ESR IR 2021 - EN

17 ESR Interim Report 2021 Management Discussion and Analysis FINANCIAL REVIEW ESR has continued its strong momentum and delivered outstanding performance during 1H2021. This is attributable to accelerated business performance across all segments (especially fund management) and AUM reached US$36.3 billion, up 36.9% year-on-year. As of 30 June 2021, the Group has a robust and well- capitalised balance sheet with US$1.1 billion in cash, and net debt over total assets of 30.6%. REVENUE The Group’s revenue (ex-construction) grew 24.7% from US$142.4 million in 1H2020 to US$177.7 million in 1H2021, driven by higher fees from fund management segment. Management fee increased by 48.2% from US$83.6 million in 1H2020 to US$123.9 million in 1H2021 contributed by AUM growth across multiple markets, as well as increased recurring fee income base, promote income and higher development activities. Construction revenue decreased by 51.6% from US$55.2 million in 1H2020 to US$26.7 million in 1H2021 which is due to lower construction income from outstanding projects subsequent to ESR Australia’s disposal of its construction arm in September 2020. Accordingly, cost of sales also decreased correspondingly. Geographically, revenue from the Australia market which made up of 22.6% of the Group’s revenue, decreased from US$84.9 million in 1H2020 to US$46.3 million in 1H2021 mainly due to disposal of construction arm. Excluding construction revenue, the Australia market revenue made up of 11.0% of the Group’s 1H2021 revenue. China, Japan and South Korea markets accounted for 80.0% in aggregate to the Group’s 1H2021 revenue (ex- construction). These four markets collectively made up of 91.0% of the Group’s revenue. Singapore and India made up of the remaining 9.0% revenue (ex-construction) of the Group. 12% South Korea 33% China 35% Japan 7% Singapore 11% Australia 2% India/Others 1H2021 Revenue ContributionBy Region 7 Note: 7. Excludes contribution from construction income. 61% Fund Management 26% Investment 13% Development 1H2021 Revenue By Segment PATMI AND EBITDA EBITDA increased by 38.6% from US$269.4 million in 1H2020 to US$373.5 million in 1H2021. PATMI grew 60.9% from US$133.0 million in 1H2020 to US$213.9 million in 1H2021. Profit for the 1H2021 increased by 58.8% from US$144.7 million in 1H2020 to US$229.7 million in 1H2021. Higher PATMI was driven by the growth in the Group’s co- investments in funds, associates, and joint ventures, as well as lower borrowing costs. This is in line with ESR’s asset light strategy and disciplined capital management. The Group recorded fair value gain on investment properties of US$165.9 million for 1H2021 (1H2020: US$125.8 million). The increase contributed from the acquisition of a key data centre asset in Osaka, Japan. Higher share of profits of US$78.1 million was recognised from share of joint ventures’ results, compared to US$43.8 million in 1H2020. The increase was mainly driven by asset appreciation of the Group’s investments in South Korea. The Group’s weighted average interest rate cost as of 30 June 2021 was 4.6% compared to 5.0% as of 30 June 2020. Accordingly, overall finance cost increased by 11.4% from US$71.7 million in 1H2020 to US$79.8 million in 1H2021 despite total borrowings increased by 31.5% year-on-year. Administrative expenses increased by 13.1% from US$85.5 million in 1H2020 to US$96.8 million in 1H2021 primarily due to higher non-recurring professional fees incurred for acquisitions of assets and investments.