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IN THE FACE OF CHANGE

inancial Year 2019/20 witnessed F many commemorative moments for Airport Group (CAG) – the opening of a new world-class travel experience at Jewel , the company’s 10th anniversary celebrations, Changi Airport recognised as the Skytrax World’s Best Airport for the eighth straight year, and more. The company was on track to reach new heights with all-time highs in business performance, amid a promising outlook for the global aviation industry.

But unexpectedly, the year ended with CAG being thrown off its growth trajectory by the global pandemic that has caused a collapse in air travel demand and created havoc in the world of aviation. With looming uncertainty facing the industry, it will be critical for the airport community to stand united. Working together with its partners, CAG is confident that the resilience and agility that it has built within the ‘One Changi’ community will see the airport through its darkest time.

As it has done for more than a decade, CAG continues to focus on meeting the needs of passengers and customers; its passion to serve remains unwavering, even in times of crisis.

Annual Report 2019/20 01 MISSION, VISION, VALUES

MISSION VALUES

TO BE THE WORLD’S LEADING AIRPORT COMPANY, WE VALUE WE ARE

growing a safe, secure and OUR THE BEST vibrant air hub in and PEOPLE IN OUR enhancing the communities we BUSINESS serve worldwide.

INTEGRITY VISION IS AT THE EXCEPTIONAL PEOPLE, HEART OF EVERYTHING CONNECTING LIVES WE DO We aspire to build a company where ordinary people achieve exceptional results. We believe in the potential of our people. Working together as a team, we bring great ideas to life and achieve exceptional results beyond our individual capabilities. WE ARE WE COMMITTED SUCCEED Customers are our inspiration. WITH OUR From the youngest child to TO OUR PARTNERS the largest corporation, we CUSTOMERS understand that what we provide connects people in ways that will enhance their lives.

02 Changi Airport Group CORPORATE PROFILE

hangi Airport Group C (Singapore) Pte Ltd (CAG) was formed on 16 June 2009 and the corporatisation of Singapore Changi Airport (IATA: SIN, ICAO: WSSS) followed on 1 July 2009. As the company managing Changi Airport, CAG undertakes key functions focusing on airport operations and management, air hub development, commercial activities and airport emergency services. CAG also manages Airport (IATA: XSP, ICAO: WSSL) and through its subsidiary Changi Airports International, invests in and manages airports around the world.

Annual Report 2019/20 03 CHAIRMAN & CEO MESSAGE

Liew Mun Leong, Chairman (left) and Lee Seow Hiang, CEO (right)

The celebration of a decade of achievements was sweetened by increasing demand for travel, reflected in a steady growth of The Group was performing well, 4.2% in Changi’s passenger traffic and development projects were in the first ten months of financial on track for Changi Airport to year 2019/20. During this period, build on its position as a leading Changi Airport welcomed six new international air hub. airlines and added four new city links, including Busan and Seattle. We were proud to raise industry The increase in passenger traffic benchmarks when we unveiled translated to higher concession (Jewel) in sales, up 1.5% year-on-year (y-o-y). April 2019 and presented a new Operating revenue for the same airport experience to travellers. period was a healthy 8.6% higher FINANCIAL YEAR Widely recognised for its unique than the previous year. architecture and offering a 2019/20 WAS A multi-faceted experience of A Covid-19 Crisis YEAR OF MIXED awe-inspiring attractions in an As we entered the last two months integrated shopping and dining of the financial year, CAG was not FORTUNES FOR complex, Jewel is a new icon for spared from the unprecedented CAG, BEGINNING Singapore and has redefined what coronavirus disease (Covid-19) WITH THE PROMISE it means to be an airport and global pandemic that has enhanced Changi’s proposition caused massive disruption to the OF A POSITIVE as an attractive air hub for international aviation industry. As INDUSTRY OUTLOOK passengers. the virus escalated at speed around the world, countries imposed travel BUT ENDING ON A Jewel epitomises CAG’s bold spirit restrictions and tightened border SOBERING NOTE of innovation, and its successful controls in a bid to keep the virus at INSTEAD. launch to the world was symbolic bay. The strong performance that for the company as it turned 10 the Group had chalked up in the in 2019. We were honoured first ten months of the year was to have the Prime Minister of severely negated by the collapse in Singapore be our Guest of Honour air travel. at Jewel’s official opening in October, when we also marked Passenger traffic at Changi plunged CAG’s 10th anniversary. 32.8% and 70.7% y-o-y in February

04 Changi Airport Group CAG is determined to ride out this storm and we are confident of doing so because “of the strong fundamentals upon which we are anchored.

and March 2020 respectively. As has recognised a one-off non-cash with the use of virtual reality a result, for the first time since impairment of assets in Tom Jobim. technology to train staff in a 2008/09, Changi Airport saw safe and controlled simulated” passenger traffic decline, by 5.1% for Against the backdrop of a gloomy environment. We also enhanced the year to 62.9 million movements. business climate, the Group wildlife management with the Aircraft movement declined by closed the financial year with total approved use of pyrotechnics. 6.0%, with a total of 363,000 revenue of S$3.1 billion, 2.6% above In November 2019, we held landings and take-offs, while the previous year, largely due an inaugural engineering Changi’s total cargo throughput fell to first-time contributions from innovation day to cultivate a 7.5% to 1.97 million tonnes. Jewel. Net profit attributable to the culture of innovation among shareholder was S$435 million or our engineers, regardless of age, The sharp reversal of traffic growth 35.8% lower than the year before, seniority or expertise. These efforts due to Covid-19 inevitably created mainly due to the impairment demonstrated our commitment to a deep dent in Changi Airport’s of assets in Brazil, as well as the operational readiness, with safety retail revenue, which was otherwise impact of Covid-19. and productivity continuing to be growing by 1.5% in the first ten the critical areas of our focus. months of 2019/20 despite various Anchoring on Strong headwinds. As a result of Covid-19, Fundamentals Passion for Service Excellence concessions revenue declined by CAG is determined to ride out At CAG, delighting passengers is 57.5% in the last two months of this storm and we are confident in our DNA, and the year would 2019/20, with full-year revenue of doing so because of the strong not have been complete without down by 4.9%. At Jewel, where CAG fundamentals upon which we are new experiences to excite and holds a majority stake, business also anchored. As we look back at the surprise our visitors. Changi Airport suffered as Covid-19 dampened year in review, our achievements continued to be recognised as the visitor numbers and patronage are an encouraging reminder of world’s best with 27 best airport substantially. what the Group can accomplish, awards received during the year together with our partners. including an unprecedented Beyond Singapore, the Group’s eighth consecutive World’s Best overseas ventures through wholly- Operational Readiness Airport accolade by Skytrax. owned subsidiary, Changi Airports During the year, our Aviation Safety International (CAI), also experienced Unit successfully renewed the When we presented the world with a rough year worsened by Covid-19. Changi and Seletar Aerodromes’ a whole new multi-dimensional CAI’s key investment in Brazil’s Tom certification for another five years, experience at Jewel, with its array Jobim International Airport (Tom following the completion of of shops, restaurants, best-in- Jobim) in Rio de Janeiro, in which comprehensive audits by the Civil class attractions and lush verdant it holds a 51% stake, continued to Aviation Authority of Singapore. landscaping, we also enhanced face challenging market conditions. Changi Airport also achieved the Changi Experience with more Besides economic and political a deficiency-free rating by the airport facilities within Jewel, such factors, and the cessation of International Federation of Air as early check-in and GST refund operations of a major airline in May Line Pilots’ Associations for the 38th counters, a new Changi Lounge for 2019, Covid-19 caused declining consecutive year since the airport’s passengers, as well as an expanded passenger traffic and capacity cuts opening in 1981. and refreshed T1. by airlines, which further impacted Tom Jobim’s business prospects. We continued to improve safety At Changi’s terminals, we refreshed In view of these factors, the Group and efficiency in the airside our commercial offerings at

Annual Report 2019/20 05 CHAIRMAN & CEO MESSAGE

both the landside and airside. We transformed learning with Planning and Airside team was Besides introducing new brands the launch of a new Learning all-hands-on-deck to facilitate the and products, we opened a new Management System – Learn@ parking of unused planes of home- lifestyle event space, ST3PS, at CAG. This added to our suite of based airlines. T3’s basement 2 to cater for more cloud-based HR systems for more fun activities and hosted themed convenient access to learning CAG rolled out various assistance programming activities during the content on the go and enabled schemes for our partners. This school holidays and festive season. customised learning modules to included jointly funding a S$112 be developed in-house, with an million Aviation Sector Assistance In our commitment to create efficient system for tracking and Package with the Singapore a more inclusive airport, our reporting training completion. government to help partners airport management team defray costs and protect jobs. We converted existing restrooms at We are pleased to see our efforts have also been working to pass on the T3 basement into accessible endorsed, with a second-place the additional Enhanced Aviation changing rooms, including ranking among Singapore’s most Support Package and enhanced facilities such as an adult diaper attractive employers in the 2019 property tax rebates to our partners. changing station. Trials were also Singapore Randstad Employer conducted to introduce facilities Brand Awards. This was the sixth Given that a significant portion specially designed for persons with consecutive year that CAG had of rental for Changi Airport’s reduced mobility. been ranked in the top three. concessionaires is pegged to passenger traffic, the drastic fall Building on our customer loyalty Harnessing the Strengths of a in passenger volume at Changi initiatives, we enhanced the United Community Airport due to Covid-19 has Changi Rewards membership In an unpredictable and uncertain automatically helped to reduce programme to include points Covid-19 environment, the strength the rental costs for our tenants. To accrual at Jewel as well, giving of our airport community cannot further help them tide through visitors more reasons to shop be more valuable and critical. We this difficult period, various rental and dine at the airport. With have sought to lend our partners assistance packages were provided, the growing popularity of online unwavering support and worked starting from 1 February 2020. shopping, strengthening our closely with government agencies e-commerce offering was made to combat the challenges posed by To brace for a prolonged crisis, CAG a priority as we strove to grow the pandemic. has suspended operations in T2 our non-aeronautical business. and T4 to save on running costs Towards this end, iShopChangi’s At the onset of Covid-19, our such as utilities and cleaning as inventory expanded to more immediate priority was to well as to optimise resources across than 10,000 new products and safeguard airport workers and the airport’s terminals to better it achieved 58% growth in sales passengers. Precautionary match the low travel demand during the first 10 months of measures such as temperature and airlines’ flight operations. the year. screening, enhanced cleaning The suspension of T2 operations and safe distancing were put in will also allow for the terminal’s Care for Our People place, and we made it a point to expansion plans to be accelerated At the heart of CAG’s business go the extra mile to keep Changi’s and completed ahead of schedule, operations lies our people, cleaning standards high with by 18 months. Meanwhile, the whom we continue to develop the use of an innovative self- construction of T5 at Changi East and grow. As in the past, we disinfecting coating. has been paused for at least two engaged and empowered our years. employees through CAG’s annual As airlines reduced flights due to Learning Festival, with a focus on the decrease in travel demand, our Despite best efforts, some impact accelerating the digital readiness Aerodrome Safety Unit stepped on jobs has been unfortunately and innovation capabilities of up their risk assessment reviews to unavoidable. CAG has rendered all staff, including building their preserve operational safety amid assistance to our airport partners knowledge of cybersecurity and the fluid operating situation. At to facilitate work redeployment risk management. the airfield, our Airport Operations and jobs matching for their

06 Changi Airport Group CHAIRMAN & CEO MESSAGE

affected staff. We continue to work phone-based temperature- new world order, or planning for closely with various companies recording system, for staff. new developments to position across Singapore to fill vacancies Changi Airport for growth, we stand they have. In addition, CAG has Our Changi East team worked ready to meet this challenge. stepped-up reskilling and training relentlessly to help contain opportunities to help our tenants the Covid-19 situation at their In view of the significant impact tap Singapore’s SkillsFuture dormitories housing foreign of Covid-19 on CAG’s financial funding and other subsidies. workers. In just over a week, some results, and the need to conserve of the airport’s infrastructure for cash due to the uncertainty of the Even though passenger flights are emergencies, such as casualty pandemic’s impact on our business, now at the lowest levels in Changi’s clearance stations, was converted CAG has implemented salary cuts history, our air hub continues to into isolation facilities with the of up to 30% for management play a key role in the facilitation necessary infrastructure and and staff. The Group has also of cargo flights to enable global essential amenities to keep the recommended no dividend payout supply chain flow - especially workers safe. for 2019/20. We are grateful for the of vital commodities like food support and understanding of our and medical supplies. We also Preparing for Clearer Skies Ahead shareholder. continue to facilitate flights for The battle with Covid-19 has only returning overseas Singaporeans, just begun with travel recovery In these critical times, we including their smooth transition highly dependent on how countries appreciate and are grateful for the to designated Stay-Home Notice around the world manage strong support we have received accommodations. We have also border controls, the relaxation of from the Singapore Government been assisting stranded foreign air travel requirements and the and our partners. We are most passengers at the airport, as they development of viable medical privileged to have a stellar and await arrangements for flights out treatments for the virus. The future committed Board behind our of Singapore. does appear daunting with the management team to lend situation showing no signs of their wise counsel. We take this As much as we serve our abatement. opportunity to thank our retired passengers, we are also directors, Danny Teoh and Richard committed to ensuring the well- While these uncertain times have Magnus for their contributions to being of every airport worker. called for CAG to explore new CAG over the years. We are also During the initial days of the measures, what will stay the same pleased to welcome Chng Sok Hui, crisis, when there was a supply is our pursuit of excellence, spirit Kwa Kim Li, Wahab Yusoff and Kee crunch of items such as face of innovation, passion to serve Teck Koon to the Board as we chart masks and thermometers, CAG passengers and care for people. the course together, to see Changi procured these as well as personal This has been and will continue to Airport through these tumultuous protective equipment (PPE) not be the cornerstones supporting times. just for our staff, but also those of Changi Airport’s growth and our airport partners. development as we recover from the devastating impact of Covid-19. Within CAG, business continuity plans were activated with the The aviation industry remains segregation of staff performing promising in the long term as there critical functions to ensure that is still a need and demand from airport operations face minimal people to fly again, both for leisure Liew Mun Leong risk of disruption. Workplace and business. At CAG, we will Chairman adjustments were also carried out apply our boldness and creativity, such as setting up facilities and working with relevant agencies technological support for safe and partners, to seek solutions for distancing, split teams and work safe travel, under new policies and from home arrangements. Medical regulations. Be it the facilitation of tele-consultation was also arranged, safe travel for passengers, seeking Lee Seow Hiang along with the roll-out of a mobile new business opportunities in a Chief Executive Officer

Annual Report 2019/20 07 BOARD OF DIRECTORS

1

2

6

7 8

12

1. Liew Mun Leong 6. Michael George William Barclay

2. Lee Seow Hiang 7. Chia Song Hwee

3. Tan Ching Yee 8. Kee Teck Koon

4. Tan Gee Paw 9. Eric Ang Teik Lim

5. Lim Zhi Jian 10. Professor Tan Kong Yam

As of 17 July 2020

08 Changi Airport Group 4 5 3

11 10

9

15

14 11. Ng Chee Khern

13 12. Kelvin Fan

13. Chng Sok Hui

14. Kwa Kim Li

15. Wahab Yusoff

Annual Report 2019/20 09 BOARD OF DIRECTORS

Liew Mun Leong Mr Liew graduated from the Tan Ching Yee Chairman University of Singapore with a Mrs Tan is a Non-Executive Director Mr Liew is the Chairman of CAG. degree in Civil Engineering and of CAG. She was appointed to the He was appointed to the Board on is a registered professional civil Board on 1 May 2017. 16 June 2009. engineer. He has published five books, titled Building People: Mrs Tan is the Permanent Mr Liew was the founding Group Sunday Emails from a CEO, Secretary of the Ministry of President and CEO of CapitaLand Volumes 1–3, Building People Finance, Singapore. She also holds Limited. He is concurrently the Volume 4: Sunday Emails From the appointment of Permanent Chairman of Surbana a Chairman and Sunday em@ils Secretary (Special Duties), Prime Private Limited. Mr Liew sits on from a Chairman, Volume 5. Minister’s Office. She assumed the boards of Singapore-China these posts on 1 May 2016. She is Foundation Ltd, the Chinese Chairman of the Inland Revenue Lee Seow Hiang Development Assistance Council Authority of Singapore and Chief Executive Officer and Temasek Foundation Limited. the Accounting and Corporate Mr Lee is the CEO of CAG. He He also chairs the Board of Regulatory Authority, and a board was appointed to the Board as member of the National Research Temasek Foundation Nurtures CLG Executive Director on 16 June 2009. Foundation and the Lee Kuan Yew Ltd, the Management Advisory School of Public Policy. Board of NUS Business School Mr Lee is concurrently Deputy and the NUS School of Continuing Chairman of Changi Airports She was previously Permanent and Lifelong Education (SCALE) International Pte Ltd, Director Secretary at the Ministry of Industry Advisory Board. He is a of Jewel Changi Airport Holding Health and the Ministry of Senior International Advisor of Pte Ltd and Chairman of Changi Education. Before that, she Temasek. Foundation Board. He also chairs was the Chief Executive of the the National Library Board and sits then Infocomm Development Mr Liew is the Provost’s Chair on the Board of NTUC FairPrice Authority of Singapore, and also Professor (Practice) (on pro bono) Co-operative Ltd. He holds the Deputy Secretary (Infocomm at NUS Business School, NUS appointment of President, Airports and Media Development) at the Faculty of Engineering and the Lee Council International (ACI) Asia- former Ministry of Information, Kuan Yew School of Public Policy. Pacific Regional Board and is Communications and the Arts. He is also the Rector of NUS Ridge a Director on the ACI World Prior to these roles, she had worked View Residential College. Governing Board. at the Ministry of Education and Ministry of Trade and Industry. He was elected the President of From 1989 to 2005, Mr Lee International Organisation for held various appointments in Mrs Tan read Economics at Standardisation (ISO) for the term the Republic of Singapore Air Cambridge University and 1997 to 1998. Force (RSAF) and the Ministry obtained her Masters of Science in of Defence, with his last Management from the Graduate With over 47 years of experience appointment being Deputy Head School of Business, Stanford in the construction and real of Air Operations in HQ RSAF. University. estate industries both locally From 2005 to 2008, he was the and overseas, Mr Liew has been Principal Private Secretary to the involved in several of Singapore’s Tan Gee Paw late Minister Mentor Lee Kuan Yew Mr Tan is a Non-Executive Director public sector projects, including in the Prime Minister’s Office. of CAG. He was appointed to the the development of Changi Board on 1 May 2017. Airport from the beginning Mr Lee was awarded the in 1975. For his exceptional SAF (Overseas)/President’s Mr Tan previously served as contributions, Mr Liew was Scholarship in 1989 and the Chairman of the Public Utilities awarded the Meritorious Service SAF Postgraduate Scholarship Board, Singapore’s national water Medal by the President of (General Development) in 2002. agency from 1 April 2001 until his Singapore in 2011. In 2016, Mr Liew He holds a Bachelor of Arts retirement on 31 March 2017. Mr was conferred France’s National (Honours) from the University of Tan is a member of a number of Order of the Legion of Honour Cambridge, UK, and a Master of government committees. He is (Ordre national de la Légion Business Administration from the Adjunct Professor at the Lee d’honneur), with the rank of the Massachusetts Institute of Kuan Yew School of Public Policy, Knight. Technology, USA. National University of Singapore.

10 Changi Airport Group BOARD OF DIRECTORS

Previous appointments held by Singapore and awarded the drive the rejuvenation of Mr Tan were Principal of Ngee Lifetime Engineering Achievement into an integrated wildlife and Ann Polytechnic, and Permanent Award in 2015. Mr Tan was also nature precinct, and Wildlife Secretary of the then Ministry elected as a Fellow of the Academy Reserves Singapore, the operator of the Environment and Special of Engineering, Singapore in 2012. of four award-winning attractions Advisor to Land Transport Authority. – Jurong Bird Park, Night Safari, He is currently a member of CAG’s Mr Tan is the Special Advisor to River Safari and Singapore Zoo. Executive Committee on Airport Chairman, PUB, and a member of Development and a Director of the Centre for Liveable Cities (CLC) Prior to joining Mandai Park Surbana Jurong Private Limited. Panel of Distinguished Advisors. Holdings, Mr Barclay was CEO of Development Mr Tan graduated with First Lim Zhi Jian Corporation for seven years. Class Honours in Bachelor of Mr Lim was appointed the This followed on from stints Engineering (Civil) from the Alternate Director to Mrs Tan as Regional Vice President University of Malaya in 1967, and Ching Yee on 1 May 2017. Asia for the International Air a Master of Science in Systems Transport Association (IATA) and Engineering from the University of He is Director (Reserves and Chief Executive of SilkAir. Mr Singapore in 1971. He was conferred Investment) at the Ministry of Barclay began his career with an Honorary Degree of Doctor Finance. Prior to joining the , holding various of Science from the University of Ministry of Finance in June 2016, portfolios in Singapore, Germany, Westminster, UK in 1993, and an he held various appointments in Switzerland, Belgium and the UK. Honorary Doctorate in Engineering the Ministry of Manpower and the from Sheffield University, UK in Monetary Authority of Singapore. Mr Barclay has a Master of Science 1995. In 2013, he was conferred At the Ministry of Manpower, degree in Transport Planning & an Honorary Degree of Doctor he was the Deputy Director of Engineering from the University of Engineering by the Nanyang the Foreign Workforce Policy of Leeds and he completed the Technological University. Department. At the Monetary Advanced Management Program at Harvard Business School. Mr Tan received the Public Authority of Singapore, he held the Administration Medal (Silver) positions of the Deputy Director in 1978 and a Special Award of the Strategic Planning Office Chia Song Hwee (Gold Medal) for Clean River and Senior Policy Analyst of the Mr Chia is a Non-Executive Commemoration in 1987. He Prudential Policy Department. Director of CAG and was also received the Medal of appointed to the Board on 1 Commendation at the NTUC May Mr Lim was awarded the Overseas October 2018. Day Award in 2005, the President’s Scholarship by the Monetary Award for the Environment in Authority of Singapore and Mr Chia is the Deputy Chief 2007 and the President’s Science graduated from Carnegie Mellon Executive Officer of Temasek and Technology Medal in 2015. Mr University with a double major International Pte Ltd (Temasek). Tan was conferred the Meritorious in Computer Engineering and Service Medal in 2001 for his work Economics. He also holds a Mr Chia is also a member of as Permanent Secretary of the Masters in International Policy Singapore’s Advisory Council on then Ministry of the Environment from Stanford University and a the Ethical Use of AI and Data, and the Distinguished Service Master in Public Administration as established by the Infocomm Order in 2010 for his work as Edward S. Mason Program (Mason Media Development Authority. Chairman of PUB. In 2011, Mr Tan Program) from the Harvard was conferred the Distinguished Kennedy School. Prior to joining Temasek in 2011, Engineering Alumni Award by the Mr Chia was the Chief Operating National University of Singapore; Michael George William Barclay Officer at GLOBALFOUNDRIES. the Distinguished Member Award Mr Barclay is a Non-Executive Before the integration of by the National University of Director of CAG. He was appointed GLOBALFOUNDRIES and Singapore Society in 2014; and to the Board on 16 June 2009. Chartered Semiconductor the Distinguished Professional Manufacturing Ltd (Chartered), he Engineer Award in 2018 by the Mr Barclay is the Group CEO of served as Director of the Board, Professional Engineers Board. He Mandai Park Holdings (MPH). and President & CEO of Chartered was elected an Honorary Fellow He oversees both Mandai Park from June 2002 to December of the Institution of Engineers, Development, the entity set up to 2009. Mr Chia also held a number

Annual Report 2019/20 11 BOARD OF DIRECTORS

of management positions since 2019. He also stepped down as the Raffles Medical Group, Wing he joined Chartered in 1996, non-executive Chairman of Changi Tai Holdings Limited, Surbana including Senior Vice President, Airports International Pte Ltd (CAI) Jurong Pte Ltd and NetLink NBN Chief Financial Officer, and Chief in December 2019, a post he has Management Pte Ltd. He is also Administrative Officer. held since 2012. He was also the the Co-Chairman of the SGX Non-Executive Director, Fullerton Disciplinary Committee. He was Prior to his tenure at Chartered, Fund Management Company Ltd. previously a Director of Hwang Mr Chia was from the Capital () Bhd and DBS Schlumberger group, a global Mr Kee started his career in Foundation Ltd. oilfield services group, where he 1979 with the Singapore Armed was Regional Controller for Asia, Forces and was with the Ministry Mr Ang graduated from Australia and Middle East for the of Defence until 1991. Thereafter the University of Singapore drilling group. he held senior management with a Bachelor of Business appointments with several Administration (Honours) degree. Mr Chia graduated with organisation before joining a Bachelor of Business the Capitaland Group in 2003. Professor Tan Kong Yam (Accountancy) with distinction He spent 13 years in various Professor Tan is a Non-Executive from Edith Cowan University, senior leadership positions in Director of CAG. He was appointed Australia and is a member of CPA CapitaLand and retired as its to the Board on 30 January 2015. Australia. He was honoured with Chief Investment Officer in July the EE Times Annual Creativity 2009. His other senior roles in Professor Tan is presently Professor in Electronics (ACE) Award for CapitaLand included being CEO of Economics at the Nanyang Executive of the Year in 2007. overseeing the group’s real estate Technological University. He is also fund management, commercial, Deputy Chairman of APS Asset retail mall and serviced residence Kee Teck Koon Management (China) and sits on Mr Kee is a Non-Executive Director businesses. the boards of Surbana Jurong of CAG. He was appointed to the and CapitaRetail China Trust Board on 1 March 2020. Mr Kee holds a Master of Arts in Management. Engineering Science from Oxford Mr Kee is the Deputy Chairman University, United Kingdom. From 1984 to 1988, Professor of NTUC Income Insurance Co- Tan was the Assistant Director operative Limited and from 1 Eric Ang Teik Lim on exchange rate policy at the October 2019, Non-Executive Mr Ang is a Non-Executive Monetary Authority of Singapore Director and Board Advisor of Director of CAG. He was and assistant to the late Dr Goh NTUC Enterprise Co-operative appointed to the Board on 18 Keng Swee, the former Deputy Limited, the holding entity of November 2009. Prime Minister of Singapore, who NTUC FairPrice, NTUC Income, had been invited by Mr Deng NTUC First Campus and four other Mr Ang was a Senior Executive Xiaoping to advise China on social enterprises. He is also the Advisor at DBS Bank before economic development strategy. Non-Executive Director of NTUC retiring in January 2020. He From June 2002 to June 2005, Fairprice Co-operative Limited, has been with DBS Bank since he was a senior economist at the and an independent director the start of his banking career World Bank office in Beijing. In of two public listed companies, in 1978. Prior to his role as an 2004, he was a member of the namely, CapitaLand Ltd and Advisor at DBS Bank, he was World Bank expert group on the Raffles Medical Group Ltd. the head of its Capital Markets. 11th five-year plan (2006 to 2010) Through the years, Mr Ang has for the State Council in China. The Mr Kee also sits on the board of developed a wealth of experience expert group provided analysis Mandai Park Holdings Pte Ltd and in Singapore’s capital markets, and policy recommendations to is a member of Angsana Fund having worked on landmark the Chinese government. Prior to Investment Committee (AFIC), deals such as the listing of that, he was the chief economist Singapore Labour Foundation. Singapore Airlines Ltd, Singapore of the Singapore government at Telecoms Ltd and CapitaMall the Ministry of Trade and Industry Mr Kee was the Executive Director Trust Ltd. (1999 to 2002) and head of the of NTUC Enterprise Co-operative Department of Strategy and Policy Limited from January 2017 before His current directorships at the NUS Business School. He he stepped down in September include Sembcorp Marine Ltd, has also worked at the Hoover

12 Changi Airport Group BOARD OF DIRECTORS

Institution at Stanford University of Public Administration from Chng Sok Hui and World Bank in Washington. Harvard University. Mrs Chng is a Non-Executive Director of CAG. She was Professor Tan is a graduate appointed to the Board on 1 Kelvin Fan of Princeton University with a Brigadier General (BG) Fan is a October 2019. Bachelor of Art (Honours) and has Non-Executive Director of CAG and a PhD in Economics from Stanford was appointed to the Board on 15 Mrs Chng is the Chief Financial University. August 2018. Officer of DBS Group, and a member of the DBS Executive Ng Chee Khern BG Fan is currently the Chief of Committee. Prior to this Staff – Air Staff in the Republic of appointment in 2008, she was the Mr Ng is a Non-Executive Director Singapore Air Force (RSAF). He is Managing Director and Head of of CAG. He was appointed to the concurrently the Commander of Risk Management at DBS Group Board on 1 March 2018. the Air Defence and Operations and held the position for six years. Mr Ng is Permanent Secretary Command. for Smart Nation and Digital Mrs Chng is the Chairman of BG Fan joined the Singapore Government in the Prime the Board of DBS Bank India Armed Forces (SAF) in 1998 as an Minister’s Office. He leads Limited. She serves on the Board Air Warfare Officer and has served the Smart Nation and Digital of Singapore Exchange Limited various command roles in Ground Government Group, which was and chairs its Risk Management Based Air Defence units. Prior to Committee. Additionally, she formed in May 2017. He is also his current appointment, BG Fan is the Council Member of the Chairman of the Government has served as Director (Policy) in International Integrated Reporting Technology Agency of Singapore the Ministry of Defence, as well as Council and member of the (GovTech) board, a Director of Head Air Operations and Head Air CareShield Life Council. Mrs Chng the boards of CapitaLand Mall Plans in the RSAF. has previously served on the Trust Management, member Boards of Bank of the Philippine of CapitaLand Mall Trust BG Fan is also a member of the Islands, the Inland Revenue Management Audit Committee Singapore Administrative Service. Authority of Singapore, Housing & and a board member of the Between 2007 and 2009, he Development Board, Accounting National Research Foundation served as Senior Assistant Director Standards Council and, for 10 years, (NRF). in the Ministry of Trade and as the Supervisor of the Board of Industry, where he was responsible DBS Bank (China) Limited. Mr Ng previously held the for developing tourism policies following positions: Permanent such as the Integrated Resorts. Secretary (Defence Development) Mrs Chng is a Chartered Financial in Singapore’s Ministry of Defence, In 1998, BG Fan was awarded the Analyst (CFA), a Certified Financial 2nd Permanent Secretary in SAF Overseas Scholarship. He Risk Manager (FRM), an IBF Singapore’s Ministry of Health has a Master of Economics from Distinguished Fellow as well as from August 2014 to February Cambridge University, UK, and a Fellow Chartered Accountant of Singapore. Mrs Chng was 2016, Director of the Security and a Master of International and the recipient of AsiaRisk’s Risk Intelligence Division from 2010 to Developmental Economics from Manager of the Year Award in 2014, and Chief of the Republic Yale University, USA. BG Fan was 2002 and The Asian Banker’s of Singapore Air Force from 2006 also a 2010 graduate of the US Air Inaugural Risk Manager of the to 2009. Mr Ng was also a board Force Command and Staff College Year Award in 2012. Mrs Chng member of the Civil Aviation in Maxwell Air Force Base, USA. was named Best CFO at the Authority of Singapore. In 2013, BG Fan was awarded the SAF Post-Graduate Scholarship Singapore Corporate Awards 2013 Mr Ng was a recipient of the as well as the Lee Kuan Yew and Accountant of the Year in the President’s Scholarship and Post-Graduate Scholarship. inaugural Singapore Accountancy Overseas He graduated with a Master of Awards in 2014. She is a member Scholarship. He holds a Bachelor Business Administration from the of the International Women’s of Arts (Second Upper Class Sloan School of Management, Forum (Singapore). Honours) and a Master of Arts in Massachusetts Institute of Philosophy, Politics and Economics Technology in 2014. In 2015, BG Fan Kwa Kim Li from the University of Oxford. was awarded the Public Service Ms Kwa is a Non-Executive He also graduated with a Master Administration (Military) (Silver). Director of CAG. She was

Annual Report 2019/20 13 BOARD OF DIRECTORS

appointed to the Board on 1 provides integrated security October 2019. platform services to enable enterprises and government Ms Kwa is the Managing Partner agencies to gain situational of Lee and Lee, Advocates and awareness of their extended Solicitors, one of Singapore’s enterprise environment to reduce oldest law firms, founded in 1955 cyber and operational risks. by Singapore’s first Prime Minister Mr Lee Kuan Yew. With more than 30 years of experience in the IT, Computer & Ms Kwa graduated in 1979 Cybersecurity Industry, Mr Wahab from the National University of has held various leadership roles Singapore and was called to the in numerous companies that are Singapore Bar in 1980. She has focused on helping multi-national been in active practice with the corporations establish and grow firm for over 35 years, and her their operations in the Asia Pacific practice spans various aspects region. Prior to joining Forescout of law. Although her pet area of Technologies, Mr Wahab was practice is real estate, Ms Kwa the Vice President and General also advises on loans, trusts, wills, Manager of Palo Alto Networks probates, joint ventures and cross ASEAN from 2015 to 2017. He also border transactions. held the role of Vice President of McAfee & Intel Security South Asia from 2009 to 2015 and was EMC Ms Kwa also holds various South Asia’s Vice President and positions outside her legal General Manager from 2003 to practice, including directorships 2009. in Jurong Town Corporation, Mapletree Commercial Trust and Mr Wahab is presently a Member HSBC Bank (Singapore) Limited. Board of Director of Workforce In the health sector, she sits on Singapore (WSG), EZ-Link Pte Ltd the Board of National University and Rekanext Capital Partners (a Health System (NUHS) and is a Venture Capital fund focused on Trustee of the Singapore Cardiac ASEAN pre-series start-ups). He Society. She is also the Honorary is also a member of Singapore’s Advisor to the Real Estate Future Economy Council, Developers Association (REDAS). Advisory Committee of Singapore Abroad, she sits on the Boards of Polytechnic School of Computing, London listed Laura Ashley PLC Vice Chairman of Institutional and Corus UK Group of Hotels. Discipline Advisory Committee 6 - Singapore Prisons and Chairman She was awarded the Ministry of of M3 @ -. Education “Service to Education” Award and the Ministry of Health Mr Wahab holds a Bachelor 5 years Appreciation Service of Engineering degree from Award. the National University of Singapore and is a graduate of INSEAD’s International Executive Wahab Yusoff Programme. Mr Wahab is a Non-Executive Director of CAG. He was appointed to the Board on 1 October 2019.

Mr Wahab holds the position of Vice President (Asia Pacific & Japan) at Forescout Technologies Pte. Ltd. Forescout Technologies

14 Changi Airport Group EXECUTIVE MANAGEMENT TEAM

1 2

3 4

5 6

1. Lee Seow Hiang 4. Ng Lai Leng Chief Executive Officer Chief Financial Officer Executive Vice President, Corporate 2. Eugene Gan Executive Vice President, Enterprise Chief Executive Officer, Performance & Development Changi Airports International 5. Tan Lye Teck 3. Lim Peck Hoon Executive Vice President, Executive Vice President, Airport Management Commercial 6. Yam Kum Weng Executive Vice President, Airport Development

Annual Report 2019/20 15 MANAGEMENT TEAM

CHANGI AIRPORT GROUP

Ang Siew Min Jacqueline Lee Matthew Ngan Senior Vice President, Senior Vice President, Senior Vice President, Development Operations Changi East Programme Changi East Mechanical & Electrical Management Office Chan Boon Seng Ong Chee Chiau Group Project Director, Leong How Yin Group Senior Vice President, Changi East Construction Group Project Director, Changi East Terminal 5 Planning Changi East Planning, Choy Da Wen Design and Construction Ong Sim Lian Group Senior Vice President, Group Senior Vice President, Transformation & Enterprise Leong Kok Hoong Design Management Development Senior Vice President, Development Contracts Tan Boon Seng Chung Choon San & Cost Control Project Director, Group Project Director, Project Control Changi East Construction Leong Yuh Khee Senior Vice President, Ivan Tan Goh Hwai Kar Corporate IT & Technology Group Senior Vice President, Senior Vice President, Corporate and Marketing People Services & Rewards Leslie Pakianathan Communications Project Director, Jayson Goh Tan Kok Siong Tunnel Construction Managing Director, Management Project Director, Airport Operations Management Changi East Construction Lim Ching Kiat Hung Jean Justina Tan Managing Director, Chief Executive Officer, Air Hub Development Managing Director, Jewel Changi Airport Development People Albert Lim Koh Miaw Ling Teng Hwee Onn Senior Vice President, Senior Vice President, Passenger Experience Senior Vice President, Terminal 5 Building Engineering Management Ling Ming Koon & Systems Planning Koh Ming Sue Senior Vice President, Managing Director, Teo Chew Hoon Airport Operations Planning Engineering & Development Group Senior Vice President, & Strategy Airside Concessions Senior Vice President, Leck Siew Leng Airside Operations Wen Dazhi Senior Vice President, Senior Vice President, Internal Audit Jeffrey Loke Tunnel Design Management Alvin Lee Senior Vice President, Pricing & Commercial Strategy Ivy Wong Chief, Senior Vice President, Airport Emergency Service Jessie Loong Strategy & Transformation Audrey Lee Senior Vice President, Legal & Compliance Yeo Kia Thye Group Senior Vice President, Managing Director Regulatory & Economic Affairs Airport Operations Planning & Airside

CHANGI AIRPORTS INTERNATIONAL

Sher Khan Peter Lee Chung Shek Ng Kuan Luen Managing Director, Managing Director, Director, Changi Airport Consultants Changi Airport Planners Portfolio Strategy & Engineers Mabel Kwan Wei Yee Oon Wei Ying Lim Wee Ping Director, Managing Director, Managing Director, Risk Management Investments Strategy and Planning See Ngee Muoy As of 17 July 2020 Low Beng Lan Managing Director, Chief Financial Officer Legal & Compliance

16 Changi Airport Group FINANCIAL REVIEW

Financial Highlights

FY15/16 FY16/17 FY17/18 FY18/19 FY19/20

Profit & Loss (S$’mil)

Total revenue 2,164 2,305 2,602 3,040 3,119

Total expenses 1,284 1,401 1,649 2,120 2,252

EBITDA 1,167 1,208 1,310 1,466 1,597 Profit attributable to equity holder of the Company 786 662 849 677 435

Financial Position (S$’mil)

Assets 8,460 9,260 14,894 15,108 15,953

Liabilities 1,874 2,223 6,457 6,647 7,818

Equity 6,586 7,037 8,437 8,461 8,1 3 5 Equity attributable to shareholder of the Company 6,594 7,044 7,600 7,839 7,892

Financial Ratios

EBITDA margin 53.9% 52.4% 50.3% 48.2% 51.2%

NPAT margin 36.2% 28.5% 32.1% 18.9% 4.7%

Return on equity 12.3% 9.6% 1 1 .6% 8.8% 5.5%

Annual Report 2019/20 17 FINANCIAL REVIEW

The Year in Review The Group1 achieved consolidated +2.6% operating revenue of S$3.1 billion in 48% 39% financial year 2019/20, representing S$1,498 S$1,224 a 2.6% growth from the previous year. Changi Airport remained the FY19/20 key revenue contributor for the Group Revenue Group, accounting for 85% of the Group’s total revenue, followed by S$3,119 (million) Airport Tom Jobim Airport, a 51% owned services subsidiary of Changi Airports Airport concessions International (CAI), at 10%, and and rental Jewel Changi Airport (Jewel) at income 13% 4%. The opening of Jewel in April Others S$397 2019 created a new revenue stream for the Group and was the key driver for the increase in Group attributable to shareholder (or Net recording a plunge in passenger revenue. The Group performed Profit) of S$435 million, a decrease of movements of 32.8% and 70.7% strongly in the first ten months of 35.8% as compared to the prior year. y-o-y in February and March 2020 the financial year, fuelled by strong respectively. It ended the financial travel demand at Changi Airport as Group Operating Revenue year at 62.9 million passenger well as Jewel’s opening. However, Changi Airport performed strongly movements, 5.1% lower than in the strong performance was in the first ten months of 2019/20. 2018/19. adversely impacted in the last two By the end of January 2020, months due to concerns about the passenger movements had grown The sharp reversal in traffic growth Covid-19. The resulting global travel due to Covid-19 inevitably created restrictions and border controls led to 57.8 million, 4.2% higher year- to a collapse in the demand for air on-year (y-o-y). The commendable a dent in Changi’s retail business, travel. improvement was driven by strong which had otherwise grown in travel demand, partially offset the first ten months of 2019/20. The Covid-19 pandemic also by a reduction caused by the Concession revenue dived by 57.5% affected the financial performance insolvency of Jet Airways (which in the final two months of 2019/20 of the Group’s airport investments resulted in the loss of nine daily and consequently, Changi Airport overseas, particularly Tom Jobim India-Singapore services), as well as registered a 4.1% y-o-y decline in Airport in Rio de Janeiro, Brazil. capacity constraints faced by airline airport concession and rental income The market conditions in Brazil partners arising from the worldwide to S$1.3 billion. continued to be challenging. grounding of the Boeing 737 Max Besides economic and political aircraft. Underpinned by the strong Overall, operating revenue recorded factors and the cessation of passenger traffic growth, concession by Changi Airport for the full year operations of a major airline in May sales at Changi grew 1.5% in the first amounted to S$2.6 billion, flat from 2019, Covid-19 caused declining ten months of the financial year. the year before, due to the dismal passenger traffic and capacity cuts performance in the last two months. by airlines, which further impacted However, demand for air travel the airport’s business prospects. As collapsed in the last two months The Covid-19 pandemic also affected a result, the Group has recognised of the financial year, as fears of the financial performance of the a one-off non-cash impairment of the Covid-19 outbreak led to Group’s overseas investments, in assets in Tom Jobim. government-imposed travel particular that of Tom Jobim Airport restrictions and border controls in Rio de Janeiro, Brazil. Revenue Consequently, the Group ended around the world. This crippling turn contributed by Tom Jobim fell by the financial year with a net profit of events resulted in Changi Airport S$38 million y-o-y to S$299 million

1 The CAG Group comprises Changi Airport Group (Singapore) Pte Ltd and its subsidiaries, mainly made up of Changi Airports International (CAI) Group (which holds a stake in Tom Jobim International Airport in Rio de Janeiro), Jewel Changi Airport (Jewel) Group and Changi Travel Services (CTS) Group.

18 Changi Airport Group FINANCIAL REVIEW

as a result of the challenging reduced the rental costs for tenants. monitoring and prevention. This market conditions and the Covid-19 To help tenants tide through the was partially offset by a reduction pandemic. challenging retail climate, various in employee compensation costs rental assistance packages were as the Group started to put in place On a brighter note, the highly provided, starting from 1 February measures to tighten its operating anticipated opening of Jewel in 2020. Beyond rental adjustments cost in view of the Covid-19 April 2019 brought in an additional and rebates, operating hours pandemic. revenue source for the Group. While for retail shops have also been sales at Jewel was also affected by shortened to help tenants reduce Depreciation and amortisation Covid-19 in the last two months of their operating costs. expenses, which formed the the financial year, Jewel’s higher- largest component of the Group’s than-expected number of visitors During the year, CAG continued operating expenses, increased in its first year of operations helped to support its airline partners by 33.7% y-o-y to S$730 million. to supplement the Group’s topline through multiple incentive and This was mainly attributed to with S$129 million in revenue in collaborative programmes under the opening of Jewel and the FY2019/20. the Changi Airport Growth Initiative completion of the T1E project to incentivise airlines to pursue and the adoption of SFRS 116 Overall, despite the gloomy growth, drive traffic and enhance Leases. Under this new accounting operating environment following connectivity to Changi. standard, the expenses related the Covid-19 outbreak, the Group’s to Changi’s land leases previously operating revenue achieved Jewel has also played its part in shown in the Consolidated Income 2.6% y-o-y growth to reach S$3.1 supporting its tenants during these Statement as “annual ground billion, largely due to first-time uncertain times. When the Covid-19 rent” are replaced by depreciation contributions from Jewel. pandemic struck, Jewel immediately expense and interest expense. offered its tenants rental rebates Relief Provided to Partners from February. Additional rebates Net Profit With air travel grinding to a halt, were offered post financial year-end. The Group registered Net Profit of the Group has rolled out various S$435 million, 35.8% lower than the assistance schemes to help its Group Operating Expenses prior year. This was mainly driven by partners operating at Changi Airport On the cost front, the Group’s weaker operating performance due tide through the crisis. operating expenses increased by to the impact of the impairment of 6.2% to S$2.3 billion, largely due to assets at Tom Jobim Airport as well Together with the Singapore higher depreciation and operating as Covid-19. Government and the Civil Aviation cost incurred with the opening Authority of Singapore (CAAS), of Jewel in April 2019 as well as Tom Jobim Airport suffered losses a S$112 million Aviation Sector investing in new capabilities in drone during the year and the demand Assistance Package (ASAP) was launched in February 2020 to help Changi Airport’s partners defray costs, maintain jobs as well as 13% +6.2% safeguard Changi’s air connectivity. S$288 32% In addition to the ASAP, CAG has S$730 Depreciation also been working to pass on the 15% and amortisation additional Enhanced Aviation S$348 FY19/20 Services, security Support Package and enhanced Group Expenditure and other related expenses property tax rebates to its partners. Government S$2,252 charges and As a significant portion of (million) CAAS services rental for Changi Airport’s retail Maintenance of concessionaires is pegged to 16% land, buildings S$353 and equipment passenger traffic, the low levels of 24% Employee passenger traffic at Changi Airport S$533 compensation due to Covid-19 automatically

Annual Report 2019/20 19 FINANCIAL REVIEW

for travel is expected to remain Cash and cash equivalents air travel demand will persist in suppressed in the immediate future amounted to S$2.4 billion, S$659 the near term due to Covid-19, the as the recovery of the industry may million higher than the previous Group has embarked on significant take a few years. As operations year. This increase was generated cost cutting measures to reduce in Tom Jobim Airport have been mainly from operating activities, operating and capital expenditure to affected by the challenging business buoyed by the strong performance conserve cash. For instance, Terminal environment in Brazil and the during the first ten months of the 2 operations have been suspended Covid-19 pandemic, an impairment financial year, partially offset by for 18 months from 1 May 2020, review was carried out to assess the capital expenditure incurred for while Terminal 4 has been placed recoverable amount of its intangible development projects. The strong on standby since 16 May 2020 until assets, primarily its concession cash position from past prudent air travel demand picks up and a right to operate and manage Tom cash management coupled sufficient number of flights return to Jobim Airport. As a result of the with cost cutting measures will the terminal. In addition, Singapore’s assessment, the airport recorded an strengthen the Group‘s resilience Ministry of Transport has announced impairment charge of S$323 million as it manages the challenges of the that the construction of Terminal of which the Group’s 51% share Covid-19 pandemic. 5 would be paused for at least two amounted to S$165 million. Due to years. This is to allow for time to lower profit projections, Tom Jobim With the adoption of SFRS 116 assess traffic conditions, as well as Airport also wrote down its deferred Leases on 1 April 2019, most of to undertake studies to understand tax assets to its recoverable amount, the leases previously classified as how the current designs could be which further lowered the Group’s operating leases were brought adapted for potential new safety and Net Profit by S$35 million. onto the balance sheet as right- regulatory requirements that are to of-use (ROU) assets and lease be expected post Covid-19. Financial Position liabilities. As at 1 April 2019, the As at 31 March 2020, the Group’s Group recognised ROU assets of The effect of Covid-19 on the aviation total assets and total liabilities S$1.2 billion and lease liabilities of industry is without precedent. The amounted to S$16.0 billion and S$1.1 billion, with no restatement of operating results of the Group is S$7.8 billion respectively. comparative information. expected to be materially and adversely impacted for the year Half or 50.8% of the Group’s As at 31 March 2020, the Group’s ending 31 March 2021. However, the total assets were made up of total loans and borrowings Group will continue to invest towards property, plant and equipment amounted to S$1.8 billion, or 23.1% achieving Changi Airport’s long-term and investment property. During of total liabilities. The majority of the the year, the Group invested close Group’s loans and borrowings are competitiveness while ensuring that to S$1.0 billion for the upkeep not due for repayment within the it maintains high standards of safety of airport facilities as well as the next 12 months. and security. capacity enhancement such as Jewel, T1 expansion, the three- Shareholder’s equity increased In the longer term, the impact of runway system and the ongoing marginally by less than 1% to Covid-19 on the operational and Changi East development. reach S$7.9 billion. The increase financial performance of the Group is attributed to the Net Profit remains uncertain, and recovery of Intangible assets of S$3.5 billion generated by the Group of S$435 the aviation industry is dependent made up 22.2% of the Group’s million, offset by payment of on future developments such as the total assets, comprised mainly of dividends in relation to the previous opening up of international borders, the Group’s concession right to financial year, as well as a reduction requirements and regulations operate and manage Tom Jobim in the carrying value of Tom Jobim for air travel, as well as medical Airport until 2039. A corresponding Airport due to the devaluation breakthroughs. The Group will concession payable of S$2.7 billion, of the Brazilian Real vis-à-vis the continue to work closely with the or 34.8% of the Group’s total Singapore Dollar. relevant authorities and its airport liabilities, represented the Group’s partners to pursue recovery in the payment obligations to the Brazilian Financial Outlook air travel sector while enabling a safe national agency of civil aviation for With the acute decline in passenger and comfortable flying experience for the concession right. traffic and the likelihood that weak all passengers.

20 Changi Airport Group CORPORATE GOVERNANCE

The Board and Management of CAG (‘the Company’) The profiles of the Directors can be found on are deeply committed to our Company’s core value – pages 8 to 14 in this annual report. Changi integrity – which is at the heart of everything we do. Airports International Pte Ltd (CAI), a wholly- We strive to meet and maintain the highest standards owned subsidiary of the Company, has a separate of corporate governance, professionalism and Board of Directors, the majority of whom are also integrity, to build a company our stakeholders can be independent. proud of. To operate a sustainable business over the long term and to uphold and protect the Company’s 4. The roles of the Chairman and the CEO are brand and reputation, we strongly believe in being separate and distinct. The Chairman leads the accountable to its immediate business and regulatory Board and facilitates effective and comprehensive environment, as well as to the global community. Board discussions and decision-making on strategic issues, while the CEO has full executive The Company’s Code of Conduct sets out the responsibility for the management of the principles and standards of conduct that it expects Company’s businesses and implementation of the of all employees in their day-to-day activities and in Group’s strategies and policies. the decisions they make. The Company has recently enhanced its whistle-blowing policy to detect and 5. Nine committees have been formed to assist the deter unethical or illegal conduct, and to protect Board in the detailed consideration of various whistle-blowers from retaliation. matters. These are the Executive Committee (EXCO), Executive Resource and Compensation The Board of Directors 1. The Company’s Board of Directors is our highest Committee (ERCC), Audit Committee (AC), Tenders decision-making body. It oversees the Company’s Committee (TC), Executive Committee on Airport long-term strategies and provides guidance to Development (ECAD), Operational Risk and Safety Management for the long-term performance and Committee (ORSC), Nominating Committee financial soundness of the CAG Group (‘the Group’), (NC), Capital Management Committee (CMC) while safeguarding the interests of stakeholders. and Technology Development Committee (TDC). Each committee is governed by its own terms Composition and Balance of reference, which sets out the scope of the 2. Headed by Non-Executive Chairman, Mr Liew committee’s authority, duties and responsibilities. Mun Leong, the Board comprises 15 Directors. Mr Ad-hoc committees are also formed from time to Lee Seow Hiang, our CEO, is the only executive time to review specific issues. member of the Board. The majority of our Board members are independent. Our Directors are 6. The Board meets at least four times a year. individuals with broad and diverse expertise and experience. Access to Information 7. Prior to each Board Meeting and when necessary, 3. The Board Directors of the Company are: the Board is provided with pertinent information – Mr Liew Mun Leong - Chairman including updates on the Company’s operating and Mr Lee Seow Hiang - CEO financial key performance indicators, regulatory, Mrs Tan Ching Yee - Shareholder Representative industry and other significant developments Mr Lim Zhi Jian (Alternate Director to Mrs Tan Ching relating to the Group – to enable the Board to make Yee) informed and sound decisions. The Board has full Mr Michael George William Barclay access to the Senior Management team and the Mr Eric Ang Teik Lim Company Secretary. Should the Directors require Mr Danny Teoh Leong Kay (retired on 30 September 2019) independent professional advice on matters Mr Richard R. Magnus (retired on 30 September 2019) relating to the businesses or issues affecting their Professor Tan Kong Yam duties, the Company will, at its expense, arrange for Mr Tan Gee Paw the appointment of relevant professional advisors. Mr Ng Chee Khern Mr Chia Song Hwee Capital & Investments BG Kelvin Fan 1. The members of the EXCO are: Mrs Chng Sok Hui (appointed on 1 October 2019) Mr Liew Mun Leong - Chairman Ms Kwa Kim Li (appointed on 1 October 2019) Mrs Tan Ching Yee Mr Wahab Yusoff (appointed on 1 October 2019) Mr Eric Ang Teik Lim Mr Kee Teck Koon (appointed on 1 March 2020) Mr Lee Seow Hiang

Annual Report 2019/20 21 CORPORATE GOVERNANCE

2. The EXCO reviews and recommends to the Board Accountability and Audit financing and investment strategies of the Group Accountability and approves significant investments by the 1. Management provides all members of the Board Company and CAI. The EXCO also approves treasury with reports on operating and financial information matters such as the acceptance of banking and and key performance indicators on a quarterly basis credit facilities, granting of corporate guarantees, and as the Board may require from time to time, to debt capital market issuance, opening of bank enable the Board to make balanced and informed accounts as well as hedging policies. The EXCO assessments of the Company’s performance, also sets the financial limits for the operational, position and prospects. procurement and treasury activities of the Company. Audit Matters 3. The Company expects to take on significant debt 2. The AC comprises the following non-executive in the coming years to finance the development of Directors: Changi East. In light of this, the CMC was established Mrs Chng Sok Hui – Chairman at the end of 2018 to provide specific oversight in the Mrs Tan Ching Yee area of capital management. Mr Eric Ang Teik Lim

4. The CMC comprises five Directors: 3. The main responsibilities of the AC are to assist Mr Eric Ang Teik Lim - Chairman the Board in discharging its statutory and other Mr Lim Zhi Jian responsibilities relating to the Company’s internal Mr Chia Song Hwee controls, financial and accounting matters, Mrs Chng Sok Hui compliance, and business and financial risk Mr Lee Seow Hiang management.

5. The role of the CMC is to review and recommend to 4. The AC is responsible for reviewing the the Company’s Board and/or EXCO the financing effectiveness of financial, compliance and strategies and plans of the Company (debt capital risk management frameworks, as well as the market issuances and bank facilities), as well as to robustness of the reporting and disclosure guide and advise Management on the financing processes. The AC also reviews the adequacy of execution strategy. whistleblowing arrangements implemented by the Company through which employees, partners, Executive Resource and Compensation suppliers and contractors can raise concerns in 1. The ERCC comprises the following non-executive confidence about possible improprieties in matters Directors: of financial reporting or other matters. All whistle- Mr Liew Mun Leong - Chairman blowing complaints are reviewed by the AC to Mr Eric Ang Teik Lim ensure independent and thorough investigation, Mr Chia Song Hwee and adequate follow-up and resolution of the matters reported. The AC also provides oversight 2. The ERCC supports and advises the Board on for the implementation of the Company’s anti- remuneration matters, leadership succession and bribery management system. development. The responsibilities of the ERCC include: 5. The AC performs independent review of the a. reviewing and approving the policy for financial statements of the Company, and reviews determining executive remuneration, including the key areas of management judgment applied the remuneration packages, service contract for adequate disclosure, critical accounting policies terms and benefits programme for key and any significant changes that would have a management executives; material impact on the financial statements. b. approving the appointment of key management executives, overseeing their development and 6. The AC reviews the adequacy and effectiveness of reviewing succession plans to ensure a strong the internal audit function and its processes, as pipeline of talent to enable the continued well as ensures it is adequately resourced to carry success of the Company; and out its function effectively. The AC reviews the c. recommending the remuneration framework, Internal Audit (IA) Division’s plans, its effectiveness including Directors’ fees for non-executive and audit scope, and also approves its budget. Directors. The AC also reviews the internal audit reports to

22 Changi Airport Group CORPORATE GOVERNANCE

verify the effectiveness and timeliness of actions Security, Information Security, and Enterprise taken by Management on the internal auditors’ Performance; and recommendations and observations. • the third line of defence is IA, which provides an independent assessment and assurance 7. The AC reviews and approves the external audit on the reliability, adequacy and effectiveness plan, the scope and results of the external audit. of the Company’s system of internal controls, The AC also reviews the external audit reports to risk management procedures, governance ensure that significant findings and observations framework and processes. regarding control weaknesses are promptly rectified. Prior to making recommendations to 3. The Company’s internal and external auditors the Board on the external auditor’s appointment review its key internal controls for material non- or reappointment, the AC reviews the external compliance or failures in internal controls and auditor’s independence, objectivity and quality recommend areas of improvements. The AC also of work based on the Audit Quality Indicators reviews the effectiveness of the actions taken by Disclosure framework established by the Management in response to the recommendations Accounting and Corporate Regulatory Authority. In made. line with best practice, the external audit partner is rotated every five years. The AC also reviews the 4. The AC also reviews the effectiveness of the non-audit fees awarded to the external auditors to enterprise risk management framework and ensure that the non-audit services performed by the risk management processes put in place to them would not affect their independence. manage financial and strategic (business) risks while meeting business objectives. 8. The AC meets with the internal and/or external auditors three times during the year. At least 5. As part of the Company’s anti-bribery management one of these meetings is conducted without the system and ISO37001 certification requirements, presence of Management, where the auditors may all employees have to undergo annual anti-bribery raise issues encountered in the course of their work training, and divisions perform identification and directly to the AC. assessment of bribery risk annually and put in place appropriate mitigating measures. Employees Internal Controls in sensitive positions are also required to submit 1. The Board and Management of the Company are Declaration of Anti-Bribery Compliance yearly. fully committed to maintaining a robust system of internal controls, procedures and risk management 6. A separate TC evaluates and approves the award to safeguard our shareholder’s interests and the of tenders for goods and services exceeding Group’s assets. The Board delegates its oversight S$50 million in value, with the exception of those responsibilities for internal controls, financial related to new development projects and major and strategic (business) risk management and redevelopment projects at Changi Airport, which compliance matters to the AC, which ensures come under the purview of the ECAD. The TC is the effectiveness and adequacy of the system of chaired by a non-executive Director and comprises internal controls in the Company, while the ORSC the following Directors: assists the Board in reviewing the operational and Mr Michael George William Barclay - Chairman safety risk management and compliance systems Ms Kwa Kim Li put in place by Management. Mr Lee Seow Hiang

2. The internal controls established by the Company Internal Audit are supported by systems, processes and people. 7. IA assists the AC to ensure that the Company The Company’s three lines of defence of risk maintains sound risk management and internal management are as follows: control systems. IA is independent of the activities • the first line of defence is the business units who it audits. It conducts regular audits of high-risk are responsible for identifying and managing areas, and undertakes investigations as directed risks inherent in their businesses; by the AC. It comprises suitably qualified and • the second line of defence comprises the experienced staff, headed by the Senior Vice oversight and control functions such as President, Internal Audit (SVP, IA). SVP, IA Enterprise Risk Management (ERM), Legal reports functionally to the Chairman of the AC, and Compliance, Aerodrome Safety, Aviation and administratively to the CEO. To ensure the

Annual Report 2019/20 23 CORPORATE GOVERNANCE

independence of the IA function, the IA team has Mr Tham Kui Seng unrestricted access to the AC. Mr Lai Huen Poh Mr Lee Chuan Seng 8. IA adopts a risk-based approach in formulating its Mr Lee Kut Cheung annual audit plan that aligns its activities to the key risks across the Company’s businesses, focusing 2. The ECAD oversees new development and major on key internal controls, including financial, redevelopment projects at Changi Airport. The roles operational and compliance controls. The annual of the ECAD include: audit plan is developed in consultation with, but a. reviewing and approving collaborations, is independent of, Management and is approved selection of consultants, architects and other by the AC. IA also works closely with Management professional advisors, design concepts, aesthetic to provide internal consulting and control advisory element proposals and other proposals related to promote effective risk management, robust to development projects at Changi Airport; and internal control and good governance practices b. reviewing and approving tenders for goods in the development of new services/products and and services exceeding S$50 million related to implementation of new/enhanced systems and development projects at Changi Airport. processes. Internal audit practices are also guided by the International Standards for the Professional Nominating Committee Practice of Internal Auditing set by the Institute 1. Established at the end of 2018, the NC comprises: of Internal Auditors. IA also harnesses technology Mr Liew Mun Leong - Chairman to maximise efficiencies in the way it audits, Mrs Tan Ching Yee through robust use of analytics and adopting more Mr Eric Ang Teik Lim continuous auditing going forward. Mr Chia Song Hwee

9. IA’s assessments on the adequacy and 2. The NC assists the Board in reviewing the structure, effectiveness of internal controls over processes/ size, composition, core competencies and skills systems across the businesses are reported to required by the Board and its committees to the AC, and a summary of key findings and support the strategic objectives and values of the recommendations are also discussed at the AC Company, and makes relevant recommendations meetings. IA also tracks and reports to the AC to the Board. on the implementation status of actions agreed by Management, so as to ensure prompt and Technology Development Committee adequate closure of audit observations. 1. The TDC comprises five Directors and one external member, who is co-opted to provide additional Airport Development advice and expertise. 1. The ECAD currently comprises four Directors and They are: nine non-voting co-opted members, who provide Mr Ng Chee Khern - Chairman additional advice and expertise in relation to the Mr Chia Song Hwee development projects. Mr Lim Zhi Jian Mr Wahab Yusoff The four Directors are: Mr Lee Seow Hiang Mr Liew Mun Leong - Chairman Prof Lui Pao Chuen co-opted member Mr Tan Gee Paw Mr Lim Zhi Jian 2. The TDC provides guidance to Management Mr Lee Seow Hiang on innovations driven by technology, as well as the development of technological capabilities The nine co-opted members are: in support of the Company’s transformation. It Professor Lui Pao Chuen also guides the Company on its strategy for the Ms Patricia Chia procurement of technology, co-development Mr Chua Hua Meng of solutions, or investments into startups with Mr Goh Hup Chor promising technologies. Mr Lim Bok Ngam

24 Changi Airport Group ENTERPRISE RISK MANAGEMENT

1. The Company manages a wide range of risks 6. Management leads the Company’s efforts in which includes operational and safety, regulatory, developing and strengthening its risk management financial, and developmental projects risks. With processes and framework through the RC, Covid-19 causing an unprecedented impact on supported by the ERM division. the global aviation industry, the Company has strengthened its risk governance and oversight 7. Reporting to the AC and ORSC, the RC is chaired by holding regular Covid-19 meetings to enable by the CEO and comprises Senior Management management and business units to stay updated members of the Company. It meets regularly and quickly respond to the latest Covid-19-related to review the Company’s key risks and provide issues. direction to strengthen the implementation of ERM in the Company. 2. The Company’s key challenge is to maintain safe, secure and efficient operations at Changi Risk Awareness Culture Airport, amid a “new normal” in many aspects of 8. Every employee of the Company and every person our business. We will closely monitor potential working in the airport community is a valued operational risks despite low-tempo operations, manager of risks. Therefore, the RC, through the with emphasis on ensuring that critical airport ERM division, continues with its engagement systems do not fail after long periods of inactivity. efforts through inter-divisional risk workshops and In addition, we will ensure that there is clarity in meetings with risk owners. risk ownership for all risks and regular risk reporting of top risks and controls to the Company’s Risk 9. The ERM division has also continued to strengthen Committee (RC), through the ERM division. collaboration with business units on areas such as critical engineering systems reliability, cybersecurity Risk Governance and supporting the Company’s insurance 3. Both the Board and Management are responsible programme. for the management of risks in the Company. The Board, through the ORSC, provides oversight on operational and safety risks, while the review of the Company’s financial and strategic risks are assisted by the AC.

4. The ORSC comprises three Directors and two co- opted members, who provide additional advice and expertise to the committee.

5. The three Directors are: Mr Michael George William Barclay - Chairman Ms Kwa Kim Li Mr Wahab Yusoff

The two co-opted members are: Mr Wong Woon Liong Mr Tan Kian Huay

Annual Report 2019/20 25