ESR Group Limited Annual Report 2023 29 Financial Review STRATEGIC REPORTS CORPORATE GOVERNANCE FINANCIAL STATEMENTS The Group reported growth in its AUM and fund management segment earnings for the year ended 31 December 2023. ESR remained proactive and disciplined in capital management with Gearing of 30.7% as at 31 December 2023. Gearing is expected to reduce once the publicly announced asset divestments in FY2023 are completed, with its net proceeds applied towards debt repayment. The Group has ample liquidity with an aggregated US$2.5 billion of cash and undrawn facilities. REVENUE The Group’s revenue increased 6.1% from US$821.2 million in FY2022 to US$871.3 million in FY2023, driven mainly by higher management fee. Management fee increased 3.3% from US$713.3 million in FY2022 to US$736.7 million in FY2023. The increase was contributed by growth in Fee-related AUM. Excluding promote fees, recurring Fee Income increased by 8.8% from US$509.8 million in FY2022 to US$554.4 million in FY2023. Construction revenue increased from US$10.7 million in FY2022 to US$56.3 million in FY2023, contributed by new projects in Australia. Cost of sales increased correspondingly from US$29.2 million in FY2022 to US$59.8 million in FY2023. In line with the Group’s strategy to sell down balance sheet assets into ESR-managed funds, rental income decreased 21.4% from US$91.6 million in FY2022 to US$72.0 million in FY2023. In FY2022, the Group divested nine China balance sheet assets into an ESR-managed core fund. Geographically, 94% of the Group’s revenue for FY2023 was attributed to Greater China, Japan, South Korea, Southeast Asia and Australia and New Zealand; revenue from India, Europe and USA made up the remaining 6%. PATMI AND EBITDA1 EBITDA2 decreased 32.2% from US$1,068.5 million in FY2022 to US$724.6 million in FY2023. PATMI3 decreased 59.8% from US$574.1 million in FY2022 to US$230.8 million in FY2023. Lower fair value gains and absence of one-off disposal gains recognised in FY2022 were the main reasons for the decline in EBITDA and PATMI. Notes: 1 EBITDA, Adjusted EBITDA and Adjusted PATMI are non-IFRS measures. Refer to non-IFRS measures reconciliation in page 242. 2 EBITDA is calculated as profit before tax, adding back depreciation and amortisation and finance costs (net). 3 PATMI is profit after tax and minority interests. Additionally, PATMI was impacted by higher interest expense resulting from successive interest rate increases throughout 2023, as well as delayed capital recycling from balance sheet syndication for debt repayment. The decline was partially offset by higher recurring Fee Income (8.8% y-o-y). The Group recorded fair value gain on investment properties of US$187.7 million for FY2023 (FY2022: US$195.4 million) arising mainly from assets under development in China. The Group’s share of profits and losses from joint ventures and associates decreased from a profit of US$226.7 million in FY2022 to a loss of US$20.4 million in FY2023, mainly due to share of losses from Cromwell Property Group arising from fair value losses recorded by the associate; as well as lower fair value gains from the Group’s investments in Australia, South Korea and China. The decrease was partially offset by the share of profit in BW Industrial Development Joint Stock Company (“BW”) in Vietnam pursuant to the Group’s acquisition of 15.57% interest in FY2023. FY2023 Revenue by Region 19% Greater China 9% Japan 1% India 23% South Korea 4% Europe 1% Other 19% Southeast Asia 24% Australia / New Zealand US$871 million FY2023 Revenue by Segment 9% Investment 85% Fund Management 6% New Economy Development US$871 million
RkJQdWJsaXNoZXIy MTIwODcxMw==