ESR AR 2019 EN

Notes to the Consolidated Financial Statements 31 December 2019 162 Focused 4. OPERATING SEGMENT INFORMATION For fund management purposes, the Group is organised into business units based on their products and services and has three reportable operating segments as follows: (a) The investment segment is divided into three main categories: (i) properties that the Group holds on balance sheet, from which the Group derives total return, including rental income and appreciation in value, (ii) co-investments funds and investment vehicles and the REIT the Group manages, fromwhich the Group derives dividend income, pro rata earnings and/or pro rata value appreciation, and (iii) other investments. (b) The fundmanagement segment earns fee income for managing assets on behalf of the Group’s capital partners via funds and investment vehicles. The Group’s fees include base management fees, asset fund management fees, acquisition fees, development fees and leasing fees, as well as promote fees upon reaching or exceeding certain target internal rate of return and after the Group’s capital partners have received their targeted capital returns. (c) The development segment earns development profit through the development, construction and sale of completed investment properties. The development profit includes construction income, fair value gains on investment properties under construction and gains on disposal of subsidiaries. The Group also derives pro rata earnings and pro rata value appreciation through the development activities of the development funds and investment vehicles managed by the Group in proportion to Group’s co-investments in those funds and investment vehicles. Management monitors the results of the Group’s operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/loss, which is a measure of adjusted profit/loss before tax from continuing operations. The adjusted profit/loss before tax from continuing operations is measured consistently with the Group’s profit before tax from continuing operations except that interest income, finance costs, exchange differences, depreciation and amortisation, equity-settled share option expense, a gain on deemed partial disposal of a joint venture as well as head office and corporate expenses are excluded from such measurement.