ESR Interim Report 2020 (EN)

PATMI AND EBITDA The Group further cemented market leading positions with continued growth in key markets. It registered PATMI of US$133.0 million and EBITDA of US$269.4 million. PATMI and EBITDA grew by 75.1% and 27.3% respectively. Profit for the 1H2020 increased by 72.1% from US$84.1 million in 1H2019 to US$144.7 million in 1H2020. The increase was mainly contributed by (i) fair value gains on investment properties under construction; (ii) higher contributions from the Group’s investment in South Korea and Australia joint ventures; (iii) lower financing cost; and (iv) lower administrative expenses. Details are as elaborated below. The Group recorded fair value gain on investment properties of US$125.8 million for 1H2020 (1H2019: US$103.6 million). The increase mainly from investment properties under construction from Qingpu Yurun and newly acquired projects from our China portfolio. In 1H2020, the Group recognised share of profits of US$43.8 million from its joint ventures, an increase of US$25.5 million from US$18.3 million in 1H2019. The increase was mainly driven by appreciation of fair value of underlying assets in the Group’s investments in South Korea and Australia. The Group had materially reduced its borrowing costs with lower borrowing rates despite higher borrowings at 30 June 2020. In February 2020, the Company issued S$225 million (approximately US$166 million) of five-year fixed rate notes bearing 5.10% interest per annum (“ S$225 million 5Y 5.10% Notes ”), reducing its borrowing costs by over 150bps. The Company had also drawn down US$250 million three-year unsecured term loan in March 2020 at Libor plus 3.00% (“ US$250 million 3Y term loan ”). Closing of these new financings in the 1H2020 strengthened the Group’s liquidity position with strong support from international banks and capital markets. Finance costs had decreased by US$11.7 million or 14.0% from US$83.4 million in 1H2019 to US$71.7 million in 1H2020. Decrease was primarily attributable to nil finance costs from redeemable convertible preference shares (“ Class C Preference Shares ”) and Hana Notes totalling US$36.5 million after full repayments in November 2019. The reduction was mainly offset by additional interest costs from the S$225 million 5Y 5.10% Notes and US$250 million 3Y term loan; as well as full half year effect from S$350 million 3Y 6.75% Notes issued in February 2019 and US$425 million 3Y 7.875% Notes issued in April 2019. Administrative expenses declined by US$6.1 million or 6.6% from US$91.6 million in 1H2019 to US$85.5 million in 1H2020 primarily due to lower professional fees and operating expenses. Professional fees dropped by US$14.9 million as higher non-recurring professional fees were incurred in 1H2019 mainly for the Company’s listing on The Stock Exchange of Hong Kong Limited and acquisition of Propertylink Group. The reduction in administrative expenses was offset by higher staff related costs arising from consolidation of Propertylink Group and increased manpower to support growth and expansion of the Group. SEGMENT RESULTS 1H 2020 1H 2019 Variance US$ million % US$ million % US$ million % Investment 109 36% 99 39% 9 9% Fund Management 64 22% 50 20% 15 29% Development 127 42% 103 41% 24 24% Total 300 252 48 19% Segment Results (EBITDA) 1H 2020 Segmental Results (EBITDA) • Investment 36% • Fund Management 22% • Development 42% 13 ESR Interim Report 2020 MANAGEMENT DISCUSSION AND ANALYSIS