ESR Group Limited Interim Report 2023 13 Laser-focussed on business transformation and simplification anchored by three key pillars of growth In driving business transformation and simplification across the Group to deliver long-term shareholder value, the Group has achieved the following: • US$25 million of cost savings from the integration of ARA and LOGOS has been substantially completed. The Group expects to create additional synergies as it further integrates various aspects of LOGOS through 2024. • The Group has engaged in multiple discussions with parties to streamline businesses that have previously been identified as non-core. Up to US$750 million of non-core divestments have been identified with the plan to redeploy the capital back into core areas of growth. The Group will update the market as these discussions progress. • As stated above, the Group is on track to divest over US$1 billion of balance sheet assets in 2023 with greater upside expected if a successful listing of the China REIT (“C-REIT”) is completed later this year. • The Group’s development undertaken on its balance sheet has now been materially reduced to 4% at the end of 1H2023, leaving more financial flexibility for the Group going forward. Centring on the New Economy growth pillar, the ESR Data Centre Fund was recently upsized to US$1.3 billion with another large global investor, and the Group has cemented its position in Vietnam with a strategic stake in BW Industrial, a growing development platform where ESR also earns fees as it provides its best-in-class development, leasing and other fund management services to the venture. The Group has also continued to progress on its first life sciences vehicle. Accelerating positive impact for a sustainable future The Group recently unveiled its ESG 2030 Roadmap, built on the foundation and significant progress achieved under its 2025 Roadmap launched in November 2020. The Roadmap reaffirms its commitment to accelerate long-term sustainable growth across the three key pillars with established targets under the ESG Framework — Creating a Human Centric environment that is safe, supportive and inclusive for internal and external stakeholders; Developing and maintaining a sustainable and efficient Property Portfolio; and Delivering outstanding Corporate Performance for sustained and balanced growth. Under the social domain, the Group continues to enhance diversity, equity, and inclusion in the workplace, uphold employee health and safety, and enhance community development. As of June 2023, female representation was approximately 45% and the Group has had zero ESR workforce fatalities. To contribute positively to the local communities, volunteer leave was also implemented for all employees to support the Group’s community development efforts. On the environmental front, the Group remains committed to environmental stewardship by developing and maintaining sustainable and efficient buildings, some of which are equipped with EV charging stations. An additional 15MW of rooftop solar power capacity has been installed as planned and the Group is expected to significantly increase its on-site renewable energy generation this year. This will be further accelerated with more rooftop space from its selected assets under the RMB income fund, which will contribute to the overall 1,000MW target by 2030. In addition, approximately 39% of its portfolio of completed directly managed assets has obtained sustainable building certifications and ratings such as LEED, WELL and NABERS. As part of its commitment and transition to a low-carbon organisation, the Group is on track to develop a net zero strategy and decarbonisation roadmap.
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