CEO Business Review • Publishing & Printing

ANTHONY CHEONG Acting Chief Executive Officer

passion to enrich lives with outstanding quality and a Awell-established track record.

52 A Legacy Built on Passion A Milestone for Celebration Business Overview

Revenue for the Publishing & Printing Group was down 5% Achieved Revenue of to $363 million. Adjusting for the closures of loss-making businesses of the Publishing Group (US Library and Reference, and Education ) as well as the export magazine $363M distribution business in Australia, revenue declined marginally by 1%. Although overseas demand for Education products remains strong and continues to grow, revenue for the ongoing businesses was dragged down by weaker performance of the magazine distribution business.

Overall PBIT was 136% higher at Education Publishing continued to $10 million after taking into account contribute strongly to the Group’s PBIT grew the Group’s share of much improved profitability. Our long-term strategy of operating results from associated expanding outside our base companies. Excluding contributions saw positive results in recent years. 136% from associated companies, PBIT was The market for educational products to $10M 62% lower at $2 million. Savings from remained vibrant and we were able to the closures of loss-making businesses capitalise on it and expand our global were ploughed into investments to market presence, despite a fragile global expand the Education Publishing economy last year. While expanding overseas business. In addition, profits globally, we maintained our leadership were also adversely impacted by lower position in the Singapore market. revenue for both Print and Distribution, as well as one-off impairment charge made on plant and machinery.

53 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2013 CEO Business Review • Publishing & Printing

Our digital education division made Consequently, print volume increased Group, we successfully acquired positive inroads into key markets and by about 9% over last year. However, distribution rights for major brands such its research and development arm print prices were depressed by stiff as Thule and Nite Ize. helped us set the pace for the industry. competition and eroded overall margins. With our increased emphasis on Stringent cost management measures innovation and customer needs, our helped to reduce unit operating costs Publishing education product offerings became but could not compensate for the It was an exciting and busy year for more sophisticated and comprehensive, decline in print selling prices. Publishing. Our Education brands providing targeted solutions to our gained strong global recognition with customers, be they educators, students While book distribution remained a distribution footprint currently across or parents. Digital components were relatively unaffected, magazine 40 countries, and continue to grow also better designed to seamlessly distribution saw revenues dip on lower worldwide. Sales to the US market complement the more traditional printed readership levels. Retail conditions were continued to contribute significantly to materials. also difficult, with low shopper traffic earnings. We made important inroads remaining a key concern for our retail into Chile with the adoption of our The Printing division, however, faced bookstores. Mathematics books in its primary school the brunt of a changing print landscape. curriculum. Our network of international Demand for the printing of books and To address the increasingly tougher partners and distributors continued to magazines from our traditional markets market, we reprioritised investments grow in strength. in the West, such as the US and the around growth opportunities and UK, fell. accelerated a number of initiatives. Significant investments were made in Savings from the discontinued loss- recruiting the best people in the trade, To counteract the shrinkage in demand, making businesses were channelled ensuring that our products remained an aggressive sales strategy was into strengthening and growing consistently at the forefront of adopted. We managed to renew various the Education Publishing business. education. key accounts, win back major contracts We stepped up efficiency programmes from competitors in Singapore, for the Printing division, diverting capital Our marketing programmes were Malaysia, Australia and Myanmar, and expenditure into this area. There was a intensive, and we saw encouraging secure new major accounts in , renewed focus on the local print market results in our approach to the global and Latin America. where print opportunities were still market place, with exciting innovative abundant. In the case of the Distribution products launched.

1. His Excellency Cheong Yip Seng giving his opening speech 1 2. His Excellency Cheong Yip Seng and Ms Lee Fei Chen being interviewed by the media

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54 A Legacy Built on Passion A Milestone for Celebration Launch of Marshall Cavendish Education, Chile, and Marshall 3 Cavendish Institute, Chile It was with great pleasure that we hosted His Excellency Cheong Yip Seng, Singapore Ambassador to Chile, 3. Educators browsing through the at the opening ceremony of Marshall materials at the Marshall Cavendish Cavendish Education, Chile, and Education booth at WALS 2012 Marshall Cavendish Institute, Chile, 4. Our staff demonstrating how to use the on 25 October 2012. Held at Cerro eBook on an interactive whiteboard to a teacher Santa Lucia, Santiago, the opening 5. Teachers showing interest in the new ceremony marked the beginning of a range of textbook packages stronger brand presence in Chile. 6. One of the keynote sessions during WALS 2012 Through this official launch, Marshall Cavendish Education was able 4 5 to demonstrate our dedicated commitment and capability to produce holistic high quality education solutions to educators and learners beyond Singapore. To better meet the market needs in Chile, we also had a specially selected team of qualified bilingual trainers to provide customised teacher training. These teachers were trained 6 and certified by Marshall Cavendish Institute, Singapore.

The World Association of Lesson Studies 2012 Marshall Cavendish Education, with our suite of well-researched professional development programmes, is recognised as the leading provider of Lesson Study training in Singapore. Our participation as sponsor and exhibitor in a key international Lesson Study Conference, such as the The World Association of Lesson Studies and reinforced our position as a provider Ministry of Education, Singapore, (“WALS”) conference at Nanyang of quality professional development as well as announced our position Technological University from 28 to 29 programmes. With our comprehensive as the sole textbook publisher for all November 2012, further reinforced this materials on display at the exhibitors’ Primary Science textbooks from 2014. reputation. Attended by 1,200 local area, we were able to demonstrate how and international educators, lecturers Marshall Cavendish Education is the We were also proud to showcase and professors, the conference was leading provider of holistic education the enhanced MC eBook with new the perfect platform for us to reach out solutions, offering materials from print to innovative digital elements that support to both local and international target digital and even teacher development the teaching and learning experience. audiences. programmes. At the event, teachers responded with positive feedback to our product Dr Yeap Ban Har, principal of Marshall 2014 Textbooks Launch (Singapore) offerings. The MC eBook is an epitome Cavendish Institute, chaired the of the 21st Century Competency tool presentation, ‘Developing Tools and In July, Marshall Cavendish Education that supports inventive thinking, Artifacts for Supporting Lesson Study launched the MCE 5-in-1 Power Pack self-directed and collaborative learning. and Instructional Improvement’. to all primary and secondary school His presentation highlighted the teachers in Singapore with the promise With this marked growth in product importance of using supporting to upsize their resources and downsize offerings, Marshall Cavendish Education resources, including technology, their workload. We unveiled the latest once again asserted its position as the to help teachers successfully observe range of products developed based leading provider of educational solutions and evaluate research lessons, on the 2014 syllabus provided by the in Singapore.

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“Our focus on optimising content distribution saw growth 7 8 in other revenue streams for many of our titles”

56 A Legacy Built on Passion A Milestone for Celebration English Language Teaching allowed us to reach out to consumer sales were driven by online bestsellers markets that were previously restricted like Conversations with Lee Kuan Yew. Our publishing unit in Hong Kong by the limitations of physical distribution. In custom publishing, we successfully increased its publishing activity into showcased our services. We won the English Language Teaching (“ELT”) We continued to be a strong player tender for the SATS Group’s culinary materials. To date, it has published in our home turf of Singapore for project, Around the World, a collection more than 30 printed titles as well our Learning Management System of recipes by its award-winning chefs; as created several related (mobile) in both the primary and secondary and produced turnkey publications for apps. These include grammar guides, school markets. As the home market several high profile clients. Projects this listening and speaking practice material, is relatively small, we also focused year included the ArtScience Museum’s public examination mock papers and considerable management resources catalogues for the Lego and Eames innovative English tool books. to grow our overseas portfolio. exhibitions, and a children’s book with National Parks Board. We see a huge opportunity in the Over the last few years, we have Chinese market and have been actively engaged overseas partners in Business Information devoting resources to expand our reach the region, adding new distributors in Business Information operations in in the Chinese market. Promotional Taiwan and this year. In Asia, events and training workshops were Singapore, Malaysia and Hong Kong the and Vietnam continue to SAR faced a challenging environment organised throughout the year to be an important growth market for us. develop the market, largely targeting impacted by international events and We also see opportunities in markets local issues. For one, our shipping and Beijing and Zhongshan of Guangdong. such as Australia, Chile and Russia. Growth of this segment has been very maritime related directories took a direct encouraging, with double-digit growth hit. As a result of the over-capacity and In the US, we have penetrated the depressed freight rates, shipping lines in sales recorded this year over the physical textbook market with the and airlines were forced to cut back on same period last year. adoption of our Maths textbooks by their advertising budgets. This had an US schools, and are now establishing adverse impact on Cargonews Asia, Digital Initiatives a foothold in the digital segment, which continued to suffer from lower The emphasis of our investment aggressively introducing our digital advertisement sales. strategy for our Education business products and rolling out Math Buddies has increasingly been on creating a to a sizeable number of schools. Despite these challenges, overall complete suite of education solutions, Many of these schools are located in the advertisement sales managed to with digital closely aligned to traditional tri-state area of New York, New Jersey sustain at last year’s level due in part printed materials. We see growing and Connecticut. Several schools have to higher online advertisement sales. awareness and interest in digital content also embraced Math Buddies as their The outlook for next year remains tied to in many markets. Management’s core Mathematics curriculum and done macroeconomic conditions, which has foresight in early 2000 to build research away with print textbooks altogether. a direct effect on advertisement sales. and development capabilities in this segment of the market has put us General and Reference in lead position among publishing Although hurt by the continuing companies that provide digital content weakness of the Ringgit in Malaysia, through multiple platforms. Strong which is a key market for us, our research and development will continue General and Reference unit upheld its to underpin our technological leadership reputation for high quality commercial in this area. publishing with national bestsellers such as Conversations with Ban Ki-Moon, We continued to invest heavily in Singapore Street Names and Tanoshii. research and development, creating Conversations with Ban Ki-Moon cutting-edge digital products such was launched in March, in New York, Some of the titles published by the as the MC eBook Viewer that was with UN Secretary-General Ban Ki-Moon General and Reference unit include: developed this year. This eBook reader as guest of honour. 1. Conversations with Ban Ki-Moon for our digital textbooks can run on 2. Tanoshii all the major platforms (Windows, Our focus on optimising content 3. Singapore Street Names Macintosh, Android, and Apple IOS). distribution saw growth in other revenue 4. Conversations with Lee Kuan Yew streams for many of our titles. Several (Korean Edition) To tap into the growing demand for licensing and rights deals were sealed 5. Bank 3.0 tablets and their potential in education, including a Japanese edition of Branch 6. Food Gurus (Brazilian Edition) 7. Around The World, Recipes from SATS we developed a library and database Today Gone Tomorrow, Korean and 8. Essential Eames of e-learning content that can run Polish editions of Bank 3.0, and a on multiple platforms. This has now Brazilian edition of Food Gurus. E-book

57 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2013 CEO Business Review • Publishing & Printing

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Educational Technologies In the coming year, ETL will focus on The Printing division faced a decline Limited (i) providing excitement to the sales in revenue from its existing accounts as publishers reduced print volume Educational Technologies Limited’s team through upgraded and new or pagination in response to shrinking (“ETL”) revenue declined versus last products, a wider offer of premiums book and magazine readership. year due to operational issues with and target-based incentive Publishers also experienced lower some of our distributors, delay in key programmes; advertisement placements while product development projects and the (ii) achieving shipment targets by some moved from print to e-formats. cancellation of the Kids’ Club Portal. proactive distributor management The recent conversion of the print and customised training support; and version of Newsweek to a complete The past year saw ETL take a bold step (iii) exploring business opportunities e-version is one such example. as part of its digital strategy with the resulting in scalable return. The Western markets of the US and introduction of PAL – a portable learning the UK – a major source of print work device with a touch screen for children, ETL continues to participate in a for us – have slowed down significantly with multimedia games, videos, community project, Night High due to macroeconomic factors. audio and songs. PAL is the latest Scholarship Programme, partnered by enhancement to English-Time and its our distributor in the Philippines. It is a We successfully replaced some of our content was taken from the multimedia first step and is of small scale. The idea lost volume of book and magazine components in ETL’s Total Development is to help children from poor families printing through diversification into Programme. finish high school. The commitment to commercial catalogues of the non- the selected few is for several years in publishing sector, comprising retail and PAL was launched in , Thailand, secondary education which enables commercial sectors, and government the Philippines, Indonesia, Sri Lanka, them to pursue further studies in and quasi-government agencies. Australia, Singapore, Hong Kong and colleges or universities. Taiwan. English-Time has also been Some of our notable wins this year upgraded with Walter compatibility, were renewals of contracts with the where users can use the optical pen on Printing two largest local magazine publishers, any page in the books to listen to audio FY2013 was a year of mixed results for MediaCorp and Singapore Press content and songs. This enhances user the Printing division. Despite an increase Holdings, and with major international experience and creates better sales in print volume, revenue declined on the weeklies, Time magazine, amongst opportunities. back of weaker selling prices and the others. Our Printing division also won weakening currencies of our main export back, as well as secured, a number markets (the US, Europe and Australia). of new major accounts in Singapore,

58 A Legacy Built on Passion A Milestone for Celebration “we will continue to leverage on technical innovation and our experienced pool of 3 employees to remain effi cient and nimble”

1. Employees at the press area 2. Employees working on layouts to be printed 3. Training in progress at print simulator training room

Malaysia, Australia, Myanmar, China, competitiveness. Sales growth and printing category). Times Offset Germany and Latin America. productivity management will be the key Malaysia was awarded the Certifi cate focus for China in 2014. of Excellence in the Commercial and Operations in Singapore made Publication (Web Magazine) and notable improvements in securing new In view of intense competition in the Commercial and Publication (Limp sales to partly offset lost sales from print market arising from over-capacity Bound) categories at the Malaysia Print various account closures and volume in print supply, the division’s primary Awards 2012. For the fi rst time, it won shrinkages. The Printing division will focus will be on plant effi ciency, a Bronze medal in the Book Printing continue to intensify its marketing effort quality and service excellence to (4 or More Colours category) at the in the non-publishing segment of the stay competitive. We will continue to 2012 Asian Print Awards. print market. Structural changes were leverage on technical innovation and made to merge the digital printing unit our experienced pool of employees to These awards and the accreditation into the mainstream printing business, remain effi cient and nimble. Training in the Process Standard Offset (PSO) and skills upgrading will not be which has helped to strengthen our status, which is an industry-accepted capabilities as a total solution provider. compromised. In the year, the Printing standardised procedure for the creation division invested in a print simulator of printed products, achieved by In Malaysia, we successfully made which has helped fast-track the training Times Printers Singapore, Times Offset inroads for the fi rst time into the local of operators on multiple printing Malaysia and Everbest Printing gave us religious book printing market and scenarios, something that would have the winning edge over competitors in the printing of the Malaysian general been impossible with traditional training election materials. We also expanded methods. the market this year. our range of local magazine titles to offset the dip in the export market in Despite a challenging year, our Printing As part of our continuing commitment the West. Productivity gains helped to division raked in various print awards to embrace green initiatives, Times lower production cost in the Malaysian for excellence in printing: the Asian Print Printers Singapore obtained its ISO printing plant. Award and the Malaysian Print Award 14000 certifi cation, besides the 2012/13. Times Printers received a international accredited certifi cation Export print orders for our plant in China Silver award for digital colour proofi ng of ISO 9002, FSC, PEFC and PSO. weakened in the year, exacerbated by and a Bronze award for web offset The Printing division has migrated from downward pressure on selling prices coated stock. Everbest won a Gold alcohol to close to 100% alcohol-free and increases in its national minimum award for Book Printing (in the less than printing, moved gradually into waste- wage. The appreciation of the Renminbi 4-Colour category) and a Silver award in water recycling, and implemented further dampened our export marketing Book Printing (in the more than 4-Colour various energy conservation initiatives.

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DISTRIBUTION Pansing Books Part of this decline is being plugged by the expansion into non-magazine Pansing book distribution saw an A key challenge for the Distribution (lifestyle) product range, as we actively increase in revenue, a creditable division in recent years is the need pursue more distributorship rights for performance in tough market conditions to address the downward trend in strong brands. consumer demand for books and where printed books are seen as a declining industry, as evidenced by the magazines through retail stores. Musicway The Distribution business model for closure of a number of major customers books and magazines is continually in recent years. For the lifestyle distribution business challenged by online retailers, which in Australia, we have been appointed is now the new normal. Part of this The strong performance of books as an exclusive Australian distributor challenge is being addressed by the distribution was partly due to the robust for the Thule brand of luggage and diversifi cation of our product offerings, sales of several bestsellers. One such accessories. Thule is a high quality capturing value on all fronts and title was the runaway success of books Swedish brand that offers luggage optimising our portfolio in respect to by motivational speaker Nick Vujicic. solutions, from iPad sleeves, backpacks changing market needs. We have also We also added Hachette UK to our and messenger bags to a complete broadened our customer base and sterling list of publishers. range of travel luggages with unique moved into new channel segments. features not generally seen in such Pansing Magazines products. While the impact of e-Books and Magazine distribution was affected In addition to Thule, to expand our e-Magazines is not fully felt by our by lower readership, lower volume brand offering, we secured the Nite business for now, the popularity of of trading cards, and higher sales Ize brand for distribution in Australia. internet purchases of physical products returns in Australia and Hong Kong. The brand covers several impulse is affecting sales on a larger scale. The business also saw a net reduction accessory lines which include over While book sales remained relatively of magazine retail stores (newsstands 500 products ranging from innovative stable this year, magazine sales have and bookstores) which has directly LED lighting accessories, bike, pet, declined. resulted in reduced sales touch points. and camping hardware to gift solutions which cater for different segments of the consumer market. This is part of our on-going plans to diversify and reduce our reliance on the more traditional business.

FY2014 is set to be a positive watershed year for the Distribution division as we focus heavily on new products, new brands and new retail partners. “For the retail business as a whole, we believe in the continued development of our RETAIL people and a constant review of merchandise offers to ensure 1 relevance and continuous There is no change in the retail optimisation of operational environment as the high street effi ciencies” bookshop business continues to be challenged. Low shopper traffi c remains a key concern for us.

More non-book and book-related merchandise were added to our stores. During the year, we undertook a partial revamp of two high street stores in Singapore (The Centrepoint and Tampines 1) to improve and enhance the stores’ offering in the children’s category. We have introduced educational toys to complement the revamped stores.

For selected Malaysian stores, we increased the range of non-English books to include other languages such as Malay and Chinese. We also introduced a ‘factory outlet store’ concept. 2

A new store was opened at Gurney Paragon, Penang (Malaysia).

Following last year’s successful renewal of its six existing leases at Terminal 1 and 3 (Singapore Changi Airport) and the recoup of the three books, press and convenience stores from Hudson’s at Terminal 2, Times Newslink has extended its retail presence under the RELAY and Times Travel concept stores across all three terminals in Singapore Changi Airport.

The three new stores at Terminal 2 commenced trading in October 2012.

Times Newslink was also successful 1. Times Bookstore (The Centrepoint) in its 3-year contract renewal for our 2. Staff serving a customer at Times Bookstore children’s specialty store - KABOOM at Terminal 2. The new lease commenced in May 2013.

61 Fraser and Neave, Limited & Subsidiary Companies Annual Report 2013 CEO Business Review • Publishing & Printing

The business is being challenged by the rising passenger numbers travelling 1 on low-cost carriers and the increase in short-haul travels that have resulted in a change in passenger demographics. The digital evolution facing printed books and press has also impacted us.

We constantly push for improved product margins and operation effi ciencies, while developing new strategies to drive footfall and raise customer conversion. For example, to compensate for the fall in demand of printed books and press, the layout of stores is being re-drawn to allow a change in merchandise mix that will be relevant to evolving passenger demands. “we will continue to Plans have been implemented to increase the general merchandise invest in marketing (stationery, gifts and souvenirs) and 2 campaigns, expand our travel convenience product categories. fulfi lment capabilities Dedicated travel needs corners were and deliver exceptional implemented in stores to target people on the move. customer experience”

For the retail business as a whole, we believe in the continued development of our people and a constant review of merchandise offers to ensure relevance and continuous optimisation of operational effi ciencies.

NoQ webstore Our webstore NoQ has been steadily increasing its web presence with encouraging growth seen in our customer base. We attribute the 1. Times Bookstore (Gurney Paragon, Penang) increase partly to our aggressive 2. NoQ App marketing programmes and partly to our capability to offer products at competitive prices combined with the high service standard levels. Mobile applications for the Android and iOS platforms were also introduced last year.

We will continue to invest in marketing campaigns, expand our fulfi lment capabilities and deliver exceptional customer experience.

62 A Legacy Built on Passion A Milestone for Celebration