GOODMAN GROUP

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GOODMAN GROUP STAKEHOLDER REVIEW AND 2021 ANNUAL REPORT

Date 27.09.2021

The Goodman Group Stakeholder Review and 2021 Annual Report (incorporating the consolidated financial reports for Goodman Limited, Goodman Industrial Trust, and Goodman Logistics HK Limited) were dispatched to Securityholders today.

The Reports and covering letter are attached.

– ENDS –

Authorised for release to the ASX by Carl Bicego, Company Secretary and Group Head of Legal.

For further information, please contact: Media Investors Investors Kerrie Muskens James Inwood Phillip Henderson Tel: + 612 9230 7400 Tel: + 612 9230 7400 Tel: +612 9230 7400

About Goodman

Goodman Group is an integrated property group with operations throughout Australia, New Zealand, Asia, Continental Europe, the United Kingdom, North America and Brazil. Goodman Group, comprised of the stapled entities Goodman Limited, Goodman Industrial Trust and Goodman Logistics (HK) Limited, is the largest industrial property group listed on the Australian Securities Exchange and one of the largest listed specialist investment managers of industrial property and business space globally.

Goodman’s global property expertise, integrated own+develop+manage customer service offering and significant investment management platform ensures it creates innovative property solutions that meet the individual requirements of its customers, while seeking to deliver long-term returns for investors.

GRP01-7-2301\0.2

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27 September 2021

Dear Securityholder

Goodman Group – 2021 Annual Report

Goodman Group delivered another very strong result in 2021. Our focus was on remaining flexible – enabling us to make positive changes to the business, while prioritising our people’s safety and wellbeing.

The enclosed Annual Report includes the consolidated financial reports for Goodman Limited (being for the entire consolidated Goodman Group), Goodman Industrial Trust and Goodman Logistics (HK) Limited.

2021 Stakeholder Review – Wired for Change

Our Stakeholder Review this year is fully electronic, with the ability to download a pdf, and can be accessed at www.2021ar.goodman.com. The theme of this year’s review is “Wired for Change” which reflects on the era of rapid change that we are living in and how Goodman has embraced this change with new skills, processes and ways of working for the better of our business, our people and the planet.

I encourage you to take a look at the Stakeholder Review. It provides a comprehensive overview of our business, our performance, highlights and achievements.

Annual General Meetings

The Annual General Meetings for the Goodman Group entities will be held at 10:00am (Sydney time) on Thursday, 18 November 2021. In the interests of health and safety, we are adopting measures to allow securityholders to participate in this year’s Annual General Meetings remotely via an online webcast. Details of how to join the webcast will be provided with the Notice of Meetings.

Thank you for your ongoing support.

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Greg Goodman`

Group Chief Executive Officer

Goodman Group 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 091213 839

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Goodman Group Stakeholder Review 2021
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GOODMAN GROUP 2021

TABLE OF CONTENTS

06. BREAKING AWAY FROM THE KNOWN

Wired for change

1. NEW PATHWAYS EARLY ADAPTERS

Chairman’s letter 03 Group CEO’s letter 09 04. ESSENTIAL INFRASTRUCTURE FOR THE DIGITAL ECONOMY

Operational overview Online shift Operational highlights

17 19 21

DRIVING

CHANGE

Environmental social governance	23
2021 ESG highlights	25
Accelerated targets	27
Leading by example	29
Sustainable properties	31
Corporate performance	32
People and culture	33
Sustainable solutions for a better world	35
Climate related targets	39

MAKE YOURSELF UNCOMFORTABLE THE FUTURE OF WORK IS HERE Feature: The future of work 41

GLOBAL INFILL

Regional networks	61
Australia	63
New Zealand	65
Asia	67
Europe	71
UK	73
The Americas	75

WE’RE ALL IN THIS TOGETHER

Goodman Foundation	77
Children and youth	81
Community and community health	83
Food rescue and environment	87

09.
CORPORATE	INFORMATION
Board of directors	91
Five year fnancial summary	93
Securities information and corporate directory	95

GOODMAN GROUP 2021 1 WIRED FOR CHANGE 2 We’re living in an era of rapid change. Digital technology is advancing at pace, our fastest growing consumer group has an ever-increasing expectation for immediacy and the global pandemic has caused us all to rethink what we do and how we do it. The world is changing, and Goodman is changing with it. We’ve developed new skills, new processes and new ways of working that will help make the world a better place for all of us. B R E A K I N G A W A Y FROM THE KNOWN

GOODMAN GROUP 2021 3 CHAIRMAN’S LETTER 4 Stephen Johns, Independent Chairman Goodman delivered another very strong result in 2021 during an extremely challenging period. The Group’s focus was on remaining agile, embracing opportunities and making positive changes to the business. We redesigned how our teams work to prioritise our people’s safety and wellbeing in the short term and enable greater diversity in the longer term. We accelerated our environmental, social and governance (ESG) targets, and we N met the demands of an escalating digital economy. E PATHWAYS

GOODMAN GROUP 2021

CHAIRMAN’S LETTER

Success in such conditions was only possible due to the Group’s strategy, executed consistently by our strong local leadership teams in global markets, and galvanised with one culture. Goodman’s business strategy is fit for purpose and comprehensive. It is designed for the long term, with our property investment strategy, environmental and sustainability targets and remuneration aligned to provide profitable and sustainable outcomes well into the future.

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Strong and sustainable

The right balance and focus

A strong balance sheet to secure financial sustainability remains central to the Group’s strategy. Low gearing levels and strong liquidity give Goodman the ability to seize quality opportunities as they arise, as well as providing a safeguard during turbulent periods. The Group’s strong relationship with our international Investment Partners, some of the world’s largest pension and sovereign funds that co-invest with Goodman globally, further strengthens our financial capability. Within these Partnerships, we currently have $18.1 billion of liquidity available for future investments in the form of equity commitments, cash and undrawn debt. The strategy has been critical, given the properties we seek to acquire are both scarce and highly valuable.

I believe one of Goodman’s greatest strengths lies in our ability to balance our entrepreneurial spirit, which remains undiminished, with the attention to detail required for compliance and risk management, which is fundamental to running a major ASX-listed company whose global operations span 14 countries. Aiding this balance is the Group’s remuneration strategy, which provides for all of our people globally to be owners in the business, fostering an innovative culture as well as creating a loyal and experienced team which remains engaged and committed.

While the approach of investing in high quality locations has been at the heart of Goodman’s strategy, it has been refined over time to adapt to a changing world. For example, in recent years our asset sale program has allowed us to focus on infill markets which can lead to higher intensification of use and a greater focus on sustainability. Customer demand outweighs supply for these properties, driven by consumers’ growing expectation to have goods delivered quickly. The pandemic saw significant growth in e-commerce penetration in all of our markets and further accelerated this demand.

Goodman’s long-term view impacts all areas of the business and is key to our success. Our focus on infill markets increases the scale and complexity of projects, which leads to significantly longer development timeframes, often exceeding five years. This is in addition to the time needed to achieve the best urban regeneration outcomes at infill sites. Similarly, our ever-increasing focus on environmental and sustainability goals, which we expect will take five to 10-years to implement and which will, in all likelihood, keep evolving over time, are aligned with long-term financial sustainability.

GOODMAN GROUP 2021

CHAIRMAN’S LETTER

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Goodman Business Park, Greater Tokyo, Japan.
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The Goodman Board

Our long serving Chairman, Mr Ian Ferrier, retired from the Board at last year’s AGM. On behalf of the Board, I would like to thank him for his outstanding service to Goodman over his 17-year tenure on the Board and, in particular, his leadership during his 12-years as Chairman of the Board.

At this year’s AGM, Independent Directors, Ms Rebecca McGrath and Mr David Collins, together with Executive Director, Mr Danny Peeters, will be standing for re-election. Ms Penny Winn has decided not to stand for re-election this year and will retire from the Board at the conclusion of this year’s AGM. On behalf of the Board, I would like to extend my gratitude to Penny for her valuable contribution.

Goodman seeks to maintain a diverse Board with the appropriate mix of skills, gender and geographic representation, which will continue to be supported through future appointments. Our focus specifically will be on meeting our target of 40% representation for female Board members and additionally, in view of the global nature of Goodman, we will be seeking to appoint an internationally based director with the appropriate skill set during the course of the current financial year.

Goodman’s straightforward and transparent culture invites the Board to have a constructive and open dialogue with management. This enables directors to add value in their deliberations with management, particularly in setting the Group’s long-term growth strategy.

Many thanks

Goodman’s strong performance in the challenging year that was 2021 was made possible by the strength of our global leadership and teams around the world. On behalf of the Board, I sincerely thank our people for their commitment and determination in achieving this result. I also extend my gratitude to all of our stakeholders for their ongoing support and the Board for their valuable contribution.

Sincerely,

Stephen Johns Independent Chairman

The 10-year plan

Given the long-term nature of Goodman’s approach to real estate investment, the Board has introduced a new Long Term Incentive Plan for the senior leadership team to provide even greater alignment with securityholders. The new 10-year plan will see the testing and vesting periods for the senior leadership team extended to four and 10 years, respectively, with the existing plan’s three and five year periods remaining in place for all other employees.

The new plan will position the Group with a market leading remuneration structure which will help to retain key people in a competitive labour market. It will support our objective to influence our people’s long-term decision making and will incorporate environmental and sustainability targets in assessing our operational performance.

GOODM A N’S S T RONG PERFORM A NCE IN 2021 WA S M A DE P OS SIBLE BY T HE S T RENGT H OF OUR G LOB A L LE A DERSHIP A ND T E A MS A ROUND T HE WOR LD

GOODMAN GROUP 2021

GROUP CEO’S LETTER

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them well which is putting us in good stead for the future.

GOODMAN GROUP 2021

GROUP CEO’S LETTER

In 2021, as global uncertainty and market disruption continued, our agile culture helped us embrace the changes we were presented with. The determination and talent of our people shone through.

During the year, we have continued our concerted efforts to make ESG fundamental to our business. Goodman’s long-term approach continued to engender positive economic, environmental and social outcomes for our business, our stakeholders, and the world.

Our results demonstrate this, as well as the team’s alignment of consistently owning properties around the world, close to consumers. We delivered profitability, maintained a strong balance sheet, and stayed true to our purpose.

W E D E L I V E R E D P R O F I TA B I L I T Y, M A I N TA I N E D A S T R O N G B A L A N C E S H E E T, A N D S TA Y E D T R U E T O O U R P U R P O S E

As providers of essential infrastructure, sustainability is crucial to Goodman, and we are proud that our global operations achieved carbon neutrality this year. Around the world, we made progressive choices and changes to our operations to achieve this carbon neutral result well ahead of our 2025 target.

Goodman’s financial highlights include an operating profit of $1.2 billion, statutory profit of $2.3 billion and assets under management that grew to $58 billion. Our balance sheet remains strong with gearing of 6.8% and available liquidity of $1.9 billion. Globally, our Group and Partnership properties achieved a revaluation uplift of $5.8 billion, reflecting the portfolio’s quality. Distribution per stapled security was 30.0 cents, and net tangible assets increased 14.4% to $6.68 per security.

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GOODMAN GROUP 2021

GROUP CEO’S LETTER

Future ready

The breadth of Goodman’s portfolio gives us valuable insights across geographies. Globally, we saw evidence that our consumer-centric approach to growth in targeted locations was meeting our customers’ requirements for faster speed to market. Meanwhile, our properties continued to provide opportunities for automation and for higher utilisation of space to allow for greater supply chain efficiency.

We continued to deploy capital to support our organic growth strategy, which saw our development workbook increase to $10.6 billion. Our global work-in-progress is spread across 73 projects and 12 countries, and the depth of demand is leading to a high level of lease pre-commitment.

Goodman leads in the urban regeneration of logistics sites around the world. This expertise has grown more valuable, with the sustainable redevelopment of brownfield sites in high demand by our customers and these are supported by the public sector. Such developments are beneficial to the environment as they reduce the amount of greenfield land developed and re-use existing infrastructure. Infill locations, meanwhile, tend to be close to consumers, which provides our customers with faster speed to market and lower transportrelated emissions.

Global online sales increased 30% in 2020*, fuelled by e-commerce and the consumption of digital media and services. We saw a direct correlation between consumer habits, customer demand and our infill strategy.

Goodman has been positioning itself for this demand for several years. Our strategy is serving our customers well and during the year we leased 3.9 million sqm of space and our portfolio occupancy remains high at 98.1%. This supported the like for like growth in rental income of 3.2%.

Globally, Goodman continued to work with planning authorities and local municipalities on innovative land use developments – an endeavour of greater mutual benefit where planning authorities are conducive to the increased utilisation of space, including multi-storey buildings which comprise approximately 50% of what we are currently developing around the world.

Our Partnerships achieved average total returns of close to 18% while maintaining strong credit metrics. External assets under management reached $54.0 billion with $18.1 billion liquidity in the form of equity commitments, cash and undrawn debt. We also completed $3.1 billion of asset sales across our Partnerships – primarily in Europe where we have continued to refine our investment strategy. Strong demand for industrial assets globally resulted in demand from capital partners seeking to invest alongside us.

Our financial performance, high occupancy rates and rental growth are the result of our strategy to own assets in markets where barriers to entry are high, land is scarce, and demand is robust.

W E S A W A D I R E C T C O R R E L A T I O N B E T W E E N C O N S U M E R H A B I T S , C U S T O M E R D E M A N D A N D O U R I N F I L L S T R A T E G Y

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A sustainable impact

By accelerating the scale and timing of our sustainability goals, Goodman achieved carbon neutral global operations four years ahead of our 2025 target.

Collectively with our contractors and customers, we are working to decarbonise our development projects. We believe it is critical to examine the impact of steel, concrete and other materials and processes. As such, we have established a framework to measure the volume of embodied emissions in our development projects globally. This will enable Goodman to reduce or offset embodied carbon in the future.

Our sustainability goals are progressive, appropriate and aligned with our customers’ and investors’ aspirations. They reflect our obligation to act decisively on climate change, to reduce the risk of obsolescence and to ensure the future performance of our assets.

Throughout the year, the Goodman Foundation remained steadfast in its efforts to help its charitable partners not only survive but rise to the challenge of the pandemic. It was a time to back our many charity partners who knew what their communities needed most, and to be generous and flexible in how we supported them through one of the most challenging years imaginable.

*Source: Euromonitor, 2020.

GOODMAN GROUP 2021

GROUP CEO’S LETTER

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Flexible and inclusive

Flexible working is the new normal at Goodman. We have created an agile, technology-enabled working environment, which prioritises health, safety and wellbeing for our people around the world. Flexible working suits our culture and global operations. It also protects our teams and increases our productivity and diversity. Furthermore, it opens up opportunities for our people – particularly caregivers and parents.

We view our people as owners in the business. All Goodman employees participate in our Long Term Incentive Plan (LTIP), which aligns their interests to those of our securityholders and helps us to retain key talent and maintain low turnover. The financial framework around our LTIP encourages long-term decision making and underpins personal responsibility.

We are committed to inclusion and diversity. Our target is to increase women in senior roles to 40% by 2030 so that our capable female leaders, mentors and managers can continue to have a widespread and meaningful impact on our culture.

Forward thinking

We have witnessed the digitalisation of the world. And there’s more to come.

Changing consumption habits have fundamentally changed the volume and nature of demand from our customers – which Goodman was, and still is, ready for. As a business that is always looking to the future, we have been strengthening our expertise and operational platform, while maintaining our strong balance sheet over several years to facilitate this transition.

I couldn’t be prouder of the Goodman team’s commitment to deliver high-quality, sustainable assets with integrity, determination and innovation. We’re well prepared for the future.

Sincerely,

Greg Goodman Group Chief Executive Officer

GOODMAN GROUP 2021 17 OPERATIONAL OVERVIEW 18 Since the beginning of the global pandemic, the digital economy has experienced rapid, unrelenting growth. Goodman’s long term strategy of owning, developing and managing high quality, sustainable properties that are close to consumers, has positioned our customers, and our own business, well to meet demand. E-commerce is a large part of our customers’ businesses and our early investment in infill locations has enabled them to have a greater speed to market, and an edge on their competitors. ESSENTIAL INFRASTRUCTURE FOR THE DIGITAL ECONOMY

GOODMAN GROUP 2021

OPERATIONAL OVERVIEW

Online shift

In FY21, Goodman has remained flexible and adapted to the changing conditions. Customer demand for space continued to increase across a range of industry segments and the prolonged impacts of the global pandemic accelerated our consumers’ propensity to shift to online shopping. Logistics and warehousing have provided critical infrastructure to enable distribution of essential goods to time-sensitive consumers through this period.

Top 20 global customers

We have a diverse range of 1,600 customers across e-commerce, logistics, retail, consumer goods, automotive, pharmaceutical and technology industries.

Our development workbook remains robust as we continue to focus on infill markets, resulting in high levels of pre-commitment. Our projects have been increasing in scale and value with the average development period for projects now 19 months. Repositioning and redevelopment of existing assets is increasingly contributing to the future activity, with 50% of our development sites now brownfields. We have progressed projects through planning and undertaken infrastructure work over a number of years to make sites available for expected customer demand.

Work in progress

Our assets under management grew solidly and our Partnerships delivered average returns of approximately 18% with strong income and capital growth. We’re also well capitalised with gearing low and liquidity high, including $18.1 billion available in the form of equity commitments, cash and undrawn debt through our Partnerships.

Market conditions are strong in our sector. Continued growth in the digital economy is giving our customers confidence to grow too. Our global portfolio is well positioned to facilitate their needs.

Top 20 global customers (by net income – look through basis)

~~Amazon~~		~~7.1%~~

~~Deutsche Post (DHL)~~	~~2.2%~~

~~A.P Moller – Maersk~~	~~1.7%~~

~~Japan Post (Toll)~~	~~1.6%~~

~~BMW Group~~	~~1.3%~~

~~SF Express~~	~~1.2%~~

~~Iron Mountain~~		~~1.1%~~

~~Koch~~	~~1.0%~~

~~Equinix~~	~~1.0%~~

~~DB Schenker~~	~~1.0%~~

~~Australia Post~~	~~0.8%~~

~~JD.com~~	~~0.8%~~

~~Kuehne + Nagel~~	~~0.7%~~

~~Mainfreight~~	~~0.7%~~

~~Noble House Home Furniture LLC~~	~~0.7%~~

~~Syncreon Technology~~	~~0.7%~~

~~Omlog~~	~~0.6%~~

~~Coca-Cola Amatil~~	~~0.6%~~

~~Linfox~~	~~0.6%~~

~~IVE Group~~	~~0.6%~~

Work in progress ($bn)

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12
10.6
10
8
6.5
6
4.1
4 3.5 3.6
2
0
2017 2018 2019 2020 2021
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Assets under management ($bn)

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60
57.9
54.0
51.6
50
48.0
46.2
42.9
40
38.3
34.6 35.1
30.5
30
2017 2018 2019 2020 2021
Partnership AUM Total AUM ($bn)
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GOODMAN GROUP 2021

OPERATIONAL OVERVIEW

Operational highlights

OWN

OCCUPANCY

98.1%

High occupancy maintained at 98% and WALE of 4.5 years NPI GROWTH

3.2%

Like-for-like NPI growth at 3.2%

SQUARE METRES LEASED

3.9M

Equating to $517.1 million of annual rental property income

INVESTMENTS

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Significant higher and better use opportunities exist across the portfolio including residential, data centre and multi-storey logistics. These are in various stages of planning with outcomes expected over the medium to long term

DEVELOP MANAGE

WORK IN PROGRESS

VALUATION GROWTH $5.8BN 4.3%

$10.6BN

WACR tightened 55bps to 4.3%

12 countries, 73 projects, forecast yield on cost of 6.7%

IN PARTNERSHIP

TOTAL AUM

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$57.9BN
+12%
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81%

External AUM increasing to $54.0 billion, up 12% on FY20

WIP undertaken within Partnerships or third parties

AVERAGE ANNUAL PRODUCTION RATE

AVERAGE RETURN

$6.6BN 19 months

17.7%

Partnership average total return on net assets

Average project development period of 19 months

DEVELOPMENT COMMENCEMENT

GEARING

$6.6BN

17.5%

With 57% committed

Average Partnership gearing

COMMITTED

AVAILABLE LIQUIDITY

$18.1BN

96%

Comprising equity commitments, cash and undrawn debt

Development completions for the period were 96% committed

GOODMAN GROUP 2021 23 ENVIRONMENTAL SOCIAL GOVERNANCE 24 When it comes to sustainability, we believe the property sector has a vital role to play and we’re leading by example. This year, we achieved carbon neutral global operations four years ahead of schedule – and we’re determined to deliver on our commitments. We’re continuing to work closely with our customers and our investors to continually support and influence long-term sustainable solutions that will help us meet, and in some cases beat, our ESG targets across every aspect of our business. . DRIVING . CHANGE

GOODMAN GROUP 2021

ENVIRONMENTAL SOCIAL GOVERNANCE

2021 ESG highlights

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Our global 04 operations were certified as We began calculating embodied emissions for our developments Carbon Neutral globally as we move towards carbon 01 by Climate Active neutral developments 06 03 We finalised our transition to 100% certified green power in our Australian operations which will increase Goodman’s global renewable energy usage to approximately 60%

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Our Japanese Partnership was awarded Sector Leader in the 2021 Global Real Estate Sustainability Benchmark (GRESB) in the Industrial Distribution Warehouse category

02 We installed 70MW of solar on our rooftops globally taking our total 05 to 125MW to date – equivalent of powering 17,600 Australian homes We implemented per year, and we have more large biodiversity initiatives installations planned for FY22 including planting urban forests at multiple European sites

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We continued to roll out smart irrigation technology in Australia, completing around 43% of the portfolio and saving 53% of irrigation water (the equivalent of 30 Olympic swimming pools of water) in the last 12 months

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09
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We contributed $6.3 million to community and philanthropic causes including $400,000 raised by Goodman people

[08 ] modern slavery

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We sharpened our focus on our supply chain ethics and developed a global supplier code of conduct centred on human rights and preventing

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We launched a $10 million global incentive to support Goodman people to buy electric vehicles

GOODMAN GROUP 2021

ENVIRONMENTAL SOCIAL GOVERNANCE

Accelerated targets

Goodman achieved carbon neutral global operations ahead of our 2025 target. Certified by the Australian government’s Climate Active program, the result comes from reducing our own operational emissions, increasing our use of renewable energy, supporting our customers and investors to reduce their emissions, and investing in 100% Australian carbon credit units.

Reducing emissions

All regions contributed to our reduced carbon footprint, with Europe and New Zealand having already achieved carbon neutral status. During the year, our Australian operations transitioned to 100% green power, which will dramatically reduce the Company’s total future emissions.

We continued to support and influence long-term sustainable solutions for our customers and investors. We believe the property sector has a vital sustainability role – from the estates we develop, through to how we can work with our customers to achieve greener outcomes in their businesses too.

Goodman is reducing carbon in the development process as well. We are calculating the volume of – and placing a value on – embodied emissions in our projects globally, which means we can offset the carbon.

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Highbrook Business Park, Auckland, New Zealand.
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Investing in carbon credits

To offset the carbon emitted in areas outside Goodman’s control, as well as to support an Aboriginal-owned and operated carbon farming business, we invested in the Arnhem Land Fire Abatement (ALFA) projects in Australia’s Northern Territory.

Arnhem Land is prone to extreme wildfires that affect people, plants and animals. The ALFA projects employ Traditional Owners and Aboriginal rangers to undertake traditional fire management across more than 80,000 square kilometres. This work drastically reduces emissions while protecting culturally significant sites from destructive wildfires.

Funding from carbon offsets also enables the projects to invest in other community identified priorities and projects that support Traditional Owners to manage the land and sea country of Arnhem Land.

GOODMAN GROUP 2021

ENVIRONMENTAL SOCIAL GOVERNANCE

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Leading by example

Our ESG strategy

Our 2030 Sustainability strategy

Goodman is a leader in environmental social governance (ESG). We have a long-term peoplefocused approach that looks to achieve positive outcomes for our business, our stakeholders and the world.

Goodman’s 2030 Sustainability strategy is about transitioning our business into a truly resilient and low-carbon company. The strategy is based on our people and culture, our engagement with stakeholders and our status as a trusted investment manager and partner in the community. It shapes all aspects of Goodman’s business and is one important way we measure our success.

Building a platform for authentic and positive change over the next decade is important to Goodman. We will continue to work closely with our customers, our investors and our people to decarbonise, to mitigate climate risk and to boost biodiversity.

UN Sustainable Development Goals

Our sustainability strategy is based around three pillars:

Our Sustainability Strategy involves 12 targets that are material to our business. The targets correlate with nine of the 17 UN Sustainable Development Goals.

Sustainable properties

Our sustainably designed, energy-efficient and professionally managed properties are strategically located and designed to meet the business needs of our customers, and to remain resilient to tomorrow’s global challenges.

03 Good health and wellbeing

05 Gender equality

People and culture

07 Affordable and clean energy 08 Decent work and economic growth 09 Industry, innovation and infrastructure 11 Sustainable cities and communities 12 Responsible consumption and production

Our workplaces promote the health, safety and wellbeing of our people and our customers. Our people are recruited and rewarded based on their commitment to our values, their local expertise and their long-term strategic and ethical thinking.

Corporate performance

Our capital structure is sustainable and we have a positive impact in our global communities through the Goodman Foundation. We promote strong leadership and governance, engage regularly with our stakeholders and measure and disclose our financial and community impact.

13 Climate action

15 Life on land

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ENVIRONMENTAL SOCIAL GOVERNANCE

GOODMAN GROUP 2021

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SUSTAINABLE PROPERTIES

Our development specifications maximise energy efficiency, generate renewable energy and enhance our customers’ wellbeing. We understand the value of strategically located properties and the environmental benefits of repurposing brownfield sites into innovative new facilities.

Our properties are designed to be as climate resilient as possible and include sustainable features that create greater amenity as well as appeal to changing customer needs.

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CORPORATE PERFORMANCE

Goodman’s global success in industrial real estate is founded on our capabilities, expertise and governance structures. Goodman’s Risk and Compliance Committee oversees the Group’s response to climate risk and ESG matters, including our risk management framework.

We engage regularly with stakeholders and disclose our ESG performance to maintain their trust. Meanwhile, our financial resilience allows us to make a tangible difference to the lives of vulnerable people through the Goodman Foundation.

The Global Real Estate Sustainability Benchmark (GRESB) is the leading ESG survey for the real estate sector and one of the main ways we communicate our performance. GRESB analyses and scores a range of ESG indicators and gives detailed insights to investors. In 2021, Goodman responded for eight entities and scored well, achieving Sector Leadership status for Goodman Japan Core Partnership (Stabilised benchmark) and Goodman UK Partnership (Development benchmark) within their respective peer groups.

Material drivers of our strategy Sustainable design and management Strategic locations Customer attraction and retention Climate risk and resilience Carbon reduction strategies Smart energy solutions Flexible and adaptable properties.	Target Progress
	400MW of solar PV capacity in operation by 2025 A further 70MW of solar PV installed or committed to during FY21 taking Goodman’s global installations to approximately 125MW. Targeting an additional 75MW in FY22 subject to planning approvals.
	100% renewable energy use within our operations by 2025 Finalised an agreement to start using 100% green power in our Australian operations from 1 July 2021. This will raise our global energy usage from renewable sources to approximately 60%. Continued investing in solar to increase renewable energy across our property portfolio. Looked at opportunities to generate renewable energy certifcates to compensate for limited renewable options in some markets.
	Carbon neutral operations by 2025 Achieved carbon neutrality for our global operations in FY21. This includes emissions within our operational control and excludes embodied emissions from our developments and our customers’ emissions. We will continue to lower our operational emissions and increase our use of renewable energy.
	Maintain >95% overall occupancy rate Achieved a 98% occupancy rate.

Material drivers of our strategy Sustainable operations and results ESG performance Responsible investment Environmental stewardship Sustainable capital structure Stakeholder and community engagement

Target	Progress
Retain investment	Continued to meet fnancial targets to underpin
grade credit rating	capital sources and retain credit rating.
	Maintained credit rating at BBB+ (S&P) and
	Baa1 (Moody’s).
Adopt the TCFD guidelines	Adopted Task Force on Climate-related Financial
for climate risk assessment	Disclosures (TCFD) guidelines in 2020 and published
and disclosure by 2022	our frst TCFD statement one year ahead of target.
4 Star Green Star	Submitted GRESB responses for eight Goodman
GRESB rating average	entities with results due in late 2021.

Submitted GRESB responses for eight Goodman entities with results due in late 2021. Achieved strong results in the 2020 GRESB survey including:

- Goodman Japan Core Partnership achieved 5 Green Stars and awarded Sector Leader (Stabilised) for its peer group for the fourth consecutive year
- Goodman UK Partnership achieved 5 Green Stars and awarded Sector Leader (Development) for its peer group
- Goodman Australia Industrial Partnership achieved 5 Green Stars (Development) and ranked second in its peer group.
$50 million in social investment by the Goodman Foundation by 2030
The Goodman Foundation contributed more than $6.3 million to community and philanthropic causes, including $400,000 raised by our people and 5,360 pro-bono hours.

GOODMAN GROUP 2021

ENVIRONMENTAL SOCIAL GOVERNANCE

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Material drivers of our strategy

Workplace safety

Group and regional leadership

ESG performance targets

Diversity and inclusiveness

Promotion of the Goodman values

Social equity

Customer wellbeing

PEOPLE AND CULTURE

At Goodman, we value diversity, health, safety, high standards of behaviour and wellbeing – knowing that our people are our greatest asset. We provide them with contemporary technology to allow for efficiency, productivity and flexible working, which suits our culture and keeps our people safe.

Retention of our people remains high due to an effective employee equity plan, internal development programs that reward and advance high potential employees and challenging, yet exciting, work opportunities. Our target is to have 40% female senior management representation by 2030, achieved through succession planning, employee development and talent management strategies that focus on senior women with expanded roles and exposure to large customers or investors.

Globally, our developments are increasingly featuring design aspects that support our customers’ health and wellbeing. To further their comfort and convenience at work, Goodman’s properties have health and recreation facilities, breakout spaces, green areas and onsite dining options.

Meanwhile, our work culture promotes a safe and inclusive working environment. We focus on the safety of our people and contractors and prioritise business ethics and human rights in our global supply chain.

Target Progress

Safe working environment Put a global safety framework in place that prioritises safety standards and the management of critical risk controls.

Rolled out safety training and contractor management procedures.

Unfortunately in FY21, four fatalities occurred on development projects under the control of our Principal Contractors. While Goodman is not responsible for the day-to-day management of works on these projects, we actively monitor them and will be working to introduce improved safety standards in all our regions.

Global supply chain ethics policy

Expanded our view of business ethics in our supply chain and we are developing an enforceable Code of Conduct including our commitments to human rights and to preventing modern slavery.

Further reviewed our supply chain in Australia to focus on high-risk sectors.

Gender ratio of 50/50, with 40% female senior executives by 2030

Reached a gender ratio of 44% female and 56% male, with 30% female senior executives.

Concluded that 100% of employees are demonstrating or exceeding Goodman’s values.

100% of employees assessed as demonstrating Goodman’s values

WE ARE WHAT WE VALUE

During the year we took time to refresh our values to further align them with our strategy. Some of the words might have changed but the spirit remains the same: Innovation, Determination, Integrity and Sustainability. These four values reflect not only who we are today, but who we want to be, long into the future.

INNOVATION

New ideas push our business forward. We focus on the future, proactively looking for new opportunities and improved solutions for our stakeholders that will make the world a better place for all of us.

DETERMINATION

Determination gets things done. We are motivated by excellence and work hard to achieve it, actively pursuing the very best outcomes for all our stakeholders.

INTEGRITY

We have integrity, always. We work inclusively and transparently, balancing the needs of our business and our people, with the needs of the community and those we do business with.

SUSTAINABILITY

We’re building our business for the long term. That’s why we consider the planet, and all the people on it, in everything we do. Our ESG initiatives demonstrate our ongoing commitment to having a positive economic, environmental and social impact on the world.

GOODMAN GROUP 2021

ENVIRONMENTAL SOCIAL GOVERNANCE

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In the heart of Hong Kong SAR’s technological
precinct is Goodman’s four-building
development, Tsuen Wan West: a market-
leading data, IT and communications hub.
The project, due to open in June 2022, is an
example of a highly sustainable brownfield
development.
Before After
Goodman Tsuen Wan West, Hong Kong SAR, China
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Sustainability in the heart of Madrid

Sustainability was considered at every stage, starting with demolition. Close to 85% of the total nonhazardous material – around 60,000 cubic metres – was recycled into the new centre’s base.

Just 20 minutes from Madrid’s centre, Goodman is working with the Getafe municipality to regenerate the Getafe Terminal Logistics Centre area – a former industrial warehouse, unused for a decade.

The building’s water-saving drainage and preparation for future solar panels will see it achieve a BREEAM Excellent ranking. Meanwhile, it is Spain’s first industrial project to achieve BREEAM Green Urbanisation certification for its surrounding infrastructure and zoning works.

The centre will depart from the traditional idea of how an industrial business park should look, feel and operate. Featuring 24,000 sqm of green space, its innovative split design means that despite heavy truck transit, employees who do not deal with trucks as part of their job will never cross paths with one.

The extra mile was travelled aesthetically too. While Getafe Terminal Logistics Centre is firmly focused on the future, its design pays homage to the area’s proud

Getafe’s warehouse spaces are cleverly designed to incentivise smaller retailers and enterprises, while the project’s revitalisation of this once-abandoned area will tempt aviation heritage. back businesses and residents alike.

SUSTAINABLE SOLUTIONS FOR A BETTER WORLD Brownfield developments

Brownfield sites are those that have previously been developed yet offer an opportunity to be re-developed into modern, efficient, sustainable properties. These older style developments are typically located in established industrial locations that are closer to urban centres.

Our global portfolio is concentrated in urban locations that are close to the majority of consumers. This brings our customers the benefit of faster speed to market and reduces their transport-related emissions.

It’s part of Goodman’s strategy to continue to acquire and redevelop existing brownfield sites. Goodman has extensive development experience in this area and, currently, more than half our global developments are on brownfield sites.

Brownfield redevelopments offer significant benefits to our customers, including being close to the consumer and providing employment to local communities, reducing the demand on rezoning and developing greenfield land, utilising existing infrastructure, and providing the opportunity to recycle materials from the current facility into new construction – thereby reducing waste being sent to landfill.

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After Before
Getafe Terminal Logistics Centre, Madrid, Spain.
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GOODMAN GROUP 2021

ENVIRONMENTAL SOCIAL GOVERNANCE

Sustainable solutions for a better world

Continued

Goodman people go $10 million greener

Our holistic approach to ESG not only reduces our properties’ carbon impact but looks to embed sustainability broadly in our culture.

To help unlock more sustainable transport for our people we offered $10 million worth of electric vehicle (EV) incentives over the next five years. Those who accept will be immediately making a difference. The initiative showcases how our people are encouraged to help Goodman broaden the radius of its impact in the carbon economy.

In addition, we are transitioning our global vehicle fleet to EV with the current Australian fleet of 55 hybrid vehicles due to be 100% EV by 2025. Furthermore, all new Goodman developments globally will feature EV bays with battery charging stations.

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Managing climate risk

Goodman supports the Paris Agreement goal to limit global warming to well below two degrees Celsius compared to pre-industrial levels.

As part of this, we assess our climate risks and have set several targets as part of our 2030 Sustainability Strategy. The strategy responds to the current and projected impacts of climate change on our business while disclosing our approach to investors and capital partners.

Goodman’s approach to managing climate risks is incorporated in our risk management framework. The framework looks at our property development, property management and fund management activities.

Goodman completed a scenario-based climate risk assessment aligned with TCFD guidelines in 2020. Key physical and transitional climate risks were examined in the major regions where we operate. The five most material risks were identified as:

Increasing temperatures and heatwaves
Extreme precipitation events
Windstorms (tropical and extra tropical)
Severity of hailstorms
Sea level rise

For more information on Goodman’s TCFD climate risk assessment, please view our statement here.

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Bicycles for customer use at Goodman Business Park, Greater Tokyo, Japan
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GOODMAN GROUP 2021

ENVIRONMENTAL SOCIAL GOVERNANCE

CLIMATE RELATED TARGETS CARBON NEUTRAL OPERATIONS BY 2025 Achieved in FY21. TCFD ALIGNED DISCLOSURES BY 2022 Achieved in FY21. 100% RENEWABLE ENERGY USE WITHIN OUR OPERATIONS BY 2025 In progress. 400MW OF SOLAR PV CAPACITY INSTALLED BY 2025

In progress.

GOODMAN GROUP 2021 41 THE FUTURE OF WORK 42 MAKE YOURSELF THE FUTURE OF WORK IS HERE UNCOMFORTABLE

GOODMAN GROUP 2021

THE FUTURE OF WORK

The office used to be a place we simply went to work, but more than 18 months of rolling lockdowns have disrupted the systems and practices that were established with the industrial revolution, and they’ve catapulted future workplace trends into our present.

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GOODMAN GROUP 2021

THE FUTURE OF WORK

■ Lawrence Goldstone, PwC’s Partner – Future of Work, talks to us about the new office, hybrid working and the impacts of pandemicstyle acceleration.

“I don’t believe the office is dead,” says Lawrence Goldstone, PwC Partner - Future of Work, “I believe the office is as important as it ever was. But it needs a new definition.”

The Future of Work, according to Goldstone, can be divided into four sectors: work type, workforce, workplaces and work experience, and it’s the last two that are undergoing dramatic transformation.

So, what’s the new role of the office? Goldstone believes it should be a physical representation of an organisation’s culture. A space that brings a company’s purpose to life. A space for employees to collaborate, ideate and brainstorm. Where they can come together to inspire and learn from each other.

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GOODMAN GROUP 2021

THE FUTURE OF WORK

I DON’T BELIEVE THE OFFICE IS DEAD... BUT IT NEEDS A NEW DEFINITION.”

Lawrence Goldstone, PwC Partner – Future of Work

Since the pandemic, however, a lot of big organisations have been reconsidering the size of their office footprint over their workplace strategy. Goldstone challenges this kind of shortterm thinking. He believes companies first need to rethink the role of their office and the potential for how it can be used. “If you need more collaboration space,” he says, “you’re actually going to need the same footprint, but thought differently.” Although, he adds “space, alone, does not equip people for change.”

Emerging trends in office design include the introduction of Zoom rooms, collaboration spaces, and Grandstand or Town Hall areas that allow companies to bring their entire organisation together safely. But even with newly designed workspaces, the idea of everyone returning to the office five days a week is an old one. But it doesn’t have to be all or nothing.

Hybrid working, which is a combination of working some days in the office and some days remotely, is the new way forward. It allows employees the flexibility to work in and outside of the physical office, as well as in and outside of standard office hours. And while flexibility is not new, it hasn’t always been so well accommodated. “Things have definitely shifted to be all about the employee,” says Goldstone. “And I love that.”

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GOODMAN GROUP 2021

THE FUTURE OF WORK

“TAKING A LONG-TERM APPROACH HAS NEVER BEEN MORE VITAL.”

In the last year, the option to work within a 24/7 work environment has allowed more people to find a way to make work, truly work for them. And from an employer standpoint, it opens the way for a more inclusive, diverse workforce. “There’s certainly a ‘haves’ and ‘have-nots’ element within that,” admits Goldstone, “but if we can blend choice through all areas of the workforce, I think we’re in really exciting and interesting times.”

Flexible working still comes with its own challenges. Proximity bias – favouring those that come into the office more often – and remotely managing employee health and wellbeing are two complications leaders are now working to solve. They’re learning it’s not enough to respond to these issues as they arise, companies need to proactively embed inclusion and wellbeing practices into their operations.

Nonetheless, people want more choice in how they work, where they work and when they work. Which might make some leadership teams feel uncomfortable.

“This is a pivotal moment, where we can break some of those old-fashioned paradigms – the nine to five, Monday to Friday, productivity-based measures,” Goldstone says of the opportunities reimagining the future of work can bring.

Taking a long-term approach has never been more vital, especially when it comes to attracting future talent. By the year 2030, over 50% of the workforce will be made up of Millennials and Gen Z. And if you ask someone in that age bracket how and where they want to work, the last thing they’ll say is full-time in an office.

Goldstone believes the worst thing we could do is waste this crisis by just returning to the way things used to be, and it’s hard to disagree. He wants to see more ‘pandemic-style acceleration’. It’s a phrase he coined to describe applying this type of COVID-led acceleration of trends, only without the crisis. “What would happen if we had such an accelerated change of conditions that we radically shifted boards in this country?” he says, using gender imbalance as an example.

On its current trajectory, it is about 100 years until we will achieve gender parity. According to Goldstone, there’s no reason we can’t make it happen in ten. “It takes some bold thinking to go and reimagine how work gets done,” he says. “You have to be prepared to break some old patterns.”

WATCH MORE ON THE FUTURE OF WORK

Lawrence Goldstone, PwC Partner – Future of Work

GOODMAN GROUP 2021 51

THE FUTURE OF WORK 52

THIS IS THE ■ The Hayesbery is Goodman’s new flagship workspace. Located in Rosebery, on Sydney’s city fringe, the recent move takes Goodman back to its industrial heartland, while the redeveloped heritage site has helped redefine its operations for the future. Goodman’s Ben McGilp and Kori Todd take us through The Hayesbery’s design and development and the positive effect it’s having on their people. Set over four buildings, The Hayesbery campus is connected by a shared external laneway, converting what was once a hat factory into a contemporary workspace that flows easily between indoor and outdoor spaces. From its discreet entry to its lobby-style foyer, The Hayesbery has everything a boutique hotel might offer, except a place to sleep. With technology thoughtfully integrated into every aspect of the design, it creates a very human-centric environment while still enabling people to work efficiently. Post-COVID, there’s touchless entry, as well as health and wellbeing features that include a yoga room, gymnasium, wellness and multi-faith rooms, and end of trip facilities that are worth getting on a bike for. The Hayesbery even has a fragrance – musky and herbal – and a coffee cart that HAYESBERY donates all proceeds to charity.

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GOODMAN GROUP 2021

THE FUTURE OF WORK

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“We’re in an experience era,” explains Senior Designer, Kori Todd. “Hotels nail experience, from the time you book to the minute you walk in the door. And wellness and sustainability were big drivers in creating Goodman’s workspace. We looked at the sorts of things that would drive those types of experiences, both from our people’s point of view on a day-to-day level and from a customer’s as well.”

The Hayesbery is the result of a small working group of diverse Goodman team members, led by Ben McGilp, General Manager, Developments. The group, which included people from different units across the business as well as different levels of seniority, left no stone unturned. They discussed everything from the size of the meeting rooms, to how people would drive into the car park. “We found ourselves asking ‘why not?’ rather than ‘why’?” McGilp says of the process, “Why wouldn’t you put music into the building, why wouldn’t you develop a booking app?” Although all of these micro-decisions are now deemed invisible by McGilp who noticed, “People don’t even see them anymore, because it all just works and flows seamlessly.”

“WE FOUND OURSELVES ASKING ‘WHY NOT’ RATHER THAN ‘WHY’?”

Ben McGilp, General Manager, Developments, Goodman Australia

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GOODMAN GROUP 2021

THE FUTURE OF WORK

The Hayesbery design took a light touch approach when it came to both maintaining the authenticity and the heritage of the original warehouse, as well taking a long-term approach to sustainability. “There is so much natural light,” says Todd of the workspace. “We don’t need to have the lights on in the day.”

As design development took place in the 2020 lockdown, the team were adapting and making updates to the plans to correspond with what they thought they’d need for the changing environment. And they really got the balance right.

”THERE IS SO MUCH NATURAL LIGHT WE DON’T NEED TO HAVE THE LIGHTS ON IN THE DAY.”

“I had no intention when we began this project, that I was going to be working for Goodman at the end of it,” says Todd who started the project as Lead Designer at Woods Bagot. “So, it’s been an amazing experience to watch how people actually use the space as you intended it.”

Bringing a human scale to soaring 5.5 metre ceilings in certain areas was part of Todd’s vision, while still acknowledging the industrial nature of the structure and the business itself. “I think we were really successful in achieving this because the spaces have an intimate quality to them,” explains Todd. “We made this big gesture by bringing in trees to celebrate the volume,” she says, “But it also created an intimate scale that you’re sitting under a tree canopy, so that was a good example of functionality that held the design aesthetic.”

Kori Todd, Senior Designer, Goodman Australia

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GOODMAN GROUP 2021

THE FUTURE OF WORK

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One of the things Todd hadn’t anticipated was how much time people would spend working outside. “It’s incredible,” she says, “to be in a workplace where you spend a good deal of your day outdoors. You can schedule meetings outdoors or have impromptu meetings. It’s been really successful and a wonderful thing to see.”

While some companies still struggle to motivate staff to come back to the office, Goodman has had the opposite experience. “We thought if people came into the office two to three days a week, that would be great,” says Todd.

The reality is people are choosing to work in the office more often and it’s this enthusiasm to come in that McGilp is most proud of. “In truth, we’re oversubscribed” he says. “But our aim was always to give our people the flexibility – the choice – to work their day in the way that suits them. People want to come in because it’s a great space to work in.”

It’s not only Goodman people who want to come into The Hayesbery. The team are also bringing in their customers, their suppliers, families and friends. “It’s completely different than anything else on the market at the moment,” says Todd enthusiastically, “It’s fit for purpose, and it’s not like anything anyone’s really seen before.”

Some customers have asked whether Goodman could create another Hayesbery for their business, and while McGilp says of course that’s possible, it’s not about just duplicating the design, it’s a process. “I think you’ve got to really know your people,” he says. “I think the thing we did best here was solve for our own culture, first and foremost.”

But that doesn’t mean his team can’t take learnings from The Hayesbery and apply them to other commercial projects. According to McGilp, Goodman has plans to speculatively develop some fully formed fitouts in the near future. “This is an opportunity for us to take it up a level,” he says.

“One of the best things we’ve done since completing The Hayesbery was to engage Kori Todd,” he explains. “The purpose of that was to do two things: one was to solve planning challenges with improved design, and the other was to think about our buildings from a human experience perspective – so we can walk the journey of the truck driver, the supplier, the office manager, CEO. We’ve not really done that before, so I think that’s really stepping into the customer’s shoes a little further.”

Todd, too, is excited about where the industrial sector can go. “Some of what we’ve done at The Hayesbery absolutely has the ability to translate into some of those projects,” she says. “I think when we talk about what that means for industrial projects, the opportunities are tremendous.”

“I THINK THE THING WE DID BEST HERE WAS SOLVE FOR OUR OWN CULTURE, FIRST AND FOREMOST.”

Kori Todd, Senior Designer, Goodman Australia

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GOODMAN GROUP 2021

THE FUTURE OF WORK

HAYESBERY DESIGN FEATURES

HEALTH AND WELLBEING

Check-in technology

Temperature checks and hand sanitisation stations throughout

Socially distanced desk configurations

Microbial copper handles on meeting rooms

Hand sensor operated bathroom doors

Gymnasium and yoga room

Wellness and multi-faith rooms

Natural light

Outdoor areas

Fresh air

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SUSTAINABILITY

5 Star GreenStar Design and As-built (interior)
5 Star NABERS rating
Solar panels (100kW system on building B and C)
Rainwater storage tank for irrigation

Bike storage

End of trip facilities
Increased fresh air to mechanically air-conditioned areas
Access to fresh air from all buildings

Indoor planting

Recycled materials

Utilisation of existing spaces from original building

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TECHNOLOGY

Wireless connectivity throughout
Hi-tech meeting rooms
High quality, easy to connect conferencing facilities
IT tech support bar
Booking apps for parking, workstations, fitness classes, transport, catering and dry cleaning
SMS notifications on guest arrival and deliveries
Swipe card access
Fully automated parking management
24/7 on-site security and remote monitoring

REGIONAL NETWORKS

GOODMAN GROUP 2021 61 Goodman’s global concentration of properties positions our customers closer to consumers, giving them a high speed to market advantage. But with limited availability of greenfield sites, the real difference is our ability to acquire well located brownfield sites that can be redeveloped. With a growing number of innovative new urban developments, we’re providing high quality, sustainable properties for our customers and solutions that will enhance and protect the environment for many years to come. OUR NETWORK $57.9BN TOTAL AUM 363 PROPERTIES GLOBAL ALLENTOWN BIRMINGHAM BEIJING LOS ANGELES BRUSSELS CHENGDU THE AMERICAS NEW JERSEY EUROPE/UK DÜSSELDORF ASIA CHONGQING AUS/NZ SAN FRANCISCO HAMBURG GUANGZHOU SÃO PAULO LONDON HONG KONG SAR $5.0BN $9.1BN $20.0BN $23.8BN AUM AUM LUXEMBOURG AUM OSAKA AUM MADRID SHANGHAI 20 108 MILAN 69 SHENZHEN 166 PROPERTIES PROPERTIES PARIS PROPERTIES TOKYO PROPERTIES

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AUCKLAND BRISBANE MELBOURNE SYDNEY

Cities marked are Goodman office locations. E-commerce sales growth statisitcs from Euromonitor 2020.

GOODMAN GROUP 2021

REGIONAL NETWORKS

Australia

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Oakdale West Industrial Estate, Sydney

The new Oakdale West Industrial Estate offers 89 hectares of development opportunity within the larger Oakdale Industrial Estate in Western Sydney. The project has attracted high profile customers including Amazon, Woolworths, Coles, Xylem and a large ASX-listed telco.

Together with Goodman’s joint venture partner, Brickworks, investment was made in Oakdale West’s infrastructure early in the project life including construction of Compass Drive, providing direct access to the estate.

Oakdale West connects smoothly to Sydney’s motorway network and Western Sydney Airport, and will benefit from future road upgrades. Within a one-hour drive of the estate are 4.4 million people, or 1.5 million households, representing a total online shopping spend of $15.6 billion.

Sustainability features

Electric vehicle charging stations 250kW of solar panels installed for every 10,000 sqm Roof structures that facilitate solar panels on entire roof Automated LED lighting in warehouse and office Rainwater harvesting for re-use in landscaping and amenities Designed to support wellness and wellbeing Green walls in amenity areas Native, drought-resistant vegetation used in landscaping

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Oakdale West Industrial Estate, Sydney, Australia
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Market update

Australia’s population, infrastructure and economic output are concentrated in Sydney and Melbourne. Sydney is Australia’s most densely populated city, with land constraints and a complex planning system.

Development activity in Australia is forecast to remain at above average levels due to strong leasing and investment demand.

The pandemic has accelerated e-commerce penetration but Australia still lags the world. Despite this, technological advances in e-commerce are transforming supply chain and distribution operations.

Australia – projected e-commerce sales growth 2020-2025

42%

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GOODMAN GROUP 2021

REGIONAL NETWORKS

New Zealand

Roma Road Estate, Auckland

In Auckland, a 13-hectare brownfield site is being transformed into a modern logistics hub that maximises the property’s inner-city location.

Targeting a five-star Green Star certification, Roma Road will feature four highly sustainable buildings with workspaces complemented by extensive onsite amenities. The embodied carbon from the estate’s building materials and construction process will be reduced, where possible, with the remainder offset.

Sustainability features

Electric vehicle charging stations

Automated LED lighting Rainwater harvesting and low-flow water fittings

Electrical smart metering to measure and reduce energy use

Low volatile organic compound materials and finishes

Net zero embodied carbon

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Artist’s impression, Roma Road Estate, Auckland, New Zealand
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Market update

Continued urbanisation in New Zealand has confirmed the importance of central locations for industrial properties, close to consumers. Goodman’s portfolio is in Auckland where land is constrained and warehouse rental growth continues.

Fifty-three percent of New Zealanders now shop online, which has increased customer demand for strategic locations that enable speed to market.

New Zealand – projected e-commerce sales growth 2020-2025

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84%
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GOODMAN GROUP 2021

REGIONAL NETWORKS

Asia

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Goodman Westlink, Hong Kong SAR

Located in the busy hub of Hong Kong SAR, Goodman’s new three-hectare logistics facility with 140,000 sqm of gross floor area, Westlink, is characterised by efficient, large, floorplates – unusual in a city where space is limited.

The innovative design of the four-storey facility will offer vehicle access to all floors, including the roof, via ramps, which improve vehicle circulation and manoeuvrability. The property will feature market-leading amenities such as a café, rooftop garden, fitness facilities, sustainable farming and will be suitable for the newest advancements in robotics and automation.

Westlink’s sustainability initiatives will be the most extensive of Goodman’s Hong Kong SAR portfolio with the development and the building being carbon neutral and pre-certified to LEED Gold standard.

Sustainability features

Carbon neutral

300kW rooftop solar panels Water efficient design and fittings

Rainwater harvesting for re-use in landscaping and amenities Energy efficient systems and digital power controls

Green spaces and fitness facilities to support health and wellness

Electric vehicle charging stations Demand-controlled ventilation system

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Artist’s impression of Westlink, Hong Kong SAR, China.
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Goodman Huiyang Industrial Park, Mainland China

One of the largest industrial developments in mainland China’s Greater Bay area, the final phase of Huiyang Industrial Park is a multi-storey, six building facility with total GLA of 375,000 sqm due for completion this year.

The Park is in the Huiyang Economic and Development Zone, a highly sought after area for national logistics customers. It is ideal for regional distribution with good connectivity to the cities of Huizhou and Shenzhen.

Sustainability features

Over 11MW rooftop solar panels

Significant rainwater harvesting and automated landscape watering

Automated LED lighting Fresh air ventilation system Electric vehicle charging stations Water efficient design and fittings

Green spaces and fitness installations to support health and wellness

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Artist’s impression of Goodman Huiyang Industrial Park, Huiyang, China
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GOODMAN GROUP 2021

REGIONAL NETWORKS

Goodman Business Park, Greater Tokyo

Asia

Located in Greater Tokyo, Goodman Business Park, is setting precedents for utility, sustainability and amenity for customers across its 50 hectares.

Continued

On completion, the Park will comprise over 750,000 sqm of floor space, including five large-scale logistics properties. Goodman Business Park offers excellent connectivity to Greater Tokyo, superior power infrastructure and amenities including green open spaces, shared e-bikes, cafés, childcare, a fitness centre, truck driver rest facilities and retail. The local community is also an integral part of the Park, benefiting from the amenities and participating in activities such as drive-in theatre events.

Sustainability features

16MW solar – equivalent to powering 4,300 households

Automated LED lighting

Shared e-bikes for carbon-free transit across the precinct

Landscaped gardens and parks

Rooftop garden terraces

Design elements such as a mesh façade that serve to reduce direct sunlight and therefore energy costs

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Goodman Business Park, Tokyo, Japan
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Market update

Mainland China and Hong Kong SAR

Ongoing urbanisation in mainland China is driving a shift to the five ‘megacity’ clusters of Greater Beijing, Greater Shanghai, Central China, Western China and Greater Bay Area.

Greenfield land is increasingly scarce with multi-storey warehousing becoming the norm. In urban locations, demand is being driven by e-commerce, fresh food and technology.

Hong Kong SAR remains a major gateway to mainland China. There, industrial property is tightly held and stock levels are decreasing.

Japan

Logistics is the most-favoured real estate asset for Japanese institutional investors (CBRE).

Demand remains strong with a vacancy rate of 0.5% in Greater Tokyo and 3.7% in Greater Osaka due to accelerating e-commerce demand.

Hong Kong SAR – projected e-commerce sales growth 2020-2025

84%

China – projected e-commerce sales growth 2020-2025

64%

Japan – projected e-commerce sales growth 2020-2025

38%

GOODMAN GROUP 2021

REGIONAL NETWORKS

Europe

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GREEN DOCK, Paris

Located at the Port of Gennevilliers, Goodman’s new sustainable urban regeneration project, GREEN DOCK, will showcase best practices in decarbonised logistics.

The 90,000 sqm four-level facility will link directly to the River Seine, allowing urban distribution businesses to provide last mile delivery and develop riverbased transport into Paris.

GREEN DOCK’s ecologically sensitive design has a façade that will use natural, recycled materials including wood and concrete to integrate into its Seine riverbank surroundings. The project incorporates some of the largest sustainability initiatives in industrial real estate, aiming for BREEAM certification at Outstanding level plus BiodiverCity and low-carbon labels.

Sustainability features

11,000 sqm of rooftop solar for the site’s own supply

Heat exchanger connected to the River Seine for heating and cooling the building

The rooftop will be home to the largest urban farm in Europe, covering 17,000 sqm

Electric vehicle charging stations

Alblasserdam Logistics Centre, Rotterdam

Goodman’s Alblasserdam development at Europe’s largest port is transforming a former brownfield site into a facility that will bring unique social and environmental benefits to the Netherlands.

The 27,000 sqm property has direct access to the Alblasserdam container terminal and the Netherlands’ extensive river system, offering significant supply chain advantages.

To neutralise unavoidable CO2 emissions during development, Goodman will plant 65,000 trees in neighbouring areas that will benefit from environmental restoration.

Sustainability features

Automated LED lighting Electric vehicle charging stations Smart metering for reduced energy consumption Gasless heating and cooling in office spaces 6.99MW of rooftop solar panels BREEAM Very Good certification

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GOODMAN GROUP 2021

REGIONAL NETWORKS

UK

Market update

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Crossways Commercial Park, Greater London

Crossways Commercial Park demonstrates Goodman’s investment in London and the South East and will help e-commerce, retail and third-party logistics customers reach areas with the highest consumer demand.

Located in an established business park, the development offers 26.8 acres of prime industrial and logistics and brings excellent facilities together with green open spaces, lakeside walks and cycle routes.

Designed to a BREEAM Excellent standard, Crossways will be one of Goodman’s most sustainable developments in the United Kingdom.

Sustainability features

2.2MW of rooftop solar across the estate

Electric vehicle charging stations and infrastructure for electric vehicle fleets

Smart metering to measure and reduce energy use

Rainwater harvesting and solar thermal hot water

Carbon neutral cladding system

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Crossways Commercial Park, Greater London, United Kingdom.
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In Continental Europe, urbanisation is expected to exceed 80% by 2050*. It is a fiercely competitive property market with strong demand for industrial space, solid rental growth and few vacancies in certain land-constrained cities. The COVID-19 pandemic fuelled e-commerce growth.

In the United Kingdom, land supply in urban areas such as London is scarce and expensive. There is strong rental growth, particularly in London and the South East, with a national vacancy rate of less than 6% and below 3% in London. The pandemic saw online UK food sales increase by 70% on the previous year.

Europe – projected e-commerce sales growth 2020-2025

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57%
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UK – projected e-commerce sales growth 2020-2025

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59%
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*European Commission

GOODMAN GROUP 2021

REGIONAL NETWORKS

The Americas

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Goodman Logistics Center El Monte, Los Angeles

Goodman Logistics Center El Monte, in the Los Angeles area, showcases Goodman’s global gateway city strategy to provide customers with urban logistics sites that are close to consumers.

Spanning 114,766 sqm across two buildings, the brownfield site was once a groceries warehouse. During demolition, 94% of materials were salvaged, recycled or crushed and used for the new site.

Sustainability features

LEED certified shell

Buildings have cool roofs with interior ventilation capable of two air changes per hour

Landscaping focus on native, drought-resistant plants

400kW rooftop solar

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Goodman Logistics Center El Monte, Los Angeles, USA.
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Market update

In North America, personal consumption makes up approximately 70% of GDP. As the rapid growth in e-commerce continues to redefine last-mile delivery, new building uses and logistics technologies are emerging. More e-commerce consumers are driving demand for distribution centres and the need to store additional stock.

In Brazil, Goodman’s logistics properties are mainly in São Paulo where the limited land is expensive. E-commerce grew significantly during the pandemic yet the penetration of e-commerce in Brazil is still relatively low, representing a substantial growth opportunity in coming years.

US – projected e-commerce sales growth 2020-2025

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70%
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Brazil – projected e-commerce sales growth 2020-2025

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80%
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Artist’s impression of Goodman Itaquera, Sáo Paulo, Brazil.
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GOODMAN GROUP 2021 77 GOODMAN FOUNDATION 78 The Goodman Foundation brings together our people, properties and resources to address disadvantage in the world and make a tangible and sustainable difference to people’s lives. By partnering with like-minded charities and funding projects with clearly defined timelines and outcomes, we’re able to provide real support where it is needed most. W E ’ R E A L L I N T H I S T E T H E R O G

GOODMAN GROUP 2021

GOODMAN FOUNDATION

A challenging year

For our global charity partners, it has been a full year of dealing with the fallout from the COVID pandemic. We’ve remained steadfast throughout this period in an effort to not only help our partners survive, but to rise to the challenge.

Those already most vulnerable in the community were heavily impacted by lockdowns, financial hardship and isolation. Simultaneously, the ability of charities to meet the soaring demand was compromised by a diminishing number of workers, volunteers, regular donors and crucial fundraising opportunities.

For the Goodman Foundation, it was a time to stay the course and hold strong in our support, even if charities decided to re-focus their efforts in new and unanticipated ways.

It was a time to trust that the organisations we’ve partnered with over the years know what their communities need. And to be generous and flexible in how we support them through one of the most challenging years imaginable.

How we help

The Goodman Foundation supports charities in three key areas: children and youth, community and community health, and food rescue and the environment.

Our support is offered as:

Cash grants

Funding for projects with defined outcomes over one to three years.

Do good

Goodman people volunteering or fundraising for charities.

Give back

Workplace giving schemes that equally match contributions from Goodman people.

In-kind

Donations of our expertise, space, office furniture, computers and other critical items.

GOODMAN GROUP 2021

GOODMAN FOUNDATION

Children and youth

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ClassContact, Belgium

Children with long-term illnesses in hospital, or at home, do better if they stay in close contact with school. On top of their physical burdens, long or repeated absences from school can cause children’s motivation to plummet and their mental health to suffer.

Children from disadvantaged backgrounds are more vulnerable to isolation as they have less access to technology. Since 2006, ClassContact has helped around 1,000 children from 415 schools and 14 hospitals in the Brussels region.

In Belgium, the Goodman Foundation is supporting ClassContact’s provision of free computers, internet connections and cameras to long-term ill children. Connecting live means they can participate in team projects and ask questions of teachers in a classroom setting.

Almost 90% of children who continue their education in this way pass their exams and progress to the next grade.

Demand exploded in 2020 because severely ill children are often at higher risk of contracting COVID, so they needed to even further self-isolate.

While ClassContact was able to support 130 children in the Brussels region during the year – with Goodman funding access for seven children – it identified another 200 children at risk of losing touch with school. To increase the charity’s reach, Goodman helped to fund a marketing outreach to connect disadvantaged schools and social workers directly.

S M A L L O R G A N I S A T I O N S D O I N G B I G T H I N G S F O R F A M I L I E S T H A T D E S P E R A T E LY N E E D H E L P

Bestest Foundation, Australia

For nine years, Goodman has supported Bestest Foundation’s work addressing the neglected needs of severely ill or disabled children, and their families, in regional Australia. This support ensures such families do not fall through the cracks.

The organisation is highly targeted. Every dollar goes directly to a specific need such as a modified van with a patient lift hoist, a new refrigerator, a braille computer, an insulin pump, food vouchers or mental health support.

Goodman’s long-term support of Bestest Foundation shows its commitment to small organisations doing big things for families that desperately need a helping hand.

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GOODMAN GROUP 2021

GOODMAN FOUNDATION

Community and community health

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Inba Gakusha, Japan

Japanese social inclusion organisation, Inba Gakusha, provides employment, transportation and home care to people with physical and intellectual disabilities in Chiba.

Recently, Inba Gakusha moved into a 131 square metre space in Goodman Business Park in Inzai City that is part art studio and part fresh produce store.

Goodman has been investing in Inba Gakusha for some years at the Business Park. Employees are paid a fair wage to maintain grass areas, provide catering and charge e-bike batteries. Meanwhile, Inba Gakusha’s handcrafted furniture and art is featured in lobbies and resting areas.

The Goodman Foundation is funding the space for three years to allow Inba Gakusha to continue to find independent income sources for people who may otherwise struggle to secure them.

PA R T A R T S T UDIO, PA R T FRESH PRODUC E OU T L E T – PROV IDING OPP OR T UNI T IES FOR PEOP L E W I T H DIS A BI L I T IES

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Inba Gakusya arts and crafts display, Goodman Business Park, Greater Tokyo.
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Thread Together, Australia

Wearing new, high-quality clothes never fails to bring dignity and confidence. That’s the truth at the heart of clothes redistribution charity, Thread Together.

Last year, to further the charity’s tangible community work, Goodman provided Thread Together with a 1,600 square metre warehouse, custom-fitted for clothes. The new warehouse will allow the charity to save more brand-new clothing from landfill and provide more vulnerable people in Australia with the basic human right of essential clothing.

Since 2012, Thread Together has been giving those in need the chance to hand-select a wardrobe of brand-name clothes and accessories from excess stock donated by Australian fashion retailers.

From the new warehouse, Thread Together is supplying clothes to around 2,000 people a week through a network of 500 charities, partners and social service agencies, including the Department of Justice and Corrective Services.

Rather than going to landfill, clothes are given to people who are experiencing homelessness, youth at risk, Indigenous communities, survivors of domestic violence, refugees and the long-term unemployed.

As an early supporter, Goodman provided shared warehouse space and a van to help Thread Together deliver essential clothing to people in need including vulnerable women escaping coercive and abusive relationships as well as new arrivals to our country who are seeking refuge.

It is also a beautifully branded space where Thread Together can hold corporate fundraising events, employ long-term unemployed people and host volunteering drives.

Goodman showcases Thread Together’s work internally, to encourage and match employee donations and, when it is again possible, to engage its people in volunteer days.

Thread Together responds in times of crisis too. When fires and floods wrecked homes and livelihoods in 2020, the charity drove clothes to those in need. Their roving vans and flagship locations are set up like stores so people can browse and try clothes on offering choice to empower and restore dignity.

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Thread Together clothing storage at Goodman’s Discovery Cove Industrial Park, Sydney, Australia.
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GOODMAN GROUP 2021

GOODMAN FOUNDATION

Community and community health Continued

Delivery of the NSW RFS helicopter, Australia

In response to the devastating 2019-2020 bush fires, Goodman made the largest corporate donation ever to the NSW Rural Fire Service (NSW RFS) by pledging a state-of-the-art firefighting helicopter. NSW RFS recently took delivery of the helicopter which is being fitted out with a winch, a belly tank for water bombing and a surveillance camera for use in firefighting and search and rescue operations. It is being prepared to be used for the 2021-22 fire season.

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RFS NSW Bell 412, state-of-the-art fire fighting helicopter, Sydney, Australia
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Paralympics Australia

For two years, the Goodman Foundation has supported Paralympics Australia in its quest to achieve its goals in Tokyo by funding vital warehouse space to allow the team’s athletes and support staff to focus on event preparation. When the Tokyo Paralympic Games were postponed in 2020, we provided additional funding to cover the warehouse space for a second consecutive year.

Goodman is proud to support Paralympics Australia and the role of the Paralympic Games in showcasing disability, challenging stigma and creating a more inclusive society.

Watch Goodman Foundation’s Paralympics Australia video

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Our Watch, Australia

Violence against women is a serious problem globally. One of the most worrying social impacts of the COVID lockdowns is women’s increased exposure to violent partners at a time of decreased access to services, data from the World Health Organisation states.

In Australia, almost 10 women each day are hospitalised for assault injuries perpetrated by a spouse or domestic partner. To help to address this urgent need, the Goodman Foundation engaged with Our Watch, a registered charity established in 2013. Our Watch is a national leader in the primary prevention of violence against women and their children in Australia. It works to embed gender equality and prevent violence where Australians live, learn, work and socialise.

With seed funding from the Goodman Foundation, Our Watch plans to create an institute to empower Australians to stop violence before it starts through training and practical tools that will equip individuals and organisations to lead prevention work in their communities.

GOODMAN GROUP 2021

GOODMAN FOUNDATION

Food rescue and environment

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UKHarvest

Demand for meals from UKHarvest soared during the pandemic. Yet without a central warehouse, the food rescue not-for-profit was grappling with the distances between its locations.

Not only that. UKHarvest had lost most of its workforce, volunteers and fundraising opportunities due to social distancing, making its mission to nurture those most food insecure a lot harder.

Last year, Goodman, as founding partners, stepped up again to fund a warehouse in Chichester, enabling UKHarvest to efficiently rescue and redistribute around 75,000 meals a week, contributing to the 7,900 tonnes of greenhouse gases it has saved to date.

The warehouse has cooking stations, fridges, a commercial dishwasher, a blast chiller, an area to repackage meals into smaller packages for partner charities and a spot to make pickles and jams.

There is also space to host cooking classes to boost community knowledge around healthy eating and how to make delicious inexpensive meals, while also reducing food waste.

I N I T S F I R S T N I N E M O N T H S N Z F N O N B O A R D E D 3 9 F O O D H U B S A N D D I S T R I B U T E D T H E E Q U I V A L E N T O F 5 . 8 M I L L I O N M E A L S

New Zealand Food Network

When the COVID pandemic hit, New Zealand food rescue organisation, KiwiHarvest, anticipated an urgent need for a national food distribution service.

After the New Zealand government agreed to fund the New Zealand Food Network (NZFN), KiwiHarvest approached Goodman, its founding partner since 2012, to support the rapid set-up of a warehouse to help with the new organisation’s crucial work.

As soon as the 830 square metre warehouse was fitted out with racking, sorting and vehicle access zones, NZFN began taking receipt of large volumes of food and co-ordinating its delivery.

In its first nine months, NZFN onboarded 39 food hubs and distributed more than two million kilos of donated and surplus food – the equivalent of 5.8 million meals.

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Goodman team volunteering for New Zealand Food Network.
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GOODMAN GROUP 2021

CORPORATE INFORMATION

GOODMAN GROUP 2021

CORPORATE INFORMATION

Board of directors

From left:

Danny Peeters Executive Director, Corporate Appointed 1 January 2013

Penny Winn Independent Director Appointed 1 February 2018

Chris Green Independent Director Appointed 28 April 2019

Greg Goodman Group Chief Executive Officer Appointed 7 August 1998

Rebecca McGrath Independent Director Appointed 3 April 2012

Stephen Johns Independent Director Appointed 1 January 2017

Phillip Pryke Independent Director Appointed 13 October 2010

Mark G. Johnson Independent Director Appointed 1 June 2020

Anthony Rozic Deputy Group Chief Executive Officer and Chief Executive Officer, North America Appointed 1 January 2013

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GOODMAN GROUP 2021

CORPORATE INFORMATION

FIVE

YEAR FINANCIAL SUMMARY

	2017	2018	2019	2020	2021
INCOME STATEMENT	$M	$M	$M	$M	$M
Gross property income	177.1	150.4	114.6	115.9	112.4
Management income	266.3	316.5	469.7	511.2	383.9
Development income	1,207.1	1,115.8	1,134.3	882.6	1,492.0
Net gain/(loss) on disposals of assets	129.1	108.1	27.9	56.3	42.7
Net gain from fair value adjustments on investment
properties	180.9	71.1	146.8	45.2	63.1
Share of net results of equity accounted investments	587.7	910.9	1,132.5	1,022.2	1,708.9
Total income	2,548.2	2,672.8	3,025.8	2,633.4	3,803.0
Property expenses	(46.9)	(36.4)	(40.2)	(36.4)	(32.8)
Development expenses	(919.9)	(808.9)	(727.3)	(443.4)	(862.3)
Employee expenses	(195.9)	(180.7)	(191.9)	(203.7)	(210.8)
Share based payments expense	(85.4)	(125.6)	(196.6)	(164.0)	(268.8)
Administrative and other expenses	(76.5)	(68.7)	(75.8)	(88.6)	(83.2)
Impairment losses	(93.0)	–	–	–	–
Net fnance costs	(279.4)	(267.3)	(49.3)	(80.2)	74.9
Total expenses	(1,697.0)	(1,487.6)	(1,281.1)	(1,016.3)	(1,383.0)
Proft before income tax	851.2	1,185.2	1,744.7	1,617.1	2,420.0
Income tax expense	(54.4)	(82.4)	(116.8)	(113.0)	(108.1)
Proft for the year	796.8	1,102.8	1,627.9	1,504.1	2,311.9
Proft attributable to other non-controlling interests	(18.7)	(4.6)	–	–	–
Proft attributable to Securityholders	778.1	1,098.2	1,627.9	1,504.1	2,311.9
OPERATING PROFIT RECONCILIATION (NON-IFRS)
Operating proft	776.0	845.9	942.3	1,060.2	1,219.4
Adjustments for:
Property valuation related movements	397.6	639.0	871.7	621.3	1,308.5
Fair value adjustments and unrealised foreign currency
exchange movements related to liability management	(243.8)	(174.4)	17.0	6.8	55.0
Other non-cash adjustments or non-recurring items	(151.7)	(212.3)	(203.1)	(184.2)	(271.0)
Proft attributable to Securityholders	778.1	1,098.2	1,627.9	1,504.1	2,311.9
Operating proft per stapled security (cents)1	43.1	46.7	51.6	57.5	65.6
Dividends/distributions per security (cents)	25.9	28.0	30.0	30.0	30.0

Fully diluted for performance rights.

	2017	2018	2019	2020	2021
STATEMENT OF FINANCIAL POSITION	$M	$M	$M	$M	$M
Cash and receivables	2,681.9	3,088.7	1,981.4	2,172.5	1,529.2
Property assets	3,245.7	2,732.6	2,966.1	3,081.4	3,279.0
Equity accounted investments	5,522.7	6,585.5	8,452.4	9,370.8	10,660.0
Intangible assets	771.9	816.7	840.0	845.8	822.6
Other (including derivative fnancial instruments)	489.0	235.9	672.9	667.7	576.2
Total assets	12,711.2	13,459.4	14,912.8	16,138.2	16,867.0
Payables, provisions and contract liabilities	866.6	918.4	944.1	988.3	1,009.3
Interest bearing liabilities	2,878.3	3,081.5	2,975.0	2,938.5	2,060.3
Other (including derivative fnancial instruments)	344.1	285.8	471.2	690.8	635.9
Total liabilities	4,089.0	4,285.7	4,390.3	4,617.6	3,705.5
Net assets	8,622.2	9,173.7	10,522.5	11,520.6	13,161.5
Comprising:
Net assets attributable to Securityholders	8,296.4	9,173.7	10,522.5	11,520.6	13,161.5
Net assets attributable to other non-controlling interests	325.8	–	–	–	–
Net tangible assets per security ($)	4.21	4.64	5.34	5.84	6.68
Gearing ratio (%)	5.9	5.1	9.7	7.5	6.8
STATEMENT OF CHANGES IN EQUITY
Total equity at the beginning of the year	8,393.3	8,622.2	9,173.7	10,522.5	11,520.6
Total comprehensive income for the year	678.2	1,304.9	1,795.4	1,467.7	2,027.1
	9,071.5	9,927.1	10,969.1	11,990.2	13,547.7
Contributions of equity, net of transaction costs	–	–	–	–	64.7
Distributions provided or paid	(481.2)	(504.2)	(544.2)	(548.5)	(554.2)
Other transactions with equity holders	62.5	82.4	97.6	78.9	103.3
Movements in other non-controlling interests	(30.6)	(331.6)	–	–	–
Total equity at the end of the year	8,622.2	9,173.7	10,522.5	11,520.6	13,161.5
CASH FLOW STATEMENT
Net cash provided by operating activities	586.4	1,161.2	827.5	1,156.9	1,114.7
Net cash provided by/(used in) investing activities	730.0	(26.5)	(818.2)	(306.4)	(549.9)
Net cash used in fnancing activities	(556.3)	(799.2)	(849.2)	(660.9)	(1,349.1)
Net increase/(decrease) in cash held	760.1	335.5	(839.9)	189.6	(784.3)
Cash at the beginning of the year	1,337.0	2,095.1	2,406.8	1,607.1	1,792.8
Effect of exchange rate fuctuations on cash held	(2.0)	(23.8)	40.2	(3.9)	(88.1)
Cash at the end of the year	2,095.1	2,406.8	1,607.1	1,792.8	920.4

GOODMAN GROUP 2021 95 SE CUR I T IE S INFORMATION

CORPORATE INFORMATION

CORPORATE D I R E C T O R Y

Top 20 Securityholders				Percentage of
As at 25 August 2021			Number of securities	total issued securities
1. HSBC Custody Nominees (Australia) Limited			661,497,211	35.81
2. J P Morgan Nominees Australia Pty Limited			575,719,739	31.16
3. Citicorp Nominees Pty Limited			179,518,534	9.72
4. National Nominees Limited			72,892,779	3.95
5. BNP Paribas Noms Pty Ltd			65,122,257	3.53
6. Citicorp Nominees Pty Limited			33,855,552	1.83
7. BNP Paribas Noms Pty Ltd			33,514,572	1.81
8. Trison Investments Pty Ltd			16,874,053	0.91
9. Beeside Pty Ltd ATF The Beeside Trust			13,192,040	0.71
10. BNP Paribas Nominees Pty Ltd Six Sis Ltd <DRP A/C	>		10,248,121	0.55
11. HSBC Custody Nominees (Australia) Limited			9,549,917	0.52
12. Australian Foundation Investment Company Limited			6,685,000	0.36
13. UBS Nominees Pty Ltd			4,179,793	0.23
14. BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd			3,214,030	0.17
15. National Nominees Pty Ltd			3,065,053	0.17
16. Custodial Services Limited,			3,024,649	0.16
17. Netwealth Investments Limited			2,546,642	0.14
18. AMP Life Limited			2,510,153	0.14
19. One Managed Investment Funds Ltd <Charter Hall Maxim		Property SE>	2,425,000	0.13
20. HSBC Custody Nominees (Australia) Limited			2,209,960	0.12
Securities held by top 20 Securityholders			1,701,845,055	92.12
Balance of securities held			145,584,200	7.88
Total issued securities			1,847,429,255	100.0
		Number of	Number of	Percentage of total
Range of securities	Securityholders		securities	issued securities
1 – 1,000		23,031	8,939,504	0.48
1,001 – 5,000		15,941	37,146,083	2.01
5,001 – 10,000		2,998	21,227,837	1.15
10,001 – 100,000		1,706	36,666,195	1.98
100,001 – over		102	1,743,449,636	94.37
Rounding				0.01
Total		43,778	1,847,429,255	100.0
There were 651 Securityholders with less than a marketable parcel in relation to 2,712 securities as at 25 August				2021.
Substantial Securityholders1				Number of securities
Leader Investment Corporation; China Investment Corporation				166,917,309
Vanguard Group Inc.				187,278,775
Blackrock Investment Management Limited				137,503,983

In accordance with latest Substantial Securityholder Notices as at 25 August 2021.

Goodman Logistics (HK) Limited CHESS Depository Interests ASX reserves the right (but without limiting its absolute discretion) to remove Goodman Logistics (HK) Limited, Goodman Limited and Goodman Industrial Trust from the official list of the ASX if a CHESS Depository Interest (CDI) referencing an ordinary share in Goodman Logistics (HK) Limited, a share in Goodman Limited or a unit in Goodman Industrial Trust cease to be stapled, or any new securities are issued by Goodman Logistics (HK) Limited, Goodman Limited or Goodman Industrial Trust and are not (or CDIs in respect of them are not) stapled to equivalent securities in the Goodman Group.

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). At

a general meeting of Goodman Logistics (HK) Limited, all resolutions will be determined by poll, and eligible Securityholders will be able to direct Chess Depositary Nominees Pty Limited to cast one vote for each Chess Depositary Instrument (referencing a Goodman Logistics (HK) Limited share) that the eligible Securityholder holds or represents (as the case may be).

Goodman Limited ABN 69 000 123 071 Goodman Industrial Trust ARSN 091 213 839 Responsible Entity of Goodman Industrial Trust

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

Goodman Logistics (HK) Limited Company No. 1700359 ARBN 155 911 149

REGISTERED OFFICES

The Hayesbery 1-11 Hayes Road Rosebery NSW 2018 Australia GPO Box 4703 Sydney NSW 2001 Australia Telephone 1300 791 100 (within Australia) +61 2 9230 7400 (outside Australia) Facsimile +61 2 9230 7444 Suite 901 Three Pacific Place 1 Queen’s Road East Hong Kong

Telephone +852 2249 3100 Facsimile +852 2525 2070 Email [email protected] Website goodman.com

OTHER OFFICES

Amsterdam Hamburg Osaka Auckland Hong Kong Paris Beijing London Pennsylvania Birmingham Los Angeles San Francisco Brisbane Luxembourg São Paulo Brussels Madrid Shanghai Chengdu Melbourne Shenzhen Chongqing Milan Tokyo Düsseldorf Munich Guangzhou New Jersey

DIRECTORS

Goodman Limited and Goodman Funds Management Limited Stephen Johns Independent Chairman Greg Goodman Group Chief Executive Officer

Anthony Rozic Executive Director

Penny Winn Independent Director

Company Secretary Carl Bicego

Goodman Logistics (HK) Limited

Chris Green Independent Director

Stephen Johns Independent Chairman

Mark G Johnson Independent Director

David Collins Independent Director

Rebecca McGrath Independent Director

Danny Peeters Executive Director

Company Secretary Goodman Secretarial Asia Limited

Phillip Pryke Independent Director

SECURITY REGISTRAR

Computershare Investor Services Pty Limited Level 5, 115 Grenfell Street Adelaide SA 5000 Australia GPO Box 1903 Adelaide SA 5001 Australia

Telephone 1300 723 040 (within Australia) +61 3 9415 4043 (outside Australia) Facsimile +61 8 8236 2305 Email investorcentre.com/contact Website computershare.com

ASX CODE

GMG

AUDITOR

KPMG Level 38, Tower Three International Towers Sydney 300 Barangaroo Avenue Sydney NSW 2000 Australia

On-market buy-back There is no current on-market buy-back.

GOODMAN GROUP 2021

This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071), Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) as the Responsible Entity for Goodman Industrial Trust (ARSN 091 213 839) and Goodman Logistics (HK) Limited (Company No. 1700359; ARBN 155 911 149)). 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 document 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 document 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 2021.

Goodman Group Annual Report 2021

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Annual Report 2021

Chairman’s letter	2
Group CEO's letter	4
Corporate Governance 2021	6
Goodman Limited and its controlled entities	7
Appendix A – Goodman Logistics (HK) Limited
and its subsidiaries	136
Securities information	189
Glossary	190
Corporate directory	192

Goodman Group

Chairman's letter

Strong and sustainable

Goodman delivered another very strong result in 2021 during an extremely challenging period. The Group’s focus was on remaining agile, embracing opportunities and making positive changes to the business. We redesigned how our teams work to prioritise our people’s safety and wellbeing in the short term and enable greater diversity in the longer term. We accelerated our environmental, social and governance (ESG) targets, and we met the demands of an escalating digital economy.

The right balance and focus

While the approach of investing in high quality locations has been at the heart of Goodman’s strategy, it has been refined over time to adapt to a changing world. For example, in recent years, our asset sale program has allowed us to focus on infill markets which can lead to higher intensification of use and a greater focus on sustainability. Customer demand outweighs supply for these properties, driven by consumers’ growing expectation to have goods delivered quickly. The pandemic saw significant growth in e-commerce penetration in all of our markets and further accelerated this demand.

Goodman’s long-term view impacts all areas of the business and is key to our success. Our focus on infill markets increases the scale and complexity of projects, which leads to significantly longer development timeframes, often exceeding five years. This is in addition to the time needed to achieve the best urban regeneration outcomes at infill sites. Similarly, our ever-increasing focus on environmental and sustainability goals, which we expect will take five to 10 years to implement and which will, in all likelihood, keep evolving over time, is aligned with long-term financial sustainability.

The 10-year plan

Annual Report 2021

The Goodman Board

Goodman seeks to maintain a diverse Board with the appropriate mix of skills, gender and geographic representation, which will continue to be supported through future appointments. Our focus specifically will be on meeting our target of 40% representation for female Board members and additionally, in view of the global nature of Goodman, we will be seeking to appoint an internationally based director with the appropriate skill base during the course of the current financial year.

Many thanks

Goodman’s strong performance in 2021 was made possible by the strength of our global leadership and teams around the world. On behalf of the Board, I sincerely thank our people for their commitment and determination in achieving this result. I also extend my gratitude to all of our stakeholders for their ongoing support and the Board for their valuable contribution. Sincerely

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Stephen Johns Independent Chairman

Goodman Group

Group CEO's letter

Future ready

We knew this year would bring changes, and we were wellprepared for it. Our strong financial performance is the result of our long-term consumer-centric approach to growth. In the area of sustainability, we exceeded our own targets by reaching our 2025 goal of carbon neutrality four years ahead of schedule. We’ve been making progressive choices early on and executed them well which is putting us in good stead for the future. In 2021, as global uncertainty and market disruption continued, our agile culture helped us embrace the changes we were presented with. The determination and talent of our people shone through.

Our results demonstrate this, as well as the team's alignment of consistently owning properties around the world, close to consumers. We delivered profitability, maintained a strong balance sheet, and stayed true to our purpose.

During the year, we have continued our concerted efforts to make ESG fundamental to our business. Goodman’s longterm approach continued to engender positive economic, environmental and social outcomes for our business, our stakeholders, and the world.

Our financial performance, high occupancy rates and rental growth are the result of our strategy to own assets in markets where barriers to entry are high, land is scarce, and demand is robust.

*Source: Euromonitor 2020

Annual Report 2021

A sustainable impact

By accelerating the scale and timing of our sustainability goals, Goodman achieved carbon neutral global operations four years ahead of our 2025 target.

Our sustainability goals are progressive, appropriate and aligned with our customers’ aspirations. They reflect our obligation to act decisively on climate change, to reduce the risk of obsolescence and to ensure the future performance of our assets.

Throughout the year, Goodman Foundation remained steadfast in its efforts to help its charitable partners not only survive but rise to the challenge of the pandemic. It was a time to back our many charity partners who knew what their communities needed most, and to be generous and flexible in how we supported them through one of the most challenging years imaginable.

Forward thinking

We have witnessed the digitalisation of the world. And there’s more to come.

I couldn’t be prouder of the Goodman team’s commitment to deliver high-quality, sustainable assets with integrity, determination and innovation. We’re well prepared for the future. Sincerely

Gregory Goodman Group Chief Executive Officer

Flexible and inclusive

We view our people as owners in the business. All Goodman employees participate in our Long Term Incentive Plan (LTIP), which aligns their interests to those of our securityholders and helps us to retain key talent and maintain low turnover. The financial framework around our LTIP encourages longterm decision making and underpins personal responsibility.

Goodman Group

Corporate Governance 2021

Goodman Group (Goodman or Group) is a triple stapled entity comprised of the Australian company, Goodman Limited (GL), the Australian trust, Goodman Industrial Trust (GIT) and the Hong Kong company, Goodman Logistics (HK) Limited (GLHK). The Boards of GL and Goodman Funds Management Limited as the responsible entity of GIT comprise the same directors while GLHK has a distinct Board with some overlap (together they are referred to as the Boards).

The Goodman Boards and management team are committed to the highest standards of corporate governance and recognise that an effective corporate governance culture is critical to the long-term performance of the business. Goodman’s corporate governance framework underpins our commitment to maximise long-term sustainable value for Securityholders through:

- Effective controls, risk management, transparency and corporate responsibility
- Strategic planning and alignment of the interests of employees, whom we refer to as team members, with that of Securityholders and other stakeholders
- Meeting stakeholder expectations of a global ASX listed entity through acting lawfully and responsibly while prudently managing both financial and non-financial risk, and
- Seeking to ensure we are an organisation that acts with integrity by promoting a culture which values the principles of honesty, fairness, transparency and ethical behaviour.

The diagram below shows an overview of Goodman’s Corporate governance framework.

Goodman Group Boards

Risk and Compliance Committee	Audit Committee	Remuneration Committee	Nomination Committee

Group CEO

Group Investment	Finance and Treasury	Corporate Services
Committee	Committee	Committee

Goodman’s Corporate Governance Statement can be viewed on our website at goodman.com/who-we-are/corporate-governance Goodman’s core corporate governance framework documents including Charters and Policies are available at goodman.com/who-we-are/corporate-governance. Additional information for securityholders is available at the Goodman Investor Centre at goodman.com/investor-centre

Annual Report 2021

Goodman Limited and its controlled entities

Consolidated financial report for the year ended 30 June 2021

CONTENTS
Directors’ report	8
Lead auditor’s independence declaration	67
Consolidated statements of fnancial position	68
Consolidated income statements	69
Consolidated statements of comprehensive income	70
Consolidated statements of changes in equity	71
Consolidated cash fow statements	73
Notes to the consolidated fnancial statements
Basis of preparation
1 Basis of preparation	74
Results for the year
2 Proft before income tax	76
3 Proft per security	79
4 Segment reporting	79
5 Taxation	83
Operating assets and liabilities
6 Property assets	86
7 Receivables	96
8 Contract balances	96
9 Assets held for sale	97
10 Payables	97
11 Provisions	97
12 Property, plant and equipment	98
13 Leases	98
14 Goodwill and intangible assets	99
Capital management
15 Net fnance income/(expense)	102
16 Interest bearing liabilities	103
17 Other fnancial assets and liabilities	105
18 Financial risk management	106
19 Dividends and distributions	114
20 Issued capital	115
Other items
21 Notes to the cash fow statements	117
22 Equity attributable to Goodman Limited
and non-controlling interests	120
23 Controlled entities	122
24 Related parties	124
25 Commitments	126
26 Auditors’ remuneration	127
27 Parent entity disclosures	127
28 Events subsequent to balance date	128
Directors’ declaration	129
Independent auditor’s report	130
Appendix A – Goodman Logistics (HK) Limited
fnancial report for the year ended 30 June 2021	136

Goodman Group

Directors’ report

The directors (Directors) of Goodman Limited (ABN 69 000 123 071) and Goodman Funds Management Limited (GFML), the responsible entity for Goodman Industrial Trust (ARSN 091 213 839), present their Directors’ report together with the consolidated financial statements of Goodman Limited and the entities it controlled (Goodman or Group) and the consolidated financial statements of Goodman Industrial Trust and the entities it controlled (GIT) at the end of, or during, the financial year ended 30 June 2021 (FY21) and the audit report thereon.

Shares in Goodman Limited (Company or GL), units in Goodman Industrial Trust (Trust) and CHESS Depositary Interests (CDIs) over shares in Goodman Logistics (HK) Limited (GLHK) are stapled to one another and are quoted as a single security on the Australian Securities Exchange (ASX). In respect of stapling arrangements, Australian Accounting Standards require an acquirer to be identified and an in-substance acquisition to be recognised and accordingly Goodman Limited is identified as having acquired control over the assets of GIT and GLHK. The consolidated financial statements of Goodman Limited therefore include the results of GIT and GLHK.

As permitted by the relief provided in Australian Securities & Investments Commission (ASIC) Instrument 20-0568, the accompanying consolidated financial statements present both the financial statements and accompanying notes of Goodman and GIT. GLHK, which is incorporated and domiciled in Hong Kong, prepares its financial statements under Hong Kong Financial Reporting Standards and the applicable requirements of the Hong Kong Companies Ordinance and accordingly the financial statements of GLHK have not been included as adjacent columns in the consolidated financial statements. The financial statements of GLHK have been included as an appendix to this financial report.

GFML, as responsible entity for the Trust, is solely responsible for the preparation of the accompanying consolidated financial report of GIT, in accordance with the Trust’s Constitution and the Corporations Act 2001.

Annual Report 2021

OPERATING AND FINANCIAL REVIEW

Principal activities

Goodman is a global integrated property group and one of the world’s leading listed industrial property groups. Goodman is focused on its proven business model of owning, developing and managing industrial property and business space in its chosen key markets around the world.

The principal activities of Goodman during the financial year were investment in directly and indirectly held industrial property, investment management, property services and property development. Goodman’s key operating regions during the financial year were Australia and New Zealand, Asia, Continental Europe, the United Kingdom and the Americas.

Goodman strategy

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DEVELOP
Develop properties in key locations to
meet our customers’ business needs
CUSTOMER
Manage and invest in high-quality
real estate globally for our investment partners
Our
customers
OWN
high-quality properties
heart of our business
Own are at the
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----- Start of picture text -----

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

Goodman’s purpose is to make space for its stakeholders’ ambitions. This purpose is executed through Goodman’s integrated business capabilities model – ‘own+develop+manage’, where its customers’ need for sustainable solutions and service excellence in high quality locations, is at the centre.

The business capabilities are supported by:

1. Quality partnerships – develop and maintain strong relationships with key stakeholders including customers, investment partners, suppliers and employees.

2. Quality product and service – deliver high quality product and customer service in key logistics markets globally by actively leveraging Goodman’s industrial sector expertise, development and management experience and global operating platform.

3. Culture and brand – promote Goodman’s unique brand and embed Goodman’s core values across each operating division to foster a strong and consistent culture. The core values are:

- Innovation – New ideas push our business forward. We focus on the future, proactively looking for new opportunities and improved solutions for our stakeholders that will make the world a better place for all of us.
- Determination – Determination gets things done. We are motivated by excellence and work hard to achieve it, actively pursuing the very best outcomes for our stakeholders.
- Integrity – We have integrity, always. We work inclusively and transparently, balancing the needs of our business and our people, with the needs of the community and those we do business with.
- Sustainability – We’re building our business for the long term. That’s why we consider the planet and all the people on it in everything we do. Our initiatives demonstrate our ongoing commitment to having a positive economic, environmental and social impact on the world.

4. Operational efficiency – optimise business resources to maximise effectiveness and drive efficiencies.

5. Capital efficiency – maintain active capital

management to facilitate appropriate returns and sustainability of the business.

Goodman Group

Directors’ report

Operating and financial review (continued)

Financial highlights

Financial highlights
	2021	2020	Change %
Revenue and other income before fair value adjustments on investment properties ($M)	2,444.1	1,982.1	23.3%
Fair value adjustments on investment properties including share of adjustments for Partnerships ($M)	1,358.9	651.3	108.6%
Revenue and other income ($M)	3,803.0	2,633.4	44.4%
Proft attributable to Securityholders ($M)	2,311.9	1,504.1	53.7%
Statutory proft per security – basic (¢)	125.4	82.4	52.2%
Operating proft ($M)	1,219.4	1,060.2	15.0%
Operating proft per security (operating EPS) (¢)1	65.6	57.5	14.1%
Dividends/distributions in relation to the year ($M)	554.2	548.5	1.0%
Dividends/distributions per security in relation to the year (¢)	30.0	30.0	–
Weighted average number of securities on issue (M)	1,844.2	1,826.0	1.0%
Total equity attributable to Securityholders ($M)	13,161.5	11,520.6	14.2%
Number of securities on issue (M)	1,847.4	1,828.4	1.0%
Net tangible assets per security ($)	6.68	5.84	14.4%
Net assets per security ($)	7.12	6.30	13.0%
External assets under management ($B)	54.0	48.0	12.5%
Total assets under management ($B)	57.9	51.6	12.2%
Development work in progress ($B)2	10.6	6.5	63.1%
Gearing (%)3	6.8	7.5
Interest cover4(times)	63.7	15.3
Liquidity ($B)	1.9	2.8
Weighted average debt maturity (years)	6.3	5.8

Operating profit per security (operating EPS) is the operating profit divided by the weighted average number of securities on issue during FY21, including securities relating to performance rights that have not yet vested but where the performance hurdles have been achieved. Operating profit comprises profit attributable to Securityholders adjusted for net property valuations gains, non-property impairment losses, net gains/losses from the fair value movements on derivative financial instruments and unrealised fair value and foreign exchange movements on interest bearing liabilities and other non-cash adjustments or non-recurring items e.g. the share based payments expense associated with Goodman’s Long Term Incentive Plan (LTIP).

As it is closely aligned with operating cash generation, the Directors consider that Goodman’s operating profit is a key measure by which to examine the underlying performance of the business, notwithstanding that operating profit is not an income measure under International Financial Reporting Standards.

Development work in progress (WIP) is the end value of active developments across Goodman and its investments in associates and joint ventures (referred to as Partnerships).
Gearing is calculated as total interest bearing liabilities over total assets, both net of cash and the fair values of certain derivative financial instruments included in other financial assets of $134.1 million (2020: $292.5 million). Total interest bearing liabilities are grossed up for the fair values of certain derivative financial instruments included in other financial liabilities of $62.3 million (2020: $194.0 million).
Interest cover is operating profit before net finance expense (operating) and income tax (operating) divided by net finance expense (operating). The calculation is in accordance with the financial covenants associated with the Group’s unsecured bank loans and includes certain adjustments to the numerator and denominator.

Annual Report 2021

Overview

The Group has been able to adapt to the challenges that FY21 has brought and has continued to grow the business sustainably for the long term.

The global pandemic has accelerated the changes in consumption trends that had already begun across the physical and digital spaces and this has increased demand for warehouse and logistics facilities. This has benefitted the Group’s existing portfolios in FY21, which have reported growth in rental income and maintained high occupancy levels. It has also given the Group confidence to commence a number of new developments, particularly multi-storey and higher intensity buildings within its urban locations, and these developments are providing essential real estate infrastructure for the long-term requirements of those cities and the Group’s customers.

This increase in development activity has been a key driver of the Group’s operating performance for FY21, with operating profit increasing by 15.0% to $1,219.4 million. This equates to an operating EPS of 65.6 cents, up 14.1% on FY20.

The customer demand for industrial space has led to another strong property valuation result with total property uplifts, including the Group’s share of Partnerships, for FY21 of $1,308.5 million. Across FY21, the weighted average capitalisation rate of the stabilised assets in the Goodman portfolios contracted from 4.9% to 4.3%.

Key operational highlights for FY21:

Property investment:

- Investment earnings of $411.5 million (2020: $425.2 million)
- $57.9 billion of total assets under management (AUM), of which the Group owns a whole or a part share
- 3.2% like for like growth in net property income (NPI) in Partnerships
- 98% occupancy across the Group and Partnerships.

Management:

- Management earnings of $459.1 million (2020: $511.2 million)
- $54.0 billion of external AUM in Partnerships
- Partnerships reported 17.7% weighted average total return on net assets.

Development:

- Development earnings of $717.9 million (2020: $575.7 million)
- $10.6 billion of development WIP (end value)
- $6.6 billion of development commencements.

The operating performance and property valuation results have contributed to Goodman’s statutory profit attributable to Securityholders for FY21 increasing by $807.9 million to $2,311.9 million. The statutory profit is reported net of the accounting expense of the Goodman LTIP of $268.8 million and included a $55.0 million fair value gain on derivatives. These items, as well as the property valuation results, are excluded from the calculation of operating profit.

Goodman has achieved this result while maintaining credit metrics in accordance with its fnancial risk management policy. At 30 June 2021, gearing was 6.8% and the funds available to the Group for future investment were $1.9 billion. Dividends and distributions relating to FY21 were maintained at 30 cents per security, equivalent to 46% of operating profit. The cash retained in the business is consistent with the financial risk management targets and is considered appropriate given the significant development activity and the commensurate growth in investments that is expected in the near term.

Goodman Group

Directors’ report

Operating and financial review (continued)

Analysis of performance

Goodman’s key operating regions are Australia and New Zealand (reported on a combined basis), Asia (Greater China and Japan), Continental Europe (with the vast majority of assets located in Germany and France), the United Kingdom and the Americas (North America and Brazil). The operational performance can be analysed into property investment earnings, management earnings and development earnings, and the Directors consider this presentation of the consolidated results facilitates a better understanding of the underlying performance of Goodman given the differing nature of and risks associated with each earnings stream.

Property investment earnings consist of gross property income (excluding straight lining of rental income), less property expenses, plus Goodman’s share of the operating results of Partnerships that is allocable to property investment activities which excludes the Group’s share of property revaluations and derivative mark to market movements. The key drivers for maintaining or growing Goodman’s property investment earnings are increasing the level of AUM (subject also to Goodman’s direct and indirect interest), maintaining or increasing occupancy and rental levels within the portfolio, and controlling operating and financing costs within Partnerships.

Management earnings relate to the revenue from managing both the property portfolios and the capital invested in Partnerships (management income). This includes performance related revenues but excludes earnings from managing development activities in Partnerships, which are included in development earnings. The key drivers for maintaining or growing management earnings are activity levels, asset performance, and increasing the level of AUM, which can be impacted by property valuations and asset disposals and is also dependent on liquidity including the continued availability of third party capital to fund both development activity and acquisitions across Goodman’s Partnerships.

Development earnings consist of development income, plus Goodman’s share of the operating results of Partnerships that is allocable to development activities, plus net gains or losses from disposals of investment properties and equity investments that are allocable to development activities, plus interest income on loans to development joint ventures, less development expenses. Development income includes development management fees and also performance related revenues associated with managing individual development projects in Partnerships. The key drivers for Goodman’s development earnings are the level of development activity, land and construction prices, property valuations and the continued availability of third party capital to fund development activity.

Annual Report 2021

The analysis of Goodman’s performance and the reconciliation of the operating profit to profit attributable to Securityholders for FY21 are set out in the table below:

FY21 are set out in the table below:
	2021	2020
Note	$M	$M
Analysis of operating proft
Property investment earnings	411.5	425.2
Management earnings	459.1	511.2
Development earnings	717.9	575.7
	1,588.5	1,512.1
Operating expenses	(294.0)	(292.3)
Net fnance expense (operating)1 Income tax expense (operating)2	1,294.5 (16.4) (58.7)	1,219.8 (70.8) (88.8)
Operating proft	1,219.4	1,060.2
Adjustments for: Property valuation related movements – Net gain from fair value adjustments on investment properties 6(e) – Share of fair value adjustments attributable to investment properties in Partnerships after tax 6(f) – Deferred tax on fair value adjustments on investment properties 5(a)	63.1 1,295.8 (50.4)	45.2 591.7 (15.6)
	1,308.5	621.3
Fair value adjustments related to liability management – Fair value adjustments on derivative fnancial instruments 15 – Share of fair value adjustments on derivative fnancial instruments in Partnerships 6(f)	83.9 (28.9)	(9.4) 16.2
	55.0	6.8
Other non-cash adjustments or non-recurring items – Share based payments expense 2 – Straight lining of rental income and tax deferred adjustments	(268.8) (2.2)	(164.0) (20.2)
	(271.0)	(184.2)
Proft for the year attributable to Securityholders	2,311.9	1,504.1

Net finance expense (operating) excludes derivative mark to market and unrealised foreign exchange movements.
Income tax expense (operating) excludes the deferred tax movements relating to investment property valuations and other non-operating items, such as the Group’s LTIP.

Goodman Group

Directors’ report

Operating and financial review (continued) Analysis of performance (continued)

Property investment

Property investment earnings in FY21 of $411.5 million decreased by 3% on the prior year and comprised 26% of the total earnings (2020: 28%).

	2021	2020
	$M	$M
Analysis of property investment earnings:
Direct	79.3	78.5
Partnerships	332.2	346.7
	411.5	425.2

	2021	2020
Key metrics:
Weighted average capitalisation rate (WACR) (%)	4.3	4.9
Weighted average lease expiry (WALE) (yrs)	4.5	4.5
Occupancy (%)	98	98

The Group’s property portfolios are concentrated in large, urban centres around the world where demand from customers has put pressure on land use and availability. As a consequence of the acceleration of consumer purchasing habits to online shopping, Goodman has seen increased demand for space from customers in the food, consumer goods and logistics sectors, particularly related to e-commerce operators and those transitioning to online. At the same time, customers have continued to invest in order to improve the efficiency of their supply chains. In addition to storage and movements of goods, data centres have also emerged as a rapidly growing user of industrial property.

The directly held properties are primarily in Australia and have potential for significant long-term growth from redevelopment to more intense or higher and better uses. The net income from the Group’s directly held properties was similar to the prior year as the impacts of rental growth, completion of developments and acquisitions were offset by assets sold in the current and prior periods.

The more significant component of the Group’s property investment earnings was from its cornerstone interests in the Partnerships. The earnings from the Group’s share of these stabilised assets decreased by $14.5 million to $332.2 million compared to the prior year. The impact of disposals in FY20 and FY21, which included properties in central and eastern Europe, and the foreign currency translation on the overseas earnings resulted in a decrease in earnings of $29.0 million. This was partly offset by the stabilisation of developments in FY20 and FY21, as the Group has continued to invest in the Partnerships to fund its share of those developments and rental income growth from existing stabilised properties. Net property income from the Partnership portfolios in FY21 was up by over 3% on a like for like basis compared to FY20 and average occupancy was maintained at 98%.

During FY21, the Group’s share of property valuations from the stabilised portfolios (before deferred tax) was $1,174.9 million, which included valuation uplifts of $164.2 million on developments that reached completion during the year. Valuation gains occurred in all regions and whilst the rental income growth and development completions were contributors to these uplifts, the primary driver, especially in the second half of the financial year, was capitalisation rate compression. At 30 June 2021, the WACR for the Group’s portfolios was 4.3%, compared to 4.9% at the start of FY21.

The operating return on Goodman’s investment in the stabilised portfolios held by the Partnerships was 4.3% compared to 4.9% in FY20, as the growth in net property income was offset by the impacts of the valuation uplifts that increased the investment base. The returns from the Partnerships were also impacted by the level of debt in each Partnership. Gearing was maintained at the lower end of target ranges, which continued to be appropriate given the ongoing development activity and the aim of Goodman and its investment partners to position the Partnerships for sustainable long-term growth.

Annual Report 2021

Management

Management earnings in FY21 of $459.1 million decreased by 10% compared to the prior year and comprised 29% of total operating earnings (2020: 34%). This was due to lower performance fee revenue recognised in FY21 and the net adverse impact of the translation of the overseas earnings compared to the prior year. The reduction in performance related revenue was the result of the timing of calculation and recognition of fees. With the strong performance of the Partnerships in recent times, a significant backlog of potential fees may be earned in the future should conditions remain stable. The decline was partially offset by the higher base management fees as a result of the increased AUM. During FY21, external AUM increased by 12% to $54.0 billion from $48.0 billion as set out below:

External assets under management

External assets under management
	2021
At the beginning of the year Acquisitions	$B 48.0 3.1
Disposals	(3.1)
Capital expenditure (developments)	2.1
Valuations	5.6
Foreign currency translation	(1.7)
At the end of the year	54.0

Excluding performance related income, management fee income earned from the overall management of the Group’s Partnerships was $310.1 million (2020: $304.0 million). Base management fee income increased in line with the external AUM, noting that the majority of the disposals occurred in the early part of the year and a significant component of the valuation uplifts were recorded at 30 June 2021. The base management fee income was supplemented by both property services income, which was based on the gross property income in Partnerships, and other income such as leasing fees and transactional fees.

For FY21, the Partnerships reported a weighted average total return on net assets of 17.7% (2020: 16.6%). The consistently high Partnership returns over the past few years again resulted in a strong contribution from performance fee revenue of $149.0 million; however, the timing of the assessment dates meant this was down on the prior period (FY20: $207.2 million). These performance fees arose primarily in Australia/ New Zealand, Asia and Continental Europe.

Development

In FY21, development earnings were $717.9 million (excluding revaluation gains), an increase of 25% on the prior year and comprised 45% of total operating earnings (2020: 38%). This increase would have been greater but for the adverse impact on earnings from the foreign currency translation of overseas earnings.

The increase in the Group’s earnings has primarily been volume driven and the progress and execution of the Group’s developments continues to be robust with commencements in FY21 of $6.6 billion (FY20: $4.5 billion). At 30 June 2021, WIP (based on end value) had increased to $10.6 billion (FY20: $6.5 billion) across 73 projects with a forecast yield on cost of 6.7% and a number of those projects will also generate income for FY22 and FY23.

This increase in development volumes has more than offset the impact on income arising from the longer development timeframes required for the size and scale of current projects, given the concentration in urban locations. Approximately 55% of WIP at 30 June 2021 was multi-storey and the average duration of projects in WIP was around 19 months, which implied an annualised production rate for the workbook of $6.6 billion.

Given the strong customer demand and the continued focus on urban centres, where the supply of available land is restricted, the Group has been able to commence certain projects prior to securing a pre-lease commitment. Nevertheless, of the $6.6 billion of project commencements during the year, 57% had pre-committed leases and of the development completions during FY21 of $2.4 billion (FY20: $2.4 billion), 96% had pre-committed leases.

The Group’s development earnings arise in each operating segment and from a number of different transaction types, often dependent on the nature of the Partnership. In most of the operating segments, development earnings are a mix of development management income, including performance related income, and the Group’s share of transactional profits reported by the Partnerships. The majority of inventory disposals and fixed price contract income occurred in Continental Europe, where the local Partnerships frequently acquire completed developments from Goodman; however, there were inventory disposals in Australia and the United Kingdom during FY21. Consistent with the prior year, the majority of development activity in FY21 was undertaken by or for the Partnerships and third parties (81% of WIP at 30 June 2021).

Goodman Group

Directors’ report

Operating and financial review (continued) Analysis of performance (continued)

Operating expenses

For FY21, operating expenses increased to $294.0 million from $292.3 million, despite a $10 million decrease from the impact of foreign currency translation on overseas expenses. The majority of the operating expenses related to remuneration costs which increased to $210.8 million from $203.7 million as a result of modest inflation pressure and cash incentives paid as a result of the Group’s overall performance and include an allowance for a sustainability initiative to incentivise employees to switch to electric vehicles. Headcount was maintained in most divisions. The Group’s aim is to keep base remuneration costs relatively steady, and instead use variable remuneration to incentivise staff.

Administrative expenses decreased to $83.2 million from $88.9 million primarily due to the impacts of foreign currency translation and savings in travel expenses.

Net finance expense (operating)

Net finance expense (operating), which excluded interest income on loans to development joint ventures, derivative mark to market and unrealised foreign exchange movements, decreased to $16.4 million from $70.8 million. This was due to lower borrowing expenses on the Group’s foreign denominated loans and derivatives due to the impact of the higher Australian dollar. The foreign exchange driven decline in investment, development and management earnings described above has been offset in the benefits recorded in the finance expense. This is consistent with the Group’s hedging strategy that has been in effect for many years. In some prior periods, the borrowing expenses where higher but that offset the translation gains in revenues. The redemption of certain 144A notes also contributed to the decline in net finance expenses. These factors were partly offset by the lower interest received on the Group’s cash balances and lower capitalised interest due to declining interest rates.

Income tax expense (operating)

Income tax expense (operating) for FY21 at $58.7 million (2020: $88.8 million) decreased compared to the prior year. A significant proportion of Goodman’s earnings related to GIT and its controlled entities, which, as trusts, are ‘flow through’ entities under Australian tax legislation, meaning Securityholders (and not GIT) are taxed on their respective share of income. However, the decrease in the tax expense was primarily due to the nature and location of the Group’s development revenues.

Capital management

Interest bearing liabilities

At 30 June 2021, the Group’s available debt facilities and fixed rate long-term bonds, which totalled $3.1 billion (of which $2.1 billion had been drawn), had a weighted average maturity of 6.3 years. The Group’s cash and undrawn bank facilities totalled $1.9 billion.

At 30 June 2021, gearing was 6.8% (2020: 7.5%), which continued to be at the lower end of the Group’s policy range of 0% to 25%. Interest cover was 63.7 times (2020: 15.3 times) and the Group continued to have significant headroom relative to its financing covenants. Goodman’s credit ratings were unchanged over the year.

During FY21, the Group and its Partnerships refinanced $5.4 billion of bank debt and secured third party equity commitments of $1.8 billion to provide liquidity for ongoing acquisition and development opportunities. At 30 June 2021, the Partnerships had $18.1 billion in available cash, undrawn bank facilities and equity commitments, noting that the majority of the equity commitments remain subject to the approval by the relevant investment partners, including Goodman, of proposed property investments for which the funding is required.

Dividends and distributions

The Group’s distribution for FY21 was maintained at 30 cents per security, a pay-out ratio of 46%, with 15 cents paid on 25 February 2020 and 15 cents to be paid on 26 August 2021. This pay-out ratio has assisted the Group in retaining sufficient funds for its ongoing development activity and in keeping gearing at an appropriate level, within the desired range. The distribution reinvestment plan was not in operation during the year.

In respect of the separate components that comprise the 30 cents per security:

- Goodman Limited did not declare any dividends during the financial year (2020: $nil).
- Goodman Industrial Trust declared and accrued distributions of 24.0 cents per security (2020: 26.0 cents per security), amounting to $443.4 million (2020: $475.4 million).
- GLHK declared and accrued a dividend of 6.0 cents per security (2020: 4.0 cents per security), amounting to $110.8 million (2020: $73.1 million).

Annual Report 2021

Summary of items that reconcile operating profit to statutory profit

Property valuation related movements

The net gain from fair value adjustments on investment properties directly held by Goodman was $63.1 million (2020: $45.2 million). The uplift in value was primarily due to the contraction in capitalisation rates.

Goodman’s share of net gains from fair value adjustments before deferred tax attributable to investment properties in Partnerships was $1,335.4 million (2020: $625.0 million), a reflection of the quality of the property portfolios and the continued customer and investor demand for industrial assets. This valuation uplift comprised $1,111.8 million in respect of the stabilised portfolio (including valuation uplifts on developments that stabilised during the year) and $223.6 million (2020: $182.0 million) from investment properties that were still under development at 30 June 2021.

At 30 June 2021, the WACR for Goodman’s stabilised property portfolios (both directly held and Partnerships) decreased from 4.9% to 4.3%.

The valuation gains of $223.6 million from investment properties that were still under development at 30 June 2021 included gains of $95.9 million that related to buildings under development that were subject to conditional contracts for sale. In prior years, properties under development were typically not revalued prior to completion due to the shorter development periods and, as a consequence, the entire development profit was recognised in the Group’s statutory profit in the year the contract was completed. This profit was also reported as Development earnings in the analysis of the Group’s operating profit.

Given the lengthening time periods for the Group’s developments, it has become increasingly common that at reporting dates properties under development that have incomplete contracts for disposal are subject to more significant fair value movements. These movements would be reflected in the Group’s statutory profit but would not form part of that year’s operating profit. The Board intends, however, that any property valuation gains associated with properties contracted for sale that arise during the period from the commencement of the development until the date of disposal are included as Development earnings for the purposes of the Group’s operating profit calculation, but this should only occur in the reporting period when the conditions have been satisfied and the properties have been derecognised. This will usually be upon cash settlement, which reinforces the principle for determining operating profit based on cash realisation.

Accordingly, the fair value gains of $95.9 million in FY21 that related to buildings under development subject to conditional contracts for sale at 30 June 2021 will be reflected in operating profit, but only in the future reporting period when the properties are derecognised. In the future period when this occurs, the reconciliation of the Group’s statutory profit to the Group’s operating profit will include a separate line item under the property valuation related movements. This way, the valuation increases are not double counted when considering total gains generated over multiple periods. This operating profit treatment is consistent with the approach applied to a similar property disposal by one of the Partnerships that was contracted in FY19 and completed in FY20. In respect of the current financial year, there were no similar development completions.

There were no impairment losses associated with the Group’s inventories during FY21.

Fair value adjustments and unrealised foreign currency exchange movements related to liability management

The amount reported in the income statement associated with the Group’s derivative financial instruments was a net gain of $55.0 million (2020: $6.8 million net gain). This was due to the strengthening of the Australian dollar against the currencies where the Group has its principal operations.

Under the Group’s policy, it continues to hedge between 65% and 90% of the net investment in its major overseas operations. Where Goodman invests in foreign assets, it will borrow in that currency or enter into derivative financial instruments to create a similar liability. In so doing, Goodman reduces its net asset and income exposures to those currencies. The unrealised fair value movement of the derivative financial instruments (up or down) is recorded in the income statement; however, the foreign currency translation of the net investment that is being hedged is recorded directly in reserves. In FY21, the movement in reserves attributable to foreign currency movements was a loss of $279.4 million.

Other non-cash adjustments or non-recurring items

The principal other non-cash adjustments or non-recurring items for FY21 related to the share based payments expense of $268.8 million for Goodman’s LTIP, which increased from $164.0 million in FY20. The increase primarily related to the fact that the Goodman Group security price increased from $14.85 to $21.17 during FY21 compared to a decrease from $15.03 to $14.85 in FY20 and also the impact of a higher vesting probability applied to the awards made in FY20 that are subject to an operating EPS target that will be measured over the year ending 30 June 2022.

Goodman Group

Directors’ report

Operating and financial review (continued)

Statement of financial position

Statement of fnancialposition
	2021	2020
	$M	$M
Stabilised investment properties	2,022.2	1,797.9
Cornerstone investments in Partnerships	8,668.6	7,807.3
Development holdings	3,645.1	3,140.1
Intangible assets	822.6	845.8
Cash and cash equivalents	920.4	1,781.9
Other assets	788.1	765.2
Total assets Interest bearing liabilities Other liabilities	16,867.0 2,060.3 1,645.2	16,138.2 2,938.5 1,679.1
Total liabilities	3,705.5	4,617.6
Net assets	13,161.5	11,520.6

The carrying value of wholly owned, stabilised investment properties increased by $224.3 million to $2,022.2 million at 30 June 2021. This was primarily due to valuation uplifts of $63.1 million and the net impact of acquisitions, capital expenditure, disposals and transfers to/from development.

The value of Goodman’s cornerstone investments in Partnerships, which excludes the Group’s share of their development assets, increased by $861.3 million to $8,668.6 million, primarily due to the valuation uplifts across the portfolios. The impacts of the stabilisations of development properties of $267.9 million (primarily in GNAP) and the associated equity contributed was offset by the impact of foreign currency translation of $279.2 million. The impact of the sale of central and eastern European assets went partially to debt reduction so it did not materially impact the Group’s overall investments.

Goodman’s development holdings, which include the Group’s share of development assets in the Partnerships as well as the directly held properties, increased during the year by $505.0 million to $3,645.1 million. This was a result of both the increased activity levels that occurred in most regions and valuation uplifts associated with investment properties under development in the Partnerships (primarily in Asia and North America). The strong levels of development activity are also reflected in the level of the Group’s development WIP (end value), which increased over the year from $6.5 billion to $10.6 billion at 30 June 2021.

The principal goodwill and intangible asset balances were in Continental Europe and the United Kingdom. The movement during FY21 related to changes in foreign currency exchange rates and there were no impairments or reversals of impairments.

During FY21, the Group redeemed USD denominated notes of US$453.8 million out of its existing cash. On a net basis, the Group’s cash and interest bearing liabilities were $1,139.9 million at 30 June 2021 compared to $1,156.6 million at 30 June 2020. Other assets included receivables and the fair values of derivative financial instruments that are in an asset position. The derivative financial instruments, both those in an asset and those in a liability position, are in place to hedge the Group’s interest rate and foreign exchange rate risks.

Other liabilities included trade and other payables, the provision for dividends/distributions to Securityholders, fair values of derivative financial instruments that are in a liability position and tax liabilities (including deferred tax).

Cash flows

	2021	2020
Operating cash fows Investing cash fows Financing cash fows (excluding dividends and distributions) Dividends and distributions paid	$M 1,114.7 (549.9) (797.7) (551.4)	$M 1,156.9 (306.4) (114.6) (546.3)
Net (decrease)/increase in cash and cash equivalents held Cash and cash equivalents at the beginning of the year	(784.3) 1,792.8	189.6 1,607.1
Effect of exchange rate fuctuations on cash held	(88.1)	(3.9)
Cash and cash equivalents at the end of the year	920.4	1,792.8

Operating cash flows

Operating cash flows of $1,114.7 million were slightly lower than the prior year. This was a result of lower cash receipts from portfolio performance fees, which was offset by an increase in the net development cash flows and lower net cash outflows associated with the Group’s finance costs.

The receipts of portfolio performance fees are dependent on the assessment dates for the Partnerships although revenues may be recognised in advance of the assessment dates where the consistently strong Partnership returns mean that the receipt of revenue is highly probable. The prior year included cash receipts from portfolio performance fees in respect of certain of the larger Partnerships. In some cases, cash from management activities may be received in advance of the services being provided; as a result, these revenues will be reflected in the income statement later than the receipt. Such cash receipts occurred in FY20 in advance of revenue recognised in FY21 in the income statement.

Annual Report 2021

The net development cash inflow was $612.9 million (2020: $412.4 million), although both the gross receipts from development activities of $1,560.3 million (2020: $1,031.4 million) and the gross payments for development activities of $947.4 million (2020: $619.0 million) were higher than the prior year. This arose in part due to the nature and structure of the development activities and also the timing of completions, especially in respect of the developments that are undertaken directly by the Group and subsequently sold to Partnerships or third parties. For FY21 overall, Goodman undertook a similar percentage of its total development activities in joint ventures and Partnerships relative to the prior year. When Partnerships require funding for development activities then the Group’s share of the investment is reported in investing cash flows.

The distributions received from Partnerships in FY21 were $536.9 million, increased from $462.2 million in the prior year. The Partnerships continued to distribute their net cash flows from property investment (rental income) but the primary reason for this increase was the Group’s share of development activities in the Partnerships.

Investing cash flows

Investing cash flows primarily related to the net investments in Partnerships. In FY21 the Group invested $790.3 million (2020: $806.6 million) across all regions in order to fund new and ongoing developments. Capital returns from the Partnerships reflected capital management initiatives by certain Partnerships, with the receipts often used to fund investments in other Partnerships.

The investment property acquisitions of $192.3 million (2020: $234.3 million) were in Asia and the United Kingdom and the investment property disposals arose in Australia.

Financing cash flows

Financing cash flows include the drawdowns and repayments associated with Goodman’s interest bearing liabilities. As referred to previously, the Group redeemed USD denominated notes of US$453.8 million during the year.

The other principal financing cash outflows were the distributions paid to Securityholders of $551.4 million (2020: $546.3 million) and loan funding provided to development joint ventures of $135.0 million (2020: $ 9.8 million).

Outlook

Goodman has developed significant expertise in its markets with a deliberate strategy to target high barrier to entry markets. This has positioned the Group well for future growth. The business remains agile and consumer-centric, focused on the changing consumption habits across the physical and digital space and the evolving requirements of customers around the world. The logistics and warehousing sector continues to play a significant role globally in providing essential infrastructure, enabling distribution of critical products.

Development activity and performance will continue to be driven by significant customer led demand and the Group’s ability to meet the opportunities that this presents. The growth in demand from customers and investors, and the strength of the Group’s locations have seen land values rise and as a result many of Goodman’s existing stabilised properties have become viable for redevelopment. The Board expects the increased levels of development activity seen in FY21 will continue into FY22 and the Group is well positioned to maintain an average annual production rate consistent with the current levels, with multi-storey developments a meaningful contributor.

The outlook for investment and management earnings also remains strong, as the customer demand and supply constraints in the Group’s markets provide support for both rents and occupancy. Investment earnings will also benefit from the completion of the ongoing developments and management earnings will be further enhanced by the strong positive near-term valuation outlook, which combined with the sustained development volumes, are expected to provide growth in AUM to more than $65 billion in FY22.

The Board sets financial performance targets annually and reviews them regularly. The Board anticipates that the challenges brought about by COVID-19 will continue over the longer term, however the Group has significant expertise, financial resources, a strategic real estate portfolio and culture to adapt to challenging business conditions. Overall, the Group expects to achieve operating EPS of 72.2 cents in FY22, up 10% on FY21.

Forecasts are subject to there being no material adverse change in market conditions or the occurrence of other unforeseen events.

During FY21, the Group also issued new capital of $65.1 million (2020: $nil) to fund certain obligations under the LTIP.

Goodman Group

Directors’ report

Risks

Goodman identifies strategic and operational risks for each of its regions as part of its strategy process. The key risks, an assessment of their likelihood of occurrence and consequences and controls that are in place to mitigate the risks are reported to the Board annually.

Goodman has established formal systems and processes to manage the risks at each stage of its decision making process. This is facilitated by a Group Investment Committee comprising senior executives, chaired by the Group Chief Executive Officer, which considers all major operational decisions and transactions. The Group Investment Committee meets on a weekly basis.

The Board has separate committees to review and assess key risks. The Risk and Compliance Committee reviews and monitors a range of material risks in Goodman’s risk management systems including, among other risks, market risks, operational risks, sustainability, regulation and compliance and information technology. The Audit Committee reviews and monitors financial risk management and tax policies.

The key risks faced by Goodman and the controls that have been established to manage those risks are set out below:

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Risk area Mitigation
Capital Goodman could suffer an inability to deliver its + Low gearing, ample liquidity and appropriate hedging and
management strategy, or an acute liquidity or solvency crisis, duration to absorb market shocks
(debt, equity financial loss or financial distress as a result of + Appropriate hedging quantities and duration in accordance with
and cashflow) a failure in the design or execution of its capital management and financing strategy. Financial Risk Management Policy
+ Diversification and tenure of debt funding sources and maturities
+ Capital partnering transfers risks into Partnerships
+ Diversification of investment partners
+ Change in distribution pay-out ratio consistent with contribution
to increasing development workbook
+ Strong assets that can generate better rental outcomes
+ Long lease terms with prime customers
+ Key urban market strategy – urban infill locations support
re-usability of property
+ Adaptable and re-usable building design – ease to reconfigure
for another customer.
Economic and Global economic conditions and government + Global diversification of Goodman’s property portfolios
geopolitical policies present both risks and opportunities + Focus on core property portfolios in key urban market locations
environment in the property and financial markets and the
+ Focus on cost management
business of our customers, which can impact
the delivery of Goodman’s strategy and its + Prudent capital management with low gearing and significant
financial performance. available liquidity to allow for potential market shocks
A continued increase in geopolitical tension + Co-investment with local capital partners.
between countries could have potential
consequences on our people, operations
and capital partners.
Governance, Non-compliance with legislation, regulators, or + Independent governance structures
regulation and internal policies, or to understand and respond + Core values and attitudes, with an embedded compliance culture
compliance to changes in the political and regulatory focused on best practice
environment (including taxation) could result in
+ Dedicated Chief Risk Officer and Compliance Officer
legal action, financial consequences and damage
our standing and reputation with stakeholders. + Review of transactions by the Group Investment Committee.
People and culture Failure to recruit, develop, support and retain + Succession planning for senior executives
staff with the right skills and experience may + Competitive remuneration structures, including the LTIP
result in significant underperformance or impact
+ Performance management and review
the effectiveness of operations and decision
making, in turn impacting business performance. + Goodman values program
Maintaining an organisational culture, in a + Learning, development and engagement programs.
changing workplace environment, commensurate
with Goodman’s values.
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Annual Report 2021

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Risk area Mitigation
Development Development risks may arise from location, + Review of development projects by the Group Investment Committee
site complexity, planning and permitting, + Goodman defined design specifications, which cover
infrastructure, size, duration along with general environmental, technological, and safety requirements,
contractor capability. protecting against short-term obsolescence
+ Redevelopment of older assets to intensify use
+ Pre-selecting and engaging general contractors that are
appropriately capitalised
+ Internal audit reviews
+ Insurance program, both Goodman and general contractor, including
project specific insurance
+ Ongoing monitoring and reporting of WIP and levels of speculative
development, with Board oversight including limits with respect to
speculative development and higher development risk provisions.
Disruption, changes The longer-term risk that an inability to + Key urban market strategy – urban infill locations support
in demand and understand and respond effectively to changes re-usability of property
obsolescence in our competitive landscape and customer + Adaptable and re-usable building design – ease to reconfigure for
value chain could result in business model another customer
disruption and asset obsolescence, including the
+ Geographic diversification
perception of obsolescence in the short term.
+ Capital partnering transfers risks into Partnerships
+ Insurance program (both Goodman’s and key contractors),
including project specific insurance covering design and defects
+ Long lease terms with prime customers.
Environmental Failure to deliver on Goodman’s sustainability + Corporate Responsibility and Sustainability policy
sustainability and leadership strategy and ambitions may lead to a + 2030 Sustainability Strategy including the assessment
climate change negative impact on Goodman’s reputation, ability of individual assets to improve resilience and implementation
to raise capital and a disruption to operations and of sustainability initiatives
stranded assets.
+ Sustainability guidelines for development projects
+ Review and approval of acquisitions and development projects
by the Group Investment Committee and relevant Partnership
Investment Committee, including consideration of climate in due
diligence and specification.
Asset and portfolio Inability to execute asset planning and + Key urban market strategy – urban, infill locations where customer
management strategies, including leasing demand is strongest
risk exposures, can reduce returns from + Diversification of customer base and lease expiries
Goodman’s portfolios.
+ Review of significant leasing transactions and development projects
by the Group Investment Committee
+ Capital expenditure program keeping pace with property lifecycle.
Concentration Over-exposure to specific areas, such as capital + Diversification of customer base and lease expiries
of counterparties partners, supply chain, customers and markets, + Diversification of capital partners and Partnership expiries
and markets may limit growth and sustainability opportunities.
+ Contractor pre-selection and tendering
+ Independence governance structure.
Information and Maintaining security (including cyber security) + Reporting of risks and management activity
data security of IT environment and data, ensuring continuity + Proactive monitoring, review and testing of infrastructure
of IT infrastructure and applications to support
+ Disaster recovery and business continuity planning and testing
sustainability and growth and prevent operational,
regulatory, financial and reputational impacts. + Benchmarked strategy for delivery of security IT infrastructure
and systems
+ Training and awareness program and other assurance activities
for monitoring and improvement.
Infectious There continues to be significant uncertainty + Protect and support our people
disease pandemic associated with the COVID-19 pandemic, + Global diversification of Goodman's property portfolios
with mutations of the virus and significant
+ Diversification of customer base
outbreaks continuing to occur globally. While
vaccine distribution is underway, there are + In-house property management team enabling flexibility to support
challenges with production and supply. Also the and respond to customers
success of the vaccine in enabling the world to + Capital model, strong balance sheet with adequate liquidity available.
stabilise and transition to a normal footing is still
to be understood.
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Goodman Group

Directors’ report

(continued)

QUALIFICATIONS, EXPERIENCE AND SPECIAL RESPONSIBILITIES OF DIRECTORS AND COMPANY SECRETARY

Board of Directors

Stephen Johns Independent Chairman

Stephen is the Independent Chairman following the retirement of Ian Ferrier at the 2020 AGM. He is a Non-executive Director of Goodman Limited, Goodman Funds Management Limited and Goodman Logistics (HK) Limited.

Appointed : 1 January 2017 (Goodman Limited and Goodman Funds Management Limited); 19 November 2020 (Goodman Logistics (HK) Limited).

Board Committees : Member of the Audit Committee and Remuneration Committee and Chairman of the Nomination Committee.

Skills, Experience and Expertise

Stephen retired as Chairman of Brambles Limited in June 2020 after a period of 16 years on that Board and was previously Chairman of Leighton Holdings Limited and Spark Infrastructure Group.

Stephen is a former executive of Westfield Group where he had a long executive career during which he held a number of senior positions including that of Finance Director from 1985 to 2002. He was a non-executive director of Westfield Group from 2003 to 2013.

He has a Bachelor of Economics degree from the University of Sydney and is a Fellow of Chartered Accountants Australia and New Zealand and a Fellow of the Australian Institute of Company Directors.

Other Directorships and Offices

Director of the Garvan Institute of Medical Research.

Former directorships of other listed entities in the past three years

- Brambles Limited (August 2004 to June 2020).

Ian Ferrier, AM Independent Chairman (retired)

Ian was the Independent Chairman (appointed on 28 July 2009 having been Acting Chairman from 28 November 2008). He was also a Non-executive Director of Goodman Limited, Goodman Funds Management Limited and Goodman Logistics (HK) Limited (since 22 February 2012) until his retirement at the 2020 AGM.

Appointed : 1 September 2003 and retired on 19 November 2020. Board Committees : Member of the Audit Committee and Remuneration Committee until his retirement.

Skills, Experience and Expertise

Ian is a Fellow of Chartered Accountants Australia and New Zealand and has in excess of 40 years of experience in company corporate recovery and turnaround practice.

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

Other Directorships and Offices

Director of EnergyOne Limited (from January 2007).

Former directorships of other listed entities in the past three years

Reckon Limited (August 2004 to July 2018).

Gregory Goodman Group Chief Executive Officer

Gregory is the Managing Director of Goodman Limited and Goodman Funds Management Limited and Group Chief Executive Officer of Goodman. He is also an alternate director of Goodman Logistics (HK) Limited.

Appointed : 7 August 1998 (Goodman Limited and 17 January 1995 Goodman Funds Management Limited); 18 January 2012 (Goodman Logistics (HK) Limited).

Board Committees : Nil.

Skills, Experience and Expertise

Gregory is responsible for Goodman’s overall operations and the implementation of its strategic plan. He has over 30 years of experience in the property industry with significant expertise in the industrial property arena. Gregory was a 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.

Other Directorships and Offices

- Director of Goodman (NZ) Limited (the manager of the New Zealand Exchange listed Goodman Property Trust)
- Director and/or representative on other subsidiaries and management companies of the Consolidated Entity and Partnerships.

Annual Report 2021

Christopher Green Independent Director

Chris is an Independent Non-executive Director of Goodman Limited and Goodman Funds Management Limited. Appointed : 28 April 2019.

Board Committees : Member of the Audit Committee and Nomination Committee.

Rebecca McGrath Independent Director

Rebecca is an Independent Non-executive Director of Goodman Limited and Goodman Funds Management Limited. Appointment: 3 April 2012.

Board Committees : Chairman of the Risk and Compliance Committee and Member of the Remuneration Committee and the Nomination Committee.

Skills, Experience and Expertise

Chris spent 16 years at Macquarie Group and was the Global Head of Macquarie Capital’s real estate business leading its global expansion through to 2018. He has a Bachelor of Laws (Honours) degree and a Bachelor of Commerce (Computer Science and Accounting) degree from the University of Sydney. Chris is also the Founder and Chief Executive Officer of GreenPoint Partners, a New York headquartered firm investing in real estate innovation, technology and private equity.

Other Directorships and Offices

Chief Executive Officer of GreenPoint Partners.

Mark Johnson

Independent Director

Mark is an Independent Non-executive Director of Goodman Limited and Goodman Funds Management Limited. Appointed : 1 June 2020.

Board Committees : Chairman of the Audit Committee and member of the Risk and Compliance Committee.

Skills, Experience and Expertise

Mark is a trained accountant and spent 30 years at PricewaterhouseCoopers (PwC) where he was CEO from 2008 to 2012 as well as holding positions as Asian Deputy-Chairman and as a member of PwC’s global strategy council.

Mark also has extensive experience as a Director of charities, educational bodies and mutual organisations and he is currently a Director of the Smith Family, a Councillor at UNSW Sydney and the Chairman of the Hospitals Contribution Fund of Australia.

Mark holds a Bachelor of Commerce (UNSW) degree and is a Fellow, Chartered Accountants Australia and New Zealand, Certified Practicing Accountant Australia and Fellow, Australian Institute of Company Directors.

Other Directorships and Offices

Skills, Experience and Expertise

During her executive career at BP plc Rebecca held numerous senior roles in finance, operations, corporate planning, project management and marketing in Australasia, the UK, and Europe. Her most recent executive experience was as Chief Financial Officer of BP Australasia. Rebecca was formerly a director of CSR Limited and Incitec Pivot Limited.

Rebecca holds a Bachelors Degree of Town Planning and a Masters of Applied Science (Project Management) and is a graduate of the Cambridge University Business and Environment Programme. She is Victorian Council President of the Australian Institute of Company Directors and a member of the national board.

Other Directorships and Offices

- Chairman of Oz Minerals Limited (Director since November 2010)
- Director of Macquarie Group Limited and Macquarie Bank Limited (since January 2021)
- Director of Investa Wholesale Funds Management Limited
- Chairman of Scania Australia Pty Limited.

Former directorships of other listed entities in the past three years

- Incitec Pivot Limited (September 2011 to December 2020).

Danny Peeters

Executive Director, Corporate

Danny is an Executive Director of Goodman Limited, Goodman Funds Management Limited and Goodman Logistics (HK) Limited.

Appointed : 1 January 2013 (Goodman Limited and Goodman Funds Management Limited); 1 February 2018 (Goodman Logistics (HK) Limited).

Board Committees : Nil.

- Chairman of G8 Education Limited
- Director of Corrs Chambers Westgarth
- Director of Aurecon Group Pty Ltd.

Former directorships of other listed entities in the past

three years

- Westfield Corporation Limited (May 2013 to June 2018)
- Coca-Cola Amatil Limited (December 2016 to May 2021).

Skills, Experience and Expertise

Danny has oversight of Goodman’s European and Brazilian operations and strategy. Danny has been with Goodman since 2006 and has 19 years of experience in the property and logistics sectors.

During his career, Danny has built up extensive experience in the design, implementation and outsourcing of pan-European supply chain and real estate strategies for various multinationals.

Goodman Group

Directors’ report

(continued)

Danny was Chief Executive Officer of Eurinpro, a developer of tailor-made logistic property solutions in Europe acquired by Goodman in May 2006.

Other Directorships and Offices

Director and/or representative of Goodman’s subsidiaries and Partnership entities in Europe and Brazil.

Phillip Pryke Independent Director

Phillip is an Independent Non-executive Director of Goodman Limited and Goodman Funds Management Limited.

Appointed: 13 October 2010.

Board Committees: Chairman of the Remuneration Committee and Member of the Audit Committee.

Skills, Experience and Expertise

Phillip has wide experience in the fishing, energy, financial services and health and technology industries and holds a Bachelor of Economics Degree.

Phillip is currently a director of Carbine Aginvest Corporation Limited. He was formerly the Deputy Chairman and Lead Independent Director of New Zealand Exchange listed Contact Energy Limited, a director of Tru-Test Corporation Limited and North Ridge Partners Pty Limited, Vice President of EDS, Chief Executive of Nextgen Networks, Chief Executive Officer of Lucent Technologies Australia Pty Limited and New Zealand Health Funding Authority and a Member of the Treaty of Waitangi Fisheries Commission.

Other Directorships and Offices

Director of Goodman (NZ) Limited, the manager of the New Zealand Exchange listed Goodman Property Trust, Director of Carbine Aginvest Corporation Limited.

Anthony Rozic Deputy Chief Executive Officer and Chief Executive Officer North America

Anthony is an Executive Director of Goodman Limited and Goodman Funds Management Limited.

Appointed: 1 January 2013.

Anthony is a qualified Chartered Accountant and has over 20 years’ experience in the property industry having previously held a number of senior roles in the property funds management industry and chartered accountancy profession.

Other Directorships and Offices

Director and/or representative of Goodman’s subsidiaries and Partnership entities in North America.

Penny Winn Independent Director

Penny is an Independent Non-executive Director of Goodman Limited and Goodman Funds Management Limited. Appointed: 1 February 2018.

Board Committees: Member of the Remuneration Committee and Risk and Compliance Committee.

Skills, Experience and Expertise

Penny has over 30 years of experience in retail, supply chain and digital strategy in senior management roles in Australia and overseas, including as Director Group Retail Services with Woolworths Limited (2011 to 2015) where she was responsible for leading the Logistics and Information Technology divisions, Online Retailing and the Customer Engagement teams across the organisation. She has previously served as a director of a Woolworths business, Greengrocer.com, a Myer business, sass & bide, and Quantium Group.

Penny is a graduate of the Australian Institute of Company Directors and holds a Bachelor of Commerce from the Australian National University and a Master of Business Administration from the University of Technology, Sydney.

Other Directorships and Offices

- Director of CSR Limited (since November 2015)
- Director of Ampol Limited (since November 2015).

Former directorships of other listed entities in the past three years

- Port Waratah Coal Services Limited (June 2015 to December 2019)
- Coca-Cola Amatil Limited (December 2019 to May 2021).

Board Committees: Nil.

Skills, Experience and Expertise

Anthony is an Executive Director and Deputy Chief Executive Officer (since August 2010). He was appointed Chief Executive Officer, North America in September 2016, and in that role is responsible for setting and managing the strategy, business performance and corporate transactions for the Group’s North American business.

Anthony joined Goodman in 2004 as Group Chief Financial Officer and was appointed Group Chief Operating Officer in February 2009 before taking on his current positions.

Company Secretary

Carl Bicego

Group Head of Legal and Company Secretary

Appointed : 24 October 2006.

Skills, Experience and Expertise

Carl is the Group Head of Legal and Company Secretary of the Company. He was admitted as a solicitor in 1996 and joined Goodman from law firm Allens in 2006. Carl holds a Master of Laws and Bachelor of Economics/Bachelor of Laws (Hons).

Annual Report 2021

Directors’ meetings (GL and GFML)

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:

	Board	meetings	Audit	Committee	Remuneration	Remuneration	Risk and Compliance	Risk and Compliance		Nomination
				meetings	Committee	meetings5	Committee	meetings	Committee meetings6
Directors	Held1	Attended	Held1	Attended	Held1	Attended	Held1	Attended	Held1	Attended
Stephen Johns2	10	10	4	4	3	3	1	1	1	1
Ian Ferrier3	5	5	1	1	2	2	–	–	–	–
Gregory Goodman	10	10	–	–	–	–	–	–	–	–
Christopher Green	9	9	4	4	–	–	–	–	1	1
Mark Johnson4	10	10	4	4	–	–	3	3	–	–
Rebecca McGrath	10	10	–	–	5	5	4	4	1	1
Danny Peeters	9	8	–	–	–	–	–	–	–	–
Phillip Pryke	10	10	4	4	5	5	–	–	–	–
Anthony Rozic	9	9	–	–	–	–	–	–	–	–
Penny Winn	10	10	–	–	5	5	4	4	–	–

Reflects the number of meetings individuals were entitled to attend.
Stephen Johns was appointed Chairman of Goodman on 19 November 2020. He concurrently resigned as Chairman of the Audit Committee while remaining a member, commenced as a member of the Remuneration Committee and resigned as a member of the Risk and Compliance committee. 3. Ian Ferrier retired on 19 November 2020.
Mark Johnson was appointed Chairman of the Audit Committee on 19 November 2020 and commenced as a member of the Risk and Compliance Committee on 19 November 2020.
The Remuneration Committee was formerly known as the Remuneration and Nomination Committee until it was reconstituted on 18 February 2021.
The Nomination Committee was established on 18 February 2021 and held the first meeting in March 2021.

Goodman Group

Directors’ report

Remuneration report – audited

Letter from the Chairman and the Remuneration Committee Chair

1. REMUNERATION GOVERNANCE

1.1 The role of the Board and Remuneration Committee
1.2 Key activities of the Remuneration Committee for FY21
1.3 Key Management Personnel (KMP)

GROUP PERFORMANCE AND OUTCOMES

4.

4.1 Group FY21 highlights
4.2 Financial measures
4.3 Total returns comparison
4.4 Remuneration outcomes for FY21

2. REMUNERATION STRATEGY

2.1 Key remuneration principles
2.2 Objectives of the remuneration strategy
2.3 Remuneration mix and alignment across the Group

3. EXECUTIVE REMUNERATION FRAMEWORK

3.1 Remuneration components for executive KMP – continued enhancements
3.2 Setting awards for the Group Chief Executive Officer (CEO) and executive KMP
4.4.1 STI outcomes
4.4.2 ESG assessment
4.4.3 LTI outcomes
4.4.3.1 Operating EPS hurdle (75% weighting)
4.4.3.2 Relative total securityholder return hurdle (25% weighting)
4.4.4 Group CEO achievements
4.4.5 Other executive KMP achievements
4.5 LTI grants to be made in September 2021 in relation to FY21 performance
3.3 Considerations for award quantum
3.4 Valuation of performance rights (Economic Value)

5. NON-EXECUTIVE DIRECTOR REMUNERATION

3.5 When is remuneration earned and received?
3.6 Non-financial measures
3.6.1 Types of non-financial measures
3.6.2 Integration of non-financial measures into short-term incentives (STI)
3.6.3 Integration of non-financial measures into long-term incentives (LTI)
3.7 Short-term incentive
3.8 Long-term incentive
3.8.1 FY22 LTI awards (five and ten year plans)
3.8.2 FY21 LTI awards
3.8.3 FY20 LTI awards
3.8.4 LTI awards prior to FY20
3.8.5 Operating EPS – long-term cash flow alignment with vesting outcomes
3.8.6 Operating EPS hurdles for proposed ten year plan awards to the Group CEO, executive KMP and other senior executives
5.1 Key elements of the Non-Executive Director remuneration policy
5.2 Board and committee annual fees

6. STATUTORY DISCLOSURES

6.1 KMP remuneration (statutory analysis) 6.2 Movements in performance rights held by executive KMP
6.3 Analysis of performance rights held by executive KMP
Securities issued on exercise of performance rights
6.4
6.5 Unissued securities under performance rights 6.6 Non-Executive Directors’ remuneration (statutory analysis)
6.7 Movements in Goodman securities held
6.8 Transactions with Directors, executives and their related entities

Annual Report 2021

Dear Securityholders,

On behalf of the Board, we are pleased to present the 2021 remuneration report, outlining Goodman’s remuneration strategy and principles.

The financial year 2021 (FY21) has been marked by the ongoing impact of the COVID-19 pandemic and the associated challenges for Goodman’s business, our people, customers, investors and the communities in which we operate and live.

During this time and amid physical changes to the working environment, Goodman’s culture and long-term focus on building leadership capability and resilience in our assets, has allowed us to continue to respond and adapt. Our business plays an important role in providing essential infrastructure as well as aspiring to make a tangible difference to the communities in which we operate, and Goodman has reacted to the crisis through increasing support to affected groups. We appreciate the exceptional effort that has been made by our people.

Managing the welfare of employees has been a critical consideration in achieving the Group’s financial and operational targets. Goodman has moved to a fully flexible operating environment with all our people globally set up with access to mobile connectivity, to mitigate the impact of the pandemic on personal situations. We believe over time this will lead to improved diversity in the workforce. Managers within the Group, in particular the senior executives, have demonstrated significant levels of leadership, compassion and commitment in their efforts to achieve the Group’s commercial objectives.

Goodman is a leading internationally diversified real estate fund manager in the logistics real estate sector. The attraction and retention of talent is essential for the long-term success of the business. This is increasingly challenging as opportunistic competitors seek to recruit Goodman’s high-performing teams, exacerbated by significantly increased demand for logistics real estate in our markets.

Our longstanding and consistent approach to remuneration has served us well and has been a key driver of our sustained success as an international business. Goodman’s remuneration framework is essential to attracting and retaining high quality professionals with local expertise, who develop businesses and foster relationships globally and drive Goodman’s long-term success. This approach aligns the interests of employees and Securityholders and is integral to the exceptional results delivered for Securityholders over a sustained period.

Sustained performance

Over more than a decade, the Group has established strong and resilient leadership teams, culture, financial resources and a strategic real estate portfolio, to enhance the sustainability of earnings through difficult market conditions. This has allowed us to adapt to the new operating environment with limited disruption and continue to position for long-term growth. The Board is proud that Goodman has performed strongly through this period and our long-term vision, which includes a strong focus on cash flow, liquidity, and risk management, has been executed consistently and diligently.

Total securityholder return (TSR) for the Group versus comparable indices is detailed below, indicating sustained material outperformance over many years:

Total securityholder returns	1 year %	3 years %	5 years %	10 years %
Goodman1 S&P/ASX 20 S&P/ASX 100 S&P/ASX 200 A-REIT MSCI World REITs2	44.7 32.7 29.2 33.3 39.0	133.4 41.7 37.5 25.3 52.1	236.9 86.5 81.9 33.1 99.6	742.1 181.3 185.5 204.9 175.2

Source: Bloomberg/Nasdaq.

Goodman TSR does not assume reinvestment of distributions.
2 MSCI World REITs index returns measured in USD.

Goodman has demonstrated great resilience against a challenging backdrop. Our strong financial results and returns to Securityholders in FY21 reflect the global diversity of our businesses and our ability to support our customers and adapt to a rapidly changing external environment. Highlights include:

- Statutory profit of $2.3 billion for Goodman and $6.7 billion across the combined Group and Partnerships
- Operating profit of $1.2 billion (+15%) for Goodman
- Goodman operating EPS growth of 14% materially exceeded initial guidance to the market of 9%
- Significant growth in the end value of development work in progress up 63% during FY21 to $10.6 billion at 30 June 2021, positioning the business well into FY22 and making Goodman the largest listed specialist developer of logistics assets globally
- Total assets under management increased 12% to $57.9 billion
- Substantial revaluation growth of $5.8 billion across the Group and Partnerships.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

FY21 results represented a competitive rate of growth in earnings whilst maintaining appropriate levels of risk relative to other large listed equity alternatives. The results delivered in the year also represented significant outperformance relative to operational targets and this translated into superior returns for Securityholders while positioning the business for future sustainable growth. Despite the market uncertainty, our measured approach over many years has allowed Goodman to retain, and also exceed, previous operating EPS guidance for FY21 and to position the business for a competitive rate of operating EPS growth for FY22.

We have continued to reflect the importance placed on achieving our sustainability and environmental objectives, incorporating key targets into the operations and longterm business strategies of the Group. These objectives are not only cultural, but our people will be measured on achievements against them over the long term.

Continued improvement and alignment of the LTIP

We believe that our fundamental principle of aligning all our people and Securityholders meaningfully through equity is unusual in the Australian market and has been a significant factor contributing to the resilience of our business. This should help deliver the Group’s and Securityholders’ desired outcomes despite the uncertain outlook for global markets.

Goodman’s business has evolved significantly over the past 12 years since the introduction of the current LTIP. The Group’s increased focus on urban infill markets has led to significantly longer development horizons and time frames for realisation of value through the regeneration and change of use of these assets. In the Board’s view, the long-term nature of the structural trends impacting our sector and Goodman’s approach to real estate investment in relation to this, necessitates refinements to the current LTIP. Consequently, the Board has made changes to the LTIP awards that will be made in FY22. For the Group CEO, executive KMP and senior executives this includes:

- Extending the testing period to four years (from three years)
- Significantly increasing the vesting period to ten years (from five years)
- Increasing the difficulty of the testing and vesting thresholds for both operating EPS and relative TSR
- Adding environmental and sustainability hurdles to the vesting conditions.

The Board believes increasing the testing period and significantly lengthening the vesting period for the key leadership group in the organisation, will further influence decision making to deliver operating results which are both superior and sustainable over the long term. It also provides sufficient time scale to implement our ESG initiatives and achieve our targets in a manner which creates even greater alignment with the outcomes for Securityholders.

The Board’s belief in a pay for performance culture is reflected in the challenging hurdles set for FY22 remuneration awards, which if achieved at the top end of the range, should provide Securityholders with top decile performance and over 50% growth in operating profit over the four years. The Board is always mindful of the focus on overall remuneration levels and spends considerable time each year determining remuneration outcomes for the Group CEO and other Key Management Personnel. We recognise the range of expectations and have made decisions that we believe take into consideration the perspectives of all stakeholders.

We continue to engage in an open and meaningful dialogue with Securityholders and other stakeholders to enhance understanding of our policy and its contribution to Goodman’s performance as well as giving us the opportunity to get an update on Securityholder perspectives and local and global market practices. We look forward to receiving your views and support at our 2021 Annual General Meeting.

Yours sincerely,

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Stephen Johns Chairman

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Phillip Pryke Chairman, Remuneration Committee

Annual Report 2021

1. REMUNERATION GOVERNANCE

1.1 The role of the Board and Remuneration Committee

The Board considers remuneration with a minimum five year view. It takes into consideration the impact that decisions made over the last three to five years have had on current performance and how it expects the business to perform over the next five years and beyond. It is not solely an exercise in reviewing a single year.

The Board believes the success of Goodman is primarily due to its people and their ability to execute a global strategy that requires agility, strong collaboration and an inclusive culture, all of which are key elements supported by the LTIP.

The Board:

- Encourages management to take a long-term strategic rather than opportunistic approach to property investment
- Integrates the operational, financial, environmental, and human strategy to create long-term sustainable returns
- Focuses on the consistency of cash generation, through the Group’s operating profit, as the most tangible means of measuring long-term value creation for Securityholders.

When determining the remuneration levels and outcomes for FY21, the Remuneration Committee has considered the specifics of individual performance, in the context of the ongoing challenges of the COVID-19 environment and collectively in the context of the Group’s continued strong performance. Given the nature of the Group’s global operations, the Remuneration Committee has paid particular attention to the global marketplace and the competitors in our sector.

Refinements to the LTIP this year aim to reinforce Goodman’s long-term decision making in line with the evolution of the business and operational strategy, aligning this with outcomes for Securityholders as well as providing competitive remuneration to attract and retain high quality people.

1.2 Key Activities of the Remuneration Committee for FY21

The Remuneration and Nomination Committee was reconstituted as the Remuneration Committee on 18 February 2021 and a separate Nomination Committee was established. The establishment of a separate Nomination Committee is in line with the ASX Corporate Governance Council’s Principles and Recommendations and provides a separate focus on the Board composition and skills, succession planning for Directors and senior executives (refer to Goodman’s Corporate Governance statement for further information).

Members of the Remuneration Committee for FY21 were:

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Member Role
Phillip Pryke Independent Director and Chairman of
the Remuneration Committee
Stephen Johns Independent Director and Chairman of
Goodman Group (appointed 19 November 2020)
Rebecca McGrath Independent Director
Penny Winn Independent Director
Ian Ferrier Former Independent Director and Chairman of
Goodman Group (retired 19 November 2020)
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The Remuneration Committee has continued to make significant enhancements to the structure of remuneration. The Committee has:

- Enhanced the LTI awards through the introduction of a ten year plan for the Group CEO, executive KMP and other senior executives (as detailed in Section 3). This plan, which will apply for the intended grant of performance rights to be made in September 2021 in respect of FY21 performance, will extend the testing period to four years and the vesting period to ten years, thereby increasing the period of alignment between executive remuneration and Securityholder returns, will include more challenging hurdles and incorporate additional environmental and sustainability targets to the testing conditions for all other eligible employees
- Agreed with the Group CEO (as in prior years) that he would not participate in the STI award and all his performance-based remuneration in relation to his FY21 performance will be in the form of LTI
- Added a requirement for executive KMP to hold securities in the Group, to a minimum value of 100% of fixed remuneration (requirement to be met by 1 October 2021).

Changes are also proposed to Non-Executive Director fees to bring them in line with market levels and to the Non-Executive Director annual fee cap, to facilitate the increased fees, manage Board succession and overlaps, and accommodate the potential appointment of additional Directors.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

1.3 Key Management Personnel (KMP)

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Member Role Tenure at Goodman
Executive KMP
Gregory Goodman Group Chief Executive Officer 26 years
Danny Peeters Executive Director Corporate 15 years 1 month
Anthony Rozic Deputy CEO and CEO North America 17 years 1 month
Nick Vrondas Group Chief Financial Officer 15 years 2 months
Nick Kurtis Group Head of Equity 21 years 8 months
Michael O’Sullivan Group Chief Risk Officer 19 years 10 months
Non-Executive KMP Tenure on Goodman Board
Stephen Johns Chairman and Non-Executive Director 4 years 6 months
Chris Green Non-Executive Director 2 years 2 months
Mark Johnson Non-Executive Director 1 year 1 month
Phillip Pryke Non-Executive Director 10 years 9 months
Rebecca McGrath Non-Executive Director 9 years 3 months
Penny Winn Non-Executive Director 3 years 5 months
David Collins GLHK Non-Executive Director 3 years 5 months
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2. REMUNERATION STRATEGY

Goodman is a globally diversified real estate fund manager, the largest developer of industrial and logistics buildings in the world and one of the largest listed industrial property managers. The Group’s people are largely based outside Australia, and Goodman’s remuneration structure reflects the requirements of the highly competitive labour markets we are competing in globally, not just in Australia, and the objective of aligning multiple regional businesses and operational segments with Group strategy and performance outcomes. A significant proportion of the value of the Group, reflected in the $27 billion premium between Goodman’s security price of $21.17 and Goodman’s net tangible assets per security of $6.68, is attributable to the value created across the global platform. Given the active nature of the Group’s operations, the Board believes that this is almost entirely due to Goodman’s people, the decisions they make and their ability to execute that has positioned the Group to grow cash flow from operations sustainably.

The retention of talent is therefore critical for the long-term success of the Group and is increasingly challenging as opportunistic competitors seek to recruit Goodman’s high-performing teams in each of Goodman’s markets. The Group’s remuneration policy is crucial to its ability to have the appropriate human resources to deliver on the strategy, create the right culture and drive performance for the benefit of all stakeholders.

Goodman’s remuneration structure, in particular the focus on equity-based reward, has been a key component of the success of Goodman as an international organisation. The Board believes aligning all people at Goodman with Securityholders through the Group’s remuneration policy has added significant value to the Group. It has been a fundamental differentiator in generating and rewarding long-term performance and retaining quality people in a highly competitive global environment. It is particularly important considering the challenges COVID-19 has created, as it binds all employees together as owners of the business and is a powerful incentive and driver of operational resilience.

Annual Report 2021

2.1 Key remuneration principles

Refining remuneration in line with Group strategy, structural changes and our ESG aspirations

Given the cyclical nature of real estate, incentive structures within real estate businesses are highly outcome driven (particularly by private equity real estate managers where most institutional assets reside). Goodman’s capital and resource allocations shift over time, requiring rewards to be measured over longer periods. The Group’s remuneration framework is therefore focused on influencing long-term decision making and collaboration across business units and international operations to derive sustainable outcomes.

There are several key principles of remuneration at Goodman:

- Focus on LTI as the predominant source of pay for performance across the Group. All employees are eligible to receive LTI grants as a material component of remuneration and are tested using challenging hurdles without encouraging inappropriate risk (see section 3.8.6), enhancing alignment of rewards across the Group with Securityholders
- Aligning the deliverable outcomes of all employees globally, with Goodman’s aspirations of long-term cash flow growth, resilience, and sustainability. This is practically achieved through the focus on operating profit (which is closely aligned with cash profits) as the primary testing measure for LTI awards (see section 3.8.5)
- Collaboration to achieve Group-wide targets across regions and business units
- A culture of ownership, inclusion and alignment, where all Goodman’s people experience investment returns aligned with Securityholders.

Goodman’s business has evolved significantly over the past 12 years since the introduction of the LTIP. The Group’s increased focus on urban infill markets has led to significantly longer development horizons, realisation of urban regeneration and change of use of existing assets. In summary:

- Site acquisition and value add to existing stabilised sites, typically require five to ten year (and sometimes longer) time frames to achieve highest and best use and urban regeneration outcomes
- Goodman’s approach to development considers the lifecycle of the asset even for new developments which allow further intensification or change of use at a later time. This sometimes comes at the expense of short-term performance; however, this approach is consistent with the Group’s strategic objectives and provides future value realisation potential, over significant time periods
- Increased focus on ESG and integration of these aspirations into the Group’s operational activities similarly requires significant time periods (often beyond five years) for implementation. Goodman’s approach to community, environmental sustainability and wellbeing are all long-term aspirations aligned with the financial sustainability objectives.

In the Board’s view, the long-term nature of the structural trends impacting our sector and Goodman’s approach to real estate investment in relation to this, necessitates refinements to the LTIP for future awards.

Consequently, the Board has made changes to the LTI awards that will be made in FY22. For the Group CEO, executive KMP and senior executives this includes:

- Extending the testing period to four years (from three years)
- Significantly increasing the vesting period to ten years (from five years)
- Increasing the difficulty of the testing and vesting thresholds for both operating EPS and Relative TSR
- Adding environmental and sustainability hurdles to the vesting conditions.

The Board believes increasing the LTIP testing period and the significant lengthening of the vesting period for the senior executives in the organisation, will further influence decision making and more closely align with the time periods required to deliver superior operational results on a sustainable basis. It also provides sufficient time scale to implement key ESG initiatives and achieve the Group’s targets, particularly in relation to environmental and sustainability objectives, in a manner that creates alignment with the outcomes for Securityholders.

The existing LTIP is already inclusive across the organisation and spans over five years. It will remain in place for all eligible employees who do not participate in the new ten year plan and will be enhanced to include hurdles aligned with the ten year plan.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

2.2 Objectives and remuneration strategy

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Attract Reward Long-term alignment of our people and Securityholders
Remuneration structure Performance conditions Alignment with strategy and long-term performance
Fixed remuneration Scope and complexity of Real estate investment management and development are cyclical,
Low fixed costs, with the the role, individual absolute so fixed employee costs are kept low. Most KMP fixed remuneration
focus on “at risk” equity and relative comparison has not grown in several years.
in the relevant market and
comparator group.
STI remuneration is an Assessment includes STI is an at-risk component, rewarding financial and non-financial
at-risk award for four key components: performance against objectives of the individual and the Group.
outperformance + Meeting Goodman Awards have varied from 0% to 100% of the maximum over time and
over the past 12 months. behavioural expectations have declined over the past five years to 66% in FY21, in favour of LTI.
However the Group CEO per the Code of Conduct Base salaries for the executive KMP roles are set low versus peers and
forgoes STI in favour of LTI. + Achieving operating this is carried through in lower STI outcomes for relevant KMP.
Similarly, other executive EPS target The performance of individuals is assessed through a performance
KMP only received + Individual financial and appraisal process based on contribution to strategic, financial, operational
between 0% to 22% operational assessment and ESG objectives, while also reflecting behavioural expectations.
of total remuneration in STI. + Assessment against environmental and Financial performance is the primary measure in determining the maximum level of STI for the individual; however, this can be penalised if behavioural
sustainability objectives. standards or ESG targets are not met or breached (up to 100% of STI
for certain measures). These factors together encourage not only the
operating EPS targets being met but also that the method in which they
are met matches appropriate risk and governance settings. This structure
is simple and transparent and aligns management with the operating
EPS growth and ESG expectations of Securityholders.
LTI at-risk remuneration Operating EPS hurdle range The weighting to LTI is believed to be the most effective way of rewarding
rewards long-term (75%) reflecting underlying sustained performance and retaining talent whilst maintaining alignment
sustained performance. cash flow from operations with Securityholders’ interests.
New awards will be Relative TSR against the Hurdles are set to be competitive and challenging without encouraging
granted in FY22 in relation S&P/ASX 100 (25%) – this inordinate risk (see sections 3.8.5 and 3.8.6) relative to external and
to FY21 performance aligns with a significant portion internal reference points.
achievements and of investors’ benchmarks The relative TSR and operating EPS hurdles interact as TSR impacts the
assessment of potential relevant to their holdings and value of all performance rights. Given the significant skew in remuneration
future contributions. provides closest alignment to performance rights, the impact of the TSR hurdle is greater than its
Ten year plan awards with their performance 25% weighting in that TSR provides an effective check against increasing
to Group CEO, executive Environmental and sustainability risk or unsustainable practices within the Group. The price to earnings
KMP and senior executives targets (set by the Board) over multiple attributable to securities will reflect the risk in achieving operating
tested over four years and the LTIP testing period with EPS targets, which impacts the likelihood of vesting and the ultimate value
vesting in equal tranches penalty to vesting outcomes upon vesting.
annually from the end of of up to 20% of rights satisfying The total number of performance rights outstanding under the LTIP
year four to the end of the operating EPS hurdle for equates to 3.7% of the Group’s issued securities. The maximum
year ten material underperformance number of performance rights under the LTIP is limited to 5% of the
Five year plan awards against targets. Group’s issued securities.
to remaining employees Encourages a collaborative approach and broader distribution of
tested over three years and remuneration across the entire workforce when the Group is performing.
vesting in equal tranches
annually from the end of
year 3 to the end of year 5.
At-risk remuneration
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Annual Report 2021

2.3 Remuneration mix and alignment across the Group

The Board believes that the alignment between pay and long-term performance is evidenced by the significant proportion of the total remuneration that is at risk for the Group CEO, the other executive KMP and the whole organisation. In respect of the Group CEO, all of his ‘at risk’ remuneration is in the form of LTI.

This point is demonstrated in the charts below that consider the vested remuneration received during FY21. Vested remuneration represents the value that is received during the year. It includes fixed base pay, STI and the value of performance rights that vested during the year (from prior grants) using the closing Goodman security price on the day of vesting.

The ‘at risk’ remuneration (FY21 STI and LTI performance rights that vested on 1 September 2020) forms a significant proportion of total vested remuneration for all employees, but especially for the Group CEO and the other executive KMP. The Board believes that this demonstrates the alignment of the remuneration outcomes for the Group CEO with the outcomes for Securityholders, who have experienced very strong performance in recent years. Had the Securityholder returns been lower, the level of ‘at risk’ remuneration would have been lower and fixed remuneration would have made up a greater proportion of the total vested remuneration in FY21 for all employees, but especially for the Group CEO and the other executive KMP.

FY21 vested remuneration outcome

Group CEO FY21 remuneration

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3.8%
96.2%
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SQUARE-FULL STI and LTI SQUARE-FULL Fixed remuneration

Executive KMP (excluding Group CEO) FY21 remuneration

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6.3%
93.7%
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SQUARE-FULL STI and LTI SQUARE-FULL Fixed remuneration

All employees (excluding executive KMP) FY21 remuneration

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26.4% 73.6%
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SQUARE-FULL STI and LTI SQUARE-FULL Fixed remuneration

Goodman Group

Directors’ report

Remuneration report – audited (continued)

3. EXECUTIVE REMUNERATION FRAMEWORK

3.1 Remuneration components for executive KMP – continued enhancements

LTI enhancements for the FY22 awards for Group CEO, executive KMP and other senior executives

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Five year plan (current) Change Ten year plan (FY22 onwards) Comment/rationale
Testing criteria EPS 75% No EPS 75% Consistent business strategy focused on
long-term cash flow growth as value driver
reflected through operating EPS growth
TSR 25% No TSR 25% TSR impacts the value of all performance
rights, which is the primary form of
remuneration. Therefore, the impact of the
25% weighting to TSR is understated in relation
to the overall alignment with Securityholders
Testing period Three years Yes Four years Improves the existing system by:
+ Increasing the period of alignment
with operational results
+ Places more of the employee’s
remuneration at risk and for a longer period
Vesting period Five years for full vesting – Yes Ten years for full vesting – Improves the existing plan by:
if hurdles are met then if hurdles are met then + Significant extension of alignment
vesting occurs in equal vesting occurs in equal through longer vesting period
tranches (33% per annum) tranches (14% per annum)
at the end of each financial at the end of each financial + Encourages long-term thinking
and behaviour
year from years three to year from years four to
year five year ten + Longer hold period allows additional
time for clawback for fraud/malus
EPS performance
testing Five year plan (current) Change Ten year plan (FY22 onwards) Comment/rationale
Threshold 6% compound annual No 6% CAGR in operating EPS 25% of performance rights will satisfy the
growth rate (CAGR) hurdle at the Threshold level and 100% will
in operating EPS satisfy the hurdle at the Upper level, with a
sliding scale of vesting for outcomes between
this range. operating EPS hurdles are net of
the dilution from vesting prior period tranches
Vesting at threshold 25% No 25%
Upper level 9% CAGR in operating EPS Yes 10% CAGR in operating EPS Increased Upper level required
Vesting at upper level 100% No 100%
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Annual Report 2021

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TSR performance
hurdle Five year plan (current) Change Ten year plan (FY22 onwards) Comment/rationale
Testing criteria TSR against ASX 100 No TSR against ASX 100 Peer group for relative TSR is to remain
the S&P/ASX 100, which correlates
with most investor benchmarks relevant
to Securityholders
Testing thresholds 0% at 50th percentile Yes 0% at 50th percentile To increase the level of outperformance
50% at 51st percentile 25% at 51st percentile required to achieve vesting in line with
Straight line vesting Straight line vesting significant Securityholder outperformance
percentage to 75th percentage to 90th
percentile where 100% vests percentile where 100% vests
Environmental and
sustainability hurdles Five year plan (current) Change Ten year Plan (FY22 onwards) Comment/rationale
Environmental No formal targets Yes Targets set by the Board are Given environmental and sustainability
and sustainability tested annually and at the end initiatives are integrated into the operations
performance of year four. of the business, the penalty applies to the
Penalty applies to the number number of performance rights that have
of performance rights that have satisfied the operating EPS hurdle with 20%
satisfied the operating EPS maximum reduction in the event of material
hurdle with 20% maximum underperformance against targets
reduction in the event of
material underperformance
against targets
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The Board also notes that:

- There are no changes to fixed remuneration levels for executive KMP in FY22
- As in previous years the Group CEO will not participate in the STI award or any other form of variable cash remuneration (comparatively, the ASX 100 average fixed pay plus STI is approximately 50% of total remuneration)
- 87% of the Group CEO’s remuneration for his FY21 performance will be taken in the form of performance rights.
Under the new ten year plan and with the above remuneration structure:
- The Group CEO would not receive any performance-based reward in respect of his performance for FY21 if the Group does not meet its minimum performance hurdles under the LTIP over the next four years (measured at 30 June 2025)
- The ultimate value of the award will be subject to Goodman’s security price performance and will only be fully realised over the ten years to the 2032 financial year.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

The chart below illustrates the components of KMP remuneration in relation to FY21 performance using:

- Current fixed base pay
- STI award (where applicable)
- LTI award value using 100% of the intended grant to be made in September 2021 based on the economic value of the grants of $6.10 per right, as detailed in section 3.4.

Gregory Goodman Danny Peeters Anthony Rozic Nick Kurtis Michael O’Sullivan Nick Vrondas Fixed remuneration (%)	STI (%)	LTI (%) 13 87 12 88 12 76 16 65 14 64 19 12 11 11 78 22	LTI (%) 13 87 12 88 12 76 16 65 14 64 19 12 11 11 78 22

			At risk

Note: This analysis is different to both the statutory presentation of remuneration and the vested remuneration, which are referred to elsewhere in the remuneration report.

3.2 Setting awards for the Group Chief Executive Officer (CEO) and executive KMP

When assessing the Group CEO’s and other executive KMP remuneration for FY21, the Board has given consideration to:

- The structure of the awarded remuneration
- Goodman’s relative performance amongst global peers and operational targets for FY21
- Goodman’s consistent track record over the past ten years that has also positioned the business for the future
- Global market conditions for human capital in the sector.

The Board is firstly focused on creating a remuneration structure that supports the Group’s strategy and is aligned with outcomes for Securityholders and then on determining an appropriate quantum of remuneration under that structure.

On this basis, the Board has considered the outcomes for Securityholders, based on the testing criteria under the ten year plan and the ‘pay for performance’ alignment with all Goodman employees (all permanent employees, approximately 930 people, are eligible). As demonstrated below, before any performance awards are realised under the ten year plan, significant Securityholder value is required to be created (all other things equal, that equates to $12 billion in market capitalisation growth, consistent with >31% TSR over the period, based on the assumptions set out in the table below). If full vesting occurs, based on all other things remaining equal, $22 billion of Securityholder value will have been created and this would result in approximately 50% TSR (based on the assumptions below) and the employee’s share of this would be approximately 3%. Returns are net to Securityholders as operating EPS calculations driving the growth in value account for the full dilution of the plan over the testing period.

Annual Report 2021

Estimated Securityholder value over the four year testing period under the ten year plan

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<5.99% CAGR 6.0% CAGR 10.0% (or greater)
Plan over four years over four years CAGR over four years
Economic outcomes
Cumulative operating EPS growth <26.2% 26.2% 46.4%
Percentage of performance rights vesting [1] 0.0% 25.0% 100.0%
Cumulative operating profit growth (including LTIP dilution) [2] <31.0% 31.1% 51.8%
Year 4 operating profit to meet operating EPS hurdle <$1.6bn $1.6bn $1.9bn
Market capitalisation (MCAP) at end of year 4 [3] <$51.7bn $51.7bn $60.0bn
Net value created for Securityholders (growth in MCAP) [3] <$12.3bn $12.4bn $20.5bn
Assumed security price [3] n/a $26.73 $30.99
Employee share of Securityholder value created [4] 0.0% 1.4% 3.4%
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Notes:

Assumes that the proportion of rights that vest under the operating EPS hurdle also applies to the rights that vest under the relative TSR hurdle.
Based on 30 June 2021 security price, assuming the market Price/Earnings (P/E) multiple applied to operating EPS remains unchanged over time and is inclusive of an allowance for increases in the securities on issue because of securities vesting under the LTIP. Excludes distributions and dividend payments that may be made during the period.
Assumes constant P/E multiple at the end of year 4 and the relevant CAGR in operating EPS growth.
Values the number of vested securities at the assumed security price which is calculated using the 30 June 2021 value and growing it at the same rate as the operating EPS growth.

The maximum employee share of the value created will occur if the awards fully vest through reaching the cumulative 10% CAGR in operating EPS after four years and the relative TSR performance is at the 90th percentile. This represents only 3.4% of the $20.6 billion value potentially created for Securityholders or the 46.4% potential security price growth (all other things being equal). If growth exceeds 10% per annum and the security price grows beyond the assumption above, the employees will receive greater rewards in absolute terms, but their share diminishes relative to Securityholders.

Based on the reduction in economic value (as detailed in section 4) of performance rights issued under the ten year plan, additional performance rights will be awarded to maintain the same economic value compared with what would otherwise have been awarded under the five year plan. However, under the proposed grants, the increase in units issued, if 100% vesting for both the relative TSR and operating EPS rights are achieved, would only result in approximately 0.2% additional operating EPS dilution to Securityholders, which is spread over a further five years. The Board believes that the benefits of alignment and securing senior executives over a significantly longer period of time, as a result of the ten year plan, outweighs this relatively small dilution to Securityholders which only occurs should the hurdles be met.

For these reasons, the Board has concluded that the structure of the Goodman LTIP is aligned with the business strategy and Securityholder returns.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

3.3 Considerations for award quantum

Given the variability in the components of remuneration structures in the market, Goodman’s comparator group analysis of value and quantum of awards must be considered in the context of the degree of risk associated with the structures and the vesting periods.

The Board has set the hurdles in respect of the intended LTI award for FY22 to achieve a significant degree of alignment with Securityholder outcomes and to provide substantial challenges (and risk of achievement) for the executive KMP. This is reflected in the ten year plan for the Group CEO, executive KMP and other senior executives (with four year testing and ten year vesting). The alignment and challenges are also reflected in the five year plan, which will be maintained for remaining employees (with three year testing and five year vesting). In comparison, ASX 300 listed companies’ long-term incentives average approximately three years and generally are only for a few senior executives. In addition, performance rights awarded under the LTIP do not have any voting rights or rights to dividends until vested, even after passing testing hurdles.

While the face value (represented by the current security price multiplied by the number of performance rights granted) provides an indication of potential value of the grant at a point in time, it does not consider absolute or subjective criteria in achieving the awards nor the skew to remuneration that is at risk. The face value measure does not allow for direct comparison when assessing the different risk profiles associated with the vesting hurdles and substantially longer vesting periods. Having regard to these factors, the Board considers it both appropriate and necessary to consider the economic value of awards and consequently performance rights under both the five year and, even more importantly, to assessing the ten year plan.

The Board has determined its LTI awards for KMP on the basis that the hurdles, testing and vesting requirements under the ten year plan are significantly more onerous relative to the LTI awarded in the prior year under the five year plan. The awards under the ten year plan require higher returns over a longer period and include additional environmental and sustainability hurdles (see section 3.8.6 on proposed FY21 LTIP operating EPS grant targets).

The economic value of performance rights in particular, and remuneration structures in general, have taken into account:

- The composition of remuneration, taking into consideration the proportion of cash versus conditional equity
- An appropriate discount to allow for the lower probability of vesting given the increase to a four year testing period and the more challenging hurdles/thresholds set by the Board
- A further discount for time value of money differential given the vesting of the rights occurs over ten years.

3.4 Valuation of performance rights (Economic Value)

Valuation methodology

The Board engaged an international accounting firm and two investment banks to assist it in the determination of the economic value of the performance rights. A Black Scholes approach was applied having regard, among other things, to:

- The probability of achieving the TSR and EPS vesting criteria, and the associated impact that this has on the expected vesting outcome
- Expectations with respect to the Group’s security price (including growth and volatility) and distribution payments
- The time value of money applied through a discount rate.

A number of different methods were considered to determine the appropriate discount rate. The Board resolved that a discount rate based on observable expected returns provided the best estimate for the cost of equity of the Group over a time period consistent with the LTIP. This can be calculated based on the current earnings of the Group and its expected growth rate over the foreseeable period. These factors can be reliably measured based on available market information and are most closely aligned with Securityholder return expectations over the relevant period.

As a result, the Board has adopted a 12.5% discount rate. Applying this discount rate and the other key inputs results in an assessed economic value per right of $6.10 for the ten year plan.

Note that this economic value assessment does not include any discount factor to take account of the additional environmental and sustainability objectives, which if not met, will reduce the amount of performance rights that vest.

Other relevant considerations

The Board and Remuneration Committee have considered the entire enterprise of the Group and its Partnerships globally, when assessing the executive’s roles and remuneration awards. In this context, Goodman:

- Is an international real estate fund manager
- Reported $2.3 billion statutory profit, and a combined statutory profit across the Group and Partnerships of $6.7 billion in FY21
- Delivered $5.8 billion in valuation growth across the Group and Partnerships in FY21
- Is the largest listed specialist developer of logistics real estate in the world, with $10.6 billion of work in progress
- Manages and creates value across of $57.9 billion of assets globally
- Manages capital allocation and funding across various activity types, which is sourced from multiple sophisticated markets and jurisdictions
- Has grown to $39.1 billion market capitalisation at 30 June 2021 and is a member of the S&P/ASX 20 index

Annual Report 2021

- Generates 68% of operating earnings from management and development activities which require more intensive day to day activity than a passive investment portfolio
- Provides its customers and partners with investment management, asset management, development, financial, transaction and capital management services in the listed and private equity capital markets globally
- Derives 71% of operating earnings from international markets with approximately 70% of employees situated offshore.

The Group has limited direct comparable market peers in Australia, having operating businesses in five continents and 14 countries, each with market driven remuneration outcomes. The Group has 941 employees at 30 June 2021, the majority of whom are offshore, and consequently Goodman competes for labour in an international market, which the Board considers when assessing the quantum of remuneration awards. In FY21, the Board has set this by reference to:

- A range of local and global comparators with operations of similar scale and complexity and certain companies in the ASX 20
- Private equity (PE) firms. Noting that PE firms are significant players in the logistics real estate sector with considerable new capital with a desire to assemble teams and invest in the sector. PE remuneration is particularly relevant because (1) the nature of pay for performance remuneration structures is highly equity based and outcome-driven similar to Goodman’s remuneration structure and (2) the period of testing and realisation of remuneration is linked to investor outcomes over significant periods up to ten years, again similar to Goodman’s remuneration structure. The majority of the Group’s assets are within PE (unlisted) market entities, which in turn creates significant competition for high quality people.

In the Board’s view, the competitive environment for logistics assets and consequently teams with skills to develop and manage the products and services over the long term, has intensified significantly over the past 18 months. Goodman is seen as a global leader in this space and the potential loss of key employees and regional teams poses significant commercial risk. The Board has assessed the FY21 awards in this context.

Under the Group CEO’s proposed FY22 LTI award, the Board has again considered the range of outcomes that are possible and the Securityholder returns that accompany them.

On the basis of the estimated economic values of the total remuneration outlined (noting the proposed LTI awards with longer testing period, longer vesting period and significantly larger portion at risk) and considering the market capitalisation and performance differentials of the groups below, it is considered that an appropriate benchmark for the Group CEO’s remuneration is around A$15 million. Despite this, the Board has agreed a value of A$10.9 million in respect of his performance in FY21.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

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Annual CEO remuneration [1]
LTI
Peer group Average/ Term 1 year 3 years 5 years
comparator Reason for comparison Range Individual Median % LTI years TSR TSR TSR
Goodman Goodman CEO n/a $10.9m $10.9m 91% 10 44.3% 133% 236%
S&P/ASX 20 Goodman is number 14 $2m-$25m $8m $7m 47% 4 33% 42% 87%
in the S&P/ASX 20 index
Selected global 71% of Goodman’s earnings are $7m- $22m $20m 60% [2] 4 28% 67% 145%
comparators outside Australia. The comparator $42.5m
including ASX group provides a reference to local
companies with companies with international operations
global operations and similar global companies
Company A Australia and North America, cyclical n/a $20m n/a 3 68% 111% 144%
Global, complex, similar scale, n/a $25m n/a 4, 7 [3] 36% 42% 182%
Company B
no further LTI testing post grant
Predominantly North America, n/a $42m n/a 5 31% 97% 180%
Company C
global, Real estate, Grant tested
Company D International, Medical n/a $17m n/a 4 0% 53% 171%
Company E Global, Passive, Real Assets n/a $7m n/a 3 3% 34% 47%
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Reflects fixed base pay and the economic value of the intended award of performance rights.
Excluding one outlier LTI as a percentage of total remuneration would be 51%.
Company B’s primary form of remuneration is in Profit Share which is not LTI but is deferred over 7 years.

In conjunction with the appropriate quantum, the Board views the alignment of outcomes for the Group CEO (and executive KMP) as a primary consideration in setting awards and ties to the thresholds and vesting conditions in order to create a system in which competitive returns accrue to Securityholders in order for performance based pay to be triggered.

The Group CEO’s intended LTI grant for FY22 has been formulated based on:

- The Board’s assessment of appropriate quantum of award in respect of his FY21 performance
- The FY22 LTIP structure (considering that the potential vesting of performance rights under the ten year plan does not occur fully until 1 September 2031)
- The economic value assessment.

The below table illustrates the Group CEO’s potential economic remuneration outcomes over the four year testing period that may result from the intended grant.

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<6% CAGR in 6% CAGR in 10% CAGR in
Economic outcomes operating EPS operating EPS operating EPS
Cumulative operating EPS growth <26.2% 26.2% 46.4%
Vesting % [1] 0.0% 25.0% 100.0%
Cumulative operating profit growth (including LTIP dilution) [2] <31.0% 31.1% 51.8%
Net value created for Securityholders (growth in market capitalisation) [3] <$12.3bn $12.4bn $20.6bn
Group CEO outcomes
Base salary $1.4m $1.4m $1.4m
Performance rights award receivable over FY26-FY32 at the assessed economic value [1] $0 $2.4m $9.5m
Total remuneration receivable in respect of FY21 performance $1.4m $3.8m $10.9m
Annual vesting (using assessed economic value) FY26-FY32 $– $0.3m $1.4
Group CEO share of Securityholder value created [2,3] 0.0% 0.1% 0.2%
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Assumes that the proportion of the operating EPS hurdle met also applies to the relative TSR hurdle.
Based on 30 June 2021 security price, assuming the market P/E multiple applied to operating EPS remains unchanged over time and is inclusive of an allowance for increases in the securities on issue as a result of stock vesting under the LTIP. Excludes distributions and dividend payments that may be made during the period.
Values the number of vested securities at the assumed security price which is calculated using the 30 June 2021 value and growing it by the same rate as the operating EPS growth.

Annual Report 2021

3.5 When is remuneration earned and received?

The chart below illustrates the timing of receipt of the remuneration components for executive KMP. Performance goals under the ten year plan must be achieved over a period of four years to qualify for performance-based pay. Vesting then occurs in seven equal tranches from years four to ten. There is no certainty of vesting and the outcome is dependent on the movement in the security price over the next ten years.

100% of fxed pay awarded in cash Fixed remuneration	14% of LTI award (subject to service / performance requirements) vests shortly after the end of year 4 14% of LTI award (subject to service / performance requirements) vests shortly after the end of year 5 14% of LTI award (subject to service / performance requirements) vests shortly after the end of year 6 14% of LTI award (subject to service / performance requirements) vests shortly after the end of year 7 14% of LTI award (subject to service / performance requirements) vests shortly after the end of year 8 14% of LTI award (subject to service / performance requirements) vests shortly after the end of year 9 25% of award based on a relative TSR hurdle. Performance measured at the end of year 4 75% of award based on an operating EPS hurdle and subject to no material underperformance against environmental and sustainability targets. Performance measured at the end of year 4 50% of total STI deferred for 1 year, awarded in cash
At risk remuneration	50% of total STI deferred for 1 year, awarded in cash
	75% of award based on an operating EPS hurdle and subject to no material underperformance against environmental and sustainability targets. Performance measured at the end of year 4
	25% of award based on a relative TSR hurdle. Performance measured at the end of year 4
	14% of LTI award (subject to service / performance requirements) vests shortly after the end of year 10
	Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Goodman Group

Directors’ report

Remuneration report – audited (continued)

3.6 Non-financial measures

3.6.1 Types of non-financial measures

Goodman continues to increase accountability and transparency across a range of non-financial measures which are important to the Group culture, its stakeholders and the world more broadly. These are integral components to the operations of the organisation, the health and wellbeing of the Group’s people and the communities in which Goodman operates. These values and aspirations encompass a wide range of areas including:

- Environmental considerations for developments and building operations
- Energy procurement including renewable targets
- Group emissions and embodied emissions
- Health and wellbeing of Goodman’s people and communities
- Good corporate and social governance including diversity and inclusion in the workforce
- Behaviour in line with Goodman’s Code of Conduct.

All of these aspirations are integrated into Goodman’s culture and business operations and the Group’s financial results are achieved while also implementing and performing to these standards.

The way employees conduct themselves is crucial to the success of the Group. Goodman has consistent and transparent practices in place for managing non-compliance with policies and the approach to risk guides the way all employees are expected to conduct themselves. Within the Code of Conduct, there is a set of eight guiding principles that encourage employees to uphold Goodman’s reputation and behave appropriately in dealing with our customers and other team members. The guiding principles are:

- Act in a professional manner
- Work as a team and respect others
- Treat stakeholders fairly
- Value honesty and integrity
- Follow the law and our policies
- Respect confidentiality and do not misuse information
- Manage conflicts of interest
- Strive to be a great team member.

Individual’s behaviour and adherence to the code of conduct, governance, implementation of diversity principles and social programs is assessed as a gate to STI and LTI awards. Breaches can also result in forfeiture of LTI or potentially more stern consequences depending on severity.

In respect of the FY21 STI awards and the intended LTI awards that will be made in September 2021 (in respect of FY21 performance), key environmental and sustainability targets will also be assessed based on the individual’s areas of influence and contributions as part of overall assessment.

3.6.2 Integration of non-financial measures into STI

	STI Process
	Impact
	1st Hurdle Conduct, Governance, Social and Diversity Gate 2nd Hurdle Operating EPS Gate Financial, and operational assessments (including environmental objectives) Individual assessment 0-100%

3.6.3 Integration of non-financial measures into LTI

The Board also believes that ownership through the LTIP embeds a culture of inclusion and sense of place in Goodman and that this has been strongly reflected in the Group’s performance over many years and particularly through COVID-19. While behaviour and adherence to the Group’s Code of Conduct has always been a prerequisite to entitlement to vested LTI, for future LTI awards, starting with the intended awards in September 2021, the Board will incorporate an additional hurdle for vesting, related to our environmental and sustainability targets.

- The Board will set annual targets which form a subset of the Group’s long-term and publicly available environmental and sustainability targets and measure performance against these each year
- Environmental and sustainability objectives and their execution are integrated into the operations of the Group, particularly for development projects. For this reason, the additional penalty criteria will apply to the operating EPS tested performance rights. This aligns operational targets which are within the control of senior executives and employees at all levels and therefore have the most logical connection to operational performance
- Targets set by Board will be tested annually and at the end of year four
- The penalty applies to the number of performance rights that have satisfied the operating EPS hurdle with 20% maximum reduction in the event of material underperformance against targets
- Targets will be reported each year in the remuneration report.

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LTI Process – three and four year testing period
Impact
1st Hurdle Conduct and Gate: 0 – 100%
behaviour
2nd Hurdle Operating EPS 0 – 100%
and relative TSR
Group Environmental The penalty applies to the number
assessment and sustainability of performance rights that have
satisfied the operating EPS hurdle
with 20% maximum reduction in the
event of material underperformance
against targets
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Annual Report 2021

3.7 Short-term incentive

STI is a component of remuneration that is at risk. It is specific to achievement of financial and non-financial objectives. This structure is very transparent and aligns management with the operating EPS growth expectations of Securityholders.

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Questions
Who is eligible to All full-time and part-time permanent employees.
participate in the STI? The Group CEO agreed with the Board not to participate in the STI awards, to emphasise reward for long-term
decision making across the organisation.
Nick Kurtis (Group Head of Equities), Michael O’Sullivan (Group Chief Risk Officer) and Nick Vrondas
(Group Chief Financial Officer) have agreed with the Board to forgo varying portions of their STI awards in line
with FY20 in exchange for LTI, to emphasise reward for long-term decision making across the organisation.
What is the form Cash. For executive KMP, 50% of the STI award is paid on finalisation of Goodman’s full year result.
of the STI award? 50% of the STI award is deferred and paid in cash after a period of 12 months and the deferred STI amount
is subject to forfeiture under malus provisions (see below).
What is the maximum STI awards are capped at 150% of fixed remuneration for executive KMP. Target STI for individuals is also
award participants compared to market based remuneration data and their manager’s own assessment of what an appropriate
may earn? level of incentive compensation may be relative to the long-term value that person brings to the Group.
How is the STI earned? The Board sets budget targets for the business annually. These targets are set relative to the market conditions,
earnings visibility, financial structure and strategy and are believed to be challenging and appropriate.
STI for all staff is subject to: (1) meeting behavioural expectations under the Group Code of Conduct; and
(2) achieving operating EPS (based on the annual forecast for the relevant year) (3) financial and operational
assessment (4) assessment against environmental and sustainability targets.
How is the individual STI rewards annual performance against objectives of the individual and the Group.
STI award determined? The Group objectives include multiple factors as set from time to time, dependent on the market and strategy
of the Group. Overall Group financial performance relative to targets is the primary assessment, overlaid with
required achievement against environmental and sustainability objectives and adherence to the Group’s core values.
The Remuneration Committee looks at conduct and specific judgements are made in relation to this.
The performance of individuals is assessed through a detailed and formal performance appraisal process based
on contribution to defined objectives, behavioural expectations, annual contribution to results as well as strategic
and other contributions where these results or benefits may be reflected in future years.
Is there malus/clawback? The executive KMP STI awards are subject to 50% deferral for 12 months from the date of publication of Goodman’s
financial statements. This deferral period provides protection from malus. The Board has discretion to forfeit deferred
amounts for material misstatement, fraud or adverse changes that would have affected the award where there is
executive responsibility.
Is STI deferred into equity? No. A much greater portion of remuneration for executive KMP is in the form of LTI (equity) than arguably any other
S&P/ASX 100 entity and hence they are already significantly more aligned with Securityholders’ outcomes than
executives at other listed entities. As a result, in the Board’s view, there is little further benefit in deferring STI into equity.
What happens to For all executive KMP, the deferred portion of STI award is subject to immediate forfeiture in circumstances where
STI upon termination? employees are dismissed for cause without notice (e.g. fraud or serious misconduct) or resign from the organisation.
The Board has discretion to pay deferred STI in exceptional circumstances, where employees leave the Group, with
good leaver status, due to certain personal circumstances or due to permanent disablement or death.
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3.8 Long-term incentive

The LTIP is an equity plan where rewards are at risk of performance and time. It is open to all permanent employees to create alignment with the interests of Securityholders over the long term.

- No value is derived from LTI unless minimum performance hurdles of operating EPS and relative TSR are met or exceeded, and performance rights have no entitlement to income or assets until they vest.
- If performance achieves or exceeds long-term targets and performance rights vest, LTI represents the majority of remuneration for executive KMP and becomes a material component of remuneration for all participating employees.
- In FY22 a ten year plan will be introduced for the Group CEO, executive KMP and other senior executives. Key differences to the previous five year plan are explained in section 3.1 and the key terms of both plans are set out below.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

3.8.1 FY22 LTI awards (five and ten year plans)

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Questions in relation to grants to be made in FY22
Who is eligible All full-time and part-time permanent employees are eligible to participate in either the five year or the ten year
to participate? plans. Executive KMP and senior executives participate in the ten year plan.
What is the form The LTIP awards performance rights linked to the underlying ASX listed securities. The performance rights do not
of the award? receive distributions or have any right to income net assets or voting until vesting.
What is the maximum When considering the overall size of LTI awards, the Board also considers the number of securities that could
LTI participants vest and the associated impact on the operating EPS growth. The total five year and ten year performance rights
may earn? outstanding under the LTIP are capped at 5% of issued capital with vesting of approximately 1% per annum,
assuming all hurdles are met and all employees remain employed. The Board considers the performance of the
Group in comparison with the comparator group, the amount of overall operating profit, the competitive nature of
the global labour markets where Goodman operates and the value of the team in the local and global marketplace,
as appropriate.
How is the number The Board sets quantum based on a number of factors described in section 3. The number of rights is then
of rights determined? determined by dividing the LTI award amount by the economic value per right, as determined by the Board.
What are the Behaviour in accordance with Goodman’s core values is an absolute requirement for the granting of performance
performance measures? rights and a minimum hurdle for LTI awards to vest as continued employment is a pre-condition.
The Board believes that the commercial decisions Goodman makes in fulfilment of its overall financial objectives
are best reflected in two key indicators: operating EPS and TSR (relative to the S&P/ASX 100).
Operating EPS is a critical measure of long-term global performance of the operations (see section 3.8.5).
The hurdles are set to be competitive and challenging relative to external and internal historical and prospective
reference points (see section 3.8.6).
TSR provides an effective check against increasing risk practices within the Group i.e. the security price to
earnings multiple will reflect the perceived risk in the Group in achieving operating EPS targets.
Focus on LTI is an efficient way of rewarding sustained performance and retaining talent.
FY22 LTI awards, will incorporate environmental and sustainability targets, in addition to the operating EPS and
relative TSR hurdles. Targets set by the Board will be tested annually and at the end of the LTIP testing period.
A penalty applies to the number of performance rights that have satisfied the operating EPS hurdle, with 20%
maximum reduction if material underperformance against the environmental and sustainability targets occur.
What is the weighting? 75% operating EPS hurdle 25% relative TSR hurdle
What is the Ten year plan: both operating EPS and relative TSR performance are tested over four financial years starting
performance period? from 1 July in the year the grant was made. Operating EPS growth is assessed in the fourth year relative to the
year preceding the year of the grant. Environmental and sustainability targets are tested annually and at the
end of year four.
Five year plan: both operating EPS and relative TSR performance are tested over three financial years starting
from 1 July in the year the grant was made. Operating EPS growth is assessed in the third year relative to the
year preceding the year of the grant. Environmental and sustainability targets are tested annually and at the end
of year three.
How do the Ten year plan: Subject to meeting performance hurdles, vesting occurs in equal tranches shortly after the end
LTIP awards vest? of years 4-10, provided participants remain employed by the Group.
Five year plan: Subject to meeting performance hurdles, vesting occurs in equal tranches shortly after the end
of years 3-5, provided participants remain employed by the Group.
Is there malus/clawback? Subject to immediate forfeiture in circumstances where employees are dismissed for cause without notice
(e.g. fraud or serious misconduct). LTI will also be forfeited where employees cease to be employed, unless in
Special Circumstances.
What happens to LTIP Performance rights lapse upon the employee leaving Goodman unless in Special Circumstances (primarily
awards upon termination? Death, TPD, Redundancy and Retirement (at retirement age) in which case they are not subject to the employment
requirement and vest subject to performance hurdles being met and the usual timetable. The Board may determine
acceleration in exceptional circumstances if considered appropriate.
What rights are attached Performance rights have no Securityholder rights prior to vesting (e.g. distributions, voting, rights issue participation).
to the performance rights?
Executive KMP Executive KMP are required to hold 100% of the value of their fixed remuneration in Goodman securities, determined
equity holding at time of purchase. The requirement will apply from 1 October 2021. In addition, Goodman’s remuneration structure
includes significant emphasis on performance-based remuneration in equity and the overall exposure of KMP
to Goodman securities extends significantly beyond this requirement principally through participation in the LTIP.
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Annual Report 2021

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What are the vesting Operating EPS tested (75% of grant) Relative TSR tested (25% of grant)
conditions for FY22 The Board has set an operating EPS performance TSR awards are subject to achievement of cumulative.
ten year plan grants? hurdle of growing operating EPS from the FY21 result TSR relative to the S&P/ASX 100 over a four year period:
of 65.6 cents to between 82.8 cents (Threshold level) – 25% of awards vest for performance at the
and 96.0 cents (Upper level) in FY25. Vesting of 25% 51st percentile.
of the operating EPS portion occurs upon satisfying
– Awards vest on a sliding scale between 25%
testing conditions at the Threshold level with a sliding
and 100% for performance between the 51st
scale up to 100% at the Upper level. The range is
and the 90th percentile.
equivalent to between 6% and 10% CAGR in operating
EPS or approximately 26% to 46% cumulatively over – 100% of awards vest for performance at the
the four year testing period. 90th percentile or above.
In addition, a penalty may apply to the number of
performance rights that have satisfied the operating
EPS hurdle if environmental and sustainability targets
are not met. These are set by the Board annually with
20% maximum reduction in the number of rights
vesting under the operating EPS tranches in the event
of material underperformance against targets.
What are the vesting Operating EPS tested (75% of grant) Relative TSR tested (25% of grant)
conditions for FY22 The Board has set an operating EPS performance TSR awards are subject to achievement of cumulative
five year plan grants? hurdle of growing operating EPS from the FY21 result TSR relative to the S&P/ASX 100 over a three year period:
of 65.6 cents to between 78.1 cents (Threshold level) – 25% of awards vest for performance at the
and 87.3 cents (Upper level) in FY24. Vesting of 25% 51st percentile.
of the operating EPS portion occurs upon satisfying
– Awards vest on a sliding scale between 25%
testing conditions at the Threshold level with a sliding
and 100% for performance between the 51st
scale up to 100% at the Upper level. The range is
and the 90th percentile.
equivalent to between 6% and 10% CAGR in operating
EPS or approximately 19% to 33% cumulatively over – 100% of awards vest for performance at the
the three year testing period. 90th percentile or above.
In addition, a penalty may apply to the number of
performance rights that have satisfied the operating
EPS hurdle if Environmental and Sustainability targets
are not met. These are set by the Board annually
with 20% maximum reduction in the number of rights
vesting under the operating EPS tranches in the event
of material underperformance against targets.
Can the hurdles No (subject to Listing Rule adjustments). No.
be adjusted?
3.8.2 FY21 LTI awards
Questions specific to the grants made in FY21
What are the Operating EPS tested (75% of grant) Relative TSR tested (25% of grant)
vesting conditions The Board has set an operating EPS performance TSR awards are subject to achievement of cumulative
for FY21 grants? hurdle of growing operating EPS from the FY20 result TSR relative to the S&P/ASX 100 over a three year period:
of 57.5 cents to between 68.5 cents (Threshold level) – 50% of awards vest for performance at
and 74.5 cents (Upper level) in FY23. Vesting of 25% of the 51st percentile.
the operating EPS portion occurs upon satisfying testing
– Awards vest on a sliding scale between 50%
conditions at the Threshold level with a sliding scale
and 100% for performance between the 51st
up to 100% at the Upper level. The range is equivalent
and the 76th percentile.
to between 6% and 9% CAGR in operating EPS or
approximately 19% to 30% cumulatively over – 100% of awards vest for performance at the
the three year testing period. 76th percentile or above.
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Goodman Group

Directors’ report

Remuneration report – audited (continued)

3.8.3 FY20 LTI awards

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Questions specific to the grants made in FY20
What are the Operating EPS tested (75% of grant) Relative TSR tested (25% of grant)
vesting conditions The Board set an operating EPS performance hurdle TSR awards are subject to achievement of cumulative
for FY20 grants? of growing operating EPS from the FY19 result of 51.6 TSR relative to the S&P/ASX 100 over a three year period:
cents to between 61.4 cents (Threshold level) and – 50% of awards vest for performance at
66.8 cents (Upper level) in FY22. Vesting of 25% of the the 51st percentile.
operating EPS portion occurs upon satisfying testing
– Awards vest on a sliding scale between 50%
conditions at the Threshold level with a sliding scale
and 100% for performance between the 51st
up to 100% at the Upper level. The range is equivalent
and the 76th percentile.
to between 6% and 9% CAGR in operating EPS or
approximately 19% to 30% cumulatively over the three – 100% of awards vest for performance at the
year testing period. 76th percentile or above.
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3.8.4 LTI awards prior to FY20

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Questions specific to outstanding historic grants made between FY17 and FY19
What are the vesting Operating EPS tested (75% of grant) Relative TSR tested (25% of grant)
conditions for prior grants Operating EPS awards are subject to achievement TSR awards are subject to achievement of cumulative
(FY17 to FY19) currently of a cumulative operating EPS hurdle, which is the TSR relative to the S&P/ASX 100 over a three year period:
outstanding? combination of three years’ individual operating EPS – 50% of awards vest for performance at the
hurdles. This ensures that the appropriate balance 51st percentile.
between short and long-term challenges is incorporated.
– Awards vest on a sliding scale between 50%
With the vast majority of remuneration through LTI, the
and 100% for performance between the 51st
focus remains on sustainable performance.
and the 76th percentile.
Targets are disclosed to the market each year and are
– 100% of awards vest for performance at the 76th
equal to the forecast operating EPS. For FY21, this is
62.7 cents as it relates to the FY19 award. Performance percentile or above.
conditions for the FY17 and FY18 awards which have
outstanding tranches, have already been tested. See
section 4.4.3. for details of testing results for FY19 awards.
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Annual Report 2021

3.8.5 Operating EPS – long-term cash flow alignment with vesting outcomes

The Group presents statutory profit in accordance with Australian Accounting Standards, including all required disclosures. The Board believes that managing the business, on what is primarily a cash profit basis, is fundamental to long-term resilience and is the strongest determinant of value creation for Securityholders over time. That is the intent of the Group’s operating profit definition and it is one of the key measures used to drive the business strategy that is communicated to Goodman’s employees to execute. This is also why the Board has used operating EPS as one of the principal targets in its awards of both STI and LTI.

Calculation of operating EPS

Operating EPS has been calculated and applied consistently since being adopted in 2005.

- Operating profit intentionally excludes non-cash measures. Previously, the Group has excluded significant realised gains (such as the urban renewal realisation gains) where these were believed to be cyclical in nature and not reflective of underlying long-term earnings.
- As required under the accounting standards, the share-based payments (SBP) expense in the Group’s statutory income statement reflects the amortisation of the aggregated fair value applicable to the outstanding performance rights. Given the volatility inherent in the accounting valuation of the performance rights, the SBP expense is excluded from operating profit, like other non-cash items (such as revaluations). Instead, the Board believes the cost of the plan, which arises from the future dilution through the issuance of securities under the LTIP, is most appropriately reflected by including all vested and tested performance rights in the denominator used for determining operating EPS.
- The operating EPS at each reporting date is calculated using the weighted average number of securities, which includes:
all securities that have already vested
rights that have been tested and assessed as having met the hurdles but have not yet vested.

The inclusion of these unvested performance rights in the operating EPS calculation is a conservative treatment as:

- The financial impact of the performance rights occurs only when securities are issued through the dilution to net assets at the time of issuance and the dilution to future operating EPS
- Not all performance rights necessarily vest. This can only occur if testing criteria are met and by extension, the Group’s performance has achieved or exceeded performance criteria, which doesn’t necessarily align with SBP expense
- Following successful testing at years three or four, performance rights still have no entitlement to income (distributions) or net assets nor do they have any of the other usual Securityholder rights until they vest, which may be up to six years later (under the ten year plan).

Therefore, in the Board’s view realised cash profit as represented by diluted operating EPS is the most reliable measure of value creation for Securityholders and continues to be an appropriate means by which to assess employee performance. It is also consistent with the predominant method of valuation of Goodman by the market.

Notwithstanding this, the Board notes that using the Group’s statutory profit instead of operating profit as the basis for the earnings hurdle under the LTIP would have had no impact on the future vesting of those performance rights that were tested at June 2021. It would, however, have materially increased the volatility of the Group’s earnings.

Use of Phantoms

In certain jurisdictions, it is impractical to issue performance rights which vest into Goodman securities. In these instances, ‘Phantom’ performance rights are issued, with the same economic outcome, but with the intent to be cash settled on vesting. From time to time, the Group may issue new securities into the market to fund the settlement of those rights. This results in the same outcome to Securityholders as if the Phantoms had been settled in Goodman securities because it results in the situation where the dilutionary impact to operating EPS is consistent with the equity settled performance rights. As in recent years, the Board’s current intention is to issue securities to fund the cash requirements to settle the Phantoms. This results in the effective funding of the LTIP having no cash impact for the Group and as a consequence the share based payments expense remains effectively a non-cash item in the context of the definition of operating profit.

3.8.6 Operating EPS hurdles for proposed ten year plan awards to the Group CEO, executive KMP and other senior executives

The operating EPS target range under the ten year plan is for the purpose of remuneration only, specifically the testing criteria for vesting of performance rights. The range does not constitute earnings guidance for the Group.

The Board has set an operating EPS performance hurdle for FY22 of growing operating EPS from the FY21 result of 65.6 cents to between 82.8 cents (Threshold level) and 96.0 cents (Upper level) in FY25. At the Threshold level, 25% satisfy the hurdle with a sliding scale up to 100% satisfying the hurdle at the Upper level. This range is equivalent to between 6% and 10% CAGR in operating EPS or approximately 26% to 46% cumulative over the four year testing period. Notwithstanding Goodman achieved operating EPS growth in excess of 10% in FY20 and FY21 performance at the upper level is considered significantly challenging over four years and in the Board’s view is likely to be achieved only after exceptional performance.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

The range has been set with particular reference to:

- A significant proportion of the Group’s revenue over the next four years, particularly in regard to development activities, is at risk and uncontracted
- The range of potential real estate opportunities for the Group globally, given the Group’s risk parameters and concentrated locations
- The long-run historical performance of the Group, noting that previous history is not a reflection of future earnings
- The global economic environment, noting the uncertainty around ongoing impacts of COVID-19 on global economies, that the current rate of inflation in Australia and the major markets in which Goodman operates globally is around 0% to 1.5% per annum and the current ten year rate of interest on government securities in Australia and most major markets is <1.5% per annum.

The Board believes the higher FY22 hurdle is significantly more challenging given the current economic environment particularly given the extension of the testing period (and independently verified through the lower economic value of performance rights under the new plan). The hurdles are set for the entire period of the grant and hence performance must be achieved regardless of changes to business conditions globally. Management and other employees carry the risk associated with external factors negatively impacting operating earnings and in the Board’s view this risk has increased given the ongoing and unknown impacts of COVID-19.

The hurdles are set with the desire to achieve a sustainable long-term growth rate that is competitive with the market on a risk adjusted basis, reflecting the low financial leverage of Goodman and other risk settings particularly given the continued impact of the current global pandemic and economic environment. In the Board’s view, increasing hurdles to unsustainable levels would encourage riskier behaviour, inconsistent with an acceptable risk tolerance and framework and expectations of Securityholders. This could potentially lead to lower quality earnings and adversely affect the intent of the LTIP and ultimately Securityholder returns.

LTI hurdle period (estimated)	Ten year plan	CAGR in	Ten year plan
	operating EPS	operating EPS	Cumulative growth
	(cents)	FY22 – FY25	in operating EPS
			FY22 to FY25
S&P/ASX 100		5.4%	23.3%
Threshold level	82.8%	6%	26%
Upper level	96.0%	10%	46%
Sources: Nasdaq, FactSet.
Economic indicators	Australia	United States	Europe
	(% per annum)	(% per annum)	(% per annum)
Ten year bond rate	1.35	1.40	-0.29
Infation rate	1.10	5.4	0.39

Source: Bloomberg

Annual Report 2021

4. GROUP PERFORMANCE AND OUTCOMES

Despite the significant headwinds caused by the global pandemic, the Group has recorded another year of material outperformance, both relative to its external targets and its internal operational targets. Goodman’s security price performance in FY21 continued to be significantly ahead of its peer groups, following ten years of outperformance.

The Group’s remuneration strategy focused on long-term outcomes is the key driver of this sustained performance.

4.1 Group FY21 highlights

Financial

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Statutory profit of $2,311.9 million for Goodman and $6,722.6 million for the combined Group and Partnerships Operating profit of $1,219.4 million (up 15.0% on FY20)

Operating EPS of 65.6 cents (up 14.1% on FY20)

Maintained distribution of 30.0 cents per security

Net tangible assets (NTA) per security increased 14.4% to $6.68 per security

Operational property investment, management and development

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High occupancy maintained at 98% and like for like net property income growth of 3.2%

Total AUM of $57.9 billion (up 12.0% on FY20)

Significant outperformance by the 16 Partnerships achieving average returns of 17.7%

Development WIP (end value) increased to $10.6 billion and with 96% commitment levels on completions and 13 year weighted average lease terms

People and culture

Social investment of approximately $6 million by the Goodman Foundation and through efforts of employees worldwide

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Female senior roles up from 23% in FY20 to 30% in FY21. Goodman continues to work towards 40% females in senior roles by 2030 and 50/50 representation overall by 2030

Expansion of Goodman’s supply chain ethics towards a global supplier code of conduct increasing the focus on human rights and potential modern slavery

Strong focus to employees on reinforcing behaviours that are consistent with the Group’s values

Feedback from employees via surveys undertaken in FY21 indicates strong communication and employee engagement

Environmental

Goodman’s global operations achieved carbon neutrality and certified as a Carbon Neutral Organisation

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Transitioned to 100% certified GreenPower secured for Goodman’s Australian operations from 1 July 2021, increasing Goodman’s global renewable energy usage to over 60%

Approximately 125MW of solar PV now installed or committed across the global portfolio, an increase of 70MW in FY21

Commenced calculating the embodied emissions of all of Goodman’s logistics developments globally and established a framework for integration into approval processes as we transition to carbon neutral developments

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Capital management

Maintained significant available liquidity at $1.9 billion, including $0.9 billion in cash

Significant business growth while maintaining low gearing at 6.8%

Group and Partnerships completed debt refinancing transactions totalling $5.4 billion

Goodman Group

Directors’ report

Remuneration report – audited (continued)

Over the past decade, the Group has established teams with significant specialist expertise, financial resources, and a strategic real estate portfolio. It has deliberately positioned its business to maximise cash flow resilience in varying market cycles, primarily through:

- Concentration of the portfolio on logistics real estate in urban infill markets, where supply is limited, and demand is driven by consumers
- Deleveraging the Group’s balance sheet and retaining significant liquidity
- Partnering with long-term capital to share risk and return over a significant globally diversified platform.

This has included specific actions over successive years, including:

- Significant reduction in financial leverage (gearing) over the last twelve years from 47.9% to 6.8% and maintained low leverage in the past few years
- Increased quality of the property portfolio through over $27 billion of asset sales since 2013 concentrating the portfolio in predominantly urban infill markets and providing funding for the development of new buildings
- Established an international platform with significant depth of experience required to generate excess returns in competitive high barrier to entry markets
- Diversification of the Group’s sources of debt and tenor
- Reduced operational risk through undertaking more development activity in Partnerships, which has reduced volatility of earnings while increasing return on assets for the Group. The impact of increased development within the Partnerships has increased their returns and the prospects for Goodman to earn performance fees in the medium to longer term
- Significant sales of assets that were reconfigured for higher and better residential use. For these transactions, the substantial profit was not included in operating profit despite being cash realised gains as they were believed to be over and above the usual course of business
- Maintained a conservative distribution pay-out ratio to retain funding for growing development activity.

Many of these strategic initiatives rely on foregoing some short-term returns to secure potentially larger long-term sustainable returns.

The resilience of the Group through this period is largely due to strategic long-term thinking, a highly talented team with specialist skills, and incentivising those employees through equity, linked to sustained operational performance over a long period.

4.2 Financial measures

4.2 Financial measures
Performance measures	FY16	FY17	FY18	FY19	FY20	FY21
Operating proft ($M)	714.5	776.0	845.9	942.3	1,060.2	1,219.4
Operating EPS (cents)	40.1	43.1	46.7	51.6	57.5	65.6
Operating EPS growth (%)	7.8	7.5	8.3	10.5	11.4	14.1
Security price as at 30 June ($)	7.11	7.87	9.62	15.03	14.85	21.17
Distributions per security (cents)	24.0	25.9	28.0	30.0	30.0	30.0
TSR (%)	17.0	14.2	26.0	59.4	-0.4	43.3
3 year TSR growth ($B)1	5.1	4.4	6.1	14.6	13.5	23.4
NTA per security ($)	4.10	4.21	4.64	5.34	5.84	6.68
Growth in NTA ($B)	1.2	0.2	0.9	1.3	1.0	1.7
Gearing (%)	11.8	5.9	5.1	9.7	7.5	6.8
AUM ($B)	34.1	34.6	38.3	46.2	51.6	57.9
Market capitalisation premium to NTA ($B)	5.4	6.6	9.0	17.6	16.5	26.8

TSR is the increase in market capitalisation plus dividend and distribution, attributable to the respective financial year.

Annual Report 2021

The key financial metrics which are aligned with the Group’s strategy, long-term performance and STI and LTI programs for all employees are operating EPS and relative TSR. CAGR in operating EPS over the past five years has been exceptional at 10.3%, which has exceeded the forecasts and therefore the hurdles. This has been achieved while at the same time reducing gearing, and not utilising the short-term benefits of low interest rates to financially engineer performance.

Operating EPS growth and targets %

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Gearing
%
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14.1
11.4
10.5
9
8.3
7.5
7
6 6 6
FY17 FY18 FY19 FY20 FY21
SQUARE-FULL EPS growth target SQUARE-FULL EPS growth achieved
5 year CAGR 10.3%
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23.9
19.5
18.9
17.3
11.8
9.7
7.5
6.8
5.9
5.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
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4.3 Total returns comparison

Goodman is the only real estate group in the ASX 20 and the 14th largest ASX listed entity at 30 June 2021 with a market capitalisation of over $39 billion. The chart below shows the Group has significantly outperformed the S&P/ASX 20, S&P/ASX 100 and S&P/ASX 200 AREIT indices over the past one, three and five years.

Securityholder return relative performance

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300
250
200
150
100
50
June 2016 June 2017 June 2018 June 2019 June 2020 June 2021
Return (%)
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SQUARE-FULL Goodman SQUARE-FULL S&P/ASX 20 SQUARE-FULL S&P/ASX 100 SQUARE-FULL S&P/ASX 200 A-REIT index

Goodman Group

Directors’ report

Remuneration report – audited (continued)

4.4 Remuneration outcomes for FY21

4.4.1 STI outcomes

The Board has again agreed with the Group CEO that he will not participate in the STI award. In line with continued focus on sustained long-term performance, all performance based remuneration relating to the Group CEO’s FY21 performance will be awarded in the form of performance rights.

Given the global nature of the Group’s operations the recommendations for each executive KMP are based on the Remuneration Committee’s review of several sources of market information relating to the individual’s role, region and global comparisons and specific incentive schemes that apply in competitor organisations.

Executive KMP STI outcomes (excluding the Group CEO), on average, are consistent with FY20 and down 27% over the past two years, (averaging 66% of the maximum potential versus 64% in FY20). This reflects the Board’s decision to focus reward in the form of LTI, particularly for the KMP whose roles have greater focus on overall Group strategy. The table below indicates the maximum possible STI and the actual STI awarded for FY21.

It should be noted that based on the Group and individual performances in FY21, KMP were eligible for the maximum STI.

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Test Metrics Result
Gate 1: Behaviour Code of Conduct: Pass/Fail Pass
Gate 2: Operating EPS – FY21 Operating EPS growth: 14.1% operating EPS growth
operating EPS versus target Target 9% (62.7 cents per security) (65.6 cents per security)
Financial and operational assessments Individual assessment Various (0-100%)
(including environmental objectives)
STI Actual STI Cash Deferred Actual STI %
Executive Year maximum awarded component component of maximum
$M $M $M $M
Gregory Goodman FY21 2.10 – – – –
FY20 2.10 – – – –
Nick Kurtis FY21 1.05 – – – –
FY20 1.05 – – – –
Michael O’Sullivan FY21 0.75 0.50 0.25 0.25 67
FY20 0.75 0.40 0.20 0.20 53
Nick Vrondas FY21 1.05 0.70 0.35 0.35 67
FY20 1.05 0.60 0.30 0.30 57
€M €M €M €M
Danny Peeters FY21 0.85 0.70 0.35 0.35 82
FY20 0.85 0.70 0.35 0.35 82
US$M US$M US$M US$M
Anthony Rozic FY21 1.05 1.05 0.525 0.525 100
FY20 1.05 1.05 0.525 0.525 100
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Annual Report 2021

4.4.2 ESG assessment

STI (and LTI) award grant assessments are undertaken with reflection on behaviour, governance, social, environmental and sustainability goals and targets. The Group has made significant contributions and efforts in a wide range of areas, with key highlights including:

- Goodman’s global operations achieved carbon neutrality and certified as a Carbon Neutral Organisation by Climate Active
- Approximately 125MW of solar PV installed and committed on Goodman’s rooftops globally, including an additional 70MW in FY21
- Transition to 100% certified GreenPower secured for Goodman’s Australian operations from 1 July 2021, increasing Goodman’s global renewable energy usage to over 60%
- Commenced calculating the embodied emissions of all of Goodman’s logistics developments globally and established a framework for integration into approval processes as the Group transitions to carbon neutral developments
- Biodiversity initiatives underway including the establishment of urban forests across Goodman’s European operations
- Achieved Sector Leader in the 2020 Global Real Estate Sustainability Benchmark (GRESB) for the Goodman Japan Partnership in the East Asia Distribution Warehouse peer group
- Expansion of Goodman’s supply chain ethics towards a global supplier code of conduct increasing the focus on human rights and potential modern slavery
- Goodman Group’s Task Force on Climate-related Financial Disclosures (TCFD) statement completed and available on the Goodman Group website
- Cutting edge sustainability design initiatives in our global development specifications including solar PV, electric vehicle charging points, LED lighting and drought tolerant landscaping
- $10 million EV incentive program launched to staff globally to assist in electric vehicle purchase over the next five years
- Contributed $6.3 million to community and philanthropic causes including $0.4 million raised directly by staff
- Results of the engagement surveys undertaken across various regions were pleasing with an average of approximately 85% positive responses. Key area to focus on is social interaction, given the dislocation of operations due to COVID-19.

Key areas of assessment for FY21 are detailed below. The form of disclosure below (subject to relevant evolution and changes over time as set by the Board) will be used as the basis for future assessment of environmental and sustainability measures which will be set and tested annually in conjunction with the assessment over the testing period for performance rights.

- Smart irrigation technology in approximately 43% of the portfolio saving approximately 53% in water used on irrigation, or equivalent to 30 Olympic swimming pools

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Assessment area
Environment Long-term target Outcome Pass/Fail
100% renewable energy use within Achieved 100% Renewable Energy use Australia in
Renewable Energy
Goodman’s operations by 2025 FY21, and increased to approximately 60% globally
Solar PV Installation 400MW of solar PV installed or committed by 2025 [1] Solar PV increased to 125MW in FY21
Carbon Neutral Carbon neutral operations by 2025 Achieved Carbon Neutral operations during FY21, four
years ahead of target
TCFD Achieve TCFD by FY22 Achieved FY21
GRESB >4 star Achieved 4 star FY21
Occupancy >95% 98%
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Subject to Government regulation in each jurisdiction.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

Code of conduct, behaviour, social and governance requirements

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Assessment area
Diversity Long-term target Outcome Pass/Fail
Gender ratio in
50% Gender ratio in the workforce by 2030 Currently at 44% female workforce
the workforce
Women in senior roles >40% in senior roles by 2030 Increase from 23% to 30% in FY21
Governance
Unfortunately, four fatalities occurred on development projects
Safe working environment with demonstrable under the control of principal contractors during FY21. While
Workplace safety risk controls, contractor management and Goodman is not responsible for the day to day management
monitoring of key safety metrics of works on these projects, it is active in monitoring and
working to introduce improved safety standards in all regions
Significant reputational
issues arising from Zero Zero
illegal conduct
Social
$6.3 million was contributed to community
Social/charitable $50 million in social investment by
donations Goodman Foundation by 2030 and philanthropic causes during FY21, taking
our total to $20 million in the past two years
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4.4.3 LTI outcomes

Testing as at 30 June 2021 was completed for the grants of performance rights made to executive KMP in respect of executive KMP performance in FY18 (called FY19 awards). These performance rights were tested over three years and vest in three equal tranches shortly after the third, fourth and fifth anniversary of the grant. The FY19 awards had two hurdles: operating EPS and a relative TSR, both measured over the three years ended 30 June 2021.

The mechanics of the testing are detailed in section 3.8.

4.4.3.1 Operating EPS hurdle (75% weighting)

The operating EPS is calculated by dividing operating profit by the weighted average number of securities on issue adjusted to include all performance rights which have passed the testing criteria, even though they are not yet vested (issued) to account for potential EPS dilution. Operating EPS growth for the three year period to 30 June 2021 was 40.5%, compared to a cumulative target of 27.4%.

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Target Actual Outperformance Outcome
FY19 50.0 cents 51.6 cents 1.6 cents Pass
FY20 56.3 cents 57.5 cents 1.2 cents Pass
FY21 62.7 cents 65.6 cents 2.9 cents Pass
Cumulative 5.7 cents 100%
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4.4.3.2 Relative TSR hurdle (25% weighting)

TSR provides an effective check against increasing risk practices within the Group, as the price to earnings multiple will reflect the perceived risk in the Group. Relative TSR is measured against the S&P/ASX 100 peer group. Vesting applies on a sliding scale:

0% vests up to and including the 50th percentile
Vesting of 50% starts at the 51st percentile on a sliding scale with 100% vesting at the 75th percentile.

Goodman posted a three year TSR of 128.9% to 30 June 2021, under the LTIP TSR calculation methodology. This ranked Goodman in the 92nd percentile against the S&P/ASX 100 and consequently 100% of these performance rights vested.

				GMG TSR1	S&P/ASX 10 TSR1	Percentile	Outcome
FY18 LTIP	grant	–	TSR	hurdle1 128.9%	37.5%	92nd	100%

1 Testing period for grant: 1 July 2018 to 30 June 2021, in accordance with the LTIP the TSR is based on the 10 day VWAP at beginning and end of testing period and is therefore different from the three year TSR sourced from Bloomberg and presented elsewhere in this report.

As a result of satisfying 100% of the EPS hurdle and the relative TSR hurdle, a total of 16,012,338 equity settled performance rights will vest in September 2021, September 2022 and September 2023. In addition, 3,875,750 cash settled performance rights will also vest. The Group may elect to issue the equivalent number of new securities to satisfy those obligations in the future.

Annual Report 2021

4.4.4 Group CEO achievements

In determining the Group CEO’s remuneration, the Board acknowledged his strong leadership through the challenges of COVID-19. It has also considered the following contributing factors and highlights:

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Greg Goodman
Leadership + Developed and drove a consistent global business strategy across all markets to sustain the performance
of the Group despite prolonged and significant challenges presented by COVID-19. The Group has adapted
to these challenges and continues to outperform its own targets and the broader market performance,
retaining employees and increasing community support and charitable programs.
+ He has positioned the busines as a leader in its field, managing, motivating and incentivising key personnel
across the platform to perform in a highly competitive environment
+ Fostered a culture that focused on delivering quality across all aspects of the business: people, properties
and service
+ Lead global internal programs to promote a strong culture of inclusion, collaboration and conduct across
the organisation, underpinned by the long-held principles in the Group’s Code of Conduct, treating all
stakeholders with integrity, and accountability
+ Reinforced Goodman’s purpose aimed at understanding the drivers of change and the needs of customers
and all stakeholders to support their future success.
Financial and risk + He has fostered continuity of strategy over successive years leading to outperformance over benchmark
indices and comparator companies in FY21, and delivered strong and sustained TSR of 133.4% over three
years and 235.9% over five years
+ Delivered:
– Revaluation growth across the Group and Partnership of $5.8 billion
– Statutory profit of $2,311.9 million (up 54%), driven by growth in property values as a result of asset
selection over the past few years and operational activities such as development
– Operating profit of $1,219.4 million, up 15% on FY20
– Operating EPS of 65.6 cents, up 14% on FY20
– NTA increased 14% to $6.68 per security
+ Exceeded earnings guidance in FY21 after posting significant outperformance in FY20 through the COVID-19 period
+ Drove a clearly defined capital management strategy with financial leverage 6.8% and maintained a strong
Group balance sheet with $1.9 billion of liquidity
+ Integrated strong risk management approaches globally.
Environment + Instrumental in significantly increasing the focus on ESG initiatives and programs throughout the Group and
a culture which continually looks to improve Goodman’s impact on the world. In particular:
– Establishing a zero carbon emissions target for the Group by 2025 and achieving it in FY21
– Increasing the 2025 target for solar PV capacity installed on the rooftops of Goodman’s global portfolios
and installed almost 80MW in FY21
– Completing compliance with TCFD in FY21
+ Established a framework for measuring and assessing embodied carbon to transition to carbon
neutral developments
+ Implemented an EV incentive scheme for staff globally to encourage a shift towards lower emissions vehicles.
Social and culture + Led the shift for all employees to increase alignment with Securityholders through the LTIP as the preferred form
of remuneration by taking 100% of performance based remuneration in performance rights and working with the
Board to implement the new ten year plan.
+ Commenced new initiatives and Goodman Foundation commitments to enable it to meet its $50 million 2030
social impact target. The Group CEO led initiatives that:
– Contributed $6.3 million to community and philanthropic causes including $400,000 raised directly by staff.
Expansion of Goodman’s supply chain ethics towards a global supplier Code of Conduct increasing the
focus on human rights and potential modern slavery.
– Enabled the Goodman team globally to contribute 5,360 hours to volunteering and community events
through the year. The Goodman Foundation focuses on children and youth, community and its health,
and food rescue and the environment
– Through Goodman’s funding, food rescue partners have provided more than 197 million meals globally
and made significant commitment to domestic violence prevention.
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The charts below demonstrate the performance of the Group and various key metrics relative to the Group CEO’s vested remuneration outcomes in FY21 and prior years. They illustrate that the significant operating profit growth, security price growth and consequently returns for Securityholders over the testing periods, correlate with increased Group CEO remuneration over time. Given the strong increase in the market price of securities between the time of the grant and the time of vesting, the Group CEO (and all recipients of the LTIP) has participated in the performance alongside Securityholders.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

Importantly, the Group CEO’s vested remuneration as a proportion of TSR (in $ billion) and statutory profit has trended lower over the past five years, indicating that the Securityholders have experienced a more than proportionate benefit from the Group’s performance relative to the Group CEO.

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CEO remuneration and growth in market cap Profit and vested remuneration
3 year rolling 2.5 2.3 40
35
25 40
2.0
35 30
1.7
20
30 1.5 25
1.5
15 25 1.2 1.1 1.1 1.2 20
20 1.0 0.9
0.8 0.8 0.8 15
10 15 0.7
10
10 0.5
5
5 5
0 0 0.0 0
FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21
SQUARE-FULL Remuneration at grant date ($M) SQUARE-FULL Statutory profit ($B)
SQUARE-FULL Remuneration at vesting date ($M) SQUARE-FULL Operating profit ($B)
SQUARE-FULL TSR growth ($B) SQUARE-FULL Vested REM ($M)
Profit
Vested remuneration Vested remuneration
Market cap growth
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The table below includes awarded remuneration at grant date and the vested remuneration over the past five years for the Group CEO. The numbers in this table differ from the statutory disclosure in section 5 primarily due to the differences in the measurement and timing of recognition in respect of performance rights granted under the LTIP and not the final vesting outcome. The below figures show the base salary received by the Group CEO in the respective year plus the value of performance rights which vested during that year at the closing price on the day the performance rights vested.

The table highlights:

- No change in fixed remuneration over the period
- The proportion of remuneration from fixed (cash) salary has continued to decline
- Significant growth in the value of LTI from grant date to the vesting date due to the increase in security price (on average an increase of 147% for grants vesting in FY21).

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FY16 FY17 FY18 FY19 FY20 FY21
$M $M $M $M $M $M
Base salary 1.4 1.4 1.4 1.4 1.4 1.4
STI – – – – – –
Value of LTI on grant date [1] 3.1 3.8 4.7 7.3 11.6 14.4
Value of LTI on vesting date 5.2 7.0 8.8 13.5 25.4 35.6
Total remuneration based on LTI value at grant date [1] 4.5 5.2 6.1 8.7 13.0 15.8
Total vested remuneration based on LTI value at vesting date 6.6 8.4 10.2 14.9 26.8 37.0
Increase in LTI value due to security price performance of the Group 2.1 3.2 4.1 6.2 13.8 21.2
Percentage growth in value of LTI during vesting period 66% 84% 88% 86% 119% 147%
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Value based on the security prices at the grant dates for the performance rights that vested in the financial year. This is so as to allow comparison of the security price outperformance over the period between grant and vesting dates.

Annual Report 2021

The chart below illustrates the increase in the value of the Group CEO’s vested LTI in FY21 from the date of the original awards in 2015, 2016 and 2017. These significant gains have arisen due to consistent earnings growth and security price outperformance of the Group.

Group CEO FY21 vested performance rights

Value at grant date ($M) Value at vesting date ($M) Performance rights Gain due to increase in security price ($21.2M) 14.4 35.6

4.4.5 Other executive KMP achievements

In FY21, the Board considered the following highlights when assessing other KMP

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Danny Peeters
Executive Director, + Successfully overseeing Brazil, playing a critical role in communicating and reinforcing the Group’s strategy,
Corporate both from a real estate and corporate perspective
+ Delivered strong outperformance against all key performance and financial parameters
+ Played a key role in overseeing a successful third year of the Brazil Investment Partnership with strong
transactional and development activity resulting in a total return of more than 25%
+ Continued to secure significant infill land banks in core markets (potential gross lettable area (GLA) 270,000
sqm), positioning the Partnership in a strong position to capitalise on the growing e-commerce penetration
+ Construction starts on major development sites (GLA 247,000 sqm) after obtaining building permits.
Successful progress of permit processes on sites acquired during the year which will allow start of
construction in FY22
+ All development projects on budget and schedule despite the challenging pandemic context in Brazil.
+ Provided guidance and team coaching in a complex acquisition and development environment effecting
above-target performance
+ Embedded key controls and culture with the team working cohesively and capability increasing
+ Drove further integration of the Brazil operation into the global network
+ Provided advice and support to senior management in Continental Europe. Repositioning of the CE business
was further refined (with the sale of the Central and Eastern European business). The platform delivered
another year of very strong financial outperformance
+ Important direct link for the Board to the operations in Continental Europe and Brazil
+ Further embedded key controls and culture with the team working cohesively and increasing capability.
Anthony Rozic
Chief Executive Officer, + All financial measures have exceeded budget
North America, + Critical role in communicating and reinforcing the Group’s strategy in the region
and Deputy Group
Chief Executive Officer + Managed a focused and motivated team with an emphasis on succession planning and strong leadership
in embedding the Goodman values in the behaviour of the team and encouraging teamwork with respect
+ With the COVID-19 disruption and employees working remotely, a high level of productivity has been
maintained with a focus on key operational priorities
+ Developed a high-quality portfolio and strongly differentiated brand position and building team capabilities
and skill sets for complex acquisitions and developments ahead of future growth
+ Commenced five development projects with a value of $810 million
+ Continued to grow infill development pipeline of $2.8 billion in major US gateway cities providing strong
positioning for future performance
+ Successfully oversaw strong growth in business operations in North America:
– AUM grown to $4.8 billion
– Stabilised occupancy of 100%
– WALE of 7.9 years
– Total available liquidity in the Partnership US$3.0 billion
+ Positioned the North American business over FY21 with a number of developments pre-leased and
replenishing the land/value-add inventory. Emphasis on developing major infill sites and value-add
development skillsets.
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Goodman Group

Directors’ report

Remuneration report – audited (continued)

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Nick Kurtis
Group Head of Equities + Formulated and implemented the Partnerships’ strategies to successfully deliver significant total returns.
Partnership investment portfolio delivered:
– Annualised average total return on net assets of 17.7% (based on the respective Partnership reporting periods)
+ Delivered strong performance metrics including:
– Management earnings contribution of $459 million to the Group’s operating earnings of $459 million
– Performance fee revenue of $149 million
– Growth in external AUM up 12% to $57.9 billion across 16 Partnerships in 14 countries
+ Strong asset selection focus resulting in superior property level returns
+ Fostered strong investor relationships and successful communication of Partnership strategies and alignment
of interests with investors
+ Successfully executed continuation of several Partnerships through the course of FY21
+ Established new Partnerships with investors
+ Provided strategic advice across a range of corporate and structural transactions in the business to position
opportunities for future years.
Michael O’Sullivan
Group Chief Risk Officer + Responsible for identifying, assessing and monitoring risks at Goodman Group and reporting to the Risk and
Compliance Committee
+ Oversaw and aligned the Group Investment Committee (GIC) process with strategy execution to ensure final
commercial outcomes remain consistent with Group strategy. A requested member of regional due diligence
committee meetings relating to major acquisitions, disposals, and capital market transactions
+ Performs a critical role in commercial oversight and assessment of globally complex transactions of the Group
to allow the required level of autonomy at a regional level within delegated authority limits
+ Maintained frameworks with improved outcomes across the Group and Managed Partnerships in FY21
adapting to the changing nature of our business including nature, scale and complexity of development
projects globally
+ Responsible for co-ordination and reporting of Group Corporate Service functions, specifically as they relate to
the identification and monitoring of non-financial risks with specific reference to internal audit, safety, sustainability,
insurance and business continuity planning. Successfully transitioned the Knowledge Management function to
Group IT while remaining a resource for the Group Chief Information Officer to call upon
+ FY21 saw continued Group activities, in relation to GIC process including:
– Over 400 GIC submissions with 15% involving detailed involvement from the Group Risk function
– Work in progress of $10.6 billion with an annual production rate of $6.6 billion
– $4.2 billion of asset sales, including both the disposals of directly held developments and disposals to
external parties globally
– $6.4 billion of global acquisitions and development expenditure
– 16 business plans and Partnership strategy proposals across $54.0 billion of external AUM, in which the
Group’s equity investment was $10.7 billion.
Nick Vrondas
Group Chief + Successfully developed and played a key role in the execution of the business strategy including the
Financial Officer management and allocation of capital that has delivered strong returns to investors over several years
culminating in FY21 operating profit of over $1.2 billion
+ Full oversight of balance sheet and profit and loss outcomes for the Group and Partnerships across multiple
jurisdictions in 14 countries. Effective statutory and management financial reporting giving clarity to support
strong operational decision making
+ Built improvements and resilience into systems and controls framework. Strengthened monitoring,
coordination and consolidation of financial performance and financial position of regional business units and
divisions to exceed budget and financial plans
+ Effected strong capital management and compliance with Financial Risk Management policies of Group
and Partnerships
+ Established and oversaw debt finance transactions in banking and debt capital markets of $5.4 billion for the
Group and its Partnerships, adding term to maturity profile and diversity of funding sources
+ Effective hedging and financial risk management. Involved in and oversaw derivative and hedge transactions
of over $5.6 billion for the Group and its Partnerships. Progressed framework for future risk mitigation measures
and appropriate enhancements in line with changing nature of the business and industry
+ Led operational improvements in relation to business IT systems and processes, particularly considering the
necessary changes that COVID-19 has given rise to
+ Updated and improved various operational policies to enhance compliance and reduce risk. Has demonstrated
an ability to manage through variable market conditions. Maintains valuable relationships in the capital markets.
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Annual Report 2021

4.5 LTI grants to be made in September 2021 in relation to FY21 performance

The remuneration awards made by the Board in respect of the executive KMP performance in FY21 comprise fixed remuneration, STI and awards under the LTIP that will be made in September 2021.

The table below lists the maximum number of performance rights which could vest if the highest hurdles are met over the four years ending 30 June 2025. The minimum vesting percentage is 0% if hurdles are not met. The vesting of those performance rights that achieve the performance hurdles (if any) will occur in seven equal tranches in September each year, starting from September 2025 with the last tranche vesting ten years from initial grant in September 2031.

The value of the grants that the Board intends to make in September 2021, in respect of the executive KMP performance in FY21, have been determined using the economic value as detailed in section 3.4

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Performance Economic value per Economic value
Executive Year of grant rights proposed performance right of grant
Gregory Goodman FY22 1,560,000 6.10 9.5
Danny Peeters FY22 625,000 6.10 3.8
Anthony Rozic FY22 690,000 6.10 4.2
Nick Kurtis FY22 805,000 6.10 4.9
Michael O’Sullivan FY22 560,000 6.10 3.4
Nick Vrondas FY22 690,000 6.10 4.2
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5. NON-EXECUTIVE DIRECTOR REMUNERATION

5.1 Key elements of the Non-Executive Director remuneration policy

The policy is structured to ensure independence of judgement in the performance of their duties.
Non-Executive Directors receive fixed fees for Board membership and additional fees for membership of committees.
The fees consider the size and scope of Goodman’s activities and the responsibilities and experience of the Directors. Periodically, these fees are benchmarked against data for comparable entities provided by external advisers.
As approved by Securityholders at the 2006 Annual General Meeting, total remuneration (including superannuation) payable by Goodman to all Non-Executive Directors in aggregate must not exceed $2.5 million per annum. For the current financial year, total Non-Executive Directors’ remuneration was $2.4 million (2020: $2.2 million).
The increase in Non-Executive Director fees compared to the prior financial year was due to the change in composition of the Board and the establishment of a separate Nomination Committee. There were no changes to the Board and committee annual fees in respect of FY21.
Non-Executive Directors are not entitled to participate in any STI or LTI schemes as they may be perceived to create a bias when overseeing executive decision making.
To align the interests of the Board with Securityholders, the Board updated the Directors’ Security Holding Policy in April 2021. The policy requires Non-Executive Directors to accumulate and hold Goodman securities with a value equivalent to their pre-tax annual base fee within three years of appointment, or in the case of the Chairman the pre-tax Chairman’s fee within three years of appointment as Chairman (subject to a transitional year following adoption of the new policy). 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 Group

Directors’ report

Remuneration report – audited (continued)

5.2 Board and committee annual fees

The Board and committee fees that applied for FY21 are set out below.

Board $	Audit	Risk and	Remuneration	Nomination
	Committee	Compliance	Committee	Committee
	$	Committee	$	$
		$
Chairman 625,000 Member 230,000	50,000 25,000	40,000 25,000	40,000 25,000	n/a 25,000

With effect from 1 July 2021, the Board has decided to increase the remuneration of Non-Executive Directors for the first time since June 2018. The new Board and Committee annual fees are set out below.

Board $	Audit	Risk and	Remuneration	Nomination
	Committee	Compliance	Committee	Committee
	$	Committee	$	$
		$
Chairman 625,000 Member 240,000	60,000 30,000	50,000 30,000	40,000 30,000	n/a 30,000

The remuneration of the Non-Executive Director of GLHK will also increase to HK$680,000 (2021: HK$625,000).

Annual Report 2021

6. STATUTORY DISCLOSURES

6.1 KMP remuneration (statutory analysis)

Details of the nature and amount of each major element of the remuneration of each executive KMP, as calculated under Australian Accounting Standards, are set out below:

								Share
								based		Performance
						Long-term		payments			related
Salary and fees1	Bonus	(STI)2	Other3,4	Total	Super- annuation benefts	Bonus (STI)2	Other3	Performance rights (LTI)5	Total	STI and LTI as %	LTI as % of total
Executive
KMP $ Gregory Goodman FY21 1,447,398 FY20 1,396,329 Nick Kurtis FY21 707,113 FY20 687,653 Michael O’Sullivan FY21 474,143 FY20 487,275 Nick Vrondas FY21 679,746 FY20 635,820 € Danny Peeters6 FY21 593,400 FY20 593,400 US$ Anthony Rozic7 FY21 697,211 FY20 680,039	$ – – – – – – – – € – – US$ – –		$ 11,201 17,169 12,468 18,010 11,423 16,500 11,423 16,500 € – – US$ 29,466 170,587	$ 1,458,599 1,413,498 719,581 705,663 485,556 503,775 691,169 652,320 € 593,400 593,400 US$ 726,677 850,627	$ 21,694 21,003 21,694 21,003 21,694 21,003 21,694 21,003 € – – US$ 16,210 14,102	$ – – – – 500,000 400,000 700,000 600,000 € 700,000 700,000 US$ 1,050,000 1,050,000	$ 44,203 24,841 17,509 12,414 13,242 (891) 18,073 12,421 € – – US$ (1,715) 14,766	$ 11,854,105 10,534,692 4,742,939 3,740,638 3,336,045 2,493,876 4,598,229 3,783,979 € 2,656,555 2,070,939 US$ 3,445,575 2,548,576	$ 13,378,601 11,994,033 5,501,723 4,479,717 4,356,547 3,417,763 6,029,165 5,069,723 € 3,949,955 3,364,339 US$ 5,236,747 4,478,071	% 88.6 87.8 86.2 83.5 88.1 84.7 87.9 86.5 85.0 82.4 85.8 80.4	% 88.6 87.8 86.2 83.5 76.6 73.0 76.3 74.6 67.3 61.6 65.8 56.9

Executive KMP are engaged under written employment contracts until notice is given by either Goodman or the executive KMP. Notice periods are for six months except for Gregory Goodman and Danny Peeters for whom the period is 12 months. Danny Peeters provides his services through a management company, DPCON Bvba.

Salary and fees represent the amounts due under the terms of executives’ service contracts and include movements in annual leave provisions. 2. Executives’ bonus (STI) awards are paid in two instalments: 50% on finalisation of Goodman’s financial statements and 50% 12 months later. Under Australian Accounting Standards, this means the entire bonus award is considered as a long-term benefit with regard to the disclosure of individual executive’s remuneration. No bonuses were forfeited during the financial year.
Other includes reportable fringe benefits, car parking and changes in long service leave provisions.
In the prior year, the Board agreed certain tax equalisation arrangements with Anthony Rozic in connection with his employment arrangements in the United States and Australia to ensure that he was no better or worse off. As a result, in FY20 Goodman made additional tax related payments of US$150,005 in respect of the period prior to 1 January 2019. These amounts were on top of Anthony Rozic’s Australian tax obligations for which he remained exclusively responsible. The Board also advanced under an interest free loan, double-tax amounts in respect of the period prior to 1 January 2019 for which Foreign Income Tax Offsets from the Australian Taxation Office will be used to repay the advances.
At 1 July 2021 the advances made by Goodman amounted to US$503,729, and as there have been no further advances or repayments during the year ended 30 June 2021, the balance at 30 June 2021 is also US$503,729. The amount of interest that would have been payable if charged on an arm's-length basis during the year is $20,149 (2020: $8,490). The notional interest amount has been included in Anthony Rozic’s statutory remuneration for FY21 (Other remuneration). In the prior year both the additional tax related amount and the notional interest amount were included in Anthony Rozic’s statutory remuneration (Other remuneration).
No other executive KMP received a loan from the Group during the current or prior financial years.
Performance rights are an LTI and in accordance with Australian Accounting Standards: the values of the awards are determined using option pricing models and amortised in the income statement over the vesting periods.
The remuneration of Danny Peeters is disclosed in Euros, the currency in which his base remuneration and STI are determined. The value attributed to his performance rights is translated from Australian dollars at the weighted average rate for the relevant financial year.
The remuneration of Anthony Rozic is disclosed in US dollars, the currency in which his base remuneration and STI are determined. The value attributed to his performance rights is translated from Australian dollars at the weighted average rate for the relevant financial year.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

6.2 Movements in performance rights held by executive KMP

The movements in the number of performance rights during FY21 are summarised as follows:

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Held at the start Granted as Held at the end
Executive Directors Year of the year compensation Vested Forfeited of the year
Gregory Goodman FY21 6,350,000 950,000 (1,983,333) – 5,316,667
FY20 7,231,827 900,000 (1,781,827) – 6,350,000
Danny Peeters FY21 1,996,250 380,000 (529,583) – 1,846,667
FY20 2,158,413 350,000 (512,163) – 1,996,250
Anthony Rozic FY21 2,241,666 400,000 (628,333) – 2,013,333
FY20 2,470,996 380,000 (609,330) – 2,241,666
Other executive KMP
Nick Kurtis FY21 2,290,416 490,000 (677,083) – 2,103,333
FY20 2,568,495 380,000 (658,079) – 2,290,416
Michael O’Sullivan FY21 1,503,750 340,000 (393,750) – 1,450,000
FY20 1,607,018 300,000 (403,268) – 1,503,750
Nick Vrondas FY21 2,323,750 420,000 (693,750) – 2,050,000
FY20 2,603,412 380,000 (659,662) – 2,323,750
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6.3 Analysis of performance rights held by executive KMP

Details of the awards of performance rights under the LTIP granted by Goodman as compensation to the executive KMP are set out in the following tables:

Executive Directors	Number of performance rights granted	Date performance rights granted	Year	Fair value per performance right1 $	Total value of performance rights granted1 $	Vested in prior years %	Vested in the year2 %	Forfeited %	Value of performance rights vested in the year3 $	Financial years in which grant vests	Expiry date4
Gregory Goodman Danny Peeters Anthony Rozic	950,000 900,000 1,600,000 1,600,000 2,400,000 2,000,000 380,000 350,000 550,000 550,000 600,000 450,000 400,000 380,000 600,000 600,000 700,000 600,000	19 Nov 2020 20 Nov 2019 15 Nov 2018 16 Nov 2017 30 Sep 2016 25 Nov 2015 19 Nov 2020 20 Nov 2019 15 Nov 2018 16 Nov 2017 30 Sep 2016 25 Nov 2015 19 Nov 2020 20 Nov 2019 15 Nov 2018 16 Nov 2017 30 Sep 2016 25 Nov 2015	FY21 FY20 FY19 FY18 FY17 FY16 FY21 FY20 FY19 FY18 FY17 FY16 FY21 FY20 FY19 FY18 FY17 FY16	16.07 11.48 8.72 6.70 5.64 4.44 16.07 11.48 8.72 6.70 5.64 4.44 16.07 11.48 8.72 6.70 5.64 4.44	15,266,500 10,332,000 13,952,000 10,720,000 13,536,000 8,880,000 6,106,600 4,018,000 4,796,000 3,685,000 3,384,000 1,998,000 6,428,000 4,362,400 5,232,000 4,020,000 3,948,000 2,664,000	– – – – 33.3 65.0 – – – – 33.3 65.0 – – – – 33.3 65.0	– – – 33.3 33.3 32.5 – – – 33.3 33.3 32.5 – – – 33.3 33.3 32.5	– – – – – 2.5 – – – – – 2.5 – – – – – 2.5	– – – 9,567,994 14,352,000 11,661,000 – – – 3,288,994 3,588,000 2,623,725 – – – 3,588,000 4,185,994 3,498,300	2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2019–2021 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2019–2021 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2019–2021	1 Sep 2025 2 Sep 2024 1 Sep 2023 1 Sep 2022 1 Sep 2021 1 Sep 2020 1 Sep 2025 2 Sep 2024 1 Sep 2023 1 Sep 2022 1 Sep 2021 1 Sep 2020 1 Sep 2025 2 Sep 2024 1 Sep 2023 1 Sep 2022 1 Sep 2021 1 Sep 2020

Refer to page 63 for explanatory footnotes.

Annual Report 2021

Other executive KMP	Number of performance rights granted	Date performance rights granted	Year	Fair value per performance right1 $	Total value of performance rights granted1 $	Vested in prior years %	Vested in the year2 %	Forfeited %	Value of performance rights vested in the year3 $	Financial years in which grant vests	Expiry date4
Nick Kurtis	490,000 380,000 600,000 600,000 700,000 750,000	30 Sep 2020 30 Sep 2019 28 Sep 2018 30 Sep 2017 30 Sep 2016 23 Sep 2015	FY21 FY20 FY19 FY18 FY17 FY16	15.77 11.26 8.52 6.41 5.64 4.06	7,727,300 4,278,800 5,112,000 3,846,000 3,948,000 3,045,000	– – – – 33.3 65.0	– – – 33.3 33.3 32.5	– – – – – 2.5	– – – 3,588,000 4,185,994 4,372,875	2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2019–2021	1 Sep 2025 2 Sep 2024 1 Sep 2023 1 Sep 2022 1 Sep 2021 1 Sep 2020
Michael O’Sullivan	340,000	30 Sep 2020	FY21	15.77	5,361,800	–	–	–	–	2024–2026	1 Sep 2025
	300,000	30 Sep 2019	FY20	11.26	3,378,000	–	–	–	–	2023–2025	2 Sep 2024
	400,000	28 Sep 2018	FY19	8.52	3,408,000	–	–	–	–	2022–2024	1 Sep 2023
	390,000	30 Sep 2017	FY18	6.41	2,499,900	–	33.3	–	2,332,200	2021–2023	1 Sep 2022
	450,000	30 Sep 2016	FY17	5.64	2,538,000	33.3	33.3	–	2,691,000	2020–2022	1 Sep 2021
Nick Vrondas	350,000 420,000 380,000 600,000 600,000 750,000 750,000	23 Sep 2015 30 Sep 2020 30 Sep 2019 28 Sep 2018 30 Sep 2017 30 Sep 2016 23 Sep 2015	FY16 FY21 FY20 FY19 FY18 FY17 FY16	4.06 15.77 11.26 8.52 6.41 5.64 4.06	1,421,000 6,623,400 4,278,800 5,112,000 3,846,000 4,230,000 3,045,000	65.0 – – – – 33.3 65.0	32.5 – – – 33.3 33.3 32.5	2.5 – – – – – 2.5	2,040,675 – – – 3,588,000 4,485,000 4,372,875	2019–2021 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2019–2021	1 Sep 2020 1 Sep 2025 2 Sep 2024 1 Sep 2023 1 Sep 2022 1 Sep 2021 1 Sep 2020

Footnotes to the analysis of executive KMP performance rights table:

The fair value was determined at grant date and calculated using a combination of the standard Black Scholes model with a continuous dividend/distribution yield and a Monte Carlo model which simulated total returns for each of the ASX 100 entities and discounted the future value of any potential future vesting performance rights to arrive at a present value.
As performance rights had an exercise price of $nil, Goodman securities were automatically issued to employees when the performance rights vested. Accordingly, the percentage of performance rights that vested during the financial year equalled the percentage of securities issued during the financial year.
The value of performance rights vested was calculated using the closing price of a Goodman security on the ASX of $17.94 on 1 September 2020, the day the performance rights vested.
As Goodman securities were automatically issued to employees when the performance rights vested, and lapsed where they failed to do so, the vesting date was also deemed to be the expiry date.

6.4 Securities issued on exercise of performance rights

During FY21, Goodman issued 15,438,241 securities as a result of the vesting of performance rights. The amount paid by the employees on exercise of these securities was $nil.

No performance rights have vested since the end of the financial year.

6.5 Unissued securities under performance rights

At the date of this Directors’ report, unissued securities of Goodman under performance rights, i.e. those performance rights that have not yet vested, were:

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Expiry date Exercise price $ Number of performance rights [1]
Sep 2025 – 12,461,933
Sep 2024 – 10,824,964
Sep 2023 – 16,012,338
Sep 2022 – 9,747,941
Sep 2021 – 5,759,671
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The number of performance rights at the date of this Directors’ report is net of any rights forfeited and excludes 13,833,873 performance rights where the intention is to cash settle.

Goodman Group

Directors’ report

Remuneration report – audited (continued)

6.6 Non-Executive Directors’ remuneration (statutory analysis)

Details of the nature and amount of each major element of the remuneration of Non-Executive Directors, as calculated under Australian Accounting Standards, are set out below:

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Salary and fees Superannuation benefits Total
Non-Executive Directors – GL and GFML $ $ $
Stephen Johns [1] FY21 480,131 21,694 501,825
FY20 283,997 21,003 305,000
Ian Ferrier [2] FY21 234,619 8,437 243,056
FY20 603,997 21,003 625,000
Christopher Green FY21 264,062 – 264,062
FY20 255,000 – 255,000
Mark Johnson [3] FY21 264,060 21,694 285,754
FY20 19,500 1,750 21,250
Rebecca McGrath FY21 282,368 21,694 304,062
FY20 273,997 21,003 295,000
Phillip Pryke [4] FY21 357,068 21,694 378,762
FY20 359,354 21,003 380,357
Penny Winn FY21 258,306 21,694 280,000
FY20 258,997 21,003 280,000
Non-Executive Director – GLHK HK$ HK$ HK$
David Collins [5] FY21 625,000 – 625,000
FY20 625,000 – 625,000
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Stephen Johns was appointed Chairman on 19 November 2020.
Ian Ferrier retired as a Director on 19 November 2020.
Mark Johnson was appointed as a Director on 1 June 2020.
Salary and fees for Phillip Pryke included an amount of A$83,760 (NZ$90,000) (2020: A$85,357 (NZ$90,000)) due in respect of his role on the board and audit committee of Goodman (NZ) Limited, the manager of Goodman Property Trust.
David Collins is a director of GLHK and his director fees are disclosed in Hong Kong dollars.

Annual Report 2021

6.7 Movements in Goodman securities held

The movements during the financial year in the number of Goodman securities held, directly, indirectly or beneficially, by each KMP, including their related parties, are set out below:

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Non-Executive Held at Securities issued Held at
Directors – the start of on vesting of the end of
GL and GFML Year the year [1] performance rights Acquisitions Disposals the year [2]
Stephen Johns FY21 25,000 – 16,182 39 41,143
FY20 25,000 – – – 25,000
Ian Ferrier FY21 208,325 – 1,893 – 210,218
FY20 202,922 – 5,403 – 208,325
Christopher Green FY21 78,996 – – – 78,996
FY20 78,996 – – – 78,996
Mark Johnson FY21 – – 5,000 – 5,000
(appointed 1 Jun 2020) FY20 – – – – –
Rebecca McGrath FY21 42,144 – 917 – 43,061
FY20 39,540 – 2,604 – 42,144
Phillip Pryke FY21 59,880 – – – 59,880
FY20 100,880 – – (41,000) 59,880
Penny Winn FY21 24,700 – – – 24,700
FY20 24,700 – – – 24,700
Non Executive Directors – GLHK
David Collins FY21 5,000 – – – 5,000
FY20 5,000 – – – 5,000
Executive Directors – GL and GFML
Gregory Goodman FY21 38,104,547 1,983,333 – (1,600,000) 38,487,880
FY20 38,102,720 1,781,827 5,000 (1,785,000) 38,104,547
Danny Peeters FY21 2,103,548 529,583 – (1,000,000) 1,633,131
FY20 1,591,385 512,163 – – 2,103,548
Anthony Rozic FY21 1,475,958 628,333 – (894,831) 1,209,460
FY20 1,109,460 609,330 – (242,832) 1,475,958
Other executive KMP
Nick Kurtis FY21 503,330 677,083 – (626,127) 554,286
FY20 407,140 658,079 – (561,889) 503,330
Michael O’Sullivan FY21 666,601 393,750 – (217,232) 843.119
FY20 464,967 403,268 – (201,634) 666,601
Nick Vrondas FY21 – 693,750 – (563,841) 129,909
FY20 – 659,662 – (659,662) –
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Relates to securities held at the later of the start of the financial year or the date of becoming a KMP.
Relates to securities held at the earlier of the end of the financial year or the date of ceasing to be a KMP.

6.8 Transactions with Directors, executives and their related entities

GreenPoint Real Estate Innovation and Technology Venture, LP

On 16 July 2020, the Group committed to investing USD15.0 million in GreenPoint Real Estate Innovation and Technology Venture, LP, a property technology fund that is a Delaware limited partnership, managed by Greenpoint Group LP, also a Delaware limited partnership. Greenpoint Group LP is beneficially owned and controlled by Christopher Green, a Director of Goodman Limited. As at 30 June 2021, the Group had invested USD3,826,595.

Other than as disclosed elsewhere in the remuneration report, there were no other transactions with Directors, executives, and their related entities.

Goodman Group

Directors’ report

Environmental regulations

Goodman has policies and procedures to identify and appropriately address environmental obligations that might arise in respect of Goodman’s operations that are subject to significant environmental laws and regulation. The Directors have determined that Goodman has complied with those obligations during the financial year and that there has not been any material breach.

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 Goodman for the year ended 30 June 2021 have been properly maintained and the financial report for the year ended 30 June 2021 complies with accounting standards and presents a true and fair view of Goodman’s financial condition and operational results. The Group Chief Executive Officer and Group Chief Financial Officer confirmed that the above declaration was, to the best of their knowledge and belief, founded on a sound system of risk management and internal control and that the system was operating effectively in all material respects in relation to the financial reporting risks.

Disclosure in respect of any indemnification and insurance of officers and auditors

Pursuant to the Constitution of Goodman, current and former Directors and officers of Goodman are entitled to be indemnified. Deeds of Indemnity have been executed by Goodman, consistent with the Constitution, in favour of each Director. The Deed indemnifies each Director to the extent permitted by law for liabilities (other than legal costs) incurred in their capacity as a director of Goodman Limited or a controlled entity and, in respect of legal costs, for liabilities incurred in defending or resisting civil or criminal proceedings. Goodman has insured, to the extent permitted by law, current and former Directors and officers of Goodman in respect of liability and legal expenses incurred in their capacity as a director or officer. As it is prohibited under the terms of the contract of insurance, the Directors have not included details of the nature of the liabilities covered or the amount of the premiums paid.

The auditors of Goodman are not indemnified by Goodman or covered in any way by this insurance in respect of the audit.

Non-audit services

During the financial year, KPMG, Goodman and GIT’s auditor, performed certain other services in addition to the audit and review of the financial statements.

The Board has considered the non-audit services provided during the financial year 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 Goodman and have been reviewed by the Audit Committee to determine they do not impact the integrity and objectivity of the auditor
- 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 Goodman, acting as an advocate for Goodman or jointly sharing risks and rewards.

Details of the amounts paid to the auditor of Goodman and GIT, KPMG and its network firms, for the audit and non-audit services provided during the financial year, are set out in note 26 to the consolidated financial statements.

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

The lead auditor’s independence declaration is set out on page 67 and forms part of this Directors’ report for the financial year.

Rounding

Goodman and GIT are entities of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. In accordance with that Instrument, amounts in this Directors’ report and the consolidated financial statements have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

Events subsequent to balance date

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of Goodman, the results of those operations, or the state of affairs of Goodman, in future financial years.

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

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Stephen Johns Independent Chairman Sydney, 12 August 2021

Gregory Goodman Group Chief Executive Officer

Annual Report 2021

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To the Directors of Goodman Limited and 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 audits of Goodman Limited (as the deemed parent presenting the stapled security arrangement of the Goodman Group) and Goodman Industrial Trust for the financial year ended 30 June 2021, there have been:

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

KPMG

Eileen Hoggett Partner

Sydney, 12 August 2021

KPMG, an Australian partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved, The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization, Liability limited by a scheme approved under Professional Standards Legislation.

Goodman Group

Consolidated statements of financial position

as at 30 June 2021

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Goodman GIT
2021 2020 2021 2020
Note $M $M $M $M
Current assets
Cash and cash equivalents 21(a) 920.4 1,781.9 379.8 1,302.6
Receivables 7 331.3 282.3 816.1 1,602.1
Contract assets 8 80.9 25.7 – –
Inventories 6(b) 235.1 544.1 – –
Other financial assets 17 16.5 59.3 16.5 59.3
Assets held for sale 9 41.5 112.5 – –
Total current assets 1,625.7 2,805.8 1,212.4 2,964.0
Non-current assets
Receivables 7 277.5 108.3 2,528.5 1,487.4
Inventories 6(b) 1,192.7 636.1 5.9 5.9
Investment properties 6(b) 1,851.2 1,901.2 1,155.7 1,202.4
Investments accounted for using the equity method 6(b) 10,660.0 9,370.8 8,078.4 7,148.3
Deferred tax assets 5(e) 19.9 10.5 – –
Other financial assets 17 362.8 408.8 314.4 444.1
Property, plant and equipment 12 54.6 50.9 – –
Intangible assets 14 822.6 845.8 – –
Total non-current assets 15,241.3 13,332.4 12,082.9 10,288.1
Total assets 16,867.0 16,138.2 13,295.3 13,252.1
Current liabilities
Payables 10 565.9 584.5 607.6 655.3
Current tax payables 5(d) 160.1 140.8 – –
Interest bearing liabilities 16 – 260.1 – 260.1
Provisions 11 294.2 289.4 166.3 201.1
Lease liabilities 13 11.9 17.6 – –
Other financial liabilities 17 1.9 50.4 1.9 50.4
Total current liabilities 1,034.0 1,342.8 775.8 1,166.9
Non-current liabilities
Payables 10 125.5 85.4 232.2 231.5
Interest bearing liabilities 16 2,060.3 2,678.4 2,062.8 2,679.4
Deferred tax liabilities 5(e) 168.4 121.8 124.0 82.3
Provisions 11 23.7 29.0 – –
Lease liabilities 13 82.1 29.2 – –
Other financial liabilities 17 211.5 331.0 124.6 302.6
Total non-current liabilities 2,671.5 3,274.8 2,543.6 3,295.8
Total liabilities 3,705.5 4,617.6 3,319.4 4,462.7
Net assets 13,161.5 11,520.6 9,975.9 8,789.4
Equity attributable to Securityholders
Issued capital 20 8,096.4 8,031.7 7,849.0 7,623.5
Reserves 134.8 384.7 (33.7) 136.7
Retained earnings 4,930.3 3,104.2 2,160.6 1,029.2
Total equity attributable to Securityholders 13,161.5 11,520.6 9,975.9 8,789.4
Comprising:
Total equity attributable to GL 22(a) 1,635.6 1,278.0
Total equity attributable to other entities stapled to GL 22(b) 11,525.9 10,242.6
Total equity attributable to Securityholders 13,161.5 11,520.6 9,975.9 8,789.4
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The consolidated statements of financial position are to be read in conjunction with the accompanying notes.

Annual Report 2021

Consolidated income statements

for the year ended 30 June 2021

Goodman Note 2021 $M 2020 $M Revenue Gross property income 2 112.4 115.9 Management income 2 383.9 511.2 Development income 2 1,492.0 882.6 Distributions from investments – 1.2 1,988.3 1,510.9 Property and development expenses Property expenses (32.8) (36.4) Development expenses 2 (862.3) (443.4) (895.1) (479.8) Other income Net gain from fair value adjustments on investment properties 6(e) 63.1 45.2 Net gain on disposal of investment properties 37.7 54.5 Share of net results of equity accounted investments 6(f) 1,708.9 1,022.2 Net gain on disposal of equity investments 2 5.0 0.6 1,814.7 1,122.5 Other expenses Employee expenses 2 (210.8) (203.7) Share based payments expense 2 (268.8) (164.0) Administrative and other expenses (83.2) (88.6) Reversal of previous impairments – – (562.8) (456.3) Proft before interest and tax 2,345.1 1,697.3 Net fnance income/(expense) Finance income 15 94.3 13.2 Finance expense 15 (19.4) (93.4) Net fnance income/(expense) 74.9 (80.2) Proft before income tax 2,420.0 1,617.1 Income tax expense 5(a) (108.1) (113.0) Proft for the year 2,311.9 1,504.1 Proft attributable to GL 22(a) 300.2 315.9 Proft attributable to other entities stapled to GL 22(b) 2,011.7 1,188.2 Proft for the year attributable to Securityholders 2,311.9 1,504.1 Basic proft per security (¢) 3 125.4 82.4 Diluted proft per security (¢) 3 122.1 80.0	GIT
	2021 $M 2020 $M
	60.2 67.9 – – – 0.3 9.1 9.9
	69.3 78.1
	(20.2) (23.0) (2.3) (1.0)
	(22.5) (24.0)
	60.2 36.5 39.3 9.1 1,373.8 825.5 3.2 0.1
	1,476.5 871.2
	– – – – (52.1) (54.0) 17.6 –
	(34.5) (54.0)
	1,488.8 871.3
	177.9 133.1 (42.4) (157.2)
	135.5 (24.1)
	1,624.3 847.2 (49.5) (11.1)
	1,574.8 836.1

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

Goodman Group

Consolidated statements of comprehensive income

for the year ended 30 June 2021

Goodman Note 2021 $M 2020 $M Proft for the year 2,311.9 1,504.1 Other comprehensive income/(loss) for the year Items that will not be reclassifed to proft or loss Actuarial losses on defned beneft superannuation funds (6.0) (8.2) Effect of foreign currency translation (0.8) 0.2 (6.8) (8.0) Items that are or may be reclassifed subsequently to proft or loss Increase/(decrease) due to revaluation of other fnancial assets 0.3 – Cash fow hedges: – Change in value of fnancial instruments 0.3 (1.7) Effect of foreign currency translation (278.6) (26.7) (278.0) (28.4) Other comprehensive (loss)/income for the year, net of income tax (284.8) (36.4) Total comprehensive income for the year 2,027.1 1,467.7 Total comprehensive income attributable to GL 22(a) 271.6 281.7 Total comprehensive income attributable to other entities stapled to GL 22(b) 1,755.5 1,186.0 Total comprehensive income for the year attributable to Securityholders 2,027.1 1,467.7	GIT
	2021 $M 2020 $M
	1,574.8 836.1
	– – – –
	– –
	(2.2) (5.6) 0.3 (1.7) (182.2) 32.5
	(184.1) 25.2
	(184.1) 25.2
	1,390.7 861.3

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

Annual Report 2021

Consolidated statements of changes in equity

for the year ended 30 June 2021

						Attributable to	Attributable to	Attributable to	Securityholders	Securityholders	Securityholders	Securityholders
Goodman	Issued capital	Asset	revaluation	reserve	Cash fow hedge reserve	Foreign currency	translation reserve	Employee	compensation reserve	Defned beneft	retirement schemes reserve	Total reserves	Retained earnings	Total
Note	$M		$M		$M		$M		$M		$M	$M	$M	$M
Balance at 1 July 2019	8,031.7		(7.1)		(3.3)	215.0		216.2		(23.3)		397.5	2,093.3	10,522.5
Total comprehensive income/(loss)
for the year
Proft for the year	–			–	–		–		–		–	–	1,504.1	1,504.1
Other comprehensive income/(loss)
Effect of foreign currency translation	–		(0.1)		(0.2)		(26.4)		–		0.2	(26.5)	–	(26.5)
Cash fow hedges:
– Change in value of fnancial instruments	–			–	(1.7)		–		–		–	(1.7)	–	(1.7)
Actuarial losses on defned beneft superannuation funds,net of income tax	–			–	–		–		–		(8.2)	(8.2)	–	(8.2)
Total other comprehensive (loss)/income for theyear,net of income tax	–		(0.1)		(1.9)		(26.4)		–		(8.0)	(36.4)	–	(36.4)
Total comprehensive (loss)/income for theyear,net of income tax	–		(0.1)		(1.9)		(26.4)		–		(8.0)	(36.4)	1,504.1	1,467.7
Transfers Contributions by and distributions to owners Dividends/distributions on stapled securities 19 Purchase of securities for the LTIP Equity settled share based payments expense	– – – –			– – – –	– – – –		– – – –		(55.3) – (19.1) 98.0		– – – –	(55.3) – (19.1) 98.0	55.3 (548.5) – –	– (548.5) (19.1) 98.0
Balance at 30 June 2020	8,031.7		(7.2)		(5.2)		188.6		239.8		(31.3)	384.7	3,104.2	11,520.6
Total comprehensive income/(loss) for the year Proft for the year Other comprehensive income/(loss) Effect of foreign currency translation Cash fow hedges: – Change in value of fnancial instruments Decrease due to revaluation of other fnancial assets Actuarial losses on defned beneft superannuation funds,net of income tax	– – – – –			– 0.2 – 0.3 –	– 0.5 0.3 – –	– (279.3) – – –			– – – – –		– (0.8) – – (6.0)	– (279.4) 0.3 0.3 (6.0)	2,311.9 – – – –	2,311.9 (279.4) 0.3 0.3 (6.0)
Total other comprehensive income/(loss) for theyear,net of income tax	–			0.5	0.8	(279.3)			–		(6.8)	(284.8)	–	(284.8)
Total comprehensive income/(loss) for theyear,net of income tax	–			0.5	0.8	(279.3)			–		(6.8)	(284.8)	2,311.9	2,027.1
Transfers Contributions by and distributions to owners Dividends/distributions on stapled securities 19 Issue of securities 20(a) Issue costs Purchase of securities for the LTIP Equity settled share based payments expense Deferred taxes associated with the LTIPs Transfer to payables	– – 65.1 (0.4) – – – –			– – – – – – – –	– – – – – – – –		– – – – – – – –		(68.4) – – – (22.4) 134.7 8.1 (17.1)		– – – – – – – –	(68.4) – – – (22.4) 134.7 8.1 (17.1)	68.4 (554.2) – – – – – –	– (554.2) 65.1 (0.4) (22.4) 134.7 8.1 (17.1)
Balance at 30 June 2021	8,096.4		(6.7)		(4.4)		(90.7)		274.7		(38.1)	134.8	4,930.3	13,161.5

The consolidated statements of changes in equity are to be read in conjunction with the accompanying notes. For an analysis of equity attributable to non-controlling interests, refer to note 22(b).

Goodman Group

Consolidated statements of changes in equity

for the year ended 30 June 2021

			Attributable to Unitholders	Attributable to Unitholders	Attributable to Unitholders	Attributable to Unitholders	Attributable to Unitholders	Attributable to Unitholders
GIT	Issued capital	Asset revaluation reserve	Cash fow hedge reserve	Foreign currency translation reserve	Employee	compensation	reserve	Total reserves	Retained earnings	Total
Note	$M	$M	$M	$M		$M		$M	$M	$M
Balance at 1 July 2019	7,477.3	12.6	(3.3)	(71.1)	159.7			97.9	668.5	8,243.7
Total comprehensive income/(loss) for the year
Proft for the year	–	–	–	–			–	–	836.1	836.1
Other comprehensive income/(loss)
Effect of foreign currency translation	–	–	(0.2)	32.7			–	32.5	–	87.5
Cash fow hedges:
– Change in value of fnancial instruments	–	–	(1.7)	–			–	(1.7)	–	(1.7)
Decrease due to revaluation of other fnancial assets	–	(5.6)	–	–			–	(5.6)	–	(5.6)
Total other comprehensive (loss)/income for the year, net of income tax	–	(5.6)	(1.9)	32.7			–	25.2	–	25.2
Total comprehensive (loss)/income for the year	–	(5.6)	(1.9)	32.7			–	25.2	836.1	861.3
Contributions by and distributions to owners Distributions on ordinary units 19 Issue of ordinary units under the LTIP 20(a) Equity settled share based payments transactions	– 146.2 –	– – –	– – –	– – –		– – 13.6		– – 13.6	(475.4) – –	(475.4) 146.2 13.6
Balance at 30 June 2020	7,623.5	7.0	(5.2)	(38.4)	173.3			136.7	1,029.2	8,789.4
Total comprehensive income/(loss) for the year Proft for the year Other comprehensive (loss)/income Effect of foreign currency translation Cash fow hedges: – Change in value of fnancial instruments Decrease due to revaluation of other fnancial assets	– – – –	– (0.2) – (2.2)	– 0.4 0.3 –	– (182.3) – –			– – – –	– (182.2) 0.3 (2.2)	1,574.8 – – –	1,574.8 (182.2) 0.3 (2.2)
Total other comprehensive (loss)/income for the year, net of income tax	–	(2.5)	0.7	(182.3)			–	(184.1)	–	(184.1)
Total comprehensive (loss)/income for the year	–	(2.5)	0.7	(182.3)			–	(184.1)	1,574.8	1,390.7
Contributions by and distributions to owners Distributions on ordinary units 19 Issue of ordinary units Issue of ordinary units for the LTIP 20(a) Issue costs on ordinary units Equity settled share based payments transactions	– 42.5 183.2 (0.2) –	– – – – –	– – – – –	– – – – –		– – – – 13.7		– – – – 13.7	(443.4) – – – –	(443.4) 42.5 183.2 (0.2) 13.7
Balance at 30 June 2021	7,849.0	4.5	(4.5)	(220.7)		187.0		(33.7)	2,160.6	9,975.9

The consolidated statements of changes in equity are to be read in conjunction with the accompanying notes.

Annual Report 2021

Consolidated cash flow statements

for the year ended 30 June 2021

Goodman Note 2021 $M 2020 $M Cash fows from operating activities Property income received 108.3 130.2 Cash receipts from development activities 1,560.3 1,031.4 Other cash receipts from services provided 346.4 692.1 Property expenses paid (41.7) (39.0) Payments for development activities (947.4) (619.0) Other cash payments in the course of operations (381.6) (337.3) Distributions received from equity investments, including Partnerships 536.9 462.2 Interest received 9.2 18.1 Finance costs paid (34.3) (105.5) Net income taxes (paid)/refunded (41.4) (76.3) Net cash provided by operating activities 21(b) 1,114.7 1,156.9 Cash fows from investing activities Net proceeds from disposal of investment properties 170.2 212.3 Proceeds from disposal of controlled entities, net of cash disposed – 95.6 Net proceeds from disposal of equity investments 13.1 0.7 Return of capital by Partnerships 256.3 428.4 Payments for investment properties (192.2) (234.3) Payments for investments in Partnerships (790.3) (806.6) Payments for plant and equipment (7.0) (2.5) Net cash used in investing activities (549.9) (306.4) Cash fows from fnancing activities Proceeds from issue of stapled securities Issue costs due to stapled securities Net cash fows from/to loans with related parties Proceeds from borrowings and derivative fnancial instruments Payments on borrowings and derivative fnancial instruments Dividends and distributions paid Payments of lease liabilities Purchase of securities to fund LTIP obligations 65.1 (0.3) (135.0) 204.6 (891.9) (551.4) (17.8) (22.4) – – (9.8) 50.0 (118.0) (546.3) (17.7) (19.1) Net cash (used in)/provided by fnancing activities (1,349.1) (660.9) Net (decrease)/increase in cash held (784.3) 189.6 Cash and cash equivalents at the beginning of the year 1,792.8 1,607.1 Effect of exchange rate fuctuations on cash held (88.1) (3.9) Cash and cash equivalents at the end of the year 21(a) 920.4 1,792.8	GIT
	2021 $M 2020 $M
	62.1 64.3 – – – – (21.1) (20.8) – (0.5) (54.1) (50.0) 381.7 244.0 8.7 16.4 (38.2) (114.9) 0.5 (3.2)
	339.6 135.3
	161.9 2.4 – – 11.3 0.2 166.1 415.0 (17.5) (12.9) (464.9) (552.0) – –
	(143.1) (147.3)
	42.5 (0.2) 25.1 246.8 (891.9) (478.2) – – – – 511.7 50.0 (0.9) (455.7) – –
	(1,055.9) 105.1
	(859.4) 93.1 1,302.6 1,214.4 (63.4) (4.9)
	379.8 1,302.6

The consolidated cash flow statements are to be read in conjunction with the accompanying notes. Non-cash transactions are included in note 21(c).

Goodman Group

Notes to the consolidated financial statements

BASIS OF PREPARATION

This section sets out the general basis upon which Goodman and GIT have prepared their financial statements and information that is disclosed to comply with the Australian Accounting Standards, Corporations Act 2001 or Corporations Regulations.

Specific accounting policies can be found in the sections to which they relate.

1. Basis of preparation

Goodman Limited and Goodman Industrial Trust are for-profit entities domiciled in Australia.

The consolidated financial statements are 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
- Investments in unlisted securities
Liabilities for cash settled share based payment arrangements. In accordance with ASIC Corporations (Rounding in Financial/ Directors’ Reports) Instrument 2016/191, amounts in these consolidated financial statements have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

Foreign currency translation

Functional and presentation currency

Statement of compliance

These consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. International Financial Reporting Standards (IFRS) form the basis of Australian Accounting Standards adopted by the AASB. The consolidated financial statements also comply with IFRS.

The consolidated financial statements are presented in Australian dollars and were authorised for issue by the Directors on 12 August 2021.

Basis of preparation of the consolidated financial reports

Shares in the Company, units in the Trust and CDIs over shares in GLHK are stapled to one another and are quoted as a single security on the ASX. Australian Accounting Standards require an acquirer to be identified and an in-substance acquisition to be recognised. In relation to the stapling of the Company, the Trust and GLHK, the Company is identified as having acquired control over the assets of the Trust and GLHK. In the consolidated statement of financial position of the Group, equity attributable to the Trust and the CDIs over the shares of GLHK are presented as non-controlling interests.

As permitted by the relief provided in ASIC Instrument 20-0568, these financial statements present both the financial statements and accompanying notes of Goodman and GIT. GLHK, which is incorporated and domiciled in Hong Kong, prepares its financial statements under Hong Kong Financial Reporting Standards and the applicable requirements of the Hong Kong Companies Ordinance and accordingly the financial statements of GLHK have not been combined and included as adjacent columns in this report. The financial statements of GLHK have been included as an appendix to this report.

Items included in the consolidated financial statements of each of the 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 and the Trust’s functional and presentation currency.

Transactions

Foreign currency transactions are translated to each entity’s functional 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 the income statement.

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 controlled foreign operations are translated into Australian dollars at foreign exchange rates ruling 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. On cessation of operations in a foreign region, the cumulative exchange differences relating to the operations in that region, that have been included in the foreign currency translation reserve, are reclassified to the income statement. 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.

Annual Report 2021

Exchange rates used

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

	Weighted	average	As at	30 June
Australian dollars (AUD)	2021	2020	2021	2020
New Zealand dollars (NZD)	1.0745	1.0544	1.0739	1.0694
Hong Kong dollars (HKD)	5.7958	5.2340	5.8222	5.3402
Chinese yuan (CNY)	4.9419	4.7200	4.8412	4.8688
Japanese yen (JPY)	79.6101	72.6051	83.2780	74.2910
Euros (EUR) British pounds sterling (GBP)	0.6262 0.5546	0.6071 0.5329	0.6327 0.5432	0.6128 0.5566
United States dollars (USD)	0.7472	0.6714	0.7497	0.6890
Brazilian real (BRL)	4.0236	2.9963	3.7528	3.7602

Changes in accounting policies

The AASB has issued new or amendments to standards that are first effective from 1 July 2020 but none of these have a material impact on the Group’s financial statements.

Australian Accounting Standards issued but not yet effective

The Group has not applied any new or amended standard that is not yet effective but available for early application in the current accounting period. None of the new or amended accounting standards are expected to have a significant impact on the future results of the Group.

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 Goodman. 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 can be found in the following notes:

- Note 6 – Property assets
- Note 14 – Goodwill and intangible assets
- Note 18 – Financial risk management.

The accounting impacts of revisions to estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Measurement of fair values

A number of Goodman’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

When measuring the fair value of an asset or a liability, Goodman uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy and 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)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 6 – Property assets
- Note 18 – Financial risk management.

Goodman Group

Notes to the consolidated financial statements

(continued)

RESULTS FOR THE YEAR

The notes in this section focus on the significant items in the income statement, and include the profit per security, analysis of the results by operating segment and taxation details.

2. Profit before income tax

Gross property income

Rental income under operating leases is 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 amortised on a straight-line basis over the life of the lease as a reduction of gross property income.

Management and development income

The revenue from management and development activities is measured based on the consideration specified in a contract with a customer. Goodman recognises revenue when it transfers control over a product or service to a customer.

Management income

Fee income derived from management services relates to investment management base fees and property services fees and is recognised and invoiced progressively as the services are provided. Customers make payments usually either monthly or quarterly in arrears.

Performance related management income generally relates to portfolio performance fee income, which is recognised progressively as the services are provided but only when the income can be reliably measured and is highly probable of not being reversed. These portfolio performance fees are typically dependent on the overall returns of a Partnership relative to an agreed benchmark return, assessed over the life of the Partnership, which can vary from one year to seven years. The returns are impacted by operational factors such as the quality and location of the portfolio, active property management, rental income rates and development activity but can also be significantly affected by changes in global and local economic conditions. Accordingly, portfolio performance fee revenue is only recognised towards the end of the relevant assessment period, as prior to this revenue recognition is not considered to be sufficiently certain.

In determining the amount of revenue that can be reliably measured, management prepares a sensitivity analysis to understand the impact of changes in asset valuations on the potential performance fee at the assessment date. The assessment of revenue will depend on the prevailing market conditions at the reporting date relative to long-term averages and also the length of time until the assessment date; e.g. the longer the time period to assessment date, the greater the impact of the sensitivity analysis. The potential portfolio performance fee revenue is then recognised based on the length of time from the start of the assessment period to the reporting date as a proportion of the total assessment period. Where the income is attributable to development activities or it relates to a combination of inextricable management and development activities that have occurred over the performance fee period, then it is reported as development income; otherwise, the income is reported as management income. The Partnerships make payments in respect of portfolio performances fees at the end of the performance periods once the attainment of the conditions has been verified and the amount of the fee has been agreed by all parties.

Annual Report 2021

Development income – disposal of inventories

The disposal of inventories is recognised at the point in time when control over the property asset is transferred to the customer. This will generally occur on transfer of legal title and payment in full by the customer. The gain or loss on disposal of inventories is calculated as the difference between the carrying amount of the asset at the time of disposal and the proceeds on disposal (less transaction costs) and is included in the income statement in the period of disposal.

Development income – development management services

Fee income from development management services (including master-planning, development management and overall project management) is recognised progressively as the services are provided in proportion to the stage of completion by reference to costs. Payments are received in accordance with the achievement of agreed milestones over the development period. The development period can be up to 24 months for larger, more complex projects.

Performance related development income includes income associated with the returns from individual developments under the Group’s management and performance fee income that relates to development activity. Income in respect of individual developments is recognised by Goodman on attainment of the performance related conditions, which is when the income can be reliably measured and is highly probable of not being reversed. These amounts are paid by the Partnership when the amounts have been measured and agreed. Income associated with development activities as part of a portfolio assessment is recognised on the same basis as outlined above in the management income section.

Development income – fixed price development contracts

Certain development activities are assessed as being fixed price development contracts. This occurs when a signed contract exists, either prior to the commencement of or during the development phase, to acquire a development asset from Goodman on completion. Revenue and expenses relating to these development contracts are recognised in the income statement in proportion to the stage of completion of the relevant contracts by reference to costs. The payments may be on completion of the development once legal title has been transferred. The development period can be up to 24 months for larger, more complex projects.

Net gain on disposal of investment properties

The disposal of an investment property is recognised at the point in time when control over the property has been transferred to the purchaser.

Employee expenses

Wages, salaries and annual leave

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 rates that are expected to be paid as at balance date including related on-costs, such as insurances and payroll tax.

Bonuses

A liability is recognised in other payables and accruals for bonuses where there is a contractual obligation or where there is a past practice that has created a constructive obligation. Liabilities for bonuses are measured at the amounts expected to be paid, including related on-costs, when they are settled.

Superannuation

Defined contribution funds

Obligations for contributions to defined contribution funds are recognised as an expense as incurred. Defined benefit retirement schemes

The net obligation in respect of defined benefit retirement schemes is recognised in the statement of financial position and is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest), are recognised immediately in other comprehensive income. Net interest expense and other expenses related to defined benefit retirement schemes are recognised in the income statement.

Goodman Group

Notes to the consolidated financial statements

Results for the year (continued)

Profit before income tax has been arrived at after crediting/(charging) the following items:

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Goodman GIT
2021 2020 2021 2020
$M $M $M $M
Gross property income
Rental income 93.0 94.6 45.9 53.6
Recovery of property outgoings 19.4 21.3 14.3 14.3
Gross property income 112.4 115.9 60.2 67.9
Management activities
Management services 310.1 304.0 – –
Performance related income 73.8 207.2 – –
Management income 383.9 511.2 – –
Development activities
Income from disposal of inventories 890.5 461.8 – 0.3
Income from fixed price development contracts 195.0 82.8 – –
Other development income, including development management [1] 274.2 309.5 – –
Net gain on disposal of assets held for sale 132.3 – – –
Net gain on disposal of special purpose development entities – 28.5 – –
Development income 1,492.0 882.6 – 0.3
Inventory cost of sales (686.8) (329.8) (2.3) (1.0)
– –
Other development expenses (175.5) (113.6)
Development expenses (862.3) (443.4) (2.3) (1.0)
Disposal of equity investments
Net consideration from disposal of associates and JVs 17.0 7.7 11.3 0.1
–
Carrying value of associates and JVs disposed 6(f) (12.0) (7.1) (8.1)
Net gain on disposal of equity investments 5.0 0.6 3.2 0.1
Employee expenses
– –
Wages, salaries and on-costs (203.4) (195.2)
– –
Annual and long service leave (1.4) (1.9)
– –
Superannuation costs (6.0) (6.6)
– –
Employee expenses (210.8) (203.7)
Share based payments expense
– –
Equity settled share based payments expense (134.7) (98.0)
– –
Cash settled share based payments expense (105.4) (41.2)
– –
Other share based payments related costs (28.7) (24.8)
– –
Share based payments expense (268.8) (164.0)
– –
Amortisation and depreciation (23.0) (22.5)
Impairment losses
Reversal of previous impairment on loans to related parties – – 17.6 –
Impairment losses – – 17.6 –
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Fee revenues from single contractual arrangements involving a combination of inextricable Investment Management and Development Management services and recognised over the life of the underlying development projects are classified as development income for statutory reporting purposes. During the year, $75.2 million (FY20: $nil) of such income was recognised.

Annual Report 2021

3. Profit per security

Basic profit per security of the Group is calculated by dividing the profit attributable to the Securityholders by the weighted average number of securities outstanding during the year. Diluted profit per security is determined by adjusting the profit attributable to the Securityholders and weighted average number of securities outstanding for all dilutive potential securities, which comprise performance rights issued under the LTIP.

Goodman

Goodman
	2021	2020
	¢	¢
Proft per security
Basic proft per security	125.4	82.4
Diluted proft per security	122.1	80.0

Profit after tax of $2,311.9 million (2020: $1,504.1 million) was used in calculating basic and diluted profit per security. Weighted average number of securities used in calculating basic and diluted profit per security:

	2021	2020
	Number of securities
Weighted average number of securities used in calculating basic proft per security	1,844,221,829	1,826,031,065
Effect of performance rights on issue	48,908,249	54,173,117
Weighted average number of securities used in calculating diluted proft per security	1,893,130,078	1,880,204,182

The calculation of profit per security is not required for GIT.

Goodman Limited

Under Australian Accounting Standards, the issued units of the Trust and the CDIs over the shares of GLHK are presented as non-controlling interests. As a consequence, the Directors are required to present a profit per share and a diluted profit per share based on Goodman Limited’s consolidated result after tax but excluding the results attributable to the Trust and GLHK.

	2021	2020
	¢	¢
Proft per Goodman Limited share
Basic proft per Goodman Limited share	16.3	17.3
Diluted proft per Goodman Limited share	15.9	16.8

Profit after tax of $300.2 million (2020: $315.9 million) was used in calculating basic and diluted profit per Goodman Limited share.

4. Segment reporting

An operating segment is a component of Goodman that engages in business activities from which it may earn revenues and incur expenses. Goodman reports the results and financial position of its operating segments 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.

Operating segment information is reported on a geographic basis and Goodman has determined that its operating segments are Australia and New Zealand (reported on a combined basis), Asia (Greater China and Japan), Continental Europe (primarily Germany and France), the United Kingdom and the Americas (North America and Brazil).

The activities and services undertaken by the operating segments include:

- Property investment, through both direct ownership and cornerstone investments in Partnerships
- Management activities, both investment and property management
- Development activities, including development of directly owned assets (predominantly disclosed as inventories) and management of development activities for Partnerships.

The segment results that are reported to the Group Chief Executive Officer are based on profit before net finance expense and income tax expense, and also exclude non-cash items such as fair value adjustments and impairments, corporate expenses and incentive based remuneration. The assets allocated to each operating segment are the property assets, including the investments in Partnerships and trade and other receivables associated with the operating activities, but exclude inter-entity funding, income tax receivables and corporate assets. The liabilities allocated to each operating segment primarily relate to trade and other payables associated with the operating activities, but exclude interest bearing liabilities, derivative financial instruments, provisions for distributions and corporate liabilities.

Goodman Group

Notes to the consolidated financial statements

Results for the year (continued)

4 Segment reporting (continued)

The accounting policies used to report segment information are the same as those used to prepare the consolidated financial statements of Goodman and GIT.

For the purpose of operating segment reporting, there are no material intersegment revenues and costs. Information regarding the operations of each reportable segment is included on the following pages.

Information about reportable segments

Goodman	Australia and	Australia and			Continental	Continental	United	United
	New Zealand		Asia		Europe		Kingdom		Americas		Total
	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
Income statement	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M
External revenues
Gross property income	95.8	105.6	6.5	0.1	8.5	–	1.0	9.7	0.6	0.5	112.4	115.9
Management income	147.0	159.6	110.2	246.2	107.4	88.0	3.3	2.3	16.0	15.1	383.9	511.2
Development income	223.6	99.6	164.8	193.8	796.5	511.3	245.3	19.0	61.8	58.9	1,492.0	882.6
Distributions from investments	–	–	–	–	–	1.2	–	–	–	–	–	1.2
Total external revenues	466.4	364.8	281.5	440.1	912.4	600.5	249.6	31.0	78.4	74.5	1,988.3	1,510.9
Analysis of external revenues Revenue from contracts with customers Assets and services transferred at a point in time Assets and services transferred over time Other revenue Rental income (excludes outgoings recoveries) Distributions from investments	106.3 282.6 77.5 –	11.5 266.1 87.2 –	17.2 260.4 3.9 –	18.6 421.5 – –	730.5 174.2 7.7 –	494.4 104.9 – 1.2	228.7 20.0 0.9 –	4.5 17.0 9.5 –	– 77.8 0.6 –	– 74.0 0.5 –	1,082.7 815.0 90.6 –	529.0 883.5 97.2 1.2
Total external revenues	466.4	364.8	281.5	440.1	912.4	600.5	249.6	31.0	78.4	74.5	1,988.3	1,510.9
Reportable segment proft before tax	467.4	435.8	324.5	477.7	458.8	282.3	31.8	20.9	128.9	102.5	1,411.4	1,319.2
Share of net results of equity
accounted investments	853.0	384.7	273.2	394.3	165.7	98.3	32.9	14.8	384.1	130.1	1,708.9	1,022.2
Material non-cash items not included
in reportable segment proft before tax
Net gain from fair value adjustments
on investment properties	63.1	46.4	–	–	–	–	–	(1.2)	–	–	63.1	45.2
	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
Statement of fnancial position	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M
Reportable segment assets	6,619.9	5,854.1	3,565.7	3,345.3	2,382.2	2,310.2	840.6	891.8	2,475.9	2,122.8	15,884.3	14,524.2
Non-current assets	6,314.6	5,445.6	3,261.8	2,938.3	2,126.5	1,870.6	761.8	591.2	2,335.8	2,017.3	14,800.5	12,829.3
Included in reportable
segment assets are:
Investment properties	1,687.3	1,894.0	137.7	–	–	–	26.2	7.2	–	–	1,851.5	1,901.2
Investments accounted for
using the equity method	4,251.0	3,451.5	2,808.8	2,732.8	865.2	898.9	408.0	281.0	2,327.0	2,006.6	10,660.0	9,370.8
Reportable segment liabilities	113.9	137.1	242.4	205.9	111.0	101.6	80.4	77.9	156.2	109.5	703.9	632.0

Annual Report 2021

GIT	Australia and	Australia and			Continental	Continental
	New Zealand		Asia		Europe		Americas		Total
Income statement	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M
External revenues
Gross property income	60.2	67.9	–	–	–	–	–	–	60.2	67.9
Development income	–	0.3	–	–	–	–	–	–	–	0.3
Distributions from investments	–	–	–	–	9.1	9.9	–	–	9.1	9.9
Total external revenues	60.2	68.2	–	–	9.1	9.9	–	–	69.3	78.1
Analysis of external revenues Revenue from contracts with customers Assets and services transferred at a point in time Assets and services transferred over time Other revenue Rental income (excludes outgoings recoveries) Distributions from investments	– 14.3 45.9 –	0.3 14.3 53.6 –	– – – –	– – – –	– – – 9.1	– – – 9.9	– – – –	– – – –	– 14.3 45.9 9.1	0.3 14.3 53.6 9.9
Total external revenues	60.2	68.2	–	–	9.1	9.9	–	–	69.3	78.1
Reportable segment proft before tax	240.2	180.9	33.0	34.3	69.2	64.9	73.9	70.8	416.3	350.9
Share of net results of equity accounted investments	726.2	332.2	137.3	284.7	140.0	83.2	370.3	125.4	1,373.8	825.5
Material non-cash items not included
in reportable segment proft before tax
Net gain from fair value adjustments
on investment properties	60.2	36.5	–	–	–	–	–	–	60.2	36.5
	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
Statement of fnancial position	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M
Reportable segment assets	4,947.0	4,405.5	1,522.5	1,510.6	732.9	779.1	2,268.1	1,953.8	9,470.5	8,649.0
Non-current assets	4,939.3	4,153.2	1,522.5	1,510.6	727.9	778.1	2,243.2	1,934.5	9,432.9	8,376.4
Included in reportable segment assets are:
Investment properties	1,155.7	1,202.4	–	–	–	–	–	–	1,155.7	1,202.4
Investments accounted for using the equity method	3,601.7	2,944.8	1,522.5	1,510.6	711.0	758.4	2,243.2	1,934.5	8,078.4	7,148.3
Reportable segment liabilities	44.6	91.3	–	–	0.6	–	124.1	82.3	169.3	173.6

Goodman Group

Notes to the consolidated financial statements

Results for the year (continued)

4 Segment reporting (continued)

Reconciliation of reportable segment revenues, profit or loss, assets and liabilities

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Goodman GIT
Note 2021 2020 2021 2020
$M $M $M $M
Revenues
Total revenue for reportable segments 1,988.3 1,510.9 69.3 78.1
Consolidated revenues 1,988.3 1,510.9 69.3 78.1
Profit or loss
Total profit before tax for reportable segments
Property investment earnings 411.5 425.2 416.3 350.9
Management earnings 459.1 511.2 – –
Development earnings [1] 717.9 575.7 – –
– –
Operating expenses allocated to reportable segments (177.1) (192.9)
Reportable segment profit before tax 1,411.4 1,319.2 416.3 350.9
Corporate expenses not allocated to reportable segments (116.9) (99.4) (51.7) (53.6)
1,294.5 1,219.8 364.6 297.3
Valuation and other items not included in reportable segment profit before tax:
– Net gain from fair value adjustments on investment properties 6(e) 63.1 45.2 60.2 36.5
– Share of fair value adjustments attributable to investment properties in Partnerships 6(f) 1,295.8 591.7 1,072.1 536.0
– Reversal of previous impairment on loans to related parties – – 17.6 –
– Share of fair value adjustments on derivative financial instruments in Partnerships 6(f) (28.9) 16.2 (28.3) 15.0
– Share based payments expense 2 (268.8) (164.0) – –
– Straight lining of rental income and tax deferred adjustments (3.2) (11.6) 2.6 (13.5)
Profit before interest and tax 2,352.5 1,697.3 1,488.8 871.3
Net finance (expense) [1] 15 67.5 (80.2) 135.5 (24.1)
Consolidated profit before income tax 2,420.0 1,617.1 1,624.3 847.2
Assets
Assets for reportable segments 15,884.3 14,524.2 9,470.5 8,649.0
Cash 514.6 1,042.9 349.6 1,039.5
Other unallocated amounts [2] 468.1 571.1 3,475.2 3,563.6
Consolidated total assets 16,867.0 16,138.2 13,295.3 13,252.1
Liabilities
Liabilities for reportable segments 703.9 632.0 169.3 173.6
Interest bearing liabilities 2,060.3 2,938.5 2,062.8 2,939.5
Provisions for dividends/distributions to Securityholders 11 277.1 274.3 166.3 201.1
Other unallocated amounts [2] 664.2 772.8 921.0 1,148.5
Consolidated total liabilities 3,705.5 4,617.6 3,319.4 4,462.7
----- End of picture text -----

Development earnings include $7.4 million (2020: $nil) of interest income from a loan to a development JV. The interest income is reported under finance income in note 15.
Other unallocated amounts in Goodman and GIT included other financial assets and liabilities, deferred tax assets, tax payables and provisions which did not relate to the reportable segments. Additionally, other unallocated assets and liabilities in GIT included loans due from/to controlled entities of Goodman.

Annual Report 2021

5. Taxation

Income tax for the period comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in the income statement except to the extent that they relate to items recognised directly in equity, in which case the relevant amounts of tax are recognised directly 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 recognised in respect of 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
- 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. Deferred tax assets or liabilities in respect of investment properties held at fair value are calculated on the presumption that the carrying amount of the investment property will be recovered through sale. 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.

(a) Amounts recognised in the income statement

Goodman 2021 $M 2020 $M Current tax expense recognised in the income statement Current year (66.3) (128.5) Adjustment for current tax in prior periods 8.5 5.5	GIT
	2021 $M 2020 $M
	(0.9) (8.0) – –
Current tax expense (57.8) (123.0)	(0.9) (8.0)
Deferred tax expense recognised in the income statement Origination and reversal of temporary differences (50.3) 10.0	(48.6) (19.1)
Deferred tax expense (50.3) 10.0	(48.6) (19.1)
Total income tax expense recognised in the income statement1 (108.1) (113.0)	(49.5) (11.1)

Goodman’s total income tax expense includes deferred taxes of $50.4 million (2020: $15.6 million) on fair value adjustments on investment properties.

(b) Amounts recognised in equity

	Goodman	Goodman
	2021	2020
	$M	$M
Deferred tax beneft/(expense) recognised in equity
LTIP	8.1	–
Defned beneft superannuation funds	(4.7)	(4.9)
Total income tax beneft/(expense) recognised in equity	3.4	(4.9)

Goodman Group

Notes to the consolidated financial statements

Results for the year (continued)

5 Taxation (continued)

(c) Reconciliation of income tax expense to profit before income tax

(c)	Reconciliation of income tax expense to proft before income tax
		Goodman
		2021	2020
		$M	$M
Proft before income tax		2,420.0	1,617.1
Prima facie income tax expense calculated at 30% (2020: 30%) on the proft before income tax		(726.0)	(485.1)
Decrease/(increase) in income tax due to:
–	Proft attributable to GIT Unitholders	483.5	252.6
–	Current year losses for which no deferred tax asset was recognised	(34.3)	(3.4)
–	Other non-assessable/(deductible) items, net	135.7	101.3
–	Utilisation of previously unrecognised tax losses	68.9	39.5
–	Difference in overseas tax rates	11.2	5.5
–	Adjustment for current tax in prior periods	8.5	5.5
–	Taxes on partnership income	(62.8)	(25.8)
–	Other items	7.2	(3.1)
Income tax expense		(108.1)	(113.0)

GIT

The income tax expense recorded by GIT relates to withholding taxes on actual distributions and deferred taxes on potential future distributions from Partnerships.

(d) Current tax receivable/payable

		Goodman	Goodman
		2021	2020
		$M	$M
Net	income tax payable
Net	income tax payable at the beginning of the year	(131.8)	(85.0)
Decrease/(increase) in current tax payable due to:
–	Net income taxes paid	41.4	76.3
–	Current tax expense	(57.8)	(123.0)
–	Other	4.2	(0.1)
Net	income tax payable at the end of the year	(144.0)	(131.8)
Current tax receivables (refer to note 7) Current tax payables		16.1 (160.1)	9.0 (140.8)
		(144.0)	(131.8)

Annual Report 2021

(e) Deferred tax assets and liabilities

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

(e) Deferred tax assets and liabilities Deferred tax assets/(liabilities) are attributable to the following:
Goodman	Deferred tax assets		Deferred tax liabilities
	2021	2020	2021	2020
	$M	$M	$M	$M
Investment properties	–	–	(182.0)	(119.4)
Receivables	–	–	(9.3)	(3.4)
Tax losses	27.3	–	–	–
Payables	11.5	11.3	–	–
Provisions	4.4	10.1	–	–
Other items	1.5	–	(1.9)	(9.9)
Tax assets/(liabilities)	44.7	21.4	(193.2)	(132.7)
Set off of tax	(24.8)	(10.9)	24.8	10.9
Net tax assets/(liabilities)	19.9	10.5	(168.4)	(121.8)

Deferred tax assets of $323.3 million (2020: $219.9 million) arising primarily from tax losses and deductions associated with the LTIPs have not been recognised by Goodman.

GIT

At 30 June 2021, deferred tax liabilities of $124.0 million (2020: $82.3 million) have been recognised in relation to potential future distributions from Partnerships.

(f) Taxation of GIT

Under current Australian income tax legislation, the Trust is not liable for income tax, including capital gains tax, provided that Securityholders are presently entitled to the distributable income of the Trust as calculated for trust law purposes. The controlled entities of the Trust that operate in certain foreign jurisdictions are liable to pay tax in those jurisdictions.

Goodman Group

Notes to the consolidated financial statements

Results for the year (continued)

OPERATING ASSETS AND LIABILITIES

The notes in this section focus on Goodman’s property assets, working capital and goodwill and intangible assets.

6. Property assets

(a) Principles and policies

Investment in property assets includes both inventories and investment properties (including those under development), which may be held either directly or through investments in Partnerships (both associates and JVs).

Inventories

Inventories relate to land and property developments that are held for sale or development and sale in the normal course of the Group’s business. Inventories are carried at the lower of cost or net realisable value. The calculation of net realisable value requires estimates and assumptions which are regularly evaluated and are based on historical experience and expectations of future events that are believed to be reasonable under the circumstances.

Inventories are classified as non-current assets unless they are contracted to be sold within 12 months of the end of the reporting period, in which case they are classified as current assets.

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 fair value. The calculation of fair value requires estimates and assumptions which are continually evaluated and are based on historical experience and expectations of future events that are believed to be reasonable under the circumstances. Investment properties are not depreciated as they are subject to continual maintenance and regularly revalued on the basis described below. Changes in the fair value of investment properties are recognised directly in the income statement.

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.

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. Direct expenditure associated with leasing a property is also capitalised within investment property values and amortised over the term of the lease.

Classification of investment properties

Investment properties are classified as either properties under development or stabilised properties. Investment properties under development include land, new investment properties in the course of construction and investment properties that are being redeveloped. Stabilised investment properties are all investment properties not classed as being under development and would be completed properties that are leased or are available for lease to customers.

For investment properties under development, the carrying values are reviewed by management at each reporting date to consider whether they reflect the fair value and at completion external valuations are obtained to determine the fair values.

For stabilised investment properties, independent valuations are obtained at least every three years to determine the fair values. At each reporting date between obtaining independent valuations, the carrying values are reviewed by management to ensure they reflect the fair values.

Deposits for investment properties

Deposits and other costs associated with acquiring investment properties that are incurred prior to obtaining legal title are recorded at cost and disclosed as other assets in the statement of financial position.

Annual Report 2021

(b) Summary of investment in property assets

Goodman Note 2021 $M 2020 $M Inventories Current 6(d) 235.1 544.1 Non-current 6(d) 1,192.7 636.1 1,427.8 1,180.2 Assets held for sale Investment property 41.5 – Investment properties Stabilised investment properties 1,791.1 1,797.9 Investment properties under development 60.1 103.3 6(e) 1,851.2 1,901.2 Investments accounted for using the equity method Associates 6(f)(i) 6,302.6 5,617.2 JVs 6(f)(ii) 4,357.4 3,753.6 10,660.0 9,370.8 Total property assets 13,980.5 12,452.2	GIT
	2021 $M 2020 $M
	– – 5.9 5.9
	5.9 5.9
	– –
	1,093.4 1,192.4 62.3 10.0
	1,155.7 1,202.4
	5,292.9 4,761.4 2,785.5 2,386.9
	8,078.4 7,148.3
	9,240.0 8,356.6

(c) Estimates and assumptions in determining property carrying values

Inventories

For both inventories held directly and inventories held in Partnerships, external valuations are not performed but instead valuations are determined using the feasibility studies supporting the land and property developments. The end values of the developments in the feasibility studies are based on assumptions such as capitalisation rates, letting up periods and incentives that are consistent with those observed in the relevant market. If the feasibility study calculations indicate that the forecast cost of a completed development will exceed the net realisable value, then the inventories are impaired.

Investment properties

Stabilised investment properties

The fair value of stabilised investment properties 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

The approach to determination of fair value of investment properties is applied to both investment properties held directly and investment properties held in Partnerships.

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. In making the determination of whether a market segment is active, the following characteristics are considered:

- Function of the asset (distribution/warehouse or suburban office)
- Location of asset (city, suburb or regional area)
- Carrying value of the asset (categorised by likely appeal to private (including syndicates), national and institutional investors)
- 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.

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

Where a market segment is observed to be active, then external independent valuations are performed for stabilised investment properties where there has been more than a 25 basis point movement in capitalisation rates and/or there has been a material change in tenancy profile (including changes in the creditworthiness of a significant customer that may have a material impact on the property valuation), and/or there has been significant capital expenditure, and/or there has been a change in use (or zoning) of the asset and/or it has been three years since the previous external independent valuation. For all other stabilised investment properties in an active market segment, an internal valuation is performed based on observable capitalisation rates and referenced to independent market data.

Where a market segment is observed to be inactive, then no external independent valuations are performed and internal valuations are undertaken based on discounted cash flow (DCF) calculations. The DCF calculations are prepared over a 10 year period. The key inputs considered for each individual calculation 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

The investment market for industrial, logistics and warehousing properties has been strong during FY21. At 30 June 2021, the Board has been able to assess that all markets in which the Group operated were active and as a consequence no adjustments have been made to the carrying values of the Group’s stabilised investment property portfolios on the basis of internally prepared discounted cash flow valuations.

During the current financial year, the fair values of 59% (2020: 59%) of stabilised investment properties held directly by Goodman were determined based on a valuation by an independent valuer who held a recognised and relevant professional qualification and had recent experience in the location and category of the investment property being valued. The equivalent percentage for GIT was 78% (2020: 42%).

For investments in Partnerships, all properties that were stabilised investment properties throughout FY21 were valued by an independent valuer during the year.

Sensitivity analysis

The fair value measurement approach for directly held investment properties has been categorised as a Level 3 fair value based on the inputs to the valuation method used (see note 1). The stabilised investment property valuations at 30 June 2021 are most sensitive to the following inputs:

- Capitalisation rates
- Market rents
- Level of incentives provided to customers

and/or the amount of vacant time on expiry of a lease.

The majority of directly held stabilised investment properties are in Australia and the average capitalisation rate and the range of market rents are summarised in the table below:

Valuation technique	Signifcant unobservable inputs	2021	2020
Income	Range of net market rents	$90 to	$44 to
capitalisation	(per square metre per annum)	$450	$320
	Capitalisation rate (weighted average)	4.4%	5.2%

The overall weighted average capitalisation rates for the divisional portfolios (including Partnerships) are as set out in the table below:

	Total portfolio weighted average capitalisation rate	Total portfolio weighted average capitalisation rate	Total portfolio weighted average capitalisation rate	Total portfolio weighted average capitalisation rate
	Goodman		GIT
	2021	2020	2021	2020
Division	%	%	%	%
Australia and	4.4	5.1	4.4	5.1
New Zealand
Asia	4.4	4.7	3.9	4.2
Continental	3.8	4.9	3.9	5.0
Europe
United Kingdom	4.1	4.5	–	–
Americas	4.0	4.4	4.0	4.4

Annual Report 2021

The impacts on the Group’s financial position that would arise from the changes in capitalisation rates, market rents and incentives/voids are set out in the table below. This illustrates the impacts on Goodman in respect of both the directly held stabilised investment properties and its share of those stabilised investment properties held by Partnerships.

Goodman
Directly held
properties
$M
Partnerships1
$M
Book value at 30 June 2021
1,791.1
11,316.8
Changes in capitalisation rates:
Increase in cap rates +50bps
(170.8)
(1,195.8)
Increase in cap rates +25bps
(89.7)
(631.5)
Decrease in cap rates -25bps
99.7
711.6
Decrease in cap rates -50bps
211.2
1,519.7
Changes in market rents:
Decrease in rents -10%
(86.3)
(510.4)
Decrease in rents -5%
(43.2)
(255.2)
Increase in rents +5%
43.2
255.5
Increase in rents +10%
86.3
510.4
Changes in voids/incentives2:
Increase in voids/ incentives +3 months
(6.4)
(30.2)
Increase in voids/ incentives +6 months
(12.8)
(60.3)

GIT

Directly held
properties
$M
Partnerships1
$M

1,093.4
7,091.4
(107.6)
(759.9)
(56.6)
(401.5)
63.2
452.9
134.1
967.9
(50.1)
(319.4)
(25.1)
(159.7)
25.1
159.7
50.1
319.4
(4.4)
(16.3)
(8.8)
(32.6)

Goodman’s share of stabilised investment properties held by Partnerships.
On assumed lease expiries over the next 12 months.

Investment properties under development

External valuations are generally not performed for investment properties under development, but instead valuations are determined using the feasibility studies supporting the developments. The end values of the developments in the feasibility studies are based on assumptions such as capitalisation rates, letting up periods and incentives that are consistent with those observed in the relevant market adjusted for a profit and risk factor. This profit and risk factor is dependent on the function, location, size and current status of the development and is generally in a market range of 10% to 15%; although for larger more complex projects that are at an early stage of the development, the profit and risk factor could be up to 25%. This adjusted end value is then compared to the forecast cost of a completed development to determine whether there is an increase or decrease in value.

This practice of determining fair value by reference to the development feasibility is generally also applied for Goodman’s investments in Partnerships. However, certain Partnerships do obtain independent valuations for investment properties under development each financial year.

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

(d) Inventories

Goodman 2021 $M 2020 $M Current Land and development properties 235.1 544.1 235.1 544.1 Non-current Land and development properties 1,192.7 636.1 1,192.7 636.1	GIT
	2021 $M 2020 $M
	– –
	– –
	5.9 5.9
	5.9 5.9

Goodman

During the current and prior financial years no impairment losses were recognised on land and development properties. During the financial year, borrowing costs of $3.8 million (2020: $6.7 million) previously capitalised into the carrying value of inventories were expensed to the income statement on disposal of the inventories.

(e) Investment properties

Reconciliation of carrying amount of directly held investment properties

Goodman 2021 $M 2020 $M Carrying amount at the beginning of the year 1,901.2 1,897.1 Acquisitions 163.0 – Capital expenditure 24.8 123.4 Carrying value of properties disposed (127.8) (165.2) Transfers to assets held for sale (41.5) – Transfers to inventories (131.5) – Net gain from fair value adjustments 63.1 45.2 Effect of foreign currency translation (0.1) 0.7 Carrying amount at the end of the year 1,851.2 1,901.2 Analysed by segment: Australia and New Zealand 1,687.3 1,894.0 Asia 137.7 – United Kingdom 26.2 7.2 1,851.2 1,901.2	GIT
	2021 $M 2020 $M
	1,202.4 1,158.6 – – 22.0 8.5 (128.9) (1.0) – – – – 60.2 36.5 – (0.2)
	1,155.7 1,202.4
	1,155.7 1,202.4 – – – –
	1,155.7 1,202.4

Annual Report 2021

Goodman

During the financial year, borrowing costs of $nil (2020: $1.8 million) previously capitalised into the carrying value of investment properties were expensed to the income statement on disposal of the investment properties.

Non-cancellable operating lease commitments receivable from investment property customers

The analysis in the table below reflects the gross property income, excluding recoverable outgoings, based on existing lease agreements. It assumes that leases will not extend beyond the next review date, where the customer has an option to end the lease.

Goodman 2021 $M 2020 $M Non-cancellable operating lease commitments receivable: Less than one year 80.7 85.8 One to two years 63.9 71.4 Two to three years 49.4 54.3 Three to four years 38.4 44.7 Four to fve years 30.1 33.3 More than fve years 120.4 190.3 382.9 479.8	GIT
	2021 $M 2020 $M
	45.8 47.0 37.0 39.3 28.6 27.6 21.1 20.3 16.8 14.4 36.9 29.1
	186.2 177.7

(f) Investments accounted for using the equity method

Investments accounted for using the equity method comprise associates and JVs, which are collectively referred to as Partnerships.

Associates

An associate is an entity in which Goodman exercises significant influence but not control over its 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, Goodman’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.

JVs

A JV is an arrangement in which Goodman is considered to have joint control for accounting purposes, whereby Goodman has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. In the consolidated financial statements, investments in JVs are accounted for using the equity method. Investments in JVs are carried at the lower of the equity accounted amount and recoverable amount. Goodman’s share of the JVs’ net profit or loss is recognised in the consolidated income statement from the date the arrangement commences to the date the arrangement ceases. Movements in reserves are recognised directly in consolidated reserves.

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

(i) Investments in associates

Investments in Partnerships classified as associates are set out below:

(i) Investments in associates Investments in Partnerships classifed as associates are set out below:
Goodman Share of net results Ownership interest Investment carrying amount Name of associate Country of establishment 2021 $M 2020 $M 2021 % 2020 % 2021 $M 2020 $M Property investment Goodman Australia Industrial Partnership (GAIP) Australia 366.9 201.8 29.1 28.82,208.5 1,729.8 Goodman Australia Partnership (GAP) Australia 192.1 91.6 19.9 19.9 850.9 762.6 Goodman Property Trust (GMT)1 New Zealand 126.7 52.1 22.4 21.4 633.4 490.8 Goodman Hong Kong Logistics Partnership (GHKLP) Cayman Islands 137.3 284.7 20.3 20.21,522.51,510.6 Goodman Japan Core Partnership (GJCP)2 Japan 29.8 32.5 14.7 15.5 376.3 365.0 Goodman European Partnership (GEP) Luxembourg 140.0 83.2 20.4 20.4 711.0 758.4 992.8 745.9 6,302.6 5,617.2	GIT
	Share of net results Ownership interest Investment carrying amount
	2021 $M 2020 $M 2021 % 2020 % 2021 $M 2020 $M
	366.9 201.8 29.1 28.82,208.5 1,729.8 192.1 91.6 19.9 19.9 850.9 762.6 – – – – – – 137.3 284.7 20.3 20.21,522.51,510.6 – – – – – – 140.0 83.2 20.4 20.4 711.0 758.4
	836.3 661.3 5,292.9 4,761.4

GMT is listed on the New Zealand Stock Exchange (NZX). The market value of Goodman’s investment in GMT at 30 June 2021 using the quoted price on the last day of trading was $676.6 million (2020: $565.6 million).
Goodman’s ownership interest in GJCP reflected the weighted average ownership interest in the various property investment vehicles.

The reconciliation of the carrying amount of investments in Partnerships classified as associates is set out as follows:

Goodman Movement in carrying amount of investments in associates 2021 $M 2020 $M Carrying amount at the beginning of the year 5,617.2 4,856.0 Share of net results after tax (before fair value adjustments) 261.7 226.8 Share of fair value adjustments attributable to investment properties after tax 765.8 493.3 Share of fair value adjustments on derivative fnancial instruments (34.7) 25.8 Share of net results 992.8 745.9 Share of movements in reserves 0.3 (1.8) Acquisitions 287.2 272.6 Disposals (3.9) (6.8) Capital return (79.7) (59.7) Distributions received and receivable (318.4) (207.6) Effect of foreign currency translation (192.9) 18.6 Carrying amount at the end of the year 6,302.6 5,617.2	GIT
	2021 $M 2020 $M
	4,761.4 4,120.4
	225.4 191.4 643.3 445.6 (32.4) 24.3
	836.3 661.3
	0.3 (1.8) 211.6 187.9 – – (79.7) (59.7) (287.6) (172.0) (149.4) 25.3
	5,292.9 4,761.4

Annual Report 2021

The table below includes further information regarding Partnerships classified as associates, held at the end of the financial year:

	GAIP	GAIP	GAP	GAP	GMT	GMT	GHKLP	GHKLP	GJCP	GJCP	GEP	GEP
	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M
Summarised statement
of fnancial position
Total current assets	698.4	230.3	61.3	170.9	8.3	13.6	75.0	129.7	227.6	326.2	461.3	1,422.6
Total non-current assets	9,338.5	8,406.4	5,338.1	4,385.5	3,562.2	2,954.6	9,188.4	8,913.5	3,672.8	3,486.8	5.318.4	5,043.6
Total current liabilities	402.2	114.9	98.9	111.4	113.7	111.8	176.2	216.6	23.7	25.7	456.5	365.9
Total non-current liabilities	2,097.3 2,575.2 1,094.9			682.8	685.8	611.2	1,584.9	1,411.1	1,324.7	1,424.5	1,832.1	2,376.7
Net assets (100%)	7,537.4 5,946.6 4,205.6			3,762.2	2,771.0	2,245.2	7,502.3	7,415.5 2,552.0 2,362.8			3,491.1	3,723.6
Summarised statement of comprehensive income Revenue	418.1	428.0 256.2		258.7	109.4	139.0	270.9	294.5 189.8 265.4			440.8	357.4
Proft after tax and revaluations Other comprehensive (loss)/income	1,263.1 –	730.5 964.6 – –		460.1 –	590.2 –	243.0 –	677.1 1.5	1,409.9 189.5 191.8 (8.8) – –			744.4 –	404.0 –
Total comprehensive income (100%)	1,263.1	730.5 964.6		460.1	590.2	243.0	678.6	1,401.1	189.5 191.8		744.4	404.0
Goodman Consolidated ownership interest Consolidated share of net assets Other items, including capitalised costs Distributions receivable1	29.1% 28.8% 19.9% 2,190.9 1,711.5 837.3 1.2 1.0 0.3 16.4 17.3 13.3			19.9% 749.1 0.2 13.3	22.4% 621.1 12.3 –	21.4% 480.9 9.9 –	20.3% 1,521.2 1.3 –	20.2% 14.7% 15.5% 1,498.6 376.2 365.5 1.5 0.1 (0.5) 10.5 – –			20.4% 711.0 – –	20.4% 758.4 – –
Carrying amount of investment	2,208.5	1,729.8	850.9	762.6	633.4	490.8	1,522.5	1,510.6	376.3	365.0	711.0	758.4
Distributions received and receivable	66.2 66.3 24.1			29.2	14.7	18.4	33.6	32.7 16.1		17.2	163.7	43.8
GIT Consolidated ownership interest Consolidated share of net assets Other items, including capitalised costs Distributions receivable1	29.1% 28.8% 19.9% 2,190.9 1,711.5 837.3 1.2 1.0 0.3 16.4 17.3 13.3			19.9% 749.1 0.2 13.3	– – – –	– – – –	20.3% 1,521.2 1.3 –	20.2% 1,498.6 1.5 10.5	– – – –	– – – –	20.4% 711.0 – –	20.4% 758.4 – –
Carrying amount of investment in associate	2,208.5	1,729.8	850.9	762.6	–	–	1,522.5	1,510.6	–	–	711.0	758.4
Distributions received
and receivable	66.2	66.3	24.1	29.2	–	–	33.6	32.7	–	–	163.7	43.8

Distributions receivable related to distributions provided for but not paid by the Partnerships at 30 June 2021. This was applicable to trusts in Australia where unitholders were presently entitled to income at the end of the financial year.

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

(ii) Investments in JVs

A summary of the results and ownership interests of principal Partnerships classified as JVs is set out below:

Goodman Share of net results Ownership interest Investment carrying amount Name of JV Country of establishment/ incorporation 2021 $M 2020 $M 2021 % 2020 % 2021 $M 2020 $M Property investment KWASA Goodman Industrial Partnership (KGIP) Australia 47.6 20.0 40.0 40.0 228.3 189.2 KWASA Goodman Germany (KGG)1 Luxembourg 27.6 13.0 19.2 20.5 151.9 137.4 Property development Goodman Japan Development Partnership (GJDP) Japan 40.3 49.4 50.0 50.0 76.1 119.3 Property investment and development Goodman China Logistics Partnership (GCLP) Cayman Islands 65.2 30.3 20.0 20.0 832.7 737.2 Goodman UK Partnership (GUKP)2 United Kingdom 32.9 14.8 33.3 33.3 404.0 277.0 Goodman North America Partnership (GNAP) United States of America 379.5 127.7 55.0 55.0 2,310.6 1,988.5 Other JVs3 123.0 21.1 353.8 305.0 716.1 276.3 4,357.4 3,753.6	GIT
	Share of net results Ownership interest Investment carrying amount
	2021 $M 2020 $M 2021 % 2020 % 2021 $M 2020 $M
	47.6 20.0 40.0 40.0 228.3 189.2 – – – – – –
	– – – – – –
	– – – – – – – – – – – – 365.7 123.1 53.0 53.02,226.8 1,916.4
	124.2 21.1 330.4 281.3
	537.5 164.2 2,785.5 2,386.9

The consolidated ownership interest in KGG reflected the weighted average ownership in the various property investment vehicles.
GUKP incorporated two separate investment vehicles in which the investment partners, including the Consolidated Entity, had the same ownership interests.
Other JVs included the Group’s investment in Goodman Brazil Logistics Partnership. Additionally, the share of net results of other JVs for FY21 included $95.9 million (FY20: $nil) of valuation gains in respect of property development JVs in Australia.

The reconciliation of the carrying amount of investments in Partnerships classified as JVs is set out as follows:

Goodman Movement in carrying amount of investments in JVs 2021 $M 2020 $M Carrying amount at the beginning of the year 3,753.6 3,596.4 Share of net results after tax (before fair value adjustments) 180.3 173.1 Share of fair value adjustments attributable to investment properties after tax1 530.0 112.8 Share of fair value adjustments on derivative fnancial instruments 5.8 (9.6) Share of net results 716.1 276.3 Share of movements in reserves 2.9 (25.8) Reclassifcation of loan to related party – (3.3) Acquisitions 449.7 504.2 Disposals (8.1) (0.3) Transfer to assets held for sale – (11.2) Capital return (176.6) (368.6) Distributions/dividends received and receivable (218.0) (252.8) Effect of foreign currency translation (162.2) 38.7 Carrying amount at the end of the year 4,357.4 3,753.6	GIT
	2021 $M 2020 $M
	2,386.9 2,280.6
	104.6 83.1 428.8 90.4 4.1 (9.3)
	537.5 164.2
	– – – – 197.4 335.8 (8.1) – – – (86.4) (355.2) (85.0) (62.3) (156.8) 23.8
	2,785.5 2,386.9

The share of fair value adjustments attributable to investment properties after tax for FY21 included $95.9 million (FY20: $nil) of valuation gains in respect of properties under development that as at 30 June 2021 were subject to conditional contracts for disposal.
At 30 June 2021, the Group’s share of carried forward valuation gains on development properties subject to conditional contracts for disposal, incorporating all valuation gains since the commencement of the development or the most recent redevelopment, was $95.9 million (FY20: nil).

Annual Report 2021

The table below includes further information regarding principal Partnerships classified as JVs, held at the end of the financial year:

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KGIP KGG GJDP GCLP GUKP GNAP
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
$M $M $M $M $M $M $M $M $M $M $M $M
Summarised statement of financial position
Current assets
Cash and cash equivalents 2.7 9.0 25.3 36.5 79.9 112.6 281.3 231.1 43.4 38.6 62.8 39.6
Other current assets 2.0 1.8 4.4 6.5 10.6 16.1 84.4 73.5 1,490.3 2.0 33.7 0.1
Total current assets 4.7 10.8 29.7 43.0 90.5 128.7 365.7 304.6 1,533.7 40.6 96.5 39.7
Total non-current assets 851.8 718.4 1,441.9 1,215.1 254.2 378.5 5,537.5 4,741.5 – 813.4 4,846.1 4,291.7
Current liabilities
Other current liabilities 53.6 16.4 17.4 88.8 3.9 28.7 2,796.4 2,736.5 36.1 15.5 102.8 58.5
Total current liabilities 53.6 16.4 17.4 88.8 3.9 28.7 2,796.4 2,736.5 36.1 15.5 102.8 58.5
Non-current liabilities
Financial liabilities 242.5 248.0 505.8 460.8 188.6 232.0 757.7 390.1 287.0 – 640.3 653.1
Other non-current liabilities 0.8 1.4 159.3 37.2 4.3 12.8 613.7 509.8 – – 6.7 13.4
Total non-current liabilities 243.3 249.4 665.1 498.0 192.9 244.8 1,371.4 899.9 287.0 – 647.0 666.5
Net assets (100%) 559.6 463.4 789.1 671.3 147.9 233.7 1,735.4 1,409.7 1,210.6 838.5 4,192.8 3,606.4
Summarised statement
of comprehensive income
Revenue 43.6 43.4 62.9 100.0 492.5 519.6 193.6 193.3 28.5 17.0 181.7 170.1
Net finance (expense)/income (3.8) (7.6) (8.3) (5.6) – (0.8) (19.2) (22.4) (3.7) – 6.4 (18.0)
Income tax expense – – (4.7) (22.3) (2.1) (3.1) (37.4) (23.9) – – (0.5) (0.4)
Profit after tax
and revaluations 118.9 50.0 189.7 80.2 80.6 98.8 326.2 151.4 98.7 44.5 690.0 301.6
Other comprehensive income – – – – – – (12.8) (129.0) – – – –
Total comprehensive
income (100%) 118.9 50.0 189.7 80.2 80.6 98.8 313.4 22.4 98.7 44.5 690.0 301.6
Goodman
Consolidated
ownership interest 40.0% 40.0% 19.2% 20.5% 50.0% 50.0% 20.0% 20.0% 33.3% 33.3% 55.0% 55.0%
Consolidated share
of net assets 223.8 185.4 151.9 137.4 74.0 116.9 347.1 282.0 403.5 279.5 2,306.0 1,983.5
Shareholder loan [1] – – – – – – 482.3 451.9 – – – –
Other items, including
capitalised costs – – – – 2.1 2.4 3.3 3.4 0.5 (2.5) 4.6 5.0
Distributions receivable 4.5 3.8 – – – – – – – – – –
Carrying amount
of investment 228.3 189.2 151.9 137.4 76.1 119.3 832.7 737.2 404.0 277.0 2,310.6 1,988.5
Distributions/dividends
received and receivable 8.4 7.1 15.9 20.4 102.5 163.7 6.1 3.1 4.6 – 57.8 53.6
GIT
Consolidated
ownership interest 40.0% 40.0% – – – – – – – – 53.0% 53.0%
Consolidated share
of net assets 223.8 185.4 – – – – – – – – 2,222.2 1,911.4
Other items, including
capitalised costs – – – – – – – – – – 4.6 5.0
Distributions receivable 4.5 3.8 – – – – – – – – – –
Carrying amount
of investment in JV 228.3 189.2 – – – – – – – – 2,226.8 1,916.4
Distributions/dividends
received and receivable 8.4 7.1 – – – – – – – – 55.7 51.6
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Shareholder loans have been provided by investors of GCLP in proportion to their ownership interest. The shareholder loans are interest free, unsecured and have no fixed terms of repayment. The shareholder loans are not expected to be repaid within 12 months from the end of the reporting period and the Directors consider the loans to form part of Goodman’s investment in GCLP.

With respect to Goodman’s other JVs, the total profit after tax and revaluations was $332.4 million (2020: $92.9 million) and total other comprehensive loss was $12.8 million (2020: $nil). With respect to GIT’s other JVs, the total profit after tax and revaluations was $341.2 million (2020: $107.5 million) and total other comprehensive income was $nil (2020: $nil).

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

7. Receivables

Receivables comprise trade and other receivables and loans to related parties and are recognised on the date that they are originated, initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, receivables are measured at amortised cost using the effective interest rate method, less any impairment losses.

Receivables are derecognised when the contractual rights to the cash flows from the receivable expire or the Group transfers the rights to receive the contractual cash flows on the receivable in a transaction in which substantially all the risks and rewards of the receivable are transferred.

Goodman 2021 $M 2020 $M Current Trade receivables 16.4 15.6 Tax receivables 16.1 9.0 Other receivables 197.2 91.6 Amounts due from related parties1 101.6 132.4 Loans to related parties1 – 33.7 331.3 282.3 Non-current Other receivables 7.1 8.1 Loans to related parties1 270.4 100.2 277.5 108.3	GIT
	2021 $M 2020 $M
	0.1 2.7 1.4 3.0 5.8 4.3 0.1 0.3 808.7 1,591.8
	816.1 1,602.1
	– – 2,528.5 1,487.4
	2,528.5 1,487.4

Goodman assessed the receivables balances at 30 June 2021 for expected credit losses (risk of non-payment). The level of provisioning was not significant in the context of the Group’s financial position.

8. Contract balances

Contract assets primarily comprise amounts recoverable from fixed price development contracts (disclosed net of any payments received on account) and accrued performance fee income where the Group assesses that the income can be reliably measured.

Contract liabilities primarily comprise consideration received in advance of the completion of development contracts and rental guarantees.

The following table provides an analysis of receivables from contracts with customers (excluding rental income receivables), contract assets and contract liabilities at the reporting dates:

	Goodman	Goodman
	2021	2020
	$M	$M
Current
Receivables, which are included
in trade receivables, other receivables
and amounts due from related parties	143.6	146.1
Contract assets Contract liabilities	80.9 5.0	25.7 12.3
Non-current
Contract liabilities	1.0	1.5

Refer to note 24 for details of amounts due from and loans to related parties.

Significant changes in the contract assets and the contract liabilities balances during the year are set out below:

		Goodman	Goodman
	2021		2020
	Contract	Contract	Contract	Contract
	assets	liabilities	assets	liabilities
	$M	$M	$M	$M
Balance at the beginning of the year	25.7	13.8	308.1	9.0
Increase due to changes in the measure of progress during the year	237.5	–	531.3	–
Transfers from contract assets to receivables	(182.3)	–	(823.9)	(0.1)
Revenue recognised that was included in the contract
liability balance at the beginning of the year	–	(7.7)	–	(1.6)
Increases due to cash received, excluding amounts
recognised as revenue during the year	–	0.1	–	6.5
Effect of foreign currency translation	–	(0.2)	10.2	–
Balance at the end of the year	80.9	6.0	25.7	13.8
Current contract assets and liabilities Non-current contract liabilities	80.9 –	5.0 1.0	25.7 –	12.3 1.5
	80.9	6.0	25.7	13.8

Annual Report 2021

Transaction price allocated to the remaining contract obligations

The amount of the transaction price allocated to the remaining performance obligations under Goodman’s existing contracts was $12.5 million (2020: $14.3 million). This amount represents revenue expected to be recognised in the future from ongoing management and fixed price development contracts with customers. Goodman will recognise the expected revenue in the future as the work is completed, which is expected to be within the next 12 months.

Details regarding Goodman’s future rental income associated with existing lease agreements is included in note 6.

In addition, Goodman receives investment management, development management and property services fees under various contracts that it has with its Partnerships. These contracts are for varying lengths of time and are typically transacted on terms that are consistent with market practice. The revenues under these contracts are linked to the AUM, total development project costs or gross property income of Partnerships and are invoiced as the services are provided.

9. Assets held for sale

At 30 June 2021, assets held for sale amounting to $41.5 million comprised an investment property in Australia. In the prior year, the Group together with GEP entered into an agreement with a third party in March 2020 to dispose a portfolio of property assets and the Group’s operating platform in the Czech Republic, Hungary, Poland and Slovakia. The disposal was completed on 8 July 2020. At 30 June 2020, the directly held assets and liabilities to be disposed were presented as a disposal group held for sale and comprised the following assets and liabilities within the Continental Europe segment:

	Note	2020 $M
Cash	21(a)	10.9
Receivables		6.5
Inventories		89.0
Investments accounted for using the equity method	6f(ii)	11.2
Other assets		6.9
Payables1		(12.0)
Assets held for sale		112.5

Excludes $77.7 million payable to fellow controlled entities in Goodman Group as these amounts are eliminated on consolidation.

No impairment losses were recognised in the current and prior year in respect of the disposal group.

10. Payables

Trade and other payables are recognised initially at trade date fair value plus any directly attributable transaction costs. Subsequent to initial recognition, trade and other payables are measured at amortised cost.

Trade and other payables are derecognised when the contractual obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, there is a legal right to offset the amounts and an intention to either settle on a net basis or to realise the asset and settle the liability simultaneously.

Goodman 2021 $M 2020 $M Current Trade payables 73.1 74.8 Other payables and accruals 487.8 497.4 Contract liabilities 5.0 12.3 Loans from related parties1 – – 565.9 584.5 Non-current Other payables and accruals 124.5 83.9 Contract liabilities 1.0 1.5 Loans from related parties1 – – 125.5 85.4	GIT
	2021 $M 2020 $M
	7.1 0.8 51.3 125.8 – – 549.2 528.7
	607.6 655.3
	3.7 0.2 – – 228.5 231.3
	232.2 231.5

Refer to note 24 for details of loans from related parties.

11. 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.

Goodman Note 2021 $M 2020 $M Current Dividends/ distributions to Securityholders 19 277.1 274.3 Other provisions 17.1 15.1 294.2 289.4 Non-current Net defned beneft superannuation funds in the United Kingdom 22.0 24.8 Other provisions 1.7 4.2 23.7 29.0	GIT
	2021 $M 2020 $M
	166.3 201.1 – –
	166.3 201.1
	– – – –
	– –

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

12. Property, plant and equipment

	2021	2020
	$M	$M
Property, plant and equipment at cost	128.7	115.6
Accumulated amortisation	(74.1)	(64.7)
Property, plant and equipment at net book value1	54.6	50.9

Refer to note 13 for property, plant and equipment held as a lessee.

13. Leases

Goodman leases office buildings, motor vehicles and office equipment. Certain investment properties and developments classified as inventories are also built on land held under leasehold interests.

Goodman recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost plus any direct costs incurred and an estimate of costs to restore the underlying asset or the site on which it is located, less any lease incentives received.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the lessee’s incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change arising from the reassessment of whether Goodman will be reasonably certain to exercise an extension or termination option.

Information about leases for which Goodman is a lessee is detailed below:

	2021	20201
	$M	$M
Right of use assets
Inventories	359.2	122.9
Investment properties	340.3	273.6
Property, plant and equipment	39.6	37.1
	739.1	433.6
Lease liabilities Current Non-current	11.9 82.1	17.6 29.2
	94.0	46.8

The comparative figures for inventories and investment properties have been updated to include right of use assets for which the lease payments have been made upfront.

The following were recognised during the year:

Additions to right of use assets	2021 $M 402.9	2020 $M 47.9
Depreciation for right of use assets	15.1	17.1
Interest expense on lease liabilities	1.0	1.3
Cash outfows on lease liabilities	18.8	17.7

The right of use assets in respect of office buildings, motor vehicles and office equipment are depreciated using the straightline method over the period of the lease. Right of use assets that meet the definition of investment property are carried at fair value in accordance with note 6(a). Ground leases of development land that are classified as inventories are not depreciated but are assessed at each reporting date for impairments to ensure they are recorded at the lower of cost and net realisable value.

Annual Report 2021

14. Goodwill and intangible assets

Goodman recognises both goodwill and indefinite life management rights in its statement of financial position. Goodwill

Goodwill arising on the acquisition of controlled entities is stated at cost less any accumulated impairment losses (refer below). No amortisation is provided.

Management rights

When fund and/or investment management activities are acquired as part of a business combination, management rights are recorded where they arise from contractual or other legal rights, and the fair value can be measured reliably.

Management rights are stated at cost less impairment. Management rights are not amortised as they are assumed to have an indefinite life given they are routinely renewed at minimal cost and on broadly similar terms.

Impairment

The carrying amounts of goodwill and management rights are tested annually for impairment. For the purpose of impairment testing, goodwill and management rights are allocated to the related cash-generating units monitored by management. An impairment loss is recognised whenever the carrying amount of the cash-generating unit exceeds its recoverable amount. Recoverable amount is the greater of the fair value (net of disposal costs) and the value in use but given that goodwill and management rights are not frequently traded (i.e. fair value is difficult to ascertain), the recoverable amount will be equal to the value in use of the cash-generating unit. 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 cash-generating unit.

Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the goodwill allocated to the cash-generating unit, then to the carrying amount of the management rights allocated to the cash-generating unit and then to reduce the carrying amount of the other assets in the cash-generating unit on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. An impairment loss for management rights is reversed only to the extent that its carrying amount does not exceed its original cost. A summary of Goodman’s goodwill and intangible assets is set out by below:

	Goodman	Goodman
	2021	2020
	$M	$M
Goodwill	715.2	735.1
Management rights	107.4	110.7
	822.6	845.8

The carrying value of goodwill and intangible assets is analysed by division in the table below:

	2021	2020
	$M	$M
Goodwill
Continental Europe United Kingdom Other	601.4 90.5 23.3	620.8 88.4 25.9
Subtotal – goodwill	715.2	735.1
Management rights Continental Europe Other	34.1 73.3	35.3 75.4
Subtotal – management rights	107.4	110.7
Total	822.6	845.8

A reconciliation of the movement in the cost of goodwill and management rights during the financial year is set out below:

		Effect of			Effect of
	Balance at	foreign currency	Balance at		foreign currency	Balance at
30 June 2019		translation	30 June 2020		translation	30 June 2021
Cost	$M	$M		$M	$M		$M
Goodwill
Continental Europe	623.6	5.0		628.6	(19.6)		609.0
United Kingdom	129.0	(1.1)		127.9	3.1		131.0
Other	33.4	0.3		33.7	(2.8)		30.9
Subtotal – goodwill	786.0	4.2		790.2	(19.3)		770.9
Management rights Continental Europe Other	35.0 85.7	0.3 1.5		35.3 87.2	(1.2) (2.5)		34.1 84.7
Subtotal – management rights	120.7	1.8		122.5	(3.7)		118.8
Total	906.7	6.0		912.7	(23.0)		889.7

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 14 Goodwill and intangible assets (continued)

A reconciliation of the movement in the impairment losses during the financial year is set out below:

		Effect of		Effect of
	Balance at	foreign currency	Balance at	foreign currency	Balance at
30 June 2019		translation	30 June 2020	translation	30 June 2021
Impairment losses	$M	$M	$M	$M	$M
Goodwill
Continental Europe	7.7	0.1	7.8	(0.2)	7.6
United Kingdom	39.8	(0.3)	39.5	1.0	40.5
Other	7.7	0.1	7.8	(0.2)	7.6
Subtotal – goodwill Other	55.2 11.5	(0.1) 0.3	55.1 11.8	0.6 (0.4)	55.7 11.4
Subtotal – management rights	11.5	0.3	11.8	(0.4) 11.4
Total	66.7	0.2	66.9	0.2	67.1

Impairments and reversals of impairments

There were no impairment losses or reversals of impairment losses during either the current or prior financial year.

Impairment testing for intangible assets

The carrying values of both goodwill and indefinite life management rights are assessed for impairment annually. For the purpose of impairment testing, goodwill and indefinite life management rights are allocated to the Goodman divisions that represent the lowest level within Goodman at which the goodwill and indefinite life management rights are monitored for internal management purposes. Where goodwill and management rights arise in the same division, impairment testing has been performed on the combined intangible asset.

The impairment tests for all intangible assets are based on each division’s value in use. Value in use is determined by discounting the future projected cash flows generated from continuing operations. These cash flows are for a five-year period, with a year five terminal value calculated using a terminal growth rate and an appropriate discount rate for each division.

The key drivers of value in respect of the intangible assets are:

- Development cash flows, which are impacted by development volumes and margins and whether the developments are undertaken directly by Goodman or directly by Partnerships or in joint venture with Partnerships
- Management cash flows, which are driven by the level of AUM and net property income in Partnerships and, in the case of portfolio performance fee income, the long-term performance of the Partnerships.

The estimation of future cash flows requires assumptions to be made regarding uncertain future events. The cash flows do not assume a downturn in earnings that might arise in the event of a significant adverse change in market conditions for the Group. The cash flows also assume that Goodman’s management contracts with Partnerships have an indefinite life. This is on the basis that in the past these contracts have been typically renewed at minimal cost and on broadly similar financial terms.

When assessing a potential impairment, the value in use is compared against the sum of the intangible asset balance and the plant and equipment balance for each division.

Key assumptions

Key assumptions
		Continental Europe	United Kingdom
Value in use (A$M)	2021	2,344.9	161.1
	2020	2,341.7	153.6
Pre-tax discount rate (per annum)	2021	9.7%	9.6%
	2020	9.4%	8.6%
Average annual development (million square metres)	2021	0.60	0.16
	2020	0.60	0.16
Average annual growth in assets under management (AUM)	2021	8.0%	21.6%
	2020	3.4%	28.9%

All amounts were calculated in local currency and translated to Australian dollars at the closing exchange rate at the end of the financial period. Averages related to average amounts over the five-year forecast period.

100

Annual Report 2021

Value in use

The value in use for both Continental Europe and the United Kingdom are consistent with the prior years. The Group’s strategy remains the same with assets focused on core infill locations.

Discount rates

The post-tax discount rates were determined using the capital asset pricing model, with individual assumptions referenced to market data, where available, and adjusting for specific factors associated with each division. A risk premium was included in each division’s discount rate, reflecting the level of forecasting, size, country and financing risks for that division. The value in use was determined using the after-tax cash flows and the post-tax discount rates, with the discount rates then converted to the equivalent pre-tax rates.

Developments

Demand for modern, well-located industrial product in both Continental Europe and the United Kingdom remains strong. Earnings forecasts for each division include projects which have not yet been contracted.

Continental Europe

The activities will be focused on core markets in western and southern Europe. The average annual development activity over the next five years is expected to be 0.6 million square metres and the estimated cash outflow from Goodman and Partnerships required to fund the assumed development pipeline across the forecast period is A$0.9 billion per annum.

United Kingdom

The activity will continue to be focused on the core markets close to London and along the M1 corridor. In the short term, developments will include a number of sites that have already been acquired. The division’s development activity over the next five years is forecast to be 0.16 million square metres per annum, on average, which will be undertaken by GUKP, with Goodman earning development management fee income. The estimated cash outflow from Goodman and GUKP required to finance the assumed development pipeline across the forecast period is A$0.42 billion per annum.

Sources of funding for development activity

Capital inflows required to fund acquisitions and development activity in both divisions are assumed to arise from the following sources: equity investment directly into Partnerships (including distribution reinvestment plans) by Goodman and its investment partners (in some cases, the projections assume future equity investment will be greater than existing commitments); lending facilities advanced to Partnerships; debt capital markets; customer-funded turnkey developments; and proceeds from disposals of assets. It is not practicable to determine the percentage of the total which will flow from each source.

Funds available to Goodman and its investment partners 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.

AUM

For Continental Europe, the average annual increase in AUM of 8.0% (2020: 3.4%) over the forecast period is higher than the prior year forecasts following the disposal of assets in central and eastern Europe in FY21. The projected AUM assumes that most of the development over the forecast period is for Partnerships. For the purpose of the value in use assessments, capitalisation rates are expected to be stable over the period and no portfolio performance revenue is assumed.

For United Kingdom, the significant percentage growth in AUM over the period reflects the fact that GUKP is a relatively new Partnership, with AUM forecast to grow from £0.9 billion to approximately £2.3 billion. GUKP has secured a number of sites that will be developed over the next three years and underpin the projected growth. For the purpose of the forecasts, capitalisation rates are expected to be stable over the period.

Assumptions impacting the terminal year

		Continental Europe	United Kingdom
Growth rate applied to future cash fows (per annum)	2021	0.4%	1.5%
	2020	0.6%	1.0%
Development in terminal year (million square metres)	2021	0.60	0.19
	2020	0.60	0.19
Development in terminal year (cost in A$B)	2021	0.92	0.36
	2020	0.96	0.36

Long-term growth rates have been used to extrapolate cash flow projections beyond the period covered by the five-year forecast. For both Continental Europe and United Kingdom, the growth rate was based on the consumer price indices. The forecast cost of developments in year five represents the estimated total funding requirements for both directly held developments and developments within Partnerships. The cost of developments in Australian dollars has remained relatively stable.

101

Goodman Group

Notes to the consolidated financial statements

CAPITAL MANAGEMENT

The notes in this section focus on Goodman’s and GIT’s financing activities, capital structure and management of the financial risks involved.

15. Net finance income/(expense)

Interest income and expense are recognised using the effective interest rate method.

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 using the effective interest rate method.

costs are expensed using the effective interest rate method.
Goodman 2021 $M 2020 $M Finance income Interest income from: – Related parties 8.1 1.3 – Other parties 2.3 11.9 Fair value adjustments on derivative fnancial instruments 83.9 – Foreign exchange gains – – 94.3 13.2 Finance expense Interest expense from third party loans, overdrafts and derivatives (18.3) (86.6) Interest expense from related party loans – – Other borrowing costs (7.4) (8.7) Fair value adjustments on derivative fnancial instruments – (9.4) Foreign exchange losses (0.4) (0.1) Capitalised borrowing costs1 6.7 11.4 (19.4) (93.4) Net fnance (expense)/income 74.9 (80.2)	GIT
	2021 $M 2020 $M
	69.1 123.2 1.4 9.9 104.0 – 3.4 –
	177.9 133.1
	(25.9) (98.9) (11.7) (9.5) (4.8) (16.2) – (6.0) – (26.6) – –
	(42.4) (157.2)
	135.5 (24.1)

Borrowing costs were capitalised to inventories and investment properties under development during the financial year at rates between 0.92% and 4.0% per annum (2020: 1.7% and 4.2% per annum).

102

Annual Report 2021

16. Interest bearing liabilities

Interest bearing liabilities comprise bank loans, notes issued in the capital markets and private placements. Interest bearing liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, interest bearing liabilities are measured at amortised cost using the effective interest rate method.

Goodman Note 2021 $M 2020 $M Current Unsecured: – USD denominated notes – 260.1 – 260.1 Non-current Unsecured: – Bank loans 16(a) – 50.0 – USD denominated notes 16(b) 1,133.8 1,659.2 – EUR denominated notes 16(c) 790.3 815.9 – Foreign private placement 16(d) 150.1 168.3 Borrowing costs (13.9) (15.0) 2,060.3 2,678.4	GIT
	2021 $M 2020 $M
	– 260.1
	– 260.1
	– 50.0 1,133.8 1,659.2 790.3 815.9 150.1 168.3 (11.4) (14.0)
	2,062.8 2,679.4

(a) Bank loans, unsecured

As at 30 June 2021, Goodman and GIT had the following unsecured bank facilities.

(a) Bank loans, unsecured As at 30 June 2021, Goodman and GIT had the following unsecured bank facilities.
Goodman Facility maturity date Facility limit $M Amounts drawn $M 31 Dec 2023 50.0 – 31 Mar 2024 75.0 – 1 Jul 2024 50.0 – 31 Jul 2024 133.4 – 30 Sep 2024 50.0 – 30 Sep 2024 37.5 – 31 Dec 2024 118.5 – 31 Mar 2026 180.1 – 31 Mar 2026 96.1 – 30 Jun 2026 75.0 – 30 Sep 2026 180.1 – Total as at 30 June 2021 1,045.7 – Total as at 30 June 2020 1,120.9 50.0	GIT
	Facility limit $M Amounts drawn $M
	50.0 – 75.0 – 50.0 – 133.4 – 50.0 – 37.5 – 118.5 – – – – – 75.0 – – –
	589.4 –
	609.4 50.0

The majority of the unsecured bank loans are multi-currency facilities.

103

Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

16 Interest bearing liabilities (continued)

(b) USD denominated notes

As at 30 June 2021, Goodman and GIT had notes on issue in the United States 144A/Reg S bond market as follows:

	Carrying amount	Carrying amount	Face	value	Coupon (fxed)
Notes maturity date	A$M	US$M	A$M	US$M	per annum
15 Mar 2028	700.3	525.0	700.3	525.0	3.700%
15 Oct 2037	433.5	325.0	433.5	325.0	4.500%
30 June 2021	1,133.8	850.0	1,133.8	850.0
30 June 2020	1,919.3	1,322.4	1,892.3	1,303.8

(c) EUR denominated notes

As at 30 June 2021, Goodman and GIT had A$790.3 million (2020: A$815.9 million) (€500.0 million) Reg S EUR denominated senior notes on issue. The notes have a fixed coupon of 1.375% per annum and mature on 27 September 2025.

(d) Foreign private placement

As at 30 June 2021, Goodman and GIT had A$150.1 million (2020: A$168.3 million) (¥12.5 billion) in a foreign private placement denominated in Japanese yen. The facility has a fixed coupon of 3.32% per annum payable semi-annually and expires on 3 April 2023.

(e) Finance facilities

Goodman Facilities available $M Facilities utilised $M Current 30 June 2021 Unsecured: – Bank loans – USD denominated notes – EUR denominated notes – Foreign private placement – Bank guarantees1 1,045.7 1,133.8 790.3 150.1 – – 1,133.8 790.3 150.1 32.7 3119.9 2,106.9 30 June 2020 Unsecured: – Bank loans – USD denominated notes2 – EUR denominated – Foreign private placement – Bank guarantees1 1,120.9 1,892.3 815.9 168.3 – 50.0 1,892.3 815.9 168.3 32.8 3,997.4 2,959.3	GIT
	Facilities available $M Facilities utilised $M
	589.4 1,133.8 790.3 150.1 – – 1,133.8 790.3 150.1 –
	2,663.6 2,074.2
	609.4 1,892.3 815.9 168.3 – 50.0 1,892.3 815.9 168.3 –
	3,485.9 2,926.5

Bank guarantees are drawn from facilities available under unsecured bank loans. The guarantees are not reflected as a liability in the statements of financial position.
Facilities available and facilities utilised in respect of the USD denominated notes represent the face value of the notes on issue and exclude the fair value adjustment of A$27.0 million that is being amortised over the period to maturity.

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Annual Report 2021

17. Other financial assets and liabilities

Other financial assets and liabilities primarily comprise derivative financial instruments that are recognised initially on the trade date at which Goodman and GIT become a party to the contractual provisions of the instrument.

Derivative financial instruments and hedging

Goodman and GIT use derivative financial instruments to hedge their economic exposure to foreign exchange and interest rate risks arising from operating, investing and financing activities. In accordance with the Group’s Financial Risk Management policy, Goodman and GIT do not hold or issue derivative financial instruments for speculative trading purposes.

Goodman and GIT’s derivative financial instruments are not designated as a hedge for accounting purposes, and accordingly movements in the fair value of derivative financial instruments are recognised in the income statement.

Cash flow hedges

Certain of Goodman and GIT’s associates and JVs continue to designate derivative financial instruments as cash flow hedges for accounting purposes. Goodman’s and GIT’s share of the effective portion of changes in the fair value of derivative financial instruments in associates and JVs that are designated and qualify as cash flow hedges is recognised in the cash flow hedge reserve. The gain or loss relating to any ineffective portion is recognised in the income statement.

Other financial assets

Other fnancial assets
Goodman 2021 $M 2020 $M Current Derivative fnancial instruments1 16.5 59.3 16.5 59.3 Non-current Derivative fnancial instruments1 354.5 405.8 Investment in unlisted securities, at fair value 8.3 3.0 362.8 408.8	GIT
	2021 $M 2020 $M
	16.5 59.3
	16.5 59.3
	292.4 424.4 22.0 19.7
	314.4 444.1

Includes fair values of derivative financial instruments equating to $134.1 million (2020: $292.5 million) that hedge Goodman’s net investments in Continental Europe and the United Kingdom.

Other financial liabilities

Goodman 2021 $M 2020 $M Current Derivative fnancial instruments 1.9 50.4 1.9 50.4 Non-current Derivative fnancial instruments1 211.5 331.0 211.5 331.0	GIT
	2021 $M 2020 $M
	1.9 50.4
	1.9 50.4
	124.6 302.6
	124.6 302.6

Includes fair values of derivative financial instruments equating to $62.3 million (2020: $194.0 million) that hedge Goodman’s net investments in Continental Europe and the United Kingdom.

105

Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

18. Financial risk management

The Directors have ultimate responsibility for Goodman’s financial risk management (FRM) processes and have established policies, documented in the FRM policy, to manage Goodman’s exposure to financial risks and to utilise capital in an efficient manner.

Goodman’s treasury function is responsible for monitoring the day to day compliance with the Group’s FRM policies and prepares reports for consideration by management committees and the Board including:

- Cash flow projections over a period of at least 12 months to assess the level of cash and undrawn facilities, and headline gearing at each month end
- Debt maturity profile, to allow the Group to plan well in advance of maturing facilities
- Interest rate hedge profile over the next 10 years, to allow the Group to manage the proportion of fixed and floating rate debt in accordance with its FRM policy
- Capital hedge position (by currency) and profile of expiring currency derivatives, to allow the Group to manage its net investment hedging in accordance with its FRM policy.

Any significant investments or material changes to the finance facilities or FRM policies require approval by the Board.

Capital management

Goodman’s principal capital management objectives are to maintain a strong capital base and provide funds for operating activities (including development expenditure), capital expenditure and investment opportunities as they arise. This is achieved through an appropriate mix of debt and equity.

(a) Market risk

Foreign exchange risk

Goodman is exposed to foreign exchange risk through its investments in New Zealand, Hong Kong, China, Japan, Continental Europe, the United Kingdom, North America and Brazil. Foreign exchange risk represents the gain or loss that would be recognised from fluctuations in currency prices against the Australian dollar as a result of Goodman’s net investment in foreign operations, future commercial transactions, and other foreign currency denominated assets and liabilities.

In managing foreign exchange risks, Goodman aims to reduce the impact of short-term fluctuations on Goodman’s earnings and net assets. However, over the long term, permanent changes in foreign exchange rates will have an impact on both earnings and net assets.

Goodman’s capital hedge policy for each overseas region is to hedge between 65% and 90% of foreign currency denominated assets with foreign currency denominated liabilities. This is achieved by borrowing in the same currency as the overseas investments to form a natural economic hedge against any foreign currency fluctuations and/or using derivatives such as cross currency interest rate swaps (CCIRS) and foreign exchange contracts (FEC).

The Group’s hedge position is monitored on an ongoing basis and the Group will enter into new derivatives (including forward start contracts) and close out or enter into contra derivative contracts to manage the capital hedge position.

Goodman is able to alter the capital mix by issuing new Goodman debt and equity securities or hybrid securities, by reinstating the distribution reinvestment plan, by adjusting the timing of development and capital expenditure and by selling assets to reduce borrowings. Goodman also manages capital through its distribution policy in which distributions made to Securityholders are based on the Group’s operating profit, subject to a minimum distribution equal to the taxable income of the Trust.

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

106

Annual Report 2021

As at 30 June 2021, the principal that was used to hedge its exposures using derivatives and the weighted average exchange rates, by currency, are set out below:

Goodman

Goodman
		2021			2020
			Weighted			Weighted
	Amounts	Amounts	average	Amounts	Amounts	average
	payable	receivable	exchange rate	payable	receivable	exchange rate
	NZD'M	AUD'M	AUD/NZD	NZD'M	AUD'M	AUD/NZD
AUD receivable/NZD payable	(600.0)	557.3	1.0771	(400.0)	368.3	1.0864
	HKD'M	AUD'M	AUD/HKD	HKD'M	AUD'M	AUD/HKD
AUD receivable/HKD payable	(7,490.0)	1,301.8	5.7659	(5,190.0)	908.6	5.7260
	EUR'M	AUD'M	AUD/EUR	EUR'M	AUD'M	AUD/EUR
AUD receivable/EUR payable	(675.0)	1,086.7	0.6214	(495.0)	803.0	0.6165
	GBP'M	AUD'M	AUD/GBP	GBP'M	AUD'M	AUD/GBP
AUD receivable/GBP payable	(330.3)	587.6	0.5635	(280.0)	496.6	0.5660
	USD'M	AUD'M	AUD/USD	USD'M	AUD'M	AUD/USD
AUD receivable/USD payable	(650.0)	894.7	0.7276	(450.0)	634.6	0.7141
	JPY'M	AUD'M	AUD/JPY	JPY'M	AUD'M	AUD/JPY
AUD receivable/JPY payable	(23,000.0)	297.2	77.5413	(21,000.0)	278.3	75.4695
	CNY'M	USD'M	USD/CNY	CNY'M	USD'M	USD/CNY
USD receivable/CNY payable	(4,545.2)	600.0	7.5753	(3,823.9)	500.0	7.6477

GIT

GIT
		2021			2020
			Weighted			Weighted
	Amounts	Amounts	average	Amounts	Amounts	average
	payable	receivable	exchange rate	payable	receivable	exchange rate
	NZD'M	AUD'M	AUD/NZD	NZD'M	AUD'M	AUD/NZD
AUD receivable/NZD payable	(600.0)	557.3	1.0771	(400.0)	368.3	1.0864
	HKD'M	AUD'M	AUD/HKD	HKD'M	AUD'M	AUD/HKD
AUD receivable/HKD payable	(6,990.0)	1,217.8	5.7523	(5,190.0)	908.6	5.7260
	GBP'M	AUD'M	AUD/GBP	GBP'M	AUD'M	AUD/GBP
AUD receivable/GBP payable	(330.0)	587.6	0.5635	(280.0)	496.6	0.5660
	USD'M	AUD'M	AUD/USD	USD'M	AUD'M	AUD/USD
AUD receivable/USD payable	(200.0)	260.2	0.7688	(450.0)	634.6	0.7141
	JPY'M	AUD'M	AUD/JPY	JPY'M	AUD'M	AUD/JPY
AUD receivable/JPY payable	(17,000.0)	225.3	75.4506	(21,000.0)	278.3	75.4695

In addition to the derivatives detailed in the table above, GIT also has a FEC with a controlled entity of GL to hedge that entity’s USD exposure. On maturity of the contract, GIT will receive USD 257.3 million from GL (2020: USD 81.8 million) and pay GBP 183.9 million to GL (2020: GBP 53.8 million).

107

Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

18 Financial risk management (continued)

Sensitivity analysis

Throughout the financial year, if the Australian dollar had been 5% stronger against all other currencies, with all other variables held constant, the profit attributable to Securityholders, excluding derivative mark to market and unrealised foreign exchange movements, would have decreased by A$72.9 million (2020: A$58.2 million decrease) for Goodman and A$28.6 million (2020: A$22.7 million) for GIT. If the Australian dollar had been 5% weaker against all other currencies, with all other variables held constant, the profit attributable to Securityholders, excluding derivative mark to market and unrealised foreign exchange movements, would have increased by A$72.9 million (2020: A$58.2 million increase) for Goodman and A$28.6 million (2020: A$22.7 million) for GIT.

Interest rate risk

Goodman’s interest rate risk arises from variable rate borrowings and the Group’s CCIRS that hedge the overseas investments. Goodman adopts a policy of hedging such that between 60% and 100% of its current year exposure to changes in interest rates on borrowings is on a fixed rate basis. Goodman enters into interest rate derivatives (IRD), comprising both interest rate swaps and interest rate caps, to manage cash flow risks associated with the interest rates on borrowings that are floating. The IRD contracts are for 90 day intervals and involve quarterly payments or receipts of the net amount of interest.

As at 30 June 2021, Goodman and GIT’s fixed and floating interest rate exposure (by principal) based on existing interest bearing liabilities and derivative financial instruments is set out below:

Goodman

Goodman
	Interest bearing	Impact of derivatives		Net interest rate
	liabilities	CCIRS	IRD	exposure
	A$M	A$M	A$M	A$M
30 June 2021
Fixed rate liabilities	2,074.2	–	(101.4)	1,972.8
Floating rate liabilities	–	(123.6)	101.4	(22.2)
	2,074.2	(123.6)	–	1,950.6
30 June 2021 Fixed rate liabilities Floating rate liabilities	2,903.5 50.0	– 41.1	156.9 (156.9)	3,060.4 (65.8)
	2,953.5	41.1	–	2,994.6

GIT

	Interest bearing	Impact of derivatives	Impact of derivatives	Net interest rate
	liabilities	CCIRS	IRD	exposure
	A$M	A$M	A$M	A$M
30 June 2021
Fixed rate liabilities	2,074.2	–	(575.6)	1,498.6
Floating rate liabilities	–	(71.6)	575.6	504.0
	2,074.2	(71.6)	–	2,002.6
30 June 2021 Fixed rate liabilities Floating rate liabilities	2,903.5 50.0	– 36.3	(169.4) 169.4	2,734.1 255.7
	2,953.5	36.3	–	2,989.8

108

Annual Report 2021

As a result of the fixed rate interest bearing liabilities and derivative financial instruments that existed at 30 June 2021, Goodman and GIT would have the following fixed interest rate exposure (by principal) at the end of each of the next five financial years. This assumes all interest bearing liabilities and derivative financial instruments mature in accordance with current contractual terms.

Goodman

Goodman
	2021		2020
	Fixed interest rate	Weighted average	Fixed interest rate	Weighted average
Number of years	(by principal)	interest rate	(by principal)	interest rate
post balance date	A$M	% per annum	A$M	% per annum
1 year	1,951.0	2.15	2,962.1	3.02
2 years	2,075.2	2.12	2,730.9	2.51
3 years	2,176.4	1.97	2,777.1	2.04
4 years	1,900.8	2.29	2,977.2	1.91
5 years	1,065.2	3.36	2,694.0	2.13

GIT

	2021		2020
	Fixed interest rate	Weighted average	Fixed interest rate	Weighted average
Number of years	(by principal)	interest rate	(by principal)	interest rate
post balance date	A$M	% per annum	A$M	% per annum
1 year	1,476.9	2.99	2,601.7	3.52
2 years	1,601.0	2.89	2,241.4	3.16
3 years	1,767.9	2.54	2,287.6	2.58
4 years	1,742.8	2.53	2,555.4	2.30
5 years	907.1	4.00	2,530.8	2.29

Sensitivity analysis

Throughout the financial year, if interest rates on borrowings (based on the interest bearing liabilities and derivative financial instruments in place at the end of the year) had been 100 basis points higher/lower, with all other variables held constant, the profit attributable to Securityholders would have increased/decreased by A$0.2 million (2020: increased/decreased by A$0.7 million) for Goodman and decreased/increased by A$5.0 million (2020: decreased/increased by A$2.6 million) for GIT.

(b) Liquidity risk

Liquidity risk is the risk that Goodman will not be able to meet its financial obligations as they fall due. Goodman’s objective is to maintain sufficient liquidity to fund short-term working capital, capital expenditure, investment opportunities, debt expiries and distributions. This is achieved through the monthly preparation of a three-year cash flow forecast to understand the uses of funds and to identify potential shortfalls in funding or potential breaches of financial covenants in its loan arrangements. This allows Goodman to plan for renewal of debt facilities, negotiation of new debt facilities, new issues of securities, including the distribution reinvestment plan, and other potential sources of funding.

Goodman’s treasury function is responsible for reporting details of all debt maturities to the Board at its regular meetings. Goodman seeks to spread its debt maturities such that the total debt repayable in a single financial year does not exceed Board approved policy levels.

109

Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

18 Financial risk management (continued)

The contractual maturities of financial liabilities are set out below:

	Carrying	Contractual	Less than	1 – 2	2 – 3	3 – 4	4 – 5	More than
	amount	cash fows	1 year	year(s)	years	years	years	5 years
Goodman	$M	$M	$M	$M	$M	$M	$M	$M
As at 30 June 2021
Non-derivative fnancial liabilities
Payables (excluding contract liabilities)	685.4	685.4	560.9	61.9	31.3	20.9	10.4	–
Lease liabilities	94.0	179.2	11.9	7.9	6.3	6.8	6.3	140.0
USD denominated notes, unsecured	1,133.8	1,625.3	45.4	45.4	45.4	45.4	45.4	1,398.3
EUR denominated notes, unsecured	790.3	836.5	10.9	10.9	10.9	10.9	792.9	–
Foreign private placement, unsecured	150.1	158.9	5.0	153.9	–	–	–	–
Total non-derivative fnancial liabilities	2,853.6	3,485.3	634.1	280.0	93.9	84.0	855.0	1,538.3
Derivative fnancial (assets)/liabilities – net Net settled1 Gross settled2 (Infow) Outfow	(18.9) (138.7) –	(17.8) (570.0) 371.2	(36.8) (82.9) 57.5	0.8 (78.0) 87.3	10.2 (176.1) 72.1	16.9 (77.1) 29.8	(1.2) (75.7) 62.5	(7.7) (80.2) 62.0
Total derivative fnancial (assets)/liabilities – net	(157.6)	(216.6)	(62.2)	10.1	(93.8)	(30.4)	(14.4)	(25.9)
As at 30 June 2020 Non-derivative fnancial liabilities Payables (excluding contract liabilities) Lease liabilities Bank loans, unsecured3 USD denominated notes, unsecured EUR denominated notes, unsecured Foreign private placement, unsecured	656.1 46.8 50.0 1,919.3 815.9 168.3	656.1 56.3 50.0 2,554.1 883.1 185.0	572.2 17.6 – 362.5 19.7 6.9	50.3 11.3 – 472.5 11.2 5.6	16.8 4.5 – 49.4 11.2 172.5	11.2 2.2 50.0 49.4 11.2 –	5.6 1.5 – 49.4 11.2 –	– 19.2 – 1,570.9 818.6 –
Total non-derivative fnancial liabilities	3,656.4	4,384.6	978.9	550.9	254.4	124.0	67.7	2,408.7
Derivative fnancial (assets)/liabilities – net Net settled1 Gross settled2 (Infow) Outfow	(124.8) – 41.0	(127.9) (495.7) 521.2	(55.1) (72.0) 74.4	(35.9) (93.9) 82.9	(20.2) (74.3) 99.1	(0.6) (152.2) 133.5	3.2 (34.2) 27.9	(19.3) (69.1) 103.5
Total derivative fnancial (assets)/liabilities – net	(83.8)	(102.4)	(52.7)	(46.9)	4.6	(19.3)	(3.1)	15.1

Net settled includes IRD and FEC.
Gross settled includes CCIRS.
Contractual cash flows relating to bank loans exclude any estimate of interest payments that might arise under Goodman’s revolving loan facilities.

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Annual Report 2021

The contractual maturities of financial liabilities are set out below:

	Carrying	Contractual	Less than	1 – 2	2 – 3	3 – 4	4 – 5	More than
	amount	cash fows	1 year	year(s)	years	years	years	5 years
GIT	$M	$M	$M	$M	$M	$M	$M	$M
As at 30 June 2021
Non-derivative fnancial liabilities
Payables	839.8	839.8	607.6	–	95.9	9.2	123.3	3.8
USD denominated notes, unsecured	1,133.8	1,625.3	45.4	45.4	45.4	45.4	45.4	1,398.3
EUR denominated notes, unsecured	790.3	836.5	10.9	10.9	10.9	10.9	792.9	–
Foreign private placement, unsecured	150.1	158.9	5.0	153.9	–	–	–	–
Total non-derivative fnancial liabilities	2,914.0	3,460.5	668.9	210.2	152.2	65.5	961.6	1,402.1
Derivative fnancial (assets)/liabilities – net Net settled1 Gross settled2 (Infow) Outfow	(98.3) (84.1) –	(91.3) (446.9) 303.7	(37.0) (71.4) 56.3	(28.2) (60.7) 84.1	(12.5) (120.0) 67.2	(6.6) (54.4) 28.6	(0.8) (62.7) 36.9	(6.2) (77.7) 30.6
Total derivative fnancial (assets)/liabilities – net	(182.4)	(234.5)	(52.1)	(4.8)	(65.3)	(32.4)	(26.6)	(53.3)
As at 30 June 2020 Non-derivative fnancial liabilities Payables Bank loans, unsecured3 USD denominated notes, unsecured EUR denominated notes, unsecured Foreign private placement, unsecured	886.8 50.0 1,919.3 815.9 168.3	886.8 50.0 2,554.1 883.1 185.0	655.3 – 362.5 19.7 6.9	127.0 – 472.5 11.2 5.6	– – 49.4 11.2 172.5	– 50.0 49.4 11.2 –	– – 49.4 11.2 –	104.5 – 1,570.9 818.6 –
Total non-derivative fnancial liabilities	3,840.3	4,559.0	1,044.4	616.3	233.1	110.6	60.6	2,494.0
Derivative fnancial (assets)/liabilities – net Net settled1 Gross settled2 (Infow) Outfow	(143.4) – 12.7	(145.1) (444.2) 466.4	(54.5) (65.2) 74.4	(35.5) (85.8) 82.9	(23.4) (64.8) 99.1	(6.8) (140.7) 133.5	(6.5) (22.4) 27.9	(18.3) (65.4) 48.7
Total derivative fnancial (assets)/liabilities – net	(130.7)	(122.9)	(45.3)	(38.4)	10.9	(14.0)	(1.0)	(35.0)

Net settled includes IRD and FEC.
Gross settled includes CCIRS.
Contractual cash flows relating to bank loans exclude any estimate of interest payments that might arise under Goodman’s revolving loan facilities.

111

Goodman Group

Notes to the consolidated financial statements

Capital management (continued) 18 Financial risk management (continued)

(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, which have been recognised on the statement of financial position, is equal to the carrying amount.

Goodman has a policy of assessing the creditworthiness of all potential customers and is not materially exposed to any one customer. Goodman 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. Bank guarantees are accepted from financial institutions which have an investment grade credit rating from a major rating agency.

Concentration of credit risk may exist due to receivables in respect of the disposals of investment properties. The credit risk is minimised as legal title to the properties is only transferred upon receipt of proceeds and typically Goodman will have either received a cash deposit or be the beneficiary of a bank guarantee for 10% to 20% of the total proceeds.

In relation to material bank deposits, Goodman minimises credit risk by dealing with major financial institutions. The counterparty must have a long-term investment grade credit rating from a major rating agency. The amounts and other terms associated with bank deposits are formally reviewed monthly.

The credit risks associated with derivative financial instruments are managed by:

- Transacting with multiple derivatives counterparties that have a long-term investment grade credit rating
- Utilising International Swaps and Derivatives Association (ISDA) agreements with derivative counterparties in order to limit exposure to credit risk through netting of amounts receivable and amounts payable to individual counterparties (refer below)
- Formally reviewing the mark to market position of derivative financial instruments by counterparty on a monthly basis.

Master netting off or similar agreements

Goodman enters into derivative transactions under ISDA master netting off agreements. Under these agreements, where certain credit events occur (such as a default), all outstanding transactions under the agreement are terminated and a single net termination value is payable in full and final settlement.

As Goodman does not have any current legally enforceable right to offset, the fair values associated with derivative financial instruments have been presented gross in the statement of financial position. However, if a credit event occurred, the ISDA master netting off agreement would allow A$175.2 million (2020: A$294.7 million) and

A$112.9 million (2020: A$291.9 million) of financial assets and financial liabilities in relation to Goodman’s and GIT’s respective derivative financial instruments to be offset.

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Annual Report 2021

(d) Fair values of financial instruments

The carrying amounts shown in the statement of financial position and fair values of financial assets and liabilities are as follows:

Goodman Carrying amount Fair value Carrying amount Fair value Note 2021 $M 2021 $M 2020 $M 2020 $M Financial assets Cash and cash equivalents 21(a) 920.4 920.4 1,781.9 1,781.9 Receivables 7 608.8 608.8 390.6 390.6 Other fnancial assets: 17 – IRD 114.3 114.3 160.3 160.3 – CCIRS 256.7 256.7 231.5 231.5 – FEC – – 73.3 73.3 – Investments in unlisted securities 8.3 8.3 3.0 3.0 1,908.5 1,908.5 2,640.6 2,640.6 Financial liabilities Payables 10 685.4 685.4 656.1 656.1 Interest bearing liabilities1 16 2,060.3 2,236.3 2,938.5 3,083.1 Other fnancial liabilities: 17 – IRD 15.9 15.9 35.5 35.5 – CCIRS 118.0 118.0 277.1 277.1 – FEC 79.5 79.5 68.8 68.8 2,959.1 3,135.1 3,976.0 4,120.6	GIT
	Carrying amount Fair value Carrying amount Fair value
	2021 $M 2021 $M 2020 $M 2020 $M
	379.8 379.8 1,302.6 1,302.6 3,344.6 3,344.6 3,089.5 3,089.5 111.9 111.9 158.3 158.3 194.7 194.7 231.5 231.5 2.3 2.3 93.9 93.9 22.0 22.0 19.7 19.7
	4,055.3 4,055.3 4,895.5 4,895.5
	839.8 839.8 886.8 886.8 2,062.8 2,236.3 2,939.5 3,083.1 15.9 15.9 35.5 35.5 110.6 110.6 268.9 268.9 – – 48.6 48.6
	3,029.1 3,202.6 4,179.3 4,322.9

The fair value of certain fixed rate interest bearing liabilities has been determined by reference to the quoted market prices at 30 June 2021.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method:

Goodman Level 1 $M Level 2 $M Level 3 $M Total $M As at 30 June 2020 Derivative fnancial assets – 371.0 – 371.0 Investment in unlisted securities – – 8.3 8.3 – 371.0 8.3 379.3 Derivative fnancial liabilities – 213.4 – 213.4 – 213.4 – 213.4 As at 30 June 2020 Derivative fnancial assets – 465.1 – 465.1 Investment in unlisted securities – – 3.0 3.0 – 465.1 3.0 468.1 Derivative fnancial liabilities – 381.4 – 381.4 – 381.4 – 381.4	GIT
	Level 1 $M Level 2 $M Level 3 $M Total $M
	– 308.9 – 308.9 – – 22.0 22.0
	– 308.9 22.0 330.9
	– 126.5 – 126.5
	– 126.5 – 126.5

	– 483.7 – 483.7 – – 19.7 19.7
	– 483.7 19.7 503.4
	– 353.0 – 353.0
	– 353.0 – 353.0

There were no transfers between the levels during the year.

113

Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

18 Financial risk management (continued)

Valuation techniques used to derive

Level 2 and Level 3 fair values

The Level 2 derivative financial instruments held by Goodman and GIT consist of IRD, CCIRS and FEC.

The fair values of derivative financial instruments are determined using generally accepted pricing models which discount estimated future cash flows based on the terms and maturity of each contract and current market interest rates and/or foreign currency rates, adjusted for specific features of the instruments.

FY20 dividends/distributions

	Dividends/distributions cents per security	Total amount	Date of payment
		$M
GL	–	–	n/a
GIT
– 31 Dec 2019	15.00	274.3	25 Feb 2020
– 30 Jun 2020 GLHK	11.00 4.00	201.1 73.1	28 Aug 2020 28 Aug 2020
	30.00	548.5

19. Dividends and distributions

GIT

Dividends and distributions are recognised when they are declared and before deduction of any withholding tax. Any non-recoverable withholding tax is included in income tax.

In FY21, GIT’s distributions were 24.0 cents per security (2020: 26.0 cents per security) amounting to $443.4 million (2020: $475.4 million).

Goodman

FY21 dividends/distributions

Goodman FY21 dividends/distributions	Goodman FY21 dividends/distributions
Dividends/distributions cents per security		Total amount	Date of payment
GL	–	$M –	n/a
GIT
– 31 Dec 2020	15.00	277.1	25 Feb 2021
– 30 Jun 2021	9.00	166.3	26 Aug 2021
GLHK	6.00	110.8	26 Aug 2021
	30.00	554.2

Movement in provision for dividends/distributions to Securityholders

Goodman 2021 $M 2020 $M Balance at the beginning of the year 274.3 272.1 Provisions for dividends/distributions 554.2 548.5 Dividends/distributions paid (551.4) (546.3) Balance at the end of the year 277.1 274.3	GIT
	2021 $M 2020 $M
	201.1 181.4 443.4 475.4 (478.2) (455.7)
	166.3 201.1

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Annual Report 2021

20. Issued capital

(a) Ordinary securities

Ordinary securities are classified as equity. Incremental costs directly attributable to issues of ordinary securities are recognised as a deduction from equity, net of any tax effects.

Goodman 2021 2020 2021 $M 2020 $M Number of securities Stapled securities – issued and fully paid 1,847,429,255 1,828,413,236 8,257.3 8,192.2 Less: Accumulated issue costs (160.9) (160.5) Total issued capital 8,096.4 8,031.7	GIT
	2021 $M 2020 $M
	7,997.7 7,772.0 (148.7) (148.5)
	7,849.0 7,623.5

Terms and conditions

Stapled security means one share in the Company stapled to one unit in the Trust and one CDI over a share in GLHK. Holders of stapled securities are entitled to receive dividends or distributions as declared from time to time and are entitled to one vote per security at Securityholders’ meetings. In the event of a winding up, Securityholders rank after creditors and are fully entitled to any net proceeds of liquidation.

Movement in ordinary securities

Date	Details	Number of	Goodman	GIT
		securities	$M	$M
30 Jun 2019	Balance before accumulated issue costs	1,813,881,995	8,192.2	7,625.8
31 Aug 2019	Securities issued to employees under the LTIP	14,531,241	–	146.2
30 Jun 2020	Balance before accumulated issue costs	1,828,413,236	8,192.2	7,772.0
31 Aug 2020	Securities issued to employees under the LTIP	15,438,241	–	183.2
4 Sep 2020	Issue of securities	3,577,778	65.1	42.5
	Less: Accumulated issue costs		(160.9)	(148.7)
30 Jun 2021	Closing balance	1,847,429,255	8,096.4	7,849.0

(b) Share based payments

LTIP

The Group’s share based payments primarily relate to performance rights awarded to employees under the LTIP. These performance rights entitle an employee to either acquire Goodman securities for $nil consideration (equity settled performance rights) or, in certain jurisdictions, to receive an amount in cash equal to the value of the securities (cash settled performance rights), subject to the vesting conditions having been satisfied. Further details regarding the vesting conditions are included in the remuneration report section of the Directors’ report.

During the year, the movement in the number of equity settled and cash settled performance rights under the LTIP was as follows:

	Number	of rights
	2021	2020
Outstanding at the beginning of the year	73,987,645	79,062,163
Granted	16,079,977	14,435,282
Exercised	(19,016,019)	(17,969,122)
Forfeited	(2,410,883)	(1,540,678)
Outstanding at the end of the year	68,640,720	73,987,645
Exercisable at the end of the year	–	–

115

Goodman Group

Notes to the consolidated financial statements

Capital management (continued) 20 Issued capital (continued)

(b) Share based payments (cont)

Share based payments transactions

The fair value of equity settled performance rights at the grant date is expensed with a corresponding increase in the employee compensation reserve over the period from the grant date to the vesting dates. The expense is adjusted to reflect the actual number of performance rights for which the related service and non-market vesting conditions are expected to be met. The accumulated share based payments expense of performance rights which have vested or lapsed is transferred from the employee compensation reserve to retained earnings.

The fair value of cash settled performance rights is also recognised as an expense but with a corresponding increase in liabilities over the vesting period. The expense is adjusted to reflect the actual number of performance rights for which the related service and non-market vesting conditions are expected to be met. The liability is remeasured at each reporting date and at the vesting date based on the fair value of the rights.

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 fair value of the performance rights granted during the year was measured as follows:

- Operating EPS tranche: these rights were valued as a granted call option, using the standard Black Scholes model with a continuous dividend/distribution yield
- Relative TSR tranche: these rights were valued using a Monte Carlo model which simulated total returns for each of the ASX 100 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 co-variance.

The model inputs for performance rights, both equity and cash settled, awarded during the current financial year included the following:

	Rights issued on	Rights issued on
	19 Nov 2020	30 Sep 2020
Fair value at	16.07	15.77
measurement date ($)
Security price ($)	18.68	17.49
Exercise price ($)	–	–
Expected volatility (%)	28.08	27.21
Rights' expected weighted	3.8	3.9
average life (years)
Dividend/distribution	1.61	1.67
yield per annum (%)
Average risk free rate of	0.21	0.25
interest per annum (%)

The amounts recognised as an expense are set out in note 2. At 30 June 2021, a liability of $158.0 million (2020: $91.0 million) was recognised in relation to cash settled performance rights.

Goodman’s New Zealand Long Term Incentive Plan

Under Goodman’s New Zealand Long Term Incentive Plan, employees receive approximately half of their LTI in the form of performance rights over GMT units that vest subject to meeting performance hurdles based on the achievement of distributable earnings targets by GMT and the relative total unitholder return from holding GMT units compared to other NZX property vehicles. On vesting, delivery of units in GMT is made from units held by Goodman or acquired on-market.

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Annual Report 2021

OTHER ITEMS

The notes in this section set out other information that is required to be disclosed to comply with the Australian Accounting Standards, Corporations Act 2001 or Corporations Regulations.

21. Notes to the cash flow statements

(a) Reconciliation of cash

For the purpose of the cash flow statements, cash and cash equivalents includes cash on hand at the bank and short-term deposits at call. Cash at the end of the year as shown in the cash flow statements is reconciled to the related items in the statements of financial position as follows:

statements of fnancial position as follows:
Goodman Note 2021 $M 2020 $M Bank balances 853.7 1,128.8 Call deposits 66.7 653.1 920.4 1,781.9 Cash classifed as assets held for sale 9 – 10.9 920.4 1,792.8	GIT
	2021 $M 2020 $M
	313.1 649.5 66.7 653.1
	379.8 1,302.6

	379.8 1,302.6

(b) Reconciliation of profit for the year to net cash provided by operating activities

Goodman 2021 $M 2020 $M Proft for the year 2,311.9 1,504.1 Items classifed as investing activities Net gain on disposal of investment properties (37.7) (54.5) Net gain on disposal of equity investments (5.0) (0.6) Non-cash items Amortisation and depreciation 23.0 22.5 Share based payments expense 266.9 156.1 Net gain from fair value adjustments on investment properties (63.1) (45.2) Reversal of previous impairments – – Share of net results of equity accounted investments (1,708.9) (1,022.2) Net fnance expense/(income) (74.9) 80.2 Income tax expense 108.1 113.0 820.3 753.4 Changes in assets and liabilities during the year: – (Increase)/decrease in receivables (146.7) 259.2 – (Increase)/decrease in inventories (29.9) (207.0) – (Increase)/decrease in other assets (6.0) 3.9 – Increase/(decrease) in payables 6.7 45.3 – (Decrease)/increase in provisions (0.1) 4.8 644.3 859.6 Distributions/dividends received from Partnerships 536.9 461.0 Net fnance costs paid (25.1) (87.4) Net income taxes (paid)/received (41.4) (76.3) Net cash provided by operating activities 1,114.7 1,156.9	GIT
	2021 $M 2020 $M
	1,574.8 836.1 (39.3) (9.1) (3.2) (0.1) – – – – (60.2) (36.5) (17.6) – (1,373.8) (825.5) (135.5) 24.1 49.5 11.1
	(5.3) 0.1
	1.7 0.2 – 0.6 (2.2) 2.5 1.8 (0.4) – –
	(4.0) 3.0
	372.6 234.0 (29.5) (98.5) 0.5 (3.2)
	339.6 135.3

117

Goodman Group

Notes to the consolidated financial statements

Other items (continued)

21 Notes to the cash flow statements (continued)

(c) Non-cash transactions

During the current and prior financial years, other than disclosed elsewhere in the consolidated financial statements, there were no significant non-cash transactions.

(d) Reconciliation of liabilities arising from financing activities

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Interest Derivative
bearing financial Provision for Lease
liabilities instruments distributions liabilities Total
Goodman $M $M $M $M $M
Balance at 30 June 2019 2,975.0 (90.5) 272.1 – 3,156.6
Impact of adopting AASB 16 on 1 July 2019 – – – 75.4 75.4
Proceeds from borrowings 50.0 – – – 50.0
Payments on borrowings and derivative financial instruments (117.1) (0.9) – – (118.0)
Payment of lease liabilities – – – (17.7) (17.7)
Distributions paid – – (546.3) – (546.3)
Total changes from financing cash flows (67.1) (0.9) (546.3) (17.7) (632.0)
Effect of changes in foreign exchange rates 48.8 (1.8) – – 47.0
Changes in fair value (18.2) 9.4 – – (8.8)
Other changes
Interest expense on lease liabilities – – – 1.3 1.3
Other movements – – – (12.2) (12.2)
Distributions declared – – 548.5 – 548.5
Total other changes – – 548.5 (10.9) 537.6
Balance at 30 June 2020 2,938.5 (83.7) 274.3 46.8 3,175.9
Changes from financing cash flows
Proceeds from borrowings and derivative financial instruments 200.0 4.6 – – 204.6
– – –
Payments on borrowings and derivative financial instruments (891.9) (891.9)
– – –
Payment of lease liabilities (17.8) (17.8)
– – –
Distributions paid (551.4) (551.4)
Total changes from financing cash flows (691.9) 4.6 (551.4) (17.8) (1,256.5)
Effect of changes in foreign exchange rates (195.8) 5.4 – – (190.4)
– –
Changes in fair value (25.7) (83.9) (109.6)
Other changes
New leases – – – 64.2 64.2
Other borrowing costs 0.6 – – – 0.6
Interest expense on lease liabilities – – – 0.8 0.8
Debt modification costs 34.6 – – – 34.6
Distributions declared – – 554.2 – 554.2
Total other changes 35.2 – 554.2 65.0 654.4
Balance at 30 June 2021 2,060.3 (157.6) 277.1 94.0 2,273.8
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Interest Derivatives Loans with
bearing used for Provision for related
liabilities hedging distributions parties, net Total
GIT $M $M $M $M $M
Balance at 1 July 2019 2,864.3 (133.4) 181.4 (2,569.2) 343.1
Changes from financing cash flows
Net cash flows from loans to related parties – – – 511.7 511.7
Proceeds from borrowings 50.0 – – – 50.0
Payments on borrowings and
derivative financial instruments – (0.9) – – (0.9)
Distributions paid – – (455.7) – (455.7)
Total changes from financing cash flows 50.0 (0.9) (455.7) 511.7 105.1
Effect of changes in foreign exchange rates 41.3 (2.4) – 18.3 57.2
Changes in fair value (18.3) 6.0 – – (12.3)
Other changes
Issue of units under the LTIP – – – (146.2) (146.2)
Equity settled share based payments transactions – – – (13.6) (13.6)
Interest income – – – (123.2) (123.2)
Interest expense – – – 9.5 9.5
Interest paid – – – (6.5) (6.5)
Other borrowing costs 2.2 – – – 2.2
Distributions declared – – 475.4 – 475.4
Total other changes 2.2 – 475.4 (280.0) 197.6
Balance at 30 June 2020 2,939.5 (130.7) 201.1 (2,319.2) 690.7
Changes from financing cash flows
Net cash flows from loans to related parties – – – 25.1 25.1
Proceeds from borrowings and derivative
financial instruments 200.0 46.8 – – 246.8
Payments on borrowings and
derivative financial instruments (891.9) – – – (891.9)
Distributions paid – – (478.2) – (478.2)
Total changes from financing cash flows (691.9) 46.8 (478.2) 25.1 (1,098.2)
Effect of changes in foreign exchange rates (195.4) 5.5 – (4.0) (193.9)
Changes in fair value (25.8) (104.0) – (0.2) (130.0)
Other changes
Issue of units under the LTIP – – – (183.2) (183.2)
Equity settled share based payments transactions – – – (13.7) (13.7)
Interest income – – – (69.1) (69.1)
Interest expense – – – 11.7 11.7
Interest paid – – – (6.9) (6.9)
Other borrowing costs 2.1 – – – 2.1
Debt modification costs 34.3 – – – 34.3
Distributions declared – – 443.4 – 443.4
Total other changes 36.4 – 443.4 (261.2) 218.6
Balance at 30 June 2021 2,062.8 (182.4) 166.3 (2,559.5) (512.8)
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119

Goodman Group

Notes to the consolidated financial statements

Other items (continued)

22. Equity attributable to Goodman Limited and non-controlling interests

Under Australian Accounting Standards, stapled entities are required to separately identify equity attributable to the parent entity from equity attributable to other entities stapled to the parent. The equity attributable to other entities stapled to the parent is presented as non-controlling interests in the statement of financial position of the Group. The tables below in notes 22(a) and 22(b) provide an analysis of equity, profit for the year and total comprehensive income for the year attributable to each of Goodman Limited and the other entities stapled to Goodman Limited (non-controlling interests).

(a) Equity attributable to Goodman Limited

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Attributable to Goodman Limited
Foreign Defined
currency Employee benefit
Issued translation compensation retirement Total Retained
capital reserve reserve schemes reserves earnings Total
Goodman $M $M $M reserve $M $M $M
Balance at 30 June 2019 483.2 (2.7) 28.3 (23.3) 2.3 450.7 936.2
Total comprehensive
(loss)/income for the year
Profit for the year – – – – – 315.9 315.9
Other comprehensive
(loss)/income
Effect of foreign
currency translation – (34.2) – – (34.2) – (34.2)
Total comprehensive
(loss)/income for the year,
net of income tax – (34.2) – – (34.2) 315.9 281.7
Transfers – – (55.3) – (55.3) 55.3 –
Contributions by and
distributions to owners
Purchase of securities for the LTIP – – (19.1) – (19.1) – (19.1)
Equity settled share based
payments transactions – – 79.2 – 79.2 – 79.2
Balance at 30 June 2020 483.2 (36.9) 33.1 (23.3) (27.1) 821.9 1,278.0
Total comprehensive
(loss)/income for the year
Profit for the year – – – – – 300.2 300.2
Other comprehensive
(loss)/income
Effect of foreign
currency translation – (28.6) – – (28.6) – (28.6)
Total comprehensive
(loss)/income for the year,
net of income tax – (28.6) – – (28.6) 300.2 271.6
Transfers – – (68.4) – (68.4) 68.4 –
Contributions by and
distributions to owners
Purchase of securities for the LTIP – – (22.4) – (22.4) – (22.4)
Issue of securities 11.4 – – – – 11.4
Issue costs (0.1) – – – – (0.1)
Equity settled share based
payments transactions – – 106.1 – 106.1 – 106.1
Deferred tax associated
with the LTIP – – 8.1 – 8.1 – 8.1
– – – –
Transfer to payables (17.1) (17.1) (17.1)
Balance at 30 June 2021 494.5 (65.5) 39.4 (23.3) (49.4) 1,190.5 1,635.6
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(b) Equity attributable to other entities stapled to Goodman Limited (non-controlling interests)

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Attributable to other entities stapled to Goodman Limited (non-controlling interests)
Defined
Cash Foreign benefit
Asset flow currency Employee retirement
Issued revaluation hedge translation compensation schemes Total Retained
capital reserve reserve reserve reserve reserve reserves earnings Total
$M $M $M $M $M $M $M $M $M
Balance at 1 July 2019 7,548.5 (7.1) (3.3) 217.7 187.9 – 395.2 1,642.6 9,586.3
Total comprehensive
(loss)/income for the year
Profit for the year – – – – – – – 1,188.2 1,188.2
Other comprehensive
(loss)/income
Effect of foreign
currency translation – (0.1) (0.2) 7.8 – 0.2 7.7 – 7.7
Actuarial losses on defined
benefit superannuation funds – – – – – (8.2) (8.2) – (8.2)
Other changes – – (1.7) – – – (1.7) – (1.7)
Total comprehensive
(loss)/income for the year,
net of income tax – (0.1) (1.9) 7.8 – (8.0) (2.2) 1,188.2 1,186.0
Contributions by and
distributions to owners
Dividends/distributions
on stapled securities – – – – – – – (548.5) (548.5)
Equity settled share based
payments transactions – – – – 18.8 – 18.8 – 18.8
Balance at 30 June 2020 7,548.5 (7.2) (5.2) 225.5 206.7 (8.0) 411.8 2,282.3 10,242.6
Total comprehensive
(loss)/income for the year
– – – – – – –
Profit for the year 2,011.7 2,011.7
Other comprehensive
income/(loss)
Effect of foreign
currency translation – 0.2 0.5 (250.7) – (0.8) (250.8) – (250.8)
Actuarial losses on defined
– – – – – –
benefit superannuation funds (6.0) (6.0) (6.0)
Other changes – 0.3 0.3 – – – 0.6 – 0.6
Total comprehensive
income/(loss) for the year,
net of income tax – 0.5 0.8 (250.7) – (6.8) (256.2) 2,011.7 1,755.5
Contributions by and
distributions to owners
Dividends/distributions
– – – – – – –
on stapled securities (554.2) (554.2)
Issue of securities 53.7 – – – – – – – 53.7
Issue costs (0.3) – – – – – – – (0.3)
Equity settled share based
payments transactions – – – – 28.6 – 28.6 – 28.6
Balance at 30 June 2021 7,601.9 (6.7) (4.4) (25.2) 235.3 (14.8) 184.2 3,739.8 11,525.9
----- End of picture text -----

121

Goodman Group

Notes to the consolidated financial statements

Other items (continued)

23. Controlled entities

Controlled entities are entities controlled by the Company. Under Australian Accounting Standards, the Company is identified as having acquired control over the assets of the Trust and GLHK. The consolidated financial statements incorporate the assets and liabilities of all controlled entities as at 30 June 2021 and the results of all such entities for the year ended 30 June 2021. Where an entity either began or ceased to be controlled during the financial year, the results of that entity are included only from or to the date control commenced or ceased.

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

The significant controlled entities of the Company are set out below:

eliminated in full on consolidation. The signifcant controlled entities of the Company are set out below:
Signifcant controlled entities of Goodman Limited	Country of establishment/incorporation
Clayton 3 Trust	Australia
GA Industrial Portfolio Trust	Australia
GIT Investments Holding Trust No.31	Australia
Goodman Australia Finance Pty Limited1	Australia
Goodman Capital Trust1	Australia
Goodman Europe Development Trust1	Australia
Goodman Finance Australia Trust1	Australia
Goodman Funds Management Australia Limited	Australia
Goodman Funds Management Limited	Australia
Goodman Industrial Funds Management Limited	Australia
Goodman Industrial Trust	Australia
Goodman Property Services (Aust) Pty Limited	Australia
Goodman Treasury Trust1	Australia
Homebush Subtrust1	Australia
Moorabbin Airport Corporation Pty Ltd	Australia
Goodman Belgium NV	Belgium
Goodman Management Services (Belgium) NV	Belgium
Goodman China Asset Management Limited	Cayman Islands
Goodman China Developments	Cayman Islands
Goodman Developments Asia	Cayman Islands
Goodman Management Consulting (Beijing) Co. Ltd	China
Goodman Management Consulting (Shanghai) Co. Ltd	China
Goodman France Sàrl	France
Goodman Germany GmbH	Germany
GFM Hong Kong Limited	Hong Kong
Goodman Asia Limited	Hong Kong
Goodman China Limited	Hong Kong
Goodman Hong Kong Investment Trust	Hong Kong
Goodman Logistics (HK) Limited	Hong Kong
Goodman UK Investment (HK) Limited	Hong Kong
GPS Hong Kong Limited	Hong Kong
Goodman Italy S.R.L.	Italy

122

Annual Report 2021

Signifcant controlled entities of Goodman Limited	Country of establishment/incorporation
Goodman Japan Funds Limited	Japan
Goodman Japan Limited	Japan
Goodman Finance (Jersey) Limited1	Jersey
GELF Management (Lux) Sàrl	Luxembourg
Goodman Artemis Logistics (Lux) Sàrl	Luxembourg
Goodman Finance (Lux) Sàrl1	Luxembourg
Goodman Finance Two (Lux) Sàrl1	Luxembourg
Goodman Management Holdings (Lux) Sàrl	Luxembourg
Goodman Meadow Logistics (Lux) Sàrl	Luxembourg
Goodman Midnight Logistics (Lux) Sàrl	Luxembourg
Goodman Property Opportunities (Lux) Sàrl, SICAR	Luxembourg
GPO Advisory (Lux) Sàrl	Luxembourg
Goodman Finance NZ Limited1	New Zealand
Goodman Investment Holdings (NZ) Limited	New Zealand
Goodman (NZ) Limited	New Zealand
Goodman Property Services (NZ) Limited	New Zealand
Goodman Galaxy Holding BV	The Netherlands
Goodman Netherlands BV	The Netherlands
Goodman Real Estate (Spain) S.L.	Spain
Goodman Logistics Developments (UK) Limited	United Kingdom
Goodman Real Estate Adviser (UK) Limited	United Kingdom
Goodman Real Estate (UK) Limited	United Kingdom
Goodman Development Management LLC	United States
Goodman Management USA Inc	United States
Goodman North America LLC	United States
Goodman North America Management LLC	United States
Goodman US Finance One, LLC1	United States
Goodman US Finance Two, LLC1	United States
Goodman US Finance Three, LLC1	United States
Goodman US Finance Four, LLC1	United States
Tarpon Properties REIT Inc1	United States

Significant controlled entities of Goodman Industrial Trust.

123

Goodman Group

Notes to the consolidated financial statements

Other items (continued)

24. Related parties

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

Non-Executive Directors – GL and GFML Executive KMP Stephen Johns Gregory Goodman Ian Ferrier, AM (retired on 19 November 2020) Danny Peeters Christopher Green Anthony Rozic Mark Johnson Nick Kurtis Rebecca McGrath Michael O'Sullivan Phillip Pryke Nick Vrondas Penny Winn Non-Executive Directors – GLHK David Collins

Remuneration of key management personnel

The key management personnel remuneration totals are as follows:

	Goodman	Goodman	Goodman Limited1	Goodman Limited1
	2021	2020	2021	2020
	$000	$000	$000	$000
Short-term employee benefts	7,523.5	7,693.9	–	–
Post-employment benefts	225.4	211.8	–	–
Equity compensation benefts	33,385.0	27,760.3	–	–
Long-term employee benefts	3,813.8	3,787.7	–	–
	44,947.7	39,453.7	–	–

The remuneration is paid by wholly owned controlled entities of Goodman Limited.

GIT does not employ personnel in its own right. However, it is required to have an incorporated responsible entity to manage its activities and GFML is considered to be the key management personnel of GIT.

Individual Directors’ and executives’ compensation disclosures

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

GreenPoint Real Estate Innovation and Technology Venture, LP

On 16 July 2020, GIT committed to investing USD15.0 million in GreenPoint Real Estate Innovation and Technology Venture, LP, a property technology fund that is a Delaware limited partnership, managed by Greenpoint Group LP, also a Delaware limited partnership. Greenpoint Group LP is beneficially owned and controlled by Christopher Green, a Director of Goodman Limited. As at 30 June 2021, GIT has invested USD3,826,595.

Transactions with associates and JVs

The transactions with Partnerships during the financial year were as follows:

	Revenue from disposal of	Revenue from disposal of	Revenue from management	Revenue from management	Interest charged on loans	Interest charged on loans
	investment	properties	and development activities		to associates and JVs
	2021	2020	2021	2020	2021	2020
Goodman	$000	$000	$000	$000	$000	$000
Associates	163,046.2	56,900.7	712,234.5	883,521.8	–	–
JVs	–	–	442,607.0	261,195.5	8,131.9	1,319.8
GIT
Associates	163,046.2	–	–	–	15.7	–
JVs	–	–	–	–	7,417.6	–

124

Annual Report 2021

In addition to the transactions included above, as at 30 June 2021, the Group had entered into conditional contractual arrangements to sell two properties to a Partnership for consideration of $109.7 million. As the conditions under the contracts had not been satisfied as at 30 June 2021, the disposal transactions were not reflected in the Group’s FY21 results. Amounts due from Partnerships at 30 June 2021 were as follows:

Goodman Amounts due from related parties1 Loans provided by Goodman2 2021 $000 2020 $000 2021 $000 2020 $000 Associates GAIP 10,811.2 10,850.4 – – GAP 3,843.9 3,633.8 – – GMT 2,123.8 1,540.4 – – GHKLP 41,987.7 56,779.4 – – GJCP 3,017.4 5,352.0 – – GEP 8,454.0 16,526.1 – 3,616.0 70,238.0 94,682.1 – 3,616.0 JVs GCLP 12,566.5 20,360.9 – – Other JVs 18,803.7 17,353.5 270,368.8 130,296.1 31,370.2 37,714.4 270,368.8 130,296.1	GIT
	Amounts due from related parties1 Loans provided by GIT2
	2021 $000 2020 $000 2021 $000 2020 $000
	– – – – – – – – – – – – – – – – – – – – – – – –
	– – – –
	– – – – 70.5 263.2 240,731.6 69,498.4
	70.5 263.2 240,731.6 69,498.4

Amounts due from related parties include contract assets arising from transactions with related parties.
Loans provided by Goodman and GIT to associates and JVs have been provided on an arm’s length basis.

Transactions between GIT and other Goodman entities

The transactions with other Goodman entities during the financial year were as follows:

Transactions between GIT and other Goodman entities The transactions with other Goodman entities during the fnancial year were as follows:
	GIT
	2021	2020
	$000	$000
Management income	2,384.0	2,379.0
Revenue from disposal of investment properties	8,073.0	–
Reimbursement of expenses	50,392.9	52,479.8
	60,849.9	54,858.8

In addition, interest bearing loans exist between GIT and other Goodman entities. At 30 June 2021, interest bearing loans of $3,096.5 million (2020: $3,008.0 million) were receivable by GIT from other Goodman entities and $777.7 million (2020: $760.0 million) was payable by GIT to other Goodman entities. Loans to related Goodman entities bear interest at rates referenced to GIT’s external funding arrangements.

125

Goodman Group

Notes to the consolidated financial statements

Other items (continued)

25. Commitments

Development activities

At 30 June 2021, Goodman was committed to expenditure in respect of $534.7 million (2020: $251.8 million) on inventories and other development activities. GIT has no such commitments (2020: $nil).

Investment properties

At 30 June 2021, Goodman had contracted to acquire an investment property for $67.7 million. In the prior year, Goodman had capital expenditure commitments of $32.2 million in respect of its existing investment property portfolio. GIT has no such commitments (2020: $nil).

Partnerships

At 30 June 2021, Goodman had remaining equity commitments of $63.0 million (2020: $65.1 million) into GEP and $144.7 million (2020: $nil) into GAIP. These commitments also apply to GIT. In relation to GEP, Goodman offers limited liquidity facilities to investors, which allow the investors to sell to Goodman some or all of their investment in GEP. Limits apply to these liquidity facilities and Goodman is only required to offer to purchase up to €50 million of the issued capital of GEP each half year subject to 1) a maximum of €50 million in any calendar year; and 2) a cumulative maximum of €150 million. Furthermore, Goodman is only required to purchase units where its coinvestment in GEP is either below a prescribed limit or a maximum amount of liquidity has been provided. Currently, Goodman’s interest in GEP is below the prescribed limit and the liquidity facility is open for investors. The commitment under the liquidity facility also applies to GIT.

Furthermore, in respect of certain Partnerships, Goodman and its investment partners have committed to invest further capital, subject to the approval by the partners of the property acquisitions and/or developments for which the funding is required. Goodman’s commitment in respect of these Partnerships is set out below:

- $nil (2020: $23.8 million) into KGIP
- $136.2 million (2020: $147.8 million) into KGG
- $410.1 million (2020: 436.6 million) into GJDP
- $808.0 million (2020: $853.8 million) into GCLP
- $512.8 million (2020: $136.8 million) into GUKP
- $2,156.2 million (2020: $2,546.8 million) into GNAP
- $72.7 million (2020: $84.4 million) into Goodman Brazil Logistics Partnership.

126

Annual Report 2021

26. Auditors’ remuneration

Goodman 2021 $000 2020 $000 Audit services Auditor of the Company: – Audit and review of fnancial reports (KPMG Australia) 1,161.9 1,043.8 – Audit and review of fnancial reports (overseas KPMG frms) 1,127.9 898.4 2,289.8 1,942.2 Other services – Other regulatory services (KPMG Australia) 56.7 53.8 – Other advisory services (KPMG Australia) – 80.7 – Other advisory services (overseas KPMG frms) 18.2 – – Taxation compliance services (KPMG Australia) 100.0 123.4 – Taxation compliance services (overseas KPMG frms) 196.3 189.2 – Taxation advice (KPMG Australia) 23.0 190.8 – Taxation advice (overseas KPMG frms) 338.5 257.0 732.7 894.9 Total paid/payable to KPMG 3,022.5 2,837.1 Other auditors – Audit and review of fnancial reports (non-KPMG frms) 163.4 125.9	GIT
	2021 $000 2020 $000
	691.9 624.5 85.8 73.2
	777.7 697.7
	35.7 53.8 – – – – 91.7 96.3 – 35.3 – – – 1.6
	127.4 187.0
	905.1 884.7

	– –

27. Parent entity disclosures

As at, and throughout the financial year ended, 30 June 2021, the parent entities of Goodman and GIT were Goodman Limited and Goodman Industrial Trust respectively. The financial information for the parent entities is disclosed as follows:

Goodman 2021 $M 2020 $M Result of the parent entity Proft/(loss) for the year 63.0 (91.4) Other comprehensive income for the year – – Total comprehensive income/(loss) for the year 63.0 (91.4) Financial position of the parent entity at year end Current assets 49.1 53.8 Total assets 1,591.9 1,570.7 Current liabilities 164.4 362.7 Total liabilities 1,163.7 1,272.2 Total equity of the parent entity comprising: Issued capital 852.5 792.0 Profts reserve 90.7 90.7 Employee compensation reserve 39.3 33.1 Accumulated losses (554.3) (617.3) Total equity 428.2 298.5	GIT
	2021 $M 2020 $M
	140.0 322.0 – –
	140.0 322.0
	2,329.3 2,614.9 7,424.8 7,314.9 1,107.4 2,455.6 2,666.1 2,537.9 7,849.0 7,623.5 – – 159.8 173.4 (3,250.1) (3,019.9)
	4,758.7 4,777.0

127

Goodman Group

Notes to the consolidated financial statements

Other items (continued)

27 Parent entity disclosures (continued)

The financial information for the parent entities of Goodman and GIT has been prepared on the same basis as the consolidated financial statements, except as set out below:

Investments in controlled entities and Partnerships

Investments in controlled entities and Partnerships are accounted for at cost in the financial statements of Goodman Limited and Goodman Industrial Trust. Distributions/dividends received from Partnerships are recognised in the income statement, rather than being deducted from the carrying amount of these investments.

Tax consolidation

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

Financial guarantees

Where the parent entities have 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.

Parent entity capital commitments

At 30 June 2021, the parent entities had no capital commitments (2020: $nil).

Parent entity contingencies

Capitalisation Deed Poll

The Company, GFML, as responsible entity of the Trust, GLHK 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 finance documents for the purpose of the CDP when the borrower fails to make a payment. Any payments by an investor to a borrower will be by way of loan to, or proceeds for the subscription of equity in, the borrower by the investor.

United States and Reg S senior notes

Under the issue of notes in the United States 144A/Reg S bond market (refer to notes 16(b) and 16(c)), controlled entities of GIT had on issue USD and EUR notes amounting to US$850.0 million and €500.0 million respectively. GL, GFML, as responsible entity of the Trust, and GLHK have unconditionally and irrevocably guaranteed on a joint and several basis the payment of principal and interest in respect of each of the notes.

28. Events subsequent to balance date

Goodman and GIT

Other than as disclosed elsewhere in the consolidated financial report, there has not arisen in the interval between the end of the financial year and the date of this consolidated financial report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of Goodman and GIT, the results of those operations, or the state of affairs of Goodman and GIT, in future financial years.

128

Annual Report 2021

DIRECTORS' DECLARATION

In the opinion of the directors of Goodman Limited and the directors of Goodman Funds Management Limited, the responsible entity for Goodman Industrial Trust:

(a) the consolidated financial statements and the notes of Goodman Limited and its controlled entities and Goodman Industrial Trust and its controlled entities set out on pages 68 to 128 and the remuneration report that is contained on pages 26 to 65 in the Directors’ report, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of Goodman’s and GIT’s financial position as at 30 June 2021 and of their performance for the financial year ended on that date
(ii) complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Regulations 2001
(b) there are reasonable grounds to believe that the Company and the Trust will be able to pay their 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 Chief Financial Officer for the financial year ended 30 June 2021.

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 [92 x 85] intentionally omitted <==

Stephen Johns Independent Chairman

Gregory Goodman Group Chief Executive Officer Sydney, 12 August 2021

129

Goodman Group

Independent Auditor’s Report

To the stapled security holders of Goodman Group and the unitholders of Goodman Industrial Trust

REPORT ON THE AUDIT OF THE FINANCIAL REPORT

Opinion

We have audited the Financial Report of Goodman Limited (the Company) as the deemed parent presenting the stapled security arrangement of the Goodman Group (the Goodman Group Financial Report).

We have also audited the Financial Statements of Goodman Industrial Trust (the Trust Financial Report).

In our opinion, each of the accompanying Goodman Group Financial Report and Trust Financial Report are in accordance with the Corporations Act 2001 , including:

- giving a true and fair view of the Goodman Group’s and of the Trust’s financial position as at 30 June 2021 and of their financial performance for the year ended on that date; and
- complying with Australian Accounting Standards and the Corporations Regulations 2001 .

The content of each of the Goodman Group and Trust Financial Report comprise:

- Consolidated statement of financial position as at 30 June 2021;
- Consolidated income statement, Consolidated statement of comprehensive income, Consolidated statement of changes in equity and Consolidated cash flow statement for the year then ended;
- Notes including a summary of significant accounting policies; and
(collectively referred to as Financial Statements )
- Directors’ Declaration.

The Goodman Group consists of Goodman Limited and the entities it controlled at the year-end or from time to time during the financial year, Goodman Industrial Trust (the Trust ) and the entities it controlled at the year-end or from time to time during the financial year and Goodman Logistics (HK) Limited and the entities it controlled at the year-end or from time to time during the financial year.

Basis for opinions

We conducted our audits in accordance with Australian Auditing Standards . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report.

We are independent of the Goodman Group, Goodman Limited, Goodman Funds Management Limited (the Responsible Entity of the Trust) and the Trust in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audits of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matters

The Key Audit Matters we identified for the Goodman Group are:

- Recognition of development income;
- Valuation of investment properties, investments accounted for using the equity method and inventories; and
- Value of intangible assets.

Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period.

These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

130

Annual Report 2021

Recognition of development income ($1,492.0m)

Refer to Note 2 to the Financial Report

Refer to Note 2 to the Financial Report
The key audit matter	How the matter was addressed in our audit
Development income was a key audit matter due to:	Our	procedures included:
+ its signifcant value (39% of revenue and other income);	+	Selecting specifc contracts from development income recognised
+ the high volume of transactions; and + the judgements applied by us to assess the Goodman Group’s determination of revenue recognised during the period in relation to contracts which remain in progress at period end. Development income comprises income from disposal of inventories, other development income (including development management services) and income from fxed price construction contracts.	+ For +	(in relation to contracts that remain in progress at period end) based on quantitative and qualitative information (such as the size and complexity of the arrangement); and Evaluating Goodman Group’s recognition of development income against the criteria in the accounting standards. the specifc contracts selected, our procedures included: Understanding the underlying contractual arrangements, in particular
Income from development management services is recognised		their unique terms;
progressively, requiring judgement by us when considering the Goodman	+	Where recognition of development income is conditional upon certain
Group’s determination of the amount and extent of the services provided		events occurring, checking correspondence with external parties for
based on contract deliverables.		evidence of achievement of conditions;
Income from certain inventory disposals and fxed price construction	+	Assessing the Goodman Group’s determination of revenue
contracts is recognised in proportion to the stage of completion of the		recognised during the period in accordance with the provision
relevant contracts. We focused on the stage of completion estimation		of services stipulated in the underlying contract or the stage of
which is based on costs incurred as a percentage of estimated total		completion;
costs for each contract.	+	For revenue recognised based on the stage of completion, assessing
		a sample of costs incurred to date and total forecast costs against
		project feasibilities; and
	+	Challenging the key assumptions included in the Goodman Group’s
		project feasibilities by comparing to commentary published by
		industry experts, recent market transactions, and our knowledge of
		historical performance of the assets.

131

Goodman Group

Independent Auditor’s Report

Valuation of investment properties ($1,851.2m), investments accounted for using the equity method ($10,660.0m) and inventories ($1,427.8m)

Refer to Note 6 to the Financial Report

The key audit matter

The Goodman Group’s investments in property assets include investment properties and inventories, which are held either directly or through its investments accounted for using the equity method.

Investment properties are held at fair value and inventories are held at the lower of cost and net realisable value. The valuation of property assets are determined using internal methodologies or through the use of external valuation experts.

The valuation of property assets is a key audit matter as they are significant in value (being 83% of total assets) and contain assumptions with estimation uncertainty.

This leads to additional audit effort due to differing assumptions based on asset classes, geographies and characteristics of individual property assets.

The valuation of property assets include a number of significant assumptions:

- Investment properties: - capitalisation rates;
discount rates;
customer covenant strength;
market rental income;
weighted average lease expiry and vacancy levels;
projections of capital expenditure; and
lease incentive costs.
- Inventories: - forecast capitalisation rates and market rental income;
land value per square metre;
letting up periods and lease incentive costs; and
development costs.

In assessing this Key Audit Matter, we involved real estate valuation specialists, who understand the Group’s investment profile, business and the economic environment it operates in.

How the matter was addressed in our audit Our procedures included:

- Obtaining an understanding of the Goodman Group’s process regarding the valuation of property assets;
- Assessing the methodologies used in the valuations of property assets, for consistency with accounting standards, industry practice and the Goodman Group’s policies; and
- Working with real estate valuation specialists to read published reports and industry commentary to gain an understanding of prevailing property market conditions.

For investment properties, taking into account asset classes, geographies and characteristics of individual investment properties:

- Assessing the scope, competence and objectivity of external valuation experts and Goodman Group’s internal valuers;
- Challenging significant assumptions, with reference to published industry reports and commentary to gain an understanding of prevailing property market conditions;
- With assistance of real estate valuation specialists, assessing a sample of significant assumptions including capitalisation rates, discount rates, customer covenant strength, market rental income, weighted average lease expiry and vacancy levels, projections of capital expenditure and lease incentive costs. We did this by comparing to market analysis published by industry experts, recent market transactions, inquiries with the Goodman Group, historical performance of the assets and using our industry experience; and
- Assessing the disclosures in the financial report using our understanding obtained from our testing, against accounting standard requirements.

For inventories:

- Challenging the key assumptions included in the Goodman Group’s internal recoverability assessments (project feasibilities) and valuations by comparing to commentary published by industry experts, recent market transactions, and our knowledge of historical performance of the assets.

132

Annual Report 2021

Value of intangible assets ($822.6m)

Refer to Note 14 to the Financial Report

The key audit matter How the matter was addressed in our audit At 30 June 2021 the Goodman Group’s intangible assets comprised Our procedures included: goodwill and management rights. The valuation of intangible assets + Considering the appropriateness of the value in use method applied was identified as a key audit matter as the Goodman Group’s annual by the Goodman Group to perform the annual test of goodwill and impairment assessment contains significant judgments involving management rights impairment, against the requirements of the forecasting and discounting future cash flows. accounting standards. The impairment assessment is based on the value in use model + For divisions with significant intangible assets: performed for each division of the Goodman Group. The value in use models incorporate significant judgment in respect of future conditions - Working with our valuation specialists, comparing the discount rates and terminal growth rates used in the value in use models to
and we focussed on key assumptions such as: publicly available data of comparable entities;
- forecast cash flows, growth rates and terminal growth rates, taking - Assessing the ability of the Goodman Group to accurately forecast
into consideration the level and margins from ongoing development by comparing previous forecasts to actual results;
activity and forecast funds management income (which is primarily dependent on assets under management). The Group’s models are - Comparing the division’s forecast cash flows contained in the value Comparing the division’s forecast cash flows contained in the value sensitive to small changes in these assumptions, which may reduce in use models to Board approved forecasts; available headroom. This drives additional audit effort specific to their - Challenging the divisions forecast cash flows from development Challenging the divisions forecast cash flows from development feasibility and consistency of application to the Group’s strategy; and activity and funds management based on our understanding of
- discount rates – these are complicated in nature and vary according local market conditions; and to the conditions the division is subject to from time to time. - Performing a sensitivity analysis on the discount rates, growth rates Performing a sensitivity analysis on the discount rates, growth rates
We involved valuation specialists in assessing this Key Audit Matter. and forecast assets under management by applying a reasonably
Comparing the division’s forecast cash flows contained in the value Comparing the division’s forecast cash flows contained in the value in use models to Board approved forecasts;
- Challenging the divisions forecast cash flows from development Challenging the divisions forecast cash flows from development activity and funds management based on our understanding of local market conditions; and
- Performing a sensitivity analysis on the discount rates, growth rates Performing a sensitivity analysis on the discount rates, growth rates and forecast assets under management by applying a reasonably possible range of outcomes to focus our further procedures.
- Assessing the disclosures in the financial report using our understanding from our testing and against the requirements of the accounting standards.

133

Goodman Group

Independent Auditor’s Report

Other Information

Other Information is financial and non-financial information in Goodman Group’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors of the Company and the Directors of the Responsible Entity are responsible for the Other Information.

The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report (including the Remuneration Report). The Chairman’s Letter, Group Chief Executive Officer’s Report, Corporate Responsibility and Sustainability, Corporate Governance and Securities Information are expected to be made available to us after the date of the Auditor's Report.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report, we have nothing to report.

Responsibilities of the Directors for the Financial Report

The Directors of the Company and the Responsible Entity are responsible for:

- preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 ;
- implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and
- assessing the Goodman Group and Trust’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Goodman Group or the Trust or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report

Our objective is:

- to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and
- to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at:

https://www.auasb.gov.au/admin/fle/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report.

134

Annual Report 2021

REPORT ON THE REMUNERATION REPORT

Opinion

In our opinion, the Remuneration Report of Goodman Limited for the year ended 30 June 2021, complies with Section 300A of the Corporations Act 2001 .

Directors’ responsibilities

The Directors of Goodman Limited are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001 .

Our responsibilities

We have audited the Remuneration Report included on pages 26 to 65 of the Directors’ report for the year ended 30 June 2021.

Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards .

KPMG

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Eileen Hoggett Partner Sydney 12 August 2021

135

Goodman Group

Appendix A – Goodman Logistics (HK) Limited and its subsidiaries

Consolidated financial statements for the year ended 30 June 2021

CONTENTS	CONTENTS
Report of the Directors		137
Independent auditor’s report		146
Consolidated statement of fnancial position		148
Consolidated statement of comprehensive income		149
Consolidated statement of changes in equity		150
Consolidated cash fow statement		151
Notes to the consolidated fnancial statements
Basis of preparation
1	Basis of preparation	152
Results for the year
2	Proft before interest and income tax	154
3	Segment reporting	156
4	Income tax expense	159
5	Proft attributable to equity
	shareholders of the Company	160
Operating assets and liabilities
6	Property assets	161
7	Receivables	167
8	Contract balances	169
9	Assets held for sale	170
10	Payables	170
11	Leases	170
Capital management
12	Finance income and expense	171
13	Other fnancial assets and liabilities	172
14	Financial risk management	172
15	Dividends	177
16	Share capital	178
Other items
17	Notes to the consolidated cash fow statement	180
18	Reserves	182
19	Retained earnings	183
20	Investments in subsidiaries	183
21	Related party transactions	184
22	Commitments	186
23	Contingencies	186
24	Company level statement of fnancial position	187
25	Subsequent events	187

136

Annual Report 2021

Report of the Directors

The Directors have pleasure in submitting their annual financial report together with the audited financial statements of Goodman Logistics (HK) Limited (Company) and its subsidiaries (collectively referred to as the Consolidated Entity) for the year ended 30 June 2021 (FY21).

Incorporation and principal place of business

Goodman Logistics (HK) Limited was incorporated in Hong Kong on 18 January 2012 and has its principal place of business at Suite 901, Three Pacific Place, 1 Queen’s Road East, Hong Kong.

On 22 August 2012, the Company became a party to the stapling deed with Goodman Limited (GL) and Goodman Industrial Trust (GIT), and together the three entities and their subsidiaries are known as Goodman Group. Goodman Group is listed on the Australian Securities Exchange (ASX).

Principal activities

The principal activities of the Consolidated Entity are investment in directly and indirectly held industrial property, investment management, property management services and development management. The principal activities and other particulars of the subsidiaries are set out in note 20 to the consolidated financial statements.

Financial statements

The financial performance of the Consolidated Entity for the year ended 30 June 2021 and the Consolidated Entity’s financial position at that date are set out in the consolidated financial report on pages 148 to 187.

During the financial year, the Company declared a final dividend of 6.0 cents per share amounting to $110.8 million. The dividend is payable out of FY21 profit after tax. In the prior year, the Company declared a final dividend of 4.0 cents per share amounting to $73.1 million out of FY20 profit after tax.

Directors of subsidiaries

The names of Directors who have served on the Boards of the subsidiaries of the Company during FY21 are set out below:

Kristoffer Allan Harvey Lien Standaert Luke Caffey Nick Taunt Mak Chun Kit Jacky Marwan Bustani Matthew Macdonald Michael O'Sullivan Michael Woodford Nicholas Kurtis Nigel Allsop Paul Adams Paul Heslop Peter Ralston Philippe Arfi Philippe Van der Beken Philip Turpin Robert Nicholson Robert Reed Shiling Li Stephen Young Tai Yit Chan Tan Ai Ning Tang Chenying Tim Cruypelans Timothy Downes Wai Ho Stephen Lee Wang Chen Xiaoyin Zhang

Ai Ning Tan Bart Manteleers Béla Kakuk Charles Crossland Chi Wing Lin Chun Kit Fung David Anthony Hinchey Dominique Prince Edwin Chong Chee Wai Francisco Palacio Garcia Cuenca Ignacio Gareth Owen Godfrey Abel Goh Hoi Lai Hans Ongena Henry Kelly Hugh Baggie Izak ten Hove James Cornell Jan Palek Jason Harris Jie Yang John Conway John Morton Dakin Jorn Bruyninckx Joseph Salvaggio Karl Dockx Kelly Moore Kim Swee Seah

Share capital

Details of the movements in share capital of the Company during FY21 are set out in note 16 to the consolidated financial statements.

Directors

The Directors during the year and up to the date of this report were:

- Stephen Paul Johns (appointed 19 November 2020)
- David Jeremy Collins
- Gregory Leith Goodman[1] (alternate Director to Stephen Paul Johns)
- Daniel Cornelius D. Peeters
- Ian Douglas Ferrier, AM (retired 19 November 2020).
Alternate Director to Ian Douglas Ferrier until 19 November 2020.

137

Goodman Group

Report of the Directors

(continued)

BUSINESS REVIEW

State of affairs

There were no significant changes in the Consolidated Entity’s state of affairs during the year.

Goodman Group’s strategy

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MANAGE
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Goodman Group’s purpose is to make space for its stakeholders’ ambitions. This purpose is executed through Goodman Group’s integrated business capabilities model – “own+develop+manage”, where its customers’ need for sustainable solutions and service excellence in high quality locations, is at the centre.

The business capabilities are supported by:

1. Quality partnerships – develop and maintain strong relationships with key stakeholders including customers, investment partners, suppliers and employees.

2. Quality product and service – deliver high quality product and customer service in key logistics markets globally by actively leveraging Goodman Group’s industrial sector expertise, development and management experience and global operating platform.

3. Culture and brand – promote Goodman Group’s unique brand and embed Goodman Group’s core values across each operating division to foster a strong and consistent culture. The core values are:

- Innovation – New ideas push our business forward. We focus on the future, proactively looking for new opportunities and improved solutions for our stakeholders that will make the world a better place for all of us.
- Determination – Determination gets things done. We are motivated by excellence and work hard to achieve it, actively pursuing the very best outcomes for our stakeholders.
- Integrity – We have integrity, always. We work inclusively and transparently, balancing the needs of our business and our people, with the needs of the community and those we do business with.
- Sustainability – We’re building our business for the long term. That’s why we consider the planet and all the people on it in everything we do. Our initiatives demonstrate our ongoing commitment to having a positive economic, environmental and social impact on the world.

4. Operational efficiency – optimise business resources to maximise effectiveness and drive efficiencies.

5. Capital efficiency – maintain active capital management to facilitate appropriate returns and sustainability of the business.

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Annual Report 2021

Performance review

The Consolidated Entity has operations in Asia, Continental Europe and the United Kingdom, and its earnings are derived from property investment, development and management activities.

The Consolidated Entity has been able to adapt to the challenges that FY21 has brought and has continued to grow the business sustainably for the long term.

This increase in development activity has been a key driver of the Consolidated Entity’s operating performance for FY21, with operating profit increasing by 28.1% to $499.8 million, compared to $390.3 million for the prior year.

In assessing Goodman Group’s underlying performance, the Directors consider operating earnings as well as Goodman Group’s statutory profit. Operating earnings is a proxy for ‘cash earnings’ and is not an income measure under Hong Kong Financial Reporting Standards. It is defined as profit attributable to Shareholders adjusted for property valuations, impairment losses and other non-cash adjustments or non-recurring items.

	2021	2020
	$M	$M
Analysis of operating proft
Property investment earnings Development earnings	46.1 528.0	54.2 356.6
Management earnings	146.3	219.1
	720.4	629.9
Operating expenses	(199.6)	(186.1)
	520.8	443.8
Net fnance expense (operating)1	(8.8)	(13.3)
Income tax expense (operating) Operating proft	(12.2) 499.8	(40.2) 390.3

Net finance expense (operating) excludes derivative mark to market and unrealised foreign exchange movements.

Property investment activities

Property investment earnings in FY21 of $46.1 million were lower than the prior year and comprised 6% of the total earnings (2020: 8%).

earnings (2020: 8%).
	2021	2020
	$M	$M
Net property income	13.4	16.6
Partnerships	32.7	37.6
Property investment earnings	46.1	54.2

Key metrics	2021	2020
Weighted average capitalisation rate (%)	4.9	5.2
Weighted average lease expiry (years)	3.8	4.0
Occupancy (%)	98.0	96.7

Property investment earnings comprise gross property income (excluding straight lining of rental income), less property expenses, plus the Consolidated Entity’s share of the results of property investment joint ventures (referred to by the Consolidated Entity as Partnerships). The key drivers for maintaining or growing the Consolidated Entity’s property investment earnings are increasing the level of assets under management (AUM) (subject also to the Consolidated Entity’s direct and indirect interest), maintaining or increasing occupancy and rental levels within the portfolio, and controlling operating and financing costs within Partnerships.

The Consolidated Entity’s property portfolios are concentrated in large, urban centres where demand from customers has put pressure on land use and availability. As a consequence of the acceleration of consumer purchasing habits to online shopping, the Consolidated Entity has seen increased demand for space from customers in the food, consumer goods and logistics sectors, particularly related to e-commerce operators and those transitioning to online. At the same time, customers have continued to invest in order to improve the efficiency of their supply chains. In addition to storage and movements of goods, data centres have also emerged as a rapidly growing user of industrial property.

The Consolidated Entity’s share of investment earnings from its cornerstone holdings in the Partnerships decreased by 13% to $32.7 million compared to the prior year. The lower earnings in Continental Europe as a result of disposals in FY20 was partly offset by the stabilisation of developments in Asia and the United Kingdom in FY20 and FY21.

During FY21, the Consolidated Entity’s share of property valuations from the stabilised portfolios was $90.2 million. Valuation gains occurred in all regions and whilst the rental income growth and development completions were contributors to these uplifts, the primary driver was capitalisation rate compression. At 30 June 2021, the weighted average capitalisation rate for the Consolidated Entity’s portfolios was 4.9%, compared to 5.2% at the start of FY21.

139

Goodman Group

Report of the Directors

Business review (continued)

Development activities

In FY21, development earnings were $528.0 million, an increase of 48% on the prior year, and comprised 73% of total operating earnings (2020: 57%).

Development activity continued to be strong with work in progress of $5.8 billion across 37 projects at 30 June 2021. The increase in the Consolidated Entity’s development earnings was primarily volume driven.

	2021	2020
	$M	$M
Net development income	487.7	307.0
Partnerships	40.3	49.6
Development earnings	528.0	356.6
Key metrics:	2021	2020
Work in progress ($B)	5.8	3.1
Work in progress (million square metres)	2.0	1.2
Work in progress (number of developments)	37	21
Developments completed during the year	18	28
(number of developments)

Development earnings consist of development income, plus the Consolidated Entity’s share of the operating results of Partnerships that is allocable to development activities, plus net gains or losses from disposals of investment properties and equity investments that are allocable to development activities, plus interest income on loans to development joint ventures, less development expenses. Development income includes development management fees and also performance related revenues associated with managing individual development projects in Partnerships. The key drivers for the Consolidated Entity’s development earnings are the level of development activity, land and construction prices, property valuations and the continued availability of third-party capital to fund development activity.

Most of the inventory disposals and fixed price contract income arose in Continental Europe, as Goodman Group’s Partnerships in Continental Europe generally acquire completed developments from the Consolidated Entity. In the Consolidated Entity’s other operating segments, development earnings are a mix of development management income, including performance related income, and transactional activity, including the Consolidated Entity’s share of development profits reported by the Partnerships themselves. Consistent with the prior year, most of the development activity in FY21 was undertaken by or for the Partnerships and third parties.

Management activities

Management earnings in FY21 of $146.3 million decreased by 33% compared to the prior year and comprised 20% of total operating earnings (2020: 35%). This was due to lower performance fee revenue recognised in FY21 and the net adverse impact of the translation of the overseas earnings compared to the prior year. The reduction in performance related revenue was the result of the timing of calculation and recognition of fees.

	2021	2020
	$M	$M
Management earnings	146.3	219.1

Key metrics:	2021	2020
Number of Partnerships	7	7
External AUM ($B)	23.0	21.5

Management earnings relate to the revenue from managing both the property portfolios and the capital invested in the Partnerships (management income). This includes performance related revenues but excludes earnings from managing development activities in the Partnerships, which are included in development earnings. The key drivers for maintaining or growing management earnings are activity levels, asset performance, and increasing the level of AUM, which can be impacted by property valuations and asset disposals and is also dependent on liquidity including the continued availability of third party capital to fund both development activity and acquisitions across the Consolidated Entity’s Partnerships.

Other items

Operating expenses increased mainly due to remuneration costs as a result of modest inflation pressure and cash incentives paid as a result of the Consolidated Entity’s overall performance. Borrowing costs have fallen as a result of lower interest rates on the Consolidated Entity’s loans. The reduction in tax expense is primarily a function of changes to the origin and nature of revenue arising from management and development activities.

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Annual Report 2021

Statement of financial position

Statement of fnancial position
	2021	2020
	$M	$M
Stabilised investment properties	163.9	7.2
Cornerstone investments in Partnerships	1,470.0	1,276.2
Development holdings	1,140.9	1,056.2
Cash	358.4	357.4
Other assets	1,233.0	942.0
Total assets	4,366.2	3,639.0
Loans from related parties Other liabilities Total liabilities	1,891.1 705.2 2,596.3	1,731.0 493.3 2,224.3
Non-controlling interests	22.2	20.0
Net assets attributable to Shareholders	1,747.7	1,394.7

The stabilised investment properties relate to new acquisitions in Asia and the United Kingdom.

The carrying value of cornerstone investments in Partnerships has increased by $193.8 million to $1,470.0 million, principally due to the net investment in the Partnerships and the valuation uplifts. A reconciliation of the current year movement in cornerstone investments in Partnerships is detailed in note 6(f) to the consolidated financial statements.

The increase in development holdings by $84.7 million to $1,140.9 million is primarily due to additional expenditure on development projects in Continental Europe, China and the United Kingdom during the year.

Other assets included receivables, fair values of derivative financial instruments that are in an asset position, contract assets, property, plant and equipment and tax assets (including deferred tax). Other liabilities included trade and other payables, the provision for dividends to Shareholders, fair values of derivative financial instruments that are in a liability position, employee benefits and tax liabilities (including deferred tax).

Cash flow

Cash fow
	2021	2020
	$M	$M
Operating cash fows	473.6	376.3
Investing cash fows	(271.2)	(5.4)
Financing cash fows	(200.5)	(213.4)
Net increase in cash held	1.9	157.5
Effect of exchange rate fuctuations on cash held Cash at the beginning of the year	(11.7) 368.2	(2.0) 212.7
Cash at the end of the year	358.4	368.2

The increase in the net operating cash flows compared to the prior year primarily relates to development activities. During the year, the Consolidated Entity disposed of developments in Continental Europe and the United Kingdom, however, this was partly offset by an increase in development cash outflows, with market conditions remaining strong in all regions.

The net investing cash outflow was due to the net investment in the Consolidated Entity’s Partnerships, to fund acquisitions and new developments, plus the acquisitions of investment properties in Asia and the United Kingdom.

Financing cash flows principally relate to the net repayment of loans to related parties and payment of the dividend in August 2020.

Outlook

The Consolidated Entity has been able to adapt to the changes in the world to enable it to execute its strategy well and be in a strong position to continue to do so.

The Consolidated Entity’s urban infill markets are experiencing significant demand as customers respond to consumer needs. The evolving consumption trends across the physical and digital space are fundamentally impacting the volume and changing the nature of demand from customers. As a consequence, development activity is expected to be a key contributor to the Group’s performance, with the customer demand maintaining the high occupancy levels and the rental income growth across the Consolidated Entity’s portfolios. 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 this report of the Directors because disclosure of the information would be likely to result in unreasonable prejudice to the Consolidated Entity.

141

Goodman Group

Report of the Directors

Risks

Goodman Group identifies strategic and operational risks for each of its regions as part of its strategy process. The key risks, an assessment of their likelihood of occurrence and consequences and controls that are in place to mitigate the risks are reported to the Goodman Group Board annually.

Goodman Group has established formal systems and processes to manage the risks at each stage of its decision-making process. This is facilitated by a Goodman Group Investment Committee comprising senior executives, chaired by the Group Chief Executive Officer, which considers all major operational decisions and transactions. The Goodman Group Investment Committee meets on a weekly basis.

The Goodman Group Board has separate Board committees to review and assess key risks. The Risk and Compliance Committee reviews and monitors a range of material risks in Goodman Group’s risk management systems including, among other risks, market, operational, sustainability, regulation and compliance and information technology. The Goodman Group Audit Committee reviews and monitors financial risk management and tax policies.

The key risks faced by Goodman Group and the controls that have been established to manage those risks are set out below:

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Risk area Mitigation
Capital Goodman Group could suffer an inability to + Low gearing, ample liquidity and appropriate hedging and duration
management deliver its strategy, or an acute liquidity or to absorb market shocks
(debt, equity solvency crisis, financial loss or financial distress + Appropriate hedging quantities and duration in accordance with
and cash flow) as a result of a failure in the design or execution Goodman Group's financial risk management policy
of its capital management and financing strategy.
+ Diversification and tenure of debt funding sources and maturities
+ Capital partnering transfers risks into Partnerships
+ Diversification of investment partners
+ Change in distribution pay-out ratio consistent with contribution
to increasing development workbook
+ Strong assets that can generate better rental outcomes
+ Long lease terms with prime customers
+ Key urban market strategy – urban, infill locations support re-usability
of property
+ Adaptable and re-usable building design – ease to reconfigure for
another customer.
Economic and Global economic conditions and government + Global diversification of Goodman Group's property portfolios
geopolitical policies present both risks and opportunities + Focus on core property portfolios in key urban market locations
environment in the property and financial markets and the
+ Focus on cost management
business of our customers, which can impact the
delivery of Goodman Group's strategy and + Prudent capital management with low gearing and significant
its financial performance. available liquidity to allow for potential market shocks
A continued increase in geopolitical tension + Co-investment with local capital partners.
between countries could have potential
consequences on our people, operations and
capital partners.
Governance, Non-compliance with legislation, regulators, or + Independent governance structures
regulation and internal policies, or to understand and respond + Core values and attitudes, with an embedded compliance culture
compliance to changes in the political and regulatory focused on best practice
environment (including taxation) could result in
+ Dedicated Chief Risk Officer and Compliance Officer
legal action, financial consequences and damage
our standing and reputation with stakeholders. + Review of transactions by the Goodman Group Investment Committee.
People and culture Failure to recruit, develop, support, and retain + Succession planning for senior executives
staff with the right skills and experience may + Competitive remuneration structures, including the
result in significant underperformance or impact Goodman Group Long Term Incentive Plan (LTIP)
the effectiveness of operations and decision
+ Performance management and review
making, in turn impacting business performance.
+ Goodman Group values program
Maintaining an organisational culture, in a
changing workplace environment, commensurate + Learning, development and engagement programs.
with Goodman Group’s values.
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Annual Report 2021

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Risk area Mitigation
Development Development risks may arise from location, + Review of development projects by the Goodman Group
site complexity, planning and permitting, Investment Committee
infrastructure, size, duration along with general + Goodman Group defined design specifications, which cover
contractor capability. environmental, technological, and safety requirements, protecting
against short-term obsolescence
+ Redevelopment of older assets to intensify use
+ Pre-selecting and engaging general contractors that are
appropriately capitalised
+ Internal audit reviews
+ Insurance program, both Goodman Group and general contractor,
including project specific insurance
+ Ongoing monitoring and reporting of WIP and levels of speculative
development, with Goodman Group Board oversight including limits
with respect to speculative development and higher development
risk provisions.
Disruption, changes The longer-term risk that an inability to + Key urban market strategy – urban, infill locations support re-usability
in demand and understand and respond effectively to changes of property
obsolescence in our competitive landscape and customer + Adaptable and re-usable building design – ease to reconfigure for
value chain could result in business model another customer
disruption and asset obsolescence, including the
+ Geographic diversification
perception of obsolescence in the short term.
+ Capital partnering transfers risks into Partnerships
+ Insurance program (both Goodman Group's and key contractors),
including project specific insurance covering design and defects
+ Long lease terms with prime customers.
Environmental Failure to deliver on Goodman Group's + Corporate Responsibility and Sustainability policy
sustainability and sustainability leadership strategy and ambitions + 2030 Sustainability Strategy including the assessment of
climate change may lead to a negative impact on Goodman individual assets to improve resilience and implementation
Group's reputation, ability to raise capital and of sustainability initiatives
a disruption to operations and stranded assets.
+ Sustainability guidelines for development projects
+ Review and approval of acquisitions and development projects by
the Goodman Group Investment Committee and relevant Partnership
Investment Committee, including consideration of climate in due
diligence and specification.
Asset and portfolio Inability to execute asset planning and + Key urban market strategy – urban, infill locations where customer
management strategies, including leasing demand is strongest
risk exposures, can reduce returns from + Diversification of customer base and lease expiries
Goodman Group's portfolios.
+ Review of significant leasing transactions and development projects
by the Goodman Group Investment Committee
+ Capital expenditure programs keeping pace with property lifecycle.
Concentration Over-exposure to specific areas, such as capital + Diversification of customer base and lease expiries
of counterparties partners, supply chain, customers and markets, + Diversification of capital partners and Partnership expiries
and markets may limit growth and sustainability opportunities.
+ Contractor pre-selection and tendering
+ Independence governance structure.
Information and Maintaining security (including cyber security) + Reporting of risks and management activity
data security of IT environment and data, ensuring continuity + Proactive monitoring, review and testing of infrastructure
of IT infrastructure and applications to support
+ Disaster recovery and business continuity planning and testing
sustainability and growth and prevent operational,
regulatory, financial and reputational impacts. + Benchmarked strategy for delivery of security IT infrastructure and systems
+ Training and awareness program and other assurance activities
for monitoring and improvement.
Infectious There continues to be significant uncertainty + Protect and support our people
disease pandemic associated with the COVID-19 pandemic, with + Global diversification of Goodman Group's property portfolios
mutations of the virus and significant outbreaks
+ Diversification of customer base
continuing to occur globally. While vaccine
distribution is underway, there are challenges + In-house property management team enabling flexibility to support
with production and supply. Also the success of and respond to customers
the vaccine in enabling the world to stabilise and + Capital model, strong balance sheet with adequate liquidity available.
transition to a normal footing is still to be understood.
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143

Goodman Group

Report of the Directors

Environmental regulations

The Consolidated Entity has policies and procedures to identify and appropriately address environmental obligations that might arise in respect of the Consolidated Entity’s operations that are subject to significant environmental regulation under the laws of the countries the Consolidated Entity operates in. The Directors have determined that the Consolidated Entity has complied with those obligations during the financial year and that there has not been any material breach.

Disclosure in respect of any indemnification of Directors

A permitted indemnity provision (as defined in section 469 of the Hong Kong Companies Ordinance) for the benefit of the Directors of the Company is currently in force and was in force throughout this year.

Directors’ interests in contracts

No contract of significance in relation to the Consolidated Entity’s business to which the Company, its subsidiaries or any of its fellow subsidiaries was a party and in which the Directors of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Directors’ interests in shares

At the end of the year, the Directors (including alternate Directors) held the following interests in the stapled securities of Goodman Group, which are listed on the ASX:

	Direct	Indirect
Directors	securities	securities	Total
Stephen Paul Johns	–	41,143	41,143
David Jeremy Collins	5,000	–	5,000
Gregory Leith Goodman	458,207	38,029,673	38,487,880
Daniel Cornelius D. Peeters	–	1,633,131	1,633,131

In addition, Gregory Goodman and Daniel Peeters participate in the LTIP under which they hold performance rights. Performance rights entitle participants to receive Goodman Group stapled securities without the payment of consideration, subject to Goodman Group satisfying performance criteria and the participants remaining employees of Goodman Group.

Details of the awards of performance rights under the LTIP granted as compensation to the Directors (including alternate Directors) at 30 June 2021 are as follows:

	Number of	Number of	Number of	Number of	Number of
	performance	performance	performance	performance	performance	Date	Financial
	rights at the start	rights granted	rights vested	rights forfeited	rights at the	performance	years in which
	of the year	during the year	during the year	during the year	end of the year	rights granted	grant vests
Gregory Leith	–	950,000	–	–	950,000	19 Nov 20	2024 – 2026
Goodman	900,000	–	–	–	900,000	20 Nov 19	2023 – 2025
	1,600,000	–	–	–	1,600,000	15 Nov 18	2022 – 2024
	1,600,000	–	(533,333)	–	1,066,667	16 Nov 17	2021 – 2023
	1,600,000	–	(800,000)	–	800,000	30 Sep 16	2020 – 2022
	650,000	–	(650,000)	–	–	25 Nov 15	2019 – 2021
Daniel Cornelius	–	380,000		–	380,000	19 Nov 20	2024 – 2026
D. Peeters	350,000	–	–	–	350,000	20 Nov 19	2023 – 2025
	550,000	–	–	–	550,000	15 Nov 18	2022 – 2024
	550,000	–	(183,333)	–	366,667	16 Nov 17	2021 – 2023
	400,000	–	(200,000)	–	200,000	30 Sep 16	2020 – 2022
	146,250	–	(146,250)	–	–	25 Nov 15	2019 – 2021

Apart from the above, at no time during the year was the Company, its subsidiaries or any of its fellow subsidiaries a party to any arrangement to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other related body corporate.

144

Annual Report 2021

Auditors

KPMG retire and, being eligible, offer themselves for reappointment. A resolution for the re-appointment of KPMG as auditors of the Company is to be proposed at the forthcoming Annual General Meeting.

Subsequent events

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity, in future financial years.

Declaration by the Group Chief Executive Officer and Chief Financial Officer

The Directors have been given declarations equivalent to those required of listed Australian companies by section 295A of the Corporations Act 2001 from the Group Chief Executive Officer and Chief Financial Officer for the year ended 30 June 2021.

By order of the Board of Directors

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Stephen Paul Johns Independent Chairman

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David Jeremy Collins Director Sydney, 12 August 2021

145

Goodman Group

Independent auditor’s report

To the members of Goodman Logistics (HK) Limited (Incorporated in Hong Kong with limited liability)

Opinion

We have audited the consolidated financial statements of Goodman Logistics (HK) Limited (the Company) and its subsidiaries (the Group) set out on pages 148 to 187, which comprise the consolidated statement of financial position as at 30 June 2021, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (HKFRSs) issued by the Hong Kong Institute of Certified Public Accountants (HKICPA) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

Basis for opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing (HKSAs) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information other than the consolidated financial statements and auditor’s report thereon

The Directors are responsible for the other information which comprises all the information included in the Company’s Report of the Directors.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors

for the consolidated financial statements

The Directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance and for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. This report is made solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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Annual Report 2021

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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KPMG

Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong 12 August 2021

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.
- Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

147

Goodman Group

Consolidated statement of financial position

as at 30 June 2021

(expressed in Australian dollars)

(expressed in Australian dollars)
		2021	2020
	Note	$M	$M
Current assets
Cash and cash equivalents	17(a)	358.4	357.4
Inventories	6(b)	106.4	405.1
Receivables	7	744.3	563.6
Contract assets	8	55.7	25.1
Current tax receivables	4(c)	4.2	0.8
Other assets		12.9	1.7
Assets held for sale	9	–	97.9
Total current assets		1,281.9	1,451.6
Non-current assets Inventories Investment properties Investments accounted for using the equity method Receivables Other fnancial assets Deferred tax assets Property, plant and equipment Other assets	6(b) 6(b) 6(b) 7 13 4(d)	1,034.5 163.9 1,470.0 276.2 102.6 15.2 17.1 4.8	553.2 7.2 1,276.2 279.0 36.4 6.3 23.8 5.3
Total non-current assets		3,084.3	2,187.4
Total assets		4,366.2	3,639.0
Current liabilities Payables Loans from related parties Current tax payables Employee benefts Dividendpayable	10 21(c) 4(c) 15	263.0 806.7 48.9 45.1 110.8	200.5 1,403.7 48.2 39.4 73.1
Total current liabilities		1,274.5	1,764.9
Non-current liabilities Payables Loans from related parties Deferred tax liabilities Employee benefts Other fnancial liabilities	10 21(c) 4(d) 13	124.7 1,084.4 1.6 22.0 89.1	57.5 327.3 0.9 24.8 48.9
Total non-current liabilities		1,321.8	459.4
Total liabilities		2,596.3	2,224.3
Net assets		1,769.9	1,414.7
Equity attributable to Shareholders Share capital Reserves Retained earnings	16(a) 18 19	791.9 (629.0) 1,584.8	732.0 (624.5) 1,287.2
Total equityattributable to Shareholders		1,747.7	1,394.7
Non-controllinginterests		22.2	20.0
Total equity		1,769.9	1,414.7

The notes on pages 152 to 187 form part of these consolidated financial statements. Approved and authorised for issue by the Board of Directors on 12 August 2021.

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Stephen Paul Johns

Director

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David Jeremy Collins

Director

148

Annual Report 2021

Consolidated statement of comprehensive income

for the year ended 30 June 2021

(expressed in Australian dollars)

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2021 2020
Note $M $M
Revenue
Gross property income 15.6 21.5
Management income 2 188.7 276.5
Development income 2 1,171.7 653.6
Dividends from investments 0.8 –
1,376.8 951.6
Property and development expenses
Property expenses (2.2) (4.9)
Development expenses 2 (684.7) (371.5)
(686.9) (376.4)
Other income
–
Net loss from fair value adjustments on investment properties (1.2)
Net (loss)/gain on disposal of investment properties (1.9) 0.2
Share of net results of equity accounted investments 6(f) 164.7 107.0
Net gain on disposal of equity accounted investments 1.8 24.9
164.6 130.9
Other expenses
Employee expenses 2 (166.6) (146.8)
Share based payments expense (124.0) (57.6)
Administrative and other expenses (33.0) (39.3)
Transaction management fees (42.4) (57.4)
(366.0) (301.1)
Profit before interest and income tax 2 488.5 405.0
Net finance income/(expense)
Finance income 12 21.8 23.7
Finance expense 12 (82.9) (58.8)
Net finance expense (61.1) (35.1)
Profit before income tax 427.4 369.9
Income tax expense 4 (12.2) (40.2)
Profit for the year 415.2 329.7
Profit for the year attributable to:
Shareholders 19 408.4 325.5
Non-controlling interests 6.8 4.2
Profit for the year 415.2 329.7
Other comprehensive income
Item that will not be reclassified to profit or loss:
Increase due to revaluation of other financial assets 7.6 5.5
Actuarial losses on defined benefit retirement schemes (net of tax) (6.0) –
1.6 5.5
Item that may be reclassified subsequently to profit or loss:
Effect of foreign currency translation (21.5) (14.6)
(21.5) (14.6)
Other comprehensive (loss)/income for the year, net of tax (19.9) (9.1)
Total comprehensive income for the year 395.3 320.6
Total comprehensive income for the year attributable to:
Shareholders 389.0 316.2
Non-controlling interests 6.3 4.4
Total comprehensive income for the year 395.3 320.6
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The notes on pages 152 to 187 form part of these consolidated financial statements.

149

Goodman Group

Consolidated statement of changes in equity

for the year ended 30 June 2021

Year ended 30 June 2020

(expressed in Australian dollars)

Year ended 30 June 2020 (expressed in Australian dollars)
			Attributable to Shareholders
						Non-
		Share		Retained		controlling	Total
		capital	Reserves	earnings	Total	interests	equity
	Note	$M	$M	$M	$M	$M	$M
Balance at 1 July 2019		696.0	(447.4)	1,034.8	1,283.4	24.7	1,308.1
Total comprehensive income for the year
Proft for the year	19	–	–	325.5	325.5	4.2	329.7
Other comprehensive (loss)/income for the year		–	(9.3)	–	(9.3)	0.2	(9.1)
Total comprehensive (loss)/income for the year, net of income tax		–	(9.3)	325.5	316.2	4.4	320.6
~~Contributions by and distributions to owners~~ Dividend declared/paid Issue of shares to employees of Goodman Group Equity settled share based payments transactions Actuarial losses on defned beneft retirement schemes, net of tax Acquisition of entities from Goodman Limited Acquisition of special purpose development entity with non-controlling interests	15 16(a) 18(c) 18(d) 18(e)	– 36.0 – – – –	– – 5.2 (8.2) (164.8) –	(73.1) – – – – –	(73.1) 36.0 5.2 (8.2) (164.8) –	(9.8) – – – – 0.7	(82.9) 36.0 5.2 (8.2) (164.8) 0.7
Balance at 30 June 2020		732.0	(624.5)	1,287.2	1,394.7	20.0	1,414.7

Year ended 30 June 2021

(expressed in Australian dollars)

				Attributable to Shareholders	Attributable to Shareholders	Attributable to Shareholders
						Non-
		Share		Retained		controlling	Total
		capital	Reserves	earnings	Total	interests	equity
	Note	$M	$M	$M	$M	$M	$M
Balance at 1 July 2020		732.0	(624.5)	1,287.2	1,394.7	20.0	1,414.7
Total comprehensive income for the year
Proft for the year	19	–	–	408.4	408.4	6.8	415.2
Other comprehensive (loss)/income for the year		–	(19.4)	–	(19.4)	(0.5)	(19.9)
Total comprehensive (loss)/income for the year, net of income tax		–	(19.4)	408.4	389.0	6.3	395.3
Contributions by and distributions to owners Dividend declared/paid Issue of shares to employees of Goodman Group Issue of ordinary shares Equity settled share based payments transactions Acquisition of special purpose development entity with non-controlling interests	15 16(a) 16(a) 18(c)	– 48.6 11.3 – –	– – – 14.9 –	(110.8) – – – –	(110.8) 48.6 11.3 14.9 –	(9.0) – – – 4.9	(119.8) 48.6 11.3 14.9 4.9
Balance at 30 June 2021		791.9	(629.0)	1,584.8	1,747.7	22.2	1,769.9

The notes on pages 152 to 187 form part of these consolidated financial statements.

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Annual Report 2021

Consolidated cash flow statement

for the year ended 30 June 2021

(expressed in Australian dollars)

(expressed in Australian dollars)
	2021	2020
Note	$M	$M
Cash fows from operating activities
Property income received	14.7	20.2
Cash receipts from development activities	1,155.0	796.1
Other cash receipts from services provided	251.7	451.5
Property expenses paid	(2.0)	(4.8)
Payments for development activities	(821.6)	(513.8)
Other cash payments in the course of operations	(204.8)	(418.3)
Dividends/distributions received	81.7	77.6
Interest received	16.1	21.1
Finance costs paid	(1.0)	(0.9)
Net income taxes paid	(16.2)	(52.4)
Net cash provided by operating activities 17(b)	473.6	376.3
Cash fows from investing activities Proceeds from disposal of investment properties Proceeds from disposal of controlled entities, net of cash disposed Payments for investment properties Capital return from equity accounted investments Payments for equity investments Payments for plant and equipment Cash acquired on acquisition of subsidiaries	5.4 – (173.0) 139.8 (243.1) (0.3) –	4.8 95.6 (97.1) 109.2 (155.7) (0.1) 37.9
Net cash used in investing activities	(271.2) (5.4)
Cash fows from fnancing activities Proceeds from issue of ordinary share Net repayments of loans with related parties Payments on derivative fnancial instruments Dividends paid to Shareholders Dividends paid to non-controlling interests Payments of lease liabilities Capital contributed by non-controlling interests	11.3 (83.7) (42.2) (73.1) (9.0) (8.7) 4.9	– (101.0) – (90.7) (9.8) (11.9) –
Net cash used in fnancing activities	(200.5) (213.4)
Net increase in cash held Cash and cash equivalents at the beginning of the year Effect of exchange rate fuctuations on cash held	1.9 368.2 (11.7)	157.5 212.7 (2.0)
Cash and cash equivalents at the end of the year 17(a)	358.4	368.2

The notes on pages 152 to 187 form part of these consolidated financial statements.

151

Goodman Group

Notes to the consolidated financial statements

(expressed in Australian dollars)

BASIS OF PREPARATION

1. Basis of preparation

(a) Statement of compliance

These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (HKFRSs), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (HKASs) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (HKICPA) and accounting principles generally accepted in Hong Kong. These financial statements also comply with the applicable requirements of the Hong Kong Companies Ordinance.

(b) Basis of preparation of the consolidated financial statements

The measurement basis used in the preparation of the consolidated financial statements is the historical cost basis except for investment properties and other financial assets which are stated at fair value.

The preparation of financial statements in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Going concern

As at 30 June 2021, the Consolidated Entity had net current assets of $7.4 million.

Additionally, in accordance with the stapling agreement between the Company (GLHK), Goodman Limited (GL) and Goodman Funds Management Limited as responsible entity for Goodman Industrial Trust (GIT), on request, each party (and its subsidiaries) must provide financial support to the other party (and its subsidiaries). The financial support to the other party (and its subsidiaries) may include:

- Lending money or providing financial accommodation
- Guaranteeing any loan or other financing facility including providing any security
- Entering into any covenant, undertaking, restraint, negative pledge on the obtaining of any financial accommodation or the provision of any guarantee or security in connection with any financial accommodation
- Entering into any joint borrowing or joint financial accommodation and providing any guarantee, security, indemnities and undertakings in connection with the relevant joint borrowing or joint financial accommodation.

A party need not do anything under the above arrangements to the extent that the party considers that it is not in the interests of Goodman Group Securityholders as a whole, or would cause a member of the party’s group to contravene or breach applicable laws or particular finance arrangements.

On the basis of the above, the consolidated financial statements have been prepared on a going concern basis.

(c) Accounting for acquisitions of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no gain or loss and no goodwill is recognised as a result of such transactions.

(d) Foreign currency translation

Functional and presentation currency

Items included in the consolidated financial statements of each of the Company’s subsidiaries 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.

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Annual Report 2021

Transactions

Foreign currency transactions are translated to each entity’s functional currency at rates approximating the foreign exchange rates ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at the reporting date are translated at the rates of exchange ruling on that date. Resulting exchange differences are recognised in profit or loss.

Translation of controlled foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars at foreign exchange rates applicable at the reporting date.

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

(e) Changes in accounting policies

The AASB has issued new or amendments to standards that are first effective from 1 July 2020 but none of these have a material impact on the Consolidated Entity’s financial statements.

(f) Accounting standards issued but not yet effective

The Consolidated Entity has not applied any new standard or interpretation that is not yet effective for the current accounting period. None of the new accounting standards or interpretations is expected to have a significant impact on the future results of the Consolidated Entity.

(g) 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.

- Note 6 – Property assets
- Note 14 – Financial risk management.

The accounting impacts of revisions to estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Measurement of fair values

A number of the Consolidated Entity’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

When measuring the fair value of an asset or a liability, the Consolidated Entity uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy and 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)
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 6 – Property assets
- Note 14 – Financial risk management.

153

Goodman Group

Notes to the consolidated financial statements

RESULTS FOR THE YEAR

2. Profit before interest and income tax

Gross property income

Gross property income comprises rental income under operating leases (net of incentives provided) and amounts billed to customers for outgoings (e.g. rates, levies, cleaning, security, etc.). Amounts billed to customers for outgoings are a cost recovery for the Consolidated Entity and are recognised once the expense has been incurred. The expense is included in property expenses. Rental income under operating leases is recognised on a straightline 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 amortised on a straight-line basis over the life of the lease as a reduction of gross property income.

Management and development income

The revenue from management and development activities is measured based on the consideration specified in a contract with a customer. The Consolidated Entity recognises revenue when it transfers control over a product or service to a customer.

Management income

of the sensitivity analysis. The potential portfolio performance fee revenue is then recognised based on the length of time from the start of the assessment period to the reporting date as a proportion of the total assessment period. Where the income is attributable to development activities or it relates to a combination of inextricable management and development activities that have occurred over the performance fee period, then it is reported as development income, otherwise the income is reported as management income. The Partnerships make payments in respect of portfolio performances fees at the end of the performance periods, once the attainment of the conditions has been verified and the amount of the fee has been agreed by all parties.

Development income – disposal of inventories

Development income – development management services

Performance related development income includes income associated with the returns from individual developments under the Consolidated Entity’s management and performance fee income that relates to development activity. Income in respect of individual developments is recognised by the Consolidated Entity on attainment of the performance related conditions, which is when the income can be reliably measured and is highly probable of not being reversed. These amounts are paid by the Partnership when the amounts have been measured and agreed. Income associated with development activities as part of a portfolio assessment is recognised on the same basis as outlined above in the management income section.

Development income – fixed price development contracts

Certain development activities are assessed as being fixed price development contracts. This occurs when a signed contract exists, either prior to the commencement of or during the development phase, to acquire a development asset from the Consolidated Entity on completion. Revenue and expenses relating to these development contracts are recognised in profit or loss in proportion to the stage of completion of the relevant contracts by reference to costs. The payments may be on completion of the development once legal title has been transferred. The development period can be up to 24 months for larger and more complex developments.

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Annual Report 2021

Net (loss)/gain on disposal of investment properties

The disposal of an investment property is recognised at the point in time when control over the property has been transferred to the purchaser.

Employee benefits

Wages, salaries and annual leave

Wages and salaries, including non-monetary benefits, and annual leave that are expected to be settled within 12 months of the reporting date, represent present obligations resulting from employees’ services provided to the reporting date. These are calculated at undiscounted amounts based on rates that are expected to be paid as at the reporting date including related on-costs, such as workers’ compensation insurance and payroll tax.

Bonuses

A liability is recognised in other payables and accruals for bonuses where there is a contractual obligation or where there is a past practice that has created a constructive obligation. Liabilities for bonuses that are expected to be settled within 12 months are measured at the amounts expected to be paid, including related on-costs, when they are settled.

Defined contribution retirement plans

Obligations for contributions to defined contribution retirement plans are recognised as an expense as incurred.

Defined benefit retirement schemes

Profit before interest and income tax has been arrived at after crediting/(charging) the following items:

	2021	2020
	$M	$M
Management services	135.1	146.4
Performance related income	53.6	130.1
Management income	188.7	276.5
Income from disposal of inventories Development income from fxed price development contracts Other development income, including development management1 Net gain on disposal of assets previously classifed as held for sale Net gain on disposal of special purpose development entities	809.8 98.5 131.1 132.3 –	451.6 35.4 165.3 – 1.3
Development income	1,171.7	653.6
Inventory cost of sales Other development expenses	(619.4) (65.3)	(318.8) (52.7)
Development expenses	(684.7)	(371.5)
Included in employee expenses are the following items: Salaries, wages and other benefts Contributions to defned contribution retirement plans	(163.5) (3.1)	(145.5) (1.3)
Employee expenses	(166.6)	(146.8)
Depreciation of plant and equipment	(9.6)	(11.7)
Auditor's remuneration	(1.5)	(1.2)

Fee revenues from single contractual arrangements involving a combination of inextricable Investment Management and Development Management services and recognised over the life of the underlying developments projects are classified as development income for statutory reporting purposes. During the period, $75.2 million (2020: $nil) of such income was recognised.

155

Goodman Group

Notes to the consolidated financial statements

Results for the year (continued)

3. Segment reporting

An operating segment is a component of the Consolidated Entity that engages in business activities from which it may earn revenues and incur expenses. The Consolidated Entity reports the results and financial position of its operating segments 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. Operating segment information is reported on a geographic basis and the Consolidated Entity has determined that its operating segments are Asia (which consists of Greater China and Japan), Continental Europe and the United Kingdom. The activities and services undertaken by the operating segments include:

- Property investment, both through direct ownership and cornerstone investments in Partnerships
- Management activities, both investment and property management
- Development activities, including development of directly owned assets (predominantly disclosed as inventories) and management of development activities for the Consolidated Entity’s Partnerships.

The segment results that are reported to the Group Chief Executive Officer are based on profit before net finance expense and income tax expense, and also exclude noncash items such as fair value adjustments and impairments, corporate expenses and incentive based remuneration. The assets allocated to each operating segment relate to the properties, which also includes the investments in Partnerships, and the trade and other receivables associated with the operating activities, but excludes receivables from GL, GIT and their controlled entities, income tax receivables and corporate assets. The liabilities allocated to each operating segment primarily relate to trade and other payables associated with the operating activities, but exclude payables to GL, GIT and their controlled entities, provision for dividends to Shareholders, income tax payables and corporate liabilities.

The accounting policies used to report segment information are the same as those used to prepare the consolidated financial statements for the Consolidated Entity.

For the purpose of operating segment reporting, there are no material intersegment revenues and costs.

Information regarding the operations of each reportable segment is included on the following pages.

156

Annual Report 2021

Information about reportable segments

					Continental	Continental	United
		Asia			Europe		Kingdom		Total
		2021		2020	2021	2020	2021	2020	2021	2020
Statement of comprehensive income		$M		$M	$M	$M	$M	$M	$M	$M
External revenues
Gross property income		6.2		1.8	8.4	10.5	1.0	9.2	15.6	21.5
Management income		77.8		186.4	106.7	88.0	4.2	2.1	188.7	276.5
Development income		129.9		160.1	796.5	476.2	245.3	17.3	1,171.7	653.6
Distributions from investments		0.8		–	–	–	–	–	0.8	–
Total external revenues		214.7		348.3	911.6	574.7	250.5	28.6	1,376.8	951.6
Analysis of external revenues: Revenues from contracts with customers Assets and services transferred at a point in time 10.3 Assets and services transferred over time 197.7 Other revenue Rental income (excludes outgoings recoveries) 5.9 Dividends from investments 0.8				15.3 331.5 1.5 –	729.9 174.0 7.7 –	467.0 99.6 8.1 –	228.8 20.8 0.9 –	3.7 15.6 9.3 –	969.0 392.5 14.5 0.8	486.0 446.7 18.9 –
Total external revenues		214.7		348.3	911.6	574.7	250.5	28.6	1,376.8	951.6
Reportable segment proft before income tax		205.4		259.6	376.5	219.7	20.4	6.1	602.3	485.4
Other key components of fnancial performance included in reportable segment proft before income tax
Share of net results of equity accounted investments in Partnerships(before fair value adjustments)		60.4		68.8	6.5	13.3	6.1	4.9	73.0	87.0
Material non-cash items not included in reportable segment proft before income tax
Share of fair value adjustments attributable to	investment
properties in Partnerships		44.2		8.2	19.2	1.7	26.8	10.1	90.2	20.0
		2021		2020	2021	2020	2021	2020	2021	2020
Statement of fnancial position		$M		$M	$M	$M	$M	$M	$M	$M
Reportable segment assets		1,573.6	1,334.5		1,030.2	880.0	752.2	822.2	3,356.0	3,036.7
Investments in Partnerships (included in reportable segment assets)		908.0		854.7	154.0	140.5	408.0	281.0	1,470.0	1,276.2
Total non-current assets		1,306.6		991.7	77.9.6	422.0	673.6	523.4	2,759.8	1,937.1
Reportable segment liabilities		137.0		96.1	106.3	98.7	85.8	103.2	329.1	298.0

157

Goodman Group

Notes to the consolidated financial statements

Results for the year (continued)

3 Segment reporting (continued)

Reconciliation of reportable segment revenue, profit or loss, assets and liabilities

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2021 2020
$M $M
Revenue
Total revenue for reportable segments 1,376.8 951.6
Consolidated revenues 1,376.8 951.6
Profit or loss
Total profit before income tax for reportable segments 602.3 485.4
Corporate expenses not allocated to reportable segments (81.5) (41.6)
520.8 443.8
Valuation and other adjustments not included in reportable segment profit before income tax:
– Net loss from fair value adjustments on investment properties – (1.2)
– Share of fair value adjustments attributable to investment properties in Partnerships 90.2 20.0
– Share of fair value adjustments on derivative financial instruments in Partnerships 1.5 –
– Share based payments expense (124.0) (57.6)
Net finance expense – refer to note 12 (61.1) (35.1)
Consolidated profit before income tax 427.4 369.9
Assets
Total assets for reportable segments 3,356.0 3,036.7
Other unallocated amounts [1] 1,010.2 602.3
Consolidated total assets 4,366.2 3,639.0
Liabilities
Total liabilities for reportable segments 329.1 298.0
Other unallocated amounts [1] 2,267.2 1,926.3
Consolidated total liabilities 2,596.3 2,224.3
----- End of picture text -----

Other unallocated amounts comprise principally receivables from and payables to GL, GIT and their controlled entities.

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Annual Report 2021

4. Income tax expense

Income tax for the period comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognised in profit or loss except to the extent that they relate to items recognised in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognised in other comprehensive income or directly in equity respectively.

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

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. Apart from differences which arise on initial recognition of assets and liabilities, all deferred tax liabilities and all deferred tax assets, to the extent that it is probable that future taxable profits will be available against which the asset can be utilised, are recognised. The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.

(a) Taxation in the consolidated statement of comprehensive income

	2021	2020
	$M	$M
Current tax expense – Hong Kong profts tax
Current year Adjustment for prior periods	(15.1) 1.6 (13.5)	(41.4) 1.2 (40.2)

Current tax expense – overseas Current year	(9.2)	(34.8)
Adjustment for prior periods	5.7	2.0
	(3.5)	(32.8)
Deferred tax expense Origination and reversal of temporary differences	4.8	32.8
	4.8	32.8
Total income tax expense	(12.2)	(40.2)

The provision for Hong Kong profits tax for the year ended 30 June 2021 is calculated at 16.5% (2020: 16.5%) of the estimated assessable profits for the year. Taxation for overseas subsidiaries is charged at the appropriate current rates of taxation ruling in the relevant countries.

159

Goodman Group

Notes to the consolidated financial statements

Results for the year (continued)

4 Income tax expense (continued)

(b) Reconciliation between income tax expense and accounting profit at applicable tax rates

	2021	2020
	$M	$M
Proft before income tax	427.4	369.9
Notional tax on proft before income tax, calculated at the rates applicable to profts in the countries concerned	(133.3)	(98.1)
(Increase)/decrease in income tax due to:
– Current year losses for which no deferred tax asset was recognised	(15.3)	(9.4)
– Non-assessable income	172.8	104.5
– Non-deductible expense	(47.1)	(49.9)
– Utilisation of previously unrecognised tax losses	3.4	9.5
– Adjustment for prior periods	7.3	3.2
Income tax expense	(12.2)	(40.2)

(c) Net income tax payable

	2021	2020
	$M	$M
Net balance at the beginning of the year	(47.4)	(27.1)
Decrease/(increase) in current net tax payable due to:
– Net income taxes paid	16.2	52.4
– Net income tax expense on current year’s proft	(24.3)	(76.2)
– Adjustment for prior periods	7.3	3.2
– Other	3.5	0.3
Net balance at the end of the year	(44.7)	(47.4)
Current tax receivables Current tax payables	4.2 (48.9)	0.8 (48.2)
	(44.7)	(47.4)

(d) Deferred tax assets and liabilities

Deferred tax assets of $15.2 million (2020: $6.3 million) arising from employee benefits and deferred tax liabilities of $1.6 million (2020: $0.9 million) arising from other receivables were recognised in the consolidated statement of financial position. Deferred tax assets of $236.6 million (2020: $71.8 million) arising primarily from tax losses have not been recognised by the Consolidated Entity.

5. Profit attributable to equity shareholders of the Company

The consolidated profit attributable to equity shareholders of the Company includes a profit of $329.9 million (2020: $395.0 million) which has been dealt with in the financial statements of the Company.

160

Annual Report 2021

OPERATING ASSETS AND LIABILITIES

6. Property assets

(a) Types of property assets

Investment in property assets includes both inventories and investment properties (including those under development), which may be held either directly or through investments in Partnerships.

Inventories

Inventories relate to land and property developments that are held for sale or development and sale in the normal course of business. Inventories are carried at the lower of cost or net realisable value. The calculation of net realisable value requires estimates and assumptions which are regularly evaluated and are based on historical experience and expectations of future events that are believed to be reasonable under the circumstances.

Inventories are classified as non-current assets unless they are contracted to be sold within 12 months of the end of the reporting period, in which case they are classified as current assets.

Investment properties

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 statements.

Investment property carrying values include the costs of acquiring the assets and subsequent costs of development, including costs of all labour and materials used in construction, costs of managing the projects, holding costs and borrowing costs incurred during the development periods. 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. Direct expenditure associated with leasing a property is also capitalised within investment property values and amortised over the term of the lease.

Classification of investment properties

Investment properties are classified as either properties under development or stabilised properties. Investment properties under development include land, new investment properties in the course of construction and investment properties that are being redeveloped. Stabilised investment properties are all investment properties not classified as being under development and would be completed properties that are leased or are available for lease to customers.

For investment properties under development, the carrying values are reviewed by management at each reporting date to consider whether they reflect their fair values and at completion external valuations are obtained to determine the fair values.

Deposits for investment properties

(b) Summary of the Consolidated Entity’s investment in property assets

Directly held properties:	Note	2021 $M	2020 $M
Inventories
Current	6(d)	106.4	405.1
Non-current	6(d)	1,034.5	553.2
		1,140.9	958.3
Investment properties
Stabilised investment properties	6(e)	163.9	7.2
		163.9	7.2
Property held by Partnerships: Investments accounted for using the equity method – JVs	6(f)	1,470.0 1,470.0	1,276.2 1,276.2

161

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

(c) Estimates and assumptions in determining property carrying values

Inventories

Stabilised investment properties

Approach to determination of fair value

The approach to determination of fair value of investment properties is applied to both investment properties held directly and investment properties held in Partnerships.

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.

- Function of the asset (distribution/warehouse or suburban office)

Where a market segment is observed to be inactive, no external, independent valuations are performed and internal valuations are undertaken based on discounted cash flow (DCF) calculations. The DCF calculations are prepared over a 10 year period. The key inputs considered for each individual calculation 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

The investment market for industrial, logistics and warehousing properties has been strong during FY21. At 30 June 2021, the Board has been able to assess that all markets in which the Consolidated Entity operated were active and as a consequence, no adjustments have been made to the carrying values of the Consolidated Entity’s stabilised investment property portfolios on the basis of internally prepared discounted cash flow valuations. The overall weighted average capitalisation rates for the divisional portfolios (including Partnerships) are set out in the table below:

- Location of the asset (city, suburb or regional area)
- Carrying value of the asset (categorised by likely appeal to private (including syndicates), national and institutional investors)
- 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.

	Total portfolio weighed	average
	capitalisation rate
	2021	2020
	%	%
Asia	5.4	5.6
Continental Europe	3.7	4.3
United Kingdom	4.1	4.4

162

Annual Report 2021

Sensitivity analysis

The fair value measurement approach for directly held investment properties has been categorised as a Level 3 fair value based on the inputs to the valuation method used (see note 1(g)). The stabilised investment property valuations are most sensitive to the following inputs:

- Capitalisation rates
- Market rents
- Level of incentives provided to customers and/or the amount of vacant time on expiry of a lease.

The impacts on the Consolidated Entity’s financial position that would arise from the changes in the above assumptions are set out in the table below. This illustrates the impacts on the Consolidated Entity in respect of both the directly held stabilised investment properties and its share of those stabilised investment properties held by Partnerships.

	Directly held properties	Partnerships1
	$M	$M
Book value at 30 June 2021	163.9	2,985.9
Changes in capitalisation rates:
Increase in capitalisation rates +50bps	(17.3)	(312.6)
Increase in capitalisation rates +25bps	(9.1)	(165.1)
Decrease in capitalisation rates -25bps	10.3	186.2
Decrease in capitalisation rates -50bps	22.0	397.8
Changes in market rents:
Decrease in rents -5%	(5.0)	(132.3)
Decrease in rents -2.5%	(2.5)	(66.1)
Increase in rents +2.5%	2.5	66.1
Increase in rents +5%	5.0	132.3
Changes in voids/incentives:2
Increase in voids/incentives +3 months	(1.0)	(10.2)
Increase in voids/incentives +6 months	(2.0)	(20.5)

Reflects the Consolidated Entity’s share in Partnerships.
On assumed lease expiries over the next 12 months.

Investment properties under development

External valuations are generally not performed for investment properties under development, but instead valuations are determined using the feasibility studies supporting the developments. The end values of the developments in the feasibility studies are based on assumptions such as capitalisation rates, letting up periods and incentives that are consistent with those observed in the relevant market adjusted for a profit and risk factor. This profit and risk factor is dependent on the function, location, size and current status of the development and is generally in a market range of 10% to 15%. This adjusted end value is then compared to the forecast cost of a completed development to determine whether there is an increase or decrease in value.

This practice of determining fair value by reference to the development feasibility is generally also applied for the Consolidated Entity’s investments in Partnerships. However, certain Partnerships do obtain independent valuations for investment properties under development each financial year.

163

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

(d) Inventories

2021	2020
$M	$M
Current
Land and development properties 106.4	405.1
106.4	405.1
Non-current Land and development properties 1,034.5	553.2
1,034.5	553.2

During the current and prior financial year, no impairment losses were recognised on land and development properties.

(e) Investment properties

Reconciliation of carrying amount of directly held investment properties

	2021	2020
	$M	$M
Carrying amount at the beginning of the year	7.2	–
Cost of acquisition:
– On acquisition of controlled entities	–	13.1
– Other acquisitions	163.0	–
Capital expenditure	1.2	0.2
Carrying value of properties disposed	(7.4)	(4.6)
Net gain from fair value adjustments	–	(1.2)
Effect of foreign currency translation	(0.1)	(0.3)
Carrying amount at the end of the year	163.9	7.2
Analysed by segment: Asia United Kingdom	137.7 26.2	– 7.2
	163.9	7.2

(f) Investments accounted for using the equity method

Joint ventures

A joint venture (JV) is an arrangement (referred to by the Consolidated Entity as a Partnership) in which the Consolidated Entity is considered to have joint control for accounting purposes, whereby the Consolidated Entity has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. In the consolidated financial statements, investments in JVs are accounted for using the equity method. Investments in JVs are carried at the lower of the equity accounted amount and recoverable amount. The Consolidated Entity’s share of the JVs’ net profit or loss is recognised in the consolidated profit or loss from the date the arrangement commences to the date the arrangement ceases. Movements in reserves are recognised directly in the consolidated reserves.

Transactions eliminated on consolidation

Unrealised gains arising from asset disposals with JVs, 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 JVs 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.

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Annual Report 2021

The Consolidated Entity’s principal Partnerships are set out below:

		Consolidated	Consolidated	Consolidated	Consolidated	Consolidated	Consolidated
			share of net		ownership		investment
		results recognised			interest	carrying amount
	Country of	2021	2020	2021	2020	2021	2020
Name	establishment	$M	$M	%	%	$M	$M
Property investment
KWASA Goodman Germany (KGG)	Luxembourg	27.6	13.0	19.2	20.5	151.9	137.4
Property development
Goodman Japan
Development Partnership (GJDP)	Japan	40.3	49.4	50.0	50.0	73.9	116.8
Property investment and development
Goodman China Logistics Partnership (GCLP)	Cayman Islands	65.2	30.3	20.0	20.0	832.7	737.2
Goodman UK Partnership (GUKP)1	United Kingdom	32.9	14.8	33.3	33.3	404.0	277.0
Other JVs		(1.3)	(0.5)			7.5	7.8
		164.7	107.0			1,470.0	1,276.2

GUKP incorporated two separate investment vehicles in which the investment partners, including the Consolidated Entity, had the same ownership interests.

GJDP undertakes property development activities, with completed developments sold at, or shortly after, completion depending on leasing status. The Consolidated Entity’s other Partnerships have a long-term remit to hold investment properties to earn rental income and for capital appreciation, although they will undertake developments when an appropriate opportunity arises.

The reconciliation of the carrying value at the beginning of the year to the carrying value at the end of the year is set out as follows:

	2021	2020
Movements in carrying amount of investments in JVs	$M	$M
Carrying amount at the beginning of the year	1,276.2	1,226.9
Share of net results after tax (before fair value adjustments)	73.0	87.0
Share of fair value adjustments attributable to investment properties after tax	90.2	20.0
Share of fair value adjustments on derivative fnancial instruments	1.5	–
Share of net results	164.7	107.0
Share of movements in reserves	3.1	(25.8)
Acquisitions	245.9	153.0
Capital return	(143.2)	(116.0)
Disposals	–	(0.3)
Transfer to assets held for sale	–	(11.2)
Dividends/distributions received and receivable	(76.4)	(71.3)
Effect of foreign currency translation	(0.3)	13.9
Carrying amount at the end of the year	1,470.0	1,276.2

165

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

Summary financial information of JVs

The following table summarises the financial information of the material Partnerships as included in their own financial statements. The table also reconciles the summarised financial information to the carrying amount of the Consolidated Entity’s interest in the JVs.

	KGG	KGG	GJDP	GJDP	GCLP	GCLP	GUKP	GUKP
	2021	2020	2021	2020	2021	2020	2021	2020
	$M	$M	$M	$M	$M	$M	$M	$M
Summarised statement of fnancial position
Current assets
Cash and cash equivalents	25.3	36.5	79.9	112.6	281.3	231.1	43.4	38.6
Other current assets	4.4	6.5	10.6	16.1	84.4	73.5	1,490.3	2.0
Total current assets	29.7	43.0	90.5	128.7	365.7	304.6	1,533.7	40.6
Total non-current assets	1,441.9	1,215.1	254.2	378.5	5,537.5	4,741.5	–	813.4
Current liabilities Financial liabilities (excluding trade payables and other provisions) Other current liabilities	– 17.4	– 88.8	– 3.9	– 28.7	89.6 2,707.0	220.7 2,515.9	– 36.1	– 15.5
Total current liabilities	17.4	88.8	3.9	28.7	2,796.6	2,736.6	36.1	15.5
Non-current liabilities Financial liabilities (excluding trade payables and other provisions) Other non-current liabilities	505.8 159.3	460.8 37.2	188.6 4.3	232.0 12.8	757.7 613.7	390.1 509.8	287.0 –	– –
Total non-current liabilities	665.1	498.0	192.9	244.8	1,371.4	899.9	287.0	–
Net assets (100%)	789.1	671.3	147.9	233.7	1,735.2	1,409.6	1,210.6	838.5
Consolidated ownership interest (%) Consolidated share of net assets Shareholder loans1 Other items, including acquisition costs	19.2 151.9 – –	20.5 137.4 – –	50.0 73.9 – –	50.0 116.8 – –	20.0 347.0 482.3 3.4	20.0 281.9 452.0 3.3	33.3 403.1 – 0.9	33.3 279.2 – (2.2)
Carrying amount of interest in JV	151.9	137.4	73.9	116.8	832.7	737.2	404.0	277.0
Summarised statement of comprehensive income		100.0	492.5	519.6	193.6	193.3
Revenue	62.9	(5.6)	–	(0.8)	(19.2)	(22.4)	28.5	17.0
Net fnance expense/(income)	(8.3)	(22.3)	(2.1)	(3.1)	(37.4)	(23.9)	(3.7)	0.1
Income tax expense	(4.7)	80.2	80.6	98.8	313.4	22.4	–	–
Proft and total comprehensive income (100%)	189.7						98.7	44.5
Consolidated share of proft
and total comprehensive income	27.6	13.0	40.3	49.4	67.8	4.5	32.9	14.8
Dividends/distributions received
and receivable by the Consolidated Entity	13.8	13.7	52.1	54.5	6.1	3.1	4.6	–

Shareholder loans have been provided by investors of GCLP in proportion to their ownership interest. The shareholder loans are interest free, unsecured and have no fixed terms of repayment. The shareholder loans are not expected to be repaid within 12 months from the end of the reporting period and the Directors consider the loans to form part of the Consolidated Entity’s investment in GCLP.

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Annual Report 2021

7. Receivables

Non-derivative financial assets

The Consolidated Entity initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are recognised initially on the trade date at which the Consolidated Entity becomes a party to the contractual provisions of the instrument.

The Consolidated Entity derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Consolidated Entity is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Consolidated Entity has a legal right to offset the amounts and intends to either settle on a net basis or to realise the asset and settle the liability simultaneously.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest rate method, less allowance for impairment of doubtful debts, except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.

Impairment

Non-financial assets

The carrying amounts of the Consolidated Entity’s assets (except inventories, refer to note 6(d); and deferred tax assets, refer to note 4) are reviewed at each reporting 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 profit or loss in the reporting period in which it occurs.

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

Impairment losses recognised in respect of cash-generating units are allocated 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 and contract assets

The Consolidated Entity recognises an impairment loss allowance for expected credit losses (ECLs) on financial assets measured at amortised cost and contract assets. Financial assets measured at amortised cost include cash and cash equivalents, trade receivables, amounts and loans due from related parties and other receivables.

Other financial assets measured at fair value are not subject to the ECL assessment.

Loans and receivables comprise trade and other receivables, amounts due from related parties and loans to related parties.

Amounts recoverable on development contracts

Amounts recoverable on development contracts arise when the Consolidated Entity contracts to sell a completed development asset either prior to or during the development phase. The receivables are stated at cost plus profit recognised to date less an allowance for foreseeable losses and less amounts already billed.

167

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 7 Receivables (continued)

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected cash shortfalls. In measuring ECLs, the Consolidated Entity takes into account information about past events, current conditions and forecasts of future economic conditions.

Impairment loss allowances for trade receivables, amounts due from related parties, other receivables and contract assets are measured at an amount equal to a lifetime ECL. Lifetime ECLs are losses that are expected to result from all possible default events over the expected lives of the items to which the ECL model applies.

The Consolidated Entity recognises an impairment loss allowance equal to the expected losses within 12 months after the reporting date on loans to related parties, unless there has been a significant increase in credit risk of the loans since initial recognition, in which case the loss allowance is measured at an amount equal to lifetime ECLs.

	2021	2020
Note	$M	$M
Current
Trade receivables	12.4	11.1
Other receivables	94.0	61.8
Amounts due from related parties	75.3	106.3
Loans to related parties 21(c)	562.6	384.4
	744.3	563.6
Non-current Loans to related parties 21(c)	276.2	279.0
	276.2	279.0

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

Trade receivables

No trade receivables were impaired at 30 June 2021 and 2020. There are no significant overdue trade receivables at 30 June 2021.

Other receivables

At 30 June 2021, none of the other receivables balance was overdue or impaired (2020: $nil).

Amounts due from related parties

At 30 June 2021, none of the amounts due from related parties was overdue or impaired (2020: $nil). Amounts due from related parties are typically repayable within 30 days. The amounts due from related parties are unsecured.

Loans to related parties

Loans to related parties principally relate to loans to fellow subsidiaries of GL and GIT and loans to JVs. Refer to note 21(c) for details of loans to related parties. During the year, no impairment losses were recognised on loans to related parties (2020: $nil). The loans to related parties are unsecured.

168

Annual Report 2021

8. Contract balances

Contract assets primarily comprise amounts recoverable from fixed price development contracts (disclosed net of any payments received on account) and accrued performance fee income where the Consolidated Entity assesses that the income can be reliably measured.

Contract liabilities primarily comprise deposits and other amounts received in advance for development contracts and rental guarantees.

The following table provides an analysis of receivables from contracts with customers (excluding rental income receivables), contract assets and contract liabilities at the reporting dates:

assets and contract liabilities at the reporting dates:
	2021	2020
	$M	$M
Current
Receivables from contracts with customers, which are included in trade receivables,
other receivables and amounts due from related parties	87.2	110.2
Contract assets	55.7	25.1
Contract liabilities	4.8	12.3
Non-current
Contract liabilities	1.0	1.5

Significant changes in the contract assets and the contract liabilities balances during the year are set out below:

		2021		2020
	Contract	Contract	Contract	Contract
	assets	liabilities	assets	liabilities
	$M	$M	$M	$M
Balance at the beginning of the year	25.1	13.8	279.5	8.2
Revenue recognised that was included in the contract liability
balance at the beginning of the year	–	(7.7)	–	(1.6)
Increases due to cash received, excluding amounts recognised
as revenue during the year	–	–	–	7.2
Transfers from contract assets to receivables	(70.5)	–	(729.0)	–
Increase due to changes in the measure of progress during the year	101.1	–	464.5	–
Effect of foreign currency translation	–	(0.3)	10.1	–
Balance at the end of the year	55.7	5.8	25.1	13.8

Current contract assets and liabilities	55.7	4.8	25.1	12.3
Non-current contract liabilities	–	1.0	–	1.5
	55.7	5.8	25.1	13.8

Transaction price allocated to the remaining contract obligations

The amount of the transaction price allocated to the remaining performance obligations under the Consolidated Entity’s existing contracts is $nil (2020: $14.3 million).

In addition, the Consolidated Entity receives investment management, development management and property services fees under various contracts that it has with its Partnerships. These contracts are for varying lengths of time and are typically transacted on terms that are consistent with market practice. The revenues under these contracts are linked to the AUM, total development project costs or gross property income of the Partnerships and are invoiced as the services are provided.

169

Goodman Group

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

9. Assets held for sale

In the prior year, the Consolidated Entity entered into an agreement with a third party to dispose a portfolio of property assets and the Consolidated Entity’s operating platform in the Czech Republic, Hungary, Poland and Slovakia. The disposal was completed on 8 July 2020. At 30 June 2020, the directly held assets and liabilities to be disposed were presented as a disposal group held for sale and comprised the following assets and liabilities within the Continental Europe segment:

	Note	2020 $M
Cash Receivables	17(a)	10.8 6.5
Inventories		89.1
Investments accounted for using the equity method		11.2
Other assets		7.0
Assets held for sale		124.6
Payables Loans from related parties Lease liabilities		5.5 14.6 6.6
Liabilities held for sale		26.7

No impairment losses were recognised in the current and prior year in respect of the disposal group.

10. Payables

Non-derivative financial liabilities

The Consolidated Entity initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date at which the Consolidated Entity becomes a party to the contractual provisions of the instrument.

The Consolidated Entity derecognises a financial liability when the contractual obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Consolidated Entity has a legal right to offset the amounts and intends to either settle on a net basis or to realise the asset and settle the liability simultaneously.

The Consolidated Entity has classified non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest rate method.

Other financial liabilities comprise trade payables, other payables and accruals and contract and lease liabilities.

	Note	2021 $M	2020 $M
Current
Trade payables		50.3	63.0
Other payables and accruals		201.2	114.7
Contract liabilities	8	4.8	12.3
Lease liabilities	11	6.7	10.5
		263.0	200.5
Non-current Other payables and accruals Contract liabilities Lease liabilities	8 11	64.4 1.0 59.3	38.2 1.5 17.8
		124.7	57.5

11. Leases

The Consolidated Entity leases office buildings, motor vehicles and office equipment. Certain investment properties and developments classified as inventories are also built on land held under leasehold interests.

The Consolidated Entity recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost plus any direct costs incurred and an estimate of costs to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right of use assets in respect of office buildings, motor vehicles and office equipment are depreciated using the straight-line method over the period of the lease. Right of use assets that meet the definition of investment property are carried at fair value in accordance with note 6(a). Ground leases of development land that are classified as inventories are not depreciated but are assessed at each reporting date for impairments to ensure they are recorded at the lower of cost and net realisable value.

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Annual Report 2021

Information about leases for which the Consolidated Entity is a lessee is detailed below:

CAPITAL MANAGEMENT

12. Finance income and expense

	2021	20201
	$M	$M
Right of use assets
Inventories	315.5	122.9
Investment properties	137.7	–
Property, plant and equipment	12.1	18.9
	465.3	141.8
Lease liabilities Current Non-current	6.7 59.3	10.5 17.8
	66.0	28.3

The comparative figures for inventories has been updated to include right of use assets for which the lease payments have been made upfront.

The following were recognised during the year:

Additions to right of use assets Depreciation of right of use assets Interest expense on lease liabilities Cash outfows on lease liabilities	2021 $M 344.3 7.6 0.5 8.7	2020 $M 52.3 9.8 0.9 11.9

Finance income

Interest is recognised on an accruals basis using the effective interest rate method, and, if not received at the reporting date, is reflected in the consolidated statement of financial position as a receivable.

Finance expense

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 interest rate 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 are recognised as a finance cost in the financial year in which the significant modification occurs.

		2021	2020
	Note	$M	$M
Finance income
Interest income on loans to:
– Related parties	21	12.7	10.2
– Other parties		0.8	1.1
Interest income from derivatives		8.3	12.4
		21.8	23.7
Finance expense Interest expense from related party loans Other borrowing costs Fair value adjustments on derivative fnancial instruments Foreign exchange losses Capitalised borrowing costs	21	(38.9) (1.1) (20.1) (32.2) 9.4	(44.9) (1.2) (21.8) – 9.1
		(82.9)	(58.8)
		(61.1)	(35.1)

Borrowing costs were capitalised to inventories and investment properties under development during the financial year at rates between 1.0% and 10.6% per annum (2020: 2.0% and 4.2% per annum).

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Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

13. Other financial assets and liabilities

Other financial assets and liabilities are recognised initially on the trade date at which the Consolidated Entity become a party to the contractual provisions of the instrument.

Derivative financial instruments and hedging

The Consolidated Entity uses derivative financial instruments to hedge its economic exposure to foreign exchange and interest rate 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 speculative trading purposes.

The Consolidated Entity’s derivative financial instruments are not designated as a hedge for accounting purposes, and accordingly movements in the fair value of derivative financial instruments are recognised in profit or loss.

Investments in unlisted securities

Subsequent to initial recognition, investments in unlisted securities are measured at fair value and changes therein are recognised as other comprehensive income and presented in the asset revaluation reserve in equity. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in other comprehensive income and are never reclassified to profit or loss. When such an asset is derecognised, the cumulative gain or loss in equity is transferred to retained earnings.

Other financial assets

	2021	2020
	$M	$M
Derivative fnancial instruments	64.4	2.1
Investment in unlisted securities, at fair value1	38.2	34.3
	102.6	36.4

Principally relates to the Consolidated Entity’s 10.0% (2020: 10.0%) interest in Goodman Japan Limited. During the year, a revaluation gain of $7.6 million was recognised in other comprehensive income (2020: $5.5 million gain). Refer to note 14(d) for assumptions made in measuring fair value of the unlisted securities.

Other financial liabilities

	2021	2020
	$M	$M
Derivative fnancial instruments	89.1	48.9
	89.1	48.9

14. Financial risk management

The Consolidated Entity’s capital management and financial risk management processes are managed as part of the wider Goodman Group. There are established policies, documented in Goodman Group’s financial risk management (FRM) policy document, to ensure both the efficient use of capital and the appropriate management of the exposure to financial risk.

Goodman Group’s treasury function is responsible for monitoring the day to day compliance with Goodman Group’s FRM policies and prepares reports for consideration by management committees and Goodman Group’s Board including:

- Cash flow projections over a period of at least 12 months to assess the level of cash and undrawn facilities, and headline gearing at each month end
- Debt maturity profile, to allow the Goodman Group to plan well in advance of maturing facilities
- Interest rate hedge profile over the next 10 years, to allow Goodman Group to manage the proportion of fixed and floating rate debt in accordance with its FRM policy
- Capital hedge position (by currency) and profile of expiring currency derivatives, to allow Goodman Group to manage its net investment hedging in accordance with its FRM policy.

Any significant investments or material changes to the finance facilities or FRM policies require approval by the Goodman Group Board.

The Consolidated Entity’s key financial risks are market risk (including foreign exchange and interest rate risk), liquidity risk and credit risk.

(a) Market risk

Foreign exchange risk

The Consolidated Entity is exposed to transactional foreign currency risk and net investment foreign currency risk through its investments in Hong Kong, Japan, China, Continental Europe and United Kingdom and also loans to related parties in North America. Foreign exchange risk represents the loss that would be recognised from adverse fluctuations in currency prices as a result of future commercial transactions, recognised assets and liabilities and, principally, net investments in foreign operations.

Goodman Group manages foreign currency exposure on a consolidated basis. In managing foreign currency risks, Goodman Group aims to reduce the impact of short-term fluctuations on earnings and net assets. However, over the long term, permanent changes in foreign exchange will have an impact on both earnings and net assets.

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Goodman Group’s capital hedge policy for each overseas region is to hedge between 65% and 90% of foreign currency denominated assets with foreign currency denominated liabilities. This is achieved by borrowing in the same functional currency as the investments to form a natural economic hedge against any foreign currency fluctuations and/or using derivatives such as cross currency interest rate swaps (CCIRS) and forward exchange contracts (FEC).

As at 30 June 2021, a summary of the derivative financial instruments used to hedge the Consolidated Entity’s exposures arising from its investments in foreign operations is set out below:

		2021			2020
			Weighted			Weighted
	Amounts	Amounts	average	Amounts	Amounts	average
	payable	receivable	exchange rate	payable	receivable	exchange rate
	HKD'M	AUD'M	AUD/HKD	HKD'M	AUD'M	AUD/HKD
AUD receivable/HKD payable	(500.0)	83.9	5.9560	–	–	–
	EUR'M	AUD'M	AUD/EUR	EUR'M	AUD'M	AUD/EUR
AUD receivable/EUR payable	(675.0)	1,086.7	0.6214	(495.0)	803.0	0.6165
	USD'M	AUD'M	AUD/USD	USD'M	AUD'M	AUD/USD
AUD receivable/USD payable	(450.0)	634.6	0.7092	–	–	–
	JPY'M	AUD'M	AUD/JPY	JPY'M	AUD'M	AUD/JPY
AUD receivable/JPY payable	(6,000.0)	71.9	83.4650	–	–	–
	CNY'M	USD'M	USD/CNY	CNY'M	USD'M	USD/CNY
USD receivable/CNY payable	(4,545.2)	600.0	7.5753	(3,823.9)	500.0	7.6477

Sensitivity analysis

Throughout the financial year, if the Australian dollar had been 5% (2020: 5%) stronger against all other currencies, with all other variables held constant, the Consolidated Entity’s profit attributable to Shareholders, excluding derivative mark to market and unrealised foreign exchange movements, would have decreased by $36.7 million (2020: $16.3 million). If the Australian dollar had been 5% (2020: 5%) weaker against all other currencies, with all other variables held constant, the Consolidated Entity’s profit attributable to Shareholders, excluding derivative mark to market and unrealised foreign exchange movements, would have increased by $36.7 million (2020: $16.3 million).

173

Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

14 Financial risk management (continued)

Interest rate risk

Goodman Group adopts a policy that at all times interest rates on between 60% and 100% of the Group’s external borrowings and derivatives (by principal) are hedged for the next 12 months. The Consolidated Entity’s interest rate risk arises from floating interest rates on related party loans (receivable and payable) and from the floating interest rate legs of certain CCIRS. The Consolidated Entity does not hedge its interest rate exposure on related party loans but has entered into interest rate swaps (IRS) to manage certain cash flow risks associated with floating interest rates on its CCIRS.

As at 30 June 2021, the Consolidated Entity’s fixed and floating rate exposure (by principal) arising from its derivative financial instruments is set out below:

instruments is set out below:
		Impact of derivatives
	CCIRS	IRS	Net position
	A$M	A$M	A$M
30 June 2021
Fixed rate liabilities	–	474.2	474.2
Floating rate – payable	1,825.0	(474.2)	1,350.8
Floating rate – receivable	(1,877.1)	–	(1,877.1)
	(52.1)	–	(52.1)
30 June 2020
Fixed rate liabilities	–	326.4	326.4
Floating rate – payable	807.8	(326.4)	481.4
Floating rate – receivable	(803.0)	–	(803.0)
	4.8	–	4.8

As a result of the derivative financial instruments that existed at 30 June 2021, the Consolidated Entity would have the following fixed interest rate exposure (by principal) at the end of each of the next five financial years. This assumes all derivative financial instruments mature in accordance with current contractual terms.

		2021		2020
	Fixed interest rate	Weighted average	Fixed interest rate	Weighted average
Number of years	(by principal)	interest rate	(by principal)	interest rate
post balance date	A$M	% per annum	A$M	% per annum
1 year	474.2	(0.47)	360.3	(0.52)
2 years	474.2	(0.47)	489.6	(0.47)
3 years	408.5	(0.45)	489.6	(0.47)
4 years	158.1	(0.31)	421.8	(0.45)
5 years	158.1	(0.31)	163.2	(0.31)

Sensitivity analysis

Based on the Consolidated Entity’s interest bearing borrowings at 30 June 2021, if interest rates on borrowings had been 100 bps per annum (2020: 100 bps per annum) higher/lower, with all other variables held constant, the Consolidated Entity’s profit attributable to Shareholders would have been $10.8 million lower/higher (2020: $11.5 million lower/higher).

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Annual Report 2021

(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 to fund short-term working capital, capital expenditure, investment opportunities and dividends. Management seeks to achieve these objectives through the preparation of regular forecast cash flows to understand the application and use of funds and through the identification of future funding, primarily through loans from related parties in Goodman Group. The contractual maturities of financial liabilities are set out below:

	Carrying	Contractual	Up to 12	1 to 2	2 to 3	3 to 4	4 to 5	More than
	amount	cash fows	months	year(s)	years	years	years	5 years
	$M	$M	$M	$M	$M	$M	$M	$M
As at 30 June 2021
Non-derivative fnancial liabilities
Trade and other payables	315.9	315.9	251.5	64.4	–	–	–	–
Contract liabilities	5.8	5.8	4.8	1.0	–	–	–	–
Lease liabilities	66.0	151.4	6.7	3.8	3.3	3.8	3.3	130.5
Loans from related parties	1,891.1	1,905.3	811.1	104.4	43.2	74.6	540.5	331.5
Total non-derivative fnancial liabilities	2,278.8	2,378.4	1,074.1	173.6	46.5	78.4	543.8	462.0
Derivative fnancial liabilities Net settled1: Gross settled2: (Infow) Outfow	79.4 (54.7) –	73.5 (123.1) 67.5	0.2 (11.5) 1.2	29.0 (17.3) 3.2	22.7 (56.1) 4.9	23.5 (22.7) 1.1	(0.3) (13.0) 25.6	(1.6) (2.5) 31.5
Total derivative fnancial liabilities	24.7	17.9	(10.1)	14.9	(28.5) 1.9		12.3	27.4
As at 30 June 2020 Non-derivative fnancial liabilities Trade and other payables Contract liabilities Lease liabilities Loans from related parties	215.9 13.8 28.3 1,731.0	215.9 13.8 43.3 1,753.1	177.7 12.3 12.3 1,409.0	38.2 1.5 7.0 5.4	– – 2.3 148.2	– – 1.6 2.3	– – 1.2 2.3	– – 18.9 185.9
Total non-derivative fnancial liabilities	1,989.0	2,026.1	1,611.3	52.1	150.5	3.9	3.5	204.8
Derivative fnancial liabilities Net settled1: Gross settled2: (Infow) Outfow	18.5 – 28.3	17.2 (51.4) 54.8	(0.6) (6.8) –	(0.3) (8.1) –	3.2 (9.5) –	6.2 (11.5) –	9.8 (11.8) –	(1.1) (3.7) 54.8
Total derivative fnancial liabilities	46.8	20.6	(7.4)	(8.4)	(6.3)	(5.3)	(2.0)	50.0

Net settled includes IRS and FEC.
Gross settled includes CCIRS.

175

Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

14 Financial risk management (continued)

(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 in the consolidated statement of financial position, is the carrying amount (refer to note 7).

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.

In relation to material bank deposits, the Consolidated Entity minimises credit risk by dealing with major financial institutions. The counterparty must have a long-term investment grade credit rating from a major rating agency. The amounts and other terms associated with bank deposits are formally reviewed monthly.

From time to time, the Consolidated Entity also makes loans to JVs, typically to fund development projects. In making its investment decisions, the Consolidated Entity will undertake a detailed assessment of the development feasibility and credit risks associated with the relevant counterparties.

During the current and prior year, credit risk arising from cash and cash equivalents, trade receivables, amounts and loans due from related parties and other receivables was not determined to be significant and no impairment losses were recognised.

The credit risks associated with derivative financial instruments are managed by:

- Transacting with multiple derivatives counterparties that have a long-term investment grade credit rating
- Utilising International Swaps and Derivatives Association (ISDA) agreements with derivative counterparties in order to limit exposure to credit risk through netting of amounts receivable and amounts payable to individual counterparties (refer below) and
- Formal review of the mark to market position of derivative financial instruments by counterparty on a monthly basis.

Master netting off or similar agreements

Goodman Group enters into derivative transactions under ISDA master netting off agreements. Under these agreements, where certain credit events occur (such as a default), all outstanding transactions under the agreement are terminated and a single net termination value is payable in full and final settlement.

(d) Fair values of financial instruments

Except for derivative financial instruments and investments in unlisted securities which are carried at fair value, the Consolidated Entity’s financial instruments are carried at cost or amortised cost. The carrying amounts of the Consolidated Entity’s financial instruments carried at cost or amortised cost were not materially different from their fair values as at 30 June 2021 and 2020.

(i) Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method (see note 1(g)):

	Level 1	Level 2	Level 3	Total
	$M	$M	$M	$M
As at 30 June 2021
Derivative fnancial assets	–	64.4	–	64.4
Investment in unlisted securities	–	–	38.2	38.2
	–	64.4	38.2	102.6
Derivative fnancial liabilities	–	89.1	–	89.1
	–	89.1	–	89.1
As at 30 June 2020
Derivative fnancial assets	–	2.1	–	2.1
Investment in unlisted securities	–	–	34.3	34.4
	–	2.1	34.3	36.4
Derivative fnancial liabilities	–	48.9	–	48.9
	–	48.9	–	48.9

There were no transfers between the levels during the year.

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Annual Report 2021

(ii) Valuation techniques used to derive Level 2 and Level 3 fair values

The Level 2 derivative financial instruments held by the Consolidated Entity consist of IRS, CCIRS and FEC.

The fair values of derivatives are determined using generally accepted pricing models which discount estimated future cash flows based on the terms and maturity of each contract and current market interest rates and/or foreign currency rates, adjusted for specific features of the instruments.

The fair value measurement for investment in unlisted securities has been categorised as a Level 3 fair value. The following table shows the valuation technique used in measuring fair value as well as the significant unobservable inputs used:

Type	Valuation technique	Signifcant	Inter-relationship between
		unobservable inputs	signifcant unobservable inputs
			and fair value measurement
Equity securities	Discounted cash fows: The valuation	+ Assets under management	The estimated fair value would
+ Goodman Japan Limited	model was determined by discounting the future cash fows expected to be generated from continuing operations. The future cash fows were based on fund and development forecasts and then estimating a year fve terminal	of $5.4 billion in year fve + Average annual development of 83,500 square metres + Five year terminal value growth rate of 0.38%	increase/(decrease) if: + The level of assets under management, development activity and terminal value growth rate were higher/(lower) or
	value using a terminal growth rate	+ Risk adjusted post tax	+ The risk adjusted discount rate
	and an appropriate discount rate.	discount rate of nil per annum.	were lower/(higher).

(iii) Reconciliation of Level 3 fair values

(iii) Reconciliation of Level 3 fair values
	2021	2020
	$M	$M
Carrying amount at the beginning of the year	34.3	28.2
Acquisitions	–	0.1
Net change in fair value – included in other comprehensive income	7.6	5.5
Effect of foreign currency translation	(3.7)	0.5
Carrying amount at the end of the year	38.2	34.3

15. Dividends

During the financial year, the Company declared a final dividend of 6.0 cents per share amounting to $110.8 million. This dividend will be paid on 26 August 2021. In the prior year, the Company declared a final dividend of 4.0 cents per share amounting to $73.1 million. This was paid on 28 August 2020.

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Goodman Group

Notes to the consolidated financial statements

Capital management (continued)

16. Share capital

(a) Ordinary shares

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

	2021	2020	2021	2020
		Number of shares	SM	SM
Share capital	1,847,429,255	1,828,413,236	792.5	732.6
Accumulated issue costs			(0.6)	(0.6)
Total issued capital			791.9	732.0

Date	Details		Number of shares	Share capital
				$M
	Ordinary shares, issued and fully paid
30 Jun 2019	Balance at 30 June 2019		1,813,881,995	696.6
31 Aug 2019	Shares issued to employees of Goodman Group1		14,531,241	36.0
30 Jun 2020	Balance at 30 June 2020		1,828,413,236	732.6
31 Aug 2020	Shares issued to employees of Goodman Group1		15,438,241	48.6
4 Sep 2020	Issue of ordinary shares		3,577,778	11.3
30 Jun 2021	Balance at 30 June 2021		1,847,429,255	792.5

During the year, the Company issued 15,438,241 (2020: 14,531,241) shares to employees of Goodman Group under the Goodman Group Long Term Incentive Plan (LTIP).

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

(b) Equity settled share based payment transactions

LTIP

Goodman Group’s share based payments primarily relate to performance rights awarded to employees under the LTIP. These performance rights entitle an employee to either acquire Goodman Group securities for $nil consideration (equity settled performance rights) or, in certain jurisdictions, to receive an amount in cash equal to the value of the securities (cash settled performance rights), subject to the vesting conditions having been satisfied.

During the year, the movement in the number of equity settled and cash settled performance rights under the LTIP was as follows:

		Number of rights
	2021	2020
Outstanding at the beginning of the year	24,921,436	21,300,216
Issued	5,580,560	5,221,335
Transferred from other Goodman Group entities	–	4,386,501
Vested	(5,952,229)	(5,526,953)
Forfeited	(1,815,340)	(459,663)
Outstanding at the end of the year	22,734,427	24,921,436
Exercisable at the end of the year	–	–

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Annual Report 2021

Share based payments transactions

- Operating earnings per security tranche: these rights were valued as a granted call option, using the standard Black Scholes model with a continuous dividend yield
- Relative total shareholder return tranche: these rights were valued using a Monte Carlo model which simulated total returns for each of the ASX 100 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 co-variance.

The model inputs for performance rights, both equity and cash settled, awarded during the current financial year included the following:

	Rights issued on	Rights issued on
	19 Nov 2020	30 Sep 2020
Fair value at measurement date ($)	16.07	15.77
Security price ($)	18.68	17.49
Exercise price ($)	–	–
Expected volatility (%)	28.08	27.21
Rights' expected weighted average life (years)	3.8	3.9
Dividend/distribution yield per annum (%)	1.61	1.67
Average risk free rate of interest per annum (%)	0.21	0.25

Share based payment expense included in profit or loss was as follows:

Share based payment expense included in proft or loss was as follows:
	2021	2020
	$M	$M
Share based payment expense:
– Equity settled	44.5	29.8
– Cash settled	79.5	27.8
	124.0	57.6

At 30 June 2021, a liability of $111.2 million (2020: $51.9 million) was recognised in relation to cash settled performance rights.

179

Goodman Group

Notes to the consolidated financial statements

OTHER ITEMS

17. Notes to the consolidated cash flow statement

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.

(a) Reconciliation of cash

Cash as at the end of the year as shown in the consolidated cash flow statement is reconciled to the related items in the consolidated statement of financial position as follows:

consolidated statement of fnancial position as follows:
	2021	2020
Note	$M	$M
Cash assets	358.4	357.4
Cash classifed as held for sale 9	–	10.8
	358.4	368.2

(b) Reconciliation of profit for the year to net cash provided by operating activities

(b) Reconciliation of proft for the year to net cash provided by operating activities
	2021	2020
	$M	$M
Proft for the year	415.2	329.7
Items classifed as investing activities
Net loss/(gain) on disposal of investment properties	1.9	(0.2)
Net gain on disposal of equity accounted investments	(1.8)	(24.9)
Non-cash items
Depreciation of plant and equipment	9.6	11.7
Share based payments expense	124.0	57.6
Net loss from fair value adjustments on investment properties	–	1.2
Share of net results of equity accounted investments	(164.7)	(107.0)
Net fnance expense	61.1	35.1
Income tax expense	12.2	40.2
	457.5	343.4
Changes in assets and liabilities during the year: – Increase/(decrease) in receivables – Increase in inventories – Increase in other assets – Increase/(decrease) in payables – Increase in provisions (including employee benefts)	(39.5) (93.2) (1.5) 69.5 1.0	253.5 (123.8) (5.3) (163.7) 26.8
	393.8	330.9
Dividends/distributions received from equity accounted investments	80.9	77.6
Net fnance costs received	15.1	20.1
Net income taxes paid	(16.2)	(52.4)
Net cash provided by operating activities	473.6	376.3

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Annual Report 2021

(c) Reconciliation of liabilities arising from financing activities

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Derivatives Dividends Loans (to)/from Lease
used for hedging payable related parties liabilities
$M $M $M $M
Balance at 1 July 2019 6.7 90.7 612.3 34.4
Changes from financing cash flows
Net proceeds from loans with related parties – – (101.0) –
Payment of lease liabilities – – – (11.9)
Dividends paid – (90.7) – –
Total changes from financing cash flows – (90.7) (101.0) (11.9)
Changes arising from acquisition of entities from GL 19.2 – 505.1 12.9
Effect of foreign exchange movements (0.9) – 27.9 –
Changes in fair value 21.8 – – –
Other changes
Issue of shares under the LTIP – – (36.0) –
Equity settled share based payments transactions – – 24.6 –
Interest income – – (10.2) –
Interest expense – – 44.9 0.9
Interest paid – – – –
Dividends declared – 73.1 – –
Other movements – – – (8.0)
Total other changes – 73.1 23.3 (7.1)
Balance at 30 June 2020 46.8 73.1 1,067.6 28.3
Balance at 1 July 2020 46.8 73.1 1,067.6 28.3
Changes from financing cash flows
Payment of derivative financial instruments (42.2) – – –
Net repayments of loans with related parties – – (83.7) –
Payment of lease liabilities – – – (8.7)
Dividends paid – (73.1) – –
Total changes from financing cash flows (42.2) (73.1) (83.7) (8.7)
Changes arising from disposal of controlled entities – – 14.6 –
Effect of foreign exchange movements – – 50.0 –
Changes in fair value 20.1 – – –
Other changes
Issue of shares under the LTIP – – (48.6) –
Equity settled share based payments transactions – – 26.2 –
New leases – – – 45.9
Interest income – – (12.7) –
Interest expense – – 38.9 0.5
Dividends declared – 110.8 – –
Total other changes – 110.8 3.8 46.4
Balance at 30 June 2021 24.7 110.8 1,052.3 66.0
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181

Goodman Group

Notes to the consolidated financial statements

Other items (continued)

18. Reserves

18. Reserves
		Consolidated			Company
		2021	2020	2021	2020
	Note	$M	$M	$M	$M
Asset revaluation reserve	18(a)	27.3	19.7	27.0	19.7
Foreign currency translation reserve	18(b)	12.7	33.5	4.8	–
Employee compensation reserve	18(c)	48.3	33.4	40.2	33.4
Defned beneft retirement schemes reserve	18(d)	(14.4)	(8.2)	–	–
Common control reserve1	18(e)	(702.9)	(702.9)	–	–
Total reserves		(629.0)	(624.5)	72.0	53.1

The common control reserve arises from the acquisition of entities from other members of Goodman Group under the pooling of interest method. The amount in the common control reserve reflects the difference between the consideration paid and the carrying values of the assets and liabilities of the acquired entity at the date of acquisition.

The movements in reserves of the Consolidated Entity and the Company are analysed below:

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Consolidated Company
2021 2020 2021 2020
$M $M $M $M
(a) Asset revaluation reserve
Balance at the beginning of the year 19.7 14.2 19.7 14.2
Increase due to revaluation of other financial assets 7.6 5.5 7.3 5.5
Balance at the end of the year 27.3 19.7 27.0 19.7
(b) Foreign currency translation reserve
Balance at the beginning of the year 33.5 48.3 – –
Net exchange differences on conversion of foreign operations (20.8) (14.8) 4.8 –
Balance at the end of the year 12.7 33.5 4.8 –
(c) Employee compensation reserve
Balance at the beginning of the year 33.4 28.2 33.4 28.2
Equity settled share based payment transactions 14.9 5.2 6.8 5.2
Balance at the end of the year 48.3 33.4 40.2 33.4
(d) Defined benefits funds actuarial losses reserve
Balance at the beginning of the year (8.2) – – –
Actuarial losses on defined benefit superannuation funds (6.0) (8.2) – –
Effect of foreign currency translation (0.2) – – –
Balance at the end of the year (14.4) (8.2) – –
(e) Common control reserve
Balance at the beginning of the year (702.9) (538.1) – –
Acquisition of entities from GL – (164.8) – –
Balance at the end of the year (702.9) (702.9) – –
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Annual Report 2021

19. Retained earnings

19. Retained earnings
	Consolidated			Company
	2021	2020	2021	2020
Note	$M	$M	$M	$M
Balance at the beginning of the year	1,287.2	1,034.8	575.6	253.7
Proft for the year	408.4	325.5	329.9	395.0
Dividends declared 15	(110.8)	(73.1)	(110.8) (73.1)
Balance at the end of the year	1,584.8	1,287.2	794.7	575.6

20. Investments in subsidiaries

Subsidiaries

Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Company has power, only substantive rights (held by the Company and other parties) are considered.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. When an entity ceases to be controlled by the Company, it is accounted for as a disposal of the entire interest in the entity, with a resulting gain or loss being recognised in profit or loss.

In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses.

The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of the Consolidated Entity. The class of shares held is ordinary unless otherwise stated.

				Interest held
		Country of	2021	2020
Signifcant controlled companies	Principal activities	incorporation	%	%
Goodman Asia Limited	Investment and property	Hong Kong	100.0	100.0
	management services
Goodman China Limited	Property management and development	Hong Kong	100.0	100.0
	management consultancy services
Goodman China Asset Management Limited	Investment management	Cayman Islands	100.0	100.0
Goodman Developments Asia	Investment and property development	Cayman Islands	100.0	100.0
GJSP Limited	Investment management	Japan	100.0	–
GELF Management (Lux) Sàrl	Investment management	Luxembourg	100.0	100.0
Goodman Management Holdings (Lux) Sàrl	Intermediate holding company	Luxembourg	100.0	100.0
Goodman Midnight Logistics (Lux) Sàrl	Investment holding company	Luxembourg	100.0	100.0
Goodman Property Opportunities (Lux) Sàrl SICAR	Property investment and development	Luxembourg	94.0	94.0
GPO Advisory (Lux) Sàrl	Property management services	Luxembourg	100.0	100.0
Goodman UK Holdings (HK) Limited	Intermediate holding company	United Kingdom	100.0	100.0

183

Goodman Group

Notes to the consolidated financial statements

Other items (continued) 20 Investments in subsidiaries (continued)

Combination of entities or businesses under common control

Where the Consolidated Entity acquires entities or businesses from other members of Goodman Group such that all of the combining entities (businesses) are ultimately controlled by Goodman Group Securityholders both before and after the combination, the Consolidated Entity applies the pooling of interests method.

At the date of the combination of entities under common control, the assets and liabilities of the combining entities are reflected at their carrying amounts. No adjustments are made to reflect fair values, or recognise any new assets or liabilities that would otherwise be done under the acquisition method. The only goodwill that is recognised is any existing goodwill relating to either of the combining entities. Any difference between the consideration transferred and the equity “acquired” by the Consolidated Entity is reflected within equity (common control reserve).

Similar to the acquisition method, the results of the “acquired” entity are included only from the date control commenced. Comparatives are not restated to present the consolidated financial statements as if the entities had always been combined.

21. Related party transactions

Related parties

(i) A person, or a close member of that person’s family, is related to the Company if that person:
(1) Has control or joint control over the Company
(2) Has significant influence over the Company or
(3) Is a member of the key management personnel of the Company or the Company’s parent.
(ii) An entity is related to the Company if any of the following conditions applies:
(1) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others)
(2) One entity is an associate or JV of the other entity (or an associate or JV of a member of a group of which the other entity is a member)
(3) Both entities are JVs of the same third party
(4) One entity is a JV of a third entity and the other entity is an associate of the third entity
(5) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company
(6) The entity is controlled or jointly controlled by a person identified in (i)
(7) A person identified in (i)(1) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity) or
(8) The entity, or any member of a group of which it is a part, provides key management personnel services to the Company or the Company’s parent.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(a) Directors’ remuneration

Directors’ remuneration (including alternate Directors) disclosed pursuant to section 383(1) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation is as follows:

	2021	2020
	$M	$M
Directors fees	0.7	0.6
Salaries, allowances and benefts in kind	3.7	3.8
Share based payments	16.1	13.9
	20.5	18.3

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Annual Report 2021

(b) Transactions and amounts due from related parties

	Management and	Management and	Amounts due from	Amounts due from
	development activities		related parties1
	2021	2020	2021	2020
	$M	$M	$M	$M
JVs
GCLP	64.9	67.9	12.6	20.4
KGG	141.7	41.7	–	–
	206.6	109.6	12.6	20.4
Related parties of GL and GIT Goodman Hong Kong Logistics Partnership Goodman European Partnership Other related parties	135.2 221.9 67.0	255.3 323.9 18.7	42.0 36.4 10.4	56.8 20.1 9.0
	424.1	597.9	88.8	85.9

Includes contract assets arising from transactions with related parties.

Transactions with GL

During the year, the Consolidated Entity recognised expenses of $42.4 million (2020: $91.1 million) for services provided by a controlled entity of GL.

(c) Financing arrangements with related parties

					Interest income/(expense)	Interest income/(expense)
					charged on loans to/from
	Loans to related parties1		Loans from related parties1			related parties
	2021	2020	2021	2020	2021	2020
	$M	$M	$M	$M	$M	$M
JVs	29.6	60.8	–	–	0.3	0.3
GL, GIT and their controlled entities	809.2	599.0	(1,891.1)	(1,731.0)	(26.5)	(35.0)
Related parties of GL and GIT
Goodman European Partnership	–	3.6	–	–	–	–
Related parties of GL and GIT	–	3.6	–	–	–	–
	838.8	663.4	(1,891.1)	(1,731.0)	(26.2)	(34.7)

Loans by the Consolidated Entity to/from JVs and other related parties have generally been provided on an arm’s length basis. At 30 June 2021, details in respect of the principal loan balances are set out below:
Loans to GL, GIT and its controlled entities amounting to $809.2 million (2020: $599.0 million) are interest bearing and repayable on demand. The interest bearing loans incur interest at rates ranging from 0.7% to 7.2% per annum (2020: 0.8% to 1.7% per annum).
Loans from GL, GIT and their controlled entities are interest bearing and amount to $1,891.1 million (2020: $1,731.0 million). $806.7 million of the loans is repayable on demand and $1,084.4 million is repayable greater than one year from the reporting date. The interest bearing loans incur floating interest at rates ranging from 0.9% to 10.6% per annum (2020: 1.0% to 4.4% per annum).

– In the prior year, a loan of $3.6 million was provided to Goodman Pyrite Logistics (Lux) Sàrl, a controlled entity of Goodman European Partnership, and incurred interest at 6.9% per annum.

185

Goodman Group

Notes to the consolidated financial statements

Other items (continued)

22. Commitments

Development activities

At 30 June 2021, the Consolidated Entity was committed to $351.3 million (2020: $251.1 million) expenditure in respect of inventories and other development activities.

Investment properties

At 30 June 2021, the Consolidated Entity had contracted to acquire an investment property for $67.7 million (2020: $nil).

23. Contingencies

Capitalisation Deed Poll

GLHK, GL, GIT 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 finance documents for the purpose of the CDP when the borrower fails to make a payment. Any payments by an investor to a borrower will be by way of loan to, or proceeds for the subscription of equity in, the borrower by the investor.

United States and Reg S senior notes

Under the issue of notes in the United States 144A/Reg S bond market, controlled entities of GIT had on issue USD and EUR notes amounting to US$850.0 million and €500.0 million respectively. GL, Goodman Funds Management Limited, as responsible entity of GIT, and GLHK have unconditionally and irrevocably guaranteed on a joint and several basis the payment of principal and interest in respect of each of the notes.

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Annual Report 2021

24. Company level statement of financial position

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2021 2020
Note $M $M
Current assets
Cash 167.8 169.5
Receivables 126.1 306.5
Total current assets 293.9 476.0
Non-current assets
Investments in subsidiaries 1,821.9 1,169.1
Receivables 169.8 –
Other financial assets 171.8 124.1
Total non-current assets 2,163.5 1,293.2
Total assets 2,457.4 1,769.2
Current liabilities
Payables 96.0 –
Dividends payable 110.8 73.1
Total current liabilities 206.8 73.1
Non-current liabilities
Payables 505.2 327.3
Other financial liabilities 86.8 8.1
Total non-current liabilities 592.0 335.4
Total liabilities 798.8 408.5
Net assets 1,658.6 1,360.7
Equity attributable to Shareholders
Share capital 791.9 732.0
Reserves 18 72.0 53.1
Retained earnings 19 794.7 575.6
Total equity attributable to Shareholders 1,658.6 1,360.7
----- End of picture text -----

The Company level statement of financial position was approved and authorised for issue by the Board of Directors on 12 August 2021.

==> picture [110 x 38] intentionally omitted <==

Stephen Paul Johns Director

David Jeremy Collins Director

25. Subsequent events

There has not arisen in the interval between the end of the financial year and the date of this financial report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity, in future financial years.

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Annual Report 2021

Securities information

Top 20 Securityholders	Top 20 Securityholders	Number of	Percentage of total
As at 25 August 2021		securities	issued securities
1.	HSBC Custody Nominees (Australia) Limited	661,497,211	35.81
2.	J P Morgan Nominees Australia Limited	575,719,739	31.16
3.	Citicorp Nominees Pty Limited	179,518,534	9.72
4.	National Nominees Limited	72,892,779	3.95
5.	BNP Paribas Noms Pty Ltd	65,122,257	3.53
6.	Citicorp Nominees Pty Limited	33,855,552	1.83
7.	BNP Paribas Noms Pty Ltd	33,514,572	1.81
8.	Trison Investments Pty Ltd	16,874,053	0.91
9.	Beeside Pty Ltd Atf The Beeside Trust	13,192,040	0.71
10.	BNP Paribas Nominees Pty Ltd Six Sis Ltd	10,248,121	0.55
11.	HSBC Custody Nominees (Australia) Limited	9,549,917	0.52
12.	Australian Foundation Investment Company Limited	6,685,000	0.36
13.	UBS Nominees Pty Ltd	4,179,793	0.23
14.	BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd	3,214,030	0.17
15.	National Nominees Limited	3,065,053	0.17
16.	Custodial Services Limited	3,024,649	0.16
17.	Netwealth Investments Limited	2,546,642	0.14
18.	AMP Life Limited	2,510,153	0.14
19.	One Managed Investment Funds Ltd	2,425,000	0.13
20.	HSBC Custody Nominees (Australia) Limited	2,209,960	0.12
Securities held by top 20 Securityholders		1,701,845,055	92.12
Balance of securities held		145,584,200	7.88
Total issued securities		1,847,429,255	100.00

	Number of	Number of	Percentage of total
Range of securities	Securityholders	securities	issued securities
1 – 1,000	23,031	8,939,504	0.48
1,001 – 5,000	15,941	37,146,083	2.01
5,001 – 10,000	2,998	21,227,837	1.15
10,001 – 100,000	1,706	36,666,195	1.98
100,001 – over	102	1,743,449,636	94.38
Total	43,778	1,847,429,255	100.00

There were 651 Securityholders with less than a marketable parcel in relation to 2,712 securities as at 25 August 2021.

Substantial Securityholders1	Number of securities
CIC (Leader Investment Corporation)	166,917,309
Vanguard Group	187,278,775
Blackrock Investment Management Limited	137,503,983
1. In accordance with the latest Substantial Securityholder Notices as at 25 August 2021.

Voting rights On a show of hands at a general meeting of Goodman Limited or Goodman Industrial Trust, 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). At a general meeting of Goodman Logistics (HK) Limited, all resolutions will be determined by poll, and eligible Securityholders will be able to direct Chess Depositary Nominees Pty Limited to cast one vote for each Chess Depositary Instrument (referencing a Goodman Logistics (HK) Limited share) that the eligible Securityholder holds or represents (as the case may be).

Securityholder approval of securities During the financial year, 13,340,317 performance rights were issued under the Long Term Incentive Plan, of which 1,730,000 performance rights were issued to Executive Directors with securityholder approval under ASX Listing Rule 10.14.

On-market buy-back There is no current on-market buy-back.

189

Goodman Group

Glossary

AASB Australian Accounting Standards Board.

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.

CPPIB Canada Pension Plan Investment Board.

Cps Cents per security.

Cpu Cents per unit.

DPS Distribution per security. Total distributions to investors divided by the number of securities outstanding.

EPS Earnings per security.

GADP Goodman Australia Development Partnership, an unlisted property investment vehicle specialising in the investment of industrial property in Australia.

GAIP Goodman Australia Industrial Partnership, an unlisted property investment vehicle specialising in the investment of industrial property in Australia.

GAP Goodman Australia Partnership, an unlisted property investment vehicle specialising in the investment of industrial property in Australia.

GBLP Goodman Brazil Logistics Partnership.

GCLP Goodman China Logistics Partnership Limited, an unlisted property investment vehicle specialising in the investment of industrial property in China.

GEP Goodman European Partnership, an unlisted property investment vehicle specialising in the investment of industrial property in Continental Europe.

GFML Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621).

GHKLP Goodman Hong Kong Logistics Fund, an unlisted property investment vehicle specialising in the investment of industrial property in Hong Kong.

GIT Goodman Industrial Trust (ARSN 091 213 839) and its controlled entities or GFM as Responsible Entity for GIT, where the context requires.

GJCP Goodman Japan Core Partnership, an unlisted property investment vehicle specialising in the investment of industrial property in Japan.

GJDP Goodman Japan Development Partnership, a logistics and industrial partnership specialising in the development of industrial property in Japan.

GL Goodman Limited (ABN 69 000 123 071) and where the context requires, its controlled entities.

GMT Goodman Property Trust, a listed property trust on the

190

Annual Report 2021

NZX managed by GMG.

GNAP Goodman North America Partnership, a logistics and industrial partnership specialising in the investment of industrial property in North America.

GLHK Goodman Logistics (HK) Limited (Company No. 1700359; ARBN 155 911 149) and where the context requires, its controlled entities.

Goodman Group or GMG Goodman Limited, Goodman Industrial Trust and Goodman Logistics (HK) Limited, trading as Goodman Group and where the context requires, their controlled entities.

GUKP Goodman United Kingdom Partnership

KGIP KWASA-Goodman Industrial Partnership, an unlisted property investment vehicle specialising in the investment of industrial property in Australia.

KGG KWASA-Goodman Germany, an unlisted property trust specialising in the investment of industrial property in Germany.

Stapled The linking together of a GIT unit, a GL share and a CDI in respect of a GLHK 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 or Security A GIT unit, a GL share and

a CDI in respect of a GLHK share which are stapled so that they can only be traded together.

NAV Net asset value: the value of 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.

NZX New Zealand Exchange Limited or New Zealand Exchange being the equity security market operated by it, as the case requires.

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 GFML, 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 and/or GLHK.

Sqm Square metres.

Sq ft Square feet.

Substantial Securityholder A person or company that holds at least 5% of Goodman Group’s voting rights.

TSR Total securityholder return.

191

Goodman Group

Corporate directory

Goodman Group

Goodman Limited ABN 69 000 123 071 Goodman Industrial Trust ARSN 091 213 839 Responsible Entity of Goodman Industrial Trust Goodman Funds Management Limited ABN 48 067 796 641 AFSL Number 223621

Goodman Logistics (HK) Limited Company No. 1700359 ARBN 155 911 149

Registered offices

The Hayesbery 1-11 Hayes Road Rosebery NSW 2018 Australia GPO Box 4703 Sydney NSW 2001 Australia

Telephone 1300 791 100 (within Australia) +61 2 9230 7400 (outside Australia) Facsimile +61 2 9230 7444 Suite 901 Three Pacific Place 1 Queen’s Road East Hong Kong

Telephone +852 2249 3100 Facsimile +852 2525 2070 Email [email protected] Website goodman.com

Other offices

Directors

Goodman Limited and Goodman Funds Management Limited Stephen Johns Danny Peeters Independent Chairman Executive Director Greg Goodman Phillip Pryke Group Chief Executive Officer Independent Director Chris Green Anthony Rozic Independent Director Executive Director Mark G Johnson Penny Winn Independent Director Independent Director Rebecca McGrath Carl Bicego Independent Director Company Secretary

Chris Green Independent Director Mark G Johnson Independent Director Rebecca McGrath Independent Director

Goodman Logistics (HK) Limited Stephen Johns Independent Chairman

David Collins Independent Director Danny Peeters Executive Director Company Secretary Goodman Secretarial Asia Limited

Security Registrar

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

GPO Box 1903 Adelaide SA 5001 Australia Telephone 1300 723 040 (within Australia) +61 3 9415 4043 (outside Australia) Facsimile +61 8 8236 2305 Email investorcentre.com/contact Website computershare.com

Auditor

KPMG Level 38, Tower Three International Towers Sydney 300 Barangaroo Avenue Sydney NSW 2000 Australia

ASX code

GMG

192

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Disclaimer: This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071), Goodman Funds Management Limited (ABN 48 067 796 641; AFSL Number 223621) as the responsible Entity for Goodman Industrial Trust (ARSN 091 213 839) and Goodman Logistics (HK) Limited (Company No. 1700359; ARBN 155 911 149). 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 document 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 document 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 2021.

AI assistant

GOODMAN GROUP — Annual Report 2021

64998_rns_2021-09-26_69579233-b1ba-48a2-b5af-7fe84df6465c.pdf

GOODMAN GROUP STAKEHOLDER REVIEW AND 2021 ANNUAL REPORT

– ENDS –

About Goodman

27 September 2021

Dear Securityholder

Goodman Group – 2021 Annual Report

2021 Stakeholder Review – Wired for Change

Annual General Meetings

06.

BREAKING AWAY FROM THE KNOWN

DRIVING

Strong and sustainable

The right balance and focus

The Goodman Board

Many thanks

The 10-year plan

Future ready

A sustainable impact

Flexible and inclusive

Forward thinking

Online shift

Top 20 global customers

Work in progress

Work in progress ($bn)

Assets under management ($bn)

Operational highlights

OWN

DEVELOP MANAGE

$6.6BN 19 months

Accelerated targets

Reducing emissions

Investing in carbon credits

Leading by example

Our ESG strategy

Our 2030 Sustainability strategy

UN Sustainable Development Goals

Our sustainability strategy is based around three pillars:

Sustainable properties

People and culture

Corporate performance

SUSTAINABLE PROPERTIES

CORPORATE PERFORMANCE

Material drivers of our strategy

PEOPLE AND CULTURE

Target Progress

WE ARE WHAT WE VALUE

INNOVATION

DETERMINATION

INTEGRITY

SUSTAINABILITY

Sustainability in the heart of Madrid

Sustainable solutions for a better world

Continued

Goodman people go $10 million greener

Managing climate risk

I DON’T BELIEVE THE OFFICE IS DEAD... BUT IT NEEDS A NEW DEFINITION.”

“TAKING A LONG-TERM APPROACH HAS NEVER BEEN MORE VITAL.”

“WE FOUND OURSELVES ASKING ‘WHY NOT’ RATHER THAN ‘WHY’?”

”THERE IS SO MUCH NATURAL LIGHT WE DON’T NEED TO HAVE THE LIGHTS ON IN THE DAY.”

“I THINK THE THING WE DID BEST HERE WAS SOLVE FOR OUR OWN CULTURE, FIRST AND FOREMOST.”

HAYESBERY DESIGN FEATURES

HEALTH AND WELLBEING

SUSTAINABILITY

TECHNOLOGY

Australia

Oakdale West Industrial Estate, Sydney

Sustainability features

Market update

Australia – projected e-commerce sales growth 2020-2025

New Zealand

Roma Road Estate, Auckland

Sustainability features

Market update

Goodman Westlink, Hong Kong SAR

Sustainability features

Goodman Huiyang Industrial Park, Mainland China

Sustainability features

GOODMAN GROUP Annual Report 2021