MANAGEMENT DISCUSSION & ANALYSIS The Group’s share of profits from joint ventures and associates increased by 85.5% from US$78.1 million in 1H2021 to US$145.0 million in 1H2022. The increase is mainly due to higher share of profits from the Group’s investments in China and Australia, as well as contributions from ARA’s joint ventures and associates to the Group’s results subsequent to their acquisition. The Group’s weighted average interest rate cost as of 30 June 2022 was 3.8% as compared to 4.6% as of 30 June 2021. Overall finance cost increased by 24.4% from US$79.8 million in 1H2021 to US$99.3 million in 1H2022 in line with the increase in total borrowings from US$3.7 billion as at 30 June 2021 to US$4.9 billion as at 30 June 2022, mainly arising from consolidation of ARA. Administrative expenses increased by 146.9% from US$96.8 million in 1H2021 to US$238.9 million in 1H2022. The increase is primarily from consolidation of ARA’s administrative expenses and transaction costs related to the acquisition of ARA. SEGMENT RESULTS Investment segment results increased by 15.1% from US$183.1 million in 1H2021 to US$210.8 million in 1H2022, supported by higher co-investment income, rental growth and dividend income. Higher 1H2022 investment segment results contributed by higher dividend income and addition of share of associates’ profits subsequent to ARA acquisition; partially offset by reduced share of coinvestment income due to sell down of Korea assets into K-REIT in 2H2021 and lower relative fair value gain from existing balance sheet assets (including Cosmosquare). Fund management segment results increased by US$190.8 million or 196.4% from US$97.1 million in 1H2021 to US$287.9 million in 1H2022. The increase was driven by higher recurring fee revenue from higher AUM, record development and leasing fees and solid promotes. The Group’s fund management segment also benefitted from ARA’s recurring and stable fee revenue. New Economy development segment results increased by 69.1% from US$135.3 million in 1H2021 to US$228.7 million in 1H2022. The increase was underpinned by growth of record work-in-progress that yield significant contributions from fair value gains on projects under development, share of development profits of joint ventures and associates and substantial development completions (US$2 billion). This was further enhanced by a disposal gain of Kemps Creek, an Australian development asset to an ESR-managed fund. 1H2022 Segmental Results (EBITDA) INVESTMENT 29% FUND 40% MANAGEMENT NEW ECONOMY 31% DEVELOPMENT Segmental Results EBITDA 1H2022 1H2021 Variance* US$ million % US$ million % US$ million % Investment 211 29% 183 44% 28 15% Fund Management 288 40% 97 23% 191 196% New Economy Development 229 31% 135 33% 93 69% * Year-on-Year (“YoY”) change % represents a comparison between the first half of current year (1H2022) and the first half of last year (1H2021). R E A C H I N G N E W H E I G H T S 14
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