Page 18 - GMT and GMT Bond Issuer Annual Report 2017 v2

FINANCIAL SUMMARY
With a profit before tax of $220.5 million, GMT has delivered another impressive financial result.
Over 50% of this year’s pro t has been as a result of fair value gains attributable to the investment portfolio. The $114.7 million gain following independent valuations re ects market rental growth and a further
strengthening in investor demand for high quality industrial property.
The 5.4% uplift in the value of the Trust’s property portfolio, follows the record 6.7%, or $145.8 million increase achieved in the previous nancial year. The lower revaluation gain this year is the principal difference with the $247.9 million pro t before tax in 2016.
Adjusting for these fair value gains and other cash and non-cash items provides the reconciliation between statutory pro t and operating earnings.
OPERATING PERFORMANCE
A positive operating environment is continuing to facilitate an active investment approach for GMT. A development led growth strategy and selective acquisitions, funded through asset sales, are re ning the portfolio and delivering strong gains for the Trust.
The timing of transactions in 2017 means that the increased revenue from completed developments and earlier acquisitions has been largely offset by asset sales with net rental income increasing 0.3%, to $134.2 million.
When GMT’s proportionate share of the Wynyard Precinct joint venture is included, net rental income increased 2.9% from $143.1 million to $147.2 million. The strong growth re ecting the full year income contribution of the Fonterra Centre, purchased in February 2016.
Administrative expenses have increased
$0.3 million to $2.9 million as a result of
increased valuation fees while net interest costs have reduced from $20.5 million to $18.0 million. The main contributor to the reduction in borrowing costs is a lower effective interest rate of 5.0%.
The lower net interest cost also re ects a greater level of interest income received as a result of the development funding arrangement with Fletcher Building. The loan, to nance
the construction of the Datacom building, has subsequently been repaid following the acquisition of the completed of ce development by the Wynyard Precinct joint venture in May 2017.
The combination of greater revenue and lower interest costs are the main contributors to the 4.0% increase this year in operating earnings before tax to $121.7 million.
On a weighted average unit basis, this equates to 9.51 cents per unit, consistent with earlier guidance. Full year cash distributions paid to Unitholders have been maintained at 6.65 cents per unit, which represents around 94% of GMT’s cash earnings.
CASH EARNINGS
Cash earnings is a non-GAAP measure that assesses free cash ow, on a per unit basis, after adjusting for certain items.
The table below shows how the Trust’s cash earnings are calculated and how this compares to the distributions it pays.
With distributions fully cash covered in 2017, it has been an improving trend that re ects
the positive progress made toward a more sustainable distribution policy.
$million
Operating earnings before tax
Tax on operating earnings Operating earnings after tax (1) Capitalised borrowing costs – land (2) Maintenance capex (3)
Cash earnings
Cash earnings after tax cpu
Distributions per unit cpu Distributions % of cash earnings
31 March 17
121.7 (15.7) 106.0 (11.4) (3.9)
90.7
7.08
6.65 93.9%
31 March 16
117.0 (18.9) 98.1 (17.1) (5.0)
76.0
6.11
6.65 108.8%
(1) (2) (3)
Refer to note 4.2 of the Financial Statements. Refer to note 1.8 of the Financial Statements. Refer to note 1.6 of the Financial Statements.
The Manager currently uses the base management fee it earns to subscribe for new units in the Trust. It is required to do so for a period of ve years, ending 31 March 2019.
Adding back the base management fee in 2017 would reduce cash earnings by $7.7 million or around 0.6 cents per unit.
GOODMAN PROPERTY TRUST ANNUAL REPORT 2017 16 FINANCIAL
GMT BOND ISSUER LIMITED ANNUAL REPORT 2017
SUMMARY