likely appeal to private investors (including syndicates), national and institutional investors); and
- categorisation as primary or secondary based on a combination of location, weighted average lease expiry, quality of tenant covenant (internal assessment based on available market evidence) and age of construction.

Goodman Group Annual Report 2009

173

Notes to the fi nancial statements for the year ended 30 June 2009

2. Critical accounting estimates used in the preparation of the fi nancial statements (cont)

Key assumptions for discounted cash fl ow (DCF) calculations

Internal valuations were prepared using a DCF methodology and referenced to cap rate information where reliable cap rate information was available. The DCF calculations were prepared over a 10 year period. The key inputs considered for each individual calculation were rental growth rates, discount rates, market rental rates and letting up incentives. Discount rates were computed using the 10 year bond rate or equivalent in each jurisdiction plus increments to refl ect country risk, tenant credit risk and industry risk. Where possible, the components of the discount rate were benchmarked to available market data. The ranges utilised for each division are set out below:

	Forecast average	Annual			Derived
	annual rental	discount	Letting up		weighted average
	growth (10 years)	rate	period	Incentives	cap rate
Division	%	%	months	%	%
Australia	2.8 – 3.2	9.0 – 9.75	3 – 6	8.0 – 10.0	8.0
New Zealand	1.3 – 2.5	9.5 – 10.8	4 – 12	8.0 – 12.0	8.7
Hong Kong	2.2 – 3.0	8.8 – 9.5	Nil – 3	Nil – 5.6	7.1
China	5.2	12.5	3	5.6	9.2
Japan	Nil	5.2	6 – 12	6.0 – 12.0	5.5
UK Business Parks	(1.9) – 0.7	6.9 – 9.8	1 – 33	5.0 – 25.0	7.9
UK Logistics	0.5 – 1.05	7.0 – 9.3	12	10.0 – 25.0	8.2
Continental Europe
(Logistics)	1.5 – 2.2	6.7 – 14.3	Nil – 6	Nil – 13.0	7.7

The table below shows the sensitivity of those investment properties which have been internally valued at 30 June 2009 to a 25 basis point increase in the discount rate. All other assumptions are property specifi c and it is impractical to show sensitivities.

		GIT share of decrease in
	Decrease in investment property	investment property values
	values (GIT properties)	(properties held by managed funds)
Division	$M	$M
Australia	(40.7)	(25.3)
UK Business Parks	–	(15.5)
UK Logistics	(8.2)	–
Continental Europe (Logistics)	(0.9)	(9.7)

As at 30 June 2009, the carrying value of completed investment properties held by the Consolidated Entity is $2,332.1 million (2008: $2,790.6 million). Consistent assumptions were also utilised in feasibility models supporting development properties.

174

3. (Loss)/profi t before income tax

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

Consolidated Parent entity
2009 2008 2009 2008
$M $M $M $M
(Loss)/profi t before income tax for the year has been arrived
at after crediting/(charging) the following items:
Net proceeds from the sale of investment properties 197.8 867.4 – –
– –
Carrying value of investment properties sold (188.7) (809.0)
Net gain on disposal of investment properties 9.1 58.4 – –
Net consideration received and receivable from the sale of controlled entities 186.0 960.5 – 510.0
Net assets disposed (152.2) (808.0) 0.5 (447.6)
Net gain on disposal of controlled entities 33.8 152.5 0.5 62.4
Net proceeds from the sale of equity investments 286.5 98.4 15.3 60.0
Carrying value of equity investments sold (275.6) (86.3) (25.6) (59.7)
Net gain/(loss) on disposal of equity investments 10.9 12.1 (10.3) 0.3
– –
Share of net results of investments in associates (refer to note 9a) (415.1) (9.5)
Share of net results of investments in JVEs (refer to note 9b) 2.8 8.3 – –
– –
Share of net results of equity accounted investments (412.3) (1.2)
– – –
Loss on loans to controlled entities forgiven (102.5)
– –
Impairment of equity investments (228.0) (506.1)
– – –
Impairment of assets classifi ed as held for sale (8.7)
– – –
Impairment of loans to controlled entities (969.8)
– –
Impairment of loans to related parties (217.6) (15.2)
– – –
Impairment of equity accounted investments (2.0)
–
Impairment of other fi nancial asset [1] (161.4) (108.2) (161.4)
Total impairment losses (389.7) (108.2) (1,374.4) (608.6)
Financial income
Interest income from:
– Related parties 187.4 176.7 77.5 3.7
– Controlled entities – – 23.5 51.6
– Other parties 5.6 6.7 7.7 4.1
Fair value adjustments on derivative instruments [2] – 35.9 11.8 –
Foreign exchange gain – – – 4.1
193.0 219.3 120.5 63.5
Financial expenses
Interest expense on loans, overdrafts and derivatives (186.1) (228.8) (0.1) (21.0)
Interest expense to:
– Controlled entities – – (60.9) –
– – –
Fair value adjustments on derivative instruments [2] (61.0)
– –
Foreign exchange loss [3] (26.7) (16.9)
Capitalised borrowing costs [4] 28.9 47.1 – –
(218.2) (208.4) (77.9) (21.0)
Net fi nancing (costs)/income (25.2) 10.9 42.6 42.5
----- End of picture text -----

An impairment loss of $161.4 million (2008: $108.2 million) was recognised on the investment in ING Industrial Fund.
Includes fair value losses on the ineffective portion of derivatives and gains on terminated derivative contracts included in the cash fl ow hedge reserve. The gains on terminated derivative contracts included in the cash fl ow hedge reserve are recognised in the income statement when the underlying hedged transaction is recognised.
Foreign exchange loss of $26.7 million has been reclassifi ed in the comparative period from fi nancial income to fi nancial expenses.
Borrowing costs were capitalised to investment properties under development at weighted average rates between 1.4% and 10.8% per annum (2008: 3.2% and 8.6% per annum).

Goodman Group Annual Report 2009

175

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

4. Distributions

(a) Ordinary units

(a) Ordinary units
		Total
	Distribution	amount	Date of
	cpu	$M	payment
Distributions for the half years ended:
– 31 Dec 08	9.65	268.2	26 Feb 09
– 30 Jun 09	–	–	–
Distributions for the comparative quarters ended: – 30 Sep 07 – 31 Dec 07 – 31 Mar 08 – 30 Jun 08	9.65 8.5 8.5 8.5 8.5 34.0	268.2 144.8 145.8 145.8 145.9 582.3	8 Nov 07 14 Feb 08 8 May 08 26 Aug 08

The distribution for the quarter ended 30 June 2007 of $133.3 million was paid on 23 August 2007.

Movement in provision for distributions to Unitholders

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Balance at the beginning of the year	145.9	133.3	145.9	133.3
Provisions for distributions	268.2	582.3	268.2	582.3
Payment of distributions	(414.1)	(569.7)	(414.1)	(569.7)
Balance at the end of the year	–	145.9	–	145.9

(b) Hybrid Securities

		Total
	Distribution	amount	Date of
	cpu	$M	payment
Distributions for the quarters ended:
– 21 Sep 08	242.5	7.9	22 Sep 08
– 21 Dec 08	233.7	7.6	22 Dec 08
– 21 Mar 09	150.6	4.9	23 Mar 09
– 21 Jun 09	124.6	4.1	22 Jun 09
Distributions for the comparative quarters ended: – 21 Mar 08 – 21 Jun 08	751.4 240.0 238.2 478.2	24.5 7.8 7.8 15.6	25 Mar 08 23 Jun 08

176

5. Receivables

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Current
Trade receivables	10.1	13.3	0.4	–
Other receivables	84.2	91.3	1.0	31.4
Loans to related parties	2,364.4	2,360.3	949.6	1,192.0
Loans to controlled entities	–	–	955.9	1,810.8
Derivative f nancial instruments	2.7	121.7	–	–
Non-current Loans to related parties Derivative f nancial instruments	2,461.4 401.9 28.2 430.1	2,586.6 187.3 – 187.3	1,906.9 256.3 11.8 268.1	3,034.2 67.5 – 67.5

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

Amounts in A$M	NZD	HKD	USD	GBP	EUR	JPY
2009	33.6	175.0	11.5	1,105.0	1,159.2	226.8
2008	103.2	116.7	5.3	833.8	1,368.8	174.7

Trade receivables

Trade receivables that are past due are not considered impaired. At 30 June 2009, no signifi cant overdue trade receivables (2008: nil) were impaired. The ageing analysis of these trade receivables is as follows:

	Consolidated
	2009 $M 2008 $M
Overdue by: Up to one month One to four months Greater than four months	1.7 1.8 1.2 4.7 1.0 3.6
	3.9 10.1

The Consolidated Entity holds bank guarantees as security for $3.4 million (2008: $8.0 million) of its trade receivables from investment property customers.

Loans to related parties

The Consolidated Entity’s loans to related parties principally relate to amounts owed by fellow controlled entities of GL and advances to associates and JVEs. The effective interest rates on loans to related parties are 1.6% to 10.6% per annum (2008: 3.1% to 11.6% per annum). An impairment loss of $217.6 million was recognised on loans to controlled entities in the current year (2008: $nil). Further details of loans to related parties are set out in note 22.

Goodman Group Annual Report 2009

177

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

Loans to controlled entities

The effective interest rates on loans to controlled entities at 30 June 2009 are 4.5% to 5.7% per annum (2008: 3.1% to 8.6% per annum). An impairment loss of $969.8 million was recognised on loans to controlled entities in the current year (2008: $nil). Further details of loans to controlled entities are set out in note 22.

6. Assets/liabilities classifi ed as held for sale

6. Assets/liabilities classif ed as held for sale
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Assets classif ed as held for sale
Cash	21.3	–	–	–
Investment properties	157.3	–	–	–
Investment in associates	–	22.8	–	22.8
Other f nancial assets	–	8.5	–	–
Other assets	4.3	–	–	–
Liabilities classif ed as held for sale Other liabilities	182.9 (10.1) (10.1)	31.3 – –	– – –	22.8 – –

At 30 June 2009, the Consolidated Entity was at an advanced stage of negotiations to sell an entity incorporated in the Cayman Islands that holds four investment properties in China. This transaction was completed subsequent to the year end (refer to note 25). Accordingly, at 30 June 2009, the assets and liabilities of the entity have been presented as held for sale and recorded at the lower of cost or net realisable value. There have been no impairment losses on these assets.

As part of the completion of the sale of Goodman Property Investors Limited in May 2008 by the Consolidated Entity, it was agreed that certain of the Consolidated Entity’s other investments would be sold by 28 February 2009. Accordingly, these investments were presented as held for sale at 30 June 2008, and were recorded at the lower of their carrying amount and fair value less costs to sell. During the period prior to disposal, impairment losses of $8.7 million were recorded.

At 30 June 2008, the investment in associate related to the Consolidated Entity’s investment in the listed securities of UK Active Property Fund plc (UK Active Fund). The market value of this investment at 30 June 2008 using the quoted price on the last day of trading was $23.7million.

7. Other assets

7. Other assets
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Prepayments	6.5	5.8	–	–
Other	25.0	66.8	–	–
	31.5	72.6	–	–

178

8. Investment properties

8. Investment properties
	Completed				Investment
	investment		Redevelopment		properties under		Total investment
	properties		projects		development		properties
	2009	2008	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M	$M	$M
Carrying amount at the beginning of the year	2,790.6	3,728.7	132.6	67.8	522.8	735.1	3,446.0	4,531.6
Cost of acquisition:
– On acquisition of controlled entities	23.9	–	–	–	–	–	23.9	–
– Other acquisitions	34.8	29.0	–	–	67.5	61.8	102.3	90.8
Transfers in from other assets	–	–	–	–	37.7		37.7	–
Capital expenditure	38.2	302.8	15.5	36.4	109.0	547.6	162.7	886.8
Transfers in/(out)	181.2	567.2	(10.6)	66.2	(170.6)	(633.4)	–	–
Disposals:
– Carrying value of properties sold	(147.3)	(766.2)	–	(31.4)	(41.4)	(11.4)	(188.7)	(809.0)
– On disposal of interests in controlled entities	(120.8)	(934.2)	–	–	(90.1)	(93.6)	(210.9)	(1,027.8)
– Transfers to assets held for sale	(157.3)	–	–	–	–	–	(157.3)	–
Changes in fair value	(334.9)	(62.4)	(3.0)	(6.4)	(36.8)	(48.3)	(374.7)	(117.1)
Effect of foreign currency translation	23.7	(74.3)	–	–	6.0	(35.0)	29.7	(109.3)
Carrying amount at the end of the year	2,332.1	2,790.6	134.5	132.6	404.1	522.8	2,870.7	3,446.0

Investment prope rties with carrying value of $1,289.6 million (2008: $157.0 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.

9. Investments accounted for using the equity method

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Share of net assets of entities accounted for using the equity method:
Associates (a)	2,250.9	2,018.0	–	–
JVEs (b)	76.5	39.2	–	–
	2,327.4	2,057.2	–	–

Goodman Group Annual Report 2009

179

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

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

(a) Investments in associates

(a) Investments in associates
		Country of		Share of		Consolidated		Consolidated
		incorporation/		associate’s result		ownership		investment
		establishment		recognised		interest carrying amount
				2009 2008		2009	2008	2009	2008
				$M	$M	%	%	$M	$M
Property investment associates
Goodman Australia Industrial Fund	(GAIF)	Australia		(156.8)	76.9	45.4	44.1 1,122.9		1,206.5
Goodman Property Trust (GMT)		New	Zealand	(13.6)	19.5	21.9	22.2	170.7	199.2
Highbrook Development Limited (HDL)		New	Zealand	–	0.6	–	–	–	–
Goodman Hong Kong Logistics Fund (GHKLF) Cayman Islands				15.7	24.8	24.2	20.0	244.2	147.7
Goodman European Logistics Fund	(GELF)	Luxembourg		(72.2)	9.6	32.9	22.0	409.4	283.8
Arlington Business Parks Partnership (ABPP) UK				(188.2) (126.8)		28.9	16.0	303.7	180.8
UK Active Fund		Republic of Ireland		– (415.1)	(14.1) (9.5)	–	– – 2,250.9		– 2,018.0
								Net assets
				Result			Total	as reported
			Revenue1	after tax1	Total assets		liabilities	by associate
	Year ended		(100%)	(100%)		(100%)	(100%)		(100%)
Name	30	June	$M	$M		$M	$M		$M
GAIF		2009	404.6	(336.4)		4,637.8	2,165.1		2,472.7
		2008	373.4	232.2		4,977.1	1,996.4		2,980.7
GMT		2009	106.8	(63.2)		1,256.9	530.7		726.2
		2008	108.2	85.1		1,262.2	405.8		856.4
HDL		2009	–	–		–	–		–
		2008	0.3	1.6		–	–		–
GHKLF		2009	121.4	71.2		1,703.4	729.3		974.1
		2008	79.2	124.0		1,240.8	503.3		737.5
GELF		2009	183.9	(229.5)		2,633.3	1,471.6		1,161.7
		2008	52.5	43.6		2,571.5	1,274.2		1,297.3
ABPP		2009	200.9	(517.2)		3,147.6	2,004.0		1,143.6
		2008	180.6	(791.9)		3,124.1	1,992.2		1,131.9
UK Active Fund		2009	–	–		–	–		–
		2008	20.8	(56.3)		240.7	141.9		98.8

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

180

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

(a) Investments in associates (cont) Movements in carrying amount of investments in associates

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Carrying amount at the beginning of the year	2,018.0	864.3	–	–
Acquisition of investments	1,039.0	1,319.8	–	–
Share of net results after tax	(415.1)	(9.5)	–	–
Share of increment on revaluation of investments	–	3.3	–	–
Share of movement in reserves	(121.0)	–
Distributions received/receivable	(122.0)	(60.3)	–	–
Transfer from other f nancial assets	–	86.3	–	–
Transfer to JVEs	–	(21.6)	–	–
Transfer to assets classif ed as held for sale	–	(22.8)	–	–
Disposals of investments during the year	(180.3)	(76.7)	–	–
Effect of foreign currency translation	32.3	(64.8)	–	–
Carrying amount at the end of the year	2,250.9	2,018.0	–	–

(b) Investments in JVEs

	Country of	Share of	Share of	Consolidated	Consolidated	Investment	Investment
	establishment/	JVE’s result		ownership		carrying
	incorporation	recognised		interest		amount
		2009	2008	2009	2008	2009	2008
		$M	$M	%	%	$M	$M
Property investment JVEs
HDL	New Zealand	2.1	5.0	25.0	25.0	36.9	24.4
MGJ Cayman 1 Limited	Cayman Islands	(0.8)	3.3	50.0	50.0	14.1	12.7
413 King William Street Trust	Australia	–	–	50.0	–	0.5	–
Property development JVEs
GGGAIF Huntingwood East	Australia	–	–	50.0	–	–	–
GGGAIF Huntingwood West	Australia	–	–	50.0	–	–	–
Goodman Seaview Ltd	Cayman Islands	–	–	50.0	50.0	5.5	2.1
Goodman Interlink Ltd	Cayman Islands	–	–	50.0	50.0	12.7	–
Goodman Herten Logistics (Lux) Sàrl	Luxembourg	1.5	–	50.0	100.0	1.4	–
Goodman Lazulite Logistics (Lux) Sàrl	Luxembourg	0.4	–	50.0	100.0	0.4	–
Ullo One 2008 Kft	Hungary	(0.4)	–	50.0	–	4.5	–
Agate Ingatlanforgalmazo Kft	Hungary	–	–	50.0	–	–	–
WMP NV	Belgium	–	–	50.0	–	0.5	–
		2.8	8.3			76.5	39.2

Goodman Group Annual Report 2009

181

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

9. Investments acc ounted for using the equity method (cont)

(b) Investments in JVEs (cont)

			Result after			Net assets as
		Revenue1	tax1	Total assets	Total liabilities	reported by
	Year ended	(100%)	(100%)	(100%)	(100%)	JVE (100%)
Name	30 June	$M	$M	$M	$M	$M
HDL	2009	11.4	7.9	259.4	150.8	108.6
	2008	17.6	16.8	154.3	96.2	58.1
MGJ Cayman 1 Limited	2009	12.7	(1.8)	43.9	12.8	31.1
	2008	3.0	7.4	45.0	18.2	26.8
413 King William Street Trust	2009	–	–	5.0	–	5.0
	2008	–	–	–	–	–
GGGAIF Huntingwood East	2009	–	–	15.9	15.9	–
	2008	–	–	–	–	–
GGGAIF Huntingwood West	2009	–	–	21.4	21.4	–
	2008	–	–	–	–	–
Goodman Seaview Ltd	2009	–	–	121.4	121.4	–
	2008	0.2	–	94.3	94.5	(0.2)
Goodman Interlink Ltd	2009	–	–	141.8	141.8	–
	2008	–	–	103.6	103.9	(0.3)
Goodman Herten Logistics
(Lux) Sàrl	2009	–	3.0	12.0	9.1	2.9
	2008	–	–	–	–	–
Goodman Lazulite Logistics
(Lux) Sàrl	2009	–	0.8	7.1	6.3	0.8
	2008	–	–	–	–	–
Ullo One 2008 Kft	2009	–	(0.8)	14.5	5.4	9.1
	2008	–	–	–	–	–
Agate Ingatlanforgalmazo Kft	2009	–	–	7.9	7.9	–
	2008	–	–	–	–	–
WMP NV	2009	–	–	17.3	16.3	1.0
	2008	–	–	–	–	–

Amounts presented above for revenue, and result 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.

182

9. Investments acc ounted for using the equity method (cont)

(b) Investments in JVEs (cont)

Movements in carrying amount of investments in JVE’s

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Carrying amount at the beginning of the year	39.2	–	–	–
Acquisition of investments	104.2	21.1	–	–
Share of net results after tax	2.8	8.3	–	–
Share of movement in reserves	(1.7)	–	–	–
Impairment1	(2.0)	–	–	–
Distributions received/receivable	(2.0)	–	–	–
Transfer from associates	–	21.6	–	–
Return of investment capital	–	(9.0)	–	–
Disposals of investments	(67.3)	–	–	–
Effect of foreign currency translation Carrying amount at the end of the year	3.3 76.5	(2.8) 39.2	– –	– –

Relates to investment in 413 King William Street Trust.

10. Other fi nancial assets

10. Other f nancial assets
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Investments in controlled entities, at fair value	–	–	1,566.1	1,690.9
Investments in listed securities, at fair value1	27.7	177.2	27.7	177.2
Investments in unlisted securities2	0.3	13.2	1,122.9	1,107.1
	28.0	190.4	2,716.7	2,975.2

Investment in listed securities relates to ING Industrial Fund, which is valued using the quoted price on the last day of trading in the year.
Investments in associates and JVEs are accounted for at cost by the Parent Entity. All other investments are accounted for at fair value.

Goodman Group Annual Report 2009

183

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

10. Other fi nancial assets (cont)

10. Other f nancial assets (cont)
Signif cant controlled companies Country of incorporation	Interest held
	2009 % 2008 %
Blackberry Logistics nv Belgium Red Pine Logistics nv Belgium Willebroek Platform Project nv Belgium MGI HK Finance Cayman Islands Goodman Developments Asia Cayman Islands Goodman China Investments Cayman Islands Goodman Management Consulting (Shanghai) Co. Ltd. China Goodman MKR (Shanghai) Warehouse Co. Ltd. China Jia Meng (Shanghai) Warehouse Co. Ltd. China LPR Czech sro Czech Republic MNB Czech sro Czech Republic Goodman Nantes Logistics (France) Sàrl France Goodman Oracle Logistics (France) Sàrl France Goodman Properties (Germany) GmbH Germany Ludwigstrasse Beteiligungsgesellschaft mbH Germany Ludwigstrasse-Ost Projektentwicklungs GmbH & Co KG Germany Ludwigstrasse-West Projektentwicklungs GmbH & Co KG Germany Rebstockpark Beteiligungsgesellschaft mbH Germany Rebstockpark Eins GmbH & Co KG Germany ABPP Investment Jersey Limited Jersey Goodman Brackmills (Jersey) Limited Jersey Goodman Burton (Jersey) Limited Jersey Goodman Citadel (Jersey) Limited Jersey Goodman Coventry (Jersey) Limited Jersey Goodman Daventry (Jersey) Limited Jersey Goodman Ellesmere Port (Jersey) Limited Jersey Goodman Finance (Jersey) Limited Jersey Goodman Gloucester (Jersey) Limited Jersey Goodman Harthills (Jersey) Limited Jersey Goodman Holdings (Jersey) Limited Jersey Goodman Leicester (Jersey) Limited Jersey Goodman Logistics (Jersey) Limited Jersey Goodman Maltby (Jersey) Limited Jersey	100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

184

10. Other fi nancial assets (cont)

10. Other f nancial assets (cont)
Signif cant controlled companies Country of incorporation	Interest held
	2009 % 2008 %
Goodman Oceanview Logistics (Jersey) Limited Jersey Goodman Property Holdings (Jersey) Limited Jersey Goodman Regent Residential (Jersey) Limited Jersey Goodman South Normanton (Jersey) Limited Jersey Goodman Thurrock (Jersey) Limited Jersey Goodman West Thurrock (Jersey) Limited Jersey Goodman APP 1&2 (Lux) Sàrl Luxembourg Goodman APP 3 (Lux) Sàrl Luxembourg Goodman APP 4,5, & CdV (Lux) Sàrl Luxembourg Goodman APP Holdings (Lux) Sàrl Luxembourg Goodman Aventurine Logistics (Lux) Sàrl Luxembourg Goodman Bad Hersfeld Logistics (Lux) Sàrl Luxembourg Goodman Business Parks (Lux) Sàrl Luxembourg Goodman Feldspar Logistics (Lux) Sàrl Luxembourg Goodman Finance (Lux) Sàrl Luxembourg Goodman Heliotrope Logistics (Lux) Sàrl Luxembourg Goodman Hematite Logistics (Lux) Sàrl Luxembourg Goodman Jasper Logistics (Lux) Sàrl Luxembourg Goodman Leucite Logistics (Lux) Sàrl Luxembourg Goodman Magnetite Logistics (Lux) Sàrl Luxembourg Goodman Malachite Logistics (Lux) Sàrl Luxembourg Goodman Marcasite Logistics (Lux) Sàrl Luxembourg Goodman Option (Lux) Sàrl Luxembourg Goodman Property Opportunities (Lux) Sàrl, SICAR Luxembourg Goodman Serpentine Logistics (Lux) Sàrl Luxembourg Goodman Turquoise Logistics (Lux) Sàrl Luxembourg Rowan Logistics Sàrl Luxembourg Goodman Finance NZ Limited New Zealand Goodman Funding Singapore Pte Limited Singapore Goodman Westpoort Logistics (Netherlands) B.V. The Netherlands Aquamarine Gayrimenkul Ticareti Anonim Sirketi Turkey Junehurst Limited United Kingdom	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 2009

185

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

10. Other fi nancial assets (cont)

10. Other f nancial assets (cont)
Signif cant controlled unit trusts Country of establishment	Interest held
	2009 % 2008 %
BDE Unit Trust Australia Biloela Street Unit Trust Australia Binary No. 2 Trust Australia Cambridge Off ce Park Trust Australia Carter Street Trust Australia CC Trust Australia Clayton 3 Trust Australia Edinburgh Trust Australia Euston Road Subtrust Australia Goodman Capital Trust Australia Goodman Dandenong Trust Australia Goodman Europe Development Trust Australia Goodman Finance Australia Trust Australia Goodman Hong Kong Investment Trust Australia Goodman Industrial Trust Australia Goodman Japan Investment Trust Australia Goodman JV Holding Trust Australia Goodman Palmers Trust Australia Goodman Perth Airport No. 1 Trust Australia Goodman Perth Airport No. 2 Trust Australia Goodman Perth Airport No. 3 Trust Australia Goodman Perth Airport No. 4 Trust Australia Goodman Treasury Trust Australia Highbrook Trust Australia Hill Road Trust Australia Homebush Subtrust Australia IBC Trust Australia MGA Industrial Portfolio Trust Australia MIP 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 Saunders Street Trust Australia West Melbourne Trust Australia Waterloo Road Off ce 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

186

11. Payables

11. Payables
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Current
Trade payables	8.9	3.2	–	–
Rental income received in advance	3.0	3.9	–	–
Loans from related parties1	90.3	9.3	5.2	–
Loans from controlled entities1	–	–	1,022.3	2,219.7
Derivative f nancial instruments	13.7	–	–	–
Other payables and accruals	100.6	155.7	1.4	21.0
Non-current Derivative f nancial instruments Other payables	216.5 186.6 – 186.6	172.1 – 1.8 1.8	1,028.9 – – –	2,240.7 – – –

Details of loans from related parties and loans from controlled entities are set out in note 22.

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

Amounts in A$M	NZD	HKD	USD	SGD	GBP	EUR	JPY
2009	20.1	24.9	10.4	–	145.1	76.5	18.5
2008	3.9	4.1	14.2	–	33.2	42.9	2.9

12. Interest bearing liabilities

12. Interest bearing liabilities
		Consolidated		Parent Entity
		2009	2008	2009	2008
	Note	$M	$M	$M	$M
Current
Bank loans, unsecured	12(a)	584.4	491.2	–	–
Bank loan, secured	12(b)	391.0	–	–	–
Non-current Bank loans, unsecured Bank loan, secured Euro medium term notes, unsecured Foreign private placement, unsecured	12(a) 12(b) 12(c) 12(d)	975.4 2,694.2 – 513.1 46.9 3,254.2	491.2 3,073.0 129.5 514.4 – 3,716.9	– – – – – –	– – – – – –

Goodman Group Annual Report 2009

187

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

12. Interest bearing liabilities (cont)

(a) Bank loans – unsecured 2009

(a) Bank loans – unsecured 2009
				Amounts drawn down in			A$M equivalents
Facility		AUD	SGD	NZD	HKD	USD	GBP	EUR	JPY	Total
Syndicated multi-currency facility (SMCF)1	2009	1,017.2	–	–	–	270.2	3.3	40.9	44.8	1,376.4
	2008	117.0	–	–	100.6	143.8	784.1	289.6	54.8	1,489.9
Bank loan2	2009	–	–	–	–	–	328.4	–	–	328.4
	2008	–	–	–	–	–	561.4	–	–	561.4
Bank loan3	2009	448.2	–	–	–	–	–	109.3	–	557.5
	2008	–	–	96.9	–	–	287.5	349.9	–	734.3
Bank loan4	2009	–	–	–	–	–	–	–	101.1	101.1
	2008	–	–	–	–	–	–	–	84.6	84.6
Bank loan5	2009	–	–	–	–	–	–	–	–	–
	2008	–	–	47.3	–	–	–	–	–	47.3
Bank loan6	2009	–	–	–	–	–	306.1	623.6	–	929.7
	2008	–	–	–	–	–	524.8	136.3	–	661.1
Total bank loans Less: unamortised borrowing costs Total unsecured bank loans	2009 2008 2009 2008 2009 2008	1,465.4 117.0	– –	– 144.2	– 100.6	270.2 143.8	637.8 2,157.8	773.8 775.8	145.9 139.4	3,293.1 3,578.6 (14.5) (14.4) 3,278.6 3,564.2

The SMCF comprises three revolving tranches: a A$520 million tranche maturing on 24 May 2010 (drawn to A$483.4 million at 30 June 2009), a A$520 million tranche maturing on 24 May 2011 (drawn to A$500.6 million at 30 June 2009) and a A$400 million tranche maturing on 24 May 2012 (drawn to A$392.4 million at 30 June 2009).
A controlled entity has a bank loan of A$328.4 million denominated in British pounds sterling. The facility expires on 7 April 2013.
Controlled entities have bank loans of A$557.5 million denominated in Australian dollars (A$448.2 million) and euros (A$109.3 million). The facility expires on 8 February 2012.
A controlled entity has a bank loan of A$101.1 million denominated in Japanese yen. The facility expires on 31 December 2009.
As at 30 June 2008, a controlled entity had a bank loan of A$47.3 million denominated in New Zealand dollars. The facility was repaid in full during December 2008.
Controlled entities have bank loans of A$929.7 million denominated in British pounds sterling (A$306.1 million) and euros (A$623.6 million). The facility expires on 5 December 2012.

188

12. Interest bearing liabilities (cont)

(b) Bank loans – secured

				Amounts	drawn down in A$M	drawn down in A$M	equivalents	equivalents
Facility		AUD	SGD	NZD	HKD	USD	GBP	EUR	Total
Bank loan1	2009	–	–	–	–	–	106.2	–	106.2
	2008	–	–	–	–	–	129.5	–	129.5
Bank loan2	2009	300.0	–	–	–	–	–	–	300.0
	2008	–	–	–	–	–	–	–	–
Total bank loans Less: unamortised borrowing costs Total secured bank loans	2009 2008 2009 2008 2009 2008	300.0 –	– –	– –	– –	– –	106.2 129.5	– –	406.2 129.5 (15.2) – 391.0 129.5

A controlled entity has a bank loan of A$106.2 million denominated in British pounds sterling. The facility expires on 20 September 2009.
A controlled entity has a bank loan of A$300 million denominated in Australian dollars. The facility expires on 20 February 2010.

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 note 8).

(c) Euro medium term notes, unsecured

(d) Foreign private placement, unsecured

As at 30 June 2009, the Consolidated Entity has an A$46.9 million unsecured foreign private placement denominated in euros. The facility was drawn in July 2008 and expires on 30 June 2023.

Goodman Group Annual Report 2009

189

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

12. Interest bearing liabilities (cont)

Finance facilities

	Consolidated	Consolidated	Parent Entity	Parent Entity
	Facilities	Facilities	Facilities	Facilities
	available	utilised	available	utilised
	$M	$M	$M	$M
At 30 June 2009
Bank loans, unsecured	3,388.1	3,278.6	–	–
Bank loans, secured	591.2	391.0	–	–
Euro medium term notes, unsecured	513.1	513.1	–	–
Foreign private placement, unsecured	46.9	46.9	–	–
Bank guarantees1	–	50.0	–	–
At 30 June 2008 Bank loans, unsecured Bank loans, secured Euro medium term notes, unsecured Foreign private placement, unsecured Bank guarantees1	4,539.3 4,559.5 129.5 514.4 44.1 – 5,247.5	4,279.6 3,564.2 129.5 514.4 – 82.2 4,290.3	– – – – – – –	– – – – – – –

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

190

13. Issued capital

13. Issued capital
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
2,779,651,716 fully paid units on issue (2008: 1,715,805,005)	5,324.7	4,415.8	5,324.7	4,415.8
Issue costs1	(95.6)	(66.6)	(95.6)	(66.6)
	5,229.1	4,349.2	5,229.1	4,349.2

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.

Terms and conditions

Stapled security means one unit in GIT stapled to one share in GL. Holders of Goodman Group 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 Limited and the entities it controlled (Goodman Group), Unitholders and Shareholders rank after creditors and are fully entitled to any proceeds of liquidation.

Equity raising

On 28 November 2008, Goodman Group completed a capital raising of approximately $956 million, comprising a $229.5 million institutional placement and a $726.5 million, 0.47 for one accelerated non-renounceable entitlement offer of Goodman Group stapled securities at an issue price of $0.90 per security. GIT’s share of the capital raised amounted to $904.1 million.

For details of the further capital raising announced subsequent to the year refer to note 25.

Consolidated	Consolidated	Parent Entity	Parent Entity
2009	2008	2009	2008
Units	Units	$M	$M
Units on issue at 1 July 2007	1,692,736,692		4,277.6
Issued under the DRP1	19,419,978		118.9
Issued to employees of Goodman Group under the ESAP2	2,000,000		13.7
Issued due to exercise of executive options	1,648,335		5.6
Units on issue at 30 June 2008 Units on issue at 1 July 2008 1,715,805,005 Issued under the institutional placement and entitlement offer 1,062,207,693 Issued under the earn out provisions on acquisition of a related entity 1,605,684 Issued due to exercise of executive options 33,334 Units on issue at 30 June 2009 2,779,651,716	1,715,805,005	4,415.8 904.1 4.7 0.1 5,324.7	4,415.8

Under the Distribution Reinvestment Plan (DRP), holders of ordinary units may elect to have all or part of their distribution entitlement satisfi ed 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 the Responsible Entity.
Employee Securities Acquisition Plan.

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.

Goodman Group Annual Report 2009

191

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

14. Reserves

==> picture [497 x 563] intentionally omitted <==

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

Consolidated Parent Entity
2009 2008 2009 2008
Note $M $M $M $M
Asset revaluation reserve 14(a) (1,283.7) (330.3) (726.1) (284.8)
Capital profi ts reserve 14(b) 138.3 231.4 – –
Cash fl ow hedge reserve 14(c) (223.2) 72.6 – –
Foreign currency translation reserve 14(d) (70.7) 23.9 – –
Total reserves (1,439.3) (2.4) (726.1) (284.8)
(a) Asset revaluation reserve
Balance at the beginning of the year (330.3) 134.0 (284.8) 256.9
Revaluation of controlled entities – – (63.7) (35.6)
Revaluation of investments 8.1 4.3 11.8 –
Transfer to income statement on disposal of investment 2.8 – – –
Transfer to capital profi ts reserve 90.4 (175.6) – –
Transfer from (accumulated losses)/retained earnings (1,058.5) (313.6) (389.4) (506.1)
Effect of foreign currency translation 3.8 20.6 – –
Balance at the end of the year (1,283.7) (330.3) (726.1) (284.8)
(b) Capital profi ts reserve
Balance at the beginning of the year 231.4 57.5 – –
Transfer from asset revaluation reserve (90.4) 175.6 – –
– –
Transfer from (accumulated losses)/retained earnings (2.7) (1.0)
– – –
Effect of foreign currency translation (0.7)
Balance at the end of the year 138.3 231.4 – –
(c) Cash fl ow hedge reserve
Balance at the beginning of the year 72.6 60.6 – –
Change in value of fi nancial instruments (282.2) 24.1 – –
Transfer to income statement (16.4) (6.2) – –
Effect of foreign currency translation 2.8 (5.9) – –
Balance at the end of the year (223.2) 72.6 – –
(d) Foreign currency translation reserve
Balance at the beginning of the year 23.9 0.4 – –
Net exchange differences (94.6) 23.5 – –
Balance at the end of the year (70.7) 23.9 – –
----- End of picture text -----

192

15. (Accumulated losses)/retained earnings

15. (Accumulated losses)/retained earnings
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Balance at the beginning of the year	(0.6)	67.9	256.3	89.6
(Loss)/prof t attributable to Unitholders	(1,005.0)	221.8	(965.3)	242.9
Distributions declared	(268.2)	(582.3)	(268.2)	(582.3)
Transfer to asset revaluation reserve	1,058.5	313.6	389.4	506.1
Transfer from capital prof ts reserve	2.7	1.0	–	–
Effect of foreign currency translation	–	(22.6)	–	–
Balance at the end of the year	(212.6)	(0.6)	(587.8)	256.3

16. Minority interests

16. Minority interests
	Consolidated
	2009 $M 2008 $M
Goodman PLUS Trust hybrid securities	318.8 320.6

Issue costs of $1.8 million associated with the hybrid securities were paid in the current year (2008: $6.4 million).

Goodman Group Annual Report 2009

193

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

17. Segment reporting

The Consolidated Entity’s business is investing, directly or indirectly, in industrial and commercial properties in Asia Pacifi c and Europe.

Primary segment reporting – geographical segments

	Asia Pacif c	Asia Pacif c		Europe	Consolidated	Consolidated
	2009	2008	2009	2008	2009	2008
	$M	$M	$M	$M	$M	$M
Revenue and other income
Gross property income	202.4	256.0	36.2	37.0	238.6	293.0
Net (loss)/gain from fair value adjustments
on investment properties	(242.8)	50.9	(131.9)	(168.0)	(374.7)	(117.1)
Net gain/(loss) on disposal
of investment properties	15.1	58.4	(6.0)	–	9.1	58.4
Net gain on disposal of controlled entities	0.5	86.0	33.3	66.5	33.8	152.5
Net gain/(loss) on disposal of equity investments	12.8	10.3	(1.9)	1.8	10.9	12.1
Share of net results of equity
accounted investments	(153.4)	129.4	(258.9)	(130.6)	(412.3)	(1.2)
Distributions from investments	6.0	20.1	10.0	0.7	16.0	20.8
Other income	0.4	–	3.6	–	4.0	–
Total revenue and other income Segment result (Loss)/prof t before net f nancing (costs)/income and income tax Net f nancing (costs)/income Income tax expense (Loss)/prof t for the year	(159.0) (408.6)	611.1 427.3	(315.6) (541.7)	(192.6) (200.2)	(474.6) (950.3) (25.2) (5.5) (981.0)	418.5 227.1 10.9 – 238.0

194

17. Segment reporting (cont)

Primary segment reporting – geographical segments (cont)

	Asia Pacif c	Asia Pacif c		Europe	Consolidated	Consolidated
	2009	2008	2009	2008	2009	2008
As at 30 June	$M	$M	$M	$M	$M	$M
Segment assets
Investment properties	2,308.1	2,572.5	562.6	873.5	2,870.7	3,446.0
Investments accounted for using	1,607.5	1,569.8	719.9	487.4	2,327.4	2,057.2
the equity method
Other f nancial assets	27.6	181.6	0.4	8.8	28.0	190.4
Assets classif ed as held for sale	182.9	–	–	31.3	182.9	31.3
Other assets	50.0	39.7	537.0	137.5	587.0	177.2
Total segment assets	4,176.1	4,363.6	1,819.9	1,538.5	5,996.0	5,902.1
Segment liabilities
Deferred income	(4.2)	(5.4)	(5.7)	–	(9.9)	(5.4)
Liabilities classif ed as held for sale	(10.1)	–	–	–	(10.1)	–
Payables	(81.7)	(97.8)	(28.6)	(76.1)	(110.3)	(173.9)
Total segment liabilities Total segment assets less segment liabilities Non-segment assets and liabilities Cash Derivative f nancial instruments (net) Interest bearing assets Interest bearing liabilities and loans from related entities Provision for distributions Current tax payable (net) Total non-segment assets less total non-segment liabilities Net assets Capital expenditure	(96.0) 4,080.1 175.9	(103.2) 4,260.4 450.7	(34.3) 1,785.6 89.1	(76.1) 1,462.4 526.9	(130.3) 5,865.7 216.7 (169.4) 2,305.1 (4,319.9) – (2.2) (1,969.7) 3,896.0 265.0	(179.3) 5,722.8 628.7 121.7 2,547.6 (4,208.1) (145.9) – (1,056.0) 4,666.8 977.6

Goodman Group Annual Report 2009

195

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

18. Acquisition of controlled entity

On 15 October 2008, GIT acquired 100% of the benefi cial interests in Uptime Enterprises Limited for a net consideration of $10.5 million. Uptime Enterprises Limited owns a development property in China. The effect of this acquisitions on the Consolidated Entity’s assets and liabilities was as follows:

						Uptime
						Enterprises
						Limited
						$M
Cash						4.2
Receivables						0.1
Investment properties						23.9
Other assets						14.2
Payables						(13.4)
Net identif able assets and liabilities						29.0
Less: Interests in the entity already owned						(14.3)
Add: Intangible assets on acquisition						–
Total consideration payable						14.7
Less: Transaction costs						–
Gross cash outf ow						14.7
Cash held by controlled entity on acquisition						(4.2)
Net cash outf ow						10.5
			Actual	contribution	Contribution if acquisition
			since	acquisition	took place on 1 July 2008
				Prof t		Prof t
				before		before
	Principal	Date of	Revenue	tax	Revenue	tax
Entity acquired	activity	acquisition	$M	$M	$M	$M
Uptime Enterprises Limited	Property investment	15 Oct 08	2.1	1.0	2.1	1.0

196

19. Disposals of interests in controlled entities

In the current year, the Consolidated Entity disposed of controlled entities as set out below:

	Total
	$M
Cash consideration received on disposals to ABPP1	–
Cash consideration received on sale of special purpose entities in Europe2	12.4
Net cash inf ow	12.4

On 23 December 2008, GIT contributed the entire issued share capital of three entities holding four investment properties in the United Kingdom to ABPP. Consideration of $144.1 million was provided to the Consolidated Entity in equity by the fund. The equity provided by ABPP has a preferred return of between 7% and 10% per annum. The principal impact on the Consolidated Entity’s balance sheet of the disposals of these controlled entities was a decrease in the carrying value of investment properties of $142.4 million, offset by an increase in investments accounted for using the equity method of $144.1 million.
During the year, further investment in ABPP was made by Goodman Group through the contribution of a two property assets under the same conditions. The impact on the Consolidated Entity’s balance sheet of the disposal of these properties was an increase in investments accounted for using the equity method of $118.0 million offset by a decrease in loans to related parties of the same amount.
No cash payments or receipts were recorded as a result of any of the above transactions with ABPP, which in aggregate resulted in an increase of $262.1 million in investments in associates, a decrease in investment properties of $142.4 million, after revaluation adjustments of $27.9 million, and an increase in loans to related parties of $118.0 million.
During the year, controlled entities disposed of several special purpose development property entities located in Europe for a net consideration of $12.4 million (2008: $30.3 million). The principal impact on the Consolidated Entity’s balance sheet was a decrease of investment properties by $68.5 million and a decrease of payables by $77.8 million.

20. Auditors’ remuneration

20. Auditors’ remuneration
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$000	$000	$000	$000
Audit services
Auditors of GIT:
– Audit and review of f nancial reports (KPMG Australia)	657.7	444.2	657.7	444.2
– Audit and review of f nancial reports (overseas KPMG f rms)	285.8	323.1	–	–
	943.5	767.3	657.7	444.2
Other assurance services
– Investigative accounting services (KPMG Australia)	819.3	533.5	819.3	533.5
– Investigative accounting services (overseas KPMG f rms)	9.2	18.6	–	–
Other services
– Other regulatory services (KPMG Australia)	74.2	32.1	74.2	32.1
– Other regulatory services (overseas KPMG f rms)	–	–	–	–
– Taxation compliance services (KPMG Australia)	218.8	167.1	218.8	167.1
– Taxation compliance services (overseas KPMG f rms)	160.3	72.6	–	–
– Other taxation advice (KPMG Australia)	–	48.2	–	48.2
– Other taxation advice (overseas KPMG f rms)	29.3	106.6	–	–
	1,311.1	978.7	1,112.3	780.9
Other auditors – Audit and review of f nancial reports	2,254.6 133.9 133.9	1,746.0 21.5 21.5	1,770.0 – –	1,225.1 – –

Goodman Group Annual Report 2009

197

for the year ended 30 June 2009

Notes to the fi nancial statements (cont)

21. Notes to the cash fl ow statements

(a) Reconciliation of cash

For the purpose of the cash fl ow 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 fl ow statement is reconciled to the related items in the balance sheet as follows:

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Cash assets	216.7	628.7	56.6	613.0
(b) Reconciliation of (loss)/prof t for the year to net cash provided by operating activities
	Consolidated		Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
(Loss)/prof t for the year	(981.0)	238.0	(965.3)	242.9
Adjustments for:
– Net gain on disposal of investment properties	(9.1)	(58.4)	–	–
– Net gain on disposal of controlled entities	(33.8)	(152.5)	(0.5)	(62.4)
– Net (gain)/loss on disposal of equity investments	(10.9)	(12.1)	10.3	(0.3)
– Net loss on fair value adjustments on investment properties	374.7	117.1	–	–
– Impairment losses	389.7	108.2	1,374.4	608.6
– Share of net results of equity accounted investments	412.3	1.2	–	–
– Distributions received from controlled entities	–	–	(319.5)	(752.7)
– Net f nance expense/(income)	25.2	10.9	(42.6)	(42.5)
– Income tax expense	5.5	–	–	–
Operating prof t/(loss) before changes in
working capital and provisions	172.6	252.4	56.8	(6.4)
Changes in assets and liabilities during the year:
– Decrease in receivables	0.4	50.9	27.1	1,276.3
– (Increase)/decrease in other assets	(0.7)	(39.7)	–	2.1
– Increase/(decrease) in payables	18.1	12.9	(19.6)	(1,276.1)
	190.4	276.5	64.3	(4.1)
Distributions received from equity accounted investments	114.4	87.7	–	752.7
Net f nance (costs paid)/income received	(128.1)	25.5	7.7	(27.7)
Net income taxes paid	(3.3)	–	–	–
Net cash provided by operating activities	173.4	389.7	72.0	720.9

(c) Non-cash fi nancing and investing activities

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

- The Consolidated Entity transferred three special purpose entities to ABPP in return for equity and further investment in ABPP was made by the Consolidated Entity through the contribution of a two property assets by a related entity under the same conditions. No cash payments or receipts were recorded as a result of any of the above transactions with ABPP, which in aggregate resulted in an increase of $262.1 million in investments in associates, a decrease in investment properties of $142.4 million, after revaluation adjustments of $27.9 million, and an increase in loans to related parties of $118.0 million.
- Settlement of Distribution Liabilities:

During the year, no securities were allocated under the DRP. In the prior year, 19,419,978 securities were allocated for total consideration of $118.9 million.

198

22. 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	Consolidated	Parent	Entity
	2009	2008	2009	2008
	$	$	$	$
Management fees	12,408,645	574,479	12,408,645	574,479

As at 30 June 2009, the amounts owed to the Responsible Entity were $nil (2008: $0.5m).

Goodman Group performs a number of services for the Consolidated Entity and has billed the following amounts during the year:

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$	$	$	$
Property services fees (including property management and leasing)	7,395,334	13,039,358	–	–
Development management and project fees	365,583	10,819,730	–	–
Building supervisor costs reimbursed	1,857,111	2,442,236	–	–
Due diligence	3,575,918	5,281,803	–	–
	13,193,946	31,583,127	–	–

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 2009 is $46.2 million (2008: $49.6 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 $11.8 million (2008: $10.7 million);
- Dollhurst Limited, a fellow controlled entity of Goodman Group, has issued $133.4 million (£65.0 million) (2008: $133.7 million, £65.0 million) of fi xed 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;
- Other loans to Goodman Group exist at 30 June 2009 totalling $2,491.1 million (2008: $2,177.0 million) of which $2,030.0 million are interest bearing and $461.1 million are non-interest bearing. Interest bearing loans bear interest at rates determined based on the tranche under which the funds are borrowed; and
- Other loans from Goodman Group exist at 30 June 2009 totalling $90.3 million (2008: $9.3 million). The loans are interest bearing at rates determined based on the tranche under which the funds are borrowed.

Goodman Group Annual Report 2009

199

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

22. Related party disclosures (cont)

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
	2009 $M 2008 $M 2009 $M 2008 $M
GAIF GELF GHKLF GMT	75.2 1,074.1 0.1 – 68.4 65.8 0.6 – 80.2 – – – 2.8 18.8 – –

Amounts due (to)/from associates and JVEs at 30 June 2009 are as follows:

	Trade and	Trade and	Shareholder	Shareholder
	other receivables		loans	provided
	2009	2008	2009	2008
	$M	$M	$M	$M
GAIF	16.0	15.4	–	–
GMT	–	–	–	–
GELF	18.8	54.4	25.8	–
ABPP	13.5	–	–	–
GGAIF Huntingwood East	–	–	15.9	–
GGAIF Huntingwood West	–	–	21.4	–
413 King William Street Trust	–	–	2.1	–
Goodman Seaview Ltd	–	–	60.4	–
Goodman Interlink Ltd	–	–	70.4	–
Goodman Herten Logistics (Lux) Sàrl	–	–	4.8	–
Goodman Lazulite Logistics (Lux) Sàrl	–	–	3.4	–
Ullo One 2008 Kft	–	–	3.1	–
Agate Ingatlanforgalmazo Kft	–	–	3.6	–
WMP NV	–	–	8.3	–

Trade and other amounts due are receivable within 30 days.
Shareholder loans to associates and JVEs have generally been provided on an arms length basis. Details In respect of the principle loan balances are set out below:
- a shareholder loan of $22.4 million has been provided to Goodman Pyrite Logistics (Lux) Sàrl, a controlled entity of GELF. The loan bears interest at
6.9% per annum, but no amounts were recognised in the year (2008: $nil);
- interest income of $1.7 million (2008 $nil) was recognised on loans to GGGAIF Huntingwood East and GGGAIF Huntingwood West. The loans bear interest at 4.5% per annum; and
- interest income of $5.6 million (2008: $2.0 million) was recognised on loans to Seaview and Interlink. The loans bear interest at the three month Hong Kong Interbank Offer Rate plus 1.5% per annum.

200

22. Related party disclosures (cont)

Other related party disclosures

Moorabbin Airport Corporation Pty Limited

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 comparative year amounted to $81,360. The CityWest property was sold to GAIF in the comparative year.

Transactions between the Parent Entity and its controlled entities

The signifi cant 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 2009 and 2008 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 receivable from, and payable to, wholly-owned controlled entities at balance date are disclosed in notes 5 and 11 respectively.

23. Financial risk management

Overview

Goodman Group’s treasury function 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 with Goodman Group’s hedging policy and recommendations for future hedging strategies; and
- full mark to market of all derivative positions.

Capital management

Goodman Group is able to alter the capital mix, subject to Board approval, by issuing new stapled securities or Hybrid Securities, electing to have the DRP underwritten and recycling assets to funds managed by Goodman Group or to third parties to reduce borrowings. Equity should be fully invested to ensure that a maximum return on the capital is achieved.

Goodman Group monitors capital on the basis of both the gearing ratio and the weighted average cost of debt. Gearing is reviewed at a Consolidated Entity basis and 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.

Financial risk management

The Consolidated Entity’s key fi nancial risks are market risk (including interest rate risk, foreign exchange risk and price risk), liquidity risk and credit risk.

Goodman Group Annual Report 2009

201

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

23. Financial risk management (cont)

(a) Market risk

Interest rate risk

The Consolidated Entity’s interest rate risk primarily arises from variable rate borrowings. The Consolidated Entity adopts a policy of ensuring that between 60% and 100% of its exposure to changes in interest rates on borrowings is on a fi xed rate basis. 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.

		At 30 June 2009	At 30 June 2009			At 30 June 2008	At 30 June 2008
	Interest rate swaps		Fixed rate	debt	Interest rate swaps		Fixed rate	debt
	Notional				Notional
	principal	Average	Principal	Average	principal	Average	Principal	Average
	currency1	rate pa2	currency	rate pa2	currency1	rate pa2	currency	rate pa2
	M	%	M	%	M	%		%
New Zealand dollars payable
30 June 2009	–	–	–	–	(253.3)	7.10	–	–
30 June 2010	(173.0)	7.70	–	–	(250.0)	7.06	–	–
30 June 2011	(135.2)	8.10	–	–	(250.0)	7.06	–	–
30 June 2012	(110.0)	8.79	–	–	(250.0)	7.06	–	–
30 June 2013	(110.0)	8.79	–	–	(250.0)	7.06	–	–
30 June 2014	(110.0)	8.79	–	–	–	–	–	–
30 June 2015	(68.8)	7.33	–	–	–	–	–	–
Hong Kong dollars payable
30 June 2009	–	–	–	–	(1,600.0)	4.28	–	–
30 June 2010	(1,530.4)	4.28	–	–	(1,530.4)	4.28	–	–
30 June 2011	(871.2)	4.25	–	–	(871.2)	4.25	–	–
30 June 2012	(345.5)	4.30	–	–	(345.5)	4.30	–	–
30 June 2013	(124.7)	4.25	–	–	(124.7)	4.25	–	–
Japanese yen payable
30 June 2009	–	–	–	–	(17,000.0)	1.49	–	–
30 June 2010	(15,750.0)	1.51	–	–	(17,000.0)	1.49	–	–
30 June 2011	(14,911.6)	1.53	–	–	(16,161.6)	1.51	–	–
30 June 2012	(13,633.9)	1.55	–	–	(14,808.7)	1.53	–	–
30 June 2013	(4,000.0)	1.69	–	–	(4,000.0)	1.69	–	–
30 June 2014	(3,758.9)	1.69	–	–	–	–	–	–

202

23. Financial risk management (cont)

(a) Market risk (cont) Interest rate risk (cont)

		At 30 June 2009	At 30 June 2009			At 30 June 2008	At 30 June 2008
	Interest rate swaps		Fixed rate	debt	Interest rate swaps		Fixed rate debt
	Notional				Notional
	principal	Average	Principal	Average	principal	Average	Principal	Average
	currency1	rate pa2	currency	rate pa2	currency1	rate pa2	currency	rate pa2
	M	%	M	%	M	%		%
Euro payable
30 June 2009	–	–	–	–	(653.2)	3.96	–	–
30 June 2010	(660.0)	3.82	–	–	(590.0)	4.11	–	–
30 June 2011	(386.1)	4.17	–	–	(487.2)	4.09	–	–
30 June 2012	(173.2)	4.98	–	–	(353.2)	4.07	–	–
30 June 2013	(140.0)	5.12	–	–	(291.8)	4.05	–	–
30 June 2014	(132.4)	5.16	–	–	–	–	–	–
30 June 2015	(50.0)	5.91	–	–	–	–	–	–
British pounds sterling payable
30 June 2009	–	–	–	–	(463.2)	4.97	(250.0)	9.75
30 June 2010	(535.0)	3.56	(250.0)	9.75	(460.0)	4.98	(250.0)	9.75
30 June 2011	(494.8)	4.69	(250.0)	9.75	(433.0)	5.00	(250.0)	9.75
30 June 2012	(435.0)	5.38	(250.0)	9.75	(345.0)	5.07	(250.0)	9.75
30 June 2013	(435.0)	5.38	(250.0)	9.75	(328.7)	5.09	(250.0)	9.75
30 June 2014	(435.0)	5.38	(250.0)	9.75	–	–	–	–
30 June 2015	(398.8)	5.40	(250.0)	9.75	–	–	–	–

The amount is the principal balance at each year end that is hedged as a result of the existing interest rate swap contracts as at 30 June 2009.
Average rate per annum represents the weighted average interest rate payable, by region, as a result of the existing interest rate swap contracts as at 30 June 2009.

At 30 June 2009, if interest rates on borrowings had been 100 basis points per annum (2008: 500 basis points per annum) higher/lower, with all other variables held constant, the Consolidated Entity result attributable to Unitholders for the year would have been A$0.1million lower/higher (2008: A$0.1 million).

At 30 June 2009, if interest rates on borrowings had 100 basis points per annum (2008: 100 basis points per annum) higher/lower, with all other variables held constant, the Parent Entity result for the year would have been A$6.6 million lower/higher (2008: A$8.5 million).

Foreign exchange risk

The Consolidated Entity is exposed to foreign exchange risk through its investments in New Zealand, Hong Kong, China, Japan, Continental Europe and the United Kingdom. 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.

The Consolidated Entity’s capital hedge policy for each overseas region is to hedge between 70% and 95% of foreign currency denominated assets with foreign currency denominated liabilities. The Consolidated Entity’s investment in foreign denominated investments is generally achieved by borrowing in the same functional currency as the investments to form a natural economic hedge against any foreign currency fl uctuations. Further draw downs or repayments of debt are made to maintain this hedge. Derivatives such as cross currency swaps are also used to achieve the hedge position required under the FRM policy.

Goodman Group Annual Report 2009

203

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

23. Financial risk management (cont)

(a) Market risk (cont) Foreign exchange risk (cont)

a) Market risk (cont) Foreign exchange risk (cont)
	Weighted average		Amounts	receivable	Amounts	payable
					2009	2008
	2009	2008	2009	2008	Currency	Currency
			A$M	A$M	M	M
Australian dollars receivable/New Zealand dollars payable
30 June 2009	–	1.1328	–	176.6	–	(200.0)
30 June 2010	1.2590	1.1328	81.0	176.6	(102.0)	(200.0)
30 June 2011	1.2590	1.1328	81.0	176.6	(102.0)	(200.0)
30 June 2012	1.2590	1.1328	81.0	176.6	(102.0)	(200.0)
30 June 2013	1.2590	1.1328	81.0	176.6	(102.0)	(200.0)
Australian dollars receivable/Hong Kong dollars payable
30 June 2009	–	6.7145	–	148.9	–	(1,000.0)
30 June 2010	6.4213	6.7145	234.6	148.9	(1,500.0)	(1,000.0)
30 June 2011	6.4213	6.7145	148.9	148.9	(1,500.0)	(1,000.0)
30 June 2012	6.7153	6.7145	148.9	148.9	(1,000.0)	(1,000.0)
30 June 2013	6.7153	6.7145	148.9	148.9	(1,000.0)	(1,000.0)
Australian dollars receivable/Japanese yen payable
30 June 2009	–	97.4500	–	44.5	–	(4,340.0)
30 June 2010	97.4500	97.4500	44.5	44.5	(4,340.0)	(4,340.0)
30 June 2011	97.4500	97.4500	44.5	44.5	(4,340.0)	(4,340.0)
30 June 2012	97.4500	97.4500	44.5	44.5	(4,340.0)	(4,340.0)
30 June 2013	97.4500	97.4500	44.5	44.5	(4,340.0)	(4,340.0)
Australian dollars receivable/euros payable
30 June 2009	–	0.6090	–	492.6	–	(300.0)
30 June 2010	0.5665	–	369.3	–	(209.0)	–
30 June 2011	0.5665	–	369.3	–	(209.0)	–
30 June 2012	0.5665	–	369.3	–	(209.0)	–
30 June 2013	0.5500	–	198.2	–	(109.0)	–
30 June 2014	0.5500	–	198.2	–	(109.0)	–
Australian dollars receivable/British pounds sterling payable
30 June 2009	–	–	–	–	–	–
30 June 2010	0.4700	–	272.3	–	(128.0)	–
30 June 2011	0.4700	–	272.3	–	(128.0)	–
30 June 2012	0.4700	–	183.0	–	(86.0)	–
30 June 2013	0.4700	–	183.0	–	(86.0)	–

204

23. Financial risk management (cont)

(a) Market risk (cont)

Foreign exchange risk (cont)

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. Based on the Consolidated Entity’s existing forward foreign exchange contracts as at 30 June 2009, the weighted average exchange rates and the principal amounts expiring in future years, by region, is set out below:

	Weighted average	Weighted average	Amounts	receivable	Amounts	payable
					2009	2008
	2009	2008	2009	2008	Currency	Currency
Year ending			A$M	A$M	M	M
Contracts to buy Australian dollars and sell New Zealand dollars
30 June 2009	–	1.1571	–	0.5	–	(0.6)
30 June 2010	1.1491	1.1571	4.9	0.5	(5.6)	(0.6)
30 June 2011	1.1630	1.1571	4.6	0.3	(5.3)	(0.3)
30 June 2012	1.1768	1.1571	4.5	0.3	(5.3)	(0.3)
30 June 2013	1.1932	–	4.2	–	(5.0)	–
Contracts to buy Australian dollars and sell Hong Kong dollars
30 June 2009	–	6.1394	–	2.5	–	(15.1)
30 June 2010	5.3333	6.3403	13.0	1.6	(68.5)	(10.0)
30 June 2011	5.0701	–	12.4	–	(62.6)	–
30 June 2012	4.9885	–	12.6	–	(62.6)	–
30 June 2013	4.9077	–	12.8	–	(62.6)	–
Contracts to buy Australian dollars and sell euro
30 June 2009	–	0.5832	–	41.3	–	(24.0)
30 June 2010	0.5667	0.5667	42.5	42.5	(24.0)	(24.0)
30 June 2011	0.5273	0.5551	32.4	17.2	(17.0)	(9.5)
30 June 2012	0.5229	0.5421	27.9	17.6	(14.5)	(9.5)
30 June 2013	0.4837	–	18.6	–	(9.0)	–
Contracts to buy Australian dollars and sell British pounds sterling
30 June 2009	–	0.4150	–	24.1	–	(10.0)
30 June 2010	–	0.4150	–	24.1	–	(10.0)
30 June 2011	–	0.4150	–	12.0	–	(5.0)

At 30 June 2009, if the Australian dollar has strengthened by 5% (2008: 5%), with all other variables held constant, the Consolidated Entity’s result attributable to Unitholders would have decreased by A$15.6 million (2008: A$17.0 million decrease). If the Australian dollar had weakened by 5% (2008: 5%), with all other variables held constant, the Consolidated Entity’s result attributable to Securityholders would have increased by A$17.2 million (2008: A$17.0 million increase).

At 30 June 2009, if the Australian dollar has strengthened by 5% (2008: 5%), with all other variables held constant, the Parent Entity’s result for the year would have decreased by A$10.0 million (2008: A$8.0 million decrease). If the Australian dollar has weakened by 5% (2008: 5%), with all other variables held constant, the Parent Entity’s result for the year would have increased by A$9.0 million (2008: A$8.0 million increase).

Goodman Group Annual Report 2009

205

Notes to the fi nancial statements (cont)

for the year ended 30 June 2009

23. Financial risk management (cont)

(a) Market risk (cont)

Price risk

The Consolidated Entity is exposed to equity securities price risk because of its investment in ING Industrial Fund, which is listed on the ASX and classifi ed on the balance sheet as an other fi nancial asset (refer to note 10).

As at 30 June 2009, a 5% (2008: 5%) movement in the security price of ING Industrial Fund would have impacted equity by A$1.4 million (2008: A$8.9 million). There would be no impact on the Consolidated Entity’s result attributable to Unitholders. The analysis is based on the assumption that all other variables are held constant.

The Parent Entity is not exposed to equity securities price risk.

The Consolidated Entity is not exposed to commodity price risk.

(b) Liquidity risk

- 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.

				Consolidated	Consolidated
	Carrying	Contractual	Up to 12	1 – 2	2 – 3	3 – 4	4 – 5	More than
	amount	cash f ows	months	years	years	years	years	5 years
30 June 2009	$M	$M	$M	$M	$M	$M	$M	$M
Non-derivative f nancial liabilities1
Bank loans – unsecured	3,278.6	3,278.6	584.4	486.2	949.9	1,258.1	–	–
Bank loans – secured	391.0	391.0	391.0	–	–	–	–	–
Euro Medium Term Notes
– unsecured	513.1	513.1	–	–	–	–	–	513.1
Foreign private placement
– unsecured Total non-derivative f nancial liabilities Derivative f nancial liabilities Net settled2 Gross settled3: Inf ow Outf ow Total derivative f nancial liabilities	46.9 4,229.6 152.3 17.0 – 169.3	46.9 4,229.6 156.6 (176.3) 182.5 162.8	– 975.4 60.5 (45.9) 15.9 30.5	– 486.2 39.5 (52.2) 34.3 21.6	– 949.9 17.6 (47.3) 44.9 15.2	– 1,258.1 9.7 (27.2) 69.8 52.3	– – 11.7 (3.7) 17.6 25.6	46.9 560.0 17.6 – – 17.6

Cash fl ows relating to non-derivative fi nancial liabilities exclude any estimated interest payments.
Net settled includes interest rate swaps and forward foreign currency contracts.
Gross settled includes cross currency interest rate swaps.

206

23. Financial risk management (cont)

(b) Liquidity risk (cont)

(b) Liquidity risk (cont)
				Consolidated
	Carrying	Contractual	Up to 12	1 – 2	2 – 3	3 – 4	4 – 5	More than
	amount	cash f ows	months	years	years	years	years	5 years
30 June 2008	$M	$M	$M	$M	$M	$M	$M	$M
Non-derivative f nancial liabilities1
Bank loans – unsecured	3,564.2	3,564.2	491.2	379.0	504.0	967.5	1,222.5	–
Bank loans – secured	129.5	129.5	–	129.5	–	–	–	–
Euro medium term notes
– unsecured	514.4	514.4	–	–	–	–	–	514.4
Total non-derivative f nancial liabilities Derivative f nancial liabilities Net settled2 Gross settled3: Inf ow Outf ow Total derivative f nancial liabilities	4,208.1 (65.9) (33.4) – (99.3)	4,208.1 (87.6) (95.9) 82.5 (101.0)	491.2 (25.3) (25.8) 20.0 (31.1)	508.5 (21.5) (22.6) 18.8 (25.3)	504.0 (17.6) (18.7) 16.6 (19.7)	967.5 (11.8) (20.1) 18.5 (13.4)	1,222.5 (7.8) (8.7) 8.6 (7.9)	514.4 (3.6) – – (3.6)

Cash fl ows relating to non-derivative fi nancial liabilities exclude any estimated interest payments.
Net settled includes interest rate swaps and forward foreign currency contracts.
Gross settled includes cross currency interest rate swaps.

The Parent Entity’s fi nancial liabilities all mature in less than 12 months.

(c) Credit risk

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

The 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 5).

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 the amounts receivable and the amounts payable to individual counterparties.

Goodman Group Annual Report 2009

207

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

23. Financial risk management (cont)

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 value1	amount	Fair value1
		2009	2009	2008	2008
Consolidated	Note	$M	$M	$M	$M
Financial assets
Cash	21(a)	216.7	216.7	628.7	628.7
Receivables	5
– Derivative f nancial instruments		30.9	30.9	121.7	121.7
– Loans to related parties		2,766.3	2,766.3	2,547.6	2,547.6
– Other receivables		94.3	94.3	104.6	104.6
Other f nancial assets	10
– Investments in listed securities		27.7	27.7	177.2	177.2
– Investments in other unlisted securities		0.3	0.3	13.2	13.2
Financial liabilities Payables Interest bearing liabilities Provision for distributions Parent Entity Financial assets Cash Receivables – Derivative f nancial instruments – Loans to controlled entities – Loans to other related parties – Other receivables Other f nancial assets – Investments in listed securities – Investments in other unlisted securities Financial liabilities Payables – Other payables and accruals – Loans from controlled entities – Loans related parties Provision for distributions	11 12 4 21(a) 5 10 11 4	3,136.2 403.1 4,229.6 – 4,632.7 56.6 11.8 955.9 1,205.9 1.0 27.7 2,689.0 4,947.9 1.4 1,022.3 5.2 – 1,028.9	3,136.2 403.1 4,059.5 – 4,462.6 56.6 11.8 955.9 1,205.9 1.0 27.7 2,689.0 4,947.9 1.4 1,022.3 5.2 – 1,028.9	3,593.0 173.9 4,208.1 145.9 4,527.9 613.0 – 1,810.8 1,259.5 31.4 177.2 2,798.0 6,689.9 21.0 2,219.7 – 145.9 2,386.6	3,593.0 173.9 4,208.1 145.9 4,527.9 613.0 – 1,810.8 1,259.5 31.4 177.2 2,798.0 6,689.9 21.0 2,219.7 – 145.9 2,386.6

The methods used for determining fair values of fi nancial instruments are discussed in notes 1, 2, 5 and 10. The fair value of the euro medium term notes included in interest bearing liabilities have been determined by reference to their quoted price on the Singapore Stock Exchange at 30 June 2009.

208

24. Commitments

	Consolidated	Consolidated	Parent	Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Capital expenditure commitments
Contracted but not provided for and payable:
– within one year	0.6	69.1	–	–
– one year or later and no later than f ve years	0.6	–	–	–

Acquisition of investment properties

The amount contracted for the acquisition of investment properties not provided for is $54.4 million (2008: $77.2 million).

Commitment to investment in managed funds

During the year, the Consolidated Entity participated in the fi rst and second closings of an equity offer undertaken by GELF and committed to subscribe for the lower of A$386.0 million or such amount as represents 40% of the GELF units on issue. That commitment will be drawn down as and when required by the capital management plan of GELF. At 30 June 2009, that commitment had been drawn to A$198.2 million.

The Consolidated Entity has a commitment to provide additional shareholder funding of up to A$2.0 million (2008: A$nil) into HDL, A$9.5 million into Seaview and A$16.7 million into Interlink. This is to fund development projects committed to by these JVEs.

Stapling agreement with GL

As at 30 June 2009, GL had net liabilities of $92.8 million. Under the stapling agreement between GIT and GL, the Responsible Entity and GL are obliged to provide fi nancial support to each other to enable both entities to repay their debts as and when they become due and payable.

Guaranteed land payments – development of M7 Business Hub, Eastern Creek, NSW

Non-cancellable operating lease receivable from investment property customers

	Consolidated	Consolidated	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$M	$M	$M	$M
Non-cancellable operating lease commitments receivable
Within one year	155.3	185.5	–	–
One year or later but not later than f ve years	415.2	585.5	–	–
Later than f ve years	143.9	249.0	–	–
	714.4	1,020.0	–	–

Goodman Group Annual Report 2009

209

Notes to the fi nancial statements (cont) for the year ended 30 June 2009

25. Contingencies

Issue of conditional options

On 19 May 2009, Goodman Group signed a $300 million secured Finance Facility with Macquarie Group. In conjunction with the Facility, Macquarie Group were granted options over 414 million Goodman Group stapled securities at an exercise price of $0.30 per security. The issue of 294 million of these options is subject to Securityholder approval.

On 16 June 2009, CIC became a party to the above Finance Facility resulting in an increase in the Facility limit by $185 million to $485 million. In conjunction with the amendment to the facility, CIC were granted options over 255.3 million options with an exercise price of $0.40 per security. The issue of all these options is subject to Securityholder approval.

Macquarie Group and CIC reached an agreement to share the $0.30 and $0.40 exercise price per security options on a pro rata basis having regard to their commitments under the Facility.

If the Securityholders do not approve the issue of the conditional options at a specifi cally convened Extraordinary General Meeting, then in the period to 22 May 2011, Macquarie Group and CIC can require the Consolidated Entity and GL to pay to them an amount equal the number of conditional options multiplied by the amount by which the weighted average stapled security price over the 10 days prior to the written election exceeds the option exercise price. If the option exercise price is greater than the weighted average stapled security price over the 10 days prior to the written election then the amount will be $nil.

26. Events subsequent to balance date

In conjunction with the equity raising, the Consolidated Entity has received credit approval (subject to documentation and Goodman raising $1.2 billion of equity) to an extension and renegotiation of a signifi cant portion of the Consolidated Entity’s bank debt facilities and the bank debt facilities of investments in which the Consolidated Entity has signifi cant infl uence. These include:

extension from 2011 to 2012 of A$438 million of the $520 million Tranche C of the SMCF and extension from 2012 to 2013 of 80% of the €525 million European revolving credit facility, along with amended covenants to the common terms deed poll, to which they are a party;
- extension of facilities and renegotiation of covenants with GAIF;
- renegotiation of the covenants for GELF; and
- renegotiation of covenants for ABPP.

During August 2009, Goodman Group also announced the creation of a new joint venture with Canada Pension Plan Investment Board (CPPIB) in China. The joint venture (of which Goodman Group holds 20% and CPPIB holds 80%) acquired four stabilised assets with a book value at 30 June 2009 of A$157.3 million. The joint venture has established a platform for future funding of further opportunities in China. Goodman Group will receive fees for the services it provides to the joint venture.

210

Directors’ declaration

In the opinion of the Directors of Goodman Funds Management Limited, the Responsible Entity for Goodman Industrial Trust:

(a) the fi nancial statements and the accompanying notes set out on pages 162 to 210, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the fi nancial position of the Parent Entity and the Consolidated Entity as at 30 June 2009 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;
(b) the fi nancial 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 Offi cer and Group Chief Financial Offi cer for the year ended 30 June 2009.

Signed in accordance with a resolution of the Directors of the Responsible Entity.

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

Ian Ferrier, AM Independent Chairman Sydney, 28 August 2009

==> picture [178 x 73] intentionally omitted <==

Gregory Goodman Group Chief Executive Offi cer

Goodman Group Annual Report 2009

211

Independent auditor’s report to the unitholders of

Goodman Industrial Trust

Report on the fi nancial report

We have audited the accompanying fi nancial report of Goodman Industrial Trust (the Trust), which comprises the balance sheets as at 30 June 2009, and the income statements, statements of changes in equity 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 26 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 fi nancial year.

Directors’ responsibility for the fi nancial report

The directors of the Responsible Entity, Goodman Funds Management Limited, are responsible for the preparation and fair presentation of the fi nancial 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 fi nancial 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 fi nancial report of the Consolidated Entity, comprising the fi nancial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Trust’s preparation and fair presentation of the fi nancial 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 Trust’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 fi nancial 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 Trust’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 fi nancial 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 fi nancial position as at 30 June 2009 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.

(b) the fi nancial report of the Consolidated Entity also complies with International Financial Reporting Standards as disclosed in note 1.

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KPMG

==> picture [140 x 78] intentionally omitted <==

John Teer Partner

Sydney, 28 August 2009

212

Securities information

Securities information			+
		Number of	Percentage of total
Top 20 Securityholders as at 31 August 2009		securities	issued securities
1. HSBC Custody Nominees (Australia) Limited		1,238,611,715	23.93
2. National Nominees Limited		950,698,129	18.37
3. JP Morgan Nominees Australia Limited		707,863,234	13.67
4. Citicorp Nominees Pty Limited		470,679,379	9.09
5. ANZ Nominees Limited		158,207,759	3.06
6. AMP Life Limited		153,987,373	2.98
7. Cogent Nominees Pty Limited		136,647,649	2.64
8. Citicorp Nominees Pty Limited		119,465,062	2.31
9. Cogent Nominees Pty Limited		96,448,765	1.86
10. Goodman Holdings Group		75,549,343	1.46
11. Queensland Investment Corporation		51,374,482	0.99
12. Citicorp Nominees Pty Limited		48,307,490	0.93
13. HSBC Custody Nominees (Australia) Limited –	GSCO ECA	38,145,084	0.74
14. Bond Street Custodians Limited		33,944,979	0.66
15. UBS Nominees Pty Ltd		32,619,052	0.63
16. Woodross Nominees Pty Ltd		29,708,865	0.57
17. HSBC Custody Nominees (Australia) Limited –	A/C 3	28,111,632	0.54
18. Merrill Lynch (Australia) Nominees Pty Limited		24,476,184	0.47
19. Bond Street Custodians Limited		22,470,840	0.43
20. RBC Dexia Investor Services Australia Nominees Pty Ltd		22,097,170	0.43
Securities held by top 20 Securityholders		4,439,414,186	85.76
Balance of securities held		737,374,078	14.24
Total issued securities		5,176,788,264	100.00
	Number of	Number of	Percentage of total
Range of securities	Securityholders	securities	issued securities
1 – 1,000	2,943	1,461,755	0.03
1,001 – 5,000	10,425	30,457,354	0.59
5,001 – 10,000	7,166	55,505,406	1.07
10,001 – 100,000	8,723	228,932,670	4.42
100,001 – over	613	4,860,431,079	93.89
Rounding
Total	29,870	5,176,788,264	100.00
There were 2,072 Securityholders with less than a marketable parcel in relation		to 614,392 securities as at	31 August 2009.
Substantial Securityholders1			Number of securities
Commonwealth Bank of Australia			150,334,077
Barclays Group			160,571,114
IOOF Holdings Limited			457,683,438
AMP Limited			378,389,582

In accordance with latest Substantial Securityholder Notices as at 31 August 2009.

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 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 2009

213

Glossary

AASB Australian Accounting Standards Board.

ASIC Australian Securities and 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.

Cps Cents per security.

Cpu Cents per unit.

Customer Service Model Customer Service Model means Goodman Group’s operating and cultural philosophy, which is based on providing complete property solutions to its customers through the delivery of a diverse range of industrial property and business space products and in-house property services.

Distribution yield The annual distribution expressed as a percentage of the security price.

DPS Distribution per security. Total distributions to investors divided by the number of securities outstanding.

EBIT Earnings before interest and tax.

EPS Earnings per security.

ESAP Employee Securities Acquisition Plan.

Eurinpro Eurinpro International SA.

Executive Option Plan 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.

GAL Goodman Asia Limited (formerly Macquarie Goodman Asia Limited, a joint venture between Goodman Group and Macquarie Bank Limited) which has investments in Hong Kong, China and Japan.

GFML Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) (formerly Macquarie Goodman Funds Management Limited).

GHKLF Goodman Hong Kong Logistics Fund (formerly Macquarie Goodman Hong Kong Logistics Fund), an unlisted property fund specialising in the investment of industrial property in Hong Kong.

GL Goodman Limited (formerly Goodman International Limited ABN 69 000 123 071) and its controlled entities, where the context requires.

GIT Goodman Industrial Trust and its controlled entities or GFM as Responsible Entity for GIT, where the context requires.

GMT Goodman Property Trust, a listed property trust on the NZX managed by GMG.

Goodman Group or GMG Goodman Limited and Goodman Industrial Trust, trading as Goodman Group and where the context requires, their controlled entities.

Goodman Holdings Group Goodman Holdings Pty Limited and its controlled entities.

J-REP Japan Representative: an industrial property management company listed on the Tokyo Stock Exchange.

Macquarie Group Macquarie Group Limited and its controlled entities, where the context requires.

NAV Net asset value: the value of the total assets less liabilities. For this purpose, liabilities include both current and long-term liabilities. To calculate the net asset value per ordinary security, divide the net asset value by the number of securities on issue.

NLA Net lettable area.

NTA Net tangible assets: the value of gross assets less all debts and other liabilities, divided by the number of securities on issue expressed as a dollar value.

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.

Responsible Entity Responsible Entity means a public company that holds an Australian Financial Services Licence (“AFSL”) authorising it to operate a managed investment scheme. In respect of GIT, the Responsible Entity is GFM, a wholly-owned subsidiary of GL.

S&P Standard & Poor’s: an independent rating agency that provides evaluation of securities investments and credit risk.

Securityholder A holder of a Stapled Security.

Shareholder A shareholder of GL.

Sq ft Square feet.

Sqm Square metres.

Stapled The linking together of a GIT unit and a GL share so that one may not be transferred or otherwise dealt with without the other and which are quoted on the ASX jointly as a “stapled security”.

Stapled Security A GIT unit and a GL share which are stapled so that they can only be traded together.

Substantial Securityholder A person or company that holds at least 5% of Goodman Group’s voting rights.

Unitholder A unitholder of GIT.

Wholesale fund An unlisted fund managed by a professional fund manager that pools moneys from institutional investors to invest in assets that would not normally be accessible to individuals. Wholesale funds aim to deliver income and capital growth to investors, eg. GAIF and GHKLF.

214

Corporate directory

Goodman Group

Goodman 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

Adelaide Eindhoven Paris Auckland Fukuoka Perth Barcelona Hong Kong Poznan Beijing London Prague Birmingham Luxembourg Reading Brisbane Lyon Senec Brussels Madrid Shanghai Budapest Marseille Sydney Christchurch Melbourne Tokyo Cracow Milan Warsaw Düsseldorf Osaka

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 – until 2 July 2009) Mr Gregory Goodman (Group Chief Executive Offi cer) Mr Ian Ferrier, AM (Independent Director and Chairman – since 28 July 2009) Mr Patrick Goodman (Non-Executive Director) Ms Dianne Grady, AM (Independent Director) Mr John Harkness (Independent Director) Mr James Hodgkinson (Non-Executive Director) Ms Anne Keating (Independent Director) Mr James Sloman, OAM (Independent Director)

Company Secretary

Mr Carl Bicego

Goodman Group Annual Report 2009

215

US Notice

Goodman Group gives notice that:

(i) each Securityholder that is in the United States or a U.S. Person is required to be a Qualifi ed Institutional Buyer as defi ned under the U.S. Securities Act and a Qualifi ed Purchaser under the U.S. Investment Company Act (“QIB/QP”) at the time of the acquisition of any Stapled Securities of Goodman Group, and is required to make the representations in the Subscription Agreement as of the time it acquired the applicable Stapled Securities;
(ii) the Stapled Securities can only be resold or transferred in a regular brokered transaction on the ASX in accordance with Rule 903 or 904 of Regulation S, where neither it nor any person acting on its behalf knows, or has reason to know, that the sale has been prearranged with, or that the purchaser is, in the United States or a U.S. Person (e.g. no prearranged trades (“special crossing”) with U.S. Persons or other off-market transactions); and

(iii) to the maximum extent permitted by law, Goodman Group reserves the right to (i) request any person that they deem to be in the United States or a U.S. Person, who was not at the time of acquisition of the Stapled Securities a QIB/QP, to sell its Stapled Securities, (ii) refuse to record any subsequent sale or transfer of Stapled Securities to a person in the United States or a U.S. Person that Goodman Group reasonably believes is not a QIB/QP, and (iii) take such other action as they deem necessary or appropriate to enable the GL and GIT to maintain the exception from registration under Section 3(c)(7) of the Investment Company Act.

Disclaimer

This Annual Report has been prepared by Goodman Group (Goodman 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 forwardlooking 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 2009.

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Goodman Group Annual Report 2009

AI assistant

GOODMAN GROUP — Annual Report 2009

64998_rns_2009-09-29_90cc5821-656c-42c0-b015-11e1c3563d95.pdf

Goodman Group (Goodman) – Annual Report 2009

Company Secretary

30 September 2009

Goodman Group (Goodman or Group) - Annual Report 2009

Positioned for the future+

Contents

Highlights

Positioned to create value+

Positioned + for the long-term

Group operations

Property investment

Property services

Earnings composition

Property development

Capital allocation

Fund management

Outlook

Capital management

Positioned + for fi nancial stability

Fund debt maturity profi le

Positioned for a sustainable future+

Corporate governance+

The Board

(a) act honestly;

Directors’ obligations and rights

Independent decision making

Criteria for assessing independence

Chairman

Group Chief Executive Offi cer

Company Secretary

Remuneration and Nomination Committee

Remuneration

Performance review

Policies and codes

Responsible and ethical decision making

Sustainability

Securities trading

Related parties

Gifts

Dealing with public offi cials

Group Employee Handbook

Occupational Health and Safety (OH&S) Manual

Committees and oversight

Audit Committee

Risk and Compliance Committee

Investment Committee

Timely and balanced disclosure

Securityholders

Complaints handling

Financial report for Goodman Limited

Directors’ report

Goodman Limited (formerly Goodman International Limited) and its Controlled Entities

Directors

Company Secretary

Directors’ meetings

Principal activities

Directors’ report (cont)

Review and results of operations

Dividends and distributions

Reconciliation of (loss)/profi t attributable to Securityholders to operating profi t available for distribution

Directors’ report (cont)

State of affairs

(a) Change of name

(b) Equity raising and acquisition of equity interest in Goodman Asia Limited (GAL) (formerly Macquarie Goodman Asia Limited)

(c) New Finance Facility

(d) Other fi nance facilities

(e) Goodman Australia Industrial Fund (GAIF)

(f) Arlington Business Parks Partnership (ABPP)

(g) Goodman European Logistics Fund (GELF)

(h) Japan fund

Strategy and outlook

Options granted during the year

(a) Granted to employees

(b) Granted to fi nance facility providers

Unissued securities under option

Securities issued on exercise of options

Directors’ interests

GOODMAN GROUP Annual Report 2009