STRENGTH IN UNITY 30 Finance cost increased 40.7% from US$222.4 million in FY2022 to US$312.9 million in FY2023. Total borrowings increased from US$5.5 billion as at 31 December 2022 to US$6.0 billion as at 31 December 2023, as additional borrowings were drawn for transitionary bridging of projects. The Group’s weighted average interest cost was reduced by 30 basis points from 5.6% in 1H2023 to 5.3% for FY2023 (FY2022: 4.2%). Administrative expenses decreased 6.3% from US$491.3 million in FY2022 to US$460.5 million in FY2023. Included in FY2022 was a one-off transaction costs relating to the acquisition of ARA Asset Management Limited (“ARA”) of US$22.5 million. In FY2023, administrative expenses included impairment losses relating to non-core business of US$29.2 million. Excluding these non-recurring items, administrative expenses were lower by 8.0% y-o-y contributed by corporate cost savings. SEGMENT RESULTS FY2023 Segmental Results 4% Investment 66% Fund Management 30% New Economy Development US$869 million Fund management segment results increased 0.2% from US$573.7 million in FY2022 to US$574.7 million in FY2023. Growth was driven by higher recurring fee revenue (excluding promote fees) of 8.8% y-o-y from growth in Fee-related AUM and prudent operating expenses. Supported by higher fee revenue, cost containment and broader economies of scale, a strong fund management EBITDA margin of 78.0% was achieved for FY2023. As part of the Group's ongoing capital recycling to syndicate balance sheet assets into ESR-managed vehicles, the contribution from the Investment segment decreased 89.8% from US$333.6 million in FY2022 to US$34.1 million in FY2023. Rental income decreased as the Group divested nine China balance sheet assets into an ESR-managed core fund in FY2022. The decrease in the investment segment results was further contributed by lower one-off investment income, divestment gains, and fair value gains from the Group’s investments in Australia and China. In addition, the share of result from Cromwell Property Group has declined by US$119.4 million, mainly attributed to higher fair value losses and lower operating profits reported by the associate. New Economy development segment results decreased 24.2% from US$342.7 million in FY2022 to US$259.8 million in FY2023. The decrease was mainly due to lower fair value gains from the Group’s investments in South Korea. In addition, there was also lower one-off divestment gains compared to FY2022. This was partially offset by the share of profit from BW in FY2023. ASSETS The Group’s total assets remained at US$16.2 billion as at 31 December 2023 (31 December 2022: US$16.2 billion). Its cash balances of US$1.0 billion were primarily denominated in USD, RMB, SGD, JPY, KRW, AUD and HKD, and were utilised in FY2023 to pay down borrowings with higher funding cost, as well as to fund ongoing projects and new investments. Investment properties decreased 3.6% to US$3.2 billion as at 31 December 2023 (31 December 2022: US$3.3 billion). The slight decrease is mainly contributed by disposal of certain properties. The reduction was partially offset by the ongoing development of the Group’s China projects during FY2023. Additionally, the Group made prepayments of additional land use rights mainly in Japan which contributed partly to the increase in other non-current assets by 59.3% to US$362.3 million.
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