ESR IR 2021 - EN

18 STEP FORWARD Management Discussion and Analysis SEGMENT RESULTS Investment segment results increased by 68.7% from US$108.6 million in 1H2020 to US$183.1 million in 1H2021. The increase was mainly contributed by fair value gain from the Group’s investment properties in Japan and China, higher share of results from its investment in South Korea and US$3.3 million gain from disposal of one of the Group’s interest in an associate. In 1H2021, the Group recorded dividend income amounted to US$27.4 million from distributions received Japan co- investments. Accordingly, the Group recorded share of reduction in the carrying value in these co-investments of US$36.8 million in aggregate. Excluding such amount, the change in carrying value of financial assets and liabilities at fair value through profit or loss would have been a gain of US$22.8 million. Fund management segment results increased by US$32.8 million or 50.9% from US$64.4 million in 1H2020 to US$97.1 million in 1H2021. The increase was driven by growth in funds under management such as Australia, Japan and South Korea funds, as well as recurring income base. Development segment results increased by 6.7% from US$126.8 million in 1H2020 to US$135.3 million in 1H2021. Higher segment results were contributed by share of results from the Group’s joint venture in South Korea, a gain from the further sell down of the Group’s associate and an asset disposal in Australia. 23% Fund Management 44% Investment 33% Development 1H2021 Segmental Results (EBITDA) Segmental Results (EBITDA) 1H2021 1H2020 Variance US$ million % US$ million % US$ million % change Investment 183 44% 109 36% 74 69% Fund Management 97 23% 64 22% 33 51% Development 135 33% 127 42% 8 7% Total 415 300 115 39% ASSETS Total assets increased from US$7.7 billion as of 31 December 2020 to US$8.6 billion as of 30 June 2021, comprised mainly investment properties, investment in joint ventures and associates, investment in funds (classified as financial assets at fair value through profit or loss), investment in listed securities (classified as financial assets at fair value through other comprehensive income) and cash balances. Investment properties increased by 35.1% to US$3.6 billion as of 30 June 2021 (31 December 2020: US$2.7 billion). The increase contributed by the acquisitions of a key data centre asset in Osaka, which will be developed into a multi-phase data centre campus; and an asset in Kwai Chung in Hong Kong, which will be developed into data centre. In addition, the Group acquired Nanko Distribution Centre 1, a stabilised asset in Osaka which will be injected as seed asset into Japan Income Fund where ESR will be the manager. Investment in joint ventures and associates increased by 17.6% to US$1.3 billion as of 30 June 2021 (31 December 2020: US$1.1 billion) contributed by the Group’s acquisition of ESR Milestone Partnership in June 2021, in addition to higher share of results from existing joint ventures in South Korea and China. Increase in goodwill by US$332.9 million to US$673.1 million as of 30 June 2021, was contributed by acquisition of Milestone Operation Limited, the manager of the Milestone Portfolio. The Group also recorded an increase in intangibles balances from the acquisition of the Milestone Portfolio. Investment in listed securities decreased by 18.3% to US$717.5 million (31 December 2020: US$878.3 million), which was mainly due to a partial disposal of Centuria Capital Group (“ CNI ”) shares in May 2021. Post 30 June 2021, the Group has fully disposed of its remaining stake in CNI. The above was partially offset with an increase in holding of the Group’s existing investments.