GOODMAN GROUP

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Goodman Group Sustainability Report and 2022 Annual Report

29 September 2022

The Goodman Group Sustainability Report and 2022 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, Group Head of Legal and Company Secretary.

For further information, please contact:

Media

Investors

Michelle Chaperon James Inwood Head of Group Corporate Communications Head of Group Stakeholder Relations [email protected] [email protected] Ph: +61 (0) 416 285 907 Tel: + 612 9230 7400

About Goodman

Goodman Group is an integrated property group with operations throughout Australia, New Zealand, Asia, 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.

For more information visit: www.goodman.com

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29 September 2022

Dear Securityholder

At Goodman, we believe the ability to evolve in a changing world is essential in delivering our long-term strategy. In FY22 we demonstrated the resilience of our strategy and our team to deliver another strong result for all our stakeholders.

The enclosed documents provide you with an overview of the year as well as an opportunity to join us either physically or virtually at our Annual General Meetings in November.

FY22 Annual report

The enclosed annual report includes consolidated financial reports for Goodman Limited (being for the entire consolidated Goodman Group), Goodman Industrial Trust and Goodman Logistics (HK) Limited. It provides detailed information on our strong performance in FY22.

FY22 Sustainability Report

The theme of this year’s sustainability report is Response Ability, where we demonstrate:

How we’re building a highly responsible and sustainable business
Why we’ve integrated ambitious and tangible ESG targets into our organisation and KPIs, and
The action we’re taking to make a tangible difference to the planet and the people on it.

Our 2022 Sustainability Report is fully electronic and can be accessed at www.2022sustainabilityreport.goodman.com. Alternatively, you can also scan the QR code below which will take you directly to the report.

Annual General Meetings

The Annual General Meetings for the Goodman Group entities will be held at 10.00am on Thursday, 17 November 2022 at the Times on the Park Room, Sheraton Grand Sydney Hyde Park, 161 Elizabeth Street, Sydney. The meeting will be a hybrid event giving you the option to attend in person or online. Details of how to participate can be found in the Notice of Meetings.

Thank you for your ongoing support.

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Gregory Goodman Group Chief Executive Officer

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Title ~~Goodman Group~~

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Goodman Group Sustainability Report 2022
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Table of contents

Goodman Group Sustainability Report 2022

Introduction	03
Performance highlights	04
Leadership statements	05
– Chairman’s letter
– Group CEO’s letter
About Goodman	15
– About us
– Own/Develop/Manage
– Our strategy
– Global network
– Our values
– Our purpose
– Our structure
– Corporate governance
Live. Shop. Build. Renew	23
– Sustainability approach
– Sustainability overview
– Our material issues
– Engaging our stakeholders
Sustainability approach	32

Sustainability approach	32
– 2030 Sustainability strategy
– Our pillars
– Addressing the UNSDGs
Sustainability results	40
Sustainable properties	45
People and culture	70
Corporate performance	87
Goodman Foundation	94
ESG metrics	110
– Overview
– Energy and carbon emissions

Goodman global workforce, health and safety
GRI table – ESG affiliations and partnerships
Corporate information 120 – Board of directors – Five year financial summary
Corporate directory
Disclaimer

Goodman Group Sustainability Report 2022

Introduction

A responsible organisation needs to be future focused, authentic and agile. At Goodman, the ability to evolve in an ever-changing world is essential in delivering our long-term strategy.

That’s why we’re building a highly responsible and sustainable business. One that makes a tangible difference to the planet and the people on it.

We think innovatively about the key issues that matter to all of us – supporting more sustainable supply chains, improving workplaces for people, and developing cleaner, greener, more compact cities.

We all have a role to play. That’s why we’ve integrated ambitious and tangible ESG targets into our business – to help us live up to our purpose of making space for greatness.

Performance highlights

Goodman Group Sustainability Report 2022

FY22 performance highlights

OPERATIONAL $73bn Total AUM

SUSTAINABILITY SBT Science-based target[[Carbon]] Carbon neutral operations

Financial $1.5bn Operating profit[1]

81.3cOperating EPS[2] $13.6bnDevelopment work in progress[[Carbon]] Carbon neutral operations $3.4bn 98.7% US$500m Statutory profit[3] Occupancy[6] Sustainability-linked bond (SLB) 8.5% 3.9% 203MW Gearing[4] NPI growth[6] Solar installations and commitments $20.9bn $8.5bn $11.6m Available liquidity[5] Revaluation gains Charity contributions

203MW Solar installations and commitments $11.6m Charity contributions

Targets for reducing carbon emissions validated by SBTi[7]

Addressing embodied carbon and on track for carbon neutral operations

Establishment of Sustainable Financing Framework and issue of SLB

More than halfway to 400MW target of solar PV globally

Contributions from the Goodman Foundation and Goodman team

1 Operating profit comprises profit attributable to Securityholders adjusted for property valuations, derivative and foreign currency mark to market and other non-cash or non-recurring items.

2 Operating EPS is calculated using operating profit and weighted average diluted securities of 1,879.0 million which includes 15.3 million LTIP securities which have achieved the required performance hurdles and vest in September 2022 and September 2023.

3 Statutory profit includes the Group’s share of valuation gains, non-cash items and derivative and mark to market improvements.

4 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 $133.3 million (30 June 2021: $134.1 million). Total interest bearing liabilities are grossed up for the fair values of certain derivative financial instruments included in other financial liabilities of $79.6 million (30 June 2021: $62.3 million).

5 Includes available liquidity across the Group and Partnerships. Partnership investments are subject to Investment Committee approval.

6 Partnership industrial and warehouse assets (excludes office properties which have been earmarked for redevelopment) and represents 97% of Partnership assets.

7 Science Based Targets initiative.

Goodman Group Sustainability Report 2022

Leadership statements

Artist's impression of Green Dock Logistics Centre, Paris, France

CHAIRMAN’S LETTER

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Stephen Johns Independent Chairman

This year we’ve continued to prove our capabilities in all areas of Goodman’s business.

We have a robust strategy to deliver essential infrastructure for the digital economy with an experienced and passionate team. We seek to realise our vision of making positive change to the environment and communities we operate in.

Throughout the year, we have progressed our sustainability initiatives across all aspects of the Environmental, Social and Governance areas. You will see throughout this report that our focus is on both short-term programs that we can implement and measure today, while establishing long-term strategies that will have an enduring impact on our business – and that of our customers – and stakeholders into the future. This includes the Group’s Long Term Incentive Plan which provides alignment with securityholders and incorporates environmental and sustainability targets in assessing performance for all employees.

Goodman Group Sustainability Report 2022

Leadership statements

Investing in sustainable innovation

Over several years, the Group has been working to expand its innovation strategy. We aim to facilitate and invest in products that provide sustainable solutions to customers across property technology, supply chain, transport, construction and manufacturing. Examples include smart metering, carbon neutral building products, on-site safety management and the use of robotics and electric vehicles to assist with logistics and transportation.

Our investment strategy across these technologies provides the Group with greater access, visibility and insight into the technological trends affecting real estate. Our focus is on evaluating how these can be applied to our own portfolio to improve sustainable outcomes for all.

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Sustainability governance

From 1 October, we will be establishing a new Sustainability and Innovation Committee to support the management team, and to enhance the Board’s visibility and efficacy on our ESG initiatives. This Committee will be Chaired by Chris Green with Phil Pryke and newly appointed Directors Hilary Spann and Vanessa Liu as members. Chris, Hilary and Vanessa are all New York-based, actively work in the sustainability and innovation space in their day-to-day businesses, and therefore are expertly positioned for these roles. Phil has experience in the green energy field, is the Chair of the Remuneration Committee and plays an important role in setting and reviewing the aforementioned LTIP targets.

In summary, the Committee will have responsibility in relation to overseeing the Group’s:

+[ Sustainability strategy – including reviewing and monitoring performance, assessing material ] drivers and risks, making recommendations, and reporting on performance
+[ Innovation strategy – including reviewing innovation and developments that may impact ] the Group’s strategy and assets, and monitoring the performance of investments or potential collaborations.

Sustainability and Innovation Committee Charter

Goodman Group Sustainability Report 2022

Leadership statements

Board progression

This year we have made significant progress to deliver on our strategy to maintain a diverse Board with the appropriate mix of skills, gender and geographic representation. To this effect we have appointed two US-based Directors.

In April we appointed Hilary Spann, a highly experienced global real estate executive with an extensive background in public and private equity markets, both in the US and globally, with a particular focus on real estate. She is currently a senior executive at NYSE-listed Boston Properties, Inc.

Vanessa Liu was appointed in May. She’s an experienced technology innovator, business leader and digital media entrepreneur. Vanessa is currently Co-Founder and CEO of SaaS technology company Sugarwork, and an Independent Director of ASX-listed artificial intelligence company, Appen Ltd.

Both Hilary’s and Vanessa’s experience and insights are well aligned to our long-term strategy and values, while bringing greater diversity to the Board and helping continue to shape Goodman as a forward-thinking company.

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OUR SUSTAINABILITY INITIATIVES ARE
ENTRENCHED INTO THE GROUP’S
STRATEGY AND WILL CONTINUE TO
REMAIN A KEY PRIORITY FOR THE
BOARD AND MANAGEMENT.
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Demonstrating action

This report demonstrates Goodman’s continued determination to deliver tangible outcomes that will have a measurable and meaningful impact on the business and the wider community. Our Sustainability initiatives are entrenched into the Group’s strategy and will continue to remain a key priority for the Board and management.

Sincerely,

Stephen Johns

Independent Chairman

Goodman Group Sustainability Report 2022

Leadership statements

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Goodman Commerce Center Eastvale, Los Angeles, USA.

GROUP CEO’S LETTER

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Greg Goodman Group CEO

Goodman Group takes a long-term view. As providers of essential infrastructure for the digital economy, we recognise the impact that our business has on the planet and communities that we operate in.

Through our location choices, sustainable building approach, and focus on relationships, we work to make a tangible difference today, and long into the future. We integrate sustainability throughout our business. It’s embedded in our values, our investment strategy and our key performance indicators for executive remuneration.

With $73 billion of assets under management and $13.6 billion of developments in progress around the world, we are one of the largest developers of industrial property globally. This scale comes with enormous responsibility. We acknowledge that our actions today can have significant implications in the future, so we lead by example.

Our properties add value to local communities and the wider economy and we know it’s important that we continue to operate in a responsible and sustainable way. We continue to assess the most material issues for our business and have refined our 2030 sustainability strategy as the roadmap for our wide range of ESG activities.

Our strategy creates a framework to deliver on our sustainability targets that minimise our adverse impacts and maximise positive outcomes for people and planet. It shapes the operation of our core business, and we focus on the areas where we have the greatest control and influence, including the development and management of a global portfolio of sustainable industrial properties.

Goodman Group Sustainability Report 2022

Leadership statements

Through our strategy, Goodman is proactively responding to the global challenges of climate change. We’re taking action now by reducing carbon emissions, using renewable energy and developing greener buildings. We’re also adopting circularity, regenerating infill sites, building more equitable supply chains, and partnering with community groups. You’ll read more about these activities and more throughout this report.

We believe that allocating financial resources and human capital to reduce potential impacts now makes commercial sense over the long term. By integrating sustainability throughout our business, we also achieve our financial goals as our properties and services will be more attractive to customers and investors well into the future.

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- Setting science based targets

Reducing our carbon emissions is vital on the path to Net Zero.

Goodman is on track to maintain its carbon neutral status for its global operations for the second consecutive year. We continue to work on decarbonising our development projects, taking into account upfront embodied emissions and designing for efficiency throughout the whole building’s lifecycle.

We are ready to go further. This year we developed science-based targets that will see us significantly reduce our global greenhouse gas (GHG) emissions by 2030. We are aiming to reduce absolute Scope 1 and 2 GHG emissions by 42% and relative Scope 3 emissions by 50% from an FY21 base year. These targets are approved by the Science Based Targets initiative and are aligned to the Paris Agreement’s objective to keep global warming below 1.5 degrees. Meeting these goals, particularly Scope 3 goals, will require collaboration with our stakeholders including both suppliers and customers.

Goodman Group Sustainability Report 2022

Leadership statements

Increasing our investment in sustainability

Achieving these targets won’t be easy. It will require genuine commitment, and significant investment in time, money and resources. However, we see both a moral and a financial business case for sustainability.

While we’ve been investing in the sustainability space for a number of years, our future commitment has increased to approximately $820 million from $700 million across the Group and Partnerships. This investment will fund our sustainability initiatives to 2025.

While it includes standard programs such as solar installations, LED lighting upgrades, water saving features, carbon reduction and renewable energy, we’re also pushing well beyond these programs. We are investing in technology and innovation that will drive significant long-term change.

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Goodman Business Park, Greater Tokyo, Japan.
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Generating our own carbon ofsets

Our first priority is to reduce our carbon emissions. Where we’re unable to reduce our operational and embodied emissions, we purchase carbon offsets. As part of our approach, Goodman has recently made a strategic investment in an integrated carbon credit and regeneration platform – Wyuna Regenerative Agriculture.

Investing alongside Australia’s Clean Energy Finance Corporation, this innovative project responds to multiple UN Sustainable Development Goals (UNSDGs), operating at the intersection of land regeneration, sustainable food production and carbon markets. It’s focused on regenerating large areas of land driving biodiversity value and sustainable red meat production, together with the creation of carbon credits.

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WE BELIEVE BUILDINGS THAT
AREN’T SUSTAINABLE AND ADAPTABLE,
WILL BECOME OBSOLETE OVER TIME.
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Goodman Group Sustainability Report 2022

Leadership statements

Collaborating to reduce carbon in building products

Achieving carbon neutral buildings that require little to no offsets requires low-carbon, innovative building products and close collaboration. That’s why we’re working with material suppliers, industry groups and experts in the field to support the development of materials with lower embodied carbon.

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Maximising property efciency

We’re also investing in innovative ways to get more productivity and operational efficiencies out of our buildings for customers. One solution is to invest in PropTech or other specialist technology companies to help them develop and grow. In return, we learn more about the future of these technologies and what they mean for our customers and industry. Examples include drone delivery technology and infrastructure through Skyports, parking management and traffic management systems and smart meters for energy and water.

Another way we help improve the efficiency of buildings is by optimising land use. Goodman’s focus is on infill locations, close to consumers, where we can regenerate existing sites and optimise space by building multi-storey facilities.

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Artist’s impression, multi-storey development, Sydney, Australia.
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Goodman Group Sustainability Report 2022

Leadership statements

Aligning with our customers’ goals

A growing number of our customers are now on their own sustainability journeys. By providing the sustainable infrastructure they need, we’re helping them achieve their own sustainability goals. Although our sustainability investments are significant, they’re prudent. Our customers increasingly require a minimum standard of sustainability features. For many, we help them go beyond that.

The benefits are twofold. While our actions drive positive customer relationships they make financial sense too – we believe buildings that aren’t sustainable and adaptable, will become obsolete over time.

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Highbrook Business Park, Auckland, New Zealand.
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Generating fnancial sustainability

For a business to be truly sustainable, it needs to be financially sustainable. Goodman’s consistent and prudent financial management provides the resources we need to carry out our sustainability vision. Capital markets endorsed this approach, so we created a Sustainable Finance Framework which provides us with financial flexibility to issue sustainability-linked bonds and loans.

This year, the Group issued a $US500 million sustainability-linked bond. Additionally, several of our Partnerships have entered into sustainability-linked finance instruments. This is just one element of a capital management strategy which sees Goodman with available liquidity of $20.9 billion across the Group and our Partnerships.

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WE HAVE THE STRATEGY IN PLACE
TO MAKE A DIFFERENCE AND THE
COMMITTED CAPITAL, PEOPLE AND
RESOURCES TO EXECUTE IT.
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Goodman Group Sustainability Report 2022

Leadership statements

Progressing our Reconciliation Action Plan

Goodman recognises the importance of Aboriginal and Torres Strait Islander communities in Australia. We also recognise the need for reconciliation and this year we’ve moved through the Reflect stage of our Reconciliation Action Plan (RAP).

We have created economic empowerment through charitable and business opportunities, as well as created cultural learning occasions for our people. We move forward through our RAP process with a strong determination to take action and make a difference.

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Smoking Ceremony and Welcome to Country, The Hayesbery, Sydney, Australia.
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Supporting workforce wellbeing

This year we continued to play close attention to the health and safety of our own people as well as the workforces of our customers and contractors. Goodman has embraced a flexible work environment that helps retain and attract the best staff globally. This flexibility supports our diverse and inclusive team by improving wellbeing, morale and productivity.

For our customers, we continue to evolve our designs to provide spaces that encourage wellbeing across their own workforce, such as providing more natural light, outdoor fitness equipment, stylish staff amenities and creating more breakout areas. This focus has led to Goodman being the first logistics real estate company in Hong Kong to achieve the WELL Health-Safety Rating from the International WELL Building Institute.

Goodman Group Sustainability Report 2022

Leadership statements

Stepping up the impact of our Foundation

In another challenging year, the Goodman Foundation made a tangible and sustainable difference to the communities we operate in, facilitating $11.6 million in donations. We also extended beyond our established pillars, responding to emergencies including the humanitarian crisis in the Ukraine and the floods in Europe and Eastern Australia.

In addition to the worthy programs we support around the world, we also increased our support of the Australian Indigenous community.

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UNICEF Blue Dot Hub.
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Looking forward

Goodman has taken meaningful action and is making significant progress in achieving our sustainability targets. I’d like to thank our people, customers, investors and all other stakeholders for their continued support and contribution to Goodman’s sustainable growth.

We have the strategy in place to make a difference and the committed capital, people and resources to execute it.

Sincerely,

Greg Goodman Group Chief Executive Officer

About Goodman

Goodman Group Sustainability Report 2022

About Goodman

Goodman is a global industrial property specialist group. We own, develop and manage high-quality sustainable properties that are close to consumers and provide essential infrastructure for the digital economy.

We have 410 properties located in key consumer markets in 14 countries across the Asia Pacific, Europe, the UK and the Americas. With $73 billion of assets under management, we are the largest property group listed on the Australian Securities Exchange and invest significantly alongside our capital partners in our investment Partnerships.

But we’re more than our properties. We’re a collaborative team who work together to make a tangible difference for our customers, our people and communities we operate in. We believe in innovation, determination, integrity and sustainability – and we strive to make space for greatness in everything we do.

$73BN

ASSETS UNDER MANAGEMENT

OFFICE LOCATIONS ACROSS ASIA PACIFIC, EUROPE, THE UK AND THE AMERICAS 410 PROPERTIES

About Goodman

Goodman Group Sustainability Report 2022

OUR INTEGRATED BUSINESS MODEL

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Goodman’s Own Develop Manage model focuses our business on our customers’ current and future needs.

We own and maintain high-quality properties close to consumers, we develop sustainable properties, and we manage our global investment portfolio to the highest standards. We work alongside our capital partners, which include sovereign wealth, pension and large multi-manager funds. In each market, our dedicated local teams take care of all aspects of property asset and investment management, ensuring a high level of customer service.

About Goodman

Goodman Group Sustainability Report 2022

OUR

STRATEGY

Providing essential infrastructure for the digital economy

Urbanisation, globalisation, demographics, digitisation, sustainability and an increased focus on health and wellbeing have all changed the way people live, work and consume. These structural shifts have increased the importance of industrial properties in the global supply chain.

Globally, the logistics and warehousing sectors are now considered essential infrastructure for digital economies, and key to the efficient distribution of products to consumers. As industrial property specialists, Goodman’s long-term strategy is built on supporting our customers to operate in the most productive, sustainable and efficient way possible. We focus on key markets and concentrate our portfolio where we can create the most value for customers and investors.

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Goodman Tsuen Wan West Centre, Hong Kong SAR, China.
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Proximity to people

Our properties are located close to consumers, in urban infill locations where barriers to entry are high and supply is limited. Choosing locations close to large consumer populations helps our customers meet rising delivery and service expectations. It also provides greater resilience for customers’ supply chains.

Accessibility

Properties located close to major transport infrastructure, like motorways, ports and airports, enable efficient deliveries and reduce supply chain costs and transport-related emissions for our customers. They also make commuting to work easier for our customers’ workforce.

By positioning our portfolio in these key locations we are fulfilling our customers’ needs for sustainable properties that provide efficiency and faster speed to market. In doing so, we are building a sustainable business for our investors.

About Goodman

Goodman Group Sustainability Report 2022

STRATEGICLOCATIONS

OUR NETWORK $73.0BN AUM

410 PROPERTIES

14 COUNTRIES 1,000+ PEOPLE

EUROPE/UK ASIA AUS/NZ THE AMERICAS $11.9bn $22.8bn $29.8bn $8.5bn AUM AUM AUM AUM 132 71 179 28 PROPERTIES PROPERTIES PROPERTIES PROPERTIES 100% 98% 99% 96% OCCUPANCY OCCUPANCY OCCUPANCY OCCUPANCY 130+ 300 370+ 100+ PEOPLE PEOPLE PEOPLE PEOPLE

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

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As a global industrial property specialist, We aim to be the best at what we do, rather than the biggest. Our properties are strategically located in major consumer markets, providing our customers with faster speed to market and the opportunity to reduce transport costs and related carbon emissions. When considering new locations, our focus is on acquiring urban infill assets or brownfields sites that can be redeveloped into sustainable properties, allowing us to minimise our carbon footprint. With higher density of land use in these locations, our customers are looking to maximise their supply chain efficiency with greater utilisation of automation and increased sustainability features.

About Goodman

Goodman Group Sustainability Report 2022

OUR

VALUES

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Goodman’s values reflect who we are are today and who we want to be long into the future.

About Goodman

Goodman Group Sustainability Report 2022

OUR

PURPOSE

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Oakdale West Industrial Estate, Sydney, Australia.
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Goodman’s purpose of making space for greatness recognises our stakeholders’ needs and drives us to help them reach their full potential. Here’s how we make space for greatness for each of our stakeholders.

Customers

Our customers come from a wide range of industries including e-commerce, logistics, retail, consumer goods, automotive, pharmaceutical and technology. Regardless of their sector, they all need the right properties in the right locations. Proximity to their end consumer is key: increasing speed to market, and reducing transport costs and related emissions. Our customers are increasingly taking a strategic approach to their infrastructure decisions. They’re boosting their investment in our buildings to maximise both supply chain efficiency and overall capacity as the digital economy grows.

To help our customers make space for greatness, we create sustainable logistics spaces in high-quality locations. Here, the greatest ambitions of our customers can flourish as we give them the space and services they need to reach their goals.

Securityholders and investment partners

At Goodman, we manage the investment portfolio alongside our investment partners – some of the world’s largest pension and sovereign wealth funds. We have a patient and long-term approach to managing capital and focus on growing a sustainable business over time.

This long-term approach guides our decision making. By owning, developing and managing high-quality sustainable properties in key locations, we provide both short-term and long-term benefits for our customers while simultaneously delivering sustainable returns for our Securityholders and investors.

Community partners

We work with local charities and community partners in all our markets to make a positive difference. Whether it’s working with organisations on emergency response, community and community health, children and youth, or food rescue and the environment, the Goodman Foundation provides tangible assistance that translates to real support where it’s needed most.

We make space for greatness in the communities we operate in by taking a multi-year partnership approach with the organisations the Foundation supports. We share our resources, knowledge and experience to make a tangible difference and improve the quality of life, standard of living and health of people in our communities.

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About Goodman

Goodman Group Sustainability Report 2022

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OUR TEAM OF 1000+ IN 29 OFFICES
AROUND THE WORLD ARE KEY TO OUR
LONG-TERM SUCCESS.
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Our people

Our team of around 1,000 people in 29 offices around the world are key to our long-term success. Skilled and diverse, team members use their expertise across the range of cultures and locations we operate in to deliver strong results. There are many opportunities for our people to get involved, to learn and to build rewarding careers with us. Our sustainability strategy and actions help with attracting new talent and retaining our people.

Goodman encourages innovation. We look for people who want to realise their ambitions, challenge our thinking, drive change and develop new ideas that deliver a sustainable business, making a tangible difference today – and long into the future. Through Goodman’s long-term incentive program, our team have a stake in our business, which motivates them to work hard and take a long-term strategic approach to decision making.

Supply chains

We acknowledge that providing a high-quality sustainable offering to our customers is a team effort, requiring relationships built on integrity. Our network of suppliers extends from our general building contractors who we work with closely to build facilities for our customers, to the providers of our office supplies.

In each case, we respect the needs of our suppliers. This ranges from implementing strategies against modern slavery to treating our suppliers as part of our team, keeping them safe and paying them fairly and on time. In return, we expect our suppliers to abide by our high standards and communicate these requirements within their own supply chains.

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About Goodman

Goodman Group Sustainability Report 2022

HOW

WE’RE STRUCTURED

Goodman works as one integrated team, executing our global strategy on a local level.

Our specialist property management, development and investment management teams within countries work alongside our corporate services. By everyone focusing their skills we can provide a quality industrial property offering that best serves our customers and investors alike.

Our corporate governance statement provides more information on our corporate governance framework.

The Boards and Committees

Goodman 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 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 with those 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.

Reflecting the increasing importance of sustainability issues and the continuing rate of change through technology and innovation, the Board has also agreed to establish a new Sustainability and Innovation Committee drawing on the skills and experience of Chris Green (Committee Chair), Vanessa Liu, Phil Pryke and Hilary Spann. The new Committee will commence from 1 October 2022.

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Goodman’s corporate governance framework

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View Goodman’s 2022 Corporate Governance statement online

View Goodman’s corporate governance framework documents (including Charters and Policies) online

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

LIVE. SHOP. BUILD. RENEW. As our climate changes, every action we take to mitigate its effects can have an impact on the future. Green buildings are only part of the solution.

Sustainability needs to be woven through every aspect of our lives, and sustainability thinking is vital. It’s a perspective we need to apply to how we design, build and live in our cities, how we shop and even where we source our food.

We spoke to global industry thought-leaders to learn more about the big picture. Their take? The key to a cleaner, greener world is developing the ability to do more without requiring more. Here are their tips on where our attention needs to go.

Watch the highlights video

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

LIVE.

City living is on the rise. But what we think of as a successful city today – a place with high density office jobs in the centre, housing on the outside, and tourist attractions, amenities, services, and public space throughout – is fast becoming a thing of the past. Those attributes are still important, but there’s something else making way for us to live more sustainably in these environments.

“Digitisation,” says Professor Greg Clark, Group Adviser, Future Cities and New Industries for HSBC, “is revolutionising the way our cities work. Firstly, digitisation is making the systems of our cities more efficient. Transport, buildings, commerce, entertainment – so much more happens in an omni-channel way using digital platforms”.

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Greg says that the abundance of jobs in technology-led sectors is a development that allows city dwellers to work in ways that are connected to other parts of the planet. But digitisation is also shaping these individuals’ lives every day. “It’s giving our citizens a new set of choices about how they work, where they live, when they travel and how they consume.”

DIGITISATION IS REVOLUTIONISING THE WAY OUR CITIES WORK

During the industrial period land use in our cities was highly separated. But one of the effects of new, clean energy and buildings is that we’re able to remix cities in ways we couldn’t 100, 200 and 300 years ago.

“We now see it’s perfectly possible,” Greg says, “for clean industries to exist side-by-side with residential areas, schools, hospitals and more.”

Creating efficiency with our land and building use means we’re able to accommodate more people in our cities without the effects of overcrowding. One way to optimise the limited space we do have is to reclaim and re-utilise brownfield locations, or urban sites that have already been developed, and to move them from single static use, to mixed use, plus flexible formats. “Agile land use,” says Greg, “is a very important new ingredient for cities.”

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

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The switch to digital cities

According to Clark, the digital city will be a place “that optimises its space, and also the time of its citizens, by making access and connectivity instant, predictable and seamless.” It will shape cities that, over time, will become cleaner, greener and more compact.

Cities are attracting more people than ever before. Today, 57% of us – a total of 4.4 billion people – live in cities. This percentage is trending upwards. By 2050, the World Bank says almost 70% of us will be city dwellers.

“The shapes and sizes of our cities have actually been changing for some time,” says Clark. “Because we can now do so many things these days online, cities have to switch focus and specialise on things that are best done face-to-face, or, face-to-place.”

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It’s true our cities are already starting to feel different. There are more delivery vans in the city during the day, buses and trains are less full than pre-pandemic but are getting fuller, and office buildings can be busy some days but not others. “Cities are in a great adjustment process,” says Clark, “trying to manage the road and the transport system to be able to accommodate the changes in patterns of travel, delivery and distribution.”

Offices too are reinventing themselves as places of creativity and connection, and employees have new expectations of what a safe, healthy and flexible working environment is.

As our cities change around us, if we want to achieve Net Zero, we need to change the behaviours of those living in them. As Clark points out, given our burgeoning urban populations, cities are an essential part of a sustainable future for all. “Without cities and the people in them, and the ability of cities to trigger behaviour changes, and spur new innovations,” Clark says, “we can’t decarbonise the planet.”

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

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SHOP.

Consumers know what they want and today, they want more than ever before. As the retail industry scrambles to reconfigure its offering for the digital era, consumers are raising their expectations. One of the fastest growing expectations is that their next purchase will be a sustainable one.

“The retail sector has undergone seismic structural shifts,” says Natalie Berg, retail analyst, trend forecaster, and founder of retail consultancy, NBK Retail.

Those personal shopping devices (aka: phones) we each have in our pockets, Natalie explains, do more than allow us to be digitally connected when we walk into a physical store. They empower us to shop on our own terms.

“We’re seeing an acceleration in the demise of mediocre retail,” says Natalie. “COVID has exacerbated the many challenges the industry was facing, and retailers are finding that if they weren’t relevant before the pandemic, they’re certainly not relevant now.”

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Natalie predicts that in the future, retail will consist of fewer but better-quality stores, and that investing in e-commerce and digital experiences will be crucial to meet customers wherever they are.

WHEN WE THINK ABOUT THE STORE OF THE FUTURE IT HAS TO BE FRICTIONLESS

More than ever before, retailers will need to be agile. The path to purchase is no longer linear and there is a plethora of choice when it comes to how shoppers access retail brands. We’re experiencing a convergence of our online and offline worlds and, according to Natalie, it will soon be hard to know where one world ends and the other begins.

“When we think about the store of the future it has to be frictionless,” says Natalie.

Ironically, delivering that level of experience in a physical store in the 21st century relies heavily on technology. According to Natalie, the challenge for retailers is working out how to do it so they offer customers an experience that is seamless, integrated and holistic.

“Retailers have to give shoppers a compelling reason to ditch their screens and offer a sensory-filled, memorable experience,” she says.

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

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Supporting conscious consumers

Today’s consumers want more from retailers than ever before. But environmentally speaking, they want their impact to be low. The shift to conscious consumerism becoming mainstream means retailers need to consider sustainability in every aspect of their businesses to remain competitive.

Transparency is also part of the picture. There’s significant pressure on retailers to become transparent around their sustainability initiatives. Why? Consumers want assurances that the products and services they’re buying are not damaging to people or the planet. Even one bad experience can be detrimental to a retail brand.

“We’re entering an era where our own values will trump monetary value,” says Natalie. In other words, consumers are looking for more than just a financial exchange for goods or services. Physical stores are quickly becoming representative of an experience; one of community, discovery, curation, human touch and emotional connection.

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Behind the scenes, the increased focus on decarbonising distribution chains to support the boom in online purchases means price wars are being replaced by delivery wars. But with more and more delivery vans on our roads, there’s a growing need for delivery that is sustainable as well as fast and reliable.

“Big retailers are recognising that they have a duty to improve the way that they do business,” says Natalie. “And this is only going to continue with pressure coming directly from consumers.”

Overall, consumers might be calling the shots, but innovative retailers are rising to the challenge. Whatever form our future purchases take, it will certainly be a richer experience.

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

BUILD.

37% of energy-related carbon emissions come from the built environment. It’s a term that, doesn’t just refer to buildings, it’s also the infrastructure that sits around them.

Catriona Brady, Director of Strategy and Development at the World Green Building Council, says there are some estimates that the equivalent of a city the size of Paris is being built every single week. “The raw materials and the energy being used for that is absolutely monumental,” she says.

In contrast, we could have an equally significant impact – this time positive – by rethinking the global approach to building policies and procedures. Large-scale actions like this are vital, Catriona points out, as she emphasises the urgency to both sustainably retrofit existing buildings and to ensure new buildings are not locking in emissions for decades to come.

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Goodman Huiyang Industrial Park, Huiyang, China.
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Currently the way we use our building materials is fairly linear. “We take, we make, we use, and we dispose,” says Catriona. We need to shift to a circular economy to keep value in materials for as long as possible. “Individuals want to have a long life,” she says. “We want our materials to have a long life too.”

37% OF ENERGYRELATED CARBON EMISSIONS COME FROM THE BUILT ENVIRONMENT

Circularity within the built environment means creating a closed loop so that whatever we design, and build can essentially be dismantled – without being contaminated with chemicals. It’s then reused or adapted for use in the future.

There are challenges with implementing a circular economy in any industry, but the scale of our built environment creates additional complexity for the sector.

“We’re calling for new design methods, new construction practices and different materials,” says Catriona. While these added levels of complexity can bring higher upfront financial costs, the biggest challenge is probably the commitment required from stakeholders across every stage of the value chain.

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

Roma Road Estate, Auckland, New Zealand.

The ongoing life cycle of circular

A building that’s designed to be circular and then gets demolished or sent to landfill is not a circular building. “It has to be about how it’s treated throughout its whole life cycle,” says Catriona. “And that’s a real challenge because it requires engagement from every single person or stakeholder organisation that’s participating in the lifespan of the building.”

We also need to take into account the whole life carbon emissions of an asset, not just the emissions when it’s operational. “We need to change our thinking,” says Catriona. “How can we make sure that the building will have as sustainable an impact as it can on the planet, from beginning to end?”

As complex an endeavour as this might sound, there are changes we can make right now by retrofitting existing buildings. There’s a real business case to be made for creating a lean, clean and green building, and the key ingredient is people. “I think it’s important for us to frame the business case for today in the context of society as it exists right now,” says Catriona. “The business case for a sustainable building now is influenced by the fact that people want to work in a healthy space. They want to know their health is being protected, and that the building has net positive environmental benefits.”

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Once the case is made, the concepts of lean, clean and green can be rolled out. “Lean is all about being efficient in your energy use,” she says. “Clean is all about the systems that are being used – making sure they’re as energy efficient as possible, clean in their power requirements and use.” And lastly, “Green is all about the production and consumption of renewable energy. How can we use green technologies as far as possible? How can we innovate and use green renewable energy requirements to generate clean power onsite?”

The good news for the sector is that this type of change is not just good for the planet. Compared to the standard alternative, sustainable buildings represent a more resilient investment too.

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

RENEW.

If we’re going to meet the targets set out in the Paris Agreement, we need to rethink the way we use and decarbonise the buildings, assets and spaces we already have.

As our cities evolve, our buildings are increasingly becoming multi-purpose, performing different functions at different times of day, or different days of the week. We are also starting to see buildings service dual industries side-by-side.

Urban farming, the practise of cultivating, processing and distributing food in urban areas, is one welcome trend that’s solving multiple sustainability issues in the heart of our cities. It offers extensive partnership opportunities for the industrial property sector.

Sarah Msika, cofounder of Plantation Paris, one of Europe’s largest urban rooftop ecosystems, is passionate about bringing agriculture into the city and reducing the carbon impact of our end produce.

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There are many different types of urban agriculture, but Sarah’s approach is to try and use vacant rooftop spaces.

Utilising a 7,000 sqm logistics rooftop, Plantation Paris is a greenhouse and garden project located high above the city of Paris in the 18th arrondissement. It offers a myriad of benefits, including that it creates opportunities to build large-scale farms close to the people who will consume the produce. By partnering with industrial and logistics property developers, the project provides opportunities to access sustainable heat sources. In the case of Plantation Paris, this heat comes from a data centre located directly beneath its greenhouse.

“It’s very important to have the lowest carbon footprint on all the aspects of what we are doing,” says Sarah. “For example, if we want to grow tropical varieties, we need to do it with a secured sustainable source of heat, like our project does with a data centre.”

Live. Shop. Build. Renew.

Goodman Group Sustainability Report 2022

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Plantation Paris produces microgreens and herbs in its greenhouse and 70 different varieties of vegetables and herbs in its permaculture garden. There are also edible flowers, which otherwise travel from the Netherlands. In a few short years the site has been completely transformed. “Urban farming has a very big role to play in biodiversity,” says Msika, who reports seeing many kinds of bees, birds and wildlife in the area. “Which is huge,” she says. “There was no wildlife when we arrived and now, we have a whole wildlife ecosystem, including falcons.”

Today, Plantation Paris supplies tonnes of fresh food all over the city but for Sarah the social impact is more important than the volumes produced. People want to know where their food is coming from and being so close to the city means it can be delivered environmentally. “We won’t be able to sustain the whole city,” says Sarah. “But people can see it’s possible to buy their produce the same day it was harvested.”

A number of Michelin hatted restaurants regularly collaborate with Sarah’s team. They discuss growing options and menu ideas. Some even harvest ingredients themselves on a weekly basis. “Urban agriculture,” says Sarah, “is giving chefs the chance to work directly with farmers, and for the farmers to see the produce grown a few Metro stations away from their kitchens.”

THERE WAS NO WILDLIFE WHEN WE ARRIVED AND NOW, WE HAVE A WHOLE WILDLIFE ECOSYSTEM, INCLUDING FALCONS.

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As well as the greenhouse and garden, Plantation Paris has a communal event space with a full view of the sky, an unusual feature for Paris. “It’s important to have a place where you can just go and feel well and our garden is a good place for that,” says Sarah.” This space is where yoga courses, meditation sessions, plant-based cuisine workshops and private events are held: a place where the urban farm becomes a place for daily inspiration.

Urban agriculture is a positive example of the community-led greening of the built environment Catriona say our cities desperately need. “We need whole communities to be green,” she says. “We want them to be physically green, we want to see nature, we want to be able to encourage rewilding the return of biodiversity and ecosystem services.”

To hear more from these global thought leaders, watch the Goodman Thought starters series

Sustainability approach

Goodman Group Sustainability Report 2022

Sustainability approach

A responsible and sustainable strategy

ESG is an integral part of Goodman’s business strategy. We make investment decisions based on strategic long-term thinking and operate with sustainability goals front of mind.

As Goodman has grown to become Australia’s largest listed-property company, our commitment to ESG principles continues to shape our operations.

Our role in providing essential infrastructure for supply chains means we are uniquely positioned to identify and adapt to global trends. As the world begins to work more actively on climate mitigation, Goodman continues to seek and embrace opportunities to become a truly sustainable business. In doing so we’re not only aiming to meet the expectations of our stakeholders, but we’re acting in alignment with our own company values.

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Chifley Business Park South, Melbourne, Australia.
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Material and ambitious targets

Under our 2030 Sustainability Strategy, Goodman has committed to making change across a range of ESG activities. This includes working towards measurable and ambitious sustainability targets, to help make a tangible and positive difference in the world.

The breadth of our targets means we’re able to embrace the strategic opportunities currently available to those willing to make real change in their organisations and supply chains. It also mitigates against key ESG risks which come with inaction.

Our strategy includes actions that will reduce carbon emissions and increase the use of renewable energy across our portfolio. We’re also very active in our development of greener buildings, an action which not only helps the planet, but leads to healthier work environments with greater amenity for our customers.

People are integral to our strategy too. We’re creating diverse leadership teams, building more equitable supply chains, and partnering with community groups who deliver life changing support in our communities.

We don’t consider this activity ‘additional’ to our day-to-day. Instead, it’s embedded within our core business. We also firmly believe our approach will help deliver sustainable returns and positive outcomes for our stakeholders.

Sustainability approach

Goodman Group Sustainability Report 2022

Local teams, global network

Operating across a global network presents both challenges and opportunities for our people. While we’ve set ourselves global sustainability targets, achieving these requires contribution from local teams in each of our markets.

While we have a relatively small global workforce of around 1,000 people, a large number of people have been with the business for many years. Our team is motivated and incentivised to demonstrate our corporate values of determination, innovation, integrity and sustainability. The people at the top of our business aim to lead by example as they demonstrate these values in their behaviours and decision making. Our values are also part of how we assess the performance of our people.

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Goodman Interlink, Hong Kong SAR, China.

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Although our global business allows us to share knowledge and best practice across jurisdictions, it also highlights the disparity between the policies and opportunities across the markets where Goodman operates. Our ambition to use 100% renewable energy is one example of how great this challenge is. In some markets, this commitment is in line with customer expectations and market trends; while in others, availability of renewable energy options makes the transition more difficult.

Regardless of the location however, we’re determined to find pathways to achieve the sustainability targets we’ve set for ourselves. The challenge requires our team to think strategically, collaborate with market leaders and create opportunities to overcome hurdles.

Sustainability approach

Goodman Group Sustainability Report 2022

Goodman Akamatsudai, Greater Tokyo, Japan.

The material issues which shape our sustainability strategy

In 2019, Goodman set its 2030 Sustainability Strategy based on six material ESG priorities. We believed each was not only critical to our business and ESG performance but would also be an area where we could make a tangible and positive impact.

It’s important that these material priorities are dynamic and are reviewed regularly. We start by considering them alongside global sustainability trends to gain an understanding of where and how they interconnect. Next, they’re influenced by our stakeholders, customers and investment partners. Lastly, we factor in the broader economic and social context.

This approach aligns our sustainability strategy with our operational drivers to address shared global challenges.

With the above in mind, we reviewed our material ESG priorities in 2022.

We partnered with leading sustainability advisors BWD Strategic for the review. The process was rigorous and involved a series of interviews with external stakeholders as well as an assessment of the effectiveness and suitability of our strategy. The review also considered how our measurable targets respond to a suite of current and emerging global ESG trends.

The result saw us keep our original six material issues and add two more. The updated list of material ESG issues for Goodman includes:

+[ Actively contributing to the Net Zero transition]
+[ Owning strategically located properties close to ] consumers in key global markets
+[ Developing and adapting innovative, efficient and flexible ] properties with a future focus
+[ Demonstrating Goodman’s values and promoting ] diversity, inclusiveness and social equity
+[ Investing responsibly with defined governance and ] sustainable capital structures
+[ Promoting workplace safety and wellbeing for all]
+[ Delivering resilient assets that support human health and ] value natural capital
+[ Influencing the sustainability practices of our value chain.]

We consider these priorities to be essential to Goodman’s continued success and have shaped our sustainability strategy accordingly.

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Sustainability approach

Goodman Group Sustainability Report 2022

Venlo III Logistics Centre, Venlo, The Netherlands.

Sustainable assets

Our buildings are fundamental to Goodman’s business strategy. Goodman’s developments increasingly include a range of sustainable design features and innovations that improve energy efficiency, water efficiency and the wellbeing of our customers. Sustainability also plays a role in our choice of locations. Our strategy of prioritising properties in urban infill markets that are close to large consumer populations is gaining momentum.

These properties (often re-purposed existing buildings in older industrial precincts) are in high demand. Not only do they present opportunities for our customers to improve efficiency and reduce transport-related emissions and costs, but they can also unlock positive social outcomes. We’ve found that revitalising underused and outdated precincts quickly provides new opportunities for employment and other community benefits.

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While sustainable building design is prioritised on every Goodman property, we look well beyond the design itself. We find opportunities to innovate with materials and onsite energy generation, taking a building lifecycle approach. This is helping us transition to carbon neutral developments, and to meet growing market demand for reducing carbon emissions.

As our properties have emerged as essential infrastructure for the storage and movement of goods around the world, we’ve seen automation become a priority for many supply chains. This global trend is impacting the design of our buildings. We are developing buildings that enable our customers to incorporate automation and technology.

Partnerships like this shift the value proposition for well-located and well-designed logistics properties. Often, they result in longer lease periods, which aligns with Goodman’s long-term strategy.

Sustainability approach

Goodman Group Sustainability Report 2022

Responding to climate risk

Climate risk presents a real and unfolding challenge to Goodman’s business and properties.

Goodman’s Boards and leadership teams are fully committed to taking pragmatic action to identify, mitigate and respond to this risk, including designing and building properties which are resilient in the face of climate-related disruptions.

This year, Goodman reinforced its support of the Paris Agreement by developing an emissions reduction target, which aligns with the Science Based Targets initiative, to limit global warming to 1.5 degrees. The process was an extension of our 2021 carbon neutral operations achievement and involved an in-depth review of our global carbon emissions and the opportunities to reduce them.

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Goodman Cajamar, São Paulo, Brazil.
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Our targets consider our Scope 1, Scope 2 and Scope 3 emissions. We look at our design and construction processes and actively engage with our supply chain to encourage the supply of low carbon materials.

For the time being, carbon offsets are part of our transition to a lower carbon business. However, based on conversations we’re having with investors and our supply chain, new technologies will play a greater role in enabling us to achieve our sustainability goals and rely less on offsets.

Our commitments to solar and renewable energy targets remain resolute. They’re an essential piece of our low carbon future and a vital element to reduce global emissions.

Our commitments to solar power are also a very tangible way to make a positive difference. This aligns well with the ambitions of many of our large global customers, who are increasingly setting their own carbon reduction targets.

Engaging our stakeholders

Meeting the needs of our stakeholders is paramount to Goodman’s ongoing success. Regular engagement with our stakeholders and nurturing of long-term relationships helps us understand their priorities and anticipate their needs. This way we can better support their ambitions and deliver sustainable returns for our investors.

We prioritise to the effective disclosure of our ESG performance to our stakeholders. These include our customers, investors and securityholders, our employees, suppliers and local communities.

We disclose through multiple channels and provide regular updates via Goodman’s website, our Sustainability and Annual Reports, and the ESG reporting benchmarks we work towards.

Sustainability approach

Goodman Group Sustainability Report 2022

Airgate Business Park, Sydney, Australia.

Our customers

Goodman has a diverse range of global and local customers within the ecommerce, logistics, retail, consumer goods, automotive, pharmaceutical and technology industries. Our business is focused on their current and future needs.

We work with our customers to gain a deep understanding of their real estate needs. We also look for where our sustainability goals align. This provides new and ongoing opportunities to collaborate.

Most of our top 10 global customers have set significant carbon emissions reduction targets and renewable energy commitments. As a result, they’re increasingly looking for partners who can help them take action and make significant progress towards their targets.

We’re gaining momentum too, when it comes to the quality and number of conversations we’re having with our customers about aligned sustainability goals. These discussions usually centre around the future of green buildings and focus on opportunities, such as onsite power generation, where we can innovate to fast-track our shared and individual goals.

Top 20 customers by rent

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Sustainability approach

Goodman Group Sustainability Report 2022

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Bungarribee Industrial Estate, Sydney, Australia.
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- Long term investment partners

Through our managed Partnerships, Goodman has developed longstanding relationships with several of the world’s largest and leading pension and sovereign wealth groups.

Engagement with our investment partners about our ESG strategy has increased this year, as well as become broader and more detailed. Many of our equity partners are increasingly intent on working with companies with clearly articulated ESG strategies. Goodman’s strong ESG approach is integral to their decision to do business with us.

Many of our investment partners operate according to their own dynamic ESG policies. This in turn has an influence on Goodman’s development and management activities. We regularly seek feedback from our investment partners during our investor updates and customer meetings. This feedback helps us to review our material sustainability priorities and impacts of our business.

In the last few years, we’ve increased our use of video conferencing and online communication tools to communicate with a wide group of investors, without the need to travel. We see this as a long-term trend that aligns well with our own sustainability goals.

Finally, we participate in several ESG benchmarks and ratings, including GRESB, MSCI and Sustainalytics. These platforms review the non-financial ESG performance aspects of our operations and provide value to the investment sector.

Sustainability approach

Goodman Group Sustainability Report 2022

Goodman’s global team

With a global workforce of more than 1,000 employees and a relatively flat organisational structure, constant engagement and communication across our global teams is vital. It is one of the many ways we remain focused on our strategy, performance, and the direction of our business.

The health and wellbeing of our people remains a significant priority for Goodman. Programs such as the (good) life aim to support our people to find a productive work life balance. We survey our employees periodically. Throughout the COVID period we increased communication as well as online team engagement.

We induct new employees using e-learning modules and one-on-one sessions during their early months at Goodman. Ongoing training is generally delivered online and is available to all Goodman employees.

Half yearly and annual performance reviews help us understand which people are suitable for role progression and a training plan. This allows us to identify succession opportunities, career aspirations and boost diverse leadership.

We prioritise the rewarding and advancing of our people’s careers, on skills development and the provision of challenging work opportunities. We believe our high retention rate is partly due to programs like our long-term employee equity plan which gives our people a stake in the business.

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Communities

The Goodman Foundation utilises our people, properties and resources to address disadvantage in the world. Together, they make a tangible and sustainable difference to people’s lives. By partnering with likeminded charities and funding projects with clearly defined timelines and outcomes, we’re able to provide real support where it is needed most.

For the broader community, Goodman provides a comprehensive overview and regular updates on its ESG performance. We do this through our website, media releases and social media platforms including LinkedIn, Twitter and Instagram.

We also respond to enquiries through our website and emails to our investor relations team.

The global supply chain

Our supply chain consists of small, medium and large-scale suppliers who we partner with to help deliver our global property development, property management and funds management activities.

We’ve established, extensive supply chain relationships across each of our operating regions. We engage with these partners at every stage, from initial development through to operation and management.

We also actively engage with suppliers and organisations who can help us make progress on our sustainability targets. This work includes engineering organisations and associations such as the Materials and Embodied Carbon Leaders Alliance (MECLA), whose members are driven to reduce embodied carbon in the building and construction industry.

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Sustainability results

Goodman Group Sustainability Report 2022

Goodman Kunchi East China, Shanghai, China.

2030 Sustainability Strategy

Goodman’s 2030 Sustainability Strategy shapes all aspects of our business and is one important way we measure our success. Our strategy builds on our work to date, aligns with our purpose and approaches the future proactively. It’s helping transition our business into a truly resilient and low-carbon company.

Our pillars

The three pillars of our strategy capture the sustainability commitments and goals for our global business. They set the context for our specific long-term and short-term targets based on material ESG issues which we track, measure and report against annually.

Sustainability results

Goodman Group Sustainability Report 2022

SUSTAINABLE PROPERTIES

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

PEOPLE

AND CULTURE

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

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.

Supporting the United Nations Sustainable Development Goals

The UN Sustainable Development Goals (UNSDGs) are a call to action to address the world’s most significant challenges including climate change, poverty, gender equality and good health and wellbeing for all.

Goodman’s 2030 Sustainability Strategy and ESG targets are in alignment with 9 of the 17 SDGs which are most relevant to our operations. Our progress towards these targets helps towards solving some of the world’s biggest challenges.

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GOOD HEALTH AND WELLBEING

GENDER EQUALITY

AFFORDABLE AND CLEAN ENERGY

DECENT WORK AND ECONOMIC GROWTH

INDUSTRY, INNOVATION AND INFRASTRUCTURE

SUSTAINABLE CITIES AND COMMUNITIES

RESPONSIBLE CONSUMPTION AND PRODUCTION

CLIMATE ACTION

LIFE ON LAND

Sustainable properties

Goodman Group Sustainability Report 2022

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Goodman Kunchi East China, Shanghai, China.
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Sustainable properties

As a leading owner, developer and manager of industrial real estate globally, we recognise the role our properties play in our customer’s value chain. Our preference for strategic infill development sites provides not only opportunities for our customers to be close to transport hubs and consumers, but is also a chance to rejuvenate and reposition existing brownfield sites into modern business precincts.

Our sustainably designed, energy-efficient and well managed properties are strategically located to meet the business, health and wellbeing needs of our customers. We collaborate to provide the properties they need today, and the resilience to withstand the global challenges of tomorrow. Sustainability shapes our commitment to reduce carbon emissions from our developments and create buildings that are energy efficient and help generate their power.

We measure the embodied carbon emissions of our developments and continue to collaborate with our supply chain partners to support developments in lower-carbon materials and designs.

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Material drivers

+[ Actively contributing to the Net Zero transition]
+[ Owning strategically located properties close ] to consumers in key global markets
+[ Developing or adapting properties to be ] innovative, energy-efficient, and flexible
+[ Delivering resilient assets that support human ] health and value natural capital

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Goodman Huiyang Industrial Park, Huiyang, China.
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Sustainable properties

Goodman Group Sustainability Report 2022

Progress against targets

TARGET	FY22 ACTIVITY PROGRESS	FY22 ACTIVITY PROGRESS
400MW of solar	A further 78 MW of solar PV installed
PV capacity in	or committed to during FY22.
operation by 2025	Taking Goodman’s global installations to approximately 203MW. 2019			2022			2025
		0MW		203MW		400MW
						On track
100% renewable	Achieved 100% renewable energy use
energy use within	Australia in FY22 and increased to
our operations by 2025	approximately 65% globally. Continued investing in solar to increase 2019				2022		2025
	energy use across our portfolio. 0				65%		100%
						On track
Carbon neutral	Maintaining carbon neutrality for our
operations by 2025	global operations in FY22. This includes
	emissions within our operational control
	and excludes embodied emissions from
	our developments and our customers’ 2019		2021	2022			2025
	emissions.
	We will continue to lower our operational		Achieved	On track
	emissions and increase our use of	Carbon neutral	operations
	renewable energy.
Maintain >95%	Achieved 98% occupancy rate.
overall occupancy
rate							2022

		Occupancy				>95%
						Surpassed

These targets are incorporated into Goodman’s performance review process from financial year 2022.

Sustainable properties

Goodman Group Sustainability Report 2022

SUSTAINABLE DESIGN AND DEVELOPMENT

Sustainable design approach

Goodman’s properties are designed to be efficient and highly functional both today and into the future. We achieve this by combining sustainable design fundamentals with the use of innovative materials and building automation.

Our experience plays a key role too. Goodman’s designs have been shaped by our many years developing cutting-edge logistics properties. Our designs also incorporate wellbeing initiatives that positively impact our customers and their workforce.

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Goodman Business Park, Greater Tokyo, Japan.
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Chifley Business Park South, Melbourne, Australia.

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Strategic assets

Extensive engagement with our customers is at the core of our design approach. We look to include emerging technologies so we can better support design priorities.

We view our properties as a strategic part of our customer’s supply chain. Using this lens we take a lifecycle approach with our designs, developing flexible and adaptable properties we know will be in demand in the years to come.

Although we incorporate many sustainable design features as part of our standard designs, we also work closely with customers to see where, together, we can push boundaries.

The long-term relationships we build with our customers are reflected in our high occupancy levels, sustained rental growth and strong level of development activity.

Sustainable properties

Goodman Group Sustainability Report 2022

Sustainability property design features

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Automated LED
lighting and
sub-metering to
Multi-storey reduce and monitor
properties optimising energy use
land use in strategic
infill locations close
Efficient water to consumers Solar panels for Promoting innovative
fittings and rainwater and transport renewable energy building materials like
harvesting infrastructure and skylights low-carbon concrete
Low-E glazing to improve Employee amenity, End-of-trip Enhancing
comfort and energy efficiency health and fitness facilities biodiversity, extensive
landscaping,
and beehives
Improving circularity
through recycling and
reusing materials EV charging
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Sustainable properties

Goodman Group Sustainability Report 2022

Actively adapting

Our efforts to improve resilience across Goodman’s portfolio are an important part of our strategy. We aim to develop properties that are flexible with greater resilience to intensifying climate-related events. They also need to adapt to shifting customer and market dynamics.

The locations of our properties and accessibility for customers remain integral to Goodman. We understand the value of strategically-located properties and our preference for sites in these locations supports our long-term approach to real estate.

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Highbrook Business Park, Auckland, New Zealand.
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Our commitment to reduce carbon in the development process and provide buildings that generate energy has greatly influenced our design process. The priorities support the broader commitments that Goodman, as well as many of our customers and investment partners, have made towards reducing emissions.

Our environmental targets will be achieved through collaboration and alignment across the entire value chain. We’re pleased that the conversations we’re increasingly having with our stakeholders show that we’re moving in the right direction.

We’re also continuing our transition to carbon neutral buildings. We’ve established processes for calculating embodied emissions consistently across our global operations, and this is now a standard part of our development approach.

Our work to decarbonise our developments by supporting the take up of lower carbon materials is progressing. As part of this commitment, our participation in industry movements such as the Materials and Embodied Carbon Leaders Alliance (MECLA) provides a channel for organisations to work together to reduce embodied carbon emissions in the building and construction industry.

Sustainable properties

Goodman Group Sustainability Report 2022

DESIGN IN

ACTION

- MULTI STOREY DEVELOPMENT IN SPAIN

As land is becoming scarce in Barcelona the answer for logistics companies is increasingly: ‘go up’. Making use of limited land is vital when the vacancy rate in the Catalan logistics market is very low – less than 2%.

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Multi-storey warehouses like the Goodman Castellbisbal Logistics Centre provide a sustainable solution for our Spanish customers. Featuring two units of 13,200 sqm, the multi-storey facility lies at an intersection of the two most important highways in Spain, just 28 km from the centre of Barcelona. This strategic location allows our customers to be close to Barcelona’s 5.5 million consumers[1 ] and maximise last mile operations.

Goodman first introduced multi-storey logistics centres to Spain in 2021. Now Goodman Castellbisbal Logistics Centre is Goodman’s second multi-storey real estate logistics project in the country. Multi-storey facilities are a sophisticated solution to land scarcity and urbanisation challenges. They streamline delivery processes and reduce traffic – benefiting cities and communities. They reduce the distance of the last mile and provide flexibility for our customers.

Goodman has been developing multi-storey facilities globally since 2012. We have now worked on 46 of these properties around the world.

Sustainable properties

Goodman Group Sustainability Report 2022

SUSTAINABILITY EXCELLENCE IN ACTION IN MILAN

In East Milan, Goodman’s new Pioltello Logistics Centre has achieved one of the highest BREEAM rating scores for a logistics asset in Italy. The property achieved BREEAM New Construction Excellent certification with an outstanding score of 79.5%.

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The 10,000 sqm property is a great example of sustainability applied to logistics real estate. A Life Cycle Analysis provided insight into the overall carbon impact of the building over the long term, and it was designed and developed adhering to the highest sustainability standards.

Achieving the excellence rating from BREEAM required the Pioltello Logistics Centre to rank strongly across nine categories: management, energy, pollution, health and wellbeing, land use and ecology, transport, materials, waste and water.

Water management was the top performer, with a 100/100 score. This is in large part due to its design that minimises flood risks and reuses rainfall.

BREEAM wasn’t the only certification achieved for this property. The building’s energy efficiency features including high performing HVAC also earned the building an A4 energy performance certification – the highest available in Italy.

Features include:

+[High-performance insulation]
+[LED lighting with motion and daylight sensors]
+[470kWp of rooftop solar providing 52MWh per year]
+[54 EV charging stations with another 200 ready to be installed when needed.]

As with all our developments, strategic location is key. Pioltello Logistics Centre provides easy access to a large consumer market with 2.5 million people accessible in a 30-minute drive time.[1]

Sustainable properties

Goodman Group Sustainability Report 2022

STRATEGIC LOCATION AND SUSTAINABILITY MEET AT FULLERTON

In a former paper factory just 20 miles from the Port of Los Angeles/Long Beach, Goodman Logistics Center Fullerton has both strategic location and environmental credentials in its favour.

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This LEED registered, modern facility feels worlds apart from its origins. Today, 13.5 million people live within a one-hour drive of the four-building industrial campus, which reduces delivery times and transport emissions for our customers servicing the local market. There’s another benefit too: Fullerton’s connectivity to the greater Los Angeles areas and direct access to I-91 and other major motorways means 20 million customers fall into its same-day delivery zone.[1]

The brownfield development was built with 95% of recycled materials already on site and incorporates a number of sustainability features such as electric vehicle charging stations, motion detected lighting and a solar ready roofing system.

When it comes to wellbeing, Goodman Logistics Center Fullerton offers various employee amenities encouraging a healthy and active workforce including breakout areas outside with enabled Wi-Fi, and a greenscaped walking trail for midday walks. The site is also close to world-class restaurants, shopping, Disneyland Resort, Downtown Fullerton, Honda Center, Anaheim Convention Center, Angel Stadium and California State University, Fullerton – making it an attractive destination for people to work.

To see more examples of sustainable design in action, go to www.goodman.com/sustainability/casestudies

Source: Michael Bauer Research

Sustainable properties

Goodman Group Sustainability Report 2022

RESPONDING TO CLIMATE RISK

Goodman’s Boards have committed to addressing climate risk at the highest level of the organisation. We work to maintain our understanding of current potential exposure to risks, gauge their impact on the business and identify meaningful mitigation responses.

Redbank Motorway Estate, Brisbane, Australia

Our view of risk goes beyond the direct physical risks to our assets posed by climate change. It also includes transitional risks to our business that relate to shifts in policy, regulatory and disclosure obligations, insurance impacts, and the market broadly.

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This year, we finalised our 2030 science-based emission reduction targets, which are considered ambitious and aligned with a 1.5°C pathway.

Our first scenario-based climate-risk assessment aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) guidelines was completed in 2020 and is reviewed annually. This assessment examined the key physical and transitional risks in our major regions and determined the following to be the most material:

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

The 2020 assessment process provided Goodman with an effective method of communicating risks and opportunities to our investors. It also led to us setting ambitious targets around reducing emissions, increasing renewable energy, and achieving carbon neutrality.

We continue to evaluate the risks posed by extreme weather events and update our due diligence, design guidelines and property management operations to help mitigate our risks.

View our TCFD Statement

Sustainable properties

Goodman Group Sustainability Report 2022

CARBON EMISSIONS

Goodman recognises the risk changing climate presents to our business. How we respond to these risks influences how we operate, develop and manage our properties now and in the future. Managing climate risk is incorporated into Goodman’s broader risk management framework and our responses are strategic and based on long-term outcomes.

- Science based approach

During the year, we finalised our science-based emission reduction targets. Using 2021 as our baseline year, our 2030 targets have been validated by the SBTi as being aligned with the UN Paris Agreement’s goal of 1.5°C.

Our science-based target commitments include:

+[ 42% reduction in absolute Scope 1 and Scope 2 GHG emissions. ] These include Goodman’s electricity, fuel and refrigerant emissions
+[ 50% sqm intensity reduction of Scope 3 GHG emissions, including indirect ] emissions generated during the use of our stabilised and sold assets.

Our targets were derived in collaboration with greenhouse gas accounting specialists using the SBTi methodology. As our ability to control our Scope 3 emissions is limited, collaboration with suppliers and customers will be important. We will also need to remain focused on factors like efficient design and the location of our properties, supply of onsite renewable energy, EV infrastructure and our ability to influence our customers’ own emission reduction commitments.

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GoodNature, vegetable garden at Interchange Park,
Sydney, Australia.
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- Sustainability linked fnance

This year Goodman created a Sustainability-Linked Bond Framework (Framework) to outline how Goodman Group will link our financing strategy with our sustainability strategy. The Framework uses Goodman’s science-based targets for our Scope 1 and Scope 2 reduction as performance criteria.

After developing the framework, we issued our first US$500 million of Sustainability-Linked Bonds (SLB) into the Rule 144A / Reg S market with a scheduled maturity of 2032. They reflect the Group’s focus on operating sustainably as well as our commitment to reducing emissions aligned with 1.5°C science-based targets. Failure to meet our targets has a financial consequence under the terms of the SLB.

Maintaining carbon neutral certifcation

We’re on track to maintain our carbon neutral certification for our global corporate operations under the Climate Active Carbon Neutral Standard. We remain focused on reducing our operational emissions through efficiencies and increasing our use of renewable energy.

Our carbon inventory includes Goodman Scope 1 and 2 emissions. It also encompasses Scope 3 emissions from operational activities.

Importantly, the boundary of our carbon neutral certification excludes the embodied emissions from our developments and the emissions of our customers from the spaces they lease from Goodman. However, our solar PV and efficient building designs help support our customers’ Scope 1 and 2 emissions reductions targets.

Sustainable properties

Goodman Group Sustainability Report 2022

Carbon neutral developments

Goodman Logistics Center Fontana II, Los Angeles, USA.

Embodied carbon is a key issue for Goodman as building materials and construction account for approximately 11% of global energy-related carbon emissions.

Through our design approach, we reduce our customers’ emissions by including features like solar PV, EV charging stations, energy-efficient LED motion-sensor lights, passive lighting and electric heat pumps.

To tackle the challenge of reducing embodied emissions, we are collaborating with our supply chain partners to encourage lower carbon materials in our building designs.

As part of this work, we recently introduced a process to measure and offset the embodied emissions of our new developments. Our approach uses Life Cycle Assessments (LCA) and helps us create carbon baselines for our developments across each of our regions. These can be used to forecast emissions.

This process to measure embodied emissions enables us to place a value on carbon. It also provides a framework for investing in carbon reductions, including offsets. Over time, we anticipate that the availability of low carbon materials which we can use will increase, further reducing our embodied emissions.

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Investing in carbon ofsetting

We realise investing in carbon offsets is necessary to support the world transition to Net Zero. We invest in carbon offsets both to meet Goodman’s Climate Active Carbon Neutral certification, and as part of our transition to carbon neutral developments.

This year we refined our process and criteria for purchasing carbon offsets. This will help mitigate risks and help us procure quality offsets.

We prefer nature-based projects and if feasible, projects occurring in the regions where Goodman operates. We partner with leading carbon offset suppliers to procure offsets which meet our high standards. These suppliers provide additional due diligence on carbon offset projects and guidance on the additional social and biodiversity benefits of different projects.

Sustainable properties

Goodman Group Sustainability Report 2022

ORIGINATING CARBON OFFSETS

As part of our procurement of quality carbon offsets, Goodman has made a strategic investment in an integrated carbon credit and regenerative platform in Australia – Wyuna Regenerative Agriculture.

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Investing alongside Australia’s Clean Energy Finance Corporation, this project assists land regeneration, sustainable food production and land-based solutions to climate change.

Carbon credits for the scheme will be produced using the Clean Energy Regulator’s ‘Human Induced Regeneration’ methodology. It deploys technology and improved land management practices that result in the growth of vegetation to deliver carbon sequestration.

Sustainable properties

Goodman Group Sustainability Report 2022

RENEWABLE

ENERGY

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We are reducing emissions across our business by decreasing energy demand in our buildings and transitioning towards renewable energy sources. This includes energy which we generate ourselves through our solar PV installations and electricity we purchase.

At Goodman it’s now standard practice to incorporate sustainability into our developments at the design stage. We continue to increase our knowledge and awareness of new products and technologies so that we can develop cutting edge energy efficient buildings.

Some examples of our approach include the use of carbon neutral cladding and insulation in the UK, efficient heat pumps for heating in Continental Europe, and deploying building management systems in our properties around the world (see Sustainable design section above for more information).

We also enhance the operational energy efficiency of our stabilised assets and invest in upgrades to keep improving. These opportunities include energy-efficient LED motion-sensor lights, and electric heat pumps and energy monitoring systems.

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Generating clean energy

To help our customers reduce their emissions and to reduce the demand on electricity grids, we continue to build our own capacity to generate clean energy. This year, in collaboration with our customers, we installed and committed to 78MW of new solar PV capacity on both our developments and stabilised assets. This takes us up to 203MW of solar PV installed globally; on track to meet our 400MW target by 2025.

Shifting to renewable energy

Where our properties cannot generate enough energy to cover their consumption, we are increasingly looking to source 100% renewable electricity from accredited suppliers. Around 65% of Goodman’s global electricity consumption (in Goodman’s controlled areas) is generated from renewable energy sources and we remain on track to meet our 100% renewable energy target by 2025.

Sustainable properties

Goodman Group Sustainability Report 2022

– LARGE SCALE SOLAR ROTTERDAM I LOGISTICS CENTRE

At the Rotterdam I Logistics Centre in the Netherlands, connection to the future is obvious. The 65,926 sqm of first-generation warehouse space is equipped with smart meters, efficient lighting and EV charging stations.

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But it’s the rooftop that really shows Goodman’s commitment to a sustainable future. This year, we installed 7MW of solar panels on the roof. This complex project required over 17,000 panels to be spread across a space roughly the size of five football fields.

Rotterdam I Logistics Centre has the largest solar installation on one building in our global network. It’s also currently the largest solar roof in South Holland – providing enough green energy to support the electricity needs of the equivalent of 1,934 Dutch households per annum.

Key statistics

7MW of solar capacity 17,000+ solar panels

1,934 Dutch households’ equivalent average electricity use p.a.

Sustainable properties

Goodman Group Sustainability Report 2022

LATEST SOLAR AT GOODMAN BUSINESS PARK WEST BUILDING

At Goodman Business Park, Greater Tokyo, our 500,000 sqm master planned business and technology precinct now hosts another of Goodman’s largest solar installations globally.

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The latest installation is a 3MW solar array on the recently completed Goodman Business Park West Building. For this installation, building and customer energy needs are prioritised with remaining power sold to the grid.

While the solar array at Goodman Business Park, Chiba, is impressive, it’s only one of the sustainability features on a site renowned for its design and customer amenities. This multi-level, carbon-neutral development features EV chargers, LED sensor lighting, rooftop urban gardens and break-out spaces. Customers and the local community can also take advantage of the amenities in the Park, including a child care facility, a gym, restaurants, and a coffee shop – all in a strategic location with excellent access to downtown Tokyo.

Our next major development in Japan will also feature a large solar array with Joso 1 planning 4.52MW of solar in addition to plans for battery storage.

Key statistics

3MW of energy capacity 9,940 solar panels

14.9MW across the entire estate

Sustainable properties

Goodman Group Sustainability Report 2022

Solar progress

400MW TARGET BY 2025

203MW REACHED IN 2022

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78MW THIS YEAR

Sustainable properties

Goodman Group Sustainability Report 2022

GASLESS HVAC IN EUROPE

Goodman has mandated that from FY22 all new developments and renovations in Europe will no longer use gas as a heating or cooling source. Transitioning from gas to gasless heating sources is an important climate-driven decision. However, it has gained momentum with the geopolitical issues in the region impacting oil and gas prices and availability.

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Halle VI Logistics Centre, Halle, Germany.
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There are several heating, ventilation and air conditioning (HVAC) technologies in the market, but not all are technically and economically viable. The diagram below shows some of the gasless heating technologies currently commercially available.

Goodman will use the right system for each individual property and operational requirement.

The preferred gasless heating technology uses electric HVAC systems coupled with onsite renewable energy production. In our recently completed Halle VI Logistics Centre development in Germany, the warehouse and office space are 100% heated and cooled by electric heat pumps.

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

ELECTRIC
HVAC + ON-SITE BIOMASS
RENEWABLES Dependent on local
Efficient and soalable availability
option
LOW
CARBON
HEATING
BIOGAS HEAT
Considered together NETWORKS
with price volatility Dependent on local
forecast availability
H2
Competitiveness
expected to increase
by 2030
----- End of picture text -----

Goodman Europe’s gasless strategy

+[ New developments and renovations will solely consider electric HVAC systems and on-site ] renewables.
+[ For stabilised assets, a roadmap for HVAC replacements is being developed.]

Sustainable properties

Goodman Group Sustainability Report 2022

BROWNFIELD DEVELOPMENTS

Repurposing adaptive properties

More than 50% of our global development program occurs on brownfield sites. These are previously developed properties that are no longer in use or out of date and require regeneration or remediation by specialists like Goodman.

Brownfield sites are integral to Goodman’s sustainability strategy and support Goodman’s commitment to circularity by reducing, recycling and reusing existing resources for as long as possible. Brownfield developments offer Goodman opportunities to use our expertise to regenerate existing sites, reuse finite materials and reduce waste, improve natural habitats and enhance biodiversity, and reduce our construction emissions while providing logistics facilities in strategic locations.

By replacing or repurposing outdated buildings found on brownfield sites, we can improve the quality and performance of existing building stock without requiring additional land. In a world with a growing population, urbanisation and land scarcity, this is particularly important.

Brownfield sites are close to transport infrastructure and large populations, providing our customers with opportunities to find efficiencies within their logistics operations. Transforming these industrial areas into modern, efficient and sustainable commercial precincts also unlocks additional labour benefits for our customers, as brownfield sites are often close to a large workforce.

The social value we add serves local communities too. Our new industrial precincts often include cafes and fitness and recreation facilities. Goodman developments such as Goodman Business Park Chiba, in Greater Tokyo Japan, and Highbrook Business Park in Auckland, New Zealand are recent examples.

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(Before) Goodman Commerce Center Santa Fe Springs, Los Angeles, USA.
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(After) Goodman Commerce Center Santa Fe Springs, Los Angeles, USA.
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Sustainable properties

Goodman Group Sustainability Report 2022

REGENERATION AT AUCKLAND’S ROMA ROAD

Regeneration is underway at the former Foodstuffs distribution centre on Roma Road in Auckland.

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Artist’s impression of Roma Road Estate, Auckland, New Zealand.
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As we target a 5 Green Star Built rating, our company-wide commitment to circularity is paying off. Around 96% of demolition material from Roma Road was diverted from landfill. We recycled steel framing and roofing, large volumes of concrete and masonry were crushed onsite and retained for construction base, and local stone masons used the volcanic rock we uncovered.

All four new warehouses will use sustainably sourced materials where possible and energy-efficiency will feature prominently. Customers will have LED lighting, EV charging systems, and low emission refrigerants for HVAC.

Roofs have a role too. They’ll generate solar energy and harvest 80,000 litres of rainwater. An urban ngahere (forest) will be planted where native plants will replace exotics, attracting birds and enriching the environment for the workforce.

NZ Post will anchor the new development. The last mile location will mean fewer trucks and lower transport emissions for its increasing number of deliveries as e-commerce grows in New Zealand.

Sustainable properties

Goodman Group Sustainability Report 2022

– DESIGNING CIRCULARITY INTO DECONSTRUCTION - - REUSING MATERIALS AT TREMBLAY EN FRANCE

At Tremblay-en-France, 30km from the centre of Paris, Goodman was able to reuse, recover or recycle 99.1% of waste from the old buildings on this brownfield site.

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Approximately 44 tons of materials, including partition walls, fire doors and raised floors were re-used locally – within an average of 60km from the site. We also recycled 7,900 tons of materials like glass, carpet, ceramics, plaster and steel.

In the extensive pre-deconstruction stage, which included cleaning, sorting and on-site repairs, specialist local SMEs and circular economy start-ups helped identify the right channel for each resource. At one stage, 16 types of waste were stored across the Tremblay-en-France property.

The deconstruction process required specific methods, tools and machinery. It also required more people on site – a 20% increase over the standard demolition workforce. We worked closely with our contractors to train their people in the new techniques.

Learnings from Tremblay-en-France will be employed across future Goodman projects.

Sustainable properties

Goodman Group Sustainability Report 2022

REVITALISING OUR PORTFOLIO

Not all brownfield developments are newly acquired. Our practice of buying strategically located sites means we already own some older sites ripe for redevelopment. This is particularly the case in Australia, where we’ve operated for almost 30 years.

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One example is in the Sydney suburb of Smithfield, just 24 km from the CBD. Easy access to Sydney’s motorway network meant customers had long coveted the strategic location of the old Smithfield Distribution Centre, but the property had reached the end of its economic life.

This year we completed the transformation of this outdated warehouse into a flexible, modern multi-unit estate. Now, Gateway@Smithfield houses eight customer units across two buildings, providing 46,455 sqm GLA.

As part of our sustainability commitment, we installed 1.14MW of solar for the new development. We also included provisions for EV charging on 10% of the car spaces and LED lighting with daylight harvesting capabilities in all warehouse spaces, 10% translucent roof sheeting and 5kL rainwater collection tanks.

Brownfield redevelopments are complex, and Smithfield was no exception. The timing of the regeneration project meant that strict lockdowns were in place during some of the process, while the team also had to contend with sustainably managing contaminated materials during the demolition and building process.

The site is now fully leased to a range of customers who appreciate the easy access and proximity to 4.5 million consumers within a 60-minute drive time[1] .

Sustainable properties

Goodman Group Sustainability Report 2022

BIODIVERSITY

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Beehives on rooftop, Senlis Logistics Centre, Paris, France.
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GoodNature – vegetable garden at Interchange Park, Sydney, Australia.

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Using circularity to support biodiversity

Nature provides many of the essential resources we rely on to survive. Yet, global biodiversity and the health of ecosystems are under threat. Scarcity of resources and demand for more materials are creating the need for businesses to challenge themselves to respond to these threats. We can design for circularity by identifying new strategies to operate more efficiently, design out waste through reuse and recycling, and where possible use fewer resources. In this light, circularity can help reduce biodiversity loss.

Circularity, or the circular economy approach, is a blueprint for action, and it’s gaining traction. Consumers, investors, companies and governments are recognising the importance of circularity and how it can be used to respond to global challenges like climate change, reducing pollution and declining biodiversity.

Goodman has a responsibility to do what it can to preserve and improve biodiversity across its global operations. Our ambition is to deliver resilient assets that support human health and value natural capital, and our customers and investment partners are looking to us to lead on these efforts. We are certain that disclosure of natural capital and biodiversity management will increase, highlighted by the global launch of the Taskforce for Nature-Related Financial Disclosures (TNFD) framework.

Our preference for re-developing brownfield sites, and when needed, rehabilitating contaminated industrial environments, supports the circularity approach. It offers Goodman the opportunity to enhance the local environment and improve biodiversity as well as make other positive improvements. This work is underway. We’ve already begun establishing urban forests, linking wildlife corridors, installing gardens with beehives and expanding conservation areas at our sites.

Sustainable properties

Goodman Group Sustainability Report 2022

BIODIVERSITY KEY TO BEDFORD COMMERCIAL PARK

Set in a landscaped park environment, Bedford Commercial Park will offer green open spaces and attractive surroundings for our customers and their employees to enjoy.

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The Park includes a network of landscaped ponds, designed to support local wildlife and protect natural habitats. The Park is complemented by a community orchard, extensive woodland planting, and a series of pedestrian footpaths and cycle routes which link the Park with its natural surroundings. It will also be the home to a future canal link between Bedford and Milton Keynes.

Since we completed Phase 1 in 2019, we’ve worked with the local charitable trust, the Forest of Marston Vale, to increase tree canopy cover in the area by 30%. More than 950 native trees have been planted across the Park, with Goodman people also volunteering their time to help.

Once complete, Bedford Commercial Park will include four acres of ponds and close to seven acres of new and existing woodland.

Sustainable properties

Goodman Group Sustainability Report 2022

IMPROVING BIODIVERSITY BY SUPPORTING BEES

Bees help support biodiversity across the globe. Without them, many ecosystems would cease to exist. But today’s global bee populations face a multitude of threats, including habitat destruction, disease and the use of agricultural chemicals.

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To help, Goodman is colonising wild bees by planting wildflower meadows with nesting sites on the grounds at some of our German properties in Pforzheim, Nuremberg, Stuttgart and Hamburg. The project, supported by bee experts and beekeepers at Pforzheim III Logistics Centre in Germany, will help these threatened species as we improve biodiversity in the area. It will also provide wellbeing benefits to the local workforce, as they will be able to enjoy the improved natural surroundings.

Another way we support biodiversity is through the 100-plus beehives now installed across our European sites. In Germany, our honeybees produced almost 600 kilograms of honey this year. Some of it came from the beehives located at our logistics sites in Nuremberg, Eppertshausen, Leipzig and Pforzheim, where our customers are partnering with us to support the bees.

Sustainable properties

Goodman Group Sustainability Report 2022

INNOVATIONS AND SUSTAINABILITY IN OUR LANDSCAPING

Preserving and maintaining our natural assets is important to Goodman. Innovation – both in technology and in our thinking – has helped us make big leaps in sustainable landscaping practices in Australia.

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Through pilot projects, collaboration with suppliers and trials of new technologies, we have been able to reorient our landscaping operations with sustainability front of mind.

- Technology led solutions to reduce water waste

Last year we installed 384 potable water meter devices – at least one on each Australian property. These meters track the 1,468 megalitres of water used across our portfolio every year. Their real time data helps customers understand their water usage and identify leaks or wastage so that they can be repaired well before a bill arrives.

We also deployed smart irrigation across Goodman’s Australian portfolio. This technology-led solution is so smart that individual garden beds can be remotely controlled, reducing water use at some properties by 54%.

Making our landscaping practices more sustainable

We used new technology to reduce the chemicals used to tackle weeds. After comparing various low-toxic weed control options, we trialled new equipment combining saturated steam and boiling water. This solution helps nurture soil and use less of the chemical Glyphosate. We are working closely with the manufacturer to make it more portable so we can use it more widely.

From December 2022 all our landscaping contractors will need to use lithium battery-powered blowers, hedge trimmers and other handheld landscaping equipment. These are lighter, quieter and easier to handle than combustion options – and don’t rely on fossil fuels for power.

A sustainable approach to trees

There are 21,000 trees across the Australian portfolio. We have a maintenance plan in place which helps maintain optimum health and longevity. Soon, when our trees are trimmed, the branches will be broken down into mulch, soil or compost and then reused. A green waste recycling pilot project on several Goodman properties in Sydney processed an estimated 500 cubic metres of green waste in just six months. This project will soon roll out nationally.

Source: Esri and Michael Bauer Research

Goodman Group Sustainability Report 2022

People and culture

Our people are our greatest asset. Their determination and innovation combined with the strong relationships they build with our customers and partners, push our business forward. That’s why we work hard to create a culture that enables our people to realise their ambitions. It’s integral to who we are and what we stand for. We encourage innovation and we offer skills development and challenging work opportunities that advance people’s careers.

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Team approach

Goodman people work as a collaborative and engaged team. We strongly believe that using a team-based approach, where our people, customers, partners and contractors work together, is the way we can all perform at our best.

To support and retain our people and attract new talent, we foster a diverse and inclusive culture. Our people participate in the Group’s long term incentive scheme, in part to build collective responsibility, and to align with the interests of our stakeholders.

Goodman actively supports a strong culture in many ways. To keep our people healthy, connected and motivated, we provide regionally specific online and interactive health and wellbeing initiatives. These initiatives have become even more important during the pandemic. Incorporating health and wellbeing features into our properties for our customers is also a focus. These include facilities like recreational and fitness facilities, break-out spaces and garden areas.

We focus on our safety standards and monitoring to prioritise the safety of each team member and contractor. And we are seeking to protect human rights by mitigating the risk of modern slavery in our global supply chains, and continuously improving our business ethics and processes.

Goodman Group Sustainability Report 2022

People and culture

We operate a hybrid working model globally. Our commitment to flexibility allowed us to adapt and successfully work through lockdowns, travel restrictions and home schooling, while continuing to meet our customers’ needs during the pandemic.

Our remuneration strategy is designed to attract the best talent and retain our people. We invest in retaining our people through our unique long-term employee equity plan. This gives all our people a material stake in the business.

We value and welcome diversity. We recognise the need to increase our female senior management representation and to reach our target of 40% by 2030. We are actively working towards this target through succession planning, promotions, recruitment and employee development. We are also providing this cohort with increased direct involvement with large customers and investors, and additional talent management opportunities.

Material drivers

+[ Promoting workplace safety and wellbeing for all ]
+[ Demonstrating Goodman’s values and promoting ] diversity, inclusiveness, and social equity
+[ Group and regional leadership]
+[ Influencing the sustainability practices ] of our value chain.

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Goodman Group Sustainability Report 2022

People and culture

Progress against targets

TARGET FY22 ACTIVITY

PROGRESS

Safe working In FY22, zero fatalities occurred on environment construction projects under the control of our Principal Contractors.

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This achievement was supported through the launch of a Return to Zero program for our contractors which increased operational monitoring of safety standards.

In FY22, zero fatalities occurred on construction projects under the control of our Principal Contractors. This achievement was supported through the launch of a Return to Zero
program for our contractors which increased operational monitoring of	Safety policy		Safety training
safety standards.				On track
We also developed specifcations for
minimum contractual safety standards
on construction projects for Principal
Contractors.
Development of our Sustainable
Sourcing Framework, including updates
to our Supplier Code of Conduct. These
commitments will assist us in protecting	2019	2022 2021		2025
human rights within our supply chain and to mitigate the risk of modern slavery. A comprehensive modern slavery		Modern Slavery Statement	Sustainable sourcing framework	On track

Improve supply Development of our Sustainable chain business Sourcing Framework, including updates ethics to our Supplier Code of Conduct. These commitments will assist us in protecting human rights within our supply chain and to mitigate the risk of modern slavery. A comprehensive modern slavery training module was launched in FY22.

Gender ratio of We reached a gender ratio of 44% female 50/50, with 40% and 56% male. female senior Female Target Male executives by 2030 Goodman maintained 30% female senior executives. Gender ratio 50/50 2022 2030 40% female senior executives 30% 40% 100% of employees As of September 2022, 98% of assessed as employees had been rated as at least demonstrating ‘demonstrate’ or above of the Group’s Goodman’s values values. 0 Achieved 98% Demonstrate Goodman values

Goodman Group Sustainability Report 2022

People and culture

LIVING

OUR VALUES

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Sustainability, innovation, determination and integrity – Goodman’s values are integral to the success of the business. They shape our culture and focus our teams on delivering high-quality service, and innovative property and investment solutions over the long term. As part of the annual performance review process, our people are assessed on their demonstration of the Goodman values.

Goodman Group Sustainability Report 2022

People and culture

SUPPORTING OUR PEOPLE

Our wellbeing offering evolved during the year to respond to the ongoing nature of the pandemic. Our people in some regions took part in anonymous mental health surveys with the results helping our managers better understand the indicators of mental health in our people, and how to support their team members across the globe.

We encouraged our managers to have more regular check-ins with their team members to better support them throughout the pandemic and beyond. We continued to provide counselling for our people and their families, as well as tailored online educational support on a range of health and wellbeing issues. In some regions these programs were run by an expert external provider.

Goodman continues to offer flexibility and remote working. We are strong supporters of flexible work and the benefits it brings. Plus, our people like the flexibility and we want to support them in this. Now, our people typically work in a hybrid arrangement depending on their commitments. Both options have benefits for our people, customers, relationships and our culture.

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Goodman’s office at The Hayesbery, Sydney, Australia.
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People frst design

Our offices are designed for collaboration, health, wellbeing, connectivity and sustainability. We provide a mix of quiet spaces and areas to connect and collaborate –all in contemporary and sustainable surroundings.

Where possible, we design our workspaces to maximise natural light and fresh air. We use natural non-toxic materials and incorporate plants and trees to lower stress and improve mental clarity. Several of our offices have yoga rooms, gyms, multi-faith rooms and end-of-trip facilities.

Our workplaces also allow for limited physical contact, which helps prevent the spread of illness. We have touchless entry to our buildings, and our people use their own technology equipment. There is also plenty Connected wellbeing of physical space between people in the office.

Connected wellbeing

Flexibility allowed Goodman to adapt and successfully work through lockdowns, travel restrictions and home schooling, while continuing to be productive and meet our customers’ changing needs in a time of global disruption.

Where the pandemic impacted our people’s work and home lives, we offered region-specific online and interactive health and wellbeing initiatives to keep them physically and mentally healthy, connected to their colleagues and motivated. These included virtual fitness sessions, karaoke competitions, walking groups, cooking competitions, book clubs, guided meditations, wellness talks, and other initiatives.

In China and Hong Kong, we provided additional support for our people during the extended lockdowns through tutoring services for children who were unable to attend school, and other opportunities for regular communication with management and colleagues across their region.

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Goodman Group Sustainability Report 2022

People and culture

HUMAN

CAPITAL MANAGEMENT

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The value of diversity

At Goodman, we are committed to enhancing diversity and encouraging inclusion. We each bring unique perspectives, experiences, knowledge, backgrounds and thinking. Diverse teams foster a rich mix of differing views and ideas, all of which challenge our thinking and result in better decision making and business performance.

Diversity allows our people to know they genuinely belong and feel included. Diversity of thought is greatly valued at Goodman. Our success depends on it.

Our diversity policy supports:

+[ Workplaces free of harassment or unlawful discrimination]
+[ Recruitment and promotion based on merit]
+[ Equal access to personal development, management skills and career ] opportunities
+[ Cultural differences]
+[ The needs of individuals with family and carer responsibilities]
+[ Customers’ diversity and their expectations]
+[ An inclusive work environment where ideas and opinions are shared]
+[ A range of philanthropic channels for community contributions]
+[Increased career advancement opportunities for women.]

Goodman Group Sustainability Report 2022

People and culture

In FY22, Goodman undertook several diversity and inclusion initiatives to enhance our workplaces. These included:

+[ Conducted training and other initiatives in various regions ] on inclusion and diversity, as well as specific inclusive leadership training
+[ As part of the Group’s support of Our Watch, Goodman ] worked closely with the organisation to establish the Our Watch Institute (for more information see page 94). Starting in FY23, gender equality training will be rolled out to all Goodman employees, commencing in Australia . This training is designed to reinforce the message within Goodman about the importance of gender equality in the wider community, recognising it as the primary cause of violence against women. Participant feedback will help assist Our Watch refine training content in preparation for rollout across other workplaces. As part of the support from Goodman, valuable communication and marketing advice will help to implement the program with other corporates, and ultimately the wider community
+[ Important corporate messages translated into local ] languages when needed to improve understanding and demonstrate to our people that the Group is cognisant of language differences
+[ Parental leave entitlements were reviewed and ] increased in the UK, New Zealand and Australia. We also introduced online tools, such as Circle In and Enboarder in Australia and NZ, to assist in the transition to and from parental leave and improve communication with our people on parental leave
+[ A flexible work policy was introduced in Japan, ] an employment market that traditionally has not embraced flexible work to the same extent as some others
+[ In Continental Europe and New Zealand, we ] implemented an improved (voluntary) approach to capture workplace demographics, in order to assist with planning and target setting
+[ In support of FY22 International Women’s Day (IWD), ] various offices around the world participated in activities to enhance gender equality
The Goodman Hong Kong business undertook the Women Build 2022 project in conjunction with Habitat for Humanity Hong Kong (for more information see page 94)
Goodman NZ recognised IWD by launching an updated parental leave policy. The enhancements support the Group’s commitment to reduce bias and improve representation across genders through providing practical and financial support to parents and caregivers. Also, employees attended an IWD “Break The Bias” webinar hosted by the Property Council NZ
Also in NZ, a refreshed diversity and inclusion survey was launched which for the first time included a question on identifying as part of the LGBTQI+ community. The section of the Circle In platform was also utilised by an employee (who is part of the LGBTQI+ community) who shared their parenting story with the Goodman and wider Circle In community
In Australia, Patty Kinnersely, CEO of Our Watch, presented at a Goodman staff web conference to outline the importance of gender equality and addressed the key features of the training program
+[ A steering group was established in Australia to support ] the development of a comprehensive and meaningful Diversity and Inclusion strategy
+[ Also in Australia, the development of a Reconciliation ] Action Plan is underway to drive awareness and reconciliation with First Nations peoples. (See Advancing reconciliation with Australia’s First Nations people section below for more detail)
+[ We continue to support the Property Council of ] Australia’s 500 Women in Property Mentoring Program. Goodman’s Australian business also sponsors the Women in Industrial Program, which promotes female participation in the industrial property sector
+[ Within the Australian business, internal group mentoring ] is available to some of our people by senior leaders.

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

WE EACH BRING UNIQUE
PERSPECTIVES, EXPERIENCES,
KNOWLEDGE, BACKGROUNDS
AND THINKING.
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Goodman Group Sustainability Report 2022

People and culture

Developing leadership

Building an inclusive workplace at Goodman starts with our leaders. They lead by example when creating the culture of our business.

In Continental Europe, our management and reporting structure continue to evolve to strongly encourage teamwork. In Australia, we facilitated leadership workshops that focused on the value of inclusion.

This is important long-term work. We know by leveraging diverse thinking and enriching our capabilities, we can create a positive work and team culture, improve collaboration and positively impact the performance of our global business. The result of this work creates a culture where our people realise their potential and are empowered to pursue leadership.

We have a global workforce of approximately 1,000 people and a relatively flat organisational structure. So when evaluating if an employee should be categorised as a senior executive, we consider:

+[ Proximity of the employee on the Group’s organisational ] chart to the Group CEO or regional CEOs
+[ Scope of the role]
+[ Potential commercial impact]
+[ Accountability for risk factors]
+[ Total remuneration level.]

Encouraging leadership styles that recognise the importance of inclusion, supports our aim of creating a more diverse workplace by lifting the representation of females in leadership roles. We are committed to 40% of females in the senior executive category by 2030. In FY22, this was maintained at 30% through targeted recruitment, talent reviews and promotions. We also continued to upskill senior female employees, where opportunities become available, by giving them more responsibility and exposure to major customers, investors or corporate activity.

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The (good) life

To foster engagement, promote a greater work-life balance and enhance productivity, Goodman provides a range of activities for our people around the world.

In Australia, Goodman’s health and wellbeing program, the (good) life, supports our people through six pillars:

+[the (social) life ]
+[the (healthy) life]
+[the (balanced) life]
+[the (energetic) life]
+[the (informed) life]
+[the (beneficial) life]

In the last few years we have expanded this program so that our people can take part while working from home with a focus on exercise and education.

Goodman Group Sustainability Report 2022

People and culture

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People resources and skills

Goodman is proactive about identifying and managing human capital risks. As our business evolves, this risk management approach includes identifying potential gaps in available human resources. A recent example includes the recruitment of specialist personnel with experience managing Life Cycle Carbon Assessments.

Goodman operates with global mandates to provide technical expertise and alignment across the Group. For example, the Group Technical Director, Group Insurance Manager and Group Safety Manager engage with our regional teams. Goodman’s Group Head of HR reports to the Remuneration Committee on any material employee relations and HR issues, along with gender equity and related matters. The Nominations Committee oversees the Group’s succession plan at senior levels.

Building capacity

Online learning provides an effective platform for learning and training for Goodman’s global teams. However, we also consider it a positive sign that there was a return to more face-to-face learning for key technical requirements in FY22.

Goodman’s Continental Europe business ran the Goodman Academy again this year, where internal subject matter experts present to peers on technical aspects of their roles. These sessions provide employees the opportunity to present and engage within the business.

These types of peer-to-peer training sessions are highly valued by Goodman, and we run similar programs in other regions, such as the ‘In Focus’ program in Australia.

This year we also launched a global communications training program, facilitated by an external writing expert. The program has been rolled out in Australia, New Zealand, Continental Europe and North America – with remaining regions to be trained in FY23.

Goodman’s people can also access a comprehensive catalogue of LinkedIn Learning content via the Group’s global learning system, Aspire. Aspire is the gateway to a range of professional development and skills training relating to compliance, technical and management skills. It’s the backbone of Goodman’s human capital skills offerings. All content is kept current and it remains a popular method of self-paced learning among our employees.

During FY22, 69% of Goodman’s global workforce accessed LinkedIn learning to view 9,565 hours of training across both internal and external courses. The most popular online modules were communication and negotiation, personal coaching, and leadership.

Goodman’s Greater China team has developed its own competency framework designed to assist employees identify what skills and experiences they require to progress their development and learning pathways.

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Goodman Group Sustainability Report 2022

People and culture

Managing our team

Goodman’s human resources team manages our human capital including the global performance management process in place for our workforce.

We do background checks on new employees where relevant and ongoing checks on employees where required by regulatory bodies. Our Code of Conduct covers all employees and regular governance compliance training takes place to boost awareness, among employees, of their obligations.

We look at human capital metrics including gender representation, gender pay equity, remuneration, diversity, learning, turnover and absenteeism. Voluntary turnover across Goodman Group is around 6.4% per annum.

Across the Group, we prioritise equal fixed remuneration for employees who do similar work within the same region. Differences in total remuneration, including incentives, are based on performance.

These performance-based incentives are a large portion of our remuneration. All employees globally participate in our LTIP and it is a critical element of the Group’s remuneration philosophy. The structure and long-term nature of the LTIP is fundamental in generating the type of culture that we want for long-term success. It creates significant long-term alignment between the sustained financial and operational outcomes of the business delivered and the returns to securityholders.

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Career direction

It is important to Goodman that we recruit, engage, develop and retain the best people in the market.

We focus on providing development opportunities for our people throughout their career with Goodman. This includes setting clear performance expectations from the outset. We induct new employees with face-to-face and e-learning modules during their early months at Goodman.

Crucial to the development of our people is monitoring performance and providing competitive remuneration and benefits. To develop careers, we offer learning and development opportunities that help build new and existing skills. We prioritise talent and use succession planning to make sure we build a strong workforce and leadership team for the future.

Employee development plans are reviewed each year with managers. These focus on career aspirations, goals, and potential training. Our people are offered incentives to study during their career at Goodman. This includes study support schemes, which in some regions includes an allowance of up to AU$8,000.

The annual performance review and development process helps identify and plan for role progression and identify what specialised management training is required. This training includes peer-to-peer engagement with Goodman’s senior leadership team and management committees, which helps identify succession opportunities and creates a diverse leadership team for the longer term.

Goodman Group Sustainability Report 2022

People and culture

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Sustainable movement

Our holistic approach to sustainability not only focuses on Goodman’s business but also supports sustainability actions for our people.

To help our people access more sustainable transport we continued offering electric vehicle (EV) incentives. Our people who purchase an EV are offered a financial subsidy by the Group, with the popularity of this scheme gaining momentum each year.

We are also transitioning Goodman’s global vehicle fleet to electric, with programs in place in Australia, Continental Europe and New Zealand to upgrade their fleets. In addition, Goodman’s developments globally increasingly feature EV bays with battery charging stations.

Goodman Group Sustainability Report 2022

People and culture

ADVANCING RECONCILIATION WITH AUSTRALIA’S FIRST NATION’S PEOPLE

Refect: Our Reconciliation Action Plan

Goodman sees it as our responsibility to listen to, learn from and amplify First Nations voices where we work and live in Australia. We are at the beginning of realising our ambitions in this space. Our focus this year has been on moving through the Reflect stage of our Reconciliation Action Plan (RAP). A RAP is designed to provide tangible and substantive benefits for Aboriginal and Torres Strait Islander peoples around the core pillars of relationships, respect and opportunities. Like anything we do, it’s important that our first RAP is authentic and ambitious – we’re determined to make a difference.

Relationships

We are actively engaging with Indigenous organisations to assist us with our Reflect RAP, including cultural immersion and building relationships with Local Land Councils in the areas where we operate.

To understand the right training and immersion opportunities to offer, we surveyed our people and offered senior leadership briefings on reconciliation and the RAP process. Both will enable our people to be a part of our engagement with First Nations peoples.

Respect

Acknowledging Country at Goodman’s official investor events such as the AGM and results presentations is an important mark of respect. For new developments, we conduct a Welcome to Country and smoking ceremony officiated by Local Land Councils.

During NAIDOC Week and National Reconciliation Week we worked to further facilitate greater understanding and respect through cultural immersions, communication, Indigenous movie screenings and food workshops.

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Goodman Group Sustainability Report 2022

People and culture

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Smoking Ceremony to mark the start of construction at Proximity@Botany, Sydney, Australia.
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Opportunities

Goodman is engaging with Indigenous suppliers where possible and seeking opportunities to employ indigenous people within our Australian team.

Through the Goodman Foundation we are committed to education support programs like the Clontarf Foundation and other culturally safe initiatives as with the Stepping Stone House Bawaga program.

More information about our broad indigenous support can be found in the Goodman Foundation section (see page 94).

Goodman Group Sustainability Report 2022

People and culture

NAIDOC WEEK

NAIDOC Week is a time to celebrate the history, culture and achievements of Aboriginal and Torres Strait Islander peoples. It seemed the right moment to conduct a Welcome to Country and smoking ceremony at Goodman’s flagship workspace, The Hayesbery in Sydney’s Rosebery. Uncle Allen Madden from the Metro Local Aboriginal Land Council conducted the Welcome on behalf of the Gadigal people.

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Smoking Ceremony and Welcome to Country, The Hayesbery, Sydney, Australia.
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“ABORIGINAL CULTURE IS EASY TO UNDERSTAND. IT’S ALL ABOUT SHARING AND CARING, AND RESPECT. THAT’S SOMETHING THAT’S ALWAYS IN YOUR HEART AND MIND.”

Uncle Allen Madden

Goodman Group Sustainability Report 2022

People and culture

SYSTEMS

FOR SAFETY

Goodman is a global business and our commitment to safety is consistent across regions. Our global safety framework helps us implement our approach to safety management for construction and maintenance activities in our portfolio.

Crossways Commercial Park, London, United Kingdom.

The major risks for life safety, and a key area of our focus, are in the development and construction of our properties on sites under control and supervision of Principal Contractors.

Goodman is committed to positively influencing high safety standards in our contracted workforce. We also actively monitor safety standards to minimise incidents and achieve our objective of zero fatal accidents in our supply chain.

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Major safety initiatives

During FY22 our priority was achieving zero fatal accidents on construction projects controlled by Principal Contractors. We launched a ‘Return to Zero’ program to directly influence contractors and increase operational monitoring of safety standards.

We developed specifications for minimum contractual safety standards on construction projects for Principal Contractors. The standards outline our expectations for contractors as they provide control measures for high-risk activities. During FY22 we proactively monitored the implementation of these contractual safety standards during construction.

During our ‘Return to Zero’ program, we conducted frequent safety inspections and issued non-conformance reports and stop work orders to Principal Contractors. This not only enforced our standards but also served to influence contractor safety standards overall.

We also developed a program to provide increased powers for our site safety representatives and initiated penalties for contractors deemed to be non-compliant with Goodman expectations. Our combined approach helped us achieve zero fatal accidents on contractor-controlled projects this year.

Goodman Group Sustainability Report 2022

People and culture

CUSTOMER WELLBEING

Our commitment to sustainable properties means we develop and own buildings that are great places to work in and support the health and wellbeing needs of our customers.

We believe that our commitment to providing healthy, sustainable buildings makes it easier for our customers to attract their own workforce to our properties. In turn, our business benefits from high occupancy levels and sustained rental growth.

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Goodman Group Sustainability Report 2022

People and culture

- WELL HEALTH SAFETY RATING FOR 10 HONG KONG PROPERTIES

In Hong Kong, urban density means our properties are central hubs and home to bigger workforces than many other locations.

The globally-recognised WELL Health-Safety Rating, from the International WELL Building Institute (IWBI), guides, validates and recognises the efforts of building owners and operators on critical health and safety issues. This year Goodman submitted 10 of our Hong Kong properties for the rating. We became Hong Kong’s first logistics developer in our asset class to achieve it.

The WELL rating assesses more than 20 features across five core areas:

+[Cleaning and sanitisation procedures]
+[Emergency preparedness programs]
+[Health service resources]
+[Air and water quality management]
+[Stakeholder engagement and communication.]

Health, safety and wellbeing is a priority at Goodman. Now, when customers, suppliers or our team walk into our Hong Kong properties and see the WELL certification logo, they can be reassured this remains a key commitment.

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Goodman Yuen Long Logistics Centre, Hong Kong SAR, China.
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Corporate performance

Goodman Group Sustainability Report 2022

Corporate performance

We are proactive about ESG at Goodman. It is a people-focused approach that achieves positive outcomes for our business, people, stakeholders and the communities where we operate, in the long term.

Goodman’s Boards are committed to managing ESG matters with the highest priority. The Boards monitor progress towards our 2030 Sustainability Strategy and targets. They recently established a Sustainability and Innovation Committee to support the management team. The new Committee, along with Goodman’s Risk and Compliance Committee, will enhance the Board’s visibility and oversight of our ESG initiatives.

ESG has been further embedded into our business recently through our remuneration structure. Meeting environmental and sustainability targets is now a further performance assessment for vesting of our LTIs linked to operational outcomes, and is measurable and disclosed as part of our remuneration structure. It means our people have a long-term financial interest in the environmental and sustainability performance of our business.

Maintaining sustainable sources of capital requires demonstratable governance of ESG priorities. During the year, Goodman established a Sustainability Linked Bond Framework. This provides a structure to link financing with our sustainability strategy and the achievement of our sustainability goals.

Our reputation is important so we act in line with our Code of Conduct (the Code) and comprehensive suite of governance policies, and with integrity wherever we do business. Together, these documents set the standard of professional and ethical behaviour expected from all of those who represent us. They are available on Goodman’s global website. The Code was updated during the year to better align with our revised values.

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Crossways Commercial Park, Greater London, UK.
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Effective and regular disclosure of our ESG performance with stakeholders helps maintain trust in Goodman’s governance and leadership teams. We participate in several ESG ratings and benchmarks that our investment partners value, and we use these as tools to identify where we can improve. The benchmarks/ratings we participate in are set to grow in FY23. The list currently includes:

+[Global Real Estate Sustainability Benchmark (GRESB)]
+[MSCI ESG Index]
+[Sustainalytics benchmark.]

In 2022, 10 Goodman partnerships participated in the GRESB, with results due over the coming months. Last year, we achieved excellent results including our Japanese Core Partnership being awarded Sector Leader in the industrial distribution warehouse category for the fourth consecutive year.

Corporate performance

Goodman Group Sustainability Report 2022

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Material drivers

+[ Sustainable operations and results ]
+[Effective disclosures of ESG performance ]
+[ Investing responsibly with defined governance and ] sustainable capital structures
+[ Protecting human rights and sourcing sustainably]
+[ Supporting the community through the Goodman ] Foundation

Progress against targets

TARGET	TARGET	PROGRESS
Retain investment		Continued to meet fnancial targets to
grade credit rating		underpin capital sources and retain credit
		rating. Maintained credit rating at BBB+ (S&P)	2019			2022
		and Baa1 (Moody’s).
			Maintained credit rating at BBB+			Achieved
			(S&P) and Baa1 (Moody’s)
Adopt the TCFD		Adopted Task Force on Climate-related
guidelines for climate		Financial Disclosures (TCFD) guidelines in	2019	2020		2022
risk	assessment and	2020 and updated in 2022.
disclosure by 2022					Achieved in 2020
					Maintained in 2022
$50 million in social		The Goodman Foundation contributed
investment by the		more than $10.6 million in cash, plus another
Goodman Foundation		$1 million in staf fundraising and in-kind
by 2030		contributions. This takes our total investment
		to $37.3 million since our 2030 sustainability strategy came into efect in 2019.	2019		2022	2030
		302 Goodman people contributed 2,196	$M		37.3	50
		volunteering hours to our community eforts.	Goodman Foundation social investment			On track

Corporate performance

Goodman Group Sustainability Report 2022

Governance of ESG issues

At Goodman, we are committed to the highest standards of corporate governance and recognise that an effective corporate governance framework is critical to the long-term performance of the business. This extends to governance relating to ESG matters, which we believe is essential to maximise long-term sustainable value for securityholders.

The Sustainability and Innovation Committee will focus on Goodman’s sustainability strategy, responding to material drivers such as climate risk, as well as our performance on our ESG targets. The Committee will also oversee and monitor Goodman’s investment in innovation and review the impact of innovation and technological developments on the business.

Goodman’s team will provide quarterly updates to the Sustainability and Innovation Committee as it does for the Risk and Compliance Committee. These committees provide strategic insights to Goodman’s Boards.

We believe the overall long-term sustainability of our business requires long-term strategic operational objectives. These must sit alongside a remuneration system which builds a culture of ownership for our employees as we focus performance on long-term success rather than short-term gains.

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Goodman’s remuneration structure is integrated into the business to encourage sustainable financial results alongside improvement in all areas of ESG over time. This includes sustainability targets which are incorporated into the performance reviews and remuneration structure for Goodman’s management teams.

In particular, for LTI awards made since 2021 the Board has discretion to apply a reduction to the number of performance rights that vest where it considers that management’s performance is not sufficient against sustainability targets. For the awards made in September 2022, these targets will include:

+[ Renewable energy ]
Increasing our global renewable energy usage to include 70% of electricity generated from renewable sources (including the allocation of renewable energy certificates) as we progress to our long-term target of 100% renewable energy use by 2025
+[ Solar Power ]
65MW of new solar PV installations or commitments (on-site and offsite sources) as we progress to our 2025 400MW target*
+[ Carbon ]
Maintaining carbon-neutral operations (within our direct operational control) by reducing emissions and using verified carbon offsets
Embodied carbon emissions of new developments are calculated and considered in investment papers. This will be done on a globally consistent basis for carbon neutral developments
A reduction in the Group’s Scope 1 and 2 GHG emissions by 2030, against 2021 baseline, in line with 1.5°C Paris Agreement pathway as validated by SBTi (this is a new target for FY22)
+[ TCFD ]
Maintaining and updating our climate disclosures in line with the TCFD guidelines
+[ Occupancy ]
Maintaining a >95% occupancy rate.

Inclusion of these assessments provides real financial impact to our people if they materially underperform on these long-term objectives.

*Subject to government, local authority and network operator approvals, and meeting community or social issues.

Corporate performance

Goodman Group Sustainability Report 2022

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Code of conduct

At Goodman we believe in conducting ourselves and our business with integrity. Maintaining our reputation is critical.

These beliefs underly our Code of Conduct (the Code), which clearly sets out the standards of professional and ethical behaviour expected from those who represent us.

Goodman updated its Code during the year to better align with our values. The updated Code is more comprehensive and links directly to our corporate governance policies. Our corporate governance policies were also reviewed during the year.

The Code is endorsed by Goodman’s Boards and extends to anyone who works for Goodman, including non-executive directors (Directors) as well as employees and contractors (team members). It also informs how we interact with everyone we encounter at work, including customers, suppliers, partners, regulators and securityholders.

At Goodman, we have zero tolerance for any improper or unethical conduct, including bribery and corruption. All team members complete ethical behaviour training, which includes bullying, harassment, anti-bribery and corruption.

The Code has nine guiding principles to preserve Goodman’s reputation of doing the right thing by our customers and team members. The 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
+[ Support our sustainability strategy and targets]
+[ Manage conflicts of interest]
+[ Strive to be a great team member.]

These principles operate alongside Goodman’s values, policies and procedures and everyone is expected to follow them when representing Goodman.

View our full Code of Conduct View our Governance Policies and Charters View Goodman’s Corporate Governance Statement

Corporate performance

Goodman Group Sustainability Report 2022

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Human rights and modern slavery

Goodman supports the protection of human rights, and equity and fairness within our supply chains. We acknowledge that modern slavery is a global risk and that managing this risk is an ongoing responsibility. Modern Slavery is a serious form of exploitation present in global supply chains, that can take place through labour rights abuses including forced labour, debt bondage and child labour. It can come about through the use of coercion, threats or deception to exploit and deprive people of their freedoms, rights and access to safe and fairly compensated employment.

Modern slavery spans industries, but an estimated 18% of modern slavery victims are in the property and construction industry. Additionally, 22% of forced labour occurs in the manufacture and production of raw materials – key suppliers to the property and construction industry.

Goodman is not immune to the risk of modern slavery. The risk of modern slavery is most likely to be present within our supply chain which includes over 8,000 suppliers (as opposed to our direct employees where we have strong controls in place).

Our Sustainable Sourcing Framework and our robust, risk-based approach to modern slavery both enable us to respond better to these risks, and work with suppliers to mitigate them. We have also committed to developing and implementing global operational and supplier standards and guidance on modern slavery to assist our teams involved in procurement in FY23. Together, these actions represent a strong signal about business ethics that will spread along our operations and through our supply chain.

View our Modern Slavery Statement

Corporate performance

Goodman Group Sustainability Report 2022

Sustainable sourcing

This year Goodman developed its Sustainable Sourcing Framework. The Framework provides direction to achieve Goodman’s overarching sourcing and supply chain objectives globally. We recognise we have an opportunity to influence the sustainability outcomes of a value chain that consists of over 8,000 suppliers. The Framework will help us to protect human rights within our supply chain and to mitigate the risk of modern slavery, as well as respond to the social, environment and governance targets in our 2030 sustainability strategy.

We have developed a roadmap to successfully implement the Framework from FY23.

The first step of the roadmap is engaging with our internal and external stakeholders to build awareness of our sourcing and supply chain objectives and expectations. Internal working groups have been established to support this task, and to help with implementation of the Framework in each of the regions where we operate.

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Goodman Group 2030 Sustainability Strategy

Sustainable Property People and Culture Corporate Performance

Sustainable Sourcing Framework

Modern Slavery, Business Ethics and Other Social Procurement

A framework to achieve Goodman’s sourcing and supply chain objectives that support our sustainability goals

Commitments and principles Procurement Policies that shape our procurement practices, including our Global Procurement Principles, Code Local procurement of Conduct, Workplace Safety policies adapted from and Modern Slavery policies our global principles

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Goodman recognises the impact of procured products and services on the environment and people. As a result, this year we expanded our procurement policies to support the new Framework – they now prioritise environmental, social and governance objectives.

We aim to adopt procurement strategies which avoid unnecessary consumption and, where possible, benefit society, while considering environmental impact and lifecycle.

We anticipate our new Framework and procurement decision making will see us increase the number of our suppliers that prioritise social, environmental and governance factors. We look forward to working with like-minded suppliers.

We recognise that our suppliers operate in a variety of legal frameworks and cultural environments around the world. However, we believe that engaging consistently with our supply chain on our Framework will lead to broader positive change in our sector.

Corporate performance

Goodman Group Sustainability Report 2022

ESG benchmarking

ESG performance and rating benchmarks allow Goodman to measure and communicate our ESG efforts to our stakeholders. They also allow us to assess opportunities for improvement. We participate in several global benchmarking programs, including the Global Real Estate Sustainability Benchmark (GRESB), the MSCI ESG Index, and the Sustainalytics benchmark.

One of the leaders in sustainability assessments in real estate is GRESB, which helps our stakeholders contextualise our sustainability performance. Over the decade Goodman has been a participant in GRESB, we have continually improved our scores and increased our number of participating entities. This year, 10 of our partnerships made submissions, with the results due for release late 2022.

To date Goodman has achieved some excellent GRESB results within our peer groups. While 2022 results are due later this year, 2021 highlights include:

+[ Goodman Group maintained its ‘A’ rating for its public ESG disclosure]
+[ Goodman Japan Core Partnership achieved 5 Stars ] and Sector Leader for the fourth consecutive year
+[ Goodman Australia Partnership achieved joint overall ] Regional Sector Leader
+[ Goodman UK Partnership was ranked First in the ] Development benchmark.

We were also active in other benchmarks this year. In March 2022, Goodman received an ESG Risk Rating of 9.5 from Sustainalytics, where we were assessed as being at ‘Negligible’ risk of experiencing material financial impacts from ESG factors – a strong result.

The Group was also upgraded by MSCI to ‘AA’ from ‘A’, reflecting our robust corporate governance and anti-corruption controls.

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Crossways Commercial Park, Greater London, UK.
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Investment grade credit rating

Maintaining a sustainable and strong balance sheet with available liquidity and ongoing access to capital is important to our business. Increasingly, our finance partners are valuing ESG performance and using their investments to influence sustainable outcomes like those which Goodman supports.

Goodman Group has longstanding relationships with some of the world’s largest pension and sovereign wealth groups through our managed Partnerships. Our approach to sustainability, and the targets we set ourselves, are one way we can build trust with our stakeholders, including our investment partners.

Many of our investment partners operate with their own dynamic ESG policies. As a result, these relationships have supported Goodman’s investment teams to adopt sustainability principles in our own development and management activities. This has contributed to the sustained improvement in Goodman’s external ESG benchmarks.

We measure our financial sustainability and strength through our credit ratings of BBB+ (S&P) and Baa1 (Moody’s). These ratings reflect our sustainable operations and results, capital stability and approach to responsible investments.

During the year, Goodman developed its Sustainability Linked Bond Framework (framework). The framework outlines how Goodman Group can link our financing strategy with our sustainability strategy, helping to deliver on our sustainability goals. Following the development of the framework, Goodman closed its first US$500 million Sustainability Linked Bond into the US144A/Reg S market.

Goodman Foundation

Goodman Group Sustainability Report 2022

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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. We partner with like-minded charities and fund projects with clearly defined timelines and outcomes, to provide real support where it’s needed most. We are proud that across the world, our people are increasingly engaged with the Foundation and living our values through these efforts.

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The Clontarf Foundation, Tennant Creek Primary Academy in
Northern Territory.
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A changing world

With another year of global challenges, the Goodman Foundation continued to support our charity partners as the world changed around them yet again. While demand for charitable services soared, capacity to deliver or implement crucial fundraising activities remained compromised. Working in partnership with local charities who know best what their communities need, the Goodman Foundation helped them respond strategically and scale their impact as required.

We stayed generous and flexible, our doors open, whether we were responding to disasters like floods or helping those impacted by the war in the Ukraine. We also remained acutely aware of the new and pressing challenges COVID was creating for our communities.

This year, our support for the Indigenous community in Australia increased and we expect will continue to increase in coming years. We worked closely with existing partners to find ways to contribute to their Indigenous programs, such as Meals for the Mob through FareShare. Plus, we sought new partnerships to help us work towards the objectives of our Reconciliation Action Plan.

Across the year our support totalled $10.6 million in cash, plus another $1 million in staff fundraising and in-kind contributions. This takes our total investment to $37.3 million since our 2030 sustainability strategy came into effect in 2019.

Goodman Foundation

Goodman Group Sustainability Report 2022

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Thread Together, Sydney, Australia.
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How we help

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

Our focus is on providing real support where it’s needed most, so emergency response became a significant part of our program this year. By integrating our support into an organisation’s strategy, we enable growth and help them make a bigger impact.

Our support is offered as:

Cash grants

Funding for projects with defined outcomes (usually over one to three years) that enable charities to scale or make a bigger, tangible impact.

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.

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THE GOODMAN FOUNDATION
PARTNERS WITH CHARITIES IN
THREE KEY AREAS: CHILDREN AND
YOUTH, COMMUNITY AND COMMUNITY
HEALTH, AND FOOD/PRODUCT RESCUE
AND THE ENVIRONMENT.
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Goodman Foundation

Goodman Group Sustainability Report 2022

EMERGENCY RESPONSE

Disasters like floods, fires or droughts now happen on a size and frequency not seen in our lifetime. When they affect the work of our charity partners or the communities we operate in, we step up to help them respond at speed or at scale.

In emergency situations, like the humanitarian crisis in Ukraine, providing support is just the right thing to do, despite us not having a presence in that market. Here, we turn to local experts to find ways to assist.

In either situation, our people play an important role – mainly by raising funds.

Ukraine humanitarian crisis

Responding to the humanitarian crisis in Ukraine and surrounding countries, the Foundation committed €1 million to support emergency response and ongoing aid.

Nearly two-thirds of Ukraine’s children are now displaced. For those crossing the border to safety, many find sanctuary within a Blue Dot Hub – safe spaces along migration routes for children and families.

Blue Dot Hubs provide critical information, emergency supplies, medical and psychological first aid, logistics and supplies for the onward journey, child-friendly spaces and activities, and more. Part of Goodman’s larger donation to UNICEF has been used to support the initial set-up and running costs of a Blue Dot Hub.

This year the Goodman team also wanted to support the people of Ukraine. Our fundraising efforts boosted Goodman’s total contribution towards the Blue Dot Hub initiative to more than $400,000.

As it became obvious that rapid medical relief was required on the ground, the Goodman team began discussions with one of our European Foundation partners, Universitair Ziekenhuis Brussel (UZ Brussel). We worked together to send medicine and medical equipment to hospitals in Ukraine with the assistance of local non-government organisations (NGOs).

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Goodman Foundation

Goodman Group Sustainability Report 2022

Goodman funded a convoy of minivans loaded with medical supplies, including anaesthesia for surgeries. The vans made the 1,800-kilometre trip from Belgium to the small town of Medyka on the PolandUkraine border.

Once supplies were delivered, transport was offered to Ukrainians wishing to depart for safe haven in Brussels. In April, 19 refugees, mostly families of women and children, took up this offer to travel to safety.

The program has adapted as needs have been revealed. For example, when Goodman learned many of the children had no means of communication, we stepped in to provide phones or laptops.

We have also allocated funding to UZ Brussel for future dedicated Ukrainian support, with a focus on settlement needs for the Ukrainian refugees in Belgium.

The impact of this humanitarian crisis will be felt for some time. That’s why the Foundation is currently working to identify mediumterm projects that will provide tangible and sustainable benefits for the people of Ukraine, now and into the future.

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Perinatal Centre in Kharkiv, Ukraine, supported by UNICEF.
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RFS Helicopter donated by Goodman, assisting with flood rescue in NSW, Australia.

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Goodman Foundation

Goodman Group Sustainability Report 2022

Flood relief in Europe and Australia

As climate change takes hold around the world, major floods devastated two of our communities in the last year. In Europe and Australia, we saw tens of thousands of people struggle with the after-effects of these events. In Europe, major floods hit the Netherlands, Belgium and Germany in July 2021, killing hundreds and devastating local communities, households and the environment. The Red Cross stepped in to coordinate a response, and Goodman donated to support its efforts.

The European floods left the region’s rivers filled with debris and plastic. After the floods subsided, 32 of Goodman’s European team joined Belgian environmental organisation River Cleanup in its fight against plastic pollution. The team spent a day removing rubbish from local rivers, with Goodman covering the cost of all clean-up materials.

The Goodman Foundation also turned its attention to floods in Australia.

A state-of-the-art helicopter, donated to the NSW Rural Fire Service by Goodman in 2021, had its first deployment helping local authorities in the State’s west after flooding in Forbes.

The helicopter has done over 190 hours since coming into service in October 2021, participating in over 130 operations.

Goodman took further action when floods in Queensland, New South Wales and Central Australia left thousands without housing, income or clothing. We turned to our partners and their networks, asking how we could best help them provide the emergency response needed on the ground.

One of these partners, Good360 Australia, has been working hard throughout the Australian floods. Good360 connects the right goods to the right people at the right time during all stages of a disaster, supporting affected communities with the essential items they need. Our funding in previous years helped Good360 establish disaster recovery capabilities. Since February 2022, our funding has helped provide over 618,000 items to 194 flood affected communities.

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Goodman team assisting in River CleanUp following European floods.
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Goodman Foundation

Goodman Group Sustainability Report 2022

We are also a founding partner of Thread Together, which has been incredibly active after the Australian floods. Thread Together works with 1,000 brands and retailers nationally. It provides new clothing to those experiencing homelessness, escaping domestic violence, or surviving natural disasters.

Increased support from the Goodman Foundation helped Thread Together expand its operations into flood-affected communities. For many impacted community members, the clothes provided by Thread Together are the only outfits they now own.

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OZ Harvest food hampers prepared with help from Goodman.
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Continued response to COVID

In this second year of the COVID pandemic, Goodman increased support to charity partners in many parts of the world, including Australia, New Zealand, China, Hong Kong and Germany.

Lockdowns impacted livelihoods, education and mental health. When strict lockdowns were in place in Sydney, Australia, Goodman’s donation to Good360, Australia helped this matching charity get personal protection equipment into heavily impacted communities in South-west Sydney.

For social enterprise, the Bread and Butter Project café closures meant it lost most of its income from wholesale bread supply, so we made a significant donation to keep its refugee staff in work. We also provided two of our warehouses to OzHarvest, which gave its teams of volunteers space to build more than 300,000 food hampers. And we funded the supply of more than 800,000 meals to families in the most impacted Sydney suburbs before Christmas.

We found extended lockdowns were affecting the mental health of young people. With our support, Raise Foundation helped 280 at-risk youth in 18 schools, receive access to youth mentors – some of them were our own people.

Goodman Foundation

Goodman Group Sustainability Report 2022

COMMUNITY

AND

Charity organisations in the community and community health space support those living with a condition, illness or disability. Or their efforts help to create a more inclusive and equitable community.

Our Watch

Violence against women is a serious problem globally. In Australia, on average one woman a week is murdered by her current or former partner. Our Watch, an Australian organisation that works to prevent violence against women and their children, has undertaken evidencebased research which demonstrates gender inequality is at the heart of the problem for violence against women. Our Watch works to embed gender equality and prevent violence where Australians live, learn, work and socialise.

To expand the reach of its services and effect real change across the country, Our Watch is partnering with the Goodman Foundation to establish the Our Watch Institute. The Institute’s mission is to inspire and support Australians to end violence against women by doing their part to promote gender equality. Through training and practical tools, individuals and organisations will be equipped to lead prevention work in their own communities and spheres of influence.

Nationally there’s limited workplace training, expertise and evidence-based resources on preventing violence against women. There’s also limited understanding of the difference between workplace activities that prevent violence against women and those that respond to experiences of violence. The Institute will address these gaps by providing expert, tailored and trusted advice and support to advance gender equality in workplaces and inspire and support them to end violence against women.

The Goodman Foundation has committed $1 million towards the establishment and launch of the Institute and will commit a further $700,000 over the coming years to assist the operations. For the first phase in 2023, the Institute will focus on corporate Australia and workplaces. Over time we plan for the Institute to inspire and support organisations, workplaces, education institutions and sporting clubs to collectively put an end to domestic violence in Australia.

To learn more, watch: Let’s change the story: Violence against women in Australia – YouTube

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Habitat for Humanity, Hong Kong

On International Women’s Day this year, the Goodman Foundation announced a new partnership with Habitat for Humanity, Hong Kong, to support its Women Build 2022 campaign – supporting disadvantaged women and children’s groups in Hong Kong.

Goodman provided funding to renovate three facilities for disadvantaged women and children across two local NGOs on the Women Build project and utilised its team’s expertise to provide support in the planning and design.

Mother’s Choice provides a Child Care Home for children without families and pregnant teenagers who cannot be adequately cared for by their families. Goodman and Habitat renovated the outside areas at the Child Care Home, creating a safer and more welcoming environment for the people living there.

PathFinders operates a community centre and a shelter for some of Hong Kong’s 390,000 migrant domestic workers. Goodman funded an upgrade to the community centre to make space for additional facilities and provide a more functional, welcoming environment for existing counselling, education and healthcare services.

Funding also helped provide new furniture and fittings for the PathFinders shelter, which offers emergency and temporary accommodation for migrant domestic workers and their new-born babies.

Through this project, we hope to make a tangible difference in achieving gender equality and supporting women in need in Hong Kong.

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Kris Harvey, Goodman Greater China CEO, at the opening of three renovated
facilities provided to Habitat for Humanity.
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Sternebrücke Children’s Hopsice, Germany.
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Sternenbrücke Children’s Hospice, Germany

In the west of Hamburg, the Sternenbrücke Children’s Hospice cares for terminally ill children and their families. Since it opened in 2003, around 700 families have already been guests.

Families can stay at the children’s hospice not only in the final stages of the young people’s lives, but also for 28 days a year, allowing them to gain new strength and recuperate during this difficult time. Even after the child dies, the organisation continues to support their family through their grief.

Physical distancing requirements and the increased demand for Sternenbrücke’s service have led to new space constraints. As part of our participation in the 19th Hamburg Logistics Days in mid-May, Goodman donated funds towards construction of a winter garden. The conservatory will serve as both a dining and recreation room and will visually connect families with the beautiful Klövensteen forest area surrounding the hospice.

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Sport dans la Ville, France.
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Sport dans la Ville, France

For over 20 years, French charity Sport dans la Ville has built sports facilities in underprivileged urban areas. Sport is used to support change. It’s also a precursor to structured experiences like cultural exchanges, academic support and employment mentoring.

Goodman’s support this year will allow Sport dans la Ville to build a football pitch in Île Saint Denis and run twice-weekly free classes for at risk youth. In this disadvantaged district within the Parisian community, 26% of 16-to-25 year-olds are out of school and unemployed. Sport offers connection and a chance to build self-confidence and other soft skills.

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Sport dans la Ville, France.
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Paediatric Intensive Care Unit, UZ Brussel, Belgium
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UZ Brussel, Belgium

The staff of the paediatric intensive care unit (PICU) in UZ Brussel in Belgium, have a saying: “We want to care, not scare.”

Built in 1984, and treating 400 children a year, the unit is outdated in both size and function. 150 children a year are turned away for lack of space. There are other problems too. The tubes, machines, blank ceilings, tiny rooms and excessive noise aren’t child-friendly or welcoming.

That will change with the build of a new paediatric intensive care unit, funded in part by Goodman. By increasing to 10 beds, they will be able to treat up to 550 children a year. The unit will feature leading technology that helps alleviate the wires and beeps that can scare children and cause them distress. It also includes sofa beds for parents to stay with their children and much welcomed space to gather in. Video chat in each room means kids can stay in contact with friends and family while undergoing lifesaving care.

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CHILDREN

AND YOUTH

Charity organisations in the children and youth space help protect, nurture and support children or young people.

The Goodman Mais Education Program, Brazil

Brazil faces a raft of issues stemming from serious social inequality. As the country faced a huge burden from COVID, unemployment in the world’s eighth-largest economy soared. Now, inflation is the highest it’s been for 20 years.

Goodman’s team in Brazil understand the depth of the country’s challenges. They thought long and hard about how their contribution through the Goodman Foundation could make the most impact in their community.

The team decided to focus on education, given its capacity to improve so many aspects of a person’s life. In 2019, more than 36.5% of Brazilians under 19 didn’t finish high school, while in 2018 almost a third of the country’s 15-to 17-year-olds dropped out of school to earn income for their families.

Together with experts from the education sector and other partners, our project team worked through the pandemic to bring the Goodman Mais (‘More’) Education Program to life.

The bespoke program has been carefully designed to build skills and confidence and support its graduates to find jobs in the challenging Brazilian market.

Over a number of months, our team carefully selected 30 energised, motivated young adults from disadvantaged areas of Sao Paulo. These young people have become the Goodman Mais Education Program’s first cohort.

Program organisers remained flexible, providing support as unanticipated challenges arose: some students had no access to laptops – so were provided one. For others, the cost of bus travel to and from school was a barrier – monthly bus passes are now built into the program.

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Participants in the Goodman Mais program with the Goodman team,
São Paulo, Brazil.
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Formal studies in Environment Management, delivered by training provider Senac, will provide participants with an impactful technical qualification. Additionally, regular presentations from employers across the sector will inspire the students, revealing how to apply their upcoming qualification in future employment. Towards the end of the program, the goal is for many of these employers to also provide students with valuable work placements.

The Goodman team will play a crucial role. Each student has been assigned a personal mentor to meet with monthly across the life of the program. It’s here that the team’s commitment to the success of Goodman Mais speaks volumes with almost 50% of our people in Brazil having already signed up as mentors.

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Stepping Stone House, Australia

Stepping Stone House Community Hub, Sydney Corporate Park, Australia.

About 45,000 young people in Australia are homeless. It’s a statistic New South Wales organisation Stepping Stone House has spent 33 years working hard to change.

By providing safe places for children and young people at risk or experiencing homelessness, the charity helps them begin to heal, build resilience and become the best they can be.

Many of the young people at Stepping Stone House have a childhood background of trauma. Government funded services in NSW will only support children until they are 18, but they often need help for much longer. That’s why the community at Stepping Stone House, which is independently funded, provides long-term accommodation and support until they are 24 years old.

This people-centred approach has already helped over 450 young people become independent adults. The educational outcomes alone are significant. Stepping Stone House graduates have school attendance figures of 87%. They also have 100% employment rates on graduation from the program.

Goodman, a long-term partner of Stepping Stone House, significantly increased its support to the organisation this year. Multi-year funding supported its Bawaga Indigenous program through the employment of Indigenous support workers for the home. It also provided cultural awareness training for staff.

As the charity’s programs have grown, activities like career workshops, workplace dressing, cooking and sewing classes have outgrown the spaces available in Stepping Stone’s residential houses. The answer is a new Community Hub housed within a Goodman site in Sydney’s Alexandria. The Hub will become a home for these important ancillary programs, and a place for the Stepping Stone community to meet.

Goodman provided the fit-out and building works for the new space, and members of our team also designed and sourced items for the Community Hub’s welcoming interior.

There’s been a lot happening in this partnership – Goodman’s cars are used to help Stepping Stone House residents learn to drive, and we’re a major partner of its key Sleeping Under the Stars fundraiser.

The charity is currently working on a strategy to integrate and scale its support model, to replicate its success across Australia. Doing so, it says, would halve youth homelessness figures, increase education outcomes, and provide a myriad of short and longterm community benefits.

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Hope in a Suitcase, California, USA.
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Shanghai Sunrise, China

Disadvantaged students were especially affected by COVID lockdowns in Shanghai.

This year Goodman began an annual commitment to support 20 disadvantaged students in secondary and tertiary education through local charity, Shanghai Sunrise. In its 25 years of operation, Shanghai Sunrise has helped educate more than 3,200 students.

Goodman’s team was also keen to provide short-term support for each of the 100 students through the Shanghai Sunrise program. Activities included webinars and mental health support, reading camps and annual online book subscriptions. Additionally, 30 technology scholarships helped students buy laptops or printers so they could engage with home education.

Hope in a Suitcase, USA

Every year in Southern California, 30,000 kids enter the foster care system. Especially in emergency situations, they often enter the system with nothing but the clothes on their backs or with just a few personal belongings that they carry from home to home in a rubbish bag. Throughout the year, Hope in a Suitcase helps change the situation for many of these children by providing suitcases and duffel bags filled with new clothing and other essentials.

At its (free of charge) ‘Shopping Events’ Hope in a Suitcase provides an opportunity for foster children to stock up on clothes, shoes and other essentials. Volunteers walk with the participants to help them shop as they fill their bag with brand new items. For foster youth who are frequently at the mercy of other people’s decisions, the ability to select the items that THEY want and need is particularly empowering.

Over the past two years, the Goodman Foundation has donated funds to help Hope in a Suitcase purchase the new items. The events have also seen growing numbers of Goodman volunteers. Many eagerly await these events, where the excitement of the young attendees is contagious.

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Shanghai Sunrise, Shanghai, China.
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The Clontarf Foundation.

The Clontarf Foundation, Australia

The Clontarf Foundation, founded in 2000, aims to help close the gap for young Aboriginal and Torres Strait Islander males. Today the organisation partners with 152 schools across Australia, to help improve school attendance and graduation rates for over 10,400 at-risk teenage boys.

Participants in Clontarf’s programs experience a wide variety of activities, environments and social settings to help broaden their thinking about life’s possibilities and their future.

In partnership with teachers, parents and each community, local staff work as mentors. They also assist graduates to find employment or help them transition into further study or training.

Having supported Clontarf academies in Western Sydney in the past, this year Goodman began working with the Clontarf Foundation to fund a new Academy in the NSW community of Lake Cargelligo. Our annual contribution will directly cover costs for 40+ Indigenous students to participate in the holistic program which focuses on education, leadership, employment, health and wellbeing.

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THE CLONTARF FOUNDATION HELPS
IMPROVE SCHOOL ATTENDANCE AND
GRADUATION RATES FOR OVER 10,400
AT-RISK TEENAGE BOYS.
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FOOD AND

RESCUE ENVIRONMENT

Charity organisations in the food rescue and environment space reduce waste and support those in need by redistributing fresh food or useful items that would otherwise go to landfill.

UKHarvest, United Kingdom

UKHarvest is on a mission to eliminate hunger and reduce food waste. It’s work that has become increasingly challenging this year as inflation has jumped to a 40-year high, impacting communities right across the UK.

A combination of factors has led to soaring prices for food, fuel and energy. For many families this new environment can result in impossible choices. Should they turn on the heat or feed their family?

It’s against this backdrop that the impact of this charity, which rescues and redistributes 75,000 meals every week, has become increasingly important – supplying fresh food, dry goods hampers and pre-made meals that make a real difference.

About 50% of the food eaten in the UK comes from Europe. A fact that has caused havoc with the UK’s food supply this year – the first since it exited the European Union. For many farmers, the new (and largely untested) import procedures that came as a result of Brexit saw some farmers’ seeds stuck in limbo for so long that they missed their entire planting season.

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Nourish Hub, London, UK.
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Her Majesty The Queen Consort and a
UK Harvest volunteer, London, UK.
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As founding partner of UKHarvest, the Goodman Foundation increased its support by committing to funding for the next three years. The extra funds will help UKHarvest continue to scale up operations and feed more people finding it tough.

Despite the challenges thrown at them, UKHarvest has remained determined and stayed innovative, providing new solutions for communities, such as pop-up pantries.

Eight pop-up pantries were implemented this year, which allow 50 to 100 families to visit each pantry, fill up a bag of fresh produce for £2.50, and access wraparound care from services like a Citizen’s Advice Bureau and housing support. At the same time, visitors to the pantries also left with new skills. Education is a big part of UKHarvest’s mission and families are offered classes in reducing food waste or cooking well for less, while they are on site.

At the charity’s Nourish Hub in London’s Shepherd’s Bush, an eclectic mix of diners visit for the daily ‘pay what you can’ lunch. Volunteers also prepare catering for those vulnerable people who are housebound. On-site food education classes run for everyone including refugees, including recent refugees from Afghanistan and Ukraine, while school holidays are used to teach disadvantaged youth how to become food waste warriors and to combat school holiday hunger. In addition, 40 days of sessions ran throughout UKHarvest over the summer holidays in a variety of venues. These reached thousands of young people.

Watch the Nourish Hub video

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Refettorio, Sydney, Australia. Photo credit Nikki To.

OzHarvest, Australia

Refettorio, Sydney, Australia. Photo credit Nikki To.

A founding partner of OzHarvest since it began in 2004, the Goodman Foundation continued its support of Australia’s leading food rescue organisation this year.

In addition to the Food Hamper support outlined earlier, another project Goodman contributed to this year was a unique community space, Refettorio OzHarvest Sydney.

This social impact collaboration between OzHarvest and one of the world’s leading culinary figures, chef Massimo Bottura, was an Australian first. Since 2015, using his charity Food for Soul, Bottura has dedicated himself to reducing food waste and forming community projects across the globe.

The result includes Refettorios – physical, zero-waste spaces designed as community hubs to inspire and empower human potential. By day, Refettorio OzHarvest Sydney (on Crown Street in Surry Hills) opens its doors to the most vulnerable people in the local community, providing a nourishing meal and a place to connect.

By night OzHarvest uses the space to host Neighbourhood Dinner, open to anyone keen to support the Refettorio and experience its delicious food and warm service. It’s a great way to raise awareness and funds, and within three years the restaurant aims to be self-sustaining.

Goodman was one of a handful of partners helping to fund the operational costs of this unique social enterprise initiative.

In additional to our support of special projects that help OzHarvest scale its impact, the Goodman Foundation continues to provide cash grants for the charity’s annual operational costs.

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Fare Share Community Garden, Moorabbin,
Victoria, Australia.
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FareShare, Australia

FareShare operates charity kitchens in Melbourne and Brisbane, transforming quality rescued and donated food, together with vegetables in its own kitchen gardens, into millions of delicious of healthy meals for people who are struggling to put food on the table. Together with Moorabbin Airport Corporation, Goodman Foundation has supported FareShare since 2016, providing a 3,000 sqm kitchen garden on airport land. Our team has also actively volunteered with harvesting produce and maintaining the garden.

With the continuing pandemic, rising cost of living pressures and natural disasters, the demand for FareShare’s free meals has never been greater. To assist, Goodman provides multi-year funding for a farmhand on FareShare’s Baguley farm site. The support will help the charity harvest nearly 100,000kg of vegetables a year from this location.

Goodman has also committed to help scale up a new program by FareShare called Meals for the Mob. The program provides healthy meals – cooked by First Nations peoples for First Nations peoples – and transports them to remote communities. Our multi-year funding will employ a chef to oversee the program, empowering Meals for the Mob to expand.

Second Harvest Food Bank of Orange County, USA

Finding enough affordable food is an ongoing struggle for many in Orange County, California, with one in seven children experiencing food insecurity. Second Harvest Food Bank of Orange County is driven by its purpose to end hunger in the local community. The organisation collaborates with over 250 food pantries and partners that all work towards this goal.

Harvest Solutions Farm was developed in partnership with the UC South Coast Research and Extension Center and A.G Kawamura, Chairman of Solutions for Urban Agriculture. This local sustainability farming pioneer manages 45 acres of property and has provided space for the non-profit to grow its own food.

This year, Goodman Foundation donated money for an electric/hybrid farm vehicle to help transport produce from the farm with greater ease and make a huge difference to the farm’s efficiency. Volunteers work hard, having helped harvest over 53 truckloads of fresh produce in the last 12 months.

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Second Harvest Food Bank of Orange County volunteers,
California, USA.
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LIFE Community, New Zealand.
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LIFE Community’s Christmas Box initiative, New Zealand

The charitable trust, LIFE Community, is behind the Christmas Box initiative, providing families in need with Christmas hampers made up of donated food and other goods. Last Christmas, volunteers helped pack hampers in Auckland, Kaikohe, Whangārei, Hamilton, Tauranga, Rotorua, Palmerston North, Wellington, Christchurch and Dunedin.

The Goodman Foundation was pleased to play a part, providing warehousing space at M20 Business Park in Wiri for this annual event. Operating as a distribution hub for the other centres, over 260 tonnes of food was processed with around half of this packed into 12,000 hampers for the wider Auckland region. In total, 25,000 boxes were distributed to families in need, from Kaitaia to Bluff.

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ESG metrics

GOODMAN GROUP GREENHOUSE GAS EMISSIONS

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Reporting boundary

Goodman Group calculates its global greenhouse gas emissions from its operations using the GHG Protocol. Goodman reports its operational carbon inventory annually to Climate Active as part of our commitment to maintaining our carbon-neutral organisation certification.

Our emissions boundary is based on operational control. Our inventory includes emissions generated from Goodman’s corporate activities and managed portfolio emissions, which relate to properties and areas where we are involved in the dayto-day operations. For example, electricity emissions generated by common area lifts or carpark lights of an estate would be included, as Goodman oversees the operating and maintenance schedules.

We take responsibility for 100% of these emissions, regardless of the Group’s equity share in the Investment Partnership that owns the property. For our Climate Active carbon-neutral organisation certification, our boundary excludes emissions generated by our customers’ activities within leased areas. However, our sciencebased targets, discussed below, include customer emissions.

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Carbon inventory

- 2022 OPERATIONAL EMISSIONS (tCO e) 2

The below table details our FY22 operational emissions used for Climate Active certification. During the year, we saw a significant decrease in Scope 2 emissions due to the purchase of 100% GreenPower across Goodman’s Australian offices and properties.

GHG Scope	Emissions Source 2021 tCO2-e1 2022 tCO2-e
Scope 1	Natural Gas 1,001 899
	Fuels 898 846
	Refrigerants 1,414 1,360
Scope 2	Electricity 37,065 11,6372
Scope 3	Energy 4,251 748
	Waste 3,073 2,975
	IT 1,388 1,320
	Marketing 999 1,141
	Corporate travel 474 590
	Employee commuting 292 438
	Working from home 132 169
	Other expenses3 1,974 1,605
	Total 52,962 23,728

1 Due to the availability of more current data, previous data has been updated, where applicable.
2 Market-based emissions. Scope 2 location-based emissions are equivalent to 29,765 tCO2-e.
3 Accommodation, water use, advertising, cleaning, telecommunications, other expenses.

- Science based targets

This year Science Based Targets initiative validated Goodman’s 2030 emissions reduction commitments. Using a 2021 baseline, our targets include reducing our absolute Scope 1 and 2 GHG emissions by 42% in total.

Our Scope 3 targets include reducing emissions by 50% per square metre, including both downstream leased and sold assets. Our progress is detailed below.

GHG		Unit	2021	2022	2030
Scope					target
Scope	1+2	tCO2-e	40,379	14,7421	23,420
Scope	3	kgCO2-e/m2	39.9	37.8	20.0
		leased assets
Scope	3	kgCO2-e/m2	502.5	442.6	251.2
		sold assets

1 Market-based emissions. Scope 1+2 location-based emissions are equivalent to 32,870 tCO2-e.

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ANNUAL OPERATIONAL EMISSIONS (tCO2-e)
60,000
45,000
30,000
15,000
0
2021 2022
SCOPE 1 SCOPE 2 SCOPE 3
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- Sustainability linked bond

This year Goodman created a Sustainability-Linked Bond (SLB) Framework using Goodman’s science-based targets for our Scope 1 and Scope 2 emissions as the performance criteria. After developing the Framework, Goodman issued its first SLB into the Rule 144A / Reg S market with a scheduled maturity of 2032.

Our annual progress can be seen in the below table. Note that the large reduction in Scope 2 emissions is predominantly due to the uptake of 100% GreenPower in our Australian business.

GHG Scope	2021 tCO2-e1	2022 tCO2-e2
Scope 1	3,314	3,105
Scope 2	37,065	11,6373
Total	40,379 14,742 23,420

1 Validated by the Science Based Targets initiative
2 Externally verified under ASRS 4400 by a qualified, independent reviewer
3 Market-based emissions. Scope 2 location-based emissions are equivalent to 29,765 tCO2-e.

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GOODMAN GLOBAL WORKFORCE

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WORKFORCE
FY20
FY21
FY22
Total number of contractor employees (fxed term/temporary)
< 5%
< 5%
< 5%
Number of employees at end of year global
963
922
950
Australia
288
287
314
NZ
63
58
61
Europe
214
187
202
UK
35
33
37
China
212
192
171
Japan
63
63
64
US
56
58
70
Brazil
32
33
31
Total workforce by age
<20
1
0
2
20–29
166
139
135
30–39
357
331
317
40–49
299
289
296
50–59
102
129
144
> 60
36
34
36
Total workforce by gender
Female
43%
44%
44%
Male
57%
56%
56%
Governance bodies
Non-executive Directors on Goodman Boards
70%
70%
72%
Female Directors on Goodman Boards (Non-executive)
28.5%
28.5%
27%
Parental leave
Total number of employees entitled to parental leave
All employees in
accordance with
local regulations
All employees in
accordance with
local regulations
All employees in
accordance with
local regulations
Number of employees who took parental leave through the year
23 Male
11 Female
27 Male
22 Female
12 Male
38 Female
Number of employees who returned from parental leave
24 Male
12 Female
27 Male
22 Female
10 Male
25 Female
Number of employees who returned from leave still employed
12 months later
24 Male
11 Female
26 Male
19 Female
13 Male
12 Femal
Learning and development
Percentage of employees who had regular performance and career
development reviews
93%
93%
96%

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HEALTH AND SAFETY

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HEALTH AND SAFETY	FY20	FY21	FY22
Goodman employees
Employees in Goodman controlled premises covered
by the Goodman Safety System	100%	100%	100%
Number and rate of employee workplace fatalities	0	0	0
Number and rate of lost time injury frequency1	0	0	0
Total number of employee hours worked	c.2 million	c.2 million	c.2 million
Development projects – Principal Contractor Controlled Sites2
Number of contractor fatalities	1 contractor	4 contractors	0
	1 visitor
Number and rate lost time injury frequency rate1	1.35	0.59	0.49
Number and rate total recordable injury frequency rate1	4.00	1.96	1.84
Total number of worker hours worked
(Development Principal Contractors)	c.5.3 million	c.12.1 million	c.17.6 million

Frequency rates are standardised to 200,000 hours.
Development data is taken from sites under the control of Principle Contractors.

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GLOBAL REPORTING INITIATIVE (GRI) INDEX

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DISCLOSURE
DESCRIPTION
LOCATION OR DIRECT RESPONSE
GRI102: General Disclosures
102-1
Name of the organisation
Goodman Group which comprises of three entities:
Goodman Limited
Goodman Funds Management Limited, as the responsible entity for Goodman Industrial
Trust Goodman Logistics (HK)
102-2
Activities, brands, products, and
services
Goodman.com/What we do
102-3
Location of headquarters
1-11 Hayes Road, Roseberry NSW 2018, Australia
102-4
Location of operations
Goodman Sustainability Report, Strategic Locations - page 18
102-5
Ownership and legal form
Goodman.com/About us
102-6
Markets served
Goodman.com/About us
102-7
Scale of the organisation
Goodman.com/About us
102-8
Information on employees and
other workers
Goodman Sustainability Report, Human capital management - page 75
102-9
Supply chain
Modern slavery statement
102-10
Signifcant changes to the
organisation and its supply chain
Annual Report– page 24
102-11
Precautionary Principle or
approach
Goodman’s risk management process includes evaluation using the precautionary
principle. This means Goodman’s actions are based on potential ESG impact, instead of
proven impact, as a precaution.
102-12
External initiatives
Goodman Sustainability Report, ESG afliations and partnerships - page 119
United Nations Sustainable Development Goals, SBTi, TCFD, GRESB, Climate Leaders
Coalition, Sustainalytics, MSCI, GRI and ISO Standards
102-13
Membership of associations
Goodman Sustainability Report, ESG afliations and partnerships - page 119
Various global relationships including Property Council of Australia, Green Building
Council of Australia, Australasian Investor Relations Association, GRESB, ANREV and
INREV plus various professional memberships
102-14
Statement from senior
decision-maker
Goodman Sustainability Report, Chairman’s Letter – page 05
Goodman Sustainability Report, CEO’s letter – page 08
102-15
Key impacts, risks and
opportunities
Goodman Sustainability Report, CEO’s letter – page 08
Goodman Sustainability Report, Sustainability approach - page 32
TCFD Statement– pages 4-8
102-16
Values, principles, standards and
norms of behaviour
Diversity and inclusion policy – page 1
Code of Conduct– page 3
Statement of Business ethics – page 2
Workplace bullying and harassment policy– page 3
Corporate Governance Statement – page 3, Principle 3
102-17
Mechanisms for advice and
concerns about ethics
Ethical concerns
Corporate Governance Statement – page 3, Principle 3
Corporate Governance Statement– page 3, Principle 4
Corporate Governance Statement – page 3, Principle 7

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GLOBAL REPORTING INITIATIVE (GRI) INDEX

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102-18
Governance Structure
Goodman Sustainability Report, How we’re structured – page 22
Corporate Governance Statement – page 2, Principle 1
Corporate Governance Statement – page 3, Principle 2
Corporate Governance Statement – page 3, Principle 3
Corporate Governance Statement – page 3, Principle 4
Corporate Governance Statement – page 3, Principle 7
102-20
Executive-level responsibility for
economic, environmental, and
social topics
Corporate Governance Statement – page 4
102-21
Consulting stakeholders on
economic, environmental, and
social topics
Corporate Governance Statement – page 3, Principle 6
102-22
Composition of the highest
governance body and its
committees
Corporate Governance Statement – page 3, Principle 2
Corporate Governance Statement – page 5, Board composition
102-23
Chair of the highest governance
committee
Goodman Sustainability Report, Board of Directors – page 120
Board of Directors
102-24
Nominating and selecting the
highest governance body
Corporate Governance Statement – page 2, Principle 1
Corporate Governance Statement – page 3, Principle 2
102-25
Conficts of interest
Conficts of interest – pages 2-3
Corporate Governance Statement – page 3, Principle 2
Corporate Governance Statement – page 3, Principle 3
102-26
Role of highest governance body
in setting purpose, values, and
strategy
Goodman Sustainability Report, The Boards and Committees - page 22
Board of Directors
Corporate Governance Statement – page 2, Principle 1
102-27
Collective knowledge of highest
governance body
Goodman Sustainability Report, Board of Directors – page 120
Board of Directors
Corporate Governance Statement – page 3, Principle 2
Corporate Governance Statement – page 7, Board skills
102-28
Evaluating the highest governance
body’s performance
Corporate Governance Statement – page 2, Principle 1
102-29
Identifying and managing,
economic, environmental, and
social impacts
Corporate Governance Statement – page 3, Principle 7
102-30
Efectiveness of risk management
processes
Corporate Governance Statement – page 3, Principle 7
102-31
Review of economic,
environmental, and social topics
Corporate Governance Statement – page 3, Principle 7
102-32
Highest governance body’s role in
sustainability reporting
Corporate Governance Statement – page 3, Principle 3
Corporate Governance Statement – page 3, Principle 7
102-33
Communicating critical concerns
Corporate Governance Statement – page 3, Principle 7
102-35
Remuneration policies
Corporate Governance Statement – page 3, Principle 8
Remuneration Committee Charter
102-36
Process for determining
remuneration
Corporate Governance Statement – page 3, Principle 8
Remuneration Committee Charter
102-37
Stakeholders’ involvement in
remuneration
Corporate Governance Statement – page 3, Principle 6
Remuneration Committee Charter

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102-40
List of stakeholder groups
Goodman Sustainability Report, Our Purpose – page 20
Goodman Sustainability Report, Engaging our stakeholders - page 36
102-41
Collective bargaining agreements
Goodman is not opposed to collective bargaining although the relationship we have with
our employees means we have no single global collective bargaining agreement
102-42
Identifying and selecting
stakeholders
Goodman Sustainability Report, Engaging our stakeholders - page 36
102-43
Approach to stakeholder
engagement
Goodman Sustainability Report, Engaging our stakeholders - page 36
102-44
Key topics and concerns raised
Goodman Sustainability Report, Sustainability approach - page 32
102-45
Entities included in the
consolidated fnancial statements
Annual Report
102-46
Defning report content and topic
Boundaries
This report has been prepared in accordance with the GRI standards core option. Our
report includes FY22 performance highlights from across Goodman’s global operations.
Goodman.com/Corporate governance
102-47
List of material topics
Goodman Sustainability Report, Sustainability approach - page 32
102-48
Restatements of information
No restatements have been made
102-49
Changes in reporting
No changes. Reporting is aligned with GRI standards: Core option
102-50
Reporting period
Reporting period is for 12 months:
1 July 2021 – 30 June 2022
102-51
Date of most recent report
December 2021
102-52
Reporting cycle
Annual
102-53
Contact point for questions
regarding the report
[email protected]
102-54
Claims of reporting in accordance
with the GRI standard
This report has been prepared in accordance with the GRI Standards: Core option
102-55
GRI content index
This document represents the company’s content index
102-56
External assurance
External assurance is provided over fnancials and selected carbon emissions data is
independently verifed
GRI 201 Economic Performance
201-1
Direct economic value generated
and distributed
Annual Report
201-2
Financial implications and other
risks and opportunities due to
climate change
TCFD Statement– pages 4-8
GRI 205 Anti-corruption
205-1
Operations assessed for risks
related to corruption
Anti-bribery and corruption policy – page 3
Ethical concerns – page 2
205-2
Communication and training
about anti-corruption policies and
procedures
Code of Conduct– page 3
Anti-bribery and corruption policy – page 3
205-3
Confrmed incidents of corruption
and actions taken
There were no instances of corruption identifed during this period
GRI 206 Anti-competitive behaviour
206-1
Legal actions for anti-competitive
behaviour, anti-trust, and monopoly
practices
No current legal actions are recorded

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GLOBAL REPORTING INITIATIVE (GRI) INDEX

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GRI 304 Biodiversity
304-4
IUCN Red List species and
national conservation list species
with habitats in areas afected by
operations
Ecologists are engaged to research, identify and report on threatened species, terrestrial
or aquatic, on development sites
GRI 305 Emissions
305-1
Direct (Scope 1) GHG emissions
Goodman Sustainability Report, Carbon inventory – page 111
305-2
Energy indirect (Scope 2) GHG
emissions
Goodman Sustainability Report, Carbon inventory – page 111
305-3
Other indirect (Scope 3) GHG
emissions
Goodman Sustainability Report, Carbon inventory – page 111
305-5
Reduction of GHG emissions
Goodman Sustainability Report, Carbon inventory – page 111
GRI 306 Water
306-3
Signifcant spills
No signifcant spills were identifed
306-4
Transport of hazardous waste
Goodman does not transport hazardous waste as part of day-to-day operations.
If remediation is required, Goodman appoints principal contractors to complete works in
accordance with applicable laws and regulations.
Under its lease obligations, Moorabbin Airport,a subsidiary of Goodman Limited,
manages legacy obligations relating to historical use PFAS at the airport.
GRI 307 Environmental Compliance
307-1
Non-compliance with
environmental laws and regulations
No signifcant breaches of environmental laws
GRI 401 Employment
401-1
New employee hires and employee
turnover
6.4% voluntary turnover rate
401-2
Benefts provided to full-time
employees that are not provided to
temporary or part-time employees
Part-time employees receive the same benefts on a pro-rated basis or eligibility as
full-time employees. Employees on a fxed term or casual basis do not participate in the
Goodman long-term incentive plan.
401-3
Parental leave
Goodman Sustainability Report, ESG metrics, Goodman global workforce – page 112
GRI 403 Occupational Health and Safety
403-1
Occupational health and safety
management system
Goodman Sustainability Report, Systems for Safety - page 84
403-2
Hazard identifcation, risk
assessment, and incident
investigation
Goodman Sustainability Report, Systems for Safety - page 84
403-3
Occupational health services
Goodman Sustainability Report, Systems for Safety - page 84
403-4
Worker participation, consultation,
and communication on
occupational health and safety
Goodman Sustainability Report, Systems for Safety - page 84
403-5
Worker training on occupational
health and safety
Goodman Sustainability Report, Systems for Safety - page 84
403-8
Workers covered by an
occupational health and safety
management system
Goodman Sustainability Report, ESG metrics, Health and Safety – page 113
403-9
Work-related injuries
Goodman Sustainability Report, ESG metrics, Health and Safety – page 113

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GLOBAL REPORTING INITIATIVE (GRI) INDEX

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GRI 404 Training and Education
404-2
Programs for upgrading employee
skills and transition assistance
programs
Goodman Sustainability Report, Human capital management – page 75
404-3
Percentage of employees receiving
regular performance and career
development reviews
Goodman Sustainability Report, Human capital management – page 75
GRI 405 Diversity and Equal Opportunity
405-1
Diversity of governance bodies and
employees
Goodman Sustainability Report, Goodman global workforce – page 112
GRI 407 Freedom of Association and Collective Bargaining
407-1
Operations and suppliers in which
the right to freedom of association
and collective bargaining may be
at risk
Goodman does not prohibit or restrict freedom of association
GRI 413 Local Communities
413-1
Operations with local community
engagement, impact assessments,
and development programs
Goodman Sustainability Report, Goodman Foundation - page 94
Goodman Sustainability Report, Reconciliation Action Plan - page 81
GRI 418 Customer Privacy
418-1
Substantiated complaints
concerning breaches of customer
privacy and losses of customer
data
There were no reported incidents

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ESG AFFILIATIONS AND PARTNERSHIPS

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TCFD

The TCFD aims to guide companies in incorporating the considerations of the effects of climate change into business and financial decisions to help facilitate the transition to a more sustainable, lower carbon economy.

R E A L E S T A T E

GRESB

GRESB globally benchmarks the ESG performance of commercial real estate and infrastructure companies to provide investors with standardised and validated data for informing investment decision making.

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CLIMATE ACTIVE

Climate Active certification is awarded to businesses and organisations that have credibly achieved carbon neutrality. The Climate Active initiative and Climate Active Carbon Neutral Standard provide a framework for businesses to measure, reducevvz and offset their carbon emissions.

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SUSTAINALYTICS

Sustainalytics’ ESG Risk Ratings measure and assess a company’s managed and unmanaged industry-specific ESG risks.

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SCIENCE BASED TARGETS

The Science Based Targets initiative (SBTi) drives ambitious climate action in the private sector by enabling organisations to set science-based emissions reduction targets.

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MSCI

The MSCI ESG Ratings are designed to measure the long-term resilience of a company by investigating ESG performance and industry-specific material risks not identified through conventional financial analysis.

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GREENPOWER

GreenPower is 100% renewable energy available for households and businesses through most energy retailers in Australia.

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RECONCILIATION AUSTRALIA

Reconciliation Australia is a not-for-profit foundation that advances the national focus for reconciliation between Indigenous and non-Indigenous Australians.

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MECLA

Driving reductions in embodied carbon in the building and construction industry.

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CLIMATE LEADERS COALITION

CLC is a group of cross-sectoral Australian corporate CEOs supporting the Paris Agreement commitments and setting public decarbonisation targets.

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Corporate information

BOARD OF DIRECTORS

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Stephen Johns
Independent Chairman
Appointed 1 January 2017
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Greg Goodman Chris Green Mark G. Johnson Vanessa Liu Group Chief Executive Officer Independent Director Independent Director Independent Director Appointed 7 August 1998 Appointed 28 April 2019 Appointed 1 June 2020 Appointed 1 June 2022

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Rebecca McGrath Danny Peeters Phillip Pryke
Independent Director Executive Director, Corporate Independent Director
Appointed 3 April 2012 Appointed 1 January 2013 Appointed 13 October 2010
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Anthony Rozic Hilary Spann Deputy Group Chief Executive Independent Director Officer and Appointed 4 April 2022 Chief Executive Officer, North America Appointed 1 January 2013

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Five year fnancial summary

INCOME STATEMENT	2018	2019	2020	2021	2022
	$M	$M	$M	$M	$M
Gross property income	150.4	114.6	115.9	112.4	138.0
Management income	316.5	469.7	511.2	383.9	511.4
Development income	1,115.8	1,134.3	882.6	1,492.0	1,441.6
Net gain/(loss) on disposals of assets	108.1	27.9	56.3	42.7	86.3
Net gain from fair value adjustments on investment properties	71.1	146.8	45.2	63.1	260.1
Share of net results of equity accounted investments	910.9	1,132.5	1,022.2	1,708.9	2,718.2
Distributions from investments	–	–	–	–	0.8
Total income	2,672.8	3,025.8	2,633.4	3,803.0	5,156.4
Property expenses	(36.4)	(40.2)	(36.4)	(32.8)	(33.7)
Development expenses	(808.9)	(727.3)	(443.4)	(862.3)	(554.9)
Employee expenses	(180.7)	(191.9)	(203.7)	(210.8)	(258.9)
Share based payments expense	(125.6)	(196.6)	(164.0)	(268.8)	(257.6)
Administrative and other expenses	(68.7)	(75.8)	(88.6)	(83.2)	(90.4)
Net fnance costs	(267.3)	(49.3)	(80.2)	74.9	222.8
Total expenses	(1,487.6)	(1,281.1)	(1,016.3)	(1,383.0)	(1,418.3)
Proft before income tax	1,185.2	1,744.7	1,617.1	2,420.0	3,738.1
Income tax expense	(82.4)	(116.8)	(113.0)	(108.1)	(324.1)
Proft for the year	1,102.8	1,627.9	1,504.1	2,311.9	3,414.0
Proft attributable to other non-controlling interests	(4.6)	–	–	–	–
Proft attributable to Securityholders	1,098.2	1,627.9	1,504.1	2,311.9	3,414.0
OPERATING PROFIT RECONCILIATION (NON-IFRS)
Operating proft	845.9	942.3	1,060.2	1,219.4	1,528.0
Adjustments for:
Property valuation related movements	639.0	871.7	621.3	1,308.5	2,326.3
Fair value adjustments and unrealised foreign currency
exchange movements related to liability management	(174.4)	17.0	6.8	55.0	(191.4)
Other non-cash adjustments or non-recurring items	(212.3)	(203.1)	(184.2)	(271.0)	(248.9)
Proft attributable to Securityholders	1,098.2	1,627.9	1,504.1	2,311.9	3,414.0
Operating proft per stapled security (cents)1	46.7	51.6	57.5	65.6	81.3
Dividends/distributions per security (cents)	28.0	30.0	30.0	30.0	30.0

Fully diluted for performance rights.

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Goodman Group Sustainability Report 2022

Five year fnancial summary

STATEMENT OF FINANCIAL POSITION	2018	2019	2020	2021	2022
	$M	$M	$M	$M	$M
Cash and receivables	3,088.7	1,981.4	2,172.5	1,529.2	1,447.2
Property assets	2,732.6	2,966.1	3,081.4	3,279.0	4,148.0
Equity accounted investments	6,585.5	8,452.4	9,370.8	10,660.0	14,379.6
Intangible assets	816.7	840.0	845.8	822.6	795.4
Other (including derivative fnancial instruments)	235.9	672.9	667.7	576.2	662.2
Total assets	13,459.4	14,912.8	16,138.2	16,867.0	21,432.4
Payables, provisions and contract liabilities	918.4	944.1	988.3	1,009.3	1,032.2
Interest bearing liabilities	3,081.5	2,975.0	2,938.5	2,060.3	2,832.2
Other (including derivative fnancial instruments)	285.8	471.2	690.8	635.9	1,143.2
Total liabilities	4,285.7	4,390.3	4,617.6	3,705.5	5,007.6
Net assets attributable to Securityholders	9,173.7	10,522.5	11,520.6	13,161.5	16,424.8
Net tangible assets per security ($)	4.64	5.34	5.84	6.68	8.37
Gearing ratio (%)	5.1	9.7	7.5	6.8	8.5
STATEMENT OF CHANGES IN EQUITY
Total equity at the beginning of the year	8,622.2	9,173.7	10,522.5	11,520.6	13,161.5
Total comprehensive income for the year	1,304.9	1,795.4	1,467.7	2,027.1	3,581.1
	9,927.1	10,969.1	11,990.2	13,547.7	16,742.6
Contributions of equity, net of transaction costs	–	–	–	64.7	109.7
Distributions provided or paid	(504.2)	(544.2)	(548.5)	(554.2)	(560.1)
Other transactions with equity holders	82.4	97.6	78.9	103.3	132.6
Movements in other non-controlling interests	(331.6)	–	–	–	–
Total equity at the end of the year	9,173.7	10,522.5	11,520.6	13,161.5	16,424.8
CASH FLOW STATEMENT
Net cash provided by operating activities	1,161.2	827.5	1,156.9	1,114.7	841 .0
Net cash provided by/(used in) investing activities	(26.5)	(818.2)	(306.4)	(549.9)	(1,001.5)
Net cash used in fnancing activities	(799.2)	(849.2)	(660.9)	(1,349.1)	299.7
Net increase/(decrease) in cash held	335.5	(839.9)	189.6	(784.3)	139.2
Cash at the beginning of the year	2,095.1	2,406.8	1,607.1	1,792.8	920.4
Efect of exchange rate fuctuations on cash held	(23.8)	40.2	(3.9)	(88.1)	(3.6)
Cash at the end of the year	2,406.8	1,607.1	1,792.8	920.4	1,056.0

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Goodman Group Sustainability Report 2022

Corporate directory

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

OTHER OFFICES

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

DIRECTORS

Goodman Limited and Goodman Funds Management Limited

Stephen Johns Independent Chairman

Greg Goodman Group Chief Executive Officer Chris Green Independent Director

Mark G Johnson Independent Director Vanessa Liu Independent Director Rebecca McGrath Independent Director

Danny Peeters Executive Director Phillip Pryke Independent Director Anthony Rozic Executive Director

Hilary Spann Independent Director

Company Secretary Carl Bicego

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

ASX CODE GMG

AUDITOR

KPMG

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

Email [email protected]

Website goodman.com

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Goodman Group Sustainability Report 2022

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 as well as expectations, objectives and assumptions in our climate change and sustainability related statements are also forwardlooking 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 2022.

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Goodman Group Annual Report 2022

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GOODMAN GROUP

ANNUAL REPORT 2022

Chairman’s letter	4
Group CEO letter	6
Corporate Governance 2021	8
Goodman Limited and its controlled entities	9
Appendix A – Goodman Logistics (HK) Limited and its subsidiaries	154
Securities information	207
Glossary	208
Corporate directory	209

GOODMAN GROUP

Chairman's letter

Sustained vision

2022 saw Goodman deliver another very strong result with operating earnings per security increasing by 24%, well ahead of the initial guidance to the market of 10%. Significant contributions were made from all areas of the business. The resilience of the Group’s business strategy and that of our team has been tested in a challenging environment, and Goodman’s management has demonstrated their ability to adapt and grow with changing market conditions.

We remain focused on the long-term sustainability of the business and are cautious and prudent in our approach to capital management, retaining significant resources and liquidity to manage through uncertain economic environments.

Throughout the year, we have progressed our sustainability initiatives across all aspects of the Environmental, Social and Governance areas. Our focus is on both short-term programs that we can implement and measure today while establishing long-term strategies that will have provide enduring benefits for our business – and for of all our stakeholders – well into the future.

This includes the Group’s Long Term Incentive Plan (LTIP) which both incentivises management to achieve superior results and provides alignment with the interests of securityholders. The Plan also incorporates environmental and sustainability targets in assessing performance for all employees.

Our people are our strength and attracting and retaining talent in all our markets is critical to our success. Given our track record and global expertise, this has become increasingly difficult as competitors seek to recruit our high-performing people around the world. Goodman’s remuneration strategy, featuring a long-term incentive plan that includes the whole team, has been a key driver of our success, and ability to retain talent globally.

Investing in sustainable innovation

Over several years, the Group has been working to expand its innovation strategy. We aim to facilitate and invest in products that provide sustainable solutions to customers across property technology, supply chain and transport and construction and manufacturing. Examples include smart metering, carbon neutral building products, on site safety management and the use of robotics and electric vehicles to assist with logistics and transportation.

Our investment strategy across these technologies provides the Group with greater access, visibility and insight into the related trends affecting real estate. Our focus is on evaluating how these can be applied to our own portfolio to improve sustainable outcomes for all.

Sustainability governance

Our Sustainability initiatives are entrenched into the Group’s business strategy and continue to remain a key priority for the Board and management. To support the management team and to enhance the Board’s visibility and efficacy on our ESG initiatives, we are in the process of establishing a new Sustainability and Innovation Committee which will commence its activities in October of this year. This Committee will be Chaired by Chris Green with Phil Pryke and newly appointed Directors, Hilary Spann and Vanessa Liu, as members. Chris, Hilary and Vanessa are all New York-based and actively work in the sustainability and innovation space in their day-to-day businesses and are expertly positioned for these roles. Phil has experience in the green energy field and, as the Chair of the Remuneration Committee, plays an important role in setting and reviewing the LTIP targets.

The Sustainability and Innovation Committee charter can be found here: https://www.goodman.com/-/media/fles/sites/global/who-we-are/ corporate-governance/charters/Sustainability-and-Innovation-Committeecharter-2022.pdf

ANNUAL REPORT 2022

Board progression

This year we have made significant progress to deliver on our strategy to maintain a diverse Board with the appropriate mix of skills, gender and geographic representation.

Hilary Spann, appointed in April, is a highly experienced global real estate executive with an extensive background in public and private equity markets. She is currently a senior executive at NYSE-listed Boston Properties, Inc, based in New York.

Vanessa Liu was appointed in May. She is an experienced technology innovator, business leader and digital media entrepreneur. Vanessa is currently Co-Founder and CEO of SaaS technology company Sugarwork, and an Independent Director of ASX-listed artificial intelligence company, Appen Ltd.

At this year’s AGM, Hilary and Vanessa will be standing for election to the Board. Independent Directors Phil Pryke and Chris Green together with Executive Director Anthony Rozic will be standing for re-election.

Rebecca McGrath has notified the Goodman Board of her intention to bring forward her retirement from the Board from the 2024 AGM to 28 February 2023 to accommodate her expanding commitments with other companies. Since joining the Goodman Board in 2011, the Group has undergone substantial growth and changed markedly. – Rebecca has played an important role particularly through her chairmanship of the Risk and Compliance Committee. – On behalf of the Board and management, I thank Rebecca for her significant contribution over the last 11 years.

Demonstrating action

At Goodman we remain focused on our long-term sustainable business model. With a strong and determined global team, we are working with our customers to address the needs for more efficient and sustainable supply chains and for our investors to achieve long term, sustainable returns. At the same time, we are focused on providing our own people with opportunities and workplaces that enable them to be challenged and grow. I believe we have the right strategy and culture to achieve these objectives.

On behalf of the Board, I sincerely thank our customers and investors for their continued support and the Goodman team for their considerable efforts in making 2022 a most successful year for the Group.

Sincerely

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Stephen Johns Independent Chairman

In light of the appointment of our two new directors and the forthcoming replacement for Rebecca, the Board has asked long standing director, Phil Pryke, the Chair of the Remuneration Committee, to stand again for re-election at this year’s AGM. This will help preserve knowledge and experience on the Board. It is intended that Phil would retire from the Board during his next term after facilitating a smooth transition for a new Remuneration Committee Chair.

GOODMAN GROUP

Group CEO letter

Goodman Group delivered a strong result for FY22, reflecting the continued demand for industrial space in our markets. Our customers’ need for more productivity and sustainability from their supply chains continues to drive this demand. By focusing our portfolio and development workbook on key infill locations, we have seen accelerating market rental growth, significant valuation uplift and subsequent outperformance of our Partnerships.

Key financial highlights:

- Operating profit was $1.5 billion, up 25% on FY21,
- Operating EPS was 81.3 cents, up 24% on FY21
- Statutory profit was $3.4 billion, up 48%.

All business areas have contributed to the Group’s solid performance with:

- Investment earnings up 20%
- Management earnings up 28%
- Development earnings up 34%.

Assets under management have grown 26% to $73 billion, with an average total return of 21.4% for our Partnerships. We continue to be prudent and patient with our capital. Over the year $1.8 billion in third party equity was raised and we completed $8.5 billion of debt refinancing across the Group and Partnerships.

As a result, the Group’s balance sheet remains well positioned with low gearing at 8.5%, $2.8 billion of available liquidity, and $18.1 billion available across the Partnerships.

Optimising operations

The structural changes driving demand for industrial property remain. The digital economy continues to grow alongside our customers’ need for greater supply chain efficiency and sustainable properties close to consumers.

We’re working closely with our customers to optimise space, leverage technology, and provide strategic locations that lower transport requirements, costs and delivery times.

Property fundamentals remain strong in our markets. With stabilised occupancy at 98.7%, organic growth through our $13.6 billion development book continues to provide our customers with a source of quality properties in key locations. Our developments were 99% leased on completion and the high level of customer demand, coupled with low levels of supply have seen market rental growth accelerating at a rapid pace.

Consistent execution of our development workbook, and value-add across our sites, is contributing to strong margins, and offsetting cost pressure from increased construction costs globally.

Taking action on climate

Goodman is proactively responding to the global challenges of climate change and delivering on our ESG commitments. We’re taking action by reducing carbon emissions, regenerating infill sites, using renewable energy, developing greener buildings and creating more equitable supply chains. Through the Goodman Foundation, we’re partnering with community groups, and have facilitated $11.6 million of charity contributions throughout the year. We have increased our sustainability initiatives and commitments have grown from $700 million to approximately $820 million through to 2025.

Working with our customers and reducing our carbon emissions remains a priority. We’ve had our carbon reduction targets validated by the Science-Based Targets initiative and the Group is more than halfway to our 2025 target of having 400MW of solar PV installed across our global portfolio. Goodman is also on track to maintain carbon neutrality for our operations, while importantly, calculating and addressing the embodied carbon in our developments and investigating low carbon materials.

ANNUAL REPORT 2022

Outlook for FY23

Goodman is forecast to deliver another good performance in FY23, off the back of a strong year. We have a significant development workbook underway, continued underlying structural demand from our customers, and a robust capital position across the Group and Partnerships. As a result, we expect FY23 operating EPS growth to be 11%.

Focused team

Goodman’s agility, locational strategy and strong balance sheet, mean we are well positioned to continue to adapt to ongoing market challenges. Our global team remains focused on providing value and operational excellence for our customers and investors.

I’d like to thank our people who have continued to live our values of integrity, determination, innovation and sustainability. They have worked together to deliver an excellent result for our securityholders and investors. I would also like to thank you, our securityholders, as well as our customers, and all other stakeholders for your continued support and contribution to Goodman’s sustainable growth.

Sincerely

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Gregory Goodman Group Chief Executive Officer

GOODMAN GROUP

Corporate Governance 2022

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 with those 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.

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

Goodman's Corporate Governance Framework

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Reflecting the increasing importance of sustainability issues and the continuing rate of change through technology and innovation, the Board has also agreed to establish a new Sustainability and Innovation Committee drawing on the skills and experience of Chris Green (Committee Chair), Vanessa Liu, Phil Prkye and Hilary Spann. The new Committee will commence from 1 October 2022.

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 2022

Goodman Limited and its controlled entities Consolidated financial report for the year ended 30 June 2022

CONTENTS
Directors’ report	10
Lead auditor’s independence declaration	78
Consolidated statements of fnancial position	79
Consolidated income statements	80
Consolidated statements of comprehensive income	81
Consolidated statements of changes in equity	82
Consolidated cash fow statements	84
Notes to the consolidated fnancial statements
Basis of preparation
1 Basis of preparation	85
Results for the year
2 Proft before income tax	87
3 Proft per security	90
4 Segment reporting	91
5 Taxation	95
Operating assets and liabilities
6 Property assets	98
7 Receivables	110
8 Contract balances	111
9 Assets held for sale	112
10 Payables	113
11 Provisions	113
12 Property, plant and equipment	114
13 Leases	114
14 Goodwill and intangible assets	115

Capital management
15 Net fnance (expense)/income	119
16 Interest bearing liabilities	120
17 Other fnancial assets and liabilities	123
18 Financial risk management	124
19 Dividends and distributions	133
20 Issued capital	134
Other items
21 Notes to the cash fow statements	136
22 Equity attributable to Goodman Limited
and non-controlling interests	139
23 Controlled entities	141
24 Related parties	143
25 Commitments	145
26 Auditors’ remuneration	146
27 Parent entity disclosures	147
28 Events subsequent to balance date	148
Directors’ declaration	149
Independent auditor’s report	150
Appendix A – Goodman Logistics (HK) Limited
fnancial report for the year ended 30 June 2022	154

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 2022 (FY22) 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 GL is identified as having acquired control over the assets of GIT and GLHK. The consolidated financial statements of GL 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 2022

OPERATING AND FINANCIAL REVIEW

About Goodman

Goodman is a specialist global industrial property group. We own, develop and manage high-quality, sustainable properties that are close to consumers and provide essential infrastructure for the digital economy.

Goodman and its Partnerships have 410 properties located in key consumer markets in 14 countries across Asia Pacific, Europe and the Americas. With $73.0 billion of assets under management, Goodman is the largest property group listed on the Australian Securities Exchange (ASX) and invests significantly alongside our capital partners in our Partnerships.

Our integrated business model

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Goodman’s Own Develop Manage model focuses the business on its customers’ current and future needs.

Our strategy

Maximise returns by providing essential, sustainable infrastructure for the digital economy.

- Urbanisation, globalisation, demographics, digitalisation, sustainability and an increased focus on health and wellbeing: all have changed the way people live, work and consume. These structural shifts have increased the importance of industrial properties in the global supply chain
- Globally, the logistics and warehousing sectors are now considered essential infrastructure for digital economies, and key to the efficient distribution of products to consumers. As industrial property specialists, Goodman’s long-term strategy is built on supporting our customers to deliver in the most sustainable and efficient way possible. Goodman focuses on key markets and concentrates our portfolio where the most value can be created for customers and investors.

Our values

As a specialist global industrial property group, we aim to be the best at what we do, rather than the biggest. Goodman’s values reflect who we are today and who we want to be long into the future.

These 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 are building our business for the long term. That is 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.

We own and maintain high-quality properties close to consumers, develop sustainable properties, and manage our global investment portfolio to a high standard. Goodman works alongside our capital partners, which include sovereign wealth, pension and large multi-manager funds. In each market, our dedicated local teams take care of all aspects of property asset and investment management, ensuring a high level of customer service.

GOODMAN GROUP

Directors’ report Operating and financial review (continued)

$3,414.0M $1,528.0M 81.3¢

30¢ $8.37 $73.0BN $13.6BN 8.5% $2.8BN 36.7X

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PROFIT ATTRIBUTABLE TO SECURITYHOLDERS

$2,311.9 million in FY21 Increase of 47.7% 183.2c Statutory profit per security (FY21: 125.4c)

OPERATING PROFIT

$1,219.4 million in FY21 Increase of 25.3%

OPERATING PROFIT PER SECURITY (OPERATING EPS)[1]

65.6c in FY21 Increase of 23.9%

DIVIDENDS/DISTRIBUTIONS PER SECURITY

30c in FY21

Stable, in line with financial risk management objective to sustainably fund future investments 1,863.7 million weighted average number of securities on issue

NET TANGIBLE ASSETS PER SECURITY

$6.68 in FY21 Increase of 25.3% 1,868.2 million securities on issue

TOTAL ASSETS UNDER MANAGEMENT

$57.9 billion in FY21 Increase of 26.1%

DEVELOPMENT WORK IN PROGRESS[2]

$10.6 billion in FY21 Increase of 28.3%

GEARING[3]

6.8% in FY21

LIQUIDITY

$1.9 billion in FY21

INTEREST COVER[4]

63.7 times in FY21 6.2 years weighted average debt maturity (FY21: 6.3 years)

Operating profit per security (operating EPS) is the operating profit divided by the weighted average number of securities on issue during FY22, 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 projected 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 $133.3 million (2021: $134.1 million). Total interest bearing liabilities are grossed up for the fair values of certain derivative financial instruments included in other financial liabilities of $79.6 million (2021: $62.3 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 2022

Overview

Goodman has delivered a strong operating performance during FY22 with operating profit increasing by 25.3% to $1,528.0 million. This equates to an operating EPS of 81.3 cents, up 24.0% on FY21.

The business environment is changing, with increased interest rates, inflation, geopolitical risks and the ongoing impacts of the COVID-19 pandemic; however, the long-term structural drivers of demand for our assets have not changed. Tight supply and strong customer demand continue to support leasing across our stabilised portfolio and developments, with high occupancy in the markets the Group has chosen to invest in. Our customers continue to intensify their warehousing in order to enhance their ability to service their customers in urban locations. There has been an increase in the use of automation and technology to optimise delivery and improve supply chain efficiency and the Group aims to continue to facilitate this with the selection of assets in the portfolio.

We have continued to successfully execute our strategy, which is providing our customers with essential locations and offering productivity improvements to help absorb cost and time. It is also delivering to the Group and Partnerships a portfolio of assets with consistently strong risk adjusted returns. This is reflected in both the Group’s property investment earnings and management earnings.

Development activity has again been a significant contributor to the operating performance. Construction costs are increasing globally but the Group has been able to manage these impacts successfully. However, by delivering increased productivity and value from our sites and development execution, Goodman has provided productivity benefits to customers which has assisted in the maintenance of strong returns.

The investor and customer demand for industrial space has led to another strong property valuation result, especially in the first half of the financial year. Rising interest rates have meant that the pace of the capitalisation rate compression, and therefore valuation growth, slowed in the second half of the financial year; however, growth in rental income that is occurring in Goodman’s portfolio has contributed an increasing proportion of the valuation result. While transactional activity has slowed in the last quarter, transactions that have completed show that valuations for good quality real estate in the right locations remain supported. The total property uplifts (net of tax), including the Group’s share of Partnerships, for FY22 was $2,326.3 million and the weighted average capitalisation rate for the stabilised assets in the portfolios contracted from 4.3% at 30 June 2021 to 4.0% at 30 June 2022.

Goodman’s capital position remains sound. At 30 June 2022, gearing was 8.5% and the cash and undrawn bank lines available to the Group were $2.8 billion. In April 2022, the Group closed a US$500 million Sustainability Linked Bond into the US144A/Regulation S market. Dividends and distributions relating to FY22 were maintained at 30 cents per security, equivalent to 37% of operating profit. The cash retained for future investment in the business enables the maintenance of the balance sheet and capital position that 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.

Over the year, progress on Environmental, Social and Governance (ESG) objectives was met or exceeded. Please refer to the FY22 Group Sustainability Report for more detail. This is expected to be released before the 2022 Annual General Meeting (AGM).

Key operational highlights for FY22:

Property investment:

- Property investment earnings of $494.6 million (2021: $411.5 million)
- $73.0 billion (2021: $57.9 billion) of total AUM, of which the Group owns a whole or a part share
- 3.9% like for like growth in net property income (NPI) in Partnerships
- 98.7% occupancy across the Partnerships.

Management:

- Management earnings of $588.4 million (2021: $459.1 million)
- $68.7 billion of external AUM in Partnerships
- Partnerships reported 21.4% weighted average total return on net assets.

Development:

- Development earnings of $960.7 million (2021: $717.9 million)
- $13.6 billion of development WIP (by estimated end value)
- 85% of WIP is currently conducted within, or pre-sold to, Partnerships or third parties.

The operating performance and property valuation results have contributed to Goodman’s statutory profit attributable to Securityholders for FY22 increasing by $1,102.1 million to $3,414.0 million. The statutory profit is reported net of the accounting expense of the Goodman LTIP of $257.6 million and a loss of $191.4 million from derivative fair value movements. These items, as well as the property valuation gains, are excluded from the calculation of operating profit.

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 (including the Hong Kong SAR) and Japan), Continental Europe (with the vast majority of assets located in Germany and France), the United Kingdom and the Americas (principally North America and including 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 JVs, 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 2022

The analysis of Goodman’s performance and the reconciliation of the operating profit to profit for the year attributable to Securityholders for FY22 are set out in the table below:

	2022	2021
Note	$M	$M
Analysis of operating profit
Property investment earnings	494.6	411.5
Management earnings	588.4	459.1
Development earnings	960.7	717.9
Operating earnings	2,043.7	1,588.5
Operating expenses	(349.3)	(294.0)
	1,694.4	1,294.5
Net finance expense (operating)1 Income tax expense (operating)2	(39.3) (127.1)	(16.4) (58.7)
Operating profit	1,528.0	1,219.4
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(d)	260.1 2,272.9 (206.7)	63.1 1,295.8 (50.4)
	2,326.3	1,308.5
Fair value adjustments related to liability management – Fair value adjustments on derivative financial instruments 15 – Share of fair value adjustments on derivative financial instruments in Partnerships 6(f)	(189.7) (1.7)	83.9 (28.9)
	(191.4)	55.0
Other non-cash adjustments or non-recurring items – Share based payments expense 2 – Straight lining of rental income and tax deferred adjustments	(257.6) 8.7	(268.8) (2.2)
	(248.9)	(271.0)
Profit for the year attributable to Securityholders	3,414.0	2,311.9

Net finance expense (operating) excludes derivative mark to market and unrealised foreign exchange movements and interest income from related parties of $6.2 million that has been reported under development earnings in the analysis above.
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 FY22 of $494.6 million increased by 20% on the prior year and comprised 24% of the total operating earnings (2021: 26%).

	2022	2021
	$M	$M
Analysis of property investment earnings
Direct	103.7	79.3
Partnerships	390.9	332.2
	494.6	411.5

Key metrics:	2022	2021
Weighted average capitalisation rate (WACR) (%)	4.0	4.3
Weighted average lease expiry (WALE) (years)	5.2	4.5
Occupancy (%)	99	89

Goodman’s property portfolios are concentrated in large, urban locations where available space remains restricted, driven by significant customer demand, combined with relatively high barriers to entry and limited supply. Consequently, we are seeing significant market rental growth across many locations globally. This is supporting strong underlying investment fundamentals and cash flows in our portfolio.

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 increased compared to the prior year as a result of both like for like increases in NPI and rental income earned from completed developments (held in inventories, mainly in Continental Europe) prior to their disposal to Partnerships or third parties.

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 increased by $58.7 million to $390.9 million compared to the prior year. This was due to the stabilisation of developments in FY21 and FY22, 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. NPI from the Partnership portfolios in FY22 was up by over 3.9% on a like for like basis compared to FY21 and average occupancy increased to 99%.

During FY22, the Group’s share of property valuations from the stabilised portfolios (before deferred tax) was $2,138.8 million (2021: $1,174.9 million), which included valuation uplifts of $204.3 million (2021: $164.2 million) on developments that reached completion during the year. In addition, the Group’s share of property valuations from investment properties Under Development and those held for sale was $452.1 million (2021: $223.6 million). Valuation gains occurred in all regions and while capitalisation rate compression was the main driver, in the first half of the year, both rental income growth and development activities have provided an increasing contribution. At 30 June 2022, the WACR for the Group’s portfolios was 4.0%, compared to 4.3% at the start of the financial year.

The operating income return on Goodman’s investment in the stabilised portfolios held by the Partnerships was 4.2% compared to 4.3% in FY21, as the growth in NPI was offset by the impacts of the valuation uplifts that increased the investment base. These valuation uplifts resulted in a 21% total return for the financial year. The income returns from the Partnerships were also impacted by the increased level of active development which has not yet begun to deliver rental income. 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 2022

Management

Management earnings in FY22 of $588.4 million increased by 28% compared to the prior year and comprised 29% of total operating earnings (2021: 29%). This increase was a combination of higher base management and property service fees and higher performance fees.

The higher base management fees were primarily a result of the increased AUM. During FY22, external AUM increased by 27% to $68.7 billion from $54.0 billion, primarily due to valuations, acquisitions and developments in the Partnerships.

External AUM

	2022
	$B
At the beginning of the year	54.0
Acquisitions	4.2
Disposals	(0.9)
Capital expenditure (developments)	2.6
Valuations	8.2
Foreign currency translation	0.6
At the end of the year	68.7

Excluding performance related income, management fee income earned from the overall management of the Group’s Partnerships was $380.4 million (2021: $310.1 million). Base management fee income increased in line with the external AUM, noting that a significant component of the valuation uplifts were recorded at 31 December 2021 and that the completion of developments throughout the year was skewed to the second half of FY22. 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.

Performance fee revenue of $208.0 million (2021: $149.0 million) again provided a strong contribution to the Group’s operating earnings. As in the prior year, these performance fees arose in Australia/New Zealand, Asia and Continental Europe, with the higher performance fees in FY22 due to the timing of the assessment dates relative to the prior year. For FY22, the Partnerships reported a weighted average total return on net assets of 21.4% (2021: 17.7%) and with the consistently strong performance of the Partnerships in recent times, a significant backlog of potential fees may be earned in the future should conditions remain stable.

Development

In FY22, development earnings were $960.7 million (excluding revaluation gains), an increase of 34% on the prior year and comprised 47% of total operating earnings (2021: 45%).

Strong occupier demand has continued to give the Group confidence to grow the development workbook as customers look for sites closer to consumers and invest in new facilities to accommodate significant investments in technology and automation. Goodman’s development activity is underpinning its organic growth with an average annual production rate for FY22 (based on expected development end value) of approximately $7.0 billion, an increase of over $1.0 billion on FY21.

WIP (based on development end value) is $13.6 billion at 30 June 2022 (2021: $10.6 billion). The WIP is globally diversified across 85 projects and has grown in volume, scale and value. The increased scale and complexity have seen the average development period increase from 19 to 23 months over the past year. The majority of development activity in FY22 was again undertaken by or for the Partnerships and third parties (85% of WIP at 30 June 2022).

While costs have increased globally across the construction process due to supply chain, labour and material shortages, Goodman’s margins have remained strong. This has been managed proactively through the Group’s procurement practices and contingencies for time and cost. In addition, rental growth and value-add activities across the portfolio and development projects have provided the ability to mitigate these costs.

The Group remains focused on regeneration of existing land and buildings and enhancing value through intensification of use such as multi-storey developments which make up $7.7 billion of the current WIP. Goodman is continuing to add opportunities to its portfolio incrementally to support future development in constrained markets, while reducing its impact on the environment through brownfield developments. Brownfield developments and regeneration of sites continues to be greater than 50% of our global WIP.

Given the strength in customer demand, especially in locations where the supply of available land is restricted, the Group has chosen to commence certain projects prior to securing a pre-lease commitment. Consequently, of the $7.9 billion of project commencements during the year, 59% had pre-committed leases. However, of the $6.0 billion of development completions during the year, 99% had pre-committed leases, a reflection of the strong customer demand and the Group’s ability to convert that into lease contracts that support the value of the investment.

GOODMAN GROUP

Directors’ report Operating and financial review (continued) Analysis of performance (continued)

Operating expenses

For FY22, operating expenses were $349.3 million, up from $294.0 million in the prior year, an increase of $55.3 million. This was primarily in wages and salaries, due to additional headcount to support the ongoing activity levels, inflationary pressures in most regions and additional short-term incentives due to the outperformance in the Group’s overall operating profit. The Group’s aim is to keep base remuneration costs relatively steady, and instead use variable remuneration to incentivise staff.

Administrative and other expenses increased to $90.4 million from $83.2 million due to recommencement of travel and the associated costs, higher information technology expenditure and increased charitable donations.

Net finance expense (operating)

Net finance expense (operating), which excludes interest income on loans to development JVs, derivative mark to market and unrealised foreign exchange movements, increased to $39.3 million from $16.4 million. This was due to a greater level of interest bearing liabilities, including the new US$500 million Sustainability Linked Bond and higher interest rates, partly offset by an increase in capitalised interest.

Income tax expense (operating)

Income tax expense (operating) for FY22 at $127.1 million (2021: $58.7 million) increased 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 increase in the tax expense was primarily due to the nature and geographic location of the Group’s increased revenues.

Capital management

Interest bearing liabilities

At 30 June 2022, the Group’s available debt facilities and fixed rate long-term bonds, which totalled $4.6 billion (of which $2.9 billion had been drawn), had a weighted average maturity of 6.2 years with $0.1 billion due to mature in FY23. The Group’s cash and undrawn bank facilities totalled $2.8 billion. During the year, the Group’s issued its first US$500 million 10-year Sustainability Linked Bond into the US144A/Regulation S debt capital market.

At 30 June 2022, gearing was 8.5% (2021: 6.8%), which continued to be at the lower end of the Group’s policy range of 0% to 25%. Interest cover was 36.7 times (2021: 63.7 times) and the Group continued to have significant headroom relative to its financing covenants. Goodman’s strong investment grade credit ratings were unchanged over the year.

During FY22, the Group and its Partnerships issued new long-term bonds of $2.0 billion (including $859.0 million of Sustainability Linked Bonds), refinanced $6.4 billion of bank debt and secured third party equity commitments to allocate $1.8 billion that will provide liquidity for ongoing acquisition and development opportunities. At 30 June 2022, 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 FY22 was maintained at 30 cents per security, a pay-out ratio of 37%, with 15 cents per security paid on 24 February 2022 and 15 cents per security to be paid on 25 August 2022. 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 distribution for FY22:

- Goodman Limited did not declare any dividends during the financial year (2021: $nil)
- Goodman Industrial Trust declared and accrued distributions of 27.5 cents per security (2021: 24.0 cents per security), amounting to $513.8 million (2021: $443.4 million)
- GLHK declared and accrued a dividend of 2.5 cents per security (2021: 6.0 cents per security), amounting to $46.7 million (2021: $110.8 million).

ANNUAL REPORT 2022

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 $260.1 million (2021: $63.1 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 $2,330.8 million (2021: $1,335.4 million), a reflection of the quality of the property portfolios and the continued customer and investor demand for industrial assets. This valuation uplift comprised $1,674.4 million (2021: $947.6 million) in respect of the stabilised portfolio, $204.3 million (2021: $164.2 million) on developments that stabilised during the year) and $452.1 million (2021: $223.6 million) from investment properties that were still under development at 30 June 2022.

At 30 June 2022, the WACR for Goodman’s stabilised property portfolios (both directly held and Partnerships) was 0.3 percentage points lower than 30 June 2021, declining from 4.3% to 4.0%.

At 30 June 2022, the Group’s share of cumulative valuation gains on properties that were subject to conditional contracts for disposal, incorporating all valuation gains since the most recent repositioning activities commenced, was $429.6 million (2021: $95.9 million).

These gains related to directly held properties and properties held in Partnerships that have been contracted for disposal and included two directly held properties that were contracted for disposal in the current year. The Group’s share of these cumulative valuation gains that have been reported as part of the statutory result included $333.7 million recognised in FY22 and $95.9 million in prior reporting periods. No valuation gains in respect of properties that had previously been subject to a conditional contract for disposal were realised in the current year (2021: $nil) and therefore none of the gains has been reflected in the operating profit for the current or any past periods.

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 loss of $191.4 million (2021: $55.0 million net gain). This was primarily due to the weakening of the AUD against the USD and HKD partly offset by a strengthening of the AUD against the JPY, EUR and GBP and the impact of higher interest rates on the associated hedge contracts.

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 economic 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 FY22, the movement in reserves attributable to foreign currency movements was a gain of $145.3 million (2021: $279.4 million loss).

Other non-cash adjustments or non-recurring items

The principal other non-cash adjustments or non-recurring items for FY22 related to the share based payments expense of $257.6 million (2021: $268.8 million) for Goodman’s LTIP. The decrease primarily related to the fact that the Goodman Group security price fell from $21.17 to $17.84 during FY22 compared to an increase from $14.85 to $21.17 in FY21.

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

GOODMAN GROUP

Directors’ report Operating and financial review (continued)

Statement of financial position

	2022	2021
	$M	$M
Stabilised properties	2,387.1	2,022.2
Cornerstone investments
in Partnerships	11,903.9	8,668.6
Development holdings	4,455.2	3,645.1
Intangible assets	795.4	822.6
Cash and cash equivalents	1,056.0	920.4
Other assets	834.8	788.1

Total assets Interest bearing liabilities Other liabilities	21,432.4 2,832.2 2,175.4	16,867.0 2,060.3 1,645.2
Total liabilities	5,007.6	3,705.5
Net assets	16,424.8	13,161.5

The carrying value of the directly held stabilised investment properties (which included assets held for sale at 30 June 2022 of $598.1 million) increased by $364.9 million to $2,387.1 million at 30 June 2022. This was due to acquisitions in Australia and Asia of $409.9 million, development completions of $477.5 million and valuation uplifts of $260.1 million being partly offset by disposals of $823.9 million.

The value of Goodman’s cornerstone investments in Partnerships, which excludes the Group’s share of their development assets, increased by $3,235.3 million to $11,903.9 million. This movements during the year included the Group’s net investments in the Partnerships of $462.1 million, the valuation uplifts (net of deferred tax) across the portfolios of $1,821.6 million, transfers from development properties on stabilisation of $709.3 million and the impact of foreign currency translation $195.1 million.

The increase in the directly held development properties is due to the ongoing acquisitions and development expenditure of $1,267.1 million, which was greater than the disposals and transfers to stabilised assets at completion of $909.8 million.

The increase in the Group’s share of development assets in the Partnerships was due to acquisitions of $710.2 million and valuation uplifts of $451.3 million (net of deferred tax), partly offset by transfers to stabilised assets at completion of $724.9 million.

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

The movement in the cash balance during the year is explained in the cash flows section of this report. In respect of the interest bearing liabilities, Goodman has renegotiated a number of bank facilities to provide ongoing funds for the business, but the principal change in the drawn debt during the year was the completion of a US$500 million Sustainability Linked Bond into the US144A/Regulation S market. The foreign private placement of ¥12.5 billion is scheduled to mature in April 2023 and is disclosed as a current liability.

Other assets included receivables, right of use assets from the Group’s operating leases (primarily office premises) and the fair values of certain derivative financial instruments, which hedge the Group’s interest rate and foreign exchange rate risks. There were no material movement during FY22.

Other liabilities include trade and other payables, lease liabilities, the provision for distributions to Securityholders, fair values of certain derivative financial instruments and tax liabilities (including deferred tax). The increase in other liabilities is primarily due to mark to market movements on derivative financial instruments.

Goodman’s development holdings include directly held properties (primarily inventories) of $1,976.4 million (2021: $1,650.5 million) and the Group’s share of development assets in the Partnerships of $2,478.8 million (2021: $1,994.6 million), and on a combined basis increased during the year by $810.1 million to $4,455.2 million (2021: $3,645.1 million). This was a reflection of the increased activity levels in most regions with the Group’s development WIP (as measured by estimated end value) having increased from $10.6 billion at 20 June 2021 to $13.6 billion at 30 June 2022.

ANNUAL REPORT 2022

Cash flows

	2022	2021
	$M	$M
Operating cash flows	841.0	1,114.7
Investing cash flows	(1,001.5)	(549.9)
Financing cash flows (excluding dividends and distributions)	856.9	(797.7)
Dividends and distributions paid	(557.2)	(551.4)
Net increase/(decrease) in cash held	139.2	(784.3)
Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash held Cash and cash equivalents at the end of the year	920.4 (3.6) 1,056.0	1,792.8 (88.1) 920.4

Operating cash flows

Operating cash flows of $841.0 million (2021: $1,114.7) million were lower than the prior year. This was mainly due to an increase in the payments associated with development activities. There was also an increase in other cash payments, lower cash received from the Partnership distributions (as a result of sales completed last year) that were partly offset by higher cash receipts from portfolio performance fees.

The net development cash inflow was $367.1 million (2021: $612.9 million). The gross receipts from development activities were similar to the prior year at $1,587.8 million (2021: $1,560.3 million), but the gross payments for development activities were higher than the prior year at $1,220.7 million (2021: $947.4 million). 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. However, it also reflected an investment in inventories that will be developed to generate profits in future periods. For FY22 overall, compared to the prior year Goodman undertook a similar percentage of its total development activities in the Partnerships. When Partnerships require funding for development activities, then the Group’s share of the investment is reported in investing cash flows.

The increase in other cash payments is due to the increase in operating costs, primarily wages and salaries, and also includes the cost of cash settled performance rights under the LTIP. The cash settled portion of the LTIP was offset by the issue of new securities to raise an equivalent amount of funds. That issue is reported in the financing cash flows. As a result, the LTIP was cash neutral overall.

The distributions received from Partnerships in FY22 were $442.5 million, lower than $536.9 million received in the prior year. The Partnerships continued to distribute their net cash flows from property investment (rental income) but the primary reason for this decrease was the timing of distributions associated with the Group’s share of development activities in the Partnerships.

The timing of 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 current year included cash receipts from previously accrued portfolio performance fees; hence, overall receipts were higher than the prior year.

Investing cash flows

Investing net cash outflow was $1,001.5 million, an increase of $451.6 million compared to the prior year. During FY22, the principal investing cash outflows related to acquisitions of directly held properties in Asia and the United Kingdom of $431.7 million (2021: $192.2 million) and to investments in the Group’s Partnerships of $1,332.3 million (2021: $790.3 million). The Group received proceeds of $671.8 million from the disposals of investment properties in the United Kingdom and Australia. Capital returns from the Partnerships of $91.8 million (2021: $256.3 million) occurred after capital management initiatives in Goodman UK Partnership and Goodman North America Partnership.

Financing cash flows

Financing cash inflow (net of dividends and distributions) was $299.7 million, an increase of $1,648.8 million compared to a net cash outflow of $1,349.1 million in the prior year.

Proceeds from borrowings and derivative financial instruments were $1,466.5 million (2021: $204.6 million). This included cash inflows in respect of the the completion of a US$500 million Sustainability Linked Bond into the US144A/Regulation S debt capital market and drawdowns on the Group’s revolving bank loans of $777.3 million.

Payments on borrowings and derivative financial instruments were $789.3 million (2021: $891.9 million). This included repayments on the Group’s revolving bank loans of $768.4 million. In the prior year, the cash outflows included the redemption of US$453.8 million notes in the US144A/Regulation S market.

The net cash flow from related party loans was an inflow of $111.4 million (2021: $135.0 million net outflow). These loans are provided by the Group to fund developments in the Partnerships (including JVs) and are repaid either at completion or when the Partnership obtains its own external debt.

The net proceeds from the issue of stapled securities of $109.7 million (2021: $64.8 million) were directly used to fund obligations under the LTIP that have been reported as part of the Group’s operating cash flows.

The other principal financing cash outflows were the distributions paid to Securityholders of $557.2 million (2021: $551.4 million).

GOODMAN GROUP

Directors’ report Operating and financial review (continued)

Outlook

Goodman has developed significant expertise and a deliberate strategy to target high barrier to entry markets and to undertake larger, more complex projects over longer periods of time, providing our customers access to facilities where they are scarce and has positioned the Group well for future growth.

In the near term, market conditions are likely to be volatile and the risks associated with rising inflation, interest rates and slowing economic activity are elevated. This may impact consumers; however, they continue to seek faster and more flexible delivery, which requires ongoing intensification of warehousing in urban locations to optimise delivery and improve productivity. The business remains agile, focused on the changing consumption habits across the physical and digital space and, as a result, the evolving requirements of customers around the world.

Demand is currently exceeding supply in our markets, supporting our development-led growth strategy and producing well located assets for the Group and our Partnerships. In addition to strategic site acquisitions, the opportunities for regeneration of existing assets support our future development workbook by providing value add opportunities, while reducing our environmental impact. Our production rate, depth of customer demand and strong margins are supporting the outlook for development earnings into FY23.

In addition, the Group continues to maintain a strong balance sheet, which combined with retained income, provides significant liquidity, stability and financial resources.

The outlook for property investment and management earnings remains strong, as the customer demand and supply constraints in the Group’s markets provide support for both rental growth and a high level of occupancy. Investment and management earnings will also benefit from the completion of ongoing developments. Development completions and market rental growth are also expected to support growth in AUM.

Goodman has made a strong start to FY23 with a significant development workbook underway, continued underlying structural demand from customers and a robust capital position across the Group and Partnerships. The Board believes the Group is positioned to continue to deliver growth despite the risks associated with current market volatility and expects to achieve operating EPS growth of 11% in FY23.

The Group sets financial performance targets annually and reviews them regularly. Forecasts are subject to there being no material adverse change in market conditions or the occurrence of other unforeseen events.

ANNUAL REPORT 2022

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 management Goodman could suffer an inability to deliver + Low gearing, ample liquidity and appropriate hedging and duration to absorb market shocks
(debt, equity and cash flow) its strategy, or an acute liquidity or solvency + Appropriate hedging quantities and duration in accordance with Goodman's FRM policy
crisis, financial loss or financial distress as a
+ Diversification and tenure of debt funding sources and maturities
result of a failure in the design or execution of
its capital management and financing strategy. + Capital partnering transfers risks into Partnerships
+ Diversification of investment partners
+ 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
+ Insurance program including project specific insurance.
Economic and Global economic conditions and government + Global diversification of Goodman's property portfolios
geopolitical environment policies present both risks and opportunities + Focus on core property portfolios in key urban market locations
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, appropriate hedging 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 + Long term leases with review mechanisms.
consequences on our people, operations and
capital partners.
In the near-term, market conditions are likely to
be volatile and the risks associated with rising
inflation, interest rates and slowing economic
activity are elevated.
Governance, regulation Non-compliance with legislation, regulators, + Independent governance structures
and compliance or internal policies, or to understand and + Core values and attitudes, with an embedded compliance culture focused on best practice
respond to changes in the political and
+ Dedicated Chief Risk Officer and Compliance Officer
regulatory environment (including taxation)
could result in legal action, financial + Review of transactions by the Goodman Investment Committee
consequences and damage our standing + Verification and sign off process for all public announcements
and reputation with stakeholders.
+ Comprehensive insurance program, covering property, liability, directors and officers
and professional indemnity.
People and culture Failure to recruit, develop, support, and + Succession planning for senior executives
retain staff with the right skills and experience + Competitive remuneration structures, including the LTIP
may result in significant underperformance
or impact the effectiveness of operations + Performance management and review
and decision making, in turn impacting + Goodman values program
business performance. + Learning, development and engagement programs
+ Staff engagement through team strategy days, town halls and the (good) life program.
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GOODMAN GROUP

Directors’ report

Risks (continued)

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Development Development risks may arise from location, + Review of development projects by the Goodman Investment Committee
site complexity, planning and permitting, + Goodman defined design specifications, which cover environmental, technological,
infrastructure, size, duration along with general and safety requirements, protecting against short-term obsolescence
contractor capability.
+ Redevelopment of older assets to intensify use
+ Pre-selecting and engaging general contractors that are appropriately capitalised
and reviewing contractor liquidity
+ 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
Goodman Board oversight including limits with respect to speculative development and
higher development risk provisions
+ Capital partnering development projects.
Disruption, changes in The longer-term risk that an inability + Key urban market strategy – urban, infill locations support re-usability of property
demand and obsolescence to understand and respond effectively + Adaptable and re-usable building design – ease to reconfigure for another customer
to changes in our competitive landscape
and customer value chain could result + Geographic diversification
in business model disruption and asset + Capital partnering transfers risks into Partnerships
obsolescence, including the perception + Insurance program (both Goodman's and key contractors), including project specific
of obsolescence in the short term. insurance covering design and defects
+ Long lease terms with prime customers
+ Investment in innovation and technology strategies.
Environmental Failure to deliver on Goodman's sustainability + Corporate Responsibility and Sustainability policy
sustainability and leadership strategy and ambitions may lead to + 2030 Sustainability Strategy including the assessment of individual assets to improve
climate change a negative impact on Goodman's reputation, resilience and implementation of sustainability initiatives
ability to raise capital and a disruption to
+ Sustainability guidelines for development projects
operations and stranded assets.
+ Review and approval of acquisitions and development projects by the Goodman
Investment Committee and relevant Partnership Investment Committee, including
consideration of climate in due diligence and specification
+ Adoption of the Task Force on Climate-Related Financial Disclosures recommendations
as a framework for climate risks.
Asset and portfolio Inability to execute asset planning and + Key urban market strategy – urban, infill locations where customer demand is strongest
management strategies, including leasing + Diversification of customer base and lease expiries
risk exposures, can reduce returns from
+ Review of significant leasing transactions and development projects by the Goodman
Goodman's portfolios.
Investment Committee
+ Capital expenditure programs keeping pace with property lifecycle.
Concentration Over-exposure to specific areas, such + Diversification of customer base and lease expiries
of counterparties as capital partners, supply chain, + Diversification of capital partners and Partnership expiries
and markets customers and markets, may limit growth
+ Contractor pre-selection and tendering
and sustainability opportunities.
+ Independence governance structure.
Information and Maintaining security (including cyber + Reporting of risks and management activity
data security security) of IT environment and data, ensuring + Proactive monitoring, review and testing of infrastructure
continuity of IT infrastructure and applications
+ Disaster recovery and business continuity planning and testing
to support sustainability and growth and
prevent operational, regulatory, financial and + Benchmarked strategy for delivery of security IT infrastructure and systems
reputational impacts. + Training and awareness program and other assurance activities for monitoring
and improvement.
Infectious disease There continues to be significant uncertainty + Protect and support our people
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. The
approach in enabling the world to stabilise + In-house property management team enabling flexibility to support and respond
and transition to a "normal" footing is still to to customers
be understood, while "Zero COVID" policies + Capital model, strong balance sheet with adequate liquidity available.
by some nations is having both economic and
supply chain issues globally.
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ANNUAL REPORT 2022

QUALIFICATIONS, EXPERIENCE AND

SPECIAL RESPONSIBILITIES OF DIRECTORS AND COMPANY SECRETARY

Board of Directors

Stephen Johns Independent Chairman

Stephen is the Independent Chairman and 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
- Director of European-Australian Business Council.

Directorships of Other Listed Entities in the Past Three Years

- Brambles Limited (August 2004 to June 2020).

Gregory Goodman Group Chief Executive Officer

Greg is the Managing Director of Goodman Limited and Goodman Funds Management Limited and Group Chief Executive Office 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

Greg 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 industrial property. Greg is the 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 Goodman and its Partnerships.

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 Nomination Committee and the Remuneration Committee (since 19 November 2021). Chris retired as a member of the Audit Committee on 19 November 2021.

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
- Director of Wyuna Regenerative Ag Pty Limited
- Director of Infinium Logistics Solutions UK Limited
- Director of The Opportunity Network
- Director of Ility inc.

GOODMAN GROUP

Directors’ report

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

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. He was until recently Chairman and a director of G8 Education Limited and was formerly an independent director of Coca-Cola Amatil Limited and Westfield Corporation Limited.

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

Other Directorships and Offices

- Director of Aurecon Limited

She was most recently Vice President of SAP.iO North America, SAP’s early-stage venture arm, where she recruited and accelerated 87 enterprise software startups. Prior to SAP, Vanessa was Chief Operating Officer at Trigger Media Group, a digital media venture studio, and co-founded Trigger’s portfolio companies: digital media company InsideHook and SaaS technology company Fevo.

Vanessa graduated magna cum laude highest honours with an AB in Psychology from Harvard University and cum laude with a JD from Harvard Law School. She was a Fulbright Scholar at Universiteit Utrecht in the Netherlands. She serves as a Past President Director of the Harvard Alumni Association and is a Board Advisor of Talking Talent Ltd. and a Board Observer of Fevo.

Other Directorships and Offices

- Director of Appen Ltd
- CEO of Sugarwork.

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 Nomination Committee and the Audit Committee (appointed on 19 November 2021). Rebecca resigned as a member of the Remuneration Committee on 19 November 2021.

- Director of Boral Limited
- Director of Metcash Limited.

Former Directorships of Other Listed Entities in the Past Three Years

- Coca-Cola Amatil Limited (December 2016 – May 2021)
- G8 Education Limited (January 2016 – November 2021).

Vanessa Liu Independent Director

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

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 last role as a senior executive 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 and a member of The Australian British Chamber of Commerce Advisory Council.

Appointed: 1 June 2022.

Board Committees: Nil.

Other Directorships and Offices

- Chairman of OZ Minerals Limited (Director since November 2010)

Skills, Experience and Expertise

Vanessa is an experienced technology business leader and currently Co-Founder and CEO of SaaS technology company Sugarwork, and an independent director of ASX-listed artificial intelligence company Appen Ltd (since March 2020). She has more than twenty years of experience in the technology sector having started her career at McKinsey in the Telecom, Media & Technology Practice.

- Director of Macquarie Group Limited and Macquarie Bank Limited (since January 2021)
- Director of Investa Wholesale Funds Management Limited
- Director of Investa Office Management Holdings Pty Ltd
- 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).

ANNUAL REPORT 2022

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.

Skills, Experience and Expertise

Danny was formerly CEO of Goodman’s European business and has oversight and is currently the Acting CEO of Goodman’s Brazilian operations. Danny has been with Goodman since 2006 and has over 20 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. 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.

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.

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.

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

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, member of the Audit Committee and the Risk and Compliance Committee (from 19 November 2021).

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

Hilary Spann Independent Director

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

Appointed: 4 April 2022.

Board Committees: Nil.

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.

Skills, Experience and Expertise

Hilary has an extensive background in public and private equity markets and is currently a senior executive at NYSE-listed Boston Properties, Inc. (NYSE: BXP), based in New York. There, she is responsible for all aspects of the office developer, owner, and manager’s portfolio in the New York region. She was previously the Head of Real Estate for the Americas at CPP Investments and prior to that she held a number of senior real estate roles at JPMorgan in the United States.

Hilary graduated from the Georgia Institute of Technology with a BS and a Masters in City Planning, both from the College of Architecture. She also studied architecture at L’École Nationale Supérieure D’architecture de Paris – La Villette.

Other Directorships and Offices

- Executive Vice President, Boston Properties, Inc. (NYSE: BXP)
- Director, ULI Foundation.

GOODMAN GROUP

Directors’ report

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

Penny Winn Independent Director

Penny retired as an Independent Non-executive Director of Goodman Limited and Goodman Funds Management Limited.

Company Secretary

Carl Bicego

Group Head of Legal and Company Secretary

Appointed: 24 October 2006.

Appointed: 1 February 2018 and retired on 18 November 2021.

Board Committees: Member of the Remuneration Committee and Risk and Compliance Committee until 18 November 2021.

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 (2011–2015) where she was responsible for leading the Logistics and Information Technology divisions, Online Retailing and the Customer Engagement teams across the organisation. She previously served as a director of a Woolworths business, Greengrocer.com, a Myer business, sass & bide, Quantium Group and Port Waratah Coal Services Limited.

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).

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

Coca-Cola Amatil Limited (December 2019 to May 2021).

ANNUAL REPORT 2022

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:

			Audit	Committee	Remuneration	Remuneration	Risk and Compliance	Risk and Compliance		Nomination
	Board	meetings		meetings	Committee	meetings	Committee meetings		Committee meetings
Directors	Held1	Attended	Held1	Attended	Held1	Attended	Held1	Attended	Held1	Attended
Stephen Johns	10	10	4	4	3	3	–	–	6	6
Gregory Goodman	10	10	–	–	–	–	–	–	–	–
Christopher Green2	10	10	1	1	2	2	–	–	6	6
Mark Johnson	10	10	4	4	–	–	4	4	–	–
Vanessa Liu3	1	1	–	–	–	–	–	–	–	–
Rebecca McGrath4	10	10	3	3	1	1	4	3	6	6
Danny Peeters	10	10	–	–	–	–	–	–	–	–
Phillip Pryke5	10	10	4	4	3	3	3	3	–	–
Anthony Rozic	10	10	–	–	–	–	–	–	–	–
Hilary Spann6	4	4	–	–	–	–	–	–	–	–
Penny Winn7	4	4	–	–	1	1	1	1	–	–

Reflects the number of meetings individuals were entitled to attend.
Christopher Green resigned as a member of the Audit Committee and commenced as a member of the Remuneration Committee on 19 November 2021.
Vanessa Liu was appointed to the Board on 1 June 2022.
Rebecca McGrath resigned as member of the Remuneration Committee and commenced as a member of the Audit Committee on 19 November 2021.
Phillip Pryke commenced as a member of the Risk and Compliance Committee on 19 November 2021.
Hilary Spann was appointed to the Board on 4 April 2022.
Penny Winn retired on 18 November 2021.

GOODMAN GROUP

Directors’ report

Remuneration report – audited

Letter from the Chairman and the Remuneration Committee Chair

4. GROUP PERFORMANCE AND OUTCOMES

4.1 Group FY22 highlights
REMUNERATION GOVERNANCE
1.1 The role of the Board and Remuneration Committee
1.2 Key activities of the Remuneration Committee for FY22
1.3 Key Management Personnel (KMP)
4.2 Financial measures 4.3 Total security price returns comparison 4.4 Remuneration outcomes for FY22
4.4.1 STI outcomes
4.4.2 ESG assessment
REMUNERATION STRATEGY
2.1 Key remuneration principles 2.2 Objectives of the remuneration strategy 2.3 Remuneration mix and alignment across the Group
4.4.3 LTI outcomes

4.4.3.1 Operating EPS hurdle (75% weighting)

4.4.3.2 Relative TSR hurdle (25% weighting)

4.4.4 Group CEO achievements
4.4.5 Other executive KMP achievements

3. EXECUTIVE REMUNERATION FRAMEWORK

4.5 LTI grants in relation to FY22 performance

3.	EXECUTIVE REMUNERATION FRAMEWORK	4.4. 4.5
3.1	Feedback and response
3.2	Remuneration enhancements for executive KMP	5.
3.3	When is remuneration earned and received?	5.1
3.4	Short-term incentive	5.2
3.5	Long-term incentive
3.5.1	FY23 LTI awards (fve and ten-year plans)	6.
3.5.2	FY22 LTI awards	6.1
3.5.3	FY21 LTI awards	6.2
3.5.4	Setting operating EPS hurdles for proposed ten year plan	6.3
	awards to the Group CEO, other executive KMP and other
	senior executives	6.4
3.5.5	Operating EPS – long-term cash fow alignment with	6.5
	vesting outcomes	6.6
3.6	Non-fnancial measures	6.7
3.6.1	Types of non-fnancial measures	6.8
3.6.2	Integration of non-fnancial measures into STI
3.6.3	Integration of non-fnancial measures into LTI
3.7	Considerations for setting of awards
3.7.1	Considerations for award quantum – Goodman Group in context
3.7.2	Considerations for award quantum – structure
3.7.3	Valuation of performance rights (economic value) ten-year grants

5. NON-EXECUTIVE DIRECTOR REMUNERATION

Key elements of the Non-Executive Director remuneration policy

Board and committee annual fees

STATUTORY DISCLOSURES

KMP remuneration (statutory analysis)
Movements in performance rights held by executive KMP

Analysis of performance rights held by executive KMP Securities issued on exercise of performance rights

6.4

Unissued securities under performance rights
Non-Executive Directors’ remuneration (statutory analysis)
Movements in Goodman securities held

Transactions with Directors, executives and their related entities

ANNUAL REPORT 2022

Letter from the Chairman and the Remuneration Committee Chair

Dear Securityholders,

On behalf of the Board, we are pleased to present the 2022 remuneration report, outlining Goodman’s remuneration strategy and principles.

FY22 was another successful year for the Group, significantly exceeding financial performance expectations while making significant progress on our ESG initiatives. This has been delivered in difficult conditions. The ongoing impact of the COVID-19 pandemic, global political instability, rising inflation and higher interest rates have all presented challenges for Goodman’s business, our people, customers, investors, and the communities in which we operate and live.

The attraction and retention of talent are critical for the success of the Group and is increasingly challenging as opportunistic competitors seek to recruit high-performing teams around the world. The Group’s longstanding and consistent approach to remuneration has been a key driver of our sustained success as an international business.

Our approach is reflected in our strong financial results for FY22 including:

- Operating profit of $1.5 billion (+25%) for Goodman in FY22 and growth of 59% for the three year period to FY22 (which aligns with the Group’s LTIP testing period)
- Statutory profit of $3.4 billion for Goodman and $9.0 billion across the combined Group and Partnerships
- Goodman operating EPS growth of 24% materially exceeding initial expectations of 10%
- Significant growth in the end value of development work in progress up 28% to $13.6 billion at 30 June 2022, providing a solid base for future profitability
- Total AUM increasing 26% to $73.0 billion
- Substantial revaluation growth increasing $8.5 billion across the Group and Partnerships reflecting the quality of the portfolio and the contribution management has made to enhance its value
- Low leverage of 8.5% and significant liquidity of $2.8 billion providing strong financial capacity both for resilience and growth.

We have continued to reflect the importance placed on providing financial returns and operating within appropriate sustainability and environmental objectives, incorporating key targets into the operations and long-term business strategies of the Group.

2021 AGM results and subsequent securityholder engagement

Given the positive feedback from investors on the innovations introduced last year in relation to the new 10 year Long Term Incentive Plan (LTIP) for senior executives and the introduction of environmental objectives into both the five and 10 year plans, and the significant outperformance of the Group in FY21, we were disappointed at the level of support for our remuneration report and executive director grants at the 2021 AGM. The Remuneration Committee takes the result of our remuneration vote extremely seriously and has engaged with a significant proportion of our top 50 securityholders to discuss this and other governance matters. We also engaged with proxy advisory firms to better understand their views.

In response to investor feedback, we have:

- Retained the ten year plan for senior executives continuing significant long term alignment with securityholders
- Reduced the proposed quantum of awards significantly while recognising the exceptional outperformance of the Group in FY22
for the Group CEO, the proposed number rights under the FY23 awards have declined by 36% and the face value of the proposed award has declined by 46% relative to FY22 award
for other executive KMP, the proposed number of rights under the FY23 awards have declined by 20% and the face value of the proposed awards has declined by 33% relative to FY22 award
- Adopted significantly more challenging and competitive hurdles for operating EPS, notwithstanding the current, considerable market uncertainties, which if achieved at the top end of the range, should provide Securityholders with strong performance in both relative and absolute terms. Full vesting requires almost 60% growth in Operating Profit over four years, relative to the very strong FY22 result.

The Board is always mindful of the focus on overall remuneration levels and spends considerable time each year determining remuneration outcomes. On the one hand, we recognise the need to attract, retain and incentivise our employees while, on the other hand, meet the range of expectations of our Securityholders. This is evidenced by the fact that, notwithstanding the outstanding performance achieved in FY22, the Board intends to grant a significantly reduced number of performance rights to the Group CEO and other executive KMP in FY23 while making the hurdles more challenging. We look forward to receiving your views and support at our 2022 AGM.

Yours sincerely,

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Stephen Johns Chairman

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Phillip Pryke Chairman, Remuneration Committee

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

1. REMUNERATION GOVERNANCE

1.1 The role of the Board and Remuneration Committee

The Board and the Remuneration Committee is responsible for the structure of the remuneration of the Group’s employees and for the specific pay of the Group CEO and other KMP. In setting these, the Board considers remuneration with a five to ten-year horizon. 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.

1.2 Key activities of the Remuneration Committee for FY22

Members of the Remuneration Committee for FY22 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
Christopher Green Independent Director
(appointed 19 November 2021)
Rebecca McGrath Independent Director
(resigned as a member of the Remuneration
Committee on 19 November 2021)
Penny Winn Independent Director
(retired as a Director on 18 November 2021)
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The Board:

- Encourages management to take a long-term strategic view rather than opportunistic approach to property investment
- Expect the senior leadership team to accept collective responsibility for the outcomes
- 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 FY22, the Remuneration Committee has considered

- Feedback from Securityholder engagement
- The significant operational and financial outperformance of the Group
- The specifics of individual performance.

These have been assessed in the context of the ongoing challenges presented by COVID-19, the significant volatility and inflationary conditions affecting the global operating environment and particularly construction and development. Given the nature of the Group’s global operations the Remuneration Committee has considered the impact of strong competitor activity in our sector on attracting and retaining employees.

Refinements to the LTIP this year aim to better balance Securityholder and employee outcomes while continuing to reinforce Goodman’s longterm decision making. This is in line with the evolution of the business and operational strategy, as well as providing competitive remuneration to attract and retain high quality people.

Following significant enhancements to the Remuneration plan in 2021, the Remuneration Committee has made additional changes for the FY23 awards, in response to investor feedback. Key decisions made and items considered in the determination of FY22 remuneration, include the following:

- The quantum of Long Term Incentive (LTI) awards has been reviewed and in determining these, consideration of both face value and economic value have been taken into account. Subsequently, there has been a significant reduction in the number of performance rights and the face value of proposed FY23 awards:
for the Group CEO, the number rights has declined by 36% and the face value of the proposed award has declined by 46% relative to FY22 awards
for other executive KMP, the number of rights has declined by 20% and the face value of the proposed award has declined by 33% relative to FY22 awards
- 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 FY22 performance will be in the form of LTI. In general, LTI remains the significant focus of remuneration awards across the Group
- Continued the issuance of LTI awards under the ten-year plan for the Group CEO, executive KMP and other senior executives
- Continued to make the five-year LTIP plan available to the balance of employees
- Further increase in challenge and outperformance required to achieve hurdles. For the maximum vesting to occur on the operating EPS linked portion of the plan, a compound annual growth rate (CAGR) of 11% per annum must be achieved over four years; this equates to almost 60% growth in Operating Profit in FY26 relative to the very strong FY22 result
- Additional environmental and sustainability targets have been included in the FY23 performance right testing conditions.

Changes are also proposed to the Non-Executive Director annual fee pool to be considered at the 2022 AGM, to facilitate greater use of committees, keep fees in line with market levels, manage Board succession and accommodate the potential appointment of additional Directors’. This is the first change in the Directors’ fee pool since 2006.

ANNUAL REPORT 2022

1.3 Key Management Personnel (KMP)

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Member Role Tenure at Goodman
Executive KMP
Gregory Goodman Group Chief Executive Officer 27 years
Danny Peeters Executive Director Corporate 16 years 1 month
Anthony Rozic Deputy CEO and CEO North America 18 years 1 month
Nick Kurtis Group Head of Equities 22 years 4 months
Michael O’Sullivan Group Chief Risk Officer 19 years 10 months
Nick Vrondas Group Chief Financial Officer 16 years 2 months
Non-Executive KMP
Stephen Johns Chairman and Non-Executive Director 5 years 6 months
Chris Green Non-Executive Director 3 years 2 months
Mark Johnson Non-Executive Director 2 years 1 month
Vanessa Liu Non-Executive Director 1 month
Rebecca McGrath Non-Executive Director 10 years 3 months
Phillip Pryke Non-Executive Director 11 years 9 months
Hilary Spann Non-Executive Director 3 months
David Collins GLHK Non-Executive Director 4 years 5 months
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2. REMUNERATION STRATEGY

Goodman is one of the largest listed industrial real estate fund managers and developers globally. The Group’s people are largely based outside Australia. The remuneration structure reflects the requirements in the highly competitive labour markets the Group operates in globally, not just in Australia, and the objective of aligning multiple regional businesses and operational segments with a global strategy and pay for performance outcomes.

A significant proportion of the value of the Group, reflected in the $17.7 billion premium between the security price of $17.84 at 30 June 2022 and Goodman’s net tangible assets per security of $8.37, 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 consistently and at all levels that has positioned the Group to sustainably grow the cash generation measure of the business that is encapsulated by Operating Profit (as described in the section 3.5.5).

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 high-performing teams around the world. 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.

The Group’s remuneration structure, in particular the focus on equity based reward, has been a key component of its success as an international organisation. The Board believes aligning all employees 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 created by COVID-19 and global political and capital markets volatility, as it binds all employees together as owners of the business and is a powerful incentive and driver of operational resilience.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

2.1 Key remuneration principles

Continuing alignment of remuneration in line with Group strategy, structural changes and 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). The Group’s capital and resource allocations shift over time in response to variable market circumstances. The effect of these strategies take time to manifest, 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 that the Board considers to be most relevant:

- Focus on LTI as the predominant source of pay for performance for senior members and a material factor for all employees of 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 3.5.4), 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)
Goodman’s remuneration structure results in a significantly higher proportion of pay in the form of equity-based performance awards (87% for the Group CEO versus around 45% for S&P/ASX20 and S&P/ASX100 CEO’s). As a consequence, despite only 25% of LTI testing against relative total securityholder return (TSR), employees have significant alignment and exposure to TSR outcomes versus typical remuneration structures. In addition, Operating Profit which determines operating EPS is a cash based measure which management globally can have a tangible influence on. Importantly operating EPS is the underlying value driver for Goodman and will ultimately align with TSR outcomes over the longer term

Business evolution requires long remuneration time frames to align outcomes

Goodman’s business has evolved significantly over the past 13 years since the introduction of the LTIP. Our increased focus on urban infill markets with their significant increase in complexity has led to longer development horizons to maximise outcomes which have delivered significant rewards to investors. 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
- The Group’s approach to development considers the lifecycle of an 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 environmental sustainability aspirations into the Group’s operational activities requires significant time periods (often beyond five years) for implementation. Goodman’s approach to community, environmental sustainability and wellbeing are long-term aspirations aligned with the financial sustainability objectives.

In the Board’s view, the long-term nature of the structural trends impacting the sector, the Group’s approach to real estate investment in relation to this, and investor feedback, supports continuation of the LTIP structure. The 10 year plan for the Group CEO, other executive KMP and other senior executives in the organisation, will continue to influence decision making and closely align with the time periods required to deliver superior operational results on a sustainable basis. It also provides sufficient time to implement key ESG initiatives and achieve the Group’s targets, particularly in relation to longer-dated environmental and sustainability objectives, in a manner that creates alignment with the outcomes for Securityholders. The five-year LTIP is longer than most in the S&P/ASX 100 and remains in place for all eligible employees who do not participate in the ten-year plan but will include hurdles aligned with the ten-year plan.

- Securityholders are the beneficiaries of the Group-wide outcomes. Collaboration is required to achieve Group-wide targets across regions and business units. Remuneration should engender a collective responsibility for the consolidated outcomes which can facilitate decision making that leads to the optimal allocation of resources between locations and activity types to pursue the most appropriate opportunities at different points in time
- A culture of ownership, inclusion and alignment, where all employees experience investment returns aligned with Securityholders creates stability which reduces turnover
- Balancing reward and retention with long-term cost to Securityholders at respective levels of performance.

ANNUAL REPORT 2022

2.2 Objectives of the 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 the role, Real estate investment management and development are cyclical, so fixed
Low fixed costs, with the individual absolute and relative employee costs are kept relatively low, below median and mean for comparable
focus on “at-risk” equity. comparison in the relevant market companies. CEO fixed remuneration has not changed for 16 years.
and comparator group.
STI remuneration is a 100% Assessment includes four STI is an at-risk component, rewarding financial and non-financial performance
at-risk performance base key components: against objectives of the individual and the Group. Awards in FY22 represent 87%
award tied to operational + Meeting Goodman of the maximum for executive KMP (excluding Group CEO).
performance metrics over the behavioural expectations The performance of individuals is assessed through a performance appraisal
past 12 months. However, per the Code of Conduct process based on contribution to strategic, financial, operational and ESG
the Group CEO forgoes + Achieving operating EPS target objectives, while also reflecting behavioural expectations (see section 4.4.).
STI in favour of LTI. + Individual financial and Financial performance is the primary measure in determining the maximum level
Similarly, other executive KMP operational assessment of STI for the individual; however, this can be penalised if behavioural standards
received between 11% to 21% of + Assessment against environmental or ESG targets are not met or breached (up to 100% of STI for certain measures).
total remuneration in STI. and sustainability objectives. These factors together encourage not only the operating EPS targets being met,
For the other executive KMP, but also that that the method in which they are met matches appropriate risk and
payments will be made in governance settings. Given the complex nature of the Group’s global operations,
two instalments, the first in individual financial metrics are reflected in the operating EPS. This structure is
September after the financial simple and transparent and aligns management with the operating EPS growth
year end and the second expectations of Securityholders. Detailed financial metrics for the business are
12 months later. additionally disclosed in reporting to the market.
STI uses the operating EPS hurdle that forms part of the formal financial guidance
to the market. It is not directly linked to LTI operating EPS targets as LTIP targets
are set over four years and represent the longer term aspirations of the business.
LTI is “at-risk” remuneration 75% tested based on achieving The weighting to LTI is believed to be the most effective way of rewarding
that rewards long-term the cash-based operating EPS sustained performance and retaining talent while maintaining alignment with
sustained performance. hurdle range Securityholders’ experience.
New awards will be granted 25% tested based on relative TSR Hurdles are set to be competitive relative to reference groups, challenging for
in FY23 in relation to FY22 against the S&P/ASX 100 constituents. management with a significant stretch component but without encouraging
performance achievements The benchmark index aligns with inordinate risk in execution (see sections 3.5.4 and 3.5.5) relative to external and
assessment of potential future a significant portion of investors’ internal reference points.
contributions and relevant benchmarks relevant to their holdings TSR provides an effective check against increasing risk or unsustainable practices
alignment of KMP. and provides closest alignment with within the Group. The price to earnings multiple attributable to securities will reflect
Ten-year plan awards to Group their performance the risk in achieving operating EPS targets, which impacts the likelihood of vesting
CEO, executive KMP and Environmental and sustainability and the ultimate value upon vesting.
senior executives tested over targets (set by the Board) over The relative TSR and operating EPS hurdles interact as TSR impacts the value of
four years and vesting in equal the LTIP testing period with penalty all performance rights. Given the significant skew in remuneration to performance
tranches annually from the to vesting outcomes of up to 20% rights, the impact of the TSR on remuneration is significantly greater than its
end of year four to the end of of rights satisfying the operating 25% weighting. The combination of 25% TSR testing and 70-90% equity based
year ten. EPS hurdle for material awards for executive KMP, provides significant overall exposure to TSR based on
Five-year plan awards to underperformance against targets. the Group’s remuneration structure is high.
remaining employees tested The total number of performance rights outstanding under the LTIP at 30 June
over three years and vesting 2022 equates to 3.8% of the Group’s issued securities. The maximum number of
in equal tranches annually performance rights under the LTIP is limited to 5% of the Group’s issued securities.
from the end of year 3 to the Equity issuance to all employees encourages a collaborative approach and
end of year 5. broader distribution of remuneration across the entire workforce when the Group
is performing.
At-risk remuneration (typically 90% of CEO total remuneration)
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GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

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 employees throughout the organisation. In respect of the Group CEO, all of his at risk remuneration is in the form of LTI.

This is demonstrated in the charts below that consider the vested remuneration received during FY22. Vested remuneration represents the value that is received during FY22. It includes fixed base pay, STI and the value of performance rights that vested during FY22 (from prior grants) using the closing Goodman security price on the day of vesting.

The Board believes that this demonstrates the alignment of the remuneration outcomes for the Group CEO with the outcomes for Securityholders, who have experienced strong performance over a significant period alongside the Group CEO. Had the Securityholder returns been lower, the level of at risk remuneration would have been lower (due to lower vesting outcomes and lower value of vesting performance rights) and fixed remuneration would have made up a greater proportion of the total vested remuneration in FY22 for all employees, but especially for the Group CEO and the other executive KMP.

FY22 vested remuneration outcome

Group CEO FY22 remuneration

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3.2%
96.8%
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SQUARE-FULL LTI SQUARE-FULL Fixed remuneration

Executive KMP (excluding Group CEO) FY22 remuneration 3 year rolling

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5%
95%
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SQUARE-FULL STI and LTI SQUARE-FULL Fixed remuneration

All employees (excluding Executive KMP) FY22 remuneration

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24.6% 75.4%
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SQUARE-FULL STI and LTI SQUARE-FULL Fixed remuneration

ANNUAL REPORT 2022

3. EXECUTIVE REMUNERATION FRAMEWORK

3.1 Feedback and response

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Securityholder feedback Response
Strong positive feedback regarding the structure Continued the issuance of LTI awards under the ten-year plan for the Group CEO, other executive
of the plan, testing and vesting period. KMP and other senior executives (as detailed in Section 3). This will apply to the intended
grant of performance rights to be made in September 2022 in respect of FY22 performance.
While Securityholders recognised the long-term A significant emphasis has been placed on face value comparison while economic value
nature of LTI awards and many recognize economic assessment has been reviewed. This has seen a significant reduction in face value of awards.
value approach, the majority use face value for Face value of the proposed FY23 performance rights awards for the Group CEO has declined
determining outcomes. 46% on FY22 and 33% for executive KMP (excluding Group CEO).
Hurdles are set to be competitive and challenging in LTI hurdles have been reviewed and set such that they remain competitive relative to peers
line with long term performance and the risk settings and challenging for management. The increase in the Upper level of cumulative operating
appropriate for the Group. However, feedback from EPS growth to 11% per annum is in a more uncertain and volatile geopolitical and commercial
some securityholders indicated that additional environment. Noting that for the CEO LTI forms most of the remuneration, so performance
‘stretch’ is desirable in the targets based on market below threshold will result in 0% vesting and only base salary.
expectations and the Groups strong performance Hurdles for the proposed grants are based off a significant year of outperformance in FY22
in recent years, resulting in high vesting outcomes. (24% operating EPS growth) and if achieved reflects almost 60% Operating Profit growth
over the coming four years. This compares very favourably to the average for the peer groups
and relative to what the Board believes are reasonable long term “Targets” with considerable
additional required stretch.
Preference for Long Term ESG targets. ESG targets will remain as an additional test for operating EPS tranches of Performance
Rights, allowing for up to 20% reduction in vesting outcomes if targets are materially
missed. Additional environmental and sustainability targets have been included in the
testing conditions for FY23 awards. Progress against targets is reviewed annually.
Preference for long-term at-risk remuneration. Agreed with the Group CEO (as in prior years) that he would not participate in the STI award
Securityholders prefer in principle lower fixed and all his performance based remuneration in relation to his FY22 performance will be in the
and STI remuneration and more at risk LTI. form of LTI.
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GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

3.2 Remuneration enhancements for executive KMP

Key testing criteria and modifications made to the Long Term Incentive plan

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EPS performance testing Ten-year plan FY22 Change Ten-Year plan FY23 Comment/rationale
Threshold 6% (CAGR) in operating No 6% CAGR in operating Performance at the threshold hurdle level (CAGR in operating EPS of
EPS. EPS. 6% for the 4 years to FY26) for performance rights vesting to start has
been set such that it requires performance in excess of that expected
from relevant peer groups S&P/ASX100 (0%pa) and S&P/ASX200 REIT’s
(4.6%pa) based on “Visible Alpha” and broker research) but would only
result in 25% vesting and subsequent remuneration outcomes that are
expected to be in line with the median for the peers.
Vesting at Threshold 25% No 25%
Target Not previously disclosed. Yes 8-9% CAGR in operating Performance at Target hurdle level (CAGR in operating EPS of 8-9%
EPS. for the 4 years to FY26 pa) is in line with aspirations determined by the
Board to be reasonable (which already include a significant number of
assumptions concerning growth in activity levels, funding needs and
market conditions remaining buoyant) and is in excess of broker research
estimates [1] for the Group (7.8% pa) and materially in excess of peers.
Vesting at Target N/a 55
%-70%
Upper level 10% CAGR in operating Yes 11% CAGR in operating Performance at the Upper level (CAGR in operating EPS of 11% pa for the 4
EPS. EPS. years to FY26) would require outcomes significantly above Target (2%-3%
pa) significantly higher than broker research estimates (+3% pa). The
upper level of the testing range represents an additional approximately
$200 million of additional operating profit to be generated in FY26 relative
to the Target and consensus views.
Vesting at Upper level 100% No 100%
TSR performance hurdle Ten-Year plan FY22 Change Ten-Year plan FY23 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 No 0% at 50th percentile Outperformance required before any portion is vested.
25% at 51st percentile 25% at 51st percentile
Straight line vesting Straight line vesting
percentage to percentage to
90th percentile 90th percentile
where 100% vests. where 100% vests.
Environmental and Ten-Year plan FY22 Change Ten-Year plan FY23 Comment/rationale
sustainability hurdles
Environmental Targets set by the Board Yes Targets set by the Board Given environmental and sustainability initiatives are integrated into
and sustainability are tested at the end of (additional are tested annually and the operations of the business, the penalty applies to the number of
performance year four. Hurdles) at the end of year four. performance rights that have satisfied the operating EPS hurdle with 20%
Penalty applies to the Penalty applies to the maximum reduction in the event of material underperformance against
number of performance number of performance targets.
rights that have rights that have satisfied
satisfied the operating the operating EPS
EPS hurdle with 20% hurdle with 20%
maximum reduction maximum reduction in
in the event of material the event of material
underperformance underperformance
against targets. against targets.
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ANNUAL REPORT 2022

The chart below illustrates the components of KMP remuneration in relation to FY22 performance using:

- Current fixed base pay
- STI award (where applicable)
- LTI award value using 100% of the intended grant to be made in September 2022 based on the face value at 30 June 2022 as detailed in section 3.4.

REMUNERATION

Gregory Goodman Danny Peeters Anthony Rozic Nick Kurtis Michael O’Sullivan Nick Vrondas Fixed remuneration (%)	STI (%)	STI (%)	LTI (%) 14 86	LTI (%) 14 86	LTI (%) 14 86	LTI (%) 14 86	LTI (%) 14 86	LTI (%) 14 86	LTI (%) 14 86	LTI (%) 14 86	LTI (%) 14 86

			15 68 17

			14 66 20

			10 76 14

			12 10 78

			11 74 15

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.

Under the 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 FY22 if the Group does not meet its minimum performance hurdles under the LTIP over the next four years (measured at 30 June 2026)
- 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 September 2032.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

3.3 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 final cash outcome is dependent on the movement in the security price over the next ten years.

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Fixed 100% of fixed pay
remuneration awarded in cash
Performance
50% of total STI
STI period (1 year), deferred for 1 year,
50% awarded
awarded in cash
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 4
14% of LTI award (subject to service / performance
requirements) vests shortly after the end of year 5
Performance period
LTI 14% of LTI award (subject to service / performance requirements)
(1 year)
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
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 10
Current year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
At risk remuneration
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ANNUAL REPORT 2022

3.4 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 All full-time and part-time permanent employees.
to participate The Group CEO agreed with the Board not to participate in the STI awards, to emphasise reward for long-term decision making across
in the STI? 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 compared to market based
award participants remuneration data and their manager’s own assessment of what an appropriate level of incentive compensation may be relative to the long-term
may earn? value that person brings to the Group.
How is the The Board sets budget targets for the business annually. These targets are set relative to the market conditions, earnings visibility, financial
STI earned? 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; (2) achieving operating EPS (based on
the annual target for the relevant year which is disclosed to the market at the beginning of the year in the form of “guidance” (3) financial and
operational assessment; and (4) assessment against environmental and sustainability targets.
How is the STI rewards annual performance against objectives of the individual and the Group.
individual STI The Group objectives include multiple factors as set from time to time, dependent on the market and strategy of the Group. Overall Group
award determined? 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.
Consideration is also given to the total remuneration package with a view to retaining and appropriately aligning and motivating employees.
Is there The executive KMP STI awards are subject to 50% deferral for 12 months from the date of publication of Goodman’s financial statements.
malus/clawback? 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 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
into equity? 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 STI For all executive KMP, the deferred portion of STI award is subject to immediate forfeiture in circumstances where employees are dismissed
upon termination? 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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3.5 Long-term incentive

The LTIP is an equity plan where rewards are at risk and dependent on 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. The threshold target with respect to operating EPS (where only 25% of performance rights vest) is significantly ahead of estimates for the S&P/ASX 100 and S&P/ASX200 REIT sector
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.
Performance rights represent a small portion of the Group equity and a small percentage of the value created for Securityholders if they vest

The key terms of both plans are set out overleaf.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

3.5.1 FY23 LTI awards (five and ten-year plans)

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Questions in relation to grants to be made in FY23
Who is eligible All full-time and part-time permanent employees are eligible to participate in either the five year or the ten-year plans. Executive KMP and senior
to participate? 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 receive distributions or have
of the award? 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 vest and the associated impact
LTI participants on the operating EPS growth. The total five year and ten-year performance rights outstanding under the LTIP are capped at 5% of issued capital
may earn? with vesting of approximately 1% pa, 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
in which the Group operates and the value of the team in the local and global marketplace, as appropriate.
How is the number The Board’s sets the quantum based on a number of factors described in sections 3.7.1 and 3.7.2. The number of rights is then determined
of rights determined? by dividing the LTI award amount by face 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 rights.
performance The Board believes that the commercial decisions management makes in fulfilment of its overall financial objectives are best reflected in two key
measures? indicators: operating EPS and TSR (relative to the S&P/ASX 100).
Operating EPS is a critical measure of long-term Group-wide performance of the operations (see section 3.5.5).
The hurdles are set to be competitive and challenging relative to external and internal historical and prospective reference points (see section 3.5.4).
TSR provides an effective check against increasing risk practices within the Group in that 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.
The proposed FY23 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 can apply 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 from 1 July in the year the grant was
performance period? 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 reviewed annually and tested 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 reviewed annually and tested at the end of year three.
How do the LTIP Ten-Year plan: Subject to meeting performance hurdles, vesting occurs in equal tranches shortly after the end of years 4 – 10, provided
awards vest? 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 Subject to immediate forfeiture in circumstances where employees are dismissed for cause without notice (e.g. fraud or serious misconduct).
malus/clawback? LTI will also be forfeited where employees cease to be employed, unless in Special Circumstances.
What happens Performance rights lapse upon the employee leaving Goodman unless in Special Circumstances (primarily Death, Total and Permanent
to LTIP awards Disablement, Redundancy and Retirement in the normal course) in which case they are not subject to the employment requirement and vest
upon termination? subject to performance hurdles being met and the usual timetable.
What rights are Performance rights have no Securityholder rights prior to vesting (e.g. distributions, voting, rights issue participation). They would be subject
attached to the to reconstruction in instances of corporate events such as stock splits or stock consolidations.
performance rights?
Executive KMP Executive KMP are required to hold 100% of the value of their fixed remuneration in Goodman securities, determined at time of purchase.
equity holding In addition, Goodman’s remuneration structure includes significant emphasis on performance-based remuneration in equity and the overall
exposure of executive KMP to Goodman Group securities extends significantly beyond this requirement principally through participation in
the LTIP.
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ANNUAL REPORT 2022

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What are the vesting Operating EPS tested (75% of grant) Relative TSR tested (25% of grant)
conditions for FY23 The Board has set an operating EPS performance TSR awards are subject to achievement of cumulative. TSR relative to the S&P/ASX 100
ten-year plan grants? hurdle of growing operating EPS from the FY22 result over a four year period:
of 81.3 cents to between 102.7 cents (Threshold level) – 25% of awards vest for performance at the 51st percentile.
and 123.4 cents (Upper level) in FY26. Vesting of 25%
– Awards vest on a sliding scale between 25% and 100% for performance between
of the operating EPS portion occurs upon satisfying
the 51st and the 90th percentile.
testing conditions at the Threshold level with a sliding
scale up to 100% at the Upper level. The range is – 100% of awards vest for performance at the 90th percentile or above.
equivalent to between 6%pa and 11%pa CAGR
in operating EPS or approximately 26% to 52%
cumulatively over the four year testing period.
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 reviewed by the Board annually
and at the end of the testing period with 20% maximum
reduction in the number of rights vesting under the
operating EPS tranches, in the event of material
underperformance against targets at final testing year.
What are the vesting Operating EPS tested (75% of grant) Relative TSR tested (25% of grant)
conditions for FY23 The Board has set an operating EPS performance TSR awards are subject to achievement of cumulative TSR relative to the S&P/ASX 100
five year plan grants? hurdle of growing operating EPS from the FY22 result over a three year period:
of 81.3 cents to between 96.9 cents (Threshold level) – 25% of awards vest for performance at the 51st percentile.
and 111.2 cents (Upper level) in FY25. Vesting of 25%
– Awards vest on a sliding scale between 25% and 100% for performance between
of the operating EPS portion occurs upon satisfying
the 51st and the 90th percentile.
testing conditions at the Threshold level with a sliding
scale up to 100% at the Upper level. The range is – 100% of awards vest for performance at the 90th percentile or above.
equivalent to between 6% pa and 11% CAGR in operating
EPS or approximately 19% to 37% cumulatively over
the three year testing period.
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 reviewed by the Board annually
and at the end of the testing period with 20% maximum
reduction in the number of rights vesting under the
operating EPS tranches, in the event of material
underperformance against targets at final testing year.
Can the hurdles No (subject to ASX Listing Rule adjustments). No.
be adjusted?
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GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

3.5.2 FY22 LTI awards

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Questions specific to grants made in FY22
What happens to Performance rights lapse upon the employee leaving Goodman unless in Special Circumstances (primarily Death, TPD, Redundancy and
LTIP awards upon Retirement in the normal course) in which case they are not subject to the employment requirement and vest subject to performance hurdles
termination? being met and the usual timetable.
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 hurdle of TSR awards are subject to achievement of cumulative. TSR relative
ten-year plan grants? growing operating EPS from the FY21 result of 65.6 cents to between to the S&P/ASX 100 over a four year period:
82.8 cents (Threshold level) and 96.0 cents (Upper level) in FY25. – 25% of awards vest for performance at the 51st percentile.
Vesting of 25% of the operating EPS portion occurs upon satisfying
– Awards vest on a sliding scale between 25% and 100% for
testing conditions at the Threshold level with a sliding scale up
performance between the 51st and the 90th percentile.
to 100% at the Upper level. The range is equivalent to between
6% and 10% CAGR in operating EPS or approximately 26% to 46% – 100% of awards vest for performance at the 90th percentile
cumulatively over the four year testing period. 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 reviewed by the Board
annually and at the end of the testing period with 20% maximum
reduction in the number of rights vesting under the operating EPS
tranches, in the event of material underperformance against targets
at final testing year.
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 hurdle of growing TSR awards are subject to achievement of cumulative TSR relative
five year plan grants? operating EPS from the FY21 result of 65.6 cents to between 78.1 to the S&P/ASX 100 over a three year period:
cents (Threshold level) and 87.3 cents (Upper level) in FY24. Vesting – 25% of awards vest for performance at the 51st percentile.
of 25% of the operating EPS portion occurs upon satisfying testing
– Awards vest on a sliding scale between 25% and 100% for
conditions at the Threshold level with a sliding scale up to 100% at the
performance between the 51st and the 90th percentile.
Upper level. The range is equivalent to between 6% and 10% CAGR
in operating EPS or approximately 19% to 33% cumulatively over the – 100% of awards vest for performance at the 90th percentile
three year testing period. or above.
3.5.3 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 hurdle of growing TSR awards are subject to achievement of cumulative TSR relative
for FY21 grants? operating EPS from the FY20 result of 57.5 cents to between 68.5 to the S&P/ASX 100 over a three year period:
cents (Threshold level) and 74.5 cents (Upper level) in FY23. Vesting – 50% of awards vest for performance at the 51st percentile
of 25% of the operating EPS portion occurs upon satisfying testing
– Awards vest on a sliding scale between 50% and 100% for
conditions at the Threshold level with a sliding scale up to 100% at the
performance between the 51st and the 76th percentile
Upper level. The range is equivalent to between 6% and 9% CAGR
in operating EPS or approximately 19% to 30% cumulatively over the – 100% of awards vest for performance at the 76th percentile
three year testing period. or above.
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ANNUAL REPORT 2022

3.5.4 Setting operating EPS hurdles for proposed ten-year plan awards to the Group CEO, other executive KMP and other senior executives

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

The hurdles are set in line with the “pay for performance” culture and the desire for them to be both challenging and competitive while maintaining the integrity of the business strategy and risk management objectives in a sustainable manner.

More challenging hurdles have been set for the FY23 performance rights awards when compared to recent years. The Board has set an operating EPS performance hurdle for operating EPS growth relative to the FY22 result of 81.3 cents of between 102.7 cents (Threshold level) and 123.4 cents (Upper Level) in FY26. 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 11% CAGR in operating EPS or approximately 26% to 52% cumulative growth over the four year testing period.

The range has been set with particular reference to:

- The significant proportion of the Group’s revenue over the next four years, being at risk in the sense that it is not currently contracted and subject to a wide number of variables, particularly in regard to development activities and performance fees
- The range of potential real estate opportunities for the Group globally, given the Group’s risk parameters and concentrated locations of operation
- The long-run historical performance of the Group, noting that previous history is not a reflection of future earnings
- Increased volatility across the global economic and political environment which are manifesting in higher cost inflation, slower real GDP growth rates and higher interest rates
- The ongoing potential for disruption to business activity resulting from COVID-19.

Consistent with the Board’s aim to set hurdles which are both challenging for management and competitive against peers, it is believed that achievement at or above the top end of the range will represent a strong performance in both relative and absolute terms. For the Upper Level vesting to occur on the Operating EPS linked portion of the plan, almost 60% growth in operating profit relative to the very strong FY22 result needs to be achieved over the next four years.

The Board believes that the hurdles are competitive and challenging for the following reasons:

- Goodman’s operating EPS grew strongly over FY20, FY21 and FY22, despite the impact of COVID over the period (no hurdles were amended to adjust for COVID during this period). This has resulted in a significantly higher base year from which to measure operating EPS growth compared with peer groups. For the 3 year period from FY19-FY22:
The Group has grown operating EPS by 56%
The average growth for the S&P/ASX 100 is approximately 24%
The S&P/ASX 200 REIT’s EPS declined by an average of approximately 14%
- The strong growth in earnings in FY22, combined with the higher hurdles for Upper Level vesting means that a significant acceleration of growth in operating profit is required to achieve full vesting (relative to that embedded within the FY22 grants). By way of comparison, an extrapolation of the growth rates contained within the FY22 grants to FY26 and applying the previous Upper Level hurdle rate would have resulted in an operating profit benchmark that is over $300 million lower than that which will now be applicable for FY26 under the new hurdles to be applied to the FY23 grant (see table below)

Operating Profit comparison of vesting conditions

At grant date of FY22 Awards	At grant date of FY23 Awards
$M	$M
Base year Profit 1,358 FY26 interpolated profit @ Threshold (6%pa) 1,714 FY26 interpolated profit @ the Upper Level (10% at FY22, 11% at FY23) 1,988 Additional profit required due to higher base year and hurdles	1,528 1,929 2,320 331

- Performance at “Target” hurdle level (CAGR in operating EPS of 8-9% for the 4 years to FY26 pa) is in line with aspirational objectives the Board believes are appropriate (which take into account the risk management constraints of the Group the Board believes appropriate for the business, given the context of the global economic and political environment, higher interest rates, inflation, cost of capital and risk settings). It is contingent upon increased activity levels and market conditions remaining favourable. Importantly the Target hurdles are in excess of peers (see below) and broker research estimates for the Group (CAGR of approximately 8%)

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

- Performance at the threshold hurdle level (CAGR in operating EPS of 6% pa for the 4 years to FY26) for performance rights vesting to start has been set such that it requires performance in excess of relevant peer groups (S&P/ASX 100 (current market consensus expectations average 0%pa) and S&P/ASX200 REIT’s (current market consensus expectations average 4% per annum) but would only result in 25% vesting. Under this scenario it is estimated that the remuneration outcomes will be well below the median for the above peer groups and the ASX100
- Performance at the Upper Level hurdle (CAGR in operating EPS of 11% for the four years to FY26) would require outcomes significantly ahead of internal targets and significantly (3% per annum) higher than market consensus expectations (this equates to an additional circa $200 million in operating profit in FY26 compared to the average broker research consensus)
- The hurdles reflect approximately 50% relative earnings growth outperformance compared to estimates for the S&P/ASX100 and require the Group to absorb the risk associated with the significant increase in volatility in the global operating environment, interest rates and inflation.

The Board believes the higher FY22 hurdle is significantly more challenging given the current economic environment. The hurdles are set for the entire period of the plan 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, geo-political tensions and impacts on supply chains, and global economic activity.

In addition, 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. This is reflected in the relatively low gearing of the Group and its other risk settings. Taking into account the difference in gearing, the FY23 hurdles are relatively high compared to peers.

3.5.5 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 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. This is not subject to accounting estimation and is a more reliable measure
- 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

	Ten-Year plan	CAGR	Ten-Year plan
	operating	in EPS1	Cumulative
LTI hurdle period	EPS hurdles	FY23 –	growth in EPS1
(estimated)	(cents)	FY26	FY23 to FY26
S&P/ASX 1002 S&P/ASX 200 REITs2		-0.1% 4.6%	-0.2% 19.7%
Broker Consensus for GMG3		7.8%	35.2%
Threshold level Target Level Upper level	102.7 110.6 – 114.8 123.4	6% 8% – 9% 11%	26.4% 36% – 41% 51.8%

Operating EPS for Goodman Group.
Broker Estimates
Visible Alpha.

ANNUAL REPORT 2022

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 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 align with SBP expense
- Following successful testing at years three or four (for the five year plan and ten-year plan respectively), 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.

Use of cash settled “Phantom” performance rights

In certain jurisdictions, it is impractical to issue performance rights which vest into Goodman securities. In these instances, cash settled Phantom performance rights are issued, with the same economic outcome 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.

3.6 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.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

Individuals’ behaviour and adherence to the Code of Conduct, governance, implementation of diversity principles and social programs are assessed as a gate to STI and LTI awards. Breaches can also result in forfeiture of LTI or potentially more severe consequences depending on severity. Consequences of breaches of Code of Conduct in FY22

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Conduct and or behavioural Issues
Consequences Termination, forfeiture of STI, forfeiture of LTI
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In respect of the FY22 STI awards and the intended LTI awards that will be made in September 2022 (in respect of FY22 performance), key environmental and sustainability targets will also be assessed based on the individuals’ areas of influence and contributions as part of overall assessment.

3.6.2 Integration of non-financial measures into STI

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

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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 the organisation and that this has been strongly reflected in the Group’s performance over many years and particularly through COVID-19. Behaviour and adherence to the Group’s Code of Conduct have always been a prerequisite to entitlement to vested LTI and since 2021, additional hurdles for vesting, related to our environmental and sustainability targets have been incorporated into intended awards.

- The Board will review progress on targets annually and set review long term targets each year as they relate to the new testing period
- 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 formally at the end of the testing period (year four for the ten-year plan)
- 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 behaviour Gate: 0% – 100%
2nd hurdle Operating EPS and relative TSR 0% – 100%
Group Environmental The penalty applies to the number of performance rights that have satisfied
assessment and sustainability the operating EPS hurdle with 20% maximum reduction in the event of material
underperformance against targets
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ANNUAL REPORT 2022

3.7 Considerations for setting of awards

The Board is 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. In assessing the Group CEO and other executive KMP remuneration for FY22, the Board has given consideration to:

- Feedback from investor engagement following the disappointing level of support at the November 2021 AGM for remuneration related matters
- Maintaining the general structure and principles of the Group’s remuneration strategy
- The Group’s relative performance against operational targets FY22
- The Group’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
- Balancing employee and Securityholder outcomes
- Hurdles and testing criteria for performance rights.

The Board has assessed outcomes for Securityholders, based on the testing criteria under the five and ten-year plan and that the pay for performance alignment is with all Goodman employees (all permanent employees, 1020 people, are eligible to participate in the LTIP). Based on the proposed hurdles, the Board believes that significant balance and alignment exists between the cost of the plan and net outcomes achieved for Securityholders as demonstrated below (see note 4 below):

- before any performance awards are realised under the ten-year plan hurdles, significant Securityholder value, that equates to $11 billion in market capitalisation growth, must be created, consistent with >33% TSR over the period (all other things being equal and based on the assumptions set out in the table below)
- The maximum employee share of the value created will occur if the awards fully vest through reaching the cumulative 11% CAGR in operating EPS after four years and the relative TSR performance is at the 90th percentile. This represents only 3.1% of the $19 billion value potentially created for Securityholders (net of dilution) or 52% potential security price growth (all other things being equal). This would result in approximately 60% TSR
- If growth were to exceed 11% per annum and the security price grows beyond the assumption above, the employee share diminishes relative to Securityholders.

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

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Plan <5.99% CAGR over 6.0% CAGR 11.0% (or greater)
four years over four years CAGR over
four years
Economic outcomes
Cumulative operating profit growth <32.1% 32.1% 58.5%
Cumulative operating EPS growth <26.2% 26.2% 51.8%
Percentage of performance rights vesting [1] 0.0% 25.0% 100.0%
Year 4 operating profit to meet operating EPS hurdle <$2.1B $2.1B $2.4B
Market capitalisation (MCAP) at end of year 4 [2] <$43.8B $43.8B $52.6B
Net value created for Securityholders (growth in MCAP) [2] <$10.4B $10.5B $19.3B
Assumed security price [3] n/a $22.52 $27.08
Effect cost of total plan / MCAP 0.0% 0.3% 1.1%
Employee share of Securityholder value created [4] 0.0% 1.4% 3.1%
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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 2022 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. This includes full dilution including the five-year plan securities assuming the same growth rate for FY26.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

3.7.1 Considerations for award quantum – Goodman Group in context

The Board and Remuneration Committee have considered the entire enterprise of the Group and its Partnerships globally, when assessing the executives’ roles and remuneration awards.

In this context, Goodman:

- Is an international real estate fund manager
- Reported $3.4 billion statutory profit, and a combined statutory profit across the Group and Partnerships of $9.0 billion in FY22
- Delivered $8.5 billion in valuation growth across the Group and Partnerships in FY22
- Reported NTA of $8.37, with gearing of 8.5% and available liquidity of $2.8 billion
- Is the largest listed specialist developer of logistics real estate in the world, with $13.6 billion of WIP
- Manages and creates value across of $73 billion of assets globally which has almost doubled in the past 5 years
- Manages capital allocation and funding across various activity types, which is sourced from multiple jurisdictions
- Has grown to $33.3 billion market capitalisation at 30 June 2022 and is a member of the S&P/ASX 20 index
- Generates 71% 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 1,025 employees at 30 June 2022, 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 FY22, the Board has referenced:

- 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
the nature of pay for performance remuneration structures is highly equity based and outcome-driven similar to the Group’s remuneration structure and
the period of testing and realisation of remuneration is linked to investor outcomes over significant periods up to ten years, again a similar 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
- Prologis and Segro are relevant global peers from the logistics real estate sector, albeit Segro is predominantly in the UK
Prologis is larger by market capitalisation and assets, but Goodman has a more significant proportion of earnings from development and Management activities
Segro is smaller, and predominantly UK focused, with small proportion of its assets in Europe whereas Goodman operates in 14 countries globally
The range of Remuneration outcomes are approximately
$10 million-$37 million for these two companies.

ANNUAL REPORT 2022

Various Reference Groups

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Annual CEO remuneration
Peer group Reason for Range Average Median % LTI LTI 1 year 3 years 5 year
comparator comparison Term TSR TSR TSR
years
Goodman Goodman Group CEO n/a $19.2m [1] 86% 10 -14.56% 25% 151%
S&P/ASX 20 Goodman is number 14 $6m – $28m $10.4m $9.6m 47% 4 0% 18% 77%
in the S&P/ASX 20 index
Selected 71% of Goodman’s earnings are $6m – $37m $16m $13m 62% 4 -11% 29% 90%
global outside Australia.
comparators The comparator group provides
including ASX a reference to
companies local companies with
with global international operations and
operations similar global companies
S&P/ASX Goodman is in the REIT index, $5m – $19m $8.3m $7.2m 47% 3 -7% 21% 114%
100 Property but has limited comparability
Companies / given,
REITs typically this Group:
– are domestic only vs
Goodman in 14 countries
– have <20% active earnings vs
Goodman at 70%
– have an average
MCAP of only $12bn
vs Goodman at $33bn
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1. Based on proposed FY23 Award.

In the Board’s view, the competitive environment for logistics assets and consequently also for teams with skills to develop and manage the products and services over the long term, has intensified significantly over the past 24 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 also assessed the FY22 awards in this context.

3.7.2 Considerations for award quantum – structure

Given the variability in the components of remuneration structures in the market, Goodman’s comparator group analysis of value and quantum of awards is assessed 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 FY23 to provide substantially increased challenges (and risk of achievement) for all employees and to achieve a high degree of alignment and balance with Securityholder outcomes
- Performance rights awarded under the LTIP do not have any voting rights or rights to dividends until vested, even after passing testing hurdles
- Significant financial outperformance in FY22 versus targets and continued outperformance of peer Group over three and five years.

While not the primary measure this year, the Board has considered the economic value of performance rights when allocating awards to employees, as this is a relevant component for how employees and the Board look at value. Employees make commercial assessments of the equity awards based on:

- 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 over the testing period and the more challenging hurdles set by the Board
- A further discount for time value of money differential given the vesting of the rights occurs over ten years.

GOODMAN GROUP

Directors’ report Remuneration report – audited (continued)

However, as discussed previously, with respect to quantum, the Board has predominantly made final comparison of the awards based on face value. On this basis 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 above, it is considered that an appropriate benchmark for the Group CEO’s remuneration is around A$20 million ($10 million economic value).

The Boards proposed award for the Group CEO is detailed below:

Performance Rights	Price at 30 June	Face Value (25% vesting) $M	Face Value (100% vesting) $M	Fixed Remuneration $M	Total Remuneration (25% vesting) $M	Total Remuneration (100% vesting) $M
FY22 CEO 1,000,000 FY21 CEO 1,560,000 % Change -36%	$17.84 $21.17	4.5 8.3 -46%	17.8 33.0 -46%	1.4 1.4 0%	5.9 9.7 -39%	19.2 34.4 -44%

Group CEO maximum possible outcomes for FY22 versus FY21

Based on the proposed award, the maximum face value of remuneration which can be received by the Group CEO, (over ten years), if 100% vesting occurs, is 46% lower than the equivalent award last year, noting that FY22 was the strongest financial performance in the Group’s history.

- At Threshold performance, (6% pa CAGR in operating EPS for the 4 years to FY26), the Group will have
significantly outperformed S&P/ASX100 EPS growth estimates over the 4 years to FY26 (56% outperformance)
significantly outperformed S&P/ASX100 REIT EPS growth estimates over the 4 years to FY26 (32% outperformance)
- CEO potential remuneration, (all else being equal) to be received over a further 7 years would be $5.9 million, lower than the median of the S&P/ASX20, the S&P/ASX100 REIT’s and the S&P/ASX100 average
- At the Upper level, (11% pa CAGR in operating EPS for the 4 years to FY26), the Group will have also
significantly outperformed analyst broker estimates (Visible Alpha) for the Group (7.8% pa CAGR in EPS for the 4 years to FY26)
delivered 59% TSR to securityholders
- CEO potential remuneration, (all else being equal) to be received over a further 7 years would be $19 million, still below various global and local peers as per the table above

In economic value terms, the award is estimated to be $8.4 million using the valuation methodology employed by Deloitte (an international accounting firm) (see below). Applying this same methodology to the FY21 award means that the economic value is down 28%.

3.7.3 Valuation of performance rights (Economic Value) 10 year grants

The Board engaged Deloitte (an international accounting firm) to assist in the determination of an economic value for the performance rights. A modified 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.

For the determination of the discount rate, a single discount rate was determined having regard for a Discount for Lack of Marketability and the Capital Asset Pricing Model (CAPM) framework. The economic valuation has included the probability of achieving the TSR and EPS measures, which are based on historical statistical analysis. This economic valuation returned a value of $8.40 per right as at June 2022. This same methodology applied to the grants made in 2021 would have returned a valuation of $7.47 per right as at June 2021.

The economic value of the performance rights is determined on a different basis to the fair value of the performance rights for accounting purposes.

ANNUAL REPORT 2022

4. GROUP PERFORMANCE AND OUTCOMES

The Group has delivered and exceptional result, significantly outperforming the original estimates notwithstanding the challenging operating conditions and market volatility. Despite the volatility in the global equity markets, Goodman’s security price has continued to demonstrate a significant premium to underlying net assets and therefore the value creation by employees and subsequently medium and longer term outperformance of the peer group indices.

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

4.1 Group FY22 highlights

Financial

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Statutory profit of $3,414.0 million for Goodman and $9,029.6 million for the combined Group and Partnerships Operating profit of $1,528.0 million (up 25% on FY21)

Operating EPS of 81.3 cents (up 24% on FY21)

Maintained distribution of 30.0 cents per security to sustain financial risk management objectives

Net tangible assets per security increased 25% to $8.37 per security

Operational property investment, management, and development

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High occupancy maintained at 99% and like for like net property income growth of 3.9%

Total AUM of $73 billion (up 26% on FY21)

Significant outperformance by the 16 Partnerships achieving weighted average returns of over 21%

Development WIP (end value) increased to $13.6 billion and with 99% commitment levels on completions and 14 year weighted average lease terms

People and culture

Social investment of over $11 million by the Goodman Foundation and through efforts of employees worldwide

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Female senior roles now 30% in FY22. 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 in the Australian business via surveys undertaken in FY22 indicates strong communication and employee engagement

Environmental

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

Transitioned to 100% certified GreenPower secured for Goodman’s Australian operations on 1 July 2021, increasing Goodman’s global renewable energy usage to approximately 65%

Approximately 203MW of solar PV now installed or committed across the global portfolio, an increase of 78MW in FY22 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

Capital management

Maintained significant available liquidity of $2.8 billion for the Group and capital resources of $18.1 billion in the Partnerships Significant business growth while maintaining low gearing at 8.5%

Group and Partnerships completed debt refinancing transactions totalling $8.5 billion

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

Over the past decade, the Group has established a global business with significant specialist expertise, financial resources, and a strategic real estate portfolio. The business has been deliberately positioned 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 relatively high due to the long term structural trends that have been identified many years ago
- 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 several years, including:

- Significant reduction in financial leverage (gearing) with the target gearing range reduced to 0% to 25% and retaining a position below the mid-point in the past five years
- Increased quality of the property portfolio through $30 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 the 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 over recent years. 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
- Investment in innovation and technology to provide knowledge of potential future risks and opportunities for our operations.

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

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Performance measures FY17 FY18 FY19 FY20 FY21 FY22
Operating profit ($M) 776.0 845.9 942.3 1,060.2 1,219.4 1,528.0
Operating EPS (cents) 43.1 46.7 51.6 57.5 65.6 81.3
Operating EPS growth (%) 7.5 8.3 10.5 11.4 14.1 24.0
Security price as at 30 June ($) 7.87 9.62 15.03 14.85 21.17 17.84
Distributions per security (cents) 25.9 28.0 30.0 30.0 30.0 30.0
3 year rolling TSR (%) [1] 72.7 69.5 130.8 103.4 133.4 24.7
NTA per security ($) 4.21 4.64 5.34 5.84 6.68 8.37
Growth in NTA ($B) 0.2 0.9 1.3 1.0 1.7 3.3
Gearing (%) 5.9 5.1 9.7 7.5 6.8 8.5
AUM ($B) 34.6 38.3 46.2 51.6 57.9 73.0
Market capitalisation premium to NTA ($B) 6.6 9.0 17.6 16.5 26.8 17.7
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TSR is the increase in market capitalisation plus dividends and distributions, attributable to the respective financial year.

ANNUAL REPORT 2022

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 13.5%, which has exceeded forecasts. 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.

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EPS "Guidance" and Growth %
25 24.0
20
15 14.1
11.4
10.5 10.0
10 8.3 9.0 9 . 0
7.0
6.0
5
0
FY18 FY19 FY20 FY21 FY22
EPS Guidance
EPS Growth
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Gearing %
9.7
10
8.5
8 7.5
6.8
6
5.0
4
2
0
2018 2019 2020 2021 2022
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4.3 Total security price returns comparison

Goodman is the only real estate group currently in the ASX 20 and the 14[th] largest ASX listed entity at 30 June 2022 with a market capitalisation of over $33 billion. Despite the volatility in the past 6 months impacting pricing of global interest rate sensitive sectors, the chart below shows the Group has consistently outperformed the S&P/ASX 20, S&P/ASX 100 and S&P/ASX 200 A-REIT indices over the past three, five and ten years. Importantly, underlying performance of the operations has been significantly ahead of target.

Security price returns

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800
700
600
500
400
300
200
100
0 06/2012 06/2013 06/2014 06/2015 06/2016 06/2017 06/2018 06/2019 06/2020 06/2021 06/2022
Goodman Group S&P ASX 20 S&P ASX 100 S&P ASX 200 / A-REIT (sector)
Return (%)
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GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

4.4 Remuneration outcomes for FY22

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 FY22 performance will be awarded in the form of performance rights.

Given the global nature of the Group’s operations, the recommendations for the other 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.

It should be noted that based on the Group and individual performances in FY22, other executive 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 – FY22 Operating EPS growth: Target 10% (72.1 cents) 24.0% operating EPS growth (81.3 cents)
operating EPS versus target
Financial and operational assessments Individual assessment Various (0 – 100%)
(including environmental objectives)
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The table below indicates the maximum possible STI and the actual STI awarded for FY22.

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STI Actual STI Cash Deferred Actual STI %
Executive Year maximum awarded component component of maximum
$M $M $M $M
Gregory Goodman FY22 2.10 – – – –
FY21 2.10 – – – –
Nick Kurtis FY22 1.05 1.0 0.5 0.5 95
FY21 1.05 – – – –
Michael O’Sullivan FY22 0.75 0.55 0.275 0.275 73
FY21 0.75 0.50 0.25 0.25 67
Nick Vrondas FY22 1.05 0.90 0.45 0.45 86
FY21 1.05 0.70 0.35 0.35 67
€M €M €M €M
Danny Peeters FY22 0.92 0.70 0.35 0.35 76
FY21 0.85 0.70 0.35 0.35 82
US$M US$M US$M US$M
Anthony Rozic FY22 1.05 1.05 0.525 0.525 100
FY21 1.05 1.05 0.525 0.525 100
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ANNUAL REPORT 2022

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 maintained certification under the Climate Active program for being a Carbon Neutral Organisation*
- Development of science-based emissions reduction targets validated by the Science Based Target initiative as being ambitious and aligned with a 1.5°C Paris Agreement pathway
- Approximately 203MW of solar PV installed and committed on Goodman’s rooftops globally, reaching the halfway point to our 2025 400MW target
- Continued transition to renewable energy across Goodman’s operations, including 100% GreenPower for Goodman’s Australian operations electricity usage
- Integrated a consistent process for calculating and including embodied emissions into the approval process for new developments, with approximately 750,000 carbon offsets purchased so far for embodied emissions as we transition to carbon neutral developments
- Development of a Sustainability Linked Bond Framework, providing the criteria for the US$500 million of Sustainability-Linked Bond issuance completed this year
- Recognised by Sustainalytics as an ‘Sector’ and ‘Region’ Top Rated ESG performer during 2022 in the ESG Ratings
- Achieved Sector Leader in the 2021 Global Real Estate Sustainability Benchmark (GRESB) for the Goodman Japan Partnership in the Japan Industrial Distribution peer group
- Goodman Group’s Task Force on Climate related Financial Disclosures (TCFD) statement has been updated and is available on the Goodman website
- Cutting edge sustainability design initiatives in our global development specifications including solar PV, electric vehicle charging points, LED lighting and drought tolerant landscaping
- Greater than 50% of Goodman’s developments globally were completed on brownfield developments
- Continued focus on biodiversity initiatives including support of urban forests and reforestation with tree planting projects completed across the Continental Europe, United Kingdom and NZ operations
- Zero workplace fatalities across Goodman’s global operations including our workforce and contractors
- Development of Goodman’s Sustainable Sourcing Framework to increase focus on supply chain human rights and help meet our sustainability goals
- Contributed a further $11.6 million to community and philanthropic causes.

*Subject to final verification

Key areas of assessment for FY22 are disclosed below in addition to two new targets for FY23 onwards. 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. The measures are formally set over the testing period for performance rights, and are reviewed annually for relevant progress.

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Assessment of progress on prior period targets
Target Long-term target Progress
Renewable Energy 100% renewable electricity Achieved 100% Renewable electricity use Australia On target
use within Goodman’s (in Goodman’s operations) during FY22, resulting
operations by 2025 in approximately 65% renewable electricity use globally
Subject to final verification
Solar PV Installation 400MW of solar PV installed Solar PV installations and commitments increased On target
or committed by 2025 [1 ] to approximately 203MW in FY22
Carbon Neutral Carbon neutral Maintained Carbon Neutral operations during FY222. Ahead of target
operations by 2025 This was initially achieved in FY21, four years ahead of target
TCFD Achieve TCFD by FY22 TCFD compliance achieved, with FY22 statements
updated and registered. This is available online
Occupancy >95% 99% Materially
ahead of target
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Subject to Government regulation in each jurisdiction.
Formal confirmation from Climate Active due in October 2022.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

Additional Targets for FY23 onwards

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Target Long-term target Progress
Embodied We are committed to measuring, New Target for FY23 onwards. Embodied carbon emissions calculated New target
Carbon reducing and offsetting and included in all Group Investment Committee development papers
embodied carbon emissions in preparation for future carbon neutral buildings. A number of buildings
from our global development have been built on an embodied carbon neutral basis as offsets have
workbook and have commenced been purchased and retired. Offset procurement guidance and criteria
the process to reduce and offset have been established and procedures are in place with global teams.
this over time Formal Targets to be established during the year
Science In addition to our continued New Target for FY23 onwards New target
Based Targets commitments to renewable
energy and carbon neutrality,
the Group has committed to
Scope 1 and 2 GHG emissions
reductions of 42% by 2030 in
line with 1.5°C Paris Agreement
pathway and validated by SBTi
Code of conduct, behaviour, social and governance requirements
Assessment area Long-term target Outcome Pass/Fail
Diversity
Gender ratio 50% gender ratio in Female representation stable with total employees 44% female, 56% male On target
in the workforce the workforce by 2030 overall. Senior female roles represent 30% of senior positions. Significant
progress has been made on career development (job scope widening,
internal promotions etc) and recruitment of females into roles that should
over time evolve into senior roles
Women in >40% in senior roles by 2030 Senior female roles represent 30% of senior positions. Significant progress On target
senior roles has been made on career development (job scope widening, internal
promotions etc) and recruitment of females into roles that should over time
evolve into senior roles The Group is on track to reach >40% by 2030
Governance
Workplace safety Safe working environment with There have been zero fatalities in FY22. This includes Goodman employees On target
demonstrable risk controls, or contractors on Goodman controlled areas or contractor controlled
contractor management and sites. There has been significant focus on ensuring the implementation and
monitoring of key safety metrics execution of the Group’s comprehensive safety processes and procedures.
made particularly difficult through pandemic given regional visitation was
not possible
Significant Zero Zero On target
reputational
issues arising
from illegal
conduct
Social
Social/charitable $50 million in social investment $11.6 million was contributed to community and philanthropic causes Ahead of target
donations by Goodman Foundation during FY21, taking our total to $31 million in the past 3 years
by 2030
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ANNUAL REPORT 2022

4.4.3 LTI outcomes

Testing as at 30 June 2022 was completed for the grants of performance rights made to executive KMP in respect of executive KMP performance in FY19 (called FY20 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 FY20 awards had two hurdles: operating EPS and a relative TSR, both measured over the three years ended 30 June 2022. The mechanics of the testing are detailed in section 3.5.

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 operating EPS dilution. Operating EPS growth for the three year period to 30 June 2022 was 57.6%, compared to a cumulative target of 29.5% at the upper level of the threshold.

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Threshold level Upper level Actual Outperformance Outcome
FY19 LTIP grant – Operating EPS hurdle [1 ] 61.4 cents 66.8 cents 81.3 cents 14.5 cents 100%
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Testing period for grant: EPS growth from 1 July 2019 to 30 June 2022. At the threshold level, 25% satisfy the hurdle with a sliding scale up to 100% satisfying the hurdle at the upper level.

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 20.5% to 30 June 2022, under the LTIP TSR calculation methodology. This ranked Goodman in the 68th percentile against the S&P/ASX 100 and consequently 84% of these performance rights vested.

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Goodman TSR [1] S&P/ASX 100 TSR [1] Percentile Outcome
FY19 LTIP grant – TSR hurdle [1] 20.5% 16.0% 68th 84%
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Testing period for grant: 1 July 2019 to 30 June 2022, in accordance with the LTIP the TSR is based on the 10 day volume weighted average price (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 operating EPS hurdle and 84% of the relative TSR hurdle, a total of 10,296,905 equity settled performance rights will vest in September 2022, September 2023 and September 2024. In addition, 2,837,750 cash settled performance rights will also vest. The Group currently intends to issue the equivalent number of new securities to satisfy those obligations in the future.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

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, positioning the business for resilience and significant outperformance in FY22, far exceeding the Group’s operational targets. It has also considered the following contributing factors and highlights:

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Gregory Goodman Group CEO
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 and the increases in volatility, costs and risk in the global operating environment. The Group has
adapted to these challenges and continues to outperform targets, retaining employees and increasing community support and charitable programs
+ He has positioned the business as a leader in its field, managing, motivating and incentivising key personnel across the platform to perform in highly
competitive environment
+ Fostered a culture that focused on delivering quality across all aspects of the business: people, properties and service
+ Led 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, reflected in top decile engagement scores
+ Reinforced Goodman’s purpose aimed at understanding the drivers of change and the needs of customers and all stakeholders to support
their future success
+ 6.4% voluntary staff turnover in FY22
Financial and risk + He has fostered continuity of strategy over successive years leading to continued outperformance over benchmark indices and comparator
companies in FY22, and with strong and sustained TSR of 151.36% over five years
+ Delivered:
– Statutory profit of $3.4 billion (up 48%), driven by growth in property values as a result of asset selection over the past few years and operational
activities such as development
– Significant Operating Profit growth of 25% on FY21, to $1,528 million, significantly ahead of budget
– Revaluation growth across the Group and Partnership of $8.5 billion
– Operating EPS of 81.3 cents, up 24% on FY21
– NTA increased 25% to $8.37 per security
– Occupancy increased to 99%
+ Exceeded earnings guidance in FY22 after posting significant outperformance in FY21 through the pandemic and volatile economic conditions
+ Drove a clearly defined capital management strategy with financial leverage of 8.5% and maintained a strong Group balance sheet with
$2.8 billion of liquidity
+ Continued managing relationships with capital partners and secured additional equity and financial facilities to total $18.1 billion of available
funding capacity
+ 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 carbon neutral emissions target for the Group by 2025 and achieving it in FY21
– Significant progress on the 2025 solar PV installation on the rooftops of Goodman’s global portfolios and installing or committing to 78 MW
in FY22 taking global installation and commitment to over 200MW
– Maintained compliance with TCFD since FY21
+ Established a framework for measuring and assessing embodied carbon to transition to carbon neutral developments
+ Drove the development of science-based emissions reduction targets validated by the Science Based Target initiative as being ambitious and
aligned with a 1.5°C Paris Agreement pathway
+ Supported implementation and progression of EV incentive scheme for staff globally to encourage a shift towards lower emissions vehicles.
Social and cultural + Continues to lead 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 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 $11.6 million to community and philanthropic causes including $200,000 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 2,195 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 founding food rescue partners have provided meals to charities that help feed people in need and made a significant
commitment to domestic violence prevention.
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ANNUAL REPORT 2022

The charts below demonstrate the performance of the Group and various key metrics relative to the Group CEO’s vested remuneration outcomes in FY22 and prior years. They illustrate that the significant operating profit growth, security price growth and consequently returns for Securityholders over the testing and vesting periods, correlate with increased Group CEO remuneration over time. Despite significant market volatility and price movement in FY22, the market price of securities between the time of the grant and the time of vesting has seen significant growth, and the Group CEO (and all recipients of the LTIP) has participated in this performance alongside Securityholders.

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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 figures 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 169% for grants vesting in FY22).

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FY17 FY18 FY19 FY20 FY21 FY22
$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] 3.8 4.7 7.3 11.6 14.4 15.9
Value of LTI on vesting date 7.0 8.8 13.5 25.4 35.6 42.9
Total remuneration based on LTI value at grant date [1] 5.2 6.1 8.7 13.0 15.8 17.3
Total vested remuneration based on LTI value at vesting date 8.4 10.2 14.9 26.8 37.0 44.3
Increase in LTI value due to security price performance of the Group 3.2 4.1 6.2 13.8 21.2 26.9
Percentage growth in value of LTI during vesting period 84% 88% 86% 119% 147% 169%
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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.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

The chart below illustrates the increase in the value of the Group CEO’s vested LTI in FY22 from the date of the original awards in 2017, 2018 and 2019. These significant gains have arisen due to consistent earnings growth and security price outperformance of the Group.

Value at	grant date ($M)
Performance rights			Gain due to increase in security price
		15.9		42.9
4.4.5	Other executive KMP achievements

In FY22, the Board considered the following highlights when assessing other executive KMP:

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Danny Peeters Executive Director, Corporate
+ Successfully overseeing Brazil, playing a critical role in communicating and reinforcing the Group’s strategy, both from
a real estate and corporate perspective – currently acting as CEO ad interim
+ Played a key role in overseeing the Brazil Investment Partnership with strong financial outcomes
+ Continued to progress acquisition and permitting of significant infill development sites, positioning the Group and
Partnership in a strong position to capitalise on the growing e-commerce penetration
+ Construction completion including permits and successful leasing progress of major development sites despite the
challenging pandemic context in Brazil – strong leasing results and asset rotation. Strong focus
on quality of developments and property management to drive long term value of the assets
+ 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 and Group regarding sustainability and
innovation initiatives
+ Important direct link for the Board to the operations in Continental Europe and Brazil
+ Further improved key controls and culture with the team working cohesively and increasing capability.
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ANNUAL REPORT 2022

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Anthony Rozic Chief Executive Officer North America, and Deputy Group Chief Executive Officer
+ Significant outperformance to budget EBIT and valuations.
+ Significant investment outperformance during the year through strategic value add, development, re-leasing and debt
issuance initiatives
+ Critical role in communicating and reinforcing the Group’s strategy in the region
+ Managed a focused and motivated team with an emphasis on succession planning strong leadership in embedding
the Goodman values in the behaviour of the team and encouraging teamwork and collaboration
+ With the COVID-19 disruption and employees working remotely, a high level of productivity has been maintained with
a focus on key operational priorities
+ Continued to develop 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 2.7 million square feet, completed 2.4 million square feet, stabilised 2.2 million square feet of infill
development projects
+ Continued to grow infill development pipeline with acquisitions of 2.3m sf in major US gateway cities providing strong
positioning for future performance
+ Successfully entered the two new target markets of New York and San Francisco with the acquisition of strategic
developments and value add opportunities
+ Continued to diversify capital sources with the doubling of the debt facility with the second USPP Bond issuance
of $400 million and bank debt extension and increase of $300 million taking total debt to $1 billion with $200 million
of liquidity at the end of the financial year. Maintained gearing level below 14%
+ Successfully oversaw strong growth in business operations in North America, achieving a number of key milestones:
– Significant growth in AUM to $8.4 billion
– Stabilised occupancy of 96.4%
– Maintained a long WALE of 8.9 years
– Total available uncommitted liquidity in the Partnership $3.8 billion at financial year end
+ Introduced new regional and global customer relationships to the portfolio over FY22 with a number of developments
pre-leased and replenishing the land/value-add inventory. Emphasis on developing major infill sites and value-add
development skill sets
+ Successfully launched numerous ESG initiatives including renewable energy solar power and carbon
neutral developments.
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 21.4% (based on the respective
Partnership reporting periods). Materially in excess of benchmark and target hurdle returns
+ Delivered strong performance metrics including:
– Management earnings contribution of $588 million to the Group’s operating earnings
– Performance fee revenue of $208 million
– Growth in external AUM up 27% to $68.7 billion across 16 Partnerships in 14 countries
+ Strategic asset planning and new asset selection focus resulting in superior property level returns
+ Establishment and communication of Group strategy and values across the investment management platform
+ Communication with key capital partners during the COVID-19 disruption and established strategies to ensure portfolio
strategy and execution was consistent with capital partner expectations
+ Oversight of Partnership capital management plans, including equity, debt and hedging strategies across the whole
portfolio in all jurisdictions
+ Developed the strategy and led execution on new equity raisings of $1.8 billion in FY22
+ Fostered strong relationships with existing and new capital partners
+ Successfully executed continuation of several Partnerships through the course of FY22
+ 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.
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GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

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Michael O’Sullivan Group Chief Risk Officer
+ Responsible for identifying, assessing, and monitoring risks at Goodman and reporting to the Risk and Compliance Committee
+ Oversee 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 risk management frameworks with improved outcomes across the Group and Partnerships
in FY22 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, compliance, insurance and business continuity planning
+ Work closely with all Group functions, in particular, Finance, Legal, Compliance, Technical, Investment Management
and IT where it relates to risk management practices and processes in those specific functions
+ FY22 saw continued Group activities, in relation to the GIC process including:
– Over 400 GIC submissions with over 20% involving detailed involvement from the Group Risk function
– WIP of $13.6 billion with an annual production rate of $7.1 billion
– $2.3 billion of asset sales, including both the disposals of directly held developments and disposals
to external parties globally
– $8.4 billion of global acquisitions and development expenditure
– 16 Partnership business plans and strategy proposals across $68.7 billion of external AUM, in which the Group’s
equity investment was $14.4 billion.
Nick Vrondas Group Chief Financial Officer
+ Successfully developed and played a key role in the execution of the business strategy including the management
and allocation of capital that has delivered strong returns to investors over several years culminating in FY22 operating
profit of over $1.5 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, co-ordination
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 over $8 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 money market and hedge transactions
of $11 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 the recent operating climate have 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 2022

4.5 LTI grants in relation to FY22 performance

The remuneration proposed by the Board in respect of the executive KMP performance in FY22 comprise fixed remuneration, STI awards and awards under the LTIP.

As discussed in earlier sections, the Board has decided to reduce the number of performance rights to be issued to the Group CEO and other executive KMP under the LTIP. The Board has taken into account the face value of the grants and their economic value in making its determination. The Board believes that the significant reduction will find a new balance between the interests of Securityholders and the recipients. The Board also believes that this will not adversely impact the motivations of the recipients.

The table below lists the maximum number of performance rights which could vest if the maximum hurdles are met over the four years ending 30 June 2026. The minimum vesting percentage is 0% if the threshold 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 2026 with the last tranche vesting ten years from initial grant, in September 2032.

The grants that the Board intends to make in September 2022 and proposes to make for Executive Directors after the AGM (subject to Securityholder approval) in respect of the executive KMP performance in FY22, are detailed below. The FY23 performance rights awards reflect:

A reduction in the number of rights for the Group CEO of 36% and other executive KMP of 20%
A reduction in the face value for the Group CEO of 46% and 33% for other executive KMP.

			Face value per	Face value	Economic value per	Economic
	Year of	Performance	performance right	of grant	performance right	value of grant
Executive	grant	rights proposed	$	$M	$	$M
Gregory Goodman Danny Peeters Anthony Rozic Nick Kurtis Michael O’Sullivan Nick Vrondas	FY23 FY23 FY23 FY23 FY23 FY23	1,000,000 500,000 550,000 645,000 450,000 550,000	17.84 17.84 17.84 17.84 17.84 17.84	17.8 8.9 9.8 11.5 8.0 9.8	8.40 8.40 8.40 8.40 8.40 8.40	8.4 4.2 4.6 5.4 3.8 4.6

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

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 are set considering 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 AGM, total remuneration (including superannuation) payable by Goodman to all Non-Executive Directors in aggregate must not exceed $2.5 million per annum. For FY22, total Non-Executive Directors’ remuneration was $2.4 million (2021: $2.4 million). With the recent appointments, increasing size and depth of operations of the Group, and responsibilities of Directors, the Group will be seeking an increase in permitted Non-Executive Director fee pool at the 2022 AGM.
The Board has approved the establishment of a Sustainability and Innovation Committee which will be constituted in FY23.
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.

5.2 Board and committee annual fees

The Board and committee fees that applied for FY22 are set out below:

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

The remuneration of the Non-Executive Director of GLHK was HK$680,000.

ANNUAL REPORT 2022

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	Superannuation benefits	Bonus (STI)2	Other3	Performance rights (LTI)5	Total	STI and LTI as % of total	LTI as % of total
Executive KMP	$	$	$	$	$	$	$	$	$	%	%
Gregory Goodman Nick Kurtis Michael O’Sullivan Nick Vrondas Danny Peeters6 Anthony Rozic7	FY22 1,445,570 FY21 1,447,398 FY22 687,955 FY21 707,113 FY22 500,095 FY21 474,143 FY22 713,882 FY21 679,746 € FY22 610,450 FY21 593,400 US$ FY22 729,880 FY21 697,211	– – – – – – – – € – – US$ – –	– 11,201 – 12,468 – 11,423 – 11,423 € – – US$ 20,149 29,466	1,445,570 1,458,599 687,955 719,581 500,095 485,566 713,882 691,169 € 610,450 593,400 US$ 750,029 726,677	23,568 21,694 23,568 21,694 23,568 21,694 23,568 21,694 € – – US$ 17,100 16,210	– – 1,000,000 – 550,000 500,000 900,000 700,000 € 700,000 700,000 US$ 1,050,000 1,050,000	10,199 44,203 8,584 17,509 6,403 13,242 8,159 18,073 € – – US$ 14,651 (1,715)	14,293,367 11,854,105 6,253,120 4,742,939 4,424,720 3,336,045 5,706,958 4,598,229 € 3,539,015 2,656,555 US$ 4,305,210 3,445,575	15,772,704 13,378,601 7,973,227 5,501,723 5,504,786 4,356,547 7,352,567 6,029,165 € 4,849,465 3,949,955 US$ 6,136,989 5,236,747	90.6 88.6 91.0 86.2 90.4 88.1 89.9 87.9 87.4 85.0 87.3 85.8	90.6 88.6 78.4 86.2 80.4 76.6 77.6 76.3 73.0 67.3 70.2 65.8

The footnotes for this table are set out on the following page.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

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.

Footnotes to the executive KMP remuneration table:

Salary and fees represent the amounts due under the terms of executives’ service contracts and include movements in annual leave provisions.
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 changes in long service leave provisions and in the prior year, car parking and reportable fringe benefits.
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 2022, the balance at 30 June 2022 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 (2021: $20,149). The notional interest amount has been 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.

ANNUAL REPORT 2022

6.2 Movements in performance rights held by executive KMP

The movements in the number of performance rights during FY22 are summarised as follows:

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Held at the Granted as Held at the
start of the year compensation Vested Forfeited end of the year
Executive Directors
Gregory Goodman FY22 5,316,667 1,560,000 (1,866,666) – 5,010,001
FY21 6,350,000 950,000 (1,983,333) – 5,316,667
Danny Peeters FY22 1,846,667 625,000 (566,666) – 1,905,001
FY21 1,996,250 380,000 (529,583) – 1,846,667
Anthony Rozic FY22 2,013,333 690,000 (633,333) – 2,070,000
FY21 2,241,666 400,000 (628,333) – 2,013,333
Other executive KMP
Nick Kurtis FY22 2,103,333 805,000 (633,333) – 2,275,000
FY21 2,290,416 490,000 (677,083) – 2,103,333
Michael O’Sullivan FY22 1,450,000 560,000 (413,333) – 1,596,667
FY21 1,503,750 340,000 (393,750) – 1,450,000
Nick Vrondas FY22 2,050,000 690,000 (650,000) – 2,090,000
FY21 2,323,750 420,000 (693,750) – 2,050,000
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GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

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 year %	Forfeited	%	Value of performance rights vested in the year3 $	Financial years in which grant vests4
Gregory Goodman Danny Peeters Anthony Rozic	1,560,000 18 Nov 2021 950,000 19 Nov 2020 900,000 20 Nov 2019 1,600,000 15 Nov 2018 1,600,000 16 Nov 2017 2,400,000 30 Sep 2016 625,000 18 Nov 2021 380,000 19 Nov 2020 350,000 20 Nov 2019 550,000 15 Nov 2018 550,000 16 Nov 2017 600,000 30 Sep 2016 690,000 18 Nov 2021 400,000 19 Nov 2020 380,000 20 Nov 2019 600,000 15 Nov 2018 600,000 16 Nov 2017 700,000 30 Sep 2016	FY22 FY21 FY20 FY19 FY18 FY17 FY22 FY21 FY20 FY19 FY18 FY17 FY22 FY21 FY20 FY19 FY18 FY17	20.16 16.07 11.48 8.72 6.70 5.64 20.16 16.07 11.48 8.72 6.70 5.64 20.16 16.07 11.48 8.72 6.70 5.64	31,449,600 15,266,500 10,332,000 13,952,000 10,720,000 13,536,000 12,600,000 6,106,600 4,018,000 4,796,000 3,685,000 3,384,000 13,910,400 6,428,000 4,362,400 5,232,000 4,020,000 3,948,000	– – – – 33.3 66.7 – – – – 33.3 66.7 – – – – 33.3 66.7	– – – 33.3 33.3 33.3 – – – 33.3 33.3 33.3 – – – 33.3 33.3 33.3		– – – – – – – – – – – – – – – – – –	– – – 12,245,326 12,245,326 18,368,000 – – – 4,209,326 4,209,326 4,592,000 – – – 4,592,000 4,592,000 5,357,326	2026–2032 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2026–2032 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2026–2032 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022

Refer to page 71 for explanatory footnotes.

ANNUAL REPORT 2022

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 year %2	Forfeited	%	Value of performance rights vested in the year3 $	Financial years in which grant vests4
Nick Kurtis Michael O’Sullivan Nick Vrondas	805,000 30 Sep 2021 490,000 30 Sep 2020 380,000 30 Sep 2019 600,000 28 Sep 2018 600,000 30 Sep 2017 700,000 30 Sep 2016 560,000 30 Sep 2021 340,000 30 Sep 2020 300,000 30 Sep 2019 400,000 28 Sep 2018 390,000 30 Sep 2017 450,000 30 Sep 2016 690,000 30 Sep 2021 420,000 30 Sep 2020 380,000 30 Sep 2019 600,000 28 Sep 2018 600,000 30 Sep 2017 750,000 30 Sep 2016	FY22 FY21 FY20 FY19 FY18 FY17 FY22 FY21 FY20 FY19 FY18 FY17 FY22 FY21 FY20 FY19 FY18 FY17	17.22 15.77 11.26 8.52 6.41 5.64 17.22 15.77 11.26 8.52 6.41 5.64 17.22 15.77 11.26 8.52 6.41 5.64	13,862,100 7,727,300 4,278,800 5,112,000 3,846,000 3,948,000 9,643,200 5,361,800 3,378,000 3,408,000 2,499,900 2,538,000 11,881,800 6,623,400 4,278,800 5,112,000 3,846,000 4,230,000	– – – – 33.3 66.7 – – – – 33.3 66.7 – – – – 33.3 66.7	– – – 33.3 33.3 33.3 – – – 33.3 33.3 33.3 – – – 33.3 33.3 33.3		– – – – – – – – – – – – – – – – – –	– – – 4,592,000 4,592,000 5,357,326 – – – 3,061,326 2,984,800 3,444,000 – – – 4,592,000 4,592,000 5,740,000	2026–2032 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2026–2032 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022 2026–2032 2024–2026 2023–2025 2022–2024 2021–2023 2020–2022

Footnotes to the analysis of executive KMP performance rights table:

The fair value was determined at grant date for each of the tranches 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 S&P/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 year equalled the percentage of securities issued during the year.
The value of performance rights vested was calculated using the closing price of a Goodman security on the ASX of $22.96 on 1 September 2021, 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.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

6.4 Securities issued on exercise of performance rights

During FY22, Goodman issued 14,716,648 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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Vesting date [1] Exercise price $ Number of performance rights [2]
Ten-year plan
Sep 2031 – 1,607,145
Sep 2030 – 1,607,143
Sep 2029 – 1,607,144
Sep 2028 – 1,607,142
Sep 2027 – 1,607,142
Sep 2026 – 1,607,142
Sep 2025 – 1,607,142
Five-year plan
Sep 2026 – 2,501,648
Sep 2025 – 6,607,973
Sep 2024 – 10,183,285
Sep 2023 – 12,920,177
Sep 2022 – 13,645,975
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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.
The number of performance rights at the date of this Directors’ report is net of any rights forfeited and excludes 14,641,586 performance rights where the intention is to cash settle.

ANNUAL REPORT 2022

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] FY22 601,432 23,568 625,000
FY21 480,131 21,694 501,825
Ian Ferrier [2] FY22 – – –
FY21 234,619 8,437 243,056
Christopher Green FY22 300,000 – 300,000
FY21 264,062 – 264,062
Mark Johnson FY22 306,432 23,568 330,000
FY21 264,060 21,694 285,754
Vanessa Liu [3] FY22 20,000 – 20,000
FY21 – – –
Rebecca McGrath FY22 344,108 5,892 350,000
FY21 282,368 21,694 304,062
Phillip Pryke [4] FY22 408,701 23,568 432,269
FY21 357,068 21,694 378,762
Hilary Spann [5] FY22 59,048 – 59,048
FY21 – – –
Penny Winn [6] FY22 107,850 9,195 117,045
FY21 258,306 21,694 280,000
Non-Executive Director – GLHK HK$ HK$ HK$ HK$
David Collins [7] FY22 680,000 – 680,000
FY21 625,000 – 625,000
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Stephen Johns was appointed Chairman on 19 November 2020 and movement in Director’s fees reflects this appointment.
Ian Ferrier retired as a Director on 19 November 2020.
Vanessa Liu was appointed as a Director on 1 June 2022.
Salary and fees for Phillip Pryke included an amount of A$93,747 (NZ$100,000) (2021: A$83,760 (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.
Hilary Spann was appointed as a Director on 4 April 2022.
Penny Winn retired as a Director on 18 November 2021.
David Collins is a director of GLHK and his director’s fees are disclosed in Hong Kong dollars.

GOODMAN GROUP

Directors’ report

Remuneration report – audited (continued)

6.7 Movements in Goodman securities held

The movements during the 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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Held at Securities issued
Non-Executive Directors – the start of on vesting of Held at the end
GL and GFML the year [1] performance rights Acquisitions Disposals of the year [2]
Stephen Johns FY22 41,143 – – – 41,143
FY21 25,000 – 16,182 (39) 41,143
Christopher Green FY22 78,996 – – – 78,996
FY21 78,996 – – – 78,996
Mark Johnson FY22 5,000 – 10,000 - 15,000
FY21 – – 5,000 - 5,000
Vanessa Liu FY22 – – – – –
FY21 – – – – –
Rebecca McGrath FY22 43,061 – - - 43,061
FY21 42,144 – 917 - 43,061
Phillip Pryke FY22 59,880 – – – 59,880
FY21 59,880 – – – 59,880
Hilary Spann FY22 – – 3,500 – 3,500
FY21 – – – – –
Penny Winn FY22 24,700 – – – 24,700
FY21 24,700 – – – 24,700
Non-Executive Director – GLHK
David Collins FY22 5,000 – – – 5,000
FY21 5,000 – – – 5,000
Executive Directors – GL and GFML
Gregory Goodman FY22 38,487,880 1,866,666 – (1,750,000) 38,604,546
FY21 38,104,547 1,983,333 – (1,600,000) 38,487,880
Danny Peeters FY22 1,633,131 566,666 – - 2,199,797
FY21 2,103,548 529,583 – (1,000,000) 1,633,131
Anthony Rozic FY22 1,209,460 633,333 – (891,486) 951,307
FY21 1,475,958 628,333 – (894,831) 1,209,460
Other executive KMP
Nick Kurtis FY22 554,286 633,333 – (684,000) 503,619
FY21 503,330 677,083 – (626,127) 554,286
Michael O’Sullivan FY22 843,119 413,333 – (190,000) 1,066,452
FY21 666,601 393,750 – (217,232) 843,119
Nick Vrondas FY22 129,909 650,000 – (650,000) 129,909
FY21 – 693,750 – (563,841) 129,909
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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.

ANNUAL REPORT 2022

6.8 Transactions with Directors, executives and their related entities GreenPoint Real Estate Innovation and Technology Venture, LP

In order to enhance understanding of and access to technologies that may influence the property sector and the business, the Group has 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 GL. As at 30 June 2022, the Group had invested USD5.3 million.

Wyuna Regenerative Ag Investment Fund (Wyuna)

The Group has, as part of our ESG strategy, committed to investing $30.0 million in Wyuna, a fund offering a model blending carbon farming, red meat production and regeneration in Australia. The fund is managed by Wyuna Regenerative Ag, which is 50% owned by Christopher Green, a director of Goodman Limited. As at 30 June 2022, the Group had invested $nil.

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

(continued)

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 2022 have been properly maintained and the financial report for the year ended 30 June 2022 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.

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

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.

ANNUAL REPORT 2022

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

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Gregory Goodman Group Chief Executive Officer Sydney, 16 August 2022

GOODMAN GROUP

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 2022, 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.

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KPMG

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Eileen Hoggett

Partner

Sydney

16 August 2022

KPMG, an Australian partnership and a member firm of the KPMG global organisation 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 organisation. Liability limited by a scheme approved under Professional Standards Legislation.

ANNUAL REPORT 2022

Consolidated statements of financial position as at 30 June 2022

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Goodman GIT
2022 2021 2022 2021
Note
$M $M $M $M
Current assets
Cash and cash equivalents 21(a) 1,056.0 920.4 473.6 379.8
Receivables 7 217.8 331.3 131.0 816.1
Contract assets 8 77.6 80.9 – –
Inventories 6(b) 389.0 235.1 – –
Other financial assets 17 1.6 16.5 1.6 16.5
Assets held for sale 9 608.2 41.5 608.2 –
Total current assets 2,350.2 1,625.7 1,214.4 1,212.4
Non-current assets
Receivables 7 173.4 277.5 3,137.4 2,528.5
Inventories 6(b) 1,727.1 1,192.7 5.9 5.9
Investment properties 6(b) 1,423.7 1,851.2 495.3 1,155.7
Investments accounted for using the equity method 6(b) 14,379.6 10,660.0 11,356.1 8,078.4
Deferred tax assets 5(d) 25.2 19.9 – –
Other financial assets 17 496.4 362.8 373.1 314.4
Property, plant and equipment 12 61.4 54.6 – –
Intangible assets 14 795.4 822.6 – –
Total non-current assets 19,082.2 15,241.3 15,367.8 12,082.9
Total assets 21,432.4 16,867.0 16,582.2 13,295.3
Current liabilities
Payables 10 606.5 565.9 72.7 607.6
Current tax payables 5(c) 173.4 160.1 – –
Interest bearing liabilities 16 133.3 – 133.3 –
Provisions 11 299.2 294.2 233.5 166.3
Lease liabilities 13 12.5 11.9 – –
Other financial liabilities 17 71.2 1.9 25.9 1.9
Total current liabilities 1,296.1 1,034.0 465.4 775.8
Non-current liabilities
Payables 10 111.0 125.5 723.8 232.2
Interest bearing liabilities 16 2,698.9 2,060.3 2,692.1 2,062.8
Deferred tax liabilities 5(d) 380.3 168.4 267.9 124.0
Provisions 11 15.5 23.7 – –
Lease liabilities 13 58.1 82.1 – –
Other financial liabilities 17 447.7 211.5 325.3 124.6
Total non-current liabilities 3,711.5 2,671.5 4,009.1 2,543.6
Total liabilities 5,007.6 3,705.5 4,474.5 3,319.4
Net assets 16,424.8 13,161.5 12,107.7 9,975.9
Equity attributable to Securityholders
Issued capital 20(a) 8,206.1 8,096.4 8,154.5 7,849.0
Reserves 352.7 134.8 238.8 (33.7)
Retained earnings 7,866.0 4,930.3 3,714.4 2,160.6
Total equity attributable to Securityholders 16,424.8 13,161.5 12,107.7 9,975.9
Comprising:
Total equity attributable to GL 22(a) 2,292.9 1,635.6
Total equity attributable to other entities stapled to GL 22(b) 14,131.9 11,525.9
Total equity attributable to Securityholders 16,424.8 13,161.5
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The consolidated statements of financial position are to be read in conjunction with the accompanying notes.

GOODMAN GROUP

Consolidated income statements

for the year ended 30 June 2022

Goodman Note 2022 $M 2021 $M Revenue Gross property income 2 138.0 112.4 Management income 2 511.4 383.9 Development income 2 1,441.6 1,492.0 Distributions from investments 0.8 – 2,091.8 1,988.3 Property and development expenses Property expenses (33.7) (32.8) Development expenses 2 (554.9) (862.3) (588.6) (895.1) Other income Net gain from fair value adjustments on investment properties 6(e) 260.1 63.1 Net gain on disposal of investment properties 73.6 37.7 Net gain on disposal of assets held for sale 12.5 – Net gain on disposal of equity investments 2 0.2 5.0 Share of net results of equity accounted investments 6(f) 2,718.2 1,708.9 3,064.6 1,814.7 Other expenses Employee expenses 2 (258.9) (210.8) Share based payments expense 2 (257.6) (268.8) Administrative and other expenses (90.4) (83.2) Reversal of previous impairment 2 – – (606.9) (562.8) Profit before interest and tax 3,960.9 2,345.1 Net finance (expense)/income Finance income 15 8.3 94.3 Finance expense 15 (231.1) (19.4) Net finance (expense)/income (222.8) 74.9 Profit before income tax 3,738.1 2,420.0 Income tax expense 5(a) (324.1) (108.1) Profit for the year 3,414.0 2,311.9 Profit attributable to GL 22(a) 552.6 300.2 Profit attributable to other entities stapled to GL 22(b) 2,861.4 2,011.7 Profit for the year attributable to Securityholders 3,414.0 2,311.9 Basic profit per security (¢) 3 183.2 125.4 Diluted profit per security (¢) 3 178.8 122.1	GIT
	2022 $M 2021 $M
	51.7 60.2 – – – – 6.4 9.1
	58.1 69.3
	(16.5) (20.2) – (2.3)
	(16.5) (22.5)
	208.3 60.2 69.8 39.3 – – – 3.2 2,173.0 1,373.8
	2,451.1 1,476.5
	– – – – (60.4) (52.1) – 17.6
	(60.4) (34.5)
	2,432.3 1,488.8
	72.8 177.9 (304.4) (42.4)
	(231.6) 135.5
	2,200.7 1,624.3 (133.1) (49.5)
	2,067.6 1,574.8

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

ANNUAL REPORT 2022

Consolidated statements of comprehensive income for the year ended 30 June 2022

Goodman Note 2022 $M 2021 $M Profit for the year 3,414.0 2,311.9	GIT
	2022 $M 2021 $M
	2,067.6 1,574.8
Other comprehensive income/(loss) for the year Items what will not be classified to profit or loss Actuarial gains/(losses) on defined benefit retirement schemes, net of income tax 5.6 (6.0) Effect of foreign currency translation 1.6 (0.8) 7.2 (6.8) Items that are or may be reclassified subsequently to profit or loss Increase due to revaluation of other financial assets 0.3 0.3 Cash flow hedges: – Change in value of financial instruments 15.9 0.3 Effect of foreign currency translation 143.7 (278.6) 159.9 (278.0) Other comprehensive income/(loss) for the year, net of income tax 167.1 (284.8) Total comprehensive income for the year 3,581.1 2,027.1 Total comprehensive income attributable to GL 22(a) 542.7 271.6 Total comprehensive income attributable to other entities stapled to GL 22(b) 3,038.4 1,755.5 Total comprehensive income for the year attributable to Securityholders 3,581.1 2,027.1	– – – –
	– –
	5.0 (2.2) 15.9 0.3 221.8 (182.2)
	242.7 (184.1)
	242.7 (184.1)
	2,310.3 1,390.7

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

GOODMAN GROUP

Consolidated statements of changes in equity

for the year ended 30 June 2022

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Attributable to Securityholders
Defined
Foreign benefit
Asset Cash flow currency Employee retirement
Issued revaluation hedge translation compensation schemes Total Retained
Goodman capital reserve reserve reserve reserve reserve reserves earnings Total
Note $M $M $M $M $M $M $M $M $M
Balance at 1 July 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
Profit for the year – – – – – – – 2,311.9 2,311.9
Other comprehensive
income/(loss)
Effect of foreign currency translation – 0.2 0.5 (279.3) – (0.8) (279.4) – (279.4)
Cash flow hedges:
– Change in value of financial instruments – – 0.3 – – – 0.3 – 0.3
Increase due to revaluation
of other financial assets – 0.3 – – – – 0.3 – 0.3
Actuarial losses on defined benefit
– – – – – (6.0) (6.0) – (6.0)
superannuation funds, net of income tax
Total other comprehensive income/(loss)
– 0.5 0.8 (279.3) – (6.8) (284.8) – (284.8)
for the year, net of income tax
Total comprehensive income/(loss)
– 0.5 0.8 (279.3) – (6.8) (284.8) 2,311.9 2,027.1
for the year, net of income tax
Transfers – – – – (68.4) – (68.4) 68.4 –
Contributions by and distributions to owners
Dividends/distributions on stapled securities 19 – – – – – – – (554.2) (554.2)
Issue of stapled securities 20(a) 65.1 – – – – – – – 65.1
Issue costs (0.4) – – – – – – – (0.4)
Purchase of stapled securities for the LTIP – – – – (22.4) – (22.4) – (22.4)
Equity settled share based payments expense – – – – 134.7 – 134.7 – 134.7
Deferred taxes associated with the LTIP – – – – 8.1 – 8.1 – 8.1
Transfer to payables – – – – (17.1) – (17.1) – (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
Total comprehensive income/(loss) for the year
Profit for the year – – – – – – – 3,414.0 3,414.0
Other comprehensive (loss)/income
Effect of foreign currency translation – – (0.4) 144.1 – 1.6 145.3 – 145.3
Cash flow hedges:
– Change in value of financial instruments – – 15.9 – – – 15.9 – 15.9
Increase due to revaluation of other
financial assets – 0.3 – – – – 0.3 – 0.3
Actuarial gains on defined benefit
– – – – – 5.6 5.6 – 5.6
superannuation funds, net of income tax
Total other comprehensive income
– 0.3 15.5 144.1 – 7.2 167.1 – 167.1
for the year, net of income tax
Total comprehensive income
– 0.3 15.5 144.1 – 7.2 167.1 3,414.0 3,581.1
for the year, net of income tax
Transfers – – – – (81.8) – (81.8) 81.8 –
Contributions by and distributions to owners
Dividends/distributions on stapled securities 19 – – – – – – – (560.1) (560.1)
Issue of stapled securities 20(a) 109.8 – – – – – – – 109.8
Issue costs (0.1) – – – – – – – (0.1)
Purchase of stapled securities for the LTIP – – – – (28.0) – (28.0) – (28.0)
Equity settled share based payments expense – – – – 164.8 – 164.8 – 164.8
Deferred taxes associated with the LTIP – – – – (4.2) – (4.2) – (4.2)
Balance at 30 June 2022 8,206.1 (6.4) 11.1 53.4 325.5 (30.9) 352.7 7,866.0 16,424.8
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The consolidated statements of changes in equity is to be read in conjunction with the accompanying notes. For an analysis of equity attributable to non-controlling interests, refer to note 22(b).

ANNUAL REPORT 2022

Consolidated statements of changes in equity

for the year ended 30 June 2022

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Attributable to Unitholders
Foreign
Asset Cash flow currency Employee
Issued revaluation hedge translation compensation Total Retained
GIT capital reserve reserve reserve reserve reserves earnings Total
Note $M $M $M $M $M $M $M $M
Balance at 1 July 2020 7,623.5 7.0 (5.2) (38.4) 173.3 136.7 1,029.2 8,789.4
Total comprehensive (loss)/income for the year
Profit for the year – – – – – – 1,574.8 1,574.8
Other comprehensive (loss)/income
Effect of foreign currency translation – (0.2) 0.4 (182.4) – (182.2) – (182.2)
Cash flow hedges:
– Change in value of financial instruments – – 0.3 – – 0.3 – 0.3
Increase due to revaluation of other financial assets – (2.2) – – – (2.2) – (2.2)
Total other comprehensive (loss)/income for the year,
– (2.4) 0.7 (182.4) – (184.1) – (184.1)
net of income tax
Total comprehensive (loss)/income for the year – (2.4) 0.7 (182.4) – (184.1) 1,574.8 1,390.7
Contributions by and distributions to owners
Distributions on ordinary units 19 – – – – – – (443.4) (443.4)
Issue of ordinary units 20(a) 42.5 – – – – – – 42.5
Issue of ordinary units for the LTIP 20(a) 183.2 – – – – – – 183.2
Issue costs on ordinary units (0.2) – – – – – – (0.2)
Equity settled share based payments transactions – – – – 13.7 13.7 – 13.7
Balance at 30 June 2021 7,849.0 4.6 (4.5) (220.8) 187.0 (33.7) 2,160.6 9,975.9
Total comprehensive income/(loss) for the year
Profit for the year – – – – – – 2,067.6 2,067.6
Other comprehensive (loss)/income
Effect of foreign currency translation – (0.2) (0.3) 222.3 – 221.8 – 221.8
Cash flow hedges:
– Change in value of financial instruments – – 15.9 – – 15.9 – 15.9
Increase due to revaluation of other financial assets – 5.0 – – – 5.0 – 5.0
Total other comprehensive income for the year,
– 4.8 15.6 222.3 – 242.7 – 242.7
net of income tax
Total comprehensive income for the year – 4.8 15.6 222.3 – 242.7 2,067.6 2,310.3
Contributions by and distributions to owners
Distributions on ordinary units 19 – – – – – – (513.8) (513.8)
Issue of ordinary units 20(a) 71.2 – – – – – – 71.2
Issue of ordinary units for the LTIP 20(a) 234.4 – – – – – – 234.4
Issue costs on ordinary units (0.1) – – – – – – (0.1)
Equity settled share based payments transactions – – – – 29.8 29.8 – 29.8
Balance at 30 June 2022 8,154.5 9.4 11.1 1.5 216.8 238.8 3,714.4 12,107.7
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The consolidated statements of changes in equity is to be read in conjunction with the accompanying notes.

GOODMAN GROUP

Consolidated cash flow statements

for the year ended 30 June 2022

Goodman Note 2022 $M 2021 $M Cash flows from operating activities Property income received 138.4 108.3 Cash receipts from development activities 1,587.8 1,560.3 Other cash receipts from management and other activities 523.8 346.4 Property expenses paid (28.6) (41.7) Payments for development activities (1,220.7) (947.4) Other cash payments in the course of operations (456.8) (381.6) Distributions received from equity investments including Partnerships 442.5 536.9 Interest received 9.3 9.2 Finance costs paid (44.2) (34.3) Net income taxes (paid)/refunded (110.5) (41.4) Net cash provided by operating activities 21(b) 841.0 1,114.7 Cash flows from investing activities Net proceeds from disposal of investment properties 671.8 170.2 Proceeds from disposal of controlled entities, net of cash disposed 0.4 – Net proceeds from disposal of equity investments 4.4 13.1 Return of capital by Partnerships 91.8 256.3 Payments for investment properties (431.7) (192.2) Payments for investments in Partnerships (1,332.3) (790.3) Payments for plant and equipment (5.9) (7.0) Net cash used in investing activities (1,001.5) (549.9) Cash flows from financing activities Net proceeds from issue of stapled securities 109.7 64.8 Net cash flows from/to loans with related parties 111.4 (135.0) Proceeds from borrowings and derivative fnancial instruments 1,466.5 204.6 Payments on borrowings and derivative financial instruments (789.3) (891.9) Dividends and distributions paid (557.2) (551.4) Payments of lease liabilities (13.4) (17.8) Purchase of securities to fund LTIP obligations (28.0) (22.4) Net cash provided by/(used in) financing activities 299.7 (1,349.1) Net increase/(decrease) in cash held 139.2 (784.3) Cash and cash equivalents at the beginning of the year 920.4 1,792.8 Effect of exchange rate fluctuations on cash held (3.6) (88.1) Cash and cash equivalents at the end of the year 21(a) 1,056.0 920.4	GIT
	2022 $M 2021 $M
	50.8 62.1 – – – – (13.9) (21.1) (1.1) – (60.4) (54.1) 245.3 381.7 8.9 8.7 (32.5) (38.2) (1.1) 0.5
	196.0 339.6
	345.6 161.9 – – 22.6 11.3 20.9 166.1 (15.1) (17.5) (1,050.0) (464.9) – –
	(676.0) (143.1)
	71.1 42.3 279.6 25.1 1,456.4 246.8 (787.4) (891.9) (446.6) (478.2) – – – –
	573.1 (1,055.9)
	93.1 (859.4) 379.8 1,302.6 0.7 (63.4)
	473.6 379.8

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

Non-cash transactions are included in note 21(c).

ANNUAL REPORT 2022

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.

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 16 August 2022.

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.

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

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 controlled foreign operation are recognised in the foreign currency translation reserve on consolidation.

GOODMAN GROUP

Notes to the consolidated financial statements Basis of preparation (continued)

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	As at 30	June
Australian dollars (AUD) to	2022	2021	2022		2021
New Zealand dollars (NZD) Hong Kong dollars (HKD)	1.0667 5.6626	1.0745 5.7958	1.1057 5.4241		1.0739 5.8222
Chinese yuan (CNY)	4.6840	4.9419	4.6154		4.8412
Japanese yen (JPY)	85.1512	79.6101	93.7770	83.2780
Euros (EUR)	0.6442	0.6262	0.6594		0.6327
British pounds sterling (GBP) United States dollars (USD)	0.5456 0.7255	0.5546 0.7472	0.5676 0.6912		0.5432 0.7497
Brazilian real (BRL)	3.8037	4.0236	3.5905		3.7528

Changes in accounting policies

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative risk-free rates (referred to as IBOR reform). The Group has adopted Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) from 1 July 2021. These amendments provide reliefs relating to modifications of financial instruments and lease contracts or hedging relationships triggered by a replacement of a benchmark interest rate in a contract with a new alternative benchmark rate. The Group applied the Phase 2 amendments retrospectively. However, in accordance with the exceptions permitted in the Phase 2 amendments, the Group has elected not to restate comparatives for the prior periods to reflect the application of these amendments.

The overall impact of the IBOR reform is not significant in the context of Goodman’s financial position and performance.

See note 18 for related disclosures about risks, financial assets and financial liabilities indexed to IBORs.

Apart from the above, the AASB has also issued other amendments to standards that are first effective from 1 July 2021 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.

ANNUAL REPORT 2022

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

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 Goodman 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 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.

GOODMAN GROUP

Notes to the consolidated financial statements

Results for the year (continued) 2 Profit before income tax (continued)

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 masterplanning, 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 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.

ANNUAL REPORT 2022

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

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Goodman GIT
2022 2021 2022 2021
Note $M $M $M $M
Gross property income
Rental income 120.9 93.0 41.4 45.9
Recovery of property outgoings 17.1 19.4 10.3 14.3
Gross property income 138.0 112.4 51.7 60.2
Management activities
Management services 380.5 310.1 – –
Performance related income 130.9 73.8 – –
Management income 511.4 383.9 – –
Development activities
Income from disposal of inventories 803.0 890.5 – –
Income from fixed price development contracts 206.8 195.0 – –
Other development income, including development management1 388.3 274.2 – –
Net gain on disposal of assets held for sale – 132.3 – –
Net gain on disposal of special purpose
43.5 – – –
development entities, including JVs
Development income 1,441.6 1,492.0 – –
Inventory cost of sales (381.8) (686.8) – (2.3)
Other development expenses (173.1) (175.5) – –
Development expenses (554.9) (862.3) – (2.3)
Disposal of equity investments
Net consideration from disposal of associates and JVs 8.5 17.0 – 11.3
Carrying value of associates and JVs disposed 6(f) (8.3) (12.0) – (8.1)
Net gain on disposal of equity investments 0.2 5.0 – 3.2
Employee expenses
Wages, salaries and on–costs (251.4) (203.4) – –
Annual and long service leave (0.6) (1.4) – –
Superannuation costs (6.9) (6.0) – –
Employee expenses (258.9) (210.8) – –
Share based payments expense
Equity settled share based payments expense (164.8) (134.7) – –
Cash settled share based payments expense (57.3) (105.4) – –
Other share based payments related costs (35.5) (28.7) – –
Share based payments expense (257.6) (268.8) – –
Amortisation and depreciation (17.1) (23.0) – –
Impairment reversals
Reversal of previous impairment on loans to related parties – – – 17.6
Impairment reversals – – – 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, $77.0 million (2021: $75.2 million) of such income was recognised.

GOODMAN GROUP

Notes to the consolidated financial statements

Results for the year (continued)

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

	2022	2021
	¢	¢
Profit per security
Basic profit per security	183.2	125.4
Diluted profit per security	178.8	122.1

Profit after tax of $3,414.0 million (2021: $2,311.9 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:

2022	2021
Number of securities
Weighted average number of securities used in calculating basic profit per security 1,863,693,802 Effect of performance rights on issue 45,396,402	1,844,221,829 48,908,249
Weighted average number of securities used in calculating diluted profit per security 1,909,090,204	1,893,130,078

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.

	2022	2021
	¢	¢
Profit per Goodman Limited share
Basic profit per Goodman Limited share	29.7	16.3
Diluted profit per Goodman Limited share	28.9	15.9

Profit after tax of $552.6 million (2021: $300.2 million) was used in calculating basic and diluted profit per Goodman Limited share.

ANNUAL REPORT 2022

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 (including the Hong Kong SAR) and Japan), Continental Europe (with the vast majority of assets located in Germany and France), the United Kingdom and the Americas (principally North America and including 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 share 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.

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.

GOODMAN GROUP

Notes to the consolidated financial statements

Results for the year (continued) 4 Segment reporting (continued)

Information about reportable segments

	Australia and	Australia and				Continental	Continental
Goodman	New Zealand			Asia		Europe		United Kingdom		Americas		Total
	2022	2021	2022		2021	2022	2021	2022	2021	2022	2021	2022	2021
Income statement	$M	$M	$M		$M	$M	$M	$M	$M	$M	$M	$M	$M
External revenues
Gross property income	90.4	95.8	15.4		6.5	27.5	8.5	3.0	1.0	1.7	0.6	138.0	112.4
Management income	256.2	147.0	131.3		110.2	91.0	107.4	5.7	3.3	27.2	16.0	511.4	383.9
Development income Total external revenues 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)	207.6 554.2 71.7 405.2 77.3	223.6 466.4 106.3 282.6 77.5	192.0 338.7 25.0 299.5 14.2		164.8 281.5 17.2 260.4 3.9	891.9 1,010.4 792.0 193.7 24.7	796.5 912.4 730.5 174.2 7.7	32.8 41.5 12.8 25.7 3.0	245.3 249.6 228.7 20.0 0.9	117.3 146.2 – 144.5 1.7	61.8 78.4 – 77.8 0.6	1,441.6 2,091.0 901.5 1,068.6 120.9	1,492.0 1,988.3 1,082.7 815.0 90.6
Total external revenues	554.2	466.4	338.7		281.5	1,010.4	912.4	41.5	249.6	146.2	78.4	2,091.0	1,988.3
Reportable segment profit before tax	616.9	467.4	386.4		324.5	582.5	458.8	41.1	31.8	210.8	128.9	1,837.7	1,411.4
Share of net results of equity
accounted investments	1,171.5	853.0	215.4		273.2	174.9	165.7	213.6	32.9	942.8	384.1	2,718.2	1,708.9
Material non-cash items not included
in reportable segment profit before tax
Net gain/(loss) from fair value
adjustments on investment properties	260.4	63.1	(0.3)		–	–	–	–	–	–	–	260.1	63.1
Share of net gain from fair value adjustments
in equity accounted investments	1,012.0	667.8	96.2		163.1	119.9	107.5	203.8	26.9	839.3	301.6	2,271.2	1,266.9
	Australia and					Continental
	New Zealand			Asia		Europe		United Kingdom		Americas		Total
	2022	2021	2022		2021	2022	2021	2022	2021	2022	2021	2022	2021
Statement of financial position	$M	$M	$M		$M	$M	$M	$M	$M	$M	$M	$M	$M
Reportable segment assets	8,106.2	6,619.9	4,162.0		3,565.7	2,779.7	2,382.2	1,024.9	840.6	4,030.8	2,475.9	20,103.6	15,884.3
Included in reportable segment assets are:
Investment properties	1,086.9	1,687.3	336.8		137.7	–	–	–	26.2	–	–	1,423.7	1,851.2
Investments accounted for
using the equity method	5,709.6	4,251.0	3,102.8		2,808.8	1,020.7	865.2	680.6	408.0	3,865.9	2,327.0	14,379.6	10,660.0
Non-current assets	7,195.8	6,314.6	3,888.8		3,261.8	2,483.6	2,126.5	966.6	761.8	3,876.3	2,335.8	18,411.1
													14,800.5
Additions to non-current assets include:
– Investment properties	22.9	23.5	181.2		138.5	–	–	243.7	25.8	–	–	447.8	187.8
– Investments accounted for
using the equity method	455.8	222.4	159.7		129.6	63.3	10.0	162.1	178.8	431.3	196.1	1,272.2	736.9
Reportable segment liabilities	129.9	113.9	268.6		242.4	122.6	111.0	94.5	80.4	319.5	156.2	935.1	703.9

ANNUAL REPORT 2022

	Australia and	Australia and			Continental	Continental	Continental
GIT	New Zealand		Asia		Europe			Americas			Total
	2022	2021	2022	2021	2022		2021	2022	2021		2022	2021
Income statement	$M	$M	$M	$M	$M		$M	$M		$M	$M	$M
External revenues
Gross property income	51.7	60.2	–	–	–		–	–		–	51.7	60.2
Distributions from investments	–	–	–	–	5.6		9.1	–		–	5.6	9.1
Total external revenues	51.7	60.2	–	–	5.6		9.1	–		–	57.3	69.3
Analysis of external revenues Revenue from contracts with customers Assets and services transferred over time Other revenue Rental income (excludes outgoings recoveries) Distributions from investments	10.3 41.4 –	14.3 45.9 –	– – –	– – –	– – 5.6		– – 9.1	– – –		– – –	10.3 41.4 5.6	14.3 45.9 9.1
Total external revenues	51.7	60.2	–	–	5.6		9.1	–		–	57.3	69.3
Reportable segment profit before tax	239.7	240.2	34.5	33.0	57.3	69.2		91.0	73.9		422.5	416.3
Share of net results of equity accounted investments	1,053.0	726.2	66.4	137.3	144.9	140.0		908.7	370.3		2,173.0	1,373.8
Material non–cash items not included
in reportable segment profit before tax
Net gain from fair value adjustments on investment properties	208.3	60.2	–	–	–		–	–		–	208.3	60.2
Share of net gain from fair value adjustments
in equity accounted investments	917.7	562.9	31.7	104.3	97.5	86.1		808.8	290.5		1,855.7	1,043.8
	Australia and				Continental
	New Zealand		Asia		Europe			Americas			Total
	2022	2021	2022	2021	2022		2021	2022	2021		2022	2021
Statement of financial position	$M	$M	$M	$M	$M		$M	$M		$M	$M	$M
Reportable segment assets	6,178.8	4,947.0	1,719.4	1,522.5	878.5	732.9		3,736.5	2,268.1		12,513.1	9,470.5
Included in reportable segment assets are:
Investment properties	495.3	1,155.7	–	–	–		–	–		–	495.3	1,155.7
Investments accounted for using the equity method	5,054.0	3,601.7	1,719.4	1,522.5	856.4	711.0		3,726.3	2,243.2		11,356.1	8,078.4
Non–current assets	5,555.1	4,939.3	1,719.4	1,522.5	877.8	727.9		3,726.3	2,243.2		11,878.6	9,432.9
Additions to non–current assets include:
– Investment properties	17.6	22.0	–	–	–		–	–		–	17.6	22.0
– Investments accounted for using the equity method	509.9	186.0	35.5	33.6	61.9		–	415.7	189.4		1,023.0	409.0
Reportable segment liabilities	45.2	44.6	–	–	–	0.6		269.5	124.1		314.7	169.3

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 2022 2021 2022 2021
$M $M $M $M
Revenues
Total revenues for reportable segments 2,091.0 1,988.3 57.3 69.3
Total revenues for other segments 0.8 – 0.8 –
Consolidated revenues 2,091.8 1,988.3 58.1 69.3
Profit or loss
Total profit before tax for reportable segments
Property investment earnings 494.6 411.5 422.5 416.3
Management earnings 588.4 459.1 – –
Development earnings [1] 960.7 717.9 – –
Operating expenses allocated to reportable segments (206.0) (177.1) – –
Reportable segment profit before tax 1,837.7 1,411.4 422.5 416.3
Corporate expenses not allocated to reportable segments (143.3) (116.9) (59.1) (51.7)
1,694.4 1,294.5 363.4 364.6
Valuation and other items not included
in reportable segment profit before tax:
– Net gain from fair value adjustments
on investment properties 6(e) 260.1 63.1 208.3 60.2
– Share of fair value adjustments attributable
to investment properties in Partnerships 6(f) 2,272.9 1,295.8 1,849.0 1,072.1
– Reversal of previous impairment
on loans to related parties – – – 17.6
– Share of fair value adjustments on derivative
financial instruments in Partnerships 6(f) (1.7) (28.9) 6.7 (28.3)
– Share based payments expense 2 (257.6) (268.8) – –
– Straight lining of rental income
and tax deferred adjustments (1.0) (3.2) 4.9 2.6
Profit before interest and tax 3,967.1 2,352.5 2,432.3 1,488.8
Net finance (expense)/income [1] 15 (229.0) 67.5 (231.6) 135.5
Consolidated profit before income tax 3,738.1 2,420.0 2,200.7 1,624.3
Assets
Assets for reportable segments 20,103.6 15,884.3 12,513.3 9,470.5
Cash 649.4 514.6 450.6 349.6
Other unallocated amounts [2] 679.4 468.1 3,618.3 3,475.2
Consolidated total assets 21,432.4 16,867.0 16,582.2 13,295.3
Liabilities
Liabilities for reportable segments 935.1 703.9 314.7 169.3
Interest bearing liabilities 2,832.2 2,060.3 2,825.4 2,062.8
Provisions for dividends/distributions to Securityholders 19 280.0 277.1 233.5 166.3
Other unallocated amounts [2] 960.3 664.2 1,100.9 921.0
Consolidated total liabilities 5,007.6 3,705.5 4,474.5 3,319.4
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Development earnings include $6.2 million (2021: $7.4 million) 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 2022

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 2022 $M 2021 $M Current tax expense recognised in the income statement Current year (142.4) (66.3) Changes in estimates related to prior years 7.3 8.5 Current tax expense (135.1) (57.8) Deferred tax expense recognised in the income statement Origination and reversal of temporary differences (189.0) (50.3) Deferred tax expense (189.0) (50.3) Total income tax expense recognised in the income statement (324.1) (108.1)	GIT
	2022 $M 2021 $M
	(6.0) (0.9) – –
	(6.0) (0.9)
	(127.1) (48.6)
	(127.1) (48.6)
	(133.1) (49.5)

GOODMAN GROUP

Notes to the consolidated financial statements

Results for the year (continued)

5 Taxation (continued)

(b) Reconciliation of profit before income tax to income tax expense

		Goodman
	2022	2021
	$M	$M
Profit before income tax	3,738.1	2,420.0
Prima facie income tax expense calculated at 30% (2021: 30%) on the profit before income tax	(1,121.4)	(726.0)
Decrease/(increase) in income tax due to:
– Profit attributable to GIT Unitholders	680.4	483.5
– Current year losses for which no deferred tax asset was recognised	(36.8)	(34.3)
– Other non-assessable/(non-deductible) items, net	168.7	135.7
– Benefit of previously unrecognised temporary differences, including tax losses	95.7	68.9
– Difference in overseas tax rates	23.6	11.2
– Changes in estimates related to prior years	7.3	8.5
– Taxes on Partnership income	(149.7)	(62.8)
– Other items	8.1	7.2
Income tax expense	(324.1)	(108.1)

GIT

The income tax expense recorded by GIT relates to withholding taxes on actual distributions and deferred taxes on potential future distributions from Partnerships. Refer to note 5(e).

		Goodman
	2022	2021
	$M	$M
Net income tax payable
Net income tax payable at the beginning of the year	(144.0)	(131.8)
Decrease/(increase) in current tax payable due to:
– Net income taxes paid	110.5	41.4
– Current tax expense	(135.1)	(57.8)
– Other	(0.9)	4.2
Net income tax payable at the end of the year	(169.5)	(144.0)
Current tax receivables (refer to note 7) Current tax payables	3.9 (173.4)	16.1 (160.1)
	(169.5)	(144.0)

ANNUAL REPORT 2022

(d) Deferred tax assets and liabilities

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

			Goodman
	2022	2021	2022	2021
	Deferred tax assets		Deferred tax liabilities
	$M	$M	$M	$M
Investment properties1	–	–	(403.4)	(182.0)
LTIP	39.3	27.3	–	–
Other items	19.9	17.4	(10.9)	(11.2)
Tax assets/(liabilities)	59.2	44.7	(414.3)	(193.2)
Set off of tax	(34.0)	(24.8)	34.0	24.8
Net tax assets/(liabilities)	25.2	19.9	(380.3)	(168.4)

Including potential future distributions from the disposal of investment properties by Partnerships.

Movements in deferred taxes recognised in expenses and equity are attributable to the following:

		Goodman
	2022	2021
	$M	$M
Deferred tax (expense)/benefit recognised in expenses
Investment properties – fair value adjustments	(206.7)	(50.4)
LTIP	16.2	19.2
Other items	1.5	(19.1)
Total deferred tax expense recognised in expenses	(189.0)	(50.3)
Deferred tax (expense)/benefit recognised in equity LTIP Other items	(4.2) –	8.1 (4.7)
Total deferred tax (expense)/benefit recognised in equity	(4.2)	3.4
Total deferred tax movements recognised in expenses and equity	(193.2)	(46.9)

Deferred tax assets of $266.9 million (2021: $323.3 million) arising primarily from tax losses (revenue and capital in nature) and deductions associated with the LTIP have not been recognised by Goodman.

GIT

At 30 June 2022, deferred tax liabilities of $267.9 million (2021: $124.0 million) have been recognised in relation to potential future distributions from the disposal of investment properties by Partnerships.

(e) 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

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.

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 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 two 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 receivables in the statement of financial position.

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.

ANNUAL REPORT 2022

(b) Summary of investment in property assets

Goodman Note 2022 $M 2021 $M Inventories Current 6(d) 389.0 235.1 Non-current 6(d) 1,727.1 1,192.7 2,116.1 1,427.8 Assets held for sale Investmentproperties 9 609.3 41.5 Investment properties Stabilised investment properties 1,286.6 1,791.1 Investmentproperties under development 137.1 60.1 6(e) 1,423.7 1,851.2 Investments accounted for using the equity method Associates 6(f)(i) 7,850.7 6,302.6 JVs 6(f)(ii) 6,528.9 4,357.4 14,379.6 10,660.0 Totalpropertyassets 18,528.7 13,980.5	GIT
	2022 $M 2021 $M
	– – 5.9 5.9
	5.9 5.9
	– –
	358.3 1,093.4 137.0 62.3
	495.3 1,155.7
	6,814.4 5,292.9 4,541.7 2,785.5
	11,356.1 8,078.4
	11,857.3 9,240.0

At 30 June 2022, the total property assets of $18,528.7 million included properties that have been repositioned and were subject to conditional contracts for disposal. As discussed in the Directors’ report on page 19, the Group’s share of valuation gains since the repositioning activities commenced, was $429.6 million (2021: $95.9 million).

(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/or 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. The number of sales and the circumstances of each sale are assessed to determine whether a market segment is active or 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 a combination of factors that are likely to have resulted in a material movement in valuation. The considerations include a greater than 10% movement in market rents, more than a 25 basis point movement in capitalisation rates, 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), significant capital expenditure, a change in use (or zoning), a development has reached completion/stabilisation of the asset or it has been two 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:

- Current contractual lease terms
- Current market rents
- Projected growth in market rents
- Expected and likely capital expenditures
- Projected letting up incentives provided to customers and vacant time on expiry of leases

The overall weighted average capitalisation rates for the divisional portfolios (including Partnerships) are as set out in the table below:

	Total	portfolio weighted average	portfolio weighted average	capitalisation rate	capitalisation rate
Division Australia and Zealand	New	Goodman 2022 % 3.9	2021 % 4.4	GIT 2022 % 3.8	2021 % 4.4
Asia		4.3	4.4	3.8	3.9
Continental
Europe		3.5	3.8	3.5	3.9
United Kingdom		3.7	4.1	–	–
Americas		4.1	4.0	4.1	4.0

In respect of the Group’s and GIT’s directly held investment properties at 30 June 2022, 57% (2021: 59%) and 100% (2021: 78%), respectively, had been valued by an external independent valuer during the financial year. All independent valuers used by the Group are required to hold a recognised and relevant professional qualification and have recent experience in the location and category of the investment properties being valued.

For the Partnerships, all properties bar one that had been stabilised investment properties throughout FY22 were valued by an external independent valuer during the financial year.

Sensitivity analysis

- Discount rates – 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 continued to be strong during FY22, despite the increased interest rates in the last quarter of FY22. At 30 June 2022, 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.

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 2022 are most sensitive to the following inputs:

- Capitalisation rates
- Market rents
- Incentives provided to customers and/or vacant time on expiry of leases.

The directly held stabilised investment properties are in Australia and Asia. The range of market rents and average capitalisation rates are summarised in the table below:

Valuation	Significant
technique	unobservable inputs	2022	2021
	Range of net market
Income	rents (per square metre	$90 to	$90 to
capitalisation	Aper annum)	$450	$450
	Capitalisation rate
	(weighted average)	4.4%	4.4%

100

ANNUAL REPORT 2022

The impacts on the Group’s financial position that would arise from the changes in capitalisation rates, market rents and incentives/vacant time 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 Valuation impact for the Group Directly held properties Partnerships1 $M $M Book value at 30 June 2022 1,286.6 15,215.0 Changes in capitalisation rates: Increase in cap rates +50 bps (132.9) (1,722.6) Increase in cap rates +25 bps (70.1) (913.4) Decrease in cap rates -25 bps 78.6 1,039.2 Decrease in cap rates -50 bps 167.5 2,232.4 Changes in market rents: Decrease in rents -10% (70.8) (627.6) Decrease in rents -5% (35.4) (313.8) Increase in rents +5% 35.4 313.8 Increase in rents +10% 70.8 627.6 Changes in voids/incentives2: Increase in incentives/ vacant time +3 months (6.9) (30.6) Increase in incentives/ vacant time +6 months (13.9) (61.2)	GIT
	Valuation impact for GIT Directly held properties Partnerships1 $M $M
	358.3 11,835.5 (41.0) (1,367.3) (21.7) (725.6) 24.8 827.3 53.3 1,779.5
	(16.5) (466.2) (8.3) (233.1) 8.3 233.1 16.5 466.2
	(1.4) (20.7) (2.8) (41.3)

Goodman’s share of stabilised investment properties held by Partnerships.
On assumed lease expiries over the next 12 months.

Investment properties under development

For the directly held investment properties under development, external independent valuations are generally not performed, but instead valuations are determined at each reporting date using the feasibility assessments supporting the developments. The end values of the developments in the feasibility assessments are based on assumptions such as capitalisation rates, market rents, incentives provided to customers and vacant time 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 are 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 35%. 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.

In respect of the Partnerships, certain Partnerships obtain external independent valuations of investment properties under development at reporting dates. However, the majority determine the fair values at reporting dates by reference to the feasibility assessments, with external independent valuations obtained when the properties has been stabilised.

101

GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

6 Property assets (continued)

(d) Inventories

(d) Inventories
Goodman 2022 $M 2021 $M Current Land and development properties 389.0 235.1 389.0 235.1 Non-current Land and development properties 1,727.1 1,192.7 1,727.1 1,192.7	GIT
	2022 $M 2021 $M
	– –
	– –
	5.9 5.9
	5.9 5.9

Goodman

During the current and prior financial year, no impairment losses were recognised on land and development properties.

During the financial year, borrowing costs of $3.1 million (2021: $3.8 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

Reconciliation of carrying amount of directly held investment properties
Goodman 2022 $M 2021 $M Carrying amount at the beginning of the year 1,851.2 1,901.2 Acquisitions 420.4 163.0 Capital expenditure 27.4 24.8 Carrying value of properties disposed (546.5) (127.8) Transfers to assets held for sale (609.3) (41.5) Transfers from/(to) inventories 2.5 (131.5) Net gain from fair value adjustments 260.1 63.1 Effect of foreign currency translation 17.9 (0.1) Carrying amount at the end of the year 1,423.7 1,851.2 Analysed by segment: Australia and New Zealand 1,086.9 1,687.3 Asia 336.8 137.7 United Kingdom – 26.2 1,423.7 1,851.2	GIT
	2022 $M 2021 $M
	1,155.7 1,202.4 – – 17.6 22.0 (276.9) (128.9) (609.3) – – – 208.3 60.2 (0.1) –
	495.3 1,155.7
	495.3 1,155.7 – – – –
	495.3 1,155.7

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ANNUAL REPORT 2022

Goodman

During the financial year, borrowing costs of $nil (2021: $nil) 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 2022 $M 2021 $M Non-cancellable operating lease commitments receivable: Less than one year 57.6 80.7 One to two years 47.4 63.9 Two to three years 37.9 49.4 Three to four years 24.5 38.4 Four to five years 15.9 30.1 More than five years 87.0 120.4 270.3 382.9	GIT
	2022 $M 2021 $M
	27.1 45.8 20.1 37.0 14.8 28.6 8.4 21.1 5.5 16.8 10.9 36.9
	86.8 186.2

(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.

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 Partnerships are accounted for using the equity method. Under this method, Goodman’s investment is initially recognised at cost. Subsequent to initial recognition, the consolidated financial statements include Goodman’s share of the gains or losses and other comprehensive income of Partnerships until the date on which significant influence or joint control ceases.

103

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:

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 2022 $M 2021 $M 2022 % 2021 % 2022 $M 2021 $M Property investment Goodman Australia Industrial Partnership (GAIP) Australia 503.4 366.9 28.6 29.13,008.32,208.5 Goodman Australia Partnership (GAP) Australia 234.1 192.1 19.9 19.91,060.0 850.9 Goodman Property Trust (GMT)1 New Zealand 150.0 126.7 24.9 22.4 825.9 633.4 Goodman Hong Kong Logistics Partnership (GHKLP) Cayman Islands 66.4 137.3 20.3 20.3 1,719.4 1,522.5 Goodman Japan Core Partnership (GJCP)2 Japan 47.3 29.8 14.4 14.7 380.7 376.3 Goodman European Partnership (GEP) Luxembourg 144.9 140.0 19.8 20.4 856.4 711.0 1,146.1 992.8 7,850.7 6,302.6	GIT
	Share of net results Ownership interest Investment carrying amount
	2022 $M 2021 $M 2022 % 2021 % 2022 $M 2021 $M
	503.4 366.9 28.6 29.13,008.32,208.5 234.1 192.1 19.9 19.91,060.0 850.9 31.6 – 5.1 – 170.3 – 66.4 137.3 20.3 20.3 1,719.4 1,522.5 – – – – – – 144.9 140.0 19.8 20.4 856.4 711.0
	980.4 836.3 6,814.4 5,292.9

GMT is listed on the New Zealand Stock Exchange (NZX). At 30 June 2022, the market value of Goodman’s investment in GMT using the quoted price on the last day of trading was $651.7 million (2021: $676.6 million), which compared to the carrying value of $825.9 million. Goodman does not consider its investment impaired as the carrying value is equal to its share of GMT’s net assets and is supported by independent valuations of the individual investment properties in GMT.
GIT has a 5.1% ownership interest in GMT and is part of Goodman, which has a combined ownership in GMT of 24.9%. As a result, the Directors have assessed that GIT has significant influence over GMT and has applied the equity method of accounting for its 5.1% interest.
Goodman’s ownership interest in GJCP reflected the weighted average ownership interest in the various property investment vehicles.

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ANNUAL REPORT 2022

The reconciliation of the carrying amount of investments in Partnerships classified as associates is set out as follows:

Goodman Movement in carryingamount of investments in associates 2022 $M 2021 $M Carrying amount at the beginning of the year 6,302.6 5,617.2 Share of net results after tax (before fair value adjustments) 242.7 261.7 Share of fair value adjustments attributable to investment properties after tax 914.7 765.8 Share of fair value adjustments on derivative financial instruments (11.3) (34.7) Share of net results 1,146.1 992.8 Share of movements in reserves 15.0 0.3 Acquisitions 575.6 287.2 Disposals (4.9) (3.9) Capital return – (79.7) Distributions received and receivable (193.2) (318.4) Effect of foreign currency translation 9.5 (192.9) Carrying amount at the end of the year 7,850.7 6,302.6	GIT
	2022 $M 2021 $M
	5,292.9 4,761.4
	201.3 225.4 790.9 643.3 (11.8) (32.4)
	980.4 836.3
	15.0 0.3 605.1 211.6 – – – (79.7) (155.1) (287.6) 76.1 (149.4)
	6,814.4 5,292.9

105

GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

6 Property assets (continued)

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
	2022	2021	2022	2021	2022	2021	2022	2021	2022	2021	2022	2021
	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M	$M
Summarised statement
of fnancial position
Total current assets	1,081.6	698.4	100.6	61.3	6.1	8.3	187.4	75.0	232.2	227.6	200.2	461.3
Total non–current assets	12,266.3	9,338.5	6,513.1	5,338.1	4,435.0	3,562.2	10,679.1	9,188.4	3,825.8	3,672.8	6,818.2	5,318.4
Total current liabilities	348.9	402.2	142.1	98.9	24.0	113.7	244.9	176.2	231.8	23.7	233.7	456.5
Total non–current liabilities	2,545.6	2,097.3	1,212.3	1,094.9	1,105.8	685.8	2,236.3	1,584.9	1,189.4	1,324.7	2,456.5	1,832.1
Net assets (100%)	10,453.4	7,537.4	5,259.3	4,205.6	3,311.3	2,771.0	8,385.3	7,502.3	2,636.8	2,552.0	4,328.2	3,491.1
Summarised statement of comprehensive income Revenue	459.0	418.1	288.6	256.2	112.1	109.4	287.8	270.9	414.2	189.8	239.0	440.8
Profit after tax and revaluations Other comprehensive income	1,739.1 –	1,263.1 –	1,181.0 –	964.6 –	701.7 –	590.2 –	326.6 74.7	677.1 1.5	329.4 –	189.5 –	656.1 –	744.4 –
Total comprehensive income (100%)	1,739.1	1,263.1	1,181.0	964.6	701.7	590.2	401.3	678.6	329.4	189.5	656.1	744.4
Goodman Consolidated ownership interest Consolidated share of net assets Other items, including capitalised costs Distributions receivable1	28.6% 2,990.7 0.1 17.5	29.1% 2,190.9 1.2 16.4	19.9% 1,047.2 – 12.8	19.9% 837.3 0.3 13.3	24.9% 825.7 0.2 –	22.4% 621.1 12.3 –	20.3% 1,706.2 1.3 11.9	20.3% 1,521.2 1.3 –	14.4% 380.8 (0.1) –	14.7% 376.2 0.1 –	19.8% 856.4 – –	20.4% 711.0 – –
Carrying amount of investment	3,008.3	2,208.5	1,060.0	850.9	825.9	633.4	1,719.4	1,522.5	380.7	376.3	856.4	711.0
Distributions received and receivable	66.3	66.2	25.1	24.1	17.8	14.7	35.5	33.6	20.3	16.1	28.2	163.7
GIT Consolidated ownership interest Consolidated share of net assets Other items, including capitalised costs Distributions receivable1	28.6% 2,990.7 0.1 17.5	29.1% 2,190.9 1.2 16.4	19.9% 1,047.2 – 12.8	19.9% 837.3 0.3 13.3	5.1% 169.6 0.7 –	– – – –	20.3% 1,706.2 1.3 11.9	20.3% 1,521.2 1.3 –	– – – –	– – – –	19.8% 856.4 – –	20.4% 711.0 – –
Carrying amount of investment	3,008.3	2,208.5	1,060.0	850.9	170.3	–	1,719.4	1,522.5	–	–	856.4	711.0
Distributions received
and receivable	66.3	66.2	25.1	24.1	–	–	35.5	33.6	–	–	28.2	163.7

Distributions receivable related to distributions provided for but not paid by the Partnerships at 30 June 2022. This was applicable to trusts in Australia where unitholders were presently entitled to income at the end of the financial year.

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ANNUAL REPORT 2022

(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 2022 $M 2021 $M 2022 % 2021 % 2022 $M 2021 $M Property investment and development Goodman China Logistics Partnership (GCLP) Cayman Islands 56.8 65.2 20.0 20.0 918.0 832.7 Goodman UK Partnership (GUKP)1 United Kigdom 213.4 32.9 35.3 33.3 676.3 404.0 Goodman North America Partnership (GNAP) United States of America 938.6 379.5 55.0 55.0 3,846.0 2,310.6	GIT
	Share of net results Ownership interest Investment carrying amount
	2022 $M 2021 $M 2022 % 2021 % 2022 $M 2021 $M
	– – – – – – – – – – – – 904.4 365.7 53.0 53.0 3,706.4 2,226.8
Other JVs2 363.3 238.5 1,088.6 810.1	288.2 171.8 835.3 558.7
1,572.1 716.1 6,528.9 4,357.4	1,192.6 537.5 4,541.7 2,785.5

The consolidated ownership interest in GUKP reflected the weighted average ownership in GUKP, GUKP II and GUKP III.
Other JVs included a development JV in Australia where GAIP has paid Goodman a refundable fee of $22.6 million for an option to acquire a 40% interest in the JV from the Group. At 30 June 2022, the transaction is conditional on certain matters and settlement would only occur on stabilisation of certain development properties in the JV. Therefore, the disposal transaction had not been reflected in the Group’s results at 30 June 2022. The investment carrying amount at 30 June 2022 and the Group’s share of the fair value adjustment attributable to the properties in the JV for the year ended 30 June 2022 were aligned with to the disposal price under the option deed.

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GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

6 Property assets (continued)

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 2022 $M 2021 $M	GIT
	2022 $M 2021 $M
Carrying amount at the beginning of the year 4,357.4 3,753.6	2,785.5 2,386.9
Share of net results after tax (before fair value adjustments) 204.3 180.3 Share of fair value adjustments attributable to investment properties after tax 1,358.2 530.0 Share of fair value adjustments on derivative financial instruments 9.6 5.8 Share of net results 1,572.1 716.1 Share of movements in reserves 7.2 2.9 Acquisitions 696.8 449.7 Disposals (3.4) (8.1) Transfer on reclassification as a controlled entity (15.6) – Capital return (91.8) (176.6) Distributions received and receivable (248.7) (218.0) Effect of foreign currency translation 254.9 (162.2) Carrying amount at the end of the year 6,528.9 4,357.4	116.0 104.6 1,058.1 428.8 18.5 4.1
	1,192.6 537.5
	– – 417.9 197.4 – (8.1) – – (20.9) (86.4) (83.8) (85.0) 250.4 (156.8)
	4,541.7 2,785.5

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ANNUAL REPORT 2022

The table below includes further information regarding principal Partnerships classified as JVs, held at the end of the financial year:

==> picture [532 x 508] intentionally omitted <==

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

GCLP [1] GUKP GNAP
2022 2021 2022 2021 2022 2021
$M $M $M $M $M $M
Summarised statement of financial position
Current assets
Cash and cash equivalents 427.4 281.3 41.1 43.4 75.0 62.8
Other current assets 148.3 84.4 12.9 1,490.3 56.8 33.7
Total current assets 575.7 365.7 54.0 1,533.7 131.8 96.5
Total non–current assets 6,303.3 5,537.5 2,421.8 – 8,270.0 4,846.1
Current liabilities
Other current liabilities 2,940.6 2,796.4 24.7 36.1 273.8 102.8
Total current liabilities 2,940.6 2,796.4 24.7 36.1 273.8 102.8
Non–current liabilities
Financial liabilities 1,111.8 757.7 537.8 287.0 1,144.3 640.3
Other non–current liabilities 718.3 613.7 – – – 6.7
Total non–current liabilities 1,830.1 1,371.4 537.8 287.0 1,144.3 647.0
Net assets (100%) 2,108.3 1,735.4 1,913.3 1,210.6 6,983.7 4,192.8
Summarised statement
of comprehensive income
Revenue 215.0 193.6 39.8 28.5 250.0 181.7
Net finance (expense)/income (20.3) (19.2) (1.0) (3.7) 14.9 6.4
Income tax expense (46.3) (37.4) (0.2) – (0.4) (0.5)
Profit after tax and revaluations 283.8 326.2 575.6 98.7 1,706.6 690.0
Other comprehensive income/(loss) 36.2 (12.8) – – – –
Total comprehensive income (100%) 320.0 313.4 575.6 98.7 1,706.6 690.0
Goodman
Consolidated ownership interest 20.0% 20.0% 35.3% 33.3% 55.0% 55.0%
Consolidated share of net assets 421.7 347.1 676.0 403.5 3,841.0 2,306.0
Shareholder loan [1] 492.9 482.3 – – – –
Other items, including capitalised costs 3.4 3.3 0.3 0.5 5.0 4.6
Distributions receivable – – – – – –
Carrying amount of investment 918.0 832.7 676.3 404.0 3,846.0 2,310.6
Distributions/dividends
7.3 6.1 3.9 4.6 68.9 57.8
received and receivable
GIT
Consolidated ownership interest – – – – 53.0% 53.0%
Consolidated share of net assets – – – – 3,701.4 2,222.2
Other items, including capitalised costs – – – – 5.0 4.6
Distributions receivable – – – – – –
Carrying amount of investment in JV – – – – 3,706.4 2,226.8
Distributions/dividends
– – – – 66.4 55.7
received and receivable
----- End of picture text -----

Shareholder loans have been provided by investors of GCLP in proportion to their ownership interest. The shareholder loans are interest free and 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 $1,333.2 million (2021: $721.5 million) and total other comprehensive income was $nil (2021: $nil). With respect to GIT’s other JVs, the total profit after tax and revaluations was $1,024.5 million (2021: $460.1 million) and total other comprehensive income was $nil (2021: $nil).

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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		GIT
	2022	2021	2022	2021
	$M	$M	$M	$M
Current
Trade receivables	7.8	16.4	0.1	0.1
Tax receivables	3.9	16.1	–	1.4
Other receivables	123.1	197.2	3.8	5.8
Amounts due from related parties1	83.0	101.6	–	0.1
Loans to related parties1	–	–	127.1	808.7
	217.8	331.3	131.0	816.1
Non–current Other receivables Loans to related parties1	5.9 167.5	7.1 270.4	– 3,137.4	– 2,528.5
	173.4	277.5	3,137.4	2,528.5

Refer to note 24 for details of amounts due from and loans to related parties.

Goodman assessed the receivables balances at 30 June 2022 for expected credit losses (risk of non-payment). The level of provisioning was not significant in the context of the Group’s financial position.

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ANNUAL REPORT 2022

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
	2022	2021
	$M	$M
Current
Receivables, which are included in trade receivables,
other receivables and amounts due from related parties	111.7	143.6
Contract assets	77.6	80.9
Contract liabilities	4.7	5.0
Non-current
Contract liabilities	–	1.0

Significant changes in the contract assets and the contract liabilities balances during the year are set out below:

			Goodman
		2022		2021
	Contract	Contract	Contract	Contract
	assets	liabilities	assets	liabilities
	$M	$M	$M	$M
Balance at the beginning of the year	80.9	6.0	25.7	13.8
Increase due to changes in the measure
of progress during the year	476.9	–	237.5	–
Transfers from contract assets to receivables	(480.5)	–	(182.3)	–
Revenue recognised that was included in the
contract liability balance at the beginning of the year	–	(1.6)	–	(7.7)
Increases due to cash received, excluding
amounts recognised as revenue during the year	–	0.1	–	0.1
Effect of foreign currency translation	0.3	0.2	–	(0.2)
Balance at the end of the year	77.6	4.7	80.9	6.0
Current contract assets and liabilities Non–current contract liabilities	77.6 –	4.7 –	80.9 –	5.0 1.0
	77.6	4.7	80.9	6.0

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GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 8 Contract balances (continued)

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 $nil (2021: $12.5 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

In June 2022, the Group entered into a conditional contract to dispose of three controlled entities which own two investment properties. As the conditions under the contracts had not been satisfied as at 30 June 2022, the directly held assets and liabilities to be disposed have been presented as a disposal group held for sale.

Assets and liabilities of disposal group held for sale

At 30 June 2022, the disposal group was held at the lower of carrying amount and fair value less costs to sell, and comprised the following assets and liabilities within the Australia and New Zealand segment:

		$M
	Receivables	2.5
	Investment properties	609.3
	Payables	(3.6)
	Assets held for sale	608.2

No impairment losses have been recognised in FY22 in respect of the disposal group.

In the prior year, assets held for sale amounting to $41.5 million comprised an investment property in Australia. The disposal of the investment property was completed in FY22.

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ANNUAL REPORT 2022

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 2022 $M 2021 $M Current Trade payables 76.4 73.1 Other payables and accruals 525.4 487.8 Contract liabilities 4.7 5.0 Loans from related parties1 – – 606.5 565.9 Non–current Other payables and accruals 111.0 124.5 Contract liabilities – 1.0 Loans from related parties1 – – 111.0 125.5	GIT
	2022 $M 2021 $M
	7.9 7.1 61.5 51.3 – – 3.3 549.2
	72.7 607.6
	3.3 3.7 – – 720.5 228.5
	723.8 232.2

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 2022 $M 2021 $M Current Dividends/distributions to Securityholders 19 280.0 277.1 Other 19.2 17.1 299.2 294.2 Non–current Defined benefit retirement schemes in the United Kingdom 13.9 22.0 Other 1.6 1.7 15.5 23.7	GIT
	2022 $M 2021 $M
	233.5 166.3 – –
	233.5 166.3
	– – – –
	– –

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GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

12 Property, plant and equipment

	2022	2021
	$M	$M
Property, plant and equipment at cost	147.0	128.7
Accumulated amortisation	(85.6)	(74.1)
Property, plant and equipment at net book value1	61.4	54.6

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 rate 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:

	2022	2021
	$M	$M
Right of use assets
Inventories	453.3	359.2
Investment properties	568.0	340.3
Property, plant and equipment	42.4	39.6
	1,063.7	739.1
Lease liabilities Current Non-Current	12.5 58.1	11.9 82.1
	70.6	94.0

The following were recognised during the year:

	2022	2021
	$M	$M
Additions to right of use assets	338.4	402.9
Depreciation for right of use assets	12.6	15.1
Interest expense on lease liabilities	1.0	1.0
Cash outflows on lease liabilities	14.4	18.8

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 2022

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 cashgenerating 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
	2022	2021
	$M	$M
Goodwill	685.6	715.2
Management rights	109.8	107.4
	795.4	822.6

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GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

14 Goodwill and intangible assets (continued)

The carrying value of goodwill and intangible assets is analysed by division in the table below:

The carrying value of goodwill and intangible assets is analysed by division in the table below:
	2022	2021
	$M	$M
Analysed:
Goodwill
Continental Europe	577.0	601.4
United Kingdom	86.6	90.5
Other	22.0	23.3
Subtotal–goodwill	685.6	715.2
Management rights Continental Europe Other	32.7 77.1	34.1 73.3
Subtotal–management rights	109.8	107.4
Total	795.4	822.6

A reconciliation of the movement in the cost of goodwill and management rights during the year is set out below:

		Effect of			Effect of
	Balance at	foreign	Balance at		foreign	Balance at
	30 June	currency	30 June		currency	30 June
	2020	translation	2021	Disposals	translation	2022
Cost	$M	$M	$M	$M	$M	$M
Goodwill
Continental Europe	628.6	(19.6)	609.0	–	(24.7)	584.3
United Kingdom	127.9	3.1	131.0	–	(5.6)	125.4
Other	33.7	(2.8)	30.9	–	(1.6)	29.3
Subtotal –goodwill	790.2	(19.3)	770.9	–	(31.9)	739.0
Management rights Continental Europe Other	35.3 87.2	(1.2) (2.5)	34.1 84.7	– (10.9)	(1.4) 3.3	32.7 77.1
Subtotal – management rights	122.5	(3.7)	118.8	(10.9)	1.9	109.8
Total	912.7	(23.0)	889.7	(10.9)	(30.0)	848.8

A reconciliation of the movement in the impairment losses during the year is set out below:

		Effect of			Effect of
	Balance at	foreign	Balance at		foreign	Balance at
	30 June	currency	30 June		currency	30 June
	2020	translation	2021	Disposals	translation	2022
Impairment losses	$M	$M	$M	$M	$M	$M
Goodwill
Continental Europe	7.8	(0.2)	7.6	–	(0.3)	7.3
United Kingdom	39.5	1.0	40.5	–	(1.7)	38.8
Other	7.8	(0.2)	7.6	–	(0.3)	7.3
Subtotal –goodwill	55.1	0.6	55.7	–	(2.3)	53.4
Management rights Other	11.8	(0.4)	11.4	(10.9)	(0.5)	–
Subtotal – management rights	11.8	(0.4)	11.4	(10.9)	(0.5)	–
Total	66.9	0.2	67.1	(10.9)	(2.8)	53.4

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ANNUAL REPORT 2022

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.

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.

		Continental Europe	United Kingdom
Value in use (A$M)	2022	2,444.3	191.8
	2021	2,344.9	161.1
Key assumptions
		Continental Europe	United Kingdom
Pre-tax discount rate (per annum)	2022	11.6%	11.9%
	2021	9.7%	9.6%
Average annual development (million square metres)	2022	0.60	0.12
	2021	0.60	0.16
Average annual growth in AUM	2022	7.7%	13.2%
	2021	8.0%	21.6%

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.

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.

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GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

14 Goodwill and intangible assets (continued)

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 0.60 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$1.28 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 0.12 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$0.51 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 7.7% (2021: 8.0%) over the forecast period is consistent with the prior year assumption. 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, property values are expected to be stable over the period and no portfolio performance revenue is assumed.

For United Kingdom, the average annual increase in AUM of 13.2% (2021:21.6%) is lower than the prior year forecast due to the stabilisation of developments during FY22 i.e. a higher starting AUM position. The UK Partnerships are developing several sites that underpin the projected growth over the five-year period. For the purpose of the forecasts, property values are expected to be stable over the period.

Assumptions impacting the terminal year

		Continental Europe	United Kingdom
Growth rate applied to future cash flows (per annum)	2022	2.3%	2.8%
	2021	0.4%	1.5%
Development in terminal year (million square metres)	2022	0.60	0.14
	2021	0.60	0.19
Development in terminal year (cost in A$B)	2022	1.34	0.55
	2021	0.92	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.

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ANNUAL REPORT 2022

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 (expense)/income

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.

Goodman 2022 $M 2021 $M Finance income Interest income from: – Related parties 6.5 8.1 – Other parties 1.8 2.3 Fair value adjustments on derivative financial instruments – 83.9 Foreign exchange gains – – 8.3 94.3 Finance expense Interest expense from third party loans, overdrafts and derivatives (42.4) (18.3) Interest expense from related party loans – – Other borrowing costs (9.5) (7.4) Fair value adjustments on derivative financial instruments (189.7) – Foreign exchange losses (0.3) (0.4) Capitalised borrowing costs1 10.8 6.7 (231.1) (19.4) Net finance (expense)/income (222.8) 74.9	GIT
	2022 $M 2021 $M
	72.3 69.1 0.5 1.4 – 104.0 – 3.4
	72.8 177.9
	(38.2) (25.9) (9.7) (11.7) (5.3) (4.8) (181.5) – (69.7) – – –
	(304.4) (42.4)
	(231.6) 135.5

Borrowing costs were capitalised to inventories and investment properties under development during the year at rates between 0.95% and 4.85% per annum (2021: 0.92% and 4.0% per annum).

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Notes to the consolidated financial statements

Capital management (continued)

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 2022 $M 2021 $M Current Unsecured: – Foreign private placement 16(d) 133.3 – 133.3 – Non–current Secured: – Bank loans 16(a) 9.0 – Unsecured: – Bank loans 16(a) – – – USD denominated notes 16(b) 1,953.1 1,133.8 – EUR denominated notes 16(c) 758.3 790.3 – Foreign private placement 16(d) – 150.1 Borrowing costs (21.5) (13.9) 2,698.9 2,060.3	GIT
	2022 $M 2021 $M
	133.3 –
	133.3 –
	– – – – 1,953.1 1,133.8 758.3 790.3 – 150.1 (19.3) (11.4)
	2,692.1 2,062.8

(a) Bank loans

Secured

As at 30 June 2022, Goodman and GIT had the following secured bank facilities:

Goodman Facility maturity date Facility limit $M Amounts drawn $M 13 May 20261 65.0 – 13 May 20261 65.0 – 13 May 20271 130.0 – 18 March 2034 28.2 9.0 Total at 30 June 2022 288.2 9.0 Total at 30 June 2021 – –	GIT
	Facility limit $M Amounts drawn $M
	65.0 – 65.0 – 130.0 – – –
	260.0 –
	– –

These facilities, amounting to $260.0 million, are held by a controlled entity that is part of a disposal group at 30 June 2022. The facilities are secured against investment properties that also form part of the disposal group. Refer to note 9.

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ANNUAL REPORT 2022

Unsecured

As at 30 June 2022, Goodman and GIT had the following unsecured bank facilities:

Goodman Facility maturity date Facility limit $M Amounts drawn $M 31 December 2024 100.0 – 31 March 2025 70.0 – 31 March 2025 30.0 – 31 March 2026 85.2 – 31 March 2026 160.0 – 1 July 2026 100.0 – 31 July 2026 144.7 – 30 September 2026 160.0 – 30 September 2026 54.3 – 30 September 2026 37.5 – 21 October 2026 150.0 – 22 October 2026 150.0 – 31 December 2026 113.7 – 30 June 2027 70.0 – 30 June 2027 30.0 – Total at 30 June 2022 1,455.4 – Total at 30 June 2021 1,045.7 –	GIT
	Facility limit $M Amounts drawn $M
	100.0 – 70.0 – 30.0 – – – – – 100.0 – 144.7 – – – 54.3 – 37.5 – 150.0 – 150.0 – 113.7 – 70.0 – 30.0 –
	1,050.2 –
	589.4 –

The majority of the unsecured bank loans are multi-currency facilities.

(b) USD denominated notes

As at 30 June 2022, Goodman and GIT had notes on issue in the US144A/Regulation S bond market as follows:

	Carrying amount	Carrying amount	Coupon
			(fixed) per
Maturity date	A$M	US$M	annum
15 Mar 2028	759.5	525.0	3.70%
04 May 2032	723.4	500.0	4.63%
15 October 2037	470.2	325.0	4.50%
Carrying amount at 30 June 2022	1,953.1	1,350.0
Carrying amount at 30 June 2021	1,133.8	850.0

(c) EUR denominated notes

As at 30 June 2022, Goodman and GIT had A$758.3 million (2021: A$790.3 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 2022, Goodman and GIT had A$133.3 million (2021: A$150.1 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.

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Notes to the consolidated financial statements

Capital management (continued)

16 Interest bearing liabilities (continued)

(e) Finance facilities

Goodman Facilities available1 $M Facilities utilised $M 30 June 2022 Secured: – Bank loans1 288.2 9.0 Unsecured: – Bank loans 1,455.4 – – USD denominated notes 1,953.1 1,953.1 – EUR denominated notes 758.3 758.3 – Foreign private placement 133.3 133.3 – Bank guarantees2 – 7.3 4,588.3 2,861.0 30 June 2021 Unsecured: – Bank loans 1,045.7 – – USD denominated notes 1,133.8 1,133.8 – EUR denominated notes 790.3 790.3 – Foreign private placement 150.1 150.1 – Bank guarantees2 – 32.7 3,119.9 2,106.9	GIT
	Facilities available1 $M Facilities utilised $M
	260.0 – 1,050.2 – 1,953.1 1,953.1 758.3 758.3 133.3 133.3 – 7.3
	4,154.9 2,852.0
	589.4 – 1,133.8 1,133.8 790.3 790.3 150.1 150.1 – 32.7
	2,663.6 2,106.9

Facilities available under secured bank loans include $260.0 million of unutilised loans held by a controlled entity that is part of a disposal group at 30 June 2022. Refer to note 9.
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.

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ANNUAL REPORT 2022

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 (FRM) 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

Goodman 2022 $M 2021 $M Current Derivative financial instruments1 1.6 16.5 1.6 16.5 Non-current Derivative financial instruments1 482.8 354.5 Investment in unlisted securities, at fair value 13.6 8.3 496.4 362.8	GIT
	2022 $M 2021 $M
	1.6 16.5
	1.6 16.5
	341.3 292.4 31.8 22.0
	373.1 314.4

Includes fair values of derivative financial instruments equating to $133.3 million (2021: $134.1 million) that hedge Goodman’s net investments in Continental Europe and the United Kingdom.

Other financial liabilities

Goodman 2022 $M 2021 $M Current Derivative financial instruments1 71.2 1.9 71.2 1.9 Non-current Derivative financial instruments1 447.7 211.5 447.7 211.5	GIT
	2022 $M 2021 $M
	25.9 1.9
	25.9 1.9
	325.3 124.6
	325.3 124.6

Includes fair values of derivative financial instruments equating to $79.6 million (2021: $62.3 million) that hedge Goodman’s net investments in Continental Europe and the United Kingdom.

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Notes to the consolidated financial statements Capital management (continued)

18 Financial risk management

The Directors have ultimate responsibility for Goodman’s 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 policy 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 policy 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.

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.

(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.

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ANNUAL REPORT 2022

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.

As at 30 June 2022, the principal that was used to hedge its exposures using derivatives and the weighted average exchange rates, by currency, are set out below:

Goodman

		2022			2021
			Weighted			Weighted
			average			average
	Amounts	Amounts	exchange	Amounts	Amounts	exchange
	payable	receivable	rate	payable	receivable	rate
	NZD’M	AUD’M	AUD/NZD	NZD’M	AUD’M	AUD/NZD
AUD receivable/NZD payable	(750.0)	696.4	1.0775	(600.0)	557.3	1.0771
	HKD’M	AUD’M	AUD/HKD	HKD’M	AUD’M	AUD/HKD
AUD receivable/HKD payable	(8,340.0)	1,466.9	5.6976	(7,490.0)	1,301.8	5.7659
	EUR’M	AUD’M	AUD/EUR	EUR’M	AUD’M	AUD/EUR
AUD receivable/EUR payable	(825.0)	1,314.0	0.6283	(675.0)	1,086.7	0.6214
	GBP’M	AUD’M	AUD/GBP	GBP’M	AUD’M	AUD/GBP
AUD receivable/GBP payable	(380.0)	703.4	0.5403	(330.0)	587.6	0.5635
	USD’M	AUD’M	AUD/USD	USD’M	AUD’M	AUD/USD
AUD receivable/USD payable	(1,050.0)	1,455.5	0.7221	(650.0)	894.7	0.7276
	JPY’M	AUD’M	AUD/JPY	JPY’M	AUD’M	AUD/JPY
AUD receivable/JPY payable	(23,000.0)	297.2	77.5413	(23,000.0)	297.2	77.5413
	CNY’M	USD’M	USD/CNY	CNY’M	USD’M	USD/CNY
USD receivable/CNY payable	(4,258.6)	539.6	7.8927	(4,545.2)	600.0	7.5753

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GOODMAN GROUP

Notes to the consolidated financial statements

Capital management (continued)

18 Financial risk management (continued)

GIT

		2022			2021
			Weighted			Weighted
			average			average
	Amounts	Amounts	exchange	Amounts	Amounts	exchange
	payable	receivable	rate	payable	receivable	rate
	NZD’M	AUD’M	AUD/NZD	NZD’M	AUD’M	AUD/NZD
AUD receivable/NZD payable	(450.0)	416.3	1.0814	(600.0)	557.3	1.0771
	HKD’M	AUD’M	AUD/HKD	HKD’M	AUD’M	AUD/HKD
AUD receivable/HKD payable	(7,190.0)	1,264.6	5.6981	(6,990.0)	1,217.8	5.7523
	EUR’M	AUD’M	AUD/EUR	EUR’M	AUD’M	AUD/EUR
AUD receivable/EUR payable	(50.0)	75.7	0.6605	–	–	–
	GBP’M	AUD’M	AUD/GBP	GBP’M	AUD’M	AUD/GBP
AUD receivable/GBP payable	(125.0)	228.9	0.5460	(330.0)	587.6	0.5635
	USD’M	AUD’M	AUD/USD	USD’M	AUD’M	AUD/USD
AUD receivable/USD payable	(600.0)	820.9	0.7318	(200.0)	260.2	0.7688
	JPY’M	AUD’M	AUD/JPY	JPY’M	AUD’M	AUD/JPY
AUD receivable/JPY payable	(17,000.0)	225.3	75.4506	(17,000.0)	225.3	75.4506

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 81.8 million from GL (2021: USD 257.3 million) and pay GBP 53.8 million to GL (2021: GBP 183.9 million).

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$107.9 million (2021: A$72.9 million decrease) for Goodman and A$48.1 million (2021: A$28.6 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$107.9 million (2021: A$72.9 million increase) for Goodman and A$48.1 million (2021: A$28.6 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.

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ANNUAL REPORT 2022

As at 30 June 2022, 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
	liabilities	CCIRS	IRD	rate exposure
	A$M	A$M	A$M	A$M
30 June 2022
Fixed rate liabilities	2,844.7	–	747.1	3,591.8
Floating rate liabilities	9.0	(75.6)	(747.1)	(813.7)
	2,853.7	(75.6)	–	2,778.1
30 June 2021 Fixed rate liabilities Floating rate liabilities	2,074.2 –	– (123.6)	(101.4) 101.4	1,972.8 (22.2)
	2,074.2	(123.6)	–	1,950.6

GIT

GIT
	Interest bearing	Impact of derivatives		Net interest
	liabilities	CCIRS	IRD	rate exposure
	A$M	A$M	A$M	A$M
	A$M	A$M	A$M	A$M
30 June 2022
Fixed rate liabilities	2,844.7	–	(539.8)	2,304.9
Floating rate liabilities	–	3.0	539.8	542.8
	2,844.7	3.0	–	2,847.7
30 June 2021 Fixed rate liabilities Floating rate liabilities	2,074.2 –	– (71.6)	(575.6) 575.6	1,498.6 504.0
	2,074.2	(71.6)	–	2,002.6

As a result of the fixed rate interest bearing liabilities and derivative financial instruments that existed at 30 June 2022, 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
	2022			2021
	Fixed		Fixed
	interest rate	Weighted average	interest rate		Weighted average
	(by principal)	interest rate	(by principal)		interest rate
Number of years post balance date	A$M	% per annum	A$M		% per annum
1 year	3,716.6	2.12	1,951.0		2.15
2 years	3,826.1	2.06	2,075.2		2.12
3 years	3,107.3	2.51	2,176.4		1.97
4 years	2,160.9	3.22	1,900.8		2.29
5 years	1,368.3	4.43	1,065.2		3.36
GIT

GIT
	2022		2021
	Fixed		Fixed
	interest rate	Weighted average	interest rate	Weighted average
	(by principal)	interest rate	(by principal)	interest rate
Number of years post balance date	A$M	% per annum	A$M	% per annum
1 year	2,502.1	3.01	1,476.9	2.99
2 years	2,674.5	2.80	1,601.0	2.89
3 years	2,651.1	2.84	1,767.9	2.54
4 years	1,836.2	3.70	1,742.8	2.53
5 years	1,111.4	5.33	907.1	4.00

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Notes to the consolidated financial statements

Capital management (continued)

18 Financial risk management (continued)

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 per annum higher/lower, with all other variables held constant, the profit attributable to Securityholders would have increased/decreased by A$8.1 million (2021: increased/decreased by A$0.2 million) for Goodman and decreased/increased by A$5.4 million (2021: decreased/increased by A$5.0 million) for GIT.

For Goodman’s other IBOR exposures, the transition to alternative risk-free rates has been deferred and/or extended and therefore no action has been or will be taken in that regard until such time as the alternative reference rates are defined and scheduled. It is expected that these will follow the conventions established in other markets and the Group will apply the same principles for those transitions as and when they become relevant.

The table below details the Group’s exposure at 30 June 2022 to significant IBORs subject to reform that have yet to transition to alternate benchmark rates:

Managing interest rate benchmark reform and associated risks

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative risk-free rates (referred to as IBOR reform). The Group has exposure to IBORs through certain of its bank loans (interest bearing liabilities) and its derivative instruments (IRD and CCIRS). Most of the Group’s external interest bearing liabilities are bonds with fixed coupons and are not exposed to IBORs. The Group’s derivative instruments are governed by contracts based on the International Swaps and Derivatives Association (ISDA) master agreements.

The United Kingdom, Japan and the United States had announced plans to discontinue using London Interbank Offered Rate (LIBOR) by 31 December 2021. The alternative reference rate for sterling LIBOR is the Sterling Overnight Index Average rate, for Japanese yen LIBOR is the Tokyo Overnight Average Rate and for US dollar LIBOR is the Secured Overnight Financing Rate. Amendments to the Group’s financial instruments with contractual terms indexed to sterling LIBOR or Japanese yen LIBOR, such that they incorporate the new benchmark rates, were completed by 31 December 2021. Although US dollar LIBOR was planned to be discontinued by the end of 2021, in November 2020 the Intercontinental Exchange Benchmark Administration, the Financial Conduct Authority-regulated and authorised administrator of LIBOR, announced that it had started to consult on its intention to cease the publication of certain US dollar LIBORs after June 2023. It is still unclear when the announcement that will set a date for the termination of the publication of US dollar LIBOR will take place. Nevertheless, the Group has finished the process of implementing appropriate fallback provisions for all US dollar LIBOR indexed exposures.

		USD LIBOR
	Notional amount
	Goodman	GIT
	$M	$M
IRD	900.0	500.0
CCIRS	2,330.0 3,230.0	1,430.0 1,930.0

The exposure disclosed is for derivatives with contractual maturities after 30 June 2022. Derivative exposure has been reported using the notional contract amount and where derivatives such as CCIRS have both a receiver and a payer leg with exposure to IBOR reform, the notional contract amount is disclosed for both legs.

(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.

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ANNUAL REPORT 2022

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 flows	1 year	year(s)	years	years	years	5 years
Goodman	$M	$M	$M	$M	$M	$M	$M	$M
As at 30 June 2022
Non–derivative fnancial liabilities
Payables (excluding contract liabilities)	712.8	712.8	601.8	58.2	26.4	17.6	8.8	–
Lease liabilities	70.6	121.6	12.5	14.2	76.5	4.1	3.9	10.4
Bank loans, secured1	9.0	9.0	–	–	–	–	–	9.0
USD denominated notes, unsecured	1,953.1	2,822.9	139.2	82.7	82.7	82.7	82.7	2,352.9
EUR denominated notes, unsecured	758.3	799.9	18.3	10.4	10.4	760.8	–	–
Foreign private placement, unsecured	133.3	137.7	137.7	–	–	–	–	–
Total non–derivative fnancial liabilities	3,637.1	4,603.9	909.5	165.5	196.0	865.2	95.4	2,372.3
Derivative fnancial (assets)/liabilities – net Net settled2 Gross settled3: (Inflow) Outflow	33.8 0.7 –	35.3 (1,565.0) 1,113.4	14.0 (249.5) 218.5	5.7 (411.0) 329.5	22.2 (257.1) 169.6	8.2 (310.8) 189.7	3.5 (171.2) 156.4	(18.3) (165.5) 49.7
Total derivative fnancial (assets)/liabilities – net	34.5	(416.3)	(17.0)	(75.8)	(65.3)	(112.9)	(11.3)	(134.1)
As at 30 June 2021 Non–derivative fnancial liabilities Payables (excluding contract liabilities) Lease liabilities USD denominated notes, unsecured EUR denominated notes, unsecured Foreign private placement, unsecured	685.4 94.0 1,133.8 790.3 150.1	685.4 179.2 1,625.3 836.5 158.9	560.9 11.9 45.4 10.9 5.0	61.9 7.9 45.4 10.9 153.9	31.3 6.3 45.4 10.9 –	20.9 6.8 45.4 10.9 –	10.4 6.3 45.4 792.9 –	– 140.0 1,398.3 – –
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 settled2 Gross settled3: (Inflow) Outflow	(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)

Contractual cash flows relating to bank loans exclude any estimate of interest payments that might arise under Goodman’s revolving loan facilities.
Net settled includes IRD and FEC.
Gross settled includes CCIRS.

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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 flows	1 year	year(s)	years	years	years	5 years
GIT	$M	$M	$M	$M	$M	$M	$M	$M
As at 30 June 2022
Non–derivative fnancial liabilities
Payables	796.5	796.5	72.7	4.8	64.5	282.7	139.4	232.4
USD denominated notes, unsecured	1,953.1	2,822.9	139.2	82.7	82.7	82.7	82.7	2,352.9
EUR denominated notes, unsecured	758.3	800.0	18.3	10.4	10.4	760.8	–	–
Foreign private placement, unsecured	133.3	137.7	137.7	–	–	–	–	–
Total non–derivative fnancial liabilities	3,641.2	4,557.1	367.9	97.9	157.6	1,126.2	222.1	2,585.3
Derivative fnancial (assets)/liabilities – net Net settled1 Gross settled2: (Inflow) Outflow	(22.0) 30.3 –	141.6 (737.3) 753.2	39.4 (104.8) 161.1	35.5 (234.6) 237.7	33.3 (90.9) 100.7	33.5 (115.1) 125.6	10.5 (51.6) 87.3	(10.5) (140.1) 40.8
Total derivative financial (assets)/liabilities – net	8.3	157.5	95.7	38.6	43.1	44.0	46.2	(109.8)
As at 30 June 2021 Non–derivative financial liabilities Payables USD denominated notes, unsecured EUR denominated notes, unsecured Foreign private placement, unsecured	839.8 1,133.8 790.3 150.1	839.8 1,625.4 836.4 158.9	607.6 45.4 10.9 5.0	– 45.4 10.9 153.9	95.9 45.4 10.9 –	9.2 45.4 10.9 –	123.3 45.4 792.9 –	3.8 1,398.3 – –
Total non–derivative financial liabilities	2,914.0	3,460.5	668.9	210.2	152.2	65.5	961.6	1,402.1
Derivative financial (assets)/liabilities – net Net settled1 Gross settled2: (Inflow) Outflow	(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 financial (assets)/liabilities – net	(182.4)	(234.5)	(52.1)	(4.8)	(65.3)	(32.4)	(26.6)	(53.3)

Net settled includes IRD and FEC.
Gross settled includes CCIRS.

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ANNUAL REPORT 2022

(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 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$361.3 million (2021: A$175.2 million) and A$256.1 million (2021: A$112.9 million) of financial assets and financial liabilities in relation to Goodman’s and GIT’s respective derivative financial instruments to be offset.

(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 2022 2022 2021 2021 $M $M $M $M Financial assets Cash and cash equivalents 1,056.0 1,056.0 920.4 920.4 Receivables 391.2 391.2 608.8 608.8 Other financial assets: – IRD 210.5 210.5 114.3 114.3 – CCIRS 271.6 271.6 256.7 256.7 – FEC 2.3 2.3 – – – Investments in unlisted securities 13.6 13.6 8.3 8.3 1,945.2 1,945.2 1,908.5 1,908.5 Financial liabilities Payables (excluding contract liabilities) 712.8 712.8 685.4 685.4 Interest bearing liabilities1 2,832.2 2,670.6 2,060.3 2,236.3 Other financial liabilities: – IRD 126.2 126.2 15.9 15.9 – CCIRS 272.3 272.3 118.0 118.0 – FEC 120.4 120.4 79.5 79.5 4,063.9 3,902.3 2,959.1 3,135.1	GIT
	Carrying amount Fair value Carrying amount Fair value 2022 2022 2021 2021 $M $M $M $M
	473.6 473.6 379.8 379.8 3,268.4 3,268.4 3,344.6 3,344.6 129.1 129.1 111.9 111.9 194.8 194.8 194.7 194.7 19.0 19.0 2.3 2.3 31.8 31.8 22.0 22.0
	4,116.7 4,116.7 4,055.3 4,055.3
	796.5 796.5 839.8 839.8 2,825.4 2,528.3 2,062.8 2,236.3 126.2 126.2 15.9 15.9 225.0 225.0 110.6 110.6 – – – –
	3,973.1 3,676.0 3,029.1 3,202.6

The fair value of certain fixed rate interest bearing liabilities has been determined by reference to the quoted market prices at 30 June 2022.

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GOODMAN GROUP

Notes to the consolidated financial statements

Capital management (continued)

18 Financial risk management (continued)

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method:

Goodman Level 1 Level 2 Level 3 Total $M $M $M $M As at 30 June 2022 Derivative financial assets – 484.4 – 484.4 Investments in unlisted securities – – 13.6 13.6 – 484.4 13.6 498.0 Derivative financial liabilities – 518.9 – 518.9 – 518.9 – 518.9 As at 30 June 2021 Derivative financial assets – 371.0 – 371.0	GIT
	Level 1 Level 2 Level 3 Total $M $M $M $M
	– 342.9 – 342.9 – – 31.8 31.8
	– 342.9 31.8 374.7
	– 351.2 – 351.2
	– 351.2 – 351.2
	– 308.9 – 308.9
Investments in unlisted securities – – 8.3 8.3	– – 22.0 22.0
– 371.0 8.3 379.3 Derivative financial liabilities – 213.4 – 213.4 – 213.4 – 213.4	– 308.9 22.0 330.9
	– 126.5 – 126.5
	– 126.5 – 126.5

There were no transfers between the levels during the year.

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.

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ANNUAL REPORT 2022

19 Dividends and distributions

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.

Goodman

FY22 dividends/distributions

	Dividends/distributions	Total amount	Date of
	cents per security	$M	payment
GL	–	–	n/a
GIT
– 31 December 2021	15.0	280.2	24 Feb 2022
– 30 June 2022	12.5	233.6	25 Aug 2022
GLHK	2.5	46.7	25 Aug 2022
	30.0	560.5
Distributions on treasury securities		(0.4)
	30.0	560.1

FY21 dividends/distributions

	Dividends/distributions	Total amount	Date of
	cents per security	$M	payment
GL	–	–	n/a
GIT
– 31 December 2020	15.0	277.1	25 Feb 2021
– 30 June 2021	9.0	166.3	26 Aug 2021
GLHK	6.0	110.8	26 Aug 2021
	30.0	554.2

GIT

In FY22, GIT’s distributions were 27.5 cents per security (2021: 24.0 cents per security) amounting to $513.8 million (2021: $443.4 million).

Movement in provision for dividends/distributions to Securityholders

Goodman 2022 $M 2021 $M Balance at the beginning of the year 277.1 274.3 Provisions for dividends/distributions 560.1 554.2 Dividends/distributions paid (557.2) (551.4) Balance at the end of the year 280.0 277.1	GIT
	2022 $M 2021 $M
	166.3 201.1 513.8 443.4 (446.6) (478.2)
	233.5 166.3

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GOODMAN GROUP

Notes to the consolidated financial statements

Capital management (continued)

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.

equity, net of any tax efects.
Goodman 2022 2021 2022 2021 Number of securities $M $M Stapled securities: – Issued and fully paid 1,866,989,276 1,847,429,255 8,367.1 8,257.3 – Treasury securities 1,233,333 – – – Derivative financial liabilities (161.0) (160.9) Total issued capital 1,868,222,609 1,847,429,255 8,206.1 8,096.4	GIT
	2022 2021 $M $M
	8,303.3 7,997.7 – – (148.8) (148.7)
	8,154.5 7,849.0

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

		Number of	Goodman	GIT
Date	Details	securities	$M	$M
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
30 Jun 2021	Balance before accumulated issue costs	1,847,429,255	8,257.3	7,997.7
31 Aug 2021 31 Aug 2021 2 Sep 2021	Securities issued to employees under the LTIP Issue of treasury securities Issue of securities Less: Accumulated issue costs	14,716,648 1,233,333 4,843,373	– – 109.8 (161.0)	216.3 18.1 71.2 (148.8)
30 Jun 2022	Closing balance	1,868,222,609	8,206.1	8,154.5

(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	Number of rights
	2022	2021
Outstanding at the beginning of the year	68,640,720	73,987,645
Granted	23,468,860	16,079,977
Exercised	(19,545,855)	(19,016,019)
Forfeited	(813,081)	(2,410,883)
Outstanding at the end of the year	71,750,644	68,640,720
Exercisable at the end of the year	–	–

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ANNUAL REPORT 2022

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:

	10–year	10–year	5–year
	rights	rights	rights
	issued on	issued on	issued on
	18 Nov 2021	30 Sep 2021	30 Sep 2021
Fair value at measurement date ($)	20.16	17.22	17.87
Security price ($)	24.49	21.68	21.68
Exercise price ($)	–	–	–
Expected volatility (%)	25.45	25.36	28.54
Rights’ expected weighted average life (years)	6.8	6.9	3.9
Dividend/distribution yield per annum (%)	1.23	1.38	1.38
Average risk free rate of interest per annum (%)	1.51	1.03	0.49

The model inputs for the remeasurement of the cash settled performance rights at 30 June 2022 included the following:

	10-year	5-year	5-year	5-year	5-year	5-year
	rights issued	rights issued	rights issued	rights issued	rights issued	rights issued
	in FY22	in FY22	in FY21	in FY20	in FY19	in FY18
Fair value at measurement date ($)	13.61	14.12	15.02	17.49	17.64	17.79
Security price ($)	17.84	17.84	17.84	17.84	17.84	17.84
Exercise price ($)	–	–	–	–	–	–
Expected volatility (%)	27.44	29.24	28.56	32.65	36.02	44.77
Rights’ expected weighted average life (years)	6.2	3.2	2.2	1.2	0.7	0.2
Dividend/distribution yield per annum (%)	1.68	1.68	1.68	1.68	1.68	1.68
Average risk free rate of interest per annum (%)	3.42	3.09	2.90	2.35	2.12	1.53

Amounts recognised as an expense are set out in note 2. At 30 June 2022, a liability of $126.6 million (2021: $158.0 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.

135

GOODMAN GROUP

Notes to the consolidated financial statements

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:

Goodman 2022 $M 2021 $M Bank balances 811.3 853.7 Call deposits 244.7 66.7 1,056.0 920.4	GIT
	2022 $M 2021 $M
	184.2 313.1 289.4 66.7
	473.6 379.8

(b) Reconciliation of profit for the year to net cash provided by operating activities

Goodman 2022 $M 2021 $M Profit for the year 3,414.0 2,311.9 Items classified as investing activities Net gain on disposal of investment properties (73.6) (37.7) Net gain on disposal of equity investments (0.2) (5.0) Non–cash items Amortisation and depreciation 17.1 23.0 Share based payments expense 257.0 266.9 Net gain from fair value adjustments on investment properties (260.1) (63.1) Reversal of previous impairments – – Share of net results of equity accounted investments (2,718.2) (1,708.9) Net finance expense/(income) 222.8 (74.9) Income tax expense 324.1 108.1 1,182.9 820.3 Changes in assets and liabilities during the year: – Decrease/(increase) in receivables 93.4 (146.7) – Increase in inventories (646.1) (29.9) – (Increase)/decrease in other assets (0.1) (6.0) – (Decrease)/increase in payables (85.5) 6.7 – Decrease inprovisions (0.1) (0.1) 544.5 644.3 Distributions/dividends received from Partnerships 441.9 536.9 Net finance costs paid (34.9) (25.1) Net income taxes(paid)/received (110.5) (41.4) Net cashprovided byoperatingactivities 841.0 1,114.7	GIT
	2022 $M 2021 $M
	2,067.6 1,574.8 (69.8) (39.3) – (3.2) – – – – (208.3) (60.2) – (17.6) (2,173.0) (1,373.8) 231.6 (135.5) 133.1 49.5
	(18.8) (5.3)
	0.7 1.7 – – 1.4 (2.2) (1.5) 1.8 – –
	(18.2) (4.0)
	238.9 372.6 (23.6) (29.5) (1.1) 0.5
	196.0 339.6

(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.

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ANNUAL REPORT 2022

(d) Reconciliation of liabilities arising from financing activities

	Interest	Derivative	Provision
	bearing	financial	for	Lease
	liabilities	instruments	distributions	liabilities	Total
Goodman	$M	$M	$M	$M	$M
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	200.0	4.6	–	–	204.6
derivative financial instruments
Payments on borrowings and	(891.9)	–	–	–	(891.9)
derivative financial instruments
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 Other borrowing costs Interest expense on lease liabilities Debt modification costs Distributions declared	– 0.6 – 34.6 –	– – – – –	– – – – 554.2	64.2 – 0.8 – –	64.2 0.6 0.8 34.6 554.2
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
Proceeds from borrowings and derivative financial instruments Payments on borrowings and derivative financial instruments Payment of lease liabilities Distributions paid	1,466.5 (779.2) – –	– (10.1) – –	– – – (557.2)	– – (13.4) –	1,466.5 (789.3) (13.4) (557.2)
Total changes from financing cash flows	687.3	(10.1)	(557.2)	(13.4)	106.6
Effect of changes in foreign exchange rates	83.2	12.5	–	(1.6)	94.1
Changes in fair value	(2.2)	189.7	–	–	187.5
Other changes New leases Other borrowing costs Interest expense on lease liabilities Disposal of right of use assets Distributions declared	– 3.6 – – –	– – – – –	– – – – 560.1	15.6 – 1.0 (25.0) –	15.6 3.6 1.0 (25.0) 560.1
Total other changes	3.6	–	560.1	(8.4)	555.3
Balance at 30 June 2022	2,832.2	34.5	280.0	70.6	3,217.3

137

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued)

21 Notes to the cash flow statements (continued)

	Interest	Derivatives	Provision	Loans with
	bearing	used for	for	related
	liabilities	hedging	distributions	parties, net	Total
GIT	$M	$M	$M	$M	$M
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	200.0	46.8	–	–	246.8
financial instruments
Payments on borrowings and derivative	(891.9)	–	–	–	(891.9)
financial instruments
Distributionspaid	–	–	(478.2)	–	(478.2)
Total changes from financingcash 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 Equity settled share based payments transactions Interest income Interest expense Interest paid Other borrowing costs Debt modification costs Distributions declared	– – – – – 2.1 34.3 –	– – – – – – – –	– – – – – – – 443.4	(183.2) (13.7) (69.1) 11.7 (6.9) – – –	(183.2) (13.7) (69.1) 11.7 (6.9) 2.1 34.3 443.4
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)
Changes from financing cash flows Net cash flows from loans to related parties Proceeds from borrowings and derivative financial instruments Payments on borrowings and derivative financial instruments Distributionspaid	– 1,456.4 (777.3) –	17.4 – (10.1) –	– – – (446.6)	262.2 – – –	279.6 1,456.4 (787.4) (446.6)
Total changes from financingcash flows	679.1	7.3	(446.6)	262.2	502.0
Effect of changes in foreign exchange rates	79.8	1.9	–	60.3	142.0
Changes in fair value	–	181.5	–	–	181.5
Other changes Issue of units under the LTIP Equity settled share based payments transactions Interest income Interest expense Interest paid Other borrowing costs Derivative financial instrument settlement through loans with related parties Distributions declared	– – – – – 3.7 – –	– – – – – – – –	– – – – – – – 513.8	(234.4) (29.8) (72.3) 9.7 5.7 – 17.4 –	(234.4) (29.8) (72.3) 9.7 5.7 3.7 17.4 513.8
Total other changes	3.7	–	513.8	(303.7)	213.8
Balance at 30 June 2022	2,825.4	8.3	233.5	(2,540.7)	526.5

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ANNUAL REPORT 2022

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
Defined
Foreign benefit
currency Employee retirement
Issued translation compensation schemes Total Retained
capital reserve reserve reserve reserves earnings Total
$M $M $M $M $M $M $M
Balance at 1 July 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
Total comprehensive
(loss)/income for the year
Profit for the year – – – – – 552.6 552.6
Other comprehensive (loss)/income
Effect of foreign currency translation – (10.9) – 1.0 (9.9) – (9.9)
Total comprehensive (loss)/income
– (10.9) – 1.0 (9.9) 552.6 542.7
for the year, net of income tax
Transfers – – (81.8) – (81.8) 81.8 –
Contributions by and
distributions to owners
Purchase of securities for the LTIP – – (28.0) – (28.0) – (28.0)
Issue of securities 19.8 – – – – – 19.8
Equity settled share based
payments transactions – – 127.0 – 127.0 – 127.0
Deferred tax associated with the LTIP – – (4.2) – (4.2) – (4.2)
Balance at 30 June 2022 514.3 (76.4) 52.4 (22.3) (46.3) 1,824.9 2,292.9
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139

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued)

22 Equity attributable to Goodman Limited and non-controlling interests (continued)

(b) Equity attributable to other entities stapled to Goodman Limited (non-controlling interests)

		Attributable to other	Attributable to other	entities stapled to Goodman Limited (non–controlling interests)	entities stapled to Goodman Limited (non–controlling interests)	entities stapled to Goodman Limited (non–controlling interests)	entities stapled to Goodman Limited (non–controlling interests)	entities stapled to Goodman Limited (non–controlling interests)
						Defined
				Foreign		benefit
		Asset	Cash 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 2020	7,548.5	(7.2)	(5.2)	225.5	206.7	(8.0)	411.8	2,282.3	10,242.6
Total comprehensive
income/(loss) 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, net of income tax	–	–	–	–	–	(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 Issue of securities Issue costs Equity settled share based payments transactions	– 53.7 (0.3) –	– – – –	– – – –	– – – –	– – – 28.6	– – – –	– – – 28.6	(554.2) – – –	(554.2) 53.7 (0.3) 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
Total comprehensive income/(loss) for the year Profit for the year Other comprehensive income/(loss) Effect of foreign currency translation Actuarial gains on defined benefit superannuation funds, net of income tax Other changes	– – – –	– – – 0.3	– (0.4) – 15.9	– 155.0 – –	– – – –	– 0.6 5.6 –	– 155.2 5.6 16.2	2,861.4 – – –	2,861.4 155.2 5.6 16.2
Total comprehensive income for the year, net of income tax	–	0.3	15.5	155.0	–	6.2	177.0	2,861.4	3,038.4
Contributions by and distributions to owners Dividends/distributions on stapled securities Issue of stapled securities Issue costs Equity settled share based payments transactions	– 90.1 (0.2) –	– – – –	– – – –	– – – –	– – – 37.8	– – – –	– – – 37.8	(560.1) – – –	(560.1) 90.1 (0.2) 37.8
Balance at 30 June 2022	7,691.8	(6.4)	11.1	129.8	273.1	(8.6)	399.0	6,041.1	14,131.9

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ANNUAL REPORT 2022

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 2022 and the results of all such entities for the year ended 30 June 2022.

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:

Significant controlled entities of Goodman Limited	Country of establishment/ incorporation
GA Industrial Portfolio Trust1	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
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 Trust1	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

Significant controlled entities of Goodman Industrial Trust.

141

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued)

23 Controlled entities

Significant controlled entities of Goodman Limited	Country of establishment/ incorporation
Goodman Japan Funds Limited	Japan
Goodman Japan Limited	Japan
GELF Management (Lux) Sàrl	Luxembourg
Goodman Finance (Lux) Sàrl1	Luxembourg
Goodman Finance Two (Lux) Sàrl1	Luxembourg
Goodman Management Holdings (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 (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 Three, LLC1	United States
Goodman US Finance Four, LLC1	United States
Goodman US Finance Five, LLC1	United States
Tarpon Properties REIT Inc1	United States

Significant controlled entities of Goodman Industrial Trust.

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ANNUAL REPORT 2022

24 Related parties

The names of KMP of Goodman at any time during the financial year are as follows:

Non-Executive Directors – GL and GFML

Executive KMP

Stephen Johns Gregory Goodman Christopher Green Danny Peeters Mark Johnson Anthony Rozic Vanessa Liu Nick Kurtis Rebecca McGrath Michael O’Sullivan Phillip Pryke Nick Vrondas Hilary Spann Penny Winn

Non-Executive Director – GLHK

David Collins

Remuneration of KMP

The KMP remuneration totals are as follows:

		Goodman	Goodman Limited1	Goodman Limited1
	2022	2021	2022	2021
	$000	$000	$000	$000
Short-term employee benefits	7,596.6	7,693.9	–	–
Post-employment benefits	203.6	211.8	–	–
Post-employment benefits	42,106.0	27,760.3	–	–
Long-term employee benefits	5,037.4	3,787.7	–	–
	54,943.6	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

In order to enhance understanding of and access to technologies that may influence the property sector and the business, 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 GL. During the year, GIT invested a further USD1.5 million, such that that the total investment at 30 June 2022 was USD5.3 million (2021: USD3.8 million).

Wyuna Regenerative Ag Investment Fund (Wyuna)

During the year, as part of its ESG strategy, Goodman committed to investing $30.0 million in Wyuna, a fund offering a model blending carbon farming, red meat production and regeneration in Australia. The fund is managed by Wyuna Regenerative Ag, which is 50% owned by Christopher Green, a director of GL. Total investment in Wyuna at 30 June 2022 is $nil.

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GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued)

24 Related parties (continued)

Transactions with associates and JVs

The transactions with Partnerships during the year were as follows:

	Revenue from disposal	Revenue from disposal	Revenue from management	Revenue from management	Revenue from management	Interest charged on loans
	of investmentproperties		and development activities			to associates and JVs
	2022	2021	2022		2021	2022	2021
Goodman	$000	$000	$000		$000	$000	$000
Associates	400,825.4	163,046.2	1,279,744.9	712,234.5		–	–
JVs	274,018.6	–	447,461.7	442,607.0		6,514.7	8,131.9
GIT
Associates	346,825.4	163,046.2	–		–	(36.1)	15.7
JVs	–	–	–		–	6,166.6	7,417.6

In addition to the transactions included in the table above:

Goodman incurred $3.7 million of costs from Partnerships, primarily for the leasing of office premises
GAIP paid Goodman a refundable fee of $22.6 million for an option to acquire a 40% interest in a JV from the Group.

Amounts due from Partnerships at 30 June 2022 were as follows:

Amounts due from Partnerships at 30 June 2022 were as follows:
Goodman Amounts due from related parties1 Loans provided by Goodman2 2022 $000 2021 $000 2022 $000 2021 $000 Associates GAIP 14,204.2 10,811.2 – – GAP 5,626.5 3,843.9 – – GMT 3,579.3 2,123.8 – – GHKLP 9,757.3 41,987.7 – – GJCP 4,371.3 3,017.4 – – GEP 13,912.2 8,454.0 – – 51,450.8 70,238.0 – – JVs GCLP 6,617.4 12,566.5 – – Other JVs 24,865.6 18,803.7 167,464.7 270,368.8 31,483.0 31,370.2 167,464.7 270,368.8	GIT
	Amounts due from related parties1 Loans provided by GIT2 2022 $000 2021 $000 2022 $000 2021 $000
	– – – – – – – – – – – – – – – – – – – – – – – –
	– – – –
	– – – – 4.8 70.5 140,162.8 240,731.6
	4.8 70.5 140,162.8 240,731.6

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 year were as follows:

		GIT
	2022	2021
	$000	$000
Management income	1,850.9	2,384.0
Revenue from disposal of investment properties	–	8,073.0
Reimbursement of expenses	58,381.5	50,392.9
	60,232.4	60,849.9

Interest bearing loans exist between GIT and other Goodman entities. At 30 June 2022, interest bearing loans of $3,122.6 million (2021: $3,096.5 million) were receivable by GIT from other Goodman entities and $723.8 million (2021: $777.7 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.

Additionally, during the year GIT acquired 65,906,199 units in GMT from a controlled entity of GL for consideration of NZ$139.1 million.

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ANNUAL REPORT 2022

25 Commitments

Development activities

At 30 June 2022, Goodman was committed to expenditure in respect of $691.8 million (2021: $534.7 million) on inventories and other development activities. GIT has no such commitments (2021: $nil).

Investment properties

At 30 June 2022, Goodman had capital expenditure commitments of $6.1 million (2021: $nil) in respect of its existing investment property portfolio. GIT had capital expenditure commitments of $4.5 million (2021: $nil).

Partnerships

At 30 June 2022, Goodman had remaining equity commitments of $217.9 million (2021: $144.7 million) into GAIP and $135.0 million (2021: $63.0 million) into GEP. In addition, Goodman has undertaken to acquire up to 82.1 million units in GAIP if their holder elects to sell them. The price Goodman will pay will be determined by the prevailing unit price at the time of the sale. As at 30 June 2022, this equates to a total value of $162.1 million (cum distribution value) or $161.1 million (ex distribution price). Goodman’s commitment to this sale process ends in May 2026. These commitments also apply 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 (including Goodman) of the expenditures for which the funding is required. Goodman’s commitment in respect of these Partnerships is set out below:

- $30.0 million (2021: $nil) into Wyuna
- $130.7 million (2021: $136.2 million) into KWASA Goodman Germany
- $344.8 million (2021: $410.1 million) into Goodman Japan Development Partnership
- $793.8 million (2021: $808.0 million) into GCLP
- $599.3 million (2021: $512.8 million) into GUKP
- $1,888.9 million (2021: $2,156.2 million) into GNAP
- $73.0 million (2021: $72.7 million) into Goodman Brazil Logistics Partnership.

In relation to GEP, Goodman offers two liquidity facilities which allow certain of the partners to sell to the Group some or all of their investments in GEP, but only when Goodman’s ownership interest in GEP is below 40.0%. At 30 June 2022, Goodman’s ownership interest in GEP was 19.8% and therefore the facilities are available to the partners. The first facility, which applies to 6.4% of the issued and committed units, would require Goodman to purchase up to €210.5 million of units (at a 1% discount to current unit value), subject to a maximum in each quarter of 2.5% of units. The second facility, which applies to 12.7% of the issued and committed units, would require Goodman to purchase up to €150.0 million of units (at a 5% discount to current unit value), subject to a maximum in each calendar year of €50.0 million.

145

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued)

26 Auditors’ remuneration

26 Auditors’ remuneration
		Goodman		GIT
	2022	2021	2022		2021
	$000	$000	$000		$000
Audit services
Auditor of the Company:
– Audit and review of financial reports (KPMG Australia)	1,279.1	1,161.9	737.3		691.9
– Audit and review of financial reports(overseas KPMG firms)	1,218.7	1,127.9	77.3		85.8
	2,497.8	2,289.8	814.6		777.7
Other services – Other regulatory services (KPMG Australia) – Other assurance services (KPMG Australia)1 – Other advisory services (KPMG Australia) – Other advisory services (overseas KPMG firms) – Taxation compliance services (KPMG Australia) – Taxation compliance services (overseas KPMG firms) – Taxation advice (KPMG Australia) – Taxation advice(overseas KPMG firms)	64.9 670.0 15.0 – – 172.8 – 178.8	56.7 – – 18.2 100.0 196.3 23.0 338.5	41.8 – – – – – – –		35.7 – – – 91.7 – – –
	1,101.5	732.7	41.8		127.4
Totalpaid/payable to KPMG	3,599.3	3,022.5	856.4		905.1
Other auditors
– Audit and review of financial reports(non–KPMG firms)	151.5	163.4	–		–

These assurance services relate to the issue of the US$500 million Sustainability Linked Bond in the US144A/Regulation S market.

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ANNUAL REPORT 2022

27 Parent entity disclosures

As at, and throughout the financial year ended, 30 June 2022, 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	GIT	GIT
	2022	2021	2022	2021
	$M	$M	$M	$M
Result of the parent entity
Profit for the year	176.8	63.0	451.7	140.0
Other comprehensive income for theyear	–	–	–	–
Total comprehensive income for theyear	176.8	63.0	451.7	140.0
Financial position of the parent entity at year end Current assets Total assets Current liabilities Total liabilities Total equity of the parent entity comprising: Issued capital Profits reserve Employee compensation reserve Accumulated losses	223.9 1,895.5 108.6 1,192.4 937.4 90.7 52.4 (377.4)	49.1 1,591.9 164.4 1,163.7 852.5 90.7 39.3 (554.3)	3,076.5 8,075.8 553.9 3,016.6 8,154.5 – 216.8 (3,312.1)	2,329.3 7,424.8 1,107.4 2,666.1 7,849.0 – 159.8 (3,250.1)
Total equity	703.1	428.2	5,059.2	4,758.7

147

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (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 GL and GIT. Distributions/dividends received from Partnerships are recognised in the income statement, rather than being deducted from the carrying amount of these investments.

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.

Tax consolidation

GL 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 2022, the parent entities had no capital commitments (2021: $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.

US144A/Regulation S senior notes

Under the issue of notes in the US144A/Regulation 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$1,350.0 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.

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ANNUAL REPORT 2022

Director's 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 79 to 148 and the remuneration report that is contained on pages 30 to 75 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 2022 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 2022.

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.

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Stephen Johns Independent Chairman

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Gregory Goodman Group Chief Executive Officer Sydney 16 August 2022

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GOODMAN GROUP

Independent auditor’s report

To the stapled security holders of Goodman Group and the unitholders of Goodman Industrial Trust

Report on the audits 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 and Directors’ Declaration 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 2022 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

Reports comprise:

- Consolidated statement of financial position as at 30 June 2022;
- 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 these requirements.

Key Audit Matters

The Key Audit Matters we identified for the Goodman Group are:

- Recognition of development income; and
- Valuation of investment properties, investments accounted for using the equity method and inventories.

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.

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ANNUAL REPORT 2022

Recognition of development income ($1,441.6m)

Refer to Note 2 to the Financial Report

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

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 significant value (28% of revenue and other income); + Evaluating Goodman Group’s recognition of development income
+ the unique nature of contracts; and against the criteria in the accounting standards;
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- the judgements applied by us to assess Goodman Group’s determination of revenue recognised during the period in relation to contracts which remain in progress at period end.

Income from development management services is recognised progressively, requiring judgment by us when considering Goodman Group’s determination of the amount and extent of the services provided within the period based on contract deliverables.

Goodman Group’s policy is for income from inventory disposals to be recognised at a point in time when control is transferred to the customer and fixed price development contracts to be recognised in proportion to the stage of completion of the relevant contracts.

We focused on the stage of completion estimation which is based on costs incurred as a percentage of estimated total costs for each contract.

- Selecting specific contracts from development income recognised based on quantitative and qualitative information (such as the size and complexity of the arrangement) and performed the following:
Understanding the underlying contractual arrangements, in particular their unique terms, for their impact to recognition of development income;
Where recognition of development income was conditional upon certain events occurring, checking conditions within the contract to evidence of achievement of conditions, such as correspondence with external parties;
Assessing Goodman Group’s determination of revenue recognised during the period in accordance with the provision of services stipulated in the underlying contract or the stage of completion; and
For revenue recognised based on the stage of completion, assess the cost assumptions used by the Group in determining the stage of completion estimate as follows:
Costs incurred – assessing a sample of costs incurred to date to relevant underlying external sources, such as invoices; and
Estimated total costs – assessing a sample of total forecast costs to secured contracts for construction activities, other relevant underlying sources, and our understanding of the industry and economic conditions.

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GOODMAN GROUP

Valuation of investment properties ($1,423.7m), investments accounted for using the equity method ($14,379.6m) and inventories ($2,116.1m)

Refer to Note 6 to the Financial Report

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

The key audit matter How the matter was addressed in our audit
Goodman Group’s investments in property assets include investment Our procedures included:
properties and inventories, which are held either directly or through + Obtaining an understanding of Goodman Group’s process regarding
its investments accounted for using the equity method.
the valuation of property assets;
Goodman Group’s policy is investment properties are held at fair value + Assessing the methodologies used in the valuations of property
and inventories are held at the lower of cost and net realisable value,
assets, for consistency with accounting standards, industry practice
determined using internal methodologies or through the use of external
and Goodman Group’s policies;
valuation experts.
+ Working with real estate valuation specialists to read published
The valuation of property assets is a key audit matter as they are
reports and industry commentary to gain an understanding
significant in value (being 84% of total assets) and contain assumptions
of prevailing property market conditions.
with estimation uncertainty.
For a sample of investment properties, taking into account asset classes,
This leads to additional audit effort due to differing assumptions
geographies and characteristics of individual investment properties:
used by Goodman Group based on asset classes, geographies and
+ Assessing the scope, competence and objectivity of external
characteristics of individual property assets.
valuation experts and Goodman Group’s internal valuers;
We considered significant assumption in the valuation of property
+ Challenging significant assumptions, with reference to
assets including :
published industry reports and commentary of prevailing property
+ Investment properties:
market conditions;
– capitalisation rates; + With assistance of real estate valuation specialists, assessing
– discount rates; a sample of significant assumptions including capitalisation rates,
discount rates, customer covenant strength, market rental income,
– market rental income;
weighted average lease expiry and vacancy levels, projections
– weighted average lease expiry and vacancy levels;
of capital expenditure and lease incentive costs. We did this by
– projections of capital expenditure; and comparing to market analysis published by industry experts, recent
– lease incentive costs. market transactions, inquiries with Goodman Group’s historical
performance of the assets and using our industry experience;
+ Inventories:
+ Assessing the disclosures in the financial report using our
– forecast capitalisation rates and market rental income;
understanding obtained from our testing, against accounting
– land value per square metre; standard requirements.
– letting up periods and lease incentive costs; and For a sample of inventories:
– development costs. + Challenging the key assumptions included in Goodman Group’s
internal recoverability assessments and valuations by comparing to
In assessing this Key Audit Matter, we involved real estate valuation
specialists, who understand the Group’s investment profile, business commentary published by industry experts, recent market transactions,
and our knowledge of historical performance of the assets.
and the economic environment it operates in.
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ANNUAL REPORT 2022

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).

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.

Report on the Remuneration Report Opinion

In our opinion, the Remuneration Report of Goodman Limited for the year ended 30 June 2022, complies with Section 300A of the Cor porations 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 30 to 75 of the Directors’ report for the year ended 30 June 2022.

Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards .

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KPMG

Eileen Hoggett Partner Sydney 16 August 2022

153

GOODMAN GROUP

Appendix A – Goodman Logistics (HK) Limited and its subsidiaries

Consolidated financial statements for the year ended 30 June 2022

CONTENTS
Report of the Directors	155
Independent auditor’s report	165
Consolidated statement of fnancial position	167
Consolidated statement of comprehensive income	168
Consolidated statement of changes in equity	169
Consolidated cash fow statement	170
Notes to the consolidated fnancial statements

Basis of preparation	Basis of preparation
1	Basis of preparation	171
Results for the year
2	Proft before interest and income tax	172
3	Segment reporting	174
4	Taxation	177
5	Proft attributable to equity shareholders of the Company	178
Operating assets and liabilities
6	Property assets	179
7	Receivables	186
8	Contract balances	187
9	Payables	189
10	Leases	189
Capital management
11	Net fnance expense	190
12	Interest bearing liabilities	190
13	Other fnancial assets and liabilities	191
14	Financial risk management	191
15	Dividends	196
16	Share capital	197
Other items
17	Notes to the consolidated cash fow statement	199
18	Reserves	201
19	Retained earnings	201
20	Investments in subsidiaries	202
21	Related party transactions	203
22	Commitments	205
23	Contingencies	205
24	Company level statement of fnancial position	206
25	Subsequent events	206

154

ANNUAL REPORT 2022

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 2022 (FY22).

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 2022 and the Consolidated Entity’s financial position at that date are set out in the consolidated financial report on pages 167 to 206.

During the financial year, the Company declared a final dividend of 2.5 cents per share amounting to $46.7 million. This dividend will be paid on 25 August 2022. In the prior year, the Company declared a final dividend of 6.0 cents per share amounting to $110.8 million. This was paid on 26 August 2021.

Share capital

Details of the movements in share capital of the Company during FY22 are set out in note 16 to the consolidated financial statements.

Directors of subsidiaries

The names of Directors who have served on the Boards of the subsidiaries of the Company during FY22 are set out below:

Ai Ning Tan James Nicholson Paul Adams Andrew McGregor Jan Palek Paul Heslop Aurelien Noel Jason Harris Peck Khim Yap Bart Manteleers Jie Yang Peter Ralston Béla Kakuk John Conway Philip Turpin Charles Crossland John Morton Dakin Philippe Arfi Chi Wing Lin Jorn Bruyninckx Philippe Van der Beken Christof Prange Joseph Salvaggio Robert Nicholson Chun Kit Fung Karl Dockx Robert Reed David Anthony Hinchey Kelly Moore Shiling Li Dirk Mölter Kim Swee Seah Simone Weyermanns Dominique Prince Kristoffer Allan Harvey Song Yun Edwin Chong Chee Wai Lien Standaert Stephen Young Francisco Palacio Luke Caffey Tai Yit Chan Garcia Cuenca Ignacio Mak Chun Kit Jacky Tan Ai Ning Gareth Owen Marwan Bustani Tang Chenying Godfrey Abel Matthew Macdonald Tim Cruypelans Goh Hoi Lai Matthew Phillips Timothy Downes Hans Ongena Michael O'Sullivan Timour Wielemans Henry Kelly Michael Woodford Wai Ho Stephen Lee Hugh Baggie Nicholas Kurtis Wang Chen Izak ten Hove Nick Taunt Xiaoyin Zhang James Cornell Nigel Allsop

Directors

The Directors during the year and up to the date of this report were:

Stephen Paul Johns

David Jeremy Collins

Gregory Leith Goodman (alternate Director to Stephen Paul Johns)

Daniel Cornelius D. Peeters.

155

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.

About Goodman Group

Goodman Group is a global industrial property specialist group whose strategy is to maximise returns by providing essential infrastructure for the digital economy.

- Urbanisation, globalisation, demographics, digitalisation, sustainability and an increased focus on health and wellbeing: all have changed the way people live, work and consume. These structural shifts have increased the importance of industrial properties in the global supply chain
- Globally, the logistics and warehousing sectors are now considered essential infrastructure for digital economies, and key to the efficient distribution of products to consumers. As industrial property specialists, Goodman Group’s long-term strategy is built on supporting its customers to deliver in the most sustainable and efficient way possible. Goodman focuses on key markets and concentrates our portfolio where the most value can be created for customers and investors.

Goodman Group’s integrated business model

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Goodman Group’s Own Develop Manage model focuses the business on its customers’ current and future needs.

The Consolidated Entity owns and maintains high-quality properties close to consumers, develops sustainable properties, and manages its global investment portfolio to a high standard. The Consolidated Entity works alongside its capital partners, which include sovereign wealth, pension and large multi-manager funds. In each market, the Consolidated Entity has dedicated local teams which take care of property asset and investment management, delivering a high level of customer service.

156

ANNUAL REPORT 2022

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 business environment is changing, with increased interest rates, inflation, geopolitical risks and the ongoing impacts of the COVID-19 pandemic; however, the long-term structural drivers of demand have not changed. Tight supply and customer demand continues to support leasing across the stabilised portfolio and developments, with high occupancy in the Consolidated Entity’s markets. The Consolidated Entity’s customers continue to intensify warehousing in urban locations and increase automation and technology to optimise delivery and improve supply chain efficiency.

The Consolidated Entity has continued to successfully execute its strategy, which is providing customers with essential locations and offering productivity improvements to help absorb cost and time. It is also delivering the Consolidated Entity and its Partnerships a portfolio of assets at consistently strong risk adjusted returns. This is reflected in both the property investment earnings and the management earnings.

Development activity has again been a significant contributor to the operating performance. Construction costs are increasing globally. However, by delivering increased productivity and value from the project sites and development execution, the Consolidated Entity has maintained strong returns.

In assessing the Consolidated Entity’s underlying performance, the Directors consider operating profit as well as statutory profit. Operating profit 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.

The Consolidated Entity has delivered a strong operating performance for FY22, with operating profit increasing by 21.5% to $607.4 million, compared to $499.8 million for the prior year.

Analysis of operating profit	2022 $M	2021 $M
Property investment earnings	82.1	46.1
Management earnings	170.6	146.3
Development earnings	689.1	528.0
	941.8	720.4
Operating expenses	(207.9) 733.9	(199.6) 520.8
Net finance expense (operating)1 Income tax expense	(12.4) (114.1)	(8.8) (12.2)
Operating profit	607.4	499.8

Property investment activities

Property investment earnings in FY22 of $82.1 million were higher than the prior year and comprised 9% of the total earnings (2021: 6%).

	2022	2021
Net property income	$M 40.9	$M 13.4
Partnerships	41.2	32.7
Property investment earnings	82.1	46.1
Key metrics	2022	2021
Weighted average capitalisation rate (%)	4.7	4.9
Weighted average lease expiry (years)	4.2	3.8
Occupancy (%)	97.6	98.0

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 (JV) (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 locations where available space remains restricted, driven by significant customer demand, combined with barriers to entry and limited supply. Consequently, the Consolidated Entity is seeing significant market rental growth across its locations. This is supporting strong underlying investment fundamentals and cash flows in the Consolidated Entity’s portfolio.

The net income from the Consolidated Entity’s directly held properties increased by 205% to $40.9 million compared to the prior year as a result of acquisitions in Asia in both the current and prior year and rental income earned from completed developments (held in inventories, mainly in Continental Europe) prior to their disposal.

The Consolidated Entity’s share of investment earnings from its cornerstone holdings in the Partnerships increased by 26% to $41.2 million compared to the prior year. This was due to the stabilisation of developments in FY21 and FY22, as the Consolidated Entity has continued to invest in the Partnerships to fund its share of those developments and rental income growth from existing stabilised properties.

During FY22, the Consolidated Entity’s share of property valuations from the stabilised portfolios was $269.8 million. Valuation gains occurred in all regions and while capitalisation rate compression was the main driver, especially in the first half of the year, both rental income growth and development completions have provided an increasing contribution. At 30 June 2022, the weighted average capitalisation rate for the Consolidated Entity’s portfolios was 4.7%, compared to 4.9% at the start of FY22.

Net finance expense (operating) excludes derivative mark to market and unrealised foreign exchange movements.

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GOODMAN GROUP

Report of the Directors Business review (continued)

Management activities

Management earnings in FY22 of $170.6 million increased by 17% compared to the prior year and comprised 18% of total operating earnings (2021: 20%). The main driver of management earnings was the increase in external AUM. A reduction in performance related revenue was the result of the timing of calculation and recognition of fees.

	2022	2021
	$M	$M
Management earnings	170.6	146.3

Key metrics Number of Partnerships External AUM ($B)	2022 8 27.8	2021 7 23.0

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.

Development activities

In FY22, development earnings were $689.1 million, an increase of 31% on the prior year, and comprised 73% of total operating earnings (2021: 73%).

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 JVs, less development expenses. Development income includes development management fees and 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 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 FY22 was undertaken by or for the Partnerships and third parties.

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 increased as a result of increased borrowings on the Consolidated Entity’s loans. The increase in tax expense is primarily a function of changes to the origin and nature of revenue arising from management and development activities.

Development activity continued to be strong with work in progress of $7.1 billion across 36 projects at 30 June 2022. The increase in the Consolidated Entity’s development earnings was primarily volume driven.

	2022	2021
	$M	$M
Net development income	645.7	487.7
Partnerships	43.4	40.3
Development earnings	689.1	528.0

Key metrics	2022	2021
Work in progress ($B)	7.1	5.8
Work in progress
(million square metres)	2.3	2.0
Work in progress
(number of developments)	36	37
Developments completed during
the year (number of developments)	23	18

158

ANNUAL REPORT 2022

Statement of financial position

Cash flows

Statement of fnancial position	Cash fows
2022 $M 2021 $M Stabilised investment properties 336.8 163.9 Cornerstone investments in Partnerships 1,845.6 1,470.0 Development holdings 1,552.6 1,140.9 Cash 357.5 358.4 Other assets 1,190.8 1,233.0 Total assets 5,283.3 4,366.2 Loans from related parties 1,941.0 1,891.1 Other liabilities 756.2 705.2 Total liabilities 2,697.2 2,596.3 Non-controlling interests 28.2 22.2 Net assets attributable to Shareholders 2,557.9 1,747.7	2022 $M 2021 $M
	Operating cash flows 216.5 473.6 Investing cash flows (234.8) (271.2) Financing cash flows 12.5 (200.5)
	Net (decrease)/increase in cash held (5.8) 1.9
	Effect of exchange rate fluctuations on cash held 4.9 (11.7) Cash and cash equivalents at the beginning of the year 358.4 368.2
	Cash and cash equivalents at the end of the year 357.5 358.4
	The decrease in the net operating cash fows is primarily due to more development disposals in Continental Europe in the prior year and the increased investment into new development opportunities

The decrease in the net operating cash flows is primarily due to more development disposals in Continental Europe in the prior year and the increased investment into new development opportunities.

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. Financing cash flows principally relate to the net proceeds from loans with related parties and payment of the dividend in August 2021.

The stabilised investment properties relate to acquisitions in Asia.

The carrying value of cornerstone investments in Partnerships has increased by $375.6 million to $1,845.6 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 $411.7 million to $1,552.6 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).

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Report of the Directors Business review (continued)

Outlook

The Consolidated Entity has developed significant expertise and a deliberate strategy to target high barrier to entry markets and to undertake larger, more complex projects over longer periods of time, providing our customers access to facilities where they are scarce and has positioned the Consolidated Entity well for future growth.

Demand is currently exceeding supply in the Consolidated Entity’s markets, supporting the Consolidated Entity’s development-led growth strategy and producing well located assets for the Consolidated Entity and its Partnerships. In addition to strategic site acquisitions, the opportunities for regeneration of existing assets support our future development workbook by providing value add opportunities, while reducing the Consolidated Entity’s environmental impact. The Consolidated Entity’s production rate, depth of customer demand and strong margins are supporting the outlook for development earnings into FY23.

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 outlook for property investment and management earnings remains strong, as the customer demand and supply constraints in the Consolidated Entity’s markets provide support for both rental growth and a high level of occupancy. Investment and management earnings will also benefit from the completion of ongoing developments. Development completions and market rental growth are also expected to support growth in AUM.

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.

160

ANNUAL REPORT 2022

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 deliver its strategy, or an + Low gearing, ample liquidity and appropriate hedging and duration
management acute liquidity or solvency crisis, financial loss or financial distress as to absorb market shocks
(debt, equity a result of a failure in the design or execution of its capital + Appropriate hedging quantities and duration in accordance with
and cash flow) management and financing strategy. Goodman Group’s 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
+ Insurance program including project specific insurance.
Economic and Global economic conditions and government policies present both + Global diversification of Goodman Group’s property portfolios
geopolitical risks and opportunities in the property and financial markets and the + Focus on core property portfolios in key urban market locations
environment business of customers, which can impact the delivery of Goodman
+ Focus on cost management
Group’s strategy and its financial performance.
+ Prudent capital management with low gearing, appropriate hedging
A continued increase in geopolitical tension between countries
and significant available liquidity to allow for potential market shocks
could have potential consequences on its people, operations and
capital partners. + Co-investment with local capital partners
In the near term, market conditions are likely to be volatile and the + Long-term leases with review mechanisms.
risks associated with rising inflation, interest rates and slowing
economic activity are elevated.
Governance, Non-compliance with legislation, regulators, or internal policies, or to + Independent governance structures
regulation and understand and respond to changes in the political and regulatory + Core values and attitudes, with an embedded compliance culture
compliance environment (including taxation) could result in legal action, financial focused on best practice
consequences and damage its standing and reputation with stakeholders.
+ Dedicated Chief Risk Officer and Compliance Officer
+ Review of transactions by the Goodman Group Investment Committee
+ Verification and sign off process for all public announcements
+ Comprehensive insurance program, covering property, liability,
directors and officers and professional indemnity.
People Failure to recruit, develop, support, and retain staff with the right skills + Succession planning for senior executives
and culture and experience may result in significant underperformance or impact + Competitive remuneration structures, including the Goodman
the effectiveness of operations and decision making, in turn impacting Group Long Term Incentive Plan (LTIP)
business performance.
+ Performance management and review
+ Goodman Group values program
+ Learning, development and engagement programs
+ Staff engagement through team strategy days, town halls and the
(good) life program.
Development Development risks may arise from location, site complexity, + Review of development projects by the Goodman Group
planning and permitting, infrastructure, size, duration along with Investment Committee
general contractor capability. + Goodman Group defined design specifications, which cover
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 and reviewing contractor liquidity
+ Internal audit reviews
+ Insurance program, both Goodman Group and general contractor,
including project specific insurance
+ Ongoing monitoring and reporting of work in progress and levels
of speculative development, with Goodman Group Board oversight
including limits with respect to speculative development and higher
development risk provisions
+ Capital partnering development projects.
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GOODMAN GROUP

Report of the Directors

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Risk area Mitigation
Disruption, The longer-term risk that an inability to understand and respond + Key urban market strategy – urban, infill locations support
changes in effectively to changes in the competitive landscape and customer value re-usability of property
demand and chain could result in business model disruption and asset obsolescence, + Adaptable and re-usable building design – ease to reconfigure
obsolescence including the perception of obsolescence in the short term. for another customer
+ Geographic diversification
+ 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
+ Investment in innovation and technology strategies.
Environmental Failure to deliver on Goodman Group’s sustainability leadership + Corporate Responsibility and Sustainability policy
sustainability and strategy and ambitions may lead to a negative impact on Goodman + 2030 Sustainability Strategy including the assessment of
climate change Group’s reputation, ability to raise capital and a disruption to individual assets to improve resilience and implementation
operations and stranded assets. of sustainability initiatives
+ 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
+ Adoption of the Task Force on Climate-Related Financial
Disclosures recommendations as a framework for climate risks.
Asset and Inability to execute asset planning and management strategies, + Key urban market strategy – urban, infill locations where customer
portfolio including leasing risk exposures, can reduce returns from Goodman demand is strongest
Group’s portfolios. + Diversification of customer base and lease expiries
+ 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 partners, supply chain, + Diversification of customer base and lease expiries
of counterparties customers and markets, may limit growth and sustainability opportunities. + Diversification of capital partners and Partnership expiries
and markets
+ Contractor pre-selection and tendering
+ Independence governance structure.
Information and Maintaining security (including cyber security) of IT environment + Reporting of risks and management activity
data security and data, ensuring continuity of IT infrastructure and applications + Proactive monitoring, review and testing of infrastructure
to support sustainability and growth and prevent operational,
+ Disaster recovery and business continuity planning and testing
regulatory, financial and reputational impacts.
+ Benchmarked strategy for delivery of security information
technology infrastructure and systems
+ Training and awareness program and other assurance activities
for monitoring and improvement.
Infectious disease There continues to be significant uncertainty associated with the + Protect and support Goodman Group’s people
pandemic COVID-19 pandemic, with mutations of the virus and significant outbreaks + Global diversification of Goodman Group’s property portfolios
continuing to occur globally. The approach in enabling the world to
+ Diversification of customer base
stabilise and transition to a “normal” footing is still to be understood, while
“Zero COVID” policies by some nations is having both economic and + In-house property management team enabling flexibility to
supply chain issues globally. support and respond to customers
+ Capital model, strong balance sheet with adequate liquidity available.
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ANNUAL REPORT 2022

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:

	Directly held	Indirectly held
Directors	securities	securities	Total
Stephen Paul Johns	–	41,143	41,143
David Jeremy Collins	5,000	–	5,000
Gregory Leith Goodman	874,873	37,729,673	38,604,546
Daniel Cornelius Peeters	–	2,199,797	2,199,797

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 2022 are as follows:

	Number of	Number of	Number of	Number of	Number of
	performance	performance	performance	performance	performance	Date	Financial years
	rights at the start	rights granted	rights vested	rights forfeited	rights at the end	performance	in which
	of the year	during the year	during the year	during the year	of the year	rights granted	grant vests
Gregory Leith Goodman	–	1,560,000	–	–	1,560,000	18 Nov 21	2026 – 2032
	950,000	–	–	–	950,000	19 Nov 20	2024 – 2026
	900,000	–	–	–	900,000	20 Nov 19	2023 – 2025
	1,600,000	–	(533,333)	–	1,066,667	15 Nov 18	2022 – 2024
	1,066,667	–	(533,333)	–	533,334	16 Nov 17	2021 – 2023
	800,000	–	(800,000)	–	–	30 Sep 16	2020 – 2022
Daniel Cornelius Peeters	–	625,000	–	–	625,000	18 Nov 21	2026 – 2032
	380,000	–	–	–	380,000	19 Nov 20	2024 – 2026
	350,000	–	–	–	350,000	20 Nov 19	2023 – 2025
	550,000	–	(183,333)	–	366,667	15 Nov 18	2022 – 2024
	366,667	–	(183,333)	–	183,334	16 Nov 17	2021 – 2023
	200,000	–	(200,000)	–	–	30 Sep 16	2020 – 2022

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.

163

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Report of the Directors

Auditors

KPMG retire and, being eligible, offer themselves for re-appointment. 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 2022.

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 16 August 2022

164

ANNUAL REPORT 2022

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 167 to 206, which comprise the consolidated statement of financial position as at 30 June 2022, 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 2022 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.

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.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

165

GOODMAN GROUP

Independent Auditor's Report (continued)

To the members of Goodman Logistics (HK) Limited (incorporated in Hong Kong with limited liability)

- 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.

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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Certified Public Accountants 8th Floor, Prince’s Building 10 Chater Road Central, Hong Kong 16 August 2022

166

ANNUAL REPORT 2022

Consolidated statement of financial position as at 30 June 2022

(expressed in Australian dollars)

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

2022 2021
Note
$M $M
Current assets
Cash and cash equivalents 17(a) 357.5 358.4
Inventories 6(b) 175.2 106.4
Receivables 7 115.6 744.3
Contract assets 8 60.5 55.7
Current tax receivables 4(c) 0.6 4.2
Other assets 3.2 12.9
Total current assets 712.6 1,281.9
Non-current assets
Inventories 6(b) 1,377.4 1,034.5
Investment properties 6(b) 336.8 163.9
Investments accounted for using the equity method 6(b) 1,845.6 1,470.0
Receivables 7 789.6 276.2
Other financial assets 13 174.8 102.6
Deferred tax assets 4(d) 18.8 15.2
Property, plant and equipment 24.0 17.1
Other assets 3.7 4.8
Total non-current assets 4,570.7 3,084.3
Total assets 5,283.3 4,366.2
Current liabilities
Payables 9 274.6 263.0
Loans from related parties 21(c) 125.4 806.7
Current tax payables 4(c) 32.5 48.9
Employee benefits 49.0 45.1
Dividend payable 15 46.7 110.8
Other financial liabilities 13 45.4 –
Total current liabilities 573.6 1,274.5
Non-current liabilities
Payables 9 93.2 124.7
Interest bearing liabilities 12 9.0 –
Loans from related parties 21(c) 1,815.6 1,084.4
Deferred tax liabilities 4(d) 50.5 1.6
Employee benefits 13.9 22.0
Other financial liabilities 13 141.4 89.1
Total non-current liabilities 2,123.6 1,321.8
Total liabilities 2,697.2 2,596.3
Net assets 2,586.1 1,769.9
Equity attributable to Shareholders
Share capital 16(a) 873.0 791.9
Reserves 18 (605.1) (629.0)
Retained earnings 19 2,290.0 1,584.8
Total equity attributable to Shareholders 2,557.9 1,747.7
Non-controlling interests 28.2 22.2
Total equity 2,586.1 1,769.9
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The notes on pages 171 to 206 form part of these consolidated financial statements.

Approved and authorised for issue by the Board of Directors on 16 August 2022.

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Stephen Paul Johns Director

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David Jeremy Collins Director

167

GOODMAN GROUP

Consolidated statement of comprehensive income

for the year ended 30 June 2022

(expressed in Australian dollars)

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

2022 2021
Note $M $M
Revenue
Gross property income 45.9 15.6
Management income 2 193.7 188.7
Development income 2 1,075.0 1,171.7
Dividends from investments 0.2 0.8
1,314.8 1,376.8
Property and development expenses
Property expenses (5.0) (2.2)
Development expenses 2 (433.5) (684.7)
(438.5) (686.9)
Other income
Net loss from fair value adjustments on investment properties 6(e) (0.3) –
Net gain/(loss) on disposal of investment properties 3.8 (1.9)
Share of net results of equity accounted investments 6(f) 345.3 164.7
Net gain on disposal of equity accounted investments 0.2 1.8
349.0 164.6
Other expenses
Employee expenses (170.5) (166.6)
Share based payments expense 16(b) (94.0) (124.0)
Administrative and other expenses (37.4) (33.0)
Transaction management fees (23.1) (42.4)
(325.0) (366.0)
Profit before interest and income tax 900.3 488.5
Net finance expense
Finance income 11 48.0 21.8
Finance expense 11 (71.4) (82.9)
Net finance expense (23.4) (61.1)
Profit before income tax 876.9 427.4
Income tax expense 4 (a) (114.1) (12.2)
Profit for the year 762.8 415.2
Profit for the year attributable to:
Shareholders 19 751.9 408.4
Non-controlling interests 10.9 6.8
Profit for the year 762.8 415.2
Other comprehensive income/(loss)
Items that will not be reclassified to profit or loss
Increase due to revaluation of other financial assets 9.4 7.6
Actuarial gains/(losses) on defined benefit retirement schemes (net of tax) 5.6 (6.0)
15.0 1.6
Item that may be reclassified subsequently to profit or loss
Effect of foreign currency translation 0.1 (21.5)
0.1 (21.5)
Other comprehensive income/(loss) for the year, net of tax 15.1 (19.9)
Total comprehensive income for the year 777.9 395.3
Total comprehensive income for the year attributable to:
Shareholders 767.8 389.0
Non-controlling interests 10.1 6.3
Total comprehensive income for the year 777.9 395.3
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The notes on pages 171 to 206 form part of these consolidated financial statements.

168

ANNUAL REPORT 2022

Consolidated statement of changes in equity for the year ended 30 June 2022

Year ended 30 June 2021

(expressed in Australian dollars)

Year ended 30 June 2021 (expressed in Australian dollars)
			Attributable to Shareholders
		Share		Retained		Non–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/(loss) for the year
Profit for the year	19	–	–	408.4	408.4	6.8	415.2
Other comprehensive loss 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 Dividends declared/paid Issue of shares to employees of Goodman Group Issue of ordinary shares Equity settled share based payments transactions Deferred tax associated with the LTIP Acquisition of special purpose development entity with non–controlling interests	15 16(a) 16(a) 18(c) 18(c)	– 48.6 11.3 – – –	– – – 6.8 8.1 –	(110.8) – – – – –	(110.8) 48.6 11.3 6.8 8.1 –	(9.0) – – – – 4.9	(119.8) 48.6 11.3 6.8 8.1 4.9
Balance at 30 June 2021		791.9	(629.0)	1,584.8	1,747.7	22.2	1,769.9

Year ended 30 June 2022

(expressed in Australian dollars)

Year ended 30 June 2022 (expressed in Australian dollars)
			Attributable to Shareholders
		Share		Retained		Non–controlling	Total
		capital	Reserves	earnings	Total	interests	equity
	Note	$M	$M	$M	$M	$M	$M
Balance at 1 July 2021		791.9	(629.0)	1,584.8	1,747.7	22.2	1,769.9
Total comprehensive
income/(loss) for the year
Profit for the year	19	–	–	751.9	751.9	10.9	762.8
Other comprehensive		–	15.9	–	15.9	(0.8)	15.1
income/(loss) for the year
Total comprehensive income for the year, net of income tax		–	15.9	751.9	767.8	10.1	777.9
Contributions by and distributions to owners Dividends declared/paid Issue of shares to employees of Goodman Group Issue of treasury shares Issue of ordinary shares Equity settled share based payments transactions Deferred tax associated with the LTIP Acquisition of special purpose development entity with non–controlling interests	15 16(a) 16(a) 16(a) 18(c) 18(c)	– 57.4 4.8 18.9 – – –	– – – – 12.2 (4.2) –	(46.7) – – – – – –	(46.7) 57.4 4.8 18.9 12.2 (4.2) –	(5.5) – – – – – 1.4	(52.2) 57.4 4.8 18.9 12.2 (4.2) 1.4
Balance at 30 June 2022		873.0	(605.1)	2,290.0	2,557.9	28.2	2,586.1

The notes on pages 171 to 206 form part of these consolidated financial statements.

169

GOODMAN GROUP

Consolidated cash flow statement

for the year ended 30 June 2022

(expressed in Australian dollars)
	2022	2021
Note	$M	$M
Cash flows from operating activities
Property income received	42.7	14.7
Cash receipts from development activities	1,036.2	1,155.0
Other cash receipts from services provided	300.0	251.7
Property expenses paid	(5.9)	(2.0)
Payments for development activities	(886.8)	(821.6)
Other cash payments in the course of operations	(262.6)	(204.8)
Dividends/distributions received	66.1	81.7
Interest received	15.5	16.1
Finance costs paid	(1.0)	(1.0)
Net income taxes paid	(87.7)	(16.2)
Net cash provided by operating activities 17(b)	216.5	473.6
Cash flows from investing activities Net proceeds from disposal of investment properties Payments for investment properties Net proceeds from disposal of equity accounted investments Return of capital from equity accounted investments Payments for equity investments Payments for plant and equipment	272.5 (413.0) 4.4 166.3 (263.3) (1.7)	5.4 (173.0) – 139.8 (243.1) (0.3)
Net cash used in investing activities	(234.8)	(271.2)
Cash flows from financing activities Net proceeds from issue of ordinary shares Proceeds from borrowings Net proceeds from/(repayments of) loans with related parties Payments on derivative financial instruments Dividends paid to Shareholders Dividends paid to non–controlling interests Payments of lease liabilities Capital contributed by non–controlling interests	18.9 9.0 107.5 – (110.8) (5.5) (8.0) 1.4	11.3 – (83.7) (42.2) (73.1) (9.0) (8.7) 4.9
Net cash provided by/(used in) financing activities	12.5	(200.5)
Net (decrease)/increase in cash held	(5.8)	1.9
Cash and cash equivalents at the beginning of the year Effect of exchange rate fluctuations on cash held	358.4 4.9	368.2 (11.7)
Cash and cash equivalents at the end of the year 17(a)	357.5	358.4

The notes on pages 171 to 206 form part of these consolidated financial statements.

170

ANNUAL REPORT 2022

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 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.

Translation of controlled foreign operations

The assets and liabilities of controlled 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 controlled foreign operation are recognised in the foreign currency translation reserve on consolidation.

Exchange rates used

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

	Weighted	average	As at 30 June	As at 30 June
Australian dollars (AUD) to Hong Kong dollars (HKD)	2022 5.6626	2021 5.7958	2022 5.4241	2021 5.8222
Chinese yuan (CNY)	4.6840	4.9419	4.6154	4.8412
Japanese yen (JPY)	85.1512	79.6101	93.7770	83.2780
Euros (EUR)	0.6442	0.6262	0.6594	0.6327
British pounds sterling (GBP)	0.5456	0.5546	0.5676	0.5432
United States dollars (USD)	0.7255	0.7472	0.6912	0.7497

(e) Changes in accounting policies

(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.

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.

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative risk-free rates (referred to as IBOR reform). The Consolidated Entity has adopted Interest Rate Benchmark Reform – Phase 2 (Amendments to International Financial Reporting Standard (IFRS) 9, International Accounting Standard (IAS) 39, IFRS 7, IFRS 4 and IFRS 16) from 1 July 2021. These amendments provide reliefs relating to modifications of financial instruments and lease contracts or hedging relationships triggered by a replacement of a benchmark interest rate in a contract with a new alternative benchmark rate.

The overall impact of the IBOR reform is not significant in the context of the Consolidated Entity’s financial position and performance.

See note 14 for related disclosures about risks, financial assets and financial liabilities indexed to IBORs.

(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.

171

GOODMAN GROUP

Notes to the consolidated financial statements Basis of preparation (continued)

(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.

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.

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

172

ANNUAL REPORT 2022

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, when 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.

Net gain/(loss) 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 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.

Superannuation

Defined contribution retirement plans

Obligations for contributions to defined contribution retirement plans are recognised as an expense as incurred.

Defined benefit retirement schemes

173

GOODMAN GROUP

Notes to the consolidated financial statements

Results for the year (continued) 2 Profit before interest and income tax (continued)

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

	2022	2021
	$M	$M
Management services	162.7	135.1
Performance related income	31.0	53.6
Management income	193.7	188.7
Income from disposal of inventories Development income from fixed price development contracts Other development income, including development management1 Net gain on disposal of assets previously classified as held for sale Net gain on disposal of special purpose development entities, including JVs	747.4 114.6 169.6 – 43.4	809.8 98.5 131.1 132.3 –
Development income	1,075.0	1,171.7
Inventory cost of sales Other development expenses	(354.9) (78.6)	(619.4) (65.3)
Development expenses	(433.5)	(684.7)
Included in employee expenses are the following items: Salaries, wages and other benefits Contributions to defined contribution retirement plans	(169.1) (1.4)	(163.5) (3.1)
Employee expenses	(170.5)	(166.6)
Depreciation of plant and equipment	(8.7)	(9.6)
Auditor’s remuneration	(1.5)	(1.5)

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, $77.0 million (2021: $75.2 million) of such income was recognised.

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 non-cash items such as fair value adjustments and impairments, corporate expenses and share based remuneration. The assets allocated to each operating segment relate to the properties, which also include the investments in Partnerships, and the trade and other receivables associated with the operating activities, but exclude 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.

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ANNUAL REPORT 2022

Information about reportable segments

Information about reportable segments
	Asia		Continental Europe		United Kingdom		Total
	2022	2021	2022	2021	2022	2021	2022	2021
Statement of comprehensive income	$M	$M	$M	$M	$M	$M	$M	$M
External revenues
Gross property income	15.3	6.2	27.6	8.4	3.0	1.0	45.9	15.6
Management income	96.8	77.8	90.9	106.7	6.0	4.2	193.7	188.7
Development income	150.2	129.9	892.1	796.5	32.7	245.3	1,075.0	1,171.7
Dividends from investments	0.2	0.8	–	–	–	–	0.2	0.8
Total external revenues	262.5	214.7	1,010.6	911.6	41.7	250.5	1,314.8	1,376.8
Analysis of external revenues: Revenues 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) Dividends from investments	24.8 223.2 14.3 0.2	10.3 197.7 5.9 0.8	792.2 193.7 24.7 –	729.9 174.0 7.7 –	12.8 25.9 3.0 –	228.8 20.8 0.9 –	829.8 442.8 42.0 0.2	969.0 392.5 14.5 0.8
Total external revenues	262.5	214.7	1,010.6	911.6	41.7	250.5	1,314.8	1,376.8
Reportable segment
profit before income tax	252.5	205.4	505.2	376.5	42.8	20.4	800.5	602.3
Other key components of financial
performance included in reportable
segment profit before income tax
Share of net results of equity
accounted investments in Partnerships
(before fair value adjustments)	67.2	60.4	7.6	6.5	9.8	6.1	84.6	73.0
Material non–cash items not
included in reportable segment
profit before income tax
Share of fair value adjustments
attributable to investment properties
in Partnerships	43.7	44.2	22.3	19.2	203.8	26.8	269.8	90.2
	Asia		Continental Europe		United Kingdom		Total
	2022	2021	2022	2021	2022	2021	2022	2021
Statement of financialposition	$M	$M	$M	$M	$M	$M	$M	$M
Reportable segment assets	1,971.9	1,573.6	1,312.4	1,030.2	957.2	752.2	4,241.5	3,356.0
Included in reportable
segment assets are:
Investments in Partnerships	1,000.8	908.0	164.2	154.0	680.6	408.0	1,845.6	1,470.0
Non–current assets	1,743.8	1,306.6	1,017.0	779.6	899.0	673.6	3,659.8	2,759.8
Additions to non–current assets include:
– Investment properties	181.3	138.4	–	–	243.6	25.8	424.9	164.2
– Investments accounted for	99.9	57.1	1.3	10.0	162.1	178.8	263.3	245.9
usingthe equitymethod
Reportable segment liabilities	160.8	137.0	124.1	106.3	113.5	85.8	398.4	329.1

175

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

==> picture [532 x 350] intentionally omitted <==

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

2022 2021
Note $M $M
Revenue
Total revenue for reportable segments 1,314.8 1,376.8
Consolidated revenues 1,314.8 1,376.8
Profit or loss
Total profit before income tax for reportable segments 800.5 602.3
Corporate expenses not allocated to reportable segments (66.6) (81.5)
733.9 520.8
Valuation and other adjustments not included in reportable segment profit before income tax:
– Net loss from fair value adjustments on investment properties 6(e) (0.3) –
– Share of fair value adjustments attributable to investment properties in Partnerships 6(f) 269.8 90.2
– Share of fair value adjustments on derivative financial instruments in Partnerships 6(f) (9.1) 1.5
– Share based payments expense 16(b) (94.0) (124.0)
Net finance expense 11 (23.4) (61.1)
Consolidated profit before income tax 876.9 427.4
Assets
Total assets for reportable segments 4,241.5 3,356.0
Other unallocated amounts [1] 1,041.8 1,010.2
Consolidated total assets 5,283.3 4,366.2
Liabilities
Total liabilities for reportable segments 398.4 329.1
Other unallocated amounts [1] 2,298.8 2,267.2
Consolidated total liabilities 2,697.2 2,596.3
----- 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 2022

4 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 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

	2022	2021
	$M	$M
Current tax expense – Hong Kong profits tax
Current year	(14.2)	(15.1)
Changes in estimates related to prior years	1.9	1.6
	(12.3)	(13.5)
Current tax expense – overseas Current year Changes in estimates related to prior years	(59.8) 0.4	(9.2) 5.7
	(59.4)	(3.5)
Deferred tax (expense)/benefit Origination and reversal of temporary differences	(42.4)	4.8
	(42.4)	4.8
Total income tax expense	(114.1)	(12.2)

The provision for Hong Kong profits tax for the year ended 30 June 2022 is calculated at 16.5% (2021: 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.

(b) Reconciliation between accounting profit and income tax expense at applicable tax rates

	2022	2021
	$M	$M
Profit before income tax	876.9	427.4
Notional tax on proft before income tax, calculated at the rates applicable to profts in the countries concerned	(206.4)	(133.3)
(Increase)/decrease in income tax due to:
– Current year losses for which no deferred tax asset was recognised	(11.4)	(15.3)
– Non–assessable income	123.5	172.8
– Non–deductible expense	(45.4)	(47.1)
– Utilisation of previously unrecognised tax losses	23.3	3.4
– Changes in estimates related to prior years	2.3	7.3
Income tax expense	(114.1)	(12.2)

177

GOODMAN GROUP

Notes to the consolidated financial statements

Results for the year (continued) 4 Taxation (continued)

(c) Current tax receivables/payables

	2022	2021
	$M	$M
Net income tax payable at the beginning of the year	(44.7)	(47.4)
Decrease/(increase) in current net tax payable due to:
– Net income taxes paid	87.7	16.2
– Net income tax expense on current year’s profit	(74.0)	(24.3)
– Changes in estimates related to prior years	2.3	7.3
– Other	(3.2)	3.5
Net income tax payable at the end of the year	(31.9)	(44.7)
Current tax receivables Current tax payables	0.6 (32.5)	4.2 (48.9)
	(31.9)	(44.7)

(d) Deferred tax assets and liabilities

Deferred tax assets of $18.8 million (2021: $15.2 million) arising from performance rights awarded under the LTIP and deferred tax liabilities of $50.5 million (2021: $1.6 million) arising from investment properties were recognised in the consolidated statement of financial position.

Movements in deferred taxes recognised in expenses and equity are attributable to the following:

	2022	2021
	$M	$M
Deferred tax (expense)/benefit recognised in expenses
Investment properties – fair value adjustments	(54.6)	(0.1)
LTIP	7.8	5.6
Other items	4.4	(0.7)
Total deferred tax (expense)/benefit recognised in expenses	(42.4)	4.8
Deferred tax benefit/(expense) recognised in equity LTIP Other items	(4.2) –	8.1 (4.7)
Total deferred tax (expense)/benefit recognised in equity	(4.2)	3.4
Total deferred tax movements recognised in expenses and equity	(46.6)	8.2

Deferred tax assets of $190.0 million (2021: $236.6 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 $265.3 million (2021: $329.9 million) which has been dealt with in the financial statements of the Company.

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ANNUAL REPORT 2022

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

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

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 consolidated statement of financial position.

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.

179

GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

(b) Summary of the Consolidated Entity’s investment in property assets

		2022	2021
	Note	$M	$M
Directly held properties:
Inventories
Current	6(d)	175.2	106.4
Non-current	6(d)	1,377.4	1,034.5
		1,552.6	1,140.9
Investment properties Stabilised investment properties	6(e)	336.8	163.9
		336.8	163.9
Property held by Partnerships: Investments accounted for using the equity method – JVs	6(f)	1,845.6	1,470.0
		1,845.6	1,470.0

(c) Estimates and assumptions in determining property carrying values

Inventories

Investment properties

Stabilised investment properties

Approach to determination of fair value

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

- Function of the asset (distribution/warehouse or suburban office)
- Location of the asset (city, suburb or regional area)
- Carrying value of the asset (categorised by likely appeal to private (including syndicates), national and/or 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.

The approach to determination of fair value of investment properties is applied to both investment properties held directly and investment properties held in Partnerships.

180

ANNUAL REPORT 2022

Where a market segment is observed to be active, then external

independent valuations are performed for stabilised investment properties where there has been a combination of factors that are likely to have resulted in a material movement in valuation. The considerations include a greater than 10% movement in market rents, more than a 25 basis point movement in capitalisation rates, 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), significant capital expenditure, a change in use (or zoning), a development has reached completion/stabilisation of the asset or it has been two 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.

Market assessment

The investment market for industrial, logistics and warehousing properties has continued to be strong during FY22, despite the increased interest rates in the last quarter of FY22. At 30 June 2022, 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 DCF valuations.

The overall weighted average capitalisation rates for the divisional portfolios (including Partnerships) are set out in the table below:

	Total portfolio	weighted
	average capitalisation rate
	2022	2021
Segment	%	%
Asia	5.2	5.4
Continental Europe	3.4	3.7
United Kingdom	3.7	4.1

- Current contractual lease terms
- Current market rents
- Projected growth in market rents
- Expected and likely capital expenditures
- Projected letting up incentives provided to customers and vacant time on expiry of leases
- Discount rates – 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.

Sensitivity Ananlysis

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 at 30 June 2022 are most sensitive to the following inputs:

- Capitalisation rates
- Market rents
- Incentives provided to customers and/or vacant time on expiry of leases.

The directly held stabilised investment properties are in Asia. The average net market rent and weighted average capitalisation rate is summarised in the table below:

Valuation
technique	Significant unobservable inputs	2022
Income	Average net market rent	$258
capitalisation	(per square metre per annum)
	Capitalisation rate (weighted average)	4.2%

181

GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

The impacts on the Consolidated Entity’s financial position that would arise from the changes in capitalisation rates, market rents and incentives/vacant time 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
	A$M	$M
Book value at 30 June 2022	336.8	1,907.8
Changes in capitalisation rates:
Increase in capitalisation rates +50 basis points (bps)	(35.6)	(195.2)
Increase in capitalisation rates +25 bps	(18.8)	(103.0)
Decrease in capitalisation rates -25 bps	21.1	116.1
Decrease in capitalisation rates -50 bps	45.1	248.1
Changes in market rents:
Decrease in rents -5%	(14.0)	(86.0)
Decrease in rents -2.5%	(7.0)	(43.0)
Increase in rents +2.5%	7.0	43.0
Increase in rents +5%	14.0	86.0
Changes in incentives/vacant time2:
Increase in incentives/vacant time +3 months	(3.4)	(6.0)
Increase in incentives/vacant time +6 months	(6.8)	(12.0)

Reflects the Consolidated Entity’s share in Partnerships.
On assumed lease expiries over the next 12 months.

Investment properties under development

For the directly held investment properties under development, external independent valuations are generally not performed, but instead valuations are determined at each reporting date using the feasibility assessments supporting the developments. The end values of the developments in the feasibility studies are based on assumptions such as capitalisation rates, market rents, incentives provided to customers and vacant time that are consistent with those observed in the relevant market, adjusted for a profit and risk factor. The profit and risk factors are dependent on the function, location, size and current status of the developments and are 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 in the order of 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.

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ANNUAL REPORT 2022

(d) Inventories

	2022	2021
Current	$M	$M
Land and development properties	175.2	106.4
	175.2	106.4
Non–current Land and development properties Leasehold land and development properties	964.1 413.3	719.1 315.4
	1,377.4	1,034.5

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

	2022	2021
Carrying amount at the beginning of the year	$M 163.9	$M 7.2
Acquisitions	420.4	163.0
Capital expenditure	4.5	1.2
Disposals	(269.7)	(7.4)
Net loss from fair value adjustments	(0.3)	–
Effect of foreign currency translation	18.0	(0.1)
Carrying amount at the end of the year	336.8	163.9
Analysed by segment: Asia United Kingdom	336.8 –	137.7 26.2
	336.8	163.9

(f) Investments accounted for using the equity method

JVs

A 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 Partnerships are accounted for using the equity method. Under this method, the Consolidated Entity’s investment is initially recognised at cost. Subsequent to initial recognition, the consolidated financial statements include the Consolidated Entity’s share of the gains or losses and other comprehensive income of Partnerships until the date on which significant influence or joint control ceases.

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.

The Consolidated Entity’s principal Partnerships are set out below

Non-cancellable operating lease commitments receivable from investment property customers

	2022	2021
	$M	$M
Non–cancellable operating lease
commitments receivable:
Less than one year	8.6	4.1
One to two years	8.7	2.7
Two to three years	8.2	1.1
Three to four years	6.6	1.1
Four to five years	3.5	0.2
	35.6	9.2

183

GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 6 Property assets (continued)

		Consolidated	Consolidated			Consolidated	Consolidated
		share of net		Consolidated		investment
		results recognised		ownership interest		carrying amount
	Country of	2022	2021	2022	2021	2022	2021
Name	establishment	$M	$M	%	%	$M	$M
Property investment and development
Goodman China Logistics Partnership (GCLP)	Cayman Islands	56.8	65.2	20.0	20.0	918.0	832.7
Goodman UK Partnership (GUKP)1	United Kingdom	213.4	32.9	35.3	33.3	676.3	404.0
Other JVs		75.1	66.6			251.3	233.3
		345.3	164.7			1,845.6	1,470.0

The consolidated ownership interest in GUKP reflected the weighted average ownership in GUKP, GUKP II and GUKP III.

The Consolidated Entity’s property investment 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:

	2022	2021
Movements in carrying amount of investments in JVs	$M	$M
Carrying amount at the beginning of the year	1,470.0	1,276.2
Share of net results after tax (before fair value adjustments)	84.6	73.0
Share of fair value adjustments attributable to investment properties after tax	269.8	90.2
Share of fair value adjustments on derivative financial instruments	(9.1)	1.5
Share of net results	345.3	164.7
Share of movements in reserves Acquisitions Disposals Capital return Dividends/distributions received and receivable Effect of foreign currency translation	7.2 263.3 (3.4) (166.3) (65.8) (4.7)	3.1 245.9 – (143.2) (76.4) (0.3)
Carrying amount at the end of the year	1,845.6	1,470.0

184

ANNUAL REPORT 2022

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.

		GCLP		GUKP
	2022	2021	2022	2021
	$M	$M	$M	$M
Summarised statement of financial position
Current assets
Cash and cash equivalents	427.4	281.3	41.1	43.4
Other current assets	148.3	84.4	12.9	1,490.3
Total current assets	575.7	365.7	54.0	1,533.7
Total non–current assets	6,303.3	5,537.5	2,421.8	–
Current liabilities Financial liabilities (excluding trade payables and other provisions) Other current liabilities	70.6 2,870.0	89.6 2,707.0	– 24.7	– 36.1
Total current liabilities	2,940.6	2,796.6	24.7	36.1
Non–current liabilities Financial liabilities (excluding trade payables and other provisions) Other non–current liabilities	1,111.8 718.3	757.7 613.7	537.8 –	287.0 –
Total non–current liabilities	1,830.1	1,371.4	537.8	287.0
Net assets (100%)	2,108.3	1,735.2	1,913.3	1,210.6
Consolidated ownership interest (%) Consolidated share of net assets Shareholder loans1 Other items, including acquisition costs	20.0 421.7 492.9 3.4	20.0 347.0 482.3 3.4	35.3 676.0 – 0.3	33.3 403.1 – 0.9
Carrying amount of interest in JV	918.0	832.7	676.3	404.0
Summarised statement of comprehensive income
Revenue	215.0	193.6	39.8	28.5
Net finance expense	(20.3)	(19.2)	(1.0)	(3.7)
Income tax expense	(46.3)	(37.4)	(0.2)	–
Profit and total comprehensive income (100%)	320.0	313.4	575.6	98.7
Consolidated share of profit and total comprehensive income	64.0	67.8	213.4	32.9
Dividends/distributions received and receivable by the Consolidated Entity	7.3	6.1	3.9	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.

With respect to the Consolidated Entity’s other JVs, the total profit after tax and revaluations was $308.7 million and total other comprehensive income was $nil.

185

GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued)

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.

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

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.

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.

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ANNUAL REPORT 2022

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.

		2022	2021
	Note	$M	$M
Current
Trade receivables		5.0	12.4
Other receivables		70.2	94.0
Amounts due from related parties		37.1	75.3
Loans to related parties	21(c)	3.3	562.6
		115.6	744.3
Non–current Loans to related parties	21(c)	789.6	276.2
		789.6	276.2

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. All non-current receivables of the Consolidated Entity are due within five years from the 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 2022 and 2021. There are no significant overdue trade receivables at 30 June 2022.

Other receivables

At 30 June 2022, none of the other receivables balance was overdue or impaired (2021: $nil).

Amounts due from related parties

At 30 June 2022, none of the amounts due from related parties was overdue or impaired (2021: $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 (2021: $nil). The loans to related parties are unsecured.

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:

	2022	2021
	$M	$M
Current
Receivables from contracts
with customers, which are
included in trade receivables,
other receivables and amounts
due from related parties	42.7	87.2
Contract assets	60.5	55.7
Contract liabilities	4.6	4.8
Non–current
Contract liabilities	–	1.0

Significant changes in the contract assets and the contract liabilities balances during the year are set out below:

187

GOODMAN GROUP

Notes to the consolidated financial statements

Operating assets and liabilities (continued) 8 Contract assets (continued)

		2022		2021
	Contract	Contract	Contract	Contract
	assets	liabilities	assets	liabilities
	$M	$M	$M	$M
Balance at the beginning of the year	55.7	5.8	25.1	13.8
Revenue recognised that was included in the
contract liability balance at the beginning of the year	–	(1.4)	–	(7.7)
Transfers from contract assets to receivables	(380.4)	–	(70.5)	–
Increase due to changes in the measure of progress during the year	385.0	–	101.1	–
Effect of foreign currency translation	0.2	0.2	–	(0.3)
Balance at the end of the year	60.5	4.6	55.7	5.8
Current contract assets and liabilities Non–current contract liabilities	60.5 –	4.6 –	55.7 –	4.8 1.0
	60.5	4.6	55.7	5.8

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 (2021: $nil).

Details regarding the Consolidated Entity’s future rental income associated with existing lease agreements is included in note 6.

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.

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ANNUAL REPORT 2022

9 Payables

10 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.

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 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 Consolidated Entity derecognises a financial liability when the contractual obligations are discharged or cancelled or expire.

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 rate 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 the Consolidated Entity will be reasonably certain to exercise an extension or termination option.

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.

costs. Subsequent to initial recognition, these fnancial liabilities are measured at amortised cost using the efective interest rate method. Other fnancial liabilities comprise trade payables, other payables and accruals and contract and lease liabilities.	The right of use assets in respect of ofce buildings, motor vehicles and ofce equipment are depreciated using the straight-line method over the period of the lease. Right of use assets that meet the defnition of investment property are carried at fair value in accordance with note 6(a). Ground leases of development land that are classifed as inventories are
Note 2022 $M 2021 $M Current Trade payables 45.7 50.3 Other payables and accruals 216.1 201.2 Contract liabilities 8 4.6 4.8 Lease liabilities 10 8.2 6.7 274.6 263.0 Non–current Other payables and accruals 56.1 64.4 Contract liabilities 8 – 1.0 Lease liabilities 10 37.1 59.3 93.2 124.7	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. Information about leases for which the Consolidated Entity is a lessee is detailed below:
	2022 $M 2021 $M
	Right of use assets Inventories 413.3 315.5 Investment properties 336.8 137.7 Property, plant and equipment 18.1 12.1
	768.2 465.3
	Lease liabilities Current 8.2 6.7 Non–current 37.1 59.3
	45.3 66.0

The following were recognised during the year:

	2022	2021
	$M	$M
Additions to right of use assets	332.0	344.3
Depreciation of right of use assets	6.9	7.6
Interest expense on lease liabilities	0.4	0.5
Cash outflows on lease liabilities	8.0	8.7

189

GOODMAN GROUP

Notes to the consolidated financial statements

CAPITAL MANAGEMENT

11 Net finance expense

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.

		2022	2021
	Note	$M	$M
Finance income
Interest income on loans to:
– Related parties	21(c)	11.6	12.7
– Other parties		0.9	0.8
Interest income from derivatives		8.0	8.3
Foreign exchange gain		27.5	–
		48.0	21.8
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(c)	(41.8) (2.7) (38.5) – 11.6	(38.9) (1.1) (20.1) (32.2) 9.4
		(71.4)	(82.9)
Net fnance expense		(23.4)	(61.1)

12 Interest bearing liabilities

Interest bearing liabilities comprise bank loans. 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.

		2022	2021
	Note	$M	$M
Secured:
– Bank loans	12(a)	9.0 9.0	– –

(a) Bank loans, secured

As at 30 June 2022, the Consolidated Entity had the following secured bank facilities.

	Facility	Amounts
	limit	drawn
Facility maturity date	$M	$M
18 March 2034	28.2	9.0
Total at 30 June 2022	28.2	9.0
Total at 30 June 2021	–	–

(b) Finance facilities

	Facilities	Facilities
	available	utilised
	$M	$M
30 June 2022
Secured:
– Bank loans	28.2	9.0
	28.2	9.0
30 June 2021 Secured: – Bank loans	–	–
	–	–

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 (2021: 1.0% and 10.6% per annum).

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ANNUAL REPORT 2022

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

	2022	2021
	$M	$M
Derivative financial instruments	131.3	64.4
Investment in unlisted
securities, at fair value1	43.5	38.2
	174.8	102.6

Principally relates to the Consolidated Entity’s 10.0% (2021: 10.0%) interest in Goodman Japan Limited. During the year, a revaluation gain of $9.4 million was recognised in other comprehensive income (2021: $7.6 million gain). Refer to note 14(d) for assumptions made in measuring fair value of the unlisted securities.

Other financial liabilities

	2022 $M	2021 $M
Current
Derivative financial instruments	45.4	–
	45.4	–
Non–current Derivative financial instruments	141.4 141.4	89.1 89.1

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 the 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.

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).

191

GOODMAN GROUP

Notes to the consolidated financial statements

Capital management (continued)

14 Financial risk management (continued)

As at 30 June 2022, 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:

in foreign operations is set out below:
			2022			2021
			Weighted			Weighted
			average			average
	Amounts	Amounts	exchange	Amounts	Amounts	exchange
	payable	receivable	rate	payable	receivable	rate
	HKD’M	AUD’M	AUD/HKD	HKD’M	AUD’M	AUD/HKD
AUD receivable/HKDpayable	(1,150.0)	202.3	5.6948	(500.0)	83.9	5.9560
	EUR’M	AUD’M	AUD/EUR	EUR’M	AUD’M	AUD/EUR
AUD receivable/EURpayable	(775.0)	1,238.3	0.6263	(675.0)	1,086.7	0.6214
	GBP’M	AUD’M	AUD/GBP	GBP’M	AUD’M	AUD/GBP
AUD receivable/GBPpayable	(255.0)	474.4	0.5375	–	–	–
	USD’M	AUD’M	AUD/USD	USD’M	AUD’M	AUD/USD
AUD receivable/USDpayable	(450.0)	634.6	0.7092	(450.0)	634.6	0.7092
	JPY’M	AUD’M	AUD/JPY	JPY’M	AUD’M	AUD/JPY
AUD receivable/JPYpayable	(6,000.0)	71.9	83.4650	(6,000.0)	71.9	83.4650
	CNY’M	USD’M	USD/CNY	CNY’M	USD’M	USD/CNY
USD receivable/CNYpayable	(4,258.6)	539.6	7.9827	(4,545.2)	600.0	7.5753

Sensitivity analysis

Throughout the financial year, if the Australian dollar had been 5% (2021: 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 $48.8 million (2021: $36.7 million). If the Australian dollar had been 5% (2021: 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 $48.8 million (2021: $36.7 million).

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 derivatives (IRD) to manage certain cash flow risks associated with floating interest rates on its CCIRS.

As at 30 June 2022, the Consolidated Entity’s fixed and floating rate exposure (by principal) arising from its derivative financial instruments is set out below:

	Interest bearing	Impact of derivatives	Impact of derivatives	Net interest
	liabilities	CCIRS	IRD	rate exposure
	$M	$M	$M	$M
30 June 2022
Fixed rate liabilities	–	–	1,106.0	1,106.0
Floating rate liabilities	9.0	(69.9)	(1,106.0)	(1,166.9)
	9.0	(69.9)	–	(60.9)
30 June 2021 Fixed rate liabilities Floating rate liabilities	– –	– (52.1)	474.2 (474.2)	474.2 (526.3)
	–	(52.1)	–	(52.1)

As a result of the derivative financial instruments that existed at 30 June 2022, 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.

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ANNUAL REPORT 2022

	2022			2021
	Fixed		Weighted	Fixed		Weighted
	interest rate		average	interest rate		average
Number of years post	(by principal)	interest rate		(by principal)	interest rate
balance date	$M	% per annum		$M	% per annum
1 year	1,033.7		0.54	474.2		(0.47)
2 years	970.7		0.54	474.2		(0.47)
3 years	275.3		0.44	408.5		(0.45)
4 years	151.7		0.31	158.1		(0.31)
5 years	151.7		0.31	158.1		(0.31)

Sensitivity analysis

Based on the Consolidated Entity’s interest bearing borrowings at 30 June 2022, if interest rates on borrowings had been 100 bps per annum (2021: 100 bps per annum) higher/lower, with all other variables held constant, the Consolidated Entity’s profit attributable to Shareholders would have been $11.8 million lower/higher (2021: $10.8 million lower/higher).

Managing interest rate benchmark reform and associated risks

A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative risk-free rates (referred to as IBOR reform). The Consolidated Entity has exposure to IBORs through certain of its related party loans and its derivative instruments (IRD and CCIRS). The Consolidated Entity’s derivative instruments are governed by contracts based on the International Swaps and Derivatives Association (ISDA) master agreements.

The United Kingdom, Japan and the United States had announced plans to discontinue using London Interbank Offered Rate (LIBOR) by 31 December 2021. The alternative reference rate for sterling LIBOR is the Sterling Overnight Index Average rate, for Japanese yen LIBOR is the Tokyo Overnight Average Rate and for US dollar LIBOR is the Secured Overnight Financing Rate. Amendments to the Consolidated Entity’s financial instruments with contractual terms indexed to sterling LIBOR or Japanese yen LIBOR, such that they incorporate the new benchmark rates, were completed by 31 December 2021. Although US dollar LIBOR was planned to be discontinued by the end of 2021, in November 2020 the Intercontinental Exchange Benchmark Administration, the Financial Conduct Authority-regulated and authorised administrator of LIBOR, announced that it had started to consult on its intention to cease the publication of certain US dollar LIBORs after June 2023. It is still unclear when the announcement that will set a date for the termination of the publication of US dollar LIBOR will take place. Nevertheless, the Consolidated Entity has finished the process of implementing appropriate fallback provisions for all US dollar LIBOR indexed exposures.

For the Consolidated Entity’s other IBOR exposures, the transition to alternative risk-free rates has been deferred and/or extended and therefore no action has been or will be taken in that regard until such time as the alternative reference rates are defined and scheduled. It is expected that these will follow the conventions established in other markets and the Consolidated Entity will apply the same principles for those transitions as and when they become relevant.

The table below details the Consolidate Entity’s exposure at 30 June 2022 to significant IBORs subject to reform that have yet to transition to alternate benchmark rates:

	USD LIBOR
	Notional amount
	$M
IRD	400.0
CCIRS	900.0
	1,300.0

The exposure disclosed is for derivatives with contractual maturities after 30 June 2022. Derivatives exposure has been reported using the notional contract amount and where derivatives such as CCIRS have both a receiver and a payer leg with exposure to IBOR reform, the notional contract amount is disclosed for both legs.

193

GOODMAN GROUP

Notes to the consolidated financial statements

Capital management (continued)

14 Financial risk management (continued)

(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 5
	amount	cash fows	months	year(s)	years	years	years	years
	$M	$M	$M	$M	$M	$M	$M	$M
As at 30 June 2022
Non–derivative fnancial liabilities
Trade and other payables	317.9	317.9	261.8	56.1	–	–	–	–
(excluding contract liabilities)
Lease liabilities	45.3	94.9	8.4	10.9	73.3	0.9	0.6	0.8
Bank loans, secured	9.0	9.0	–	–	–	–	–	9.0
Loans from related parties	1,941.0	1,949.0	129.3	3.1	26.3	504.8	708.9	576.6
Total non–derivative fnancial liabilities	2,313.2	2,370.8	399.5	70.1	99.6	505.7	709.5	586.4
Derivative fnancial liabilities Net settled1: Gross settled2: (Inflow) Outflow	(39.6) 95.1 –	15.5 (459.5) 308.4	22.0 (78.4) 47.1	5.9 (95.3) 80.3	19.6 (88.8) 57.8	(20.5) (118.5) 53.2	(5.0) (72.8) 63.2	(6.5) (5.7) 6.8
Total derivative fnancial liabilities	55.5	(135.6)	(9.3)	(9.1)	(11.4)	(85.8)	(14.6)	(5.4)
As at 30 June 2021 Non–derivative fnancial liabilities Trade and other payables (excluding contract liabilities) Lease liabilities Loans from related parties	315.9 66.0 1,891.1	315.9 151.4 1,905.3	251.5 6.7 811.1	64.4 3.8 104.4	– 3.3 43.2	– 3.8 74.6	– 3.3 540.5	– 130.5 331.5
Total non–derivative fnancial liabilities	2,273.0	2,372.6	1,069.3	172.6	46.5	78.4	543.8	462.0
Derivative fnancial liabilities Net settled1: Gross settled2: (Inflow) Outflow	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

Net settled includes IRD and FEC.
Gross settled includes CCIRS.

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ANNUAL REPORT 2022

(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 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)
- 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 2022 and 2021.

(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 2022
Derivative financial assets	–	131.3	–	131.3
Investment in unlisted securities	–	–	43.5	43.5
	–	131.3	43.5	174.8
Derivative financial liabilities	–	186.8	–	186.8
	–	186.8	–	186.8
As at 30 June 2021 Derivative financial assets Investment in unlisted securities	– –	64.4 –	– 38.2	64.4 38.2
	–	64.4	38.2	102.6
Derivative financial liabilities	–	89.1	–	89.1
	–	89.1	–	89.1

There were no transfers between the levels during the year.

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GOODMAN GROUP

Notes to the consolidated financial statements

Capital management (continued) 14 Financial risk management (continued)

(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 IRD, 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:

		Inter–relationship between	Inter–relationship between
Type Valuation technique	Signifcant unobservable inputs	signifcant unobservable inputs and fair value measurement
Equity securities DCF: The valuation model was	+Assets under management	The estimated fair value would
+Goodman Japan Limited 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 value using a terminal growth rate and an appropriate discount rate.	of $6.1 billion in year fve +Average annual development of 82,500 square metres +Five–year terminal value growth rate of 0.63% +Risk adjusted post tax discount rate of 7.20% per annum.	increase/(decrease) if: +The level of assets under management, development activity and terminal value growth rate were higher/(lower) or +The risk adjusted discount rate were lower/(higher).
(iii) Reconciliation of Level 3 fair values
		2022	2021
		$M	$M
Carrying amount at the beginning of the year		38.2	34.3
Net change in fair value – included in other comprehensive	income/(loss)	9.4	7.6
Effect of foreign currency translation		(4.1)	(3.7)
Carrying amount at the end of the year		43.5	38.2

15 Dividends

During the financial year, the Company declared a final dividend of 2.5 cents per share amounting to $46.7 million. This dividend will be paid on 25 August 2022 In the prior year, the Company declared a final dividend of 6.0 cents per share amounting to $110.8 million. This was paid on 26 August 2021.

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ANNUAL REPORT 2022

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.

	2022	2021	2022	2021
	Number of shares		$M	$M
Share capital	1,868,222,609	1,847,429,255	873.6	792.5
Less: Accumulated issue costs			(0.6)	(0.6)
Total issued capital	1,868,222,609	1,847,429,255	873.0	791.9

			Share capital
Date	Details	Number of shares	$M
	Ordinary shares, issued and fully paid
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	Ordinary shares issued	3,577,778	11.3
30 Jun 2021	Balance at 30 June 2021	1,847,429,255	792.5
31 Aug 2021 31 Aug 2021 2 Sep 2021	Shares issued to employees of Goodman Group1 Treasury shares issued Ordinary shares issued	14,716,648 1,233,333 4,843,373	57.4 4.8 18.9
30 Jun 2022	Balance at 30 June 2022	1,868,222,609	873.6

During the year, the Company issued 14,716,648 (2021: 15,438,241) shares to employees of Goodman Group under the 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	Number of rights
	2022	2021
Outstanding at the beginning of the year	22,734,427	24,921,436
Issued	8,220,860	5,580,560
Vested	(6,208,554)	(5,952,229)
Forfeited	(130,552)	(1,815,340)
Outstanding at the end of the year	24,616,181	22,734,427
Exercisable at the end of the year	–	–

197

GOODMAN GROUP

Notes to the consolidated financial statements

Capital management (continued) 16 Share capital (continued)

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:

	10–year rights	10–year rights	5–year rights
	issued on	issued on	issued on
	18 Nov 2021	30 Sep2021	30 Sep2021
Fair value at measurement date ($)	20.16	17.22	17.87
Security price ($)	24.49	21.68	21.68
Exercise price ($)	–	–	–
Expected volatility (%)	25.45	25.36	28.54
Rights’ expected weighted average life (years)	6.8	6.9	3.9
Dividend/distribution yield per annum (%)	1.23	1.38	1.38
Average risk–free rate of interestper annum(%)	1.51	1.03	0.49

The model inputs for the remeasurement of the cash settled performance rights at 30 June 2022 included the following:

	10–year	5–year	5–year	5–year	5–year	5–year
	rights	rights	rights	rights	rights	rights
	issued in	issued In	issued In	issued In	issued In	issued In
	FY22	FY22	FY21	FY20	FY19	FY18
Fair value at measurement date ($)	13.61	14.12	15.02	17.49	17.64	17.79
Security price ($)	17.84	17.84	17.84	17.84	17.84	17.84
Exercise price ($)	–	–	–	–	–	–
Expected volatility (%)	27.44	29.24	28.56	32.65	36.02	44.77
Rights’ expected weighted average life (years)	6.2	3.2	2.2	1.2	0.7	0.2
Dividend/distribution yield per annum (%)	1.68	1.68	1.68	1.68	1.68	1.68
Average risk–free rate of interestper annum(%)	3.42	3.09	2.90	2.35	2.12	1.53

Share based payment expense included in profit or loss was as follows:

Share based payment expense included in proft or loss was as follows:
	2022	2021
	$M	$M
Share based payment expense:
– Equity settled	41.2	44.5
– Cash settled	52.8	79.5
	94.0	124.0

At 30 June 2022, a liability of $91.7 million (2021: $111.2 million) was recognised in relation to cash settled performance rights.

198

ANNUAL REPORT 2022

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:

	2022	2021
	$M	$M
Cash assets	357.5	358.4
	357.5	358.4

(b) Reconciliation of profit for the year to net cash provided by operating activities

	2022	2021
	$M	$M
Profit for the year	762.8	415.2
Items classified as investing activities
Net gain/(loss) on disposal of investment properties	(3.8)	1.9
Net gain on disposal of equity accounted investments	(0.2)	(1.8)
Non-cash items
Depreciation of plant and equipment	8.7	9.6
Share based payments expense	94.0	124.0
Net loss from fair value adjustments on investment properties	0.3	–
Share of net results of equity accounted investments	(345.3)	(164.7)
Net finance expense	23.4	61.1
Income tax expense	114.1	12.2
	654.0	457.5
Changes in assets and liabilities during the year: – Decrease/(increase) in receivables – Increase in inventories – Decrease/(increase) in other assets – (Decrease)/increase in payables – Increase in provisions (including employee benefits)	52.0 (447.8) 10.9 (45.8) 0.6	(39.5) (93.2) (1.5) 69.5 1.0
	223.9	393.8
Dividends/distributions received from equity accounted investments Net finance income received Net income taxes paid	65.8 14.5 (87.7)	80.9 15.1 (16.2)
Net cash provided by operating activities	216.5	473.6

199

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued) 17 Notes to the consolidated cash flow statement (continued)

(c) Reconciliation of liabilities arising from financing activities

(c) Reconciliation of liabilities arising from fnancing activities
				Loans
	Interest	Derivatives		(to)/from
	bearing	used for	Dividends	related	Lease
	liabilities	hedging	payable	parties	liabilities
	$M	$M	$M	$M	$M
Balance at 1 July2020	–	46.8	73.1	1,067.6	28.3
Changes from financing cash flows
Payments on derivative financial instruments	–	(42.2)	–	–	–
Net repayments of loans with related parties	–	–	–	(83.7)	–
Payments of lease liabilities	–	–	–	–	(8.7)
Dividendspaid	–	–	(73.1)	–	–
Total changes from financingcash flows	–	(42.2)	(73.1)	(83.7)	(8.7)
Changes arisingfrom 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 Equity settled share based payments transactions New leases Interest income Interest expense Dividends declared	– – – – – –	– – – – – –	– – – – – 110.8	(48.6) 26.2 – (12.7) 38.9 –	– – 45.9 – 0.5 –
Total other changes	–	–	110.8	3.8	46.4
Balance at 30 June 2021	–	24.7	110.8	1,052.3	66.0
Balance at 1 July2021	–	24.7	110.8	1,052.3	66.0
Changes from financing cash flows Proceeds from borrowings Net (repayments of)/proceeds from loans with related parties Payments of lease liabilities Dividendspaid	9.0 – – –	– (17.4) – –	– – – (110.8)	– 124.9 – –	– – (8.0) –
Total changes from financingcash flows	9.0	(17.4)	(110.8)	124.9	(8.0)
Changes arisingfrom disposal of controlled entities	–	–	–	1.5	–
Effect of foreign exchange movements	–	9.7	–	11.2	–
Changes in fair value	–	38.5	–	–	–
Other changes Issue of shares under the LTIP Equity settled share based payments transactions New leases Interest income Interest expense Disposal of right of use assets Derivative fnancial instrument settlement through loans with related parties Dividends declared	– – – – – – – –	– – – – – – – –	– – – – – – – 46.7	(57.4) (32.0) – (11.6) 41.8 – 17.4 –	– – 13.4 – 0.4 (26.5) – –
Total other changes	–	–	46.7	(41.8)	(12.7)
Balance at 30 June 2022	9.0	55.5	46.7	1,148.1	45.3

200

ANNUAL REPORT 2022

18 Reserves

18 Reserves
		Consolidated			Company
		2022	2021	2022	2021
	Note	$M	$M	$M	$M
Asset revaluation reserve	18(a)	36.7	27.3	36.2	27.0
Foreign currency translation reserve	18(b)	13.6	12.7	–	4.8
Employee compensation reserve	18(c)	56.3	48.3	52.4	40.2
Defined benefit retirement schemes reserve	18(d)	(8.8)	(14.4)	–	–
Common control reserve1	18(e)	(702.9)	(702.9)	–	–
Total reserves		(605.1)	(629.0)	88.6	72.0

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:

	Consolidated	Consolidated		Company
	2022	2021	2022	2021
	$M	$M	$M	$M
(a) Asset revaluation reserve
Balance at the beginning of the year	27.3	19.7	27.0	19.7
Increase due to revaluation of other financial assets	9.4	7.6	9.2	7.3
Balance at the end of theyear	36.7	27.3	36.2	27.0
(b) Foreign currency translation reserve Balance at the beginning of the year Net exchange differences on conversion of foreign operations	12.7 0.9	33.5 (20.8)	4.8 (4.8)	– 4.8
Balance at the end of theyear	13.6	12.7	–	4.8
(c) Employee compensation reserve Balance at the beginning of the year Equity settled share based payment transactions Deferred tax associated with the LTIP	48.3 12.2 (4.2)	33.4 6.8 8.1	40.2 12.2 –	33.4 6.8 –
Balance at the end of theyear	56.3	48.3	52.4	40.2
(d) Defined benefit retirement schemes reserve Balance at the beginning of the year Actuarial gains/(losses) on defined benefit retirement schemes (net of tax) Effect of foreign currencytranslation	(14.4) 5.6 –	(8.2) (6.0) (0.2)	– – –	– – –
Balance at the end of theyear	(8.8)	(14.4)	–	–
(e) Common control reserve Balance at the beginningof theyear	(702.9)	(702.9)	–	–
Balance at the end of theyear	(702.9)	(702.9)	–	–

19 Retained earnings

19 Retained earnings
		Consolidated			Company
		2022	2021	2022	2021
	Note	$M	$M	$M	$M
Balance at the beginning of the year		1,584.8	1,287.2	794.7	575.6
Profit for the year		751.9	408.4	265.3	329.9
Dividends declared	15	(46.7)	(110.8)	(46.7)	(110.8)
Balance at the end of theyear		2,290.0	1,584.8	1,013.3	794.7

201

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued)

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	2022 2021
Significant controlled companies	Principal activities	incorporation	% %
Goodman Asia Limited	Investment and property management services	Hong Kong	100.0 100.0
Goodman China Limited	Property management and development management consultancy services	Hong Kong	100.0 100.0
Goodman UK Holdings (HK) Limited	Intermediate holding company	Hong Kong	100.0 100.0
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	100.0 100.0
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 Logistics Developments (UK) Limited	Investment and property management services	United Kingdom	100.0 100.0
Goodman Real Estate (UK) Limited	Investment and property development	United Kingdom	100.0 100.0

202

ANNUAL REPORT 2022

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:

	2022	2021
	$M	$M
Directors’ fees	0.6	0.7
Salaries, allowances and benefits in kind	3.6	3.7
Share based payments	19.8	16.1
	24.0	20.5

203

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued)

21 Related party transactions (continued)

(b) Transactions and amounts due from related parties

	Management and	Management and		Amounts due
	development	activities	from related parties1
	2022	2021	2022	2021
	$M	$M	$M	$M
JVs
GCLP	104.5	64.9	6.6	12.6
GUKP	55.8	–	2.1	–
KWASA Goodman Germany	10.1	141.7	–	–
Goodman Japan Development Partnership	–	–	0.7	–
	170.4	206.6	9.4	12.6
Related parties of GL and GIT Goodman Hong Kong Logistics Partnership Goodman European Partnership Other related parties	139.1 769.2 5.8	135.2 221.9 67.0	9.8 47.7 –	42.0 36.4 10.4
	914.1	424.1	57.5	88.8

Includes contract assets arising from transactions with related parties.

Transactions with GL

During the year, the Consolidated Entity recognised expenses of $23.1 million (2021: $42.4 million) for services provided by a controlled entity of GL.

(c) Financing arrangements with related parties

				Interest
				income/(expense)
		Loans to	Loans from	charged on loans
	related parties1		related parties1	to/from related parties
	2022	2021	2022 2021	2022 2021
	$M	$M	$M $M	$M $M
JVs	27.3	29.6	– –	0.4 0.3
GL,	GIT and their controlled entities 765.6	809.2	(1,941.0) (1,891.1)	(30.6) (26.5)
	792.9	838.8	(1,941.0) (1,891.1)	(30.2) (26.2)

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 2022, details in respect of the principal loan balances are set out below:
Loans to GL, GIT and their controlled entities amounting to $765.6 million (2021: $809.2 million) are interest bearing and repayable on demand. The interest bearing loans incur interest at rates ranging from 0.6% to 5.1% per annum (2021: 0.7% to 7.2% per annum)
Loans from GL, GIT and their controlled entities are interest bearing and amount to $1,941.0 million (2021: $1,891.1 million). $125.4 million of the loans is repayable on demand and $1,815.6 million is repayable greater than one year from the reporting date. The interest bearing loans incur floating interest at rates ranging from 0.2% to 10.6% per annum (2021: 0.9% to 10.6% per annum).

204

ANNUAL REPORT 2022

22 Commitments

Development activities

At 30 June 2022, the Consolidated Entity was committed to $206.4 million (2021: $351.3 million) expenditure in respect of inventories and other development activities.

Investment properties

At 30 June 2022, the Consolidated Entity had capital expenditure commitments of $0.1 million (2021: $nil). In the prior year, the Consolidated Entity had contracted to acquire an investment property for $67.7 million.

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.

US144A/Regulation S senior notes

Under the issue of notes in the US144A/Regulation S bond market, controlled entities of GIT had on issue USD and EUR notes amounting to US$1,350.0 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.

205

GOODMAN GROUP

Notes to the consolidated financial statements

Other items (continued)

24 Company level statement of financial position

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

2022 2021
Note $M $M
Current assets
Cash 138.5 167.8
Receivables 7.9 126.1
Total current assets 146.4 293.9
Non-current assets
Investments in subsidiaries 2,550.5 1,821.9
Receivables 32.9 169.8
Other financial assets 267.7 171.8
Total non-current assets 2,851.1 2,163.5
Total assets 2,997.5 2,457.4
Current liabilities
Payables 0.5 96.0
Dividend payable 46.7 110.8
Other financial liabilities 45.4 –
Total current liabilities 92.6 206.8
Non-current liabilities
Payables 807.7 505.2
Other financial liabilities 122.3 86.8
Total non-current liabilities 930.0 592.0
Total liabilities 1,022.6 798.8
Net assets 1,974.9 1,658.6
Equity attributable to Shareholders
Share capital 873.0 791.9
Reserves 18 88.6 72.0
Retained earnings 19 1,013.3 794.7
Total equity attributable to Shareholders 1,974.9 1,658.6
----- End of picture text -----

The Company level statement of financial position was approved and authorised for issue by the Board of Directors on 16 August 2022.

==> picture [92 x 85] intentionally omitted <==

Stephen Paul Johns Independent Chairman

==> picture [120 x 37] intentionally omitted <==

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.

206

ANNUAL REPORT 2022

Securities information

Top 20 Securityholders	Top 20 Securityholders		Number of	Percentage of total
As at 8 September 2022			securities	issued securities
1.	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED		681,499,089	36.24
2.	J P MORGAN NOMINEES AUSTRALIA PTY LIMITED		561,957,776	29.88
3.	CITICORP NOMINEES PTY LIMITED		190,580,369	10.13
4.	NATIONAL NOMINEES LIMITED		76,665,425	4.08
5.	BNP PARIBAS NOMS PTY LTD		68,172,806	3.63
6.	CITICORP NOMINEES PTY LIMITED		36,355,892	1.93
7.	BNP PARIBAS NOMINEES PTY LTD		36,269,494	1.93
8.	TRISON INVESTMENTS PTY LTD		17,463,993	0.93
9.	BEESIDE PTY LTD ATF THE BEESIDE TRUST		13,192,040	0.70
10.	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED		9,373,751	0.50
11.	AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED		8,835,000	0.47
12.	CUSTODIAL SERVICES LIMITED		4,426,940	0.24
13.	BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD		4,075,984	0.22
14.	UBS NOMINEES PTY LTD		3,289,853	0.17
15.	NETWEALTH INVESTMENTS LIMITED		3,009,858	0.16
16.	CPU SHARE PLANS PTY LTD		2,820,000	0.15
17.	DPCON BVBA		2,678,465	0.14
18.	ONE MANAGED INVESTMENT FUNDS LTD		2,500,000	0.13
19.	BNP PARIBAS NOMS (NZ) LTD		2,278,718	0.12
20.	GOODMAN EQUITIES PTY LTD		2,229,540	0.12
Securities held by top 20 Securityholders			1,727,684,993	91.88
Balance of securities held			152,784,095	8.12
Total issued securities			1,880,469,088	100.00

		Number of	Number of	Percentage of total
Range of securities		Securityholders	securities	issued securities
1 – 1,000		29,629	11,301,082	0.60
1,001 – 5,000		18,141	41,687,906	2.22
5,001 – 10,000		3,142	22,361,098	1.19
10,001 – 100,000		1,813	38,963,560	2.07
100,001 – over		105	1,766,155,442	93.92
Total		52,830	1,880,469,088	100

There were 1,113 Securityholders with less than a marketable parcel in relation to 12,398 securities as at 8 September 2022.
Substantial Securityholders1	Number of securities
Vanguard Group Inc.	167,546,666
Leader Investment Corporation; China Investment Corporation	167,247,241
Blackrock Investment Management Limited	137,503,983
State Street Corporation	99,948,106
1. In accordance with latest Substantial Securityholder Notices as at 26 August 2022.

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.

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, 18,892,650 performance rights were issued under the Long Term Incentive Plan, of which 2,875,000 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.

207

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.

CPP Investments. Formerly 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 Partnership, 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.

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.

GMT Goodman Property Trust, a listed property trust on the NZX managed by GMG.

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Corporate directory

GOODMAN GROUP

Goodman Limited ABN 69 000 123 071

Goodman Industrial Trust ARSN 091 213 839

Goodman Funds Management Limited Responsible Entity of Goodman Industrial Trust 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

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 Hilary Spann Independent Director Independent Director Vanessa Liu Carl Bicego Independent Director Company Secretary

Rebecca McGrath Independent Director

Goodman Logistics (HK) Limited

Stephen Johns Goodman Secretarial Independent Chairman Asia Limited David Collins Company Secretary Independent Director Danny Peeters Executive Director

SECURITY REGISTRAR

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

Telephone +852 2249 3100

Facsimile +852 2525 2070 Email info [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

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 www.investorcentre.com/contact Website computershare.com/au

ASX CODE

GMG

AUDITOR

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

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GOODMAN GROUP

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 2022.

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AI assistant

GOODMAN GROUP — Annual Report 2022

64998_rns_2022-09-28_bd367744-bc84-40da-80a7-d4bf789149a1.pdf

Goodman Group Sustainability Report and 2022 Annual Report

– ENDS –

Media

Investors

About Goodman

Dear Securityholder

FY22 Annual report

FY22 Sustainability Report

Annual General Meetings

FY22 performance highlights

Investing in sustainable innovation

Sustainability governance

Board progression

Demonstrating action

GROUP CEO’S LETTER

- Setting science based targets

Increasing our investment in sustainability

Generating our own carbon ofsets

Collaborating to reduce carbon in building products

Maximising property efciency

Aligning with our customers’ goals

Generating fnancial sustainability

Progressing our Reconciliation Action Plan

Supporting workforce wellbeing

Stepping up the impact of our Foundation

Looking forward

About Goodman

$73BN

OUR INTEGRATED BUSINESS MODEL

OUR

STRATEGY

Providing essential infrastructure for the digital economy

Proximity to people

Accessibility

STRATEGICLOCATIONS

OUR

VALUES

OUR

PURPOSE

Customers

Securityholders and investment partners

Community partners

Our people

Supply chains

HOW

WE’RE STRUCTURED

The Boards and Committees

LIVE. SHOP. BUILD. RENEW. As our climate changes, every action we take to mitigate its effects can have an impact on the future. Green buildings are only part of the solution.

LIVE.

The switch to digital cities

SHOP.

Supporting conscious consumers

BUILD.

The ongoing life cycle of circular

RENEW.

Sustainability approach

A responsible and sustainable strategy

Material and ambitious targets

Local teams, global network

The material issues which shape our sustainability strategy

Sustainable assets

Responding to climate risk

Engaging our stakeholders

Our customers

Top 20 customers by rent

- Long term investment partners

Goodman’s global team

Communities

The global supply chain

2030 Sustainability Strategy

Our pillars

SUSTAINABLE PROPERTIES

PEOPLE

AND CULTURE

CORPORATE PERFORMANCE

Supporting the United Nations Sustainable Development Goals

Sustainable properties

GOODMAN GROUP Annual Report 2022