ESR AR 2019 EN

49 ESR Annual Report 2019 FINANCIAL REVIEW SEGMENT RESULTS FY2019 Segmental Results (EBITDA) 40% 21% 39% Investment Fund Management Development Investment segment results increased by 9.6% from US$233.6 million in FY2018 to US$256.1 million in FY2019. This was primarily due to rental income from consolidation of Propertylink and full year rental income from RW Higashi- Ogishima DC property that was acquired in second half of 2018. The Group also recognised higher fair value gain by US$22.3 million from its investment in funds and dividend income by US$8.1 million. Our fund management segment results also recorded an increase of 20.3% from US$109.6 million in FY2018 to US$131.8 million in FY2019. The increase was driven by strong recurring income base from funds under management such as South Korea Core Fund, Japan Core Fund and RJLF III; and consolidation of Propertylink. In FY2019, the Group recognised promote income of US$23.5 million. The development segment result increased by more than 100% from US$115.5 million in FY2018 to US$244.8 million in FY2019. This is contributed by fair value gains recognised on investment properties under construction in our portfolio assets such as Qingpu Yurun, Sachiura properties and RW Higashi-Ogishima DC; as well as higher share of profits of the Group joint ventures. During the year, the Group also recognised US$16.5 million gain on disposal of seven balance sheet properties to NCI Core Fund as part of the Group’s assets light capital recycling strategy. ASSETS The Group reported a strong balance sheet and ended 2019 with US$884.2 million in cash, and healthy net debt over total assets of 26.6%. Total assets as at 31 December 2019 were US$6.35 billion (2018: US$4.43 billion) comprised mainly investment properties, investment in joint ventures, investment in funds (classified as financial assets at fair value through profit or loss) and investment in listed securities (classified as financial assets at fair value through other comprehensive income) and cash balances. Investment properties increased by 47.8% to US$2.79 billion (2018: US$1.89 billion) as at 31 December 2019. This was mainly from consolidation of Propertylink, acquisition of new properties during the year such as Sachiura, Wuxi Lekun and Kawajima properties, as well as revaluation gains on our investment properties. The increase was partially offset by deconsolidation of seven balance sheet properties upon disposal to NCI Core Fund. Investment in joint ventures increased by 72.5% to US$698.0 million (2018: US$404.7 million) as at 31 December 2019 contributed by the Group’s South Korea platform investment in Sunwood Star, consolidation of Propertylink, and new joint ventures set up in India. Investment in funds increased by 75.5% to US$589.4 million (2018: US$335.8 million) as at 31 December 2019, which was in line with establishment of new funds, as well as revaluation gains on investment properties held by the funds. LIABILITIES Total bank and other borrowings as at 31 December 2019 were US$2.57 billion compared to US$1.46 billion at end of 2018. With cash balance of US$884.2 million, the net debt to total assets as at 31 December 2019 was 26.6%. The increase in net debt was primarily due to additional borrowings to fund the Group’s investments and ongoing developments. Additional corporate borrowings included issuance of S$350 million fixed rates notes in February 2019 and US$425 million fixed rates notes in April 2019 respectively. Of the total borrowings, more than 90% are due and payable after one-year. Subsequent to listing on SEHK, the Group had fully repaid the US$300m Hana Notes and redeemed in full previously unconverted Class C Preference Shares.