GOODMAN GROUP

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28 September 2010

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

Dear Sir

Goodman Group (Goodman) – Annual Report 2010

We confirm that the Goodman Securityholder Review and Financial Report 2010 (incorporating the Goodman Industrial Trust Financial Report 2010) was dispatched to Securityholders today. The Reports and covering letter are attached.

Please contact the undersigned should you have any queries.

Yours faithfully

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Carl Bicego

Company Secretary

enc

Level 10, 60 Castlereagh Street Sydney NSW 2000 | GPO Box 4703, Sydney NSW 2001 Australia Tel +61 2 9230 7400 | Fax +61 2 9230 7444 | [email protected] | www.goodman.com Goodman 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

28 September 2010

Dear Securityholder

Goodman Group (Goodman or Group) – Securityholder Review and Financial Report 2010

We are pleased to present the Goodman Securityholder Review and Financial Report 2010 (incorporating the Goodman Industrial Trust Financial Report 2010). The online versions are now available at www.goodman.com.

Goodman completed a number of initiatives during the 2010 financial year that have enabled us to capture opportunities and build operating momentum across our business despite the challenging global environment.

We retained our leading global operating platform and capable team of people. Our focus has been to expand our customer and investor relationships, at the Group level and in our managed funds, to capture prudent growth opportunities that will deliver value and drive future earnings growth.

Goodman achieved an operating profit of $310 million for the year ended 30 June 2010, equivalent to operating earnings per security of 5.25 cents on a fully diluted basis, and paid a distribution of 3.4 cents per security.

Annual General Meeting

The Annual General Meeting will be held on Tuesday, 30 November 2010 at The Westin Sydney, No 1 Martin Place, Sydney at 10:00am. A Notice of Meetings and Proxy Forms will be dispatched to all Securityholders during October.

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

120142 - V2

Goodman Group Securityholder Review 2010

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building momentum + delivering opportunities

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Contents
Chairman’s letter	2	Financial summary+
Group Chief Executive Offcer’s report	6	corporate information
Group operations		Five year fnancial summary	28
Property investment	14	Group executives	30
Property development	16	Board of Directors	32
Property services	18	Securities information	34
Fund management	20	Corporate directory	35
Sustainability	22

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Highlights

5.25c

Earnings per security (fully diluted)

$310m

Operating profit

3.4c

Distribution per security

$12.6b

Third party assets under management

$1.2b

Development commencements

2m sqm

Space leased globally

93%

Occupancy

5.5 years

Weighted average lease expiry

Offices worldwide

Goodman Group Securityholder Review 2010

building value + delivering results

At Goodman Group, the 2010 financial year was focused on ensuring we maintained the stable financial position the Group had secured, capitalising upon our existing strategic relationships and gaining momentum on the modest operational activity that was taking place across our markets around the world.

The past 12 months saw the Group maintain a sound financial position following the recapitalisation undertaken in August 2009.

Financial highlights for 2010 include:

- the Group achieved an operating profit of $310 million for the year to 30 June 2010;
- the Group reported a statutory loss of $562.6 million, the difference to operating profit reflecting property and investment revaluations and other non-operating items. With approximately 90% of this incurred in the first half, we are seeing property and equity investment valuations stabilise;
- a fully diluted operating earnings per security of 5.25 cents was achieved, slightly higher than the forecast 5.2 cents;
- gearing has been lowered and maintained at 25% and interest cover has increased to 3.8 times, which is well within banking covenants; and
- available liquidity is currently $1.7 billion which is sufficient to meet all debt maturities to the first half of the 2013 financial year.

A number of restructuring initiatives were also introduced to right size the business for the new world we are now operating in. As we expect to see a continuation of the subdued global market conditions, it is important that we remain committed to maintaining this strong financial position. We have explored and will continue to explore a range of capital sources and opportunities to diversify our debt platforms and lengthen the term of our debt maturities.

Our results highlight the operating stability that has been building across our business throughout the 2010 financial year and will continue into 2011, despite a challenging global environment. We have completed a number of initiatives at the Group level and in our managed funds during the year that have secured a strong platform for growth. This has ensured we are well positioned not only for today, but also for when market conditions improve across our key markets.

These initiatives will allow us to continue to build momentum across our global platform. The reactivation of our development pipeline has been undertaken on a prudent basis. We have commenced $1.2 billion of new projects during the year and, in line with our development strategy, these have been primarily matched with third party capital.

Our managed fund platform continued to gain support from institutional fund investors with $1.3 billion of new third party equity raised for our Australia, UK, Continental Europe and China platforms. This was achieved by leveraging the relationships that have been built with our strategic partners. A range of opportunities were achieved with our global investor groups, Canada Pension Plan Investment Board (CPPIB), CB Richard Ellis Realty Trust (CBRERT) and China Investment Corporation (CIC).

In May, we expanded our strategic relationship with the launch of our second fund with CPPIB, Goodman Australia Development Fund (GADF). This new fund focuses on acquiring a range of high quality pre-committed development opportunities in Australia and secures a funding platform for our Australian development business over the next two years. GADF has been established on an 80/20 basis, with CPPIB holding the majority share, and is seeded with the acquisition of our Kmart development in Melbourne. The initial equity commitment to the fund is $250 million with a target gross asset value of approximately $400 million.

Goodman Group Securityholder Review 2010

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Chairman’s letter continued
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+ Millennium Centre,
Auckland, New Zealand
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With customer retention at 75% and occupancy up 1% to 93%, our commitment to customers and the ability to build strong relationships by remaining flexible in meeting their needs are two key reasons we have managed to remain operationally strong, even through the most challenging times. Goodman’s global footprint and ability to partner with our customers to develop world class facilities in key markets have enabled us to build relationships with companies such as Toll, Kmart, Linfox, Unilever, Kuehne + Nagel, DHL, Brambles, NYK Logistics and Schenker in many countries around the world. We have been able to provide our customers with a service that is in turn designed to meet the needs of their customers, today and into the future.

In June we announced the establishment of two new co-investment vehicles in the UK and Europe with our investment partner, CBRERT. These vehicles will invest in precommitted logistics development opportunities sourced through Goodman. They will be funded on an 80/20 basis, targeting an initial investment term of three years with the majority share being held by CBRERT. The UK vehicle is targeting a total investment of £400 million ($696 million) and the European vehicle is targeting a total investment of €400 million ($575 million), focusing on the core Western European markets of Germany, France and Benelux.

Our relationship with CIC and our commitment to the China market took a significant step forward with the signing of a Memorandum of Understanding (MOU) with the Langfang Municipal Government in China. Under the MOU, we will use our worldwide expertise in business park development, masterplanning and property management to develop a leading logistics and business hub for the greater Beijing-Tianjin area in northern China.

Overall, the Group’s results for the financial year reflect the strength of our underlying business and importantly demonstrate that Goodman has delivered on all of its objectives outlined at the time of the recapitalisation.

Goodman expects a continuation of the subdued global market conditions, contributing to a lower growth environment. However, the strategy adopted by the Group over the past 12 months has laid a solid foundation for growth and for Goodman to capitalise on the new market conditions. Our business has been tested in the most challenging market conditions. Our current position demonstrates its robustness and will provide Goodman with the ability to endure further uncertain market conditions while continuing to deliver results and create value for Securityholders.

Our Interlink development in Hong Kong is one of the largest industrial development projects currently being undertaken in the world and when completed in January 2012 will be the fourth largest warehouse in Hong Kong at 220,000 sqm. Over 40% of the gross lettable area has already been pre-leased to leading global logistics operators, DHL Supply Chain and Yusen Air & Sea Service. Interlink is designed to meet all the needs of modern logistics operators and marks a new milestone in the Group’s commitment to Asia. It will introduce approximately 5% of prime new space to the local market and is being built in compliance with both the Hong Kong Building Environments Assessment Method and Leadership in Energy and Environmental Design.

On behalf of the Board and management, I would like to thank our Securityholders and customers for their continued support and commitment and assure you that we remain fully committed to deliver the results to create value for all of our stakeholders.

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Ian Ferrier, AM Independent Chairman

Goodman Group Securityholder Review 2010

building relationships + delivering opportunities

Goodman Group expanded its investor and customer relationships at the Group level and in our managed funds during the year. This has enabled us to capitalise on a number of opportunities that will deliver value and drive earnings growth into the future.

The 2010 financial year has seen the completion of a number of initiatives across Goodman. We positioned the Group appropriately to not only manage through the challenging global market conditions and weak operating environment, but also for long-term growth and to take advantage of future opportunities. We recapitalised the Group and our managed funds, significantly strengthened our balance sheet and vigorously managed operating costs. We introduced new capital partners and repositioned our business to establish a solid platform for growth.

Importantly, we retained our leading global operating platform and a very capable team of people. This provided us with a range of opportunities to work with customers around the world and to continue delivering high quality solutions to their changing business needs.

In this context, we refocused on the active components of our business as market conditions began to stabilise during the year. Our development pipeline was prudently reactivated and we sought to match this against new equity capital from the Group’s fund investors. This integrated approach between our development and fund management businesses, combined with our extensive global infrastructure and resources have been key drivers of the operating momentum that has been building steadily across the Group over the last year.

Goodman posted operating earnings per security of 5.25 cents and an operating profit after tax of $310 million. Our operating result was consistent with the guidance provided by the Group at the beginning of the 2010 financial year, reflecting our increased operating momentum as well as the initiatives delivered over the full year period.

The Group distributed an amount of 3.4 cents per security for the full year. The total distribution for the year consisted of a 1.5 cents per security interim distribution declared for the half year ended 31 December 2009 and paid in February 2010, and a 1.9 cents per security final distribution declared for the year ended 30 June 2010 and paid in August 2010.

A key achievement for the year has been the introduction of new capital partners to the Group and into our managed funds, raising $1.8 billion. Specifically, China Investment Corporation (CIC) has made a $500 million equity investment in the Group in the form of hybrid securities and has agreed to explore a range of opportunities with Goodman. The strength of our cooperation with CIC has further benefited the Group through the Memorandum of Understanding signed with the Langfang Municipal Government in China to participate in the development of a premier business and logistics hub for the Beijing-Tianjin area in northern China.

Furthermore, we introduced two large North American investors, Canada Pension Plan Investment Board (CPPIB) and CB Richard Ellis Realty Trust (CBRERT) to our fund management business, contributing a combined $1.1 billion in new third party equity capital. CPPIB committed equity capital of $0.5 billion during the year to establish a joint venture in China, and a new Australian development fund. Similarly, two co-investment vehicles were established with CBRERT in the UK and Europe with a combined initial equity commitment of $0.6 billion, and a target total investment of $1.3 billion.

These new partnerships demonstrate our ability to raise third party capital and the strength and quality of the relationships we have with global investor groups.

We also worked hard during the year to build on the strength of our customer relationships and meet the diverse property needs of our customers in all of our markets around the world. Customer demand for high quality logistics space was reflective of slower growth markets, however in an environment of reduced competition, Goodman has been well placed to respond through the reactivation of our development pipeline during the first half of the year on a pre-leased and pre-funded basis.

Goodman Group Securityholder Review 2010

Group Chief Executive Officer’s report continued

After reaching the low point in the development cycle in the second half of the 2009 financial year, Goodman steadily increased its development commencements in the 2010 financial year, with 23 new projects valued at $1.2 billion across nine countries. Importantly, these commencements have been substantially pre-leased and matched to third party capital.

The past year has also seen the business space requirements of a number of our customers change and we have been active in providing flexible, value-added leasing solutions to help them consolidate or upgrade their accommodation needs. Our Property Services teams have strived to provide exceptional levels of customer service which is reflected in our high customer retention and occupancy rates of 75% and 93% respectively.

On behalf of the Board and management team, I would like to thank our people for their dedication and significant ongoing contribution over the last year, to drive our growth and position our business for future success.

Group operations

Goodman’s commitment to, and focus on, its core operations has been demonstrated through the retention of the Group’s leading global business platform and well regarded team of people in our key markets. We adjusted our own+develop+manage approach to further de-risk our development business by matching pre-committed projects with third party capital. Our strong operational focus ensured that we continued to be responsive to the needs of our customers and selectively capture opportunities.

The Group’s operations delivered operating EBIT of $382.9 million with 65% of our

Capital allocation

earnings sourced from the Asia Pacific region and 35% from Europe. The composition of our earnings reflected the impact of the prior year adjustments to our operations, with the contribution to full year earnings from developments increasing from the cyclical low point reached in the second half of the 2009 financial year. Our property investment activities contributed 82% to earnings, with 8% being derived from our development activities and 10% from management services.

Property investment

Goodman’s total investment portfolio consists of the Group’s direct property investments, cornerstone investments in Goodman’s managed funds and other financial investments. The value of the investment portfolio decreased from $5.6 billion to $4.7 billion during the year, mainly as a result of the downward property revaluations, currency movements and a reduction in our cornerstone investments.

The total investment portfolio performed well overall for the year, with underlying property fundamentals remaining stable. Occupancy at year end was 93% across the overall investment portfolio and 95% for the direct investment component. Other features included a weighted average lease expiry of 5.5 years and a continued low arrears trend. Rental growth was flat for the year, largely due to fixed rental growth being offset by longer let-up times and lower market rental growth.

Our direct investment portfolio as well as the Group’s cornerstone investments experienced property valuation losses for the full year, with around 90% of the write-downs recorded in the first half. Valuations began to stabilise in the second half, with some firming of property investment values evident.

Earnings composition

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$B
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5.6
4.7
1.7 1.7
1.2 1.3
Property Development Other
investments land and WIP
Jun 2010 Jun 2009
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Investments Developments
82% 8%
Management
10%
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The Group is a strategic cornerstone investor in our managed funds, retaining a significant $2.4 billion investment. This is $361 million lower than for the 2009 financial year and is mainly the result of the sale of units in Goodman Property Trust and property valuation movements. Our long-term strategy is to target a cornerstone interest of around 20% across all of our funds.

Property development

Following a subdued period of development activity reflecting the weak operating environment and the Group’s need to conserve capital, Goodman increased its development activities in the first half of the 2010 financial year through the reactivation of its development pipeline. This was prudently undertaken with our focus on pre-committed projects and where possible, match funded to third party capital. Our approach included the establishment of four new investment vehicles with global investor groups, CPPIB and CBRERT, which provided a secure funding source for our development pipeline. This ensured we were able to meet the demand for new business space from our customers without compromising our balance sheet position.

The momentum within our development business continued to build over the reporting period and by year end Goodman had commenced a total of $1.2 billion of new projects at a yield on cost of 9.4%, compared with $533 million in the 2009 financial year. Commenced developments included the 222,000 sqm Interlink warehouse and distribution centre in Hong Kong, which is 41.5% pre-leased to DHL Supply Chain and Yusen Air & Sea Service; a 76,735 sqm development in Melbourne and a 13,400 sqm facility in Auckland for discount retailer Kmart; a 43,484 sqm development at Andover in the UK for food retailer, The Co-operative Group; a 39,392 sqm distribution centre for supermarket chain, LIDL in France; a 21,581 sqm facility for Staples in Sweden; and in Germany, a 20,913 sqm warehouse for transport and logistics provider, DSV.

The Group and managed funds also completed $411 million of developments in the 2010 financial year, delivering approximately 500,000 sqm of space for 20 customers. Significantly, 99% of these completed developments had customer pre-commitments and all were undertaken on behalf of our managed funds or third parties.

The value of development projects underway at year end was $1.3 billion. Approximately 73% of the developments being undertaken are on behalf of our managed funds or third parties, of which 96% are pre-committed excluding the Interlink development in Hong Kong. The development activity being undertaken has consumed approximately 7% or 500,000 sqm of the land inventory controlled by the Group and our managed funds.

Goodman will continue the prudent rollout of its development pipeline with the controlled land inventory across the Group and managed funds capable of producing over $10 billion of new development product, which we expect to realise over the medium to long-term. Despite the expected continuation of the subdued global market conditions, we believe Goodman’s development business is well positioned in an environment of reduced competition and a smaller number of high quality development opportunities across the industrial property sector.

Property services

Goodman’s specialist in-house Property Services teams are responsible for delivering a wide range of services to our customers around the world. These services cover activities from maintenance and general site operations, to leasing and responding to the specific changing business space needs of customers.

Our Property Services teams are responsible for 10.4 million sqm of total business space under management, equating to total assets under management (AUM) of $16.2 billion. Their professionalism, dedication and proactive approach have ensured that the needs of our more than 1,260 customers were understood and attended to across 327 properties in our 16 countries of operation.

This is best demonstrated through the results achieved by our teams, with the successful leasing of approximately 2 million sqm of business space globally in the 2010 financial year to the value of $238 million in net annual rent.

Fund management

Goodman’s third party AUM was $12.6 billion at year end, a reduction of $1.7 billion compared with the same time last year. Significantly, property valuation and currency movements accounted for the lower AUM, which otherwise remained stable and our managed funds continue to be well supported by investors.

Goodman Group Securityholder Review 2010

Group Chief Executive Officer’s report continued

The strong support received from major institutional investors during the year is evident in the number of major new initiatives undertaken in the 2010 financial year. We raised $1.3 billion of new third party equity across our managed fund platform and at year end had access to $1.3 billion in uncalled equity and a further $800 million of undrawn debt available.

CPPIB committed $350 million to Goodman to establish an 80/20 China joint venture fund, with CPPIB holding the majority share. The fund, Goodman China Logistics Holding, will invest in high quality logistics assets in Mainland China. It was initially seeded with four of Goodman’s existing assets located in the Shanghai vicinity.

The relationship with CPPIB was further expanded with a $250 million equity commitment to establish Goodman Australia Development Fund (GADF), on an 80/20 basis, again with CPPIB holding the majority share. GADF has a target gross asset value of $400 million and will focus on acquiring high quality pre-committed development opportunities in Australia.

Goodman also established a $1.3 billion relationship in the second half of the 2010 financial year with CBRERT through two new co-investment vehicles in the UK and Europe. As with the CPPIB joint ventures, the co-investment vehicles will be funded on an 80/20 basis and target a total investment of £400 million ($696 million) in the UK and €400 million ($575 million) in Continental Europe and will focus on the acquisition of high quality pre-committed logistics development opportunities.

The strategic relationships formed with CPPIB and CBRERT demonstrate Goodman’s ability to access global third party capital and the demand that exists for high quality, well

managed property investment products. The four new initiatives will facilitate the ongoing expansion of our logistics business in key markets around the world, ensure that the Group has a secure funding platform for its development business and provide alternative sources of capital to maintain our strong financial position.

Goodman Australia Industrial Fund (GAIF), Australia’s largest unlisted industrial property fund, with AUM of $4.4 billion, successfully completed $320 million of equity raising initiatives to strengthen its balance sheet. The initiatives which consisted of a $120 million mandatory distribution reinvestment plan and a $200 million pro rata non-renounceable rights issue were strongly supported by GAIF’s existing investors. GAIF also completed the refinancing of $1.9 billion of existing debt facilities and separately, diversified its debt funding platform through the establishment of a new five year, $250 million debt facility with Challenger Life Company Limited.

In New Zealand, our listed Goodman Property Trust (GMT) diversified its debt funding sources with the successful completion of its NZ$150 million Goodman+Bonds issue, which was offered to both retail and institutional investors. Goodman+Bonds are investment grade, five year fixed rate senior secured debt securities, which are quoted and traded on the New Zealand Debt Market.

During the first half of the 2010 financial year, Goodman reduced its cornerstone investment in GMT from 28% to 17% consistent with the Group’s long-term strategy of targeting around 20% for cornerstone investments in our managed funds.

Capital management

The recapitalisation of the business announced in August 2009 significantly strengthened

Group debt maturity profile

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$M
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1,000.0
553.9
632.3 647.6
399.7
94.3
33.0 164.0
Jun 2011 Dec 2011 Jun 2012 Dec 2012 Jun 2013 Dec 2013 Jun 2014 Dec 2014
Unfunded maturity Funded maturity from available liquidity
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Hong Kong
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the financial position of the Group and our managed funds. This financial stability has provided the Group with the flexibility to explore and capitalise on a range of growth opportunities across our markets. We have done this in a prudent manner and continue to adopt a vigilant and cautious approach regarding the use of our balance sheet.

Goodman’s financial position was strengthened during the 2010 financial year, with a significant reduction in gearing to 24.9% compared with 47.9% as at 30 June 2009. Our liquidity position was $1.5 billion at year end, increasing to $1.7 billion post balance date. The Group now has sufficient funding to meet its debt maturities until the first half of the 2013 financial year, which is an improvement of six months since the recapitalisation was undertaken in the first half of the year. The Group also finished the year with a weighted average debt maturity of 3.3 years.

The Group and our managed funds extended $4 billion of debt facilities during the year, and a further $1.4 billion of new debt facilities were established with an average term to maturity of 3.9 years.

opportunities to diversify our debt funding platform and lengthen the term of our debt maturities. Consistent with this strategy, we have already secured alternative debt funding sources in our managed funds, with GAIF arranging a new five year, $250 million facility and GMT raising NZ$150 million from its Goodman+Bonds issue, also with a five year term.

Outlook

Goodman has completed a broad range of initiatives at the Group level and in our managed funds over the last 12 months which provided a solid platform for growth. The strength and quality of our business are reflected in the operating momentum that has been building during the year and into the 2011 financial year.

Our outlook is for a continuation of the subdued global market conditions and a low growth environment, limited access to capital and reduced competition, all of which are expected to generate a smaller number of higher quality opportunities across the industrial property sector. Goodman is well positioned to capitalise on these opportunities given its specialist industrial focus; proven capability and leading global operating platform; extensive relationships with customers and investment partners; and strong balance sheet.

Goodman will adopt a prudent yet active approach in the delivery of our business strategy and will focus on capital management, active asset management and tight cost control to differentiate Goodman from our peers, while increasing the contribution from the active parts of our business, being developments and fund management, to drive earnings growth.

For the 2011 financial year and assuming no material change to market conditions, Goodman expects to achieve an operating profit after tax within a range of $370 to $380 million, equating to operating earnings per security of 5.3 to 5.5 cents on a fully diluted basis.

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Gregory Goodman Group Chief Executive Officer

Goodman Group Securityholder Review 2010

Group operations

Goodman Group Goodman Group Securityholder Review 2010

quality investments + proven capability

327

quality industrial and business space properties under management in 32 cities around the world.

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United Kingdom
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Facts and figures

The Group’s total property investment portfolio consists of $2.3 billion direct property investments across Australia, the United Kingdom and Europe, and cornerstone investments across our managed fund platform valued at $2.4 billion. 77% of Goodman’s total investment portfolio is in Asia Pacific and 23% in Europe.

Goodman invests in quality industrial property and business space in key markets around the world. We take a long-term investment view and are focused on building long-term relationships with our customers and creating value for our investors.

The Group’s direct property investment portfolio consists of 44 properties with a net lettable area of 1.6 million sqm. During the year we leased 405,000 sqm and the portfolio has achieved an occupancy rate of 95% and average lease duration of 4.3 years.

The Group’s cornerstone investments across our managed fund platform directly align our interests with those of our investors. The Group’s long-term strategy is to achieve a cornerstone investment target of around 20%. This strategy is reflected in the recent sale of units in Goodman Property Trust in New Zealand and the establishment of four joint venture funds during the year on an 80/20 basis, with Goodman holding the 20% share.

Goodman Group Securityholder Review 2010

Case study: Interlink Hong Kong Interlink is one of the largest industrial development projects currently being undertaken anywhere in the world and is one of the first major new Hong Kong warehouse projects in nearly a decade. China’s logistics industry has recently grown at an annual rate of around 20% and the Interlink development demonstrates our strategic commitment to Asia.

Property development

Located in the strategically important Tsing Yi port district, the 2.4 million sq ft (222,000 sqm) development is valued at more than HK$4 billion (approximately $600 million) and on completion will be the fourth largest warehouse in Hong Kong.

“ Located at the heart of Tsing Yi container port in Hong Kong and built to Goodman’s high environmental and construction standards, Interlink is designed to meet all the needs of modern logistics operators. We look forward to delivering this landmark warehouse and distribution development.”

Interlink will incorporate a number of sustainable design features including low energy light fittings, light and motion sensors, harvesting of rain water and landscaping on flat roofs. It will be built in compliance with both the Hong Kong Building Environments Assessment Method and the Leadership in Energy and Environmental Design environmental assessment method, with the aim to be the first of its type to obtain such accreditations and awards in Hong Kong. Construction is well advanced on this exciting development and completion is anticipated in January 2012.

Philip Pearce, Goodman’s Managing Director, Greater China

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capturing momentum + developing opportunities

$1.2 billion

of new development projects were commenced, demonstrating the positive momentum gained across our global development platform.

Goodman Group Securityholder Review 2010

adding value + delivering service

10,400,000 sqm

of total business space is managed by Goodman’s in-house Property Services teams for 1,260 customers in 16 countries around the world.

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+ Venlo North Logistics Centre,
The Netherlands
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Customer case study: DSV

Global transport and logistics solutions company, DSV is a Goodman customer in Australia and across three countries in Continental Europe. DSV currently occupies approximately 110,000 sqm, with a further 20,913 sqm facility being developed in Germany.

“ We value highly the professionalism, responsiveness and flexibility shown by the Goodman team as they worked closely with us during the year to find a solution for our changing accommodation needs. We have now consolidated a number of our divisions into a single larger site and are delighted with the outcome and the high standard of service provided.”

DSV Australia has had a relationship with Goodman for over five years, initially leasing around 500 sqm of office space at our Discovery Cove Industrial Estate in South Sydney. During the year, DSV approached Goodman’s Property Services team to help find a larger space to enable the consolidation of a number of DSV’s sites and create greater operational efficiencies. The Goodman team worked with DSV to quickly secure suitable alternative premises within our South Sydney portfolio, finalise the lease and undertake a make good of the space to facilitate a seamless relocation.

Danny Ayoub, Managing Director Australia, DSV Air & Sea Australia

DSV’s resulting move to 5,200 sqm of combined warehouse and office space at Portside Distribution Centre demonstrates the strength of Goodman’s customer service offering and the commitment and dedication of our Property Services team.

Goodman Group Securityholder Review 2010

Case study: Investor relationships We retained our global managed fund platform and strengthened the financial position of all of our funds. This has enhanced our leading position in key markets and secured ongoing investor demand for our managed property investment products. As a result, Goodman’s managed funds have retained the strong support of major local and international investment partners, many of whom invest in a number of our funds.

Fund management

“ The co-investment vehicles with Goodman provide us an outstanding opportunity to partner with a leading global logistics development organisation that is well-established in both the UK and European markets. The alignment of our strategies has been a key component that led to our partnership, and we look forward to building upon our mutual interests.”

Goodman also continued to build relationships with global investor groups, leading to the introduction of two high quality North American institutional investors. As a result, we successfully established four new investment vehicles, partnering with Canada Pension Plan Investment Board and CB Richard Ellis Realty Trust (CBRERT). These partnerships have introduced new committed equity capital of $1.1 billion into our managed funds business through the launch of four new joint venture funds across Asia Pacific and Europe.

Jack Cuneo, President and CEO of CB Richard Ellis Realty Trust

Our strategic relationship with CBRERT announced in June 2010 for example, spans the UK and key markets in Continental Europe. We have established two co-investment vehicles with a targeted total investment of $1.3 billion over an initial three year period. The vehicles will invest in logistics opportunities sourced through Goodman, and this enables us to continue building momentum across our European platform, while securing the prudent ongoing delivery of our significant development pipeline.

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leading platform + quality partnerships

11

distinct sector and geographic funds that invest in high quality logistics and industrial property, and business space. Goodman’s managed funds are predominantly ‘core’ and ‘core plus’ income producing funds.

Goodman Group Securityholder Review 2010

developing quality + building the future + Keylink Industrial Estate, Edinburgh, South Australia

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

The 2010 financial year was marked by the achievement of two significant sustainability milestones. We commenced the rollout of our sustainability programme globally and established some key performance management and reporting infrastructure in Australia.

In addition, we continued to undertake market leading green developments around the world, our community programmes have been productive and we have initiated the next phase of our stakeholder engagement strategy.

Environmental progress – new developments The application of green building principles in industrial property is still a new frontier in property markets around the world and Goodman is enjoying the challenge of working with our customers to progress this. In the last year, we have initiated and advanced a large number of innovative green industrial building projects around the world. Highlights include:

- Keylink Industrial Estate, South Australia: incorporating a 50 kW solar photovoltaic system;
- London Sustainable Industries Park (SIP), UK: Government Development Partner to deliver one of the UK’s flagship green development projects, providing a park of BREEAM Excellent buildings;
- Herten Logistics Centre, Germany: first Gold pre-certification of a logistics project with the DGNB (German Sustainable Building Council);
- Moët Hennessy, France: one of the first logistics facilities in France to achieve HQE certification;
- Courier Post, New Zealand: New Zealand’s first Green Star certified industrial building; and
- Schneider Electric, New Zealand: one of the most energy efficient industrial buildings in New Zealand.

We have a number of other developments currently seeking green building certifications in locations including Australia, New Zealand, the UK, The Netherlands, Germany and Hong Kong, and look forward to presenting these in the future.

Regulatory compliance in Australia On 1 July 2010, Commercial Building Disclosure (also known as Mandatory Disclosure) was initiated under the new Commonwealth Government Building Energy Efficiency Disclosure Act, 2010. This regulation requires the disclosure of NABERS Energy ratings when office space of 2,000 sqm NLA or more is sold or leased. Goodman’s new environmental data management and smart metering systems, coupled with a current programme of systematically NABERS rating our business and office park assets, will assist Goodman to effectively and efficiently manage its requirements under the Act.

To further support high quality project outcomes in Australia, Goodman has rewritten its standard briefs for office and industrial projects and these will underpin good sustainability performance, as well as overall lifecycle quality. Goodman’s UK business has committed to all new developments achieving a BREEAM rating of Very Good or better.

Environmental progress

– performance management

The 2010 financial year saw the development and roll out of two infrastructure system projects that will underpin Goodman Australia’s environmental performance and reporting work from the 2011 financial year onwards.

The first of these projects is an environmental data management system to streamline asset performance management, utility billing and reporting activities. This system will enable Goodman to take a portfolio-wide approach to asset performance management. Goodman will also report its Australian energy, greenhouse gas and water footprints, from both its corporate and asset operations.

Goodman will be reporting its greenhouse gas footprint as part of a sustainability progress report due for publication in the first half of the 2011 financial year.

The second infrastructure project is a smart metering system for Goodman Australia’s business and office park assets. This multi-million dollar project involves the installation of smart metering equipment at 76 properties. It will deliver centrally reported operating data that will greatly assist with the environmental performance optimisation of these properties and help satisfy regulatory reporting requirements. It also allows the achievement of base-building National Australian Built Environment Rating System (NABERS) Energy ratings on a large number of business park assets that were previously not rateable due to technical challenges not typically faced in office building portfolios.

Goodman Group Securityholder Review 2010

Sustainability continued

Programme leadership

Goodman has commenced the rollout of a global programme framework. With involvement in many regional green building bodies and initiatives, and numerous market leading green building projects around the world, the expansion of the pilot programme in our Australian business will greatly accelerate the flow of best-practice knowledge across our global operations.

To lead the expansion, a Group Head of Sustainability has been appointed to operate globally and work closely with our Sustainability Steering Committee, as well as members of Goodman’s executive and regional management teams. Our European business has also appointed a Sustainability and Technical Director, Continental Europe to work closely with the Group Head of Sustainability in rolling out the programme and to oversee its progress.

Goodman is a member of the Green Building Council of Australia (GBCA) and is a member of similar bodies in the UK (UKGBC) and New Zealand (NZGBC).

In Australia, we have been actively supporting the development of the GBCA’s Green Star – Industrial v1 tool and have been a Platinum level sponsor of the tool since 2007.

Stakeholder engagement progress

In the 2009 financial year, Goodman committed to aligning its sustainability framework with the Global Reporting Initiative (GRI) to support clear and credible voluntary reporting of our performance in the future.

Goodman is also developing a sustainability progress report for release in the first half of the 2011 financial year. This report will provide more detailed information on the progress Goodman is making on its sustainability programme. It will also be used as a tool for engagement with a number of key stakeholder groups to garner feedback on expectations and aspirations around our sustainability activities.

Community progress

Goodman’s community support programmes, including our good+deeds employee giving and good+heart staff volunteering programmes, continue to support dozens of not-for-profit community organisations in the regions in which we operate. Examples of the work being undertaken include:

- Goodman Asia was recognised by The Hong Kong Council of Social Service with a Caring Company Award. Goodman Hong Kong chose to support the Children’s Cancer Foundation, Children’s Thalassaemia Foundation, Jackie Chan Charitable Foundation, Chi Lin Care and Attention Home and the Hong Kong Red Cross. Goodman China supported the United Nations Children’s Fund and the Shanghai Red Cross; and
- in Australia, good+deeds completed its fourth year of operation and again supported a number of charities that assist disadvantaged people, including The McGrath Foundation, beyondblue, The Smith Family, Education Development Association and Cancer Council Australia. The Goodman Foundation continued to match all employee contributions.

Priorities for 2010/11

Over the coming year, Goodman will focus on a number of priorities:

- continue the rollout of our sustainability programme globally;
- publish a sustainability progress report and engage with key stakeholders;
- prepare for a submission to the Carbon Disclosure Project;
- in Australia, complete the rollout of our smart metering system, NABERS Energy rate our business and office park portfolios, and develop environmental performance improvement plans for each of our business and office park assets;
- utilise locally applicable green building rating schemes (eg Green Star, BREEAM, LEED, HQE, DGNB certification and HK BEAM) for new developments;
- continue to satisfy all local regulatory requirements; and
- continue to grow our community programmes around the world, including good+deeds.

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Keylink Industrial Estate, Edinburgh, South Australia

Goodman completed the Keylink Industrial Estate facility including a 300 panel, 50kW solar photovoltaic system, for leading distributor of engines and power system brands, MTU Detroit Diesel Australia. Keylink is one of the flagship projects in the Commonwealth funded Adelaide Solar City programme. This $600,000 system is expected to generate 70,000 kW hours of electricity per annum and reduce MTU Detroit Diesel Australia’s greenhouse gas emissions by 70 tonnes each year.

Goodman and MTU Detroit Diesel Australia also developed a solar system education package for primary and secondary school students. Live performance data for the system can be found at w w w.keylinksolar.com.au.

Schneider Electric, Highbrook Business Park, Auckland, New Zealand The Schneider Electric facility was designed to achieve a 4 Star Green Star rating and is one of the most energy efficient industrial buildings in New Zealand. The 5,800 sqm office and warehouse facility was constructed using Environmental Choice products and recyclable materials where possible. A number of environmentally sustainable design initiatives were incorporated in the design and include controlled lighting with dimmers and sensors, an air conditioning system with occupancy sensors and the use of lowEglass to enhance solar heat gain and building temperature control.

The overall design showcases Schneider Electric’s technical capability and demonstrates how technical innovation can contribute to smarter, more sustainable business. The building was recognised with an industrial Excellence Award from Property Council New Zealand.

London Sustainable Industries Park, Dagenham, UK

Goodman UK Logistics is proud to have been appointed by London Thames Gateway Development Corporation as the developer of the new 25 hectare London Sustainable Industries Park, which will be the largest concentration of environmental industries and technologies in the UK. The park is designed to utilise synergies between occupant processes, such as the reuse of waste, in order to generate good park-wide environmental efficiencies. Construction is advancing on the 125,000 sqm of BREEAM Excellent rated office space that the park will eventually offer.

Goodman Group Securityholder Review 2010

+ Financial summary corporate information

Goodman Group Securityholder Review 2010

Five year financial summary

2006
2007
2008
2009
2010
$M
$M
$M
$M
$M
Income statement
Gross property income
434.9
419.8
310.5
264.3
237.4
Fund management income
62.8
71.8
86.9
84.4
76.2
Property services income
9.4
65.0
75.1
65.5
55.8
Development management income
113.9
190.1
351.1
305.4
147.2
Income from sales of inventories
–
–
–
–
51.3
Distributions from investments
8.7
18.0
28.9
19.6
26.7
Net gain/(loss) on disposals of assets
44.0
173.4
399.6
54.3
(0.1)
Net gain/(loss) from fair value adjustments
on investment properties
113.5
64.0
(144.3)
(527.0)
(210.0)
Share of net results of equity accounted investments
46.7
121.2
(25.0)
(508.7)
(236.8)
~~Total income~~
~~833.9~~
~~1,123.3~~
~~1,082.8~~
~~(242.2)~~
~~147.7~~
Property expenses
(90.5)
(94.4)
(64.4)
(53.2)
(59.8)
Development expenses
(96.9)
(134.4)
(296.5)
(243.4)
(107.9)
Inventory cost of sales
–
–
–
–
(39.8)
Employee expenses
(47.8)
(81.0)
(144.7)
(30.3)
(83.6)
Administrative and other expenses
(23.9)
(93.2)
(77.1)
(81.2)
(66.4)
Impairment losses
–
–
(108.2)
(229.7)
(145.4)
Restructuring costs
–
–
–
(85.7)
–
Net fnancing costs
(69.0)
(96.3)
(110.5)
(153.6)
(154.1)
~~Total expenses~~
~~(328.1)~~
~~(499.3)~~
~~(801.4)~~
~~(877.1)~~
~~(657.0)~~
Proft/(loss) before income tax
505.8
624.0
281.4
(1,119.3)
(509.3)
Income tax(expense)/beneft
(5.5)
(23.8)
(5.2)
23.3
(1.0)
Proft/(loss) for the year from continuing operations
500.3
600.2
276.2
(1,096.0)
(510.3)
Proft/(loss)from discontinued operation(net of income tax)
–
22.5
(7.8)
–
–
Proft/loss for the year
500.3
622.7
268.4
(1,096.0)
(510.3)
Proft attributable to other non-controlling interests
(0.2)
(0.2)
(17.7)
(24.0)
(52.3)
~~Proft/(loss) attributable to Securityholders~~
~~500.1~~
~~622.5~~
~~250.7~~
~~(1,120.0)~~
~~(562.6)~~
Operating proft summary
Operating proft available for distribution
386.2
510.6
564.7
408.1
310.0
Operating proft per stapled security (cents per security)
26.70
31.50
34.00
17.40
5.25
Distributions(centsper security)
27.50
31.50
34.00
9.65
3.40

2006
2007
2008
2009
2010
$M
$M
$M
$M
$M
Balance sheet
Cash and receivables
excludes derivative fnancial instruments
320.3
819.6
1,300.4
830.8
1,008.6
Property assets
includes inventory
4,450.4
5,388.7
4,306.7
3,579.5
3,223.6
Equity accounted investments
475.2
1,092.1
2,399.5
2,662.3
2,279.2
Intangible assets
1,185.6
1,281.8
1,073.2
1,125.4
929.4
Other (including derivative fnancial instruments)
includes available for sale assets
321.7
587.1
553.8
385.0
157.4
~~Total assets~~
~~6,753.2~~
~~9,169.3~~
~~9,633.6~~
~~8,583.0~~
~~7,598.2~~
Payables and provisions
excludes derivative fnancial instruments
572.3
595.8
630.8
299.7
387.1
Interest bearing liabilities
2,172.3
3,861.6
4,229.1
4,239.8
2,276.6
Other (including derivative fnancial instruments)
37.3
133.7
104.6
265.9
212.8
~~Total liabilities~~
~~2,781.9~~
~~4,591.1~~
~~4,964.5~~
~~4,805.4~~
~~2,876.5~~
Net assets
3,971.3
4,578.2
4,669.1
3,777.6
4,721.7
Non-controlling interests
(21.2)
(23.7)
(320.6)
(318.8)
(798.1)
~~Net assets(after non-controlling interests)~~
~~3,950.1~~
~~4,554.5~~
~~4,348.5~~
~~3,458.8~~
~~3,923.6~~
NTA per security ($)
1.73
1.93
1.91
0.84
0.47
Gearingratio(%)
32.2
41.6
39.9
47.9
24.9
Statement of changes in equity
Total equity at the beginning of the year
3,037.4
3,971.3
4,578.2
4,669.1
3,777.6
Total comprehensive income for the year
552.8
711.7
190.4
(1,491.1)
(619.0)
~~3,590.2~~
~~4,683.0~~
~~4,768.6~~
~~3,178.0~~
~~3,158.6~~
Contributions of equity, net of transaction costs
825.4
390.5
145.1
927.6
1,343.6
Distributions provided or paid
(403.8)
(514.0)
(568.2)
(264.1)
(212.9)
Other transactions with equity holders
7.5
16.2
26.7
(38.1)
5.4
Movements in non-controlling interests during the year
(48.0)
2.5
296.9
(25.8)
427.0
~~Total equity at the end of theyear~~
~~3,971.3~~
~~4,578.2~~
~~4,669.1~~
~~3,777.6~~
~~4,721.7~~
Cash fow statement
Net cash provided by operating activities
273.6
334.0
345.2
320.8
195.2
Net cash (used in)/provided by investing activities
(1,459.8)
(1,658.8)
(328.1)
(1,049.6)
17.1
Net cashprovided byfnancingactivities
1,202.3
1,383.3
540.3
332.1
60.3
Net increase/(decrease) in cash held
16.1
58.5
557.4
(396.7)
272.6
Cash at the beginning of the year
7.2
23.3
81.8
639.2
242.5
~~Cash at the end of theyear~~
~~23.3~~
~~81.8~~
~~639.2~~
~~242.5~~
~~515.1~~

Goodman Group Securityholder Review 2010

Group executives

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Gregory Goodman Group Chief Executive Officer Gregory is responsible for Goodman’s overall operations and the implementation of its strategic plan. He has 28 years of experience in the property industry with significant 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 and 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 many of its subsidiaries.

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Anthony Rozic Group Chief Operating Officer

Anthony’s responsibilities for the Group include assisting in setting and managing strategy, business performance and related operational projects with direct line management of Marketing, Information Technology (IT), Human Resources and Legal, Risk and Compliance. He was until February 2009 Group Chief Financial Officer. His responsibilities included financial reporting, management reporting, forecasting and budgeting, tax, capital and financial risk management since joining the group in 2004. Anthony is a qualified Chartered Accountant and has held a number of senior roles in the property funds management industry and Chartered Accountancy profession.

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Nick Vrondas Group Chief Financial Officer Nick is responsible for the Group’s finance function, which includes accounting and finance, treasury and tax as well as the planning and analysis function. He also plays a key role in the Group’s strategic planning and capital management. Nick has 15 years of experience in the property industry and prior to joining Goodman was head of the securities research team at Goldman Sachs JBWere. He has also worked in public and private real estate markets in roles at Jones Lang LaSalle and BBY.

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Nick Kurtis Group Head of Equities Nick is responsible for the coordination and performance of the Group’s corporate activities and funds management platform. He joined Goodman in 2000 and has held a number of senior positions within funds management and corporate services. Nick has 14 years of experience in the property funds management industry and holds an undergraduate degree in Real Estate and a Masters in Finance from the University of Technology, Sydney.

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Carolyn Scobie Group General Counsel Carolyn is directly responsible for the legal activities of Goodman including corporate, property and compliance matters. Carolyn has over 18 years of legal experience in corporate and commercial property areas including three years within the legal profession and six years as in-house Counsel with Kumagai Australia Group. She holds a Masters of Arts from Sydney University, a Bachelor of Arts/Bachelor of Laws from the Australian National University and a Graduate Diploma in Company Secretarial Practice. She is a member of Chartered Secretaries Australia.

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Alison Brink Group General Manager, Marketing Alison is responsible for marketing and communications across the Group including branding, advertising and corporate communications. Prior to joining Goodman, she held various marketing positions at DHL in Asia, Europe and the United States, including regional brand director for Asia Pacific and Europe, US marketing vice-president and head of global advertising. Alison has 20 years of experience in international marketing and holds a Bachelor of Business from the University of Technology, Sydney and a diploma in logistics.

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Michael O’Sullivan Group Corporate Executive Michael is responsible for managing Goodman’s relationship with institutional investors, retail investors and governance groups and is also involved in significant corporate transactions undertaken by the Group. Prior to this role, Michael was Chief Executive Officer, Europe, based in London and responsible for the performance of the Group’s business in Europe. He joined the Group in 2002 and has managed complex financial and corporate transactions as well as played a leading role in the corporate strategy and development of the business. Michael has had extensive experience in property and financial services having worked previously at KPMG.

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James Inwood Group Head of Funds Management James has been with the Group for three years and is responsible for the coordination and performance of the Group’s funds management platform. He has significant expertise gained over 14 years in property finance and structuring in both listed and unlisted environments. James spent 10 years as a real estate investment trust analyst, including eight years at JPMorgan, which involved equity raisings for listed and unlisted funds.

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Luc LaFontan Group Chief Information Officer Luc is responsible for the IT function at Goodman and reports to the Chief Operating Officer. He is responsible for IT strategy as it relates to applications, infrastructure and service provision globally. He oversees the activities of IT professionals based in Sydney, Hong Kong, London and Brussels. Luc joined the Group in the UK in March 2008 and was appointed to his role based in Sydney in December 2009.

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John Taylor Group General Manager, Human Resources John joined Goodman in August 2010, and is responsible for the Group’s HR strategy and HR operations globally. He joins Goodman with nearly 20 years experience in HR, in both international and domestic organisations. John joined the Group from Thomson Reuters, where he had almost five years senior HR experience (including time in Asia) and prior to that he worked in Australia for JPMorgan, The Colonial Group and Australia Post. John has a Bachelor of Business from the University of South Australia and a Masters in Commerce (Industrial Relations) from Sydney University.

Goodman Group Securityholder Review 2010

Board of Directors

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Ian Ferrier, AM Independent Chairman Appointed 1 September 2003

Ian was appointed Chairman on 28 July 2009 (having been Acting Chairman from 28 November 2008). Ian is a Fellow of The Institute of Chartered Accountants in Australia and has 45 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) and Australian Vintage Ltd (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 (from 2 May 2005 to 7 January 2009). His experience is essentially concerned with understanding the financial and other issues confronting companies which require turnaround management, analysing those issues and implementing policies and strategies which lead to a successful rehabilitation. Ian has significant experience in property and development, tourism, manufacturing, retail, hospitality and hotels, infrastructure and aviation and service industries.

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Diane Grady, AM Independent Director Appointed 30 September 2007

Patrick Goodman Non-Executive Director Appointed 14 April 1998

Gregory Goodman Group Chief Executive Officer

Appointed 7 August 1998

Patrick is the Managing Diane has been a full Gregory is responsible Director of Goodman time non-executive for Goodman’s overall Holdings Group. The director on various operations and the diversified interests of companies since 1994 implementation of its Goodman Holdings and is currently a director strategic plan. He has Group initially focused of Woolworths Limited 28 years of experience on direct and indirect (since 5 July 1996) and in the property industry property development BlueScope Steel Limited with significant expertise and have expanded to (since 10 May 2002) and in the industrial property include the management the Chair of Ascham arena. Gregory was a of a diverse portfolio School Limited. Diane is Co-Founder of Goodman, across sectors covering also a senior adviser to playing an integral role in aviation, food, rural, McKinsey & Company. establishing its specialist private and listed Previously, she was a global position in the equity, infrastructure director of Lend Lease property market through and financial services Corporation Limited (from various corporate globally. Patrick is 1994 to 2002), Wattyl transactions, including also a director of Ltd (from 1994 to 2006) takeovers and mergers companies involved in and a Trustee of the and acquisitions. information technology, Sydney Opera House. He is a director of property investment Prior to becoming an Goodman (NZ) Limited and management both independent director, (the manager of the in Australasia and the Diane was a partner with New Zealand Exchange United States. During McKinsey & Company listed Goodman Property his 29 year career, he where she spent 15 years Trust), J-REP Co., Ltd., has had considerable consulting to clients in a and the management public and private broad range of industries companies of Goodman’s company experience on strategic and unlisted funds and many both domestically and organisational issues. of its subsidiaries. internationally.

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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 five years. Since retiring from KPMG in June 2000, John has held a number of non-executive director roles. He is currently Chairman of ICA Property Development Funds and Sydney Foundation for Medical Research. John is a director of Charter Hall Retail Management Limited (since 18 August 2003), the management company of Charter Hall Retail REIT, 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.

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James Hodgkinson Non-Executive Director Appointed 21 February 2003

James is a senior investment banker with real estate specialisation, most recently, as an Executive Director of Macquarie Group. James has extensive experience as principal in the establishment, strategy and growth of a number of both listed and unlisted investment vehicles and operating businesses in Australia, Asia and North America. James was also Chief Executive Officer of Macquarie Industrial Trust for six years prior to that trust’s merger with GIT. He is a director of Goodman (NZ) Limited, the manager of the New Zealand Exchange listed Goodman Property Trust, and J-REP Co, Ltd. James is active in the not-for-profit sector and has initiated and assisted in the fund raising initiatives and strategic support of a number of community based organisations, including as Founder and Chairman of the Spastic Centre of NSW’s 20/Twenty Challenge and as a Founding Governor of the Cerebral Palsy Foundation. James has a Bachelor of Economics, is a Certified Practising Accountant and is a Fellow of the Australian Property Institute.

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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 Ardent Leisure Management Limited (since 30 March 1998) and Ardent Leisure Limited (since 28 April 2003) (being the management companies of Ardent Leisure Group), Ausflag Limited, 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.

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Jim Sloman, OAM Independent Director Appointed 1 February 2006

Jim has over 40 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 Limited in Australia and as Deputy Chief Executive and Chief Operating Officer of the Sydney Organising Committee for the Olympic Games (SOCOG) from 1997 to 2001. He is currently the 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. In addition, Jim is a director of Prime Infrastructure Holdings Limited (since 9 February 2010), Prime Infrastructure RE Limited (since 9 February 2010) (the management company of Prime Infrastructure Trust), ISIS Holdings Pty Limited and several of its associated companies and is also a member of the Laing O’Rourke Australia Advisory Panel. With his range of experience, Jim brings significant property, construction and major projects expertise to Goodman.

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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 12 years of legal experience in corporate law and joined Goodman from law firm Allens Arthur Robinson in 2006. Carl holds a Masters of Laws and Bachelor of Economics/Bachelor of Laws (Hons).

Goodman Group Securityholder Review 2010

Securities information

Percentage of
Top 20 Securityholders
Number of
total issued
As at 31 August 2010
securities
securities
1. HSBC Custody Nominees (Australia) Limited
2,007,335,328
31.51
2. JP Morgan Nominees Australia Limited
1,119,840,261
17.58
3. National Nominees Limited
1,031,246,161
16.19
4. Citicorp Nominees Pty Limited
347,760,331
5.46
5. Citicorp Nominees Pty Limited
177,315,349
2.78
6. Gillman Pty Limited
163,003,707
2.56
7. Cogent Nominees Pty Limited
128,864,106
2.02
8. AMP Life Limited
117,178,226
1.84
9. Cogent Nominees Pty Limited
105,852,597
1.66
10. ANZ Nominees Limited
65,299,504
1.03
11. Citicorp Nominees Pty Limited
52,111,553
0.82
12. Bond Street Custodians Limited
39,428,436
0.62
13. Citicorp Nominees Pty Limited
30,430,400
0.48
14. Questor Financial Services Limited
22,855,420
0.36
15. Brispot Nominees Pty Ltd
21,536,704
0.34
16. Bond Street Custodians Limited
19,704,382
0.31
17. Citicorp Nominees Pty Limited
17,313,449
0.27
18. Citicorp Nominees Pty Limited
16,545,459
0.26
19. Suncorp Custodian Services Pty Limited
16,479,836
0.26
20. Queensland Investment Corporation
16,457,349
0.26
Securities held by top 20 Securityholders
5,516,558,558
86.61
Balance of securities held
853,192,836
13.39
~~Total issued securities~~
~~6,369,751,394~~
~~100.00~~

	Percentage of Number of Number of total issued Range of securities Securityholders securities securities 1 – 1,000 2,251 999,343 0.02 1,001 – 5,000 6,446 19,240,162 0.30 5,001 – 10,000 5,125 39,641,796 0.62 10,001 – 100,000 10,375 309,371,473 4.86 100,001 – over 939 6,000,498,620 94.20 Rounding 0.00 ~~Total~~ ~~25,136~~ ~~6,369,751,394~~ ~~100.00~~

There were 1,656 Securityholders with less than a marketable parcel in relation to 435,535 securities as at 31 August 2010.

There were 1,656 Securityholders with less than a marketable parcel in relation to 435,535	securities as at 31 August 2010.
	Number of
Substantial Securityholders1	securities
ING Group	531,652,052
Commonwealth Bank of Australia	408,523,081
AMP Limited	398,688,098
BlackRock, Inc.	326,402,271
The Vanguard Group,Inc.	304,610,228

In accordance with latest Substantial Securityholder Notices as at 31 August 2010.

China Investment Corporation (CIC)

As disclosed in the substantial shareholder notice to the ASX on 30 November 2009, CIC holds 5,000 Exchangeable Securities that are exchangeable for 604,439,396 Goodman Group Stapled Securities. Prior to exchange, these securities have a voting interest in Goodman Industrial Trust under the Corporations Act. However, CIC has executed a Voting Deed Poll under which they have undertaken to not exercise their voting power for ‘non-preference matters’. CIC also holds 276,000,000 options over Goodman Group Stapled Securities.

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.

Corporate directory

Goodman Limited ABN 69 000 123 071

Goodman Industrial Trust ARSN 091 213 839

Security Registrar

Computershare Investor Services Pty Limited Level 5 115 Grenfell Street Adelaide SA 5000

GPO Box 1903 Adelaide SA 5001

Responsible Entity

Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Offices

Registered office

Level 10 60 Castlereagh Street Sydney NSW 2000 Australia

GPO Box 4703 Sydney NSW 2001

Telephone 1300 791 100 (within Australia) +61 2 9230 7400 (outside Australia) Facsimile +61 2 9230 7444 Email [email protected] Website www.goodman.com

Other offices

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

Telephone 1300 723 040 (within Australia) +61 3 9415 4043 (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 Ian Ferrier, AM (Independent Chairman) Mr Gregory Goodman (Group Chief Executive Officer) Mr Patrick Goodman (Non-Executive Director) Ms Diane 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 Securityholder Review 2010

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 Qualified Institutional Buyer as defined under the U.S. Securities Act and a Qualified 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, financial situation or needs of any particular investor. These should be considered, with professional advice, when deciding if an investment is appropriate. This Annual Report is not an offer or invitation for subscription or purchase of securities or other financial products. It does not constitute an offer of securities in the United States. Securities may not be offered or sold in the United States unless they are registered under the US Securities Act of 1933 or an exemption from registration is available. This Annual Report contains certain “forward-looking statements”. The words “anticipate”, “believe”, “expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Due care and attention have been used in the preparation of forecast information. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Goodman 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 2010.

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Goodman Group Financial Report 2010

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building momentum + delivering opportunities

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Chairman’s letter	1
Group Chief Executive Offcer’s report	3
Corporate governance	7
Consolidated fnancial report for Goodman Limited	17
Consolidated fnancial report for Goodman Industrial Trust	121
Securities information	181
Glossary	184
Corporate directory	185

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 Qualified Institutional Buyer as defined under the U.S. Securities Act and a Qualified 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

Chairman’s letter

The past 12 months saw the Group maintain a sound financial position following the recapitalisation undertaken in August 2009.

Financial highlights for 2010 include:

- the Group achieved an operating profit of $310 million for the year to 30 June 2010;
- the Group reported a statutory loss of $562.6 million, the difference to operating profit reflecting property and investment revaluations and other non-operating items. With approximately 90% of this incurred in the first half, we are seeing property and equity investment valuations stabilise;
- a fully diluted operating earnings per security of 5.25 cents was achieved, slightly higher than the forecast 5.2 cents;
- gearing has been lowered and maintained at 25% and interest cover has increased to 3.8 times, which is well within banking covenants; and
- available liquidity is currently $1.7 billion which is sufficient to meet all debt maturities to the first half of the 2013 financial year.

Goodman Group Financial Report 2010

Chairman’s letter (cont)

In June we announced the establishment of two new co-investment vehicles in the UK and Europe with our investment partner, CBRERT. These vehicles will invest in pre-committed logistics development opportunities sourced through Goodman. They will be funded on an 80/20 basis, targeting an initial investment term of three years with the majority share being held by CBRERT. The UK vehicle is targeting a total investment of £400 million ($696 million) and the European vehicle is targeting a total investment of €400 million ($575 million), focusing on the core Western European markets of Germany, France and Benelux.

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Ian Ferrier, AM Independent Chairman

Group Chief Executive Officer’s report

the Group through the Memorandum of Understanding signed with the Langfang Municipal Government in China to participate in the development of a premier business and logistics hub for the Beijing-Tianjin area in northern China.

These new partnerships demonstrate our ability to raise third party capital and the strength and quality of the relationships we have with global investor groups.

Group operations

Goodman Group Financial Report 2010

Group Chief Executive Officer’s report (cont)

The Group’s operations delivered operating EBIT of $382.9 million with 65% of our earnings sourced from the Asia Pacific region and 35% from Europe. The composition of our earnings reflected the impact of the prior year adjustments to our operations, with the contribution to full year earnings from developments increasing from the cyclical low point reached in the second half of the 2009 financial year. Our property investment activities contributed 82% to earnings, with 8% being derived from our development activities and 10% from management services.

Property investment

The Group is a strategic cornerstone investor in our managed funds, retaining a significant $2.4 billion investment. This is $361 million lower than for the 2009 financial year and is

mainly the result of the sale of units in Goodman Property Trust and property valuation movements. Our long-term strategy is to target a cornerstone interest of around 20% across all of our funds.

Property development

Following a subdued period of development activity reflecting the weak operating environment and the Group’s need to conserve capital, Goodman increased its development activities in the first half of the 2010 financial year through the reactivation of its development pipeline. This was prudently undertaken with our focus on precommitted projects and where possible, match funded to third party capital. Our approach included the establishment of four new investment vehicles with global investor groups, CPPIB and CBRERT, which provided a secure funding source for our development pipeline. This ensured we were able to meet the demand for new business space from our customers without compromising our balance sheet position.

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Capital allocation
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Earnings composition

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$B
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5.6
4.7
1.7 1.7
1.2 1.3
Property Development Other
investments land and WIP
Jun 2010 Jun 2009
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Investments Developments
82% 8%
Management
10%
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customer pre-commitments and all were undertaken on behalf of our managed funds or third parties.

Goodman will continue the prudent rollout of its development pipeline with the controlled land inventory across the Group and managed funds capable of producing over $10 billion of new development product, which we expect to realise over the medium to longterm. Despite the expected continuation of the subdued global market conditions, we believe Goodman’s development business is well positioned in an environment of reduced competition and a smaller number of high quality development opportunities across the industrial property sector.

Property services

Goodman’s specialist in-house Property Services teams are responsible for delivering a wide range of services to our customers around the world. These services cover from maintenance and general site operations, to leasing and responding to the specific changing business needs of customers that may affect their space requirements.

Fund management

Goodman also established a $1.3 billion relationship in the second half of the 2010 financial year with CBRERT through two new co-investment vehicles, in the UK and Europe. As with the CPPIB joint ventures, the co-investment vehicles will be funded on an 80/20 basis and target a total investment of £400 million ($696 million) in the UK and €400 million ($575 million) in Continental Europe and will focus on the acquisition of high quality pre-committed logistics development opportunities.

The strategic relationships formed with CPPIB and CBRERT demonstrate Goodman’s ability to access global third party capital and the demand that exists for high quality, well managed property investment products. The four new initiatives will facilitate the ongoing expansion of our logistics business in key markets around the world, ensure that the Group has a secure funding platform for its development business and provide alternative sources of capital to maintain our strong financial position.

In New Zealand, our listed Goodman Property Trust (GMT) diversified its debt funding sources with the successful completion of its NZ$150 million Goodman+Bonds issue, which was offered to both retail and institutional investors. Goodman+Bonds are investment grade, five year fixed rate senior secured debt securities which are quoted and traded on the New Zealand Debt Market.

Goodman Group Financial Report 2010

Group Chief Executive Officer’s report (cont)

Capital management

The recapitalisation of the business announced in August 2009 significantly strengthened the financial position of the Group and our managed funds. This financial stability has provided the Group with the flexibility to explore and capitalise on a range of growth opportunities across our markets. We have done this in a prudent manner and continue to adopt a vigilant and cautious approach regarding the use of our balance sheet.

The availability of capital and financing opportunities improved materially during the 2010 financial year, not only as a result of general market conditions, but also in line with Goodman’s financial stability. The Group’s proven ability to access third party capital throughout the year with the introduction of new investment partners is evidence of this. Goodman is committed to maintaining its strong financial position and we will continue to explore a range of capital sources and opportunities to diversify our debt funding platform and lengthen the term of our debt maturities. Consistent with this strategy, we have already secured alternative debt funding sources in our managed funds, with GAIF arranging a new five year, $250 million facility and GMT raising NZ$150 million from its Goodman+Bonds issue, also with a five year term.

Outlook

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Gregory Goodman Group Chief Executive Officer

Group debt maturity profile

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Corporate governance

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

Goodman recognises that an effective corporate governance culture is critical to success. 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 Principles of Good Corporate Governance and Best Practice Recommendations (2nd Edition). Any departures to implementation of the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations are described in the Corporate Governance Statement below.

The Board

In February 2005, Goodman 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 & 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 registered managed investment schemes, as prescribed by the Corporations Act 2001. These duties require GFM to:

- act honestly;
- exercise the degree of care and diligence that a reasonable person would exercise if they were in the responsible entity’s position;
- act in the best interests of members; and
- treat members of the same class equally.

In addition, similar duties are also prescribed on the directors of a responsible entity of a registered managed investment scheme, such as GFM, by the Corporations Act 2001.

The Board is comprised of eight Directors, the majority of whom are independent, and is currently chaired by Mr Ian Ferrier, AM. Ian succeeded David Clarke, AO as Chairman on 2 July 2009 having been appointed as Acting Chairman (as a result of the ill health of David Clarke) on 28 November 2008. The Board believes its existing size and composition provide 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. On 16 August 2010, the Group announced to the ASX that Patrick Goodman intends to retire as a Director at the next Annual General Meeting (AGM).

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

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

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

The Board’s functions include:

- appointing the Group Chief Executive Officer;
- setting strategic direction;
- reviewing progress on strategy;
- developing key policies which impact on Goodman;
- approving strategic alliances;
- monitoring organisational performance against set targets;
- ensuring compliance with statutory, financial and social responsibilities; and
- ensuring business risks are appropriately identified 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 finance, corporate matters and property transactions.

Goodman Group Financial Report 2010

Corporate governance (cont)

The Board (cont)

The composition of the Board as at 30 June 2010 is shown below. Please refer to page 18 in the Directors’ report for details of each Director’s attendance at Board and committee meetings during the year.


Name	Description	Yes	No
Mr Ian Ferrier	Chairman	+
Mr Gregory Goodman	Group Chief Executive Offcer		+
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	+

Directors’ obligations and rights

Goodman uses formal letters of appointment for Directors in order to ensure that the Directors clearly understand the expectations of them. Each letter outlines the terms of the Director’s appointment and includes matters such as their powers and duties, attendance at meetings, remuneration, appointment on committees, induction and continuing education, disclosure of interests and circumstances when their office becomes vacant. Please refer to pages 37 to 39 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 first 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.

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

Goodman requires Directors to hold securities with a value equivalent to twice their base annual fees and applies 25% of Directors’ remuneration to the acquisition of Goodman securities until that value of securities is held. For the 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 financial 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 clarification 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 are also conducted prior to the completion of key acquisitions.

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

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 confirmations on their ability to adequately perform their role on an annual basis. The Directors bring independent thinking, high standards of corporate governance and good judgement to the Board.

The 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 definition of independence provided in the ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations. Independence is assessed annually and was last confirmed in June 2010.

The Board considers that a material professional adviser 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 8 sets out the Directors and their status.

The Directors consider Mr Ian Ferrier, Ms Diane Grady, Mr John Harkness, Ms Anne Keating and Mr Jim Sloman to be independent.

Mr James Hodgkinson is not considered independent due to Goodman’s business relationships with Macquarie Group Limited, (of which he was an executive until 30 June 2010) which include Macquarie’s investment in the manager of Macquarie Goodman Japan Logistics Fund and Macquarie Group Limited’s participation and advisory roles in Goodman’s recent capital management initiatives.

Mr Patrick Goodman is not considered to be independent due to his role as Managing Director of Goodman Holdings Group, which held a significant holding in Goodman. As stated above, Mr Patrick Goodman intends to retire at the Group’s next AGM.

Mr Gregory Goodman is an Executive Director of Goodman.

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 financial year. The process for conducting this review consists of each Director completing a self-assessment questionnaire, which also elicits comments and key issues the Director wishes to raise at that time. Following the collation of the questionnaire results, the Chairman meets with each Director individually to discuss their Board participation. In relation to the 2010 performance review, the questionnaires completed by the Directors covered the following matters:

- Board contribution to developing strategy and policy;
- interaction between the Board and management;
- Board processes to monitor business performance and compliance, control risk and evaluate management;
- Board composition and structure; and
- 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 reviewed against previously established goals and objectives by the Group Chief Executive Officer. This process is co-ordinated by Goodman’s Human Resources department and applied globally throughout Goodman.

Chairman

Mr Ian Ferrier was appointed as Acting Chairman on 28 November 2008 and Chairman on 2 July 2009.

Ian is an Independent Director with over 45 years of experience in corporate recovery and turnaround practice.

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 Officer 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.

Goodman Group Financial Report 2010

Corporate governance (cont)

The Board (cont)

Group Chief Executive Officer

The Group Chief Executive Officer 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 Officer 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 appraising the Board on legal and governance issues. His biographical details appear on page 39 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 fixed, performance-linked and equity based remuneration. Further information in relation to the remuneration policies is set out in the remuneration report on pages 26 to 28 in the Directors’ report.

The salary and/or fees of each Director, key management personnel and five highest paid company and Group executives are disclosed on pages 30 to 31 in the Directors’ report.

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 specific 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 financial reports are true and fair and comply with applicable accounting standards. A summary of the roles of the various committees is set out below.

Audit Committee

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

- oversight of financial reporting principles and policies, controls and procedures;
- ensuring the integrity of Goodman’s financial statements, independent external audit and its compliance with legal and regulatory requirements relating to financial statements;
- audit functions and committees of any entity within Goodman;
- due diligence and prudential supervision procedures required by regulatory bodies; and
- 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 financial 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 fulfil its purpose including:

- approving principles, policies, strategies, processes and control frameworks for the management of audit matters; and
- 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:

- senior members of management are invited to attend Committee meetings and to present to the Committee on key issues; and
- 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 findings on matters which have or are likely to have a material impact on the operating results or financial 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 or audit as relevant, the half-yearly and annual financial report prior to approval by the Board, discuss its findings with the Committee including the adequacy of financial 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 review or audit. 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. The findings of the internal audit function are reported to both the Audit and Risk and Compliance Committees and management responds to the recommendations.

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

The Audit Committee is chaired by Mr John Harkness. John is a Chartered Accountant and was a former partner of KPMG before resigning in June 2000. He was a partner of KPMG while it was engaged to conduct the audit of Goodman’s entities, however, he was not involved in those audits. The other members of the Committee are Mr Ian Ferrier and Mr James Hodgkinson. Ian is also a Chartered Accountant with significant financial expertise and was previously the Chairman of the Audit Committee. James was a senior executive at Macquarie Group Limited and has significant experience in the listed property sector, in particular, the financial management and reporting of listed vehicles. Prior to joining Macquarie Group Limited, James worked at PricewaterhouseCoopers. All three members of the Committee are non-executive and the majority of the members are Independent Directors. Please refer to page 18 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.

Executive confirmations

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

The Group Chief Executive Officer and the Group Chief Financial Officer also provide written confirmation that, to the best of their knowledge and belief:

- the statement given to the Board on the integrity of Goodman’s financial statements is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
- Goodman’s risk management and internal compliance and control systems are operating efficiently and effectively in all material aspects.

These statements are based on a group-wide and broad ranging series of half and full year confirmations from senior executives and department heads in relation to the financial 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:

- internal risk management systems;
- incident management;
- business continuity planning and support processes;
- external compliance audit functions;
- internal compliance systems;
- sustainability framework; and
- insurance requirements.

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

Goodman Group Financial Report 2010

Corporate governance (cont)

Committees and oversight (cont)

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 profiles 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 efficiency of the compliance systems on an ongoing basis and for reporting on the results of these activities to the Risk and Compliance Committee.

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:

- identify and recommend individuals to the Board for nomination as members of the Board and its committees;
- ensure performance of members of the Board is reviewed;
- ensure an appropriate Board and committee structure is in place so that the Board can perform a proper review function;
- review and make recommendations to the Board in respect of the administration of Goodman’s remuneration programmes (including the engagement of any remuneration advisers);
- review and make recommendations to the Board in respect of the approval and remuneration of senior executives and Non-Executive Directors;
- 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
- 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 is chaired by Mr Ian Ferrier and is also comprised of Ms Diane Grady and Ms Anne Keating, with all three being Independent Directors. Further information regarding the attendance of Committee members can be found on page 18 of the Directors’ report.

Investment Committee

The Investment Committee has authority to:

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

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

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 18 in the Directors’ report.

- develop and recommend to the Board relevant corporate governance principles;

Policies and codes

Responsible and ethical decision making

In addition to the responsibilities which apply specifically 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:

- keep abreast of Goodman’s policies and procedures, and where necessary sign acknowledgements that they have read these policies;
- co-operate fully with any investigations relating to Goodman’s policies;
- 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 Goodman;
- keep any and all Goodman information confidential, except as necessary for marketing Goodman products and services;
- notify the Group General Counsel and/or the General Manager, People and Services if they have reason to suspect fraud, corrupt, criminal or unethical conduct by any Director or employee of Goodman; and
- are prohibited from accepting payment or any other benefit 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 Goodman.

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 confidential 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 and is available on Goodman’s website. 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 customer service 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 reflected in our approach to both the workplace and the marketplace. Further information is available on pages 22-25 of the Goodman Group Securityholder Review 2010.

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 two week period before the end of a financial period through to the release of Goodman’s half yearly or yearly results. A trading blackout is notified to Directors and employees during those times and may also be notified by the Company Secretary or Group Chief Executive Officer at other times when considered appropriate.

Approval is not given during a trading blackout unless the Group Chief Executive Officer or Chairman is satisfied 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.

Goodman Group Financial Report 2010

Corporate governance (cont)

Policies and codes (cont)

The Securities Trading Policy applies to decisions to sell Goodman securities by a mortgagee, chargee or margin lender under a margin loan or other financing arrangements. Directors or employees may apply, on the basis of hardship, for consent to trade from the Chairman or Group Chief Executive Officer notwithstanding that a trading blackout that might otherwise apply.

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.

Conflicts of interest

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

- identify conflicts of interest;
- manage conflicts of interest by assessing and evaluating actual or potential conflicts, and decide upon and implement an appropriate response to those matters; and
- maintain written records that demonstrate how Goodman manages conflicts which occur.

Directors, consultants and employees are required to comply with the Conflicts 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 conflicts 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.

Gifts

All Directors and employees are prohibited from accepting payment or any other benefits 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:

Dealing with public officials

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 influence a public official in any country to act (or omit to act) in a way that differs from that official’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 policies, 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 Group 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 referred to 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.

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

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 confidence 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 sign-off of key staff in each division to which the ASX announcement relates. The Group Chief Executive Officer and the Company Secretary (Communications Officer) review all filings 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 on key transactions. In addition, the Board will approve periodic or other mandatory disclosures (or near final drafts) of announcements concerning:

- half yearly and full year financial statements and results;
- annual reports;
- Investor or Market Updates (especially when including new price sensitive information);
- Extraordinary or Annual General Meetings;
- disclosure documents concerning the issues of securities (eg prospectus/PDSs, information memoranda, investor presentations, or cleansing statements in connection with Entitlement Offers, Placements, DRPs or SPPs);
- transactions that will require Securityholder approval (such as related party transactions, matters requiring Board recommendations); and
- corporate transactions such as takeovers or schemes.

All announcements are reported to the Board and a record is made of where the announcement has been reviewed by the Board as part of Board papers or otherwise. The Communications Officer has responsibility for all communications with the ASX. The Communications Officer authorises all market communications and should be kept informed of issues discussed during meetings with investors/analysts. The Communications Officer 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 confirmation of lodgement and the release of announcements, relevant information is then published on Goodman’s website.

Goodman’s senior executives, including the Communications Officer, regularly meet to consider operational matters and regulatory compliance, including the consideration of identified potential transactions that may require disclosure. In particular, this includes significant corporate or property transactions, and refinancing at the Group level or within Goodman’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 efficient exercise of the rights of all Securityholders. Goodman 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 financial 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.

Goodman Group Financial Report 2010

Corporate governance (cont)

Timely and balanced disclosure (cont)

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

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

Complaints handling

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

Consolidated financial report for Goodman Limited

and its Controlled Entities for the year ended 30 June 2010

Contents
Directors’ report	18
Lead auditor’s independence declaration	40
Balance sheet	41
Income statement	42
Statement of comprehensive income	43
Statement of changes in equity	44
Cash fow statement	46
Notes to the consolidated fnancial statements
1 Statement of signifcant accounting policies	47
2 Critical accounting estimates used in the
preparation of the consolidated fnancial
statements	60
3 Loss per Company share/per security	62
4 Segment reporting	63
5 Loss before income tax	66
6 Income tax (expense)/beneft	68
7 Dividends and distributions	69
8 Receivables	71
9 Inventories	72
10 Assets/liabilities classifed as held for sale	73
11 Other assets	73
12 Investment properties	73
13 Investments accounted for using the
equity method	76
14 Other fnancial assets	80

15 Plant and equipment	80
16 Intangible assets	81
17 Payables	86
18 Interest bearing liabilities	86
19 Employee benefts	88
20 Provisions	93
21 Issued capital	94
22 Reserves	96
23 Accumulated losses	97
24 Other non-controlling interests	98
25 Disposals of interests in controlled entities	98
26 Commitments	99
27 Notes to the cash fow statement	100
28 Controlled entities	101
29 Interest in joint venture operation	104
30 Related parties	104
31 Financial risk management	110
32 Auditors’ remuneration	117
33 Parent Entity disclosures	117
34 Events subsequent to balance date	118
Directors’ declaration	119
Independent auditor’s report	120

Goodman Group Financial Report 2010

Directors’ report

Goodman Limited and its Controlled Entities

The directors (Directors) of Goodman Limited (Company) present their Directors’ report on the consolidated entity consisting of the Company and the entities it controlled (Goodman or Consolidated Entity) at the end of, or during, the financial year ended 30 June 2010 and the audit report thereon.

Directors

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

Director	Appointment date
Mr Ian Ferrier, AM (Independent Chairman)1	1 September 2003
Mr Gregory Goodman (Group Chief Executive Offcer)	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 February2006

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 confirmed as Independent Chairman on 29 July 2009.

Details of the Directors’ qualifications and experience are set out on pages 37 to 39 in this Directors’ report.

Company Secretary

The Company Secretary at any time during, or since the end of, the financial year is:

Company Secretary	Appointment date
Mr Carl Bicego	24 October 2006

Details of the Company Secretary’s qualifications and experience are set out on page 39 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 financial year were:

					Remuneration	Remuneration
						and	Risk and				Moorabbin
			Audit		Nomination		Compliance		Investment		Sub‑
	Board		Committee		Committee		Committee		Committee		Committee
	meetings		meetings		meetings		meetings		meetings		meetings2
Director	Held1 Attended		Held1 Attended		Held1	Attended	Held1 Attended		Held1 Attended		Held1 Attended
Mr Ian Ferrier	18	17	5	4	5	5	–	–	5	5	9	9
Mr David Clarke3	–	–	–	–	–	–	–	–	–	–	–	–
Mr Gregory Goodman	16	15	–	–	–	–	–	–	5	5	–	–
Mr Patrick Goodman	17	17	–	–	–	–	4	4	–	–	–	–
Ms Diane Grady	18	17	–	–	5	5	–	–	–	–	–	–
Mr John Harkness	18	18	5	5	–	–	4	4	–	–	–	–
Mr James Hodgkinson	18	18	5	4	–	–	–	–	2	2	1	1
Ms Anne Keating	18	18	–	–	5	5	1	1	–	–	–	–
Mr Jim Sloman	18	15	–	–	–	–	4	3	5	3	9	8

Reflects 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.
A separate committee was established during the financial year to consider the potential acquisition of the business park in Moorabbin, Victoria, currently owned by Goodman Holdings Group (refer to page 39). In addition to the nine meetings held during the financial year, Mr Jim Sloman also attended two meetings that were not official meetings of the sub-committee as a quorum was not reached. Mr James Hodgkinson attended one meeting as an alternate for Mr Jim Sloman.
Mr David Clarke 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 Goodman during the course of the financial 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, Continental Europe and the United Kingdom. There were no significant changes to the nature of the Consolidated Entity’s activities during the financial year.

Review and results of operations

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

	Consolidated
	2010 2009
Revenue and other income before fair value adjustments on investment properties ($M) Fair value adjustments on investmentproperties($M)	666.6 915.5 (518.9) (1,157.7)
Revenue and other income($M)	147.7 (242.2)
Loss attributable to Securityholders ($M) Basic loss per Company share (¢) Basic loss per security (¢) Dividends and distributions provided for or paid by Goodman ($M) Weighted average number of securities on issue(M)	(562.6) (1,120.0) (4.6) (11.1) (9.9) (39.2) 212.9 264.1 5,668.3 2,857.8
Net assets ($M) Number of securities on issue (M)1 Net tangible assetsper security ($)2	4,721.7 3,777.6 6,333.4 2,738.0 0.47 0.85

Represents amounts as per Australian Securities Exchange (ASX) excluding 36.3 million treasury securities (2009: 41.7 million).
Net tangible assets per security is stated after deducting amounts due to other non-controlling interests.

Dividends and distributions

The Company did not declare any dividends during the financial year ended 30 June 2010 or up to the date of this report (2009: $nil).

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

	Distribution Total amount Date of cpu $M payment Distributions for the year ended 30 June 2010: – 31 Dec 09 1.50 92.6 26 Feb 10 – 30 Jun 10 1.90 120.3 26 Aug10 ~~3.40~~ ~~212.9~~ Distributions for the year ended 30 June 2009: – 31 Dec 08 9.65 264.1 26 Feb 09 – 30 Jun 09 – – – ~~9.65~~ ~~264.1~~

Distributions declared during the financial year by controlled entities, Goodman PLUS Trust and CIC Hybrid Investment sub-trust, to holders of hybrid securities were $18.3 million (2009: $24.5 million) and $34.0 million (2009: $nil) respectively.

Goodman Group Financial Report 2010

Directors’ report (cont)

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

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

2010
2009
Note
$M
$M
Loss attributable to Securityholders
(562.6)
(1,120.0)
Valuation adjustments
– Net loss from fair value adjustments on investment properties
12
210.0
527.0
– Share of net loss from fair value adjustments on investment properties in associates
13 (a)
275.3
578.6
– Share of net loss from fair value adjustments on investment properties in
joint venture entities
13 (b)
33.6
52.1
– Impairment losses
5
145.4
229.7
– Share of impairment losses in joint venture entities
13 (b)
4.5
–
– Fair value adjustments on derivative fnancial instruments
5
75.4
62.3
– Share of fair value adjustments on interest rate swaps in associates
13 (a)
4.5
–
– Share of fair value adjustments on interest rate swaps injoint venture entities
13(b)
0.6
8.0
Other adjustments
– Share of losses on disposals of investment properties by associates
13 (a)
19.3
17.1
– Share of (profts)/losses on disposals of investment properties by joint venture entities
13 (b)
(0.3)
1.8
– Capital losses not distributed
14.9
2.2
– Straight lining of rent and amortisation of lease incentives
(1.2)
(3.3)
– Share based payments expense/(credit)
19 (b)
5.4
(38.1)
– Restructuring costs
5
–
85.7
– Share of restructuring costs incurred within associates
13 (a)
–
2.2
– Share of restructuring costs incurred within joint venture entities
13 (b)
0.6
2.8
– Debt restructuring costs
5
59.1
–
– Share of debt restructuring costs incurred within associates
13 (a)
19.7
–
– Dilution of Goodman’s interest in joint venture entities as a result of the exercise
of employee share options
13 (b)
0.7
–
– Non-cash items impactingdistributable income in associates
13(a)
5.1
–
~~Operating proft available for distribution~~
~~310.0~~
~~408.1~~

State of affairs

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

(a) Equity raisings

During August and September 2009, Goodman undertook a fully underwritten equity raising to raise a total of $1,278.6 million 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.

(b) China Investment Corporation (CIC) convertible preference securities

On 16 October 2009, Goodman received $500 million from the issue of three tranches of convertible preference securities to CIC. Each tranche will receive a coupon of 10% per annum 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. During the financial year and up to the date of signature of the Directors’ report none of the securities were converted.

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.

State of affairs (cont)

(c) Exercise of options over Goodman stapled securities

During the financial year, Macquarie Group exercised 243,278,351 options over stapled securities at a price of $0.2464 per stapled security and 150,021,649 options over stapled securities at a price of $0.3464 per stapled security.

(d) Financing initiatives

The proceeds from the equity raising were used to retire the A$300 million drawn under the A$485 million secured loan provided by Macquarie Group and CIC and the amounts drawn under the A$520 million tranche B of the syndicated multi currency facility (SMCF). The Consolidated Entity also renegotiated a significant portion of both Goodman’s bank debt facilities and the bank debt facilities of funds managed by Goodman. This included:

- extension from May 2011 to September 2012 of A$438.0 million of the A$520 million tranche C of the SMCF and extension from December 2012 to December 2013 of €340 million of the €525 million European revolving credit facility, along with amended covenants to the common terms deed poll, which applies to both facilities;
- extension of facilities and renegotiation of covenants with Goodman Australia Industrial Fund (GAIF);
- renegotiation of the covenants for Goodman European Logistics Fund; and
- renegotiation of covenants for Arlington Business Parks Partnership.

(e) Disposal of units in Goodman Property Trust

On 19 August 2009, the Consolidated Entity completed the sale of 93 million units in Goodman Property Trust (GMT) to a number of institutional investors at a price of NZ$0.95 per unit. Subsequent to the disposal, Goodman owns 17% of GMT, which is in line with Goodman’s strategy of targeting a long-term holding of 15% to 20% for investments in funds managed by Goodman.

(f) Joint ventures with Canada Pension Plan Investment Board and CB Richard Ellis Realty Trust

On 6 August 2009, Goodman announced a strategic partnership with Canada Pension Plan Investment Board (CPPIB). CPPIB initially invested $163 million in a fund in China, Goodman China Logistics Holding Limited (GCLHL). This entity was funded on an 80/20 basis, with CPPIB holding the majority share. GCLHL owns four logistics assets and could invest a further $185 million to develop facilities on land owned by Goodman in Shanghai.

On 17 May 2010, a second fund, Goodman Australia Development Fund (GADF), was established in Australia, again funded on an 80/20 basis, with CPPIB holding the majority share. GADF has an initial equity commitment of $250 million with a target gross asset value of $400 million and will be seeded with the acquisition of the Consolidated Entity’s Kmart development in Melbourne.

On 11 June 2010, the Consolidated Entity announced the establishment of two new co-investment vehicles with CB Richard Ellis Realty Trust in Continental Europe and the United Kingdom. The co-investment vehicles will invest in pre-committed logistics development opportunities sourced through Goodman and will be funded on an 80/20 basis, with CB Richard Ellis Realty Trust holding the majority share.

The Continental Europe co-investment vehicle will target a total investment of €400 million over an initial investment term of three years, focusing on the core Western European markets of Germany, France and Benelux. The United Kingdom co-investment vehicle will target a total investment of £400 million over an initial investment term of three years.

Details of changes in the state of affairs of the Consolidated Entity subsequent to the balance date are set out on page 39 in this Directors’ report.

Strategy and outlook

Goodman’s business strategy is to be the leading international provider of industrial property and business space to leading global customers in each of the markets in which the Consolidated Entity operates. Goodman’s integrated “own+develop+manage” customer service model is a driving principle in the Consolidated Entity’s operations.

The Consolidated Entity’s “own+develop+manage” customer service model is intended to allow the Consolidated Entity to build an in-depth understanding of customer needs and to assist the Consolidated Entity in providing access to quality information on portfolio performance and market dynamics. The Consolidated Entity believes its ability to establish a better understanding of its clients’ needs allows for better client management opportunities and enables the Consolidated Entity to provide a more tailored property management service. Goodman strives to meet the requirements of its customers “in-house” through the repositioning of existing assets or via the development of new pre-leased sites, while the “in-house” property management team works to efficiently satisfy customer needs.

Goodman Group Financial Report 2010

Directors’ report (cont)

Strategy and outlook (cont)

The Consolidated Entity seeks to create value through expansion, both organically and through strategic acquisitions, while enhancing returns through the active management of its property portfolio. The cornerstone of this strategy is a substantial portfolio (including both directly owned property and cornerstone investments in Goodman managed funds) of quality industrial and business space assets, coupled with the Consolidated Entity’s integrated property platform. Goodman looks to enhance its return on property investments with property and funds management income and development profits.

Development is an important component of the Consolidated Entity’s business strategy, because it drives portfolio growth with the expansion of existing customers and the procurement of new customers and provides a source of investment products for the Goodman managed funds. The Consolidated Entity’s current strategy is to ensure that the majority of developments are conducted within Goodman managed funds.

The Consolidated Entity believes that its ability to recycle capital in this way, coupled with the Consolidated Entity’s ability to utilise third party capital invested in Goodman managed funds, enables it to grow development and investment activity and earnings outside of the Consolidated Entity’s traditional Australian markets. Through cornerstone investments in Goodman managed funds, the Consolidated Entity intends to align its interests with those of the funds’ investors and believes that it is able to foster long-term relationships with the funds’ investors. By attracting a group of key global investors, the Consolidated Entity aims to secure sources of funding for Goodman managed funds and the Consolidated Entity’s joint ventures, allowing for the expansion of the Consolidated Entity’s business without needing to fund such expansion entirely with the Consolidated Entity’s balance sheet.

The Consolidated Entity intends to continue to follow this strategy in its existing markets.

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

Rights and options granted during the financial year

(a) Granted to employees

During the financial year, the following rights over unissued securities were granted by the Company to employees under the Long Term Incentive Plan (LTIP).

	Exercise price Dategranted Expiry date $ Rights issued Equity settled 14 May 10 1 Sep 14 – 46,961,409 Cash settled 14 May10 1 Sep14 – 2,988,000 ~~49,949,409~~

(b) Granted to finance facility providers

The following options over unissued securities were granted during the prior financial year but only approved by Securityholders at the Extraordinary General Meeting on 24 September 2009. These options were granted under the option deed associated with the financing arrangement with Macquarie Group and CIC:

		Exercise price
Dategranted	Expiry date	$	Options issued1
19 May 09	22 May 11	0.2464	294,000,000
15 Jun 09	22 May11	0.3464	255,300,000

On 19 May 2009, in addition to the options over unissued securities included in the table above, 120 million options over unissued securities that did not require Securityholder approval were granted under the option deed associated with the financing arrangement with Macquarie Group and CIC.

Securities issued on exercise of rights or options

During or since the end of the financial year, no securities were issued to employees as a result of the exercise of rights or options.

During or since the end of the financial year, Goodman issued to Macquarie Group 243,278,351 securities with an exercise price of $0.2464 per stapled security and 150,021,649 securities with an exercise price of $0.3464 per stapled security.

Unissued securities under option

At the date of signature of the Directors’ report, unissued securities under option issued to employees and the applicable return on equity (ROE) performance hurdles are:

				Performance
				hurdle2
		Exercise price1	Number of	ROE
Dategranted	Expiry date	$	unissued options	%
3 Nov 05	30 Jun 11	4.00	3,153,445	11
9 Dec 05	31 Dec 11	4.20	11,250,000	11
14 Jun 06	31 Dec 11	5.15	2,119,000	12
13 Oct 06	30 Sep 12	6.27	7,522,500	12
10 Apr 07	31 Dec 12	7.14	19,745,000	12
22 Jun 07	31 Dec 12	7.04	6,310,000	12
19 Oct 07	30 Jun 13	6.27	31,746,500	12
26 Nov 07	30 Jun 13	6.27	2,700,000	12
5 Sep 08	30 Jun 13	2.98	42,925,000	12
5 Sep 08	30 Jun 13	3.01	3,850,000	12
17 Nov 08	30 Jun 13	3.01	7,000,000	12

As a consequence of the entitlement offers on 26 August 2009 and 16 September 2009, the exercise prices have been reduced in accordance with the ASX Listing Rules by $0.0536 per security. The amounts disclosed in the table above reflect this reduced exercise price.
The ROE performance hurdle applicable to the options issued under the Executive Option Plan (EOP) requires the Consolidated Entity achieving compound annual growth 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).

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).

At the date of signature of the Directors’ report, performance rights issued to employees under the LTIP and the applicable total securityholder return (TSR) or earnings per security (EPS) performance hurdles are:

			Number of
		Exercise price	performance	Performance
Dategranted	Expiry date	$	rights1	hurdles2
14 May 10	1 Sep 14	–	49,813,610	TSR (50%) and
				EPS(50%)

The number of performance rights at the date of the Directors’ report is net of any rights forfeited.
The TSR vesting condition is determined by the Consolidated Entity’s relative TSR over the three year period from 1 July 2009 to 30 June 2012, as determined by the Board. The Consolidated Entity’s TSR performance will be measured against the TSR performance of the entities comprising the Standard & Poor’s (S&P)/ASX 200 index. The EPS vesting condition is determined by the Consolidated Entity’s aggregated operating EPS over the three year period from 1 July 2009 to 30 June 2012, compared to the target EPS and stretch target EPS as determined by the Board.

All performance rights 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).

At the date of signature of the Directors’ report, unissued securities under option issued to CIC are:

		Exercise price	Number of
Dategranted	Expiry date	$	unissued options
19 May 09	22 May 11	0.2464	170,721,649
15 Jun 09	22 May11	0.3464	105,278,351

Goodman Group Financial Report 2010

Directors’ report (cont)

Directors’ interests

The relevant interest of each Director in the issued capital of Goodman as notified by the Directors to the ASX in accordance with section 205G(1) of the Corporations Act 2001 at the date of signature of this Director’s report is as follows:

follows:
	Direct	Indirect
Directors	securities	securities	Total
Non‑Executive
Mr Ian Ferrier	299,839	–	299,839
Mr Patrick Goodman	–	5,955,992	5,955,992
Ms Diane Grady	–	208,200	208,200
Mr John Harkness	269,368	–	269,368
Mr James Hodgkinson	333,730	920,572	1,254,302
Ms Anne Keating	–	304,866	304,866
Mr Jim Sloman	230,361	–	230,361
Executive
Mr GregoryGoodman	5,955,992	–	5,955,992

None of the Non-Executive Directors held any options over unissued securities at 30 June 2010. Mr Gregory Goodman held 9,700,000 options and 3,900,000 performance rights over securities of Goodman (including units in GIT) at 30 June 2010 (2009: 9,700,000 options and nil performance rights). Mr Patrick Goodman has an indirect interest in respect of those options and performance rights.

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

Remuneration report – audited

The remuneration report sets out the Board’s policies for determining the remuneration of key management personnel and other senior executives and the relationship between that policy and the performance of Goodman.

In particular, this report discloses prescribed remuneration details for Non-Executive Directors, the Executive Director (Mr Gregory Goodman) and other key management personnel.

The Board, based on advice from the Remuneration and Nomination Committee, has developed policies dealing with fixed pay and short and long-term incentive remuneration. 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 specific remuneration arrangements applying to Non-Executive Directors, the Group Chief Executive Officer and senior executives. The Committee is also responsible for oversight of specific aspects of remuneration including short-term incentive (STI), long-term incentive (LTI), superannuation/pension entitlements, termination payments and related policies.

Members of the Remuneration and Nomination Committee during the financial year were:

- Mr Ian Ferrier (Independent Member);
- Ms Diane Grady (Independent Member);
- Ms Anne Keating (Independent Member); and
- 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).

The Remuneration and Nomination Committee meets as required to consider and recommend to the Board remuneration policy and specific remuneration arrangements for senior employees and Directors and general remuneration outcomes for the wider employee population. Decisions are made by the Committee during the financial year either at meetings or via circular resolutions. The Committee has the resources and authority to appropriately discharge its duties and responsibilities. It directly engages external professionals to advise on any relevant matters. The Committee members’ attendance record is disclosed on page 18 in this Directors’ report.

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

Goodman Group Financial Report 2010

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 qualified and experienced Directors and senior executives. The Remuneration and Nomination Committee obtains independent advice on the appropriateness of remuneration for both Directors and senior executives. This takes into account remuneration trends in comparable companies and markets. Non-Executive Directors are paid a fixed fee plus consideration for Board Committee responsibilities. Remuneration packages for executives include a mix of fixed remuneration, short-term performance based remuneration and equity based remuneration. The remuneration structures explained below are designed to attract and retain suitably qualified 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 benefits policies that reflect 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 benefits with those applying in different local or regional environments.

The Committee seeks professional 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 total remuneration has not altered significantly over the last 12 months in most regional markets and Goodman’s remuneration practice reflects this subdued market. For example, no bonuses (STI) were awarded to key management personnel in respect of both the 2008 and 2009 financial years.

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. In this regard it is noted that the findings of the Report into Executive Remuneration prepared by the Productivity Commission, which made a series of recommendations as to appropriate methodologies in setting executive remuneration, were generally reflected in the current practices at Goodman.

One of the challenges faced by all boards is finding the balance between offering competitive remuneration which includes effective retention mechanisms and also delivers appropriate performance based rewards. For example, it is important that any STIs 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.

During the financial year, the Remuneration and Nomination Committee conducted a review of Goodman’s remuneration methodologies and as a result implemented two significant changes.

The first was to formalise a “total remuneration” approach whereby total remuneration was benchmarked against what was offered as total remuneration in comparable roles in comparably sized organisations, as measured by a number of factors including market capitalisation. This analysis also depicted market practice as to the “mix” between fixed pay, STIs and LTIs for nominated positions. Using this method, Goodman is progressively establishing a preferred mix of components of remuneration consistent with the market practice for key positions.

The second was to introduce a new Long Term Incentive Plan (LTIP) which was approved by Securityholders at the Annual General Meeting on 30 November 2009. Under the LTIP, Goodman may offer performance rights (sometimes known as zero priced options) or options to its employees. Previously, the Company had a scheme which enabled it to offer options over Goodman stapled securities. The design features of the LTIP closely reflect the principles supported by Securityholders including minimum three year vesting periods and relevant, transparent performance hurdles including relative total securityholder return (TSR) and growth in earnings per security (EPS).

Remuneration report – audited (cont)

Remuneration policies

Fixed remuneration

Fixed remuneration consists of a base remuneration package which includes cash, non-cash benefits (e.g. motor vehicles and allowances) including the full cost of any related fringe benefits tax charges, plus any salary sacrificed 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. Senior executives’ remuneration may also be reviewed by the Remuneration and Nomination Committee on individual appointment or promotion. For key management personnel, apart from one off adjustments to remuneration of particular individuals due to significant changes in role/responsibilities, the fixed base pay element of remuneration has remained unaltered since July 2006.

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 Officer 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 financial 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 to 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 Officer of each individual’s performance and contribution to the Consolidated Entity’s performance. The bonus pool is calculated having regard to a number of factors, including earnings performance, and is dependent upon at least the target earnings guidance announced to the market being achieved.

The current bonus policy provides that the higher of either the first $100,000 (2009: $100,000) or 25% of any STI bonus granted is paid in cash in August or September of the financial year following the financial 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 two years. Employees forfeit any entitlement to accrued but unpaid STI payments if they cease employment by resigning from the Consolidated Entity.

As reported above, no bonuses were awarded to key management personnel in respect of the 2008 and 2009 financial years. However, the Board has approved a provision for a bonus pool in respect of the 2010 financial year and intends that bonuses will be allocated and paid for the 2010 financial year provided individual performance warrants payment of an STI.

(b) Long‑term incentive

The LTIP provides equity based remuneration through the opportunity to issue either performance rights or options (including phantom equivalents in certain jurisdictions).

The purpose of the LTIP is to achieve enhanced alignment of the interests of employees and Securityholders by matching rewards under the LTIP with the long-term growth and prosperity of Goodman.

Details of equity based remuneration are as follows:

Long Term Incentive Plan

The LTIP was approved at the Annual General Meeting on 30 November 2009 and replaces the previous EOP.

Each performance right issued under the LTIP entitles an employee to acquire a Goodman stapled security for nil consideration subject to the vesting conditions having been satisfied. The LTIP also provides for the issue of options, though this has not been utilised to date. If options were to be issued it would entitle an employee to acquire a Goodman stapled security on payment of the exercise price for the option subject to the vesting conditions having been satisfied.

Non-Executive Directors are not entitled to participate in the LTIP and no performance rights or options over stapled securities have been issued to Non-Executive Directors.

Goodman Group Financial Report 2010

Directors’ report (cont)

Remuneration report – audited (cont)

Under the terms of the LTIP and decisions made by the Board in accordance with the plan, issues of performance rights to employees during the financial year are subject to the following broad terms:

- the exercise of performance rights will be conditional on the Consolidated Entity achieving a TSR in excess of that achieved by 50% of listed entities in the S&P/ASX 200 index and an operating EPS outcome at least at the target level notified to the market over a three year “testing period” which ends on 30 June 2012 (refer below for further details) and continued employment (subject to special circumstances e.g. death, total and permanent disability, redundancy or retirement). These two measures are made in accordance with a graduating scale as set out in the LTIP scheme rules presented to Securityholders in November 2009;
- performance rights lapse on the earlier of approximately five years from the offer or the termination of the employee’s employment (unless such termination is due to special circumstances);
- performance rights vest in three equal tranches on 3 September 2012, 2 September 2013 and 1 September 2014; and + the majority of Australian based employees were also permitted to receive up to $1,000 of restricted Goodman stapled securities under guidelines issued by the Australian Tax Office (ATO). The allotment of these securities was made under the Goodman Tax Exempt Plan, as approved by the Board.

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 performance rights, options or securities issued under the Employee Securities Acquisition Plan (ESAP). In accordance with their terms of engagement, Directors and employees are required to comply with the Consolidated Entity’s policies.

Remuneration and past financial performance

The level of remuneration paid in Goodman has been a function of the Company’s ability to attract and retain qualified and experienced management. The key longer-term financial drivers used to determine the level of performance-linked pay are growth in relative TSR and EPS. 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 applied a graduating performance hurdle for TSR and EPS that will be used to determine the proportion of performance rights that will vest on vesting dates. For each tranche of performance rights, 50% are subject to the TSR hurdle and 50% are subject to the growth in EPS hurdle. The extent to which the performance rights are subject to the TSR and EPS performance hurdles is set out below:

TSR

- 100% vesting of the TSR tranche will occur where Goodman achieves a TSR score over three years at or above the 76th percentile of that achieved by S&P/ASX 200 entities;
- nil vesting will arise if a TSR score at or less than the 50th percentile is achieved; and
- proportional vesting will arise for scores between the 51st and 75th percentiles;

EPS

- 100% vesting of the EPS tranche will occur if Goodman on average achieves an annual “stretch” EPS target over the three year vesting period;
- nil vesting applies if target earnings is not achieved on average over the three year vesting period; and
- proportional vesting applies for outcomes between the target and the stretch target.

In relation to the TSR performance hurdle, Goodman considers that the S&P/ASX 200 index is the most appropriate comparator group on the basis that it is sufficiently broad to include a sample of businesses with geographic diversity and business complexity to compare with the Consolidated Entity’s performance.

In relation to the EPS performance hurdle, the target EPS for the 2010 financial year was 5.2 cents per security and the stretch target EPS was 5.4 cents per security. Both amounts are fully diluted for the convertible preference securities and securities under option issued to CIC. Consistent with the rigorous standards applying to performance pay in Goodman and for the LTIP performance hurdle purposes only, the 2011 financial year target EPS has been established at 5.5 cents per security, again fully diluted for the convertible preference securities and securities under option issued to CIC. This target is above the average consensus broker forecast for the 2011 financial year. The stretch target EPS will be advised at the end of the 2011 financial year.

The individual short-term performance based remuneration disclosed in this financial year’s remuneration report was based on the financial performance delivered in the 2009 financial year. This is consistent with past practice and remuneration reports included in previous annual consolidated financial reports.

Remuneration report – audited (cont)

Historical performance for TSR and EPS over the past five financial years for Goodman is as follows:

==> picture [498 x 168] intentionally omitted <==

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

Total Securityholder return [1] Earnings per security [1]
% cents
75.7
55.0 34.0
31.5
17.0 26.7
17.4
-49.1
-84.5 5.25
06 07 08 09 10 06 [2] 07 08 09 10
Year Year
----- End of picture text -----

Based on distributions and the security price movement during each financial year.
Earnings per security is the operating profit available for distribution (refer to Director’s report page 20) divided by the weighted average number of securities in issue during the year (fully diluted for the convertible preference securities and securities under option issued to CIC from the date of allotment).
Before performance fee and merger cost.

During the current financial year, the components of performance-linked remuneration have been closely aligned with the Consolidated Entity’s financial performance, as demonstrated by the bonus pool being dependent on at least target earnings guidance announced to the market being achieved and LTIP performance hurdles being TSR and EPS, as stated above.

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

Goodman has agreed specific 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 Officer and the named executives are as follows:

executives are as follows:
	Noticeperiod
	Company Employee
Executive director: Mr Gregory Goodman Executives: Mr Anthony Rozic Mr Nick Kurtis Mr Michael O’Sullivan Mr Nick Vrondas Mr James Inwood Mr DannyPeeters	12 months 12 months 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.

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 the financial year were $1.8 million (2009: $2.1 million) which takes 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.

Goodman Group Financial Report 2010

Directors’ report (cont)

Remuneration report – audited (cont)

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 significant 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 financial year. This holding may be acquired at any time but where not held at the beginning of a financial year, 25% of net base fees during the financial year must be applied to the on-market purchase of securities.

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:

			Short‑term	Short‑term			Long‑term	Long‑term		Share based	payments
		Salary and fees1	Bonus2	Other3	Total	Post‑employment superannuation benefts	Bonus2	Other	3	Securities (ESAP) 4	Rights and options4	Total	Proportion of	remuneration	performance related	Value of options	as proportion of	remuneration5
Directors		$	$	$	$	$	$	$		$	$	$			%			%
Non‑Executive
Mr Ian Ferrier	2010	571,539	–	–	571,539	14,461	–	–		–	–	586,000			–			–
	2009	414,547	–	–	414,547	13,745	–	–		–	–	428,292
Mr David Clarke	2010	–	–	–	–	–	–	–		–	–	–			–			–
(retired 2 July 2009)	2009	437,755	–	–	437,755	13,745	–	–		–	–	451,500
Mr Patrick Goodman	2010	173,039	–	–	173,039	14,461	–	–		–	–	187,500			–			–
	2009	173,755	–	–	173,755	13,745	–	–		–	–	187,500
Ms Diane Grady	2010	173,039	–	–	173,039	14,461	–	–		–	–	187,500			–			–
	2009	173,755	–	–	173,755	13,745	–	–		–	–	187,500
Mr John Harkness	2010	193,039	–	–	193,039	14,461	–	–		–	–	207,500			–			–
	2009	190,630	–	–	190,630	13,745	–	–		–	–	204,375
Mr James Hodgkinson6	2010	235,281	–	–	235,281	14,461	–	–		–	–	249,742			–			–
	2009	237,285	–	–	237,285	13,745	–	–		–	–	251,030
Ms Anne Keating	2010	173,039	–	–	173,039	14,461	–	–		–	–	187,500			–			–
	2009	173,755	–	–	173,755	13,745	–	–		–	–	187,500
Mr Jim Sloman	2010	183,039	–	–	183,039	14,461	–	–		–	–	197,500			–			–
	2009	183,755	–	–	183,755	13,745	–	–		–	–	197,500
Executive
Mr Gregory Goodman	2010	1,385,539	–	(6,496)	1,379,043	14,461	–	23,942		–	451,763	1,869,209		24.2			24.2
	2009	1,386,255	–	39,821	1,426,076	13,745	–	24,342	(1,869,516)		(556,500)	(961,853)

Salary and fees represents the amounts due to the Directors under the terms of their service agreements and does not reflect any salary sacrifice elections by the Directors.
As in prior financial years, the total individual bonus amounts included in the remuneration report represent the amounts with respect to the previous financial years’ performance, as the individual bonus awards are only determined subsequent to the approval of the consolidated financial report. No bonuses were awarded to Mr Gregory Goodman in respect of the 2008 or 2009 financial years’ performance.
Other includes reportable fringe benefits, car parking and per diem allowances and changes in annual leave balances.
During the comparative financial year, the Directors assessed that the non-market related performance hurdles attached to certain of the options issued under the EOP and securities issued under the ESAP were unlikely to be achieved. Accordingly, the share based payment expense recognised in previous financial years’ remuneration for Mr Gregory Goodman was reversed. This resulted in a net credit in reporting the comparative financial year’s remuneration.
For the current financial year, the value of options as a proportion of remuneration included performance rights. For the comparative financial year, the value of options as a proportion of remuneration included the reversal of options issued under the EOP and securities issued under the ESAP.
Salary and fees reported in the current financial year for Mr James Hodgkinson includes an amount of A$59,742 (NZ$75,000) (2009: A$61,030 (NZ$75,000)) due in respect of his role on the board of Goodman (NZ) Limited, the responsible entity of Goodman Property Trust.

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:

Executives1	Short‑term Long‑term Share based payments Salary and fees Bonus2 Other3 Total Post‑employment superannuation benefts Bonus2 Other Securities 3 (ESAP) Rights and 4 options4 Total Proportion of remuneration performance related Value of options as proportion of remuneration5 $ $ $ $ $ $ $ $ $ $ % %
Mr Anthony Rozic 2010 685,539 – 72,880 758,419 14,461 – 14,541 – 301,658 1,089,079 27.7 27.7 Group Chief Operating Offcer 2009 686,255 – 25,413 711,668 13,745 – 12,248 (914,148) (309,167) (485,654) Mr Nick Kurtis 2010 685,539 – 8,063 693,602 14,461 – 11,965 – 301,658 1,021,686 29.5 29.5 Group Head of Funds Management 2009 686,255 – 36,432 722,687 13,745 – 41,883 (892,606) (309,167) (423,458) Mr Michael O’Sullivan 2010 546,273 – 75,325 621,598 10,370 – (18,702) – 101,357 714,623 14.2 14.2 Group Corporate Executive 2009 864,865 – 187,711 1,052,576 – – 18,815 (875,828) (309,167) (113,604) Mr Nick Vrondas6 2010 585,539 – 46,811 632,350 14,461 – 11,843 – 241,326 899,980 26.8 26.8 Chief Financial Offcer 2009 159,401 – 18,370 177,771 5,022 – 3,361 – – 186,154 Mr David van Aanholt7 2010 – – – – – – – – – – – – former Chief Executive Offcer, Asia Pacifc 2009 433,319 – 30,924 464,243 1,037 – 7,166 (923,673) (309,167) (760,394) Mr James Inwood 2010 539,458 – 86,895 626,353 6,674 – 11,292 – 217,194 861,513 25.2 25.2 Head of European Funds Management 2009 627,027 108,108 181,155 916,290 – – 3,858 (352,361) (154,583) 413,204 Mr Danny Peeters 2010 788,523 – – 788,523 – – – – 321,120 1,109,643 28.9 28.9 Chief Executive Offcer Continental Europe 2009 913,872 – – 913,872 – – – –(708,160) 205,712

Executives1

Short‑term
Long‑term
Share based payments
Salary and
fees
Bonus2
Other3
Total
Post‑employment
superannuation
benefts
Bonus2
Other
Securities
3
(ESAP)
Rights and
4
options4
Total
Proportion of
remuneration
performance related
Value of options
as proportion of
remuneration5
$
$
$
$
$
$
$
$
$
$
%
%

Mr Anthony Rozic
2010
685,539
–
72,880
758,419
14,461
–
14,541
–
301,658 1,089,079
27.7
27.7
Group Chief Operating Offcer
2009
686,255
–
25,413
711,668
13,745
–
12,248
(914,148) (309,167) (485,654)
Mr Nick Kurtis
2010
685,539
–
8,063
693,602
14,461
–
11,965
–
301,658 1,021,686
29.5
29.5
Group Head of Funds Management
2009
686,255
–
36,432
722,687
13,745
–
41,883 (892,606) (309,167) (423,458)
Mr Michael O’Sullivan
2010
546,273
–
75,325
621,598
10,370
–
(18,702)
–
101,357
714,623
14.2
14.2
Group Corporate Executive
2009
864,865
–
187,711 1,052,576
–
–
18,815 (875,828) (309,167) (113,604)
Mr Nick Vrondas6
2010
585,539
–
46,811
632,350
14,461
–
11,843
–
241,326
899,980
26.8
26.8
Chief Financial Offcer
2009
159,401
–
18,370
177,771
5,022
–
3,361
–
–
186,154
Mr David van Aanholt7
2010
–
–
–
–
–
–
–
–
–
–
–
–
former Chief Executive Offcer, Asia Pacifc
2009
433,319
–
30,924
464,243
1,037
–
7,166 (923,673) (309,167) (760,394)
Mr James Inwood
2010
539,458
–
86,895
626,353
6,674
–
11,292
–
217,194
861,513
25.2
25.2
Head of European Funds Management
2009
627,027
108,108
181,155
916,290
–
–
3,858 (352,361) (154,583) 413,204
Mr Danny Peeters
2010
788,523
–
–
788,523
–
–
–
–
321,120 1,109,643
28.9
28.9
Chief Executive Offcer Continental Europe
2009
913,872
–
–
913,872
–
–
–
–(708,160)
205,712

For the current financial year, Mr Anthony Rozic, Mr Nick Kurtis, Mr Michael O’Sullivan and Mr Nick Vrondas 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 Officer on 24 February 2009.
Bonuses paid to executives are in accordance with the bonus policy and based on individual performance of executives. As in prior financial years, the total individual bonus amounts included in the remuneration report represent the amounts with respect to the previous financial years’ performance, as the individual bonus awards are only determined subsequent to the approval of the consolidated financial report. Accordingly, the bonus amounts of nil for the current financial year disclosed in the table above relate to the 2009 financial year’s performance.
Other includes reportable fringe benefits, car parking and per diem allowances and changes in annual leave and long service leave balances.
During the prior financial year, the Directors assessed that the non-market related performance hurdles attached to certain of the options issued under the EOP and securities issued under the ESAP were unlikely to be achieved. Accordingly, the share based payment expense recognised in previous financial years’ remuneration was reversed. This resulted in a net credit in reporting the comparative financial year’s remuneration.
For the current financial year, the value of options as a proportion of remuneration included performance rights. For the comparative financial year, the value of options as a proportion of remuneration included the reversal of options issued under the EOP 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.
Effective 11 February 2009, Mr David van Aanholt ceased employment with Goodman. He did not receive any additional benefits on termination beyond what was provided in his service agreement.

Goodman Group Financial Report 2010

Directors’ report (cont)

Remuneration report – audited (cont)

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

The Consolidated Entity’s share based payment remuneration during the current financial year included performance rights under the LTIP. The share based payment remuneration during the prior financial year reflected the reversal of amounts relating to options issued under the EOP and securities under the ESAP, as the Directors assessed that the non-market related performance hurdles attached to these schemes were unlikely to be achieved.

For the current financial year, the following assumptions were used in determining the fair value of performance rights on grant date:

grant date:
		Fair value per			Risk free	Distribution
		performance	Market price	Expected	interest rate	yield
		right	of security	volatility	per annum	per annum
Grant date	Expiry date	$	$	%	%	%
2010
14 May10	1 Sep14	0.60	0.67	64.94	5.04	5.23

In the prior financial year, the following assumptions were used in determining the fair value of options on grant date:

						Risk free	Distribution
		Fair value	Exercise	Market price	Expected	interest rate	yield
		per option	price1	of security	volatility	per annum	per annum
Grant date	Expiry date	$	$	$	%	%	%
2009
5 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 offers on 28 November 2008, 26 August 2009 and 16 September 2009, the exercise prices of certain options under the EOP have been reduced. The amounts disclosed in the table above reflect the original exercise price at the grant date.

Analysis of bonuses included in the remuneration

The total bonus amount included in remuneration represents the amount in relation to the previous year’s financial performance as the individual bonus awards are only determined subsequent to the approval of the consolidated financial report. The bonuses included in the current financial year are nil as neither the Executive Director nor any of the named executives were awarded bonuses as part of their remuneration in relation to the 2008-2009 financial year’s performance. Details of the Consolidated Entity’s policy in relation to the proportion of remuneration that is performance related is discussed on pages 27 and 28. No bonuses were forfeited during the financial year.

During the prior financial year, Mr James Inwood was awarded a bonus of $108,108, all of which was paid in the financial year ended 30 June 2009. Neither the Executive Director nor any of the other named executives were awarded bonuses as part of their remuneration in the prior financial 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 performance rights over Goodman stapled securities issued under the LTIP, 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 27 and 28.

Performance rights over equity instruments granted as compensation

Details of performance rights under the LTIP that were granted by the Company as compensation to the Executive Director and each of the named executives and details of the performance rights that vested during the current financial year are as follows:

year are as follows:
			Fair value per
	Number of		performance		Number of
	performance	Grant	right1	Expiry	performance
	rightsgranted	date	$	date	rights vested
Executive Director
Mr GregoryGoodman	3,900,000	14 May10	0.60	1 Sep14	–
Executives
Mr Anthony Rozic	2,604,167	14 May 10	0.60	1 Sep 14	–
Mr Nick Kurtis	2,604,167	14 May 10	0.60	1 Sep 14	–
Mr Michael O’Sullivan	875,000	14 May 10	0.60	1 Sep 14	–
Mr Nick Vrondas	2,083,333	14 May 10	0.60	1 Sep 14	–
Mr James Inwood	1,875,000	14 May 10	0.60	1 Sep 14	–
Mr DannyPeeters	2,772,177	14 May10	0.60	1 Sep14	–

Fair value determined at the grant date.

No performance rights provided under the LTIP have been granted since the end of the financial year.

All performance rights expire on the earlier of their expiry date or termination of the individual’s employment (subject to special circumstances). For performance rights granted during the current financial year, the earliest exercise date is 3 September 2012.

Options over equity instruments granted as compensation

No options under the EOP were granted to any employee during the current financial year. No options granted by the Company as compensation to the Executive Director and each of the named executives vested during the current financial year.

No options provided under the EOP have been granted since the end of the financial year.

All options expire on the earlier of their expiry date or termination of the individual’s employment (subject to special circumstances). The options are exercisable in three equal tranches from the end of each of years three, four and five after the grant date. In addition to a continuing employment service condition, the ability to exercise options under the EOP is conditional on Goodman achieving the performance hurdle.

Securities granted as compensation under the Employee Securities’ Acquisition Plan

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

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

The offers under the ESAP expire 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 five 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.

Goodman Group Financial Report 2010

Directors’ report (cont)

Remuneration report – audited (cont)

Modification of terms of equity settled share based payment transactions

During the financial year, the Board approved a new LTIP that provided employees with performance rights over Goodman stapled securities. The LTIP was subsequently approved by the Securityholders at the Annual General Meeting on 30 November 2009.

The terms of other equity settled share based payment transactions (including options under the EOP or securities under the ESAP) have not been altered or modified by Goodman during the current financial year. However, as a consequence of the entitlement offers on 26 August 2009 and 16 September 2009, the exercise prices of certain options on issue have been reduced.

Exercise of options and rights over equity instruments granted as compensation

No rights under the LTIP, no options under the EOP and no securities under the ESAP previously granted as compensation were exercised in the financial year by the key management personnel and each of the named executives.

Analysis of options and rights over equity instruments granted as compensation

Details of vesting profiles of the performance rights granted under the LTIP as remuneration to the Executive Director and each of the named executives are detailed below:

	Number of	Date	Number of			Financial
	performance	performance	performance			years
	rights	rights	rights vested	% vested	% forfeited	in which
	granted	granted	in theyear	in theyear	in theyear	grant vests
Executive Director
Mr GregoryGoodman	3,900,000	14 May10	–	–	–	2012 – 2014
Executives
Mr Anthony Rozic	2,604,167	14 May 10	–	–	–	2012 – 2014
Mr Nick Kurtis	2,604,167	14 May 10	–	–	–	2012 – 2014
Mr Michael O’Sullivan	875,000	14 May 10	–	–	–	2012 – 2014
Mr Nick Vrondas	2,083,333	14 May 10	–	–	–	2012 – 2014
Mr James Inwood	1,875,000	14 May 10	–	–	–	2012 – 2014
Mr DannyPeeters	2,772,177	14 May10	–	–	–	2012 – 2014

Details of vesting profiles of the options granted under the EOP as remuneration to the Executive Director and each of the named executives are detailed below:

						Financial
	Number	Date	Number of			years
	of options	options	options vested	% vested	% forfeited	in which
	granted	granted	in theyear	in theyear	in theyear	grant vests1
Executive Director
Mr Gregory Goodman	7,000,000	17 Nov 08	–	–	–	2011 – 2013
	2,700,000	26 Nov 07	–	–	–	2011 – 2013
Executives
Mr Anthony Rozic	3,500,000	5 Sep 08	–	–	–	2011 – 2013
	1,500,000	19 Oct 07	–	–	–	2011 – 2013
Mr Nick Kurtis	3,500,000	5 Sep 08	–	–	–	2011 – 2013
	1,500,000	19 Oct 07	–	–	–	2011 – 2013
Mr Michael O’Sullivan	3,500,000	5 Sep 08	–	–	–	2011 – 2013
	1,500,000	19 Oct 07	–	–	–	2011 – 2013
Mr Nick Vrondas	3,000,000	5 Sep 08	–	–	–	2011 – 2013
	1,250,000	19 Oct 07	–	–	–	2011 – 2013
Mr James Inwood	3,000,000	5 Sep 08	–	–	–	2011 – 2013
	750,000	19 Oct 07	–	–	–	2011 – 2013
Mr Danny Peeters	1,500,000	5 Sep 08	–	–	–	2011 – 2013
	200,000	19 Oct 07	–	–	–	2011 – 2013
	1,000,000	10 Apr 07	–	–	–	2010 – 2012
	1,500,000	13 Oct 06	–	–	–	2010 – 2012

It is unlikely that the unvested options will vest as performance hurdles attached to these options are unlikely to be achieved.

Remuneration report – audited (cont)

Details of vesting profiles 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
	securities	securities	vested	% vested	% forfeited	in which
	granted	granted	in theyear	in theyear	in theyear1	grant 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	–	–	67	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	–	–	67	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	–	–	67	2008 – 2010
Mr Michael O’Sullivan	850,000	10 Apr 07	–	–	–	2010 – 2012
	1,000,000	14 Jun 06	–	–	–	2009 – 2011
	855,746	3 Nov 05	–	–	67	2008 – 2010
Mr Nick Vrondas	200,000	10 Apr 07	–	–	–	2010 – 2012
	1,000,000	13 Apr 06	–	–	–	2009 – 2011
Mr James Inwood	200,000	10 Apr 07	–	–	–	2010 – 2012
	1,000,000	29 Sep 06	–	–	–	2009 – 2011
Mr DannyPeeters	–	–	–	–	–	–

The percentage forfeited in the financial year represents the reduction from the maximum number of securities available to vest due to vesting criteria not being achieved. It is unlikely that the unvested securities issued under the ESAP will vest as performance hurdles attached to these securities are unlikely to be achieved. Despite vesting criteria not being achieved, the securities remain on issue as they have not expired.

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.

Analysis of movements in performance rights issued under the LTIP, options issued under the EOP and securities issued under the ESAP

The movement during the financial year, by value, of performance rights granted under the LTIP to the Executive Director and each of the named senior executives is detailed below:

	Value of	Value of	Value of
	performance	performance rights	performance
	rights issued in year1	exercised in year	rights lapsed in year
Long Term Incentive Plan	$	$	$
Executive Director
Mr GregoryGoodman	1,704,006	–	–
Executives
Mr Anthony Rozic	1,137,825	–	–
Mr Nick Kurtis	1,137,825	–	–
Mr Michael O’Sullivan	382,309	–	–
Mr Nick Vrondas	910,260	–	–
Mr James Inwood	819,234	–	–
Mr DannyPeeters	1,211,233	–	–

The value of performance rights under the LTIP granted in the financial year was the fair value of the performance rights calculated at grant date using a combination of the standard Black Scholes model with a continuous dividend yield and a Monte Carlo model which simulated total returns for each of the ASX 200 stocks, and discounted the future value of any potential future vesting performance rights to arrive at a present value. The total value of the performance rights issued under the LTIP is included in the table above. This amount is allocated to remuneration over the vesting period of the performance rights from 1 July 2009 to 30 June 2012.

During the financial year, there were no issues or exercises of either options under the EOP or securities granted under the ESAP to the Executive Director and each of the named senior executives. None of the options under the EOP or securities granted under the ESAP to the Executive Director and each of the named senior executives lapsed in the financial year.

Goodman Group Financial Report 2010

Directors’ report (cont)

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 significant environmental regulation under a law of Australia, those obligations are identified and appropriately addressed. The Directors have determined that there has not been any material breach of those obligations during the financial year.

Declaration by the Group Chief Executive Officer and Group Chief Financial Officer

The Group Chief Executive Officer and Group Chief Financial Officer declared in writing to the Board that, in their opinion, the financial records of the Consolidated Entity for the year ended 30 June 2010 have been properly maintained and the financial report for the year ended 30 June 2010 complies with accounting standards and presents a true and fair view of the Consolidated Entity’s financial condition and operational results. This statement is required annually.

Indemnification and insurance of officers and auditors

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

Non-audit services

During the financial 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 financial 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 satisfied that the provision of those non-audit services during the financial 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.

Non-audit services (cont)

Details of the amounts paid to KPMG and its related practices for the audit and non-audit services, provided during the financial 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 2010 2009 $000 $000 943.3 1,099.6 961.7 1,122.7 1,905.0 2,222.3 15.0 100.2 34.9 124.4 967.0 893.9 – 639.5 404.0 358.0 212.7 668.7 17.2 19.3 81.5 63.3 1,732.3 2,867.3 ~~3,637.3~~ ~~5,089.6~~ 181.9 244.4
	Audit services Auditor of the Company: – Audit and review of fnancial reports (KPMG Australia) – Audit and review of fnancial reports(overseas KPMG frms)

	Other regulatory services: – Other regulatory services (KPMG Australia) – Other regulatoryservices(overseas KPMG frms)
	Other assurance services: – Investigative accounting services (KPMG Australia) – Investigative accountingservices(overseas KPMG frms)
	Taxation services: – Taxation compliance services (KPMG Australia) – Taxation compliance services (overseas KPMG frms) – Other taxation advice (KPMG Australia) – Other taxation advice(overseas KPMG frms)


	~~Totalpaid/payable to KPMG~~
	Other auditors: – Audit and review of fnancial reports(non-KPMG frms)

Qualifications, experience and special responsibilities of Directors and Company Secretary

Board of Directors

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

Mr Gregory Goodman – Group Chief Executive Officer

Appointed 7 August 1998

Gregory is responsible for Goodman’s overall operations and the implementation of its strategic plan. He has 28 years of experience in the property industry with significant 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., the management companies of Goodman’s unlisted funds and many of its subsidiaries.

Goodman Group Financial Report 2010

Directors’ report (cont)

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

Mr Patrick Goodman – Non‑Executive Director

Appointed 14 April 1998

Patrick is the Managing Director of Goodman Holdings Group. The diversified interests of Goodman Holdings Group initially focused on direct and indirect property development and have expanded to include the management of a diverse portfolio across sectors covering aviation, food, rural, private and listed equity, infrastructure and financial services globally. Patrick is also a director of companies involved in information technology, property investment and management both in Australasia and the United States. During his 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

Diane has been a full-time non-executive director on various companies since 1994 and is currently a director of Woolworths Limited (since 5 July 1996) and BlueScope Steel Limited (since 10 May 2002) and the Chair of Ascham School Limited. Diane is also a senior adviser to McKinsey & Company. Previously, she was a director of Lend Lease Corporation Limited (from 1994 to 2002), Wattyl Ltd (from 1994 to 2006) 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

Mr James Hodgkinson – Non‑Executive Director Appointed 21 February 2003

James is a senior investment banker with real estate specialisation, most recently, as an Executive Director of Macquarie Group. James has extensive experience as principal in the establishment, strategy and growth of a number of both listed and unlisted investment vehicles and operating businesses in Australia, Asia and North America. James was also Chief Executive Officer of Macquarie Industrial Trust for six years prior to that trust’s merger with GIT. He is a director of Goodman (NZ) Limited, the manager of the New Zealand Exchange listed Goodman Property Trust, and J-REP Co., Ltd. James is active in the not-for-profit sector and has initiated and assisted in the fund raising initiatives and strategic support of a number of community based organisations, including as Founder and Chairman of the Spastic Centre of NSW’s 20/Twenty Challenge and as a Founding Governor of the Cerebral Palsy Foundation. James has a Bachelor of Economics, is a Certified Practising Accountant and is a Fellow of the Australian Property Institute.

Ms Anne Keating – Independent Director

Appointed 23 February 2005

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

Mr Jim Sloman, OAM – Independent Director

Appointed 1 February 2006

Company Secretary

Mr Carl Bicego – Company Secretary

Events subsequent to balance date

On 16 August 2010, Goodman announced the proposed strategic acquisition of Moorabbin Airport and business park, Victoria for $201.5 million from Goodman Holdings Group. Mr Gregory Goodman and Mr Patrick Goodman are directors of and shareholders in Goodman Holdings Group. The transaction, which is subject to review by an independent expert, Securityholder approval and government and regulatory approvals, would be funded via issue of ordinary equity in Goodman of $146.5 million, $35.0 million of vendor finance and $20.0 million cash to fund working capital.

On 17 August 2010, the Consolidated Entity entered into a new £85 million (A$150 million) unsecured loan with an international bank. The loan is revolving and available in multiple currencies for a three year term. As a result, the Consolidated Entity’s total liquidity position has increased to approximately A$1.65 billion.

In the opinion of the Directors, other than this proposed strategic acquisition and the new loan facility, there were no events subsequent to balance date, and up to the date of signature of this Directors’ report, that would require adjustment or disclosure in the consolidated financial report.

Lead auditor’s independence declaration under section 307C of the Corporations Act 2001 The lead auditor’s independence declaration is set out on 40 and forms part of this Directors’ report for the financial year.

Rounding

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

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

==> picture [118 x 51] intentionally omitted <==

Ian Ferrier, AM Independent Chairman

==> picture [120 x 47] intentionally omitted <==

Gregory Goodman Group Chief Executive Officer

Sydney, 19 August 2010

Goodman Group Financial Report 2010

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 financial year ended 30 June 2010 there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

==> picture [59 x 38] intentionally omitted <==

KPMG

==> picture [96 x 62] intentionally omitted <==

John Teer Partner

Sydney, 19 August 2010

Balance sheet

as at 30 June 2010

	Note	Consolidated 2010 2009 $M $M 515.1 242.5 228.0 315.6 244.3 10.0 1.1 5.4 – 182.9 31.7 42.9 ~~1,020.2~~ ~~799.3~~ 288.5 303.6 181.9 35.5 1.0 – 2,797.4 3,534.0 2,279.2 2,662.3 18.0 28.2 69.9 71.1 12.7 23.6 929.4 1,125.4 ~~6,578.0~~ ~~7,783.7~~ ~~7,598.2~~ ~~8,583.0~~ 193.0 245.1 25.3 13.2 84.1 986.7 32.6 11.4 125.4 24.6 – 10.1 ~~460.4~~ ~~1,291.1~~ 177.7 188.0 2,192.5 3,253.1 4.5 42.4 22.9 18.4 18.5 12.4 ~~2,416.1~~ ~~3,514.3~~ ~~2,876.5~~ ~~4,805.4~~ ~~4,721.7~~ ~~3,777.6~~ 368.3 241.6 (340.6) (235.3) (215.7) (93.7) ~~(188.0)~~ ~~(87.4)~~ 6,220.1 5,003.2 (1,980.7) (1,436.9) (127.8) (20.1) ~~4,111.6~~ ~~3,546.2~~ 798.1 318.8 ~~4,721.7~~ ~~3,777.6~~
	Current assets Cash 27 (a) Receivables 8 Inventories 9 Current tax receivables 6 (c) Assets classifed as held for sale 10 Other assets 11

	~~Total current assets~~
	Non‑current assets Receivables 8 Inventories 9 Other assets 11 Investment properties 12 Investments accounted for using the equity method 13 Deferred tax assets 6 (e) Other fnancial assets 14 Plant and equipment 15 Intangible assets 16

	~~Total non‑current assets~~

	~~Total assets~~
	Current liabilities Payables 17 Current tax payables 6 (d) Interest bearing liabilities 18 Employee benefts 19 Provisions 20 Liabilities classifed as held for sale 10

	~~Total current liabilities~~
	Non‑current liabilities Payables 17 Interest bearing liabilities 18 Deferred tax liabilities 6 (e) Employee benefts 19 Provisions 20

	~~Total non‑current liabilities~~

	~~Total liabilities~~

	~~Net assets~~
	Equity attributable to Shareholders Issued capital 21 Reserves 22 Accumulated losses 23

	~~Total equity attributable to Shareholders~~
	Non‑controlling interests Equity attributable to Unitholders Issued capital 21 Reserves 22 Accumulated losses 23

	~~Total equity attributable to Unitholders~~
	Other non-controllinginterests 24

	~~Total equity~~

The balance sheet is to be read in conjunction with the accompanying notes.

Goodman Group Financial Report 2010

Income statement

for the year ended 30 June 2010

	Note	Consolidated 2010 2009 $M $M 237.4 264.3 76.2 84.4 55.8 65.5 147.2 305.4 51.3 – 26.7 19.6 ~~594.6~~ ~~739.2~~ (59.8) (53.2) (107.9) (243.4) (39.8) – ~~(207.5)~~ ~~(296.6)~~ (210.0) (527.0) 2.6 1.8 12.3 40.6 (236.8) (508.7) (15.0) 11.9 ~~(446.9)~~ ~~(981.4)~~ (78.2) (68.4) (5.4) 38.1 (66.4) (81.2) (145.4) (229.7) – (85.7) ~~(295.4)~~ ~~(426.9)~~ ~~(355.2)~~ ~~(965.7)~~ 41.9 18.9 (196.0) (172.5) ~~(154.1)~~ ~~(153.6)~~ ~~(509.3)~~ ~~(1,119.3)~~ (1.0) 23.3 ~~(510.3)~~ ~~(1,096.0)~~ (263.0) (317.4) (299.6) (802.6) ~~(562.6)~~ ~~(1,120.0)~~ 52.3 24.0 ~~(510.3)~~ ~~(1,096.0)~~ (4.6) (11.1) (4.6) (11.1)
	Revenue Gross property income Fund management income Property services income Development management income Income from sales of inventories Distributions from investments


	Property and development expenses Property expenses Development expenses Inventorycost of sales


	Other income Net loss from fair value adjustments on investment properties 12 Net gain on disposal of investment properties 5 Net gain on disposal of controlled entities 5 Share of net results of equity accounted investments 5 Net(loss)/gain on disposal of equityinvestments 5


	Other expenses Employee expenses Share based payments (expense)/credit 19 (b) Administrative and other expenses Impairment losses 5 Restructuringcosts 5



	~~Loss before interest and tax~~
	Financing costs Financial income 5 Financial expenses 5

	~~Net fnancing costs~~

	~~Loss before income tax~~
	Income tax(expense)/beneft 6

	~~Loss for theyear~~
	Loss attributable to Shareholders Loss attributable to Unitholders

	~~Loss attributable to Securityholders~~
	Proft attributable to other non-controllinginterests

	~~Loss for theyear~~
	Basic loss per Company share (¢) 3 Diluted lossper Companyshare(¢) 3

The income statement is to be read in conjunction with the accompanying notes.

Statement of comprehensive income

for the year ended 30 June 2010

	Note	Consolidated 2010 2009 $M $M (510.3) (1,096.0) 35.5 (13.8) – 4.1 0.5 (294.7) 53.8 (16.4) (193.4) (48.4) (0.6) (16.6) (4.5) (9.3) ~~(108.7)~~ ~~(395.1)~~ ~~(619.0)~~ ~~(1,491.1)~~ (671.3) (1,515.1) 52.3 24.0 ~~(619.0)~~ ~~(1,491.1)~~
	Loss for theyear
	Other comprehensive income, net of income tax Increase/(decrease) due to revaluation of listed/unlisted investments 22 Fair value of available for sale equity securities transferred to the income statement on disposal 22 Cash fow hedges: – Change in value of fnancial instruments 22 – Transfers to the income statement 22 Effect of foreign currency translation 22 Share based payments adjustments booked directly to reserves 22 Actuarial losses on defned beneft superannuation funds 22

	~~Other comprehensive income for theyear, net of income tax~~

	~~Total comprehensive income for theyear~~
	Attributable to: Securityholders Other non-controllinginterests

	~~Total comprehensive income for theyear~~

The statement of comprehensive income is to be read in conjunction with the accompanying notes.

Goodman Group Financial Report 2010

Statement of changes in equity

for the year ended 30 June 2010

Non‑
controlling
Total
Consolidated
Attributable to Securityholders
interests
equity
Defned
beneft
Foreign
Employee
funds
Asset
Cash fow
currency
Capital
compen‑
actuarial
Accum‑
Share revaluation
hedge translation
profts
sation
losses
ulated
capital
reserve
reserve
reserve
reserve
reserve
reserve
losses
Total
Note
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
Balance at 1 July 2008
4,317.2
(356.9)
72.4
6.8
309.1
36.6
(2.9)
(33.8) 4,348.5
320.6
4,669.1
Total comprehensive income for the year
22, 23
(Loss)/proft for the year
–
–
–
–
–
–
–
(1,120.0)
(1,120.0)
24.0
(1,096.0)
Total other comprehensive income for theyear
–
(4.9)
(308.3)
(69.6)
11.6
(14.5)
(9.4)
–
(395.1)
–
(395.1)
~~Total comprehensive income for theyear~~
~~–~~
~~(4.9)~~
~~(308.3)~~
~~(69.6)~~
~~11.6~~
~~(14.5)~~
~~(9.4) (1,120.0) (1,515.1)~~
~~24.0~~
~~(1,491.1)~~
Transfers
–
(1,159.2)
–
–
(144.9)
–
–
1,304.1
–
–
–
Contributions by and distributions to owners
– Increase due to stapled securities issued
to Securityholders
21
956.1
–
–
–
–
–
–
–
956.1
–
956.1
– Issue costs due to stapled securities
21
(30.4)
–
–
–
–
–
–
–
(30.4)
–
(30.4)
– Securities issued on exercise of options
21
0.1
–
–
–
–
–
–
–
0.1
–
0.1
– Securities issued under the earn-out
provisions of the Eurinpro acquisition
21
5.0
–
–
–
–
–
–
–
5.0
–
5.0
– Treasury securities vested but not converted
to securities under the Employee Securities
Acquisition Plan
21
(3.2)
–
–
–
–
–
–
–
(3.2)
–
(3.2)
– Issue costs due to Goodman PLUS
Trust hybrid securities
–
–
–
–
–
–
–
–
–
(1.8)
(1.8)
– Distributions declared on stapled securities
7
–
–
–
–
–
–
–
(264.1)
(264.1)
–
(264.1)
– Distributions declared on Goodman PLUS
Trust hybrid securities
7
–
–
–
–
–
–
–
–
–
(24.0)
(24.0)
– Share based payments recognised in the
income statement
19(b)
–
–
–
–
–
(38.1)
–
–
(38.1)
–
(38.1)
~~Balance at 30 June 2009~~
~~5,244.8~~
~~(1,521.0)~~
~~(235.9)~~
~~(62.8)~~
~~175.8~~
~~(16.0)~~
~~(12.3)~~
~~(113.8) 3,458.8~~
~~318.8~~
~~3,777.6~~

Statement of changes in equity (cont)

for the year ended 30 June 2010

Non‑
controlling
Total
Consolidated
Attributable to Securityholders
interests
equity
Defned
beneft
Foreign
Employee
funds
Asset
Cash fow
currency
Capital
compen‑
actuarial
Accum‑
Share revaluation
hedge translation
profts
sation
losses
ulated
capital
reserve
reserve
reserve
reserve
reserve
reserve
losses
Total
Note
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
$M
Balance at 1 July 2009
5,244.8
(1,521.0)
(235.9)
(62.8)
175.8
(16.0)
(12.3)
(113.8) 3,458.8
318.8
3,777.6
Total comprehensive income for the year
22, 23
(Loss)/proft for the year
–
–
–
–
–
–
–
(562.6)
(562.6)
52.3
(510.3)
Total other comprehensive income for theyear
–
153.4
79.5
(351.5)
13.9
(1.3)
(2.7)
–
(108.7)
–
(108.7)
~~Total comprehensive income for theyear~~
~~–~~
~~153.4~~
~~79.5~~
~~(351.5)~~
~~13.9~~
~~(1.3)~~
~~(2.7)~~
~~(562.6)~~
~~(671.3)~~
~~52.3~~
~~(619.0)~~
Transfers
–
(503.9)
–
–
(46.3)
4.4
–
545.8
–
–
–
Contributions by and distributions to owners
– Increase due to stapled securities issued
to Securityholders
21
1,393.7
–
–
–
–
–
–
–
1,393.7
–
1,393.7
– Issue costs due to stapled securities
21
(50.1)
–
–
–
–
–
–
–
(50.1)
–
(50.1)
– Increase due to convertible preference
securities issued to China Investment
Corporation (CIC)
–
–
–
–
–
–
–
–
–
500.0
500.0
– Issue costs due to convertible preference
securities issued to CIC
–
–
–
–
–
–
–
–
–
(20.7)
(20.7)
– Distributions declared on stapled securities
7
–
–
–
–
–
–
–
(212.9)
(212.9)
–
(212.9)
– Distributions declared on Goodman PLUS
Trust hybrid securities
7
–
–
–
–
–
–
–
–
–
(18.3)
(18.3)
– Distributions declared on convertible
preference securities issued to CIC
7
–
–
–
–
–
–
–
–
–
(34.0)
(34.0)
– Share based payments recognised in the
income statement
19(b)
–
–
–
–
–
5.4
–
–
5.4
–
5.4
~~Balance at 30 June 2010~~
~~6,588.4~~
~~(1,871.5)~~
~~(156.4)~~
~~(414.3)~~
~~143.4~~
~~(7.5)~~
~~(15.0)~~
~~(343.5) 3,923.6~~
~~798.1~~
~~4,721.7~~

The statement of changes in equity is to be read in conjunction with the accompanying notes.

Goodman Group Financial Report 2010

Cash flow statement

for the year ended 30 June 2010

	Note	Consolidated 2010 2009 $M $M 260.8 271.8 28.0 9.7 298.4 364.0 (53.0) (42.8) (36.2) (27.6) (272.1) (252.4) 53.7 153.9 50.7 18.9 (124.2) (143.2) (10.9) (31.5) ~~195.2~~ ~~320.8~~ 48.7 204.9 193.3 15.2 – (21.3) 70.0 301.9 – 0.9 – (61.8) (134.7) (899.7) (159.4) (580.1) (0.8) (9.6) ~~17.1~~ ~~(1,049.6)~~ 1,393.7 956.0 500.0 – (51.7) (32.1) (20.7) – (32.1) (49.8) 921.7 5,293.0 (2,508.3) (5,404.0) (142.3) (431.0) ~~60.3~~ ~~332.1~~ 272.6 (396.7) 242.5 639.2 ~~515.1~~ ~~242.5~~
	Cash fows from operating activities Property income received Proceeds from sale of inventories Other cash receipts from services provided Property expenses paid Payments for inventories Other cash payments in the course of operations Dividends/distributions received Interest received Finance costs paid (including debt restructuring costs paid in 2010 of $35.0 million (2009: $nil)) Net income taxespaid

	~~Net cashprovided by operating activities~~ ~~27(b)~~
	Cash fows from investing activities Proceeds from deferred settlement and sale of investment properties Proceeds from sale of controlled entities (net of cash disposed) 25 Cash included in assets held for sale Proceeds from sale of equity investments Proceeds from 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 forplant and equipment

	~~Net cashprovided by/(used in) investing activities~~
	Cash fows from fnancing activities Proceeds from issue of ordinary securities Proceeds from issue of convertible preference securities to CIC Transaction costs from issue of ordinary securities Transaction costs from issue of convertible preference securities to CIC Loans to related entities Proceeds from borrowings Repayments of borrowings Distributionspaid 7

	~~Net cashprovided by fnancing activities~~
	Net increase/(decrease) in cash held Cash at the beginningof theyear

	~~Cash at the end of theyear~~ ~~27(a)~~

Non-cash operating, investing and financing activities are included in note 27(c).

The cash flow statement is to be read in conjunction with the accompanying notes.

Notes to the consolidated financial statements

for the year ended 30 June 2010

1. Statement of significant accounting policies

Goodman Limited (Company or Parent Entity) is a company domiciled in Australia. The consolidated financial report of the Company as at and for the year ended 30 June 2010 comprises the Company and its controlled entities (together Goodman or Consolidated Entity) and the Consolidated Entity’s interest in associates and joint venture entities.

Statement of compliance

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

The consolidated financial report is presented in Australian dollars and was authorised for issue by the Directors on 19 August 2010.

Changes in accounting policy

Starting as of 1 July 2009, Goodman has changed its accounting policies in the following areas:

- business combinations, refer to note 1(b);
- investment properties, refer to note 1(g);
- segment reporting, refer to note 1(x); and
- presentation of financial statements, refer to note 1(y).

The Corporations Amendment (Corporate Reporting Reform) Act 2010 amended the Corporations Act 2001 to require the presentation of consolidated financial statements only. Summarised financial information of the Parent Entity is disclosed in note 33.

The significant accounting policies which have been adopted in the preparation of the consolidated financial report are set out below:

(a) Basis of preparation of the consolidated financial report

The consolidated financial 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 financial instruments;
- financial instruments classified as available for sale; and
- liabilities for cash settled share based payment arrangements.

(b) Principles of consolidation

Accounting for the acquisition of control of Goodman Industrial Trust

The stapling of the Company and Goodman Industrial Trust (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 identified and an in-substance acquisition to be recognised. In relation to the merger of the Company and GIT, the Company is identified 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 non-controlling 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 identified in the balance sheet and the profit or loss arising from those net assets has been separately identified in the income statement.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(b) Principles of consolidation (cont)

Business combinations

All business combinations that occurred on or after 1 July 2004 and on or prior to 30 June 2009 were accounted for by applying the purchase method.

Change in accounting policy

The Consolidated Entity has adopted revised AASB 3 Business Combinations (2008) and amended AASB 127 Consolidated and Separate Financial Statements (2008) for business combinations occurring in the financial year starting 1 July 2009. All business combinations occurring on or after 1 July 2009 are accounted for by applying the acquisition method. The change in accounting policy is applied prospectively and had no material impact on earnings per share/security.

For every business combination, the Consolidated Entity identifies the acquirer, which is the combining entity that obtains control of the other combining entities or businesses. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Consolidated Entity takes into consideration potential voting rights that currently are exercisable. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control has passed from one party to another.

Measuring goodwill

The Consolidated Entity measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as at the acquisition date.

Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Consolidated Entity to the previous owners of the acquiree, and equity interests issued by the Consolidated Entity. Consideration transferred also includes the fair value of any contingent consideration and share based payment awards of the acquiree that are replaced mandatorily in the business combination.

Contingent liabilities

A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably.

Non‑controlling interest

The Consolidated Entity measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.

Transaction costs

Transaction costs that the Consolidated Entity incurs in connection with a business combination, such as legal fees, due diligence fees and other professional and consulting fees, are expensed as incurred.

Accounting for acquisitions of non‑controlling interests

The Consolidated Entity has adopted AASB 3 Business Combinations (2008) and amended AASB 127 Consolidated and Separate Financial Statements (2008) for acquisitions of non-controlling interests occurring in the financial year starting 1 July 2009. Under the new accounting policy, acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions.

Controlled entities

Controlled entities are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Company at 30 June 2010 and the results of all such entities for the year ended 30 June 2010.

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

1. Statement of significant accounting policies (cont)

(b) Principles of consolidation (cont)

Associates

Associates are those entities over which the Consolidated Entity exercises significant influence but not control over their financial and operating policies. In the consolidated financial statements, investments in associates are accounted for using the equity method. Investments in associates are carried at the lower of the equity accounted amount and recoverable amount. Under this method, the Consolidated Entity’s share of post-acquisition gains or losses of associates is recognised in the consolidated income statement and its share of post-acquisition movements in reserves is recognised in consolidated reserves. Cumulative post-acquisition movements in both profit or loss and reserves are adjusted against the cost of the investment.

Joint ventures

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

Joint venture entities

In the consolidated financial statements, investments in joint venture entities are accounted for using 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 profit or loss is recognised in the consolidated income statement 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 classified 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.

Hybrid securities

Certain controlled entities of GIT have issued hybrid securities that meet the definition of equity for the purpose of the Consolidated Entity. Accordingly, hybrid securities have been classified as equity and presented as other non-controlling interests. Incremental costs directly attributable to the issue of hybrid securities 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 fixed increases in rentals in future years, an asset is recognised. This asset is a component of the relevant investment property carrying amount. The cost of lease incentives provided to customers is recognised on a straight-line basis 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.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(d) Revenue recognition (cont)

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 fixed price construction contracts rather than a rendering of services.

Revenue and expenses relating to construction contracts are recognised in the income statement 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 the income statement.

Financial income

Interest

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

Dividends and distributions

Dividend income is recognised when a dividend has been declared and, if not received at balance date, is reflected 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 consolidated financial 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 financial 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 balance date are translated at the rates of exchange ruling on that date. Resulting exchange differences are recognised in profit 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 balance date.

Revenue and expenses are translated at weighted average rates for the financial year. Exchange differences arising on translation are taken directly to the foreign currency translation reserve until the disposal or partial disposal of the operations.

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

1. Statement of significant accounting policies (cont)

(e) Foreign currency translation (cont)

Exchange rates used

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

(e) Foreign currency translation (cont) Exchange rates used The following exchange rates are the main exchange rates used in fnancial statements:	translating foreign currency transactions, balances and
	Weighted average As at 30 June
	2010 2009 2010 2009
New Zealand dollar Singapore dollar Hong Kong dollar United States dollar Japanese yen Euro Britishpounds sterling	1.2554 1.2289 1.2321 1.2428 1.2404 1.0916 1.1831 1.1699 6.8469 5.8048 6.5923 6.2586 0.8822 0.7473 0.8523 0.8114 80.7539 74.2058 76.7200 77.7600 0.6359 0.5416 0.7050 0.5751 0.5588 0.4625 0.5666 0.4872

(f) Intangible assets

All business combinations are accounted for by applying the acquisition method (refer to note 1(b)). The Consolidated Entity measures goodwill arising on a business combination as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as at the acquisition date.

Goodwill

Goodwill is stated at cost less any accumulated impairment losses (refer to note 1(n)). 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. Where the recoverable amount of the reporting unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement.

In respect of associates and joint venture entities, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss that might arise forms part of this carrying amount.

Management rights

As distinct from goodwill, management rights acquired as part of a business combination are recognised if the asset is separable or arises from contractual or other legal rights, and its fair value can be measured reliably. Management rights, including indefinite life contracts to manage assets, are carried at cost less accumulated amortisation and impairment losses. Where management rights are for an indefinite 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 (refer to note 1(n)). Where management rights are for a finite period, they are amortised on a straight-line basis over that term.

(g) 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 consolidated financial report. Investment properties are not depreciated as they are subject to continual maintenance and regularly revalued on the basis described below. Taxation allowances for building, plant and equipment depreciation are claimed by trusts within the Consolidated Entity and are declared as tax deferred components of distributions.

Investment property carrying values include the costs of acquiring the properties and subsequent costs of development, if applicable. 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. 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.

Amounts provided to customers as lease incentives and assets relating to fixed 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.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(g) Investment properties (cont)

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 financial year.

Stabilised investment properties

An independent valuation of stabilised 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 balance date occurring between obtaining independent valuations, the Directors review the carrying value of the Consolidated Entity’s investment properties to be satisfied that, in their opinion, the carrying value of the investment properties reflects the fair value of the investment properties at that date.

Changes in fair value are recognised directly in the income statement. The net of unrealised revaluations from investment properties is transferred to the asset revaluation reserve.

Investment properties under development

Investment properties under development include land, new investment properties in the course of construction and investment properties that are being redeveloped.

The Consolidated Entity has adopted AASB 2008-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB 2008-6 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project for the financial year ended 30 June 2010. The principal impact for the Consolidated Entity relates to the amendments to AASB 140 Investment Property which brings into scope, property under development for future use as an investment property and land. As Goodman adopts the fair value approach under AASB 140, property under development for future use as an investment property is now measured at fair value (previously, it was measured at the lower of cost and recoverable amount). The change in accounting policy has been applied prospectively with the movement between book value at 1 July 2009 and fair value at 30 June 2010 (i.e. including the difference between book value and fair value at 1 July 2009) reported through the income statement as a component of the net loss from fair value adjustments on investment properties.

Disposal of investment properties

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

(h) 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:

class of asset are as follows:
Plant and equipment	Useful lives
Leasehold improvements	4 to 10 years
Plant and equipment	2 to 15years

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

(i) Receivables

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

Construction contract receivables are stated at cost plus profit recognised to date less an allowance for foreseeable losses and less progress billings. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred, relating to the Consolidated Entity’s construction contract activities based on normal operating activity.

1. Statement of significant accounting policies (cont)

(j) Inventories

Work in progress in relation to on balance sheet construction projects, land subdivision and development projects includes the costs of acquisition, planning, management and development and holding costs such as interest and taxes. Work in progress is carried at the lower of cost and net realisable value.

(k) Finance costs

Expenditure incurred in obtaining debt finance is offset against the principal amount of the interest bearing liability to which it relates, and is recognised as a finance cost on an effective yield basis over the life of the facility or until the facility is significantly modified. Where a facility is significantly modified, any unamortised expenditure in relation to that facility and incremental expenditure incurred in modifying the facility is recognised as a finance cost in the financial year in which the significant modification occurs.

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 finance costs are expensed as incurred.

(l) Investments

Investments in equity securities

Investments held for trading are classified as current assets and are stated at fair value with any resultant gain or loss recognised in profit or loss.

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

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

(m) Leased assets

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

Finance leases

A lease asset and a lease liability equal to the present value of the minimum lease payments are recorded at the inception of the lease. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed. Contingent rentals are expensed as incurred.

Finance lease payments

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance 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.

(n) Impairment

Non‑financial assets

The carrying amounts of the Consolidated Entity’s assets (except investment properties, refer to note 1(g); inventories, refer to note 1(j); 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 the income statement in the reporting period in which it occurs.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(n) Impairment (cont)

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.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the goodwill allocated to cash-generating units (group of units), then to the carrying amount of any identified 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 financial asset is assessed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the financial asset is written down to the present value of the estimated future cash flows discounted at the original effective interest rate, or in the case of an available for sale financial asset, to its fair value. The impairment is recognised in profit or loss in the reporting period in which it occurs.

When a decline in the fair value of an available for sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit 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 flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.

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

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

Reversals of impairment

Impairment losses, 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 classified as available for sale is not reversed through profit or loss. If the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, with the amount of the reversal recognised in profit 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 inflows, the recoverable amount is assessed in relation to that group of assets.

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

(o) Non‑current assets held for sale

Non-current assets that are expected to be recovered through sale rather than through continuing use are classified as held for sale. Immediately before classification 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 classification as held for sale and subsequent gains or losses on re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

1. Statement of significant accounting policies (cont)

(p) 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 profit 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.

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

(r) Provisions

A provision is recognised when there is a legal, equitable or constructive obligation as a result of a past event and it is probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain.

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

Restructuring

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.

Onerous contracts

A provision for onerous contracts is recognised when the expected benefits 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.

(s) Derivative financial instruments and hedging

The Consolidated Entity uses derivative financial instruments to hedge its exposure to interest rate and foreign exchange risks arising from operating, investing and financing activities. In accordance with its treasury policy, the Consolidated Entity does not hold or issue derivative financial instruments for trading purposes.

Effective 1 July 2009, the Consolidated Entity amended its financial risk management policy (refer to note 31) such that derivative financial instruments are not designated as a hedge for accounting purposes, and accordingly such derivative financial instruments are treated as trading instruments, with movements in their fair value recognised in the income statement.

In prior years, the Consolidated Entity designated derivative financial instruments as a hedge of an anticipated interest transaction only when they would be expected to reduce exposure to the risks being hedged; were designated prospectively so that it was clear when an anticipated transaction had or had not occurred; and it was probable the anticipated transaction would occur as designated.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that were designated and qualified as cash flow hedges were recognised in the cash flow hedge reserve. The gain or loss relating to any ineffective portion was recognised in the income statement.

When a hedging instrument expired or was sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in the cash flow hedge reserve at that time remains in the reserve 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 the cash flow hedge reserve is recognised in the income statement.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(s) Derivative financial instruments and hedging (cont)

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 was determined to be an effective hedge was recognised in the foreign currency translation reserve. The ineffective portion was recognised immediately in profit 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 financial year and any adjustment to tax payable in respect of previous financial years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial 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 profit; 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 profits 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 benefit 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.

GIT and its controlled entities

Under current Australian income tax legislation, GIT is 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.

(u) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST (or value added tax in certain jurisdictions), 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 flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority, are presented as operating cash flows.

(v) Employee benefits

Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits, and annual leave that are expected to be settled within 12 months of the balance date represent present obligations resulting from employees’ services provided to the balance date. These are calculated at undiscounted amounts based on remuneration wage and salary rates that the Consolidated Entity expects to pay as at balance date including related on-costs, such as workers’ compensation insurance and payroll tax.

Long‑term service benefits

The Consolidated Entity’s net obligation in respect of long-term service benefits, other than defined benefit superannuation funds, is the amount of future benefit that employees have earned in return for their service in the current and prior financial 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 reflect the estimated timing of benefit payments.

1. Statement of significant accounting policies (cont)

(v) Employee benefits (cont)

Defined contribution superannuation funds

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

Defined benefit superannuation funds

A liability or asset in respect of a defined benefit superannuation fund is recognised in the balance sheet, and is measured as the present value of the defined benefit obligation at the balance date less the fair value of the superannuation fund’s assets at that date. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the balance 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 balance date on government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

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

Share based payment transactions

The fair value of rights and options over stapled securities at the grant date is expensed with a corresponding increase in the employee compensation reserve. The share based payments expense is calculated over the period to the vesting date and is adjusted to reflect the actual number of rights or options for which the related service and non-market vesting conditions are expected to be met. The fair values of rights and options are measured at grant date using a combination of Monte Carlo simulations and binomial pricing models.

Prior to 30 June 2008, the Consolidated Entity offered Australian based employees the opportunity to participate in the Employee Securities Acquisition Plan (ESAP). This policy was changed following the implementation by the Australian Government of regulatory changes that facilitated Australian employees of stapled groups being offered rights or options over stapled securities. Under the terms of the ESAP, because of the limited recourse nature of certain loans provided to employees in respect of securities granted to them, the value of the limited recourse feature of those loans was required to be accounted for as an option.

Where the Company has issued or purchased securities in advance of the 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. 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 rights or options over stapled securities 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.

(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 profit 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 profit 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 non-controlling interest, and therefore the profit 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 financial report.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(x) Segment reporting

The Consolidated Entity has adopted AASB 8 Operating Segments which requires a change in the presentation of and disclosure of segment information based on the internal reports regularly reviewed by the Group Chief Executive Officer in order to assess each segment’s performance and to allocate resources to them.

An operating segment is a component of the Consolidated Entity that engages in business activities from which it may earn revenues and incur expenses. All operating segments’ operating results are regularly reviewed by the Group Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the Group Chief Executive Officer include items that are directly attributable to a segment and the portion that can be allocated to the segment on a reasonable basis. Unallocated items include interest bearing receivables and payables, derivative financial instruments, provision for distributions to Securityholders, provisions for distributions on hybrid securities, corporate assets, head office expenses and income tax assets and liabilities.

Comparative segment information has been re-presented in accordance with AASB 8. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per Company share/security.

(y) Presentation of financial statements

The Consolidated Entity has adopted revised AASB 101 Presentation of Financial Statements (2007) which is effective from 1 July 2009. As a result, the Consolidated Entity presents in the consolidated statement of changes in equity all owner changes in equity, whereas non-owner changes in equity are presented in the consolidated statement of comprehensive income.

Comparative information has been re-presented so that it also conforms to the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per Company share/security.

(z) Parent entity financial information

The financial information for the Parent Entity, Goodman Limited, disclosed in note 33 has been prepared on the same basis as the consolidated financial statements, except as set out below.

Investments in controlled entities, associates and joint venture entities

Investments in controlled entities, associates and joint venture entities are accounted for at cost in the financial statements of Goodman Limited. Dividends received from associates and joint venture entities are recognised in the Parent Entity’s income statement, rather than being deducted from the carrying amount of these investments.

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 financial 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 reflects the timing of the head entity’s obligations to make payments for tax liabilities to the relevant tax authorities. The assets and liabilities arising under the tax funding arrangement are recognised as inter-company assets and liabilities with a consequential adjustment to income tax expense/revenue.

Financial guarantees

Where the Parent Entity has provided financial guarantees in relation to loans and payables of controlled entities for no compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.

1. Statement of significant accounting policies (cont)

(aa) Australian accounting standards issued but not yet effective

As at the date of this consolidated financial report, the following new or revised Australian Accounting Standards on issue with mandatory application for the Consolidated Entity’s 30 June 2010 financial statements are available for early adoption at 30 June 2010:

- AASB 9 Financial Instruments includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments: Recognition and Measurement . AASB 9 will become mandatory for the Consolidated Entity’s 30 June 2014 financial statements. Retrospective application is generally required, although there are exceptions, particularly if Goodman adopts the standard for the financial year ending 30 June 2012 or earlier. The Consolidated Entity has not yet determined the potential effect of the standard;
- AASB 124 Related Party Disclosures (revised December 2009) simplifies and clarifies the intended meaning of the definition of a related party. The amendments will become mandatory for Goodman’s financial statements for the financial year ending 30 June 2012 and are not expected to have any impact on the consolidated financial statements;
- AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project affects various standards resulting in minor changes for presentation, disclosure, recognition and measurement purposes. The amendments, which become mandatory for the Consolidated Entity’s financial statements for the financial year ending 30 June 2011, are not expected to have a significant impact on the consolidated financial statements; and
- AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement – AASB 14 make amendments to Interpretation 14 AASB 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction removing an unintended consequence arising from the treatment of the prepayments of future contributions in some circumstances where there is a minimum funding requirement. The amendments will become mandatory for the Consolidated Entity’s 30 June 2012 financial statements with retrospective application required. The amendments are not expected to have any impact on the consolidated financial statements.

(ab) Rounding

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

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

Critical accounting estimates used in the preparation of the consolidated financial statements The preparation of consolidated financial 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 significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. The accounting impacts of revisions to estimates are recognised in the period in which the estimate is revised and in any future periods affected.

(a) Investment property values – stabilised investment properties

Stabilised investment properties refer to investment properties which are not under development. Stabilised 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 knowledgably, prudently and without compulsion.

Approach to determination of fair value

Valuations are determined based on assessments and estimates of uncertain future events, including upturns and downturns in property markets and availability of similar properties, vacancy rates, market rents and capitalisation and discount rates. Recent and relevant sales evidence and other market data are taken into account.

Valuations are either based on an external, independent valuation or on an internal valuation. External valuations are undertaken only where market segments were observed to be active. This determination is made based on the criteria set out below:

- function of the asset (distribution/warehouse or suburban office);
- 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 is assessed and grouped with assets in the same or similar market segments. Information on all relevant recent sales is also analysed using the same criteria to provide a comparative set. Unless three or more sales are observed in an individual market segment (taken together with any comparable market segments as necessary), that market segment is considered inactive with the consequence that no external valuations are undertaken for those property assets. An internal valuation is completed for each asset for which an external valuation is not undertaken. Internal valuations may be based on discounted cash flow (DCF) calculations or based on cap rates and referenced to independent market data. This approach is also consistently applied to investment properties within funds managed by Goodman.

Key assumptions for internal valuations

Where an internal valuation can be prepared with reference to recent and reliable cap rate information, a cap rate approach is used. Whilst providing general information on markets, broad index based valuation approaches may not be sufficiently specific to apply directly to calculations of fair value.

Alternatively, internal valuations are prepared using a DCF methodology. The DCF calculations are 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) are rental growth rates, discount rates, market rental rates and letting up incentives. Discount rates are computed using the 10 year bond rate or equivalent in each jurisdiction plus increments to reflect country risk, tenant credit risk and industry risk. Where possible, the components of the discount rate are benchmarked to available market data.

Market assessment at 30 June 2010 and 30 June 2009

Investment property markets in most regions were significantly and adversely impacted by the changes in economic conditions during the course of the comparative financial year and during the early part of the current financial year. The scarcity of finance resulted in a reduced number of transactions involving properties comparable to those owned or managed by Goodman which significantly increased the level of uncertainty inherent in determining the fair value of individual properties. The difficulties in determining fair value were exacerbated by an absence of consensus on how to distinguish sales where sellers are forced as opposed to willing.

2. Critical accounting estimates used in the preparation of the consolidated financial statements (cont)

(a) Investment property values – stabilised investment properties (cont)

In the latter part of the current financial year, the increasing number of sales transactions in property markets in which Goodman operates means that more market segments are considered to be active at 30 June 2010. This has increased the extent to which external valuations have been undertaken with a consequent reduction in circumstances where fair value is determined solely by reference to an internal valuation.

Key assumptions adopted at 30 June 2010 and 30 June 2009

As a consequence of lack of available comparable sales across all markets at 30 June 2009, internal valuations using DCF calculations were used to determine adjustments to the carrying values of stabilised properties in each market. The largest adjustments were adopted in the following property markets: Australia; Logistics – Continental Europe; Logistics – United Kingdom; and Business Parks – United Kingdom.

At 30 June 2010, adjustments were made to the carrying value of stabilised investment properties arising from internal valuations using DCF calculations for Goodman properties in Australia and Continental Europe only. No such adjustments were made to properties within managed funds at 30 June 2010. For all other stabilised investment properties, there was sufficient recent and reliable cap rate information available and the underlying parameters supporting the existing internal or external valuation were compared to information derived from recent relevant market transactions and the existing carrying value was considered to represent the fair value of the property at 30 June 2010.

The cap rates derived for properties internally valued using DCF calculations, the weighted average cap rates for those properties valued externally at 30 June 2010 and the overall weighted average cap rates for the portfolio (including managed funds) are set out in the table below.

Division	Derived weighted Weighted average cap Total average cap rate rate for external portfolio weighted (DCF method)1 valuations at 30 June average cap rate
	2010 2009 2010 2009 2010 2009 % % % % % %
Australia New Zealand Hong Kong China Japan Logistics – Continental Europe Logistics – United Kingdom Business Parks – United Kingdom	8.2 8.0 8.0 8.5 8.2 8.0 n/a 8.7 – – 8.6 8.7 n/a 7.1 6.7 7.4 6.9 7.1 n/a 9.2 – – 9.2 9.2 n/a 5.5 6.1 5.5 6.1 5.5 7.7 7.7 7.9 7.4 7.9 7.7 n/a 8.2 7.5 8.0 8.0 8.2 n/a 7.9 7.6 – 7.6 7.9

Adjustments were made to the carrying value of stabilised investment properties arising from internal valuations at 30 June 2010 in Australia and Continental Europe only. Valuation movements in those divisions reflect increased rental growth assumptions offset by higher discount rates and incentives, and longer letting up allowances.

The table below shows the sensitivity of the fair value of those stabilised investment properties which have been internally valued to a 25 basis point increase in the annual discount rate. All other assumptions are property specific and it is impractical to show sensitivities.

Division	Goodman share of Decrease in investment decrease in investment property values property values (Goodmanproperties) (managed funds)
	2010 2009 2010 2009 $M $M $M $M
Australia Logistics – Continental Europe Logistics – United Kingdom Business Parks – United Kingdom	(7.0) (40.7) n/a1 (25.3) (1.4) (0.9) n/a1 (9.7) n/a1 (8.2) n/a1 – n/a1 – n/a1 (15.5)

Adjustments were made to the carrying value of stabilised investment properties arising from internal valuations at 30 June 2010 for Goodman properties in Australia and Continental Europe only.

At 30 June 2010, the carrying value of stabilised investment properties held by the Consolidated Entity is $2,295.6 million (2009: $2,547.2 million).

Consistent assumptions for cap rates, letting up periods and incentives were also adopted in feasibility models supporting development properties and at 30 June 2010, the carrying value of investment properties under development held by the Consolidated Entity was $501.8 million (2009: $986.8 million).

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

2. Critical accounting estimates used in the preparation of the consolidated financial statements (cont)

(b) Intangible assets

The Consolidated Entity recognises both indefinite life management rights and goodwill in its balance sheet at 30 June 2010. At 30 June 2010, the carrying value of management rights and goodwill held by the Consolidated Entity are respectively as follows: $285.4 million (2009: $326.0 million) and $644.0 million (2009: $799.4 million). Details of key assumptions are set out in note 16.

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 financial performance of the entities which generate those future fee income streams.

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 profitability of the businesses acquired.

(c) Equity accounted investments

The Consolidated Entity has a 50% investment in a joint venture entity, Macquarie Goodman Japan Pte Ltd (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 but has subsequently completed a restructuring of its business. Given that no new equity was raised by the fund during the financial year, management re-assessed the carrying value of the Consolidated Entity’s investment in MGJ based on a value in use calculation using a discount rate of 9.52% per annum (2009: 9.15% per annum). The key assumption used in the value in use calculation was that further equity of ¥68 billion will be raised by the fund over the period to March 2015, which will result in a fund size of ¥95 billion (by equity) at 31 March 2015. In the light of declining industrial property values in Japan, this assumption was revised down from the prior financial year assumption that the fund size (by equity) at the end of the five year forecast period would be ¥150 billion.

At 30 June 2010, the carrying value of the investment in MGJ was A$108.6 million (2009: A$165.4 million), which was net of an impairment loss of A$28.7 million (2009: A$8.3 million). The table below sets out the sensitivity of the fair value to the amount of equity raised in the next five years:

	Impact on fair value of investment in MGJ Sensitivity $M 10% reduction in new equity (¥7 billion) raised in each of the next fve years (1.4) 10% reduction in new equity (¥nil) raised in the next 12 months – 50% reduction in new equity (¥34 billion) raised in each of the next fve years (20.2) 100 basispoint increase in the discount rateper annum (1.6) 3. Loss per Company share/per security Consolidated Note 2010 2009 ¢ ¢ Loss per Company share Basic loss per Company share1 3(a) (4.6) (11.1) Diluted loss per Company share1 3(a) (4.6) (11.1) Loss per security Basic loss per security1 3(a) (9.9) (39.2) Diluted lossper security1 3(a) (9.9) (39.2) ~~Distributionper security~~ ~~3(b)~~ ~~3.40~~ ~~9.65~~
	10% reduction in new equity (¥7 billion) raised in each of the next fve years 10% reduction in new equity (¥nil) raised in the next 12 months 50% reduction in new equity (¥34 billion) raised in each of the next fve years 100 basispoint increase in the discount rateper annum
	3. Loss per Company share/per security Note
	Loss per Company share Basic loss per Company share1 3(a) Diluted loss per Company share1 3(a) Loss per security Basic loss per security1 3(a) Diluted lossper security1 3(a)

	~~Distributionper security~~ ~~3(b)~~

In accordance with AASB 133 Earnings per Share , the prior financial year weighted average number of securities and loss per Company share and loss per security have been adjusted for the equity raisings in November 2008, August 2009 and September 2009. The weighted average number of Company shares and securities on issue for the current financial year, prior to the equity raisings in August 2009 and September 2009 have also been adjusted, as required by AASB 133.

3. Loss per Company share/per security (cont)

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

	Note
	Loss per Company share Loss after tax used in calculating basic loss per Company share 23 Effect of options on issue

	~~Loss after tax used in calculating diluted lossper Company share~~
	Loss per security Loss after tax used in calculating basic loss per security 23 Distribution on Goodman PLUS Trust hybrid securities and CIC convertible preference securities

	~~Loss after tax used in calculating basic and diluted lossper security~~

Prior financial year weighted average number of securities and loss per Company share and loss per security have been adjusted for the equity raisings in November 2008, August 2009 and September 2009.

As at 30 June 2010, 36,322,476 securities (2009: 41,649,309 securities) granted under the Employee Securities Acquisition Plan (ESAP) and 138,321,445 options (2009: 139,398,445 options) issued under the Executive Option Plan (EOP) were anti-dilutive and therefore excluded from the calculation of diluted loss per Company share/per security.

As at 30 June 2010, the following options, performance rights and contingently issuable securities are potentially dilutive in future periods:

- 276,000,000 options issued to CIC;
- 46,825,610 performance rights granted to employees under the Long Term Incentive Plan (LTIP);
- securities contingently issuable on conversion of Goodman PLUS Trust hybrid securities; and
securities contingently issuable on conversion of CIC convertible preference securities.

(b) Dividends per Company share and distributions per security

No dividends were declared or paid by the Company during the financial year (2009: $nil). Total distributions for the financial year made by GIT equal 3.4 cents per security (2009: 9.65 cents per security). Details of the dates of payment are set out in note 7.

4. Segment reporting

The Consolidated Entity is based in Australia and has separately managed divisions in Asia Pacific (primarily Australia, New Zealand, Hong Kong, China and Japan) and Europe (Continental Europe and the United Kingdom). The Consolidated Entity has three reportable segments defined by AASB 8 Operating Segments , namely Australia, Continental Europe and the United Kingdom. The other divisions in Asia Pacific do not meet the quantitative requirements, either individually or collectively, to require separate disclosure as reportable segments.

The activities and services undertaken by the divisions include:

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

Information regarding the operations of each reportable segment is included on the following page. Performance is measured based on the return on assets employed and therefore the segment result is presented before interest and tax.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

4. Segment reporting (cont)

Information about reportable segments

	Income statement	Continental United Australia Europe Kingdom Other1 Total 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 $M $M $M $M $M $M $M $M $M $M 195.1 193.0 8.0 5.5 32.0 52.9 2.3 12.9 237.4 264.3 28.2 20.3 14.5 19.6 11.9 16.6 21.6 27.9 76.2 84.4 17.0 17.3 8.4 11.5 21.3 27.7 9.1 9.0 55.8 65.5 54.1 136.2 80.2 146.4 5.9 14.5 7.0 8.3 147.2 305.4 7.5 – – – 43.8 – – – 51.3 – 1.8 6.1 2.9 0.8 22.0 12.7 – – 26.7 19.6 ~~303.7~~ ~~372.9~~ ~~114.0~~ ~~183.8~~ ~~136.9~~ ~~124.4~~ ~~40.0~~ ~~58.1~~ ~~594.6~~ ~~739.2~~ (3.9) (5.1) (0.9) (2.4) (2.9) (0.7) (0.6) (0.8) (8.3) (9.0) 1.5 17.8 0.8 (8.4) 0.3 (7.7) – 0.1 2.6 1.8 – 1.3 9.3 29.8 3.0 7.4 – 2.1 12.3 40.6 (87.3)(155.3) (69.9) (70.7) (56.8)(242.7) (22.8) (40.0)(236.8)(508.7) – – – 0.4 – (3.6) (15.0) 15.1 (15.0) 11.9 (89.2)(244.5) (32.3) (33.3) (81.7)(245.6) (6.8) (3.6)(210.0)(527.0) (33.9) (178.7) (71.0) – (7.5) (42.7) (33.0) (8.3) (145.4) (229.7) (34.2) (346.2) (139.2) (75.6) (76.6) (476.9) (52.9) 2.6(302.9) (896.1) – (13.1) – (26.6) – (33.4) – (12.6) – (85.7) 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 $M $M $M $M $M $M $M $M $M $M 3,479.6 3,657.61,161.0 1,640.81,553.8 1,871.6 931.4 1,222.07,125.8 8,392.0 1,093.11,124.6 306.6 418.5 335.3 418.8 544.2 700.42,279.22,662.3 3,337.13,477.51,085.11,496.71,251.31,786.1 881.7 992.56,555.27,752.8 42.8 81.9 8.1 39.8 128.7 227.0 3.6 100.1 183.2 448.8 ~~(41.6)~~ ~~(35.6)~~ ~~(43.4)~~ ~~(91.9) (102.3) (147.8)~~ ~~(8.8)~~ ~~(20.9) (196.1) (296.2)~~
	External revenues Gross property income Fund management income Property services income Development management income Income from sales of inventories Distributions from investments

	~~Total external revenues~~
	Depreciation and amortisation
	Other key components of fnancial performance Net gain/(loss) on disposal of investment properties Net gain on disposal of controlled entities Share of net results of equity accounted investments Net gain/(loss) on disposal of equityinvestments
	Other material non‑cash items Net loss from fair value adjustments on investment properties Impairment losses
	Reportable segment (loss)/proft
	before interest and tax
	Other components of the income statement not included in reportable segment (loss)/proft before tax Restructuringcosts
	Balance sheet
	Reportable segment assets
	Investments in equity accounted investments (included in reportable segment assets)
	Total non-current assets
	Capital expenditure

	~~Reportable segment liabilities~~

Other primarily relates to the results and assets of the separately managed divisions in Asia Pacific, excluding Australia.

4. Segment reporting (cont)

Reconciliation of reportable segment revenues and profit or loss

2010
2009
$M
$M
Revenues
Total revenue for reportable segments
554.6
681.1
Other revenue
40.0
58.1
~~Consolidated revenue~~
~~594.6~~
~~739.2~~
Proft or loss
Total loss for reportable segments
(250.0)
(898.7)
Other (loss)/proft (primarily Asia Pacifc, excluding Australia)
(52.9)
2.6
Unallocated amounts: other corporate expenses
(46.9)
(22.0)
Restructuring costs
–
(85.7)
Share based payments (expense)/credit
(5.4)
38.1
Net fnancingcosts
(154.1)
(153.6)
~~Consolidated loss before income tax~~
~~(509.3)~~
~~(1,119.3)~~
Assets
Total assets for reportable segments
6,194.4
7,170.0
Other assets
931.4
1,222.0
Other unallocated amounts
472.4
191.0
~~Consolidated total assets~~
~~7,598.2~~
~~8,583.0~~
Liabilities
Total liabilities for reportable segments
(187.3)
(275.3)
Other liabilities
(8.8)
(20.9)
Interest bearing liabilities
(2,276.6)
(4,239.8)
Distribution payable
(120.3)
–
Other unallocated amounts
(283.5)
(269.4)
~~Consolidated total liabilities~~
~~(2,876.5)~~
~~(4,805.4)~~

		2010			2009
	Reportable			Reportable
	segment		Consolidated	segment		Consolidated
	totals	Other	totals	totals	Other	totals
	$M	$M	$M	$M	$M	$M
Other material items
Depreciation and amortisation	(7.7)	(0.6)	(8.3)	(8.2)	(0.8)	(9.0)
Net gain on disposal of investment
properties	2.6	–	2.6	1.7	0.1	1.8
Net gain on disposal of controlled
entities	12.3	–	12.3	38.5	2.1	40.6
Share of net results of equity
accounted investments	(214.0)	(22.8)	(236.8)	(468.7)	(40.0)	(508.7)
Net (loss)/gain on disposal of equity
investments	–	(15.0)	(15.0)	(3.2)	15.1	11.9
Net loss from fair value adjustments
on investmentproperties	(203.2)	(6.8)	(210.0)	(523.4)	(3.6)	(527.0)
Impairment losses	(112.4)	(33.0)	(145.4)	(221.4)	(8.3)	(229.7)
~~Capital expenditure~~	~~179.6~~	~~3.6~~	~~183.2~~	~~348.7~~	~~100.1~~	~~448.8~~

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

5. Loss before income tax

		Consolidated 2010 2009 $M $M 55.0 382.7 (52.4) (380.9) ~~2.6~~ ~~1.8~~ 193.3 179.4 (181.0) (138.8) ~~12.3~~ ~~40.6~~ (202.6) (463.5) (34.2) (45.2) ~~(236.8)~~ ~~(508.7)~~ 67.6 286.0 (82.6) (274.1) ~~(15.0)~~ ~~11.9~~ (2.0) (1.3) (6.3) (7.7) ~~(8.3)~~ ~~(9.0)~~ (43.9) – (8.9) (15.3) – (9.6) (3.8) – (29.1) (10.2) (33.5) (161.4) (26.2) (33.2) ~~(145.4)~~ ~~(229.7)~~ – (23.7) – (16.2) – (45.8) ~~–~~ ~~(85.7)~~
	Loss before income tax has been arrived at after crediting/(charging) the following items: Net consideration from disposal of investment properties Carryingvalue of investmentproperties disposed

	~~Netgain on disposal of investmentproperties~~
	Net consideration received and receivable from the disposal of controlled entities Carryingvalue of net assets disposed

	~~Netgain on disposal of controlled entities~~
	Share of net results of investments in associates – refer to note 13(a) Share of net results of investments injoint venture entities – refer to note 13(b)

	~~Share of net results of equity accounted investments~~
	Net consideration from disposal of equity investments Carryingvalue of equityinvestments disposed

	~~Net(loss)/gain on disposal of equity investments~~
	Amortisation of leasehold improvements Depreciation ofplant and equipment

	~~Total amortisation and depreciation~~
	Impairment of receivables – refer below Impairment of inventories – refer to note 9 Impairment of assets classifed as held for sale Impairment of other assets – refer below Impairment of equity accounted investments – refer to note 13(b) Impairment of other fnancial assets – refer below Impairment of intangible assets – refer to note 16

	~~Total impairment losses~~
	Restructuring costs Employee expenses Development expenses Administrative and other expenses

	~~Total restructuring costs~~

(a) Impairment losses

During the financial year, the impairment losses on receivables, other assets and other financial assets relate to the following items:

(i) Receivables

The impairment loss relates to loans provided to certain joint venture entities to fund specific development projects. The impairment is a result of a devaluation of the development asset in the joint venture entity.

(ii) Other assets

The impairment loss relates to the write off of property related costs following the Consolidated Entity’s decision to withdraw from certain projects.

(iii) Other financial assets

In the current financial year, the impairment loss relates to the fair value adjustment arising on the investment in Goodman European Business Parks Fund (GEBPF). In the prior financial year, the impairment loss relates to the mark to market losses on the investment in ING Industrial Fund.

5. Loss before income tax (cont)

(b) Restructuring costs

During the prior financial 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 significantly reduced. The cost for the prior financial 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 prior financial year were included in restructuring costs. These costs were incurred in Australia ($2.1 million), New Zealand ($1.4 million), China ($1.9 million), Continental Europe ($7.8 million) and the United Kingdom ($3.0 million).

(iii) Administrative and other expenses

Business development projects

A full review of business development opportunities and related timelines was undertaken during the prior financial year. Key changes as a result of this review related to the Middle East and the United Kingdom. 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 United Kingdom Logistics fund were expensed to restructuring costs ($7.9 million). The cost of other commenced business development initiatives included in restructuring costs totalled $2.0 million.

Office accommodation

During the prior financial year, each office occupied by the Consolidated Entity was reviewed and a decision was taken to vacate certain premises and identify opportunities for subleasing where practical. Unamortised fit-out costs were also expensed. The restructuring cost recognised in the prior financial year in relation to office space totalled $21.1 million.

Net financing costs

		Consolidated 2010 2009 $M $M 17.4 9.8 24.5 9.1 ~~41.9~~ ~~18.9~~ (124.8) (167.0) (59.1) – (8.4) (14.9) (75.4) (62.3) (0.3) – 72.0 71.7 (196.0) (172.5) ~~(154.1)~~ ~~(153.6)~~
	Financial income Interest income from: Related parties Otherparties


	Financial expenses Interest expense from: Third party loans, overdrafts and derivatives Debt restructuring costs Other borrowing costs Fair value adjustments on derivative fnancial instruments1 Foreign exchange loss Capitalised borrowingcosts2


	~~Net fnancing costs~~

Includes fair value movements on the derivatives not designated for hedge accounting during the financial year and amortisation of gains or losses on terminated derivative contracts included in the cash flow hedge reserve. The remaining gains or losses on terminated derivative contracts included in the cash flow hedge reserve will be amortised over future periods.
Borrowing costs were capitalised during the financial year at rates between 1.3% and 9.4% per annum (2009: 1.4% and 10.8% per annum).

(a) Restructuring costs associated with the financing initiatives

During the financial year, the Consolidated Entity completed a number of financing initiatives including:

- an institutional placement and a one for one non-renounceable entitlement offering;
- retirement of the A$300 million drawn under the A$485 million secured loan provided by Macquarie Group and CIC;
- retirement of the amounts drawn under the A$520 million tranche B of the syndicated multi currency facility (SMCF);
- renegotiation of the extension from May 2011 to September 2012 of A$438 million of the A$520 million tranche C of the SMCF;

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

5. Loss before income tax (cont)

(a) Restructuring costs associated with the financing initiatives (cont)

- extension from December 2012 to December 2013 of €340 million of the €525 million European revolving credit facility; and
- negotiation of amended covenants to the common terms deed poll, which applies to both the SMCF and European revolving credit facility.

The Consolidated Entity also renegotiated a significant portion of the bank debt facilities of funds managed by Goodman.

The costs associated with these initiatives of $59.1 million included advisors’ fees, arrangers’ fees, commitment fees, internal salary costs and write off of the unamortised fees that had previously been capitalised to modified facilities.

6. Income tax (expense)/benefit

		Consolidated 2010 2009 $M $M (28.4) 3.7 4.8 20.7 ~~(23.6)~~ ~~24.4~~ 38.0 (1.1) (15.4) – ~~22.6~~ ~~(1.1)~~ ~~(1.0)~~ ~~23.3~~ Consolidated 2010 2009 $M $M (509.3) (1,119.3) 152.8 335.8 (62.5) (244.2) (28.0) (18.8) (29.0) (9.5) (12.6) (29.9) (23.2) (33.5) (12.4) (7.0) (1.6) (6.4) 2.7 2.9 – 3.7 (1.7) 10.8 11.2 16.8 (1.1) – 1.3 (0.1) (1.6) (14.0) 4.8 20.7 – (4.0) ~~(0.9)~~ ~~23.3~~ 1.4 3.3 1.9 – ~~3.3~~ ~~3.3~~
	Current tax (expense)/beneft recognised in the income statement Current year Adjustment forpriorperiods


	Deferred tax beneft/(expense) recognised in the income statement Origination and reversal of temporary differences Derecognition ofpreviouslyrecognised tax losses



	~~Total income tax(expense)/beneft ~~

	(a) Income tax (expense)/beneft Loss before income tax Prima facie income tax beneft calculated at 30% (2009: 30%) on the loss before income tax Decrease/(increase) in income tax due to: – Loss attributable to Unitholders – Current year losses for which no deferred tax asset was recognised – Non-deductible impairment losses – Non-deductible losses from share of results of equity accounted investments – Non-deductible fair value adjustments on investment properties – Non-deductible interest expense – Other non-deductible items – Non-assessable interest income – Net assessable foreign income – Non-assessable option (expense)/beneft – Other non-assessable income – Derecognition of previously recognised deferred taxes – Other items – Difference in overseas tax rates – Adjustment for current tax in prior periods – Adjustment for deferred tax inpriorperiods

	~~Income tax(expense)/beneft attributable to loss~~
	(b) Deferred tax beneft recognised directly in equity Equity issue costs Defned beneftspension scheme

6. Income tax (expense)/benefit (cont)

		Consolidated 2010 2009 $M $M 5.4 0.3 (4.5) 4.6 – 0.5 0.2 – ~~1.1~~ ~~5.4~~ (13.2) (50.8) 15.4 26.9 (28.4) 3.2 – (13.2) 4.6 20.7 (3.7) – ~~(25.3)~~ ~~(13.2)~~
	(c) Current tax receivables Balance at the beginning of the year (Decrease)/increase in current tax receivables due to: – Net income taxes (received)/paid – Income tax beneft on current year’s loss – Adjustment forpriorperiods

	~~Balance at the end of theyear~~
	(d) Current tax payables Balance at the beginning of the year Decrease/(increase) in current tax payables due to: – Net income taxes paid – Income tax (expense)/beneft on current year’s loss – Income tax on ESAP interest income recognised in reserves – Adjustment for prior periods – Other

	~~Balance at the end of theyear~~

(e) Deferred tax assets and liabilities

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

	Consolidated	Deferred tax assets Deferred tax liabilities Net 2010 2009 2010 2009 2010 2009 $M $M $M $M $M $M – – (4.5) (3.3) (4.5) (3.3) – – – (39.1) – (39.1) 6.1 19.1 – – 6.1 19.1 1.6 1.8 – – 1.6 1.8 7.9 6.5 – – 7.9 6.5 2.4 0.8 – – 2.4 0.8 ~~18.0~~ ~~28.2~~ ~~(4.5)~~ ~~(42.4)~~ ~~13.5~~ ~~(14.2)~~
	Receivables Investment properties Tax losses Payables Provisions Other items

	~~Tax assets/(liabilities)~~

Deferred tax assets of $60.3 million in relation to tax losses have not been recognised by the Consolidated Entity at 30 June 2010 (30 June 2009: $20.5 million).

7. Dividends and distributions

(a) Dividends declared by the Company

No dividends were declared or paid by the Company during the financial year ended 30 June 2010 or up to the date of this report (2009: $nil).

(b) Distributions declared by GIT

	Distribution Total Date of cpu $M payment Distributions for the year ended 30 June 2010: – 31 Dec 09 1.50 92.6 26 Feb 10 – 30 Jun 10 1.90 120.3 26 Aug10 ~~3.40~~ ~~212.9~~ Distributions for the year ended 30 June 2009: – 31 Dec 08 9.65 264.1 26 Feb 09 – 30 Jun 09 – – – ~~9.65~~ ~~264.1~~

The distribution for the quarter ended 30 June 2008 of $142.4 million was paid on 26 August 2008.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

7. Dividends and distributions (cont)

(b) Distributions declared by GIT (cont)

Movement in provision for distributions to Securityholders

	(b) Distributions declared by GIT (cont) Movement in provision for distributions to Securityholders
		Consolidated 2010 2009 $M $M – 142.4 212.9 264.1 (92.6) (406.5) ~~120.3~~ ~~–~~
	Balance at the beginning of the year Provisions for distributions Payment of distributions

	~~Balance at the end of theyear~~

Dividend franking account

		Goodman Limited 2010 2009 $M $M ~~43.3~~ ~~39.8~~

	~~30% franking credits available to Shareholders for subsequent fnancialyears~~

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

The above amounts are based on the dividend franking account at the balance date 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 the balance date;
- franking credits that will arise from the receipt of dividends recognised as a receivable at the balance date; and
franking credits that the entity may be prevented from distributing in subsequent financial years.

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

(c) Distributions declared and paid by Goodman PLUS Trust

Distribution
Total
Date of
cpu
$M
payment
Distributions for the year ended 30 June 2010:
– 21 Sep 09
128.0
4.2
21 Sep 09
– 21 Dec 09
129.2
4.2
21 Dec 09
– 21 Mar 10
148.1
4.9
21 Mar 10
– 21 Jun 10
153.9
5.0
21 Jun 10
~~559.2~~
~~18.3~~
Distributions for the year ended 30 June 2009:
– 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
~~751.4~~
~~24.5~~

Goodman PLUS Trust, a controlled entity of GIT, has hybrid securities on issue which meet the definition of equity (refer to note 24).

(d) Distributions declared and paid by China Hybrid Investment Sub‑Trust

	Distribution Total Date of cpu $M payment Distributions for the year ended 30 June 2010: – 21 Dec 09 180,821.9 9.1 21 Dec 09 – 21 Jun 10 498,630.1 24.9 21 Jun 10 ~~679,452.0~~ ~~34.0~~

On 16 October 2009, China Hybrid Investment Sub-Trust, a controlled entity of GIT, issued hybrid securities (CIC convertible preference securities) which meet the definition of equity (refer to note 24).

8. Receivables

		Consolidated 2010 2009 $M $M 16.8 38.2 65.5 106.8 59.0 88.1 83.8 79.8 2.9 2.7 ~~228.0~~ ~~315.6~~ 246.2 243.0 – 15.5 22.2 16.9 20.1 28.2 ~~288.5~~ ~~303.6~~
	Current Trade receivables Other receivables Construction contract receivables Other amounts due from related parties Derivative fnancial instruments


	Non‑current Loans to related parties Other amounts due from related parties Other receivables Derivative fnancial instruments

The maximum exposure to credit risk at the balance date is the fair value of each class of receivable mentioned above. All non-current receivables of the Consolidated Entity are due within five years from the balance 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	GBP	EUR
2010	2.5	172.3	23.0	104.7	112.1
2009	2.6	137.1	9.0	90.3	184.0

Trade receivables

As at 30 June 2010, trade receivables of $0.6 million were impaired (2009: $0.9 million). The ageing analysis of trade receivables (before impairment) is as follows:

		Consolidated 2010 2009 $M $M 2.4 6.1 2.4 11.4 3.4 4.1 ~~8.2~~ ~~21.6~~
	Overdue by: Up to one month One month to four months Greater than four months

The Consolidated Entity holds bank guarantees as security for $7.4 million (2009: $3.4 million) of its trade receivables from investment property customers.

Other receivables

Other receivables that are past due are not considered impaired. At 30 June 2010, there is no provision for impairment of overdue other receivables (2009: $nil). The ageing analysis of these other receivables is as follows:

		Consolidated 2010 2009 $M $M 0.2 5.1 7.1 17.0 0.4 3.6 ~~7.7~~ ~~25.7~~
	Overdue by: Up to one month One month to four months Greater than four months

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

8. Receivables (cont)

Construction contract receivables

		Consolidated 2010 2009 $M $M 232.2 216.8 – – ~~232.2~~ ~~216.8~~ (159.8) (130.4) (13.4) 1.7 ~~59.0~~ ~~88.1~~ 59.0 88.1 – – ~~59.0~~ ~~88.1~~
	Net contract debtors excluding retentions Retentions

	~~Net contract debtors~~
	Cash received to date Effect of foreign currencytranslation

	~~Totalprogressive value~~
	Amounts due from customers – contract debtors Amounts due from customers – trade debtors

	~~Construction contract receivables~~

Amounts due from related parties

Amounts due from related parties that are past due are not considered impaired. At 30 June 2010, there is no provision for impairment of overdue other receivables (2009: $nil). The ageing analysis of these amounts due from related parties is as follows:

		Consolidated 2010 2009 $M $M 5.5 21.0 7.3 12.4 0.4 6.0 ~~13.2~~ ~~39.4~~
	Overdue by: Up to one month One month to four months Greater than four months

Loans to related parties

Details of loans to related parties are set out in note 30. During the financial year impairments of $43.9 million (2009: $nil) have been recorded against related party loans provided to fund development projects.

Receivables from the ESAP

At 30 June 2009 and 2010, receivables from employees under the ESAP have been impaired to $nil as the security exercise prices were above the market price of the stapled security as quoted on the ASX. Gross amounts receivable from employees of $12.5 million (2009: $17.2 million) continue to bear interest at the Consolidated Entity’s weighted average interest rate of 6.9% per annum (2009: 5.5% per annum) and are for periods of up to five years. Loans shown are full recourse in respect of those securities vested under the ESAP.

9. Inventories

		Consolidated 2010 2009 $M $M 244.3 10.0 ~~244.3~~ ~~10.0~~ 181.9 35.5 ~~181.9~~ ~~35.5~~
	Current Development land


	Non‑current Development land

During the financial year, borrowing costs of $8.4 million (2009: $nil) previously capitalised into the carrying value of inventories were expensed to the income statement on disposal.

10. Assets/liabilities classified as held for sale

	10. Assets/liabilities classifed as held for sale
		Consolidated 2010 2009 $M $M – 21.3 – 157.3 – 4.3 ~~–~~ ~~182.9~~ – (10.1) ~~–~~ ~~(10.1)~~
	Assets classifed as held for sale Cash Investment properties Other assets


	Liabilities classifed as held for sale Other liabilities

At 30 June 2009, the Consolidated Entity’s China division was at an advanced stage of negotiations to sell 80% of its interest in an entity incorporated in the Cayman Islands that held four investment properties. This transaction was completed on 9 September 2009. Accordingly, at 30 June 2009, the assets and liabilities of the entity were presented as held for sale and recorded at the lower of cost or net realisable value.

11. Other assets

		Consolidated 2010 2009 $M $M – 4.4 11.2 11.6 20.5 26.9 ~~31.7~~ ~~42.9~~ 1.0 – ~~1.0~~ ~~–~~
	Current Refundable deposits for the purchase of investment properties Prepayments Other


	Non‑current Refundable deposits for thepurchase of investmentproperties

12. Investment properties

12. Investment properties
	Stabilised	investment	Investment properties		Total	investment
	properties		under development		properties
	2010	2009	2010	2009	2010	2009
	$M	$M	$M	$M	$M	$M
Carrying amount at the beginning of
the year	2,547.2	2,953.1	986.8	1,310.7	3,534.0	4,263.8
Cost of acquisition:
– On acquisition of controlled entities	–	23.9	–	–	–	23.9
– Other acquisitions	–	36.9	28.1	107.9	28.1	144.8
Transfers in from other assets	–	–	–	37.7	–	37.7
Capital expenditure	53.6	39.3	99.5	255.4	153.1	294.7
Transfers	(36.2)	254.8	36.2	(254.8)	–	–
Disposals:
– Carrying value of properties sold	(24.9)	(148.1)	(27.5)	(232.8)	(52.4)	(380.9)
– On disposal of interests in controlled
entities	(79.5)	(121.0)	–	(90.1)	(79.5)	(211.1)
Transfers to assets held for sale	–	(157.3)	–	–	–	(157.3)
Transfers to inventories	–	–	(393.1)	–	(393.1)	–
Transfers to construction contract
receivables	–	–	(12.2)	–	(12.2)	–
Net loss from fair value adjustments	(87.4)	(355.0)	(122.6)	(172.0)	(210.0)	(527.0)
Effect of foreign currencytranslation	(77.2)	20.6	(93.4)	24.8	(170.6)	45.4
~~Carrying amount at the end of theyear1 ~~	~~2,295.6~~	~~2,547.2~~	~~501.8~~	~~986.8~~	~~2,797.4~~	~~3,534.0~~

As at 30 June 2010, investment properties with a carrying value of $72.5 million (2009: $1,289.6 million) were subject to charges to secure bank loans.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

12. Investment properties (cont)

Details of the Consolidated Entity’s stabilised investment properties are set out below:

Fair value
Last
Last
adjustment
Book value
Book value
independent
independent
during
30 June
30 June
valuation
valuation
the year
2010
2009
Stabilisedproperties
date
$M
$M
$M
$M
Australia
Warehouse/distribution centres
MFive Industry Park, Moorebank, NSW
30 Jun 08
152.5
(3.2)
133.4
136.4
GreystanesPark East, Prospect, NSW
30 Jun 08
135.5
(2.4)
121.3
123.5
GreystanesPark West, Prospect, NSW
31 Dec 09
64.0
(2.0)
64.0
66.3
Southend Distribution Centre, Mascot, NSW
31 Dec 09
39.5
(4.8)
39.3
44.2
Roberts Distribution Centre, Chullora, NSW
– Building A
31 Dec 08
34.4
(2.3)
33.2
35.0
Roberts Distribution Centre, Chullora, NSW
– Building B
30 Jun 10
33.0
(3.0)
33.0
36.4
Perth Airport, Perth, WA
30 Jun 10
35.0
2.7
35.0
32.1
Kingston Distribution Centre, Braeside, Vic
31 Dec 09
24.5
(2.0)
24.5
26.6
Sheffeld Distribution Centre, Welshpool, WA
31 Dec 09
24.0
(1.5)
24.1
33.3
Taylor Distribution Centre, Edinburgh, SA
30 Jun 10
9.0
(0.4)
9.0
9.4
Perth Airport – Amerind Development,
Perth Airport, WA
31 Dec 09
6.3
(1.5)
6.3
7.8
Perth Airport – ITT Flygt,Perth Airport,WA
31 Dec 09
4.1
0.5
4.1
3.6
Business parks
Lidcombe Business Park, Lidcombe, NSW
31 Dec 08
165.0
–
156.5
155.8
Campus Business Park, Homebush, NSW
30 Jun 10
152.5
(3.4)
152.5
154.9
Clayton Business Park, Clayton, Vic
30 Jun 08
116.5
(0.2)
113.1
110.6
Slough Business Park, Silverwater, NSW
31 Dec 08
111.5
(5.5)
101.7
106.3
Homebush Corporate Park, Homebush, NSW1
30 Jun 10
98.5
0.9
101.0
97.0
IBC Corporate Centre, Homebush, NSW
30 Jun 10
99.0
(5.0)
99.0
99.9
Airgate Business Park, Mascot, NSW
30 Jun 10
77.5
(5.8)
77.5
83.2
Botany Grove Business Park, Botany, NSW
– Stage 1, 2 and 3
31 Dec 08
67.7
(6.1)
61.7
67.5
Euston Business Park, Alexandria, NSW
31 Dec 08
55.9
–
52.2
52.2
Toyotagreen Business Park, Port Melbourne, Vic2
31 Dec 09
83.6
(5.3)
83.1
89.7
Forestridge Business Park, Frenchs Forest, NSW
31 Dec 09
38.5
(5.7)
39.0
43.7
Orion Business Park, Lane Cove, NSW
30 Jun 09
13.3
–
13.1
13.2
Botany Grove Business Park, Botany, NSW
– Stage 4
30 Jun 09
4.8
–
4.8
4.8
Chase Business Park,Chatswood,NSW
31 Dec 09
1.3
(0.3)
1.3
1.5
Industrial estates
Discovery Cove Industrial Estate, Banksmeadow,
NSW
30 Jun 10
89.4
0.9
89.4
88.6
Alexandria Industrial Estate, Alexandria, NSW
30 Jun 10
72.0
0.2
72.0
72.1
Mitchell Industrial Estate, 149 Mitchell Road,
Alexandria, NSW
31 Dec 07
60.0
0.1
61.6
61.5
Burrows Industrial Estate, Alexandria, NSW
30 Jun 10
34.1
(0.9)
34.1
35.0
Mitchell Industrial Estate, 165 Mitchell Road,
Alexandria, NSW
30 Jun 09
16.8
–
16.7
16.6
Homebush Bay Industrial Estate, Homebush, NSW
30 Jun 09
10.3
–
10.4
10.3
Keylink Industrial Estate, Edinburgh Parks, SA
31 Dec 09
12.4
(0.3)
12.1
12.1
Goldsborough Industrial Estate, Pooraka, SA
31 Dec 09
5.5
(1.6)
5.5
7.0
Westcove Industrial Estate, Lane Cove, NSW
n/a
n/a
–
–
8.1
Kingsford Smith Industrial Estate,Alexandria,NSW
n/a
n/a
(9.4)
–
42.0
~~(67.3)~~
~~1,885.5~~
~~1,988.2~~

The valuation of Homebush Corporate Park at 30 June 2010 excluded a small portion of the site included in the book value above.
Toyotagreen Business Park includes land and buildings for redevelopment with book value of $19.0 million (2009: $19.2 million). The land and buildings for redevelopment have not been externally revalued.

12. Investment properties (cont)

Fair value
Last
Last
adjustment
Book value
Book value
independent
independent
during
30 June
30 June
valuation
valuation
the year
2010
2009
Stabilisedproperties
date
$M
$M
$M
$M
Europe
Warehouse/distribution centres
Düren Logistics Centre, Düren, Germany
n/a
n/a
(1.3)
–
24.4
Schönberg Logistics Centre, Schönberg, Germany
n/a
n/a
(2.0)
–
25.5
Theodorstrasse, Düsseldorf, Germany
n/a
n/a
–
–
1.5
Business parks
Air Park Paris-Sud,Wissous,France
30 Jun 08
57.6
(6.6)
36.8
56.1
~~(9.9)~~
~~36.8~~
~~107.5~~
United Kingdom
Warehouse/distribution centres
Royal Oak Ind Estate, Daventry, East Midlands,
England
30 Jun 08
129.6
(1.1)
89.3
104.8
Amazon Unit, Jersey Marine, Swansea, Wales
30 Jun 08
49.3
(1.3)
44.4
45.0
Tunnel Industrial Estate, West Thurrock,
South East England
30 Jun 08
45.0
–
32.8
38.1
Citadel Junction, Wolverhampton, West Midlands,
England
30 Jun 08
44.8
(2.3)
30.0
37.2
Gloucester Business Park, Gloucester,
South West England
30 Jun 08
36.0
–
28.5
33.2
Gemini Business Park, Beckton, South East England
–
–
–
27.4
2.0
Pioneer Business Park, Ellesmere Port,
North West England
30 Jun 08
23.8
–
18.7
20.9
Centrum 100 Business Park, Burton-on-Trent,
East Midlands, England
30 Jun 10
17.8
–
17.8
20.7
Hoddesdon – Innovate Unit Phase 2,
South East England
30 Jun 08
20.9
(2.3)
16.6
17.8
Hoddesdon – CERT Unit, Phase 3,
South East England
30 Jun 10
14.9
(2.5)
14.9
20.2
Hoddesdon – Recall Unit B, South East England
30 Jun 08
15.4
–
11.7
13.6
Maltby, Rotherham, North East England
30 Jun 08
16.3
–
10.9
12.7
Hoddesdon – Phase 3 G Unit, South East England
30 Jun 08
11.4
–
8.0
9.3
RD Park, Hoddesdon, South East England
30 Jun 08
8.5
(0.7)
6.9
7.5
Scottish Widows Unit 1, Hinckley, East Midlands,
England
30 Jun 08
7.3
0.3
5.6
5.6
Johnsons Palace Unit 2, Hinckley, East Midlands,
England
30 Jun 08
8.4
–
4.8
5.5
Earlstrees Industrial Estate, Corby, East Midlands,
England
30 Jun 08
6.2
–
4.6
5.4
Hoddesdon – K Units Phase 2, South East England
30 Jun 08
1.6
(0.1)
0.4
0.9
Brackmills Industrial Estate, Northampton,
East Midlands, England
n/a
n/a
–
–
23.8
Amber Park, South Normanton, East Midlands,
England
n/a
n/a
–
–
19.6
Harthills, Glasgow, Scotland
n/a
n/a
–
–
3.9
Golden Business Park,Leyton,South East England
n/a
n/a
(0.2)
–
3.8
~~(10.2)~~
~~373.3~~
~~451.5~~
~~Portfolio total~~
~~(87.4)~~
~~2,295.6~~
~~2,547.2~~

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

13. Investments accounted for using the equity method

	Note	Consolidated 2010 2009 $M $M 2,035.7 2,373.6 243.5 288.7 ~~2,279.2~~ ~~2,662.3~~ Consolidated 2010 2009 $M $M 2,373.6 2,142.1 77.2 123.1 (275.3) (578.6) (4.5) (8.0) ~~(202.6)~~ ~~(463.5)~~ (0.6) (132.2) 193.5 1,100.8 (76.2) (182.9) (116.2) (126.3) (135.8) 35.6 ~~2,035.7~~ ~~2,373.6~~
	Share of net assets accounted for using the equity method Associates 13(a) Joint venture entities 13(b)

	~~Total~~
	(a) Investments in associates Movements in carrying amount of investments in associates
	Carryingamount at the beginningof theyear
	Share of net results after tax (before revaluations)1 Share of net loss from fair value adjustments on investment properties2 Share of fair value adjustments on interest rate swaps

	~~Share of net results~~
	Share of movements in reserves Acquisitions Disposals Distributions received and receivable Effect of foreign currencytranslation

	~~Carrying amount at the end of theyear~~

Share of net results after tax (before revaluations) includes losses on disposals of investment properties of $19.3 million (2009: $17.1 million), restructure charges of $nil (2009: $2.2 million), debt restructure charges of $19.7 million (2009: $nil) and other losses impacting the distributable results of associates of $5.0 million (2009: $nil).
Share of net loss from fair value adjustments on investment properties includes a non-recurring deferred tax charge of $21.9 million in the New Zealand division as a result of the removal of the ability to claim depreciation deductions on buildings with an estimated useful life of 50 years or more.

		Consolidated	Consolidated			Consolidated	Consolidated	Consolidated
			share of	Consolidated			investment
		associate’s result		ownership			carrying
		recognised		interest			amount
	Country of
	establishment/	2010	2009	2010	2009	2010		2009
Name	incorporation	$M	$M	%	%	$M		$M
Property investment associates
Goodman Australia
Industrial Fund (GAIF)	Australia	(87.9)	(156.8)	43.8	45.4	1,090.8	1,122.9
Goodman Australia
Development Fund
(GADF)1	Australia	–	–	20.0	–	–		–
Goodman Property
Trust (GMT)2	New Zealand	(17.8)	(17.4)	16.8	28.1	109.3		215.0
Goodman Hong Kong
Logistics Fund (GHKLF)	Cayman Islands	23.3	15.7	24.2	24.2	242.6	244.2
Goodman China
Logistics Holding
Limited (GCLHL)	China	3.0	–	20.0	–	9.4		–
Goodman European
Logistics Fund (GELF)	Luxembourg	(65.0)	(72.2)	38.3	32.9	294.4		411.7
Arlington Business Parks
Partnership (ABPP)	United Kingdom	(58.2)	(232.8)	35.7	35.8	289.2		379.8
		~~(202.6)~~	~~(463.5)~~			~~2,035.7~~	~~2,373.6~~

On 17 May 2010, GADF was established in Australia. The Consolidated Entity has a 20% ownership interest in GADF, which has a target gross asset value of $400 million and is contracted to acquire the Consolidated Entity’s Kmart development in Melbourne.
GMT is a listed entity. The market value of the Consolidated Entity’s investment in GMT at 30 June 2010 using the quoted price on the last day of trading was $134.4 million (2009: $173.7 million).

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

(a) Investments in associates (cont)

			Result	Total	Total	Net
		Revenue1	after tax1	assets	liabilities	assets
	Year ended	(100%)	(100%)	(100%)	(100%)	(100%)
Name	30 June	$M	$M	$M	$M	$M
GAIF	2010	413.6	(194.8)	4,430.6	1,953.2	2,477.4
	2009	404.6	(336.4)	4,637.8	2,165.1	2,472.7
GADF	2010	–	–	–	–	–
	2009	–	–	–	–	–
GMT	2010	45.7	(111.4)	1,269.1	671.5	597.6
	2009	106.8	(63.2)	1,256.9	530.7	726.2
GHKLF	2010	92.1	94.9	1,628.0	625.4	1,002.6
	2009	121.4	71.2	1,703.4	729.3	974.1
GCLHL	2010	11.1	14.8	216.6	180.1	36.5
	2009	–	–	–	–	–
GELF	2010	80.1	27.3	1,925.6	1,175.7	749.9
	2009	183.9	(229.5)	2,633.3	1,471.6	1,161.7
ABPP	2010	136.2	(158.9)	2,327.4	1,512.4	815.0
	2009	200.9	(517.2)	3,147.6	2,004.0	1,143.6

Amounts presented above for revenue and result after tax are measured from the later of the beginning of the financial year or the date that equity accounting commenced to the end of the financial year or date equity accounting ceased, if earlier.

(b) Investments in joint venture entities (JVEs)

	Movements in carrying amount of investments in JVEs	Consolidated 2010 2009 $M $M 288.7 257.4 – 6.9 (33.6) (52.1) (0.6) – ~~(34.2)~~ ~~(45.2)~~ (0.1) (1.1) (29.1) (10.2) 26.9 120.4 – (1.2) – (73.5) – 2.5 – (19.6) (8.7) 59.2 ~~243.5~~ ~~288.7~~
	Carryingamount at the beginningof theyear
	Share of net results after tax (before revaluations)1 Share of net loss from fair value adjustments on investment properties2 Share of fair value adjustments on interest rate swaps

	~~Share of net results~~
	Share of movements in reserves Impairment3 Acquisitions Transfer on reclassifcation as a controlled entity4 Disposals Transfer from other fnancial assets5 Distributions received and receivable Effect of foreign currencytranslation

	~~Carrying amount at the end of theyear~~

Share of net results after tax (before revaluations) for the current financial year includes gains of $0.3 million (2009: losses of $1.8 million) on disposals of investment properties, impairment losses of $4.5 million (2009: $nil), restructure charges of $0.6 million (2009: $2.8 million) and losses of $0.7 million (2009: $nil) on exercise of employee share options.
Share of net loss from fair value adjustments on investment properties includes a non-recurring deferred tax charge of $7.2 million in the New Zealand division as a result of the removal of the ability to claim depreciation deductions on buildings with an estimated useful life of 50 years or more.
Relates to the investments in MGJ (refer to note 2) and 413 King William Street Trust.
Relates to the acquisition of remaining 50% share of Goodman Asia Limited on 3 December 2008.
Relates to the investment in 413 King William Street Trust.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

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

(b) Investments in joint venture entities (JVEs) (cont)

			Consolidated	Consolidated		Consolidated	Consolidated	Consolidated	Consolidated
			share of JVEs				ownership	investment
			result recognised				interest	carrying	amount
	Country of
	establishment/		2010	2009		2010	2009	2010	2009
Name	incorporation		$M		$M	%	%	$M	$M
Fund management JVEs
Goodman Asia
Limited (GAL)1	Hong Kong		–		2.1	–	–	–	–
MGJL Management
Lux Sàrl	Luxembourg		–		–	50.0	50.0	0.1	0.2
Property investment JVEs
413 King William Street
Trust (KWS)	Australia		–		–	50.0	50.0	0.5	0.5
Macquarie Goodman
Japan Pte Ltd (MGJ)	Singapore	(27.0)		(40.8)		50.0	50.0	108.6	165.4
MGJ Cayman1	Cayman Islands		(4.1)	(0.8)		50.0	50.0	11.9	14.1
Goodman Princeton
Holdings (Lux) Sàrl
(Princeton Lux)	Luxembourg		–		–	20.0	–	9.3	–
Goodman Princeton
Holdings (Jersey)
Limited (Princeton Jersey)	Jersey		–		–	20.0	–	9.2	–
Colworth Park Ltd
Partnership (Colworth)	United Kingdom		1.6		1.8	50.0	50.0	17.8	18.9
The Harwell Science
and Innovation Campus
Limited Partnership
(Harwell)	United Kingdom		(0.3)	(0.2)		50.0	50.0	5.5	6.6
Abu Dhabi Business
Parks Company LLC
(Abu Dhabi)	United Arab Emirates		–	(0.8)		49.0	49.0	–	–
Property development JVEs
BGA1 Pty Ltd	Australia		0.1		1.1	50.0	50.0	(0.2)	–
Toll Goodman Property
Services Pty Ltd (TGPS)	Australia		0.5		0.4	50.0	50.0	1.9	1.2
GGGAIF Huntingwood
East (Huntingwood East)	Australia		–		–	50.0	50.0	–	–
GGGAIF Huntingwood
West (Huntingwood West)	Australia		–		–	50.0	50.0	–	–
GGGAIF Moorebank
(Moorebank)	Australia		–		–	50.0	50.0	–	–
Highbrook Development
Ltd (HDL)	New Zealand		(0.2)		2.1	25.0	25.0	44.9	43.3
Goodman Seaview Ltd
(Seaview)	Cayman Islands		–		–	50.0	50.0	5.2	5.5
Goodman Interlink Ltd
(Interlink)	Cayman Islands		–		–	50.0	50.0	12.1	12.7
Goodman Herten
Logistics (Lux) Sàrl
(Herten)	Luxembourg		(1.3)		1.5	50.0	50.0	–	1.4
Goodman Lazulite
Logistics (Lux) Sàrl
(Lazulite)	Luxembourg		(0.3)		0.4	50.0	50.0	0.1	0.4
Ullo One 2008 Kft	Hungary		(2.8)	(0.4)		50.0	50.0	2.9	4.5
Agate Ingatlanforgalmazo
Kft (Agate)	Hungary		–		–	50.0	50.0	–	–
WMP NV	Belgium		(0.5)		–	50.0	50.0	–	0.5
BL Goodman LLP	United Kingdom		0.1	(7.9)		50.0	50.0	6.3	6.2
Desborough Developments
Ltd (Desborough)	United Kingdom		–	(2.4)		50.0	50.0	2.8	2.7
Gateway LLP	United Kingdom		–		–	50.0	50.0	3.0	3.2
Pochin Rosemound
(Deeside)Ltd(Pochin)	United Kingdom		–	(1.3)		50.0	50.0	1.6	1.4
		~~(34.2)~~		~~(45.2)~~				~~243.5~~	~~288.7~~

On 3 December 2008, Goodman acquired the remaining 50% of GAL, which is now disclosed as a controlled entity (refer to note 28). The ownership interest for the purposes of the JVEs disclosure is nil.

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

(b) Investments in joint venture entities (JVEs) (cont)

			Result	Total	Total	Net assets/
		Revenue1	after tax1	assets2	liabilities2	(liabilities)
	Year ended	(100%)	(100%)	(100%)	(100%)	(100%)
Name	30 June	$M	$M	$M	$M	$M
GAL	2010	–	–	–	–	–
	2009	11.7	4.2	–	–	–
MGJL Management Lux Sàrl	2010	–	–	0.3	–	0.3
	2009	–	–	0.3	–	0.3
KWS	2010	–	–	9.0	4.0	5.0
	2009	–	–	5.0	–	5.0
MGJ	2010	52.9	(115.8)	934.2	577.8	356.4
	2009	36.8	(173.0)	1,139.3	547.8	591.5
MGJ Cayman1	2010	2.1	(9.0)	27.7	1.4	26.3
	2009	12.7	(1.8)	43.9	12.8	31.1
Princeton Lux	2010	–	–	39.5	–	39.5
	2009	–	–	–	–	–
Princeton Jersey	2010	0.2	0.2	41.0	1.0	40.0
	2009	–	–	–	–	–
Colworth	2010	7.8	3.1	80.0	44.5	35.5
	2009	11.5	4.1	88.8	51.0	37.8
Harwell	2010	2.4	(0.5)	9.0	0.5	8.5
	2009	2.0	(0.3)	11.1	0.6	10.5
Abu Dhabi	2010	–	–	–	–	–
	2009	–	(1.7)	–	–	–
BGA1 Pty Ltd	2010	0.3	0.2	0.3	0.7	(0.4)
	2009	2.1	2.1	2.0	2.6	(0.6)
TGPS	2010	1.4	0.9	3.5	0.1	3.4
	2009	0.7	0.7	2.5	–	2.5
Huntingwood East	2010	–	–	23.2	34.1	(10.9)
	2009	–	–	15.9	15.9	–
Huntingwood West	2010	–	–	106.4	157.8	(51.4)
	2009	–	–	21.4	21.4	–
Moorebank	2010	–	–	–	–	–
	2009	–	–	–	–	–
HDL	2010	73.1	63.3	359.9	155.9	204.0
	2009	11.4	7.9	259.4	150.8	108.6
Seaview	2010	–	–	134.2	125.6	8.6
	2009	–	–	121.4	121.4	–
Interlink	2010	–	–	235.6	200.7	34.9
	2009	–	–	141.8	141.8	–
Herten	2010	–	0.1	7.8	8.3	(0.5)
	2009	–	3.0	12.0	9.1	2.9
Lazulite	2010	–	0.2	5.7	6.0	(0.3)
	2009	–	0.8	7.1	6.3	0.8
Ullo One 2008 Kft	2010	–	0.1	12.7	11.1	1.6
	2009	–	(0.8)	14.5	5.4	9.1
Agate	2010	–	0.2	5.5	6.0	(0.5)
	2009	–	–	7.9	7.9	–
WMP NV	2010	–	0.3	15.6	15.1	0.5
	2009	–	–	17.3	16.3	1.0
BL Goodman LLP	2010	0.8	0.2	26.4	27.1	(0.7)
	2009	2.5	(15.9)	32.5	31.4	1.1
Desborough	2010	–	–	–	–	–
	2009	–	(4.7)	–	–	–
Gateway LLP	2010	–	–	1.9	–	1.9
	2009	–	–	1.3	1.3	–
Pochin	2010	–	–	11.4	0.1	11.3
	2009	–	(2.6)	13.1	13.1	–

Amounts presented above for revenue and result after tax are measured from the later of the beginning of the financial year or the date that equity accounting commenced to the end of the financial year or date equity accounting ceased, if earlier.
Included in the balance sheets of the JVEs disclosed above are total non-current assets of $1,907.3 million (2009: $1,666.3 million) and total non-current liabilities of $1,215.6 million (2009: $1,059.9 million).

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

14. Other financial assets

	14. Other fnancial assets
		Consolidated 2010 2009 $M $M 42.3 27.7 27.6 43.4 ~~69.9~~ ~~71.1~~
	Investment in listed securities, at fair value1 Investment in unlisted securities,at fair value2

The investment in listed securities relates to ING Industrial Fund, which is valued using the quoted price on the last day of trading in the financial year.
The investment in unlisted securities relates to GEBPF. The fair value of GEBPF is determined by reference to the net asset value per security advised to investors.

15. Plant and equipment

		Consolidated 2010 2009 $M $M 8.1 12.9 (3.1) (4.6) 5.0 8.3 30.2 47.3 (22.5) (32.0) 7.7 15.3 ~~12.7~~ ~~23.6~~ 8.3 10.0 0.6 1.1 (1.3) (1.4) (2.0) (1.3) (0.6) (0.1) ~~5.0~~ ~~8.3~~ 15.3 14.9 – 1.4 1.5 8.2 (1.4) (1.7) (6.3) (7.7) (1.4) 0.2 ~~7.7~~ ~~15.3~~
	Leasehold improvements, at cost Accumulated amortisation

	Plant and equipment, at cost Accumulated depreciation


	~~Totalplant and equipment, at net book value~~
	Reconciliation Leasehold improvements Carrying amount at the beginning of the year Additions Disposals Amortisation Effect of foreign currencytranslation

	~~Carrying amount at the end of theyear~~
	Plant and equipment Carrying amount at the beginning of the year Additions on acquisition of controlled entities Other additions Disposals Depreciation Effect of foreign currencytranslation

	~~Carrying amount at the end of theyear~~

16. Intangible assets

		Consolidated 2010 2009 $M $M 644.0 799.4 61.6 51.4 223.8 274.6 ~~929.4~~ ~~1,125.4~~
	Goodwill relating to European operations, at cost Management rights relating to Asia Pacifc operations, at cost Management rights relatingto European operations,at cost

The management rights relating to Asia Pacific and European operations have been assessed to have an indefinite life as these rights are routinely renewed at minimal cost.

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

Carrying
amount
Effect of
Carrying
at the
foreign
amount
beginning
currency
at the end
of the year
Acquisitions Adjustments2
Impairment
translation
of the year
Reconciliation
Note
$M
$M
$M
$M
$M
$M
Goodwill
Logistics – Continental Europe
16(a)
669.5
–
–
(7.6)
(122.6)
539.3
Business Parks – Continental Europe
16(b)
8.2
–
–
(7.4)
(0.8)
–
Logistics – United Kingdom
16(c)
121.7
–
–
–
(17.0)
104.7
Subtotal –goodwill
799.4
–
–
(15.0)
(140.4)
644.0
Asia Pacifc management rights
Fund management – New Zealand
5.5
–
–
–
–
5.5
Fund management – Hong Kong
16(d)
25.1
–
–
–
(1.3)
23.8
Fund management – China
16(e)
20.8
12.0
–
–
(0.5)
32.3
Subtotal – Asia Pacifc management rights
51.4
12.0
–
–
(1.8)
61.6
European management rights
Logistics – Continental Europe
16(a)
37.6
–
–
–
(6.8)
30.8
Business Parks – Continental Europe
16(b)
12.5
–
–
(11.2)
(1.3)
–
Business Parks – United Kingdom
16(f)
214.6
–
–
–
(30.2)
184.4
Science Parks – United Kingdom1
9.9
–
–
–
(1.3)
8.6
Subtotal – European management rights
274.6
–
–
(11.2)
(39.6)
223.8
~~Subtotal – management rights~~
~~326.0~~
~~12.0~~
~~–~~
~~(11.2)~~
~~(41.4)~~
~~285.4~~
~~Total – 2010~~
~~1,125.4~~
~~12.0~~
~~–~~
~~(26.2)~~
~~(181.8)~~
~~929.4~~
~~Total – 2009~~
~~1,073.2~~
~~56.6~~
~~(8.4)~~
~~(33.2)~~
~~37.2~~
~~1,125.4~~

In the consolidated financial report for the previous financial year the Science Parks – United Kingdom business was referred to as Business Parks – Colworth. The management rights in the Science Parks – United Kingdom business relate to the Colworth business unit.
In the prior financial year, adjustments related to the release of surplus provisions which arose on the acquisition of Eurinpro.

Impairment charge

The intangible assets relating to the Business Parks – Continental Europe business were impaired and fully written down during the financial year. Given the revision of development estimates during the forecast period and the decline in investment property values, the forecast net cash flows no longer support the carrying value of these intangible assets. The intangible assets that were impaired comprised goodwill totalling $7.4 million, which arose on the acquisition of the Calliston business during the financial year ended 30 June 2007, and management rights totalling $11.2 million, which arose on the acquisition of Arlington during the financial year ended 30 June 2006.

An impairment loss of $7.6 million was also recognised in respect of the Logistics – Continental Europe business. This arose primarily as a result of the increased discount rate for the division, reflecting the adverse change in underlying sovereign credit risk in certain Continental European countries. The impairment loss has been applied against goodwill.

In the comparative financial year, as a result of current conditions in the United Kingdom property market and the consequent delay in establishing a United Kingdom Logistics fund platform, an impairment charge of $24.5 million was recognised against the goodwill in the Logistics – United Kingdom division. Also, as a result of the revised prospective cash flows from the Colworth business unit, an impairment charge of $8.7 million was recognised against management rights in the Science Parks – United Kingdom business.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

16. Intangible assets (cont)

Impairment charge (cont)

Impairment losses have been reflected as impairment losses in the income statement (refer to note 5). There have been no reversals of impairment losses during the financial year (2009: $nil).

Impairment testing for intangible assets

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

The impairment tests for all intangible assets 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 flows generated from continuing operations. The future cash flows for all intangible assets were based on the most recent fund and development forecasts and then estimating a year five 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 intangible assets was based on the key assumptions set out below. Averages relate to average amounts over the five year forecast period.

							Business	Science
		Logistics –	Logistics –				Parks –	Parks –
		Continental	United	New	Hong		United	United
		Europe	Kingdom	Zealand4	Kong5	China	Kingdom	Kingdom
Pre-tax discount rate (%) (pa)1,2	2010	13.3	18.5	17.0	11.8	18.4	8.7	8.7
	2009	11.5	15.3	n/a	9.2	16.0	11.4	11.8
Average annual development	2010	0.65	0.25	0.10	0.23	0.20	0.06	–
(million square metres)	2009	0.43	0.23	n/a	0.23	0.20	0.07	–
Average annual growth in	2010	8.1	46.4	4.0	6.9	35.8	0.8	–
assets under management3(%)	2009	6.0	31.4	n/a	9.5	63.5	8.3	–
Total performance fees (A$M)	2010	–	–	5.8	44.8	0.5	18.0	–
	2009	–	2.3	n/a	32.5	28.5	25.7	–
Average increase in operating	2010	17.1	3.9	5.9	8.0	7.0	3.1	–
expenses(%)	2009	6.8	(4.0)	n/a	5.6	9.0	(5.0)	2.0

The gearing assumption used in impairment testing for all intangible assets has been revised from 40% at 30 June 2009 to 30% at 30 June 2010. As the cost of equity exceeds the cost of debt, this had an incremental effect on discount rates.
A risk premium is included in each division’s discount rate reflecting the level of forecasting, size, country and financing risks for that division. The adverse movement in the underlying sovereign credit risks within Continental Europe has contributed to the increased discount rate for that division. The improvements in underlying forecasting risks and the reduced cost of debt in the United Kingdom have resulted in a significantly lower discount rate for the Business Parks – United Kingdom division. An increase in the market risk premium from 30 June 2009 has been adopted for Hong Kong and China discount rates to reflect changes in investor expectations.
Assets under management (AUM) growth rates are highest in UK Logistics and China as the initial portfolios containing a low number of completed properties are augmented by completed developments over the forecast period.
No impairment testing was performed for the New Zealand intangible assets at 30 June 2009.
The forecast for Hong Kong for both 2010 and 2009 assumed completion of 0.1 million square metres of business space in year two.

Development activity

For impairment testing in both 2010 and 2009, demand is assumed to continue to grow for premium grade industrial product in each market. This demand is driven by a trend towards modern distribution methods, use of specialist logistics operations and modern well located facilities. Earnings forecasts for each division include projects which have not yet been contracted. The majority of developed product is expected to be sold to funds managed by Goodman although sales to third parties are also anticipated in Continental Europe and the United Kingdom. The forecasts assume an increase in development starts (by area) each year.

The forecast models assume that capital continues to be available to each fund managed by Goodman, except GEBPF. This capital is assumed to be made available to fund acquisitions of property (complete or under development) and services from Goodman. These investment activities generate development and transactional profits for the Consolidated Entity.

16. Intangible assets (cont)

Impairment testing for intangible assets (cont) Specific development assumptions included in the five year forecasts

(a) Logistics – Continental Europe

The forecasts assume an increase in development starts (by area) each year. Growth in year four is assumed to flow from a significant expansion in the development pipeline from year three levels of circa 0.6 million square metres of business space to 0.9 million square metres in years four and five. This assumption is based on Goodman continuing to grow its Logistics – Continental Europe development business and recovery in demand for premium grade modern logistics facilities. The estimated total cash outflow required to fund the assumed development pipeline increases from circa $0.4 billion in year one to circa $0.8 billion in year five.

(b) Business Parks – Continental Europe

The carrying value of intangible assets relating to Business Parks – Continental Europe was fully impaired during the financial year. In the comparative financial year, the fund was assumed to recommence developments in the year commencing 1 July 2011.

(c) Logistics – United Kingdom

The majority of development land is expected to be sold to the joint venture with the remaining on balance sheet development properties assumed to be developed by Goodman on behalf of third parties. This is consistent with the assumption made in the comparative financial year. Development activity is forecast to peak in years three and four at approximately 0.4 million square metres of completed product per annum.

(d) Hong Kong

For both 2010 and 2009, development management income is earned on identified projects until completion in the year ending 30 June 2012. The forecast does not include any significant contributions from development activity thereafter.

(e) China

Existing properties owned by Goodman are assumed to be fully developed and sold to GCLHL on completion. Additional land will be acquired by Goodman on an ongoing basis to accommodate property developments for ultimate ownership by the joint venture.

(f) Business Parks – United Kingdom

The United Kingdom property market has started to recover in 2010 but will remain a difficult operating environment in the short term. This is reflected in the level of future developments for ABPP, which drives the growth in AUM, and therefore impacts both base fees and development fees for the Consolidated Entity.

Sources of funding for development activity

For impairment testing in both 2010 and 2009, capital inflows required to fund development activity in each division are assumed to flow from the following sources: equity investment directly into managed funds (including distribution reinvestment plans) from private and public markets; the creation of joint ventures or other investment structures involving Goodman; lending facilities (general term facilities or construction financing facilities) advanced to Goodman and/or equity investors; debt capital markets; turnkey developments; and proceeds from an orderly assets sale programme. It is not practical to determine the approximate ratio of the total which will flow from each source.

Funds available to Goodman and potential equity investors are assumed to be sourced from available global markets and are not limited to lending markets in the regions to which the relevant intangible asset relates. The level of uncertainty relating to the availability of these cash inflows continues to diminish as global debt and investment market conditions improve; however, uncertainty remains in forecasting macroeconomic performance in certain markets.

The downturn in earnings resulting from a combination of the Consolidated Entity’s capital preservation strategies and severe adverse conditions in certain markets experienced between 2008 and 2009 is assumed not to recur in the foreseeable property cycle. Business conditions in Continental Europe and the United Kingdom in particular have improved during 2010 and are assumed to improve steadily over the forecast period.

Margins to be earned from development activity

Assumptions on margins earned from developments included in impairment testing by each business unit are consistent with those adopted at 30 June 2009. An assumption has been made that margins will improve gradually over the forecast period as business conditions continue to recover from lows in 2008, 2009 and 2010. This is consistent with assumptions made in the comparative financial year.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

16. Intangible assets (cont)

Impairment testing for intangible assets (cont)

Growth in assets under management

Investment property values in each market have stabilised at 30 June 2010. Growth in property values has been forecast in each division as a result of increased rental income. A decrease in market capitalisation rates of 25 basis points has been included in the forecast for Business Parks – United Kingdom in year one. No other division has included changes in property values as a result of changes in underlying market capitalisation rates in its forecast model. AUM in each division are also forecast to grow as a result of the acquisition of developed product by managed funds. This growth generates an increase in base funds management fees in each division. The above assumptions are consistent with those made in impairment testing for 30 June 2009, with the exception that a decrease in property values was assumed for Business Parks – United Kingdom in year one (2010), with increases over the remainder of the forecast period.

New funds or joint ventures

No new funds or joint ventures have been assumed by any division in their impairment tests. For the comparative period, new joint venture structures were assumed within Logistics – United Kingdom and China in the year ended 30 June 2010. A further joint venture was forecast by Logistics – United Kingdom in the year ending 30 June 2011. All joint ventures were assumed to be seeded with initial portfolios from investment properties owned by Goodman. On balance sheet properties were assumed to drive further growth in the assets under management of each joint venture. Goodman was assumed to earn fund management revenue from all joint ventures at levels consistent with those earned from other funds managed by Goodman.

Performance fees

Performance fees are assumed to be earned by Business Parks – United Kingdom in years three to five (2009: years four and five). In Hong Kong, performance fees are assumed to be recouped from outperformance in previous years. Additional moderate performance fees are earned in each year commencing on or after 1 July 2010 (2009: each year commencing on or after 1 July 2011).

Operating expenses

Operating expenses in Continental Europe are expected to increase by an average of 17.1% over the forecast period as development activity returns. For all other divisions, operating expenses are expected to increase on average at rates between 3.1% and 8% per annum. As a result of the restructuring implemented during the comparative financial year, each of the other divisions’ annual operating expenses were assumed to reduce. For each division, synergies in operating expenses were assumed such that operating expenses increase at a lower rate than projected income.

Assumptions impacting the terminal year[1]

							Business	Science
		Logistics –	Logistics –				Parks –	Parks –
		Continental	United	New	Hong		United	United
		Europe	Kingdom	Zealand3	Kong	China	Kingdom	Kingdom
Development in terminal year	2010	0.88	0.25	0.11	–	0.05	0.05	–
(million square metres)	2009	0.95	0.29	n/a	–	0.57	0.08	–
Growth rate (%) (pa)2	2010	2.0	2.5	2.5	2.0	2.6	2.5	2.5
	2009	2.5	2.5	n/a	2.0	5.0	2.5	2.5
Development in terminal year	2010	0.76	0.23	0.07	–	0.03	0.14	–
(cost in A$ billion)1	2009	0.84	0.72	n/a	–	0.09	0.24	–

Figures are not disclosed for Business Parks – Continental Europe as the intangible assets have been fully impaired at 30 June 2010. Comparative figures for 30 June 2009 are as follows: pre-tax discount rate: 14.2% per annum; development in year five: 0.02 million square metres; growth rate: 2.5% per annum; and development cost in year five: $0.06 billion.
Long-term growth rates have been used to extrapolate cash flow projections beyond the period covered by the five year forecast. The cost of developments in year five represents the estimated total funding requirements for assumed developments both on balance sheet and within managed funds and joint ventures.
No impairment testing was performed for the New Zealand intangible assets at 30 June 2009.

16. Intangible assets (cont)

Sensitivity analysis

The table below shows the impact on the impairment charge of changes in key assumptions at 30 June 2010. Figures are not disclosed for Business Parks – Continental Europe as the intangible assets have been fully impaired at 30 June 2010.

		Increase		10%	10%	5% increase	25%
		pre‑tax	Six month	decrease in	decrease in	in forecast	reduction in
		discount	delay in all	development	property	operating	performance
		rate by	development	margins in	values in	costs	fees in
	Value in use	100 bps1	starts	each year	each year	each year	each year
30 June 2010	$M	$M	$M	$M	$M	$M	$M
Logistics – Continental Europe2	570.1	(18.9)	(40.6)	(122.9)	(10.5)	(20.3)	–
Logistics – United Kingdom	106.4	(1.3)	–	(28.1)	–	(1.5)	–
New Zealand	54.5	–	–	–	–	–	–
Hong Kong	88.9	–	–	–	–	–	–
China	42.9	–	–	–	–	–	–
Business Parks – United Kingdom	187.1	(7.3)	(4.2)	–	(11.6)	(7.7)	(9.3)
Science Parks – United Kingdom	8.8	–	–	–	–	–	–

Incremental impairment loss from a 100 basis points increase in the pre-tax discount rate.
The value in use for intangible assets relating to the Logistics – Continental Europe business is sensitive to changes in the volume of business space expected to be developed. For comparison, 0.8 million square metres of industrial business space was developed by Goodman in Europe in the year to 30 June 2008. Using development area of 0.5 million square metres in years four and five (representing an average for business area development over the last three financial years), the impairment loss to the business would be $296.0 million.

The table below shows the impact on the impairment charge of changes in key assumptions at 30 June 2009.

		Increase	10%		5% increase
		pre‑tax	reduction in	5% decrease	in forecast
		discount	development	in property	operating
		rate by	starts in	values in	costs
	Value in use7	100 bps1	each year	each year	each year
30 June 2009	$M	$M	$M	$M	$M
Logistics – Continental Europe	756.9	–	(111.8)	(2.6)	(28.0)
Business Parks – Continental Europe	23.3	–	(2.2)2	(2.3)	(2.7)
Logistics – United Kingdom3	121.7	(4.3)	(16.1)4	n/a3	(2.9)
Hong Kong	115.0	–	n/a5	n/a5	n/a5
China	113.3	–	n/a5	n/a5	n/a5
Business Parks – United Kingdom6	297.1	–	n/a6	8.6	(7.6)
Science Parks – United Kingdom	9.9	(0.3)	n/a5	n/a5	n/a5

Incremental impairment loss from a 100 basis points increase in the pre-tax discount rate.
The amount disclosed represents the impact of a 10% reduction in development management fees in each year.
The impact of a one year delay in formation of the first joint venture disclosed at 30 June 2009 was a reduction in Logistics – United Kingdom intangible assets of $10.3 million. The impact of a decrease in property values was not disclosed at 30 June 2009.
The amount disclosed represents the impact of a one year delay in development starts.
Other than the impact on carrying values as a result of a 100 basis point increase in the pre-tax discount rate, no other sensitivity testing was disclosed at 30 June 2009 for Hong Kong, China or Science Parks – United Kingdom.
The impact of a 25% reduction in performance fees in years four and five was a reduction in the carrying value of intangible assets for Business Parks – United Kingdom of $9.0 million. The impact of a reduction in development starts in each year was not disclosed at 30 June 2009.
Value in use testing was not performed for the New Zealand business in 2009.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

17. Payables

		Consolidated 2010 2009 $M $M 42.1 82.9 126.1 147.6 – 0.9 24.8 13.7 ~~193.0~~ ~~245.1~~ 19.5 1.5 158.2 186.5 ~~177.7~~ ~~188.0~~
	Current Trade payables Other payables and accruals Deferred settlements1 Derivative fnancial instruments


	Non‑current Other payables and accruals Derivative fnancial instruments

Deferred settlements at 30 June 2009 relate to the acquisition of Eurinpro.

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

Amounts in A$M	NZD	HKD	USD	SGD	GBP	EUR	JPY
2010	20.6	25.6	9.6	0.1	217.3	69.2	4.3
2009	21.0	26.7	12.5	0.1	208.1	131.6	18.5

18. Interest bearing liabilities

	Note	Consolidated 2010 2009 $M $M 84.1 584.4 – 402.3 ~~84.1~~ ~~986.7~~ 1,686.3 2,693.1 26.7 – 441.2 513.1 38.3 46.9 ~~2,192.5~~ ~~3,253.1~~
	Current Bank loans, unsecured 18(a) Bank loans,secured 18(b)


	Non‑current Bank loans, unsecured 18(a) Bank loans, secured 18(b) Euro medium-term notes, unsecured 18(c) Foreignprivateplacement,unsecured 18(d)

18. Interest bearing liabilities (cont)

(a) Bank loans, unsecured

	(a) Bank loans, unsecured
	Facility	Amounts drawn down in A$M equivalents AUD NZD HKD USD GBP EUR JPY Total 2010 0.4 – – 164.8 279.2 111.3 192.1 747.8 2009 1,017.2 – – 270.2 3.3 40.9 44.8 1,376.4 2010 – – – – 282.4 – – 282.4 2009 – – – – 328.4 – – 328.4 2010 285.9 – – – – 92.7 – 378.6 2009 448.2 – – – – 109.3 – 557.5 2010 – – – – – – – – 2009 – – – – – – 101.1 101.1 2010 – – – – 372.3 – 372.3 2009 – – – – 306.1 623.6 – 929.7 2010 286.3 – – 164.8 561.6 576.3 192.1 1,781.1 2009 1,465.4 – – 270.2 637.8 773.8 145.9 3,293.1 2010 (10.7) 2009 (15.6) 2010 1,770.4 2009 3,277.5
	Syndicated multi currency facility (SMCF)1 Bank loan2 Bank loan3 Bank loan4 Bank loan5
	Total

	Less: Unamortised borrowingcosts
	Total unsecured bank loans

The terms of the SMCF were amended in August 2009 such that an A$82.1 million facility (calculated using the exchange rates specified under the facility agreement) expires on 23 May 2011, an A$400.0 million facility expires on 24 May 2012 and an A$437.9 million facility expires on 1 September 2012. As at 30 June 2010, the facility is drawn to A$747.8 million.
A controlled entity has a bank loan of A$282.4 million denominated in British pounds sterling. The facility expires on 7 April 2013.
Controlled entities have bank loans of A$378.6 million denominated in Australian dollars (A$285.9 million) and euros (A$92.7 million). The facility expires on 8 February 2012.
The facility, denominated in Japanese yen, was repaid in full in February 2010.
Controlled entities have bank loans of A$372.3 million denominated in euros. The terms of the facility were amended in August 2009 such that an A$262.4 million facility expires on 5 December 2012 (drawn to A$70.9 million as at 30 June 2010) and an A$482.3 million facility expires on 5 December 2013 (drawn to A$301.4 million as at 30 June 2010).

(b) Bank loans, secured

	(b) Bank loans, secured
	Facility	Amounts drawn down in A$M equivalents AUD GBP EUR Total – 26.7 – 26.7 – 106.2 – 106.2 – – – – – 5.1 6.2 11.3 – – – – 300.0 – – 300.0 – 26.7 – 26.7 300.0 111.3 6.2 417.5 – (15.2) 26.7 402.3
	Bank loan1 2010 2009 Bank loan2 2010 2009 Bank loan3 2010 2009
	Total 2010
	2009
	Less: Unamortised borrowing costs 2010 2009
	Total secured bank loans 2010
	2009

A controlled entity has a bank loan of A$26.7 million denominated in British pounds sterling. The facility expires on 30 September 2011. 2. The terms of this facility were amended in August 2009 and the facility, which has not been drawn at 30 June 2010, is now classified as unsecured (refer to note 18(e)).
This facility was cancelled and the loan outstanding was repaid on 25 September 2009.

Security for all loans referred to above is by way of first and second ranking charges over various assets of the Consolidated Entity (refer also to note 12).

(c) Euro medium‑term notes, unsecured

Goodman Australia Finance Pty Limited, a controlled entity of GIT, has on issue A$441.2 million (2009: A$513.1 million) euro medium-term notes. All notes were issued at a fixed coupon of 9.75%, payable annually. The notes mature on 16 July 2018. The notes are listed on the Singapore Stock Exchange and the market value of the notes using the quoted price at 30 June 2010 was A$503.2 million (2009: A$343.0 million).

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

18. Interest bearing liabilities (cont)

(d) Foreign private placement, unsecured

As at 30 June 2010, the Consolidated Entity has an unsecured foreign private placement of A$38.3 million (2009: A$46.9 million) denominated in euros. The facility was drawn in July 2008 and expires on 30 June 2023.

(e) Finance facilities

	(e) Finance facilities
		Consolidated Facilities4 Facilities available utilised $M $M 2,850.2 1,781.1 45.2 26.7 441.2 441.2 38.3 38.3 – 43.1 ~~3,374.9~~ ~~2,330.4~~ 3,388.1 3,277.5 611.7 402.3 513.1 513.1 46.9 46.9 – 50.0 ~~4,559.8~~ ~~4,289.8~~
	At 30 June 2010 Bank loans, unsecured1 Bank loans, secured2 Euro medium-term notes, unsecured Foreign private placement, unsecured Bankguarantees3


	At 30 June 2009 Bank loans, unsecured Bank loans, secured Euro medium-term notes, unsecured Foreign private placement, unsecured Bankguarantees3

At 30 June 2010, the Consolidated Entity had agreed the following unsecured facilities that had not been drawn: A$17.7 million, denominated in British pounds sterling, expires on 1 September 2012; A$58.7 million, denominated in US dollars, was signed on 28 June 2010 and expires on 28 June 2013; A$58.7 million, denominated in US dollars, was signed on 24 June 2010 and expires on 24 June 2013; and A$168.1 million, denominated in US dollars and Japanese yen, was signed on 4 June 2010 and expires on 4 June 2015.
At 30 June 2010, the Consolidated Entity had agreed the following secured facilities that had not been drawn: A$12.2 million, denominated in euros, was signed on 29 April 2010 and expires on 30 April 2011; and A$6.4 million, denominated in euros, was signed on 29 June 2010 and expires on 31 December 2011.
Bank guarantees relate to the Consolidated Entity’s unsecured facilities.
On 17 August 2010, the Consolidated Entity entered into a new £85 million (A$150 million) unsecured loan with an international bank. The loan is revolving and available in multiple currencies for a three year term.

19. Employee benefits

	Aggregate liability for employee benefts including on‑costs Note	Consolidated 2010 2009 $M $M 3.8 4.3 0.8 0.8 28.0 6.3 ~~32.6~~ ~~11.4~~ 0.9 0.8 22.0 17.4 – 0.2 ~~22.9~~ ~~18.4~~
	Current Annual leave Long service leave Other employee beneftsprovision


	Non‑current Long service leave Defned beneft pension obligations 19(a) Other employee beneftsprovision

19. Employee benefits (cont)

(a) Liability for defined benefit obligation

During the current and prior financial year, the Consolidated Entity operated two United Kingdom defined benefit funds of the “final salary” type, both of which are closed to new entrants. Employer contributions payable over the annual period after the balance date will be re-assessed on conclusion of the actuarial valuations of the defined benefit funds due in the financial year ending 30 June 2011.

There have been no changes to the scheme rules in the current and prior financial years.

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.

2010
2009
$M
$M
Change in beneft obligation
Beneft obligation at the beginning of the year
59.4
52.4
Current service cost
1.0
1.0
Interest cost
3.1
3.6
Past service cost
–
1.1
Actuarial losses
9.8
2.2
Members’ contributions
0.1
0.3
Curtailments or settlements
(0.1)
(0.1)
Benefts paid
(0.6)
(0.5)
Effect of foreign currencytranslation
(8.5)
(0.6)
~~Beneft obligation at the end of theyear~~
~~64.2~~
~~59.4~~
Analysis of defned beneft obligation
Funds that are whollyorpartlyfunded
64.2
59.4
Change in fund assets
Fair value of fund assets at the beginning of the year
42.0
49.1
Expected return on fund assets
2.2
3.4
Actuarial gains/(losses)
3.4
(11.5)
Employer contributions
1.2
1.1
Members’ contributions
0.1
0.3
Curtailments or settlements
(0.1)
(0.1)
Benefts paid
(0.6)
(0.5)
Effect of foreign currencytranslation
(6.0)
0.2
~~Fair value of fund assets at the end of theyear~~
~~42.2~~
~~42.0~~
Fundingdefcit at the end of theyear
22.0
17.4
~~Net liability recognised at the end of theyear~~
~~22.0~~
~~17.4~~
Components of pension cost
Current service cost
1.0
1.0
Interest cost
3.1
3.6
Expected return on fund assets
(2.2)
(3.4)
Past service cost
–
1.1
Effects of curtailments or settlements
(0.1)
–
~~Total cost recognised in income statement~~
~~1.8~~
~~2.3~~
Actuarial losses recognised in equity
(6.4)
(13.1)
Less: Deferred tax expense
1.9
3.8
~~Net actuarial losses recognised in equity~~
~~(4.5)~~
~~(9.3)~~

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

19. Employee benefits (cont)

(a) Liability for defined benefit obligation (cont)

Fund assets

The actual return on fund assets during the financial year was a $5.3 million gain (2009: $8.1 million loss). The weighted average asset allocation at the end of the financial year was as follows:

	2010 2009 % % Equities 65.7 62.0 Bonds 33.6 33.0 Property – 5.0 Cash 0.7 – ~~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.

				2010	2009
				% per	% per
				annum	annum
Weighted average assumptions used to determine beneft obligations
Discount rate				5.30	6.00
Rate of compensation increase				–	–
Weighted average assumptions used to determine net pension cost
Discount rate				6.00	6.00
Expected long-term return on fund assets				5.86	5.90
Rate of beneft increase				3.30	2.30
Rate of compensation increase				–	–
Historical information	2010	2009	2008	2007	2006
Beneft obligation at the end of the year ($M)	(64.2)	(59.4)	(52.4)	(69.5)	(67.5)
Fair value of fund assets at the end of the year ($M)	42.2	42.0	49.1	55.1	56.3
Fundingdefcit($M)	(22.0)	(17.4)	(3.3)	(14.4)	(11.2)
Difference between expected and actual return
on fund assets
Amount ($M)	3.1	(11.5)	(2.5)	(2.8)	(1.0)
Percentage of fund assets(%)	8.8	(25.9)	(5.0)	(5.0)	(2.0)
Experience (losses)/gains on fund liabilities
Amount ($M)	(11.2)	0.3	(0.6)	0.4	–
Percentage of fund liabilities(%)	(18.9)	0.6	1.0	1.0	–

(b) Share based payments

The Company provides equity based remuneration through the issue of shares under the LTIP. Under the LTIP, Goodman can offer performance rights (sometimes known as zero priced options) and options to its employees.

In prior financial years, Goodman offered options over securities under the EOP; however, during the current financial year the Directors conducted a review of Goodman’s remuneration methodologies and as a result the EOP was replaced with the LTIP. The design features of the LTIP more closely reflect the principles supported by Securityholders, including minimum three year vesting periods and relevant, transparent performance hurdles including relative total securityholder return (TSR) and growth in earnings per security (EPS).

Prior to the EOP, Australian based employees were able to participate 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.

19. Employee benefits (cont)

(b) Share based payments (cont)

Details of the Consolidated Entity’s equity based remuneration schemes are set out below.

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

	Consolidated
	2010 2009 $M $M
Share basedpayments expense/(credit)	5.4 (38.1)

The share based payments expense during the current financial year is in relation to the performance rights granted on 14 May 2010. During the prior financial year, the Directors 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 were unlikely to be achieved. Accordingly, the expense recognised in the income statement in previous periods was reversed. This resulted in a net credit to the income statement of $38.1 million.

(i) Long Term Incentive Plan (LTIP)

The LTIP was approved at the Annual General Meeting on 30 November 2009, and on 14 May 2010, the Consolidated Entity issued 49,949,409 performance rights under the LTIP. Each performance right issued under the LTIP entitles an employee to acquire a Goodman stapled security for nil consideration subject to the vesting conditions having been satisfied. The LTIP also provides for the issue of options, though this has not been utilised to date. If options were to be issued it would entitle an employee to acquire a Goodman stapled security on payment of the exercise price for the option subject to the vesting conditions having been satisfied.

Non-Executive Directors are not entitled to participate in the LTIP and no rights over stapled securities were issued to Non-Executive Directors during the financial year and up to the date of signature of the consolidated financial report.

Under the terms of the LTIP and decisions made by the Directors in accordance with the plan, issues of performance rights during the financial year to employees are subject to the following broad terms:

- the exercise of performance rights will be conditional on the Consolidated Entity achieving a TSR in excess of that achieved by 50% of listed entities in the Standard & Poor’s/ASX 200 index and an operating EPS outcome at least at the target level notified to the market over a three year “testing period” which ends on 30 June 2012 and continued employment (subject to special circumstances e.g. death, total and permanent disability, redundancy or retirement). These two measures are made in accordance with a graduating scale as set out in the LTIP scheme rules presented to Securityholders in November 2009;
- performance rights lapse on the earlier of approximately five years from the offer or the termination of the employee’s employment (unless such termination is due to special circumstances);
- performance rights vest in three equal tranches on 3 September 2012, 2 September 2013 and 1 September 2014; and + the majority of Australian based employees were also permitted to receive up to $1,000 of restricted Goodman stapled securities under guidelines issued by the Australian Tax Office. The allotment of these securities was made under the Goodman Tax Exempt Plan, as approved by the Board.

The movement in the number of performance rights is as follows:

	Number of rights
	2010 2009
Outstanding at the beginning of the year Granted Exercised Forfeited	– – 49,949,409 – – – (135,799) –
Outstanding at the end of theyear	49,813,610 –
Exercisable at the end of theyear	– –

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

19. Employee benefits (cont)

(b) Share based payments (cont)

The model inputs for performance rights awarded during the financial year ended 30 June 2010 include the following:

	Rights issued on
	14 May 2010
Fair value at measurement date ($)	0.60
Security price ($)	0.67
Exercise price ($)	–
Expected volatility (%)	64.94
Rights expected weighted average life (years)	3.3
Distribution/dividend yield per annum (%)	5.23
Average risk free rate of interestper annum(%)	5.04

The fair value of services received in return for performance rights granted under the LTIP is measured by reference to the fair value of the performance rights granted. The estimate of the fair value of the services received is measured as follows:

- TSR performance hurdle: these rights have been valued using a Monte Carlo simulation model which simulated total returns for each of the ASX 200 stocks, and discounted the future value of any potential future vesting performance rights to arrive at a present value. The model uses statistical analysis to forecast total returns, based on expected parameters of variance and covariance; and
- EPS performance hurdle: these rights have been valued as a granted call option, using the standard Black Scholes model with a continuous dividend yield.

(ii) Executive Option Plan

No employees were granted options under the EOP during the financial year and up to the date of signature of the consolidated financial report. Options previously issued under the EOP entitle 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 satisfied.

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 five 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 fifth 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 was 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 Number of exerciseprice securities
	2010 2009 2010 2009 $ $
Outstanding at the beginning of the year Granted Exercised Forfeited	4.97 6.23139,398,445102,812,279 – 3.07 – 55,175,000 – 2.59 – (33,334) 4.69 6.03 (1,077,000) (18,555,500)
Outstanding at the end of theyear1	4.92 4.97138,321,445 139,398,445
Exercisable at the end of theyear	4.00 3.80 1,051,148 1,151,148

As at 30 June 2010, the options outstanding have exercise prices in the range of $2.98 to $7.14 (2009: $3.04 to $7.23).

19. Employee benefits (cont)

(b) Share based payments (cont)

(iii) Employee Securities Acquisition Plan (ESAP)

No employees were granted securities under the ESAP during the financial year and up to the date of signature of the consolidated financial report.

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

	Weighted average exerciseprice Number of securities
	2010 2009 2010 2009 $ $
Outstanding at the beginning of the year Forfeited	5.63 5.63 41,649,309 41,649,309 5.63 – (5,326,833) –
Outstanding at the end of theyear1	5.64 5.63 36,322,476 41,649,309
Exercisable at the end of theyear	4.09 3.83 3,192,158 4,723,605

The outstanding securities under the ESAP at 30 June 2010 have an exercise price in the range of $2.59 to $7.23 (2009: $2.59 to $7.23).

20. Provisions

	Consolidated	Distributions to Onerous Rental Securityholders contracts guarantees Other Total $M $M $M $M $M – 24.0 11.8 1.2 37.0 212.9 3.9 4.2 0.1 221.1 (92.6) (8.4) (6.1) (1.2) (108.3) – (3.9) (2.0) – (5.9) ~~120.3~~ ~~15.6~~ ~~7.9~~ ~~0.1~~ ~~143.9~~ 120.3 1.2 3.8 0.1 125.4 – 14.4 4.1 – 18.5 ~~120.3~~ ~~15.6~~ ~~7.9~~ ~~0.1~~ ~~143.9~~
	Balance at the beginning of the year Provisions made Provisions used Effect of foreign currencytranslation

	~~Balance at the end of theyear~~
	Analysed as: Current Non-current

Onerous contracts

The provision for onerous contracts includes both onerous lease provisions and onerous fund management contract provisions.

Onerous lease provisions relate to future lease costs of office accommodation vacated by Goodman. The leases expire at various dates between July 2010 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.

Onerous management contracts arise where the net operating result is forecast to be a loss over the remaining contract life. The principal management contract to which the provision relates expires in December 2012.

Rental guarantees

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 disposal contracts.

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

	21. Issued capital	Consolidated 2010 2009 6,369,751,394 2,779,651,716 (36,322,476) (41,649,311) ~~6,333,428,918~~ ~~2,738,002,405~~ $M $M 380.1 249.8 (1.4) (1.5) (10.4) (6.7) ~~368.3~~ ~~241.6~~ 6,584.9 5,324.7 (142.0) (95.6) ~~6,442.9~~ ~~5,229.1~~ (222.8) (225.9) ~~6,220.1~~ ~~5,003.2~~ ~~6,588.4~~ ~~5,244.8~~
	Securities on issue Number of securities on issue on the ASX Treasurysecurities issued under the ESAP

	~~Balance included in issued capital~~

	Parent Entity Issued capital, fully paid Treasury securities Issue costs

	~~Equity attributable to Shareholders~~
	GIT Issued capital, fully paid Issue costs


	Amounts attributable to Shareholders1

	~~Equity attributable to Unitholders~~

	~~Total issued capital~~

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.

21. Issued capital (cont)

	Securities	Securities	Treasury	Treasury					Treasury	Treasury
		per ASX	securities		Consolidated			Equity	securities		Consolidation			GIT	Parent	Entity
	M	M	M	M	M	M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M
	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009	2010	2009
Balance at the beginning
of the year
Securities on issue at 1 July	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 at 1 July	–	–	(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~~
Movements during the year
– 3,196,599,473 securities
issued under the institutional
placement and entitlement
offer (2009: 1,062,207,693)	3,196.6	1,062.2	–	–	3,196.6	1,062.2	1,278.6	956.0	–	–	–	–	1,156.9	904.1	121.7	51.9
– 393,300,000 securities
issued on exercise of
options by Macquarie Group	393.3	–	–	–	393.3	–	111.9	–	–	–	–	–	103.3	–	8.6	–
– nil securities issued to
employees on exercise of
options (2009: 33,334)	–	0.1	–	–	–	0.1	–	0.1	–	–	–	–	–	0.1	–	–
– 200,205 securities issued
to employees under the
Goodman Tax Exempt Plan
(2009: nil)	0.1	–	–	–	0.1	–	–	–	–	–	–	–	–	–	–	–
– 5,326,833 treasury securities
forfeited (2009: nil)	–	–	5.4	–	5.4	–	(5.4)	–	8.6	–	3.1	–	–	–	0.1	–
– nil securities issued under the
earn-out provisions of the
Eurinpro acquisition
(2009: 1,605,684)	–	1.6	–	–	–	1.6	–	5.0	–	–	–	–	–	4.7	–	0.3
– nil treasury securities vested
but not converted to securities
under the ESAP
(2009: 1,066,669)	–	–	–	(1.1)	–	(1.1)	–	(3.2)	–	–	–	–	–	–	–	(3.2)
	6,369.7	2,779.7	(36.3)	(41.7)	6,333.4	2,738.0	6,795.8	5,410.7	(55.0)	(63.6)	(222.8)	(225.9)	6,584.9	5,324.7	378.7	248.3
Less: Issue costs	–	–	–	–	–	–	(152.4)	(102.3)	–	–	–	–	(142.0)	(95.6)	(10.4)	(6.7)
Balance at the end of
theyear	6,369.7	2,779.7	(36.3)	(41.7)	6,333.4	2,738.0	6,643.4	5,308.4	(55.0)	(63.6)	(222.8)	(225.9)	6,442.9	5,229.1	368.3	241.6
Comprises:
Securities on issue at 30 June	6,369.7	2,779.7	–	–	6,369.7	2,779.7	6,795.8	5,410.7	–	–	(169.1)	(163.8)	6,584.9	5,324.7	380.1	249.8
Treasury securities on issue at
30 June	–	–	(36.3)	(41.7)	(36.3)	(41.7)	–	–	(55.0)	(63.6)	(53.7)	(62.1)	–	–	(1.4)	(1.5)
Less: Issue costs	–	–	–	–	–	–	(152.4)	(102.3)	–	–	–	–	(142.0)	(95.6)	(10.4)	(6.7)
	~~6,369.7 ~~	~~2,779.7~~	~~(36.3)~~	~~(41.7) ~~	~~6,333.4 ~~	~~2,738.0~~	~~6,643.4 ~~	~~5,308.4~~	~~(55.0)~~	~~(63.6) ~~	~~(222.8) ~~	~~(225.9) ~~	~~6,442.9 ~~	~~5,229.1~~	~~368.3~~	~~241.6~~

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

22. Reserves

		Consolidated 2010 2009 Note $M $M 22(a) (1,871.5) (1,521.0) 22(b) (156.4) (235.9) 22(c) (414.3) (62.8) 22(d) 143.4 175.8 22(e) (7.5) (16.0) 22(f) (15.0) (12.3) ~~(2,321.3)~~ ~~(1,672.2)~~
	Asset revaluation reserve Cash fow hedge reserve Foreign currency translation reserve Capital profts reserve Employee compensation reserve Defned beneft funds actuarial losses reserve

	~~Total reserves~~

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

	Shareholders	Shareholders	Unitholders	Unitholders	Securityholders	Securityholders
	2010	2009	2010	2009	2010	2009
	$M	$M	$M	$M	$M	$M
(a) Asset revaluation reserve
Balance at the beginning of the year	(260.3)	(49.6)	(1,260.7)	(307.3)	(1,521.0)	(356.9)
Increase/(decrease) due to revaluation of
listed/unlisted investments, net of tax	20.8	(21.9)	14.7	8.1	35.5	(13.8)
Transfers to capital profts reserve	15.3	52.7	31.0	90.4	46.3	143.1
Transfers from accumulated losses	(144.2)	(243.8)	(406.0)	(1,058.5)	(550.2)	(1,302.3)
Fair value of available for sale equity
securities transferred to the income
statement on disposal	–	1.3	–	2.8	–	4.1
Effect of foreign currencytranslation	31.6	1.0	86.3	3.8	117.9	4.8
~~Balance at the end of theyear~~	~~(336.8)~~	~~(260.3)~~	~~(1,534.7)~~	~~(1,260.7)~~	~~(1,871.5)~~	~~(1,521.0)~~
Refer to notes 1(g) and 1(l) for the accounting	policies relating to this		reserve.
(b) Cash fow hedge reserve
Balance at the beginning of the year	(12.7)	(0.2)	(223.2)	72.6	(235.9)	72.4
Change in value of fnancial instruments	0.9	(12.5)	(0.4)	(282.2)	0.5	(294.7)
Transfers to the income statement	1.1	–	52.7	(16.4)	53.8	(16.4)
Effect of foreign currencytranslation	1.6	–	23.6	2.8	25.2	2.8
~~Balance at the end of theyear~~	~~(9.1)~~	~~(12.7)~~	~~(147.3)~~	~~(223.2)~~	~~(156.4)~~	~~(235.9)~~
Refer to note 1(s) for the accounting policy relating to this reserve.
(c) Foreign currency translation reserve
Balance at the beginning of the year	7.9	(17.1)	(70.7)	23.9	(62.8)	6.8
Net exchange differences on conversion of
foreign operations	(23.2)	25.0	(328.3)	(94.6)	(351.5)	(69.6)
~~Balance at the end of theyear~~	~~(15.3)~~	~~7.9~~	~~(399.0)~~	~~(70.7)~~	~~(414.3)~~	~~(62.8)~~
(d) Capital profts reserve
Balance at the beginning of the year	58.1	98.3	117.7	210.8	175.8	309.1
Transfers from asset revaluation reserve	(15.3)	(52.7)	(31.0)	(90.4)	(46.3)	(143.1)
Transfers to/(from) accumulated losses	–	0.9	–	(2.7)	–	(1.8)
Effect of foreign currencytranslation	0.3	11.6	13.6	–	13.9	11.6
~~Balance at the end of theyear~~	~~43.1~~	~~58.1~~	~~100.3~~	~~117.7~~	~~143.4~~	~~175.8~~

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

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

Reserves (cont)

22. Reserves (cont)
	Shareholders		Unitholders		Securityholders
	2010	2009	2010	2009	2010	2009
	$M	$M	$M	$M	$M	$M
(e) Employee compensation reserve
Balance at the beginning of the year	(16.0)	36.6	–	–	(16.0)	36.6
Expense/(credit) recognised in the
income statement	5.4	(38.1)	–	–	5.4	(38.1)
Difference between the ESAP interest
income and distribution	–	8.6	–	–	–	8.6
Transfers to accumulated losses	4.4	–	–	–	4.4	–
Other	(0.6)	(25.2)	–	–	(0.6)	(25.2)
Effect of foreign currencytranslation	(0.7)	2.1	–	–	(0.7)	2.1
~~Balance at the end of theyear~~	~~(7.5)~~	~~(16.0)~~	~~–~~	~~–~~	~~(7.5)~~	~~(16.0)~~
Refer to note 1(v) for the accounting policy relating to this reserve.
(f) Defned beneft funds actuarial losses reserve
Balance at the beginning of the year	(12.3)	(2.9)	–	–	(12.3)	(2.9)
Actuarial losses, net of tax	(4.5)	(9.3)	–	–	(4.5)	(9.3)
Effect of foreign currencytranslation	1.8	(0.1)	–	–	1.8	(0.1)
~~Balance at the end of theyear~~	~~(15.0)~~	~~(12.3)~~	~~–~~	~~–~~	~~(15.0)~~	~~(12.3)~~

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

23. Accumulated losses

The accumulated losses 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 2010 2009 2010 2009 2010 2009 $M $M $M $M $M $M (93.7) (23.3) (20.1) (10.5) (113.8) (33.8) (263.0) (317.4) (299.6) (802.6) (562.6) (1,120.0) 144.2 243.8 406.0 1,058.5 550.2 1,302.3 – (0.9) – 2.7 – 1.8 (4.4) – – – (4.4) – 1.2 4.1 (214.1) (268.2) (212.9) (264.1) ~~(215.7)~~ ~~(93.7)~~ ~~(127.8)~~ ~~(20.1)~~ ~~(343.5)~~ ~~(113.8)~~
	Balance at the beginning of the year Loss for the year Transfers to asset revaluation reserve Transfers (from)/to capital profts reserve Transfers from employee compensation reserve Distributions declared1

	~~Balance at the end of theyear~~

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

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

24. Other non-controlling interests

Other non-controlling interests in controlled entities comprise:

	24. Other non-controlling interests Other non-controlling interests in controlled entities comprise:
		Consolidated 2010 2009 $M $M 318.8 318.8 479.3 – ~~798.1~~ ~~318.8~~
	Goodman PLUS Trust hybrid securities CIC convertiblepreference securities

Goodman PLUS Trust hybrid securities

Goodman PLUS Trust, a controlled entity of GIT, has 3,269,665 hybrid securities on issue at a face value of $100 each. The hybrid securities are preferred, perpetual non-call securities which are listed on the ASX. Goodman PLUS Trust pays, at its discretion, distributions at a market rate plus a margin. The hybrid securities may be exchanged or repurchased in certain circumstances.

The non-controlling interest balance is net of issue costs.

CIC convertible preference securities

On 16 October 2009, Goodman received $500 million from the issue of three tranches of convertible preference securities to CIC. Each tranche will receive a coupon of 10% per annum 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. During the financial year and up to the date of signature of the consolidated financial report none of the securities were converted.

The non-controlling interest balance is net of issue costs.

25. Disposals of interests in controlled entities

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

	Total $M Cash consideration received: – On part disposal of Goodman China Investments1 98.3 – On disposal of entities to Princeton Lux and Princeton Jersey2 75.0 – On disposal of other specialpurpose entities in Continental Europe3 20.0 ~~Net cash infow~~ ~~193.3~~

On 9 September 2009, Goodman effectively disposed of 80% of its interest in Goodman China Investments, which owned four stabilised investment properties, to Canada Pension Plan Investment Board. The principal impact on the Consolidated Entity’s balance sheet was a decrease in investment properties within assets classified as held for sale of $151.4 million.
On 11 June 2010, Goodman effectively disposed of 80% of its interest in four special purpose vehicles to two JVEs with CB Richard Ellis Realty Trust in Continental Europe (Princeton Lux) and the United Kingdom (Princeton Jersey). The net consideration for the 80% share was A$75.0 million, which included repayment of inter-company loans provided to the special purpose vehicles. The principal impact on the Consolidated Entity’s balance sheet was a decrease in investment properties of $79.5 million.
In addition to the disposals of controlled entities to Princeton Lux and Princeton Jersey, during the financial year, controlled entities in Continental Europe disposed of several other special purpose development property entities for a net consideration of $20.0 million (2009: $12.4 million). There is no significant impact on the Consolidated Entity’s balance sheet as a result of these disposals.

26. Commitments

		Consolidated 2010 2009 $M $M 26.8 21.8 8.8 9.1 – – ~~35.6~~ ~~30.9~~ 7.6 3.9 19.8 12.4 29.5 39.0 ~~56.9~~ ~~55.3~~
	Capital expenditure commitments Contracted but not provided for and payable: – Within one year – One year or later and no later than fve years – Later than fveyears


	Non‑cancellable operating lease commitments Future operating lease commitments not provided for in the fnancial statements and payable: – Within one year – One year or later and no later than fve years – Later than fveyears

At 30 June 2010, the Consolidated Entity was also committed to expenditure on inventories of $6.1 million (2009: $nil) and expenditure in relation to construction contracts of $81.1 million (2009: $nil).

Commitment to investment in funds managed by Goodman

At 30 June 2010, the Consolidated Entity was committed to invest A$97.1 million into GHKLF (2009: A$102.2 million).

In 2008, Goodman committed to subscribe for the lower of €222 million (A$315 million) or such amount as represents 40% of the issued and committed but uncalled GELF units, which is the maximum that Goodman is currently permitted to hold under the terms of the GELF constitutional documents. That commitment has been drawn down as and when required under the capital management plan of GELF. At 30 June 2010, that commitment had been drawn to €152 million (A$216 million), although based on GELF’s latest current unit value, the Consolidated Entity is only able to invest a further €15 million (A$21 million) before it reaches the maximum permitted holding of 40% of the issued and committed but uncalled GELF units.

At 30 June 2010, the Consolidated Entity was committed to invest A$12.0 million (2009: A$nil) into GADF, A$8.5 million into GCLHL (2009: A$nil) and A$4.8 million into Princeton Lux (2009: A$nil) to fund the acquisitions of completed properties by these associates and JVEs.

Goodman also has a commitment to provide additional shareholder funding of up to A$0.9 million (2009: A$2.0 million) into HDL, A$3.6 million (2009: A$9.5 million) into Seaview, and A$30.5 million (2009: 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 2010 is $78.1 million (2009: $54.4 million).

Guaranteed land payments – M7 Business Hub development

A commitment exists at 30 June 2010 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 2010, the maximum amount payable, in the event that there are no further disposals of the lots of land between now and 31 December 2011, is $13.0 million (2009: $16.8 million).

Goodman Group Financial Report 2010

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

26. Commitments (cont)

Non‑cancellable operating lease receivables from investment property customers

		Consolidated 2010 2009 $M $M 173.8 155.3 532.6 415.2 238.6 143.9 ~~945.0~~ ~~714.4~~
	Non‑cancellable operating lease commitments receivable: – Within one year – One year or later and no later than fve years – Later than fveyears

27. Notes to the cash flow statement

(a) Reconciliation of cash

For the purpose of the cash flow statement, cash includes cash on hand at the bank and short-term deposits at call. Cash at the balance date as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:

		Consolidated 2010 2009 $M $M ~~515.1~~ ~~242.5~~ Consolidated 2010 2009 $M $M (510.3) (1,096.0) (2.6) (1.8) 2.7 (52.5) 8.3 9.0 5.4 (38.1) 210.0 527.0 145.4 229.7 236.8 508.7 154.1 153.6 1.0 (23.3) 250.8 216.3 (5.8) 94.8 20.6 (17.9) (45.5) 30.4 (24.3) 27.8 31.0 (9.1) 226.8 342.3 52.8 134.3 (73.5) (124.3) (10.9) (31.5) ~~195.2~~ ~~320.8~~

	~~Cash assets~~
	(b) Reconciliation of loss after income tax to net cash provided by operating activities
	Loss for theyear
	Items classifed as investing/fnancing activities Net gain on disposal of investment properties Net loss/(gain)on disposal of equityinvestments
	Non‑cash items Amortisation and depreciation Share based payments expense/(credit) Net loss on fair value adjustments on investment properties Impairment losses Share of net results of equity accounted investments Net fnancing costs paid Income tax expense/(beneft)
	Operating proft before changes in working capital and provisions Changes in assets and liabilities during the year: – (Increase)/decrease in receivables – Decrease/(increase) in inventories – (Increase)/decrease in other assets – (Decrease)/increase in payables – Increase/(decrease)inprovisions(includingemployee benefts)
	Distributions received from equity accounted investments Net fnancing costs paid Net income taxespaid

	~~Net cashprovided by operating activities~~

(c) Non‑cash financing and investing activities

During the current financial year, GAIF activated its distribution reinvestment plan, and the Consolidated Entity received its distribution of $63.7 million in the form of units in GAIF. In the prior financial year, the Consolidated Entity transferred three special purpose entities and one investment property to ABPP in return for equity. The combined consideration for these assets was $321.8 million.

100

28. Controlled entities

The significant controlled companies and trusts of Goodman Limited are set out below:

28. Controlled entities The signifcant controlled companies and trusts of Goodman Limited are set out below:
Signifcant controlled companies Country of incorporation	Interest held
	2010 2009 % %
Goodman Finance Australia Limited Australia Goodman Funds Management Limited Australia Goodman Singapore Industrial Management (Aust) Pty Limited Australia Goodman Property Services (Aust) Pty Limited Australia Goodman Vineyard Pty Limited Australia Goodman Funds Management Australia Limited Australia Goodman Singapore Holdings (Aust) Pty Limited Australia Goodman 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 Logistics Developments (France) Sàrl France Goodman Nantes Logistics (France) Sàrl France Goodman Oracle Logistics (France) Sàrl France Goodman Germany GmbH Germany SMH Sparkasse Mannesmann Hoffmeister Projektentwicklung GmbH & Co. KG Germany SMH Sparkasse Mannesmann Hoffmeister Projektentwicklung Verwaltungsgesellschaft mbH Germany Goodman Asia Limited Hong Kong Goodman China Limited Hong Kong Goodman Hungary Ingatlankezelo Kft Hungary Goodman Italy srl Italy ABPP Investment 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 Thurrock (Jersey) Limited Jersey Goodman UAE (Jersey) Limited Jersey Goodman West Thurrock(Jersey)Limited Jersey	100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 99.7 99.7 94.6 94.6 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Goodman Group Financial Report 2010

101

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

28. Controlled entities (cont)

28. Controlled entities (cont)
Signifcant controlled companies Country of incorporation	Interest held
	2010 2009 % %
GELF Management (Lux) Sàrl Luxembourg 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 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 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 Singapore Pte Limited Singapore Ascendas Globlal 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 SL Spain Goodman Real Estate (Spain) SL Spain Goodman Växjö Logistics (Sweden) AB Sweden 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 Dollhurst Limited United Kingdom Dollmist Limited United Kingdom Dollplace Limited United Kingdom Frenbury Properties Limited United Kingdom Goodman BidCo 1 (UK) Limited United Kingdom Goodman BidCo 3 (UK) Limited United Kingdom Goodman Business Parks (UK) Limited United Kingdom Goodman Business Services (UK) Limited United Kingdom Goodman Development Management (UK) Limited United Kingdom Goodman Group Holdings (UK) Limited United Kingdom Goodman Hinckley (UK) Limited United Kingdom Goodman Logistics Developments(UK)Limited United Kingdom	100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 60.0 60.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 – 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 99.6 99.6 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

~~102~~

28. Controlled entities (cont)

28. Controlled entities (cont)
Signifcant controlled companies Country of incorporation	Interest held
	2010 2009 % %
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 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 Top Co (UK) Limited United Kingdom Goodman UK Limited United Kingdom Goodman UK Pension Plan Trustees Limited United Kingdom Junegrange Ltd United Kingdom Junehurst Limited United Kingdom Property Management Employment Services Ltd United Kingdom Signifcant controlled unit trusts Country of establishment	100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Interest held
	2010 2009 % %
BDE Unit Trust Australia Biloela Street Unit Trust Australia Binary No. 2 Trust Australia Cambridge Offce Park Trust Australia Carter Street Trust Australia CC Trust Australia Clayton 3 Trust Australia Edinburgh Trust Australia Euston Road Subtrust Australia GEBPF Investment Trust Australia GIL Holdings (Aust) Trust 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 Jersey Holdings 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 PLUS Trust Australia Goodman Stockyards Trust Australia Goodman Treasury Trust Australia Highbrook Trust Australia Hill Road Trust Australia HK Tsuen Wan Development Trust Australia Homebush Subtrust Australia IBC Trust Australia MGA Industrial Portfolio Trust Australia MIP Trust Australia Orion Road Trust Australia	100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Goodman Group Financial Report 2010

103

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

28. Controlled entities (cont)

Signifcant controlled companies Country of incorporation	Interest held
	2010 2009 % %
Penrose Trust Australia Perth Leasing Trust Australia Port Melbourne 3 Trust Australia Regal Business Park Trust Australia Saunders Street Trust Australia West Melbourne Trust Australia Waterloo Road Offce Trust Australia Harwell Unit Trust Jersey	100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

29. Interest in joint venture operation

The Consolidated Entity participates equally in a joint venture operation with Austral relating to the M7 Business Hub development 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 specified dates subject to certain conditions (refer to note 26).

Included in the assets and liabilities and the revenue and expenses of the Consolidated Entity are the following items which represent the Consolidated Entity’s interest in the assets and liabilities employed in the joint venture operation and the revenue and expenses recorded by the joint venture operation. These amounts are recorded in accordance with the Consolidated Entity’s accounting policies (refer to note 1).

	Consolidated Entity’s accounting policies (refer to note 1).
		Consolidated 2010 2009 $M $M 25.7 13.5 16.6 33.1 (46.5) (21.5) ~~(4.2)~~ ~~25.1~~ 7.6 6.1 (7.5) (3.7) – 8.2 ~~0.1~~ ~~10.6~~
	Balance sheet Trade receivables Inventories Payables

	~~Net assets~~
	Contribution to proft Sale of inventories Cost of sales Income tax beneft

	~~Proft after tax~~

30. Related parties

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

Non‑Executive Directors Executive Director Mr Ian Ferrier, AM Mr Gregory Goodman Mr David S Clarke, AO[1] Mr Patrick Goodman Executives[2] Ms Diane Grady, AM Mr Anthony Rozic Mr John Harkness Mr Nick Kurtis Mr James Hodgkinson Mr Michael O’Sullivan Ms Anne Keating Mr Nick Vrondas[3] Mr Jim Sloman, OAM

Mr David Clarke retired as a Director on 2 July 2009.
Mr David van Aanholt was a key management person in the prior financial year until his resignation effective 11 February 2009.
Mr Nick Vrondas became a key management person on his appointment as Chief Financial Officer on 24 February 2009.

104

30. Related parties (cont)

Key management personnel compensation

The key management personnel compensation totals are as follows:

		Consolidated Goodman Limited1 2010 2009 2010 2009 $M $M $M $M 5.8 6.5 – – 0.2 0.2 – – 1.4 (7.3) – – – 0.1 – – ~~7.4~~ ~~(0.5)~~ ~~–~~ ~~–~~
	Short-term employee benefts Post-employment benefts Equity compensation benefts Long-term employee benefts

The Directors’ compensation is paid by Goodman Property Services (Aust) Pty Limited, a wholly-owned 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 25 to 35.

Loans to key management personnel and their related parties

On 6 August 2008, an interest free loan of $219,852 to Mr Michael O’Sullivan was repaid. The interest that would have been charged on an arm’s length basis from 1 July 2008 until the date of repayment amounted to $1,825.

Rights and options over equity instruments

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

								Vested
								but not
		Held	Granted as			Held	Vested	exercised
		at the start	compen‑			at the end	during	at the end
	Year	of theyear1	sation	Exercised	Forfeited	of theyear	theyear	of theyear
Executive Director
Mr Gregory Goodman	2010	–	3,900,000	–	–	3,900,000	–	–
	2009	–	–	–	–	–	–	–
Executives
Mr Anthony Rozic	2010	–	2,604,167	–	–	2,604,167	–	–
	2009	–	–	–	–	–	–	–
Mr Nick Kurtis	2010	–	2,604,167	–	–	2,604,167	–	–
	2009	–	–	–	–	–	–	–
Mr Michael O’Sullivan	2010	–	875,000	–	–	875,000	–	–
	2009	–	–	–	–	–	–	–
Mr Nick Vrondas	2010	–	2,083,333	–	–	2,083,333	–	–
	2009	–	–	–	–	–	–	–

These figures represent the securities held at the later of either the start of the financial year or the date of becoming a key management person.

Goodman Group Financial Report 2010

105

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

30. Related parties (cont)

Rights and options over equity instruments (cont)

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

								Vested
								but not
		Held	Granted as			Held	Vested	exercised
		at the start	compen‑			at the end	during	at the end
	Year	of theyear1	sation	Exercised	Forfeited	of theyear	theyear	of theyear
Executive Director
Mr Gregory Goodman	2010	9,700,000	–	–	–	9,700,000	–	–
	2009	2,700,000	7,000,000	–	–	9,700,000	–	–
Executives
Mr Anthony Rozic	2010	5,000,000	–	–	–	5,000,000	–	–
	2009	1,500,000	3,500,000	–	–	5,000,000	–	–
Mr Nick Kurtis	2010	5,000,000	–	–	–	5,000,000	–	–
	2009	1,500,000	3,500,000	–	–	5,000,000	–	–
Mr Michael O’Sullivan	2010	5,000,000	–	–	–	5,000,000	–	–
	2009	1,500,000	3,500,000	–	–	5,000,000	–	–
Mr Nick Vrondas	2010	4,250,000	–	–	–	4,250,000	–	–
	2009	4,250,000	–	–	–	4,250,000	–	–

These figures represent the securities held at the later of either the start of the financial year or the date of becoming a key management person. Mr Nick Vrondas became a key management person on his appointment as Chief Financial Officer on 24 February 2009.

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

								Vested
								but not
		Held	Granted as			Held	Vested	exercised
		at the start	compen‑			at the end	during	at the end
	Year	of theyear1	sation	Exercised	Forfeited	of theyear	theyear	of theyear
Executive Director
Mr Gregory Goodman	2010	5,955,990	–	–	–	5,955,990	–	651,996
	2009	5,955,990	–	–	–	5,955,990	–	651,996
Executives
Mr Anthony Rozic	2010	2,733,496	–	–	–	2,733,496	–	244,498
	2009	2,733,496	–	–	–	2,733,496	–	244,498
Mr Nick Kurtis	2010	2,683,496	–	–	–	2,683,496	–	244,498
	2009	2,683,496	–	–	–	2,683,496	–	244,498
Mr Michael O’Sullivan	2010	2,705,746	–	–	–	2,705,746	–	285,248
	2009	2,705,746	–	–	–	2,705,746	–	285,248
Mr Nick Vrondas	2010	1,200,000	–	–	–	1,200,000	–	–
	2009	1,200,000	–	–	–	1,200,000	–	–

These figures represent the securities held at the later of either the start of the financial year or the date of becoming a key management person.

106

30. Related parties (cont)

Movement in ordinary securities

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

		Held at			Held at
		the start			the end
	Year	of theyear1	Acquisitions	Disposals2	of theyear
Non‑Executive Directors
Mr Ian Ferrier	2010	107,718	192,121	–	299,839
	2009	10,188	97,530	–	107,718
Mr Patrick Goodman	2010	76,294,926	75,549,345	(145,888,279)	5,955,992
	2009	74,398,414	36,625,386	(34,728,874)	76,294,926
Ms Diane Grady	2010	104,100	104,100	–	208,200
	2009	30,000	74,100	–	104,100
Mr John Harkness	2010	117,460	151,908	–	269,368
	2009	21,931	95,529	–	117,460
Mr James Hodgkinson	2010	627,151	627,151	–	1,254,302
	2009	426,632	200,519	–	627,151
Ms Anne Keating	2010	152,433	239,179	(86,746)	304,866
	2009	53,583	98,850	–	152,433
Mr Jim Sloman	2010	99,103	131,258	–	230,361
	2009	7,736	91,367	–	99,103
Executive Director
Mr Gregory Goodman	2010	76,294,926	75,549,345	(145,888,279)	5,955,992
	2009	74,398,414	36,625,386	(34,728,874)	76,294,926
Executives
Mr Anthony Rozic	2010	3,786,751	5,036,751	(6,090,006)	2,733,496
	2009	2,831,195	955,556	–	3,786,751
Mr Nick Kurtis	2010	3,233,505	4,283,496	(4,833,505)	2,683,496
	2009	4,063,505	540,000	(1,370,000)	3,233,505
Mr Michael O’Sullivan	2010	4,273,208	4,273,208	(3,705,746)	4,840,670
	2009	4,278,070	923,202	(928,064)	4,273,208
Mr Nick Vrondas	2010	1,324,950	1,324,950	(1,249,900)	1,400,000
	2009	1,324,950	–	–	1,324,950

These figures represent the securities held at the later of either the start of the financial year or the date of becoming a key management person.
The disposals figure for Mr Patrick Goodman and Mr Gregory Goodman includes 745,581 stapled securities that were personally held by Mr Craig Goodman and over which they had no relevant interest.

Movement in hybrid securities issued by Goodman PLUS Trust

The movement during the financial year in the number of hybrid securities issued by Goodman PLUS Trust held, directly or beneficially, by each key management person, including their related parties, is as follows:

		Held at				Held at
		the start				the end
	Year	of theyear1	Acquisitions	Disposals	of theyear
Executives
Mr Anthony Rozic	2010	1,000	–	–		1,000
	2009	1,000	–	–		1,000
Mr Nick Kurtis	2010	–	–	–		–
	2009	–	–	–		–
Mr Michael O’Sullivan	2010	–	–	–		–
	2009	–	–	–		–
Mr Nick Vrondas	2010	120	–	–		120
	2009	120	–	–		120

These figures represent the securities held at the later of either the start of the financial year or the date of becoming a key management person.

None of the Directors had any interests in the hybrid securities issued by Goodman PLUS Trust.

Goodman Group Financial Report 2010

107

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

30. Related parties (cont)

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 financial year, Goodman Holdings Group reimbursed the Consolidated Entity for office rental costs of $374,002 (2009: $315,120) and for IT licence costs of $nil (2009: $45,312).

(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). Subsequent to the balance date, the Consolidated Entity announced the proposed strategic acquisition of a business park in Moorabbin, which would include the acquisition of MAC (refer to note 34).

In prior financial years, the Consolidated Entity paid all infrastructure costs as part of the development agreement for Chifley Business Park, Moorabbin, Victoria, a site owned by MAC. At 30 June 2010, the Consolidated Entity is to be reimbursed an amount of $3.6 million (2009: $3.6 million) from MAC in respect of these infrastructure costs. This amount is included in receivables (refer to note 8).

Transactions with associates and joint venture entities

The transactions with associates and JVEs during the financial year are as follows:

Proceeds
from disposals
Proceeds from
of controlled
disposals of
entities and
Management
Interest charged
investment
other equity
services and
on loans to
properties
investments
other income
relatedparties

2010
2009
2010
2009
2010
2009
2010
2009
$M
$M
$M
$M
$M
$M
$M
$M

GAIF
GADF
GMT
GHKLF
GCLHL
GELF
ABPP
Princeton Lux
Princeton Jersey
Colworth
Harwell
Huntingwood East
Huntingwood West
HDL
Seaview
Interlink
Lazulite
Ullo One 2008 Kft
BL Goodman LLP
GEBPF

–
75.2
–
–
37.5
106.9
–
–
–
–
–
–
6.9
–
–
–
–
2.7
–
2.1
12.6
12.1
–
–
–
–
–
80.2
17.8
11.5
–
–
–
–
98.3
–
0.8
–
–
–
–
–
6.3
68.4
23.4
41.9
1.2
–
–
–
–
21.8
20.0
22.6
–
–
–
–
34.7
–
–
–
–
–
–
–
40.3
–
–
–
–
–
–
–
–
–
2.9
6.8
–
–
–
–
–
–
1.1
0.9
–
–
–
–
–
–
–
–
0.9
0.7
–
–
–
–
–
–
1.0
1.0
–
–
–
–
0.7
1.7
–
–
–
–
–
–
2.0
1.1
3.7
2.6
–
–
–
–
4.0
2.1
6.1
3.0
–
–
–
–
–
–
0.2
–
–
–
–
–
–
–
0.2
–
–
–
–
–
0.4
0.4
–
–
–
–
–
–
5.0
4.3
2.9
0.5

108

30. Related parties (cont)

Transactions with associates and joint venture entities (cont)

Amounts due from associates and JVEs at 30 June 2010 are as follows:

	Trade and Loans provided other receivables1 by Goodman2
	2010 2009 2010 2009 $M $M $M $M
GAIF GADF GMT GCLHL GELF ABPP KWS Colworth Harwell Abu Dhabi BGA1 Pty Ltd TGPS Huntingwood East Huntingwood West Seaview Interlink Herten Lazulite Ullo One 2008 Kft Ullo 2 Kft Agate WMP NV BL Goodman LLP Gateway LLP Pochin Scottish Widows partnership3 GEBPF	20.7 21.3 – – 6.9 – – – 0.3 0.3 – – – – 22.6 – 6.0 31.9 17.7 25.8 44.0 36.8 – – – – 2.2 2.1 0.4 0.4 – – 0.2 – – – – 1.0 – – – – (0.8) 1.2 – – – 0.3 – – 11.6 15.9 – – – 21.4 – – 56.8 60.4 – – 92.4 70.4 – – 4.1 4.8 – – 3.0 3.4 – – 6.3 3.1 – – 3.0 – – – 1.5 3.6 – – 6.3 8.3 – – 12.9 15.0 – – 0.9 0.2 – – 5.7 6.5 1.5 – – 0.6 0.2 – – –
	80.2 91.7 246.2 243.0

Trade and other amounts due are receivable within 30 days.
Loans provided by Goodman to associates and JVEs have generally been provided on an arm’s length basis. Details In respect of the principle loan balances are set out below:
a shareholder loan of $17.7 million (2009: $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, and interest of $1.2 million was recognised in the financial year (2009: $nil);
interest income of $1.9 million (2009 $1.7 million) was recognised on loans to Huntingwood East and Huntingwood West. The loans bear interest at 4.5% per annum;
interest income of $9.8 million (2009: $5.6 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 joint venture partner, no interest income was recognised on the loan to BL Goodman LLP.
The Consolidated Entity is in a partnership arrangement with Scottish Widows in the United Kingdom in relation to co-ownership of certain properties.

Goodman Group Financial Report 2010

109

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

31. Financial risk management

The Directors have ultimate responsibility for the Consolidated Entity’s capital management and financial risk management processes and have established policies, documented in the Consolidated Entity’s financial risk management (FRM) policy document, to ensure both the efficient use of capital and the appropriate management of the exposure to financial risk.

Management has established a finance and treasury committee, which is the primary forum where strategic capital and financial management requirements are discussed and decisions made in accordance with the FRM policy. The committee meets at least six times during the financial 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 profile;
- 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.

During the financial year, the Consolidated Entity amended its FRM policy such that derivative financial instruments are not generally designated as a hedge for accounting purposes, and accordingly such derivative financial instruments are treated as trading instruments.

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 distribution reinvestment plan 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; however, at 30 June 2010 and in the period since the completion of the refinancing in the first half of the financial year the Consolidated Entity has held cash, which is placed on deposit for periods ranging from overnight up to three months.

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 financial risks are market risk (including interest rate risk and 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 fixed rate basis. The Consolidated Entity enters into interest rate swaps to manage cash flow risks associated with the interest rates on borrowings that are floating. The interest rate swap contracts are for 90 day intervals and involve quarterly payments or receipts of the net amount of interest.

110

31. 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 2010, the principal amounts as at future balance dates and the weighted average interest rates during future financial years, by currency, are set out below:

Year to	2010 2009
	Interest rate swaps Fixed rate debt Interest rate swaps Fixed rate debt
	Notional Notional principal Principal principal Principal currency1 Average currency Average currency1 Average currency Average M ratepa2 M ratepa2 M ratepa2 M ratepa2
New Zealand dollars receivable/payable 30 June 2010 (165.0) 8.05% – – (173.0) 7.70% – – 30 June 2011 (135.3) 7.77% – – (135.2) 8.10% – – 30 June 2012 (110.0) 8.79% – – (110.0) 8.79% – – 30 June 2013 (110.0) 8.79% – – (110.0) 8.79% – – 30 June 2014 (110.0) 8.79% – – (110.0) 8.79% – – 30 June 2015 (69.5) 7.30% – – (68.8) 7.33% – – 30 June 2016 (50.0) 5.75% – – (50.0) 5.75% – – 30 June 2017 (16.2) 5.75% – – (16.2) 5.75% – –
Hong Kong dollars receivable/payable 30 June 2010 (1,550.0) 2.81% – – (1,530.4) 4.28% – – 30 June 2011 (1,831.1) 3.04% – – (871.2) 4.25% – – 30 June 2012 (1,750.0) 2.90% – – (345.5) 4.30% – – 30 June 2013 (1,406.3) 2.76% – – (124.7) 4.25% – – 30 June 2014 (760.0) 2.27% – – – – – – 30 June 2015 (122.1) 1.98% – – – – – –
Japanese yen receivable/payable 30 June 2010 (7,000.0) 1.56% – – (15,750.0) 1.51% – – 30 June 2011 (7,000.0) 1.54% – – (14,911.6) 1.53% – – 30 June 2012 (6,639.3) 1.54% – – (13,633.9) 1.55% – – 30 June 2013 (1,000.0) 1.68% – – (4,000.0) 1.69% – – 30 June 2014 (939.7) 1.68% – – (3,758.9) 1.69% – –
Euro receivable/payable 30 June 2010 (430.0) 3.76% – – (660.0) 3.82% – – 30 June 2011 (415.1) 3.78% – – (386.1) 4.17% – – 30 June 2012 (384.1) 3.54% – – (173.2) 4.98% – – 30 June 2013 (305.0) 3.63% – – (140.0) 5.12% – – 30 June 2014 (191.1) 3.89% – – (132.4) 5.16% – – 30 June 2015 (50.0) 4.50% – – (50.0) 5.91% – – 30 June 2016 (50.0) 4.50% – – (50.0) 4.50% – – 30 June 2017 (33.3) 4.50% – – (33.3) 4.50% – –
British pounds sterling receivable/payable 30 June 2010 (335.0) 5.63% (250.0) 9.75% (535.0) 3.56% (250.0) 9.75% 30 June 2011 (209.1) 5.01% (250.0) 9.75% (494.8) 4.69% (250.0) 9.75% 30 June 2012 (175.0) 5.96% (250.0) 9.75% (435.0) 5.38% (250.0) 9.75% 30 June 2013 (175.0) 5.96% (250.0) 9.75% (435.0) 5.38% (250.0) 9.75% 30 June 2014 (175.0) 5.96% (250.0) 9.75% (435.0) 5.38% (250.0) 9.75% 30 June 2015 (187.6) 5.55% (250.0) 9.75% (398.8) 5.40% (250.0) 9.75% 30 June 2016 (138.7) 5.43% (250.0) 9.75% (280.5) 5.54% (250.0) 9.75% 30 June 2017 (57.2) 5.75% (250.0) 9.75% (128.0) 5.80% (250.0) 9.75% 30 June 2018 (16.0) 5.20% (250.0) 9.75% (16.0) 5.20% (250.0) 9.75% 30 June 2019 – – (250.0) 9.75% – – (250.0) 9.75%

The amount is the principal balance at each future balance date that is hedged as a result of the existing interest rate swap contracts as at 30 June 2010.
Average rate per annum represents the weighted average interest rate payable, by currency, as a result of the existing interest rate swap contracts as at 30 June 2010.

At 30 June 2010, if interest rates on borrowings had been 100 basis points per annum (2009: 100 basis points per annum) higher/lower, with all other variables held constant, the Consolidated Entity result attributable to Securityholders for the financial year would have been A$0.2 million lower/higher (2009: A$0.1 million).

Goodman Group Financial Report 2010

111

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

31. 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 fluctuations in currency prices against the Australian dollar as a result of future commercial transactions, recognised assets and liabilities and principally, net investments in foreign operations.

In managing foreign currency risks, the Consolidated Entity aims to reduce the impact of short-term fluctuations 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 fluctuations. 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 2010, the weighted average foreign exchange rates during future financial years and the principal hedged amount at each future balance date, by currency, are set out below:

Year to	Weighted average Amounts Amounts exchange rate receivable payable
	2010 2009 2010 2009 Currency Currency 2010 2009 A$M A$M M M
Australian dollars receivable/New Zealand dollars payable 30 June 2010 1.2413 1.2590 150.7 81.0 (187.0) (102.0) 30 June 2011 1.2413 1.2590 150.7 81.0 (187.0) (102.0) 30 June 2012 1.2413 1.2590 150.7 81.0 (187.0) (102.0) 30 June 2013 1.2413 1.2590 150.7 81.0 (187.0) (102.0) 30 June 2014 1.2200 – 69.7 – (85.0) –
Australian dollars receivable/Hong Kong dollars payable 30 June 2010 6.6088 6.4213 342.0 234.6 (2,250.0) (1,500.0) 30 June 2011 6.6088 6.4213 342.0 148.9 (2,250.0) (1,500.0) 30 June 2012 6.8299 6.7145 256.4 148.9 (1,750.0) (1,000.0) 30 June 2013 6.8299 6.7145 256.4 148.9 (1,750.0) (1,000.0) 30 June 2014 6.9838 – 107.4 – (750.0) – 30 June 2015 7.1000 – 56.3 – (400.0) –
Australian dollars receivable/Japanese yen payable 30 June 2010 – 97.4500 – 44.5 – (4,340.0) 30 June 2011 – 97.4500 – 44.5 – (4,340.0) 30 June 2012 – 97.4500 – 44.5 – (4,340.0) 30 June 2013 – 97.4500 – 44.5 – (4,340.0)
Australian dollars receivable/euros payable 30 June 2010 0.6705 0.5665 179.0 369.3 (120.0) (209.0) 30 June 2011 0.6705 0.5665 179.0 369.3 (120.0) (209.0) 30 June 2012 0.6705 0.5665 179.0 369.3 (120.0) (209.0) 30 June 2013 0.6705 0.5500 179.0 198.2 (120.0) (109.0) 30 June 2014 0.6705 0.5500 179.0 198.2 (120.0) (109.0) 30 June 2015 0.6705 – 179.0 – (120.0) – 30 June 2016 0.6705 – 179.0 – (120.0) –
Australian dollars receivable/British pounds sterling payable 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)

112

31. 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 2010, the weighted average exchange rates and the principal amounts expiring in future financial years, by currency, are set out below:

Year to	Weighted average Amounts Amounts exchange rate receivable payable
	2010 2009 2010 2009 Currency Currency 2010 2009 A$M A$M M M
Contracts to buy Australian dollars and sell New Zealand dollars 30 June 2010 – 1.1491 – 4.9 – (5.6) 30 June 2011 1.1630 1.1630 4.6 4.6 (5.3) (5.3) 30 June 2012 1.1768 1.1768 4.5 4.5 (5.3) (5.3) 30 June 2013 1.1932 1.1932 4.2 4.2 (5.0) (5.0)
Contracts to buy Australian dollars and sell Hong Kong dollars 30 June 2010 – 5.3333 – 13.0 – (68.5) 30 June 2011 5.0557 5.0701 12.4 12.4 (62.6) (62.6) 30 June 2012 4.9743 4.9885 12.6 12.6 (62.6) (62.6) 30 June 2013 4.8940 4.9077 12.8 12.8 (62.6) (62.6)
Contracts to buy Australian dollars and sell euros 30 June 2010 – 0.5667 – 42.5 – (24.0) 30 June 2011 – 0.5273 – 32.4 – (17.0) 30 June 2012 – 0.5229 – 27.9 – (14.5) 30 June 2013 – 0.4837 – 18.6 – (9.0)

At 30 June 2010, if the Australian dollar had strengthened by 5% (2009: 5%), with all other variables, in particular interest rates, held constant, the Consolidated Entity’s result attributable to Securityholders would have decreased by A$21.1 million (2009: A$33.2 million decrease). If the Australian dollar had weakened by 5% (2009: 5%), with all other variables, in particular interest rates, held constant, the Consolidated Entity’s result attributable to Securityholders would have increased by A$23.3 million (2009: A$36.7 million increase).

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 classified on the balance sheet as an other financial asset (refer to note 14). As at 30 June 2010, a 5% (2009: 5%) movement in the security price of ING Industrial Fund would have impacted equity by A$2.1 million (2009: A$1.4 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 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 financial obligations as they fall due. The Consolidated Entity’s objective is to maintain sufficient liquidity resources to maintain operations, meet its financial obligations and liabilities, pay distributions and provide funds for capital expenditure and investment opportunities. Management seeks to achieve these objectives through:

preparation of regular forecast cash flows to understand the application and use of funds; and
identification of future funding, including new debt facilities, new issues of securities or the distribution reinvestment plan.

Goodman’s treasury function is responsible for reporting details of all debt maturities for all loans across the regions to the finance, treasury and tax committee and the Board at their regular meetings. Goodman’s treasury function is also responsible for reporting to the finance, treasury and tax committee and the Board all the information and term sheets relating to any financing arrangements being contemplated or negotiated by the Consolidated Entity for their review and approval.

The Consolidated Entity seeks to spread its debt maturities such that the total debt maturing in a single financial year does not exceed Board approved policy levels.

Goodman Group Financial Report 2010

113

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

31. Financial risk management (cont)

(b) Liquidity risk (cont)

The contractual maturities of financial liabilities are set out below:

Carrying
Contractual
Up to
More than
amount
cash fows
12 months
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
5 years
As at 30 June 2010
$M
$M
$M
$M
$M
$M
$M
$M
Non‑derivative fnancial liabilities1
Payables
187.7
187.7
168.2
19.5
–
–
–
–
Bank loans, unsecured
1,770.4
1,770.4
84.1
593.8
791.1
301.4
–
–
Bank loans, secured
26.7
26.7
–
26.7
–
–
–
–
Euro medium-term notes,
unsecured
441.2
441.2
–
–
–
–
–
441.2
Foreign private placement,
unsecured
38.3
38.3
–
–
–
–
–
38.3
Total non‑derivative
fnancial liabilities
2,464.3
2,464.3
252.3
640.0
791.1
301.4
–
479.5
Derivative fnancial liabilities
Net settled2
150.0
162.9
42.2
40.0
27.2
20.6
13.5
19.4
Gross settled3:
– Infow
–
(119.7)
(32.4)
(29.4)
(22.9)
(16.8)
(13.5)
(4.7)
– Outfow
10.0
118.4
13.6
10.9
30.8
16.6
19.4
27.1
Total derivative
fnancial liabilities
160.0
161.6
23.4
21.5
35.1
20.4
19.4
41.8
As at 30 June 2009
Non‑derivative fnancial 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
fnancial liabilities
4,472.7
4,472.7
1,218.1
486.6
949.9
1,258.1
–
560.0
Derivative fnancial liabilities
Net settled2
152.3
156.6
60.5
39.5
17.6
9.7
11.7
17.6
Gross settled3:
– Infow
–
(176.3)
(45.9)
(52.2)
(47.3)
(27.2)
(3.7)
–
– Outfow
17.0
182.5
15.9
34.3
44.9
69.8
17.6
–
Total derivative
fnancial liabilities
169.3
162.8
30.5
21.6
15.2
52.3
25.6
17.6

Cash flows relating to non-derivative financial 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.

114

31. Financial risk management (cont)

(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 financial assets, excluding investments, of the Consolidated Entity which have been recognised on the balance sheet, is the carrying amount (refer to note 8).

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 financial 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 generally transferred only upon receipt of proceeds for the sale of those assets.

The credit risks associated with financial instruments are managed by:

- transacting with multiple derivatives counterparties that have a long-term credit rating of at least AA– (or its equivalent); and
- utilising ISDA agreements with derivative counterparties in order to limit exposure to credit risk through netting of amounts receivable and amounts payable to individual counterparties.

(d) Fair values of financial instruments

The carrying amounts shown in the balance sheet and fair values of financial assets and liabilities, are as follows:

Carrying
Fair
Carrying
Fair
amount
value
amount
value
2010
2010
2009
2009
Consolidated
Note
$M
$M
$M
$M
Financial assets
Cash
27(a)
515.1
515.1
242.5
242.5
Receivables:
8
– Loans and receivables
493.5
493.5
588.3
588.3
– Interest rate derivatives
2.8
2.8
1.3
1.3
– Cross currency swaps
13.0
13.0
18.5
18.5
– Foreign exchange contracts
7.2
7.2
11.1
11.1
Other fnancial assets:
14
– Investments in listed securities
42.3
42.3
27.7
27.7
– Investments in other unlisted securities
27.6
27.6
43.4
43.4
~~1,101.5~~
~~1,101.5~~
~~932.8~~
~~932.8~~
Financial liabilities
Payables:
17
– Trade, other payables and accruals and deferred settlements
187.7
187.7
232.9
232.9
– Interest rate derivatives
159.2
159.2
163.4
163.4
– Cross currency swaps
23.8
23.8
35.6
35.6
– Foreign exchange contracts
–
–
1.2
1.2
Interest bearingliabilities1
18
2,276.6
2,338.6
4,239.8
4,069.7
~~2,647.3~~
~~2,709.3~~
~~4,672.9~~
~~4,502.8~~

The methods used for determining fair values of financial instruments are discussed in notes 1, 2 and 14. The fair value of the euro medium-term notes included in interest bearing liabilities has been determined by reference to their quoted price on the Singapore Stock Exchange at 30 June 2010 (refer to note 18).

Goodman Group Financial Report 2010

115

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

31. Financial risk management (cont)

(e) Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 1
Level 2
Level 3
Total
As at 30 June 2010
$M
$M
$M
$M
Available for sale fnancial assets
42.3
–
27.6
69.9
Derivative fnancial assets
–
23.0
–
23.0
~~42.3~~
~~23.0~~
~~27.6~~
~~92.9~~
Derivative fnancial liabilities
–
183.0
–
183.0
~~–~~
~~183.0~~
~~–~~
~~183.0~~
As at 30 June 2009
Available for sale fnancial assets
27.7
–
43.4
71.1
Derivative fnancial assets
–
30.9
–
30.9
~~27.7~~
~~30.9~~
~~43.4~~
~~102.0~~
Derivative fnancial liabilities
–
200.2
–
200.2
~~–~~
~~200.2~~
~~–~~
~~200.2~~

The reconciliation of the carrying amount for Level 3 financial instruments is set out below:

	Available for sale fnancial assets $M Carrying amount at the beginning of the year 43.4 Additions 4.0 Revaluation loss to other comprehensive income (11.3) Effect of foreign currencytranslation (8.5) ~~Carrying amount at the end of theyear~~ ~~27.6~~

Level 3 available for sale financial assets related to GEBPF. The fair value was determined by reference to the net asset value of GEBPF, which incorporated the fair values of investment properties.

116

32. Auditors’ remuneration

		Consolidated 2010 2009 $000 $000 943.3 1,099.6 961.7 1,122.7 ~~1,905.0~~ ~~2,222.3~~ 15.0 100.2 34.9 124.4 967.0 893.9 – 639.5 404.0 358.0 212.7 668.7 17.2 19.3 81.5 63.3 ~~1,732.3~~ ~~2,867.3~~ ~~3,637.3~~ ~~5,089.6~~ 181.9 244.4
	Audit services Auditor of the Company: – Audit and review of fnancial reports (KPMG Australia) – Audit and review of fnancial reports(overseas KPMG frms)


	Other regulatory services: – Other regulatory services (KPMG Australia) – Other regulatory services (overseas KPMG frms) Other assurance services: – Investigative accounting services (KPMG Australia) – Investigative accounting services (overseas KPMG frms) Taxation services: – Taxation compliance services (KPMG Australia) – Taxation compliance services (overseas KPMG frms) – Other taxation advice (KPMG Australia) – Other taxation advice(overseas KPMG frms)



	~~Totalpaid/payable to KPMG~~
	Other auditors: – Audit and review of fnancial reports(non-KPMG frms)

33. Parent Entity disclosures

As at, and throughout the financial year ended 30 June 2010, the parent company of the Consolidated Entity was Goodman Limited.

2010
2009
$M
$M
Result of the Parent Entity
Proft/(loss) for the year
92.5
(104.2)
Other comprehensive income
(0.3)
(10.2)
~~Total comprehensive income~~
~~92.2~~
~~(114.4)~~
Financial position of the Parent Entity at year end
Current assets
623.7
709.9
Total assets
1,081.7
1,104.3
Current liabilities
950.0
1,197.1
Total liabilities
950.3
1,197.1
Total equity of the Parent Entity comprising of:
Share capital
368.3
241.6
Foreign currency translation reserve
(0.1)
–
Employee compensation reserve
(7.9)
41.3
Accumulated losses
(228.9)
(375.7)
~~Total equity~~
~~131.4~~
~~(92.8)~~

Parent Entity capital commitments

The Parent Entity has no capital commitments (2009: $nil).

Goodman Group Financial Report 2010

117

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

33. Parent Entity disclosures (cont)

Parent Entity contingencies

Capitalisation Deed Poll

Goodman Limited and certain of its wholly-owned controlled entities are “investors” under a Capitalisation Deed Poll (CDP) dated 23 May 2007. Under the CDP, each investor undertakes to pay to the relevant controlled entity borrower (borrower) any amounts owing under the CDP when the borrower fails to make a payment. Any payments by an investor to a borrower will be by way of loan or proceeds for the subscription of equity in the borrower by the investor. As at 30 June 2010, the Consolidated Entity had A$1,770.4 million of debt which had the benefit of the CDP.

Euro medium‑term note programme

Under the euro medium-term note programme (refer to note 18), Goodman Australia Finance Pty Limited issued £250 million notes, maturing on 16 July 2016, at a fixed coupon of 9.75%. Goodman Limited and Goodman Funds Management Limited, as responsible entity of GIT, has unconditionally and irrevocably guaranteed on a joint and several basis the payment of principal and interest in respect of the euro medium-term notes.

Performance guarantee

Goodman Limited, Goodman Funds Management Limited, as responsible entity of GIT, and GHKLF have guaranteed to an unrelated party the completion of Interlink, a distribution and warehouse facility being developed by Goodman Interlink Ltd in Hong Kong, with an estimated completion value of HK$3,010 million.

Goodman PLUS Trust hybrid securities guarantee

Goodman Limited and Goodman Funds Management Limited, as responsible entity of GIT, guarantee jointly and severally, unconditionally and irrevocably the payment of the moneys owing to the holders of Goodman PLUS Trust hybrid securities (refer to note 24) under the terms of issue and subscription terms for those securities.

CIC convertible preference securities guarantee

Goodman Limited and Goodman Funds Management Limited, as responsible entity of GIT, guarantee jointly and severally, unconditionally and irrevocably the payment of the moneys owing to the holders of convertible preference securities (refer to note 24) under the terms of issue and subscription terms for those securities.

34. Events subsequent to balance date

In the opinion of the Directors, other than this proposed strategic acquisition and the new loan facility, there were no events subsequent to balance date, and up to the date of signature of this consolidated financial report, that would require adjustment or disclosure in the consolidated financial report.

118

Directors’ declaration

In the opinion of the Directors of Goodman Limited:

(a) the consolidated financial statements and the accompanying notes set out on pages 41 to 118 and the remuneration disclosures that are contained on pages 25 to 35 in the remuneration report in the Directors’ report, are in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the financial position of the Consolidated Entity as at 30 June 2010 and of its performance for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Consolidated Entity 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 Officer and Group Chief Financial Officer for the year ended 30 June 2010.

The Directors draw attention to note 1 to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards.

Signed in accordance with a resolution of the Directors.

==> picture [127 x 52] intentionally omitted <==

Ian Ferrier, AM Independent Chairman Sydney, 19 August 2010

==> picture [127 x 47] intentionally omitted <==

Gregory Goodman Group Chief Executive Officer

Goodman Group Financial Report 2010

119

Independent auditor’s report to the members of

Goodman Limited

Report on the financial report

We have audited the accompanying financial report of the Consolidated Entity comprising Goodman Limited (the Company) and the entities it controlled at the year’s end or from time to time during the financial year, which comprises the balance sheet as at 30 June 2010, and income statement and statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a description of significant accounting policies and other explanatory notes 1 to 34 and the directors’ declaration.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In note 1, the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements , that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Consolidated Entity’s financial position and of its performance. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Auditor’s opinion

In our opinion:

(a) the financial report of Goodman Limited is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2010 and of its 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 financial report also complies with International Financial Reporting Standards as disclosed in note 1.

Report on the remuneration report

We have audited the remuneration report included on pages 25 to 35 in the Directors’ report for the year ended 30 June 2010. 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 for the year ended 30 June 2010, complies with section 300A of the Corporations Act 2001 .

==> picture [45 x 29] intentionally omitted <==

KPMG

==> picture [47 x 30] intentionally omitted <==

John Teer Partner

Sydney, 19 August 2010

120

Consolidated financial report for Goodman Industrial Trust

and its Controlled Entities for the year ended 30 June 2010

Contents
Directors’ report	122
Lead auditor’s independence declaration	131
Balance sheet	132
Income statement	133
Statement of comprehensive income	134
Statement of changes in equity	135
Cash fow statement	136

Notes to the consolidated financial statements

1	Statement of signifcant accounting policies	137
2	Critical accounting estimates used in the
	preparation of the consolidated fnancial
	statements	146
3	Loss before income tax	148
4	Distributions	149
5	Receivables	150
6	Inventories	151
7	Assets/liabilities classifed as held for sale	151
8	Other assets	151
9	Investment properties	152
10	Investments accounted for using the equity
	method	152
11	Other fnancial assets	156
12	Payables	158
13	Provisions	158
14	Interest bearing liabilities	159
15	Issued capital	161
16	Reserves	162
17	Accumulated losses	162
18	Minority interests	162
19	Segment reporting	163
20	Disposals of interests in controlled entities	165
21	Auditors’ remuneration	165
22	Notes to the cash fow statement	166
23	Related party disclosures	167
24	Financial risk management	169
25	Commitments	176
26	Parent Entity fnancial information	177
27	Events subsequent to balance date	178
	Directors’ declaration	179
	Independent auditor’s report	180

Goodman Group Financial Report 2010

121

Directors’ report

The directors (Directors) of Goodman Funds Management Limited (Responsible Entity), the responsible entity for Goodman Industrial Trust (GIT, Trust or Parent Entity), present their Directors’ report together with the consolidated financial report of GIT and the entities it controlled (Consolidated Entity) at the end of, or during, the year ended 30 June 2010 (year) and the audit report thereon.

GIT is deemed to be a controlled entity of Goodman 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:

Directors The Directors at any time during, or since the end of, the year were:
	Appointment date
Mr Ian Ferrier, AM (Independent Chairman)1	23 February 2005
Mr Gregory Goodman (Group Chief Executive Offcer)	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 February2006

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 confirmed as Independent Chairman on 29 July 2009.

Details of the Directors’ qualifications, experience and special responsibilities are set out on pages 127 and 128 in this Directors’ report.

Company Secretary

The Company Secretary at any time during, or since the end of, the year was:

	Appointment date
Mr Carl Bicego	24 October 2006

Details of the Company Secretary’s qualifications and experience are set out on page 128 in this Directors’ report.

122

Directors’ meetings

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

Director	Remuneration and Risk and Moorabbin Audit Nomination Compliance Investment Sub‑ Board Committee Committee Committee Committee Committee meetings meetings meetings meetings meetings meetings2
	Held1 Attended Held1 Attended Held1 Attended Held1 Attended Held1 Attended Held1 Attended
Mr Ian Ferrier Mr David Clarke3 Mr Gregory Goodman Mr Patrick Goodman Ms Diane Grady Mr John Harkness Mr James Hodgkinson Ms Anne Keating Mr Jim Sloman	18 17 5 4 5 5 – – 5 5 9 9 – – – – – – – – – – – – 16 15 – – – – – – 5 5 – – 17 17 – – – – 4 4 – – – – 18 17 – – 5 5 – – – – – – 18 18 5 5 – – 4 4 – – – – 18 18 5 4 – – – – 2 2 1 1 18 18 – – 5 5 1 1 – – – – 18 15 – – – – 4 3 5 3 9 8

Reflects 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.
A separate committee was established during the year to consider the potential acquisition of the business park at Moorabbin, currently owned by Goodman Holdings Group (refer to page 178). In addition to the nine meetings held during the year, Mr Jim Sloman also attended two meetings that were not official meetings of the sub-committee as a quorum was not reached. Mr James Hodgkinson attended one meeting as an alternate for Mr Jim Sloman.
Mr David Clarke 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 significant changes to the nature of the Consolidated Entity’s activities during the year.

Distributions

The total distribution declared to ordinary unitholders of GIT (Unitholders) during the year was 3.4 cents per unit (2009: 9.65 cents per unit). Further details of distributions paid or declared during the year are set out in note 4 to the financial statements.

Review of operations

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

	Consolidated
	2010 2009 $M $M
Grosspropertyincome	225.1 238.6
Loss attributable to Unitholders	(299.6) (1,005.0)

Goodman Group Financial Report 2010

123

Directors’ report (cont)

Value of assets

Value of assets
	Consolidated
	30 June 30 June 2010 2009 $M $M
Carryingvalue of assets	7,650.5 8,548.7

The basis for valuation of assets is disclosed in notes 1 and 2 to the financial statements.

Issued capital

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

	Issued capital The movement in units on issue in GIT during the year is set out below:
		Consolidated 2010 2009 M M 2,779.7 1,715.8 3,590.1 1,063.9 ~~6,369.8~~ ~~2,779.7~~
	Units on issue at the beginning of the year Units issued duringtheyear

	~~Units on issue at the end of theyear~~

State of affairs

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

(a) Equity raising

During August and September 2009, Goodman Limited and the entities it controlled (Goodman Group) undertook a fully underwritten equity raising to raise a total of $1,278.6 million 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. The Consolidated Entity’s share of the capital raising amounted to $1,156.9 million.

(b) China Investment Corporation (CIC) convertible preference securities

On 16 October 2009, Goodman Group received $500 million from the issue of three tranches of convertible preference securities to CIC. Each tranche will receive a coupon of 10% per annum 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. During the financial year and up to the date of signature of the Directors’ report none of the securities were converted.

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.

(c) Exercise of options over Goodman Group stapled securities

(d) Financing initiatives

The proceeds from the equity raising have been used to retire the A$300 million drawn under the A$485 million secured loan provided by Macquarie Group and CIC and the amounts drawn under the $520 million tranche B of the syndicated multi-currency facility (SMCF). The Consolidated Entity also renegotiated a significant portion of both its bank debt facilities and the bank debt facilities of funds in which the Consolidated Entity has significant influence. This included:

- extension from May 2011 to September 2012 of A$438 million of the A$520 million tranche C of the SMCF and extension from December 2012 to December 2013 of €340 million of the €525 million European revolving credit facility, along with amended covenants to the common terms deed poll, which applies to both facilities;
- extension of facilities and renegotiation of covenants with Goodman Australia Industrial Fund;
- renegotiation of the covenants for Goodman European Logistics Fund; and
- renegotiation of covenants for Arlington Business Parks Partnership.

124

State of affairs (cont)

(e) Disposal of units in Goodman Property Trust (GMT)

During the year, Goodman Group completed the sale of 93 million units in GMT 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. Subsequent to the disposal, the Consolidated Entity owns 17% of GMT, which is in line with Goodman Group’s strategy of targeting a long-term holding of 15% to 20% for investments in funds managed by Goodman Group.

(f) Joint ventures with Canada Pension Plan Investment Board and CB Richard Ellis Realty Trust

On 6 August 2009, Goodman Group announced a strategic partnership with Canada Pension Plan Investment Board (CPPIB). CPPIB initially invested $163 million in a fund in China, Goodman China Logistics Holding Limited (GCLHL). This entity was funded on an 80/20 basis, with CPPIB holding the majority share. GCLHL owns four logistics assets and could invest a further $185 million to develop facilities on land owned by Goodman Group in Shanghai.

On 17 May 2010, a second fund, Goodman Australia Development Fund (GADF) was established in Australia, again funded on an 80/20 basis, with CPPIB holding the majority share. GADF has an initial equity commitment of $250 million with a target gross asset value of $400 million and will be seeded with the acquisition of the Consolidated Entity’s Kmart development in Melbourne.

On 11 June 2010, Goodman Group announced the establishment of two new co-investment vehicles with CB Richard Ellis Realty Trust in Continental Europe and the United Kingdom. The co-investment vehicles will invest in pre-committed logistics development opportunities sourced through Goodman Group and will be funded on an 80/20 basis, with CB Richard Ellis Realty Trust holding the majority share.

The Continental Europe co-investment vehicle will target a total investment of €400 million over an initial investment term of three years, focusing on the core Western European markets of Germany, France and Benelux. The UK co-investment vehicle will target a total investment of £400 million over an initial investment term of three years.

Details of changes in the state of affairs of the Consolidated Entity subsequent to the year end are set out on page 130 in this Directors’ report.

Strategy and outlook

Goodman Group’s business strategy is to be the leading international provider of industrial property and business space to leading global customers in each of the markets in which the Consolidated Entity operates. Goodman Group’s integrated “own+develop+manage” customer service model is a driving principle in the Consolidated Entity’s operations.

The Consolidated Entity’s “own+develop+manage” customer service model is intended to allow the Consolidated Entity to build an in-depth understanding of customer needs and to assist the Consolidated Entity in providing access to quality information on portfolio performance and market dynamics. The Consolidated Entity believes its ability to establish a better understanding of its clients’ needs allows for better client management opportunities and enables the Consolidated Entity to provide a more tailored property management service. Goodman Group strives to meet the requirements of its customers “in-house” through the repositioning of existing assets or via the development of new pre-leased sites, while the “in-house” property management team works to efficiently satisfy customer needs.

The Consolidated Entity seeks to create value through expansion, both organically and through strategic acquisitions, while enhancing returns through the active management of its property portfolio. The cornerstone of this strategy is a substantial portfolio (including both directly owned property and cornerstone investments held by the Consolidated Entity) of quality industrial and business space assets, coupled with the Consolidated Entity’s integrated property platform.

The Consolidated Entity intends to continue to follow this strategy in its existing markets.

Environmental regulations

Goodman Group Financial Report 2010

125

Directors’ report (cont)

Strategy and outlook (cont)

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 consolidated financial report.

Indemnification and insurance of officers and auditors

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

Fees paid to and interests held by related entities and Directors

Fees were paid or are payable to Goodman Group and its associated entities for services provided during the year. Details of these fees and the interests of the Responsible Entity and other related party information are set out in note 23 to the financial statements.

The relevant interest of each Director in Goodman Group stapled securities as notified by the Directors to the ASX in accordance with section 205G(1) of the Corporations Act 2001 at the date of the consolidated financial report is as follows:

		Indirect
Directors	Direct securities	securities	Total
Non‑Executive
Mr Ian Ferrier	299,839	–	299,839
Mr Patrick Goodman	–	5,955,992	5,955,992
Ms Diane Grady	–	208,200	208,200
Mr John Harkness	269,368	–	269,368
Mr James Hodgkinson	333,730	920,572	1,254,302
Ms Anne Keating	–	304,866	304,866
Mr Jim Sloman	230,361	–	230,361
Executive
Mr GregoryGoodman	5,955,992	–	5,955,992

None of the Non-Executive Directors held any options over unissued securities at 30 June 2010. Mr Gregory Goodman held 9,700,000 options and 3,900,000 performance rights over securities of Goodman Group at 30 June 2010 (2009: 9,700,000 options and nil performance rights). Mr Patrick Goodman has an indirect interest in respect of those options and performance rights.

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

126

Qualifications, experience and special responsibilities of Directors and Company Secretary

Board of Directors

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

Mr Gregory Goodman – Group Chief Executive Officer

Appointed 17 January 1995

Gregory is responsible for Goodman Group’s overall operations and the implementation of its strategic plan. He has 28 years of experience in the property industry with significant expertise in the industrial property arena. Gregory was a Co-Founder of Goodman Group playing an integral role in establishing its specialist global position in the property market through various corporate transactions, including takeovers, mergers and acquisitions. He is a director of Goodman (NZ) Limited (the manager of the New Zealand Exchange listed Goodman Property Trust), J-REP Co., Ltd, the management companies of Goodman’s unlisted funds and many of its subsidiaries.

Mr Patrick Goodman – Non‑Executive Director Appointed 23 February 2005

Ms Diane Grady, AM – Independent Director Appointed 30 September 2007

Mr John Harkness – Independent Director

Appointed 1 September 2004

Goodman Group Financial Report 2010

127

Directors’ report (cont)

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

Mr James Hodgkinson – Non‑Executive Director Appointed 21 February 2003

James is a senior investment banker with real estate specialisation, most recently, as an Executive Director of Macquarie Group. James has extensive experience as principal in the establishment, strategy and growth of a number of both listed and unlisted investment vehicles and operating businesses in Australia, Asia and North America. James was also Chief Executive Officer of Macquarie Industrial Trust for six years prior to that trust’s merger with GIT. He is a director of Goodman (NZ) Limited, the manager of the New Zealand Exchange listed Goodman Property Trust, and J-REP Co., Ltd. James is active in the not-for-profit sector and has initiated and assisted in the fund raising initiatives and strategic support of a number of community based organisations, including as Founder and Chairman of the Spastic Centre of NSW’s 20/Twenty Challenge and as a Founding Governor of the Cerebral Palsy Foundation. James has a Bachelor of Economics, is a Certified Practising Accountant and is a Fellow of the Australian Property Institute.

Ms Anne Keating – Independent Director

Appointed 6 February 2004

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

128

Rights and options over Goodman Group stapled securities

Details of the rights and options over stapled securities of Goodman Group held by Mr Gregory Goodman are set out below. None of the other Directors held any rights or options over stapled securities.

			Fair value per
	Number of		performance	Exercise		Number of
	performance		right1	price		performance
	rightsgranted	Grant date	$	per right1	Expiry date	rights vested
Executive Director
Mr GregoryGoodman	3,900,000	14 May2010	0.60	–	1 Sep2014	–
1. Goodman Group stapled securities are issued for nil consideration on vesting.
			Fair value	Exercise
	Number of		per option	price		Number of
	optionsgranted	Grant date	$	per option1	Expiry date	options vested
Executive Director
Mr Gregory Goodman	7,000,000	17 Nov 2008	0.04	3.01	30 June 2013	–
	2,700,000	26 Nov 2007	0.77	6.27	30 June 2013	–

As a consequence of the entitlement offer on 6 August 2009, the exercise prices of certain options issued to Mr Gregory Goodman have been reduced. The amounts disclosed in the table above reflect the reduced exercise price, where relevant.

No rights or options have been granted since the end of the financial year.

At the date of signature of the Directors’ report, performance rights issued under the employee long term incentive plan and the applicable total securityholder return (TSR) or earnings per security (EPS) performance hurdles are:

Performance rights

Performance rights
			Number of
		Exercise price	performance	Performance
Dategranted	Expiry date	$	rights	hurdles1
				TSR2(50%)
14 May2010	1 Sep2014	–	49,813,610	and EPS3 (50%)

Performance hurdles are based on the results of Goodman Group.
The TSR vesting condition is determined by Goodman Group’s relative TSR over the three year period from 1 July 2009 to 30 June 2012, as determined by the Board of Goodman Group. Goodman Group’s TSR performance will be measured against the TSR performance of the entities comprising the ASX 200 index.
The EPS vesting condition is determined by the Goodman Group’s aggregated operating EPS over the three year period from 1 July 2009 to 30 June 2012, compared to the target EPS and stretch target EPS as determined by the Board of Goodman Group.

At the date of signature of the Directors’ report, unissued securities under option issued to employees and the applicable return on equity (ROE) performance hurdles are:

		Exercise price1	Number of	Performance
Dategranted	Expiry date	$	unissued options	hurdle2
3 Nov 2005	30 Jun 2011	4.00	3,153,445	11% ROE
9 Dec 2005	31 Dec 2011	4.20	11,250,000	11% ROE
14 Jun 2006	31 Dec 2011	5.15	2,119,000	12% ROE
13 Oct 2006	30 Sep 2012	6.27	7,522,500	12% ROE
10 Apr 2007	31 Dec 2012	7.14	19,745,000	12% ROE
22 Jun 2007	31 Dec 2012	7.04	6,310,000	12% ROE
19 Oct 2007	30 Jun 2013	6.27	31,746,500	12% ROE
26 Nov 2007	30 Jun 2013	6.27	2,700,000	12% ROE
5 Sep 2008	30 Jun 2013	2.98	42,925,000	12% ROE
5 Sep 2008	30 Jun 2013	3.01	3,850,000	12% ROE
17 Nov 2008	30 Jun 2013	3.01	7,000,000	12% ROE

As a consequence of the entitlement offer on 6 August 2009, the exercise prices of certain options on issue have been reduced. The amounts disclosed in the table above reflect the reduced exercise price, where relevant.
Performance hurdles are based on the results of Goodman Group. The ROE performance hurdle requires the Goodman Group achieving compound annual growth 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 Goodman Group).

Goodman Group Financial Report 2010

129

Directors’ report (cont)

Rights and options over Goodman Group stapled securities (cont)

At the date of signature of the Directors’ report, unissued securities under option issued to CIC are:

		Exercise price	Number of
Dategranted	Expiry date	$	unissued options
19 May 2009	22 May 11	0.2464	170,721,649
15 Jun 2009	22 May11	0.3464	105,278,351

Events subsequent to balance date

On 16 August 2010, Goodman Group announced the proposed strategic acquisition of Moorabbin Airport and business park, Victoria for $201.5 million from Goodman Holdings Group. Mr Gregory Goodman and Mr Patrick Goodman are directors of and shareholders in Goodman Holdings Group. The transaction, which is subject to review by an independent expert, approval by securityholders of Goodman Group and government and regulatory approvals, would be funded via issue of ordinary equity in Goodman Group of $146.5 million, $35.0 million of vendor finance and $20.0 million cash to fund working capital.

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

The lead auditor’s independence declaration is set out on page 131 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 & Investments Commission Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in this Directors’ report and the consolidated financial report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

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

==> picture [127 x 52] intentionally omitted <==

Ian Ferrier, AM Independent Chairman Sydney, 19 August 2010

==> picture [127 x 47] intentionally omitted <==

Gregory Goodman Group Chief Executive Officer

130

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 financial year ended 30 June 2010, there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

==> picture [60 x 38] intentionally omitted <==

KPMG

==> picture [96 x 62] intentionally omitted <==

John Teer Partner

Sydney, 19 August 2010

Goodman Group Financial Report 2010

131

Balance sheet

as at 30 June 2010

	Note	Consolidated 2010 2009 $M $M 474.8 216.7 1,989.2 2,461.4 28.7 – – 182.9 27.8 31.5 ~~2,520.5~~ ~~2,892.5~~ 445.1 430.1 70.7 – 2,500.2 2,870.7 2,071.4 2,327.4 42.6 28.0 ~~5,130.0~~ ~~5,656.2~~ ~~7,650.5~~ ~~8,548.7~~ 4.8 8.1 124.7 204.9 124.8 11.6 84.1 975.4 – 10.1 ~~338.4~~ ~~1,210.1~~ 0.6 1.8 224.1 186.6 4.1 – 2,193.3 3,254.2 ~~2,422.1~~ ~~3,442.6~~ ~~2,760.5~~ ~~4,652.7~~ ~~4,890.0~~ ~~3,896.0~~ 6,442.9 5,229.1 (1,983.1) (1,439.3) (320.3) (212.6) ~~4,139.5~~ ~~3,577.2~~ 750.5 318.8 ~~4,890.0~~ ~~3,896.0~~
	Current assets Cash 22(a) Receivables 5 Inventories 6 Assets classifed as held for sale 7 Other assets 8

	~~Total current assets~~
	Non‑current assets Receivables 5 Inventories 6 Investment properties 9 Investments accounted for using the equity method 10 Other fnancial assets 11

	~~Total non‑current assets~~

	~~Total assets~~
	Current liabilities Deferred income Payables 12 Provisions 13 Interest bearing liabilities 14 Liabilities classifed as held for sale 7

	~~Total current liabilities~~
	Non‑current liabilities Deferred income Payables 12 Provisions 13 Interest bearingliabilities 14

	~~Total non‑current liabilities~~

	~~Total liabilities~~

	~~Net assets~~
	Equity Issued capital 15 Reserves 16 Accumulated losses 17

	~~Total equity attributable to Unitholders~~
	Minorityinterests 18

	~~Total equity~~

The balance sheet is to be read in conjunction with the accompanying notes.

132

Income statement

for the year ended 30 June 2010

	Note	Consolidated 2010 2009 $M $M 225.1 238.6 (132.7) (374.7) 1.7 9.1 (0.1) 33.8 (8.0) 10.9 (194.6) (412.3) 19.7 16.0 6.6 4.0 (82.3) (474.6) (55.9) (63.1) (2.3) (3.7) (27.8) (12.4) (48.9) (389.7) (6.1) (6.8) (141.0) (475.7) ~~(223.3)~~ ~~(950.3)~~ 210.5 193.0 (234.7) (218.2) ~~(24.2)~~ ~~(25.2)~~ ~~(247.5)~~ ~~(975.5)~~ 0.2 (5.5) ~~(247.3)~~ ~~(981.0)~~ (299.6) (1,005.0) 52.3 24.0 ~~(247.3)~~ ~~(981.0)~~
	Revenue and other income Gross property income Net loss from fair value adjustments on investment properties 9 Net gain on disposal of investment properties 3 Net (loss)/gain on disposal of controlled entities 3 Net (loss)/gain on disposal of equity investments 3 Share of net results of equity accounted investments 3 Distributions from equity investments Other income

	Property and other expenses Property expenses Trust expenses Management fee Impairment losses 3 Other expenses


	~~Loss before interest and tax~~
	Financing costs Financial income 3 Financial expenses 3

	~~Net fnancing costs~~

	~~Loss before income tax~~
	Income tax beneft/(expense)

	~~Loss for theyear~~
	Loss attributable to Unitholders Proft attributable to minorityinterests

	~~Loss for theyear~~

The income statement is to be read in conjunction with the accompanying notes.

Goodman Group Financial Report 2010

133

Statement of comprehensive income

for the year ended 30 June 2010

	Note	Consolidated 2010 2009 $M $M (247.3) (981.0) 14.7 8.1 – 2.8 (0.4) (282.2) 52.7 (16.4) (204.8) (88.0) (137.8) (375.7) ~~(385.1)~~ ~~(1,356.7)~~ (437.4) (1,380.7) 52.3 24.0 ~~(385.1)~~ ~~(1,356.7)~~
	Loss for theyear
	Other comprehensive income Change in fair value of other fnancial assets 16 Transfers to income statement due to disposal of investments 16 Cash fow hedges: – Change in value of fnancial instruments 16 – Transfers to income statement 16 Effect of foreign currencytranslation 16
	Other comprehensive income for theyear

	~~Total comprehensive income for theyear~~
	Attributable to: Unitholders Minorityinterests

	~~Total comprehensive income for theyear~~

The statement of comprehensive income is to be read in conjunction with the accompanying notes.

134

Statement of changes in equity

for the year ended 30 June 2010

Minority
Total
Consolidated
Attributable to Unitholders
interests
equity
Foreign
Asset
Cash fow
currency
Capital
Accum‑
Issued revaluation
hedge translation
profts
ulated
equity
reserve
reserve
reserve
reserve
losses
Total
Note
$M
$M
$M
$M
$M
$M
$M
$M
$M
Balance at 1 July 2008
4,349.2
(330.3)
72.6
23.9
231.4
(0.6) 4,346.2
320.6
4,666.8
Total comprehensive income for
the year
16,17
Loss for theyear
–
–
–
–
–
(1,005.0)
(1,005.0)
24.0
(981.0)
Total other comprehensive income
for the year
–
14.7
(295.8)
(94.6)
–
–
(375.7)
–
(375.7)
Transfers
–
(968.1)
–
–
(93.1)
1,061.2
–
–
–
~~Total comprehensive income for theyear~~
~~–~~
~~(953.4)~~
~~(295.8)~~
~~(94.6)~~
~~(93.1)~~
~~56.2(1,380.7)~~
~~24.0(1,356.7)~~
Contributions by and distributions to owners
Ordinary units issued to Unitholders
904.1
–
–
–
–
–
904.1
–
904.1
Issue costs due to ordinary units
(28.9)
–
–
–
–
–
(28.9)
–
(28.9)
Ordinary units issued under the earn-out
provisions of the Eurinpro acquisition
4.7
–
–
–
–
–
4.7
–
4.7
Issue costs due to Goodman PLUS Trust
hybrid securities
–
–
–
–
–
–
–
(1.8)
(1.8)
Distributions declared on ordinary units
4
–
–
–
–
–
(268.2)
(268.2)
–
(268.2)
Distributions declared on Goodman
PLUS Trust hybrid securities
4
–
–
–
–
–
–
–
(24.0)
(24.0)
~~Balance at 30 June 2009~~
~~5,229.1(1,283.7)~~
~~(223.2)~~
~~(70.7)~~
~~138.3~~
~~(212.6)~~
~~3,577.2~~
~~318.8~~
~~3,896.0~~
Minority
Total
Consolidated
Attributable to Unitholders
interests
equity
Foreign
Asset
Cash fow
currency
Capital
Accum‑
Issued revaluation
hedge translation
profts
ulated
equity
reserve
reserve
reserve
reserve
losses
Total
Note
$M
$M
$M
$M
$M
$M
$M
$M
$M
Balance at 1 July 2009
5,229.1
(1,283.7)
(223.2)
(70.7)
138.3
(212.6)
3,577.2
318.8
3,896.0
Total comprehensive income for
the year
16,17
Loss for theyear
–
–
–
–
–
(299.6)
(299.6)
52.3
(247.3)
Total other comprehensive income
for the year
–
101.0
75.9
(328.3)
13.6
–
(137.8)
–
(137.8)
Transfers
–
(375.0)
–
–
(31.0)
406.0
–
–
–
~~Total comprehensive income for theyear~~
~~–~~
~~(274.0)~~
~~75.9~~
~~(328.3)~~
~~(17.4)~~
~~106.4~~
~~(437.4)~~
~~52.3~~
~~(385.1)~~
Contributions by and distributions to owners
Ordinary units issued to Unitholders
1,260.2
–
–
–
–
–
1,260.2
–
1,260.2
Issue costs due to ordinary units
(46.4)
–
–
–
–
–
(46.4)
–
(46.4)
Increase due to China Investment
Corporation (CIC) convertible preference
securities issued
–
–
–
–
–
–
–
452.3
452.3
Issue costs due to CIC convertible
preference securities
–
–
–
–
–
–
–
(20.6)
(20.6)
Distributions declared on ordinary units
4
–
–
–
–
–
(214.1)
(214.1)
–
(214.1)
Distributions declared on Goodman PLUS
Trust hybrid securities
4
–
–
–
–
–
–
–
(18.3)
(18.3)
Distributions declared on CIC convertible
preference securities
4
–
–
–
–
–
–
–
(34.0)
(34.0)
~~Balance at 30 June 2010~~
~~6,442.9~~
~~(1,557.7)~~
~~(147.3)~~
~~(399.0)~~
~~120.9~~
~~(320.3)~~
~~4,139.5~~
~~750.5~~
~~4,890.0~~

The statement of changes in equity is to be read in conjunction with the accompanying notes.

Goodman Group Financial Report 2010

135

Cash flow statement

for the year ended 30 June 2010

	Note	Consolidated 2010 2009 $M $M 225.4 261.5 80.7 4.4 (51.1) (70.3) (81.8) (26.2) 53.7 135.4 (162.8) (142.9) 50.2 14.8 (0.9) (3.3) ~~113.4~~ ~~173.4~~ 41.4 203.5 186.8 12.4 – (21.3) 31.1 282.1 – (10.5) (116.1) (880.5) (54.7) (318.9) ~~88.5~~ ~~(733.2)~~ 1,260.2 904.1 500.0 – (46.4) (30.8) (20.6) – 895.3 5,271.1 (2,514.8) (5,372.2) 125.4 (185.8) (142.9) (438.6) ~~56.2~~ ~~147.8~~ 258.1 (412.0) 216.7 628.7 ~~474.8~~ ~~216.7~~
	Cash fows from operating activities Property income received Other cash receipts from services provided Property expenses paid Other cash payments in the course of operations Dividends/distributions received Interest and other fnance costs paid Interest received Income taxespaid

	~~Net cashprovided by operating activities~~ ~~22(b)~~
	Cash fows from investing activities Proceeds from sale of investment properties Proceeds from sale of controlled entities (net of cash disposed) 20 Cash included in assets held for sale Proceeds from sale of equity investments Payments to acquire controlled entities (net of cash acquired) Payments for equity investments Payments for investmentproperties and developments

	~~Net cashprovided by/(used in) investing activities~~
	Cash fows from fnancing activities Proceeds from issue of units to Unitholders Proceeds from issue of CIC convertible preference securities Transaction costs from issue of securities Transaction costs from issue of CIC convertible preference securities Proceeds from borrowings Repayments of borrowings Loans from/(to) related parties Distributionspaid 4

	~~Net cashprovided by fnancing activities~~
	Net increase/(decrease) in cash held Cash at the beginningof theyear

	~~Cash at the end of theyear~~ ~~22(a)~~

Non-cash financing and investing activities are included in note 22(c).

The cash flow statement is to be read in conjunction with the accompanying notes.

136

Notes to the consolidated financial statements

for the year ended 30 June 2010

1. Statement of significant accounting policies

Goodman Industrial Trust (GIT, Trust or Parent Entity) is established in Australia. The consolidated financial report of GIT for the year ended 30 June 2010 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 the Trust, and GL must at all times act in the best interest of the stapled entity.

Statement of compliance

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

The consolidated financial report is presented in Australian dollars and was authorised for issue by the directors (Directors) of Goodman Funds Management Limited on 19 August 2010.

Changes in accounting policy

Starting as of 1 July 2009, the Consolidated Entity has changed its accounting policies in the following areas:

- business combinations, refer to note 1(b);
- investment properties, refer to note 1(e);
- segment reporting, refer to note 1(q); and
- presentation of financial statements, refer to note 1(r).

The Corporations Amendment (Corporate Reporting Reform) Act 2010 amended the Corporations Act 2001 to require the presentation of consolidated financial statements only. Summarised financial information of the Parent Entity is disclosed in note 26.

The significant accounting policies which have been adopted in the preparation of the consolidated financial report are set out below.

(a) Basis of preparation of the consolidated financial report

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

- investment properties;
- derivative financial instruments; and
- financial instruments classified as available for sale.

(b) Principles of consolidation

Business combinations

All business combinations that occurred on or after 1 July 2004 and on or prior to 30 June 2009 were accounted for by applying the purchase method.

Change in accounting policy

Goodman Group Financial Report 2010

137

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(b) Principles of consolidation (cont)

Measuring goodwill

Contingent liabilities

Non‑controlling interest

The Consolidated Entity measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.

Transaction costs

Accounting for acquisitions of non‑controlling interests

The Consolidated Entity has adopted revised AASB 3 Business Combination s (2008) and amended AASB 127 Consolidated and Separate Financial Statements (2008) for acquisitions of non-controlling interests occurring in the financial year starting 1 July 2009. Under the new accounting policy, acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions.

Controlled entities

The consolidated financial statements incorporate the assets and liabilities of all entities controlled by the Parent Entity as at 30 June 2010 and the results of all such entities for the year ended 30 June 2010. Control exists when the Parent Entity has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.

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

Accounting for hybrid and convertible preference securities

Goodman PLUS Trust and China Hybrid Investment Sub-trust are wholly-owned subsidiaries of GIT. Both trusts have issued convertible hybrid securities (Hybrid Securities) which meet the definition of equity for the purposes of the Consolidated Entity. Accordingly, the Hybrid Securities have been classified as equity and presented as minority interests. Incremental costs directly attributable to the issue of Hybrid Securities are recognised as a deduction from equity, net of any tax effects.

Associates

Associates are those entities over which the Consolidated Entity exercises significant influence but not control and which are not intended for sale in the near future. In the consolidated financial statements, investments in associates are accounted for using the equity method. Investments in associates are carried at the lower of the equity accounted amount and recoverable amount. Under this method, the Consolidated Entity’s share of post-acquisition profits or losses of associates is recognised in the consolidated income statement, and its share of post-acquisition movements in reserves is recognised in consolidated reserves. Cumulative post-acquisition movements in both profit or loss and reserves are adjusted against the cost of the investment.

Joint venture entities (JVEs)

A JVE is an entity that is jointly controlled by the Consolidated Entity. In the consolidated financial 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 profit or loss is recognised in the consolidated income statement from the date joint control commences until the date joint control ceases. Movements in reserves are recognised directly in consolidated reserves.

138

1. Statement of significant 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 an impairment of recoverable amounts.

(c) Revenue recognition

Rental income

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

Recoverable outgoings

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

Loan facilities

Income from the provision of loan facilities including establishment fees, line fees and interest income is recognised over the relevant service period on an effective yield basis.

Interest income

Interest is brought to account on an accruals basis using the effective interest rate method, and, if not received at balance date, is reflected in the balance sheet as a receivable.

Income from dividends and distributions

Dividend and distribution income is recognised net of any franking credits and before deduction of any withholding tax.

Dividend and distribution income is recognised when a dividend/distribution is declared and, if not received at balance date, is reflected in the balance sheet as a receivable.

(d) Foreign currency translation

Functional and presentation currency

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

Transactions

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

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

Translation of controlled foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars at foreign exchange rates ruling at the balance sheet date.

Revenue and expenses are translated at weighted average rates for the year. Exchange differences arising on translation are taken directly to the foreign currency translation reserve until the disposal or partial disposal of the operations. Fair value adjustments arising on the acquisition of foreign entities are treated as assets of the foreign entities and translated at the closing rate.

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

Goodman Group Financial Report 2010

139

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(d) Foreign currency translation (cont)

Exchange rates used

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

as follows:
	Weighted average As at 30 June
	2010 2009 2010 2009
New Zealand dollar Singapore dollar Hong Kong dollar United States dollar Japanese yen Euro Britishpounds sterling	1.2554 1.2289 1.2321 1.2428 1.2404 1.0916 1.1831 1.1699 6.8469 5.8048 6.5923 6.2586 0.8822 0.7473 0.8523 0.8114 80.7539 74.2058 76.7200 77.7600 0.6359 0.5416 0.7050 0.5751 0.5588 0.4625 0.5666 0.4872

(e) Investment properties

Components of investment properties

Completed investment properties

An independent valuation of completed 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 satisfied that, in their opinion, the carrying value of the investment properties reflects the fair value of the investment properties at that date.

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

Investment properties under development

Investment properties under development include land, new investment properties in the course of construction and investment properties that are being redeveloped.

140

1. Statement of significant accounting policies (cont)

(e) Investment properties (cont)

The Consolidated Entity has adopted AASB 2008-5 Amendments to Australian Accounting Standards arising from the Annual Improvements Project and AASB 2008-6 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project for the year ended 30 June 2010. The principal impact for the Consolidated Entity relates to the amendments to AASB 140 Investment Property which brings into scope, property under development for future use as an investment property and land. As the Consolidated Entity adopts the fair value approach under AASB 140, property under development for future use as an investment property is now measured at fair value (previously, it was measured at the lower of cost and recoverable amount). The change in accounting policy has been applied prospectively with the movement between book value at 1 July 2009 and fair value at 30 June 2010 (i.e. including the difference between book value and fair value at 1 July 2009) reported through the income statement as a component of the net loss from fair value adjustments on investment properties.

Disposal of investment properties

(f) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST (or value added tax in certain jurisdictions), 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 flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the relevant taxation authority are classified as operating cash flows.

(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. The wholly-owned entities of GIT that operate in certain foreign jurisdictions are liable to pay tax in those jurisdictions.

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

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

Goodman Group Financial Report 2010

141

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(j) Finance costs

Finance costs relating to a qualifying asset are capitalised as part of the cost of that asset using a weighted average cost of debt. Qualifying assets are assets which take a substantial time to get ready for their intended use or sale. All other finance costs are expensed as incurred.

(k) Interest bearing liabilities

Bank loans are recognised on inception at their fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing liabilities are stated at amortised cost with any difference being recognised in the income statement over the period 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

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.

(m) Provisions

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

Distributions payable

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

(n) Derivative financial instruments and hedging

The Consolidated Entity uses derivative financial instruments to hedge its exposure to interest rate and foreign exchange risks arising from operating, financing and investing activities. In accordance with its treasury policy, the Consolidated Entity does not hold or issue derivative financial instruments for trading purposes. From 1 July 2009, the Consolidated Entity amended its financial risk management policy (refer to note 24) such that derivative financial instruments are not generally designated as a hedge for accounting purposes, and accordingly such derivative financial instruments are treated as trading instruments.

In certain circumstances, the Consolidated Entity may consider it appropriate to designate certain transactions as a hedge. Such transactions are designated as a hedge of the anticipated specific purchase or sale of goods or services, purchase of qualifying assets, or an anticipated interest transaction, only when they are expected to reduce exposure to the risks being hedged; and 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 profit or loss.

142

1. Statement of significant accounting policies (cont)

(n) Derivative financial instruments and hedging (cont)

Cash flow hedges

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

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 profit or loss.

(o) Investments

Investments in equity securities

Investments held for trading are classified as current assets and are stated at fair value with any resultant gain or loss recognised in profit or loss.

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

Investments in listed entities which are designated as available for sale (other than investments in listed associates and 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 classified as available for sale are sold, the accumulated fair value adjustments are included in the profit or loss as gains or losses from disposal of investment securities.

(p) Impairment

The carrying amounts of the Consolidated Entity’s assets (except investment properties) are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the asset is written down to the recoverable amount. The write-down is expensed in the reporting period in which it occurs.

When a decline in the fair value of an available for sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the income statement even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the income statement.

Calculation of recoverable amount

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

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

Goodman Group Financial Report 2010

143

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

1. Statement of significant accounting policies (cont)

(p) Impairment (cont)

Reversals of impairment

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

An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

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

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

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

(q) Segment reporting

Segment results that are reported to the Group Chief Executive Officer include items that are directly attributable to a segment and the portion that can be allocated to the segment on a reasonable basis. Unallocated items include interest bearing receivables and payables, derivative financial instruments, provision for distributions to Unitholders, corporate assets, head office expenses and income tax assets and liabilities.

Comparative segment information has been re-presented in accordance with AASB 8.

(r) Presentation of financial statements

(s) Parent Entity financial information

The financial information for the Parent Entity, Goodman Industrial Trust, disclosed in note 26 has been prepared on the same basis as the consolidated financial statements, except as set out below:

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 associates and JVEs

Investments in associates and JVEs are accounted for at cost in the financial statements of Goodman Industrial Trust. Dividends/distributions received from associates and JVEs are recognised in the Parent Entity’s income statement, rather than being deducted from the carrying amount of these investments.

144

1. Statement of significant accounting policies (cont)

(t) Australian accounting standards issued but not yet effective

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

- AASB 9 Financial Instruments includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments: Recognition and Measurement . AASB 9 will become mandatory for the Consolidated Entity’s 30 June 2014 financial statements. Retrospective application is generally required, although there are exceptions, particularly if the Consolidated Entity adopts the standard for the year ending 30 June 2012 or earlier. The Consolidated Entity has not yet determined the potential effect of the standard;
- AASB 124 Related Party Disclosures (revised December 2009) simplifies and clarifies the intended meaning of the definition of a related party. The amendments will become mandatory for the Consolidated Entity’s financial statements for the year ending 30 June 2012 and are not expected to have any impact on the financial statements;
- AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project affect various standards resulting in minor changes for presentation, disclosure, recognition and measurement purposes. The amendments, which become mandatory for the Consolidated Entity’s financial statements for the year ending 30 June 2011, are not expected to have a significant impact on the financial statements; and
- AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement – AASB 14 make amendments to AASB Interpretation 14 AASB 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements removing an unintended consequence arising from the treatment of the prepayments of future contributions in some circumstances where there is a minimum funding requirement. The amendments will become mandatory for the Consolidated Entity’s 30 June 2012 financial statements with retrospective application required. The amendments are not expected to have any impact on the financial statements.

(u) Rounding

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

Goodman Group Financial Report 2010

145

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

2. Critical accounting estimates used in the preparation of the financial statements

The preparation of consolidated financial 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 significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. The accounting impacts of revisions to estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Investment property values – stabilised investment properties

Stabilised investment property refers to investment property which is not under development. Stabilised 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 knowledgably, prudently and without compulsion.

Approach to determination of fair value

- function of the asset (distribution/warehouse or suburban office);
- 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.

Key assumptions for DCF calculations

Alternatively, internal valuations are prepared using a DCF methodology. The DCF calculations are 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 Group) are rental growth rates, discount rates, market rental rates and letting up incentives. Discount rates are computed using the 10 year bond rate or equivalent in each jurisdiction plus increments to reflect country risk, tenant credit risk and industry risk. Where possible, the components of the discount rate are benchmarked to available market data.

Market assessment at 30 June 2010 and 30 June 2009

Investment property markets in most regions were significantly and adversely impacted by the changes in economic conditions during the course of the comparative financial year and during the early part of the current financial year. The scarcity of finance resulted in a reduced number of transactions involving properties comparable to those owned or managed by Goodman Group which significantly increased the level of uncertainty inherent in determining the fair value of individual properties. The difficulties in determining fair value were exacerbated by an absence of consensus on how to distinguish sales where sellers are forced as opposed to willing.

146

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

Investment property values – stabilised investment properties (cont)

In the latter part of the current financial year, the increasing number of sales transactions in property markets in which Goodman Group operates means that more market segments are considered to be active at 30 June 2010. This has increased the extent to which external valuations have been undertaken with a consequent reduction in circumstances where fair value is determined solely by reference to an internal valuation.

Key assumptions adopted at 30 June 2010 and 30 June 2009

At 30 June 2010, adjustments were made to the carrying value of stabilised investment properties arising from internal valuations using DCF calculations for Goodman Group properties in Australia and Continental Europe only. No such adjustments were made to properties within managed funds at 30 June 2010. For all other stabilised investment properties, there was sufficient recent and reliable cap rate information available and the underlying parameters supporting the existing internal or external valuation were compared to information derived from recent relevant market transactions and the existing carrying value was considered to represent the fair value of the property at 30 June 2010.

Division	Weighted average Derived weighted cap rate for Total portfolio average cap rate external valuations weighted average (DCF method)1 at 30 June cap rate
	2010 2009 2010 2009 2010 2009 % % % % % %
Australia New Zealand Hong Kong China Japan Logistics – Continental Europe Logistics – United Kingdom Business Parks – United Kingdom	8.2 8.0 8.0 8.5 8.2 8.0 n/a 8.7 – – 8.6 8.7 n/a 7.1 6.7 7.4 6.9 7.1 n/a 9.2 – – 9.2 9.2 n/a 5.5 6.1 5.5 6.1 5.5 7.7 7.7 7.9 7.4 7.9 7.7 n/a 8.2 7.5 8.0 8.0 8.2 n/a 7.9 7.6 – 7.6 7.9

Adjustments were made to the carrying value of stabilised investment properties arising from internal valuations at 30 June 2010 in Australia and Continental Europe only. Valuation movements in those divisions reflect increased rental growth assumptions offset by higher discount rates and incentives, and longer letting up allowances.

Division	GIT share Decrease in of decrease investment in investment property values property values (GITproperties) (managed funds)
	2010 2009 2010 2009 $M $M $M $M
Australia Logistics – Continental Europe Logistics – United Kingdom Business Parks – United Kingdom	(7.0) (40.7) n/a1 (25.3) (1.4) (0.9) n/a1 (9.7) n/a1 (8.2) n/a1 – n/a1 – n/a1 (15.5)

Adjustments were made to the carrying value of stabilised investment properties arising from internal valuations at 30 June 2010 for Goodman Group properties in Australia and Continental Europe only.

At 30 June 2010, the carrying value of stabilised investment properties held by the Consolidated Entity is $2,244.3 million (2009: $2,332.1 million).

Goodman Group Financial Report 2010

147

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

3. Loss for the year

	.	Consolidated 2010 2009 $M $M 30.2 197.8 (28.5) (188.7) ~~1.7~~ ~~9.1~~ 186.8 186.0 (186.9) (152.2) ~~(0.1)~~ ~~33.8~~ 30.2 286.5 (38.2) (275.6) ~~(8.0)~~ ~~10.9~~ (191.9) (415.1) (2.7) 2.8 ~~(194.6)~~ ~~(412.3)~~ (0.8) – – (8.7) (2.4) – (45.3) (217.6) (0.4) (2.0) – (161.4) ~~(48.9)~~ ~~(389.7)~~ 186.7 187.4 23.8 5.6 210.5 193.0 (124.0) (186.1) (50.7) – (8.2) – (6.5) – (67.7) (61.0) 22.4 28.9 (234.7) (218.2) ~~(24.2)~~ ~~(25.2)~~
	Loss before income tax has been arrived at after crediting/(charging) the following items: Net consideration from the sale of investment properties Carryingvalue of investmentproperties sold

	~~Netgain on disposal of investmentproperties~~
	Net consideration received and receivable from the sale of controlled entities Net assets disposed

	~~Net(loss)/gain on disposal of controlled entities~~
	Net consideration from the sale of equity investments Carryingvalue of equityinvestments sold

	~~Net(loss)/gain on disposal of equity investments~~
	Share of net results of investments in associates – refer to note 10(a) Share of net results of investments in JVEs – refer to note 10(b)

	~~Share of net results of equity accounted investments~~
	Impairment of receivables Impairment of assets classifed as held for sale Impairment of inventories Impairment of loans to related parties1 Impairment of equity accounted investments Impairment of other fnancial assets2

	~~Total impairment losses~~
	Financial income Interest income from: – Related parties – Otherparties

	Financial expenses Interest expense on third party loans, overdrafts and derivatives Debt restructuring costs Other borrowing costs Foreign exchange loss Fair value adjustments on derivative fnancial instruments3 Capitalised borrowingcosts4


	~~Net fnancing costs~~

The impairment loss relates to loans provided to certain JVEs to fund specific development projects. The impairment is a result of a devaluation of the development asset in the JVE.
An impairment loss of $nil (2009: $161.4 million) was recognised on the investment in ING Industrial Fund.
Includes fair value movements on the derivatives not designated for hedge accounting during the year and amortisation of gains or losses on terminated derivative contracts included in the cash flow hedge reserve. The remaining gains or losses on terminated derivative contracts included in the cash flow hedge reserve will be amortised over future periods.
Borrowing costs were capitalised to investment properties under development at weighted average rates of between 1.8% and 8.0% per annum (2009: 1.4% and 10.8% per annum).

148

3. Loss for the year (cont)

Restructuring costs associated with the financing initiatives

During the year, the Consolidated Entity completed a number of financing initiatives including:

an institutional placement and a one for one non-renounceable entitlement offering;
- retirement of the A$300 million drawn under the A$485 million secured loan provided by Macquarie Group and CIC;
- retirement of the amounts drawn under the A$520 million tranche B of the syndicated multi currency facility (SMCF);
- renegotiated the extension from May 2011 to September 2012 of A$438 million of the A$520 million tranche C of the SMCF;
- extension from December 2012 to December 2013 of €340 million of the €525 million European revolving credit facility; and
- negotiation of amended covenants to the common terms deed poll, which applies to both the SMCF and European revolving credit facility.

The costs associated with these initiatives of $50.7 million included advisers’ fees, arrangers’ fees, commitment fees and write off of the unamortised fees that had previously been capitalised to modified facilities.

4. Distributions

(a) Distributions declared and paid by GIT

	Distribution Total amount Date of cpu $M payment Distribution for the year ended 30 June 2010: – 31 Dec 2009 1.50 93.1 26 Feb 2010 – 30 Jun 2010 1.90 121.0 26 Aug2010 ~~3.40~~ ~~214.1~~ Distribution for the year ended 30 June 2009: – 31 Dec 2008 9.65 268.2 26 Feb 2009 – 30 Jun 2009 – – – ~~9.65~~ ~~268.2~~

The distribution for the quarter ended 30 June 2008 of $145.9 million was paid on 26 August 2008.

(b) Distributions declared and paid by Goodman PLUS Trust

Distribution
Total amount
Date of
cpu
$M
payment
Distributions for the year ended 30 June 2010:
– 21 Sep 2009
128.0
4.2
21 Sep 2009
– 21 Dec 2009
129.2
4.2
21 Dec 2009
– 21 Mar 2010
148.1
4.9
21 Mar 2010
– 21 Jun 2010
153.9
5.0
21 Jun 2010
~~559.2~~
~~18.3~~
Distribution
Total amount
Date of
cpu
$M
payment
Distributions for the year ended 30 June 2009:
– 21 Sep 2008
242.5
7.9
22 Sep 2008
– 21 Dec 2008
233.7
7.6
22 Dec 2008
– 21 Mar 2009
150.6
4.9
23 Mar 2009
– 21 Jun 2009
124.6
4.1
22 Jun 2009
~~751.4~~
~~24.5~~

Goodman Group Financial Report 2010

149

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

4. Distributions (cont)

(c) Distributions declared and paid by China Hybrid Investment Sub‑Trust

	Distribution Total amount Date of cpu $M payment Distributions for the year ended 30 June 2010: – 21 Dec 2009 180,821.9 9.0 21 Dec 2009 – 21 Jun 2010 498,630.1 25.0 21 Jun 2010 ~~679,452.0~~ ~~34.0~~

The Hybrid Securities were issued by China Hybrid Investment Sub-Trust on 16 October 2009.

5. Receivables

		Consolidated 2010 2009 $M $M 8.2 10.1 32.4 84.2 1,945.7 2,364.4 2.9 2.7 ~~1,989.2~~ ~~2,461.4~~ 408.0 401.9 20.1 28.2 17.0 – ~~445.1~~ ~~430.1~~
	Current Trade receivables Other receivables Loans to related parties Derivative fnancial instruments


	Non‑current Loans to related parties Derivative fnancial instruments Other receivables

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

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

Amounts in A$M	NZD	HKD	USD	GBP	EUR	JPY
2010	1.4	179.5	45.6	1,383.2	519.8	238.6
2009	33.6	175.0	11.5	1,105.0	1,159.2	226.8

Trade receivables

Trade receivables that are past due are not considered impaired. As at 30 June 2010, trade receivables of $0.8 million were impaired (2009: $nil). The ageing analysis of these trade receivables (before impairment) is as follows:

		Consolidated 2010 2009 $M $M 1.6 1.7 0.8 1.2 2.3 1.0 ~~4.7~~ ~~3.9~~
	Overdue by: Up to one month One to four months Greater than four months

The Consolidated Entity holds bank guarantees as security for $7.2 million (2009: $3.4 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 15.6% per annum (2009: 1.6% to 10.6% per annum). An impairment loss of $45.3 million was recognised on loans to related parties in the current year (2009: $217.6 million). Further details of loans to related parties are set out in note 23.

150

6. Inventories

	6. Inventories
		Consolidated 2010 2009 $M $M 28.7 – ~~28.7~~ ~~–~~ 70.7 – ~~70.7~~ ~~–~~
	Current Development land


	Non‑current Development land

7. Assets/liabilities classified as held for sale

		Consolidated 2010 2009 $M $M – 21.3 – 157.3 – 4.3 ~~–~~ ~~182.9~~ – (10.1) ~~–~~ ~~(10.1)~~
	Assets classifed as held for sale Cash Investment properties Other assets


	Liabilities classifed as held for sale Other liabilities

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 on 9 September, 2009. Accordingly, at 30 June 2009, the assets and liabilities of the entity were presented as held for sale and recorded at the lower of cost or net realisable value.

8. Other assets

		Consolidated 2010 2009 $M $M 7.5 6.5 20.3 25.0 ~~27.8~~ ~~31.5~~
	Prepayments Other

Goodman Group Financial Report 2010

151

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

9. Investment properties

9. Investment properties
				Investment
	Completed		investment	properties	under	Total	investment
		properties		development		properties
	2010		2009	2010	2009	2010	2009
	$M		$M	$M	$M	$M	$M
Carrying amount at the beginning
of the year	2,332.1		2,790.6	538.6	655.4	2,870.7	3,446.0
Acquisitions:
– On acquisition of controlled entities	–		23.9	–	–	–	23.9
– Other acquisitions	–		34.8	13.9	67.5	13.9	102.3
Transfers in from other assets	–		–	–	37.7	–	37.7
Capital expenditure	19.5		219.4	20.6	(56.7)	40.1	162.7
Transfers in/(out)	138.0		–	(138.0)	–	–	–
Disposals:
– Carrying value of properties sold	(20.2)		(147.3)	(8.3)	(41.4)	(28.5)	(188.7)
– On disposal of interests in controlled
entities	(79.5)		(120.8)	–	(90.1)	(79.5)	(210.9)
– Transfers to asset held for sale	–		(157.3)	–	–	–	(157.3)
Transfers to inventory	–		–	(104.0)	–	(104.0)	–
Net loss from fair value adjustments	(81.7)		(334.9)	(51.0)	(39.8)	(132.7)	(374.7)
Effect of foreign currencytranslation	(63.9)		23.7	(15.9)	6.0	(79.8)	29.7
~~Carrying amount at the end of theyear~~	~~2,244.3~~		~~2,332.1~~	~~255.9~~	~~538.6~~	~~2,500.2~~	~~2,870.7~~

Investment properties with carrying value of $72.5 million (2009: $1,289.6 million) were subject to charges to secure bank loans.

10. Investments accounted for using the equity method

	10. Investments accounted for using the equity method
	Note	Consolidated 2010 2009 $M $M 1,976.3 2,250.9 95.1 76.5 ~~2,071.4~~ ~~2,327.4~~
	Share of net assets accounted for using the equity method Associates 10(a) JVEs 10(b)

(a) Investments in associates

	Movements in carrying amount of investments in associates	Consolidated 2010 2009 $M $M 2,250.9 2,018.0 75.1 112.1 (267.0) (527.2) ~~(191.9)~~ ~~(415.1)~~ (1.6) (121.0) 197.5 1,039.0 (38.2) (180.3) (116.2) (122.0) (124.2) 32.3 ~~1,976.3~~ ~~2,250.9~~
	Carryingamount at the beginningof theyear
	Share of net results after tax (before revaluations) Share of net loss from fair value adjustments on investmentproperties

	~~Share of net results~~
	Share of movements in reserves Acquisitions of investments Disposals of investments Distributions received and receivable Effect of foreign currencytranslation

	~~Carrying amount at the end of theyear~~

152

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

(a) Investments in associates (cont)

	Country	of			Share of			Consolidated	Consolidated		Consolidated	Consolidated
	establishment/				associate’s			ownership			investment
	incorporation				result recognised				interest		carrying amount
					2010	2009		2010	2009		2010	2009
					$M	$M		%		%	$M	$M
Property investment associates
Goodman Australia Industrial
Fund (GAIF)	Australia				(87.9) (156.8)			43.8	45.4		1,090.8	1,122.9
Goodman Property
Trust (GMT)1	New Zealand				(18.3) (13.6)			16.8	21.9		109.3	170.7
Goodman Hong Kong
Logistics Fund (GHKLF)	Cayman Islands				23.3	15.7		24.2	24.2		242.6	244.2
Goodman European
Logistics Fund (GELF)	Luxembourg				(65.0) (72.2)			38.3	32.9		292.7	409.4
Arlington Business
Parks Partnership
(ABPP)	United	Kingdom			(47.0) (188.2)			28.9	28.9		231.7	303.7
Goodman China
Logistics Holding
Limited(GCLHL)	China				3.0	–		20.0		–	9.2	–
					~~(191.9)~~ ~~(415.1)~~						~~1,976.3~~	~~2,250.9~~
1. GMT is a listed entity. The market value of the Consolidated Entity’s					investment in GMT at 30			June 2010 using the quoted			price on the last day of
trading was $134.4 million (2009: $135.8	million).
												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
GAIF				2010	413.6	(194.8)			4,430.6		1,953.2	2,477.4
				2009	404.6	(336.4)			4,637.8		2,165.1	2,472.7
GMT				2010	45.7		(111.4)		1,269.1		671.5	597.6
				2009	106.8		(63.2)		1,256.9		530.7	726.2
GHKLF				2010	92.1			94.9	1,628.0		625.4	1,002.6
				2009	121.4			71.2	1,703.4		729.3	974.1
GELF				2010	80.1			27.3	1,925.6		1,175.7	749.9
				2009	183.9	(229.5)			2,633.3		1,471.6	1,161.7
ABPP				2010	136.2	(158.9)			2,327.4		1,512.4	815.0
				2009	200.9	(517.2)			3,147.6		2,004.0	1,143.6
GCLHL				2010	11.1			14.8	216.6		180.1	36.5
				2009	–			–	–		–	–

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.

Goodman Group Financial Report 2010

153

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

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

(b) Investments in JVEs

	Movements in carrying amount of investments in JVEs	Consolidated 2010 2009 $M $M 76.5 39.2 1.4 3.4 (4.1) (0.6) ~~(2.7)~~ ~~2.8~~ 0.3 (1.7) – (2.0) 23.3 104.2 – (67.3) – (2.0) (2.3) 3.3 ~~95.1~~ ~~76.5~~
	Carryingamount at the beginningof theyear
	Share of net results after tax (before revaluations) Share of net loss from fair value adjustments on investmentproperties

	~~Share of net results~~
	Share of movements in reserves Impairment1 Acquisitions of investments Disposals of investments Distributions received and receivable Effect of foreign currencytranslation

	~~Carrying amount at the end of theyear~~

Relates to investment in 413 King William Street Trust.

	Country of			Consolidated	Consolidated	Consolidated	Consolidated
	establishment/	Share of JVE’s		ownership		investment
	incorporation	result recognised			interest	carrying	amount
		2010	2009	2010	2009	2010	2009
		$M	$M	%	%	$M	$M
Property investment JVEs
413 King William Street Trust
(KWS)	Australia	–	–	50.0	50.0	0.5	0.5
MGJ Cayman 1 (MGJ)	Cayman Islands	(4.1)	(0.8)	50.0	50.0	11.9	14.1
Abu Dhabi Business Parks
Company (Abu Dhabi)	United Arab Emirates	–	–	49.0	49.0	–	–
Goodman Princeton Holdings
(Lux) Sàrl (Princeton Lux)	Luxembourg	–	–	20.0	–	9.3	–
Goodman Princeton Holdings
(Jersey)Limited(Princeton Jersey)	Jersey	–	–	20.0	–	8.2	–
Property development JVEs
GGGAIF Huntingwood East
(Huntingwood East)	Australia	–	–	50.0	50.0	–	–
GGGAIF Huntingwood West
(Huntingwood West)	Australia	–	–	50.0	50.0	–	–
GGGAIF Moorebank
(Moorebank)	Australia	–	–	50.0	50.0	–	–
Highbrook Development
Limited (HDL)	New Zealand	6.3	2.1	25.0	25.0	44.9	36.9
Goodman Seaview Ltd (Seaview)	Cayman Islands	–	–	50.0	50.0	5.2	5.5
Goodman Interlink Ltd (Interlink)	Cayman Islands	–	–	50.0	50.0	12.1	12.7
Goodman Herten Logistics
(Lux) Sàrl (Herten)	Luxembourg	(1.3)	1.5	50.0	50.0	–	1.4
Goodman Lazulite Logistics
(Lux) Sàrl (Lazulite)	Luxembourg	(0.3)	0.4	50.0	50.0	0.1	0.4
Ullo One 2008 Kft (Ullo)	Hungary	(2.8)	(0.4)	50.0	50.0	2.9	4.5
Agate Ingatlanforgalmazo
Kft (Agate)	Hungary	–	–	50.0	50.0	–	–
WMP NV	Belgium	(0.5)	–	50.0	50.0	–	0.5
		~~(2.7)~~	~~2.8~~			~~95.1~~	~~76.5~~

154

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

(b) Investments in JVEs (cont)

(b) Investments in JVEs (cont)
						Net assets
			Result	Total	Total	as reported
		Revenue1	after tax1	assets	liabilities	by JVE
	Year ended	(100%)	(100%)	(100%)	(100%)	(100%)
Name	30 June	$M	$M	$M	$M	$M
KWS	2010	–	–	9.0	4.0	5.0
	2009	–	–	5.0	–	5.0
MGJ	2010	2.1	(9.0)	27.7	1.4	26.3
	2009	12.7	(1.8)	43.9	12.8	31.1
Princeton Lux	2010	–	–	39.5	–	39.5
	2009	–	–	–	–	–
Princeton Jersey	2010	0.2	0.2	41.0	1.0	40.0
	2009	–	–	–	–	–
Huntingwood East	2010	–	–	23.2	34.1	(10.9)
	2009	–	–	15.9	15.9	–
Huntingwood West	2010	–	–	106.4	157.8	(51.4)
	2009	–	–	21.4	21.4	–
HDL	2010	31.9	63.3	359.9	155.9	204.0
	2009	11.4	7.9	259.4	150.8	108.6
Seaview	2010	–	–	134.2	125.6	8.6
	2009	–	–	121.4	121.4	–
Interlink	2010	–	–	235.6	200.7	34.9
	2009	–	–	141.8	141.8	–
Herten	2010	–	0.1	7.8	8.3	(0.5)
	2009	–	3.0	12.0	9.1	2.9
Lazulite	2010	–	0.2	5.7	6.0	(0.3)
	2009	–	0.8	7.1	6.3	0.8
Ullo	2010	–	0.1	12.7	11.1	1.6
	2009	–	(0.8)	14.5	5.4	9.1
Agate	2010	–	0.2	5.5	6.0	(0.5)
	2009	–	–	7.9	7.9	–
WMP NV	2010	–	0.3	15.6	15.1	0.5
	2009	–	–	17.3	16.3	1.0

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 Financial Report 2010

155

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

11. Other financial assets

	11. Other fnancial assets
		Consolidated 2010 2009 $M $M 42.3 27.7 0.3 0.3 ~~42.6~~ ~~28.0~~
	Investment in listed securities, at fair value1 Investments in unlisted securities,at fair value

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.

Country of
Signifcant controlled companies
incorporation

Interest held

2010
2009
%
%

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
ABPP Investment 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 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 Oceanview Logistics (Jersey) Limited
Jersey
Goodman Property Holdings (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 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 PropertyOpportunities(Lux)Sàrl,SICAR
Luxembourg

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

156

11. Other financial assets (cont)

11. Other fnancial assets (cont)
Country of Signifcant controlled companies(cont) incorporation	Interest held
	2010 2009 % %
Goodman Serpentine Logistics (Lux) Sàrl Luxembourg Goodman Turquoise Logistics (Lux) Sàrl Luxembourg GPO Advisory (Lux) Sàrl Luxembourg Rowan Logistics Sàrl Luxembourg Goodman Finance NZ Limited New Zealand Goodman Funding Singapore Pte Limited Singapore Goodman Växjö Logistics (Sweden) AB Sweden Goodman Westpoort Logistics (Netherlands) B.V. The Netherlands Aquamarine Gayrimenkul Ticareti Anonim Sirketi Turkey Junehurst Limited United Kingdom	100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 – 100.0 100.0 100.0 100.0 100.0 100.0

Country of
Signifcant controlled unit trusts
establishment

Interest held

2010
2009
%
%

BDE Unit Trust
Australia
Biloela Street Unit Trust
Australia
Binary No. 2 Trust
Australia
Cambridge Offce Park Trust
Australia
Carter Street Trust
Australia
CC Trust
Australia
Clayton 3 Trust
Australia
Edinburgh Trust
Australia
Euston Road Subtrust
Australia
GEBPF Investment Trust
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 Japan Investment Trust
Australia
Goodman Jersey Holdings 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 PLUS Trust
Australia
Goodman Treasury Trust
Australia
Highbrook Trust
Australia
Hill Road Trust
Australia
HK Tsuen Wan Development 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
Saunders Street Trust
Australia
West Melbourne Trust
Australia
Waterloo Road Offce Trust
Australia

Goodman Group Financial Report 2010

157

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

12. Payables

		Consolidated 2010 2009 $M $M 8.9 8.9 60.9 89.0 1.3 3.0 28.8 90.3 24.8 13.7 ~~124.7~~ ~~204.9~~ 65.9 – 158.2 186.6 ~~224.1~~ ~~186.6~~
	Current Trade payables Other payables and accruals1 Rental income received in advance Loans from related parties2 Derivative fnancial instruments


	Non‑current Other payables and accruals Derivative fnancial instruments

Provisions for rental guarantees of $11.6 million have been reclassified in the comparative period from other payables and accruals to provisions. 2. Details of loans from related parties are set out in note 23.

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

Amounts in A$M	NZD	HKD	USD	GBP	EUR	JPY
2010	19.5	13.0	9.4	147.7	67.4	4.2
2009	20.1	24.9	10.4	145.1	76.5	18.5

13. Provisions

Distributions
Rental
to Unitholders
guarantees
Total
Consolidated
$M
$M
$M
Balance at the beginning of the year
–
11.6
11.6
Provisions made
214.1
4.2
218.3
Provisions used
(93.1)
(5.9)
(99.0)
Effect of foreign currencytranslation
–
(2.0)
(2.0)
~~Balance at the end of theyear~~
~~121.0~~
~~7.9~~
~~128.9~~
Analysed as:
Current
121.0
3.8
124.8
Non-current
–
4.1
4.1
~~121.0~~
~~7.9~~
~~128.9~~

Rental guarantees

158

14. Interest bearing liabilities

	Note	Consolidated 2010 2009 $M $M 84.1 584.4 – 391.0 ~~84.1~~ ~~975.4~~ 1,687.1 2,694.2 26.7 – 441.2 513.1 38.3 46.9 ~~2,193.3~~ ~~3,254.2~~
	Current Bank loans, unsecured 14(a) Bank loans,secured 14(b)


	Non‑current Bank loans, unsecured 14(a) Bank loans, secured 14(b) Euro medium term notes, unsecured 14(c) Foreignprivateplacement,unsecured 14(d)

(a) Bank loans, unsecured

As at 30 June 2010

	Facility	Amounts drawn down in A$M equivalents AUD NZD HKD USD GBP EUR JPY Total 0.4 – – 164.8 279.2 111.3 192.1 747.8 1,017.2 – – 270.2 3.3 40.9 44.8 1,376.4 – – – – 282.4 – – 282.4 – – – – 328.4 – – 328.4 285.9 – – – – 92.7 – 378.6 448.2 – – – – 109.3 – 557.5 – – – – – – – – – – – – – – 101.1 101.1 – – – – – 372.3 – 372.3 – – – – 306.1 623.6 – 929.7 286.3 – – 164.8 561.6 576.3 192.1 1,781.1 1,465.4 – – 270.2 637.8 773.8 145.9 3,293.1 (9.9) (14.5) 1,771.2 3,278.6
	Syndicated multi-currency facility (SMCF)1 2010 2009 Bank loan2 2010 2009 Bank loan3 2010 2009 Bank loan4 2010 2009 Bank loan5 2010 2009
	Total bank loans 2010
	2009
	Less: Unamortised borrowing costs 2010 2009
	Total unsecured bank loans 2010
	2009

The terms of the SMCF were amended in August 2009 such that an A$82.1 million facility (calculated using the exchange rates specified under the facility agreement) expires on 23 May 2011, an A$400.0 million facility expires on 24 May 2012 and an A$437.9 million facility expires on 1 September 2012. As at 30 June 2010, the facility is drawn to A$747.8 million.
A controlled entity has a bank loan of A$282.4 million denominated in British pounds sterling. The facility expires on 7 April 2013.
Controlled entities have bank loans of A$378.6 million denominated in Australian dollars (A$285.9 million) and euros (A$92.7 million). The facility expires on 8 February 2012.
The facility, denominated in Japanese yen, was repaid in full in February 2010.
Controlled entities have bank loans of A$372.3 million denominated in euros. The terms of the facility were amended in August 2009 such that an A$262.4 million facility expires on 5 December 2012 (drawn to A$70.9 million as at 30 June 2010) and an A$482.3 million facility expires on 5 December 2013 (drawn to A$301.4 million as at 30 June 2010).

Goodman Group Financial Report 2010

159

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

14. Interest bearing liabilities (cont)

(b) Bank loans, secured

	(b) Bank loans, secured
	Facility	Amounts drawn down in A$M equivalents AUD GBP Total – 26.7 26.7 – 106.2 106.2 – – – 300.0 – 300.0 – 26.7 26.7 300.0 106.2 406.2 – (15.2) 26.7 391.0
	Bank loan1 2010 2009
	Bank loan2 2010 2009
	Total 2010 2009
	Less: Unamortised 2010 borrowingcosts 2009
	Total secured bank loans 2010
	2009

A controlled entity has a bank loan of A$26.7 million denominated in British pounds sterling. The facility expires on 30 September 2011.
This facility was cancelled and the loan outstanding was repaid on 25 September 2009.

Security for all loans referred to above is by way of first and second ranking charges over various assets of the Consolidated Entity (refer also to note 9).

(c) Euro medium term notes, unsecured

The Consolidated Entity has on issue A$441.2 million (2009: A$513.1 million) euro medium term notes. All notes were issued at a fixed coupon of 9.75%, payable annually. The notes mature on 16 July 2018. The notes are listed on the Singapore Stock Exchange and the market value of the notes using the quoted price at 30 June 2010 was A$503.2 million (2009: A$343.0 million).

(d) Foreign private placement, unsecured

Finance facilities

		Consolidated Facilities Facilities available utilised $M $M 2,850.2 1,781.1 45.2 26.7 441.2 441.2 38.3 38.3 – 43.1 ~~3,374.9~~ ~~2,330.4~~ 3,388.1 3,278.6 591.2 391.0 513.1 513.1 46.9 46.9 – 50.0 ~~4,539.3~~ ~~4,279.6~~
	At 30 June 2010 Bank loans, unsecured Bank loans, secured Euro medium term notes, unsecured Foreign private placement, unsecured Bankguarantees1


	At 30 June 2009 Bank loans, unsecured Bank loans, secured Euro medium term notes, unsecured Foreign private placement, unsecured Bankguarantees1

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

160

15. Issued capital

	15. Issued capital
		Consolidated 2010 2009 $M $M 6,584.9 5,324.7 (142.0) (95.6) ~~6,442.9~~ ~~5,229.1~~
	6,369,751,394 (2009: 2,779,651,716) fully paid units on issue Issue costs1

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, Unitholders and Shareholders rank after creditors and are fully entitled to any proceeds of liquidation.

Equity raising

In August 2009, Goodman Group completed a fully underwritten equity raising to raise a total of $1,278.6 million 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. GIT’s share of the capital raised amounted to $1,156.9 million.

In 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.

2010
2009
Units
Units
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 party
1,605,684
Issued due to exercise of executive options
33,334
~~Units on issue at 30 June 2009~~
~~2,779,651,716~~
Units on issue at 1 July 2009
2,779,651,716
Issued under the institutional placement and entitlement offer
3,196,599,473
Issued due to exercise of options by Macquarie Group
393,300,000
Issued under the Goodman GroupTax Exempt Plan
200,205
~~Units on issue at 30 June 2010~~
~~6,369,751,394~~

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 Financial Report 2010

161

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

16. Reserves

	Note	Consolidated 2010 2009 $M $M (1,557.7) (1,283.7) 120.9 138.3 (147.3) (223.2) (399.0) (70.7) ~~(1,983.1)~~ ~~(1,439.3)~~ (1,283.7) (330.3) 14.7 8.1 31.0 90.4 (406.0) (1,058.5) – 2.8 86.3 3.8 ~~(1,557.7)~~ ~~(1,283.7)~~ 138.3 231.4 (31.0) (90.4) – (2.7) 13.6 – ~~120.9~~ ~~138.3~~ (223.2) 72.6 (0.4) (282.2) 52.7 (16.4) 23.6 2.8 ~~(147.3)~~ ~~(223.2)~~ (70.7) 23.9 (328.3) (94.6) ~~(399.0)~~ ~~(70.7)~~ Consolidated 2010 2009 $M $M (212.6) (0.6) (299.6) (1,005.0) 406.0 1,058.5 – 2.7 (214.1) (268.2) ~~(320.3)~~ ~~(212.6)~~
	Asset revaluation reserve 16(a) Capital profts reserve 16(b) Cash fow hedge reserve 16(c) Foreign currency translation reserve 16(d)
	~~Total reserves~~
	(a) Asset revaluation reserve Balance at the beginning of the year Revaluation of investments Transfers to capital profts reserve Transfers from accumulated losses Transfers to income statement due to disposal of investments Effect of foreign currencytranslation

	~~Balance at the end of theyear~~
	(b) Capital profts reserve Balance at the beginning of the year Transfers from asset revaluation reserve Transfers to accumulated losses Effect of foreign currencytranslation

	~~Balance at the end of theyear~~
	(c) Cash fow hedge reserve Balance at the beginning of the year Change in value of fnancial instruments Transfers to income statement Effect of foreign currencytranslation

	~~Balance at the end of theyear~~
	(d) Foreign currency translation reserve Balance at the beginning of the year Net exchange differences on conversion of foreign operations

	~~Balance at the end of theyear~~
	17. Accumulated losses
	Accumulated losses at the beginning of the year Loss attributable to Unitholders Transfers to asset revaluation reserve Transfers to capital profts reserve Distributions declared

	~~Balance at the end of theyear~~

18. Minority interests

	18. Minority interests
		Consolidated 2010 2009 $M $M 318.8 318.8 431.7 – ~~750.5~~ ~~318.8~~
	Goodman PLUS Trust hybrid securities CIC convertiblepreference securities

Issue costs of $20.6 million associated with the CIC convertible preference securities were paid in the current year.

162

19. Segment reporting

The Consolidated Entity is based in Australia and has separately managed divisions in Asia Pacific (primarily Australia, New Zealand, Hong Kong, China and Japan) and Europe (Continental Europe and United Kingdom). The Consolidated Entity has three reportable segments defined by AASB 8 Operating Segments , namely Australia, Continental Europe and United Kingdom. The other divisions in Asia Pacific do not meet the quantitative requirements, either individually or collectively, to require separate disclosure as reportable segments.

The activities and services undertaken by the divisions are direct and indirect ownership of investment properties. Information regarding the operations of each reportable segment is included on the following page. Performance is measured based on the return on assets employed and therefore the segment result is presented before interest and tax.

Information about reportable segments

				Continental	Continental	Continental	United	United
		Australia		Europe			Kingdom		Other1		Consolidated
		2010	2009	2010	2009		2010	2009	2010	2009	2010	2009
		$M	$M	$M		$M	$M	$M	$M	$M	$M	$M
Revenue and other income
Gross property income		194.6	189.4	4.7		1.5	23.6	34.8	2.2	12.9	225.1	238.6
Distributions from equity investments		1.8	6.0	–		0.2	17.9	9.8	–	–	19.7	16.0
Other income		3.7	–	2.2		0.8	0.7	2.8	–	0.4	6.6	4.0
~~Total revenue and other income~~		~~200.1~~	~~195.4~~	~~6.9~~		~~2.5~~	~~42.2~~	~~47.4~~	~~2.2~~	~~13.3~~	~~251.4~~	~~258.6~~
Other key components of
fnancial performance
Net gain/(loss) on disposal of
investment properties		1.5	15.2	0.3		1.6	(0.1)	(7.5)	–	(0.2)	1.7	9.1
Net gain/(loss) on disposal of
controlled entities		–	0.5	9.4	30.7		2.5	2.6	(12.0)	–	(0.1)	33.8
Net gain/(loss) on disposal of
equity investments		–	–	–		0.4	–	(2.3)	(8.0)	12.8	(8.0)	10.9
Share of net results of equity
accounted investments		(87.8)	(156.9)	(69.8)	(70.7)		(47.0)	(188.1)	10.0	3.4	(194.6)	(412.3)
Other material non‑cash items
Net losses from fair value
adjustments on investment
properties		(88.9)	(239.9)	(15.3)	(13.8)		(21.7)	(118.0)	(6.8)	(3.0)	(132.7)	(374.7)
Impairment losses		(33.9)	(178.6)	(10.8)		–	–	–	(4.2)	–	(48.9)	(178.6)
Reportable segment (loss)/proft
before tax		(62.0)	(415.2)	(82.8)	(60.1)		(28.8)	(282.2)	(21.1)	23.3	(194.7)	(734.2)
		2010	2009	2010	2009		2010	2009	2010	2009	2010	2009
Balance sheet		$M	$M	$M		$M	$M	$M	$M	$M	$M	$M
~~Reportable segment assets~~	~~3,310.2 ~~		~~3,436.6~~	~~652.3~~	~~1,102.8~~		~~559.4~~	~~735.4~~	~~556.4~~	~~793.9~~	~~5,078.3 ~~	~~6,068.7~~
Capital expenditure		41.7	75.8	(3.4)	44.6		17.1	44.5	(1.3)	100.1	54.1	265.0
~~Reportable segment liabilities~~		~~27.4~~	~~18.7~~	~~15.2~~	~~118.4~~		~~15.5~~	~~8.3~~	~~4.4~~	~~11.3~~	~~62.5~~	~~156.7~~

Other primarily relates to the results and assets of the separately managed divisions in Asia Pacific, excluding Australia.

Goodman Group Financial Report 2010

163

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

19. Segment reporting (cont)

Reconciliation of reportable segment revenues, profit or loss, assets and liabilities and other material items

2010
2009
$M
$M
Revenues
Total revenue for reportable segments
249.2
245.3
Other revenue
2.2
13.3
~~Consolidated revenue~~
~~251.4~~
~~258.6~~
Proft or loss
Total loss for reportable segments
(173.6)
(757.5)
Other (loss)/proft
(21.1)
23.3
Unallocated amounts: other corporate expenses/income
(28.6)
(216.1)
Net fnancingcosts
(24.2)
(25.2)
~~Consolidated loss before income tax~~
~~(247.5)~~
~~(975.5)~~
30 Jun 2010
30 Jun 2009
$M
$M
Assets
Total assets for reportable segments
4,521.9
5,274.8
Other assets
556.4
793.9
Interest bearing assets
2,087.9
2,305.1
Other unallocated amounts
484.3
174.9
~~Consolidated total assets~~
~~7,650.5~~
~~8,548.7~~
Liabilities
Total liabilities for reportable segments
58.1
145.4
Other liabilities
4.4
11.3
Interest bearing liabilities
2,277.4
4,229.6
Other unallocated amounts
420.6
266.4
~~Consolidated total liabilities~~
~~2,760.5~~
~~4,652.7~~

	2010 2009
	Reportable Reportable segment Consolidated segment Consolidated totals Other totals totals Other totals $M $M $M $M $M $M
Other material items Netgain/(loss)on disposal of investmentproperties 1.7 – 1.7 9.3 (0.2) 9.1
Netgain/(loss)on disposal of controlled entities 11.9 (12.0) (0.1) 33.8 – 33.8
Net(loss)/gain on disposal of equityinvestments – (8.0) (8.0) (1.9) 12.8 10.9
Share of net results of equityaccounted investments (204.6) 10.0 (194.6) (415.7) 3.4 (412.3)
Net loss from fair value adjustments on investment properties (125.9) (6.8) (132.7) (371.7) (3.0) (374.7)
Capital expenditure 55.4 (1.3) 54.1 164.9 100.1 265.0

164

20. 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 part disposal of Goodman China Investments1 98.3 – On disposal of entities to Princeton Lux and Princeton Jersey2 75.0 – On disposal of other specialpurpose entities in Continental Europe3 13.5 ~~Net cash infow~~ ~~186.8~~

On 9 September 2009, the Consolidated Entity effectively disposed of 80% of its interest in Goodman China Investments, which owned four stabilised investment properties, to Canada Pension Plan Investment Board. The principal impact on the Consolidated Entity’s balance sheet was a decrease in investment properties within assets classified as held for sale of $151.4 million.
On 11 June 2010, the Consolidated Entity effectively disposed of 80% of its interest in four special purpose vehicles to two JVEs with CB Richard Ellis Realty Trust in Continental Europe (Princeton Lux) and the United Kingdom (Princeton Jersey). The net consideration for the 80% share was A$75.0 million, which included repayment of inter-company loans provided to the special purpose vehicles. The principal impact on the Consolidated Entity’s balance sheet was a decrease in investment properties of $79.5 million.
In addition to the disposals of controlled entities to Princeton Jersey and Princeton Lux, during the year, controlled entities in Continental Europe disposed of several other special purpose development property entities for a net consideration of $13.5 million (2009: $12.4 million). There is no significant impact on the Consolidated Entity’s balance sheet as a result of these disposals.

21. Auditors’ remuneration

		Consolidated 2010 2009 $000 $000 600.6 657.7 89.0 285.8 689.6 943.5 15.0 74.2 44.0 – 866.5 819.3 – 9.2 362.0 218.8 22.7 160.3 5.1 – – 29.3 1,315.3 1,311.1 ~~2,004.9~~ ~~2,254.6~~ 80.1 133.9
	Audit services Auditor of GIT: – Audit and review of fnancial reports (KPMG Australia) – Audit and review of fnancial reports(overseas KPMG frms)

	Other regulatory services: – Other regulatory services (KPMG Australia) – Other regulatory services (overseas KPMG frms) Other assurance services: – Investigative accounting services (KPMG Australia) – Investigative accounting services (overseas KPMG frms) Taxation services – Taxation compliance services (KPMG Australia) – Taxation compliance services (overseas KPMG frms) – Other taxation advice (KPMG Australia) – Other taxation advice(overseas KPMG frms)


	~~Totalpaid/payable to KPMG~~
	Other auditors: – Audit and review of fnancial reports(non-KPMG frms)

Goodman Group Financial Report 2010

165

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

22. Notes to the cash flow statement

(a) Reconciliation of cash

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

sheet as follows:
	Consolidated
	2010 2009 $M $M
Cash assets	474.8 216.7

(b) Reconciliation of loss for the year to net cash provided by operating activities

		Consolidated 2010 2009 $M $M (247.3) (981.0) (1.7) (9.1) 0.1 (33.8) 8.0 (10.9) 132.7 374.7 48.9 389.7 194.6 412.3 24.2 25.2 (0.2) 5.5 159.3 172.6 35.1 0.4 (19.3) (0.7) (2.8) 18.1 1.7 – 174.0 190.4 52.9 114.4 (112.6) (128.1) (0.9) (3.3) ~~113.4~~ ~~173.4~~
	Loss for theyear
	Adjustments for: – Net gain on disposal of investment properties – Net loss/(gain) on disposal of controlled entities – Net loss/(gain) on disposal of equity investments – Net loss from fair value adjustments on investment properties – Impairment losses – Share of net results of equity accounted investments – Net fnancing costs – Income tax(beneft)/expense
	Operating proft/(loss) before changes in working capital andprovisions
	Change in assets and liabilities during the year: – Decrease in receivables – Increase in other assets – (Decrease)/increase in payables – Increase inprovisions

	Distributions received from equity accounted investments Net fnancing costs paid Net income taxespaid

	~~Net cashprovided by operating activities~~

(c) Non‑cash financing and investing activities

There were no significant non-cash transactions in the year. In the prior year, the Consolidated Entity transferred three special purpose entities to ABPP in return for equity. The combined consideration for these assets was $262.1 million.

166

23. 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:

reimbursements where expenses have been incurred on behalf of GIT:
	Consolidated
	2010 2009 $ $
Management fees	27,780,287 12,408,645

As at 30 June 2010, the amounts owed to the Responsible Entity were $nil (2009: $nil).

Goodman Group

Other Goodman Group entities perform a number of services for the Consolidated Entity and have billed the following amounts during the year:

		Consolidated 2010 2009 $ $ 4,636,708 7,395,334 3,982,147 365,583 1,562,335 1,857,111 – 3,575,918 ~~10,181,190~~ ~~13,193,946~~
	Property services fees (including property management and leasing) Development management and project fees Building supervisor costs reimbursed Due diligence

In addition to the above, there have been the following transactions between other Goodman Group entities 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 2010 is $55.2 million (2009: $46.2 million). The purpose of the loan to Vineyard is to fund the development of M7 Business Hub, Eastern Creek, NSW. The loan is limited recourse, interest bearing at a rate of 15% per annum and with a maturity date of December 2011. Interest and other amounts charged to Vineyard during the year totalled $11.0 million (2009: $11.8 million);
- Dollhurst Limited, a fellow controlled entity of Goodman Group, has issued $114.7 million (£65.0 million) (2009: $133.4 million, £65.0 million) of fixed rate notes (Notes) to GIT. The Notes are unsecured with limited recourse and mature in December 2011. Interest at 8.5% per annum is payable on the Notes semi-annually in arrears on 30 June and 31 December;
- other loans to other Goodman Group entities exist at 30 June 2010 totalling $2,120.1 million (2009: $2,491.1 million), of which $1,849.8 million are interest bearing and $270.3 million are non-interest bearing. Interest bearing loans bear interest at rates determined based on the terms under which the funds are borrowed; and
- other loans from other Goodman Group entities exist at 30 June 2010 totalling $28.8 million (2009: $90.3 million). The loans are interest bearing at rates determined based on the terms under which the funds are borrowed.

Goodman Group Financial Report 2010

167

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

23. 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 Interest charged on loans properties to relatedparties Other
	2010 2009 2010 2009 2010 2009 $M $M $M $M $M $M
GAIF GMT GHKLF GELF Princeton Lux Princeton Jersey Huntingwood East Huntingwood West Seaview Interlink	– 75.2 – – – 0.1 – 2.8 – – – – – 80.2 – – – – 13.5 68.4 1.2 – – 0.6 34.7 – – – – – 40.3 – – – – – – – 0.9 0.7 – – – – 1.0 1.0 – – – – 3.7 2.6 – – – – 6.1 3.0 – –

Amounts due from associates and JVEs at 30 June 2010 are as follows:

	Trade and other Shareholder receivables1 loansprovided2
	2010 2009 2010 2009 $M $M $M $M
GAIF GMT GELF ABPP GCLHL Huntingwood East Huntingwood West KWS Seaview Interlink Herten Lazulite Ullo Ullo 2 Kft Agate WMP NV	– 16.0 – – – – – – 2.3 18.8 17.7 25.8 26.4 13.5 – – – – 33.6 – – – 11.6 15.9 – – – 21.4 – – 2.2 2.1 – – 56.8 60.4 – – 92.4 70.4 – – 4.1 4.8 – – 3.0 3.4 – – 6.3 3.1 – – 3.0 – – – 1.5 3.6 – – 6.3 8.3

Trade and other amounts due are receivable within 30 days.
Loans provided to associates and JVEs have generally been provided on an arm’s length basis. Details In respect of the principle loan balances are set out below:
- a shareholder loan of $17.7 million has been provided to Goodman Pyrite Logistics (Lux) Sàrl, a controlled entity of GELF. The loan bears interest at 6.9% per annum, and interest of $1.2 million was recognised in the year (2009: $nil);
- interest income of $1.9 million (2009 $1.7 million) was recognised on loans to Huntingwood East and Huntingwood West. The loans bear interest at 4.5% per annum; and
- interest income of $9.8 million (2009: $5.6 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.

168

24. Financial risk management

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 profile;
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.

During the year, the Consolidated Entity amended its FRM policy such that derivative financial instruments are not generally designated as a hedge for accounting purposes, and accordingly such derivative financial instruments are treated as trading instruments.

Capital management

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 Distribution Reinvestment Plan (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, however, at 30 June 2010 and in the period since the completion of the refinancing in the first half of the financial year the Consolidated Entity has held cash, which is placed on deposit for periods ranging from overnight up to three months.

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 financial 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

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 fixed rate basis. The Consolidated Entity enters into interest rate swaps to manage cash flow risks associated with the interest rates on borrowings that are floating. The interest rate swap contracts are for 90 day intervals and involve quarterly payments or receipts of the net amount of interest.

Goodman Group Financial Report 2010

169

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

24. 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 2010, the principal balances as at future year ends and the weighted average interest rates during future years, by currency, are set out below:

Year ending	2010 2009
	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 2010 (165.0) 8.05 – – (173.0) 7.70 – – 30 June 2011 (135.3) 7.77 – – (135.2) 8.10 – – 30 June 2012 (110.0) 8.79 – – (110.0) 8.79 – – 30 June 2013 (110.0) 8.79 – – (110.0) 8.79 – – 30 June 2014 (110.0) 8.79 – – (110.0) 8.79 – – 30 June 2015 (69.5) 7.30 – – (68.8) 7.33 – – 30 June 2016 (50.0) 5.75 – – (50.0) 5.75 – – 30 June 2017 (16.2) 5.75 – – (16.2) 5.75 – –
Hong Kong dollars receivable/payable 30 June 2010 (1,550.0) 2.81 – – (1,530.4) 4.28 – – 30 June 2011 (1,831.1) 3.04 – – (871.2) 4.25 – – 30 June 2012 (1,750.0) 2.90 – – (345.5) 4.30 – – 30 June 2013 (1,406.3) 2.76 – – (124.7) 4.25 – – 30 June 2014 (760.0) 2.27 – – – – – – 30 June 2015 (122.1) 1.98 – – – – – –
Japanese yen receivable/payable 30 June 2010 (7,000.0) 1.56 – – (15,750.0) 1.51 – – 30 June 2011 (7,000.0) 1.54 – – (14,911.6) 1.53 – – 30 June 2012 (6,639.3) 1.54 – – (13,633.9) 1.55 – – 30 June 2013 (1,000.0) 1.68 – – (4,000.0) 1.69 – – 30 June 2014 (939.7) 1.68 – – (3,758.9) 1.69 – –
Euro receivable/payable 30 June 2010 (430.0) 3.76 – – (660.0) 3.82 – – 30 June 2011 (415.1) 3.78 – – (386.1) 4.17 – – 30 June 2012 (384.1) 3.54 – – (173.2) 4.98 – – 30 June 2013 (305.0) 3.63 – – (140.0) 5.12 – – 30 June 2014 (191.1) 3.89 – – (132.4) 5.16 – – 30 June 2015 (50.0) 4.50 – – (50.0) 5.91 – – 30 June 2016 (50.0) 4.50 – – (50.0) 4.50 – – 30 June 2017 (33.3) 4.50 – – (33.3) 4.50 – –
British pounds sterling receivable/payable 30 June 2010 (335.0) 5.63 (250.0) 9.75 (535.0) 3.56 (250.0) 9.75 30 June 2011 (209.1) 5.01 (250.0) 9.75 (494.8) 4.69 (250.0) 9.75 30 June 2012 (175.0) 5.96 (250.0) 9.75 (435.0) 5.38 (250.0) 9.75 30 June 2013 (175.0) 5.96 (250.0) 9.75 (435.0) 5.38 (250.0) 9.75 30 June 2014 (175.0) 5.96 (250.0) 9.75 (435.0) 5.38 (250.0) 9.75 30 June 2015 (187.6) 5.55 (250.0) 9.75 (398.8) 5.40 (250.0) 9.75 30 June 2016 (138.7) 5.43 (250.0) 9.75 (280.5) 5.54 (250.0) 9.75 30 June 2017 (57.2) 5.75 (250.0) 9.75 (128.0) 5.80 (250.0) 9.75 30 June 2018 (16.0) 5.20 (250.0) 9.75 (16.0) 5.20 (250.0) 9.75 30 June 2019 – 0.00 (250.0) 9.75 – – (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 2010.
Average rate per annum represents the weighted average interest rate payable, by currency, as a result of the existing interest rate swap contracts as at 30 June 2010.

At 30 June 2010, if interest rates on borrowings had been 100 basis points per annum (2009: 100 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$0.2 million lower/higher (2009: A$0.1 million).

170

24. Financial risk management (cont)

(a) Market risk (cont)

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 fluctuations in currency prices against the Australian dollar as a result of future commercial transactions, recognised assets and liabilities and, principally, net investments in foreign operations.

The Consolidated Entity’s 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 fluctuations. 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 2010, the weighted average foreign exchange rates during future years and the principal hedged amount at each future year end, by currency, are set out below:

Year ending	Weighted average Amounts Amounts exchange rate receivable payable
	2010 2009 2010 2009 Currency Currency 2010 2009 A$M A$M M M
Australian dollars receivable/New Zealand dollars payable 30 June 2010 1.2413 1.2590 150.7 81.0 (187.0) (102.0) 30 June 2011 1.2413 1.2590 150.7 81.0 (187.0) (102.0) 30 June 2012 1.2413 1.2590 150.7 81.0 (187.0) (102.0) 30 June 2013 1.2413 1.2590 150.7 81.0 (187.0) (102.0) 30 June 2014 1.2200 – 69.7 – (85.0) –
Australian dollars receivable/Hong Kong dollars payable 30 June 2010 6.6088 6.4213 342.0 234.6 (2,250.0) (1,500.0) 30 June 2011 6.6088 6.4213 342.0 148.9 (2,250.0) (1,500.0) 30 June 2012 6.8299 6.7145 256.4 148.9 (1,750.0) (1,000.0) 30 June 2013 6.8299 6.7145 256.4 148.9 (1,750.0) (1,000.0) 30 June 2014 6.9838 – 107.4 – (750.0) – 30 June 2015 7.1000 – 56.3 – (400.0) –
Australian dollars receivable/Japanese yen payable 30 June 2010 – 97.4500 – 44.5 – (4,340.0) 30 June 2011 – 97.4500 – 44.5 – (4,340.0) 30 June 2012 – 97.4500 – 44.5 – (4,340.0) 30 June 2013 – 97.4500 – 44.5 – (4,340.0)
Australian dollars receivable/euros payable 30 June 2010 0.6705 0.5665 179.0 369.3 (120.0) (209.0) 30 June 2011 0.6705 0.5665 179.0 369.3 (120.0) (209.0) 30 June 2012 0.6705 0.5665 179.0 369.3 (120.0) (209.0) 30 June 2013 0.6705 0.5500 179.0 198.2 (120.0) (109.0) 30 June 2014 0.6705 0.5500 179.0 198.2 (120.0) (109.0) 30 June 2015 0.6705 – 179.0 – (120.0) – 30 June 2016 0.6705 – 179.0 – (120.0) –
Australian dollars receivable/British pounds sterling payable 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 Financial Report 2010

171

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

24. 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.

Year ending	Weighted average Amounts Amounts exchange rate receivable payable
	2010 2009 2010 2009 Currency Currency 2010 2009 A$M A$M M M
Contracts to buy Australian dollars and sell New Zealand dollars 30 June 2010 – 1.1491 – 4.9 – (5.6) 30 June 2011 1.1630 1.1630 4.6 4.6 (5.3) (5.3) 30 June 2012 1.1768 1.1768 4.5 4.5 (5.3) (5.3) 30 June 2013 1.1932 1.1932 4.2 4.2 (5.0) (5.0)
Contracts to buy Australian dollars and sell Hong Kong dollars 30 June 2010 – 5.3333 – 13.0 – (68.5) 30 June 2011 5.0557 5.0701 12.4 12.4 (62.6) (62.6) 30 June 2012 4.9743 4.9885 12.6 12.6 (62.6) (62.6) 30 June 2013 4.8940 4.9077 12.8 12.8 (62.6) (62.6)
Contracts to buy Australian dollars and sell euros 30 June 2010 – 0.5667 – 42.5 – (24.0) 30 June 2011 – 0.5273 – 32.4 – (17.0) 30 June 2012 – 0.5229 – 27.9 – (14.5) 30 June 2013 – 0.4837 – 18.6 – (9.0)

At 30 June 2010, if the Australian dollar had strengthened by 5% (2009: 5%), with all other variables held constant, the Consolidated Entity’s result attributable to Unitholders would have decreased by A$10.6 million (2009: A$15.6 million decrease). If the Australian dollar had weakened by 5% (2009: 5%), with all other variables held constant, the Consolidated Entity’s result attributable to Unitholders would have increased by A$11.7 million (2009: A$17.2 million increase).

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 classified on the balance sheet as an other financial asset (refer to note 11).

As at 30 June 2010, a 5% (2009: 5%) movement in the security price of ING Industrial Fund would have impacted equity by A$2.1 million (2009: A$1.4 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 Consolidated Entity is not exposed to commodity price risk.

(b) Liquidity risk

preparation of regular forecast cash flows to understand the application and use of funds; and + identification of future funding, including new debt facilities, new issues of securities or the DRP.

Goodman Group’s treasury function is responsible for reporting details of all debt maturities for all loans across the regions to the finance, treasury and tax committee and the Board at their regular meetings. Goodman Group’s treasury function is also responsible for reporting to the finance, treasury and tax committee and the Board all the information and term sheets relating to any financing arrangements being contemplated or negotiated by the Consolidated Entity for their review and approval.

172

24. Financial risk management (cont)

(b) Liquidity risk (cont)

The Consolidated Entity seeks to spread its debt maturities such that the total debt maturing in a single financial year does not exceed Board approved policy levels. The contractual maturities of financial liabilities are set out below:

Contractual maturities of financial liabilities

Carrying Contractual
Up to
More than
amount
cash fows
12 months
1 – 2 year(s)
2 – 3 years
3 – 4 years
4 – 5 years
5 years
As at 30 June 2010
$M
$M
$M
$M
$M
$M
$M
$M
Non‑derivative fnancial liabilities1
Payables
165.8
165.8
99.9
65.9
–
–
–
–
Bank loans, unsecured
1,771.2
1,771.2
84.1
593.8
791.9
301.4
–
–
Bank loans, secured
26.7
26.7
–
26.7
–
–
–
–
Euro medium-term notes,
unsecured
441.2
441.2
–
–
–
–
–
441.2
Foreign private placement,
unsecured
38.3
38.3
–
–
–
–
–
38.3
Total non‑derivative
fnancial liabilities
2,443.2
2,443.2
184.0
686.4
791.9
301.4
–
479.5
Derivative fnancial liabilities
Net settled2
150.0
162.9
42.2
40.0
27.2
20.6
13.5
19.4
Gross settled3:
– Infow
(119.7)
(32.4)
(29.4)
(22.9)
(16.8)
(13.5)
(4.7)
– Outfow
10.0
118.4
13.6
10.9
30.8
16.6
19.4
27.1
Total derivative
fnancial liabilities
160.0
161.6
23.4
21.5
35.1
20.4
19.4
41.8
As at 30 June 2009
Non‑derivative fnancial liabilities1
Payables
191.2
191.2
191.2
–
–
–
–
–
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
46.9
46.9
–
–
–
–
–
46.9
Total non‑derivative
fnancial liabilities
4,420.8
4,420.8
1,166.6
486.2
949.9
1,258.1
–
560.0
Derivative fnancial liabilities
Net settled2
152.3
156.6
60.5
39.5
17.6
9.7
11.7
17.6
Gross settled3:
– Infow
(176.3)
(45.9)
(52.2)
(47.3)
(27.2)
(3.7)
–
– Outfow
17.0
182.5
15.9
34.3
44.9
69.8
17.6
–
Total derivative
fnancial liabilities
169.3
162.8
30.5
21.6
15.2
52.3
25.6
17.6

Cash flows relating to non-derivative financial 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 Financial Report 2010

173

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

24. Financial risk management (cont)

(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 financial assets, excluding investments, of the Consolidated Entity which have been recognised on the balance sheet, is the carrying amount (refer to note 5).

The Consolidated Entity minimises credit risk by dealing with major financial institutions in relation to cash and short-term borrowings. Concentration of credit risk exists from time to time on 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 financial instruments are managed by:

- transacting with multiple derivatives counterparties that have a long-term credit rating of at least AA– (or its equivalent); and
- utilising ISDA agreements with derivative counterparties in order to limit exposure to credit risk through netting of amounts receivable and amounts payable to individual counterparties.

Fair values of financial instruments

The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:

Carrying
Carrying
amount
Fair value
amount
Fair value
2010
2010
2009
2009
Consolidated
Note
$M
$M
$M
$M
Assets carried at fair value
Receivables:
– Derivative fnancial instruments
5
23.0
23.0
30.9
30.9
Other fnancial assets:
11
– Investment in listed securities
42.3
42.3
27.7
27.7
– Investments in other unlisted securities
0.3
0.3
0.3
0.3
~~65.6~~
~~65.6~~
~~58.9~~
~~58.9~~
Assets carried at amortised cost
Cash
22(a)
474.8
474.8
216.7
216.7
Loans to related parties
5
2,353.7
2,353.7
2,766.3
2,766.3
Trade and other receivables
5
57.6
57.6
94.3
94.3
~~2,886.1~~
~~2,886.1~~
~~3,077.3~~
~~3,077.3~~
Liabilities carried at fair value
Payables:
– Derivative fnancial instruments
12
183.0
183.0
200.3
200.3
~~183.0~~
~~183.0~~
~~200.3~~
~~200.3~~
Liabilities carried at amortised cost
Payables
12
165.8
165.8
191.2
202.8
Interest bearing liabilities1
14
2,277.4
2,339.4
4,229.6
4,059.5
Provisions
13
128.9
128.9
11.6
–
~~2,572.1~~
~~2,634.1~~
~~4,432.4~~
~~4,262.3~~

The methods used for determining fair values of financial instruments are discussed in notes 1, 2, 5 and 11. 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 2010.

174

24. Financial risk management (cont)

(c) Credit risk (cont)

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Level 1
Level 2
Level 3
Total
As at 30 June 2010
$M
$M
$M
$M
Available for sale fnancial assets
42.3
–
0.3
42.6
Derivative fnancial assets
–
23.0
–
23.0
~~42.3~~
~~23.0~~
~~0.3~~
~~65.6~~
Derivative fnancial liabilities
–
183.0
–
183.0
~~–~~
~~183.0~~
~~–~~
~~183.0~~
As at 30 June 2009
Available for sale fnancial assets
27.7
–
0.3
28.0
Derivative fnancial assets
–
30.9
–
30.9
~~27.7~~
~~30.9~~
~~0.3~~
~~58.9~~
Derivative fnancial liabilities
–
200.3
–
200.3
~~–~~
~~200.3~~
~~–~~
~~200.3~~

Goodman Group Financial Report 2010

175

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

25. Commitments

	Consolidated
	2010 2009 $M $M
Capital expenditure commitments Contracted but not provided for and payable: – Within one year – Oneyear or later and no later than fveyears	16.6 0.6 0.2 0.6

Acquisition of investment properties

The amount contracted for the acquisition of investment properties not provided for is $62.5 million (2009: $54.4 million).

Commitment to investment in managed funds

At 30 June 2010, the Consolidated Entity was committed to invest A$97.1 million into GHKLF (2009: A$102.2 million).

In 2008, Goodman Group committed to subscribe for the lower of €222 million (A$315 million) or such amount as represents 40% of the issued and committed but uncalled GELF units, which is the maximum that Goodman Group is currently permitted to hold under the terms of the GELF constitutional documents. That commitment has been drawn down as and when required under the capital management plan of GELF. At 30 June 2010, that commitment had been drawn to €152 million (A$216 million), although based on GELF’s latest current unit value, Goodman Group is only able to invest a further €15 million (A$21 million) before it reaches the maximum permitted holding of 40% of the issued and committed but uncalled GELF units.

At 30 June 2010, the Consolidated Entity was committed to invest A$12.0 million (2009: A$nil) into Goodman Australia Development Fund (GADF), A$8.5 million into GCLHL (2009: A$nil) and A$4.8 million into Princeton Lux (2009: A$nil) to fund the acquisitions of completed properties by these associates and JVEs.

The Consolidated Entity has a commitment to provide additional shareholder funding of up to A$0.9 million (2009: A$2.0 million) into HDL, A$3.6 million into Seaview (2009: A$9.5 million) and A$30.5 million (2009: 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 2010, GL had net assets of $131.4 million (2009: net liabilities of $92.8 million). Under the stapling agreement between GIT and GL, the Responsible Entity and GL are obliged to provide financial 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

A commitment exists at 30 June 2010 in respect of a Heads of Agreement signed between GIT, 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 2010, 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 $13.0 million (2009: $16.8 million).

Non‑cancellable operating lease receivable from investment property customers

		Consolidated 2010 2009 $M $M 168.0 155.3 511.0 415.2 191.6 143.9 ~~870.6~~ ~~714.4~~
	Non‑cancellable operating lease commitments receivable: – Within one year – Later than one year but not later than fve years – Later than fveyears

176

26. Parent Entity financial information

The individual financial statements for the Parent Entity show the following aggregate amounts:

2010
2009
$M
$M
Balance sheet
Current assets
1,327.0
1,963.5
Total assets
4,310.9
4,948.3
Current liabilities
120.8
1,031.3
Total liabilities
121.4
1,033.1
Unitholders’ equity
Issued capital
6,442.9
5,229.1
Asset revaluation reserve
(822.3)
(726.1)
Accumulated losses
(1,431.1)
(587.8)
~~4,189.5~~
~~3,915.2~~
Loss for the year
(742.2)
(965.3)
Other comprehensive income for theyear
–
11.8
~~Total comprehensive income for theyear~~
~~(742.2)~~
~~(953.5)~~

Parent Entity capital commitments

The Parent Entity has no capital commitments (2009: $nil).

Parent Entity contingencies

Capitalisation Deed Poll

GIT, Goodman Limited and certain of their wholly-owned controlled entities are “investors” under a Capitalisation Deed Poll (CDP) dated 23 May 2007. Under the CDP, each investor undertakes to pay to the relevant controlled entity borrower (borrower) any amounts owing under the CDP when the borrower fails to make a payment. Any payments by an investor to a borrower will be by way of loan or proceeds for the subscription of equity in the borrower by the investor. As at 30 June 2010, the Consolidated Entity had A$1,770.4 million of debt which had the benefit of the CDP.

Euro medium‑term note programme

Under the euro medium-term note programme (refer to note 14), Goodman Australia Finance Pty Limited issued £250 million notes, maturing on 16 July 2016, at a fixed coupon of 9.75%. Goodman Funds Management Limited, as responsible entity of GIT and Goodman Limited, has unconditionally and irrevocably guaranteed on a joint and several basis the payment of principal and interest in respect of the euro medium-term notes.

Performance guarantee

Goodman Funds Management Limited, as responsible entity of GIT and GHKLF, has guaranteed to an unrelated party the completion of Interlink, a distribution and warehouse facility being developed by Goodman Interlink Ltd in Hong Kong, with an estimated completion value of HK$3,010 million.

Goodman PLUS Trust hybrid securities guarantee

Goodman Funds Management Limited, as responsible entity of GIT and Goodman Limited, guarantees jointly and severally, unconditionally and irrevocably the payment of the moneys owing to the holders of Goodman PLUS Trust hybrid securities (refer to note 18) under the terms of issue and subscription terms for those securities.to the holders under the hybrid securities terms of issue on a subordinated and unsecured basis.

CIC convertible preference securities guarantee

Goodman Funds Management Limited as responsible entity of GIT and Goodman Limited, guarantees jointly and severally, unconditionally and irrevocably the payment of the moneys owing to the holders of convertible preference securities (refer to note 18) under the terms of issue and subscription terms for those securities.

Stapling agreement with GL

Goodman Group Financial Report 2010

177

Notes to the consolidated financial statements (cont)

for the year ended 30 June 2010

27. Events subsequent to balance date

178

Directors’ declaration

In the opinion of the directors of Goodman Funds Management Limited, the responsible entity for Goodman Industrial Trust:

(a) the financial statements and notes that are set out on pages 132 to 178, are in accordance with the Corporations Act 200 1, including:
(i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2010 and of its performance for the financial year ended on that date;
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable.

The directors of the Responsible Entity have been given the declarations required by section 295A of the Corporations Act 2001 from the Group Chief Executive Officer and Group Chief Financial Officer for the year ended 30 June 2010.

The directors of the Responsible Entity draw attention to note 1 to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards.

Signed in accordance with a resolution of the directors of the Responsible Entity.

==> picture [127 x 52] intentionally omitted <==

Ian Ferrier, AM Independent Chairman Sydney, 19 August 2010

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Gregory Goodman Group Chief Executive Officer

Goodman Group Financial Report 2010

179

Independent auditor’s report to the Unitholders of

Goodman Industrial Trust

Report on the financial report

We have audited the accompanying financial report of Goodman Industrial Trust (the Trust), which comprises the balance sheet as at 30 June 2010, and income statement and statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a description of significant accounting policies and other explanatory notes 1 to 27 and the directors’ declaration.

Directors’ responsibility for the financial report

The directors of Goodman Funds Management Limited (the Responsible Entity) are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In note 1, the directors of the Responsible Entity also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements , that the financial report, comprising the financial 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 financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Trust’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the 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 of the Responsible Entity, as well as evaluating the overall presentation of the financial report.

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Trust’s financial position, and of its performance.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Auditor’s opinion

In our opinion:

(a) the financial report of Goodman Industrial Trust is in accordance with the Corporations Act 2001 , including:
(i) giving a true and fair view of the Trust’s financial position as at 30 June 2010 and of its 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 financial report also complies with International Financial Reporting Standards as disclosed in note 1.

==> picture [60 x 38] intentionally omitted <==

KPMG

==> picture [96 x 61] intentionally omitted <==

John Teer Partner

Sydney, 19 August 2010

180

Securities information

	Percentage of Number of Number of total issued Range of securities Securityholders securities securities 1 – 1,000 2,251 999,343 0.02 1,001 – 5,000 6,446 19,240,162 0.30 5,001 – 10,000 5,125 39,641,796 0.62 10,001 – 100,000 10,375 309,371,473 4.86 100,001 – over 939 6,000,498,620 94.20 Rounding 0.00 ~~Total~~ ~~25,136~~ ~~6,369,751,394~~ ~~100.00~~

There were 1,656 Securityholders with less than a marketable parcel in relation to 435,535 securities as at 31 August 2010.

There were 1,656 Securityholders with less than a marketable parcel in relation to 435,535	securities as at 31 August 2010.
	Number of
Substantial Securityholders1	securities
ING Group	531,652,052
Commonwealth Bank of Australia	408,523,081
AMP Limited	398,688,098
BlackRock, Inc.	326,402,271
The Vanguard Group,Inc.	304,610,228

In accordance with latest Substantial Securityholder Notices as at 31 August 2010.

China Investment Corporation (CIC)

As disclosed in the substantial shareholder notice to the ASX on 30 November 2009, CIC holds 5,000 Exchangeable Securities that are exchangeable for 604,439,396 Goodman Group Stapled Securities. Prior to exchange, these securities have a voting interest in Goodman Industrial Trust under the Corporations Act. However, CIC has executed a Voting Deed Poll under which they have undertaken to not exercise their voting power for “non-preference matters”. CIC also holds 276,000,000 options over Goodman Group Stapled Securities.

Voting rights

On‑market buy‑back

There is no current on-market buy-back.

Goodman Group Financial Report 2010

181

Terms of the Exchangeable Securities

A summary of the key terms of the Exchangeable Securities is set out below.

Summary terms and conditions	Summary terms and conditions
Issuer Number of Exchangeable Securities on Issue Holder Description of securities Issue size and initial Exchange Price Transferability Ranking Voting rights Allotment date Distributions Alternative Coupon Satisfaction Mechanism (ACSM) Triggers	Goodman Funds Management Limited (ACN 067 796 641) in its capacity as trustee of the China Hybrid Investment sub-trust, a special purpose sub-trust of Goodman Industrial Trust
	5000 (Issue price of $100,000 per Exchangeable Security)
	A wholly-owned subsidiary of CIC
	Perpetual, unsecured, subordinated securities exchangeable into ordinary stapled securities of Goodman1
	A$500 million split into three tranches: Tranche 1: A$225 million at A$0.43 (exchangeable into 523,255,814 Stapled Securities) + Tranche 2: A$150 million at A$0.44 (exchangeable into 340,909,090 Stapled Securities) + Tranche 3: A$125 million at A$0.45 (exchangeable into 277,777,777 Stapled Securities) + Exchange Price subject to anti-dilution adjustments for future events
	The Exchangeable Securities are not transferable until each Exchange Date after which time the applicable Exchangeable Securities will be fully transferable. Exchange Dates are as set out under “Holder exchange rights” below
	The Exchangeable Securities shall at all times rank pari passu and without any preference or priority among themselves and among Goodman PLUS, and subordinate to all other debts of the Exchangeable Securities Issuer, but ranking in priority to all Stapled Securities and all ordinary units in the sub-trust, both for distributions and on a winding up
	Usual voting rights for preference securities
	16 October 2009
	10% per annum payable semi-annually in arrears on each distribution date (21 June or 21 December) Distributions are non-cumulative and payable at the sole discretion of the Exchangeable Securities Issuer Step-up of 1.00% from 1 January 2012 if the Exchangeable Securities are not exchanged into Stapled Securities Distributions cannot be paid in cash in the event of a breach of the Triggers
	If Distributions are paid in Stapled Securities, the Stapled Securities will be issued at a 2.5% discount to the 15 day VWAP If the Exchangeable Securities Issuer is unable to pay the Distribution in Stapled Securities at the time for a legal or regulatory reason, the coupon, which is not cumulative, will be paid as soon as reasonably practicable
	The Exchangeable Securities Issuer must comply with the following fnancial covenants in order to be able to pay a cash Distribution: Interest cover >= 2.5x (EBITDA to Interest Expense) i. Gearing <= 55% (Net Liabilities to Net Tangible Assets) ii. Trigger calculation defnitions are to be consistent with the calculation defnitions applied under Goodman’s Common Terms Deed Poll Triggers will not be calculated until post the 30 June 2010 balance date

182

Holder exchange rights Exchangeable Securities Issuer redemption right Distribution stopper Anti‑dilution Governing law Listing	No exchange before the relevant Exchange Date: Tranche 1: 31 October 2009 + Tranche 2: 30 June 2010 + Tranche 3: 31 December 2010 + Earlier exchange is permitted in limited circumstances including where a change of control occurs before 31 December 2010. A change of control includes the making of an offer for Stapled Securities which becomes unconditional and gives a person relevant interests in 20% or more of the Stapled Securities. After each period, CIC may exchange the Exchangeable Security tranche available for exchange (in full or in two tranches, with the minimum conversion tranche being A$60 million) into Stapled Securities at the Exchange Price at any time
	Redeemable by the Exchangeable Securities Issuer at its election if the closing price of Stapled Securities for 20 out of 30 consecutive trading days is in excess of 125% of the exchange price from: Tranche 1: 31 December 2010 (where the trading price is above A$0.5375) + Tranche 2: 31 December 2011 (where the trading price is above A$0.55) + Tranche 3: 30 June 2012 (where the trading price is above A$0.5625) +
	No dividends or distributions may be made or paid to holders of Stapled Securities or Goodman PLUS (subject to payments which cannot be lawfully deferred or waived) if not all the Exchangeable Securities coupons are paid in cash or ACSM
	Exchange Price to be adjusted to refect the dilutionary impact of future events including (but not limited to) a reorganisation of Goodman’s capital, extraordinary distributions, pro rata issues or bonus issues No adjustment to the Exchange Price is to be made for Distributions (other than extraordinary distributions), Stapled Securities issued pursuant to an employee share scheme or the broader equity raising announced by Goodman in August 2009
	New South Wales, Australia
	None Stapled Securities of Goodman issued on exchange to be listed on ASX

There have been no Stapled Securities issued in satisfaction of the distributions paid on the Exchangeable Securities. If the December 2010 distribution on the Exchangeable Securities was to be satisfied by the issue of Stapled Securities at an issue price of $0.6111, (being the 15 business day VWAP as at 3 September 2010 of $0.6268 at a discount of 2.5%), the notional number of Stapled Securities to be issued would be approximately 41,021,916.

1 On a fully diluted basis assuming the exchange of the Exchangeable Securities and exercise of the Options issued on 19 May 2009 and
9 October 2009, there would be 7,787,694,074 Stapled Securities on issue.

Goodman Group Financial Report 2010

183

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 financial market which it operates as the case requires.

AUM Assets under management: total value of properties directly held or under management.

BREEAM Building Research Establishment’s Environmental Assessment Method.

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.

DNGB German Sustainability Building Council.

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.

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.

GFM 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 (formerly Macquarie Goodman Hong Kong Wholesale Fund).

GIT Goodman Industrial Trust and its controlled entities or GFM as Responsible Entity for GIT, where the context requires.

GL Goodman Limited (formerly Goodman International Limited ABN 69 000 123 071) and its controlled entities, 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.

HK BEAM Hong Kong Building Environmental Assessment Method.

HQE High Environmental Quality standard.

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.

NABERS National Australian Built Environment Rating System.

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 GIL 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.

184

Corporate directory

Goodman Group

Goodman Limited ABN 69 000 123 071

Goodman Industrial Trust ARSN 091 213 839

Security Registrar

Computershare Investor Services Pty Limited

Level 5 115 Grenfell Street Adelaide SA 5000

GPO Box 1903 Adelaide SA 5001

Responsible Entity

Goodman Funds Management Limited ABN 48 067 796 641; AFSL Number 223621

Offices

Registered office

Level 10 60 Castlereagh Street Sydney NSW 2000 Australia

GPO Box 4703 Sydney NSW 2001

Telephone 1300 791 100 (within Australia) +61 2 9230 7400 (outside Australia) Facsimile +61 2 9230 7444 Email [email protected] Website www.goodman.com

Other offices

Telephone 1300 723 040 (within Australia) +61 3 9415 4043 (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

Company Secretary

Mr Carl Bicego

==> picture [100 x 101] intentionally omitted <==

AI assistant

GOODMAN GROUP — Annual Report 2010

64998_rns_2010-09-27_9206677c-1025-4766-809c-77e9e8d1cdb6.pdf

Goodman Group (Goodman) – Annual Report 2010

Goodman Group (Goodman or Group) – Securityholder Review and Financial Report 2010

Annual General Meeting

Contents

Highlights

5.25c

3.4c

$12.6b

2m sqm

93%

5.5 years

Group operations

Capital allocation

Property investment

Earnings composition

Property development

Property services

Fund management

Capital management

Outlook

Group operations

327

Facts and figures

Property development

$1.2 billion

10,400,000 sqm

Fund management

11

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

Environmental progress

– performance management

Programme leadership

Stakeholder engagement progress

Community progress

Priorities for 2010/11

Keylink Industrial Estate, Edinburgh, South Australia

+ Financial summary corporate information

Five year financial summary

Group executives

Board of Directors

Securities information

China Investment Corporation (CIC)

Voting rights

On-market buy-back

Corporate directory

Goodman Group

Security Registrar

Responsible Entity

Offices

Registered office

Other offices

Custodians

Trust Company Limited

Auditor

KPMG

ASX code

Directors

Company Secretary

US Notice

Disclaimer

Contents

US Notice

Disclaimer

Chairman’s letter

Chairman’s letter (cont)

Group Chief Executive Officer’s report

Group operations

Group Chief Executive Officer’s report (cont)

Property investment

Property development

Earnings composition

Property services

Fund management

Group Chief Executive Officer’s report (cont)

Capital management

Outlook

Corporate governance

GOODMAN GROUP Annual Report 2010