ESR Group (1821) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 6.1% to US$871.3m, while adjusted EBITDA and adjusted PATMI fell 23.1% and 38.8%, respectively, amid lower fair value gains, absent one-off income and higher finance costs.

• Fee-related AUM grew 6.3% to US$81bn and total AUM rose 7.3% to US$156bn; fund management EBITDA reached a record US$578.8m.

• Priorities include recurring fund management earnings, New Economy growth, asset sales, debt reduction, business simplification and LOGOS integration.

Financial highlights

• Revenue was US$871.3m, up 6.1%; management fees were US$736.7m, up 3.3%, and recurring fee income excluding promote fees grew 8.8% to US$554.4m.

• Adjusted EBITDA was US$885.3m, down 23.1%, and adjusted PATMI was US$400.3m, down 38.8%.

• Reported EBITDA fell 32.2% to US$724.6m; profit for the year was US$268.1m, down 57.5%, and PATMI was US$230.8m, down 59.8%.

• Gross profit was US$811m versus US$792m; finance costs rose to US$312.9m from US$222m, while JV and associate results swung to a US$20.4m loss from US$226.7m profit.

• Construction revenue rose to US$56.3m from US$10.7m, while rental income declined 21.4% to US$72m as balance-sheet assets were sold down.

Outlook and guidance

• FY2024 priorities include completing integration, realising further revenue and cost synergies, advancing asset-light strategies and disposing of non-core assets.

• Gearing targets are 25% by FY2024 and ~20% over the medium term; up to US$2.0bn of subsequent balance-sheet assets are earmarked for divestment over 12 months.

• FY2024 interest expense is expected to decline YoY; refinancing some debt with longer-term fixed-rate debt is planned to balance fixed and floating exposure.

• Management targets continued fee-related AUM and fund management earnings growth, and is cautiously optimistic about deploying dry powder in H2 2024; development workbook is expected at US$13–15bn.