MANAGEMENT DISCUSSION & ANALYSIS BUSINESS REVIEW During 1H2022, ESR continued to deliver stellar financial and operational results on the back of strong secular trends such as sustained e-commerce demand amidst pandemic-led supply disruptions and accelerated growth of data consumption. ESR’s outstanding set of results is a testament to the Group’s strong business fundamentals, as well as unmatched scale and breadth of our APAC-focused investment platform and New Economy infrastructure as an enlarged Group, combined with the recent successful acquisition and integration of ARA and LOGOS (the "Enlarged Group"). The comparative financial information for 1H2021 set out in this report are based on the Company’s consolidated financial results for 1H2021 as reported in the Company’s announcement dated 19 August 2021. As announced on 20 January 2022, the Company completed the acquisition of ARA on 20 January 2022, following which the financial results of ARA have been consolidated into the accounts of the Company. A comparison of the Group’s 1H2022 financial information with the unaudited pro forma consolidated statement of profit or loss and other comprehensive income of the Enlarged Group for 1H2021 as set out in the Company’s circular dated 18 October 2021 and the unaudited pro forma consolidated statement of financial position of the Enlarged Group as of 31 December 2021 as set out in the Company’s 2021 annual report published on 29 April 2022 are included in the Company’s 1H2022 financial results presentation, which is available on the Company’s website at www.esr.com and which can also be accessed through the QR code below. Supported by its well-established fund management platform and ongoing fundraising growth momentum, the Group’s total AUM increased 312% year-on-year to US$149 billion1. On a pro forma Enlarged Group basis, the Group's total AUM increased 14% year-on-year, while New Economy AUM accelerated 23% year-on-year to US$67 billion1. Following the successful accretive acquisition of ARA, EPS2 growth was 31.8% year-on-year despite the enlarged share base. Maiden Dividend Declaration The Board declared a maiden interim dividend of HK$12.5 cents per share (approximately 1.6 US cents per share) (which implies a 1.3%3 yield) for the financial year ending 31 December 2022, amounting to approximately US$70 million, which will be paid to Shareholders on Friday, 30 September 2022. The distribution of a dividend follows the announcement of the adoption of the Group’s Dividend Policy in July 2022, underscoring the Group's commitment to deliver returns and continued growth to its shareholders. Exceptional fund management performance fuelled by strong capital support ESR Fund Management segment continued to record new highs in terms of performance, given the strong capital entrustment from its capital partners. Fund management EBITDA2,4 increased 196.4% to US$288 million, driven by high recurring fee revenue from higher AUM, record development, leasing fees and solid promote fees. This was even a stronger result as the first half 2021 Fund Management EBITDA (on a pro forma Enlarged Group basis) was a very robust period for comparison given that it delivered higher EBITDA than in the second half of 2021 (on a pro forma Enlarged Group basis). Segment growth was driven by the exceptional growth momentum of the Group’s fund AUM which rose 14% to US$146 billion1 on a normalised basis as well as the record development starts and leasing fees. New Economy AUM grew 23% year-onyear to US$67 billion1. The Group continues to see strong capital flows into logistics from global institutional investors who are seeking to strategically rebalance their portfolios into New Economy sectors. Supported by the deep capital partner relationships and track record the Group has established, the Group raised US$3.9 billion through 15 new or upsized funds and mandates, representing a 56% year-on-year growth, of which over 80% of new capital Notes: 1. Based on constant FX translation as of 31 December 2021 for a like-for-like comparison. Based on FX translation as of 30 June 2022, total AUM would be US$138 billion (US$11 billion FX translation impact), total Fund AUM would be US$135 billion (US$11 billion FX translation impact), and New Economy AUM would be US$63 billion (US$4 billion FX translation impact). Includes ESR Data Centre Fund 1 which was disclosed in a news release dated 25 July 2022 2. Excludes amortisation of intangibles and transaction costs relating to ARA and M&A related items such as bargain purchase and financial instruments in relation to certain associates. 3. Based on closing share price of HK$19.12 as of 24 August 2022; on an annualised basis 4. Reclassification of Cromwell under Investment segment to reflect the current asset heavy nature of the investment esr.com Investor Relations Presentations & Webcast R E A C H I N G N E W H E I G H T S 10
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