In the last five years, Goodman has capitalised on opportunities within the industrial property sector driven by growth in e‑commerce, consumerism and changes in technology.

I am proud to say we have exceeded our five-year targets on a nominal and risk-adjusted basis. We have outperformed our local and global competition and in FY17 the Group has delivered total Securityholder returns of 15%, with 159% achieved for the five years to 30 June 2017, both of which are excellent outcomes. Across the industrial asset class, our customer base remains stable and strong due to long-term lease commitments.

Many of the customers contributing to our growth are digital disruptors seeking precisely the kind of innovative solutions Goodman is delivering. Our gateway city strategy, for example, provides such customers with properties close to large urban populations, enabling them to better service their own customers.

FY17 was an outstanding year for Goodman. Our financial highlights include:

• Operating profit of $776 million, up 8.6% on FY16
• Statutory profit of $778 million which was down on last year mainly due to a one off $205 million unrealised valuation loss and costs on our US bonds associated with the modifications made to their covenants in June
• Group property valuation growth of $1.6 billion contributing to 3% growth in net tangible assets per security
• Operating earnings per security (EPS) of 43.1 cents, up 7.5% on FY16
• Distribution per security of 25.9 cents, up 8% on FY16
• Maintaining a strong financial position with gearing reduced to 5.9%
• Interest cover ratio of 9.5 times and Group liquidity at $3.2 billion.

A BALANCED APPROACH

Our success at Goodman relies on our ability to be both responsive to the market and proactive in securing new opportunities. Some examples of how our balanced approach works are through:

1. Strong financial position. This is the result of prudently balancing risk and return in our development activities. Most development activity is contained within our managed Partnerships, which allows us to reduce the capital we directly contribute. Our speculative development is mainly limited to supply constrained and proven logistics markets.
2. Quality portfolio supporting sustainable growth. As part of our strategy, we have continued with our asset rotation programme and reinvested the proceeds from asset sales into developing modern logistics properties in strategic gateway cities. Long term, this will contribute additional value to our global portfolio providing sustainable returns for Goodman and our stakeholders.
3. Appropriate mix of resources across regions and business segments. Goodman continues to benefit from a global operating platform with offshore earnings now contributing 59% of operating earnings. Our US expansion now contributes 18% of the Group’s development work in progress (WIP), with $1.3 billion in assets under management (AUM) across 11 properties.

Our management and development businesses have been key growth drivers, contributing 65% of operating earnings. While our asset sales programme has diluted investment earnings, our reduced development capital and the proceeds from asset sales resulted in lower net interest expense and higher return on capital.