ESR Group Limited Interim Report 2023 17 ASSETS AND LIABILITIES The Group had a robust and well-capitalised balance sheet with gearing of 27.6% (net debt to total assets). Total assets remained at US$16.3 billion as of 30 June 2023 (31 December 2022: US$16.2 billion). As of 30 June 2023, the Group had cash balances of US$1.1 billion that were primarily denominated in USD, RMB, SGD, JPY, KRW, AUD and HKD. Cash balances had reduced as part of the Group’s proactive capital management to pay down borrowings with higher funding cost, as well as deployment to fund ongoing projects and new investments. Investment properties decreased by 5.2% to US$3.2 billion as of 30 June 2023 (31 December 2022: US$3.3 billion). The slight decrease is mainly contributed by classification of certain properties as asset held for sale as of June 2023 in line with view for near-term disposal. The reduction was offset by ongoing development of the Group’s China projects during 1H2023. Additionally, the Group made prepayments of additional land use rights in Australia, Japan and Vietnam which partially contributed to the increase in other non-current assets by 40.4% to US$319.3 million. Investment in joint ventures and associates increased by 11.4% to US$3.3 billion as of 30 June 2023 (31 December 2022: US$3.0 billion). The increase was mainly contributed by the Group’s acquisition of 10.4% interest in Vietnam’s BW Industrial Development Joint Stock Company (“BW”) for US$207.8 million in 1H2023. On 4 August 2023, the Group exercised its additional subscription right to subscribe additional issued shares in BW. Upon completion, the Group will hold 15.57% of the issued shares of BW. Financial assets at fair value through other comprehensive income (“FVOCI”) increased by 5.8% or US$56.3 million to US$1.0 billion as of 30 June 2023 contributed mainly by the Group additional investment in ESR-LOGOS REIT. Trade receivables increased by 36.6% to US$482.8 million as at 30 June 2023 (31 December 2022: US$353.5 million) mainly arising from higher fee income. Total bank and other borrowings as of 30 June 2023 remained flat at US$5.6 billion (31 December 2022: US$5.5 billion). Net debt was US$4.5 billion compared to US$3.7 billion as of 31 December 2022 mainly due to lower cash balance arising from the Group’s ongoing fundings to its investments. As of 30 June 2023, 90% of total debt maturing in year 2023 has been refinanced. TOTAL EQUITY Total equity remained strong at US$9.1 billion as of 30 June 2023 (US$9.1 billion as of 31 December 2022), backed by 1H2023 net profits of US$313.9 million, offset by dividend distribution to shareholders of US$69.9 million and shares repurchased of US$68.0 million. In addition, an unrealised loss of US$48.2 million was recognised on the Group’s financial assets through other comprehensive income (“FVOCI”), mainly due to mark-to-market losses adjusted based on quoted market prices. The Group manages and minimises its foreign currency exposures by natural hedges using various currencies via project and corporate level; and continues to assess the use of financial derivatives where appropriate to manage its foreign currency exposures. For the 1H2023, the Group recorded unrealised currency translation losses of US$61.6 million arising from its foreign operations due to the strengthening of US dollars against the respective local currencies.
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